N-CSR

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM N-CSRS

CERTIFIED SHAREHOLDER REPORT OF REGISTERED

MANAGEMENT INVESTMENT COMPANIES

Investment Company Act file number: 811-4984

AMERICAN BEACON FUNDS

(Exact name of registrant as specified in charter)

4151 Amon Carter Boulevard, MD 2450

Fort Worth, Texas 76155

(Address of principal executive offices)-(Zip code)

GENE L. NEEDLES, JR., PRESIDENT and Executive Vice President

4151 Amon Carter Boulevard, MD 2450

Fort Worth, Texas 76155

(Name and address of agent for service)

Registrant’s telephone number, including area code: (817) 391-6100

Date of fiscal year end: October 31, 2012

Date of reporting period: October 31, 2012

ITEM 1. REPORTS TO STOCKHOLDERS.

About American Beacon Advisors

Since 1986, American Beacon Advisors has offered a variety of products and investment advisory services to numerous institutional and retail clients, including a variety of mutual funds, corporate cash management, and separate account management.

Our clients include defined benefit plans, defined contribution plans, foundations, endowments, corporations, financial planners, and other institutional investors. With American Beacon Advisors, you can put the experience of a multi-billion dollar asset management firm to work for your company.

Contents
President’s Message	1
Market and Performance Overview	2 - 4
Schedule of Investments	7
Financial Highlights	24
Additional Information	Back Cover

The Fund may invest in futures contracts, which are a type of derivative investment. Investing in derivatives could result in losing more than the amount invested. Investing in foreign securities entails additional risk not associated with domestic securities, such as currency fluctuations, economic and political instability and differences in accounting standards. The intrinsic value of stocks selected for the Fund may never be realized by the market, and the prices of value stocks may go down. While investing in value stocks may limit downside risk over time, the Fund may produce more modest gains than riskier stock funds as a trade-off for this potentially lower risk. Please see the prospectus for a complete discussion of the Fund’s risks.

Any opinions herein, including forecasts, reflect our judgment as of the end of the reporting period and are subject to change. Each advisor’s strategies and the Fund’s portfolio composition will change depending on economic and market conditions. This report is not a complete analysis of market conditions and therefore, should not be relied upon as investment advice. Although economic and market information has been compiled from reliable sources, American Beacon Advisors, Inc. makes no representation as to the completeness or accuracy of the statements contained herein.

American Beacon Funds October 31, 2012

Dear Shareholders,

In recent years, growth stocks have outpaced value stocks. In 2011, for instance, the Russell 1000 Growth Index gained 2.64%, while the Russell 1000 Value Index rose only 0.39%. But this shouldn’t deter investors from looking at value-oriented vehicles, since value and growth stocks tend to ebb and flow in relation to one another over the long term.

As evidence of this, the Russell 1000 Value Index has returned 16.89% for the 12 months ended on October 31, 2012. For the same period, the Russell 1000 Growth Index returned 13.02%.

Even with the recent run-up in stock prices, there is reason to think that many large-cap stocks are still undervalued. In a low-growth economy, it makes sense to seek out undervalued stocks that are stable and established enough to withstand weakened conditions. That is precisely the strategy pursued by the American Beacon Large Cap Value Fund.

For the 12-month period ended October 31, 2012, the American Beacon Large Cap Value Fund (Institutional Class) performed in line with its benchmark index and returned 16.48%.

Many long-term investors have embraced a value-oriented strategy because over long periods of time, value-investing strategies have outperformed their growth-oriented counterparts. That is what the Fund strives to achieve. With four highly regarded sub-advisors, the Fund not only offers a wide breadth of expertise in portfolio management, but serves as a vehicle for potential diversification as well.

Thank you for your continued investment in the American Beacon Funds. For additional information about the Funds or to access your account information, please visit our website at www.americanbeaconfunds.com.

Best Regards,

Gene L. Needles, Jr.

President

American Beacon Funds

1

Domestic Equity Market Overview

October 31, 2012 (Unaudited)

U.S. stocks saw a resurgence for the one-year period ended October 31, 2012, with the Russell 1000, Russell 1000 Value and S&P 500 Indexes returning 14.97%, 16.89% and 15.21%, respectively. The advance was impressive, as it was made in the face of a deteriorating global growth outlook and while individuals continued to withdraw billions of dollars from domestic equity mutual funds.

The bulk of these gains can be attributed to a significant fourth-quarter 2011 and first-quarter 2012 rally that saw stock prices surge, as solid retail sales growth and upbeat gains in employment buoyed economic confidence. Through the middle part of spring, though, weak payroll employment reports and concerns over the eurozone debt crisis let the air out of the rally. There was a significant slowdown in economic activity in the U.S. and around the world in the second quarter, and Europe re-entered recession. Stocks responded to the weakening economic developments by dropping about 9% before rallying in June to cut the second quarter’s loss to 2.8% for the S&P 500 Index.

Improvement in the U.S. economy emerged late in the third quarter when reports for retail sales, automobile sales and consumer confidence were better than expected in September. Surprisingly strong housing activity also helped drive a summer rise in stocks that was wholly unexpected by many market observers.

Despite the strong gains during the year, it is still possible to find equities that remain inexpensive, but the broad market is no longer “cheap.” Stocks finished the period ended October 31, 2012, by plateauing in reaction to disappointing third-quarter earnings. Forward guidance still seems to be vulnerable to downward revisions, especially if the “fiscal cliff” remains on the horizon. Economic growth is still sluggish.

The U.S. economy also appears to be in better shape relative to most of the developed world. An energy boom is underway here that will radically reshape U.S. trade balances and competitiveness. U.S. oil and natural gas production is rising; imports of oil are falling. A manufacturing renaissance is underway, and here again, natural gas plays a part, as energy input costs here are far lower than the rest of the world. As labor costs soar in China, India, Brazil and other developing markets, the cost savings from moving overseas are disappearing. A June survey of 259 American manufacturers indicated 40% of them were returning production to the U.S. The U.S. is also an agricultural powerhouse and does not face food inflation, shortages or distribution problems like many other countries. And the U.S. remains far and away the leader in technology innovation; others may manufacture the products (for now) but the ideas come from U.S. shores more often than not.

From a longer-term perspective, stocks appear attractive. The economy is operating well below capacity while corporations are sitting on mountains of cash and balance sheets have been largely cleansed since the recession. U.S. Treasury securities, which offer negative real yields, look like an unattractive investment choice long-term. Individuals are underinvested in equities after moving billions of dollars out of domestic equity mutual funds. Corporate pension plans have made similar moves out of equities into very low-returning government bonds when bonds are the least attractive they have been in generations. Despite macroeconomic and geopolitical uncertainties, equities appear to continue to be a more compelling alternative.

2

American Beacon Large Cap Value Fund^SM

Performance Overview

October 31, 2012 (Unaudited)

The Investor Class of the Large Cap Value Fund (the “Fund”) returned 16.05% for the twelve months ended October 31, 2012. The Fund underperformed the Russell 1000^® Value Index (the “Index”) return of 16.89% but outperformed the Lipper Large-Cap Value Funds Index return of 14.06%.

Comparison of Change in Value of a $10,000 Investment

for the Period from 10/31/02 through 10/31/12

	Annualized Total Returns Periods Ended 10/31/12									Value of $10,000
										10/31/02-
	1 Year			5 Years			10 Years			10/31/12
Institutional Class(1,8)		16.48	%		-1.05	%		8.47	%	$	22,558
Y Class(1, 2, 8)		16.43	%		-1.11	%		8.44	%		22,488
Investor Class(1,8)		16.05	%		-1.38	%		8.15	%		21,900
Advisor Class(1,3,8)		15.96	%		-1.54	%		8.00	%		21,591
Retirement Class(1,4,8)		15.57	%		-1.75	%		7.88	%		21,358
A Class with sales charge(1,5,8)		9.24	%		-2.60	%		7.48	%		20,576
A Class without sales charge(1,5,8)		15.91	%		-1.44	%		8.12	%		21,835
C Class with sales charge(1,6,8)		13.97	%		-1.78	%		7.94	%		21,462
C Class without sales charge(1,6,8)		14.97	%		-1.78	%		7.94	%		21,462
AMR Class(1,8)		16.80	%		-0.80	%		8.76	%		23,154
Lipper Large-Cap Value Funds Index(7)		14.06	%		-1.33	%		6.33	%		18,475
Russell 1000 Value Index(7)		16.89	%		-1.00	%		7.34	%		20,312

1. Performance shown is historical and is not indicative of future returns. Please note that recent growth in the stock market has helped to produce short-term returns that are not typical and may not continue in the future. Investment returns and principal value will vary, and shares may be worth more or less at redemption than at original purchase. Performance shown is as of date indicated, and current performance may be lower or higher than the performance data quoted. To obtain performance as of the most recent month end, visit www.americanbeaconfunds.com or call 1-800-967-9009. Fund performance in the table above does not reflect the deduction of taxes a shareholder would pay on distributions or the redemption of shares.

2. Fund performance for the five-year and ten-year periods represent the total returns achieved by the Institutional Class from 10/31/02 up to 8/3/09, the inception date of the Y Class, and the returns of the Y Class since its inception. Expenses of the Y Class are higher than those of the Institutional Class. As a result, total returns shown may be higher than they would have been had the Y Class been in existence since 10/31/02.

3. Fund performance for the ten-year period represents the total returns achieved by the Investor Class from 10/31/02 up to 5/31/05, the inception date of the Advisor Class, and the returns of the Advisor Class since its inception. Expenses of the Advisor Class are higher than those of the Investor Class. As a result, total returns shown may be higher than they would have been had the Advisor Class been in existence since 10/31/02. A portion of the fees charged to the Advisor Class of the Fund was waived in 2005. Performance prior to waiving fees was lower than the actual returns shown for 2005.

4. Fund performance for the five-year and ten-year periods represent the total returns achieved by the Investor Class from 10/31/02 through 5/31/05 and the Advisor Class from 6/1/05 up to 5/1/09, the inception date of the Retirement Class, and the returns of the Retirement Class since its inception. Expenses of the Retirement Class are higher than those of the Advisor and Investor Classes. As a result, total returns shown may be higher than they would have been had the Retirement Class been in existence since 10/31/02.

5. Fund performance for the five-year and ten-year periods represent the total returns achieved by the Investor Class from 10/31/02 through 5/17/10, the inception date of the A Class, and the returns of the A Class since its inception. Expenses of the A Class are higher than those of the Investor Class. As a result, total returns shown may be higher than they would have been had the A Class been in existence since 10/31/02. A Class shares have a maximum sales charge of 5.75%.

6. Fund performance for the five-year and ten-year periods represent the total returns achieved by the Investor Class from 10/31/02 through 9/1/10, the inception date of the C Class, and the returns of the C Class since its inception. Expenses of the C Class are higher than those of the Investor Class. As a result, total returns shown may be higher than they would have been had the C Class been in existence since 10/31/02. C Class has a maximum contingent deferred sales charge of 1.00% for shares redeemed within one year of the date of purchase.

7. 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. Russell 1000 Value Index is a registered trademark of the Frank Russell Company. The Lipper Large-Cap Value Funds Index tracks the results of the 30 largest

3

American Beacon Large Cap Value Fund^SM

Performance Overview

October 31, 2012 (Unaudited)

mutual funds in the Lipper Large-Cap Value Funds category. Lipper is an independent mutual fund research and ranking service. One cannot directly invest in an index.

8. The total annual Fund operating expense ratio set forth in the most recent Fund prospectus for the Institutional, Y, Investor, Advisor, Retirement, A, and C Class shares was 0.59%, 0.70%, 0.96%, 1.09%, 1.40%, 1.17%, and 2.55%, respectively. The expense ratios above may vary from the expense ratios presented in other sections of this report that are based on expenses incurred during the period covered by this report.

Prior to the deduction of expenses, the Fund outperformed the Index. The Fund’s excess performance was primarily generated through stock selection as sector allocation detracted value relative to the Index.

From a stock selection standpoint, the Fund’s Financials and Information Technology sector holdings added the most value to performance. Companies in the Financials sector that had the greatest impact on the Fund’s performance were Allstate (up 56.6%), Bank of America (up 38.7%) and JP Morgan Chase (up 24.5%). In the Information Technology sector, Seagate Technology (up 82.2%) and Apple (up 65.9%) were the largest contributors to performance. Poor stock selection in the Consumer Discretionary sector detracted from the Fund’s returns. Johnson Controls (down 19.6%) and The Walt Disney Company (up 42.8%) hurt relative performance in the Consumer Discretionary sector. Not owning Lowes, which was up 57.3% in the Index, also detracted value.

The Fund’s overweight position in Information Technology, the worst performing sector in the Index, detracted value through sector allocation. This was somewhat offset by an underweight in the Utilities sector which added value relative to the Index.

The sub-advisors continue to invest in a broadly diversified portfolio of companies that they believe have attractive valuations and above-average earnings growth potential. This approach should allow the Fund to benefit over the longer term.

Top Ten Holdings

	% of Net  Assets
JPMorgan Chase & Co.		3.8	%
Wells Fargo & Co.		2.7	%
Pfizer, Inc.		2.6	%
Johnson & Johnson		2.4	%
Bank of America Corp.		2.4	%
Vodafone Group plc		2.2	%
Microsoft Corp.		1.9	%
Philip Morris International, Inc.		1.8	%
General Electric Co.		1.7	%
Citigroup		1.6	%

Sector Allocation

	% of Equities
Financials		26.9	%
Health Care		13.1	%
Energy		12.6	%
Industrials		10.7	%
Information Technology		10.0	%
Consumer Staples		8.8	%
Consumer Discretionary		7.6	%
Utilities		4.7	%
Telecommunication Services		4.2	%
Materials		1.3	%

4

American Beacon Large Cap Value Fund^SM

Fund Expenses

October 31, 2012 (Unaudited)

Fund Expense Example

As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments and (2) ongoing costs, including management fees, administrative service fees, distribution (12b-1) fees, and other Fund expenses. The examples below are intended to help you understand the ongoing cost (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.

The examples are based on an investment of $1,000 invested at the beginning of the period in each Class and held for the entire period from May 1, 2012 through October 31, 2012.

Actual Expenses

The “Actual” lines of the table provide information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading “Expenses Paid During Period” to estimate the expenses you paid on your account during this period. Shareholders of the Investor and Institutional Classes that invest in the Fund through an IRA may be subject to a custodial IRA fee of $15 that is typically deducted each December. If your account was subject to a custodial IRA fee during the period, your costs would have been $15 higher.

Hypothetical Example for Comparison Purposes

The “Hypothetical” lines of the table provide information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed 5% per year rate of return before expenses (not the Fund’s actual return). You may compare the ongoing costs of investing in the Fund with other funds by contrasting this 5% hypothetical example and the 5% hypothetical examples that appear in the shareholder reports of the other funds. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. Shareholders of the Investor and Institutional Classes that invest in the Fund through an IRA may be subject to a custodial IRA fee of $15 that is typically deducted each December. If your account was subject to a custodial IRA fee during the period, your costs would have been $15 higher.

You should also be aware that the expenses shown in the table highlight only your ongoing costs and do not reflect any transaction costs charged by the Fund. Similarly, the expense examples for other funds do not

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

	Beginning Account Value 5/1/12		Ending Account Value 10/31/12		Expenses Paid During Period* 5/1/12-10/31/12
Institutional Class
Actual	$	1,000.00	$	1,027.62	$	3.01
Hypothetical **	$	1,000.00	$	1,022.17	$	3.00
Y Class
Actual	$	1,000.00	$	1,027.28	$	3.52
Hypothetical **	$	1,000.00	$	1,021.67	$	3.51
Investor Class
Actual	$	1,000.00	$	1,025.10	$	4.84
Hypothetical **	$	1,000.00	$	1,020.36	$	4.82
Advisor Class
Actual	$	1,000.00	$	1,024.79	$	5.50
Hypothetical **	$	1,000.00	$	1,019.71	$	5.48
Retirement Class
Actual	$	1,000.00	$	1,022.93	$	7.27
Hypothetical **	$	1,000.00	$	1,017.95	$	7.25
A Class
Actual	$	1,000.00	$	1,024.60	$	5.75
Hypothetical **	$	1,000.00	$	1,019.46	$	5.74
AMR Class
Actual	$	1,000.00	$	1,028.88	$	1.68
Hypothetical **	$	1,000.00	$	1,023.48	$	1.68
C Class
Actual	$	1,000.00	$	1,020.63	$	9.60
Hypothetical **	$	1,000.00	$	1,015.63	$	9.58

* Expenses are equal to the Fund’s annualized expense ratios for the six-month period of 0.59%, 0.69%, 0.95%, 1.08%, 1.43%, 1.13%, 1.89% and 0.33% for the Institutional, Y, Investor, Advisor, Retirement, A, C and AMR Classes respectively, multiplied by the average account value over the period, multiplied by the number derived by dividing the number of days in the most recent fiscal half-year (184) by days in the year (366) to reflect the half year period.

** 5% return before expenses.

5

American Beacon Large Cap Value Fund^SM

Report of Independent Registered Public Accounting Firm

To the Shareholders and the Board of Trustees of

American Beacon Large Cap Value Fund:

We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of the American Beacon Large Cap Value Fund (one of the funds constituting the American Beacon Funds) (collectively, the “Fund”), as of October 31, 2012, and the related statement of operations for the year then ended, the statement of changes in net assets for each of the two years in the period then ended, and financial highlights for the periods indicated therein. These financial statements and financial highlights are the responsibility of the Fund’s management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. We were not engaged to perform an audit of the Fund’s internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Fund’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements and financial highlights, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of October 31, 2012, by correspondence with the custodian and brokers or by other appropriate auditing procedures where replies from brokers were not received. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of the American Beacon Large Cap Value Fund at October 31, 2012, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended, and the financial highlights for each of the periods indicated therein, in conformity with U.S. generally accepted accounting principles.

Dallas, Texas

December 27, 2012

6

American Beacon Large Cap Value Fund^SM

Schedule of Investments

October 31, 2012

	Shares		Fair Value
			(000’s)
COMMON STOCK—93.69%
CONSUMER DISCRETIONARY—6.79%
Auto Components—1.68%
Delphi Automotive plcA		514,210	$	16,167
Johnson Controls, Inc.		3,489,925		89,865
Magna International, Inc., Class A		774,800		34,409
				140,441
Automobiles—0.76%
General Motors Co.A		2,495,333		63,631
Hotels, Restaurants & Leisure—0.66%
Carnival Corp.		1,388,200		52,585
McDonald’s Corp.		26,410		2,292
				54,877
Household Durables—0.11%
Stanley Black & Decker, Inc.		126,954		8,798
Leisure Equipment & Products—0.08%
Hasbro, Inc.		185,197		6,665
Media—2.20%
Comcast Corp., Class A		1,107,400		41,540
Comcast Corp.—Special Class A		563,940		20,550
Interpublic Group of Cos., Inc.		2,743,100		27,705
McGraw-Hill Cos., Inc.		57,480		3,177
Omnicom Group, Inc.		182,717		8,754
Time Warner Cable, Inc.		221,600		21,963
Time Warner, Inc.		849,400		36,906
Viacom, Inc., Class B		178,960		9,175
Walt Disney Co.		284,855		13,978
				183,748
Multiline Retail—0.58%
JC Penney Co., Inc.		1,439,500		34,562
Kohl’s Corp.		50,632		2,698
Target Corp.		176,250		11,236
				48,496
Specialty Retail—0.63%
Abercrombie & Fitch Co., Class A		772,900		23,635
Advance Auto Parts, Inc.		77,806		5,520
Lowe’s Cos., Inc.		644,800		20,879
Staples, Inc.		241,957		2,786
				52,820
Textiles & Apparel—0.09%
Deckers Outdoor Corp.A		275,040		7,874
Total Consumer Discretionary				567,350
CONSUMER STAPLES—8.26%
Beverages—1.50%
Coca-Cola Enterprises, Inc.		52,010		1,635
Diageo plc, ADRB		689,556		78,697
Dr Pepper Snapple Group, Inc.		74,810		3,206
Molson Coors Brewing Co., Class B		275,300		11,876
PepsiCo, Inc.		432,620		29,955
				125,369
Food & Drug Retailing—2.69%
CVS Caremark Corp.		785,543		36,449
Kroger Co.		3,757,000		94,751
Walgreen Co.		45,050		1,587

	Shares		Fair Value
			(000’s)
Wal-Mart Stores, Inc.		1,227,960	$	92,122
				224,909
Food Products—0.78%
Danone S.A., ADRB		626,090		7,695
General Mills, Inc.		759,185		30,428
JM Smucker Co.		26,210		2,245
Kellogg Co.		69,769		3,650
Kraft Foods Group, Inc.A		89,300		4,061
Mondelez International, Inc.A		300,600		7,978
Nestle S.A., ADRB		142,732		9,059
				65,116
Household Products—0.05%
Procter & Gamble Co.		58,939		4,081
Tobacco—3.24%
Altria Group, Inc.		1,447,762		46,039
Imperial Tobacco Group plc, ADRB		929,300		70,067
Lorillard, Inc.		68,620		7,961
Philip Morris International, Inc.		1,656,501		146,700
				270,767
Total Consumer Staples				690,242
ENERGY—11.85%
Energy Equipment & Services—1.66%
Cobalt International Energy, Inc.A		2,627,700		54,682
Halliburton Co.		865,000		27,931
Transocean Ltd.		1,226,351		56,032
				138,645
Oil & Gas—10.19%
Apache Corp.		722,771		59,809
BP plc, ADRB		2,734,988		117,305
Chevron Corp.		612,987		67,557
ConocoPhillips		1,229,040		71,100
EOG Resources, Inc.		48,056		5,598
Exxon Mobil Corp.		164,716		15,017
Hess Corp.		335,600		17,538
Marathon Oil Corp.		1,911,200		57,451
Marathon Petroleum Corp.		342,750		18,827
Murphy Oil Corp.		302,300		18,138
Occidental Petroleum Corp.		935,248		73,848
Phillips 66		1,512,220		71,317
Royal Dutch Shell plc, ADRB		1,421,907		98,879
Seadrill Ltd.		662,100		26,709
Spectra Energy Corp.		2,391,800		69,051
Total S.A., ADRB		1,254,500		63,105
				851,249
Total Energy				989,894
FINANCIALS—25.34%
Banks—8.28%
Bank of America Corp.		21,221,590		197,785
Bank of New York Mellon Corp.		3,224,697		79,682
Fifth Third Bancorp		1,680,600		24,419
KeyCorp		2,120,374		17,854
PNC Financial Services Group, Inc.		1,668,243		97,075
SunTrust Banks, Inc.		1,106,600		30,100
Wells Fargo & Co.		6,723,571		226,517
Zions Bancorporation		858,000		18,421
				691,853
Diversified Financials—9.87%
American Express Co.		1,475,900		82,606

See accompanying notes

7

American Beacon Large Cap Value Fund^SM

Schedule of Investments

October 31, 2012

	Shares		Fair Value
			(000’s)
BlackRock, Inc., Class A		54,528	$	10,343
Capital One Financial Corp.		1,352,200		81,362
Charles Schwab Corp.		2,841,200		38,583
Citigroup, Inc.		3,675,476		137,426
Franklin Resources, Inc.		42,810		5,471
Goldman Sachs Group, Inc.		161,447		19,759
JPMorgan Chase & Co.		7,560,394		315,117
Mastercard, Inc., Class A		9,259		4,268
Moody’s Corp.		91,020		4,384
Morgan Stanley		1,692,400		29,414
SLM Corp.		2,435,300		42,813
State Street Corp.		1,076,324		47,972
Western Union Co.		417,454		5,302
				824,820
Insurance—6.91%
ACE Ltd.		435,716		34,269
Allstate Corp.		1,488,300		59,502
American International Group, Inc.A		2,757,700		96,327
Aon plc		152,946		8,251
Berkshire Hathaway, Inc., Class BA		620,710		53,598
Chubb Corp.		82,390		6,342
Hartford Financial Services Group, Inc.		1,353,450		29,383
Lincoln National Corp.		2,069,700		51,308
MetLife, Inc.		3,189,720		113,204
Prudential Financial, Inc.		388,508		22,164
Travelers Cos., Inc.		151,019		10,713
Unum Group		2,338,100		47,417
XL Group plc		1,801,200		44,562
				577,040
Real Estate—0.28%
Chimera Investment Corp.C		8,795,700		23,485
Total Financials				2,117,198
HEALTH CARE—12.34%
Health Care Equipment & Supplies—2.71%
Baxter International, Inc.		1,252,200		78,425
Becton Dickinson and Co.		53,785		4,070
Covidien plc		549,700		30,206
Medtronic, Inc.		2,095,549		87,134
St Jude Medical, Inc.		173,156		6,625
Thermo Fisher Scientific, Inc.		122,850		7,501
Zimmer Holdings, Inc.		188,400		12,097
				226,058
Health Care Providers & Services—1.87%
Humana, Inc.		504,900		37,499
Quest Diagnostics, Inc.		393,012		22,685
UnitedHealth Group, Inc.		436,400		24,438
WellPoint, Inc.		1,165,800		71,440
				156,062
Pharmaceuticals—7.76%
Abbott Laboratories		183,329		12,012
AstraZeneca plc, ADRB		258,300		11,985
Eli Lilly & Co.		236,100		11,482
Johnson & Johnson		2,841,581		201,241
Merck & Co., Inc.		2,356,155		107,511
Novartis AG, ADRB		804,900		48,448
Pfizer, Inc.		8,723,137		216,944
Roche Holding AG, ADRB		92,721		4,458
Sanofi, ADRB		784,100		34,454
				648,535
Total Health Care				1,030,655

	Shares		Fair Value
			(000’s)
INDUSTRIALS—10.04%
Aerospace & Defense—3.20%
Boeing Co.		996,750	$	70,211
Exelis, Inc.		1,442,800		15,957
Lockheed Martin Corp.		747,596		70,027
Northrop Grumman Corp.		300,157		20,618
Raytheon Co.		1,338,100		75,683
United Technologies Corp.		198,285		15,498
				267,994
Air Freight & Couriers—0.43%
FedEx Corp.		264,800		24,359
United Parcel Service, Inc., Class B		154,740		11,335
				35,694
Commercial Services & Supplies—0.05%
Dun & Bradstreet Corp.		49,151		3,983
Construction & Engineering—0.02%
Fluor Corp.		26,192		1,463
Electronic Equipment & Instruments—0.44%
Emerson Electric Co.		760,100		36,812
Industrial Conglomerates—2.93%
3M Co.		150,944		13,223
General Electric Co.		6,654,900		140,151
Honeywell International, Inc.		1,355,498		83,011
Tyco International Ltd.		298,990		8,034
				244,419
Machinery—2.93%
Cummins, Inc.		696,300		65,159
Danaher Corp.		187,467		9,698
Eaton Corp.		1,124,594		53,103
Illinois Tool Works, Inc.		689,100		42,263
ITT Corp.		524,400		10,908
PACCAR, Inc.		751,000		32,548
Pentair Ltd.		67,038		2,832
Xylem, Inc.		1,179,300		28,610
				245,121
Road & Rail—0.04%
Canadian National Railway Co.		43,508		3,758
Total Industrials				839,244
INFORMATION TECHNOLOGY—9.44%
Communications—0.24%
Facebook, Inc.A		930,300		19,643
Communications Equipment—0.95%
Cisco Systems, Inc.		1,277,514		21,897
Corning, Inc.		4,874,400		57,274
				79,171
Computers & Peripherals—3.10%
Hewlett-Packard Co.		5,989,849		82,959
International Business Machines Corp.		327,846		63,776
Seagate Technology plc		2,736,825		74,770
Western Digital Corp.		1,128,300		38,622
				260,127
Electronic Equipment & Instruments—0.43%
Avnet, Inc.A		187,600		5,375
TE Connectivity Ltd.		940,000		30,249
				35,624

See accompanying notes

8

American Beacon Large Cap Value Fund^SM

Schedule of Investments

October 31, 2012

	Shares		Fair Value
			(000’s)
IT Consulting & Services—0.68%
Accenture plc, Class A		265,288	$	17,883
Fidelity National Information Services, Inc.		1,056,900		34,740
Fiserv, Inc.A		53,490		4,009
				56,632
Semiconductor Equipment & Products—1.00%
Intel Corp.		3,014,917		65,197
Texas Instruments, Inc.		643,000		18,062
				83,259
Software—3.04%
CA, Inc.		948,903		21,369
Microsoft Corp.		5,695,600		162,524
Oracle Corp.		2,267,594		70,409
				254,302
Total Information Technology				788,758
MATERIALS—1.24%
Chemicals—0.70%
Air Products & Chemicals, Inc.		321,338		24,914
EI du Pont de Nemours & Co.		501,400		22,323
PPG Industries, Inc.		94,939		11,115
				58,352
Metals & Mining—0.54%
Newmont Mining Corp.		832,400		45,407
Total Materials				103,759
TELECOMMUNICATION SERVICES—3.94%
Diversified Telecommunication Services—1.78%
AT&T, Inc.		2,634,192		91,117
Verizon Communications, Inc.		1,298,886		57,982
				149,099
Wireless Telecommunication Services—2.16%
Vodafone Group plc, ADRB		6,633,974		179,821
Total Telecommunication Services				328,920
UTILITIES—4.45%
CenterPoint Energy, Inc.		2,753,200		59,662
Dominion Resources, Inc.		336,100		17,739
Edison International		516,000		24,221
Entergy Corp.		937,500		68,044
Exelon Corp.		1,556,300		55,684
NRG Energy, Inc.		1,354,800		29,209
PG&E Corp.		130,334		5,542
PPL Corp.		53,535		1,584
Public Service Enterprise Group, Inc.		3,447,826		110,469
Total Utilities				372,154
Total Common Stock (Cost $7,130,568)				7,828,174
PREFERRED STOCK—0.36%
CONSUMER DISCRETIONARY—0.34%
General Motors Co., 4.75%, Due 12/1/2013		686,125		27,870
INDUSTRIALS—0.01%
United Technologies Corp., 7.5%, Due 12/1/2012		14,770		803

	Shares		Fair Value
			(000’s)
UTILITIES—0.01%
PPL Corp., 9.5%, Due 7/1/2013		18,398	$	1,000
Total Preferred Stock (Cost $33,888)				29,673
SHORT-TERM INVESTMENTS—6.34%
American Beacon U.S. Government Money Market Select Fund, Select Class D		35,000,000		35,000
JPMorgan U.S. Government Money Market Fund, Capital Class		494,786,104		494,786
Total Short-Term Investments (Cost $529,786)				529,786
TOTAL INVESTMENTS—100.39% (Cost $7,694,242)				8,387,633
LIABILITIES, NET OF OTHER ASSETS—(0.39%)				(32,401	)
TOTAL NET ASSETS—100.00%			$	8,355,231

Percentages are stated as a percent of net assets.

^A  Non-income producing security.

^B  ADR—American Depositary Receipt.

^C  REIT—Real Estate Investment Trust.

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

See accompanying notes

9

American Beacon Large Cap Value Fund^SM

Schedule of Investments

October 31, 2012

Futures Contracts Open on October 31, 2012 ($000’s):

Description	Type		Number of Contracts		Expiration Date		Contract Value		Unrealized Appreciation (Depreciation)
S&P 500 Mini E Index Future		Long		7,000		December, 2012	$	492,380	$	(5,280	)
							$	492,380	$	(5,280	)

See accompanying notes

10

American Beacon Large Cap Value Fund^SM

Statement of Assets and Liabilities

October 31, 2012 (in thousands, except share and per share amounts)

Assets:
Investments in unaffiliated securities, at fair value A	$	8,352,633
Investments in affiliated securities, at fair value B		35,000
Deposit with brokers for futures contracts		17,594
Receivable for investments sold		518
Dividends and interest receivable		7,700
Receivable for fund shares sold		11,418
Receivable for tax reclaims		577
Prepaid expenses		112
Total assets		8,425,552
Liabilities:
Payable for investments purchased		15
Payable for variation margin from open futures contracts		678
Payable for fund shares redeemed		59,999
Management and investment advisory fees payable		5,708
Administrative service and service fees payable		2,728
Professional fees payable		64
Other liabilities		1,129
Total liabilities		70,321
Net assets	$	8,355,231
Analysis of Net Assets:
Paid-in-capital		8,780,136
Undistributed net investment income		125,361
Accumulated net realized loss		(1,238,377	)
Unrealized appreciation of investments and futures contracts		688,111
Net assets	$	8,355,231
Shares outstanding at no par value (Unlimited shares authorized):
Institutional Class		181,392,286
Y Class		4,122,893
Investor Class		177,913,306
Advisor Class		5,117,808
Retirement Class		111,139
A Class		304,947
C Class		121,646
AMR Class		28,208,158
Net asset value, offering and redemption price per share:
Institutional Class (Net assets $3,914,172,668)	$	21.58
Y Class (Net assets $88,508,971)	$	21.47
Investor Class (Net assets $3,635,332,581)	$	20.43
Advisor Class (Net assets $103,628,855)	$	20.25
Retirement Class (Net assets $2,230,063)	$	20.07
A Class (Net assets $6,222,523) (offering price $21.66)	$	20.41
C Class (Net assets $2,468,569)	$	20.29
AMR Class (Net assets $602,667,171)	$	21.36
A         Cost of investments in unaffiliated securities	$	7,659,242
B        Cost of investments in affiliated securities	$	35,000

See accompanying notes

11

American Beacon Large Cap Value Fund^SM

Statement of Operations

For the year ended October 31, 2012 (in thousands)

Investment Income:
Dividend income from unaffiliated securities (net of foreign taxes)A	$	231,857
Dividend income from affiliated securities		10
Interest income		7
Other income		2
Total investment income		231,876
Expenses:
Management and investment advisory fees (Note 2)		19,394
Administrative service fees (Note 2):
Institutional Class		11,116
Y Class		470
Investor Class		11,000
Advisor Class		374
Retirement Class		3
A Class		20
C Class		7
AMR Class		289
Transfer agent fees:
Institutional Class		119
Y Class		6
Investor Class		196
Advisor Class		4
Retirement Class		1
A Class		2
C Class		1
AMR Class		13
Custody and fund accounting fees		1,010
Professional fees		310
Registration fees and expenses		200
Service fees (Note 2):
Y Class		157
Investor Class		13,623
Advisor Class		312
Retirement Class		3
A Class		8
C Class		3
Distribution fees (Note 2):
Advisor Class		312
Retirement Class		5
A Class		13
C Class		18
Prospectus and shareholder report expenses		602
Insurance fees		199
Trustee fees		632
Other expenses		466
Total expenses		60,888
Net investment income		170,988
Realized and unrealized gain (loss) on investments:
Net realized gain (loss) from:
Investments		184,727
Commission recapture (Note 3)		121
Futures contracts		34,593
Change in net unrealized appreciation or (depreciation) from:
Investments		849,623
Futures contracts		(18,647	)
Net gain on investments		1,050,417
Net increase in net assets resulting from operations	$	1,221,405
A        Foreign taxes	$	1,504

See accompanying notes

12

American Beacon Large Cap Value Fund^SM

Statement of Changes of Net Assets (in thousands)

	Year Ended October 31, 2012			Year Ended October 31, 2011
Increase (Decrease) in Net Assets:
Operations:
Net investment income	$	170,988		$	153,935
Net realized gain from investments and futures contracts		219,441			599,299
Change in net unrealized appreciation or (depreciation) from investments and futures contracts		830,976			(479,211	)
Net increase in net assets resulting from operations		1,221,405			274,023
Distributions to Shareholders:
Net investment income:
Institutional Class		(82,469	)		(47,237	)
Y Class		(3,555	)		(27	)
Investor Class		(77,449	)		(48,747	)
Advisor Class		(2,549	)		(1,398	)
Retirement Class		(18	)		0
A Class		(88	)		(13	)
C Class		(23	)		(1	)
AMR Class		(14,457	)		(8,633	)
Net distributions to shareholders		(180,608	)		(106,056	)
Capital Share Transactions:
Proceeds from sales of shares		1,598,720			1,902,054
Reinvestment of dividends and distributions		170,923			101,485
Cost of shares redeemed		(2,437,583	)		(2,384,873	)
Net (decrease) in net assets from capital share transactions		(667,940	)		(381,334	)
Net increase (decrease) in net assets		372,857			(213,367	)
Net Assets:
Beginning of period		7,982,374			8,195,741
End of Period *	$	8,355,231		$	7,982,374
*  Includes undistributed net investment income of	$	125,361		$	134,981

See accompanying notes

13

American Beacon Large Cap Value Fund^SM

Notes to Financial Statements

October 31, 2012

1. Organization and Significant Accounting Policies

American Beacon Funds (the “Trust”), which is comprised of 24 Funds, is organized as a Massachusetts business trust and is registered under the Investment Company Act of 1940, as amended (the “Act”), as a diversified, open-end management investment company. These financial statements and notes to the financial statements relate to the American Beacon Large Cap Value Fund (the “Fund”), a series of the Trust.

American Beacon Advisors, Inc. (the “Manager”) is a wholly-owned subsidiary of Lighthouse Holdings, Inc. and was organized in 1986 to provide business management, advisory, administrative, and asset management consulting services to the Trust and other investors.

Class Disclosure

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

Class:	Offered to:
Institutional Class	Investors making an initial investment of $ 250,000
Y Class	Investors making an initial investment of $ 100,000
Investor Class	General public and investors investing through an intermediary
Advisor Class	Investors investing through an intermediary
Retirement Class	Investors investing through an intermediary
A Class	General public and investors investing through an intermediary with applicable sales charges
C Class	General public and investors investing through an intermediary with applicable sales charges
AMR Class	Investors in the tax-exempt retirement and benefit plans of the Manager, AMR Corporation, and its affiliates

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

New Accounting Prouncements

In May 2011, the Financial Accounting Standards Board (“FASB”) issued an Accounting Standards Update (“ASU”) ASU No. 2011-04 “Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. Generally Accepted Accounting Principles (“U.S. GAAP”) and the International Financial Reporting Standards (“IFRSs”)”. ASU No. 2011-04 amends FASB ASC Topic 820, Fair Value Measurements and Disclosures, to establish common requirements for measuring fair value and for disclosing information about fair value measurements in accordance with U.S. GAAP and IFRSs. ASU No. 2011-04 is effective for fiscal years beginning after December 15, 2011 and for the interim period May 1, 2012 to October 31, 2012.

Management has evaluated the implications of these changes and determined that the impact of the new guidance will only affect the disclosure requirements related to the financial statements. However, as the Fund did not hold any Level 3 investments as of October 31, 2012, the financial statement disclosures were not affected.

2. Transactions with Affiliates

Management Agreement

The Trust and the Manager are parties to a Management Agreement that obligates the Manager to provide or oversee the provision of all investment advisory, fund management, and securities lending services.

14

American Beacon Large Cap Value Fund^SM

Notes to Financial Statements

October 31, 2012

Investment assets of the Fund are managed by multiple investment advisors which have entered into separate investment advisory agreements with the Manager. As compensation for performing the duties required under the Management Agreement, the Manager receives from the Fund an annualized fee equal to 0.05% of the average daily net assets plus amounts paid by the Manager to unaffiliated investment advisors hired by the Manager to direct investment activities of the Fund. Management fees paid during the year ended October 31, 2012 were as follows (dollars in thousands):

Management Fee Rate	Management Fee	Amounts paid to Investment Advisors	Net Amounts Retained by Manager
0.24%	$19,394	$15,302	$4,092

Administrative Services Agreement

The Manager and the Trust entered into an Administrative Services Agreement which obligates the Manager to provide or oversee administrative services to the Fund. As compensation for performing the duties required under the Administrative Services Agreement, the Manager receives an annualized fee of 0.30% of the average daily net assets of the Institutional, Y, Investor, Advisor, and Retirement Classes of the Fund, 0.40% of the average daily net assets of the A and C Classes of the Fund, and 0.05% of the average daily net assets of the AMR Class of the Fund.

Distribution Plans

The Fund, except for the Advisor, Retirement, A, and C Classes of the Fund, has adopted a “defensive” Distribution Plan (the “Plan”) in accordance with Rule 12b-1 under the Act, pursuant to which no fees may be charged to the Fund for distribution purposes. However, the Plan authorizes the management and administrative service fees received by the Manager and the investment advisors hired by the Manager to be used for distribution purposes. Under this Plan, the Fund does not intend to compensate the Manager or any other party, either directly or indirectly, for the distribution of Fund shares.

Separate Distribution Plans (the “Distribution Plans”) have been adopted pursuant to Rule 12b-1 under the Act for the Advisor, Retirement, A, and C Classes of the Fund. Under the Distribution Plans, as compensation for distribution assistance, the Manager receives an annual fee of 0.25% of the average daily net assets of the Advisor, and A Classes, 0.50% of the average daily net assets of the Retirement Class, and 1.00% of the average daily net assets of the C Class. The fee will be payable without regard to whether the amount of the fee is more or less than the actual expenses incurred in a particular month by the Manager for distribution assistance.

Service Plans

The Manager and the Trust entered into Service Plans that obligate the Manager to oversee additional shareholder servicing of the Y, Investor, Advisor, Retirement, A, and C Classes. As compensation for performing the duties required under the Service Plans, the Manager receives 0.10% of the average daily net assets of the Y Class, 0.15% of the average daily net assets of the A and C Classes, 0.25% of the average daily net assets of the Advisor and Retirement Classes, and up to 0.375% of the average daily net assets of the Investor Class of the Fund.

Investment in Affiliated Funds

The Fund may invest in the American Beacon Money Market Select Fund (the “MM Select Fund”) and the American Beacon U.S. Government Money Market Select Fund (the “USG Select Fund”), (collectively the “Select Funds”). The Select Funds and the Fund have the same investment advisor and therefore, are considered to be affiliated. The Manager serves as investment advisor to the Select Funds and receives Management and Administrative Service fees totaling 0.10% of its average daily net assets of the Select Funds.

15

American Beacon Large Cap Value Fund^SM

Notes to Financial Statements

October 31, 2012

During the year ended October 31, 2012, the Manager earned fees from the Select Funds totaling $12,541 on the Fund’s direct investment in the Select Funds.

Interfund Lending Program

Pursuant to an exemptive order issued by the Securities and Exchange Commission (“SEC”), the Fund, along with other registered investment companies having management contracts with the Manager, may participate in an interfund lending program as a borrower. This program provides an alternative credit facility allowing the Fund to borrow from other participating Funds. During the year ended October 31, 2012, the Fund participated as a lender by loaning, on average, $9,507,014 for 7 days at an average rate of 0.82% with interest charges of $563 and $941 to the American Beacon SiM High Yield Opportunities and Balanced Funds, respectively.

Expense Reimbursement Plan

The Fund has adopted an Expense Reimbursement Plan whereby the Manager may seek repayment of fees waived or expenses reimbursed for a period of up to three years. However, reimbursement will occur only if the Class’ average net assets have grown or expenses have declined sufficiently to allow reimbursement without causing its expense ratio to exceed the previously agreed upon contractual expense limit. During the year ended October 31, 2012, the Manager contractually reimbursed $91 for the C Class of which $8 was receivable at October 31, 2012. A liability has not been booked as the Manager does not intend to seek repayment of this reimbursement.

Sales Commissions

The Funds’ distributor, Foreside Fund Services, LLC (“Foreside”), may receive a portion of A Class sales charges from broker dealers and it may be used to offset distribution related expenses. For the year ended October 31, 2012, Foreside has collected $9,056 from the sale of Class A Shares.

A contingent deferred sales charge (“CDSC”) of 1.00% will be deducted with respect to Class C Shares redeemed within 12 months of purchase, unless waived as discussed in the Prospectus. Any applicable CDSC will be 1.00% of the lesser of the original purchase price or the value of the redemption of the Class C Shares redeemed. During the year ended October 31, 2012, $886 in CDSC fees were collected for the Fund.

3. Security Valuation and Fair Value Measurements

Investments are valued at the close of the New York Stock Exchange (the “Exchange”), normally 4 p.m. ET, each day that the Exchange is open for business. Equity securities for which market quotations are available are valued at the last sale price or official closing price (closing bid price or last evaluated quote if no sale has occurred) on the primary market or exchange on which they trade.

Investments in mutual funds are valued at the closing net asset value (“NAV”) per share of the mutual fund on the day of valuation. Investment grade short-term obligations with 60 days or less to maturity are valued using the amortized cost method, which approximates fair value.

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

Futures contracts are valued based upon their quoted daily settlement prices. Upon entering into a futures contract, a Fund is required to deposit with its futures broker, an amount of cash or U.S. Government and Agency Obligations in accordance with the initial margin requirements of the broker or exchange. Futures contracts are marked to market daily and an appropriate payable or receivable for the change in value (“variation margin”) is recorded by the Fund. Gains or losses are recognized, but not considered realized until

16

American Beacon Large Cap Value Fund^SM

Notes to Financial Statements

October 31, 2012

the contracts expire or are closed. Futures contracts involve, to varying degrees, risk of loss in excess of the variation margin disclosed on the Statement of Assets and Liabilities.

Valuation Inputs

Various inputs may be used to determine the fair value of the Fund’s investments. These inputs are summarized in three broad levels for financial statement purposes. The inputs or methodologies used to value securities are not necessarily an indication of the risk associated with investing in those securities.

Level 1 -	Quoted prices in active markets for identical securities.
Level 2 -	Prices determined using other significant observable inputs. These may include quoted prices for similar securities, interest rates, prepayment speeds, credit risk, and others.
Level 3 -	Prices determined using other significant unobservable inputs. Unobservable inputs reflect the Fund’s own assumptions about the factors market participants would use in pricing an investment, and would be based on the best information available.

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

Common stocks and financial derivative instruments, such as futures contracts that are traded on a national securities exchange, are stated at the last reported sale or settlement price on the day of valuation. To the extent these securities are actively traded and valuation adjustments are not applied, they are categorized as Level 1 of the fair value hierarchy. Preferred securities and other equities traded on inactive markets or valued by reference to similar instruments are also categorized as Level 2 of the fair value hierarchy.

Investments in registered open-end investment management companies will be valued based upon the NAVs of such investments and are categorized as Level 1 of the fair value hierarchy. Short-term investments having a maturity of 60 days or less are generally valued at amortized cost which approximates fair value. These investments are categorized as Level 2 of the fair value hierarchy.

The end of period timing recognition is used for the significant transfers between Levels of the Fund’s assets and liabilities. In accordance with the requirements of U.S. GAAP, a fair value hierarchy and Level 3 reconciliation, if any, have been included in the Notes to the Schedule of Investments for the Fund.

The Funds’ investments are summarized by level based on the inputs used to determine their values. U.S. GAAP also requires all transfers between any levels to be disclosed. As of October 31, 2012, there were no transfers between levels. As of October 31, 2012, the investments were classified as described below (in thousands):

	Level 1			Level 2		Level 3		Total
Common Stock	$	7,828,174		$	—	$	—	$	7,828,174
Preferred Stock		29,673			—		—		29,673
Short-Term Investments-Money Markets		529,786			—		—		529,786
Total Investments in Securities	$	8,387,633		$	—	$	—	$	8,387,633
Futures Contracts	$	(5,280	)	$	—	$	—	$	(5,280	)

Security Transactions and Investment Income

Security transactions are recorded on the trade date of the security purchase or sale. The Fund may purchase securities with delivery or payment to occur at a later date. At the time the Fund enters into a commitment to purchase a security, the transaction is recorded, and the value of the security is reflected in the NAV. The value of the security may vary with market fluctuations.

17

American Beacon Large Cap Value Fund^SM

Notes to Financial Statements

October 31, 2012

Dividend income, net of foreign taxes, is recorded on the ex-dividend date, except certain dividends from foreign securities which are recorded as soon as the information is available to the Fund. Interest income is earned from settlement date, recorded on the accrual basis, and adjusted, if necessary, for accretion of discounts and amortization of premiums. For financial and tax reporting purposes, realized gains and losses are determined on the basis of specific lot identification.

Dividends to Shareholders

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

Commission Recapture

The Fund has established brokerage commission recapture arrangements with certain brokers or dealers. If the Fund’s investment advisor chooses to execute a transaction through a participating broker, the broker rebates a portion of the commission back to the Fund. Any collateral benefit received through participation in the commission recapture program is directed exclusively to the Fund. This amount is reported with the net realized gain in the Fund’s Statement of Operations.

Allocation of Income, Expenses, Gains, and Losses

Income, expenses (other than those attributable to a specific class), gains, and losses are allocated daily to each class of shares based upon the relative proportion of net assets represented by such class. Operating expenses directly attributable to a specific class are charged against the operations of that class.

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results may differ from those estimated.

Other

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

4. Securities and Other Investments

Real Estate Investment Trusts

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

18

American Beacon Large Cap Value Fund^SM

Notes to Financial Statements

October 31, 2012

5. Financial Derivative Instruments

Futures Contracts

Futures contracts are contracts to buy or sell a standard quantity of securities at a specified price on a future date. The Fund may enter into financial futures contracts as a method for keeping assets readily convertible to cash if needed to meet shareholder redemptions or for other needs while maintaining exposure to the stock or bond market, as applicable. The primary risks associated with the use of futures contracts are the possibility of illiquid markets or imperfect correlation between the values of the contracts and the underlying securities, or that the counterparty will fail to perform its obligations.

Upon entering into a futures contract, the Fund is required to set aside or deposit with a broker an amount, termed the initial margin, which typically represents a portion of the face value of the futures contract. The Fund usually reflects this amount on the Schedule of Investments as a U.S. Treasury Bill held as collateral for futures contracts or as Cash deposited with broker on the Statement of Assets and Liabilities. Payments to and from the broker, known as variation margin, are required to be made on a daily basis as the price of the futures contract fluctuates. Changes in initial settlement values are accounted for as unrealized appreciation (depreciation) until the contracts are terminated, at which time realized gains and losses are recognized. Futures contracts are valued at the most recent settlement price established each day by the exchange on which they are traded.

Values of Derivative Instruments not accounted for as hedging instruments as of October 31, 2012 (in thousands):

Statement of Assets and Liabilities	Derivatives	Fair Value
Unrealized appreciation of investments and futures contracts	Equity Contracts*	$	(5,280	)

Effect of derivative instruments not accounted for as hedging instruments during the year ended October 31, 2012 (in thousands):

Statement of Operations	Derivatives		Total
Net realized gain (loss) from futures contracts		Equity Contracts	$	34,593
Change in net unrealized appreciation or (depreciation) of futures contracts		Equity Contracts	$	(18,647	)

* Includes cumulative appreciation or (depreciation) of futures contracts as reported in the Schedule of Investments footnotes. Only current day’s variation margin is reported within the Statement of Assets and Liabilities.

6. Federal Income and Excise Taxes

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

The Fund does not have any unrecognized tax benefits in the accompanying financial statements. Each of the tax years in the four year period ended October 31, 2012 remains subject to examination by the Internal Revenue Service. If applicable, the Fund recognizes interest accrued related to unrecognized tax benefits in interest expense and penalties in “Other expenses” on the Statement of Operations.

Dividends are categorized in accordance with income tax regulations which may treat certain transactions differently than U.S. GAAP. Accordingly, the character of distributions and composition of net assets for tax purposes may differ from those reflected in the accompanying financial statements.

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

19

American Beacon Large Cap Value Fund^SM

Notes to Financial Statements

October 31, 2012

	Year Ended October 31, 2012		Year Ended October 31, 2011
Distributions paid from:
Ordinary income*
Institutional Class	$	82,469	$	47,237
Y Class		3,555		27
Investor Class		77,449		48,747
Advisor Class		2,549		1,398
Retirement Class		18		—
A Class		88		13
C Class		23		1
AMR Class		14,457		8,633
Total distributions paid	$	180,608	$	106,056

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

As of October 31, 2012, the components of distributable earnings or (deficits) on a tax basis were as follows (in thousands):

Cost basis of investments for federal income tax purposes	$	7,984,005
Unrealized appreciation		1,137,184
Unrealized depreciation		(733,556	)
Net unrealized appreciation or (depreciation)		403,628
Undistributed ordinary income		125,361
Accumulated long-term gain or (loss)		(948,639	)
Other temporary differences		(5,255	)
Distributable earnings or (deficits)	$	(424,905	)

Financial reporting records are adjusted for permanent book/tax differences to reflect tax character. Financial records are not adjusted for temporary differences. The temporary differences between financial reporting and tax-basis reporting of unrealized appreciation or depreciation are attributable primarily to the tax deferral of losses from wash sales and the realization for tax purposes of unrealized gains or losses on certain derivative instruments.

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

Accordingly, the following amounts represent current year permanent differences derived from Section 732 basis adjustments that have been reclassified as of October 31, 2012 (in thousands):

Paid-in-capital	$	8
Undistributed net investment income (loss)		—
Accumulated net realized gain (loss)		(8	)
Unrealized appreciation or (depreciation) of investments and futures contracts		—

On December 22, 2010, the Regulated Investment Company Modernization Act of 2010 (the “RIC MOD”) was enacted, which changed various technical rules governing the tax treatment of RICs. The changes are generally effective for taxable years beginning after the date of enactment. One of the more prominent changes addresses capital loss carryforwards. Under the RIC MOD, each Fund will be permitted to carry forward capital losses incurred in taxable years beginning after the date of enactment for an unlimited period. However, any losses incurred during those future taxable years will be required to be utilized prior to the losses incurred in pre-enactment taxable years, which carry an expiration date. As a result of this ordering rule, pre-enactment capital loss carryforwards may be more likely to expire unused. Additionally, post-enactment capital loss carryforwards will retain their character as either short-term or long-term capital losses rather than being considered all short-term as permitted under previous regulation.

20

American Beacon Large Cap Value Fund^SM

Notes to Financial Statements

October 31, 2012

Finally, the RIC MOD contains several provisions aimed at preserving the character of distributions made by a fiscal year RIC during the portion of its taxable year ending after October 31 or December 31, reducing the circumstances under which a RIC might be required to file amended Forms 1099 to restate previously reported distributions. Except for the simplification provisions related to RIC qualification, the RIC MOD is effective for taxable years beginning after December 22, 2010. The provisions related to RIC qualification are effective for taxable years for which the extended due date of the tax return is after December 22, 2010.

At October 31, 2012 the capital loss carry forward positions that may be applied against realized net taxable gains in each succeeding year or until the expiration date, whichever occurs first, prior to the RIC MOD provisions are $227,053, $684,423, and $42,443 expiring in 2016, 2017, and 2018 respectively. The Fund utilized $229,261 of net capital loss carryovers for the year ended October 31, 2012. (in thousands)

7. Investment Transactions

The aggregate cost of purchases and proceeds from sales of investments other than short-term obligations for the year ended October 31, 2012 were $2,400,271 and $3,191,648, respectively (in thousands).

A summary of the Fund’s direct ownership and transactions in the USG Select Fund for the year ended October 31, 2012 is set forth below (in thousands):

Affiliate	October 31, 2011 Shares/Fair Value		Purchases		Sales		October 31, 2012 Shares/Fair Value
USG Select Fund	$	25,000	$	50,000	$	40,000	$	35,000

8. Capital Share Transactions

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

For the Year Ended October 31, 2012

	Institutional Class						Y Class						Investor Class						Advisor Class
	Shares			Amount			Shares			Amount			Shares			Amount			Shares			Amount
Shares sold		38,505		$	784,522			2,764		$	57,155			26,251		$	506,078			1,041		$	19,728
Reinvestment of dividends		4,077			75,537			192			3,547			4,246			74,766			143			2,499
Shares redeemed		(39,268	)		(795,028	)		(5,966	)		(126,980	)		(61,686	)		(1,177,109	)		(3,341	)		(65,045	)
Net increase (decrease) in shares outstanding		3,314		$	65,031			(3,010	)	$	(66,278	)		(31,189	)	$	(596,265	)		(2,157	)	$	(42,818	)
	Retirement Class						AMR Class						A Class						C Class
	Shares			Amount			Shares			Amount			Shares			Amount			Shares			Amount
Shares sold		104		$	1,982			11,216		$	224,730			171		$	3,306			63		$	1,219
Reinvestment of dividends		1			18			789			14,457			4			79			1			20
Shares redeemed		(51	)		(943	)		(14,041	)		(270,477	)		(89	)		(1,684	)		(16	)		(317	)
Net increase (decrease) in shares outstanding		54		$	1,057			(2,036	)	$	(31,290	)		86		$	1,701			48		$	922

21

American Beacon Large Cap Value Fund^SM

Notes to Financial Statements

October 31, 2012

For the Year Ended October 31, 2011

	Institutional Class						Y Class						Investor Class						Advisor Class
	Shares			Amount			Shares			Amount			Shares			Amount			Shares			Amount
Shares sold		39,716		$	774,595			7,497		$	151,632			45,467		$	843,177			1,548		$	28,674
Reinvestment of dividends		2,273			44,274			1			27			2,547			47,168			75			1,372
Shares redeemed		(45,266	)		(866,688	)		(480	)		(9,076	)		(74,020	)		(1,366,606	)		(1,681	)		(30,880	)
Net increase (decrease) in shares outstanding		(3,277	)	$	(47,819	)		7,018		$	142,583			(26,006	)	$	(476,261	)		(58	)	$	(834	)
	Retirement Class						AMR Class						A Class						C Class
	Shares			Amount			Shares			Amount			Shares			Amount			Shares			Amount
Shares sold		63		$	1,138			5,137		$	97,647			210		$	3,855			73		$	1,336
Reinvestment of dividends		–			–			448			8,633			1			11			–			–
Shares redeemed		(6	)		(109	)		(5,724	)		(110,845	)		(38	)		(650	)		(1	)		(19	)
Net increase (decrease) in shares outstanding		57		$	1,029			(139	)	$	(4,565	)		173		$	3,216			72		$	1,317

22

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23

American Beacon Large Cap Value Fund^SM

Financial Highlights

(For a share outstanding throughout the period)

	Institutional Class
	Year Ended October 31,
	2012			2011G			2010			2009			2008
Net asset value, beginning of period	$	18 .99		$	18 .56		$	16 .32		$	15 .01		$	26 .03
Income from investment operations:
Net investment incomeA		0 .45			0 .39			0 .32			0 .35			0 .51
Net gains (losses) from securities (both realized and unrealized)		2 .60			0 .30			2 .22			1 .40			(10 .41	)
Total income (loss) from investment operations		3 .05			0 .69			2 .54			1 .75			(9 .90	)
Less distributions:
Dividends from net investment income		(0 .46	)		(0 .26	)		(0 .30	)		(0 .44	)		(0 .41	)
Distributions from net realized gains on securities		—			—			—			—			(0 .71	)
Total distributions		(0 .46	)		(0 .26	)		(0 .30	)		(0 .44	)		(1 .12	)
Net asset value, end of period	$	21 .58		$	18 .99		$	18 .56		$	16 .32		$	15 .01
Total return B		16 .48	%		3 .69	%		15 .68	%		12 .41	%		(39 .59	)%
Ratios and supplemental data:
Net assets, end of period (in thousands)	$	3,914,173		$	3,380,918		$	3,366,011		$	2,221,162		$	2,038,539
Ratios to average net assets (annualized):
Expenses, before reimbursements		0 .59	%		0 .58	%		0 .59	%		0 .61	%		0 .58	%
Expenses, net of reimbursements		0 .59	%		0 .58	%		0 .59	%		0 .61	%		0 .58	%
Net investment income (loss), before reimbursements		2 .23	%		1 .96	%		1 .73	%		2 .36	%		2 .19	%
Net investment income, net of reimbursements		2 .23	%		1 .96	%		1 .73	%		2 .36	%		2 .19	%
Portfolio turnover rate		30	%		90	%		28	%		27	%		28	%

^A  For purposes of this calculation, through October 31, 2007, the change in undistributed net investment income per share was derived by dividing the change in undistributed net investment income by average shares outstanding.

^B  Based on net asset value, which does not reflect the sales charge, redemption fee, or contingent deferred sales charge, if applicable.

^C  Portfolio turnover rate is for the period from November 1, 2008 through October 31, 2009.

^D  Not annualized.

^E Annualized.

^F Portfolio turnover rate is for the period from November 1, 2009 through October 31, 2010.

^G On December 1, 2010, MFS Institutional Advisors, Inc. assumed management of the Large Cap Value Fund’s assets previously managed by Metropolitan West Capital Management, LLC.

24

American Beacon Large Cap Value Fund^SM

Financial Highlights

(For a share outstanding throughout the period)

Y Class												Investor Class															Advisor Class
Year Ended October 31,									Aug. 3 to Oct 31,			Year Ended October 31,															Year Ended October 31,
2012			2011G			2010			2009			2012			2011G			2010			2009			2008			2012			2011G			2010			2009			2008
$	18.92		$	18.49		$	16.32		$	15.59		$	17.99		$	17.61		$	15.51		$	14.29		$	24.83		$	17.83		$	17.47		$	15.39		$	14.19		$	24.70
	0.53			0.37			0.29			0.06			0.36			0.30			0.23			0.28			0.41			0.31			0.27			0.21			0.26			0.32
	2.50			0.30			2.22			0.67			2.47			0.29			2.12			1.34			(9.88	)		2.48			0.28			2.10			1.32			(9.79	)
	3.03			0.67			2.51			0.73			2.83			0.59			2.35			1.62			(9.47	)		2.79			0.55			2.31			1.58			(9.47	)
	(0.48	)		(0.24	)		(0.34	)		—			(0.39	)		(0.21	)		(0.25	)		(0.40	)		(0.36	)		(0.37	)		(0.19	)		(0.23	)		(0.38	)		(0.33	)
	—			—			—			—			—			—			—			—			(0.71	)		—			—			—			—			(0.71	)
	(0.48	)		(0.24	)		(0.34	)		—			(0.39	)		(0.21	)		(0.25	)		(0.40	)		(1.07	)		(0.37	)		(0.19	)		(0.23	)		(0.38	)		(1.04	)
$	21.47		$	18.92		$	18.49		$	16.32		$	20.43		$	17.99		$	17.61		$	15.51		$	14.29		$	20.25		$	17.83		$	17.47		$	15.39		$	14.19
	16.43	%		3.58	%		15.50	%		4.68	%D		16.05	%		3.30	%		15.27	%		11.99	%		(39.72	)%		15.96	%		3.11	%		15.14	%		11.81	%		(39.87	)%
$	88,509		$	134,968		$	2,123		$	1		$	3,635,333		$	3,761,691		$	4,140,584		$	3,798,632		$	3,594,565		$	103,629		$	129,739		$	128,080		$	114,945		$	99,416
	0.69	%		0.69	%		0.70	%		0.68	%E		0.96	%		0.95	%		0.96	%		0.93	%		0.83	%		1.08	%		1.08	%		1.10	%		1.12	%		1.08	%
	0.69	%		0.69	%		0.70	%		0.68	%E		0.96	%		0.95	%		0.96	%		0.93	%		0.83	%		1.08	%		1.08	%		1.10	%		1.10	%		1.08	%
	2.12	%		1.88	%		1.51	%		1.58	%E		1.89	%		1.59	%		1.36	%		2.05	%		1.94	%		1.78	%		1.46	%		1.23	%		1.84	%		1.69	%
	2.12	%		1.88	%		1.51	%		1.58	%E		1.89	%		1.59	%		1.36	%		2.05	%		1.94	%		1.78	%		1.46	%		1.23	%		1.86	%		1.69	%
	30	%		90	%		28	%		27	%C		30	%		90	%		28	%		27	%		28	%		30	%		90	%		28	%		27	%		28	%

25

American Beacon Large Cap Value Fund^SM

Financial Highlights

(For a share outstanding throughout the period)

	Retirement Class												A Class
	Year Ended October 31,									May 1 to October 31, 2009			Year Ended October  31,						May 17 to October 31, 2010
	2012			2011G			2010						2012			2011G
Net asset value, beginning of period	$	17.74		$	17.32		$	15.36		$	12.66		$	18.01		$	17.61		$	16.93
Income from investment operations:
Net investment income (loss)A		0.28			0.20			0.18			0.08			0.36			0.24			0.03
Net gains (losses) from securities (both realized and unrealized)		2.42			0.30			2.07			2.62			2.44			0.31			0.65
Total income (loss) from investment operations		2.70			0.50			2.25			2.70			2.80			0.55			0.68
Less distributions:
Dividends from net investment income		(0.37	)		(0.08	)		(0.29	)		—			(0.40	)		(0.15	)		—
Distributions from net realized gains on securities		—			—			—			—			—			—			—
Total distributions		(0.37	)		(0.08	)		(0.29	)		—			(0.40	)		(0.15	)		—
Net asset value, end of period	$	20.07		$	17.74		$	17.32		$	15.36		$	20.41		$	18.01		$	17.61
Total return B		15.57	%		2.86	%		14.78	%		21.33	%D		15.91	%		3.12	%		4.02	%D
Ratios and supplemental data:
Net assets, end of period (in thousands)	$	2,230		$	1,019		$	2		$	1		$	6,222		$	3,942		$	814
Ratios to average net assets (annualized):
Expenses, before reimbursements		1.42	%		1.39	%		1.37	%		1.37	%E		1.12	%		1.16	%		1.06	%E
Expenses, net of reimbursements		1.42	%		1.39	%		1.37	%		1.37	%E		1.12	%		1.16	%		1.06	%E
Net investment income (loss), before reimbursements		1.19	%		1.06	%		0.95	%		1.15	%E		1.66	%		1.37	%		1.09	%E
Net investment income, net of reimbursements		1.19	%		1.06	%		0.95	%		1.15	%E		1.66	%		1.37	%		1.09	%E
Portfolio turnover rate		30	%		90	%		28	%		27	%C		30	%		90	%		28	%F

^A  For purposes of this calculation, through October 31, 2007, the change in undistributed net investment income per share was derived by dividing the change in undistributed net investment income by average shares outstanding.

^B  Based on net asset value, which does not reflect the sales charge, redemption fee, or contingent deferred sales charge, if applicable.

^C  Portfolio turnover rate is for the period from November 1, 2008 through October 31, 2009.

^D Not annualized.

^E Annualized.

^F  Portfolio turnover rate is for the period from November 1, 2009 through October 31, 2010.

^G  On December 1, 2010, MFS Institutional Advisors, Inc. assumed management of the Large Cap Value Fund’s assets previously managed by Metropolitan West Capital Management, LLC.

26

American Beacon Large Cap Value Fund^SM

Financial Highlights

(For a share outstanding throughout the period)

C Class									AMR Class
Year Ended October  31,						Sept. 1 to October 31, 2010			Year Ended October 31,
2012			2011G						2012			2011G			2010			2009			2008
$	17.95		$	17.58		$	16.17		$	18.81		$	18.37		$	16.14		$	14.88		$	25.80
	0.22			0.10			(0.01	)		0.52			0.41			0.34			0.37			0.51
	2.42			0.32			1.42			2.54			0.32			2.22			1.38			(10.26	)
	2.64			0.42			1.41			3.06			0.73			2.56			1.75			(9.75	)
	(0.30	)		(0.05	)		—			(0.51	)		(0.29	)		(0.33	)		(0.49	)		(0.46	)
	—			—			—			—			—			—			—			(0.71	)
	(0.30	)		(0.05	)		—			(0.51	)		(0.29	)		(0.33	)		(0.49	)		(1.17	)
$	20.29		$	17.95		$	17.58		$	21.36		$	18.81		$	18.37		$	16.14		$	14.88
	14.97	%		2.36	%		8.72	%D		16.75	%		3.94	%		16.04	%		12.59	%		(39.43	)%
$	2,468		$	1,329		$	38		$	602,667		$	568,768		$	558,089 $			520,799		$	497,127
	1.88	%		2.54	%		2.14	%E		0.33	%		0.33	%		0.34	%		0.36	%		0.32	%
	1.87	%		1.84	%		1.87	%E		0.33	%		0.33	%		0.34	%		0.36	%		0.32	%
	0.89	%		(0.01	)%		(0.76	)%E		2.51	%		2.21	%		1.98	%		2.62	%		2.44	%
	0.89	%		0.68	%		(0.50	)%E		2.51	%		2.21	%		1.98	%		2.62	%		2.44	%
	30	%		90	%		28	%F		30	%		90	%		28	%		27	%		28	%

27

American Beacon Large Cap Value Fund^SM

Privacy Policy & Federal Tax Information

October 31, 2012 (Unaudited)

Privacy Policy

The American Beacon Funds recognize and respect the privacy of our shareholders. We are providing this notice to you so you will understand how shareholder information may be collected and used.

We may collect nonpublic personal information about you from one or more of the following sources:

• information we receive from you on applications or other forms;

• information about your transactions with us or our service providers; and

• information we receive from third parties.

We do not disclose any nonpublic personal information about our customers or former customers to anyone, except as permitted by law.

We restrict access to your nonpublic personal information to those employees or service providers who need to know that information to provide products or services to you. To ensure the confidentiality of your nonpublic personal information, we maintain safeguards that comply with federal standards.

Federal Tax Information

Certain tax information regarding the Fund is required to be provided to shareholders based upon the Fund’s income and distribution for the taxable year ended October 31, 2012. The information and distributions reported herein may differ from information and distribution taxable to the shareholders for the calendar year ended December 31, 2012.

The Fund designated the following items with regard to distributions paid during the fiscal year ended October 31, 2011. All designations are based on financial information available as of this annual report and, accordingly, are subject to change. For each item, it is the intention of the Fund to designate the maximum amount permitted under the Internal Revenue Code of 1986, as amended, and the regulations there under.

Corporate Dividends Received Deduction	75.66	%
Qualified Dividend Income	100.00	%

Shareholders will receive notification in January 2013 of the applicable tax information necessary to prepare their 2012 income tax returns.

28

Disclosure Regarding the Board of Trustees’ Approval of the Management

Agreement and Investment Advisory Agreements (Unaudited)

At its May 9, 2012 meeting, the Board of Trustees (“Board”) considered the renewal of the Management Agreement between the Manager and the American Beacon Funds (“Beacon Trust”) on behalf of each of their series (collectively, the “Funds”) and the renewal of each investment advisory agreement between the Manager and a subadvisor (each an “Investment Advisory Agreement”). The Management Agreement and the Investment Advisory Agreements are collectively referred to herein as the “Agreements.” In preparation for the Board’s consideration to renew and approve these Agreements, the Board and its Investment Committee undertook steps to gather and consider information furnished by the Manager, the subadvisors and Lipper, Inc. (“Lipper”). The Board, with the assistance of independent legal counsel, requested and received certain relevant information from the Manager and each subadvisor.

In addition, the Board’s Investment Committee worked with Lipper to obtain relevant comparative information regarding the performance, fees and expenses of the Funds. The Investment Committee held a separate meeting on May 4, 2012 to consider the information provided by Lipper. Further, the Board took into consideration information furnished for the Board’s review and consideration throughout the year at regular Board and Investment Committee meetings, as well as information specifically prepared in connection with the renewal process.

In connection with the Board’s consideration of the Management Agreement and each Investment Advisory Agreement, the Trustees received and evaluated such information as they deemed necessary. The materials requested by the Board included, among other information, the following:

• a description of any significant changes (actual or anticipated) to principal activities, personnel, services provided to the Funds, or any other area, including how these changes might affect the Funds;

• a copy of the firm’s most recent audited or unaudited financial statements, as well as Parts 1 and 2 of its Form ADV registration statement with the SEC;

• a summary of any material pending or anticipated litigation or regulatory proceedings involving the firm or its personnel, including the results of any recent regulatory examination or independent audit;

• a comparison of the performance of that portion of Fund assets managed or to be managed by each firm with the performance of other similar accounts managed by the firm, including a discussion of relative performance versus a peer group average and any remedial measures if the firm’s performance was materially below that of the peer group;

• any actual or anticipated economies of scale in relation to the services the Manager and the firm provide or will provide to each Fund and whether the current fee rates charged or to be charged to each Fund reflects these economies of scale for the benefit of the Fund’s investors;

• an analysis of compensation, including a comparison with fee rates charged to other clients for which similar services are provided, any proposed changes to the fee schedule, if applicable, and the effect of any fee waivers;

• a description of any payments made or to be made by the subadvisors to the Manager to support a Fund’s marketing efforts;

• a copy of the firm’s proxy voting policies and procedures and, if applicable, the name of the third party voting service used by the firm;

• an evaluation of any other benefits to the firm or Funds as a result of their relationship, if any;

• confirmation that the firm’s financial condition would not impair its ability to provide high-quality advisory services to the Funds;

• a description of the scope of portfolio management services provided or to be provided to the Funds, including whether such services differ from the services provided to other clients, including other registered investment companies, and any advantages or disadvantages that might accrue to the Funds due to the firm’s involvement in other activities;

• a description of the personnel who are or will be assigned primary responsibility for managing the Funds, including any changes during the past year, and a discussion of the adequacy of current and projected staffing levels to service the Funds;

• a description of the basis upon which portfolio managers are compensated, including any “incentive” arrangements, and a description of the oversight mechanisms used to prevent a portfolio manager whose compensation is tied to performance of a Fund from taking undue risks;

• a description of the firm’s practices in monitoring the quality of portfolio holdings and in reviewing portfolio valuation;

• a description of the firm’s use of derivatives, short sells, leveraged trading strategies or other similar trading strategies for the Funds;

• a discussion regarding the firm’s participation in third-party and proprietary “soft dollar” arrangements, if any, or other brokerage allocation policies with respect to Fund transactions;

• a discussion of the firm’s methodology for obtaining best execution, including any plans to improve the quality of execution in the upcoming year, and the use of any affiliated broker-dealers;

• a description of any actual or potential conflicts of interest anticipated in managing Fund assets;

• a discussion of whether the firm has identified any investment or operational matters that likely present a high risk in managing Fund assets;

• a description of the firm’s criteria for assessing counterparties and counterparty risk to the extent the firm enters into transactions with counterparties on a Fund’s behalf;

• a description of trade allocation procedures among accounts managed by the firm;

• a discussion of whether the firm utilizes “commission recapture” or “directed brokerage” arrangements for the benefit of the Funds or “step-out” transactions;

• a discussion of whether the firm receives, or anticipates receiving, other compensation, including any payment for order flow or ECN liquidity rebates with respect to the Funds;

29

Disclosure Regarding the Board of Trustees’ Approval of the Management

Agreement and Investment Advisory Agreements (Unaudited)

• a certification by the firm regarding the reasonable design of its compliance program;

• a summary of the results of the firm’s most recent annual review of its compliance program and a discussion of any material compliance problems encountered by a subadvisor since the most recent annual review;

• information regarding the firm’s code of ethics, insider trading policy and disaster recovery plan, including a description of any material changes thereto and a related certification of compliance by the firm;

• a description of the firm’s affiliation with any broker-dealer;

• a discussion of any anticipated change in the firm’s controlling persons; and

• verification of the firm’s insurance coverage with regards to the services provided to the Funds.

In addition to the foregoing, the Manager provided the following information specific to the renewal of the Management Agreement:

• a comparison of the performance of each Fund to comparable investment companies and appropriate indices, including comments on the relative performance of, as applicable, each subadvisor and each Fund versus the respective peer group average;

• a discussion, if applicable, of any underperformance by a subadvisor relative to its peer group and what, if any, remedial measures the Manager has or intends to take;

• a comparison of advisory fee rates and expense ratios for comparable mutual funds;

• a profit/loss analysis of the Manager;

• an analysis of any material complaints received from Fund shareholders;

• a description of the extent to which the Manager monitors the investment activities and financial conditions of each subadvisor to the Funds;

• a description of the Manager’s distribution activities with respect to promoting sales of Fund shares, including any revenue sharing practices;

• a description of the Manager’s securities lending practices and the fees received from such practices;

• a discussion of any rebate arrangements between the Manager and a service provider to the Funds pursuant to which the Manager receives direct or indirect benefits from the service provider;

• a description of the portfolio turnover rate and average execution costs for each Fund and, as applicable, each subadvisor to a Fund; and

• a description of how expenses that are not readily identifiable to a particular Fund are allocated.

In connection with the Management Agreement and each Investment Advisory Agreement, the Board also obtained an analysis provided by Lipper that compared: (i) investment performance of each Fund versus comparable investment companies and appropriate indices; (ii) total Fund expenses of each Fund versus comparable mutual funds; and (iii) each Fund’s investment advisory fee rate versus comparable mutual funds. For each Fund with more than one class of shares, the class of shares used for comparative purposes was the class with the longest performance history, which in most cases was the Institutional Class. References below to each Fund’s Lipper peer group are to the group of comparable mutual funds included in the analysis provided by Lipper.

Provided below is an overview of the primary factors the Trustees considered at the Investment Committee meeting on May 4, 2012 at which the Trustees reviewed the investment performance of the Manager and each subadvisor and the primary factors considered by the Board at its May 9, 2012 meeting at which the Board considered the renewal of the Management Agreement and Investment Advisory Agreements.

The Board did not identify any particular information that was most relevant to its consideration to renew or approve each Agreement, and each Trustee may have afforded different weight to the various factors. Legal counsel to the independent Trustees provided the Board with a memorandum regarding its responsibilities pertaining to the renewal and approval of each Agreement. The memorandum explained the regulatory requirements surrounding the Trustees’ process for evaluating investment advisors and the terms of the contracts. Based on its evaluation, the Board unanimously concluded that the terms of each Agreement were reasonable and fair and that the renewal and approval of each Agreement was in the best interests of the Funds and their shareholders.

Considerations With Respect to the Renewal of the Management Agreement and each Investment Advisory Agreement

In determining whether to renew the Management Agreement and each Investment Advisory Agreement on behalf of the Funds, the Trustees considered the best interests of each Fund separately. While the Management Agreement and the Investment Advisory Agreements for all of the Funds were considered at the May 9, 2012 meeting, the Board considered each Fund’s investment management and subadvisory relationships separately.

In each instance, the Board considered, among other things, the following factors: (1) the nature, extent and quality of the services provided; (2) the investment performance of a Fund and, as applicable, each subadvisor for a Fund; (3) the costs incurred by the Manager in rendering services to the Funds and its resulting profits or losses; (4) the extent to which economies of scale have been taken into account in setting each fee schedule; (5) whether fee levels reflect these economies of scale for the benefit of Fund investors; (6) comparisons of services and fee rates with contracts entered into by the Manager or a subadvisor or their affiliates with other clients (such as pension funds and other institutional funds); and (7) any other benefits derived or anticipated to be derived by the Manager or a subadvisor from their relationship with a Fund. The

30

Disclosure Regarding the Board of Trustees’ Approval of the Management

Agreement and Investment Advisory Agreements (Unaudited)

Trustees posed questions to various management personnel of the Manager regarding certain key aspects of the materials submitted in support of the renewal.

Nature, Extent and Quality of Services. With respect to the renewal of the Management Agreement, the Board considered, among other factors: each Fund’s long-term performance and the background and experience of key investment personnel at the Manager; the low cost structure of the Funds; the Manager’s culture of compliance and support for compliance operations that reduce risks to the Funds; the manager’s commitment to enhance the Funds’ product line and increase assets in the Funds; the Manager’s high quality of services; the Manager’s active role in monitoring and, as appropriate recommending additional or replacement subadvisors; the Manager’s commitment to training employees; and the Manager’s efforts to retain key employees and maintain staff levels.

With respect to the renewal of each Investment Advisory Agreement, the Trustees considered the level of staffing, quality, background and experience of each subadvisor’s investment personnel responsible for managing the Funds, the size of the subadvisor and the subadvisor’s ability to continue to attract and retain qualified investment personnel. The Board also considered the adequacy of the resources committed to the Funds by each subadvisor, and whether those resources were commensurate with the needs of the Funds and are sufficient to sustain appropriate levels of performance and compliance needs. In this regard, the Board considered the financial stability of each subadvisor. The Board also considered the subadvisors’ representations regarding their compliance programs and code of ethics. Based on the foregoing information, the Board concluded that the nature, extent and quality of the management and advisory services provided by the Manager and each subadvisor were appropriate for each Fund and, thus, determined to renew the Management Agreement and the Investment Advisory Agreement for each Fund.

Investment Performance. The Board evaluated the comparative information provided by Lipper and the Manager regarding each Fund’s investment performance relative to its benchmark index(es) and peer group. The Board considered the information provided by Lipper regarding its independent peer selection methodology to select all peer groups and universes. The Board also considered the performance reports and discussions with management at Board and Committee meetings throughout the year. The Manager also noted that it generally was satisfied with the performance of the subadvisors. A discussion regarding the Board’s considerations with respect to each Fund’s performance appears below under “Additional Considerations and Conclusions with Respect to Each Fund.”

Costs of the Services Provided to the Funds and the Profits Realized by the Manager from its Relationship with the Funds. In analyzing the cost of services and profitability of the Manager, the Board considered the revenues earned and the expenses incurred by the Manager. The profits or losses were noted at both an aggregate level for all Funds and at an individual Fund level, with some Funds being profitable for the Manager and with the Manager sustaining losses with respect to other Funds. The Board also considered that the Management Agreement for the Beacon Trust stipulates that, to the extent that a Fund invests all of its investable assets in another registered investment company (i.e., is a “Feeder Fund”), the Fund will not pay the Manager a management fee. Although the Board noted that, in certain cases, the fee rates paid by other clients of the Manager are lower than the fee rates paid by the Funds, the difference reflects the greater level of responsibility and regulatory requirements associated with managing the Funds.

The Board also noted that the Manager proposed to continue the expense waivers and reimbursements for certain Funds and classes that were in place during the last fiscal year and to put in place new expense waivers and reimbursements for certain new classes of the Funds and new series of the Beacon Trust. The Board further considered that each subadvised Fund pays the Manager the amounts due to its subadvisors, and the Manager remits these amounts directly to the applicable subadvisors. The Board considered that the Manager receives service and administrative fees to compensate the Manager for providing administrative services to the Funds and to compensate third-party administrators and broker-dealers for services to Fund shareholders. In addition, the Board considered that the Manager receives management fees for overseeing the securities lending program on behalf of various Funds. The Board also noted that certain classes of the Funds maintain higher expense ratios in order to compensate third-party distributors.

In analyzing the cost of services and profitability for each subadvisor in connection with its investment advisory services to the Fund, the Board considered that, in many cases, the Manager has negotiated the lowest subadvisory fee rate a subadvisor charges for any comparable client accounts. The Board did not consider profitability data of the subadvisors as imperative to its deliberations given the arm’s length nature of the relationship between the Manager and the subadvisors with respect to the negotiation of subadvisory fee rates.

Based on the foregoing information, the Board concluded that the profitability levels of the Manager were reasonable in light of the services performed by the Manager. A discussion regarding the Board’s considerations with respect to each Fund’s fee rates is set forth below under “Additional Considerations and Conclusions with Respect to Each Fund.”

Economies of Scale. In considering the reasonableness of the management and investment advisory fees rates, the Board considered whether economies of scale will be realized as the Funds grow and whether fee levels reflect these economies of scale for the benefit of Fund shareholders. In this regard, the Board considered that the Manager has negotiated breakpoints in many subadvisory fee rates. The Board also noted that, for purposes of determining the fee rates chargeable to the Funds, many subadvisors have agreed to take into account assets of AMR Corporation and its pension plans that are managed by the subadvisors. Thus, the Funds are able to receive lower effective fee rates.

In addition, the Board noted the Manager’s representation that many of the Funds benefit from economies of scale because comparably low fee rate levels are reflected in the current management and administration fee rates the Manager charges. The Board further noted the Manager’s representation that many of the Funds benefit from these comparably low fee rate levels despite not having yet reached an asset size at which economies of scale would traditionally be considered to exist, and the Manager’s belief that breakpoints are not appropriate at this time. Based on the foregoing information, the Board concluded that the Manager and subadvisor fee schedules for each Fund provides for a reasonable sharing of benefits from any economies of scale with the Funds.

Benefits Derived from the Relationship with the Funds. The Board considered the “fall-out” or ancillary benefits that accrue to the Manager and/or the subadvisors as a result of the advisory relationships with the Funds, including greater exposure in the marketplace with respect

31

Disclosure Regarding the Board of Trustees’ Approval of the Management

Agreement and Investment Advisory Agreements (Unaudited)

to the Manager’s or subadvisor’s investment process and expanding the level of assets under management by the Manager and the subadvisors. The Board also considered that the Manager uses its proprietary American Beacon Large Cap Value Fund model to manage its collective investment trust.

In addition, the Manager noted that the Trusts also derive benefits from their association with the Manager. Specifically, the Board noted the Manager’s representation that it provides services to most Funds at a lower than industry average cost. The Board considered that certain of the subadvisors reimburse the Manager for certain of its costs relating to distribution activities for the Funds. The Board also considered that, with the exception of the American Beacon Emerging Markets Fund, the Funds did not pay commissions to any affiliated broker-dealer of the Manager or the relevant subadvisor during the most recent fiscal year ended October 31, 2011.

Based on the foregoing information, the Board concluded that the potential benefits accruing to the Manager and the subadvisors by virtue of their relationships with the Funds appear to be fair and reasonable.

Additional Considerations and Conclusions with Respect to Each Fund

The performance comparisons below were made versus each Fund’s Lipper peer universe median and/or benchmark index. References to the Lipper expense universe below are to the group of comparable mutual funds included in the analysis provided to the Trustees by Lipper. In reviewing the performance, the Trustees viewed longer-term performance over five years or longer as the most important consideration, because relative performance over shorter periods may be significantly impacted by market or economic events that do not reflect manager skill.

Additional Considerations and Conclusions with Respect to the American Beacon Large Cap Value Fund

In considering the renewal of the Management Agreement for the American Beacon Large Cap Value Fund, the Trustees considered the following additional factors: (1) the Fund outperformed the peer universe median for the one-, three-, five-, and ten-year periods ended March 31, 2012; and (2) the expense ratio of the Institutional Class of Fund shares ranked better than the median of its Lipper universe.

In considering the renewal of the Investment Advisory Agreements with Barrow, Hanley, Mewhinney & Strauss, LLC (“Barrow”), Brandywine Global Investment Management, LLC (“Brandywine”), Hotchkis and Wiley Capital Management, LLC (“Hotchkis”), and Massachusetts Financial Services Company (“MFS”), the Trustees considered the following additional factors: (1) Barrow outperformed the peer universe median for the one-, three-, five- and ten-year periods ended March 31, 2012; (2) Brandywine outperformed the peer universe median for the one-, three- and ten-year periods ended March 31, 2012, but underperformed for the five-year period; (3) Hotchkis outperformed the peer universe median for the one-, three- and ten-year periods ended March 31, 2012, but underperformed for the five-year period; (4) MFS outperformed for the one-year period ended March 31, 2012; (5) management’s explanation that Brandywine’s underperformance was due in part to poor stock selection in 2008, Brandywine’s defensive position in 2009, and a focus on high quality securities in 2011; (6) management’s explanation that Hotchkis’ underperformance was due in part to exposure to homebuilders and a lack of holdings in the energy sector in 2007, poor stock selection in 2008, and Hotchkis’ overweight position in low P/E stocks in 2011; (7) the recent improved performance of both Brandywine and Hotchkis; (8) the performance of Barrow with respect to the portion of the Fund’s assets it manages was comparable or better than the performance of its composite of similarly managed accounts; (9) the performance of Brandywine with respect to the portion of the Fund’s assets it manages was comparable to its composite of similarly managed accounts; (10) the performance of Hotchkis with respect to the portion of the Fund’s assets it manages was comparable to the performance of its composite of similarly managed accounts; (11) the performance of MFS with respect to the portion of the Fund’s assets it manages was comparable to MFS’ other funds and client accounts with similar investment objectives and policies as the Fund; (12) representations by each subadvisor regarding fee rates charged by the subadvisor to other comparable clients; (13) whether the subadvisors use Fund commissions to obtain proprietary or third-party research; and (14) the Manager’s recommendation to continue to retain each subadvisor.

Based on these and other considerations the Trustees (1) concluded that the fees paid to the Manager and the subadvisors under the Agreements are fair and reasonable, (2) determined that the American Beacon Large Cap Value Fund and its shareholders would benefit from the Manager’s and subadvisors’ continued management of the Fund and (3) approved the renewal of the Management and Investment Advisory Agreements with respect to the American Beacon Large Cap Value Fund.

32

Trustees and Officers of the American Beacon Funds^SM

(Unaudited)

The Trustees and officers of the American Beacon Funds (the “Trust”) are listed below, together with their principal occupations during the past five years. Unless otherwise indicated, the address of each person listed below is 4151 Amon Carter Boulevard, MD 2450, Fort Worth, Texas 76155. Each Trustee oversees twenty-six funds in the fund complex that includes the Trust and the American Beacon Select Funds. The Trust’s Statement of Additional Information contains additional information about the Trustees and is available without charge by calling 1-800-658-5811.

Name, Age and Address	Position, Term of Office and Length of Time Served with the Trust	Principal Occupation(s) During Past 5 Years and Current Directorships
INTERESTED TRUSTEES
	Term
	Lifetime of Trust until removal, resignation or retirement*
Gerard J. Arpey** (54)	Trustee since 2012	Partner, Emerald Creek Group (private equity firm) (2011-Present); Chairman and Chief Executive Officer, (2003-2011), AMR Corp. and American Airlines; Inc.; Director, S. C. Johnson & Son, Inc. (privately held company) (2008-present); Trustee, American Beacon Select Funds (2012-Present).
Alan D. Feld*** (75)	Trustee since 1996	Sole Shareholder of a professional corporation which is a Partner in the law firm of Akin, Gump, Strauss, Hauer & Feld, LLP (law firm) (1960-Present); Director, Clear Channel Communications (1984-2008); Trustee, American Beacon Mileage Funds (1996-2012); Trustee, American Beacon Select Funds (1999-Present); Trustee, American Beacon Master Trust (1996-2012).
NON-INTERESTED
TRUSTEES	Term
	Lifetime of Trust until removal, resignation or retirement*
W. Humphrey Bogart (68)	Trustee since 2004	Trustee, American Beacon Mileage Funds (2004-2012); Trustee, American Beacon Select Funds (2004-Present); Trustee, American Beacon Master Trust (2004- 2012).
Brenda A. Cline (51)	Trustee since 2004	Executive Vice President, Chief Financial Officer, Treasurer and Secretary, Kimbell Art Foundation (1993-Present); Trustee, American Beacon Mileage Funds (2004-2012); Trustee, American Beacon Select Funds (2004-Present); Trustee, American Beacon Master Trust (2004-2012).
Eugene J. Duffy (58)	Trustee since 2008	Principal and Executive Vice President, Paradigm Asset Management (1994- Present); Director, Sunrise Bank of Atlanta (2008-Present); Trustee, American Beacon Mileage Funds (2008-2012); Trustee, American Beacon Select Funds (2008-Present); Trustee, American Beacon Master Trust (2008-2012).
Thomas M. Dunning (70)	Trustee since 2008	Chairman Emeritus (2008-Present); Chairman (1998-2008) and Chief Executive Officer (1998-2007), Lockton Dunning Benefits (consulting firm in employee benefits); Board Director, Oncor Electric Delivery Company LLC (2007-Present); Board Member, BancTec (2010-Present); Trustee, American Beacon Mileage Funds (2008-2012); Trustee, American Beacon Select Funds (2008-Present); Trustee, American Beacon Master Trust (2008-2012).
Richard A. Massman (69)	Trustee since 2004	Consultant and General Counsel Emeritus (2009-Present) and Senior Vice
	Chairman since 2008	President and General Counsel (1994-2009), Hunt Consolidated, Inc. (holding company engaged in oil and gas exploration and production, refining, real estate, farming, ranching and venture capital activities); Trustee, American Beacon Mileage Funds (2004-2012); Trustee, American Beacon Select Funds (2004- Present); Trustee, American Beacon Master Trust (2004-2012).

33

Trustees and Officers of the American Beacon Funds^SM

(Unaudited)

Name, Age and Address	Position, Term of Office and Length of Time Served with the Trust	Principal Occupation(s) During Past 5 Years and Current Directorships
Barbara J. McKenna, CFA (49)	Trustee since 2012	Managing Principal, Longfellow Investment Management Company (2005- Present); Trustee, American Beacon Select Funds (2012-Present).
R. Gerald Turner (66)	Trustee since 2001	President, Southern Methodist University (1995-Present); Director, J.C. Penney Company, Inc. (1996-Present); Director, Kronus Worldwide Inc. (chemical manufacturing) (2003-Present); Director, First Broadcasting Investment Partners, LLC (2003-2007); Trustee, American Beacon Mileage Funds (2001- 2012); Trustee, American Beacon Select Funds (2001-Present); Trustee, American Beacon Master Trust (2001-2012).
Paul J. Zucconi, CPA (72)	Trustee since 2008	Director, Affirmative Insurance Holdings, Inc. (producer of nonstandard automobile insurance) (2004-Present); Director, Titanium Metals Corporation (producer of titanium melted and mill products) (2002-Present); Director, Torchmark Corporation (life and health insurance products) (2002-Present); Director, Charter Bank (community bank services and products) (2010-2011); Trustee, American Beacon Mileage Funds (2008-2012); Trustee, American Beacon Select Funds (2008-Present); Trustee, American Beacon Master Trust (2008-2012).
OFFICERS
	Term
	One Year
Gene L. Needles, Jr. (57)	President since 2009 Executive Vice President since 2009	President, CEO and Director (2009-Present), American Beacon Advisors, Inc.; President (2009-Present), President, CEO and Director (2009-Present), Lighthouse Holdings, Inc.; President and CEO (2009-Present), Lighthouse Holdings Parent, Inc.; President (2009-Present), American Beacon Select Funds; President (2009-Present), American Beacon Mileage Funds; President (2008- 2009), Touchstone Investments; President (2003-2007), CEO (2004-2007), AIM Distributors.
Rosemary K. Behan (53)	VP, Secretary and Chief Legal Officer since 2006	Vice President, Legal and Compliance, American Beacon Advisors, Inc. (2006- Present); Secretary, American Beacon Advisors, Inc. (2008 – present); Secretary, Lighthouse Holdings, Inc. (2008-Present); Secretary Lighthouse Holdings Parent, Inc. (2008-Present).
Brian E. Brett (52)	VP since 2004	Vice President, Director of Sales, American Beacon Advisors, Inc. (2004- Present).
Wyatt L. Crumpler (46)	VP since 2007	Chief Investment Officer (2012-Present), Vice President, Asset Management (2009-2011), and Vice President, Trust Investments (2007-2009), American Beacon Advisors, Inc.
Erica Duncan (42)	VP Since 2011	Vice President, Marketing and Client Services (2011-Present), American Beacon Advisors, Inc.; Supervisor, Brand Marketing (2010-2011), Invesco; Supervisor, Marketing Communications (2009-2010) and Senior Financial Writer (2004-2009), Invesco AIM.
Michael W. Fields (58)	VP since 1989	Chief Fixed Income Officer (2011-Present) and Vice President, Fixed Income Investments, American Beacon Advisors, Inc. (1988-2011); Director, American Beacon Global Funds SPC (2002-2011); Director, American Beacon Global Funds plc (2007-2009).
Melinda G. Heika (51)	Treasurer since 2010	Treasurer (2010-Present), and Controller (2005-2009), American Beacon Advisors, Inc.; Treasurer, Lighthouse Holdings, Inc. (2010 – Present); Treasurer, Lighthouse Holdings Parent, Inc. (2010-Present).
Terri L. McKinney (48)	VP since 2010	Vice President, Enterprise Services (2009-Present) and Managing Director (2003- 2009), American Beacon Advisors, Inc.
Jeffrey K. Ringdahl (37)	VP since 2010	Chief Operating Officer, American Beacon Advisors, Inc. (2010-Present); Vice President, Product Management, Touchstone Advisors, Inc. (2007-2010); Senior Director, Business Integration, Fidelity Investments (2005-2007).

34

Trustees and Officers of the American Beacon Funds^SM

(Unaudited)

Name, Age and Address	Position, Term of Office and Length of Time Served with the Trust	Principal Occupation(s) During Past 5 Years and Current Directorships
Samuel J. Silver (49)	VP Since 2011	Vice President, Fixed Income Investments (2011-Present) and Senior Portfolio Manager, Fixed Income Investments (1999-2011), American Beacon Advisors, Inc.
Christina E. Sears (41)	Chief Compliance Officer since 2004 and Asst. Secretary since 1999	Chief Compliance Officer (2004-Present), American Beacon Advisors, Inc.
John J. Okray (38)	Asst. Secretary since 2010	Deputy General Counsel (2012-Present) and Assistant General Counsel (2010- 2012), American Beacon Advisors, Inc.; Asst. Secretary (2010-Present), Lighthouse Holdings, Inc.; Asst. Secretary (2010-Present), Lighthouse Holdings Parent, Inc.; Vice President, OppenheimerFunds, Inc. (2004-2010).
Sonia L. Bates (55)	Asst. Treasurer since 2011	Director, Tax and Financial Reporting (2011 - Present) and Manager, Tax and Financial Reporting (2005-2010), American Beacon Advisors, Inc.; Asst. Treasurer (2011-Present), Lighthouse Holdings, Inc.; Asst. Treasurer (2011- Present), Lighthouse Holdings Parent, Inc.

* The Board has adopted a retirement plan that requires Trustees to retire no later than the last day of the calendar year in which they reach the age of 72, provided, however, that the board may determine to grant one or more annual exemptions to this requirement.

** Mr. Arpey is deemed to be an “interested person” of the Trust, as defined by the 1940 Act. Mr. Arpey previously served as CEO of AMR Corp., which has a material relationship with the Manager.

*** Mr. Feld is deemed to be an “interested person” of the Trust, as defined by the 1940 Act. Mr. Feld’s law firm of Akin, Gump, Strauss, Hauer & Feld LLP has provided legal services within the past two years to the Manager and one or more of the Trust’s sub-advisors.

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Delivery of Documents

eDelivery is NOW AVAILABLE – Stop traditional mail delivery and receive your

shareholder reports and summary prospectus on-line. Sign up at

www.americanbeaconfunds.com

If you invest in the Fund through a financial institution, you may be able to receive the Fund’s regulatory mailings, such as the Summary Prospectus, Annual Report and Semi-Annual Report, by e-mail. If you are interested in this option, please go to www.icsdelivery.com and search for your financial institution’s name or contact your financial institution directly.

To obtain more information about the Fund:

By E-mail:	On the Internet:
american_beacon.funds@ambeacon.com	Visit our website at www.americanbeaconfunds.com
By Telephone:	By Mail:
Institutional, Y, Investor, Advisor, Retirement Classes	American Beacon Funds
Call (800) 658-5811	P.O. Box 219643
AMR ClassSM	Kansas City, MO 64121-9643
Call (800) 345-2345
Availability of Quarterly Portfolio Schedules	Availability of Proxy Voting Policy and Records
In addition to the Schedule of Investments provided in each semi-annual and annual report, the Fund files a complete schedule of its portfolio holdings with the Securities and Exchange Commission (“SEC”) on Form N-Q as of the first and third fiscal quarters. The Fund’s Forms N-Q are available on the SEC’s website at www.sec.gov. The Forms N-Q may also be reviewed and copied at the SEC’s Public Reference Section, 100 F Street, NE, Washington, DC 20549-1520. Information regarding the operation of the SEC’s Public Reference Room may be obtained by calling 1-800-SEC-0330. A complete schedule of the Fund’s portfolio holdings is also available at www.americanbeaconfunds.com approximately twenty days after the end of each month.	A description of the policies and procedures the Fund uses to determine how to vote proxies relating to portfolio securities is available in the Fund’s Statement of Additional Information, is available free of charge on the Fund’s website www.americanbeaconfunds.com and by calling 1-800-967-9009 or by accessing the SEC’s website at www.sec.gov. The Fund’s proxy voting record for the most recent year ended June 30 is filed annually with the SEC on Form N-PX. The Fund’s Forms N-PX are available on the SEC’s website at www.sec.gov. The Fund’s proxy voting record may also be obtained by calling 1-800-967- 9009.

Fund Service Providers:

CUSTODIAN State Street Bank and Trust Boston, Massachusetts TRANSFER AGENT Boston Financial Data Services Kansas City, Missouri INDEPENDENT REGISTERED
PUBLIC ACCOUNTING
FIRM
Ernst & Young LLP Dallas, Texas DISTRIBUTOR
Foreside Fund Services,
LLC Portland, Maine

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

American Beacon Funds and American Beacon Large Cap Value Fund are service marks of American Beacon Advisors, Inc.

AR 10/12

About American Beacon Advisors	Contents
Since 1986, American Beacon Advisors has offered a variety of products and investment advisory services to numerous institutional and retail clients, including a variety of mutual funds, corporate cash management, and separate account management. Our clients include defined benefit plans, defined contribution plans, foundations, endowments, corporations, financial planners, and other institutional investors. With American Beacon Advisors, you can put the experience of a multi-billion dollar asset management firm to work for your company.	President’s Message	1
	Market and Performance Overview	2-4
	Schedule of Investments	7
	Financial Highlights	28
	Additional Information	Back Cover

The Fund may invest in futures contracts, which are a type of derivative investment. Investing in derivatives could result in losing more than the amount invested. Investing in foreign securities entails additional risk not associated with domestic securities, such as currency fluctuations, economic and political instability and differences in accounting standards. The intrinsic value of stocks selected for the Fund may never be realized by the market, and the prices of value stocks may go down. While investing in value stocks may limit downside risk over time, the Fund may produce more modest gains than riskier stock funds as a trade-off for this potentially lower risk. Investing in the securities of small capitalization companies involves greater risk and the possibility of greater price volatility than investing in larger capitalization and more established companies. Please see the prospectus for a complete discussion of the Fund’s risks.

Any opinions herein, including forecasts, reflect our judgment as of the end of the reporting period and are subject to change. Each advisor’s strategies and the Fund’s portfolio composition will change depending on economic and market conditions. This report is not a complete analysis of market conditions and therefore, should not be relied upon as investment advice. Although economic and market information has been compiled from reliable sources, American Beacon Advisors, Inc. makes no representation as to the completeness or accuracy of the statements contained herein.

American Beacon Funds October 31, 2012

Dear Shareholders,   In recent years, small-cap growth stocks have performed better than small-cap value stocks. In 2011, for instance, the Russell 2000 Growth Index lost 2.91%, while the Russell 2000 Value Index lost 5.50%. But this shouldn’t deter investors from considering value-oriented vehicles, since value and growth stocks tend to ebb and flow in relation to one another over the long term.   As evidence of this, the Russell 2000 Value Index has returned 14.47% in the 12 months ended on October 31, 2012. For the same period, the Russell 2000 Growth Index returned 9.70%.

For the 12-month period ended October 31, 2012, the American Beacon Small Cap Value Fund (Institutional Class) returned 12.71%.

Many long-term investors have embraced a value-oriented strategy because over long periods of time, value-investing strategies have outperformed their growth-oriented counterparts. That is what the American Beacon Small Cap Value Fund strives to achieve. With six highly regarded sub-advisors, the Fund not only offers a wide breadth of expertise in portfolio management, but serves as a vehicle for diversification as well.

Thank you for your continued investment in the American Beacon Funds. For additional information about the Funds or to access your account information, please visit our website at www.americanbeaconfunds.com.

Best Regards,

Gene L. Needles, Jr.

President

American Beacon Funds

1

Domestic Equity Market Overview

October 31, 2012 (Unaudited)

U.S. stocks saw a resurgence for the one-year period ended October 31, 2012, with the Russell 1000, Russell 1000 Value and S&P 500 Indexes returning 14.97%, 16.89% and 15.21%, respectively. The advance was impressive, as it was made in the face of a deteriorating global growth outlook and while individuals continued to withdraw billions of dollars from domestic equity mutual funds.

The bulk of these gains can be attributed to a significant fourth-quarter 2011 and first-quarter 2012 rally that saw stock prices surge, as solid retail sales growth and upbeat gains in employment buoyed economic confidence. Through the middle part of spring, though, weak payroll employment reports and concerns over the eurozone debt crisis let the air out of the rally. There was a significant slowdown in economic activity in the U.S. and around the world in the second quarter, and Europe re-entered recession. Stocks responded to the weakening economic developments by dropping about 9% before rallying in June to cut the second quarter’s loss to 2.8% for the S&P 500 Index.

Improvement in the U.S. economy emerged late in the third quarter when reports for retail sales, automobile sales and consumer confidence were better than expected in September. Surprisingly strong housing activity also helped drive a summer rise in stocks that was wholly unexpected by many market observers.

Despite the strong gains during the year, it is still possible to find equities that remain inexpensive, but the broad market is no longer “cheap.” Stocks finished the period ended October 31, 2012, by plateauing in reaction to disappointing third-quarter earnings. Forward guidance still seems to be vulnerable to downward revisions, especially if the “fiscal cliff” remains on the horizon. Economic growth is still sluggish.

The U.S. economy also appears to be in better shape relative to most of the developed world. An energy boom is underway here that will radically reshape U.S. trade balances and competitiveness. U.S. oil and natural gas production is rising; imports of oil are falling. A manufacturing renaissance is underway, and here again, natural gas plays a part, as energy input costs here are far lower than the rest of the world. As labor costs soar in China, India, Brazil and other developing markets, the cost savings from moving overseas are disappearing. A June survey of 259 American manufacturers indicated 40% of them were returning production to the U.S. The U.S. is also an agricultural powerhouse and does not face food inflation, shortages or distribution problems like many other countries. And the U.S. remains far and away the leader in technology innovation; others may manufacture the products (for now) but the ideas come from U.S. shores more often than not.

From a longer-term perspective, stocks appear attractive. The economy is operating well below capacity while corporations are sitting on mountains of cash and balance sheets have been largely cleansed since the recession. U.S. Treasury securities, which offer negative real yields, look like an unattractive investment choice long-term. Individuals are underinvested in equities after moving billions of dollars out of domestic equity mutual funds. Corporate pension plans have made similar moves out of equities into very low-returning government bonds when bonds are the least attractive they have been in generations. Despite macroeconomic and geopolitical uncertainties, equities appear to continue to be a more compelling alternative.

2

American Beacon Small Cap Value Fund^SM

Performance Overview

October 31, 2012 (Unaudited)

The Investor Class of the Small Cap Value Fund (the “Fund”) returned 12.25% for the twelve months ended October 31, 2012, lagging the Russell 2000^® Value Index (the “Index”) return of 14.47% but outperforming the Lipper Small-Cap Value Funds Index return of 11.18% for the same period.

Comparison of Change in Value of a $10,000 Investment

For the Period from 10/31/02 through 10/31/12

	Annualized Total Returns Periods Ended 10/31/12
	1 Year			5 Years			10 Years			Value of $10,000 10/31/02- 10/31/12
Institutional Class(1,8)		12.71	%		2.49	%		10.74	%	$	27,726
Y Class(1,2,8)		12.58	%		2.38	%		10.68	%		27,577
Investor Class(1,8)		12.25	%		2.14	%		10.42	%		26,934
Advisor Class(1,3,8)		12.18	%		1.98	%		10.19	%		26,387
Retirement Class (1,4,8)		11.77	%		1.79	%		10.08	%		26,136
A Class with sales charge (1,5,8)		5.66	%		0.85	%		9.72	%		25,281
A Class without sales charge(1,5,8)		12.11	%		2.05	%		10.37	%		26,813
C Class with sales charge (1,6,8)		10.25	%		1.69	%		10.17	%		26,344
C Class without sales charge (1,6,8)		11.25	%		1.69	%		10.17	%		26,344
AMR Class(1,8)		13.00	%		2.75	%		11.03	%		28,464
Lipper Small-Cap Value Funds Index(7)		11.18	%		1.75	%		10.11	%		26,188
Russell 2000 Value Index(7)		14.47	%		0.87	%		9.38	%		24,509

1. Performance shown is historical and is not indicative of future returns. Investment returns and principal value will vary, and shares may be worth more or less at redemption than at original purchase. Performance shown is as of date indicated, and current performance may be lower or higher than the performance data quoted. To obtain performance as of the most recent month end, call 1-800-967-9009 or visit www.americanbeaconfunds.com. Fund performance in the table above does not reflect the deduction of taxes a shareholder would pay on distributions or the redemption of shares.

2. Fund performance for the five-year and ten-year periods represent the total returns achieved by the Institutional

Class from 10/31/02 up to 8/3/09, the inception date of the Y Class. Expenses of the Y Class are higher than those of the Institutional Class. As a result, total returns shown may be higher than they would have been had the Y Class been in existence since 10/31/02.

3. Fund performance for the ten-year period represents the total returns achieved by the Investor Class from 10/31/02 up to 5/1/03, and the returns of the Advisor Class since its inception. Expenses of the Advisor Class are higher than those of the Investor Class. As a result, total returns shown may be higher than they would have been had the Advisor Class been in existence since 10/31/02. A portion of the fees charged to the Advisor Class of the Fund was waived through 2004. Performance prior to waiving fees was lower than the actual returns shown for periods through 2004.

4. Fund performance for the five-year and ten-year periods represent the total returns achieved by the Investor Class from 10/31/02 up to 5/1/03 and the Advisor Class from 5/1/03 up to 5/1/09, the inception date of the Retirement Class, and the returns of the Retirement Class since its inception. Expenses of the Retirement Class are higher than those of the Advisor and Investor Classes. As a result, total returns shown may be higher than they would have been had the Retirement Class been in existence since 10/31/02.

5. Fund performance for the five-year and ten-year periods represent the total returns achieved by the Investor Class from 10/31/02 up to 5/17/10, the inception date of the A Class, and the returns of the A Class since its inception. Expenses of the A Class are higher than those of the Investor Class. As a result, total returns shown may be higher than they would have been had the A Class been in existence since 10/31/02. The maximum sales charge for A Class is 5.75%.

6. Fund performance for the five-year and ten-year periods represent the total returns achieved by the Investor Class from 10/31/02 up to 9/1/10, the inception date of the C Class, and the returns of the C Class since its inception. Expenses of the C Class are higher than those of the Investor Class. As a result, total returns shown may be higher than they would have been had the C Class been in existence since 10/31/02. The maximum contingent deferred sales charge for C Class is 1.00% for shares redeemed within one year of the date of purchase.

7. 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 Lipper Small-Cap Value Funds Index tracks the results of the 30 largest mutual funds in the Lipper Small-Cap Value Funds category. Lipper is an independent mutual fund research and ranking service. One cannot directly invest in an index.

8. The total annual Fund operating expense ratio set forth in the most recent Fund prospectus for the Institutional, Y, Investor, Advisor, Retirement, A, C, and AMR Class shares was 0.83%, 0.95%, 1.18%, 1.33%, 1.63%, 1.58%, 2.61%, and 0.57%, respectively. The expense ratios above may vary from the expense ratios presented in other sections of this

3

American Beacon Small Cap Value Fund^SM

Performance Overview

October 31, 2012 (Unaudited)

report that are based on expenses incurred during the period covered by this report.

The Fund trailed the Index as both stock selection and sector allocation detracted value relative to the Index.

The Fund’s holdings in the Consumer Discretionary and Financials sectors detracted most from performance. In the Consumer Discretionary sector, WMS Industries (down 25.5%), Gentex (down 41.4%) and Big Lots (down 21.9%) had the largest negative impact on the Fund’s returns. EZ Corp (down 28.6%) and Cash America International (down 29.4%) were the largest detractors in the Financials sector. Not owning Invesco Mortgage Capital, which was up 57.4% in the Index, also detracted from the Fund’s returns. Good stock selection in the Industrials and Materials sectors contributed to the Fund’s performance; however, it did not generate enough positive returns to offset the aforementioned poor performance. In the Industrials sector, RSC Holdings (up 128.1%), Oshkosh (up 45.8%) and Terex (up 36.7%) added the most value relative to the Index. PolyOne (up 70.7%) and Jarden (up 57.6%) were the largest contributors in the Materials sector.

A significant underweight in Financials detracted approximately 60 basis points (0.60%) from performance through sector allocation. Overweight positions in Information Technology and Energy, the two worst performing sectors in the Index, also detracted from the Fund’s returns.

The sub-advisors continue to focus on uncovering investment opportunities through stock selection that should benefit the Fund’s performance over the longer term.

Top Ten Holdings

	% of Net Assets
HealthSouth Corp.		0.9	%
Endurance Specialty Holdings Ltd.		0.8	%
First Horizon National Corp.		0.8	%
Aspen Insurance Holdings Ltd.		0.8	%
Oshkosh Corp.		0.8	%
Valassis Communications, Inc.		0.8	%
Rent-A-Center, Inc.		0.7	%
Atlas Air Worldwide Holdings, Inc.		0.7	%
Great Plains Energy, Inc.		0.7	%
Portland General Electric Co.		0.7	%

Sector Allocation

	% of Equities
Financials		29.6	%
Industrials		19.4	%
Consumer Discretionary		14.2	%
Information Technology		12.6	%
Materials		7.1	%
Energy		6.5	%
Health Care		4.8	%
Utilities		3.8	%
Consumer Staples		1.7	%
Telecommunication Services		0.3	%

4

American Beacon Small Cap Value Fund^SM

Fund Expenses

October 31, 2012 (Unaudited)

Fund Expense Example

As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments and (2) ongoing costs, including management fees, administrative service fees, distribution (12b-1) fees, and other Fund expenses. The examples below are intended to help you understand the ongoing cost (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.

The examples are based on an investment of $1,000 invested at the beginning of the period in each Class and held for the entire period from May 1, 2012 through October 31, 2012.

Actual Expense

The “Actual” lines of the table provide information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading “Expenses Paid During Period” to estimate the expenses you paid on your account during this period. Shareholders of the Investor and Institutional Classes that invest in the Fund through an IRA may be subject to a custodial IRA fee of $15 that is typically deducted each December. If your account was subject to a custodial IRA fee during the period, your costs would have been $15 higher.

Hypothetical Example for Comparison Purposes

The “Hypothetical” lines of the table provide information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed 5% per year rate of return before expenses (not the Fund’s actual return). You may compare the ongoing costs of investing in the Fund with other funds by contrasting this 5% hypothetical example and the 5% hypothetical examples that appear in the shareholder reports of the other funds. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. Shareholders of the Investor and Institutional Classes that invest in the Fund through an IRA may be subject to a custodial IRA fee of $15 that is typically deducted each December. If your account was subject

to a custodial IRA fee during the period, your costs would have been $15 higher.

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

	Beginning Account Value 5/1/12		Ending Account Value 10/31/12		Expenses Paid During Period* 5/1/12-10/31/12
Institutional Class
Actual	$	1,000.00	$	1,006.70	$	4.14
Hypothetical **	$	1,000.00	$	1,021.01	$	4.17
Y Class
Actual	$	1,000.00	$	1,006.27	$	4.64
Hypothetical **	$	1,000.00	$	1,020.51	$	4.67
Investor Class
Actual	$	1,000.00	$	1,004.42	$	6.00
Hypothetical **	$	1,000.00	$	1,019.15	$	6.04
Advisor Class
Actual	$	1,000.00	$	1,004.44	$	6.65
Hypothetical **	$	1,000.00	$	1,018.50	$	6.70
Retirement Class
Actual	$	1,000.00	$	1,002.50	$	8.41
Hypothetical **	$	1,000.00	$	1,016.74	$	8.47
A Class
Actual	$	1,000.00	$	1,004.44	$	6.65
Hypothetical **	$	1,000.00	$	1,018.50	$	6.70
AMR Class
Actual	$	1,000.00	$	1,008.16	$	2.83
Hypothetical **	$	1,000.00	$	1,022.32	$	2.85
C Class
Actual	$	1,000.00	$	1,000.01	$	10.36
Hypothetical **	$	1,000.00	$	1,014.78	$	10.43

* Expenses are equal to the Fund’s annualized expense ratios for the six-month period of 0.82%, 0.92%, 1.19%, 1.32%, 1.67%, 1.32%, 2.06% and 0.56% for the Institutional, Y, Investor, Advisor, Retirement, A, C and AMR Classes respectively, multiplied by the average account value over the period, multiplied by the number derived by dividing the number of days in the most recent fiscal half-year (184) by days in the year (366) to reflect the half year period.

** 5% return before expenses.

5

American Beacon Small Cap Value Fund^SM

Report of Independent Registered Public Accounting Firm

To the Shareholders and the Board of Trustees of

American Beacon Small Cap Value Fund:

We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of the American Beacon Small Cap Value Fund (one of the funds constituting the American Beacon Funds) (collectively, the “Fund”), as of October 31, 2012, and the related statement of operations for the year then ended, the statement of changes in net assets for each of the two years in the period then ended, and the financial highlights for the periods indicated therein. These financial statements and financial highlights are the responsibility of the Fund’s management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. We were not engaged to perform an audit of the Fund’s internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Fund’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements and financial highlights, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of October 31, 2012, by correspondence with the custodian and brokers or by other appropriate auditing procedures where replies from brokers were not received. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of the American Beacon Small Cap Value Fund at October 31, 2012, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended, and the financial highlights for each of the periods indicated therein, in conformity with U.S. generally accepted accounting principles.

Dallas, Texas

December 27, 2012

6

American Beacon Small Cap Value Fund^SM

Schedule of Investments

October 31, 2012

	Shares		Fair Value
			(000’s)
COMMON STOCK—95.94%
CONSUMER DISCRETIONARY—13.61%
Auto Components—1.59%
American Axle & Manufacturing Holdings, Inc.A		1,712,659	$	18,617
Cooper Tire & Rubber Co.		298,931		6,017
Dana Holding Corp.		884,790		11,644
Gentex Corp.		384,300		6,618
Sauer-Danfoss, Inc.		154,900		6,205
Superior Industries International, Inc.		68,220		1,166
Tenneco, Inc.A		91,600		2,798
				53,065
Automobiles—0.63%
Avis Budget Group, Inc.A		639,200		10,566
Hyster-Yale Materials Handling, Inc.A		43,418		1,784
Thor Industries, Inc.		232,690		8,849
				21,199
Hotels, Restaurants & Leisure—1.13%
Ameristar Casinos, Inc.		68,100		1,243
Boyd Gaming Corp.A		27,900		172
Brinker International, Inc.		245,160		7,551
CEC Entertainment, Inc.		21,295		660
International Speedway Corp., Class A		146,289		3,730
Lakes Entertainment, Inc.A		150,800		360
Orient-Express Hotels Ltd., Class AA		223,700		2,624
Pinnacle Entertainment, Inc.A		171,100		2,183
Ruby Tuesday, Inc.A		175,000		1,264
Speedway Motorsports, Inc.		103,500		1,687
WMS Industries, Inc.		983,830		16,165
				37,639
Household Durables—1.64%
Cavco Industries, Inc.A		51,569		2,493
Ethan Allen Interiors, Inc.		174,870		5,143
Furniture Brands International, Inc.A		833,900		1,268
Helen of Troy Ltd.A		159,486		4,820
KB HomeB		593,570		9,485
Lancaster Colony Corp.		43,760		3,185
M/I Homes, Inc.A		208,486		4,639
Matthews International Corp., Class A		21,075		606
Meritage Homes Corp.		170,280		6,297
Whirlpool Corp.		174,200		17,015
				54,951
Internet & Catalog Retail—0.06%
Insight Enterprises, Inc.A		118,350		1,914
Leisure Equipment & Products—0.59%
Brunswick Corp.		809,730		19,101
Callaway Golf Co.B		122,120		667
				19,768
Media—2.54%
AMC Networks, Inc., Class AA		220,100		10,283
Belo Corp., Series A		259,040		1,938
Digital Generation, Inc.A B		533,900		4,965
DreamWorks Animation SKG, Inc., Class AA B		278,800		5,679
EW Scripps Co., Class AA		119,710		1,270
Gannett Co. Inc.		499,200		8,436
John Wiley & Sons, Inc., Class A		150,838		6,543
Meredith Corp.B		323,078		10,813
Scholastic Corp.		82,406		2,719
Sinclair Broadcast Group, Inc., Class A		477,920		6,022

	Shares		Fair Value
			(000’s)
Valassis Communications, Inc.A B		1,002,400	$	26,083
				84,751
Multiline Retail—0.32%
Big Lots, Inc.		104,300		3,038
Fred’s, Inc., Class A		79,540		1,078
Saks, Inc.B		652,744		6,710
				10,826
Specialty Retail—3.76%
Aaron’s, Inc.		91,700		2,827
Aeropostale, Inc.A		215,958		2,581
America’s Car-Mart, Inc.A		300,100		12,562
Asbury Automotive Group, Inc.A		83,220		2,640
Ascena Retail Group, Inc.A		64,388		1,275
Big 5 Sporting Goods Corp.		29,311		262
Buckle, Inc.B		88,450		3,995
Cabela’s, Inc.A		208,400		9,338
Cato Corp., Class A		230,210		6,533
Children’s Place Retail Stores, Inc.A		88,820		5,190
Express, Inc.		192,220		2,139
Finish Line Inc., Class A		285,260		5,935
GameStop Corp., Class AB		198,740		4,537
Hanesbrands, Inc.A		89,570		2,998
Lithia Motors, Inc., Class A		47,700		1,631
Men’s Wearhouse, Inc.		424,000		13,903
OfficeMax, Inc.		365,800		2,689
Pep Boys, Inc.A		477,260		4,768
Rent-A-Center, Inc.		748,818		24,958
Rush Enterprises, Inc., Class AA		337,000		6,403
Sonic Automotive, Inc., Class A		103,640		2,011
Titan Machinery, Inc.A B		269,350		6,370
				125,545
Textiles & Apparel—1.35%
Crocs, Inc.A		196,200		2,472
G-III Apparel Group Ltd.A		30,700		1,135
Guess?, Inc.		373,480		9,255
Jones Group, Inc.		341,877		4,038
Perry Ellis International, Inc.A		148,450		3,064
Quiksilver, Inc.A		3,308,900		10,588
Skechers U.S.A. Inc., Class AA		385,860		6,405
True Religion Apparel, Inc.		4,550		117
Warnaco Group, Inc.A		112,580		7,946
				45,020
Total Consumer Discretionary				454,678
CONSUMER STAPLES—1.61%
Food & Drug Retailing—0.68%
Andersons, Inc.		46,640		1,832
Casey’s General Stores, Inc.		124,376		6,412
Flowers Foods, Inc.		260,530		5,130
Harris Teeter Supermarkets, Inc.		199,970		7,489
Spartan Stores, Inc.		122,030		1,752
				22,615
Food Products—0.77%
Darling International, Inc.A		642,800		10,626
Dole Food Co. IncA B		327,760		4,126
Fresh Del Monte Produce, Inc.		150,480		3,788
Ingredion, Inc.		72,115		4,432
Overhill Farms, Inc.A		316,300		1,423
USANA Health Sciences, Inc.A B		36,800		1,588
				25,983

See accompanying notes

7

American Beacon Small Cap Value Fund^SM

Schedule of Investments

October 31, 2012

	Shares		Fair Value
			(000’s)
Personal Products—0.07%
Revlon, Inc., Class AA		124,250	$	1,913
Steiner Leisure Ltd.A		11,700		514
				2,427
Tobacco—0.09%
Universal Corp.		58,400		2,894
Total Consumer Staples				53,919
ENERGY—6.28%
Energy Equipment & Services—3.68%
Atwood Oceanics, Inc.A		415,717		19,872
Bristow Group, Inc.		299,940		14,974
Exterran Holdings, Inc.A		137,700		2,751
Hercules Offshore, Inc.A		396,270		1,886
Hornbeck Offshore Services, Inc.A		65,610		2,273
Key Energy Services, Inc.A		1,071,750		7,009
Matrix Service Co.A		153,775		1,613
McDermott International, Inc.A		560,710		6,005
Newpark Resources, Inc.A		1,666,100		11,313
Oil States International, Inc.A		88,100		6,440
Precision Drilling Corp.A B		1,758,050		12,659
RPC, Inc.B		548,800		6,289
SEACOR Holdings, Inc.		58,710		5,149
Superior Energy Services, Inc.A		100,400		2,041
Tesco Corp.A		473,154		4,168
Tidewater, Inc.		141,890		6,741
Unit Corp.A		292,935		11,820
				123,003
Oil & Gas—2.60%
Approach Resources, Inc.A B		220,690		5,436
Berry Petroleum Co., Class A		286,461		11,032
Cloud Peak Energy, Inc.		1,012,550		21,364
Comstock Resources, Inc.A		132,400		2,267
Contango Oil & Gas Co.A		55,200		2,714
Delek US Holdings, Inc.		142,600		3,672
EPL Oil & Gas, Inc.A		398,220		8,617
Gulfport Energy Corp.A		244,310		8,106
Helix Energy Solutions Group, Inc.A		262,980		4,547
Stone Energy Corp.A		519,400		12,253
W&T Offshore, Inc.		75,884		1,286
Western Refining, Inc.B		227,200		5,650
				86,944
Total Energy				209,947
FINANCIALS—28.39%
Banks—12.34%
Associated Banc-Corp.		1,476,700		19,035
Astoria Financial Corp.		232,000		2,327
Bancorp, Inc.A		104,357		1,187
BancorpSouth, Inc.		667,332		9,443
Bank of Hawaii Corp.		107,506		4,747
Bank of the Ozarks, Inc.		563,050		18,434
BBCN Bancorp, Inc.		678,485		8,094
Beneficial Mutual Bancorp, Inc.A		197,600		1,873
Berkshire Hills Bancorp, Inc.		51,898		1,219
Brookline Bancorp, Inc.		689,690		5,849
Cardinal Financial Corp.		234,820		3,750
Cathay General Bancorp		198,960		3,520
Chemical Financial Corp.		104,020		2,447
Citizens Republic Bancorp, Inc.A		78,800		1,429

	Shares		Fair Value
			(000’s)
City Holding Co.B		35,710	$	1,254
City National Corp.		159,113		8,131
CoBiz Financial, Inc.		115,531		824
Columbia Banking System, Inc.		106,830		1,892
Community Bank System, Inc.		26,230		724
Community Trust Bancorp, Inc.		37,900		1,286
CVB Financial Corp.		636,143		6,883
Dime Community Bancshares, Inc.		86,255		1,251
East West Bancorp, Inc.		89,280		1,901
First Commonwealth Financial Corp.		283,600		1,858
First Financial Bancorp		652,000		10,236
First Financial Holdings, Inc.		182,800		2,577
First Horizon National Corp.		2,924,473		27,226
First Interstate Bancsystem, Inc.		296,000		4,449
First Midwest Bancorp, Inc.		819,612		10,139
First Niagara Financial Group, Inc.		221,600		1,835
FirstMerit Corp.		456,150		6,322
FNB Corp.		319,630		3,430
Fulton Financial Corp.		800,465		7,781
Glacier Bancorp, Inc.		133,974		1,943
Hancock Holding Co.		555,043		17,534
Home Federal Bancorp, Inc.		171,000		1,953
Iberiabank Corp.		377,820		18,812
Independent Bank Corp.		34,795		1,027
International Bancshares Corp.		198,442		3,602
Lakeland Financial Corp.		111,060		2,964
MB Financial, Inc.		514,220		10,418
National Penn Bancshares, Inc.		960,857		8,580
NBT Bancorp, Inc.		95,353		2,028
Northwest Bancshares, Inc.		279,190		3,322
Old National Bancorp		255,840		3,139
PacWest Bancorp		286,180		6,439
Pinnacle Financial Partners, Inc.A		86,420		1,690
Popular, Inc.A		226,200		4,372
PrivateBancorp, Inc.		176,300		2,849
Prosperity Bancshares, Inc.		403,029		16,871
Provident Financial Services, Inc.		459,870		6,898
Republic Bancorp, Inc., Class A		45,800		990
Sandy Spring Bancorp, Inc.		58,700		1,122
SCBT Financial Corp.		36,710		1,457
State Bank Financial Corp.		824,850		12,513
Sterling Financial Corp.		135,100		2,872
Susquehanna Bancshares, Inc.		986,720		10,232
Synovus Financial Corp.B		8,824,900		21,620
TCF Financial Corp.		298,696		3,417
Umpqua Holdings Corp.		305,555		3,694
Washington Federal, Inc.		455,245		7,639
Washington Trust Bancorp, Inc.		58,410		1,576
Webster Financial Corp.		754,686		16,603
WesBanco, Inc.		98,208		2,161
Western Alliance BancorpA		590,118		6,055
Wintrust Financial Corp.		373,730		13,809
Zions Bancorporation		391,400		8,403
				411,957
Diversified Financials—4.11%
CapitalSource, Inc.		502,550		3,975
Capitol Federal Financial, Inc.		411,650		4,903
Cash America International, Inc.		286,550		11,201
CoreLogic, Inc.A		386,060		9,188
Credit Acceptance Corp.A		69,268		5,656
DFC Global Corp.A		67,000		1,129
Duff & Phelps Corp., Class A		748,011		9,298

See accompanying notes

8

American Beacon Small Cap Value Fund^SM

Schedule of Investments

October 31, 2012

	Shares		Fair Value
			(000’s)
E*Trade Financial Corp.A		1,743,090	$	14,572
Encore Capital Group, Inc.A		359,200		10,417
Euronet Worldwide, Inc.A		31,614		641
EZCORP, Inc., Class AA		616,100		12,113
Federated Investors, Inc., Class BB		95,722		2,225
Generac Holdings, Inc.		144,300		4,906
Green Dot Corp., Class AA B		679,450		6,924
Interactive Brokers Group, Inc., Class A		76,971		1,097
Janus Capital Group, Inc.		1,546,300		13,144
Jefferies Group, Inc.		310,000		4,414
KBW, Inc.		256,140		4,162
National Financial Partners Corp.A		70,740		1,298
Nelnet, Inc., Class A		87,500		2,136
NewStar Financial, Inc.A		128,030		1,600
Oritani Financial Corp.		111,800		1,708
Piper Jaffray CosA		182,857		4,910
Waddell & Reed Financial, Inc., Class A		94,505		3,150
World Acceptance Corp.A B		39,580		2,642
				137,409
Insurance—8.66%
Allied World Assurance Co. Holdings AG		116,380		9,345
Alterra Capital Holdings Ltd.		268,340		6,556
American Equity Investment Life Holding Co.B		180,670		2,080
American Financial Group, Inc.		204,535		7,936
Amtrust Financial Services, Inc.B		180,314		4,364
Argo Group International Holdings Ltd.		222,100		7,640
Aspen Insurance Holdings Ltd.		810,415		26,216
Assurant, Inc.		37,900		1,433
CNO Financial Group, Inc.		2,158,230		20,676
Employers Holdings, Inc.		472,160		8,617
Endurance Specialty Holdings Ltd.		675,285		27,382
Enstar Group Ltd.A		34,643		3,464
First American Financial Corp.		580,640		13,210
Global Indemnity plcA		434,123		9,629
Hanover Insurance Group, Inc.		139,995		5,055
HCC Insurance Holdings, Inc.		188,860		6,731
Hilltop Holdings, Inc.A		50,000		680
Horace Mann Educators Corp.		577,300		11,090
Infinity Property & Casualty Corp.		43,738		2,498
Kemper Corp.		153,190		4,749
Maiden Holdings Ltd.		166,160		1,404
MBIA, Inc.A B		288,500		2,856
Montpelier Re Holdings Ltd.		223,378		5,109
National Western Life Insurance Co., Class A		7,730		1,085
Navigators Group, Inc.A		39,693		2,107
Platinum Underwriters Holdings Ltd.		129,887		5,767
Primerica, Inc.		95,400		2,696
ProAssurance Corp.		244,710		21,877
Protective Life Corp.		418,680		11,430
RenaissanceRe Holdings Ltd.		51,000		4,149
RLI Corp.		59,590		4,063
Safety Insurance Group, Inc.		38,030		1,763
Selective Insurance Group, Inc.		123,290		2,280
StanCorp Financial Group, Inc.		194,350		6,676
State Auto Financial Corp.		36,400		587
Symetra Financial Corp.		1,308,770		15,640
Tower Group, Inc.		95,710		1,725
United Fire Group, Inc.		40,700		967
Validus Holdings Ltd.		249,130		8,919

	Shares		Fair Value
			(000’s)
White Mountains Insurance Group Ltd.		17,204	$	8,820
				289,271
Real Estate—3.28%
Brandywine Realty TrustC		230,855		2,678
CapLease, Inc.C		915,800		4,698
CBL & Associates Properties, Inc.C		117,465		2,628
Chesapeake Lodging TrustC		608,750		11,475
Colony Financial, Inc.C		567,400		11,354
CommonWealth REITC		125,371		1,719
Corporate Office Properties TrustC		111,550		2,783
DCT Industrial Trust, Inc.C		1,192,780		7,693
Duke Realty Corp.C		127,108		1,841
First Potomac Realty TrustC		386,610		4,605
Forestar Group, Inc.A		86,800		1,390
Getty Realty Corp.B C		162,530		2,976
Granite Real Estate, Inc.C		149,000		5,465
Hospitality Properties TrustC		106,608		2,465
LaSalle Hotel PropertiesC		503,430		12,051
National Health Investors, Inc.C		138,910		7,419
Omega Healthcare Investors, Inc.B C		122,580		2,812
Pebblebrook Hotel TrustC		262,524		5,571
Pennsylvania Real Estate Investment TrustC		157,715		2,607
Starwood Property Trust, Inc.C		512,500		11,746
Urstadt Biddle Properties, Inc., Class AC		189,990		3,598
				109,574
Total Financials				948,211
HEALTH CARE—4.63%
Biotechnology—0.27%
Charles River Laboratories International, Inc.A		80,415		3,001
United Therapeutics Corp.A		129,200		5,901
				8,902
Health Care Equipment & Supplies—0.61%
Bruker Corp.A		168,784		2,041
Computer Programs and Systems, Inc.		13,540		661
CONMED Corp.		59,220		1,638
Haemonetics Corp.A		88,420		7,223
Hillenbrand, Inc.		42,040		861
Hill-Rom Holdings, Inc.		61,589		1,730
ICU Medical, Inc.A		83,470		4,952
Natus Medical, Inc.A		119,190		1,347
				20,453
Health Care Providers & Services—3.29%
Community Health Systems, Inc.A		227,300		6,233
Covance, Inc.A		182,300		8,879
Ensign Group, Inc.		52,112		1,520
Hanger Orthopedic Group, Inc.A		255,170		6,469
Health Management Associates, Inc., Class A		704,700		5,144
HealthSouth Corp.A		1,370,270		30,323
Kindred Healthcare, Inc.A		132,300		1,297
LifePoint Hospitals, Inc.A		612,410		21,642
Magellan Health Services, Inc.A		90,910		4,559
MAXIMUS, Inc.		95,410		5,265
Omnicell, Inc.A		352,670		5,142
Owens & Minor, Inc.		90,290		2,571
Select Medical Holdings Corp.		349,500		3,701
Triple-S Management Corp., Class BA		49,640		896
Vanguard Health Systems, Inc.A		192,468		1,863

See accompanying notes

9

American Beacon Small Cap Value Fund^SM

Schedule of Investments

October 31, 2012

	Shares		Fair Value
			(000’s)
WellCare Health Plans, Inc.A		93,700	$	4,460
				109,964
Pharmaceuticals—0.46%
Endo Pharmaceuticals Holdings, Inc.A		249,700		7,156
PharMerica Corp.A		292,300		3,572
Salix Pharmaceuticals Ltd.A		121,280		4,735
				15,463
Total Health Care				154,782
INDUSTRIALS—18.59%
Aerospace & Defense—1.91%
Aerovironment, Inc.A		222,220		4,887
Alliant Techsystems, Inc.		261,080		14,957
Curtiss-Wright Corp.		305,942		9,444
Huntington Ingalls Industries, Inc.		326,100		13,820
Spirit Aerosystems Holdings, Inc., Class AA		298,620		4,667
Triumph Group, Inc.		247,500		16,192
				63,967
Airlines—0.06%
Aircastle Ltd.		190,511		2,120
Building Products—1.96%
Apogee Enterprises, Inc.		179,787		3,662
Armstrong World Industries, Inc.		137,480		7,121
Crane Co.		332,184		13,945
Drew Industries, Inc.		94,380		2,989
Fortune Brands Home & Security, Inc.A		212,900		6,055
Owens CorningA		258,400		8,680
Simpson Manufacturing Co. Inc.		381,325		11,615
Trex Co. IncA B		281,800		9,846
Universal Forest Products, Inc.		40,100		1,544
				65,457
Commercial Services & Supplies—5.81%
ABM Industries, Inc.		61,970		1,177
Aceto Corp.		242,400		2,429
Atlas Air Worldwide Holdings, Inc.A		435,350		23,941
Brink’s Co.		331,070		8,710
Coinstar, Inc.A B		78,200		3,671
Convergys Corp.		308,790		5,191
Con-way, Inc.		618,100		17,994
CSG Systems International, Inc.A		94,640		1,951
Deluxe Corp.		138,960		4,379
DeVry, Inc.B		133,900		3,516
Dun & Bradstreet Corp.		101,600		8,234
Ennis, Inc.		81,580		1,248
Geo Group, Inc.		190,400		5,278
Heidrick & Struggles International, Inc.		161,500		1,912
Herman Miller, Inc.		470,000		9,113
Hudson Global, Inc.A		630,300		2,546
Huron Consulting Group, Inc.A		121,470		3,504
Interface, Inc.		439,120		6,284
Koppers Holdings, Inc.		68,839		2,458
Korn/Ferry InternationalA		1,106,210		14,812
Manpower, Inc.		272,100		10,323
McGrath Rentcorp		167,623		4,402
Mobile Mini, Inc.A		858,400		14,953
Monotype Imaging Holdings, Inc.		373,250		5,714
Navigant Consulting, Inc.A		41,100		427
PHH Corp.A B		670,900		13,961
PHI, Inc.A		6,808		213

	Shares		Fair Value
			(000’s)
Quad Graphics, Inc.B		81,800	$	1,499
Steelcase, Inc., A Shares		681,802		6,825
TAL International Group, Inc.		84,580		2,888
Tetra Tech, Inc.A		169,980		4,409
				193,962
Construction & Engineering—1.61%
Aegion Corp.A		563,000		10,398
Comfort Systems USA, Inc.		859,865		9,373
Dycom Industries, Inc.A		700,150		9,970
EMCOR Group, Inc.		149,690		4,814
Foster Wheeler AGA		129,822		2,891
Granite Construction, Inc.		280,765		8,482
Tutor Perini Corp.		123,846		1,256
URS Corp.		197,510		6,613
				53,797
Diversified Manufacturing—0.26%
Barnes Group, Inc.		54,377		1,244
Myers Industries, Inc.		502,046		7,445
				8,689
Electrical Equipment—1.97%
Brady Corp., Class A		42,379		1,304
Energy XXI Bermuda Ltd.		198,100		6,557
EnerSys, Inc.A		458,460		15,808
General Cable Corp.A		206,279		5,885
Geospace Technologies Corp.A		95,540		6,184
GrafTech International Ltd.A		990,330		10,408
II-VI, Inc.		242,330		4,001
IPG Photonics Corp.A		35,020		1,859
Power-One, Inc.A B		268,900		1,084
Regal-Beloit Corp.		194,400		12,671
				65,761
Industrial Conglomerates—0.60%
Carlisle Cos., Inc.		44,515		2,473
Chemed Corp.		133,000		8,944
ICF International, Inc.A		142,330		2,612
Standex International Corp.		27,700		1,281
Teleflex, Inc.		40,650		2,762
Trimas Corp.A		83,300		2,089
				20,161
Machinery—3.44%
Actuant Corp., Class A		148,200		4,185
Astec Industries, Inc.		151,360		4,359
Briggs & Stratton Corp.		95,010		1,876
CIRCOR International, Inc.		211,700		7,302
Esterline Technologies Corp.A		105,419		6,092
FreightCar America, Inc.		107,240		2,064
Greenbrier Cos., Inc.A		474,100		8,254
ITT Corp.		123,385		2,566
John Bean Technologies Corp.		70,420		1,086
Kennametal, Inc.		123,000		4,357
Meritor, Inc.A		579,600		2,562
Miller Industries, Inc.		231,100		3,547
NACCO Industries, Inc., Class A		21,709		1,099
Oshkosh Corp.A		870,600		26,102
Reliance Steel & Aluminum Co.		117,990		6,412
SPX Corp.		34,155		2,343
Terex Corp.		726,000		16,372
Titan International, Inc.B		116,160		2,437
Trinity Industries, Inc.		120,400		3,766
WABCO Holdings, Inc.A		136,900		8,018
				114,799

See accompanying notes

10

American Beacon Small Cap Value Fund^SM

Schedule of Investments

October 31, 2012

	Shares		Fair Value
			(000’s)
Marine—0.14%
Kirby Corp.A		79,600	$	4,575
Road & Rail—0.65%
Amerco, Inc.		54,290		6,273
Forward Air Corp.		380,009		12,681
Ryder System, Inc.		57,785		2,607
				21,561
Trading Companies & Distributors—0.18%
WESCO International, Inc.A		92,600		6,008
Total Industrials				620,857
INFORMATION TECHNOLOGY—12.10%
Communications Equipment—2.41%
Anixter International, Inc.		89,100		5,223
Arris Group, Inc.A		1,209,811		16,623
Black Box Corp.		92,100		2,019
Brocade Communications Systems, Inc.A		1,481,272		7,851
Comtech Telecommunications Corp.		67,540		1,700
Comverse Technology, Inc.A		2,151,800		14,180
Extreme NetworksA		912,260		2,974
InterDigital, Inc.B		568,000		21,635
IxiaA		309,780		4,340
Plantronics, Inc.		66,255		2,149
Symmetricom, Inc.A		315,000		1,937
				80,631
Computers & Peripherals—0.91%
Electronics for Imaging, Inc.A		160,370		2,784
Lexmark International, Inc., Class AB		137,100		2,915
Mercury Computer Systems, Inc.A		580,637		4,758
NCR Corp.A		99,506		2,117
Synaptics, Inc.A B		432,050		10,007
Xyratex Ltd.		928,050		7,675
				30,256
Electronic Equipment & Instruments—2.25%
Benchmark Electronics, Inc.A		156,100		2,313
Celestica, Inc.A		81,710		593
Diebold, Inc.		173,700		5,168
Ingram Micro, Inc., Class AA		141,046		2,144
Intersil Corp., Class A		284,600		2,006
Itron, Inc.A		150,650		6,186
Littelfuse, Inc.		203,300		10,897
Methode Electronics, Inc.		774,500		7,838
MTS Systems Corp.		32,885		1,658
PerkinElmer, Inc.		88,430		2,735
Plexus Corp.A		364,000		9,795
Sanmina-SCI Corp.A		10,600		94
Tech Data Corp.A		82,871		3,672
TTM Technologies, Inc.A		57,115		514
Vishay Intertechnology, Inc.A		2,361,305		19,552
				75,165
Internet Software & Services—0.74%
Digital River, Inc.A		89,000		1,276
Ebix, Inc.B		471,000		10,264
Grand Canyon Education, Inc.A		161,870		3,522
j2 Global, Inc.		114,000		3,425
Netgear, Inc.A		148,280		5,265
Websense, Inc.A		64,606		854
				24,606

	Shares		Fair Value
			(000’s)
IT Consulting & Services—0.91%
Booz Allen Hamilton Holding Corp.B		273,200	$	3,655
CACI International, Inc., Class AA		71,600		3,611
CIBER, Inc.A		347,900		1,085
Lender Processing Services, Inc.		184,200		4,441
SYNNEX Corp.A		487,460		15,789
Unisys Corp.A		109,830		1,873
				30,454
Semiconductor Equipment & Products—3.00%
Amkor Technology, Inc.A B		481,773		2,081
ATMI, Inc.A		235,100		4,643
Brooks Automation, Inc.		1,276,700		9,218
Entegris, Inc.A		337,440		2,770
Entropic Communications, Inc.A		1,715,300		8,251
Fairchild Semiconductor International, Inc.A		320,500		3,769
FEI Co.		75,980		4,183
Kulicke & Soffa Industries, Inc.A		1,202,270		12,335
Microsemi Corp.		138,465		2,659
MKS Instruments, Inc.		156,640		3,701
Omnivision Technologies, Inc.A		1,168,450		16,710
ON Semiconductor Corp.A		1,356,100		8,340
PMC—Sierra, Inc.A		424,645		1,987
QLogic Corp.A		163,893		1,537
Semtech Corp.A		201,400		5,029
Teradyne, Inc.A		803,930		11,753
TriQuint Semiconductor, Inc.A		249,700		1,174
				100,140
Software—1.88%
Cognex Corp.		450,990		16,443
DST Systems, Inc.		164,890		9,405
FARO Technologies, Inc.A		251,940		10,128
JDA Software Group, Inc.A		77,786		2,967
Mentor Graphics Corp.A		1,006,400		15,619
Parametric Technology Corp.A		113,540		2,291
Take-Two Interactive Software, Inc.		545,530		6,083
				62,936
Total Information Technology				404,188
MATERIALS—6.77%
Chemicals—2.78%
A Schulman, Inc.		103,190		2,648
Cabot Corp.		238,058		8,513
Chemtura Corp.A		245,422		3,910
Cytec Industries, Inc.		150,610		10,365
Huntsman Corp.		626,472		9,422
Innospec, Inc.A		58,000		1,878
Kraton Performance Polymers, Inc.A		68,500		1,495
LSB Industries, Inc.A		61,400		2,473
Methanex Corp.		205,700		6,171
Olin Corp.		661,040		13,710
OM Group, Inc.A		114,450		2,315
PolyOne Corp.		1,146,600		21,704
Quaker Chemical Corp.		26,700		1,415
Rockwood Holdings, Inc.		100,400		4,608
Stepan Co.		24,680		2,364
				92,991
Containers & Packaging—0.65%
Boise, Inc.		307,630		2,581
Jarden Corp.B		146,323		7,287
KapStone Paper and Packaging Corp.A		226,151		4,969

See accompanying notes

11

American Beacon Small Cap Value Fund^SM

Schedule of Investments

October 31, 2012

	Shares		Fair Value
			(000’s)
Owens-Illinois, Inc.A		350,400	$	6,829
				21,666
Metals & Mining—2.63%
AMCOL International Corp.		203,218		6,418
AuRico Gold, Inc.A		1,682,568		14,049
Carpenter Technology Corp.		167,910		8,162
Coeur d’Alene Mines Corp.		354,869		10,969
Gibraltar Industries, Inc.A		468,139		5,833
Horsehead Holding Corp.A		296,600		2,684
Kaiser Aluminum Corp.		52,170		3,160
Materion Corp.		699,600		14,658
Metals USA Holdings Corp.		92,600		1,350
Noranda Aluminum Holding Corp.		775,700		4,755
Pan American Silver Corp.B		82,623		1,818
RTI International Metals, Inc.A		34,200		779
Steel Dynamics, Inc.		155,203		1,963
Thompson Creek Metals Co. Inc.A B		326,830		863
US Silica Holdings, Inc.A B		372,250		4,765
Worthington Industries, Inc.		257,328		5,563
				87,789
Paper & Forest Products—0.71%
Buckeye Technologies, Inc.		226,860		5,944
Domtar Corp.		72,480		5,780
Louisiana-Pacific Corp.A		461,730		7,292
PH Glatfelter Co.		116,700		2,078
Schweitzer-Mauduit International, Inc.		79,400		2,781
				23,875
Total Materials				226,321
TELECOMMUNICATION SERVICES—0.30%
Diversified Telecommunication Services—0.07%
EchoStar Corp., Class AA		73,519		2,335
Wireless Telecommunication Services—0.23%
Iridium Communications, Inc.A		179,900		1,329
Telephone & Data Systems, Inc.		253,663		6,309
				7,638
Total Telecommunication Services				9,973
UTILITIES—3.66%
Electric Utilities—2.83%
Black Hills Corp.		96,870		3,465
El Paso Electric Co.		215,940		7,340
GenOn Energy, Inc.A		1,457,800		3,747
Great Plains Energy, Inc.		1,023,510		22,968
Hawaiian Electric Industries, Inc.		255,300		6,607
IDACORP, Inc.		193,520		8,654
NorthWestern Corp.		177,580		6,359
NV Energy, Inc.		317,905		6,043
Ormat Technologies, Inc.		113,500		2,160
PNM Resources, Inc.		218,910		4,851
Portland General Electric Co.		817,314		22,394
TECO Energy, Inc.		19,335		346
				94,934
Gas Utilities—0.34%
Atmos Energy Corp.		82,800		2,978
Energen Corp.		49,193		2,295
WGL Holdings, Inc.		151,370		6,020
				11,293
Multi-Utilities—0.49%
Avista Corp.		146,030		3,712

	Shares		Fair Value
			(000’s)
Westar Energy, Inc.		421,290	$	12,512
				16,224
Total Utilities				122,451
Total Common Stock (Cost $2,865,530)				3,205,327
SHORT-TERM INVESTMENTS—4.00%
American Beacon U.S. Government Money Market Select Fund, Select Class D		5,000,000		5,000
JPMorgan U.S. Government Money Market Fund, Capital Class		128,677,716		128,678
Total Short-Term Investments (Cost $133,678)				133,678
SECURITIES LENDING COLLATERAL—4.93%
DWS Government and Agency Securities Portfolio, Institutional Class		9,831,300		9,831
American Beacon U.S. Government Money Market Select Fund, Select ClassD		155,060,165		155,060
Total Securities Lending Collateral (Cost $164,891)				164,891
TOTAL INVESTMENTS —104.87% (Cost $3,164,099)				3,503,896
LIABILITIES, NET OF OTHER ASSETS—(4.87%)				(162,567	)
TOTAL NET ASSETS—100.00%			$	3,341,329

Percentages are stated as a percent of net assets.

^A  Non-income producing security.

^B  All or a portion of this security is on loan at October 31, 2012.

^C  REIT—Real Estate Investment Trust.

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

See accompanying notes

12

American Beacon Small Cap Value Fund^SM

Schedule of Investments

October 31, 2012

Futures Contracts Open on October 31, 2012 ($000’s):
Description	Type		Number of Contracts		Expiration Date		Contract Value		Unrealized Appreciation (Depreciation)
Russell 2000 Mini Index Future		Long		1,551		December, 2012	$	126,608	$	(3,365	)
							$	126,608	$	(3,365	)

See accompanying notes

13

American Beacon Small Cap Value Fund^SM

Statement of Assets and Liabilities

October 31, 2012 (in thousands, except share and per share amounts)

Assets:
Investments in unaffiliated securities, at fair value A C	$	3,343,836
Investments in affiliated securities, at fair value B		160,060
Deposit with brokers for futures contracts		6,076
Receivable for investments sold		430
Dividends and interest receivable		979
Swap Income receivable		—
Receivable for fund shares sold		5,037
Receivable for expense reimbursement (Note 2)		1
Receivable for variation margin from open futures contracts		694
Prepaid expenses		30
Total assets		3,517,143
Liabilities:
Payable for investments purchased		228
Payable upon return of securities loaned		164,891
Payable for fund shares redeemed		4,563
Management and investment advisory fees payable		4,756
Administrative service and service fees payable		934
Professional fees payable		40
Other liabilities		402
Total liabilities		175,814
Net assets	$	3,341,329
Analysis of Net Assets:
Paid-in-capital		2,931,247
Undistributed net investment income		19,858
Accumulated net realized gain		53,792
Unrealized appreciation of investments, foreign currency translations, and futures contracts		336,432
Net assets	$	3,341,329
Shares outstanding at no par value (Unlimited Shares Authorized):
Institutional Class		104,054,926
Y Class		1,865,869
Investor Class		36,560,319
Advisor Class		2,197,794
Retirement Class		317,449
A Class		199,715
C Class		116,062
AMR Class		14,599,200
Net asset value, offering and redemption price per share:
Institutional Class (Net assets $2,189,761,186)	$	21.04
Y Class (Net assets $38,982,081)	$	20.89
Investor Class (Net assets $748,550,056)	$	20.47
Advisor Class (Net assets $44,730,536)	$	20.35
Retirement Class (Net assets $6,365,640)	$	20.05
A Class (Net assets $4,064,204) (Offering price $21.59)	$	20.35
C Class (Net assets $2,329,911)	$	20.07
AMR Class (Net assets $306,545,157)	$	21.00

A    Cost of investments in unaffiliated securities	$	3,004,039
B    Cost of investments in affiliated securities	$	160,060
C    Fair value of securities on loan	$	160,615

See accompanying notes

14

American Beacon Small Cap Value Fund^SM

Statement of Operations

For the year ended October 31, 2012 (in thousands)

Investment Income:
Dividend income from unaffiliated securities (net of foreign taxes)A	$	53,175
Dividend income from affiliated securities		10
Interest income		14
Income derived from securities lending, net		2,461
Total investment income		55,660
Expenses:
Management and investment advisory fees (Note 2)		15,275
Administrative service fees (Note 2):
Institutional Class		6,330
Y Class		105
Investor Class		2,397
Advisor Class		112
Retirement Class		15
A Class		12
C Class		7
AMR Class		169
Transfer agent fees:
Institutional Class		53
Y Class		2
Investor Class		60
Advisor Class		5
Retirement Class		4
A Class		4
C Class		3
AMR Class		6
Custody and fund accounting fees		412
Professional fees		147
Registration fees and expenses		131
Service fees (Note 2):
Y Class		35
Investor Class		2,920
Advisor Class		94
Retirement Class		12
A Class		4
C Class		2
Distribution fees (Note 2):
Advisor Class		94
Retirement Class		24
A Class		8
C Class		17
Prospectus and shareholder report expenses		307
Insurance fees		75
Trustee fees		246
Other expenses		184
Total expenses		29,271
Net (fees waived and expenses reimbursed) (Note 2)		(5	)
Net expenses		29,266
Net investment income		26,394
Realized and unrealized gain (loss) on investments:
Net realized gain (loss) from:
Investments		196,382
Commission recapture (Note 3)		90
Foreign currency transactions		2
Futures contracts		35,267
Change in net unrealized appreciation or (depreciation) of:
Investments		142,212
Futures contracts		(17,118	)
Net gain on investments		356,835
Net increase in net assets resulting from operations	$	383,229
A Foreign taxes	$	113

See accompanying notes

15

American Beacon Small Cap Value Fund^SM

Statement of Changes in Net Assets (in thousands)

	Year Ended October 31, 2012			Year Ended October 31, 2011
Increase (Decrease) in Net Assets:
Operations:
Net investment income	$	26,394		$	12,296
Net realized gains from investments, foreign currency translations, and futures contracts		231,741			273,996
Change in net unrealized appreciation or (depreciation) of investments and futures contracts		125,094			(135,769	)
Net increase in net assets resulting from operations		383,229			150,523
Distributions to Shareholders:
Net investment income:
Institutional Class		(8,493	)		(7,510	)
Y Class		(185	)		(4	)
Investor Class		(197	)		(3,709	)
Advisor Class		—			(117	)
Retirement Class		(14	)		(1	)
A Class		(4	)		—
AMR Class		(2,114	)		(2,000	)
Net distributions to shareholders		(11,007	)		(13,341	)
Capital Share Transactions:
Proceeds from sales of shares		787,975			1,125,906
Reinvestment of dividends and distributions		10,798			13,190
Cost of shares redeemed		(922,085	)		(920,005	)
Net increase (decrease) in net assets from capital share transactions		(123,312	)		219,091
Net increase in net assets		248,910			356,273
Net Assets:
Beginning of period		3,092,419			2,736,146
End of Period *	$	3,341,329		$	3,092,419
*Includes undistributed net investment income of	$	19,858		$	6,430

See accompanying notes

16

American Beacon Small Cap Value Fund^SM

Notes to Financial Statements

October 31, 2012

1. Organization and Significant Accounting Policies

American Beacon Funds (the “Trust”), which is comprised of 24 Funds, is organized as a Massachusetts business trust and is registered under the Investment Company Act of 1940, as amended (the “Act”), as a diversified, open-end management investment company. These financial statements and notes to the financial statements relate to the American Beacon Small Cap Value Fund (the “Fund”), a series of the Trust.

American Beacon Advisors, Inc. (the “Manager”) is a wholly-owned subsidiary of Lighthouse Holdings, Inc. and was organized in 1986 to provide business management, advisory, administrative, and asset management consulting services to the Trust and other investors.

Class Disclosure

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

Class:	Offered to:
Institutional Class	Investors making an initial investment of $250,000
Y Class	Investors making an initial investment of $100,000
Investor Class	General public and investors investing through an intermediary
Advisor Class	Investors investing through an intermediary
Retirement Class	Investors investing through an intermediary
A Class	General public and investors investing through an intermediary with applicable sales charges
C Class	General public and investors investing through an intermediary with applicable sales charges
AMR Class	Investors in the tax-exempt retirement and benefit plans of the Manager, AMR Corporation, and its affiliates

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

New Accounting Pronouncements

In May 2011, the Financial Accounting Standards Board (“FASB”) issued an Accounting Standards Update (“ASU”) ASU No. 2011-04 “Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. Generally Accepted Accounting Principles (“U.S. GAAP”) and the International Financial Reporting Standards (“IFRSs”)”. ASU No. 2011-04 amends FASB ASC Topic 820, Fair Value Measurements and Disclosures, to establish common requirements for measuring fair value and for disclosing information about fair value measurements in accordance with U.S. GAAP and IFRSs. ASU No. 2011-04 is effective for fiscal years beginning after December 15, 2011 and for the interim period May 1, 2012 to October 31, 2012.

Management has evaluated the implications of these changes and determined that the impact of the new guidance will only affect the disclosure requirements related to the financial statements. However, as the Fund did not hold any Level 3 investments as of October 31, 2012, the financial statement disclosures were not affected.

2. Transactions with Affiliates

Management Agreement

The Trust and the Manager are parties to a Management Agreement that obligates the Manager to provide or oversee the provision of all investment advisory, fund management, and securities lending services. Investment assets of the Fund are managed by multiple investment advisors which have entered into separate investment advisory

17

American Beacon Small Cap Value Fund^SM

Notes to Financial Statements

October 31, 2012

agreements with the Manager. As compensation for performing the duties required under the Management Agreement, the Manager receives from the Fund an annualized fee equal to 0.05% of the average daily net assets plus amounts paid by the Manager to the unaffiliated investment advisors hired by the Manager to direct investment activities of the Fund. Management fees paid during the year ended October 31, 2012 were as follows (dollars in thousands):

Management Fee Rate	Management Fee	Amounts paid to Investment Advisors	Net Amounts Retained by Manager
0.46%	$15,275	$13,626	$1,649

As compensation for services provided by the Manager in connection with securities lending activities, the lending Fund pays to the Manager, with respect to cash collateral posted by borrowers, a fee up to 25% of the net monthly interest income (the gross interest income earned by the investment of cash collateral, less the amount paid to borrowers and related expenses) from such activities and, with respect to loan fees paid by borrowers, a fee up to 25% of such loan fees. This fee is netted against securities lending income in the Statement of Operations. During the year ended October 31, 2012, securities lending fees paid to the Manager were $294,512.

Administrative Services Agreement

The Manager and the Trust entered into an Administrative Services Agreement which obligates the Manager to provide or oversee administrative services to the Fund. As compensation for performing the duties required under the Administrative Services Agreement, the Manager receives an annualized fee of 0.30% of the average daily net assets of the Institutional, Y, Investor, Advisor, and Retirement Classes of the Fund, 0.40% of the average daily net assets of the A and C Classes of the Fund, and 0.05% of the average daily net assets of the AMR Class of the Fund.

Distribution Plans

The Fund, except for the Advisor, Retirement, A, and C Classes of the Fund, has adopted a “defensive” Distribution Plan (the “Plan”) in accordance with Rule 12b-1 under the Act, pursuant to which no fees may be charged to the Fund for distribution purposes. However, the Plan authorizes the management and administrative service fees received by the Manager and the investment advisors hired by the Manager to be used for distribution purposes. Under this Plan, the Fund does not intend to compensate the Manager or any other party, either directly or indirectly, for the distribution of Fund shares.

Separate Distribution Plans (the “Distribution Plans”) have been adopted pursuant to Rule 12b-1 under the Act for the Advisor, Retirement, A, and C Classes of the Fund. Under the Distribution Plans, as compensation for distribution assistance, the Manager receives an annual fee of 0.25% of the average daily net assets of the Advisor and A Classes, 0.50% of the average daily net assets of the Retirement Class, and 1.00% of the average daily net assets of the C Class. The fee will be payable without regard to whether the amount of the fee is more or less than the actual expenses incurred in a particular month by the Manager for distribution assistance.

Service Plans

The Manager and the Trust entered into Service Plans that obligate the Manager to oversee additional shareholder servicing of the Y, Investor, Advisor, Retirement, A, and C Classes. As compensation for performing the duties required under the Service Plans, the Manager receives 0.10% of the average daily net assets of the Y Class, 0.15% of the average daily net assets of the A and C Classes, 0.25% of the average daily net assets of the Advisor and Retirement Classes, and up to 0.375% of the average daily net assets of the Investor Class of the Fund.

Brokerage Commissions

Affiliated entities of an investment advisor to the Fund received net commissions on purchases and sales of the Fund’s portfolio securities totaling $2,619 for the year ended October 31, 2012.

18

American Beacon Small Cap Value Fund^SM

Notes to Financial Statements

October 31, 2012

Investment in Affiliated Funds

The Fund may invest in the American Beacon Money Market Select Fund (the “MM Select Fund”) and the American Beacon U.S. Government Money Market Select Fund (the “USG Select Fund”), (collectively the “Select Funds”). Cash collateral received by the Fund in connection with securities lending may be invested in the Select Funds. The Select Funds and the Fund have the same investment advisor and therefore, are considered to be affiliated. The Manager serves as investment advisor to the Select Funds and receives Management and Administrative Service fees totaling 0.10% of the average daily net assets of the Select Funds. During the year ended October 31, 2012, the Manager earned fees from the Select Funds totaling $12,919 on the Fund’s direct investment in the Select Funds and $164,784 from the Fund’s securities lending collateral invested in the Select Funds.

Interfund Lending Program

Pursuant to an exemptive order by the Securities and Exchange Commission (“SEC”), the Fund, along with other registered investment companies having management contracts with the Manager, may participate in an interfund lending program as a borrower. This program provides an alternative credit facility allowing the Fund to borrow from other participating Funds. During the year ended October 31, 2012, the Fund did not utilize the credit facility.

Expense Reimbursement Plan

The Fund has adopted an Expense Reimbursement Plan whereby the Manager may seek repayment of fees waived or expenses reimbursed for a period of up to three years. However, reimbursement will occur only if the Class’ average net assets have grown or expenses have declined sufficiently to allow reimbursement without causing its expense ratio to exceed the previously agreed upon contractual expense limit. During the year ended October 31, 2012, the manager contractually reimbursed $3,162 for the A Class and $1,838 for the C Class. Of these amounts $780 was receivable at October 31, 2012. A liability has not been booked as the Manager does not intend to seek repayment of this reimbursement.

Sales Commissions

The Funds’ distributor, Foreside Fund Services, LLC (“Foreside”), may receive a portion of A Class sales charges from broker dealers and it may be used to offset distribution related expenses. For the year ended October 31, 2012, Foreside collected $6,089 from the sale of Class A Shares.

Foreside may also collect a contingent deferred sales charge (“CDSC”) of 1.00% will be deducted with respect to Class C Shares redeemed within 12 months of purchase, unless waived as discussed in the Prospectus. Any applicable CDSC will be 1.00% of the lesser of the original purchase price or the value of the redemption of the Class C Shares redeemed. During the year ended October 31, 2012, $391 in CDSC fees were collected for Class C Shares.

3. Security Valuation and Fair Value Measurements

Investments are valued at the close of the New York Stock Exchange (the “Exchange”), normally 4 p.m. ET, each day that the Exchange is open for business. Equity securities for which market quotations are available are valued at the last sale price or official closing price (closing bid price or last evaluated quote if no sale has occurred) on the primary market or exchange on which they trade.

Investments in mutual funds are valued at the closing net asset value (“NAV”) per share of the mutual fund on the day of valuation. Investment grade short-term obligations with 60 days or less to maturity are valued using the amortized cost method, which approximates fair value.

19

American Beacon Small Cap Value Fund^SM

Notes to Financial Statements

October 31, 2012

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

Futures contracts are valued based upon their quoted daily settlement prices. Upon entering into a futures contract, a Fund is required to deposit with its futures broker, an amount of cash or U.S. Government and Agency Obligations in accordance with the initial margin requirements of the broker or exchange. Futures contracts are marked to market daily and an appropriate payable or receivable for the change in value (“variation margin”) is recorded by the Fund. Gains or losses are recognized, but not considered realized until the contracts expire or are closed. Futures contracts involve, to varying degrees, risk of loss in excess of the variation margin disclosed on the Statement of Assets and Liabilities.

Valuation Inputs

Various inputs may be used to determine the fair value of the Fund’s investments. These inputs are summarized in three broad levels for financial statement purposes. The inputs or methodologies used to value securities are not necessarily an indication of the risk associated with investing in those securities.

Level 1 -	Quoted prices in active markets for identical securities.
Level 2 -	Prices determined using other significant observable inputs. These may include quoted prices for similar securities, interest rates, prepayment speeds, credit risk, and others.
Level 3 -	Prices determined using other significant unobservable inputs. Unobservable inputs reflect the Fund’s own assumptions about the factors market participants would use in pricing an investment, and would be based on the best information available.

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

Common stocks and financial derivative instruments, such as futures contracts that are traded on a national securities exchange, are stated at the last reported sale or settlement price on the day of valuation. To the extent these securities are actively traded and valuation adjustments are not applied, they are categorized as Level 1 of the fair value hierarchy. Preferred securities and other equities traded on inactive markets or valued by reference to similar instruments are also categorized as Level 2 of the fair value hierarchy.

Investments in registered open-end investment management companies will be valued based upon the NAVs of such investments and are categorized as Level 1 of the fair value hierarchy. Short-term investments having a maturity of 60 days or less are generally valued at amortized cost which approximates fair value. These investments are categorized as Level 2 of the fair value hierarchy.

The end of period timing recognition is used for the significant transfers between Levels of the Fund’s assets and liabilities. In accordance with the requirements of U.S. GAAP, a fair value hierarchy and Level 3 reconciliation, if any, have been included in the Notes to the Schedule of Investments for the Fund.

The Fund’s investments are summarized by level based on the inputs used to determine its values. U.S. GAAP also requires all transfers between any levels to be disclosed. As of October 31, 2012, there were no transfers between levels. As of October 31, 2012, the investments were classified as described below (in thousands):

	Level 1			Level 2		Level 3		Total
Common Stock	$	3,204,435		$	892	$	—	$	3,205,327
Short-Term Investments—Money Markets		133,678			—		—		133,678
Securities Lending Collateral invested in Money Market Funds		164,891			—		—		164,891
Total Investments in Securities	$	3,503,004		$	892	$	—	$	3,503,896
Futures Contracts	$	(3,365	)	$	—	$	—	$	(3,365	)

20

American Beacon Small Cap Value Fund^SM

Notes to Financial Statements

October 31, 2012

Security Transactions and Investment Income

Security transactions are recorded on the trade date of the security purchase or sale. The Fund may purchase securities with delivery or payment to occur at a later date. At the time the Fund enters into a commitment to purchase a security, the transaction is recorded, and the value of the security is reflected in the NAV. The value of the security may vary with market fluctuations.

Dividend income, net of foreign taxes, is recorded on the ex-dividend date, except certain dividends from foreign securities which are recorded as soon as the information is available to the Fund. Interest income is earned from settlement date, recorded on the accrual basis, and adjusted, if necessary, for accretion of discounts and amortization of premiums. For financial and tax reporting purposes, realized gains and losses are determined on the basis of specific lot identification.

Dividends to Shareholders

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

Commission Recapture

The Fund has established brokerage commission recapture arrangements with certain brokers or dealers. If the Fund’s investment advisor chooses to execute a transaction through a participating broker, the broker rebates a portion of the commission back to the Fund. Any collateral benefit received through participation in the commission recapture program is directed exclusively to the Fund. This amount is reported with the net realized gain in the Fund’s Statement of Operations.

Allocation of Income, Expenses, Gains, and Losses

Income, expenses (other than those attributable to a specific class), gains, and losses are allocated daily to each class of shares based upon the relative proportion of net assets represented by such class. Operating expenses directly attributable to a specific class are charged against the operations of that class.

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results may differ from those estimated.

Other

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

4. Securities and Other Investments

Real Estate Investment Trusts

The Fund may own shares of real estate investment trusts (“REITS”) which report information on the source of their distributions annually. The Fund re-characterizes distributions received from REIT investments based on

21

American Beacon Small Cap Value Fund^SM

Notes to Financial Statements

October 31, 2012

information provided by the REITs into the following categories: ordinary income, long-term capital gains, and return of capital. If information is not available on a timely basis from the REITs, the re-characterization will be estimated based on available information which may include the previous year allocation. If new or additional information becomes available from the REITs at a later date, a re-characterization will be made the following year. These re-characterizations are not recorded for financial statement purposes, but as an adjustment to the calculation of taxable income.

5. Financial Derivative Instruments

Futures Contracts

Futures contracts are contracts to buy or sell a standard quantity of securities at a specified price on a future date. The Fund may enter into financial futures contracts as a method for keeping assets readily convertible to cash if needed to meet shareholder redemptions or for other needs while maintaining exposure to the stock or bond market, as applicable. The primary risks associated with the use of futures contracts are the possibility of illiquid markets or imperfect correlation between the values of the contracts and the underlying securities, or that the counterparty will fail to perform its obligations.

Upon entering into a futures contract, the Fund is required to set aside or deposit with a broker an amount, termed the initial margin, which typically represents a portion of the face value of the futures contract. The Fund usually reflects this amount on the Schedule of Investments as a U.S. Treasury Bill held as collateral for futures contracts or as Cash deposited with broker on the Statement of Assets and Liabilities. Payments to and from the broker, known as variation margin, are required to be made on a daily basis as the price of the futures contract fluctuates. Changes in initial settlement values are accounted for as unrealized appreciation (depreciation) until the contracts are terminated, at which time realized gains and losses are recognized. Futures contracts are valued at the most recent settlement price established each day by the exchange on which they are traded.

Fair Values of Derivative Instruments not accounted for as hedging instruments as of October 31, 2012 (in thousands):

Statement of Assets and Liabilities	Derivatives			Fair Value
Unrealized appreciation of investments, foreign currency translations, and futures contracts		Equity Contracts	(1)	$	(3,365	)

Effect of derivative instruments not accounted for as hedging instruments during the year ended October 31, 2012 (in thousands):

Statement of Operations	Derivatives		Balance
Net realized gain (loss) from futures contracts		Equity Contracts	$	35,267
Change in net unrealized appreciation or (depreciation) of futures contracts		Equity Contracts		(17,118	)

⁽¹⁾  Includes cumulative appreciation or (depreciation) of futures contracts as reported in the Schedule of Investments footnotes. Only current day’s variation margin is reported within the Statement of Assets and Liabilities.

6. Federal Income and Excise Taxes

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

The Fund does not have any unrecognized tax benefits in the accompanying financial statements. Each of the tax years in the four year period ended October 31, 2012 remains subject to examination by the Internal Revenue Service. If applicable, the Fund recognizes interest accrued related to unrecognized tax benefits in interest expense and penalties in “Other expenses” on the Statement of Operations.

22

American Beacon Small Cap Value Fund^SM

Notes to Financial Statements

October 31, 2012

Dividends are categorized in accordance with income tax regulations which may treat certain transactions differently than U.S. GAAP. Accordingly, the character of distributions and composition of net assets for tax purposes may differ from those reflected in the accompanying financial statements.

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

	Year Ended October  31, 2012		Year Ended October  31, 2011
Distributions paid from:
Ordinary income*
Institutional Class	$	8,493	$	7,510
Y Class		185		4
Investor Class		197		3,709
Advisor Class		—		117
Retirement Class		14		1
A Class		4		—
AMR Class		2,114		2,000
Total distributions paid	$	11,007	$	13,341

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

As of October 31, 2012, the components of distributable earnings or (deficits) on a tax basis were as follows (in thousands):

Cost basis of investments for federal income tax purposes	$	3,203,025
Unrealized appreciation		481,670
Unrealized depreciation		(180,799	)
Net unrealized appreciation or (depreciation)		300,871
Undistributed ordinary income		16,403
Accumulated long-term gain or (loss)		96,173
Other temporary differences		(3,365	)
Distributable earnings or (deficits)	$	410,082

Financial reporting records are adjusted for permanent book/tax differences to reflect tax character. Financial records are not adjusted for temporary differences. The temporary differences between financial reporting and tax-basis reporting of unrealized appreciation or depreciation are attributable primarily to the tax deferral of losses from wash sales, the realization for tax purposes of unrealized gains (losses) on certain derivative instruments, and reclassifications of income from real estate investment securities.

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

Accordingly, the following amounts represent current year permanent differences derived from reclassifications of foreign currency, income from real estate investment securities, and business development companies as of October 31, 2012 (in thousands):

Paid-in-capital	$	163
Undistributed net investment income (loss)		(1,959	)
Accumulated net realized gain (loss)		1,796
Unrealized appreciation or (depreciation) of investments and futures contracts		—

On December 22, 2010, the Regulated Investment Company Modernization Act of 2010 (the “RIC MOD”) was enacted, which changed various technical rules governing the tax treatment of RICs. The changes are generally effective for taxable years beginning after the date of enactment. One of the more prominent changes addresses capital loss carryforwards. Under the RIC MOD, each Fund will be permitted to carry forward capital losses incurred in taxable years beginning after the date of enactment for an unlimited period. However, any losses incurred during those future taxable years will be required to be utilized prior to the losses incurred in pre-enactment taxable years, which

23

American Beacon Small Cap Value Fund^SM

Notes to Financial Statements

October 31, 2012

carry an expiration date. As a result of this ordering rule, pre-enactment capital loss carryforwards may be more likely to expire unused. Additionally, post-enactment capital loss carryforwards will retain their character as either short-term or long-term capital losses rather than being considered all short-term as permitted under previous regulation.

Finally, the RIC MOD contains several provisions aimed at preserving the character of distributions made by a fiscal year RIC during the portion of its taxable year ending after October 31 or December 31, reducing the circumstances under which a RIC might be required to file amended Forms 1099 to restate previously reported distributions. Except for the simplification provisions related to RIC qualification, the RIC MOD is effective for taxable years beginning after December 22, 2010. The provisions related to RIC qualification are effective for taxable years for which the extended due date of the tax return is after December 22, 2010.

For the year ended October 31, 2012 the Fund utilized $118,516 of net capital loss carryovers (in thousands).

7. Investment Transactions

The aggregate cost of purchases and proceeds from sales of investments, other than short-term obligations, for the year ended October 31, 2012 were $1,610,301 and $1,596,418, respectively (in thousands).

A summary of the Fund’s direct transactions and security lending collateral transactions in the USG Select Fund for the year ended October 31, 2012 is set forth below (in thousands):

	Affiliate	October 31, 2011 Shares/Fair Value		Purchases		Sales		October 31, 2012 Shares/Fair Value
Direct	USG Select Fund	$	20,000	$	—	$	15,000	$	5,000
Securities Lending	USG Select Fund		180,689		525,167		550,796		155,060

8. Securities Lending

The Fund may lend its securities to qualified financial institutions, such as certain broker-dealers, to earn additional income. The borrowers are required to secure their loans continuously with collateral in an amount at least equal to the fair value of the securities loaned, initially in an amount at least equal to 102% of the fair value of domestic securities loaned and 105% of the fair value of international securities loaned. Collateral is monitored and marked to market daily. Daily mark to market amounts are required to be paid to the borrower or received from the borrower by the end of the following business day. This one day settlement for mark to market amounts may result in the collateral being temporarily less than the value of the securities on loan or temporarily more than the required minimum collateral.

To the extent that a loan is collateralized by cash, such cash collateral shall be invested by the securities lending agent (the “Agent”) in money market mutual funds, and other short-term investments, provided the investments meet certain quality and diversification requirements. Securities purchased with cash collateral proceeds are listed in the Fund’s Schedule of Investments and the collateral is shown on the Statement of Assets and Liabilities as a payable.

Securities lending income is generated from the demand premium (if any) paid by the borrower to borrow a specific security and from the return on investment of cash collateral, reduced by negotiated rebate fees paid to the borrower and transaction costs. To the extent that a loan is secured by non-cash collateral, securities lending income is generated as a demand premium reduced by transaction costs. The Fund, the Agent, and the Manager retain 78%, 12% and 10%, respectively, of the income generated from securities lending.

While securities are on loan, the Fund continues to receive certain income associated with that security and any gain or loss in the market price that may occur during the term of the loan. In the case of domestic equities, the value of any dividend is received in the form of a substitute payment approximately equal to the dividend. In the case

24

American Beacon Small Cap Value Fund^SM

Notes to Financial Statements

October 31, 2012

of foreign securities, a negotiated amount is received that is less than the actual dividend, but higher than the dividend amount minus the foreign tax that the Fund would be subject to on the dividend.

Securities lending transactions pose certain risks to the Fund, including that the borrower may not provide additional collateral when required or return the securities when due, that the value of the short-term investments will be less than the amount of cash collateral required to be returned to the borrower, that non-cash collateral may be subject to legal constraints in the event of a borrower bankruptcy, and that the cash collateral investments could become illiquid and unable to be used to return collateral to the borrower. The Fund could also experience delays and costs in gaining access to the collateral. The Fund bears the risk of any deficiency in the amount of the cash collateral available for return to the borrower and any action which impairs its ability to liquidate non-cash collateral to satisfy a borrower default.

As of October 31, 2012, the value of outstanding securities on loan and the value of collateral was as follows (in thousands):

Fair Value of Securities on Loan	Non-Cash Collateral	Cash Collateral Posted by Borrower
$ 160,615	$ —	$ 164,891

The cash collateral listed in the Fund’s Schedule of Investments was purchased using cash collateral proceeds and also is shown on the Statement of Assets and Liabilities as a Payable upon return of securities earned. Income earned from securities lending is included in Income derived from securities lending in the Statement of Operations.

Non-cash collateral received by the Fund may not be sold or re-pledged except to satisfy a borrower default. Therefore, non-cash collateral is not included on the Fund’s Schedule of Investments or Statement of Assets and Liabilities.

9. Capital Share Transactions

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

For the Year Ended October 31, 2012

	Institutional Class						Y Class						Investor Class						Advisor Class
	Shares			Amount			Shares			Amount			Shares			Amount			Shares			Amount
Shares sold		23,720		$	479,712			849		$	16,953			6,070		$	119,765			1,164		$	22,488
Reinvestment of dividends		434			8,287			10			185			10			194			—			—
Shares redeemed		(18,398	)		(371,650	)		(560	)		(11,286	)		(15,772	)		(310,055	)		(786	)		(15,262	)
Net increase (decrease) in shares outstanding		5,756		$	116,349			299		$	5,852			(9,692	)	$	(190,096	)		378		$	7,226
	Retirement Class						AMR Class						A Class						C Class
	Shares			Amount			Shares			Amount			Shares			Amount			Shares			Amount
Shares sold		273		$	5,134			7,278		$	139,525			157		$	3,079			68		$	1,319
Reinvestment of dividends		1			14			111			2,114			—			4			—			—
Shares redeemed		(57	)		(1,121	)		(10,896	)		(211,293	)		(57	)		(1,158	)		(13	)		(260	)
Net increase (decrease) in shares outstanding		217		$	4,027			(3,507	)	$	(69,654	)		100		$	1,925			55		$	1,059

25

American Beacon Small Cap Value Fund^SM

Notes to Financial Statements

October 31, 2012

For the Year Ended October 31, 2011

	Institutional Class						Y Class						Investor Class						Advisor Class
	Shares			Amount			Shares			Amount			Shares			Amount			Shares			Amount
Shares sold		32,139		$	624,258			1,690		$	33,343			14,401		$	280,691			762		$	14,511
Reinvestment of dividends		372			7,454			—			5			185			3,613			6			117
Shares redeemed		(16,620	)		(326,085	)		(176	)		(3,142	)		(20,730	)		(395,525	)		(811	)		(15,684	)
Net increase (decrease) in shares outstanding		15,891		$	305,627			1,514		$	30,206			(6,144	)	$	(111,221	)		(43	)	$	(1,056	)
	Retirement Class						AMR Class						A Class						C Class
	Shares			Amount			Shares			Amount			Shares			Amount			Shares			Amount
Shares sold		95		$	1,761			8,795		$	167,845			122		$	2,379			61		$	1,118
Reinvestment of dividends		—			1			100			2,000			—			—			—			—
Shares redeemed		(15	)		(261	)		(8,847	)		(178,901	)		(23	)		(406	)		—			(1	)
Net increase (decrease) in shares outstanding		80		$	1,501			48		$	(9,056	)		99		$	1,973			61		$	1,117

26

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27

American Beacon Small Cap Value Fund^SM

Financial Highlights

(For a share outstanding throughout the period)

	Institutional Class															Y Class
	Year Ended October 31,															Year Ended October 31,									August 3 to October  31, 2009
	2012			2011			2010			2009			2008			2012			2011			2010
Net asset value, beginning of period	$	18.75		$	17.84		$	14.39		$	12.53		$	22.10		$	18.66		$	17.76		$	14.37		$	14.03
Income from investment operations:
Net investment income (loss)		0.17			0.08			0.08			0.10			0.25			0.15			0.06			0.14			0.00
Net gains (losses) from securities (both realized and unrealized)		2.20			0.92			3.46			1.96			(7.13	)		2.19			0.92			3.36			0.34
Total income (loss) from investment operations		2.37			1.00			3.54			2.06			(6.88	)		2.34			0.98			3.50			0.34
Less distributions:
Dividends from net investment income		(0.08	)		(0.09	)		(0.09	)		(0.20	)		(0.22	)		(0.11	)		(0.08	)		(0.11	)		—
Distributions from net realized gains on securities		—			—			—			—			(2.47	)		—			—			—			—
Total distributions		(0.08	)		(0.09	)		(0.09	)		(0.20	)		(2.69	)		(0.11	)		(0.08	)		(0.11	)		—
Net asset value, end of period	$	21.04		$	18.75		$	17.84		$	14.39		$	12.53		$	20.89		$	18.66		$	17.76		$	14.37
Total return A,B		12.71	%		5.57	%		24.71	%		16.97	%		(34.84	)%		12.58	%		5.49	%		24.44	%		2.42	%E
Ratios and supplemental data:
Net assets, end of period (in thousands)	$	2,189,761		$	1,843,285		$	1,470,084		$	1,040,805		$	826,232		$	38,982		$	29,234		$	931		$	1
Ratios to average net assets (annualized):
Expenses before reimbursements		0.82	%		0.82	%		0.81	%		0.84	%		0.81	%		0.91	%		0.94	%		0.91	%		1.11	%C
Expenses, net of reimbursements		0.82	%		0.82	%		0.81	%		0.84	%		0.81	%		0.91	%		0.94	%		0.91	%		1.11	%C
Net investment income (loss), before reimbursements		0.87	%		0.47	%		0.52	%		0.87	%		1.36	%		0.77	%		0.30	%		0.39	%		0.03	%C
Net investment income (loss), net of reimbursements		0.87	%		0.47	%		0.52	%		0.87	%		1.36	%		0.77	%		0.30	%		0.39	%		0.03	%C
Portfolio turnover rate		51	%		59	%		59	%		61	%		62	%		51	%		59	%		59	%		61	%D

^A  May include adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net assets for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions.

^B  Based on net asset value, which does not reflect the sales charge, redemption fee, or contingent deferred sales charge, if applicable.

^C  Annualized.

^D  Portfolio turnover rate is for the period from November 1, 2008 through October 31, 2009.

^E  Not annualized.

^F  Portfolio turnover rate is for the period from November 1, 2009 through October 31, 2010.

28

American Beacon Small Cap Value Fund^SM

Financial Highlights

(For a share outstanding throughout the period)

Investor Class															Advisor Class															Retirement Class
Year Ended October 31,															Year Ended October 31,															Year Ended October 31,									May 1 to October  31, 2009
2012			2011			2010			2009			2008			2012			2011			2010			2009			2008			2012			2011			2010
$	18.23		$	17.40		$	14.05		$	12.22		$	21.62		$	18.15		$	17.33		$	13.97		$	12.13		$	21.46		$	18.01		$	17.23		$	13.95		$	11.58
	0.11			0.02			0.03			0.08			0.20			0.06			(0.01	)		0.01			0.06			0.16			0.06			0.02			0.04			(0.02	)
	2.13			0.88			3.37			1.91			(6.97	)		2.14			0.89			3.35			1.90			(6.93	)		2.05			0.81			3.28			2.39
	2.24			0.90			3.40			1.99			(6.77	)		2.20			0.88			3.36			1.96			(6.77	)		2.11			0.83			3.32			2.37
	0.00			(0.07	)		(0.05	)		(0.16	)		(0.16	)		—			(0.06	)		—			(0.12	)		(0.09	)		(0.07	)		(0.05	)		(0.04	)		—
	—			—			—			—			(2.47	)		—			—			—			—			(2.47	)		—			—			—			—
	0.00			(0.07	)		(0.05	)		(0.16	)		(2.63	)		—			(0.06	)		—			(0.12	)		(2.56	)		(0.07	)		(0.05	)		(0.04	)		—
$	20.47		$	18.23		$	17.40		$	14.05		$	12.22		$	20.35		$	18.15		$	17.33		$	13.97		$	12.13		$	20.05		$	18.01		$	17.23		$	13.95
	12.31	%		5.20	%		24.21	%		16.59	%		(35.04	)%		12.12	%		5.07	%		24.05	%		16.41	%		(35.19	)%		11.77	%		4.79	%		23.82	%		20.47	%E
$	748,550		$	843,400		$	911,737		$	719,239		$	699,670		$	44,731		$	33,032		$	32,295		$	28,333		$	33,479		$	6,366		$	1,817		$	360		$	1
	1.18	%		1.17	%		1.18	%		1.15	%		1.06	%		1.32	%		1.32	%		1.32	%		1.34	%		1.31	%		1.63	%		1.62	%		1.54	%		1.53	%C
	1.18	%		1.17	%		1.18	%		1.15	%		1.06	%		1.32	%		1.32	%		1.32	%		1.31	%		1.31	%		1.63	%		1.62	%		1.54	%		1.53	%C
	0.51	%		0.12	%		0.17	%		0.59	%		1.12	%		0.35	%		(0.02	)%		0.03	%		0.44	%		0.86	%		0.02	%		(0.35	)%		(0.20	)%		(0.28	)%C
	0.51	%		0.12	%		0.17	%		0.59	%		1.12	%		0.35	%		(0.02	)%		0.03	%		0.48	%		0.86	%		0.02	%		(0.35	)%		(0.20	)%		(0.28	)%C
	51	%		59	%		59	%		61	%		62	%		51	%		59	%		59	%		61	%		62	%		51	%		59	%		59	%		61	%D

29

American Beacon Small Cap Value Fund^SM

Financial Highlights

(For a share outstanding throughout the period)

	A Class									C Class
	Year Ended October 31,						May 17 to October 31,			Year Ended October 31,						September 1 to October 31,
	2012			2011			2010			2012			2011			2010
Net asset value, beginning of period	$	18 .19		$	17 .39		$	17 .33		$	18 .04		$	17 .37		$	15 .62
Income from investment operations:
Net investment income (loss)		0 .08			0 .03			0 .00			(0 .03	)		(0 .04	)		(0 .01	)
Net gains (losses) from securities (both realized and unrealized)		2 .12			0 .83			0 .06			2 .06			0 .74			1 .76
Total income (loss) from investment operations		2 .20			0 .86			0 .06			2 .03			0 .70			1 .75
Less distributions:
Dividends from net investment income		(0 .04	)		(0 .06	)		—			—			(0 .03	)		—
Distributions from net realized gains on securities		—			—			—			—			—			—
Total distributions		(0 .04	)		(0 .06	)		—			—			(0 .03	)		—
Net asset value, end of period	$	20 .35		$	18 .19		$	17 .39		$	20 .07		$	18 .04		$	17 .37
Total return A,B		12.11	%		4 .92	%		0.35	%E		11.25	%		4 .06	%		11 .20	%E
Ratios and supplemental data:
Net assets, end of period (in thousands)	$	4,064		$	1,822		$	18		$	2,330		$	1,106		$	6
Ratios to average net assets (annualized):
Expenses before reimbursements		1 .44	%		1 .57	%		1.28	%C		2 .21	%		2 .60	%		2 .69	%C
Expenses, net of reimbursements		1 .34	%		1 .57	%		1.28	%C		2 .10	%		2 .60	%		2 .10	%C
Net investment income (loss), before
reimbursements		0 .21	%		(0.32	)%		0.01	%C		(0.54	)%		(1 .36	)%		(1.86	)%C
Net investment income (loss), net of
reimbursements		0 .32	%		(0.32	)%		0.01	%C		(0.43	)%		(1.36	)%		(1.28	)%C
Portfolio turnover rate		51	%		59	%		59	%F		51	%		59	%		59	%F

^A  May include adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net assets for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions.

^B  Based on net asset value, which does not reflect the sales charge, redemption fee, or contingent deferred sales charge, if applicable.

^C  Annualized.

^D  Portfolio turnover rate is for the period from November 1, 2008 through October 31, 2009.

^E  Not annualized.

^F  Portfolio turnover rate is for the period from November 1, 2009 through October 31, 2010.

30

American Beacon Small Cap Value Fund^SM

Financial Highlights

(For a share outstanding throughout the period)

AMR Class
Year Ended October 31,
2012		2011			2010			2009			2008
	$     18.71	$	17.76		$	14.32		$	12.48		$	22.05
	0.34		0.13			0.18			0.11			0.33
	2.08		0.92			3.38			1.97			(7.15	)
	2.42		1.05			3.56			2.08			(6.82	)
	(0.13)		(0.10	)		(0.12	)		(0.24	)		(0.28	)
	—		—			—			—			(2.47	)
	(0.13)		(0.10	)		(0.12	)		(0.24	)		(2.75	)
	$     21.00	$	18.71		$	17.76		$	14.32		$	12.48
	13.00%		5.85	%		25.00	%		17.30	%		(34.71	)%
	$ 306,545	$	338,723		$	320,715		$	271,066		$	209,927
	0.56%		0.56	%		0.57	%		0.59	%		0.56	%
	0.56%		0.56	%		0.57	%		0.59	%		0.56	%
	1.14%		0.72	%		0.76	%		1.11	%		1.62	%
	1.14%		0.72	%		0.76	%		1.11	%		1.62	%
	51%		59	%		59	%		61	%		62	%

31

American Beacon Funds^SM

Privacy Policy & Federal Tax Information

October 31, 2012 (Unaudited)

Privacy Policy

The American Beacon Funds recognize and respect the privacy of our shareholders. We are providing this notice to you so you will understand how shareholder information may be collected and used.

We may collect nonpublic personal information about you from one or more of the following sources:

• information we receive from you on applications or other forms;

• information about your transactions with us or our service providers; and

• information we receive from third parties.

We do not disclose any nonpublic personal information about our customers or former customers to anyone, except as permitted by law.

We restrict access to your nonpublic personal information to those employees or service providers who need to know that information to provide products or services to you. To ensure the confidentiality of your nonpublic personal information, we maintain safeguards that comply with federal standards.

Federal Tax Information

Certain tax information regarding the Fund is required to be provided to shareholders based upon the Fund’s income and distribution for the taxable year ended October 31, 2012. The information and distributions reported herein may differ from information and distribution taxable to the shareholders for the calendar year ended December 31, 2012.

The Fund designated the following items with regard to distributions paid during the fiscal year ended October 31, 2011. All designations are based on financial information available as of this annual report and, accordingly, are subject to change. For each item, it is the intention of the Fund to designate the maximum amount permitted under the Internal Revenue Code of 1986, as amended, and the regulations there under.

Corporate Dividends Received Deduction	69.70	%
Qualified Dividend Income	100.00	%

Shareholders will receive notification in January 2013 of the applicable tax information necessary to prepare their 2012 income tax returns.

32

Disclosure Regarding the Board of Trustees’ Approval of the Management

Agreement and Investment Advisory Agreements of the Fund (Unaudited)

At its May 9, 2012 meeting, the Board of Trustees (“Board”) considered the renewal of the Management Agreement between the Manager and the American Beacon Funds (“Beacon Trust”) on behalf of each of their series (collectively, the “Funds”) and the renewal of each investment advisory agreement between the Manager and a subadvisor (each an “Investment Advisory Agreement”). The Management Agreement and the Investment Advisory Agreements are collectively referred to herein as the “Agreements.” In preparation for the Board’s consideration to renew and approve these Agreements, the Board and its Investment Committee undertook steps to gather and consider information furnished by the Manager, the subadvisors and Lipper, Inc. (“Lipper”). The Board, with the assistance of independent legal counsel, requested and received certain relevant information from the Manager and each subadvisor.

In addition, the Board’s Investment Committee worked with Lipper to obtain relevant comparative information regarding the performance, fees and expenses of the Funds. The Investment Committee held a separate meeting on May 4, 2012 to consider the information provided by Lipper. Further, the Board took into consideration information furnished for the Board’s review and consideration throughout the year at regular Board and Investment Committee meetings, as well as information specifically prepared in connection with the renewal process.

In connection with the Board’s consideration of the Management Agreement and each Investment Advisory Agreement, the Trustees received and evaluated such information as they deemed necessary. The materials requested by the Board included, among other information, the following:

• a description of any significant changes (actual or anticipated) to principal activities, personnel, services provided to the Funds, or any other area, including how these changes might affect the Funds;

• a copy of the firm’s most recent audited or unaudited financial statements, as well as Parts 1 and 2 of its Form ADV registration statement with the SEC;

• a summary of any material pending or anticipated litigation or regulatory proceedings involving the firm or its personnel, including the results of any recent regulatory examination or independent audit;

• a comparison of the performance of that portion of Fund assets managed or to be managed by each firm with the performance of other similar accounts managed by the firm, including a discussion of relative performance versus a peer group average and any remedial measures if the firm’s performance was materially below that of the peer group;

• any actual or anticipated economies of scale in relation to the services the Manager and the firm provide or will provide to each Fund and whether the current fee rates charged or to be charged to each Fund reflects these economies of scale for the benefit of the Fund’s investors;

• an analysis of compensation, including a comparison with fee rates charged to other clients for which similar services are provided, any proposed changes to the fee schedule, if applicable, and the effect of any fee waivers;

• a description of any payments made or to be made by the subadvisors to the Manager to support a Fund’s marketing efforts;

• a copy of the firm’s proxy voting policies and procedures and, if applicable, the name of the third party voting service used by the firm;

• an evaluation of any other benefits to the firm or Funds as a result of their relationship, if any;

• confirmation that the firm’s financial condition would not impair its ability to provide high-quality advisory services to the Funds;

• a description of the scope of portfolio management services provided or to be provided to the Funds, including whether such services differ from the services provided to other clients, including other registered investment companies, and any advantages or disadvantages that might accrue to the Funds due to the firm’s involvement in other activities;

• a description of the personnel who are or will be assigned primary responsibility for managing the Funds, including any changes during the past year, and a discussion of the adequacy of current and projected staffing levels to service the Funds;

• a description of the basis upon which portfolio managers are compensated, including any “incentive” arrangements, and a description of the oversight mechanisms used to prevent a portfolio manager whose compensation is tied to performance of a Fund from taking undue risks;

• a description of the firm’s practices in monitoring the quality of portfolio holdings and in reviewing portfolio valuation;

• a description of the firm’s use of derivatives, short sells, leveraged trading strategies or other similar trading strategies for the Funds;

• a discussion regarding the firm’s participation in third-party and proprietary “soft dollar” arrangements, if any, or other brokerage allocation policies with respect to Fund transactions;

• a discussion of the firm’s methodology for obtaining best execution, including any plans to improve the quality of execution in the upcoming year, and the use of any affiliated broker-dealers;

• a description of any actual or potential conflicts of interest anticipated in managing Fund assets;

• a discussion of whether the firm has identified any investment or operational matters that likely present a high risk in managing Fund assets;

• a description of the firm’s criteria for assessing counterparties and counterparty risk to the extent the firm enters into transactions with counterparties on a Fund’s behalf;

• a description of trade allocation procedures among accounts managed by the firm;

• a discussion of whether the firm utilizes “commission recapture” or “directed brokerage” arrangements for the benefit of the Funds or “step-out” transactions;

33

Disclosure Regarding the Board of Trustees’ Approval of the Management

Agreement and Investment Advisory Agreements of the Fund (Unaudited)

• a discussion of whether the firm receives, or anticipates receiving, other compensation, including any payment for order flow or ECN liquidity rebates with respect to the Funds;

• a certification by the firm regarding the reasonable design of its compliance program;

• a summary of the results of the firm’s most recent annual review of its compliance program and a discussion of any material compliance problems encountered by a subadvisor since the most recent annual review;

• information regarding the firm’s code of ethics, insider trading policy and disaster recovery plan, including a description of any material changes thereto and a related certification of compliance by the firm;

• a description of the firm’s affiliation with any broker-dealer;

• a discussion of any anticipated change in the firm’s controlling persons; and

• verification of the firm’s insurance coverage with regards to the services provided to the Funds.

In addition to the foregoing, the Manager provided the following information specific to the renewal of the Management Agreement:

• a comparison of the performance of each Fund to comparable investment companies and appropriate indices, including comments on the relative performance of, as applicable, each subadvisor and each Fund versus the respective peer group average;

• a discussion, if applicable, of any underperformance by a subadvisor relative to its peer group and what, if any, remedial measures the Manager has or intends to take;

• a comparison of advisory fee rates and expense ratios for comparable mutual funds;

• a profit/loss analysis of the Manager;

• an analysis of any material complaints received from Fund shareholders;

• a description of the extent to which the Manager monitors the investment activities and financial conditions of each subadvisor to the Funds;

• a description of the Manager’s distribution activities with respect to promoting sales of Fund shares, including any revenue sharing practices;

• a description of the Manager’s securities lending practices and the fees received from such practices;

• a discussion of any rebate arrangements between the Manager and a service provider to the Funds pursuant to which the Manager receives direct or indirect benefits from the service provider;

• a description of the portfolio turnover rate and average execution costs for each Fund and, as applicable, each subadvisor to a Fund; and

• a description of how expenses that are not readily identifiable to a particular Fund are allocated.

In connection with the Management Agreement and each Investment Advisory Agreement, the Board also obtained an analysis provided by Lipper that compared: (i) investment performance of each Fund versus comparable investment companies and appropriate indices; (ii) total Fund expenses of each Fund versus comparable mutual funds; and (iii) each Fund’s investment advisory fee rate versus comparable mutual funds. For each Fund with more than one class of shares, the class of shares used for comparative purposes was the class with the longest performance history, which in most cases was the Institutional Class. References below to each Fund’s Lipper peer group are to the group of comparable mutual funds included in the analysis provided by Lipper.

Provided below is an overview of the primary factors the Trustees considered at the Investment Committee meeting on May 4, 2012 at which the Trustees reviewed the investment performance of the Manager and each subadvisor and the primary factors considered by the Board at its May 9, 2012 meeting at which the Board considered the renewal of the Management Agreement and Investment Advisory Agreements.

The Board did not identify any particular information that was most relevant to its consideration to renew or approve each Agreement, and each Trustee may have afforded different weight to the various factors. Legal counsel to the independent Trustees provided the Board with a memorandum regarding its responsibilities pertaining to the renewal and approval of each Agreement. The memorandum explained the regulatory requirements surrounding the Trustees’ process for evaluating investment advisors and the terms of the contracts. Based on its evaluation, the Board unanimously concluded that the terms of each Agreement were reasonable and fair and that the renewal and approval of each Agreement was in the best interests of the Funds and their shareholders.

Considerations With Respect to the Renewal of the Management Agreement and each Investment Advisory Agreement

In determining whether to renew the Management Agreement and each Investment Advisory Agreement on behalf of the Funds, the Trustees considered the best interests of each Fund separately. While the Management Agreement and the Investment Advisory Agreements for all of the Funds were considered at the May 9, 2012 meeting, the Board considered each Fund’s investment management and subadvisory relationships separately.

In each instance, the Board considered, among other things, the following factors: (1) the nature, extent and quality of the services provided; (2) the investment performance of a Fund and, as applicable, each subadvisor for a Fund; (3) the costs incurred by the

34

Disclosure Regarding the Board of Trustees’ Approval of the Management

Agreement and Investment Advisory Agreements of the Fund (Unaudited)

Manager in rendering services to the Funds and its resulting profits or losses; (4) the extent to which economies of scale have been taken into account in setting each fee schedule; (5) whether fee levels reflect these economies of scale for the benefit of Fund investors; (6) comparisons of services and fee rates with contracts entered into by the Manager or a subadvisor or their affiliates with other clients (such as pension funds and other institutional funds); and (7) any other benefits derived or anticipated to be derived by the Manager or a subadvisor from their relationship with a Fund. The Trustees posed questions to various management personnel of the Manager regarding certain key aspects of the materials submitted in support of the renewal.

Nature, Extent and Quality of Services. With respect to the renewal of the Management Agreement, the Board considered, among other factors: each Fund’s long-term performance and the background and experience of key investment personnel at the Manager; the low cost structure of the Funds; the Manager’s culture of compliance and support for compliance operations that reduce risks to the Funds; the manager’s commitment to enhance the Funds’ product line and increase assets in the Funds; the Manager’s high quality of services; the Manager’s active role in monitoring and, as appropriate recommending additional or replacement subadvisors; the Manager’s commitment to training employees; and the Manager’s efforts to retain key employees and maintain staff levels.

With respect to the renewal of each Investment Advisory Agreement, the Trustees considered the level of staffing, quality, background and experience of each subadvisor’s investment personnel responsible for managing the Funds, the size of the subadvisor and the subadvisor’s ability to continue to attract and retain qualified investment personnel. The Board also considered the adequacy of the resources committed to the Funds by each subadvisor, and whether those resources were commensurate with the needs of the Funds and are sufficient to sustain appropriate levels of performance and compliance needs. In this regard, the Board considered the financial stability of each subadvisor. The Board also considered the subadvisors’ representations regarding their compliance programs and code of ethics. Based on the foregoing information, the Board concluded that the nature, extent and quality of the management and advisory services provided by the Manager and each subadvisor were appropriate for each Fund and, thus, determined to renew the Management Agreement and the Investment Advisory Agreement for each Fund.

Investment Performance. The Board evaluated the comparative information provided by Lipper and the Manager regarding each Fund’s investment performance relative to its benchmark index(es) and peer group. The Board considered the information provided by Lipper regarding its independent peer selection methodology to select all peer groups and universes. The Board also considered the performance reports and discussions with management at Board and Committee meetings throughout the year. The Manager also noted that it generally was satisfied with the performance of the subadvisors. A discussion regarding the Board’s considerations with respect to each Fund’s performance appears below under “Additional Considerations and Conclusions with Respect to Each Fund.”

Costs of the Services Provided to the Funds and the Profits Realized by the Manager from its Relationship with the Funds. In analyzing the cost of services and profitability of the Manager, the Board considered the revenues earned and the expenses incurred by the Manager. The profits or losses were noted at both an aggregate level for all Funds and at an individual Fund level, with some Funds being profitable for the Manager and with the Manager sustaining losses with respect to other Funds. The Board also considered that the Management Agreement for the Beacon Trust stipulates that, to the extent that a Fund invests all of its investable assets in another registered investment company (i.e., is a “Feeder Fund”), the Fund will not pay the Manager a management fee. Although the Board noted that, in certain cases, the fee rates paid by other clients of the Manager are lower than the fee rates paid by the Funds, the difference reflects the greater level of responsibility and regulatory requirements associated with managing the Funds.

The Board also noted that the Manager proposed to continue the expense waivers and reimbursements for certain Funds and classes that were in place during the last fiscal year and to put in place new expense waivers and reimbursements for certain new classes of the Funds and new series of the Beacon Trust. The Board further considered that each subadvised Fund pays the Manager the amounts due to its subadvisors, and the Manager remits these amounts directly to the applicable subadvisors. The Board considered that the Manager receives service and administrative fees to compensate the Manager for providing administrative services to the Funds and to compensate third-party administrators and broker-dealers for services to Fund shareholders. In addition, the Board considered that the Manager receives management fees for overseeing the securities lending program on behalf of various Funds. The Board also noted that certain classes of the Funds maintain higher expense ratios in order to compensate third-party distributors.

In analyzing the cost of services and profitability for each subadvisor in connection with its investment advisory services to the Fund, the Board considered that, in many cases, the Manager has negotiated the lowest subadvisory fee rate a subadvisor charges for any comparable client accounts. The Board did not consider profitability data of the subadvisors as imperative to its deliberations given the arm’s length nature of the relationship between the Manager and the subadvisors with respect to the negotiation of subadvisory fee rates.

Based on the foregoing information, the Board concluded that the profitability levels of the Manager were reasonable in light of the services performed by the Manager. A discussion regarding the Board’s considerations with respect to each Fund’s fee rates is set forth below under “Additional Considerations and Conclusions with Respect to Each Fund.”

Economies of Scale. In considering the reasonableness of the management and investment advisory fees rates, the Board considered whether economies of scale will be realized as the Funds grow and whether fee levels reflect these economies of scale for the benefit of Fund shareholders. In this regard, the Board considered that the Manager has negotiated breakpoints in many subadvisory fee rates. The Board also noted that, for purposes of determining the fee rates chargeable to the Funds, many subadvisors have agreed to take into account assets of AMR Corporation and its pension plans that are managed by the subadvisors. Thus, the Funds are able to receive lower effective fee rates.

In addition, the Board noted the Manager’s representation that many of the Funds benefit from economies of scale because comparably low fee rate levels are reflected in the current management and administration fee rates the Manager charges. The Board further noted the Manager’s representation that many of the Funds benefit from these comparably low fee rate levels despite not having yet reached an asset size at which economies of scale would traditionally be considered to exist, and the Manager’s belief that breakpoints are

35

Disclosure Regarding the Board of Trustees’ Approval of the Management

Agreement and Investment Advisory Agreements of the Fund (Unaudited)

not appropriate at this time. Based on the foregoing information, the Board concluded that the Manager and subadvisor fee schedules for each Fund provides for a reasonable sharing of benefits from any economies of scale with the Funds.

Benefits Derived from the Relationship with the Funds. The Board considered the “fall-out” or ancillary benefits that accrue to the Manager and/or the subadvisors as a result of the advisory relationships with the Funds, including greater exposure in the marketplace with respect to the Manager’s or subadvisor’s investment process and expanding the level of assets under management by the Manager and the subadvisors. The Board also considered that the Manager uses its proprietary American Beacon Large Cap Value Fund model to manage its collective investment trust.

In addition, the Manager noted that the Trusts also derive benefits from their association with the Manager. Specifically, the Board noted the Manager’s representation that it provides services to most Funds at a lower than industry average cost. The Board considered that certain of the subadvisors reimburse the Manager for certain of its costs relating to distribution activities for the Funds. The Board also considered that, with the exception of the American Beacon Emerging Markets Fund, the Funds did not pay commissions to any affiliated broker-dealer of the Manager or the relevant subadvisor during the most recent fiscal year ended October 31, 2011.

Based on the foregoing information, the Board concluded that the potential benefits accruing to the Manager and the subadvisors by virtue of their relationships with the Funds appear to be fair and reasonable.

Additional Considerations and Conclusions with Respect to Each Fund

The performance comparisons below were made versus each Fund’s Lipper peer universe median and/or benchmark index. References to the Lipper expense universe below are to the group of comparable mutual funds included in the analysis provided to the Trustees by Lipper. In reviewing the performance, the Trustees viewed longer-term performance over five years or longer as the most important consideration, because relative performance over shorter periods may be significantly impacted by market or economic events that do not reflect manager skill.

Additional Considerations and Conclusions with Respect to the American Beacon Small Cap Value Fund

In considering the renewal of the Management Agreement for the American Beacon Small Cap Value Fund, the Trustees considered the following additional factors: (1) the Fund outperformed the peer universe median for the three-, five- and ten-year periods ended March 31, 2012, but underperformed for the one-year period; and (2) the expense ratio of the Institutional Class of Fund shares ranked better than the median of its Lipper expense universe.

In considering the renewal of the Investment Advisory Agreements with Barrow, Hanley, Mewhinney & Strauss, LLC (“Barrow”), Brandywine Global Investment Management, LLC (“Brandywine”), Dreman Value Management, LLC (“Dreman”), Hotchkis and Wiley Capital Management, LLC (“Hotchkis”), Opus Capital Group, LLC (“Opus”), and The Boston Company Asset Management, LLC (“TBC”), the Trustees considered the following additional factors: (1) Barrow outperformed the peer universe median for the three- and five-year periods ended March 31, 2012, but underperformed for the one-year period; (2) Brandywine outperformed the peer universe median for the one-year period ended March 31, 2012, but underperformed for the three-, five-, and ten-year periods; (3) Dreman underperformed the peer universe median for the one-year period ended March 31, 2012; (4) Hotchkis outperformed the peer universe median for the three- and ten-year periods ended March 31, 2012, but underperformed for the one- and five-year periods; (5) Opus underperformed the peer universe median for the one-, three- and five-year periods ended March 31, 2012, but outperformed the American Beacon Small Cap Value Fund benchmark for the three- and five-year periods ended March 31, 2012; (6) TBC outperformed the peer universe median for the one- and five-year periods ended March 31, 2012, but underperformed for the three-year period; (7) management’s explanation that Brandywine’s underperformance was due in part to its underperformance compared to its peers in 2009 when companies with negative earnings or no earnings performed best, and Brandywine’s poor stock selection in 2010; (8) management’s explanation that Hotchkis’ underperformance was due in part to poor stock selection in 2007 and 2008, and Hotchkis’ overweight position in low P/E stocks in 2011; (9) management’s explanation that Opus’ underperformance was due in part to its poor results in 2009 as compared to its peers when companies with negative earnings or no earnings performed best; (10) management’s explanation that Dreman’s underperformance was due in part to poor stock selection; (11) the performance of Brandywine with respect to the portion of the Fund’s assets it manages outperformed its composite of similarly managed accounts for the one-, three- and five-year periods ended December 31, 2011; (12) the performance of Hotchkis with respect to the portion of the Fund’s assets that it manages underperformed its composite of similarly managed accounts for the one- and three-year periods ended March 31, 2012, and outperformed its composite of similarly managed accounts for the five-year and since inception periods; (13) the performance of Opus with respect to the portion of the Fund’s assets it manages was comparable to the performance of its composite of similarly managed accounts for the three- and five-year periods ended December 31, 2011 but underperformed its composite of similarly managed accounts for the one-year period; (14) the performance of Dreman with respect to the portion of the Fund’s assets it manages underperformed its composite, consisting of funds managed by Dreman that have the same investment style as the Fund, for the one-year period ended March 31, 2012 and for the first quarter ended March 31, 2012; (15) representations by each subadvisor regarding fee rates charged by the subadvisor to other comparable clients; (16) whether the subadvisors use Fund commissions to obtain proprietary or third-party research; and (17) the Manager’s recommendation to continue to retain each subadvisor.

Based on these and other considerations the Trustees (1) concluded that the fees paid to the Manager and the subadvisors under the Agreements are fair and reasonable, (2) determined that the American Beacon Small Cap Value Fund and its shareholders would benefit from the Manager’s and subadvisors’ continued management of the Fund and (3) approved the renewal of the Management and Investment Advisory Agreements with respect to the American Beacon Small Cap Value Fund.

36

Trustees and Officers of the American Beacon Funds^SM

(Unaudited)

The Trustees and officers of the American Beacon Funds (the “Trust”) are listed below, together with their principal occupations during the past five years. Unless otherwise indicated, the address of each person listed below is 4151 Amon Carter Boulevard, MD 2450, Fort Worth, Texas 76155. Each Trustee oversees twenty-six funds in the fund complex that includes the Trust and the American Beacon Select Funds. The Trust’s Statement of Additional Information contains additional information about the Trustees and is available without charge by calling 1-800-658-5811.

Name, Age and Address	Position, Term of Office and Length of Time Served with the Trust	Principal Occupation(s) During Past 5 Years and Current Directorships
INTERESTED TRUSTEES
	Term
	Lifetime of Trust until removal, resignation or retirement*
Gerard J. Arpey** (54)	Trustee since 2012	Partner, Emerald Creek Group (private equity firm) (2011-Present); Chairman and Chief Executive Officer, (2003-2011), AMR Corp. and American Airlines; Inc.; Director, S. C. Johnson & Son, Inc. (privately held company) (2008-present); Trustee, American Beacon Select Funds (2012-Present).
Alan D. Feld*** (75)	Trustee since 1996	Sole Shareholder of a professional corporation which is a Partner in the law firm of Akin, Gump, Strauss, Hauer & Feld, LLP (law firm) (1960-Present); Director, Clear Channel Communications (1984-2008);Trustee, American Beacon Mileage Funds (1996-2012); Trustee, American Beacon Select Funds (1999-Present); Trustee, American Beacon Master Trust (1996-2012).
NON—INTERESTED TRUSTEES
	Term
	Lifetime of Trust until removal, resignation or retirement*
W. Humphrey Bogart (68)	Trustee since 2004	Trustee, American Beacon Mileage Funds (2004-2012); Trustee, American Beacon Select Funds (2004-Present); Trustee, American Beacon Master Trust (2004-2012).
Brenda A. Cline (51)	Trustee since 2004	Executive Vice President, Chief Financial Officer, Treasurer and Secretary, Kimbell Art Foundation (1993-Present); Trustee, American Beacon Mileage Funds (2004-2012); Trustee, American Beacon Select Funds (2004-Present); Trustee, American Beacon Master Trust (2004-2012).
Eugene J. Duffy (58)	Trustee since 2008	Principal and Executive Vice President, Paradigm Asset Management (1994-Present); Director, Sunrise Bank of Atlanta (2008-Present); Trustee, American Beacon Mileage Funds (2008-2012); Trustee, American Beacon Select Funds (2008-Present); Trustee, American Beacon Master Trust (2008-2012).
Thomas M. Dunning (70)	Trustee since 2008	Chairman Emeritus (2008-Present); Chairman (1998-2008) and Chief Executive Officer (1998-2007), Lockton Dunning Benefits (consulting firm in employee benefits); Board Director, Oncor Electric Delivery Company LLC (2007-Present); Board Member, BancTec (2010-Present); Trustee, American Beacon Mileage Funds (2008-2012); Trustee, American Beacon Select Funds (2008-Present); Trustee, American Beacon Master Trust (2008-2012).
Richard A. Massman (69)	Trustee since 2004 Chairman since 2008	Consultant and General Counsel Emeritus (2009-Present) and Senior Vice President and General Counsel (1994-2009), Hunt Consolidated, Inc. (holding company engaged in oil and gas exploration and production, refining, real estate, farming, ranching and venture capital activities); Trustee, American Beacon Mileage Funds (2004-2012); Trustee, American Beacon Select Funds (2004-Present); Trustee, American Beacon Master Trust (2004-2012).

37

Trustees and Officers of the American Beacon Funds^SM

(Unaudited)

Name, Age and Address	Position, Term of Office and Length of Time Served with the Trust	Principal Occupation(s) During Past 5 Years and Current Directorships
Barbara J. McKenna, CFA (49)	Trustee since 2012	Managing Principal, Longfellow Investment Management Company (2005-Present); Trustee, American Beacon Select Funds (2012-Present).
R. Gerald Turner (66)	Trustee since 2001	President, Southern Methodist University (1995-Present); Director, J.C. Penney Company, Inc. (1996-Present); Director, Kronus Worldwide Inc. (chemical manufacturing) (2003-Present); Director, First Broadcasting Investment Partners, LLC (2003-2007); Trustee, American Beacon Mileage Funds (2001-2012); Trustee, American Beacon Select Funds (2001-Present); Trustee, American Beacon Master Trust (2001-2012).
Paul J. Zucconi,CPA (72)	Trustee since 2008	Director, Affirmative Insurance Holdings, Inc. (producer of nonstandard automobile insurance) (2004-Present); Director, Titanium Metals Corporation (producer of titanium melted and mill products) (2002-Present); Director, Torchmark Corporation (life and health insurance products) (2002-Present); Director, Charter Bank (community bank services and products) (2010-2011); Trustee, American Beacon Mileage Funds (2008-2012); Trustee, American Beacon Select Funds (2008-Present); Trustee, American Beacon Master Trust (2008-2012).
OFFICERS
	Term
	One Year
Gene L. Needles, Jr. (57)	President since 2009 Executive Vice President since 2009	President, CEO and Director (2009-Present), American Beacon Advisors, Inc.; President (2009-Present), President, CEO and Director (2009-Present), Lighthouse Holdings, Inc.; President and CEO (2009-Present), Lighthouse Holdings Parent, Inc.; President (2009-Present), American Beacon Select Funds; President (2009-Present), American Beacon Mileage Funds; President (2008-2009), Touchstone Investments; President (2003-2007), CEO (2004-2007), AIM Distributors.
Rosemary K. Behan (53)	VP, Secretary and Chief Legal Officer since 2006	Vice President, Legal and Compliance, American Beacon Advisors, Inc. (2006-Present); Secretary, American Beacon Advisors, Inc. (2008 – present); Secretary, Lighthouse Holdings, Inc. (2008-Present); Secretary Lighthouse Holdings Parent, Inc. (2008-Present).
Brian E. Brett (52)	VP since 2004	Vice President, Director of Sales, American Beacon Advisors, Inc. (2004-Present).
Wyatt L. Crumpler (46)	VP since 2007	Chief Investment Officer (2012-Present), Vice President, Asset Management (2009-2011), and Vice President, Trust Investments (2007-2009), American Beacon Advisors, Inc.
Erica Duncan (42)	VP Since 2011	Vice President, Marketing and Client Services (2011-Present), American Beacon Advisors, Inc.; Supervisor, Brand Marketing (2010-2011), Invesco; Supervisor, Marketing Communications (2009-2010) and Senior Financial Writer (2004-2009), Invesco AIM.
Michael W. Fields (58)	VP since 1989	Chief Fixed Income Officer (2011-Present) and Vice President, Fixed Income Investments, American Beacon Advisors, Inc. (1988-2011); Director, American Beacon Global Funds SPC (2002-2011); Director, American Beacon Global Funds plc (2007-2009).
Melinda G. Heika (51)	Treasurer since 2010	Treasurer (2010-Present), and Controller (2005-2009), American Beacon Advisors, Inc.; Treasurer, Lighthouse Holdings, Inc. (2010 – Present); Treasurer, Lighthouse Holdings Parent, Inc. (2010-Present).
Terri L. McKinney (48)	VP since 2010	Vice President, Enterprise Services (2009-Present) and Managing Director (2003-2009), American Beacon Advisors, Inc.
Jeffrey K. Ringdahl (37)	VP since 2010	Chief Operating Officer, American Beacon Advisors, Inc. (2010-Present); Vice President, Product Management, Touchstone Advisors, Inc. (2007-2010); Senior Director, Business Integration, Fidelity Investments (2005-2007).

38

Trustees and Officers of the American Beacon Funds^SM

(Unaudited)

Name, Age and Address	Position, Term of Office and Length of Time Served with the Trust	Principal Occupation(s) During Past 5 Years and Current Directorships
Samuel J. Silver (49)	VP Since 2011	Vice President, Fixed Income Investments (2011-Present) and Senior Portfolio Manager, Fixed Income Investments (1999-2011), American Beacon Advisors, Inc.
Christina E. Sears (41)	Chief Compliance Officer since 2004 and Asst. Secretary since 1999	Chief Compliance Officer (2004-Present), American Beacon Advisors, Inc.
John J. Okray (38)	Asst. Secretary since 2010	Deputy General Counsel (2012-Present) and Assistant General Counsel (2010-2012), American Beacon Advisors, Inc.; Asst. Secretary (2010-Present), Lighthouse Holdings, Inc.; Asst. Secretary (2010-Present), Lighthouse Holdings Parent, Inc.; Vice President, OppenheimerFunds, Inc. (2004-2010).
Sonia L. Bates (55)	Asst. Treasurer since 2011	Director, Tax and Financial Reporting (2011 - Present) and Manager, Tax and Financial Reporting (2005-2010), American Beacon Advisors, Inc.; Asst. Treasurer (2011-Present), Lighthouse Holdings, Inc.; Asst. Treasurer (2011-Present), Lighthouse Holdings Parent, Inc.

* The Board has adopted a retirement plan that requires Trustees to retire no later than the last day of the calendar year in which they reach the age of 72, provided, however, that the board may determine to grant one or more annual exemptions to this requirement.

** Mr. Arpey is deemed to be an “interested person” of the Trust, as defined by the 1940 Act. Mr. Arpey previously served as CEO of AMR Corp., which has a material relationship with the Manager.

*** Mr. Feld is deemed to be an “interested person” of the Trust, as defined by the 1940 Act. Mr. Feld’s law firm of Akin, Gump, Strauss, Hauer & Feld LLP has provided legal services within the past two years to the Manager and one or more of the Trust’s sub-advisors.

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41

Delivery of Documents

eDelivery is NOW AVAILABLE - Stop traditional mail delivery and receive your

shareholder reports and summary prospectus on-line. Sign up at

www.americanbeaconfunds.com

If you invest in the Fund through a financial institution, you may be able to receive the Fund’s regulatory mailings, such as the Summary Prospectus, Annual Report and Semi-Annual Report, by e-mail. If you are interested in this option, please go to www.icsdelivery.com and search for your financial institution’s name or contact your financial institution directly.

To obtain more information about the Fund:

By E-mail: american_beacon.funds@ambeacon.com	On the Internet: Visit our website at www.americanbeaconfunds.com
By Telephone: Institutional, Y, Investor, Advisor and Retirement Classes Call (800) 658-5811 AMR ClassSM Call (800) 345-2345	By Mail: American Beacon Funds P.O. Box 219643 Kansas City, MO 64121-9643
Availability of Quarterly Portfolio Schedules In addition to the Schedule of Investments provided in each semi-annual and annual report, the Fund files a complete schedule of its portfolio holdings with the Securities and Exchange Commission (“SEC”) on Form N-Q as of the first and third fiscal quarters. The Fund’s Forms N-Q are available on the SEC’s website at www.sec.gov. The Forms N-Q may also be reviewed and copied at the SEC’s Public Reference Section, 100 F Street, NE, Washington, D.C. 20549-1520. Information regarding the operation of the SEC’s Public Reference Room may be obtained by calling 1-800-SEC-0330. A complete schedule of the Fund’s portfolio holdings is also available at www.americanbeaconfunds.com approximately twenty days after the end of each month.	Availability of Proxy Voting Policy and Records A description of the policies and procedures the Fund uses to determine how to vote proxies relating to portfolio securities is available in the Fund’s Statement of Additional Information, is available free of charge on the Fund’s website www.americanbeaconfunds.com and by calling 1-800-967-9009 or by accessing the SEC’s website at www.sec.gov. The Fund’s proxy voting record for the most recent year ended June 30 is filed annually with the SEC on Form N-PX. The Fund’s Forms N-PX are available on the SEC’s website at www.sec.gov. The Fund’s proxy voting record may also be obtained by calling 1-800-967-9009.

Fund Service Providers:

CUSTODIAN State Street Bank and Trust Boston, Massachusetts TRANSFER AGENT Boston Financial Data Services Kansas City, Missouri INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM Ernst & Young LLP Dallas, Texas DISTRIBUTOR Foreside Fund Services, LLC Portland, Maine

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

American Beacon Funds and American Beacon Small Cap Value Fund are service marks of American Beacon Advisors, Inc.

AR 10/12

About American Beacon Advisors

Since 1986, American Beacon Advisors has offered a variety of products and investment advisory services to numerous institutional and retail clients, including a variety of mutual funds, corporate cash management, and separate account management.

Our clients include defined benefit plans, defined contribution plans, foundations, endowments, corporations, financial planners, and other institutional investors. With American Beacon Advisors, you can put the experience of a multi-billion dollar asset management firm to work for your company.

Contents

President’s Message	1
Market and Performance Overviews	2-8
Schedule of Investments
Emerging Markets Fund	11
International Equity Fund	16
Financial Highlights	40
Additional Information	Back Cover

The Emerging Markets Fund may invest in futures contracts, which are a type of derivative investment. Investing in derivatives could result in losing more than the amount invested. Investing in foreign securities entails additional risk not associated with domestic securities, such as currency fluctuations, economic and political instability and differences in accounting standards. The risks of investing in foreign securities are heightened when investing in emerging markets. Please see the prospectus for a complete discussion of the Fund’s risks.

The International Equity Fund may invest in futures contracts, which are a type of derivative investment. Investing in derivatives could result in losing more than the amount invested. Investing in foreign securities entails additional risk not associated with domestic securities, such as currency fluctuations, economic and political instability and differences in accounting standards. The intrinsic value of stocks selected for the Fund may never be realized by the market, and the prices of value stocks may go down. While investing in value stocks may limit downside risk over time, the Fund may produce more modest gains than riskier stock funds as a trade-off for this potentially lower risk. Please see the prospectus for a complete discussion of the Fund’s risks.

Any opinions herein, including forecasts, reflect our judgment as of the end of the reporting period and are subject to change. Each advisor’s strategies and the Fund’s portfolio composition will change depending on economic and market conditions. This report is not a complete analysis of market conditions and, therefore, should not be relied upon as investment advice. Although economic and market information has been compiled from reliable sources, American Beacon Advisors, Inc. makes no representation as to the completeness or accuracy of the statements contained herein.

American Beacon Funds October 31, 2012

Dear Shareholders,

Foreign economies have been addressing many of the same issues facing us here in the U.S., primarily determining a balance between using monetary policy to foster growth and fighting off inflation. Japan and the eurozone have embarked on monetary easing moves similar to what our own Federal Reserve has done. The Reserve Bank of India has been raising interest rates to bring down inflation that has been more than 8% a year, while China’s central bank is less worried about rising prices than about jump-starting the country’s economy. Brazil had gotten out in front of inflation-fighting in recent years, only to be faced more recently with an economic slowdown.

As a result, the past 12 months have been extraordinarily turbulent for investors in international equities. After falling by more than 12% in 2011, international developed markets, as measured by the MSCI EAFE Index, were up by double digits through the first ten months of this year. The MSCI Emerging Markets Index showed similar volatility, rising by 14.1% in the first quarter of 2012, falling by 8.9% in the second quarter, and then rising another 7.7% in the third quarter. These kinds of movements can be trying for even the most seasoned investors.

It is in times like these that investors most appreciate having a steady hand at the helm. The sub-advisors of our American Beacon International Equity Fund and American Beacon Emerging Markets Fund bring decades of experience in international and emerging markets to their work with the funds.

For the 12 months ended October 31, 2012:

• The American Beacon International Equity Fund (Institutional Class) returned 9.25%.

• The American Beacon Emerging Markets Fund (Institutional Class) returned 3.05%.

Thank you for your continued investment in the American Beacon Funds. For additional information about the Funds or to access your account information, please visit our website at www.americanbeaconfunds.com.

Best Regards,

Gene L. Needles, Jr.

President

American Beacon Funds

1

Emerging Markets Overview

October 31, 2012 (Unaudited)

For the 12 months ended October 31, 2012, the MSCI Emerging Markets Index (the “Index”) gained 2.63%, underperforming the developed markets (as measured by the MSCI World Index), which returned 9.5%. The period was characterized by volatility resulting from slowing growth in developed and emerging economies, and the sovereign-debt crisis in the eurozone, set against corresponding action from central banks and policy makers.

Late 2011 saw investors shy away from the asset class as the ongoing sovereign debt crisis and potential for broadened recession in Europe weighed on emerging equities. The Emerging Markets Index fell by over 7% in the November to December time period.

The emerging market asset class temporarily bounced back from a difficult 2011 to post its best first quarter return in 20 years. The Index rose 14.1%, benefiting from a surge in risk appetite due to better than expected data out of the U.S. and improved liquidity conditions in the troubled European markets. Inflation began to ease in several countries, including China and Brazil, prompting their central banks to take action in support of growth. The People’s Bank of China cut bank reserve requirements in the first quarter, after five interest rate increases from late 2010 to mid-2011, and the Central Bank of Brazil cut rates by 1.25%.

Despite the strong rally in the first quarter, renewed investor concerns over the health of the global economy pushed the Index into negative territory in the second quarter, down 8.9%. The market reflected renewed uneasiness into the second quarter, related to downward revisions in global growth, and acknowledgement of the large structural problems burdening the developed economies. Meanwhile, China, the world’s main growth engine, started to show signs of a harsher-than-expected slowdown. Markets gained some footing late in the second quarter on modestly more productive solutions to the European Union’s debt crisis and growth-supportive measures in Asia. The People’s Bank of China continued to lower bank reserve requirements and cut its benchmark interest rate by 0.25%, while the Reserve Bank of India lowered rates for the first time since 2009.

In the third quarter, emerging equities posted solid gains as the result of a combination of positive developments around the globe, helping the Index gain 7.7%. The European Central Bank’s bond buying plan helped to reduce peripheral borrowing costs, the U.S. Federal Reserve’s quantitative easing program buoyed investor sentiment, the Indian government announced long-awaited and significant policy changes, and the Central Bank of Brazil sustained its series of rate cuts—hitting record lows in September and October.

However, difficulties remained at period-end, as China embarked on its once-a-decade change in leadership, the U.S. prepared for its election cycle, and uncertainty surrounding global fiscal stability and economic growth persisted. Continued volatility is expected to continue as complex issues facing the global economy will not be resolved immediately.

2

American Beacon Emerging Markets Fund^SM

Performance Overview

October 31, 2012 (Unaudited)

The Investor Class of the Emerging Markets Fund (the “Fund”) returned 2.72% for the twelve months ended October 31, 2012. The Fund outperformed the MSCI Emerging Markets Index (the “Index”) return of 2.63%, but underperformed the Lipper Emerging Markets Funds Index return of 5.46% for the period.

Comparison of Change in Value of a $10,000 Investment

For The Period From 10/31/02 Through 10/31/12

	Annualized Total  Returns Periods Ended 10/31/12									Value of $10,000 10/31/02- 10/31/12
	1 Year			5 Years			10 Years
Institutional Class(1,6)		3.05	%		-4.46	%		14.81	%	$	39,798
Y Class (1,2,6)		2.91	%		-4.53	%		14.77	%		39,658
Investor Class(1,6)		2.72	%		-4.81	%		14.45	%		38,551
A Class with sales charge(1,3,6)		-3.26	%		-5.96	%		13.75	%		36,276
A Class without sales charge(1,3,6)		2.64	%		-4.84	%		14.43	%		38,496
C Class with sales charge(1,4,6)		0.83	%		-5.14	%		14.25			37,900
C Class without sales charge(1,4,6)		1.83	%		-5.14	%		14.25	%		37,900
AMR Class(1,6)		3.26	%		-4.33	%		15.04	%		40,585
MSCI Emg Mkts Index(5)		2.63	%		-3.47	%		16.20	%		44,874
Lipper Emg Mkts Funds Index(5)		5.46	%		-3.78	%		15.62	%		42,698

1. Performance shown is historical and is not indicative of future returns. Investment returns and principal value will vary, and shares may be worth more or less at redemption than at original purchase. Performance shown is as of the date indicated, and current performance may be lower or higher than the performance data quoted. To obtain performance as of the most recent month end, please visit www.americanbeaconfunds.com or call 1-800-967-9009. Fund performance in the table above does not reflect the deduction of taxes a shareholder would pay on distributions or the redemption of shares.

2. Fund performance for the five-year and ten-year periods represent the returns achieved by the Institutional Class from 10/31/02 up to 3/1/10, the inception date of the Y Class, and the returns of the Y Class since its inception. Expenses of the Y Class are higher than those of the Institutional Class. As a result, total returns shown may be higher than they would have been had the Y Class been in existence since 10/31/02.

3. Fund performance for the five-year and ten-year periods represent the returns achieved by the Investor Class from 10/31/02 up to 5/17/10, the inception date of the A Class, and the returns of the A Class since its inception. Expenses of the A Class are higher than those of the Investor Class. As a result, total returns shown may be higher than they would have been had the A Class been in existence since 10/31/02. The maximum sales charge for A Class is 5.75%.

4. Fund performance for the five-year and ten-year periods represent the returns achieved by the Investor Class from 10/31/02 up to 9/1/10, the inception date of the C Class, and the returns of the C Class since its inception. Expenses of the C Class are higher than those of the Investor Class. As a result, total returns shown may be higher than they would have been had the C Class been in existence since 10/31/02. The maximum contingent deferred sales charge for C Class is 1.00% for shares redeemed within one year of the date of purchase.

5. The MSCI Emerging Markets Index is a market capitalization weighted index composed of companies that are representative of the market structure of developing countries in Latin America, Asia, Eastern Europe, the Middle East and Africa. The Lipper Emerging Markets Funds Index tracks the results of the 30 largest mutual funds in the Lipper Emerging Markets Funds category. Lipper is an independent mutual fund research and ranking service. One cannot directly invest in an index.

6. The total annual Fund operating expense ratio set forth in the most recent Fund prospectus for the Institutional, Y, Investor, A, C, and AMR Class shares was 1.56%, 1.69%, 1.85%, 2.98%, 26.97%, and 1.32%, respectively. The expense ratios above may vary from the expense ratios presented in other sections of this report that are based on expenses incurred during the period covered by this report.

The Fund outperformed the Index over the twelve-month period due to country allocation, as stock selection detracted from relative performance for the period.

Stock selections in Brazil and China lagged during the period, offsetting positive selections in Malaysia and Mexico. In Brazil, the Fund lost value through investments in Viver Incorporadora e Construtora S.A. (down 55.2%), Banco Santander Brasil S.A. (down 23.3%), and Centrais Eletricas Brasileiras S.A. (down 39.9%). Detractors in China included Weiqiao Textile Co. (down 27.8%), and Sinotrans Ltd. H (down 25.1%). Positive contributors to relative performance included Proton Holdings Bhd (up 103.2%) and Axiata Group Bhd (up 40.3%) in Malaysia, as well as Cemex SAB de CV (up 115.1%) and Gruma SAB de CV (up 35.7%) in Mexico.

3

American Beacon Emerging Markets Fund^SM

Performance Overview

October 31, 2012 (Unaudited)

Relative contribution from country allocation was positive for the twelve-month period, as a result of overweighting Turkey and the Philippines (up 32.3% and 31.3%, respectively) —the two best performing markets in the Index. Underweighting Colombia and China (up 22.6% and 7.9%, respectively) detracted from relative performance for the period.

The Fund’s basic philosophy remains focused on investing in attractively valued companies with above-average earnings growth expectations.

Top Ten Holdings

	% of Net Assets
Petroleo Brasileiro S.A.		3.5	%
Samsung Electronics Co. Ltd.		3.2	%
Lukoil OAO		2.2	%
China Mobile Ltd.		2.0	%
Gazprom OAO		2.0	%
Hyundai Motor Co.		1.8	%
KB Financial Group, Inc.		1.8	%
POSCO		1.6	%
Turkiye Garanti Bankasi A.S.		1.6	%
Banco Santander Brasil S.A.		1.3	%

Sector Allocation

	% of Equities
Financials		23.6	%
Information Technology		12.2	%
Energy		11.2	%
Telecommunication Services		10.2	%
Consumer Discretionary		10.1	%
Materials		9.2	%
Consumer Staples		9.0	%
Industrials		8.1	%
Utilities		3.7	%
Health Care		0.2	%

Country Allocation

	% of Equities
South Korea		19.0	%
Hong Kong/China		17.0	%
Brazil		15.6	%
India		7.7	%
Taiwan		6.5	%
Russia		5.8	%
South Africa		4.7	%
Turkey		4.0	%
Mexico		4.0	%
Indonesia		2.6	%
Poland		1.7	%
Philippines		1.7	%
Thailand		1.6	%
Singapore		1.5	%
Malaysia		1.1	%
Austria		1.1	%
Hungary		1.0	%
Chile		0.9	%
United States		0.6	%
Czech Republic		0.6	%
Peru		0.6	%
Egypt		0.3	%
Japan		0.2	%
Cayman Islands		0.1	%
Argentina		0.1	%

4

American Beacon Emerging Markets Fund^SM

Fund Expenses

October 31, 2012 (Unaudited)

Fund Expense Example

As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, such as redemption fees, and (2) ongoing costs, including management fees, administrative service fees, distribution (12b-1) fees, and other Fund expenses. The examples below are intended to help you understand the ongoing cost (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.

The examples are based on an investment of $1,000 invested at the beginning of the period in each Class and held for the entire period from May 1, 2012 through October 31, 2012.

Actual Expenses

The “Actual” lines of the table provide information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading “Expenses Paid During Period” to estimate the expenses you paid on your account during this period. Shareholders of the Investor and Institutional Classes that invest in the Fund through an IRA may be subject to a custodial IRA fee of $15 that is typically deducted each December. If your account was subject to a custodial IRA fee during the period, your costs would have been $15 higher.

Hypothetical Example for Comparison Purposes

The “Hypothetical” lines of the table provide information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed 5% per year rate of return before expenses (not the Fund’s actual return). You may compare the ongoing costs of investing in the Fund with other funds by contrasting this 5% hypothetical example and the 5% hypothetical examples that appear in the shareholder reports of the other funds. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. Shareholders of the Investor and Institutional Classes that invest in the Fund through an IRA may be subject to a custodial IRA fee of $15 that is typically deducted each December. If your account was subject to a custodial IRA fee during the period, your costs would have been $15 higher.

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

	Beginning Account Value 5/1/12		Ending Account Value 10/31/12		Expenses Paid During Period* 5/1/12-10/31/12
Institutional Class
Actual	$	1,000.00	$	993.86	$	6.67
Hypothetical **	$	1,000.00	$	1,018.45	$	6.75
Y Class
Actual	$	1,000.00	$	993.90	$	7.17
Hypothetical **	$	1,000.00	$	1,017.95	$	7.25
Investor Class
Actual	$	1,000.00	$	991.98	$	8.71
Hypothetical **	$	1,000.00	$	1,016.39	$	8.82
A Class
Actual	$	1,000.00	$	991.08	$	8.91
Hypothetical **	$	1,000.00	$	1,016.19	$	9.02
AMR Class
Actual	$	1,000.00	$	994.78	$	5.72
Hypothetical **	$	1,000.00	$	1,019.41	$	5.79
C Class
Actual	$	1,000.00	$	987.49	$	12.44
Hypothetical **	$	1,000.00	$	1,012.62	$	12.60

* Expenses are equal to the Fund’s annualized expense ratios for the six-month period of 1.33%, 1.43%, 1.74%, 1.78%, 2.49% and 1.14% for the Institutional, Y, Investor, A, C and AMR Classes respectively, multiplied by the average account value over the period, multiplied by the number derived by dividing the number of days in the most recent fiscal half-year (184) by days in the year (366) to reflect the half year period.

** 5% return before expenses.

5

International Equity Market Overview

October 31, 2012 (Unaudited)

Despite a shaky start to the review period, international equities rallied in early 2012 before a brief swoon in the spring gave way to a recovery that ultimately yielded decent gains for the 12 months ended October 31, 2012. The period was marked by volatility resulting from concerns about global economic growth and Europe’s unfolding fiscal crisis, offset by political transitions and global policy initiatives that were welcomed by investors. Overall, developed equity markets as measured by the EAFE Index (the “Index”) returned 4.61% for the 12-months.

The year 2011 ended disappointingly as the international developed markets fell by over 5% in the November to December time period. The European sovereign debt crisis and fiscal tightening continued to weigh on economies worldwide.

After falling by more than 12% in 2011, international developed markets produced their best first quarter return in over a decade. The Index ended the first quarter with a gain of 10.9%, returning more than 5% in January and February, before dropping slightly in March. A combination of stronger economic data from the U.S., better than expected growth in China, and the recognition that long-term refinancing operations put into place by the European Central Bank (“ECB”) had eased funding pressures aided the market in the first quarter.

Early in the second quarter, fears of a potential Greek exit from the eurozone fueled an equity sell-off, following the country’s inability to form a coalition government. In May alone, the EAFE Index fell 11.5% due to concerns about Greece’s deficit and renewed worries over Spain’s fragile banking system and disappointing economic data. However, Greek elections in June led to the victory of a pro-austerity party, which stabilized the country’s position in the eurozone in the short term. The EAFE Index fell 7.1% during the second quarter, despite a rally of more than 7% in June.

In order to bolster investor confidence and respond to a general weakening of economic growth, policy actions were taken across the globe to support markets into the summer and fall of 2012, causing the Index to rise nearly 7% in the third quarter. In the U.S., the Federal Reserve Board opted to extend Operation Twist in an effort to lower systemically important interest rates, while the People’s Bank of China slashed borrowing costs for the first time since the onset of the Global Financial Crisis. European Central Bank president Mario Draghi declared that “the ECB is ready to do whatever it takes to preserve the euro,” and the Bank of Japan launched its eighth round of quantitative easing in little more than a decade.

Despite policy makers’ apparent commitment to stabilizing markets, investors remained cautious at period-end due to uncertainties surrounding issues such as the U.S. November election cycle and the impending fiscal cliff, European debt stability, and overall global economic growth.

6

American Beacon International Equity Fund^SM

Performance Overview

October 31, 2012 (Unaudited)

The Investor Class of the International Equity Fund (the “Fund”) returned 8.84% for the twelve months ended October 31, 2012. The Fund outperformed the MSCI EAFE Index (the “Index”) return of 4.61% and the Lipper International Funds Index return of 7.02% for the period.

Comparison of Change in Value of a $10,000 Investment

For The Period From 10/31/02 Through 10/31/12

	Annualized Total Returns Periods Ended 10/31/12									Value of $10,000 10/31/02- 10/31/12
	1 Year			5 Years			10 Years
Institutional Class(1,8)		9.25	%		-4.33	%		8.70	%	$	23,025
Y Class(1,2,8)		9.15	%		-4.39	%		8.66	%		22,954
Investor Class(1,8)		8.84	%		-4.65	%		8.41	%		22,414
Advisor Class(1,3,8)		8.59	%		-4.89	%		8.13	%		21,851
Retirement Class(1,4,8)		8.48	%		-4.95	%		8.10	%		21,787
A Class with sales charge(1,5,8)		2.35	%		-5.85	%		7.72	%		21,044
A Class without sales charge(1,5,8)		8.62	%		-4.73	%		8.36	%		22,329
C Class with sales charge(1,6,8)		6.89	%		-5.06	%		8.18	%		21,942
C Class without sales charge(1,6,8)		7.89	%		-5.06	%		8.18	%		21,942
AMR Class(1,8)		9.47	%		-4.10	%		8.96	%		23,591
Lipper Int’l. Funds Index(7)		7.02	%		-5.04	%		8.34	%		22,272
MSCI EAFE Index (7)		4.61	%		-5.81	%		7.73	%		21,051

1. Performance shown is historical and is not indicative of future returns. Investment returns and principal value will vary, and shares may be worth more or less at redemption than at original purchase. Performance shown is as of date indicated and current performance may be lower or higher than the performance data quoted. To obtain performance as of the most recent month end, please visit www.americanbeaconfunds.com or call 1-800-967-9009. Fund performance in the table above does not reflect the deduction of taxes a shareholder would pay on distributions or the redemption of shares.

2. Fund performance for the five-year and ten-year periods represent the total returns achieved by the Institutional Class from 10/31/02 up to 8/3/09, the inception date of the Y Class, and the returns of the Y Class since its inception. Expenses of the Y Class are higher than those of the Institutional Class. As a result, total returns shown may be higher than they would have been had the Y Class been in existence since 10/31/02.

3. Fund performance for the ten-year period represents the total returns achieved by the Investor Class from 10/31/02 up to 5/1/03, the inception date of the Advisor Class, and the returns of the Advisor Class since its inception. Expenses of the Advisor Class are higher than those of the Investor Class. As a result, total returns shown may be higher than they would have been had the Advisor Class been in existence since 10/31/02. A portion of the fees charged to the Advisor Class of the Fund was waived through 2007. Performance prior to waiving fees was lower than the actual returns shown for periods through 2007.

4. Fund performance for the five-year and ten-year periods represent the total returns achieved by the Investor Class from 10/31/02 through 4/30/03 and the Advisor Class from 5/1/03 up to 5/1/09, the inception date of the Retirement Class, and the returns of the Retirement Class since its inception. Expenses of the Retirement Class are higher than those of the Advisor and Investor Classes. As a result, total returns shown may be higher than they would have been had the Retirement Class been in existence since 10/31/02.

5. Fund performance for the five-year and ten-year periods represents the total returns achieved by the Investor Class from 10/31/02 up to 5/17/10, the inception date of the A Class, and the returns of the A Class since its inception. Expenses of the A Class are higher than those of the Investor Class. As a result, total returns shown may be higher than they would have been had the A Class been in existence since 10/31/02. The maximum sales charge for A Class is 5.75%.

6. Fund performance for the five-year and ten-year periods represent the total returns achieved by the Investor Class from 10/31/02 up to 9/1/10, the inception date of the C Class, and the returns of the C Class since its inception. Expenses of the C Class are higher than those of the Investor Class. As a result, total returns shown may be higher than they would have been had the C Class been in existence since 10/31/02. The maximum contingent deferred sales charge for C Class is 1.00% for shares redeemed within one year of the date of purchase.

7. The Lipper International Funds Index tracks the results of the 30 largest mutual funds in the Lipper International Funds category. Lipper is an independent mutual fund research and ranking service. The MSCI EAFE Index is a market capitalization weighted index of international stock performance composed of equities from developed markets excluding the U.S. and Canada. One cannot directly invest in an index.

8. The total annual Fund operating expense ratio set forth in the most recent Fund prospectus for the Institutional, Y, Investor, Advisor, Retirement, A, C, and AMR Class shares was 0.71%, 0.82%, 1.08%, 1.25%, 3.44%, 2.25%, 7.40%, and 0.46%, respectively. The expense ratios above may vary from the expense ratios presented in other sections of this report that are based on expenses incurred during the period covered by this report.

7

American Beacon International Equity Fund^SM

Performance Overview

October 31, 2012 (Unaudited)

The Fund outperformed the Index over the twelve-month period due to stock selection and country allocation.

Stock selections in France and Japan contributed to the Fund’s relative outperformance. Within France, the Fund added value through investments in Sanofi (up 27.0%), Gemalto N.V. (up 92.7%), and BNP Paribas S.A. (up 15.0%). In Japan, JGC Corp. (up 21.4%) and KDDI Corp. (up 7.4%) benefited relative performance for the period. Stock selections in the Netherlands lagged during the period, including SBM Offshore N.V. (down 41.5%) and PostNL N.V. (down 18.8%).

From a country allocation perspective, the Fund added value through underweighting Japan (down 3.3%), and overweighting Germany (up 9.8%). Underweighting Australia and top-performing Denmark (up 7.7% and 26.9%, respectively) detracted from relative performance for the year.

Although economic and market conditions vary from period to period, the Fund’s primary strategy of investing in undervalued companies with above-average earnings growth expectations remains consistent.

Top Ten Holdings

	% of Net  Assets
Sanofi		2.8	%
Novartis AG Reg		2.4	%
Royal Dutch Shell plc		1.9	%
Total S.A.		1.9	%
Bayer AG Reg		1.9	%
SAP AG		1.7	%
British American Tobacco plc		1.6	%
Akzo Nobel		1.4	%
Merck KGaA		1.4	%
Rexam plc		1.3	%

Sector Allocation

	% of Equities
Financials		19.5	%
Industrials		15.0	%
Health Care		11.6	%
Consumer Discretionary		11.2	%
Materials		11.0	%
Energy		10.4	%
Consumer Staples		7.4	%
Telecommunication Services		5.8	%
Information Technology		5.8	%
Utilities		2.4	%

Regional Allocation*

* shown as a percentage of equities

Region
Europe	75.7	%
Asia	22.5	%
North America	1.8	%

8

American Beacon International Equity Fund^SM

Fund Expenses

October 31, 2012 (Unaudited)

Fund Expense Example

As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, such as redemption fees, and (2) ongoing costs, including management fees, administrative service fees, distribution (12b-1) fees, and other Fund expenses. The examples below are intended to help you understand the ongoing cost (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.

The examples are based on an investment of $1,000 invested at the beginning of the period in each Class and held for the entire period from May 1, 2012 through October 31, 2012.

Actual Expenses

The “Actual” lines of the table provide information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading “Expenses Paid During Period” to estimate the expenses you paid on your account during this period. Shareholders of the Investor and Institutional Classes that invest in the Fund through an IRA may be subject to a custodial IRA fee of $15 that is typically deducted each December. If your account was subject to a custodial IRA fee during the period, your costs would have been $15 higher.

Hypothetical Example for Comparison Purposes

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

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

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

	Beginning Account Value 5/1/12		Ending Account Value 10/31/12		Expenses Paid During  Period* 5/1/12-10/31/12
Institutional Class
Actual	$	1,000.00	$	1,049.70	$	3.61
Hypothetical **	$	1,000.00	$	1,021.62	$	3.56
Y Class
Actual	$	1,000.00	$	1,049.15	$	4.02
Hypothetical **	$	1,000.00	$	1,021.22	$	3.96
Investor Class
Actual	$	1,000.00	$	1,048.15	$	5.56
Hypothetical **	$	1,000.00	$	1,019.71	$	5.48
Advisor Class
Actual	$	1,000.00	$	1,046.71	$	6.79
Hypothetical **	$	1,000.00	$	1,018.50	$	6.70
Retirement Class
Actual	$	1,000.00	$	1,046.22	$	5.81
Hypothetical **	$	1,000.00	$	1,019.46	$	5.74
A Class
Actual	$	1,000.00	$	1,046.37	$	6.43
Hypothetical **	$	1,000.00	$	1,018.85	$	6.34
AMR Class
Actual	$	1,000.00	$	1,050.97	$	2.22
Hypothetical **	$	1,000.00	$	1,022.97	$	2.19
C Class
Actual	$	1,000.00	$	1,043.19	$	10.12
Hypothetical **	$	1,000.00	$	1,015.23	$	9.98

* Expenses are equal to the Fund’s annualized expense ratios for the six-month period of 0.70%, 0.78%, 1.08%, 1.32%, 1.13%, 1.25%, 1.97% and 0.43% for the Institutional, Y, Investor, Advisor, Retirement, A, C and AMR Classes respectively, multiplied by the average account value over the period, multiplied by the number derived by dividing the number of days in the most recent fiscal half-year (184) by days in the year (366) to reflect the half year period.

** 5% return before expenses.

9

American Beacon Funds^SM

Report of Independent Registered Public Accounting Firm

To the Shareholders and the Board of Trustees of

American Beacon Emerging Markets Fund and American Beacon International Equity Fund:

We have audited the accompanying statements of assets and liabilities, including the schedules of investments, of the American Beacon Emerging Markets Fund and the American Beacon International Equity Fund (two of the funds constituting the American Beacon Funds) (collectively, the “Funds”), as of October 31, 2012, and the related statements of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, and the financial highlights for the periods indicated therein. These financial statements and financial highlights are the responsibility of the Funds’ management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. We were not engaged to perform an audit of the Funds’ internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of each Fund’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements and financial highlights, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of October 31, 2012, by correspondence with the custodian and brokers or by other appropriate auditing procedures where replies from brokers were not received. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of the American Beacon Emerging Markets Fund and the American Beacon International Equity Fund at October 31, 2012, the results of their operations for the year then ended, the changes in their net assets for each of the two years in the period then ended, and the financial highlights for each of the periods indicated therein, in conformity with U.S. generally accepted accounting principles.

Dallas, Texas

December 27, 2012

10

American Beacon Emerging Markets Fund^SM

Schedule of Investments

October 31, 2012

	Shares		Fair Value
			(000’s)
ARGENTINA—0.11%
PREFERRED STOCKS—(Cost $365)
Nortel Inversora S.A., Class B, ADRA		12,460	$	135
AUSTRIA—1.10%
COMMON STOCKS—(Cost $2,033)
Erste Group Bank AGB		53,481		1,343
BRAZIL—14.94%
COMMON STOCKS—(Cost $21,042)
Banco Bradesco S.A.B		17,500		230
Banco do Brasil S.A.		57,490		613
Banco Santander Brasil S.A., ADRA		238,680		1,639
Brasil Insurance Participacoes e Administracao S.A.		37,900		335
BRF—Brasil Foods S.A.		38,210		696
Centrais Eletricas Brasileiras S.A., ADRA B		100,100		549
Centrais Eletricas Brasileiras S.A.B		35,066		193
Diagnosticos da America S.A.		24,200		161
EDP—Energias do Brasil S.A.		44,400		278
Embraer S.A., ADRA B		47,170		1,320
Fibria Celulose S.A. B		15,600		132
Fibria Celulose S.A., ADRA		70		1
Gerdau S.A., ADRA		14,630		128
Itau Unibanco Holding S.A.		17,400		228
Itau Unibanco Holding S.A., ADRA		51,572		755
JBS S.A.		89,800		290
Magnesita Refratarios S.A.		53,700		200
Marfrig Alimentos S.A.		54,800		283
Oi S.A., ADRA		38,972		160
PDG Realty S.A. Empreendimentos e Participacoes		57,400		97
Petroleo Brasileiro S.A.		15,596		165
Petroleo Brasileiro S.A., A Shares, ADRA		118,729		2,432
Petroleo Brasileiro S.A., ADRA		69,120		1,464
Porto Seguro S.A.		25,360		270
Raia Drogasil S.A.B		12,600		139
Sul America S.A.		32,421		255
Telefonica Brasil S.A., ADRA		37,655		835
TIM Participacoes S.A.		403,900		1,432
Ultrapar Participacoes S.A.		12,000		252
Vale S.A., ADRA		34,030		628
Vale SAB		616		11
Viver Incorporadora e Construtora S.A.B		429,059		260
Total Common Stocks				16,431
PREFERRED STOCKS—(Cost $1,455)
Banco Bradesco S.A.		27,300		430
Companhia de Bebidas, ADRA		17,680		722
Gerdau S.A.		5,800		51
Itau Unibanco Holding S.A.		9,700		142
Petroleo Brasileiro S.A.		18,800		193
Vale S.A., ADRA		3,486		62
Vale S.A., A Shares		15,804		283
Total Preferred Stocks				1,883
Total Brazil				18,314

	Shares		Fair Value
			(000’s)
CAYMAN ISLANDS—0.12%
COMMON STOCKS—(Cost $152)
Chailease Holding Co. LtdB		1,500	$	13
Daphne International Holdings Ltd.		10,000		12
Qihoo 360 Technology Co. LtdB		2,695		55
Sino Biopharmaceutical		152,000		62
Uni-President China Holdings Ltd.		9,000		11
Total Cayman Islands				153
CHILE—0.82%
COMMON STOCKS—(Cost $1,018)
Banco Santander Chile S.A., ADRA		3,545		98
Cencosud S.A.		21,435		117
Empresa Nacional de Electricidad S.A.		101,277		163
SACI Falabella		29,529		303
Sociedad Quimica y Minera de Chile S.A., ADRA		5,633		326
Total Chile				1,007
CZECH REPUBLIC—0.61%
COMMON STOCKS—(Cost $729)
Komercni Banka AS		670		137
Telefonica Czech Republic AS		30,820		614
Total Czech Republic				751
EGYPT—0.31%
COMMON STOCKS—(Cost $334)
Commercial International Bank Egypt SAE		27,755		173
Eastern Tobacco		13,770		209
Total Egypt				382
HONG KONG/CHINA—16.33%
COMMON STOCKS—(Cost $22,205)
Anhui Conch Cement Co. Ltd. H		47,000		162
Asia Cement China Holdings Corp.		180,000		77
Bank of China Ltd. H		498,000		205
Beijing Capital International Airport Co Ltd. H		346,000		223
Belle International Holdings Ltd.		102,000		190
Bosideng International Holdings Ltd.		552,000		176
BYD Electronic International Co Ltd.		851,000		181
Chaoda Modern Agriculture Holdings Ltd.		2,200,000		51
China Coal Energy Co Ltd. H		476,000		474
China Communications Services Corp. Ltd. H		300,000		168
China Construction Bank H		1,345,325		1,016
China Life Insurance Co Ltd. H		290,000		857
China Mengniu Dairy Co Ltd.		131,000		397
China Mobile Ltd.		219,000		2,427
China Overseas Land & Investment Ltd.		40,000		105
China Pacific Insurance Group Co Ltd. H		125,800		395
China Power International Development Ltd.		621,800		168
China Railway Construction Corp Ltd. H		42,000		42
China Railway Group Ltd. H		460,000		235
China Resources Enterprise Ltd.		10,000		33
China Telecom Corp Ltd. H		140,000		83

See accompanying notes

11

American Beacon Emerging Markets Fund^SM

Schedule of Investments

October 31, 2012

	Shares		Fair Value
			(000’s)
China Yuchai International Ltd.		25,420	$	352
Chow Tai Fook Jewellery Group Ltd.		56,400		70
CNOOC Ltd.		155,000		322
Cosco International Holdings Ltd.		1,036,000		420
COSCO Pacific Ltd.		215,910		316
Dickson Concepts International Ltd.		390,445		202
Dongfeng Motor Group Co Ltd. H		116,000		144
First Pacific Co Ltd.		1,237,074		1,378
Global Bio-Chem Technology Group Co Ltd.		1,592,520		185
Guangzhou Automobile Group Co Ltd. H		647,370		443
Hengan International Group Co Ltd.		30,000		274
Huaneng Power International, Inc., Series N, ADRA		370		12
Huaneng Power International, Inc. H		263,900		211
Industrial & Commercial Bank of China Ltd.		1,116,555		739
Lianhua Supermarket Holdings Co. Ltd.		353,000		286
Minth Group Ltd.		156,000		159
NWS Holdings Ltd.		194,225		295
People’s Food Holdings Ltd.		1,560,911		1,126
PetroChina Co. Ltd. H		398,000		542
Samsonite International S.A		158,700		330
Shanghai Industrial Holdings Ltd.		137,000		440
Shanghai Pharmaceuticals Holding Co Ltd.		110,600		205
Sinotrans Ltd. H		6,307,058		968
Sinotrans Shipping Ltd.		2,868,000		707
Tencent Holdings Ltd.		22,900		811
Tingyi Cayman Islands Holding Corp		40,000		119
TPV Technology Ltd.		264,970		59
Tsingtao Brewery Co. Ltd. H		38,000		205
Weiqiao Textile Co. Ltd. H		1,263,600		494
Xinhua Winshare Publishing and Media Co Ltd.		477,000		256
Zhejiang Expressway Co. Ltd. H		396,000		289
Total Hong Kong/China				20,024
HUNGARY—0.98%
COMMON STOCKS—(Cost $1,396)
Magyar Telekom Telecommunications plc		421,763		781
Richter Gedeon Nyrt		2,246		419
Total Hungary				1,200
INDIA—7.42%
COMMON STOCKS—(Cost $9,144)
ACC Ltd.		10,624		272
Asian Paints Ltd.		3,096		222
Bank of India		4,440		23
Bharat Heavy Electricals Ltd.		45,810		191
Dr Reddy’s Laboratories Ltd.		5,489		179
Glenmark Pharmaceuticals Ltd.		36,467		289
HDFC Bank Ltd.		42,792		502
Hindustan Petroleum Corp Ltd.		27,990		155
ICICI Bank Ltd., ADRA		4,690		183
India Cements Ltd.		176,980		315
Indian Oil Corp Ltd.		191,780		934
IndusInd Bank Ltd.		38,878		262
ITC Ltd.		72,218		379

	Shares		Fair Value
			(000’s)
Jubilant Life Sciences Ltd.		50,070	$	207
Larsen & Toubro Ltd.		7,445		225
NMDC Ltd.		39,340		129
Oriental Bank of Commerce		57,630		332
Punjab National Bank Ltd.		1,930		26
Reliance Industries Ltd.		76,801		1,150
Reliance Infrastructure Ltd.		98,720		859
Rolta India Ltd.		132,830		160
State Bank of India		7,420		290
State Bank of India, GDRC		2,380		196
Steel Authority of India Ltd.		137,370		205
Sterlite Industries India Ltd., ADRA		7,220		54
Sterlite Industries India Ltd.		151,950		282
Sun Pharmaceutical		18,236		236
Tata Consultancy Services Ltd.		11,137		272
Tata Motors Ltd.		74,986		355
Tata Steel Ltd.		28,227		205
Total India				9,089
INDONESIA—2.46%
COMMON STOCKS—(Cost $2,369)
Aneka Tambang Persero Tbk PT		407,500		54
Astra International Tbk PT		533,500		447
Bank Mandiri Tbk PT		377,500		325
Bank Negara Indonesia Persero Tbk PT		662,500		266
Bank Tabungan Negara Persero Tbk PT		179,500		28
Indofood Sukses Makmur Tbk PT		385,000		228
Indosat Tbk PT		813,500		551
Kalbe Farma Tbk PT		2,307,500		233
Lippo Karawaci Tbk PT		4,080,000		395
Medco Energi Internasional Tbk PT		810,000		133
Telekomunikasi Indonesia Tbk PT		355,000		360
Total Indonesia				3,020
JAPAN—0.21%
COMMON STOCKS—(Cost $346)
Nexon Co. Ltd B		21,200		258
MALAYSIA—1.08%
COMMON STOCKS—(Cost $1,231)
Axiata Group Bhd		57,400		123
CIMB Group Holdings Bhd		126,100		315
Gamuda Bhd		155,600		185
Genting Bhd		97,600		284
IHH Healthcare BhdB		114,200		123
IJM Corp Bhd		24,500		40
Sime Darby Bhd		79,500		255
Total Malaysia				1,325
MEXICO—3.83%
COMMON STOCKS—(Cost $4,702)
ALFA S.A.BB		100,980		186
America Movil SAB de CV, Series L, ADRA		25,718		653
Cemex SAB de CV, Series L, ADRA		153,804		1,394
Consorcio ARA SAB de CV		299,700		95
Desarrolladora Homex SAB de CV, ADRA B		18,600		247
Grupo Financiero Santander Mexico SAB de CVB		27,400		375
Grupo Televisa S.A., ADRA		31,800		722

See accompanying notes

12

American Beacon Emerging Markets Fund^SM

Schedule of Investments

October 31, 2012

	Shares		Fair Value
			(000’s)
Mexichem SAB de CV		65,651	$	325
Wal-Mart de Mexico SAB de CV		235,700		694
Total Mexico				4,691
PERU—0.58%
COMMON STOCKS—(Cost $629)
Cia de Minas Buenaventura S.A., ADRA		3,857		137
Credicorp Ltd.		4,410		570
Total Peru				707
PHILIPPINES—1.65%
COMMON STOCKS—(Cost $1,350)
Bloomberry Resorts Corp.B		714,200		244
DMCI Holdings Inc.B		155,820		204
Metro Pacific Investments Corp.		2,963,000		298
Metropolitan Bank & Trust		173,549		400
Philippine Long Distance Telephone Co.		6,520		419
SM Investments Corp.		23,510		459
Total Philippines				2,024
POLAND—1.64%
COMMON STOCKS—(Cost $1,946)
Asseco Poland S.A.		14,111		177
Bank Pekao S.A.		4,140		199
Eurocash S.A.		36,110		441
PGNiG Group		369,180		456
Powszechny Zaklad Ubezpieczen S.A.		3,807		445
Telekomunikacja Polska S.A.		77,294		292
Total Poland				2,010
RUSSIA—5.55%
COMMON STOCKS—(Cost $6,503)
Eurasia Drilling Co Ltd., GDRC		1,586		55
Eurasia Drilling Co. Ltd, GDRC		3,279		113
Federal Hydro Generating, ADRA		242,140		595
Lukoil OAO, ADRA		44,711		2,716
Pharmstandard OJSC, GDRB C		21,500		316
Rosneft Oil Co., GDRB C		44,705		331
VimpelCom Ltd., ADRA		23,290		257
Total Russia				6,798
SINGAPORE—1.39%
COMMON STOCKS—(Cost $2,099)
Flextronics International Ltd.B		230,410		1,329
Haw Par Corp Ltd.		70,325		376
Total Singapore				1,705
SOUTH AFRICA—4.52%
COMMON STOCKS—(Cost $6,026)
ABSA Group Ltd.		7,670		123
Adcock Ingram Holdings Ltd.		25,890		173
Anglo American Platinum Ltd.		8,312		387
AngloGold Ashanti Ltd.		4,421		147
AngloGold Ashanti Ltd., ADRA		1,510		51
AVI Ltd.		20,731		137
Clicks Group Ltd.		29,029		200
JD Group Ltd.		63,540		339
Life Healthcare Group Holdings Ltd.		42,800		162

	Shares		Fair Value
			(000’s)
MTN Group Ltd.		69,535	$	1,253
Murray & Roberts Holdings Ltd.B		140,120		363
Naspers Ltd., N Shares		6,002		390
Pick n Pay Stores Ltd.		28,671		140
SABMiller plc		8,133		347
Sappi Ltd.B		17,374		49
Sasol Ltd.		9,600		410
Standard Bank Group Ltd.		54,466		673
Telkom SA Ltd.		94,410		199
Total South Africa				5,543
SOUTH KOREA—18.17%
COMMON STOCKS—(Cost $18,989)
Cheil Industries, Inc.		1,961		168
Cheil Worldwide, Inc.		4,370		84
Halla Climate ControlB		12,534		233
Hite Jinro Ltd.		16,527		489
Hyundai Development Co.		11,740		211
Hyundai Engineering & Construction Co Ltd.		4,437		267
Hyundai Glovis Co. Ltd.		1,030		214
Hyundai Heavy Industries Co Ltd.		1,127		237
Hyundai Mobis		870		222
Hyundai Motor Co.		4,061		836
KB Financial Group, Inc.		61,778		2,102
KB Financial Group, Inc., ADRA		1,650		56
Kia Motors Corp.		6,630		368
Korea Aerospace Industries Ltd.		4,750		119
Korea Electric Power Corp., ADRA B		11,580		150
Korea Electric Power Corp.B		33,955		881
Korea Exchange BankB		18,800		130
KT Corp., ADRA		10,920		185
KT Corp.		4,640		157
LG Chem Ltd.		785		220
LG Display Co Ltd.B		520		15
LG Electronics, Inc.		8,584		598
LG Household & Health Care Ltd.		350		206
Lotte Chilsung Beverage Co Ltd.		399		521
Lotte Confectionery Co Ltd.		428		616
Mando Corp.		3,110		411
Mirae Asset Securities Co. Ltd.		12,700		345
NCSoft Corp.		1,243		238
NHN Corp.		544		126
NongShim Co Ltd.		849		201
POSCO, ADRA		1,110		88
POSCO		6,002		1,891
Samsung Electronics Co. Ltd.		3,309		3,976
Samsung Fire & Marine Insurance Co Ltd.		2,587		566
Samsung Life Insurance Co. Ltd.		1,023		88
Shinhan Financial Group Co Ltd.		42,602		1,463
Shinsegae Co Ltd.		2,637		471
SK C&C Co. Ltd.		2,034		178
SK Telecom Co Ltd.		2,746		386
SK Telecom Co Ltd., ADRA		16,620		260
SM Entertainment Co.B		3,400		193
Tong Yang Life Insurance		12,350		134
Woongjin Coway Co Ltd.		4,516		164
Yuhan Corp.		90		16
Total Common Stocks				20,480
PREFERRED STOCKS—(Cost $1,509)
Hyundai Motor Co.		23,042		1,412

See accompanying notes

13

American Beacon Emerging Markets Fund^SM

Schedule of Investments

October 31, 2012

	Shares		Fair Value
			(000’s)
Samsung Electronics Co. Ltd.		529	$	384
Total Preferred Stocks				1,796
Total South Korea				22,276
TAIWAN—6.11%
COMMON STOCKS—(Cost $7,816)
Asustek Computer, Inc.		24,648		264
AU Optronics Corp.		5,000		2
AU Optronics Corp., ADRA		57,790		220
Catcher Technology Co. Ltd.		13,000		57
Chailease Holding Co. Ltd.		105,000		187
China Life Insurance Co Ltd.B		139,419		109
Chinatrust Financial Holding Co Ltd.		569,045		314
Compal Electronics, Inc.		1,167,000		735
Formosa Plastics Corp.		48,000		131
Fubon Financial Holding Co Ltd.		4,244		4
Hon Hai Precision Industry Co Ltd.		381,059		1,156
Lung Yen Life Service Corp.		33,000		102
MediaTek, Inc.		10,000		111
MStar Semiconductor, Inc.		23,000		195
Nan Ya Printed Circuit Board Corp.		225,099		259
Novatek Microelectronics Corp.		37,000		139
Powertech Technology, Inc.		153,400		238
Siliconware Precision Industries Co.		272,000		265
Siliconware Precision Industries Co., ADRA		7,460		36
Simplo Technology Co. Ltd.B		19,000		94
SinoPac Financial Holdings Co Ltd.		1,039,146		402
Taiwan Cement Corp.		121,000		155
Taiwan Semiconductor Manufacturing Co Ltd.		350,385		1,064
Tatung Co Ltd.		317,298		73
Transcend Information, Inc.		86,520		218
Uni-President Enterprises Corp.		184,141		325
United Microelectronics Corp.		1,274,226		473
United Microelectronics Corp., ADRA		4,830		9
Young Fast Optoelectronics Co Ltd.		85,541		147
Total Taiwan				7,484
THAILAND—1.49%
COMMON STOCKS—(Cost $1,575)
Bangkok Bank		39,700		229
Bangkok Bank PCL		30,490		180
Bank of AyudhyaB		250,500		245
Banpu PCL		25,550		333
Kasikornbank PCL		54,900		323
Land and Houses PCL, NVDRD		1,276,000		358
Supalai PCL, NVDRD		261,400		164
Total Thailand				1,832
TURKEY—3.79%
COMMON STOCKS—(Cost $3,839)
Anadolu Efes Biracilik Ve Malt Sanayii A.S.		41,864		628
Asya Katilim Bankasi A.S.		140,240		157
Aygaz AS.		69,890		322
Haci Omer Sabanci Holding A.S.		63,298		334
Turk Telekomunikasyon A.S.		57,776		226
Turkcell Iletisim Hizmetleri A.S., ADRAB		4,710		72
Turkiye Garanti Bankasi A.S.		399,793		1,909

	Shares		Fair Value
			(000’s)
Turkiye Vakiflar Bankasi Tao		423,747	$	998
Total Turkey				4,646
UNITED KINGDOM—0.05%
COMMON STOCKS—(Cost $155)
JKX Oil & Gas plc B		44,300		56
UNITED STATES—0.60%
COMMON STOCKS—(Cost $823)
AsiaInfo-Linkage, Inc. B		73,110		731
SHORT-TERM INVESTMENTS—3.78% (Cost $4,632)
JPMorgan U.S. Government Money Market Fund, Capital Class		4,631,909		4,632
TOTAL INVESTMENTS—99.64% (Cost $126,412)				122,136
OTHER ASSETS, NET OF LIABILITIES—0.36%				437
TOTAL NET ASSETS—100.00%			$	122,573

Percentages are stated as a percent of net assets.

^A  ADR—American Depositary Receipt.

^B  Non-income producing security.

^C  GDR—Global Depositary Receipt.

^D  NVDR—Non Voting Depositary Receipt.

See accompanying notes

14

American Beacon Emerging Markets Fund^SM

Schedule of Investments

October 31, 2012

Futures Contracts Open on October 31, 2012 ($000’s):

Description	Type		Number of Contracts	Expiration Date		Contract Value		Unrealized Appreciation (Depreciation)
MSCI Emerging Market EMini Future		Long	92		December, 2012	$	4,554	$	(29	)
						$	4,554	$	(29	)

See accompanying notes

15

American Beacon International Equity Fund^SM

Schedule of Investments

October 31, 2012

	Shares		Fair Value
			(000’s)
AUSTRALIA—1.18%
COMMON STOCKS—(Cost $14,846)
James Hardie Industries plc, CDI		894,500	$	8,570
Orica Ltd.A		241,393		6,295
QBE Insurance Group Ltd.		161,588		2,211
Total Australia				17,076
AUSTRIA—0.06%
COMMON STOCKS—(Cost $2,898)
Telekom Austria AG A		135,569		854
BELGIUM—1.29%
COMMON STOCKS—(Cost $8,547)
Anheuser-Busch InBev N.V.		212,500		17,768
KBC Groep NV		40,863		959
Total Belgium				18,727
CANADA—1.73%
COMMON STOCKS—(Cost $25,116)
Potash Corp of Saskatchewan, Inc.		155,120		6,236
Rogers Communications, Inc., Class B		177,200		7,778
Suncor Energy, Inc.		170,600		5,726
Talisman Energy, Inc.		470,600		5,334
Total Canada				25,074
DENMARK—0.22%
COMMON STOCKS—(Cost $3,109)
AP Moeller—Maersk A/S, Class B		454		3,168
FINLAND—0.55%
COMMON STOCKS—(Cost $6,580)
Sampo OYJ, A Shares		253,670		7,950
FRANCE—10.71%
COMMON STOCKS—(Cost $137,277)
Air Liquide S.A.		12,437		1,467
Alstom S.A.		197,990		6,762
AXA S.A.		799,241		12,706
BNP Paribas S.A.		372,376		18,732
Cie Generale des Etablissements Michelin		111,790		9,600
France Telecom S.A.		330,700		3,687
Legrand S.A.		260,933		10,052
Rexel S.A.		301,050		5,449
Sanofi		466,510		41,008
Technip S.A.		82,494		9,292
Total S.A.		540,274		27,185
Valeo S.A.		127,710		5,612
Vivendi S.A.		201,073		4,114
Total France				155,666
GERMANY—12.67%
COMMON STOCKS—(Cost $148,925)
BASF SEA		26,870		2,227
Bayer AG Reg		311,418		27,120
Bayerische Motoren Werke AG		54,710		4,358

	Shares		Fair Value
			(000’s)
Daimler AG		167,139	$	7,804
Deutsche Boerse AG		130,990		7,090
Deutsche Post AG Reg		854,940		16,949
E.ON AG		252,980		5,748
HeidelbergCement AG		107,870		5,717
Infineon Technologies AG		345,290		2,350
Linde AG		66,483		11,180
MAN SE		42,300		4,266
Merck KGaA		158,870		20,304
Muenchener Rueckversicherungs AG Reg		81,996		13,179
RWE AGA		167,309		7,645
SAP AG		344,144		25,069
Siemens AG Reg		184,250		18,518
Thyssenkrupp AGA		203,537		4,631
Total Germany				184,155
HONG KONG/CHINA—3.28%
COMMON STOCKS—(Cost $42,590)
AIA Group Ltd.		1,612,000		6,375
Cheung Kong Holdings Ltd.		335,500		4,957
China Merchants Hlds Intl.A		580,000		1,923
CNOOC Ltd.		3,444,000		7,146
HSBC Holdings plc		1,742,796		17,181
Hutchison Whampoa Ltd.		231,000		2,276
Yue Yuen Industrial Holdings Ltd.		2,264,667		7,787
Total Hong Kong/China				47,645
IRELAND—1.17%
COMMON STOCKS—(Cost $21,307)
CRH plc		590,080		10,989
Smurfit Kappa Group plc		542,337		5,954
Total Ireland				16,943
ITALY—1.75%
COMMON STOCKS—(Cost $25,630)
Atlantia SpA		391,153		6,454
ENI SpA		289,326		6,641
Intesa Sanpaolo SpA		2,847,656		4,574
Snam Rete Gas SpAB		1,216,233		5,382
UniCredit SpA		546,000		2,410
Total Italy				25,461
JAPAN—11.74%
COMMON STOCKS—(Cost $158,627)
Asics Corp.		386,680		5,614
Canon, Inc.		159,700		5,157
Daikin Industries Ltd.		192,800		5,332
Daito Trust Construction Co. Ltd.		89,600		9,046
Don Quijote Co. Ltd.		213,800		8,423
FANUC Corp.		56,300		8,963
Honda Motor Co. Ltd.		76,300		2,284
ITOCHU Corp.		507,400		5,078
JGC Corp.		452,000		15,542
KDDI Corp.		145,100		11,270
Komatsu Ltd.		246,400		5,161
Konica Minolta Holdings, Inc.		765,000		5,079
LIXIL Group Corp.		380,900		8,422
Nissan Motor Co. Ltd.		586,500		4,908
Sankyo Co. Ltd.		54,300		2,459
Seven & I Holdings Co. Ltd.		212,600		6,557
Shin-Etsu Chemical Co. Ltd.		107,000		6,032

See accompanying notes

16

American Beacon International Equity Fund^SM

Schedule of Investments

October 31, 2012

	Shares		Fair Value
			(000’s)
Softbank Corp.		125,300	$	3,966
Sony Financial Holdings, Inc.		533,500		9,517
Sumitomo Mitsui Financial Group, Inc.		309,900		9,487
The Bank of Yokohama Ltd.		341,000		1,568
Tokyo Electron Ltd.		91,800		4,123
Toyota Motor Corp.		457,300		17,557
Trend Micro Inc.A		148,300		4,154
Yahoo Japan Corp.		14,157		4,872
Total Japan				170,571
NETHERLANDS—5.34%
COMMON STOCKS—(Cost $83,982)
Akzo Nobel		382,825		20,826
ING Groep N.V. CVAA		2,003,312		17,698
Koninklijke Philips Electronics N.V.		309,647		7,742
PostNL N.V.		1,768,987		6,975
Randstad Holding N.V.		97,990		3,199
Reed Elsevier N.V.		1,231,840		16,549
SBM Offshore N.V.C		355,135		4,640
Total Netherlands				77,629
NEW ZEALAND—0.27%
COMMON STOCKS—(Cost $2,946)
Telecom Corp. of New Zealand Ltd.		1,999,650		3,955
NORWAY—1.45%
COMMON STOCKS—(Cost $13,207)
Statoil ASA		329,640		8,147
Telenor ASA		659,120		12,959
Total Norway				21,106
PORTUGAL—0.26%
COMMON STOCKS—(Cost $5,853)
Portugal Telecom SGPS S.A. Reg		747,760		3,761
SINGAPORE—2.50%
COMMON STOCKS—(Cost $29,548)
DBS Group Holdings Ltd.		1,156,342		13,177
Flextronics International Ltd.A		872,720		5,036
SembCorp Industries Ltd.		477,000		2,127
SembCorp Marine Ltd.		1,729,000		6,676
Singapore Telecommunications Ltd.		98,000		259
Singapore Telecommunications Ltd., New		3,428,000		9,049
Total Singapore				36,324
SOUTH KOREA—3.02%
COMMON STOCKS—(Cost $39,459)
Duksan Hi-Metal Co. LtdA		81,603		1,526
Hyundai Mobis		21,759		5,546
KB Financial Group, Inc., ADRD		177,398		6,035
KT&G Corp.		177,571		13,531
LG Electronics, Inc.		74,646		5,195
POSCO		20,558		6,475
Samsung Electronics Co. Ltd., GDRE		9,140		5,511
Total South Korea				43,819
SPAIN—3.06%
COMMON STOCKS—(Cost $37,568)
Amadeus IT Holding S.A., A Shares		215,510		5,335

	Shares		Fair Value
			(000’s)
Enagas S.A.		335,688	$	6,674
InditexA		16,887		2,155
Mediaset Espana Comunicacion S.A.		1,023,416		5,497
Red Electrica Corporation S.A.A		159,765		7,492
Repsol S.A.		286,407		5,724
Tecnicas Reunidas S.A.		150,969		7,414
Telefonica S.A.		321,963		4,240
Total Spain				44,531
SWEDEN—2.57%
COMMON STOCKS—(Cost $33,308)
Assa Abloy AB, B Shares		263,540		8,785
Autoliv, Inc.		76,209		4,406
Ericsson LM, B Shares		658,210		5,785
Sandvik ABA		496,440		6,886
Skandinaviska Enskilda Banken AB, A Shares		608,601		5,047
Swedbank AB, A Shares		345,370		6,404
Total Sweden				37,313
SWITZERLAND—6.80%
COMMON STOCKS—(Cost $84,970)
Adecco S.A. Reg		85,290		4,125
Credit Suisse Group AG Reg		238,340		5,525
Givaudan S.A. Reg		8,853		8,860
Nestle S.A. Reg		45,460		2,885
Novartis AG Reg		567,475		34,154
Roche Holding AG Genusschein		87,136		16,757
Swiss Re AG		101,260		6,997
UBS AG Reg		741,668		11,117
Zurich Insurance Group AG		33,975		8,372
Total Switzerland				98,792
UNITED KINGDOM—21.02%
COMMON STOCKS—(Cost $272,986)
Aviva plc		2,504,473		13,394
BAE Systems plc		1,564,304		7,881
Balfour Beatty plc		1,521,317		7,738
Barclays plc		1,798,784		6,604
BG Group plc		654,174		12,114
BHP Billiton plc		444,013		14,226
BP plc		1,161,340		8,308
British American Tobacco plc		457,651		22,669
Direct Line Insurance GroupA		149,388		469
Eurasian Natural Resources Corp plc		378,362		2,001
GlaxoSmithKline plc		720,690		16,125
HSBC Holdings plc		176,260		1,732
Informa plc		1,516,288		9,792
Kingfisher plc		1,692,500		7,907
Lloyds Banking Group plcA		11,120,460		7,281
Marks & Spencer Group plc		1,059,270		6,732
Michael Page International plc		720,727		4,192
Petrofac Ltd.		445,642		11,535
Prudential plc		747,050		10,229
Reed Elsevier plc		606,368		5,930
Rexam plc		2,667,734		19,231
Rio Tinto plc		105,411		5,281
Rolls-Royce Holdings plc		640,014		8,826
Royal Dutch Shell plc, A Shares		494,708		16,965
Royal Dutch Shell plc, B Shares		307,736		10,878
Standard Chartered plc		620,654		14,658
Tesco plc		3,554,982		18,349
Unilever plc		479,591		17,886

See accompanying notes

17

American Beacon International Equity Fund^SM

Schedule of Investments

October 31, 2012

	Shares		Fair Value
			(000’s)
Vodafone Group plc		6,019,265	$	16,343
Total Common Stocks				305,276
PREFERRED STOCKS—(Cost $95)
Rolls-Royce Group plc, Entitlement Jan. 13, C SharesA		59,004,424		95
Total United Kingdom				305,371
SHORT-TERM INVESTMENTS—5.83%
American Beacon U.S. Government Money Market Select Fund, Select ClassF		10,000,000		10,000
JPMorgan U.S. Government Money Market Fund, Capital Class		74,763,030		74,763
Total Short-Term Investments (Cost $84,763)				84,763
SECURITIES LENDING COLLATERAL—0.38% (Cost $5,538)
American Beacon U.S. Government Money Market Select Fund, Select ClassF		1,598,600		1,598
DWS Government and Agency Securities Portfolio, Institutional Class		3,939,800		3,940
Total Securities Lending Collateral				5,538
TOTAL INVESTMENTS—98.85% (Cost $1,289,675)				1,436,192
OTHER ASSETS, NET OF LIABILITIES—1.15%				16,734
TOTAL NET ASSETS—100.00%			$	1,452,926

Percentages are stated as a percent of net assets.

^A  Non-income producing security.

^B  All or a portion of this security is on loan at October 31, 2012.

^C  Private Placement

^D  ADR—American Depositary Receipt.

^E  GDR—Global Depositary Receipt.

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

See accompanying notes

18

American Beacon International Equity Fund^SM

Schedule of Investments

October 31, 2012

Futures Contracts Open on October 31, 2012 ($ 000’s):

Description	Type	Number of Contracts	Expiration Date	Contract Value		Unrealized Appreciation (Depreciation)
Italy FTSE MIB Index Futures	Long	20	December, 2012	$	2,010	$	(62	)
France CAC 40 Index Futures	Long	186	December, 2012		8,234		(168	)
Germany DAX Index Futures	Long	32	December, 2012		7,539		(81	)
Sweden OMXS30 Double Long Index	Long	174	November, 2012		2,757		(39	)
Netherlands AEX Index Futures	Long	26	November, 2012		2,221		(6	)
Tokyo TOPIX Index Futures	Long	186	December, 2012		17,265		171
UK FTSE 100 Index Futures	Long	220	December, 2012		20,464		(263	)
Australia ASX SPI 200 Index Futures	Long	68	December, 2012		7,948		111
Cananda S&P TSE 60 Index Futures	Long	76	December, 2012		10,806		62
Spain IBEX 35 Index Future	Long	25	November, 2012		2,536		(9	)
Hang Seng Index Futures	Long	20	November, 2012		2,797		(3	)
				$	84,577	$	(287	)

Foreign Currency Contracts Open on October 31, 2012:

Type	Currency		Principal Amount Covered by Contract		Settlement Date		Counterparty		Unrealized Appreciation		Unrealized (Depreciation)			Net Unrealized Appreciation/ (Depreciation)
Buy		EUR		3,163,539		11/2/2012		BNY	$	—	$	(476	)	$	(476	)
Buy		EUR		3,123,561		11/2/2012		BNY		—		(1,095	)		(1,095	)
Buy		EUR		3,119,750		11/2/2012		BNY		15,753		—			15,753
Sell		EUR		2,160,300		11/2/2012		BNY		—		(71,613	)		(71,613	)
Sell		EUR		2,429,200		11/2/2012		BNY		—		(134,333	)		(134,333	)
Sell		EUR		2,334,000		11/2/2012		BNY		—		(149,025	)		(149,025	)
Sell		EUR		2,334,000		11/2/2012		SSB		—		(148,744	)		(148,744	)
Sell		EUR		2,429,200		11/2/2012		SSB		—		(135,791	)		(135,791	)
Sell		EUR		2,160,300		11/2/2012		SSB		—		(72,261	)		(72,261	)
Sell		EUR		2,483,350		11/2/2012		SSB		—		(45,866	)		(45,866	)
Sell		EUR		2,483,350		11/2/2012		BNY		—		(45,965	)		(45,965	)
Buy		AUD		802,000		12/14/2012		GLM		11,376		—			11,376
Buy		AUD		4,204,000		12/14/2012		SCB		—		(10,448	)		(10,448	)
Buy		AUD		793,000		12/14/2012		DUB		—		(1,799	)		(1,799	)
Buy		AUD		1,006,000		12/14/2012		BRC		2,014		—			2,014
Sell		AUD		905,000		12/14/2012		CBK		—		(5,027	)		(5,027	)
Buy		CAD		1,324,000		12/14/2012		BRC		345		—			345
Buy		CAD		1,132,000		12/14/2012		GLM		—		(21,671	)		(21,671	)
Buy		CAD		5,819,000		12/14/2012		SCB		—		(131,211	)		(131,211	)
Buy		CAD		1,133,000		12/14/2012		DUB		—		(24,528	)		(24,528	)
Sell		CAD		1,306,000		12/14/2012		CBK		19,332		—			19,332
Buy		CHF		888,000		12/14/2012		BOA		1,637		—			1,637
Buy		CHF		4,633,000		12/14/2012		CBK		28,034		—			28,034
Buy		CHF		807,000		12/14/2012		BNP		779		—			779
Buy		CHF		898,000		12/14/2012		BOA		4,058		—			4,058
Sell		CHF		937,000		12/14/2012		CBK		—		(8,113	)		(8,113	)
Buy		EUR		1,809,000		12/14/2012		CBK		1,475		—			1,475
Buy		EUR		9,189,000		12/14/2012		BRC		57,848		—			57,848
Buy		EUR		1,847,000		12/14/2012		BNP		—		(2,548	)		(2,548	)
Buy		EUR		2,283,000		12/14/2012		BOA		6,382		—			6,382
Sell		EUR		2,030,000		12/14/2012		CBK		—		(16,900	)		(16,900	)
Buy		GBP		1,325,000		12/14/2012		CBK		8,548		—			8,548
Buy		GBP		7,225,000		12/14/2012		CBK		23,998		—			23,998
Buy		GBP		1,352,000		12/14/2012		BNP		—		(10,358	)		(10,358	)
Buy		GBP		1,607,000		12/14/2012		BOA		6,438		—			6,438
Sell		GBP		1,465,000		12/14/2012		CBK		—		(2,639	)		(2,639	)
Buy		JPY		175,799,000		12/14/2012		BRC		—		(4,856	)		(4,856	)
Buy		JPY		143,625,000		12/14/2012		BOA		—		(27,421	)		(27,421	)
Buy		JPY		833,269,000		12/14/2012		SCB		—		(265,318	)		(265,318	)

See accompanying notes

19

American Beacon International Equity Fund^SM

Schedule of Investments

October 31, 2012

Type	Currency		Principal Amount Covered by Contract		Settlement Date		Counterparty		Unrealized Appreciation		Unrealized (Depreciation)			Net Unrealized Appreciation/ (Depreciation)
Buy		JPY		146,443,000		12/14/2012		DUB	$	—	$	(37,060	)	$	(37,060	)
Sell		JPY		177,073,000		12/14/2012		CBK		51,363		—			51,363
Buy		SEK		2,025,000		12/14/2012		BOA		1,263		—			1,263
Buy		SEK		9,994,000		12/14/2012		BRC		—		(9,922	)		(9,922	)
Buy		SEK		1,950,000		12/14/2012		BNP		—		(4,350	)		(4,350	)
Buy		SEK		2,427,000		12/14/2012		BOA		4,054		—			4,054
Sell		SEK		2,203,000		12/14/2012		CBK		1,425		—			1,425
									$	246,122	$	(1,389,338	)	$	(1,143,216	)

Glossary:

Counterparty Abbreviations:

BNP	BNP Paribas	CBK	Citibank, N.A.	HUS	HSBC Bank USA
BNY	BNY Mellon Bank	DUB	Deutsche Bank AG	SCB	Standard Chartered Bank
BOA	Bank of America, N.A.	GLM	Goldman Sachs Bank	SSB	State Street Bank and Trust
BRC	Barclays Bank PLC

Currency Abbreviations:

AUD	Australian Dollar	EUR	Euro	SEK	Swedish Krona
CAD	Canadian Dollar	GBP	British Pound
CHF	Swiss Franc	JPY	Japanese Yen

See accompanying notes

20

American Beacon Funds^SM

Statements of Assets and Liabilities

October 31, 2012 (in thousands, except share and per share amounts)

	Emerging Markets Fund			International Equity Fund
Assets:
Investments in unaffiliated securities, at fair value A D	$	122,136		$	1,424,594
Investments in affiliated securities, at fair value B		—			11,598
Foreign currency, at fair value C		226			75
Foreign currency deposits with brokers, at fair value E		—			8,458
Deposit with brokers for futures contracts		184			6
Receivable for investments sold		393			3,663
Dividends and interest receivable		154			3,558
Receivable for fund shares sold		84			10,746
Receivable for tax reclaims		4			1,274
Receivable for expense reimbursement (Note 2)		5			4
Unrealized appreciation of foreign currency contracts		—			246
Prepaid expenses		15			71
Total assets		123,201			1,464,293
Liabilities:
Payable for investments purchased		173			548
Payable upon return of securities loaned		—			5,538
Payable for fund shares redeemed		76			1,426
Payable for variation margin from open futures contracts		22			89
Management and investment advisory fees payable		303			1,415
Administrative service and service fees payable		10			498
Professional fees payable		10			36
Trustee fees payable		3			23
Payable for prospectus and shareholder reports		11			99
Unrealized depreciation of foreign currency contracts		—			1,389
Other liabilities		20			304
Total liabilities		628			11,367
Net Assets	$	122,573		$	1,452,926
Analysis of Net Assets:
Paid-in-capital		132,266			1,503,237
Undistributed net investment income		1,040			37,686
Accumulated net realized (loss)		(6,423	)		(233,199	)
Unrealized appreciation or (depreciation) of investments, foreign currency contracts, and futures contracts		(4,310	)		145,202
Net assets	$	122,573		$	1,452,926
Shares outstanding at no par value (Unlimited shares authorized):
Institutional Class		728,442			37,906,141
Y Class		161,001			90,781
Investor Class		757,166			28,526,540
Advisor Class		N/A			85,395
Retirement Class		N/A			3,127
A Class		61,677			78,367
C Class		462			7,325
AMR Class		9,037,530			24,073,833
Net asset value, offering and redemption price per share:
Institutional Class	$	11.33		$	16.05
Y Class	$	11.41		$	16.65
Investor Class	$	11.13		$	15.88
Advisor Class		N/A		$	16.36
Retirement Class		N/A		$	16.75
A Class (offering price $11.79 and $17.00, respectively)	$	11.11		$	16.02
C Class	$	11.05		$	15.70
AMR Class	$	11.44		$	16.08

See accompanying notes

21

American Beacon Funds^SM

Statements of Assets and Liabilities

October 31, 2012 (in thousands, except share and per share amounts)

	Emerging Markets Fund		International Equity Fund
Net assets (not in thousands):
Institutional Class	$	8,255,815	$	608,256,240
Y Class		1,836,721		1,511,614
Investor Class		8,426,642		453,141,427
Advisor Class		N/A		1,396,948
Retirement Class		N/A		52,359
A Class		685,461		1,255,390
C Class		5,101		114,972
AMR Class		103,363,187		387,197,170
A        Cost of investments in unaffiliated securities	$	126,412	$	1,278,077
B        Cost of investments in affiliated securities	$	—	$	11,598
C        Cost of foreign currency	$	225	$	74
D        Fair value of securities on loan	$	—	$	5,263
E        Cost of foreign currency on deposits with the brokers	$	—	$	8,415

See accompanying notes

22

American Beacon Funds^SM

Statements of Operations

For the year ended October 31, 2012 (in thousands)

	Emerging Markets Fund			International Equity Fund
Investment Income:
Dividend income from unaffiliated securities (net of foreign taxes) A	$	3,072		$	46,110
Dividend income from affiliated securities		—			8
Interest income		1			18
Income derived from securities lending, net		—			1,664
Total investment income		3,073			47,800
Expenses:
Management and investment advisory fees (Note 2)		1,017			4,189
Administrative service fees (Note 2):
Institutional Class		25			1,711
Y Class		6			3
Investor Class		26			1,227
Advisor Class		—			3
A Class		2			2
AMR Class		55			191
Transfer agent fees:
Institutional Class		1			36
Y Class		1			—
Investor Class		9			217
Advisor Class		—			1
A Class		—			1
AMR Class		7			13
Custody and fund accounting fees		307			385
Professional fees		80			90
Registration fees and expenses		60			138
Service fees (Note 2):
Y Class		2			1
Investor Class		22			1,405
Advisor Class		—			3
A Class		1			1
Distribution fees (Note 2):
Advisor Class		—			3
A Class		2			2
C Class		—			1
Prospectus and shareholder report expenses		26			154
Trustee fees		10			98
Other expenses		33			228
Total expenses		1,692			10,103
Net (fees waived and expenses reimbursed) (Note 2)		(29	)		(19	)
Net expenses		1,663			10,084
Net investment income		1,410			37,716
Realized and unrealized gain (loss) from investments:
Net realized gain (loss) from: B
Investments		732			(20,537,647	)
Commission recapture (Note 3)		6			30
Foreign currency translations		(1,712	)		20,462,634
Futures contracts		339			5,474
Change in net unrealized appreciation or (depreciation) of:
Investments		4,071			208,622
Foreign currency contracts		(781	)		(52,807	)
Futures contracts		(581	)		(3,437	)
Net gain from investments		2,074			82,869
Net increase in net assets resulting from operations	$	3,484		$	120,585
A        Foreign taxes	$	360		$	4,132
B        Net of foreign withholding taxes on capital gains	$	9		$	—

See accompanying notes

23

American Beacon Funds^SM

Statements of Changes of Net Assets (in thousands)

	Emerging Markets Fund						International Equity Fund
	Year Ended October 31, 2012			Year Ended October 31, 2011			Year Ended October 31, 2012			Year Ended October 31, 2011
Increase (Decrease) in Net Assets:
Operations:
Net investment income	$	1,410		$	1,970		$	37,716		$	40,671
Net realized gain or (loss) from investments, foreign currency transactions, and futures contracts		(635	)		20,912			(69,509	)		72,027
Change in net unrealized appreciation or (depreciation) from investments, foreign currency contracts, and futures contracts		2,709			(40,439	)		152,378			(183,996	)
Net increase (decrease) in net assets resulting from operations		3,484			(17,557	)		120,585			(71,298	)
Distributions to Shareholders:
Net investment income:
Institutional Class		(105	)		(85	)		(18,420	)		(14,155	)
Y Class		(62	)		—			(32	)		(7	)
Investor Class		(71	)		(43	)		(12,396	)		(8,721	)
Advisor Class		—			—			(28	)		(13	)
A Class		(4	)		—			(13	)		—
C Class		—			—			(3	)		—
AMR Class		(1,312	)		(942	)		(14,493	)		(15,008	)
Net realized gain from investments:
Institutional Class		(905	)		—			—			—
Y Class		(572	)		—			—			—
Investor Class		(1,012	)		—			—			—
A Class		(46	)		—			—			—
C Class		(1	)		—			—			—
AMR Class		(12,236	)		—			—			—
Net distributions to shareholders		(16,326	)		(1,070	)		(45,385	)		(37,904	)
Capital Share Transactions:
Proceeds from sales of shares		37,709			51,671			408,688			286,664
Reinvestment of dividends and distributions		16,254			1,067			42,922			35,604
Cost of shares redeemed		(55,746	)		(47,315	)		(363,018	)		(385,830	)
Redemption fees		14			30			23			42
Net increase (decrease) in net assets from capital share transactions		(1,769	)		5,453			88,615			(63,520	)
Net increase (decrease) in net assets		(14,611	)		(13,174	)		163,815			(172,722	)
Net Assets:
Beginning of period		137,184			150,358			1,289,111			1,461,833
End of Period *	$	122,573		$	137,184		$	1,452,926		$	1,289,111
*  Includes undistributed net investment income (loss) of	$	1,040		$	1,256		$	37,686		$	44,439

See accompanying notes

24

American Beacon Funds^SM

Notes to Financial Statements

October 31, 2012

1. Organization and Significant Accounting Policies

American Beacon Funds (the “Trust”), which is comprised of 24 Funds, is organized as a Massachusetts business trust and is registered under the Investment Company Act of 1940, as amended (the “Act”), as a diversified, open-end management investment company. These financial statements and notes to the financial statements relate to the American Beacon Emerging Markets Fund and the American Beacon International Equity Fund (each a “Fund” and collectively, the “Funds”), each a series of the Trust.

American Beacon Advisors, Inc. (the “Manager”) is a wholly-owned subsidiary of Lighthouse Holdings, Inc. and was organized in 1986 to provide business management, advisory, administrative, and asset management consulting services to the Trust and other investors.

Class Disclosure

Each Fund has multiple classes of shares designed to meet the needs of different groups of investors; however, not all Funds offer all classes. The following table sets forth the differences amongst the classes:

Class:	Offered to:
Institutional Class	Investors making an initial investment of $250,000
Y Class	Investors making an initial investment of $100,000
Investor Class	General public and investors investing through an intermediary
Advisor Class	Investors investing through an intermediary
Retirement Class	Investors investing through an intermediary
A Class	General public and investors investing through an intermediary with applicable sales charges
C Class	General public and investors investing through an intermediary with applicable sales charges
AMR Class	Investors in the tax-exempt retirement and benefit plans of the Manager, AMR Corporation, and its affiliates

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

New Accounting Pronouncements

In May 2011, the Financial Accounting Standards Board (“FASB”) issued an Accounting Standards Update (“ASU”) ASU No. 2011-04 “Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. Generally Accepted Accounting Principles (“U.S. GAAP”) and the International Financial Reporting Standards (“IFRSs”)”. ASU No. 2011-04 amends FASB ASC Topic 820, Fair Value Measurements and Disclosures, to establish common requirements for measuring fair value and for disclosing information about fair value measurements in accordance with U.S. GAAP and IFRSs. ASU No. 2011-04 is effective for fiscal years beginning after December 15, 2011 and for the interim period May 1, 2012 to October 31, 2012.

Management has evaluated the implications of these changes and determined that the impact of the new guidance will only affect the disclosure requirements related to the financial statements. However, as the Funds did not hold any Level 3 investments as of October 31, 2012, the financial statement disclosures were not affected.

25

American Beacon Funds^SM

Notes to Financial Statements

October 31, 2012

2. Transactions with Affiliates

Management Agreement

The Trust and the Manager are parties to a Management Agreement that obligates the Manager to provide or oversee the provision of all investment advisory, fund management, and securities lending services. Investment assets of the Funds are managed by multiple investment advisors which have entered into separate investment advisory agreements with the Manager. As compensation for performing the duties required under the Management Agreement, the Manager receives from the Funds an annualized fee equal to 0.05% of the average daily net assets plus amounts paid by the Manager to the unaffiliated investment advisors hired by the Manager to direct investment activities of the Funds. Management fees paid during the year ended October 31, 2012 were as follows (dollars in thousands):

	Management Fee Rate			Management Fee		Amounts paid to Investment Advisors		Net Amounts Retained by Manager
Emerging Markets		0.80	%	$	1,017	$	952	$	65
International Equity		0.32	%	$	4,189	$	3,523	$	666

As compensation for services provided by the Manager in connection with securities lending activities, the lending Fund pays to the Manager, with respect to cash collateral posted by borrowers, a fee up to 25% of the net monthly interest income (the gross interest income earned by the investment of cash collateral, less the amount paid to borrowers and related expenses) from such activities and, with respect to loan fees paid by borrowers, a fee up to 25% of such loan fees. This fee is netted against securities lending income in the Statements of Operations. During the year ended October 31, 2012, securities lending fees paid to the Manager on behalf of the International Equity Fund was $208,488.

Administrative Services Agreement

The Manager and the Trust entered into an Administrative Services Agreement which obligates the Manager to provide or oversee administrative services to the Funds. As compensation for performing the duties required under the Administrative Services Agreement, the Manager receives an annualized fee of 0.30% of the average daily net assets of the Institutional, Y, Investor, Advisor and Retirement Classes, 0.40% of the average daily net assets of the A and C Classes, and 0.05% of the average daily net assets of the AMR Class of the Funds. Administrative Service fees for the Retirement and C Classes for the period ended October 31, 2012 were less than $500.

Distribution Plans

The Funds, except for the Advisor, Retirement, A, and C Classes of the Funds, have adopted a “defensive” Distribution Plan (the “Plan”) in accordance with Rule 12b-1 under the Act, pursuant to which no fees may be charged to the Funds for distribution purposes. However, the Plan authorizes the management and administrative service fees received by the Manager and the investment advisors hired by the Manager to be used for distribution purposes. Under this Plan, the Funds do not intend to compensate the Manager or any other party, either directly or indirectly, for the distribution of Funds shares.

Separate Distribution Plans (the “Distribution Plans”) have been adopted pursuant to Rule 12b-1 under the Act for the Advisor, Retirement, A, and C Classes of the Funds. Under the Distribution Plans, as compensation for distribution assistance, the Manager receives an annual fee of 0.25% of the average daily net assets of the Advisor and A Classes, 0.50% of the average daily net assets of the Retirement Class, and 1.00% of the average daily net assets of the C Class. The fee will be payable without regard to whether the amount of the fee is more or less than the actual expenses incurred in a particular month by the Manager for distribution assistance. Distribution fees for the Retirement Class for the period ended October 31, 2012 were less than $500.

26

American Beacon Funds^SM

Notes to Financial Statements

October 31, 2012

Service Plans

The Manager and the Trust entered into Service Plans that obligate the Manager to oversee additional shareholder servicing of the Y, Investor, Advisor, Retirement, A, and C Classes. As compensation for performing the duties required under the Service Plans, the Manager receives 0.10% of the average daily net assets of the Y Class, 0.15% of the average daily net assets of the A and C Classes, 0.25% of the average daily net assets of the Advisor and Retirement Classes, and up to 0.375% of the average daily net assets of the Investor Class of the Funds. Service fees for the Retirement and C Classes for the period ended October 31, 2012 were less than $500.

Brokerage Commissions

Affiliated entities of an investment advisor to the Emerging Markets Fund received net commissions on purchases and sales of the Fund’s portfolio securities totaling $319 for the year ended October 31, 2012.

Investment in Affiliated Funds

The Funds may invest in the American Beacon Money Market Select Fund (the “MM Select Fund”) and the U.S. Government Money Market Fund (the “USG Select Fund”), (collectively the “Select Funds”). Cash collateral received by the Funds in connection with securities lending may be invested in the Select Funds. The Select Funds and the Funds have the same investment advisor and therefore, are considered to be affiliated. The Manager serves as investment advisor to the Select Funds and receives Management and Administrative Service fees totaling 0.10% of the average daily net assets of the Select Funds. During the year ended October 31, 2012, fees earned by the Manager from the Select Funds were as follows:

	Direct Investments in Select Funds		Securities Lending Collateral  Invested in Select Funds		Total
International Equity	$	8,664	$	20,146	$	28,810

Interfund Lending Program

Pursuant to an exemptive order by the Securities and Exchange Commission (“SEC”), the Funds, along with other registered investment companies having management contracts with the Manager, may participate in an interfund lending program as a borrower. This program provides an alternative credit facility allowing the Funds to borrow from other participating Funds. During the year ended October 31, 2012, the Funds did not utilize the credit facility.

Expense Reimbursement Plan

The Manager voluntary and contractually agreed to reimburse the following Funds to the extent that total operating expenses exceeded a Fund’s expense cap. For the year ended October 31, 2012, the Manager reimbursed expenses as follows:

		Expense Caps
Fund	Class	11/1/11 to 2/28/12			3/1/12 to 10/31/12			Reimbursed Expenses		Expiration of Reimbursements
Emerging Markets	Institutional		1.35	%		1.35	%	$	13,514		2015
Emerging Markets	Y		1.45	%		1.45	%		5,917		2015
Emerging Markets	Investor		1.79	%		1.79	%		8,048		2015
Emerging Markets	A		1.79	%		1.79	%		1,258		2015
Emerging Markets	C		2.54	%		2.54	%		96		2015
International Equity	Institutional*		N/A			0.72	%*		18,792		2015
International Equity	Retirement		1.47	%		1.47	%		365		2015
International Equity	A		1.25	%		1.25	%		200		2015
International Equity	C		1.99	%		1.99	%		134		2015

* Voluntary Reimbursement

27

American Beacon Funds^SM

Notes to Financial Statements

October 31, 2012

Of these amounts, $4,512 and $4,149 was receivable from the Manager to the Emerging Markets and International Equity Funds respectively, at October 31, 2012. The Funds have adopted an Expense Reimbursement Plan whereby the Manager may seek repayment of fees waived or expenses reimbursed for a period of up to three years. However, reimbursement will occur only if the Class’ average net assets have grown or expenses have declined sufficiently to allow reimbursement without causing its expense ratio to exceed the previously agreed upon contractual expense limit. The reimbursed expenses above will expire in 2015. The carryover of excess expenses potentially reimbursable to the Manager, but not recorded as a liability for the Emerging Markets Fund is $28,821 and $67,581 expiring in 2013 and 2014, respectively and for the International Equity Fund $3,363 expiring in 2014. For the year ended October 31, 2012, the Funds did not record a liability for potential reimbursements, due to the current assessment that a reimbursement is unlikely.

Sales Commissions

The Funds’ distributor, Foreside Fund Services, LLC (“Foreside”), may receive a portion of A Class sales charges from broker dealers and it may be used to offset distribution related expenses. For the year ended October 31, 2012, Foreside has collected $116 and $2,270 for Emerging Markets and International Equity Funds, respectively from the sale of Class A Shares.

A contingent deferred sales charge (“CDSC”) of 1.00% will be deducted with respect to Class C Shares redeemed within 12 months of purchase, unless waived as discussed in the Prospectus. Any applicable CDSC will be 1.00% of the lesser of the original purchase price or the value of the redemption of the Class C Shares redeemed. During the year ended October 31, 2012 there were no CDSC fees collected for the Emerging Markets and International Equity Funds.

3. Security Valuation and Fair Value Measurements

Investments are valued at the close of the New York Stock Exchange (the “Exchange”), normally 4 p.m. ET, each day that the Exchange is open for business. Equity securities for which market quotations are available are valued at the last sale price or official closing price (closing bid price or last evaluated quote if no sale has occurred) on the primary market or exchange on which they trade.

Investments in mutual funds are valued at the closing net asset value (“NAV”) per share of the mutual fund on the day of valuation. Investment grade short-term obligations with 60 days or less to maturity are valued using the amortized cost method, which approximates fair value.

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

Futures contracts are valued based upon their quoted daily settlement prices. Upon entering into a futures contract, a Fund is required to deposit with its futures broker, an amount of cash or U.S. Government and Agency Obligations in accordance with the initial margin requirements of the broker or exchange. Futures contracts are marked to market daily and an appropriate payable or receivable for the change in value (“variation margin”) is recorded by the Fund. Gains or losses are recognized, but not considered realized until the contracts expire or are closed. Futures contracts involve, to varying degrees, risk of loss in excess of the variation margin disclosed on the Statements of Assets and Liabilities.

For valuation purposes, the last quoted prices of non-U.S. equity securities may be adjusted under the circumstances described below. If the Fund determines that developments between the close of a foreign market and the close of the Exchange will, in its judgment, materially affect the value of some or all of its portfolio securities, the Fund will adjust the previous closing prices to reflect what it believes to be the fair

28

American Beacon Funds^SM

Notes to Financial Statements

October 31, 2012

value of the securities as of the close of the Exchange. In deciding whether it is necessary to adjust closing prices to reflect fair value, the Fund reviews a variety of factors, including developments in foreign markets, the performance of U.S. securities markets, and the performance of instruments trading in U.S. markets that represent foreign securities and baskets of foreign securities. A Fund may also fair value securities in other situations, such as when a particular foreign market is closed, but the Fund is open. The Fund uses outside pricing services to provide it with closing prices and information to evaluate and/or adjust those prices. The Fund cannot predict how often it will use closing prices and how often it will determine it necessary to adjust those prices to reflect fair value. As a means of evaluating its security valuation process, the Fund routinely compares closing prices, the next day’s opening prices in the same markets, and adjusted prices.

Valuation Inputs

Various inputs may be used to determine the fair value of the Funds’ investments. These inputs are summarized in three broad levels for financial statement purposes. The inputs or methodologies used to value securities are not necessarily an indication of the risk associated with investing in those securities.

Level 1 - Quoted prices in active markets for identical securities.

Level 2 - Prices determined using other significant observable inputs. These may include quoted prices for similar securities, interest rates, prepayment speeds, credit risk, and others.

Level 3 - Prices determined using other significant unobservable inputs. Unobservable inputs reflect the Fund’s own assumptions about the factors market participants would use in pricing an investment, and would be based on the best information available.

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

Common stocks and financial derivative instruments, such as futures contracts that are traded on a national securities exchange, are stated at the last reported sale or settlement price on the day of valuation. To the extent these securities are actively traded and valuation adjustments are not applied, they are categorized as Level 1 of the fair value hierarchy. Valuation adjustments may be applied to certain securities that are solely traded on a foreign exchange to account for the market movement between the close of the foreign market and the close of the Exchange. These securities are valued using pricing service providers that consider the correlation of the trading patterns of the foreign security to the intraday trading in the U.S. markets for investments. Securities using these valuation adjustments are categorized as Level 2 of the fair value hierarchy. Preferred securities and other equities traded on inactive markets or valued by reference to similar instruments are also categorized as Level 2 of the fair value hierarchy.

Investments in registered open-end investment management companies will be valued based upon the NAVs of such investments and are categorized as Level 1 of the fair value hierarchy. Short-term investments having a maturity of 60 days or less are generally valued at amortized cost which approximates fair value. These investments are categorized as Level 2 of the fair value hierarchy.

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

29

American Beacon Funds^SM

Notes to Financial Statements

October 31, 2012

The end of period timing recognition is used for the significant transfers between Levels of the Fund’s assets and liabilities. In accordance with the requirements of U.S. GAAP, a fair value hierarchy and Level 3 reconciliation, if any, have been included in the Notes to the Schedule of Investments for the Fund.

The Funds’ investments are summarized by level based on the inputs used to determine their values. U.S. GAAP also requires all transfers between any levels to be disclosed. At October 31, 2012, the investments were classified as described below (in thousands):

Emerging Markets	Level 1			Level 2			Level 3		Total
Foreign Preferred Stocks	$	3,814		$	—		$	—	$	3,814
Foreign Common Stocks		112,870			89			—		112,959
U.S. Common Stocks		731			—			—		731
Short-Term Investments—Money Markets		4,632			—			—		4,632
Total Investments in Securities	$	122,047		$	89		$	—	$	122,136
Futures Contracts	$	(29	)	$	—		$	—	$	(29	)
International Equity	Level 1			Level 2			Level 3		Total
Foreign Preferred Stocks	$	95		$	—		$	—	$	95
Foreign Common Stocks		1,345,796			—			—		1,345,796
Short-Term Investments—Money Markets		84,763			—			—		84,763
Securities Lending Collateral invested in Money Market Funds		5,538			—			—		5,538
Total Investments in Securities	$	1,436,192		$	—		$	—	$	1,436,192
Financial Derivative Instruments-Assets*	Level 1			Level 2			Level 3		Total
Futures Contracts		344			—			—		344
Foreign Currency Contracts		—			246			—		246
	$	344		$	246		$	—	$	590
Financial Derivative Instruments-Liabilities*	Level 1			Level 2			Level 3		Total
Futures Contracts	$	(631	)	$	—		$	—	$	(631	)
Foreign Currency Contracts		—			(1,389	)		—		(1,389	)
	$	(631	)	$	(1,389	)	$	—	$	(2,020	)

* Financial derivative instruments may include open futures contracts and foreign currency contracts.

During the fiscal year October 31, 2012, the Emerging Markets Fund and the International Equity Fund held securities valued at $64,043 and $1,048,416, respectively that were transferred from Level 2 to Level 1 of the valuation hierarchy. The value of securities held by the Emerging Markets Fund that was transferred to Level 2 as of October 31, 2012 is $51.

Security Transactions and Investment Income

Security transactions are recorded on the trade date of the security purchase or sale. The Funds may purchase securities with delivery or payment to occur at a later date. At the time the Funds enter into a commitment to purchase a security, the transaction is recorded, and the value of the security is reflected in the NAV. The value of the security may vary with market fluctuations.

Dividend income, net of foreign taxes, is recorded on the ex-dividend date, except certain dividends from foreign securities which are recorded as soon as the information is available to the Funds. Interest income is earned from settlement date, recorded on the accrual basis, and adjusted, if necessary, for accretion of discounts and amortization of premiums. For financial and tax reporting purposes, realized gains and losses are determined on the basis of specific lot identification.

30

American Beacon Funds^SM

Notes to Financial Statements

October 31, 2012

Currency Translation

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

Dividends to Shareholders

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

Commission Recapture

The Funds have established brokerage commission recapture arrangements with certain brokers or dealers. If a Fund’s investment advisor chooses to execute a transaction through a participating broker, the broker rebates a portion of the commission back to the Fund. Any collateral benefit received through participation in the commission recapture program is directed exclusively to the Fund. This amount is reported with the net realized gain in the Fund’s Statement of Operations.

Allocation of Income, Expenses, Gains, and Losses

Income, expenses (other than those attributable to a specific class), gains, and losses are allocated daily to each class of shares based upon the relative proportion of net assets represented by such class. Operating expenses directly attributable to a specific class are charged against the operations of that class.

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results may differ from those estimated.

Redemption Fees

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

Other

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

31

American Beacon Funds^SM

Notes to Financial Statements

October 31, 2012

4. Securities and Other Investments

Restricted Securities

Certain Funds may invest in securities that are subject to legal or contractual restrictions on resale. These securities may be sold privately, but are required to be registered or exempted from such registration before being sold to the public. Private placement securities are generally considered to be restricted except for those securities traded between qualified institutional investors under the provisions of Rule 144A of the Securities Act of 1933. Disposal of restricted securities may involve time-consuming negotiations and expenses, and prompt sale at an acceptable price may be difficult to achieve. Restricted securities outstanding at the year ended October 31, 2012 are disclosed in the Notes to the Schedules of Investments.

5. Financial Derivative Instruments

Forward Foreign Currency Contracts

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

Futures Contracts

Futures contracts are contracts to buy or sell a standard quantity of securities at a specified price on a future date. The Funds may enter into financial futures contracts as a method for keeping assets readily convertible to cash if needed to meet shareholder redemptions or for other needs while maintaining exposure to the stock or bond market, as applicable. The primary risks associated with the use of futures contracts are the possibility of illiquid markets or imperfect correlation between the values of the contracts and the underlying securities, or that the counterparty will fail to perform its obligations.

Upon entering into a futures contract, the Funds are required to set aside or deposit with a broker an amount, termed the initial margin, which typically represents a portion of the face value of the futures contract. A Fund usually reflects this amount on the Schedule of Investments as a U.S. Treasury Bill held as collateral for futures contracts or as Cash deposited with broker on the Statements of Assets and Liabilities. Payments to and from the broker, known as variation margin, are required to be made on a daily basis as the price of the futures contract fluctuates. Changes in initial settlement values are accounted for as unrealized appreciation (depreciation) until the contracts are terminated, at which time realized gains and losses are recognized. Futures contracts are valued at the most recent settlement price established each day by the exchange on which they are traded.

Emerging Markets

Values of Derivative Instruments not accounted for as hedging instruments as of October 31, 2012 (in thousands):

Statements of Assets and Liabilities	Derivatives			Fair Value
Unrealized appreciation or (depreciation) of investments, foreign currency contracts, and futures contracts		Equity Contracts	(1)	$	(29	)

Effect of financial derivative instruments not accounted for as hedging instruments during the year ended October 31, 2012 (in thousands):

Statements of Operations	Derivatives		Balance
Net realized gain (loss) from futures contracts		Equity Contracts	$	339
Change in net unrealized appreciation or (depreciation) of futures contracts		Equity Contracts		(581	)

32

American Beacon Funds^SM

Notes to Financial Statements

October 31, 2012

International Equity

Values of financial instruments not accounted for as hedging instruments as of October 31, 2012 (in thousands):

Statements of Assets and Liabilities: Assets	Equity contracts			Foreign exchange contracts			Total
Unrealized appreciation of investments, foreign currency contracts, and futures contracts	$	344		$	—		$	344
Unrealized appreciation of foreign currency contracts		—			246			246
	$	344		$	246		$	590
Liabilities	Equity contracts			Foreign exchange contracts			Total
Unrealized depreciation of investments, foreign currency contracts, and futures contracts(1)	$	(631	)	$	—		$	(631	)
Unrealized depreciation of foreign currency contracts		—			(1,389	)		(1,389	)
	$	(631	)	$	(1,389	)	$	(2,020	)

Effect of financial derivative instruments on the Statements of Operations for the period ended October 31, 2012 (in thousands):

Statements of Operations:	Equity contracts			Foreign exchange contracts			Total
Net realized gain (loss) from futures contracts	$	5,474		$	—		$	5,474
Net realized gain (loss) from foreign currency contracts		—			567			567
	$	5,474		$	567		$	6,041
	Equity contracts			Foreign exchange contracts			Total
Change in net unrealized appreciation or (depreciation) of futures contracts	$	(3,437	)	$	—		$	(3,437	)
Change in net unrealized appreciation or (depreciation) of foreign currency contracts		—			(52,807	)		(52,807	)
	$	(3,437	)	$	(52,807	)	$	(56,244	)

⁽¹⁾  Includes cumulative appreciation or (depreciation) of futures contracts as reported in the Schedule of Investments footnotes. Only current day’s variation margin is reported within the Statements of Assets and Liabilities.

6. Federal Income and Excise Taxes

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

The Funds do not have any unrecognized tax benefits in the accompanying financial statements. Each of the tax years in the four year period ended October 31, 2012 remains subject to examination by the Internal Revenue Service. If applicable, the Funds recognize interest accrued related to unrecognized tax benefits in interest expense and penalties in “Other expenses” on the Statements of Operations.

Dividends are categorized in accordance with income tax regulations which may treat certain transactions differently than U.S. GAAP. Accordingly, the character of distributions and composition of net assets for tax purposes may differ from those reflected in the accompanying financial statements.

33

American Beacon Funds^SM

Notes to Financial Statements

October 31, 2012

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

	Emerging Markets				International Equity
	Year Ended October 31, 2012		Year Ended October 31, 2011		Year Ended October 31, 2012		Year Ended October 31, 2011
Distributions paid from:
Ordinary income*
Institutional Class	$	105	$	85	$	18,420	$	14,155
Y Class		62		—		32		7
Investor Class		71		43		12,396		8,721
Advisor Class		—		—		28		13
A Class		4		—		13		—
C Class		—		—		3		—
AMR Class		1,312		942		14,493		15,008
Capital gains
Institutional Class		905		—		—		—
Y Class		572		—		—		—
Investor Class		1,012		—		—		—
Advisor Class		—		—		—		—
A Class		46		—		—		—
C Class		1		—		—		—
AMR Class		12,236		—		—		—
Total distributions paid	$	16,326	$	1,070	$	45,385	$	37,904

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

As of October 31, 2012, the components of distributable earnings or (deficit) on a tax basis were as follows (in thousands):

	Emerging Markets			International Equity
Cost basis of investments for federal income tax purposes	$	131,448		$	1,305,951
Unrealized appreciation		12,339			207,406
Unrealized depreciation		(21,651	)		(77,165	)
Net unrealized appreciation or (depreciation)		(9,312	)		130,241
Undistributed ordinary income		1,251			36,746
Accumulated long-term gain or (loss)		(1,598	)		(219,584	)
Other temporary differences		(34	)		2,286
Distributable earnings or (deficits)	$	(9,693	)	$	(50,311	)

Financial reporting records are adjusted for permanent book/tax differences to reflect tax character. Financial records are not adjusted for temporary differences. The temporary differences between financial reporting and tax-basis reporting of unrealized appreciation or depreciation are attributable primarily to the tax deferral of losses from wash sales, the realization for tax purposes of unrealized gain (losses) on certain derivative instruments, the realization for tax purposes of unrealized gain (losses) on investments in passive foreign investment companies, and Section 732 basis adjustments.

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

Accordingly, the following amounts represent current year permanent differences derived from foreign currency, gains (losses) from sales of investments in passive foreign investment companies, and Section 732 basis adjustments that have been reclassified as of October 31, 2012 (in thousands):

	Emerging			International
	Markets			Equity
Paid-in-capital	$	—		$	297
Undistributed net investment income (loss)		(72	)		916
Accumulated net realized gain (loss)		72			(1,214	)
Unrealized appreciation or depreciation of investments, futures contracts, and foreign currency contracts		—			1

34

American Beacon Funds^SM

Notes to Financial Statements

October 31, 2012

On December 22, 2010, the Regulated Investment Company Modernization Act of 2010 (the “RIC MOD”) was enacted, which changed various technical rules governing the tax treatment of regulated investment companies. The changes are generally effective for taxable years beginning after the date of enactment. One of the more prominent changes addresses capital loss carryforwards. Under the RIC MOD, each Fund will be permitted to carry forward capital losses incurred in taxable years beginning after the date of enactment for an unlimited period. However, any losses incurred during those future taxable years will be required to be utilized prior to the losses incurred in pre-enactment taxable years, which carry an expiration date. As a result of this ordering rule, pre-enactment capital loss carryforwards may be more likely to expire unused. Additionally, post-enactment capital loss carryforwards will retain their character as either short-term or long-term capital losses rather than being considered all short-term as permitted under previous regulation.

Finally, the RIC MOD contains several provisions aimed at preserving the character of distributions made by a fiscal year RIC during the portion of its taxable year ending after October 31 or December 31, reducing the circumstances under which a RIC might be required to file amended Forms 1099 to restate previously reported distributions. Except for the simplification provisions related to RIC qualification, the RIC MOD is effective for taxable years beginning after December 22, 2010. The provisions related to RIC qualification are effective for taxable years for which the extended due date of the tax return is after December 22, 2010.

Losses incurred that will be carried forward under the provisions of the Act for the year ended October 31, 2012 are al follows (in thousands):

	Loss Carryforward Character
Fund	Short-Term		Long Term		Total
Emerging Markets	$	—	$	1,628	$	1,628
International Equity		33,010		43,716		76,726

As of October 31, 2012 the capital loss carryforward positions of the Funds prior to the provisions of RIC MOD that may be applied against realized net taxable gains in each succeeding year or until their expiration dates, whichever occurs first, are as follows (in thousands):

Fund	2017
International Equity	$	143,145

The Funds did not utilize any capital loss carryforwards for the year ended October 31, 2012.

7. Investment Transactions

The aggregate cost of purchases and proceeds from sales of investments, other than short-term obligations, for the year ended October 31, 2012 were (in thousands):

	Emerging Markets		International Equity
Purchases	$	54,229	$	806,842
Sales and Maturities		67,933		750,406

A summary of the Fund’s direct transactions in the USG Select Fund for the year ended October 31, 2012 is set forth below (in thousands):

	Affiliated Fund	October 31, 2011 Shares/Fair Value		Purchases		Sales		October 31, 2012 Shares/Fair Value
International Equity-Direct	USG Select Fund	$	10,000	$	22,540	$	22,540	$	10,000
International Equity- Securities Lending	USG Select Fund	$	3,078	$	621,696	$	623,176	$	1,598

35

American Beacon Funds^SM

Notes to Financial Statements

October 31, 2012

8. Securities Lending

The International Equity Fund may lend its securities to qualified financial institutions, such as certain broker-dealers, to earn additional income. The borrowers are required to secure their loans continuously with collateral in an amount at least equal to the fair value of the securities loaned, initially in an amount at least equal to 102% of the fair value of domestic securities loaned and 105% of the fair value of international securities loaned. Collateral is monitored and marked to market daily. Daily mark to market amounts are required to be paid to the borrower or received from the borrower by the end of the following business day. This one day settlement for mark to market amounts may result in the collateral being temporarily less than the value of the securities on loan or temporarily more than the required minimum collateral.

To the extent that a loan is collateralized by cash, such cash collateral shall be invested by the securities lending agent (the “Agent”) in money market mutual funds, and other short-term investments, provided the investments meet certain quality and diversification requirements. Securities purchased with cash collateral proceeds are listed in the Fund’s Schedule of Investments and the collateral is shown on the Statements of Assets and Liabilities as a payable.

Securities lending income is generated from the demand premium (if any) paid by the borrower to borrow a specific security and from the return on investment of cash collateral, reduced by negotiated rebate fees paid to the borrower and transaction costs. To the extent that a loan is secured by non-cash collateral, securities lending income is generated as a demand premium reduced by transaction costs. The Fund, the Agent, and the Manager retain 78%, 12% and 10%, respectively, of the income generated from securities lending.

While securities are on loan, the Fund continues to receive certain income associated with that security and any gain or loss in the market price that may occur during the term of the loan. In the case of domestic equities, the value of any dividend is received in the form of a substitute payment approximately equal to the dividend. In the case of foreign securities, a negotiated amount is received that is less than the actual dividend, but higher than the dividend amount minus the foreign tax that the Fund would be subject to on the dividend.

Securities lending transactions pose certain risks to the Fund, including that the borrower may not provide additional collateral when required or return the securities when due, that the value of the short-term investments will be less than the amount of cash collateral required to be returned to the borrower, that non-cash collateral may be subject to legal constraints in the event of a borrower bankruptcy, and that the cash collateral investments could become illiquid and unable to be used to return collateral to the borrower. The Fund could also experience delays and costs in gaining access to the collateral. The Fund bears the risk of any deficiency in the amount of the cash collateral available for return to the borrower and any action which impairs its ability to liquidate non-cash collateral to satisfy a borrower default.

As of October 31, 2012, the value of outstanding securities on loan and the value of collateral was as follows (in thousands):

Fair Value of Securities on Loan	Non-Cash Collateral	Cash Collateral Posted by Borrower
$ 5,263	$ —	$ 5,538

The cash collateral listed in the International Equity Fund’s Schedule of Investments was purchased using cash collateral proceeds also is shown on the Statements of Assets and Liabilities as a Payable upon return of securities loaned. Income earned from Securities Lending is included in Income derived from securities lending in the Statements of Operations.

36

American Beacon Funds^SM

Notes to Financial Statements

October 31, 2012

Non-cash collateral received by the Fund may not be sold or re-pledged except to satisfy a borrower default. Therefore, non-cash collateral is not included on the Fund’s Schedule of Investments or Statements of Assets and Liabilities.

9. Capital Share Transactions

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

For the Year ended October 31, 2012

	Institutional Class						Y Class						Investor Class						AMR Class
Emerging Markets Fund	Shares			Amount			Shares			Amount			Shares			Amount			Shares			Amount
Shares sold		10		$	113			115		$	1,324			124		$	1,394			2,982		$	34,518
Reinvestment of dividends		98			1,005			60			626			102			1,034			1,304			13,548
Shares redeemed		(52	)		(595	)*		(429	)		(4,960	)*		(195	)		(2,136	)*		(4,187	)		(47,924	)*
Net increase (decrease) in shares outstanding		56		$	523			(254	)	$	(3,010	)		31		$	292			99		$	142

	A Class						C Class
Emerging Markets Fund	Shares			Amount			Shares			Amount
Shares sold		33		$	356			1		$	4
Reinvestment of dividends		4			40			—			1
Shares redeemed		(10	)		(110	)*		(1	)		(7	)*
Net increase (decrease) in shares outstanding		27		$	286			—		$	(2	)

	Institutional Class						Y Class						Investor Class						Advisor Class
International Equity Fund	Shares			Amount			Shares			Amount			Shares			Amount			Shares			Amount
Shares sold		12,127		$	182,817			53		$	806			10,041		$	149,389			31		$	479
Reinvestment of dividends		1,161			16,128			2			32			886			12,231			2			28
Shares redeemed		(8,916	)		(134,295	)*		(10	)		(150	)*		(7,985	)		(118,633	)*		(13	)		(195	)*
Net increase in shares outstanding		4,372		$	64,650			45		$	688			2,942		$	42,987			20		$	312
	Retirement Class						AMR Class						A Class						C Class
International Equity Fund	Shares			Amount			Shares			Amount			Shares			Amount			Shares			Amount
Shares sold		3		$	52			4,926		$	74,189			60		$	920			2		$	36
Reinvestment of dividends		—			—			1,043			14,493			—			7			—			3
Shares redeemed		—			(2	)*		(7,254	)		(109,534	)*		(12	)		(182	)*		—			(4	)*
Net increase (decrease) in shares outstanding		3		$	50			(1,285	)	$	(20,852	)		48		$	745			2		$	35
For the Year Ended October 31, 2011
	Institutional Class						Y Class						Investor Class						AMR Class
Emerging Markets Fund	Shares			Amount			Shares			Amount			Shares			Amount			Shares			Amount
Shares sold		234		$	3,361			447		$	6,562			178		$	2,540			2,808		$	38,701
Reinvestment of dividends		6			84			—			—			3			41			63			942
Shares redeemed		(187	)		(2,712	)*		(33	)		(458	)*		(329	)		(4,588	)*		(2,747	)		(39,516	)*
Net increase (decrease) in shares outstanding		53		$	733			414		$	6,104			(148	)	$	(2,007	)		124		$	127

37

American Beacon Funds^SM

Notes to Financial Statements

October 31, 2012

	A Class						C Class
Emerging Markets Fund	Shares			Amount			Shares		Amount
Shares sold		36		$	498			1	$	9
Reinvestment of dividends		—			—			—		—
Shares redeemed		(1	)		(11	)*		—		—	*
Net increase in shares outstanding		35		$	487			1	$	9

	Institutional Class						Y Class						Investor Class						Advisor Class
International Equity Fund	Shares			Amount			Shares			Amount			Shares			Amount			Shares			Amount
Shares sold		8,441		$	139,313			32		$	548			5,946		$	98,128			84		$	1,395
Reinvestment of dividends		732			11,984			—			7			529			8,593			1			13
Shares redeemed		(7,305	)		(122,646	)*		(1	)		(21	)*		(9,134	)		(152,000	)*		(64	)		(1,074	)*
Net increase (decrease) in shares outstanding		1,868		$	28,651			31		$	534			(2,659	)	$	(45,279	)		21		$	334

	Retirement Class				AMR Class						A Class						C Class
International Equity Fund	Shares		Amount		Shares			Amount			Shares			Amount			Shares		Amount
Shares sold		—	$	—		3,041		$	46,659			32		$	536			5	$	85
Reinvestment of dividends		—		—		917			15,007			—			—			—		—
Shares redeemed		—		—		(6,578	)		(110,019	)*		(2	)		(28	)*		—		—	*
Net increase (decrease) in shares outstanding		—	$	—		(2,620	)	$	(48,353	)		30		$	508			5	$	85

* Net of Redemption Fees

38

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39

American Beacon Emerging Markets Fund^SM

Financial Highlights

(For a share outstanding throughout the period)

	Institutional Class															Y Class
	Year Ended October 31,															Year Ended October 31,						March 1 to October 31, 2010
	2012			2011A			2010			2009			2008			2012			2011A
Net asset value, beginning of period	$	12.67		$	14.55		$	11.95		$	9.00		$	24.20		$	12.75		$	14.53		$	12.29
Income from investment operations:
Net investment income (loss)		0.12			0.16			0.13			0.05			0.23			0.06			0.13			0.04
Net gains (losses) from securities (both realized and unrealized)		0.11			(1.91	)		2.63			4.42			(11.78	)		0.16			(1.91	)		2.20
Total income (loss) from investment operations		0.23			(1.75	)		2.76			4.47			(11.55	)		0.22			(1.78	)		2.24
Less distributions:
Dividends from net investment income		(0.16	)		(0.13	)		(0.16	)		(0.21	)		(0.10	)		(0.15	)		—			—
Distributions from net realized gains on securities		(1.41	)		—			—			(1.31	)		(3.55	)		(1.41	)		—			—
Total distributions		(1.57	)		(0.13	)		(0.16	)		(1.52	)		(3.65	)		(1.56	)		—			—
Redemption fees added to beneficial interests		0.00	B		0.00	B		0.00	B		—			—			0.00	B		0.00	B		0.00	B
Net asset value, end of period	$	11.33		$	12.67		$	14.55		$	11.95		$	9.00		$	11.41		$	12.75		$	14.53
Total return C,D		3.05	%		(12.18	)%		23.36	%		60.56	%		(55.59	)%		2.91	%		(12.25	)%		18.23	%E
Ratios and supplemental data:
Net assets, end of period (in thousands)	$	8,256		$	8,523		$	9,023		$	9,494		$	5,478		$	1,837		$	5,296		$	13
Ratios to average net assets (annualized):
Expenses, before reimbursements		1.50	%		1.55	%		1.58	%		1.66	%		1.38	%		1.72	%		1.68	%		1.82	%F
Expenses, net of reimbursements		1.33	%		1.24	%		1.39	%		1.66	%		1.38	%		1.44	%		1.33	%		1.42	%F
Net investment income (loss), before reimbursements		0.87	%		0.99	%		0.58	%		0.95	%		1.35	%		(0.05	)%		0.99	%		0.40	%F
Net investment income (loss), net of reimbursements		1.04	%		1.30	%		0.77	%		0.95	%		1.35	%		0.23	%		1.35	%		0.79	%F
Portfolio turnover rate		44	%		101	%		64	%		70	%		82	%		44	%		101	%		64	%G

^A Brandes Investment Partners, LP was added as an investment manager to the Emerging Markets Fund on December 31, 2010.

^B Amounts represent less than $0.01 per share.

^C May include adjustments in accordance with accounting principles generally accepted in the United States of America 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 Based on net asset value, which does not reflect the sales charge, redemption fee, or contingent deferred sales charge, if applicable.

^E Not annualized.

^F Annualized.

^G Portfolio turnover rate is for the period from November 1, 2009 through October 31, 2010.

40

American Beacon Emerging Markets Fund^SM

Financial Highlights

(For a share outstanding throughout the period)

Investor Class															A Class									C Class									AMR Class
Year Ended October 31,															Year Ended October 31,						May 17 to October 31, 2010			Year Ended October 31,						Sept. 1 to October 31, 2010			Year Ended October 31,
2012			2011A			2010			2009			2008			2012			2011A						2012			2011A						2012			2011A			2010			2009			2008
$	12.44		$	14.29		$	11.77		$	8.85		$	23.91		$	12.47		$	14.27		$	12.10		$	12.38		$	14.26		$	12.89		$	12.74		$	14.62		$	12.02		$	9.06		$	24.37
	0.08			0.13			0.04			0.04			0.17			0.10			0.06			0.02			0.03			0.09			(0.02	)		0.14			0.18			0.11			0.09			0.33
	0.12			(1.93	)		2.63			4.35			(11.60	)		0.09			(1.85	)		2.15			0.07			(1.97	)		1.39			0.12			(1.97	)		2.68			4.43			(11.91	)
	0.20			(1.80	)		2.67			4.39			(11.43	)		0.19			(1.79	)		2.17			0.10			(1.88	)		1.37			0.26			(1.79	)		2.79			4.52			(11.58	)
	(0.10	)		(0.05	)		(0.15	)		(0.16	)		(0.08	)		(0.14	)		(0.01	)		—			(0.02	)		—			—			(0.15	)		(0.09	)		(0.19	)		(0.25	)		(0.18	)
	(1.41	)		—			—			(1.31	)		(3.55	)		(1.41	)		—			—			(1.41	)		—			—			(1.41	)		—			—			(1.31	)		(3.55	)
	(1.51	)		(0.05	)		(0.15	)		(1.47	)		(3.63	)		(1.55	)		(0.01	)		—			(1.43	)		—			—			(1.56	)		(0.09	)		(0.19	)		(1.56	)		(3.73	)
	0.00	B		0.00	B		0.00	B		—			—			0.00	B		0.00	B		0.00	B		0.00	B		0.00	B		0.00	B		0.00	B		0.00	B		0.00	B		—			—
$	11.13		$	12.44		$	14.29		$	11.77		$	8.85		$	11.11		$	12.47		$	14.27		$	11.05		$	12.38		$	14.26		$	11.44		$	12.74		$	14.62		$	12.02		$	9.06
	2.72	%		(12.65	)%		22.85	%		60.24	%		(55.75	)%		2.64	%		(12.58	)%		17.93	%E		1.83	%		(13.18	)%		10.63	%E		3.26	%		(12.30	)%		23.47	%		61.01	%		(55.48	)%
$	8,427		$	9,030		$	12,478		$	10,208		$	5,183		$	685		$	433		$	2		$	5		$	8		$	1		$	103,363		$	113,894		$	128,841		$	109,985		$	72,516
	1.84	%		1.84	%		1.86	%		1.96	%		1.72	%		2.01	%		2.97	%		2.26	%F		3.74	%		26.96	%		4.49	%F		1.24	%		1.31	%		1.34	%		1.42	%		1.17	%
	1.75	%		1.70	%		1.77	%		1.96	%		1.72	%		1.78	%		1.46	%		1.78	%F		2.52	%		2.41	%		2.54	%F		1.24	%		1.31	%		1.34	%		1.42	%		1.17	%
	0.56	%		0.77	%		0.29	%		0.65	%		1.00	%		0.46	%		(0.10	)%		(0.10	)%F		(1.19	)%		(23.86	)%		(2.91	)%F		1.15	%		1.29	%		0.79	%		1.27	%		1.46	%
	0.65	%		0.91	%		0.37	%		0.65	%		1.00	%		0.69	%		1.41	%		0.39	%F		0.03	%		0.69	%		(0.96	)%F		1.15	%		1.29	%		0.79	%		1.27	%		1.46	%
	44	%		101	%		64	%		70	%		82	%		44	%		101	%		64	%G		44	%		101	%		64	%G		44	%		101	%		64	%		70	%		82	%

41

American Beacon International Equity Fund^SM

Financial Highlights

(For a share outstanding throughout the period)

	Institutional Class															Y Class
	Year Ended October 31,															Year Ended October 31,									August 3 to October 31,
	2012			2011			2010			2009			2008			2012			2011			2010			2009
Net asset value, beginning of period	$	15.27		$	16.67		$	15.51		$	13.13		$	27.32		$	15.82		$	17.17		$	15.52		$	14.89
Income from investment operations:
Net investment income		0.41			0.46			0.35			0.54			0.77			0.41			0.49			0.04			0.04
Net gains (losses) from securities (both realized and unrealized)		0.92			(1.41	)		1.30			2.78			(11.60	)		095			(1.50	)		1.61			0.59
Total income (loss) from investment operations		1.33			(0.95	)		1.65			3.32			(10.83	)		1.36			(1.01	)		1.65			0.63
Less distributions:
Dividends from net investment income		(0.55	)		(0.45	)		(0.49	)		(0.61	)		(0.70	)		(0.53	)		(0.34	)		—			—
Distributions from net realized gains on securities		—			—			—			(0.33	)		(2.66	)		—			—			—			—
Total distributions		(0.55	)		(0.45	)		(0.49	)		(0.94	)		(3.36	)		(0.53	)		(0.34	)		—			—
Redemption fees added to beneficial interest		—			—			—			0.00	A		0.00	A		—			—			—			0.00	A
Net asset value, end of period	$	16.05		$	15.27		$	16.67		$	15.51		$	13.13		$	16.65		$	15.82		$	17.17		$	15.52
Total return B,C		9.25	%		(5.89	)%		10.81	%		27.44	%		(44.81	)%		9.15	%		(6.00	)%		10.63	%		4.23	%D
Ratios and supplemental data:
Net assets, end of period (in thousands)	$	608,256		$	512,093		$	527,718		$	489,837		$	567,414		$	1,512		$	720		$	245		$	1
Ratios to average net assets (annualized):
Expenses, before reimbursements		0.72	%		0.70	%		0.71	%		0.73	%		0.66	%		0.80	%		0.81	%		0.81	%		0.69	%E
Expenses, net of reimbursements		0.72	%		0.70	%		0.71	%		0.73	%		0.66	%		0.80	%		0.81	%		0.81	%		0.69	%E
Net investment income, before reimbursements		2.85	%		2.90	%		2.21	%		2.76	%		2.91	%		2.74	%		3.00	%		1.44	%		1.00	%E
Net investment income, net of reimbursements		2.85	%		2.90	%		2.21	%		2.76	%		2.91	%		2.74	%		3.00	%		1.44	%		1.00	%E
Portfolio turnover rate		60	%		33	%		38	%		41	%		31	%		60	%		33	%		38	%		41	%F

^A  Amount represents less than $0.01 per share.

^B  May include adjustments in accordance with accounting principles generally accepted in the United States of America 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  Based on net asset value, which does not reflect the sales charge, redemption fee, or contingent deferred sales charge, if applicable.

^D  Not annualized.

^E  Annualized.

^F  Portfolio turnover rate is for the period from November 1, 2008 through October 31, 2009.

42

American Beacon International Equity Fund^SM

Financial Highlights

(For a share outstanding throughout the period)

	Investor Class
	Year Ended October 31,
	2012			2011			2010			2009			2008
Net asset value, beginning of period	$	15.11		$	16.42		$	15.30		$	12.95		$	26.99
Income from investment operations:
Net investment income		0.38			0.44			0.29			0.37			0.66
Net gains (losses) from securities (both realized and unrealized)		0.87			(1.44	)		1.27			2.87			(11.41	)
Total income (loss) from investment operations		1.25			(1.00	)		1.56			3.24			(10.75	)
Less distributions:
Dividends from net investment income		(0.48	)		(0.31	)		(0.44	)		(0.56	)		(0.63	)
Distributions from net realized gains on securities		—			—			—			(0.33	)		(2.66	)
Total distributions		(0.48	)		(0.31	)		(0.44	)		(0.89	)		(3.29	)
Redemption fees added to beneficial interest		—			—			—			0.00	A		0.00	A
Net asset value, end of period	$	15.88		$	15.11		$	16.42		$	15.30		$	12.95
Total return B,C		8.77	%		(6.21	)%		10.36	%		27.08	%		(44.96	)%
Ratios and supplemental data:
Net assets, end of period (in thousands)	$	453,142		$	386,560		$	463,704		$	445,596		$	426,473
Ratios to average net assets (annualized):
Expenses, before reimbursements		1.09	%		1.07	%		1.07	%		1.05	%		0.92	%
Expenses, net of reimbursements		1.09	%		1.07	%		1.07	%		1.05	%		0.92	%
Net investment income, before reimbursements		2.50	%		2.55	%		1.83	%		2.45	%		2.82	%
Net investment income, net of reimbursements		2.50	%		2.55	%		1.83	%		2.45	%		2.82	%
Portfolio turnover rate		60	%		33	%		38	%		41	%		31	%

^A  Amount represents less than $0.01 per share.

^B  May include adjustments in accordance with accounting principles generally accepted in the United States of America 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  Based on net asset value, which does not reflect the sales charge, redemption fee, or contingent deferred sales charge, if applicable.

43

American Beacon International Equity Fund^SM

Financial Highlights

(For a share outstanding throughout the period)

	Advisor Class															Retirement Class
	Year Ended October 31,															Year Ended October 31,
	2012			2011			2010			2009			2008			2012			2011			2010
Net asset value, beginning of period	$	15.52		$	16.74		$	15.20		$	12.86		$	26.83		$	15.44		$	16.71		$	15.20
Income from investment operations:
Net investment income (loss)		0.09			0.07			0.89			0.31			0.62			(0.45	)		0.39			0.22
Net gains (losses) from securities (both realized and unrealized)		1.18			(1.12	)		0.65			2.86			(11.35	)		1.76			(1.44	)		1.29
Total income (loss) from investment operations		1.27			(1.05	)		1.54			3.17			(10.73	)		1.31			(1.05	)		1.51
Less distributions:
Dividends from net investment income		(0.43	)		(0.17	)		—			(0.50	)		(0.58	)		—			(0.22	)		—
Distributions from net realized gains on securities		—			—			—			(0.33	)		(2.66	)		—			—			—
Total distributions		(0.43	)		(0.17	)		—			(0.83	)		(3.24	)		—			(0.22	)		—
Redemption fees added to beneficial interest		—			—			—			0.00	A		0.00	A		—			—			—
Net asset value, end of period	$	16.36		$	15.52		$	16.74		$	15.20		$	12 .86		$	16.75		$	15.44		$	16.71
Total return B,C		8.59	%		(6.35	)%		10.13	%		26.58	%		(45.10	)%		8.48	%		(6.37	)%		9.93	%
Ratios and supplemental data:
Net assets, end of period (in thousands)	$	1,397		$	1,015		$	746		$	1,722		$	1,546		$	52		$	1		$	1
Ratios to average net assets (annualized):
Expenses, before reimbursements		1.31	%		1.24	%		1.26	%		1.45	%		1.19	%		6.40	%		3.43	%		1.66	%
Expenses, net of reimbursements		1.31	%		1.24	%		1.26	%		1.44	%		1.19	%		1.24	%		1.30	%		1.47	%
Net investment income (loss), before reimbursements		2.18	%		2.52	%		1.64	%		2.25	%		2.36	%		(3.06	)%		0.17	%		1.25	%
Net investment income, net of reimbursements		2.18	%		2.52	%		1.64	%		2.26	%		2.36	%		2.10	%		2.30	%		1.44	%
Portfolio turnover rate		60	%		33	%		38	%		41	%		31	%		60	%		33	%		38	%

^A  Amount represents less than $0.01 per share.

^B  May include adjustments in accordance with accounting principles generally accepted in the United States of America 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  Based on net asset value, which does not reflect the sales charge, redemption fee, or contingent deferred sales charge, if applicable.

^D  Not annualized.

^E  Annualized.

^F  Portfolio turnover rate is for the period from November 1, 2008 through October 31, 2009.

^G Portfolio turnover rate is for the period from November 1, 2009 through October 31, 2010.

44

American Beacon International Equity Fund^SM

Financial Highlights

(For a share outstanding throughout the period)

Retirement Class			A Class									C Class									AMR Class
May 1 to October 31, 2009			Year Ended October 31,						May 17 to October  31, 2010			Year Ended October 31,						Sept. 1 to October 31, 2010			Year Ended October 31,
			2012			2011						2012			2011						2012			2011			2010			2009			2008
$	11.78		$	15.33		$	16.40		$	14.14		$	15.21		$	16.39		$	14.82		$	15.31		$	16.78		$	15.61		$	13.25		$	27.54
	0.12			0.48			0.12			0.03			0.40			0.07			(0.01	)		0.49			0.53			0.39			0.37			0.72
	3.30			0.76			(1.14	)		2.23			0.71			(1.25	)		1.58			0.87			(1.44	)		1.30			2.99			(11.58	)
	3.42			1.24			(1.02	)		2.26			1.11			(1.18	)		1.57			1.36			(0.91	)		1.69			3.36			(10.86	)
	—			(0.55	)		(0.05	)		—			(0.62	)		—			—			(0.59	)		(0.56	)		(0.52	)		(0.67	)		(0.77	)
	—			—			—			—			—			—			—			—			—			—			(0.33	)		(2.66	)
	—			(0.55	)		(0.05	)		—			(0.62	)		—			—			(0.59	)		(0.56	)		(0.52	)		(1.00	)		(3.43	)
	0.00	A		—			—			—			—			—			—			—			—			—			0.00	A		0.00	A
$	15.20		$	16.02		$	15.33		$	16.40		$	15.70		$	15.21		$	16.39		$	16.08		$	15.31		$	16.78		$	15.61		$	13.25
	29.03	%D		8.62	%		(6.26	)%		15.98	%D		7.89	%		(7.20	)%		10.59	%D		9.47	%		(5.62	)%		11.05	%		27.70	%		(44.65	)%
$	1		$	1,255		$	461		$	4		$	115		$	76		$	1		$	387,197		$	388,185		$	469,414		$	431,499		$	328,083
	1.48	%E		1.29	%		2.24	%		1.26	%E		2.12	%		7.39	%		2.60	%E		0.45	%		0.45	%		0.46	%		0.48	%		0.41	%
	1.48	%E		1.26	%		1.22	%		1.25	%E		1.98	%		1.95	%		1.99	%E		0.45	%		0.45	%		0.46	%		0.48	%		0.41	%
	1.72	%E		2.03	%		1.03	%		0.96	%E		1.56	%		(4.32	)%		(0.81	)%E		3.16	%		3.15	%		2.45	%		3.00	%		3.24	%
	1.72	%E		2.07	%		2.05	%		0.98	%E		1.70	%		1.11	%		(0.20	)%E		3.16	%		3.15	%		2.45	%		3.00	%		3.24	%
	41	%F		60	%		33	%		38	%G		60	%		33	%		38	%G		60	%		33	%		38	%		41	%		31	%

45

American Beacon Funds^SM

Privacy Policy & Federal Tax Information

October 31, 2012 (Unaudited)

Privacy Policy

The American Beacon Funds recognize and respect the privacy of our shareholders. We are providing this notice to you so you will understand how shareholder information may be collected and used.

We may collect nonpublic personal information about you from one or more of the following sources:

• information we receive from you on applications or other forms;

• information about your transactions with us or our service providers; and

• information we receive from third parties.

We do not disclose any nonpublic personal information about our customers or former customers to anyone, except as permitted by law.

We restrict access to your nonpublic personal information to those employees or service providers who need to know that information to provide products or services to you. To ensure the confidentiality of your nonpublic personal information, we maintain safeguards that comply with federal standards.

Federal Tax Information

Certain tax information regarding the Funds is required to be provided to shareholders based upon the Funds’ income and distributions for the taxable year ended October 31, 2012. The information and distributions reported herein may differ from information and distributions taxable to the shareholders for the calendar year ended December 31, 2012.

The Funds designated the following items with regard to distributions paid during the fiscal year ended October 31, 2011. All designations are based on financial information available as of this annual report and, accordingly, are subject to change. For each item, it is the intention of the Funds to designate the maximum amount permitted under the Internal Revenue Code of 1986, as amended, and the regulations there under.

	Emerging Markets			International Equity
Corporate Dividends Received Deduction		0.00	%		0.00	%
Qualified Dividend Income		100.00	%		79.06	%

The International Equity Fund designated a foreign tax credit of $4,131,506 and recognized foreign source income of $50,283,572 for the year ended October 31, 2012.

The Emerging Markets Fund designated $14,771,585 as long-term capital gains distributions for the year ended October 31, 2012.

Shareholders will receive notification in January 2013 of the applicable tax information necessary to prepare their 2012 income tax returns.

46

Disclosure Regarding the Board of Trustees’ Approval of the Investment

Management Agreement and Advisor Agreement (Unaudited)

At its May 9, 2012 meeting, the Board of Trustees (“Board”) considered the renewal of the Management Agreement between the Manager and the American Beacon Funds (“Beacon Trust”) on behalf of each of their series (collectively, the “Funds”) and the renewal of each investment advisory agreement between the Manager and a subadvisor (each an “Investment Advisory Agreement”). The Management Agreement and the Investment Advisory Agreements are collectively referred to herein as the “Agreements.” In preparation for the Board’s consideration to renew and approve these Agreements, the Board and its Investment Committee undertook steps to gather and consider information furnished by the Manager, the subadvisors and Lipper, Inc. (“Lipper”). The Board, with the assistance of independent legal counsel, requested and received certain relevant information from the Manager and each subadvisor.

In addition, the Board’s Investment Committee worked with Lipper to obtain relevant comparative information regarding the performance, fees and expenses of the Funds. The Investment Committee held a separate meeting on May 4, 2012 to consider the information provided by Lipper. Further, the Board took into consideration information furnished for the Board’s review and consideration throughout the year at regular Board and Investment Committee meetings, as well as information specifically prepared in connection with the renewal process.

In connection with the Board’s consideration of the Management Agreement and each Investment Advisory Agreement, the Trustees received and evaluated such information as they deemed necessary. The materials requested by the Board included, among other information, the following:

• a description of any significant changes (actual or anticipated) to principal activities, personnel, services provided to the Funds, or any other area, including how these changes might affect the Funds;

• a copy of the firm’s most recent audited or unaudited financial statements, as well as Parts 1 and 2 of its Form ADV registration statement with the SEC;

• a summary of any material pending or anticipated litigation or regulatory proceedings involving the firm or its personnel, including the results of any recent regulatory examination or independent audit;

• a comparison of the performance of that portion of Fund assets managed or to be managed by each firm with the performance of other similar accounts managed by the firm, including a discussion of relative performance versus a peer group average and any remedial measures if the firm’s performance was materially below that of the peer group;

• any actual or anticipated economies of scale in relation to the services the Manager and the firm provide or will provide to each Fund and whether the current fee rates charged or to be charged to each Fund reflects these economies of scale for the benefit of the Fund’s investors;

• an analysis of compensation, including a comparison with fee rates charged to other clients for which similar services are provided, any proposed changes to the fee schedule, if applicable, and the effect of any fee waivers;

• a description of any payments made or to be made by the subadvisors to the Manager to support a Fund’s marketing efforts;

• a copy of the firm’s proxy voting policies and procedures and, if applicable, the name of the third party voting service used by the firm;

• an evaluation of any other benefits to the firm or Funds as a result of their relationship, if any;

• confirmation that the firm’s financial condition would not impair its ability to provide high-quality advisory services to the Funds;

• a description of the scope of portfolio management services provided or to be provided to the Funds, including whether such services differ from the services provided to other clients, including other registered investment companies, and any advantages or disadvantages that might accrue to the Funds due to the firm’s involvement in other activities;

• a description of the personnel who are or will be assigned primary responsibility for managing the Funds, including any changes during the past year, and a discussion of the adequacy of current and projected staffing levels to service the Funds;

• a description of the basis upon which portfolio managers are compensated, including any “incentive” arrangements, and a description of the oversight mechanisms used to prevent a portfolio manager whose compensation is tied to performance of a Fund from taking undue risks;

• a description of the firm’s practices in monitoring the quality of portfolio holdings and in reviewing portfolio valuation;

• a description of the firm’s use of derivatives, short sells, leveraged trading strategies or other similar trading strategies for the Funds;

• a discussion regarding the firm’s participation in third-party and proprietary “soft dollar” arrangements, if any, or other brokerage allocation policies with respect to Fund transactions;

• a discussion of the firm’s methodology for obtaining best execution, including any plans to improve the quality of execution in the upcoming year, and the use of any affiliated broker-dealers;

• a description of any actual or potential conflicts of interest anticipated in managing Fund assets;

• a discussion of whether the firm has identified any investment or operational matters that likely present a high risk in managing Fund assets;

• a description of the firm’s criteria for assessing counterparties and counterparty risk to the extent the firm enters into transactions with counterparties on a Fund’s behalf;

• a description of trade allocation procedures among accounts managed by the firm;

• a discussion of whether the firm utilizes “commission recapture” or “directed brokerage” arrangements for the benefit of the Funds or “step-out” transactions;

47

Disclosure Regarding the Board of Trustees’ Approval of the Investment

Management Agreement and Advisor Agreement (Unaudited)

• a discussion of whether the firm receives, or anticipates receiving, other compensation, including any payment for order flow or ECN liquidity rebates with respect to the Funds;

• a certification by the firm regarding the reasonable design of its compliance program;

• a summary of the results of the firm’s most recent annual review of its compliance program and a discussion of any material compliance problems encountered by a subadvisor since the most recent annual review;

• information regarding the firm’s code of ethics, insider trading policy and disaster recovery plan, including a description of any material changes thereto and a related certification of compliance by the firm;

• a description of the firm’s affiliation with any broker-dealer;

• a discussion of any anticipated change in the firm’s controlling persons; and

• verification of the firm’s insurance coverage with regards to the services provided to the Funds.

In addition to the foregoing, the Manager provided the following information specific to the renewal of the Management Agreement:

• a comparison of the performance of each Fund to comparable investment companies and appropriate indices, including comments on the relative performance of, as applicable, each subadvisor and each Fund versus the respective peer group average;

• a discussion, if applicable, of any underperformance by a subadvisor relative to its peer group and what, if any, remedial measures the Manager has or intends to take;

• a comparison of advisory fee rates and expense ratios for comparable mutual funds;

• a profit/loss analysis of the Manager;

• an analysis of any material complaints received from Fund shareholders;

• a description of the extent to which the Manager monitors the investment activities and financial conditions of each subadvisor to the Funds;

• a description of the Manager’s distribution activities with respect to promoting sales of Fund shares, including any revenue sharing practices;

• a description of the Manager’s securities lending practices and the fees received from such practices;

• a discussion of any rebate arrangements between the Manager and a service provider to the Funds pursuant to which the Manager receives direct or indirect benefits from the service provider;

• a description of the portfolio turnover rate and average execution costs for each Fund and, as applicable, each subadvisor to a Fund; and

• a description of how expenses that are not readily identifiable to a particular Fund are allocated.

In connection with the Management Agreement and each Investment Advisory Agreement, the Board also obtained an analysis provided by Lipper that compared: (i) investment performance of each Fund versus comparable investment companies and appropriate indices; (ii) total Fund expenses of each Fund versus comparable mutual funds; and (iii) each Fund’s investment advisory fee rate versus comparable mutual funds. For each Fund with more than one class of shares, the class of shares used for comparative purposes was the class with the longest performance history, which in most cases was the Institutional Class. References below to each Fund’s Lipper peer group are to the group of comparable mutual funds included in the analysis provided by Lipper.

Provided below is an overview of the primary factors the Trustees considered at the Investment Committee meeting on May 4, 2012 at which the Trustees reviewed the investment performance of the Manager and each subadvisor and the primary factors considered by the Board at its May 9, 2012 meeting at which the Board considered the renewal of the Management Agreement and Investment Advisory Agreements.

The Board did not identify any particular information that was most relevant to its consideration to renew or approve each Agreement, and each Trustee may have afforded different weight to the various factors. Legal counsel to the independent Trustees provided the Board with a memorandum regarding its responsibilities pertaining to the renewal and approval of each Agreement. The memorandum explained the regulatory requirements surrounding the Trustees’ process for evaluating investment advisors and the terms of the contracts. Based on its evaluation, the Board unanimously concluded that the terms of each Agreement were reasonable and fair and that the renewal and approval of each Agreement was in the best interests of the Funds and their shareholders.

Considerations With Respect to the Renewal of the Management Agreement and each Investment Advisory Agreement

In determining whether to renew the Management Agreement and each Investment Advisory Agreement on behalf of the Funds, the Trustees considered the best interests of each Fund separately. While the Management Agreement and the Investment Advisory Agreements for all of the Funds were considered at the May 9, 2012 meeting, the Board considered each Fund’s investment management and subadvisory relationships separately.

In each instance, the Board considered, among other things, the following factors: (1) the nature, extent and quality of the services provided; (2) the investment performance of a Fund and, as applicable, each subadvisor for a Fund; (3) the costs incurred by the Manager in rendering services to the Funds and its resulting profits or losses; (4) the extent to which economies of scale have been taken into account in setting each fee schedule; (5) whether fee levels reflect these economies of scale for the benefit of Fund investors; (6)

48

Disclosure Regarding the Board of Trustees’ Approval of the Investment

Management Agreement and Advisor Agreement (Unaudited)

comparisons of services and fee rates with contracts entered into by the Manager or a subadvisor or their affiliates with other clients (such as pension funds and other institutional funds); and (7) any other benefits derived or anticipated to be derived by the Manager or a subadvisor from their relationship with a Fund. The Trustees posed questions to various management personnel of the Manager regarding certain key aspects of the materials submitted in support of the renewal.

Nature, Extent and Quality of Services. With respect to the renewal of the Management Agreement, the Board considered, among other factors: each Fund’s long-term performance and the background and experience of key investment personnel at the Manager; the low cost structure of the Funds; the Manager’s culture of compliance and support for compliance operations that reduce risks to the Funds; the manager’s commitment to enhance the Funds’ product line and increase assets in the Funds; the Manager’s high quality of services; the Manager’s active role in monitoring and, as appropriate recommending additional or replacement subadvisors; the Manager’s commitment to training employees; and the Manager’s efforts to retain key employees and maintain staff levels.

With respect to the renewal of each Investment Advisory Agreement, the Trustees considered the level of staffing, quality, background and experience of each subadvisor’s investment personnel responsible for managing the Funds, the size of the subadvisor and the subadvisor’s ability to continue to attract and retain qualified investment personnel. The Board also considered the adequacy of the resources committed to the Funds by each subadvisor, and whether those resources were commensurate with the needs of the Funds and are sufficient to sustain appropriate levels of performance and compliance needs. In this regard, the Board considered the financial stability of each subadvisor. The Board also considered the subadvisors’ representations regarding their compliance programs and code of ethics. Based on the foregoing information, the Board concluded that the nature, extent and quality of the management and advisory services provided by the Manager and each subadvisor were appropriate for each Fund and, thus, determined to renew the Management Agreement and the Investment Advisory Agreement for each Fund.

Investment Performance. The Board evaluated the comparative information provided by Lipper and the Manager regarding each Fund’s investment performance relative to its benchmark index(es) and peer group. The Board considered the information provided by Lipper regarding its independent peer selection methodology to select all peer groups and universes. The Board also considered the performance reports and discussions with management at Board and Committee meetings throughout the year. The Manager also noted that it generally was satisfied with the performance of the subadvisors. A discussion regarding the Board’s considerations with respect to each Fund’s performance appears below under “Additional Considerations and Conclusions with Respect to Each Fund.”

Costs of the Services Provided to the Funds and the Profits Realized by the Manager from its Relationship with the Funds. In analyzing the cost of services and profitability of the Manager, the Board considered the revenues earned and the expenses incurred by the Manager. The profits or losses were noted at both an aggregate level for all Funds and at an individual Fund level, with some Funds being profitable for the Manager and with the Manager sustaining losses with respect to other Funds. The Board also considered that the Management Agreement for the Beacon Trust stipulates that, to the extent that a Fund invests all of its investable assets in another registered investment company (i.e., is a “Feeder Fund”), the Fund will not pay the Manager a management fee. Although the Board noted that, in certain cases, the fee rates paid by other clients of the Manager are lower than the fee rates paid by the Funds, the difference reflects the greater level of responsibility and regulatory requirements associated with managing the Funds.

The Board also noted that the Manager proposed to continue the expense waivers and reimbursements for certain Funds and classes that were in place during the last fiscal year and to put in place new expense waivers and reimbursements for certain new classes of the Funds and new series of the Beacon Trust. The Board further considered that each subadvised Fund pays the Manager the amounts due to its subadvisors, and the Manager remits these amounts directly to the applicable subadvisors. The Board considered that the Manager receives service and administrative fees to compensate the Manager for providing administrative services to the Funds and to compensate third-party administrators and broker-dealers for services to Fund shareholders. In addition, the Board considered that the Manager receives management fees for overseeing the securities lending program on behalf of various Funds. The Board also noted that certain classes of the Funds maintain higher expense ratios in order to compensate third-party distributors.

In analyzing the cost of services and profitability for each subadvisor in connection with its investment advisory services to the Fund, the Board considered that, in many cases, the Manager has negotiated the lowest subadvisory fee rate a subadvisor charges for any comparable client accounts. The Board did not consider profitability data of the subadvisors as imperative to its deliberations given the arm’s length nature of the relationship between the Manager and the subadvisors with respect to the negotiation of subadvisory fee rates.

Based on the foregoing information, the Board concluded that the profitability levels of the Manager were reasonable in light of the services performed by the Manager. A discussion regarding the Board’s considerations with respect to each Fund’s fee rates is set forth below under “Additional Considerations and Conclusions with Respect to Each Fund.”

Economies of Scale. In considering the reasonableness of the management and investment advisory fees rates, the Board considered whether economies of scale will be realized as the Funds grow and whether fee levels reflect these economies of scale for the benefit of Fund shareholders. In this regard, the Board considered that the Manager has negotiated breakpoints in many subadvisory fee rates. The Board also noted that, for purposes of determining the fee rates chargeable to the Funds, many subadvisors have agreed to take into account assets of AMR Corporation and its pension plans that are managed by the subadvisors. Thus, the Funds are able to receive lower effective fee rates.

In addition, the Board noted the Manager’s representation that many of the Funds benefit from economies of scale because comparably low fee rate levels are reflected in the current management and administration fee rates the Manager charges. The Board further noted the Manager’s representation that many of the Funds benefit from these comparably low fee rate levels despite not having yet reached an asset size at which economies of scale would traditionally be considered to exist, and the Manager’s belief that breakpoints

49

Disclosure Regarding the Board of Trustees’ Approval of the Investment

Management Agreement and Advisor Agreement (Unaudited)

are not appropriate at this time. Based on the foregoing information, the Board concluded that the Manager and subadvisor fee schedules for each Fund provides for a reasonable sharing of benefits from any economies of scale with the Funds.

Benefits Derived from the Relationship with the Funds. The Board considered the “fall-out” or ancillary benefits that accrue to the Manager and/or the subadvisors as a result of the advisory relationships with the Funds, including greater exposure in the marketplace with respect to the Manager’s or subadvisor’s investment process and expanding the level of assets under management by the Manager and the subadvisors. The Board also considered that the Manager uses its proprietary American Beacon Large Cap Value Fund model to manage its collective investment trust.

In addition, the Manager noted that the Trusts also derive benefits from their association with the Manager. Specifically, the Board noted the Manager’s representation that it provides services to most Funds at a lower than industry average cost. The Board considered that certain of the subadvisors reimburse the Manager for certain of its costs relating to distribution activities for the Funds. The Board also considered that, with the exception of the American Beacon Emerging Markets Fund, the Funds did not pay commissions to any affiliated broker-dealer of the Manager or the relevant subadvisor during the most recent fiscal year ended October 31, 2011.

Based on the foregoing information, the Board concluded that the potential benefits accruing to the Manager and the subadvisors by virtue of their relationships with the Funds appear to be fair and reasonable.

Additional Considerations and Conclusions with Respect to Each Fund.

The performance comparisons below were made versus each Fund’s Lipper peer universe median and/or benchmark index. References to the Lipper expense universe below are to the group of comparable mutual funds included in the analysis provided to the Trustees by Lipper. In reviewing the performance, the Trustees viewed longer-term performance over five years or longer as the most important consideration, because relative performance over shorter periods may be significantly impacted by market or economic events that do not reflect manager skill.

Additional Considerations and Conclusions with Respect to the American Beacon Emerging Markets Fund

In considering the renewal of the Management Agreement for the American Beacon Emerging Markets Fund, the Trustees considered the following additional factors: (1) the Fund outperformed the peer universe median for the five-year period ended March 31, 2012, but underperformed for the one-, three-, and ten-year periods; and (2) the expense ratio of the Institutional Class of the Fund ranked better than the median of its Lipper expense universe.

In considering the renewal of the Investment Advisory Agreements with The Boston Company Asset Management, LLC (“TBC”), Morgan Stanley Investment Management Inc., including the MSIM subadvisors Morgan Stanley Investment Management Limited and Morgan Stanley Investment Management Company (collectively, “MSIM”), and Brandes Investment Partners, L.P. (“Brandes”), the Trustees considered the following additional factors: (1) MSIM outperformed the peer universe median for the one-, three- and ten-year periods ended March 31, 2012, but underperformed for the five-year period; (2) TBC outperformed the peer universe median for the five- and ten-year periods ended March 31, 2012, but underperformed for the one- and three-year periods; (3) Brandes was added as a subadvisor in December 2010 and underperformed the peer universe median for the one-year period ended March 31, 2012; (4) management’s explanation that MSIM’s and Brandes’ underperformance were due in part to poor stock selection; (5) the performance of TBC with respect to the portion of the Fund’s assets it manages was comparable to the performance of its composite of similarly managed accounts; (6) the performance of MSIM with respect to the portion of the Fund’s assets it manages as compared to a similarly managed account underperformed for the one-year period ended December 31, 2011, and outperformed for the three- and five-year periods ended December 31, 2011; (7) with respect to the portion of the Fund’s assets Brandes manages as compared to three similarly managed accounts, Brandes outperformed two of the similarly managed accounts for the one-year period ended March 31, 2012, and underperformed one of the similarly managed accounts for the one-year period ended March 31, 2012; (8) representations by each subadvisor regarding fee rates charged by the subadvisor to other comparable clients; (9) whether the subadvisors use Fund commissions to obtain proprietary or third-party research; and (10) the Manager’s recommendation to continue to retain each subadvisor.

Based on these and other considerations the Trustees (1) concluded that the fees paid to the Manager and the subadvisors under the Agreements are fair and reasonable, (2) determined that the American Beacon Emerging Markets Fund and its shareholders would benefit from the Manager’s and subadvisors’ continued management of the Fund and (3) approved the renewal of the Management and Investment Advisory Agreements with respect to the American Beacon Emerging Markets Fund.

Additional Considerations and Conclusions with Respect to the American Beacon International Equity Fund

In considering the renewal of the Management Agreement for the American Beacon International Equity Fund, the Trustees considered the following additional factors: (1) the American Beacon International Equity Fund outperformed the peer universe median for the one-, three-, five- and ten-year periods ended March 31, 2012; and (2) the expense ratio of the Institutional Class of Fund shares ranked better than the median of its Lipper expense universe.

In considering the renewal of the Investment Advisory Agreements with Causeway Capital Management LLC (“Causeway”), Lazard Asset Management LLC (“Lazard”), and Templeton Investment Counsel, LLC (“Templeton”), the Trustees considered the following additional factors: (1) Templeton outperformed the peer universe median for the three-, five- and ten-year periods ended March 31, 2012, but underperformed for the one-year period; (2) Causeway outperformed the peer universe median for the one-, three-, five- and ten-year periods ended March 31, 2012; (3) Lazard outperformed the peer universe median for the one-, five- and ten-year period ending March 31,

50

Disclosure Regarding the Board of Trustees’ Approval of the Investment

Management Agreement and Advisor Agreement (Unaudited)

2012, but underperformed for the three-year period; (4) the performance of Causeway with respect to the portion of the Fund’s assets it manages was comparable to the performance of its composite of similarly managed accounts; (5) the performance of Lazard with respect to the portion of the Fund’s assets it manages underperformed its composite of similarly managed accounts for the one-, five- and ten-year periods, but outperformed for the three-year period; (6) the performance of Templeton with respect to the portion of the Fund’s assets it manages as compared to similar accounts was not available because Templeton indicated that there are no comparable funds or accounts that it manages; (7) representations by each subadvisor regarding fee rates charged by the subadvisor to other comparable clients; (8) whether the subadvisors use Fund commissions to obtain proprietary or third-party research; and (9) the Manager’s recommendation to continue to retain each subadvisor.

Based on these and other considerations the Trustees (1) concluded that the fees paid to the Manager and the subadvisors under the Agreements are fair and reasonable, (2) determined that the American Beacon International Equity Fund and its shareholders would benefit from the Manager’s and subadvisors’ continued management of the Fund and (3) approved the renewal of the Management and Investment Advisory Agreements with respect to the American Beacon International Equity Fund.

51

Trustees and Officers of the American Beacon Funds^SM

(Unaudited)

The Trustees and officers of the American Beacon Funds (the “Trust”) are listed below, together with their principal occupations during the past five years. Unless otherwise indicated, the address of each person listed below is 4151 Amon Carter Boulevard, MD 2450, Fort Worth, Texas 76155. Each Trustee oversees twenty-six funds in the fund complex that includes the Trust and the American Beacon Select Funds. The Trust’s Statement of Additional Information contains additional information about the Trustees and is available without charge by calling 1-800-658-5811.

Name, Age and Address	Position, Term of Office and Length of Time Served with the Trust	Principal Occupation(s) During Past 5 Years and Current Directorships
INTERESTED TRUSTEES	Term Lifetime of Trust until removal, resignation or retirement*
Gerard J. Arpey** (54)	Trustee since 2012	Partner, Emerald Creek Group (private equity firm) (2011-Present); Chairman and Chief Executive Officer, (2003-2011), AMR Corp. and American Airlines; Inc.; Director, S. C. Johnson & Son, Inc. (privately held company) (2008-present); Trustee, American Beacon Select Funds (2012-Present).
Alan D. Feld*** (75)	Trustee since 1996	Sole Shareholder of a professional corporation which is a Partner in the law firm of Akin, Gump, Strauss, Hauer & Feld, LLP (law firm) (1960-Present); Director, Clear Channel Communications (1984-2008);Trustee, American Beacon Mileage Funds (1996-2012); Trustee, American Beacon Select Funds (1999-Present); Trustee, American Beacon Master Trust (1996-2012).
NON-INTERESTED TRUSTEES	Term Lifetime of Trust until removal, resignation or retirement*
W. Humphrey Bogart (68)	Trustee since 2004	Trustee, American Beacon Mileage Funds (2004-2012); Trustee, American Beacon Select Funds (2004-Present); Trustee, American Beacon Master Trust (2004- 2012).
Brenda A. Cline (51)	Trustee since 2004	Executive Vice President, Chief Financial Officer, Treasurer and Secretary, Kimbell Art Foundation (1993-Present); Trustee, American Beacon Mileage Funds (2004-2012); Trustee, American Beacon Select Funds (2004-Present); Trustee, American Beacon Master Trust (2004-2012).
Eugene J. Duffy (58)	Trustee since 2008	Principal and Executive Vice President, Paradigm Asset Management (1994- Present); Director, Sunrise Bank of Atlanta (2008-Present); Trustee, American Beacon Mileage Funds (2008-2012); Trustee, American Beacon Select Funds (2008-Present); Trustee, American Beacon Master Trust (2008-2012).
Thomas M. Dunning (70)	Trustee since 2008	Chairman Emeritus (2008-Present); Chairman (1998-2008) and Chief Executive Officer (1998-2007), Lockton Dunning Benefits (consulting firm in employee benefits); Board Director, Oncor Electric Delivery Company LLC (2007-Present); Board Member, BancTec (2010-Present); Trustee, American Beacon Mileage Funds (2008-2012); Trustee, American Beacon Select Funds (2008-Present); Trustee, American Beacon Master Trust (2008-2012).
Richard A. Massman (69)	Trustee since 2004 Chairman since 2008	Consultant and General Counsel Emeritus (2009-Present) and Senior Vice President and General Counsel (1994-2009), Hunt Consolidated, Inc. (holding company engaged in oil and gas exploration and production, refining, real estate, farming, ranching and venture capital activities); Trustee, American Beacon Mileage Funds (2004-2012); Trustee, American Beacon Select Funds (2004- Present); Trustee, American Beacon Master Trust (2004-2012).

52

Trustees and Officers of the American Beacon Funds^SM

(Unaudited)

Name, Age and Address	Position, Term of Office and Length of Time Served with the Trust	Principal Occupation(s) During Past 5 Years and Current Directorships
Barbara J. McKenna, CFA (49)	Trustee since 2012	Managing Principal, Longfellow Investment Management Company (2005- Present); Trustee, American Beacon Select Funds (2012-Present).
R. Gerald Turner (66)	Trustee since 2001	President, Southern Methodist University (1995-Present); Director, J.C. Penney Company, Inc. (1996-Present); Director, Kronus Worldwide Inc. (chemical manufacturing) (2003-Present); Director, First Broadcasting Investment Partners, LLC (2003-2007); Trustee, American Beacon Mileage Funds (2001- 2012); Trustee, American Beacon Select Funds (2001-Present); Trustee, American Beacon Master Trust (2001-2012).
Paul J. Zucconi,CPA (72)	Trustee since 2008	Director, Affirmative Insurance Holdings, Inc. (producer of nonstandard automobile insurance) (2004-Present); Director, Titanium Metals Corporation (producer of titanium melted and mill products) (2002-Present); Director, Torchmark Corporation (life and health insurance products) (2002-Present); Director, Charter Bank (community bank services and products) (2010-2011); Trustee, American Beacon Mileage Funds (2008-2012); Trustee, American Beacon Select Funds (2008-Present); Trustee, American Beacon Master Trust (2008-2012).
OFFICERS
	Term One Year
Gene L. Needles, Jr. (57)	President since 2009 Executive Vice President since 2009	President, CEO and Director (2009-Present), American Beacon Advisors, Inc.; President (2009-Present), President, CEO and Director (2009-Present), Lighthouse Holdings, Inc.; President and CEO (2009-Present), Lighthouse Holdings Parent, Inc.; President (2009-Present), American Beacon Select Funds; President (2009-Present), American Beacon Mileage Funds; President (2008- 2009), Touchstone Investments; President (2003-2007), CEO (2004-2007), AIM Distributors.
Rosemary K. Behan (53)	VP, Secretary and Chief Legal Officer since 2006	Vice President, Legal and Compliance, American Beacon Advisors, Inc. (2006- Present); Secretary, American Beacon Advisors, Inc. (2008 – present); Secretary, Lighthouse Holdings, Inc. (2008-Present); Secretary Lighthouse Holdings Parent, Inc. (2008-Present).
Brian E. Brett (52)	VP since 2004	Vice President, Director of Sales, American Beacon Advisors, Inc. (2004- Present).
Wyatt L. Crumpler (46)	VP since 2007	Chief Investment Officer (2012-Present), Vice President, Asset Management (2009-2011), and Vice President, Trust Investments (2007-2009), American Beacon Advisors, Inc.
Erica Duncan (42)	VP Since 2011	Vice President, Marketing and Client Services (2011-Present), American Beacon Advisors, Inc.; Supervisor, Brand Marketing (2010-2011), Invesco; Supervisor, Marketing Communications (2009-2010) and Senior Financial Writer (2004-2009), Invesco AIM.
Michael W. Fields (58)	VP since 1989	Chief Fixed Income Officer (2011-Present) and Vice President, Fixed Income Investments, American Beacon Advisors, Inc. (1988-2011); Director, American Beacon Global Funds SPC (2002-2011); Director, American Beacon Global Funds plc (2007-2009).
Melinda G. Heika (51)	Treasurer since 2010	Treasurer (2010-Present), and Controller (2005-2009), American Beacon Advisors, Inc.; Treasurer, Lighthouse Holdings, Inc. (2010 – Present); Treasurer, Lighthouse Holdings Parent, Inc. (2010-Present).
Terri L. McKinney (48)	VP since 2010	Vice President, Enterprise Services (2009-Present) and Managing Director (2003- 2009), American Beacon Advisors, Inc.
Jeffrey K. Ringdahl (37)	VP since 2010	Chief Operating Officer, American Beacon Advisors, Inc. (2010-Present); Vice President, Product Management, Touchstone Advisors, Inc. (2007-2010); Senior Director, Business Integration, Fidelity Investments (2005-2007).

53

Trustees and Officers of the American Beacon Funds^SM

(Unaudited)

Name, Age and Address	Position, Term of Office and Length of Time Served with the Trust	Principal Occupation(s) During Past 5 Years and Current Directorships
Samuel J. Silver (49)	VP Since 2011	Vice President, Fixed Income Investments (2011-Present) and Senior Portfolio Manager, Fixed Income Investments (1999-2011), American Beacon Advisors, Inc.
Christina E. Sears (41)	Chief Compliance Officer since 2004 and Asst. Secretary since 1999	Chief Compliance Officer (2004-Present), American Beacon Advisors, Inc.
John J. Okray (38)	Asst. Secretary since 2010	Deputy General Counsel (2012-Present) and Assistant General Counsel (2010- 2012), American Beacon Advisors, Inc.; Asst. Secretary (2010-Present), Lighthouse Holdings, Inc.; Asst. Secretary (2010-Present), Lighthouse Holdings Parent, Inc.; Vice President, OppenheimerFunds, Inc. (2004-2010).
Sonia L. Bates (55)	Asst. Treasurer since 2011	Director, Tax and Financial Reporting (2011 - Present) and Manager, Tax and Financial Reporting (2005-2010), American Beacon Advisors, Inc.; Asst. Treasurer (2011-Present), Lighthouse Holdings, Inc.; Asst. Treasurer (2011- Present), Lighthouse Holdings Parent, Inc.

* The Board has adopted a retirement plan that requires Trustees to retire no later than the last day of the calendar year in which they reach the age of 72, provided, however, that the board may determine to grant one or more annual exemptions to this requirement.

** Mr. Arpey is deemed to be an “interested person” of the Trust, as defined by the 1940 Act. Mr. Arpey previously served as CEO of AMR Corp., which has a material relationship with the Manager.

*** Mr. Feld is deemed to be an “interested person” of the Trust, as defined by the 1940 Act. Mr. Feld’s law firm of Akin, Gump, Strauss, Hauer & Feld LLP has provided legal services within the past two years to the Manager and one or more of the Trust’s sub- advisors.

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57

Delivery of Documents

eDelivery is NOW AVAILABLE – Stop traditional mail delivery and receive your

shareholder reports and summary prospectus on-line. Sign up at

www.americanbeaconfunds.com

If you invest in the Fund through a financial institution, you may be able to receive the Fund’s regulatory mailings, such as the Summary Prospectus, Annual Report and Semi-Annual Report, by e-mail. If you are interested in this option, please go to www.icsdelivery.com and search for your financial institution’s name or contact your financial institution directly.

To obtain more information about the Fund:

By E-mail: american_beacon.funds@ambeacon.com	On the Internet: Visit our website at www.americanbeaconfunds.com
By Telephone: Institutional, Y, Investor, Advisor, Retirement, A, and C Classes Call (800) 658-5811 AMR ClassSM Call (800) 345-2345	By Mail: American Beacon Funds P.O. Box 219643 Kansas City, MO 64121-9643
Availability of Quarterly Portfolio Schedules In addition to the Schedule of Investments provided in each semi-annual and annual report, the Fund files a complete schedule of its portfolio holdings with the Securities and Exchange Commission (“SEC”) on Form N-Q as of the first and third fiscal quarters. The Fund’s Forms N-Q are available on the SEC’s website at www.sec.gov. The Forms N-Q may also be reviewed and copied at the SEC’s Public Reference Section, 100 F Street, NE, Washington, D.C. 20549-1520. Information regarding the operation of the SEC’s Public Reference Room may be obtained by calling 1-800-SEC-0330. A complete schedule of each Fund’s portfolio holdings is also made available on the Funds’ website at www.americanbeaconfunds.com approximately twenty days after the end of each month.	Availability of Proxy Voting Policy and Records A description of the policies and procedures the Fund uses to determine how to vote proxies relating to portfolio securities is available in the Fund’s Statement of Additional Information, is available free of charge on the Fund’s website www.americanbeaconfunds.com and by calling 1-800-967-9009 or by accessing the SEC’s website at www.sec.gov. The Fund’s proxy voting record for the most recent year ended June 30 is filed annually with the SEC on Form N-PX. The Fund’s Forms N-PX are available on the SEC’s website at www.sec.gov. The Fund’s proxy voting record may also be obtained by calling 1-800-967- 9009.

Fund Service Providers:

CUSTODIAN State Street Bank and Trust Boston, Massachusetts TRANSFER AGENT Boston Financial Data Services Kansas City, Missouri INDEPENDENT REGISTERED
PUBLIC ACCOUNTING
FIRM Ernst & Young LLP Dallas, Texas DISTRIBUTOR
Foreside Fund Services,
LLC Portland, Maine

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

American Beacon Funds, American Beacon Emerging Markets Fund, and American Beacon International Equity Fund are service marks of American Beacon Advisors, Inc.

AR 10//12

About American Beacon Advisors

Since 1986, American Beacon Advisors has offered a variety of products and investment advisory services to numerous institutional and retail clients, including a variety of mutual funds, corporate cash management, and separate account management.

Our clients include defined benefit plans, defined contribution plans, foundations, endowments, corporations, financial planners, and other institutional investors. With American Beacon Advisors, you can put the experience of a multi-billion dollar asset management firm to work for your company.

Contents
President’s Message	1
Market and Performance Overviews	2-8
Schedules of Investments:
Balanced Fund	13
Mid-Cap Value Fund	22
Small Cap Value II Fund	25
Financial Highlights	46
Additional Information	Back Cover

Investing in debt securities entails interest rate risk which is the risk that debt securities will decrease in value with increases in market interest rates. Investing in the securities of small and mid-capitalization companies involves greater risk and the possibility of greater price volatility than investing in larger capitalization and more established companies.

Duration is a measure of price sensitivity relative to changes in interest rates.

Any opinions herein, including forecasts, reflect our judgment as of the end of the reporting period and are subject to change. Each advisor’s strategies and each Fund’s portfolio composition will change depending on economic and market conditions. This report is not a complete analysis of market conditions and, therefore, should not be relied upon as investment advice. Although economic and market information has been compiled from reliable sources, American Beacon Advisors, Inc. makes no representation as to the completeness or accuracy of the statements contained herein.

American Beacon Funds October 31, 2012

Dear Shareholders,

After muddling through 2011, during which the S&P 500 Index finished the year almost exactly flat, the domestic stock markets have performed much better of late. The first three months of 2012 were the best first quarter that the S&P 500 has experienced in more than a decade, and the markets have maintained most of those gains ever since.

Certainly, the U.S. economy appears to be in better shape than the rest of the developed world. While the eurozone continues to struggle, with several of its member economies back in recession, and China worries about its slowing growth rate, the U.S economy, while not yet at full strength, looks very well positioned. Corporations are sitting on mountains of cash and balance sheets have been largely cleansed since the recession. Although the economy is still operating below capacity, it retains the capability of growing much faster.

For the 12-month period ended October 31, 2012:

• The American Beacon Balanced Fund (Institutional Class) returned 13.23%.

• The American Beacon Mid-Cap Value Fund (Institutional Class) returned 14.07%.

• Since its inception on November 15, 2011, the American Beacon Small Cap Value II Fund (Y Class) has returned 7.10%.

We will continue to serve as responsible stewards for your assets, and continue to treat your investments as if they were our own money.

Thank you for your continued investment in American Beacon Funds. For additional information about the Funds or to access your account information, please visit our website at www.americanbeaconfunds.com.

Best Regards,
	Gene L. Needles, Jr.
	President
	American Beacon Funds

1

Domestic Equity Market Overview

October 31, 2012 (Unaudited)

U.S. stocks saw a resurgence for the one-year period ended October 31, 2012, with the Russell 1000, Russell 1000 Value and S&P 500 Indexes returning 14.97%, 16.89% and 15.21%, respectively. The advance was impressive, as it was made in the face of a deteriorating global growth outlook and while individuals continued to withdraw billions of dollars from domestic equity mutual funds.

The bulk of these gains can be attributed to a significant fourth-quarter 2011 and first-quarter 2012 rally that saw stock prices surge, as solid retail sales growth and upbeat gains in employment buoyed economic confidence. Through the middle part of spring, though, weak payroll employment reports and concerns over the eurozone debt crisis let the air out of the rally. There was a significant slowdown in economic activity in the U.S. and around the world in the second quarter, and Europe re-entered recession. Stocks responded to the weakening economic developments by dropping about 9% before rallying in June to cut the second quarter’s loss to 2.8% for the S&P 500 Index.

Improvement in the U.S. economy emerged late in the third quarter when reports for retail sales, automobile sales and consumer confidence were better than expected in September. Surprisingly strong housing activity also helped drive a summer rise in stocks that was wholly unexpected by many market observers.

Despite the strong gains during the year, it is still possible to find equities that remain inexpensive, but the broad market is no longer “cheap.” Stocks finished the period ended October 31, 2012, by plateauing in reaction to disappointing third-quarter earnings. Forward guidance still seems to be vulnerable to downward revisions, especially if the “fiscal cliff” remains on the horizon. Economic growth is still sluggish.

The U.S. economy also appears to be in better shape relative to most of the developed world. An energy boom is underway here that will radically reshape U.S. trade balances and competitiveness. U.S. oil and natural gas production is rising; imports of oil are falling. A manufacturing renaissance is underway, and here again, natural gas plays a part, as energy input costs here are far lower than the rest of the world. As labor costs soar in China, India, Brazil and other developing markets, the cost savings from moving overseas are disappearing. A June survey of 259 American manufacturers indicated 40% of them were returning production to the U.S. The U.S. is also an agricultural powerhouse and does not face food inflation, shortages or distribution problems like many other countries. And the U.S. remains far and away the leader in technology innovation; others may manufacture the products (for now) but the ideas come from U.S. shores more often than not.

From a longer-term perspective, stocks appear attractive. The economy is operating well below capacity while corporations are sitting on mountains of cash and balance sheets have been largely cleansed since the recession. U.S. Treasury securities, which offer negative real yields, look like an unattractive investment choice long-term. Individuals are underinvested in equities after moving billions of dollars out of domestic equity mutual funds. Corporate pension plans have made similar moves out of equities into very low-returning government bonds when bonds are the least attractive they have been in generations. Despite macroeconomic and geopolitical uncertainties, equities appear to continue to be a more compelling alternative.

2

American Beacon Balanced Fund^SM

Performance Overview

October 31, 2012 (Unaudited)

The Investor Class of the Balanced Fund (the “Fund”) returned 12.86% for the twelve months ended October 31, 2012. The Fund outperformed the 60% Russell 1000^® Value/40% Barclays Capital Aggregate Index (the “Balanced Composite Index”) benchmark return of 12.26% and the Lipper Mixed-Asset Target Allocation Growth Funds Index return of 10.30%.

Comparison of Change in Value of a $10,000 Investment

For The Period from 10/31/02 through 10/31/12

	Annualized Total Returns Periods Ended 10/31/12									Value of $10,000 10/31/02- 10/31/12
	1 Year			5 Years			10 Years
Institutional Class(1,8)		13.23	%		2.26	%		7.57	%	$	20,745
Y Class(1,3,8)		13.04	%		2.18	%		7.53	%		20,669
Investor Class(1,8)		12.86	%		1.94	%		7.23	%		20,104
Advisor Class(1,2,8)		12.62	%		1.75	%		7.04	%		19,752
A Class with sales charge (1,4,8)		6.13	%		0.68	%		6.57	%		18,891
A Class without sales charge(1,4,8)		12.65	%		1.88	%		7.20	%		20,044
C Class with sales charge (1,5,8)		10.86	%		1.53	%		7.02	%		19,708
C Class without sales charge(1,5,8)		11.86	%		1.53	%		7.02	%		19,708
AMR Class(1,8)		13.55	%		2.52	%		7.83	%		21,261
Balanced Composite Index(6)		12.26	%		2.40	%		6.90	%		19,491
Russell 1000 Value Index(7)		16.89	%		-1.00	%		7.34	%		20,312
Barclays Capital Aggregate Index(7)		5.25	%		6.38	%		5.39	%		16,910
Lipper Mixed-Asset Target Allocation Growth Funds Index(7)		10.30	%		1.52	%		6.80	%		19,310

1. Performance shown is historical and is not indicative of future returns. Investment returns and principal value will vary, and shares may be worth more or less at redemption than at original purchase. Performance shown is as of date indicated, and current performance may be lower or higher than the performance data quoted. To obtain performance as of the most recent month end, please visit our website at www.americanbeaconfunds.com or call 1-800-967-9009. Fund performance in the table above does not reflect the deduction of taxes a shareholder would pay on distributions or the redemption of shares.

2. Fund performance for the ten-year period represents the total returns achieved by the Investor Class from 10/31/02 up to 5/31/05, the inception date of the Advisor Class, and the returns of the Advisor Class since its inception. Expenses of the Advisor Class are higher than those of the Investor Class. Therefore, total returns shown may be higher than they would have been had the Advisor Class been in existence since 10/31/02. A portion of the fees charged to the Advisor Class of the Fund was waived in 2005. Performance prior to waiving fees was lower than actual returns shown for 2005.

3. Fund performance for the five-year and ten-year periods represent the total returns achieved by the Institutional Class from 10/31/02 up to 3/1/10, the inception date of the Y Class, and the returns of the Y Class since its inception. Expenses of the Y Class are higher than those of the Institutional Class. Therefore, total returns shown may be higher than they would have been had the Y Class been in existence since 10/31/02.

4. Fund performance for the five-year and ten-year periods represent the total returns achieved by the Investor Class from 10/31/02 up to 5/17/10, the inception date of the A Class, and the returns of the A Class since its inception. Expenses of the A Class are higher than those of the Investor Class. Therefore, total returns shown may be higher than they would have been had the A Class been in existence since 10/31/02. A Class has a maximum sales charge of 5.75%.

5. Fund performance for the five-year and ten-year periods represent the total returns achieved by the Investor Class from 10/31/02 up to 9/1/10, the inception date of the C Class, and the returns of the C Class since its inception. Expenses of the C Class are higher than those of the Investor Class. Therefore, total returns shown may be higher than they would have been had the C Class been in existence since 10/31/02. The maximum contingent deferred sales charge for C Class is 1% for shares redeemed within one year of the date of purchase.

6. To reflect the Fund’s allocation of its assets between investment grade fixed-income securities and equity securities, the returns of the Russell 1000 Value Index and the Barclays Capital Aggregate Index have been combined in a 60%/40% proportion.

7. 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 values. Russell 1000 Value Index and Russell 1000 Index are a registered trade marks of Frank Russell Company. The Barclays Capital Aggregate Index is a market value weighted index of government, corporate, mortgage-backed and asset-backed fixed-rate debt securities of all maturities. The Lipper Mixed-Asset Target Allocation Growth Funds Index tracks the results of the 30 largest mutual funds in the Lipper Mixed-Asset Target Allocation Growth Funds category. Lipper is an independent mutual fund research and ranking service. One cannot directly invest in an index.

8. The total annual Fund operating expense ratio set forth in the most recent Fund prospectus for the Institutional, Y, Investor, Advisor, A, C, and AMR Class shares was 0.59%, 1.49%, 0.93%, 1.10%, 1.60%, 2.35%, and 0.34%, respectively. The expense ratios above may vary from the expense ratios presented in other sections of this report that are based on expenses incurred during the period covered by this report.

3

American Beacon Balanced Fund^SM

Performance Overview

October 31, 2012 (Unaudited)

During the twelve-month period, the Fund’s assets on average were invested 65% in equities (including equitized cash) and 35% in fixed-income securities, ending the period with approximately 64% in equities and 36% in fixed-income securities.

The equity portion of the Fund (excluding equitized cash) returned 17.8%, outperforming the Russell 1000^® Value Index (the “Index”) return of 16.9%. The Fund’s equities outperformed the Index entirely due to security selection as sector allocation detracted value from relative returns. The Fund’s holdings in the Financials, Information Technology and Energy sectors added the most value relative to the Index. In the Financials sector, J.P. Morgan Chase (up 25.6%), Bank of America (up 38.1%) and Allstate (up 57.8%) were the largest contributors to excess performance. Seagate Technology (up 78.8%) and Apple (up 66.2%) positively impacted performance in the Information Technology sector. In the Energy sector, Phillips 66 (up 47.6%) and Chevron (up 7.6%) added the most value relative to the Index. Poor stock selection in the Materials and Consumer Discretionary sectors detracted from the Fund’s performance. Cliffs Natural Resources (down 46.3%) and ArcelorMittal (down 25.0%) were the largest detractors in the Materials sector. In the Consumer Discretionary sector, not owning The Walt Disney Company and Lowes, which were up 43.2% and 57.3%, respectively, in the Index detracted from the Fund’s returns. Holding Johnson Controls (down 19.9%) also detracted value relative to the Index.

Overweight positions in Information Technology and Energy, the two worst performing sectors in the Index, detracted from performance through sector allocation.

The fixed-income portion of the Fund returned 6.7% for the period, outperforming the Barclays Capital Aggregate Index (the “Barclays Index”) return of 5.4%. The Fund’s overweight and good security selection in Corporates, which was one of the better performing sectors in the Barclays Index, contributed most to excess performance. The Fund’s shorter duration detracted value as interest rates declined modestly during the period.

The sub-advisors continue to focus on the disciplined selection of attractive securities that should allow the Fund to benefit long term.

Top Ten Holdings

	% of Net Assets
JPMorgan Chase & Co.		2.6	%
Bank of America Corp.		1.8	%
Wells Fargo & Co.		1.8	%
Citigroup, Inc.		1.1	%
Vodafone Group plc		1.5	%
Pfizer, Inc.		1.6	%
Johnson & Johnson		1.5	%
Microsoft Corp.		1.3	%
General Electric Co.		1.1	%
BP plc.		1.1	%

Sector Allocation

	% of Equities
Financials		27.4	%
Energy		13.7	%
Health Care		13.1	%
Information Technology		10.2	%
Industrials		9.6	%
Consumer Staples		7.9	%
Consumer Discretionary		7.2	%
Utilities		5.1	%
Telecommunication Services		4.5	%
Materials		1.3	%

Sector Allocation

	% of Fixed Income
Corporate		42.0	%
U.S. Agency Mortgage-Backed Obligations		28.5	%
U.S. Treasury Obligations		17.1	%
Other Short-Term Investments		7.0	%
Commercial Mortgage-Backed Securities		2.2	%
Asset-Backed Obligations		1.9	%
Municipal Obligations		0.7	%
Agency		0.3	%
Sovereign Obligations		0.2	%
U.S. Agency Obligations		0.1	%

Investing in debt securities entails interest rate risk, which is the risk that debt securities will decrease in value with increases in market interest rates. The Fund may invest in futures contracts, which are a type of derivative investment. Investing in derivatives could result in losing more than the amount invested. Investing in foreign securities entails additional risk not associated with domestic securities, such as currency fluctuations, economic and political instability and differences in accounting standards. Investing in the securities of small and mid-capitalization companies involves greater risk and the possibility of greater price volatility than investing in larger capitalization and more established companies. The intrinsic value of stocks selected for the Fund may never be realized by the market, and the prices of value stocks may go down. While investing in value stocks may limit downside risk over time, the Fund may produce more modest gains than riskier stock funds as a trade-off for this potentially lower risk. Credit risk is the risk that the issuer of a bond will fail to make timely payment of interest or principal; and the decline in an issuer’s credit rating can cause the price of its bonds to go down. Please see the prospectus for a complete discussion of the Fund’s risks.

4

American Beacon Mid-Cap Value Fund^SM

Performance Overview

October 31, 2012 (Unaudited)

The Investor Class of the Mid-Cap Value Fund (the “Fund”) returned 13.84% for the twelve months ended October 31, 2012. The Fund underperformed the Russell Midcap^® Value Index (the “Index”) return of 14.99% and the Lipper Mid-Cap Value Funds Index return of 14.01%.

Comparison of Change in Value of a $10,000 Investment

For the Period from 6/30/04* through 10/31/12

* Inception of Fund

	Annualized Total Returns Periods Ended 10/31/12									Value  of $10,000 6/30/04- 10/31/12
	1 Year			5 Years			Since Incep. (6/30/04)
Institutional Class(1,3,9)		14.07	%		2.80	%		6.47	%	$	16,860
Y Class(1,4,9)		13.97	%		2.77	%		6.44	%		16,831
Investor Class(1,2,9)		13.84	%		2.66	%		6.33	%		16,681
Advisor Class(1,5,9)		13.44	%		2.39	%		6.15	%		16,450
A Class with sales charge(1,6,9)		7.00	%		1.16	%		5.40	%		15,503
A Class without sales charge(1,6,9)		13.56	%		2.37	%		6.15	%		16,449
C Class with sales charge(1,7,9)		11.75	%		2.06	%		5.96	%		16,199
C Class without sales charge(1,7,9)		12.75	%		2.06	%		5.96	%		16,199
AMR Class(1,9)		14.34	%		2.93	%		6.61	%		17,051
Russell Midcap Value Index(8)		14.99	%		1.68	%		7.22	%		17,877
Lipper Mid-Cap Value Funds Index(8)		14.01	%		0.95	%		5.83	%		16,042

1. Performance shown is historical and is not indicative of future returns. Investment returns and principal value will vary, and shares may be worth more or less at redemption than at original purchase. Performance shown is as of date indicated and current performance may be lower or higher than the performance data quoted. To obtain performance as of the most recent month end, please visit www.americanbeaconfunds.com or call 1-800-967-9009. Fund performance in the table above does not reflect the deduction of taxes a shareholder would pay on distributions or the redemption of shares. A portion of the fees charged to the AMR Class of the Fund was waived through 2005. Performance prior to

waiving fees was lower than the actual returns shown for periods through 2005.

2. Fund performance for the since inception period represents the total returns achieved by the AMR Class from 6/30/04 up to 3/1/06, the inception date of the Investor Class, and the returns of the Investor Class since its inception. Expenses of the Investor Class are higher than those of the AMR Class. As a result, total returns shown may be higher than they would have been had the Investor Class been in existence since 6/30/04. A portion of the fees charged to the Investor Class of the Fund has been waived since 2006. Performance prior to waiving fees was lower than actual returns shown since 2006.

3. Fund performance for the since inception period represents the total returns achieved by the AMR Class from 6/30/04 up to 11/30/05, the inception date of the Institutional Class, and the returns of the Institutional Class since its inception. Expenses of the Institutional Class are higher than those of the AMR Class. As a result, total returns shown may be higher than they would have been had the Institutional Class been in existence since 6/30/04. A portion of the fees charged to the Institutional Class of the Fund has been waived since 2007. Performance prior to waiving fees was lower than actual returns shown since 2007.

4. Fund performance for the five-year and since inception periods represent the total returns achieved by the AMR Class from 6/30/04 up to 11/30/05, the inception date of the Institutional Class, and the total returns of the Institutional Class from 11/30/05 up to 3/1/10, the inception date of the Y Class and the returns of the Y Class since its inception. Expenses of the AMR and Institutional Classes are lower than those of the Y Class. As a result, total returns shown may be higher than they would have been had the Y Class been in existence since 6/30/04.

5. Fund performance for the since inception period represents the total returns achieved by the AMR Class from 6/30/04 to 11/30/05, the Institutional Class from 11/30/05 to 3/1/06 and the Investor Class from 3/1/06 to 6/29/07, the inception date of the Advisor Class, and the returns of the Advisor Class since its inception. Expenses of the AMR, Institutional, and Investor Classes are lower than those of the Advisor Class. As a result, total returns shown may be higher than they would have been had the Advisor Class been in existence since 6/30/04. A portion of the fees charged to the Advisor Class of the Fund has been waived since 2007. Performance prior to waiving fees was lower than the actual returns shown since 2007.

6. Fund performance for the five-year and since inception periods represent the total returns achieved by the AMR Class from 6/30/04 to 11/30/05, the Institutional Class from 11/30/05 to 3/1/06 and the Investor Class from 3/1/06 to 5/17/10, the inception date of the A Class, and the returns of the A Class since its inception. Expenses of the AMR, Institutional, and Investor Classes are lower than those of the A Class. As a result, total returns shown may be higher than they would have been had the A Class been in existence since 6/30/04. A Class shares has a maximum sales charge of 5.75%.

7. Fund performance for the five-year and since inception periods represent the total returns achieved by the AMR Class from 6/30/04 to 11/30/05, the Institutional Class from 11/30/05 to 3/1/06 and the Investor Class from 3/1/06 to 9/1/10, the inception date of the C Class, and the returns of the C Class since its inception. Expenses of the AMR, Institutional, and Investor Classes are lower than those of the C Class. As a result, total returns

5

American Beacon Mid-Cap Value Fund^SM

Performance Overview

October 31, 2012 (Unaudited)

shown may be higher than they would have been had the C Class been in existence since 6/30/04. The maximum contingent deferred sales charge for C Class is 1.00% for shares redeemed within one year of the date of purchase.

8. The Russell Midcap Value Index is an unmanaged index of those stocks in the Russell Midcap Index with lower price-to-book ratios and lower forecasted growth values. The Russell Midcap Index measures the performance of the 800 smallest companies in the Russell 1000 Index. Russell Midcap Value Index and Russell 1000 Index are registered trademarks of Frank Russell Company. The Lipper Mid-Cap Value Funds Index tracks the results of the 30 largest mutual funds in the Lipper Mid-Cap Value Funds category. Lipper is an independent mutual fund research and ranking service. One cannot directly invest in an index.

9. The total annual Fund operating expense ratio set forth in the most recent Fund prospectus for the Institutional, Y, Investor, Advisor, A, C, and AMR Class shares was 1.11%, 11.63%, 1.33%, 1.99%, 3.45%, 19.15%, and 0.84%, respectively. The expense ratios above may vary from the expense ratios presented in other sections of this report that are based on expenses incurred during the period covered by this report.

The Fund underperformed the Index as both stock selection and sector allocation detracted value relative to the Index.

Most of the Fund’s poor performance was attributed to holdings in the Consumer Discretionary sector which detracted approximately 150 basis points (1.50%) from performance. In the Consumer Discretionary sector, International Game Technology (down 27.2%), Staples (down 20.0%) and WMS Industries (down 28.2%) had the largest negative impact on the Fund’s returns. This was somewhat offset by good stock selection in the Financials sector where Allstate (up 55.3%), Delphi Financial Group (up 64.2%) and Discover Financial Services (up 74.5%) were the largest contributors.

Overweight positions in the Information Technology and Health Care sectors detracted value relative to the Index through sector allocation. Being underweight in the Energy and Financials sectors also negatively impacted the Fund’s performance. An overweight in Consumer Discretionary, the best performing sector in the Index, generated positive excess returns.

The sub-advisors’ philosophy of investing in undervalued companies that exhibit improving profitability and earnings growth potential should allow the Fund to benefit longer term.

Top Ten Holdings

	% of Net Assets
Fifth Third Bancorp		2.3	%
L-3 Communications Holdings, Inc.		1.8	%
Avnet, Inc.		1.7	%
Masco Corp.		1.6	%
Allstate Corp.		1.6	%
Willis Group Holdings plc		1.6	%
Invesco Ltd.		1.5	%
Stanley Black & Decker, Inc.		1.4	%
Hasbro, Inc.		1.4	%
Staples, Inc.		1.4	%

Sector Allocation

	% of Equities
Financials		29.4	%
Industrials		20.8	%
Consumer Discretionary		12.3	%
Information Technology		9.9	%
Health Care		7.8	%
Utilities		6.7	%
Consumer Staples		4.7	%
Materials		4.5	%
Energy		3.9	%

The Fund may invest in futures contracts, which are a type of derivative investment. Investing in derivatives could result in losing more than the amount invested. Investing in foreign securities entails additional risk not associated with domestic securities, such as currency fluctuations, economic and political instability and differences in accounting standards. The intrinsic value of stocks selected for the Fund may never be realized by the market, and the prices of value stocks may go down. While investing in value stocks may limit downside risk over time, the Fund may produce more modest gains than riskier stock funds as a trade-off for this potentially lower risk. Investing in the securities of mid-capitalization companies involves greater risk and the possibility of greater price volatility than investing in larger capitalization and more established companies. Please see the prospectus for a complete discussion of the Fund’s risks.

6

American Beacon Small Cap Value II Fund^SM

Performance Overview

October 31, 2012 (Unaudited)

The Investor Class of the Small Cap Value II Fund (the “Fund”) returned 6.82% for the period since inception on November 15, 2011 through October 31, 2012, trailing the Russell 2000^® Value Index (the “Index”) return of 14.39% and the Lipper Small-Cap Value Funds Index return of 10.55% for the same period.

Comparison of Change in Value of a $10,000 Investment

For the Period from 11/15/11* through 10/31/12

* Inception of Fund

	Annualized Total Returns Period Ended 10/31/12			Value of $10,000 11/15/11 - 10/31/12
	Since Incep. (11/15/11)†
Y Class(1,3)		7.10	%	$	10,710
Investor Class (1,3)		6.82	%		10,682
Russell 2000 Value Index(2)		14.39	%		11,439
Lipper Small-Cap Value Funds Index(2)		10.55	%		11,055

^†  Not annualized.

1. Performance shown is historical and is not indicative of future returns. Investment returns and principal value will vary, and shares may be worth more or less at redemption than at original purchase. Performance shown is as of date indicated and current performance may be lower or higher than the performance data quoted. To obtain performance as of the most recent month end, please visit www.americanbeaconfunds.com or call 1-800-967-9009. Fund performance in the table above does not reflect the deduction of taxes a shareholder would pay on distributions or the redemption of shares.

2. 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 Lipper Small-Cap Value Funds Index tracks the results of the 30 largest mutual funds in the Lipper Small-Cap Value Funds category. Lipper is an independent mutual fund research and ranking service. One cannot directly invest in an index.

3. The total annual Fund operating expense ratio set forth in the most recent Fund prospectus for the Y and Investor Class shares was 1.52% and 1.80%, respectively. The expense ratios above may vary from the expense ratios presented in other sections of this report that are based on expenses incurred during the period covered by this report.

The Fund underperformed the Index primarily through stock selection as sector allocation detracted minimal value relative to the Index. The following discussion of Fund performance is for the period from November 30, 2011 through October 31, 2012.

From a stock selection standpoint, holdings in the Financials and Energy sectors negatively impacted the Fund’s returns most. Knight Capital Group (down 99.9%) and not owning Ocwen Financial, which was up 192.9% in the Index, were the largest detractors in the Financials sector. In the Energy sector, Gulfport Energy (down 55.3%), Cal Dive International (down 55.8%) and Tetra Technologies (down 41.8%) detracted from performance relative to the Index. The Fund’s Information Technology and Consumer Discretionary companies also negatively impacted the Fund’s returns. In the Information Technology sector, Lexmark (down 46.2%) and Photronics (down 16.7%) hurt performance most. Aeropostale (down 22.8%) and Radio Shack (down 37.8%) were the largest detractors in the Consumer Discretionary sector.

The Fund’s significant underweight in Financials, one of the better performing sectors in the Index, and an overweight in Energy, the worst performing sector in the Index, detracted value relative to the Index through sector allocation. This was mostly offset by an overweight position in Consumer Discretionary, the best performing sector in the Index, and an underweight in the Utilities sector which contributed to the Fund’s relative returns.

The sub-advisors continue to focus on uncovering investment opportunities through stock selection that should benefit the Fund’s performance over the longer-term.

Top Ten Holdings

	% of Net Assets
Magellan Health Services, Inc.		1.4	%
Hospitality Properties Trust		1.3	%
Crane Co.		1.2	%
Washington Federal, Inc.		1.1	%
EMCOR Group, Inc.		1.1	%
Old Dominion Freight Line, Inc.		1.1	%
Vishay Intertechnology, Inc.		1.0	%
JDA Software Group, Inc.		1.0	%
Barnes Group, Inc.		1.0	%
MasTec, Inc.		1.0	%

7

American Beacon Small Cap Value II Fund^SM

Performance Overview

October 31, 2012 (Unaudited)

Sector Allocation

	% of Equities
Financials		28.0	%
Industrials		23.7	%
Consumer Discretionary		14.3	%
Information Technology		11.2	%
Materials		7.0	%
Energy		6.7	%
Health Care		4.7	%
Consumer Staples		2.3	%
Utilities		1.7	%
Telecommunication Services		0.4	%

The Fund may invest in futures contracts, which are a type of derivative investment. Investing in derivatives could result in losing more than the amount invested. Investing in foreign securities entails additional risk not associated with domestic securities, such as currency fluctuations, economic and political instability and differences in accounting standards. The intrinsic value of stocks selected for the Fund may never be realized by the market, and the prices of value stocks may go down. While investing in value stocks may limit downside risk over time, the Fund may produce more modest gains than riskier stock funds as a trade-off for this potentially lower risk. Investing in the securities of mid-capitalization companies involves greater risk and the possibility of greater price volatility than investing in larger capitalization and more established companies. Please see the prospectus for a complete discussion of the Fund’s risks.

8

American Beacon Funds^SM

Fund Expenses

October 31, 2012 (Unaudited)

Fund Expense Example

As a shareholder of a Fund, you incur two types of costs: (1) transaction costs, including redemption fees if applicable, and (2) ongoing costs, including management fees, administrative service fees, distribution (12b-1) fees, and other Fund expenses. The examples below are intended to help you understand the ongoing cost (in dollars) of investing in a particular Fund and to compare these costs with the ongoing costs of investing in other mutual funds. The examples are based on an investment of $1,000 invested at the beginning of the period in each Class and held for the entire period from May 1, 2012 through October 31, 2012.

Actual Expenses

The following tables provide information about actual account values and actual expenses. You may use the information on this page, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the “Expenses Paid During Period” for the applicable Fund to estimate the expenses you paid on your account during this period. Shareholders of the Investor and Institutional Classes that invest in a Fund through an IRA may be subject to a custodial IRA fee of $15 that is typically deducted each December. If your account was subject to a custodial IRA fee during the period, your costs would have been $15 higher.

Institutional Class	Balanced Fund			Mid-Cap Value Fund
Beginning Account Value 5/1/12	$	1,000.00		$	1,000.00
Ending Account Value 10/31/12	$	1,029.87		$	1,005.51
Expenses Paid During Period 5/1/12 - 10/31/12 *	$	3.11		$	4.94
Annualized Expense Ratio		0.61	%		0.98	%

Y Class	Balanced Fund			Mid-Cap Value Fund			Small Cap Value II Fund
Beginning Account Value 5/1/12	$	1,000.00		$	1,000.00		$	1,000.00
Ending Account Value 10/31/12	$	1,027.97		$	1,004.57		$	979.79
Expenses Paid During Period 5/1/12 - 10/31/12 *	$	3.57		$	5.34		$	5.58
Annualized Expense Ratio		0.70	%		1.06	%		1.12	%

Investor Class	Balanced Fund			Mid-Cap Value Fund			Small Cap Value II Fund
Beginning Account Value 5/1/12	$	1,000.00		$	1,000.00		$	1,000.00
Ending Account Value 10/31/12	$	1,027.97		$	1,004.57		$	979.79
Expenses Paid During Period 5/1/12 - 10/31/12 *	$	4.79		$	6.20		$	7.51
Annualized Expense Ratio		0.94	%		1.23	%		1.51	%

Advisor Class	Balanced Fund			Mid-Cap Value Fund
Beginning Account Value 5/1/12	$	1,000.00		$	1,000.00
Ending Account Value 10/31/12	$	1,026.85		$	1,002.78
Expenses Paid During Period 5/1/12 - 10/31/12 *	$	5.60		$	7.45
Annualized Expense Ratio		1.10	%		1.48	%

A Class	Balanced Fund			Mid-Cap Value Fund
Beginning Account Value 5/1/12	$	1,000.00		$	1,000.00
Ending Account Value 10/31/12	$	1,026.93		$	1,003.71
Expenses Paid During Period 5/1/12 - 10/31/12 *	$	5.60		$	7.50
Annualized Expense Ratio		1.10	%		1.49	%

C Class	Balanced Fund			Mid-Cap Value Fund
Beginning Account Value 5/1/12	$	1,000.00		$	1,000.00
Ending Account Value 10/31/12	$	1,023.81		$	1,000.00
Expenses Paid During Period 5/1/12 - 10/31/12 *	$	9.31		$	11.11
Annualized Expense Ratio		1.83	%		2.21	%

9

American Beacon Funds^SM

Fund Expenses

October 31, 2012 (Unaudited)

AMR Class	Balanced Fund			Mid-Cap Value Fund
Beginning Account Value 5/1/12	$	1,000.00		$	1,000.00
Ending Account Value 10/31/2012	$	1,031.41		$	1,007.35
Expenses Paid During Period 5/1/12 - 10/31/12 *	$	1.69		$	3.99
Annualized Expense Ratio		0.33	%		0.79	%

Hypothetical Example for Comparison Purposes

The following tables provide information about hypothetical account values and hypothetical expenses based on a Fund’s actual expense ratio and an assumed 5% per year rate of return before expenses (not the Fund’s actual return). You may compare the ongoing costs of investing in a particular Fund with other funds by contrasting this 5% hypothetical example and the 5% hypothetical examples that appear in the shareholder reports of the other funds. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. Shareholders of the Investor and Institutional Classes that invest in a Fund through an IRA may be subject to a custodial IRA fee of $15 that is typically deducted each December. If your account was subject to a custodial IRA fee during the period, your costs would have been $15 higher.

You should also be aware that the expenses shown in the table highlight only your ongoing costs and do not reflect any transaction costs charged by a Fund, such as redemption fees as applicable. Similarly, the expense examples for other funds do not reflect any transaction costs charged by those funds, such as sales charges (loads), redemption fees or exchange fees. Therefore, the following tables are useful in comparing ongoing costs only and will not help you determine the relative total costs of owning different funds. If you were subject to any transaction costs during the period, your costs would have been higher.

Institutional Class	Balanced Fund			Mid-Cap Value Fund
Beginning Account Value 5/1/12	$	1,000.00		$	1,000.00
Ending Account Value 10/31/12	$	1,022.07		$	1,020.21
Expenses Paid During Period 5/1/12 - 10/31/12 *	$	3.10		$	4.98
Annualized Expense Ratio		0.61	%		0.98	%

Y Class	Balanced Fund			Mid-Cap Value Fund			Small Cap Value II  Fund
Beginning Account Value 5/1/12	$	1,000.00		$	1,000.00		$	1,000.00
Ending Account Value 10/31/12	$	1,020.41		$	1,018.95		$	1,017.55
Expenses Paid During Period 5/1/12 - 10/31/12 *	$	3.56		$	5.38		$	5.69
Annualized Expense Ratio		0.70	%		1.06	%		1.12	%

Investor Class	Balanced Fund			Mid-Cap  Value Fund			Small Cap Value II Fund
Beginning Account Value 5/1/12	$	1,000.00		$	1,000.00		$	1,000.00
Ending Account Value 10/31/12	$	1,020.41		$	1,018.95		$	1,017.55
Expenses Paid During Period 5/1/12 - 10/31/12 *	$	4.77		$	6.24		$	7.66
Annualized Expense Ratio		0.94	%		1.23	%		1.51	%

Advisor Class	Balanced Fund			Mid-Cap  Value Fund
Beginning Account Value 5/1/12	$	1,000.00		$	1,000.00
Ending Account Value 10/31/12	$	1,019.61		$	1,017.70
Expenses Paid During Period 5/1/12 - 10/31/12 *	$	5.58		$	7.51
Annualized Expense Ratio		1.10	%		1.48	%

A Class	Balanced Fund			Mid-Cap Value Fund
Beginning Account Value 5/1/12	$	1,000.00		$	1,000.00
Ending Account Value 10/31/12	$	1,019.61		$	1,017.65
Expenses Paid During Period 5/1/12 - 10/31/12 *	$	5.58		$	7.56
Annualized Expense Ratio		1.10	%		1.49	%

10

American Beacon Funds^SM

Fund Expenses

October 31, 2012 (Unaudited)

C Class	Balanced Fund			Mid-Cap Value Fund
Beginning Account Value 5/1/12	$	1,000.00		$	1,000.00
Ending Account Value 10/31/12	$	1,015.94		$	1,014.03
Expenses Paid During Period 5/1/12 - 10/31/12 *	$	9.27		$	11.19
Annualized Expense Ratio		1.83	%		2.21	%

AMR Class	Balanced Fund			Mid-Cap Value Fund
Beginning Account Value 5/1/12	$	1,000.00		$	1,000.00
Ending Account Value 10/31/12	$	1,023.48		$	1,021.17
Expenses Paid During Period 5/1/12 - 10/31/12 *	$	1.68		$	4.01
Annualized Expense Ratio		0.33	%		0.79	%

* Expenses are equal to the Fund’s annualized expense ratios for the six-month period multiplied by the average account value over the period, multiplied by the number derived by dividing the number of days in the most recent fiscal half-year (184) by days in the year (366) to reflect the half-year period.

11

American Beacon Funds^SM

Report of Independent Registered Public Accounting Firm

To the Shareholders and the Board of Trustees of

American Beacon Balanced Fund, American Beacon Mid-Cap Value Fund, and American Beacon Small Cap Value II Fund:

We have audited the accompanying statements of assets and liabilities, including the schedules of investments, of the American Beacon Balanced Fund, the American Beacon Mid-Cap Value Fund, and the American Beacon Small Cap Value II Fund (three of the funds constituting the American Beacon Funds) (collectively, the “Funds”), as of October 31, 2012, and the related statements of operations, the statements of changes in net assets, and the financial highlights for the periods indicated therein. These financial statements and financial highlights are the responsibility of the Funds’ management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. We were not engaged to perform an audit of the Funds’ internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of each Fund’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements and financial highlights, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of October 31, 2012, by correspondence with the custodian and brokers or by other appropriate auditing procedures where replies from brokers were not received. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of the American Beacon Balanced Fund, the American Beacon Mid-Cap Value Fund, and the American Beacon Small Cap Value II Fund at October 31, 2012, the results of their operations, the changes in their net assets, and the financial highlights for each of the periods indicated therein, in conformity with U.S. generally accepted accounting principles.

Dallas, Texas

December 27, 2012

12

American Beacon Balanced Fund^SM

Schedule of Investments

October 31, 2012

	Shares		Fair Value
			(000’s)
COMMON STOCK—60.93%
CONSUMER DISCRETIONARY—4.15%
Auto Components—1.12%
Delphi Automotive plcA		27,500	$	865
Johnson Controls, Inc.		242,700		6,249
Magna International, Inc., Class A		55,000		2,443
				9,557
Automobiles—0.58%
General Motors Co.A		195,100		4,975
Hotels, Restaurants & Leisure—0.48%
Carnival Corp.		107,100		4,057
Media—1.24%
Comcast Corp., Class A		86,000		3,225
Comcast Corp.—Special Class A,		25,100		915
Interpublic Group of Cos., Inc.		185,800		1,877
Time Warner Cable, Inc.		15,900		1,576
Time Warner, Inc.		66,900		2,906
				10,499
Multiline Retail—0.29%
JC Penney Co., Inc.		104,000		2,497
Specialty Retail—0.37%
Abercrombie & Fitch Co., Class A		59,600		1,823
Lowe’s Cos., Inc.		41,800		1,353
				3,176
Textiles & Apparel—0.07%
Deckers Outdoor Corp.A		21,440		614
Total Consumer Discretionary				35,375
CONSUMER STAPLES—4.85%
Beverages—0.89%
Diageo plc, ADRB		41,600		4,748
Molson Coors Brewing Co., Class B		19,500		841
PepsiCo, Inc.		29,300		2,029
				7,618
Food & Drug Retailing—1.84%
CVS Caremark Corp.		39,700		1,842
Kroger Co.		284,400		7,172
Wal-Mart Stores, Inc.		89,000		6,677
				15,691
Food Products—0.25%
General Mills, Inc.		31,800		1,275
Kraft Foods Group, Inc.A		6,533		297
Mondelez International, Inc.A		21,000		557
				2,129
Tobacco—1.87%
Altria Group, Inc.		89,800		2,856
Imperial Tobacco Group plc, ADRB		64,000		4,825
Philip Morris International, Inc.		92,900		8,227
				15,908
Total Consumer Staples				41,346
ENERGY—8.35%
Energy Equipment & Services—1.21%
Cobalt International Energy, Inc.A		180,200		3,750
Halliburton Co.		68,300		2,205

	Shares		Fair Value
			(000’s)
Transocean Ltd.		95,020	$	4,342
				10,297
Oil & Gas—7.14%
Apache Corp.		51,900		4,295
BP plc, ADRB		222,394		9,537
Chevron Corp.		36,528		4,026
ConocoPhillips		87,090		5,038
Hess Corp.		24,300		1,270
Marathon Oil Corp.		175,800		5,285
Marathon Petroleum Corp.		31,750		1,744
Murphy Oil Corp.		20,500		1,230
Occidental Petroleum Corp.		55,100		4,351
Phillips 66		107,645		5,077
Royal Dutch Shell plc, ADRB		107,337		7,459
Seadrill Ltd.		48,500		1,956
Spectra Energy Corp.		176,200		5,087
Total S.A., ADRB		91,300		4,593
				60,948
Total Energy				71,245
FINANCIALS—16.74%
Banks—5.68%
Bank of America Corp.		1,608,880		14,996
Bank of New York Mellon Corp.		227,900		5,631
Fifth Third Bancorp		129,700		1,885
KeyCorp		146,757		1,236
PNC Financial Services Group, Inc.		106,858		6,218
SunTrust Banks, Inc.		72,000		1,958
Wells Fargo & Co.		444,298		14,968
Zions Bancorporation		72,900		1,565
				48,457
Diversified Financials—6.40%
American Express Co.		106,300		5,950
Capital One Financial Corp.		95,800		5,764
Charles Schwab Corp.		221,500		3,008
Citigroup, Inc.		255,770		9,563
JPMorgan Chase & Co.		538,634		22,451
Morgan Stanley		119,900		2,084
SLM Corp.		181,800		3,196
State Street Corp.		57,900		2,581
				54,597
Insurance—4.46%
ACE Ltd.		22,700		1,785
Allstate Corp.		101,000		4,038
American International Group, Inc.A		189,000		6,602
Berkshire Hathaway, Inc., Class BA		49,371		4,263
Hartford Financial Services Group, Inc.		104,100		2,260
Lincoln National Corp.		164,500		4,078
MetLife, Inc.		214,588		7,615
Prudential Financial, Inc.		15,400		879
Unum Group		163,300		3,312
XL Group plc		128,900		3,189
				38,021
Real Estate—0.20%
Chimera Investment Corp.C		627,872		1,676
Total Financials				142,751
HEALTH CARE—8.01%
Health Care Equipment & Supplies—1.66%
Baxter International, Inc.		82,200		5,148

See accompanying notes

13

American Beacon Balanced Fund^SM

Schedule of Investments

October 31, 2012

	Shares		Fair Value
			(000’s)
Covidien plc		37,500	$	2,061
Medtronic, Inc.		146,400		6,087
Zimmer Holdings, Inc.		13,300		854
				14,150
Health Care Providers & Services—1.44%
Humana, Inc.		38,100		2,830
Quest Diagnostics, Inc.		21,800		1,258
UnitedHealth Group, Inc.		35,100		1,966
WellPoint, Inc.		101,700		6,232
				12,286
Pharmaceuticals—4.91%
AstraZeneca plc, ADRB		18,800		872
Eli Lilly & Co.		16,400		798
Johnson & Johnson		185,900		13,165
Merck & Co., Inc.		163,476		7,459
Novartis AG, ADRB		60,400		3,636
Pfizer, Inc.		545,854		13,575
Sanofi, ADRB		54,300		2,386
				41,891
Total Health Care				68,327
INDUSTRIALS—5.88%
Aerospace & Defense—1.74%
Boeing Co.		71,900		5,065
Exelis, Inc.		95,200		1,053
Lockheed Martin Corp.		31,200		2,923
Northrop Grumman Corp.		12,100		831
Raytheon Co.		87,100		4,926
				14,798
Air Freight & Couriers—0.22%
FedEx Corp.		20,100		1,849
Electronic Equipment & Instruments—0.37%
Emerson Electric Co.		65,700		3,182
Industrial Conglomerates—1.67%
General Electric Co.		459,900		9,686
Honeywell International, Inc.		74,200		4,544
				14,230
Machinery—1.88%
Cummins, Inc.		50,300		4,706
Eaton Corp.		76,400		3,608
Illinois Tool Works, Inc.		47,100		2,889
ITT Corp.		33,600		699
PACCAR, Inc.		53,900		2,336
Xylem, Inc.		76,400		1,853
				16,091
Total Industrials				50,150
INFORMATION TECHNOLOGY—6.25%
Communications—0.17%
Facebook, Inc.A		68,400		1,444
Communications Equipment—0.65%
Cisco Systems, Inc.		89,100		1,527
Corning, Inc.		339,700		3,992
				5,519
Computers & Peripherals—2.12%
Hewlett-Packard Co.		408,600		5,659
International Business Machines Corp.		18,100		3,521
Seagate Technology plc		210,425		5,749

	Shares		Fair Value
			(000’s)
Western Digital Corp.		93,300	$	3,194
				18,123
Electronic Equipment & Instruments—0.29%
Avnet, Inc.A		13,800		395
TE Connectivity Ltd.		64,825		2,086
				2,481
IT Consulting & Services—0.32%
Fidelity National Information Services, Inc.		82,600		2,715
Semiconductor Equipment & Products—0.66%
Intel Corp.		198,200		4,286
Texas Instruments, Inc.		47,700		1,340
				5,626
Software—2.04%
CA, Inc.		69,474		1,565
Microsoft Corp.		400,400		11,425
Oracle Corp.		141,000		4,378
				17,368
Total Information Technology				53,276
MATERIALS—0.82%
Chemicals—0.40%
Air Products & Chemicals, Inc.		14,200		1,101
EI du Pont de Nemours & Co.		51,800		2,306
				3,407
Metals & Mining—0.42%
Newmont Mining Corp.		66,200		3,611
Total Materials				7,018
TELECOMMUNICATION SERVICES—2.75%
Diversified Telecommunication Services—1.25%
AT&T, Inc.		159,977		5,534
Verizon Communications, Inc.		114,908		5,129
				10,663
Wireless Telecommunication Services—1.50%
Vodafone Group plc, ADRB		471,830		12,790
Total Telecommunication Services				23,453
UTILITIES—3.13%
CenterPoint Energy, Inc.		188,100		4,076
Dominion Resources, Inc.		34,400		1,816
Edison International		37,300		1,751
Entergy Corp.		67,100		4,870
Exelon Corp.		111,600		3,993
NRG Energy, Inc.		94,400		2,035
Public Service Enterprise Group, Inc.		254,500		8,154
Total Utilities				26,695
Total Common Stock (Cost $460,689)				519,636
PREFERRED STOCK—0.25% (Cost $2,246)
CONSUMER DISCRETIONARY—0.25%
General Motors Co., 4.75%, Due 12/1/2013		52,400		2,128

See accompanying notes

14

American Beacon Balanced Fund^SM

Schedule of Investments

October 31, 2012

	Par Amount		Fair Value
	(000’s)		(000’s)
CORPORATE OBLIGATIONS—16.47%
Financials—7.93%
AEGON Funding Co. LLC,
5.75%, Due 12/15/2020D	$	350	$	412
American Express Co.,
8.15%, Due 3/19/2038		200		322
American Express Credit Corp.,
1.75%, Due 6/12/2015		875		897
American International Group, Inc.,
6.40%, Due 12/15/2020		625		768
4.875%, Due 6/1/2022		600		677
Bank of America Corp.,
6.50%, Due 8/1/2016		2,090		2,431
7.80%, Due 9/15/2016		700		823
7.625%, Due 6/1/2019		1,280		1,623
Bank of New York Mellon Corp.,
2.30%, Due 7/28/2016		665		699
Bank of Nova Scotia,
0.75%, Due 10/9/2015		535		535
Bank One Corp.,
4.90%, Due 4/30/2015		250		271
Barclays Bank plc,
3.90%, Due 4/7/2015		330		351
6.75%, Due 5/22/2019		350		429
Bear Stearns Cos. LLC,
7.25%, Due 2/1/2018D		1,640		2,041
BNP Paribas S.A.,
3.60%, Due 2/23/2016		320		339
Canadian Imperial Bank of Commerce,
2.35%, Due 12/11/2015		510		534
Capital One Financial Corp.,
2.125%, Due 7/15/2014		335		342
Citigroup, Inc.,
1.290%, Due 4/1/2014E		98		98
6.375%, Due 8/12/2014		1,720		1,874
0.722%, Due 11/5/2014E		320		317
6.01%, Due 1/15/2015		250		275
8.50%, Due 5/22/2019		1,705		2,273
CNA Financial Corp.,
7.35%, Due 11/15/2019		245		307
Danske Bank A/S,
1.390%, Due 4/14/2014E F		620		614
Deutsche Bank AG,
3.875%, Due 8/18/2014		325		343
Fifth Third Bancorp,
3.625%, Due 1/25/2016		325		350
0.799%, Due 12/20/2016E		1,000		965
8.25%, Due 3/1/2038		1,900		2,756
General Electric Capital Corp.,
1.048%, Due 6/2/2014E		1,595		1,602
0.551%, Due 1/8/2016E		1,125		1,108
5.625%, Due 5/1/2018		375		445
6.00%, Due 8/7/2019		995		1,219
5.50%, Due 1/8/2020		250		297
5.30%, Due 2/11/2021		170		198
5.875%, Due 1/14/2038		505		622
Goldman Sachs Group, Inc.,
5.35%, Due 1/15/2016		725		804
6.25%, Due 9/1/2017		650		764
5.95%, Due 1/18/2018		590		687
6.00%, Due 6/15/2020		175		205

	Par Amount		Fair Value
	(000’s)		(000’s)
5.75%, Due 1/24/2022	$	400	$	464
6.75%, Due 10/1/2037		2,080		2,291
HCP, Inc.,
5.375%, Due 2/1/2021		355		411
Health Care REIT, Inc.,
3.625%, Due 3/15/2016C		185		196
5.25%, Due 1/15/2022C		250		285
HSBC Finance Corp.,
0.590%, Due 1/15/2014E		1,050		1,045
ING Bank N.V.,
1.808%, Due 6/9/2014E F		1,980		1,994
5.125%, Due 5/1/2015F		450		473
3.75%, Due 3/7/2017F		400		424
JPMorgan Chase & Co.,
1.116%, Due 1/24/2014E		840		845
3.45%, Due 3/1/2016		480		511
0.729%, Due 6/13/2016E		415		402
4.50%, Due 1/24/2022		695		785
5.50%, Due 10/15/2040		325		396
KeyCorp,
5.10%, Due 3/24/2021		140		166
Liberty Mutual Group, Inc.,
5.00%, Due 6/1/2021F		280		303
6.50%, Due 5/1/2042F		1,000		1,140
Liberty Mutual Insurance Co.,
7.875%, Due 10/15/2026F		1,500		1,895
Lincoln National Corp.,
4.75%, Due 2/15/2014		245		257
Lloyds TSB Bank plc,
4.375%, Due 1/12/2015F		325		346
Merrill Lynch & Co. Inc,
6.40%, Due 8/28/2017		670		790
6.50%, Due 7/15/2018		260		306
6.11%, Due 1/29/2037		365		400
7.75%, Due 5/14/2038		1,660		2,187
MetLife, Inc.,
5.00%, Due 11/24/2013		335		351
6.375%, Due 6/15/2034		350		458
Monumental Global Funding III,
0.540%, Due 1/15/2014E F		325		322
Morgan Stanley,
0.651%, Due 1/9/2014E		1,760		1,745
0.820%, Due 10/15/2015E		920		887
4.75%, Due 3/22/2017		805		871
7.30%, Due 5/13/2019		350		421
5.625%, Due 9/23/2019		350		389
National Australia Bank Ltd.,
4.375%, Due 12/10/2020F		325		365
Nordea Bank AB,
4.875%, Due 1/27/2020F		300		342
PNC Funding Corp.,
4.25%, Due 9/21/2015		370		406
4.375%, Due 8/11/2020		330		381
3.30%, Due 3/8/2022		340		365
Prudential Financial, Inc.,
7.375%, Due 6/15/2019		300		385
Rabobank Nederland,
2.125%, Due 10/13/2015		340		351
Royal Bank of Canada,
1.15%, Due 3/13/2015		285		290
Simon Property Group LP,
6.125%, Due 5/30/2018G		555		681
10.35%, Due 4/1/2019C G		325		468

See accompanying notes

15

American Beacon Balanced Fund^SM

Schedule of Investments

October 31, 2012

	Par Amount		Fair Value
	(000’s)		(000’s)
Societe Generale S.A.,
2.20%, Due 9/14/2013F	$	300	$	303
1.397%, Due 4/11/2014E F		900		897
State Street Corp.,
4.30%, Due 5/30/2014		215		228
2.875%, Due 3/7/2016		505		539
SunTrust Banks, Inc.,
3.50%, Due 1/20/2017		460		495
Svenska Handelsbanken AB,
2.875%, Due 4/4/2017		550		581
Toyota Motor Credit Corp.,
2.05%, Due 1/12/2017		365		379
UBS AG,
5.875%, Due 12/20/2017		1,050		1,242
US Bancorp,
1.65%, Due 5/15/2017		880		900
Wachovia Corp.,
0.710%, Due 10/15/2016E		650		632
5.75%, Due 2/1/2018		1,370		1,653
Willis North America, Inc.,
6.20%, Due 3/28/2017		295		339
				67,595
Industrials—7.17%
ABB Finance USA, Inc.,
2.875%, Due 5/8/2022		255		264
Altera Corp.,
1.75%, Due 5/15/2017		150		154
Altria Group, Inc.,
9.70%, Due 11/10/2018		95		135
4.75%, Due 5/5/2021		310		359
America Movil SAB de CV,
6.375%, Due 3/1/2035		350		462
American Honda Finance Corp.,
4.625%, Due 4/2/2013F		425		432
3.875%, Due 9/21/2020F		250		270
Analog Devices, Inc.,
3.00%, Due 4/15/2016		330		354
Anheuser-Busch InBev Worldwide, Inc.,
5.00%, Due 4/15/2020		330		403
8.00%, Due 11/15/2039		125		208
Apache Corp.,
3.25%, Due 4/15/2022		270		294
5.10%, Due 9/1/2040		170		207
Applied Materials, Inc.,
2.65%, Due 6/15/2016		345		365
AT&T, Inc.,
5.10%, Due 9/15/2014		605		656
5.50%, Due 2/1/2018		775		942
6.80%, Due 5/15/2036		150		206
6.40%, Due 5/15/2038		175		237
5.35%, Due 9/1/2040		253		310
Baxter International, Inc.,
1.85%, Due 1/15/2017		225		233
Becton Dickinson and Co.,
3.25%, Due 11/12/2020		330		357
BHP Billiton Finance USA Ltd.,
1.625%, Due 2/24/2017		310		317
Boeing Co.,
1.875%, Due 11/20/2012		350		350
BP Capital Markets plc,
3.20%, Due 3/11/2016		750		806
Burlington Northern Santa Fe LLC,
5.75%, Due 3/15/2018D		425		517

	Par Amount		Fair Value
	(000’s)		(000’s)
7.95%, Due 8/15/2030D	$	235	$	335
5.75%, Due 5/1/2040D		170		218
Cameron International Corp.,
6.375%, Due 7/15/2018		135		166
Canadian National Railway Co.,
5.55%, Due 5/15/2018		350		425
Canadian Natural Resources Ltd.,
3.45%, Due 11/15/2021		430		467
6.25%, Due 3/15/2038		365		492
Caterpillar Financial Services Corp.,
1.10%, Due 5/29/2015		360		364
2.75%, Due 6/24/2015		340		358
1.625%, Due 6/1/2017		480		492
CBS Corp.,
3.375%, Due 3/1/2022		720		757
Cellco Partnership,
8.50%, Due 11/15/2018		320		446
Coca-Cola Co.,
0.75%, Due 11/15/2013		350		351
Comcast Cable Communications Holdings, Inc.,
8.375%, Due 3/15/2013		128		132
Comcast Corp.,
5.875%, Due 2/15/2018		700		854
6.55%, Due 7/1/2039		450		606
Cooper US, Inc.,
2.375%, Due 1/15/2016		330		339
3.875%, Due 12/15/2020		355		387
Covidien International Finance S.A.,
2.80%, Due 6/15/2015		290		305
CSX Corp.,
5.50%, Due 4/15/2041		325		403
CVS Caremark Corp.,
3.25%, Due 5/18/2015		170		181
Daimler Finance North America LLC,
3.00%, Due 3/28/2016D F		160		168
2.95%, Due 1/11/2017D F		300		315
2.40%, Due 4/10/2017D F		550		566
Deutsche Telekom International Finance BV,
4.875%, Due 3/6/2042F		300		327
Devon Energy Corp.,
4.75%, Due 5/15/2042		300		339
Diageo Capital plc,
1.50%, Due 5/11/2017		345		352
DIRECTV Holdings LLC,
2.40%, Due 3/15/2017D		425		438
6.35%, Due 3/15/2040D		140		168
Dow Chemical Co.,
7.60%, Due 5/15/2014		170		187
4.25%, Due 11/15/2020		305		338
4.125%, Due 11/15/2021		300		328
Eaton Corp.,
5.60%, Due 5/15/2018		300		355
eBay, Inc.,
1.35%, Due 7/15/2017		350		355
EOG Resources, Inc.,
2.50%, Due 2/1/2016		325		341
Express Scripts, Inc.,
6.25%, Due 6/15/2014		370		402
Ford Motor Credit Co. LLC,
4.25%, Due 2/3/2017D		300		320
5.875%, Due 8/2/2021D		400		461

See accompanying notes

16

American Beacon Balanced Fund^SM

Schedule of Investments

October 31, 2012

	Par Amount		Fair Value
	(000’s)		(000’s)
France Telecom S.A.,
4.375%, Due 7/8/2014	$	215	$	228
2.125%, Due 9/16/2015		150		155
Freeport-McMoRan Copper & Gold, Inc.,
3.55%, Due 3/1/2022		325		331
Genzyme Corp.,
5.00%, Due 6/15/2020		190		225
Gilead Sciences, Inc.,
2.40%, Due 12/1/2014		355		367
GlaxoSmithKline Capital plc,
1.50%, Due 5/8/2017		535		547
Halliburton Co.,
3.25%, Due 11/15/2021		275		301
Hewlett-Packard Co.,
2.20%, Due 12/1/2015		325		324
4.65%, Due 12/9/2021		925		926
4.05%, Due 9/15/2022		300		289
6.00%, Due 9/15/2041		1,885		1,856
Husky Energy, Inc.,
5.90%, Due 6/15/2014		245		265
3.95%, Due 4/15/2022		370		401
Intel Corp.,
3.30%, Due 10/1/2021		215		236
John Deere Capital Corp.,
4.90%, Due 9/9/2013		380		395
0.95%, Due 6/29/2015		175		177
Johnson Controls, Inc.,
1.75%, Due 3/1/2014		565		574
5.00%, Due 3/30/2020		320		367
Kellogg Co.,
4.25%, Due 3/6/2013		500		506
1.875%, Due 11/17/2016		150		154
Koninklijke Philips Electronics N.V.,
5.75%, Due 3/11/2018		415		505
Kraft Foods Group, Inc.,
1.625%, Due 6/4/2015F		190		194
Lorillard Tobacco Co.,
8.125%, Due 6/23/2019		275		354
Marathon Oil Corp.,
6.00%, Due 10/1/2017		365		443
McKesson Corp.,
3.25%, Due 3/1/2016		160		172
Medtronic, Inc.,
3.00%, Due 3/15/2015		365		385
Molson Coors Brewing Co.,
3.50%, Due 5/1/2022		80		86
Norfolk Southern Corp.,
5.75%, Due 4/1/2018		425		509
Northrop Grumman Corp.,
5.05%, Due 8/1/2019		150		175
Novartis Capital Corp.,
2.90%, Due 4/24/2015		435		460
Oi S.A.,
5.75%, Due 2/10/2022F		585		632
Oracle Corp.,
1.20%, Due 10/15/2017		385		387
PepsiCo, Inc.,
2.50%, Due 5/10/2016		320		339
Phillips 66,
1.95%, Due 3/5/2015F		195		200
4.30%, Due 4/1/2022F		385		433
Pride International, Inc.,
6.875%, Due 8/15/2020		220		283

	Par Amount		Fair Value
	(000’s)		(000’s)
Quest Diagnostics, Inc.,
4.75%, Due 1/30/2020	$	150	$	167
Rio Tinto Finance USA Ltd.,
2.50%, Due 5/20/2016		335		349
Rogers Communications, Inc.,
5.50%, Due 3/15/2014		325		346
SABMiller Holdings, Inc.,
4.95%, Due 1/15/2042F		300		359
Sanofi,
1.625%, Due 3/28/2014		380		386
4.00%, Due 3/29/2021		355		409
St Jude Medical, Inc.,
2.50%, Due 1/15/2016		435		455
Teck Resources Ltd.,
6.00%, Due 8/15/2040		145		161
Teva Pharmaceutical Finance II,
3.00%, Due 6/15/2015		420		446
Thomson Reuters Corp.,
4.70%, Due 10/15/2019		150		172
Time Warner Cable, Inc.,
5.85%, Due 5/1/2017		650		778
6.75%, Due 7/1/2018		410		519
7.30%, Due 7/1/2038		1,920		2,683
Time Warner, Inc.,
4.875%, Due 3/15/2020		460		541
4.75%, Due 3/29/2021		325		380
Tyco Electronics Group S.A.,
1.60%, Due 2/3/2015		170		173
6.55%, Due 10/1/2017		255		305
Union Pacific Corp.,
4.163%, Due 7/15/2022		306		348
United Parcel Service, Inc.,
1.125%, Due 10/1/2017		185		187
United Technologies Corp.,
1.20%, Due 6/1/2015		370		377
1.80%, Due 6/1/2017		485		504
6.125%, Due 7/15/2038		450		619
UnitedHealth Group, Inc.,
5.375%, Due 3/15/2016		350		398
3.875%, Due 10/15/2020		325		362
6.625%, Due 11/15/2037		1,590		2,195
3.95%, Due 10/15/2042		155		157
Valero Energy Corp.,
9.375%, Due 3/15/2019		135		186
Verizon Communications, Inc.,
1.95%, Due 3/28/2014		535		546
5.50%, Due 4/1/2017		350		415
4.60%, Due 4/1/2021		380		452
3.50%, Due 11/1/2021		140		155
6.90%, Due 4/15/2038		275		399
Viacom, Inc.,
6.875%, Due 4/30/2036		2,880		3,914
4.50%, Due 2/27/2042		450		468
Vodafone Group plc,
1.625%, Due 3/20/2017		535		547
6.15%, Due 2/27/2037		365		501
Volkswagen International Finance N.V.,
1.625%, Due 3/22/2015F		500		508
Walgreen Co.,
3.10%, Due 9/15/2022		185		188
Wal-Mart Stores, Inc.,
7.55%, Due 2/15/2030		350		529
Watson Pharmaceuticals, Inc.,

See accompanying notes

17

American Beacon Balanced Fund^SM

Schedule of Investments

October 31, 2012

	Par Amount		Fair Value
	(000’s)		(000’s)
3.25%, Due 10/1/2022	$	285	$	294
WellPoint, Inc.,
4.35%, Due 8/15/2020		525		582
Xerox Corp.,
5.65%, Due 5/15/2013		75		77
8.25%, Due 5/15/2014		160		177
4.25%, Due 2/15/2015		355		377
2.95%, Due 3/15/2017		150		155
				61,103
Utilities—1.37%
Columbus Southern Power Co.,
5.50%, Due 3/1/2013		510		518
Commonwealth Edison Co.,
4.00%, Due 8/1/2020		175		199
Consolidated Edison Co. of New York, Inc.,
5.50%, Due 12/1/2039		350		455
Duke Energy Indiana, Inc.,
6.05%, Due 6/15/2016		365		423
EDF S.A.,
4.60%, Due 1/27/2020F		320		365
Energy Transfer Partners LP,
8.50%, Due 4/15/2014G		309		340
9.00%, Due 4/15/2019G		260		342
Enterprise Products Operating LLC,
5.65%, Due 4/1/2013D		355		362
6.125%, Due 10/15/2039D		310		392
Exelon Generation Co. LLC,
5.20%, Due 10/1/2019D		245		282
6.25%, Due 10/1/2039D		275		333
FirstEnergy Solutions Corp.,
4.80%, Due 2/15/2015		175		189
Georgia Power Co.,
4.30%, Due 3/15/2042		180		197
MidAmerican Energy Holdings Co.,
6.125%, Due 4/1/2036		500		657
National Rural Utilities Cooperative Finance Corp.,
1.125%, Due 11/1/2013		335		337
5.45%, Due 4/10/2017		270		320
ONEOK Partners LP,
6.125%, Due 2/1/2041G		355		452
Pacific Gas & Electric Co.,
6.25%, Due 12/1/2013		175		185
3.50%, Due 10/1/2020		300		334
Progress Energy, Inc.,
4.875%, Due 12/1/2019		350		406
Sempra Energy,
6.50%, Due 6/1/2016		265		314
Southern Co.,
1.95%, Due 9/1/2016		310		321
Southwestern Electric Power Co.,
3.55%, Due 2/15/2022		600		635
Spectra Energy Capital LLC,
5.668%, Due 8/15/2014D		275		297
5.65%, Due 3/1/2020D		275		331
Spectra Energy Partners LP,
4.60%, Due 6/15/2021G		160		175
TransCanada PipeLines Ltd.,
7.625%, Due 1/15/2039		300		474
6.10%, Due 6/1/2040		170		237
Union Electric Co.,
6.70%, Due 2/1/2019		380		483

	Par Amount		Fair Value
	(000’s)		(000’s)
Virginia Electric and Power Co.,
5.40%, Due 4/30/2018	$	350	$	426
Westar Energy, Inc.,
6.00%, Due 7/1/2014		175		190
Xcel Energy, Inc.,
5.613%, Due 4/1/2017		639		751
				11,722
Total Corporate Obligations (Cost $125,195)				140,420
FOREIGN GOVERNMENT OBLIGATION—0.19%
Agency—0.10%
Petrobras International Finance Co.,
3.875%, Due 1/27/2016		200		212
3.50%, Due 2/6/2017		135		143
6.875%, Due 1/20/2040		115		149
Petroleos Mexicanos,
6.00%, Due 3/5/2020		325		388
				892
Sovereign/Government—0.09%
Province of Ontario Canada,
4.10%, Due 6/16/2014		350		371
3.15%, Due 12/15/2017		325		358
				729
Total Foreign Government Obligations (Cost $1,445)				1,621
U.S. AGENCY OBLIGATION—0.04% (Cost $300)
U.S. Agency Obligations—0.04%
Private Export Funding Corp.,
2.125%, Due 7/15/2016		300		316
NON-AGENCY MORTGAGE-BACKED OBLIGATIONS—0.87%
Banc of America Commercial Mortgage Trust,
5.317%, Due 9/10/2047, 2006-5 A2		263		263
5.634%, Due 4/10/2049, 2007-2 A2		242		246
Bear Stearns Commercial Mortgage Securities,
5.201%, Due 12/11/2038, 2006-PW14 A4		665		766
5.54%, Due 9/11/2041, 2006-PW13 A4		840		968
4.831%, Due 7/11/2042, 2004-PWR5 A4		282		288
GS Mortgage Securities Corp II,
4.607%, Due 7/10/2039, 2005-GG4 A3		77		78
3.679%, Due 8/10/2043, 2010-C1 A1F		352		381
3.849%, Due 12/10/2043, 2010-C2 A1F		525		571
3.645%, Due 3/10/2044, 2011-GC3 A2F		500		542
JP Morgan Chase Commercial Mortgage Securities Corp.,
4.678%, Due 7/15/2042, 2005-LDP2 A3A		174		177
3.853%, Due 6/15/2043, 2010-C1 A1F		666		712
4.388%, Due 2/15/2046, 2011-C3 A3F		550		623
4.625%, Due 3/15/2046, 2005-LDP1 A2		201		202

See accompanying notes

18

American Beacon Balanced Fund^SM

Schedule of Investments

October 31, 2012

	Par Amount		Fair Value
	(000’s)		(000’s)
5.728%, Due 2/12/2049, 2007-CB19 A4	$	550	$	648
5.629%, Due 2/12/2051, 2007-CB20 A2		265		265
LB-UBS Commercial Mortgage Trust,
5.424%, Due 2/15/2040, 2007-C1 A4		500		582
Wachovia Bank Commercial Mortgage Trust,
5.745%, Due 6/15/2049, 2007-C32 A2		112		115
Total Non-Agency Mortgage-Backed Obligations (Cost $6,737)				7,427
ASSET-BACKED OBLIGATIONS—0.74%
Ally Master Owner Trust,
0.864%, Due 6/15/2015, 2011-5 AE		600		601
1.21%, Due 6/15/2017, 2012 3 A2		1,900		1,916
CNH Equipment Trust,
1.17%, Due 5/15/2015, 2010-C A3		205		205
2.04%, Due 10/17/2016, 2011-A A4		380		391
0.94%, Due 5/15/2017, 2012 A A3		440		444
Honda Auto Receivables Owner Trust,
3.30%, Due 9/15/2015, 2009-3 A4		172		173
Hyundai Auto Receivables Trust,
3.15%, Due 3/15/2016, 2009-A A4		224		228
Nissan Auto Lease Trust,
0.58%, Due 11/16/2015, 2012 B A3		615		615
Nissan Master Owner Trust Receivables,
0.684%, Due 5/15/2017, 2012 A AE		1,200		1,203
Volkswagen Auto Loan Enhanced Trust,
0.87%, Due 7/20/2015, 2012 A A3		535		541
Total Asset-Backed Obligations (Cost $6,278)				6,317
U.S. AGENCY MORTGAGE-BACKED OBLIGATIONS—11.23%
Federal Home Loan Mortgage Corporation
4.50%, Due 1/15/2015		22,140		24,152
4.50%, Due 3/1/2019		227		240
5.00%, Due 10/1/2020		93		101
5.00%, Due 8/1/2033		511		558
5.50%, Due 2/1/2034		445		487
5.00%, Due 3/1/2034		372		404
6.00%, Due 6/1/2034		339		381
6.00%, Due 8/1/2034		263		293
5.00%, Due 8/1/2035		356		386
5.00%, Due 9/1/2035		259		281
5.50%, Due 4/1/2037		450		489
5.50%, Due 5/1/2038		203		221
4.00%, Due 10/1/2039		2,364		2,524
0.614%, Due 12/15/2040E		1,165		1,169
4.00%, Due 1/1/2041		1,155		1,233
4.50%, Due 2/1/2041		1,039		1,120
3.50%, Due 3/1/2042		533		569
4.00%, Due 3/1/2042		448		478
3.50%, Due 6/1/2042		2,910		3,099
3.50%, Due 7/1/2042		1,316		1,401
3.00%, Due 8/1/2042		991		1,039
				40,625
Federal National Mortgage Association
5.50%, Due 2/1/2014		29		31
6.00%, Due 4/1/2016		68		71

	Par Amount		Fair Value
	(000’s)		(000’s)
5.00%, Due 12/1/2017	$	202	$	220
4.50%, Due 9/1/2018		142		154
4.00%, Due 8/1/2020		223		239
4.50%, Due 3/1/2025		335		367
3.50%, Due 1/1/2026		276		293
4.00%, Due 5/1/2026		1,471		1,572
5.00%, Due 3/1/2034		567		623
4.50%, Due 9/1/2034		251		271
5.50%, Due 12/1/2035		160		176
5.00%, Due 2/1/2036		1,561		1,710
5.50%, Due 4/1/2036		324		357
6.00%, Due 9/1/2036		252		280
5.50%, Due 2/1/2037		400		439
5.50%, Due 6/1/2038		79		86
4.50%, Due 1/1/2040		1,177		1,270
4.00%, Due 9/1/2040		894		959
4.00%, Due 1/1/2041		1,542		1,653
5.00%, Due 1/1/2041		1,071		1,187
4.00%, Due 2/1/2041		1,415		1,570
4.00%, Due 4/1/2041		1,959		2,173
4.50%, Due 4/1/2041		2,504		2,753
4.50%, Due 5/1/2041		1,645		1,814
4.50%, Due 7/1/2041		768		833
4.50%, Due 8/1/2041		1,467		1,612
4.50%, Due 10/1/2041		878		967
3.50%, Due 2/1/2042		1,426		1,527
4.00%, Due 4/1/2042		1,226		1,345
3.00%, Due 8/1/2042		1,348		1,415
3.50%, Due 9/1/2042		863		920
				28,887
Government National Mortgage Association
7.00%, Due 12/15/2025		150		176
6.50%, Due 8/15/2027		154		176
6.50%, Due 11/15/2027		162		186
7.50%, Due 12/15/2028		137		165
5.50%, Due 7/15/2033		383		430
6.00%, Due 12/15/2033		415		482
5.50%, Due 2/20/2034		552		615
1.692%, Due 11/16/2035, 2010-148 A		291		294
2.174%, Due 7/16/2038, 2011-147 A		1,959		2,021
6.00%, Due 10/15/2038		733		829
2.989%, Due 3/16/2039, 2010-71 AC		680		702
5.00%, Due 10/15/2039		2,594		2,859
5.50%, Due 2/15/2040		787		869
2.12%, Due 5/16/2040, 2012 4 A		2,875		2,973
4.50%, Due 10/20/2040		1,014		1,125
5.00%, Due 9/20/2041		737		817
2.70%, Due 4/16/2043, 2011-109 AB		1,959		2,054
2.543%, Due 9/16/2044, 2011-96 AC		912		952
2.70%, Due 11/16/2044, 2011-92 AB		1,226		1,288
3.20%, Due 11/16/2044, 2011-92 B		2,400		2,594
6.00%, Due 5/20/2042		557		632
				22,239
National Credit Union Administration
0.616%, Due 3/11/2020, 2011 R3 1AE		2,173		2,184
0.669%, Due 10/7/2020, 2010 R1 1AE		1,828		1,835
				4,019
Total U.S. Agency Mortgage-Backed Obligations (Cost $90,894)				95,770
U.S. TREASURY OBLIGATIONS—5.68%

See accompanying notes

19

American Beacon Balanced Fund^SM

Schedule of Investments

October 31, 2012

	Par Amount		Fair Value
	(000’s)		(000’s)
U.S. Treasury Bonds
2.00%, Due 11/15/2021	$	1,180	$	1,226
2.00%, Due 2/15/2022		4,845		5,018
6.25%, Due 8/15/2023		800		1,154
6.875%, Due 8/15/2025		580		900
5.25%, Due 11/15/2028		750		1,046
4.75%, Due 2/15/2037		130		179
4.50%, Due 8/15/2039		930		1,247
3.125%, Due 11/15/2041		4,070		4,319
				15,089
U.S. Treasury Notes
0.625%, Due 4/30/2013		22,425		22,475
2.625%, Due 7/31/2014		2,500		2,602
2.125%, Due 11/30/2014		1,650		1,712
2.50%, Due 3/31/2015		800		842
3.125%, Due 10/31/2016		1,900		2,094
0.875%, Due 1/31/2017		1,530		1,548
1.50%, Due 8/31/2018		1,000		1,034
3.125%, Due 2/15/2042		1,000		1,060
				33,367
Total U.S. Treasury Obligations (Cost $47,064)				48,456
	Par Amount
MUNICIPAL OBLIGATIONS—0.26%
Municipal Electric Authority of Georgia,
6.64%, Due 4/1/2057	$	1,145		1,379
6.66%, Due 4/1/2057		710		844
Total Municipal Obligations (Cost $1,839)				2,223
	Shares
SHORT-TERM INVESTMENTS—3.77%
JPMorgan U.S. Government Money Market Fund, Capital Class		23,440,194		23,440
	Par Amount
U.S. Treasury Bill , 0.01%, Due 7/25/2013	$	8,680		8,670
Total Short-Term Investments (Cost $32,110)				32,110
TOTAL INVESTMENTS—100.43% (Cost $774,797)				856,424
LIABILITIES, NET OF OTHER ASSETS—(0.43%)				(3,703	)
TOTAL NET ASSETS—100.00%			$	852,721

^A  Non-income producing security.

^B  ADR—American Depositary Receipt.

^C  REIT—Real Estate Investment Trust.

^D  Limited Liability Company.

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

^F  Security exempt from registration under the Securities Act of 1933. These securities may be resold to qualified institutional buyers pursuant to Rule 144A. At the period end, the value of these securities amounted to $17,016 or 2.00% of net assets. The Fund has no right to demand registration of these securities.

^G  Limited Partnership.

See accompanying notes

20

American Beacon Balanced Fund^SM

Schedule of Investments

October 31, 2012

Futures Contracts Open on October 31, 2012 ($ 000’s):

Description	Type		Number of Contracts		Expiration Date		Contract Value		Unrealized Appreciation (Depreciation)
S&P 500 Mini E Index Future		Long		302		December, 2012	$	21,243	$	(591	)
							$	21,243	$	(591	)

See accompanying notes

21

American Beacon Mid-Cap Value Fund^SM

Schedule of Investments

October 31, 2012

	Shares		Fair Value
			(000’s)
COMMON STOCK—98.96%
CONSUMER DISCRETIONARY—12.20%
Auto Components—0.71%
Delphi Automotive plcA		26,275	$	826
Automobiles—0.43%
Harley-Davidson, Inc.		10,788		504
Hotels, Restaurants & Leisure—2.47%
International Game Technology		70,300	$	903
Royal Caribbean Cruises Ltd.		46,892		1,578
WMS Industries, Inc.		23,648		389
				2,870
Household Durables—2.63%
Mohawk Industries, Inc.A		10,150		847
Newell Rubbermaid, Inc.		28,628		591
Stanley Black & Decker, Inc.		23,392		1,621
				3,059
Leisure Equipment & Products—1.39%
Hasbro, Inc.		44,771		1,611
Media—1.60%
Interpublic Group of Cos., Inc.		31,149		315
Omnicom Group, Inc.		23,100		1,107
Scripps Networks Interactive, Inc., Class A		7,237		439
				1,861
Specialty Retail—2.97%
Abercrombie & Fitch Co., Class A		10,707		327
Hanesbrands, Inc.A		29,200		977
Rent-A-Center, Inc.		15,800		527
Staples, Inc.		139,275		1,605
				3,436
Total Consumer Discretionary				14,167
CONSUMER STAPLES—4.64%
Beverages—1.17%
Coca-Cola Enterprises, Inc.		13,801		434
Constellation Brands, Inc., Class AA		10,694		378
Molson Coors Brewing Co., Class B		12,668		546
				1,358
Food & Drug Retailing—1.02%
Kroger Co.		25,365		639
Sysco Corp.		17,686		550
				1,189
Food Products—0.83%
JM Smucker Co.		5,231		448
Tyson Foods, Inc., Class A		30,658		515
				963
Tobacco—1.62%
Lorillard, Inc.		8,200		952
Reynolds American, Inc.		22,300		929
				1,881
Total Consumer Staples				5,391
ENERGY—3.72%
Energy Equipment & Services—0.43%
McDermott International, Inc.A		24,287		261
Nabors Industries Ltd.A		17,828		240
				501

	Shares		Fair Value
			(000’s)
Oil & Gas—3.29%
EQT Corp.		6,221	$	377
Murphy Oil Corp.		4,724		283
Newfield Exploration Co.A		19,680		534
Pioneer Natural Resources Co.		5,739		606
Range Resources Corp.		6,809		445
Seadrill Ltd.		25,100		1,013
Spectra Energy Corp.		19,400		560
				3,818
Total Energy				4,319
FINANCIALS—29.11%
Banks—7.83%
Comerica, Inc.		46,390		1,383
Fifth Third Bancorp		180,069		2,616
KeyCorp		117,950		993
New York Community Bancorp, Inc.		86,900		1,204
People’s United Financial, Inc.		65,700		790
Regions Financial Corp.		81,550		532
SunTrust Banks, Inc.		21,496		585
TCF Financial Corp.		30,388		348
Zions Bancorporation		30,163		648
				9,099
Diversified Financials—6.36%
Ameriprise Financial, Inc.		22,924		1,338
Capital One Financial Corp.		20,000		1,203
Discover Financial Services		30,200		1,238
Invesco Ltd.		69,800		1,698
SLM Corp.		59,000		1,037
Towers Watson & Co., Class A		9,568		514
Western Union Co.		28,000		356
				7,384
Insurance—11.33%
Allstate Corp.		46,084		1,842
Axis Capital Holdings Ltd.		23,150		838
Chubb Corp.		10,300		793
Endurance Specialty Holdings Ltd.		7,532		305
PartnerRe Ltd.		7,876		638
Primerica, Inc.		42,375		1,198
Protective Life Corp.		27,625		754
Reinsurance Group of America, Inc.		10,140		537
RenaissanceRe Holdings Ltd.		15,500		1,261
Torchmark Corp		15,437		781
Unum Group		30,725		623
Validus Holdings Ltd.		23,593		845
Willis Group Holdings plc		54,206		1,825
XL Group plc		36,700		908
				13,148
Real Estate—3.59%
Annaly Capital Management, Inc.B		25,300		408
Digital Realty Trust, Inc.B		10,483		644
Essex Property Trust, Inc.B		5,000		750
Hospitality Properties TrustB		55,350		1,281
Host Hotels & Resorts LPB C		33,435		483
Liberty Property TrustB		17,264		606
				4,172
Total Financials				33,803
HEALTH CARE—7.71%
Health Care Equipment & Supplies—2.52%
Becton Dickinson and Co.		15,250		1,154

See accompanying notes

22

American Beacon Mid-Cap Value Fund^SM

Schedule of Investments

October 31, 2012

	Shares		Fair Value
			(000’s)
CareFusion Corp.A		22,092	$	587
Patterson Cos., Inc.		10,940		365
St Jude Medical, Inc.		21,500		823
				2,929
Health Care Providers & Services—5.19%
AmerisourceBergen Corp.		9,369		370
Cardinal Health, Inc.		24,900		1,024
Cigna Corp.		25,300		1,289
HealthSouth Corp.A		15,729		348
Laboratory Corp. of America HoldingsA		9,050		767
Mednax, Inc.A		8,309		573
Omnicare, Inc.		32,800		1,133
Quest Diagnostics, Inc.		9,023		521
				6,025
Total Health Care				8,954
INDUSTRIALS—20.61%
Aerospace & Defense—4.15%
Curtiss-Wright Corp.		38,250		1,181
Exelis, Inc.		60,800		672
L-3 Communications Holdings, Inc.		27,675		2,043
Spirit Aerosystems Holdings, Inc., Class AA		59,308		927
				4,823
Building Products—3.12%
Fortune Brands Home & Security, Inc.A		28,700		816
Masco Corp.		122,850		1,854
Owens CorningA		28,225		948
				3,618
Commercial Services & Supplies—3.44%
Cintas Corp.		13,057		546
Con-way, Inc.		37,325		1,087
DeVry, Inc.		39,000		1,024
Manpower, Inc.		22,250		844
Republic Services, Inc.		17,575		498
				3,999
Construction & Engineering—1.50%
Engility Holdings, Inc.A		5,520		105
Fluor Corp.		8,665		484
URS Corp.		34,600		1,158
				1,747
Electrical Equipment—2.38%
Brady Corp., Class A		43,025		1,323
Molex, Inc.		55,650		1,446
				2,769
Electronic Equipment & Instruments—0.43%
Energizer Holdings, Inc.		6,841		499
Industrial Conglomerates—0.45%
Teleflex, Inc.		7,608		517
Machinery—4.41%
Dover Corp.		9,429		549
Eaton Corp.		17,000		802
Flowserve Corp.		3,563		483
ITT Corp.		28,400		591
Parker Hannifin Corp.		6,329		498
Pentair Ltd.		28,100		1,186
SPX Corp.		10,000		686
Xylem, Inc.		13,300		323
				5,118

	Shares		Fair Value
			(000’s)
Marine - 0.73%
Golar LNG Ltd.		21,700	$	847
Total Industrials				23,937
INFORMATION TECHNOLOGY—9.82%
Communications Equipment—0.77%
Anixter International, Inc.		7,000		410
Juniper Networks, Inc.A		29,075		482
				892
Electronic Equipment & Instruments—4.39%
Avnet, Inc.A		70,253		2,013
Diebold, Inc.		18,577		553
Ingram Micro, Inc., Class AA		75,675		1,150
TE Connectivity Ltd.		35,025		1,127
Vishay Intertechnology, Inc.A		30,813		255
				5,098
IT Consulting & Services—1.09%
Computer Sciences Corp.		20,900		636
Fidelity National Information Services, Inc.		19,043		626
				1,262
Semiconductor Equipment & Products—0.95%
Analog Devices, Inc.		10,993		430
Microchip Technology, Inc.		21,600		677
				1,107
Software—2.62%
Adobe Systems, Inc.A		17,108		582
CA, Inc.		46,800		1,054
Symantec Corp.A		32,932		599
Synopsys, Inc.A		25,248		813
				3,048
Total Information Technology				11,407
MATERIALS—4.49%
Chemicals—1.04%
Huntsman Corp.		26,013		391
PPG Industries, Inc.		7,000		820
				1,211
Containers & Packaging—2.11%
Greif, Inc., Class A		12,201		512
Owens-Illinois, Inc.A		27,200		530
Packaging Corp of America		12,412		438
Sonoco Products Co.		31,200		971
				2,451
Metals & Mining—1.34%
Allegheny Technologies, Inc.		23,680		624
Compass Minerals International, Inc.		5,785		456
Nucor Corp.		11,915		478
				1,558
Total Materials				5,220
UTILITIES—6.66%
Electric Utilities—4.23%
CenterPoint Energy, Inc.		44,100		956
Edison International		8,957		420
Entergy Corp.		15,950		1,159
Great Plains Energy, Inc.		34,825		781
Pinnacle West Capital Corp.		13,600		720
Portland General Electric Co.		12,239		335

See accompanying notes

23

American Beacon Mid-Cap Value Fund^SM

Schedule of Investments

October 31, 2012

	Shares		Fair Value
			(000’s)
TECO Energy, Inc.		30,159	$	539
				4,910
Gas Utilities—0.86%
AGL Resources, Inc.		16,295		665
ONEOK, Inc.		7,100		336
				1,001
Multi-Utilities—1.57%
SCANA Corp.		11,474		563
Xcel Energy, Inc.		44,479		1,257
				1,820
Total Utilities				7,731
Total Common Stock (Cost $111,669)				114,929
SHORT-TERM INVESTMENTS—2.61% (Cost $3,027)
JPMorgan U.S. Government Money Market Fund, Capital Class		3,026,989		3,027
TOTAL INVESTMENTS—101.57% (Cost $114,696)				117,956
LIABILITIES, NET OF OTHER ASSETS—(1.57%)				(1,820	)
TOTAL NET ASSETS—100.00%			$	116,136

Percentages are stated as a percent of net assets.

^A  Non-income producing security.

^B  REIT—Real Estate Investment Trust.

^C  Limited Partnership.

Futures Contracts Open on October 31, 2012 ($000’s):

Description	Type		Number of Contracts		Expiration Date		Contract Value		Unrealized Appreciation (Depreciation)
S&P Midcap 400 Mini E Index Future		Long		29		December, 2012	$	2,836	$	(35	)
							$	2,836	$	(35	)

See accompanying notes

24

American Beacon Small Cap Value II Fund^SM

Schedule of Investments

October 31, 2012

	Shares		Fair Value
			(000’s)
COMMON STOCK—96.22%
CONSUMER DISCRETIONARY—13.77%
Auto Components—2.10%
Dana Holding Corp.		2,332	$	31
Fuel Systems Solutions, Inc.A		993		16
Tenneco, Inc.A		755		23
				70
Hotels, Restaurants & Leisure—0.57%
Ruby Tuesday, Inc.A		2,581		19
Household Durables—2.34%
Helen of Troy Ltd.A		725		22
Lancaster Colony Corp.		376		27
Tempur-Pedic International, Inc.A		160		4
Tupperware Brands Corp.		415		25
				78
Leisure Equipment & Products—0.63%
Callaway Golf Co.		3,906		21
Media—1.89%
Banner Corp.		875		26
Madison Square Garden Co., Class AA		602		25
Valassis Communications, Inc.A		475		12
				63
Specialty Retail—5.07%
Aeropostale, Inc.A		1,468		18
Big 5 Sporting Goods Corp.		1,752		16
Buckle, Inc.		269		12
Casual Male Retail Group, Inc.A		3,197		12
Children’s Place Retail Stores, Inc.A		367		21
Citi Trends, Inc.A		1,799		22
Finish Line Inc., Class A		851		18
Genesco, Inc.A		185		11
Hanesbrands, Inc.A		765		25
Men’s Wearhouse, Inc.		432		14
				169
Textiles & Apparel—1.17%
Body Central Corp.A		600		6
Skechers U.S.A. Inc., Class AA		751		12
True Religion Apparel, Inc.		210		5
Warnaco Group, Inc.A		220		16
				39
Total Consumer Discretionary				459
CONSUMER STAPLES—2.19%
Food & Drug Retailing—0.93%
Andersons, Inc.		773		31
Food Products—0.36%
Darling International, Inc.A		754		12
Household Products—0.60%
Spectrum Brands Holdings, Inc.		450		20
Personal Products—0.30%
Steiner Leisure Ltd.A		225		10
Total Consumer Staples				73

	Shares		Fair Value
			(000’s)
ENERGY—6.45%
Energy Equipment & Services—3.99%
Atwood Oceanics, Inc.A		310	$	15
C&J Energy Services, Inc.A		535		10
Cal Dive International, Inc.A		7,355		9
CARBO Ceramics, Inc.		80		6
Hornbeck Offshore Services, Inc.A		600		22
Oil States International, Inc.A		141		10
Patterson-UTI Energy, Inc.		1,067		17
Superior Energy Services, Inc.A		755		15
Tetra Technologies, Inc.A		2,283		12
Unit Corp.A		424		17
				133
Oil & Gas—2.46%
Berry Petroleum Co., Class A		335		13
Cloud Peak Energy, Inc.		1,185		25
EXCO Resources, Inc.		830		7
Natural Gas Services Group, Inc.A		510		8
Stone Energy Corp.A		681		16
Vaalco Energy, Inc.		1,600		13
				82
Total Energy				215
FINANCIALS—27.01%
Banks—9.55%
Bancorp, Inc.A		1,647		19
BBCN Bancorp, Inc.		970		12
Boston Private Financial Holdings, Inc.		1,605		15
Bryn Mawr Bank Corp.		730		17
First Midwest Bancorp, Inc.		889		11
First Pactrust Bancorp, Inc.		724		9
Hanmi Financial Corp.A		1,067		13
Horizon Bancorp.		845		25
Investors Bancorp, Inc.		970		17
MB Financial, Inc.		900		18
National Penn Bancshares, Inc.		1,500		13
Prosperity Bancshares, Inc.		500		21
StellarOne Corp.		1,642		23
Trustmark Corp.		800		19
Umpqua Holdings Corp.		1,800		22
ViewPoint Financial Group, Inc.		659		14
Washington Federal, Inc.		2,243		37
Wilshire Bancorp, Inc.A		2,055		13
				318
Diversified Financials—4.56%
Cash America International, Inc.		135		5
Duff & Phelps Corp., Class A		840		10
EZCORP, Inc., Class AA		920		18
KBW, Inc.		1,525		25
National Financial Partners Corp.A		1,300		24
Pacific Continental Corp.		1,197		11
Piper Jaffray CosA		841		23
Stifel Financial Corp.A		600		19
Texas Capital Bancshares, Inc.A		240		11
World Acceptance Corp.A		85		6
				152
Insurance—5.22%
American Equity Investment Life Holding Co.		1,875		22
Amtrust Financial Services, Inc.		632		15
Aspen Insurance Holdings Ltd.		600		19

See accompanying notes

25

American Beacon Small Cap Value II Fund^SM

Schedule of Investments

October 31, 2012

	Shares		Fair Value
			(000’s)
Assured Guaranty Ltd.		405	$	6
Enstar Group Ltd.A		105		11
Greenlight Capital Re Ltd., Class AA		620		16
Investors Title Co.		175		11
Primerica, Inc.		605		17
ProAssurance Corp.		200		18
Protective Life Corp.		900		25
Tower Group, Inc.		800		14
				174
Real Estate—7.68%
Alexander & Baldwin, Inc.A		565		16
BioMed Realty Trust, Inc.B		1,510		29
Chatham Lodging TrustB		760		10
DiamondRock Hospitality Co.B		2,688		23
DuPont Fabros Technology, Inc.		416		9
Forestar Group, Inc.A		938		15
Franklin Street Properties Corp.B		2,086		24
Hospitality Properties TrustB		1,828		41
KKR Financial Holdings LLCC		2,330		24
LaSalle Hotel PropertiesB		700		17
Pebblebrook Hotel TrustB		500		11
PS Business Parks, Inc.B		154		10
Senior Housing Properties TrustB		1,237		27
				256
Total Financials				900
HEALTH CARE—4.47%
Biotechnology—0.63%
RTI Biologics, Inc.A		5,219		21
Health Care Equipment & Supplies—1.35%
AngioDynamics, Inc.A		1,475		16
CONMED Corp.		858		24
Hill-Rom Holdings, Inc.		195		5
				45
Health Care Providers & Services—2.49%
Health Net, Inc.A		450		10
Magellan Health Services, Inc.A		912		45
MAXIMUS, Inc.		500		28
				83
Total Health Care				149
INDUSTRIALS—22.77%
Aerospace & Defense—1.14%
Curtiss-Wright Corp.		400		12
LMI Aerospace, Inc.A		265		5
Triumph Group, Inc.		315		21
				38
Building Products—1.68%
Crane Co.		950		40
Universal Forest Products, Inc.		419		16
				56
Commercial Services & Supplies—3.93%
Brink’s Co.		684		18
Coinstar, Inc.A		300		14
Electro Rent Corp.		610		10
Iconix Brand Group, Inc.A		1,078		21
Koppers Holdings, Inc.		535		19
Layne Christensen Co.A		677		15
TAL International Group, Inc.		450		15

	Shares		Fair Value
			(000’s)
United Stationers, Inc.		655	$	19
				131
Construction & Engineering—3.45%
EMCOR Group, Inc.		1,160		37
Granite Construction, Inc.		830		25
MasTec, Inc.A		1,423		32
URS Corp.		625		21
				115
Diversified Manufacturing—0.99%
Barnes Group, Inc.		1,460		33
Electrical Equipment—3.48%
A.O. Smith Corp.		500		30
Belden, Inc.		165		6
EnerSys, Inc.A		335		12
General Cable Corp.A		800		23
GrafTech International Ltd.A		3,032		31
Powell Industries, Inc.A		350		14
				116
Industrial Conglomerates—0.81%
Teleflex, Inc.		400		27
Machinery—5.16%
Astec Industries, Inc.		519		15
CIRCOR International, Inc.		476		16
EnPro Industries, Inc.A		371		14
Gardner Denver, Inc.		210		15
John Bean Technologies Corp.		735		11
Kaydon Corp.		482		11
Kennametal, Inc.		899		32
Oshkosh Corp.A		400		12
Robbins & Myers, Inc.		123		7
Titan International, Inc.		515		11
Trinity Industries, Inc.		540		17
Wabash National Corp.A		1,685		11
				172
Road & Rail—2.13%
Marten Transport Ltd.		971		18
Old Dominion Freight Line, Inc.A		1,050		35
Ryder System, Inc.		405		18
				71
Total Industrials				759
INFORMATION TECHNOLOGY—10.74%
Communications Equipment—0.96%
Anixter International, Inc.		295		17
Polycom, Inc.A		1,501		15
				32
Computers & Peripherals—0.99%
Datalink Corp.A		2,430		20
Mercury Computer Systems, Inc.A		1,629		13
				33
Electronic Equipment & Instruments—3.27%
Analogic Corp.		154		11
Electro Scientific Industries, Inc.		826		9
Itron, Inc.A		300		12
MTS Systems Corp.		440		23
Tech Data Corp.A		435		19
Vishay Intertechnology, Inc.A		4,154		35
				109

See accompanying notes

26

American Beacon Small Cap Value II Fund^SM

Schedule of Investments

October 31, 2012

	Shares		Fair Value
			(000’s)
Internet Software & Services—1.98%
Keynote Systems, Inc.		1,439	$	21
Netgear, Inc.A		800		28
Perficient, Inc.A		1,496		17
				66
Semiconductor Equipment & Products—2.34%
International Rectifier Corp.A		921		14
Omnivision Technologies, Inc.A		1,366		20
Photronics, Inc.A		4,664		23
Rubicon Technology, Inc.A		2,463		21
				78
Software—1.20%
JDA Software Group, Inc.A		900		34
Progress Software Corp.A		290		6
				40
Total Information Technology				358
MATERIALS—6.69%
Chemicals—3.51%
Cabot Corp.		293		10
Calgon Carbon Corp.A		1,400		17
Innophos Holdings, Inc.		400		19
KMG Chemicals, Inc.		620		11
OM Group, Inc.A		838		17
RPM International, Inc.		1,000		26
Stepan Co.		175		17
				117
Containers & Packaging—0.63%
Aptargroup, Inc.		400		21
Metals & Mining—2.19%
Commercial Metals Co.		1,450		20
Hecla Mining Co.		1,899		12
RTI International Metals, Inc.A		703		16
Titanium Metals Corp.		440		5
US Silica Holdings, Inc.A		1,530		20
				73
Paper & Forest Products—0.36%
Schweitzer-Mauduit International, Inc.		330		12
Total Materials				223
TELECOMMUNICATION SERVICES—0.48%
Iridium Communications, Inc.A		2,185		16
UTILITIES—1.65%
Black Hills Corp.		686		25
Portland General Electric Co.		1,105		30
Total Utilities				55
Total Common Stock (Cost $3,048)				3,207
SHORT-TERM INVESTMENTS—3.69% (Cost $123)
JPMorgan U.S. Government Money Market Fund, Capital Class		122,823		123

TOTAL INVESTMENTS—99.91% (Cost $3,171)		3,330
OTHER ASSETS, NET OF LIABILITIES—0.09%		3
TOTAL NET ASSETS—100.00%	$	3,333

Percentages are stated as a percent of net assets.

^A Non-income producing security.

^B  REIT—Real Estate Investment Trust.

^C  Limited Liability Company.

See accompanying notes

27

American Beacon Small Cap Value II Fund^SM

Schedule of Investments

October 31, 2012

Futures Contracts Open on October 31, 2012 ($000’s):
Description	Type		Number of Contracts		Expiration Date		Contract Value		Unrealized Appreciation (Depreciation)
Russell 2000 Mini Index Future		Long		1		December, 2012	$	82	$	(3	)
							$	82	$	(3	)

See accompanying notes

28

American Beacon Funds^SM

Statements of Assets and Liabilities

October 31, 2012 (in thousands, except share and per share amounts)

	Balanced Fund			Mid-Cap Value Fund		Small Cap Value II Fund
Assets:
Investments in unaffiliated securities, at fair value A	$	856,424		$	117,956	$	3,330
Deposit with brokers for futures contracts		1,193			112		4
Receivable for investments sold		377			—		2
Dividends and interest receivable		2,624			86		2
Receivable for fund shares sold		268			1,494		—
Receivable for tax reclaims		46			2		—
Receivable for expense reimbursement (Note 2)		1			16		4
Receivable for variation margin on open futures contracts		—			14		—
Prepaid expenses		48			26		18
Total assets		860,981			119,706		3,360
Liabilities:
Payable for investments purchased		1,345			195		—
Payable for fund shares redeemed		6,060			3,042		—
Payable for variation margin from open futures contracts		3			—		—
Management and investment advisory fees payable		608			270		7
Administrative service and service fees payable		93			15		2
Professional fees payable		37			26		18
Trustee fees payable		12			—		—
Payable for prospectus and shareholder reports		52			14		—
Other liabilities		50			8		—
Total liabilities		8,260			3,570		27
Net Assets	$	852,721		$	116,136	$	3,333
Analysis of Net Assets:
Paid-in-capital		788,941			107,010		3,127
Undistributed net investment income		(955	)		1,685		4
Accumulated net realized gain (loss)		(16,301	)		4,216		47
Unrealized appreciation of investments and futures contracts		81,036			3,225		155
Net assets	$	852,721		$	116,136	$	3,333
Shares outstanding at no par value (Unlimited shares authorized):
Institutional Class		2,868,320			3,123,446		N/A
Y Class		173,270			47,244		158,238
Investor Class		6,783,947			378,740		153,771
Advisor Class		182,532			42,997		N/A
A Class		237,537			24,394		N/A
C Class		268,559			23,727		N/A
AMR Class		52,508,417			6,960,908		N/A
Net asset value, offering and redemption price per share:
Institutional Class	$	14.27		$	10.95		N/A
Y Class	$	14.32		$	10.92	$	10.70
Investor Class	$	13.16		$	10.98	$	10.67
Advisor Class	$	13.73		$	10.81		N/A
A Class (net asset value and redemption price)	$	13.16		$	10.82		N/A
A Class (offering price)	$	13.96		$	11.48		N/A
C Class	$	13.33		$	10.70		N/A
AMR Class	$	13.54		$	10.96		N/A

See accompanying notes

29

American Beacon Funds^SM

Statements of Assets and Liabilities

October 31, 2012 (in thousands, except share and per share amounts)

	Balanced Fund		Mid-Cap Value Fund		Small Cap Value II Fund
Net assets (Not in thousands):
Institutional Class	$	40,938,021	$	34,207,844	$	N/A
Y Class		2,482,039		516,032		1,692,863
Investor Class		89,271,812		4,156,858		1,640,247
Advisor Class		2,506,831		464,851		N/A
A Class		3,126,922		263,939		N/A
C Class		3,578,962		253,849		N/A
AMR Class		710,816,268		76,272,503		N/A
A        Cost of investments in unaffiliated securities	$	774,797	$	114,696	$	3,171

See accompanying notes

30

American Beacon Funds^SM

Statements of Operations

For the year ended October 31, 2012 (in thousands)

	Balanced Fund			Mid-Cap Value Fund			Small Cap Value II FundB
Investment Income:
Dividend income from unaffiliated securities (net of foreign taxes) A	$	16,044		$	3,320		$	45
Dividend income from affiliated securities		4			—			—
Interest income		10,671			—			—
Total investment income		26,719			3,320			45
Expenses:
Management and investment advisory fees (Note 2)		2,037			862			19
Administrative service fees (Note 2):
Institutional Class		116			106			—
Y Class		6			—			5
Investor Class		268			9			5
Advisor Class		10			1			—
A Class		8			1			—
C Class		7			—			—
AMR Class		394			55			—
Transfer agent fees:
Institutional Class		3			2			—
Y Class		—			—			3
Investor Class		22			4			5
Advisor Class		1			1			—
A Class		1			—			—
C Class		1			—			—
AMR Class		9			3			—
Custody and fund accounting fees		120			25			4
Professional fees		68			50			51
Registration fees and expenses		68			92			37
Service fees (Note 2):
Y Class		2			—			2
Investor Class		293			8			6
Advisor Class		8			1			—
A Class		3			—			—
C Class		3			—			—
Distribution fees (Note 2):
Advisor Class		8			—			—
A Class		5			1			—
C Class		19			1			—
Prospectus and shareholder report expenses		72			28			13
Trustee fees		71			12			—
Other expenses		75			19			6
Total expenses		3,698			1,281			156
Net (fees waived and expenses reimbursed) (Note 2)		(1	)		(36	)		(118	)
Net expenses		3,697			1,245			38
Net investment income		23,022			2,075			7
Realized and unrealized gain (loss) from investments:
Net realized gain (loss) from:
Investments		25,875			13,795			37
Commission recapture (Note 3)		34			60			—
Futures contracts		6,024			2,627			10
Change in net unrealized appreciation or (depreciation) of:
Investments		59,422			(4,148	)		158
Futures contracts		(3,302	)		(280	)		(3	)
Net gain from investments		88,053			12,054			202
Net increase in net assets resulting from operations	$	111,075		$	14,129		$	209
A        Foreign taxes	$	114		$	7		$	—
B        The Small Cap Value II Fund commenced operations on November 15, 2011 (inception date).

See accompanying notes

31

American Beacon Funds^SM

Statements of Changes in Net Assets (in thousands)

	Balanced Fund						Mid-Cap Value Fund						Small Cap Value II Fund
	Year Ended October 31, 2012			Year Ended October 31, 2011			Year Ended October 31, 2012			Year Ended October 31, 2011			From November 15, 2011 to October 31, 2012
Increase (Decrease) in Net Assets:
Operations:
Net investment income	$	23,022		$	22,963		$	2,075		$	1,307		$	7
Net realized gain from investments and futures contracts		31,933			49,507			16,482			8,346			47
Change in net unrealized appreciation or
(depreciation) of investments and futures contracts		56,120			(29,466	)		(4,428	)		(3,825	)		155
Net increase in net assets resulting from operations		111,075			43,004			14,129			5,828			209
Distributions to Shareholders:
Net investment income:
Institutional Class		(887	)		(876	)		(451	)		(30	)		—
Y Class		(71	)		(10	)		(1	)		—			(1	)
Investor Class		(2,133	)		(1,759	)		(14	)		(343	)		(2	)
Advisor Class		(50	)		(104	)		—			(1	)		—
A Class		(52	)		(7	)		(1	)		—			—
C Class		(41	)		(4	)		—			—			—
AMR Class		(22,506	)		(21,013	)		(788	)		(753	)		—
Net distributions to shareholders		(25,740	)		(23,773	)		(1,255	)		(1,127	)		(3	)
Capital Share Transactions:
Proceeds from sales of shares		342,622			120,787			121,566			68,649			124
Reinvestment of dividends and distributions		25,648			23,696			1,252			1,127			3
Cost of shares redeemed		(455,877	)		(181,269	)		(112,269	)		(84,216	)		—
Redemption fees		—			—			285			56			—
Net increase (decrease) in net assets from capital share transactions		(87,607	)		(36,786	)		10,834			(14,384	)		127
Net increase (decrease) in net assets		(2,272	)		(17,555	)		23,708			(9,683	)		333
Net Assets:
Beginning of period		854,993			872,548			92,428			102,111			3,000
End of Period *	$	852,721		$	854,993		$	116,136		$	92,428		$	3,333
*  Includes undistributed net investment income (loss) of	$	(955	)	$	(763	)	$	1,685		$	901		$	4

See accompanying notes

32

American Beacon Funds^SM

Notes to Financial Statements

October 31, 2012

1. Organization and Significant Accounting Policies

American Beacon Funds (the “Trust”), which is comprised of 24 Funds, is organized as a Massachusetts business trust and is registered under the Investment Company Act of 1940, as amended (the “Act”), as a diversified, open-end management investment company. These financial statements and notes to the financial statements relate to the American Beacon Balanced Fund, the American Beacon Mid-Cap Value Fund, and the American Beacon Small Cap Value II Fund (each a “Fund” and collectively, the “Funds”), each a series of the Trust.

American Beacon Advisors, Inc. (the “Manager”) is a wholly-owned subsidiary of Lighthouse Holdings, Inc. and was organized in 1986 to provide business management, advisory, administrative, and asset management consulting services to the Trust and other investors.

Class Disclosure

November 15, 2011 is the inception date for all classes of the Small Cap Value II Fund.

Each Fund has multiple classes of shares designed to meet the needs of different groups of investors; however, not all Funds offer all classes. The following table sets forth the differences amongst the classes:

Class:	Offered to:
Institutional Class	Investors making an initial investment of $250,000
Y Class	Investors making an initial investment of $100,000
Investor Class	General public and investors investing through an intermediary
Advisor Class	Investors investing through an intermediary
A Class	General public and investors investing through an intermediary with applicable sales charges
C Class	General public and investors investing through an intermediary with applicable sales charges
AMR Class	Investors in the tax-exempt retirement and benefit plans of the Manager, AMR Corporation, and its affiliates

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

New Accounting Pronouncements

In May 2011, the Financial Accounting Standards Board (“FASB”) issued an Accounting Standards Update (“ASU”) ASU No. 2011-04 “Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. Generally Accepted Accounting Principles (“U.S. GAAP”) and the International Financial Reporting Standards (“IFRSs”)”. ASU No. 2011-04 amends FASB ASC Topic 820, Fair Value Measurements and Disclosures, to establish common requirements for measuring fair value and for disclosing information about fair value measurements in accordance with U.S. GAAP and IFRSs. ASU No. 2011-04 is effective for fiscal years beginning after December 15, 2011 and for the interim period May 1, 2012 to October 31, 2012.

Management has evaluated the implications of these changes and determined that the impact of the new guidance will only affect the disclosure requirements related to the financial statements. However, as the Funds did not hold any Level 3 investments as of October 31, 2012, the financial statement disclosures were not affected.

33

American Beacon Funds^SM

Notes to Financial Statements

October 31, 2012

2. Transactions with Affiliates

Management Agreement

The Trust and the Manager are parties to a Management Agreement that obligates the Manager to provide or oversee the provision of all investment advisory, fund management, and securities lending services. Investment assets of the Funds are managed by multiple investment advisors which have entered into separate investment advisory agreements with the Manager. As compensation for performing the duties required under the Management Agreement, the Manager receives from the Funds an annualized fee equal to 0.05% of the average daily net assets plus amounts paid by the Manager to the unaffiliated investment advisors hired by the Manager to direct investment activities for the Funds. Management fees paid by the Funds during the year ended October 31, 2012 were as follows (dollars in thousands):

	Management Fee Rate			Management Fee		Amounts paid to Investment Advisors		Net Amounts Retained by Manager
Balanced		0.22	%	$	2,037	$	1,574	$	463
Mid-Cap Value		0.58	%		862		788		74
Small Cap Value II		0.60	%		19		18		1

Administrative Services Agreement

The Manager and the Trust entered into an Administrative Services Agreement which obligates the Manager to provide or oversee administrative services to the Funds. As compensation for performing the duties required under the Administrative Services Agreement, the Manager receives an annualized fee of 0.30% of the average daily net assets of the Institutional, Y, Investor, and Advisor Classes, 0.40% of the average daily net assets of the A and C Classes, and 0.05% of the average daily net assets of the AMR Class of each of the Funds.

Distribution Plans

The Funds, except for the Advisor, A, and C Classes of the Funds, have adopted a “defensive” Distribution Plan (the “Plan”) in accordance with Rule 12b-1 under the Act, pursuant to which no separate fees may be charged to the Funds for distribution purposes. However, the Plan authorizes the management and administrative service fees received by the Manager and the investment advisors hired by the Manager to be used for distribution purposes. Under this Plan, the Funds do not intend to compensate the Manager or any other party, either directly or indirectly, for the distribution of Fund shares.

Separate Distribution Plans (the “Distribution Plans”) have been adopted pursuant to Rule 12b-1 under the Act for the Advisor, A, and C Classes of the Funds. Under the Distribution Plans, as compensation for distribution assistance, the Manager receives an annual fee of 0.25% of the average daily net assets of the Advisor and A Classes, and 1.00% of the average daily net assets of the C Class. The fee will be payable without regard to whether the amount of the fee is more or less than the actual expenses incurred in a particular month by the Manager for distribution assistance.

Service Plans

The Manager and the Trust entered into Service Plans that obligate the Manager to oversee additional shareholder servicing of the Y, Investor, Advisor, A, and C Classes. As compensation for performing the duties required under the Service Plans, the Manager receives 0.10% of the average daily net assets of the Y Class, 0.15% of the average daily net assets of the A and C Classes, 0.25% of the average daily net assets of the Advisor Class and up to 0.375% of the average daily net assets of the Investor Class of the Funds.

34

American Beacon Funds^SM

Notes to Financial Statements

October 31, 2012

Investment in Affiliated Funds

The Funds may invest in the American Beacon Money Market Select Fund (the “MM Select Fund”) or the U.S. Government Money Market Select Fund (the “USG Select Fund”) (collectively, the “Select Funds”). The Select Funds and the Funds have the same investment advisor and therefore, are considered to be affiliated. The Manager serves as investment advisor to the Select Funds and receives Management and Administrative Service fees totaling 0.10% of the average daily net assets of the Select Fund. During the year ended October 31, 2012, the Manager earned $4,593 from the Balanced Fund’s investment in the Select Funds.

Interfund Lending Program

Pursuant to an exemptive order by the Securities and Exchange Commission (“SEC”), the Funds, along with other registered investment companies having management contracts with the Manager, may participate in an interfund lending program. This program provides an alternative credit facility allowing the Funds to borrow from other participating Funds. During the year ended October 31, 2012, the Balanced Fund borrowed from the American Beacon Large Cap Value Fund on average $13,787,041 for three days at 0.83% with interest charges of $940, and the Mid-Cap Value Fund borrowed from the American Beacon Intermediate Bond and Balanced Fund on average $7,874,510 for two days at an average rate of 0.80% with interest charges of $345. During the year ended October 31, 2012, the Balanced Fund also participated as a lender by loaning $12,458,533 for one day at 0.80% with interest charges of $273 to the American Beacon Mid-Cap Value Fund.

Expense Reimbursement Plan

The Manager agreed to reimburse the following Funds to the extent that total annual fund operating expenses exceeded a Fund’s expense cap. For the period ended October 31, 2012, the Manager waived or reimbursed expenses as follows:

		Expense Cap
Fund	Class	11/1/11 to 2/29/12			3/1/12 to 10/31/12			Waived or Reimbursed Expenses		Expiration
Balanced	Y		N/A			0.70	%	$	36	2015
Balanced	A*		N/A			1.10	%*		778	2015
Balanced	C		N/A			1.85	%		418	2015
Mid-Cap Value	Institutional		0.98	%		0.98	%		27,626	2015
Mid-Cap Value	Y		1.08	%		1.08	%		342	2015
Mid-Cap Value	Investor		1.23	%		1.23	%		6,552	2015
Mid-Cap Value	Advisor		1.49	%		1.49	%		1,002	2015
Mid-Cap Value	A		1.49	%		1.49	%		278	2015
Mid-Cap Value	C		2.24	%		2.24	%		206	2015
Small Cap Value II	Y		1.09	%		1.09	%		59,551	2015
Small Cap Value II	Investor		1.37	%		1.37	%		58,618	2015

* Voluntary Reimbursement

Of these amounts, $526, $16,187, and $4,451 was receivable from the Manager at October 31, 2012 for the Balanced, Mid-Cap Value, and Small Cap Value II Funds, respectively.

The Funds have adopted an Expense Reimbursement Plan whereby the Manager may seek repayment of fees waived or expenses reimbursed for a period of up to three years. However, reimbursement will occur only if the Class’ average net assets have grown or expenses have declined sufficiently to allow reimbursement without causing its expense ratio to exceed the previously agreed upon contractual expense limit. The carryovers for the Balanced Fund are $5,860 expiring in 2014; for the Mid-Cap Value Fund are $16,631 and $57,024, expiring 2013 and 2014, respectively. During the year ended October 31, 2012, the Funds have not recorded a liability for potential reimbursement, due to the current assessment that a reimbursement is unlikely.

35

American Beacon Funds^SM

Notes to Financial Statements

October 31, 2012

Sales Commissions

The Funds’ distributor, Foreside Fund Services, LLC (“Foreside”), may receive a portion of A Class sales charges from broker dealers and it may be used to offset distribution related expenses. For the year ended October 31, 2012, Foreside has collected $17,513 and $1,159 for the Balanced and Mid-Cap Value Funds, respectively from the sale of Class A Shares.

A contingent deferred sales charge (“CDSC”) of 1.00% will be deducted with respect to Class C Shares redeemed within 12 months of purchase, unless waived as discussed in the Prospectus. Any applicable CDSC will be 1.00% of the lesser of the original purchase price or the value of the redemption of the Class C Shares redeemed. During the year ended October 31, 2012 $605 in CDSC fees were collected for the Balanced Fund.

3. Security Valuation and Fair Value Measurements

Investments are valued at the close of the New York Stock Exchange (the “Exchange”), normally 4 p.m. ET, each day that the Exchange is open for business. Equity securities for which market quotations are available are valued at the last sale price or official closing price (closing bid price or last evaluated quote if no sale has occurred) on the primary market or exchange on which they trade.

Debt securities (other than short-term securities) normally are valued on the basis of prices provided by an independent pricing service and may take into account appropriate factors such as institution-size trading in similar groups of securities, yield, quality, coupon rate, maturity, type of issue, trading characteristics, and other market data. Prices of debt securities may be determined using quotes obtained from brokers.

Investments in mutual funds are valued at the closing net asset value (“NAV”) per share of the mutual fund on the day of valuation. Investment grade short-term obligations with 60 days or less to maturity are valued using the amortized cost method, which approximates fair value.

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

Futures contracts are valued based upon their quoted daily settlement prices. Upon entering into a futures contract, a Fund is required to deposit with its futures broker, an amount of cash or U.S. Government and Agency Obligations in accordance with the initial margin requirements of the broker or exchange. Futures contracts are marked to market daily and an appropriate payable or receivable for the change in value (“variation margin”) is recorded by the Fund. Gains or losses are recognized but not considered realized until the contracts expire or are closed. Futures contracts involve, to varying degrees, risk of loss in excess of the variation margin disclosed on the Statements of Assets and Liabilities.

Valuation Inputs

Various inputs may be used to determine the fair value of the Funds’ investments. These inputs are summarized in three broad levels for financial statement purposes. The inputs or methodologies used to value securities are not necessarily an indication of the risk associated with investing in those securities.

Level 1 -	Quoted prices in active markets for identical securities.
Level 2 -	Prices determined using other significant observable inputs. These may include quoted prices for similar securities, interest rates, prepayment speeds, credit risk, and others. Level 2 securities are fixed-income securities that are valued using observable inputs as stated above.

36

American Beacon Funds^SM

Notes to Financial Statements

October 31, 2012

Level 3 - Prices determined using other significant unobservable inputs. Unobservable inputs reflect the Fund’s own assumptions about the factors market participants would use in pricing an investment, and would be based on the best information available.

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

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

Fixed income securities purchased on a delayed-delivery basis are marked to market daily until settlement at the forward settlement date are categorized as Level 2 of the fair value hierarchy.

Mortgage-related and asset-backed securities are usually issued as separate tranches, or classes, of securities within each deal. These securities are also normally valued by pricing service providers that use broker dealer quotations or valuation estimates from their internal pricing models. The pricing models for these securities usually consider tranche-level attributes, current market data, estimated cash flows, and market-based yield spreads for each tranche, and incorporates deal collateral performance, as available. Mortgage-related and asset-backed securities that use similar valuation techniques and inputs as described above are categorized as Level 2 of the fair value hierarchy.

Common stocks and financial derivative instruments, such as futures contracts that are traded on a national securities exchange, are stated at the last reported sale or settlement price on the day of valuation. To the extent these securities are actively traded and valuation adjustments are not applied, they are categorized as Level 1 of the fair value hierarchy. Securities using these valuation adjustments are categorized as Level 2 of the fair value hierarchy. Preferred securities and other equities traded on inactive markets or valued by reference to similar instruments are also categorized as Level 2 of the fair value hierarchy.

Investments in registered open-end investment management companies will be valued based upon the NAVs of such investments and are categorized as Level 1 of the fair value hierarchy. Short-term investments having a maturity of 60 days or less are generally valued at amortized cost which approximates fair value. These investments are categorized as Level 2 of the fair value hierarchy.

The Funds’ investments are summarized by level based on the inputs used to determine their values. U.S. GAAP also requires all transfers between any levels to be disclosed. The end of the period timing recognition has been adopted for the transfers between levels of each Fund’s assets and liabilities. As of October 31, 2012, there were no transfers into or out of any level. As of October 31, 2012, the investments were classified as described below (in thousands):

37

American Beacon Funds^SM

Notes to Financial Statements

October 31, 2012

Balanced Fund	Level 1			Level 2		Level 3		Total
Common Stock	$	519,636		$	—	$	—	$	519,636
Preferred Stock		2,128			—		—		2,128
Corporate Obligations		—			140,420		—		140,420
Foreign Government Obligations		—			1,621		—		1,621
U.S. Agency Obligations		—			316		—		316
Non-Agency Mortgage-Backed Obligations		—			7,427		—		7,427
Asset-Backed Obligations		—			6,317		—		6,317
U.S. Agency Mortgage-Backed Obligations		—			95,770		—		95,770
U.S. Treasury Obligations		—			48,456		—		48,456
Municipal Obligations		—			2,223		—		2,223
Short-Term Investments:
Money Markets		23,440			—		—		23,440
U.S. Treasury Bills		—			8,670		—		8,670
Total Investments in Securities	$	545,204		$	311,220	$	—	$	856,424
Futures Contracts		(591	)		—		—		(591	)
Mid-Cap Value Fund	Level 1			Level 2		Level 3		Total
Common Stock	$	114,929		$	—	$	—	$	114,929
Short-Term Investments – Money Markets		3,027			—		—		3,027
Total Investments in Securities	$	117,956		$	—	$	—	$	117,956
Futures Contracts		(35	)		—		—		(35	)
Small Cap Value II Fund	Level 1			Level 2		Level 3		Total
Common Stock	$	3,207		$	—	$	—	$	3,207
Short-Term Investments – Money Markets		123			—		—		123
Total Investments in Securities	$	3,330		$	—	$	—	$	3,330
Futures Contracts		(3	)		—		—		(3	)

Security Transactions and Investment Income

Security transactions are recorded on the trade date of the security purchase or sale. The Funds may purchase securities with delivery or payment to occur at a later date. At the time the Funds enter into a commitment to purchase a security, the transaction is recorded, and the value of the security is reflected in the NAV. The value of the security may vary with market fluctuations.

Dividend income, net of foreign taxes, is recorded on the ex-dividend date, except certain dividends from foreign securities which are recorded as soon as the information is available to the Funds. Interest income is earned from settlement date, recorded on the accrual basis, and adjusted, if necessary, for accretion of discounts and amortization of premiums. For financial and tax reporting purposes, realized gains and losses are determined on the basis of specific lot identification.

Dividends to Shareholders

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

38

American Beacon Funds^SM

Notes to Financial Statements

October 31, 2012

Commission Recapture

The Funds have established brokerage commission recapture arrangements with certain brokers or dealers. If a Fund’s investment advisor chooses to execute a transaction through a participating broker, the broker rebates a portion of the commission back to the Fund. Any collateral benefit received through participation in the commission recapture program is directed exclusively to the Fund. This amount is reported with the net realized gains in the Fund’s Statement of Operations.

Allocation of Income, Expenses, Gains, and Losses

Income, expenses (other than those attributable to a specific class), gains, and losses are allocated daily to each class of shares based upon the relative proportion of net assets represented by such class. Operating expenses directly attributable to a specific class are charged against the operations of that class.

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results may differ from those estimated.

Redemption Fees

The AMR Class of the Mid-Cap Value Fund imposes a 2% redemption fee on certain shares held for less than 180 days. The fee is deducted from the redemption proceeds and is intended to offset the trading costs, market impact, and other costs associated with short-term trading activity in the Funds. The “first-in, first-out” method is used to determine the holding period. The fee is allocated to all classes of each Fund pro-rata based on their respective net assets.

Other

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

4. Securities and Other Investments

Real Estate Investment Trusts

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

39

American Beacon Funds^SM

Notes to Financial Statements

October 31, 2012

Restricted Securities

Certain Funds may invest in securities that are subject to legal or contractual restrictions on resale. These securities may be sold privately, but are required to be registered or exempted from such registration before being sold to the public. Private placement securities are generally considered to be restricted except for those securities traded between qualified institutional investors under the provisions of Rule 144A of the Securities Act of 1933. Disposal of restricted securities may involve time-consuming negotiations and expenses, and prompt sale at an acceptable price may be difficult to achieve. Restricted securities outstanding at the period ended October 31, 2012 are disclosed in the Notes to the Schedules of Investments.

5. Financial Derivative Instruments

Futures Contracts

Futures contracts are contracts to buy or sell a standard quantity of securities at a specified price on a future date. The Funds may enter into financial futures contracts as a method for keeping assets readily convertible to cash if needed to meet shareholder redemptions or for other needs while maintaining exposure to the stock or bond market, as applicable. The primary risks associated with the use of futures contracts are the possibility of illiquid markets or imperfect correlation between the values of the contracts and the underlying securities, or that the counterparty will fail to perform its obligations.

Upon entering into a futures contract, the Funds are required to set aside or deposit with a broker an amount, termed the initial margin, which typically represents a portion of the face value of the futures contract. A Fund usually reflects this amount on the Schedule of Investments as a U.S. Treasury Bill held as collateral for futures contracts or as cash deposited with broker on the Statement of Assets and Liabilities. Payments to and from the broker, known as variation margin, are required to be made on a daily basis as the price of the futures contract fluctuates. Changes in initial settlement values are accounted for as unrealized appreciation (depreciation) until the contracts are terminated, at which time realized gains and losses are recognized. Futures contracts are valued at the most recent settlement price established each day by the exchange on which they are traded.

Balanced

Values of Derivative Instruments not accounted for as hedging instruments as of October 31, 2012 (in thousands):

Statements of Assets and Liabilities	Derivatives			Fair Value
Unrealized appreciation of investments and futures contracts		Equity Contracts	(1)	$	(591	)

Effect of derivative instruments not accounted for as hedging instruments during the year ended October 31, 2012 (in thousands):

Statements of Operations	Derivatives		Balance
Net realized gain (loss) from futures contracts		Equity Contracts	$	6,024
Change in net unrealized appreciation or (depreciation) of futures contracts		Equity Contracts		(3,302	)

Mid-Cap Value

Values of Derivative Instruments not accounted for as hedging instruments as of October 31, 2012 (in thousands):

Statements of Assets and Liabilities	Derivatives			Fair Value
Unrealized appreciation of investments and futures contracts		Equity Contracts	(1)	$	(35	)

Effect of derivative instruments not accounted for as hedging instruments during the year ended October 31, 2012 (in thousands):

Statements of Operations	Derivatives		Balance
Net realized gain (loss) from futures contracts		Equity Contracts	$	2,627
Change in net unrealized appreciation or (depreciation) of futures contracts		Equity Contracts		(280	)

40

American Beacon Funds^SM

Notes to Financial Statements

October 31, 2012

Small Cap Value II

Values of Derivative Instruments not accounted for as hedging instruments as of October 31, 2012 (in thousands):

Statements of Assets and Liabilities	Derivatives			Fair Value
Unrealized appreciation of investments and futures contracts		Equity Contracts	(1)	$	(3	)

Effect of derivative instruments not accounted for as hedging instruments during the year ended October 31, 2012 (in thousands):

Statements of Operations	Derivatives		Balance
Net realized gain (loss) from futures contracts		Equity Contracts	$	10
Change in net unrealized appreciation or (depreciation) of futures contracts		Equity Contracts		(3	)

⁽¹⁾  Includes cumulative appreciation or (depreciation) of futures contracts as reported in the Schedule of Investments footnotes. Only current day’s variation margin is reported within the Statements of Assets and Liabilities.

6. Federal Income and Excise Taxes

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

The Funds do not have any unrecognized tax benefits in the accompanying financial statements. Each of the tax years in the four year period ended October 31, 2012 remains subject to examination by the Internal Revenue Service. If applicable, the Funds recognize interest accrued related to unrecognized tax benefits in interest expense and penalties in “Other expenses” on the Statements of Operations.

Dividends are categorized in accordance with income tax regulations which may treat certain transactions differently than U.S. GAAP. Accordingly, the character of distributions and composition of net assets for tax purposes may differ from those reflected in the accompanying financial statements.

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

	Balanced				Mid-Cap Value				Small Cap Value II
	Year Ended October 31, 2012		Year Ended October 31, 2011		Year Ended October 31, 2012		Year Ended October 31, 2011		Year Ended October 31, 2012
Distributions paid from:
Ordinary income*
Institutional Class	$	843	$	876	$	451	$	30	$	—
Y Class		67		10		1		—		1
Investor Class		2,026		1,759		14		343		2
Advisor Class		47		104		—		1		—
A Class		49		7		1		—		—
C Class		39		4		—		—		—
AMR Class		21,380		21,013		788		753		—
Capital Gains*
Institutional Class		44		—		—		—		—
Y Class		4		—		—		—		—
Investor Class		107		—		—		—		—
Advisor Class		3		—		—		—		—
A Class		3		—		—		—		—
C Class		2		—		—		—		—
AMR Class		1,126		—		—		—		—
Total distributions paid	$	25,740	$	23,773	$	1,255	$	1,127	$	3

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

41

American Beacon Funds^SM

Notes to Financial Statements

October 31, 2012

As of October 31, 2012, the components of distributable earnings or (deficits) on a tax basis were as follows (in thousands):

	Balanced			Mid-Cap Value			Small Cap Value II
Cost basis of investments for federal income tax purposes	$	807,141		$	115,459		$	3,173
Unrealized appreciation		97,847			7,408			295
Unrealized depreciation		(48,564	)		(4,911	)		(138	)
Net unrealized appreciation or (depreciation)		49,283			2,497			157
Undistributed ordinary income		—			1,680			44
Accumulated long-term gain or (loss)		15,086			4,983			8
Other temporary differences		(589	)		(34	)		(3	)
Distributable earnings or (deficits)	$	63,780		$	9,126		$	206

Financial reporting records are adjusted for permanent book/tax differences to reflect tax character. Financial records are not adjusted for temporary differences. The temporary differences between financial reporting and tax-basis reporting of unrealized appreciation or depreciation are attributable primarily to the tax deferral of losses from wash sales, the realization for tax purposes of unrealized gains (losses) on certain derivative instruments, and book amortization of premiums.

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

Accordingly, the following amounts represent current year permanent differences derived from book amortization of premium, pay down reclasses, Section 732 basis adjustments, non-deductible expenses, reclassifications of income from business development companies, and dividend reclasses that have been reclassified as of October 31, 2012 (in thousands):

	Balanced			Mid-Cap Value			Small Cap Value II
Paid-in-capital	$	3		$	—		$	—
Undistributed net investment income		2,526			(36	)		—
Accumulated net realized gain (loss)		(2,529	)		37			—
Unrealized appreciation or (depreciation) of investments and futures contracts		—			(1	)		—

On December 22, 2010, the Regulated Investment Company Modernization Act of 2010 (the “RIC MOD”) was enacted, which changed various technical rules governing the tax treatment of regulated investment companies. The changes are generally effective for taxable years beginning after the date of enactment. One of the more prominent changes addresses capital loss carryforwards. Under the RIC MOD, each Fund will be permitted to carry forward capital losses incurred in taxable years beginning after the date of enactment for an unlimited period. However, any losses incurred during those future taxable years will be required to be utilized prior to the losses incurred in pre-enactment taxable years, which carry an expiration date. As a result of this ordering rule, pre-enactment capital loss carryforwards may be more likely to expire unused. Additionally, post-enactment capital loss carryforwards will retain their character as either short-term or long-term capital losses rather than being considered all short-term as permitted under previous regulation.

Finally, the RIC MOD contains several provisions aimed at preserving the character of distributions made by a fiscal year RIC during the portion of its taxable year ending after October 31 or December 31, reducing the circumstances under which a RIC might be required to file amended Forms 1099 to restate previously reported distributions. Except for the simplification provisions related to RIC qualification, the RIC MOD is effective for taxable years beginning after December 22, 2010. The provisions related to RIC

42

American Beacon Funds^SM

Notes to Financial Statements

October 31, 2012

qualification are effective for taxable years for which the extended due date of the tax return is after December 22, 2010.

The Funds do not have capital loss carryforwards as of October 31, 2012.

The Balanced and Mid-Cap Value Funds utilized $14,750 and $10,955, respectively, of net capital loss carryovers for the year ended October 31, 2012.

7. Investment Transactions

The aggregate cost of purchases and proceeds from sales and maturities of long-term investments during the year ended October 31, 2012 were as follows (in thousands):

	Balanced		Mid-Cap Value		Small Cap Value II
Purchases (excluding U.S. government securities)	$	380,918	$	133,261	$	5,347
Sales and maturities (excluding U.S. government securities)		405,404		113,626		2,335
Purchases of U.S. government securities		110,474		—		—
Sales and maturities of U.S. government securities		85,596		—		—

A summary of the Funds’ direct transactions in USG Select Fund for the year ended October 31, 2012 is set forth below (in thousands):

	Affiliate		October 31, 2011 Shares/Fair Value		Purchases		Sales		October 31, 2012 Shares/Fair Value
Balanced		USG Select Fund	$	5,000	$	—	$	5,000	$	—

8. Capital Share Transactions

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

For the Year Ended October 31, 2012

	Institutional Class						Y Class						Investor Class						Advisor Class
Balanced Fund	Shares			Amount			Shares			Amount			Shares			Amount			Shares			Amount
Shares sold		997		$	13,684			404		$	5,674			3,822		$	48,716			58		$	762
Reinvestment of dividends		62			875			5			70			160			2,070			3			50
Shares redeemed		(592	)		(8,159	)		(267	)		(3,728	)		(4,209	)		(53,423	)		(165	)		(2,181	)
Net increase (decrease) in shares outstanding		467		$	6,400			142		$	2,016			(227	)	$	(2,637	)		(104	)	$	(1,369	)

	AMR Class						A Class						C Class
Balanced Fund	Shares			Amount			Shares			Amount			Shares			Amount
Shares sold		20,665		$	267,520			274		$	3,506			213		$	2,760
Reinvestment of dividends		1,694			22,506			3			41			3			36
Shares redeemed		(29,737	)		(386,931	)		(88	)		(1,159	)		(23	)		(296	)
Net increase (decrease) in shares outstanding		(7,378	)	$	(96,905	)		189		$	2,388			193		$	2,500

	Institutional Class						Y Class						Investor Class						Advisor Class
Mid-Cap Value Fund	Shares			Amount			Shares			Amount			Shares			Amount			Shares			Amount
Shares sold		419		$	4,378			43		$	466			347		$	3,608			40		$	405
Reinvestment of dividends		46			450			—			1			1			13			—			—
Shares redeemed		(779	)		(8,079	)*		(1	)		(9	)*		(156	)		(1,664	)*		(1	)		(12	)*
Net increase (decrease) in shares outstanding		(314	)	$	(3,251	)		42		$	458			192		$	1,957			39		$	393

43

American Beacon Funds^SM

Notes to Financial Statements

October 31, 2012

	AMR Class						A Class						C Class
Mid-Cap Value Fund	Shares			Amount			Shares			Amount			Shares		Amount
Shares sold		10,775		$	112,305			18		$	182			21	$	222
Reinvestment of dividends		80			788			—			—			—		—
Shares redeemed		(9,748	)		(102,183	)*		(4	)		(37	)*		—		—	*
Net increase in shares outstanding		1,107		$	10,910			14		$	145			21	$	222

	Y Class				Investor Class
Small Cap Value II Fund	Shares		Amount		Shares		Amount
Shares sold		8	$	85		4	$	39
Reinvestment of dividends		—		1		—		2
Shares redeemed		—		—		—		—
Net increase in shares outstanding		8	$	86		4	$	41

* Net of Redemption Fees

For the Year Ended October 31, 2011

	Institutional Class						Y Class					Investor Class						Advisor Class
Balanced Fund	Shares			Amount			Shares		Amount			Shares			Amount			Shares			Amount
Shares sold		631		$	8,319			27	$	354			2,294		$	27,260			136		$	1,701
Reinvestment of dividends		67			864			—		10			141			1,696			8			104
Shares redeemed		(943	)		(12,382	)		—		(1	)		(2,669	)		(32,048	)		(364	)		(4,500	)
Net increase (decrease) in shares outstanding		(245	)	$	(3,199	)		27	$	363			(234	)	$	(3,092	)		(220	)	$	(2,695	)

	AMR Class						A Class						C Class
Balanced Fund	Shares			Amount			Shares			Amount			Shares		Amount
Shares sold		6,625		$	81,564			57		$	695			76	$	894
Reinvestment of dividends		1,702			21,013			—			5			—		4
Shares redeemed		(10,718	)		(132,193	)		(12	)		(145	)		—		(1	)
Net increase (decrease) in shares outstanding		(2,391	)	$	(29,616	)		45		$	555			76	$	897

	Institutional Class						Y Class					Investor Class						Advisor Class
Mid-Cap Value Fund	Shares			Amount			Shares		Amount			Shares			Amount			Shares			Amount
Shares sold		4,220		$	42,145			5	$	48			851		$	8,664			3		$	35
Reinvestment of dividends		3			30			—		—			35			343			—			1
Shares redeemed		(1,085	)		(10,940	)*		—		—	*		(4,529	)		(43,908	)*		(8	)		(75	)*
Net increase (decrease) in shares outstanding		3,138		$	31,235			5	$	48			(3,643	)	$	(34,901	)		(5	)	$	(39	)

	AMR Class						A Class						C Class
Mid-Cap Value Fund	Shares			Amount			Shares			Amount			Shares		Amount
Shares sold		1,804		$	17,611			12		$	122			2	$	24
Reinvestment of dividends		76			753			—			—			—		—
Shares redeemed		(2,930	)		(29,205	)*		(3	)		(32	)*		—		—	*
Net increase (decrease) in shares outstanding		(1,050	)	$	(10,841	)		9		$	90			2	$	24

* Net of Redemption Fees

44

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45

American Beacon Balanced Fund^SM

Financial Highlights

(For a share outstanding throughout the period)

	Institutional Class															Y Class
	Year Ended October 31,															Year Ended October 31,						March 1 to October 31,
	2012			2011			2010			2009			2008			2012			2011			2010
Net asset value, beginning of period	$	12.89		$	12.62		$	11.83		$	10.63		$	16.09		$	12.93		$	12.78		$	12.20
Income from investment operations:
Net investment income		0.32			0.32			0.35			0.43			0.47			0.17			0.36			0.16
Net gains (losses) from securities (both realized and unrealized)		1.38			0.29			1.10			1.25			(4.70	)		1.51			0.24			0.57
Total income (loss) from investment operations		1.70			0.61			1.45			1.68			(4.23	)		1.68			0.60			0.73
Less distributions:
Dividends from net investment income		(0.32	)		(0.34	)		(0.66	)		(0.48	)		(0.44	)		(0.29	)		(0.45	)		(0.15	)
Distributions from net realized gains on securities		—			—			—			—			(0.79	)		—			—			—
Total distributions		(0.32	)		(0.34	)		(0.66	)		(0.48	)		(1.23	)		(0.29	)		(0.45	)		(0.15	)
Net asset value, end of period	$	14.27		$	12.89		$	12.62		$	11.83		$	10.63		$	14.32		$	12.93		$	12.78
Total return A		13.23	%		4.87	%		12.47	%		16.64	%		(28.23	)%		13.04	%		4.73	%		5.99	%B
Ratios and supplemental data:
Net assets, end of period (in thousands)	$	40,938		$	30,962		$	33,405		$	29,808		$	36,557		$	2,482		$	401		$	46
Ratios to average net assets (annualized):
Expenses, before reimbursements		0.59	%		0.58	%		0.58	%		0.60	%		0.56	%		0.69	%		1.48	%		0.68	%C
Expenses, net of reimbursements		0.59	%		0.58	%		0.58	%		0.60	%		0.56	%		0.69	%		0.70	%		0.68	%C
Net investment income, before reimbursements		2.27	%		2.49	%		2.67	%		3.60	%		3.37	%		2.08	%		1.55	%		2.54	%C
Net investment income, net of reimbursements		2.27	%		2.49	%		2.67	%		3.60	%		3.37	%		2.08	%		2.34	%		2.54	%C
Portfolio turnover rate		58	%		47	%		40	%		57	%		53	%		58	%		47	%		40	%D

^A  Based on net asset value, which does not reflect the sales charge, redemption fee, or contingent deferred sales charge, if applicable.

^B  Not annualized.

^C  Annualized.

^D  Portfolio turnover rate is for the period from November 1, 2009 through October 31, 2010.

46

American Beacon Balanced Fund^SM

Financial Highlights

(For a share outstanding throughout the period)

Investor Class															Advisor Class															A Class
Year Ended October 31,															Year Ended October 31,															Year Ended October 31,						May 17 to October 31,
2012			2011			2010			2009			2008			2012			2011			2010			2009			2008			2012			2011			2010
	$11.93		$	11.66		$	10.96		$	9.91		$	15.09		$	12.36		$	12.11		$	11.35		$	9.77		$	14.95		$	12.06		$	11.94		$	11.50
	0.23			0.25			0.25			0.30			0.41			0.42			0.41			0.32			0.37			0.34			0.33			0.38			0.02
	1.30			0.28			1.04			1.23			(4.39	)		1.14			0.11			1.01			1.21			(4.31	)		1.17			0.14			0.43
	1.53			0.53			1.29			1.53			(3.98	)		1.56			0.52			1.33			1.58			(3.97	)		1.50			0.52			0.45
	(0.30	)		(0.26	)		(0.59	)		(0.48	)		(0.41	)		(0.19	)		(0.27	)		(0.57	)		—			(0.42	)		(0.40	)		(0.40	)		(0.01	)
	—			—			—			—			(0.79	)		—			—			—			—			(0.79	)		—			—			—
	(0.30	)		(0.26	)		(0.59	)		(0.48	)		(1.20	)		(0.19	)		(0.27	)		(0.57	)		—			(1.21	)		(0.40	)		(0.40	)		(0.01	)
	$13.16		$	11.93		$	11.66		$	10.96		$	9.91		$	13.73		$	12.36		$	12.11		$	11.35		$	9.77		$	13.16		$	12.06		$	11.94
	12.86	%		4.52	%		12.06	%		16.29	%		(28.39	)%		12.62	%		4.33	%		11.96	%		16.17	%		(28.65	)%		12.65	%		4.37	%		3.90	%B
	$89,272		$	83,657		$	84,500		$	94,915		$	105,473		$	2,507		$	3,536		$	6,127		$	6,812		$	7,674		$	3,127		$	588		$	47
	0.92	%		0.92	%		0.93	%		0.89	%		0.82	%		1.09	%		1.09	%		1.09	%		1.09	%		1.07	%		1.13	%		1.59	%		1.08	%C
	0.92	%		0.92	%		0.93	%		0.89	%		0.82	%		1.09	%		1.09	%		1.09	%		1.09	%		1.07	%		1.09	%		1.10	%		1.08	%C
	1.95	%		2.16	%		2.34	%		3.26	%		3.12	%		1.82	%		2.01	%		2.18	%		3.06	%		2.86	%		1.62	%		1.47	%		1.51	%C
	1.95	%		2.16	%		2.34	%		3.26	%		3.12	%		1.82	%		2.01	%		2.18	%		3.06	%		2.86	%		1.66	%		1.95	%		1.51	%C
	58	%		47	%		40	%		57	%		53	%		58	%		47	%		40	%		57	%		53	%		58	%		47	%		40	%D

47

American Beacon Balanced Fund^SM

Financial Highlights

(For a share outstanding throughout the period)

	C Class									AMR Class
	Year Ended October 31,						Sept. 1 to October 31,			Year Ended October 31,
	2012			2011			2010			2012			2011			2010			2009			2008
Net asset value, beginning of period	$	12.13		$	11.92		$	11.32		$	12.27		$	12.02		$	11.31		$	10.19		$	15.49
Income from investment operations:
Net investment income		0.15			0.20			0.01			0.31			0.34			0.35			0.39			0.49
Net gains (losses) from securities (both realized and unrealized)		1.29			0.22			0.59			1.34			0.27			1.07			1.24			(4.52	)
Total income (loss) from investment operations		1.44			0.42			0.60			1.65			0.61			1.42			1.63			(4.03	)
Less distributions:
Dividends from net investment income		(0.24	)		(0.21	)		0.00			(0.38	)		(0.36	)		(0.71	)		(0.51	)		(0.48	)
Distributions from net realized gains on securities		—			—			—			—			—			—			—			(0.79	)
Total distributions		(0.24	)		(0.21	)		0.00			(0.38	)		(0.36	)		(0.71	)		(0.51	)		(1.27	)
Net asset value, end of period	$	13.33		$	12.13		$	11.92		$	13.54		$	12.27		$	12.02		$	11.31		$	10.19
Total return A		11.86	%		3.56	%		5.33	%B		13.55	%		5.09	%		12.84	%		16.95	%		(28.08	)%
Ratios and supplemental data:
Net assets, end of period (in thousands)	$	3,579		$	922		$	1		$	710,816		$	734,927		$	748,422		$	681,197		$	604,209
Ratios to average net assets (annualized):
Expenses, before reimbursements		1.85	%		2.34	%		2.14	%C		0.32	%		0.33	%		0.33	%		0.35	%		0.31	%
Expenses, net of reimbursements		1.83	%		1.82	%		1.86	%C		0.32	%		0.33	%		0.33	%		0.35	%		0.31	%
Net investment income, before reimbursements		0.88	%		0.66	%		0.20	%C		2.57	%		2.75	%		2.92	%		3.75	%		3.62	%
Net investment income, net of reimbursements		0.90	%		1.18	%		0.48	%C		2.57	%		2.75	%		2.92	%		3.75	%		3.62	%
Portfolio turnover rate		58	%		47	%		40	%D		58	%		47	%		40	%		57	%		53	%

^A  Based on net asset value, which does not reflect the sales charge, redemption fee, or contingent deferred sales charge, if applicable.

^B  Not annualized.

^C  Annualized.

^D  Portfolio turnover rate is for the period from November 1, 2009 through October 31, 2010.

48

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49

American Beacon Mid-Cap Value Fund^SM

Financial Highlights

(For a share outstanding throughout the period)

	Institutional Class
	Year Ended October 31,
	2012			2011A			2010			2009			2008
Net asset value, beginning of period	$	9.73		$	9.27		$	7.57		$	5.94		$	11.01
Income from investment operations:
Net investment income (loss)		0.14			0.09			0.08			0.10			0.16
Net gains (losses) from securities (both realized and unrealized)		1.21			0.48			1.67			1.65			(4.31	)
Total income (loss) from investment operations		1.35			0.57			1.75			1.75			(4.15	)
Less distributions:
Dividends from net investment income		(0.13	)		(0.11	)		(0.05	)		(0.12	)		(0.16	)
Distributions from net realized gains on securities		—			—			—			—			(0.76	)
Total distributions		(0.13	)		(0.11	)		(0.05	)		(0.12	)		(0.92	)
Redemption fees added to beneficial interestsC		—			0.00			0.00			0.00			0.00
Net asset value, end of period	$	10.95		$	9.73		$	9.27		$	7.57		$	5.94
Total return D,E		14.07	%		6.08	%		23.19	%		30.24	%		(40.86	)%
Ratios and supplemental data:
Net assets, end of period (in thousands)	$	34,208		$	33,441		$	2,778		$	2,197		$	2,256
Ratios to average net assets (annualized):
Expenses, before reimbursements		1.06	%		1.10	%		1.06	%		1.13	%		1.16	%
Expenses, net of reimbursements		0.98	%		0.97	%		0.98	%		0.98	%		0.98	%
Net investment income (loss), before reimbursements		1.17	%		0.91	%		0.90	%		1.14	%		1.33	%
Net investment income, net of reimbursements		1.25	%		1.04	%		0.99	%		1.29	%		1.51	%
Portfolio turnover rate		87	%		107	%		40	%		42	%		28	%

^A  Lee Munder Capital Group, LLC was added as an investment manager to the Mid-Cap Value Fund on July 1, 2011.

^B  Based on average shares outstanding.

^C  Amounts represent less than $0.01 per share.

^D  May include adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions.

^E  Based on net asset value, which does not reflect the sales charge, redemption fee, or contingent deferred sales charge, if applicable.

^F  Not annualized.

^G  Annualized.

^H  Portfolio turnover rate is for the period from November 1, 2009 through October 31, 2010.

50

American Beacon Mid-Cap Value Fund^SM

Financial Highlights

(For a share outstanding throughout the period)

Y Class									Investor Class															Advisor Class
Year Ended October 31,						March 1 to October 31, 2010			Year Ended October 31,															Year Ended October 31,
2012			2011A						2012			2011A			2010			2009			2008			2012			2011A			2010			2009			2008
$	9.72		$	9.27		$	8.48		$	9.71		$	9.20		$	7.54		$	5.92		$	10.96		$	9.56		$	9.12		$	7.49		$	5.87		$	10.94
	0.13			0.08			0.06			0.34			(0.03	)B		0.06			0.07			0.14			0.05			0.07			0.07			0.15			0.10
	1.21			0.48			0.73			1.00			0.63			1.65			1.66			(4.31	)		1.23			0.45			1.61			1.60			(4.27	)
	1.34			0.56			0.79			1.34			0.60			1.71			1.73			(4.17	)		1.28			0.52			1.68			1.75			(4.17	)
	(0.14	)		(0.11	)		—			(0.07	)		(0.09	)		(0.05	)		(0.11	)		(0.11	)		(0.03	)		(0.08	)		(0.05	)		(0.13	)		(0.14	)
	—			—			—			—			—			—			—			(0.76	)		—			—			—			—			(0.76	)
	(0.14	)		(0.11	)		—			(0.07	)		(0.09	)		(0.05	)		(0.11	)		(0.87	)		(0.03	)		(0.08	)		(0.05	)		(0.13	)		(0.90	)
	—			0.00			0.00			—			0.00			0.00			0.00			0.00			—			0.00			0.00			0.00			0.00
$	10.92		$	9.72		$	9.27		$	10.98		$	9.71		$	9.20		$	7.54		$	5.92		$	10.81		$	9.56		$	9.12		$	7.49		$	5.87
	13.97	%		5.98	%		9.32	%F		13.84	%		6.49	%		22.77	%		29.93	%		(41.04	)%		13.44	%		5.65	%		22.53	%		30.64	%		(41.28	)%
$	516		$	52		$	1		$	4,157		$	1,812		$	35,223		$	23,369		$	16,550		$	465		$	37		$	78		$	7		$	1
	1.28	%		11.62	%		1.05	%G		1.44	%		1.32	%		1.27	%		1.34	%		1.32	%		1.99	%		1.98	%		1.55	%		1.58	%		2.04	%
	1.06	%		1.06	%		1.01	%G		1.23	%		1.23	%		1.23	%		1.23	%		1.23	%		1.48	%		1.49	%		1.44	%		1.50	%		1.50	%
	0.82	%		(9.44	)%		0.93	%G		0.75	%		1.33	%		0.70	%		0.87	%		1.18	%		0.10	%		0.21	%		0.36	%		0.14	%		0.48	%
	1.03	%		1.12	%		0.97	%G		0.96	%		1.42	%		0.75	%		0.98	%		1.27	%		0.61	%		0.69	%		0.47	%		0.22	%		1.02	%
	87	%		107	%		40	%H		87	%		107	%		40	%		42	%		28	%		87	%		107	%		40	%		42	%		28	%

51

American Beacon Mid-Cap Value Fund^SM

Financial Highlights

(For a share outstanding throughout the period)

	A Class									C Class
	Year Ended October 31,						May 17 to October 31, 2010			Year Ended October 31,						September 1 to October 31, 2010
	2012			2011A						2012			2011A
Net asset value, beginning of period	$	9.61		$	9.18		$	9.00		$	9.56		$	9.18		$	8.30
Income from investment operations:
Net investment income (loss)		0.09			0.11			0.01			0.06			0.05			(0.01	)
Net gains (losses) from securities (both realized and unrealized)		1.20			0.40			0.17			1.15			0.38			0.89
Total income (loss) from investment operations		1.29			0.51			0.18			1.21			0.43			0.88
Less distributions:
Dividends from net investment income		(0.08	)		(0.08	)		—			(0.07	)		(0.05	)		—
Distributions from net realized gains on securities		—			—			—			—			—			—
Total distributions		(0.08	)		(0.08	)		—			(0.07	)		(0.05	)		—
Redemption fees added to beneficial interestsC		—			0.00			0.00			—			0.00			0.00
Net asset value, end of period	$	10.82		$	9.61		$	9.18		$	10.70		$	9.56		$	9.18
Total return D,E		13.56	%		5.49	%		2.00	%F		12.75	%		4.64	%		10.60	%F
Ratios and supplemental data:
Net assets, end of period (in thousands)	$	264		$	101		$	18		$	254		$	22		$	1
Ratios to average net assets (annualized):
Expenses, before reimbursements		1.61	%		3.44	%		1.51	%G		2.46	%		19.14	%		3.20	%G
Expenses, net of reimbursements		1.49	%		1.48	%		1.48	%G		2.22	%		2.24	%		2.24	%G
Net investment income (loss), before reimbursements		0.56	%		(1.36	)%		0.44	%G		(0.40	)%		(16.96	)%		(1.32	)%G
Net investment income (loss), net of reimbursements		0.68	%		0.60	%		0.47	%G		(0.15	)%		(0.06	)%		(0.36	)%G
Portfolio turnover rate		87	%		107	%		40	%H		87	%		107	%		40	%H

^A  Lee Munder Capital Group, LLC was added as an investment manager to the Mid-Cap Value Fund on July 1, 2011.

^B  Based on average shares outstanding.

^C  Amounts represent less than $0.01 per share.

^D  May include adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions.

^E Based on net asset value, which does not reflect the sales charge, redemption fee, or contingent deferred sales charge, if applicable.

^F  Not annualized.

^G  Annualized.

^H  Portfolio turnover rate is for the period from November 1, 2009 through October 31, 2010.

52

American Beacon Mid-Cap Value Fund^SM

Financial Highlights

(For a share outstanding throughout the period)

AMR Class
Year Ended October 31,
2012			2011A			2010			2009			2008
$	9.73		$	9.27		$	7.59		$	5.97		$	11.07
	0.24			0.15			0.10			0.07			0.18
	1.14			0.43			1.66			1.70			(4.35	)
	1.38			0.58			1.76			1.77			(4.17	)
	(0.15	)		(0.12	)		(0.08	)		(0.15	)		(0.17	)
	—			—			—			—			(0.76	)
	(0.15	)		(0.12	)		(0.08	)		(0.15	)		(0.93	)
	—			0.00			0.00			0.00			0.00
$	10.96		$	9.73		$	9.27		$	7.59		$	5.97
	14.34	%		6.20	%		23.28	%		30.56	%		(40.82	)%
$	76,273		$	56,963		$	64,012		$	53,604		$	34,253
	0.78	%		0.83	%		0.77	%		0.82	%		0.82	%
	0.78	%		0.83	%		0.77	%		0.83	%		0.82	%
	1.46	%		1.34	%		1.19	%		1.38	%		1.68	%
	1.46	%		1.34	%		1.19	%		1.38	%		1.68	%
	87	%		107	%		40	%		42	%		28	%

53

American Beacon Small Cap Value II Fund^SM

Financial Highlights

(For a share outstanding throughout the period)

	Y Class			Investor Class
	November 15, 2011 to October  31, 2012D			November 15, 2011 to October  31, 2012D
Net asset value, beginning of period	$	10.00		$	10.00
Income from investment operations:
Net investment income		0.04			0.01
Net gains from securities (both realized and unrealized)		0.67			0.67
Total income from investment operations		0.71			0.68
Less distributions:
Dividends from net investment income		(0.01	)		(0.01	)
Distributions from net realized gains on securities		—			—
Total distributions		(0.01	)		(0.01	)
Net asset value, end of period	$	10.70		$	10.67
Total return A,B		7.10	%C		6.82	%C
Ratios and supplemental data:
Net assets, end of period (in thousands)	$	1,693		$	1,640
Ratios to average net assets (annualized):
Expenses, before reimbursements E		4.44	%		4.80	%
Expenses, net of reimbursements E		1.06	%		1.33	%
Net investment (loss), before reimbursements E		(3.03	)%		(3.39	)%
Net investment income, net of reimbursements E		0.35	%		0.08	%
Portfolio turnover rate F		82	%		82	%

^A  May include adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions.

^B  Based on net asset value, which does not reflect the sales charge, redemption fee, or contingent deferred sales charge, if applicable.

^C  Not annualized.

^D  November 15, 2011 is the inception date of the Small Cap Value II Fund.

^E  Annualized.

^F  Portfolio turnover rate is for the period from November 15, 2011 through October 31, 2012.

54

American Beacon Funds^SM

Privacy Policy & Federal Tax Information

October 31, 2012 (Unaudited)

Privacy Policy

The American Beacon Funds recognize and respect the privacy of our shareholders. We are providing this notice to you so you will understand how shareholder information may be collected and used.

We may collect nonpublic personal information about you from one or more of the following sources:

• information we receive from you on applications or other forms;

• information about your transactions with us or our service providers; and

• information we receive from third parties.

We do not disclose any nonpublic personal information about our customers or former customers to anyone, except as permitted by law.

We restrict access to your nonpublic personal information to those employees or service providers who need to know that information to provide products or services to you. To ensure the confidentiality of your nonpublic personal information, we maintain safeguards that comply with federal standards.

Federal Tax Information

Certain tax information regarding the Fund is required to be provided to shareholders based upon the Fund’s income and distribution for the taxable year ended October 31, 2012. The information and distributions reported herein may differ from information and distributions taxable to the shareholders for the calendar year ended December 31, 2012.

The Funds designated the following items with regard to distributions paid during the year ended December 31, 2011. All designations are based on financial information available as of this annual report and, accordingly, are subject to change. For each item, it is the intention of the Fund to designate the maximum amount permitted under the Internal Revenue Code of 1986, as amended, and the regulations there under.

	Balanced			Mid-Cap Value
Corporate Dividends Received Deduction		39.69	%		74.97	%
Qualified Dividend Income		56.79	%		100.00	%

The Balanced Fund designated $1,289,221 as long-term capital gains distribution for the year ended October 31, 2012.

Shareholders will receive notification in January 2013 of the applicable tax information necessary to prepare their 2012 income tax returns.

55

Disclosure Regarding the Board of Trustees’ Approval of the Management

Agreement and Investment Advisory Agreements of the Funds (Unaudited)

At its May 9, 2012 meeting, the Board of Trustees (“Board”) considered the renewal of the Management Agreement between the Manager and the American Beacon Funds (“Beacon Trust”) on behalf of each of their series (collectively, the “Funds”) and the renewal of each investment advisory agreement between the Manager and a subadvisor (each an “Investment Advisory Agreement”). The Management Agreement and the Investment Advisory Agreements are collectively referred to herein as the “Agreements.” In preparation for the Board’s consideration to renew and approve these Agreements, the Board and its Investment Committee undertook steps to gather and consider information furnished by the Manager, the subadvisors and Lipper, Inc. (“Lipper”). The Board, with the assistance of independent legal counsel, requested and received certain relevant information from the Manager and each subadvisor.

In addition, the Board’s Investment Committee worked with Lipper to obtain relevant comparative information regarding the performance, fees and expenses of the Funds. The Investment Committee held a separate meeting on May 4, 2012 to consider the information provided by Lipper. Further, the Board took into consideration information furnished for the Board’s review and consideration throughout the year at regular Board and Investment Committee meetings, as well as information specifically prepared in connection with the renewal process.

In connection with the Board’s consideration of the Management Agreement and each Investment Advisory Agreement, the Trustees received and evaluated such information as they deemed necessary. The materials requested by the Board included, among other information, the following:

• a description of any significant changes (actual or anticipated) to principal activities, personnel, services provided to the Funds, or any other area, including how these changes might affect the Funds;

• a copy of the firm’s most recent audited or unaudited financial statements, as well as Parts 1 and 2 of its Form ADV registration statement with the SEC;

• a summary of any material pending or anticipated litigation or regulatory proceedings involving the firm or its personnel, including the results of any recent regulatory examination or independent audit;

• a comparison of the performance of that portion of Fund assets managed or to be managed by each firm with the performance of other similar accounts managed by the firm, including a discussion of relative performance versus a peer group average and any remedial measures if the firm’s performance was materially below that of the peer group;

• any actual or anticipated economies of scale in relation to the services the Manager and the firm provide or will provide to each Fund and whether the current fee rates charged or to be charged to each Fund reflects these economies of scale for the benefit of the Fund’s investors;

• an analysis of compensation, including a comparison with fee rates charged to other clients for which similar services are provided, any proposed changes to the fee schedule, if applicable, and the effect of any fee waivers;

• a description of any payments made or to be made by the subadvisors to the Manager to support a Fund’s marketing efforts;

• a copy of the firm’s proxy voting policies and procedures and, if applicable, the name of the third party voting service used by the firm;

• an evaluation of any other benefits to the firm or Funds as a result of their relationship, if any;

• confirmation that the firm’s financial condition would not impair its ability to provide high-quality advisory services to the Funds;

• a description of the scope of portfolio management services provided or to be provided to the Funds, including whether such services differ from the services provided to other clients, including other registered investment companies, and any advantages or disadvantages that might accrue to the Funds due to the firm’s involvement in other activities;

• a description of the personnel who are or will be assigned primary responsibility for managing the Funds, including any changes during the past year, and a discussion of the adequacy of current and projected staffing levels to service the Funds;

• a description of the basis upon which portfolio managers are compensated, including any “incentive” arrangements, and a description of the oversight mechanisms used to prevent a portfolio manager whose compensation is tied to performance of a Fund from taking undue risks;

• a description of the firm’s practices in monitoring the quality of portfolio holdings and in reviewing portfolio valuation;

• a description of the firm’s use of derivatives, short sells, leveraged trading strategies or other similar trading strategies for the Funds;

• a discussion regarding the firm’s participation in third-party and proprietary “soft dollar” arrangements, if any, or other brokerage allocation policies with respect to Fund transactions;

• a discussion of the firm’s methodology for obtaining best execution, including any plans to improve the quality of execution in the upcoming year, and the use of any affiliated broker-dealers;

• a description of any actual or potential conflicts of interest anticipated in managing Fund assets;

• a discussion of whether the firm has identified any investment or operational matters that likely present a high risk in managing Fund assets;

• a description of the firm’s criteria for assessing counterparties and counterparty risk to the extent the firm enters into transactions with counterparties on a Fund’s behalf;

• a description of trade allocation procedures among accounts managed by the firm;

• a discussion of whether the firm utilizes “commission recapture” or “directed brokerage” arrangements for the benefit of the Funds or “step-out” transactions;

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Disclosure Regarding the Board of Trustees’ Approval of the Management

Agreement and Investment Advisory Agreements of the Funds (Unaudited)

• a discussion of whether the firm receives, or anticipates receiving, other compensation, including any payment for order flow or ECN liquidity rebates with respect to the Funds;

• a certification by the firm regarding the reasonable design of its compliance program;

• a summary of the results of the firm’s most recent annual review of its compliance program and a discussion of any material compliance problems encountered by a subadvisor since the most recent annual review;

• information regarding the firm’s code of ethics, insider trading policy and disaster recovery plan, including a description of any material changes thereto and a related certification of compliance by the firm;

• a description of the firm’s affiliation with any broker-dealer;

• a discussion of any anticipated change in the firm’s controlling persons; and

• verification of the firm’s insurance coverage with regards to the services provided to the Funds.

In addition to the foregoing, the Manager provided the following information specific to the renewal of the Management Agreement:

• a comparison of the performance of each Fund to comparable investment companies and appropriate indices, including comments on the relative performance of, as applicable, each subadvisor and each Fund versus the respective peer group average;

• a discussion, if applicable, of any underperformance by a subadvisor relative to its peer group and what, if any, remedial measures the Manager has or intends to take;

• a comparison of advisory fee rates and expense ratios for comparable mutual funds;

• a profit/loss analysis of the Manager;

• an analysis of any material complaints received from Fund shareholders;

• a description of the extent to which the Manager monitors the investment activities and financial conditions of each subadvisor to the Funds;

• a description of the Manager’s distribution activities with respect to promoting sales of Fund shares, including any revenue sharing practices;

• a description of the Manager’s securities lending practices and the fees received from such practices;

• a discussion of any rebate arrangements between the Manager and a service provider to the Funds pursuant to which the Manager receives direct or indirect benefits from the service provider;

• a description of the portfolio turnover rate and average execution costs for each Fund and, as applicable, each subadvisor to a Fund; and

• a description of how expenses that are not readily identifiable to a particular Fund are allocated.

In connection with the Management Agreement and each Investment Advisory Agreement, the Board also obtained an analysis provided by Lipper that compared: (i) investment performance of each Fund versus comparable investment companies and appropriate indices; (ii) total Fund expenses of each Fund versus comparable mutual funds; and (iii) each Fund’s investment advisory fee rate versus comparable mutual funds. For each Fund with more than one class of shares, the class of shares used for comparative purposes was the class with the longest performance history, which in most cases was the Institutional Class. References below to each Fund’s Lipper peer group are to the group of comparable mutual funds included in the analysis provided by Lipper.

Provided below is an overview of the primary factors the Trustees considered at the Investment Committee meeting on May 4, 2012 at which the Trustees reviewed the investment performance of the Manager and each subadvisor and the primary factors considered by the Board at its May 9, 2012 meeting at which the Board considered the renewal of the Management Agreement and Investment Advisory Agreements.

The Board did not identify any particular information that was most relevant to its consideration to renew or approve each Agreement, and each Trustee may have afforded different weight to the various factors. Legal counsel to the independent Trustees provided the Board with a memorandum regarding its responsibilities pertaining to the renewal and approval of each Agreement. The memorandum explained the regulatory requirements surrounding the Trustees’ process for evaluating investment advisors and the terms of the contracts. Based on its evaluation, the Board unanimously concluded that the terms of each Agreement were reasonable and fair and that the renewal and approval of each Agreement was in the best interests of the Funds and their shareholders.

Considerations With Respect to the Renewal of the Management Agreement and each Investment Advisory Agreement

In determining whether to renew the Management Agreement and each Investment Advisory Agreement on behalf of the Funds, the Trustees considered the best interests of each Fund separately. While the Management Agreement and the Investment Advisory Agreements for all of the Funds were considered at the May 9, 2012 meeting, the Board considered each Fund’s investment management and subadvisory relationships separately.

In each instance, the Board considered, among other things, the following factors: (1) the nature, extent and quality of the services provided; (2) the investment performance of a Fund and, as applicable, each subadvisor for a Fund; (3) the costs incurred by the Manager in rendering services to the Funds and its resulting profits or losses; (4) the extent to which economies of scale have been taken

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Disclosure Regarding the Board of Trustees’ Approval of the Management

Agreement and Investment Advisory Agreements of the Funds (Unaudited)

into account in setting each fee schedule; (5) whether fee levels reflect these economies of scale for the benefit of Fund investors; (6) comparisons of services and fee rates with contracts entered into by the Manager or a subadvisor or their affiliates with other clients (such as pension funds and other institutional funds); and (7) any other benefits derived or anticipated to be derived by the Manager or a subadvisor from their relationship with a Fund. The Trustees posed questions to various management personnel of the Manager regarding certain key aspects of the materials submitted in support of the renewal.

Nature, Extent and Quality of Services. With respect to the renewal of the Management Agreement, the Board considered, among other factors: each Fund’s long-term performance and the background and experience of key investment personnel at the Manager; the low cost structure of the Funds; the Manager’s culture of compliance and support for compliance operations that reduce risks to the Funds; the manager’s commitment to enhance the Funds’ product line and increase assets in the Funds; the Manager’s high quality of services; the Manager’s active role in monitoring and, as appropriate recommending additional or replacement subadvisors; the Manager’s commitment to training employees; and the Manager’s efforts to retain key employees and maintain staff levels.

With respect to the renewal of each Investment Advisory Agreement, the Trustees considered the level of staffing, quality, background and experience of each subadvisor’s investment personnel responsible for managing the Funds, the size of the subadvisor and the subadvisor’s ability to continue to attract and retain qualified investment personnel. The Board also considered the adequacy of the resources committed to the Funds by each subadvisor, and whether those resources were commensurate with the needs of the Funds and are sufficient to sustain appropriate levels of performance and compliance needs. In this regard, the Board considered the financial stability of each subadvisor. The Board also considered the subadvisors’ representations regarding their compliance programs and code of ethics. Based on the foregoing information, the Board concluded that the nature, extent and quality of the management and advisory services provided by the Manager and each subadvisor were appropriate for each Fund and, thus, determined to renew the Management Agreement and the Investment Advisory Agreement for each Fund.

Investment Performance. The Board evaluated the comparative information provided by Lipper and the Manager regarding each Fund’s investment performance relative to its benchmark index(es) and peer group. The Board considered the information provided by Lipper regarding its independent peer selection methodology to select all peer groups and universes. The Board also considered the performance reports and discussions with management at Board and Committee meetings throughout the year. The Manager also noted that it generally was satisfied with the performance of the subadvisors. A discussion regarding the Board’s considerations with respect to each Fund’s performance appears below under “Additional Considerations and Conclusions with Respect to Each Fund.”

Costs of the Services Provided to the Funds and the Profits Realized by the Manager from its Relationship with the Funds. In analyzing the cost of services and profitability of the Manager, the Board considered the revenues earned and the expenses incurred by the Manager. The profits or losses were noted at both an aggregate level for all Funds and at an individual Fund level, with some Funds being profitable for the Manager and with the Manager sustaining losses with respect to other Funds. The Board also considered that the Management Agreement for the Beacon Trust stipulates that, to the extent that a Fund invests all of its investable assets in another registered investment company (i.e., is a “Feeder Fund”), the Fund will not pay the Manager a management fee. Although the Board noted that, in certain cases, the fee rates paid by other clients of the Manager are lower than the fee rates paid by the Funds, the difference reflects the greater level of responsibility and regulatory requirements associated with managing the Funds.

The Board also noted that the Manager proposed to continue the expense waivers and reimbursements for certain Funds and classes that were in place during the last fiscal year and to put in place new expense waivers and reimbursements for certain new classes of the Funds and new series of the Beacon Trust. The Board further considered that each subadvised Fund pays the Manager the amounts due to its subadvisors, and the Manager remits these amounts directly to the applicable subadvisors. The Board considered that the Manager receives service and administrative fees to compensate the Manager for providing administrative services to the Funds and to compensate third-party administrators and broker-dealers for services to Fund shareholders. In addition, the Board considered that the Manager receives management fees for overseeing the securities lending program on behalf of various Funds. The Board also noted that certain classes of the Funds maintain higher expense ratios in order to compensate third-party distributors.

In analyzing the cost of services and profitability for each subadvisor in connection with its investment advisory services to the Fund, the Board considered that, in many cases, the Manager has negotiated the lowest subadvisory fee rate a subadvisor charges for any comparable client accounts. The Board did not consider profitability data of the subadvisors as imperative to its deliberations given the arm’s length nature of the relationship between the Manager and the subadvisors with respect to the negotiation of subadvisory fee rates.

Based on the foregoing information, the Board concluded that the profitability levels of the Manager were reasonable in light of the services performed by the Manager. A discussion regarding the Board’s considerations with respect to each Fund’s fee rates is set forth below under “Additional Considerations and Conclusions with Respect to Each Fund.”

Economies of Scale. In considering the reasonableness of the management and investment advisory fees rates, the Board considered whether economies of scale will be realized as the Funds grow and whether fee levels reflect these economies of scale for the benefit of Fund shareholders. In this regard, the Board considered that the Manager has negotiated breakpoints in many subadvisory fee rates. The Board also noted that, for purposes of determining the fee rates chargeable to the Funds, many subadvisors have agreed to take into account assets of AMR Corporation and its pension plans that are managed by the subadvisors. Thus, the Funds are able to receive lower effective fee rates.

In addition, the Board noted the Manager’s representation that many of the Funds benefit from economies of scale because comparably low fee rate levels are reflected in the current management and administration fee rates the Manager charges. The Board further noted the Manager’s representation that many of the Funds benefit from these comparably low fee rate levels despite not having yet reached an asset size at which economies of scale would traditionally be considered to exist, and the Manager’s belief that breakpoints

58

Disclosure Regarding the Board of Trustees’ Approval of the Management

Agreement and Investment Advisory Agreements of the Funds (Unaudited)

are not appropriate at this time. Based on the foregoing information, the Board concluded that the Manager and subadvisor fee schedules for each Fund provides for a reasonable sharing of benefits from any economies of scale with the Funds.

Benefits Derived from the Relationship with the Funds. The Board considered the “fall-out” or ancillary benefits that accrue to the Manager and/or the subadvisors as a result of the advisory relationships with the Funds, including greater exposure in the marketplace with respect to the Manager’s or subadvisor’s investment process and expanding the level of assets under management by the Manager and the subadvisors. The Board also considered that the Manager uses its proprietary American Beacon Large Cap Value Fund model to manage its collective investment trust.

In addition, the Manager noted that the Trusts also derive benefits from their association with the Manager. Specifically, the Board noted the Manager’s representation that it provides services to most Funds at a lower than industry average cost. The Board considered that certain of the subadvisors reimburse the Manager for certain of its costs relating to distribution activities for the Funds. The Board also considered that the Funds did not pay commissions to any affiliated broker-dealer of the Manager or the relevant subadvisor during the most recent fiscal year ended October 31, 2011.

Based on the foregoing information, the Board concluded that the potential benefits accruing to the Manager and the subadvisors by virtue of their relationships with the Funds appear to be fair and reasonable.

Additional Considerations and Conclusions with Respect to Each Fund

The performance comparisons below were made versus each Fund’s Lipper peer universe median and/or benchmark index. References to the Lipper expense universe below are to the group of comparable mutual funds included in the analysis provided to the Trustees by Lipper. In reviewing the performance, the Trustees viewed longer-term performance over five years or longer as the most important consideration, because relative performance over shorter periods may be significantly impacted by market or economic events that do not reflect manager skill.

Additional Considerations and Conclusions with Respect to the American Beacon Balanced Fund

In considering the renewal of the Management Agreement for the American Beacon Balanced Fund, the Trustees considered the following additional factors: (1) the American Beacon Balanced Fund outperformed the peer universe median for the one-, three-, five- and ten-year periods ended March 31, 2012; (2) the Manager outperformed the peer universe median with respect to its portion of the Fund’s fixed income assets for the one-, three-, five- and ten-year periods ended March 31, 2012, and outperformed its benchmark index with respect to its portion of the Fund’s fixed income assets for the three- and five-year periods ended March 31, 2012, but underperformed for the one-year period; and (3) the expense ratio of the Institutional Class of Fund shares ranked better than the median of its Lipper expense universe.

In considering the renewal of the Investment Advisory Agreements with Barrow, Hanley, Mewhinney & Strauss, Inc. (“Barrow”), Brandywine Global Investment Management, LLC (“Brandywine”) and Hotchkis and Wiley Capital Management, LLC (“Hotchkis”), the Trustees considered the following additional factors: (1) Barrow outperformed the peer universe median for the one-, five- and ten-year periods ended March 31, 2012, but underperformed for the three-year period; (2) Brandywine outperformed the peer universe median for the one-, five- and ten-year periods ended March 31, 2012, but underperformed for the three-year period ended March 31, 2012; (3) Hotchkis outperformed its benchmark index with respect to its allocated portion of the Fund’s equity assets for the one-, three- and ten-year periods ended March 31, 2012, but underperformed for the five-year period ended March 31, 2012; (4) management’s explanation that Hotchkis’ and Brandywine’s underperformance was due to poor stock selection and over- and under-weightings of certain sectors; (5) the performance of each subadvisor with respect to the portion of the Fund’s assets it manages was comparable to the performance of the composite provided by each respective subadvisor, which contained accounts managed by that subadvisor with similar investment objectives and policies as the Fund; (6) representations by each subadvisor regarding fee rates charged by the subadvisor to other comparable clients; (7) whether the subadvisors use Fund commissions to obtain proprietary or third-party research; and (8) the Manager’s recommendation to continue to retain each subadvisor.

Based on these and other considerations the Trustees (1) concluded that the fees paid to the Manager and the subadvisors under the Agreements are fair and reasonable, (2) determined that the American Beacon Balanced Fund and its shareholders would benefit from the Manager’s and subadvisors’ continued management of the Fund and (3) approved the renewal of the Management and Investment Advisory Agreements with respect to the American Beacon Balanced Fund.

Additional Considerations and Conclusions with Respect to the American Beacon Mid-Cap Value Fund

In considering the renewal of the Management Agreement for the American Beacon Mid-Cap Value Fund, the Trustees considered the following additional factors: (1) the Fund outperformed its peer group universe median for the one-, three- and five-year periods ended March 31, 2012; and (2) the expense ratio of the Institutional Class of Fund shares was lower than the median of its Lipper expense universe (after consideration of the Manager’s fee waivers).

In considering the renewal of the Investment Advisory Agreements with Barrow and Pzena Investment Management, LLC (“Pzena”), the Trustees considered the following additional factors: (1) Barrow outperformed the peer universe median for the one- and five-year periods, but underperformed for the three-year period ended March 31, 2012; (2) Pzena outperformed the peer universe median for the one-, three- and five-year periods ended March 31, 2012; (3) the performance of Barrow with respect to the portion of the Fund’s

59

Disclosure Regarding the Board of Trustees’ Approval of the Management

Agreement and Investment Advisory Agreements of the Funds (Unaudited)

assets it manages was comparable to the performance of its composite of similarly managed accounts; (4) the performance of Pzena with respect to the portion of the Fund’s assets it manages outperformed its composite consisting of Pzena’s non-mutual fund clients and clients without any significant investment restrictions or guidelines, and underperformed that composite in 2007, 2008 and the first quarter of 2012; (5) representations by each subadvisor regarding fee rates charged by the subadvisor to other comparable clients; (6) whether the subadvisors use Fund commissions to obtain proprietary or third-party research; and (7) the Manager’s recommendation to continue to retain each subadvisor.

Based on these and other considerations the Trustees (1) concluded that the fees paid to the Manager and the subadvisors under the Agreements are fair and reasonable, (2) determined that the American Beacon Mid-Cap Value Fund and its shareholders would benefit from the Manager’s and subadvisors’ continued management of the Fund and (3) approved the renewal of the Management and Investment Advisory Agreements with respect to the American Beacon Mid-Cap Value Fund.

Additional Considerations and Conclusions with Respect to the American Beacon Small Cap Value II Fund

In considering the renewal of the Management Agreement for the American Beacon Small Cap Value II Fund, the Trustees considered the following additional factors: (1) the Fund was funded on November 15, 2011 and underperformed the peer universe median for the quarter ended March 31, 2012; and (2) the expense ratio of the Y Class of the Fund ranked better than the median of its Lipper expense universe.

In considering the renewal of the Investment Advisory Agreements with Dean Capital Management, LLC (“Dean”), Fox Asset Management, LLC (“Fox”) and Signia Capital Management, LLC (“Signia”), the Trustees considered the following additional factors: (1) Dean outperformed the Lipper peer universe median for the quarter ended March 31, 2012; (2) Fox underperformed the Lipper peer universe median for the quarter ended March 31, 2012; (3) Signia underperformed the Lipper peer universe median for the quarter ended March 31, 2012; (4) management’s explanation that Fox’s and Signia’s underperformance was due in part to poor stock selection; (5) the performance of Dean with respect to the portion of the Fund’s assets it manages was below the performance of a similarly managed mutual fund that Dean manages for the year-to-date and since inception periods ended March 31, 2012; (6) the performance of Fox with respect to the portion of the Fund’s assets it manages outperformed its composite of similarly managed accounts; (7) the performance of Signia with respect to the portion of the Fund’s assets it manages as compared to the performance of similar accounts was not available; (8) representations by each subadvisor regarding fee rates charged by the subadvisor to other comparable clients; (9) whether the subadvisors use Fund commissions to obtain proprietary or third-party research; and (10) the Manager’s recommendation to continue to retain each subadvisor.

Based on these and other considerations the Trustees (1) concluded that the fees paid to the Manager and the subadvisors under the Agreements are fair and reasonable; (2) determined that the American Beacon Small Cap Value II Fund and its shareholders would benefit from the Manager’s and subadvisors’ continued management of the Fund; and (3) approved the renewal of the Management and Investment Advisory Agreements with respect to the Fund.

60

Trustees and Officers of the American Beacon Funds^SM

(Unaudited)

The Trustees and officers of the American Beacon Funds (the “Trust”) are listed below, together with their principal occupations during the past five years. Unless otherwise indicated, the address of each person listed below is 4151 Amon Carter Boulevard, MD 2450, Fort Worth, Texas 76155. Each Trustee oversees twenty-six funds in the fund complex that includes the Trust and the American Beacon Select Funds. The Trust’s Statement of Additional Information contains additional information about the Trustees and is available without charge by calling 1-800-658-5811.

Name, Age and Address	Position, Term of Office and Length of Time Served with the Trust	Principal Occupation(s) During Past 5 Years and Current Directorships
INTERESTED TRUSTEES
	Term Lifetime of Trust until removal, resignation or retirement*
Gerard J. Arpey** (54)	Trustee since 2012	Partner, Emerald Creek Group (private equity firm) (2011-Present); Chairman and Chief Executive Officer, (2003-2011), AMR Corp. and American Airlines; Inc.; Director, S. C. Johnson & Son, Inc. (privately held company) (2008-present); Trustee, American Beacon Select Funds (2012-Present).
Alan D. Feld*** (75)	Trustee since 1996	Sole Shareholder of a professional corporation which is a Partner in the law firm of Akin, Gump, Strauss, Hauer & Feld, LLP (law firm) (1960-Present); Director, Clear Channel Communications (1984-2008); Trustee, American Beacon Mileage Funds (1996-2012); Trustee, American Beacon Select Funds (1999-Present); Trustee, American Beacon Master Trust (1996-2012).
NON-INTERESTED
TRUSTEES	Term Lifetime of Trust until removal, resignation or retirement*
W. Humphrey Bogart (68)	Trustee since 2004	Trustee, American Beacon Mileage Funds (2004-2012); Trustee, American Beacon Select Funds (2004-Present); Trustee, American Beacon Master Trust (2004- 2012).
Brenda A. Cline (51)	Trustee since 2004	Executive Vice President, Chief Financial Officer, Treasurer and Secretary, Kimbell Art Foundation (1993-Present); Trustee, American Beacon Mileage Funds (2004-2012); Trustee, American Beacon Select Funds (2004-Present); Trustee, American Beacon Master Trust (2004-2012).
Eugene J. Duffy (58)	Trustee since 2008	Principal and Executive Vice President, Paradigm Asset Management (1994- Present); Director, Sunrise Bank of Atlanta (2008-Present); Trustee, American Beacon Mileage Funds (2008-2012); Trustee, American Beacon Select Funds (2008-Present); Trustee, American Beacon Master Trust (2008-2012).
Thomas M. Dunning (70)	Trustee since 2008	Chairman Emeritus (2008-Present); Chairman (1998-2008) and Chief Executive Officer (1998-2007), Lockton Dunning Benefits (consulting firm in employee benefits); Board Director, Oncor Electric Delivery Company LLC (2007-Present); Board Member, BancTec (2010-Present); Trustee, American Beacon Mileage Funds (2008-2012); Trustee, American Beacon Select Funds (2008-Present); Trustee, American Beacon Master Trust (2008-2012).
Richard A. Massman (69)	Trustee since 2004 Chairman since 2008	Consultant and General Counsel Emeritus (2009-Present) and Senior Vice President and General Counsel (1994-2009), Hunt Consolidated, Inc. (holding company engaged in oil and gas exploration and production, refining, real estate, farming, ranching and venture capital activities); Trustee, American Beacon Mileage Funds (2004-2012); Trustee, American Beacon Select Funds (2004-Present); Trustee, American Beacon Master Trust (2004-2012).

61

Trustees and Officers of the American Beacon Funds^SM

(Unaudited)

Name, Age and Address	Position, Term of Office and Length of Time Served with the Trust	Principal Occupation(s) During Past 5 Years and Current Directorships
Barbara J. McKenna, CFA (49)	Trustee since 2012	Managing Principal, Longfellow Investment Management Company (2005-Present); Trustee, American Beacon Select Funds (2012-Present).
R. Gerald Turner (66)	Trustee since 2001	President, Southern Methodist University (1995-Present); Director, J.C. Penney Company, Inc. (1996-Present); Director, Kronus Worldwide Inc. (chemical manufacturing) (2003-Present); Director, First Broadcasting Investment Partners, LLC (2003-2007); Trustee, American Beacon Mileage Funds (2001-2012); Trustee, American Beacon Select Funds (2001-Present); Trustee, American Beacon Master Trust (2001-2012).
Paul J. Zucconi, CPA (72)	Trustee since 2008	Director, Affirmative Insurance Holdings, Inc. (producer of nonstandard automobile insurance) (2004-Present); Director, Titanium Metals Corporation (producer of titanium melted and mill products) (2002-Present); Director, Torchmark Corporation (life and health insurance products) (2002-Present); Director, Charter Bank (community bank services and products) (2010-2011); Trustee, American Beacon Mileage Funds (2008-2012); Trustee, American Beacon Select Funds (2008-Present); Trustee, American Beacon Master Trust (2008-2012).
OFFICERS
	Term One Year
Gene L. Needles, Jr. (57)	President since 2009 Executive Vice President since 2009	President, CEO and Director (2009-Present), American Beacon Advisors, Inc.; President (2009-Present), President, CEO and Director (2009-Present), Lighthouse Holdings, Inc.; President and CEO (2009-Present), Lighthouse Holdings Parent, Inc.; President (2009-Present), American Beacon Select Funds; President (2009-Present), American Beacon Mileage Funds; President (2008-2009), Touchstone Investments; President (2003-2007), CEO (2004-2007), AIM Distributors.
Rosemary K. Behan (53)	VP, Secretary and Chief Legal Officer since 2006	Vice President, Legal and Compliance, American Beacon Advisors, Inc. (2006-Present); Secretary, American Beacon Advisors, Inc. (2008-present); Secretary, Lighthouse Holdings, Inc. (2008-Present); Secretary Lighthouse Holdings Parent, Inc. (2008-Present).
Brian E. Brett (52)	VP since 2004	Vice President, Director of Sales, American Beacon Advisors, Inc. (2004-Present).
Wyatt L. Crumpler (46)	VP since 2007	Chief Investment Officer (2012-Present), Vice President, Asset Management (2009-2011), and Vice President, Trust Investments (2007-2009), American Beacon Advisors, Inc.
Erica Duncan (42)	VP Since 2011	Vice President, Marketing and Client Services (2011-Present), American Beacon Advisors, Inc.; Supervisor, Brand Marketing (2010-2011), Invesco; Supervisor, Marketing Communications (2009-2010) and Senior Financial Writer (2004-2009), Invesco AIM.
Michael W. Fields (58)	VP since 1989	Chief Fixed Income Officer (2011-Present) and Vice President, Fixed Income Investments, American Beacon Advisors, Inc. (1988-2011); Director, American Beacon Global Funds SPC (2002-2011); Director, American Beacon Global Funds plc (2007-2009).
Melinda G. Heika (51)	Treasurer since 2010	Treasurer (2010-Present), and Controller (2005-2009), American Beacon Advisors, Inc.; Treasurer, Lighthouse Holdings, Inc. (2010-Present); Treasurer, Lighthouse Holdings Parent, Inc. (2010-Present).
Terri L. McKinney (48)	VP since 2010	Vice President, Enterprise Services (2009-Present) and Managing Director (2003-2009), American Beacon Advisors, Inc.
Jeffrey K. Ringdahl (37)	VP since 2010	Chief Operating Officer, American Beacon Advisors, Inc. (2010-Present); Vice President, Product Management, Touchstone Advisors, Inc. (2007-2010); Senior Director, Business Integration, Fidelity Investments (2005-2007).

62

Trustees and Officers of the American Beacon Funds^SM

(Unaudited)

Name, Age and Address	Position, Term of Office and Length of Time Served with the Trust	Principal Occupation(s) During Past 5 Years and Current Directorships
Samuel J. Silver (49)	VP Since 2011	Vice President, Fixed Income Investments (2011-Present) and Senior Portfolio Manager, Fixed Income Investments (1999-2011), American Beacon Advisors, Inc.
Christina E. Sears (41)	Chief Compliance Officer since 2004 and Asst. Secretary since 1999	Chief Compliance Officer (2004-Present), American Beacon Advisors, Inc.
John J. Okray (38)	Asst. Secretary since 2010	Deputy General Counsel (2012-Present) and Assistant General Counsel (2010- 2012), American Beacon Advisors, Inc.; Asst. Secretary (2010-Present), Lighthouse Holdings, Inc.; Asst. Secretary (2010-Present), Lighthouse Holdings Parent, Inc.; Vice President, OppenheimerFunds, Inc. (2004-2010).
Sonia L. Bates (55)	Asst. Treasurer since 2011	Director, Tax and Financial Reporting (2011 - Present) and Manager, Tax and Financial Reporting (2005-2010), American Beacon Advisors, Inc.; Asst. Treasurer (2011-Present), Lighthouse Holdings, Inc.; Asst. Treasurer (2011- Present), Lighthouse Holdings Parent, Inc.

* The Board has adopted a retirement plan that requires Trustees to retire no later than the last day of the calendar year in which they reach the age of 72, provided, however, that the board may determine to grant one or more annual exemptions to this requirement.

** Mr. Arpey is deemed to be an “interested person” of the Trust, as defined by the 1940 Act. Mr. Arpey previously served as CEO of AMR Corp., which has a material relationship with the Manager.

*** Mr. Feld is deemed to be an “interested person” of the Trust, as defined by the 1940 Act. Mr. Feld’s law firm of Akin, Gump, Strauss, Hauer & Feld LLP has provided legal services within the past two years to the Manager and one or more of the Trust’s sub-advisors.

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Delivery of Documents

eDelivery is NOW AVAILABLE – Stop traditional mail delivery and receive your

shareholder reports and summary prospectus on-line. Sign up at

www.americanbeaconfunds.com

If you invest in the Fund through a financial institution, you may be able to receive the Fund’s regulatory mailings, such as the Prospectus, Annual Report and Semi-Annual Report, by e-mail. If you are interested in this option, please go to www.icsdelivery.com and search for your financial institution’s name or contact your financial institution directly.

To obtain more information about the Fund:

By E-mail:	On the Internet:
american_beacon.funds@ambeacon.com	Visit our website at www.americanbeaconfunds.com
By Telephone:	By Mail:
Institutional, Y, Investor, and Advisor Classes Call (800) 658-5811 AMR ClassSM Call (800) 345-2345	American Beacon Funds P.O. Box 219643 Kansas City, MO 64121-9643
Availability of Quarterly Portfolio Schedules	Availability of Proxy Voting Policy and Records
In addition to the Schedule of Investments provided in each semi-annual and annual report, the Fund files a complete schedule of its portfolio holdings with the Securities and Exchange Commission (“SEC”) on Form N-Q as of the first and third fiscal quarters. The Fund’s Forms N-Q are available on the SEC’s website at www.sec.gov. The Forms N-Q may also be reviewed and copied at the SEC’s Public Reference Section, 100 F Street, NE, Washington, D.C. 20549-1520. Information regarding the operation of the SEC’s Public Reference Room may be obtained by calling 1-800-SEC-0330. A complete schedule of the Fund’s portfolio holdings is also available at www.americanbeaconfunds.com approximately twenty days after the end of each month.	A description of the policies and procedures the Fund uses to determine how to vote proxies relating to portfolio securities is available in the Fund’s Statement of Additional Information, is available free of charge on the Fund’s website www.americanbeaconfunds.com and by calling 1-800-967-9009 or by accessing the SEC’s website at www.sec.gov. The Fund’s proxy voting record for the most recent year ended June 30 is filed annually with the SEC on Form N-PX. The Fund’s Forms N-PX are available on the SEC’s website at www.sec.gov. The Fund’s proxy voting record may also be obtained by calling 1-800-967- 9009.

Fund Service Providers:

CUSTODIAN State Street Bank and Trust Boston, Massachusetts TRANSFER AGENT Boston Financial Data Services Kansas City, Missouri INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM Ernst & Young LLP Dallas, Texas DISTRIBUTOR Foreside Fund Services, LLC Portland, Maine

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

American Beacon Funds, American Beacon Balanced Fund, American Beacon Mid-Cap Value Fund and American Beacon Small Cap Value II Fund are service marks of American Beacon Advisors, Inc.

AR 10//12

About American Beacon Advisors

Since 1986, American Beacon Advisors has offered a variety of products and investment advisory services to numerous institutional and retail clients, including a variety of mutual funds, corporate cash management, and separate account management.

Our clients include defined benefit plans, defined contribution plans, foundations, endowments, corporations, financial planners, and other institutional investors. With American Beacon Advisors, you can put the experience of a multi-billion dollar asset management firm to work for your company.

Contents

President’s Message	1
Market and Performance Overviews	2-12
Schedules of Investments:
High Yield Bond Fund	17
Retirement Income and Appreciation Fund	26
Intermediate Bond Fund	31
Short-Term Bond Fund	40
Financial Highlights	62
Additional Information	Back Cover

An obligation rated ‘AAA’ has the highest rating assigned by Standard & Poor’s. The obligor’s capacity to meet its financial commitment on the obligation is extremely strong. An obligation rated ‘AA’ by Standard & Poor’s differs from the highest-rated obligations only to a small degree. The obligor’s capacity to meet its financial commitment on the obligation is very strong. An obligation rated ‘A’ by Standard & Poor’s is somewhat more susceptible to the adverse effects of changes in circumstances and economic conditions than obligations in higher-rated categories. However, the obligor’s capacity to meet its financial commitment on the obligation is still strong. An obligation rated ‘BBB’ by Standard & Poor’s exhibits adequate protection parameters. However, adverse economic conditions or changing circumstances are more likely to lead to a weakened capacity of the obligor to meet its financial commitment on the obligation. Obligations rated ‘BB’, ‘B’, ‘CCC’, ‘CC’, and ‘C’ by Standard & Poor’s are regarded as having significant speculative characteristics. ‘BB’ indicates the least degree of speculation and ‘C’ the highest. While such obligations will likely have some quality and protective characteristics, these may be outweighed by large uncertainties or major exposures to adverse conditions.

Duration is a measure of price sensitivity relative to changes in interest rates.

Any opinions herein, including forecasts, reflect our judgment as of the end of the reporting period and are subject to change. Each advisor’s strategies and each Fund’s portfolio composition will change depending on economic and market conditions. This report is not a complete analysis of market conditions, and, therefore, should not be relied upon as investment advice. Although economic and market information has been compiled from reliable sources, American Beacon Advisors, Inc. makes no representation as to the completeness or accuracy of the statements contained herein.

American Beacon Funds October 31, 2012

Dear Shareholders,   There’s no doubt that the high-yield market has been booming in recent times. The past 12 months have seen a record amount of new issues, with more than $335 billion of new supply coming to the high-yield market. Over that same time frame, $38.5 billion has flowed into high-yield bond funds. And the low default rate - just 2.67% of issuers defaulted over the 12-month period under review - has helped make this market attractive for many investors.   This appetite for yield has not been limited to only high-yield funds. All told, bond funds have taken in nearly $400 billion in the first ten months of 2012. Investors still see this as a market that can benefit fixed-income investors of all temperaments.

We’re pleased with the way that our fixed-income funds have performed in this favorable landscape. For the 12 months ended October 31, 2012:

• The American Beacon High Yield Bond Fund (Institutional Class) returned 13.12%.

• The American Beacon Retirement Income and Appreciation Fund (Investor Class) returned 5.75%.

• The American Beacon Intermediate Bond Fund (Institutional Class) returned 5.59%.

• The American Beacon Short-Term Bond Fund (Institutional Class) returned 2.72%.

Thank you for your continued investment in the American Beacon Funds. For additional information about the Funds or to access your account information, please visit our website at www.americanbeaconfunds.com.

Best Regards,

Gene L. Needles, Jr.

President

American Beacon Funds

1

Bond Market Overview

October 31, 2012 (Unaudited)

For the 12-month period ended October 31, 2012, the Barclays Capital Aggregate Index returned 5.3%, and the BofA Merrill Lynch 1-3 Year Government/Corporate Index returned 1.3%. During that time, central banks around the world have continued to respond to weak economic news with more balance sheet expansion, in hopes of promoting stronger growth. In the U.S., concern over the unemployment rate and slow growth prompted the Federal Open Market Committee to institute yet another round of quantitative easing (QE) in September 2012. Unlike the first two rounds of QE, this program is open-ended, and policymakers have committed to maintaining low interest rates for an extended period with little concern for the ramifications.

The Fed’s “all-in” action is the latest attempt to stimulate economic activity by increasing home sales, creating mortgage refinancing opportunities for homeowners and inciting a wealth effect by reflating risk assets. There is no doubt that the monetary actions implemented since the financial crisis have muted the negative effects of consumer and corporate deleveraging. Retail sales, auto sales, consumer confidence and consumer spending have also been stronger. There is even encouraging news in the housing sector, as both sales and prices have enjoyed a recent rise, while foreclosures are reported to be normalizing. The question that remains is whether extraordinary monetary policy measures alone can create lasting economic growth.

The unemployment rate has remained stubbornly high, on the other hand, and the broader measure of labor underutilization that includes people involuntarily working part-time is at 14.7%, illustrating the economic malaise that remains. Business leaders are hoping to see a responsible resolution for the “fiscal cliff” issues, including the U.S. government debt ceiling limit and a reasonable long-term tax policy. Their confidence level is at its lowest since 2009, coincidentally the end of the last recession.

Europe also benefited from central bank actions. When the European debt crisis initially surfaced in 2010, the markets believed a quick and easy solution was possible. However, by late 2011, with conditions in Greece rapidly deteriorating,

investors prepared for the worst and began to shun the next weakest links, Spain and Italy, as the situation spiraled out of control.

In December 2011, the European Central Bank (ECB) announced its first Long Term Refinancing Operation (LTRO), which offered unlimited money to banks at a very low interest rate. Three months later, the ECB had to follow up with a second LTRO to assuage the markets again. These operations were helpful in that they added liquidity to the European banking sector, but they did not address the underlying problem of overly indebted governments.

By July, the markets were demanding a bolder response. After initial reluctance, and with Spanish and Italian bond yields skyrocketing, the ECB finally acknowledged that it was prepared to do “whatever is necessary” to stabilize the markets. Details of this pledge followed in September 2012 when the ECB said it would purchase unlimited amounts of short-term sovereign debt. Any country requesting such support would be required to abide by stringent fiscal conditions.

In this difficult global environment, domestic interest rates continued to fall, with the yield on 10-year Treasury bonds falling from 2.11% on October 31, 2011, to 1.69% on October 31, 2012. In addition to declining “risk-free” rates, investment-grade credit yield spreads narrowed significantly, from 183 basis points (1.83%) to 128 basis points (1.28%), over the same period.

Mortgage rates have reached a low of 3.36%, a level not seen since the 1950s. Despite such low rates, mortgage refinancing activity remains at roughly 50% of the May 2003 peak due to borrower credit issues. QE3 will support continued strong demand for mortgage-backed securities as the Fed buys $40 billion every month for the foreseeable future.

After the November election, the market’s attention will turn to fiscal-cliff negotiations during the lame-duck congressional session. The market seems to believe that any potential economic issues will be avoided by a temporary patch for difficult issues, but some tax increases may be

2

Bond Market Overview

October 31, 2012 (Unaudited)

likely and the overall impact is likely to keep economic growth slow into 2013.

In fact, top-line revenue growth has become increasingly hard to generate, so corporate earnings may be pressured. Still, with bond funds having absorbed $267 billion in inflows so far in 2012, the technical demand for fixed-income assets remains incredibly strong.

3

High Yield Bond Market Overview

October 31, 2012 (Unaudited)

After a 2011 calendar year that saw the high-yield index return its approximate coupon, in the 12 months ended October 31, 2012, the high-yield market benefited from price appreciation as well as its coupon. For the period, the JPMorgan Global High-Yield Index achieved a 14.00% total return. At the same time, high-yield bonds compared favorably against riskier asset classes as the S&P 500 Index gained 15.21% and the Russell 2000 Index returned 12.08%. Despite trading in sympathy with European sentiment over the last year, high yield remained fairly resilient, never posting back-to-back months of negative performance.

For the 12-month time period, the spread — or the differential between high-yield securities and Treasury securities — of the high-yield market fell from 834 basis points (8.34%) at the end of September 2011 to 594 basis points (5.94%) at the end of October 2012, tightening by 240 basis points (2.40%). As one would expect in a spread-tightening environment, lower quality credits outperformed, which was a reversal of much of calendar 2011 when BB-rated credits outperformed.

With global rates low across all asset classes, the high-yield market was a popular place for investors to find yield, and flows into the asset class were strong. Mutual fund flows totaled $38.5 billion over the last 12 months, which helped support market technicals. This led to a record amount of new issues, with more than $335 billion of new supply coming to the high-yield market.

The default rate remained low during the last 12 months, at 1.77% when calculated on a par amount and 2.67% when calculated on the number of issuers defaulting. In fact, there were no defaults in the marketplace in either September or October of this year. The distressed portion of the market is also quite low with less than 2.5% of the market trading at prices of less than 70 cents on the dollar. “Rising stars” generally outpaced “fallen angels,” with one of the top high-yield issuers, Ford Motor, returning to the investment-grade universe.

Headwinds for credit included more activity intended specifically to benefit shareholders as well as slow economic growth, even though tail risk associated with the European crisis and a Chinese hard landing seems to have abated. Even if there is an uptick in acquisition- and shareholder-friendly activity, this will largely be catch-up for the lack of activity over the last three years.

Inflows into the asset class have been generally strong although they ebbed somewhat toward the end of the reporting period. The aggressive issuance of the last several months may still prove to be an anomaly. Generally, issuance in the last year was healthy: refinancing for focused, high quality companies.

Among the sectors, Housing was the top industry performer, while Financial Services, Broadcasting and Lodging also outperformed for the 12-month time period. Energy, Technology and Metals and Mining were among the worst-performing sectors of the year in high yield.

4

American Beacon High Yield Bond Fund^SM

Performance Overview

October 31, 2012 (Unaudited)

The Investor Class of the High Yield Bond Fund (the “Fund”) returned 12.86% for the twelve months ended October 31, 2012. The Fund trailed the JPMorgan Global High-Yield Index (the “Index”) return of 14.00%, but outperformed the Lipper High Current Yield Funds Index return of 12.72% for the period.

Comparison of Change in Value of a $10,000 Investment

For the Period from 10/31/2002 through 10/31/12

	Annualized Total Returns
	Periods Ended 10/31/12									Value of
	1 Year			5 Years			10 Years			$10,000 10/31/02- 10/31/12
Institutional Class(1,7)		13.12	%		6.90	%		8.26	%	$	22,124
Y Class(1,3,7)		12.74	%		6.77	%		8.20	%		21,992
Investor Class(1,7)		12.86	%		6.62	%		7.97	%		21,527
A Class with sales charge (1,4,7)		7.68	%		5.66	%		7.47	%		20,561
A Class without sales charge (1,4,7)		13.01	%		6.68	%		8.00	%		21,584
C Class with sales charge (1,5,7)		11.06	%		6.26	%		7.79	%		21,163
C Class without sales charge (1,5,7)		12.06	%		6.26	%		7.79	%		21,163
AMR Class (1,2,7)		13.46	%		7.19	%		8.42	%		22,434
JPMorgan Global High-Yield Index (6)		12.72	%		6.79	%		9.35	%		24,453
Lipper High Current Yield Funds Index (6)		14.00	%		9.53	%		11.11	%		28,678

1. Performance shown is historical and is not indicative of future returns. Investment returns and principal value will vary, and shares may be worth more or less at redemption than at original purchase. Performance shown is as of date indicated, and current performance may be lower or higher than the performance data quoted. To obtain performance as of the most recent month end, please visit www.americanbeaconfunds.com or call 1-800-967-9009. Fund performance in the table above does not reflect the deduction of taxes a shareholder would pay on distributions or the redemption of shares. A portion of the fees charged to the Institutional Class of the Fund was waived through 2004.

Performance prior to waiving fees was lower than the actual returns shown for periods through 2004.

2. Fund performance for the ten-year period represents the total return achieved by the Institutional Class from 10/31/02 up to 9/4/07, the inception date of the AMR Class, and the returns of the AMR Class since its inception. Expenses of the AMR Class are lower than those of the Institutional Class. As a result, total returns shown may be lower than they would have been had the AMR Class been in existence since 10/31/02.

3. Fund performance for the five-year and ten-year periods represent the returns achieved by the Institutional Class from 10/31/02 up to 3/1/10, the inception date of the Y Class, and the returns of the Y Class since its inception. Expenses of the Y Class are higher than those of the Institutional Class. As a result, total returns shown may be higher than they would have been had the Y Class been in existence since 10/31/02.

4. Fund performance for the five-year and ten-year periods represent the returns achieved by the Investor Class from 10/31/02 up to 5/17/10, the inception date of the A Class, and the returns of the A Class since its inception. Expenses of the A Class are higher than those of the Investor Class. As a result, total returns shown may be higher than they would have been had the A Class been in existence since 10/31/02. The maximum sales charge for A Class is 4.75%.

5. Fund performance for the five-year and ten-year periods represent the returns achieved by the Investor Class from 10/31/02 up to 9/1/10, the inception date of the C Class, and the returns of the C Class since its inception. Expenses of the C Class are higher than those of the Investor Class. As a result, total returns shown may be higher than they would have been had the C Class been in existence since 10/31/02. The maximum contingent deferred sales charge for C Class is 1.00% for shares redeemed within one year of the date of purchase.

6. The JPMorgan Global High-Yield Index (“JPMorgan Index”) is an unmanaged index of fixed income securities with a maximum credit rating of BB+ or Ba1. Issues must be publicly registered or issued under Rule 144A under the Securities Act of 1933, with a minimum issue size of $75 million (par amount). A maximum of two issues per issuer are included in the JPMorgan Index. Convertible bonds, preferred stock, and floating-rate bonds are excluded from the JPMorgan Index. The Lipper High Current Yield Funds Index tracks the results of the 30 largest mutual funds in the Lipper High Current Yield Funds category. Lipper is an independent mutual fund research and ranking service. One cannot directly invest in an index.

7. The total annual Fund operating expense ratio set forth in the most recent Fund prospectus for the Institutional, Y, Investor, A, C, and AMR Class shares was 0.89%, 27.03%, 1.10%, 3.94%, 3.16%, and 0.61%, respectively. The expense ratios above may vary from the expense ratios presented in other sections of this report that are based on expenses incurred during the period covered by this report.

For the period, the Fund’s returns relative to the Index were hampered by its positioning within various industries, while strong issue selection helped to offset some of the adverse positioning.

5

American Beacon High Yield Bond Fund^SM

Performance Overview

October 31, 2012 (Unaudited)

From an industry standpoint, issue selections in the Wireless, Banking, and Independent Energy industries benefited returns. Conversely, the Fund’s holdings trailed those within the Property & Casualty Insurance and Transportation Services industries.

From an industry allocation perspective, the Fund’s relative returns were diminished by underweighting Home Building (up 31.4%) and Building Products (up 21.9%).

From a credit quality perspective, issue selections in the B and CCC-rated categories had a positive impact to the Fund’s relative returns.

From a credit quality allocation perspective, overweighting the CCC-rated securities (up 13.9%) added value, while underweighting BB-rated securities (up 13.6%) detracted.

The sub-advisors’ “bottom-up”, research intensive investment process, which focuses on companies with strong cash flow and fundamental credit strength, remains in place.

Top Ten Holdings

	% of Net Assets
Clear Channel Communications, Inc., 9.00%, Due 3/1/21		0.9	%
Cenveo Corp., 8.875%, Due 2/1/18		0.9	%
Sprint Nextel Corp., 8.375%, Due 8/15/17		0.7	%
Nuveen Investments, Inc., 9.125%, Due 10/15/17, 144A		0.6	%
Reynolds Group Issuer Inc., 8.50%, Due 5/15/18		0.6	%
Synovus Financial Corp., 7.875%, Due 2/15/19		0.6	%
Chesapeake Energy Corp., 6.625%, Due 8/15/20		0.6	%
Clear Channel Worldwide Holdings, Inc., 7.625%, Due 3/15/20		0.5	%
MacDermid, Inc., 9.50%, Due 4/15/2017, 144A		0.5	%
Samson Investment Co., 9.75%, Due 2/15/2020, 144A		0.5	%

Sector Allocation

	% of Fixed Income
Corporate Obligations - Industrials		72.2	%
Corporate Obligations - Financials		13.8	%
Corporate Obligations - Utilities		11.6	%
Equity		1.6	%
Convertible Obligations		0.8	%

Investing in debt securities entails interest rate risk, which is the risk that debt securities will decrease in value with increases in market interest rates. Investing in foreign securities entails additional risk not associated with domestic securities, such as currency fluctuations, economic and political instability and differences in accounting standards. Investing in the securities of small and mid-capitalization companies involves greater risk and the possibility of greater price volatility than investing in larger capitalization and more established companies. Credit risk is the risk that the issuer of a bond will fail to make timely payment of interest or principal; and the decline in an issuer’s credit rating can cause the price of its bonds to go down. Investing in high yield securities involves additional risks when compared to investing in investment-grade securities. These include a greater risk of default or bankruptcy and an increased sensitivity to financial difficulties or changes in interest rates. Please see the prospectus for a complete discussion of the Fund’s risks.

6

American Beacon Retirement Income and Appreciation Fund^SM

Performance Overview

October 31, 2012 (Unaudited)

The Investor Class of the Retirement Income and Appreciation Fund (the “Fund”) returned 5.75% for the twelve months ended October 31, 2012. Its benchmark, a blend of 75% Barclays Capital Aggregate Index (the “Aggregate Index”) and 25% BofA Merrill Lynch All U.S. Convertibles Index (the “ML Index”) (combined the “Retirement Income and Appreciation Composite Index”), returned 6.30%. The Fund’s peer group, the Lipper Intermediate Investment Grade Index, returned 8.09% for the same period.

Comparison of Change in Value of a $10,000 Investment

For the Period from 7/1/03* through 10/31/12

*Inception of Fund

	Annualized Total Returns
	Periods Ended 10/31/12									Value of
							Since			$10,000
	1 Year			5 Years			Incep. (7/1/03)			7/1/03- 10/31/12
Y Class(1,2,7)		6.10	%		5.35	%		4.94	%	$	15,681
Investor Class(1,7)		5.75	%		5.22	%		4.86	%		15,582
A Class with sales charge(1,3,7)		2.63	%		4.20	%		4.31	%		14,833
A Class without sales charge(1,3,7)		5.78	%		5.21	%		4.86	%		15,575
C Class with sales charge(1,4,7)		3.87	%		4.82	%		4.66	%		15,294
C Class without sales charge(1,4,7)		4.87	%		4.82	%		4.63	%		15,294
Retirement Income and Appreciation Composite Index(6)		6.30	%		5.63	%		5.31	%		16,206
Barclays Capital Aggregate Index (5)		5.25	%		6.38	%		5.39	%		15,569
BofA Merrill Lynch All U.S. Convertibles Index (5)		9.15	%		2.37	%		6.01	%		17,245
Lipper Intermediate Investment Grade Index (5)		8.09	%		6.50	%		5.13	%		15,952

1. Performance shown is historical and is not indicative of future returns. Investment returns and principal value will vary, and shares may be worth more or less at redemption than at original purchase. Performance shown is as of date indicated and current performance may be lower or higher than the performance data quoted. To obtain performance as of the most recent month end, please visit www.americanbeaconfunds.com or call 1-800-967-9009. Fund

performance in the table above does not reflect the deduction of taxes a shareholder would pay on distributions or the redemption of shares.

2. Fund performance for the five-year and since inception periods represent the returns achieved by the Investor Class from 7/1/03 up to 3/1/10, the inception date of the Y Class, and the returns of the Y Class since its inception. Expenses of the Y Class are lower than those of the Investor Class. As a result, total returns shown may be lower than they would have been had the Y Class been in existence since 7/1/03.

3. Fund performance for the five-year and since inception periods represent the returns achieved by the Investor Class from 7/1/03 up to 5/17/10, the inception date of the A Class, and the returns of the A Class since its inception. Expenses of the A Class are higher than those of the Investor Class. As a result, total returns shown may be higher than they would have been had the A Class been in existence since 7/1/03. The maximum sales charge for A Class is 4.75%.

4. Fund performance for the five-year and since inception periods represent the returns achieved by the Investor Class from 7/1/03 up to 9/1/10, the inception date of the C Class, and the returns of the C Class since its inception. Expenses of the C Class are higher than those of the Investor Class. As a result, total returns shown may be higher than they would have been had the C Class been in existence since 7/1/03. The maximum contingent deferred sales charge for C Class is 1.00% for shares redeemed within one year of the date of purchase.

5. The Barclays Capital Aggregate Index represents returns of the Barclays Capital Gov./Credit Intermediate Index (“Intermediate Index”) up to October 31, 2006 and the Barclays Capital Aggregate Index (“Aggregate Index”) thereafter. The Intermediate Index is an unmanaged index of investment grade corporate and government debt issues with maturities between one and ten years. The Aggregate Index is a market value weighted index of government, corporate, mortgage-backed and asset-backed fixed-rate debt securities of all maturities. The BofA Merrill Lynch All U.S. Convertibles Index is an unmanaged index of domestic securities of all quality grades that are convertible into U.S. dollar-denominated common stock, ADRs or cash equivalents. The Lipper Intermediate Investment Grade Index tracks the results of the 30 largest mutual funds in the Lipper Intermediate Investment Grade Funds category. Lipper is an independent mutual fund research and ranking service. One cannot directly invest in an index.

6. To reflect the Fund’s allocation of its assets between investment grade fixed-income securities and convertible securities, the returns of the Barclays Capital Aggregate Index and the BofA Merrill Lynch All U.S. Convertibles Index have been combined in a 75%/25% proportion.

7. The total annual Fund operating expense ratios set forth in the most recent Fund prospectus for the Y, Investor, A, and C Class shares was 1.81%, 1.11%, 2.01%, and 2.00%, respectively. The expense ratios above may vary from the expense ratios presented in other sections of this report that is based on expenses incurred during the period covered by this report.

The Fund’s assets have been allocated approximately 75% to American Beacon Advisors, Inc. (the “Manager”) that invests primarily in income producing, short and intermediate-term investment grade bonds and 25% to a sub-advisor that invests in securities including convertible bonds, convertible

7

American Beacon Retirement Income and Appreciation Fund^SM

Performance Overview

October 31, 2012 (Unaudited)

preferreds, high yield bonds, and equities in order to try to enhance the return of the overall Fund.

During the twelve-month period, the investment grade bond portion of the Fund returned 7.6% outperforming the 5.3% return for the Aggregate Index. This segment of the Fund’s outperformance can be attributed to a combination of favorable allocation decisions among sectors and credit quality categories, coupled with slightly stronger security selection within the various credit quality ranges.

During the period, the overweight allocation to Corporate and Commercial Mortgage Backed securities enhanced relative returns. Within the Corporate sector, the Fund’s overweight to Financials was a primary driver of the excess relative returns. In addition, the Commercial Mortgage Backed category was one of the strongest within the Aggregate Index, (up 10.5%), although the returns generated by the Fund’s holdings were not as strong as those in the Aggregate Index.

The Fund’s positioning and security selection among the various credit quality categories aided returns relative to the benchmark. During the period, lower quality securities generally outperformed those with a higher quality rating. A combination of being underweight to Treasury securities and overweight in the lower end of the investment grade spectrum (A & Baa) benefited the Fund from an allocation perspective. In addition, the positions held by the Fund outperformed those within the same categories of the Aggregate Index.

The remaining portion of the Fund, managed by the Fund’s sub-advisor, returned 4.6%. These results trailed the 9.2% return of the ML Index. This segment of the Fund’s underperformance can be attributed to less favorable portfolio positioning among economic sectors.

An overweight allocation to holdings in the Materials, Energy, and Technology sectors hindered relative returns as these were some of the weaker sectors. Additionally, having a smaller weight within the Financials sector also detracted from relative returns. While the Fund’s securities outperformed those in the ML Index during the period, those excess returns were not enough to offset the weaker relative returns from its sector positioning.

The Manager and the Fund’s sub-advisor remain focused on the Fund’s investment objectives of generating income and capital appreciation.

Top Ten Holdings

	% of Net Assets
Government National Mortgage Association, 3.20%, Due 11/16/44		1.9	%
Freddie Mac Gold Pool, 3.50%, Due 6/1/42		1.8	%
Government National Mortgage Association, 2.70%, Due 4/16/43		1.8	%
Government National Mortgage Association, 2.17%, Due 4/16/41		1.8	%
Government National Mortgage Association, 2.21%, Due 12/16/2035		1.6	%
Fannie Mae Pool, 5.00%, Due 1/1/41		1.5	%
Government National Mortgage Association, 2.543%, Due 9/16/44		1.4	%
NCUA Guaranteed Notes, 0.59%, Due 3/11/2020		1.2	%
NCUA Guaranteed Notes, 0.64%, Due 10/7/2020		1.2	%
Ally Master Owner Trust, 1.21%, Due 6/15/2017		1.1	%

Sector Allocation

	% of Fixed Income
Corporate		43.5	%
Mortgage-Backed		25.2	%
U.S. Treasury		15.0	%
Convertible Obligations		10.0	%
Commercial Mortgage-Backed Securities		3.1	%
Asset-Backed Obligations		2.3	%
Foreign Obligations		0.7	%
Agency		0.2	%

Sector Allocation

	% of Equities
Information Technology		36.8	%
Industrials		17.2	%
Energy		16.8	%
Financials		15.1	%
Materials		5.2	%
Consumer Staples		5.1	%
Health Care		3.8	%

Investing in debt securities entails interest rate risk, which is the risk that debt securities will decrease in value with increases in market interest rates. Investing in foreign securities entails additional risk not associated with domestic securities, such as currency fluctuations, economic and political instability and differences in accounting standards. Credit risk is the risk that the issuer of a bond will fail to make timely payment of interest or principal; and the decline in an issuer’s credit rating can cause the price of its bonds to go down. Please see the prospectus for a complete discussion of the Fund’s risks.

8

American Beacon Intermediate Bond Fund^SM

Performance Overview

October 31, 2012 (Unaudited)

The Investor Class of the Intermediate Bond Fund (the “Fund”) returned 5.20% for the twelve months ended October 31, 2012, trailing the Barclays Capital Aggregate Index (the “Index”) return of 5.25% and the Lipper Intermediate Investment Grade Debt Funds Index return of 8.09% for the same period.

Comparison of Change in Value of a $10,000 Investment

For the Period from 10/31/02 through 10/31/12

	Annualized Total Returns									Value of
	Periods Ended 10/31/12									$10,000
	1 Year			5 Years			10 Years			10/31/02- 10/31/12
Institutional Class(1,7)		5.59	%		6.50	%		5.44	%	$	16,986
Y Class(1,3,7)		5.33	%		6.43	%		5.41	%		16,934
Investor Class (1,2,7)		5.20	%		6.14	%		5.26	%		16,703
A Class with sales Charge(1,4,7)		-0.03	%		5.01	%		4.70	%		15,826
A Class without sales Charge(1,4,7)		4.99	%		6.03	%		5.21	%		16,616
C Class with sales Charge(1,5,7)		3.21	%		5.71	%		5.05	%		16,371
C Class without sales Charge(1,5,7)		4.21	%		5.71	%		5.05	%		16,371
Barclays Capital Agg. Index (6)		5.25	%		6.38	%		5.39	%		16,910
Lipper Intermediate Inv. Grade Index (6)		8.09	%		6.50	%		5.54	%		17,148

1. Performance shown is historical and is not indicative of future returns. Investment returns and principal value will vary, and shares may be worth more or less at redemption than at original purchase. Performance shown is as of date indicated, and current performance may be lower or higher than the performance data quoted. To obtain performance as of the most recent month end, please visit www.americanbeaconfunds.com or call 1-800-967-9009. Fund performance in the table above does not reflect the deduction of taxes a shareholder would pay on distributions or the redemption of shares.

2. Fund performance for the five-year and ten-year periods represent the total returns achieved by the Institutional Class up to 3/2/09, the inception date of the Investor Class, and the returns of the Investor Class since its inception. Expenses of the Investor Class are higher than those of the Institutional Class. As a result, total returns shown may be higher than they would have been had the Investor Class been in existence since 10/31/02.

3. Fund performance for the five-year and ten-year periods represent the total returns achieved by the Institutional Class from 10/31/02 up to 3/1/10, the inception date of the Y Class, and the returns of

the Y Class since its inception. Expenses of the Y Class are higher than those of the Institutional Class. As a result, total returns shown may be higher than they would have been had the Y Class been in existence since 10/31/02.

4. Fund performance for the five-year and ten-year periods represent the total returns achieved by the Institutional Class from 10/31/02 through 3/2/09, the Investor Class from 3/2/09 up to 5/17/10, the inception date of the A Class, and the returns of the A Class since its inception. Expenses of the A Class are higher than those of the Institutional and Investor Classes. As a result, total returns shown may be higher than they would have been had the A Class been in existence since 10/31/02. The maximum sales charge for A Class is 4.75%.

5. Fund performance for the five-year and ten-year periods represent the total returns achieved by the Institutional Class from 10/31/02 through 3/2/09, the Investor Class from 3/2/09 up to 9/1/10, the inception date of the C Class, and the returns of the C Class since its inception. Expenses of the C Class are higher than those of the Institutional and Investor Classes. As a result, total returns shown may be higher than they would have been had the C Class been in existence since 10/31/02. The maximum contingent deferred sales charge is 1.00% for shares redeemed within one year of the date of purchase.

6. The Barclays Capital Aggregate Index is a market value weighted index of government, corporate, mortgage-backed and asset-backed fixed-rate debt securities of all maturities. The Lipper Intermediate Investment Grade Index tracks the results of the 30 largest mutual funds in the Lipper Intermediate Investment Grade Funds category. Lipper is an independent research and ranking service. One cannot directly invest in an index.

7. The total annual Fund operating expense ratios set forth in the most recent Fund prospectus for the Institutional, Y, Investor, A, and C Class shares was 0.36%, 0.74%, 0.87%, 1.14%, and 1.87%, respectively. The expense ratios above may vary from the expense ratios presented in other sections of this report that is based on expenses incurred during the period covered by this report.

The Fund’s modest underperformance relative to the Index was driven largely by weaker security selection within sectors and credit quality categories. However, the Fund’s weightings in the various sectors and credit quality categories offset much of the poor security selection.

During the period, the overweight allocation to Corporate securities helped relative returns. The Fund’s overweight to the Financial sector was a positive as Financial securities were one of the best performing categories in the market (up 12.8%). Particularly, overweighting the Banking industry proved most beneficial.

The performance from the Fund’s Commercial Mortgage Backed and Corporate securities trailed those in the Index and hampered relative returns. The Commercial Mortgage Backed and Corporate categories were two of the strongest within the Index, (up 10.5% and 10.4%,

9

American Beacon Intermediate Bond Fund^SM

Performance Overview

October 31, 2012 (Unaudited)

respectively) and, while the Fund’s holdings participated in the positive results, the returns generated were not as strong as those from the Index.

The Fund’s positioning with the various credit quality categories helped returns relative to the benchmark. Maintaining an underweight allocation to Agency securities was a positive in addition to having a higher allocation to A-rated securities. Performance from the Fund’s Aaa (highest rated and considered to have minimal credit risk) lagged those in the Index (2.3% vs. 4.8%) and hindered performance on a relative basis.

The Fund’s duration positioning during the period remained similar to the duration profile of the Index. As interest rates declined in the maturity range in which the Fund typically invests (3 - 7 years), its holdings participated in the positive price gains. Securities with a duration between 5-6 years generated the strongest results gaining 14.2%.

The Fund’s investment managers remain focused on a conservative approach toward investing in the bond market and on issuer-specific opportunities.

Top Ten Holdings

	% of Net Assets
Fannie Mae Pool, 4.50%, Due 4/1/41		1.7	%
Government National Mortgage Association, 2.17%, Due 4/16/41		1.5	%
Fannie Mae Pool, 4.00%, Due 12/1/40		1.4	%
Freddie Mac Gold Pool, 3.50%, Due 6/1/42		1.3	%
Fannie Mae Pool, 5.00%, Due 5/1/35		1.3	%
Freddie Mac Gold Pool, 3.00%, Due 8/1/42		1.2	%
Freddie Mac Gold Pool, 4.00%, Due 10/1/39		1.2	%
Fannie Mae Pool, 4.00%, Due 9/1/41		1.0	%
Government National Mortgage Association, 1.732%, Due 5/16/42		0.9	%
Wachovia Corp., 5.75%, Due 2/1/18		0.9	%

Sector Allocation

	% of Fixed Income
Corporate		46.5	%
Mortgage-Backed		32.7	%
U.S. Treasury		14.9	%
Asset-Backed Obligations		2.6	%
Commercial Mortgage-Backed Securities		2.5	%
Sovereign Obligations		0.7	%
Agency		0.1	%

Investing in debt securities entails interest rate risk, which is the risk that debt securities will decrease in value with increases in market interest rates. Investing in foreign securities entails additional risk not associated with domestic securities, such as currency fluctuations, economic and political instability and differences in accounting standards. Credit risk is the risk that the issuer of a bond will fail to make timely payment of interest or principal; and the decline in an issuer's credit rating can cause the price of its bonds to go down. Please see the prospectus for a complete discussion of the Fund’s risks.

10

American Beacon Short-Term Bond Fund^SM

Performance Overview

October 31, 2012 (Unaudited)

The Investor Class of the Short-Term Bond Fund (the “Fund”) returned 2.28% for the twelve months ended October 31, 2012, which outperformed the BofA Merrill Lynch 1-3 Year Gov/Corp Index (the “Index”) return of 1.33% but underperformed the Lipper Short Investment Grade Bond Funds Index (the “Lipper”) return of 3.70%.

Comparison of Change in Value of a $10,000 Investment

For the Period from 10/31/02 through 10/31/12

	Annualized Total Returns									Value of
	Periods Ended 10/31/12									$10,000
	1 Year			5 Years			10 Years			10/31/02- 10/31/12
Institutional Class(1,6)		2.72	%		3.06	%		3.26	%	$	13,787
Y Class(1,2,6)		3.30	%		2.93	%		3.24	%		13,772
Investor Class(1,6)		2.28	%		3.21	%		2.88	%		13,175
A Class with sales Charge(1,3,6)		-0.30	%		2.07	%		2.51	%		12,817
A Class without sales Charge(1,3,6)		2.22	%		2.60	%		2.77	%		13,143
C Class with sales Charge(1,4,6)		0.98	%		2.18	%		2.59	%		12,950
C Class without sales Charge(1,4,6)		1.98	%		2.18	%		2.59	%		12,950
Lipper Short Inv. Grade Bond Funds Index (5)		3.70	%		3.17	%		3.10	%		13,580
BofA Merrill Lynch 1-3Yr. Gov./Corp Index(5)		1.33	%		3.19	%		3.19	%		13,695

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

2. Fund performance for the five-year and ten-year periods represent the total returns achieved by the Institutional Class from 10/31/02 through 3/1/10, the inception date of the Y Class, and the returns

of the Y Class since its inception. Expenses of the Y Class are higher than those of the Institutional Class. As a result, total returns shown may be higher than they would have been had the Y Class been in existence since 10/31/02.

3. Fund performance for the five-year and ten-year periods represent the total returns achieved by the Investor Class from 10/31/02 up to 5/17/10, the inception date of the A Class, and the returns of the A Class since its inception. Expenses of the A Class are higher than those of the Investor Class. As a result, total returns shown may be higher than they would have been had the A Class been in existence since 10/31/02. The maximum sales charge for A Class is 2.50%.

4. Fund performance for the five-year and ten-year periods represent the total returns achieved by the Investor Class from 10/31/02 up to 9/1/10, the inception date of the C Class, and the returns of the C Class since its inception. Expenses of the C Class are higher than those of the Investor Class. As a result, total returns shown may be higher than they would have been had the C Class been in existence since 10/31/02. The maximum contingent deferred sales charge is 1.00% for shares redeemed within one year of the date of purchase.

5. The BofA Merrill Lynch 1-3 Yr. Gov./Corp. Index is a market value weighted performance benchmark for government and corporate fixed-rate debt securities with maturities between one and three years. The Lipper Short Investment Grade Bond Funds Index tracks the results of the 30 largest mutual funds in the Lipper Short Investment Grade Bond Funds category. Lipper is an independent mutual fund research and ranking service. One cannot directly invest in an index.

6. The total annual Fund operating expense ratio set forth in the most recent Fund prospectus for the Institutional, Y, Investor, A, and C Class shares was 0.38%, 1.44%, 0.91%, 1.39%, and 2.48%, respectively. The expense ratios above may vary from the expense ratios presented in other sections of this report that are based on expenses incurred during the period covered by this report.

During the period, the Fund was overweight in the various credit sectors, primarily Financials, which outperformed as markets recovered following the European Central Bank’s aggressive policy measures.

The Fund’s overweight positions included investment-grade Corporates, Asset-Backeds, and Agency-Backed Mortgages - all of which outperformed Treasuries during the period. The Fund generally remains overweight in the various credit sectors to generate incremental yield-to-maturity compared to the Index.

Also during the period, the Fund’s duration was shorter than that of the Index, which helped as interest rates rose slightly along the short end of the yield curve. Given the unusually low levels of interest rates, we have maintained a short duration to protect the Fund from an ultimate rise in rates. While a rise in rates does not appear to be

11

American Beacon Short-Term Bond Fund^SM

Performance Overview

October 31, 2012 (Unaudited)

imminent, the absolute low level of yields warrants a more defensive approach towards duration.

In the mean time, we continue to look for opportunity in this low interest rate environment and strive to protect the Fund from volatility across the globe. We will maintain our conservative approach towards credit risk and seek to outperform over the long term on a risk-adjusted basis.

Top Ten Holdings

	% of Net Assets
NCUA Guaranteed Notes, 0.59%, Due 3/11/20		2.6	%
National Credit Union Administration, 0.678%, Due 1/8/20		2.5	%
Government National Mortgage Association, 2.25%, Due 5/16/33		1.7	%
Government National Mortgage Association, 2.45%, Due 7/16/32		1.7	%
Ally Master Owner Trust, 1.031%, Due 9/15/16		1.7	%
Government National Mortgage Association, 1.864%, Due 8/16/31		1.5	%
ING Bank N.V., 1.808%, Due 6/9/2014, 144A		1.3	%
Government National Mortgage Association, 2.45%, Due 7/16/38		1.3	%
National Australia Bank Ltd., 1.416%, Due 7/25/14, 144A		1.3	%
MetLife Institutional Funding II, 1.481%, Due 4/4/14, 144A		1.3	%

Sector Allocation

	% of  Fixed Income
Corporate		48.3	%
Commercial Mortgage-Backed Securities		20.4	%
Asset-Backed Obligations		14.1	%
Mortgage-Backed		12.5	%
U.S. Treasury		4.7	%

Investing in debt securities entails interest rate risk, which is the risk that debt securities will decrease in value with increases in market interest rates. Investing in foreign securities entails additional risk not associated with domestic securities, such as currency fluctuations, economic and political instability and differences in accounting standards. Credit risk is the risk that the issuer of a bond will fail to make timely payment of interest or principal; and the decline in an issuer’s credit rating can cause the price of its bonds to go down. Please see the prospectus for a complete discussion of the Fund’s risks.

12

American Beacon Funds^SM

Fund Expenses

October 31, 2012 (Unaudited)

Fund Expense Example

As a shareholder of a Fund, you incur two types of costs: (1) transaction costs, including redemption fees if applicable, and (2) ongoing costs, including sales charges (loads) on purchase payments including management fees, administrative service fees, distribution (12b-1) fees, and other Fund expenses. The examples below are intended to help you understand the ongoing cost (in dollars) of investing in a particular Fund and to compare these costs with the ongoing costs of investing in other mutual funds. The examples are based on an investment of $1,000 invested at the beginning of the period in each Class and held for the entire period from May 1, 2012 through October 31, 2012.

Actual Expenses

The following tables provide information about actual account values and actual expenses. You may use the information on this page, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the “Expenses Paid During Period” for the applicable Fund to estimate the expenses you paid on your account during this period. Shareholders of the Investor and Institutional Classes that invest in a Fund through an IRA may be subject to a custodial IRA fee of $15 that is typically deducted each December. If your account was subject to a custodial IRA fee during the period, your costs would have been $15 higher.

Institutional Class	High Yield Bond  Fund			Intermediate Bond Fund			Short-Term Bond Fund
Beginning Account Value 5/1/12	$	1,000.00		$	1,000.00		$	1,000.00
Ending Account Value 10/31/12	$	1,060.62		$	1,033.25		$	1,013.63
Expenses Paid During Period 5/1/12 - 10/31/12 *	$	4.97		$	1.79		$	2.02
Annualized Expense Ratio		0.96	%		0.35	%		0.40	%

Y Class	High Yield Bond Fund			Retirement Income and Appreciation Fund			Intermediate Bond Fund			Short-Term Bond Fund
Beginning Account Value 5/1/12	$	1,000.00		$	1,000.00		$	1,000.00		$	1,000.00
Ending Account Value 10/31/12	$	1,059.38		$	1,032.19		$	1,031.83		$	1,015.60
Expenses Paid During Period 5/1/12 - 10/31/12 *	$	4.66		$	4.09		$	3.27		$	3.28
Annualized Expense Ratio		0.90	%		0.80	%		0.64	%		0.64	%
Investor Class	High Yield Bond Fund			Retirement Income and Appreciation Fund			Intermediate Bond Fund			Short-Term Bond Fund
Beginning Account Value 5/1/12	$	1,000.00		$	1,000.00		$	1,000.00		$	1,000.00
Ending Account Value 10/31/12	$	1,059.38		$	1,032.19		$	1,031.83		$	1,011.55
Expenses Paid During Period 5/1/12 - 10/31/12 *	$	6.21		$	5.82		$	4.03		$	3.99
Annualized Expense Ratio		1.20	%		1.14	%		0.79	%		0.79	%
A Class	High Yield Bond Fund			Retirement Income and Appreciation Fund			Intermediate Bond Fund			Short-Term Bond Fund
Beginning Account Value 5/1/12	$	1,000.00		$	1,000.00		$	1,000.00		$	1,000.00
Ending Account Value 10/31/12	$	1,060.78		$	1,031.99		$	1,029.89		$	1,011.26
Expenses Paid During Period 5/1/12 - 10/31/12 *	$	5.75		$	5.87		$	5.05		$	4.30
Annualized Expense Ratio		1.11	%		1.15	%		0.99	%		0.85	%
C Class	High Yield Bond Fund			Retirement Income and Appreciation Fund			Intermediate Bond Fund			Short-Term Bond Fund
Beginning Account Value 5/1/12	$	1,000.00		$	1,000.00		$	1,000.00		$	1,000.00
Ending Account Value 10/31/12	$	1,055.74		$	1,027.77		$	1,026.97		$	1,007.47
Expenses Paid During Period 5/1/12 - 10/31/12 *	$	9.61		$	9.99		$	8.76		$	8.07
Annualized Expense Ratio		1.86	%		1.96	%		1.72	%		1.60	%

13

American Beacon Funds^SM

Fund Expenses

October 31, 2012 (Unaudited)

AMR Class	High Yield Bond Fund
Beginning Account Value 5/1/12	$	1,000.00
Ending Account Value 10/31/2012	$	1,062.28
Expenses Paid During Period 5/1/12 - 10/31/12 *	$	3.32
Annualized Expense Ratio		0.64	%

Hypothetical Example for Comparison Purposes

The following tables provide information about hypothetical account values and hypothetical expenses based on a Fund’s actual expense ratio and an assumed 5% per year rate of return before expenses (not the Fund’s actual return). You may compare the ongoing costs of investing in a particular Fund with other funds by contrasting this 5% hypothetical example and the 5% hypothetical examples that appear in the shareholder reports of the other funds. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. Shareholders of the Investor and Institutional Classes that invest in a Fund through an IRA may be subject to a custodial IRA fee of $15 that is typically deducted each December. If your account was subject to a custodial IRA fee during the period, your costs would have been $15 higher.

You should also be aware that the expenses shown in the table highlight only your ongoing costs and do not reflect any transaction costs charged by a Fund, such as redemption fees as applicable. Similarly, the expense examples for other funds do not reflect any transaction costs charged by those funds, such as sales charges (loads), redemption fees or exchange fees. Therefore, the following tables are useful in comparing ongoing costs only and will not help you determine the relative total costs of owning different funds. If you were subject to any transaction costs during the period, your costs would have been higher.

Institutional Class	High Yield Bond  Fund			Intermediate Bond Fund			Short-Term Bond Fund
Beginning Account Value 5/1/12	$	1,000.00		$	1,000.00		$	1,000.00
Ending Account Value 10/31/12	$	1,020.31		$	1,023.38		$	1,023.13
Expenses Paid During Period 5/1/12 - 10/31/12 *	$	4.88		$	1.78		$	2.03
Annualized Expense Ratio		0.96	%		0.35	%		0.40	%

Y Class	High Yield Bond Fund			Retirement Income and Appreciation Fund			Intermediate Bond Fund			Short-Term Bond Fund
Beginning Account Value 5/1/12	$	1,000.00		$	1,000.00		$	1,000.00		$	1,000.00
Ending Account Value 10/31/12	$	1,019.10		$	1,019.41		$	1,021.17		$	1,021.88
Expenses Paid During Period 5/1/12 - 10/31/12 *	$	4.57		$	4.06		$	3.25		$	3.20
Annualized Expense Ratio		0.90	%		0.80	%		0.64	%		0.64	%
Investor Class	High Yield Bond Fund			Retirement Income and Appreciation Fund			Intermediate Bond Fund			Short-Term Bond Fund
Beginning Account Value 5/1/12	$	1,000.00		$	1,000.00		$	1,000.00		$	1,000.00
Ending Account Value 10/31/12	$	1,019.10		$	1,019.41		$	1,021.17		$	1,021.17
Expenses Paid During Period 5/1/12 - 10/31/12 *	$	6.09		$	5.79		$	4.01		$	4.01
Annualized Expense Ratio		1.20	%		1.14	%		0.79	%		0.79	%
A Class	High Yield Bond Fund			Retirement Income and Appreciation Fund			Intermediate Bond Fund			Short-Term Bond Fund
Beginning Account Value 5/1/12	$	1,000.00		$	1,000.00		$	1,000.00		$	1,000.00
Ending Account Value 10/31/12	$	1,019.56		$	1,019.36		$	1,020.16		$	1,020.86
Expenses Paid During Period 5/1/12 - 10/31/12 *	$	5.63		$	5.84		$	5.03		$	4.32
Annualized Expense Ratio		1.11	%		1.15	%		0.99	%		0.85	%

14

American Beacon Funds^SM

Fund Expenses

October 31, 2012 (Unaudited)

C Class	High Yield Bond  Fund			Retirement Income and Appreciation Fund			Intermediate Bond Fund			Short-Term Bond Fund
Beginning Account Value 5/1/12	$	1,000.00		$	1,000.00		$	1,000.00		$	1,000.00
Ending Account Value 10/31/12	$	1,015.79		$	1,015.28		$	1,016.49		$	1,017.09
Expenses Paid During Period 5/1/12 - 10/31/12 *	$	9.42		$	9.93		$	8.72		$	8.11
Annualized Expense Ratio		1.86	%		1.96	%		1.72	%		1.60	%

AMR Class	High Yield Bond Fund
Beginning Account Value 5/1/12	$	1,000.00
Ending Account Value 10/31/12	$	1,021.92
Expenses Paid During Period 5/1/12 - 10/31/12 *	$	3.25
Annualized Expense Ratio		0.64	%

* Expenses are equal to the Fund’s annualized expense ratios for the six-month period multiplied by the average account value over the period, multiplied by the number derived by dividing the number of days in the most recent fiscal half-year (184) by days in the year (366) to reflect the half-year period.

15

American Beacon Funds^SM

Report of Independent Registered Public Accounting Firm

To the Shareholders and the Board of Trustees of

American Beacon High Yield Bond Fund, American Beacon Intermediate Bond Fund, American Beacon Retirement Income and Appreciation Fund, and American Beacon Short-Term Bond Fund:

We have audited the accompanying statements of assets and liabilities, including the schedules of investments, of the American Beacon High Yield Bond Fund, the American Beacon Retirement Income and Appreciation Fund, the American Beacon Intermediate Bond Fund, and the American Beacon Short-Term Bond Fund (four of the funds constituting the American Beacon Funds) (collectively, the “Funds”), as of October 31, 2012, and the related statements of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the periods indicated therein. These financial statements and financial highlights are the responsibility of the Funds’ management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. We were not engaged to perform an audit of the Funds’ internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of each Fund’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements and financial highlights, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of October 31, 2012, by correspondence with the custodian and brokers or by other appropriate auditing procedures where replies from brokers were not received. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of the American Beacon High Yield Bond Fund, the American Beacon Retirement Income and Appreciation Fund, the American Beacon Intermediate Bond Fund, and the American Beacon Short-Term Bond Fund at October 31, 2012, the results of their operations for the year then ended, the changes in their net assets for each of the two years in the period then ended, and the financial highlights for each of the periods indicated therein, in conformity with U.S. generally accepted accounting principles.

Dallas, Texas

December 27, 2012

16

American Beacon High Yield Bond Fund^SM

Schedule of Investments

October 31, 2012

	Shares		Fair Value
			(000’s)
COMMON STOCK - 0.38%
COMMUNICATIONS - 0.01%
Media - 0.01%
Dex One Corp. A		10,761	$	10
SuperMedia, Inc.A		1,037		3
Total Communications				13
CONSUMER DISCRETIONARY - 0.12%
Automobiles - 0.12%
General Motors Co.A		6,381		163
INDUSTRIALS - 0.01%
Basic Materials - 0.01%
Catalyst Paper Corp.AB		8,426		8
RIGHTS - 0.24%
Charter Communications, Inc., Expires 11/30/2014A C		2,759		88
Charter Communications, Inc., Expires 11/30/2014A D		2,416		66
Horizon Lines, Inc., Expires 9/27/2036A C		3,581,642		190
Total Rights				344
Total Common Stocks (Cost $2,120)				528
CONVERTIBLE PREFERRED STOCKS - 0.33%
FINANCIALS - 0.33%
Diversified Financials - 0.33%
Bank of America Corp., 7.25%, Due 12/31/2049		210		234
Wells Fargo & Co, 7.50%, Due 12/31/2049		185		231
Total Convertible Preferred Stocks (Cost $384)				465
PREFERRED STOCKS - 0.73%
FINANCIALS - 0.73%
Diversified Financials - 0.01%
Federal Home Loan Mortgage Corp., 1.00%, Due 12/31/2049A E		10,000		17
Financials - 0.72%
GMAC Capital Trust I, 1.00%, Due 2/15/2040E		11,600		303
Zions Bancorporation, 9.50%, Due 12/31/2049		26,300		701
				1,004
Total Preferred Stocks (Cost $1,210)				1,021
	Par Amount
	(000’s)
CONVERTIBLE OBLIGATIONS - 0.80%
Alpha Appalachia Holdings, Inc., 3.25%, Due 8/1/2015	$	725		686
Alpha Natural Resources, Inc., 2.375%, Due 4/15/2015		260		236
E*Trade Financial Corp., 0.01%, Due 8/31/2019		240		202
Total Convertible Obligations (Cost $1,069)				1,124
CORPORATE OBLIGATIONS - 90.01%
Financials - 12.77%
ACE Cash Express, Inc., 11.00%, Due 2/1/2019F		275		259
Algeco Scotsman Global Finance plc, 8.50%, Due 10/15/2018F		515		530
Alliant Holdings I, Inc., 11.00%, Due 5/1/2015F		425		438
Ally Financial, Inc.,
4.625%, Due 6/26/2015		105		109
5.50%, Due 2/15/2017		215		228
6.25%, Due 12/1/2017		80		88
8.00%, Due 12/31/2018		200		226
7.50%, Due 9/15/2020		500		589
Alphabet Holding Co. Inc., 7.75%, Due 11/1/2017F		140		141
ARD Finance S.A., 11.125%, Due 6/1/2018F G		411		423

See accompanying notes

17

American Beacon High Yield Bond Fund^SM

Schedule of Investments

October 31, 2012

	Par Amount		Fair Value
	(000’s)		(000’s)
Bank of America Corp., 8.125%, Due 12/31/2049E	$	400	$	453
Bank One Capital III, 8.75%, Due 9/1/2030		275		394
CDW LLC,
8.00%, Due 12/15/2018E H		140		153
8.50%, Due 4/1/2019H		500		534
Cemex Finance LLC, 9.375%, Due 10/12/2022F H		200		209
CIT Group, Inc.,
6.625%, Due 4/1/2018F		100		112
5.375%, Due 5/15/2020		200		214
5.00%, Due 8/15/2022		300		311
CKE Holdings, Inc., 10.50%, Due 3/14/2016F G		238		253
CNL Lifestyle Properties, Inc., 7.25%, Due 4/15/2019		250		237
DJO Finance LLC,
8.75%, Due 3/15/2018F H		100		107
7.75%, Due 4/15/2018H		365		338
9.875%, Due 4/15/2018F H		195		191
E*Trade Financial Corp.,
7.875%, Due 12/1/2015		235		238
6.75%, Due 6/1/2016		45		48
12.50%, Due 11/30/2017G		550		623
Eksportfinans ASA, 2.375%, Due 5/25/2016		275		259
General Electric Capital Corp., 7.125%, Due 12/31/2049E		100		114
Genworth Financial, Inc., 6.15%, Due 11/15/2066E		200		137
Hub International Ltd., 8.125%, Due 10/15/2018F		545		560
Innovation Ventures LLC, 9.50%, Due 8/15/2019F H		375		359
International Lease Finance Corp., 5.65%, Due 6/1/2014		400		420
iStar Financial, Inc., 9.00%, Due 6/1/2017		255		276
Mcron Finance Sub LLC, 8.375%, Due 5/15/2019F H		135		139
MetLife, Inc., 10.75%, Due 8/1/2069		150		226
Nara Cable Funding Ltd., 8.875%, Due 12/1/2018F		350		331
Nationwide Mutual Insurance Co., 9.375%, Due 8/15/2039F		225		326
Nuveen Investments, Inc.,
5.50%, Due 9/15/2015		380		363
9.125%, Due 10/15/2017F		805		803
9.50%, Due 10/15/2020F		580		584
Offshore Group Investments Ltd.,
11.50%, Due 8/1/2015		421		463
7.50%, Due 11/1/2019F		380		374
Oppenheimer Holdings, Inc., 8.75%, Due 4/15/2018		400		412
Provident Funding Associates LP, 10.125%, Due 2/15/2019FI		110		114
Regions Bank, 7.50%, Due 5/15/2018		250		301
ROC Finance LLC, 12.125%, Due 9/1/2018F H		375		433
Samson Investment Co., 9.75%, Due 2/15/2020F		720		759
Sophia LP, 9.75%, Due 1/15/2019F I		200		214
Synovus Financial Corp.,
5.125%, Due 6/15/2017		395		387
7.875%, Due 2/15/2019		725		815
Tronox Finance LLC, 6.375%, Due 8/15/2020F H		215		214
UPCB Finance VI Ltd., 6.875%, Due 1/15/2022F		200		214
UR Financing Escrow Corp.,
5.75%, Due 7/15/2018F		65		70
7.375%, Due 5/15/2020F		125		135
7.625%, Due 4/15/2022F		395		433
Western Alliance Bancorp, 10.00%, Due 9/1/2015		220		242
				17,923
Industrials - 66.58%
Abengoa Finance SAU, 8.875%, Due 11/1/2017F		250		230
Acadia Healthcare Co. Inc, 12.875%, Due 11/1/2018		170		200
ADS Waste Holdings, Inc., 8.25%, Due 10/1/2020F		300		311
Advanced Micro Devices, Inc., 7.75%, Due 8/1/2020		200		166
Agrokor DD, 8.875%, Due 2/1/2020F		200		208
Aircastle Ltd., 9.75%, Due 8/1/2018		290		328
Alere, Inc., 8.625%, Due 10/1/2018		205		215

See accompanying notes

18

American Beacon High Yield Bond Fund^SM

Schedule of Investments

October 31, 2012

	Par Amount		Fair Value
	(000’s)		(000’s)
Allison Transmission, Inc., 7.125%, Due 5/15/2019F	$	380	$	404
Alpha Natural Resources, Inc.,
9.75%, Due 4/15/2018		230		233
6.00%, Due 6/1/2019		100		88
6.25%, Due 6/1/2021		100		87
AMC Entertainment, Inc., 9.75%, Due 12/1/2020		160		180
American Petroleum Tankers Parent LLC, 10.25%, Due 5/1/2015H		300		314
Antero Resources Finance Corp., 9.375%, Due 12/1/2017		180		198
ArcelorMittal,
5.75%, Due 3/1/2021		100		97
6.50%, Due 2/25/2022		300		295
Arch Coal, Inc., 8.75%, Due 8/1/2016		205		208
Ardagh Packaging Finance plc, 9.125%, Due 10/15/2020F		200		209
Atkore International, Inc., 9.875%, Due 1/1/2018		340		340
Avaya, Inc., 10.125%, Due 11/1/2015		225		200
Avis Budget Car Rental LLC, 9.75%, Due 3/15/2020H		385		438
Aviv Healthcare Properties LP, 7.75%, Due 2/15/2019I		200		211
Biomet, Inc.,
6.50%, Due 8/1/2020F		125		129
6.50%, Due 10/1/2020F		525		511
Boart Longyear Management Property Ltd., 7.00%, Due 4/1/2021F		230		233
Boise Paper Holdings LLC, 9.00%, Due 11/1/2017H		210		231
Bresnan Broadband Holdings LLC, 8.00%, Due 12/15/2018F H		475		511
Brightstar Corp., 9.50%, Due 12/1/2016F		245		262
Bristow Group, Inc., 6.25%, Due 10/15/2022		190		199
Burlington Coat Factory Warehouse Corp., 10.00%, Due 2/15/2019		565		623
Cablevision Systems Corp.,
8.625%, Due 9/15/2017		100		117
5.875%, Due 9/15/2022		160		159
Caesars Entertainment Operating Co. Inc.,
11.25%, Due 6/1/2017		550		594
12.75%, Due 4/15/2018		425		308
Caesars Operating Escrow LLC, 9.00%, Due 2/15/2020F H		325		323
Callon Petroleum Co., 13.00%, Due 9/15/2016		220		227
Carmike Cinemas, Inc., 7.375%, Due 5/15/2019		200		216
Carrols Restaurant Group, Inc., 11.25%, Due 5/15/2018F		175		191
Catalyst Paper Corp., 11.00%, Due 10/30/2017		146		119
CCO Holdings LLC, 5.25%, Due 9/30/2022H		125		126
CEDC Finance Corp International, Inc., 9.125%, Due 12/1/2016F		600		390
Cemex SAB de CV, 9.00%, Due 1/11/2018F		400		415
Cengage Learning Acquisitions, Inc., 10.50%, Due 1/15/2015F		375		320
CenturyLink, Inc., 5.80%, Due 3/15/2022		300		316
Cenveo Corp.,
7.875%, Due 12/1/2013		110		109
11.50%, Due 5/15/2017		400		322
8.875%, Due 2/1/2018		1,360		1,226
Cequel Communications Holdings I LLC, 6.375%, Due 9/15/2020F H		225		228
Ceridian Corp., 8.875%, Due 7/15/2019F		100		106
CEVA Group plc,
11.625%, Due 10/1/2016F		100		103
8.375%, Due 12/1/2017F		100		96
11.50%, Due 4/1/2018F		100		86
CHC Helicopter S.A., 9.25%, Due 10/15/2020		400		406
Chesapeake Midstream Partners LP, 6.125%, Due 7/15/2022I		425		449
Chesapeake Oilfield Operating LLC, 6.625%, Due 11/15/2019F H		300		286
Chester Downs & Marina LLC, 9.25%, Due 2/1/2020F H		300		299
Chrysler Group LLC, 8.00%, Due 6/15/2019H		440		468
CHS/Community Health Systems, Inc.,
5.125%, Due 8/15/2018		100		104
8.00%, Due 11/15/2019		550		592
7.125%, Due 7/15/2020		200		212
Cie Generale de Geophysique - Veritas, 6.50%, Due 6/1/2021		400		422

See accompanying notes

19

American Beacon High Yield Bond Fund^SM

Schedule of Investments

October 31, 2012

	Par Amount		Fair Value
	(000’s)		(000’s)
Cincinnati Bell, Inc.,
8.75%, Due 3/15/2018	$	300	$	303
8.375%, Due 10/15/2020		115		124
Clear Channel Communications, Inc., 9.00%, Due 3/1/2021		1,520		1,325
Clear Channel Worldwide Holdings, Inc.,
7.625%, Due 3/15/2020		790		749
Clearwire Communications LLC, 12.00%, Due 12/1/2017F H		320		354
ClubCorp Club Operations, Inc., 10.00%, Due 12/1/2018		300		332
Colt Defense LLC, 8.75%, Due 11/15/2017H		200		136
Columbus International, Inc., 11.50%, Due 11/20/2014F		330		370
CommScope, Inc., 8.25%, Due 1/15/2019F		400		431
Comstock Resources, Inc., 7.75%, Due 4/1/2019		310		315
Concho Resources, Inc., 6.50%, Due 1/15/2022		200		220
Consol Energy, Inc.,
8.00%, Due 4/1/2017		100		106
8.25%, Due 4/1/2020		300		318
Consolidated Container Co. LLC, 10.125%, Due 7/15/2020F H		200		213
CRC Health Corp., 10.75%, Due 2/1/2016		300		282
Cricket Communications, Inc., 7.75%, Due 10/15/2020		510		526
Crown Castle International Corp., 5.25%, Due 1/15/2023F		500		518
Crown Media Holdings, Inc., 10.50%, Due 7/15/2019		320		361
CSC Holdings LLC, 6.75%, Due 11/15/2021F H		300		334
Cumulus Media Holdings, Inc., 7.75%, Due 5/1/2019		535		523
Dave & Buster's, Inc., 11.00%, Due 6/1/2018		300		336
DaVita, Inc., 5.75%, Due 8/15/2022		225		235
Del Monte Corp., 7.625%, Due 2/15/2019		515		529
Digicel Group Ltd., 8.25%, Due 9/30/2020F		400		431
DISH DBS Corp.,
7.125%, Due 2/1/2016		600		670
5.875%, Due 7/15/2022		105		110
Drill Rigs Holdings, Inc., 6.50%, Due 10/1/2017F		525		522
DynCorp International, Inc., 10.375%, Due 7/1/2017		280		246
eAccess Ltd., 8.25%, Due 4/1/2018F		300		336
Eagle Rock Energy Partners LP, 8.375%, Due 6/1/2019I		300		299
Earthlink, Inc., 8.875%, Due 5/15/2019		215		220
Eileme 2 AB, 11.625%, Due 1/31/2020F		200		225
Emergency Medical Services Corp., 8.125%, Due 6/1/2019		400		424
Endo Pharmaceuticals Holdings, Inc., 7.00%, Due 7/15/2019		200		216
Energy XXI Gulf Coast, Inc., 9.25%, Due 12/15/2017		360		406
EnergySolutions Inc., 10.75%, Due 8/15/2018		425		394
Entercom Radio LLC, 10.50%, Due 12/1/2019H		210		229
EPL Oil & Gas, Inc.,
8.25%, Due 2/15/2018F		775		768
Euramax International, Inc., 9.50%, Due 4/1/2016		200		184
EVERTEC, Inc., 11.00%, Due 10/1/2018		350		382
ExamWorks Group, Inc., 9.00%, Due 7/15/2019		200		210
EXCO Resources, Inc., 7.50%, Due 9/15/2018		485		456
Exopack Holding Corp., 10.00%, Due 6/1/2018		400		370
Expro Finance Luxembourg SCA, 8.50%, Due 12/15/2016F		400		410
FAGE Dairy Industry S.A., 9.875%, Due 2/1/2020F		275		275
FGI Operating Co. LLC, 7.875%, Due 5/1/2020F H		225		244
First Data Corp.,
10.55%, Due 9/24/2015		300		308
8.25%, Due 1/15/2021F		500		500
12.625%, Due 1/15/2021		375		387
Florida East Coast Railway Corp., 8.125%, Due 2/1/2017		300		318
FMG Resources August 2006 Property Ltd.,
7.00%, Due 11/1/2015F		210		212
6.00%, Due 4/1/2017F		225		216
6.875%, Due 2/1/2018F		500		484
Fontainebleau Las Vegas Holdings LLC, 10.25%, Due 6/15/2015E F HJK		800		1
Forbes Energy Services Ltd., 9.00%, Due 6/15/2019		450		417
Ford Motor Credit Co. LLC,

See accompanying notes

20

American Beacon High Yield Bond Fund^SM

Schedule of Investments

October 31, 2012

	Par Amount		Fair Value
	(000’s)		(000’s)
6.625%, Due 8/15/2017H	$	200	$	234
8.125%, Due 1/15/2020H		200		254
Freescale Semiconductor, Inc.,
10.125%, Due 3/15/2018F		300		324
9.25%, Due 4/15/2018F		200		214
8.05%, Due 2/1/2020		200		187
10.75%, Due 8/1/2020		200		210
Frontier Communications Corp.,
8.50%, Due 4/15/2020		400		462
8.75%, Due 4/15/2022		300		346
Geo Group, Inc., 6.625%, Due 2/15/2021		200		216
Goodrich Petroleum Corp., 8.875%, Due 3/15/2019		620		619
Goodyear Tire & Rubber Co., 8.25%, Due 8/15/2020		100		109
Gray Television, Inc., 7.50%, Due 10/1/2020F		375		370
Grifols, Inc., 8.25%, Due 2/1/2018		400		444
GWR Operating Partnership LLP, 10.875%, Due 4/1/2017L		400		456
Hanger Orthopedic Group, Inc., 7.125%, Due 11/15/2018		170		178
HCA, Inc.,
7.19%, Due 11/15/2015		300		330
7.50%, Due 2/15/2022		400		447
5.875%, Due 3/15/2022		320		343
5.875%, Due 5/1/2023		275		278
HDTFS, Inc., 6.25%, Due 10/15/2022F		100		101
Health Management Associates, Inc., 7.375%, Due 1/15/2020		100		108
Helix Energy Solutions Group, Inc., 9.50%, Due 1/15/2016F		177		183
Hercules Offshore, Inc.,
7.125%, Due 4/1/2017F		185		191
10.25%, Due 4/1/2019F		580		607
Hertz Corp.,
6.75%, Due 4/15/2019F		400		424
Hilcorp Energy I LP, 8.00%, Due 2/15/2020F I		200		219
Hologic, Inc., 6.25%, Due 8/1/2020F		100		106
Horizon Lines LLC,
1.00%, Due 10/15/2016F H		400		380
11.00%, Due 10/15/2016F H		174		171
Horsehead Holding Corp., 10.50%, Due 6/1/2017F		195		202
Hughes Satellite Systems Corp., 7.625%, Due 6/15/2021		450		501
Hyva Global BV, 8.625%, Due 3/24/2016F		200		187
IAMGOLD Corp., 6.75%, Due 10/1/2020F		230		229
Ineos Finance plc, 8.375%, Due 2/15/2019F		200		210
Ineos Group Holdings Ltd., 8.50%, Due 2/15/2016F		200		193
Infor US, Inc., 9.375%, Due 4/1/2019		350		387
Inmet Mining Corp., 8.75%, Due 6/1/2020F		400		415
Integra Telecom Holdings, Inc., 10.75%, Due 4/15/2016F		390		398
Intelsat Jackson Holdings S.A.,
7.25%, Due 10/15/2020F		350		371
7.50%, Due 4/1/2021		300		322
6.625%, Due 12/15/2022F		270		268
Intelsat Luxembourg S.A., 11.50%, Due 2/4/2017		300		316
International Automotive Components Group SL, 9.125%, Due 6/1/2018F		200		193
inVentiv Health, Inc., 10.00%, Due 8/15/2018F		580		525
iPayment, Inc., 10.25%, Due 5/15/2018		300		264
Isle of Capri Casinos, Inc.,
7.75%, Due 3/15/2019		150		161
8.875%, Due 6/15/2020F		245		258
ITC Deltacom, Inc., 10.50%, Due 4/1/2016		360		387
Jaguar Holding Co. I, 9.375%, Due 10/15/2017F		200		203
Jaguar Holding Co. II, 9.50%, Due 12/1/2019F		100		112
Jarden Corp., 7.50%, Due 5/1/2017		165		187
JBS USA LLC, 8.25%, Due 2/1/2020F H		550		567
Jo-Ann Stores Holdings, Inc.,
8.125%, Due 3/15/2019F		30		30

See accompanying notes

21

American Beacon High Yield Bond Fund^SM

Schedule of Investments

October 31, 2012

	Par Amount		Fair Value
	(000’s)		(000’s)
9.75%, Due 10/15/2019F	$	215	$	212
K Hovnanian Enterprises, Inc., 7.25%, Due 10/15/2020F		230		243
KB Home, 7.50%, Due 9/15/2022		100		109
Key Energy Services, Inc., 6.75%, Due 3/1/2021		200		199
Kodiak Oil & Gas Corp., 8.125%, Due 12/1/2019F		505		549
Level 3 Financing, Inc.,
4.469%, Due 2/15/2015E		420		419
10.00%, Due 2/1/2018		425		474
8.625%, Due 7/15/2020		380		414
Libbey Glass, Inc., 6.875%, Due 5/15/2020F		120		128
Liberty Tire Recycling, 11.00%, Due 10/1/2016F		250		248
LIN Television Corp., 8.375%, Due 4/15/2018		310		335
Linn Energy LLC,
6.50%, Due 5/15/2019H		355		358
8.625%, Due 4/15/2020H		500		547
7.75%, Due 2/1/2021H K		350		374
Lions Gate Entertainment, Inc., 10.25%, Due 11/1/2016F		155		174
Louisiana-Pacific Corp., 7.50%, Due 6/1/2020		255		284
LyondellBasell Industries N.V., 5.00%, Due 4/15/2019		245		265
M/I Homes, Inc., 8.625%, Due 11/15/2018		200		217
MacDermid, Inc., 9.50%, Due 4/15/2017F		715		746
Manitowoc Co. Inc, 8.50%, Due 11/1/2020		150		168
Marina District Finance Co. Inc, 9.50%, Due 10/15/2015		595		601
MedAssets, Inc., 8.00%, Due 11/15/2018		400		434
Media General, Inc., 11.75%, Due 2/15/2017		200		229
Meritor, Inc., 10.625%, Due 3/15/2018		300		303
MGM Resorts International,
6.625%, Due 7/15/2015		400		425
11.375%, Due 3/1/2018		200		235
8.625%, Due 2/1/2019F		105		114
6.75%, Due 10/1/2020F		235		233
Midwest Vanadium Property Ltd., 11.50%, Due 2/15/2018F		200		120
Monitronics International, Inc., 9.125%, Due 4/1/2020		290		303
National CineMedia LLC, 7.875%, Due 7/15/2021H		100		109
Navistar International Corp., 8.25%, Due 11/1/2021		200		187
NBTY, Inc., 9.00%, Due 10/1/2018		200		224
NCL Corp Ltd., 11.75%, Due 11/15/2016		350		401
NewPage Corp., 11.375%, Due 12/31/2014J K		300		143
Nexstar Broadcasting, Inc.,
8.875%, Due 4/15/2017		150		164
6.875%, Due 11/15/2020F		225		226
NII Capital Corp., 7.625%, Due 4/1/2021		365		288
Nord Anglia Education UK Holdings plc, 10.25%, Due 4/1/2017F		200		218
Norske Skogindustrier ASA, 6.125%, Due 10/15/2015F		750		633
Nortek, Inc.,
10.00%, Due 12/1/2018		230		255
8.50%, Due 4/15/2021		240		258
Novelis, Inc., 8.75%, Due 12/15/2020		400		441
NPC International Inc., 10.50%, Due 1/15/2020		175		201
Nufarm Australia Ltd., 6.375%, Due 10/15/2019F		210		215
Old AII, Inc., 7.875%, Due 11/1/2020F		190		189
Olin Corp., 5.50%, Due 8/15/2022		300		310
OnCure Holdings, Inc., 11.75%, Due 5/15/2017		600		360
Orion Engineered Carbons Bondco GmbH, 9.625%, Due 6/15/2018F		200		220
Parker Drilling Co., 9.125%, Due 4/1/2018		170		182
Peabody Energy Corp., 7.375%, Due 11/1/2016		600		686
Petco Animal Supplies, Inc., 9.25%, Due 12/1/2018F		100		110
Petco Holdings, Inc., 8.50%, Due 10/15/2017F		220		221
Petroquest Energy, Inc., 10.00%, Due 9/1/2017		250		259
Pinnacle Entertainment, Inc., 7.75%, Due 4/1/2022		85		92
Pinnacle Foods Finance LLC, 9.25%, Due 4/1/2015H		27		28
Pioneer Energy Services Corp., 9.875%, Due 3/15/2018		160		173
Post Holdings, Inc., 7.375%, Due 2/15/2022F		125		133

See accompanying notes

22

American Beacon High Yield Bond Fund^SM

Schedule of Investments

October 31, 2012

	Par Amount		Fair Value
	(000’s)		(000’s)
Prestige Brands, Inc., 8.25%, Due 4/1/2018	$	300	$	330
Quality Distribution LLC, 9.875%, Due 11/1/2018H		250		273
Quicksilver Resources, Inc., 9.125%, Due 8/15/2019		300		293
Radio One, Inc., 6.00%, Due 5/24/2016G		207		182
Radio Systems Corp., 8.375%, Due 11/1/2019F		200		204
Radnet Management, Inc., 10.375%, Due 4/1/2018		350		352
Reliance Intermediate Holdings LP, 9.50%, Due 12/15/2019F I		200		229
Reynolds Group Issuer Inc.,
8.50%, Due 5/15/2018		800		795
9.00%, Due 4/15/2019		385		390
9.875%, Due 8/15/2019		100		105
5.75%, Due 10/15/2020F		360		364
8.25%, Due 2/15/2021		200		197
Rite Aid Corp., 9.75%, Due 6/12/2016		625		680
Rockwood Specialties Group, Inc., 4.625%, Due 10/15/2020		100		103
Rosetta Resources, Inc., 9.50%, Due 4/15/2018		250		276
Ryland Group, Inc., 5.375%, Due 10/1/2022		145		147
Ryman Hospitality Properties, 6.75%, Due 11/15/2014		190		190
Sabine Pass LNG LP,
7.50%, Due 11/30/2016I		545		594
6.50%, Due 11/1/2020F I		210		214
Salem Communications Corp., 9.625%, Due 12/15/2016		105		117
Sanmina-SCI Corp., 7.00%, Due 5/15/2019F		140		137
Schaeffler Finance BV, 8.50%, Due 2/15/2019F		200		223
Select Medical Corp., 7.625%, Due 2/1/2015		41		41
Select Medical Holdings Corp., 6.429%, Due 9/15/2015E		205		204
Shea Homes LP, 8.625%, Due 5/15/2019I		200		223
Shingle Springs Tribal Gaming Authority, 9.375%, Due 6/15/2015F		200		167
Simmons Foods, Inc., 10.50%, Due 11/1/2017F		400		341
Sirius XM Radio, Inc.,
8.75%, Due 4/1/2015F		175		199
5.25%, Due 8/15/2022F		115		115
Sitel LLC,
11.00%, Due 8/1/2017F H		100		101
11.50%, Due 4/1/2018H		200		143
Sky Growth Acquisition Corp., 7.375%, Due 10/15/2020F		525		522
Smurfit Kappa Treasury Funding Ltd., 7.50%, Due 11/20/2025		425		438
Spansion LLC, 7.875%, Due 11/15/2017H		85		85
Spectrum Brands Holdings, Inc., 9.50%, Due 6/15/2018F		205		230
Sprint Capital Corp., 8.75%, Due 3/15/2032		280		330
Sprint Nextel Corp.,
9.125%, Due 3/1/2017		115		135
8.375%, Due 8/15/2017		800		927
9.00%, Due 11/15/2018F		500		617
7.00%, Due 3/1/2020F		100		116
7.00%, Due 8/15/2020		280		307
11.50%, Due 11/15/2021		550		731
SRA International, Inc., 11.00%, Due 10/1/2019		100		101
SunGard Data Systems, Inc.,
6.625%, Due 11/1/2019F		295		298
7.625%, Due 11/15/2020		200		217
Swift Services Holdings, Inc., 10.00%, Due 11/15/2018		155		166
Syniverse Holdings, Inc., 9.125%, Due 1/15/2019		195		208
Taminco Global Chemical Corp., 9.75%, Due 3/31/2020F		360		391
Taylor Morrison Communities Inc.,
7.75%, Due 4/15/2020F		600		640
Telesat Canada, 12.50%, Due 11/1/2017H		375		416
Tesoro Logistics LP, 5.875%, Due 10/1/2020F I		50		52
Titan International, Inc., 7.875%, Due 10/1/2017		460		486
Tower Automotive Holdings USA LLC, 10.625%, Due 9/1/2017F H		250		272
TransUnion LLC, 11.375%, Due 6/15/2018H		100		116
tw telecom holdings, Inc., 8.00%, Due 3/1/2018		200		220

See accompanying notes

23

American Beacon High Yield Bond Fund^SM

Schedule of Investments

October 31, 2012

	Par Amount		Fair Value
	(000’s)		(000’s)
UCI International, Inc., 8.625%, Due 2/15/2019	$	225	$	223
United Rentals North America, Inc., 8.375%, Due 9/15/2020		300		329
Univision Communications, Inc.,
7.875%, Due 11/1/2020F		400		424
8.50%, Due 5/15/2021F		375		377
Valeant Pharmaceuticals International, 6.375%, Due 10/15/2020F		280		295
Vedanta Resources plc, 8.25%, Due 6/7/2021F		240		247
Verso Paper Holdings LLC, 11.75%, Due 1/15/2019F H		400		420
Visant Corp., 10.00%, Due 10/1/2017		540		522
Viskase Cos., Inc., 9.875%, Due 1/15/2018F		150		155
VPI Escrow Corp., 6.375%, Due 10/15/2020F		500		526
W&T Offshore, Inc.,
8.50%, Due 6/15/2019F		495		521
Warner Chilcott Co. LLC, 7.75%, Due 9/15/2018H		360		380
WaveDivision Escrow LLC, 8.125%, Due 9/1/2020F H		135		139
West Corp., 7.875%, Due 1/15/2019		300		306
Western Refining, Inc., 11.25%, Due 6/15/2017F		300		331
Westmoreland Coal Co., 10.75%, Due 2/1/2018		460		454
WideOpenWest Finance LLC, 10.25%, Due 7/15/2019F H		100		105
Wind Acquisition Finance S.A.,
11.75%, Due 7/15/2017F		600		584
7.25%, Due 2/15/2018F		325		317
Wind Acquisition Holdings Finance S.A., 12.25%, Due 7/15/2017F G		272		231
Windstream Corp., 7.50%, Due 6/1/2022		225		239
WMG Acquisition Corp.,
11.50%, Due 10/1/2018F		150		169
6.00%, Due 1/15/2021F		625		626
Wok Acquisition Corp., 10.25%, Due 6/30/2020F		145		154
Wolverine World Wide, Inc., 6.125%, Due 10/15/2020F		210		219
Yonkers Racing Corp., 11.375%, Due 7/15/2016F		400		424
				93,454
Utilities - 10.66%
AES Corp., 9.75%, Due 4/15/2016		210		251
Basic Energy Services, Inc., 7.75%, Due 10/15/2022F		290		282
Calpine Corp.,
7.875%, Due 7/31/2020F		90		99
7.50%, Due 2/15/2021F		450		489
Calumet Specialty Products Partners LP, 9.375%, Due 5/1/2019I		300		323
Carrizo Oil & Gas, Inc.,
8.625%, Due 10/15/2018		300		323
7.50%, Due 9/15/2020		100		102
Chaparral Energy, Inc.,
9.875%, Due 10/1/2020		300		341
8.25%, Due 9/1/2021		185		202
7.625%, Due 11/15/2022F		280		296
Chesapeake Energy Corp.,
9.50%, Due 2/15/2015		230		258
6.625%, Due 8/15/2020		840		881
6.875%, Due 11/15/2020		280		297
6.125%, Due 2/15/2021		125		127
Clayton Williams Energy, Inc., 7.75%, Due 4/1/2019		300		301
Consolidated Communications Finance Co., 10.875%, Due 6/1/2020F		195		207
Continental Resources, Inc., 5.00%, Due 9/15/2022		240		253
Crosstex Energy LP, 8.875%, Due 2/15/2018I		400		429
Elwood Energy LLC, 8.159%, Due 7/5/2026H		287		294
Energy Future Holdings Corp., 5.55%, Due 11/15/2014		230		133
Energy Future Intermediate Holding Co. LLC, 10.00%, Due 12/1/2020H		380		415
Energy Transfer Equity LP, 7.50%, Due 10/15/2020I		400		455
Enterprise Products Operating LLC, 7.034%, Due 1/15/2068E H		300		343
Genesis Energy LP, 7.875%, Due 12/15/2018I		200		212
GenOn Energy, Inc., 7.625%, Due 6/15/2014		200		214
Halcon Resources Corp., 8.875%, Due 5/15/2021F		100		101
Holly Energy Partners LP, 6.50%, Due 3/1/2020F I		225		236

See accompanying notes

24

American Beacon High Yield Bond Fund^SM

Schedule of Investments

October 31, 2012

	Par Amount		Fair Value
	(000’s)		(000’s)
Intergen N.V., 9.00%, Due 6/30/2017F	$	400	$	379
Magnum Hunter Resources Corp., 9.75%, Due 5/15/2020F		510		523
Martin Midstream Partners LP, 8.875%, Due 4/1/2018I		437		458
MetroPCS Wireless, Inc., 6.625%, Due 11/15/2020		215		231
Newfield Exploration Co., 5.625%, Due 7/1/2024		145		155
Nokia Corp., 5.375%, Due 5/15/2019		275		228
NRG Energy, Inc.,
7.625%, Due 5/15/2019		340		362
7.875%, Due 5/15/2021		535		585
Penn Virginia Resource Partners LP, 8.375%, Due 6/1/2020F I		200		210
Plains Exploration & Production Co.,
6.125%, Due 6/15/2019		300		299
6.75%, Due 2/1/2022		100		101
6.875%, Due 2/15/2023		100		100
QEP Resources, Inc.,
5.375%, Due 10/1/2022		200		210
5.25%, Due 5/1/2023		100		104
QR Energy LP, 9.25%, Due 8/1/2020F I		370		384
Regency Energy Partners LP, 6.50%, Due 7/15/2021I		225		244
Resolute Energy Corp., 8.50%, Due 5/1/2020F		495		510
Rockies Express Pipeline LLC, 5.625%, Due 4/15/2020F H		205		195
SandRidge Energy, Inc.,
8.00%, Due 6/1/2018F		400		420
7.50%, Due 2/15/2023F		130		135
Targa Resources Partners LP,
6.875%, Due 2/1/2021I		200		217
5.25%, Due 5/1/2023F I		165		167
Texas Competitive Electric Holdings Co. LLC, 11.50%, Due 10/1/2020F H		700		501
WPX Energy, Inc., 6.00%, Due 1/15/2022		360		386
				14,968
Total Corporate Obligations (Cost $122,115)				126,345
	Shares
SHORT-TERM INVESTMENTS - 4.41% (Cost $6,184)
JPMorgan U.S. Government Money Market Fund, Capital Class		6,184,367		6,184
TOTAL INVESTMENTS - 96.66% (Cost $133,084)				135,667
OTHER ASSETS, NET OF LIABILITIES - 3.34%				4,696
TOTAL NET ASSETS - 100.00%			$	140,363

Percentages are stated as a percent of net assets.

^A Non-income producing security.

^B Valued at fair value pursuant to procedures approved by the Board of Trustees.

^C Call.

^D Put.

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

^F Security exempt from registration under the Securities Act of 1933. These securities may be resold to qualified institutional buyers pursuant to Rule 144A. At the period end, the value of these securities amounted to $49,844 or 35.51% of net assets. The Fund has no right to demand registration of these securities.

^G Is Payment in Kind.

^H Limited Liability Company.

^I Limited Partnership.

^J In Default.

^K Non-voting participating shares.

^L Limited Liability Partnership.

See accompanying notes

25

American Beacon Retirement Income and Appreciation Fund^SM

Schedule of Investments

October 31, 2012

	Shares		Fair Value
			(000’s)
COMMON STOCK - 4.77%
ENERGY - 0.42%
Energy Equipment & Services - 0.18%
National Oilwell Varco, Inc.		4,075	$	300
Oil & Gas - 0.24%
Occidental Petroleum Corp.		5,300		419
Total Energy				719
FINANCIALS - 0.68%
Franklin Resources, Inc.		5,550		709
T Rowe Price Group, Inc.		6,700		435
Total Financials				1,144
HEALTH CARE - 0.26%
Johnson & Johnson,		6,300		446
INDUSTRIALS - 0.46%
Construction & Engineering - 0.26%
Fluor Corp.		7,700		430
Machinery - 0.20%
Eaton Corp.		7,300		345
Total Industrials				775
INFORMATION TECHNOLOGY - 2.59%
Communications Equipment - 0.21%
Cisco Systems, Inc.		20,500		351
Internet Software & Services - 0.29%
eBay, Inc.A		10,000		483
IT Consulting & Services - 0.31%
Accenture plc, Class A		7,770		524
Semiconductor Equipment & Products - 0.52%
QUALCOMM, Inc.		15,100		884
Software - 1.26%
Microsoft Corp.		12,000		342
Oracle Corp.		17,000		528
SAP AG, ADRB		14,300		1,042
Symantec Corp.A		11,600		211
				2,123
Total Information Technology				4,365
MATERIALS - 0.36%
Barrick Gold Corp.,		15,200		616
Total Common Stock (Cost $7,612)				8,065
CONVERTIBLE PREFERRED - 0.36% (Cost $486)
CONSUMER STAPLES - 0.36%
Bunge Ltd., 4.875%, Due 12/31/2049		6,058		606
PREFERRED STOCK - 1.88%
ENERGY - 0.75%
Apache Corp., 6.00%, Due 8/1/2013		8,850		413

	Shares		Fair Value
			(000’s)
Chesapeake Energy Corp, 5.75%, Due 12/31/2049 C		300	$	287
Chesapeake Energy Corp., 5.75%, Due 12/31/2049C		150		142
NextEra Energy, Inc., 5.599%, Due 6/1/2015		8,500		433
Total Energy				1,275
FINANCIALS - 0.38%
Banks - 0.08%
Fifth Third Bancorp, 8.50%, Due 12/31/2049		1,041		142
Diversified Financials - 0.30%
AMG Capital Trust I, 5.10%, Due 4/15/2036		9,588		508
Total Financials				650
INDUSTRIALS - 0.75%
Aerospace & Defense - 0.50%
United Technologies Corp., 7.50%, Due 8/1/2015		15,450		840
Consumer Discretionary - 0.25%
Stanley Black & Decker, Inc., 4.75%, Due 11/17/2015		3,500		424
Total Industrials				1,264
Total Preferred Stock (Cost $3,146)				3,189
	Par Amount
	(000’s)
CORPORATE OBLIGATIONS - 39.51%
Financials - 17.98%
AEGON Funding Co. LLC,
5.75%, Due 12/15/2020D	$	250		295
American International Group, Inc.,
6.40%, Due 12/15/2020		775		952
4.875%, Due 6/1/2022		400		451
Aon Corp.,
8.205%, Due 1/1/2027		400		502
Bank of America Corp.,
7.80%, Due 9/15/2016		600		706
7.625%, Due 6/1/2019		1,250		1,585
Bank One Corp.,
4.90%, Due 4/30/2015		250		271
Barclays Bank plc,
3.90%, Due 4/7/2015		290		308
6.75%, Due 5/22/2019		650		797
Bear Stearns Cos. LLC,
7.25%, Due 2/1/2018D		925		1,151
BNP Paribas S.A.,
3.60%, Due 2/23/2016		280		296
Citigroup, Inc.,
1.290%, Due 4/1/2014E		98		98
0.722%, Due 11/5/2014E		300		297
8.50%, Due 5/22/2019		1,250		1,667
Danske Bank A/S,
1.390%, Due 4/14/2014C E		600		594
Deutsche Bank AG,

See accompanying notes

26

American Beacon Retirement Income and Appreciation Fund^SM

Schedule of Investments

October 31, 2012

	Par Amount		Fair Value
	(000’s)		(000’s)
3.875%, Due 8/18/2014	$	275	$	290
Fifth Third Bancorp,
3.625%, Due 1/25/2016		275		296
General Electric Capital Corp.,
0.551%, Due 1/8/2016E		1,145		1,128
5.625%, Due 5/1/2018		250		297
6.00%, Due 8/7/2019		300		367
5.50%, Due 1/8/2020		650		773
Goldman Sachs Group, Inc.,
5.35%, Due 1/15/2016		475		527
6.25%, Due 9/1/2017		550		646
6.00%, Due 6/15/2020		835		980
HSBC Finance Corp.,
0.590%, Due 1/15/2014E		1,200		1,195
ING Bank N.V.,
5.125%, Due 5/1/2015C		300		315
3.75%, Due 3/7/2017C		1,100		1,165
JPMorgan Chase & Co.,
0.729%, Due 6/13/2016E		375		363
5.50%, Due 10/15/2040		350		426
Lincoln National Corp.,
4.75%, Due 2/15/2014		105		110
Lloyds TSB Bank plc,
4.375%, Due 1/12/2015C		300		319
Merrill Lynch & Co. Inc,
6.11%, Due 1/29/2037		275		301
MetLife, Inc.,
6.375%, Due 6/15/2034		400		524
Monumental Global Funding III,
0.540%, Due 1/15/2014C E		300		297
Morgan Stanley,
0.820%, Due 10/15/2015E		900		868
7.30%, Due 5/13/2019		530		638
5.625%, Due 9/23/2019		450		500
National Australia Bank Ltd.,
4.375%, Due 12/10/2020C		250		281
Nordea Bank AB,
4.875%, Due 1/27/2020C		250		285
Nuveen Investments, Inc.,
9.50%, Due 10/15/2020C		420		423
PNC Funding Corp.,
4.375%, Due 8/11/2020		260		300
Prudential Financial, Inc.,
7.375%, Due 6/15/2019		250		321
Samson Investment Co.,
9.75%, Due 2/15/2020C		350		369
Simon Property Group LP,
10.35%, Due 4/1/2019F G		300		432
Societe Generale S.A.,
2.20%, Due 9/14/2013C		250		252
1.397%, Due 4/11/2014C E		1,200		1,196
Svenska Handelsbanken AB,
2.875%, Due 4/4/2017		650		687
UBS AG,
5.875%, Due 12/20/2017		950		1,124
UR Financing Escrow Corp.,
7.625%, Due 4/15/2022C		500		548
Wachovia Corp.,
0.710%, Due 10/15/2016E		600		584
5.75%, Due 2/1/2018		1,100		1,328
				30,425
Industrials - 18.02%

	Par Amount		Fair Value
	(000’s)		(000’s)
Altria Group, Inc.,
4.75%, Due 5/5/2021	$	300	$	348
America Movil SAB de CV,
6.375%, Due 3/1/2035		275		363
American Axle & Manufacturing, Inc.,
6.625%, Due 10/15/2022		420		415
American Honda Finance Corp.,
4.625%, Due 4/2/2013C		325		331
2.125%, Due 2/28/2017C		500		514
3.875%, Due 9/21/2020C		250		270
Anheuser-Busch InBev Worldwide, Inc.,
5.00%, Due 4/15/2020		290		354
8.00%, Due 11/15/2039		100		166
Apache Corp.,
5.10%, Due 9/1/2040		130		159
AT&T, Inc.,
5.50%, Due 2/1/2018		750		912
6.80%, Due 5/15/2036		125		172
6.40%, Due 5/15/2038		325		440
Boeing Co.,
1.875%, Due 11/20/2012		250		250
BP Capital Markets plc,
3.20%, Due 3/11/2016		280		301
Brunswick Corp.,
7.125%, Due 8/1/2027		400		405
Burlington Northern Santa Fe LLC,
5.75%, Due 3/15/2018D		325		396
5.75%, Due 5/1/2040D		140		179
Calfrac Holdings LP,
7.50%, Due 12/1/2020C G		410		406
Canadian National Railway Co.,
5.55%, Due 5/15/2018		250		303
Canadian Natural Resources Ltd.,
6.25%, Due 3/15/2038		275		371
Caterpillar Financial Services Corp.,
1.90%, Due 12/17/2012		100		100
2.75%, Due 6/24/2015		280		295
CBS Corp.,
3.375%, Due 3/1/2022		500		526
CHS/Community Health Systems, Inc.,
7.125%, Due 7/15/2020		400		423
Comcast Cable Communications Holdings, Inc.,
8.375%, Due 3/15/2013		109		112
Comcast Corp.,
6.55%, Due 7/1/2039		400		538
CSX Corp.,
5.50%, Due 4/15/2041		250		310
CVS Caremark Corp.,
3.25%, Due 5/18/2015		140		149
Daimler Finance North America LLC,
3.00%, Due 3/28/2016C D		150		158
2.95%, Due 1/11/2017C D		300		315
2.40%, Due 4/10/2017C D		450		463
Dean Foods Co.,
9.75%, Due 12/15/2018		400		450
Deutsche Telekom International Finance BV,
4.875%, Due 3/6/2042C		850		927
Devon Energy Corp.,
4.75%, Due 5/15/2042		300		339
Dow Chemical Co.,
4.125%, Due 11/15/2021		300		328

See accompanying notes

27

American Beacon Retirement Income and Appreciation Fund^SM

Schedule of Investments

October 31, 2012

	Par Amount		Fair Value
	(000’s)		(000’s)
Edgen Murray Corp.,
8.75%, Due 11/1/2020C	$	475	$	471
EOG Resources, Inc.,
2.50%, Due 2/1/2016		250		262
Ford Motor Credit Co. LLC,
4.25%, Due 2/3/2017D		300		320
5.875%, Due 8/2/2021D		350		403
France Telecom S.A.,
2.125%, Due 9/16/2015		125		129
Goodyear Tire & Rubber Co.,
7.00%, Due 5/15/2022		500		524
Grifols, Inc.,
8.25%, Due 2/1/2018		150		167
H&E Equipment Services, Inc.,
7.00%, Due 9/1/2022C		400		416
HCA Holdings, Inc.,
7.75%, Due 5/15/2021		400		431
Health Management Associates, Inc.,
7.375%, Due 1/15/2020		175		189
Hewlett-Packard Co.,
2.20%, Due 12/1/2015		250		249
4.05%, Due 9/15/2022		350		337
iGate Corp.,
9.00%, Due 5/1/2016		300		328
Inmet Mining Corp.,
8.75%, Due 6/1/2020C		400		415
Jaguar Land Rover plc,
7.75%, Due 5/15/2018C		400		426
8.125%, Due 5/15/2021C		350		377
Johnson Controls, Inc.,
5.00%, Due 3/30/2020		300		344
Kellogg Co.,
4.25%, Due 3/6/2013		250		253
1.875%, Due 11/17/2016		150		154
Liberty Media LLC,
8.25%, Due 2/1/2030D		450		482
McKesson Corp.,
3.25%, Due 3/1/2016		140		151
Meritage Homes Corp.,
7.00%, Due 4/1/2022		290		313
Norfolk Southern Corp.,
5.75%, Due 4/1/2018		325		389
Northrop Grumman Corp.,
5.05%, Due 8/1/2019		150		175
Nuance Communications, Inc.,
2.75%, Due 11/1/2031		260		283
Quest Diagnostics, Inc.,
4.75%, Due 1/30/2020		125		139
Qwest Capital Funding, Inc.,
7.75%, Due 2/15/2031		250		264
Royal Caribbean Cruises Ltd.,
7.50%, Due 10/15/2027		500		536
SABMiller Holdings, Inc.,
4.95%, Due 1/15/2042C		300		359
Seagate HDD Cayman,
6.875%, Due 5/1/2020		350		365
SunGard Data Systems, Inc.,
6.625%, Due 11/1/2019C		215		217
Thomson Reuters Corp.,
4.70%, Due 10/15/2019		125		143
Time Warner Cable, Inc.,
5.85%, Due 5/1/2017		650		778
Time Warner, Inc.,

	Par Amount		Fair Value
	(000’s)		(000’s)
4.875%, Due 3/15/2020	$	450	$	529
4.75%, Due 3/29/2021		325		380
Triumph Group, Inc.,
8.00%, Due 11/15/2017		300		329
Union Pacific Corp.,
4.163%, Due 7/15/2022		262		298
United Rentals North America, Inc.,
6.125%, Due 6/15/2023		90		91
United Technologies Corp.,
6.125%, Due 7/15/2038		450		619
UnitedHealth Group, Inc.,
3.875%, Due 10/15/2020		250		279
Valeant Pharmaceuticals International,
7.25%, Due 7/15/2022C		400		433
Verizon Communications, Inc.,
5.50%, Due 4/1/2017		250		297
4.60%, Due 4/1/2021		340		405
6.90%, Due 4/15/2038		325		472
Viacom, Inc.,
4.50%, Due 2/27/2042		550		573
Vodafone Group plc,
6.15%, Due 2/27/2037		375		515
Volkswagen International Finance N.V.,
1.625%, Due 3/22/2015C		650		660
W&T Offshore, Inc.,
8.50%, Due 6/15/2019		375		395
Wal-Mart Stores, Inc.,
7.55%, Due 2/15/2030		350		529
Wolverine World Wide, Inc.,
6.125%, Due 10/15/2020C		12		12
Xerox Corp.,
5.65%, Due 5/15/2013		75		77
8.25%, Due 5/15/2014		150		166
2.95%, Due 3/15/2017		175		180
				30,516
Utilities - 3.51%
Calumet Specialty Products Partners LP,
9.375%, Due 5/1/2019G		980		1,054
Carrizo Oil & Gas, Inc.,
7.50%, Due 9/15/2020		835		852
Commonwealth Edison Co.,
4.00%, Due 8/1/2020		135		153
Consolidated Edison Co. of New York, Inc.,
5.50%, Due 12/1/2039		300		390
EDF S.A.,
4.60%, Due 1/27/2020C		300		342
FirstEnergy Solutions Corp.,
4.80%, Due 2/15/2015		150		162
MidAmerican Energy Holdings Co.,
6.125%, Due 4/1/2036		500		657
Pacific Gas & Electric Co.,
6.25%, Due 12/1/2013		175		185
3.50%, Due 10/1/2020		250		279
Progress Energy, Inc.,
4.875%, Due 12/1/2019		350		406
Southern Co.,
1.95%, Due 9/1/2016		310		321
Southwestern Electric Power Co.,
3.55%, Due 2/15/2022		600		635
TransCanada PipeLines Ltd.,
6.10%, Due 6/1/2040		140		195

See accompanying notes

28

American Beacon Retirement Income and Appreciation Fund^SM

Schedule of Investments

October 31, 2012

	Par Amount		Fair Value
	(000’s)		(000’s)
Virginia Electric and Power Co.,
5.40%, Due 4/30/2018	$	250	$	305
				5,936
Total Corporate Obligations (Cost $60,779)			$	66,877
CONVERTIBLE OBLIGATIONS - 9.07%
Basic Materials - 0.71%
Goldcorp, Inc.,
2.00%, Due 8/1/2014		225		268
Newmont Mining Corp.,
1.25%, Due 7/15/2014		425		558
1.625%, Due 7/15/2017		264		374
				1,200
Communications - 0.90%
Anixter International, Inc.,
1.00%, Due 2/15/2013		610		655
Omnicom Group, Inc.,
0.00%, Due 7/1/2038		400		424
priceline.com, Inc.,
1.00%, Due 3/15/2018C		425		446
				1,525
Financials - 0.42%
Fidelity National Financial, Inc.,
4.25%, Due 8/15/2018		350		422
Leucadia National Corp.,
3.75%, Due 4/15/2014		250		282
				704
Health Care Providers & Services - 0.26%
WellPoint, Inc.,
2.75%, Due 10/15/2042 C		430		448
Industrials - 2.72%
Ares Capital Corp.,
5.75%, Due 2/1/2016		36		38
Danaher Corp.,
0.01%, Due 1/22/2021		245		368
Ixia,
3.00%, Due 12/15/2015		360		392
Jarden Corp.,
1.875%, Due 9/15/2018C		202		202
Liberty Media LLC,
3.125%, Due 3/30/2023D		325		447
3.25%, Due 3/15/2031D		425		392
Microsoft Corp.,
0.01%, Due 6/15/2013C		760		777
Symantec Corp.,
1.00%, Due 6/15/2013		660		715
Teleflex, Inc.,
3.875%, Due 8/1/2017		700		862
Trinity Industries, Inc.,
3.875%, Due 6/1/2036		400		424
				4,617
Metals & Mining - 0.53%
Royal Gold, Inc.,
2.875%, Due 6/15/2019		775		889
Pharmaceuticals - 1.69%
Amgen, Inc., 0.375%, Due 2/1/2013		750		847
Gilead Sciences, Inc.,
1.625%, Due 5/1/2016		635		999

	Par Amount		Fair Value
	(000’s)		(000’s)
Teva Pharmaceutical Finance Co. LLC,
0.25%, Due 2/1/2026D	$	950	$	1,007
			$	2,853
Software - 0.87%
Electronic Arts, Inc.,
0.75%, Due 7/15/2016		281		255
Intel Corp.,
2.95%, Due 12/15/2035		750		813
TIBCO Software, Inc.,
2.25%, Due 5/1/2032C		415		402
				1,470
Technology - 0.97%
EMC Corp.,
1.75%, Due 12/1/2013		485		753
Linear Technology Corp.,
3.00%, Due 5/1/2027		400		415
SanDisk Corp.,
1.50%, Due 8/15/2017		425		472
				1,640
Total Convertible Obligations (Cost $14,043)				15,346
FOREIGN GOVERNMENT OBLIGATIONS - 0.69%
Agency - 0.34%
Petrobras International Finance Co.,
3.875%, Due 1/27/2016		200		212
Petroleos Mexicanos,
6.00%, Due 3/5/2020		300		359
				571
Sovereign/Government - 0.35%
Province of Ontario Canada,
4.10%, Due 6/16/2014		300		318
3.15%, Due 12/15/2017		250		275
				593
Total Foreign Government Obligations (Cost $1,046)				1,164
U.S. AGENCY OBLIGATIONS - 0.19% (Cost $300)
Private Export Funding Corp.,
2.125%, Due 7/15/2016		300		316
ASSET-BACKED OBLIGATIONS - 2.11%
Ally Master Owner Trust,
0.864%, Due 6/15/2015, 2011-5 AE		650		651
1.21%, Due 6/15/2017, 2012 3 A2		1,800		1,815
Nissan Master Owner Trust Receivables,
0.684%, Due 5/15/2017, 2012 A AE		1,100		1,103
Total Asset-Backed Obligations (Cost $3,550)				3,569
NON-AGENCY MORTGAGE-BACKED OBLIGATIONS - 2.78%
Banc of America Commercial Mortgage Trust,
5.317%, Due 9/10/2047, 2006-5 A2		203		203
5.634%, Due 4/10/2049, 2007-2 A2		225		229
GS Mortgage Securities Corp II,
4.607%, Due 7/10/2039, 2005-GG4 A3		60		60
3.849%, Due 12/10/2043, 2010-C2 A1C		620		675

See accompanying notes

29

American Beacon Retirement Income and Appreciation Fund^SM

Schedule of Investments

October 31, 2012

	Par Amount		Fair Value
	(000’s)		(000’s)
3.645%, Due 3/10/2044, 2011-GC3 A2C	$	750	$	813
JP Morgan Chase Commercial Mortgage Securities Corp.,
4.678%, Due 7/15/2042, 2005-LDP2 A3A		134		136
3.853%, Due 6/15/2043, 2010-C1 A1C		523		559
4.388%, Due 2/15/2046, 2011-C3 A3C		650		736
5.728%, Due 2/12/2049, 2007-CB19 A4		400		471
5.629%, Due 2/12/2051, 2007-CB20 A2		208		208
LB-UBS Commercial Mortgage Trust,
5.424%, Due 2/15/2040, 2007-C1 A4		450		524
Wachovia Bank Commercial Mortgage Trust,
5.745%, Due 6/15/2049, 2007-C32 A2		88		91
Total Non-Agency Mortgage-Backed Obligations (Cost $4,351)				4,705
U.S. AGENCY MORTGAGE-BACKED OBLIGATIONS - 22.86%
Federal Home Loan Mortgage Corporation
5.00%, Due 2/1/2021		254		275
4.50%, Due 4/1/2021		259		278
5.00%, Due 9/1/2035		776		844
5.50%, Due 4/1/2037		225		245
5.00%, Due 3/1/2038		371		401
5.50%, Due 5/1/2038		290		315
0.614%, Due 12/15/2040E		1,165		1,169
4.00%, Due 1/1/2041		1,386		1,480
4.50%, Due 2/1/2041		1,385		1,493
3.50%, Due 6/1/2042		2,910		3,099
				9,599
Federal National Mortgage Association
3.50%, Due 1/1/2026		345		366
6.50%, Due 7/1/2032		150		173
5.50%, Due 6/1/2033		272		302
4.50%, Due 9/1/2034		150		163
5.50%, Due 12/1/2035		297		327
5.00%, Due 2/1/2036		251		275
5.50%, Due 4/1/2036		432		476
5.50%, Due 2/1/2037		300		329
6.00%, Due 9/1/2037		189		209
6.00%, Due 1/1/2038		281		312
4.50%, Due 1/1/2040		963		1,039
4.00%, Due 9/1/2040		715		767
4.00%, Due 1/1/2041		2,312		2,479
				7,217
Government National Mortgage Association
6.00%, Due 2/15/2033		400		458
5.50%, Due 4/15/2033		501		557
5.00%, Due 5/15/2033		344		379
1.692%, Due 11/16/2035, 2010-148 A		260		263
2.21%, Due 12/16/2035, 2011-31 A		2,687		2,746
2.989%, Due 3/16/2039, 2010-71 AC		518		535
2.17%, Due 4/16/2041, 2012 44 A		2,971		3,096
2.70%, Due 4/16/2043, 2011-109 AB		2,938		3,081
2.543%, Due 9/16/2044, 2011-96 AC		2,239		2,336
3.20%, Due 11/16/2044, 2011-92 B		2,900		3,136
2.351%, Due 6/16/2050, 2010-100 A		1,272		1,295

	Par Amount		Fair Value
	(000’s)		(000’s)
			$	17,882
National Credit Union Administration
0.616%, Due 3/11/2020, 2011 R3 1AE	$	1,948		1,959
0.669%, Due 10/7/2020, 2010 R1 1AE		2,025		2,031
				3,990
Total U.S. Agency Mortgage-Backed Obligations (Cost $37,128)				38,688
U.S. TREASURY OBLIGATIONS - 13.64%
U.S. Treasury Bonds
3.625%, Due 2/15/2020		875		1,025
2.00%, Due 2/15/2022		1,700		1,760
6.25%, Due 8/15/2023		800		1,154
6.875%, Due 8/15/2025		250		388
5.25%, Due 11/15/2028		550		767
4.75%, Due 2/15/2037		420		580
4.50%, Due 8/15/2039		910		1,220
				6,894
U.S. Treasury Notes
1.875%, Due 2/28/2014		2,900		2,963
2.625%, Due 7/31/2014		2,600		2,706
2.125%, Due 11/30/2014		2,500		2,594
2.50%, Due 3/31/2015		3,000		3,157
3.125%, Due 10/31/2016		700		771
0.875%, Due 1/31/2017		2,200		2,226
1.50%, Due 8/31/2018		1,000		1,034
3.125%, Due 2/15/2042		700		742
				16,193
Total U.S. Treasury Obligations (Cost $21,944)				23,087
	Shares
SHORT-TERM INVESTMENTS - 1.58% (Cost $2,669)
JPMorgan U.S. Government Money Market Fund, Capital Class		2,669,366		2,669
TOTAL INVESTMENTS - 99.44% (Cost $157,054)				168,281
OTHER ASSETS, NET OF LIABILITIES - 0.56%				949
TOTAL NET ASSETS - 100.00%			$	169,230

Percentages are stated as a percent of net assets.

^A Non-income producing security.

^B ADR - American Depositary Receipt.

^C Security exempt from registration under the Securities Act of 1933. These securities may be resold to qualified institutional buyers pursuant to Rule 144A. At the period end, the value of these securities amounted to $19,043 or 11.25% of net assets. The Fund has no right to demand registration of these securities.

^D Limited Liability Company.

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

^F REIT - Real Estate Investment Trust.

^G Limited Partnership.

See accompanying notes

30

American Beacon Intermediate Bond Fund^SM

Schedule of Investments

October 31, 2012

	Par Amount		Fair Value
	(000’s)		(000’s)
CORPORATE OBLIGATIONS - 44.71%
Financials - 18.34%
AEGON Funding Co. LLC, 5.75%, Due 12/15/2020A	$	400	$	471
American Express Co., 8.15%, Due 3/19/2038		325		524
American Express Credit Corp., 1.75%, Due 6/12/2015		1,405		1,441
American International Group, Inc.,
6.40%, Due 12/15/2020		800		982
4.875%, Due 6/1/2022		1,000		1,128
Bank of America Corp.,
7.80%, Due 9/15/2016		700		823
7.625%, Due 6/1/2019		1,695		2,149
5.70%, Due 1/24/2022		2,000		2,379
Bank of New York Mellon Corp., 2.30%, Due 7/28/2016		920		967
Bank of Nova Scotia, 0.75%, Due 10/9/2015		910		909
Bank One Corp., 4.90%, Due 4/30/2015		500		543
Barclays Bank plc,
3.90%, Due 4/7/2015		380		404
6.75%, Due 5/22/2019		650		797
Bear Stearns Cos. LLC, 7.25%, Due 2/1/2018A		2,145		2,669
BNP Paribas S.A., 3.60%, Due 2/23/2016		400		423
Canadian Imperial Bank of Commerce, 2.35%, Due 12/11/2015		850		891
Capital One Financial Corp., 2.125%, Due 7/15/2014		670		683
Citigroup, Inc.,
1.290%, Due 4/1/2014B		131		131
0.722%, Due 11/5/2014B		380		376
6.01%, Due 1/15/2015		570		628
4.45%, Due 1/10/2017		1,000		1,105
8.50%, Due 5/22/2019		2,390		3,188
5.875%, Due 1/30/2042		500		620
CNA Financial Corp., 7.35%, Due 11/15/2019		210		263
Danske Bank A/S, 1.390%, Due 4/14/2014BC		780		772
Deutsche Bank AG, 3.875%, Due 8/18/2014		400		422
Fifth Third Bancorp, 3.625%, Due 1/25/2016		400		431
General Electric Capital Corp.,
0.551%, Due 1/8/2016B		1,300		1,281
5.625%, Due 5/1/2018		375		445
6.00%, Due 8/7/2019		1,570		1,923
5.50%, Due 1/8/2020		800		952
5.30%, Due 2/11/2021		390		454
5.875%, Due 1/14/2038		945		1,164
Goldman Sachs Group, Inc.,
5.35%, Due 1/15/2016		800		888
6.25%, Due 9/1/2017		800		940
5.95%, Due 1/18/2018		935		1,089
6.00%, Due 6/15/2020		990		1,162
5.75%, Due 1/24/2022		500		580
HCP, Inc., 5.375%, Due 2/1/2021		500		579
Health Care REIT, Inc.,
3.625%, Due 3/15/2016D		565		599
5.25%, Due 1/15/2022D		495		565
HSBC Finance Corp., 0.590%, Due 1/15/2014B		1,250		1,244
ING Bank N.V.,
5.125%, Due 5/1/2015C		250		263
3.75%, Due 3/7/2017C		1,500		1,588
JPMorgan Chase & Co.,
3.45%, Due 3/1/2016		1,120		1,192
0.729%, Due 6/13/2016B		480		465
3.15%, Due 7/5/2016		1,000		1,059
5.50%, Due 10/15/2040		425		517
KeyCorp, 5.10%, Due 3/24/2021		385		456
Liberty Mutual Group, Inc., 5.00%, Due 6/1/2021C		390		421
Lincoln National Corp., 4.75%, Due 2/15/2014		50		52

See accompanying notes

31

American Beacon Intermediate Bond Fund^SM

Schedule of Investments

October 31, 2012

	Par Amount		Fair Value
	(000’s)		(000’s)
Lloyds TSB Bank plc, 4.375%, Due 1/12/2015C	$	375	$	399
Merrill Lynch & Co. Inc,
6.40%, Due 8/28/2017		940		1,108
6.50%, Due 7/15/2018		520		612
6.11%, Due 1/29/2037		360		394
MetLife, Inc.,
5.00%, Due 11/24/2013		565		592
6.375%, Due 6/15/2034		500		655
Monumental Global Funding III, 0.540%, Due 1/15/2014B C		375		371
Morgan Stanley,
1.916%, Due 1/24/2014B		2,000		2,013
0.820%, Due 10/15/2015B		1,180		1,138
7.30%, Due 5/13/2019		370		445
5.625%, Due 9/23/2019		600		666
National Australia Bank Ltd., 4.375%, Due 12/10/2020C		425		477
Nordea Bank AB, 4.875%, Due 1/27/2020C		450		513
PNC Funding Corp.,
4.25%, Due 9/21/2015		670		736
4.375%, Due 8/11/2020		410		474
3.30%, Due 3/8/2022		515		553
Prudential Financial, Inc., 7.375%, Due 6/15/2019		450		578
Rabobank Nederland, 2.125%, Due 10/13/2015		640		661
Royal Bank of Canada, 1.15%, Due 3/13/2015		375		381
Simon Property Group LP,
6.125%, Due 5/30/2018E		895		1,098
10.35%, Due 4/1/2019D E		375		540
Societe Generale S.A.,
2.20%, Due 9/14/2013C		450		454
1.397%, Due 4/11/2014B C		900		897
State Street Corp.,
4.30%, Due 5/30/2014		285		302
2.875%, Due 3/7/2016		1,025		1,093
SunTrust Banks, Inc., 3.50%, Due 1/20/2017		985		1,059
Svenska Handelsbanken AB, 2.875%, Due 4/4/2017		800		845
UBS AG, 5.875%, Due 12/20/2017		2,000		2,367
US Bancorp, 1.65%, Due 5/15/2017		1,200		1,227
Wachovia Corp.,
0.710%, Due 10/15/2016B		750		730
5.75%, Due 2/1/2018		3,125		3,773
Willis North America, Inc., 6.20%, Due 3/28/2017		455		523
				73,671
Industrials - 21.63%
ABB Finance USA, Inc., 2.875%, Due 5/8/2022		410		424
Altera Corp., 1.75%, Due 5/15/2017		280		287
Altria Group, Inc.,
9.70%, Due 11/10/2018		127		181
4.75%, Due 5/5/2021		390		452
America Movil SAB de CV, 6.375%, Due 3/1/2035		375		495
American Honda Finance Corp.,
4.625%, Due 4/2/2013C		250		254
2.125%, Due 2/28/2017C		1,000		1,028
3.875%, Due 9/21/2020C		500		540
Analog Devices, Inc., 3.00%, Due 4/15/2016		460		493
Anheuser-Busch InBev Worldwide, Inc.,
5.00%, Due 4/15/2020		380		464
8.00%, Due 11/15/2039		175		291
Apache Corp.,
3.25%, Due 4/15/2022		495		539
5.10%, Due 9/1/2040		200		244
Applied Materials, Inc., 2.65%, Due 6/15/2016		545		577
AT&T, Inc.,
5.10%, Due 9/15/2014		1,415		1,534
5.50%, Due 2/1/2018		975		1,185

See accompanying notes

32

American Beacon Intermediate Bond Fund^SM

Schedule of Investments

October 31, 2012

	Par Amount		Fair Value
	(000’s)		(000’s)
6.80%, Due 5/15/2036	$	225	$	309
6.40%, Due 5/15/2038		200		271
5.35%, Due 9/1/2040		508		623
5.55%, Due 8/15/2041		1,000		1,273
Baxter International, Inc., 1.85%, Due 1/15/2017		410		424
Becton Dickinson and Co., 3.25%, Due 11/12/2020		650		703
BHP Billiton Finance USA Ltd., 1.625%, Due 2/24/2017		435		445
Boeing Co., 1.875%, Due 11/20/2012		400		400
BP Capital Markets plc, 3.20%, Due 3/11/2016		1,330		1,430
Burlington Northern Santa Fe LLC,
5.75%, Due 3/15/2018A		600		730
7.95%, Due 8/15/2030A		375		534
5.75%, Due 5/1/2040A		190		243
Cameron International Corp., 6.375%, Due 7/15/2018		370		454
Canadian National Railway Co., 5.55%, Due 5/15/2018		400		485
Canadian Natural Resources Ltd.,
3.45%, Due 11/15/2021		555		602
6.25%, Due 3/15/2038		360		485
Caterpillar Financial Services Corp.,
1.90%, Due 12/17/2012		100		100
1.10%, Due 5/29/2015		535		542
2.75%, Due 6/24/2015		380		401
1.625%, Due 6/1/2017		740		758
CBS Corp., 3.375%, Due 3/1/2022		1,390		1,461
Cellco Partnership, 8.50%, Due 11/15/2018		485		676
Coca-Cola Co., 0.75%, Due 11/15/2013		605		607
Comcast Cable Communications Holdings, Inc., 8.375%, Due 3/15/2013		128		132
Comcast Corp.,
5.875%, Due 2/15/2018		1,090		1,330
6.55%, Due 7/1/2039		800		1,077
Cooper US, Inc.,
2.375%, Due 1/15/2016		480		494
3.875%, Due 12/15/2020		480		523
Covidien International Finance S.A., 2.80%, Due 6/15/2015		845		889
CSX Corp., 5.50%, Due 4/15/2041		425		527
CVS Caremark Corp., 3.25%, Due 5/18/2015		190		202
Daimler Finance North America LLC,
3.00%, Due 3/28/2016A C		190		200
2.95%, Due 1/11/2017A C		2,400		2,519
Deutsche Telekom International Finance BV, 4.875%, Due 3/6/2042C		850		926
Devon Energy Corp., 4.75%, Due 5/15/2042		400		452
Diageo Capital plc, 1.50%, Due 5/11/2017		380		387
DIRECTV Holdings LLC,
2.40%, Due 3/15/2017A		485		500
6.35%, Due 3/15/2040A		295		353
Dow Chemical Co.,
7.60%, Due 5/15/2014		440		485
4.25%, Due 11/15/2020		255		283
4.125%, Due 11/15/2021		400		437
Eaton Corp., 5.60%, Due 5/15/2018		380		450
eBay, Inc., 1.35%, Due 7/15/2017		515		523
EOG Resources, Inc., 2.50%, Due 2/1/2016		425		446
Express Scripts, Inc., 6.25%, Due 6/15/2014		585		636
Ford Motor Credit Co. LLC,
4.25%, Due 2/3/2017A		700		746
5.875%, Due 8/2/2021A		600		691
France Telecom S.A.,
4.375%, Due 7/8/2014		385		408
2.125%, Due 9/16/2015		225		232
Freeport-McMoRan Copper & Gold, Inc., 3.55%, Due 3/1/2022		525		535
Genzyme Corp., 5.00%, Due 6/15/2020		235		279
Gilead Sciences, Inc., 2.40%, Due 12/1/2014		875		905
GlaxoSmithKline Capital plc, 1.50%, Due 5/8/2017		900		920

See accompanying notes

33

American Beacon Intermediate Bond Fund^SM

Schedule of Investments

October 31, 2012

	Par Amount		Fair Value
	(000’s)		(000’s)
Halliburton Co., 3.25%, Due 11/15/2021	$	580	$	634
Hewlett-Packard Co.,
2.20%, Due 12/1/2015		425		424
4.05%, Due 9/15/2022		350		337
Husky Energy, Inc.,
5.90%, Due 6/15/2014		500		540
3.95%, Due 4/15/2022		690		747
Intel Corp., 3.30%, Due 10/1/2021		515		565
John Deere Capital Corp.,
4.90%, Due 9/9/2013		675		701
0.95%, Due 6/29/2015		325		328
Johnson Controls, Inc.,
1.75%, Due 3/1/2014		1,275		1,296
5.00%, Due 3/30/2020		480		551
Kellogg Co.,
4.25%, Due 3/6/2013		250		253
1.875%, Due 11/17/2016		200		206
Koninklijke Philips Electronics N.V., 5.75%, Due 3/11/2018		955		1,162
Kraft Foods Group, Inc., 1.625%, Due 6/4/2015C		295		301
Lorillard Tobacco Co., 8.125%, Due 6/23/2019		255		328
Marathon Oil Corp., 6.00%, Due 10/1/2017		475		577
McKesson Corp., 3.25%, Due 3/1/2016		200		215
Medtronic, Inc., 3.00%, Due 3/15/2015		1,580		1,665
Molson Coors Brewing Co., 3.50%, Due 5/1/2022		140		150
Norfolk Southern Corp., 5.75%, Due 4/1/2018		300		359
Northrop Grumman Corp., 5.05%, Due 8/1/2019		200		233
Novartis Capital Corp., 2.90%, Due 4/24/2015		980		1,036
Oracle Corp., 1.20%, Due 10/15/2017		720		724
PepsiCo, Inc., 2.50%, Due 5/10/2016		805		852
Phillips 66,
1.95%, Due 3/5/2015C		380		389
4.30%, Due 4/1/2022C		750		843
Pride International, Inc., 6.875%, Due 8/15/2020		460		591
Quest Diagnostics, Inc., 4.75%, Due 1/30/2020		225		251
Rio Tinto Finance USA Ltd., 2.50%, Due 5/20/2016		640		667
Rogers Communications, Inc., 5.50%, Due 3/15/2014		755		805
SABMiller Holdings, Inc.,
3.75%, Due 1/15/2022C		2,000		2,200
4.95%, Due 1/15/2042C		400		479
Sanofi,
1.625%, Due 3/28/2014		1,115		1,133
4.00%, Due 3/29/2021		320		368
St Jude Medical, Inc., 2.50%, Due 1/15/2016		645		675
Teck Resources Ltd., 6.00%, Due 8/15/2040		355		395
Teva Pharmaceutical Finance II, 3.00%, Due 6/15/2015		735		780
Thomson Reuters Corp., 4.70%, Due 10/15/2019		225		258
Time Warner Cable, Inc.,
5.85%, Due 5/1/2017		1,300		1,556
6.75%, Due 7/1/2018		540		684
4.50%, Due 9/15/2042		500		514
Time Warner, Inc.,
4.875%, Due 3/15/2020		1,090		1,282
4.75%, Due 3/29/2021		350		409
Toyota Motor Credit Corp., 2.05%, Due 1/12/2017		1,190		1,236
Tyco Electronics Group S.A.,
1.60%, Due 2/3/2015		575		584
6.55%, Due 10/1/2017		550		659
Union Pacific Corp., 4.163%, Due 7/15/2022		481		548
United Parcel Service, Inc., 1.125%, Due 10/1/2017		285		288
United Technologies Corp.,
1.20%, Due 6/1/2015		400		408
1.80%, Due 6/1/2017		730		758
6.125%, Due 7/15/2038		600		826

See accompanying notes

34

American Beacon Intermediate Bond Fund^SM

Schedule of Investments

October 31, 2012

	Par Amount		Fair Value
	(000’s)		(000’s)
UnitedHealth Group, Inc.,
5.375%, Due 3/15/2016	$	430	$	489
3.875%, Due 10/15/2020		425		474
3.95%, Due 10/15/2042		290		294
Valero Energy Corp., 9.375%, Due 3/15/2019		170		234
Verizon Communications, Inc.,
1.95%, Due 3/28/2014		890		909
5.50%, Due 4/1/2017		500		593
4.60%, Due 4/1/2021		780		928
3.50%, Due 11/1/2021		350		388
6.90%, Due 4/15/2038		500		726
Viacom, Inc., 4.50%, Due 2/27/2042		500		520
Vodafone Group plc,
1.625%, Due 3/20/2017		815		833
6.15%, Due 2/27/2037		760		1,044
Volkswagen International Finance N.V., 1.625%, Due 3/22/2015C		850		863
Walgreen Co., 3.10%, Due 9/15/2022		300		305
Wal-Mart Stores, Inc., 7.55%, Due 2/15/2030		400		604
Watson Pharmaceuticals, Inc., 3.25%, Due 10/1/2022		450		464
WellPoint, Inc., 4.35%, Due 8/15/2020		945		1,048
Xerox Corp.,
5.65%, Due 5/15/2013		50		51
8.25%, Due 5/15/2014		190		210
4.25%, Due 2/15/2015		500		531
2.95%, Due 3/15/2017		175		180
				86,889
Utilities - 4.74%
Columbus Southern Power Co., 5.50%, Due 3/1/2013		640		650
Commonwealth Edison Co., 4.00%, Due 8/1/2020		190		216
Consolidated Edison Co. of New York, Inc., 5.50%, Due 12/1/2039		350		455
Duke Energy Indiana, Inc., 6.05%, Due 6/15/2016		450		521
EDF S.A., 4.60%, Due 1/27/2020C		580		661
Energy Transfer Partners LP,
8.50%, Due 4/15/2014E		485		533
9.00%, Due 4/15/2019E		525		690
Enterprise Products Operating LLC,
5.65%, Due 4/1/2013A		555		566
6.125%, Due 10/15/2039A		615		778
Exelon Generation Co. LLC,
5.20%, Due 10/1/2019A		500		575
6.25%, Due 10/1/2039A		365		442
FirstEnergy Solutions Corp., 4.80%, Due 2/15/2015		175		189
Georgia Power Co., 4.30%, Due 3/15/2042		290		317
MidAmerican Energy Holdings Co., 6.125%, Due 4/1/2036		1,000		1,316
National Rural Utilities Cooperative Finance Corp.,
1.125%, Due 11/1/2013		465		468
5.45%, Due 4/10/2017		500		593
ONEOK Partners LP, 6.125%, Due 2/1/2041E		800		1,020
Pacific Gas & Electric Co.,
6.25%, Due 12/1/2013		150		159
3.50%, Due 10/1/2020		450		501
Progress Energy, Inc.,
4.875%, Due 12/1/2019		450		522
4.40%, Due 1/15/2021		1,000		1,125
Sempra Energy, 6.50%, Due 6/1/2016		565		669
Southern Co., 1.95%, Due 9/1/2016		380		394
Southwestern Electric Power Co., 3.55%, Due 2/15/2022		800		846
Spectra Energy Capital LLC,
5.668%, Due 8/15/2014A		320		346
5.65%, Due 3/1/2020A		265		319
Spectra Energy Partners LP, 4.60%, Due 6/15/2021E		235		256
TransCanada PipeLines Ltd.,

See accompanying notes

35

American Beacon Intermediate Bond Fund^SM

Schedule of Investments

October 31, 2012

	Par Amount		Fair Value
	(000’s)		(000’s)
7.625%, Due 1/15/2039	$	395	$	624
6.10%, Due 6/1/2040		290		404
Union Electric Co., 6.70%, Due 2/1/2019		510		649
Virginia Electric and Power Co., 5.40%, Due 4/30/2018		400		487
Westar Energy, Inc., 6.00%, Due 7/1/2014		200		217
Xcel Energy, Inc., 5.613%, Due 4/1/2017		1,321		1,552
				19,060
Total Corporate Obligations (Cost $165,174)				179,620
FOREIGN GOVERNMENT OBLIGATIONS - 0.71%
Agency - 0.50%
Petrobras International Finance Co.,
3.875%, Due 1/27/2016		300		319
3.50%, Due 2/6/2017		340		359
5.375%, Due 1/27/2021		500		567
6.875%, Due 1/20/2040		245		317
Petroleos Mexicanos, 6.00%, Due 3/5/2020		375		448
				2,010
Sovereign/Government - 0.21%
Province of Ontario Canada,
4.10%, Due 6/16/2014		350		371
3.15%, Due 12/15/2017		425		468
				839
Total Foreign Government Obligations (Cost $2,583)				2,849
U.S. AGENCY OBLIGATIONS - 0.11% (Cost $400)
Private Export Funding Corp., 2.125%, Due 7/15/2016		400		422
ASSET-BACKED OBLIGATIONS - 2.52%
Ally Master Owner Trust,
0.864%, Due 6/15/2015, 2011-5 AB		750		751
1.21%, Due 6/15/2017, 2012 3 A2		3,500		3,529
CNH Equipment Trust,
1.17%, Due 5/15/2015, 2010-C A3		262		263
2.04%, Due 10/17/2016, 2011-A A4		470		484
0.94%, Due 5/15/2017, 2012 A A3		830		837
Honda Auto Receivables Owner Trust, 3.30%, Due 9/15/2015, 2009-3 A4		221		221
Hyundai Auto Receivables Trust, 3.15%, Due 3/15/2016, 2009-A A4		183		186
Nissan Auto Lease Trust, 0.58%, Due 11/16/2015, 2012 B A3		1,155		1,155
Nissan Master Owner Trust Receivables, 0.684%, Due 5/15/2017, 2012 A AB		1,700		1,704
Volkswagen Auto Loan Enhanced Trust, 0.87%, Due 7/20/2015, 2012 A A3		985		996
Total Asset-Backed Obligations (Cost $10,064)				10,126
NON-AGENCY MORTGAGE-BACKED OBLIGATIONS - 2.36%
Banc of America Commercial Mortgage Trust,
5.317%, Due 9/10/2047, 2006-5 A2		285		285
5.634%, Due 4/10/2049, 2007-2 A2		294		299
Bear Stearns Commercial Mortgage Securities,
5.201%, Due 12/11/2038, 2006-PW14 A4		790		910
5.54%, Due 9/11/2041, 2006-PW13 A4		1,285		1,483
4.831%, Due 7/11/2042, 2004-PWR5 A4		462		472
GS Mortgage Securities Corp II,
4.607%, Due 7/10/2039, 2005-GG4 A3		84		84
3.679%, Due 8/10/2043, 2010-C1 A1C		527		571
3.849%, Due 12/10/2043, 2010-C2 A1C		764		830
3.645%, Due 3/10/2044, 2011-GC3 A2C		750		813
JP Morgan Chase Commercial Mortgage Securities Corp.,
4.678%, Due 7/15/2042, 2005-LDP2 A3A		189		192
3.853%, Due 6/15/2043, 2010-C1 A1C		713		763
4.388%, Due 2/15/2046, 2011-C3 A3C		800		905
4.625%, Due 3/15/2046, 2005-LDP1 A2		152		153

See accompanying notes

36

American Beacon Intermediate Bond Fund^SM

Schedule of Investments

October 31, 2012

	Par Amount		Fair Value
	(000’s)		(000’s)
5.728%, Due 2/12/2049, 2007-CB19 A4	$	550	$	648
5.629%, Due 2/12/2051, 2007-CB20 A2		284		284
LB-UBS Commercial Mortgage Trust, 5.424%, Due 2/15/2040, 2007-C1 A4		550		641
Wachovia Bank Commercial Mortgage Trust, 5.745%, Due 6/15/2049, 2007-C32 A2		139		143
Total Non-Agency Mortgage-Backed Obligations (Cost $8,492)				9,476
U.S. AGENCY MORTGAGE-BACKED OBLIGATIONS - 31.46%
Federal Home Loan Mortgage Corporation - 7.93%
4.50%, Due 3/1/2019		151		160
5.00%, Due 10/1/2020		372		404
5.00%, Due 8/1/2033		232		254
5.50%, Due 2/1/2034		297		325
6.00%, Due 8/1/2034		155		172
5.00%, Due 8/1/2035		152		166
5.00%, Due 9/1/2035		388		422
5.50%, Due 4/1/2037		225		245
5.00%, Due 3/1/2038		272		295
5.50%, Due 5/1/2038		363		394
5.50%, Due 6/1/2038		236		256
5.00%, Due 1/1/2039		2,970		3,216
4.00%, Due 10/1/2039		4,394		4,690
5.00%, Due 4/1/2040		2,949		3,244
4.50%, Due 8/1/2040		2,235		2,402
0.614%, Due 12/15/2040 B		1,554		1,559
4.00%, Due 1/1/2041		1,309		1,398
4.50%, Due 2/1/2041		1,039		1,120
3.50%, Due 3/1/2042		975		1,041
3.50%, Due 6/1/2042		4,851		5,163
3.00%, Due 8/1/2042		4,723		4,948
				31,874
Federal National Mortgage Association - 15.08%
6.50%, Due 2/1/2017		61		65
5.00%, Due 12/1/2017		202		220
4.50%, Due 9/1/2018		427		461
4.00%, Due 8/1/2020		96		103
4.50%, Due 3/1/2025		2,045		2,236
4.50%, Due 5/1/2025		99		107
4.50%, Due 6/1/2025		1,397		1,509
3.50%, Due 1/1/2026		414		439
4.00%, Due 5/1/2026		299		320
5.00%, Due 3/1/2034		313		344
5.50%, Due 6/1/2034		179		198
4.50%, Due 9/1/2034		100		108
5.50%, Due 2/1/2035		350		389
5.00%, Due 5/1/2035		4,730		5,184
5.00%, Due 11/1/2035		351		384
5.50%, Due 12/1/2035		228		252
5.00%, Due 2/1/2036		251		275
5.50%, Due 4/1/2036		540		595
6.00%, Due 9/1/2036		108		120
6.50%, Due 9/1/2036		431		493
6.50%, Due 12/1/2036		226		257
5.50%, Due 2/1/2037		300		329
5.50%, Due 8/1/2037		918		1,014
6.00%, Due 9/1/2037		283		314
6.00%, Due 1/1/2038		449		499
5.50%, Due 3/1/2038		572		638
5.00%, Due 4/1/2038		275		300
5.00%, Due 6/1/2038		335		366
5.50%, Due 6/1/2038		211		231
4.50%, Due 1/1/2040		2,140		2,309
5.00%, Due 5/1/2040		2,521		2,795

See accompanying notes

37

American Beacon Intermediate Bond Fund^SM

Schedule of Investments

October 31, 2012

	Par Amount		Fair Value
	(000’s)		(000’s)
5.50%, Due 6/1/2040	$	1,855	$	2,044
4.50%, Due 8/1/2040		1,454		1,574
4.00%, Due 9/1/2040		1,371		1,470
4.00%, Due 12/1/2040		5,156		5,604
4.00%, Due 1/1/2041		1,542		1,653
5.00%, Due 1/1/2041		1,691		1,874
4.00%, Due 2/1/2041		1,117		1,239
4.50%, Due 4/1/2041		6,331		6,961
4.50%, Due 5/1/2041		1,683		1,858
4.50%, Due 8/1/2041		1,821		2,002
4.00%, Due 9/1/2041		3,755		4,027
4.50%, Due 10/1/2041		1,309		1,440
4.00%, Due 11/1/2041		1,061		1,154
3.50%, Due 2/1/2042		2,613		2,799
4.00%, Due 4/1/2042		785		861
3.50%, Due 9/1/2042		1,055		1,125
				60,539
Government National Mortgage Association - 7.15%
6.50%, Due 3/15/2028		175		200
6.00%, Due 4/15/2031		200		228
5.50%, Due 2/20/2034		237		264
2.012%, Due 7/16/2035, 2011-144 AB		1,951		1,996
1.692%, Due 11/16/2035, 2010-148 A		374		378
2.174%, Due 7/16/2038, 2011-147 A		2,939		3,032
6.00%, Due 10/15/2038		911		1,031
2.989%, Due 3/16/2039, 2010-71 AC		744		768
5.50%, Due 2/15/2040		717		793
4.50%, Due 10/20/2040		1,250		1,386
2.17%, Due 4/16/2041, 2012 44 A		5,943		6,191
5.00%, Due 9/20/2041		912		1,011
1.732%, Due 5/16/2042, 2012 70 A		3,472		3,551
2.70%, Due 4/16/2043, 2011-109 AB		2,938		3,081
2.543%, Due 9/16/2044, 2011-96 AC		1,824		1,903
3.20%, Due 11/16/2044, 2011-92 B		2,700		2,919
				28,732
National Credit Union Administration - 1.30%
0.616%, Due 3/11/2020, 2011 R3 1AB		3,045		3,062
0.669%, Due 10/7/2020, 2010 R1 1AB		2,160		2,168
				5,230
Total U.S. Agency Mortgage-Backed Obligations (Cost $122,315)				126,375
U.S. TREASURY OBLIGATIONS - 14.28%
U.S. Treasury Bonds - 8.11%
2.125%, Due 8/15/2021		1,200		1,263
2.00%, Due 11/15/2021		9,400		9,763
2.00%, Due 2/15/2022		6,665		6,902
6.25%, Due 8/15/2023		1,400		2,020
6.875%, Due 8/15/2025		770		1,195
5.25%, Due 11/15/2028		750		1,046
4.75%, Due 2/15/2037		800		1,104
4.50%, Due 8/15/2039		1,010		1,355
3.125%, Due 11/15/2041		7,460		7,917
				32,565
U.S. Treasury Notes - 6.17%
1.875%, Due 2/28/2014		2,000		2,043
2.625%, Due 7/31/2014		4,500		4,684
2.125%, Due 11/30/2014		2,500		2,594
0.375%, Due 3/15/2015		1,455		1,456
2.50%, Due 3/31/2015		2,000		2,104
2.00%, Due 4/30/2016		2,950		3,107
3.125%, Due 10/31/2016		2,400		2,645
0.875%, Due 1/31/2017		4,000		4,047
3.125%, Due 2/15/2042		2,000		2,120

See accompanying notes

38

American Beacon Intermediate Bond Fund^SM

Schedule of Investments

October 31, 2012

	Shares		Fair Value
			(000’s)
			$	24,800
Total U.S. Treasury Obligations (Cost $55,349)				57,365
SHORT-TERM INVESTMENTS - 2.19% (Cost $8,792)
JPMorgan U.S. Government Money Market Fund, Capital Class		8,792,189		8,792
TOTAL INVESTMENTS - 98.34% (Cost $373,169)				395,025
OTHER ASSETS, NET OF LIABILITIES - 1.66%				6,696
TOTAL NET ASSETS - 100.00%			$	401,721

Percentages are stated as a percent of net assets.

^A Limited Liability Company.

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

^C Security exempt from registration under the Securities Act of 1933. These securities may be resold to qualified institutional buyers pursuant to Rule 144A. At the period end, the value of these securities amounted to $21,240 or 5.29% of net assets. The Fund has no right to demand registration of these securities.

^D REIT - Real Estate Investment Trust.

^E Limited Partnership.

See accompanying notes

39

American Beacon Short-Term Bond Fund^SM

Schedule of Investments

October 31, 2012

	Par Amount		Fair Value
	(000’s)		(000’s)
CORPORATE OBLIGATIONS - 34.04%
Financials - 20.18%
ABN Amro Bank N.V., 2.083%, Due 1/30/2014A B	$	2,000	$	2,023
American Express Co., 7.25%, Due 5/20/2014		1,000		1,099
American International Group, Inc.,
3.65%, Due 1/15/2014		2,000		2,059
4.25%, Due 9/15/2014		600		635
ANZ National International Ltd., 1.379%, Due 12/20/2013A B		2,000		2,017
Bank of America Corp.,
1.733%, Due 1/30/2014A		2,000		2,018
0.719%, Due 9/15/2014A		1,290		1,277
Citigroup, Inc.,
1.290%, Due 4/1/2014A		327		328
0.722%, Due 11/5/2014A		2,573		2,547
Credit Suisse, 5.00%, Due 5/15/2013		2,000		2,048
Danske Bank A/S, 1.390%, Due 4/14/2014A B		3,000		2,970
Dexia Credit Local, 0.814%, Due 3/5/2013A B		3,000		2,982
Goldman Sachs Group, Inc.,
4.75%, Due 7/15/2013		2,000		2,055
5.125%, Due 1/15/2015		1,000		1,079
0.719%, Due 7/22/2015A		1,000		980
HSBC Finance Corp., 0.590%, Due 1/15/2014A		1,000		995
ING Bank N.V., 1.808%, Due 6/9/2014A B		3,000		3,022
Lloyds TSB Bank plc, 2.666%, Due 1/24/2014A		2,000		2,035
MetLife Institutional Funding II, 1.254%, Due 4/4/2014A B		3,000		3,026
Monumental Global Funding III, 0.540%, Due 1/15/2014A B		1,000		990
Morgan Stanley, 0.820%, Due 10/15/2015A		3,000		2,892
National Australia Bank Ltd., 1.263%, Due 7/25/2014A B		3,000		3,031
Prudential Financial, Inc., 4.50%, Due 7/15/2013		1,000		1,027
Societe Generale S.A., 1.397%, Due 4/11/2014A B		2,000		1,993
Svenska Handelsbanken AB, 4.875%, Due 6/10/2014B		1,500		1,583
Wachovia Bank NA, 0.822%, Due 11/3/2014A		779		774
				47,485
Industrials - 12.66%
American Honda Finance Corp.,
1.45%, Due 2/27/2015B		2,000		2,028
1.00%, Due 8/11/2015B		2,000		2,003
Burlington Northern Santa Fe Corp., 4.875%, Due 1/15/2015		1,000		1,084
Comcast Cable Communications Holdings, Inc., 8.375%, Due 3/15/2013		1,365		1,404
Daimler Finance North America LLC,
0.972%, Due 3/28/2014A B C		2,000		2,008
2.30%, Due 1/9/2015B C		1,000		1,027
EOG Resources Canada, Inc., 4.75%, Due 3/15/2014B		1,000		1,058
Ford Motor Credit Co. LLC, 4.25%, Due 2/3/2017C		1,000		1,066
France Telecom S.A., 4.375%, Due 7/8/2014		1,000		1,059
General Mills, Inc., 5.25%, Due 8/15/2013		1,000		1,037
Hewlett-Packard Co.,
4.50%, Due 3/1/2013A		1,000		1,011
0.823%, Due 5/30/2014A		1,000		989
Johnson Controls, Inc., 1.75%, Due 3/1/2014		500		508
Kellogg Co., 1.125%, Due 5/15/2015		2,000		2,017
Nissan Motor Acceptance Corp., 4.50%, Due 1/30/2015B		1,000		1,072
Quest Diagnostics, Inc., 1.223%, Due 3/24/2014A		1,000		1,007
SABMiller Holdings, Inc., 1.85%, Due 1/15/2015B		1,000		1,025
SABMiller plc, 6.50%, Due 7/1/2016B		1,725		2,045
Telefonica Emisiones SAU, 0.772%, Due 2/4/2013A		1,000		997
Viacom, Inc., 1.25%, Due 2/27/2015		2,000		2,019
Volkswagen International Finance N.V.,
1.625%, Due 8/12/2013B		1,000		1,009
0.970%, Due 4/1/2014A B		2,000		2,007
Xerox Corp., 5.65%, Due 5/15/2013		300		308
				29,788

See accompanying notes

40

American Beacon Short-Term Bond Fund^SM

Schedule of Investments

October 31, 2012

	Par Amount		Fair Value
	(000’s)		(000’s)
Utilities - 1.20%
DTE Energy Co., 1.118%, Due 6/3/2013A	$	1,000	$	1,002
EDF S.A., 5.50%, Due 1/26/2014B		1,000		1,058
Pacific Gas & Electric Co., 6.25%, Due 12/1/2013		730		773
				2,833
Total Corporate Obligations (Cost $79,187)				80,106
ASSET-BACKED OBLIGATIONS - 9.93%
Ally Master Owner Trust,
0.844%, Due 5/15/2016, 2011-3 A1A		2,000		2,009
1.014%, Due 9/15/2016, 2011-4 A1A		4,000		4,034
BMW Vehicle Lease Trust, 0.75%, Due 2/20/2015, 2012-1 A3		2,250		2,264
Ford Credit Auto Owner Trust, 0.84%, Due 8/15/2016, 2012-1A A3		2,000		2,014
Ford Credit Floorplan Master Owner Trust, 0.814%, Due 2/15/2016, 2011-1 A2A		2,000		2,011
GE Dealer Floorplan Master Note Trust, 0.811%, Due 7/20/2016, 2011-1 AA		2,500		2,511
GE Equipment Small Ticket LLC, 1.45%, Due 1/21/2018, 2011-1A A3B C		1,000		1,006
GE Equipment Transportation LLC,
1.00%, Due 10/20/2014, 2011-1 A3C		2,000		2,005
0.62%, Due 7/25/2016, 2012-2 A3		2,500		2,501
Volkswagen Auto Loan Enhanced Trust,
0.87%, Due 7/20/2015, 2012 A A3		1,000		1,011
0.85%, Due 8/22/2016, 2012-1 A3		2,000		2,013
Total Asset-Backed Obligations (Cost $23,249)				23,379
NON-AGENCY MORTGAGE-BACKED OBLIGATIONS - 1.20%
Banc of America Commercial Mortgage Trust, 5.634%, Due 4/10/2049, 2007-2 A2		276		282
GS Mortgage Securities Corp II, 2.716%, Due 2/10/2021, 2011-ALF AB		1,500		1,531
JP Morgan Chase Commercial Mortgage Securities Corp., 3.853%, Due 6/15/2043, 2010-C1 A1B		951		1,017
Total Non-Agency Mortgage-Backed Obligations (Cost $2,737)				2,830
U.S. AGENCY MORTGAGE-BACKED OBLIGATIONS - 21.92%
Government National Mortgage Association - 16.03%
1.864%, Due 8/16/2031, 2010-141 A		3,370		3,413
2.239%, Due 12/16/2031, 2009-115 IO		2,699		2,750
2.45%, Due 7/16/2032, 2011-109 A		3,845		3,937
2.25%, Due 5/16/2033, 2011-92 A		3,854		3,931
2.25%, Due 8/16/2034, 2011-78 A		2,410		2,460
2.21%, Due 11/16/2034, 2011-16 A		2,867		2,925
1.692%, Due 11/16/2035, 2010-148 A		2,492		2,518
2.21%, Due 12/16/2035, 2011-31 A		2,879		2,943
2.782%, Due 6/16/2036, 2010-13 AD		1,825		1,888
3.069%, Due 6/16/2036, 2010-52 A		2,666		2,791
2.161%, Due 11/16/2036, 2011-96 AB		2,217		2,268
2.45%, Due 7/16/2038, 2011-49 A		2,905		2,995
2.989%, Due 3/16/2039, 2010-71 AC		1,294		1,336
3.210%, Due 10/16/2039, 2010-22 AB		1,499		1,566
				37,721
National Credit Union Administration - 5.89%
0.669%, Due 1/8/2020, 2011 R1 1AA		5,795		5,802
0.619%, Due 2/6/2020, 2011 R2 1AA		1,526		1,529
1.84%, Due 10/7/2020, 2010-R1 2A		452		459
0.616%, Due 3/11/2020, 2011 R3 1AA		6,038		6,071
				13,861
Total U.S. Agency Mortgage-Backed Obligations (Cost $51,066)				51,582
U.S. TREASURY OBLIGATIONS - 3.33%
U.S. Treasury Note,
2.50%, Due 3/31/2015		3,500		3,683
1.75%, Due 7/31/2015		4,000		4,150
Total U.S. Treasury Obligations (Cost $7,582)				7,833

See accompanying notes

41

American Beacon Short-Term Bond Fund^SM

Schedule of Investments

October 31, 2012

	Shares		Fair Value
			(000’s)
SHORT-TERM INVESTMENTS - 0.36% (Cost $854)
JPMorgan U.S. Government Money Market Fund, Capital Class		854,463	$	854
TOTAL INVESTMENTS - 70.78% (Cost $164,675)				166,584
OTHER ASSETS, NET OF LIABILITIES - 29.22%				68,764
TOTAL NET ASSETS - 100.00%			$	235,348

Percentages are stated as a percent of net assets.

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

^B  Security exempt from registration under the Securities Act of 1933. These securities may be resold to qualified institutional buyers pursuant to Rule 144A. At the period end, the value of these securities amounted to $43,531 or 18.50% of net assets. The Fund has no right to demand registration of these securities.

^C  Limited Liability Company.

See accompanying notes

42

American Beacon Funds^SM

Statements of Assets and Liabilities

October 31, 2012 (in thousands except share and per share amounts)

	High Yield Bond Fund			Retirement Income and Appreciation Fund			Intermediate Bond Fund		Short-Term Bond Fund
Assets:
Investments in unaffiliated securities, at fair value A	$	135,667		$	168,281		$	395,025	$	166,584
Cash		5			—			—		—
Receivable for investments sold		397			—			835		—
Dividends and interest receivable		2,547			1,238			2,560		560
Receivable for fund shares sold		3,828			191			11,807		68,635
Receivable for tax reclaims		1			6			7		—
Receivable for expense reimbursement (Note 2)		2			10			2		3
Prepaid expenses		21			23			22		29
Total assets		142,468			169,749			410,258		235,811
Liabilities:
Payable for investments purchased		1,339			217			861		—
Payable for fund shares redeemed		495			35			7,495		358
Dividends payable		41			2			9		4
Management and investment advisory fees payable		171			150			67		28
Administrative service and service fees payable		22			68			22		24
Professional fees payable		23			28			31		28
Trustee fees payable		1			4			5		7
Payable for prospectus and shareholder reports		—			12			31		7
Other liabilities		13			3			16		7
Total liabilities		2,105			519			8,537		463
Net Assets	$	140,363		$	169,230		$	401,721	$	235,348
Analysis of Net Assets:
Paid-in-capital		140,328			157,252			373,005		241,833
Undistributed net investment income		135			(248	)		478		(510	)
Accumulated net realized gain (loss)		(2,683	)		999			6,382		(7,884	)
Unrealized appreciation of investments		2,583			11,227			21,856		1,909
Net assets	$	140,363		$	169,230		$	401,721	$	235,348
Shares outstanding at no par value (Unlimited shares authorized):
Institutional Class		4,620,128			N/A			34,489,740		24,772,838
Y Class		47,951			205,396			9,959		30,970
Investor Class		981,234			14,698,969			979,070		1,615,668
A Class		74,392			112,258			65,329		336,183
C Class		248,797			176,998			121,990		42,875
AMR Class		9,455,147			N/A			N/A		N/A

See accompanying notes

43

American Beacon Funds^SM

Statements of Assets and Liabilities

October 31, 2012 (in thousands except share and per share amounts)

	High Yield Bond Fund		Retirement Income and Appreciation Fund		Intermediate Bond Fund		Short-Term Bond Fund
Net asset value, offering and redemption price per share:
Institutional Class	$	9 .10		N/A	$	11 .26	$	8 .78
Y Class	$	9 .12	$	11 .14	$	11 .31	$	8 .77
Investor Class	$	9 .10	$	11 .14	$	11 .25	$	8 .79
A Class (net asset value and redemption price)	$	9 .11	$	11 .17	$	11 .24	$	8 .78
A Class (offering price)	$	9 .57	$	11 .46	$	11 .80	$	9 .01
C Class	$	9 .09	$	11 .17	$	11 .25	$	8 .79
AMR Class	$	9 .10		N/A		N/A		N/A
Net assets (not in thousands):
Institutional Class	$	42,026,255	$	N/A	$	388,490,631	$	217,545,527
Y Class		437,078		2,287,371		112,638		271,620
Investor Class		8,930,091		163,712,497		11,011,566		14,203,255
A Class		678,044		1,253,367		734,382		2,950,758
C Class		2,261,893		1,977,182		1,371,781		376,731
AMR Class		86,029,468		N/A		N/A		N/A
A Cost of investments in unaffiliated securities	$	133,084	$	157,054	$	373,169	$	164,675

See accompanying notes

44

American Beacon Funds^SM

Statements of Operations

For the year ended October 31, 2012 (in thousands)

	High Yield Bond Fund			Retirement Income and Appreciation Fund			Intermediate Bond Fund			Short-Term Bond Fund
Investment Income:
Dividend income from unaffiliated securities (net of foreign taxes) A	$	140		$	281		$	3		$	—
Interest income		11,095			4,576			11,395			3,355
Other Income		182			—			—			—
Total investment income		11,417			4,857			11,398			3,355
Expenses:
Management and investment advisory fees (Note 2)		571			506			882			359
Administrative service fees (Note 2):
Institutional Class		134			—			220			94
Y Class		—			4			—			1
Investor Class		25			457			30			56
A Class		1			5			4			14
C Class		5			7			3			1
AMR Class		40			—			—			—
Transfer agent fees:
Institutional Class		20			—			11			4
Investor Class		4			7			2			7
A Class		—			—			1			—
C Class		1			1			—			—
AMR Class		3			—			—			—
Custody and fund accounting fees		25			22			56			23
Professional fees		57			44			54			46
Registration fees and expenses		65			77			77			63
Service fees (Note 2):
Y Class		—			1			—			—
Investor Class		21			571			25			47
A Class		—			2			1			5
C Class		2			3			1			1
Distribution fees (Note 2):
A Class		1			3			2			9
C Class		14			17			7			4
Prospectus and shareholder report expenses		30			22			85			36
Trustee fees		9			15			31			17
Other expenses		7			10			19			12
Total expenses		1,035			1,774			1,511			799
Net (fees waived and expenses reimbursed) (Note 2)		(7	)		(12	)		(7	)		(29	)
Net expenses		1,028			1,762			1,504			770
Net investment income		10,389			3,095			9,894			2,585
Realized and unrealized gain (loss) from investments:
Net realized gain (loss) from:
Investments		(160	)		1,443			7,693			281
Change in net unrealized appreciation or (depreciation) of:
Investments		5,699			4,158			8,819			1,785
Net gain from investments		5,539			5,601			16,512			2,066
Net increase in net assets resulting from operations	$	15,928		$	8,696		$	26,406		$	4,651
A Foreign taxes	$	—		$	5		$	—		$	—

See accompanying notes

45

American Beacon Funds^SM

Statements of Changes in Net Assets (in thousands)

	High Yield Bond Fund						Retirement Income and Appreciation Fund
	Year Ended October 31, 2012			Year Ended October 31, 2011			Year Ended October 31, 2012			Year Ended October 31, 2011
Increase (Decrease) in Net Assets:
Operations:
Net investment income	$	10,389		$	11,941		$	3,095		$	3,081
Net realized gain (loss) from investments		(160	)		8,136			1,443			2,522
Change in net unrealized appreciation or (depreciation) of investments		5,699			(12,888	)		4,158			(1,793	)
Net increase in net assets resulting from operations		15,928			7,189			8,696			3,810
Distributions to Shareholders:
Net investment income:
Institutional Class		(3,258	)		(3,296	)		—			—
Y Class		(5	)		—			(35	)		(13	)
Investor Class		(611	)		(1,941	)		(3,447	)		(3,349	)
A Class		(26	)		(5	)		(24	)		(10	)
C Class		(91	)		(11	)		(22	)		(17	)
AMR Class		(6,414	)		(6,684	)		—			—
Net realized gain from investments:
Y Class		—			—			(4	)		—
Investor Class		—			—			(745	)		—
A Class		—			—			(5	)		—
C Class		—			—			(9	)		—
Net distributions to shareholders		(10,405	)		(11,937	)		(4,291	)		(3,389	)
Capital Share Transactions:
Proceeds from sales of shares		64,875			37,430			40,957			49,115
Reinvestment of dividends and distributions		9,771			11,132			4,260			3,264
Cost of shares redeemed		(62,335	)		(107,035	)		(30,703	)		(30,079	)
Redemption fees		47			32			—			—
Net increase (decrease) in net assets from capital share transactions		12,358			(58,441	)		14,514			22,300
Net increase (decrease) in net assets		17,881			(63,189	)		18,919			22,721
Net Assets:
Beginning of period		122,482			185,671			150,311			127,590
End of Period *	$	140,363		$	122,482		$	169,230		$	150,311
*Includes undistributed net investment income (loss) of	$	135		$	150		$	(248	)	$	(149	)

See accompanying notes

46

American Beacon Funds^SM

Statements of Changes in Net Assets (in thousands)

	Intermediate Bond Fund						Short-Term Bond Fund
	Year Ended October 31, 2012			Year Ended October 31, 2011			Year Ended October 31, 2012			Year Ended October 31, 2011
Increase (Decrease) in Net Assets:
Operations:
Net investment income	$	9,894		$	8,718		$	2,585		$	2,955
Net realized gain from investments		7,693			2,756			281			1,206
Change in net unrealized appreciation or (depreciation) of investments		8,819			(635	)		1,785			(3,806	)
Net increase in net assets resulting from operations		26,406			10,839			4,651			355
Distributions to Shareholders:
Net investment income:
Institutional Class		(10,971	)		(9,074	)		(2,943	)		(3,233	)
Y Class		(2	)		(3	)		(5	)		(5	)
Investor Class		(218	)		(101	)		(273	)		(489	)
A Class		(17	)		(10	)		(49	)		(20	)
C Class		(8	)		(5	)		(3	)		(3	)
Net realized gain from investments:
Institutional Class		(2,259	)		(4,838	)		—			—
Y Class		—			(6	)		—			—
Investor Class		(16	)		(63	)		—			—
A Class		(3	)		(2	)		—			—
C Class		(2	)		(6	)		—			—
Net distributions to shareholders		(13,496	)		(14,108	)		(3,273	)		(3,750	)
Capital Share Transactions:
Proceeds from sales of shares		479,335			64,388			112,458			97,611
Reinvestment of dividends and distributions		13,407			14,072			3,212			3,703
Cost of shares redeemed		(383,824	)		(90,614	)		(67,337	)		(66,867	)
Net increase (decrease) in net assets from capital share transactions		108,918			(12,154	)		48,333			34,447
Net increase (decrease) in net assets		121,828			(15,423	)		49,711			31,052
Net Assets:
Beginning of period		279,893			295,316			185,637			154,585
End of Period *	$	401,721		$	279,893		$	235,348		$	185,637
*Includes undistributed net investment income (loss) of	$	478		$	(2,860	)	$	(510	)	$	(308	)

See accompanying notes

47

American Beacon Funds^SM

Notes to Financial Statements

October 31, 2012

1. Organization and Significant Accounting Policies

American Beacon Funds (the “Trust”), which is comprised of 24 Funds, is organized as a Massachusetts business trust and is registered under the Investment Company Act of 1940, as amended (the “Act”), as a diversified, open-end management investment company. These financial statements and notes to the financial statements relate to the American Beacon High Yield Bond Fund, the American Beacon Retirement Income and Appreciation Fund, the American Beacon Intermediate Bond Fund, and the American Beacon Short-Term Bond Fund (each a “Fund” and collectively, the “Funds”), each a series of the Trust.

American Beacon Advisors, Inc. (the “Manager”) is a wholly-owned subsidiary of Lighthouse Holdings, Inc. and was organized in 1986 to provide business management, advisory, administrative, and asset management consulting services to the Trust and other investors.

Class Disclosure

Each Fund has multiple classes of shares designed to meet the needs of different groups of investors; however, not all Funds offer all classes. The following table sets forth the differences amongst the classes:

Class:	Offered to:
Institutional Class	Investors making an initial investment of $250,000
Y Class	Investors making an initial investment of $100,000
Investor Class	General public and investors investing through an intermediary
A Class	General public and investors investing through an intermediary with applicable sales charges
C Class	General public and investors investing through an intermediary with applicable sales charges
AMR Class	Investors in the tax-exempt retirement and benefit plans of the Manager, AMR Corporation, and its affiliates

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

New Accounting Pronouncements

In May 2011, the Financial Accounting Standards Board (“FASB”) issued an Accounting Standards Update (“ASU”) ASU No. 2011-04 “Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. Generally Accepted Accounting Principles (“U.S. GAAP”) and the International Financial Reporting Standards (“IFRSs”)”. ASU No. 2011-04 amends FASB ASC Topic 820, Fair Value Measurements and Disclosures, to establish common requirements for measuring fair value and for disclosing information about fair value measurements in accordance with U.S. GAAP and IFRSs. ASU No. 2011-04 is effective for fiscal years beginning after December 15, 2011 and for the interim period May 1, 2012 to October 31, 2012.

Management has evaluated the implications of these changes and determined that the impact of the new guidance will only affect the disclosure requirements related to the financial statements. However, as the Funds did not hold any Level 3 investments as of October 31, 2012, the financial statement disclosures were not affected.

2. Transactions with Affiliates

Management Agreement

The Trust and the Manager are parties to a Management Agreement that obligates the Manager to provide or oversee the provision of all investment advisory and fund management. Investment assets of the

48

American Beacon Funds^SM

Notes to Financial Statements

October 31, 2012

High Yield Bond, Retirement Income and Appreciation, and Intermediate Bond Funds are managed by one or more investment advisors which have entered into separate investment advisory agreements with the Manager. As compensation for performing the duties required under the Management Agreement, the Manager receives from the High Yield Bond and Retirement Income and Appreciation Funds an annualized fee equal to 0.05% of the average daily net assets plus amounts paid by the Manager to the investment advisors hired by the Manager to direct investment activities of the Funds. The Manager receives an annualized fee of 0.20% of the average daily net assets of the Intermediate Bond Fund and pays a portion of its fee to an investment advisor hired by the Manager to direct investment activities of a portion of the Fund. The Manager is one of the investment advisors of the Retirement Income and Appreciation Fund and receives an annualized fee of 0.15% on the portion of assets managed by the Manager. The Manager serves as the sole investment advisor to the Short-Term Bond Fund. Management fees paid during the year ended October 31, 2012 were as follows (dollars in thousands):

	Management Fee Rate			Management Fee		Amounts paid to  Investment Advisors		Net Amounts Retained  by Manager
High Yield Bond		0.43	%		571		504		67
Retirement Income and Appreciation		0.32	%		506		428		78
Intermediate Bond		0.20	%		882		361		521
Short-Term Bond		0.20	%		359		—		359

Administrative Services Agreement

The Manager and the Trust entered into an Administrative Services Agreement which obligates the Manager to provide or oversee administrative services to the Funds. As compensation for performing the duties required under the Administrative Services Agreement, the Manager receives an annualized fee of 0.30% of the average daily net assets of the Institutional, Y, and Investor Classes of each Fund, 0.40% of the average daily net assets of the A and C Classes of each Fund, and 0.05% of the average daily net assets of the AMR Class, except for the Institutional Class of the Intermediate and Short-Term Bond Funds from which the Manager receives a fee of 0.05% of average daily net assets.

Distribution Plans

The Funds, except for the A and C Classes of the Funds, have adopted a “defensive” Distribution Plan (the “Plan”) in accordance with Rule 12b-1 under the Act, pursuant to which no separate fees may be charged to the Funds for distribution purposes. However, the Plan authorizes the management and administrative service fees received by the Manager and the investment advisors hired by the Manager to be used for distribution purposes. Under this Plan, the Funds do not intend to compensate the Manager or any other party, either directly or indirectly, for the distribution of Fund shares.

Separate Distribution Plans (the “Distribution Plans”) have been adopted pursuant to Rule 12b-1 under the Act for the A and C Classes of the Funds. Under the Distribution Plans, as compensation for distribution assistance, the Manager receives an annual fee of 0.25% of the average daily net assets of each A Class and 1.00% of the average daily net assets of each C Class. The fee will be payable without regard to whether the amount of the fee is more or less than the actual expenses incurred in a particular month by the Manager for distribution assistance.

Service Plans

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

49

American Beacon Funds^SM

Notes to Financial Statements

October 31, 2012

Interfund Lending Program

Pursuant to an exemptive order by the Securities and Exchange Commission (“SEC”), the Funds, along with other registered investment companies having management contracts with the Manager, may participate in an interfund lending program. This program provides an alternative credit facility allowing the Funds to borrow from other participating Funds. For the year ended October 31, 2012, the Intermediate Bond Fund loaned $3,290,488 for one day at 0.80% with interest charges of $72 to the American Beacon Mid-Cap Value Fund and the Short-Term Bond Fund loaned on average $336,922 for 9 days at an average rate of 0.79% with interest charges of $66 to the American Beacon Zebra Large Cap Equity and Zebra Small Cap Equity Funds.

Expense Reimbursement Plan

The Manager voluntarily and contractually agreed to reimburse the following Funds to the extent that total operating expenses exceeded the Fund’s expense cap. For the period ended October 31, 2012, the Manager reimbursed expenses as follows:

		Expense Caps
Funds	Class	11/1/11 to 2/29/12			3/1/12 to 10/31/12			Reimbursed Expenses		Expiration  of Reimbursements
High Yield Bond	Institutional*		N/A			0.93	%	$	1,653		2015
High Yield Bond	Y		N/A			0.98	%		77		2015
High Yield Bond	A		1.12	%		1.12	%		1,220		2015
High Yield Bond	C		1.87	%		1.87	%		4,247		2015
Retirement Income and Appreciation	Y		N/A			0.80	%		904		2015
Retirement Income and Appreciation	Investor*		N/A			1.12	%*		8,500		2015
Retirement Income and Appreciation	A		1.14	%		1.14	%		1,598		2015
Retirement Income and Appreciation	C		1.96	%		1.96	%		1,159		2015
Intermediate Bond	Y		0.65	%		0.65	%		232		2015
Intermediate Bond	Investor		0.79	%		0.79	%		5,268		2015
Intermediate Bond	A		0.99	%		0.99	%		1,150		2015
Intermediate Bond	C		1.74	%		1.74	%		942		2015
Short-Term Bond	Y		0.64	%		0.64	%		222		2015
Short-Term Bond*	Investor		0.79	%		0.79	%		18,250		2015
Short-Term Bond	A		0.85	%		0.85	%		9,483		2015
Short Term Bond	C		1.60	%		1.60	%		1,185		2015

* Voluntary reimbursement.

Of these amounts, $1,818, $9,865, $1,919, and $2,983 was receivable from the Manager at October 31, 2012 for the High Yield Bond, Retirement Income and Appreciation, Intermediate Bond, and Short-Term Bond Funds, respectively. The Funds have adopted an Expense Reimbursement Plan whereby the Manager may seek repayment of fees waived or expenses reimbursed for a period of up to three years. However, reimbursement will occur only if the Class’ average net assets have grown or expenses have declined sufficiently to allow reimbursement without causing its expense ratio to exceed the previously agreed upon contractual expense limit. The carryover of excess expenses potentially reimbursable to the Manager, but not recorded as a liability for the High Yield Bond Fund is $11 and $5,574 expiring in 2013 and 2014, respectively; for the Retirement Income and Appreciation Fund $9,426 expiring in 2014; the Intermediate Bond Fund $2,320 and $3,532 expiring in 2013 and 2014, respectively; and for the Short-Term Bond Fund $64,863 and $47,110 expiring in 2013 and 2014, respectively. During the year ended October 31, 2012, the Funds did not record a liability for potential reimbursement due to the current assessment that a reimbursement is unlikely.

Sales Commissions

The Funds’ distributor, Foreside Fund Services, LLC (“Foreside”), may receive a portion of A Class sales charges from broker dealers and it may be used to offset distribution related expenses. For the year ended October 31, 2012, Foreside has collected $1,119, $317, $1,623, and $51 for the High Yield Bond, Retirement Income and Appreciation, Intermediate Bond, and Short-Term Bond Funds, respectively from the sale of Class A Shares.

50

American Beacon Funds^SM

Notes to Financial Statements

October 31, 2012

A contingent deferred sales charge (“CDSC”) of 0.50% will be deducted with respect to Class A Shares on certain purchases of $250,000 or more that are redeemed in whole or part within 12 months of purchase, unless waived as discussed in the Prospectus. Any applicable CDSC will be 0.50% of the lesser of the original purchase price or the value of the redemption of the Class A Shares redeemed. During the year ended October 31, 2012 the CDSC fees of $2,752 were collected for the Short-Term Bond.

A CDSC of 1.00% will be deducted with respect to Class C Shares redeemed within 12 months of purchase, unless waived as discussed in the Prospectus. Any applicable CDSC will be 1.00% of the lesser of the original purchase price or the value of the redemption of the Class C Shares redeemed. During the year ended October 31, 2012 the following CDSC fees were collected, $1,934, $817, $44, and $30 for the High Yield Bond, Retirement Income and Appreciation, Intermediate Bond, and Short-Term Bond Funds, respectively.

3. Security Valuation and Fair Value Measurements

Investments are valued at the close of the New York Stock Exchange (the “Exchange”), normally 4 p.m. ET, each day that the Exchange is open for business. Equity securities for which market quotations are available are valued at the last sale price or official closing price (closing bid price or last evaluated quote if no sale has occurred) on the primary market or exchange on which they trade.

Debt securities (other than short-term securities) normally are valued on the basis of prices provided by an independent pricing service and may take into account appropriate factors such as institution-size trading in similar groups of securities, yield, quality, coupon rate, maturity, type of issue, trading characteristics, and other market data. The prices of debt securities may be determined using quotes obtained from brokers.

Investments in mutual funds are valued at the closing net asset value (“NAV”) per share of the mutual fund on the day of valuation. Investment grade short-term obligations with 60 days or less to maturity are valued using the amortized cost method, which approximates fair value.

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

Other investments, including restricted securities, and those financial instruments for which the above valuation procedures are inappropriate or are deemed not to reflect fair value are stated at fair value as determined in good faith by the Valuation Committee, established by the Fund’s Board.

Valuation Inputs

Various inputs may be used to determine the fair value of the Funds’ investments. These inputs are summarized in three broad levels for financial statement purposes. The inputs or methodologies used to value securities are not necessarily an indication of the risk associated with investing in those securities.

Level 1 – Quoted prices in active markets for identical securities.

Level 2 – Prices determined using other significant observable inputs. These may include quoted prices for similar securities, interest rates, prepayment speeds, credit risk, and others. Level 2 securities are fixed-income securities that are valued using observable inputs as stated above.

Level 3 – Prices determined using other significant unobservable inputs. Unobservable inputs reflect the Fund’s own assumptions about the factors market participants would use in pricing an investment, and would be based on the best information available.

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American Beacon Funds^SM

Notes to Financial Statements

October 31, 2012

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

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

Fixed income securities purchased on a delayed-delivery basis are marked to market daily until settlement at the forward settlement date are categorized as Level 2 of the fair value hierarchy.

Mortgage-related and asset-backed securities are usually issued as separate tranches, or classes, of securities within each deal. These securities are also normally valued by pricing service providers that use broker dealer quotations or valuation estimates from their internal pricing models. The pricing models for these securities usually consider tranche-level attributes, current market data, estimated cash flows, and market-based yield spreads for each tranche, and incorporates deal collateral performance, as available. Mortgage-related and asset-backed securities that use similar valuation techniques and inputs as described above are categorized as Level 2 of the fair value hierarchy.

Common stocks, exchange-traded funds and financial derivative instruments, such as futures contracts that are traded on a national securities exchange, are stated at the last reported sale or settlement price on the day of valuation. To the extent these securities are actively traded and valuation adjustments are not applied, they are categorized as Level 1 of the fair value hierarchy. Valuation adjustments may be applied to certain securities that are solely traded on a foreign exchange to account for the market movement between the close of the foreign market and the close of the Exchange. These securities are valued using pricing service providers that consider the correlation of the trading patterns of the foreign security to the intraday trading in the U.S. markets for investments. Securities using these valuation adjustments are categorized as Level 2 of the fair value hierarchy. Preferred securities and other equities traded on inactive markets or valued by reference to similar instruments are also categorized as Level 2 of the fair value hierarchy.

Investments in registered open-end investment management companies will be valued based upon the NAVs of such investments and are categorized as Level 1 of the fair value hierarchy. Short-term investments having a maturity of 60 days or less are generally valued at amortized cost which approximates fair value. These investments are categorized as Level 2 of the fair value hierarchy.

Level 3 trading assets and trading liabilities, at fair value

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

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

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

52

American Beacon Funds^SM

Notes to Financial Statements

October 31, 2012

or assets and for determining whether the value of the applicable securities or assets should be re-evaluated in light of such significant events.

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

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

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

The Funds’ investments are summarized by level based on the inputs used to determine their values. U.S. GAAP also requires all transfers between any levels to be disclosed. The end of the period timing recognition has been adopted for the transfers between levels of each Fund’s assets and liabilities. As of October 31, 2012, the investments were classified as described below (in thousands):

High Yield Bond Fund	Level 1		Level 2		Level 3		Total
Common Stocks	$	330	$	198	$	—	$	528
Convertible Preferred Stock		465		—		—		465
Preferred Stocks		1,021		—		—		1,021
Convertible Obligations		—		1,124		—		1,124
Corporate Obligations		—		126,345		—		126,345
Short-Term Investments - Money Markets		6,184		—		—		6,184
Total Investments in Securities	$	8,000	$	127,667	$	—	$	135,667

Retirement Income and Appreciation Fund	Level 1		Level 2		Level 3		Total
Common Stock	$	8,065	$	—	$	—	$	8,065
Convertible Preferred		606		—		—		606
Preferred Stock		2,760		429		—		3,189
Corporate Obligations		—		66,877		—		66,877
Convertible Obligations		—		15,346		—		15,346
Foreign Government Obligations		—		1,164		—		1,164
U.S. Agency Obligations		—		316		—		316
Asset-Backed Obligations		—		3,569		—		3,569
Non-Agency Mortgage-Backed Obligations		—		4,705		—		4,705
U.S. Agency Mortgage-Backed Obligations		—		38,688		—		38,688
U.S. Treasury Obligations		—		23,087		—		23,087
Short-Term Investments - Money Markets		2,669		—		—		2,669
Total Investments in Securities	$	14,100	$	154,181	$	—	$	168,281

53

American Beacon Funds^SM

Notes to Financial Statements

October 31, 2012

Intermediate Bond Fund	Level 1		Level 2		Level 3		Total
Corporate Obligations	$	—	$	179,620	$	—	$	179,620
Foreign Government Obligations		—		2,849		—		2,849
U.S. Agency Obligations		—		422		—		422
Asset-Backed Obligations		—		10,126		—		10,126
Non-Agency Mortgage-Backed Obligations		—		9,476		—		9,476
U.S. Agency Mortgage-Backed Obligations		—		126,375		—		126,375
U.S. Treasury Obligations		—		57,365		—		57,365
Short-Term Investments - Money Markets		8,792		—		—		8,792
Total Investments in Securities	$	8,792	$	386,233	$	—	$	395,025

Short-Term Bond Fund	Level 1		Level 2		Level 3		Total
Corporate Obligations	$	—	$	80,106	$	—	$	80,106
Asset-Backed Obligations		—		23,379		—		23,379
Non-Agency Mortgage-Backed Obligations		—		2,830		—		2,830
U.S. Agency Mortgage-Backed Obligations		—		51,582		—		51,582
U.S. Treasury Obligations		—		7,833		—		7,833
Short-Term Investments - Money Markets		854		—		—		854
Total Investments in Securities	$	854	$	165,730	$	—	$	166,584

As of October 31, 2012, there were no transfers between levels for the Retirement Income and Appreciation, Intermediate Bond, and Short-Term Bond Funds.

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

						Convertible
	Common			Preferred		Preferred		Convertible		Corporate
	Stocks			Stocks		Stocks		Obligations		Obligations		Totals
Balance as of October 31, 2011	$	53		$	—	$	—	$	—	$	—	$	53
Realized gain (loss)		(3	)		—		—		—		—		(3	)
Change in unrealized appreciation or (depreciation)		—			—		—		—		—		—
Purchases		—			—		—		—		—		—
Sales		(50	)		—		—		—		—		(50	)
Transfer into Level 3		—			—		—		—		—		—
Transfer out of Level 3		—			—		—		—		—		—
Balance as of October 31, 2012		—			—		—		—		—		—
Change in unrealized at period end*	$	—		$	—	$	—	$	—	$	—	$	—

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

Security Transactions and Investment Income

Security transactions are recorded on the trade date of the security purchase or sale. The Funds may purchase securities with delivery or payment to occur at a later date. At the time the Funds enter into a commitment to purchase a security, the transaction is recorded, and the value of the security is reflected in the NAV. The value of the security may vary with market fluctuations.

Dividend income, net of foreign taxes, is recorded on the ex-dividend date, except certain dividends from foreign securities which are recorded as soon as the information is available to the Funds. Interest income is earned from settlement date, recorded on the accrual basis, and adjusted, if necessary, for accretion of discounts and amortization of premiums. For financial and tax reporting purposes, realized gains and losses are determined on the basis of specific lot identification.

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American Beacon Funds^SM

Notes to Financial Statements

October 31, 2012

Dividends to Shareholders

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

Commission Recapture

The Funds have established brokerage commission recapture arrangements with certain brokers or dealers. If a Fund’s investment advisor chooses to execute a transaction through a participating broker, the broker rebates a portion of the commission back to the Fund. Any collateral benefit received through participation in the commission recapture program is directed exclusively to the Fund. These amounts are reported with the net realized gains in the Fund’s Statement of Operations.

Allocation of Income, Expenses, Gains, and Losses

Income, expenses (other than those attributable to a specific class), gains, and losses are allocated daily to each class of shares based upon the relative proportion of net assets represented by such class. Operating expenses directly attributable to a specific class are charged against the operations of that class.

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results may differ from those estimated.

Redemption Fees

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

Other

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

4. Securities and Other Investments

Payment In-Kind Securities

Certain Funds may invest in payment in-kind securities. Payment in-kind securities give the issuer the option at each interest payment date of making interest payments in either cash or additional debt securities. Those additional debt securities usually have the same terms, including maturity dates and interest rates, and associated risks as the original bonds. The daily market quotations of the original bonds may include the

55

American Beacon Funds^SM

Notes to Financial Statements

October 31, 2012

accrued interest (referred to as a dirty price) and require a pro-rata adjustment from the unrealized appreciation or depreciation on investment to interest receivable in the Statements of Assets and Liabilities.

Restricted Securities

Certain Funds may invest in securities that are subject to legal or contractual restrictions on resale. These securities may be sold privately, but are required to be registered or exempted from such registration before being sold to the public. Private placement securities are generally considered to be restricted except for those securities traded between qualified institutional investors under the provisions of Rule 144A of the Securities Act of 1933. Disposal of restricted securities may involve time-consuming negotiations and expenses, and prompt sale at an acceptable price may be difficult to achieve. Restricted securities outstanding at the period ended October 31, 2012 are disclosed in the Notes to the Schedules of Investments.

High-Yield Securities

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

5. Federal Income and Excise Taxes

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

The Funds do not have any unrecognized tax benefits in the accompanying financial statements. Each of the tax years in the four year period ended October 31, 2012 remains subject to examination by the Internal Revenue Service. If applicable, the Funds recognize interest accrued related to unrecognized tax benefits in interest expense and penalties in “Other expenses” on the Statements of Operations.

Dividends are categorized in accordance with income tax regulations which may treat certain transactions differently than U.S. GAAP. Accordingly, the character of distributions and composition of net assets for tax purposes may differ from those reflected in the accompanying financial statements.

56

American Beacon Funds^SM

Notes to Financial Statements

October 31, 2012

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

	High Yield Bond				Retirement Income  and Appreciation
	Year Ended October  31, 2012		Year Ended October  31, 2011		Year Ended October  31, 2012		Year Ended October  31, 2011
Distributions paid from:
Ordinary income*
Institutional Class	$	3,258	$	3,296	$	—	$	—
Y Class		5		—		35		13
Investor Class		611		1,941		3,447		3,349
A Class		26		5		24		10
C Class		91		11		22		17
AMR Class		6,414		6,684		—		—
Capital Gains
Institutional Class		—		—		—		—
Y Class		—		—		4		—
Investor Class		—		—		745		—
A Class		—		—		5		—
C Class		—		—		9		—
Total distributions paid	$	10,405	$	11,937	$	4,291	$	3,389

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

	Intermediate Bond				Short-Term Bond
	Year Ended October  31, 2012		Year Ended October  31, 2011		Year Ended October  31, 2012		Year Ended October  31, 2011
Distributions paid from:
Ordinary income*
Institutional Class	$	10,971	$	12,384	$	2,943	$	3,233
Y Class		2		8		5		5
Investor Class		218		144		273		489
A Class		17		11		49		20
C Class		8		9		3		3
Capital Gains
Institutional Class		2,259		1,528		—		—
Y Class		—		1		—		—
Investor Class		16		20		—		—
A Class		3		1		—		—
C Class		2		2		—		—
Total distributions paid	$	13,496	$	14,108	$	3,273	$	3,750

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

As of October 31, 2012, the components of distributable earnings or (deficits) on a tax basis were as follows (in thousands):

	High Yield Bond			Retirement Income  and Appreciation			Intermediate Bond			Short-Term Bond
Cost basis of investments for federal income tax purposes	$	133,591		$	157,482		$	373,178		$	165,702
Unrealized appreciation		6,814			11,756			21,963			1,636
Unrealized depreciation		(4,738	)		(957	)		(116	)		(754	)
Net unrealized appreciation		2,076			10,799			21,847			882
Undistributed ordinary income		176			178			4,335			521
Accumulated long-term gain or (loss)		(2,175	)		1,004			2,543			(7,884	)
Other temporary differences		(42	)		(3	)		(9	)		(4	)
Distributable earnings or(deficits)	$	35		$	11,978		$	28,716		$	(6,485	)

57

American Beacon Funds^SM

Notes to Financial Statements

October 31, 2012

Financial reporting records are adjusted for permanent book/tax differences to reflect tax character. Financial records are not adjusted for temporary differences. The temporary differences between financial reporting and tax-basis reporting of unrealized appreciation or depreciation are attributable primarily to the tax deferral of losses from wash sales, book amortization for premiums, and income adjustments associated with contingent payment debt instruments.

Due to inherent differences in the recognition of income, expenses, and realized gains (losses) under U.S. GAAP and federal income tax regulations, permanent differences between book and tax reporting have been identified and appropriately reclassified on the Statements of Assets and Liabilities. Accordingly, the following amounts represent current year permanent differences derived from book amortization of premium, pay down reclasses, income adjustments associated with contingent payment debt instruments, and dividend reclasses as of October 31, 2012 (in thousands):

	High Yield Bond			Retirement Income  and Appreciation			Intermediate Bond			Short-Term Bond
Paid-in-capital	$	—		$	59		$	(1	)	$	(2	)
Undistributed net investment income		1			334			1,298			486
Accumulated net realized gain (loss)		—			(393	)		(1,297	)		(485	)
Unrealized appreciation or (depreciation) of investments		(1	)		—			—			1

On December 22, 2010, the Regulated Investment Company Modernization Act of 2010 (the “RIC MOD”) was enacted, which changed various technical rules governing the tax treatment of RICs. The changes are generally effective for taxable years beginning after the date of enactment. One of the more prominent changes addresses capital loss carryforwards. Under the RIC MOD, each Fund will be permitted to carry forward capital losses incurred in taxable years beginning after the date of enactment for an unlimited period. However, any losses incurred during those future taxable years will be required to be utilized prior to the losses incurred in pre-enactment taxable years, which carry an expiration date. As a result of this ordering rule, pre-enactment capital loss carryforwards may be more likely to expire unused. Additionally, post-enactment capital loss carryforwards will retain their character as either short-term or long-term capital losses rather than being considered all short-term as permitted under previous regulation.

Finally, the RIC MOD contains several provisions aimed at preserving the character of distributions made by a fiscal year RIC during the portion of its taxable year ending after October 31 or December 31, reducing the circumstances under which a RIC might be required to file amended Forms 1099 to restate previously reported distributions. Except for the simplification provisions related to RIC qualification, the RIC MOD is effective for taxable years beginning after December 22, 2010. The provisions related to RIC qualification are effective for taxable years for which the extended due date of the tax return is after December 22, 2010.

Capital losses incurred that will be carried forward under the provisions of the Act for the year October 31, 2012 were as follows (in thousands):

	Loss Carryforward Character
Fund	Short-Term		Long Term		Total
High Yield Bond	$	—	$	205	$	205
Short-Term Bond		204		—		204

58

American Beacon Funds^SM

Notes to Financial Statements

October 31, 2012

As of October 31, 2012 the capital loss carryforward positions prior to the provisions of the Act that may be applied against any realized net taxable gains in each succeeding year or until their expiration dates, whichever occurs first, were as follows (in thousands):

Fund	2014		2015		2016		2017		Total
High Yield Bond	$	—	$	—	$	—	$	1,970	$	1,970
Short-Term Bond		2,015		467		5,198		—		7,680

The Funds did not utilize any net capital loss carryovers for the year ended October 31, 2012.

6. Investment Transactions

The aggregate cost of purchases and proceeds from sales and maturities of long-term investments during the year ended October 31, 2012 were as follows (in thousands):

	High Yield Bond		Retirement Income  and Appreciation		Intermediate Bond		Short-Term Bond
Purchases (excluding U.S. government securities)	$	139,480	$	58,829	$	329,366	$	24,971
Sales and maturities (excluding U.S. government securities)		125,171		52,950		240,435		46,969
Purchases of U.S. government securities		—		23,785		369,548		6,713
Sales and maturities of U.S. government securities		—		10,967		349,612		5,683

7. Capital Share Transactions

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

For the Year Ended October 31, 2012

	Institutional Class						Y Class						Investor Class
High Yield Bond Fund	Shares			Amount			Shares			Amount			Shares			Amount
Shares sold		1,461		$	12,932			50		$	459			572		$	5,062
Reinvestment of dividends		322			2,850			1			4			51			448
Shares redeemed		(1,898	)		(16,860	)*		(4	)		(37	)*		(512	)		(4,470	)*
Net increase (decrease) in shares outstanding		(115	)	$	(1,078	)		47		$	426			111		$	1,040
	AMR Class						A Class						C Class
High Yield Bond Fund	Shares			Amount			Shares			Amount			Shares			Amount
Shares sold		4,952		$	43,915			63		$	562			222		$	1,945
Reinvestment of dividends		725			6,414			2			18			4			37
Shares redeemed		(4,666	)		(40,679	)*		(4	)		(37	)*		(24	)		(205	)*
Net increase in shares outstanding		1,011		$	9,650			61		$	543			202		$	1,777
*     Net of Redemption Fees
	Y Class						Investor Class						A Class
Retirement Income and Appreciation Fund	Shares			Amount			Shares			Amount			Shares			Amount
Shares sold		204		$	2,217			3,449		$	37,658			60		$	648
Reinvestment of dividends		4			38			385			4,169			2			26
Shares redeemed		(52	)		(571	)		(2,740	)		(29,774	)		(21	)		(232	)
Net increase in shares outstanding		156		$	1,684			1,094		$	12,053			41		$	442

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American Beacon Funds^SM

Notes to Financial Statements

October 31, 2012

	C Class
Retirement Income and Appreciation Fund	Shares			Amount
Shares sold		40		$	434
Reinvestment of dividends		3			27
Shares redeemed		(12	)		(126	)
Net increase in shares outstanding		31		$	335

	Institutional Class						Y Class						Investor Class
Intermediate Bond Fund	Shares			Amount			Shares			Amount			Shares			Amount
Shares sold		42,148		$	463,192			7		$	77			1,267		$	13,949
Reinvestment of dividends		1,196			13,226			—			2			15			165
Shares redeemed		(33,908	)		(375,696	)		(2	)		(27	)		(643	)		(7,161	)
Net increase in shares outstanding		9,436		$	100,722			5		$	52			639		$	6,953

	A Class						C Class
Intermediate Bond Fund	Shares			Amount			Shares			Amount
Shares sold		95		$	1,037			97		$	1,080
Reinvestment of dividends		1			8			1			6
Shares redeemed		(84	)		(917	)		(2	)		(23	)
Net increase in shares outstanding		12		$	128			96		$	1,063

	Institutional Class						Y Class						Investor Class
Short-Term Bond Fund	Shares			Amount			Shares			Amount			Shares			Amount
Shares sold		11,980		$	104,985			7		$	59			740		$	6,452
Reinvestment of dividends		336			2,936			1			5			29			250
Shares redeemed		(5,553	)		(48,539	)		(16	)		(137	)		(1,969	)		(17,178	)
Net increase (decrease) in shares outstanding		6,763		$	59,382			(8	)	$	(73	)		(1,200	)	$	(10,476	)

	A Class						C Class
Short-Term Bond Fund	Shares			Amount			Shares			Amount
Shares sold		102		$	890			8		$	72
Reinvestment of dividends		2			19			—			2
Shares redeemed		(161	)		(1,411	)		(8	)		(72	)
Net increase (decrease) in shares outstanding		(57	)	$	(502	)		—		$	2

For the Year Ended October 31, 2011

	Institutional Class						Y Class					Investor Class
High Yield Bond Fund	Shares			Amount			Shares		Amount			Shares			Amount
Shares sold		1,069		$	9,564			1	$	10			495		$	4,488
Reinvestment of dividends		291			2,618			—		—			201			1,821
Shares redeemed		(1,203	)		(10,767	)*		—		—	*		(5,802	)		(53,202	)*
Net increase (decrease) in shares outstanding		157		$	1,415			1	$	10			(5,106	)	$	(46,893	)

	AMR Class						A Class					C Class
High Yield Bond Fund	Shares			Amount			Shares		Amount			Shares			Amount
Shares sold		2,566		$	22,915			9	$	82			43		$	371
Reinvestment of dividends		742			6,684			—		4			—			5
Shares redeemed		(4,800	)		(43,025	)*		—		(1	)*		(1	)		(8	)*
Net increase (decrease) in shares outstanding		(1,492	)	$	(13,426	)		9	$	85			42		$	368

^*  Net of Redemption Fees

60

American Beacon Funds^SM

Notes to Financial Statements

October 31, 2012

	Y Class						Investor Class						A Class
Retirement Income and Appreciation Fund	Shares			Amount			Shares			Amount			Shares		Amount
Shares sold		25		$	261			4,427		$	47,560			55	$	591
Reinvestment of dividends		1			13			300			3,228			1		9
Shares redeemed		(10	)		(103	)		(2,778	)		(29,805	)		—		(1	)
Net increase in shares outstanding		16		$	171			1,949		$	20,983			56	$	599

	C Class
Retirement Income and Appreciation Fund	Shares			Amount
Shares sold		65		$	704
Reinvestment of dividends		2			14
Shares redeemed		(16	)		(170	)
Net increase in shares outstanding		51		$	548

	Institutional Class						Y Class						Investor Class
Intermediate Bond Fund	Shares			Amount			Shares			Amount			Shares			Amount
Shares sold		5,783		$	62,684			5		$	53			93		$	1,002
Reinvestment of dividends		1,295			13,905			1			10			14			153
Shares redeemed		(8,216	)		(88,876	)		(35	)		(369	)		(112	)		(1,210	)
Net (decrease) in shares outstanding		(1,138	)	$	(12,287	)		(29	)	$	(306	)		(5	)	$	(55	)

	A Class						C Class
Intermediate Bond Fund	Shares			Amount			Shares			Amount
Shares sold		55		$	587			6		$	61
Reinvestment of dividends		—			1			—			3
Shares redeemed		(6	)		(61	)		(9	)		(97	)
Net increase (decrease) in shares outstanding		49		$	527			(3	)	$	(33	)

	Institutional Class						Y Class						Investor Class
Short-Term Bond Fund	Shares			Amount			Shares			Amount			Shares			Amount
Shares sold		7,973		$	70,089			37		$	323			2,600		$	22,888
Reinvestment of dividends		368			3,231			1			5			52			456
Shares redeemed		(5,105	)		(44,890	)		(4	)		(31	)		(2,442	)		(21,414	)
Net increase in shares outstanding		3,236		$	28,430			34		$	297			210		$	1,930

	A Class						C Class
Short-Term Bond Fund	Shares			Amount			Shares			Amount
Shares sold		422		$	3,711			68		$	600
Reinvestment of dividends		1			9			—			2
Shares redeemed		(34	)		(304	)		(26	)		(228	)
Net increase in shares outstanding		389		$	3,416			42		$	374

61

American Beacon High Yield Bond Fund^SM

Financial Highlights

(For a share outstanding throughout the period)

	Institutional Class															Y Class
	Year Ended October 31,															Year Ended October 31,						March 1 to October 31,
	2012			2011G			2010			2009			2008A			2012			2011G			2010
Net asset value, beginning of period	$	8 .68		$	9 .05		$	8 .42		$	6 .77		$	10 .11		$	8 .69		$	9 .06		$	8 .63
Income from investment operations:
Net investment income		0 .67			0 .71			0 .75			0 .79			0 .78			0 .64			0 .68			0 .50
Net gains (losses) from securities (both realized and unrealized)		0 .42			(0 .37	)		0 .63			1 .66			(3 .34	)		0 .43			(0.37	)		0 .43
Total income (loss) from investment operations		1 .09			0 .34			1 .38			2 .45			(2 .56	)		1 .07			0 .31			0 .93
Less distributions:
Dividends from net investment income		(0 .67	)		(0 .71	)		(0 .75	)		(0 .80	)		(0 .78	)		(0.64	)		(0.68	)		(0.50	)
Distributions from net realized gains on securities		—			—			—			—			—			—			—			—
Total distributions		(0 .67	)		(0 .71	)		(0 .75	)		(0 .80	)		(0 .78	)		(0.64	)		(0.68	)		(0.50	)
Redemption fees added to beneficial interestsB		0 .00	B		0 .00	B		0 .00	B		—			—			0 .00	B		0 .00	B		0 .00	B
Net asset value, end of period	$	9 .10		$	8 .68		$	9 .05		$	8 .42		$	6 .77		$	9 .12		$	8 .69		$	9 .06
Total return C		13.12	%		3 .79	%		17.17	%		39.06	%		(27.03	)%		12.74	%		3.36	%		11.17	%D
Ratios and supplemental data:
Net assets, end of period (in thousands)	$	42,026		$	41,093		$	41,459		$	47,254		$	62,138		$	437		$	11		$	1
Ratios to average net assets (annualized):
Expenses, before reimbursements		0 .93	%		0 .88	%		0 .79	%		0 .79	%		0 .85	%		1.13	%		27.02	%		0.82	%E
Expenses, net of reimbursements		0 .93	%		0 .88	%		0 .79	%		0 .79	%		0 .85	%		1.01	%		1.61	%		0.82	%E
Net investment income (loss), before reimbursements		7 .61	%		7 .90	%		8 .69	%		11.46	%		8 .38	%		7.08	%		(18.29	)%		8.53	%E
Net investment income, net of reimbursements		7 .62	%		7 .90	%		8 .69	%		11.46	%		8 .38	%		7.20	%		7 .11	%		8.53	%E
Portfolio turnover rate		100	%		149	%		176	%		212	%		157	%		100	%		149	%		176	%F

^A  On May 21, 2008, Post Advisory Group, LLC ceased managing a portion of the High Yield Bond Fund and on May 22, 2008 Logan Circle Partners, L.P. began managing a portion of the High Yield Bond Fund.

^B  Amounts represent less than $0.01 per share.

^C  Based on net asset value, which does not reflect the sales charge, redemption fee, or contingent deferred sales charge, if applicable.

^D  Not annualized.

^E  Annualized.

^F Portfolio turnover rate is for the period from November 1, 2009 through October 31, 2010.

^G PENN Capital Management Company, Inc. was added as an investment manager to the High Yield Bond Fund on September 15, 2011.

62

American Beacon High Yield Bond Fund^SM

Financial Highlights

(For a share outstanding throughout the period)

Investor Class															A Class									C Class
Year Ended October 31,															Year Ended October 31,						May 17 to October 31,			Year Ended October 31,						Sept. 1 to October 31,
2012			2011G			2010			2009			2008A			2012			2011G			2010			2012			2011G			2010
$	8.68		$	9 .06		$	8 .42		$	6 .77		$	10 .11		$	8.69		$	9.08		$	8.67		$	8 .67		$	9.05		$	8.68
	0.65			0 .69			0 .73			0 .78			0 .75			0 .66			0 .69			0 .32			0 .59			0 .63			0 .09
	0.42			(0 .38	)		0 .64			1 .65			(3 .34	)		0 .42			(0.39	)		0 .41			0 .42			(0.39	)		0 .37
	1.07			0 .31			1 .37			2 .43			(2 .59	)		1 .08			0 .30			0 .73			1 .01			0 .24			0 .46
	(0.65	)		(0 .69	)		(0 .73	)		(0 .78	)		(0 .75	)		(0.66	)		(0.69	)		(0.32	)		(0 .59	)		(0.62	)		(0.09	)
	—			—			—			—			—			—			—			—			—			—			—
	(0.65	)		(0 .69	)		(0 .73	)		(0 .78	)		(0 .75	)		(0.66	)		(0.69	)		(0.32	)		(0 .59	)		(0.62	)		(0.09	)
	0.00	B		0 .00	B		0 .00	B		—			—			0 .00	B		0 .00	B		0 .00	B		0 .00	B		0 .00	B		0 .00	B
$	9.10		$	8 .68		$	9 .06		$	8 .42		$	6 .77		$	9 .11		$	8 .69		$	9 .08		$	9 .09		$	8 .67		$	9 .05
	12.86	%		3.41	%		17.00	%		38.70	%		(27.24	)%		12.88	%		3.31	%		8.66	%D		12.06	%		2.67	%		5.31	%D
$	8,930		$	7,560		$	54,142		$	90,736		$	13,949		$	678		$	117		$	40		$	2,262		$	403		$	37
	1.16	%		1.09	%		1 .04	%		1 .01	%		1 .10	%		1.46	%		3.93	%		1.30	%E		2.16	%		3.15	%		2.29	%E
	1.16	%		1.09	%		1 .04	%		1 .01	%		1 .10	%		1.11	%		1.11	%		1.12	%E		1.86	%		1.85	%		1.87	%E
	7.37	%		7.75	%		8 .48	%		9 .36	%		8 .06	%		6.97	%		4.74	%		6.93	%E		6.29	%		5.53	%		4.97	%E
	7.37	%		7.75	%		8 .48	%		9 .36	%		8 .06	%		7.32	%		7.56	%		7.11	%E		6.60	%		6.82	%		5.40	%E
	100	%		149	%		176	%		212	%		157	%		100	%		149	%		176	%F		100	%		149	%		176	%F

63

American Beacon High Yield Bond Fund^SM

Financial Highlights

(For a share outstanding throughout the period)

	AMR Class
	Year Ended October 31,
	2012			2011G			2010			2009			2008A
Net asset value, beginning of period	$	8 .68		$	9 .06		$	8 .42		$	6 .77		$	10 .11
Income from investment operations:
Net investment income		0 .70			0 .74			0 .78			0 .81			0 .80
Net gains (losses) from securities (both realized and unrealized)		0 .42			(0 .38	)		0 .63			1 .65			(3 .34	)
Total income (loss) from investment operations		1 .12			0 .36			1 .41			2 .46			(2 .54	)
Less distributions:
Dividends from net investment income		(0 .70	)		(0 .74	)		(0 .77	)		(0 .81	)		(0 .80	)
Distributions from net realized gains on securities		—			—			—			—			—
Total distributions		(0 .70	)		(0 .74	)		(0 .77	)		(0 .81	)		(0 .80	)
Redemption fees added to beneficial interestsB		0.00	B		0 .00	B		0 .00	B		—			—
Net asset value, end of period	$	9 .10		$	8 .68		$	9 .06		$	8 .42		$	6 .77
Total return C		13.46	%		3 .96	%		17.59	%		39.41	%		(26.84	)%
Ratios and supplemental data:
Net assets, end of period (in thousands)	$	86,030		$	73,298		$	89,992		$	92,659		$	44,060
Ratios to average net assets (annualized):
Expenses, before reimbursements		0 .62	%		0 .60	%		0 .54	%		0 .53	%		0 .58	%
Expenses, net of reimbursements		0 .62	%		0 .60	%		0 .54	%		0 .53	%		0 .58	%
Net investment income (loss), before reimbursements		7 .91	%		8 .18	%		8 .91	%		10.34	%		8 .64	%
Net investment income, net of reimbursements		7 .91	%		8 .18	%		8 .91	%		10.34	%		8 .64	%
Portfolio turnover rate		100	%		149	%		176	%		212	%		157	%

^A  On May 21, 2008, Post Advisory Group, LLC ceased managing a portion of the High Yield Bond Fund and on May 22, 2008 Logan Circle Partners, L.P. began managing a portion of the High Yield Bond Fund.

^B Amounts represent less than $0.01 per share.

^C  Based on net asset value, which does not reflect the sales charge, redemption fee, or contingent deferred sales charge, if applicable.

^D  Not annualized.

^E  Annualized.

^F  Portfolio turnover rate is for the period from November 1, 2009 through October 31, 2010.

^G PENN Capital Management Company, Inc. was added as an investment manager to the High Yield Bond Fund on September 15, 2011.

64

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65

American Beacon Retirement Income and Appreciation Fund^SM

Financial Highlights

(For a share outstanding throughout the period)

	Y Class
							March 1 to October 31, 2010
	Year Ended
	October 31,
	2012			2011
Net asset value, beginning of period	$	10.83		$	10.80		$	10.31
Income from investment operations:
Net investment income		0.28			0.26			0.20
Net gains (losses) from securities (both realized and unrealized)		0.37			0.05			0.49
Total income (loss) from investment operations		0.65			0.31			0.69
Less distributions:
Dividends from net investment income		(0.28	)		(0.28	)		(0.20	)
Distributions from net realized gains on securities		(0.06	)		—			—
Return of capital		—			—			—
Total distributions		(0.34	)		(0.28	)		(0.20	)
Net asset value, end of period	$	11.14		$	10.83		$	10.80
Total return B,C		6.10	%		2.96	%		6.78	%D
Ratios and supplemental data:
Net assets, end of period (in thousands)	$	2,287		$	539		$	367
Ratios to average net assets (annualized):
Expenses, before reimbursements		0.87	%		1.80	%		0.80	%E
Expenses, net of reimbursements		0.81	%		0.84	%		0.80	%E
Net investment income, before reimbursements		2.20	%		1.45	%		2.74	%E
Net investment income, net of reimbursements		2.26	%		2.41	%		2.74	%E
Portfolio turnover rate		42	%		54	%		51	%F

^A  The tax return of capital is calculated based upon outstanding shares at the time of this distribution. Amounts are 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.

^C  May include adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value for financial 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 November 1, 2009 through October 31, 2010.

66

American Beacon Retirement Income and Appreciation Fund^SM

Financial Highlights

(For a share outstanding throughout the period)

Investor Class															A Class									C Class
																					May 17									Sept. 1 to October 31, 2010
															Year Ended						to			Year Ended
Year Ended October 31,															October 31,						October 31,			October 31,
2012			2011			2010			2009			2008			2012			2011			2010			2012			2011
$	10.84		$	10.81		$	10.25		$	8.80		$	10.50		$	10.85		$	10.81		$	10.37		$	10.85		$	10.82		$	10.61
	0.24			0.27			0.36			0.32			0.41			0.22			0.23			0.13			0.13			0.15			0.03
	0.37			0.02			0.51			1.53			(1.39	)		0.39			0.05			0.44			0.39			0.04			0.20
	0.61			0.29			0.87			1.85			(0.98	)		0.61			0.28			0.57			0.52			0.19			0.23
	(0.25	)		(0.26	)		(0.31	)		(0.40	)		(0.49	)		(0.23	)		(0.24	)		(0.13	)		(0.14	)		(0.16	)		(0.02	)
	(0.06	)		—			—			—			(0.23	)		(0.06	)		—			—			(0.06	)		—			—
	—			—			—			—	A		—			—			—			—			—			—			—
	(0.31	)		(0.26	)		(0.31	)		(0.40	)		(0.72	)		(0.29	)		(0.24	)		(0.13	)		(0.20	)		(0.16	)		(0.02	)
$	11.14		$	10.84		$	10.81		$	10.25		$	8.80		$	11.17		$	10.85		$	10.81		$	1.17		$	10.85		$	10.82
	5.75	%		2.71	%		8.60	%		21.50	%		(10.02	)%		5.78	%		2.61	%		5.52	%D		4.87	%		1.75	%		2.19	%D
$	163,713		$	147,415		$	126,022		$	93,727		$	100,469		$	1,253		$	770		$	166		$	1,977		$	1,587		$	1,035
	1.12	%		1.10	%		1.08	%		1.01	%		0.92	%		1.28	%		2.00	%		1.20	%E		2.04	%		1.99	%		2.33	%E
	1.12	%		1.10	%		1.08	%		1.01	%		0.92	%		1.14	%		1.15	%		1.14	%E		1.97	%		1.94	%		1.96	%E
	1.98	%		2.15	%		2.79	%		3.86	%		3.64	%		1.82	%		1.21	%		2.03	%E		1.06	%		1.25	%		1.40	%E
	1.98	%		2.15	%		2.79	%		3.86	%		3.64	%		1.95	%		2.06	%		2.10	%E		1.13	%		1.30	%		1.77	%E
	42	%		54	%		51	%		53	%		76	%		42	%		54	%		51	%F		42	%		54	%		51	%F

67

American Beacon Intermediate Bond Fund^SM

Financial Highlights

(For a share outstanding throughout the period)

	Institutional Class															Y Class
																						March 1
																Year Ended						to
	Year Ended October 31,															October 31,						October 31,
	2012			2011			2010			2009			2008			2012			2011			2010
Net asset value, beginning of period	$	10.99		$	11.10		$	10.69		$	9.61		$	10.10		$	11.03		$	11.10		$	10.69
Income from investment operations:
Net investment income		0.27			0.33			0.39			0.46			0.50			0.26			0.27			0.23
Net gains (losses) from securities (both realized and unrealized)		0.34			0.10			0.40			1.07			(0.51	)		0.32			0.17			0.41
Total income (loss) from investment operations		0.61			0.43			0.79			1.53			(0.01	)		0.58			0.44			0.64
Less distributions:
Dividends from net investment income		(0.29	)		(0.35	)		(0.38	)		(0.45	)		(0.48	)		(0.25	)		(0.32	)		(0.23	)
Distributions from net realized gains on securities		(0.05	)		(0.19	)		—			—			—			(0.05	)		(0.19	)		—
Total distributions		(0.34	)		(0.54	)		(0.38	)		(0.45	)		(0.48	)		(0.30	)		(0.51	)		(0.23	)
Net asset value, end of period	$	11.26		$	10.99		$	11.10		$	10.69		$	9.61		$	11.31		$	11.03		$	11.10
Total return A		5.59	%		4.11	%		7.56	%		16.17	%		(0.26	)%		5.34	%		4.19	%		6.03	%B
Ratios and supplemental data:
Net assets, end of period (in thousands)	$	388,491		$	275,234		$	290,734		$	210,983		$	147,634		$	113		$	60		$	382
Ratios to average net assets (annualized):
Expenses, before reimbursements		0.33	%		0.35	%		0.33	%		0.32	%		0.30	%		0.99	%		0.73	%		0.67	%C
Expenses, net of reimbursements		0.33	%		0.35	%		0.33	%		0.32	%		0.30	%		0.64	%		0.65	%		0.64	%C
Net investment income, before reimbursements		2.25	%		3.12	%		3.39	%		4.31	%		4.70	%		1.65	%		2.74	%		2.58	%C
Net investment income, net of reimbursements		2.25	%		3.12	%		3.39	%		4.32	%		4.70	%		2.00	%		2.82	%		2.60	%C
Portfolio turnover rate		144	%		75	%		96	%		157	%		105	%		144	%		75	%		96	%D

^A Based on net asset value, which does not reflect the sales charge, redemption fee, or contingent deferred sales charge, if applicable.

^B  Not annualized.

^C  Annualized.

^D  Portfolio turnover rate is for the period from November 1, 2009 through October 31, 2010.

^E  Portfolio turnover rate is for the period from November 1, 2008 through October 31, 2009.

68

American Beacon Intermediate Bond Fund^SM

Financial Highlights

(For a share outstanding throughout the period)

Investor Class												A Class									C Class
									March 2									May 17									Sept. 1
									to			Year Ended						to			Year Ended						to
Year Ended October 31,									October 31,			October 31,						October 31,			October 31,						October 31,
2012			2011			2010			2009			2012			2011			2010			2012			2011			2010
$	10.97		$	11.08		$	10.68		$	10.14		$	10.96		$	11.07		$	10.74		$	10.97		$	11.08		$	11.05
	0.22			0.29			0.33			0.27			0.18			0.28			0.13			0.13			0.19			0.03
	0.35			0.10			0.41			0.54			0.36			0.09			0.33			0.33			0.10			0.03
	0.57			0.39			0.74			0.81			0.54			0.37			0.46			0.46			0.29			0.06
	(0.24	)		(0.31	)		(0.34	)		(0.27	)		(0.21	)		(0.29	)		(0.13	)		(0.13	)		(0.21	)		(0.03	)
	(0.05	)		(0.19	)		—			—			(0.05	)		(0.19	)		—			(0.05	)		(0.19	)		—
	(0.29	)		(0.50	)		(0.34	)		(0.27	)		(0.26	)		(0.48	)		(0.13	)		(0.18	)		(0.40	)		(0.03	)
$	11.25		$	10.97		$	11.08		$	10.68		$	11.24		$	10.96		$	11.07		$	11.25		$	10.97		$	11.08
	5.20	%		3.65	%		7.01	%		8.05	%B		4.99	%		3.45	%		4.31	%B		4.21	%		2.70	%		0.56	%B
$	11,011		$	3,729		$	3,829		$	2,213		$	734		$	584		$	46		$	1,372		$	286		$	325
	0.84	%		0.86	%		0.83	%		1.22	%C		1.12	%		1.13	%		1.05	%C		1.87	%		1.86	%		2.09	%C
	0.79	%		0.79	%		0.76	%		0.81	%C		0.99	%		0.99	%		0.95	%C		1.73	%		1.72	%		1.74	%C
	1.80	%		2.59	%		2.88	%		3.33	%C		1.48	%		2.31	%		2.15	%C		0.75	%		1.61	%		0.88	%C
	1.86	%		2.66	%		2.95	%		3.74	%C		1.61	%		2.46	%		2.25	%C		0.89	%		1.75	%		1.23	%C
	144	%		75	%		96	%		157	%E		144	%		75	%		96	%D		144	%		75	%		96	%D

69

American Beacon Short-Term Bond Fund^SM

Financial Highlights

(For a share outstanding throughout the period)

	Institutional Class															Y Class
																Year Ended
	Year Ended October 31,															October 31,
	2012			2011			2010			2009			2008			2012			2011
Net asset value, beginning of period	$	8.71		$	8.89		$	8.83		$	8.58		$	8.79		$	8.73		$	8.90
Income from investment operations:
Net investment income (loss)		0.28			0.26			0.23			0.22	A		0.35	A		0.10			0.15
Net gains (losses) from securities (both realized and unrealized)		(0.05	)		(0.25	)		0.10			0.33			(0.15	)		0.11			(0.15	)
Total income (loss) from investment operations		0.23			0.01			0.33			0.55			0.20			0.21			0.00
Less distributions:
Dividends from net investment income		(0.16	)		(0.19	)		(0.27	)		(0.30	)		(0.41	)		(0.17	)		(0.17	)
Distributions from net realized gains on securities		—			—			—			—			—			—			—
Total distributions		(0.16	)		(0.19	)		(0.27	)		(0.30	)		(0.41	)		(0.17	)		(0.17	)
Net asset value, end of period	$	8.78		$	8.71		$	8.89		$	8.83		$	8.58		$	8.77		$	8.73
Total return B		2.72	%		0.17	%		3.78	%		6.56	%		2.21	%		2.42	%		0.04	%
Ratios and supplemental data:
Net assets, end of period (in thousands)	$	217,545		$	156,937		$	131,314		$	124,791		$	255,725		$	272		$	344
Ratios to average net assets (annualized):
Expenses, before reimbursements		0.37	%		0.37	%		0.35	%		0.33	%		0.31	%		0.72	%		1.43	%
Expenses, net of reimbursements		0.37	%		0.37	%		0.35	%		0.33	%		0.31	%		0.64	%		0.60	%
Net investment income (loss), before reimbursements		1.50	%		1.73	%		2.27	%		2.61	%		3.75	%		1.16	%		0.57	%
Net investment income (loss), net of reimbursements		1.50	%		1.73	%		2.27	%		2.62	%		3.75	%		1.24	%		1.40	%
Portfolio turnover rate		18	%		65	%		60	%		140	%		21	%		18	%		65	%

^A  For purposes of this calculation, the change in undistributed net investment income per share was derived by dividing the change in undistributed net investment income by 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.

^C  Not annualized.

^D  Annualized.

^E  Portfolio turnover rate is for the period from November 1, 2009 through October 31, 2010.

70

American Beacon Short-Term Bond Fund^SM

Financial Highlights

(For a share outstanding throughout the period)

			Investor Class															A Class									C Class
March 1																								May 17									Sept. 1
to																		Year Ended						to			Year Ended						to
October 31,			Year Ended October 31,															October 31,						October 31,			October 31,						October 31,
2010			2012			2011			2010			2009			2008			2012			2011			2010			2012			2011			2010
$	8.84		$	8.72		$	8.89		$	8.84		$	8.59		$	8.81		$	8.71		$	8.89		$	8.84		$	8.72		$	8.90		$	8.88
	0.15			(0.19	)		0.14			0.08			0.20	A		0.29	A		0.08			0.15			0.09			0.02			0.12			(0.04	)
	0.08			0.39			(0.15	)		0.21			0.34			(0.15	)		0.11			(0.18	)		0.07			0.11			(0.21	)		0.08
	0.23			0.20			(0.01	)		0.29			0.54			0.14			0.19			(0.03	)		0.16			0.13			(0.09	)		0.04
	(0.17	)		(0.13	)		(0.16	)		(0.24	)		(0.29	)		(0.36	)		(0.12	)		(0.15	)		(0.11	)		(0.06	)		(0.09	)		(0.02	)
	—			—			—			—			—			—			—			—			—			—			—			—
	(0.17	)		(0.13	)		(0.16	)		(0.24	)		(0.29	)		(0.36	)		(0.12	)		(0.15	)		(0.11	)		(0.06	)		(0.09	)		(0.02	)
$	8.90		$	8.79		$	8.72		$	8.89		$	8.84		$	8.59		$	8.78		$	8.71		$	8.89		$	8.79		$	8.72		$	8.90
	2.55	%C		2.28	%		(0.12	)%		3.33	%		6.34	%		1.54	%		2.22	%		(0.33	)%		1.78	%C		1.46	%		(1.00	)%		0.48	%C
$	51		$	14,203		$	24,557		$	23,175		$	30,402		$	7,733		$	2,951		$	3,428		$	44		$	377		$	371		$	1
	0.65	%D		0.89	%		0.90	%		0.86	%		0.85	%		0.88	%		1.12	%		1.38	%		1.02	%D		1.90	%		2.47	%		2.28	%D
	0.64	%D		0.79	%		0.78	%		0.67	%		0.54	%		0.85	%		0.85	%		0.84	%		0.81	%D		1.59	%		1.55	%		1.60	%D
	1.45	%D		0.99	%		1.18	%		1.75	%		1.89	%		3.16	%		0.75	%		0.49	%		0.49	%D		(0.03	)%		(0.43	)%		(3.57	)%D
	1.47	%D		1.09	%		1.30	%		1.94	%		2.20	%		3.19	%		1.03	%		1.03	%		0.69	%D		0.28	%		0.49	%		(2.88	)%D
	60	%E		18	%		65	%		60	%		140	%		21	%		18	%		65	%		60	%E		18	%		65	%		60	%E

71

American Beacon Funds^SM

Privacy Policy & Federal Tax Information

October 31, 2012 (Unaudited)

Privacy Policy

The American Beacon Funds recognize and respect the privacy of our shareholders. We are providing this notice to you so you will understand how shareholder information may be collected and used.

We may collect nonpublic personal information about you from one or more of the following sources:

• information we receive from you on applications or other forms;

• information about your transactions with us or our service providers; and

• information we receive from third parties.

We do not disclose any nonpublic personal information about our customers or former customers to anyone, except as permitted by law.

We restrict access to your nonpublic personal information to those employees or service providers who need to know that information to provide products or services to you. To ensure the confidentiality of your nonpublic personal information, we maintain safeguards that comply with federal standards.

Federal Tax Information

Certain tax information regarding the Fund is required to be provided to shareholders based upon the Fund’s income and distribution for the taxable year ended October 31, 2012. The information and distributions reported herein may differ from information and distributions taxable to the shareholders for the calendar year ended December 31, 2012.

The Funds designated the following items with regard to distributions paid during the year ended December 31, 2011. All designations are based on financial information available as of this annual report and, accordingly, are subject to change. For each item, it is the intention of the Fund to designate the maximum amount permitted under the Internal Revenue Code of 1986, as amended, and the regulations there under.

	High Yield Bond			Retirement Income  and Appreciation
Corporate Dividends Received Deduction		0.42	%		3.83	%
Qualified Dividend Income		0.32	%		6.73	%

Long-term capital gain distributions for the year ended October 31, 2012 were designated for the following Funds:

Retirement Income and Appreciation	$	763,311
Intermediate Bond		2,280,499

Shareholders will receive notification in January 2013 of the applicable tax information necessary to prepare their 2012 income tax returns.

72

Disclosure Regarding the Board of Trustees’ Approval of the Management Agreement and Investment Advisory Agreements of the Funds (Unaudited)

At its May 9, 2012 meeting, the Board of Trustees (“Board”) considered the renewal of the Management Agreement between the Manager and the American Beacon Funds (“Beacon Trust”) on behalf of each of their series (collectively, the “Funds”) and the renewal of each investment advisory agreement between the Manager and a subadvisor (each an “Investment Advisory Agreement”). The Management Agreement and the Investment Advisory Agreements are collectively referred to herein as the “Agreements.” In preparation for the Board’s consideration to renew and approve these Agreements, the Board and its Investment Committee undertook steps to gather and consider information furnished by the Manager, the subadvisors and Lipper, Inc. (“Lipper”). The Board, with the assistance of independent legal counsel, requested and received certain relevant information from the Manager and each subadvisor.

In addition, the Board’s Investment Committee worked with Lipper to obtain relevant comparative information regarding the performance, fees and expenses of the Funds. The Investment Committee held a separate meeting on May 4, 2012 to consider the information provided by Lipper. Further, the Board took into consideration information furnished for the Board’s review and consideration throughout the year at regular Board and Investment Committee meetings, as well as information specifically prepared in connection with the renewal process.

In connection with the Board’s consideration of the Management Agreement and each Investment Advisory Agreement, the Trustees received and evaluated such information as they deemed necessary. The materials requested by the Board included, among other information, the following:

• a description of any significant changes (actual or anticipated) to principal activities, personnel, services provided to the Funds, or any other area, including how these changes might affect the Funds;

• a copy of the firm’s most recent audited or unaudited financial statements, as well as Parts 1 and 2 of its Form ADV registration statement with the SEC;

• a summary of any material pending or anticipated litigation or regulatory proceedings involving the firm or its personnel, including the results of any recent regulatory examination or independent audit;

• a comparison of the performance of that portion of Fund assets managed or to be managed by each firm with the performance of other similar accounts managed by the firm, including a discussion of relative performance versus a peer group average and any remedial measures if the firm’s performance was materially below that of the peer group;

• any actual or anticipated economies of scale in relation to the services the Manager and the firm provide or will provide to each Fund and whether the current fee rates charged or to be charged to each Fund reflects these economies of scale for the benefit of the Fund’s investors;

• an analysis of compensation, including a comparison with fee rates charged to other clients for which similar services are provided, any proposed changes to the fee schedule, if applicable, and the effect of any fee waivers;

• a description of any payments made or to be made by the subadvisors to the Manager to support a Fund’s marketing efforts;

• a copy of the firm’s proxy voting policies and procedures and, if applicable, the name of the third party voting service used by the firm;

• an evaluation of any other benefits to the firm or Funds as a result of their relationship, if any;

• confirmation that the firm’s financial condition would not impair its ability to provide high-quality advisory services to the Funds;

• a description of the scope of portfolio management services provided or to be provided to the Funds, including whether such services differ from the services provided to other clients, including other registered investment companies, and any advantages or disadvantages that might accrue to the Funds due to the firm’s involvement in other activities;

• a description of the personnel who are or will be assigned primary responsibility for managing the Funds, including any changes during the past year, and a discussion of the adequacy of current and projected staffing levels to service the Funds;

• a description of the basis upon which portfolio managers are compensated, including any “incentive” arrangements, and a description of the oversight mechanisms used to prevent a portfolio manager whose compensation is tied to performance of a Fund from taking undue risks;

• a description of the firm’s practices in monitoring the quality of portfolio holdings and in reviewing portfolio valuation;

• a description of the firm’s use of derivatives, short sells, leveraged trading strategies or other similar trading strategies for the Funds;

• a discussion regarding the firm’s participation in third-party and proprietary “soft dollar” arrangements, if any, or other brokerage allocation policies with respect to Fund transactions;

• a discussion of the firm’s methodology for obtaining best execution, including any plans to improve the quality of execution in the upcoming year, and the use of any affiliated broker-dealers;

• a description of any actual or potential conflicts of interest anticipated in managing Fund assets;

• a discussion of whether the firm has identified any investment or operational matters that likely present a high risk in managing Fund assets;

• a description of the firm’s criteria for assessing counterparties and counterparty risk to the extent the firm enters into transactions with counterparties on a Fund’s behalf;

• a description of trade allocation procedures among accounts managed by the firm;

73

Disclosure Regarding the Board of Trustees’ Approval of the Management Agreement and Investment Advisory Agreements of the Funds (Unaudited)

• a discussion of whether the firm utilizes “commission recapture” or “directed brokerage” arrangements for the benefit of the Funds or “step-out” transactions;

• a discussion of whether the firm receives, or anticipates receiving, other compensation, including any payment for order flow or ECN liquidity rebates with respect to the Funds;

• a certification by the firm regarding the reasonable design of its compliance program;

• a summary of the results of the firm’s most recent annual review of its compliance program and a discussion of any material compliance problems encountered by a subadvisor since the most recent annual review;

• information regarding the firm’s code of ethics, insider trading policy and disaster recovery plan, including a description of any material changes thereto and a related certification of compliance by the firm;

• a description of the firm’s affiliation with any broker-dealer;

• a discussion of any anticipated change in the firm’s controlling persons; and

• verification of the firm’s insurance coverage with regards to the services provided to the Funds.

In addition to the foregoing, the Manager provided the following information specific to the renewal of the Management Agreement:

• a comparison of the performance of each Fund to comparable investment companies and appropriate indices, including comments on the relative performance of, as applicable, each subadvisor and each Fund versus the respective peer group average;

• a discussion, if applicable, of any underperformance by a subadvisor relative to its peer group and what, if any, remedial measures the Manager has or intends to take;

• a comparison of advisory fee rates and expense ratios for comparable mutual funds;

• a profit/loss analysis of the Manager;

• an analysis of any material complaints received from Fund shareholders;

• a description of the extent to which the Manager monitors the investment activities and financial conditions of each subadvisor to the Funds;

• a description of the Manager’s distribution activities with respect to promoting sales of Fund shares, including any revenue sharing practices;

• a description of the Manager’s securities lending practices and the fees received from such practices;

• a discussion of any rebate arrangements between the Manager and a service provider to the Funds pursuant to which the Manager receives direct or indirect benefits from the service provider;

• a description of the portfolio turnover rate and average execution costs for each Fund and, as applicable, each subadvisor to a Fund; and

• a description of how expenses that are not readily identifiable to a particular Fund are allocated.

In connection with the Management Agreement and each Investment Advisory Agreement, the Board also obtained an analysis provided by Lipper that compared: (i) investment performance of each Fund versus comparable investment companies and appropriate indices; (ii) total Fund expenses of each Fund versus comparable mutual funds; and (iii) each Fund’s investment advisory fee rate versus comparable mutual funds. For each Fund with more than one class of shares, the class of shares used for comparative purposes was the class with the longest performance history, which in most cases was the Institutional Class. References below to each Fund’s Lipper peer group are to the group of comparable mutual funds included in the analysis provided by Lipper.

Provided below is an overview of the primary factors the Trustees considered at the Investment Committee meeting on May 4, 2012 at which the Trustees reviewed the investment performance of the Manager and each subadvisor and the primary factors considered by the Board at its May 9, 2012 meeting at which the Board considered the renewal of the Management Agreement and Investment Advisory Agreements.

The Board did not identify any particular information that was most relevant to its consideration to renew or approve each Agreement, and each Trustee may have afforded different weight to the various factors. Legal counsel to the independent Trustees provided the Board with a memorandum regarding its responsibilities pertaining to the renewal and approval of each Agreement. The memorandum explained the regulatory requirements surrounding the Trustees’ process for evaluating investment advisors and the terms of the contracts. Based on its evaluation, the Board unanimously concluded that the terms of each Agreement were reasonable and fair and that the renewal and approval of each Agreement was in the best interests of the Funds and their shareholders.

Considerations With Respect to the Renewal of the Management Agreement and each Investment Advisory Agreement

In determining whether to renew the Management Agreement and each Investment Advisory Agreement on behalf of the Funds, the Trustees considered the best interests of each Fund separately. While the Management Agreement and the Investment Advisory Agreements for all of the Funds were considered at the May 9, 2012 meeting, the Board considered each Fund’s investment management and subadvisory relationships separately.

74

Disclosure Regarding the Board of Trustees’ Approval of the Management Agreement and Investment Advisory Agreements of the Funds (Unaudited)

In each instance, the Board considered, among other things, the following factors: (1) the nature, extent and quality of the services provided; (2) the investment performance of a Fund and, as applicable, each subadvisor for a Fund; (3) the costs incurred by the Manager in rendering services to the Funds and its resulting profits or losses; (4) the extent to which economies of scale have been taken into account in setting each fee schedule; (5) whether fee levels reflect these economies of scale for the benefit of Fund investors; (6) comparisons of services and fee rates with contracts entered into by the Manager or a subadvisor or their affiliates with other clients (such as pension funds and other institutional funds); and (7) any other benefits derived or anticipated to be derived by the Manager or a subadvisor from their relationship with a Fund. The Trustees posed questions to various management personnel of the Manager regarding certain key aspects of the materials submitted in support of the renewal.

Nature, Extent and Quality of Services. With respect to the renewal of the Management Agreement, the Board considered, among other factors: each Fund’s long-term performance and the background and experience of key investment personnel at the Manager; the low cost structure of the Funds; the Manager’s culture of compliance and support for compliance operations that reduce risks to the Funds; the manager’s commitment to enhance the Funds’ product line and increase assets in the Funds; the Manager’s high quality of services; the Manager’s active role in monitoring and, as appropriate recommending additional or replacement subadvisors; the Manager’s commitment to training employees; and the Manager’s efforts to retain key employees and maintain staff levels.

With respect to the renewal of each Investment Advisory Agreement, the Trustees considered the level of staffing, quality, background and experience of each subadvisor’s investment personnel responsible for managing the Funds, the size of the subadvisor and the subadvisor’s ability to continue to attract and retain qualified investment personnel. The Board also considered the adequacy of the resources committed to the Funds by each subadvisor, and whether those resources were commensurate with the needs of the Funds and are sufficient to sustain appropriate levels of performance and compliance needs. In this regard, the Board considered the financial stability of each subadvisor. The Board also considered the subadvisors’ representations regarding their compliance programs and code of ethics. Based on the foregoing information, the Board concluded that the nature, extent and quality of the management and advisory services provided by the Manager and each subadvisor were appropriate for each Fund and, thus, determined to renew the Management Agreement and the Investment Advisory Agreement for each Fund.

Investment Performance. The Board evaluated the comparative information provided by Lipper and the Manager regarding each Fund’s investment performance relative to its benchmark index(es) and peer group. The Board considered the information provided by Lipper regarding its independent peer selection methodology to select all peer groups and universes. The Board also considered the performance reports and discussions with management at Board and Committee meetings throughout the year. The Manager also noted that it generally was satisfied with the performance of the subadvisors. A discussion regarding the Board’s considerations with respect to each Fund’s performance appears below under “Additional Considerations and Conclusions with Respect to Each Fund.”

Costs of the Services Provided to the Funds and the Profits Realized by the Manager from its Relationship with the Funds. In analyzing the cost of services and profitability of the Manager, the Board considered the revenues earned and the expenses incurred by the Manager. The profits or losses were noted at both an aggregate level for all Funds and at an individual Fund level, with some Funds being profitable for the Manager and with the Manager sustaining losses with respect to other Funds. The Board also considered that the Management Agreement for the Beacon Trust stipulates that, to the extent that a Fund invests all of its investable assets in another registered investment company (i.e., is a “Feeder Fund”), the Fund will not pay the Manager a management fee. Although the Board noted that, in certain cases, the fee rates paid by other clients of the Manager are lower than the fee rates paid by the Funds, the difference reflects the greater level of responsibility and regulatory requirements associated with managing the Funds.

The Board also noted that the Manager proposed to continue the expense waivers and reimbursements for certain Funds and classes that were in place during the last fiscal year and to put in place new expense waivers and reimbursements for certain new classes of the Funds and new series of the Beacon Trust. The Board further considered that each subadvised Fund pays the Manager the amounts due to its subadvisors, and the Manager remits these amounts directly to the applicable subadvisors. The Board considered that the Manager receives service and administrative fees to compensate the Manager for providing administrative services to the Funds and to compensate third-party administrators and broker-dealers for services to Fund shareholders. In addition, the Board considered that the Manager receives management fees for overseeing the securities lending program on behalf of various Funds. The Board also noted that certain classes of the Funds maintain higher expense ratios in order to compensate third-party distributors.

In analyzing the cost of services and profitability for each subadvisor in connection with its investment advisory services to the Fund, the Board considered that, in many cases, the Manager has negotiated the lowest subadvisory fee rate a subadvisor charges for any comparable client accounts. The Board did not consider profitability data of the subadvisors as imperative to its deliberations given the arm’s length nature of the relationship between the Manager and the subadvisors with respect to the negotiation of subadvisory fee rates.

Based on the foregoing information, the Board concluded that the profitability levels of the Manager were reasonable in light of the services performed by the Manager. A discussion regarding the Board’s considerations with respect to each Fund’s fee rates is set forth below under “Additional Considerations and Conclusions with Respect to Each Fund.”

Economies of Scale. In considering the reasonableness of the management and investment advisory fees rates, the Board considered whether economies of scale will be realized as the Funds grow and whether fee levels reflect these economies of scale for the benefit of Fund shareholders. In this regard, the Board considered that the Manager has negotiated breakpoints in many subadvisory fee rates. The Board also noted that, for purposes of determining the fee rates chargeable to the Funds, many subadvisors have agreed to take into account assets of AMR Corporation and its pension plans that are managed by the subadvisors. Thus, the Funds are able to receive lower effective fee rates.

In addition, the Board noted the Manager’s representation that many of the Funds benefit from economies of scale because comparably low fee rate levels are reflected in the current management and administration fee rates the Manager charges. The Board

75

Disclosure Regarding the Board of Trustees’ Approval of the Management Agreement and Investment Advisory Agreements of the Funds (Unaudited)

further noted the Manager’s representation that many of the Funds benefit from these comparably low fee rate levels despite not having yet reached an asset size at which economies of scale would traditionally be considered to exist, and the Manager’s belief that breakpoints are not appropriate at this time. Based on the foregoing information, the Board concluded that the Manager and subadvisor fee schedules for each Fund provides for a reasonable sharing of benefits from any economies of scale with the Funds.

Benefits Derived from the Relationship with the Funds. The Board considered the “fall-out” or ancillary benefits that accrue to the Manager and/or the subadvisors as a result of the advisory relationships with the Funds, including greater exposure in the marketplace with respect to the Manager’s or subadvisor’s investment process and expanding the level of assets under management by the Manager and the subadvisors. The Board also considered that the Manager uses its proprietary American Beacon Large Cap Value Fund model to manage its collective investment trust.

In addition, the Manager noted that the Trusts also derive benefits from their association with the Manager. Specifically, the Board noted the Manager’s representation that it provides services to most Funds at a lower than industry average cost. The Board considered that certain of the subadvisors reimburse the Manager for certain of its costs relating to distribution activities for the Funds. The Board also considered that the Funds did not pay commissions to any affiliated broker-dealer of the Manager or the relevant subadvisor during the most recent fiscal year ended October 31, 2011.

Based on the foregoing information, the Board concluded that the potential benefits accruing to the Manager and the subadvisors by virtue of their relationships with the Funds appear to be fair and reasonable.

Additional Considerations and Conclusions with Respect to Each Fund

The performance comparisons below were made versus each Fund’s Lipper peer universe median and/or benchmark index. The American Beacon Short-Term Bond Fund was compared to the Lipper Index, which includes the 30 largest funds in the Lipper category. References to the Lipper expense universe below are to the group of comparable mutual funds included in the analysis provided to the Trustees by Lipper. In reviewing the performance, the Trustees viewed longer-term performance over five years or longer as the most important consideration, because relative performance over shorter periods may be significantly impacted by market or economic events that do not reflect manager skill.

Additional Considerations and Conclusions with Respect to the American Beacon High Yield Bond Fund

In considering the renewal of the Management Agreement for the American Beacon High Yield Bond Fund, the Trustees considered the following additional factors: (1) the American Beacon High Yield Bond Fund outperformed the peer universe median for the three-year period ended March 31, 2012, but underperformed for the one-, five- and ten-year periods; (2) management’s explanation that the Fund’s performance was impacted by a combination of the appointment of two new subadvisors to manage the Fund and by poor issue selections and being overweighted in certain sectors; and (3) the expense ratio of the Institutional Class of Fund shares was higher than the median of its Lipper expense universe.

In considering the renewal of the Investment Advisory Agreement with Franklin Advisors, Inc. (“Franklin”) and Logan Circle Partners, L.P. (“Logan Circle”), the Trustees considered the following additional factors: (1) Franklin outperformed the peer universe median for the one- and five-year periods ended March 31, 2012, but underperformed for the three-year period; (2) Logan Circle outperformed the peer universe median for the one- and three-year periods ended March 31, 2012; (3) Franklin’s performance with respect to the portion of the Fund assets it manages outperformed all three of its comparable accounts for the one- and three-year periods ended March 31, 2012, outperformed two of the three comparable accounts for the five-year period and underperformed one comparable account for the five-year period; (4) Logan Circle’s performance with respect to the portion of the Fund assets it manages underperformed the performance of its composite of similarly managed accounts for the one-year, three-year and since inception periods, respectively, ended March 31, 2012, which Logan Circle attributed to client directed cash flows; (5) representations by each subadvisor regarding fee rates charged by the subadvisor to other comparable clients; (6) whether the subadvisors use Fund commissions to obtain proprietary or third-party research; and (7) the Manager’s recommendation to continue to retain each subadvisor.

Based on these and other considerations the Trustees (1) concluded that the fees paid to the Manager and the subadvisors under the Agreements are fair and reasonable, (2) determined that the American Beacon High Yield Bond Fund and its shareholders would benefit from the Manager’s and subadvisors’ continued management of the Fund and (3) approved the renewal of the Management and Investment Advisory Agreements with respect to the American Beacon High Yield Bond Fund.

Additional Considerations and Conclusions with Respect to the American Beacon Retirement Income and Appreciation Fund

In considering the renewal of the Management Agreement for the American Beacon Retirement Income and Appreciation Fund, the Trustees considered the following additional factors: (1) the American Beacon Retirement Income and Appreciation Fund underperformed the peer universe median for the one-, three- and five-year periods ended March 31, 2012; (2) the Trustees also considered the Fund’s performance relative to its benchmark because the American Beacon Retirement Income and Appreciation Fund’s investment strategy of investing 25% of its assets in convertible securities that have equity sensitivity is unique among the peer group of fixed income funds only, impacting both performance and expense comparisons; (3) the American Beacon Retirement Income and Appreciation Fund underperformed its benchmark for the one-, three- and five-year periods ended March 31, 2012; (4) the Manager outperformed the peer universe median with respect to its allocated portion of the Fund’s assets for the one- and five-year periods ended March 31, 2012, but underperformed for the three-year period; and (5) the expense ratio of the American Beacon Retirement Income and Appreciation Fund ranked better than the median of its Lipper expense universe.

76

Disclosure Regarding the Board of Trustees’ Approval of the Management Agreement and Investment Advisory Agreements of the Funds (Unaudited)

In considering the renewal of the Investment Advisory Agreement with Calamos Advisors LLC (“Calamos”), the Trustees considered the following additional factors: (1) Calamos underperformed the peer universe median for the one- and five-year periods ended March 31, 2012 and outperformed for the three-year period; (2) Calamos underperformed the Merrill Lynch All U.S. Convertibles Index for the one- and three-year periods ended March 31, 2012, but outperformed for the five-year period; (3) management’s explanation that Calamos’ underperformance was due in part to the equity sensitivity of convertibles and the underperformance of equities versus fixed income in 2011 and 2008; (4) the performance of Calamos with respect to the Fund’s assets it manages as compared to similarly managed accounts was not available because Calamos does not manage other accounts comparable to the Fund; (5) representations by Calamos regarding the fee rates it charges other comparable clients; (6) whether Calamos uses Fund commissions to obtain proprietary or third-party research; and (7) the Manager’s recommendation to continue to retain Calamos.

Based on these and other considerations the Trustees (1) concluded that the fees paid to the Manager and Calamos under the Agreements are fair and reasonable, (2) determined that the American Beacon Retirement Income and Appreciation Fund and its shareholders would benefit from the Manager’s and Calamos’ continued management of the Fund and (3) approved the renewal of the Management and Investment Advisory Agreements with respect to the American Beacon Retirement Income and Appreciation Fund.

Additional Considerations and Conclusions with Respect to the American Beacon Intermediate Bond Fund

In considering the renewal of the Management Agreement for the American Beacon Intermediate Bond Fund, the Trustees considered the following additional factors: (1) the American Beacon Intermediate Bond Fund outperformed the peer universe median for the five- and ten-year periods ended March 31, 2012, but underperformed for the one- and three-year periods; (2) the Trustees also considered the American Beacon Intermediate Bond Fund’s performance relative to its benchmark because the peer universe includes many funds that invest a large percentage of their assets in high yield securities, whereas the American Beacon Intermediate Bond Fund may invest only in investment-grade securities; (3) the American Beacon Intermediate Bond Fund underperformed its benchmark for the one-, three- and ten-year periods ended March 31, 2012 and was comparable to the performance of its benchmark for the five-year period; (4) the Manager outperformed, or was equal to, the peer universe median with respect to its allocated portion of the Fund’s assets for the one-, five- and ten-year periods ended March 31, 2012, but underperformed for the three-year period; and (5) the expense ratio of the Institutional Class of Fund shares ranked better than the median of its Lipper expense universe.

In considering the renewal of the Investment Advisory Agreement with Barrow, the Trustees considered the following additional factors: (1) Barrow outperformed the peer universe median with respect to its allocated portion of the Fund’s assets for the one-, five- and ten-year periods ended March 31, 2012, but underperformed for the three-year period; (2) Barrow’s performance with respect to the portion of Fund assets it manages was below the performance of its composite of similarly managed accounts; (3) representations by Barrow regarding the fee rates it charges other comparable clients; (4) whether Barrow uses Fund commissions to obtain proprietary or third-party research; and (5) the Manager’s recommendation to continue to retain Barrow.

Based on these and other considerations the Trustees (1) concluded that the fees paid to the Manager and Barrow under the Agreements are fair and reasonable, (2) determined that the American Beacon Intermediate Bond Fund and its shareholders would benefit from the Manager’s and Barrow’s continued management of the Fund and (3) approved the renewal of the Management and Investment Advisory Agreements with respect to the American Beacon Intermediate Bond Fund.

Additional Considerations and Conclusions with Respect to the American Beacon Short-Term Bond Fund

In considering the renewal of the Management Agreement for the American Beacon Short-Term Bond Fund, the Trustees considered the following additional factors: (1) the American Beacon Short-Term Bond Fund underperformed the peer universe median for the one- and three-year periods ended March 31, 2012, but outperformed for the five- and ten-year periods; (2) the American Beacon Short-Term Bond Fund underperformed the Lipper Index for the three-year period ended March 31, 2012 and outperformed the Lipper Index for the five- and ten-year periods ended March 31, 2012; (3) the Trustees also considered the American Beacon Short-Term Bond Fund’s performance relative to its benchmark because the peer universe median and Lipper Index include many funds that invest a large percentage of their assets in high yield securities, whereas the American Beacon Short-Term Bond Fund may invest only in investment-grade securities; (4) the Fund outperformed its benchmark for the three-year period ended March 31, 2012 and underperformed its benchmark for the one-, five- and ten-year periods ended March 31, 2012; and (5) the expense ratio of the Institutional Class of Fund shares was below its Lipper expense group average.

Based on these and other considerations the Trustees (1) concluded that the fees paid to the Manager under the Management Agreement are fair and reasonable, (2) determined that the American Beacon Short-Term Bond Fund and its shareholders would benefit from the Manager’s continued management of the Fund and (3) approved the renewal of the Management Agreement with respect to the American Beacon Short-Term Bond Fund.

77

Trustees and Officers of the American Beacon Funds^SM

(Unaudited)

The Trustees and officers of the American Beacon Funds (the “Trust”) are listed below, together with their principal occupations during the past five years. Unless otherwise indicated, the address of each person listed below is 4151 Amon Carter Boulevard, MD 2450, Fort Worth, Texas 76155. Each Trustee oversees twenty-six funds in the fund complex that includes the Trust and the American Beacon Select Funds. The Trust’s Statement of Additional Information contains additional information about the Trustees and is available without charge by calling 1-800-658-5811.

Name, Age and Address	Position, Term of Office and Length of Time Served with the Trust	Principal Occupation(s) During Past 5 Years and Current Directorships
INTERESTED TRUSTEES	Term Lifetime of Trust until removal, resignation or retirement*
Alan D. Feld** (74)	Trustee since 1996	Sole Shareholder of a professional corporation which is a Partner in the law firm of Akin, Gump, Strauss, Hauer & Feld, LLP (1960-Present); Director, Clear Channel Communications (1984-2008); Trustee, Center Point Properties (1994-2006); Member, Board of Trustees, Southern Methodist University; Member, Board of Visitors, M.D. Anderson Hospital; Board of Visitors, Zale/Lipshy Hospital; Trustee, American Beacon Mileage Funds (1996-Present); Trustee, American Beacon Select Funds (1999-Present); Trustee, American Beacon Master Trust Funds (1996-Present).
NON-INTERESTED TRUSTEES	Term Lifetime of Trust until removal, resignation or retirement*
W. Humphrey Bogart (67)	Trustee since 2004	Board Member, Baylor University Medical Center Foundation (1992-2004); Consultant, New River Canada Ltd. (mutual fund servicing company) (1998-2003); President and CEO, Allmerica Trust Company, NA (1996-1997); President and CEO, Fidelity Investments Southwest Company (1983-1995); Senior Vice President of Regional Centers, Fidelity Investments (1988-1995); Trustee, American Beacon Mileage Funds (2004-Present); Trustee, American Beacon Select Funds (2004-Present); Trustee, American Beacon Master Trust Funds (2004-Present).
Brenda A. Cline (50)	Trustee since 2004	Executive Vice President, Chief Financial Officer, Treasurer and Secretary, Kimbell Art Foundation (1993-Present); Trustee, Texas Christian University (1998-Present); Trustee, W.I. Cook Foundation, Inc. (d/b/a Cook Children’s Health Foundation) (2001-2006); Director, Christian Church Foundation (1999-2007); Trustee, Trinity Valley School (2003-2004); Member; Trinity Valley School Endowment Committee (2004-Present); Trustee, American Beacon Mileage Funds (2004-present); Trustee, American Beacon Select Funds (2004-Present); Trustee, American Beacon Master Trust Funds (2004-Present).
Eugene J. Duffy (57)	Trustee since 2008	Principal and Executive Vice President, Paradigm Asset Management (1994-Present); Director, Sunrise Bank of Atlanta (2008-Present); Chairman, Special Contributions Fund Board of Trustees, National Association for the Advancement of Colored People (2007-Present); Trustee, National Association for the Advancement of Colored People (2000-Present); Board of Visitors, Emory University (2006-Present); Trustee, Atlanta Botanical Garden (2006-Present); Board Member, Willie L. Brown Jr. Institute on Politics and Public Service (2001-Present); Chair, National Association of Securities Professionals (2000-2002); Deputy Chief Administrative Officer, City of Atlanta (1985-1990); Trustee, American Beacon Mileage Funds (2008-Present); Trustee, American Beacon Select Funds (2008-Present); Trustee, American Beacon Master Trust Funds (2008-Present).

78

Trustees and Officers of the American Beacon Funds^SM

(Unaudited)

Name, Age and Address	Position, Term of Office and Length of Time Served with the Trust	Principal Occupation(s) During Past 5 Years and Current Directorships
Thomas M. Dunning (69)	Trustee since 2008	Non-Executive Chairman (2008-Present); Chairman (1998-2008) and Chief Executive Officer (1998-2007), Lockton Dunning Benefits (consulting firm in employee benefits); Director, Oncor Electric Delivery Company LLC (2007-present); Board Member, Baylor Health Care System Foundation (2007-present); Vice Chair, State Fair of Texas (1987-Present); Board Member, Southwestern Medical Foundation (1994-present); Board Member, John Tower Center for Political Studies/SMU (2008-Present); Board Member, University of Texas Development Board (2008-Present); Board Member, BancTec (2010 – Present) (software consulting); Trustee, American Beacon Mileage Funds (2008-Present); Trustee, American Beacon Select Funds (2008-Present); Trustee, American Beacon Master Trust Funds (2008-Present).
Richard A. Massman (68)	Trustee since 2004 Chairman since 2008	Consultant and General Counsel Emeritus (2009-Present), Senior Vice President and General Counsel (1994-2009), Hunt Consolidated, Inc. (holding company engaged in oil and gas exploration and production, refining, real estate, farming, ranching and venture capital activities); Chairman (2007-2011) and Director (2005-2011), The Dallas Opera Foundation; Chairman (2006-2010) and Director (2005-2009), Temple Emanu-El Foundation; Trustee, Presbyterian Healthcare Foundation (2006-Present); Director, The Retina Foundation of the Southwest (2000-Present); Trustee, American Beacon Mileage Funds (2004-Present); Trustee, American Beacon Select Funds (2004-Present); Trustee, American Beacon Master Trust Funds (2004-Present).
R. Gerald Turner (65) 225 Perkins Admin. Bldg. Southern Methodist Univ. Dallas, Texas 75275	Trustee since 2001	President, Southern Methodist University (1995-Present); Director, ChemFirst (1986-2002); Director, J.C. Penney Company, Inc. (1996-Present); Director, California Federal Preferred Capital Corp. (2001-2003); Director, Kronus Worldwide Inc. (chemical manufacturing) (2003-Present); Director, First Broadcasting Investment Partners, LLC (2003-2007); Member, Salvation Army of Dallas Board of Directors; Member, Methodist Hospital Advisory Board; Co-Chair, Knight Commission on Intercollegiate Athletics; Trustee, American Beacon Mileage Funds (2001-Present); Trustee, American Beacon Select Funds (2001-Present); Trustee, American Beacon Master Trust Funds (2001-Present).
Paul J. Zucconi,CPA (71)	Trustee since 2008	Director, Affirmative Insurance Holdings, Inc. (producer of nonstandard automobile insurance) (2004-Present); Director, Titanium Metals Corporation (producer of titanium melted and mill products) (2002-Present); Director, Torchmark Corporation (life and health insurance products) (2002-Present); Director, Charter Bank (community services and products) (2010-Present); Director, Dallas Chapter of National Association of Corporate Directors (2004-Present); Partner, KPMG (1976-2001); Trustee, American Beacon Mileage Funds (2008-Present); Trustee, American Beacon Select Funds (2008-Present); Trustee, American Beacon Master Trust Funds (2008-Present).

Name, Age and Address	Position, Term of Office and Length of Time Served with the Trust	Principal Occupation(s) During Past 5 Years and Current Directorships
OFFICERS	Term One Year
Gene L. Needles, Jr. (56)	President since 2009 Executive Vice President since 2009	President, CEO and Director (2009-Present), American Beacon Advisors, Inc.; President, CEO and Director (2009-Present), Lighthouse Holdings, Inc.; President (2009-Present), American Beacon Mileage Funds; President (2009-Present), American Beacon Select Funds; President (2008-2009), Touchstone Investments; President (2003-2007), CEO (2004-2007), Managing Director of Sales (2002-2003), National Sales Manager (1999-2002), and Regional Sales Manager (1993-1999), AIM Distributors.

79

Trustees and Officers of the American Beacon Funds^SM

(Unaudited)

William F. Quinn** (63)	Executive Vice President from 2007 to 2008 and 2009 to Present President from 1987 to 2007 and 2008 to 2009 Trustee from 1987 to 2008	Executive Chairman (2009-Present), Chairman (2006-2009), CEO (2006-2007), President (1986-2006) and Director (2003-Present), American Beacon Advisors, Inc.; Chairman and Director (2008-Present), Lighthouse Holdings, Inc.; Chairman (1989-2003) and Director (1979-1989, 2003-Present), American Airlines Federal Credit Union; Director, Hicks Acquisition I, Inc. (2007-2009), Director, Hicks Acquisition II, Inc. (2010-Present); Director, Crescent Real Estate Equities, Inc.(1994-2007); Director, Pritchard, Hubble & Herr, LLC (investment advisor) (2001-2006); Director of Investment Committee, Southern Methodist University Endowment Fund (1996-Present); Member, Southern Methodist University Cox School of Business Advisory Board (1999-2002); Member, New York Stock Exchange Pension Manager Committee (1997-1998, 2000-2002, 2006-Present); Chairman (2007-Present) and Vice Chairman (2004-2007), Committee for the Investment of Employee Benefits; Director, United Way of Metropolitan Tarrant County (1988-2000, 2004-Present); the Independent Trustee, National Railroad Retirement Investment Trust (2011-Present); Trustee (1995-2008) and President (1995-2007, 2008-2009), American Beacon Mileage Funds; Trustee (1999-2008) and President (1999-2007, 2008-Present), American Beacon Select Funds; Trustee, American Beacon Master Trust (1995-2008); Director, American Beacon Global Funds SPC (2002-2011); Director, American Beacon Global Funds, plc (2007-2009).
Rosemary K. Behan (52)	VP, Secretary and Chief Legal Officer since 2006	Vice President, Legal and Compliance, American Beacon Advisors, Inc. (2006-Present); Secretary (2008-Present), Lighthouse Holding, Inc.; Assistant General Counsel, First Command Financial Planning, Inc. (2004-2006); Attorney, U.S. Securities and Exchange Commission, (1995-2004).
Brian E. Brett (51)	VP since 2004	Vice President, Director of Sales, American Beacon Advisors, Inc. (2004-Present); Regional Vice President, Neuberger Berman, LLC (investment adviser) (1996-2004).
Wyatt Crumpler (45)	VP since 2007	Vice President, Asset Management (2009-Present) and Vice President, Trust Investments (2007-2009), American Beacon Advisors, Inc.; Managing Director of Corporate Accounting (2004-2007) and Director of IT Strategy and Finance (2001-2004), American Airlines, Inc.
Erica Duncan (41)	VP Since 2011	Vice President, Marketing and Client Services (2011-Present), American Beacon Advisors, Inc.; Supervisor, Brand Marketing (2010-2011), Invesco; Supervisor, Marketing Communications (2009-2010) and Senior Financial Writer (2004-2009), Invesco AIM.
Michael W. Fields (57)	VP since 1989	Vice President, Fixed Income Investments, American Beacon Advisors, Inc. (1988-Present); Director American Beacon Global Funds SPC (2002-Present); Director, American Beacon Global Funds plc (2007-2009).
Melinda G. Heika (50)	Treasurer since 2010	Vice President, Finance and Accounting (2010-Present), Controller (2005-2009), Assistant Controller (1998-2004), American Beacon Advisors, Inc.; Treasurer (2010-Present) Lighthouse Holdings, Inc.
Terri L. McKinney (47)	VP since 2010	Vice-President, Enterprise Services (2009-Present), Managing Director (2003-2009), and Director of Marketing and Retail Sales (1996-2003), American Beacon Advisors, Inc.; President, Board of Trustees (2010-Present), Vice-President, Board of Trustees (2008-2010), and Trustee (2006-2008), Down Syndrome Guild of Dallas.
Jeffrey K. Ringdahl (36)	VP since 2010	Chief Operating Officer, American Beacon Advisors, Inc. (2010-Present); Vice President, Product Management, Touchstone Advisors, Inc. (2007-2010); Senior Director, Business Integration, Fidelity Investments (2005-2007).
Samuel J. Silver (48)	VP Since 2011	Vice President, Fixed Income Investments (2011-Present) and Senior Portfolio Manager, Fixed Income Investments (1999-2011), American Beacon Advisors, Inc.
Christina E. Sears (40)	Chief Compliance Officer since 2004 and Asst. Secretary since 1999	Chief Compliance Officer (2004-Present) and Senior Compliance Analyst (1998-2004), American Beacon Advisors, Inc.

80

Trustees and Officers of the American Beacon Funds^SM

(Unaudited)

John J. Okray (37)	Asst. Secretary since 2010	Assistant General Counsel, American Beacon Advisors, Inc. (2010-Present); Vice President, Oppenheimer Funds, Inc. (2004-2010).
Sonia L. Bates (55)	Asst. Treasurer since 2011	Director, Tax and Financial Reporting (2011-Present), Manager, Tax and Financial Reporting (2005-2010), Senior Tax Analyst (1999-2004), American Beacon Advisors, Inc.; Asst. Treasurer (2011-Present), Lighthouse Holdings, Inc.

* The Board has adopted a retirement plan that requires Trustees to retire no later than the last day of the calendar year in which they reach the age of 72, provided, however, that the Board may determine to grant one or more annual exemptions to this requirement.

** Mr. Feld is deemed to be an “interested person” of the Trusts, as defined by the 1940 Act. Mr. Feld’s law firm of Akin, Gump, Strauss, Hauer & Feld LLP has provided legal services within the past two fiscal years to the Manager and one or more of the Trust’s and Master Trust’s sub-advisors.

81

Delivery of Documents

eDelivery is NOW AVAILABLE - Stop traditional mail delivery and receive your

shareholder reports and summary prospectus on-line. Sign up at

www.americanbeaconfunds.com

If you invest in the Fund through a financial institution, you may be able to receive the Fund’s regulatory mailings, such as the Prospectus, Annual Report and Semi-Annual Report, by e-mail. If you are interested in this option, please go to www.icsdelivery.com and search for your financial institution’s name or contact your financial institution directly.

To obtain more information about the Fund:

By E-mail: american_beacon.funds@ambeacon.com	On the Internet: Visit our website at www.americanbeaconfunds.com
By Telephone: Institutional, Y, and Investor Classes Call (800) 658-5811 AMR ClassSM Call (800) 345-2345	By Mail: American Beacon Funds P.O. Box 219643 Kansas City, MO 64121-9643
Availability of Quarterly Portfolio Schedules In addition to the Schedule of Investments provided in each semi-annual and annual report, the Fund files a complete schedule of its portfolio holdings with the Securities and Exchange Commission (“SEC”) on Form N-Q as of the first and third fiscal quarters. The Fund’s Forms N-Q are available on the SEC’s website at www.sec.gov The Forms N-Q may also be reviewed and copied at the SEC’s Public Reference Section, 100 F Street, NE, Washington, D.C. 20549-1520. Information regarding the operation of the SEC’s Public Reference Room may be obtained by calling 1-800-SEC-0330. A complete schedule of each Fund’s portfolio holdings is also made available on the Funds’ website at www.americanbeaconfunds.com approximately twenty days after the end of each month.	Availability of Proxy Voting Policy and Records A description of the policies and procedures the Fund uses to determine how to vote proxies relating to portfolio securities is available in the Fund’s Statement of Additional Information, is available free of charge on the Fund’s website www.americanbeaconfunds.com and by calling 1-800-967-9009 or by accessing the SEC’s website at www.sec.gov. The Fund’s proxy voting record for the most recent year ended June 30 is filed annually with the SEC on Form N-PX. The Fund’s Forms N-PX are available on the SEC’s website at www.sec.gov. The Fund’s proxy voting record may also be obtained by calling 1-800-967-9009.

Fund Service Providers:

CUSTODIAN State Street Bank and Trust Boston, Massachusetts TRANSFER AGENT Boston Financial Data Services Kansas City, Missouri INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM Ernst & Young LLP Dallas, Texas DISTRIBUTOR Foreside Fund Services, LLC Portland, Maine

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

American Beacon Funds, American Beacon High Yield Bond Fund, American Beacon Enhanced Income Fund, American Beacon Intermediate Bond Fund and American Beacon Short-Term Bond Fund are service marks of American Beacon Advisors, Inc.

AR 10/12

ITEM 2. CODE OF ETHICS.

The Trust did not amend the code of ethics that applies to it principal executive and financial officers (the “Code”) nor did it grant any waivers to the provisions of the Code during the period covered by the shareholder report presented in Item 1. The Code is filed herewith as Exhibit 99.CODE ETH.

ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.

The Trust’s Board of Trustees has determined that Mr. Paul Zucconi, a member of the Trust’s Audit and Compliance Committee, is an “audit committee financial expert” as defined in Form N-CSR. Mr. Paul Zucconi is “independent” as defined in Form N-CSR.

ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.

(a)

Audit Fees	Fiscal Year Ended
$ 144,159		8/31/2011
$ 381,399		10/31/2011
$ 72,527		12/31/2011
$ 27,241		6/30/2012
$ 162,479		8/31/2012
$ 372,802		10/31/2012
$ 54,482		11/30/2012
$ 163,621		12/31/2012

(b)

Audit-Related Fees	Fiscal Year Ended
$0		8/31/2011
$0		10/31/2011
$0		12/31/2011
$0		6/30/2012
$0		8/31/2012
$0		10/31/2012
$0		11/30/2012
$0		12/31/2012

(c)

Tax Fees	Fiscal Year Ended
$ 32,500		8/31/2011
$ 61,132		10/31/2011
$ 15,592		12/31/2011
$ 3,500		6/30/2012
$ 28,000		8/31/2012
$ 74,500		10/31/2012
$ 7,000		11/30/2012
$ 10,500		12/31/2012

(d)

All Other Fees	Fiscal Year Ended
$0		8/31/2011
$0		10/31/2011
$0		12/31/2011
$0		6/30/2012
$0		8/31/2012
$0		10/31/2012
$0		11/30/2012
$0		12/31/2012

(e)(1) Pursuant to its charter, the Trust’s Audit and Compliance Committee shall have the following duties and powers pertaining to pre-approval of audit and non-audit services provided by the Trust’s principal accountant:

• to approve, prior to appointment, the engagement of auditors to annually audit and provide their opinion on the Trusts’ financial statements, and, in connection therewith, reviewing and evaluating matters potentially affecting the independence and capabilities of the auditors;

• to approve, prior to appointment, the engagement of the auditors to provide non-audit services to the Trusts, an investment adviser to any series of the Trusts or any entity controlling, controlled by, or under common control with an investment adviser (“adviser affiliate”) that provides ongoing services to the Trusts, if the engagement relates directly to the operations and financial reporting of the Trusts;

• to consider whether the non-audit services provided by a Trust’s auditor to an investment adviser or any adviser affiliate that provides ongoing services to a series of the Trusts, which services were not pre-approved by the Committee, are compatible with maintaining the auditor’s independence;

• to review the arrangements for and scope of the annual audit and any special audits; and

• to review and approving the fees proposed to be charged to the Trusts by the auditors for each audit and non-audit service.

The Audit and Compliance Committee may delegate any portion of its authority, including the authority to grant pre-approvals of audit and permitted non-audit services, to a subcommittee of one or more members. Any decisions of the subcommittee to grant pre-approvals shall be presented to the full audit committee at its next regularly scheduled meeting.

(e)(2) None of the fees disclosed in paragraphs (b) through (d) above were approved by the audit committee pursuant to paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X.

(f) Not applicable.

(g)

Aggregate Non-Audit Fees for Services Rendered to the:

Registrant	Adviser		Adviser’s Affiliates Providing Ongoing Services to Registrant	Fiscal Year Ended
$32,500	$	7,885	N/A		8/31/2011
$61,132	$	0	N/A		10/31/2011
$15,592	$	0	N/A		12/31/2011
$3,500	$	0	N/A		6/30/2012
$28,000	$	0	N/A		8/31/2012
$74,500	$	0	N/A		10/31/2012
$7,000	$	0	N/A		11/30/2012
$10,500	$	0	N/A		12/31/2012

(h) Not applicable.

ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.

Not applicable.

ITEM 6. SCHEDULE OF INVESTMENTS.

The schedules of investments for each series of the Trust are included in the shareholder reports presented in Item 1.

ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES.

Not applicable.

ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.

Not applicable.

ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT COMPANY AND AFFILIATED PURCHASERS.

Not applicable.

ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

The Trust has made no material changes to the procedures by which shareholders may recommend nominees to the Trust’s Board of Trustees since the Trust last disclosed such procedures in Schedule 14A.

ITEM 11. CONTROLS AND PROCEDURES.

(a) Based upon an evaluation within 90 days of the filing date of this report, the principal executive and financial officers concluded that the disclosure controls and procedures of the Trust are effective.

(b) There were no changes in the Trust’s internal control over financial reporting during the second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the Trust’s internal control over financial reporting.

ITEM 12. EXHIBITS.

(a)(1) Filed herewith as EX-99.CODE ETH.

(a)(2) A separate certification for each principal executive officer and principal financial officer of the Trust as required by Rule

30a-2(a) under the Investment Company Act of 1940 is attached hereto as EX-99.CERT.

(a)(3) Not applicable.

(b) The certifications required by Rule 30a-2(b) under the Investment Company Act of 1940 are attached hereto as
EX-99.906CERT.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

(Registrant): American Beacon Funds
By	/s/ Gene L. Needles, Jr.
	Gene L. Needles, Jr.
	President and Executive Vice President
	American Beacon Funds
Date: January 7, 2013
By	/s/ Melinda G. Heika
	Melinda G. Heika
	Treasurer
	American Beacon Funds
Date: January 7, 2013

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

By	/s/ Gene L. Needles, Jr.
	Gene L. Needles, Jr.
	President and Executive Vice President
	American Beacon Funds
Date: January 7, 2013
By	/s/ Melinda G. Heika
	Melinda G. Heika
	Treasurer
	American Beacon Funds
Date: January 7, 2013

EX-99.CODE ETH

For period ended 10/31/12

Registrant Name: American Beacon Funds

File Number: 811-4984

EXHIBIT 99.CODE ETH

AMERICAN BEACON FUNDS

AMERICAN BEACON MILEAGE FUNDS

AMERICAN BEACON SELECT FUNDS

AMERICAN BEACON MASTER TRUST

Code of Ethics for Principal Executive and Financial Officers

Dated: February 16, 2010

Purpose

The American Beacon Funds, the American Beacon Mileage Funds, the American Beacon Select Funds, and the American Beacon Master Trust (collectively, the “Trusts”) have adopted this Code of Ethics for Principal Executive and Financial Officers (the “Code”), which applies to the Trusts’ Principal Executive Officer and Principal Financial Officer (the “Covered Officers” as set forth in Exhibit A), for the purpose of promoting:

* honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships;

* full, fair, accurate, timely, and understandable disclosure in reports and documents that a Trust files with, or submits to, the Securities and Exchange Commission (the “SEC”) and in other public communications made by the registrant;

* compliance with applicable governmental laws, rules, and regulations;

* the prompt internal reporting of violations of the Code to an appropriate person or persons identified in the Code; and

* accountability for adherence to the Code.

Each Covered Officer should adhere to a high standard of business ethics and should be sensitive to situations that may give rise to actual as well as apparent conflicts of interest.

Conflicts of Interest

For purposes of this Code, a “conflict of interest” occurs when a Covered Officer’s “personal interests” interfere with the interests of, or his/her service to, the Trusts. For example, a conflict of interest would arise if a Covered Officer, or a member of his/her family, receives improper personal benefits as a result of his/her position with the Trusts.

Certain conflicts of interest arise out of the relationship between Covered Officers and the Trusts and already are subject to conflict of interest provisions in the Investment Company Act of 1940 (“Investment Company Act”) and the Investment Advisers Act of 1940 (“Investment Advisers Act”). For example, Covered Officers may not individually engage in certain transactions (such as the purchase or sale of securities or other property) with the Trusts because of their status as “affiliated persons” of the Trusts.

Conflicts also may arise from a Covered Officer’s position or employment at American Beacon Advisors, Inc. (“AmBeacon”), the Trusts’ manager, and his/her position with each Trust. This Code recognizes that the Covered Officers will, in the normal course of their duties, be involved in establishing policies and implementing decisions that will have different effects on AmBeacon and the Trusts. The participation of the Covered Officers in such activities is inherent in the contractual relationship between the Trusts and AmBeacon and is consistent with the performance by the Covered Officers of their duties as officers of the Trusts. Thus, if performed in conformity with the provisions of the Investment Company Act and the Investment Advisers Act, such activities will be deemed to have been handled ethically.

Other conflicts of interest are covered by the Code, even if such conflicts of interest are not subject to provisions in the Investment Company Act and the Investment Advisers Act. The following list provides examples of conflicts of interest under the Code, but Covered Officers should keep in mind that these examples are not exhaustive. The overarching principle is that the personal interest of a Covered Officer should not be placed improperly before the interest of the Trusts.

Each Covered Officer should not:

* use his/her personal influence or personal relationships improperly to influence investment decisions or financial reporting by the Trusts whereby the Covered Officer would benefit personally to the detriment of the Trusts; or

* cause the Trusts to take action, or fail to take action, for the personal benefit of the Covered Officer rather than the benefit of the Trusts.

At times, certain situations may arise that may, or may not, be considered conflicts of interest under this Code. Covered Officers are encouraged to discuss such situations with the Trusts’ Chief Legal Officer (“CLO”). Examples of these types of situations include:

* service as a director on the board of any public or private company;

* the receipt of any non-nominal gifts in excess of $150;

* the receipt of any entertainment from any company with which the Trusts have current or prospective business dealings unless such entertainment is business-related, reasonable in cost, appropriate as to time and place, and not so frequent as to raise any question of impropriety;

* any ownership interest in, or any consulting or employment relationship with, any of the Trusts’ service providers, other than AmBeacon, the distributor for the Trusts’ shares, or any affiliated person thereof;

* a direct or indirect financial interest in commissions, transaction charges or spreads paid by the Trusts for effecting portfolio transactions or for selling or redeeming shares other than an interest arising from the Covered Officer’s employment, such as compensation or equity ownership.

Disclosure and Compliance

Each Covered Officer:

* should familiarize himself/herself with the disclosure requirements generally applicable to the Trusts;

* should not knowingly misrepresent, or cause others to misrepresent, facts about the Trusts to others, whether within or outside the Trusts, including to the Trusts’ Trustees and auditors, and to governmental regulators and self-regulatory organizations;

* should, to the extent appropriate within his/her area of responsibility, consult with other officers and employees of the Trusts and AmBeacon with the goal of promoting full, fair, accurate, timely and understandable disclosure in the reports and documents the Trusts file with, or submit to, the SEC and in other public communications made by the Trusts; and

* is responsible to promote compliance with the standards and restrictions imposed by applicable laws, rules and regulations.

Reporting and Accountability

Each Covered Officer must:

* upon adoption of the Code (or thereafter as applicable, upon becoming a Covered Officer), affirm in writing to the Board that he/she has received, read, and understands the Code;

* annual thereafter affirm to the Board that he/she has complied with the requirements of the Code;

* complete at least annually the Officer Questionnaire by detailing any directorships with public or private companies and/or material relationships or transactions with affiliated persons of any Trust or its series;

* not retaliate against any other Covered Officer or any employee of the Trusts or their affiliated persons for reports of potential violations that are made in good faith; and

* notify the Legal Officer promptly if he/she knows of any violations of this Code. Failure to do so is itself a violation of this Code.

The CLO is responsible for applying this Code to specific situations in which questions are presented under it and has the authority to interpret this Code in any particular situation. In addition, the CLO is authorized and encouraged to consult with counsel to the Trusts and counsel to the Independent Trustees of the Trusts’ Boards of Trustees. However, any approvals or waivers sought by the Covered Officers will be considered by the Independent Trustees.

The Trusts will follow these procedures in investigating and enforcing this Code:

* the CLO will take all appropriate action to investigate any potential violations reported to him;

* if, after such investigation, the CLO believes that no violation has occurred, the CLO is not required to take any further action;

* any matter that the CLO believes is a violation will be reported to the Independent Trustees;

* if the Independent Trustees concur that a violation has occurred, they will inform and make a recommendation to the applicable Trust’s Board of Trustees, which will consider appropriate action, which may include review of, and appropriate modifications to, applicable policies and procedures; notification to appropriate personnel of AmBeacon or its board; or a recommendation to dismiss the Covered Officer;

* the Independent Trustees will be responsible for granting waivers, as appropriate; and

* any changes to or waivers of this Code will, to the extent required, be disclosed as provided by SEC rules.

Other Policies and Procedures

This Code shall be the sole code of ethics adopted by the Trusts for purposes of Section 406 of the Sarbanes-Oxley Act and the rules and forms applicable to registered investment companies there under. Insofar as other policies or procedures of the Trusts, AmBeacon, the distributor for the Trusts’ shares, or other service providers govern or purport to govern the behavior or activities of the Covered Officers who are subject to this Code, they are superseded by this Code to the extent that they overlap or conflict with the provisions of this Code. The Trusts’ and AmBeacon’s codes of ethics under Rule 17j-1 under the Investment Company Act and the more detailed policies and procedures set forth in the Trusts’ Statement of Policy on Material Non-Public Information are separate requirements applying to the Covered Officers and others, and are not part of nor replaced by this Code.

Amendments

Any amendments to this Code, other than amendments to Exhibit A, must be approved or ratified by a majority vote of the Board, including a majority of Independent Trustees.

Confidentiality

All reports and records prepared or maintained pursuant to this Code will be considered confidential and shall be maintained and protected accordingly. Except as otherwise required by law or this Code, such matters shall not be disclosed to anyone other than the appropriate Board of Trustees, its counsel and AmBeacon.

Internal Use

This Code is intended solely for the internal use by the Trusts and does not constitute an admission, by or on behalf of any Trust, as to any fact, circumstance, or legal conclusion.

EXHIBIT A

Persons Covered by this Code of Ethics:

Position with each Trust	Name
Principal Executive Officer, President	Gene L. Needles, Jr.
Principal Financial Officer, Treasurer	Melinda G. Heika

EX-99.CERT

For period ended 10/31/2012

Registrant Name: American Beacon Funds

File Number: 811-4984

EXHIBIT 99.CERT

I, Melinda G. Heika, certify that:

1. I have reviewed this report on Form N-CSR of American Beacon Funds;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have:

(a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and

(d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize, and report financial information; and

(b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: January 7, 2013	/s/ Melinda G. Heika
	Melinda G. Heika
	Treasurer
	American Beacon Funds

I, Gene L. Needles, Jr., certify that:

1. I have reviewed this report on Form N-CSR of American Beacon Funds;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have:

(a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and

(d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize, and report financial information; and

(b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: January 7, 2013	/s/ Gene L. Needles, Jr.
	Gene L. Needles, Jr.
	President and Executive Vice President
	American Beacon Funds

EX-99.906CERT

For period ended 10/31/2012

Registrant Name: American Beacon Funds

File Number: 811-4984

EXHIBIT 99.906CERT

Gene L. Needles, Jr. and Melinda G. Heika, respectively, the President/Executive Vice President and Treasurer of the American Beacon Funds (the “Registrant”), each certify to the best of his or her knowledge and belief that:

1. the Registrant’s report on Form N-CSR for the period ended October 31, 2012 (the “Form N-CSR”) fully complies with the requirements of Section 15(d) of the Securities Exchange Act of 1934, as amended; and

2. the information contained in such Form N-CSR fairly presents, in all material respects, the financial condition and results of operations of the Registrant.

/s/ Gene L. Needles, Jr.	/s/ Melinda G. Heika
Gene L. Needles, Jr	Melinda G. Heika
President and Executive Vice President	Treasurer
American Beacon Funds	American Beacon Funds

Date: January 7, 2013

A signed original of this written statement required by Section 906 has been provided to American Beacon Funds and will be retained by American Beacon Funds and furnished to the Securities and Exchange Commission or its staff upon request.