N-CSR

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM N-CSR

CERTIFIED SHAREHOLDER REPORT OF REGISTERED

MANAGEMENT INVESTMENT COMPANIES

Investment Company Act file number: 811-4984

AMERICAN BEACON FUNDS

(Exact name of registrant as specified in charter)

220 East Las Colinas Boulevard, Suite 1200

Irving, Texas 75039

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

GENE L. NEEDLES, JR., PRESIDENT

220 East Las Colinas Boulevard, Suite 1200

Irving, Texas 75039

(Name and address of agent for service)

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

Date of fiscal year end: October 31, 2018

Date of reporting period: October 31, 2018

Form N-CSR is to be used by management investment companies to file reports with the Commission not later than 10 days after the transmission to stockholders of any report that is required to be transmitted to stockholders under Rule 30e-1 under the Investment Company Act of 1940 (17 CFR 270.30e-1). The Commission may use the information provided on Form N-CSR in its regulatory, disclosure review, inspection, and policymaking roles.

A registrant is required to disclose the information specified by Form N-CSR, and the Commission will make this information public. A registrant is not required to respond to the collection of information contained in Form N-CSR unless the Form displays a currently valid Office of Management and Budget (“OMB”) control number. Please direct comments concerning the accuracy of the information collection burden estimate and any suggestions for reducing the burden to Secretary, Securities and Exchange Commission, 450 Fifth Street, NW, Washington, DC 20549-0609. The OMB has reviewed this collection of information under the clearance requirements of 44 U.S.C. § 3507.

ITEM 1. REPORTS TO STOCKHOLDERS.

About American Beacon Advisors

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

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

LARGE CAP VALUE FUND RISKS

Investing in value stocks may limit downside risk over time; however, the Fund may produce more modest gains than riskier stock funds as a trade-off for this potentially lower risk. Investing in foreign securities may involve heightened risk due to currency fluctuations and economic and political risks. The use of futures contracts for cash management may subject the Fund to losing more money than invested. The Fund participates in a securities lending program. Please see the prospectus for a complete discussion of the Fund’s risks. There can be no assurances that the investment objectives of this Fund will be met.

Any opinions herein, including forecasts, reflect our judgment as of the end of the reporting period and are subject to change. Each advisor’s strategies and 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, 2018

Contents

President’s Message	1
Market and Performance Overview	2
Expense Example	6
Report of Independent Registered Public Accounting Firm	8
Schedule of Investments:
American Beacon Large Cap Value Fund	9
Financial Statements	17
Notes to Financial Statements	21
Financial Highlights:
American Beacon Large Cap Value Fund	41
Federal Tax Information	48
Disclosure Regarding Approval of the Management and Investment Advisory Agreements	49
Trustees and Officers of the American Beacon Funds	54
Privacy Policy	61

Additional Fund Information Back Cover

President’s Message

Dear Shareholders,   Long-term investing isn’t about identifying and anticipating the next big market move. It’s about identifying the right investment products for riding out those moves. As a long-term investor, you should strive to accomplish the three Ds: direction, discipline and diversification.   u   Direction: Achieving your long-term financial goals requires an individualized plan of action. You may want your plan to provide some measure of protection against periods of geopolitical turmoil, economic uncertainty, market volatility and job insecurity. Your plan should be reviewed annually and be adjusted in the event your long-range needs change.

u Discipline: Long-term, systematic participation in an investment portfolio requires your resolution to stay the course. Spending time in the market – rather than trying to time the market – may place you in a better position to reach your long-term financial goals.

u Diversification: By investing in different types of investment categories and asset classes, you may be able to help mitigate financial risks across your investment portfolio. By allocating your investment portfolio according to your risk-tolerance level, you may be better positioned to weather storms and achieve your long-term financial goals.

Since 1986, American Beacon has endeavored to provide investors with a disciplined approach to realizing long-term financial goals. As a manager of managers, we strive to provide investment products that may enable investors to participate during market upswings while potentially insulating against market downswings. Our approach is more than a concept. It’s the cornerstone of our culture. And we strive to apply it at every turn as we seek to provide a well-diversified line of investment products for your investment portfolio.

Many of the sub-advisors to our mutual funds pursue upside capture and/or downside protection using proprietary strategies. The investment teams behind our mutual funds seek to produce consistent, long-term results rather than focus only on short-term movements in the markets. In managing our investment products, we emphasize identifying opportunities that offer the potential for long-term rewards.

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

Best Regards,

Gene L. Needles, Jr.

President

American Beacon Funds

1

Domestic Equity Market Overview

October 31, 2018 (Unaudited)

For the year ended October 31, 2018, the broad market S&P 500^® Index (the “Index”) and the Dow Jones Industrial Average gained 7.35% and 9.87%, respectively. From a style perspective, Growth significantly outperformed Value across all market caps, according to the Russell^® Indexes. In terms of size, it went from largest to smallest with large caps as the best performers, followed by mid-caps and small caps.

The following table illustrates various Russell Index returns according to size and style.

12-Month Period Ended October 31, 2018

Large Caps	1 Year
Russell 1000 Index	6.98	%
Russell 1000 Growth Index	10.71	%
Russell 1000 Value Index	3.04	%
Mid-Caps	1 Year
Russell Midcap Index	2.80	%
Russell Midcap Growth Index	6.14	%
Russell Midcap Value Index	0.16	%
Small Caps	1 Year
Russell 2000 Index	1.85	%
Russell 2000 Growth Index	4.13	%
Russell 2000 Value Index	(0.59	)%

Although these returns may appear to be run of the mill, they are not. The 2017 calendar year ended on a strong note, riding on the wave of the Trump administration’s pro-growth policies and the Federal Reserve’s cautious navigation of the path to normalized interest rates. Short-volatility traders and cryptocurrencies were still all the rage. Unfortunately, 2018 came with a vengeance. By March of 2018, the short-volatility trade was literally wiped out and many cryptocurrencies lost value from previous-year highs. As market participants wondered how bad things would get, a shot of strong gross domestic product (“GDP”) growth in the second quarter of 2018 pushed markets higher through August. The last few months of the period under review witnessed the return of volatility as the rhetoric of a trade war heightened, economic growth forecasts declined, Capitol Hill gridlock following the mid-term elections dampened the potential for pro-growth policy, and the likelihood of continued rate hikes made investors nervous.

Looking more closely at the markets’ returns, a small subset of sectors accounted for most of the gains. For example, the Index derived more than 80% of its return from the Technology sector (315 basis points, or 3.15%), the Consumer Discretionary sector (146 basis points, or 1.46%) and the Health Care sector (144 basis points, or 1.44%), which comprise about 44% of the Index. The remaining eight sectors underperformed the Index. Similar trends also occurred in mid-caps and small caps; however, not to this degree. A narrow market is not uncommon as bull markets move into their later stages. For example, on August 22, 2018, the current bull market became the longest one in history, eclipsing the bull run in the 1990s.

The present bull market has been powered by slow and steady growth. In the last 12 months, the economy continued to be a bright spot. Third-quarter real GDP was up 3.5% (seasonally adjusted annual rate) on top of the strong 4.2% gain in the second quarter. In addition, the unemployment rate is near 50-year lows. Inflation, while rising, is still in an acceptable range, and the U.S. dollar is strong. All these factors contributed to the strong market returns and allowed the Federal Reserve to implement three rate hikes in 2018, with another expected in December.

Despite the favorable factors, the U.S. equity markets ended the 12-month period in a slump. Fear overwhelmed investors as the markets corrected. The markets sit at the crossroads of correction and a bear market – with risks of trade wars, slower growth and interest-rate hikes balanced by low unemployment, subdued inflation, and equity valuations near long-term averages.

2

American Beacon Large Cap Value Fund^SM

Performance Overview

October 31, 2018 (Unaudited)

The Investor Class of the American Beacon Large Cap Value Fund (the “Fund”) returned 1.18% for the twelve months ended October 31, 2018, underperforming the Russell 1000^® Value Index (the “Index”) return of 3.03% for the same period.

Comparison of Change in Value of a $10,000 Investment for the period from 10/31/2008 through 10/31/2018

Total Returns for the Period ended October 31, 2018
	Ticker	1 Year			3 Years			5 Years			10 Years			Value of  $10,000 10/31/2008- 10/31/2018
Institutional Class (1,5,7)	AADEX		1.51	%		8.46	%		7.79	%		11.56	%		$	29,862
Y Class (1,2,7)	ABLYX		1.42	%		8.38	%		7.70	%		11.47	%		$	29,631
Investor Class (1,7)	AAGPX		1.18	%		8.10	%		7.43	%		11.17	%		$	28,842
Advisor Class (1,7)	AVASX		1.04	%		7.95	%		7.28	%		11.02	%		$	28,444
A Class without sales charge (1,3,7)	ALVAX		1.22	%		8.08	%		7.38	%		11.09	%		$	28,638
A Class with sales charge (1,3,7)	ALVAX		(4.58	)%		5.96	%		6.11	%		10.44	%		$	26,994
C Class without sales charge (1,4,7)	ALVCX		0.57	%		7.31	%		6.61	%		10.42	%		$	26,936
C Class with sales charge (1,4,7)	ALVCX		(0.43	)%		7.31	%		6.61	%		10.42	%		$	26,936
R6 Class (1,5,7)	AALRX		1.54	%		8.47	%		7.79	%		11.56	%		$	29,873
Russell 1000® Value Index (6)			3.03	%		8.88	%		8.61	%		11.30	%		$	29,170

1. Performance shown is historical and is not indicative of future returns. Investment returns and principal value will vary, and shares may be worth more or less at redemption than at original purchase. Performance shown is calculated based on the published end of day net asset values as of date indicated, and current performance may be lower or higher than the performance data quoted. To obtain performance as of the most recent month end, please 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. Generally accepted accounting principles require adjustments to be made to the net assets of the Fund at period end for financial reporting purposes only; and as such, the total return based on the unadjusted net asset value per share may differ from the total return reported in the financial highlights.

2. Fund performance for the ten-year period represents the total returns achieved by the Institutional Class from 10/31/08 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 10/31/08.

3

American Beacon Large Cap Value Fund^SM

Performance Overview

October 31, 2018 (Unaudited)

3. Fund performance for the ten-year period represents the total returns achieved by the Investor Class from 10/31/08 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 10/31/08. A Class shares have a maximum sales charge of 5.75%.

4. Fund performance for the ten-year period represents the total returns achieved by the Investor Class from 10/31/08 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 10/31/08. A portion of the fees charged to the C Class was waived from 2010 through 2012, partially recovered in 2013, and fully recovered in 2014. Performance prior to waiving fees was lower than the actual returns shown from 2010 through 2012. C Class shares have a maximum contingent deferred sales charge of 1.00% for shares redeemed within one year of the date of purchase.

5. Fund performance for the three-year, five-year and ten-year periods represent the returns achieved by the Institutional Class from 10/31/08 through 2/28/17, the inception date of the R6 Class, and the returns of the R6 Class since its inception. Expenses of the R6 Class are lower than those of the Institutional Class. As a result, total returns shown may be lower than they would have been had the R6 Class been in existence since 10/31/08. A portion of the fees charged to the R6 Class of the Fund was waived in 2017 and fully recovered in 2018. Performance prior to waiving fees was lower than actual returns shown in 2017.

6. 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 and Russell 1000 Index are registered trademarks of the Frank Russell Company. Frank Russell Company (“Russell”) is the source and owner of the trademarks, service marks and copyrights related to the Russell Indexes. Russell^® is a trademark of Frank Russell Company. Neither Russell nor its licensors accept any liability for any errors or omissions in the Russell Indexes and/or Russell ratings or underlying data, and no party may rely on any Russell Indexes and/or Russell ratings and/or underlying data contained in this communication. No further distribution of Russell Data is permitted without Russell’s express written consent. Russell does not promote, sponsor or endorse the content of this communication. One cannot directly invest in an index.

7. The Total Annual Fund Operating Expense ratios set forth in the most recent Fund prospectus for the Institutional, Y, Investor, Advisor, A, C, and R6 Class shares was 0.60%, 0.67%, 0.92%, 1.07%, 0.98%, 1.72%, and 0.60%, 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 for the twelve-month period.

The Fund’s investments in the Financials, Consumer Staples and Industrials sectors hurt the most in terms of stock selection. In the Financials sector, American International Group (down 34.73%) and Citigroup, Inc. (down 8.88%) were the largest detractors. Positions in Imperial Brands Plc, Sponsored ADR (down 13.14%) and Molson Coors Brewing Co., B (down 15.57%) hurt the Fund’s returns in the Consumer Staples sector. Lastly, in the Industrials sector, the Fund’s positions in Johnson Controls International (down 20.14%) and Macquarie Infrastructure Corp., (down 37.63%) hurt the Fund’s performance the most for the period.

Sector allocation weighed on relative performance as an overweight to Industrials (down 8.04%) and an underweight in Health Care (up 13.32%) hurt relative performance compared to the Index. The Fund’s overweight position in the Information Technology sector (up 8.27%) somewhat muted relative underperformance during the period.

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 (% Net Assets)
JPMorgan Chase & Co.		2.9
Citigroup, Inc.		2.8
Wells Fargo & Co.		2.5
Comcast Corp., Class A		2.4
General Motors Co.		2.2
BP PLC, Sponsored ADR		2.1
Bank of America Corp.		1.9
American International Group, Inc.		1.9
ConocoPhillips		1.8
Oracle Corp.		1.8
Total Fund Holdings	193

4

American Beacon Large Cap Value Fund^SM

Performance Overview

October 31, 2018 (Unaudited)

Sector Allocation (% Equities)
Financials	25.8
Energy	14.4
Health Care	12.4
Information Technology	10.3
Industrials	9.8
Consumer Discretionary	7.8
Communication Services	7.5
Consumer Staples	6.5
Materials	3.8
Utilities	1.6
Real Estate	0.1

5

American Beacon Large Cap Value Fund^SM

Expense Example

October 31, 2018 (Unaudited)

Fund Expense Example

As a shareholder of a Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments and redemption fees if applicable, and (2) ongoing costs, including management fees, distribution (12b-1) fees, sub-transfer agent fees, and other Fund expenses. The Examples are intended to help you understand the ongoing cost (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. The Examples are based on an investment of $1,000 invested at the beginning of the period in each Class and held for the entire period from May 1, 2018 through October 31, 2018.

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 = $8.60), then multiply the result by the “Expenses Paid During Period” to estimate the expenses you paid on your account during this period. Shareholders of the Investor and Institutional Classes that invest in the Fund through an IRA or Roth IRA may be subject to a custodial IRA fee of $15 that is typically deducted each December. If your account was subject to a custodial IRA fee during the period, your costs would have been $15 higher.

Hypothetical Example for Comparison Purposes

The “Hypothetical” lines of the 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 or Roth IRA may be subject to a custodial IRA fee of $15 that is typically deducted each December. If your account was subject to a custodial IRA fee during the period, your costs would have been $15 higher.

You should also be aware that the expenses shown in the table highlight only your ongoing costs and do not reflect any transaction costs charged by the Fund, such as sales charges (loads) or redemption fees, as applicable. Similarly, the expense examples for other funds do not reflect any transaction costs charged by those funds, such as sales charges (loads), redemption fees or exchange fees. Therefore, the “Hypothetical” lines of the 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.

6

American Beacon Large Cap Value Fund^SM

Expense Example

October 31, 2018 (Unaudited)

American Beacon Large Cap Value Fund
	Beginning Account Value 5/1/2018		Ending Account Value 10/31/2018		Expenses Paid During Period 5/1/2018-10/31/2018*
Institutional Class
Actual		$1,000.00		$992.30		$3.26
Hypothetical**		$1,000.00		$1,021.90		$3.31
Y Class
Actual		$1,000.00		$991.60		$3.61
Hypothetical**		$1,000.00		$1,021.60		$3.67
Investor Class
Actual		$1,000.00		$990.60		$4.92
Hypothetical**		$1,000.00		$1,020.30		$4.99
Advisor Class
Actual		$1,000.00		$990.10		$5.57
Hypothetical**		$1,000.00		$1,019.60		$5.65
A Class
Actual		$1,000.00		$990.90		$5.02
Hypothetical**		$1,000.00		$1,020.20		$5.09
C Class
Actual		$1,000.00		$987.30		$8.26
Hypothetical**		$1,000.00		$1,016.90		$8.39
R6 Class
Actual		$1,000.00		$992.30		$2.96
Hypothetical**		$1,000.00		$1,022.23		$3.01

* Expenses are equal to the Fund’s annualized expense ratios for the six-month period of 0.65%, 0.72%, 0.98%, 1.11%, 1.00%, 1.65%, and 0.59% for the Institutional, Y, Investor, Advisor, A, C, and R6 Classes, respectively, multiplied by the average account value over the period, multiplied by the number derived by dividing the number of days in the most recent fiscal half-year (184) by days in the year (365) to reflect the half-year period.

** 5% return before expenses.

7

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

Opinion on the Financial Statements

We have audited the accompanying statement of assets and liabilities of American Beacon Large Cap Value Fund (the “Fund”) (one of the funds constituting American Beacon Funds (the “Trust”)), including the schedule of investments, as of October 31, 2018, and the related statement 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, the financial highlights for each of the five years in the period then ended and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Fund at October 31, 2018, 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 its financial highlights for each of the five years in the period then ended, in conformity with U.S. generally accepted accounting principles.

Basis for Opinion

These financial statements are the responsibility of the Trust’s management. Our responsibility is to express an opinion on the Fund’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Trust in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Trust is not required to have, nor were we engaged to perform, an audit of the Trust’s internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Trust’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of October 31, 2018, by correspondence with the custodian and brokers or by other appropriate auditing procedures where replies from brokers were not received. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

We have served as the auditor of one or more American Beacon investment companies since 1987.

Dallas, Texas

December 28, 2018

8

American Beacon Large Cap Value Fund^SM

Schedule of Investments

October 31, 2018

	Shares		Fair Value
COMMON STOCKS - 95.41%
Communication Services - 7.19%
Diversified Telecommunication Services - 1.53%
AT&T, Inc.		2,010,410		$	61,679,379
Verizon Communications, Inc.		578,680			33,036,841
					94,716,220
Entertainment - 0.12%
Walt Disney Co.		66,900			7,682,127
Interactive Media & Services - 0.65%
Facebook, Inc., Class AA		266,200			40,406,498
Media - 4.33%
CBS Corp., Class B, NVDR		340,403			19,522,112
Comcast Corp., Class A		3,849,107			146,804,941
Discovery, Inc., Class AA B		122,981			3,983,354
Discovery, Inc., Class CA		1,491,400			43,712,934
Interpublic Group of Cos, Inc.		811,182			18,786,975
News Corp., Class A		923,600			12,182,284
Omnicom Group, Inc.		304,477			22,628,731
					267,621,331
Wireless Telecommunication Services - 0.56%
Vodafone Group PLC, Sponsored ADR		1,821,450			34,480,049
Total Communication Services					444,906,225
Consumer Discretionary - 7.39%
Auto Components - 1.58%
Adient PLCB		450,698			13,710,233
Aptiv PLC		144,138			11,069,799
Garrett Motion, Inc.A		21,914			332,435
Goodyear Tire & Rubber Co.		715,400			15,066,324
Lear Corp.		19,901			2,644,843
Magna International, Inc.		1,118,541			55,076,959
					97,900,593
Automobiles - 2.38%
General Motors Co.		3,670,138			134,290,349
Harley-Davidson, Inc.		331,852			12,683,384
					146,973,733
Hotels, Restaurants & Leisure - 0.62%
Carnival Corp.		300,500			16,840,020
Norwegian Cruise Line Holdings Ltd.A		487,300			21,475,311
					38,315,331
Household Durables - 1.02%
DR Horton, Inc.		616,200			22,158,552
Mohawk Industries, Inc.A		195,200			24,347,296
Tupperware Brands Corp.		479,800			16,840,980
					63,346,828
Multiline Retail - 1.01%
Dollar General Corp.		561,512			62,541,207
Specialty Retail - 0.70%
Bed Bath & Beyond, Inc.B		296,106			4,068,496
Lowe’s Cos, Inc.		413,255			39,350,141
					43,418,637

See accompanying notes

9

American Beacon Large Cap Value Fund^SM

Schedule of Investments

October 31, 2018

	Shares		Fair Value
COMMON STOCKS - 95.41% (continued)
Consumer Discretionary - 7.39% (continued)
Textiles, Apparel & Luxury Goods - 0.08%
Hanesbrands, Inc.		292,177		$	5,013,757
Total Consumer Discretionary					457,510,086
Consumer Staples - 6.20%
Beverages - 1.31%
Diageo PLC, Sponsored ADR		111,624			15,421,972
Molson Coors Brewing Co., Class B		534,800			34,227,200
PepsiCo, Inc.		281,436			31,627,777
					81,276,949
Food Products - 1.85%
Archer-Daniels-Midland Co.		150,670			7,119,157
Danone S.A., Sponsored ADR		403,250			5,705,987
General Mills, Inc.		322,550			14,127,690
Ingredion, Inc.		125,900			12,738,562
JM Smucker Co.		48,208			5,221,891
Kellogg Co.		117,395			7,687,025
Mondelez International, Inc., Class A		536,000			22,501,280
Nestle S.A., Sponsored ADR		257,722			21,720,810
Tyson Foods, Inc., Class A		297,700			17,838,184
					114,660,586
Household Products - 0.26%
Colgate-Palmolive Co.		41,118			2,448,577
Kimberly-Clark Corp.		37,193			3,879,230
Procter & Gamble Co.		37,924			3,363,100
Reckitt Benckiser Group PLC, Sponsored ADR		391,988			6,352,166
					16,043,073
Personal Products - 0.26%
Unilever PLC, Sponsored ADR		306,100			16,217,178
Tobacco - 2.52%
Altria Group, Inc.		798,535			51,936,717
Imperial Brands PLC, Sponsored ADR		807,292			27,326,834
Philip Morris International, Inc.		868,904			76,524,375
					155,787,926
Total Consumer Staples					383,985,712
Energy - 13.72%
Energy Equipment & Services - 2.64%
Halliburton Co.		826,000			28,645,680
Helmerich & Payne, Inc.		252,800			15,746,912
National Oilwell Varco, Inc.		315,300			11,603,040
Oceaneering International, Inc.A		639,700			12,115,918
Schlumberger Ltd.		1,858,003			95,334,134
					163,445,684
Oil, Gas & Consumable Fuels - 11.08%
Apache Corp.		1,191,100			45,059,313
BP PLC, Sponsored ADR		3,034,094			131,588,657
Canadian Natural Resources Ltd.		2,115,703			57,801,006
Chevron Corp.		501,621			56,005,985
ConocoPhillips		1,576,743			110,214,336
Devon Energy Corp.		1,021,366			33,092,258

See accompanying notes

10

American Beacon Large Cap Value Fund^SM

Schedule of Investments

October 31, 2018

	Shares		Fair Value
COMMON STOCKS - 95.41% (continued)
Energy - 13.72% (continued)
Oil, Gas & Consumable Fuels - 11.08% (continued)
EOG Resources, Inc.		121,163		$	12,763,310
Exxon Mobil Corp.		136,069			10,841,978
Hess Corp.		695,292			39,909,761
Kinder Morgan, Inc.		914,600			15,566,492
Kosmos Energy Ltd.A		820,845			5,327,284
Marathon Oil Corp.		2,271,286			43,131,721
Marathon Petroleum Corp.		136,980			9,650,241
Murphy Oil Corp.		662,260			21,099,604
Occidental Petroleum Corp.		124,748			8,366,848
Phillips 66		591,699			60,838,491
Royal Dutch Shell PLC, Class A, Sponsored ADR		382,822			24,190,522
					685,447,807
Total Energy					848,893,491
Financials - 24.65%
Banks - 12.19%
Banco Santander S.A., ADRB		4,849,900			23,182,522
Bank of America Corp.		4,350,242			119,631,655
BNP Paribas S.A., ADR		509,500			13,241,905
CIT Group, Inc.		157,400			7,457,612
Citigroup, Inc.		2,619,396			171,465,662
Citizens Financial Group, Inc.		558,153			20,847,015
JPMorgan Chase & Co.		1,661,103			181,093,449
PNC Financial Services Group, Inc.		259,715			33,370,780
US Bancorp		563,513			29,454,825
Wells Fargo & Co.		2,901,554			154,449,719
					754,195,144
Capital Markets - 4.90%
Bank of New York Mellon Corp.		548,812			25,975,272
BlackRock, Inc.		28,886			11,884,278
Blackstone Group LP, MLP		1,412,448			45,706,817
Goldman Sachs Group, Inc.		291,863			65,777,164
Invesco Ltd.		1,021,600			22,178,936
KKR & Co., Inc., Class A		2,539,808			60,066,459
Moody’s Corp.		57,872			8,419,219
Morgan Stanley		176,278			8,048,853
Nasdaq, Inc.		167,252			14,502,421
State Street Corp.		509,364			35,018,775
T Rowe Price Group, Inc.		61,544			5,969,153
					303,547,347
Consumer Finance - 2.78%
Ally Financial, Inc.		469,500			11,929,995
American Express Co.		146,275			15,026,831
Capital One Financial Corp.		340,291			30,387,986
Discover Financial Services		323,700			22,552,179
Navient Corp.		1,070,306			12,394,144
OneMain Holdings, Inc.A		470,400			13,415,808
Santander Consumer USA Holdings, Inc.		1,233,347			23,125,256
SLM Corp.A		3,255,295			33,008,691
Synchrony Financial		344,200			9,940,496
					171,781,386

See accompanying notes

11

American Beacon Large Cap Value Fund^SM

Schedule of Investments

October 31, 2018

	Shares		Fair Value
COMMON STOCKS - 95.41% (continued)
Financials - 24.65% (continued)
Diversified Financial Services - 1.01%
AXA Equitable Holdings, Inc.		777,800		$	15,781,562
Berkshire Hathaway, Inc., Class BA		226,891			46,576,185
					62,357,747
Insurance - 3.77%
American International Group, Inc.		2,837,410			117,156,659
Aon PLC		172,546			26,948,234
Chubb Ltd.		189,866			23,716,162
MetLife, Inc.		316,299			13,028,356
Prudential Financial, Inc.		40,456			3,793,964
Travelers Cos, Inc.		389,562			48,745,893
					233,389,268
Total Financials					1,525,270,892
Health Care - 11.85%
Biotechnology - 0.71%
Biogen, Inc.A		36,200			11,014,574
Celgene Corp.A		153,700			11,004,920
Gilead Sciences, Inc.		246,900			16,833,642
Portola Pharmaceuticals, Inc.A B		251,200			4,946,128
					43,799,264
Health Care Equipment & Supplies - 2.53%
Abbott Laboratories		271,368			18,708,110
Danaher Corp.		180,565			17,948,161
Medtronic PLC		1,143,931			102,747,882
Zimmer Biomet Holdings, Inc.		151,767			17,239,214
					156,643,367
Health Care Providers & Services - 2.98%
Anthem, Inc.		257,284			70,899,752
Cigna Corp.		70,056			14,978,673
CVS Health Corp.		1,125,715			81,490,509
Express Scripts Holding Co.A		93,068			9,024,804
McKesson Corp.		64,294			8,021,319
					184,415,057
Life Sciences Tools & Services - 0.30%
Thermo Fisher Scientific, Inc.		79,055			18,471,201
Pharmaceuticals - 5.33%
GlaxoSmithKline PLC, Sponsored ADR		584,834			22,843,616
Horizon Pharma PLCA		642,692			11,703,421
Jazz Pharmaceuticals PLCA		73,968			11,747,598
Johnson & Johnson		575,835			80,611,142
Merck & Co., Inc.		596,128			43,880,982
Mylan N.V.A		501,085			15,658,906
Novartis AG, Sponsored ADR		36,016			3,149,960
Pfizer, Inc.		2,166,545			93,291,428
Roche Holding AG, Sponsored ADR		82,348			2,500,085
Sanofi, ADR		995,874			44,535,485
					329,922,623
Total Health Care					733,251,512

See accompanying notes

12

American Beacon Large Cap Value Fund^SM

Schedule of Investments

October 31, 2018

	Shares		Fair Value
COMMON STOCKS - 95.41% (continued)
Industrials - 9.39%
Aerospace & Defense - 1.80%
Embraer S.A., Sponsored ADR		273,900		$	6,099,753
General Dynamics Corp.		83,189			14,356,758
Lockheed Martin Corp.		27,149			7,977,734
Northrop Grumman Corp.		82,444			21,596,206
Raytheon Co.		160,148			28,032,306
United Technologies Corp.		266,122			33,055,013
					111,117,770
Air Freight & Logistics - 0.12%
United Parcel Service, Inc., Class B		68,429			7,290,426
Airlines - 1.10%
American Airlines Group, Inc.		1,044,340			36,635,447
Delta Air Lines, Inc.		566,800			31,020,964
					67,656,411
Building Products - 1.41%
Johnson Controls International PLC		2,684,640			85,827,941
Resideo Technologies, Inc.A		65,079			1,369,916
					87,197,857
Construction & Engineering - 0.02%
AECOMA		47,523			1,384,820
Electrical Equipment - 0.37%
Eaton Corp. PLC		318,823			22,850,044
Industrial Conglomerates - 1.91%
3M Co.		75,733			14,408,961
General Electric Co.		4,682,992			47,298,219
Honeywell International, Inc.		390,475			56,548,589
					118,255,769
Machinery - 1.69%
CNH Industrial N.V.B		2,989,139			31,057,154
Cummins, Inc.		232,297			31,752,677
Illinois Tool Works, Inc.		110,613			14,110,900
Ingersoll-Rand PLC		119,794			11,493,036
PACCAR, Inc.		121,851			6,971,096
Stanley Black & Decker, Inc.		79,934			9,313,910
					104,698,773
Professional Services - 0.11%
Equifax, Inc.		68,415			6,940,018
Road & Rail - 0.37%
Canadian National Railway Co.		93,166			7,963,830
Union Pacific Corp.		102,309			14,959,622
					22,923,452
Trading Companies & Distributors - 0.49%
AerCap Holdings N.V.A		560,100			28,049,808
HD Supply Holdings, Inc.A		65,638			2,466,020
					30,515,828
Total Industrials					580,831,168

See accompanying notes

13

American Beacon Large Cap Value Fund^SM

Schedule of Investments

October 31, 2018

	Shares		Fair Value
COMMON STOCKS - 95.41% (continued)
Information Technology - 9.83%
Communications Equipment - 0.74%
Cisco Systems, Inc.		662,070		$	30,289,703
Telefonaktiebolaget LM Ericsson, Sponsored ADR		1,777,120			15,389,859
					45,679,562
Electronic Equipment, Instruments & Components - 0.93%
Corning, Inc.		866,140			27,673,173
IPG Photonics Corp.A		133,300			17,802,215
TE Connectivity Ltd.		158,000			11,916,360
					57,391,748
IT Services - 1.83%
Accenture PLC, Class A		245,141			38,639,124
Amdocs Ltd.		49,544			3,134,649
Cognizant Technology Solutions Corp., Class A		70,786			4,886,358
DXC Technology Co.		83,742			6,098,930
Fidelity National Information Services, Inc.		143,444			14,932,520
First Data Corp., Class AA		1,301,300			24,386,362
Fiserv, Inc.A		174,087			13,805,099
Teradata Corp.A		207,294			7,545,502
					113,428,544
Semiconductors & Semiconductor Equipment - 2.04%
Analog Devices, Inc.		80,134			6,708,017
Micron Technology, Inc.A		1,309,679			49,401,092
QUALCOMM, Inc.		808,231			50,829,647
Texas Instruments, Inc.		209,919			19,486,781
					126,425,537
Software - 3.25%
Microsoft Corp.		864,260			92,311,611
Oracle Corp.		2,226,293			108,732,150
					201,043,761
Technology Hardware, Storage & Peripherals - 1.04%
Hewlett Packard Enterprise Co.		4,214,144			64,265,696
Total Information Technology					608,234,848
Materials - 3.60%
Chemicals - 2.85%
Air Products & Chemicals, Inc.		329,894			50,919,139
DowDuPont, Inc.		1,243,871			67,069,524
Eastman Chemical Co.		297,126			23,279,822
PPG Industries, Inc.		225,245			23,670,997
Sherwin-Williams Co.		29,061			11,434,632
					176,374,114
Containers & Packaging - 0.75%
Crown Holdings, Inc.A		541,570			22,902,995
International Paper Co.		512,786			23,259,973
					46,162,968
Total Materials					222,537,082
Real Estate - 0.08%
Equity Real Estate Investment Trusts (REITs) - 0.08%
Public Storage		23,916			4,914,021

See accompanying notes

14

American Beacon Large Cap Value Fund^SM

Schedule of Investments

October 31, 2018

	Shares		Fair Value
COMMON STOCKS - 95.41% (continued)
Utilities - 1.51%
Electric Utilities - 1.51%
Duke Energy Corp.		271,201		$	22,409,339
Entergy Corp.		223,979			18,803,037
PPL Corp.		582,654			17,712,681
Southern Co.		639,063			28,777,007
Xcel Energy, Inc.		115,534			5,662,321
					93,364,385
Total Utilities					93,364,385
Total Common Stocks (Cost $4,733,519,354)					5,903,699,422
SHORT-TERM INVESTMENTS - 4.30% (Cost $266,324,811)
Investment Companies - 4.30%
American Beacon U.S. Government Money Market Select Fund, Select Class, 2.11%C D		266,324,811			266,324,811
SECURITIES LENDING COLLATERAL - 0.28% (Cost $17,240,346)
Investment Companies - 0.28%
American Beacon U.S. Government Money Market Select Fund, Select Class, 2.11%C D		17,240,346			17,240,346
TOTAL INVESTMENTS - 99.99% (Cost $5,017,084,511)					6,187,264,579
OTHER ASSETS, NET OF LIABILITIES - 0.01%					430,506
TOTAL NET ASSETS - 100.00%				$	6,187,695,085
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, 2018.

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

^D 7-day yield.

ADR - American Depositary Receipt.

LP - Limited Partnership.

MLP – Master Limited Partnership.

NVDR - Non Voting Depositary Receipt.

PLC - Public Limited Company.

Long Futures Contracts Open on October 31, 2018:
Equity Futures Contracts
Description	Number of Contracts	Expiration Date	Notional Amount		Contract Value		Unrealized Appreciation (Depreciation)
S&P 500 E-Mini Index Futures	2,010	December 2018	$	284,082,936	$	272,465,550	$	(11,617,386	)
			$	284,082,936	$	272,465,550	$	(11,617,386	)

Index Abbreviations:
S&P 500	Standard & Poor’s U.S. Equity Large Cap Index.

See accompanying notes

15

American Beacon Large Cap Value Fund^SM

Schedule of Investments

October 31, 2018

The Fund’s investments are summarized by level based on the inputs used to determine their values. As of October 31, 2018, the investments were classified as described below:

Large Cap Value Fund	Level 1			Level 2		Level 3		Total
Assets
Common Stocks	$	5,903,699,422		$	-	$	-	$	5,903,699,422
Short-Term Investments		266,324,811			-		-		266,324,811
Securities Lending Collateral		17,240,346			-		-		17,240,346
Total Investments in Securities - Assets	$	6,187,264,579		$	-	$	-	$	6,187,264,579
Financial Derivative Instruments - Liabilities
Futures Contracts	$	(11,617,386	)	$	-	$	-	$	(11,617,386	)
Total Financial Derivative Instruments - Liabilities	$	(11,617,386	)	$	-	$	-	$	(11,617,386	)

U.S. GAAP requires transfers between all levels to level 3 to be disclosed. During the year ended October 31, 2018, there were no transfers into or out of Level 3.

See accompanying notes

16

American Beacon Large Cap Value Fund^SM

Statement of Assets and Liabilities

October 31, 2018

Assets:
Investments in unaffiliated securities, at fair value†§	$	5,903,699,422
Investments in affiliated securities, at fair value‡		283,565,157
Deposit with brokers for futures contracts		25,204,696
Dividends and interest receivable		6,429,759
Receivable for investments sold		114,049,429
Receivable for fund shares sold		11,529,007
Receivable for tax reclaims		208,666
Prepaid expenses		119,529
Total assets		6,344,805,665
Liabilities:
Payable for investments purchased		107,870,017
Payable for fund shares redeemed		13,533,360
Payable for expense reimbursement (Note 2)		14,953
Management and sub-advisory fees payable (Note 2)		6,091,543
Service fees payable (Note 2)		323,464
Transfer agent fees payable (Note 2)		96,139
Payable upon return of securities loaned (Note 9)§		17,240,346
Custody and fund accounting fees payable		51,751
Professional fees payable		77,974
Trustee fees payable (Note 2)		43,213
Payable for prospectus and shareholder reports		118,549
Payable for variation margin from open futures contracts (Note 5)		11,612,946
Other liabilities		36,325
Total liabilities		157,110,580
Net assets	$	6,187,695,085
Analysis of net assets:
Paid-in-capital	$	4,597,696,015
Total distributable earnings (deficits)A		1,589,999,070
Net assets	$	6,187,695,085

See accompanying notes

17

American Beacon Large Cap Value Fund^SM

Statement of Assets and Liabilities

October 31, 2018

Shares outstanding at no par value (unlimited shares authorized):
Institutional Class		130,254,856
Y Class		10,566,752
Investor Class		57,175,213
Advisor Class		2,420,080
A Class		1,642,911
C Class		266,518
R6 Class		20,106,349
Net assets:
Institutional Class	$	3,700,700,522
Y Class	$	298,017,629
Investor Class	$	1,505,354,807
Advisor Class	$	62,811,940
A Class	$	42,722,617
C Class	$	6,851,003
R6 Class	$	571,236,567
Net asset value, offering and redemption price per share:
Institutional Class	$	28.41
Y Class	$	28.20
Investor Class	$	26.33
Advisor Class	$	25.95
A Class	$	26.00
A Class (offering price)	$	27.59
C Class	$	25.71
R6 Class	$	28.41
† Cost of investments in unaffiliated securities	$	4,733,519,354
‡ Cost of investments in affiliated securities	$	283,565,157
§ Fair value of securities on loan	$	16,815,291
A The Fund’s investments in affiliated securities did not have unrealized appreciation (depreciation) at year end.

See accompanying notes

18

American Beacon Large Cap Value Fund^SM

Statement of Operations

For the year ended October 31, 2018

Investment income:
Dividend income from unaffiliated securities (net of foreign taxes)†	$	165,467,131
Dividend income from affiliated securities (Note 8)		3,291,443
Interest income (net of foreign taxes)		57,219
Income derived from securities lending (Note 9)		465,419
Total investment income		169,281,212
Expenses:
Management and sub-advisory fees (Note 2)		38,383,357
Transfer agent fees:
Institutional Class (Note 2)		1,331,445
Y Class (Note 2)		335,097
Investor Class		62,097
Advisor Class		3,666
A Class		2,183
R6 Class		8,940
Custody and fund accounting fees		696,285
Professional fees		290,784
Registration fees and expenses		166,796
Service fees (Note 2):
Investor Class		6,210,119
Advisor Class		195,573
A Class		38,791
C Class		4,500
Distribution fees (Note 2):
Advisor Class		195,573
A Class		106,228
C Class		78,228
Prospectus and shareholder report expenses		332,760
Trustee fees (Note 2)		489,420
Other expenses		366,436
Total expenses		49,298,278
Net fees waived and expenses (reimbursed) (Note 2)A		(37,769	)
Net expenses		49,260,509
Net investment income		120,020,703
Realized and unrealized gain (loss) from investments:
Net realized gain from:
Investments in unaffiliated securitiesB		473,465,679
Commission recapture (Note 1)		99,901
Foreign currency transactions		23,323
Futures contracts		23,069,589
Change in net unrealized (depreciation) of:
Investments in unaffiliated securitiesC		(464,683,447	)
Futures contracts		(15,177,704	)
Net gain from investments		16,797,341
Net increase in net assets resulting from operations	$	136,818,044
† Foreign taxes	$	1,756,347
A The Manager voluntarily reimbursed service fees in the amount of $8,462.
B The Fund did not recognize net realized gains (losses) from the sale of investments in affiliated securities.
C The Fund’s investments in affiliated securities did not have a change in net unrealized appreciation (depreciation) at year end.

See accompanying notes

19

American Beacon Large Cap Value Fund^SM

Statement of Changes in Net Assets

	Year Ended October 31, 2018			Year Ended October 31, 2017
Increase (decrease) in net assets:
Operations:
Net investment income	$	120,020,703		$	128,855,668
Net realized gain from investments in unaffiliated securities, commission recapture, foreign currency transactions, and futures contracts		496,658,492			694,063,205
Change in net unrealized appreciation (depreciation) of investments in unaffiliated securities and futures contracts		(479,861,151	)		828,241,553
Net increase in net assets resulting from operations		136,818,044			1,651,160,426
Distributions to shareholders:
Net investment income:
Institutional Class		–			(112,815,102	)
Y Class		–			(7,905,543	)
Investor Class		–			(44,594,218	)
Advisor Class		–			(2,058,628	)
A Class		–			(879,050	)
C Class		–			(99,793	)
Net realized gain from investments:
Institutional Class		–			(40,827,429	)
Y Class		–			(2,953,376	)
Investor Class		–			(18,906,905	)
Advisor Class		–			(953,678	)
A Class		–			(366,411	)
C Class		–			(77,352	)
Total retained earnings:*
Institutional Class		(459,420,239	)		–
Y Class		(38,692,156	)		–
Investor Class		(196,784,505	)		–
Advisor Class		(8,664,880	)		–
A Class		(4,240,901	)		–
C Class		(808,195	)		–
R6 Class		(17,634,896	)		–
Net distributions to shareholders		(726,245,772	)		(232,437,485	)
Capital share transactions (Note 11):
Proceeds from sales of shares		1,360,517,349			1,070,944,813
Reinvestment of dividends and distributions		686,933,740			220,594,801
Cost of shares redeemed		(2,588,058,224	)		(3,282,487,770	)
Net (decrease) in net assets from capital share transactions		(540,607,135	)		(1,990,948,156	)
Net (decrease) in net assets		(1,130,034,863	)		(572,225,215	)
Net assets:
Beginning of period		7,317,729,948			7,889,955,163
End of period	$	6,187,695,085		$	7,317,729,948
*  Distributions from net investment income and net realized capital gains are combined for the year ended October 31, 2018. See Note 1 in the Notes to Financial Statements for more information regarding new accounting pronouncements.

See accompanying notes

20

American Beacon Large Cap Value Fund^SM

Notes to Financial Statements

October 31, 2018

1.  Organization and Significant Accounting Policies

American Beacon Funds (the “Trust”), is organized as a Massachusetts business trust. The Fund, a series within the Trust, is registered under the Investment Company Act of 1940, as amended (the “Act”), as a diversified, open-end management investment company. As of October 31, 2018, the Trust consists of thirty-three active series, one of which is presented in this filing: American Beacon Large Cap Value Fund (the “Fund”). The remaining thirty-two active series are reported in separate filings.

American Beacon Advisors, Inc. (the “Manager”) is a Delaware corporation and a wholly-owned subsidiary of Resolute Investment Managers, Inc. (“RIM”) organized in 1986 to provide business management, advisory, administrative, and asset management consulting services to the Trust and other investors. The Manager is registered as an investment advisor under the Investment Advisers Act of 1940, as amended (the “Advisers Act”). RIM is, in turn, a wholly-owned subsidiary of Resolute Acquisition, Inc., which is a wholly-owned subsidiary of Resolute Topco, Inc., a wholly-owned subsidiary of Resolute Investment Holdings, LLC (“RIH”). RIH is owned primarily by Kelso Investment Associates VIII, L.P., KEP VI, LLC and Estancia Capital Partners L.P., investment funds affiliated with Kelso & Company, L.P. (“Kelso”) or Estancia Capital Management, LLC (“Estancia”), which are private equity firms.

Recent Accounting Pronouncements

In March 2017, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2017-08, Premium Amortization of Purchased Callable Debt Securities. The amendments in the ASU shorten the premium amortization period on a purchased callable debt security from the security’s contractual life to the earliest call date. It is anticipated that this change will enhance disclosures by reducing losses recognized when a security is called on an earlier date. This ASU is effective for fiscal years beginning after December 15, 2018. The Manager continues to evaluate the impact this ASU will have on the financial statements and other disclosures.

In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820). The amendments in the ASU impact disclosure requirements for fair value measurement. It is anticipated that this change will enhance the effectiveness of disclosures in the notes to the financial statements. This ASU is effective for fiscal years beginning after December 15, 2019. Early adoption is permitted and can include the entire standard or certain provisions that exclude or amend disclosures. For the year ended October 31, 2018, the Fund has chosen to adopt the standard. The adoption of this ASU guidance did not have a material impact on the financial statements and other disclosures.

In August 2018, the U.S. Securities and Exchange Commission (“SEC”) adopted amendments to certain disclosure requirements in Securities Act Release No. 33-10532, Disclosure Update and Simplification, which is intended to facilitate the disclosure of information to investors and simplify compliance without significantly altering the total mix of information provided to investors. Effective with the current reporting period, the Fund adopted the amendments with the impacts being that the Fund is no longer required to present components of distributable earnings on the Statement of Assets and Liabilities or the sources of distributable earnings and the amount of undistributed net investment income on the Statement of Changes in Net Assets.

Class Disclosure

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

Class	Eligible Investors	Minimum Initial Investments
Institutional	Large institutional investors - sold directly or through intermediary channels.	$	250,000
Y Class	Large institutional retirement plan investors - sold directly or through intermediary channels.	$	100,000
Investor	All investors using intermediary organizations, such as broker-dealers or retirement plan sponsors.	$	2,500
Advisor Class	All investors who invest through intermediary organizations, such as broker-dealers or third party administrators.	$	2,500

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American Beacon Large Cap Value Fund^SM

Notes to Financial Statements

October 31, 2018

Class	Eligible Investors	Minimum Initial Investments
A Class	All investors who invest through intermediary organizations, such as broker-dealers or third party administrator. Retail investors who invest directly through a financial intermediary such as a broker, bank, or registered investment advisor which may include a front-end sales charge and a contingent deferred sales charge (“CDSC”).	$	2,500
C Class	Retail investors who invest directly through a financial intermediary such as a broker or through employee directed benefit plans with applicable sales charges which may include CDSC.	$	1,000
R6	Large institutional retirement plan investors - sold through retirement plan sponsors.		None

Each class offered by the Trust has equal rights as to assets and voting privileges. Income 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 service, distribution, transfer agent fees, and sub-transfer agent fees that vary amongst the classes as described more fully in Note 2.

Significant Accounting Policies

The following is a summary of significant accounting policies, consistently followed by the Fund in preparation of the financial statements. The Fund is considered an investment company and accordingly, follows the investment company accounting and reporting guidance of the FASB Accounting Standards Codification Topic 946, Financial Services – Investment Companies, a part of Generally Accepted Accounting Principles (“U.S. GAAP”).

Security Transactions and Investment Income

Security transactions are recorded as of the trade date for financial reporting purposes. Securities purchased or sold on a when-issued or delayed-delivery basis may be settled beyond a standard settlement period for the security after the trade date.

Dividend income, net of foreign taxes, is recorded on 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, net of foreign taxes, is earned from settlement date, recorded on the accrual basis, and adjusted, if necessary, for accretion of discounts and amortization of premiums. Realized gains (losses) from securities sold are determined on the basis of specific lot identification.

Distributions to Shareholders

Distributions, if any, of net investment income are generally paid at least annually and recorded on the ex-dividend date. Distributions, if any, of net realized capital gains are generally paid at least annually and recorded on the ex-dividend date. Dividends to shareholders are determined in accordance with federal income tax regulations, which may differ in amount and character from net investment income and realized gains recognized for purposes of U.S. GAAP. To the extent necessary to fully distribute capital gains, the Fund may designate earnings and profits distributed to shareholders on the redemption of shares.

Commission Recapture

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

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American Beacon Large Cap Value Fund^SM

Notes to Financial Statements

October 31, 2018

Allocation of Income, Trust Expenses, Gains, and Losses

Investment income, realized and unrealized gains and losses from investments of the Fund is allocated daily to each class of shares based upon the relative proportion of net assets of each class to the total net assets of the Fund. Expenses directly charged or attributable to any Fund will be paid from the assets of the Fund. Generally, expenses of the Trust will be allocated among and charged to the assets of the Fund on a basis that the Trust’s Board of Trustees (the “Board”) deems fair and equitable, which may be based on the relative net assets of the Fund or nature of the services performed and relative applicability to the Fund.

Use of Estimates

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

Other

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

2.  Transactions with Affiliates

Management and Investment Sub-Advisory Agreements

The Fund and the Manager are parties to a Management Agreement that obligates the Manager to provide the Fund with investment advisory and administrative services. As compensation for performing the duties under the Management Agreement, the Manager will receive an annualized management fee based on a percentage of the Fund’s average daily net assets that is calculated and accrued daily according to the following schedule:

First $15 billion	0.35	%
Next $15 billion	0.325	%
Over $30 billion	0.30	%

The Trust, on behalf of the Fund, and the Manager have entered into Investment Advisory Agreements with Barrow, Hanley, Mewhinney & Strauss, LLC; Brandywine Global Investment Management, LLC; Hotchkis and Wiley Capital Management, LLC; and Massachusetts Financial Services Company (“Sub-Advisors”) pursuant to which the Fund has agreed to pay an annualized sub-advisory fee that is calculated and accrued daily based on the Fund’s average daily net assets.

The Management and Sub-Advisory Fees paid by the Fund for the year ended October 31, 2018 were as follows:

	Effective Fee Rate			Amount of Fees Paid
Management Fees		0.35	%	$	24,346,299
Sub-Advisor Fees		0.20	%		14,037,058
Total		0.55	%	$	38,383,357

As compensation for services provided by the Manager in connection with securities lending activities conducted by the Fund, the lending Fund pays to the Manager, with respect to cash collateral posted by borrowers, a fee up to 10% of the net monthly interest income (the gross interest income earned by the investment of cash collateral, less the amount paid to borrowers and related expenses) from such activities and, with respect to loan

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American Beacon Large Cap Value Fund^SM

Notes to Financial Statements

October 31, 2018

fees paid by borrowers, a fee up to 10% of such loan fees. These fees are included in “Income derived from securities lending” and “Management and investment advisory fees” on the Statement of Operations. During the year ended October 31, 2018, the Manager received securities lending fees of $47,013 for the securities lending activities of the Fund.

Distribution Plans

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

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

Service Plans

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

Sub-Transfer Agent Fees

The Manager has entered into agreements, which include servicing agreements, with financial intermediaries that provide recordkeeping, processing, shareholder communications and other services to customers of the intermediaries that hold positions in the Institutional and Y Classes of the Fund and has agreed to compensate the intermediaries for providing these services. Intermediaries transact with the Fund primarily through the use of omnibus accounts on behalf of its customers who hold positions in the Fund. Certain services would have been provided by the Fund’s transfer agent and other service providers if the shareholders’ accounts were maintained directly by the Fund’s transfer agent. Accordingly, the Fund, pursuant to Board approval, has agreed to reimburse the Manager for certain non-distribution shareholder services provided by financial intermediaries for the Institutional and Y Classes. The reimbursement amounts (sub-transfer agent fees) paid to the Manager are subject to a fee limit of up to 0.10% of an intermediary’s average net assets in the Institutional and Y Classes on an annual basis. During the year ended October 31, 2018, the sub-transfer agent fees, as reflected in “Transfer agent fees” on the Statement of Operations, were as follows:

Fund	Sub-Transfer Agent Fees
Large Cap Value	$	1,526,830

As of October 31, 2018, the Fund owed the Manager the following reimbursement of sub-transfer agent fees, as reflected in “Transfer agent fees payable” on the Statement of Assets and Liabilities:

Fund	Reimbursement Sub-Transfer Agent Fees
Large Cap Value	$	54,726

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American Beacon Large Cap Value Fund^SM

Notes to Financial Statements

October 31, 2018

Investments in Affiliated Funds

The Fund may invest in the American Beacon U.S. Government Money Market Select Fund (the “USG Select Fund”). Cash collateral received by the Fund in connection with securities lending may also be invested in the USG Select Fund. The Fund and the USG Select Fund have the same investment advisor and therefore, are considered to be affiliated. The Manager serves as investment advisor to the USG Select Fund and receives management fees and administrative fees totaling 0.10% of the average daily net assets of the USG Select Fund. During the year ended October 31, 2018, the Manager earned fees on the Fund’s direct investments and securities lending collateral investments in the USG Select Fund as shown below:

Fund	Direct Investments in USG Select Fund		Securities Lending Collateral in USG Select Fund		Total
Large Cap Value	$	214,336	$	105,485	$	319,821

Interfund Credit Facility

Pursuant to an exemptive order issued by the SEC, the Fund, along with other registered investment companies having management contracts with the Manager, may participate in a credit facility whereby each fund, under certain conditions, is permitted to lend money directly to and borrow directly from other participating funds for temporary purposes. The interfund credit facility is advantageous to the funds because it provides added liquidity, and eliminates the need to maintain higher cash balances to meet redemptions. This situation could arise when shareholder redemptions exceed anticipated volumes and certain funds have insufficient cash on hand to satisfy such redemptions or when sales of securities do not settle as expected, resulting in a cash shortfall for a fund. When a fund liquidates portfolio securities to meet redemption requests, they often do not receive payment in settlement for up to two days (or longer for certain foreign transactions). Redemption requests normally are satisfied on the next business day. The credit facility provides a source of immediate, short-term liquidity pending settlement of the sale of portfolio securities. The credit facility is administered by a credit facility team consisting of professionals from the Manager’s asset management, compliance, and accounting areas who report the activities of the credit facility to the Board. During the year ended October 31, 2018, the Fund participated as a lender by loaning an average amount of $2,128,732 for 96 days at an average interest rate of 2.28% with interest charges earned of $12,820. This amount is included in “Interest income” on the Statement of Operations.

Expense Reimbursement Plan

The Manager contractually agreed to reduce fees and/or reimburse expenses for the classes of the Fund to the extent that total operating expenses exceed the Fund’s expense cap. During the year ended October 31, 2018, the Manager waived and/or reimbursed expenses as follows:

		Expense Cap							Expiration of Reimbursed Expenses
Fund	Class	11/1/2017 - 10/31/2018			Reimbursed Expenses		(Recouped) Expenses
Large Cap Value	R6		0.58	%	$	29,307	$	-		2021

Of these amounts, $14,953 was disclosed as a payable to the Manager on the Statement of Assets and Liabilities at October 31, 2018.

The Fund has adopted an Expense Reimbursement Plan whereby the Manager may seek repayment of such fee reductions and expense reimbursements. Under the policy, the Manager can be reimbursed by the Fund for any contractual or voluntary fee reductions or expense reimbursements if reimbursement to the Manager (a) occurs within three years after the Manager’s own waiver or reimbursement and (b) does not cause the Fund’s annual operating expenses to exceed the lesser of the contractual percentage limit in effect at the time of the

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American Beacon Large Cap Value Fund^SM

Notes to Financial Statements

October 31, 2018

waiver/reimbursement or time of recoupment. The reimbursed expenses listed above will expire in 2021. The carryover of excess expenses potentially reimbursable to the Manager are as follows:

Fund	Recouped Expenses		Excess Expense Carryover		Expired Expense Carryover		Expiration of Reimbursed Expenses
Large Cap Value	$	–	$	1,950	$	–		2020

The Distributor

Effective March 1, 2018, Resolute Investment Distributors, Inc. (“RID” or “Distributor”) replaced Foreside Fund Services, LLC (“Foreside”) as the Fund’s distributor and principal underwriter of the Fund’s shares.

RID is a registered broker-dealer and is a member of the Financial Industry Regulatory Authority, Inc. (“FINRA”). The Distributor is affiliated with the Manager through common ownership. Under a Distribution Agreement with the Trust, the Distributor acts as the distributor and principal underwriter of the Trust in connection with the continuous offering of shares of the Fund. The Distributor continually distributes shares of the Fund on a best efforts basis. The Distributor has no obligation to sell any specific quantity of the Fund’s shares. Pursuant to the Distribution Agreement, to the extent applicable, the Distributor receives, and may re-allocate to broker-dealers, all or a portion of the sales charge paid by the purchasers of A Class and C Class shares. For A Class and C Class shares, the Distributor receives commission revenue consisting of the portion of A Class and C Class sales charge remaining after the allowances by the Distributor to the broker-dealers. The Distributor retains any portion of the commission fees that are not paid to the broker-dealers for use solely to pay distribution related expenses.

Prior to March 1, 2018, Foreside served as the distributor and principal underwriter of the Fund’s shares. Pursuant to a Sub-Administration Agreement between Foreside and the Manager in effect through February 28, 2018, Foreside received a fee from the Manager for providing administrative services in connection with the marketing and distribution of shares of the Trust, including the registration of Manager employees as registered representatives of Foreside to facilitate distribution of Fund shares. Foreside also received a fee from the Manager under a Marketing Agreement pursuant to which Foreside provided services in connection with the marketing of a Fund to institutional investors. Pursuant to the Distribution Agreement with the Trust in effect through February 28, 2018, Foreside received, and may have re-allocated to broker-dealers, all or a portion of the sales charge paid by the purchasers of A and C Class shares. For A and C Class shares, Foreside received commission revenues consisting of the portion of A and C Class sales charge remaining after the allowances by Foreside to the broker dealers. Foreside retained any portion of the commission fees that were not paid to the broker-dealers for use solely to pay distribution related expenses.

Sales Commissions

The Fund’s Distributor, formerly Foreside, may receive a portion of A Class sales charges from broker dealers and it may be used to offset distribution related expenses. During the period November 1, 2017 through February 28, 2018, Foreside collected $1,070 for the Fund from the sale of Class A Shares. During the period March 1, 2018 through October 31, 2018, RID collected $968 for the Fund from the sale of Class A Shares.

A CDSC of 0.50% will be deducted with respect to Class A Shares on certain purchases of $1,000,000 or more that are redeemed in whole or part within 18 months of purchase, unless waived as discussed in the Fund’s Prospectus. Any applicable CDSC will be 0.50% of the lesser of the original purchase price or the value of the redemption of the Class A Shares redeemed. During the year ended October 31, 2018, there were no CDSC fees collected for Class A Shares of the Fund.

A CDSC of 1.00% will be deducted with respect to Class C Shares redeemed within 12 months of purchase, unless waived as discussed in the Fund’s Prospectus. Any applicable CDSC will be 1.00% of the lesser of the original

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American Beacon Large Cap Value Fund^SM

Notes to Financial Statements

October 31, 2018

purchase price or the value of the redemption of the Class C Shares redeemed. During the period November 1, 2017 through February 28, 2018, Foreside collected CDSC fees of $32 for Class C Shares of the Fund. During the period March 1, 2018 through October 31, 2018, RID collected $164 for Class C Shares of the Fund.

Trustee Fees and Expenses

As compensation for their service to the Trust, American Beacon Select Funds, American Beacon Institutional Funds Trust, American Beacon Sound Point Enhanced Income Fund, and American Beacon Apollo Total Return Fund, each Trustee receives an annual retainer of $120,000, plus $10,000 for each Board meeting attended in person or via teleconference, $2,500 for attendance by Committee members at meetings of the Audit Committee and the Investment Committee, and $1,500 for attendance by Committee members at meetings of the Nominating and Governance Committee, plus reimbursement of reasonable expenses incurred in attending Board meetings, Committee meetings, and relevant educational seminars. The Trustees also may be compensated for attendance at special Board and/or Committee meetings from time to time. The Board Chairman receives an additional annual retainer of $50,000 as well as a $2,500 fee each quarter for his attendance at the committee meetings. Effective January 1, 2018, the Board Vice Chair receives an additional annual retainer of $10,000. The Chairpersons of the Audit Committee and the Investment Committee each receive an additional annual retainer of $25,000 and the Chairman of the Nominating and Governance Committee receives an additional annual retainer of $10,000. These expenses are allocated on a prorated basis to each Fund of the Trusts according to its respective net assets.

3.  Security Valuation and Fair Value Measurements

The price of the Fund’s shares is based on its net asset value (“NAV”) per share. The Fund’s NAV is computed by adding total assets, subtracting all the Fund’s liabilities, and dividing the result by the total number of shares outstanding.

The NAV of each class of the Fund’s shares is determined based on a pro rata allocation of the Fund’s investment income, expenses and total capital gains and losses. The Fund’s NAV per share is determined each business day as of the regular close of trading on the New York Stock Exchange (“NYSE” or “Exchange”), which is typically 4:00 p.m. Eastern Time (“ET”). However, if trading on the NYSE closes at a time other than 4:00 p.m. ET, the Fund’s NAV per share typically would still be determined as of the regular close of trading on the NYSE. The Fund does not price its shares on days that the NYSE is closed. Foreign exchanges may permit trading in foreign securities on days when the Fund is not open for business, which may result in the value of the Fund’s portfolio investments being affected at a time when you are unable to buy or sell shares.

Equity securities, including shares of closed-end funds and exchange-traded funds (“ETFs”), are valued at the last sale price or official closing price taken from the primary exchange in which each security trades. Investments in other mutual funds are valued at the closing NAV per share on the day of valuation. Debt securities are valued at bid quotes from broker/dealers or evaluated bid prices from pricing services, who may consider a number of inputs and factors, such as prices of comparable securities, yield curves, spreads, credit ratings, coupon rates, maturity, default rates, and underlying collateral. Futures are valued based on their daily settlement prices. Exchange-traded and over-the-counter (“OTC”) options are valued at the last sale price. Options with no last sale for the day are priced at mid quote. Swaps are valued at evaluated mid prices from pricing services.

The valuation of securities traded on foreign markets and certain fixed income securities will generally be based on prices determined as of the earlier closing time of the markets on which they primarily trade unless a significant event has occurred. When the Fund holds securities or other assets that are denominated in a foreign currency, the Fund will normally use the currency exchange rates as of 4:00 p.m. ET.

Securities may be valued at fair value, as determined in good faith and pursuant to procedures approved by the Board, under certain limited circumstances. For example, fair value pricing will be used when market quotations are not readily available or reliable, as determined by the Manager, such as when (i) trading for a

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American Beacon Large Cap Value Fund^SM

Notes to Financial Statements

October 31, 2018

security is restricted or stopped; (ii) a security’s trading market is closed (other than customary closings); or (iii) a security has been de-listed from a national exchange. A security with limited market liquidity may require fair value pricing if the Manager determines that the available price does not reflect the security’s true market value. In addition, if a significant event that the Manager determines to affect the value of one or more securities held by the Fund occurs after the close of a related exchange but before the determination of the Fund’s NAV, fair value pricing may be used on the affected security or securities. Securities of small-capitalization companies are also more likely to require a fair value determination using these procedures because they are more thinly traded and less liquid than the securities of larger-capitalization companies. The Fund may fair value securities as a result of significant events occurring after the close of the foreign markets in which the Fund invests as described below. In addition, the Fund may invest in illiquid securities requiring these procedures.

The Fund may use fair value pricing for securities primarily traded in non-U.S. markets because most foreign markets close well before the Fund’s pricing time of 4:00 p.m. ET. The earlier close of these foreign markets gives rise to the possibility that significant events, including broad market moves, may have occurred in the interim and may materially affect the value of those securities. If the Manager determines that the last quoted prices of non-U.S. securities will, in its judgment, materially affect the value of some or all its portfolio securities, the Manager can adjust the previous closing prices to reflect what it believes to be the fair value of the securities as of the close of the Exchange. In deciding whether it is necessary to adjust closing prices to reflect fair value, the Manager reviews a variety of factors, including developments in foreign markets, the performance of U.S. securities markets, and the performance of instruments trading in U.S. markets that represent foreign securities and baskets of foreign securities. These securities are fair valued using a pricing service, using methods approved by the Board, that considers the correlation of the trading patterns of the foreign security to intraday trading in the U.S. markets, based on indices of domestic securities and other appropriate indicators such as prices of relevant American Depository Receipts (“ADRs”) and futures contracts. The Valuation Committee, established by the Board, may also fair value securities in other situations, such as when a particular foreign market is closed but the Fund is open. The Fund uses outside pricing services to provide closing prices and information to evaluate and/or adjust those prices. As a means of evaluating its security valuation process, the Valuation Committee routinely compares closing prices, the next day’s opening prices in the same markets and adjusted prices.

Attempts to determine the fair value of securities introduce an element of subjectivity to the pricing of securities. As a result, the price of a security determined through fair valuation techniques may differ from the price quoted or published by other sources and may not accurately reflect the market value of the security when trading resumes. If a reliable market quotation becomes available for a security formerly valued through fair valuation techniques, the Manager compares the new market quotation to the fair value price to evaluate the effectiveness of the Fund’s fair valuation procedures. If any significant discrepancies are found, the Manager may adjust the Fund’s fair valuation procedures.

Investments in open-end mutual funds are valued at the closing NAV per share of the mutual fund on the day of valuation.

Securities for which the market prices are not readily available or are not reflective of the fair value of the security, as determined by the Manager, will be priced at fair value following procedures approved by the Board.

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

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American Beacon Large Cap Value Fund^SM

Notes to Financial Statements

October 31, 2018

Other investments for which the above valuation procedures are inappropriate or are deemed not to reflect fair value, are stated at fair value as determined in good faith by the Manager’s Valuation Committee, pursuant to procedures established by the Board.

Valuation Inputs

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

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

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

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

Investments in 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.

4.  Securities and Other Investments

American Depositary Receipts and Non-Voting Depositary Receipts

ADRs are depositary receipts for foreign issuers in registered form traded in U.S. securities markets. Non-Voting Depositary Receipts (“NVDRs”) represent financial interests in an issuer but the holder is not entitled to any voting rights. Depositary receipts may not be denominated in the same currency as the securities into which they may be converted. Investing in depositary receipts entails substantially the same risks as direct investment in foreign securities. There is generally less publicly available information about foreign companies and there may be less governmental regulation and supervision of foreign stock exchanges, brokers, and listed companies. In addition, such companies may use different accounting and financial standards (and certain currencies may become unavailable for transfer from a foreign currency), resulting in the Fund possible inability to convert immediately into U.S. currency proceeds realized upon the sale of portfolio securities of the affected foreign companies. In addition, the Fund may invest in unsponsored depositary receipts, the issuers of which are not obligated to disclose material information about the underlying securities to investors in the United States. Ownership of unsponsored depositary receipts may not entitle the Fund to the same benefits and rights as ownership of a sponsored depositary receipt or the underlying security.

Common Stock

Common stock generally takes the form of shares in a corporation which represent an ownership interest. It ranks below preferred stock and debt securities in claims for dividends and for assets of the company in a liquidation or bankruptcy. The value of a company’s common stock may fall as a result of factors directly relating

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American Beacon Large Cap Value Fund^SM

Notes to Financial Statements

October 31, 2018

to that company, such as decisions made by its management or decreased demand for the company’s products or services. A stock’s value may also decline because of factors affecting not just the company, but also companies in the same industry or sector. The price of a company’s stock may also be affected by changes in financial markets that are relatively unrelated to the company, such as changes in interest rates, currency exchange rates or industry regulation. Companies that elect to pay dividends on their common stock generally only do so after they invest in their own business and make required payments to bondholders and on other debt and preferred stock. Therefore, the value of a company’s common stock will usually be more volatile than its bonds, other debt and preferred stock. Common stock may be exchange-traded or OTC. OTC stock may be less liquid than exchange-traded stock.

Other Investment Company Securities and Other Exchange-Traded Products

The Fund may invest in shares of other investment companies, including open-end funds, closed-end funds, business development companies, ETFs, unit investment trusts, and other investment companies of the Trust. The Fund may invest in investment company securities advised by the Manager or a sub-advisor. Investments in the securities of other investment companies may involve duplication of advisory fees and certain other expenses. By investing in another investment company, the Fund becomes a shareholder of that investment company. As a result, the Fund’s shareholders indirectly will bear the Fund’s proportionate share of the fees and expenses paid by shareholders of the other investment company, in addition to the fees and expenses the Fund’s shareholders directly bear in connection with the Fund’s own operations. These other fees and expenses are reflected as Acquired Fund Fees and Expenses and are included in the Fees and Expenses Table for the Fund in its Prospectus, if applicable. Investments in other investment companies may involve the payment of substantial premiums above the value of such issuer’s portfolio securities.

Publicly Traded Partnerships; Master Limited Partnerships

The Fund may invest in publicly traded partnerships such as master limited partnerships (“MLPs”). MLPs issue units that are registered with the SEC and are freely tradable on a securities exchange or in the OTC market. An MLP may have one or more general partners, who conduct the business, and one or more limited partners, who contribute capital. An MLP also may be an entity similar to a limited partnership, such as a limited liability company, which has a manager or managing member and non-managing members (who are like limited partners). The general partner or partners are jointly and severally responsible for the liabilities of the MLP. A Fund invests as a limited partner and normally would not be liable for the debts of an MLP beyond the amount the Fund has invested therein but it would not be shielded to the same extent that a shareholder of a corporation would be. In certain instances, creditors of an MLP would have the right to seek a return of capital that had been distributed to a limited partner. The right of an MLP’s creditors would continue even after a Fund had sold its investment in the partnership. MLPs typically invest in real estate and oil and gas equipment leasing assets, but they also finance entertainment, research and development, and other projects.

Real Estate Investment Trusts

The 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.

5.  Financial Derivative Instruments

The Fund may utilize derivative instruments to gain market exposure on cash balances to reduce market exposure in anticipation of liquidity needs. When considering the Fund’s use of derivatives, it is important to note that the Fund does not use derivatives for the purpose of creating financial leverage.

30

American Beacon Large Cap Value Fund^SM

Notes to Financial Statements

October 31, 2018

Futures Contracts

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

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

During the year ended October 31, 2018, the Fund entered into futures contracts primarily for exposing cash to markets.

The Fund’s average futures contracts outstanding fluctuate throughout the operating year as required to meet strategic requirements. The following table illustrates the average quarterly volume of futures contracts. For purpose of this disclosure, volume is measured by contracts outstanding at each quarter end.

Average Futures Contracts Outstanding
Fund	Year Ended October 31, 2018
Large Cap Value		1,605

The following is a summary of the fair valuations of the Fund’s derivative instruments categorized by risk exposure⁽¹⁾:

Fair values of financial instruments on the Statement of Assets and Liabilities as of October 31, 2018:
	Derivatives not accounted for as hedging instruments
Liabilities:	Credit contracts			Foreign exchange contracts			Commodity contracts			Interest rate contracts			Equity contracts				Total
Payable for variation margin from open futures contracts(2)		$	–		$	–		$	–		$	–		$	(11,617,386	)		$	(11,617,386	)
The effect of financial derivative instruments on the Statement of Operations as of October 31, 2018:
	Derivatives not accounted for as hedging instruments
Realized gain (loss) from derivatives recognized as a result of operations	Credit contracts			Foreign exchange contracts			Commodity contracts			Interest rate contracts			Equity contracts				Total
Futures contracts		$	–		$	–		$	–		$	–		$	23,069,589			$	23,069,589
Net change in unrealized appreciation (depreciation) of derivatives recognized as a result from operations:	Credit contracts			Foreign exchange contracts			Commodity contracts			Interest rate contracts			Equity contracts				Total
Futures contracts		$	–		$	–		$	–		$	–		$	(15,177,704	)		$	(15,177,704	)

⁽¹⁾ See Note 3 in the Notes to Financial Statements for additional information.

⁽²⁾ Includes cumulative appreciation (depreciation) of futures contracts as reported in the Fund’s Schedule of Investments footnotes. Only current day’s variation margin is reported within the Statement of Assets and Liabilities.

31

American Beacon Large Cap Value Fund^SM

Notes to Financial Statements

October 31, 2018

Offsetting Assets and Liabilities

The Funds are parties to enforceable master netting agreements between brokers and counterparties which provide for the right to offset under certain circumstances. The Fund employs multiple money managers and counterparties and has elected not to offset qualifying financial and derivative instruments on the Statement of Assets and Liabilities, as such all financial and derivative instruments are presented on a gross basis. The impacts of netting arrangements that provide the right to offset are detailed below. The net amount represents the net receivable or payable that would be due from or to the counterparty in the event of default. Exposure from borrowings and other financing agreements such as repurchase agreements can only be netted across transactions governed by the same Master Agreement with the same legal entity. All amounts reported below represent the balance as of the report date, October 31, 2018.

Offsetting of Financial and Derivative Assets as of October 31, 2018:
	Assets		Liabilities
Futures Contracts	$	–	$	11,617,386
Total derivative assets and liabilities in the Statement of Assets and Liabilities	$	–	$	11,617,386
Derivatives not subject to a Master Netting Agreement or similar agreement (“MNA”)	$	–	$	(11,617,386	)

	Remaining Contractual Maturity of the Agreements As of October 31, 2018
	Overnight and Continuous		<30 days		Between 30 & 90 days		>90 days		Total
Securities Lending Transactions
Common Stocks	$	17,240,346	$	–	$	–	$	–	$	17,240,346
Total Borrowings	$	17,240,346	$	–	$	–	$	–	$	17,240,346
Gross amount of recognized liabilities for securities lending transactions									$	17,240,346

6.  Principal Risks

Investing in the Fund may involve certain risks including, but not limited to, those described below.

Equity Investments Risk

Equity securities are subject to market risk. The Fund’s investments in equity securities may include common stocks, preferred stocks, securities convertible into or exchangeable for common stocks, REITs, depositary receipts, and U.S. dollar-denominated foreign stocks traded on U.S. exchanges. Such investments may expose the Fund to additional risk. The value of a company’s common stock may fall as a result of factors affecting the company, companies in the same industry or sector, or the financial markets overall. Common stock generally is subordinate to preferred stock upon the liquidation or bankruptcy of the issuing company. Preferred stocks are sensitive to movements in interest rates. Preferred stocks may be less liquid than common stocks and, unlike common stocks, participation in the growth of an issuer may be limited. Distributions on preferred stocks generally are payable at the discretion of an issuer and after required payments to bond holders. Convertible securities are subject to the risk that the credit standing of the issuer may have an effect on the convertible securities’ investment value. Investments in REITs are subject to the risks associated with investing in the real estate industry such as adverse developments affecting the real estate industry and real property values. Depositary receipts are subject to certain of the risks associated with investing directly in foreign securities, including, but not limited to, currency exchange rate fluctuations, political and financial instability in the home country of a particular depositary receipt, less liquidity and more volatility, less government regulation and supervision and delays in transaction settlement.

32

American Beacon Large Cap Value Fund^SM

Notes to Financial Statements

October 31, 2018

Foreign Investing Risk

The Fund may invest in securities issued by foreign companies through ADRs and U.S. dollar-denominated foreign stocks traded on U.S. exchanges. The Fund may also invest in local currency investments. ADRs are subject to many of the risks inherent in currency fluctuations and political and financial instability in the home country of a particular ADR or foreign stock. Non-U.S. investments carry potential risks not associated with U.S. investments. Such risks include, but are not limited to: (1) currency exchange rate fluctuations, (2) political and financial instability, (3) less liquidity and greater volatility, (4) lack of uniform accounting, auditing and financial reporting standards, (5) increased price volatility, (6) less government regulation and supervision of foreign stock exchanges, brokers and listed companies, and (7) delays in transaction settlement in some foreign markets.

The risk of investing in Europe may be heightened due to the 2016 referendum in which the United Kingdom voted to exit the European Union (EU). There is a significant degree of uncertainty about how negotiations relating to the United Kingdom’s withdrawal will be conducted, as well as the potential consequences and precise time frame for “Brexit.” It is expected that the United Kingdom’s exit from the EU will take place within two years of the United Kingdom notifying the European Council that it intends to withdraw from the EU. While it is not possible to determine the precise impact these events may have on a Fund, during this period and beyond, the impact on the United Kingdom and European economies and the broader global economy could be significant, resulting in negative impacts, such as increased volatility and illiquidity, and potentially lower economic growth, on markets in the United Kingdom, Europe and globally, which may adversely affect the value of a Fund’s investments. In addition, if one or more other countries were to exit the EU or abandon the use of the euro as a currency, the value of investments tied to those countries or the euro could decline significantly and unpredictably.

Futures Contracts Risk

Futures contracts are derivative instruments where one party pays a fixed price for an agreed amount of securities or other underlying assets at an agreed date. The use of such derivative instruments may expose the Fund to additional risks that it would not be subject to if it invested directly in the securities underlying those derivatives. Futures contracts may experience potentially dramatic price changes (losses) and imperfect correlation between the price of the contract and the underlying security or index, which will increase the volatility of the Fund and may involve a small investment of cash (the amount of initial and variation margin) relative to the magnitude of the risk assumed (the potential increase or decrease in the price of the futures contract).

Market Risk

Since the financial crisis that started in 2008, the U.S. and many foreign economies continue to experience its after-effects. Conditions in the U.S. and many foreign economies have resulted, and may continue to result, in certain instruments experiencing unusual liquidity issues, increased price volatility and, in some cases, credit downgrades and increased likelihood of default. These events have reduced the willingness and ability of some lenders to extend credit, and have made it more difficult for some borrowers to obtain financing on attractive terms, if at all. In some cases, traditional market participants have been less willing to make a market in some types of debt instruments, which has affected the liquidity of those instruments. During times of market turmoil, investors tend to look to the safety of securities issued or backed by the U.S. Treasury, causing the prices of these securities to rise and the yields to decline. Reduced liquidity in fixed income and credit markets may negatively affect many issuers worldwide. In addition, global economies and financial markets are becoming increasingly interconnected, which increases the possibilities that conditions in one country or region might adversely impact issuers in a different country or region. A rise in protectionist trade policies, and the possibility of changes to some international trade agreements, could affect the economies of many nations in ways that cannot necessarily be foreseen at the present time.

33

American Beacon Large Cap Value Fund^SM

Notes to Financial Statements

October 31, 2018

In response to the financial crisis, the U.S. and other governments and the Federal Reserve and certain foreign central banks have taken steps to support financial markets. In some countries where economic conditions are recovering, they are nevertheless perceived as still fragile. Withdrawal of government support, failure of efforts in response to the crisis, or investor perception that such efforts are not succeeding, could adversely impact the value and liquidity of certain securities. The severity or duration of adverse economic conditions may also be affected by policy changes made by governments or quasi-governmental organizations, including changes in tax laws. The impact of new financial regulation legislation on the markets and the practical implications for market participants may not be fully known for some time. Regulatory changes are causing some financial services companies to exit long-standing lines of business, resulting in dislocations for other market participants. In addition, political and diplomatic events within the U.S. and abroad, such as the U.S. government’s inability at times to agree on a long-term budget and deficit reduction plan, the threat of a federal government shutdown and threats not to increase the federal government’s debt limit, may affect investor and consumer confidence and may adversely impact financial markets and the broader economy, perhaps suddenly and to a significant degree. The U.S. government has recently reduced federal corporate income tax rates, and future legislative, regulatory and policy changes may result in more restrictions on international trade, less stringent prudential regulation of certain players in the financial markets, and significant new investments in infrastructure and national defense. Markets may react strongly to expectations about the changes in these policies, which could increase volatility, especially if the markets’ expectations for changes in government policies are not borne out.

Changes in market conditions will not have the same impact on all types of securities. Interest rates have been unusually low in recent years in the U.S. and abroad. Because there is little precedent for this situation, it is difficult to predict the impact of a significant rate increase on various markets. For example, because investors may buy securities or other investments with borrowed money, a significant increase in interest rates may cause a decline in the markets for those investments. Because of the sharp decline in the worldwide price of oil, there is a concern that oil producing nations may withdraw significant assets now held in U.S. Treasuries, which could force a substantial increase in interest rates. Regulators have expressed concern that rate increases may cause investors to sell fixed income securities faster than the market can absorb them, contributing to price volatility. In addition, there is a risk that the prices of goods and services in the U.S. and many foreign economies may decline over time, known as deflation (the opposite of inflation). Deflation may have an adverse effect on stock prices and creditworthiness and may make defaults on debt more likely. If a country’s economy slips into a deflationary pattern, it could last for a prolonged period and may be difficult to reverse. The precise details and the resulting impact of the United Kingdom’s vote to leave the European Union (the “EU”), commonly referred to as “Brexit,” are not yet known. The effect on the United Kingdom’s economy will likely depend on the nature of trade relations with the EU and other major economies following its exit, which are matters to be negotiated. The outcomes may cause increased volatility and have a significant adverse impact on world financial markets, other international trade agreements, and the United Kingdom and European economies, as well as the broader global economy for some time, which could significantly adversely affect the value of the Fund’s investments in the United Kingdom and Europe.

Multiple Sub-Advisor Risk

The Manager may allocate the Fund’s assets among multiple sub-advisors, each of which is responsible for investing its allocated portion of the Fund’s assets. To a significant extent, the Fund’s performance will depend on the success of the Manager in allocating the Fund’s assets to sub-advisors and its selection and oversight of the sub-advisors. Because each sub-advisor manages its allocated portion of the Fund independently from another sub-advisor, the same security may be held in different portions of the Fund, or may be acquired for one portion of the Fund at a time when a sub-advisor to another portion deems it appropriate to dispose of the security from that other portion, resulting in higher expenses without accomplishing any net result in the Fund’s holdings. Similarly, under some market conditions, one sub-advisor may believe that temporary, defensive investments in short-term instruments or cash are appropriate when another sub-advisor believes continued exposure to the equity or debt markets is appropriate for its allocated portion of the Fund. Because each sub-advisor directs the trading for its own portion of the Fund, and does not aggregate its transactions with those of the other sub-advisors, the Fund

34

American Beacon Large Cap Value Fund^SM

Notes to Financial Statements

October 31, 2018

may incur higher brokerage costs than would be the case if a single sub-adviser were managing the entire Fund. In addition, while the Manager seeks to allocate the Fund’s assets among the Fund’s sub-advisors in a manner that it believes is consistent with achieving the Fund’s investment objective(s), the Manager may be subject to potential conflicts of interest in allocating the Fund’s assets among sub-advisors.

Other Investment Companies Risk

The Fund may invest in shares of other registered investment companies, including money market funds. To the extent that the Fund invests in shares of other registered investment companies, the Fund will indirectly bear the fees and expenses charged by the underlying funds in addition to the Fund’s direct fees and expenses and will be subject to the risks associated with investments in those companies. For example, money market funds are subject to interest rate risk, credit risk, and market risk.

Sector Risk

Sector risk is the risk associated with a Fund holding a significant amount of investments in similar businesses, which would be similarly affected by particular economic or market events, which may, in certain circumstances, cause the value of the equity and debt securities of companies in a particular sector of the market to change. To the extent a Fund has substantial holdings within a particular sector, the risks to a Fund associated with that sector increase.

To the extent a Fund invests in the financial services sector, the value of the Fund’s shares may be particularly vulnerable to factors affecting that sector, such as the availability and cost of capital funds, changes in interest rates, the rate of corporate and consumer debt defaults, extensive government regulation and price competition. The value of a Fund’s shares could experience significantly greater volatility than investment companies investing more broadly.

Securities Lending Risk

A Fund may lend its portfolio securities to brokers, dealers and financial institutions to seek income. There is a risk that a borrower may default on its obligations to return loaned securities; however, a Fund’s securities lending agent may indemnify the Fund against that risk. There is a risk that the assets of a Fund’s securities lending agent may be insufficient to satisfy any contractual indemnification requirements to the Fund. Borrowers of a Fund’s securities typically provide collateral in the form of cash that is reinvested in securities. A Fund will be responsible for the risks associated with the investment of cash collateral, including any collateral invested in an affiliated money market fund. A Fund may lose money on its investment of cash collateral or may fail to earn sufficient income on its investment to meet obligations to the borrower. In addition, delays may occur in the recovery of securities from borrowers, which could interfere with a Fund’s ability to vote proxies or to settle transactions and there is the risk of possible loss of rights in the collateral should the borrower fail financially.

7.  Federal Income and Excise Taxes

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

The Fund does not have any unrecorded tax liabilities in the accompanying financial statements. Each of the tax years in the four year period ended October 31, 2018 remain subject to examination by the Internal Revenue Service. If applicable, the Fund recognizes interest accrued related to unrecognized tax benefits in interest expense and penalties in “Other expenses” on the Statement of Operations.

35

American Beacon Large Cap Value Fund^SM

Notes to Financial Statements

October 31, 2018

The Fund may be subject to taxes imposed by countries in which it invests. Such taxes are generally based on returns of income earned or gains realized or repatriated. Taxes are accrued and applied to net investment income, net realized capital gains and net unrealized appreciation (depreciation), as applicable, as the income is earned or capital gains are recorded.

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

The tax character of distributions paid were as follows:

	Year Ended October 31, 2018		Year Ended October 31, 2017
Distributions paid from:
Ordinary income*
Institutional Class	$	165,506,978	$	112,815,101
Y Class		13,806,107		7,905,543
Investor Class		66,628,592		44,594,219
Advisor Class		2,835,000		2,058,628
A Class		1,445,057		879,050
C Class		235,964		99,793
R6 Class		6,390,376		–
Long-term capital gains
Institutional Class		293,913,261		40,827,429
Y Class		24,886,049		2,953,376
Investor Class		130,155,913		18,906,905
Advisor Class		5,829,879		953,678
A Class		2,795,844		366,411
C Class		572,231		77,352
R6 Class		11,244,521		–
Total distributions paid	$	726,245,772	$	232,437,485

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

As of October 31, 2018 the components of distributable earnings (deficits) on a tax basis were as follows:

Fund	Tax Cost		Unrealized Appreciation		Unrealized (Depreciation)			Net Unrealized Appreciation (Depreciation)
Large Cap Value	$	5,099,700,298	$	1,402,287,492	$	(314,723,209	)	$	1,087,564,283

Fund	Net Unrealized Appreciation (Depreciation)		Undistributed Ordinary Income		Undistributed Long-Term Capital Gains		Accumulated Capital and Other (Losses)		Other Temporary Differences		Distributable Earnings
Large Cap Value	$	1,087,564,283	$	117,445,376	$	384,989,411	$	–	$	–	$	1,589,999,070

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

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.

36

American Beacon Large Cap Value Fund^SM

Notes to Financial Statements

October 31, 2018

Accordingly, the following amounts represent current year permanent differences derived from tax-exempt interest and nondeductible expenses from investments in publicly traded partnerships as of October 31, 2018:

Fund	Paid-In-Capital			Distributable Earnings/(Loss)
Large Cap Value	$	(106,120	)	$	106,120

Under the Regulated Investment Company Modernization Act of 2010 (“RIC MOD”), net capital losses recognized by the Fund in taxable years beginning after December 22, 2010 are carried forward indefinitely and retain their character as short-term and/or long-term losses.

During the year ended October 31, 2018, the Fund did not any have capital loss carryforwards.

8.  Investment Transactions

The aggregate cost of purchases and proceeds from sales and maturities of investments, other than short-term obligations, for the year ended October 31, 2018 were as follows:

Fund	Purchases (non-U.S. Government Securities)		Sales (non-U.S. Government Securities)
Large Cap Value	$	1,508,012,268	$	2,660,455,529

A summary of the Fund’s transactions in the USG Select Fund for the year ended October 31, 2018 were as follows:

Fund	Type of Transaction	October 31, 2017 Shares/Fair Value		Purchases		Sales		October 31, 2018 Shares/Fair Value		Dividend Income
Large Cap Value	Direct	$	288,452,185	$	2,444,604,189	$	2,466,731,563	$	266,324,811	$	3,291,443
Large Cap Value	Securities Lending		97,150,617		665,976,587		745,886,858		17,240,346		1,877

9.  Securities Lending

The Fund may lend its securities to qualified financial institutions, such as certain broker-dealers, to earn additional income. The borrowers are required to secure their loans continuously with collateral in an amount at least equal to the fair value of the securities loaned, initially in an amount at least equal to 102% of the fair value of domestic securities loaned and 105% of the fair value of international securities loaned. Collateral is monitored 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

37

American Beacon Large Cap Value Fund^SM

Notes to Financial Statements

October 31, 2018

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 retained 80%, 10%, and 10%, respectively, of the income generated from securities lending.

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

Securities lending transactions pose certain risks to the Fund, including that the borrower may not provide additional collateral when required or return the securities when due, that the value of the short-term investments will be less than the amount of cash collateral required to be returned to the borrower, 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, 2018, the value of outstanding securities on loan and the value of collateral were as follows:

Fund	Market Value of Securities on Loan		Cash Collateral Received		Non-Cash Collateral Received		Total Collateral Received
Large Cap Value	$	16,815,291	$	17,240,346	$	–	$	17,240,346

Cash collateral is listed on the Fund’s Schedule of Investments and is shown on the Statement of Assets and Liabilities. Income earned on these investments is included in “Income derived from securities lending” on the Statement of Operations.

Non-cash collateral received by the Fund may not be sold 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.

10.  Borrowing Arrangements

Effective November 16, 2017, the Fund, along with certain other funds managed by the Manager (“Participating Funds”), entered into a committed revolving line of credit (the “Committed Line”) agreement with State Street Bank and Trust Company (the “Bank”) to be used to facilitate portfolio liquidity. The maximum borrowing amount under the Committed Line is $50 million with interest at a rate equal to the higher of (a) one-month London Inter-Bank Offered Rate (“LIBOR”) plus 1.25% per annum or (b) the Federal Funds rate plus 1.25% per annum on amounts borrowed. Each of the Participating Funds will pay a commitment fee at a rate of 0.25% per annum on the unused portion of the Committed Line amount. The Committed Line expires November 15, 2018, unless extended by the Bank or terminated by the Participating Funds in accordance with the agreement.

Effective November 16, 2017, the Fund, along with certain other Participating Funds managed by the Manager, entered into an uncommitted discretionary demand revolving line of credit (the “Uncommitted Line”) agreement with the Bank to be used to facilitate portfolio liquidity. The maximum borrowing amount under the Uncommitted Line is $50 million with interest at a rate equal to the higher of (a) one-month LIBOR plus 1.25% per annum or (b) the Federal Funds rate. The Uncommitted Line expires November 15, 2018 unless extended by the Bank or terminated by the Participating Funds in accordance with the agreement.

38

American Beacon Large Cap Value Fund^SM

Notes to Financial Statements

October 31, 2018

The Participating Funds paid administration, legal and arrangement fees, which are recognized as a component of “Other expenses” on the Statement of Operations, along with commitment fees, that have been allocated among the Participating Funds based on average daily net assets.

During the year ended October 31, 2018, the Fund did not utilize this facility.

11.  Capital Share Transactions

The tables below summarize the activity in capital shares for each Class of the Fund:

	Institutional Class
	Year Ended October 31,
	2018						2017
Large Cap Value Fund	Shares			Amount			Shares			Amount
Shares sold		15,590,380		$	461,010,040			22,769,063		$	656,233,956
Reinvestment of dividends		14,507,737			424,641,445			5,164,960			144,102,372
Shares redeemed		(53,655,757	)		(1,600,135,398	)		(73,234,805	)		(2,103,146,975	)
Net (decrease) in shares outstanding		(23,557,640	)	$	(714,483,913	)		(45,300,782	)	$	(1,302,810,647	)
	Y Class
	Year Ended October 31,
	2018						2017
Large Cap Value Fund	Shares			Amount			Shares			Amount
Shares sold		3,099,705		$	91,175,749			3,126,566		$	89,594,420
Reinvestment of dividends		1,294,567			37,646,020			382,065			10,598,482
Shares redeemed		(6,308,043	)		(182,284,089	)		(4,661,125	)		(131,631,686	)
Net (decrease) in shares outstanding		(1,913,771	)	$	(53,462,320	)		(1,152,494	)	$	(31,438,784	)
	Investor Class
	Year Ended October 31,
	2018						2017
Large Cap Value Fund	Shares			Amount			Shares			Amount
Shares sold		6,511,604		$	180,144,427			9,354,201		$	251,586,213
Reinvestment of dividends		7,135,711			194,091,350			2,362,886			61,718,592
Shares redeemed		(25,281,746	)		(699,918,301	)		(35,958,339	)		(961,374,863	)
Net (decrease) in shares outstanding		(11,634,431	)	$	(325,682,524	)		(24,241,252	)	$	(648,070,058	)
	Advisor Class
	Year Ended October 31,
	2018						2017
Large Cap Value Fund	Shares			Amount			Shares			Amount
Shares sold		327,661		$	8,945,251			472,811		$	12,521,928
Reinvestment of dividends		297,468			7,987,006			108,296			2,795,115
Shares redeemed		(1,295,285	)		(35,519,351	)		(2,242,361	)		(58,812,119	)
Net (decrease) in shares outstanding		(670,156	)	$	(18,587,094	)		(1,661,254	)	$	(43,495,076	)
	A Class
	Year Ended October 31,
	2018						2017
Large Cap Value Fund	Shares			Amount			Shares			Amount
Shares sold		652,905		$	17,333,416			740,832		$	19,929,459
Reinvestment of dividends		156,140			4,195,476			47,258			1,221,618
Shares redeemed		(567,054	)		(15,500,596	)		(854,841	)		(22,876,376	)
Net increase (decrease) in shares outstanding		241,991		$	6,028,296			(66,751	)	$	(1,725,299	)

39

American Beacon Large Cap Value Fund^SM

Notes to Financial Statements

October 31, 2018

	C Class
	Year Ended October 31,
	2018						2017
Large Cap Value Fund	Shares			Amount			Shares			Amount
Shares sold		28,678		$	766,750			38,862		$	1,023,344
Reinvestment of dividends		27,603			737,547			6,172			158,622
Shares redeemed		(85,211	)		(2,307,165	)		(129,249	)		(3,392,547	)
Net (decrease) in shares outstanding		(28,930	)	$	(802,868	)		(84,215	)	$	(2,210,581	)
	R6 Class
	Year Ended October 31, 2018						February 28, 2017A to October 31, 2017
Large Cap Value Fund	Shares			Amount			Shares			Amount
Shares sold		19,947,926		$	601,141,716			1,364,784		$	40,055,493
Reinvestment of dividends		602,696			17,634,896			–			–
Shares redeemed		(1,767,061	)		(52,393,324	)		(41,996	)		(1,253,204	)
Net increase in shares outstanding		18,783,561		$	566,383,288			1,322,788		$	38,802,289

^A Commencement of operations.

12. Subsequent Events

Effective November 15, 2018, the Fund, along with certain other funds managed by the Manager, entered into a committed revolving line of credit with a max borrowing amount of $250 million.

Management has evaluated additional subsequent events for possible recognition or disclosure in the financial statements through the date the financial statements are issued. Management has determined that there are no material events that would require disclosure in the Fund’s financial statements through this date.

40

American Beacon Large Cap Value Fund^SM

Financial Highlights

(For a share outstanding throughout the period)

	Institutional ClassA
	Year Ended October 31,
	2018			2017			2016			2015			2014
Net asset value, beginning of period	$	30.98		$	25.80		$	28.38		$	31.21		$	27.59
Income (loss) from investment operations:
Net investment income		0.63			0.59			0.61			0.55			0.73
Net gains (losses) on investments (both realized and unrealized)		(0.07	)		5.41			(0.29	)		(0.70	)		3.33
Total income (loss) from investment operations		0.56			6.00			0.32			(0.15	)		4.06
Less distributions:
Dividends from net investment income		(0.55	)		(0.60	)		(0.52	)		(0.67	)		(0.44	)
Distributions from net realized gains		(2.58	)		(0.22	)		(2.38	)		(2.01	)		-
Total distributions		(3.13	)		(0.82	)		(2.90	)		(2.68	)		(0.44	)
Net asset value, end of period	$	28.41		$	30.98		$	25.80		$	28.38		$	31.21
Total returnB		1.51	%		23.60	%		1.69	%		(0.76	)%		14.89	%
Ratios and supplemental data:
Net assets, end of period	$	3,700,700,522		$	4,765,771,483		$	5,137,688,375		$	6,198,883,300		$	5,816,013,064
Ratios to average net assets:
Expenses, before reimbursements		0.62	%		0.60	%		0.60	%		0.58	%		0.58	%
Expenses, net of reimbursements		0.62	%		0.60	%		0.60	%		0.58	%		0.58	%
Net investment income, before expense reimbursements		1.83	%		1.78	%		2.16	%		1.88	%		2.35	%
Net investment income, net of reimbursements		1.83	%		1.78	%		2.16	%		1.88	%		2.35	%
Portfolio turnover rate		23	%		25	%		25	%		32	%		29	%

^A  On May 31, 2016, the AMR Class closed and the assets were merged into the Institutional Class.

^B  Based on net asset value, which does not reflect the sales charge, redemption fee, or contingent deferred sales charge, if applicable. May include adjustments in accordance with U.S. GAAP and as such, the net asset value for reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions.

See accompanying notes

41

American Beacon Large Cap Value Fund^SM

Financial Highlights

(For a share outstanding throughout the period)

	Y Class
	Year Ended October 31,
	2018			2017			2016			2015			2014
Net asset value, beginning of period	$	30.78		$	25.64		$	28.21		$	31.04		$	27.46
Income (loss) from investment operations:
Net investment income		0.57			0.48			0.59			0.56			0.64
Net gains (losses) on investments (both realized and unrealized)		(0.04	)		5.46			(0.29	)		(0.72	)		3.37
Total income (loss) from investment operations		0.53			5.94			0.30			(0.16	)		4.01
Less distributions:
Dividends from net investment income		(0.53	)		(0.58	)		(0.49	)		(0.66	)		(0.43	)
Distributions from net realized gains		(2.58	)		(0.22	)		(2.38	)		(2.01	)		-
Total distributions		(3.11	)		(0.80	)		(2.87	)		(2.67	)		(0.43	)
Net asset value, end of period	$	28.20		$	30.78		$	25.64		$	28.21		$	31.04
Total returnA		1.42	%		23.51	%		1.61	%		(0.80	)%		14.78	%
Ratios and supplemental data:
Net assets, end of period	$	298,017,629		$	384,155,569		$	349,542,346		$	419,096,844		$	434,880,702
Ratios to average net assets:
Expenses, before reimbursements		0.68	%		0.67	%		0.67	%		0.67	%		0.67	%
Expenses, net of reimbursements		0.68	%		0.67	%		0.67	%		0.67	%		0.67	%
Net investment income, before expense reimbursements		1.77	%		1.69	%		2.08	%		1.80	%		2.24	%
Net investment income, net of reimbursements		1.77	%		1.69	%		2.08	%		1.80	%		2.24	%
Portfolio turnover rate		23	%		25	%		25	%		32	%		29	%

^A  Based on net asset value, which does not reflect the sales charge, redemption fee, or contingent deferred sales charge, if applicable. May include adjustments in accordance with U.S. GAAP and as such, the net asset value for reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions.

See accompanying notes

42

American Beacon Large Cap Value Fund^SM

Financial Highlights

(For a share outstanding throughout the period)

	Investor Class
	Year Ended October 31,
	2018			2017			2016			2015			2014
Net asset value, beginning of period	$	28.92		$	24.13		$	26.70		$	29.51		$	26.11
Income (loss) from investment operations:
Net investment income		0.41			0.40			0.46			0.45			0.57
Net gains (losses) on investments (both realized and unrealized)		0.02			5.12			(0.25	)		(0.68	)		3.18
Total income (loss) from investment operations		0.43			5.52			0.21			(0.23	)		3.75
Less distributions:
Dividends from net investment income		(0.44	)		(0.51	)		(0.40	)		(0.57	)		(0.35	)
Distributions from net realized gains		(2.58	)		(0.22	)		(2.38	)		(2.01	)		-
Total distributions		(3.02	)		(0.73	)		(2.78	)		(2.58	)		(0.35	)
Net asset value, end of period	$	26.33		$	28.92		$	24.13		$	26.70		$	29.51
Total returnA		1.18	%		23.20	%		1.33	%		(1.07	)%		14.50	%
Ratios and supplemental data:
Net assets, end of period	$	1,505,354,807		$	1,990,199,621		$	2,245,534,741		$	3,167,585,961		$	4,158,361,296
Ratios to average net assets:
Expenses, before reimbursements		0.95	%		0.92	%		0.93	%		0.93	%		0.93	%
Expenses, net of reimbursements		0.95	%		0.92	%		0.93	%		0.93	%		0.93	%
Net investment income, before expense reimbursements		1.50	%		1.46	%		1.84	%		1.54	%		2.01	%
Net investment income, net of reimbursements		1.50	%		1.46	%		1.84	%		1.54	%		2.01	%
Portfolio turnover rate		23	%		25	%		25	%		32	%		29	%

^A  Based on net asset value, which does not reflect the sales charge, redemption fee, or contingent deferred sales charge, if applicable. May include adjustments in accordance with U.S. GAAP and as such, the net asset value for reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions.

See accompanying notes

43

American Beacon Large Cap Value Fund^SM

Financial Highlights

(For a share outstanding throughout the period)

	Advisor ClassA
	Year Ended October 31,
	2018			2017			2016			2015			2014
Net asset value, beginning of period	$	28.54		$	23.82		$	26.40		$	29.24		$	25.89
Income (loss) from investment operations:
Net investment income		0.28			0.21			0.40			0.40			0.47
Net gains (losses) on investments (both realized and unrealized)		0.10			5.20			(0.22	)		(0.66	)		3.20
Total income (loss) from investment operations		0.38			5.41			0.18			(0.26	)		3.67
Less distributions:
Dividends from net investment income		(0.39	)		(0.47	)		(0.38	)		(0.57	)		(0.32	)
Distributions from net realized gains		(2.58	)		(0.22	)		(2.38	)		(2.01	)		–
Total distributions		(2.97	)		(0.69	)		(2.76	)		(2.58	)		(0.32	)
Net asset value, end of period	$	25.95		$	28.54		$	23.82		$	26.40		$	29.24
Total returnB		1.00	%		23.00	%		1.21	%		(1.19	)%		14.31	%
Ratios and supplemental data:
Net assets, end of period	$	62,811,940		$	88,196,090		$	113,168,437		$	140,975,319		$	149,422,940
Ratios to average net assets:
Expenses, before reimbursements		1.09	%		1.07	%		1.08	%		1.07	%		1.07	%
Expenses, net of reimbursements		1.09	%		1.07	%		1.08	%		1.07	%		1.07	%
Net investment income, before expense reimbursements		1.36	%		1.31	%		1.69	%		1.40	%		1.83	%
Net investment income, net of reimbursements		1.36	%		1.31	%		1.69	%		1.40	%		1.83	%
Portfolio turnover rate		23	%		25	%		25	%		32	%		29	%

^A  On January 15, 2016, the Retirement Class closed and the assets were merged into the Advisor Class.

^B  Based on net asset value, which does not reflect the sales charge, redemption fee, or contingent deferred sales charge, if applicable. May include adjustments in accordance with U.S. GAAP and as such, the net asset value for reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions.

See accompanying notes

44

American Beacon Large Cap Value Fund^SM

Financial Highlights

(For a share outstanding throughout the period)

	A Class
	Year Ended October 31,
	2018			2017			2016			2015			2014
Net asset value, beginning of period	$	28.61		$	23.90		$	26.51		$	29.38		$	26.03
Income (loss) from investment operations:
Net investment income		0.48			0.28			0.42			0.47			0.54
Net gains (losses) on investments (both realized and unrealized)		(0.06	)		5.17			(0.21	)		(0.71	)		3.16
Total income (loss) from investment operations		0.42			5.45			0.21			(0.24	)		3.70
Less distributions:
Dividends from net investment income		(0.45	)		(0.52	)		(0.44	)		(0.62	)		(0.35	)
Distributions from net realized gains		(2.58	)		(0.22	)		(2.38	)		(2.01	)		–
Total distributions		(3.03	)		(0.74	)		(2.82	)		(2.63	)		(0.35	)
Net asset value, end of period	$	26.00		$	28.61		$	23.90		$	26.51		$	29.38
Total returnA		1.15	%		23.13	%		1.33	%		(1.14	)%		14.37	%
Ratios and supplemental data:
Net assets, end of period	$	42,722,617		$	40,073,435		$	35,071,001		$	39,401,153		$	22,781,918
Ratios to average net assets:
Expenses, before reimbursements		0.93	%		0.98	%		0.98	%		0.97	%		1.04	%
Expenses, net of reimbursements		0.93	%		0.98	%		0.98	%		0.97	%		1.04	%
Net investment income, before expense reimbursements		1.49	%		1.38	%		1.78	%		1.48	%		1.83	%
Net investment income, net of reimbursements		1.49	%		1.38	%		1.78	%		1.48	%		1.83	%
Portfolio turnover rate		23	%		25	%		25	%		32	%		29	%

^A  Based on net asset value, which does not reflect the sales charge, redemption fee, or contingent deferred sales charge, if applicable. May include adjustments in accordance with U.S. GAAP and as such, the net asset value for reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions.

See accompanying notes

45

American Beacon Large Cap Value Fund^SM

Financial Highlights

(For a share outstanding throughout the period)

	C Class
	Year Ended October 31,
	2018			2017			2016			2015			2014
Net asset value, beginning of period	$	28.27		$	23.57		$	26.17		$	29.03		$	25.81
Income (loss) from investment operations:
Net investment income		0.21			0.09			0.20			0.27			0.35
Net gains (losses) on investments (both realized and unrealized)		0.05			5.11			(0.19	)		(0.70	)		3.11
Total income (loss) from investment operations		0.26			5.20			0.01			(0.43	)		3.46
Less distributions:
Dividends from net investment income		(0.24	)		(0.28	)		(0.23	)		(0.42	)		(0.24	)
Distributions from net realized gains		(2.58	)		(0.22	)		(2.38	)		(2.01	)		–
Total distributions		(2.82	)		(0.50	)		(2.61	)		(2.43	)		(0.24	)
Net asset value, end of period	$	25.71		$	28.27		$	23.57		$	26.17		$	29.03
Total returnA		0.57	%		22.27	%		0.51	%		(1.83	)%		13.48	%
Ratios and supplemental data:
Net assets, end of period	$	6,851,003		$	8,351,349		$	8,950,263		$	12,389,141		$	9,964,292
Ratios to average net assets:
Expenses, before reimbursements or recoupments		1.64	%		1.72	%		1.74	%		1.73	%		1.79	%
Expenses, net of reimbursements or recoupments		1.54	%		1.72	%		1.74	%		1.73	%		1.81	%
Net investment income, before expense reimbursements or recoupments		0.79	%		0.66	%		1.02	%		0.73	%		1.09	%
Net investment income, net of reimbursements or recoupments		0.90	%		0.66	%		1.02	%		0.73	%		1.07	%
Portfolio turnover rate		23	%		25	%		25	%		32	%		29	%

^A  Based on net asset value, which does not reflect the sales charge, redemption fee, or contingent deferred sales charge, if applicable. May include adjustments in accordance with U.S. GAAP and as such, the net asset value for reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions.

See accompanying notes

46

American Beacon Large Cap Value Fund^SM

Financial Highlights

(For a share outstanding throughout the period)

	R6 Class
	Year Ended October 31, 2018			February 28, 2017A to October 31, 2017
Net asset value, beginning of period	$	30.98		$	28.64
Income from investment operations:
Net investment income		0.59			0.12
Net gains (losses) on investments (both realized and unrealized)		(0.02	)		2.22
Total income from investment operations		0.57			2.34
Less distributions:
Dividends from net investment income		(0.56	)		-
Distributions from net realized gains		(2.58	)		-
Total distributions		(3.14	)		-
Net asset value, end of period	$	28.41		$	30.98
Total returnB		1.54	%		8.17	%C
Ratios and supplemental data:
Net assets, end of period	$	571,236,567		$	40,982,401
Ratios to average net assets:
Expenses, before reimbursements		0.59	%		0.60	%D
Expenses, net of reimbursements		0.58	%		0.58	%D
Net investment income, before expense reimbursements		1.75	%		1.38	%D
Net investment income, net of reimbursements		1.76	%		1.40	%D
Portfolio turnover rate		23	%		25	%E

^A  Commencement of operations.

^B  Based on net asset value, which does not reflect the sales charge, redemption fee, or contingent deferred sales charge, if applicable. May include adjustments in accordance with U.S. GAAP and as such, the net asset value for reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions.

^C  Not annualized.

^D  Annualized.

^E  Portfolio turnover rate is for the period from February 28, 2017 through October 31, 2017 and is not annualized.

See accompanying notes

47

American Beacon Funds^SM

Federal Tax Information

October 31, 2018 (Unaudited)

Certain tax information regarding the Funds are required to be provided to shareholders based upon the Fund’s income and distributions for the taxable year ended October 31, 2018. The information and distributions reported herein may differ from information and distributions taxable to the shareholders for the calendar year ended December 31, 2018.

The Fund designated the following items with regard to distributions paid during the fiscal year ended October 31, 2018. 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.

Corporate Dividends-Received Deduction:
Large Cap Value		100.00	%
Qualified Dividend Income:
Large Cap Value		100.00	%
Long-Term Capital Gain Distributions:
Large Cap Value	$	469,397,698
Short-Term Capital Gain Distributions:
Large Cap Value	$	136,511,984

Shareholders will receive notification in January 2019 of the applicable tax information necessary to prepare their 2018 income tax returns.

48

Disclosure Regarding Approval of the Management and Investment Advisory Agreements (Unaudited)

Renewal and Approval of Management Agreement and Investment Advisory Agreements

At in-person meetings held on May 18, 2018 and June 5-6, 2018 (collectively, the “Meetings”), the Board of Trustees (“Board” or “Trustees”) considered and then, at its June 6, 2018 meeting, approved the renewal of:

(1) the Management Agreement between American Beacon Advisors, Inc. (“Manager”) and the American Beacon Funds (“Trust”), on behalf of the American Beacon Large Cap Value Fund (“Fund”); and

(2) the Investment Advisory Agreements among the Manager, the Trust, on behalf of the Fund, and each of 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”) (each, a “subadvisor” and collectively, the “subadvisors”).

The Management Agreement and the Investment Advisory Agreements are collectively referred to herein as the “Agreements.” In preparation for its consideration of the renewal of the Agreements, the Board undertook steps to gather and consider information furnished by, or derived from, the Manager, the subadvisors, Broadridge, Inc. (“Broadridge”) and Morningstar, Inc. (“Morningstar”). The Board, with the assistance of independent legal counsel, requested and received certain relevant information from the Manager and the subadvisors.

In advance of the Meetings, the Board’s Investment Committee and/or the Manager coordinated the production of information from Broadridge regarding the performance, fees and expenses of the Fund as well as information from the Manager and the subadvisors. At the Meetings, the Board considered the information provided. Further, the Board took into consideration information furnished to the Board throughout the year at regular meetings of the Board and its committees, as well as information specifically prepared in connection with the renewal process.

In connection with the Board’s consideration of the Agreements, the Trustees received and evaluated such information as they deemed necessary. The information requested on behalf of the Board included, among other information, the following materials. References herein to the “firm” refer to the Manager and/or the subadvisors.

• comparisons of the performance of an appropriate share class of the Fund to comparable investment companies and appropriate benchmark indices, including peer group averages and performance analyses from Broadridge, and to the performance of any similar accounts or a composite of similar accounts, as applicable, managed by the firm;

• comparisons of the Fund’s management and subadvisory fee rates and expense ratio with the management fee rates paid by comparable mutual funds and their expense ratios, including peer group averages and fee and expense analyses from Broadridge, and the advisory fee rates charged to other clients for which similar services are provided by a firm;

• a description of any applicable fee waivers and/or expense reimbursements in place for the Fund during the past year, and any proposed changes to the expense limitation arrangements;

• the Manager’s profitability with respect to the services that it provided to the Fund;

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

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

• information regarding administrative, accounting-related, cash management and securities lending services that the Manager provides to the Fund and the fees that the Manager receives for such services; and

49

Disclosure Regarding Approval of the Management and Investment Advisory Agreements (Unaudited)

• information regarding a firm’s financial condition, the personnel of the Manager who are assigned primary responsibility for managing the Fund, staffing levels, portfolio managers’ compensation, insurance coverage, material pending litigation, code of ethics, compliance matters, actual or potential conflicts of interest that the firm experiences, or anticipates that it will experience, in providing services to the Fund, and the Manager’s disaster recovery plans.

The Board noted that the Manager provides management and administrative services to the Fund pursuant to the Management Agreement. The Board considered that many mutual funds have separate contracts governing each type of service and observed that, with respect to such mutual funds, the actual management fee rates provided by Broadridge for peer group funds reflect the combined advisory and administrative expenses, reduced by any fee waivers and/or reimbursements.

A firm may not have been able to, or opted not to, provide information in response to certain information requests, in which case the Board conducted its evaluation of the firm based on information that was provided. In such cases, the Board determined that the omission of any such information was not material to its considerations. The class of shares used for comparative performance purposes was the share class with the lowest expenses available for purchase by the general public, which was the Institutional Class. The Board also considered that the use of Institutional Class performance generally facilitates a meaningful comparison for expense and performance purposes.

Provided below is an overview of certain factors the Board considered in connection with its renewal and approval of the 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 investment advisory contracts, such as the Agreements. The memorandum explained the regulatory requirements surrounding the Trustees’ process for evaluating investment advisors and the terms of investment advisory contracts. Based on its evaluation, the Board unanimously concluded that the terms of each Agreement were reasonable and fair and that the renewal and approval of each Agreement was in the best interests of the Fund and its shareholders.

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

In determining whether to renew the Agreements, the Trustees considered the best interests of the Fund. While the Management Agreement and the Investment Advisory Agreements for the Fund were considered at the Meetings, the Board considered the 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 the Fund; (3) the costs incurred by the Manager in rendering services to the Fund and its resulting profits or losses; (4) comparisons of services and fee rates with contracts entered into by the Manager or the subadvisors or their affiliates with other clients (such as pension funds and other institutional clients); (5) the extent to which economies of scale, if any, have been taken into account in setting each fee rate schedule; (6) whether fee rate levels reflect economies of scale, if any, for the benefit of Fund investors; and (7) any other benefits derived or anticipated to be derived by the Manager or the subadvisors from their relationships with the Fund.

Nature, Extent and Quality of Services. With respect to the renewal of the Management Agreement, the Board considered, among other factors: the Fund’s long-term performance; the length of service of key investment personnel at the Manager; the cost structure of the Fund; the Manager’s culture of compliance and support that reduce risks to the Fund; the Manager’s quality of services; the Manager’s active role in monitoring and, as appropriate, recommending additional or replacement subadvisors; and the Manager’s efforts to retain key employees and maintain staffing levels.

50

Disclosure Regarding Approval of the Management and Investment Advisory Agreements (Unaudited)

With respect to the renewal of the Investment Advisory Agreements, the Board considered the level of staffing and the size of the subadvisors. The Board also considered the adequacy of the resources committed to the Fund by the subadvisors, and whether those resources were commensurate with the needs of the Fund and are sufficient to sustain appropriate levels of performance and compliance needs. In this regard, the Board considered the financial stability of the subadvisors. The Board also considered the subadvisors’ representations regarding their compliance program 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 the subadvisors were appropriate for the Fund.

Investment Performance. The Board evaluated the comparative information provided by Broadridge and the Manager regarding the performance of the Fund relative to its Broadridge performance universe, Morningstar Category, and benchmark indices, as well as the Fund’s Morningstar rating. The Board considered the information provided by Broadridge regarding Broadridge’s independent methodology for selecting the Fund’s Broadridge performance universe. The Board also considered that the performance universes selected by Broadridge may not provide appropriate comparisons for the Fund. In addition, the Board considered the performance reports and discussions with management at Board and Committee meetings throughout the year. The Board also evaluated the comparative information provided by each subadvisor regarding the performance of its portion of the Fund relative to the performance of a composite of similar accounts managed by the subadvisor and the Fund’s benchmark index. In addition, the Board considered the Manager’s recommendation to continue to retain each subadvisor. A discussion regarding the Board’s considerations with respect to the Fund’s performance appears below under “Additional Considerations and Conclusions with Respect to the Fund.”

Costs of the Services Provided to the Fund and the Profits Realized by the Manager from its Relationship with the Fund. In analyzing the cost of services and profitability of the Manager, the Board considered the revenues earned and the expenses incurred by the Manager, before and after the payment of distribution-related expenses by the Manager. The profits or losses were noted at both an aggregate level for all funds within the group of mutual funds sponsored by the Manager (the “Fund Complex”) and at an individual Fund level, with the Manager earning a profit before and after the payment of distribution-related expenses by the Manager. The Board also considered comparative information provided by the Manager regarding the Manager’s overall profitability with respect to the Fund Complex relative to the overall profitability of other firms in the mutual fund industry, as disclosed in publicly available sources. 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 Fund, the Manager represented that, among other matters, the difference is attributable to the fact that the Manager does not perform administrative services for non-investment company clients and reflects the greater level of responsibility and regulatory requirements associated with managing the Fund.

The Board also noted that the Manager proposed to continue the expense waivers and reimbursements for the Fund’s R6 Class shares that were in place during the last fiscal year. The Board further considered that, with respect to the Fund, the applicable Management Agreement provides for the Manager to receive a management fee comprised of an annualized fee that is retained by the Manager. In addition, the Board considered that the Manager receives fees for overseeing the securities lending program on behalf of the Fund. The Board also noted that certain share classes of the Fund maintain higher expense ratios in order to compensate third-party financial intermediaries.

In analyzing the fee rates charged by each subadvisor in connection with its investment advisory services to the Fund, the Board considered representations made by each subadvisor that the Fund’s subadvisory fee rate schedule for each such firm is favorable compared to other comparable client accounts of that firm. The Board did not request profitability data from the subadvisors because the Board did not view this data 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. In addition, the Board noted that the subadvisors may not account for their profits on an account-by-account basis and that different firms likely employ different methodologies in connection with these calculations.

51

Disclosure Regarding Approval of the Management and Investment Advisory Agreements (Unaudited)

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 the Fund’s fee rates is set forth below under “Additional Considerations and Conclusions with Respect to the 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 Fund grows and whether fee rate levels reflect these economies of scale for the benefit of Fund shareholders. In this regard, the Board considered that, with respect to each subadvisor, the Manager has negotiated breakpoints in the subadvisory fee rate for the Fund.

In addition, the Board noted the Manager’s representation that the Management Agreement contains fee schedule breakpoints at higher asset levels with respect to the Fund. Based on the foregoing information, the Board concluded that the Manager and subadvisor fee rate schedules for the Fund provide for a reasonable sharing of benefits from any economies of scale with the Fund.

Benefits Derived from the Relationship with the Fund. 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 Fund, 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. In addition, the Board noted that each subadvisor benefits from soft dollar arrangements for proprietary and/or third-party research. 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 Fund appear to be fair and reasonable.

Additional Considerations and Conclusions with Respect to the Fund

The performance comparisons below were made in comparison to the Fund’s Broadridge performance universe and Morningstar Category. With respect to the Broadridge performance universe, the 1^st Quintile represents the top twenty percent of the universe based on performance and the 5^th Quintile representing the bottom twenty percent of the universe based on performance. References below to the Fund’s Broadridge performance universe are to the universe of mutual funds with a comparable investment classification/objective included in the analysis provided by Broadridge. In reviewing the performance, the Trustees viewed longer-term performance over a full market cycle as the most important consideration, because relative performance over shorter periods may be significantly impacted by market or economic events and not necessarily reflective of manager skill.

The expense comparisons below were made in comparison to the Fund’s Broadridge expense universe and Broadridge expense group, with the 1^st Quintile representing the top twenty percent of the universe or group based on lowest total expense and the 5^th Quintile representing the bottom twenty percent of the universe or group based on highest total expense. References below to the Fund’s expense group and expense universe are to the respective group or universe of comparable mutual funds included in the analysis by Broadridge. A Broadridge expense group consists of the Fund and a representative sample of funds with similar operating structures and asset sizes, as selected by Broadridge. A Broadridge expense universe includes all funds in the investment classification/objective with a similar operating structure as the share class of the Fund included in the Broadridge comparative information and provides a broader view of expenses across the Fund’s investment classification/objective. The Trustees also considered the Fund’s Morningstar fee level category. In reviewing expenses, the Trustees considered the positive impact of fee waivers where applicable and the Manager’s agreement to continue the fee waivers. In addition, information regarding the subadvisors’ use of soft dollars was requested from the Manager and was considered by the Trustees.

52

Disclosure Regarding Approval of the Management and Investment Advisory Agreements (Unaudited)

In considering the renewal of the Management Agreement for the Fund, the Trustees considered the following additional factors:

Broadridge Total Expense Analysis Excluding 12b-1 Fees and Morningstar Fee Level Ranking

Compared to Broadridge Expense Group	2nd Quintile
Compared to Broadridge Expense Universe	1st Quintile
Morningstar Fee Level Ranking – Institutional Class	Below Average Expense Ratio

Broadridge and Morningstar Performance Analysis (five-year period ended December 31, 2017)

Compared to Broadridge Performance Universe	2nd Quintile
Compared to Morningstar Category	3rd Quintile

In considering the renewal of the Investment Advisory Agreements with Barrow, Brandywine, Hotchkis and MFS, the Trustees considered that the diversification of investment strategies facilitated by the Fund’s multi-manager structure permits the Fund to mitigate the risks associated with a single subadvisor. The Trustees also considered the following additional factors:

Subadvisor Performance (compared to Broadridge Performance Universe for period indicated ended December 31, 2017)

Barrow	5 Years	4	th Quintile
Brandywine	5 Years	4	th Quintile
Hotchkis	5 Years	1	st Quintile
MFS	5 Years	1	st Quintile

The Trustees also considered: (1) Barrow and Brandywine’s consistent process and consistent team; (2) the Manager’s explanation that Barrow and Brandywine’s deeper value equity investment style (in companies with more significant discounts to price-to-earnings and price-to book ratios relative to other investment managers) has been out of favor; (3) information provided by each subadvisor regarding fee rates charged for managing accounts in the same strategy as the subadvisor manages its allocation of the Fund; and (4) 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 Management and Investment Advisory Agreements are fair and reasonable; and (2) determined that the Fund and its shareholders would benefit from the Manager’s and subadvisors’ continued management of the Fund.

53

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. The address of each person listed below is 220 Las Colinas Boulevard East, Suite 1200, Irving, Texas 75039. Each Trustee oversees thirty-seven funds in the fund complex that includes the Trust, the American Beacon Select Funds, the American Beacon Institutional Funds Trust, the American Beacon Sound Point Enhanced Income Fund, and the American Beacon Apollo Total Return Fund. 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** (81)	Trustee since 1996	Partner in the law firm of Akin, Gump, Strauss, Hauer & Feld, LLP (law firm) (1960-Present); Trustee, American Beacon Mileage Funds (1996-2012); Trustee, American Beacon Select Funds (1999-Present); Trustee, American Beacon Master Trust (1996-2012); Trustee, American Beacon Institutional Funds Trust (2017-Present); Trustee, American Beacon Sound Point Enhanced Income Fund (2018-Present); Trustee, American Beacon Apollo Total Return Fund (2018-Present).
NON-INTERESTED TRUSTEES	Term
	Lifetime of Trust until removal, resignation or retirement*
Gilbert G. Alvarado (48)	Trustee since 2015	Director, Kura MD, Inc. (local telehealth organization) (2015-present); Vice President & CFO, Sierra Health Foundation (health conversion private foundation) (2006-Present); Vice President & CFO, Sierra Health Foundation: Center for Health Program Management (California public benefit corporation) (2012-Present); Director, Innovative North State (2012-2015); Director, Sacramento Regional Technology Alliance (2011-2016); Director, Women’s Empowerment (2009-2014); Director, Valley Healthcare Staffing (2017-present); Trustee, American Beacon Select Funds (2015-Present); Trustee, American Beacon Institutional Funds Trust (2017-Present); Trustee, American Beacon Sound Point Enhanced Income Fund (2018-Present); Trustee, American Beacon Apollo Total Return Fund (2018-Present).
Joseph B. Armes (56)	Trustee since 2015	Chairman & CEO, CSW Industrials f/k/a Capital Southwest Corporation (investment company) (2015-Present); Chairman of the Board of Capital Southwest Corporation, predecessor to CSW Industrials, Inc. (2014-present) (investment company); CEO, Capital Southwest Corporation (2013-2015); President & CEO, JBA Investment Partners (family investment vehicle) (2010-Present); Director and Chair of Audit Committee, RSP Permian (oil and gas producer) (2013-Present); Trustee, American Beacon Select Funds (2015-Present); Trustee, American Beacon Institutional Funds Trust (2017-Present); Trustee, American Beacon Sound Point Enhanced Income Fund (2018-Present); Trustee, American Beacon Apollo Total Return Fund (2018-Present).
Gerard J. Arpey (60)	Trustee since 2012	Director, The Home Depot, Inc. (2015-Present); Partner, Emerald Creek Group (private equity firm) (2011-Present); Director, S.C. Johnson & Son, Inc. (privately held company) (2008-present); Trustee, American Beacon Select Funds (2012-Present); Trustee, American Beacon Institutional Funds Trust (2017-Present); Trustee, American Beacon Sound Point Enhanced Income Fund (2018-Present); Trustee, American Beacon Apollo Total Return Fund (2018-Present).

54

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
NON-INTERESTED TRUSTEES (CONT.)	Term
	Lifetime of Trust until removal, resignation or retirement*
Brenda A. Cline (57)	Trustee since 2004 Vice Chair since 2018	Chief Financial Officer, Treasurer and Secretary, Kimbell Art Foundation (1993-Present); Director, Tyler Technologies, Inc. (public sector software solutions company) (2014-Present); Director, Range Resources Corporation (oil and natural gas company) (2015-Present); Trustee, Cushing Closed-End Funds (2017-Present); Trustee, American Beacon Mileage Funds (2004-2012); Trustee, American Beacon Select Funds (2004-Present); Trustee, American Beacon Master Trust (2004-2012); Trustee, American Beacon Institutional Funds Trust (2017-Present); Trustee, American Beacon Sound Point Enhanced Income Fund (2018-Present); Trustee, American Beacon Apollo Total Return Fund (2018-Present).
Eugene J. Duffy (64)	Trustee since 2008	Managing Director, Global Investment Management Distribution, Mesirow Financial (2016-Present); Managing Director, Institutional Services, Intercontinental Real Estate Corporation (2014-Present); Principal and Executive Vice President, Paradigm Asset Management (1994-2014); Director, Sunrise Bank of Atlanta (2008-2013); Trustee, American Beacon Mileage Funds (2008-2012); Trustee, American Beacon Select Funds (2008-Present); Trustee, American Beacon Master Trust (2008-2012); Trustee, American Beacon Institutional Funds Trust (2017-Present); Trustee, American Beacon Sound Point Enhanced Income Fund (2018-Present); Trustee, American Beacon Apollo Total Return Fund (2018-Present).
Claudia A. Holz*** (61)	Trustee since 2018	Partner, KPMG LLP (1990-2017); Trustee, American Beacon Select Funds (2018-Present); Trustee, American Beacon Institutional Funds Trust (2018-Present); Trustee, American Beacon Sound Point Enhanced Income Fund (2018-Present); Trustee, American Beacon Apollo Total Return Fund (2018-Present).
Douglas A. Lindgren**** (56)	Trustee since 2018	CEO North America, Carne Global Financial Services (2016-2017); Managing Director, IPS Investment Management and Global Head, Content Management, UBS Wealth Management (2010-2016); Managing Director, P&S Hedge Funds, UBS Wealth Management (2008-2010); Managing Director, Head of Alternative Investments, UBS Financial Services, Inc. (2005-2008); Trustee, American Beacon Select Funds (2018-Present); Trustee, American Beacon Institutional Funds Trust (2018-Present); Trustee, American Beacon Sound Point Enhanced Income Fund (2018-Present); Trustee, American Beacon Apollo Total Return Fund (2018-Present).
Richard A. Massman (75)	Trustee since 2004 Chairman since 2008	Consultant and General Counsel Emeritus, Hunt Consolidated, Inc. (holding company engaged in oil and gas exploration and production, refining, real estate, farming, ranching and venture capital activities) (2009-Present); Trustee, American Beacon Mileage Funds (2004-2012); Trustee, American Beacon Select Funds (2004-Present); Trustee, American Beacon Master Trust (2004-2012); Trustee, American Beacon Institutional Funds Trust (2017-Present); Trustee, American Beacon Sound Point Enhanced Income Fund (2018-Present); Trustee, American Beacon Apollo Total Return Fund (2018-Present).
Barbara J. McKenna, CFA (55)	Trustee since 2012	Managing Principal, Longfellow Investment Management Company (2005-Present); Trustee, American Beacon Select Funds (2012-Present); Trustee, American Beacon Institutional Funds Trust (2017-Present); Trustee, American Beacon Sound Point Enhanced Income Fund (2018-Present); Trustee, American Beacon Apollo Total Return Fund (2018-Present).

55

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
NON-INTERESTED TRUSTEES (CONT.)	Term
	Lifetime of Trust until removal, resignation or retirement*
R. Gerald Turner (72)	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); Trustee, American Beacon Mileage Funds (2001-2012); Trustee, American Beacon Select Funds (2001-Present); Trustee, American Beacon Master Trust (2001-2012); Trustee, American Beacon Institutional Funds Trust (2017-Present); Trustee, American Beacon Sound Point Enhanced Income Fund (2018-Present); Trustee, American Beacon Apollo Total Return Fund (2018-Present).
OFFICERS	Term
	One Year
Gene L. Needles, Jr. (63)	President since 2009	CEO and Director (2009-Present), and Chairman (2018-Present), American Beacon Advisors, Inc.; President, American Beacon Advisors (2009-2018); Chairman and CEO, Resolute Investment Managers, Inc. (2015-Present); Director, Chairman, President and CEO, Resolute Investment Distributors (2017-Present); Director, Chairman and CEO; Resolute Investment Services, Inc. (2015-Present); Director, Resolute Acquisition, Inc. (2015-Present); President (2015-2018), Director, Resolute Topco, Inc. (2015-Present), President (2015-2018), CEO (2015-Present), and Chairman (2018-Present), Resolute Investment Holdings, LLC; President, CEO and Director, Lighthouse Holdings, Inc. (2009-2015); President and CEO, Lighthouse Holdings Parent, Inc. (2009-2015); Manager, President, American Private Equity Management, LLC (2012-Present); President, American Beacon Cayman Managed Futures Strategy Fund, Ltd. (2014-Present); Director, Chairman, President and CEO, Alpha Quant Advisors, LLC (2016-Present); Director, ARK Investment Management LLC (2016-Present); Director, Shapiro Capital Management LLC (2017-Present); Director and Vice President, American Beacon Cayman Transformational Innovation Company, LTD., (2017-Present); Vice President, American Beacon Delaware Transformational Innovation Corporation (2017-Present); Executive Vice President and Chief Operating Officer, Continuous Capital, LLC (2018-Present); Member, Investment Advisory Committee, Employees Retirement System of Texas (2017-Present); Trustee, American Beacon NextShares Trust (2015-Present); President, American Beacon Select Funds (2009-Present); President, American Beacon Mileage Funds (2009-2012); President, American Beacon Master Trust (2009-2012); President, American Beacon Institutional Funds Trust (2017-Present); President, American Beacon Sound Point Enhanced Income Fund (2018-Present); President, American Beacon Apollo Total Return Fund (2018-Present).

56

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
OFFICERS (CONT.)	Term
	One Year
Rosemary K. Behan (59)	VP, Secretary and Chief Legal Officer since 2006	Vice President and Secretary, American Beacon Advisors, Inc. (2006-Present); Secretary, Resolute Investment Holdings, LLC (2015-Present); Vice President, Secretary and General Counsel, Resolute Investment Managers, Inc. (2015-Present); Secretary, Resolute Topco, Inc. (2015-Present); Secretary, Resolute Acquisition, Inc. (2015-Present); Vice President, Secretary and General Counsel, Resolute Investment Services, Inc. (2015-Present); Secretary, Lighthouse Holdings, Inc. (2008-2015); Secretary, Lighthouse Holdings Parent, Inc. (2008-2015); Secretary, American Private Equity Management, LLC (2008-Present); Secretary, American Beacon Cayman Managed Futures Strategy Fund, Ltd. (2014-Present); Secretary, Alpha Quant Advisors, LLC (2016-Present); Secretary, American Beacon Cayman Transformational Innovation Company, Ltd. (2017-Present); Secretary, American Beacon Delaware Transformational Innovation Corporation (2017-Present); Secretary, Resolute Investment Distributors, Inc. (2017-Present); Vice President and Secretary, Continuous Capital, LLC (2018-Present); Chief Legal Officer, Vice President and Secretary, American Beacon Select Funds (2006-Present); Chief Legal Officer, Vice President and Secretary, American Beacon Mileage Funds (2006-2012); Chief Legal Officer, Vice President and Secretary, American Beacon Master Trust (2006-2012); Chief Legal Officer, Vice President and Secretary, American Beacon Institutional Funds Trust (2017-Present); Vice Chief Legal Officer, Vice President and Secretary, American Beacon Sound Point Enhanced Income Fund (2018-Present); Chief Legal Officer, Vice President and Secretary American Beacon Apollo Total Return Fund (2018-Present).
Brian E. Brett (58)	VP since 2004	Senior Vice President, Head of Distribution (2012-Present) and Vice President, Director of Sales (2004-2012), American Beacon Advisors, Inc.; Senior Vice President, Resolute Investment Distributors, Inc. (2017-Present) and Vice President (2017-2018); Vice President, American Beacon Select Funds (2004-Present); Vice President, American Beacon Mileage Funds (2004-2012); Vice President, American Beacon Master Trust (2004-2012); Vice President, American Beacon Institutional Funds Trust (2017-Present); Vice President American Beacon Sound Point Enhanced Income Fund (2018-Present); Vice President American Beacon Apollo Total Return Fund (2018-Present).
Paul B. Cavazos (49)	VP since 2016	Chief Investment Officer and Senior Vice President, American Beacon Advisors, Inc. (2016-Present); Chief Investment Officer, DTE Energy (2007-2016); Vice President, American Private Equity Management, L.L.C. (2017-Present) Vice President, American Beacon Select Funds (2016-Present); Vice President, American Beacon Institutional Funds Trust (2017-Present); Vice President American Beacon Sound Point Enhanced Income Fund (2018-Present); Vice President American Beacon Apollo Total Return Fund (2018-Present).
Erica Duncan (48)	VP Since 2011	Vice President, American Beacon Advisors, Inc. (2011-Present); Vice President, Resolute Investment Managers (2015-Present); Vice President, Resolute Investment Services, Inc. (2015-Present) Vice President, American Beacon Select Funds (2011-Present); Vice President, American Beacon Mileage Funds (2011-2012); Vice President, American Beacon Master Trust (2011-2012); Vice President, American Beacon Institutional Funds Trust (2017-Present); Vice President American Beacon Sound Point Enhanced Income Fund (2018-Present); Vice President American Beacon Apollo Total Return Fund (2018-Present).

57

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
OFFICERS (CONT.)	Term
	One Year
Melinda G. Heika (57)	Treasurer since 2010	Treasurer, American Beacon Advisors, Inc. (2010-Present) and Chief Financial Officer (2010-Present); Treasurer and Chief Financial Officer, Resolute Investment Managers, Inc. (2015-Present); Treasurer, Resolute Acquisition, Inc. (2015-Present); Treasurer, Resolute Topco, Inc. (2015-Present); Treasurer, Resolute Investment Holdings, LLC. (2015-Present); Treasurer and Chief Financial Officer, Resolute Investment Services, Inc. (2015-Present); Treasurer, Lighthouse Holdings, Inc. (2010-2015); Treasurer, Lighthouse Holdings Parent Inc., (2010-2015); Treasurer, American Private Equity Management, LLC (2012-Present); Director and Treasurer, American Beacon Cayman Managed Futures Strategy Fund, Ltd. (2014-Present); Treasurer and Chief Financial Officer, Alpha Quant Advisors, LLC (2016-Present); Treasurer, American Beacon Cayman Transformational Innovation, Ltd. (2017-Present); Treasurer, American Beacon Delaware Transformational Innovation Corporation (2017-Present); Treasurer, Resolute Investment Distributors, Inc. (2017-2017); Treasurer and Chief Financial Officer, Continuous Capital, LLC (2018-Present); Treasurer, American Beacon Select Funds (2010-Present); Treasurer, American Beacon Mileage Funds (2010-2012); Treasurer, American Beacon Master Trust (2010-2012); Treasurer, American Beacon Institutional Funds Trust (2017-Present); Treasurer, American Beacon Sound Point Enhanced Income Fund (2018-Present); Treasurer, American Beacon Apollo Total Return Fund (2018-Present).
Terri L. McKinney (54)	VP since 2010	Vice President (2009-Present) and Managing Director (2003-2009), American Beacon Advisors, Inc.; Vice President, Resolute Investment Managers, Inc. (2017-Present); Vice President, Resolute Investment Services, Inc (2015-Present); Vice President, Alpha Quant Advisors, LLC (2016-Present); Vice President, Continuous Capital, LLC (2018-Present); Vice President, American Beacon Select Funds (2010-Present); Vice President, American Beacon Mileage Funds (2010-2012); Vice President, American Beacon Master Trust (2010-2012); Vice President, American Beacon Institutional Funds Trust (2017-Present); Vice President, American Beacon Sound Point Enhanced Income Fund (2018-Present); Vice President, American Beacon Apollo Total Return Fund (2018-Present).

58

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
OFFICERS (CONT.)	Term
	One Year
Jeffrey K. Ringdahl (43)	VP since 2010	Chief Operating Officer (2010-Present), Vice President (2010-2013), Senior Vice President (2013-Present), Director (2015-Present), and President (2018-Present), American Beacon Advisors, Inc.; Senior Vice President (2018-Present), Vice President (2012-2018) and Manager (2015-2018), American Private Equity Management, LLC; Senior Vice President, Lighthouse Holdings, Inc. (2013-2015); Senior Vice President, Lighthouse Holdings Parent, Inc. (2013-2015); Director and Vice President, American Beacon Cayman Managed Futures Strategy Fund, Ltd. (2014-Present); Trustee, American Beacon NextShares Trust (2015-Present); Director (2015-Present), Senior Vice Present (2015-2018), and President (2018-Present), Resolute Investment Holdings, LLC; Director (2015-Present), Senior Vice President (2015-2018) and President (2018-Present), Resolute Topco, Inc.; Director (2015-Present), Senior Vice President (2015-2018), and President (2018-Present), Resolute Acquisition, Inc.; Director (2015-Present), Senior Vice President (2015-2018), and President (2018-Present), Resolute Investment Managers, Inc.; Director, Executive Vice President and Chief Operating Officer, Alpha Quant Advisors, LLC (2016-Present); Director (2017-Present), Executive Vice President (2017-2018), and President and Chief Operating Officer (2018-Present), Resolute Investment Services, Inc.; Director and Executive Vice President, Resolute Investment Distributors, Inc. (2017-Present); Director, Shapiro Capital Management, LLC (2017-Present); Director and Vice President, American Beacon Cayman Transformational Innovation Company, LTD., (2017-Present); Vice President, American Beacon Delaware Transformational Innovation Corporation (2017-Present); Director, Executive Vice President and Chief Operating Officer, Continuous Capital, LLC (2018-Present); Vice President, American Beacon Select Funds (2010-Present); Vice President, American Beacon Institutional Funds Trust (2017-Present); Vice President, American Beacon Sound Point Enhanced Income Fund (2018-Present); Vice President, American Beacon Apollo Total Return Fund (2018-Present)
Samuel J. Silver (55)	VP Since 2011	Vice President, American Beacon Advisors, Inc. (2011-Present); Vice President, American Beacon Select Funds (2011-Present); Vice President, American Beacon Mileage Funds (2011-2012); Vice President, American Beacon Master Trust (2011-2012); American Beacon Institutional Funds Trust (2011-Present); Vice President, American Beacon Sound Point Enhanced Income Fund (2018-Present); Vice President, American Beacon Apollo Total Return Fund (2018-Present).
Christina E. Sears (47)	Chief Compliance Officer since 2004 and Asst. Secretary since 1999	Chief Compliance Officer, American Beacon Advisors, Inc. (2004-Present); Chief Compliance Officer, American Private Equity Management, LLC (2012-Present); Chief Compliance Officer and Vice President, Alpha Quant Advisors, LLC (2016-Present); Vice President, Resolute Investment Managers, Inc. (2017-Present); Vice President, Resolute Investment Distributors (2017-Present); Vice President, Continuous Capital, LLC (2018-Present); Chief Compliance Officer (2004-Present) and Assistant Secretary (1999-Present), American Beacon Select Funds; Chief Compliance Officer (2004-2012) and Assistant Secretary (1999-2012), American Beacon Mileage Funds; Chief Compliance Officer (2004-2012) and Assistant Secretary (1999-2012), American Beacon Master Trust; Chief Compliance Officer and Assistant Secretary, American Beacon Institutional Funds Trust (2017-Present); Chief Compliance Officer and Assistant Secretary, American Beacon Sound Point Enhanced Income Fund (2018-Present); Chief Compliance Officer and Assistant Secretary, American Beacon Apollo Total Return Fund (2018-Present).

59

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
OFFICERS (CONT.)	Term
	One Year
Sonia L. Bates (61)	Asst. Treasurer since 2011	Assistant Treasurer, American Beacon Advisors, Inc. (2011-2018); Assistant Treasurer, Resolute Acquisition, Inc. (2015-2018); Assistant. Treasurer, Resolute Topco, Inc. (2015-2018); Assistant Treasurer, Resolute Investment Holdings, LLC. (2015-2018); Assistant Treasurer, Lighthouse Holdings, Inc. (2011-2015); Assistant Treasurer, Lighthouse Holdings Parent Inc. (2011-2015); Assistant Treasurer, American Private Equity Management, LLC (2012-Present); Assistant Treasurer, American Beacon Cayman Transformational Innovation Company, Ltd. (2017-Present); Assistant Treasurer, American Beacon Select Funds (2011-Present); Assistant Treasurer American Beacon Mileage Funds (2011-2012); Assistant Treasurer, American Beacon Master Trust (2011-2012); Assistant Treasurer, American Beacon Institutional Funds Trust (2017-Present); Assistant Treasurer, American Beacon Sound Point Enhanced Income Fund (2018-Present); Assistant Treasurer, American Beacon Apollo Total Return Fund (2018-Present).
Shelley D. Abrahams (43)	Assistant Secretary since 2008	Assistant Secretary, American Beacon Select Funds (2008-Present); Assistant Secretary, American Beacon Mileage Funds (2008-2012); Assistant Secretary, American Beacon Master Trust (2008-2012); Assistant Secretary, American Beacon Institutional Funds Trust (2017-Present); Assistant Secretary, American Beacon Sound Point Enhanced Income Fund (2018-Present); Assistant Secretary, American Beacon Apollo Total Return Fund (2018-Present).
Rebecca L. Harris (51)	Assistant Secretary since 2010	Vice President, American Beacon Advisors, Inc. (2016-Present); Vice President, Resolute Investment Managers, Inc. (2017-Present); Vice President, Resolute Investment Services (2015-Present); Vice President, Alpha Quant Advisors, LLC (2016-Present); Vice President, Continuous Capital, LLC (2018-Present); Assistant Secretary, American Beacon Select Funds (2010-Present); Assistant Secretary, American Beacon Mileage Funds (2010-2012); Assistant Secretary, American Beacon Master Trust (2010-2012); Assistant Secretary, American Beacon Institutional Funds Trust (2017-Present); Assistant Secretary, American Beacon Sound Point Enhanced Income Fund (2018-Present); Assistant Secretary, American Beacon Apollo Total Return Fund (2018-Present).
Diana N. Lai (42)	Assistant Secretary since 2012	Assistant Secretary, American Beacon Cayman Transformational Innovation Company, Ltd. (2017-Present); Assistant Secretary, American Beacon Select Funds (2012-Present); Assistant Secretary, American Beacon Institutional Funds Trust (2017-Present); Assistant Secretary, American Beacon Sound Point Enhanced Income Fund (2018-Present); Assistant Secretary, American Beacon Apollo Total Return Fund (2018-Present).
Teresa A. Oxford (60)	Assistant Secretary since 2015	Assistant Secretary, American Beacon Advisors, Inc. (2015-Present); Assistant Secretary, Resolute Investment Distributors (2018-Present); Assistant Secretary, Resolute Investment Services (2015-Present); Assistant Secretary, Alpha Quant Advisors, LLC (2016-Present); Assistant Secretary, American Beacon Select Funds (2015-Present); Assistant Secretary, American Beacon Institutional Funds Trust (2017-Present); Assistant Secretary, American Beacon Sound Point Enhanced Income Fund (2018-Present); Assistant Secretary, American Beacon Apollo Total Return Fund (2018-Present).

* As of 11/12/2014, the Board adopted a retirement plan that requires Trustees, other than Messrs. Feld and Massman to retire no later than the last day of the calendar year in which they reach the age of 75.

** 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 one or more of the Trust’s sub-advisors.

*** Claudia A. Holz became a new Trustee to each of the Trusts on 4/1/2018.

**** Douglas A. Lindren became a new Trustee to each of the Trusts on 1/1/2018.

60

American Beacon Funds^SM

Privacy Policy

October 31, 2018 (Unaudited)

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.

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64

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: Call (800) 658-5811	By Mail: American Beacon Funds P.O. Box 219643 Kansas City, MO 64121-9643
Availability of Quarterly Portfolio Schedules	Availability of Proxy Voting Policy and Records
In addition to the Schedule of Investments provided in each semi-annual and annual report, the Fund files a complete schedule of its portfolio holdings with the Securities and Exchange Commission (“SEC”) on Form N-Q as of the first and third fiscal quarters. The Fund’s Forms N-Q are available on the SEC’s website 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 (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 DST Asset Manager Solutions, Inc. Quincy, Massachusetts INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM Ernst & Young LLP Dallas, Texas DISTRIBUTOR Resolute Investment Distributors, Inc. Irving, Texas

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

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

AR 10/18

About American Beacon Advisors

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

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

GARCIA HAMILTON QUALITY BOND FUND RISKS

The use of fixed-income securities entails interest rate and credit risks. 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. There can be no assurances that the investment objectives of this Fund will be met.

This may contain information obtained from third parties, including ratings from credit rating agencies such as Standard & Poor’s. Reproduction and distribution of third-party content in any form is prohibited except with the prior written permission of the related third party. Third-party content providers do not guarantee the accuracy, completeness, timeliness or availability of any information, including ratings, and are not responsible for any errors or omissions (negligent or otherwise), regardless of the cause, or for the results obtained from the use of such content. THIRD-PARTY CONTENT PROVIDERS GIVE NO EXPRESS OR IMPLIED WARRANTIES, INCLUDING, BUT NOT LIMITED TO, ANY WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE. THIRD-PARTY CONTENT PROVIDERS SHALL NOT BE LIABLE FOR ANY DIRECT, INDIRECT, INCIDENTAL, EXEMPLARY, COMPENSATORY, PUNITIVE, SPECIAL OR CONSEQUENTIAL DAMAGES, COSTS, EXPENSES, LEGAL FEES OR LOSSES (INCLUDING LOST INCOME OR PROFITS AND OPPORTUNITY COSTS OR LOSSES CAUSED BY NEGLIGENCE) IN CONNECTION WITH ANY USE OF THEIR CONTENT, INCLUDING RATINGS.

Credit ratings are statements of opinions and are not statements of fact or recommendations to purchase, hold or sell securities. They do not address the suitability of securities or the suitability of securities for investment purposes and should not be relied on as investment advice.

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

American Beacon Funds October 31, 2018

Contents

President’s Message	1
Market and Performance Overview	2
Expense Example	5
Report of Independent Registered Public Accounting Firm	7
Schedule of Investments:
American Beacon Garcia Hamilton Quality Bond Fund	8
Financial Statements	10
Notes to Financial Statements	13
Financial Highlights:
American Beacon Garcia Hamilton Quality Bond Fund	28
Federal Tax Information	31
Disclosure Regarding Approval of the Management and Investment Advisory Agreements	32
Trustees and Officers of the American Beacon Funds	37
Privacy Policy	44

Additional Fund Information Back Cover

President’s Message

Dear Shareholders,   Long-term investing isn’t about identifying and anticipating the next big market move. It’s about identifying the right investment products for riding out those moves. As a long-term investor, you should strive to accomplish the three Ds: direction, discipline and diversification.   u   Direction: Achieving your long-term financial goals requires an individualized plan of action. You may want your plan to provide some measure of protection against periods of geopolitical turmoil, economic uncertainty, market volatility and job insecurity. Your plan should be reviewed annually and be adjusted in the event your long-range needs change.

u Discipline: Long-term, systematic participation in an investment portfolio requires your resolution to stay the course. Spending time in the market – rather than trying to time the market – may place you in a better position to reach your long-term financial goals.

u Diversification: By investing in different types of investment categories and asset classes, you may be able to help mitigate financial risks across your investment portfolio. By allocating your investment portfolio according to your risk-tolerance level, you may be better positioned to weather storms and achieve your long-term financial goals.

Since 1986, American Beacon has endeavored to provide investors with a disciplined approach to realizing long-term financial goals. As a manager of managers, we strive to provide investment products that may enable investors to participate during market upswings while potentially insulating against market downswings. Our approach is more than a concept. It’s the cornerstone of our culture. And we strive to apply it at every turn as we seek to provide a well-diversified line of investment products for your investment portfolio.

Many of the sub-advisors to our mutual funds pursue upside capture and/or downside protection using proprietary strategies. The investment teams behind our mutual funds seek to produce consistent, long-term results rather than focus only on short-term movements in the markets. In managing our investment products, we emphasize identifying opportunities that offer the potential for long-term rewards.

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

Best Regards,

Gene L. Needles, Jr.

President

American Beacon Funds

1

Domestic Bond Market Overview

October 31, 2018 (Unaudited)

Over the past 12 months, the Federal Reserve (the “Fed”) continued on the path of removing monetary stimulus from the economic system by raising the target federal funds rate four times, a quarter percentage point each, taking the rate from a range of 1.00% to 1.25% to a range of 2.00% to 2.25%. The Fed also increased its balance-sheet reduction program as planned. Given these moves, monetary policy was no longer characterized as “accommodative” by the Federal Open Market Committee in its official September release. However, during the press conference, Chairman Jerome H. Powell stated the change in language did not indicate “any change in the likely path of policy.” In the U.S. economy, despite the ongoing trade war with China, consumer confidence surged to its highest level since the year 2000, and small-business optimism reached an all-time high. Additionally, the third-quarter gross domestic product was 3.50%, and inflation remained around the Fed’s target of 2.00%.

Given the reduction in monetary stimulus and strong economic data, interest rates rose, and the yield curve flattened during the past 12 months. The 10-year Treasury yield rose 77 basis points (+0.77%) to 3.15% at period end. The two-year Treasury yield increased 127 basis points (+1.27%) to 2.87%, and the 30-year Treasury yield increased 51 basis points (+0.51%) to 3.39%. These moves caused the two- to 30-year Treasury yield spread to flatten by 76 basis points (-0.76%) to 0.52%.

As interest rates rose, bond prices declined, leading to a total return of -2.05% for the Bloomberg Barclays U.S. Aggregate Bond Index (the “Index”) over the past 12 months. Credit risk was generally out of favor over the period as three of the four credit sectors posted a negative excess return. The Corporate sector was the worst performer with -47 basis points (-0.47%) of excess return relative to similar-duration Treasury securities. The Mortgage-Backed Securities and Agency sectors followed with -23 basis points (-0.23%) and -9 basis points (-0.09%), respectively. The lone bright spot was the Asset-Backed Securities sector with 34 basis points (0.34%) of excess return relative to similar-duration Treasuries. Thus, the Index had a negative return of -17 basis points (-0.17%) for the period.

2

American Beacon Garcia Hamilton Quality Bond Fund^SM

Performance Overview

October 31, 2018 (Unaudited)

The Investor Class of the American Beacon Garcia Hamilton Quality Bond Fund (the “Fund”) returned 0.36% for the twelve months ended October 31, 2018. The Bloomberg Barclays U.S. Aggregate Bond Index (the “Index”) returned -2.05% for the same period.

Comparison of Change in Value of a $10,000 Investment for the period from 4/4/16 through 10/31/18

Total Returns for the Period ended October 31, 2018
	Ticker	1 Year			Since Inception 04/04/2016			Value of $10,000 04/04/2016- 10/31/2018
Institutional Class (1,3)	GHQIX		0.74	%		0.77	%		$	10,201
Y Class (1,3)	GHQYX		0.74	%		0.67	%		$	10,175
Investor Class (1,3)	GHQPX		0.36	%		0.40	%		$	10,103
Bloomberg Barclays US Aggregate Bond Index (2)			(2.05	)%		0.26	%		$	10,066

1. Performance shown is historical and is not indicative of future returns. Investment returns and principal value will vary, and shares may be worth more or less at redemption than at original purchase. Performance shown is calculated based on the published end of day net asset values as of the date indicated and current performance may be lower or higher than the performance data quoted. To obtain performance as of the most recent month end, please 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. Generally accepted accounting principles require adjustments to be made to the net assets of the Fund at period end for financial reporting purposes only; and as such, the total return based on the unadjusted net asset value per share may differ from the total return reported in the financial highlights. A portion of the fees charged to each Class of the Fund has been waived since Fund inception. Performance prior to waiving fees was lower than the actual returns shown since inception.

2. The Bloomberg Barclays U.S. Aggregate Bond Index is a market value weighted performance benchmark for government, corporate, mortgage-backed and asset-backed fixed-rate debt securities of all maturities.

3. The Total Annual Fund Operating Expense ratios set forth in the most recent Fund prospectus for the Institutional, Y, and Investor Class shares were 0.70%, 0.77%, and 0.94%, 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 Garcia Hamilton Quality Bond Fund^SM

Performance Overview

October 31, 2018 (Unaudited)

Duration management was the primary contributor to the Fund’s out performance during the year as the Fund maintained a shorter duration than the Index as interest rates rose. Market participants underestimated the strength of the economy and the number of Fed rate hikes which caused rates to rise as investors realigned their positioning and outlook.

In addition to active duration management, the Fund maintained a barbell yield-curve position as the yield curve flattened. The Fund was overweight the shortest and longest durations along the curve and was underweight in the middle. Floating-rate corporate bonds were used on the front end of the barbell to generate yield and protect from rising rates, and long-duration treasury bonds were used to manage overall duration.

While the barbell position helped as the yield curve flattened, it also contributed to a lower yield-to-maturity for the Fund. Barbell positions generally result in lower yield; therefore, the curve must flatten quickly for the position to benefit. This defensive positioning served as a slight detractor to relative performance.

Sector positioning also benefited the Fund as it maintained an underweight position in credit risk during a period of widening spreads. The Fund’s allocation to corporate bonds was in line with the Index, but its holdings had a much shorter maturity; therefore, it had lower credit risk.

Overall, the Fund continues to emphasize high-quality, active fixed-income investing that seeks to perform well in volatile markets and serves an important role in asset allocation.

Top Ten Holdings (% Net Assets)
U.S. Treasury Notes/Bonds, 2.375%, Due 5/15/2027		12.3
U.S. Treasury Notes/Bonds, 2.500%, Due 5/15/2046		11.9
U.S. Treasury Notes/Bonds, 6.250%, Due 5/15/2030		5.9
Federal Home Loan Mortgage Corp., 2.243%, Due 7/5/2019, (3-mo. USD LIBOR - 0.165%)		4.7
Federal Farm Credit Banks, 2.207%, Due 5/11/2020, (1-mo. USD LIBOR - 0.080%)		2.9
American Express Credit Corp., 3.021%, Due 3/3/2022, (3-mo. USD LIBOR + 0.700%)		2.8
EI du Pont de Nemours & Co., 3.071%, Due 5/1/2020, (3-mo. USD LIBOR + 0.530%)		2.8
Walt Disney Co., 2.711%, Due 3/4/2022, (3-mo. USD LIBOR + 0.390%)		2.8
Wells Fargo & Co., 3.597%, Due 1/24/2023, (3-mo. USD LIBOR + 1.110%)		2.8
Manufacturers & Traders Trust Co., 2.932%, Due 5/18/2022, (3-mo. USD LIBOR + 0.610%)		2.7
Total Fund Holdings	35
Sector Allocation (% Investments)
U.S. Treasury Obligations		36.0
Financial		27.9
U.S. Agency Mortgage-Backed Obligations		8.0
U.S. Government Agency Obligations		7.7
Technology		7.6
Basic Materials		3.2
Communications		3.2
Consumer, Non-Cyclical		3.1
Energy		1.9
Utilities		1.4

4

American Beacon Garcia Hamilton Quality Bond Fund^SM

Expense Example

October 31, 2018 (Unaudited)

Fund Expense Example

As a shareholder of a Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments and redemption fees if applicable, and (2) ongoing costs, including management fees, distribution (12b-1) fees, sub-transfer agent fees, and other Fund expenses. The Examples are intended to help you understand the ongoing cost (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. The Examples are based on an investment of $1,000 invested at the beginning of the period in each Class and held for the entire period from May 1, 2018 through October 31, 2018.

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 = $8.60), then multiply the result by “Expenses Paid During Period” to estimate the expenses you paid on your account during this period. Shareholders of the Investor and Institutional Classes that invest in the Fund through an IRA or Roth IRA may be subject to a custodial IRA fee of $15 that is typically deducted each December. If your account was subject to a custodial IRA fee during the period, your costs would have been $15 higher.

Hypothetical Example for Comparison Purposes

The “Hypothetical” lines of the 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 or Roth IRA may be subject to a custodial IRA fee of $15 that is typically deducted each December. If your account was subject to a custodial IRA fee during the period, your costs would have been $15 higher.

You should also be aware that the expenses shown in the table highlight only your ongoing costs and do not reflect any transaction costs charged by the Fund, such as sales charges (loads). 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.

5

American Beacon Garcia Hamilton Quality Bond Fund^SM

Expense Example

October 31, 2018 (Unaudited)

American Beacon Garcia Hamilton Quality Bond Fund
	Beginning Account Value 5/1/2018		Ending Account Value 10/31/2018		Expenses Paid During Period 5/1/2018-10/31/2018*
Institutional Class
Actual		$1,000.00		$1,004.90		$2.27
Hypothetical**		$1,000.00		$1,022.90		$2.29
Y Class
Actual		$1,000.00		$1,004.40		$2.78
Hypothetical**		$1,000.00		$1,022.40		$2.80
Investor Class
Actual		$1,000.00		$1,002.00		$4.19
Hypothetical**		$1,000.00		$1,021.00		$4.23

* Expenses are equal to the Fund’s annualized expense ratios for the six-month period of 0.45%, 0.55%, and 0.83% for the Institutional, Y, and Investor Classes, respectively, multiplied by the average account value over the period, multiplied by the number derived by dividing the number of days in the most recent fiscal half-year (184) by days in the year (365) to reflect the half-year period.

** 5% return before expenses.

6

American Beacon Garcia Hamilton Quality Bond Fund^SM

Report of Independent Registered Public Accounting Firm

To the Shareholders and the Board of Trustees of American Beacon Garcia Hamilton Quality Bond Fund

Opinion on the Financial Statements

We have audited the accompanying statement of assets and liabilities of American Beacon Garcia Hamilton Quality Bond Fund (the “Fund”) (one of the funds constituting American Beacon Funds (the “Trust”)), including the schedule of investments, as of October 31, 2018, and the related statement 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, the financial highlights for each of the two years in the period ended October 31, 2018 and the period from April 4, 2016 (commencement of operations) to October 31, 2016 and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Fund at October 31, 2018, 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 its financial highlights for each of the two years in the period ended October 31, 2018 and the period from April 4, 2016 (commencement of operations) to October 31, 2016, in conformity with U.S. generally accepted accounting principles.

Basis for Opinion

These financial statements are the responsibility of the Trust’s management. Our responsibility is to express an opinion on each of the Fund’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Trust in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Trust is not required to have, nor were we engaged to perform, an audit of the Trust’s internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Trust’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of October 31, 2018, by correspondence with the custodian. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

We have served as the auditor of one or more American Beacon investment companies since 1987.

Dallas, Texas

December 28, 2018

7

American Beacon Garcia Hamilton Quality Bond Fund^SM

Schedule of Investments

October 31, 2018

	Principal Amount			Fair Value
CORPORATE OBLIGATIONS - 42.75%
Basic Materials - 2.84%
EI du Pont de Nemours & Co., 3.071%, Due 5/1/2020, (3-mo. USD LIBOR + 0.530%)A		$	7,065,000		$	7,097,207
Communications - 2.84%
Walt Disney Co., 2.711%, Due 3/4/2022, (3-mo. USD LIBOR + 0.390%)A			7,036,000			7,088,199
Consumer, Non-Cyclical - 2.68%
Merck & Co., Inc., 2.716%, Due 2/10/2020, (3-mo. USD LIBOR + 0.375%)A			4,860,000			4,872,709
PepsiCo, Inc., 2.924%, Due 5/2/2022, (3-mo. USD LIBOR + 0.365%)A			1,800,000			1,812,499
						6,685,208
Energy - 1.68%
Chevron Corp., 2.844%, Due 11/15/2021, (3-mo. USD LIBOR + 0.530%)A			4,140,000			4,188,912
Financial - 24.71%
American Express Credit Corp., 3.021%, Due 3/3/2022, (3-mo. USD LIBOR + 0.700%)A			7,068,000			7,105,251
Bank of America Corp.,
3.129%, Due 7/21/2021, (3-mo. USD LIBOR + 0.660%)A			3,730,000			3,746,159
3.023%, Due 6/25/2022, (3-mo. USD LIBOR + 0.650%)A			3,820,000			3,820,683
Citibank NA,
2.769%, Due 10/20/2020, (3-mo. USD LIBOR + 0.300%)A			4,000,000			3,999,486
2.688%, Due 2/12/2021, (3-mo. USD LIBOR + 0.350%)A			3,581,000			3,580,064
Goldman Sachs Group, Inc.,
3.307%, Due 10/31/2022, (3-mo. USD LIBOR + 0.780%)A			2,395,000			2,403,320
3.917%, Due 11/29/2023, (3-mo. USD LIBOR + 1.600%)A			4,080,000			4,218,471
JPMorgan Chase & Co.,
3.801%, Due 3/1/2021, (3-mo. USD LIBOR + 1.480%)A			2,300,000			2,355,063
3.717%, Due 10/24/2023, (3-mo. USD LIBOR + 1.230%)A			4,700,000			4,782,758
Manufacturers & Traders Trust Co., 2.932%, Due 5/18/2022, (3-mo. USD LIBOR + 0.610%)A			6,700,000			6,716,630
Morgan Stanley, 3.887%, Due 10/24/2023, (3-mo. USD LIBOR + 1.400%)A			4,935,000			5,025,133
US Bank NA,
2.989%, Due 10/28/2019, (3-mo. USD LIBOR + 0.480%)A			4,240,000			4,255,162
2.828%, Due 4/26/2021, (3-mo. USD LIBOR + 0.320%)A			2,800,000			2,804,211
Wells Fargo & Co., 3.597%, Due 1/24/2023, (3-mo. USD LIBOR + 1.110%)A			6,795,000			6,872,307
						61,684,698
Technology - 6.75%
Apple, Inc., 2.641%, Due 5/6/2019, (3-mo. USD LIBOR + 0.300%)A			5,504,000			5,512,614
IBM Credit LLC, 2.729%, Due 1/20/2021, (3-mo. USD LIBOR + 0.260%)A			2,475,000			2,480,753
Intel Corp., 2.688%, Due 5/11/2022, (3-mo. USD LIBOR + 0.350%)A			4,540,000			4,563,423
Oracle Corp., 3.016%, Due 1/15/2019, (3-mo. USD LIBOR + 0.580%)A			4,280,000			4,284,515
						16,841,305
Utilities - 1.25%
Consolidated Edison Co. of New York, Inc., 2.773%, Due 6/25/2021, Series C, (3-mo. USD LIBOR + 0.400%)A			3,110,000			3,122,016
Total Corporate Obligations (Cost $106,616,830)						106,707,545
U.S. GOVERNMENT AGENCY OBLIGATIONS - 6.84%
Federal Farm Credit Banks,
2.121%, Due 7/2/2019, (1-mo. USD LIBOR - 0.140%)A			4,000,000			3,997,494
2.207%, Due 5/11/2020, (1-mo. USD LIBOR - 0.080%)A			7,160,000			7,153,652
2.334%, Due 2/10/2020, (1-mo. USD LIBOR + 0.050%)A			5,910,000			5,919,129
Total U.S. Government Agency Obligations (Cost $17,079,467)						17,070,275
U.S. AGENCY MORTGAGE-BACKED OBLIGATIONS - 7.10%
Federal Home Loan Mortgage Corp.,
2.243%, Due 7/5/2019, (3-mo. USD LIBOR - 0.165%)A			11,635,000			11,632,350
4.500%, Due 12/1/2034			2,826,062			2,908,101

See accompanying notes

8

American Beacon Garcia Hamilton Quality Bond Fund^SM

Schedule of Investments

October 31, 2018

	Principal Amount			Fair Value
U.S. AGENCY MORTGAGE-BACKED OBLIGATIONS - 7.10% (continued)
Federal National Mortgage Association,
5.500%, Due 1/1/2024		$	1,811,575		$	1,873,410
5.000%, Due 7/1/2026			1,261,485			1,299,641
Total U.S. Agency Mortgage-Backed Obligations (Cost $17,919,906)						17,713,502
U.S. TREASURY OBLIGATIONS - 31.92%
U.S. Treasury Notes/Bonds,
2.375%, Due 5/15/2027			32,410,000			30,590,736
6.250%, Due 5/15/2030			11,300,000			14,629,527
2.875%, Due 8/15/2045			5,345,000			4,847,456
2.500%, Due 5/15/2046			35,320,000			29,597,056
Total U.S. Treasury Obligations (Cost $81,168,997)						79,664,775
	Shares
SHORT-TERM INVESTMENTS - 10.90% (Cost $27,218,440)
Investment Companies - 10.90%
American Beacon U.S. Government Money Market Select Fund, Select Class, 2.11%B C			27,218,440			27,218,440
TOTAL INVESTMENTS - 99.51% (Cost $250,003,640)						248,374,537
OTHER ASSETS, NET OF LIABILITIES - 0.49%						1,226,537
TOTAL NET ASSETS - 100.00%					$	249,601,074
Percentages are stated as a percent of net assets.

^A Variable, floating, or adjustable rate securities with an interest rate that changes periodically. Rates are periodically reset with rates that are based on a predetermined benchmark such as a widely followed interest rate such as T-bills, LIBOR or PRIME plus a fixed spread. The interest rate disclosed reflects the rate in effect on October 31, 2018.

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

^C 7-day yield.

LLC - Limited Liability Company.

LIBOR - London Interbank Offered Rate.

The Fund’s investments are summarized by level based on the inputs used to determine their values. As of October 31, 2018, the investments were classified as described below:

Garcia Hamilton Quality Bond Fund	Level 1		Level 2		Level 3		Total
Assets
Corporate Obligations	$	-	$	106,707,545	$	-	$	106,707,545
U.S. Government Agency Obligations		-		17,070,275		-		17,070,275
U.S. Agency Mortgage-Backed Obligations		-		17,713,502		-		17,713,502
U.S. Treasury Obligations		-		79,664,775		-		79,664,775
Short-Term Investments		27,218,440		-		-		27,218,440
Total Investments in Securities - Assets	$	27,218,440	$	221,156,097	$	-	$	248,374,537

U.S. GAAP requires transfers between all levels to level 3 to be disclosed. During the year ended October 31, 2018, there were no transfers into or out of Level 3.

See accompanying notes

9

American Beacon Garcia Hamilton Quality Bond Fund^SM

Statement of Assets and Liabilities

October 31, 2018

Assets:
Investments in unaffiliated securities, at fair value†	$	221,156,097
Investments in affiliated securities, at fair value‡		27,218,440
Interest receivable		1,616,486
Receivable for fund shares sold		111,338
Receivable for expense reimbursement (Note 2)		57,088
Prepaid expenses		16,176
Total assets		250,175,625
Liabilities:
Payable for fund shares redeemed		259,515
Dividends payable		115,869
Management and sub-advisory fees payable (Note 2)		116,810
Service fees payable (Note 2)		2,331
Transfer agent fees payable (Note 2)		9,181
Custody and fund accounting fees payable		1,912
Professional fees payable		59,388
Trustee fees payable (Note 2)		968
Payable for prospectus and shareholder reports		7,486
Other liabilities		1,091
Total liabilities		574,551
Net assets	$	249,601,074
Analysis of net assets:
Paid-in-capital	$	254,621,543
Total distributable earnings (deficits)A		(5,020,469	)
Net assets	$	249,601,074
Shares outstanding at no par value (unlimited shares authorized):
Institutional Class		23,990,390
Y Class		376,632
Investor Class		1,122,774
Net assets:
Institutional Class	$	234,919,975
Y Class	$	3,685,857
Investor Class	$	10,995,242
Net asset value, offering and redemption price per share:
Institutional Class	$	9.79
Y Class	$	9.79
Investor Class	$	9.79
† Cost of investments in unaffiliated securities	$	222,785,200
‡ Cost of investments in affiliated securities	$	27,218,440
A The Fund’s investments in affiliated securities did not have unrealized appreciation (depreciation) at year end.

See accompanying notes

10

American Beacon Garcia Hamilton Quality Bond Fund^SM

Statement of Operations

For the year ended October 31, 2018

Investment income:
Dividend income from affiliated securities (Note 7)	$	145,360
Interest income		4,078,623
Total investment income		4,223,983
Expenses:
Management and sub-advisory fees (Note 2)		983,927
Transfer agent fees:
Institutional Class (Note 2)		69,120
Y Class (Note 2)		3,062
Investor Class		1,607
Custody and fund accounting fees		30,150
Professional fees		44,090
Registration fees and expenses		47,292
Service fees (Note 2):
Investor Class		26,091
Prospectus and shareholder report expenses		25,331
Trustee fees (Note 2)		11,315
Other expenses		15,998
Total expenses		1,257,983
Net fees waived and expenses (reimbursed) (Note 2)		(410,947	)
Net expenses		847,036
Net investment income		3,376,947
Realized and unrealized (loss) from investments:
Net realized (loss) from:
Investments in unaffiliated securitiesA		(780,123	)
Change in net unrealized (depreciation) of:
Investments in unaffiliated securitiesB		(1,810,001	)
Net (loss) from investments		(2,590,124	)
Net increase in net assets resulting from operations	$	786,823
A The Fund did not recognize net realized gains (losses) from the sale of investments in affiliated securities.
B The Fund’s investments in affiliated securities did not have a change in net unrealized appreciation (depreciation) at year end.

See accompanying notes

11

American Beacon Garcia Hamilton Quality Bond Fund^SM

Statement of Changes in Net Assets

	Year Ended October 31, 2018			Year Ended October 31, 2017
Increase (decrease) in net assets:
Operations:
Net investment income	$	3,376,947		$	1,879,017
Net realized (loss) from investments in unaffiliated securities		(780,123	)		(2,226,277	)
Change in net unrealized appreciation (depreciation) of investments in unaffiliated securities		(1,810,001	)		1,566,653
Net increase in net assets resulting from operations		786,823			1,219,393
Distributions to shareholders:
Net investment income:
Institutional Class		–			(1,962,423	)
Y Class		–			(43,416	)
Investor Class		–			(104,914	)
Net realized gain from investments:
Institutional Class		–			(90,251	)
Y Class		–			(2,127	)
Investor Class		–			(6,000	)
Total retained earnings:*
Institutional Class		(3,305,504	)		–
Y Class		(59,124	)		–
Investor Class		(165,821	)		–
Net distributions to shareholders		(3,530,449	)		(2,209,131	)
Capital share transactions (Note 9):
Proceeds from sales of shares		128,042,724			30,683,516
Reinvestment of dividends and distributions		3,065,757			2,206,616
Cost of shares redeemed		(24,196,699	)		(22,360,012	)
Net increase in net assets from capital share transactions		106,911,782			10,530,120
Net increase in net assets		104,168,156			9,540,382
Net assets:
Beginning of period		145,432,918			135,892,536
End of period	$	249,601,074		$	145,432,918
*  Distributions from net investment income and net realized capital gains are combined for the year ended October 31, 2018. See Note 1 in the Notes to Financial Statements for more information regarding new accounting pronouncements.

See accompanying notes

12

American Beacon Garcia Hamilton Quality Bond Fund^SM

Notes to Financial Statements

October 31, 2018

1.  Organization and Significant Accounting Policies

American Beacon Funds (the “Trust”), is organized as a Massachusetts business trust. The Fund, a series within the Trust, is registered under the Investment Company Act of 1940, as amended (the “Act”), as a diversified, open-end management investment company. As of October 31, 2018, the Trust consists of thirty-three active series, one of which is presented in this filing: American Beacon Garcia Hamilton Quality Bond Fund (the “Fund”). The remaining thirty-two active series are reported in separate filings.

American Beacon Advisors, Inc. (the “Manager”) is a Delaware corporation and a wholly-owned subsidiary of Resolute Investment Managers, Inc. (“RIM”) organized in 1986 to provide business management, advisory, administrative, and asset management consulting services to the Trust and other investors. The Manager is registered as an investment advisor under the Investment Advisers Act of 1940, as amended (the “Advisers Act”). RIM is, in turn, a wholly-owned subsidiary of Resolute Acquisition, Inc., which is a wholly-owned subsidiary of Resolute Topco, Inc., a wholly-owned subsidiary of Resolute Investment Holdings, LLC (“RIH”). RIH is owned primarily by Kelso Investment Associates VIII, L.P., KEP VI, LLC and Estancia Capital Partners L.P., investment funds affiliated with Kelso & Company, L.P. (“Kelso”) or Estancia Capital Management, LLC (“Estancia”), which are private equity firms.

Recent Accounting Pronouncements

In March 2017, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2017-08, Premium Amortization of Purchased Callable Debt Securities. The amendments in the ASU shorten the premium amortization period on a purchased callable debt security from the security’s contractual life to the earliest call date. It is anticipated that this change will enhance disclosures by reducing losses recognized when a security is called on an earlier date. This ASU is effective for fiscal years beginning after December 15, 2018. The Manager continues to evaluate the impact this ASU will have on the financial statements and other disclosures.

In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820). The amendments in the ASU impact disclosure requirements for fair value measurement. It is anticipated that this change will enhance the effectiveness of disclosures in the notes to the financial statements. This ASU is effective for fiscal years beginning after December 15, 2019. Early adoption is permitted and can include the entire standard or certain provisions that exclude or amend disclosures. For the year ended October 31, 2018, the Fund has chosen to adopt the standard. The adoption of this ASU guidance did not have a material impact on the financial statements and other disclosures.

In August 2018, the U.S. Securities and Exchange Commission (“SEC”) adopted amendments to certain disclosure requirements in Securities Act Release No. 33-10532, Disclosure Update and Simplification, which is intended to facilitate the disclosure of information to investors and simplify compliance without significantly altering the total mix of information provided to investors. Effective with the current reporting period, the Fund adopted the amendments with the impacts being that the Fund is no longer required to present components of distributable earnings on the Statement of Assets and Liabilities or the sources of distributable earnings and the amount of undistributed net investment income on the Statement of Changes in Net Assets.

Class Disclosure

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

Class	Eligible Investors	Minimum Initial Investments
Institutional	Large institutional investors - sold directly through intermediary channels.	$	250,000
Y Class	Large institutional retirement plan investors - sold directly or through intermediary channels.	$	100,000
Investor	All investors using intermediary organizations, such as broker-dealers or retirement plan sponsors.	$	2,500

13

American Beacon Garcia Hamilton Quality Bond Fund^SM

Notes to Financial Statements

October 31, 2018

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 service, distribution, transfer agent fees, and sub-transfer agent fees that vary amongst the classes as described more fully in Note 2.

Significant Accounting Policies

The following is a summary of significant accounting policies, consistently followed by the Fund in preparation of the financial statements. The Fund is considered an investment company and accordingly, follows the investment company accounting and reporting guidance of the FASB Accounting Standards Codification Topic 946, Financial Services – Investment Companies, a part of Generally Accepted Accounting Principles (“U.S. GAAP”).

Security Transactions and Investment Income

Security transactions are recorded as of the trade date for financial reporting purposes. Securities purchased or sold on a when-issued or delayed-delivery basis may be settled beyond a standard settlement period for the security after the trade date.

Dividend income, net of foreign taxes, is recorded on 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, net of foreign taxes, is earned from settlement date, recorded on the accrual basis, and adjusted, if necessary, for accretion of discounts and amortization of premiums. Realized gains (losses) from securities sold are determined on the basis of specific lot identification.

Distributions to Shareholders

Distributions, if any, of net investment income are generally paid at least annually and recorded on the ex-dividend date. Distributions, if any, of net realized capital gains are generally paid at least annually and recorded on the ex-dividend date. Dividends to shareholders are determined in accordance with federal income tax regulations, which may differ in amount and character from net investment income and realized gains recognized for purposes of U.S. GAAP. To the extent necessary to fully distribute capital gains, the Fund may designate earnings and profits distributed to shareholders on the redemption of shares.

Allocation of Income, Trust Expenses, Gains, and Losses

Investment income, realized and unrealized gains and losses from investments of the Fund is allocated daily to each class of shares based upon the relative proportion of net assets of each class to the total net assets of the Fund. Expenses directly charged or attributable to any Fund will be paid from the assets of the Fund. Generally, expenses of the Trust will be allocated among and charged to the assets of the Fund on a basis that the Trust’s Board of Trustees (the “Board”) deems fair and equitable, which may be based on the relative net assets of the Fund or nature of the services performed and relative applicability to the Fund.

Use of Estimates

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

Other

Under the Trust’s organizational documents, its officers and trustees are indemnified against certain liabilities arising out of the performance of their duties to the Trust. In the normal course of business, the Trust enters into contracts that provide indemnification to the other party or parties against potential costs or liabilities.

14

American Beacon Garcia Hamilton Quality Bond Fund^SM

Notes to Financial Statements

October 31, 2018

The Trust’s maximum exposure under these arrangements is dependent on claims that may be made in the future and, therefore, cannot be estimated. The Trust has had no prior claims or losses pursuant to any such agreement.

2.  Transactions with Affiliates

Management and Investment Sub-Advisory Agreements

The Fund and the Manager are parties to a Management Agreement that obligates the Manager to provide the Fund with investment advisory and administrative services. As compensation for performing the duties under the Management Agreement, the Manager will receive an annualized management fee based on a percentage of the Fund’s average daily net assets that is calculated and accrued daily according to the following schedule:

First $5 billion	0.35	%
Next $5 billion	0.325	%
Next $10 billion	0.30	%
Over $20 billion	0.275	%

The Trust, on behalf of the Fund, and the Manager have entered into an Investment Advisory Agreement with Garcia Hamilton & Associates, L.P. (the “Sub-Advisor”) pursuant to which the Fund has agreed to pay an annualized sub-advisory fee that is calculated and accrued daily based on the Fund’s average daily net assets according to the following schedule:

First $1 billion	0.20	%
Over $1 billion	0.15	%

The Management and Sub-Advisory Fees paid by the Fund for the year ended October 31, 2018 were as follows:

	Effective Fee Rate			Amount of Fees Paid
Management Fees		0.35	%	$	625,499
Sub-Advisor Fees		0.20	%		358,428
Total		0.55	%	$	983,927

Distribution Plans

The Fund has 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 Fund for distribution purposes. However, the Plan authorizes the management fee received by the Manager and the investment advisors hired by the Manager to be used for distribution purposes. Under this Plan, the Fund does not intend to compensate the Manager or any other party, either directly or indirectly, for the distribution of Fund shares.

Service Plans

The Manager and the Trust entered into a Service Plan that obligates the Manager to oversee additional shareholder servicing of the Investor Class of the Fund. As compensation for performing the duties required under the Service Plan, the Manager receives an annualized fee up to 0.375% of the average daily net assets of the Investor Class of the Fund.

Sub-Transfer Agent Fees

The Manager has entered into agreements, which include servicing agreements, with financial intermediaries that provide recordkeeping, processing, shareholder communications and other services to customers of the intermediaries that hold positions in the Institutional and Y Classes of the Fund and has agreed to compensate the intermediaries for providing these services. Intermediaries transact with the Fund primarily through the use of omnibus accounts on behalf of its customers who hold positions in the Fund. Certain services would have been provided by the Fund’s transfer agent and other service providers if the shareholders’ accounts

15

American Beacon Garcia Hamilton Quality Bond Fund^SM

Notes to Financial Statements

October 31, 2018

were maintained directly by the Fund’s transfer agent. Accordingly, the Fund, pursuant to Board approval, has agreed to reimburse the Manager for certain non-distribution shareholder services provided by financial intermediaries for the Institutional and Y Classes. The reimbursement amounts (sub-transfer agent fees) paid to the Manager are subject to a fee limit of up to 0.10% of an intermediary’s average net assets in the Institutional and Y Classes on an annual basis. During the year ended October 31, 2018, the sub-transfer agent fees, as reflected in “Transfer agent fees” on the Statement of Operations, were as follows:

Fund	Sub-Transfer Agent Fees
Garcia Hamilton Quality Bond	$	67,531

As of October 31, 2018, the Fund owed the Manager the following reimbursement of sub-transfer agent fees, as reflected in “Transfer agent fees payable” on the Statement of Assets and Liabilities:

Fund	Reimbursement Sub-Transfer Agent Fees
Garcia Hamilton Quality Bond	$	8,127

Investments in Affiliated Funds

The Fund may invest in the American Beacon U.S. Government Money Market Select Fund (the “USG Select Fund”). Cash collateral received by the Fund in connection with securities lending may also be invested in the USG Select Fund. The Fund and the USG Select Fund have the same investment advisor and therefore, are considered to be affiliated. The Manager serves as investment advisor to the USG Select Fund and receives management fees and administrative fees totaling 0.10% of the average daily net assets of the USG Select Fund. During the year ended October 31, 2018, the Manager earned fees on the Fund’s direct investments in the USG Select Fund as shown below:

Fund	Direct Investments in USG Select Fund
Garcia Hamilton Quality Bond	$	8,335

Interfund Credit Facility

Pursuant to an exemptive order issued by the SEC, the Fund, along with other registered investment companies having management contracts with the Manager, may participate in a credit facility whereby each fund, under certain conditions, is permitted to lend money directly to and borrow directly from other participating funds for temporary purposes. The interfund credit facility is advantageous to the fund because it provides added liquidity, and eliminates the need to maintain higher cash balances to meet redemptions. This situation could arise when shareholder redemptions exceed anticipated volumes and certain funds have insufficient cash on hand to satisfy such redemptions or when sales of securities do not settle as expected, resulting in a cash shortfall for a fund. When a fund liquidates portfolio securities to meet redemption requests, they often do not receive payment in settlement for up to two days (or longer for certain foreign transactions). Redemption requests normally are satisfied on the next business day. The credit facility provides a source of immediate, short-term liquidity pending settlement of the sale of portfolio securities. The credit facility is administered by a credit facility team consisting of professionals from the Manager’s asset management, compliance, and accounting areas who report the activities of the credit facility to the Board. During the year ended October 31, 2018, the Fund did not utilize the credit facility.

16

American Beacon Garcia Hamilton Quality Bond Fund^SM

Notes to Financial Statements

October 31, 2018

Expense Reimbursement Plan

The Manager contractually agreed to reduce fees and/or reimburse expenses for the classes of the Fund to the extent that total operating expenses exceed the Fund’s expense cap. During the year ended October 31, 2018, the Manager waived and/or reimbursed expenses as follows:

		Expense Cap							Expiration of Reimbursed Expenses
Fund	Class	11/1/2017 - 10/31/2018			Reimbursed Expenses		(Recouped) Expenses
Garcia Hamilton Quality Bond	Institutional		0.45	%	$	395,844	$	–		2021
Garcia Hamilton Quality Bond	Y		0.55	%		6,229		–		2021
Garcia Hamilton Quality Bond	Investor		0.83	%		8,874		–		2021

Of these amounts, $57,088 was disclosed as a receivable from the Manager on the Statement of Assets and Liabilities at October 31, 2018.

The Fund has adopted an Expense Reimbursement Plan whereby the Manager may seek repayment of such fee reductions and expense reimbursements. Under the policy, the Manager can be reimbursed by the Fund for any contractual or voluntary fee reductions or expense reimbursements if reimbursement to the Manager (a) occurs within three years after the Manager’s own waiver or reimbursement and (b) does not cause the Fund’s annual operating expenses to exceed the lesser of the contractual percentage limit in effect at the time of the waiver/reimbursement or time of recoupment. The reimbursed expenses listed above will expire in 2021. The Fund did not record a liability for potential reimbursement due to the current assessment that a reimbursement is unlikely. The carryover of excess expenses potentially reimbursable to the Manager, but not recorded as a liability are as follows:

Fund	Recouped Expenses		Excess Expense Carryover		Expired Expense Carryover		Expiration of Reimbursed Expenses
Garcia Hamilton Quality Bond	$	–	$	248,391	$	–		2019
Garcia Hamilton Quality Bond		–		334,782		–		2020

The Distributor

Effective March 1, 2018, Resolute Investment Distributors, Inc. (“RID” or “Distributor”) replaced Foreside Fund Services, LLC (“Foreside”) as the Fund’s distributor and principal underwriter of the Fund’s shares.

RID is a registered broker-dealer and is a member of the Financial Industry Regulatory Authority, Inc. (“FINRA”). The Distributor is affiliated with the Manager through common ownership. Under a Distribution Agreement with the Trust, the Distributor acts as the distributor and principal underwriter of the Trust in connection with the continuous offering of shares of the Fund. The Distributor continually distributes shares of the Fund on a best efforts basis. The Distributor has no obligation to sell any specific quantity of the Fund’s shares.

Prior to March 1, 2018, Foreside served as the distributor and principal underwriter of the Fund’s shares. Pursuant to a Sub-Administration Agreement between Foreside and the Manager in effect through February 28, 2018, Foreside received a fee from the Manager for providing administrative services in connection with the marketing and distribution of shares of the Trust, including the registration of Manager employees as registered representatives of Foreside to facilitate distribution of Fund shares. Foreside also received a fee from the Manager under a Marketing Agreement pursuant to which Foreside provided services in connection with the marketing of a Fund to institutional investors.

17

American Beacon Garcia Hamilton Quality Bond Fund^SM

Notes to Financial Statements

October 31, 2018

Trustee Fees and Expenses

As compensation for their service to the Trust, American Beacon Select Funds, American Beacon Institutional Funds Trust, American Beacon Sound Point Enhanced Income Fund, and American Beacon Apollo Total Return Fund, each Trustee receives an annual retainer of $120,000, plus $10,000 for each Board meeting attended in person or via teleconference, $2,500 for attendance by Committee members at meetings of the Audit Committee and the Investment Committee, and $1,500 for attendance by Committee members at meetings of the Nominating and Governance Committee, plus reimbursement of reasonable expenses incurred in attending Board meetings, Committee meetings, and relevant educational seminars. The Trustees also may be compensated for attendance at special Board and/or Committee meetings from time to time. The Board Chairman receives an additional annual retainer of $50,000 as well as a $2,500 fee each quarter for his attendance at the committee meetings. Effective January 1, 2018, the Board Vice Chair receives an additional annual retainer of $10,000. The Chairpersons of the Audit Committee and the Investment Committee each receive an additional annual retainer of $25,000 and the Chairman of the Nominating and Governance Committee receives an additional annual retainer of $10,000. These expenses are allocated on a prorated basis to each Fund of the Trusts according to its respective net assets.

3.  Security Valuation and Fair Value Measurements

The price of the Fund’s shares is based on the Fund’s Net Asset Value (“NAV”). The NAV of the Fund, or each of its share classes, as applicable, is determined by dividing the total value of portfolio investments and other assets, less any liabilities attributable to the Fund or class, by the total number of shares outstanding of the Fund or class.

Investments are valued at the close of the New York Stock Exchange (the “Exchange”), normally at 4:00 p.m. Eastern Time, each day that the Exchange is open for business.

Debt securities normally are valued on the basis of prices provided by an independent pricing service and may take into account appropriate factors such 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 open-end mutual funds are valued at the closing NAV per share of the mutual fund on the day of valuation.

Securities for which the market prices are not readily available or are not reflective of the fair value of the security, as determined by the Manager, will be priced at fair value following procedures approved by the Board.

Other investments, including restricted securities and those financial instruments for which the above valuation procedures are inappropriate or are deemed not to reflect fair value, are stated at fair value, as determined in good faith by the Manager’s Valuation Committee, pursuant to procedures established by the Board.

Valuation Inputs

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

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

18

American Beacon Garcia Hamilton Quality Bond Fund^SM

Notes to Financial Statements

October 31, 2018

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.

Mortgage-related and asset-backed securities (“ABS”) are usually issued as separate tranches, or classes, of securities within each deal. These securities are also normally valued by pricing service providers that use broker-dealer quotations or valuation estimates from their internal pricing models. The pricing models for these securities usually consider tranche-level attributes, current market data, estimated cash flows, and market-based yield spreads for each tranche, and incorporates deal collateral performance, as available. Mortgage-related and asset-backed securities that use similar valuation techniques and inputs as described above are 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.

4.  Securities and Other Investments

Agency Mortgage-Backed Securities

Certain mortgage-backed securities (“MBS”) may be issued or guaranteed by the U.S. government or a government sponsored entity, such as the Federal National Mortgage Association (“Fannie Mae”) or the Federal Home Loan Mortgage Corporation (“Freddie Mac”). Although these instruments may be guaranteed by the U.S. government or a government sponsored entity, many such MBS are not backed by the full faith and credit of the United States and are still exposed to the risk of non-payment.

Fixed-Income Investments

The Fund may hold debt, including government and corporate debt, and other fixed-income securities. Typically, the values of fixed-income securities change inversely with prevailing interest rates. Therefore, a fundamental risk of fixed-income securities is interest rate risk, which is the risk that their value will generally decline as prevailing interest rates rise, which may cause the Fund’s net asset value to likewise decrease, and vice versa. How specific fixed-income securities may react to changes in interest rates will depend on the specific characteristics of each security. For example, while securities with longer maturities tend to produce higher yields, they also tend to be more sensitive to changes in prevailing interest rates and are, therefore, more volatile than shorter-term securities and are subject to greater market fluctuations as a result of changes in interest rates. Fixed-income securities are also subject to credit risk, which is the risk that the credit strength of an issuer of a fixed-income security will weaken and/or that the issuer will be unable to make timely principal and interest payments and that the security may go into default. In addition, there is prepayment risk, which is the risk that during periods of falling interest rates, certain fixed-income securities with higher interest rates, such as mortgage- and asset-backed securities, may be prepaid by their issuers thereby reducing the amount of interest payments. This may result in a Fund having to reinvest its proceeds in lower yielding securities. Securities underlying mortgage- and asset-backed securities, which may include subprime mortgages, also may be subject to a higher degree of credit risk, valuation risk, and liquidity risk.

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American Beacon Garcia Hamilton Quality Bond Fund^SM

Notes to Financial Statements

October 31, 2018

Mortgage-Backed Securities

MBS often have stated maturities of up to thirty years when they are issued, depending upon the length of the mortgages underlying the securities. In practice however, unscheduled or early payments of principal and interest on the underlying mortgages may make the securities’ effective maturity shorter than this, and the prevailing interest rates may be higher or lower than the current yield of the Fund’s portfolio at the time resulting in reinvestment risk.

Rising or high interest rates may result in slower than expected principal payments which may tend to extend the duration of MBS, making them more volatile and more sensitive to changes in interest rates. This is known as extension risk.

MBS may have less potential for capital appreciation than comparable fixed-income securities due to the likelihood of increased prepayments of mortgages resulting from foreclosures or declining interest rates. These foreclosed or refinanced mortgages are paid off at face value (par) or less, causing a loss, particularly for any investor who may have purchased the security at a premium or a price above par. In such an environment, this risk limits the potential price appreciation of these securities.

Mortgage-Related and Other Asset-Backed Securities

The Fund may invest in mortgage or other ABS. These securities may include mortgage instruments issued by U.S. government agencies (“agency mortgages”) or those issued by private entities (“non-agency mortgages”). Specific types of instruments may include mortgage pass-through securities, collateralized mortgage obligations (“CMOs”), commercial mortgage-backed securities, mortgage dollar rolls, CMO residuals, stripped mortgage-backed securities and other securities that directly or indirectly represent a participation in, or are secured by a payable from, mortgage loans on real property. The value of the Fund’s MBS may be affected by, among other things, changes or perceived changes in interest rates, factors concerning the interests in and structure of the issuer or the originator of the mortgage, or the quality of the underlying assets. The mortgages underlying the securities may default or decline in quality or value. Through its investments in MBS, a Fund has exposure to subprime loans, Alt-A loans and non-conforming loans as well as to the mortgage and credit markets generally. Underlying collateral related to subprime, Alt-A and non-conforming mortgage loans has become increasingly susceptible to defaults and declines in quality or value, especially in a declining residential real estate market. In addition, regulatory or tax changes may adversely affect the mortgage securities markets as a whole.

Other Investment Company Securities and Other Exchange-Traded Products

The Fund may invest in shares of other investment companies, including open-end funds, closed-end funds, business development companies, ETFs, unit investment trusts, and other investment companies of the Trust. The Fund may invest in investment company securities advised by the Manager or a sub-advisor. Investments in the securities of other investment companies may involve duplication of advisory fees and certain other expenses. By investing in another investment company, the Fund becomes a shareholder of that investment company. As a result, the Fund’s shareholders indirectly will bear the Fund’s proportionate share of the fees and expenses paid by shareholders of the other investment company, in addition to the fees and expenses the Fund’s shareholders directly bear in connection with the Fund’s own operations. These other fees and expenses are reflected as Acquired Fund Fees and Expenses and are included in the Fees and Expenses Table for the Fund in its Prospectus, if applicable. Investments in other investment companies may involve the payment of substantial premiums above the value of such issuer’s portfolio securities.

U.S. Government Agency Securities

U.S. Government agency securities are issued or guaranteed by the U.S. Government or its agencies or instrumentalities. Some obligations issued by U.S. Government agencies and instrumentalities are supported by the

20

American Beacon Garcia Hamilton Quality Bond Fund^SM

Notes to Financial Statements

October 31, 2018

full faith and credit of the U.S. Treasury; others by the right of the issuer to borrow from the U.S. Treasury; others by discretionary authority of the U.S. Government to purchase certain obligations of the agency or instrumentality; and others only by the credit of the agency or instrumentality. U.S. Government securities bear fixed, floating or variable rates of interest. While the U.S. Government currently provides financial support to certain U.S. Government-sponsored agencies or instrumentalities, no assurance can be given that it will always do so, since it is not so obligated by law. U.S. Government securities include U.S. Treasury bills, notes and bonds, Federal Home Loan Bank (“FHLB”) obligations, Federal Farm Credit Bank (“FFCB”) obligations, U.S. Government agency obligations and repurchase agreements secured thereby. U.S. Government agency securities are subject to credit risk and interest rate risk.

U.S. Treasury Obligations

U.S. Treasury obligations include bills (initial maturities of one year or less), notes (initial maturities between two and ten years), and bonds (initial maturities over ten years) issued by the U.S. Treasury, Separately Traded Registered Interest and Principal component parts of such obligations (known as “STRIPS”) and inflation-indexed securities. The prices of these securities (like all debt securities) change between issuance and maturity in response to fluctuating market interest rates. U.S. Treasury obligations are subject to credit risk and interest rate risk.

5.  Principal Risks

Investing in the Fund may involve certain risks including, but not limited to, those described below.

Credit Risk

The Fund is subject to the risk that the issuer or guarantor of a debt security, or the counterparty to a derivatives contract or a loan, will fail to make timely payment of interest or principal or otherwise honor its obligations or default completely. A decline in the credit rating of an individual security held by a Fund may have an adverse impact on its price and make it difficult for a Fund to sell it. Ratings represent a rating agency’s opinion regarding the quality of the security and are not a guarantee of quality. Rating agencies might not always change their credit rating on an issuer or security in a timely manner to reflect events that could affect the issuer’s ability to make timely payments on its obligations. Credit risk is typically greater for securities with ratings that are below investment grade.

Floating Rate Securities Risk

The coupons on certain fixed income securities in which the Fund may invest are not fixed and may fluctuate based upon changes in market rates. The coupon on a floating rate security is generally based on an interest rate such as a money-market index, London Interbank Offered Rate (“LIBOR”) or a Treasury bill rate. Such securities are subject to interest rate risk and may fluctuate in value in response to interest rate changes if there is a delay between changes in market interest rates and the interest reset date for the obligation, or for other reasons. As short-term interest rates decline, the coupons on floating rate securities typically decrease. Alternatively, during periods of rising interest rates, changes in the coupons of floating rate securities may lag behind changes in market rates or may have limits on the maximum increases in the coupon rates. The value of floating rate securities may decline if their coupons do not rise as much, or as quickly, as interest rates in general. Conversely, floating rate securities will not generally increase in value if interest rates decline. Floating rate obligations are less effective than fixed rate obligations at locking in a particular yield and are subject to credit risk.

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American Beacon Garcia Hamilton Quality Bond Fund^SM

Notes to Financial Statements

October 31, 2018

Interest Rate Risk

Investments in investment-grade and non-investment grade fixed-income securities are subject to interest rate risk. The value of the Fund’s fixed-income investments typically will fall when interest rates rise. The Fund may be particularly sensitive to changes in interest rates if it invests in debt securities with intermediate and long terms to maturity. Debt securities with longer durations tend to be more sensitive to changes in interest rates, usually making them more volatile than debt securities with shorter durations. For example, if a bond has a duration of seven years, a 1% increase in interest rates could be expected to result in a 7% decrease in the value of the bond. Yields of debt securities will fluctuate over time. Following the financial crisis that started in 2008, the Federal Reserve attempted to stabilize the economy and support the economic recovery by keeping the federal funds rate (the interest rate at which depository institutions lend reserve balances to each other overnight) at or near zero percent. The Federal Reserve has raised the federal funds rate several times since December 2015 and has signaled additional increases in the near future. Interest rates may rise significantly and/or rapidly, potentially resulting insubstantial losses to the Fund. During periods of very low or negative interest rates, the Fund may be unable to maintain positive returns. Certain European countries and Japan have recently experienced negative interest rates on deposits and debt securities have traded at negative yields. Negative interest rates may become more prevalent among non-U.S. issuers, and potentially within the United States. Changing interest rates, including rates that fall below zero, may have unpredictable effects on markets, may result in heightened market volatility and may detract from Fund performance to the extent the Fund is exposed to such interest rates.

Investment Risk

An investment in the Fund is not a deposit with a bank and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. When you sell your shares of the Fund, they could be worth less than what you paid for them. Therefore, you may lose money by investing in the Fund.

Liquidity Risk

When there is little or no active trading market for a specific security it can become more difficult to purchase or sell the securities at or near their perceived value. During such periods, certain investments held by the Fund may be difficult to sell or other investments may be difficult to purchase at favorable times or prices. As a result, the Fund may have to lower the price on certain securities that it is trying to sell, sell other securities instead or forgo an investment opportunity, any of which could have a negative effect on Fund management or performance. Redemptions by a few large investors in the Fund at such times may have a significant adverse effect on the Fund’s NAV and remaining Fund shareholders. In addition, the market-making capacity of dealers in certain types of securities has been reduced in recent years, in part as a result of structural and regulatory changes, such as fewer proprietary trading desks and increased regulatory capital requirements for broker-dealers. Further, many broker-dealers have reduced their inventory of certain debt securities. This could negatively affect the Fund’s ability to buy or sell debt securities and increase the related volatility and trading costs. The Fund may lose money if it is forced to sell certain investments at unfavorable prices to meet redemption requests or other cash needs.

Market Risk

Since the financial crisis that started in 2008, the U.S. and many foreign economies continue to experience its after-effects. Conditions in the U.S. and many foreign economies have resulted, and may continue to result, in certain instruments experiencing unusual liquidity issues, increased price volatility and, in some cases, credit downgrades and increased likelihood of default. These events have reduced the willingness and ability of some lenders to extend credit, and have made it more difficult for some borrowers to obtain financing on attractive terms, if at all. In some cases, traditional market participants have been less willing to make a market in some types of debt instruments, which has affected the liquidity of those instruments. During times of market turmoil, investors tend to look to the safety of securities issued or backed by the U.S. Treasury, causing the prices of these securities to rise and the yields to decline. Reduced liquidity in fixed-income and credit markets may negatively

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American Beacon Garcia Hamilton Quality Bond Fund^SM

Notes to Financial Statements

October 31, 2018

affect many issuers worldwide. In addition, global economies and financial markets are becoming increasingly interconnected, which increases the possibilities that conditions in one country or region might adversely impact issuers in a different country or region. A rise in protectionist trade policies, and the possibility of changes to some international trade agreements, could affect the economies of many nations in ways that cannot necessarily be foreseen at the present time.

In response to the financial crisis, the U.S. and other governments and the Federal Reserve and certain foreign central banks have taken steps to support financial markets. In some countries where economic conditions are recovering, they are nevertheless perceived as still fragile. Withdrawal of government support, failure of efforts in response to the crisis, or investor perception that such efforts are not succeeding, could adversely impact the value and liquidity of certain securities. The severity or duration of adverse economic conditions may also be affected by policy changes made by governments or quasi-governmental organizations, including changes in tax laws. The impact of new financial regulation legislation on the markets and the practical implications for market participants may not be fully known for some time. Regulatory changes are causing some financial services companies to exit long-standing lines of business, resulting in dislocations for other market participants. In addition, political and diplomatic events within the U.S. and abroad, such as the U.S. government’s inability at times to agree on a long-term budget and deficit reduction plan, the threat of a federal government shutdown and threats not to increase the federal government’s debt limit, may affect investor and consumer confidence and may adversely impact financial markets and the broader economy, perhaps suddenly and to a significant degree. The U.S. government has recently reduced federal corporate income tax rates, and future legislative, regulatory and policy changes may result in more restrictions on international trade, less stringent prudential regulation of certain players in the financial markets, and significant new investments in infrastructure and national defense. Markets may react strongly to expectations about the changes in these policies, which could increase volatility, especially if the markets’ expectations for changes in government policies are not borne out.

Changes in market conditions will not have the same impact on all types of securities. Interest rates have been unusually low in recent years in the U.S. and abroad. Because there is little precedent for this situation, it is difficult to predict the impact of a significant rate increase on various markets. For example, because investors may buy securities or other investments with borrowed money, a significant increase in interest rates may cause a decline in the markets for those investments. Because of the sharp decline in the worldwide price of oil, there is a concern that oil producing nations may withdraw significant assets now held in U.S. Treasuries, which could force a substantial increase in interest rates. Regulators have expressed concern that rate increases may cause investors to sell fixed income securities faster than the market can absorb them, contributing to price volatility. In addition, there is a risk that the prices of goods and services in the U.S. and many foreign economies may decline over time, known as deflation (the opposite of inflation). Deflation may have an adverse effect on stock prices and creditworthiness and may make defaults on debt more likely. If a country’s economy slips into a deflationary pattern, it could last for a prolonged period and may be difficult to reverse. The precise details and the resulting impact of the United Kingdom’s vote to leave the European Union (the “EU”), commonly referred to as “Brexit,” are not yet known. The effect on the United Kingdom’s economy will likely depend on the nature of trade relations with the EU and other major economies following its exit, which are matters to be negotiated. The outcomes may cause increased volatility and have a significant adverse impact on world financial markets, other international trade agreements, and the United Kingdom and European economies, as well as the broader global economy for some time, which could significantly adversely affect the value of the Fund’s investments in the United Kingdom and Europe.

Mortgage-Backed and Mortgage Related Securities Risk

Investments in mortgage-backed and mortgage-related securities are subject to market risks for fixed-income securities which include, but are not limited to, interest rate risk, credit risk, extension risk and prepayment risk. When mortgages and other obligations are prepaid and when securities are called, a Fund may have to reinvest in securities with a lower yield or fail to recover additional amounts (i.e., premiums) paid for securities with higher interest rates, resulting in an unexpected capital loss and/or a decrease in the amount of dividends and yield.

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American Beacon Garcia Hamilton Quality Bond Fund^SM

Notes to Financial Statements

October 31, 2018

Other Investment Companies Risk

The Fund may invest in shares of other registered investment companies, including ETFs and money market funds that are advised by the Manager. To the extent that the Fund invest in shares of other registered investment companies, the Fund will indirectly bear the fees and expenses charged by those investment companies in addition to the Fund’s direct fees and expenses and will be subject to the risks associated with investments in those companies.

Prepayment Risk

When interest rates fall, borrowers will generally repay the loans that underlie certain debt securities, especially mortgage-related and other types of asset-backed securities, more quickly than expected, causing the issuer of the security to repay the principal prior to the security’s expected maturity date. The Fund may need to reinvest the proceeds at a lower interest rate, reducing its income. Securities subject to prepayment risk generally offer less potential for gains when prevailing interest rates fall. If the Fund buys those securities at a premium, accelerated prepayments on those securities could cause the Fund to lose a portion of its principal investment. The impact of prepayments on the price of a security may be difficult to predict and may increase the security’s price volatility. Interest-only and principal-only securities are especially sensitive to interest rate changes, which can affect not only the prices but can also change the income flows and repayment assumptions about those investments.

Redemption Risk

The Fund may experience periods of heavy redemptions that could cause the Fund to sell assets at inopportune times or at a loss or depressed value. Redemption risk is greater to the extent that one or more investors or intermediaries control a large percentage of investments in the Fund, have short investment horizons, or have unpredictable cash flow needs. A general rise in interest rates has the potential to cause investors to move out of fixed-income securities on a large scale, which may increase redemptions from mutual funds that hold large amounts of fixed-income securities. This, coupled with a reduction in the ability or willingness of dealers and other institutional investors to buy or hold fixed-income securities, may result in decreased liquidity and increased volatility in the fixed-income markets, and heightened redemption risk. Heavy redemptions, whether by a few large investors or many smaller investors, could hurt the Fund’s performance. The sale of assets to meet redemption requests may create net capital gains or losses, which could cause the Fund to have to distribute substantial capital gains.

Sector Risk

Sector risk is the risk associated with the Fund holding a significant amount of investments in similar businesses, which would be similarly affected by particular economic or market events, which may, in certain circumstances, cause the value of the equity and debt securities of companies in a particular sector of the market to change. To the extent the Fund has substantial holdings within a particular sector, the risks to the Fund associated with that sector increase.

U.S. Government Securities and Government-Sponsored Enterprises Risk

A security backed by the U.S. Treasury or the full faith and credit of the United States is guaranteed by the applicable entity only as to the timely payment of interest and principal when held to maturity. The market prices for such securities are not guaranteed and will fluctuate. Securities held by the Fund that are issued by government-sponsored enterprises, such as the Fannie Mae, Freddie Mac, FHLB, FFCB, and the Tennessee Valley Authority are not guaranteed by the U.S. Treasury and are not backed by the full faith and credit of the U.S. Government and no assurance can be given that the U.S. Government will provide financial support if these organizations do not have the funds to meet future payment obligations. U.S. Government securities and securities of government sponsored entities are also subject to credit risk, interest rate risk and market risk.

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American Beacon Garcia Hamilton Quality Bond Fund^SM

Notes to Financial Statements

October 31, 2018

6.  Federal Income and Excise Taxes

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

The Fund does not have any unrecorded tax liabilities in the accompanying financial statements. Each of the tax years in the three year period ended October 31, 2018 remain subject to examination by the Internal Revenue Service. If applicable, the Fund recognizes interest accrued related to unrecognized tax benefits in interest expense and penalties in “Other expenses” on the Statement of Operations.

The Fund may be subject to taxes imposed by countries in which it invests. Such taxes are generally based on returns of income earned or gains realized or repatriated. Taxes are accrued and applied to net investment income, net realized capital gains and net unrealized appreciation (depreciation), as applicable, as the income is earned or capital gains are recorded.

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

The tax character of distributions paid were as follows:

	Year Ended October 31, 2018		Year Ended October 31, 2017
Distributions paid from:
Ordinary income*
Institutional Class	$	3,305,504	$	2,052,674
Y Class		59,124		45,543
Investor Class		165,821		110,914
Total distributions paid	$	3,530,449	$	2,209,131

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

As of October 31, 2018 the components of distributable earnings (deficits) on a tax basis were as follows:

Fund	Tax Cost		Unrealized Appreciation		Unrealized (Depreciation)			Net Unrealized Appreciation (Depreciation)
Garcia Hamilton Quality Bond	$	250,302,965	$	234,693	$	(2,163,121	)	$	(1,928,428	)

Fund	Net Unrealized Appreciation (Depreciation)			Undistributed Ordinary Income		Undistributed Long-Term Capital Gains		Accumulated Capital and Other (Losses)			Other Temporary Differences			Distributable Earnings
Garcia Hamilton Quality Bond	$	(1,928,428	)	$	115,877	$	–	$	(3,092,049	)	$	(115,869	)	$	(5,020,469	)

Financial reporting records are adjusted for permanent book/tax differences to reflect tax character. Financial records are not adjusted for temporary differences. The temporary differences between financial reporting and tax-basis reporting of unrealized appreciation (depreciation) are attributable primarily to the tax deferral of losses from wash sales and dividends payable.

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.

As of October 31, 2018, the Fund had no permanent differences.

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American Beacon Garcia Hamilton Quality Bond Fund^SM

Notes to Financial Statements

October 31, 2018

Under the Regulated Investment Company Modernization Act of 2010 (“RIC MOD”), net capital losses recognized by the Fund in taxable years beginning after December 22, 2010 are carried forward indefinitely and retain their character as short-term and/or long-term losses.

As of October 31, 2018, the Fund had the following capital loss carryforwards:

Fund	Short-Term Capital Loss Carryforwards		Long-Term Capital Loss Carryforwards
Garcia Hamilton Quality Bond	$	1,967,308	$	1,124,741

7.  Investment Transactions

The aggregate cost of purchases and proceeds from sales and maturities of investments, other than short-term obligations, for the year ended October 31, 2018 were as follows:

Fund	Purchases (non-U.S. Government Securities)		Purchases of U.S. Government Securities		Sales (non-U.S. Government Securities)		Sales of U.S. Government Securities
Garcia Hamilton Quality Bond	$	147,555,712	$	178,054,593	$	159,320,428	$	83,259,535

A summary of the Fund’s transactions in the USG Select Fund for the year ended October 31, 2018 were as follows:

Fund	Type of Transaction		October 31, 2017 Shares/Fair Value		Purchases		Sales		October 31, 2018 Shares/Fair Value		Dividend Income
Garcia Hamilton Quality Bond		Direct	$	1,557,790	$	265,623,687	$	239,963,037	$	27,218,440	$	145,360

8.  Borrowing Arrangements

Effective November 16, 2017, the Fund, along with certain other funds managed by the Manager (“Participating Funds”), entered into a committed revolving line of credit (the “Committed Line”) agreement with State Street Bank and Trust Company (the “Bank”) to be used to facilitate portfolio liquidity. The maximum borrowing amount under the Committed Line is $50 million with interest at a rate equal to the higher of (a) one-month London Inter-Bank Offered Rate (“LIBOR”) plus 1.25% per annum or (b) the Federal Funds rate plus 1.25% per annum on amounts borrowed. Each of the Participating Funds will pay a commitment fee at a rate of 0.25% per annum on the unused portion of the Committed Line amount. The Committed Line expires November 15, 2018, unless extended by the Bank or terminated by the Participating Funds in accordance with the agreement.

Effective November 16, 2017, the Fund, along with certain other Participating Funds managed by the Manager, entered into an uncommitted discretionary demand revolving line of credit (the “Uncommitted Line”) agreement with the Bank to be used to facilitate portfolio liquidity. The maximum borrowing amount under the Uncommitted Line is $50 million with interest at a rate equal to the higher of (a) one-month LIBOR plus 1.25% per annum or (b) the Federal Funds rate. The Uncommitted Line expires November 15, 2018 unless extended by the Bank or terminated by the Participating Funds in accordance with the agreement.

The Participating Funds paid administration, legal and arrangement fees, which are recognized as a component of “Other expenses” on the Statement of Operations, along with commitment fees, that have been allocated among the Participating Funds based on average daily net assets.

During the year ended October 31, 2018, the Fund did not utilize this facility.

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American Beacon Garcia Hamilton Quality Bond Fund^SM

Notes to Financial Statements

October 31, 2018

9.  Capital Share Transactions

The tables below summarize the activity in capital shares for each Class of the Fund:

	Institutional Class
	Year Ended October 31,
	2018						2017
Garcia Hamilton Quality Bond Fund	Shares			Amount			Shares			Amount
Shares sold		12,598,631		$	124,573,816			2,836,854		$	27,939,755
Reinvestment of dividends		287,808			2,842,265			207,980			2,050,230
Shares redeemed		(2,278,673	)		(22,493,423	)		(2,086,333	)		(20,542,888	)
Net increase in shares outstanding		10,607,766		$	104,922,658			958,501		$	9,447,097
	Y Class
	Year Ended October 31,
	2018						2017
Garcia Hamilton Quality Bond Fund	Shares			Amount			Shares			Amount
Shares sold		77,645		$	766,204			28,621		$	283,135
Reinvestment of dividends		5,845			57,695			4,616			45,481
Shares redeemed		(23,305	)		(230,768	)		(44,015	)		(430,968	)
Net increase (decrease) in shares outstanding		60,185		$	593,131			(10,778	)	$	(102,352	)
	Investor Class
	Year Ended October 31,
	2018						2017
Garcia Hamilton Quality Bond Fund	Shares			Amount			Shares			Amount
Shares sold		273,789		$	2,702,704			249,891		$	2,460,626
Reinvestment of dividends		16,784			165,797			11,248			110,905
Shares redeemed		(149,158	)		(1,472,508	)		(140,498	)		(1,386,156	)
Net increase in shares outstanding		141,415		$	1,395,993			120,641		$	1,185,375

10.  Subsequent Events

Effective November 15, 2018, the Fund, along with certain other funds managed by the Manager, entered into a committed revolving line of credit with a max borrowing amount of $250 million.

Management has evaluated additional subsequent events for possible recognition or disclosure in the financial statements through the date the financial statements are issued. Management has determined that there are no material events that would require disclosure in the Fund’s financial statements through this date.

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American Beacon Garcia Hamilton Quality Bond Fund^SM

Financial Highlights

(For a share outstanding throughout the period)

	Institutional Class
	Year Ended October 31,						April 4, 2016A to October 31, 2016
	2018			2017
Net asset value, beginning of period	$	9.91		$	9.98		$	10.00
Income (loss) from investment operations:
Net investment income		0.20			0.14			0.05
Net (losses) on investments (both realized and unrealized)		(0.13	)		(0.05	)		(0.02	)
Total income from investment operations		0.07			0.09			0.03
Less distributions:
Dividends from net investment income		(0.19	)		(0.15	)		(0.05	)
Distributions from net realized gains		–			(0.01	)		–
Total distributions		(0.19	)		(0.16	)		(0.05	)
Net asset value, end of period	$	9.79		$	9.91		$	9.98
Total returnB		0.74	%		0.91	%		0.34	%C
Ratios and supplemental data:
Net assets, end of period	$	234,919,975		$	132,575,412		$	124,032,604
Ratios to average net assets:
Expenses, before reimbursements		0.69	%		0.70	%		1.06	%D
Expenses, net of reimbursements		0.45	%		0.45	%		0.45	%D
Net investment income, before expense reimbursements		1.68	%		1.12	%		0.29	%D
Net investment income, net of reimbursements		1.92	%		1.37	%		0.91	%D
Portfolio turnover rate		143	%		52	%		40	%E

^A  Commencement of operations.

^B  Based on net asset value, which does not reflect the sales charge, redemption fee, or contingent deferred sales charge, if applicable. May include adjustments in accordance with U.S. GAAP and as such, the net asset value for reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions.

^C  Not annualized.

^D  Annualized.

^E  Portfolio turnover rate is for the period from April 4, 2016 through October 31, 2016 and is not annualized.

See accompanying notes

28

American Beacon Garcia Hamilton Quality Bond Fund^SM

Financial Highlights

(For a share outstanding throughout the period)

	Y Class
	Year Ended October 31,						April 4, 2016A to October 31, 2016
	2018			2017
Net asset value, beginning of period	$	9.90		$	9.98		$	10.00
Income (loss) from investment operations:
Net investment income		0.18			0.13			0.05
Net (losses) on investments (both realized and unrealized)		(0.11	)		(0.06	)		(0.02	)
Total income from investment operations		0.07			0.07			0.03
Less distributions:
Dividends from net investment income		(0.18	)		(0.14	)		(0.05	)
Distributions from net realized gains		–			(0.01	)		–
Total distributions		(0.18	)		(0.15	)		(0.05	)
Net asset value, end of period	$	9.79		$	9.90		$	9.98
Total returnB		0.74	%		0.71	%		0.29	%C
Ratios and supplemental data:
Net assets, end of period	$	3,685,857		$	3,133,476		$	3,265,315
Ratios to average net assets:
Expenses, before reimbursements		0.75	%		0.77	%		1.29	%D
Expenses, net of reimbursements		0.55	%		0.55	%		0.55	%D
Net investment income, before expense reimbursements		1.58	%		1.05	%		0.11	%D
Net investment income, net of reimbursements		1.78	%		1.27	%		0.85	%D
Portfolio turnover rate		143	%		52	%		40	%E

^A  Commencement of operations.

^B  Based on net asset value, which does not reflect the sales charge, redemption fee, or contingent deferred sales charge, if applicable. May include adjustments in accordance with U.S. GAAP and as such, the net asset value for reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions.

^C  Not annualized.

^D  Annualized.

^E  Portfolio turnover rate is for the period from April 4, 2016 through October 31, 2016 and is not annualized.

See accompanying notes

29

American Beacon Garcia Hamilton Quality Bond Fund^SM

Financial Highlights

(For a share outstanding throughout the period)

	Investor Class
	Year Ended October 31,						April 4, 2016A to October 31, 2016
	2018			2017
Net asset value, beginning of period	$	9.91		$	9.99		$	10.00
Income (loss) from investment operations:
Net investment income		0.15			0.10			0.03
Net (losses) on investments (both realized and unrealized)		(0.11	)		(0.06	)		(0.01	)
Total income from investment operations		0.04			0.04			0.02
Less distributions:
Dividends from net investment income		(0.16	)		(0.11	)		(0.03	)
Distributions from net realized gains		–			(0.01	)		–
Total distributions		(0.16	)		(0.12	)		(0.03	)
Net asset value, end of period	$	9.79		$	9.91		$	9.99
Total returnB		0.36	%		0.43	%		0.24	%C
Ratios and supplemental data:
Net assets, end of period	$	10,995,242		$	9,724,030		$	8,594,617
Ratios to average net assets:
Expenses, before reimbursements		0.92	%		0.94	%		1.19	%D
Expenses, net of reimbursements		0.83	%		0.83	%		0.83	%D
Net investment income, before expense reimbursements		1.41	%		0.89	%		0.21	%D
Net investment income, net of reimbursements		1.50	%		0.99	%		0.57	%D
Portfolio turnover rate		143	%		52	%		40	%E

^A  Commencement of operations.

^B  Based on net asset value, which does not reflect the sales charge, redemption fee, or contingent deferred sales charge, if applicable. May include adjustments in accordance with U.S. GAAP and as such, the net asset value for reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions.

^C  Not annualized.

^D  Annualized.

^E  Portfolio turnover rate is for the period from April 4, 2016 through October 31, 2016 and is not annualized.

See accompanying notes

30

American Beacon Funds^SM

Federal Tax Information

October 31, 2018 (Unaudited)

Certain tax information regarding the Funds are required to be provided to shareholders based upon the Fund’s income and distributions for the taxable year ended October 31, 2018. The information and distributions reported herein may differ from information and distributions taxable to the shareholders for the calendar year ended December 31, 2018.

The Fund designated the following items with regard to distributions paid during the fiscal year ended October 31, 2018. 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.

Corporate Dividends-Received Deduction:

Garcia Hamilton Quality Bond - % 

Qualified Dividend Income:

Garcia Hamilton Quality Bond - % 

Long-Term Capital Gain Distributions:

Garcia Hamilton Quality Bond $         -        

Short-Term Capital Gain Distributions:

Garcia Hamilton Quality Bond $         -        

Shareholders will receive notification in January 2019 of the applicable tax information necessary to prepare their 2018 income tax returns.

31

Disclosure Regarding Approval of the Management and Investment Advisory Agreements (Unaudited)

Renewal and Approval of Management Agreement and Investment Advisory Agreement

At in-person meetings held on May 18, 2018 and June 5-6, 2018 (collectively, the “Meetings”), the Board of Trustees (“Board” or “Trustees”) considered and then, at its June 6, 2018 meeting, approved the renewal of:

(1) the Management Agreement between American Beacon Advisors, Inc. (“Manager”) and the American Beacon Funds (“Trust”), on behalf of the American Beacon Garcia Hamilton Quality Bond Fund (“Fund”); and

(2) the Investment Advisory Agreement among the Manager, the Trust, on behalf of the Fund, and Garcia Hamilton & Associates, LP (the “subadvisor”).

The Management Agreement and the Investment Advisory Agreement are collectively referred to herein as the “Agreements.” In preparation for its consideration of the renewal of the Agreements, the Board undertook steps to gather and consider information furnished by, or derived from, the Manager, the subadvisor, Broadridge, Inc. (“Broadridge”) and Morningstar, Inc. (“Morningstar”). The Board, with the assistance of independent legal counsel, requested and received certain relevant information from the Manager and the subadvisor.

In advance of the Meetings, the Board’s Investment Committee and/or the Manager coordinated the production of information from Broadridge regarding the performance, fees and expenses of the Fund as well as information from the Manager and the subadvisor. At the Meetings, the Board considered the information provided. Further, the Board took into consideration information furnished to the Board throughout the year at regular meetings of the Board and its committees, as well as information specifically prepared in connection with the renewal process.

In connection with the Board’s consideration of the Agreements, the Trustees received and evaluated such information as they deemed necessary. The information requested on behalf of the Board included, among other information, the following materials. References herein to the “firm” refer to the Manager and/or the subadvisor.

• comparisons of the performance of an appropriate share class of the Fund to comparable investment companies and appropriate benchmark indices, including peer group averages and performance analyses from Broadridge, and to the performance of any similar accounts or a composite of similar accounts, as applicable, managed by the firm;

• comparisons of the Fund’s management and subadvisory fee rates and expense ratio with the management fee rates paid by comparable mutual funds and their expense ratios, including peer group averages and fee and expense analyses from Broadridge, and the advisory fee rates charged to other clients for which similar services are provided by a firm;

• a description of any applicable fee waivers and/or expense reimbursements in place for the Fund during the past year, and any proposed changes to the expense limitation arrangements;

• the Manager’s profitability with respect to the services that it provided to the Fund;

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

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

• information regarding administrative, accounting-related and cash management services that the Manager provides to the Fund and the fees that the Manager receives for such services; and

• information regarding a firm’s financial condition, the personnel of the Manager who are assigned primary responsibility for managing the Fund, staffing levels, portfolio managers’ compensation, insurance coverage, material pending litigation, code of ethics, compliance matters, actual or potential conflicts of interest that the firm experiences, or anticipates that it will experience, in providing services to the Fund, and the Manager’s disaster recovery plans.

32

Disclosure Regarding Approval of the Management and Investment Advisory Agreements (Unaudited)

The Board noted that the Manager provides management and administrative services to the Fund pursuant to the Management Agreement. The Board considered that many mutual funds have separate contracts governing each type of service and observed that, with respect to such mutual funds, the actual management fee rates provided by Broadridge for peer group funds reflect the combined advisory and administrative expenses, reduced by any fee waivers and/or reimbursements.

A firm may not have been able to, or opted not to, provide information in response to certain information requests, in which case the Board conducted its evaluation of the firm based on information that was provided. In such cases, the Board determined that the omission of any such information was not material to its considerations. The class of shares used for comparative performance purposes was the share class with the lowest expenses available for purchase by the general public, which was the Institutional Class. The Board also considered that the use of Institutional Class performance generally facilitates a meaningful comparison for expense and performance purposes.

Provided below is an overview of certain factors the Board considered in connection with its renewal and approval of the 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 investment advisory contracts, such as the Agreements. The memorandum explained the regulatory requirements surrounding the Trustees’ process for evaluating investment advisors and the terms of investment advisory contracts. Based on its evaluation, the Board unanimously concluded that the terms of each Agreement were reasonable and fair and that the renewal and approval of each Agreement was in the best interests of the Fund and its shareholders.

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

In determining whether to renew the Agreements, the Trustees considered the best interests of the Fund. While the Management Agreement and the Investment Advisory Agreement for the Fund were considered at the Meetings, the Board considered the 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 the Fund; (3) the costs incurred by the Manager in rendering services to the Fund and its resulting profits or losses; (4) comparisons of services and fee rates with contracts entered into by the Manager or the subadvisor or their affiliates with other clients (such as pension funds and other institutional clients); (5) the extent to which economies of scale, if any, have been taken into account in setting each fee rate schedule; (6) whether fee rate levels reflect economies of scale, if any, for the benefit of Fund investors; and (7) any other benefits derived or anticipated to be derived by the Manager or the subadvisor from their relationships with the Fund.

Nature, Extent and Quality of Services. With respect to the renewal of the Management Agreement, the Board considered, among other factors: the Fund’s performance since its inception on April 4, 2016; the length of service of key investment personnel at the Manager; the cost structure of the Fund; the Manager’s culture of compliance and support that reduce risks to the Fund; the Manager’s quality of services; the Manager’s active role in monitoring and, as appropriate, recommending additional or replacement subadvisor; and the Manager’s efforts to retain key employees and maintain staffing levels.

With respect to the renewal of the Investment Advisory Agreement, the Board considered the level of staffing and the size of the subadvisor. The Board also considered the adequacy of the resources committed to the Fund by the subadvisor, and whether those resources were commensurate with the needs of the Fund and are sufficient to sustain appropriate levels of performance and compliance needs. In this regard, the Board considered the financial stability of the subadvisor. The Board also considered the subadvisor’s representations regarding their

33

Disclosure Regarding Approval of the Management and Investment Advisory Agreements (Unaudited)

compliance program 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 the subadvisor were appropriate for the Fund.

Investment Performance. The Board evaluated the comparative information provided by Broadridge and the Manager regarding the performance of the Fund relative to its Broadridge performance universe, Morningstar Category, and benchmark indices, as well as the Fund’s Morningstar rating. The Board considered the information provided by Broadridge regarding Broadridge’s independent methodology for selecting the Fund’s Broadridge performance universe. The Board also considered that the performance universes selected by Broadridge may not provide appropriate comparisons for the Fund. In addition, the Board considered the performance reports and discussions with management at Board and Committee meetings throughout the year. The Board also evaluated the comparative information provided by the subadvisor regarding the performance of its portion of the Fund relative to the performance of comparable investment accounts managed by the subadvisor and the Fund’s benchmark index. In addition, the Board considered the Manager’s recommendation to continue to retain the subadvisor. A discussion regarding the Board’s considerations with respect to the Fund’s performance appears below under “Additional Considerations and Conclusions with Respect to the Fund.”

Costs of the Services Provided to the Fund and the Profits Realized by the Manager from its Relationship with the Fund. In analyzing the cost of services and profitability of the Manager, the Board considered the revenues earned and the expenses incurred by the Manager, before and after the payment of distribution-related expenses by the Manager. The profits or losses were noted at both an aggregate level for all funds within the group of mutual funds sponsored by the Manager (the “Fund Complex”) and at an individual Fund level, with the Manager earning a profit before and after the payment of distribution-related expenses by the Manager. The Board also considered comparative information provided by the Manager regarding the Manager’s overall profitability with respect to the Fund Complex relative to the overall profitability of other firms in the mutual fund industry, as disclosed in publicly available sources. 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 Fund, the Manager represented that, among other matters, the difference is attributable to the fact that the Manager does not perform administrative services for non-investment company clients and reflects the greater level of responsibility and regulatory requirements associated with managing the Fund.

The Board also noted that the Manager proposed to continue the expense waivers and reimbursements for the Fund that were in place during the last fiscal year. The Board further considered that, with respect to the Fund, the applicable Management Agreement provides for the Manager to receive a management fee comprised of an annualized fee that is retained by the Manager. The Board also noted that certain share classes of the Fund maintain higher expense ratios in order to compensate third-party financial intermediaries.

In analyzing the fee rates charged by the subadvisor in connection with its investment advisory services to the Fund, the Board considered representations made by the subadvisor that the Fund’s subadvisory fee rate schedule is favorable compared to other comparable client accounts. The Board did not request profitability data from the subadvisor because the Board did not view this data as imperative to its deliberations given the arm’s-length nature of the relationship between the Manager and the subadvisor with respect to the negotiation of subadvisory fee rates. In addition, the Board noted that the subadvisor may not account for its profits on an account-by-account basis and that different firms likely employ different methodologies in connection with these calculations.

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 the Fund’s fee rates is set forth below under “Additional Considerations and Conclusions with Respect to the Fund.”

34

Disclosure Regarding Approval of the Management and Investment Advisory Agreements (Unaudited)

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 Fund grows and whether fee rate 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 the subadvisory fee rate for the Fund.

In addition, the Board noted the Manager’s representation that the Management Agreement contains fee schedule breakpoints at higher asset levels with respect to the Fund. Based on the foregoing information, the Board concluded that the Manager and subadvisor fee rate schedules for the Fund provide for a reasonable sharing of benefits from any economies of scale with the Fund.

Benefits Derived from the Relationship with the Fund. The Board considered the “fall-out” or ancillary benefits that accrue to the Manager and/or the subadvisor as a result of the advisory relationships with the Fund, 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 subadvisor. Based on the foregoing information, the Board concluded that the potential benefits accruing to the Manager and the subadvisor by virtue of their relationships with the Fund appear to be fair and reasonable.

Additional Considerations and Conclusions with Respect to the Fund

The performance comparisons below were made in comparison to the Fund’s Broadridge performance universe and Morningstar Category. With respect to the Broadridge performance universe, the 1^st Quintile represents the top twenty percent of the universe based on performance and the 5^th Quintile representing the bottom twenty percent of the universe based on performance. References below to the Fund’s Broadridge performance universe are to the universe of mutual funds with a comparable investment classification/objective included in the analysis provided by Broadridge.

The expense comparisons below were made in comparison to the Fund’s Broadridge expense universe and Broadridge expense group, with the 1^st Quintile representing the top twenty percent of the universe or group based on lowest total expense and the 5^th Quintile representing the bottom twenty percent of the universe or group based on highest total expense. References below to the Fund’s expense group and expense universe are to the respective group or universe of comparable mutual funds included in the analysis by Broadridge. A Broadridge expense group consists of the Fund and a representative sample of funds with similar operating structures and asset sizes, as selected by Broadridge. A Broadridge expense universe includes all funds in the investment classification/objective with a similar operating structure as the share class of the Fund included in the Broadridge comparative information and provides a broader view of expenses across the Fund’s investment classification/objective. The Trustees also considered the Fund’s Morningstar fee level category. In reviewing expenses, the Trustees considered the positive impact of fee waivers where applicable and the Manager’s agreement to continue the fee waivers. In addition, information regarding the subadvisor’s use of soft dollars was requested from the Manager and was considered by the Trustees.

In considering the renewal of the Management Agreement and the Investment Advisory Agreement for the Fund, the Trustees considered the following additional factors:

Broadridge Total Expense Analysis Excluding 12b-1 Fees and Morningstar Fee Level Ranking

Compared to Broadridge Expense Group	1st Quintile
Compared to Broadridge Expense Universe	3rd Quintile
Morningstar Fee Level Ranking – Institutional Class	Below Average Expense Ratio

35

Disclosure Regarding Approval of the Management and Investment Advisory Agreements (Unaudited)

Broadridge and Morningstar Performance Analysis (one-year period ended December 31, 2017)

Compared to Broadridge Performance Universe	3rd Quintile
Compared to Morningstar Category	4th Quintile

The Trustees also considered: (1) information provided by the subadvisor regarding fee rates charged for managing accounts in the same strategy as the subadvisor manages the Fund; (2) the Manager’s explanation that, unlike the funds in its Broadridge performance universe and Morningstar category, the Fund does not invest in high-yield (below investment grade securities), which have performed well in the recent past; (3) the subadvisor’s and Manager’s explanation that the Fund’s relative performance declined when a material increase in assets shortly after the Fund commenced operations required subadvisor to rebalance the Fund’s investment and sector allocations; and (4) the Manager’s recommendation to continue to retain the subadvisor based upon, among other factors, the relatively brief period that this Fund has been in operation.

Based on these and other considerations, the Trustees: (1) concluded that the fees paid to the Manager and the subadvisor under the Management and Investment Advisory Agreements are fair and reasonable; and (2) determined that the Fund and its shareholders would benefit from the Manager’s and subadvisor’s continued management of the 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. The address of each person listed below is 220 Las Colinas Boulevard East, Suite 1200, Irving, Texas 75039. Each Trustee oversees thirty-seven funds in the fund complex that includes the Trust, the American Beacon Select Funds, the American Beacon Institutional Funds Trust, the American Beacon Sound Point Enhanced Income Fund, and the American Beacon Apollo Total Return Fund. 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** (81)	Trustee since 1996	Partner in the law firm of Akin, Gump, Strauss, Hauer & Feld, LLP (law firm) (1960-Present); Trustee, American Beacon Mileage Funds (1996-2012); Trustee, American Beacon Select Funds (1999-Present); Trustee, American Beacon Master Trust (1996-2012); Trustee, American Beacon Institutional Funds Trust (2017-Present); Trustee, American Beacon Sound Point Enhanced Income Fund (2018-Present); Trustee, American Beacon Apollo Total Return Fund (2018-Present).
NON-INTERESTED TRUSTEES	Term
	Lifetime of Trust until removal, resignation or retirement*
Gilbert G. Alvarado (48)	Trustee since 2015	Director, Kura MD, Inc. (local telehealth organization) (2015-present); Vice President & CFO, Sierra Health Foundation (health conversion private foundation) (2006-Present); Vice President & CFO, Sierra Health Foundation: Center for Health Program Management (California public benefit corporation) (2012-Present); Director, Innovative North State (2012-2015); Director, Sacramento Regional Technology Alliance (2011-2016); Director, Women’s Empowerment (2009-2014); Director, Valley Healthcare Staffing (2017-present); Trustee, American Beacon Select Funds (2015-Present); Trustee, American Beacon Institutional Funds Trust (2017-Present); Trustee, American Beacon Sound Point Enhanced Income Fund (2018-Present); Trustee, American Beacon Apollo Total Return Fund (2018-Present).
Joseph B. Armes (56)	Trustee since 2015	Chairman & CEO, CSW Industrials f/k/a Capital Southwest Corporation (investment company) (2015-Present); Chairman of the Board of Capital Southwest Corporation, predecessor to CSW Industrials, Inc. (2014-present) (investment company); CEO, Capital Southwest Corporation (2013-2015); President & CEO, JBA Investment Partners (family investment vehicle) (2010-Present); Director and Chair of Audit Committee, RSP Permian (oil and gas producer) (2013-Present); Trustee, American Beacon Select Funds (2015-Present); Trustee, American Beacon Institutional Funds Trust (2017-Present); Trustee, American Beacon Sound Point Enhanced Income Fund (2018-Present); Trustee, American Beacon Apollo Total Return Fund (2018-Present).
Gerard J. Arpey (60)	Trustee since 2012	Director, The Home Depot, Inc. (2015-Present); Partner, Emerald Creek Group (private equity firm) (2011-Present); Director, S.C. Johnson & Son, Inc. (privately held company) (2008-present); Trustee, American Beacon Select Funds (2012-Present); Trustee, American Beacon Institutional Funds Trust (2017-Present); Trustee, American Beacon Sound Point Enhanced Income Fund (2018-Present); Trustee, American Beacon Apollo Total Return Fund (2018-Present).

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
NON-INTERESTED TRUSTEES (CONT.)	Term
	Lifetime of Trust until removal, resignation or retirement*
Brenda A. Cline (57)	Trustee since 2004 Vice Chair since 2018	Chief Financial Officer, Treasurer and Secretary, Kimbell Art Foundation (1993-Present); Director, Tyler Technologies, Inc. (public sector software solutions company) (2014-Present); Director, Range Resources Corporation (oil and natural gas company) (2015-Present); Trustee, Cushing Closed-End Funds (2017-Present); Trustee, American Beacon Mileage Funds (2004-2012); Trustee, American Beacon Select Funds (2004-Present); Trustee, American Beacon Master Trust (2004-2012); Trustee, American Beacon Institutional Funds Trust (2017-Present); Trustee, American Beacon Sound Point Enhanced Income Fund (2018-Present); Trustee, American Beacon Apollo Total Return Fund (2018-Present).
Eugene J. Duffy (64)	Trustee since 2008	Managing Director, Global Investment Management Distribution, Mesirow Financial (2016-Present); Managing Director, Institutional Services, Intercontinental Real Estate Corporation (2014-Present); Principal and Executive Vice President, Paradigm Asset Management (1994-2014); Director, Sunrise Bank of Atlanta (2008-2013); Trustee, American Beacon Mileage Funds (2008-2012); Trustee, American Beacon Select Funds (2008-Present); Trustee, American Beacon Master Trust (2008-2012); Trustee, American Beacon Institutional Funds Trust (2017-Present); Trustee, American Beacon Sound Point Enhanced Income Fund (2018-Present); Trustee, American Beacon Apollo Total Return Fund (2018-Present).
Claudia A. Holz*** (61)	Trustee since 2018	Partner, KPMG LLP (1990-2017); Trustee, American Beacon Select Funds (2018-Present); Trustee, American Beacon Institutional Funds Trust (2018-Present); Trustee, American Beacon Sound Point Enhanced Income Fund (2018-Present); Trustee, American Beacon Apollo Total Return Fund (2018-Present).
Douglas A. Lindgren**** (56)	Trustee since 2018	CEO North America, Carne Global Financial Services (2016-2017); Managing Director, IPS Investment Management and Global Head, Content Management, UBS Wealth Management (2010-2016); Managing Director, P&S Hedge Funds, UBS Wealth Management (2008-2010); Managing Director, Head of Alternative Investments, UBS Financial Services, Inc. (2005-2008); Trustee, American Beacon Select Funds (2018-Present); Trustee, American Beacon Institutional Funds Trust (2018-Present); Trustee, American Beacon Sound Point Enhanced Income Fund (2018-Present); Trustee, American Beacon Apollo Total Return Fund (2018-Present).
Richard A. Massman (75)	Trustee since 2004 Chairman since 2008	Consultant and General Counsel Emeritus, Hunt Consolidated, Inc. (holding company engaged in oil and gas exploration and production, refining, real estate, farming, ranching and venture capital activities) (2009-Present); Trustee, American Beacon Mileage Funds (2004-2012); Trustee, American Beacon Select Funds (2004-Present); Trustee, American Beacon Master Trust (2004-2012); Trustee, American Beacon Institutional Funds Trust (2017-Present); Trustee, American Beacon Sound Point Enhanced Income Fund (2018-Present); Trustee, American Beacon Apollo Total Return Fund (2018-Present).
Barbara J. McKenna, CFA (55)	Trustee since 2012	Managing Principal, Longfellow Investment Management Company (2005-Present); Trustee, American Beacon Select Funds (2012-Present); Trustee, American Beacon Institutional Funds Trust (2017-Present); Trustee, American Beacon Sound Point Enhanced Income Fund (2018-Present); Trustee, American Beacon Apollo Total Return Fund (2018-Present).

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
NON-INTERESTED TRUSTEES (CONT.)	Term
	Lifetime of Trust until removal, resignation or retirement*
R. Gerald Turner (72)	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); Trustee, American Beacon Mileage Funds (2001-2012); Trustee, American Beacon Select Funds (2001-Present); Trustee, American Beacon Master Trust (2001-2012); Trustee, American Beacon Institutional Funds Trust (2017-Present); Trustee, American Beacon Sound Point Enhanced Income Fund (2018-Present); Trustee, American Beacon Apollo Total Return Fund (2018-Present).
OFFICERS	Term
	One Year
Gene L. Needles, Jr. (63)	President since 2009	CEO and Director (2009-Present), and Chairman (2018-Present), American Beacon Advisors, Inc.; President, American Beacon Advisors (2009-2018); Chairman and CEO, Resolute Investment Managers, Inc. (2015-Present); Director, Chairman, President and CEO, Resolute Investment Distributors (2017-Present); Director, Chairman and CEO; Resolute Investment Services, Inc. (2015-Present); Director, Resolute Acquisition, Inc. (2015-Present); President (2015-2018), Director, Resolute Topco, Inc. (2015-Present), President (2015-2018), CEO (2015-Present), and Chairman (2018-Present), Resolute Investment Holdings, LLC; President, CEO and Director, Lighthouse Holdings, Inc. (2009-2015); President and CEO, Lighthouse Holdings Parent, Inc. (2009-2015); Manager, President, American Private Equity Management, LLC (2012-Present); President, American Beacon Cayman Managed Futures Strategy Fund, Ltd. (2014-Present); Director, Chairman, President and CEO, Alpha Quant Advisors, LLC (2016-Present); Director, ARK Investment Management LLC (2016-Present); Director, Shapiro Capital Management LLC (2017-Present); Director and Vice President, American Beacon Cayman Transformational Innovation Company, LTD., (2017-Present); Vice President, American Beacon Delaware Transformational Innovation Corporation (2017-Present); Executive Vice President and Chief Operating Officer, Continuous Capital, LLC (2018-Present); Member, Investment Advisory Committee, Employees Retirement System of Texas (2017-Present); Trustee, American Beacon NextShares Trust (2015-Present); President, American Beacon Select Funds (2009-Present); President, American Beacon Mileage Funds (2009-2012); President, American Beacon Master Trust (2009-2012); President, American Beacon Institutional Funds Trust (2017-Present); President, American Beacon Sound Point Enhanced Income Fund (2018-Present); President, American Beacon Apollo Total Return Fund (2018-Present).

39

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
OFFICERS (CONT.)	Term
	One Year
Rosemary K. Behan (59)	VP, Secretary and Chief Legal Officer since 2006	Vice President and Secretary, American Beacon Advisors, Inc. (2006-Present); Secretary, Resolute Investment Holdings, LLC (2015-Present); Vice President, Secretary and General Counsel, Resolute Investment Managers, Inc. (2015-Present); Secretary, Resolute Topco, Inc. (2015-Present); Secretary, Resolute Acquisition, Inc. (2015-Present); Vice President, Secretary and General Counsel, Resolute Investment Services, Inc. (2015-Present); Secretary, Lighthouse Holdings, Inc. (2008-2015); Secretary, Lighthouse Holdings Parent, Inc. (2008-2015); Secretary, American Private Equity Management, LLC (2008-Present); Secretary, American Beacon Cayman Managed Futures Strategy Fund, Ltd. (2014-Present); Secretary, Alpha Quant Advisors, LLC (2016-Present); Secretary, American Beacon Cayman Transformational Innovation Company, Ltd. (2017-Present); Secretary, American Beacon Delaware Transformational Innovation Corporation (2017-Present); Secretary, Resolute Investment Distributors, Inc. (2017-Present); Vice President and Secretary, Continuous Capital, LLC (2018-Present); Chief Legal Officer, Vice President and Secretary, American Beacon Select Funds (2006-Present); Chief Legal Officer, Vice President and Secretary, American Beacon Mileage Funds (2006-2012); Chief Legal Officer, Vice President and Secretary, American Beacon Master Trust (2006-2012); Chief Legal Officer, Vice President and Secretary, American Beacon Institutional Funds Trust (2017-Present); Vice Chief Legal Officer, Vice President and Secretary, American Beacon Sound Point Enhanced Income Fund (2018-Present); Chief Legal Officer, Vice President and Secretary American Beacon Apollo Total Return Fund (2018-Present).
Brian E. Brett (58)	VP since 2004	Senior Vice President, Head of Distribution (2012-Present) and Vice President, Director of Sales (2004-2012), American Beacon Advisors, Inc.; Senior Vice President, Resolute Investment Distributors, Inc. (2017-Present) and Vice President (2017-2018); Vice President, American Beacon Select Funds (2004-Present); Vice President, American Beacon Mileage Funds (2004-2012); Vice President, American Beacon Master Trust (2004-2012); Vice President, American Beacon Institutional Funds Trust (2017-Present); Vice President American Beacon Sound Point Enhanced Income Fund (2018-Present); Vice President American Beacon Apollo Total Return Fund (2018-Present).
Paul B. Cavazos (49)	VP since 2016	Chief Investment Officer and Senior Vice President, American Beacon Advisors, Inc. (2016-Present); Chief Investment Officer, DTE Energy (2007-2016); Vice President, American Private Equity Management, L.L.C. (2017-Present) Vice President, American Beacon Select Funds (2016-Present); Vice President, American Beacon Institutional Funds Trust (2017-Present); Vice President American Beacon Sound Point Enhanced Income Fund (2018-Present); Vice President American Beacon Apollo Total Return Fund (2018-Present).
Erica Duncan (48)	VP Since 2011	Vice President, American Beacon Advisors, Inc. (2011-Present); Vice President, Resolute Investment Managers (2015-Present); Vice President, Resolute Investment Services, Inc. (2015-Present) Vice President, American Beacon Select Funds (2011-Present); Vice President, American Beacon Mileage Funds (2011-2012); Vice President, American Beacon Master Trust (2011-2012); Vice President, American Beacon Institutional Funds Trust (2017-Present); Vice President American Beacon Sound Point Enhanced Income Fund (2018-Present); Vice President American Beacon Apollo Total Return Fund (2018-Present).

40

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
OFFICERS (CONT.)	Term
	One Year
Melinda G. Heika (57)	Treasurer since 2010	Treasurer, American Beacon Advisors, Inc. (2010-Present) and Chief Financial Officer (2010-Present); Treasurer and Chief Financial Officer, Resolute Investment Managers, Inc. (2015-Present); Treasurer, Resolute Acquisition, Inc. (2015-Present); Treasurer, Resolute Topco, Inc. (2015-Present); Treasurer, Resolute Investment Holdings, LLC. (2015-Present); Treasurer and Chief Financial Officer, Resolute Investment Services, Inc. (2015-Present); Treasurer, Lighthouse Holdings, Inc. (2010-2015); Treasurer, Lighthouse Holdings Parent Inc., (2010-2015); Treasurer, American Private Equity Management, LLC (2012-Present); Director and Treasurer, American Beacon Cayman Managed Futures Strategy Fund, Ltd. (2014-Present); Treasurer and Chief Financial Officer, Alpha Quant Advisors, LLC (2016-Present); Treasurer, American Beacon Cayman Transformational Innovation, Ltd. (2017-Present); Treasurer, American Beacon Delaware Transformational Innovation Corporation (2017-Present); Treasurer, Resolute Investment Distributors, Inc. (2017-2017); Treasurer and Chief Financial Officer, Continuous Capital, LLC (2018-Present); Treasurer, American Beacon Select Funds (2010-Present); Treasurer, American Beacon Mileage Funds (2010-2012); Treasurer, American Beacon Master Trust (2010-2012); Treasurer, American Beacon Institutional Funds Trust (2017-Present); Treasurer, American Beacon Sound Point Enhanced Income Fund (2018-Present); Treasurer, American Beacon Apollo Total Return Fund (2018-Present).
Terri L. McKinney (54)	VP since 2010	Vice President (2009-Present) and Managing Director (2003-2009), American Beacon Advisors, Inc.; Vice President, Resolute Investment Managers, Inc. (2017-Present); Vice President, Resolute Investment Services, Inc (2015-Present); Vice President, Alpha Quant Advisors, LLC (2016-Present); Vice President, Continuous Capital, LLC (2018-Present); Vice President, American Beacon Select Funds (2010-Present); Vice President, American Beacon Mileage Funds (2010-2012); Vice President, American Beacon Master Trust (2010-2012); Vice President, American Beacon Institutional Funds Trust (2017-Present); Vice President, American Beacon Sound Point Enhanced Income Fund (2018-Present); Vice President, American Beacon Apollo Total Return Fund (2018-Present).

41

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
OFFICERS (CONT.)	Term
	One Year
Jeffrey K. Ringdahl (43)	VP since 2010	Chief Operating Officer (2010-Present), Vice President (2010-2013), Senior Vice President (2013-Present), Director (2015-Present), and President (2018-Present), American Beacon Advisors, Inc.; Senior Vice President (2018-Present), Vice President (2012-2018) and Manager (2015-2018), American Private Equity Management, LLC; Senior Vice President, Lighthouse Holdings, Inc. (2013-2015); Senior Vice President, Lighthouse Holdings Parent, Inc. (2013-2015); Director and Vice President, American Beacon Cayman Managed Futures Strategy Fund, Ltd. (2014-Present); Trustee, American Beacon NextShares Trust (2015-Present); Director (2015-Present), Senior Vice Present (2015-2018), and President (2018-Present), Resolute Investment Holdings, LLC; Director (2015-Present), Senior Vice President (2015-2018) and President (2018-Present), Resolute Topco, Inc.; Director (2015-Present), Senior Vice President (2015-2018), and President (2018-Present), Resolute Acquisition, Inc.; Director (2015-Present), Senior Vice President (2015-2018), and President (2018-Present), Resolute Investment Managers, Inc.; Director, Executive Vice President and Chief Operating Officer, Alpha Quant Advisors, LLC (2016-Present); Director (2017-Present), Executive Vice President (2017-2018), and President and Chief Operating Officer (2018-Present), Resolute Investment Services, Inc.; Director and Executive Vice President, Resolute Investment Distributors, Inc. (2017-Present); Director, Shapiro Capital Management, LLC (2017-Present); Director and Vice President, American Beacon Cayman Transformational Innovation Company, LTD., (2017-Present); Vice President, American Beacon Delaware Transformational Innovation Corporation (2017-Present); Director, Executive Vice President and Chief Operating Officer, Continuous Capital, LLC (2018-Present); Vice President, American Beacon Select Funds (2010-Present); Vice President, American Beacon Institutional Funds Trust (2017-Present); Vice President, American Beacon Sound Point Enhanced Income Fund (2018-Present); Vice President, American Beacon Apollo Total Return Fund (2018-Present)
Samuel J. Silver (55)	VP Since 2011	Vice President, American Beacon Advisors, Inc. (2011-Present); Vice President, American Beacon Select Funds (2011-Present); Vice President, American Beacon Mileage Funds (2011-2012); Vice President, American Beacon Master Trust (2011-2012); American Beacon Institutional Funds Trust (2011-Present); Vice President, American Beacon Sound Point Enhanced Income Fund (2018-Present); Vice President, American Beacon Apollo Total Return Fund (2018-Present).
Christina E. Sears (47)	Chief Compliance Officer since 2004 and Asst. Secretary since 1999	Chief Compliance Officer, American Beacon Advisors, Inc. (2004-Present); Chief Compliance Officer, American Private Equity Management, LLC (2012-Present); Chief Compliance Officer and Vice President, Alpha Quant Advisors, LLC (2016-Present); Vice President, Resolute Investment Managers, Inc. (2017-Present); Vice President, Resolute Investment Distributors (2017-Present); Vice President, Continuous Capital, LLC (2018-Present); Chief Compliance Officer (2004-Present) and Assistant Secretary (1999-Present), American Beacon Select Funds; Chief Compliance Officer (2004-2012) and Assistant Secretary (1999-2012), American Beacon Mileage Funds; Chief Compliance Officer (2004-2012) and Assistant Secretary (1999-2012), American Beacon Master Trust; Chief Compliance Officer and Assistant Secretary, American Beacon Institutional Funds Trust (2017-Present); Chief Compliance Officer and Assistant Secretary, American Beacon Sound Point Enhanced Income Fund (2018-Present); Chief Compliance Officer and Assistant Secretary, American Beacon Apollo Total Return Fund (2018-Present).

42

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
OFFICERS (CONT.)	Term
	One Year
Sonia L. Bates (61)	Asst. Treasurer since 2011	Assistant Treasurer, American Beacon Advisors, Inc. (2011-2018); Assistant Treasurer, Resolute Acquisition, Inc. (2015-2018); Assistant. Treasurer, Resolute Topco, Inc. (2015-2018); Assistant Treasurer, Resolute Investment Holdings, LLC. (2015-2018); Assistant Treasurer, Lighthouse Holdings, Inc. (2011-2015); Assistant Treasurer, Lighthouse Holdings Parent Inc. (2011-2015); Assistant Treasurer, American Private Equity Management, LLC (2012-Present); Assistant Treasurer, American Beacon Cayman Transformational Innovation Company, Ltd. (2017-Present); Assistant Treasurer, American Beacon Select Funds (2011-Present); Assistant Treasurer American Beacon Mileage Funds (2011-2012); Assistant Treasurer, American Beacon Master Trust (2011-2012); Assistant Treasurer, American Beacon Institutional Funds Trust (2017-Present); Assistant Treasurer, American Beacon Sound Point Enhanced Income Fund (2018-Present); Assistant Treasurer, American Beacon Apollo Total Return Fund (2018-Present).
Shelley D. Abrahams (43)	Assistant Secretary since 2008	Assistant Secretary, American Beacon Select Funds (2008-Present); Assistant Secretary, American Beacon Mileage Funds (2008-2012); Assistant Secretary, American Beacon Master Trust (2008-2012); Assistant Secretary, American Beacon Institutional Funds Trust (2017-Present); Assistant Secretary, American Beacon Sound Point Enhanced Income Fund (2018-Present); Assistant Secretary, American Beacon Apollo Total Return Fund (2018-Present).
Rebecca L. Harris (51)	Assistant Secretary since 2010	Vice President, American Beacon Advisors, Inc. (2016-Present); Vice President, Resolute Investment Managers, Inc. (2017-Present); Vice President, Resolute Investment Services (2015-Present); Vice President, Alpha Quant Advisors, LLC (2016-Present); Vice President, Continuous Capital, LLC (2018-Present); Assistant Secretary, American Beacon Select Funds (2010-Present); Assistant Secretary, American Beacon Mileage Funds (2010-2012); Assistant Secretary, American Beacon Master Trust (2010-2012); Assistant Secretary, American Beacon Institutional Funds Trust (2017-Present); Assistant Secretary, American Beacon Sound Point Enhanced Income Fund (2018-Present); Assistant Secretary, American Beacon Apollo Total Return Fund (2018-Present).
Diana N. Lai (42)	Assistant Secretary since 2012	Assistant Secretary, American Beacon Cayman Transformational Innovation Company, Ltd. (2017-Present); Assistant Secretary, American Beacon Select Funds (2012-Present); Assistant Secretary, American Beacon Institutional Funds Trust (2017-Present); Assistant Secretary, American Beacon Sound Point Enhanced Income Fund (2018-Present); Assistant Secretary, American Beacon Apollo Total Return Fund (2018-Present).
Teresa A. Oxford (60)	Assistant Secretary since 2015	Assistant Secretary, American Beacon Advisors, Inc. (2015-Present); Assistant Secretary, Resolute Investment Distributors (2018-Present); Assistant Secretary, Resolute Investment Services (2015-Present); Assistant Secretary, Alpha Quant Advisors, LLC (2016-Present); Assistant Secretary, American Beacon Select Funds (2015-Present); Assistant Secretary, American Beacon Institutional Funds Trust (2017-Present); Assistant Secretary, American Beacon Sound Point Enhanced Income Fund (2018-Present); Assistant Secretary, American Beacon Apollo Total Return Fund (2018-Present).

* As of 11/12/2014, the Board adopted a retirement plan that requires Trustees, other than Messrs. Feld and Massman to retire no later than the last day of the calendar year in which they reach the age of 75.

** 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 one or more of the Trust’s sub-advisors.

*** Claudia A. Holz became a new Trustee to each of the Trusts on 4/1/2018.

**** Douglas A. Lindren became a new Trustee to each of the Trusts on 1/1/2018.

43

American Beacon Garcia Hamilton Quality Bond FundSM

Privacy Policy

October 31, 2018 (Unaudited)

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.

44

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: Call (800) 658-5811	By Mail: American Beacon Funds P.O. Box 219643 Kansas City, MO 64121-9643
Availability of Quarterly Portfolio Schedules	Availability of Proxy Voting Policy and Records
In addition to the Schedule of Investments provided in each semi-annual and annual report, the Fund files a complete schedule of its portfolio holdings with the Securities and Exchange Commission (“SEC”) on Form N-Q as of the first and third fiscal quarters. The Fund’s Forms N-Q are available on the SEC’s website 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. 20549-2736. Information regarding the operation of the SEC’s Public Reference Room may be obtained by calling (800)-SEC-0330. A complete schedule of the Fund’s portfolio holdings is also available 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 DST Asset Managers Solutions, Inc. Quincy, Massachusetts INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM Ernst & Young LLP Dallas, Texas DISTRIBUTOR Resolute Investment Distributors, Inc. Irving, Texas

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

American Beacon Funds and American Beacon Garcia Hamilton Quality Bond Fund are service marks of American Beacon Advisors, Inc.

AR 10/18

About American Beacon Advisors

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

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

INTERNATIONAL EQUITY FUND RISKS

Investing in foreign securities may involve heightened risk due to currency fluctuations and economic and political risks. Investing in value stocks may limit downside risk over time; however, the Fund may produce more modest gains than riskier stock funds as a trade-off for this potentially lower risk. The use of futures contracts for cash management may subject the Fund to losing more money than invested. The Fund participates in a securities lending program. Please see the prospectus for a complete discussion of the Fund’s risks. There can be no assurances that the investment objectives of this Fund will be met.

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

American Beacon Funds October 31, 2018

Contents

President’s Message	1
Market and Performance Overview	2
Expense Example	6
Report of Independent Registered Public Accounting Firm	8
Schedule of Investments:
American Beacon International Equity Fund	9
Financial Statements	18
Notes to Financial Statements	22
Financial Highlights:
American Beacon International Equity Fund	46
Federal Tax Information	53
Disclosure Regarding Approval of the Management and Investment Advisory Agreements	54
Trustees and Officers of the American Beacon Funds	59
Privacy Policy	66

Additional Fund Information Back Cover

President’s Message

Dear Shareholders,   Long-term investing isn’t about identifying and anticipating the next big market move. It’s about identifying the right investment products for riding out those moves. As a long-term investor, you should strive to accomplish the three Ds: direction, discipline and diversification.   u   Direction: Achieving your long-term financial goals requires an individualized plan of action. You may want your plan to provide some measure of protection against periods of geopolitical turmoil, economic uncertainty, market volatility and job insecurity. Your plan should be reviewed annually and be adjusted in the event your long-range needs change.  

u Discipline: Long-term, systematic participation in an investment portfolio requires your resolution to stay the course. Spending time in the market – rather than trying to time the market – may place you in a better position to reach your long-term financial goals.

u Diversification: By investing in different types of investment categories and asset classes, you may be able to help mitigate financial risks across your investment portfolio. By allocating your investment portfolio according to your risk-tolerance level, you may be better positioned to weather storms and achieve your long-term financial goals.

Since 1986, American Beacon has endeavored to provide investors with a disciplined approach to realizing long-term financial goals. As a manager of managers, we strive to provide investment products that may enable investors to participate during market upswings while potentially insulating against market downswings. Our approach is more than a concept. It’s the cornerstone of our culture. And we strive to apply it at every turn as we seek to provide a well-diversified line of investment products for your investment portfolio.

Many of the sub-advisors to our mutual funds pursue upside capture and/or downside protection using proprietary strategies. The investment teams behind our mutual funds seek to produce consistent, long-term results rather than focus only on short-term movements in the markets. In managing our investment products, we emphasize identifying opportunities that offer the potential for long-term rewards.

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

Best Regards,

Gene L. Needles, Jr.

President

American Beacon Funds

1

International Equity Market Overview

October 31, 2018 (Unaudited)

For much of the past 12 months, developed equity markets appreciated following signs of continuing global growth, albeit less synchronized than in calendar year 2017, as the U.S. outpaced other developed markets. However, the month of October 2018 brought international equity returns into negative territory, as global monetary liquidity continued to decrease, and stock volatility spiked. The best-performing markets in our investable universe included Israel, Norway, Finland, New Zealand and Switzerland. The worst-performing markets were Belgium, South Korea, China, Italy and Spain. Traditionally defensive sectors generally outperformed cyclical sectors over the year. The best-performing sectors in the MSCI EAFE Index (the “Index”) were Energy, Health Care and Consumer Staples. The worst-performing sectors were Financials, Telecommunication Services and Industrials. Every major currency except the Japanese yen depreciated compared to the U.S. dollar during the trailing 12 months, thus diminishing overall returns on overseas assets for U.S.-dollar-based investors.

Responding to fiscal and monetary stimulus, the U.S. economy appears healthy with an unemployment rate of 3.7% at the end of October – the lowest in nearly 50 years – supporting booming consumer confidence. The U.S. economy appears on track to deliver real gross domestic product (“GDP”) growth of 3% in 2018, despite the upward trajectory of the 10-year Treasury note yield, which reached 3.2% in October. Trade tensions, however, still reflect a large risk to U.S. economic growth. Companies are beginning to highlight potential cost increases resulting from tariffs and guidance on future earnings was weaker than expected, contributing to increased volatility.

In Europe, weakening global trade weighed on manufacturing growth, with the IHS Markit Eurozone Manufacturing Purchasing Managers’ Index for October reading well below the record highs seen near the turn of the calendar year, although still indicating an expansion. European Central Bank (“ECB”) President Mario Draghi said economic data indicated “an ongoing, broad-based expansion of the euro-area economy and gradually rising inflation pressures.”

Political risk remains in Europe:

The European Commission rejected the Italian government’s fiscally stimulative budget plan, requesting revisions that meet the fiscal targets set by European authorities; and

A Brexit negotiation breakthrough did not occur in the U.K. during the fiscal year, but the March 2019 deadline is fast approaching.

In China, continuing trade friction and a shift to slow the pace of credit growth in the shadow-banking sector has likely triggered a broader slowdown. GDP growth decelerated to an annualized rate of 6.5% in the third quarter of 2018, missing consensus expectations. Further escalation in tariffs would likely weigh on growth, however, the depreciation of the Chinese yuan against the U.S. dollar has partially offset the impact of tariffs.

2

American Beacon International Equity Fund^SM

Performance Overview

October 31, 2018 (Unaudited)

The Investor Class of the American Beacon International Equity Fund (the “Fund”) returned -7.86% for the twelve months ended October 31, 2018. The Fund underperformed the MSCI EAFE Index Net (the “Index”) return of -6.85%.

Comparison of Change in Value of a $10,000 Investment for the period from 10/31/2008 through 10/31/2018

Total Returns for the Period ended October 31, 2018
	Ticker	1 Year			3 Years			5 Years			10 Years			Value of $10,000 10/31/2008- 10/31/2018
Institutional Class (1,8)	AAIEX		(7.55	)%		2.56	%		1.09	%		6.98	%		$	19,640
Y Class (1,2,8)	ABEYX		(7.58	)%		2.51	%		1.01	%		6.90	%		$	19,491
Investor Class (1,8)	AAIPX		(7.86	)%		2.22	%		0.74	%		6.61	%		$	18,973
Advisor Class (1,3,8)	AAISX		(7.99	)%		2.13	%		0.63	%		6.43	%		$	18,654
A Class without sales charge (1,4,8)	AIEAX		(7.89	)%		2.20	%		0.69	%		6.53	%		$	18,823
A Class with sales Charge (1,4,8)	AIEAX		(13.19	)%		0.21	%		(0.50	)%		5.90	%		$	17,741
C Class without sales charge (1,5,8)	AILCX		(8.52	)%		1.43	%		(0.05	)%		5.87	%		$	17,691
C Class with sales charge (1,5,8)	AILCX		(9.52	)%		1.43	%		(0.05	)%		5.87	%		$	17,691
R6 Class (1,6,8)	AAERX		(7.47	)%		2.61	%		1.12	%		7.00	%		$	19,667
MSCI EAFE Index Net (7)			(6.85	)%		3.62	%		2.02	%		6.89	%		$	19,473

1. Performance shown is historical and is not indicative of future returns. Investment returns and principal value will vary, and shares may be worth more or less at redemption than at original purchase. Performance shown is calculated based on the published end of day net asset values as of date indicated and current performance may be lower or higher than the performance data quoted. To obtain performance as of the most recent month end, please 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. Generally accepted accounting principles require adjustments to be made to the net assets of the Fund at period end for financial reporting purposes only; and as such, the total return based on the unadjusted net asset value per share may differ from the total return reported in the financial highlights. A portion of the fees charged to the Institutional Class of the Fund was waived from 2013 through 2015. Performance prior to waiving fees was lower than actual returns shown from 2013 through 2015.

2. Fund performance for the ten-year period represents the total returns achieved by the Institutional Class from 10/31/08 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 10/31/08.

3

American Beacon International Equity Fund^SM

Performance Overview

October 31, 2018 (Unaudited)

3. A portion of the fees charged to the Advisor Class of the Fund was waived in 2009. Performance prior to waiving fees was lower than the actual returns shown for 2009.

4. Fund performance for the ten-year period represents the total returns achieved by the Investor Class from 10/31/08 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 10/31/08. A portion of the fees charged to the A Class of the Fund was waived from 2010 through 2012 and partially recovered in 2013. Performance prior to waiving fees was lower than the actual returns shown from 2010 through 2012. The maximum sales charge for A Class is 5.75%.

5. Fund performance for the ten-year period represents the total returns achieved by the Investor Class from 10/31/08 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 10/31/08. A portion of the fees charged to the C Class of the Fund was waived from 2010 through 2012 and partially recovered in 2013 and fully recovered in 2015. Performance prior to waiving fees was lower than the actual returns shown from 2010 through 2012. The maximum contingent deferred sales charge for C Class is 1.00% for shares redeemed within one year of the date of purchase.

6. Fund performance for the three-year, five-year and ten-year periods represent the returns achieved by the Institutional Class from 10/31/08 through 2/28/17, the inception date of the R6 Class, and the returns of the R6 Class since its inception. Expenses of the R6 Class are lower than those of the Institutional Class. As a result, total returns shown may be lower than they would have been had the R6 Class been in existence since 10/31/08. A portion of the fees charged to the R6 Class of the Fund has been waived since 2/28/17. Performance prior to waiving fees was lower than the actual returns shown.

7. The MSCI EAFE Index is a market capitalization weighted index of international stock performance composed of equities from developed markets excluding the U.S. and Canada. One cannot directly invest in an index.

8. The total Annual Fund Operating Expense ratios set forth in the most recent Fund prospectus for the Institutional, Y, Investor, Advisor, A, C and R6 Class shares were 0.73%, 0.80%, 1.07%, 1.20%, 1.12%, 1.88% and 0.89%, respectively. The expense ratios above may vary from the expense ratios presented in other sections of this report that are based on expenses incurred during the period covered by this report.

The Fund underperformed the Index over the twelve-month period due to stock selection while country allocation slightly offset the underperformance.

Stock selections within the United Kingdom and France primarily contributed to the Fund’s relative underperformance, while stock selections in Japan added value. Detracting securities included British American Tobacco PLC (down 29.32%) within the United Kingdom, and Compagnie de Saint Gobain (down 35.12%) within France. The Fund’s investments in Japan, including Don Quijote Holdings Co., Ltd. (up 47.10%) helped relative performance during the prior twelve months.

From a country allocation perspective, overweighting out-of-index Canada (down 5.84%) and underweighting Spain (down 15.05%) contributed the most to the Fund’s performance relative to the Index. However, underweighting Japan (down 3.29%) and overweighting out-of-index Korea (down 19.90%) detracted during the period.

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

Top Ten Holdings (% Net Assets)
Novartis AG		2.7
Prudential PLC		2.2
British American Tobacco PLC		1.9
BP PLC		1.8
Royal Dutch Shell PLC, Class B		1.8
Volkswagen AG		1.8
SAP SE		1.6
Samsung Electronics Co., Ltd.		1.4
BNP Paribas S.A.		1.4
UniCredit SpA		1.4
Total Fund Holdings	161

4

American Beacon International Equity Fund^SM

Performance Overview

October 31, 2018 (Unaudited)

Sector Allocation (% Equities)
Financials	20.4
Industrials	15.2
Health Care	12.7
Communication Services	9.4
Materials	9.1
Energy	8.8
Consumer Discretionary	8.1
Consumer Staples	6.7
Information Technology	5.3
Utilities	2.5
Real Estate	1.8
Country Allocation (% Equities)
United Kingdom	22.8
Japan	14.6
Germany	9.7
France	8.7
Switzerland	8.2
Netherlands	7.9
Canada	5.5
Republic of Korea	3.5
Ireland	3.0
Italy	2.2
Denmark	1.9
Norway	1.5
Singapore	1.3
Sweden	1.2
China	1.2
Luxembourg	1.2
Hong Kong	1.0
Israel	1.0
Belgium	0.9
Finland	0.9
Spain	0.9
Australia	0.9

5

American Beacon International Equity Fund^SM

Expense Example

October 31, 2018 (Unaudited)

Fund Expense Example

As a shareholder of a Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments and redemption fees if applicable, and (2) ongoing costs, including management fees, distribution (12b-1) fees, Sub-transfer agent fees, and other Fund expenses. The Examples are intended to help you understand the ongoing cost (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. The Examples are based on an investment of $1,000 invested at the beginning of the period in each Class and held for the entire period from May 1, 2018 through October 31, 2018.

Actual Expenses

The “Actual” lines of the table provide information about actual account values and actual expenses. You may use the information on this page, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = $8.60), then multiply the result by the “Expenses Paid During Period” to estimate the expenses you paid on your account during this period. Shareholders of the Investor and Institutional Classes that invest in the Fund through an IRA or Roth IRA may be subject to a custodial IRA fee of $15 that is typically deducted each December. If your account was subject to a custodial IRA fee during the period, your costs would have been $15 higher.

Hypothetical Example for Comparison Purposes

The “Hypothetical” lines of the 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 or Roth IRA may be subject to a custodial IRA fee of $15 that is typically deducted each December. If your account was subject to a custodial IRA fee during the period, your costs would have been $15 higher.

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

6

American Beacon International Equity Fund^SM

Expense Example

October 31, 2018 (Unaudited)

American Beacon International Equity Fund
	Beginning Account Value 5/1/2018		Ending Account Value 10/31/2018		Expenses Paid During Period 5/1/2018-10/31/2018*
Institutional Class
Actual		$1,000.00		$897.40		$3.59
Hypothetical**		$1,000.00		$1,021.40		$3.82
Y Class
Actual		$1,000.00		$897.40		$3.97
Hypothetical**		$1,000.00		$1,021.00		$4.23
Investor Class
Actual		$1,000.00		$896.00		$5.21
Hypothetical**		$1,000.00		$1,019.70		$5.55
Advisor Class
Actual		$1,000.00		$895.50		$5.83
Hypothetical**		$1,000.00		$1,019.10		$6.21
A Class
Actual		$1,000.00		$895.90		$5.26
Hypothetical**		$1,000.00		$1,019.70		$5.60
C Class
Actual		$1,000.00		$892.90		$8.78
Hypothetical**		$1,000.00		$1,015.90		$9.35
R6 Class
Actual		$1,000.00		$897.90		$3.16
Hypothetical**		$1,000.00		$1,021.88		$3.36

* Expenses are equal to the Fund’s annualized expense ratios for the six-month period of 0.75%, 0.83%, 1.09%, 1.22%, 1.10%, 1.84%, and 0.66% for the Institutional, Y, Investor, Advisor, A, C, and R6 Classes, respectively, multiplied by the average account value over the period, multiplied by the number derived by dividing the number of days in the most recent fiscal half-year (184) by days in the year (365) to reflect the half-year period.

** 5% return before expenses.

7

American Beacon International Equity Fund^SM

Report of Independent Registered Public Accounting Firm

To the Shareholders and the Board of Trustees of American Beacon International Equity Fund

Opinion on the Financial Statements

We have audited the accompanying statement of assets and liabilities of American Beacon International Equity Fund (the “Fund”) (one of the funds constituting American Beacon Funds (the “Trust”)), including the schedule of investments, as of October 31, 2018, and the related statement 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, the financial highlights for each of the five years in the period then ended and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Fund at October 31, 2018, 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 its financial highlights for each of the five years in the period then ended, in conformity with U.S. generally accepted accounting principles.

Basis for Opinion

These financial statements are the responsibility of the Trust’s management. Our responsibility is to express an opinion on the Fund’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Trust in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Trust is not required to have, nor were we engaged to perform, an audit of the Trust’s internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Trust’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of October 31, 2018, by correspondence with the custodian and brokers or by other appropriate auditing procedures where replies from brokers were not received. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

We have served as the auditor of one or more American Beacon investment companies since 1987.

Dallas, Texas

December 28, 2018

8

American Beacon International Equity Fund^SM

Schedule of Investments

October 31, 2018

	Shares		Fair Value
Australia - 0.85% (Cost $20,236,755)
Common Stocks - 0.85%
BHP Billiton PLCA		1,228,611		$	24,544,196
Belgium - 0.91%
Common Stocks - 0.91%
Anheuser-Busch InBev S.A.A		165,798			12,217,144
UCB S.A.A		166,830			14,003,404
Total Common Stocks					26,220,548
Total Belgium (Cost $30,884,495)					26,220,548
Canada - 5.30%
Common Stocks - 5.30%
Canadian Imperial Bank of Commerce		28,559			2,466,168
Canadian National Railway Co.		177,500			15,174,029
Canadian Pacific Railway Ltd.		62,268			12,769,564
Encana Corp.		1,789,151			18,265,934
Gildan Activewear, Inc.		488,463			14,600,645
Goldcorp, Inc.		993,800			8,975,868
Husky Energy, Inc.		990,800			14,006,448
Manulife Financial Corp.		1,595,439			25,123,210
National Bank of Canada		322,002			14,617,220
Rogers Communications, Inc., Class B		353,200			18,187,875
Wheaton Precious Metals Corp.		539,500			8,868,381
Total Common Stocks					153,055,342
Total Canada (Cost $150,346,776)					153,055,342
China - 1.17%
Common Stocks - 1.17%
China Merchants Port Holdings Co., Ltd.A		2,777,068			4,729,538
China Mobile Ltd.A		3,094,276			28,915,391
Total Common Stocks					33,644,929
Total China (Cost $39,451,028)					33,644,929
Denmark - 1.81%
Common Stocks - 1.81%
AP Moller - Maersk A/S, Class BA		8,706			11,053,061
Carlsberg A/S, Class BA		154,391			17,029,504
Novozymes A/S, Class BA		209,264			10,336,381
Vestas Wind Systems A/SA		221,082			13,846,124
Total Common Stocks					52,265,070
Total Denmark (Cost $53,676,739)					52,265,070
Finland - 0.91%
Common Stocks - 0.91%
Nordea Bank Abp		1,451,559			12,624,597
Sampo OYJ, Class AA		294,039			13,537,603
Total Common Stocks					26,162,200
Total Finland (Cost $30,792,377)					26,162,200
France - 8.48%
Common Stocks - 8.48%
Air Liquide S.A.A		83,452			10,108,821
AXA S.A.A		675,047			16,898,786
BNP Paribas S.A.A		779,956			40,670,215

See accompanying notes

9

American Beacon International Equity Fund^SM

Schedule of Investments

October 31, 2018

	Shares		Fair Value
France - 8.48% (continued)
Common Stocks - 8.48% (continued)
Capgemini SEA		143,153		$	17,502,174
Cie de Saint-GobainA		574,925			21,633,855
Cie Generale des Etablissements Michelin SCAA		166,981			17,107,815
Credit Agricole S.A.A		638,409			8,177,416
Engie S.A.A		543,293			7,243,528
Safran S.A.A		163,858			21,106,818
SanofiA		273,080			24,408,096
Societe Generale S.A.A		242,989			8,925,672
Total S.A.A		121,663			7,140,304
Veolia Environnement S.A.A		585,879			11,688,704
Vinci S.A.A B		176,276			15,740,209
Vivendi S.A.A		688,220			16,628,345
Total Common Stocks					244,980,758
Total France (Cost $243,202,509)					244,980,758
Germany - 9.41%
Common Stocks - 7.49%
BASF SEA		393,024			30,275,641
Bayer AGA		202,695			15,562,149
Deutsche Post AGA		451,164			14,284,144
E.ON SEA		1,464,646			14,190,370
Fresenius Medical Care AG & Co. KGaAA		106,087			8,350,428
Fresenius SE & Co. KGaAA		138,936			8,854,410
HeidelbergCement AGA		170,782			11,603,218
Infineon Technologies AGA		583,261			11,692,727
LANXESS AGA		212,851			13,209,500
Merck KGaAA		142,635			15,284,555
SAP SEA		419,883			44,998,924
Siemens AGA		138,739			15,987,105
Telefonica Deutschland Holding AGA		3,058,649			11,896,812
Total Common Stocks					216,189,983
Preferred Stocks - 1.92%
Draegerwerk AG & Co. KGaAA C		71,725			3,855,164
Volkswagen AGA C		306,957			51,697,990
Total Preferred Stocks					55,553,154
Total Germany (Cost $271,625,295)					271,743,137
Hong Kong - 0.97%
Common Stocks - 0.97%
CK Asset Holdings Ltd.A		1,419,082			9,188,149
CK Hutchison Holdings Ltd.A		1,460,082			14,669,518
Techtronic Industries Co., Ltd.A		874,000			4,103,147
Total Common Stocks					27,960,814
Total Hong Kong (Cost $31,351,983)					27,960,814
Ireland - 2.89%
Common Stocks - 2.89%
Bank of Ireland Group PLCA		2,288,131			16,226,390
CRH PLCA		435,632			13,066,320
Linde PLCD		240,568			39,468,645
Ryanair Holdings PLC, Sponsored ADRD		175,683			14,546,552
Total Common Stocks					83,307,907
Total Ireland (Cost $76,694,102)					83,307,907

See accompanying notes

10

American Beacon International Equity Fund^SM

Schedule of Investments

October 31, 2018

	Shares		Fair Value
Israel - 0.96%
Common Stocks - 0.96%
Bank Leumi Le-Israel BMA		1,184,312		$	7,381,371
Teva Pharmaceutical Industries Ltd., Sponsored ADR		1,018,399			20,347,612
Total Common Stocks					27,728,983
Total Israel (Cost $35,489,691)					27,728,983
Italy - 2.11%
Common Stocks - 2.11%
Eni SpAA		1,180,461			20,995,415
UniCredit SpAA		3,133,667			40,058,116
Total Common Stocks					61,053,531
Total Italy (Cost $69,229,880)					61,053,531
Japan - 14.14%
Common Stocks - 14.14%
Astellas Pharma, Inc.A		1,070,800			16,518,187
Daiwa House Industry Co., Ltd.A		882,654			26,559,422
Digital Garage, Inc.A		208,800			5,742,842
Don Quijote Holdings Co., Ltd.A B		559,700			33,487,571
East Japan Railway Co.A		229,300			20,022,033
Ezaki Glico Co., Ltd.A		219,000			10,886,646
FANUC Corp.A		74,200			12,895,120
IHI Corp.A		212,400			7,749,342
Inpex Corp.A		448,400			5,172,434
Japan Airlines Co., Ltd.A		451,300			16,040,034
Kao Corp.A		225,260			14,979,233
KDDI Corp.A		1,585,000			39,441,118
Kirin Holdings Co., Ltd.A		453,000			10,802,022
Mitsui Fudosan Co., Ltd.A		614,300			13,802,941
Nexon Co., Ltd.A D		975,900			11,060,793
Omron Corp.A		145,300			5,869,713
Panasonic Corp.A		1,005,100			11,081,985
Ryohin Keikaku Co., Ltd.A		31,800			8,397,941
Seven & i Holdings Co., Ltd.A		266,900			11,549,833
SoftBank Group Corp.A		157,300			12,753,641
Sompo Holdings, Inc.A		372,800			15,417,054
Sumitomo Metal Mining Co., Ltd.A		253,500			7,957,540
Sumitomo Mitsui Financial Group, Inc.A		735,100			28,558,036
Sumitomo Rubber Industries Ltd.A		285,700			4,097,664
Suntory Beverage & Food Ltd.A		215,300			8,761,924
Taiheiyo Cement Corp.A		126,700			3,731,214
Takeda Pharmaceutical Co., Ltd.A B		708,200			28,617,446
Yamaha Corp.A		369,100			16,207,385
Total Common Stocks					408,161,114
Total Japan (Cost $382,180,696)					408,161,114
Luxembourg - 1.13%
Common Stocks - 1.13%
SES S.A.A		999,383			21,472,936
Tenaris S.A.A		762,916			11,259,444
Total Common Stocks					32,732,380
Total Luxembourg (Cost $32,109,359)					32,732,380

See accompanying notes

11

American Beacon International Equity Fund^SM

Schedule of Investments

October 31, 2018

	Shares		Fair Value
Netherlands - 7.67%
Common Stocks - 7.67%
ABN AMRO Group N.V.A E		447,463		$	10,992,949
Aegon N.V.A		809,646			4,974,180
Akzo Nobel N.V.A		431,734			36,310,806
ING Groep N.V.A		1,986,683			23,504,335
NXP Semiconductors N.V.		153,100			11,480,969
QIAGEN N.V.A D		274,583			9,972,264
Royal Dutch Shell PLC, Class AA		1,168,770			37,338,750
Royal Dutch Shell PLC, Class BA		1,590,971			51,801,507
SBM Offshore N.V.A		668,578			11,566,926
Wolters Kluwer N.V.A		412,455			23,419,028
Total Common Stocks					221,361,714
Total Netherlands (Cost $200,603,645)					221,361,714
Norway - 1.50%
Common Stocks - 1.50%
Equinor ASAA		609,057			15,692,800
Telenor ASAA		845,519			15,485,691
Yara International ASAA		280,558			12,043,385
Total Common Stocks					43,221,876
Total Norway (Cost $37,811,150)					43,221,876
Republic of Korea - 3.43%
Common Stocks - 3.43%
Hana Financial Group, Inc.A		472,142			15,921,421
KB Financial Group, Inc., ADR		366,217			15,216,316
Samsung Electronics Co., Ltd.A		1,094,293			40,926,147
SK Innovation Co., Ltd.A		17,062			3,208,553
SK Telecom Co., Ltd.A		100,538			23,631,720
Total Common Stocks					98,904,157
Total Republic of Korea (Cost $78,778,351)					98,904,157
Singapore - 1.30%
Common Stocks - 1.30%
DBS Group Holdings Ltd.A		982,910			16,677,908
Singapore Telecommunications Ltd.A		9,172,595			20,930,919
Total Common Stocks					37,608,827
Total Singapore (Cost $36,502,512)					37,608,827
Spain - 0.86%
Common Stocks - 0.86%
CaixaBank S.A.A		2,368,254			9,586,476
Red Electrica Corp. S.A.A		729,346			15,105,562
Total Common Stocks					24,692,038
Total Spain (Cost $23,382,936)					24,692,038
Sweden - 1.21%
Common Stocks - 1.21%
Assa Abloy AB, Class BA		1,047,521			20,882,008
Epiroc AB, Class AA D		1,065,022			9,341,266
Getinge AB, Class BA		483,082			4,739,856
Total Common Stocks					34,963,130
Total Sweden (Cost $40,068,135)					34,963,130

See accompanying notes

12

American Beacon International Equity Fund^SM

Schedule of Investments

October 31, 2018

	Shares		Fair Value
Switzerland - 7.94%
Common Stocks - 7.94%
ABB Ltd.A		1,429,264		$	28,732,488
Aryzta AGA B D		332,801			3,098,998
Cie Financiere Richemont S.A.A		249,106			18,166,015
Ferguson PLCA		376,920			25,432,163
Givaudan S.A.A		4,942			11,963,899
Julius Baer Group Ltd.A D		225,980			10,304,329
Novartis AGA		900,362			78,625,183
Roche Holding AGA		135,011			32,760,169
UBS Group AGA D		1,451,884			20,258,802
Total Common Stocks					229,342,046
Total Switzerland (Cost $240,969,751)					229,342,046
United Kingdom - 22.09%
Common Stocks - 22.09%
Aon PLC		171,599			26,800,332
AstraZeneca PLCA		298,934			22,834,359
Aviva PLCA		3,324,826			18,190,277
BAE Systems PLCA		939,462			6,310,669
Balfour Beatty PLCA		2,812,579			9,451,017
Barclays PLCA		12,826,499			28,213,183
BP PLCA		7,172,547			51,954,498
British American Tobacco PLCA		1,289,809			55,969,731
Carnival PLCA		275,353			15,033,439
Cobham PLCA D		9,280,316			12,764,405
Compass Group PLCA		1,029,449			20,255,760
Diageo PLCA		643,659			22,262,340
GlaxoSmithKline PLCA		627,490			12,133,728
Howden Joinery Group PLCA		1,798,435			10,780,367
HSBC Holdings PLCA		1,634,824			13,408,816
Informa PLCA		1,667,353			15,195,060
Johnson Matthey PLCA		319,633			12,130,610
Kingfisher PLCA		3,776,078			12,285,133
Lloyds Banking Group PLCA		15,765,031			11,525,631
Melrose Industries PLCA		4,237,886			9,119,458
Micro Focus International PLCA		625,988			9,701,343
Prudential PLCA		3,192,847			64,048,519
RELX PLCA		876,041			17,341,619
Rolls Royce Holdings PLC, C Shares EntitlementA F		70,684,290			90,350
Rolls-Royce Holdings PLCA D		1,650,314			17,677,707
RSA Insurance Group PLCA		1,409,391			10,162,501
Shire PLCA		654,650			39,156,895
SSE PLCA		1,447,032			21,081,602
Standard Chartered PLCA		3,204,200			22,491,825
Travis Perkins PLCA		179,943			2,545,703
Unilever PLCA		378,110			20,022,272
Vodafone Group PLCA		14,261,593			26,936,975
Total Common Stocks					637,876,124
Total United Kingdom (Cost $710,499,019)					637,876,124
SHORT-TERM INVESTMENTS - 2.72% (Cost $78,615,200)
Investment Companies - 2.72%
American Beacon U.S. Government Money Market Select Fund, Select Class, 2.11%G H		78,615,200			78,615,200

See accompanying notes

13

American Beacon International Equity Fund^SM

Schedule of Investments

October 31, 2018

	Shares		Fair Value
SECURITIES LENDING COLLATERAL - 1.49% (Cost $43,093,443)
Investment Companies - 1.49%
American Beacon U.S. Government Money Market Select Fund, Select Class, 2.11%G H		43,093,443		$	43,093,443
TOTAL INVESTMENTS - 101.25% (Cost $2,957,595,827)					2,923,239,464
LIABILITIES, NET OF OTHER ASSETS - (1.25%)					(36,061,447	)
TOTAL NET ASSETS - 100.00%				$	2,887,178,017
Percentages are stated as a percent of net assets.

^A Fair valued pursuant to procedures approved by the Board of Trustees. At period end, the value of these securities amounted to $2,507,990,456 or 86.87% of net assets.

^B All or a portion of this security is on loan at October 31, 2018.

^C A type of Preferred Stock that has no maturity date.

^D Non-income producing security.

^E Security exempt from registration under the Securities Act of 1933. These securities may be resold to qualified institutional buyers pursuant to Rule 144A. At the period end, the value of these securities amounted to $10,992,949 or 0.38% of net assets. The Fund has no right to demand registration of these securities.

^F Value was determined using significant unobservable inputs.

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

^H 7-day yield.

ADR - American Depositary Receipt.

PLC - Public Limited Company.

Long Futures Contracts Open on October 31, 2018:
Equity Futures Contracts
Description	Number of Contracts	Expiration Date	Notional Amount		Contract Value		Unrealized Appreciation (Depreciation)
Amsterdam Index Futures	25	November 2018	$	2,918,660	$	2,926,768	$	8,108
CAC40 Index Futures	165	November 2018		9,516,379		9,512,564		(3,815	)
DAX Index Futures	24	December 2018		8,169,833		7,786,405		(383,428	)
FTSE 100 Index Futures	166	December 2018		15,413,255		15,088,209		(325,046	)
FTSE/MIB Index Futures	17	December 2018		1,967,412		1,827,786		(139,626	)
Hang Seng Index Futures	19	November 2018		2,999,607		3,017,802		18,195
IBEX 35 Index Futures	26	November 2018		2,609,559		2,616,948		7,389
OMXS30 Index Futures	136	November 2018		2,269,725		2,276,785		7,060
S&P/TSX 60 Index Futures	56	December 2018		7,992,650		7,607,611		(385,039	)
SPI 200 Futures	57	December 2018		6,146,891		5,850,842		(296,049	)
TOPIX Index Futures	144	December 2018		22,179,115		20,942,438		(1,236,677	)
			$	82,183,086	$	79,454,158	$	(2,728,928	)

Forward Foreign Currency Contracts Open on October 31, 2018:
Currency Purchased*		Currency Sold*		Settlement Date	Counterparty		Unrealized Appreciation		Unrealized (Depreciation)			Net Unrealized Appreciation (Depreciation)
CAD	2,204,496	USD	2,242,820	12/10/2018		BNP	$	-	$	(38,324	)	$	(38,324	)
USD	4,615,683	CHF	4,606,695	12/10/2018		BNP		8,988		-			8,988
CHF	1,446,879	USD	1,462,096	12/10/2018		BOM		-		(15,217	)		(15,217	)
SEK	2,878,105	USD	2,913,131	12/10/2018		BOM		-		(35,026	)		(35,026	)
CAD	11,075,667	USD	11,083,573	12/10/2018		BOM		-		(7,906	)		(7,906	)
GBP	20,322,877	USD	20,616,628	12/10/2018		BOM		-		(293,751	)		(293,751	)
USD	4,326,750	EUR	4,228,045	12/10/2018		BOM		98,705		-			98,705
USD	1,436,125	SEK	1,440,059	12/10/2018		BOM		-		(3,934	)		(3,934	)
EUR	6,164,241	USD	6,283,018	12/10/2018		BRC		-		(118,777	)		(118,777	)
USD	16,073,700	EUR	16,048,616	12/10/2018		BRC		25,084		-			25,084
USD	2,805,527	GBP	2,724,907	12/10/2018		BRC		80,620		-			80,620
EUR	4,777,997	USD	4,810,227	12/10/2018		CBK		-		(32,230	)		(32,230	)

See accompanying notes

14

American Beacon International Equity Fund^SM

Schedule of Investments

October 31, 2018

Currency Purchased*		Currency Sold*		Settlement Date	Counterparty		Unrealized Appreciation		Unrealized (Depreciation)			Net Unrealized Appreciation (Depreciation)
JPY	5,220,610	USD	5,187,799	12/10/2018		CBK	$	32,811	$	-		$	32,811
USD	3,659,972	JPY	3,623,256	12/10/2018		CBK		36,716		-			36,716
JPY	4,218,974	USD	4,246,861	12/10/2018		DUB		-		(27,887	)		(27,887	)
USD	12,986,186	JPY	13,006,877	12/10/2018		DUB		-		(20,691	)		(20,691	)
AUD	1,482,762	USD	1,476,624	12/10/2018		GSC		6,138		-			6,138
CAD	1,549,229	USD	1,564,147	12/10/2018		GSC		-		(14,918	)		(14,918	)
USD	9,492,113	GBP	9,548,699	12/10/2018		GSC		-		(56,586	)		(56,586	)
USD	5,222,609	CAD	5,205,652	12/10/2018		GSC		16,957		-			16,957
USD	929,321	AUD	922,387	12/10/2018		GSC		6,934		-			6,934
HKD	962,672	USD	962,192	12/10/2018		JPM		480		-			480
GBP	2,718,504	USD	2,741,160	12/10/2018		JPM		-		(22,656	)		(22,656	)
AUD	7,433,180	USD	7,491,398	12/10/2018		JPM		-		(58,218	)		(58,218	)
USD	1,868,682	CHF	1,829,525	12/10/2018		JPM		39,157		-			39,157
USD	3,654,747	AUD	3,640,665	12/10/2018		MYC		14,082		-			14,082
SEK	412,150	USD	413,794	12/10/2018		RBC		-		(1,644	)		(1,644	)
USD	1,505,519	CAD	1,485,374	12/10/2018		RBC		20,145		-			20,145
CHF	9,234,794	USD	9,643,218	12/10/2018		SCB		-		(408,424	)		(408,424	)
JPY	30,481,360	USD	31,042,160	12/10/2018		SOG		-		(560,800	)		(560,800	)
EUR	33,905,753	USD	34,788,987	12/10/2018		SOG		-		(883,234	)		(883,234	)
SEK	573,326	USD	579,809	12/10/2018		SOG		-		(6,483	)		(6,483	)
CHF	2,347,691	USD	2,389,252	12/10/2018		UAG		-		(41,561	)		(41,561	)
USD	394,601	SEK	385,397	12/10/2018		UAG		9,204		-			9,204
AUD	1,079,660	USD	1,077,087	12/10/2018		WBC		2,573		-			2,573
GBP	3,858,151	USD	3,962,698	12/10/2018		WBC		-		(104,547	)		(104,547	)
							$	398,594	$	(2,752,814	)	$	(2,354,220	)

* All values denominated in USD.

Glossary:
Counterparty Abbreviations:
BNP	BNP Paribas, N.A.
BOM	Bank of Montreal.
BRC	Barclays Bank PLC.
CBK	Citibank, N.A.
DUB	Deutsche Bank AG.
GSC	Goldman Sachs Capital Markets.
JPM	JPMorgan Chase Bank, N.A.
MYC	Morgan Stanley Bank, N.A.
RBC	Royal Bank of Canada.
SCB	Standard and Chartered Bank.
SOG	Societe Generale.
UAG	UBS AG.
WBC	Westpac Banking Corporation.
Currency Abbreviations:
AUD	Australian Dollar.
CAD	Canadian Dollar.
CHF	Swiss Franc.
EUR	Euro.
GBP	Pound Sterling.
HKD	Hong Kong Dollar.
JPY	Japanese Yen.
SEK	Swedish Krona.
USD	United States Dollar.

See accompanying notes

15

American Beacon International Equity Fund^SM

Schedule of Investments

October 31, 2018

Index Abbreviations:
CAC40	Euronet Paris - French Stock Market Index.
DAX	Deutsche Boerse AG German Stock Index.
FTSE 100	Financial Times Stock Exchange 100 Index.
FTSE/MIB	Borsa Italiana - Italian Stock Market Index
Hang Seng	Hong Kong Stock Market Index.
IBEX	Bolsa de Madrid - Spanish Stock Market Index.
OMXS30	Stockholm Stock Exchange’s leading share index.
SPI 200	Australian Equity Market Index Future.
S&P/TSX	Canadian Equity Market Index.
TOPIX	Tokyo Stock Exchange Tokyo Price Index.

The Fund’s investments are summarized by level based on the inputs used to determine their values. As of October 31, 2018, the investments were classified as described below:

International Equity Fund	Level 1			Level 2			Level 3		Total
Assets
Foreign Common Stocks
Australia	$	-		$	24,544,196		$	-	$	24,544,196
Belgium		-			26,220,548			-		26,220,548
Canada		153,055,342			-			-		153,055,342
China		-			33,644,929			-		33,644,929
Denmark		-			52,265,070			-		52,265,070
Finland		12,624,597			13,537,603			-		26,162,200
France		-			244,980,758			-		244,980,758
Germany		-			216,189,983			-		216,189,983
Hong Kong		-			27,960,814			-		27,960,814
Ireland		54,015,197			29,292,710			-		83,307,907
Israel		20,347,612			7,381,371			-		27,728,983
Italy		-			61,053,531			-		61,053,531
Japan		-			408,161,114			-		408,161,114
Luxembourg		-			32,732,380			-		32,732,380
Netherlands		11,480,969			209,880,745			-		221,361,714
Norway		-			43,221,876			-		43,221,876
Republic of Korea		15,216,316			83,687,841			-		98,904,157
Singapore		-			37,608,827			-		37,608,827
Spain		-			24,692,038			-		24,692,038
Sweden		-			34,963,130			-		34,963,130
Switzerland		-			229,342,046			-		229,342,046
United Kingdom		26,800,332			610,985,442			90,350		637,876,124
Foreign Preferred Stocks
Germany		-			55,553,154			-		55,553,154
Short-Term Investments		78,615,200			-			-		78,615,200
Securities Lending Collateral		43,093,443			-			-		43,093,443
Total Investments in Securities - Assets	$	415,249,008		$	2,507,900,106		$	90,350	$	2,923,239,464
Financial Derivative Instruments - Assets
Futures Contracts	$	40,752		$	-		$	-	$	40,752
Forward Foreign Currency Contracts		-			398,594			-		398,594
Total Financial Derivative Instruments - Assets	$	40,752		$	398,594		$	-	$	439,346
Financial Derivative Instruments - Liabilities
Futures Contracts	$	(2,769,680	)	$	-		$	-	$	(2,769,680	)
Forward Foreign Currency Contracts		-			(2,752,814	)		-		(2,752,814	)
Total Financial Derivative Instruments - Liabilities	$	(2,769,680	)	$	(2,752,814	)	$	-	$	(5,522,494	)

See accompanying notes

16

American Beacon International Equity Fund^SM

Schedule of Investments

October 31, 2018

U.S. GAAP requires transfers between all levels to level 3 to be disclosed. During the year ended October 31, 2018, there were no transfers into or out of Level 3.

The following table is a reconciliation of Level 3 assets within the Fund for which significant unobservable inputs were used to determine fair value. Transfers in or out of Level 3 represent the ending value of any security or instrument where a change in the level has occurred from the beginning to the end of the period:

Security Type	Balance as of 10/31/2017		Purchases		Sales		Accrued Discounts (Premiums)		Realized Gain (Loss)		Change in Unrealized Appreciation (Depreciation)			Transfer into Level 3		Transfer out of Level 3		Balance as of 10/31/2018		Change in Unrealized Appreciation (Depreciation) at Period end**
Common Stocks	$	-	$	91,268	$	-	$	-	$	-	$	(918	)	$	-	$	-	$	90,350	$	(918	)

** Change in unrealized appreciation (depreciation) attributable to Level 3 securities held at period end. This balance is included in the change in unrealized appreciation (depreciation) on the Statement of Operations.

The common stock classified as Level 3 was fair valued using the redemption value as of October 31, 2018. This security was included in the Level 3 category due to the use of unobservable inputs that were significant to the valuation.

See accompanying notes

17

American Beacon International Equity Fund^SM

Statement of Assets and Liabilities

October 31, 2018

Assets:
Investments in unaffiliated securities, at fair value†§	$	2,801,530,821
Investments in affiliated securities, at fair value‡		121,708,643
Foreign currency, at fair value^		93
Deposits with broker for futures contracts		18,312,018
Dividends and interest receivable		6,981,402
Receivable for investments sold		4,669,771
Receivable for fund shares sold		3,881,465
Receivable for tax reclaims		4,422,023
Receivable for expense reimbursement (Note 2)		186
Unrealized appreciation from forward foreign currency contracts		398,594
Prepaid expenses		91,541
Total assets		2,961,996,557
Liabilities:
Payable for investments purchased		6,924,717
Payable for fund shares redeemed		10,371,000
Payable for foreign currency deposits with broker for futures contracts, at fair value¤		4,077,358
Payable upon return of securities loaned (Note 9)§		43,093,443
Management and sub-advisory fees payable (Note 2)		3,836,135
Service fees payable (Note 2)		109,223
Transfer agent fees payable (Note 2)		163,716
Custody and fund accounting fees payable		67,026
Professional fees payable		75,151
Trustee fees payable (Note 2)		20,456
Payable for prospectus and shareholder reports		113,276
Unrealized depreciation from forward foreign currency contracts		2,752,814
Payable for variation margin from open futures contracts (Note 5)		3,177,975
Other liabilities		36,250
Total liabilities		74,818,540
Net assets	$	2,887,178,017
Analysis of net assets:
Paid-in-capital	$	2,710,082,872
Total distributable earnings (deficits)A		177,095,145
Net assets	$	2,887,178,017

See accompanying notes

18

American Beacon International Equity Fund^SM

Statement of Assets and Liabilities

October 31, 2018

Shares outstanding at no par value (unlimited shares authorized):
Institutional Class		86,224,911
Y Class		46,605,121
Investor Class		13,543,268
Advisor Class		2,566,290
A Class		764,380
C Class		371,427
R6 Class		2,601,245
Net assets:
Institutional Class	$	1,613,462,237
Y Class	$	904,847,058
Investor Class	$	250,804,403
Advisor Class	$	48,571,916
A Class	$	14,141,551
C Class	$	6,625,329
R6 Class	$	48,725,523
Net asset value, offering and redemption price per share:
Institutional Class	$	18.71
Y Class	$	19.42
Investor Class	$	18.52
Advisor Class	$	18.93
A Class	$	18.50
A Class (offering price)	$	19.63
C Class	$	17.84
R6 Class	$	18.73
† Cost of investments in unaffiliated securities	$	2,835,887,184
‡ Cost of investments in affiliated securities	$	121,708,643
§ Fair value of securities on loan	$	41,033,943
¤ Cost of foreign currency deposits with broker for futures contracts	$	(4,136,908	)
^ Cost of foreign currency	$	94
A The Fund’s investments in affiliated securities did not have unrealized appreciation (depreciation) at year end.

See accompanying notes

19

American Beacon International Equity Fund^SM

Statement of Operations

For the year ended October 31, 2018

Investment income:
Dividend income from unaffiliated securities (net of foreign taxes)†	$	88,866,699
Dividend income from affiliated securities (Note 8)		1,828,438
Interest income (net of foreign taxes)		11,900
Income derived from securities lending (Note 9)		907,013
Total investment income		91,614,050
Expenses:
Management and sub-advisory fees (Note 2)		20,029,052
Transfer agent fees:
Institutional Class (Note 2)		577,766
Y Class (Note 2)		1,040,001
Investor Class		14,045
Advisor Class		2,845
A Class		3,811
C Class		2,769
R6 Class		416
Custody and fund accounting fees		891,551
Professional fees		160,755
Registration fees and expenses		164,431
Service fees (Note 2):
Investor Class		1,071,699
Advisor Class		135,576
A Class		18,909
C Class		5,730
Distribution fees (Note 2):
Advisor Class		135,576
A Class		41,754
C Class		75,083
Prospectus and shareholder report expenses		291,032
Trustee fees (Note 2)		220,962
Other expenses		308,679
Total expenses		25,192,442
Net fees waived and expenses (reimbursed) (Note 2)		(8,383	)
Net expenses		25,184,059
Net investment income		66,429,991
Realized and unrealized gain (loss) from investments:
Net realized gain (loss) from:
Investments in unaffiliated securitiesA		180,506,328
Commission recapture (Note 1)		22,432
Foreign currency transactions		(517,228	)
Forward foreign currency contracts		(5,982,698	)
Futures contracts		(3,463,552	)
Change in net unrealized appreciation (depreciation) of:
Investments in unaffiliated securitiesB		(476,202,055	)
Foreign currency transactions		25,773
Forward foreign currency contracts		592,626
Futures contracts		(7,263,158	)
Net (loss) from investments		(312,281,532	)
Net (decrease) in net assets resulting from operations	$	(245,851,541	)
† Foreign taxes	$	8,672,394
A The Fund did not recognize net realized gains (losses) from the sale of investments in affiliated securities.
B The Fund’s investments in affiliated securities did not have a change in net unrealized appreciation (depreciation) at year end.

See accompanying notes

20

American Beacon International Equity Fund^SM

Statement of Changes in Net Assets

	Year Ended October 31, 2018			Year Ended October 31, 2017
Increase (decrease) in net assets:
Operations:
Net investment income	$	66,429,991		$	53,998,740
Net realized gain from investments in unaffiliated securities, commission recapture, foreign currency transactions, forward foreign currency contracts, and futures contracts		170,565,282			122,355,671
Change in net unrealized appreciation (depreciation) of investments in unaffiliated securities, foreign currency transactions, forward foreign currency contracts, and futures contracts		(482,846,814	)		393,563,481
Net increase (decrease) in net assets resulting from operations		(245,851,541	)		569,917,892
Distributions to shareholders:
Net investment income:
Institutional Class		-			(34,791,829	)
Y Class		-			(18,973,818	)
Investor Class		-			(7,051,311	)
Advisor Class		-			(456,420	)
A Class		-			(472,655	)
C Class		-			(111,074	)
Total retained earnings:*
Institutional Class		(51,858,343	)		-
Y Class		(30,796,239	)		-
Investor Class		(8,756,108	)		-
Advisor Class		(1,516,721	)		-
A Class		(482,751	)		-
C Class		(155,808	)		-
R6 Class		(351,275	)		-
Net distributions to shareholders		(93,917,245	)		(61,857,107	)
Capital share transactions (Note 11):
Proceeds from sales of shares		802,744,600			775,385,640
Reinvestment of dividends and distributions		86,428,547			57,320,154
Cost of shares redeemed		(740,146,553	)		(913,700,486	)
Net increase (decrease) in net assets from capital share transactions		149,026,594			(80,994,692	)
Net increase (decrease) in net assets		(190,742,192	)		427,066,093
Net assets:
Beginning of period		3,077,920,209			2,650,854,116
End of period	$	2,887,178,017		$	3,077,920,209
*  Distributions from net investment income and net realized capital gains are combined for the year ended October 31, 2018. See Note 1 in the Notes to Financial Statements for more information regarding new accounting pronouncements.

See accompanying notes

21

American Beacon International Equity Fund^SM

Notes to Financial Statements

October 31, 2018

1.  Organization and Significant Accounting Policies

American Beacon Funds (the “Trust”), is organized as a Massachusetts business trust. The Fund, a series within the Trust, is registered under the Investment Company Act of 1940, as amended (the “Act”), as a diversified, open-end management investment company. As of October 31, 2018, the Trust consists of thirty-three active series, one of which is presented in this filing: American Beacon International Equity Fund (the “Fund”). The remaining thirty-two active series are reported in separate filings.

American Beacon Advisors, Inc. (the “Manager”) is a Delaware corporation and a wholly-owned subsidiary of Resolute Investment Managers, Inc. (“RIM”) organized in 1986 to provide business management, advisory, administrative, and asset management consulting services to the Trust and other investors. The Manager is registered as an investment advisor under the Investment Advisers Act of 1940, as amended (the “Advisers Act”). RIM is, in turn, a wholly-owned subsidiary of Resolute Acquisition, Inc., which is a wholly-owned subsidiary of Resolute Topco, Inc., a wholly-owned subsidiary of Resolute Investment Holdings, LLC (“RIH”). RIH is owned primarily by Kelso Investment Associates VIII, L.P., KEP VI, LLC and Estancia Capital Partners L.P., investment funds affiliated with Kelso & Company, L.P. (“Kelso”) or Estancia Capital Management, LLC (“Estancia”), which are private equity firms.

Recent Accounting Pronouncements

In March 2017, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2017-08, Premium Amortization of Purchased Callable Debt Securities. The amendments in the ASU shorten the premium amortization period on a purchased callable debt security from the security’s contractual life to the earliest call date. It is anticipated that this change will enhance disclosures by reducing losses recognized when a security is called on an earlier date. This ASU is effective for fiscal years beginning after December 15, 2018. The Manager continues to evaluate the impact this ASU will have on the financial statements and other disclosures.

In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820). The amendments in the ASU impact disclosure requirements for fair value measurement. It is anticipated that this change will enhance the effectiveness of disclosures in the notes to the financial statements. This ASU is effective for fiscal years beginning after December 15, 2019. Early adoption is permitted and can include the entire standard or certain provisions that exclude or amend disclosures. For the year ended October 31, 2018, the Fund has chosen to adopt certain provisions of the standard which eliminated the disclosures of transfers between level 1 and level 2 portfolio investments and the policy for the timing of transfers between levels of the fair value hierarchy. Management has evaluated that the full adoption of this ASU will not have a material impact on the Fund’s financial statements.

In August 2018, the U.S. Securities and Exchange Commission (“SEC”) adopted amendments to certain disclosure requirements in Securities Act Release No. 33-10532, Disclosure Update and Simplification, which is intended to facilitate the disclosure of information to investors and simplify compliance without significantly altering the total mix of information provided to investors. Effective with the current reporting period, the Fund adopted the amendments with the impacts being that the Fund is no longer required to present components of distributable earnings on the Statement of Assets and Liabilities or the sources of distributable earnings and the amount of undistributed net investment income on the Statement of Changes in Net Assets.

Class Disclosure

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

Class	Eligible Investors	Minimum Initial Investments
Institutional	Large institutional investors - sold directly or through intermediary channels.	$	250,000
Y Class	Large institutional retirement plan investors - sold directly or through intermediary channels.	$	100,000

22

American Beacon International Equity Fund^SM

Notes to Financial Statements

October 31, 2018

Class	Eligible Investors	Minimum Initial Investments
Investor	All investors using intermediary organizations, such as broker-dealers or retirement plan sponsors.	$	2,500
Advisor Class	All investors who invest through intermediary organizations, such as broker-dealers or third party administrators.	$	2,500
A Class	All investors who invest through intermediary organizations, such as broker-dealers or third party administrator. Retail investors who invest directly through a financial intermediary such as a broker, bank, or registered investment advisor which may include a front-end sales charge and a contingent deferred sales charge (“CDSC”).	$	2,500
C Class	Retail investors who invest directly through a financial intermediary such as a broker or through employee directed benefit plans with applicable sales charges which may include CDSC.	$	1,000
R6 Class	Large institutional retirement plan investors - sold through retirement plan sponsors.		None

Each class offered by the Trust has equal rights as to assets and voting privileges. Income 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 service, distribution, transfer agent fees, and sub-transfer agent fees that vary amongst the classes as described more fully in Note 2.

Significant Accounting Policies

The following is a summary of significant accounting policies, consistently followed by the Fund in preparation of the financial statements. The Fund is considered an investment company and accordingly, follows the investment company accounting and reporting guidance of the FASB Accounting Standards Codification Topic 946, Financial Services – Investment Companies, a part of Generally Accepted Accounting Principles (“U.S. GAAP”).

Security Transactions and Investment Income

Security transactions are recorded as of the trade date for financial reporting purposes. Securities purchased or sold on a when-issued or delayed-delivery basis may be settled beyond a standard settlement period for the security after the trade date.

Dividend income, net of foreign taxes, is recorded on 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, net of foreign taxes, is earned from settlement date, recorded on the accrual basis, and adjusted, if necessary, for accretion of discounts and amortization of premiums. Realized gains (losses) from securities sold are determined on the basis of specific lot identification.

Currency Translation

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

Distributions to Shareholders

The Fund intends to declare income distributions daily and distribute them to Shareholders quarterly. The Fund’s final distribution for each taxable (fiscal) year will include any remaining investment company taxable

23

American Beacon International Equity Fund^SM

Notes to Financial Statements

October 31, 2018

income undistributed during the year, as well as all net capital gain realized during the year. Dividends to shareholders are determined in accordance with federal income tax regulations, which may differ in amount and character from net investment income and realized gains recognized for purposes of U.S. GAAP. If all or a portion of any Fund distribution exceeds the sum of the Fund’s investment company taxable income and realized net capital gain for a taxable year, the excess would be treated (i) first, as dividend income to the extent of the Fund’s current or accumulated earnings and profits, as calculated for federal income tax purposes (“E&P”), (ii) then as a tax-free “return of capital,” reducing a Shareholder’s adjusted tax basis in his or her Shares (which would result in a higher tax liability when the Shares are sold, even if they had not increased in value, or, in fact, had lost value), and (iii) then, after that basis is reduced to zero, as realized capital gain (assuming the Shares are held as capital assets), long- or short-term, depending on the Shareholder’s holding period for the Shares.

Section 19(a) of the Act and Rule 19a-1 thereunder require the Fund to provide a written statement accompanying any distribution from a source other than net income that adequately discloses its source or sources. Thus, if the source of a distribution were the original capital contribution of the Shareholder, and the payment amounted to a return of capital, the Fund would be required to provide written disclosure to that effect. Nevertheless, persons who periodically receive the payment of a dividend or other distribution may be under the impression that they are receiving net profits when they are not. Shareholders should read any written disclosure provided pursuant to Section 19(a) and Rule 19a-1 carefully and should not assume that the source of any distribution from the Fund is net profit.

Commission Recapture

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

Allocation of Income, Trust Expenses, Gains, and Losses

Investment income, realized and unrealized gains and losses from investments of the Fund is allocated daily to each class of shares based upon the relative proportion of net assets of each class to the total net assets of the Fund. Expenses directly charged or attributable to any Fund will be paid from the assets of the Fund. Generally, expenses of the Trust will be allocated among and charged to the assets of the Fund on a basis that the Trust’s Board of Trustees (the “Board”) deems fair and equitable, which may be based on the relative net assets of the Fund or nature of the services performed and relative applicability to the Fund.

Use of Estimates

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

Other

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

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Notes to Financial Statements

October 31, 2018

2.  Transactions with Affiliates

Management and Investment Sub-Advisory Agreements

The Fund and the Manager are parties to a Management Agreement that obligates the Manager to provide the Fund with investment advisory and administrative services. As compensation for performing the duties under the Management Agreement, the Manager will receive an annualized management fee based on a percentage of the Fund’s average daily net assets that is calculated and accrued daily according to the following schedule:

First $15 billion	0.35	%
Next $15 billion	0.325	%
Over $30 billion	0.30	%

The Trust, on behalf of the Fund, and the Manager have entered into Investment Advisory Agreements with Causeway Capital Management LLC; Lazard Asset Management LLC; and Templeton Investment Counsel, LLC (“Sub-Advisors”) pursuant to which the Fund has agreed to pay an annualized sub-advisory fee that is calculated and accrued daily based on the Fund’s average daily net assets.

The Management and Sub-Advisory Fees paid by the Fund for the year ended October 31, 2018 were as follows:

	Effective Fee Rate			Amount of Fees Paid
Management Fees		0.35	%	$	11,153,117
Sub-Advisor Fees		0.28	%		8,875,935
Total		0.63	%	$	20,029,052

As compensation for services provided by the Manager in connection with securities lending activities conducted by the Fund, the lending Fund pays to the Manager, with respect to cash collateral posted by borrowers, a fee up to 10% of the net monthly interest income (the gross interest income earned by the investment of cash collateral, less the amount paid to borrowers and related expenses) from such activities and, with respect to loan fees paid by borrowers, a fee up to 10% of such loan fees. These fees are included in “Income derived from securities lending” and “Management and investment advisory fees” on the Statement of Operations. During the year ended October 31, 2018, the Manager received securities lending fees of $93,380 for the securities lending activities of the Fund.

Distribution Plans

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

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

Service Plans

The Manager and the Trust entered into a Service Plan that obligates the Manager to oversee additional shareholder servicing of the Investor, Advisor, A, and C Classes of the Fund. As compensation for performing the

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Notes to Financial Statements

October 31, 2018

duties required under the Service Plan, the Manager receives an annualized fee up to 0.25% of the average daily net assets of the A and C Classes, up to 0.25% of the average daily net assets of the Advisor Class, and up to 0.375% of the average daily net assets of the Investor Class of the Fund.

Sub-Transfer Agent Fees

The Manager has entered into agreements, which include servicing agreements, with financial intermediaries that provide recordkeeping, processing, shareholder communications and other services to customers of the intermediaries that hold positions in the Institutional and Y Classes of the Fund and has agreed to compensate the intermediaries for providing these services. Intermediaries transact with the Fund primarily through the use of omnibus accounts on behalf of its customers who hold positions in the Fund. Certain services would have been provided by the Fund’s transfer agent and other service providers if the shareholders’ accounts were maintained directly by the Fund’s transfer agent. Accordingly, the Fund, pursuant to Board approval, has agreed to reimburse the Manager for certain non-distribution shareholder services provided by financial intermediaries for the Institutional and Y Classes. The reimbursement amounts (sub-transfer agent fees) paid to the Manager are subject to a fee limit of up to 0.10% of an intermediary’s average net assets in the Institutional and Y Classes on an annual basis. During the year ended October 31, 2018, the sub-transfer agent fees, as reflected in “Transfer agent fees” on the Statement of Operations, were as follows:

Fund	Sub-Transfer Agent Fees
International Equity	$	1,524,948

As of October 31, 2018, the Fund owed the Manager the following reimbursement of sub-transfer agent fees, as reflected in “Transfer agent fees payable” on the Statement of Assets and Liabilities:

Fund	Reimbursement Sub-Transfer Agent Fees
International Equity	$	140,150

Investments in Affiliated Funds

The Fund may invest in the American Beacon U.S. Government Money Market Select Fund (the “USG Select Fund”). Cash collateral received by the Fund in connection with securities lending may also be invested in the USG Select Fund. The Fund and the USG Select Fund have the same investment advisor and therefore, are considered to be affiliated. The Manager serves as investment advisor to the USG Select Fund and receives management fees and administrative fees totaling 0.10% of the average daily net assets of the USG Select Fund. During the year ended October 31, 2018, the Manager earned fees on the Fund’s direct investments and securities lending collateral investments in the USG Select Fund as shown below:

Fund	Direct Investments in USG Select Fund		Securities Lending Collateral in USG Select Fund		Total
International Equity	$	116,909	$	33,598	$	150,507

Interfund Credit Facility

Pursuant to an exemptive order issued by the SEC, the Fund, along with other registered investment companies having management contracts with the Manager, may participate in a credit facility whereby each fund, under certain conditions, is permitted to lend money directly to and borrow directly from other participating funds for temporary purposes. The interfund credit facility is advantageous to the fund because it provides added liquidity, and eliminates the need to maintain higher cash balances to meet redemptions. This situation could arise when shareholder redemptions exceed anticipated volumes and certain funds have insufficient cash on hand to satisfy such redemptions or when sales of securities do not settle as expected, resulting in a cash shortfall for a

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Notes to Financial Statements

October 31, 2018

fund. When a fund liquidates portfolio securities to meet redemption requests, they often do not receive payment in settlement for up to two days (or longer for certain foreign transactions). Redemption requests normally are satisfied on the next business day. The credit facility provides a source of immediate, short-term liquidity pending settlement of the sale of portfolio securities. The credit facility is administered by a credit facility team consisting of professionals from the Manager’s asset management, compliance, and accounting areas who report the activities of the credit facility to the Board. During the year ended October 31, 2018, the Fund did not utilize the credit facility.

Expense Reimbursement Plan

The Manager voluntarily agreed to reduce fees and/or reimburse expenses for the R6 Class of the Fund to the extent that total operating expenses exceed the expense cap. During the year ended October 31, 2018, the Manager waived and/or reimbursed expenses as follows:

		Expense Cap							Expiration of Reimbursed Expenses
Fund	Class	11/1/2017 - 10/31/2018			Reimbursed Expenses		(Recouped) Expenses
International Equity	R6		0.66	%	$	8,383	$	-		2021

Of these amounts, $186 was disclosed as a receivable from the Manager on the Statement of Assets and Liabilities at October 31, 2018.

The Fund has adopted an Expense Reimbursement Plan whereby the Manager may seek repayment of such fee reductions and expense reimbursements. Under the policy, the Manager can be reimbursed by the Fund for any contractual or voluntary fee reductions or expense reimbursements if reimbursement to the Manager (a) occurs within three years after the Manager’s own waiver or reimbursement and (b) does not cause the Fund’s annual operating expenses to exceed the lesser of the contractual percentage limit in effect at the time of the waiver/reimbursement or time of recoupment. The reimbursed expenses listed above will expire in 2021. The carryover of excess expenses potentially reimbursable to the Manager are as follows:

Fund	Recouped Expenses		Excess Expense Carryover		Expired Expense Carryover		Expiration of Reimbursed Expenses
International Equity	$	-	$	3,001	$	-		2020

The Distributor

Effective March 1, 2018, Resolute Investment Distributors, Inc. (“RID” or “Distributor”) replaced Foreside Fund Services, LLC (“Foreside”) as the Fund’s distributor and principal underwriter of the Fund’s shares.

RID is a registered broker-dealer and is a member of the Financial Industry Regulatory Authority, Inc. (“FINRA”). The Distributor is affiliated with the Manager through common ownership. Under a Distribution Agreement with the Trust, the Distributor acts as the distributor and principal underwriter of the Trust in connection with the continuous offering of shares of the Fund. The Distributor continually distributes shares of the Fund on a best efforts basis. The Distributor has no obligation to sell any specific quantity of the Fund’s shares. Pursuant to the Distribution Agreement, to the extent applicable, the Distributor receives, and may re-allocate to broker-dealers, all or a portion of the sales charge paid by the purchasers of A Class and C Class shares. For A Class and C Class shares, the Distributor receives commission revenue consisting of the portion of A Class and C Class sales charge remaining after the allowances by the Distributor to the broker-dealers. The Distributor retains any portion of the commission fees that are not paid to the broker-dealers for use solely to pay distribution related expenses.

Prior to March 1, 2018, Foreside served as the distributor and principal underwriter of the Fund’s shares. Pursuant to a Sub-Administration Agreement between Foreside and the Manager in effect through February 28, 2018, Foreside received a fee from the Manager for providing administrative services in connection with the

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October 31, 2018

marketing and distribution of shares of the Trust, including the registration of Manager employees as registered representatives of Foreside to facilitate distribution of Fund shares. Foreside also received a fee from the Manager under a Marketing Agreement pursuant to which Foreside provided services in connection with the marketing of a Fund to institutional investors. Pursuant to the Distribution Agreement with the Trust in effect through February 28, 2018, Foreside received, and may have re-allocated to broker-dealers, all or a portion of the sales charge paid by the purchasers of A and C Class shares. For A and C Class shares, Foreside received commission revenues consisting of the portion of A and C Class sales charge remaining after the allowances by Foreside to the broker dealers. Foreside retained any portion of the commission fees that were not paid to the broker-dealers for use solely to pay distribution related expenses.

Sales Commissions

The Fund’s Distributor, formerly Foreside, may receive a portion of A Class sales charges from broker dealers and it may be used to offset distribution related expenses. During the period November 1, 2017 through February 28, 2018 Foreside collected $3,091 for the Fund from the sale of Class A Shares. During the period March 1, 2018 through October 31, 2018 RID collected $1,554 for the Fund from the sale of Class A Shares.

A CDSC of 0.50% will be deducted with respect to Class A Shares on certain purchases of $1,000,000 or more that are redeemed in whole or part within 18 months of purchase, unless waived as discussed in the Fund’s Prospectus. Any applicable CDSC will be 0.50% of the lesser of the original purchase price or the value of the redemption of the Class A Shares redeemed. During the year ended October 31, 2018, there were no CDSC fees collected for Class A Shares of the Fund.

A CDSC of 1.00% will be deducted with respect to Class C Shares redeemed within 12 months of purchase, unless waived as discussed in the Fund’s Prospectus. Any applicable CDSC will be 1.00% of the lesser of the original purchase price or the value of the redemption of the Class C Shares redeemed. During the period November 1, 2017 through February 28, 2018, Foreside collected CDSC fees of $32 for Class C Shares of the Fund. During the period March 1, 2018 through October 31, 2018, RID collected CDSC fees of $590 for Class C Shares of the Fund.

Trustee Fees and Expenses

As compensation for their service to the Trust, American Beacon Select Funds, American Beacon Institutional Funds Trust, American Beacon Sound Point Enhanced Income Fund, and American Beacon Apollo Total Return Fund, each Trustee receives an annual retainer of $120,000, plus $10,000 for each Board meeting attended in person or via teleconference, $2,500 for attendance by Committee members at meetings of the Audit Committee and the Investment Committee, and $1,500 for attendance by Committee members at meetings of the Nominating and Governance Committee, plus reimbursement of reasonable expenses incurred in attending Board meetings, Committee meetings, and relevant educational seminars. The Trustees also may be compensated for attendance at special Board and/or Committee meetings from time to time. The Board Chairman receives an additional annual retainer of $50,000 as well as a $2,500 fee each quarter for his attendance at the committee meetings. Effective January 1, 2018, the Board Vice Chair receives an additional annual retainer of $10,000. The Chairpersons of the Audit Committee and the Investment Committee each receive an additional annual retainer of $25,000 and the Chairman of the Nominating and Governance Committee receives an additional annual retainer of $10,000. These expenses are allocated on a prorated basis to each Fund of the Trusts according to its respective net assets.

3.  Security Valuation and Fair Value Measurements

The price of the Fund’s shares is based on its net asset value (“NAV”) per share. The Fund’s NAV is computed by adding total assets, subtracting all the Fund’s liabilities, and dividing the result by the total number of shares outstanding.

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October 31, 2018

The NAV of each class of the Fund’s shares is determined based on a pro rata allocation of the Fund’s investment income, expenses and total capital gains and losses. The Fund’s NAV per share is determined each business day as of the regular close of trading on the New York Stock Exchange (“NYSE” or “Exchange”), which is typically 4:00 p.m. Eastern Time (“ET”). However, if trading on the NYSE closes at a time other than 4:00 p.m. ET, the Fund’s NAV per share typically would still be determined as of the regular close of trading on the NYSE. The Fund does not price its shares on days that the NYSE is closed. Foreign exchanges may permit trading in foreign securities on days when the Fund is not open for business, which may result in the value of the Fund’s portfolio investments being affected at a time when you are unable to buy or sell shares.

Equity securities, including shares of closed-end funds and exchange-traded funds (“ETFs”), are valued at the last sale price or official closing price taken from the primary exchange in which each security trades. Investments in other mutual funds are valued at the closing NAV per share on the day of valuation. Debt securities are valued at bid quotes from broker/dealers or evaluated bid prices from pricing services, who may consider a number of inputs and factors, such as prices of comparable securities, yield curves, spreads, credit ratings, coupon rates, maturity, default rates, and underlying collateral. Futures are valued based on their daily settlement prices. Exchange-traded and over-the-counter (“OTC”) options are valued at the last sale price. Options with no last sale for the day are priced at mid quote. Swaps are valued at evaluated mid prices from pricing services.

The valuation of securities traded on foreign markets and certain fixed income securities will generally be based on prices determined as of the earlier closing time of the markets on which they primarily trade unless a significant event has occurred. When the Fund holds securities or other assets that are denominated in a foreign currency, the Fund will normally use the currency exchange rates as of 4:00 p.m. ET.

Securities may be valued at fair value, as determined in good faith and pursuant to procedures approved by the Board, under certain limited circumstances. For example, fair value pricing will be used when market quotations are not readily available or reliable, as determined by the Manager, such as when (i) trading for a security is restricted or stopped; (ii) a security’s trading market is closed (other than customary closings); or (iii) a security has been de-listed from a national exchange. A security with limited market liquidity may require fair value pricing if the Manager determines that the available price does not reflect the security’s true market value. In addition, if a significant event that the Manager determines to affect the value of one or more securities held by the Fund occurs after the close of a related exchange but before the determination of the Fund’s NAV, fair value pricing may be used on the affected security or securities. Securities of small-capitalization companies are also more likely to require a fair value determination using these procedures because they are more thinly traded and less liquid than the securities of larger-capitalization companies. The Fund may fair value securities as a result of significant events occurring after the close of the foreign markets in which the Fund invests as described below. In addition, the Fund may invest in illiquid securities requiring these procedures.

The Fund may use fair value pricing for securities primarily traded in non-U.S. markets because most foreign markets close well before the Fund’s pricing time of 4:00 p.m. ET. The earlier close of these foreign markets gives rise to the possibility that significant events, including broad market moves, may have occurred in the interim and may materially affect the value of those securities. If the Manager determines that the last quoted prices of non-U.S. securities will, in its judgment, materially affect the value of some or all its portfolio securities, the Manager can adjust the previous closing prices to reflect what it believes to be the fair value of the securities as of the close of the Exchange. In deciding whether it is necessary to adjust closing prices to reflect fair value, the Manager reviews a variety of factors, including developments in foreign markets, the performance of U.S. securities markets, and the performance of instruments trading in U.S. markets that represent foreign securities and baskets of foreign securities. These securities are fair valued using a pricing service, using methods approved by the Board, that considers the correlation of the trading patterns of the foreign security to intraday trading in the U.S. markets, based on indices of domestic securities and other appropriate indicators such as prices of relevant American Depository Receipts (“ADRs”) and futures contracts. The Valuation Committee, established by the Board, may also fair value securities in other situations, such as when a particular foreign market is closed but the Fund is open. The Fund uses outside pricing services to provide closing prices and information to evaluate

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Notes to Financial Statements

October 31, 2018

and/or adjust those prices. As a means of evaluating its security valuation process, the Valuation Committee routinely compares closing prices, the next day’s opening prices in the same markets and adjusted prices.

Attempts to determine the fair value of securities introduce an element of subjectivity to the pricing of securities. As a result, the price of a security determined through fair valuation techniques may differ from the price quoted or published by other sources and may not accurately reflect the market value of the security when trading resumes. If a reliable market quotation becomes available for a security formerly valued through fair valuation techniques, the Manager compares the new market quotation to the fair value price to evaluate the effectiveness of the Fund’s fair valuation procedures. If any significant discrepancies are found, the Manager may adjust the Fund’s fair valuation procedures.

Valuation Inputs

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

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

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

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

Investments in 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.

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

Level 3 trading assets and trading liabilities, at fair value

The valuation techniques and significant inputs used in determining the fair values of financial instruments classified as Level 3 of the fair value hierarchy are as follows.

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October 31, 2018

Securities and other assets for which market quotes are not readily available are valued at fair value as determined in good faith by the Board or persons acting at their direction and may be categorized as Level 3 of the fair value hierarchy.

Market quotes are considered not readily available in circumstances where there is an absence of current or reliable market-based data (e.g., trade information or broker quotes), including where events occur after the close of the relevant market, but prior to the Exchange close, that materially affect the values of the Fund’s securities or assets. In addition, market quotes are considered not readily available when, due to extraordinary circumstances, the exchanges or markets on which the securities trade, do not open for trading for the entire day and no other market prices are available. The Board has delegated to the Manager the responsibility for monitoring significant events that may materially affect the fair values of a Fund’s securities or assets and for determining whether the value of the applicable securities or assets should 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 the Fund’s NAV that fairly reflects security values as of the time of pricing, the Trust cannot guarantee that values determined by the Board or persons acting at their direction would accurately reflect the price that a Fund could obtain for a security if it were to dispose of that security as of the time of pricing (for instance, in a forced or distressed sale). The prices used by a Fund may differ from the value that would be realized if the securities were sold.

4.  Securities and Other Investments

American Depositary Receipts

ADRs are depositary receipts for foreign issuers in registered form traded in U.S. securities markets. Depositary receipts may not be denominated in the same currency as the securities into which they may be converted. Investing in depositary receipts entails substantially the same risks as direct investment in foreign securities. There is generally less publicly available information about foreign companies and there may be less governmental regulation and supervision of foreign stock exchanges, brokers, and listed companies. In addition, such companies may use different accounting and financial standards (and certain currencies may become unavailable for transfer from a foreign currency), resulting in the Fund’s possible inability to convert immediately into U.S. currency proceeds realized upon the sale of portfolio securities of the affected foreign companies. In addition, the Fund may invest in unsponsored depositary receipts, the issuers of which are not obligated to disclose material information about the underlying securities to investors in the United States. Ownership of unsponsored depositary receipts may not entitle the Fund to the same benefits and rights as ownership of a sponsored depositary receipt or the underlying security.

Common Stock

Common stock generally takes the form of shares in a corporation which represent an ownership interest. It ranks below preferred stock and debt securities in claims for dividends and for assets of the company in a liquidation or bankruptcy. The value of a company’s common stock may fall as a result of factors directly relating to that company, such as decisions made by its management or decreased demand for the company’s products or services. A stock’s value may also decline because of factors affecting not just the company, but also companies in

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October 31, 2018

the same industry or sector. The price of a company’s stock may also be affected by changes in financial markets that are relatively unrelated to the company, such as changes in interest rates, currency exchange rates or industry regulation. Companies that elect to pay dividends on their common stock generally only do so after they invest in their own business and make required payments to bondholders and on other debt and preferred stock. Therefore, the value of a company’s common stock will usually be more volatile than its bonds, other debt and preferred stock. Common stock may be exchange-traded or OTC. OTC stock may be less liquid than exchange-traded stock.

Foreign Securities

The Fund may invest in U.S. dollar-denominated and non-U.S. dollar denominated equity and debt securities of foreign issuers and foreign branches of U.S. banks, including negotiable certificates of deposit (“CDs”), bankers’ acceptances, and commercial paper. Foreign issuers are issuers organized and doing business principally outside the United States and include corporations, banks, non-U.S. governments, and quasi-governmental organizations. While investments in foreign securities may be intended to reduce risk by providing further diversification, such investments involve sovereign and other risks, in addition to the credit and market risks normally associated with domestic securities. These additional risks include the possibility of adverse political and economic developments (including political or social instability, nationalization, expropriation, or confiscatory taxation); the potentially adverse effects of unavailability of public information regarding issuers, different governmental supervision and regulation of financial markets, reduced liquidity of certain financial markets, and the lack of uniform accounting, auditing, and financial reporting standards or the application of standards that are different or less stringent than those applied in the United States; different laws and customs governing securities tracking; and possibly limited access to the courts to enforce the Fund’s rights as an investor.

Illiquid and Restricted Securities

The Fund may invest in securities that are subject to legal or contractual restrictions on resale. These securities may be sold privately, but are required to be registered or exempted from such registration before being sold to the public. Private placement securities are generally considered to be restricted except for those securities traded between qualified institutional investors under the provisions of Rule 144A of the Securities Act of 1933 (the “Securities Act”). Illiquid securities have included securities that have not been registered under the Securities Act, securities that are otherwise not readily marketable, and repurchase agreements having a remaining maturity of longer than seven calendar days. Disposal of both illiquid and restricted securities may involve time-consuming negotiations and expenses, and prompt sale at an acceptable price may be difficult to achieve. Restricted securities outstanding during the year ended October 31, 2018 are disclosed in the Fund’s Notes to the Schedule of Investments.

Regulation S under the Securities Act permits the sale abroad of securities that are not registered for sale in the United States and includes a provision for U.S. investors, such as the Fund, to purchase such unregistered securities if certain conditions are met.

Other Investment Company Securities and Other Exchange-Traded Products

The Fund may invest in shares of other investment companies, including open-end funds, closed-end funds, business development companies, ETFs, unit investment trusts, and other investment companies of the Trust. The Fund may invest in investment company securities advised by the Manager or a sub-advisor. Investments in the securities of other investment companies may involve duplication of advisory fees and certain other expenses. By investing in another investment company, the Fund becomes a shareholder of that investment company. As a result, the Fund’s shareholders indirectly will bear the Fund’s proportionate share of the fees and expenses paid by shareholders of the other investment company, in addition to the fees and expenses the Fund’s shareholders directly bear in connection with the Fund’s own operations. These other fees and expenses are reflected as Acquired Fund Fees and Expenses and are included in the Fees and Expenses Table for the Fund in its Prospectus, if applicable. Investments in other investment companies may involve the payment of substantial premiums above the value of such issuer’s portfolio securities.

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October 31, 2018

Preferred Stock

A preferred stock blends the characteristics of a bond and common stock. It can offer the higher yield of a bond and has priority over common stock in equity ownership, but does not have the seniority of a bond and its participation in the issuer’s growth may be limited. Preferred stock generally has preference over common stock in the receipt of dividends and in any residual assets after payment to creditors should the issuer be dissolved. Although the dividend is set at a fixed or variable rate, in some circumstances it can be changed or omitted by the issuer. Preferred stocks are subject to the risks associated with other types of equity securities, as well as additional risks, such as credit risk, interest rate risk, potentially greater volatility and risks related to deferral, non-cumulative dividends, subordination, liquidity, limited voting rights, and special redemption rights.

Rights and Warrants

Rights are short-term warrants issued in conjunction with new stock or bond issues. Warrants are options to purchase an issuer’s securities at a stated price during a stated term. If the market price of the underlying common stock does not exceed the warrant’s exercise price during the life of the warrant, the warrant will expire worthless. Warrants usually have no voting rights, pay no dividends and have no rights with respect to the assets of the corporation issuing them. The percentage increase or decrease in the value of a warrant may be greater than the percentage increase or decrease in the value of the underlying common stock. Warrants may be purchased with values that vary depending on the change in value of one or more specified indices (“index warrants”). Index warrants are generally issued by banks or other financial institutions and give the holder the right, at any time during the term of the warrant, to receive upon exercise of the warrant a cash payment from the issuer based on the value of the underlying index at the time of the exercise. The market for warrants or rights may be very limited and it may be difficult to sell them promptly at an acceptable price. There is no specific limit on the percentage of assets the Fund may invest in rights and warrants.

5.  Financial Derivative Instruments

The Fund may utilize derivative instruments to gain market exposure on cash balances to hedge foreign currency exposure or reduce market exposure in anticipation of liquidity needs. When considering the Fund’s use of derivatives, it is important to note that the Fund does not use derivatives for the purpose of creating financial leverage.

Forward Foreign Currency Contracts

The Fund may enter into forward foreign currency contracts to hedge the exchange rate risk on investment transactions or to hedge the value of 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 Fund may also use currency contracts to increase exposure to a foreign currency or to shift exposure to foreign currency fluctuations from one country to another. The Fund bears the market risk that arises from changes in foreign exchange rates, and accordingly, the unrealized gain (loss) on these contracts is reflected in the accompanying financial statements. The Fund also bears the credit risk if the counterparty fails to perform under the contract.

During the year ended October 31, 2018, the Fund entered into forward foreign currency contracts primarily for hedging foreign currency fluctuations.

33

American Beacon International Equity Fund^SM

Notes to Financial Statements

October 31, 2018

The Fund’s forward foreign currency contract notional dollar values outstanding fluctuate throughout the operating year as required to meet strategic requirements. The following table illustrates the average quarterly volume of forward foreign currency contracts. For the purpose of this disclosure, volume is measured by the amounts bought and sold in USD at each quarter end.

Average Forward Foreign Currency Notional Amounts Outstanding Year Ended October 31, 2018
Fund	Purchased Contracts		Sold Contracts
International Equity	$	155,347,264	$	53,006,109

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 Statements of Assets and Liabilities. Payments to and from the broker, known as variation margin, are required to be made on a daily basis as the price of the futures contract fluctuates. Changes in initial settlement values are accounted for as unrealized appreciation (depreciation) until the contracts are terminated, at which time realized gains and losses are recognized. Futures contracts are valued at the most recent settlement price established each day by the exchange on which they are traded.

During the year ended October 31, 2018, the Fund entered into futures contracts primarily for return enhancement, hedging and exposing cash to markets.

The Fund’s average futures contracts outstanding fluctuate throughout the operating year as required to meet strategic requirements. The following table illustrates the average quarterly volume of futures contracts. For purpose of this disclosure, volume is measured by contracts outstanding at each quarter end.

Average Futures Contracts Outstanding
Fund	Year Ended October 31, 2018
International Equity		997

The following is a summary of the fair valuations of the Fund’s derivative instruments categorized by risk exposure⁽¹⁾:

Fair values of financial instruments on the Statement of Assets and Liabilities as of October 31, 2018:
	Derivatives not accounted for as hedging instruments
Assets:	Credit contracts			Foreign exchange contracts				Commodity contracts			Interest rate contracts			Equity contracts				Total
Unrealized appreciation of forward foreign currency contracts		$	-		$	398,594			$	-		$	-		$	-			$	398,594
Receivable for variation margin from open futures contracts(2)			-			-				-			-			40,752				40,752
Liabilities:	Credit contracts			Foreign exchange contracts				Commodity contracts			Interest rate contracts			Equity contracts				Total
Unrealized depreciation of forward foreign currency contracts		$	-		$	(2,752,814	)		$	-		$	-		$	-			$	(2,752,814	)
Payable for variation margin from open futures contracts			-			-				-			-			(2,769,680	)			(2,769,680	)

34

American Beacon International Equity Fund^SM

Notes to Financial Statements

October 31, 2018

The effect of financial derivative instruments on the Statement of Operations as of October 31, 2018:
	Derivatives not accounted for as hedging instruments
Realized gain (loss) from derivatives recognized as a result of operations	Credit contracts			Foreign exchange contracts				Commodity contracts			Interest rate contracts			Equity contracts				Total
Forward foreign currency contracts		$	-		$	(5,982,698	)		$	-		$	-		$	-			$	(5,982,698	)
Futures contracts			-			-				-			-			(3,463,552	)			(3,463,552	)
Net change in unrealized appreciation (depreciation) of derivatives recognized as a result from operations:	Credit contracts			Foreign exchange contracts				Commodity contracts			Interest rate contracts			Equity contracts				Total
Forward foreign currency contracts		$	-		$	592,626			$	-		$	-		$	-			$	592,626
Futures contracts			-			-				-			-			(7,263,158	)			(7,263,158	)

⁽¹⁾ See Note 3 in the Notes to Financial Statements for additional information.

⁽²⁾ Includes cumulative appreciation (depreciation) of futures contracts as reported in the Fund’s Schedule of Investments footnotes. Only current day’s variation margin is reported within the Statement of Assets and Liabilities.

Master Agreements

Master Securities Forward Transaction Agreements (“Master Forward Agreements”) govern the considerations and factors surrounding the settlement of certain forward settling transactions, such as delayed delivery or sale-buyback financing transactions by and between the Fund and select counterparties. The Master Forward Agreements maintain provisions for, among other things, initiation and confirmation, payment and transfer, events of default, termination, and maintenance of collateral.

Offsetting Assets and Liabilities

The Fund is a party to enforceable master netting agreements between brokers and counterparties which provide for the right to offset under certain circumstances. The Fund employs multiple money managers and counterparties and has elected not to offset qualifying financial and derivative instruments on the Statement of Assets and Liabilities, as such all financial and derivative instruments are presented on a gross basis. The impacts of netting arrangements that provide the right to offset are detailed below. The net amount represents the net receivable or payable that would be due from or to the counterparty in the event of default. Exposure from borrowings and other financing agreements such as repurchase agreements can only be netted across transactions governed by the same Master Agreement with the same legal entity. All amounts reported below represent the balance as of the report date, October 31, 2018.

Offsetting of Financial and Derivative Assets as of October 31, 2018:
	Assets			Liabilities
Futures Contracts	$	40,752		$	2,769,680
Forward Foreign Currency Contracts		398,594			2,752,814
Total derivative assets and liabilities in the Statement of Assets and Liabilities	$	439,346		$	5,522,494
Derivatives not subject to a Master Netting Agreement or similar agreement (“MNA”)	$	(40,752	)	$	(2,769,680	)
Total derivative assets and liabilities subject to an MNA	$	398,594		$	2,752,814

35

American Beacon International Equity Fund^SM

Notes to Financial Statements

October 31, 2018

Financial Assets, Derivatives, and Collateral Received/(Pledged) by Counterparty as of October 31, 2018:
						Gross Amounts Not Offset in the Statement of Assets and Liabilities
Counterparty	Gross Amounts of Assets Presented in the Statement of Assets and Liabilities		Derivatives Available for Offset			Non-Cash Collateral Pledged		Cash Collateral Pledged		Net Amount
BNP Paribas, N.A.	$	8,988	$	(8,988	)	$	-	$	-	$	-
Bank of Montreal		98,705		(98,705	)		-		-		-
Barclays Bank PLC		105,704		(105,704	)		-		-		-
Citibank, N.A.		69,527		(32,230	)		-		-		37,297
Goldman Sachs Capital Markets		30,029		(30,029	)		-		-		-
JPMorgan Chase Bank, N.A.		39,637		(39,637	)		-		-		-
Morgan Stanley Bank, N.A.		14,082		-			-		-		14,082
Royal Bank of Canada		20,145		(1,644	)		-		-		18,501
UBS AG		9,204		(9,204	)		-		-		-
Westpac Banking Corporation		2,573		(2,573	)		-		-		-
Total	$	398,594	$	(328,714	)	$	-	$	-	$	69,880
						Gross Amounts Not Offset in the Statement of Assets and Liabilities
Counterparty	Gross Amounts of Liabilities Presented in the Statement of Assets and Liabilities		Derivatives Available for Offset			Non-Cash Collateral Received		Cash Collateral Received		Net Amount
BNP Paribas, N.A.	$	38,324	$	(8,988	)	$	-	$	-	$	29,336
Bank of Montreal		355,834		(98,705	)		-		-		257,129
Barclays Bank PLC		118,777		(105,704	)		-		-		13,073
Citibank, N.A.		32,230		(32,230	)		-		-		-
Deutsche Bank AG		48,578		-			-		-		48,578
Goldman Sachs Capital Markets		71,504		(30,029	)		-		-		41,475
JPMorgan Chase Bank, N.A.		80,874		(39,637	)		-		-		41,237
Royal Bank of Canada		1,644		(1,644	)		-		-		-
Societe Generale		1,450,517		-			-		-		1,450,517
Standard and Chartered Bank		408,424		-			-		-		408,424
UBS AG		41,561		(9,204	)		-		-		32,357
Westpac Banking Corporation		104,547		(2,573	)		-		-		101,974
Total	$	2,752,814	$	(328,714	)	$	-	$	-	$	2,424,100

	Remaining Contractual Maturity of the Agreements As of October 31, 2018
	Overnight and Continuous		<30 days		Between 30 & 90 days		>90 days		Total
Securities Lending Transactions
Common Stocks	$	43,093,443	$	-	$	-	$	-	$	43,093,443
Total Borrowings	$	43,093,443	$	-	$	-	$	-		43,093,443
Gross amount of recognized liabilities for securities lending transactions									$	43,093,443

6.  Principal Risks

Investing in the Fund may involve certain risks including, but not limited to, those described below.

Counterparty Risk

The Fund is subject to the risk that a party or participant to a transaction, such as a broker or derivative counterparty, will be unwilling or unable to satisfy its obligation to make timely principal, interest or settlement

36

American Beacon International Equity Fund^SM

Notes to Financial Statements

October 31, 2018

payments or to otherwise honor its obligations to the Fund. As a result the Fund may obtain no recovery of its investment or may only obtain a limited recovery, and any recovery may be delayed. Not all derivative transactions require a counterparty to post collateral, which may expose the Fund to greater losses in the event of a default by a counterparty.

Credit Risk

A Fund is subject to the risk that the issuer or guarantor of a debt security or a counterparty to a loan will fail to make timely payment of interest or principal or otherwise honor its obligations or default completely. A decline in the credit rating of an individual security held by a Fund may have an adverse impact on its price and make it difficult for a Fund to sell it. Ratings represent a rating agency’s opinion regarding the quality of the security and are not a guarantee of quality. Rating agencies might not always change their credit rating on an issuer or security in a timely manner to reflect events that could affect the issuer’s ability to make timely payments on its obligations. Credit risk is typically greater for securities with ratings that are below investment grade.

Currency Risk

The Fund may have exposure to foreign currencies by making direct investments in non-U.S. currencies, in securities denominated in non-U.S. currencies or by purchasing or selling forward foreign currency exchange contracts in non-U.S. currencies. Foreign currencies will fluctuate, and may decline in value relative to the U.S. dollar and other currencies and thereby affect the Fund’s investments in foreign (non-U.S.) currencies or in securities that traded in, and receive revenues in, or in derivatives that provide exposure to, foreign (non-U.S.) currencies.

Equity Investments Risk

Equity securities are subject to market risk. The Fund’s investments in equity securities may include common stocks, preferred stocks, securities convertible into or exchangeable for common stocks, REITs, depositary receipts, and U.S. dollar-denominated foreign stocks traded on U.S. exchanges. Such investments may expose the Fund to additional risk. The value of a company’s common stock may fall as a result of factors affecting the company, companies in the same industry or sector, or the financial markets overall. Common stock generally is subordinate to preferred stock upon the liquidation or bankruptcy of the issuing company. Preferred stocks and convertible securities are sensitive to movements in interest rates. Preferred stocks may be less liquid than common stocks and, unlike common stocks, participation in the growth of an issuer may be limited. Distributions on preferred stocks generally are payable at the discretion of an issuer and after required payments to bond holders. Convertible securities are subject to the risk that the credit standing of the issuer may have an effect on the convertible securities’ investment value. Investments in REITs are subject to the risks associated with investing in the real estate industry such as adverse developments affecting the real estate industry and real property values. Depositary receipts and U.S. dollar-denominated foreign stocks traded on U.S. exchanges are subject to certain of the risks associated with investing directly in foreign securities, including, but not limited to, currency fluctuations and political and financial instability in the home country of a particular depositary receipt or foreign stock.

Foreign Investing Risk

Non-U.S. investments carry potential risks not associated with U.S. investments. Such risks include, but are not limited to: (1) currency exchange rate fluctuations, (2) political and financial instability, (3) less liquidity and greater volatility, (4) lack of uniform accounting, auditing and financial reporting standards, (5) increased price volatility, (6) less government regulation and supervision of foreign stock exchanges, brokers and listed companies, and (7) delays in transaction settlement in some foreign markets.

37

American Beacon International Equity Fund^SM

Notes to Financial Statements

October 31, 2018

The risk of investing in Europe may be heightened due to the 2016 referendum in which the United Kingdom voted to exit the European Union (EU). There is a significant degree of uncertainty about how negotiations relating to the United Kingdom’s withdrawal will be conducted, as well as the potential consequences and precise time frame for “Brexit.” It is expected that the United Kingdom’s exit from the EU will take place within two years of the United Kingdom notifying the European Council that it intends to withdraw from the EU. While it is not possible to determine the precise impact these events may have on a Fund, during this period and beyond, the impact on the United Kingdom and European economies and the broader global economy could be significant, resulting in negative impacts, such as increased volatility and illiquidity, and potentially lower economic growth, on markets in the United Kingdom, Europe and globally, which may adversely affect the value of a Fund’s investments. In addition, if one or more other countries were to exit the EU or abandon the use of the euro as a currency, the value of investments tied to those countries or the euro could decline significantly and unpredictably.

Forward Foreign Currency Contracts Risk

Forward foreign currency contracts, including non-deliverable forwards, are derivative instruments pursuant to a contract with a counterparty to pay a fixed price for an agreed amount of securities or other underlying assets at an agreed date or to buy or sell a specific currency at a future date at a price set at the time of the contract. The use of forward foreign currency contracts may expose the Fund to additional risks that it would not be subject to if it invested directly in the securities or currencies underlying the forward foreign currency contract.

Futures Contracts Risk

Futures contracts are derivative instruments where one party pays a fixed price for an agreed amount of securities or other underlying assets at an agreed date. The use of such derivative instruments may expose the Fund to additional risks that it would not be subject to if it invested directly in the securities underlying those derivatives. Futures contracts may experience potentially dramatic price changes (losses) and imperfect correlation between the price of the contract and the underlying security or index, which will increase the volatility of the Fund and may involve a small investment of cash (the amount of initial and variation margin) relative to the magnitude of the risk assumed (the potential increase or decrease in the price of the futures contract).

Market Risk

Since the financial crisis that started in 2008, the U.S. and many foreign economies continue to experience its after-effects. Conditions in the U.S. and many foreign economies have resulted, and may continue to result, in certain instruments experiencing unusual liquidity issues, increased price volatility and, in some cases, credit downgrades and increased likelihood of default. These events have reduced the willingness and ability of some lenders to extend credit, and have made it more difficult for some borrowers to obtain financing on attractive terms, if at all. In some cases, traditional market participants have been less willing to make a market in some types of debt instruments, which has affected the liquidity of those instruments. During times of market turmoil, investors tend to look to the safety of securities issued or backed by the U.S. Treasury, causing the prices of these securities to rise and the yields to decline. Reduced liquidity in fixed income and credit markets may negatively affect many issuers worldwide. In addition, global economies and financial markets are becoming increasingly interconnected, which increases the possibilities that conditions in one country or region might adversely impact issuers in a different country or region. A rise in protectionist trade policies, and the possibility of changes to some international trade agreements, could affect the economies of many nations in ways that cannot necessarily be foreseen at the present time.

In response to the financial crisis, the U.S. and other governments and the Federal Reserve and certain foreign central banks have taken steps to support financial markets. In some countries where economic conditions are recovering, they are nevertheless perceived as still fragile. Withdrawal of government support, failure of efforts in response to the crisis, or investor perception that such efforts are not succeeding, could adversely impact the value and liquidity of certain securities. The severity or duration of adverse economic conditions may also be

38

American Beacon International Equity Fund^SM

Notes to Financial Statements

October 31, 2018

affected by policy changes made by governments or quasi-governmental organizations, including changes in tax laws. The impact of new financial regulation legislation on the markets and the practical implications for market participants may not be fully known for some time. Regulatory changes are causing some financial services companies to exit long-standing lines of business, resulting in dislocations for other market participants. In addition, political and diplomatic events within the U.S. and abroad, such as the U.S. government’s inability at times to agree on a long-term budget and deficit reduction plan, the threat of a federal government shutdown and threats not to increase the federal government’s debt limit, may affect investor and consumer confidence and may adversely impact financial markets and the broader economy, perhaps suddenly and to a significant degree. The U.S. government has recently reduced federal corporate income tax rates, and future legislative, regulatory and policy changes may result in more restrictions on international trade, less stringent prudential regulation of certain players in the financial markets, and significant new investments in infrastructure and national defense. Markets may react strongly to expectations about the changes in these policies, which could increase volatility, especially if the markets’ expectations for changes in government policies are not borne out.

Changes in market conditions will not have the same impact on all types of securities. Interest rates have been unusually low in recent years in the U.S. and abroad. Because there is little precedent for this situation, it is difficult to predict the impact of a significant rate increase on various markets. For example, because investors may buy securities or other investments with borrowed money, a significant increase in interest rates may cause a decline in the markets for those investments. Because of the sharp decline in the worldwide price of oil, there is a concern that oil producing nations may withdraw significant assets now held in U.S. Treasuries, which could force a substantial increase in interest rates. Regulators have expressed concern that rate increases may cause investors to sell fixed income securities faster than the market can absorb them, contributing to price volatility. In addition, there is a risk that the prices of goods and services in the U.S. and many foreign economies may decline over time, known as deflation (the opposite of inflation). Deflation may have an adverse effect on stock prices and creditworthiness and may make defaults on debt more likely. If a country’s economy slips into a deflationary pattern, it could last for a prolonged period and may be difficult to reverse. The precise details and the resulting impact of the United Kingdom’s vote to leave the European Union (the “EU”), commonly referred to as “Brexit,” are not yet known. The effect on the United Kingdom’s economy will likely depend on the nature of trade relations with the EU and other major economies following its exit, which are matters to be negotiated. The outcomes may cause increased volatility and have a significant adverse impact on world financial markets, other international trade agreements, and the United Kingdom and European economies, as well as the broader global economy for some time, which could significantly adversely affect the value of the Fund’s investments in the United Kingdom and Europe.

Market Timing Risk

Because the Fund invests in foreign securities, it is particularly subject to the risk of market timing activities. Frequent trading by Fund shareholders poses risks to other shareholders in the Fund, including (i) the dilution of the Fund’s NAV, (ii) an increase in the Fund’s expenses, and (iii) interference with the portfolio manager’s ability to execute efficient investment strategies. Because of specific securities in which the Fund may invest, it could be subject to the risk of market timing activities by shareholders.

Multiple Sub-Advisor Risk

The Manager may allocate the Fund’s assets among multiple sub-advisors, each of which is responsible for investing its allocated portion of the Fund’s assets. To a significant extent, the Fund’s performance will depend on the success of the Manager in allocating the Fund’s assets to sub-advisors and its selection and oversight of the sub-advisors. Because each sub-advisor manages its allocated portion of the Fund independently from another sub-advisor, the same security may be held in different portions of the Fund, or may be acquired for one portion of the Fund at a time when a sub-advisor to another portion deems it appropriate to dispose of the security from that other portion, resulting in higher expenses without accomplishing any net result in the Fund’s holdings. Similarly, under some market conditions, one sub-advisor may believe that temporary, defensive investments in short-term

39

American Beacon International Equity Fund^SM

Notes to Financial Statements

October 31, 2018

instruments or cash are appropriate when another sub-advisor believes continued exposure to the equity or debt markets is appropriate for its allocated portion of the Fund. Because each sub-advisor directs the trading for its own portion of the Fund, and does not aggregate its transactions with those of the other sub-advisors, the Fund may incur higher brokerage costs than would be the case if a single sub-adviser were managing the entire Fund. In addition, while the Manager seeks to allocate the Fund’s assets among the Fund’s sub-advisors in a manner that it believes is consistent with achieving the Fund’s investment objective(s), the Manager may be subject to potential conflicts of interest in allocating the Fund’s assets among sub-advisors.

Other Investment Companies Risk

The Fund may invest in shares of other registered investment companies, including money market funds. To the extent that the Fund invests in shares of other registered investment companies, the Fund will indirectly bear the fees and expenses charged by the underlying funds in addition to the Fund’s direct fees and expenses and will be subject to the risks associated with investments in those companies.

Securities Lending Risk

To the extent the Fund lends its securities, it may be subject to the following risks. Borrowers of the Fund’s securities typically provide collateral in the form of cash that is reinvested in securities. The securities in which the collateral is invested may not perform sufficiently to cover the return collateral payments owed to borrowers. In addition, delays may occur in the recovery of securities from borrowers, which could interfere with the Fund’s ability to vote proxies or to settle transactions.

Valuation Risk

The Fund may value certain assets at a price different from the price at which they can be sold. This risk may be especially pronounced for investments, such as certain derivatives, which may be illiquid or which may become illiquid.

7.  Federal Income and Excise Taxes

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

The Fund does not have any unrecorded tax liabilities in the accompanying financial statements. Each of the tax years in the four year period ended October 31, 2018 remain subject to examination by the Internal Revenue Service. If applicable, the Fund recognizes interest accrued related to unrecognized tax benefits in interest expense and penalties in “Other expenses” on the Statement of Operations.

The Fund may be subject to taxes imposed by countries in which it invests. Such taxes are generally based on returns of income earned or gains realized or repatriated. Taxes are accrued and applied to net investment income, net realized capital gains and net unrealized appreciation (depreciation), as applicable, as the income is earned or capital gains are recorded.

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

40

American Beacon International Equity Fund^SM

Notes to Financial Statements

October 31, 2018

The tax character of distributions paid were as follows:

	Year Ended October 31, 2018		Year Ended October 31, 2017
Distributions paid from:
Ordinary income*
Institutional Class	$	33,083,270	$	34,791,829
Y Class		19,410,963		18,973,818
Investor Class		5,187,972		7,051,311
Advisor Class		904,837		456,420
A Class		277,117		472,655
C Class		71,451		111,074
R6 Class		225,362		-
Long-term capital gains
Institutional Class		18,775,073		-
Y Class		11,385,276		-
Investor Class		3,568,136		-
Advisor Class		611,884		-
A Class		205,634		-
C Class		84,357		-
R6 Class		125,913		-
Total distributions paid	$	93,917,245	$	61,857,107

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

As of October 31, 2018 the components of distributable earnings (deficits) on a tax basis were as follows:

Fund	Tax Cost		Unrealized Appreciation		Unrealized (Depreciation)			Net Unrealized Appreciation (Depreciation)
International Equity	$	2,970,868,793	$	243,598,506	$	(290,991,618	)	$	(47,393,112	)

Fund	Net Unrealized Appreciation (Depreciation)			Undistributed Ordinary Income		Undistributed Long-Term Capital Gains		Accumulated Capital and Other (Losses)		Other Temporary Differences		Distributable Earnings
International Equity	$	(47,393,112	)	$	55,542,651	$	168,945,606	$	-	$	-	$	177,095,145

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

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 Section 732 basis adjustments as of October 31, 2018:

Fund	Paid-In-Capital		Distributable Earnings/(Loss)
International Equity	$	110,911	$	(110,911	)

41

American Beacon International Equity Fund^SM

Notes to Financial Statements

October 31, 2018

Under the Regulated Investment Company Modernization Act of 2010 (“RIC MOD”), net capital losses recognized by the Fund in taxable years beginning after December 22, 2010 are carried forward indefinitely and retain their character as short-term and/or long-term losses.

As of October 31, 2018, the Fund did not any have capital loss carryforwards.

8.  Investment Transactions

The aggregate cost of purchases and proceeds from sales and maturities of investments, other than short-term obligations, for the year ended October 31, 2018 were as follows:

Fund	Purchases (non-U.S. Government Securities)		Sales (non-U.S. Government Securities)
International Equity	$	1,051,233,743	$	885,717,039

A summary of the Fund’s transactions in the USG Select Fund for the year ended October 31, 2018 were as follows:

Fund	Type of Transaction	October 31, 2017 Shares/Fair Value		Purchases		Sales		October 31, 2018 Shares/Fair Value		Dividend Income
International Equity	Direct	$	129,125,237	$	970,187,026	$	1,020,697,063	$	78,615,200	$	1,828,438
International Equity	Securities Lending		51,596,738		958,432,288		966,935,583		43,093,443		N/A

9.  Securities Lending

The Fund may lend its securities to qualified financial institutions, such as certain broker-dealers, to earn additional income. The borrowers are required to secure their loans continuously with collateral in an amount at least equal to the fair value of the securities loaned, initially in an amount at least equal to 102% of the fair value of domestic securities loaned and 105% of the fair value of international securities loaned. Collateral is monitored 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 retained 80%, 10%, and 10%, respectively, of the income generated from securities lending.

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

42

American Beacon International Equity Fund^SM

Notes to Financial Statements

October 31, 2018

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, 2018, the value of outstanding securities on loan and the value of collateral were as follows:

Fund	Market Value of Securities on Loan		Cash Collateral Received		Non-Cash Collateral Received		Total Collateral Received
International Equity	$	41,033,943	$	43,093,443	$	-	$	43,093,443

Cash collateral is listed on the Fund’s Schedule of Investments and is shown on the Statement of Assets and Liabilities. Income earned on these investments is included in “Income derived from securities lending” on the Statement of Operations.

Non-cash collateral received by the Fund may not be sold 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.

10.  Borrowing Arrangements

Effective November 16, 2017, the Fund, along with certain other funds managed by the Manager (“Participating Funds”), entered into a committed revolving line of credit (the “Committed Line”) agreement with State Street Bank and Trust Company (the “Bank”) to be used to facilitate portfolio liquidity. The maximum borrowing amount under the Committed Line is $50 million with interest at a rate equal to the higher of (a) one-month London Inter-Bank Offered Rate (“LIBOR”) plus 1.25% per annum or (b) the Federal Funds rate plus 1.25% per annum on amounts borrowed. Each of the Participating Funds will pay a commitment fee at a rate of 0.25% per annum on the unused portion of the Committed Line amount. The Committed Line expires November 15, 2018, unless extended by the Bank or terminated by the Participating Funds in accordance with the agreement.

Effective November 16, 2017, the Fund, along with certain other Participating Funds managed by the Manager, entered into an uncommitted discretionary demand revolving line of credit (the “Uncommitted Line”) agreement with the Bank to be used to facilitate portfolio liquidity. The maximum borrowing amount under the Uncommitted Line is $50 million with interest at a rate equal to the higher of (a) one-month LIBOR plus 1.25% per annum or (b) the Federal Funds rate. The Uncommitted Line expires November 15, 2018 unless extended by the Bank or terminated by the Participating Funds in accordance with the agreement.

The Participating Funds paid administration, legal and arrangement fees, which are recognized as a component of “Other expenses” on the Statement of Operations, along with commitment fees, that have been allocated among the Participating Funds based on average daily net assets.

During the year ended October 31, 2018, the Fund did not utilize this facility.

43

American Beacon International Equity Fund^SM

Notes to Financial Statements

October 31, 2018

11.  Capital Share Transactions

The tables below summarize the activity in capital shares for each Class of the Fund:

	Institutional Class
	Year Ended October 31,
	2018						2017
International Equity Fund	Shares			Amount			Shares			Amount
Shares sold		25,895,144		$	534,557,653			24,547,005		$	463,671,500
Reinvestment of dividends		2,331,173			48,325,212			1,852,549			31,919,427
Shares redeemed		(20,735,988	)		(420,683,891	)		(30,936,620	)		(572,495,075	)
Net increase (decrease) in shares outstanding		7,490,329		$	162,198,974			(4,537,066	)	$	(76,904,148	)
	Y Class
	Year Ended October 31,
	2018						2017
International Equity Fund	Shares			Amount			Shares			Amount
Shares sold		7,511,577			160,616,651			9,603,129		$	188,451,831
Reinvestment of dividends		1,249,691			26,893,341			972,177			17,372,801
Shares redeemed		(9,727,486	)		(207,013,204	)		(8,510,279	)		(164,255,587	)
Net increase (decrease) in shares outstanding		(966,218	)	$	(19,503,212	)		2,065,027		$	41,569,045
	Investor Class
	Year Ended October 31,
	2018						2017
International Equity Fund	Shares			Amount			Shares			Amount
Shares sold		1,848,441		$	37,668,754			3,314,057		$	61,659,507
Reinvestment of dividends		423,698			8,719,712			410,726			7,027,516
Shares redeemed		(4,046,440	)		(82,887,269	)		(7,835,357	)		(145,535,610	)
Net (decrease) in shares outstanding		(1,774,301	)	$	(36,498,803	)		(4,110,574	)	$	(76,848,587	)
	Advisor Class
	Year Ended October 31,
	2018						2017
International Equity Fund	Shares			Amount			Shares			Amount
Shares sold		522,085		$	10,866,488			1,750,129		$	35,235,104
Reinvestment of dividends		72,002			1,516,353			26,039			456,207
Shares redeemed		(662,602	)		(13,941,921	)		(486,266	)		(9,383,666	)
Net increase (decrease) in shares outstanding		(68,515	)	$	(1,559,080	)		1,289,902		$	26,307,645
	A Class
	Year Ended October 31,
	2018						2017
International Equity Fund	Shares			Amount			Shares			Amount
Shares sold		341,544		$	6,990,871			806,495		$	14,930,964
Reinvestment of dividends		22,967			472,205			25,526			435,992
Shares redeemed		(464,462	)		(9,545,785	)		(1,051,715	)		(20,195,546	)
Net (decrease) in shares outstanding		(99,951	)	$	(2,082,709	)		(219,694	)	$	(4,828,590	)
	C Class
	Year Ended October 31,
	2018						2017
International Equity Fund	Shares			Amount			Shares			Amount
Shares sold		98,798		$	1,957,866			293,130		$	5,116,728
Reinvestment of dividends		7,541			150,449			6,515			108,211
Shares redeemed		(117,307	)		(2,311,646	)		(93,337	)		(1,664,605	)
Net increase (decrease) in shares outstanding		(10,968	)	$	(203,331	)		206,308		$	3,560,334

44

American Beacon International Equity Fund^SM

Notes to Financial Statements

October 31, 2018

	R6 Class
	Year Ended October 31, 2018						February 28, 2017A to October 31, 2017
International Equity Fund	Shares			Amount			Shares			Amount
Shares sold		2,465,662		$	50,086,317			313,319		$	6,320,006
Reinvestment of dividends		16,937			351,275			-			-
Shares redeemed		(186,126	)		(3,762,837	)		(8,547	)		(170,397	)
Net increase in shares outstanding		2,296,473		$	46,674,755			304,772		$	6,149,609

^A Commencement of operations.

12.  Subsequent Events

Effective November 15, 2018, the Fund, along with certain other funds managed by the Manager, entered into a committed revolving line of credit with a max borrowing amount of $250 million.

Management has evaluated additional subsequent events for possible recognition or disclosure in the financial statements through the date the financial statements are issued. Management has determined that there are no material events that would require disclosure in the Fund’s financial statements through this date.

45

American Beacon International Equity Fund^SM

Financial Highlights

(For a share outstanding throughout the period)

	Institutional ClassA
	Year Ended October 31,
	2018			2017			2016			2015			2014
Net asset value, beginning of period	$	20.88		$	17.41		$	18.79		$	19.51		$	20.07
Income (loss) from investment operations:
Net investment income		0.44			0.39			0.29			0.35			0.54
Net gains (losses) on investments (both realized and unrealized)		(1.95	)		3.51			(1.24	)		(0.55	)		(0.77	)
Total income (loss) from investment operations		(1.51	)		3.90			(0.95	)		(0.20	)		(0.23	)
Less distributions:
Dividends from net investment income		(0.35	)		(0.43	)		(0.27	)		(0.52	)		(0.33	)
Distributions from net realized gains		(0.31	)		-			(0.16	)		-			-
Total distributions		(0.66	)		(0.43	)		(0.43	)		(0.52	)		(0.33	)
Redemption fees added to beneficial interests		-			-			-			0.00	B		0.00	B
Net asset value, end of period	$	18.71		$	20.88		$	17.41		$	18.79		$	19.51
Total returnC		(7.55	)%		22.94	%		(5.07	)%		(0.99	)%		(1.18	)%
Ratios and supplemental data:
Net assets, end of period	$	1,613,462,237		$	1,644,165,106		$	1,450,052,040		$	1,037,148,821		$	956,960,452
Ratios to average net assets:
Expenses, before reimbursements		0.73	%		0.73	%		0.69	%		0.70	%		0.72	%
Expenses, net of reimbursements		0.73	%		0.73	%		0.69	%		0.69	%		0.70	%
Net investment income, before expense reimbursements		2.17	%		2.01	%		2.22	%		1.93	%		2.74	%
Net investment income, net of reimbursements		2.17	%		2.01	%		2.22	%		1.94	%		2.76	%
Portfolio turnover rate		29	%		32	%		25	%		33	%		23	%

^A  On May 31, 2016, the AMR Class closed and the assets were merged into the Institutional Class.

^B  Amount represents less than $0.01 per share.

^C  Based on net asset value, which does not reflect the sales charge, redemption fee, or contingent deferred sales charge, if applicable. May include adjustments in accordance with U.S. GAAP and as such, the net asset value for reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions.

See accompanying notes

46

American Beacon International Equity Fund^SM

Financial Highlights

(For a share outstanding throughout the period)

	Y Class
	Year Ended October 31,
	2018			2017			2016			2015			2014
Net asset value, beginning of period	$	21.64		$	18.03		$	19.46		$	20.21		$	20.81
Income (loss) from investment operations:
Net investment income		0.46			0.38			0.41			0.35			0.50
Net gains (losses) on investments (both realized and unrealized)		(2.04	)		3.65			(1.40	)		(0.57	)		(0.77	)
Total income (loss) from investment operations		(1.58	)		4.03			(0.99	)		(0.22	)		(0.27	)
Less distributions:
Dividends from net investment income		(0.33	)		(0.42	)		(0.28	)		(0.53	)		(0.33	)
Distributions from net realized gains		(0.31	)		-			(0.16	)		-			-
Total distributions		(0.64	)		(0.42	)		(0.44	)		(0.53	)		(0.33	)
Redemption fees added to beneficial interests		-			-			-			0.00	A		0.00	A
Net asset value, end of period	$	19.42		$	21.64		$	18.03		$	19.46		$	20.21
Total returnB		(7.58	)%		22.84	%		(5.14	)%		(1.06	)%		(1.31	)%
Ratios and supplemental data:
Net assets, end of period	$	904,847,058		$	1,029,629,647		$	820,596,038		$	587,949,806		$	530,836,707
Ratios to average net assets:
Expenses, before reimbursements		0.80	%		0.80	%		0.77	%		0.77	%		0.82	%
Expenses, net of reimbursements		0.80	%		0.80	%		0.77	%		0.77	%		0.82	%
Net investment income, before expense reimbursements		2.10	%		1.95	%		2.43	%		1.87	%		2.62	%
Net investment income, net of reimbursements		2.10	%		1.95	%		2.43	%		1.87	%		2.62	%
Portfolio turnover rate		29	%		32	%		25	%		33	%		23	%

^A  Amount represents less than $0.01 per share.

^B  Based on net asset value, which does not reflect the sales charge, redemption fee, or contingent deferred sales charge, if applicable. May include adjustments in accordance with U.S. GAAP and as such, the net asset value for reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions.

See accompanying notes

47

American Beacon International Equity Fund^SM

Financial Highlights

(For a share outstanding throughout the period)

	Investor Class
	Year Ended October 31,
	2018			2017			2016			2015			2014
Net asset value, beginning of period	$	20.67		$	17.24		$	18.60		$	19.32		$	19.86
Income (loss) from investment operations:
Net investment income		0.41			0.35			0.34			0.31			0.46
Net gains (losses) on investments (both realized and unrealized)		(1.97	)		3.45			(1.33	)		(0.57	)		(0.76	)
Total income (loss) from investment operations		(1.56	)		3.80			(0.99	)		(0.26	)		(0.30	)
Less distributions:
Dividends from net investment income		(0.28	)		(0.37	)		(0.21	)		(0.46	)		(0.24	)
Distributions from net realized gains		(0.31	)		-			(0.16	)		-			-
Total distributions		(0.59	)		(0.37	)		(0.37	)		(0.46	)		(0.24	)
Redemption fees added to beneficial interests		-			-			-			0.00	A		0.00	A
Net asset value, end of period	$	18.52		$	20.67		$	17.24		$	18.60		$	19.32
Total returnB		(7.86	)%		22.50	%		(5.38	)%		(1.35	)%		(1.54	)%
Ratios and supplemental data:
Net assets, end of period	$	250,804,403		$	316,589,769		$	334,895,337		$	342,720,411		$	348,541,811
Ratios to average net assets:
Expenses, before reimbursements		1.06	%		1.07	%		1.06	%		1.03	%		1.05	%
Expenses, net of reimbursements		1.06	%		1.07	%		1.06	%		1.03	%		1.05	%
Net investment income, before expense reimbursements		1.83	%		1.69	%		1.95	%		1.60	%		2.36	%
Net investment income, net of reimbursements		1.83	%		1.69	%		1.95	%		1.60	%		2.36	%
Portfolio turnover rate		29	%		32	%		25	%		33	%		23	%

^A  Amount represents less than $0.01 per share.

^B  Based on net asset value, which does not reflect the sales charge, redemption fee, or contingent deferred sales charge, if applicable. May include adjustments in accordance with U.S. GAAP and as such, the net asset value for reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions.

See accompanying notes

48

American Beacon International Equity Fund^SM

Financial Highlights

(For a share outstanding throughout the period)

	Advisor ClassA
	Year Ended October 31,
	2018			2017			2016			2015			2014
Net asset value, beginning of period	$	21.15		$	17.62		$	19.01		$	19.76		$	20.36
Income (loss) from investment operations:
Net investment income		0.36			0.23			0.35			0.38			0.44
Net gains (losses) on investments (both realized and unrealized)		(1.99	)		3.64			(1.37	)		(0.68	)		(0.77	)
Total income (loss) from investment operations		(1.63	)		3.87			(1.02	)		(0.30	)		(0.33	)
Less distributions:
Dividends from net investment income		(0.28	)		(0.34	)		(0.21	)		(0.45	)		(0.27	)
Distributions from net realized gains		(0.31	)		-			(0.16	)		-			-
Total distributions		(0.59	)		(0.34	)		(0.37	)		(0.45	)		(0.27	)
Redemption fees added to beneficial interests		-			-			-			0.00	B		0.00	B
Net asset value, end of period	$	18.93		$	21.15		$	17.62		$	19.01		$	19.76
Total returnC		(7.99	)%		22.38	%		(5.40	)%		(1.51	)%		(1.64	)%
Ratios and supplemental data:
Net assets, end of period	$	48,571,916		$	55,715,606		$	23,692,313		$	22,912,069		$	7,677,201
Ratios to average net assets:
Expenses, before reimbursements		1.20	%		1.20	%		1.19	%		1.16	%		1.19	%
Expenses, net of reimbursements		1.20	%		1.20	%		1.19	%		1.16	%		1.19	%
Net investment income, before expense reimbursements		1.70	%		1.51	%		1.87	%		1.55	%		2.21	%
Net investment income, net of reimbursements		1.70	%		1.51	%		1.87	%		1.55	%		2.21	%
Portfolio turnover rate		29	%		32	%		25	%		33	%		23	%

^A  On January 15, 2016, the Retirement Class closed and the assets were merged into the Advisor Class.

^B  Amount represents less than $0.01 per share.

^C  Based on net asset value, which does not reflect the sales charge, redemption fee, or contingent deferred sales charge, if applicable. May include adjustments in accordance with U.S. GAAP and as such, the net asset value for reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions.

See accompanying notes

49

American Beacon International Equity Fund^SM

Financial Highlights

(For a share outstanding throughout the period)

	A Class
	Year Ended October 31,
	2018			2017			2016			2015			2014
Net asset value, beginning of period	$	20.63		$	17.23		$	18.59		$	19.32		$	19.92
Income (loss) from investment operations:
Net investment income		0.38			0.30			0.32			0.31			0.46
Net gains (losses) on investments (both realized and unrealized)		(1.95	)		3.48			(1.30	)		(0.59	)		(0.78	)
Total income (loss) from investment operations		(1.57	)		3.78			(0.98	)		(0.28	)		(0.32	)
Less distributions:
Dividends from net investment income		(0.25	)		(0.38	)		(0.22	)		(0.45	)		(0.28	)
Distributions from net realized gains		(0.31	)		-			(0.16	)		-			-
Total distributions		(0.56	)		(0.38	)		(0.38	)		(0.45	)		(0.28	)
Redemption fees added to beneficial interests		-			-			-			0.00	A		0.00	A
Net asset value, end of period	$	18.50		$	20.63		$	17.23		$	18.59		$	19.32
Total returnB		(7.89	)%		22.43	%		(5.34	)%		(1.42	)%		(1.65	)%
Ratios and supplemental data:
Net assets, end of period	$	14,141,551		$	17,829,657		$	18,673,142		$	10,747,749		$	8,540,234
Ratios to average net assets:
Expenses, before reimbursements		1.08	%		1.12	%		1.07	%		1.08	%		1.15	%
Expenses, net of reimbursements		1.08	%		1.12	%		1.07	%		1.08	%		1.15	%
Net investment income, before expense reimbursements		1.80	%		1.65	%		1.94	%		1.55	%		2.31	%
Net investment income, net of reimbursements		1.80	%		1.65	%		1.94	%		1.55	%		2.31	%
Portfolio turnover rate		29	%		32	%		25	%		33	%		23	%

^A  Amount represents less than $0.01 per share.

^B  Based on net asset value, which does not reflect the sales charge, redemption fee, or contingent deferred sales charge, if applicable. May include adjustments in accordance with U.S. GAAP and as such, the net asset value for reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions.

See accompanying notes

50

American Beacon International Equity Fund^SM

Financial Highlights

(For a share outstanding throughout the period)

	C Class
	Year Ended October 31,
	2018			2017			2016			2015			2014
Net asset value, beginning of period	$	19.93		$	16.73		$	18.09		$	18.83		$	19.47
Income (loss) from investment operations:
Net investment income		0.22			0.17			0.18			0.16			0.30
Net gains (losses) on investments (both realized and unrealized)		(1.87	)		3.36			(1.28	)		(0.56	)		(0.75	)
Total income (loss) from investment operations		(1.65	)		3.53			(1.10	)		(0.40	)		(0.45	)
Less distributions:
Dividends from net investment income		(0.13	)		(0.33	)		(0.10	)		(0.34	)		(0.19	)
Distributions from net realized gains		(0.31	)		-			(0.16	)		-			-
Total distributions		(0.44	)		(0.33	)		(0.26	)		(0.34	)		(0.19	)
Redemption fees added to beneficial interests		-			-			-			0.00	A		0.00	A
Net asset value, end of period	$	17.84		$	19.93		$	16.73		$	18.09		$	18.83
Total returnB		(8.52	)%		21.50	%		(6.12	)%		(2.12	)%		(2.36	)%
Ratios and supplemental data:
Net assets, end of period	$	6,625,329		$	7,622,425		$	2,945,246		$	3,899,081		$	3,028,934
Ratios to average net assets:
Expenses, before reimbursements		1.81	%		1.88	%		1.85	%		1.82	%		1.90	%
Expenses, net of reimbursements		1.81	%		1.88	%		1.85	%		1.83	%		1.90	%
Net investment income, before expense reimbursements		1.08	%		0.96	%		1.12	%		0.77	%		1.53	%
Net investment income, net of reimbursements		1.08	%		0.96	%		1.12	%		0.77	%		1.53	%
Portfolio turnover rate		29	%		32	%		25	%		33	%		23	%

^A  Amount represents less than $0.01 per share.

^B  Based on net asset value, which does not reflect the sales charge, redemption fee, or contingent deferred sales charge, if applicable. May include adjustments in accordance with U.S. GAAP and as such, the net asset value for reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions.

See accompanying notes

51

American Beacon International Equity Fund^SM

Financial Highlights

(For a share outstanding throughout the period)

	R6 Class
	Year Ended October 31, 2018			February 28, 2017A to October 31, 2017
Net asset value, beginning of period	$	20.89		$	17.80
Income (loss) from investment operations:
Net investment income		0.39			0.08
Net gains (losses) on investments (both realized and unrealized)		(1.88	)		3.01
Total income (loss) from investment operations		(1.49	)		3.09
Less distributions:
Dividends from net investment income		(0.36	)		-
Distributions from net realized gains		(0.31	)		-
Total distributions		(0.67	)		-
Net asset value, end of period	$	18.73		$	20.89
Total returnB		(7.47	)%		17.36	%C
Ratios and supplemental data:
Net assets, end of period	$	48,725,523		$	6,367,999
Ratios to average net assets:
Expenses, before reimbursements		0.70	%		0.89	%D
Expenses, net of reimbursements		0.66	%		0.66	%D
Net investment income, before expense reimbursements		2.11	%		1.63	%D
Net investment income, net of reimbursements		2.15	%		1.85	%D
Portfolio turnover rate		29	%		32	%E

^A  Commencement of operations.

^B  Based on net asset value, which does not reflect the sales charge, redemption fee, or contingent deferred sales charge, if applicable. May include adjustments in accordance with U.S. GAAP and as such, the net asset value for reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions.

^C  Not annualized.

^D  Annualized.

^E  Portfolio turnover rate is for the period from February 28, 2017 through October 31, 2017 and is annualized.

See accompanying notes

52

American Beacon Funds^SM

Federal Tax Information

October 31, 2018 (Unaudited)

Certain tax information regarding the Funds are required to be provided to shareholders based upon the Fund’s income and distributions for the taxable year ended October 31, 2018. The information and distributions reported herein may differ from information and distributions taxable to the shareholders for the calendar year ended December 31, 2018.

The Fund designated the following items with regard to distributions paid during the fiscal year ended October 31, 2018. 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.

Corporate Dividends-Received Deduction:

International Equity N/A

Qualified Dividend Income:

International Equity 100.00 % 

Long-Term Capital Gain Distributions:

International Equity $ 34,756,273

Short-Term Capital Gain Distributions:

International Equity $ 10,328,997

The Fund designated a foreign tax credit of $8,672,392 based on foreign sourced income of $97,554,254 for the year ended October 31, 2018.

Shareholders will receive notification in January 2019 of the applicable tax information necessary to prepare their 2018 income tax returns.

53

Disclosure Regarding Approval of the Management and Investment Advisory Agreements (Unaudited)

Renewal and Approval of Management Agreement and Investment Advisory Agreements

At in-person meetings held on May 18, 2018 and June 5-6, 2018 (collectively, the “Meetings”), the Board of Trustees (“Board” or “Trustees”) considered and then, at its June 6, 2018 meeting, approved the renewal of:

(1) the Management Agreement between American Beacon Advisors, Inc. (“Manager”) and the American Beacon Funds (“Trust”), on behalf of the American Beacon International Equity Fund (“Fund”); and

(2) the Investment Advisory Agreements among the Manager, the Trust, on behalf of the Fund, and each of Causeway Capital Management LLC (“Causeway”), Lazard Asset Management LLC (“Lazard”) and Templeton Investment Counsel, LLC (“Templeton”) (each, a “subadvisor” and collectively, the “subadvisors”).

The Management Agreement and the Investment Advisory Agreements are collectively referred to herein as the “Agreements.” In preparation for its consideration of the renewal of the Agreements, the Board undertook steps to gather and consider information furnished by, or derived from, the Manager, the subadvisors, Broadridge, Inc. (“Broadridge”) and Morningstar, Inc. (“Morningstar”). The Board, with the assistance of independent legal counsel, requested and received certain relevant information from the Manager and the subadvisors.

In advance of the Meetings, the Board’s Investment Committee and/or the Manager coordinated the production of information from Broadridge regarding the performance, fees and expenses of the Fund as well as information from the Manager and the subadvisors. At the Meetings, the Board considered the information provided. Further, the Board took into consideration information furnished to the Board throughout the year at regular meetings of the Board and its committees, as well as information specifically prepared in connection with the renewal process.

In connection with the Board’s consideration of the Agreements, the Trustees received and evaluated such information as they deemed necessary. The information requested on behalf of the Board included, among other information, the following materials. References herein to the “firm” refer to the Manager and/or the subadvisors.

• comparisons of the performance of an appropriate share class of the Fund to comparable investment companies and appropriate benchmark indices, including peer group averages and performance analyses from Broadridge, and to the performance of any similar accounts or a composite of similar accounts, as applicable, managed by the firm;

• comparisons of the Fund’s management and subadvisory fee rates and expense ratio with the management fee rates paid by comparable mutual funds and their expense ratios, including peer group averages and fee and expense analyses from Broadridge, and the advisory fee rates charged to other clients for which similar services are provided by a firm;

• a description of any applicable fee waivers and/or expense reimbursements in place for the Fund during the past year, and any proposed changes to the expense limitation arrangements;

• the Manager’s profitability with respect to the services that it provided to the Fund;

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

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

• information regarding administrative, accounting-related, cash management and securities lending services that the Manager provides to the Fund and the fees that the Manager receives for such services; and

• information regarding a firm’s financial condition, the personnel of the Manager who are assigned primary responsibility for managing the Fund, staffing levels, portfolio managers’ compensation, insurance

54

Disclosure Regarding Approval of the Management and Investment Advisory Agreements (Unaudited)

coverage, material pending litigation, code of ethics, compliance matters, actual or potential conflicts of interest that the firm experiences, or anticipates that it will experience, in providing services to the Fund, and the Manager’s disaster recovery plans.

The Board noted that the Manager provides management and administrative services to the Fund pursuant to the Management Agreement. The Board considered that many mutual funds have separate contracts governing each type of service and observed that, with respect to such mutual funds, the actual management fee rates provided by Broadridge for peer group funds reflect the combined advisory and administrative expenses, reduced by any fee waivers and/or reimbursements.

A firm may not have been able to, or opted not to, provide information in response to certain information requests, in which case the Board conducted its evaluation of the firm based on information that was provided. In such cases, the Board determined that the omission of any such information was not material to its considerations. The class of shares used for comparative performance purposes was the share class with the lowest expenses available for purchase by the general public, which was the Institutional Class. The Board also considered that the use of Institutional Class performance generally facilitates a meaningful comparison for expense and performance purposes.

Provided below is an overview of certain factors the Board considered in connection with its renewal and approval of the 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 investment advisory contracts, such as the Agreements. The memorandum explained the regulatory requirements surrounding the Trustees’ process for evaluating investment advisors and the terms of investment advisory contracts. Based on its evaluation, the Board unanimously concluded that the terms of each Agreement were reasonable and fair and that the renewal and approval of each Agreement was in the best interests of the Fund and its shareholders.

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

In determining whether to renew the Agreements, the Trustees considered the best interests of the Fund. While the Management Agreement and the Investment Advisory Agreements for the Fund were considered at the Meetings, the Board considered the 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 the Fund; (3) the costs incurred by the Manager in rendering services to the Fund and its resulting profits or losses; (4) comparisons of services and fee rates with contracts entered into by the Manager or the subadvisors or their affiliates with other clients (such as pension funds and other institutional clients); (5) the extent to which economies of scale, if any, have been taken into account in setting each fee rate schedule; (6) whether fee rate levels reflect economies of scale, if any, for the benefit of Fund investors; and (7) any other benefits derived or anticipated to be derived by the Manager or the subadvisors from their relationships with the Fund.

Nature, Extent and Quality of Services. With respect to the renewal of the Management Agreement, the Board considered, among other factors: the Fund’s long-term performance; the length of service of key investment personnel at the Manager; the cost structure of the Fund; the Manager’s culture of compliance and support that reduce risks to the Fund; the Manager’s quality of services; the Manager’s active role in monitoring and, as appropriate, recommending additional or replacement subadvisors; and the Manager’s efforts to retain key employees and maintain staffing levels.

55

Disclosure Regarding Approval of the Management and Investment Advisory Agreements (Unaudited)

With respect to the renewal of the Investment Advisory Agreements, the Board considered the level of staffing and the size of the subadvisors. The Board also considered the adequacy of the resources committed to the Fund by the subadvisors, and whether those resources were commensurate with the needs of the Fund and are sufficient to sustain appropriate levels of performance and compliance needs. In this regard, the Board considered the financial stability of the subadvisors. The Board also considered the subadvisors’ representations regarding their compliance program 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 the subadvisors were appropriate for the Fund.

Investment Performance. The Board evaluated the comparative information provided by Broadridge and the Manager regarding the performance of the Fund relative to its Broadridge performance universe, Morningstar Category, and benchmark indices, as well as the Fund’s Morningstar rating. The Board considered the information provided by Broadridge regarding Broadridge’s independent methodology for selecting the Fund’s Broadridge performance universe. The Board also considered that the performance universes selected by Broadridge may not provide appropriate comparisons for the Fund. In addition, the Board considered the performance reports and discussions with management at Board and Committee meetings throughout the year. The Board also evaluated the comparative information provided by each subadvisor regarding the performance of its portion of the Fund relative to the performance of the Fund’s benchmark index, and, with respect to Causeway, a composite of similar accounts managed by the subadvisor. In addition, the Board considered the Manager’s recommendation to continue to retain each subadvisor. A discussion regarding the Board’s considerations with respect to the Fund’s performance appears below under “Additional Considerations and Conclusions with Respect to the Fund.”

Costs of the Services Provided to the Fund and the Profits Realized by the Manager from its Relationship with the Fund. In analyzing the cost of services and profitability of the Manager, the Board considered the revenues earned and the expenses incurred by the Manager, before and after the payment of distribution-related expenses by the Manager. The profits or losses were noted at both an aggregate level for all funds within the group of mutual funds sponsored by the Manager (the “Fund Complex”) and at an individual Fund level, with the Manager earning a profit before and after the payment of distribution-related expenses by the Manager. The Board also considered comparative information provided by the Manager regarding the Manager’s overall profitability with respect to the Fund Complex relative to the overall profitability of other firms in the mutual fund industry, as disclosed in publicly available sources. 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 Fund, the Manager represented that, among other matters, the difference is attributable to the fact that the Manager does not perform administrative services for non-investment company clients and reflects the greater level of responsibility and regulatory requirements associated with managing the Fund.

The Board also noted that the Manager proposed to continue the expense waivers and reimbursements for the Fund’s R6 Class shares that were in place during the last fiscal year. The Board further considered that, with respect to the Fund, the applicable Management Agreement provides for the Manager to receive a management fee comprised of an annualized fee that is retained by the Manager. In addition, the Board considered that the Manager receives fees for overseeing the securities lending program on behalf of the Fund. The Board also noted that certain share classes of the Fund maintain higher expense ratios in order to compensate third-party financial intermediaries.

In analyzing the fee rates charged by each subadvisor in connection with its investment advisory services to the Fund, the Board considered representations made by each subadvisor that the Fund’s subadvisory fee rate schedule for each such firm is favorable compared to other comparable client accounts of that firm. The Board did not request profitability data from the subadvisors because the Board did not view this data 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. In addition, the Board noted that the subadvisors may not account for their profits on an account-by-account basis and that different firms likely employ different methodologies in connection with these calculations.

56

Disclosure Regarding Approval of the Management and Investment Advisory Agreements (Unaudited)

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 the Fund’s fee rates is set forth below under “Additional Considerations and Conclusions with Respect to the 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 Fund grows and whether fee rate levels reflect these economies of scale for the benefit of Fund shareholders. In this regard, the Board considered that, with respect to each subadvisor, the Manager has negotiated breakpoints in the subadvisory fee rate for the Fund.

In addition, the Board noted the Manager’s representation that the Management Agreement contains fee schedule breakpoints at higher asset levels with respect to the Fund. Based on the foregoing information, the Board concluded that the Manager and subadvisor fee rate schedules for the Fund provide for a reasonable sharing of benefits from any economies of scale with the Fund.

Benefits Derived from the Relationship with the Fund. 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 Fund, 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. In addition, the Board noted that each subadvisor benefits from soft dollar arrangements for proprietary and/or third-party research. 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 Fund appear to be fair and reasonable.

Additional Considerations and Conclusions with Respect to the Fund

The performance comparisons below were made in comparison to the Fund’s Broadridge performance universe and Morningstar Category. With respect to the Broadridge performance universe, the 1^st Quintile represents the top twenty percent of the universe based on performance and the 5^th Quintile representing the bottom twenty percent of the universe based on performance. References below to the Fund’s Broadridge performance universe are to the universe of mutual funds with a comparable investment classification/objective included in the analysis provided by Broadridge. In reviewing the performance, the Trustees viewed longer-term performance over a full market cycle as the most important consideration, because relative performance over shorter periods may be significantly impacted by market or economic events and not necessarily reflective of manager skill.

The expense comparisons below were made in comparison to the Fund’s Broadridge expense universe and Broadridge expense group, with the 1^st Quintile representing the top twenty percent of the universe or group based on lowest total expense and the 5^th Quintile representing the bottom twenty percent of the universe or group based on highest total expense. References below to the Fund’s expense group and expense universe are to the respective group or universe of comparable mutual funds included in the analysis by Broadridge. A Broadridge expense group consists of the Fund and a representative sample of funds with similar operating structures and asset sizes, as selected by Broadridge. A Broadridge expense universe includes all funds in the investment classification/objective with a similar operating structure as the share class of the Fund included in the Broadridge comparative information and provides a broader view of expenses across the Fund’s investment classification/objective. The Trustees also considered the Fund’s Morningstar fee level category. In reviewing expenses, the Trustees considered the positive impact of fee waivers where applicable and the Manager’s agreement to continue the fee waivers. In addition, information regarding the subadvisors’ use of soft dollars was requested from the Manager and was considered by the Trustees.

57

Disclosure Regarding Approval of the Management and Investment Advisory Agreements (Unaudited)

In considering the renewal of the Management Agreement for the Fund, the Trustees considered the following additional factors:

Broadridge Total Expense Analysis Excluding 12b-1 Fees and Morningstar Fee Level Ranking

Compared to Broadridge Expense Group	2nd Quintile
Compared to Broadridge Expense Universe	1st Quintile
Morningstar Fee Level Ranking – Institutional Class	Below Average Expense Ratio

Broadridge and Morningstar Performance Analysis (five-year period ended December 31, 2017)

Compared to Broadridge Performance Universe	2	nd Quintile
Compared to Morningstar Category	2	nd Quintile

In considering the renewal of the Investment Advisory Agreements with Causeway, Lazard and Templeton, the Trustees considered that the diversification of investment strategies facilitated by the Fund’s multi-manager structure permits the Fund to mitigate the risks associated with a single subadvisor. The Trustees also considered the following additional factors:

Subadvisor Performance (compared to Broadridge Performance Universe for period indicated ended December 31, 2017)

Causeway	5 Years	1	st Quintile
Lazard	5 Years	1	st Quintile
Templeton	5 Years	3	rd Quintile

The Trustees also considered: (1) information provided by each subadvisor regarding fee rates charged for managing accounts in the same strategy as the subadvisor manages its allocation of the Fund; and (2) 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 Management and Investment Advisory Agreements are fair and reasonable; and (2) determined that the Fund and its shareholders would benefit from the Manager’s and subadvisors’ continued management of the Fund.

58

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. The address of each person listed below is 220 Las Colinas Boulevard East, Suite 1200, Irving, Texas 75039. Each Trustee oversees thirty-seven funds in the fund complex that includes the Trust, the American Beacon Select Funds, the American Beacon Institutional Funds Trust, the American Beacon Sound Point Enhanced Income Fund, and the American Beacon Apollo Total Return Fund. 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** (81)	Trustee since 1996	Partner in the law firm of Akin, Gump, Strauss, Hauer & Feld, LLP (law firm) (1960-Present); Trustee, American Beacon Mileage Funds (1996-2012); Trustee, American Beacon Select Funds (1999-Present); Trustee, American Beacon Master Trust (1996-2012); Trustee, American Beacon Institutional Funds Trust (2017-Present); Trustee, American Beacon Sound Point Enhanced Income Fund (2018-Present); Trustee, American Beacon Apollo Total Return Fund (2018-Present).
NON-INTERESTED TRUSTEES	Term
	Lifetime of Trust until removal, resignation or retirement*
Gilbert G. Alvarado (48)	Trustee since 2015	Director, Kura MD, Inc. (local telehealth organization) (2015-present); Vice President & CFO, Sierra Health Foundation (health conversion private foundation) (2006-Present); Vice President & CFO, Sierra Health Foundation: Center for Health Program Management (California public benefit corporation) (2012-Present); Director, Innovative North State (2012-2015); Director, Sacramento Regional Technology Alliance (2011-2016); Director, Women’s Empowerment (2009-2014); Director, Valley Healthcare Staffing (2017-present); Trustee, American Beacon Select Funds (2015-Present); Trustee, American Beacon Institutional Funds Trust (2017-Present); Trustee, American Beacon Sound Point Enhanced Income Fund (2018-Present); Trustee, American Beacon Apollo Total Return Fund (2018-Present).
Joseph B. Armes (56)	Trustee since 2015	Chairman & CEO, CSW Industrials f/k/a Capital Southwest Corporation (investment company) (2015-Present); Chairman of the Board of Capital Southwest Corporation, predecessor to CSW Industrials, Inc. (2014-present) (investment company); CEO, Capital Southwest Corporation (2013-2015); President & CEO, JBA Investment Partners (family investment vehicle) (2010-Present); Director and Chair of Audit Committee, RSP Permian (oil and gas producer) (2013-Present); Trustee, American Beacon Select Funds (2015-Present); Trustee, American Beacon Institutional Funds Trust (2017-Present); Trustee, American Beacon Sound Point Enhanced Income Fund (2018-Present); Trustee, American Beacon Apollo Total Return Fund (2018-Present).
Gerard J. Arpey (60)	Trustee since 2012	Director, The Home Depot, Inc. (2015-Present); Partner, Emerald Creek Group (private equity firm) (2011-Present); Director, S.C. Johnson & Son, Inc. (privately held company) (2008-present); Trustee, American Beacon Select Funds (2012-Present); Trustee, American Beacon Institutional Funds Trust (2017-Present); Trustee, American Beacon Sound Point Enhanced Income Fund (2018-Present); Trustee, American Beacon Apollo Total Return Fund (2018-Present).

59

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
NON-INTERESTED TRUSTEES (CONT.)	Term
	Lifetime of Trust until removal, resignation or retirement*
Brenda A. Cline (57)	Trustee since 2004 Vice Chair since 2018	Chief Financial Officer, Treasurer and Secretary, Kimbell Art Foundation (1993-Present); Director, Tyler Technologies, Inc. (public sector software solutions company) (2014-Present); Director, Range Resources Corporation (oil and natural gas company) (2015-Present); Trustee, Cushing Closed-End Funds (2017-Present); Trustee, American Beacon Mileage Funds (2004-2012); Trustee, American Beacon Select Funds (2004-Present); Trustee, American Beacon Master Trust (2004-2012); Trustee, American Beacon Institutional Funds Trust (2017-Present); Trustee, American Beacon Sound Point Enhanced Income Fund (2018-Present); Trustee, American Beacon Apollo Total Return Fund (2018-Present).
Eugene J. Duffy (64)	Trustee since 2008	Managing Director, Global Investment Management Distribution, Mesirow Financial (2016-Present); Managing Director, Institutional Services, Intercontinental Real Estate Corporation (2014-Present); Principal and Executive Vice President, Paradigm Asset Management (1994-2014); Director, Sunrise Bank of Atlanta (2008-2013); Trustee, American Beacon Mileage Funds (2008-2012); Trustee, American Beacon Select Funds (2008-Present); Trustee, American Beacon Master Trust (2008-2012); Trustee, American Beacon Institutional Funds Trust (2017-Present); Trustee, American Beacon Sound Point Enhanced Income Fund (2018-Present); Trustee, American Beacon Apollo Total Return Fund (2018-Present).
Claudia A. Holz*** (61)	Trustee since 2018	Partner, KPMG LLP (1990-2017); Trustee, American Beacon Select Funds (2018-Present); Trustee, American Beacon Institutional Funds Trust (2018-Present); Trustee, American Beacon Sound Point Enhanced Income Fund (2018-Present); Trustee, American Beacon Apollo Total Return Fund (2018-Present).
Douglas A. Lindgren**** (56)	Trustee since 2018	CEO North America, Carne Global Financial Services (2016-2017); Managing Director, IPS Investment Management and Global Head, Content Management, UBS Wealth Management (2010-2016); Managing Director, P&S Hedge Funds, UBS Wealth Management (2008-2010); Managing Director, Head of Alternative Investments, UBS Financial Services, Inc. (2005-2008); Trustee, American Beacon Select Funds (2018-Present); Trustee, American Beacon Institutional Funds Trust (2018-Present); Trustee, American Beacon Sound Point Enhanced Income Fund (2018-Present); Trustee, American Beacon Apollo Total Return Fund (2018-Present).
Richard A. Massman (75)	Trustee since 2004 Chairman since 2008	Consultant and General Counsel Emeritus, Hunt Consolidated, Inc. (holding company engaged in oil and gas exploration and production, refining, real estate, farming, ranching and venture capital activities) (2009-Present); Trustee, American Beacon Mileage Funds (2004-2012); Trustee, American Beacon Select Funds (2004-Present); Trustee, American Beacon Master Trust (2004-2012); Trustee, American Beacon Institutional Funds Trust (2017-Present); Trustee, American Beacon Sound Point Enhanced Income Fund (2018-Present); Trustee, American Beacon Apollo Total Return Fund (2018-Present).
Barbara J. McKenna, CFA (55)	Trustee since 2012	Managing Principal, Longfellow Investment Management Company (2005-Present); Trustee, American Beacon Select Funds (2012-Present); Trustee, American Beacon Institutional Funds Trust (2017-Present); Trustee, American Beacon Sound Point Enhanced Income Fund (2018-Present); Trustee, American Beacon Apollo Total Return Fund (2018-Present).

60

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
NON-INTERESTED TRUSTEES (CONT.)	Term
	Lifetime of Trust until removal, resignation or retirement*
R. Gerald Turner (72)	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); Trustee, American Beacon Mileage Funds (2001-2012); Trustee, American Beacon Select Funds (2001-Present); Trustee, American Beacon Master Trust (2001-2012); Trustee, American Beacon Institutional Funds Trust (2017-Present); Trustee, American Beacon Sound Point Enhanced Income Fund (2018-Present); Trustee, American Beacon Apollo Total Return Fund (2018-Present).
OFFICERS	Term
	One Year
Gene L. Needles, Jr. (63)	President since 2009	CEO and Director (2009-Present), and Chairman (2018-Present), American Beacon Advisors, Inc.; President, American Beacon Advisors (2009-2018); Chairman and CEO, Resolute Investment Managers, Inc. (2015-Present); Director, Chairman, President and CEO, Resolute Investment Distributors (2017-Present); Director, Chairman and CEO; Resolute Investment Services, Inc. (2015-Present); Director, Resolute Acquisition, Inc. (2015-Present); President (2015-2018), Director, Resolute Topco, Inc. (2015-Present), President (2015-2018), CEO (2015-Present), and Chairman (2018-Present), Resolute Investment Holdings, LLC; President, CEO and Director, Lighthouse Holdings, Inc. (2009-2015); President and CEO, Lighthouse Holdings Parent, Inc. (2009-2015); Manager, President, American Private Equity Management, LLC (2012-Present); President, American Beacon Cayman Managed Futures Strategy Fund, Ltd. (2014-Present); Director, Chairman, President and CEO, Alpha Quant Advisors, LLC (2016-Present); Director, ARK Investment Management LLC (2016-Present); Director, Shapiro Capital Management LLC (2017-Present); Director and Vice President, American Beacon Cayman Transformational Innovation Company, LTD., (2017-Present); Vice President, American Beacon Delaware Transformational Innovation Corporation (2017-Present); Executive Vice President and Chief Operating Officer, Continuous Capital, LLC (2018-Present); Member, Investment Advisory Committee, Employees Retirement System of Texas (2017-Present); Trustee, American Beacon NextShares Trust (2015-Present); President, American Beacon Select Funds (2009-Present); President, American Beacon Mileage Funds (2009-2012); President, American Beacon Master Trust (2009-2012); President, American Beacon Institutional Funds Trust (2017-Present); President, American Beacon Sound Point Enhanced Income Fund (2018-Present); President, American Beacon Apollo Total Return Fund (2018-Present).

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
OFFICERS (CONT.)	Term
	One Year
Rosemary K. Behan (59)	VP, Secretary and Chief Legal Officer since 2006	Vice President and Secretary, American Beacon Advisors, Inc. (2006-Present); Secretary, Resolute Investment Holdings, LLC (2015-Present); Vice President, Secretary and General Counsel, Resolute Investment Managers, Inc. (2015-Present); Secretary, Resolute Topco, Inc. (2015-Present); Secretary, Resolute Acquisition, Inc. (2015-Present); Vice President, Secretary and General Counsel, Resolute Investment Services, Inc. (2015-Present); Secretary, Lighthouse Holdings, Inc. (2008-2015); Secretary, Lighthouse Holdings Parent, Inc. (2008-2015); Secretary, American Private Equity Management, LLC (2008-Present); Secretary, American Beacon Cayman Managed Futures Strategy Fund, Ltd. (2014-Present); Secretary, Alpha Quant Advisors, LLC (2016-Present); Secretary, American Beacon Cayman Transformational Innovation Company, Ltd. (2017-Present); Secretary, American Beacon Delaware Transformational Innovation Corporation (2017-Present); Secretary, Resolute Investment Distributors, Inc. (2017-Present); Vice President and Secretary, Continuous Capital, LLC (2018-Present); Chief Legal Officer, Vice President and Secretary, American Beacon Select Funds (2006-Present); Chief Legal Officer, Vice President and Secretary, American Beacon Mileage Funds (2006-2012); Chief Legal Officer, Vice President and Secretary, American Beacon Master Trust (2006-2012); Chief Legal Officer, Vice President and Secretary, American Beacon Institutional Funds Trust (2017-Present); Vice Chief Legal Officer, Vice President and Secretary, American Beacon Sound Point Enhanced Income Fund (2018-Present); Chief Legal Officer, Vice President and Secretary American Beacon Apollo Total Return Fund (2018-Present).
Brian E. Brett (58)	VP since 2004	Senior Vice President, Head of Distribution (2012-Present) and Vice President, Director of Sales (2004-2012), American Beacon Advisors, Inc.; Senior Vice President, Resolute Investment Distributors, Inc. (2017-Present) and Vice President (2017-2018); Vice President, American Beacon Select Funds (2004-Present); Vice President, American Beacon Mileage Funds (2004-2012); Vice President, American Beacon Master Trust (2004-2012); Vice President, American Beacon Institutional Funds Trust (2017-Present); Vice President American Beacon Sound Point Enhanced Income Fund (2018-Present); Vice President American Beacon Apollo Total Return Fund (2018-Present).
Paul B. Cavazos (49)	VP since 2016	Chief Investment Officer and Senior Vice President, American Beacon Advisors, Inc. (2016-Present); Chief Investment Officer, DTE Energy (2007-2016); Vice President, American Private Equity Management, L.L.C. (2017-Present) Vice President, American Beacon Select Funds (2016-Present); Vice President, American Beacon Institutional Funds Trust (2017-Present); Vice President American Beacon Sound Point Enhanced Income Fund (2018-Present); Vice President American Beacon Apollo Total Return Fund (2018-Present).
Erica Duncan (48)	VP Since 2011	Vice President, American Beacon Advisors, Inc. (2011-Present); Vice President, Resolute Investment Managers (2015-Present); Vice President, Resolute Investment Services, Inc. (2015-Present) Vice President, American Beacon Select Funds (2011-Present); Vice President, American Beacon Mileage Funds (2011-2012); Vice President, American Beacon Master Trust (2011-2012); Vice President, American Beacon Institutional Funds Trust (2017-Present); Vice President American Beacon Sound Point Enhanced Income Fund (2018-Present); Vice President American Beacon Apollo Total Return Fund (2018-Present).

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
OFFICERS (CONT.)	Term
	One Year
Melinda G. Heika (57)	Treasurer since 2010	Treasurer, American Beacon Advisors, Inc. (2010-Present) and Chief Financial Officer (2010-Present); Treasurer and Chief Financial Officer, Resolute Investment Managers, Inc. (2015-Present); Treasurer, Resolute Acquisition, Inc. (2015-Present); Treasurer, Resolute Topco, Inc. (2015-Present); Treasurer, Resolute Investment Holdings, LLC. (2015-Present); Treasurer and Chief Financial Officer, Resolute Investment Services, Inc. (2015-Present); Treasurer, Lighthouse Holdings, Inc. (2010-2015); Treasurer, Lighthouse Holdings Parent Inc., (2010-2015); Treasurer, American Private Equity Management, LLC (2012-Present); Director and Treasurer, American Beacon Cayman Managed Futures Strategy Fund, Ltd. (2014-Present); Treasurer and Chief Financial Officer, Alpha Quant Advisors, LLC (2016-Present); Treasurer, American Beacon Cayman Transformational Innovation, Ltd. (2017-Present); Treasurer, American Beacon Delaware Transformational Innovation Corporation (2017-Present); Treasurer, Resolute Investment Distributors, Inc. (2017-2017); Treasurer and Chief Financial Officer, Continuous Capital, LLC (2018-Present); Treasurer, American Beacon Select Funds (2010-Present); Treasurer, American Beacon Mileage Funds (2010-2012); Treasurer, American Beacon Master Trust (2010-2012); Treasurer, American Beacon Institutional Funds Trust (2017-Present); Treasurer, American Beacon Sound Point Enhanced Income Fund (2018-Present); Treasurer, American Beacon Apollo Total Return Fund (2018-Present).
Terri L. McKinney (54)	VP since 2010	Vice President (2009-Present) and Managing Director (2003-2009), American Beacon Advisors, Inc.; Vice President, Resolute Investment Managers, Inc. (2017-Present); Vice President, Resolute Investment Services, Inc (2015-Present); Vice President, Alpha Quant Advisors, LLC (2016-Present); Vice President, Continuous Capital, LLC (2018-Present); Vice President, American Beacon Select Funds (2010-Present); Vice President, American Beacon Mileage Funds (2010-2012); Vice President, American Beacon Master Trust (2010-2012); Vice President, American Beacon Institutional Funds Trust (2017-Present); Vice President, American Beacon Sound Point Enhanced Income Fund (2018-Present); Vice President, American Beacon Apollo Total Return Fund (2018-Present).

63

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
OFFICERS (CONT.)	Term
	One Year
Jeffrey K. Ringdahl (43)	VP since 2010	Chief Operating Officer (2010-Present), Vice President (2010-2013), Senior Vice President (2013-Present), Director (2015-Present), and President (2018-Present), American Beacon Advisors, Inc.; Senior Vice President (2018-Present), Vice President (2012-2018) and Manager (2015-2018), American Private Equity Management, LLC; Senior Vice President, Lighthouse Holdings, Inc. (2013-2015); Senior Vice President, Lighthouse Holdings Parent, Inc. (2013-2015); Director and Vice President, American Beacon Cayman Managed Futures Strategy Fund, Ltd. (2014-Present); Trustee, American Beacon NextShares Trust (2015-Present); Director (2015-Present), Senior Vice Present (2015-2018), and President (2018-Present), Resolute Investment Holdings, LLC; Director (2015-Present), Senior Vice President (2015-2018) and President (2018-Present), Resolute Topco, Inc.; Director (2015-Present), Senior Vice President (2015-2018), and President (2018-Present), Resolute Acquisition, Inc.; Director (2015-Present), Senior Vice President (2015-2018), and President (2018-Present), Resolute Investment Managers, Inc.; Director, Executive Vice President and Chief Operating Officer, Alpha Quant Advisors, LLC (2016-Present); Director (2017-Present), Executive Vice President (2017-2018), and President and Chief Operating Officer (2018-Present), Resolute Investment Services, Inc.; Director and Executive Vice President, Resolute Investment Distributors, Inc. (2017-Present); Director, Shapiro Capital Management, LLC (2017-Present); Director and Vice President, American Beacon Cayman Transformational Innovation Company, LTD., (2017-Present); Vice President, American Beacon Delaware Transformational Innovation Corporation (2017-Present); Director, Executive Vice President and Chief Operating Officer, Continuous Capital, LLC (2018-Present); Vice President, American Beacon Select Funds (2010-Present); Vice President, American Beacon Institutional Funds Trust (2017-Present); Vice President, American Beacon Sound Point Enhanced Income Fund (2018-Present); Vice President, American Beacon Apollo Total Return Fund (2018-Present)
Samuel J. Silver (55)	VP Since 2011	Vice President, American Beacon Advisors, Inc. (2011-Present); Vice President, American Beacon Select Funds (2011-Present); Vice President, American Beacon Mileage Funds (2011-2012); Vice President, American Beacon Master Trust (2011-2012); American Beacon Institutional Funds Trust (2011-Present); Vice President, American Beacon Sound Point Enhanced Income Fund (2018-Present); Vice President, American Beacon Apollo Total Return Fund (2018-Present).
Christina E. Sears (47)	Chief Compliance Officer since 2004 and Asst. Secretary since 1999	Chief Compliance Officer, American Beacon Advisors, Inc. (2004-Present); Chief Compliance Officer, American Private Equity Management, LLC (2012-Present); Chief Compliance Officer and Vice President, Alpha Quant Advisors, LLC (2016-Present); Vice President, Resolute Investment Managers, Inc. (2017-Present); Vice President, Resolute Investment Distributors (2017-Present); Vice President, Continuous Capital, LLC (2018-Present); Chief Compliance Officer (2004-Present) and Assistant Secretary (1999-Present), American Beacon Select Funds; Chief Compliance Officer (2004-2012) and Assistant Secretary (1999-2012), American Beacon Mileage Funds; Chief Compliance Officer (2004-2012) and Assistant Secretary (1999-2012), American Beacon Master Trust; Chief Compliance Officer and Assistant Secretary, American Beacon Institutional Funds Trust (2017-Present); Chief Compliance Officer and Assistant Secretary, American Beacon Sound Point Enhanced Income Fund (2018-Present); Chief Compliance Officer and Assistant Secretary, American Beacon Apollo Total Return Fund (2018-Present).

64

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
OFFICERS (CONT.)	Term
	One Year
Sonia L. Bates (61)	Asst. Treasurer since 2011	Assistant Treasurer, American Beacon Advisors, Inc. (2011-2018); Assistant Treasurer, Resolute Acquisition, Inc. (2015-2018); Assistant. Treasurer, Resolute Topco, Inc. (2015-2018); Assistant Treasurer, Resolute Investment Holdings, LLC. (2015-2018); Assistant Treasurer, Lighthouse Holdings, Inc. (2011-2015); Assistant Treasurer, Lighthouse Holdings Parent Inc. (2011-2015); Assistant Treasurer, American Private Equity Management, LLC (2012-Present); Assistant Treasurer, American Beacon Cayman Transformational Innovation Company, Ltd. (2017-Present); Assistant Treasurer, American Beacon Select Funds (2011-Present); Assistant Treasurer American Beacon Mileage Funds (2011-2012); Assistant Treasurer, American Beacon Master Trust (2011-2012); Assistant Treasurer, American Beacon Institutional Funds Trust (2017-Present); Assistant Treasurer, American Beacon Sound Point Enhanced Income Fund (2018-Present); Assistant Treasurer, American Beacon Apollo Total Return Fund (2018-Present).
Shelley D. Abrahams (43)	Assistant Secretary since 2008	Assistant Secretary, American Beacon Select Funds (2008-Present); Assistant Secretary, American Beacon Mileage Funds (2008-2012); Assistant Secretary, American Beacon Master Trust (2008-2012); Assistant Secretary, American Beacon Institutional Funds Trust (2017-Present); Assistant Secretary, American Beacon Sound Point Enhanced Income Fund (2018-Present); Assistant Secretary, American Beacon Apollo Total Return Fund (2018-Present).
Rebecca L. Harris (51)	Assistant Secretary since 2010	Vice President, American Beacon Advisors, Inc. (2016-Present); Vice President, Resolute Investment Managers, Inc. (2017-Present); Vice President, Resolute Investment Services (2015-Present); Vice President, Alpha Quant Advisors, LLC (2016-Present); Vice President, Continuous Capital, LLC (2018-Present); Assistant Secretary, American Beacon Select Funds (2010-Present); Assistant Secretary, American Beacon Mileage Funds (2010-2012); Assistant Secretary, American Beacon Master Trust (2010-2012); Assistant Secretary, American Beacon Institutional Funds Trust (2017-Present); Assistant Secretary, American Beacon Sound Point Enhanced Income Fund (2018-Present); Assistant Secretary, American Beacon Apollo Total Return Fund (2018-Present).
Diana N. Lai (42)	Assistant Secretary since 2012	Assistant Secretary, American Beacon Cayman Transformational Innovation Company, Ltd. (2017-Present); Assistant Secretary, American Beacon Select Funds (2012-Present); Assistant Secretary, American Beacon Institutional Funds Trust (2017-Present); Assistant Secretary, American Beacon Sound Point Enhanced Income Fund (2018-Present); Assistant Secretary, American Beacon Apollo Total Return Fund (2018-Present).
Teresa A. Oxford (60)	Assistant Secretary since 2015	Assistant Secretary, American Beacon Advisors, Inc. (2015-Present); Assistant Secretary, Resolute Investment Distributors (2018-Present); Assistant Secretary, Resolute Investment Services (2015-Present); Assistant Secretary, Alpha Quant Advisors, LLC (2016-Present); Assistant Secretary, American Beacon Select Funds (2015-Present); Assistant Secretary, American Beacon Institutional Funds Trust (2017-Present); Assistant Secretary, American Beacon Sound Point Enhanced Income Fund (2018-Present); Assistant Secretary, American Beacon Apollo Total Return Fund (2018-Present).

* As of 11/12/2014, the Board adopted a retirement plan that requires Trustees, other than Messrs. Feld and Massman to retire no later than the last day of the calendar year in which they reach the age of 75.

** 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 one or more of the Trust’s sub-advisors.

*** Claudia A. Holz became a new Trustee to each of the Trusts on 4/1/2018.

**** Douglas A. Lindren became a new Trustee to each of the Trusts on 1/1/2018.

65

American Beacon Funds^SM

Privacy Policy

October 31, 2018 (Unaudited)

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.

66

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68

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: Call (800) 658-5811	By Mail: American Beacon Funds P.O. Box 219643 Kansas City, MO 64121-9643
Availability of Quarterly Portfolio Schedules	Availability of Proxy Voting Policy and Records
In addition to the Schedule of Investments provided in each semi-annual and annual report, the Fund files a complete schedule of its portfolio holdings with the Securities and Exchange Commission (“SEC”) on Form N-Q as of the first and third fiscal quarters. The Fund’s Forms N-Q are available on the SEC’s website 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. 20549-2736. Information regarding the operation of the SEC’s Public Reference Room may be obtained by calling (800)-SEC-0330. A complete schedule of the Fund’s portfolio holdings is also available 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 DST Asset Managers Solutions, Inc. Quincy, Massachusetts INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM Ernst & Young LLP Dallas, Texas DISTRIBUTOR Resolute Investment Distributors, Inc. Irving, Texas

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

American Beacon Funds and American Beacon International Equity Fund are service marks of American Beacon Advisors, Inc.

AR 10/18

About American Beacon Advisors

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

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

SMALL CAP VALUE FUND RISKS

Investing in small-capitalization stocks may involve greater volatility and lower liquidity than larger company stocks. Investing in value stocks may limit downside risk over time; however, the Fund may produce more modest gains than riskier stock funds as a trade-off for this potentially lower risk. Investing in foreign securities may involve heightened risk due to currency fluctuations and economic and political risks. The use of futures contracts for cash management may subject the Fund to losing more money than invested. The Fund participates in a securities lending program. Please see the prospectus for a complete discussion of the Fund’s risks. There can be no assurances that the investment objectives of this Fund will be met.

Any opinions herein, including forecasts, reflect our judgment as of the end of the reporting period and are subject to change. Each advisor’s strategies and 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, 2018

Contents

President’s Message	1
Market and Performance Overview	2
Expense Example	6
Report of Independent Registered Public Accounting Firm	8
Schedule of Investments:
American Beacon Small Cap Value Fund	9
Financial Statements	27
Notes to Financial Statements	30
Financial Highlights:
American Beacon Small Cap Value Fund	50
Federal Tax Information	57
Disclosure Regarding Approval of the Management and Investment Advisory Agreements	58
Trustees and Officers of the American Beacon Funds	63
Privacy Policy	70

Additional Fund Information Back Cover

President’s Message

Dear Shareholders,   Long-term investing isn’t about identifying and anticipating the next big market move. It’s about identifying the right investment products for riding out those moves. As a long-term investor, you should strive to accomplish the three Ds: direction, discipline and diversification.   u   Direction: Achieving your long-term financial goals requires an individualized plan of action. You may want your plan to provide some measure of protection against periods of geopolitical turmoil, economic uncertainty, market volatility and job insecurity. Your plan should be reviewed annually and be adjusted in the event your long-range needs change.

u Discipline: Long-term, systematic participation in an investment portfolio requires your resolution to stay the course. Spending time in the market – rather than trying to time the market – may place you in a better position to reach your long-term financial goals.

u Diversification: By investing in different types of investment categories and asset classes, you may be able to help mitigate financial risks across your investment portfolio. By allocating your investment portfolio according to your risk-tolerance level, you may be better positioned to weather storms and achieve your long-term financial goals.

Since 1986, American Beacon has endeavored to provide investors with a disciplined approach to realizing long-term financial goals. As a manager of managers, we strive to provide investment products that may enable investors to participate during market upswings while potentially insulating against market downswings. Our approach is more than a concept. It’s the cornerstone of our culture. And we strive to apply it at every turn as we seek to provide a well-diversified line of investment products for your investment portfolio.

Many of the sub-advisors to our mutual funds pursue upside capture and/or downside protection using proprietary strategies. The investment teams behind our mutual funds seek to produce consistent, long-term results rather than focus only on short-term movements in the markets. In managing our investment products, we emphasize identifying opportunities that offer the potential for long-term rewards.

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

Best Regards,

Gene L. Needles, Jr.

President

American Beacon Funds

1

Domestic Equity Market Overview

October 31, 2018 (Unaudited)

For the year ended October 31, 2018, the broad market S&P 500^® Index (the “Index”) and the Dow Jones Industrial Average gained 7.35% and 9.87%, respectively. From a style perspective, Growth significantly outperformed Value across all market caps, according to the Russell^® Indexes. In terms of size, it went from largest to smallest with large caps as the best performers, followed by mid-caps and small caps.

The following table illustrates various Russell Index returns according to size and style.

12-Month Period Ended October 31, 2018

Large Caps	1 Year
Russell 1000 Index	6.98
Russell 1000 Growth Index	10.71
Russell 1000 Value Index	3.04
Mid-Caps	1 Year
Russell Midcap Index	2.80
Russell Midcap Growth Index	6.14
Russell Midcap Value Index	0.16
Small Caps	1 Year
Russell 2000 Index	1.85
Russell 2000 Growth Index	4.13
Russell 2000 Value Index	(0.59	)

Although these returns may appear to be run of the mill, they are not. The 2017 calendar year ended on a strong note, riding on the wave of the Trump administration’s pro-growth policies and the Federal Reserve’s (the “Feds”) cautious navigation of the path to normalized interest rates. Short-volatility traders and cryptocurrencies were still all the rage. Unfortunately, 2018 came with a vengeance. By March of 2018, the short-volatility trade was literally wiped out and many cryptocurrencies lost value from previous-year highs. As market participants wondered how bad things would get, a shot of strong gross domestic product (“GDP”) growth in the second quarter of 2018 pushed markets higher through August. The last few months of the period under review witnessed the return of volatility as the rhetoric of a trade war heightened, economic growth forecasts declined, Capitol Hill gridlock following the mid-term elections dampened the potential for pro-growth policy, and the likelihood of continued rate hikes made investors nervous.

Looking more closely at the markets’ returns, a small subset of sectors accounted for most of the gains. For example, the Index derived more than 80% of its return from the Technology sector (315 basis points, or 3.15%), the Consumer Discretionary sector (146 basis points, or 1.46%) and the Health Care sector (144 basis points, or 1.44%), which comprise about 44% of the Index. The remaining eight sectors underperformed the Index. Similar trends also occurred in mid-caps and small caps; however, not to this degree. A narrow market is not uncommon as bull markets move into their later stages. For example, on August 22, 2018, the current bull market became the longest one in history, eclipsing the bull run in the 1990s.

The present bull market has been powered by slow and steady growth. In the last 12 months, the economy continued to be a bright spot. Third-quarter real GDP was up 3.5% (seasonally adjusted annual rate) on top of the strong 4.2% gain in the second quarter. In addition, the unemployment rate is near 50-year lows. Inflation, while rising, is still in an acceptable range, and the U.S. dollar is strong. All these factors contributed to the strong market returns and allowed the Fed to implement three rate hikes in 2018, with another expected in December.

Despite the favorable factors, the U.S. equity markets ended the 12-month period in a slump. Fear overwhelmed investors as the markets corrected. The markets sit at the crossroads of correction and a bear market – with risks of trade wars, slower growth and interest-rate hikes balanced by low unemployment, subdued inflation, and equity valuations near long-term averages.

2

American Beacon Small Cap Value Fund^SM

Performance Overview

October 31, 2018 (Unaudited)

The Investor Class of the American Beacon Small Cap Value Fund (the “Fund”) returned -3.28% for the twelve months ended October 31, 2018, underperforming the Russell 2000^® Value Index (the “Index”) return of -0.59% for the same period.

Comparison of Change in Value of a $10,000 Investment for the period from 10/31/2008 through 10/31/2018

Total Returns for the Period ended October 31, 2018
	Ticker	1 Year			3 Years			5 Years			10 Years			Value of $10,000 10/31/2008- 10/31/2018
Institutional Class (1,8)	AVFIX		(2.96	)%		8.19	%		6.80	%		12.83	%		$	33,430
Y Class (1,2,8)	ABSYX		(3.03	)%		8.11	%		6.71	%		12.71	%		$	33,079
Investor Class (1,8)	AVPAX		(3.28	)%		7.87	%		6.46	%		12.44	%		$	32,314
Advisor Class (1,3,8)	AASSX		(3.44	)%		7.67	%		6.28	%		12.27	%		$	31,822
A Class without sales charge (1,4,8)	ABSAX		(3.37	)%		7.77	%		6.37	%		12.33	%		$	31,976
A Class with sales charge (1,4,8)	ABSAX		(8.93	)%		5.66	%		5.12	%		11.66	%		$	30,127
C Class without sales charge (1,5,8)	ASVCX		(3.89	)%		7.04	%		5.61	%		11.65	%		$	30,098
C Class with sales charge (1,5,8)	ASVCX		(4.89	)%		7.04	%		5.61	%		11.65	%		$	30,098
R6 Class (1,6,8)	AASRX		(2.93	)%		8.21	%		6.81	%		12.83	%		$	33,441
Russell 2000® Value Index (7)			(0.59	)%		10.52	%		7.18	%		10.95	%		$	28,257

1. Performance shown is historical and is not indicative of future returns. Investment returns and principal value will vary, and shares may be worth more or less at redemption than at original purchase. Performance shown is calculated based on the published end of day net asset values as of date indicated, and current performance may be lower or higher than the performance data quoted. To obtain performance as of the most recent month end, please 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. Generally accepted accounting principles require adjustments to be made to the net assets of the Fund at period end for financial reporting purposes only; and as such, the total return based on the unadjusted net asset value per share may differ from the total return reported in the financial highlights.

2. Fund performance for the ten-year period represents the total returns achieved by the Institutional Class from 10/31/08 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 10/31/08.

3

American Beacon Small Cap Value Fund^SM

Performance Overview

October 31, 2018 (Unaudited)

3. A portion of the fees charged to the Advisor Class of the Fund was waived in 2009. Performance prior to waiving fees was lower than the actual returns shown for the ten-year period.

4. Fund performance for the ten-year period represents the total returns achieved by the Investor Class from 10/31/08 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 10/31/08. A portion of the fees charged to the A Class of the Fund was waived in 2010, 2012, 2013, and 2014 and fully recovered in 2015. Performance prior to waiving fees was lower than the actual returns shown in 2010, 2012, 2013, and 2014. The maximum sales charge for A Class is 5.75%.

5. Fund performance for the ten-year period represents the total returns achieved by the Investor Class from 10/31/08 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 10/31/08. A portion of the fees charged to the C Class of the Fund was waived in 2010, 2012, and 2013 and fully recovered in 2015. Performance prior to waiving fees was lower than the actual returns shown in 2010, 2012 and 2013. The maximum contingent deferred sales charge for C Class is 1.00% for shares redeemed within one year of the date of purchase.

6. Fund performance for the three-year, five-year and ten-year periods represent the returns achieved by the Institutional Class from 10/31/08 through 2/28/17, the inception date of the R6 Class, and the returns of the R6 Class since its inception. Expenses of the R6 Class are lower than those of the Institutional Class. As a result, total returns shown may be lower than they would have been had the R6 Class been in existence since 10/31/08. A portion of the fees charged to the R6 Class of the Fund has been waived since 2/28/17. Performance prior to waiving fees was lower than the actual returns shown.

7. 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. Russell 2000 Value Index and Russell 2000 Index are registered trademarks of the Frank Russell Company. Frank Russell Company (“Russell”) is the source and owner of the trademarks, service marks and copyrights related to the Russell Indexes. Russell^® is a trademark of Frank Russell Company. Neither Russell nor its licensors accept any liability for any errors or omissions in the Russell Indexes and/or Russell ratings or underlying data, and no party may rely on any Russell Indexes and/or Russell ratings and/or underlying data contained in this communication. No further distribution of Russell Data is permitted without Russell’s express written consent. Russell does not promote, sponsor or endorse the content of this communication. One cannot directly invest in an index.

8. The Total Annual Fund Operating Expense ratios set forth in the most recent Fund prospectus for the Institutional, Y, Investor, Advisor, A, C, and R6 Class shares were 0.83%, 0.91%, 1.13%, 1.31%, 1.21%, 1.97%, and 0.81%, 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 trailed the Index as both stock selection and sector allocation detracted value relative to the Index.

Most of the Fund’s underperformance related to security selection was attributed to holdings in the Consumer Discretionary and Materials sectors. In Consumer Discretionary, the Fund’s positions in Tenneco Inc., Class A (down 38.6%), MDC Partners (down 78.2%) and Whirlpool Corp., (down 31.0%) negatively impacted performance. Companies in the Materials sector detracting from performance included Ferroglobe PLC (down 61.4%), Polyone Corporation (down 28.7%) and Owens Illinois, Inc. (down 36.6%). Positive security selection in the Information Technology sector added relative value. Plantronics Inc. (up 30.3%) and Ciena Corp. (up 41.7%) were the largest contributors in the Information Technology sector.

From a sector allocation perspective, the Fund’s overweight position in Information Technology, the second worst performing sector, detracted from performance. An overweight in Materials, which was the worst performing sector during the period, also detracted from relative value. This underperformance was slightly offset by an overweight in Consumer Discretionary, the second best performing sector in the Index.

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

4

American Beacon Small Cap Value Fund^SM

Performance Overview

October 31, 2018 (Unaudited)

Top Ten Holdings (% Net Assets)
Portland General Electric Co.		0.9
ARRIS International PLC		0.9
Callon Petroleum Co.		0.8
American Axle & Manufacturing Holdings, Inc.		0.7
Diodes, Inc.		0.7
UMB Financial Corp.		0.7
Enstar Group Ltd.		0.7
Associated Banc-Corp		0.7
Brooks Automation, Inc.		0.7
Ciena Corp.		0.7
Total Fund Holdings	748
Sector Allocation (% Equities)
Financials		27.4
Industrials		19.4
Information Technology		12.1
Consumer Discretionary		11.7
Energy		8.1
Materials		5.5
Health Care		4.4
Real Estate		4.2
Utilities		2.7
Consumer Staples		2.4
Communication Services		2.1

5

American Beacon Small Cap Value Fund^SM

Expense Example

October 31, 2018 (Unaudited)

Fund Expense Example

As a shareholder of a Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments and redemption fees if applicable, and (2) ongoing costs, including management fees, distribution (12b-1) fees, Sub-transfer agent fees, and other Fund expenses. The Examples are intended to help you understand the ongoing cost (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. The Examples are based on an investment of $1,000 invested at the beginning of the period in each Class and held for the entire period from May 1, 2018 through October 31, 2018.

Actual Expenses

The “Actual” lines of the table provide information about actual account values and actual expenses. You may use the information on this page, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = $8.60), then multiply the result by the “Expenses Paid During Period” to estimate the expenses you paid on your account during this period. Shareholders of the Investor and Institutional Classes that invest in the Fund through an IRA or Roth IRA may be subject to a custodial IRA fee of $15 that is typically deducted each December. If your account was subject to a custodial IRA fee during the period, your costs would have been $15 higher.

Hypothetical Example for Comparison Purposes

The “Hypothetical” lines of the 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 or Roth IRA may be subject to a custodial IRA fee of $15 that is typically deducted each December. If your account was subject to a custodial IRA fee during the period, your costs would have been $15 higher.

You should also be aware that the expenses shown in the table highlight only your ongoing costs and do not reflect any transaction costs charged by the Fund, such as sales charges (loads) or redemption fees, as applicable. Similarly, the expense examples for other funds do not reflect any transaction costs charged by those funds, such as sales charges (loads), redemption fees or exchange fees. Therefore, the “Hypothetical” lines of the 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.

6

American Beacon Small Cap Value Fund^SM

Expense Example

October 31, 2018 (Unaudited)

American Beacon Small Cap Value Fund
	Beginning Account Value 5/1/2018		Ending Account Value 10/31/2018		Expenses Paid During Period 5/1/2018-10/31/2018*
Institutional Class
Actual		$1,000.00		$964.20		$3.96
Hypothetical**		$1,000.00		$1,021.20		$4.08
Y Class
Actual		$1,000.00		$963.70		$4.31
Hypothetical**		$1,000.00		$1,020.80		$4.43
Investor Class
Actual		$1,000.00		$962.80		$5.64
Hypothetical**		$1,000.00		$1,019.50		$5.80
Advisor Class
Actual		$1,000.00		$961.90		$6.28
Hypothetical**		$1,000.00		$1,018.80		$6.46
A Class
Actual		$1,000.00		$962.10		$6.08
Hypothetical**		$1,000.00		$1,019.00		$6.26
C Class
Actual		$1,000.00		$959.00		$9.23
Hypothetical**		$1,000.00		$1,015.80		$9.50
R6 Class
Actual		$1,000.00		$964.60		$3.81
Hypothetical**		$1,000.00		$1,021.32		$3.92

* Expenses are equal to the Fund’s annualized expense ratios for the six-month period of 0.80%, 0.87%, 1.14%, 1.27%, 1.23%, 1.87%, and 0.77% for the Institutional, Y, Investor, Advisor, A, C, and R6 Classes, respectively, multiplied by the average account value over the period, multiplied by the number derived by dividing the number of days in the most recent fiscal half-year (184) by days in the year (365) to reflect the half-year period.

** 5% return before expenses.

7

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

Opinion on the Financial Statements

We have audited the accompanying statement of assets and liabilities of American Beacon Small Cap Value Fund (the “Fund”) (one of the funds constituting American Beacon Funds (the “Trust”)), including the schedule of investments, as of October 31, 2018, and the related statement of operations, the statements of changes in net assets for each of the two years in the period then ended, the financial highlights for each of the five years in the period then ended and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Fund at October 31, 2018, the results of its operations, the changes in its net assets for each of the two years in the period then ended and its financial highlights for each of the five years in the period then ended, in conformity with U.S. generally accepted accounting principles.

Basis for Opinion

These financial statements are the responsibility of the Trust’s management. Our responsibility is to express an opinion on the Fund’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Trust in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Trust is not required to have, nor were we engaged to perform, an audit of the Trust’s internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Trust’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of October 31, 2018, by correspondence with the custodian and brokers or by other appropriate auditing procedures where replies from brokers were not received. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

We have served as the auditor of one or more American Beacon investment companies since 1987.

Dallas, Texas

December 28, 2018

8

American Beacon Small Cap Value Fund^SM

Schedule of Investments

October 31, 2018

	Shares		Fair Value
COMMON STOCKS - 96.47%
Communication Services - 2.08%
Diversified Telecommunication Services - 0.13%
IDT Corp., Class B		349,596		$	2,461,156
Iridium Communications, Inc.A		297,978			5,902,944
					8,364,100
Entertainment - 0.02%
Marcus Corp.		37,962			1,481,277
Interactive Media & Services - 0.03%
Cars.com, Inc.A		57,357			1,497,591
Media - 1.77%
Entercom Communications Corp., Class AB		202,778			1,316,029
Entravision Communications Corp., Class A		397,939			1,965,819
EW Scripps Co., Class A		634,287			10,668,707
Gannett Co., Inc.		290,291			2,815,823
Gray Television, Inc.A		1,008,576			17,458,451
John Wiley & Sons, Inc., Class A		197,512			10,713,051
MDC Partners, Inc., Class AA		1,783,965			4,406,393
Meredith Corp.B		181,726			9,369,793
MSG Networks, Inc., Class AA		269,589			6,887,999
New Media Investment Group, Inc.		96,769			1,359,604
New York Times Co., Class A		330,278			8,719,339
Nexstar Media Group, Inc., Class A		142,438			10,667,182
Scholastic Corp.		429,107			18,614,662
Sinclair Broadcast Group, Inc., Class A		144,834			4,148,046
TEGNA, Inc.		599,491			6,918,126
					116,029,024
Wireless Telecommunication Services - 0.13%
Telephone & Data Systems, Inc.		281,534			8,679,693
Total Communication Services					136,051,685
Consumer Discretionary - 11.26%
Auto Components - 1.59%
American Axle & Manufacturing Holdings, Inc.A		3,229,812			48,996,248
Cooper Tire & Rubber Co.		266,992			8,247,383
Cooper-Standard Holdings, Inc.A		19,802			1,834,655
Dana, Inc.		237,652			3,700,242
Gentherm, Inc.A		325,282			14,195,306
Horizon Global Corp.A B		369,772			2,074,421
Modine Manufacturing Co.A		139,860			1,819,578
Motorcar Parts of America, Inc.A		91,709			1,942,397
Standard Motor Products, Inc.		113,309			6,131,150
Stoneridge, Inc.A		26,295			668,156
Superior Industries International, Inc.		237,625			2,335,854
Tenneco, Inc., Class A		276,691			9,526,471
Tower International, Inc.		89,617			2,660,729
					104,132,590
Automobiles - 0.10%
Winnebago Industries, Inc.		246,700			6,799,052
Diversified Consumer Services - 0.70%
Adtalem Global Education, Inc.A		301,025			15,240,896
American Public Education, Inc.A		62,283			2,038,523
Graham Holdings Co., Class B		13,081			7,600,715
H&R Block, Inc.		524,723			13,926,148
K12, Inc.A		99,844			2,137,660

See accompanying notes

9

American Beacon Small Cap Value Fund^SM

Schedule of Investments

October 31, 2018

	Shares		Fair Value
COMMON STOCKS - 96.47% (continued)
Consumer Discretionary - 11.26% (continued)
Diversified Consumer Services - 0.70% (continued)
Sotheby’sA		78,574		$	3,300,108
Strategic Education, Inc.		11,581			1,457,121
					45,701,171
Hotels, Restaurants & Leisure - 1.10%
Belmond Ltd., Class AA		363,445			6,222,178
Bloomin’ Brands, Inc.		796,188			15,883,951
Bluegreen Vacations Corp.B		98,886			1,295,407
Bojangles’, Inc.A		197,251			3,118,538
Brinker International, Inc.B		129,325			5,606,239
Carrols Restaurant Group, Inc.A		89,591			1,179,018
Cheesecake Factory, Inc.		414,750			20,049,015
Dave & Buster’s Entertainment, Inc.		175,995			10,480,502
El Pollo Loco Holdings, Inc.A		199,122			2,491,016
Eldorado Resorts, Inc.A		16,650			607,725
Hilton Grand Vacations, Inc.A		44,921			1,207,027
International Speedway Corp., Class A		75,983			2,850,122
Ruth’s Hospitality Group, Inc.		29,133			787,465
					71,778,203
Household Durables - 1.83%
Century Communities, Inc.A		117,687			2,497,318
CSS Industries, Inc.		104,835			1,377,532
Ethan Allen Interiors, Inc.		516,021			9,876,642
Flexsteel Industries, Inc.		49,876			1,267,848
Green Brick Partners, Inc.A		57,534			540,820
Helen of Troy Ltd.A		175,367			21,766,552
Hooker Furniture Corp.		59,268			1,734,774
iRobot Corp.A B		10,005			882,141
KB Home		478,266			9,550,972
La-Z-Boy, Inc.		152,055			4,227,129
LGI Homes, Inc.A B		29,411			1,258,497
Lifetime Brands, Inc.		34,129			353,235
M/I Homes, Inc.A		328,106			7,930,322
MDC Holdings, Inc.		381,754			10,727,287
Meritage Homes Corp.A		67,114			2,499,997
Taylor Morrison Home Corp., Class AA		360,299			5,959,345
Tempur Sealy International, Inc.A		14,393			665,101
TRI Pointe Group, Inc.A		1,349,210			16,055,599
Tupperware Brands Corp.		81,001			2,843,135
Whirlpool Corp.		111,457			12,233,520
William Lyon Homes, Class AA		325,636			4,415,624
ZAGG, Inc.A		102,087			1,236,274
					119,899,664
Internet & Direct Marketing Retail - 0.05%
Duluth Holdings, Inc., Class BA B		42,209			1,297,082
Lands’ End, Inc.A B		127,728			2,083,244
					3,380,326
Leisure Products - 0.32%
Brunswick Corp.		214,595			11,156,794
Malibu Boats, Inc., Class AA		181,555			7,298,511
Nautilus, Inc.A		207,399			2,536,490
					20,991,795
Media - 0.12%
AMC Networks, Inc., Class AA		134,200			7,861,436

See accompanying notes

10

American Beacon Small Cap Value Fund^SM

Schedule of Investments

October 31, 2018

	Shares		Fair Value
COMMON STOCKS - 96.47% (continued)
Consumer Discretionary - 11.26% (continued)
Multiline Retail - 0.59%
Big Lots, Inc.		449,069		$	18,645,345
Dillard’s, Inc., Class AB		279,168			19,659,011
					38,304,356
Specialty Retail - 4.30%
Aaron’s, Inc.		284,330			13,400,473
Abercrombie & Fitch Co., Class A		652,122			12,846,803
Asbury Automotive Group, Inc.A		84,859			5,524,321
Ascena Retail Group, Inc.A		394,822			1,520,065
Bed Bath & Beyond, Inc.B		420,018			5,771,047
Buckle, Inc.B		386,884			7,892,434
Caleres, Inc.		370,898			12,684,712
Chico’s FAS, Inc.		676,171			5,186,232
Dick’s Sporting Goods, Inc.		668,955			23,660,938
DSW, Inc., Class A		354,385			9,408,922
Express, Inc.A		1,510,445			13,307,020
Foot Locker, Inc.		309,100			14,570,974
Francesca’s Holdings Corp.A		508,631			1,546,238
GameStop Corp., Class AB		127,268			1,858,113
Genesco, Inc.A		130,476			5,583,068
Group 1 Automotive, Inc.		250,625			14,471,087
Guess?, Inc.		151,727			3,222,681
Haverty Furniture Cos, Inc.		33,360			676,541
Hibbett Sports, Inc.A		293,105			5,120,544
Kirkland’s, Inc.A		200,567			2,027,732
Lithia Motors, Inc., Class A		27,618			2,460,211
Lumber Liquidators Holdings, Inc.A B		98,768			1,181,265
Murphy USA, Inc.A		110,847			8,937,594
Office Depot, Inc.		7,013,497			17,954,552
Party City Holdco, Inc.A B		366,233			3,834,460
Penske Automotive Group, Inc.		228,323			10,132,975
Pier 1 Imports, Inc.		219,264			348,630
Sally Beauty Holdings, Inc.A		323,200			5,756,192
Shoe Carnival, Inc.		41,438			1,687,770
Sonic Automotive, Inc., Class A		1,276,929			23,137,953
Sportsman’s Warehouse Holdings, Inc.A		370,652			1,864,380
Tailored Brands, Inc.		134,267			2,820,950
Urban Outfitters, Inc.A		223,905			8,835,291
Williams-Sonoma, Inc.B		449,211			26,674,149
Zumiez, Inc.A		231,237			5,378,573
					281,284,890
Textiles, Apparel & Luxury Goods - 0.56%
Crocs, Inc.A		138,742			2,849,761
Deckers Outdoor Corp.A		52,359			6,658,494
Movado Group, Inc.		92,625			3,566,989
Oxford Industries, Inc.		127,638			11,357,229
Vera Bradley, Inc.A		402,384			5,307,445
Wolverine World Wide, Inc.		193,205			6,795,020
					36,534,938
Total Consumer Discretionary					736,668,421
Consumer Staples - 2.36%
Beverages - 0.21%
Boston Beer Co., Inc., Class AA		45,355			13,937,138
Food & Staples Retailing - 0.74%
Andersons, Inc.		182,998			6,587,928

See accompanying notes

11

American Beacon Small Cap Value Fund^SM

Schedule of Investments

October 31, 2018

	Shares		Fair Value
COMMON STOCKS - 96.47% (continued)
Consumer Staples - 2.36% (continued)
Food & Staples Retailing - 0.74% (continued)
Casey’s General Stores, Inc.		100,358		$	12,656,147
Performance Food Group Co.A		231,200			6,778,784
SpartanNash Co.		132,085			2,357,717
Sprouts Farmers Market, Inc.A		420,458			11,306,116
United Natural Foods, Inc.A		171,908			3,735,561
Village Super Market, Inc., Class A		52,287			1,288,352
Weis Markets, Inc.		72,400			3,341,260
					48,051,865
Food Products - 1.18%
B&G Foods, Inc.B		72,586			1,890,140
Cal-Maine Foods, Inc.		110,000			5,353,700
Darling Ingredients, Inc.A		1,542,987			31,878,111
Dean Foods Co.		195,586			1,562,732
Fresh Del Monte Produce, Inc.		280,470			9,263,924
Hain Celestial Group, Inc.A		402,609			10,016,912
Sanderson Farms, Inc.		20,972			2,063,435
SunOpta, Inc.A B		2,060,885			15,291,767
					77,320,721
Household Products - 0.14%
Energizer Holdings, Inc.		156,333			9,187,690
Metals & Mining - 0.00%
Ferroglobe Representation & Warranty InsuranceC D		2,123,070			-
Personal Products - 0.02%
Natural Health Trends Corp.B		60,094			1,366,537
Tobacco - 0.07%
Universal Corp.		67,100			4,553,406
Total Consumer Staples					154,417,357
Energy - 7.77%
Energy Equipment & Services - 2.44%
C&J Energy Services, Inc.A		1,051,418			19,745,630
CARBO Ceramics, Inc.A B		370,783			1,790,882
Diamond Offshore Drilling, Inc.A B		438,059			6,211,677
Dril-Quip, Inc.A		375,347			15,974,768
Ensco PLC, Class A		73,542			525,090
Frank’s International N.V.A		5,686,436			40,373,696
Helix Energy Solutions Group, Inc.A		398,422			3,394,555
Key Energy Services, Inc.A		308,100			2,788,305
Mammoth Energy Services, Inc.		120,400			3,005,184
Matrix Service Co.A		112,427			2,285,641
McDermott International, Inc.A		160,364			1,239,614
Nabors Industries Ltd.		867,466			4,311,306
Newpark Resources, Inc.A		1,095,460			8,993,727
Nine Energy Service, Inc.A		33,100			1,225,693
Oceaneering International, Inc.A		127,953			2,423,430
Oil States International, Inc.A		563,204			12,542,553
Patterson-UTI Energy, Inc.		617,472			10,274,734
Quintana Energy Services, Inc.A		296,600			1,895,274
Rowan Cos PLC, Class AA		92,630			1,473,743
SEACOR Holdings, Inc.A		113,390			5,441,586
Smart Sand, Inc.A B		591,468			1,638,366
Superior Energy Services, Inc.A		347,400			2,720,142

See accompanying notes

12

American Beacon Small Cap Value Fund^SM

Schedule of Investments

October 31, 2018

	Shares		Fair Value
COMMON STOCKS - 96.47% (continued)
Energy - 7.77% (continued)
Energy Equipment & Services - 2.44% (continued)
Transocean Ltd.A B		562,724		$	6,195,591
Unit Corp.A		145,509			3,365,623
					159,836,810
Oil, Gas & Consumable Fuels - 5.33%
Alliance Resource Partners LP, MLP		212,578			4,079,372
Arch Coal, Inc., Class A		108,710			10,425,289
Berry Petroleum Corp.		313,400			4,387,600
Bonanza Creek Energy, Inc.A		590,638			15,208,928
California Resources Corp.A		38,604			1,209,849
Callon Petroleum Co.A		4,986,411			49,714,518
Carrizo Oil & Gas, Inc.A		246,460			4,488,037
Chesapeake Energy Corp.A B		2,454,200			8,614,242
CNX Midstream Partners LP, MLP		73,253			1,336,867
CNX Resources Corp.A		575,582			9,007,858
Contango Oil & Gas Co.A		214,077			1,081,089
Cosan Ltd., Class A		328,595			2,743,768
CVR Refining LP		30,786			592,631
Delek US Holdings, Inc.		64,972			2,385,772
Denbury Resources, Inc.A		1,634,369			5,638,573
Earthstone Energy, Inc., Class AA		232,846			1,916,323
EP Energy Corp., Class AA B		272,538			490,568
Gran Tierra Energy, Inc.A		1,513,503			4,616,184
Gulfport Energy Corp.A		265,558			2,419,233
HighPoint Resources Corp.A		573,582			2,133,725
Kosmos Energy Ltd.A		2,096,571			13,606,746
Midstates Petroleum Co., Inc.A		107,621			775,947
Murphy Oil Corp.		444,909			14,174,801
Nordic American Tankers Ltd.B		777,877			2,014,701
Oasis Petroleum, Inc.A		1,304,960			13,127,898
Par Pacific Holdings, Inc.A		115,153			2,035,905
PBF Energy, Inc., Class A		43,200			1,807,920
PBF Logistics LP		86,409			1,888,037
PDC Energy, Inc.A		327,888			13,918,846
Peabody Energy Corp.		429,850			15,238,182
Penn Virginia Corp.A		106,200			7,304,436
QEP Resources, Inc.A		909,539			8,103,992
Range Resources Corp.		819,023			12,981,515
Renewable Energy Group, Inc.A		330,866			10,283,315
REX American Resources Corp.A		38,713			2,871,343
SemGroup Corp., Class A		194,559			3,597,396
SM Energy Co.		398,990			9,711,417
Southwestern Energy Co.A		1,956,996			10,450,359
SRC Energy, Inc.A		1,377,804			9,754,852
Talos Energy, Inc.A		67,900			1,769,474
Ultra Petroleum Corp.A B		1,789,355			2,147,226
W&T Offshore, Inc.A		805,485			5,428,969
Whiting Petroleum Corp.A		1,149,251			42,867,062
World Fuel Services Corp.		330,173			10,597,020
					348,947,785
Total Energy					508,784,595
Financials - 26.44%
Banks - 15.15%
1st Source Corp.		12,893			600,685
Access National Corp.		47,163			1,224,823
American National Bankshares, Inc.		15,892			573,542

See accompanying notes

13

American Beacon Small Cap Value Fund^SM

Schedule of Investments

October 31, 2018

	Shares		Fair Value
COMMON STOCKS - 96.47% (continued)
Financials - 26.44% (continued)
Banks - 15.15% (continued)
Arrow Financial Corp.		19,557		$	687,233
Associated Banc-Corp		1,957,707			45,379,648
Banc of California, Inc.		117,458			1,873,455
Bancorp, Inc.A		357,839			3,757,310
BancorpSouth Bank		172,361			4,946,761
Bank of Marin Bancorp		26,304			2,235,577
Bank of NT Butterfield & Son Ltd.		576,484			23,226,540
BankUnited, Inc.		448,525			14,846,177
Banner Corp.		296,462			17,141,433
Bar Harbor Bankshares		49,323			1,261,189
Berkshire Hills Bancorp, Inc.		462,098			15,420,210
Boston Private Financial Holdings, Inc.		238,458			3,219,183
Bridge Bancorp, Inc.		19,560			580,932
Brookline Bancorp, Inc.		165,994			2,572,907
Bryn Mawr Bank Corp.		132,684			5,299,399
Cadence Bancorp		898,700			19,825,322
Camden National Corp.		15,489			628,079
Carolina Financial Corp.		116,536			3,856,176
Cathay General Bancorp		414,454			15,612,482
CenterState Bank Corp.		250,600			6,159,748
Central Pacific Financial Corp.		272,879			7,378,648
Chemical Financial Corp.		262,207			12,287,020
CIT Group, Inc.		141,900			6,723,222
City Holding Co.		9,277			684,457
Community Trust Bancorp, Inc.		42,053			1,913,832
ConnectOne Bancorp, Inc.		51,315			1,063,760
Customers Bancorp, Inc.A		246,193			5,044,495
CVB Financial Corp.		532,688			11,639,233
Enterprise Financial Services Corp.		54,090			2,350,211
FCB Financial Holdings, Inc., Class AA		102,833			4,023,855
Fidelity Southern Corp.		112,351			2,608,790
Financial Institutions, Inc.		85,253			2,433,973
First BanCorpA		311,905			2,878,883
First Business Financial Services, Inc.		28,153			589,242
First Citizens BancShares, Inc., Class A		12,596			5,373,831
First Commonwealth Financial Corp.		207,297			2,798,510
First Financial Corp.		111,001			5,090,506
First Hawaiian, Inc.		1,721,840			42,667,195
First Horizon National Corp.		1,087,600			17,553,864
First Internet Bancorp		64,127			1,652,553
First Interstate BancSystem, Inc., Class A		271,553			11,258,587
First Merchants Corp.		67,570			2,811,588
First Mid-Illinois Bancshares, Inc.		17,976			670,145
First Midwest Bancorp, Inc.		1,065,476			24,463,329
Flushing Financial Corp.		155,132			3,519,945
FNB Corp.		923,817			10,928,755
Franklin Financial Network, Inc.A		68,314			2,315,845
Fulton Financial Corp.		1,836,500			29,402,365
Glacier Bancorp, Inc.		50,147			2,126,233
Great Western Bancorp, Inc.		164,307			6,021,852
Hancock Whitney Corp.		751,141			31,517,876
Hanmi Financial Corp.		113,090			2,372,628
Heartland Financial USA, Inc.		44,841			2,382,851
Heritage Financial Corp.		196,730			6,437,006
Hilltop Holdings, Inc.		137,770			2,741,623
HomeTrust Bancshares, Inc.A		25,802			703,363
Hope Bancorp, Inc.		508,700			7,365,976

See accompanying notes

14

American Beacon Small Cap Value Fund^SM

Schedule of Investments

October 31, 2018

	Shares		Fair Value
COMMON STOCKS - 96.47% (continued)
Financials - 26.44% (continued)
Banks - 15.15% (continued)
Horizon Bancorp, Inc.		73,426		$	1,230,620
Howard Bancorp, Inc.A		39,141			622,733
IBERIABANK Corp.		264,065			19,670,202
International Bancshares Corp.		508,455			19,677,208
Investors Bancorp, Inc.		1,086,028			12,141,793
Live Oak Bancshares, Inc.		66,858			1,230,187
Midland States Bancorp, Inc.		88,176			2,378,107
MidSouth Bancorp, Inc.		51,698			686,549
MidWestOne Financial Group, Inc.		21,401			616,563
National Bank Holdings Corp., Class A		447,443			15,105,676
National Bankshares, Inc.		15,043			649,557
Northrim BanCorp, Inc.		36,311			1,380,907
OFG Bancorp		429,752			7,344,462
Old National Bancorp		1,963,169			35,042,567
Opus Bank		86,319			1,639,198
Orrstown Financial Services, Inc.		26,390			534,661
Peapack Gladstone Financial Corp.		41,015			1,106,995
Popular, Inc.		818,822			42,586,932
Preferred Bank		19,200			987,072
Prosperity Bancshares, Inc.		592,095			38,503,938
RBB Bancorp		56,387			1,216,831
Renasant Corp.		124,273			4,334,642
Republic Bancorp, Inc., Class A		48,178			2,161,747
S&T Bancorp, Inc.		65,006			2,607,391
Sandy Spring Bancorp, Inc.		16,855			599,195
Seacoast Banking Corp. of FloridaA		576,236			15,160,769
Simmons First National Corp., Class A		207,712			5,562,527
South State Corp.		248,142			16,791,769
Southern National Bancorp of Virginia, Inc.		125,734			1,899,841
State Bank Financial Corp.		20,618			527,202
Sterling Bancorp		283,300			5,093,734
TCF Financial Corp.		1,319,542			27,552,037
Texas Capital Bancshares, Inc.A		495,936			32,349,905
Towne Bank		209,198			5,884,740
TriCo Bancshares		36,438			1,312,497
Trustmark Corp.		437,086			13,462,249
UMB Financial Corp.		722,683			46,143,310
Umpqua Holdings Corp.		815,640			15,660,288
Union Bankshares Corp.		461,672			15,761,482
United Bankshares, Inc.		195,494			6,484,536
United Community Banks, Inc.		438,434			10,903,854
Valley National Bancorp		2,213,164			22,087,377
Webster Financial Corp.		457,155			26,899,000
WesBanco, Inc.		238,441			9,561,484
West Bancorp, Inc.		27,090			595,709
Westamerica Bancorp		186,498			10,856,049
Wintrust Financial Corp.		162,151			12,346,177
					991,677,127
Capital Markets - 2.37%
AllianceBernstein Holding LP, MLP		419,711			12,133,845
Artisan Partners Asset Management, Inc., Class A		138,599			3,798,999
Blucora, Inc.A		247,100			7,146,132
BrightSphere Investment Group PLC		917,808			10,463,011
Cohen & Steers, Inc.		252,462			9,692,016
Donnelley Financial Solutions, Inc.A		371,347			5,774,446
Ellington Financial LLC		181,740			2,795,161

See accompanying notes

15

American Beacon Small Cap Value Fund^SM

Schedule of Investments

October 31, 2018

	Shares		Fair Value
COMMON STOCKS - 96.47% (continued)
Financials - 26.44% (continued)
Capital Markets - 2.37% (continued)
Evercore, Inc., Class A		199,298		$	16,280,654
Federated Investors, Inc., Class B		538,333			13,280,675
GAMCO Investors, Inc., Class A		29,851			612,542
Greenhill & Co., Inc.		109,870			2,422,633
INTL. FCStone, Inc.A		50,852			2,302,579
Investment Technology Group, Inc.		50,988			1,401,150
Legg Mason, Inc.		88,766			2,504,976
Och-Ziff Capital Management Group LLC, Class A		897,481			1,059,028
Oppenheimer Holdings, Inc., Class A		241,074			7,415,436
Piper Jaffray Cos		39,020			2,707,208
Stifel Financial Corp.		442,386			20,225,888
Victory Capital Holdings, Inc., Class AA		226,536			1,766,981
Virtus Investment Partners, Inc.		36,276			3,603,658
Waddell & Reed Financial, Inc., Class A		1,221,354			23,291,221
WisdomTree Investments, Inc.		547,668			4,255,380
					154,933,619
Consumer Finance - 1.34%
Encore Capital Group, Inc.A B		49,846			1,266,587
Enova International, Inc.A		109,059			2,579,245
EZCORP, Inc., Class AA		297,498			2,957,130
Navient Corp.		869,934			10,073,836
Nelnet, Inc., Class A		148,513			8,359,797
OneMain Holdings, Inc.A		365,298			10,418,299
PRA Group, Inc.A		736,034			22,699,289
SLM Corp.A		2,810,803			28,501,542
World Acceptance Corp.A		9,082			921,732
					87,777,457
Diversified Financial Services - 0.07%
Compass Diversified Holdings		147,251			2,328,038
FGL HoldingsA		316,282			2,498,628
					4,826,666
Insurance - 4.72%
Ambac Financial Group, Inc.A		501,527			10,321,426
American Equity Investment Life Holding Co.		548,513			17,124,576
Argo Group International Holdings Ltd.		286,635			17,659,582
Aspen Insurance Holdings Ltd.		129,280			5,414,246
Assured Guaranty Ltd.		291,600			11,658,168
Axis Capital Holdings Ltd.		224,800			12,541,592
CNO Financial Group, Inc.		1,764,793			33,354,588
eHealth, Inc.A		191,986			6,596,639
EMC Insurance Group, Inc.		26,805			642,516
Employers Holdings, Inc.		164,410			7,556,284
Enstar Group Ltd.A		250,405			45,473,548
FBL Financial Group, Inc., Class A		32,970			2,274,271
Global Indemnity Ltd.		400,285			14,330,203
Hanover Insurance Group, Inc.		123,251			13,727,696
Horace Mann Educators Corp.		554,124			21,765,991
Kemper Corp.		135,929			10,220,502
MBIA, Inc.A		695,386			6,884,321
National General Holdings Corp.		338,300			9,425,038
National Western Life Group, Inc., Class A		14,345			3,862,822
Navigators Group, Inc.		23,930			1,654,760
ProAssurance Corp.		54,235			2,382,001
RenaissanceRe Holdings Ltd.		108,300			13,229,928

See accompanying notes

16

American Beacon Small Cap Value Fund^SM

Schedule of Investments

October 31, 2018

	Shares		Fair Value
COMMON STOCKS - 96.47% (continued)
Financials - 26.44% (continued)
Insurance - 4.72% (continued)
Safety Insurance Group, Inc.		72,123		$	6,006,403
Selective Insurance Group, Inc.		159,418			10,338,257
State Auto Financial Corp.		45,378			1,442,567
Stewart Information Services Corp.		49,512			2,043,855
Third Point Reinsurance Ltd.A		172,408			1,906,832
United Fire Group, Inc.		47,208			2,541,207
Universal Insurance Holdings, Inc.		93,790			3,937,304
White Mountains Insurance Group Ltd.		14,202			12,592,487
					308,909,610
Mortgage Real Estate Investment Trusts (REITs) - 0.31%
Apollo Commercial Real Estate Finance, Inc.		467,592			8,748,646
Ares Commercial Real Estate Corp.		183,621			2,656,996
Colony Credit Real Estate, Inc.B		123,316			2,631,564
Exantas Capital Corp.		197,666			2,241,532
Great Ajax Corp.		49,137			640,747
Owens Realty Mortgage, Inc.B		40,158			614,417
PennyMac Mortgage Investment Trust		134,643			2,599,956
					20,133,858
Thrifts & Mortgage Finance - 2.48%
Axos Financial, Inc.A		169,051			5,132,388
Capitol Federal Financial, Inc.		516,797			6,413,451
Dime Community Bancshares, Inc.		213,029			3,434,027
Essent Group Ltd.A		532,811			21,003,410
Flagstar Bancorp, Inc.A		147,992			4,556,674
HomeStreet, Inc.A		101,271			2,631,021
Kearny Financial Corp.		249,975			3,234,676
Luther Burbank Corp.		309,869			2,996,433
Merchants Bancorp		113,537			2,611,351
Meridian Bancorp, Inc.		82,229			1,302,507
Meta Financial Group, Inc.		74,793			1,887,775
MGIC Investment Corp.A		3,462,717			42,279,775
Northfield Bancorp, Inc.		299,087			3,938,976
Northwest Bancshares, Inc.		264,571			4,270,176
OceanFirst Financial Corp.		130,000			3,291,600
Oritani Financial Corp.		257,992			3,769,263
PCSB Financial Corp.		71,509			1,338,648
Provident Financial Services, Inc.		131,189			3,201,012
Radian Group, Inc.		543,117			10,422,415
Southern Missouri Bancorp, Inc.		17,808			599,595
Sterling Bancorp, Inc.		105,284			1,089,689
Territorial Bancorp, Inc.		20,215			550,657
TrustCo Bank Corp.		240,324			1,800,027
United Financial Bancorp, Inc.		128,195			1,980,613
Walker & Dunlop, Inc.		84,148			3,530,850
Washington Federal, Inc.		829,750			23,365,760
Waterstone Financial, Inc.		81,328			1,328,900
					161,961,669
Total Financials					1,730,220,006
Health Care - 4.21%
Biotechnology - 0.31%
Emergent BioSolutions, Inc.A		137,652			8,422,926
United Therapeutics Corp.A		109,300			12,116,998
					20,539,924

See accompanying notes

17

American Beacon Small Cap Value Fund^SM

Schedule of Investments

October 31, 2018

	Shares		Fair Value
COMMON STOCKS - 96.47% (continued)
Health Care - 4.21% (continued)
Health Care Equipment & Supplies - 0.57%
Anika Therapeutics, Inc.A		43,276		$	1,547,550
Haemonetics Corp.A		16,599			1,734,097
Invacare Corp.		1,365,632			17,643,965
Meridian Bioscience, Inc.		256,847			4,163,490
NuVasive, Inc.A		196,186			11,019,768
Varex Imaging Corp.A		49,904			1,295,508
					37,404,378
Health Care Providers & Services - 2.51%
Acadia Healthcare Co., Inc.A		221,500			9,192,250
Amedisys, Inc.A		64,903			7,139,330
AMN Healthcare Services, Inc.A		372,637			18,862,885
Diplomat Pharmacy, Inc.A		327,547			6,498,532
Encompass Health Corp.		514,780			34,644,694
Hanger, Inc.A		697,921			13,023,206
LHC Group, Inc.A		165,069			15,092,259
LifePoint Health, Inc.A		162,821			10,560,570
Magellan Health, Inc.A		38,147			2,481,844
MEDNAX, Inc.A		494,696			20,425,998
National HealthCare Corp.		33,836			2,690,977
Owens & Minor, Inc.		236,860			1,871,194
Providence Service Corp.A		23,893			1,579,088
Select Medical Holdings Corp.A		376,027			6,234,528
Tivity Health, Inc.A		403,378			13,880,237
					164,177,592
Health Care Technology - 0.29%
NextGen Healthcare, Inc.A		314,841			4,650,201
Omnicell, Inc.A		197,497			13,963,038
					18,613,239
Life Sciences Tools & Services - 0.35%
Cambrex Corp.A		328,091			17,483,969
Medpace Holdings, Inc.A		108,300			5,642,430
					23,126,399
Pharmaceuticals - 0.18%
Innoviva, Inc.A		273,126			3,812,839
Supernus Pharmaceuticals, Inc.A		164,755			7,835,748
					11,648,587
Total Health Care					275,510,119
Industrials - 18.68%
Aerospace & Defense - 1.76%
AAR Corp.		476,006			22,648,366
Aerojet Rocketdyne Holdings, Inc.A		426,062			15,048,510
Aerovironment, Inc.A		111,586			10,039,392
Astronics Corp., Class BA		3,882			112,963
Astronics Corp.A		38,226			1,114,670
Cubic Corp.		66,629			4,371,529
Embraer S.A., Sponsored ADR		1,070,200			23,833,354
Esterline Technologies Corp.A		204,413			23,989,910
Moog, Inc., Class A		53,455			3,824,705
National Presto Industries, Inc.		18,054			2,250,792
Triumph Group, Inc.		119,246			2,176,240
Vectrus, Inc.A		130,458			3,496,274

See accompanying notes

18

American Beacon Small Cap Value Fund^SM

Schedule of Investments

October 31, 2018

	Shares		Fair Value
COMMON STOCKS - 96.47% (continued)
Industrials - 18.68% (continued)
Aerospace & Defense - 1.76% (continued)
Wesco Aircraft Holdings, Inc.A		196,149		$	1,996,797
					114,903,502
Air Freight & Logistics - 0.64%
Air Transport Services Group, Inc.A		1,039,453			20,373,279
Atlas Air Worldwide Holdings, Inc.A		68,767			3,549,752
Hub Group, Inc., Class AA		384,989			17,640,196
					41,563,227
Airlines - 0.37%
Allegiant Travel Co.		64,547			7,367,394
Hawaiian Holdings, Inc.		206,972			7,163,301
SkyWest, Inc.		140,141			8,028,678
Spirit Airlines, Inc.A		35,152			1,824,389
					24,383,762
Building Products - 1.98%
Apogee Enterprises, Inc.		48,272			1,742,619
Armstrong Flooring, Inc.A		479,301			7,453,131
Builders FirstSource, Inc.A		549,252			6,799,740
Caesarstone Ltd.B		146,255			2,309,367
Gibraltar Industries, Inc.A		649,755			23,157,268
Insteel Industries, Inc.		45,334			1,184,124
Masonite International Corp.A		482,349			26,717,311
NCI Building Systems, Inc.A		49,665			608,396
Patrick Industries, Inc.A		66,042			2,873,487
Simpson Manufacturing Co., Inc.		532,353			30,386,709
Trex Co., Inc.A		178,019			10,912,565
Universal Forest Products, Inc.		551,683			15,596,078
					129,740,795
Commercial Services & Supplies - 1.72%
ACCO Brands Corp.		671,057			5,415,430
Deluxe Corp.		222,728			10,514,989
Ennis, Inc.		95,963			1,857,844
Essendant, Inc.		149,715			1,907,369
Herman Miller, Inc.		342,273			11,277,895
Knoll, Inc.		1,016,647			20,180,443
LSC Communications, Inc.		1,265,100			11,929,893
Matthews International Corp., Class A		127,498			5,306,467
Mobile Mini, Inc.		760,576			31,274,885
MSA Safety, Inc.		70,339			7,346,205
Quad/Graphics, Inc.		102,485			1,581,344
Steelcase, Inc., Class A		156,775			2,602,465
Team, Inc.A B		56,130			1,116,987
UniFirst Corp.		3,931			586,898
					112,899,114
Construction & Engineering - 2.18%
AECOMA		394,647			11,500,014
Aegion Corp.A		243,133			4,707,055
Construction Partners, Inc., Class AA		325,905			2,946,181
Dycom Industries, Inc.A		26,698			1,812,260
EMCOR Group, Inc.		294,613			20,911,631
Granite Construction, Inc.		232,452			10,627,705
KBR, Inc.		1,739,722			34,411,701
MasTec, Inc.A		50,879			2,213,745

See accompanying notes

19

American Beacon Small Cap Value Fund^SM

Schedule of Investments

October 31, 2018

	Shares		Fair Value
COMMON STOCKS - 96.47% (continued)
Industrials - 18.68% (continued)
Construction & Engineering - 2.18% (continued)
MYR Group, Inc.A		64,241		$	2,145,007
Primoris Services Corp.		1,330,716			28,171,258
Quanta Services, Inc.A		262,287			8,183,354
Tutor Perini Corp.A		936,977			14,523,144
Valmont Industries, Inc.		4,766			592,462
					142,745,517
Electrical Equipment - 1.54%
Atkore International Group, Inc.A		163,179			3,142,827
Encore Wire Corp.		433,803			19,174,093
EnerSys		442,522			35,211,475
Generac Holdings, Inc.A		225,926			11,461,226
Preformed Line Products Co.		18,630			1,177,416
Regal Beloit Corp.		255,078			18,289,093
Sunrun, Inc.A		268,326			3,289,677
Thermon Group Holdings, Inc.A		75,399			1,627,110
TPI Composites, Inc.A		292,280			7,382,993
					100,755,910
Industrial Conglomerates - 0.07%
Raven Industries, Inc.		106,148			4,615,315
Machinery - 5.04%
Actuant Corp., Class A		1,024,262			24,428,649
Alamo Group, Inc.		7,598			651,300
Altra Industrial Motion Corp.		100,705			3,249,750
Astec Industries, Inc.		191,359			7,197,012
Barnes Group, Inc.		425,841			24,102,601
Blue Bird Corp.A B		203,312			3,783,636
Briggs & Stratton Corp.		620,069			9,009,603
Chart Industries, Inc.A		292,382			19,896,595
Colfax Corp.A		879,954			24,665,111
Columbus McKinnon Corp.		93,338			3,428,305
Commercial Vehicle Group, Inc.A		312,108			2,088,002
EnPro Industries, Inc.		128,533			7,994,753
Federal Signal Corp.		1,430,425			31,455,046
Global Brass & Copper Holdings, Inc.		424,106			13,410,232
Graham Corp.		55,873			1,375,034
Greenbrier Cos, Inc.		411,125			19,507,881
Hillenbrand, Inc.		162,834			7,799,749
Hurco Cos, Inc.		46,294			1,886,017
Hyster-Yale Materials Handling, Inc.		182,997			11,062,169
Kennametal, Inc.		566,182			20,071,152
Lindsay Corp.		111,777			10,688,117
Luxfer Holdings PLC		26,927			621,475
Lydall, Inc.A		34,110			1,018,866
Meritor, Inc.A		146,341			2,486,334
Miller Industries, Inc.		226,733			5,480,137
Mueller Industries, Inc.		81,352			1,980,921
Navistar International Corp.A		159,433			5,339,411
Park-Ohio Holdings Corp.		110,087			3,641,678
REV Group, Inc.B		149,938			1,635,824
Standex International Corp.		10,552			855,978
Sun Hydraulics Corp.		98,909			4,589,378
Tennant Co.		45,179			2,761,340
Terex Corp.		674,039			22,506,162
Timken Co.		206,010			8,147,695

See accompanying notes

20

American Beacon Small Cap Value Fund^SM

Schedule of Investments

October 31, 2018

	Shares		Fair Value
COMMON STOCKS - 96.47% (continued)
Industrials - 18.68% (continued)
Machinery - 5.04% (continued)
TriMas Corp.A		178,838		$	5,266,779
Trinity Industries, Inc.		350,126			9,996,097
Wabash National Corp.		210,245			3,174,699
Watts Water Technologies, Inc., Class A		37,219			2,607,191
					329,860,679
Marine - 0.57%
Kirby Corp.A		105,719			7,605,425
Matson, Inc.		849,985			29,817,474
					37,422,899
Professional Services - 0.95%
Barrett Business Services, Inc.		8,191			515,378
CBIZ, Inc.A		37,496			831,661
FTI Consulting, Inc.A		22,682			1,567,553
GP Strategies Corp.A		74,341			1,086,122
Hudson Global, Inc.A		623,926			973,324
Huron Consulting Group, Inc.A		254,414			13,863,019
InnerWorkings, Inc.A		539,210			3,876,920
Kelly Services, Inc., Class A		412,089			9,679,971
Kforce, Inc.		40,338			1,243,217
Korn/Ferry International		406,399			18,344,851
Navigant Consulting, Inc.		135,788			2,933,021
Resources Connection, Inc.		81,716			1,333,605
TrueBlue, Inc.A		252,120			5,881,959
					62,130,601
Road & Rail - 0.50%
ArcBest Corp.		440,001			16,332,837
Marten Transport Ltd.		268,021			5,162,084
Ryder System, Inc.		90,594			5,010,754
Universal Logistics Holdings, Inc.		66,357			1,802,920
Werner Enterprises, Inc.		141,192			4,544,971
					32,853,566
Trading Companies & Distributors - 1.36%
Air Lease Corp.		279,962			10,666,552
Aircastle Ltd.		720,510			13,999,509
Applied Industrial Technologies, Inc.		87,498			5,751,244
Beacon Roofing Supply, Inc.A		16,448			459,064
GATX Corp.		98,286			7,364,570
Kaman Corp.		122,008			7,749,948
MRC Global, Inc.A		315,077			4,987,669
NOW, Inc.A		277,900			3,568,236
Rush Enterprises, Inc., Class A		520,449			18,418,690
Textainer Group Holdings Ltd.A		48,684			571,063
Titan Machinery, Inc.A		64,890			924,683
Triton International Ltd.		207,020			6,659,833
WESCO International, Inc.A		158,314			7,944,197
					89,065,258
Total Industrials					1,222,940,145
Information Technology - 11.63%
Communications Equipment - 2.21%
ARRIS International PLCA		2,246,529			55,871,176
CalAmp Corp.A		107,519			2,143,929

See accompanying notes

21

American Beacon Small Cap Value Fund^SM

Schedule of Investments

October 31, 2018

	Shares		Fair Value
COMMON STOCKS - 96.47% (continued)
Information Technology - 11.63% (continued)
Communications Equipment - 2.21% (continued)
Casa Systems, Inc.A		369,800		$	5,325,120
Ciena Corp.A		1,419,541			44,374,852
Comtech Telecommunications Corp.		22,383			624,933
Digi International, Inc.A		122,590			1,422,044
Finisar Corp.A		294,100			4,908,529
InterDigital, Inc.		89,301			6,335,906
NETGEAR, Inc.A		263,742			14,632,406
Plantronics, Inc.		93,667			5,523,543
Quantenna Communications, Inc.A		111,005			1,993,650
Ribbon Communications, Inc.A		216,264			1,470,595
					144,626,683
Electronic Equipment, Instruments & Components - 4.94%
Anixter International, Inc.A		219,081			14,391,431
Avnet, Inc.		311,390			12,477,397
AVX Corp.		635,242			10,595,837
Belden, Inc.		86,545			4,677,757
Benchmark Electronics, Inc.		87,575			1,911,762
Celestica, Inc.A		612,119			6,353,795
Daktronics, Inc.		404,811			2,959,168
ePlus, Inc.A		15,217			1,291,619
FabrinetA		537,269			23,274,493
FARO Technologies, Inc.A		464,144			23,457,838
II-VI, Inc.A		1,165,514			43,392,086
Insight Enterprises, Inc.A		261,441			13,513,885
Itron, Inc.A		150,026			7,822,356
Jabil, Inc.		414,708			10,255,729
KEMET Corp.A		154,360			3,361,961
Methode Electronics, Inc.		148,115			4,384,204
MTS Systems Corp.		384,843			18,222,316
PC Connection, Inc.		117,415			3,891,133
Plexus Corp.A		519,002			30,309,717
Sanmina Corp.A		337,554			8,540,116
ScanSource, Inc.A		275,402			10,707,630
SYNNEX Corp.		27,024			2,097,333
Tech Data Corp.A		322,401			22,780,855
TTM Technologies, Inc.A		431,009			5,042,805
Vishay Intertechnology, Inc.		2,041,900			37,366,770
					323,079,993
IT Services - 1.01%
CACI International, Inc., Class AA		39,097			6,977,251
CSG Systems International, Inc.		464,000			16,286,400
LiveRamp Holdings, Inc.A		40,350			1,843,188
Luxoft Holding, Inc.A		61,821			2,548,880
NIC, Inc.		623,550			8,299,450
Science Applications International Corp.		100,750			7,003,133
Sykes Enterprises, Inc.A		192,171			5,893,885
Travelport Worldwide Ltd.		942,945			14,106,457
Unisys Corp.A B		181,176			3,335,450
					66,294,094
Semiconductors & Semiconductor Equipment - 2.61%
Advanced Energy Industries, Inc.A		147,209			6,334,403
Amkor Technology, Inc.A		333,684			2,385,841
Aquantia Corp.A B		120,634			1,153,261
Brooks Automation, Inc.		1,435,257			44,536,025

See accompanying notes

22

American Beacon Small Cap Value Fund^SM

Schedule of Investments

October 31, 2018

	Shares		Fair Value
COMMON STOCKS - 96.47% (continued)
Information Technology - 11.63% (continued)
Semiconductors & Semiconductor Equipment - 2.61% (continued)
ChipMOS Technologies, Inc., ADRB		141,794		$	1,868,845
Cirrus Logic, Inc.A		366,852			13,734,939
Cohu, Inc.		367,843			7,651,134
Diodes, Inc.A		1,579,359			47,680,848
First Solar, Inc.A		64,653			2,702,495
Ichor Holdings Ltd.A B		58,828			1,044,197
Kulicke & Soffa Industries, Inc.		319,215			6,489,641
PDF Solutions, Inc.A		62,331			498,648
Photronics, Inc.A		1,970,481			19,192,485
Semtech Corp.A		187,769			8,438,339
SMART Global Holdings, Inc.A B		134,793			3,775,552
Synaptics, Inc.A		61,109			2,294,032
Veeco Instruments, Inc.A		88,271			839,457
					170,620,142
Software - 0.68%
CommVault Systems, Inc.A		91,702			5,338,890
LogMeIn, Inc.		122,365			10,538,074
MicroStrategy, Inc., Class AA		15,046			1,895,345
Monotype Imaging Holdings, Inc.		32,809			575,142
Verint Systems, Inc.A		575,267			26,272,444
					44,619,895
Technology Hardware, Storage & Peripherals - 0.18%
Cray, Inc.A		432,307			9,809,046
Super Micro Computer, Inc.A		171,705			2,249,335
					12,058,381
Total Information Technology					761,299,188
Materials - 5.34%
Chemicals - 1.67%
American Vanguard Corp.		67,129			1,080,777
Cabot Corp.		546,314			26,594,565
Core Molding Technologies, Inc.		39,785			270,936
FutureFuel Corp.		136,269			2,234,812
GCP Applied Technologies, Inc.A		22,684			589,103
Hawkins, Inc.		56,061			1,887,013
HB Fuller Co.		91,730			4,078,316
Innospec, Inc.		89,965			6,020,458
Koppers Holdings, Inc.A		57,270			1,531,972
Kraton Corp.A		290,613			8,003,482
Kronos Worldwide, Inc.		188,494			2,644,571
LSB Industries, Inc.A		108,730			826,348
Minerals Technologies, Inc.		113,139			6,194,360
PolyOne Corp.		721,880			23,323,943
Rayonier Advanced Materials, Inc.		423,949			5,248,489
Stepan Co.		154,097			12,726,871
Trinseo S.A.		114,554			6,172,170
					109,428,186
Containers & Packaging - 0.28%
Greif, Inc., Class A		69,928			3,307,594
Owens-Illinois, Inc.A		385,644			6,043,042
Silgan Holdings, Inc.		356,024			8,555,257
					17,905,893

See accompanying notes

23

American Beacon Small Cap Value Fund^SM

Schedule of Investments

October 31, 2018

	Shares		Fair Value
COMMON STOCKS - 96.47% (continued)
Materials - 5.34% (continued)
Metals & Mining - 2.48%
Allegheny Technologies, Inc.A		1,589,900		$	41,162,511
Carpenter Technology Corp.		479,226			20,899,046
Cleveland-Cliffs, Inc.A		1,128,524			12,142,918
Coeur Mining, Inc.A		1,891,487			9,041,308
Compass Minerals International, Inc.		38,442			1,864,821
Elah Holdings, Inc.A		3,612			328,692
Ferroglobe PLC		2,562,970			15,608,487
Haynes International, Inc.		40,272			1,166,277
Hecla Mining Co.		1,757,014			4,216,834
Hudbay Minerals, Inc.		376,394			1,471,701
Kaiser Aluminum Corp.		6,386			609,033
Materion Corp.		317,451			18,040,740
Pan American Silver Corp.		431,205			6,330,089
Schnitzer Steel Industries, Inc., Class A		292,889			7,878,714
SunCoke Energy Partners LP		136,919			1,894,959
United States Steel Corp.		339,800			9,014,894
Warrior Met Coal, Inc.		142,000			3,976,000
Worthington Industries, Inc.		159,818			6,693,178
					162,340,202
Paper & Forest Products - 0.91%
Boise Cascade Co.		130,945			4,031,797
Clearwater Paper Corp.A		95,946			2,316,136
Domtar Corp.		416,032			19,266,442
Louisiana-Pacific Corp.		959,749			20,893,736
Mercer International, Inc.		292,629			4,450,887
PH Glatfelter Co.		186,827			3,344,203
Schweitzer-Mauduit International, Inc.		95,587			3,051,137
Verso Corp., Class AA		86,700			2,437,137
					59,791,475
Total Materials					349,465,756
Real Estate - 4.10%
Equity Real Estate Investment Trusts (REITs) - 4.07%
Agree Realty Corp.		218,551			12,516,416
Americold Realty Trust		471,363			11,666,234
Ashford Hospitality Trust, Inc.		964,341			4,966,356
Brandywine Realty Trust		538,925			7,577,286
CareTrust REIT, Inc.		414,127			7,313,483
Colony Capital, Inc.		1,215,880			7,137,216
CoreCivic, Inc.		686,949			15,428,875
Cousins Properties, Inc.		1,610,770			13,385,499
GEO Group, Inc.		1,357,178			30,007,206
Granite Real Estate Investment Trust		363,260			15,049,862
Hersha Hospitality Trust		357,923			6,285,128
Hospitality Properties Trust		118,232			3,029,104
Lexington Realty Trust		1,868,999			14,522,122
Medical Properties Trust, Inc.		346,606			5,150,565
Outfront Media, Inc.		526,083			9,322,191
Pennsylvania Real Estate Investment Trust		168,753			1,510,339
Preferred Apartment Communities, Inc., Class A		523,930			8,828,220
Ramco-Gershenson Properties Trust		541,255			7,187,866
Retail Properties of America, Inc., Class A		916,820			11,249,381
Ryman Hospitality Properties, Inc.		125,994			9,775,874
Select Income REIT		241,720			4,570,925
Seritage Growth PropertiesB		984,120			37,416,242

See accompanying notes

24

American Beacon Small Cap Value Fund^SM

Schedule of Investments

October 31, 2018

	Shares		Fair Value
COMMON STOCKS - 96.47% (continued)
Real Estate - 4.10% (continued)
Equity Real Estate Investment Trusts (REITs) - 4.07% (continued)
Sunstone Hotel Investors, Inc.		666,361		$	9,642,244
Urban Edge Properties		611,790			12,535,577
					266,074,211
Real Estate Management & Development - 0.03%
HFF, Inc., Class A		20,955			770,096
Marcus & Millichap, Inc.A		18,680			648,570
Tejon Ranch Co.A		44,093			837,767
					2,256,433
Total Real Estate					268,330,644
Utilities - 2.60%
Electric Utilities - 1.47%
ALLETE, Inc.		126,865			9,388,010
El Paso Electric Co.		23,747			1,354,767
IDACORP, Inc.		202,333			18,869,576
PNM Resources, Inc.		66,647			2,559,911
Portland General Electric Co.		1,363,976			61,488,038
Spark Energy, Inc., Class AB		311,472			2,323,581
					95,983,883
Gas Utilities - 0.70%
Chesapeake Utilities Corp.		134,294			10,669,658
Northwest Natural Holding Co.		33,390			2,163,338
South Jersey Industries, Inc.		366,129			10,815,451
Southwest Gas Holdings, Inc.		228,607			17,664,463
Spire, Inc.		35,238			2,557,574
Star Group LP		75,828			724,916
Suburban Propane Partners LP		61,178			1,397,917
					45,993,317
Independent Power & Renewable Electricity Producers - 0.16%
Clearway Energy, Inc., Class A		87,090			1,691,288
Clearway Energy, Inc.		467,360			9,164,929
					10,856,217
Multi-Utilities - 0.27%
Avista Corp.		53,905			2,771,795
Black Hills Corp.		42,646			2,537,437
NorthWestern Corp.		183,556			10,785,751
Unitil Corp.		29,506			1,401,830
					17,496,813
Total Utilities					170,330,230
Total Common Stocks (Cost $5,804,641,466)					6,314,018,146
SHORT-TERM INVESTMENTS - 3.53% (Cost $231,346,704)
Investment Companies - 3.53%
American Beacon U.S. Government Money Market Select Fund, Select Class, 2.11%E F		231,346,704			231,346,704
SECURITIES LENDING COLLATERAL - 2.01% (Cost $131,390,683)
Investment Companies - 2.01%
American Beacon U.S. Government Money Market Select Fund, Select Class, 2.11%E F		131,390,683			131,390,683
TOTAL INVESTMENTS - 102.01% (Cost $6,167,378,853)					6,676,755,533
LIABILITIES, NET OF OTHER ASSETS - (2.01%)					(131,482,299	)
TOTAL NET ASSETS - 100.00%				$	6,545,273,234
Percentages are stated as a percent of net assets.

See accompanying notes

25

American Beacon Small Cap Value Fund^SM

Schedule of Investments

October 31, 2018

^A Non-income producing security.

^B All or a portion of this security is on loan at October 31, 2018.

^C Fair valued pursuant to procedures approved by the Board of Trustees. At period end, the value of these securities amounted to $0 or 0.00% of net assets.

^D Value was determined using significant unobservable inputs.

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

^F 7-day yield.

ADR - American Depositary Receipt.

LLC - Limited Liability Company.

LP - Limited Partnership.

MLP – Master Limited Partnership.

PLC - Public Limited Company.

Long Futures Contracts Open on October 31, 2018:
Equity Futures Contracts
Description	Number of Contracts	Expiration Date	Notional Amount		Contract Value		Unrealized Appreciation (Depreciation)
Russell 2000 E-Mini Index Futures	2,867	December 2018	$	239,281,007	$	216,730,865	$	(22,550,142	)
			$	239,281,007	$	216,730,865	$	(22,550,142	)

The Fund’s investments are summarized by level based on the inputs used to determine their values. As of October 31, 2018, the investments were classified as described below:

Small Cap Value Fund	Level 1			Level 2		Level 3			Total
Assets
Common Stocks	$	6,314,018,146		$	-	$	0	(1)	$	6,314,018,146
Short-Term Investments		231,346,704			-		-			231,346,704
Securities Lending Collateral		131,390,683			-		-			131,390,683
Total Investments in Securities - Assets	$	6,676,755,533		$	-	$	-		$	6,676,755,533
Financial Derivative Instruments - Liabilities
Futures Contracts	$	(22,550,142	)	$	-	$	-		$	(22,550,142	)
Total Financial Derivative Instruments - Liabilities	$	(22,550,142	)	$	-	$	-		$	(22,550,142	)

⁽¹⁾ Investment held in the Fund’s Portfolio with $0 fair value.

U.S. GAAP requires transfers between all levels to level 3 to be disclosed. During the year ended October 31, 2018, there were no transfers into or out of Level 3.

The following table is a reconciliation of Level 3 assets within the Fund for which significant unobservable inputs were used to determine fair value. Transfers in or out of Level 3 represent the ending value of any security or instrument where a change in the level has occurred from the beginning to the end of the period:

Security Type	Balance as of 10/31/2017			Purchases		Sales		Accrued Discounts (Premiums)		Realized Gain (Loss)		Change in Unrealized Appreciation (Depreciation)		Transfer into Level 3		Transfer out of Level 3		Balance as of 10/31/2018			Change in Unrealized Appreciation (Depreciation) at Period end**
Common Stocks	$	0	(1)	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	0	(1)	$	-

** Change in unrealized appreciation (depreciation) attributable to Level 3 securities held at period end. This balance is included in the change in unrealized appreciation (depreciation) on the Statement of Operations.

⁽¹⁾  Investment held in the Fund’s Portfolio with $0 fair value.

The common stock, classified as Level 3, is beneficial interest units in a representation and warranty insurance trust. The shares have been fair valued at $0 due to limited market transparency.

See accompanying notes

26

American Beacon Small Cap Value Fund^SM

Statement of Assets and Liabilities

October 31, 2018

Assets:
Investments in unaffiliated securities, at fair value†§	$	6,314,018,146
Investments in affiliated securities, at fair value‡		362,737,387
Deposit with brokers for futures contracts		32,902,635
Dividends and interest receivable		2,809,719
Receivable for investments sold		20,034,074
Receivable for fund shares sold		5,881,957
Prepaid expenses		120,025
Total assets		6,738,503,943
Liabilities:
Payable for investments purchased		28,373,775
Payable for fund shares redeemed		5,928,068
Management and sub-advisory fees payable (Note 2)		4,295,592
Service fees payable (Note 2)		207,114
Transfer agent fees payable (Note 2)		137,160
Payable upon return of securities loaned (Note 9)§		131,390,683
Custody and fund accounting fees payable		70,499
Professional fees payable		86,525
Trustee fees payable (Note 2)		44,798
Payable for prospectus and shareholder reports		110,198
Payable for variation margin from open futures contracts (Note 5)		22,543,795
Other liabilities		42,502
Total liabilities		193,230,709
Net assets	$	6,545,273,234
Analysis of net assets:
Paid-in-capital	$	5,379,245,818
Total distributable earnings (deficits)A		1,166,027,416
Net assets	$	6,545,273,234
Shares outstanding at no par value (unlimited shares authorized):
Institutional Class		176,163,992
Y Class		13,275,117
Investor Class		21,444,011
Advisor Class		3,132,149
A Class		2,692,772
C Class		571,242
R6 Class		34,519,305
Net assets:
Institutional Class	$	4,604,864,422
Y Class	$	342,125,601
Investor Class	$	538,602,473
Advisor Class	$	77,578,775
A Class	$	66,380,615
C Class	$	13,480,297
R6 Class	$	902,241,051
Net asset value, offering and redemption price per share:
Institutional Class	$	26.14
Y Class	$	25.77
Investor Class	$	25.12
Advisor Class	$	24.77
A Class	$	24.65
A Class (offering price)	$	26.15
C Class	$	23.60
R6 Class	$	26.14
† Cost of investments in unaffiliated securities	$	5,804,641,466
‡ Cost of investments in affiliated securities	$	362,737,387
§ Fair value of securities on loan	$	126,252,889
A The Fund’s investments in affiliated securities did not have unrealized appreciation (depreciation) at year end.

See accompanying notes

27

American Beacon Small Cap Value Fund^SM

Statement of Operations

For the year ended October 31, 2018

Investment income:
Dividend income from unaffiliated securities (net of foreign taxes)†	$	98,195,560
Dividend income from affiliated securities (Note 8)		3,764,704
Interest income		40,624
Income derived from securities lending (Note 9)		2,473,019
Total investment income		104,473,907
Expenses:
Management and sub-advisory fees (Note 2)		52,968,583
Transfer agent fees:
Institutional Class (Note 2)		1,561,838
Y Class (Note 2)		380,918
Investor Class		29,336
Advisor Class		7,395
A Class		6,726
C Class		3,550
R6 Class		18,392
Custody and fund accounting fees		626,962
Professional fees		326,012
Registration fees and expenses		167,145
Service fees (Note 2):
Investor Class		2,157,748
Advisor Class		235,712
A Class		127,110
C Class		11,052
Distribution fees (Note 2):
Advisor Class		236,094
A Class		185,030
C Class		150,455
Prospectus and shareholder report expenses		433,525
Trustee fees (Note 2)		498,220
Other expenses		354,401
Total expenses		60,486,204
Net fees waived and expenses (reimbursed (Note 2)A		(15,836	)
Net expenses		60,470,368
Net investment income		44,003,539
Realized and unrealized gain (loss) from investments:
Net realized gain (loss) from:
Investments in unaffiliated securitiesB		683,101,516
Commission recapture (Note 1)		38,096
Foreign currency transactions		(13,146	)
Futures contracts		23,811,684
Change in net unrealized appreciation (depreciation) of:
Investments in unaffiliated securitiesC		(915,066,156	)
Foreign currency transactions		313
Futures contracts		(29,111,482	)
Net (loss) from investments		(237,239,175	)
Net (decrease) in net assets resulting from operations	$	(193,235,636	)
† Foreign taxes	$	422,513
A The Manager voluntarily reimbursed service fees in the amount of $15,836.
B The Fund did not recognize net realized gains (losses) from the sale of investments in affiliated securities.
C The Fund’s investments in affiliated securities did not have a change in net unrealized appreciation (depreciation) at year end.

See accompanying notes

28

American Beacon Small Cap Value Fund^SM

Statement of Changes in Net Assets

	Year Ended October 31, 2018			Year Ended October 31, 2017
Increase (decrease) in net assets:
Operations:
Net investment income	$	44,003,539		$	35,906,655
Net realized gain from investments in unaffiliated securities, commission recapture, foreign currency transactions, and futures contracts		706,938,150			579,320,266
Change in net unrealized appreciation (depreciation) of investments in unaffiliated securities, foreign currency transactions, and futures contracts		(944,177,325	)		807,767,623
Net increase (decrease) in net assets resulting from operations		(193,235,636	)		1,422,994,544
Distributions to shareholders:
Net investment income:
Institutional Class		-			(44,712,589	)
Y Class		-			(2,820,317	)
Investor Class		-			(3,777,116	)
Advisor Class		-			(514,722	)
A Class		-			(310,111	)
Net realized gain from investments:
Institutional Class		-			(122,225,000	)
Y Class		-			(8,295,210	)
Investor Class		-			(15,742,672	)
Advisor Class		-			(2,933,912	)
A Class		-			(1,474,164	)
C Class		-			(344,117	)
Total retained earnings:*
Institutional Class		(483,990,858	)		-
Y Class		(34,475,891	)		-
Investor Class		(58,686,508	)		-
Advisor Class		(8,714,846	)		-
A Class		(6,415,873	)		-
C Class		(1,398,033	)		-
R6 Class		(35,513,779	)		-
Net distributions to shareholders		(629,195,788	)		(203,149,930	)
Capital share transactions (Note 11):
Proceeds from sales of shares		1,841,822,459			2,041,595,238
Reinvestment of dividends and distributions		608,543,857			196,388,754
Cost of shares redeemed		(2,123,030,353	)		(2,233,807,450	)
Net increase in net assets from capital share transactions		327,335,963			4,176,542
Net increase (decrease) in net assets		(495,095,461	)		1,224,021,156
Net assets:
Beginning of period		7,040,368,695			5,816,347,539
End of period	$	6,545,273,234		$	7,040,368,695
*  Distributions from net investment income and net realized capital gains are combined for the year ended October 31, 2018. See Note 1 in the Notes to Financial Statements for more information regarding new accounting pronouncements.

See accompanying notes

29

American Beacon Small Cap Value Fund^SM

Notes to Financial Statements

October 31, 2018

1.  Organization and Significant Accounting Policies

American Beacon Funds (the “Trust”), is organized as a Massachusetts business trust. The Fund, a series within the Trust, is registered under the Investment Company Act of 1940, as amended (the “Act”), as a diversified, open-end management investment company. As of October 31, 2018, the Trust consists of thirty-three active series, one of which is presented in this filing: American Beacon Small Cap Value Fund (the “Fund”). The remaining thirty-two active series are reported in separate filings.

American Beacon Advisors, Inc. (the “Manager”) is a Delaware corporation and a wholly-owned subsidiary of Resolute Investment Managers, Inc. (“RIM”) organized in 1986 to provide business management, advisory, administrative, and asset management consulting services to the Trust and other investors. The Manager is registered as an investment advisor under the Investment Advisers Act of 1940, as amended (the “Advisers Act”). RIM is, in turn, a wholly-owned subsidiary of Resolute Acquisition, Inc., which is a wholly-owned subsidiary of Resolute Topco, Inc., a wholly-owned subsidiary of Resolute Investment Holdings, LLC (“RIH”). RIH is owned primarily by Kelso Investment Associates VIII, L.P., KEP VI, LLC and Estancia Capital Partners L.P., investment funds affiliated with Kelso & Company, L.P. (“Kelso”) or Estancia Capital Management, LLC (“Estancia”), which are private equity firms.

Recent Accounting Pronouncements

In March 2017, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2017-08, Premium Amortization of Purchased Callable Debt Securities. The amendments in the ASU shorten the premium amortization period on a purchased callable debt security from the security’s contractual life to the earliest call date. It is anticipated that this change will enhance disclosures by reducing losses recognized when a security is called on an earlier date. This ASU is effective for fiscal years beginning after December 15, 2018. The Manager continues to evaluate the impact this ASU will have on the financial statements and other disclosures.

In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820). The amendments in the ASU impact disclosure requirements for fair value measurement. It is anticipated that this change will enhance the effectiveness of disclosures in the notes to the financial statements. This ASU is effective for fiscal years beginning after December 15, 2019. Early adoption is permitted and can include the entire standard or certain provisions that exclude or amend disclosures. For the year ended October 31, 2018, the Fund has chosen to adopt certain provisions of the standard which eliminated the disclosures of transfers between level 1 and level 2 portfolio investments and the policy for the timing of transfers between levels of the fair value hierarchy. Management has evaluated that the full adoption of this ASU will not have a material impact on the Fund’s financial statements.

In August 2018, the U.S. Securities and Exchange Commission (“SEC”) adopted amendments to certain disclosure requirements in Securities Act Release No. 33-10532, Disclosure Update and Simplification, which is intended to facilitate the disclosure of information to investors and simplify compliance without significantly altering the total mix of information provided to investors. Effective with the current reporting period, the Fund adopted the amendments with the impacts being that the Fund is no longer required to present components of distributable earnings on the Statement of Assets and Liabilities or the sources of distributable earnings and the amount of undistributed net investment income on the Statement of Changes in Net Assets.

Class Disclosure

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

Class	Eligible Investors	Minimum Initial Investments
Institutional	Large institutional investors - sold directly or through intermediary channels.	$	250,000
Y Class	Large institutional retirement plan investors - sold directly or through intermediary channels.	$	100,000

30

American Beacon Small Cap Value Fund^SM

Notes to Financial Statements

October 31, 2018

Class	Eligible Investors	Minimum Initial Investments
Investor	All investors using intermediary organizations, such as broker-dealers or retirement plan sponsors.	$	2,500
Advisor Class	All investors who invest through intermediary organizations, such as broker-dealers or third party administrators.	$	2,500
A Class	All investors who invest through intermediary organizations, such as broker-dealers or third party administrator. Retail investors who invest directly through a financial intermediary such as a broker, bank, or registered investment advisor which may include a front-end sales charge and a contingent deferred sales charge (“CDSC”).	$	2,500
C Class	Retail investors who invest directly through a financial intermediary, such as a broker or through employee directed benefit plans with applicable sales charges which may include CDSC.	$	1,000
R6	Large institutional retirement plan investors - sold through retirement plan sponsors.		None

Each class offered by the Trust has equal rights as to assets and voting privileges. Income 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 service, distribution, transfer agent fees, and sub-transfer agent fees that vary amongst the classes as described more fully in Note 2.

Significant Accounting Policies

The following is a summary of significant accounting policies, consistently followed by the Fund in preparation of the financial statements. The Fund is considered an investment company and accordingly, follows the investment company accounting and reporting guidance of the FASB Accounting Standards Codification Topic 946, Financial Services – Investment Companies, a part of Generally Accepted Accounting Principles (“U.S. GAAP”).

Security Transactions and Investment Income

Security transactions are recorded as of the trade date for financial reporting purposes. Securities purchased or sold on a when-issued or delayed-delivery basis may be settled beyond a standard settlement period for the security after the trade date.

Dividend income, net of foreign taxes, is recorded on 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. Realized gains (losses) from securities sold are determined on the basis of specific lot identification.

Distributions to Shareholders

The Fund intends to declare income distributions daily and distribute them to Shareholders quarterly. The Fund’s final distribution for each taxable (fiscal) year will include any remaining investment company taxable income undistributed during the year, as well as all net capital gain realized during the year. Dividends to shareholders are determined in accordance with federal income tax regulations, which may differ in amount and character from net investment income and realized gains recognized for purposes of U.S. GAAP. If all or a portion of any Fund distribution exceeds the sum of the Fund’s investment company taxable income and realized net capital gain for a taxable year, the excess would be treated (i) first, as dividend income to the extent of the Fund’s current or accumulated earnings and profits, as calculated for federal income tax purposes (“E&P”), (ii) then as a tax-free “return of capital,” reducing a Shareholder’s adjusted tax basis in his or her Shares (which would result in a higher tax liability when the Shares are sold, even if they had not increased in value, or, in fact, had lost value), and (iii) then, after that basis is reduced to zero, as realized capital gain (assuming the Shares are held as capital assets), long- or short-term, depending on the Shareholder’s holding period for the Shares.

31

American Beacon Small Cap Value Fund^SM

Notes to Financial Statements

October 31, 2018

Section 19(a) of the Act and Rule 19a-1 thereunder require the Fund to provide a written statement accompanying any distribution from a source other than net income that adequately discloses its source or sources. Thus, if the source of a distribution were the original capital contribution of the Shareholder, and the payment amounted to a return of capital, the Fund would be required to provide written disclosure to that effect. Nevertheless, persons who periodically receive the payment of a dividend or other distribution may be under the impression that they are receiving net profits when they are not. Shareholders should read any written disclosure provided pursuant to Section 19(a) and Rule 19a-1 carefully and should not assume that the source of any distribution from the Fund is net profit.

Commission Recapture

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

Allocation of Income, Trust Expenses, Gains, and Losses

Investment income, realized and unrealized gains and losses from investments of the Fund is allocated daily to each class of shares based upon the relative proportion of net assets of each class to the total net assets of the Fund. Expenses directly charged or attributable to any Fund will be paid from the assets of the Fund. Generally, expenses of the Trust will be allocated among and charged to the assets of the Fund on a basis that the Trust’s Board of Trustees (the “Board”) deems fair and equitable, which may be based on the relative net assets of the Fund or nature of the services performed and relative applicability to the Fund.

Use of Estimates

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

Other

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

2.  Transactions with Affiliates

Management and Investment Sub-Advisory Agreements

The Fund and the Manager are parties to a Management Agreement that obligates the Manager to provide the Fund with investment advisory and administrative services. As compensation for performing the duties under the Management Agreement, the Manager will receive an annualized management fee based on a percentage of the Fund’s average daily net assets that is calculated and accrued daily according to the following schedule:

First $15 billion	0.35	%
Next $15 billion	0.325	%
Over $30 billion	0.30	%

The Trust, on behalf of the Fund, and the Manager have entered into Investment Advisory Agreements with Barrow, Hanley, Mewhinney & Strauss, LLC; Brandywine Global Investment Management, LLC; Foundry Partners, LLC; Hillcrest Asset Management, LLC; Hotchkis and Wiley Capital Management, LLC; and BNY Mellon Asset

32

American Beacon Small Cap Value Fund^SM

Notes to Financial Statements

October 31, 2018

Management North America Corporation (“Sub-Advisors”) pursuant to which the Fund has agreed to pay an annualized sub-advisory fee that is calculated and accrued daily based on the Fund’s average daily net assets.

The Management and Sub-Advisory Fees paid by the Fund for the year ended October 31, 2018 were as follows:

	Effective Fee Rate			Amount of Fees Paid
Management Fees		0.35	%	$	25,400,214
Sub-Advisor Fees		0.38	%		27,568,369
Total		0.73	%	$	52,968,583

As compensation for services provided by the Manager in connection with securities lending activities conducted by the Fund, the lending Fund pays to the Manager, with respect to cash collateral posted by borrowers, a fee up to 10% of the net monthly interest income (the gross interest income earned by the investment of cash collateral, less the amount paid to borrowers and related expenses) from such activities and, with respect to loan fees paid by borrowers, a fee up to 10% of such loan fees. These fees are included in “Income derived from securities lending” and “Management and investment advisory fees” on the Statement of Operations. During the year ended October 31, 2018, the Manager received securities lending fees of $264,301 for the securities lending activities of the Fund.

Distribution Plans

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

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

Service Plans

The Manager and the Trust entered into a Service Plan that obligates the Manager to oversee additional shareholder servicing of the Investor, Advisor, A, and C Classes of the Fund. As compensation for performing the duties required under the Service Plan, the Manager receives an annualized fee up to up to 0.25% of the average daily net assets of the A and C Classes, up to 0.25% of the average daily net assets of the Advisor Class, and up to 0.375% of the average daily net assets of the Investor Class of the Fund.

Sub-Transfer Agent Fees

The Manager has entered into agreements, which include servicing agreements, with financial intermediaries that provide recordkeeping, processing, shareholder communications and other services to customers of the intermediaries that hold positions in the Institutional and Y Classes of the Fund and has agreed to compensate the intermediaries for providing these services. Intermediaries transact with the Fund primarily through the use of omnibus accounts on behalf of its customers who hold positions in the Fund. Certain services would have been provided by the Fund’s transfer agent and other service providers if the shareholders’ accounts were maintained directly by the Fund’s transfer agent. Accordingly, the Fund, pursuant to Board approval, has agreed to reimburse the Manager for certain non-distribution shareholder services provided by financial intermediaries for the Institutional and Y Classes. The reimbursement amounts (sub-transfer agent fees) paid to the

33

American Beacon Small Cap Value Fund^SM

Notes to Financial Statements

October 31, 2018

Manager are subject to a fee limit of up to 0.10% of an intermediary’s average net assets in the Institutional and Y Classes on an annual basis. During the year ended October 31, 2018, the sub-transfer agent fees, as reflected in “Transfer agent fees” on the Statement of Operations, were as follows:

Fund	Sub-Transfer Agent Fees
Small Cap Value	$	1,749,350

As of October 31, 2018, the Fund owed the Manager the following reimbursement of sub-transfer agent fees, as reflected in “Transfer agent fees payable” on the Statement of Assets and Liabilities:

Fund	Reimbursement Sub-Transfer Agent Fees
Small Cap Value	$	92,483

Brokerage Commissions

Affiliated entities of a sub-advisor to the Fund received commissions on purchases and sales of the Fund’s portfolio securities totaling $122,480 for the year ended October 31, 2018.

Investments in Affiliated Funds

The Fund may invest in the American Beacon U.S. Government Money Market Select Fund (the “USG Select Fund”). Cash collateral received by the Fund in connection with securities lending may also be invested in the USG Select Fund. The Fund and the USG Select Fund have the same investment advisor and therefore, are considered to be affiliated. The Manager serves as investment advisor to the USG Select Fund and receives management fees and administrative fees totaling 0.10% of the average daily net assets of the USG Select Fund. During the year ended October 31, 2018, the Manager earned fees on the Fund’s direct investments and securities lending collateral investments in the USG Select Fund as shown below:

Fund	Direct Investments in USG Select Fund		Securities Lending Collateral in USG Select Fund		Total
Small Cap Value	$	241,828	$	183,722	$	425,550

Interfund Credit Facility

Pursuant to an exemptive order issued by the SEC, the Fund, along with other registered investment companies having management contracts with the Manager, may participate in a credit facility whereby each fund, under certain conditions, is permitted to lend money directly to and borrow directly from other participating funds for temporary purposes. The interfund credit facility is advantageous to the fund because it provides added liquidity, and eliminates the need to maintain higher cash balances to meet redemptions. This situation could arise when shareholder redemptions exceed anticipated volumes and certain funds have insufficient cash on hand to satisfy such redemptions or when sales of securities do not settle as expected, resulting in a cash shortfall for a fund. When a fund liquidates portfolio securities to meet redemption requests, they often do not receive payment in settlement for up to two days (or longer for certain foreign transactions). Redemption requests normally are satisfied on the next business day. The credit facility provides a source of immediate, short-term liquidity pending settlement of the sale of portfolio securities. The credit facility is administered by a credit facility team consisting of professionals from the Manager’s asset management, compliance, and accounting areas who report the activities of the credit facility to the Board. During the year ended October 31, 2018, the Fund did not utilize the credit facility.

34

American Beacon Small Cap Value Fund^SM

Notes to Financial Statements

October 31, 2018

Expense Reimbursement Plan

The Fund has adopted an Expense Reimbursement Plan whereby the Manager may seek repayment of such fee reductions and expense reimbursements. Under the policy, the Manager can be reimbursed by the Fund for any contractual or voluntary fee reductions or expense reimbursements if reimbursement to the Manager (a) occurs within three years after the Manager’s own waiver or reimbursement and (b) does not cause the Fund’s annual operating expenses to exceed the lesser of the contractual percentage limit in effect at the time of the waiver/reimbursement or time of recoupment. During the year ended October 31, 2018 there were no waived fees, expenses reimbursed, or recouped expenses.

The Distributor

Effective March 1, 2018, Resolute Investment Distributors, Inc. (“RID” or “Distributor”) replaced Foreside Fund Services, LLC (“Foreside”) as the Fund’s distributor and principal underwriter of the Fund’s shares.

RID is a registered broker-dealer and is a member of the Financial Industry Regulatory Authority, Inc. (“FINRA”). The Distributor is affiliated with the Manager through common ownership. Under a Distribution Agreement with the Trust, the Distributor acts as the distributor and principal underwriter of the Trust in connection with the continuous offering of shares of the Fund. The Distributor continually distributes shares of the Fund on a best efforts basis. The Distributor has no obligation to sell any specific quantity of the Fund’s shares. Pursuant to the Distribution Agreement, to the extent applicable, the Distributor receives, and may re-allocate to broker-dealers, all or a portion of the sales charge paid by the purchasers of A Class and C Class shares. For A Class and C Class shares, the Distributor receives commission revenue consisting of the portion of A Class and C Class sales charge remaining after the allowances by the Distributor to the broker-dealers. The Distributor retains any portion of the commission fees that are not paid to the broker-dealers for use solely to pay distribution related expenses.

Prior to March 1, 2018, Foreside served as the distributor and principal underwriter of the Fund’s shares. Pursuant to a Sub-Administration Agreement between Foreside and the Manager in effect through February 28, 2018, Foreside received a fee from the Manager for providing administrative services in connection with the marketing and distribution of shares of the Trust, including the registration of Manager employees as registered representatives of Foreside to facilitate distribution of Fund shares. Foreside also received a fee from the Manager under a Marketing Agreement pursuant to which Foreside provided services in connection with the marketing of a Fund to institutional investors. Pursuant to the Distribution Agreement with the Trust in effect through February 28, 2018, Foreside received, and may have re-allocated to broker-dealers, all or a portion of the sales charge paid by the purchasers of A and C Class shares. For A and C Class shares, Foreside received commission revenues consisting of the portion of A and C Class sales charge remaining after the allowances by Foreside to the broker dealers. Foreside retained any portion of the commission fees that were not paid to the broker-dealers for use solely to pay distribution related expenses.

Sales Commissions

The Fund’s Distributor, formerly Foreside, may receive a portion of A Class sales charges from broker dealers and it may be used to offset distribution related expenses. During the period November 1, 2017 through February 28, 2018, Foreside collected $3,562 for the Fund from the sale of Class A Shares. During the period March 1, 2018 through October 31, 2018, RID collected $2,251 from the sale of Class A Shares of the Fund.

A CDSC of 0.50% will be deducted with respect to Class A Shares on certain purchases of $1,000,000 or more that are redeemed in whole or part within 18 months of purchase, unless waived as discussed in the Fund’s Prospectus. Any applicable CDSC will be 0.50% of the lesser of the original purchase price or the value of the redemption of the Class A Shares redeemed. During the year ended October 31, 2018, there were no CDSC fees collected for Class A Shares of the Fund.

35

American Beacon Small Cap Value Fund^SM

Notes to Financial Statements

October 31, 2018

A CDSC of 1.00% will be deducted with respect to Class C Shares redeemed within 12 months of purchase, unless waived as discussed in the Fund’s Prospectus. Any applicable CDSC will be 1.00% of the lesser of the original purchase price or the value of the redemption of the Class C Shares redeemed. During the period November 1, 2017 through February 28, 2018, Foreside collected CDSC fees of $229 for Class C Shares of the Fund. During the period March 1, 2018 through October 31, 2018, RID collected CDSC fees of $391 for Class C Shares of the Fund.

Trustee Fees and Expenses

As compensation for their service to the Trust, American Beacon Select Funds, American Beacon Institutional Funds Trust, American Beacon Sound Point Enhanced Income Fund, and American Beacon Apollo Total Return Fund, each Trustee receives an annual retainer of $120,000, plus $10,000 for each Board meeting attended in person or via teleconference, $2,500 for attendance by Committee members at meetings of the Audit Committee and the Investment Committee, and $1,500 for attendance by Committee members at meetings of the Nominating and Governance Committee, plus reimbursement of reasonable expenses incurred in attending Board meetings, Committee meetings, and relevant educational seminars. The Trustees also may be compensated for attendance at special Board and/or Committee meetings from time to time. The Board Chairman receives an additional annual retainer of $50,000 as well as a $2,500 fee each quarter for his attendance at the committee meetings. Effective January 1, 2018, the Board Vice Chair receives an additional annual retainer of $10,000. The Chairpersons of the Audit Committee and the Investment Committee each receive an additional annual retainer of $25,000 and the Chairman of the Nominating and Governance Committee receives an additional annual retainer of $10,000. These expenses are allocated on a prorated basis to each Fund of the Trusts according to its respective net assets.

3.  Security Valuation and Fair Value Measurements

The price of the Fund’s shares is based on its net asset value (“NAV”) per share. The Fund’s NAV is computed by adding total assets, subtracting all the Fund’s liabilities, and dividing the result by the total number of shares outstanding.

The NAV of each class of the Fund’s shares is determined based on a pro rata allocation of the Fund’s investment income, expenses and total capital gains and losses. The Fund’s NAV per share is determined each business day as of the regular close of trading on the New York Stock Exchange (“NYSE” or “Exchange”), which is typically 4:00 p.m. Eastern Time (“ET”). However, if trading on the NYSE closes at a time other than 4:00 p.m. ET, the Fund’s NAV per share typically would still be determined as of the regular close of trading on the NYSE. The Fund does not price its shares on days that the NYSE is closed. Foreign exchanges may permit trading in foreign securities on days when the Fund is not open for business, which may result in the value of the Fund’s portfolio investments being affected at a time when you are unable to buy or sell shares.

Equity securities, including shares of closed-end funds and exchange-traded funds (“ETFs”), are valued at the last sale price or official closing price taken from the primary exchange in which each security trades. Investments in other mutual funds are valued at the closing NAV per share on the day of valuation. Debt securities are valued at bid quotes from broker/dealers or evaluated bid prices from pricing services, who may consider a number of inputs and factors, such as prices of comparable securities, yield curves, spreads, credit ratings, coupon rates, maturity, default rates, and underlying collateral. Futures are valued based on their daily settlement prices. Exchange-traded and over-the-counter (“OTC”) options are valued at the last sale price. Options with no last sale for the day are priced at mid quote. Swaps are valued at evaluated mid prices from pricing services.

The valuation of securities traded on foreign markets and certain fixed income securities will generally be based on prices determined as of the earlier closing time of the markets on which they primarily trade unless a significant event has occurred. When the Fund holds securities or other assets that are denominated in a foreign currency, the Fund will normally use the currency exchange rates as of 4:00 p.m. ET.

36

American Beacon Small Cap Value Fund^SM

Notes to Financial Statements

October 31, 2018

Securities may be valued at fair value, as determined in good faith and pursuant to procedures approved by the Board, under certain limited circumstances. For example, fair value pricing will be used when market quotations are not readily available or reliable, as determined by the Manager, such as when (i) trading for a security is restricted or stopped; (ii) a security’s trading market is closed (other than customary closings); or (iii) a security has been de-listed from a national exchange. A security with limited market liquidity may require fair value pricing if the Manager determines that the available price does not reflect the security’s true market value. In addition, if a significant event that the Manager determines to affect the value of one or more securities held by the Fund occurs after the close of a related exchange but before the determination of the Fund’s NAV, fair value pricing may be used on the affected security or securities. Securities of small-capitalization companies are also more likely to require a fair value determination using these procedures because they are more thinly traded and less liquid than the securities of larger-capitalization companies. The Fund may fair value securities as a result of significant events occurring after the close of the foreign markets in which the Fund invests as described below. In addition, the Fund may invest in illiquid securities requiring these procedures.

The Fund may use fair value pricing for securities primarily traded in non-U.S. markets because most foreign markets close well before the Fund’s pricing time of 4:00 p.m. ET. The earlier close of these foreign markets gives rise to the possibility that significant events, including broad market moves, may have occurred in the interim and may materially affect the value of those securities. If the Manager determines that the last quoted prices of non-U.S. securities will, in its judgment, materially affect the value of some or all its portfolio securities, the Manager can adjust the previous closing prices to reflect what it believes to be the fair value of the securities as of the close of the Exchange. In deciding whether it is necessary to adjust closing prices to reflect fair value, the Manager reviews a variety of factors, including developments in foreign markets, the performance of U.S. securities markets, and the performance of instruments trading in U.S. markets that represent foreign securities and baskets of foreign securities. These securities are fair valued using a pricing service, using methods approved by the Board, that considers the correlation of the trading patterns of the foreign security to intraday trading in the U.S. markets, based on indices of domestic securities and other appropriate indicators such as prices of relevant American Depository Receipts (“ADRs”) and futures contracts. The Valuation Committee, established by the Board, may also fair value securities in other situations, such as when a particular foreign market is closed but the Fund is open. The Fund uses outside pricing services to provide closing prices and information to evaluate and/or adjust those prices. As a means of evaluating its security valuation process, the Valuation Committee routinely compares closing prices, the next day’s opening prices in the same markets and adjusted prices.

Attempts to determine the fair value of securities introduce an element of subjectivity to the pricing of securities. As a result, the price of a security determined through fair valuation techniques may differ from the price quoted or published by other sources and may not accurately reflect the market value of the security when trading resumes. If a reliable market quotation becomes available for a security formerly valued through fair valuation techniques, the Manager compares the new market quotation to the fair value price to evaluate the effectiveness of the Fund’s fair valuation procedures. If any significant discrepancies are found, the Manager may adjust the Fund’s fair valuation procedures.

Valuation Inputs

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

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

37

American Beacon Small Cap Value Fund^SM

Notes to Financial Statements

October 31, 2018

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

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

Investments in 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.

Level 3 trading assets and trading liabilities, at fair value

The valuation techniques and significant inputs used in determining the fair values of financial instruments classified as Level 3 of the fair value hierarchy are as follows.

Securities and other assets for which market quotes are not readily available are valued at fair value as determined in good faith by the Board or persons acting at their direction and may be categorized as Level 3 of the fair value hierarchy.

Market quotes are considered not readily available in circumstances where there is an absence of current or reliable market-based data (e.g., trade information or broker quotes), including where events occur after the close of the relevant market, but prior to the Exchange close, that materially affect the values of the Fund’s securities or assets. In addition, market quotes are considered not readily available when, due to extraordinary circumstances, the exchanges or markets on which the securities trade, do not open for trading for the entire day and no other market prices are available. The Board has delegated to the Manager the responsibility for monitoring significant events that may materially affect the fair values of a Fund’s securities or assets and for determining whether the value of the applicable securities or assets should 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 the Fund’s NAV that fairly reflects security values as of the time of pricing, the Trust cannot guarantee that values determined by the Board or persons acting at their direction would accurately reflect the price that a Fund could obtain for a security if it were to dispose of that security as of the time of pricing (for instance, in a forced or distressed sale). The prices used by a Fund may differ from the value that would be realized if the securities were sold.

4.  Securities and Other Investments

American Depositary Receipts

ADRs are depositary receipts for foreign issuers in registered form traded in U.S. securities markets. Depositary receipts may not be denominated in the same currency as the securities into which they may be

38

American Beacon Small Cap Value Fund^SM

Notes to Financial Statements

October 31, 2018

converted. Investing in depositary receipts entails substantially the same risks as direct investment in foreign securities. There is generally less publicly available information about foreign companies and there may be less governmental regulation and supervision of foreign stock exchanges, brokers, and listed companies. In addition, such companies may use different accounting and financial standards (and certain currencies may become unavailable for transfer from a foreign currency), resulting in the Fund’s possible inability to convert immediately into U.S. currency proceeds realized upon the sale of portfolio securities of the affected foreign companies. In addition, the Fund may invest in unsponsored depositary receipts, the issuers of which are not obligated to disclose material information about the underlying securities to investors in the United States. Ownership of unsponsored depositary receipts may not entitle the Fund to the same benefits and rights as ownership of a sponsored depositary receipt or the underlying security.

Common Stock

Common stock generally takes the form of shares in a corporation which represent an ownership interest. It ranks below preferred stock and debt securities in claims for dividends and for assets of the company in a liquidation or bankruptcy. The value of a company’s common stock may fall as a result of factors directly relating to that company, such as decisions made by its management or decreased demand for the company’s products or services. A stock’s value may also decline because of factors affecting not just the company, but also companies in the same industry or sector. The price of a company’s stock may also be affected by changes in financial markets that are relatively unrelated to the company, such as changes in interest rates, currency exchange rates or industry regulation. Companies that elect to pay dividends on their common stock generally only do so after they invest in their own business and make required payments to bondholders and on other debt and preferred stock. Therefore, the value of a company’s common stock will usually be more volatile than its bonds, other debt and preferred stock. Common stock may be exchange-traded or OTC. OTC stock may be less liquid than exchange-traded stock.

Other Investment Company Securities and Other Exchange-Traded Products

The Fund may invest in shares of other investment companies, including open-end funds, closed-end funds, business development companies, ETFs, unit investment trusts, and other investment companies of the Trust. The Fund may invest in investment company securities advised by the Manager or a sub-advisor. Investments in the securities of other investment companies may involve duplication of advisory fees and certain other expenses. By investing in another investment company, the Fund becomes a shareholder of that investment company. As a result, the Fund’s shareholders indirectly will bear the Fund’s proportionate share of the fees and expenses paid by shareholders of the other investment company, in addition to the fees and expenses the Fund’s shareholders directly bear in connection with the Fund’s own operations. These other fees and expenses are reflected as Acquired Fund Fees and Expenses and are included in the Fees and Expenses Table for the Fund in its Prospectus, if applicable. Investments in other investment companies may involve the payment of substantial premiums above the value of such issuer’s portfolio securities.

Real Estate Investment Trusts

The Fund may own shares of real estate investment trusts (“REITs”) which report information on the source of their distributions annually. The 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.

39

American Beacon Small Cap Value Fund^SM

Notes to Financial Statements

October 31, 2018

5.  Financial Derivative Instruments

The Fund may utilize derivative instruments to gain market exposure on cash balances or reduce market exposure in anticipation of liquidity needs. When considering the Fund’s use of derivatives, it is important to note that the Fund does not use derivatives for the purpose of creating financial leverage.

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 Statements of Assets and Liabilities. Payments to and from the broker, known as variation margin, are required to be made on a daily basis as the price of the futures contract fluctuates. Changes in initial settlement values are accounted for as unrealized appreciation (depreciation) until the contracts are terminated, at which time realized gains and losses are recognized. Futures contracts are valued at the most recent settlement price established each day by the exchange on which they are traded.

During the year ended October 31, 2018, the Fund entered into futures contracts primarily for exposing cash to markets.

The Fund’s average futures contracts outstanding fluctuate throughout the operating year as required to meet strategic requirements. The following table illustrates the average quarterly volume of futures contracts. For purpose of this disclosure, volume is measured by contracts outstanding at each quarter end.

Average Futures Contracts Outstanding
Fund	Year Ended October 31, 2018
Small Cap Value		2,786

The following is a summary of the fair valuations of the Fund’s derivative instruments categorized by risk
exposure⁽¹⁾:

Fair values of financial instruments on the Statement of Assets and Liabilities as of October 31, 2018:
	Derivatives not accounted for as hedging instruments
Liabilities:	Credit contracts			Foreign exchange contracts			Commodity contracts			Interest rate contracts			Equity contracts				Total
Payable for variation margin from open futures contracts(2)		$	-		$	-		$	-		$	-		$	(22,550,142	)		$	(22,550,142	)

40

American Beacon Small Cap Value Fund^SM

Notes to Financial Statements

October 31, 2018

The effect of financial derivative instruments on the Statement of Operations as of October 31, 2018:
	Derivatives not accounted for as hedging instruments
Realized gain (loss) from derivatives recognized as a result of operations	Credit contracts			Foreign exchange contracts			Commodity contracts			Interest rate contracts			Equity contracts				Total
Futures contracts		$	-		$	-		$	-		$	-		$	23,811,684			$	23,811,684
Net change in unrealized appreciation (depreciation) of derivatives recognized as a result from operations:	Credit contracts			Foreign exchange contracts			Commodity contracts			Interest rate contracts			Equity contracts				Total
Futures contracts		$	-		$	-		$	-		$	-		$	(29,111,482	)		$	(29,111,482	)

⁽¹⁾ See Note 3 in the Notes to Financial Statements for additional information.

⁽²⁾ Includes cumulative appreciation (depreciation) of futures contracts as reported in the Fund’s Schedule of Investments footnotes. Only current day’s variation margin is reported within the Statement of Assets and Liabilities.

Offsetting Assets and Liabilities

The Fund is a party to enforceable master netting agreements between brokers and counterparties which provide for the right to offset under certain circumstances. The Fund employs multiple money managers and counterparties and has elected not to offset qualifying financial and derivative instruments on the Statement of Assets and Liabilities, as such all financial and derivative instruments are presented on a gross basis. The impacts of netting arrangements that provide the right to offset are detailed below. The net amount represents the net receivable or payable that would be due from or to the counterparty in the event of default. Exposure from borrowings and other financing agreements such as repurchase agreements can only be netted across transactions governed by the same Master Agreement with the same legal entity. All amounts reported below represent the balance as of the report date, October 31, 2018.

Offsetting of Financial and Derivative Assets as of October 31, 2018:
	Assets		Liabilities
Futures Contracts	$	-	$	22,550,142
Total derivative assets and liabilities in the Statement of Assets and Liabilities	$	-	$	22,550,142
Derivatives not subject to a Master Netting Agreement or similar agreement (“MNA”)	$	-	$	(22,550,142	)

	Remaining Contractual Maturity of the Agreements As of October 31, 2018
	Overnight and Continuous		<30 days		Between 30 & 90 days		>90 days		Total
Securities Lending Transactions
Common Stocks	$	131,390,683	$	-	$	-	$	-	$	131,390,683
Total Borrowings	$	131,390,683	$	-	$	-	$	-	$	131,390,683
Gross amount of recognized liabilities for securities lending transactions									$	131,390,683

6.  Principal Risks

Investing in the Fund may involve certain risks including, but not limited to, those described below.

Equity Investments Risk

Equity securities are subject to market risk. The Fund’s investments in equity securities may include common stocks, preferred stocks, securities convertible into or exchangeable for common stocks, REITs, depositary receipts, and U.S. dollar-denominated foreign stocks traded on U.S. exchanges. Such investments may expose the Fund to additional risk. The value of a company’s common stock may fall as a result of factors affecting the company, companies in the same industry or sector, or the financial markets overall. Common stock generally is subordinate to preferred stock upon the liquidation or bankruptcy of the issuing company. Preferred stocks and

41

American Beacon Small Cap Value Fund^SM

Notes to Financial Statements

October 31, 2018

convertible securities are sensitive to movements in interest rates. Preferred stocks may be less liquid than common stocks and, unlike common stocks, participation in the growth of an issuer may be limited. Distributions on preferred stocks generally are payable at the discretion of an issuer and after required payments to bond holders. Convertible securities are subject to the risk that the credit standing of the issuer may have an effect on the convertible securities’ investment value. Investments in REITs are subject to the risks associated with investing in the real estate industry such as adverse developments affecting the real estate industry and real property values. Depositary receipts and U.S. dollar-denominated foreign stocks traded on U.S. exchanges are subject to certain of the risks associated with investing directly in foreign securities, including, but not limited to, currency fluctuations and political and financial instability in the home country of a particular depositary receipt or foreign stock.

Foreign Investing Risk

Non-U.S. investments carry potential risks not associated with U.S. investments. Such risks include, but are not limited to: (1) currency exchange rate fluctuations, (2) political and financial instability, (3) less liquidity and greater volatility, (4) lack of uniform accounting, auditing and financial reporting standards, (5) increased price volatility, (6) less government regulation and supervision of foreign stock exchanges, brokers and listed companies, and (7) delays in transaction settlement in some foreign markets.

Futures Contracts Risk

Futures contracts are derivative instruments where one party pays a fixed price for an agreed amount of securities or other underlying assets at an agreed date. The use of such derivative instruments may expose the Fund to additional risks that it would not be subject to if it invested directly in the securities underlying those derivatives. Futures contracts may experience potentially dramatic price changes (losses) and imperfect correlation between the price of the contract and the underlying security or index, which will increase the volatility of the Fund and may involve a small investment of cash (the amount of initial and variation margin) relative to the magnitude of the risk assumed (the potential increase or decrease in the price of the futures contract).

Market Risk

Since the financial crisis that started in 2008, the U.S. and many foreign economies continue to experience its after-effects. Conditions in the U.S. and many foreign economies have resulted, and may continue to result, in certain instruments experiencing unusual liquidity issues, increased price volatility and, in some cases, credit downgrades and increased likelihood of default. These events have reduced the willingness and ability of some lenders to extend credit, and have made it more difficult for some borrowers to obtain financing on attractive terms, if at all. In some cases, traditional market participants have been less willing to make a market in some types of debt instruments, which has affected the liquidity of those instruments. During times of market turmoil, investors tend to look to the safety of securities issued or backed by the U.S. Treasury, causing the prices of these securities to rise and the yields to decline. Reduced liquidity in fixed income and credit markets may negatively affect many issuers worldwide. In addition, global economies and financial markets are becoming increasingly interconnected, which increases the possibilities that conditions in one country or region might adversely impact issuers in a different country or region. A rise in protectionist trade policies, and the possibility of changes to some international trade agreements, could affect the economies of many nations in ways that cannot necessarily be foreseen at the present time.

In response to the financial crisis, the U.S. and other governments and the Federal Reserve and certain foreign central banks have taken steps to support financial markets. In some countries where economic conditions are recovering, they are nevertheless perceived as still fragile. Withdrawal of government support, failure of efforts in response to the crisis, or investor perception that such efforts are not succeeding, could adversely impact the value and liquidity of certain securities. The severity or duration of adverse economic conditions may also be

42

American Beacon Small Cap Value Fund^SM

Notes to Financial Statements

October 31, 2018

affected by policy changes made by governments or quasi-governmental organizations, including changes in tax laws. The impact of new financial regulation legislation on the markets and the practical implications for market participants may not be fully known for some time. Regulatory changes are causing some financial services companies to exit long-standing lines of business, resulting in dislocations for other market participants. In addition, political and diplomatic events within the U.S. and abroad, such as the U.S. government’s inability at times to agree on a long-term budget and deficit reduction plan, the threat of a federal government shutdown and threats not to increase the federal government’s debt limit, may affect investor and consumer confidence and may adversely impact financial markets and the broader economy, perhaps suddenly and to a significant degree. The U.S. government has recently reduced federal corporate income tax rates, and future legislative, regulatory and policy changes may result in more restrictions on international trade, less stringent prudential regulation of certain players in the financial markets, and significant new investments in infrastructure and national defense. Markets may react strongly to expectations about the changes in these policies, which could increase volatility, especially if the markets’ expectations for changes in government policies are not borne out.

Changes in market conditions will not have the same impact on all types of securities. Interest rates have been unusually low in recent years in the U.S. and abroad. Because there is little precedent for this situation, it is difficult to predict the impact of a significant rate increase on various markets. For example, because investors may buy securities or other investments with borrowed money, a significant increase in interest rates may cause a decline in the markets for those investments. Because of the sharp decline in the worldwide price of oil, there is a concern that oil producing nations may withdraw significant assets now held in U.S. Treasuries, which could force a substantial increase in interest rates. Regulators have expressed concern that rate increases may cause investors to sell fixed income securities faster than the market can absorb them, contributing to price volatility. In addition, there is a risk that the prices of goods and services in the U.S. and many foreign economies may decline over time, known as deflation (the opposite of inflation). Deflation may have an adverse effect on stock prices and creditworthiness and may make defaults on debt more likely. If a country’s economy slips into a deflationary pattern, it could last for a prolonged period and may be difficult to reverse. The precise details and the resulting impact of the United Kingdom’s vote to leave the European Union (the “EU”), commonly referred to as “Brexit,” are not yet known. The effect on the United Kingdom’s economy will likely depend on the nature of trade relations with the EU and other major economies following its exit, which are matters to be negotiated. The outcomes may cause increased volatility and have a significant adverse impact on world financial markets, other international trade agreements, and the United Kingdom and European economies, as well as the broader global economy for some time, which could significantly adversely affect the value of the Fund’s investments in the United Kingdom and Europe.

Multiple Sub-Advisor Risk

The Manager may allocate the Fund’s assets among multiple sub-advisors, each of which is responsible for investing its allocated portion of the Fund’s assets. To a significant extent, the Fund’s performance will depend on the success of the Manager in allocating the Fund’s assets to sub-advisors and its selection and oversight of the sub-advisors. Because each sub-advisor manages its allocated portion of the Fund independently from another sub-advisor, the same security may be held in different portions of the Fund, or may be acquired for one portion of the Fund at a time when a sub-advisor to another portion deems it appropriate to dispose of the security from that other portion, resulting in higher expenses without accomplishing any net result in the Fund’s holdings. Similarly, under some market conditions, one sub-advisor may believe that temporary, defensive investments in short-term instruments or cash are appropriate when another sub-advisor believes continued exposure to the equity or debt markets is appropriate for its allocated portion of the Fund. Because each sub-advisor directs the trading for its own portion of the Fund, and does not aggregate its transactions with those of the other sub-advisors, the Fund may incur higher brokerage costs than would be the case if a single sub-adviser were managing the entire Fund. In addition, while the Manager seeks to allocate the Fund’s assets among the Fund’s sub-advisors in a manner that it believes is consistent with achieving the Fund’s investment objective(s), the Manager may be subject to potential conflicts of interest in allocating the Fund’s assets among sub-advisors.

43

American Beacon Small Cap Value Fund^SM

Notes to Financial Statements

October 31, 2018

Other Investment Companies Risk

The Fund may invest in shares of other registered investment companies, including ETFs and money market funds that are advised by the Manager. To the extent that the Fund invest in shares of other registered investment companies, the Fund will indirectly bear the fees and expenses charged by those investment companies in addition to the Fund’s direct fees and expenses and will be subject to the risks associated with investments in those companies. For example, ETF shares may trade at a premium or discount to their net asset value. An ETF that tracks an index may not precisely replicate the returns of its benchmark index.

Securities Lending Risk

To the extent the Fund lends its securities, it may be subject to the following risks. Borrowers of the Fund’s securities typically provide collateral in the form of cash that is reinvested in securities. The securities in which the collateral is invested may not perform sufficiently to cover the return collateral payments owed to borrowers. In addition, delays may occur in the recovery of securities from borrowers, which could interfere with the Fund’s ability to vote proxies or to settle transactions.

Sector Risk

Sector risk is the risk associated with a Fund holding a significant amount of investments in similar businesses, which would be similarly affected by particular economic or market events, which may, in certain circumstances, cause the value of the equity and debt securities of companies in a particular sector of the market to change.

To the extent a Fund invests in the financial services sector, the value of the Fund’s shares may be particularly vulnerable to factors affecting that sector, such as the availability and cost of capital funds, changes in interest rates, the rate of corporate and consumer debt defaults, extensive government regulation and price competition. The value of a Fund’s shares could experience significantly greater volatility than investment companies investing more broadly.

7.  Federal Income and Excise Taxes

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

The Fund does not have any unrecorded tax liabilities in the accompanying financial statements. Each of the tax years in the four year period ended October 31, 2018 remain subject to examination by the Internal Revenue Service. If applicable, the Fund recognizes interest accrued related to unrecognized tax benefits in interest expense and penalties in “Other expenses” on the Statement of Operations.

The Fund may be subject to taxes imposed by countries in which it invests. Such taxes are generally based on returns of income earned or gains realized or repatriated. Taxes are accrued and applied to net investment income, net realized capital gains and net unrealized appreciation (depreciation), as applicable, as the income is earned or capital gains are recorded.

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

44

American Beacon Small Cap Value Fund^SM

Notes to Financial Statements

October 31, 2018

The tax character of distributions paid were as follows:

	Year Ended October 31, 2018		Year Ended October 31, 2017
Distributions paid from:
Ordinary income*
Institutional Class	$	108,083,614	$	47,650,547
Y Class		7,511,690		3,019,712
Investor Class		11,549,809		4,155,527
Advisor Class		1,566,030		585,244
A Class		1,244,711		345,546
C Class		245,106		8,272
R6 Class		8,023,251		-
Long-term capital gains
Institutional Class		375,907,244		119,287,042
Y Class		26,964,201		8,095,815
Investor Class		47,136,699		15,364,261
Advisor Class		7,148,816		2,863,390
A Class		5,171,162		1,438,729
C Class		1,152,927		335,845
R6 Class		27,490,528		-
Total distributions paid	$	629,195,788	$	203,149,930

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

As of October 31, 2018, the components of distributable earnings (deficits) on a tax basis were as follows:

Fund	Tax Cost		Unrealized Appreciation		Unrealized (Depreciation)			Net Unrealized Appreciation (Depreciation)
Small Cap Value	$	6,230,459,556	$	931,254,035	$	(484,958,184	)	$	446,295,851

Fund	Net Unrealized Appreciation (Depreciation)		Undistributed Ordinary Income		Undistributed Long-Term Capital Gains		Accumulated Capital and Other (Losses)		Other Temporary Differences		Distributable Earnings
Small Cap Value	$	446,295,851	$	114,315,282	$	605,416,283	$	-	$	-	$	1,166,027,416

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

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 tax-exempt interest and nondeductible expenses from investments in publicly traded partnerships as of October 31, 2018:

Fund	Paid-In-Capital			Distributable Earnings/(Loss)
Small Cap Value	$	(21,498	)	$	21,498

Under the Regulated Investment Company Modernization Act of 2010 (“RIC MOD”), net capital losses recognized by the Fund in taxable years beginning after December 22, 2010 are carried forward indefinitely and retain their character as short-term and/or long-term losses.

As of October 31, 2018, the Fund did not have any capital loss carryforwards.

45

American Beacon Small Cap Value Fund^SM

Notes to Financial Statements

October 31, 2018

8.  Investment Transactions

The aggregate cost of purchases and proceeds from sales and maturities of investments, other than short-term obligations, for the year ended October 31, 2018 were as follows:

Fund	Purchases (non-U.S. Government Securities)		Sales (non-U.S. Government Securities)
Small Cap Value	$	4,770,097,692	$	5,036,536,201

A summary of the Fund’s transactions in the USG Select Fund for the year ended October 31, 2018 were as follows:

Fund	Type of Transaction	October 31, 2017 Shares/Fair Value		Purchases		Sales		October 31, 2018 Shares/Fair Value		Dividend Income
Small Cap Value	Direct	$	209,651,676	$	1,796,299,120	$	1,774,604,092	$	231,346,704	$	3,764,704
Small Cap Value	Securities Lending		236,088,074		962,181,494		1,066,878,885		131,390,683		N/A

9.  Securities Lending

The Fund may lend its securities to qualified financial institutions, such as certain broker-dealers, to earn additional income. The borrowers are required to secure their loans continuously with collateral in an amount at least equal to the fair value of the securities loaned, initially in an amount at least equal to 102% of the fair value of domestic securities loaned and 105% of the fair value of international securities loaned. Collateral is monitored 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 retained 80%, 10%, and 10%, respectively, of the income generated from securities lending.

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

Securities lending transactions pose certain risks to the Fund, including that the borrower may not provide additional collateral when required or return the securities when due, that the value of the short-term investments will be less than the amount of cash collateral required to be returned to the borrower, 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

46

American Beacon Small Cap Value Fund^SM

Notes to Financial Statements

October 31, 2018

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, 2018, the value of outstanding securities on loan and the value of collateral were as follows:

Fund	Market Value of Securities on Loan		Cash Collateral Received		Non-Cash Collateral Received		Total Collateral Received
Small Cap Value	$	126,252,889	$	131,390,683	$	-	$	131,390,683

Cash collateral is listed on the Fund’s Schedule of Investments and is shown on the Statement of Assets and Liabilities. Income earned on these investments is included in “Income derived from securities lending” on the Statement of Operations.

Non-cash collateral received by the Fund may not be sold 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.

10.  Borrowing Arrangements

Effective November 16, 2017, the Fund, along with certain other funds managed by the Manager (“Participating Funds”), entered into a committed revolving line of credit (the “Committed Line”) agreement with State Street Bank and Trust Company (the “Bank”) to be used to facilitate portfolio liquidity. The maximum borrowing amount under the Committed Line is $50 million with interest at a rate equal to the higher of (a) one-month London Inter-Bank Offered Rate (“LIBOR”) plus 1.25% per annum or (b) the Federal Funds rate plus 1.25% per annum on amounts borrowed. Each of the Participating Funds will pay a commitment fee at a rate of 0.25% per annum on the unused portion of the Committed Line amount. The Committed Line expires November 15, 2018, unless extended by the Bank or terminated by the Participating Funds in accordance with the agreement.

Effective November 16, 2017, the Fund, along with certain other Participating Funds managed by the Manager, entered into an uncommitted discretionary demand revolving line of credit (the “Uncommitted Line”) agreement with the Bank to be used to facilitate portfolio liquidity. The maximum borrowing amount under the Uncommitted Line is $50 million with interest at a rate equal to the higher of (a) one-month LIBOR plus 1.25% per annum or (b) the Federal Funds rate. The Uncommitted Line expires November 15, 2018 unless extended by the Bank or terminated by the Participating Funds in accordance with the agreement.

The Participating Funds paid administration, legal and arrangement fees, which are recognized as a component of “Other expenses” on the Statement of Operations, along with commitment fees, that have been allocated among the Participating Funds based on average daily net assets.

During the year ended October 31, 2018, the Fund did not utilize this facility.

47

American Beacon Small Cap Value Fund^SM

Notes to Financial Statements

October 31, 2018

11.  Capital Share Transactions

The tables below summarize the activity in capital shares for each Class of the Fund:

	Institutional Class
	Year Ended October 31,
	2018						2017
Small Cap Value Fund	Shares			Amount			Shares			Amount
Shares sold		28,795,136		$	813,629,911			49,422,685		$	1,376,685,742
Reinvestment of dividends		16,834,084			466,809,134			5,798,690			161,493,508
Shares redeemed		(56,760,794	)		(1,614,754,138	)		(61,608,781	)		(1,720,366,623	)
Net (decrease) in shares outstanding		(11,131,574	)	$	(334,315,093	)		(6,387,406	)	$	(182,187,373	)
	Y Class
	Year Ended October 31,
	2018						2017
Small Cap Value Fund	Shares			Amount			Shares			Amount
Shares sold		4,344,937		$	121,072,021			5,596,098		$	152,304,889
Reinvestment of dividends		1,202,236			32,893,173			377,530			10,385,850
Shares redeemed		(5,295,216	)		(145,505,953	)		(5,257,927	)		(143,345,782	)
Net increase in shares outstanding		251,957		$	8,459,241			715,701		$	19,344,957
	Investor Class
	Year Ended October 31,
	2018						2017
Small Cap Value Fund	Shares			Amount			Shares			Amount
Shares sold		3,480,761		$	95,354,068			5,842,502		$	156,520,663
Reinvestment of dividends		2,130,538			56,927,968			705,910			19,003,095
Shares redeemed		(7,367,883	)		(200,093,625	)		(9,608,715	)		(256,230,663	)
Net (decrease) in shares outstanding		(1,756,584	)	$	(47,811,589	)		(3,060,303	)	$	(80,706,905	)
	Advisor Class
	Year Ended October 31,
	2018						2017
Small Cap Value Fund	Shares			Amount			Shares			Amount
Shares sold		690,534		$	18,573,884			1,009,536		$	26,701,726
Reinvestment of dividends		330,358			8,714,846			129,599			3,448,634
Shares redeemed		(1,403,591	)		(37,945,197	)		(2,369,756	)		(62,775,350	)
Net (decrease) in shares outstanding		(382,699	)	$	(10,656,467	)		(1,230,621	)	$	(32,624,990	)
	A Class
	Year Ended October 31,
	2018						2017
Small Cap Value Fund	Shares			Amount			Shares			Amount
Shares sold		1,187,223		$	32,064,750			1,059,496		$	27,970,034
Reinvestment of dividends		241,813			6,345,165			66,206			1,754,460
Shares redeemed		(1,004,403	)		(26,949,383	)		(1,591,955	)		(41,214,901	)
Net increase (decrease) in shares outstanding		424,633		$	11,460,532			(466,253	)	$	(11,490,407	)
	C Class
	Year Ended October 31,
	2018						2017
Small Cap Value Fund	Shares			Amount			Shares			Amount
Shares sold		94,040		$	2,432,559			226,407		$	5,808,095
Reinvestment of dividends		53,040			1,339,793			11,793			303,207
Shares redeemed		(144,241	)		(3,717,938	)		(203,109	)		(5,189,248	)
Net increase in shares outstanding		2,839		$	54,414			35,091		$	922,054

48

American Beacon Small Cap Value Fund^SM

Notes to Financial Statements

October 31, 2018

	R6 Class
	Year Ended October 31,
	2018						2017
Small Cap Value Fund	Shares			Amount			Shares			Amount
Shares sold		26,568,807		$	758,695,266			10,184,651		$	295,604,089
Reinvestment of dividends		1,281,161			35,513,778			-			-
Shares redeemed		(3,354,657	)		(94,064,119	)		(160,657	)		(4,684,883	)
Net increase in shares outstanding		24,495,311		$	700,144,925			10,023,994		$	290,919,206

12.  Subsequent Events

Effective November 15, 2018, the Fund, along with certain other funds managed by the Manager, entered into a committed revolving line of credit with a max borrowing amount of $250 million.

Management has evaluated additional subsequent events for possible recognition or disclosure in the financial statements through the date the financial statements are issued. Management has determined that there are no material events that would require disclosure in the Fund’s financial statements through this date.

49

American Beacon Small Cap Value Fund^SM

Financial Highlights

(For a share outstanding throughout the period)

	Institutional Class
	Year Ended October 31,
	2018			2017			2016A			2015			2014B
Net asset value, beginning of period	$	29.51		$	24.36		$	24.69		$	27.80		$	28.04
Income (loss) from investment operations:
Net investment income		0.21			0.17			0.23			0.24			0.17
Net gains (losses) on investments (both realized and unrealized)		(0.94	)		5.83			0.79			0.02			2.18
Total income (loss) from investment operations		(0.73	)		6.00			1.02			0.26			2.35
Less distributions:
Dividends from net investment income		(0.15	)		(0.23	)		(0.20	)		(0.19	)		(0.14	)
Distributions from net realized gains		(2.49	)		(0.62	)		(1.15	)		(3.18	)		(2.45	)
Total distributions		(2.64	)		(0.85	)		(1.35	)		(3.37	)		(2.59	)
Net asset value, end of period	$	26.14		$	29.51		$	24.36		$	24.69		$	27.80
Total returnC		(2.96	)%		24.80	%		4.58	%		0.87	%		8.78	%
Ratios and supplemental data:
Net assets, end of period	$	4,604,864,422		$	5,527,380,111		$	4,717,291,753		$	4,313,522,956		$	4,002,884,144
Ratios to average net assets:
Expenses, before reimbursements		0.80	%		0.82	%		0.83	%		0.81	%		0.80	%
Expenses, net of reimbursements		0.80	%		0.82	%		0.83	%		0.81	%		0.80	%
Net investment income, before expense reimbursements		0.66	%		0.58	%		1.01	%		0.99	%		0.67	%
Net investment income, net of reimbursements		0.66	%		0.58	%		1.01	%		0.99	%		0.67	%
Portfolio turnover rate		69	%		48	%		53	%		47	%		73	%

^A  On June 20, 2016, Dreman Value Management, LLC was terminated and ceased managing assets of the Small Cap Value Fund, and was replaced by Foundry Partners, LLC.

^B  On August 19, 2014, Opus Capital Group, LLC was terminated and ceased managing assets of the Small Cap Value Fund. On March 17, 2014, Barrow Hanley, Mewhinney & Strauss, LLC began managing additional assets of the Small Cap Value Fund. On September 19, 2014, Hillcrest Asset Management, LLC began managing assets of the Small Cap Value Fund.

^C  Based on net asset value, which does not reflect the sales charge, redemption fee, or contingent deferred sales charge, if applicable. May include adjustments in accordance with U.S. GAAP and as such, the net asset value for reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions.

See accompanying notes

50

American Beacon Small Cap Value Fund^SM

Financial Highlights

(For a share outstanding throughout the period)

	Y Class
	Year Ended October 31,
	2018			2017			2016A			2015			2014B
Net asset value, beginning of period	$	29.13		$	24.06		$	24.41		$	27.52		$	27.81
Income (loss) from investment operations:
Net investment income		0.17			0.12			0.23			0.23			0.18
Net gains (losses) on investments (both realized and unrealized)		(0.90	)		5.78			0.76			0.01			2.12
Total income (loss) from investment operations		(0.73	)		5.90			0.99			0.24			2.30
Less distributions:
Dividends from net investment income		(0.14	)		(0.21	)		(0.19	)		(0.17	)		(0.14	)
Distributions from net realized gains		(2.49	)		(0.62	)		(1.15	)		(3.18	)		(2.45	)
Total distributions		(2.63	)		(0.83	)		(1.34	)		(3.35	)		(2.59	)
Net asset value, end of period	$	25.77		$	29.13		$	24.06		$	24.41		$	27.52
Total returnC		(3.03	)%		24.70	%		4.49	%		0.79	%		8.67	%
Ratios and supplemental data:
Net assets, end of period	$	342,125,601		$	379,409,116		$	296,082,333		$	251,360,287		$	190,416,114
Ratios to average net assets:
Expenses, before reimbursements		0.87	%		0.90	%		0.90	%		0.90	%		0.89	%
Expenses, net of reimbursements		0.87	%		0.90	%		0.90	%		0.90	%		0.89	%
Net investment income, before expense reimbursements		0.59	%		0.50	%		0.94	%		0.90	%		0.58	%
Net investment income, net of reimbursements		0.59	%		0.50	%		0.94	%		0.90	%		0.58	%
Portfolio turnover rate		69	%		48	%		53	%		47	%		73	%

^A  On June 20, 2016, Dreman Value Management, LLC was terminated and ceased managing assets of the Small Cap Value Fund, and was replaced by Foundry Partners, LLC.

^B  On August 19, 2014, Opus Capital Group, LLC was terminated and ceased managing assets of the Small Cap Value Fund. On March 17, 2014, Barrow Hanley, Mewhinney & Strauss, LLC began managing additional assets of the Small Cap Value Fund. On September 19, 2014, Hillcrest Asset Management, LLC began managing assets of the Small Cap Value Fund.

^C  Based on net asset value, which does not reflect the sales charge, redemption fee, or contingent deferred sales charge, if applicable. May include adjustments in accordance with U.S. GAAP and as such, the net asset value for reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions.

See accompanying notes

51

American Beacon Small Cap Value Fund^SM

Financial Highlights

(For a share outstanding throughout the period)

	Investor Class
	Year Ended October 31,
	2018			2017			2016A			2015			2014B
Net asset value, beginning of period	$	28.46		$	23.52		$	23.86		$	26.96		$	27.27
Income (loss) from investment operations:
Net investment income		0.11			0.11			0.19			0.18			0.10
Net gains (losses) on investments (both realized and unrealized)		(0.89	)		5.60			0.73			(0.02	)		2.09
Total income (loss) from investment operations		(0.78	)		5.71			0.92			0.16			2.19
Less distributions:
Dividends from net investment income		(0.07	)		(0.15	)		(0.11	)		(0.08	)		(0.05	)
Distributions from net realized gains		(2.49	)		(0.62	)		(1.15	)		(3.18	)		(2.45	)
Total distributions		(2.56	)		(0.77	)		(1.26	)		(3.26	)		(2.50	)
Net asset value, end of period	$	25.12		$	28.46		$	23.52		$	23.86		$	26.96
Total returnC		(3.28	)%		24.43	%		4.27	%		0.50	%		8.40	%
Ratios and supplemental data:
Net assets, end of period	$	538,602,473		$	660,241,571		$	617,552,712		$	723,044,801		$	851,731,763
Ratios to average net assets:
Expenses, before reimbursements		1.13	%		1.12	%		1.14	%		1.15	%		1.16	%
Expenses, net of reimbursements		1.13	%		1.12	%		1.14	%		1.15	%		1.16	%
Net investment income, before expense reimbursements		0.33	%		0.27	%		0.70	%		0.67	%		0.33	%
Net investment income, net of reimbursements		0.33	%		0.27	%		0.70	%		0.67	%		0.33	%
Portfolio turnover rate		69	%		48	%		53	%		47	%		73	%

^A  On June 20, 2016, Dreman Value Management, LLC was terminated and ceased managing assets of the Small Cap Value Fund, and was replaced by Foundry Partners, LLC.

^B  On August 19, 2014, Opus Capital Group, LLC was terminated and ceased managing assets of the Small Cap Value Fund. On March 17, 2014, Barrow Hanley, Mewhinney & Strauss, LLC began managing additional assets of the Small Cap Value Fund. On September 19, 2014, Hillcrest Asset Management, LLC began managing assets of the Small Cap Value Fund.

^C  Based on net asset value, which does not reflect the sales charge, redemption fee, or contingent deferred sales charge, if applicable. May include adjustments in accordance with U.S. GAAP and as such, the net asset value for reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions.

See accompanying notes

52

American Beacon Small Cap Value Fund^SM

Financial Highlights

(For a share outstanding throughout the period)

	Advisor ClassA
	Year Ended October 31,
	2018			2017			2016B			2015			2014C
Net asset value, beginning of period	$	28.09		$	23.22		$	23.60		$	26.69		$	27.06
Income (loss) from investment operations:
Net investment income		0.06			0.03			0.12			0.13			0.06
Net gains (losses) on investments (both realized and unrealized)		(0.88	)		5.57			0.73			0.01			2.07
Total income (loss) from investment operations		(0.82	)		5.60			0.85			0.14			2.13
Less distributions:
Dividends from net investment income		(0.01	)		(0.11	)		(0.08	)		(0.05	)		(0.05	)
Distributions from net realized gains		(2.49	)		(0.62	)		(1.15	)		(3.18	)		(2.45	)
Total distributions		(2.50	)		(0.73	)		(1.23	)		(3.23	)		(2.50	)
Net asset value, end of period	$	24.77		$	28.09		$	23.22		$	23.60		$	26.69
Total returnD		(3.44	)%		24.26	%		4.01	%		0.41	%		8.22	%
Ratios and supplemental data:
Net assets, end of period	$	77,578,775		$	98,718,359		$	110,205,158		$	98,224,328		$	102,681,998
Ratios to average net assets:
Expenses, before reimbursements		1.28	%		1.30	%		1.31	%		1.31	%		1.29	%
Expenses, net of reimbursements		1.28	%		1.30	%		1.31	%		1.31	%		1.29	%
Net investment income, before expense reimbursements		0.18	%		0.11	%		0.53	%		0.51	%		0.18	%
Net investment income, net of reimbursements		0.18	%		0.11	%		0.53	%		0.51	%		0.18	%
Portfolio turnover rate		69	%		48	%		53	%		47	%		73	%

^A  On January 15, 2016, the Retirement Class closed and the assets were merged into the Advisor Class.

^B  On June 20, 2016, Dreman Value Management, LLC was terminated and ceased managing assets of the Small Cap Value Fund, and was replaced by Foundry Partners, LLC.

^C  On August 19, 2014, Opus Capital Group, LLC was terminated and ceased managing assets of the Small Cap Value Fund. On March 17, 2014, Barrow Hanley, Mewhinney & Strauss, LLC began managing additional assets of the Small Cap Value Fund. On September 19, 2014, Hillcrest Asset Management, LLC began managing assets of the Small Cap Value Fund.

^D  Based on net asset value, which does not reflect the sales charge, redemption fee, or contingent deferred sales charge, if applicable. May include adjustments in accordance with U.S. GAAP and as such, the net asset value for reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions.

See accompanying notes

53

American Beacon Small Cap Value Fund^SM

Financial Highlights

(For a share outstanding throughout the period)

	A Class
	Year Ended October 31,
	2018			2017			2016A			2015			2014B
Net asset value, beginning of period	$	27.99		$	23.14		$	23.54		$	26.63		$	27.03
Income (loss) from investment operations:
Net investment income		0.07			0.07			0.15			0.13			0.11
Net gains (losses) on investments (both realized and unrealized)		(0.86	)		5.53			0.73			0.02			2.03
Total income (loss) from investment operations		(0.79	)		5.60			0.88			0.15			2.14
Less distributions:
Dividends from net investment income		(0.06	)		(0.13	)		(0.13	)		(0.06	)		(0.09	)
Distributions from net realized gains		(2.49	)		(0.62	)		(1.15	)		(3.18	)		(2.45	)
Total distributions		(2.55	)		(0.75	)		(1.28	)		(3.24	)		(2.54	)
Net asset value, end of period	$	24.65		$	27.99		$	23.14		$	23.54		$	26.63
Total returnC		(3.37	)%		24.36	%		4.17	%		0.45	%		8.30	%
Ratios and supplemental data:
Net assets, end of period	$	66,380,615		$	63,481,305		$	63,277,387		$	54,815,183		$	29,569,753
Ratios to average net assets:
Expenses, before reimbursements or recoupments		1.20	%		1.20	%		1.21	%		1.21	%		1.27	%
Expenses, net of reimbursements or recoupments		1.20	%		1.20	%		1.21	%		1.22	%		1.27	%
Net investment income, before expense reimbursements or recoupments		0.25	%		0.20	%		0.64	%		0.56	%		0.19	%
Net investment income, net of reimbursements or recoupments		0.25	%		0.20	%		0.64	%		0.54	%		0.20	%
Portfolio turnover rate		69	%		48	%		53	%		47	%		73	%

^A  On June 20, 2016, Dreman Value Management, LLC was terminated and ceased managing assets of the Small Cap Value Fund, and was replaced by Foundry Partners, LLC.

^B  On August 19, 2014, Opus Capital Group, LLC was terminated and ceased managing assets of the Small Cap Value Fund. On March 17, 2014, Barrow Hanley, Mewhinney & Strauss, LLC began managing additional assets of the Small Cap Value Fund. On September 19, 2014, Hillcrest Asset Management, LLC began managing assets of the Small Cap Value Fund.

^C  Based on net asset value, which does not reflect the sales charge, redemption fee, or contingent deferred sales charge, if applicable. May include adjustments in accordance with U.S. GAAP and as such, the net asset value for reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions.

See accompanying notes

54

American Beacon Small Cap Value Fund^SM

Financial Highlights

(For a share outstanding throughout the period)

	C Class
	Year Ended October 31,
	2018			2017			2016A			2015			2014B
Net asset value, beginning of period	$	26.98		$	22.39		$	22.84		$	26.05		$	26.60
Income (loss) from investment operations:
Net investment income (loss)		(0.08	)		(0.14	)		(0.02	)		0.03			(0.07	)
Net gains (losses) on investments (both realized and unrealized)		(0.81	)		5.35			0.72			(0.06	)		1.97
Total income (loss) from investment operations		(0.89	)		5.21			0.70			(0.03	)		1.90
Less distributions:
Distributions from net realized gains		(2.49	)		(0.62	)		(1.15	)		(3.18	)		(2.45	)
Total distributions		(2.49	)		(0.62	)		(1.15	)		(3.18	)		(2.45	)
Net asset value, end of period	$	23.60		$	26.98		$	22.39		$	22.84		$	26.05
Total returnC		(3.89	)%		23.39	%		3.42	%		(0.31	)%		7.46	%
Ratios and supplemental data:
Net assets, end of period	$	13,480,297		$	15,335,554		$	11,938,196		$	11,718,580		$	9,676,368
Ratios to average net assets:
Expenses, before reimbursements or recoupments		1.86	%		1.96	%		1.96	%		1.97	%		2.03	%
Expenses, net of reimbursements or recoupments		1.76	%		1.96	%		1.96	%		1.98	%		2.03	%
Net investment (loss), before expense reimbursements or recoupments		(0.41	)%		(0.58	)%		(0.12	)%		(0.17	)%		(0.56	)%
Net investment (loss), net of reimbursements or recoupments		(0.31	)%		(0.58	)%		(0.12	)%		(0.17	)%		(0.56	)%
Portfolio turnover rate		69	%		48	%		53	%		47	%		73	%

^A  On June 20, 2016, Dreman Value Management, LLC was terminated and ceased managing assets of the Small Cap Value Fund, and was replaced by Foundry Partners, LLC.

^B  On August 19, 2014, Opus Capital Group, LLC was terminated and ceased managing assets of the Small Cap Value Fund. On March 17, 2014, Barrow Hanley, Mewhinney & Strauss, LLC began managing additional assets of the Small Cap Value Fund. On September 19, 2014, Hillcrest Asset Management, LLC began managing assets of the Small Cap Value Fund.

^C  Based on net asset value, which does not reflect the sales charge, redemption fee, or contingent deferred sales charge, if applicable. May include adjustments in accordance with U.S. GAAP and as such, the net asset value for reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions.

See accompanying notes

55

American Beacon Small Cap Value Fund^SM

Financial Highlights

(For a share outstanding throughout the period)

	R6 Class
	Year Ended October 31, 2018			February 28, 2017A to October 31, 2017
Net asset value, beginning of period	$	29.51		$	28.03
Income (loss) from investment operations:
Net investment income		0.22			–	B
Net gains (losses) on investments (both realized and unrealized)		(0.94	)		1.48
Total income (loss) from investment operations		(0.72	)		1.48
Less distributions:
Dividends from net investment income		(0.16	)		-
Distributions from net realized gains		(2.49	)		-
Total distributions		(2.65	)		-
Net asset value, end of period	$	26.14		$	29.51
Total returnC		(2.93	)%		5.28	%D
Ratios and supplemental data:
Net assets, end of period	$	902,241,051		$	295,802,679
Ratios to average net assets:
Expenses, before reimbursements		0.77	%		0.80	%E
Expenses, net of reimbursements		0.77	%		0.80	%E
Net investment income (loss), before expense reimbursements		0.66	%		(0.04	)%E
Net investment income (loss), net of reimbursements		0.66	%		(0.04	)%E
Portfolio turnover rate		69	%		48	%F

^A  Commencement of operations.

^B  Amount represents less than $0.01 per share.

^C  Based on net asset value, which does not reflect the sales charge, redemption fee, or contingent deferred sales charge, if applicable. May include adjustments in accordance with U.S. GAAP and as such, the net asset value for reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions.

^D  Not annualized.

^E  Annualized.

^F  Portfolio turnover rate is for the period from February 28, 2017 through October 31, 2017 and is not annualized.

See accompanying notes

56

American Beacon Funds^SM

Federal Tax Information

October 31, 2018 (Unaudited)

Certain tax information regarding the Funds are required to be provided to shareholders based upon the Fund’s income and distributions for the taxable year ended October 31, 2018. The information and distributions reported herein may differ from information and distributions taxable to the shareholders for the calendar year ended December 31, 2018.

The Fund designated the following items with regard to distributions paid during the fiscal year ended October 31, 2018. 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.

Corporate Dividends-Received Deduction:

Small Cap Value 50.02 % 

Qualified Dividend Income:

Small Cap Value 53.34 % 

Long-Term Capital Gain Distributions:

Small Cap Value $ 490,971,577

Short-Term Capital Gain Distributions:

Small Cap Value $ 104,377,716

Shareholders will receive notification in January 2019 of the applicable tax information necessary to prepare their 2018 income tax returns.

57

Disclosure Regarding Approval of the Management and Investment Advisory Agreements (Unaudited)

Renewal and Approval of Management Agreement and Investment Advisory Agreements

At in-person meetings held on May 18, 2018 and June 5-6, 2018 (collectively, the “Meetings”), the Board of Trustees (“Board” or “Trustees”) considered and then, at its June 6, 2018 meeting, approved the renewal of:

(1) the Management Agreement between American Beacon Advisors, Inc. (“Manager”) and the American Beacon Funds (“Trust”), on behalf of the American Beacon Small Cap Value Fund (“Fund”); and

(2) the Investment Advisory Agreements among the Manager, the Trust, on behalf of the Fund, and each of Barrow, Hanley, Mewhinney & Strauss, LLC (“Barrow”), Brandywine Global Investment Management, LLC (“Brandywine”), Foundry Partners, LLC (“Foundry”), Hillcrest Asset Management LLC (“Hillcrest”), Hotchkis and Wiley Capital Management, LLC (“Hotchkis”), and BNY Mellon Asset Management North America Corp. (“BNY Mellon”) (each, a “subadvisor” and collectively, the “subadvisors”).

The Management Agreement and the Investment Advisory Agreements are collectively referred to herein as the “Agreements.” In preparation for its consideration of the renewal of the Agreements, the Board undertook steps to gather and consider information furnished by, or derived from, the Manager, the subadvisors, Broadridge, Inc. (“Broadridge”) and Morningstar, Inc. (“Morningstar”). The Board, with the assistance of independent legal counsel, requested and received certain relevant information from the Manager and the subadvisors.

In advance of the Meetings, the Board’s Investment Committee and/or the Manager coordinated the production of information from Broadridge regarding the performance, fees and expenses of the Fund as well as information from the Manager and the subadvisors. At the Meetings, the Board considered the information provided. Further, the Board took into consideration information furnished to the Board throughout the year at regular meetings of the Board and its committees, as well as information specifically prepared in connection with the renewal process.

In connection with the Board’s consideration of the Agreements, the Trustees received and evaluated such information as they deemed necessary. The information requested on behalf of the Board included, among other information, the following materials. References herein to the “firm” refer to the Manager and/or the subadvisors.

• comparisons of the performance of an appropriate share class of the Fund to comparable investment companies and appropriate benchmark indices, including peer group averages and performance analyses from Broadridge, and to the performance of any similar accounts or a composite of similar accounts, as applicable, managed by the firm;

• comparisons of the Fund’s management and subadvisory fee rates and expense ratio with the management fee rates paid by comparable mutual funds and their expense ratios, including peer group averages and fee and expense analyses from Broadridge, and the advisory fee rates charged to other clients for which similar services are provided by a firm;

• the Manager’s profitability with respect to the services that it provided to the Fund;

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

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

• information regarding administrative, accounting-related, cash management and securities lending services that the Manager provides to the Fund and the fees that the Manager receives for such services; and

58

Disclosure Regarding Approval of the Management and Investment Advisory Agreements (Unaudited)

• information regarding a firm’s financial condition, the personnel of the Manager who are assigned primary responsibility for managing the Fund, staffing levels, portfolio managers’ compensation, insurance coverage, material pending litigation, code of ethics, compliance matters, actual or potential conflicts of interest that the firm experiences, or anticipates that it will experience, in providing services to the Fund, and the Manager’s disaster recovery plans.

The Board noted that the Manager provides management and administrative services to the Fund pursuant to the Management Agreement. The Board considered that many mutual funds have separate contracts governing each type of service and observed that, with respect to such mutual funds, the actual management fee rates provided by Broadridge for peer group funds reflect the combined advisory and administrative expenses, reduced by any fee waivers and/or reimbursements.

A firm may not have been able to, or opted not to, provide information in response to certain information requests, in which case the Board conducted its evaluation of the firm based on information that was provided. In such cases, the Board determined that the omission of any such information was not material to its considerations. The class of shares used for comparative performance purposes was the share class with the lowest expenses available for purchase by the general public, which was the Institutional Class. The Board also considered that the use of Institutional Class performance generally facilitates a meaningful comparison for expense and performance purposes.

Provided below is an overview of certain factors the Board considered in connection with its renewal and approval of the 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 investment advisory contracts, such as the Agreements. The memorandum explained the regulatory requirements surrounding the Trustees’ process for evaluating investment advisors and the terms of investment advisory contracts. Based on its evaluation, the Board unanimously concluded that the terms of each Agreement were reasonable and fair and that the renewal and approval of each Agreement was in the best interests of the Fund and its shareholders.

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

In determining whether to renew the Agreements, the Trustees considered the best interests of the Fund. While the Management Agreement and the Investment Advisory Agreements for the Fund were considered at the Meetings, the Board considered the 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 the Fund; (3) the costs incurred by the Manager in rendering services to the Fund and its resulting profits or losses; (4) comparisons of services and fee rates with contracts entered into by the Manager or the subadvisors or their affiliates with other clients (such as pension funds and other institutional clients); (5) the extent to which economies of scale, if any, have been taken into account in setting each fee rate schedule; (6) whether fee rate levels reflect economies of scale, if any, for the benefit of Fund investors; and (7) any other benefits derived or anticipated to be derived by the Manager or the subadvisors from their relationships with the Fund.

Nature, Extent and Quality of Services. With respect to the renewal of the Management Agreement, the Board considered, among other factors: the Fund’s long-term performance; the length of service of key investment personnel at the Manager; the cost structure of the Fund; the Manager’s culture of compliance and support that reduce risks to the Fund; the Manager’s quality of services; the Manager’s active role in monitoring and, as appropriate, recommending additional or replacement subadvisors; and the Manager’s efforts to retain key employees and maintain staffing levels.

59

Disclosure Regarding Approval of the Management and Investment Advisory Agreements (Unaudited)

With respect to the renewal of the Investment Advisory Agreements, the Board considered the level of staffing and the size of the subadvisors. The Board also considered the adequacy of the resources committed to the Fund by the subadvisors, and whether those resources were commensurate with the needs of the Fund and are sufficient to sustain appropriate levels of performance and compliance needs. In this regard, the Board considered the financial stability of the subadvisors. The Board also considered the subadvisors’ representations regarding their compliance program 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 the subadvisors were appropriate for the Fund.

Investment Performance. The Board evaluated the comparative information provided by Broadridge and the Manager regarding the performance of the Fund relative to its Broadridge performance universe, Morningstar Category, and benchmark indices, as well as the Fund’s Morningstar rating. The Board considered the information provided by Broadridge regarding Broadridge’s independent methodology for selecting the Fund’s Broadridge performance universe. The Board also considered that the performance universes selected by Broadridge may not provide appropriate comparisons for the Fund. In addition, the Board considered the performance reports and discussions with management at Board and Committee meetings throughout the year. The Board also evaluated the comparative information provided by each subadvisor regarding the performance of its portion of the Fund relative to the performance of similar accounts or a composite of similar accounts managed by the subadvisor and the Fund’s benchmark index. In addition, the Board considered the Manager’s recommendation to continue to retain each subadvisor. A discussion regarding the Board’s considerations with respect to the Fund’s performance appears below under “Additional Considerations and Conclusions with Respect to the Fund.”

Costs of the Services Provided to the Fund and the Profits Realized by the Manager from its Relationship with the Fund. In analyzing the cost of services and profitability of the Manager, the Board considered the revenues earned and the expenses incurred by the Manager, before and after the payment of distribution-related expenses by the Manager. The profits or losses were noted at both an aggregate level for all funds within the group of mutual funds sponsored by the Manager (the “Fund Complex”) and at an individual Fund level, with the Manager earning a profit before and after the payment of distribution-related expenses by the Manager. The Board also considered comparative information provided by the Manager regarding the Manager’s overall profitability with respect to the Fund Complex relative to the overall profitability of other firms in the mutual fund industry, as disclosed in publicly available sources. 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 Fund, the Manager represented that, among other matters, the difference is attributable to the fact that the Manager does not perform administrative services for non-investment company clients and reflects the greater level of responsibility and regulatory requirements associated with managing the Fund.

The Board further considered that, with respect to the Fund, the applicable Management Agreement provides for the Manager to receive a management fee comprised of an annualized fee that is retained by the Manager. In addition, the Board considered that the Manager receives fees for overseeing the securities lending program on behalf of the Fund. The Board also noted that certain share classes of the Fund maintain higher expense ratios in order to compensate third-party financial intermediaries.

In analyzing the fee rates charged by each subadvisor in connection with its investment advisory services to the Fund, the Board considered representations made by Barrow, Brandywine, Foundry, Hillcrest and Hotchkis that the Fund’s subadvisory fee rate schedule for each such firm is favorable compared to other comparable client accounts of that firm, and representations made by BNY Mellon that, for fee comparison purposes, it does not manage any comparable client accounts, and therefore could not provide fee schedules for comparable investment accounts managed by BNY Mellon. The Board did not request profitability data from the subadvisors because the Board did not view this data 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. In addition, the Board noted that the subadvisors may not account for their profits on an account-by-account basis and that different firms likely employ different methodologies in connection with these calculations.

60

Disclosure Regarding Approval of the Management and Investment Advisory Agreements (Unaudited)

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 the Fund’s fee rates is set forth below under “Additional Considerations and Conclusions with Respect to the 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 Fund grows and whether fee rate levels reflect these economies of scale for the benefit of Fund shareholders. In this regard, the Board considered that, with respect to each subadvisor, the Manager has negotiated breakpoints in the subadvisory fee rate for the Fund.

In addition, the Board noted the Manager’s representation that the Management Agreement contains fee schedule breakpoints at higher asset levels with respect to the Fund. Based on the foregoing information, the Board concluded that the Manager and subadvisor fee rate schedules for the Fund provide for a reasonable sharing of benefits from any economies of scale with the Fund.

Benefits Derived from the Relationship with the Fund. 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 Fund, 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. In addition, the Board noted that Barrow, Brandywine, Foundry Hotchkis and BNY Mellon benefit from soft dollar arrangements for proprietary and/or third-party research. 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 Fund appear to be fair and reasonable.

Additional Considerations and Conclusions with Respect to the Fund

The performance comparisons below were made in comparison to the Fund’s Broadridge performance universe and Morningstar Category. With respect to the Broadridge performance universe, the 1^st Quintile represents the top twenty percent of the universe based on performance and the 5^th Quintile representing the bottom twenty percent of the universe based on performance. References below to the Fund’s Broadridge performance universe are to the universe of mutual funds with a comparable investment classification/objective included in the analysis provided by Broadridge.

In reviewing the performance, the Trustees viewed longer-term performance over a full market cycle as the most important consideration, because relative performance over shorter periods may be significantly impacted by market or economic events and not necessarily reflective of manager skill.

The expense comparisons below were made in comparison to the Fund’s Broadridge expense universe and Broadridge expense group, with the 1^st Quintile representing the top twenty percent of the universe or group based on lowest total expense and the 5^th Quintile representing the bottom twenty percent of the universe or group based on highest total expense. References below to the Fund’s expense group and expense universe are to the respective group or universe of comparable mutual funds included in the analysis by Broadridge. A Broadridge expense group consists of the Fund and a representative sample of funds with similar operating structures and asset sizes, as selected by Broadridge. A Broadridge expense universe includes all funds in the investment classification/objective with a similar operating structure as the share class of the Fund included in the Broadridge comparative information and provides a broader view of expenses across the Fund’s investment classification/objective. The Trustees also considered the Fund’s Morningstar fee level category. In reviewing expenses, the Trustees considered the positive impact of fee waivers where applicable and the Manager’s agreement to continue the fee waivers. In addition, information regarding the subadvisors’ use of soft dollars was requested from the Manager and was considered by the Trustees.

61

Disclosure Regarding Approval of the Management and Investment Advisory Agreements (Unaudited)

In considering the renewal of the Management Agreement for the Fund, the Trustees considered the following additional factors:

Broadridge Total Expense Analysis Excluding 12b-1 Fees and Morningstar Fee Level Ranking

Compared to Broadridge Expense Group	2nd Quintile
Compared to Broadridge Expense Universe	1st Quintile
Morningstar Fee Level Ranking – Institutional Class	Low Expense Ratio

Broadridge and Morningstar Performance Analysis (five-year period ended December 31, 2017)

Compared to Broadridge Performance Universe	2nd Quintile
Compared to Morningstar Category	2nd Quintile

In considering the renewal of the Investment Advisory Agreements with Barrow, Brandywine, Foundry, Hillcrest, Hotchkis and BNY Mellon, the Trustees considered that the diversification of investment strategies facilitated by the Fund’s multi-manager structure permits the Fund to mitigate the risks associated with a single subadvisor. The Trustees also considered the following additional factors:

Subadvisor Performance (compared to Broadridge Performance Universe for period indicated ended December 31, 2017)

Barrow (Fundamental Strategy)	5 Years	1	st Quintile
Barrow (Diversified Strategy)*	3 Years	3	rd Quintile
Brandywine	5 Years	1	st Quintile
Foundry	5 Years	1	st Quintile
Hillcrest*	3 Years	3	rd Quintile
Hotchkis (Fundamental Strategy)	5 Years	1	st Quintile
BNY Mellon	5 Years	2	nd Quintile
* Does not yet have a 5-year performance record.

The Trustees also considered: (1) that the three-year period was not long enough to fully evaluate the performance of the Barrow Diversified Strategy and Hillcrest and that the Manager was closely monitoring this performance; (2) information provided by each subadvisor, other than BNY Mellon, regarding fee rates charged for managing accounts in the same strategy as the subadvisor manages its allocation of the Fund; (3) BNY Mellon’s representation that it manages no other non-insurance registered investment company accounts in the same strategy as the subadvisor manages its allocation of the Fund; and (4) 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 Management and Investment Advisory Agreements are fair and reasonable; and (2) determined that the Fund and its shareholders would benefit from the Manager’s and subadvisors’ continued management of the Fund.

62

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. The address of each person listed below is 220 Las Colinas Boulevard East, Suite 1200, Irving, Texas 75039. Each Trustee oversees thirty-seven funds in the fund complex that includes the Trust, the American Beacon Select Funds, the American Beacon Institutional Funds Trust, the American Beacon Sound Point Enhanced Income Fund, and the American Beacon Apollo Total Return Fund. 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** (81)	Trustee since 1996	Partner in the law firm of Akin, Gump, Strauss, Hauer & Feld, LLP (law firm) (1960-Present); Trustee, American Beacon Mileage Funds (1996-2012); Trustee, American Beacon Select Funds (1999-Present); Trustee, American Beacon Master Trust (1996-2012); Trustee, American Beacon Institutional Funds Trust (2017-Present); Trustee, American Beacon Sound Point Enhanced Income Fund (2018-Present); Trustee, American Beacon Apollo Total Return Fund (2018-Present).
NON-INTERESTED TRUSTEES	Term
	Lifetime of Trust until removal, resignation or retirement*
Gilbert G. Alvarado (48)	Trustee since 2015	Director, Kura MD, Inc. (local telehealth organization) (2015-present); Vice President & CFO, Sierra Health Foundation (health conversion private foundation) (2006-Present); Vice President & CFO, Sierra Health Foundation: Center for Health Program Management (California public benefit corporation) (2012-Present); Director, Innovative North State (2012-2015); Director, Sacramento Regional Technology Alliance (2011-2016); Director, Women’s Empowerment (2009-2014); Director, Valley Healthcare Staffing (2017-present); Trustee, American Beacon Select Funds (2015-Present); Trustee, American Beacon Institutional Funds Trust (2017-Present); Trustee, American Beacon Sound Point Enhanced Income Fund (2018-Present); Trustee, American Beacon Apollo Total Return Fund (2018-Present).
Joseph B. Armes (56)	Trustee since 2015	Chairman & CEO, CSW Industrials f/k/a Capital Southwest Corporation (investment company) (2015-Present); Chairman of the Board of Capital Southwest Corporation, predecessor to CSW Industrials, Inc. (2014-present) (investment company); CEO, Capital Southwest Corporation (2013-2015); President & CEO, JBA Investment Partners (family investment vehicle) (2010-Present); Director and Chair of Audit Committee, RSP Permian (oil and gas producer) (2013-Present); Trustee, American Beacon Select Funds (2015-Present); Trustee, American Beacon Institutional Funds Trust (2017-Present); Trustee, American Beacon Sound Point Enhanced Income Fund (2018-Present); Trustee, American Beacon Apollo Total Return Fund (2018-Present).
Gerard J. Arpey (60)	Trustee since 2012	Director, The Home Depot, Inc. (2015-Present); Partner, Emerald Creek Group (private equity firm) (2011-Present); Director, S.C. Johnson & Son, Inc. (privately held company) (2008-present); Trustee, American Beacon Select Funds (2012-Present); Trustee, American Beacon Institutional Funds Trust (2017-Present); Trustee, American Beacon Sound Point Enhanced Income Fund (2018-Present); Trustee, American Beacon Apollo Total Return Fund (2018-Present).

63

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
NON-INTERESTED TRUSTEES (CONT.)	Term
	Lifetime of Trust until removal, resignation or retirement*
Brenda A. Cline (57)	Trustee since 2004 Vice Chair since 2018	Chief Financial Officer, Treasurer and Secretary, Kimbell Art Foundation (1993-Present); Director, Tyler Technologies, Inc. (public sector software solutions company) (2014-Present); Director, Range Resources Corporation (oil and natural gas company) (2015-Present); Trustee, Cushing Closed-End Funds (2017-Present); Trustee, American Beacon Mileage Funds (2004-2012); Trustee, American Beacon Select Funds (2004-Present); Trustee, American Beacon Master Trust (2004-2012); Trustee, American Beacon Institutional Funds Trust (2017-Present); Trustee, American Beacon Sound Point Enhanced Income Fund (2018-Present); Trustee, American Beacon Apollo Total Return Fund (2018-Present).
Eugene J. Duffy (64)	Trustee since 2008	Managing Director, Global Investment Management Distribution, Mesirow Financial (2016-Present); Managing Director, Institutional Services, Intercontinental Real Estate Corporation (2014-Present); Principal and Executive Vice President, Paradigm Asset Management (1994-2014); Director, Sunrise Bank of Atlanta (2008-2013); Trustee, American Beacon Mileage Funds (2008-2012); Trustee, American Beacon Select Funds (2008-Present); Trustee, American Beacon Master Trust (2008-2012); Trustee, American Beacon Institutional Funds Trust (2017-Present); Trustee, American Beacon Sound Point Enhanced Income Fund (2018-Present); Trustee, American Beacon Apollo Total Return Fund (2018-Present).
Claudia A. Holz*** (61)	Trustee since 2018	Partner, KPMG LLP (1990-2017); Trustee, American Beacon Select Funds (2018-Present); Trustee, American Beacon Institutional Funds Trust (2018-Present); Trustee, American Beacon Sound Point Enhanced Income Fund (2018-Present); Trustee, American Beacon Apollo Total Return Fund (2018-Present).
Douglas A. Lindgren**** (56)	Trustee since 2018	CEO North America, Carne Global Financial Services (2016-2017); Managing Director, IPS Investment Management and Global Head, Content Management, UBS Wealth Management (2010-2016); Managing Director, P&S Hedge Funds, UBS Wealth Management (2008-2010); Managing Director, Head of Alternative Investments, UBS Financial Services, Inc. (2005-2008); Trustee, American Beacon Select Funds (2018-Present); Trustee, American Beacon Institutional Funds Trust (2018-Present); Trustee, American Beacon Sound Point Enhanced Income Fund (2018-Present); Trustee, American Beacon Apollo Total Return Fund (2018-Present).
Richard A. Massman (75)	Trustee since 2004 Chairman since 2008	Consultant and General Counsel Emeritus, Hunt Consolidated, Inc. (holding company engaged in oil and gas exploration and production, refining, real estate, farming, ranching and venture capital activities) (2009-Present); Trustee, American Beacon Mileage Funds (2004-2012); Trustee, American Beacon Select Funds (2004-Present); Trustee, American Beacon Master Trust (2004-2012); Trustee, American Beacon Institutional Funds Trust (2017-Present); Trustee, American Beacon Sound Point Enhanced Income Fund (2018-Present); Trustee, American Beacon Apollo Total Return Fund (2018-Present).
Barbara J. McKenna, CFA (55)	Trustee since 2012	Managing Principal, Longfellow Investment Management Company (2005-Present); Trustee, American Beacon Select Funds (2012-Present); Trustee, American Beacon Institutional Funds Trust (2017-Present); Trustee, American Beacon Sound Point Enhanced Income Fund (2018-Present); Trustee, American Beacon Apollo Total Return Fund (2018-Present).

64

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
NON-INTERESTED TRUSTEES (CONT.)	Term
	Lifetime of Trust until removal, resignation or retirement*
R. Gerald Turner (72)	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); Trustee, American Beacon Mileage Funds (2001-2012); Trustee, American Beacon Select Funds (2001-Present); Trustee, American Beacon Master Trust (2001-2012); Trustee, American Beacon Institutional Funds Trust (2017-Present); Trustee, American Beacon Sound Point Enhanced Income Fund (2018-Present); Trustee, American Beacon Apollo Total Return Fund (2018-Present).
OFFICERS	Term
	One Year
Gene L. Needles, Jr. (63)	President since 2009	CEO and Director (2009-Present), and Chairman (2018-Present), American Beacon Advisors, Inc.; President, American Beacon Advisors (2009-2018); Chairman and CEO, Resolute Investment Managers, Inc. (2015-Present); Director, Chairman, President and CEO, Resolute Investment Distributors (2017-Present); Director, Chairman and CEO; Resolute Investment Services, Inc. (2015-Present); Director, Resolute Acquisition, Inc. (2015-Present); President (2015-2018), Director, Resolute Topco, Inc. (2015-Present), President (2015-2018), CEO (2015-Present), and Chairman (2018-Present), Resolute Investment Holdings, LLC; President, CEO and Director, Lighthouse Holdings, Inc. (2009-2015); President and CEO, Lighthouse Holdings Parent, Inc. (2009-2015); Manager, President, American Private Equity Management, LLC (2012-Present); President, American Beacon Cayman Managed Futures Strategy Fund, Ltd. (2014-Present); Director, Chairman, President and CEO, Alpha Quant Advisors, LLC (2016-Present); Director, ARK Investment Management LLC (2016-Present); Director, Shapiro Capital Management LLC (2017-Present); Director and Vice President, American Beacon Cayman Transformational Innovation Company, LTD., (2017-Present); Vice President, American Beacon Delaware Transformational Innovation Corporation (2017-Present); Executive Vice President and Chief Operating Officer, Continuous Capital, LLC (2018-Present); Member, Investment Advisory Committee, Employees Retirement System of Texas (2017-Present); Trustee, American Beacon NextShares Trust (2015-Present); President, American Beacon Select Funds (2009-Present); President, American Beacon Mileage Funds (2009-2012); President, American Beacon Master Trust (2009-2012); President, American Beacon Institutional Funds Trust (2017-Present); President, American Beacon Sound Point Enhanced Income Fund (2018-Present); President, American Beacon Apollo Total Return Fund (2018-Present).

65

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
OFFICERS (CONT.)	Term
	One Year
Rosemary K. Behan (59)	VP, Secretary and Chief Legal Officer since 2006	Vice President and Secretary, American Beacon Advisors, Inc. (2006-Present); Secretary, Resolute Investment Holdings, LLC (2015-Present); Vice President, Secretary and General Counsel, Resolute Investment Managers, Inc. (2015-Present); Secretary, Resolute Topco, Inc. (2015-Present); Secretary, Resolute Acquisition, Inc. (2015-Present); Vice President, Secretary and General Counsel, Resolute Investment Services, Inc. (2015-Present); Secretary, Lighthouse Holdings, Inc. (2008-2015); Secretary, Lighthouse Holdings Parent, Inc. (2008-2015); Secretary, American Private Equity Management, LLC (2008-Present); Secretary, American Beacon Cayman Managed Futures Strategy Fund, Ltd. (2014-Present); Secretary, Alpha Quant Advisors, LLC (2016-Present); Secretary, American Beacon Cayman Transformational Innovation Company, Ltd. (2017-Present); Secretary, American Beacon Delaware Transformational Innovation Corporation (2017-Present); Secretary, Resolute Investment Distributors, Inc. (2017-Present); Vice President and Secretary, Continuous Capital, LLC (2018-Present); Chief Legal Officer, Vice President and Secretary, American Beacon Select Funds (2006-Present); Chief Legal Officer, Vice President and Secretary, American Beacon Mileage Funds (2006-2012); Chief Legal Officer, Vice President and Secretary, American Beacon Master Trust (2006-2012); Chief Legal Officer, Vice President and Secretary, American Beacon Institutional Funds Trust (2017-Present); Vice Chief Legal Officer, Vice President and Secretary, American Beacon Sound Point Enhanced Income Fund (2018-Present); Chief Legal Officer, Vice President and Secretary American Beacon Apollo Total Return Fund (2018-Present).
Brian E. Brett (58)	VP since 2004	Senior Vice President, Head of Distribution (2012-Present) and Vice President, Director of Sales (2004-2012), American Beacon Advisors, Inc.; Senior Vice President, Resolute Investment Distributors, Inc. (2017-Present) and Vice President (2017-2018); Vice President, American Beacon Select Funds (2004-Present); Vice President, American Beacon Mileage Funds (2004-2012); Vice President, American Beacon Master Trust (2004-2012); Vice President, American Beacon Institutional Funds Trust (2017-Present); Vice President American Beacon Sound Point Enhanced Income Fund (2018-Present); Vice President American Beacon Apollo Total Return Fund (2018-Present).
Paul B. Cavazos (49)	VP since 2016	Chief Investment Officer and Senior Vice President, American Beacon Advisors, Inc. (2016-Present); Chief Investment Officer, DTE Energy (2007-2016); Vice President, American Private Equity Management, L.L.C. (2017-Present) Vice President, American Beacon Select Funds (2016-Present); Vice President, American Beacon Institutional Funds Trust (2017-Present); Vice President American Beacon Sound Point Enhanced Income Fund (2018-Present); Vice President American Beacon Apollo Total Return Fund (2018-Present).
Erica Duncan (48)	VP Since 2011	Vice President, American Beacon Advisors, Inc. (2011-Present); Vice President, Resolute Investment Managers (2015-Present); Vice President, Resolute Investment Services, Inc. (2015-Present) Vice President, American Beacon Select Funds (2011-Present); Vice President, American Beacon Mileage Funds (2011-2012); Vice President, American Beacon Master Trust (2011-2012); Vice President, American Beacon Institutional Funds Trust (2017-Present); Vice President American Beacon Sound Point Enhanced Income Fund (2018-Present); Vice President American Beacon Apollo Total Return Fund (2018-Present).

66

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
OFFICERS (CONT.)	Term
	One Year
Melinda G. Heika (57)	Treasurer since 2010	Treasurer, American Beacon Advisors, Inc. (2010-Present) and Chief Financial Officer (2010-Present); Treasurer and Chief Financial Officer, Resolute Investment Managers, Inc. (2015-Present); Treasurer, Resolute Acquisition, Inc. (2015-Present); Treasurer, Resolute Topco, Inc. (2015-Present); Treasurer, Resolute Investment Holdings, LLC. (2015-Present); Treasurer and Chief Financial Officer, Resolute Investment Services, Inc. (2015-Present); Treasurer, Lighthouse Holdings, Inc. (2010-2015); Treasurer, Lighthouse Holdings Parent Inc., (2010-2015); Treasurer, American Private Equity Management, LLC (2012-Present); Director and Treasurer, American Beacon Cayman Managed Futures Strategy Fund, Ltd. (2014-Present); Treasurer and Chief Financial Officer, Alpha Quant Advisors, LLC (2016-Present); Treasurer, American Beacon Cayman Transformational Innovation, Ltd. (2017-Present); Treasurer, American Beacon Delaware Transformational Innovation Corporation (2017-Present); Treasurer, Resolute Investment Distributors, Inc. (2017-2017); Treasurer and Chief Financial Officer, Continuous Capital, LLC (2018-Present); Treasurer, American Beacon Select Funds (2010-Present); Treasurer, American Beacon Mileage Funds (2010-2012); Treasurer, American Beacon Master Trust (2010-2012); Treasurer, American Beacon Institutional Funds Trust (2017-Present); Treasurer, American Beacon Sound Point Enhanced Income Fund (2018-Present); Treasurer, American Beacon Apollo Total Return Fund (2018-Present).
Terri L. McKinney (54)	VP since 2010	Vice President (2009-Present) and Managing Director (2003-2009), American Beacon Advisors, Inc.; Vice President, Resolute Investment Managers, Inc. (2017-Present); Vice President, Resolute Investment Services, Inc (2015-Present); Vice President, Alpha Quant Advisors, LLC (2016-Present); Vice President, Continuous Capital, LLC (2018-Present); Vice President, American Beacon Select Funds (2010-Present); Vice President, American Beacon Mileage Funds (2010-2012); Vice President, American Beacon Master Trust (2010-2012); Vice President, American Beacon Institutional Funds Trust (2017-Present); Vice President, American Beacon Sound Point Enhanced Income Fund (2018-Present); Vice President, American Beacon Apollo Total Return Fund (2018-Present).

67

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
OFFICERS (CONT.)	Term
	One Year
Jeffrey K. Ringdahl (43)	VP since 2010	Chief Operating Officer (2010-Present), Vice President (2010-2013), Senior Vice President (2013-Present), Director (2015-Present), and President (2018-Present), American Beacon Advisors, Inc.; Senior Vice President (2018-Present), Vice President (2012-2018) and Manager (2015-2018), American Private Equity Management, LLC; Senior Vice President, Lighthouse Holdings, Inc. (2013-2015); Senior Vice President, Lighthouse Holdings Parent, Inc. (2013-2015); Director and Vice President, American Beacon Cayman Managed Futures Strategy Fund, Ltd. (2014-Present); Trustee, American Beacon NextShares Trust (2015-Present); Director (2015-Present), Senior Vice Present (2015-2018), and President (2018-Present), Resolute Investment Holdings, LLC; Director (2015-Present), Senior Vice President (2015-2018) and President (2018-Present), Resolute Topco, Inc.; Director (2015-Present), Senior Vice President (2015-2018), and President (2018-Present), Resolute Acquisition, Inc.; Director (2015-Present), Senior Vice President (2015-2018), and President (2018-Present), Resolute Investment Managers, Inc.; Director, Executive Vice President and Chief Operating Officer, Alpha Quant Advisors, LLC (2016-Present); Director (2017-Present), Executive Vice President (2017-2018), and President and Chief Operating Officer (2018-Present), Resolute Investment Services, Inc.; Director and Executive Vice President, Resolute Investment Distributors, Inc. (2017-Present); Director, Shapiro Capital Management, LLC (2017-Present); Director and Vice President, American Beacon Cayman Transformational Innovation Company, LTD., (2017-Present); Vice President, American Beacon Delaware Transformational Innovation Corporation (2017-Present); Director, Executive Vice President and Chief Operating Officer, Continuous Capital, LLC (2018-Present); Vice President, American Beacon Select Funds (2010-Present); Vice President, American Beacon Institutional Funds Trust (2017-Present); Vice President, American Beacon Sound Point Enhanced Income Fund (2018-Present); Vice President, American Beacon Apollo Total Return Fund (2018-Present)
Samuel J. Silver (55)	VP Since 2011	Vice President, American Beacon Advisors, Inc. (2011-Present); Vice President, American Beacon Select Funds (2011-Present); Vice President, American Beacon Mileage Funds (2011-2012); Vice President, American Beacon Master Trust (2011-2012); American Beacon Institutional Funds Trust (2011-Present); Vice President, American Beacon Sound Point Enhanced Income Fund (2018-Present); Vice President, American Beacon Apollo Total Return Fund (2018-Present).
Christina E. Sears (47)	Chief Compliance Officer since 2004 and Asst. Secretary since 1999	Chief Compliance Officer, American Beacon Advisors, Inc. (2004-Present); Chief Compliance Officer, American Private Equity Management, LLC (2012-Present); Chief Compliance Officer and Vice President, Alpha Quant Advisors, LLC (2016-Present); Vice President, Resolute Investment Managers, Inc. (2017-Present); Vice President, Resolute Investment Distributors (2017-Present); Vice President, Continuous Capital, LLC (2018-Present); Chief Compliance Officer (2004-Present) and Assistant Secretary (1999-Present), American Beacon Select Funds; Chief Compliance Officer (2004-2012) and Assistant Secretary (1999-2012), American Beacon Mileage Funds; Chief Compliance Officer (2004-2012) and Assistant Secretary (1999-2012), American Beacon Master Trust; Chief Compliance Officer and Assistant Secretary, American Beacon Institutional Funds Trust (2017-Present); Chief Compliance Officer and Assistant Secretary, American Beacon Sound Point Enhanced Income Fund (2018-Present); Chief Compliance Officer and Assistant Secretary, American Beacon Apollo Total Return Fund (2018-Present).

68

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
OFFICERS (CONT.)	Term
	One Year
Sonia L. Bates (61)	Asst. Treasurer since 2011	Assistant Treasurer, American Beacon Advisors, Inc. (2011-2018); Assistant Treasurer, Resolute Acquisition, Inc. (2015-2018); Assistant. Treasurer, Resolute Topco, Inc. (2015-2018); Assistant Treasurer, Resolute Investment Holdings, LLC. (2015-2018); Assistant Treasurer, Lighthouse Holdings, Inc. (2011-2015); Assistant Treasurer, Lighthouse Holdings Parent Inc. (2011-2015); Assistant Treasurer, American Private Equity Management, LLC (2012-Present); Assistant Treasurer, American Beacon Cayman Transformational Innovation Company, Ltd. (2017-Present); Assistant Treasurer, American Beacon Select Funds (2011-Present); Assistant Treasurer American Beacon Mileage Funds (2011-2012); Assistant Treasurer, American Beacon Master Trust (2011-2012); Assistant Treasurer, American Beacon Institutional Funds Trust (2017-Present); Assistant Treasurer, American Beacon Sound Point Enhanced Income Fund (2018-Present); Assistant Treasurer, American Beacon Apollo Total Return Fund (2018-Present).
Shelley D. Abrahams (43)	Assistant Secretary since 2008	Assistant Secretary, American Beacon Select Funds (2008-Present); Assistant Secretary, American Beacon Mileage Funds (2008-2012); Assistant Secretary, American Beacon Master Trust (2008-2012); Assistant Secretary, American Beacon Institutional Funds Trust (2017-Present); Assistant Secretary, American Beacon Sound Point Enhanced Income Fund (2018-Present); Assistant Secretary, American Beacon Apollo Total Return Fund (2018-Present).
Rebecca L. Harris (51)	Assistant Secretary since 2010	Vice President, American Beacon Advisors, Inc. (2016-Present); Vice President, Resolute Investment Managers, Inc. (2017-Present); Vice President, Resolute Investment Services (2015-Present); Vice President, Alpha Quant Advisors, LLC (2016-Present); Vice President, Continuous Capital, LLC (2018-Present); Assistant Secretary, American Beacon Select Funds (2010-Present); Assistant Secretary, American Beacon Mileage Funds (2010-2012); Assistant Secretary, American Beacon Master Trust (2010-2012); Assistant Secretary, American Beacon Institutional Funds Trust (2017-Present); Assistant Secretary, American Beacon Sound Point Enhanced Income Fund (2018-Present); Assistant Secretary, American Beacon Apollo Total Return Fund (2018-Present).
Diana N. Lai (42)	Assistant Secretary since 2012	Assistant Secretary, American Beacon Cayman Transformational Innovation Company, Ltd. (2017-Present); Assistant Secretary, American Beacon Select Funds (2012-Present); Assistant Secretary, American Beacon Institutional Funds Trust (2017-Present); Assistant Secretary, American Beacon Sound Point Enhanced Income Fund (2018-Present); Assistant Secretary, American Beacon Apollo Total Return Fund (2018-Present).
Teresa A. Oxford (60)	Assistant Secretary since 2015	Assistant Secretary, American Beacon Advisors, Inc. (2015-Present); Assistant Secretary, Resolute Investment Distributors (2018-Present); Assistant Secretary, Resolute Investment Services (2015-Present); Assistant Secretary, Alpha Quant Advisors, LLC (2016-Present); Assistant Secretary, American Beacon Select Funds (2015-Present); Assistant Secretary, American Beacon Institutional Funds Trust (2017-Present); Assistant Secretary, American Beacon Sound Point Enhanced Income Fund (2018-Present); Assistant Secretary, American Beacon Apollo Total Return Fund (2018-Present).

* As of 11/12/2014, the Board adopted a retirement plan that requires Trustees, other than Messrs. Feld and Massman to retire no later than the last day of the calendar year in which they reach the age of 75.

** 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 one or more of the Trust’s sub-advisors.

*** Claudia A. Holz became a new Trustee to each of the Trusts on 4/1/2018.

**** Douglas A. Lindren became a new Trustee to each of the Trusts on 1/1/2018.

69

American Beacon Funds^SM

Privacy Policy

October 31, 2018 (Unaudited)

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.

70

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71

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72

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: Call (800) 658-5811	By Mail: American Beacon Funds P.O. Box 219643 Kansas City, MO 64121-9643
Availability of Quarterly Portfolio Schedules	Availability of Proxy Voting Policy and Records
In addition to the Schedule of Investments provided in each semi-annual and annual report, the Fund files a complete schedule of its portfolio holdings with the Securities and Exchange Commission (“SEC”) on Form N-Q as of the first and third fiscal quarters. The Fund’s Forms N-Q are available on the SEC’s website 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 (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 DST Asset Manager Solutions, Inc. Quincy, Massachusetts INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM Ernst & Young LLP Dallas, Texas DISTRIBUTOR Resolute Investment Distributors, Inc. Irving, Texas

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

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

AR 10/18

About American Beacon Advisors

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

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

BALANCED FUND RISKS

The use of fixed-income securities entails interest rate and credit risks. Investing in foreign securities may involve heightened risk due to currency fluctuations and economic and political risks. Investing in value stocks may limit downside risk over time; however, the Fund may produce more modest gains than riskier stock funds as a trade-off for this potentially lower risk. The use of futures contracts for cash management may subject the Fund to losing more money than invested. The Fund participates in a securities lending program. Please see the prospectus for a complete discussion of the Fund’s risks. There can be no assurances that the investment objectives of this Fund will be met.

MID-CAP VALUE FUND RISKS

Investing in medium-capitalization stocks may involve greater volatility and lower liquidity than larger company stocks. Investing in value stocks may limit downside risk over time; however, the Fund may produce more modest gains than riskier stock funds as a trade-off for this potentially lower risk. Investing in foreign securities may involve heightened risk due to currency fluctuations and economic and political risks. The use of futures contracts for cash management may subject the Fund to losing more money than invested. The Fund participates in a securities lending program. Please see the prospectus for a complete discussion of the Fund’s risks. There can be no assurances that the investment objectives of this Fund will be met.

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

American Beacon Funds October 31, 2018

Contents

President’s Message	1
Market and Performance Overviews	2
Expense Examples	10
Report of Independent Registered Public Accounting Firm	12
Schedules of Investments:
American Beacon Balanced Fund	13
American Beacon Mid-Cap Value Fund	28
Financial Statements	34
Notes to Financial Statements	38
Financial Highlights:
American Beacon Balanced Fund	66
American Beacon Mid-Cap Value Fund	72
Federal Tax Information	79
Disclosure Regarding Approvals of the Management and Investment Advisory Agreements	80
Trustees and Officers of the American Beacon Funds	86
Privacy Policy	93

  Additional Fund Information Back Cover

President’s Message

Dear Shareholders,   Long-term investing isn’t about identifying and anticipating the next big market move. It’s about identifying the right investment products for riding out those moves. As a long-term investor, you should strive to accomplish the three Ds: direction, discipline and diversification.   u   Direction: Achieving your long-term financial goals requires an individualized plan of action. You may want your plan to provide some measure of protection against periods of geopolitical turmoil, economic uncertainty, market volatility and job insecurity. Your plan should be reviewed annually and be adjusted in the event your long-range needs change.

u Discipline: Long-term, systematic participation in an investment portfolio requires your resolution to stay the course. Spending time in the market – rather than trying to time the market – may place you in a better position to reach your long-term financial goals.

u Diversification: By investing in different types of investment categories and asset classes, you may be able to help mitigate financial risks across your investment portfolio. By allocating your investment portfolio according to your risk-tolerance level, you may be better positioned to weather storms and achieve your long-term financial goals.

Since 1986, American Beacon has endeavored to provide investors with a disciplined approach to realizing long-term financial goals. As a manager of managers, we strive to provide investment products that may enable investors to participate during market upswings while potentially insulating against market downswings. Our approach is more than a concept. It’s the cornerstone of our culture. And we strive to apply it at every turn as we seek to provide a well-diversified line of investment products for your investment portfolio.

Many of the sub-advisors to our mutual funds pursue upside capture and/or downside protection using proprietary strategies. The investment teams behind our mutual funds seek to produce consistent, long-term results rather than focus only on short-term movements in the markets. In managing our investment products, we emphasize identifying opportunities that offer the potential for long-term rewards.

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

Best Regards,

Gene L. Needles, Jr.

President

American Beacon Funds

1

Domestic Bond and Domestic Equity Market Overviews

October 31, 2018 (Unaudited)

Domestic Bond Market Overview

Over the past 12 months, the Federal Reserve (the “Fed”) continued on the path of removing monetary stimulus from the economic system by raising the target federal funds rate four times, a quarter percentage point each, taking the rate from a range of 1.00% to 1.25% to a range of 2.00% to 2.25%. The Fed also increased its balance-sheet reduction program as planned. Given these moves, monetary policy was no longer characterized as “accommodative” by the Federal Open Market Committee in its official September release. However, during the press conference, Chairman Jerome H. Powell stated the change in language did not indicate “any change in the likely path of policy.” In the U.S. economy, despite the ongoing trade war with China, consumer confidence surged to its highest level since the year 2000, and small-business optimism reached an all-time high. Additionally, the third-quarter gross domestic product was 3.50%, and inflation remained around the Fed’s target of 2.00%.

Given the reduction in monetary stimulus and strong economic data, interest rates rose, and the yield curve flattened during the past 12 months. The 10-year Treasury yield rose 77 basis points (+0.77%) to 3.15% at period end. The two-year Treasury yield increased 127 basis points (+1.27%) to 2.87%, and the 30-year Treasury yield increased 51 basis points (+0.51%) to 3.39%. These moves caused the two- to 30-year Treasury yield spread to flatten by 76 basis points (-0.76%) to 0.52%.

As interest rates rose, bond prices declined, leading to a total return of -2.05% for the Bloomberg Barclays U.S. Aggregate Bond Index (the “Index”) over the past 12 months. Credit risk was generally out of favor over the period as three of the four credit sectors posted a negative excess return. The Corporate sector was the worst performer with -47 basis points (-0.47%) of excess return relative to similar-duration Treasury securities. The Mortgage-Backed Securities and Agency sectors followed with -23 basis points (-0.23%) and -9 basis points (-0.09%), respectively. The lone bright spot was the Asset-Backed Securities sector with 34 basis points (0.34%) of excess return relative to similar-duration Treasuries. Thus, the Index had a negative return of -17 basis points (-0.17%) for the period.

Domestic Equity Market Overview

For the year ended October 31, 2018, the broad market S&P 500^® Index (the “Index”) and the Dow Jones Industrial Average gained 7.35% and 9.87%, respectively. From a style perspective, Growth significantly outperformed Value across all market caps, according to the Russell^® Indexes. In terms of size, it went from largest to smallest with large caps as the best performers, followed by mid-caps and small caps.

The following table illustrates various Russell Index returns according to size and style.

12-Month Period Ended October 31, 2018

Large Caps	1 Year
Russell 1000 Index	6.98	%
Russell 1000 Growth Index	10.71	%
Russell 1000 Value Index	3.04	%
Mid-Caps	1 Year
Russell Midcap Index	2.80	%
Russell Midcap Growth Index	6.14	%
Russell Midcap Value Index	0.16	%
Small Caps	1 Year
Russell 2000 Index	1.85	%
Russell 2000 Growth Index	4.13	%
Russell 2000 Value Index	(0.59	)%

2

Domestic Bond and Domestic Equity Market Overviews

October 31, 2018 (Unaudited)

Although these returns may appear to be run of the mill, they are not. The 2017 calendar year ended on a strong note, riding on the wave of the Trump administration’s pro-growth policies and the Fed’s cautious navigation of the path to normalized interest rates. Short-volatility traders and cryptocurrencies were still all the rage. Unfortunately, 2018 came with a vengeance. By March of 2018, the short-volatility trade was literally wiped out and many cryptocurrencies lost value from previous-year highs. As market participants wondered how bad things would get, a shot of strong gross domestic product (“GDP”) growth in the second quarter of 2018 pushed markets higher through August. The last few months of the period under review witnessed the return of volatility as the rhetoric of a trade war heightened, economic growth forecasts declined, Capitol Hill gridlock following the mid-term elections dampened the potential for pro-growth policy, and the likelihood of continued rate hikes made investors nervous.

Looking more closely at the markets’ returns, a small subset of sectors accounted for most of the gains. For example, the Index derived more than 80% of its return from the Technology sector (315 basis points, or 3.15%), the Consumer Discretionary sector (146 basis points, or 1.46%) and the Health Care sector (144 basis points, or 1.44%), which comprise about 44% of the Index. The remaining eight sectors underperformed the Index. Similar trends also occurred in mid-caps and small caps; however, not to this degree. A narrow market is not uncommon as bull markets move into their later stages. For example, on August 22, 2018, the current bull market became the longest one in history, eclipsing the bull run in the 1990s.

The present bull market has been powered by slow and steady growth. In the last 12 months, the economy continued to be a bright spot. Third-quarter real GDP was up 3.5% (seasonally adjusted annual rate) on top of the strong 4.2% gain in the second quarter. In addition, the unemployment rate is near 50-year lows. Inflation, while rising, is still in an acceptable range, and the U.S. dollar is strong. All these factors contributed to the strong market returns and allowed the Fed to implement three rate hikes in 2018, with another expected in December.

Despite the favorable factors, the U.S. equity markets ended the 12-month period in a slump. Fear overwhelmed investors as the markets corrected. The markets sit at the crossroads of correction and a bear market – with risks of trade wars, slower growth and interest-rate hikes balanced by low unemployment, subdued inflation, and equity valuations near long-term averages.

3

American Beacon Balanced Fund^SM

Performance Overview

October 31, 2018 (Unaudited)

The Investor Class of the American Beacon Balanced Fund (the “Fund”) returned 0.62% for the twelve months ended October 31, 2018, underperforming the 60% Russell 1000^® Value Index/40% Bloomberg Barclays U.S. Aggregate Bond Index (“Balanced Composite Index”) return of 1.08% for the same period.

Comparison of Change in Value of a $10,000 Investment for the period from 10/31/2008 through 10/31/2018

Total Returns for the Period ended October 31, 2018
	Ticker	1 Year			3 Years			5 Years			10 Years			Value of $10,000 10/31/2008- 10/31/2018
Institutional Class (1,7)	AADBX		0.84	%		6.46	%		6.03	%		9.53	%		$	24,849
Y Class (1,2,7)	ACBYX		0.88	%		6.46	%		6.00	%		9.47	%		$	24,705
Investor Class (1,7)	AABPX		0.62	%		6.13	%		5.70	%		9.18	%		$	24,065
Advisor Class (1,7)	ABLSX		0.49	%		5.97	%		5.52	%		9.00	%		$	23,675
A Class without sales charge (1,3,7)	ABFAX		0.73	%		6.12	%		5.65	%		9.10	%		$	23,895
A Class with sales charge (1,3,7)	ABFAX		(5.04	)%		4.05	%		4.41	%		8.46	%		$	22,531
C Class without sales charge (1,4,7)	ABCCX		0.04	%		5.34	%		4.87	%		8.43	%		$	22,462
C Class with sales charge (1,4,7)	ABCCX		(0.96	)%		5.34	%		4.87	%		8.43	%		$	22,462
Bloomberg Barclays U.S. Aggregate Bond Index (6)			(2.05	)%		1.04	%		1.83	%		3.94	%		$	14,715
Russell 1000® Value Index (6)			3.03	%		8.88	%		8.61	%		11.30	%		$	29,170
Balanced Composite Index (5)			1.08	%		5.80	%		5.99	%		8.59	%		$	22,794

1. Performance shown is historical and is not indicative of future returns. Investment returns and principal value will vary, and shares may be worth more or less at redemption than at original purchase. Performance shown is calculated based on the published end of day net asset values as of date indicated, and current performance may be lower or higher than the performance data quoted. To obtain performance as of the most recent month end, please 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. Generally accepted accounting principles require adjustments to be made to the net assets of the Fund at period end for financial reporting purposes only; and as such, the total return based on the unadjusted net asset value per share may differ from the total return reported in the financial highlights.

2. Fund performance for the ten-year period represents the total returns achieved by the Institutional Class from 10/31/08 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

4

American Beacon Balanced Fund^SM

Performance Overview

October 31, 2018 (Unaudited)

may be higher than they would have been had the Y Class been in existence since 10/31/08. A portion of the fees charged to the Y Class of the Fund was waived in 2011, partially recovered in 2013 and fully recovered in 2014. Performance prior to waiving fees was lower than the actual returns shown in 2011.

3. Fund performance for the ten-year period represents the total returns achieved by the Investor Class from 10/31/08 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 10/31/08. A portion of the fees charged to the A Class of the Fund was waived in 2011 and 2012, partially recovered in 2013 and fully recovered in 2014. Performance prior to waiving fees was lower than the actual returns shown in 2011 and 2012. A Class has a maximum sales charge of 5.75%.

4. Fund performance for the ten-year period represents the total returns achieved by the Investor Class from 10/31/08 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 10/31/08. A portion of the fees charged to the C Class of the Fund was waived from 2010 through 2012, partially recovered in 2013 and fully recovered in 2014. Performance prior to waiving fees was lower than the actual returns shown from 2010 through 2012. The maximum contingent deferred sales charge for C Class is 1% for shares redeemed within one year of the date of purchase.

5. To reflect the Fund’s allocation of its assets between investment grade fixed-income securities and equity securities, the returns of the Russell 1000 Value Index and the Bloomberg Barclays U.S. Aggregate Bond Index have been combined in a 60% / 40% proportion.

6. The Russell 1000 Value Index is an unmanaged index of those stocks in the Russell 1000 Index with lower price-to-book ratios and lower forecasted values. Russell 1000 Value Index and Russell 1000 Index are registered trademarks of Frank Russell Company. Frank Russell Company (“Russell”) is the source and owner of the trademarks, service marks and copyrights related to the Russell Indexes. Russell^® is a trademark of Frank Russell Company. Neither Russell nor its licensors accept any liability for any errors or omissions in the Russell Indexes and/or Russell ratings or underlying data, and no party may rely on any Russell Indexes and/or Russell ratings and/or underlying data contained in this communication. No further distribution of Russell Data is permitted without Russell’s express written consent. Russell does not promote, sponsor or endorse the content of this communication. The Bloomberg Barclays U.S. Aggregate Bond Index is a market value weighted index of government, corporate, mortgage-backed and asset-backed fixed-rate debt securities of all maturities. One cannot directly invest in an index.

7. The Total Annual Fund Operating Expense ratios set forth in the most recent Fund prospectus for the Institutional, Y, Investor, Advisor, A, and C Class shares were 0.60%, 0.69%, 0.90%, 1.09%, 1.00%, and 1.74%, 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 twelve-month period, the Fund’s assets on average were invested 67% in equities (including equitized cash) and 33% in fixed-income securities, ending the period with 65% in equities (including equitized cash) and 35% in fixed-income securities.

The equity portion of the Fund (excluding equitized cash) returned 2.27% for the period, underperforming the Russell 1000 Value Index (the “Index”) return of 3.03%. The Fund underperformed the Index as both sector allocation and stock selection detracted value relative to the Index.

Stock selection in the Financials and Industrials sectors contributed the majority of the underperformance during the twelve-month period. In the Financials sector, American International Group (down 34.89%) lost value, followed by Citigroup, Inc., which fell 8.42%. In the Industrials sector, the Fund’s position in Johnson Controls International (down 19.45%) and Macquarie Infrastructure Corp., (down 37.70%) were the biggest detractors. Within Energy, positions in ConocoPhillips (up 39.04%) and BP PLC, Sponsored ADR (up 12.81%) both had positive impacts on performance.

The Fund’s overweight to Consumer Discretionary (down 2.12%) and underweight to Health Care (up 13.73%) hurt performance the most through sector allocation. On the other hand, being overweight in Information Technology (up 8.13%) helped buoy the Fund’s relative underperformance.

The fixed-income portion of the Fund returned -0.74% for the twelve-month period, outperforming the Bloomberg Barclays U.S. Aggregate Bond Index (the “Barclays Index”) return of -2.05%. The Fund’s fixed-income excess performance relative to the Barclays Index was due to security selection. The Fund’s selections in U.S. Treasuries (up 0.4%) and CMO (up 0.5%) added relative value. Good selections in Manufacturing (down 0.8%) and Energy (down 2.8%), within Corporates, also benefited the Fund. From a duration perspective, the portfolio was helped by an overweight allocation and good selections in the 0 to 1 year maturity range.

The sub-advisors continue to focus on the disciplined selection of attractive securities that should allow the Fund to benefit long-term.

5

American Beacon Balanced Fund^SM

Performance Overview

October 31, 2018 (Unaudited)

Top Ten Holdings (% Net Assets)
U.S. Treasury Notes/Bonds, 2.352%, Due 4/30/2020, (3-mo. Treasury money market yield + 0.030%)		5.2
Citigroup, Inc.		2.0
General Motors Co.		1.9
BP PLC, Sponsored ADR		1.7
Bank of America Corp.		1.6
JPMorgan Chase & Co.		1.6
American International Group, Inc.		1.6
Comcast Corp., Class A		1.5
ConocoPhillips		1.4
Wells Fargo & Co.		1.4
Total Fund Holdings	502
Sector Allocation (% Equities)
Financials		24.8
Energy		17.3
Information Technology		10.6
Health Care		10.4
Consumer Discretionary		10.1
Industrials		8.4
Communication Services		8.3
Consumer Staples		5.0
Materials		3.9
Utilities		1.2
Sector Allocation (% Fixed Income)
U.S. Treasury Obligations		43.3
U.S. Agency Mortgage-Backed Obligations		15.5
Financial		13.4
Consumer, Cyclical		5.6
Communications		4.1
Consumer, Non-Cyclical		3.0
Utilities		2.8
Industrial		2.8
Asset-Backed Obligations		2.6
Technology		2.3
Commercial Mortgage-Backed Obligations		1.8
Energy		1.6
Basic Materials		0.7
Foreign Sovereign Obligations		0.5

6

American Beacon Mid-Cap Value Fund^SM

Performance Overview

October 31, 2018 (Unaudited)

The Investor Class of the American Beacon Mid-Cap Value Fund (the “Fund”) returned -7.13% for the twelve months ended October 31, 2018, underperforming the Russell Midcap^® Value Index (the “Index”) return of 0.16% for the same period.

Comparison of Change in Value of a $10,000 Investment for the period from 10/31/2008 through 10/31/2018

Total Returns for the Period ended October 31, 2018
	Ticker	1 Year			3 Years			5 Years			10 Years			Value of $10,000 10/31/2008- 10/31/2018
Institutional Class (1,3,10)	AACIX		(6.89	)%		5.94	%		6.12	%		13.80	%		$	36,428
Y Class (1,4,10)	ACMYX		(6.96	)%		5.85	%		6.07	%		13.73	%		$	36,219
Investor Class (1,2,10)	AMPAX		(7.13	)%		5.70	%		5.89	%		13.59	%		$	35,773
Advisor Class (1,5,10)	AMCSX		(7.38	)%		5.38	%		5.57	%		13.27	%		$	34,769
A Class without sales charge (1,6,10)	ABMAX		(7.32	)%		5.53	%		5.70	%		13.31	%		$	34,879
A Class with sales charge (1,6,10)	ABMAX		(12.66	)%		3.47	%		4.46	%		12.64	%		$	32,876
C Class without sales charge (1,7,10)	AMCCX		(7.85	)%		4.78	%		4.93	%		12.63	%		$	32,862
C Class with sales charge (1,7,10)	AMCCX		(8.85	)%		4.78	%		4.93	%		12.63	%		$	32,862
R6 Class (1,8,10)	AMDRX		(6.89	)%		5.94	%		6.12	%		13.80	%		$	36,428
Russell Midcap® Value Index (9)			0.16	%		8.15	%		8.11	%		13.35	%		$	35,011

1. Performance shown is historical and is not indicative of future returns. Investment returns and principal value will vary, and shares may be worth more or less at redemption than at original purchase. Performance shown is calculated based on the published end of day net asset values as of date indicated, and current performance may be lower or higher than the performance data quoted. To obtain performance as of the most recent month end, please 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. Generally accepted accounting principles require adjustments to be made to the net assets of the Fund at period end for financial reporting purposes only; and as such, the total return based on the unadjusted net asset value per share may differ from the total return reported in the financial highlights.

2. A portion of the fees charged to the Investor Class of the Fund was waived from 2008 through 2013 and fully recovered in 2014. Performance prior to waiving fees was lower than actual returns shown from 2008 through 2013.

7

American Beacon Mid-Cap Value Fund^SM

Performance Overview

October 31, 2018 (Unaudited)

3. A portion of the fees charged to the Institutional Class of the Fund was waived from 2008 through 2013 and fully recovered in 2014. Performance prior to waiving fees was lower than actual returns shown from 2008 through 2013.

4. Fund performance for the ten-year period represents the total returns achieved by the Institutional Class from 10/31/08 up to 3/1/10, the inception date of the Y Class and the returns of the Y Class since its inception. Expenses of the Institutional Class are lower than those of the Y Class. As a result, total returns shown may be higher than they would have been had the Y Class been in existence since 10/31/08. A portion of the fees charged to the Y Class of the Fund was waived from 2010 through 2013. Performance prior to waiving fees was lower than the actual returns shown from 2010 through 2013.

5. A portion of the fees charged to the Advisor Class of the Fund was waived from 2008 through 2013 and fully recovered in 2014. Performance prior to waiving fees was lower than the actual returns shown from 2008 through 2013.

6. Fund performance for the ten-year period represents the total returns achieved by the Investor Class from 10/31/08 to 5/17/10, the inception date of the A Class, and the returns of the A Class since its inception. Expenses of the Investor Class are lower than those of the A Class. As a result, total returns shown may be higher than they would have been had the A Class been in existence since 10/31/08. A portion of the fees charged to the A Class of the Fund was waived from 2010 through 2012 and fully recovered in 2013. Performance prior to waiving fees was lower than the actual returns shown from 2010 through 2012. A Class shares have a maximum sales charge of 5.75%.

7. Fund performance for the ten-year period represents the total returns achieved by the Investor Class from 10/31/08 to 9/1/10, the inception date of the C Class, and the returns of the C Class since its inception. Expenses of the Investor Class are lower than those of the C Class. As a result, total returns shown may be higher than they would have been had the C Class been in existence since 10/31/08. A portion of the fees charged to the C Class of the Fund was waived from 2010 through 2013 and fully recovered in 2014. Performance prior to waiving fees was lower than the actual returns shown from 2010 through 2013. The maximum contingent deferred sales charge for C Class is 1.00% for shares redeemed within one year of the date of purchase.

8. Fund performance for the one-year, three-year, five-year and ten-year periods represents the returns achieved by the Institutional Class from 10/31/08 through 2/28/18, the inception date of the R6 Class, and the returns of the R6 Class since its inception. Expenses of the R6 Class are lower than those of the Institutional Class. As a result, total returns shown may be lower than they would have been had the R6 Class been in existence since 10/31/08. A portion of the fees charged to the R6 Class of the Fund has been waived since 2/28/18. Performance prior to waiving fees was lower than the actual returns shown.

9. 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, Russell Midcap Index and Russell 1000 Index are registered trademarks of Frank Russell Company. Frank Russell Company (“Russell”) is the source and owner of the trademarks, service marks and copyrights related to the Russell Indexes. Russell^® is a trademark of Frank Russell Company. Neither Russell nor its licensors accept any liability for any errors or omissions in the Russell Indexes and/or Russell ratings or underlying data, and no party may rely on any Russell Indexes and/or Russell ratings and/or underlying data contained in this communication. No further distribution of Russell Data is permitted without Russell’s express written consent. Russell does not promote, sponsor or endorse the content of this communication. One cannot directly invest in an index.

10. The Total Annual Fund Operating Expense ratios set forth in the most recent Fund prospectus for the Institutional, Y, Investor, Advisor, A, R6 and C Class shares were 0.90%, 0.98%, 1.10%, 1.41%, 1.28%, 0.89% and 2.05%, 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 trailed the Index as both stock selection and sector allocation detracted value relative to the Index.

From a security selection perspective, the Fund’s relative underperformance was driven by holdings in the Energy, Information Technology and Industrials sectors. Within Energy, EQT Corp. was down 44.4%, while Weatherford International was down 59.0%. Companies in the Consumer Discretionary sector detracting from performance included Dana, Inc. (down 48.0%) and Adient PLC (down 64.8%). In the Industrials sector, Jeld Wen Holding (down 56.6%) and Ryder System (down 30.0%) were the largest detractors for the period. Slightly offsetting this underperformance were positions in the Financials sector, such as Validus Holdings (up 25.8%), Voya Financial (up 10.7%) and Hanover Insurance Group (up 20.2%).

In sector allocation, the Fund’s overweight positions in the Industrials and Consumer Discretionary sectors, two of the worst performing sectors in the Index, were the primary drivers of underperformance for the period. Offsetting some of this performance was an overweight position in Information Technology, a top performing sector for the period. Also adding modest value was an underweight to Materials.

The sub-advisors’ philosophy of investing in undervalued companies that exhibit improving profitability and earnings growth potential should allow the Fund to benefit longer term.

8

American Beacon Mid-Cap Value Fund^SM

Performance Overview

October 31, 2018 (Unaudited)

Top Ten Holdings (% Net Assets)
KeyCorp		1.9
Axis Capital Holdings Ltd.		1.9
Willis Towers Watson PLC		1.9
Fifth Third Bancorp		1.9
MGM Growth Properties LLC, Class A		1.6
Dover Corp.		1.6
Murphy Oil Corp.		1.5
Universal Health Services, Inc., Class B		1.5
Avnet, Inc.		1.5
Cardinal Health, Inc.		1.4
Total Fund Holdings	118
Sector Allocation (% Equities)
Financials		22.8
Industrials		16.1
Consumer Discretionary		11.8
Energy		8.9
Health Care		8.5
Information Technology		8.4
Real Estate		6.9
Utilities		6.8
Communication Services		4.0
Materials		3.7
Consumer Staples		2.1

9

American Beacon Fund^SM

Expense Examples

October 31, 2018 (Unaudited)

Fund Expense Example

As a shareholder of a Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments and redemption fees if applicable, and (2) ongoing costs, including management fees, distribution (12b-1) fees, sub-transfer agent fees, and other Fund expenses. The Examples are intended to help you understand the ongoing cost (in dollars) of investing in the Funds and to compare these costs with the ongoing costs of investing in other mutual funds. The Examples are based on an investment of $1,000 invested at the beginning of the period in each Class and held for the entire period from May 1, 2018 through October 31, 2018.

Actual Expenses

The “Actual” lines on the tables provide information about actual account values and actual expenses. You may use the information on this page, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = $8.60), then multiply the result by the “Expenses Paid During Period” 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 the Fund through an IRA or Roth IRA may be subject to a custodial IRA fee of $15 that is typically deducted each December. If your account was subject to a custodial IRA fee during the period, your costs would have been $15 higher.

Hypothetical Example for Comparison Purposes

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

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

10

American Beacon Funds^SM

Expense Examples

October 31, 2018 (Unaudited)

American Beacon Balanced Fund
	Beginning Account Value 5/1/2018		Ending Account Value 10/31/2018		Expenses Paid During Period 5/1/2018-10/31/2018*
Institutional Class
Actual		$1,000.00		$990.70		$3.06
Hypothetical**		$1,000.00		$1,022.10		$3.11
Y Class
Actual		$1,000.00		$991.60		$3.51
Hypothetical**		$1,000.00		$1,021.70		$3.57
Investor Class
Actual		$1,000.00		$990.50		$4.92
Hypothetical**		$1,000.00		$1,020.30		$4.99
Advisor Class
Actual		$1,000.00		$989.70		$5.52
Hypothetical**		$1,000.00		$1,019.70		$5.60
A Class
Actual		$1,000.00		$990.30		$4.41
Hypothetical**		$1,000.00		$1,020.80		$4.48
C Class
Actual		$1,000.00		$987.30		$8.16
Hypothetical**		$1,000.00		$1,017.00		$8.29

* Expenses are equal to the Fund’s annualized expense ratios for the six-month period of 0.61%, 0.70%, 0.98%, 1.10%, 0.88%, and 1.63% for the Institutional, Y, Investor, Advisor, A, and C Classes, respectively, multiplied by the average account value over the period, multiplied by the number derived by dividing the number of days in the most recent fiscal half-year (184) by days in the year (365) to reflect the half-year period.

** 5% return before expenses.

American Beacon Mid-Cap Value Fund
	Beginning Account Value 5/1/2018		Ending Account Value 10/31/2018		Expenses Paid During Period 5/1/2018-10/31/2018*
Institutional Class
Actual		$1,000.00		$935.50		$4.20
Hypothetical**		$1,000.00		$1,020.90		$4.38
Y Class
Actual		$1,000.00		$935.00		$4.63
Hypothetical**		$1,000.00		$1,020.40		$4.84
Investor Class
Actual		$1,000.00		$934.30		$5.75
Hypothetical**		$1,000.00		$1,019.30		$6.01
Advisor Class
Actual		$1,000.00		$933.00		$6.72
Hypothetical**		$1,000.00		$1,018.20		$7.02
A Class
Actual		$1,000.00		$933.50		$6.24
Hypothetical**		$1,000.00		$1,018.80		$6.51
C Class
Actual		$1,000.00		$930.50		$9.25
Hypothetical**		$1,000.00		$1,015.60		$9.65
R6 Class
Actual		$1,000.00		$935.50		$4.29
Hypothetical**		$1,000.00		$1,020.77		$4.48

* Expenses are equal to the Fund’s annualized expense ratios for the six-month period of 0.86%, 0.95%, 1.18%, 1.38%, 1.28%, 1.90%, and 0.88% for the Institutional, Y, Investor, Advisor, A, C, and R6 Classes, respectively, multiplied by the average account value over the period, multiplied by the number derived by dividing the number of days in the most recent fiscal half-year (184) by days in the year (365) to reflect the half-year period.

** 5% return before expenses.

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 and American Beacon Mid-Cap Value Fund

Opinion on the Financial Statements

We have audited the accompanying statements of assets and liabilities of American Beacon Balanced Fund and American Beacon Mid-Cap Value Fund (collectively referred to as the “Funds”), (two of the funds constituting American Beacon Funds (the “Trust”)), including the schedules of investments, as of October 31, 2018, 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, the financial highlights for each of the five years in the period then ended and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of each of the Funds at October 31, 2018, 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 their financial highlights for each of the five years in the period then ended, in conformity with U.S. generally accepted accounting principles.

Basis for Opinion

These financial statements are the responsibility of the Trust’s management. Our responsibility is to express an opinion on each of the Funds’ financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Trust in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Trust is not required to have, nor were we engaged to perform, an audit of the Trust’s internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Trust’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of October 31, 2018, by correspondence with the custodian and brokers or by other appropriate auditing procedures where replies from brokers were not received. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

We have served as the auditor of one or more American Beacon investment companies since 1987.

Dallas, Texas

December 28, 2018

12

American Beacon Balanced Fund^SM

Schedule of Investments

October 31, 2018

	Shares		Fair Value
COMMON STOCKS - 62.19%
Communication Services - 5.17%
Diversified Telecommunication Services - 1.15%
AT&T, Inc.		75,473		$	2,315,512
Verizon Communications, Inc.		19,717			1,125,643
					3,441,155
Entertainment - 0.18%
Walt Disney Co.		4,600			528,218
Interactive Media & Services - 0.57%
Facebook, Inc., Class AA		11,200			1,700,048
Media - 2.79%
CBS Corp., Class B, NVDR		14,152			811,617
Comcast Corp., Class A		113,940			4,345,672
Discovery, Inc., Class AA B		5,100			165,189
Discovery, Inc., Class CA		63,499			1,861,156
Interpublic Group of Cos, Inc.		15,100			349,716
News Corp., Class A		41,300			544,747
Omnicom Group, Inc.		3,886			288,807
					8,366,904
Wireless Telecommunication Services - 0.48%
Vodafone Group PLC, Sponsored ADR		75,732			1,433,607
Total Communication Services					15,469,932
Consumer Discretionary - 6.29%
Auto Components - 1.18%
Adient PLCB		18,532			563,743
Garrett Motion, Inc.A		853			12,940
Goodyear Tire & Rubber Co.		29,759			626,725
Magna International, Inc.		47,627			2,345,154
					3,548,562
Automobiles - 2.04%
General Motors Co.		154,571			5,655,753
Harley-Davidson, Inc.		11,841			452,563
					6,108,316
Hotels, Restaurants & Leisure - 0.54%
Carnival Corp.		13,042			730,874
Norwegian Cruise Line Holdings Ltd.A		19,965			879,857
					1,610,731
Household Durables - 0.90%
DR Horton, Inc.		26,211			942,548
Mohawk Industries, Inc.A		8,200			1,022,786
Tupperware Brands Corp.		20,500			719,550
					2,684,884
Multiline Retail - 0.82%
Dollar General Corp.		21,951			2,444,902
Specialty Retail - 0.81%
Bed Bath & Beyond, Inc.B		14,824			203,682
Lowe’s Cos, Inc.		23,442			2,232,147
					2,435,829
Total Consumer Discretionary					18,833,224

See accompanying notes

13

American Beacon Balanced Fund^SM

Schedule of Investments

October 31, 2018

	Shares		Fair Value
COMMON STOCKS - 62.19% (continued)
Consumer Staples - 3.11%
Beverages - 0.83%
Molson Coors Brewing Co., Class B		22,600		$	1,446,400
PepsiCo, Inc.		9,200			1,033,896
					2,480,296
Food Products - 0.84%
Ingredion, Inc.		5,500			556,490
Kellogg Co.		4,792			313,780
Mondelez International, Inc., Class A		21,800			915,164
Tyson Foods, Inc., Class A		12,400			743,008
					2,528,442
Personal Products - 0.23%
Unilever PLC, Sponsored ADR		12,700			672,846
Tobacco - 1.21%
Altria Group, Inc.		21,614			1,405,775
Imperial Brands PLC, Sponsored ADR		27,160			919,366
Philip Morris International, Inc.		14,792			1,302,731
					3,627,872
Total Consumer Staples					9,309,456
Energy - 10.74%
Energy Equipment & Services - 2.02%
Halliburton Co.		34,800			1,206,864
Helmerich & Payne, Inc.		11,200			697,648
National Oilwell Varco, Inc.		13,100			482,080
Oceaneering International, Inc.A		27,055			512,422
Schlumberger Ltd.		61,556			3,158,438
					6,057,452
Oil, Gas & Consumable Fuels - 8.72%
Apache Corp.		49,614			1,876,897
BP PLC, Sponsored ADR		118,113			5,122,561
Canadian Natural Resources Ltd.		95,265			2,602,640
Chevron Corp.		15,474			1,727,672
ConocoPhillips		62,023			4,335,408
Devon Energy Corp.		43,607			1,412,867
Hess Corp.		29,032			1,666,437
Kinder Morgan, Inc.		38,600			656,972
Kosmos Energy Ltd.A		40,369			261,995
Marathon Oil Corp.		94,031			1,785,649
Marathon Petroleum Corp.		5,531			389,659
Murphy Oil Corp.		28,575			910,399
Phillips 66		23,035			2,368,459
Royal Dutch Shell PLC, Class A, Sponsored ADR		15,935			1,006,932
					26,124,547
Total Energy					32,181,999
Financials - 15.44%
Banks - 7.72%
Banco Santander S.A., ADRB		204,800			978,944
Bank of America Corp.		175,943			4,838,433
BNP Paribas S.A., ADRB		22,600			587,374
CIT Group, Inc.		6,650			315,077
Citigroup, Inc.		89,266			5,843,352

See accompanying notes

14

American Beacon Balanced Fund^SM

Schedule of Investments

October 31, 2018

	Shares		Fair Value
COMMON STOCKS - 62.19% (continued)
Financials - 15.44% (continued)
Banks - 7.72% (continued)
Citizens Financial Group, Inc.		22,568		$	842,915
JPMorgan Chase & Co.		44,120			4,809,962
PNC Financial Services Group, Inc.		4,399			565,228
Wells Fargo & Co.		81,284			4,326,747
					23,108,032
Capital Markets - 2.85%
Bank of New York Mellon Corp.		10,215			483,476
Blackstone Group LP, MLP		59,630			1,929,627
Goldman Sachs Group, Inc.		6,297			1,419,155
Invesco Ltd.		42,700			927,017
KKR & Co., Inc., Class A		99,684			2,357,527
Morgan Stanley		7,337			335,007
State Street Corp.		15,806			1,086,662
					8,538,471
Consumer Finance - 2.11%
Ally Financial, Inc.		19,700			500,577
Capital One Financial Corp.		14,629			1,306,370
Discover Financial Services		13,700			954,479
Navient Corp.		39,575			458,278
OneMain Holdings, Inc.A		20,265			577,958
Santander Consumer USA Holdings, Inc.		46,679			875,231
SLM Corp.A		121,730			1,234,342
Synchrony Financial		14,300			412,984
					6,320,219
Diversified Financial Services - 0.87%
AXA Equitable Holdings, Inc.		31,800			645,222
Berkshire Hathaway, Inc., Class BA		9,542			1,958,782
					2,604,004
Insurance - 1.89%
American International Group, Inc.		112,611			4,649,708
Travelers Cos, Inc.		8,157			1,020,686
					5,670,394
Total Financials					46,241,120
Health Care - 6.44%
Biotechnology - 0.59%
Biogen, Inc.A		1,472			447,885
Celgene Corp.A		6,286			450,078
Gilead Sciences, Inc.		9,720			662,710
Portola Pharmaceuticals, Inc.A B		11,300			222,497
					1,783,170
Health Care Equipment & Supplies - 1.18%
Medtronic PLC		31,508			2,830,048
Zimmer Biomet Holdings, Inc.		6,132			696,534
					3,526,582
Health Care Providers & Services - 1.98%
Anthem, Inc.		10,098			2,782,706
CVS Health Corp.		43,617			3,157,434
					5,940,140

See accompanying notes

15

American Beacon Balanced Fund^SM

Schedule of Investments

October 31, 2018

	Shares		Fair Value
COMMON STOCKS - 62.19% (continued)
Health Care - 6.44% (continued)
Pharmaceuticals - 2.69%
GlaxoSmithKline PLC, Sponsored ADR		24,343		$	950,838
Horizon Pharma PLCA		24,812			451,826
Jazz Pharmaceuticals PLCA		2,893			459,466
Johnson & Johnson		3,994			559,120
Merck & Co., Inc.		15,219			1,120,271
Mylan N.V.A		20,644			645,125
Pfizer, Inc.		49,205			2,118,767
Sanofi, ADR		38,923			1,740,637
					8,046,050
Total Health Care					19,295,942
Industrials - 5.24%
Aerospace & Defense - 0.84%
Embraer S.A., Sponsored ADR		10,824			241,050
General Dynamics Corp.		3,108			536,379
Raytheon Co.		6,088			1,065,644
United Technologies Corp.		5,328			661,791
					2,504,864
Airlines - 0.95%
American Airlines Group, Inc.		44,061			1,545,660
Delta Air Lines, Inc.		23,945			1,310,510
					2,856,170
Building Products - 0.87%
Johnson Controls International PLC		80,582			2,576,206
Resideo Technologies, Inc.A		1,423			29,944
					2,606,150
Construction & Engineering - 0.02%
AECOMA		2,378			69,295
Electrical Equipment - 0.15%
Eaton Corp. PLC		6,083			435,969
Industrial Conglomerates - 1.05%
General Electric Co.		188,935			1,908,243
Honeywell International, Inc.		8,535			1,236,039
					3,144,282
Machinery - 0.97%
CNH Industrial N.V.B		124,280			1,291,269
Cummins, Inc.		9,672			1,322,066
PACCAR, Inc.		5,139			294,002
					2,907,337
Trading Companies & Distributors - 0.39%
AerCap Holdings N.V.A		23,591			1,181,437
Total Industrials					15,705,504
Information Technology - 6.62%
Communications Equipment - 0.59%
Cisco Systems, Inc.		24,471			1,119,548
Telefonaktiebolaget LM Ericsson, Sponsored ADR		73,920			640,147
					1,759,695

See accompanying notes

16

American Beacon Balanced Fund^SM

Schedule of Investments

October 31, 2018

	Shares			Fair Value
COMMON STOCKS - 62.19% (continued)
Information Technology - 6.62% (continued)
Electronic Equipment, Instruments & Components - 0.78%
Corning, Inc.			34,995		$	1,118,090
IPG Photonics Corp.A			5,600			747,880
TE Connectivity Ltd.			6,358			479,521
						2,345,491
IT Services - 0.44%
First Data Corp., Class AA			52,600			985,724
Teradata Corp.A			8,818			320,975
						1,306,699
Semiconductors & Semiconductor Equipment - 1.32%
Micron Technology, Inc.A			55,335			2,087,236
QUALCOMM, Inc.			29,752			1,871,104
						3,958,340
Software - 2.62%
Microsoft Corp.			34,142			3,646,707
Oracle Corp.			85,929			4,196,772
						7,843,479
Technology Hardware, Storage & Peripherals - 0.87%
Hewlett Packard Enterprise Co.			171,108			2,609,397
Total Information Technology						19,823,101
Materials - 2.43%
Chemicals - 1.81%
Air Products & Chemicals, Inc.			12,878			1,987,719
DowDuPont, Inc.			45,227			2,438,640
Eastman Chemical Co.			12,585			986,035
						5,412,394
Containers & Packaging - 0.62%
Crown Holdings, Inc.A			21,035			889,570
International Paper Co.			21,325			967,302
						1,856,872
Total Materials						7,269,266
Utilities - 0.71%
Electric Utilities - 0.71%
Entergy Corp.			7,999			671,516
PPL Corp.			23,547			715,829
Southern Co.			16,543			744,931
						2,132,276
Total Utilities						2,132,276
Total Common Stocks (Cost $153,032,528)						186,261,820
	Principal Amount
CORPORATE OBLIGATIONS - 10.99%
Basic Materials - 0.21%
Dow Chemical Co.,
4.125%, Due 11/15/2021		$	145,000			147,191
3.500%, Due 10/1/2024			299,000			289,999
EI du Pont de Nemours & Co., 2.200%, Due 5/1/2020			70,000			69,142

See accompanying notes

17

American Beacon Balanced Fund^SM

Schedule of Investments

October 31, 2018

	Principal Amount			Fair Value
CORPORATE OBLIGATIONS - 10.99% (continued)
Basic Materials - 0.21% (continued)
Nucor Corp.,
4.125%, Due 9/15/2022		$	52,000		$	52,911
4.000%, Due 8/1/2023			80,000			81,035
						640,278
Communications - 0.89%
Amazon.com, Inc., 3.875%, Due 8/22/2037			70,000			66,040
AT&T, Inc.,
4.450%, Due 4/1/2024			80,000			80,775
3.400%, Due 5/15/2025			169,000			158,679
4.500%, Due 5/15/2035			106,000			95,633
6.350%, Due 3/15/2040			40,000			42,246
CBS Corp., 3.375%, Due 3/1/2022			337,000			331,662
Charter Communications Operating LLC, 3.750%, Due 2/15/2028			130,000			117,727
Comcast Corp.,
3.150%, Due 3/1/2026			84,000			78,552
4.600%, Due 10/15/2038			75,000			73,385
6.550%, Due 7/1/2039			217,000			256,131
eBay, Inc., 2.150%, Due 6/5/2020			95,000			93,323
NBCUniversal Enterprise, Inc., 2.737%, Due 4/1/2021, (3-mo. USD LIBOR + 0.400%)C D			735,000			734,818
RELX Capital, Inc., 3.500%, Due 3/16/2023			55,000			54,226
Verizon Communications, Inc.,
4.125%, Due 3/16/2027			150,000			148,457
4.329%, Due 9/21/2028			180,000			178,077
Warner Media LLC, 4.750%, Due 3/29/2021			157,000			161,116
						2,670,847
Consumer, Cyclical - 1.93%
American Honda Finance Corp.,
3.875%, Due 9/21/2020C			250,000			252,874
3.375%, Due 12/10/2021			130,000			129,830
Aptiv Corp., 4.150%, Due 3/15/2024			110,000			109,112
Costco Wholesale Corp., 2.150%, Due 5/18/2021			190,000			185,360
Daimler Finance North America LLC,
2.250%, Due 9/3/2019C			169,000			167,746
2.450%, Due 5/18/2020C			313,000			308,271
2.760%, Due 2/22/2021, (3-mo. USD LIBOR + 0.450%)C D			575,000			574,494
Dollar General Corp., 4.125%, Due 5/1/2028			50,000			48,441
Dollar Tree, Inc., 3.700%, Due 5/15/2023			85,000			82,843
Ford Motor Credit Co. LLC,
3.408%, Due 1/9/2020, (3-mo. USD LIBOR + 1.000%)D			222,000			222,056
3.218%, Due 4/5/2021, (3-mo. USD LIBOR + 0.810%)D			470,000			466,102
5.875%, Due 8/2/2021			200,000			207,016
3.810%, Due 1/9/2024			95,000			88,262
General Motors Financial Co., Inc.,
3.366%, Due 4/13/2020, (3-mo. USD LIBOR + 0.930%)D			805,000			808,726
3.150%, Due 6/30/2022			90,000			86,438
Home Depot, Inc.,
2.700%, Due 4/1/2023			72,000			69,769
3.350%, Due 9/15/2025			65,000			63,606
McDonald’s Corp., 3.700%, Due 1/30/2026			133,000			129,761
Nissan Motor Acceptance Corp., 2.350%, Due 3/4/2019C			289,000			288,446
O’Reilly Automotive, Inc., 4.350%, Due 6/1/2028			115,000			112,858
PACCAR Financial Corp.,
1.300%, Due 5/10/2019			58,000			57,529
2.200%, Due 9/15/2019			52,000			51,680
Starbucks Corp., 4.000%, Due 11/15/2028			90,000			87,440
Toyota Motor Credit Corp., 3.450%, Due 9/20/2023			250,000			248,181

See accompanying notes

18

American Beacon Balanced Fund^SM

Schedule of Investments

October 31, 2018

	Principal Amount			Fair Value
CORPORATE OBLIGATIONS - 10.99% (continued)
Consumer, Cyclical - 1.93% (continued)
Volkswagen Group of America Finance LLC, 2.450%, Due 11/20/2019C		$	313,000		$	309,883
Walgreens Boots Alliance, Inc., 3.800%, Due 11/18/2024			145,000			141,548
Walmart, Inc.,
3.400%, Due 6/26/2023			260,000			259,123
7.550%, Due 2/15/2030			169,000			222,433
						5,779,828
Consumer, Non-Cyclical - 0.97%
Abbott Laboratories, 4.900%, Due 11/30/2046			70,000			72,128
AbbVie, Inc.,
3.200%, Due 5/14/2026			85,000			77,794
4.300%, Due 5/14/2036			87,000			77,767
Altria Group, Inc., 4.750%, Due 5/5/2021			145,000			149,120
Amgen, Inc., 4.400%, Due 5/1/2045			75,000			68,236
Anheuser-Busch InBev Finance, Inc.,
2.650%, Due 2/1/2021			145,000			142,152
3.650%, Due 2/1/2026			145,000			137,927
Anheuser-Busch InBev Worldwide, Inc., 4.375%, Due 4/15/2038			35,000			31,814
Anthem, Inc., 2.500%, Due 11/21/2020			90,000			88,170
Baxalta, Inc., 4.000%, Due 6/23/2025			20,000			19,494
Bayer US Finance LLC, 2.375%, Due 10/8/2019C			300,000			297,511
Celgene Corp., 5.250%, Due 8/15/2043			70,000			68,681
CVS Health Corp.,
2.125%, Due 6/1/2021			60,000			57,828
5.050%, Due 3/25/2048			55,000			53,628
General Mills, Inc., 2.200%, Due 10/21/2019			289,000			286,361
Genzyme Corp., 5.000%, Due 6/15/2020			39,000			40,107
Halfmoon Parent, Inc., 4.125%, Due 11/15/2025C			75,000			74,130
Humana, Inc., 3.150%, Due 12/1/2022			115,000			111,839
Kaiser Foundation Hospitals, 4.150%, Due 5/1/2047			45,000			42,812
Kraft Heinz Foods Co., 5.000%, Due 7/15/2035			65,000			61,598
Medtronic, Inc., 3.500%, Due 3/15/2025			313,000			306,403
Molson Coors Brewing Co., 3.000%, Due 7/15/2026			90,000			80,059
Philip Morris International, Inc., 2.625%, Due 3/6/2023			85,000			81,226
Reynolds American, Inc., 5.850%, Due 8/15/2045			65,000			66,762
S&P Global, Inc., 4.400%, Due 2/15/2026			70,000			71,304
UnitedHealth Group, Inc.,
1.625%, Due 3/15/2019			120,000			119,489
3.950%, Due 10/15/2042			80,000			73,468
Zimmer Biomet Holdings, Inc., 3.550%, Due 4/1/2025			85,000			80,174
Zoetis, Inc., 3.000%, Due 9/12/2027			75,000			68,513
						2,906,495
Energy - 0.35%
BP Capital Markets America, Inc., 3.796%, Due 9/21/2025			50,000			49,006
Chevron Corp., 1.790%, Due 11/16/2018			100,000			99,973
Columbia Pipeline Group, Inc., 4.500%, Due 6/1/2025			81,000			81,395
Concho Resources, Inc., 4.300%, Due 8/15/2028			85,000			82,937
Enterprise Products Operating LLC, 6.125%, Due 10/15/2039			45,000			50,787
EOG Resources, Inc., 4.150%, Due 1/15/2026			70,000			70,592
Marathon Petroleum Corp., 3.625%, Due 9/15/2024			60,000			58,474
MPLX LP,
4.875%, Due 12/1/2024			62,000			63,487
5.200%, Due 3/1/2047			46,000			43,507
ONEOK, Inc., 4.550%, Due 7/15/2028			90,000			88,088
Phillips 66, 4.300%, Due 4/1/2022			47,000			47,935
Phillips 66 Partners LP,
3.550%, Due 10/1/2026			53,000			49,508
3.750%, Due 3/1/2028			50,000			46,290

See accompanying notes

19

American Beacon Balanced Fund^SM

Schedule of Investments

October 31, 2018

	Principal Amount			Fair Value
CORPORATE OBLIGATIONS - 10.99% (continued)
Energy - 0.35% (continued)
Spectra Energy Partners LP, 3.375%, Due 10/15/2026		$	63,000		$	58,421
Sunoco Logistics Partners Operations LP, 4.250%, Due 4/1/2024			48,000			47,316
TC PipeLines LP, 3.900%, Due 5/25/2027			40,000			37,195
Valero Energy Corp., 4.350%, Due 6/1/2028			60,000			58,565
						1,033,476
Financial - 4.02%
American Campus Communities Operating Partnership LP, 3.625%, Due 11/15/2027			85,000			78,803
American Express Co.,
3.400%, Due 2/27/2023			145,000			142,152
4.050%, Due 12/3/2042			90,000			84,183
American International Group, Inc., 4.875%, Due 6/1/2022			289,000			297,214
Bank of America Corp.,
3.124%, Due 1/20/2023, (3-mo. USD LIBOR + 1.160%)D			210,000			205,204
4.125%, Due 1/22/2024			193,000			194,121
6.110%, Due 1/29/2037			176,000			196,796
5.000%, Due 1/21/2044			245,000			250,498
Bank of New York Mellon Corp.,
2.200%, Due 3/4/2019			176,000			175,686
3.250%, Due 5/16/2027			140,000			132,865
BB&T Corp., 2.750%, Due 4/1/2022			150,000			146,047
Boston Properties LP, 3.200%, Due 1/15/2025			130,000			123,510
Capital One Financial Corp., 2.500%, Due 5/12/2020			115,000			113,373
CBOE Global Markets, Inc., 3.650%, Due 1/12/2027			125,000			118,326
Chubb INA Holdings, Inc., 3.350%, Due 5/3/2026			70,000			67,332
Citibank NA, 2.688%, Due 2/12/2021, (3-mo. USD LIBOR + 0.350%)D			510,000			509,867
Citigroup, Inc.,
3.887%, Due 1/10/2028, (3-mo. USD LIBOR + 1.563%)D			295,000			282,106
5.875%, Due 1/30/2042			145,000			163,793
Crown Castle International Corp., 3.400%, Due 2/15/2021			84,000			83,467
Digital Realty Trust LP, 3.700%, Due 8/15/2027			95,000			88,816
ERP Operating LP, 3.000%, Due 4/15/2023			52,000			50,538
Goldman Sachs Group, Inc.,
5.750%, Due 1/24/2022			385,000			406,822
3.060%, Due 2/23/2023, (3-mo. USD LIBOR + 0.750%)D			1,040,000			1,038,951
2.908%, Due 6/5/2023, (3-mo. USD LIBOR + 1.053%)D			155,000			149,358
3.500%, Due 1/23/2025			95,000			90,935
3.272%, Due 9/29/2025, (3-mo. USD LIBOR + 1.201%)D			85,000			80,582
HCP, Inc., 2.625%, Due 2/1/2020			85,000			84,081
Intercontinental Exchange, Inc.,
2.750%, Due 12/1/2020			72,000			71,177
4.250%, Due 9/21/2048			35,000			32,614
JPMorgan Chase & Co.,
3.625%, Due 5/13/2024			434,000			427,302
3.797%, Due 7/23/2024, (3-mo. USD LIBOR + 0.890%)D			85,000			84,432
3.782%, Due 2/1/2028, (3-mo. USD LIBOR + 1.337%)D			120,000			115,437
3.882%, Due 7/24/2038, (3-mo. USD LIBOR + 1.360%)D			140,000			126,678
5.500%, Due 10/15/2040			313,000			344,202
KeyCorp, 5.100%, Due 3/24/2021			60,000			62,102
Liberty Mutual Group, Inc., 4.250%, Due 6/15/2023C			113,000			113,364
Mastercard, Inc., 3.375%, Due 4/1/2024			105,000			103,970
MetLife, Inc.,
6.375%, Due 6/15/2034			169,000			200,079
4.721%, Due 12/15/2044			193,000			190,329
Metropolitan Life Global Funding I,
2.559%, Due 9/19/2019, (3-mo. USD LIBOR + 0.220%)C D			355,000			355,288
2.638%, Due 1/8/2021, (3-mo. USD LIBOR + 0.230%)C D			480,000			479,517

See accompanying notes

20

American Beacon Balanced Fund^SM

Schedule of Investments

October 31, 2018

	Principal Amount			Fair Value
CORPORATE OBLIGATIONS - 10.99% (continued)
Financial - 4.02% (continued)
Morgan Stanley,
7.300%, Due 5/13/2019		$	361,000		$	368,956
5.625%, Due 9/23/2019			169,000			172,624
3.700%, Due 10/23/2024			170,000			165,653
3.591%, Due 7/22/2028, (3-mo. USD LIBOR + 1.340%)D			105,000			98,334
National Rural Utilities Cooperative Finance Corp.,
1.650%, Due 2/8/2019			92,000			91,715
2.950%, Due 2/7/2024			65,000			62,661
PNC Financial Services Group, Inc., 3.300%, Due 3/8/2022			110,000			108,912
Prudential Financial, Inc., 4.600%, Due 5/15/2044			313,000			304,432
Public Storage, 2.370%, Due 9/15/2022			105,000			100,610
Raymond James Financial, Inc., 3.625%, Due 9/15/2026			105,000			98,808
Simon Property Group LP,
2.200%, Due 2/1/2019			170,000			169,717
3.375%, Due 10/1/2024			313,000			303,997
State Street Corp., 3.300%, Due 12/16/2024			120,000			116,462
SunTrust Bank, 2.450%, Due 8/1/2022			110,000			105,352
Travelers Cos, Inc., 4.000%, Due 5/30/2047			70,000			64,947
Ventas Realty LP, 5.700%, Due 9/30/2043			55,000			58,587
Visa, Inc.,
2.800%, Due 12/14/2022			65,000			63,338
3.150%, Due 12/14/2025			105,000			101,025
Wells Fargo & Co.,
2.150%, Due 1/30/2020, Series N			55,000			54,285
2.550%, Due 12/7/2020			110,000			107,817
3.533%, Due 7/26/2021, (3-mo. USD LIBOR + 1.025%)D			1,087,000			1,103,897
3.000%, Due 10/23/2026			65,000			59,453
4.750%, Due 12/7/2046			90,000			85,534
						12,029,033
Industrial - 0.86%
BAE Systems Holdings, Inc., 3.800%, Due 10/7/2024C			313,000			307,667
Burlington Northern Santa Fe LLC,
3.650%, Due 9/1/2025			65,000			64,635
5.750%, Due 5/1/2040			202,000			232,466
Caterpillar Financial Services Corp., 1.350%, Due 5/18/2019			105,000			104,093
CSX Corp., 5.500%, Due 4/15/2041			157,000			166,776
Eaton Corp., 2.750%, Due 11/2/2022			75,000			72,414
General Dynamics Corp., 2.875%, Due 5/11/2020			135,000			134,502
General Electric Co.,
6.000%, Due 8/7/2019			169,000			172,356
5.500%, Due 1/8/2020			120,000			122,378
John Deere Capital Corp.,
1.950%, Due 6/22/2020			105,000			103,273
2.150%, Due 9/8/2022			90,000			85,734
Lockheed Martin Corp., 3.550%, Due 1/15/2026			90,000			87,859
Martin Marietta Materials, Inc., 4.250%, Due 12/15/2047			95,000			76,270
Northrop Grumman Corp.,
5.050%, Due 8/1/2019			72,000			72,952
3.850%, Due 4/15/2045			130,000			113,568
Stanley Black & Decker, Inc., 2.451%, Due 11/17/2018			135,000			134,957
Union Pacific Corp., 4.100%, Due 9/15/2067			90,000			74,355
United Technologies Corp.,
1.900%, Due 5/4/2020			105,000			102,780
4.125%, Due 11/16/2028			95,000			93,308
6.125%, Due 7/15/2038			217,000			246,955
						2,569,298

See accompanying notes

21

American Beacon Balanced Fund^SM

Schedule of Investments

October 31, 2018

	Principal Amount			Fair Value
CORPORATE OBLIGATIONS - 10.99% (continued)
Technology - 0.80%
Analog Devices, Inc., 3.900%, Due 12/15/2025		$	75,000		$	73,370
Apple, Inc., 2.850%, Due 5/11/2024			210,000			201,537
Autodesk, Inc., 3.500%, Due 6/15/2027			95,000			87,222
Broadcom Corp., 2.375%, Due 1/15/2020			41,000			40,522
Broadridge Financial Solutions, Inc., 3.400%, Due 6/27/2026			65,000			61,162
Dell International LLC / EMC Corp., 4.420%, Due 6/15/2021C			135,000			136,120
Hewlett Packard Enterprise Co., 6.350%, Due 10/15/2045			1,178,000			1,152,280
HP, Inc., 4.050%, Due 9/15/2022			145,000			146,386
Intel Corp., 3.300%, Due 10/1/2021			86,000			86,091
Microsoft Corp., 4.450%, Due 11/3/2045			135,000			139,418
Oracle Corp.,
2.500%, Due 5/15/2022			115,000			111,309
4.300%, Due 7/8/2034			112,000			109,732
QUALCOMM, Inc., 3.000%, Due 5/20/2022			65,000			63,700
						2,408,849
Utilities - 0.96%
Berkshire Hathaway Energy Co., 6.125%, Due 4/1/2036			287,000			338,277
Consolidated Edison Co. of New York, Inc.,
5.500%, Due 12/1/2039, Series 09-C			169,000			189,749
4.625%, Due 12/1/2054			55,000			53,589
Delmarva Power & Light Co., 3.500%, Due 11/15/2023			86,000			85,346
Dominion Energy, Inc., 2.579%, Due 7/1/2020			90,000			88,632
DPL, Inc., 7.250%, Due 10/15/2021			295,000			313,255
Duke Energy Corp., 3.550%, Due 9/15/2021			130,000			129,916
Duke Energy Progress LLC, 4.150%, Due 12/1/2044			125,000			118,854
Edison International, 2.950%, Due 3/15/2023			82,000			77,996
Entergy Louisiana, LLC, 4.000%, Due 3/15/2033			67,000			66,026
Florida Power & Light Co., 3.950%, Due 3/1/2048			50,000			46,355
Georgia Power Co., 1.950%, Due 12/1/2018			55,000			54,958
MidAmerican Energy Co., 3.100%, Due 5/1/2027			100,000			94,720
National Fuel Gas Co., 3.950%, Due 9/15/2027			125,000			114,392
Nevada Power Co., 2.750%, Due 4/15/2020, Series BB			50,000			49,767
NiSource, Inc.,
3.490%, Due 5/15/2027			70,000			65,715
3.950%, Due 3/30/2048			65,000			55,966
Southern Co.,
2.150%, Due 9/1/2019			92,000			91,200
2.750%, Due 6/15/2020			241,000			238,376
Southern Power Co.,
4.150%, Due 12/1/2025			84,000			82,174
4.950%, Due 12/15/2046, Series F			62,000			58,692
Southwestern Electric Power Co., 3.550%, Due 2/15/2022			289,000			287,530
Union Electric Co., 6.700%, Due 2/1/2019			96,000			96,919
WEC Energy Group, Inc., 3.550%, Due 6/15/2025			94,000			92,122
						2,890,526
Total Corporate Obligations (Cost $33,060,523)						32,928,630
FOREIGN CORPORATE OBLIGATIONS - 1.58%
Basic Materials - 0.04%
LYB International Finance II B.V., 3.500%, Due 3/2/2027			55,000			50,208
Nutrien Ltd., 4.000%, Due 12/15/2026			74,000			70,805
						121,013
Communications - 0.53%
Alibaba Group Holding Ltd., 3.600%, Due 11/28/2024			313,000			304,532
America Movil S.A.B. de C.V., 6.375%, Due 3/1/2035			169,000			193,299

See accompanying notes

22

American Beacon Balanced Fund^SM

Schedule of Investments

October 31, 2018

	Principal Amount			Fair Value
FOREIGN CORPORATE OBLIGATIONS - 1.58% (continued)
Communications - 0.53% (continued)
Bell Canada, Inc., 4.464%, Due 4/1/2048		$	45,000		$	43,002
Deutsche Telekom International Finance B.V., 4.875%, Due 3/6/2042C			150,000			144,300
Rogers Communications, Inc., 3.625%, Due 12/15/2025			85,000			81,994
TELUS Corp., 2.800%, Due 2/16/2027			74,000			66,891
Thomson Reuters Corp.,
4.300%, Due 11/23/2023			145,000			146,234
3.850%, Due 9/29/2024			193,000			186,731
Vodafone Group PLC, 6.150%, Due 2/27/2037			393,000			414,605
						1,581,588
Consumer, Non-Cyclical - 0.07%
Coca-Cola Femsa S.A.B. de C.V., 3.875%, Due 11/26/2023			65,000			64,426
Sanofi, 4.000%, Due 3/29/2021			75,000			76,120
Shire Acquisitions Investments Ireland DAC, 2.875%, Due 9/23/2023			85,000			80,185
						220,731
Energy - 0.20%
Canadian Natural Resources Ltd.,
3.900%, Due 2/1/2025			60,000			58,272
6.250%, Due 3/15/2038			176,000			198,291
Husky Energy, Inc., 3.950%, Due 4/15/2022			100,000			100,283
TransCanada PipeLines Ltd.,
3.750%, Due 10/16/2023			145,000			143,671
6.100%, Due 6/1/2040			82,000			91,615
						592,132
Financial - 0.64%
Bank of Montreal, 1.750%, Due 9/11/2019			135,000			133,600
HSBC Holdings PLC, 3.262%, Due 3/13/2023, (3-mo. USD LIBOR + 1.055%)D			148,000			144,570
Macquarie Bank Ltd., 2.758%, Due 4/4/2019, (3-mo. USD LIBOR + 0.350%)C D			355,000			355,174
National Australia Bank Ltd., 2.820%, Due 5/22/2020, (3-mo. USD LIBOR + 0.510%)C D			470,000			471,580
Nordea Bank AB, 4.875%, Due 1/27/2020C			120,000			122,301
Royal Bank of Canada,
2.125%, Due 3/2/2020			130,000			128,286
3.200%, Due 4/30/2021			170,000			169,291
Toronto-Dominion Bank,
3.000%, Due 6/11/2020			120,000			119,651
2.550%, Due 1/25/2021			115,000			113,138
Trinity Acquisition PLC, 4.400%, Due 3/15/2026			67,000			66,198
Westpac Banking Corp., 2.650%, Due 1/25/2021			90,000			88,461
						1,912,250
Industrial - 0.10%
Ingersoll-Rand Luxembourg Finance S.A., 2.625%, Due 5/1/2020			145,000			143,330
Johnson Controls International PLC, 5.000%, Due 3/30/2020			145,000			148,075
						291,405
Total Foreign Corporate Obligations (Cost $4,698,015)						4,719,119
FOREIGN SOVEREIGN OBLIGATIONS - 0.16%
European Investment Bank, 2.375%, Due 6/15/2022			125,000			121,776
Kreditanstalt fuer Wiederaufbau, 2.125%, Due 6/15/2022			120,000			115,883
Province of Ontario Canada, 2.500%, Due 4/27/2026			150,000			140,259
Province of Quebec Canada, 2.375%, Due 1/31/2022			105,000			102,193
Total Foreign Sovereign Obligations (Cost $499,192)						480,111

See accompanying notes

23

American Beacon Balanced Fund^SM

Schedule of Investments

October 31, 2018

	Principal Amount			Fair Value
COMMERCIAL MORTGAGE-BACKED OBLIGATIONS - 0.63%
Ginnie Mae REMIC Trust,
1.147%, Due 12/16/2038, 2013-139 A		$	303,850		$	299,984
1.624%, Due 7/16/2039, 2013-78 AB			436,938			418,629
1.368%, Due 11/16/2041, 2013-125 AB			650,705			624,513
3.200%, Due 11/16/2044, 2011-92 B			7,116			7,106
GS Mortgage Securities Trust, 3.679%, Due 8/10/2043, 2010-C1 A1C			15,588			15,634
JPMBB Commercial Mortgage Securities Trust, 3.157%, Due 7/15/2045, 2013-C12 ASB			288,872			288,005
WFRBS Commercial Mortgage Trust, 3.660%, Due 3/15/2047, 2014-C19 A3			219,000			219,760
Total Commercial Mortgage-Backed Obligations (Cost $1,926,434)						1,873,631
ASSET-BACKED OBLIGATIONS - 0.90%
Ally Auto Receivables Trust, 1.750%, Due 12/15/2021, 2017 4 A3			285,000			281,504
Americredit Automobile Receivables Trust, 1.530%, Due 7/8/2021, 2016 4 A3			95,760			95,215
AmeriCredit Automobile Receivables Trust, 1.900%, Due 3/18/2022, 2017 3 A3			185,000			182,737
BMW Vehicle Lease Trust, 2.070%, Due 10/20/2020, 2017 2 A3			180,000			178,272
Capital One Multi-Asset Execution Trust, 1.340%, Due 4/15/2022, 2016 A3 A3			318,000			315,063
Chase Issuance Trust, 1.370%, Due 6/15/2021, 2016 A2 A			265,000			262,535
Ford Credit Auto Lease Trust, 2.030%, Due 12/15/2020, 2017 B A3			170,000			168,467
Ford Credit Auto Owner Trust, 2.030%, Due 8/15/2020, 2015 A B			292,000			290,863
GM Financial Automobile Leasing Trust, 2.060%, Due 5/20/2020, 2017 1 A3			284,000			282,779
GM Financial Consumer Automobile Receivables Trust, 2.320%, Due 7/18/2022, 2018 1 A3			95,000			93,628
John Deere Owner Trust, 3.080%, Due 11/15/2022, 2018 B A3			190,000			189,395
Nissan Auto Receivables Owner Trust, 2.120%, Due 4/18/2022, 2017 C A3			100,000			98,376
PSNH Funding LLC, 3.094%, Due 2/1/2026, 2018 1 A1			130,000			129,314
World Omni Auto Receivables Trust, 1.950%, Due 2/15/2023, 2017 B A3			135,000			132,376
Total Asset-Backed Obligations (Cost $2,724,626)						2,700,524
U.S. AGENCY MORTGAGE-BACKED OBLIGATIONS - 5.35%
Federal Home Loan Mortgage Corp.,
4.500%, Due 3/1/2019			2,417			2,454
5.000%, Due 10/1/2020			5,126			5,212
3.500%, Due 8/1/2026			30,812			30,838
3.500%, Due 9/1/2028			218,303			218,620
3.000%, Due 11/1/2032			211,595			207,300
5.000%, Due 8/1/2033			45,984			48,677
5.500%, Due 2/1/2034			46,707			50,239
4.000%, Due 1/1/2041			163,695			165,165
4.500%, Due 2/1/2041			116,145			120,343
3.500%, Due 6/1/2042			537,589			528,083
3.500%, Due 7/1/2042			150,086			147,438
3.000%, Due 11/1/2046			318,549			301,686
3.500%, Due 1/1/2048			490,636			477,911
						2,303,966
Federal National Mortgage Association,
4.000%, Due 8/1/2020			10,773			10,950
3.500%, Due 1/1/2028E			101,968			102,151
4.000%, Due 10/1/2033			257,197			262,110
5.000%, Due 3/1/2034E			50,292			53,350
4.500%, Due 4/1/2034			88,824			91,409
3.500%, Due 6/1/2037			311,057			307,713
5.500%, Due 6/1/2038			9,509			10,179
4.500%, Due 1/1/2040			128,082			132,631
5.000%, Due 5/1/2040			201,286			212,821
5.000%, Due 6/1/2040			160,879			170,148
4.000%, Due 9/1/2040			110,095			110,931
4.000%, Due 1/1/2041			214,705			216,331
4.500%, Due 10/1/2041			139,732			144,434

See accompanying notes

24

American Beacon Balanced Fund^SM

Schedule of Investments

October 31, 2018

	Principal Amount			Fair Value
U.S. AGENCY MORTGAGE-BACKED OBLIGATIONS - 5.35% (continued)
Federal National Mortgage Association, (continued)
3.000%, Due 6/1/2043		$	852,015		$	812,898
3.500%, Due 7/1/2043			149,577			146,601
3.000%, Due 8/1/2043			746,185			711,991
4.000%, Due 11/1/2044E			126,293			127,841
4.000%, Due 7/1/2045			694,669			695,646
3.500%, Due 8/1/2045			137,609			134,529
3.500%, Due 11/1/2045			1,514,565			1,480,664
3.000%, Due 4/1/2046			178,603			169,181
3.500%, Due 5/1/2046			520,085			508,130
4.000%, Due 7/1/2046			300,723			301,402
3.000%, Due 10/1/2046			52,622			49,822
3.000%, Due 11/1/2046			348,564			330,446
3.500%, Due 11/1/2046			541,643			529,521
3.000%, Due 12/1/2046E			211,917			200,899
3.000%, Due 2/1/2047			232,840			220,445
3.000%, Due 3/1/2047E			423,621			401,619
3.500%, Due 3/1/2047			109,737			106,964
3.000%, Due 4/1/2047			44,675			42,297
4.500%, Due 7/1/2047			136,830			140,323
3.500%, Due 9/1/2047			133,484			130,288
4.000%, Due 11/1/2047			315,601			315,948
4.000%, Due 4/1/2048			331,511			331,875
4.500%, Due 7/1/2048			388,793			398,574
5.000%, Due 8/1/2048			293,052			306,166
5.000%, Due 9/1/2048			394,239			411,861
						10,831,089
Government National Mortgage Association,
6.500%, Due 8/15/2027			41,592			45,355
6.500%, Due 11/15/2027			45,299			49,397
7.500%, Due 12/15/2028			42,442			47,380
5.500%, Due 7/15/2033			47,588			51,235
6.000%, Due 12/15/2033			61,084			67,804
5.500%, Due 2/20/2034			66,574			71,142
5.000%, Due 10/15/2039			101,002			107,299
3.500%, Due 9/15/2041			274,303			270,951
3.000%, Due 1/20/2046			80,938			77,734
3.000%, Due 4/20/2046			206,769			198,232
3.000%, Due 6/20/2046			273,319			261,865
3.500%, Due 8/20/2047			145,891			143,395
3.500%, Due 10/20/2047			224,390			220,551
4.000%, Due 1/20/2048			507,677			511,294
4.500%, Due 2/20/2048			370,064			379,875
4.500%, Due 4/20/2048			239,052			245,436
5.000%, Due 5/20/2048			126,555			131,679
						2,880,624
Total U.S. Agency Mortgage-Backed Obligations (Cost $16,542,768)						16,015,679
U.S. TREASURY OBLIGATIONS - 12.50%
U.S. Treasury Notes/Bonds,
1.250%, Due 2/29/2020			964,000			944,532
2.352%, Due 4/30/2020, (3-mo. Treasury money market yield + 0.030%)D			15,540,000			15,542,998
1.750%, Due 10/31/2020			964,000			942,912
1.250%, Due 3/31/2021			964,000			927,172
1.375%, Due 4/30/2021			964,000			928,528
2.000%, Due 5/31/2021			1,446,000			1,413,182
2.000%, Due 2/15/2022			2,406,000			2,334,760
1.750%, Due 9/30/2022			500,000			477,500

See accompanying notes

25

American Beacon Balanced Fund^SM

Schedule of Investments

October 31, 2018

	Principal Amount			Fair Value
U.S. TREASURY OBLIGATIONS - 12.50% (continued)
U.S. Treasury Notes/Bonds, (continued)
1.625%, Due 11/15/2022		$	964,000		$	914,633
2.000%, Due 2/15/2023			500,000			480,312
2.625%, Due 2/28/2023			970,000			956,284
2.750%, Due 7/31/2023			500,000			494,824
2.500%, Due 8/15/2023			964,000			943,063
2.375%, Due 8/15/2024			620,000			598,179
2.875%, Due 7/31/2025			500,000			494,004
6.875%, Due 8/15/2025			279,000			343,737
2.000%, Due 11/15/2026			1,685,000			1,551,516
2.875%, Due 5/15/2028			200,000			195,422
5.250%, Due 11/15/2028			217,000			255,526
4.750%, Due 2/15/2037			304,000			366,011
4.500%, Due 8/15/2039			241,000			283,062
3.125%, Due 11/15/2041			826,000			792,476
2.500%, Due 5/15/2046			2,348,000			1,967,551
3.000%, Due 8/15/2048			3,550,000			3,282,502
						37,430,686
Total U.S. Treasury Obligations (Cost $37,968,282)						37,430,686
	Shares
SHORT-TERM INVESTMENTS - 5.08%
Investment Companies - 2.61%
American Beacon U.S. Government Money Market Select Fund, Select Class, 2.11%F G			7,833,723			7,833,723
	Principal Amount
U.S. Treasury Obligations - 2.47%
U.S. Treasury Notes/Bonds,
2.389%, Due 4/30/2019, (3-mo. Treasury money market yield + 0.070%)D		$	1,700,000			1,701,091
1.125%, Due 5/31/2019			723,000			717,097
0.750%, Due 7/15/2019			1,056,000			1,042,388
0.875%, Due 7/31/2019			482,000			475,843
2.379%, Due 7/31/2019, (3-mo. Treasury money market yield + 0.060%)D			2,290,000			2,291,667
0.875%, Due 9/15/2019			1,205,000			1,186,313
						7,414,399
						7,414,399
Total Short-Term Investments (Cost $15,279,325)						15,248,122
	Shares
SECURITIES LENDING COLLATERAL - 0.90% (Cost $2,690,067)
Investment Companies - 0.90%
American Beacon U.S. Government Money Market Select Fund, Select Class, 2.11%F G			2,690,067			2,690,067
TOTAL INVESTMENTS - 100.28% (Cost $268,421,760)						300,348,389
LIABILITIES, NET OF OTHER ASSETS - (0.28%)						(839,866	)
TOTAL NET ASSETS - 100.00%					$	299,508,523
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, 2018.

^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 $5,509,118 or 1.84% of net assets. The Fund has no right to demand registration of these securities.

^D Variable, floating, or adjustable rate securities with an interest rate that changes periodically. Rates are periodically reset with rates that are based on a predetermined benchmark such as a widely followed interest rate such as T-bills, LIBOR or PRIME plus a fixed spread. The interest rate disclosed reflects the rate in effect on October 31, 2018.

See accompanying notes

26

American Beacon Balanced Fund^SM

Schedule of Investments

October 31, 2018

^E Coupon rate may change based on changes of the underlying collateral or prepayments of principal. The coupon rate shown represents the rate at period end.

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

^G 7-day yield.

ADR - American Depositary Receipt.

LIBOR - London Interbank Offered Rate.

LLC - Limited Liability Company.

LP - Limited Partnership.

MLP - Master Limited Partnership.

NVDR - Non Voting Depositary Receipt.

PLC - Public Limited Company.

REMIC – Real Estate Mortgage Investment Conduit.

Long Futures Contracts Open on October 31, 2018:
Equity Futures Contracts
Description	Number of Contracts	Expiration Date	Notional Amount		Contract Value		Unrealized Appreciation (Depreciation)
S&P 500 E-Mini Index Futures	59	December 2018	$	8,238,573	$	7,997,745	$	(240,828	)
			$	8,238,573	$	7,997,745	$	(240,828	)

Index Abbreviations:
S&P 500	Standard & Poor’s U.S. Equity Large Cap Index.

The Fund’s investments are summarized by level based on the inputs used to determine their values. As of October 31, 2018, the investments were classified as described below:

Balanced Fund	Level 1			Level 2		Level 3		Total
Assets
Common Stocks	$	186,261,820		$	-	$	-	$	186,261,820
Corporate Obligations		-			32,928,630		-		32,928,630
Foreign Corporate Obligations		-			4,719,119		-		4,719,119
Foreign Sovereign Obligations		-			480,111		-		480,111
Commercial Mortgage-Backed Obligations		-			1,873,631		-		1,873,631
Asset-Backed Obligations		-			2,700,524		-		2,700,524
U.S. Agency Mortgage-Backed Obligations		-			16,015,679		-		16,015,679
U.S. Treasury Obligations		-			37,430,686		-		37,430,686
Short-Term Investments:
Investment Companies		7,833,723			-		-		7,833,723
U.S. Treasury Obligations		-			7,414,399		-		7,414,399
Securities Lending Collateral		2,690,067			-		-		2,690,067
Total Investments in Securities - Assets	$	196,785,610		$	103,562,779	$	-	$	300,348,389
Financial Derivative Instruments - Liabilities
Futures Contracts	$	(240,828	)	$	-	$	-	$	(240,828	)
Total Financial Derivative Instruments - Liabilities	$	(240,828	)	$	-	$	-	$	(240,828	)

U.S. GAAP requires transfers between all levels to level 3 to be disclosed. During the year ended October 31, 2018, there were no transfers into or out of Level 3.

See accompanying notes

27

American Beacon Mid-Cap Value Fund^SM

Schedule of Investments

October 31, 2018

	Shares		Fair Value
COMMON STOCKS - 96.58%
Communication Services - 3.86%
Media - 3.86%
Altice USA, Inc., Class A		232,656		$	3,794,619
Interpublic Group of Cos, Inc.		314,335			7,279,999
Meredith Corp.A		103,659			5,344,658
News Corp., Class A		333,122			4,393,879
Omnicom Group, Inc.		107,434			7,984,495
					28,797,650
Total Communication Services					28,797,650
Consumer Discretionary - 11.38%
Auto Components - 1.98%
Adient PLC		71,105			2,163,014
Dana, Inc.		355,796			5,539,744
Delphi Technologies PLC		97,095			2,081,717
Lear Corp.		37,240			4,949,196
					14,733,671
Diversified Consumer Services - 0.79%
Adtalem Global Education, Inc.B		116,520			5,899,408
Hotels, Restaurants & Leisure - 2.48%
Norwegian Cruise Line Holdings Ltd.B		137,549			6,061,784
Royal Caribbean Cruises Ltd.		70,845			7,419,597
Wyndham Destinations, Inc.		140,148			5,028,510
					18,509,891
Household Durables - 1.89%
DR Horton, Inc.		115,569			4,155,861
Lennar Corp., Class A		50,654			2,177,109
Newell Brands, Inc.		252,652			4,012,114
Whirlpool Corp.		34,385			3,774,097
					14,119,181
Internet & Direct Marketing Retail - 0.36%
Qurate Retail, Inc.B		123,523			2,710,095
Multiline Retail - 1.10%
Dollar General Corp.		73,877			8,228,420
Specialty Retail - 2.08%
Aaron’s, Inc.		114,352			5,389,410
Advance Auto Parts, Inc.		47,146			7,532,045
Foot Locker, Inc.		55,180			2,601,185
					15,522,640
Textiles, Apparel & Luxury Goods - 0.70%
Gildan Activewear, Inc.		33,926			1,014,727
Hanesbrands, Inc.		243,675			4,181,463
					5,196,190
Total Consumer Discretionary					84,919,496
Consumer Staples - 2.05%
Beverages - 0.99%
Coca-Cola European Partners PLC		162,483			7,391,352

See accompanying notes

28

American Beacon Mid-Cap Value Fund^SM

Schedule of Investments

October 31, 2018

	Shares		Fair Value
COMMON STOCKS - 96.58% (continued)
Consumer Staples - 2.05% (continued)
Household Products - 1.06%
Spectrum Brands Holdings, Inc.		121,332		$	7,880,513
Total Consumer Staples					15,271,865
Energy - 8.57%
Energy Equipment & Services - 1.95%
National Oilwell Varco, Inc.		187,051			6,883,477
TechnipFMC PLC		199,268			5,240,748
Weatherford International PLCA B		1,805,369			2,437,248
					14,561,473
Oil, Gas & Consumable Fuels - 6.62%
Cenovus Energy, Inc.		499,019			4,221,701
Chesapeake Energy Corp.A B		541,767			1,901,602
Devon Energy Corp.		212,223			6,876,025
EQT Corp.		272,697			9,263,517
Golar LNG Ltd.		220,940			5,916,773
Murphy Oil Corp.		361,536			11,518,537
Parsley Energy, Inc., Class AB		154,374			3,615,439
Vermilion Energy, Inc.A		229,678			6,100,248
					49,413,842
Total Energy					63,975,315
Financials - 22.06%
Banks - 6.76%
Fifth Third Bancorp		511,886			13,815,803
FNB Corp.		495,156			5,857,695
KeyCorp		790,481			14,355,135
Pinnacle Financial Partners, Inc.		47,537			2,486,185
Regions Financial Corp.		395,782			6,716,421
Signature Bank		46,593			5,120,571
Valley National Bancorp		211,979			2,115,550
					50,467,360
Capital Markets - 3.18%
Apollo Global Management LLC, Class A, MLP		190,325			5,599,361
Franklin Resources, Inc.		171,895			5,242,798
Invesco Ltd.		202,373			4,393,518
KKR & Co., Inc., Class A		358,068			8,468,308
					23,703,985
Consumer Finance - 2.91%
Ally Financial, Inc.		384,351			9,766,359
Discover Financial Services		35,530			2,475,375
Navient Corp.		335,256			3,882,264
SLM Corp.B		551,978			5,597,057
					21,721,055
Diversified Financial Services - 2.35%
AXA Equitable Holdings, Inc.		322,604			6,545,635
Jefferies Financial Group, Inc.		191,951			4,121,188
Voya Financial, Inc.		156,148			6,833,037
					17,499,860

See accompanying notes

29

American Beacon Mid-Cap Value Fund^SM

Schedule of Investments

October 31, 2018

	Shares		Fair Value
COMMON STOCKS - 96.58% (continued)
Financials - 22.06% (continued)
Insurance - 5.84%
Assurant, Inc.		41,521		$	4,036,256
Axis Capital Holdings Ltd.		252,431			14,083,126
Fidelity National Financial, Inc.		310,671			10,391,945
Hanover Insurance Group, Inc.		11,426			1,272,628
Willis Towers Watson PLC		96,634			13,834,123
					43,618,078
Mortgage Real Estate Investment Trusts (REITs) - 0.40%
MFA Financial, Inc.		432,719			2,998,743
Thrifts & Mortgage Finance - 0.62%
New York Community Bancorp, Inc.		481,944			4,617,024
Total Financials					164,626,105
Health Care - 8.19%
Health Care Equipment & Supplies - 1.15%
Zimmer Biomet Holdings, Inc.		75,846			8,615,347
Health Care Providers & Services - 5.92%
Cardinal Health, Inc.		205,770			10,411,962
Cigna Corp.		40,963			8,758,299
McKesson Corp.		45,087			5,625,054
MEDNAX, Inc.B		201,360			8,314,155
Universal Health Services, Inc., Class B		91,477			11,119,944
					44,229,414
Pharmaceuticals - 1.12%
Mylan N.V.B		266,544			8,329,500
Total Health Care					61,174,261
Industrials - 15.60%
Aerospace & Defense - 2.55%
Spirit AeroSystems Holdings, Inc., Class A		107,020			8,990,750
TransDigm Group, Inc.B		30,462			10,060,076
					19,050,826
Airlines - 0.53%
Alaska Air Group, Inc.		63,919			3,925,905
Building Products - 1.86%
JELD-WEN Holding, Inc.B		345,708			5,621,212
Johnson Controls International PLC		114,602			3,663,826
Owens Corning		96,185			4,546,665
					13,831,703
Commercial Services & Supplies - 1.02%
Republic Services, Inc.		104,716			7,610,759
Construction & Engineering - 1.50%
AECOMB		165,028			4,808,916
KBR, Inc.		322,787			6,384,727
					11,193,643
Industrial Conglomerates - 0.73%
Carlisle Companies, Inc.		56,640			5,470,857

See accompanying notes

30

American Beacon Mid-Cap Value Fund^SM

Schedule of Investments

October 31, 2018

	Shares		Fair Value
COMMON STOCKS - 96.58% (continued)
Industrials - 15.60% (continued)
Machinery - 4.21%
Dover Corp.		141,597		$	11,729,895
Snap-on, Inc.		30,734			4,731,192
Stanley Black & Decker, Inc.		58,944			6,868,155
Terex Corp.		128,807			4,300,866
Wabtec Corp.A		46,278			3,795,722
					31,425,830
Professional Services - 0.53%
Nielsen Holdings PLC		151,389			3,933,086
Road & Rail - 1.76%
Avis Budget Group, Inc.B		174,398			4,904,072
Ryder System, Inc.		149,210			8,252,805
					13,156,877
Trading Companies & Distributors - 0.91%
AerCap Holdings N.V.B		136,012			6,811,481
Total Industrials					116,410,967
Information Technology - 8.09%
Electronic Equipment, Instruments & Components - 2.77%
Anixter International, Inc.B		132,413			8,698,210
Avnet, Inc.		270,882			10,854,242
Keysight Technologies, Inc.B		20,170			1,151,303
					20,703,755
IT Services - 1.93%
Alliance Data Systems Corp.		24,035			4,955,537
Genpact Ltd.		165,393			4,533,422
Total System Services, Inc.		54,134			4,934,314
					14,423,273
Semiconductors & Semiconductor Equipment - 2.44%
Marvell Technology Group Ltd.		370,144			6,074,063
Microchip Technology, Inc.		127,766			8,404,447
Versum Materials, Inc.		118,257			3,732,191
					18,210,701
Technology Hardware, Storage & Peripherals - 0.95%
Hewlett Packard Enterprise Co.		462,041			7,046,125
Total Information Technology					60,383,854
Materials - 3.53%
Chemicals - 2.18%
Ashland Global Holdings, Inc.		91,117			6,740,836
Axalta Coating Systems Ltd.B		222,537			5,492,213
Eastman Chemical Co.		51,652			4,046,934
					16,279,983
Containers & Packaging - 1.35%
Owens-Illinois, Inc.B		307,862			4,824,198
Packaging Corp. of America		57,515			5,280,452
					10,104,650
Total Materials					26,384,633

See accompanying notes

31

American Beacon Mid-Cap Value Fund^SM

Schedule of Investments

October 31, 2018

	Shares		Fair Value
COMMON STOCKS - 96.58% (continued)
Real Estate - 6.63%
Equity Real Estate Investment Trusts (REITs) - 6.15%
AvalonBay Communities, Inc.		33,084		$	5,802,272
EPR Properties		102,990			7,079,532
GEO Group, Inc.		172,363			3,810,946
HCP, Inc.		134,805			3,713,878
Lamar Advertising Co., Class A		97,160			7,123,771
Liberty Property Trust		146,023			6,113,983
MGM Growth Properties LLC, Class A		433,606			12,266,714
					45,911,096
Real Estate Management & Development - 0.48%
Realogy Holdings Corp.A		188,489			3,594,485
Total Real Estate					49,505,581
Utilities - 6.62%
Electric Utilities - 5.92%
Edison International		111,827			7,759,675
Evergy, Inc.		64,739			3,624,737
FirstEnergy Corp.		155,700			5,804,496
PG&E Corp.		218,789			10,241,513
Pinnacle West Capital Corp.		100,069			8,230,675
Xcel Energy, Inc.		173,282			8,492,551
					44,153,647
Gas Utilities - 0.70%
UGI Corp.		98,566			5,229,912
Total Utilities					49,383,559
Total Common Stocks (Cost $721,802,196)					720,833,286
SHORT-TERM INVESTMENTS - 3.05% (Cost $22,792,845)
Investment Companies - 3.05%
American Beacon U.S. Government Money Market Select Fund, Select Class, 2.11%C D		22,792,845			22,792,845
SECURITIES LENDING COLLATERAL - 1.63% (Cost $12,169,943)
Investment Companies - 1.63%
American Beacon U.S. Government Money Market Select Fund, Select Class, 2.11%C D		12,169,943			12,169,943
TOTAL INVESTMENTS - 101.26% (Cost $756,764,984)					755,796,074
LIABILITIES, NET OF OTHER ASSETS - (1.26%)					(9,410,681	)
TOTAL NET ASSETS - 100.00%				$	746,385,393
Percentages are stated as a percent of net assets.

^A All or a portion of this security is on loan at October 31, 2018.

^B Non-income producing security.

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

^D 7-day yield.

LLC - Limited Liability Company.

MLP - Master Limited Partnership.

PLC - Public Limited Company.

See accompanying notes

32

American Beacon Mid-Cap Value Fund^SM

Schedule of Investments

October 31, 2018

Long Futures Contracts Open on October 31, 2018:
Equity Futures Contracts
Description	Number of Contracts	Expiration Date	Notional Amount		Contract Value		Unrealized Appreciation (Depreciation)
S&P MidCap 400 E-Mini Index Futures	119	December 2018	$	23,162,665	$	21,715,120	$	(1,447,545	)
			$	23,162,665	$	21,715,120	$	(1,447,545	)

Index Abbreviations:
S&P 400	Standard & Poor’s Midcap Index.

The Fund’s investments are summarized by level based on the inputs used to determine their values. As of October 31, 2018, the investments were classified as described below:

Mid-Cap Value Fund	Level 1			Level 2		Level 3		Total
Assets
Common Stocks	$	720,833,286		$	-	$	-	$	720,833,286
Short-Term Investments		22,792,845			-		-		22,792,845
Securities Lending Collateral		12,169,943			-		-		12,169,943
Total Investments in Securities - Assets	$	755,796,074		$	-	$	-	$	755,796,074
Financial Derivative Instruments - Liabilities
Futures Contracts	$	(1,447,545	)	$	-	$	-	$	(1,447,545	)
Total Financial Derivative Instruments - Liabilities	$	(1,447,545	)	$	-	$	-	$	(1,447,545	)

U.S. GAAP requires transfers between all levels to level 3 to be disclosed. During the year ended October 31, 2018, there were no transfers into or out of Level 3.

See accompanying notes

33

American Beacon Funds^SM

Statements of Assets and Liabilities

October 31, 2018

	Balanced Fund		Mid-Cap Value Fund
Assets:
Investments in unaffiliated securities, at fair value†§	$	289,824,599	$	720,833,286
Investments in affiliated securities, at fair value‡		10,523,790		34,962,788
Cash		86,426		54,388
Deposit with brokers for futures contracts		605,842		2,477,481
Dividends and interest receivable		760,360		411,225
Receivable for investments sold		5,106,716		5,101,634
Receivable for fund shares sold		225,651		923,984
Prepaid expenses		194,996		51,861
Total assets		307,328,380		764,816,647
Liabilities:
Payable for investments purchased		4,503,993		3,126,794
Payable for fund shares redeemed		141,716		906,307
Payable for expense reimbursement (Note 2)		-		318
Management and sub-advisory fees payable (Note 2)		91,334		520,822
Service fees payable (Note 2)		58,368		110,992
Transfer agent fees payable (Note 2)		12,701		19,482
Payable upon return of securities loaned (Note 9)§		2,690,067		12,169,943
Custody and fund accounting fees payable		7,929		6,969
Professional fees payable		52,538		38,835
Trustee fees payable (Note 2)		2,102		5,251
Payable for prospectus and shareholder reports		16,084		17,058
Payable for variation margin from open futures contracts (Note 5)		240,737		1,501,683
Other liabilities		2,288		6,800
Total liabilities		7,819,857		18,431,254
Net assets	$	299,508,523	$	746,385,393
Analysis of net assets:
Paid-in-capital		245,459,170	$	709,061,116
Total distributable earnings (deficits)A		54,049,353		37,324,277
Net assets	$	299,508,523	$	746,385,393

See accompanying notes

34

American Beacon Funds^SM

Statements of Assets and Liabilities

October 31, 2018

	Balanced Fund		Mid-Cap Value Fund
Shares outstanding at no par value (unlimited shares authorized):
Institutional Class		3,715,744		16,027,144
Y Class		4,372,156		6,290,621
Investor Class		7,473,498		24,232,254
Advisor Class		403,690		237,174
A Class		1,259,878		797,184
C Class		2,477,621		399,941
R6 ClassB		N/A		12,357
Net assets:
Institutional Class	$	60,191,704	$	248,752,034
Y Class	$	71,296,735	$	96,799,413
Investor Class	$	107,677,984	$	379,123,913
Advisor Class	$	6,174,284	$	3,597,339
A Class	$	18,121,273	$	12,080,510
C Class	$	36,046,543	$	5,840,412
R6 ClassB		N/A	$	191,772
Net asset value, offering and redemption price per share:
Institutional Class	$	16.20	$	15.52
Y Class	$	16.31	$	15.39
Investor Class	$	14.41	$	15.65
Advisor Class	$	15.29	$	15.17
A Class	$	14.38	$	15.15
A Class (offering price)	$	15.26	$	16.07
C Class	$	14.55	$	14.60
R6 ClassB		N/A	$	15.52
† Cost of investments in unaffiliated securities	$	257,897,970	$	721,802,196
‡ Cost of investments in affiliated securities	$	10,523,790	$	34,962,788
§ Fair value of securities on loan	$	2,596,483	$	11,632,124
A The Fund’s investments in affiliated securities did not have unrealized appreciation (depreciation) at year end.
B Class commenced operations February 28, 2018 (Note 1).

See accompanying notes

35

American Beacon Funds^SM

Statements of Operations

For the year ended October 31, 2018

	Balanced Fund			Mid-Cap Value Fund
Investment income:
Dividend income from unaffiliated securities (net of foreign taxes)†	$	5,360,026		$	15,701,100
Dividend income from affiliated securities (Note 8)		96,361			570,682
Interest income		3,090,301			4,642
Income derived from securities lending (Note 9)		27,107			90,607
Total investment income		8,573,795			16,367,031
Expenses:
Management and sub-advisory fees (Note 2)		1,754,892			6,204,256
Transfer agent fees:
Institutional Class (Note 2)		9,121			63,418
Y Class (Note 2)		61,127			108,954
Investor Class		8,811			13,766
Advisor Class		543			2,277
A Class		1,263			1,193
C Class		2,551			1,378
R6 Class		-			2,131
Custody and fund accounting fees		45,995			93,343
Professional fees		60,487			66,301
Registration fees and expenses		86,508			125,507
Service fees (Note 2):
Investor Class		390,629			1,111,866
Advisor Class		19,858			9,225
A Class		9,561			23,093
C Class		15,938			1,455
Distribution fees (Note 2):
Advisor Class		19,973			9,225
A Class		52,714			36,059
C Class		406,208			68,453
Prospectus and shareholder report expenses		40,003			79,054
Trustee fees (Note 2)		23,429			55,232
Other expenses		34,466			49,654
Total expenses		3,044,077			8,125,840
Net fees waived and expenses (reimbursed) / recouped (Note 2)A		(64,825	)		(2,078	)
Net expenses		2,979,252			8,123,762
Net investment income		5,594,543			8,243,269
Realized and unrealized gain (loss) from investments:
Net realized gain (loss) from:
Investments in unaffiliated securitiesB		22,517,268			35,734,348
Commission recapture (Note 1)		3,304			51,069
Foreign currency transactions		915			(1,057	)
Futures contracts		268,213			3,261,868
Change in net unrealized appreciation (depreciation) of:
Investments in unaffiliated securitiesC		(23,885,306	)		(111,472,440	)
Foreign currency transactions		-			47
Futures contracts		(338,507	)		(2,708,683	)
Net (loss) from investments		(1,434,113	)		(75,134,848	)
Net increase (decrease) in net assets resulting from operations	$	4,160,430		$	(66,891,579	)
† Foreign taxes	$	59,657		$	82,932
A The Manager voluntarily reimbursed service fees in the Balanced Fund in the amount of $64,825.
B The Fund did not recognize net realized gains (losses) from the sale of investments in affiliated securities.
C The Fund’s investments in affiliated securities did not have a change in net unrealized appreciation (depreciation) at year end.

See accompanying notes

36

American Beacon Funds^SM

Statements of Changes in Net Assets

	Balanced Fund						Mid-Cap Value Fund
	Year Ended October 31, 2018			Year Ended October 31, 2017			Year Ended October 31, 2018			Year Ended October 31, 2017
Increase (decrease) in net assets:
Operations:
Net investment income	$	5,594,543		$	8,296,612		$	8,243,269		$	5,825,978
Net realized gain from investments in unaffiliated securities, commission recapture, foreign currency transactions, and futures contracts		22,789,700			61,221,937			39,046,228			34,267,279
Change in net unrealized appreciation (depreciation) of investments in unaffiliated securities, foreign currency transactions, and futures contracts		(24,223,813	)		11,140,075			(114,181,076	)		92,030,585
Net increase (decrease) in net assets resulting from operations		4,160,430			80,658,624			(66,891,579	)		132,123,842
Distributions to shareholders:
Net investment income:
Institutional Class		-			(3,922,895	)		-			(3,184,300	)
Y Class		-			(1,320,074	)		-			(1,054,082	)
Investor Class		-			(2,791,629	)		-			(3,122,003	)
Advisor Class		-			(196,602	)		-			(63,730	)
A Class		-			(506,915	)		-			(224,784	)
C Class		-			(535,923	)		-			(30,824	)
Total retained earnings:*
Institutional Class		(6,261,952	)		-			(9,434,653	)		-
Y Class		(4,822,027	)		-			(3,447,030	)		-
Investor Class		(9,640,824	)		-			(9,262,634	)		-
Advisor Class		(761,574	)		-			(94,728	)		-
A Class		(1,718,656	)		-			(434,137	)		-
C Class		(2,976,692	)		-			(184,144	)		-
Net distributions to shareholders		(26,181,725	)		(9,274,038	)		(22,857,326	)		(7,679,723	)
Capital share transactions (Note 11):
Proceeds from sales of shares		53,469,502			125,828,653			405,914,174			180,157,266
Reinvestment of dividends and distributions		25,384,629			8,901,335			22,545,457			7,582,763
Cost of shares redeemed		(109,865,841	)		(571,205,485	)		(261,376,072	)		(183,160,251	)
Net increase (decrease) in net assets from capital share transactions		(31,011,710	)		(436,475,497	)		167,083,559			4,579,778
Net increase (decrease) in net assets		(53,033,005	)		(365,090,911	)		77,334,654			129,023,897
Net assets:
Beginning of period		352,541,528			717,632,439			669,050,739			540,026,842
End of period	$	299,508,523		$	352,541,528		$	746,385,393		$	669,050,739
*  Distributions from net investment income and net realized capital gains are combined for the year ended October 31, 2018. See Note 1 in the Notes to Financial Statements for more information regarding new accounting pronouncements.

See accompanying notes

37

American Beacon Funds^SM

Notes to Financial Statements

October 31, 2018

1.  Organization and Significant Accounting Policies

American Beacon Funds (the “Trust”), is organized as a Massachusetts business trust. The Funds, each a series within the Trust, are registered under the Investment Company Act of 1940, as amended (the “Act”), as diversified, open-end management investment companies. As of October 31, 2018, the Trust consists of thirty-three active series, two of which are presented in this filing: American Beacon Balanced Fund and American Beacon Mid-Cap Value Fund (collectively, the “Funds” and each individually a “Fund”). The remaining thirty-one active series are reported in separate filings.

American Beacon Advisors, Inc. (the “Manager”) is a Delaware corporation and a wholly-owned subsidiary of Resolute Investment Managers, Inc. (“RIM”) organized in 1986 to provide business management, advisory, administrative, and asset management consulting services to the Trust and other investors. The Manager is registered as an investment advisor under the Investment Advisers Act of 1940, as amended (the “Advisers Act”). RIM is, in turn, a wholly-owned subsidiary of Resolute Acquisition, Inc., which is a wholly-owned subsidiary of Resolute Topco, Inc., a wholly-owned subsidiary of Resolute Investment Holdings, LLC (“RIH”). RIH is owned primarily by Kelso Investment Associates VIII, L.P., KEP VI, LLC and Estancia Capital Partners L.P., investment funds affiliated with Kelso & Company, L.P. (“Kelso”) or Estancia Capital Management, LLC (“Estancia”), which are private equity firms.

Recent Accounting Pronouncements

In March 2017, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2017-08, Premium Amortization of Purchased Callable Debt Securities. The amendments in the ASU shorten the premium amortization period on a purchased callable debt security from the security’s contractual life to the earliest call date. It is anticipated that this change will enhance disclosures by reducing losses recognized when a security is called on an earlier date. This ASU is effective for fiscal years beginning after December 15, 2018. The Manager continues to evaluate the impact this ASU will have on the financial statements and other disclosures.

In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820). The amendments in the ASU impact disclosure requirements for fair value measurement. It is anticipated that this change will enhance the effectiveness of disclosures in the notes to the financial statements. This ASU is effective for fiscal years beginning after December 15, 2019. Early adoption is permitted and can include the entire standard or certain provisions that exclude or amend disclosures. For the year ended October 31, 2018, the Funds have chosen to adopt the standard. The adoption of this ASU guidance did not have a material impact on the financial statements and other disclosures.

In August 2018, the U.S. Securities and Exchange Commission (“SEC”) adopted amendments to certain disclosure requirements in Securities Act Release No. 33-10532, Disclosure Update and Simplification, which is intended to facilitate the disclosure of information to investors and simplify compliance without significantly altering the total mix of information provided to investors. Effective with the current reporting period, the Fund adopted the amendments with the impacts being that the Fund is no longer required to present components of distributable earnings on the Statements of Assets and Liabilities or the sources of distributable earnings and the amount of undistributed net investment income on the Statements of Changes in Net Assets.

Class Disclosure

On February 28, 2018, the Mid-Cap Value Fund created the R6 Class, a new class made available for sale to large institutional retirement plan investors pursuant to an amendment to the Fund’s registration statement filed with the SEC. Refer to the Fund’s prospectus for more details.

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

Class	Eligible Investors	Minimum Initial Investments
Institutional	Large institutional investors - sold directly or through intermediary channels.	$	250,000
Y Class	Large institutional retirement plan investors - sold directly or through intermediary channels.	$	100,000

38

American Beacon Funds^SM

Notes to Financial Statements

October 31, 2018

Class	Eligible Investors	Minimum Initial Investments
Investor	All investors using intermediary organizations, such as broker-dealers or retirement plan sponsors.	$	2,500
Advisor Class	All investors who invest through intermediary organizations, such as broker-dealers or third party administrators.	$	2,500
A Class	All investors who invest through intermediary organizations, such as broker-dealers or third party administrator. Retail investors who invest directly through a financial intermediary such as a broker, bank, or registered investment advisor which may include a front-end sales charge and a contingent deferred sales charge (“CDSC”).	$	2,500
C Class	Retail investors who invest directly through a financial intermediary such as a broker or through employee directed benefit plans with applicable sales charges which may include CDSC.	$	1,000
R6	Large institutional retirement plan investors - sold through retirement plan sponsors.		None

Each class offered by the Trust has equal rights as to assets and voting privileges. Income 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 service, distribution, transfer agent fees, and sub-transfer agent fees that vary amongst the classes as described more fully in Note 2.

Significant Accounting Policies

The following is a summary of significant accounting policies, consistently followed by the Funds in preparation of the financial statements. The Funds are considered investment companies and accordingly, follow the investment company accounting and reporting guidance of the FASB Accounting Standards Codification Topic 946, Financial Services – Investment Companies, a part of Generally Accepted Accounting Principles (“U.S. GAAP”).

Security Transactions and Investment Income

Security transactions are recorded as of the trade date for financial reporting purposes. Securities purchased or sold on a when-issued or delayed-delivery basis may be settled beyond a standard settlement period for the security after the trade date.

Dividend income, net of foreign taxes, is recorded on 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 convertible securities, premiums attributable to the conversion feature are not amortized. Realized gains (losses) from securities sold are determined on the basis of specific lot identification. Estimated tax liabilities on certain foreign securities are recorded on an accrual basis and are reflected as components of interest income or net change in unrealized appreciation (depreciation) on investments on the Statement of Operations, as appropriate. Tax liabilities realized as a result of such security sales are reflected as a component of net realized gain (loss) on investments on the Statement of Operations. Paydown gains (losses) on mortgage-related and other asset-backed securities, if any, are recorded as components of interest income on the Statements of Operations. Income or short-term capital gain distributions received from registered investment companies, if any, are recorded as dividend income. Long-term gain distributions received from registered investment companies, if any, are recorded as realized gains.

Debt obligations may be placed on a non-accrual status and related interest income may be reduced by ceasing current accruals and writing off interest receivable when the collection of all or a portion of interest has become doubtful based on consistently applied procedures. A debt obligation is removed for non-accrual when the issuer resumes interest payments or when collectability of interest is probable. Realized gains (losses) from securities sold are determined on the basis of specific lot identification.

39

American Beacon Funds^SM

Notes to Financial Statements

October 31, 2018

Distributions to Shareholders

Distributions, if any, of net investment income of the Balanced Fund will normally be declared and paid quarterly. Distributions, if any, of net investment income of the Mid-Cap Value Fund will normally be declared and be paid at least annually. Distributions, if any, of net realized capital gains are generally paid at least annually and recorded on the ex-dividend date. Dividends to shareholders are determined in accordance with federal income tax regulations, which may differ in amount and character from net investment income and realized gains recognized for purposes of U.S. GAAP. To the extent necessary to fully distribute capital gains, the Funds may designate earnings and profits distributed to shareholders on the redemption of shares.

Commission Recapture

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

Allocation of Income, Trust Expenses, Gains, and Losses

Investment income, realized and unrealized gains and losses from investments of the Funds are allocated daily to each class of shares based upon the relative proportion of net assets of each class to the total net assets of the Funds. Expenses directly charged or attributable to any Fund will be paid from the assets of the Fund. Generally, expenses of the Trust will be allocated among and charged to the assets of the Funds on a basis that the Trust’s Board of Trustees (the “Board”) deems fair and equitable, which may be based on the relative net assets of the Funds or nature of the services performed and relative applicability to the Funds.

Use of Estimates

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

Other

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

Concentration of Ownership

From time to time, the Funds may have a concentration of one or more accounts constituting a significant percentage of shares outstanding. Investment activities by holders of accounts that represent a significant ownership of more than 5% of the Funds’ outstanding shares could have a material impact on the Funds. As of October 31, 2018, based on management’s evaluation of the shareholder account base, exclusive of omnibus accounts, one account has been identified as representing a non-affiliated significant ownership of approximately 7% of the Balanced Fund’s outstanding shares and one account has been identified as representing a non-affiliated significant ownership of approximately 16% of the Mid-Cap Value Fund’s outstanding shares.

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Notes to Financial Statements

October 31, 2018

2.  Transactions with Affiliates

Management and Investment Sub-Advisory Agreements

The Funds and the Manager are parties to a Management Agreement that obligates the Manager to provide the Funds with investment advisory and administrative services. As compensation for performing the duties under the Management Agreement, the Manager will receive an annualized management fee based on a percentage of each Funds’ average daily net assets that is calculated and accrued daily according to the following schedule:

First $15 billion	0.35	%
Next $15 billion	0.325	%
Over $30 billion	0.30	%

The Trust, on behalf of the Funds, and the Manager have entered into Investment Advisory Agreements with Barrow, Hanley, Mewhinney & Strauss, LLC; Brandywine Global Investment Management, LLC; and Hotchkis and Wiley Capital Management, LLC for the Balanced Fund. In addition, the Manager manages a portion of the Balanced Fund pursuant to the Management Agreement. The Trust, on behalf of the Funds, and the Manager have entered into Investment Advisory Agreements with Barrow, Hanley, Mewhinney & Strauss, LLC; Pzena Investment Management, LLC; and WEDGE Capital Management, L.L.P. for the Mid-Cap Value Fund. Pursuant to the Investment Advisory Agreements, the Funds have agreed to pay an annualized sub-advisory fee that is calculated and accrued daily based on the Funds’ average daily net assets.

The Management and Sub-Advisory Fees paid by the Funds for the year ended October 31, 2018 were as follows:

Balanced Fund

	Effective Fee Rate			Amount of Fees Paid
Management Fees		0.35	%	$	1,171,539
Sub-Advisor Fees		0.17	%		583,353
Total		0.52	%	$	1,754,892

Mid-Cap Value Fund

	Effective Fee Rate			Amount of Fees Paid
Management Fees		0.35	%	$	2,816,411
Sub-Advisor Fees		0.42	%		3,387,845
Total		0.77	%	$	6,204,256

As compensation for services provided by the Manager in connection with securities lending activities conducted by the Funds, the lending Fund pays to the Manager, with respect to cash collateral posted by borrowers, a fee up to 10% of the net monthly interest income (the gross interest income earned by the investment of cash collateral, less the amount paid to borrowers and related expenses) from such activities and, with respect to loan fees paid by borrowers, a fee up to 10% of such loan fees. These fees are included in “Income derived from securities lending” and “Management and investment advisory fees” on the Statements of Operations. During the year ended October 31, 2018, the Manager received securities lending fees of $3,011 and $9,395 for the securities lending activities of the Balanced Fund and Mid-Cap Value Fund, respectively.

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

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Notes to Financial Statements

October 31, 2018

to the Funds for distribution purposes. However, the Plan authorizes the management fee received by the Manager and the investment advisors hired by the Manager to be used for distribution purposes. Under this Plan, the Funds do not intend to compensate the Manager or any other party, either directly or indirectly, for the distribution of Fund shares.

Separate Distribution Plans (the “Distribution Plans”) have been adopted pursuant to 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 Investor, Advisor, A, and C Classes of the Funds. As compensation for performing the duties required under the Service Plans, the Manager receives an annualized fee up to 0.25% of the average daily net assets of the A and C Classes, up to 0.25% of the average daily net assets of the Advisor Class, and up to 0.375% of the average daily net assets of the Investor Class of the Funds.

Sub-Transfer Agent Fees

The Manager has entered into agreements, which include servicing agreements, with financial intermediaries that provide recordkeeping, processing, shareholder communications and other services to customers of the intermediaries that hold positions in the Institutional and Y Classes of the Funds and has agreed to compensate the intermediaries for providing these services. Intermediaries transact with the Funds primarily through the use of omnibus accounts on behalf of their customers who hold positions in the Funds. Certain services would have been provided by the Fund’s transfer agent and other service providers if the shareholders’ accounts were maintained directly by the Fund’s transfer agent. Accordingly, the Funds, pursuant to Board approval, have agreed to reimburse the Manager for certain non-distribution shareholder services provided by financial intermediaries for the Institutional and Y Classes. The reimbursement amounts (sub-transfer agent fees) paid to the Manager are subject to a fee limit of up to 0.10% of an intermediary’s average net assets in the Institutional and Y Classes on an annual basis. During the year ended October 31, 2018, the sub-transfer agent fees, as reflected in “Transfer agent fees” on the Statements of Operations, were as follows:

Fund	Sub-Transfer Agent Fees
Balanced	$	66,154
Mid-Cap Value		149,067

As of October 31, 2018, the Funds owed the Manager the following reimbursement of sub-transfer agent fees, as reflected in “Transfer agent fees payable” on the Statements of Assets and Liabilities:

Fund	Reimbursement Sub-Transfer Agent Fees
Balanced	$	7,771
Mid-Cap Value		10,735

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American Beacon Funds^SM

Notes to Financial Statements

October 31, 2018

Investments in Affiliated Funds

The Funds may invest in the American Beacon U.S. Government Money Market Select Fund (the “USG Select Fund”). Cash collateral received by the Funds in connection with securities lending may also be invested in the USG Select Fund. The Funds and the USG Select Fund have the same investment advisor and therefore, are considered to be affiliated. The Manager serves as investment advisor to the USG Select Fund and receives management fees and administrative fees totaling 0.10% of the average daily net assets of the USG Select Fund. During the year ended October 31, 2018, the Manager earned fees on the Funds’ direct investments and securities lending collateral investments in the USG Select Fund as shown below:

Fund	Direct Investments in USG Select Fund		Securities Lending Collateral in USG Select Fund		Total
Balanced	$	6,190	$	3,630	$	9,820
Mid-Cap Value		38,187		18,132		56,319

Interfund Credit Facility

Pursuant to an exemptive order issued by the SEC, the Funds, along with other registered investment companies having management contracts with the Manager, may participate in a credit facility whereby each fund, under certain conditions, is permitted to lend money directly to and borrow directly from other participating funds for temporary purposes. The interfund credit facility is advantageous to the funds because it provides added liquidity, and eliminates the need to maintain higher cash balances to meet redemptions. This situation could arise when shareholder redemptions exceed anticipated volumes and certain funds have insufficient cash on hand to satisfy such redemptions or when sales of securities do not settle as expected, resulting in a cash shortfall for a fund. When a fund liquidates portfolio securities to meet redemption requests, they often do not receive payment in settlement for up to two days (or longer for certain foreign transactions). Redemption requests normally are satisfied on the next business day. The credit facility provides a source of immediate, short-term liquidity pending settlement of the sale of portfolio securities. The credit facility is administered by a credit facility team consisting of professionals from the Manager’s asset management, compliance, and accounting areas who report the activities of the credit facility to the Board. During the year ended October 31, 2018, the Balanced Fund borrowed $4,754,923 for 1 day at an interest rate of 2.06% with interest charges of $268. This amount is included in “Interest income” on the Statements of Operations. During the year ended October 31, 2018, the Mid-Cap Value Fund did not utilize the credit facility.

Expense Reimbursement Plan

The Manager voluntarily agreed to reduce fees and/or reimburse expenses for the classes of the Funds to the extent that total operating expenses exceed the Funds’ expense cap. During the year ended October 31, 2018, the Manager waived and/or reimbursed expenses as follows:

		Expense Cap							Expiration of Reimbursed Expenses
Fund	Class	2/28/2018 - 10/31/2018			Reimbursed Expenses		(Recouped) Expenses
Mid-Cap Value	R6		0.88	%(1)	$	2,078	$	-		2021

⁽¹⁾  Voluntary expense cap effective February 28, 2018.

Of these amounts, $318 was disclosed as a payable to the Manager on the Statements of Assets and Liabilities at October 31, 2018 for the Mid-Cap Value Fund.

The Funds have adopted an Expense Reimbursement Plan whereby the Manager may seek repayment of such fee reductions and expense reimbursements. Under the policy, the Manager can be reimbursed by the Funds for any contractual or voluntary fee reductions or expense reimbursements if reimbursement to the Manager (a) occurs

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October 31, 2018

within three years after the Manager’s own waiver or reimbursement and (b) does not cause the Funds’ annual operating expenses to exceed the lesser of the contractual percentage limit in effect at the time of the waiver/reimbursement or time of recoupment. The reimbursed expenses listed above will expire in 2021. The Funds did not record a liability for potential reimbursement due to the current assessment that a reimbursement is unlikely.

The Distributor

Effective March 1, 2018, Resolute Investment Distributors, Inc. (“RID” or “Distributor”) replaced Foreside Fund Services, LLC (“Foreside”) as the Funds’ distributor and principal underwriter of the Funds’ shares.

RID is a registered broker-dealer and is a member of the Financial Industry Regulatory Authority, Inc. (“FINRA”). The Distributor is affiliated with the Manager through common ownership. Under a Distribution Agreement with the Trust, the Distributor acts as the distributor and principal underwriter of the Trust in connection with the continuous offering of shares of the Funds. The Distributor continually distributes shares of the Funds on a best efforts basis. The Distributor has no obligation to sell any specific quantity of the Funds’ shares. Pursuant to the Distribution Agreement, to the extent applicable, the Distributor receives, and may re-allocate to broker-dealers, all or a portion of the sales charge paid by the purchasers of A Class and C Class shares. For A Class and C Class shares, the Distributor receives commission revenue consisting of the portion of A Class and C Class sales charge remaining after the allowances by the Distributor to the broker-dealers. The Distributor retains any portion of the commission fees that are not paid to the broker-dealers for use solely to pay distribution related expenses.

Prior to March 1, 2018, Foreside served as the distributor and principal underwriter of the Funds’ shares. Pursuant to a Sub-Administration Agreement between Foreside and the Manager in effect through February 28, 2018, Foreside received a fee from the Manager for providing administrative services in connection with the marketing and distribution of shares of the Trust, including the registration of Manager employees as registered representatives of Foreside to facilitate distribution of Fund shares. Foreside also received a fee from the Manager under a Marketing Agreement pursuant to which Foreside provided services in connection with the marketing of a Fund to institutional investors. Pursuant to the Distribution Agreement with the Trust in effect through February 28, 2018, Foreside received, and may have re-allocated to broker-dealers, all or a portion of the sales charge paid by the purchasers of A and C Class shares. For A and C Class shares, Foreside received commission revenues consisting of the portion of A and C Class sales charge remaining after the allowances by Foreside to the broker dealers. Foreside retained any portion of the commission fees that were not paid to the broker-dealers for use solely to pay distribution related expenses.

Sales Commissions

The Funds’ Distributor, formerly Foreside, may receive a portion of A Class sales charges from broker dealers and it may be used to offset distribution related expenses. During the period ended February 28, 2018, Foreside collected $3,380 and $2,255 for Balanced Fund and Mid-Cap Value Fund, respectively, from the sale of Class A Shares. During the period March 1, 2018 through October 31, 2018, RID collected $4,077 and $1,302 for the Balanced Fund and Mid-Cap Value Fund, respectively, from the sale of Class A Shares.

A CDSC of 0.50% will be deducted with respect to Class A Shares on certain purchases of $1,000,000 or more that are redeemed in whole or part within 18 months of purchase, unless waived as discussed in the Funds’ Prospectus. Any applicable CDSC will be 0.50% of the lesser of the original purchase price or the value of the redemption of the Class A Shares redeemed. During the year ended October 31, 2018, there were no CDSC fees collected for Class A Shares of the Funds.

A CDSC of 1.00% will be deducted with respect to Class C Shares redeemed within 12 months of purchase, unless waived as discussed in the Funds’ Prospectus. Any applicable CDSC will be 1.00% of the lesser of the original purchase price or the value of the redemption of the Class C Shares redeemed. During the period ended

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Notes to Financial Statements

October 31, 2018

February 28, 2018, Foreside collected CDSC fees of $2,422 and $64 for Class C Shares of the Balanced Fund and Mid-Cap Value Fund, respectively. During the period March 1, 2018 through October 31, 2018, RID collected $3,280 and $1,344 for Class C Shares of both Funds, respectively.

Trustee Fees and Expenses

As compensation for their service to the Trust, American Beacon Select Funds, American Beacon Institutional Funds Trust, American Beacon Sound Point Enhanced Income Fund, and American Beacon Apollo Total Return Fund, each Trustee receives an annual retainer of $120,000, plus $10,000 for each Board meeting attended in person or via teleconference, $2,500 for attendance by Committee members at meetings of the Audit Committee and the Investment Committee, and $1,500 for attendance by Committee members at meetings of the Nominating and Governance Committee, plus reimbursement of reasonable expenses incurred in attending Board meetings, Committee meetings, and relevant educational seminars. The Trustees also may be compensated for attendance at special Board and/or Committee meetings from time to time. The Board Chairman receives an additional annual retainer of $50,000 as well as a $2,500 fee each quarter for his attendance at the committee meetings. Effective January 1, 2018, the Board Vice Chair receives an additional annual retainer of $10,000. The Chairpersons of the Audit Committee and the Investment Committee each receive an additional annual retainer of $25,000 and the Chairman of the Nominating and Governance Committee receives an additional annual retainer of $10,000. These expenses are allocated on a prorated basis to each Fund of the Trusts according to its respective net assets.

3.  Security Valuation and Fair Value Measurements

The price of the Fund’s shares is based on the Fund’s Net Asset Value (“NAV”). The NAV of the Fund, or each of its share classes, as applicable, is determined by dividing the total value of portfolio investments and other assets, less any liabilities attributable to the Fund or class, by the total number of shares outstanding of the Fund or class.

Investments are valued at the close of the New York Stock Exchange (the “Exchange”), normally at 4:00 p.m. Eastern Time, each day that the Exchange is open for business. Equity securities, including exchange-traded funds (“ETFs”) 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 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. Certain fixed-income securities purchased on a delayed-delivery basis are marked-to-market daily until settlement at the forward settlement date.

Investments in open-end mutual funds are valued at the closing NAV per share of the mutual fund on the day of valuation.

Securities for which the market prices are not readily available or are not reflective of the fair value of the security, as determined by the Manager, will be priced at fair value following procedures approved by the Board.

Futures contracts are valued based upon their quoted daily settlement prices. Upon entering into a futures contract, the Funds are required to deposit with their futures broker, an amount of cash or U.S. Government and Agency Obligations in accordance with the initial margin requirements of the broker or exchange. Futures contracts are marked-to-market daily and an appropriate payable or receivable for the change in value (“variation margin”) is recorded by the Funds. 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.

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American Beacon Funds^SM

Notes to Financial Statements

October 31, 2018

Other investments, including restricted securities and those financial instruments for which the above valuation procedures are inappropriate or are deemed not to reflect fair value, are stated at fair value, as determined in good faith by the Manager’s Valuation Committee, pursuant to procedures established by the Board.

Valuation Inputs

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

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

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

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

Fixed-income securities including corporate, convertible and municipal bonds and notes, U.S. government agencies, U.S. Treasury obligations, sovereign issues, bank loans, convertible preferred securities, 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 and are categorized as Level 2 of the fair value hierarchy.

Mortgage-related and asset-backed securities (“ABS”) are usually issued as separate tranches, or classes, of securities within each deal. These securities are also normally valued by pricing service providers that use broker-dealer quotations or valuation estimates from their internal pricing models. The pricing models for these securities usually consider tranche-level attributes, current market data, estimated cash flows, and market-based yield spreads for each tranche, and incorporates deal collateral performance, as available. Mortgage-related and asset-backed securities that use similar valuation techniques and inputs as described above are 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.

4.  Securities and Other Investments

Agency Mortgage-Backed Securities

Certain mortgage-backed securities (“MBS”) may be issued or guaranteed by the U.S. government or a government sponsored entity, such as the Federal National Mortgage Association (“Fannie Mae”) or the Federal

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Notes to Financial Statements

October 31, 2018

Home Loan Mortgage Corporation (“Freddie Mac”). Although these instruments may be guaranteed by the U.S. government or a government sponsored entity, many such MBS are not backed by the full faith and credit of the United States and are still exposed to the risk of non-payment.

American Depositary Receipts and Non-Voting Depositary Receipts

American Depositary Receipts (“ADRs”) are depositary receipts for foreign issuers in registered form traded in U.S. securities markets. Non-Voting Depositary Receipts (“NVDRs”) represent financial interests in an issuer but the holder is not entitled to any voting rights. Depositary receipts may not be denominated in the same currency as the securities into which they may be converted. Investing in depositary receipts entails substantially the same risks as direct investment in foreign securities. There is generally less publicly available information about foreign companies and there may be less governmental regulation and supervision of foreign stock exchanges, brokers, and listed companies. In addition, such companies may use different accounting and financial standards (and certain currencies may become unavailable for transfer from a foreign currency), resulting in the Fund’s possible inability to convert immediately into U.S. currency proceeds realized upon the sale of portfolio securities of the affected foreign companies. In addition, the Funds may invest in unsponsored depositary receipts, the issuers of which are not obligated to disclose material information about the underlying securities to investors in the United States. Ownership of unsponsored depositary receipts may not entitle the Funds to the same benefits and rights as ownership of a sponsored depositary receipt or the underlying security.

Asset-Backed Securities

ABS are securities issued by trusts and special purpose entities that are backed by pools of assets, such as automobile and credit-card receivables and home equity loans, which pass through the payments on the underlying obligations to the security holders (less servicing fees paid to the originator or fees for any credit enhancement). Typically, loans or accounts receivable paper are transferred from the originator to a specially created trust, which repackages the trust’s interests as securities with a minimum denomination and a specific term. The securities are then privately placed or publicly offered. Examples include certificates for automobile receivables and so-called plastic bonds, backed by credit card receivables. The Funds are permitted to invest in asset-backed securities, subject to the Funds’ rating and quality requirements.

The value of an asset-backed security is affected by, among other things, changes in the market’s perception of the asset backing the security, the creditworthiness of the servicing agent for the loan pool, the originator of the loans and the financial institution providing any credit enhancement. Payments of principal and interest passed through to holders of asset-backed securities are frequently supported by some form of credit enhancement, such as a letter of credit, surety bond, limited guarantee by another entity or by having a priority to certain of the borrower’s other assets. The degree of credit enhancement varies, and generally applies to only a portion of the asset-backed security’s par value. Value is also affected if any credit enhancement has been exhausted.

Common Stock

Common stock generally takes the form of shares in a corporation which represent an ownership interest. It ranks below preferred stock and debt securities in claims for dividends and for assets of the company in a liquidation or bankruptcy. The value of a company’s common stock may fall as a result of factors directly relating to that company, such as decisions made by its management or decreased demand for the company’s products or services. A stock’s value may also decline because of factors affecting not just the company, but also companies in the same industry or sector. The price of a company’s stock may also be affected by changes in financial markets that are relatively unrelated to the company, such as changes in interest rates, currency exchange rates or industry regulation. Companies that elect to pay dividends on their common stock generally only do so after they invest in their own business and make required payments to bondholders and on other debt and preferred stock. Therefore, the value of a company’s common stock will usually be more volatile than its bonds, other debt and preferred stock. Common stock may be exchange-traded or OTC. OTC stock may be less liquid than exchange-traded stock.

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Notes to Financial Statements

October 31, 2018

Fixed-Income Investments

The Funds may hold debt, including government and corporate debt, and other fixed-income securities. Typically, the values of fixed-income securities change inversely with prevailing interest rates. Therefore, a fundamental risk of fixed-income securities is interest rate risk, which is the risk that their value will generally decline as prevailing interest rates rise, which may cause the Funds’ net asset value to likewise decrease, and vice versa. How specific fixed-income securities may react to changes in interest rates will depend on the specific characteristics of each security. For example, while securities with longer maturities tend to produce higher yields, they also tend to be more sensitive to changes in prevailing interest rates and are, therefore, more volatile than shorter-term securities and are subject to greater market fluctuations as a result of changes in interest rates. Fixed-income securities are also subject to credit risk, which is the risk that the credit strength of an issuer of a fixed-income security will weaken and/or that the issuer will be unable to make timely principal and interest payments and that the security may go into default. In addition, there is prepayment risk, which is the risk that during periods of falling interest rates, certain fixed-income securities with higher interest rates, such as mortgage- and asset-backed securities, may be prepaid by their issuers thereby reducing the amount of interest payments. This may result in a Fund having to reinvest its proceeds in lower yielding securities. Securities underlying mortgage- and asset-backed securities, which may include subprime mortgages, also may be subject to a higher degree of credit risk, valuation risk, and liquidity risk.

Foreign Debt Securities

The Funds may invest in foreign fixed and floating rate income securities (including emerging market securities) all or a portion of which may be non-U.S. dollar denominated and which include: (a) debt obligations issued or guaranteed by foreign national, provincial, state, municipal or other governments with taxing authority or by their agencies or instrumentalities, including Brady Bonds; (b) debt obligations of supranational entities; (c) debt obligations of the U.S. Government issued in non-dollar securities; (d) debt obligations and other fixed income securities of foreign corporate issuers (both dollar and non-dollar denominated); and (e) U.S. corporate issuers (both Eurodollar and non-dollar denominated). There is no minimum rating criteria for the Funds’ investments in such securities. Investing in the securities of foreign issuers involves special considerations that are not typically associated with investing in the securities of U.S. issuers. In addition, emerging markets are markets that have risks that are different and higher than those in more developed markets.

Foreign Securities

The Funds may invest in U.S. dollar-denominated and non-U.S. dollar denominated equity and debt securities of foreign issuers and foreign branches of U.S. banks, including negotiable certificates of deposit (“CDs”), bankers’ acceptances, and commercial paper. Foreign issuers are issuers organized and doing business principally outside the United States and include corporations, banks, non-U.S. governments, and quasi-governmental organizations. While investments in foreign securities may be intended to reduce risk by providing further diversification, such investments involve sovereign and other risks, in addition to the credit and market risks normally associated with domestic securities. These additional risks include the possibility of adverse political and economic developments (including political or social instability, nationalization, expropriation, or confiscatory taxation); the potentially adverse effects of unavailability of public information regarding issuers, different governmental supervision and regulation of financial markets, reduced liquidity of certain financial markets, and the lack of uniform accounting, auditing, and financial reporting standards or the application of standards that are different or less stringent than those applied in the United States; different laws and customs governing securities tracking; and possibly limited access to the courts to enforce the Funds’ rights as an investor.

High-Yield Securities

Non-investment-grade securities are rated below the four highest credit grades by at least one of the public rating agencies (or are unrated if not publicly rated). Participation in high-yielding securities transactions generally involves greater returns in the form of higher average yields. However, participation in such transactions involves

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October 31, 2018

greater risks, including sensitivity to economic changes, solvency, and relative liquidity in the secondary trading market. Lower ratings may reflect a greater possibility that the financial condition of the issuer, or adverse changes in general economic conditions, or both, may impair the ability of the issuer to make payments of interest and principal. The prices and yields of lower-rated securities generally fluctuate more than higher-quality securities, and such prices may decline significantly in periods of general economic difficulty or rising interest rates.

Illiquid and Restricted Securities

The Funds may invest in securities that are subject to legal or contractual restrictions on resale. These securities may be sold privately, but are required to be registered or exempted from such registration before being sold to the public. Private placement securities are generally considered to be restricted except for those securities traded between qualified institutional investors under the provisions of Rule 144A of the Securities Act of 1933 (the “Securities Act”). Illiquid securities have included securities that have not been registered under the Securities Act, securities that are otherwise not readily marketable, and repurchase agreements having a remaining maturity of longer than seven calendar days. Disposal of both illiquid and restricted securities may involve time-consuming negotiations and expenses, and prompt sale at an acceptable price may be difficult to achieve. Restricted securities outstanding during the year ended October 31, 2018 are disclosed in the Fund’s Notes to the Schedules of Investments.

Regulation S under the Securities Act permits the sale abroad of securities that are not registered for sale in the United States and includes a provision for U.S. investors, such as the Funds, to purchase such unregistered securities if certain conditions are met.

Mortgage-Backed Securities

MBS often have stated maturities of up to thirty years when they are issued, depending upon the length of the mortgages underlying the securities. In practice however, unscheduled or early payments of principal and interest on the underlying mortgages may make the securities’ effective maturity shorter than this, and the prevailing interest rates may be higher or lower than the current yield of the Funds’ portfolio at the time resulting in reinvestment risk.

Rising or high interest rates may result in slower than expected principal payments which may tend to extend the duration of MBS, making them more volatile and more sensitive to changes in interest rates. This is known as extension risk.

MBS may have less potential for capital appreciation than comparable fixed-income securities due to the likelihood of increased prepayments of mortgages resulting from foreclosures or declining interest rates. These foreclosed or refinanced mortgages are paid off at face value (par) or less, causing a loss, particularly for any investor who may have purchased the security at a premium or a price above par. In such an environment, this risk limits the potential price appreciation of these securities.

Mortgage-Related and Other Asset-Backed Securities

The Balanced Fund may invest in mortgage or other ABS. These securities may include mortgage instruments issued by U.S. government agencies (“agency mortgages”) or those issued by private entities (“non-agency mortgages”). Specific types of instruments may include mortgage pass-through securities, collateralized mortgage obligations (“CMOs”), commercial mortgage-backed securities, mortgage dollar rolls, CMO residuals, stripped mortgage-backed securities and other securities that directly or indirectly represent a participation in, or are secured by a payable from, mortgage loans on real property. The value of the Funds’ MBS may be affected by, among other things, changes or perceived changes in interest rates, factors concerning the interests in and structure of the issuer or the originator of the mortgage, or the quality of the underlying assets. The mortgages

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underlying the securities may default or decline in quality or value. Through its investments in MBS, a Fund has exposure to subprime loans, Alt-A loans and non-conforming loans as well as to the mortgage and credit markets generally. Underlying collateral related to subprime, Alt-A and non-conforming mortgage loans has become increasingly susceptible to defaults and declines in quality or value, especially in a declining residential real estate market. In addition, regulatory or tax changes may adversely affect the mortgage securities markets as a whole.

Municipal Securities

Municipal securities may include general obligation bonds, municipal lease obligations, resource recovery obligations, revenue obligations, anticipation notes, private activity bonds and municipal warrants. The Funds may invest in municipal securities that pay taxable or tax exempt interest. Municipal securities are subject to credit risk where a municipal issuer of a security might not make interest or principal payments on a security as they become due. Municipal securities are also subject to interest rate risk. A downgrade in the issuer’s or security’s credit rating can reduce the market value of the security. A number of municipalities may face severe financial hardship making the possibility of their defaulting on obligations, and/or declaring bankruptcy where allowable, a risk to the value of municipal securities held by the Funds.

Other Investment Company Securities and Other Exchange-Traded Products

The Funds may invest in shares of other investment companies, including open-end funds, closed-end funds, business development companies, ETFs, unit investment trusts, and other investment companies of the Trust. The Funds may invest in investment company securities advised by the Manager or a sub-advisor. Investments in the securities of other investment companies may involve duplication of advisory fees and certain other expenses. By investing in another investment company, the Funds become a shareholder of that investment company. As a result, the Funds’ shareholders indirectly will bear the Funds’ proportionate share of the fees and expenses paid by shareholders of the other investment company, in addition to the fees and expenses the Funds’ shareholders directly bear in connection with the Funds’ own operations. These other fees and expenses are reflected as Acquired Fund Fees and Expenses and are included in the Fees and Expenses Table for the Funds in their Prospectus, if applicable. Investments in other investment companies may involve the payment of substantial premiums above the value of such issuer’s portfolio securities.

Privately Issued Mortgage-Backed Securities

Pools created by non-governmental issuers generally offer a higher rate of interest than government and government-related pools because there are no direct or indirect government guarantees of payments in such pools. However, timely payment of interest and principal of these pools is often partially supported by various enhancements such as over-collateralization and senior/subordination structures and by various forms of insurance or guarantees, including individual loan, title, pool and hazard insurance. The insurance and guarantees are issued by government entities, private insurers or the mortgage poolers. Although the market for such securities is becoming increasingly liquid, securities issued by certain private organizations may not be readily marketable.

Publicly Traded Partnerships; Master Limited Partnerships

The Funds may invest in publicly traded partnerships such as master limited partnerships (“MLPs”). MLPs issue units that are registered with the SEC and are freely tradable on a securities exchange or in the OTC market. An MLP may have one or more general partners, who conduct the business, and one or more limited partners, who contribute capital. An MLP also may be an entity similar to a limited partnership, such as a limited liability company, which has a manager or managing member and non-managing members (who are like limited partners). The general partner or partners are jointly and severally responsible for the liabilities of the MLP. A Fund invests as a limited partner and normally would not be liable for the debts of an MLP beyond the amount the Fund has invested therein but it would not be shielded to the same extent that a shareholder of a corporation would be. In certain instances, creditors of an MLP would have the right to seek a return of capital that had been distributed to

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a limited partner. The right of an MLP’s creditors would continue even after a Fund had sold its investment in the partnership. MLPs typically invest in real estate and oil and gas equipment leasing assets, but they also finance entertainment, research and development, and other projects.

Real Estate Investment Trusts

The Funds may own shares of real estate investment trusts (“REITs”) which report information on the source of their distributions annually. The 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.

U.S. Government Agency Securities

U.S. Government agency securities are issued or guaranteed by the U.S. Government or its agencies or instrumentalities. Some obligations issued by U.S. Government agencies and instrumentalities are supported by the full faith and credit of the U.S. Treasury; others by the right of the issuer to borrow from the U.S. Treasury; others by discretionary authority of the U.S. Government to purchase certain obligations of the agency or instrumentality; and others only by the credit of the agency or instrumentality. U.S. Government securities bear fixed, floating or variable rates of interest. While the U.S. Government currently provides financial support to certain U.S. Government-sponsored agencies or instrumentalities, no assurance can be given that it will always do so, since it is not so obligated by law. U.S. Government securities include U.S. Treasury bills, notes and bonds, Federal Home Loan Bank (“FHLB”) obligations, Federal Farm Credit Bank (“FFCB”) obligations, U.S. Government agency obligations and repurchase agreements secured thereby. U.S. Government agency securities are subject to credit risk and interest rate risk.

U.S. Treasury Obligations

U.S. Treasury obligations include bills (initial maturities of one year or less), notes (initial maturities between two and ten years), and bonds (initial maturities over ten years) issued by the U.S. Treasury, Separately Traded Registered Interest and Principal component parts of such obligations, known as “STRIPS”, and inflation-indexed securities. The prices of these securities (like all debt securities) change between issuance and maturity in response to fluctuating market interest rates and credit ratings. The principal and interest components of selected securities are traded independently under the STRIPS program. Under the STRIPS program, the principal and interest components are individually numbered and separately issued by the U.S. Treasury at the request of depository financial institutions, which then trade the component parts independently.

Variable or Floating Rate Obligations

The interest rates payable on certain fixed-income securities in which the Funds may invest are not fixed and may fluctuate based upon changes in market rates. A variable rate obligation has an interest rate which is adjusted at predesignated periods in response to changes in the market rate of interest on which the interest rate is based. Variable and floating rate obligations are less effective than fixed rate instruments at locking in a particular yield. Nevertheless, such obligations may fluctuate in value in response to interest rate changes if there is a delay between changes in market interest rates and the interest reset date for the obligation, or for other reasons.

5.  Financial Derivative Instruments

The Funds may utilize derivative instruments to gain market exposure on cash balances to hedge foreign currency exposure or reduce market exposure in anticipation of liquidity needs. When considering the Funds’ use of derivatives, it is important to note that the Funds do not use derivatives for the purpose of creating financial leverage.

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Futures Contracts

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

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

During the year ended October 31, 2018, the Funds entered into futures contracts primarily for exposing cash to markets.

The Funds’ average futures contracts outstanding fluctuate throughout the operating year as required to meet strategic requirements. The following table illustrates the average quarterly volume of futures contracts. For purpose of this disclosure, volume is measured by contracts outstanding at each quarter end.

Average Futures Contracts Outstanding
Fund	Year Ended October 31, 2018
Balanced		65
Mid-Cap Value		172

The following is a summary of the fair valuations of the Funds’ derivative instruments categorized by risk exposure⁽¹⁾:

Balanced Fund

Fair values of financial instruments on the Statements of Assets and Liabilities as of October 31, 2018:
	Derivatives not accounted for as hedging instruments
Liabilities:	Credit contracts			Foreign exchange contracts			Commodity contracts			Interest rate contracts			Equity contracts				Total
Payable for variation margin from open futures contracts(2)		$	-		$	-		$	-		$	-		$	(240,828	)		$	(240,828	)
The effect of financial derivative instruments on the Statements of Operations as of October 31, 2018:
	Derivatives not accounted for as hedging instruments
Realized gain (loss) from derivatives recognized as a result of operations	Credit contracts			Foreign exchange contracts			Commodity contracts			Interest rate contracts			Equity contracts				Total
Futures contracts		$	-		$	-		$	-		$	-		$	268,213			$	268,213
Net change in unrealized appreciation (depreciation) of derivatives recognized as a result from operations:	Credit contracts			Foreign exchange contracts			Commodity contracts			Interest rate contracts			Equity contracts				Total
Futures contracts		$	-		$	-		$	-		$	-		$	(338,507	)		$	(338,507	)

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Mid-Cap Value Fund

Fair values of financial instruments on the Statements of Assets and Liabilities as of October 31, 2018:
	Derivatives not accounted for as hedging instruments
Liabilities:	Credit contracts			Foreign exchange contracts			Commodity contracts			Interest rate contracts			Equity contracts				Total
Payable for variation margin from open futures contracts(2)		$	-		$	-		$	-		$	-		$	(1,447,545	)		$	(1,447,545	)
The effect of financial derivative instruments on the Statements of Operations as of October 31, 2018:
	Derivatives not accounted for as hedging instruments
Realized gain (loss) from derivatives recognized as a result of operations	Credit contracts			Foreign exchange contracts			Commodity contracts			Interest rate contracts			Equity contracts				Total
Futures contracts		$	-		$	-		$	-		$	-		$	3,261,868			$	3,261,868
Net change in unrealized appreciation (depreciation) of derivatives recognized as a result from operations:	Credit contracts			Foreign exchange contracts			Commodity contracts			Interest rate contracts			Equity contracts				Total
Futures contracts		$	-		$	-		$	-		$	-		$	(2,708,683	)		$	(2,708,683	)

⁽¹⁾ See Note 3 in the Notes to Financial Statements for additional information.

⁽²⁾ Includes cumulative appreciation (depreciation) of futures contracts as reported in the Fund’s Schedule of Investments footnotes. Only current day’s variation margin is reported within the Statements of Assets and Liabilities.

Offsetting Assets and Liabilities

The Funds are parties to enforceable master netting agreements between brokers and counterparties which provide for the right to offset under certain circumstances. The Funds employ multiple money managers and counterparties and have elected not to offset qualifying financial and derivative instruments on the Statements of Assets and Liabilities, as such all financial and derivative instruments are presented on a gross basis. The impacts of netting arrangements that provide the right to offset are detailed below. The net amount represents the net receivable or payable that would be due from or to the counterparty in the event of default. Exposure from borrowings and other financing agreements such as repurchase agreements can only be netted across transactions governed by the same Master Agreement with the same legal entity. All amounts reported below represent the balance as of the report date, October 31, 2018.

Balanced Fund

Offsetting of Financial and Derivative Assets as of October 31, 2018:
	Assets		Liabilities
Futures Contracts	$	-	$	240,828
Total derivative assets and liabilities in the Statement of Assets and Liabilities	$	-	$	240,828
Derivatives not subject to a Master Netting Agreement or similar agreement (“MNA”)	$	-	$	(240,828	)

	Remaining Contractual Maturity of the Agreements As of October 31, 2018
	Overnight and Continuous		<30 days		Between 30 & 90 days		>90 days		Total
Securities Lending Transactions
Common Stocks	$	2,690,067	$	-	$	-	$	-	$	2,690,067
Total Borrowings	$	2,690,067	$	-	$	-	$	-	$	2,690,067
Gross amount of recognized liabilities for securities lending transactions									$	2,690,067

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Mid-Cap Value Fund

Offsetting of Financial and Derivative Assets as of October 31, 2018:
	Assets		Liabilities
Futures Contracts	$	-	$	1,447,545
Total derivative assets and liabilities in the Statement of Assets and Liabilities	$	-	$	1,447,545
Derivatives not subject to a Master Netting Agreement or similar agreement (“MNA”)	$	-	$	(1,447,545	)

	Remaining Contractual Maturity of the Agreements As of October 31, 2018
	Overnight and Continuous		<30 days		Between 30 & 90 days		>90 days		Total
Securities Lending Transactions
Common Stocks	$	12,169,943	$	-	$	-	$	-	$	12,169,943
Total Borrowings	$	12,169,943	$	-	$	-	$	-	$	12,169,943
Gross amount of recognized liabilities for securities lending transactions									$	12,169,943

6.  Principal Risks

Investing in the Funds may involve certain risks including, but not limited to, those described below.

Asset-Backed and Mortgage Related Securities Risk

Investments in asset-backed and mortgage related securities are subject to market risks for fixed-income securities which include, but are not limited to, interest rate risk, prepayment risk and extension risk. Small movements in interest rates (both increases and decreases) may quickly and significantly reduce the value of certain mortgage-backed and asset-backed securities. If interest rates fall, the rate of prepayments tends to increase as borrowers are motivated to pay off debt and refinance at new lower rates. When mortgages and other obligations are prepaid and when securities are called, a Fund may have to reinvest in securities with a lower yield or fail to recover additional amounts (i.e., premiums) paid for securities with higher interest rates, resulting in an unexpected capital loss and/or a decrease in the amount of dividends and yield. Because prepayments increase when interest rates fall, the prices of mortgage-backed and asset-backed securities do not increase as much as other fixed income securities when interest rates fall. When interest rates rise, borrowers are less likely to prepay their mortgage and other loans. A decreased rate of prepayments lengthens the expected maturity of mortgage-backed and asset-backed securities. Therefore, the prices of mortgage-backed and asset-backed securities may decrease more than prices of other fixed-income securities when interest rates rise. Rising interest rates tend to extend the duration of these securities, making them more sensitive to changes in interest rates. Rising interest rates also may increase the risk of default by borrowers. As a result, in a period of rising interest rates, a Fund that holds these types of securities, may experience additional volatility and losses. A decline in the credit quality of and defaults by the issuers of asset-backed and mortgage related securities or instability in the markets for such securities may affect the value and liquidity of such securities, which could result in losses to a Fund. In addition, certain asset-backed and mortgage related securities may include securities backed by pools of loans made to “subprime” borrowers or borrowers with blemished credit histories; the risk of defaults is generally higher in the case of mortgage pools that include such subprime mortgages.

Credit Risk

A Fund is subject to the risk that the issuer or guarantor of a debt security or a counterparty to a loan will fail to make timely payment of interest or principal or otherwise honor its obligations or default completely. A decline in the credit rating of an individual security held by a Fund may have an adverse impact on its price and make it difficult for a Fund to sell it. Ratings represent a rating agency’s opinion regarding the quality of the security and are not a guarantee of quality. Rating agencies might not always change their credit rating on an

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issuer or security in a timely manner to reflect events that could affect the issuer’s ability to make timely payments on its obligations. Credit risk is typically greater for securities with ratings that are below investment grade.

Equity Investments Risk

Equity securities are subject to market risk. The Funds’ investments in equity securities may include common stocks, preferred stocks, securities convertible into or exchangeable for common stocks, REITs, depositary receipts, and U.S. dollar-denominated foreign stocks traded on U.S. exchanges. Such investments may expose the Funds to additional risk. The value of a company’s common stock may fall as a result of factors affecting the company, companies in the same industry or sector, or the financial markets overall. Common stock generally is subordinate to preferred stock upon the liquidation or bankruptcy of the issuing company. Preferred stocks are sensitive to movements in interest rates. Preferred stocks may be less liquid than common stocks and, unlike common stocks, participation in the growth of an issuer may be limited. Distributions on preferred stocks generally are payable at the discretion of an issuer and after required payments to bond holders. Convertible securities are subject to the risk that the credit standing of the issuer may have an effect on the convertible securities’ investment value. Investments in REITs are subject to the risks associated with investing in the real estate industry such as adverse developments affecting the real estate industry and real property values. Depositary receipts are subject to certain of the risks associated with investing directly in foreign securities, including, but not limited to, currency exchange rate fluctuations, political and financial instability in the home country of a particular depositary receipt, less liquidity and more volatility, less government regulation and supervision and delays in transaction settlement.

Foreign Investing Risk

The Funds may invest in securities issued by foreign companies through ADRs and U.S. dollar-denominated foreign stocks traded on U.S. exchanges. The Funds may also invest in local currency investments. ADRs are subject to many of the risks inherent in currency fluctuations and political and financial instability in the home country of a particular ADR or foreign stock. Non-U.S. investments carry potential risks not associated with U.S. investments. Such risks include, but are not limited to: (1) currency exchange rate fluctuations, (2) political and financial instability, (3) less liquidity and greater volatility, (4) lack of uniform accounting, auditing and financial reporting standards, (5) increased price volatility, (6) less government regulation and supervision of foreign stock exchanges, brokers and listed companies, and (7) delays in transaction settlement in some foreign markets.

The risk of investing in Europe may be heightened due to the 2016 referendum in which the United Kingdom voted to exit the European Union (EU). There is a significant degree of uncertainty about how negotiations relating to the United Kingdom’s withdrawal will be conducted, as well as the potential consequences and precise time frame for “Brexit.” It is expected that the United Kingdom’s exit from the EU will take place within two years of the United Kingdom notifying the European Council that it intends to withdraw from the EU. While it is not possible to determine the precise impact these events may have on a Fund, during this period and beyond, the impact on the United Kingdom and European economies and the broader global economy could be significant, resulting in negative impacts, such as increased volatility and illiquidity, and potentially lower economic growth, on markets in the United Kingdom, Europe and globally, which may adversely affect the value of a Fund’s investments. In addition, if one or more other countries were to exit the EU or abandon the use of the euro as a currency, the value of investments tied to those countries or the euro could decline significantly and unpredictably.

Futures Contracts Risk

Futures contracts are derivative instruments where one party pays a fixed price for an agreed amount of securities or other underlying assets at an agreed date. The use of such derivative instruments may expose the Funds to additional risks that they would not be subject to if they invested directly in the securities underlying those derivatives. Futures contracts may experience potentially dramatic price changes (losses) and imperfect

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correlation between the price of the contract and the underlying security or index, which will increase the volatility of the Funds and may involve a small investment of cash (the amount of initial and variation margin) relative to the magnitude of the risk assumed (the potential increase or decrease in the price of the futures contract).

Illiquid and Restricted Securities Risk

Securities not registered in the U.S. under the Securities Act of 1933, as amended (the “Securities Act”), including Rule 144A securities, are restricted as to their resale. Such securities may not be listed on an exchange and may have no active trading market. They may be more difficult to purchase or sell at an advantageous time or price because such securities may not be readily marketable in broad public markets. The Funds may not be able to sell a restricted security when the sub-advisor considers it desirable to do so and/or may have to sell the security at a lower price than the Funds believe is its fair market value. In addition, transaction costs may be higher for restricted securities and the Funds may receive only limited information regarding the issuer of a restricted security. The Funds may have to bear the expense of registering restricted securities for resale and the risk of substantial delays in effecting the registration.

Interest Rate Risk

Investments in investment-grade and non-investment grade fixed-income securities are subject to interest rate risk. The value of the Balanced Fund’s fixed-income investments typically will fall when interest rates rise. The Fund may be particularly sensitive to changes in interest rates if it invests in debt securities with intermediate and long terms to maturity. Debt securities with longer durations tend to be more sensitive to changes in interest rates, usually making them more volatile than debt securities with shorter durations. For example, if a bond has a duration of seven years, a 1% increase in interest rates could be expected to result in a 7% decrease in the value of the bond. Yields of debt securities will fluctuate over time. Following the financial crisis that started in 2008, the Federal Reserve attempted to stabilize the economy and support the economic recovery by keeping the federal funds rate (the interest rate at which depository institutions lend reserve balances to each other overnight) at or near zero percent. The Federal Reserve has raised the federal funds rate several times since December 2015 and has signaled additional increases in the near future. Interest rates may rise significantly and/or rapidly, potentially resulting insubstantial losses to a Fund. During periods of very low or negative interest rates, the Fund may be unable to maintain positive returns. Certain European countries and Japan have recently experienced negative interest rates on deposits and debt securities have traded at negative yields. Negative interest rates may become more prevalent among non-U.S. issuers, and potentially within the United States. Changing interest rates, including rates that fall below zero, may have unpredictable effects on markets, may result in heightened market volatility and may detract from Fund performance to the extent the Fund is exposed to such interest rates.

Liquidity Risk

When there is little or no active trading market for a specific security it can become more difficult to purchase or sell the securities at or near their perceived value. During such periods, certain investments held by the Fund may be difficult to sell or other investments may be difficult to purchase at favorable times or prices. As a result, the Fund may have to lower the price on certain securities that it is trying to sell, sell other securities instead or forgo an investment opportunity, any of which could have a negative effect on Fund management or performance. Redemptions by a few large investors in the Fund at such times may have a significant adverse effect on the Fund’s NAV and remaining Fund shareholders. In addition, the market-making capacity of dealers in certain types of securities has been reduced in recent years, in part as a result of structural and regulatory changes, such as fewer proprietary trading desks and increased regulatory capital requirements for broker-dealers. Further, many broker-dealers have reduced their inventory of certain debt securities. This could negatively affect the Fund’s ability to buy or sell debt securities and increase the related volatility and trading costs. The Fund may lose money if it is forced to sell certain investments at unfavorable prices to meet redemption requests or other cash needs.

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Market Risk

Since the financial crisis that started in 2008, the U.S. and many foreign economies continue to experience its after-effects. Conditions in the U.S. and many foreign economies have resulted, and may continue to result, in certain instruments experiencing unusual liquidity issues, increased price volatility and, in some cases, credit downgrades and increased likelihood of default. These events have reduced the willingness and ability of some lenders to extend credit, and have made it more difficult for some borrowers to obtain financing on attractive terms, if at all. In some cases, traditional market participants have been less willing to make a market in some types of debt instruments, which has affected the liquidity of those instruments. During times of market turmoil, investors tend to look to the safety of securities issued or backed by the U.S. Treasury, causing the prices of these securities to rise and the yields to decline. Reduced liquidity in fixed income and credit markets may negatively affect many issuers worldwide. In addition, global economies and financial markets are becoming increasingly interconnected, which increases the possibilities that conditions in one country or region might adversely impact issuers in a different country or region. A rise in protectionist trade policies, and the possibility of changes to some international trade agreements, could affect the economies of many nations in ways that cannot necessarily be foreseen at the present time.

In response to the financial crisis, the U.S. and other governments and the Federal Reserve and certain foreign central banks have taken steps to support financial markets. In some countries where economic conditions are recovering, they are nevertheless perceived as still fragile. Withdrawal of government support, failure of efforts in response to the crisis, or investor perception that such efforts are not succeeding, could adversely impact the value and liquidity of certain securities. The severity or duration of adverse economic conditions may also be affected by policy changes made by governments or quasi-governmental organizations, including changes in tax laws. The impact of new financial regulation legislation on the markets and the practical implications for market participants may not be fully known for some time. Regulatory changes are causing some financial services companies to exit long-standing lines of business, resulting in dislocations for other market participants. In addition, political and diplomatic events within the U.S. and abroad, such as the U.S. government’s inability at times to agree on a long-term budget and deficit reduction plan, the threat of a federal government shutdown and threats not to increase the federal government’s debt limit, may affect investor and consumer confidence and may adversely impact financial markets and the broader economy, perhaps suddenly and to a significant degree. The U.S. government has recently reduced federal corporate income tax rates, and future legislative, regulatory and policy changes may result in more restrictions on international trade, less stringent prudential regulation of certain players in the financial markets, and significant new investments in infrastructure and national defense. Markets may react strongly to expectations about the changes in these policies, which could increase volatility, especially if the markets’ expectations for changes in government policies are not borne out.

Changes in market conditions will not have the same impact on all types of securities. Interest rates have been unusually low in recent years in the U.S. and abroad. Because there is little precedent for this situation, it is difficult to predict the impact of a significant rate increase on various markets. For example, because investors may buy securities or other investments with borrowed money, a significant increase in interest rates may cause a decline in the markets for those investments. Because of the sharp decline in the worldwide price of oil, there is a concern that oil producing nations may withdraw significant assets now held in U.S. Treasuries, which could force a substantial increase in interest rates. Regulators have expressed concern that rate increases may cause investors to sell fixed income securities faster than the market can absorb them, contributing to price volatility. In addition, there is a risk that the prices of goods and services in the U.S. and many foreign economies may decline over time, known as deflation (the opposite of inflation). Deflation may have an adverse effect on stock prices and creditworthiness and may make defaults on debt more likely. If a country’s economy slips into a deflationary pattern, it could last for a prolonged period and may be difficult to reverse. The precise details and the resulting impact of the United Kingdom’s vote to leave the European Union (the “EU”), commonly referred to as “Brexit,” are not yet known. The effect on the United Kingdom’s economy will likely depend on the nature of trade relations with the EU and other major economies following its exit, which are matters to be negotiated. The outcomes may cause increased volatility and have a significant adverse impact on world financial markets, other international

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trade agreements, and the United Kingdom and European economies, as well as the broader global economy for some time, which could significantly adversely affect the value of the Fund’s investments in the United Kingdom and Europe.

Mortgage-Backed and Mortgage Related Securities Risk

Investments in mortgage-backed and mortgage-related securities are subject to market risks for fixed-income securities which include, but are not limited to, interest rate risk, credit risk, extension risk and prepayment risk. When mortgages and other obligations are prepaid and when securities are called, a Fund may have to reinvest in securities with a lower yield or fail to recover additional amounts (i.e., premiums) paid for securities with higher interest rates, resulting in an unexpected capital loss and/or a decrease in the amount of dividends and yield.

Multiple Sub-Advisor Risk

The Manager may allocate the Funds’ assets among multiple sub-advisors, each of which is responsible for investing its allocated portion of the Funds’ assets. To a significant extent, the Funds’ performance will depend on the success of the Manager in allocating the Funds’ assets to sub-advisors and its selection and oversight of the sub-advisors. Because each sub-advisor manages its allocated portion of the Funds independently from another sub-advisor, the same security may be held in different portions of the Funds, or may be acquired for one portion of the Funds at a time when a sub-advisor to another portion deems it appropriate to dispose of the security from that other portion, resulting in higher expenses without accomplishing any net result in the Funds’ holdings. Similarly, under some market conditions, one sub-advisor may believe that temporary, defensive investments in short-term instruments or cash are appropriate when another sub-advisor believes continued exposure to the equity or debt markets is appropriate for its allocated portion of the Funds. Because each sub-advisor directs the trading for its own portion of the Funds, and does not aggregate its transactions with those of the other sub-advisors, the Funds may incur higher brokerage costs than would be the case if a single sub-adviser were managing the entire Fund. In addition, while the Manager seeks to allocate the Funds’ assets among the Funds’ sub-advisors in a manner that it believes is consistent with achieving the Funds’ investment objective(s), the Manager may be subject to potential conflicts of interest in allocating the Funds’ assets among sub-advisors.

Other Investment Companies Risk

The Funds may invest in shares of other registered investment companies, including ETFs and money market funds that are advised by the Manager. To the extent that the Funds invest in shares of other registered investment companies, the Funds will indirectly bear the fees and expenses charged by those investment companies in addition to the Funds’ direct fees and expenses and will be subject to the risks associated with investments in those companies.

Prepayment and Extension Risk

Prepayment risk is the risk that the principal amount of a bond may be repaid prior to the bond’s maturity date. Due to a decline in interest rates or excess cash flow, a debt security may be called or otherwise prepaid before maturity. If this occurs, no additional interest will be paid on the investment and the Funds may have to invest at a lower rate, may not benefit from an increase in value that may result from declining interest rates, and may lose any premium it paid to acquire the security. Variable and floating rate securities may be less sensitive to prepayment risk. Extension risk is the risk that a decrease in prepayments may, as a result of higher interest rates or other factors, result in the extension of a security’s effective maturity, heighten interest rate risk and increase the potential for a decline in its price.

58

American Beacon Funds^SM

Notes to Financial Statements

October 31, 2018

Redemption Risk

The Funds may experience periods of high levels of redemptions that could cause the Funds to sell assets at inopportune times or at a loss or depressed value. The sale of assets to meet redemption requests may create net capital gains, which could cause the Funds to have to distribute substantial capital gains.

Sector Risk

Sector risk is the risk associated with a Fund holding a significant amount of investments in similar businesses, which would be similarly affected by particular economic or market events, which may, in certain circumstances, cause the value of the equity and debt securities of companies in a particular sector of the market to change. To the extent a Fund has substantial holdings within a particular sector, the risks to a Fund associated with that sector increase.

Securities Lending Risk

A Fund may lend its portfolio securities to brokers, dealers and financial institutions to seek income. There is a risk that a borrower may default on its obligations to return loaned securities; however, a Fund’s securities lending agent may indemnify the Fund against that risk. There is a risk that the assets of a Fund’s securities lending agent may be insufficient to satisfy any contractual indemnification requirements to the Fund. Borrowers of a Fund’s securities typically provide collateral in the form of cash that is reinvested in securities. A Fund will be responsible for the risks associated with the investment of cash collateral, including any collateral invested in an affiliated money market fund. A Fund may lose money on its investment of cash collateral or may fail to earn sufficient income on its investment to meet obligations to the borrower. In addition, delays may occur in the recovery of securities from borrowers, which could interfere with a Fund’s ability to vote proxies or to settle transactions and there is the risk of possible loss of rights in the collateral should the borrower fail financially.

U.S. Government Securities and Government-Sponsored Enterprises Risk

A security backed by the U.S. Treasury or the full faith and credit of the United States is guaranteed by the applicable entity only as to the timely payment of interest and principal when held to maturity. The market prices for such securities are not guaranteed and will fluctuate. Securities held by the Fund that are issued by government-sponsored enterprises, such as the Fannie Mae, Freddie Mac, FHLB, FFCB, and the Tennessee Valley Authority are not guaranteed by the U.S. Treasury and are not backed by the full faith and credit of the U.S. Government and no assurance can be given that the U.S. Government will provide financial support if these organizations do not have the funds to meet future payment obligations. U.S. Government securities and securities of government sponsored entities are also subject to credit risk, interest rate risk and market risk.

Variable and Floating Rate Securities Risk

The interest rates payable on variable and floating-rate securities are not fixed and may fluctuate based upon changes in market rates. The interest rate on a floating rate security is a variable rate which is tied to another interest rate, such as a money-market index or Treasury bill rate. Variable and floating rate securities are subject to interest rate risk and credit risk.

As short-term interest rates decline, interest payable on floating-rate securities typically decreases. Alternatively, during periods of rising interest rates, interest payable on floating-rate securities typically increases. Changes in the interest rates of floating-rate securities may lag behind changes in market rates or may have limits on the maximum rate change for a given period of time. The value of floating-rate securities may decline if their interest rates do not rise as much, or as quickly, as interest rates in general. Conversely, floating rate securities will not generally increase in value if interest rates decline.

59

American Beacon Funds^SM

Notes to Financial Statements

October 31, 2018

7.  Federal Income and Excise Taxes

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

The Funds do not have any unrecorded tax liabilities in the accompanying financial statements. Each of the tax years in the four year period ended October 31, 2018 remain subject to examination by the Internal Revenue Service. If applicable, the Funds recognize interest accrued related to unrecognized tax benefits in interest expense and penalties in “Other expenses” on the Statements of Operations.

The Funds may be subject to taxes imposed by countries in which it invests. Such taxes are generally based on returns of income earned or gains realized or repatriated. Taxes are accrued and applied to net investment income, net realized capital gains and net unrealized appreciation (depreciation), as applicable, as the income is earned or capital gains are recorded.

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

The tax character of distributions paid were as follows:

	Balanced Fund				Mid-Cap Value Fund
	Year Ended October 31, 2018		Year Ended October 31, 2017		Year Ended October 31, 2018		Year Ended October 31, 2017
Distributions paid from:
Ordinary income*
Institutional Class	$	3,590,211	$	3,922,895	$	2,517,255	$	3,184,300
Y Class		2,835,075		1,320,074		867,845		1,054,082
Investor Class		5,484,303		2,791,629		2,066,989		3,122,003
Advisor Class		404,894		196,602		5,325		63,730
A Class		990,798		506,915		59,166		224,784
C Class		1,588,575		535,923		-		30,824
Long-term capital gains
Institutional Class		2,671,741		-		6,917,398		-
Y Class		1,986,952		-		2,579,185		-
Investor Class		4,156,521		-		7,195,645		-
Advisor Class		356,680		-		89,403		-
A Class		727,858		-		374,971		-
C Class		1,388,117		-		184,144		-
Total distributions paid	$	26,181,725	$	9,274,038	$	22,857,326	$	7,679,723

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

As of October 31, 2018 the components of distributable earnings (deficits) on a tax basis were as follows:

Fund	Tax Cost		Unrealized Appreciation		Unrealized (Depreciation)			Net Unrealized Appreciation (Depreciation)
Balanced	$	269,645,635	$	43,584,692	$	(12,881,938	)	$	30,702,754
Mid-Cap Value		762,091,162		79,064,538		(85,359,706	)		(6,295,168	)

60

American Beacon Funds^SM

Notes to Financial Statements

October 31, 2018

Fund	Net Unrealized Appreciation (Depreciation)			Undistributed Ordinary Income		Undistributed Long-Term Capital Gains		Accumulated Capital and Other (Losses)		Other Temporary Differences		Distributable Earnings
Balanced	$	30,702,754		$	2,433,799	$	20,912,800	$	-	$	-	$	54,049,353
Mid-Cap Value		(6,295,168	)		6,472,244		37,147,201		-		-		37,324,277

Financial reporting records are adjusted for permanent book/tax differences to reflect tax character. Financial records are not adjusted for temporary differences. The temporary differences between financial reporting and tax-basis reporting of unrealized appreciation (depreciation) are attributable primarily to the tax deferral of losses from wash sales, the realization for tax purposes of unrealized gains (losses) on certain derivative instruments, reclassifications of income from investments in real estate investment securities and publicly traded partnerships, 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 tax-exempt interest and nondeductible expenses from investments in publicly traded partnerships and as of October 31, 2018:

Fund	Paid-In-Capital			Distributable Earnings/(Loss)
Balanced	$	(9,531	)	$	9,531
Mid-Cap Value		3,314			(3,314	)

Under the Regulated Investment Company Modernization Act of 2010 (“RIC MOD”), net capital losses recognized by the Funds in taxable years beginning after December 22, 2010 are carried forward indefinitely and retain their character as short-term and/or long-term losses.

As of October 31, 2018, the Funds did not any have capital loss carryforwards.

8.  Investment Transactions

The aggregate cost of purchases and proceeds from sales and maturities of investments, other than short-term obligations, for the year ended October 31, 2018 were as follows:

Fund	Purchases (non-U.S. Government Securities)		Purchases of U.S. Government Securities		Sales (non-U.S. Government Securities)		Sales of U.S. Government Securities
Balanced	$	55,019,266	$	28,690,217	$	113,907,606	$	17,004,682
Mid-Cap Value		421,162,637		-		256,088,405		-

A summary of the Funds’ transactions in the USG Select Fund for the year ended October 31, 2018 were as follows:

Fund	Type of Transaction	October 31, 2017 Shares/Fair Value		Purchases		Sales		October 31, 2018 Shares/Fair Value		Dividend Income
Balanced	Direct	$	7,863,253	$	122,532,010	$	122,561,540	$	7,833,723	$	96,361
Balanced	Securities Lending		3,085,328		59,592,645		59,987,906		2,690,067		N/A
Mid-Cap Value	Direct		32,552,471		439,654,782		449,414,408		22,792,845		570,682
Mid-Cap Value	Securities Lending		19,270,065		263,212,693		270,312,815		12,169,943		N/A

61

American Beacon Funds^SM

Notes to Financial Statements

October 31, 2018

9.  Securities Lending

The Funds may lend their securities to qualified financial institutions, such as certain broker-dealers, to earn additional income. The borrowers are required to secure their loans continuously with collateral in an amount at least equal to the fair value of the securities loaned, initially in an amount at least equal to 102% of the fair value of domestic securities loaned and 105% of the fair value of international securities loaned. Collateral is monitored 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 Funds’ Schedule of Investments and the collateral is shown on the Statement of Assets and Liabilities as a payable.

Securities lending income is generated from the demand premium (if any) paid by the borrower to borrow a specific security and from the return on investment of cash collateral, reduced by negotiated rebate fees paid to the borrower and transaction costs. To the extent that a loan is secured by non-cash collateral, securities lending income is generated as a demand premium reduced by transaction costs. The Funds, the Agent, and the Manager retained 80%, 10%, and 10%, respectively, of the income generated from securities lending.

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

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

As of October 31, 2018, the value of outstanding securities on loan and the value of collateral were as follows:

Fund	Market Value of Securities on Loan		Cash Collateral Received		Non-Cash Collateral Received		Total Collateral Received
Balanced	$	2,596,483	$	2,690,067	$	-	$	2,690,067
Mid-Cap Value		11,632,124		12,169,943		-		12,169,943

Cash collateral is listed on the Funds’ Schedules of Investments and is shown on the Statements of Assets and Liabilities. Income earned on these investments is included in “Income derived from securities lending” on the Statements of Operations.

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

62

American Beacon Funds^SM

Notes to Financial Statements

October 31, 2018

10.  Borrowing Arrangements

Effective November 16, 2017, the Funds, along with certain other funds managed by the Manager (“Participating Funds”), entered into a committed revolving line of credit (the “Committed Line”) agreement with State Street Bank and Trust Company (the “Bank”) to be used to facilitate portfolio liquidity. The maximum borrowing amount under the Committed Line is $50 million with interest at a rate equal to the higher of (a) one-month London Inter-Bank Offered Rate (“LIBOR”) plus 1.25% per annum or (b) the Federal Funds rate plus 1.25% per annum on amounts borrowed. Each of the Participating Funds will pay a commitment fee at a rate of 0.25% per annum on the unused portion of the Committed Line amount. The Committed Line expires November 15, 2018, unless extended by the Bank or terminated by the Participating Funds in accordance with the agreement.

Effective November 16, 2017, the Funds, along with certain other Participating Funds managed by the Manager, entered into an uncommitted discretionary demand revolving line of credit (the “Uncommitted Line”) agreement with the Bank to be used to facilitate portfolio liquidity. The maximum borrowing amount under the Uncommitted Line is $50 million with interest at a rate equal to the higher of (a) one-month LIBOR plus 1.25% per annum or (b) the Federal Funds rate. The Uncommitted Line expires November 15, 2018 unless extended by the Bank or terminated by the Participating Funds in accordance with the agreement.

The Participating Funds paid administration, legal and arrangement fees, which are recognized as a component of “Other expenses” on the Statements of Operations, along with commitment fees, that have been allocated among the Participating Funds based on average daily net assets.

During the year ended October 31, 2018, the Funds did not utilize this facility.

11.  Capital Share Transactions

The tables below summarize the activity in capital shares for each Class of the Funds:

	Institutional Class
	Year Ended October 31,
	2018						2017
Balanced Fund	Shares			Amount			Shares			Amount
Shares sold		531,898		$	8,911,974			1,092,787		$	18,080,161
Reinvestment of dividends		371,350			6,232,774			238,615			3,910,236
Shares redeemed		(2,279,037	)		(38,703,020	)		(28,034,177	)		(458,858,477	)
Net (decrease) in shares outstanding		(1,375,789	)	$	(23,558,272	)		(26,702,775	)	$	(436,868,080	)
	Y Class
	Year Ended October 31,
	2018						2017
Balanced Fund	Shares			Amount			Shares			Amount
Shares sold		1,548,487		$	26,278,299			3,930,687		$	64,515,384
Reinvestment of dividends		262,445			4,429,699			65,834			1,098,461
Shares redeemed		(1,172,305	)		(19,896,265	)		(2,147,617	)		(35,745,768	)
Net increase in shares outstanding		638,627		$	10,811,733			1,848,904		$	29,868,077
	Investor Class
	Year Ended October 31,
	2018						2017
Balanced Fund	Shares			Amount			Shares			Amount
Shares sold		693,194		$	10,443,570			1,891,239		$	27,893,209
Reinvestment of dividends		632,578			9,450,425			183,821			2,729,041
Shares redeemed		(1,856,761	)		(27,850,950	)		(3,351,461	)		(49,631,206	)
Net (decrease) in shares outstanding		(530,989	)	$	(7,956,955	)		(1,276,401	)	$	(19,008,956	)

63

American Beacon Funds^SM

Notes to Financial Statements

October 31, 2018

	Advisor Class
	Year Ended October 31,
	2018						2017
Balanced Fund	Shares			Amount			Shares			Amount
Shares sold		60,001		$	958,063			105,859		$	1,651,482
Reinvestment of dividends		48,037			761,574			12,537			196,603
Shares redeemed		(372,487	)		(5,908,441	)		(183,384	)		(2,863,636	)
Net (decrease) in shares outstanding		(264,449	)	$	(4,188,804	)		(64,988	)	$	(1,015,551	)
	A Class
	Year Ended October 31,
	2018						2017
Balanced Fund	Shares			Amount			Shares			Amount
Shares sold		160,555		$	2,416,192			410,539		$	6,059,817
Reinvestment of dividends		111,181			1,658,485			31,357			464,996
Shares redeemed		(428,548	)		(6,460,378	)		(843,857	)		(12,512,241	)
Net (decrease) in shares outstanding		(156,812	)	$	(2,385,701	)		(401,961	)	$	(5,987,428	)
	C Class
	Year Ended October 31,
	2018						2017
Balanced Fund	Shares			Amount			Shares			Amount
Shares sold		293,469		$	4,461,404			511,750		$	7,628,600
Reinvestment of dividends		188,746			2,851,672			33,550			501,998
Shares redeemed		(726,271	)		(11,046,787	)		(776,384	)		(11,594,157	)
Net (decrease) in shares outstanding		(244,056	)	$	(3,733,711	)		(231,084	)	$	(3,463,559	)
	Institutional Class
	Year Ended October 31,
	2018						2017
Mid-Cap Value Fund	Shares			Amount			Shares			Amount
Shares sold		6,269,618		$	106,947,861			5,954,710		$	95,148,198
Reinvestment of dividends		526,390			9,164,443			200,907			3,102,004
Shares redeemed		(6,183,734	)		(105,856,767	)		(4,676,013	)		(74,643,061	)
Net increase in shares outstanding		612,274		$	10,255,537			1,479,604		$	23,607,141
	Y Class
	Year Ended October 31,
	2018						2017
Mid-Cap Value Fund	Shares			Amount			Shares			Amount
Shares sold		1,857,922		$	31,620,714			1,882,597		$	30,182,084
Reinvestment of dividends		197,830			3,416,518			68,733			1,052,987
Shares redeemed		(1,620,549	)		(27,617,833	)		(1,053,861	)		(16,770,607	)
Net increase in shares outstanding		435,203		$	7,419,399			897,469		$	14,464,464
	Investor Class
	Year Ended October 31,
	2018						2017
Mid-Cap Value Fund	Shares			Amount			Shares			Amount
Shares sold		14,508,017		$	258,034,860			2,951,825		$	47,658,072
Reinvestment of dividends		526,115			9,254,355			199,673			3,114,890
Shares redeemed		(6,582,101	)		(113,606,798	)		(4,583,694	)		(73,830,629	)
Net increase (decrease) in shares outstanding		8,452,031		$	153,682,417			(1,432,196	)	$	(23,057,667	)
	Advisor Class
	Year Ended October 31,
	2018						2017
Mid-Cap Value Fund	Shares			Amount			Shares			Amount
Shares sold		113,873		$	1,888,435			81,445		$	1,272,473
Reinvestment of dividends		5,543			94,728			4,212			63,730
Shares redeemed		(101,012	)		(1,693,636	)		(350,490	)		(5,453,538	)
Net increase (decrease) in shares outstanding		18,404		$	289,527			(264,833	)	$	(4,117,335	)

64

American Beacon Funds^SM

Notes to Financial Statements

October 31, 2018

	A Class
	Year Ended October 31,
	2018						2017
Mid-Cap Value Fund	Shares			Amount			Shares			Amount
Shares sold		343,780		$	5,748,823			318,235		$	4,979,042
Reinvestment of dividends		25,397			433,278			14,503			219,286
Shares redeemed		(651,244	)		(10,958,448	)		(676,186	)		(10,691,000	)
Net (decrease) in shares outstanding		(282,067	)	$	(4,776,347	)		(343,448	)	$	(5,492,672	)
	C Class
	Year Ended October 31,
	2018						2017
Mid-Cap Value Fund	Shares			Amount			Shares			Amount
Shares sold		83,507		$	1,358,250			60,211		$	917,397
Reinvestment of dividends		11,018			182,135			2,030			29,866
Shares redeemed		(95,319	)		(1,541,599	)		(116,353	)		(1,771,416	)
Net (decrease) in shares outstanding		(794	)	$	(1,214	)		(54,112	)	$	(824,153	)
	R6 Class
	February 28, 2018A to April 30, 2018
	(unaudited)
Mid-Cap Value Fund	Shares			Amount
Shares sold		18,266		$	315,231
Shares redeemed		(5,909	)		(100,991	)
Net increase in shares outstanding		12,357		$	214,240

^A Commencement of operations.

12.  Subsequent Events

Effective November 15, 2018, the Funds, along with certain other funds managed by the Manager, entered into a committed revolving line of credit with a max borrowing amount of $250 million.

Management has evaluated additional subsequent events for possible recognition or disclosure in the financial statements through the date the financial statements are issued. Management has determined that there are no material events that would require disclosure in the Funds’ financial statements through this date.

65

American Beacon Balanced Fund^SM

Financial Highlights

(For a share outstanding throughout the period)

	Institutional ClassA
	Year Ended October 31,
	2018			2017			2016			2015			2014
Net asset value, beginning of period	$	17.30		$	15.26		$	15.79		$	16.79		$	16.31
Income (loss) from investment operations:
Net investment income		0.28			0.36			0.27			0.32			0.38
Net gains (losses) on investments (both realized and unrealized)		(0.10	)		2.04			0.20			(0.32	)		1.35
Total income (loss) from investment operations		0.18			2.40			0.47			-			1.73
Less distributions:
Dividends from net investment income		(0.48	)		(0.36	)		(0.25	)		(0.22	)		(0.42	)
Distributions from net realized gains		(0.80	)		-			(0.75	)		(0.78	)		(0.83	)
Total distributions		(1.28	)		(0.36	)		(1.00	)		(1.00	)		(1.25	)
Net asset value, end of period	$	16.20		$	17.30		$	15.26		$	15.79		$	16.79
Total returnB		0.84	%		15.82	%		3.30	%		(0.07	)%		11.15	%
Ratios and supplemental data:
Net assets, end of period	$	60,191,704		$	88,015,702		$	485,231,068		$	99,173,943		$	74,422,347
Ratios to average net assets:
Expenses, before reimbursements		0.62	%		0.59	%		0.62	%		0.58	%		0.58	%
Expenses, net of reimbursements		0.62	%		0.59	%		0.62	%		0.58	%		0.58	%
Net investment income, before expense reimbursements		1.95	%		1.80	%		1.90	%		1.83	%		2.24	%
Net investment income, net of reimbursements		1.95	%		1.80	%		1.90	%		1.83	%		2.24	%
Portfolio turnover rate		28	%		32	%		16	%		62	%		34	%

^A  On May 31, 2016, the AMR Class closed and the assets were merged into the Institutional Class.

^B  Based on net asset value, which does not reflect the sales charge, redemption fee, or contingent deferred sales charge, if applicable. May include adjustments in accordance with U.S. GAAP and as such, the net asset value for reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions.

See accompanying notes

66

American Beacon Balanced Fund^SM

Financial Highlights

(For a share outstanding throughout the period)

	Y Class
	Year Ended October 31,
	2018			2017			2016			2015			2014
Net asset value, beginning of period	$	17.39		$	15.30		$	15.84		$	16.83		$	16.37
Income (loss) from investment operations:
Net investment income		0.35			0.24			0.30			0.30			0.40
Net gains (losses) on investments (both realized and unrealized)		(0.16	)		2.20			0.13			(0.30	)		1.31
Total income (loss) from investment operations		0.19			2.44			0.43			-			1.71
Less distributions:
Dividends from net investment income		(0.47	)		(0.35	)		(0.22	)		(0.21	)		(0.42	)
Distributions from net realized gains		(0.80	)		-			(0.75	)		(0.78	)		(0.83	)
Total distributions		(1.27	)		(0.35	)		(0.97	)		(0.99	)		(1.25	)
Net asset value, end of period	$	16.31		$	17.39		$	15.30		$	15.84		$	16.83
Total returnA		0.88	%		16.05	%		3.06	%		(0.07	)%		10.98	%
Ratios and supplemental data:
Net assets, end of period	$	71,296,735		$	64,926,394		$	28,843,268		$	39,151,318		$	36,113,608
Ratios to average net assets:
Expenses, before reimbursements or recoupments		0.70	%		0.68	%		0.72	%		0.66	%		0.67	%
Expenses, net of reimbursements or recoupments		0.70	%		0.68	%		0.72	%		0.66	%		0.68	%
Net investment income, before expense reimbursements or recoupments		1.86	%		1.67	%		1.95	%		1.75	%		2.01	%
Net investment income, net of reimbursements or recoupments		1.86	%		1.67	%		1.95	%		1.75	%		2.01	%
Portfolio turnover rate		28	%		32	%		16	%		62	%		34	%

^A  Based on net asset value, which does not reflect the sales charge, redemption fee, or contingent deferred sales charge, if applicable. May include adjustments in accordance with U.S. GAAP and as such, the net asset value for reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions.

See accompanying notes

67

American Beacon Balanced Fund^SM

Financial Highlights

(For a share outstanding throughout the period)

	Investor Class
	Year Ended October 31,
	2018			2017			2016			2015			2014
Net asset value, beginning of period	$	15.51		$	13.71		$	14.30		$	15.31		$	14.98
Income (loss) from investment operations:
Net investment income		0.20			0.15			0.18			0.22			0.42
Net gains (losses) on investments (both realized and unrealized)		(0.07	)		1.96			0.18			(0.26	)		1.11
Total income (loss) from investment operations		0.13			2.11			0.36			(0.04	)		1.53
Less distributions:
Dividends from net investment income		(0.43	)		(0.31	)		(0.20	)		(0.19	)		(0.37	)
Distributions from net realized gains		(0.80	)		-			(0.75	)		(0.78	)		(0.83	)
Total distributions		(1.23	)		(0.31	)		(0.95	)		(0.97	)		(1.20	)
Net asset value, end of period	$	14.41		$	15.51		$	13.71		$	14.30		$	15.31
Total returnA		0.62	%		15.52	%		2.85	%		(0.35	)%		10.75	%
Ratios and supplemental data:
Net assets, end of period	$	107,677,984		$	124,143,894		$	127,235,433		$	155,757,561		$	165,808,020
Ratios to average net assets:
Expenses, before reimbursements		0.95	%		0.89	%		0.95	%		0.91	%		0.92	%
Expenses, net of reimbursements		0.95	%		0.89	%		0.95	%		0.91	%		0.92	%
Net investment income, before expense reimbursements		1.62	%		1.48	%		1.72	%		1.51	%		1.84	%
Net investment income, net of reimbursements		1.62	%		1.48	%		1.72	%		1.51	%		1.84	%
Portfolio turnover rate		28	%		32	%		16	%		62	%		34	%

^A  Based on net asset value, which does not reflect the sales charge, redemption fee, or contingent deferred sales charge, if applicable. May include adjustments in accordance with U.S. GAAP and as such, the net asset value for reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions.

See accompanying notes

68

American Beacon Balanced Fund^SM

Financial Highlights

(For a share outstanding throughout the period)

	Advisor Class
	Year Ended October 31,
	2018			2017			2016			2015			2014
Net asset value, beginning of period	$	16.38		$	14.46		$	15.02		$	16.04		$	15.65
Income (loss) from investment operations:
Net investment income		0.16			0.21			0.24			0.22			0.18
Net gains (losses) on investments (both realized and unrealized)		(0.06	)		1.99			0.12			(0.29	)		1.39
Total income (loss) from investment operations		0.10			2.20			0.36			(0.07	)		1.57
Less distributions:
Dividends from net investment income		(0.39	)		(0.28	)		(0.17	)		(0.17	)		(0.35	)
Distributions from net realized gains		(0.80	)		-			(0.75	)		(0.78	)		(0.83	)
Total distributions		(1.19	)		(0.28	)		(0.92	)		(0.95	)		(1.18	)
Net asset value, end of period	$	15.29		$	16.38		$	14.46		$	15.02		$	16.04
Total returnA		0.42	%		15.31	%		2.71	%		(0.58	)%		10.58	%
Ratios and supplemental data:
Net assets, end of period	$	6,174,284		$	10,944,675		$	10,603,004		$	13,510,138		$	14,705,747
Ratios to average net assets:
Expenses, before reimbursements		1.12	%		1.08	%		1.12	%		1.06	%		1.07	%
Expenses, net of reimbursements		1.12	%		1.08	%		1.12	%		1.06	%		1.07	%
Net investment income, before expense reimbursements		1.45	%		1.29	%		1.55	%		1.35	%		1.75	%
Net investment income, net of reimbursements		1.45	%		1.29	%		1.55	%		1.35	%		1.75	%
Portfolio turnover rate		28	%		32	%		16	%		62	%		34	%

^A  Based on net asset value, which does not reflect the sales charge, redemption fee, or contingent deferred sales charge, if applicable. May include adjustments in accordance with U.S. GAAP and as such, the net asset value for reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions.

See accompanying notes

69

American Beacon Balanced Fund^SM

Financial Highlights

(For a share outstanding throughout the period)

	A Class
	Year Ended October 31,
	2018			2017			2016			2015			2014
Net asset value, beginning of period	$	15.48		$	13.69		$	14.27		$	15.29		$	14.97
Income (loss) from investment operations:
Net investment income		0.22			0.16			0.21			0.23			0.33
Net gains (losses) on investments (both realized and unrealized)		(0.07	)		1.93			0.15			(0.29	)		1.18
Total income (loss) from investment operations		0.15			2.09			0.36			(0.06	)		1.51
Less distributions:
Dividends from net investment income		(0.45	)		(0.30	)		(0.19	)		(0.18	)		(0.36	)
Distributions from net realized gains		(0.80	)		-			(0.75	)		(0.78	)		(0.83	)
Total distributions		(1.25	)		(0.30	)		(0.94	)		(0.96	)		(1.19	)
Net asset value, end of period	$	14.38		$	15.48		$	13.69		$	14.27		$	15.29
Total returnA		0.73	%		15.36	%		2.84	%		(0.48	)%		10.67	%
Ratios and supplemental data:
Net assets, end of period	$	18,121,273		$	21,934,880		$	24,892,096		$	29,074,120		$	25,578,944
Ratios to average net assets:
Expenses, before reimbursements or recoupments		0.91	%		0.99	%		1.02	%		0.97	%		1.02	%
Expenses, net of reimbursements or recoupments		0.83	%		0.99	%		1.02	%		0.97	%		1.04	%
Net investment income, before expense reimbursements or recoupments		1.66	%		1.39	%		1.64	%		1.44	%		1.68	%
Net investment income, net of reimbursements or recoupments		1.74	%		1.39	%		1.64	%		1.44	%		1.67	%
Portfolio turnover rate		28	%		32	%		16	%		62	%		34	%

^A  Based on net asset value, which does not reflect the sales charge, redemption fee, or contingent deferred sales charge, if applicable. May include adjustments in accordance with U.S. GAAP and as such, the net asset value for reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions.

See accompanying notes

70

American Beacon Balanced Fund^SM

Financial Highlights

(For a share outstanding throughout the period)

	C Class
	Year Ended October 31,
	2018			2017			2016			2015			2014
Net asset value, beginning of period	$	15.64		$	13.83		$	14.43		$	15.47		$	15.13
Income (loss) from investment operations:
Net investment income		0.13			0.08			0.12			0.14			0.21
Net gains (losses) on investments (both realized and unrealized)		(0.09	)		1.92			0.13			(0.29	)		1.20
Total income (loss) from investment operations		0.04			2.00			0.25			(0.15	)		1.41
Less distributions:
Dividends from net investment income		(0.33	)		(0.19	)		(0.10	)		(0.11	)		(0.24	)
Distributions from net realized gains		(0.80	)		-			(0.75	)		(0.78	)		(0.83	)
Total distributions		(1.13	)		(0.19	)		(0.85	)		(0.89	)		(1.07	)
Net asset value, end of period	$	14.55		$	15.64		$	13.83		$	14.43		$	15.47
Total returnA		0.04	%		14.50	%		2.03	%		(1.14	)%		9.80	%
Ratios and supplemental data:
Net assets, end of period	$	36,046,543		$	42,575,983		$	40,827,570		$	45,641,648		$	32,045,404
Ratios to average net assets:
Expenses, before reimbursements or recoupments		1.66	%		1.73	%		1.77	%		1.72	%		1.78	%
Expenses, net of reimbursements or recoupments		1.54	%		1.73	%		1.77	%		1.72	%		1.79	%
Net investment income, before expense reimbursements or recoupments		0.91	%		0.63	%		0.89	%		0.69	%		0.94	%
Net investment income, net of reimbursements or recoupments		1.02	%		0.63	%		0.89	%		0.69	%		0.93	%
Portfolio turnover rate		28	%		32	%		16	%		62	%		34	%

^A  Based on net asset value, which does not reflect the sales charge, redemption fee, or contingent deferred sales charge, if applicable. May include adjustments in accordance with U.S. GAAP and as such, the net asset value for reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions.

See accompanying notes

71

American Beacon Mid-Cap Value Fund^SM

Financial Highlights

(For a share outstanding throughout the period)

	Institutional Class
	Year Ended October 31,
	2018			2017			2016			2015A			2014
Net asset value, beginning of period	$	17.25		$	14.03		$	14.62		$	14.76		$	14.33
Income (loss) from investment operations:
Net investment income		0.21			0.16			0.26			0.16			0.12
Net gains (losses) on investments (both realized and unrealized)		(1.34	)		3.28			0.03			0.25			1.27
Total income (loss) from investment operations		(1.13	)		3.44			0.29			0.41			1.39
Less distributions:
Dividends from net investment income		(0.16	)		(0.22	)		(0.17	)		(0.10	)		(0.11	)
Distributions from net realized gains		(0.44	)		-			(0.71	)		(0.45	)		(0.85	)
Total distributions		(0.60	)		(0.22	)		(0.88	)		(0.55	)		(0.96	)
Redemption fees added to beneficial interests		-			-			-			0.00	B		0.00	B
Net asset value, end of period	$	15.52		$	17.25		$	14.03		$	14.62		$	14.76
Total returnC		(6.89	)%		24.71	%		2.39	%		2.73	%		10.20	%
Ratios and supplemental data:
Net assets, end of period	$	248,752,034		$	265,934,589		$	195,472,135		$	258,503,278		$	193,634,639
Ratios to average net assets:
Expenses, before reimbursements or recoupment		0.85	%		0.89	%		0.89	%		0.85	%		0.89	%
Expenses, net of reimbursements or recoupment		0.85	%		0.89	%		0.89	%		0.85	%		0.93	%
Net investment income, before expense reimbursements or recoupment		1.19	%		1.06	%		1.65	%		1.10	%		0.92	%
Net investment income, net of reimbursements or recoupment		1.19	%		1.06	%		1.65	%		1.10	%		0.88	%
Portfolio turnover rate		34	%		28	%		27	%		79	%		24	%

^A  WEDGE Capital Management was added as an investment manager to the Mid-Cap Value Fund on May 11, 2015.

^B  Amount represents less than $0.01 per share.

^C  Based on net asset value, which does not reflect the sales charge, redemption fee, or contingent deferred sales charge, if applicable. May include adjustments in accordance with U.S. GAAP and as such, the net asset value for reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions.

See accompanying notes

72

American Beacon Mid-Cap Value Fund^SM

Financial Highlights

(For a share outstanding throughout the period)

	Y Class
	Year Ended October 31,
	2018			2017			2016			2015A			2014
Net asset value, beginning of period	$	17.11		$	13.92		$	14.52		$	14.66		$	14.25
Income (loss) from investment operations:
Net investment income		0.19			0.15			0.23			0.15			0.18
Net gains (losses) on investments (both realized and unrealized)		(1.32	)		3.25			0.05			0.26			1.19
Total income (loss) from investment operations		(1.13	)		3.40			0.28			0.41			1.37
Less distributions:
Dividends from net investment income		(0.15	)		(0.21	)		(0.17	)		(0.10	)		(0.11	)
Distributions from net realized gains		(0.44	)		-			(0.71	)		(0.45	)		(0.85	)
Total distributions		(0.59	)		(0.21	)		(0.88	)		(0.55	)		(0.96	)
Redemption fees added to beneficial interests		-			-			-			0.00	B		0.00	B
Net asset value, end of period	$	15.39		$	17.11		$	13.92		$	14.52		$	14.66
Total returnC		(6.96	)%		24.60	%		2.29	%		2.76	%		10.15	%
Ratios and supplemental data:
Net assets, end of period	$	96,799,413		$	100,190,167		$	68,994,531		$	70,009,288		$	31,074,584
Ratios to average net assets:
Expenses, before reimbursements		0.93	%		0.97	%		0.96	%		0.94	%		0.98	%
Expenses, net of reimbursements		0.93	%		0.97	%		0.96	%		0.94	%		0.98	%
Net investment income, before expense reimbursements		1.11	%		0.98	%		1.59	%		1.02	%		0.80	%
Net investment income, net of reimbursements		1.11	%		0.98	%		1.59	%		1.02	%		0.80	%
Portfolio turnover rate		34	%		28	%		27	%		79	%		24	%

^A  WEDGE Capital Management was added as an investment manager to the Mid-Cap Value Fund on May 11, 2015.

^B  Amount represents less than $0.01 per share.

^C  Based on net asset value, which does not reflect the sales charge, redemption fee, or contingent deferred sales charge, if applicable. May include adjustments in accordance with U.S. GAAP and as such, the net asset value for reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions.

See accompanying notes

73

American Beacon Mid-Cap Value Fund^SM

Financial Highlights

(For a share outstanding throughout the period)

	Investor Class
	Year Ended October 31,
	2018			2017			2016			2015A			2014
Net asset value, beginning of period	$	17.40		$	14.14		$	14.73		$	14.89		$	14.47
Income (loss) from investment operations:
Net investment income		0.16			0.14			0.21			0.13			0.16
Net gains (losses) on investments (both realized and unrealized)		(1.34	)		3.31			0.05			0.25			1.21
Total income (loss) from investment operations		(1.18	)		3.45			0.26			0.38			1.37
Less distributions:
Dividends from net investment income		(0.13	)		(0.19	)		(0.14	)		(0.09	)		(0.10	)
Distributions from net realized gains		(0.44	)		-			(0.71	)		(0.45	)		(0.85	)
Total distributions		(0.57	)		(0.19	)		(0.85	)		(0.54	)		(0.95	)
Redemption fees added to beneficial interests		-			-			-			0.00	B		0.00	B
Net asset value, end of period	$	15.65		$	17.40		$	14.14		$	14.73		$	14.89
Total returnC		(7.13	)%		24.52	%		2.12	%		2.52	%		9.99	%
Ratios and supplemental data:
Net assets, end of period	$	379,123,913		$	274,552,551		$	243,421,035		$	304,799,582		$	246,404,670
Ratios to average net assets:
Expenses, before reimbursements or recoupment		1.12	%		1.09	%		1.12	%		1.09	%		1.13	%
Expenses, net of reimbursements or recoupment		1.12	%		1.09	%		1.12	%		1.09	%		1.14	%
Net investment income, before expense reimbursements or recoupment		0.92	%		0.86	%		1.44	%		0.87	%		0.61	%
Net investment income, net of reimbursements or recoupment		0.92	%		0.86	%		1.44	%		0.87	%		0.60	%
Portfolio turnover rate		34	%		28	%		27	%		79	%		24	%

^A  WEDGE Capital Management was added as an investment manager to the Mid-Cap Value Fund on May 11, 2015.

^B  Amount represents less than $0.01 per share.

^C  Based on net asset value, which does not reflect the sales charge, redemption fee, or contingent deferred sales charge, if applicable. May include adjustments in accordance with U.S. GAAP and as such, the net asset value for reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions.

See accompanying notes

74

American Beacon Mid-Cap Value Fund^SM

Financial Highlights

(For a share outstanding throughout the period)

	Advisor Class
	Year Ended October 31,
	2018			2017			2016			2015A			2014
Net asset value, beginning of period	$	16.83		$	13.69		$	14.27		$	14.46		$	14.07
Income (loss) from investment operations:
Net investment income		0.10			0.10			0.16			0.08			0.11
Net gains (losses) on investments (both realized and unrealized)		(1.29	)		3.18			0.05			0.25			1.17
Total income (loss) from investment operations		(1.19	)		3.28			0.21			0.33			1.28
Less distributions:
Dividends from net investment income		(0.03	)		(0.14	)		(0.08	)		(0.07	)		(0.04	)
Distributions from net realized gains		(0.44	)		-			(0.71	)		(0.45	)		(0.85	)
Total distributions		(0.47	)		(0.14	)		(0.79	)		(0.52	)		(0.89	)
Redemption fees added to beneficial interests		-			-			-			0.00	B		0.00	B
Net asset value, end of period	$	15.17		$	16.83		$	13.69		$	14.27		$	14.46
Total returnC		(7.38	)%		24.10	%		1.82	%		2.25	%		9.58	%
Ratios and supplemental data:
Net assets, end of period	$	3,597,339		$	3,682,231		$	6,622,356		$	6,684,131		$	7,149,083
Ratios to average net assets:
Expenses, before reimbursements or recoupment		1.39	%		1.40	%		1.40	%		1.37	%		1.40	%
Expenses, net of reimbursements or recoupment		1.39	%		1.40	%		1.40	%		1.37	%		1.46	%
Net investment income, before expense reimbursements or recoupment		0.64	%		0.55	%		1.16	%		0.58	%		0.35	%
Net investment income, net of reimbursements or recoupment		0.64	%		0.55	%		1.16	%		0.58	%		0.30	%
Portfolio turnover rate		34	%		28	%		27	%		79	%		24	%

^A  WEDGE Capital Management was added as an investment manager to the Mid-Cap Value Fund on May 11, 2015.

^B  Amount represents less than $0.01 per share.

^C  Based on net asset value, which does not reflect the sales charge, redemption fee, or contingent deferred sales charge, if applicable. May include adjustments in accordance with U.S. GAAP and as such, the net asset value for reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions.

See accompanying notes

75

American Beacon Mid-Cap Value Fund^SM

Financial Highlights

(For a share outstanding throughout the period)

	A Class
	Year Ended October 31,
	2018			2017			2016			2015A			2014
Net asset value, beginning of period	$	16.84		$	13.70		$	14.28		$	14.43		$	14.09
Income (loss) from investment operations:
Net investment income		0.18			0.13			0.18			0.11			0.13
Net gains (losses) on investments (both realized and unrealized)		(1.36	)		3.18			0.05			0.25			1.16
Total income (loss) from investment operations		(1.18	)		3.31			0.23			0.36			1.29
Less distributions:
Dividends from net investment income		(0.07	)		(0.17	)		(0.10	)		(0.06	)		(0.10	)
Distributions from net realized gains		(0.44	)		-			(0.71	)		(0.45	)		(0.85	)
Total distributions		(0.51	)		(0.17	)		(0.81	)		(0.51	)		(0.95	)
Redemption fees added to beneficial interests		-			-			-			0.00	B		0.00	B
Net asset value, end of period	$	15.15		$	16.84		$	13.70		$	14.28		$	14.43
Total returnC		(7.32	)%		24.26	%		1.98	%		2.35	%		9.68	%
Ratios and supplemental data:
Net assets, end of period	$	12,080,510		$	18,170,218		$	19,486,655		$	16,422,504		$	18,345,497
Ratios to average net assets:
Expenses, before reimbursements		1.25	%		1.27	%		1.26	%		1.25	%		1.33	%
Expenses, net of reimbursements		1.25	%		1.27	%		1.26	%		1.25	%		1.33	%
Net investment income, before expense reimbursements		0.78	%		0.69	%		1.30	%		0.71	%		0.42	%
Net investment income, net of reimbursements		0.78	%		0.69	%		1.30	%		0.71	%		0.42	%
Portfolio turnover rate		34	%		28	%		27	%		79	%		24	%

^A  WEDGE Capital Management was added as an investment manager to the Mid-Cap Value Fund on May 11, 2015.

^B  Amount represents less than $0.01 per share.

^C  Based on net asset value, which does not reflect the sales charge, redemption fee, or contingent deferred sales charge, if applicable. May include adjustments in accordance with U.S. GAAP and as such, the net asset value for reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions.

See accompanying notes

76

American Beacon Mid-Cap Value Fund^SM

Financial Highlights

(For a share outstanding throughout the period)

	C Class
	Year Ended October 31,
	2018			2017			2016			2015A			2014
Net asset value, beginning of period	$	16.27		$	13.26		$	13.87		$	14.08		$	13.81
Income (loss) from investment operations:
Net investment income (loss)		0.03			(0.03	)		0.07			0.01			0.08
Net gains (losses) on investments (both realized and unrealized)		(1.26	)		3.11			0.06			0.23			1.09
Total income (loss) from investment operations		(1.23	)		3.08			0.13			0.24			1.17
Less distributions:
Dividends from net investment income		-			(0.07	)		(0.03	)		-			(0.05	)
Distributions from net realized gains		(0.44	)		-			(0.71	)		(0.45	)		(0.85	)
Total distributions		(0.44	)		(0.07	)		(0.74	)		(0.45	)		(0.90	)
Redemption fees added to beneficial interests		-			-			-			0.00	B		0.00	B
Net asset value, end of period	$	14.60		$	16.27		$	13.26		$	13.87		$	14.08
Total returnC		(7.85	)%		23.27	%		1.19	%		1.57	%		8.88	%
Ratios and supplemental data:
Net assets, end of period	$	5,840,412		$	6,520,983		$	6,030,130		$	6,238,827		$	5,104,394
Ratios to average net assets:
Expenses, before reimbursements or recoupment		1.87	%		2.04	%		2.04	%		2.01	%		2.12	%
Expenses, net of reimbursements or recoupment		1.87	%		2.04	%		2.04	%		2.01	%		2.13	%
Net investment income (loss), before expense reimbursements or recoupment		0.17	%		(0.09	)%		0.53	%		(0.05	)%		(0.33	)%
Net investment income (loss), net of reimbursements or recoupment		0.17	%		(0.09	)%		0.53	%		(0.05	)%		(0.34	)%
Portfolio turnover rate		34	%		28	%		27	%		79	%		24	%

^A  WEDGE Capital Management was added as an investment manager to the Mid-Cap Value Fund on May 11, 2015.

^B  Amount represents less than $0.01 per share.

^C  Based on net asset value, which does not reflect the sales charge, redemption fee, or contingent deferred sales charge, if applicable. May include adjustments in accordance with U.S. GAAP and as such, the net asset value for reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions.

See accompanying notes

77

American Beacon Mid-Cap Value Fund^SM

Financial Highlights

(For a share outstanding throughout the period)

	R6 Class
	February 28, 2018A to October 31, 2018
Net asset value, beginning of period	$	16.94
Income (loss) from investment operations:
Net investment income		0.10
Net (losses) on investments (both realized and unrealized)		(1.52	)
Total (loss) from investment operations		(1.42	)
Net asset value, end of period	$	15.52
Total returnB		(8.38	)%C
Ratios and supplemental data:
Net assets, end of period	$	191,772
Ratios to average net assets:
Expenses, before reimbursements		3.09	%D
Expenses, net of reimbursements		0.88	%D
Net investment (loss), before expense reimbursements		(0.88	)%D
Net investment income, net of reimbursements		1.32	%D
Portfolio turnover rate		34	%C

^A  Commencement of operations.

^B  Based on net asset value, which does not reflect the sales charge, redemption fee, or contingent deferred sales charge, if applicable. May include adjustments in accordance with U.S. GAAP and as such, the net asset value for reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions.

^C  Not annualized.

^D  Annualized.

See accompanying notes

78

American Beacon Funds^SM

Federal Tax Information

October 31, 2018 (Unaudited)

Certain tax information regarding the Funds are required to be provided to shareholders based upon the Funds’ income and distributions for the taxable year ended October 31, 2018. The information and distributions reported herein may differ from information and distributions taxable to the shareholders for the calendar year ended December 31, 2018.

The Funds designated the following items with regard to distributions paid during the fiscal year ended October 31, 2018. 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.

Corporate Dividends-Received Deduction:

Balanced	27.92	%
Mid-Cap Value	100.00	%

Qualified Dividend Income:

Balanced	38.59	%
Mid-Cap Value	100.00	%

Long-Term Capital Gain Distributions:

Balanced	$11,287,869
Mid-Cap Value	17,340,746

Short-Term Capital Gain Distributions:

Balanced	$5,764,975
Mid-Cap Value	-

Shareholders will receive notification in January 2019 of the applicable tax information necessary to prepare their 2018 income tax returns.

79

Disclosure Regarding Approval of the Management and Investment Advisory Agreements (Unaudited)

Renewal and Approval of Management Agreement and Investment Advisory Agreements

At in-person meetings held on May 18, 2018 and June 5-6, 2018 (collectively, the “Meetings”), the Board of Trustees (“Board” or “Trustees”) considered and then, at its June 6, 2018 meeting, approved the renewal of:

(1) the Management Agreement between American Beacon Advisors, Inc. (“Manager” or “AmBeacon”) and the American Beacon Funds (“Trust”), on behalf of the American Beacon Balanced Fund (“Balanced Fund”) and the American Beacon Mid-Cap Value Fund (“Mid Cap Fund”) (each, a “Fund” and collectively, the “Funds”);

(2) the Investment Advisory Agreements among the Manager, the Trust, on behalf of the Balanced Fund, and each of Barrow, Hanley, Mewhinney & Strauss, LLC (“Barrow”), Brandywine Global Investment Management, LLC (“Brandywine”) and Hotchkis and Wiley Capital Management, LLC (“Hotchkis”); and

(3) the Investment Advisory Agreements among the Manager, the Trust, on behalf of the Mid Cap Fund, and each of Barrow, Pzena Investment Management, LLC (“Pzena”) and WEDGE Capital Management, L.L.P. (“WEDGE”).

Barrow, Brandywine, Hotchkis, Pzena and WEDGE are hereinafter each referred to as a “subadvisor” and collectively as the “subadvisors.” The Management Agreement and the Investment Advisory Agreements are collectively referred to herein as the “Agreements.” In preparation for its consideration of the renewal of the Agreements, the Board undertook steps to gather and consider information furnished by, or derived from, the Manager, the subadvisors, Broadridge, Inc. (“Broadridge”) and Morningstar, Inc. (“Morningstar”). The Board, with the assistance of independent legal counsel, requested and received certain relevant information from the Manager and the subadvisors.

In advance of the Meetings, the Board’s Investment Committee and/or the Manager coordinated the production of information from Broadridge regarding the performance, fees and expenses of the Funds as well as information from the Manager and the subadvisors. At the Meetings, the Board considered the information provided. Further, the Board took into consideration information furnished to the Board throughout the year at regular meetings of the Board and its committees, as well as information specifically prepared in connection with the renewal process.

In connection with the Board’s consideration of the Agreements, the Trustees received and evaluated such information as they deemed necessary. The information requested on behalf of the Board included, among other information, the following materials. References herein to the “firm” refer to the Manager and/or the subadvisors.

• comparisons of the performance of an appropriate share class of each Fund to comparable investment companies and appropriate benchmark indices, including peer group averages and performance analyses from Broadridge, and to the performance of any similar accounts or a composite of similar accounts, as applicable, managed by the firm;

• comparisons of each Fund’s management and subadvisory fee rates and expense ratio with the management fee rates paid by comparable mutual funds and their expense ratios, including peer group averages and fee and expense analyses from Broadridge, and the advisory fee rates charged to other clients for which similar services are provided by a firm;

• the Manager’s profitability with respect to the services that it provided to each Fund;

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

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

80

Disclosure Regarding Approval of the Management and Investment Advisory Agreements (Unaudited)

• information regarding administrative, accounting-related, cash management and securities lending services that the Manager provides to the Funds and the fees that the Manager receives for such services; and

• information regarding a firm’s financial condition, the personnel of the Manager who are assigned primary responsibility for managing the Funds, staffing levels, portfolio managers’ compensation, insurance coverage, material pending litigation, code of ethics, compliance matters, actual or potential conflicts of interest that the firm experiences, or anticipates that it will experience, in providing services to the Funds, and the Manager’s disaster recovery plans.

The Board noted that the Manager provides management and administrative services to the Funds pursuant to the Management Agreement. The Board considered that many mutual funds have separate contracts governing each type of service and observed that, with respect to such mutual funds, the actual management fee rates provided by Broadridge for peer group funds reflect the combined advisory and administrative expenses, reduced by any fee waivers and/or reimbursements.

A firm may not have been able to, or opted not to, provide information in response to certain information requests, in which case the Board conducted its evaluation of the firm based on information that was provided. In such cases, the Board determined that the omission of any such information was not material to its considerations. For each Fund, the class of shares used for comparative performance purposes was the share class with the lowest expenses available for purchase by the general public, which was the Institutional Class. The Board also considered that the use of Institutional Class performance generally facilitates a meaningful comparison for expense and performance purposes.

Provided below is an overview of certain factors the Board considered in connection with its renewal and approval of the 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 investment advisory contracts, such as the Agreements. The memorandum explained the regulatory requirements surrounding the Trustees’ process for evaluating investment advisors and the terms of investment advisory contracts. Based on its evaluation, the Board unanimously concluded that the terms of 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 the Investment Advisory Agreements

In determining whether to renew the Agreements, the Trustees considered the best interests of each Fund separately. While the Management Agreement and the Investment Advisory Agreements for the Funds were considered at the Meetings, 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; (3) the costs incurred by the Manager in rendering services to the Funds and its resulting profits or losses; (4) comparisons of services and fee rates with contracts entered into by the Manager or the subadvisors or their affiliates with other clients (such as pension funds and other institutional clients); (5) the extent to which economies of scale, if any, have been taken into account in setting each fee rate schedule; (6) whether fee rate levels reflect economies of scale, if any, for the benefit of Fund investors; and (7) any other benefits derived or anticipated to be derived by the Manager or the subadvisors from their relationships with a Fund.

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; the length of service of key

81

Disclosure Regarding Approval of the Management and Investment Advisory Agreements (Unaudited)

investment personnel at the Manager; the cost structure of the Funds; the Manager’s culture of compliance and support that reduce risks to the Funds; the Manager’s quality of services; the Manager’s active role in monitoring and, as appropriate, recommending additional or replacement subadvisors; and the Manager’s efforts to retain key employees and maintain staffing levels.

With respect to the renewal of the Investment Advisory Agreements, the Board considered the level of staffing and the size of the subadvisors. The Board also considered the adequacy of the resources committed to the Funds by the subadvisors, and whether those resources were commensurate with the needs of the Fund and are sufficient to sustain appropriate levels of performance and compliance needs. In this regard, the Board considered the financial stability of the subadvisors. The Board also considered the subadvisors’ representations regarding their compliance program 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 the subadvisors were appropriate for each Fund.

Investment Performance. The Board evaluated the comparative information provided by Broadridge and the Manager regarding the performance of each Fund relative to its Broadridge performance universe, Morningstar Category, and benchmark indices, as well as the Fund’s Morningstar rating. The Board considered the information provided by Broadridge regarding Broadridge’s independent methodology for selecting each Fund’s Broadridge performance universe. The Board also considered that the performance universes selected by Broadridge may not provide appropriate comparisons for a Fund. In addition, the Board considered the performance reports and discussions with management at Board and Committee meetings throughout the year. The Board also evaluated the comparative information provided by each subadvisor regarding the performance of its portion of the relevant Fund relative to the performance of a composite of similar accounts managed by the subadvisor and the Fund’s benchmark index. In addition, the Board considered the Manager’s recommendation to continue to retain each subadvisor. 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, before and after the payment of distribution-related expenses by the Manager. The profits or losses were noted at both an aggregate level for all funds within the group of mutual funds sponsored by the Manager (the “Fund Complex”) and at an individual Fund level, with the Manager earning a profit with respect to each Fund before and after the payment of distribution-related expenses by the Manager. The Board also considered comparative information provided by the Manager regarding the Manager’s overall profitability with respect to the Fund Complex relative to the overall profitability of other firms in the mutual fund industry, as disclosed in publicly available sources. 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 Manager represented that, among other matters, the difference is attributable to the fact that the Manager does not perform administrative services for non-investment company clients and reflects the greater level of responsibility and regulatory requirements associated with managing the Funds.

The Board further considered that, with respect to each Fund, the applicable Management Agreement provides for the Manager to receive a management fee comprised of an annualized fee that is retained by the Manager. In addition, the Board considered that the Manager receives fees for managing the portion of the Balanced Fund with respect to which the Manager has not delegated day-to-day management to a subadviser and for overseeing the securities lending program on behalf of each Fund. The Board also noted that certain share classes of the Funds maintain higher expense ratios in order to compensate third-party financial intermediaries.

In analyzing the fee rates charged by each subadvisor in connection with its investment advisory services to a Fund, the Board considered representations made by each subadvisor that the relevant Fund’s subadvisory fee rate schedule for each such firm is favorable compared to other comparable client accounts of that firm. The Board did not request profitability data from the subadvisors because the Board did not view this data as

82

Disclosure Regarding Approval of the Management and Investment Advisory Agreements (Unaudited)

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. In addition, the Board noted that the subadvisors may not account for their profits on an account-by-account basis and that different firms likely employ different methodologies in connection with these calculations.

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 each Fund grows and whether fee rate levels reflect these economies of scale for the benefit of Fund shareholders. In this regard, the Board considered that, with respect to each subadvisor, the Manager has negotiated breakpoints with respect to each Fund’s subadvisory fee rate.

In addition, the Board noted the Manager’s representation that the Management Agreement contains fee schedule breakpoints at higher asset levels with respect to each Fund, except for the portion of the Balanced Fund with respect to which the Manager has not delegated day-to-day management to a subadviser. Based on the foregoing information, the Board concluded that the Manager and subadvisor fee rate schedules for each Fund provide for a reasonable sharing of benefits from any economies of scale with each Fund.

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. In addition, the Board noted that each subadvisor benefits from soft dollar arrangements for proprietary and/or third-party research. 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 in comparison to each Fund’s Broadridge performance universe and Morningstar Category. With respect to the Broadridge performance universe, the 1^st Quintile represents the top twenty percent of the universe based on performance and the 5^th Quintile representing the bottom twenty percent of the universe based on performance. References below to each Fund’s Broadridge performance universe are to the universe of mutual funds with a comparable investment classification/objective included in the analysis provided by Broadridge. In reviewing the performance, the Trustees viewed longer-term performance over a full market cycle as the most important consideration, because relative performance over shorter periods may be significantly impacted by market or economic events and not necessarily reflective of manager skill.

The expense comparisons below were made in comparison to each Fund’s Broadridge expense universe and Broadridge expense group, with the 1^st Quintile representing the top twenty percent of the universe or group based on lowest total expense and the 5^th Quintile representing the bottom twenty percent of the universe or group based on highest total expense. References below to each Fund’s expense group and expense universe are to the respective group or universe of comparable mutual funds included in the analysis by Broadridge. A Broadridge expense group consists of the Fund and a representative sample of funds with similar operating structures and asset sizes, as selected by Broadridge. A Broadridge expense universe includes all funds in the investment classification/objective with a similar operating structure as the share class of the Fund included in the Broadridge comparative information and provides a broader view of expenses across the Fund’s investment classification/objective. The Trustees also considered each Fund’s Morningstar fee level category. In reviewing expenses, the

83

Disclosure Regarding Approval of the Management and Investment Advisory Agreements (Unaudited)

Trustees considered the positive impact of fee waivers where applicable and the Manager’s agreement to continue the fee waivers. In addition, information regarding the subadvisors’ use of soft dollars was requested from the Manager and was considered by the Trustees.

Additional Considerations and Conclusions with Respect to the American Beacon Balanced Fund

In considering the renewal of the Management Agreement for the Balanced Fund, the Trustees considered the following additional factors:

Broadridge Total Expense Analysis Excluding 12b-1 Fees and Morningstar Fee Level Ranking

Compared to Broadridge Expense Group	1st Quintile
Compared to Broadridge Expense Universe	2nd Quintile
Morningstar Fee Level Ranking – Institutional Class	Low Expense Ratio

Broadridge and Morningstar Performance Analysis (five-year period ended December 31, 2017)

Compared to Broadridge Performance Universe	2nd Quintile
Compared to Morningstar Category	1st Quintile

In considering the renewal of the Investment Advisory Agreements with Barrow, Brandywine and Hotchkis, the Trustees considered that the diversification of investment strategies facilitated by the Balanced Fund’s multi-manager structure permits the Balanced Fund to mitigate the risks associated with a single subadvisor. The Trustees also considered the following additional factors:

Subadvisor Performance (compared to Broadridge Performance Universe for period indicated ended December 31, 2017)

Barrow*	5 Years	4	th Quintile
Brandywine*	5 Years	1	st Quintile
Hotchkis**	5 Years	1	st Quintile
AmBeacon***	5 Years	2	nd Quintile
*    Barrow and Brandywine’s combined equity and bond returns are compared to the Broadridge mixed-asset target allocation growth performance universe. **   Hotchkis’ equity value-only return is compared to the Broadridge large cap value performance universe.
*** AmBeacon’s bond-only return is compared to the Broadridge core bond performance universe.

The Trustees also considered: (1) that the funds included in the Broadridge performance universe are managed pursuant to a variety of investment styles, and the Balanced Fund may underperform when Barrow and Brandywine’s deeper value equity investment style (in companies with more significant discounts to price-to-earnings and price-to book ratios relative to other investment managers) has been out of favor; (2) that the Manager invests the Balanced Fund’s fixed income portfolio exclusively in investment grade debt securities while the funds in the Broadridge performance universe may invest in high yield debt securities; (3) information provided by each subadvisor regarding fee rates charged for managing accounts in the same strategy as the subadvisor manages its allocation of the Balanced Fund; and (4) 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 Management and Investment Advisory Agreements are fair and reasonable; and (2) determined that the Balanced Fund and its shareholders would benefit from the Manager’s and subadvisors’ continued management of the Balanced Fund.

84

Disclosure Regarding Approval of the Management and Investment Advisory Agreements (Unaudited)

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

In considering the renewal of the Management Agreement for the Mid Cap Fund, the Trustees considered the following additional factors:

Broadridge Total Expense Analysis Excluding 12b-1 Fees and Morningstar Fee Level Ranking

Compared to Broadridge Expense Group	3rd Quintile
Compared to Broadridge Expense Universe	4th Quintile
Morningstar Fee Level Ranking – Institutional Class	Average Expense Ratio

Broadridge and Morningstar Performance Analysis (five-year period ended December 31, 2017)

Compared to Broadridge Performance Universe	1st Quintile
Compared to Morningstar Category	1st Quintile

In considering the renewal of the Investment Advisory Agreements with Barrow, Pzena and WEDGE, the Trustees considered that the diversification of investment strategies facilitated by the Mid Cap Fund’s multi-manager structure permits the Mid Cap Fund to mitigate the risks associated with a single subadvisor. The Trustees also considered the following additional factors:

Subadvisor Performance (compared to Broadridge Performance Universe for period indicated ended December 31, 2017)

Barrow	5 Years	1st Quintile
Pzena	5 Years	1st Quintile
WEDGE*	1 Year	1st Quintile
* Does not yet have a 3- or 5-year performance record.

The Trustees also considered: (1) that the Mid Cap Fund’s Broadridge expense group and expense universe are comprised principally of single-manager funds, which typically reach breakpoints in their subadvisory fee schedules sooner than multi-manager funds; (2) that, since the last renewal of the Investment Advisory Agreements, the Manager had negotiated a reduced fee schedule with one of the Mid Cap Fund’s subadvisors with respect to its allocation of the Mid Cap Fund; (3) information provided by each subadvisor regarding fee rates charged for managing accounts in the same strategy as the subadvisor manages its allocation of the Mid Cap Fund; and (4) 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 Management and Investment Advisory Agreements are fair and reasonable; and (2) determined that the Mid Cap Fund and its shareholders would benefit from the Manager’s and subadvisors’ continued management of the Mid Cap Fund.

85

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. The address of each person listed below is 220 Las Colinas Boulevard East, Suite 1200, Irving, Texas 75039. Each Trustee oversees thirty-seven funds in the fund complex that includes the Trust, the American Beacon Select Funds, the American Beacon Institutional Funds Trust, the American Beacon Sound Point Enhanced Income Fund, and the American Beacon Apollo Total Return Fund. 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** (81)	Trustee since 1996	Partner in the law firm of Akin, Gump, Strauss, Hauer & Feld, LLP (law firm) (1960-Present); Trustee, American Beacon Mileage Funds (1996-2012); Trustee, American Beacon Select Funds (1999-Present); Trustee, American Beacon Master Trust (1996-2012); Trustee, American Beacon Institutional Funds Trust (2017-Present); Trustee, American Beacon Sound Point Enhanced Income Fund (2018-Present); Trustee, American Beacon Apollo Total Return Fund (2018-Present).
NON-INTERESTED TRUSTEES	Term
	Lifetime of Trust until removal, resignation or retirement*
Gilbert G. Alvarado (48)	Trustee since 2015	Director, Kura MD, Inc. (local telehealth organization) (2015-present); Vice President & CFO, Sierra Health Foundation (health conversion private foundation) (2006-Present); Vice President & CFO, Sierra Health Foundation: Center for Health Program Management (California public benefit corporation) (2012-Present); Director, Innovative North State (2012-2015); Director, Sacramento Regional Technology Alliance (2011-2016); Director, Women’s Empowerment (2009-2014); Director, Valley Healthcare Staffing (2017-present); Trustee, American Beacon Select Funds (2015-Present); Trustee, American Beacon Institutional Funds Trust (2017-Present); Trustee, American Beacon Sound Point Enhanced Income Fund (2018-Present); Trustee, American Beacon Apollo Total Return Fund (2018-Present).
Joseph B. Armes (56)	Trustee since 2015	Chairman & CEO, CSW Industrials f/k/a Capital Southwest Corporation (investment company) (2015-Present); Chairman of the Board of Capital Southwest Corporation, predecessor to CSW Industrials, Inc. (2014-present) (investment company); CEO, Capital Southwest Corporation (2013-2015); President & CEO, JBA Investment Partners (family investment vehicle) (2010-Present); Director and Chair of Audit Committee, RSP Permian (oil and gas producer) (2013-Present); Trustee, American Beacon Select Funds (2015-Present); Trustee, American Beacon Institutional Funds Trust (2017-Present); Trustee, American Beacon Sound Point Enhanced Income Fund (2018-Present); Trustee, American Beacon Apollo Total Return Fund (2018-Present).
Gerard J. Arpey (60)	Trustee since 2012	Director, The Home Depot, Inc. (2015-Present); Partner, Emerald Creek Group (private equity firm) (2011-Present); Director, S.C. Johnson & Son, Inc. (privately held company) (2008-present); Trustee, American Beacon Select Funds (2012-Present); Trustee, American Beacon Institutional Funds Trust (2017-Present); Trustee, American Beacon Sound Point Enhanced Income Fund (2018-Present); Trustee, American Beacon Apollo Total Return Fund (2018-Present).

86

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
NON-INTERESTED TRUSTEES (CONT.)	Term
	Lifetime of Trust until removal, resignation or retirement*
Brenda A. Cline (57)	Trustee since 2004 Vice Chair since 2018	Chief Financial Officer, Treasurer and Secretary, Kimbell Art Foundation (1993-Present); Director, Tyler Technologies, Inc. (public sector software solutions company) (2014-Present); Director, Range Resources Corporation (oil and natural gas company) (2015-Present); Trustee, Cushing Closed-End Funds (2017-Present); Trustee, American Beacon Mileage Funds (2004-2012); Trustee, American Beacon Select Funds (2004-Present); Trustee, American Beacon Master Trust (2004-2012); Trustee, American Beacon Institutional Funds Trust (2017-Present); Trustee, American Beacon Sound Point Enhanced Income Fund (2018-Present); Trustee, American Beacon Apollo Total Return Fund (2018-Present).
Eugene J. Duffy (64)	Trustee since 2008	Managing Director, Global Investment Management Distribution, Mesirow Financial (2016-Present); Managing Director, Institutional Services, Intercontinental Real Estate Corporation (2014-Present); Principal and Executive Vice President, Paradigm Asset Management (1994-2014); Director, Sunrise Bank of Atlanta (2008-2013); Trustee, American Beacon Mileage Funds (2008-2012); Trustee, American Beacon Select Funds (2008-Present); Trustee, American Beacon Master Trust (2008-2012); Trustee, American Beacon Institutional Funds Trust (2017-Present); Trustee, American Beacon Sound Point Enhanced Income Fund (2018-Present); Trustee, American Beacon Apollo Total Return Fund (2018-Present).
Claudia A. Holz*** (61)	Trustee since 2018	Partner, KPMG LLP (1990-2017); Trustee, American Beacon Select Funds (2018-Present); Trustee, American Beacon Institutional Funds Trust (2018-Present); Trustee, American Beacon Sound Point Enhanced Income Fund (2018-Present); Trustee, American Beacon Apollo Total Return Fund (2018-Present).
Douglas A. Lindgren**** (56)	Trustee since 2018	CEO North America, Carne Global Financial Services (2016-2017); Managing Director, IPS Investment Management and Global Head, Content Management, UBS Wealth Management (2010-2016); Managing Director, P&S Hedge Funds, UBS Wealth Management (2008-2010); Managing Director, Head of Alternative Investments, UBS Financial Services, Inc. (2005-2008); Trustee, American Beacon Select Funds (2018-Present); Trustee, American Beacon Institutional Funds Trust (2018-Present); Trustee, American Beacon Sound Point Enhanced Income Fund (2018-Present); Trustee, American Beacon Apollo Total Return Fund (2018-Present).
Richard A. Massman (75)	Trustee since 2004 Chairman since 2008	Consultant and General Counsel Emeritus, Hunt Consolidated, Inc. (holding company engaged in oil and gas exploration and production, refining, real estate, farming, ranching and venture capital activities) (2009-Present); Trustee, American Beacon Mileage Funds (2004-2012); Trustee, American Beacon Select Funds (2004-Present); Trustee, American Beacon Master Trust (2004-2012); Trustee, American Beacon Institutional Funds Trust (2017-Present); Trustee, American Beacon Sound Point Enhanced Income Fund (2018-Present); Trustee, American Beacon Apollo Total Return Fund (2018-Present).
Barbara J. McKenna, CFA (55)	Trustee since 2012	Managing Principal, Longfellow Investment Management Company (2005-Present); Trustee, American Beacon Select Funds (2012-Present); Trustee, American Beacon Institutional Funds Trust (2017-Present); Trustee, American Beacon Sound Point Enhanced Income Fund (2018-Present); Trustee, American Beacon Apollo Total Return Fund (2018-Present).

87

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
NON-INTERESTED TRUSTEES (CONT.)	Term
	Lifetime of Trust until removal, resignation or retirement*
R. Gerald Turner (72)	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); Trustee, American Beacon Mileage Funds (2001-2012); Trustee, American Beacon Select Funds (2001-Present); Trustee, American Beacon Master Trust (2001-2012); Trustee, American Beacon Institutional Funds Trust (2017-Present); Trustee, American Beacon Sound Point Enhanced Income Fund (2018-Present); Trustee, American Beacon Apollo Total Return Fund (2018-Present).
OFFICERS	Term
	One Year
Gene L. Needles, Jr. (63)	President since 2009	CEO and Director (2009-Present), and Chairman (2018-Present), American Beacon Advisors, Inc.; President, American Beacon Advisors (2009-2018); Chairman and CEO, Resolute Investment Managers, Inc. (2015-Present); Director, Chairman, President and CEO, Resolute Investment Distributors (2017-Present); Director, Chairman and CEO; Resolute Investment Services, Inc. (2015-Present); Director, Resolute Acquisition, Inc. (2015-Present); President (2015-2018), Director, Resolute Topco, Inc. (2015-Present), President (2015-2018), CEO (2015-Present), and Chairman (2018-Present), Resolute Investment Holdings, LLC; President, CEO and Director, Lighthouse Holdings, Inc. (2009-2015); President and CEO, Lighthouse Holdings Parent, Inc. (2009-2015); Manager, President, American Private Equity Management, LLC (2012-Present); President, American Beacon Cayman Managed Futures Strategy Fund, Ltd. (2014-Present); Director, Chairman, President and CEO, Alpha Quant Advisors, LLC (2016-Present); Director, ARK Investment Management LLC (2016-Present); Director, Shapiro Capital Management LLC (2017-Present); Director and Vice President, American Beacon Cayman Transformational Innovation Company, LTD., (2017-Present); Vice President, American Beacon Delaware Transformational Innovation Corporation (2017-Present); Executive Vice President and Chief Operating Officer, Continuous Capital, LLC (2018-Present); Member, Investment Advisory Committee, Employees Retirement System of Texas (2017-Present); Trustee, American Beacon NextShares Trust (2015-Present); President, American Beacon Select Funds (2009-Present); President, American Beacon Mileage Funds (2009-2012); President, American Beacon Master Trust (2009-2012); President, American Beacon Institutional Funds Trust (2017-Present); President, American Beacon Sound Point Enhanced Income Fund (2018-Present); President, American Beacon Apollo Total Return Fund (2018-Present).

88

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
OFFICERS (CONT.)	Term
	One Year
Rosemary K. Behan (59)	VP, Secretary and Chief Legal Officer since 2006	Vice President and Secretary, American Beacon Advisors, Inc. (2006-Present); Secretary, Resolute Investment Holdings, LLC (2015-Present); Vice President, Secretary and General Counsel, Resolute Investment Managers, Inc. (2015-Present); Secretary, Resolute Topco, Inc. (2015-Present); Secretary, Resolute Acquisition, Inc. (2015-Present); Vice President, Secretary and General Counsel, Resolute Investment Services, Inc. (2015-Present); Secretary, Lighthouse Holdings, Inc. (2008-2015); Secretary, Lighthouse Holdings Parent, Inc. (2008-2015); Secretary, American Private Equity Management, LLC (2008-Present); Secretary, American Beacon Cayman Managed Futures Strategy Fund, Ltd. (2014-Present); Secretary, Alpha Quant Advisors, LLC (2016-Present); Secretary, American Beacon Cayman Transformational Innovation Company, Ltd. (2017-Present); Secretary, American Beacon Delaware Transformational Innovation Corporation (2017-Present); Secretary, Resolute Investment Distributors, Inc. (2017-Present); Vice President and Secretary, Continuous Capital, LLC (2018-Present); Chief Legal Officer, Vice President and Secretary, American Beacon Select Funds (2006-Present); Chief Legal Officer, Vice President and Secretary, American Beacon Mileage Funds (2006-2012); Chief Legal Officer, Vice President and Secretary, American Beacon Master Trust (2006-2012); Chief Legal Officer, Vice President and Secretary, American Beacon Institutional Funds Trust (2017-Present); Vice Chief Legal Officer, Vice President and Secretary, American Beacon Sound Point Enhanced Income Fund (2018-Present); Chief Legal Officer, Vice President and Secretary American Beacon Apollo Total Return Fund (2018-Present).
Brian E. Brett (58)	VP since 2004	Senior Vice President, Head of Distribution (2012-Present) and Vice President, Director of Sales (2004-2012), American Beacon Advisors, Inc.; Senior Vice President, Resolute Investment Distributors, Inc. (2017-Present) and Vice President (2017-2018); Vice President, American Beacon Select Funds (2004-Present); Vice President, American Beacon Mileage Funds (2004-2012); Vice President, American Beacon Master Trust (2004-2012); Vice President, American Beacon Institutional Funds Trust (2017-Present); Vice President American Beacon Sound Point Enhanced Income Fund (2018-Present); Vice President American Beacon Apollo Total Return Fund (2018-Present).
Paul B. Cavazos (49)	VP since 2016	Chief Investment Officer and Senior Vice President, American Beacon Advisors, Inc. (2016-Present); Chief Investment Officer, DTE Energy (2007-2016); Vice President, American Private Equity Management, L.L.C. (2017-Present) Vice President, American Beacon Select Funds (2016-Present); Vice President, American Beacon Institutional Funds Trust (2017-Present); Vice President American Beacon Sound Point Enhanced Income Fund (2018-Present); Vice President American Beacon Apollo Total Return Fund (2018-Present).
Erica Duncan (48)	VP Since 2011	Vice President, American Beacon Advisors, Inc. (2011-Present); Vice President, Resolute Investment Managers (2015-Present); Vice President, Resolute Investment Services, Inc. (2015-Present) Vice President, American Beacon Select Funds (2011-Present); Vice President, American Beacon Mileage Funds (2011-2012); Vice President, American Beacon Master Trust (2011-2012); Vice President, American Beacon Institutional Funds Trust (2017-Present); Vice President American Beacon Sound Point Enhanced Income Fund (2018-Present); Vice President American Beacon Apollo Total Return Fund (2018-Present).

89

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
OFFICERS (CONT.)	Term
	One Year
Melinda G. Heika (57)	Treasurer since 2010	Treasurer, American Beacon Advisors, Inc. (2010-Present) and Chief Financial Officer (2010-Present); Treasurer and Chief Financial Officer, Resolute Investment Managers, Inc. (2015-Present); Treasurer, Resolute Acquisition, Inc. (2015-Present); Treasurer, Resolute Topco, Inc. (2015-Present); Treasurer, Resolute Investment Holdings, LLC. (2015-Present); Treasurer and Chief Financial Officer, Resolute Investment Services, Inc. (2015-Present); Treasurer, Lighthouse Holdings, Inc. (2010-2015); Treasurer, Lighthouse Holdings Parent Inc., (2010-2015); Treasurer, American Private Equity Management, LLC (2012-Present); Director and Treasurer, American Beacon Cayman Managed Futures Strategy Fund, Ltd. (2014-Present); Treasurer and Chief Financial Officer, Alpha Quant Advisors, LLC (2016-Present); Treasurer, American Beacon Cayman Transformational Innovation, Ltd. (2017-Present); Treasurer, American Beacon Delaware Transformational Innovation Corporation (2017-Present); Treasurer, Resolute Investment Distributors, Inc. (2017-2017); Treasurer and Chief Financial Officer, Continuous Capital, LLC (2018-Present); Treasurer, American Beacon Select Funds (2010-Present); Treasurer, American Beacon Mileage Funds (2010-2012); Treasurer, American Beacon Master Trust (2010-2012); Treasurer, American Beacon Institutional Funds Trust (2017-Present); Treasurer, American Beacon Sound Point Enhanced Income Fund (2018-Present); Treasurer, American Beacon Apollo Total Return Fund (2018-Present).
Terri L. McKinney (54)	VP since 2010	Vice President (2009-Present) and Managing Director (2003-2009), American Beacon Advisors, Inc.; Vice President, Resolute Investment Managers, Inc. (2017-Present); Vice President, Resolute Investment Services, Inc (2015-Present); Vice President, Alpha Quant Advisors, LLC (2016-Present); Vice President, Continuous Capital, LLC (2018-Present); Vice President, American Beacon Select Funds (2010-Present); Vice President, American Beacon Mileage Funds (2010-2012); Vice President, American Beacon Master Trust (2010-2012); Vice President, American Beacon Institutional Funds Trust (2017-Present); Vice President, American Beacon Sound Point Enhanced Income Fund (2018-Present); Vice President, American Beacon Apollo Total Return Fund (2018-Present).

90

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
OFFICERS (CONT.)	Term
	One Year
Jeffrey K. Ringdahl (43)	VP since 2010	Chief Operating Officer (2010-Present), Vice President (2010-2013), Senior Vice President (2013-Present), Director (2015-Present), and President (2018-Present), American Beacon Advisors, Inc.; Senior Vice President (2018-Present), Vice President (2012-2018) and Manager (2015-2018), American Private Equity Management, LLC; Senior Vice President, Lighthouse Holdings, Inc. (2013-2015); Senior Vice President, Lighthouse Holdings Parent, Inc. (2013-2015); Director and Vice President, American Beacon Cayman Managed Futures Strategy Fund, Ltd. (2014-Present); Trustee, American Beacon NextShares Trust (2015-Present); Director (2015-Present), Senior Vice Present (2015-2018), and President (2018-Present), Resolute Investment Holdings, LLC; Director (2015-Present), Senior Vice President (2015-2018) and President (2018-Present), Resolute Topco, Inc.; Director (2015-Present), Senior Vice President (2015-2018), and President (2018-Present), Resolute Acquisition, Inc.; Director (2015-Present), Senior Vice President (2015-2018), and President (2018-Present), Resolute Investment Managers, Inc.; Director, Executive Vice President and Chief Operating Officer, Alpha Quant Advisors, LLC (2016-Present); Director (2017-Present), Executive Vice President (2017-2018), and President and Chief Operating Officer (2018-Present), Resolute Investment Services, Inc.; Director and Executive Vice President, Resolute Investment Distributors, Inc. (2017-Present); Director, Shapiro Capital Management, LLC (2017-Present); Director and Vice President, American Beacon Cayman Transformational Innovation Company, LTD., (2017-Present); Vice President, American Beacon Delaware Transformational Innovation Corporation (2017-Present); Director, Executive Vice President and Chief Operating Officer, Continuous Capital, LLC (2018-Present); Vice President, American Beacon Select Funds (2010-Present); Vice President, American Beacon Institutional Funds Trust (2017-Present); Vice President, American Beacon Sound Point Enhanced Income Fund (2018-Present); Vice President, American Beacon Apollo Total Return Fund (2018-Present)
Samuel J. Silver (55)	VP Since 2011	Vice President, American Beacon Advisors, Inc. (2011-Present); Vice President, American Beacon Select Funds (2011-Present); Vice President, American Beacon Mileage Funds (2011-2012); Vice President, American Beacon Master Trust (2011-2012); American Beacon Institutional Funds Trust (2011-Present); Vice President, American Beacon Sound Point Enhanced Income Fund (2018-Present); Vice President, American Beacon Apollo Total Return Fund (2018-Present).
Christina E. Sears (47)	Chief Compliance Officer since 2004 and Asst. Secretary since 1999	Chief Compliance Officer, American Beacon Advisors, Inc. (2004-Present); Chief Compliance Officer, American Private Equity Management, LLC (2012-Present); Chief Compliance Officer and Vice President, Alpha Quant Advisors, LLC (2016-Present); Vice President, Resolute Investment Managers, Inc. (2017-Present); Vice President, Resolute Investment Distributors (2017-Present); Vice President, Continuous Capital, LLC (2018-Present); Chief Compliance Officer (2004-Present) and Assistant Secretary (1999-Present), American Beacon Select Funds; Chief Compliance Officer (2004-2012) and Assistant Secretary (1999-2012), American Beacon Mileage Funds; Chief Compliance Officer (2004-2012) and Assistant Secretary (1999-2012), American Beacon Master Trust; Chief Compliance Officer and Assistant Secretary, American Beacon Institutional Funds Trust (2017-Present); Chief Compliance Officer and Assistant Secretary, American Beacon Sound Point Enhanced Income Fund (2018-Present); Chief Compliance Officer and Assistant Secretary, American Beacon Apollo Total Return Fund (2018-Present).

91

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
OFFICERS (CONT.)	Term
	One Year
Sonia L. Bates (61)	Asst. Treasurer since 2011	Assistant Treasurer, American Beacon Advisors, Inc. (2011-2018); Assistant Treasurer, Resolute Acquisition, Inc. (2015-2018); Assistant. Treasurer, Resolute Topco, Inc. (2015-2018); Assistant Treasurer, Resolute Investment Holdings, LLC. (2015-2018); Assistant Treasurer, Lighthouse Holdings, Inc. (2011-2015); Assistant Treasurer, Lighthouse Holdings Parent Inc. (2011-2015); Assistant Treasurer, American Private Equity Management, LLC (2012-Present); Assistant Treasurer, American Beacon Cayman Transformational Innovation Company, Ltd. (2017-Present); Assistant Treasurer, American Beacon Select Funds (2011-Present); Assistant Treasurer American Beacon Mileage Funds (2011-2012); Assistant Treasurer, American Beacon Master Trust (2011-2012); Assistant Treasurer, American Beacon Institutional Funds Trust (2017-Present); Assistant Treasurer, American Beacon Sound Point Enhanced Income Fund (2018-Present); Assistant Treasurer, American Beacon Apollo Total Return Fund (2018-Present).
Shelley D. Abrahams (43)	Assistant Secretary since 2008	Assistant Secretary, American Beacon Select Funds (2008-Present); Assistant Secretary, American Beacon Mileage Funds (2008-2012); Assistant Secretary, American Beacon Master Trust (2008-2012); Assistant Secretary, American Beacon Institutional Funds Trust (2017-Present); Assistant Secretary, American Beacon Sound Point Enhanced Income Fund (2018-Present); Assistant Secretary, American Beacon Apollo Total Return Fund (2018-Present).
Rebecca L. Harris (51)	Assistant Secretary since 2010	Vice President, American Beacon Advisors, Inc. (2016-Present); Vice President, Resolute Investment Managers, Inc. (2017-Present); Vice President, Resolute Investment Services (2015-Present); Vice President, Alpha Quant Advisors, LLC (2016-Present); Vice President, Continuous Capital, LLC (2018-Present); Assistant Secretary, American Beacon Select Funds (2010-Present); Assistant Secretary, American Beacon Mileage Funds (2010-2012); Assistant Secretary, American Beacon Master Trust (2010-2012); Assistant Secretary, American Beacon Institutional Funds Trust (2017-Present); Assistant Secretary, American Beacon Sound Point Enhanced Income Fund (2018-Present); Assistant Secretary, American Beacon Apollo Total Return Fund (2018-Present).
Diana N. Lai (42)	Assistant Secretary since 2012	Assistant Secretary, American Beacon Cayman Transformational Innovation Company, Ltd. (2017-Present); Assistant Secretary, American Beacon Select Funds (2012-Present); Assistant Secretary, American Beacon Institutional Funds Trust (2017-Present); Assistant Secretary, American Beacon Sound Point Enhanced Income Fund (2018-Present); Assistant Secretary, American Beacon Apollo Total Return Fund (2018-Present).
Teresa A. Oxford (60)	Assistant Secretary since 2015	Assistant Secretary, American Beacon Advisors, Inc. (2015-Present); Assistant Secretary, Resolute Investment Distributors (2018-Present); Assistant Secretary, Resolute Investment Services (2015-Present); Assistant Secretary, Alpha Quant Advisors, LLC (2016-Present); Assistant Secretary, American Beacon Select Funds (2015-Present); Assistant Secretary, American Beacon Institutional Funds Trust (2017-Present); Assistant Secretary, American Beacon Sound Point Enhanced Income Fund (2018-Present); Assistant Secretary, American Beacon Apollo Total Return Fund (2018-Present).

* As of 11/12/2014, the Board adopted a retirement plan that requires Trustees, other than Messrs. Feld and Massman to retire no later than the last day of the calendar year in which they reach the age of 75.

** 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 one or more of the Trust’s sub-advisors.

*** Claudia A. Holz became a new Trustee to each of the Trusts on 4/1/2018.

**** Douglas A. Lindren became a new Trustee to each of the Trusts on 1/1/2018.

92

American Beacon Funds^SM

Privacy Policy

October 31, 2018 (Unaudited)

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.

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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: Call (800) 658-5811	By Mail: American Beacon Funds P.O. Box 219643 Kansas City, MO 64121-9643
Availability of Quarterly Portfolio Schedules	Availability of Proxy Voting Policy and Records
In addition to the Schedule of Investments provided in each semi-annual and annual report, the Fund files a complete schedule of its portfolio holdings with the Securities and Exchange Commission (“SEC”) on Form N-Q as of the first and third fiscal quarters. The Fund’s Forms N-Q are available on the SEC’s website 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. 20549-2736. Information regarding the operation of the SEC’s Public Reference Room may be obtained by calling (800)-SEC-0330. A complete schedule of the Fund’s portfolio holdings is also available 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 DST Asset Manager Solutions, Inc. Quincy, Massachusetts INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM Ernst & Young LLP Dallas, Texas DISTRIBUTOR Resolute Investment Distributors, Inc. Irving, Texas

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

American Beacon Funds, American Beacon Balanced Fund and American Beacon Mid-Cap Value Fund are service marks of American Beacon Advisors, Inc.

AR 10/18

ITEM 2. CODE OF ETHICS.

The Trust adopted a code of ethics that applies to its principal executive and financial officers (the “Code”). The Trust amended its code March 1, 2018 to disclose the addition of the American Beacon Sound Point Enhanced Income Fund and American Beacon Apollo Total Return Fund, disclose a change in the Principal Financial Officer and disclosure of conflicts due to Principal Officers serving in positions with affiliates, which also serve as sub-advisors. The Trust did not grant any waivers to the provisions of the Code during the period covered by the shareholder reports 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 Ms. Brenda A. Cline and Gilbert G. Alvarado, members of the Trust’s Audit and Compliance Committee, are “audit committee financial experts” as defined in Form N-CSR. Ms. Brenda Cline and Mr. Gilbert Alvarado are “independent” as defined in Form N-CSR.

ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.

(a)
Audit Fees	Fiscal Year Ended
$231,167		10/31/2017
$239,905		10/31/2018

(b)
Audit-Related Fees	Fiscal Year Ended
$0		10/31/2017
$10,000		10/31/2018

(c)
Tax Fees	Fiscal Year Ended
$41,259		10/31/2017
$25,859		10/31/2018

(d)
All Other Fees	Fiscal Year Ended
$0		10/31/2017
$0		10/31/2018

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
$41,259	$	54,542		N/A		10/31/2017
$35,859	$	391,405		N/A		10/31/2018

(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

American Beacon Funds

Date: January 7, 2019

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

By /s/ Gene L. Needles, Jr.

Gene L. Needles, Jr.

President

American Beacon Funds

Date: January 7, 2019

By /s/ Melinda G. Heika

Melinda G. Heika

Treasurer

American Beacon Funds

Date: January 7, 2019

EX-99.CODE

AMERICAN BEACON FUNDS

AMERICAN BEACON SELECT FUNDS

AMERICAN BEACON INSTITUTIONAL FUNDS TRUST

AMERICAN BEACON SOUND POINT ENHANCED INCOME FUND

AMERICAN BEACON APOLLO TOTAL RETURN FUND

(collectively, the “Trusts”)

Code of Ethics for Principal Executive and Financial Officers

Dated: October 31, 2018

Purpose

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. The Covered Officers may also hold positions or be employed by AmBeacon’s affiliated companies, some of which may be sub-advisors to the Trusts. 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, its affiliates 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 or its affiliates, 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;

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• 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, except for directorships or other positions with AmBeacon and its affiliates, which are already known by the CLO;

• 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 CLO 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.

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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 thereunder. 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’ 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.

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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/Principal Accounting Officer	Melinda G. Heika

EX-99.CERT

For period ended 10/31/2018

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, 2019	/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, 2019	/s/ Gene L. Needles, Jr.
	Gene L. Needles, Jr.
	President
	American Beacon Funds

EX-99.906CERT

For period ended 10/31/2018

Registrant Name: American Beacon Funds

File Number: 811-4984

EXHIBIT 99.906CERT

Gene L. Needles, Jr. and Melinda G. Heika, respectively, the 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, 2018 (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	Treasurer
American Beacon Funds	American Beacon Funds

Date: January 7, 2019

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.