N-14 1 n-14.htm n-14.htm

As filed with the Securities and Exchange Commission on December 19, 2011

1933 Act Registration File No. 333-_______

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.  20549
 
FORM N-14
 
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
[      ]           Pre-Effective Amendment No. ___
[      ]           Post-Effective Amendment No. ___
 
(Check appropriate box or boxes.)

AMERICAN BEACON FUNDS
(Exact Name of Registrant as Specified in Charter)
 
4151 Amon Carter Boulevard, MD 2450
Fort Worth, Texas 76155
(Address of Principal Executive Offices) (Zip Code)
 
Registrant’s Telephone Number, including Area Code: (817) 967-3509
 
Gene L. Needles, Jr., President
4151 Amon Carter Boulevard
MD 2450
Fort Worth, Texas 76155
(Name and Address of Agent for Service)

Copy to:
Francine J. Rosenberger, Esq.
K&L Gates LLP
1601 K Street, N.W.
Washington, D.C. 20006
 
Approximate Date of Proposed Public Offering: As soon as practicable after the Registration Statement becomes effective under the Securities Act of 1933, as amended.

It is proposed that this filing will become effective on January 18, 2012 pursuant to Rule 488.

Title of Securities Being Registered: Investor Class, Institutional Class and A Class shares of American Beacon Holland Large Cap Growth Fund, a series of the Registrant.

No filing fee is due because the Registrant is relying on Section 24(f) of the Investment Company Act of 1940, as amended, pursuant to which it has previously registered an indefinite number of securities.

 
 

 

CONTENTS OF REGISTRATION STATEMENT


This Registration Statement contains the following papers and documents:
 
 
Cover Sheet
 
 
Contents of Registration Statement
 
 
Letter to Shareholders
 
 
Notice of Special Meeting
 
 
Questions and Answers
 
 
Part A - Proxy Statement and Prospectus
 
 
Part B - Statement of Additional Information
 
 
Part C - Other Information
 
 
Signature Page
 
 
Exhibits
 

 
 

 

FORUM FUNDS
Lou Holland Growth Fund

Three Canal Plaza, Suite 600
Portland, Maine 04101
 

____________, 20___

To the Shareholders:

We are pleased to announce that the Lou Holland Growth Fund (the “Lou Holland Fund”), a series of the Forum Funds (the “Trust”), is proposing to reorganize into the American Beacon Holland Large Cap Growth Fund (the “AB Fund”), a newly created series of American Beacon Funds (the “AB Trust”).  The AB Fund is designed to be similar from an investment perspective to the Lou Holland Fund.

A Special Meeting of Shareholders of the Lou Holland Fund is to be held at _____ [a.m.][p.m.] Eastern time on Wednesday, March 7, 2012, at ____________________, where you will be asked to vote on the proposal to reorganize the Lou Holland Fund into the AB Fund.  A Combined Proxy Statement and Prospectus (the “Proxy Statement”) regarding the meeting, a proxy card for your vote at the meeting and a postage-prepaid envelope in which to return your proxy card are enclosed.

The primary purpose of the reorganization transaction (the “Reorganization”) is to move the Lou Holland Fund to the American Beacon Family of Funds.  The Reorganization will lodge management oversight responsibility for the Lou Holland Fund with American Beacon Advisors, Inc. (the “Manager”) while retaining Holland Capital Management LLC (“Holland Capital”) as the sub-adviser to the AB Fund.  The Manager is an experienced provider of investment advisory services to institutional and retail investors, with over $____ billion mutual fund and $____ billion overall assets under management.  Since 1986, the Manager has offered a variety of services and products, including corporate cash management, separate account management, and mutual funds.  The Reorganization has the potential to expand the Lou Holland Fund’s presence in more distribution channels, increase its asset base and lower operating expenses as a percentage of assets.
 
By engaging Holland Capital as the sub-adviser (the “Sub-Adviser”) to the AB Fund, the Manager will provide continuity of the portfolio management team that has been responsible for the Lou Holland Fund’s performance record since its inception in 1996. The portfolio managers of the Sub-Adviser who are primarily responsible for the day-to-day portfolio management of the Lou Holland Fund will remain the same.
 
The Reorganization will result in a decrease in the overall gross and net expense ratio during the first two years and a decrease in the advisory fees payable by the AB Fund as compared to the expenses and advisory fees that are currently paid by the Lou Holland Fund.
 
If Lou Holland Fund shareholders approve the Reorganization, it will take effect on or about March 23, 2012.  At that time, the Lou Holland Fund Investor Shares, Institutional Shares and A Shares you currently own would, in effect, be exchanged on a tax-free basis for, respectively, Investor Class, Institutional Class and A Class shares of the AB Fund with the same aggregate value, as follows:
 
 
 

 
 
Lou Holland Fund
à
American Beacon Holland Large Cap Growth Fund
 
Investor Shares
à
Investor Class shares
 
Institutional Shares
à
Institutional Class shares
 
A Shares
à
A Class shares

No sales loads, commissions or other transactional fees will be imposed on shareholders in connection with the tax-free exchange of their shares.
 
The Board of Trustees of the Trust unanimously recommends that the shareholders of the Lou Holland Fund vote in favor of the proposed Reorganization.
 
Detailed information about the proposal is contained in the enclosed materials.  Whether or not you plan to attend the meeting in person, we need your vote.  Once you have decided how you will vote, please promptly complete, sign, date and return the enclosed proxy card or vote by telephone or internet.  If you have any questions regarding the proposal to be voted on, please do not hesitate to call (____) ____-________.

Your vote is very important to us. Thank you for your response and for your continued investment in the Lou Holland Growth Fund.

Respectfully,
 
____________________
Monica L. Walker
President
Holland Capital Management LLC

 
 

 
 
FORUM FUNDS
Lou Holland Growth Fund
 
Three Canal Plaza, Suite 600
Portland, Maine 04101
 
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD MARCH 7, 2012.

To the Shareholders of the Lou Holland Growth Fund:

NOTICE IS HEREBY GIVEN that a Special Meeting of Shareholders (the “Special Meeting”) of the Lou Holland Growth Fund (the “Lou Holland Fund”), a series of the Forum Funds (the “Trust”), is to be held at ______ [a.m.][p.m.] Eastern time on Wednesday, March 7, 2012, at ___________________.

The Special Meeting is being held to consider an Agreement and Plan of Reorganization and Termination (the “Plan”) providing for the transfer of all of the assets of the Lou Holland Fund to the American Beacon Holland Large Cap Growth Fund (the “AB Fund”), a newly created series of American Beacon Funds (the “AB Trust”).  The transfer effectively would be (a) an exchange of your Investor Shares, Institutional Shares and A Shares for, respectively, Investor Class, Institutional Class and A Class shares of the AB Fund, which would be distributed pro rata by the Lou Holland Fund to the holders of its shares in complete liquidation of the Lou Holland Fund, and (b) the AB Fund’s assumption of all of the liabilities of the Lou Holland Fund, as follows:

 
Lou Holland Growth Fund
à
American Beacon Holland Large Cap Growth Fund
 
Investor Shares
à
Investor Class shares
 
Institutional Shares
à
Institutional Class shares
 
A Shares
à
A Class shares
 

Those present and the appointed proxies also will transact such other business, if any, as may properly come before the Special Meeting or any adjournments or postponements thereof.

Holders of record of the shares of beneficial interest in the Lou Holland Fund as of the close of business on January 9, 2012 are entitled to vote at the Special Meeting or any adjournments or postponements thereof.

If the necessary quorum to transact business or the vote required to approve any proposal is not obtained at the Special Meeting or if quorum is obtained but sufficient votes required to approve the Plan are not obtained, the persons named as proxies on the enclosed proxy card may propose one or more adjournments of the Special Meeting to permit, in accordance with applicable law, further solicitation of proxies with respect to the proposal. The persons designated as proxies may use their discretionary authority to vote as instructed by management of the Lou Holland Fund on questions of adjournment and on any other proposals raised at the Special Meeting to the extent permitted by the proxy rules of the Securities and Exchange Commission (the “SEC”), including proposals for which timely notice was not received, as set forth in the SEC’s proxy rules.

By order of the Board of Trustees,

 
Lina Bhatnagar, Secretary
January ___, 2012
 

 
 

 

Important Notice Regarding the Availability of Proxy Materials for the Special Meeting of Shareholders to be Held on Wednesday, March 7, 2012 or any adjournment or postponement thereof.  This Notice and Combined Proxy Statement and Prospectus are available on the internet at www.______________. On this website, you will be able to access the Notice, the Combined Proxy Statement and Prospectus, any accompanying materials and any amendments or supplements to the foregoing material that are required to be furnished to shareholders.  We encourage you to access and review all of the important information contained in the proxy materials before voting.
 
 
IMPORTANT — We urge you to sign and date the enclosed proxy card and return it in the enclosed addressed envelope, which requires no postage and is intended for your convenience. You also may vote through the internet, by visiting the website address on your proxy card, or by telephone, by using the toll-free number on your proxy card. Your prompt vote may save the Lou Holland Fund the necessity of further solicitations to ensure a quorum at the Special Meeting. If you can attend the Special Meeting and wish to vote your shares in person at that time, you will be able to do so.

 
 

 

FORUM FUNDS
Lou Holland Growth Fund
 
Three Canal Plaza, Suite 600
Portland, Maine 04101

 
QUESTIONS AND ANSWERS

 
YOUR VOTE IS VERY IMPORTANT!
 
 
Dated: __________, 20__

Question:  What is this document and why did you send it to me?

Answer:  The attached document is a proxy statement for the Lou Holland Growth Fund (the “Lou Holland Fund”), a series of the Forum Funds (the “Trust”), and a prospectus for the Investor Class, Institutional Class and A Class shares of a newly created series of the American Beacon Funds (the “AB Trust”), the American Beacon Holland Large Cap Growth Fund (the “AB Fund”).  The purposes of this Combined Proxy Statement and Prospectus (the “Proxy Statement”) are to (1) solicit votes from shareholders of the Lou Holland Fund to approve the proposed reorganization of the Lou Holland Fund into the AB Fund (the “Reorganization”) as described in the Agreement and Plan of Reorganization and Termination between the Trust and the AB Trust (the “Plan”) and (2) provide information regarding the Investor Class, Institutional Class and A Class shares of the AB Fund.

The Proxy Statement contains information that shareholders of the Lou Holland Fund should know before voting on the Reorganization.  The Proxy Statement should be retained for future reference.

Question:  What is the purpose of the Reorganization?

Answer:  The primary purpose of the Reorganization is to move the Lou Holland Fund to the American Beacon Family of Funds.  Reconstituting the Lou Holland Fund as a series of the AB Trust has the potential to (a) expand the Lou Holland Fund’s presence in more distribution channels, (b) increase its asset base, and (c) lower operating expenses as a percentage of assets. Holland Capital Management LLC (“Holland Capital”), the current adviser to the Lou Holland Fund, recommends that the Lou Holland Fund be reorganized as a series of the AB Trust.
 
Question:  How will the Reorganization work?
 
Answer:  In order to reconstitute the Lou Holland Fund as a series of the AB Trust, a similar fund, referred to as the “AB Fund,” has been created as a new series of the AB Trust.  If shareholders of the Lou Holland Fund approve the Plan, the Lou Holland Fund will transfer all of its assets to the AB Fund in return for shares of the AB Fund and the AB Fund’s assumption of the Lou Holland Fund’s liabilities.  The Lou Holland Fund will then distribute the shares it receives from the AB Fund to shareholders.  Existing shareholders of the Lou Holland Fund’s Investor Shares, Institutional Shares and A Shares will become shareholders of the AB Fund’s Investor Class, Institutional Class and A Class shares, respectively, and immediately after the Reorganization each shareholder will hold the same number of Investor Class, Institutional Class and A Class shares of the AB Fund, with the same net asset

 
 

 

value per share and total value, as the Investor Shares, Institutional Shares and A Shares of the Lou Holland Fund that the shareholder held immediately prior to the Reorganization.  Subsequently, the Lou Holland Fund will be liquidated.

Please refer to the Proxy Statement for a detailed explanation of the proposal.  If the Plan is approved by shareholders of the Lou Holland Fund at the Special Meeting of Shareholders (the “Special Meeting”), the Reorganization presently is expected to be effective on or about March 23, 2012.

Question:  How will the Reorganization affect me as a shareholder?

Answer:  You will become a shareholder of the AB Fund.  The shares of the AB Fund that you receive will have a total net asset value equal to the total net asset value of the shares you hold in the Lou Holland Fund as of the closing date of the Reorganization.  The Reorganization will not affect the value of your investment at the time of the Reorganization. The Reorganization is expected to be tax-free to the Lou Holland Fund and its shareholders.

The Reorganization will lodge management oversight responsibility for the Lou Holland Fund from Holland Capital to American Beacon Advisors, Inc. (the “Manager”).  By engaging Holland Capital (the “Sub-Adviser”), the current adviser to the Lou Holland Fund, the Manager will provide continuity of the portfolio management team that has been responsible for the Lou Holland Fund’s performance record since the inception of the Lou Holland Fund in 1996. The portfolio managers of the Sub-Adviser who are primarily responsible for the day-to-day portfolio management of the Lou Holland Fund will remain the same.  The investment objective and strategies of the AB Fund will be similar to those of the Lou Holland Fund.  Unlike the Lou Holland Fund, the AB Fund, under normal market conditions, will invest at least 80% of its net assets (plus the amount of any borrowing for investment purposes) in stocks of large market capitalization companies at the time of purchase.  Although this policy is similar to the Lou Holland Fund’s current strategy, the AB Fund is required to adopt an 80% policy because the AB Fund’s name contains the term “Large Cap”.  In addition, the AB Fund may invest cash balances in money market funds and also may purchase and sell futures contracts to gain market exposure on cash balances or to reduce market exposure in anticipation of liquidity needs. The AB Fund’s investment limitations are substantially similar to those of the Lou Holland Fund; however, the investment limitations have been updated by the AB Fund to align with the limitations with those of funds in the AB Fund complex.
 
The Manager also will provide continuity of the other services currently provided to the Lou Holland Fund.  Foreside Fund Services, LLC (“Foreside”), which currently serves as the distributor and principal underwriter of the Lou Holland Fund’s shares also will serve as the distributor and principal underwriter of the AB Fund.  Additionally, the Manager will engage Foreside to provide sub-administrative services in connection with the marketing and distribution of shares of the AB Fund.  Union Bank, N.A. currently provides custodian services for the Lou Holland Fund and Atlantic Fund Administration currently provides administration services for the Lou Holland Fund.  The AB Fund will engage State Street Bank and Trust Company (“State Street”) as custodian and accounting agent and Boston Financial Data Services, a State Street affiliate, as transfer agent. The Manager will provide administration services for the AB Fund.

The Reorganization will move the assets of the Lou Holland Fund from the Trust, which is a Delaware statutory trust, to the AB Fund, a series of the AB Trust, which is a Massachusetts business trust.  As a result of the Reorganization, the AB Fund will operate under the supervision of the AB Trust’s Board of Trustees.  Please refer to the section in the Proxy Statement entitled “Comparison of Forms of Organization and Shareholder Rights” for more information about the differences between the Trust and the AB Trust.

 
2

 
 
Question:  Who will manage the AB Fund?

Answer:  The Manager will be responsible for overseeing the management of the AB Fund, and the portfolio managers of the Sub-Adviser who are primarily responsible for the day-to-day portfolio management of the Lou Holland Fund will continue to manage the portfolio of the AB Fund.

The Manager is an experienced provider of investment advisory services to institutional and retail investors, with over $____ billion mutual fund and $____ billion overall assets under management.  Since 1986, the Manager has offered a variety of services and products, including corporate cash management, separate account management, and mutual funds.  The Manager serves retail clients as well as defined benefit plans, defined contribution plans, foundations, endowments, corporations, and other institutional investors. There are currently 20 series of the AB Trust. The American Beacon Family of Funds advised by the Manager currently includes international and domestic equity portfolios spanning a variety of longer-range investment strategies through balanced portfolios, as well as short-term investment options such as bond funds and money market funds.

The Sub-Adviser is a 100% employee-owned Delaware limited liability company. The Sub-Adviser was established in 1991 and had approximately $________ of assets under management as of ______________, 2011.

Question:  How will the Reorganization affect the fees and expenses I pay as a shareholder of the Lou Holland Fund?

Answer:  The Reorganization will result in a decrease in the overall gross and net expense ratios and in a decrease in the advisory fees payable by the AB Fund over those expense ratios and advisory fees currently incurred by the Lou Holland Fund.  The operating expenses of each of the Investor Shares, Institutional Shares and A Shares of the Lou Holland Fund based on its assets for the semi-annual period ended June 30, 2011 are ____%, ____% and ____%, respectively, of its average daily net assets before the cap on expenses.  The projected total annual operating expenses for the Investor Class, Institutional Class and A Class shares of the AB Fund, based on the same asset levels, are 1.34%, 0.97% and 1.47%, respectively, of the AB Fund’s average daily net assets before the cap on expenses. The Manager has contractually agreed to cap AB Fund expenses through April 30, 2014, to the extent that total annual fund operating expenses of the Investor Class, Institutional Class and A Class shares exceed the annual rate of 1.27%, 0.89% and 1.39% excluding taxes, interest, portfolio transaction expenses and other extraordinary expenses.

Question:  Will the Reorganization result in any taxes?

Answer:  We expect that neither the Lou Holland Fund nor its shareholders will recognize any gain or loss for federal income tax purposes as a direct result of the Reorganization, and the Trust and the AB Trust expect to receive a tax opinion confirming this position. Shareholders should consult their tax adviser about possible state and local tax consequences of the Reorganization, if any, because the information about tax consequences in this document relates to the federal income tax consequences of the Reorganization only.
 

 
3

 

Question:  Will I be charged a sales charge or contingent deferred sales charge (CDSC) as a result of the Reorganization?

Answer:  No sales loads, commissions or other transactional fees will be imposed on shareholders in connection with the Reorganization.

Question:  Why do I need to vote?

Answer:  Your vote is needed to ensure that a quorum and sufficient votes are present at the Special Meeting so that the proposal can be acted upon. Your immediate response on the enclosed Proxy Card will help prevent the need for any further solicitations for a shareholder vote, which will result in additional expenses.  Your vote is very important to us regardless of the number of shares you own.

Question:  How does the Trust’s Board of Trustees recommend that I vote?

Answer:  After careful consideration and upon recommendation of Holland Capital, the Board of Trustees unanimously recommends that shareholders vote “FOR” the Plan.

Question:  Who is paying for expenses related to the Special Meeting and the Reorganization?
 
Answer:  The Manager and Holland Capital will pay all direct costs relating to the Reorganization, including the costs relating to the Special Meeting and the Proxy Statement.  The Lou Holland Fund will not incur any expenses in connection with the Reorganization.

Question:  What will happen if the Plan is not approved by shareholders?

Answer:  If shareholders of the Lou Holland Fund do not approve the Plan, the Lou Holland Fund will not be reorganized into the AB Fund and the Board of Trustees will meet to consider other alternatives.

Question:  How do I vote my shares?
 
 
Answer:  You can vote your shares by mail, telephone or internet by following the instructions on the enclosed proxy card.

Question:  Who do I call if I have questions?

Answer:  If you have any questions about the proposal or the proxy card, please do not hesitate to call __________ at (____) ____-_______.


 
4

 


COMBINED PROXY STATEMENT AND PROSPECTUS


___________, 20___


FOR THE REORGANIZATION OF

Lou Holland Growth Fund
a series of Forum Funds
Three Canal Plaza, Suite 600
Portland, Maine 04101
(207) 347-2090

INTO

American Beacon Holland Large Cap Growth Fund,
a series of American Beacon Funds
4151 Amon Carter Boulevard, MD 2450
Fort Worth, Texas 76155
(817) 967-3509

_________________________________________


This Combined Proxy Statement and Prospectus (the “Proxy Statement”) is being sent to you in connection with the solicitation of proxies by the Board of Trustees (the “Board”) of the Forum Funds (the “Trust”) for use at a Special Meeting of Shareholders (the “Special Meeting”) of the Lou Holland Growth Fund, a series of the Trust (the “Lou Holland Fund”), managed by Holland Capital Management (“Holland Capital”), at the principal executive offices of the Trust located at _________________, March 7, 2012, at ______ [a.m.][p.m.] Eastern time.  At the Special Meeting, shareholders of the Lou Holland Fund will be asked:

1.      To approve an Agreement and Plan of Reorganization and Termination (the “Plan”) providing for the transfer of all of the assets of the Lou Holland Fund to the American Beacon Holland Large Cap Growth Fund (the “AB Fund”), a newly created series of American Beacon Funds (the “AB Trust”), in exchange for:

(a) Investor Class shares, Institutional Class shares and A Class shares of the AB Fund equal in number and value to the Lou Holland Fund’s Investor Shares, Institutional Shares and A Shares, respectively, which will be distributed pro rata by the Lou Holland Fund to the holders of its shares in complete liquidation of the Lou Holland Fund as follows:

 
Lou Holland Growth Fund
à
American Beacon Holland Large Cap Growth Fund
 
Investor Shares
à
Investor Class shares
 
Institutional Shares
à
Institutional Class shares
 
A Shares
à
A Class shares

(b) the AB Fund’s assumption of all of the liabilities of the Lou Holland Fund (collectively, the “Reorganization”); and

 
 

 
 
2.      To transact any other business as may properly come before the Special Meeting or any adjournments thereof.

The Lou Holland Fund is a series of the Trust, an open-end management investment company registered with the SEC and organized as a Delaware statutory trust.  The AB Fund is a newly created series of the AB Trust, an open-end management investment company registered with the SEC and organized as a Massachusetts business trust.

This Proxy Statement sets forth the basic information you should know before voting on the proposal.  You should read it and keep it for future reference.  Additional information relating to the AB Fund and the Proxy Statement is set forth in the Statement of Additional Information to this Proxy Statement dated _______, 20__, which is incorporated by reference into the Proxy Statement.  Additional information about the AB Fund has been filed with the Securities and Exchange Commission (the “SEC”) and is available upon request and without charge by writing to the AB Fund or by calling (800) 658-5811.  The Lou Holland Fund expects that the Proxy Statement will be mailed to shareholders on or about February 1, 2012.

The following documents have been filed with the SEC and are incorporated by this reference into this Proxy Statement, which means that these documents are considered legally to be part of the Proxy Statement:

 
Statement of Additional Information to this Proxy Statement, dated ________, 20___;
     
 
Prospectus and Statement of Additional Information of the Lou Holland Fund, each dated May 1, 2011; and
     
 
Semi-Annual Report to Shareholders of the Lou Holland Fund for the semi-annual period ended June 30, 2011 and Annual Report to Shareholders of the Lou Holland Fund for the fiscal year ended December 31, 2010.

The Lou Holland Fund’s Prospectus dated May 1, 2011 and Annual Report to Shareholders for the fiscal year ended December 31, 2010, containing audited financial statements, have been previously mailed to shareholders.  Copies of these documents are available upon request and without charge by writing to the Trust, through the internet at www.__________, or by calling (____) _____-________.

Because the AB Fund has not yet commenced operations as of the date of this Proxy Statement, no annual or semi-annual report is available for the AB Fund at this time.
 

THE SEC HAS NOT APPROVED OR DISAPPROVED THESE SECURITIES NOR HAS IT PASSED ON THE ACCURACY OR ADEQUACY OF THIS PROXY STATEMENT. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
 

The shares offered by this Proxy Statement are not deposits or obligations of any bank, and are not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency.  An investment in the AB Fund involves investment risk, including the possible loss of principal.


 
 

 


TABLE OF CONTENTS

I.
PROPOSAL – TO APPROVE THE AGREEMENT AND PLAN OF REORGANIZATION AND TERMINATION
1
 
A.
OVERVIEW
1
 
B.
REASONS FOR THE REORGANIZATION
1
 
C.
BOARD CONSIDERATIONS
2
 
D.
COMPARISON OF PRINCIPAL INVESTMENT OBJECTIVES, STRATEGIES AND POLICIES OF THE FUNDS
4
 
E.
COMPARISON OF PRINCIPAL RISKS
10
 
F.
COMPARISON OF THE FUNDS’ INVESTMENT RESTRICTIONS AND LIMITATIONS
11
 
G.
COMPARISON OF FEES AND EXPENSES
17
 
H.
PERFORMANCE INFORMATION
21
 
I.
COMPARISON OF DISTRIBUTION AND PURCHASE AND REDEMPTION PROCEDURES
23
 
J.
KEY INFORMATION ABOUT THE PROPOSAL
25
   
1.
SUMMARY OF THE PROPOSED REORGANIZATION
25
   
2.
DESCRIPTION OF THE AB FUND’S SHARES
27
   
3.
FEDERAL INCOME TAX CONSEQUENCES
27
   
4.
COMPARISON OF FORMS OF ORGANIZATION AND SHAREHOLDER RIGHTS
28
   
5.
CAPITALIZATION
29
 
K.
 
ADDITIONAL INFORMATION ABOUT THE AB FUND
30
   
1.
INVESTMENT ADVISER AND SUB-ADVISER
30
   
2.
OTHER SERVICE PROVIDERS
31
   
3.
TAX CONSIDERATIONS
31
   
4.
PAYMENTS TO BROKER-DEALERS AND OTHER FINANCIAL INTERMEDIARIES
31
II.
VOTING INFORMATION
32
 
A.
RECORD DATE, VOTING RIGHTS AND VOTE REQUIRED
32
 
B.
HOW TO VOTE
32
 
C.
PROXIES
32
 
D.
QUORUM AND ADJOURNMENTS
33
 
E.
EFFECT OF ABSTENTIONS AND BROKER “NON-VOTES”
33
 
F.
SOLICITATION OF PROXIES
33
III.
OTHER INFORMATION
34
 
A.
OTHER BUSINESS
34
 
B.
NEXT MEETING OF SHAREHOLDERS
34
 
C.
LEGAL MATTERS
34
 
D.
INFORMATION FILED WITH THE SEC
34
APPENDIX A  AGREEMENT AND PLAN OF REORGANIZATION AND TERMINATION
A-1
APPENDIX B  OWNERSHIP OF SHARES OF THE LOU HOLLAND FUND
B-1
APPENDIX C  VALUATION, PURCHASE, REDEMPTION AND TAX INFORMATION FOR THE AB FUND
C-1
APPENDIX D  FINANCIAL HIGHLIGHTS OF THE AB FUND
D-1

 
 

 


I.PROPOSAL – TO APPROVE THE AGREEMENT AND
     PLAN OF REORGANIZATION AND TERMINATION
 
A.
OVERVIEW
 
The Board, including all the Trustees who are not “interested persons,” as that term is defined in the Investment Company Act of 1940, as amended (the “1940 Act”), of the Trust, proposes that the Lou Holland Fund reorganize into the AB Fund and that each Lou Holland Fund shareholder become a shareholder of the AB Fund, pursuant to the Plan, the form of which is attached to this Proxy Statement as Appendix A.  The Board considered the Reorganization at its regularly scheduled meetings held on September 16, 2011 and December 16, 2011.  The Board believes that the Reorganization is in the best interests of the Lou Holland Fund and its shareholders.
 
In order to reorganize the Lou Holland Fund into a series of the AB Trust, a similar fund, referred to as the “AB Fund,” has been created as a new series of the AB Trust.  If the shareholders of the Lou Holland Fund approve the Plan, the Reorganization will have three primary steps:
 
               *           First, the Lou Holland Fund will transfer all of its assets to the AB Fund in exchange solely for Investor Class, Institutional Class and A Class shares of the AB Fund and the AB Fund’s assumption of all of the Lou Holland Fund’s liabilities;
 
               *           Second, each holder of Lou Holland Fund shares will receive a pro rata distribution of the AB Fund’s Investor Class, Institutional Class and/or A Class Shares, as the case may be; and
 
               *           Third, the Lou Holland Fund will be liquidated.
 
Approval of the Plan will constitute approval of the transfer of the Lou Holland Fund’s assets, the assumption of its liabilities, the distribution of the AB Fund’s Investor Class, Institutional Class and A Class shares, and liquidation of the Lou Holland Fund.  The Investor Class, Institutional Class and A Class shares issued in connection with the Reorganization will have an aggregate net asset value equal to the net value of the assets that the Lou Holland Fund transferred to the AB Fund, less the Lou Holland Fund’s liabilities that the AB Fund assumes.  The value of a Lou Holland Fund shareholder’s account with the AB Fund immediately after the Reorganization will be the same as the value of such shareholder’s account with the Lou Holland Fund immediately prior to the Reorganization.  No sales charge or fee of any kind will be charged to the Lou Holland Fund’s shareholders in connection with the Reorganization.
 
The Trust believes that the Reorganization will constitute a tax-free transaction for federal income tax purposes.  Therefore, shareholders should not recognize any gain or loss on their Lou Holland Fund shares for federal income tax purposes as a direct result of the Reorganization. The Trust and the AB Trust will receive an opinion from tax counsel to the AB Trust confirming such tax treatment.

B.
REASONS FOR THE REORGANIZATION

The primary purpose of the Reorganization is to move the investment portfolio and shareholders presently associated with Lou Holland Fund to the American Beacon Family of Funds.  Reconstituting the Lou Holland Fund as a series of American Beacon has the potential to expand the distribution network and increase the Lou Holland Fund’s assets, as the AB Trust has access to greater resources and distribution channels than does the Trust.
 

 
1

 

The Reorganization will lodge management oversight responsibility for the Lou Holland Fund with American Beacon Advisors, Inc. (the “Manager”) while retaining Holland Capital as the sub-adviser to the AB Fund.  By engaging Holland Capital (the “Sub-Adviser”), the current adviser to the Lou Holland Fund, the Manager will provide continuity of the portfolio management team that has been responsible for the Lou Holland Fund’s performance record since the inception of the Lou Holland Fund in 1996. The portfolio managers of the Sub-Adviser who are primarily responsible for the day-to-day portfolio management of the Lou Holland Fund will remain the same.  The investment objective and strategies of the AB Fund will be similar to those of the Lou Holland Fund.  Unlike the Lou Holland Fund, the AB Fund, under normal market conditions, will invest at least 80% of its net assets (plus the amount of any borrowing for investment purposes) in stocks of large market capitalization companies at the time of purchase.  Although this policy is similar to the Lou Holland Fund’s current strategy, the AB Fund is required to adopt an 80% policy because the AB Fund’s name contains the term “Large Cap”.  The AB Fund’s fundamental and non-fundamental investment limitations are substantially similar to those of the Lou Holland Fund; however, the AB Fund limitations have been updated to be in line with current limitations of the other American Beacon Funds.  Holland Capital recommends that the Lou Holland Fund be reorganized as a series of the AB Trust.
 
The Manager will provide continuity with respect to the other services currently provided to the Lou Holland Fund.  Foreside Fund Services, LLC (“Foreside”) is the distributor and principal underwriter of the Lou Holland Fund’s shares and will continue to serve as the distributor and principal underwriter of the AB Fund’s shares.  The Manager also will engage Foreside to provide sub-administrative services in connection with the marketing and distribution of shares of the AB Fund.  Union Bank, N.A. currently provides custody services to the Lou Holland Fund and Atlantic Fund Administration, LLC currently provides administration services for the Lou Holland Fund.  The AB Fund will engage State Street Bank and Trust Company (“State Street”) as custodian and accounting agent for the AB Fund and Boston Financial Data Services, a State Street affiliate, as transfer agent.  The Manager will provide administration services for the AB Fund.

The Reorganization will result in a decrease in the overall gross and net expense ratios and in the advisory fees payable by the AB Fund over those expense ratios and advisory fees currently incurred by the Lou Holland Fund.  No redemption fee currently applies to shares of the Lou Holland Fund other than redemptions on A Shares that were part of a purchase of $1 million or more that are sold within twelve months of purchase.  The AB Fund will not charge a redemption fee.
 
C.
BOARD CONSIDERATIONS
 
Holland Capital proposed, and the Board considered, the Reorganization at in-person meetings of the Board held on September 16, 2011 and December 16, 2011.  Based upon the recommendation of Holland Capital, its evaluation of the relevant information presented to it at these meetings, and in light of its fiduciary duties under federal and state law, the Board, including all trustees who are not “interested persons” of the Trust under the 1940 Act, determined that the Reorganization is in the best interests of the Lou Holland Fund and its shareholders.
 
In approving the proposed Reorganization, the Board recognized that Holland Capital considered alternatives to reorganization options with other fund complexes as well as various other alternatives for the Lou Holland Fund that were identified by Holland Capital.  The Board noted that the Lou Holland Fund assets have not achieved economies of scale despite significant sales efforts.  The Board noted further that, as a result, the Lou Holland Fund may not be able to achieve economies of scale unless it can be combined with another fund.  The Board considered the terms of the Reorganization and determined that the Reorganization would provide shareholders with the options of (i) transferring their investment to
 

 
2

 

a similar fund on a tax-free basis in the Reorganization or (ii) redeeming their investment in the Lou Holland Fund, which might have tax consequences for them.  The Board noted that liquidating and terminating the Lou Holland Fund would provide shareholders with only one option that might have adverse tax consequences for them.
 
               The Board considered the following additional matters, among others, in approving the Reorganization:
 
               The Terms and Conditions of the Reorganization.  The Board considered the terms of the Plan, and, in particular, (1) the requirement that the transfer of the assets of the Lou Holland Fund’s Investor Shares, Institutional Shares and A Shares will be in exchange for Investor Class, Institutional Class and A Class shares, respectively, of the AB Fund and (2) the AB Fund’s assumption of all known and unknown liabilities of the Lou Holland Fund.  The Board also took note of the fact that no sales charges would be imposed in connection with the Reorganization.  The Board also noted that the Reorganization would be submitted to the Lou Holland Fund’s shareholders for approval.
 
                Similarity of Investment Objectives, Policies and Restrictions and Continuity of Sub-Adviser.  The Board considered that the investment objective and strategies of the Lou Holland Fund and the AB Fund (each sometimes referred to herein as a “Fund”) are similar.  The Board noted however, that unlike the Lou Holland Fund, the AB Fund, under normal market conditions, will invest at least 80% of its net assets (plus the amount of any borrowing for investment purposes) in stocks of large market capitalization companies at the time of purchase.  The Board considered that the Lou Holland Fund invests primarily in common stocks of companies that have market capitalizations within the range of the companies included in the S&P MidCap 400 Index and Russell 1000 Index, whereas the AB Fund would invest primarily in common stocks of companies that have market capitalizations within the range of the companies included in the Russell 1000 Index.  The Board noted, however, that the market capitalizations of companies in the S&P MidCap 400 Index are included within the universe of companies within the Russell 1000 Index, and therefore the market capitalizations of the portfolio companies would not significantly change.  Accordingly, the Board also noted that although the AB Fund’s strategy is similar to the Lou Holland Fund’s current strategy, the AB Fund is required to adopt an 80% policy because the AB Fund’s name contains the term “Large Cap”.  The investment limitations of the Lou Holland Fund have been updated and reworded by the AB Fund to be conformed with the current limitations in the AB Fund complex.  A strong consideration was that the similarity of investment strategy, together with the continuation of the Sub-Adviser, provided a continuation of portfolio management expertise not otherwise available to mutual fund investors.
 
Expenses Relating to Reorganization.  The Board considered that the Manager and Holland Capital will bear the direct costs associated with the Reorganization, Special Meeting, and solicitation of proxies, including the expenses associated with preparing and filing the registration statement that includes this Proxy Statement and the cost of copying, printing and mailing proxy materials.
 
Relative Expense Ratios and Continuation of Cap on Expenses.  The Board reviewed information regarding comparative expense ratios (current and pro forma expense ratios are set forth in the “Comparison of Fees and Expenses” section below), which indicated that the gross and net total annual operating expense ratios and the advisory fee for the AB Fund for the first two years would be less than the gross and net total operating expense ratios of the Lou Holland Fund.  The Board considered the fact that the Manager would contractually agree to waive through at least April 30, 2014 the advisory fee payable by the AB Fund and/or reimburse expenses of the AB Fund in order that the total annual operating expense ratios of Investor Class, Institutional Class and A Class shares of the AB Fund would not exceed 1.27%, 0.89% and 1.39%, respectively.
 

 
3

 

                Economies of Scale. The Board considered the potential of the AB Fund to experience economies of scale as a result of its being a series of the AB Trust because certain fixed costs, such as legal, accounting, shareholder services and trustee expenses, would be spread over a larger fund complex.  The Board concluded that the structure would benefit shareholders as the AB Fund grows.
 
                Distribution and Service Fees.  The Board considered the fund distribution capabilities of the Manager and its affiliates and the commitment to distribute the AB Fund.  The Board further considered that the 0.25% Rule 12b-1 distribution and service fees currently applicable to Investor Shares of the Lou Holland Fund will not apply to the Investor Class shares of the AB Fund, but that the Investor Class of the AB Fund will pay a service fee of up to 0.375%.  The Board also considered that, in addition to a 0.25% Rule 12b-1 fee, a service fee of up to 0.25% will apply to A Class shares of the AB Fund.  The A Shares of the Lou Holland Fund do not pay a service fee.  In addition, the Board considered that the Institutional Class of the AB Fund will not pay a distribution or service fee.  The Institutional Shares of the Lou Holland Fund do not currently pay a distribution or service fee.
 
The Experience and Expertise of the Investment Adviser and Sub-Adviser.  The Board considered the following information regarding the Manager: (i) the Manager is an experienced provider of investment advisory services to institutional and retail markets, with over $____ billion mutual fund and $____ billion overall assets under management; (ii) since 1986, the Manager has offered a variety of services and products, including corporate cash management, separate account management, and mutual funds; and (iii) the Manager serves retail clients as well as defined benefit plans, defined contribution plans, foundations, endowments, corporations, and other institutional investors. The Board also considered that there are currently 20 series of the AB Trust.
 
The Board considered that the current adviser to the Lou Holland Fund, a 100% employee-owned Delaware limited liability company, would continue to provide sub-advisory services to the AB Fund.  The Board noted that the Sub-Adviser’s principals have significant investment experience related to the investment management of the Lou Holland Fund and the accounts of private individual and institutional investors.
 
                Tax Consequences.  The Board considered that the Reorganization is expected to be free from adverse federal income tax consequences.
 
                Other Alternatives.  The Board considered several alternatives to the Reorganization that were identified by Holland Capital.  After considering the merits and viability of these other alternatives, the Board concluded that the possible alternatives were less desirable than the Reorganization.

            Based on the foregoing and additional information presented at the Board meetings discussed above, the Board determined that the Reorganization is the best alternative for the Lou Holland Fund at this time and is in the best interests of the Lou Holland Fund and its shareholders.  The Board approved the Reorganization, subject to approval by shareholders of the Lou Holland Fund and the solicitation of the shareholders of the Lou Holland Fund to vote “FOR” the approval of the Plan, the form of which is attached to this Proxy Statement in Appendix A.
 
D.
COMPARISON OF PRINCIPAL INVESTMENT OBJECTIVES, STRATEGIES AND POLICIES OF THE FUNDS
 
The Lou Holland Fund and the AB Fund have similar investment objectives and strategies.  Unlike the Lou Holland Fund, the AB Fund, under normal market conditions, will invest at least 80% of its net assets (plus the amount of any borrowing for investment purposes) in stocks of large market

 
4

 

capitalization companies at the time of purchase.  Although this policy is similar to the Lou Holland Fund’s current strategy, the AB Fund is required to adopt an 80% policy because the AB Fund’s name contains the term “Large Cap”.  In addition, the AB Fund may invest cash balances in money market funds and also may purchase and sell futures contracts to gain market exposure on cash balances or to reduce market exposure in anticipation of liquidity needs.

The AB Fund has been created as a shell series of the AB Trust solely for the purpose of the acquiring the Lou Holland Fund’s assets and continuing its business investment strategy, and will not conduct any investment operations until after the closing of the Reorganization.  The Manager has reviewed the Lou Holland Fund’s current portfolio holdings and determined that those holdings are compatible with the AB Fund’s investment objectives and policies.  As a result, the Manager believes that, if the Reorganization is approved, all or substantially all of the Lou Holland Fund’s assets will be transferred to and held by the AB Fund.
 
   
Lou Holland Fund
 
 
AB Fund
Investment Objective
 
The Lou Holland Fund primarily seeks long-term growth of capital.  The receipt of dividend income is a secondary consideration.
 
The AB Fund will have the same investment objective.
 
         
   
The Lou Holland Fund’s investment objective is a fundamental policy that may not be changed without shareholder approval.
  The AB Fund’s investment objective will also be a fundamental policy that may not be changed without shareholder approval.
         
Principal Investment Strategies
 
 
 
 
 
The AB Fund's principal investment strategies are similar to the Lou Holland Fund's principal investment strategies except for:
 
The AB Fund seeks to achieve its investment objective by investing primarily in equity securities of large-capitalization companies, whereas the Lou Holland Fund seeks to achieve its investment objective by investing primarily in common stocks of mid- to large-capitalization growth companies. 
 
        The AB Fund, under normal market conditions, will invest at least 80% of its net assets in equity securities of large market capitalization companies at the time of purchase.  The Lou Holland Fund does not have a comparable 80% policy. 
   
The AB Fund's principal investment strategies include disclosure regarding its cash management investments. 
 
Accordingly, the Principal Investment Strategies section is revised as follows: 
 
   
The Lou Holland Fund seeks to achieve its investment objective by investing primarily in common stocks of mid- to large-capitalization growth companies.
 
The AB Fund seeks to achieve its investment objective by investing primarily in equity securities of large-capitalization growth companies.  In addition, the AB Fund, under normal market conditions, will invest at least 80% of its net assets (plus the amount of any borrowing for investment purposes) in equity securities of large market capitalization companies at the time of purchase.  The AB Fund will notify shareholders 60 days prior to any change to the 80% policy.
         
    The Lou Holland Fund considers mid-capitalization and large-capitalization companies to be those having market capitalizations (number of shares outstanding multiplied by share price) within the range of the companies included in the S&P MidCap 400 Index ($360.00 million to $3.03 billion as of March 31, 2011) or the Russell 1000 Index ($192.85 million to $417.17 billion as of March 31,   The AB Fund considers large market capitalization companies to be companies that have market capitalizations similar to the market capitalizations of the companies in the Russell 1000 Index at the time of investment.  The Russell 1000 Index measures the performance of the 1,000 largest U.S. companies based on total market capitalization.  As of __________, 2011, the market capitalizations of the companies in the Russell 1000 Index ranged from $______ million to $______ billion.
 
 
5

 
   
Lou Holland Fund
 
 
AB Fund
   
2011) at the time of purchase.
 
In pursuing its investment objective, the Lou Holland Fund maintains a diversified portfolio of equity securities of companies that the Adviser regards as high quality companies based on earnings growth faster than the general market, reasonable valuations, strong financial condition, strong management and superior industry positions.  Equity securities include preferred stocks, convertible securities, rights and warrants.  The Lou Holland Fund invests primarily in U.S. companies.  The Lou Holland Fund may invest up to 20% of its total assets in securities of foreign issuers that exhibit the growth characteristics mentioned above.
 
 
 
The remainder of the principal investment strategies are the same, except that the AB Fund’s principal investment strategies provide that equity securities include commonstocks, preferred stocks, securities convertible into common stock, real estate investment trusts, rights and warrants.
 
 
 
6

 
   
Lou Holland Fund
 
 
AB Fund
Temporary Defensive Strategy
 
In order to respond to adverse market, economic, political or other conditions, the Lou Holland Fund may assume a temporary defensive position that is inconsistent with its principal investment strategies and invest, without limitation, in cash or prime quality cash equivalents (including commercial paper, certificates of deposit, banker’s acceptances and time deposits). A defensive position, taken at the wrong time, may have an adverse impact on the Lou Holland Fund’s performance. The Lou Holland Fund may be unable to achieve its investment objective during the employment of a temporary defensive measure.
 
The AB Fund may depart from its principal investment strategy by taking temporary defensive or interim positions in response to adverse market, economic, political or other conditions. During these times, the AB Fund may not achieve its investment goal.
 
 
 
7

 
   
Lou Holland Fund
 
 
AB Fund
Cash
Management
Investments
 
None
 
The AB Fund can invest cash balances in money market funds that are registered investment companies under the 1940 Act, including money market funds that are sponsored or advised by the Manager, and in futures contracts.  If the AB Fund invests in money market funds, shareholders will bear their proportionate share of the expenses, including, for example, advisory and administrative fees, of the money market funds in which the AB Fund invests.  Shareholders also would be exposed to the risks associated with money market funds and the portfolio investments of such money market funds, including that a money market fund’s yield will be lower than the return that the AB Fund would have derived from other investments that would provide liquidity.
 
To gain market exposure on cash balances or reduce market exposure in anticipation of liquidity needs, the AB Fund also may purchase and sell futures contracts on a daily basis that relate to securities in which it may invest directly and indices comprised of such securities. A futures contact is a contract to purchase or sell a particular security, or the cash value of an index, at a specified future date at a price agreed upon when the contract is made. Under such contracts, no delivery of the actual securities is required. Rather, upon the expiration of the contract, settlement is made by exchanging cash in an amount equal to the difference between the contract price and the closing price of a security or index at expiration, net of the variation margin that was previously paid. As cash balances are invested in securities, the AB Fund may invest simultaneously those balances in futures contracts until the cash balances are delivered to settle the securities transactions.  Because the AB Fund will have market exposure simultaneously in both the invested securities and futures contracts, the AB Fund may have more than 100% of its assets exposed to the markets.  This can magnify gains and losses in the AB Fund. The AB Fund also may have to sell assets at inopportune times to satisfy its settlement or collateral obligations. The risks associated with the use of futures contracts also include that there may be an imperfect correlation between the changes in market value of the securities held by the AB Fund and the prices of futures contracts and that there may not be a liquid secondary market for a futures contract.
 
Investment Adviser
 
Holland Capital Management LLC
 
 
American Beacon Advisors, Inc.
 
 
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Lou Holland Fund
 
 
AB Fund
Investment
Sub-Adviser
 
 
None.
 
Holland Capital Management LLC
Portfolio
Managers
 
Monica L. Walker and Carl R. Bhathena serve as the Lou Holland Fund’s portfolio managers and are primarily response for the day-to-day management of the Lou Holland Fund’s investments.
 
Monica L. Walker has served as portfolio manager with respect to the Lou Holland Fund since its inception in 1996 and to Holland Capital’s institutional and private accounts clients since 1991.
 
Carl R. Bhathena has served as co-portfolio manager of the Lou Holland Fund since 2009.  He has served as Senior Equity Analyst at Holland Capital since 1993.
 
The portfolio managers of the Sub-Adviser who are primarily responsible for the day-to-day portfolio management of the Lou Holland Fund will remain the same.  In addition:
 
Wyatt L. Crumpler will lead the Manager’s portfolio management team that has joint responsibility for the day-to-day oversight of the AB Fund.  Mr. Crumpler is responsible for developing the AB Fund’s investment program and recommending sub-advisers to the AB Fund’s Board of Trustees.  In addition, Mr. Crumpler, Gene L. Needles, Jr. and Cynthia M. Thatcher oversee the sub-advisers, review each sub-adviser’s performance and allocate the AB Fund’s assets among the sub-advisers and the Manager, as applicable.
 
Mr. Crumpler is Vice President, Asset Management. Mr. Crumpler joined the Manager in January 2007 as Vice President of Trust Investments and a member of the portfolio management team. Mr. Crumpler’s title was redesignated as Vice President, Asset Management in July 2009. From January 2004 to January 2007, Mr. Crumpler was Managing Director of Corporate Accounting at American Airlines, Inc. Prior to that time, he was Director of IT Strategy and Finance for American Airlines, Inc.
 
Mr. Needles has served as President and Chief Executive Officer of the Manager since April 2009 and has served on the portfolio management team since June 2011. Prior to joining the Manager, Mr. Needles was President of Touchstone Investments from 2008 to 2009, President of AIM Distributors from 2003 to 2007 and CEO of AIM Distributors from 2004 to 2007.
 
Ms. Thatcher is Portfolio Manager, Asset Management, and become a member of the team upon joining the Manager in December 1999.  Ms. Thatcher is a CFA charterholder.
 

 
9

 

E.
COMPARISON OF PRINCIPAL RISKS
 
Risk is the chance that you will lose money on your investment or that it will not earn as much as you expect.  In general, the greater the risk, the more money your investment can earn for you and the more you can lose.  Like other investment companies, the value of each Fund’s shares may be affected by its investment objectives, principal investment strategies and particular risk factors.  The principal risks of investing in the Funds are discussed below.  However, other factors may also affect each Fund’s net asset value.  There is no guarantee that a Fund will achieve its investment objectives or that it will not lose principal value.
 
The main risks of investing in the Funds are similar, as the investment objectives and strategies of the Funds are also similar.  However, because the AB Fund will focus more on larger-capitalization companies, mid-capitalization company risk will not be a principal risk for the AB Fund, as it is for the Lou Holland Fund. In addition, the AB Fund has included certain additional risk disclosures, such as other investment companies risk, and revised certain risk disclosures in its registration statement to clarify for shareholders the principal risks of investing in the AB Fund.
 
                General Market Risk. The Fund’s net asset value (“NAV”) and investment return will fluctuate based upon changes in the value of its portfolio securities. You could lose money on your investment in the Fund or the Fund could underperform other investments. An investment in the Fund is not a deposit of a bank and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency.

Market Events Risk. It is important that investors closely review and understand the risks of investing in the Fund. Unprecedented turbulence in the financial markets and reduced liquidity in equity, credit and fixed-income markets may negatively affect issuers worldwide, which could have an adverse effect on the Fund.

Adviser Risk. The risk that investment strategies employed by the adviser in selecting investments and asset allocations for the Fund may not result in an increase in the value of your investment or in overall performance equal to other investments.

Common Stock and Equity Securities Risk. The Fund is subject to the risk that stock prices may fall over a short period or extended periods of time. Common stocks, which are a type of equity security, are generally subordinate to other securities, including convertible and preferred securities.

Foreign Investments Risk. Foreign securities are subject to additional risks including international trade, currency, political, regulatory and diplomatic risks.

Growth Company Risk. Securities of growth companies can be more sensitive to the company’s earnings and more volatile than the market in general.  Growth stocks also typically lack the dividend yield that can cushion stock prices in market downturns.  Different investment styles tend to shift in and out of favor, depending on market conditions and investor sentiment.  A Fund’s growth style could cause it to underperform funds that use a value or non-growth approach to investment or have a broader investment style.

Large-Capitalization Company Risk. The securities of large market capitalization companies may underperform other segments of the market because such companies may be less responsive to competitive challenges and opportunities and may be unable to attain high growth rates during periods of economic expansion.

 
10

 
 
Other Investment Companies Risk.  The Fund may invest in shares of other registered investment companies, including open-end funds, closed-end funds, business development companies, exchange-traded funds and money market funds.  To the extent that the Fund invests in shares of other registered investment companies, you will indirectly bear 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 funds.

F.
COMPARISON OF THE FUNDS’ INVESTMENT RESTRICTIONS AND LIMITATIONS
 
The investment restrictions and limitations of the Funds are substantially similar, except that the investment limitations of the AB Fund differ from those of the Lou Holland Fund to the extent necessary to harmonize them with the investment limitations of other American Beacon Funds.  Unlike the Lou Holland Fund, the AB Fund is expressly permitted to operate as a feeder fund in a master-feeder investment structure.  The AB Fund has no current intention to operate under such a structure.
 
Except as required by the 1940 Act or the Internal Revenue Code of 1986, as amended (the “Code”), if any percentage restriction on investment or utilization of assets is adhered to at the time an investment is made, a later change in percentage resulting from a change in the market values of the Lou Holland Fund’s assets or purchases and redemptions of Fund shares will not be considered a violation of the limitation.
 
A fundamental limitation cannot be changed without the affirmative vote of the lesser of: (1) 50% of the outstanding shares of the Fund; or (2) 67% of the shares present or represented at a shareholders meeting at which the holders of more than 50% of the outstanding shares are present or represented. A non-fundamental limitation may be changed by the Board of Trustees without shareholder approval.
 
All of the investment policies noted in the table below are fundamental limitations, which cannot be changed by the Board of Trustees without affirmative shareholder approval as described above.  The AB Fund, however, has sought to harmonize the fundamental investment limitations of the Lou Holland Fund with those of the other funds in the AB Fund complex.  Although the wording appears different, the fundamental investment limitations of the Lou Holland Fund and the AB Fund are substantially similar.  Notwithstanding any other limitation on investments in other investment companies, however, the AB Fund, unlike the Lou Holland Fund, is expressly permitted to operate as a feeder fund in a master-feeder investment structure.  The investment limitations for the Lou Holland Fund may be found in the Lou Holland Fund’s Statement of Additional Information (“SAI”), which is incorporated by reference into this Proxy Statement.  The investment limitations for the AB Fund may be found in the SAI to this Proxy Statement, which is incorporated by reference into this Proxy Statement.
 
 
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Fundamental Investment Policies
Policy
 
Lou Holland Fund
 
AB Fund
 
Differences
Borrowing
Money
 
 
The Lou Holland Fund may not borrow money if, as a result, outstanding borrowings would exceed an amount equal to 33 1/3% of the Lou Holland Fund’s total assets.
 
The AB Fund may not borrow money, except as otherwise permitted under the 1940 Act or pursuant to a rule, order or interpretation issued by the SEC or its staff, including (i) as a temporary measure, (ii) by entering into reverse repurchase agreements, and (iii) by lending portfolio securities as collateral. For purposes of this investment limitation, the purchase or sale of options, futures contracts, options on futures contracts, forward contracts, swaps, caps, floors, collars and other similar financial instruments shall not constitute borrowing.
 
 
The AB Fund includes examples of certain transactions and financial instruments that do not constitute borrowing for purposes of the investment limitation on borrowing money.
 
Industry
Concentration
 
The Lou Holland Fund may not invest 25% or more of the value of its total assets in any one industry, except that the Lou Holland Fund may invest 25% or more of the value of its total assets in cash or cash items, securities issued or guaranteed by the U.S. Government, its agencies or instrumentalities or instruments secured by these money market instruments, such as repurchase agreements.  For purposes of this restriction, the Lou Holland Fund will not consider “cash items” to include certificates of deposit or other bank obligations.
 
The AB Fund may not invest more than 25% of its total assets in the securities of companies primarily engaged in any one industry provided that: (i) this limitation does not apply to obligations by U.S. agencies; and (ii) tax-exempt municipalities and their agencies and authorities are not deemed to be industries.
 
The AB Fund clarifies that it will not deem tax-exempt municipalities and their agencies and authorities to be industries.
The Lou Holland Fund permits the investing of 25% or more of the value of its total assets in cash or cash items, in addition to investments in securities issued or guaranteed by the U.S. Government, its agencies or instrumentalities or instruments secured by these money market instruments, such as repurchase agreements.  For purposes of this restriction, the Lou Holland Fund will not consider “cash items” to include certificates of deposit or other bank obligations.
 
 
 
12

 
Fundamental Investment Policies
Policy
 
Lou Holland Fund
 
AB Fund
 
Differences
             
Diversification
 
The Lou Holland Fund may not make an investment unless 75% of the value of the Lou Holland Fund’s total assets is represented by cash, cash items, U.S. Government securities, securities of other investment companies and other securities.  For purposes of this restriction, the purchase of “other securities” is limited so that no more than 5% of the value of the Lou Holland Fund’s total assets would be invested in any one issuer.  As a matter of operating policy, the Lou Holland Fund will not consider repurchase agreements to be subject to the above-stated 5% limitation if all the collateral underlying the repurchase agreements are U.S. Government securities and such repurchase agreements are fully collateralized.
 
 
The AB Fund may not, with respect to 75% of its total assets, invest in the securities of any issuer if, immediately after such investment more than 5% of the total assets of the AB Fund (taken at current value) would be invested in the securities of such issuer; provided that this limitation does not apply to obligations issued or guaranteed as to interest or principal by the U.S. government or its agencies or instrumentalities.
 
The AB Fund may not, with respect to 75% of its total assets, acquire more than 10% of the outstanding voting securities of any one issuer.
 
The Lou Holland Fund clarifies that as a matter of operating policy, it will not consider repurchase agreements to be subject to the 5% limitation in any one issuer if all the collateral underlying the repurchase agreements are U.S. Government securities and such repurchase agreements are fully collateralized.
Underwriting Activities
 
The Lou Holland Fund may not underwrite securities issued by other persons except, to the extent that in connection with the disposition of portfolio securities, the Lou Holland Fund may be deemed to be an underwriter.
 
The AB Fund may not engage in the business of underwriting securities issued by others, except to the extent that, in connection with the disposition of securities, the AB Fund may be deemed an underwriter under federal securities law.
 
 
No material difference.
 
Making Loans
 
The Lou Holland Fund may not make loans to other parties.  For purposes of this limitation, entering into repurchase agreements, lending securities
 
The AB Fund may not lend any security or make any other loan except (i) as otherwise permitted under the 1940 Act, (ii) pursuant to a rule, order or interpretation
 
The AB Fund may loan to the full extent permitted by the 1940 Act whereas the Lou Holland Fund lists types of transactions that do not constitute lending.
 
 
13

 
Fundamental Investment Policies
Policy
 
Lou Holland Fund
 
AB Fund
 
Differences
    and acquiring any debt security are not deemed to be the making of loans.  
issued by the SEC or its staff, (iii) through the purchase of a portion of an issue of debt securities in accordance with the AB Fund’s investment objective, policies and limitations, or (iv) by engaging in repurchase agreements with respect to portfolio securities.
 
   
Real Estate
 
The Lou Holland Fund may not purchase or sell real estate unless acquired as a result of ownership of securities or other instruments (but this shall not prevent the Lou Holland Fund from investing in securities backed by real estate or securities of companies engaged in the real estate business) operations and securities that are secured by interests in real estate.
 
The AB Fund may not purchase or sell real estate or real estate limited partnership interests, provided, however, that the AB Fund may invest in securities secured by real estate or interests therein or issued by companies which invest in real estate or interests therein when consistent with the other policies and limitations described in the AB Fund’s prospectus.
 
 
No material difference.
 
Commodities
 
The Lou Holland Fund may not purchase or sell physical commodities unless acquired as a result of securities or other instruments (but this shall not prevent the Lou Holland Fund from purchasing or selling options and futures contracts or from investing in securities or other instruments backed by physical commodities).
 
The AB Fund may not invest in physical commodities unless acquired as a result of ownership of securities or other instruments (but this shall not prevent the Fund from purchasing or selling foreign currency, options, futures contracts, options on futures contracts, forward contracts, swaps, caps, floors, collars, securities on a forward-commitment or delayed-delivery basis, and other similar financial instruments).
 
 
The AB Fund may not invest in physical commodities unless acquired as a result of ownership of securities or other instruments, whereas the Lou Holland Fund may not purchase or sell physical commodities unless acquired as a result of securities or other instruments.
 
Issuance of
 
The Lou Holland Fund may
 
The AB Fund may not issue
 
No material difference.
 
 
14

 
Fundamental Investment Policies
Policy
 
Lou Holland Fund
 
AB Fund
 
Differences
Senior Securities  
not issue any class of senior securities to any other class of securities except pursuant to Section 18 of the 1940 Act and any interpretations or no-action positions thereof.
 
  any senior security except as otherwise permitted (i) under the 1940 Act or (ii) pursuant to a rule, order or interpretation issued by the SEC or its staff.    
Investment in
Investment
Company with
Substantially
Similar
Investment
Objectives and
Policies
 
None.
 
Notwithstanding any other limitation, the AB Fund may invest all of its investable assets in an open-end management investment company with substantially the same investment objectives, policies and limitations as the AB Fund. For this purpose, “all of the Fund’s investable assets” means that the only investment securities that will be held by the AB Fund will be the AB Fund’s interest in the investment company.
 
 
 
The Lou Holland Fund does not have a comparable policy.
             
             

 
The Lou Holland Fund has adopted the following investment limitations that may be changed by the Board of Trustees without shareholder approval.  The AB Fund’s non-fundamental policies also may be changed by the AB Board without shareholder approval.
 
  Non-Fundamental Investment Policies
Policy
 
Lou Holland Fund
 
AB Fund
 
Differences
Securities of Investment Companies
 
The Lou Holland Fund may invest in the securities of other open-end investment companies to the extent permitted by the 1940 Act and the results thereunder, including interpretations and no-action positions.  Currently, with certain exceptions, the 1940 Act limits investment in other
 
The AB Fund may invest in other investment companies (including affiliated investment companies) to the extent permitted by the 1940 Act, or exemptive relief granted by the SEC.
 
 
No material difference.
 
 
 
15

 
 
  Non-Fundamental Investment Policies
Policy
 
Lou Holland Fund
 
AB Fund
  Differences
   
investment companies if immediately thereafter the Lou Holland Fund (i) owns no more than 3% of the total outstanding voting securities of any one investment company and (ii) invests no more than 5% of its total assets (taken at market value) in the securities of any one investment company or more than 10% of its total assets in the securities of all other investment companies in the aggregate.
 
       
Margin and Short Sales
 
The Lou Holland Fund may not purchase securities on margin or sell securities short, except that the Lou Holland Fund may make margin deposits in connection with permissible options and futures transactions subject to the Lou Holland Fund’s limitations on investments in commodities and options and spreads, may make short sales “against the box” (in a short sale “against the box,” the Lou Holland Fund sells short a security in which it maintains a long position at least equal in amount to the position sold short), and may obtain short-term credits as may be necessary for clearance of transactions.
 
The AB Fund may not purchase securities on margin except that (i) the AB Fund may obtain such short-term credits as are necessary for the clearance of transactions, and (ii) the AB Fund may make margin payments in connection with foreign currency, futures contracts, options, forward contracts, swaps, caps, floors, collars, securities purchased or sold on a forward-commitment or delayed-delivery basis or other financial instruments.
 
The Lou Holland Fund clarifies that it may make margin deposits in connection with permissible options and futures transactions subject to the Lou Holland Fund’s limitations on investments in commodities and options and spreads, may make short sales “against the box” (in a short sale “against the box,” the Lou Holland Fund sells short a security in which it maintains a long position at least equal in amount to the position sold short).
 
The AB Fund clarifies that it may make margin payments in connection with foreign currency, futures contracts, options, forward contracts, swaps, caps, floors, collars, securities purchased or sold on a forward-commitment or delayed-delivery basis or
 
 
16

 
  Non-Fundamental Investment Policies
Policy
 
Lou Holland Fund
 
AB Fund
   
            other financial instruments.
 
The AB Fund does not have a comparable investment policy with regards to short sales.
 
Illiquid Securities
 
The Lou Holland Fund may not knowingly purchase or otherwise acquire any security or invest in a repurchase agreement maturing in more than seven days, if as a result, more than 15% of the net assets of the Lou Holland Fund would be invested in securities that are illiquid or not readily marketable, including repurchase agreements maturing in more than seven days and non-negotiable fixed time deposits with maturities over seven days.  The Lou Holland Fund may invest without limitation in “restricted securities” (securities which are subject to legal or contractual restrictions on resale) provided such securities are considered to be liquid.
 
The AB Fund may not invest more than 15% of its net assets in illiquid securities, including time deposits and repurchase agreements that mature in more than seven days.
 
The Lou Holland Fund specifically states that it may invest without limitation in “restricted securities” (securities which are subject to legal or contractual restrictions on resale) provided such securities are considered to be liquid.
 
 
G.
COMPARISON OF FEES AND EXPENSES
 
The tables below describe the fees and expenses that you pay if you buy and hold Investor Shares, Institutional Shares or A Shares of the Lou Holland Fund and the pro forma fees and expenses that you may pay if you buy and hold Investor Class, Institutional Class or A Class shares of the AB Fund after giving effect to the Reorganization.  Expenses for each Fund are based on the operating expenses incurred by the Lou Holland Fund and estimated to have been incurred by the Investor Class, Institutional Class and A Class shares of the AB Fund as of the semi-annual period ended June 30, 2011.  The pro forma fees and expenses for the Investor Class, Institutional Class and A Class shares of the AB Fund assume that the Reorganization had been in effect for the same period.  The Manager has contractually agreed to cap Fund expenses through April 30, 2014, to the extent that total annual fund operating expenses of the

 
17

 
Investor Class, Institutional Class and A Class shares exceed the annual rate of 1.27%, 0.89% and 1.39% excluding taxes, interest, portfolio transaction expenses and other extraordinary expenses.

Investor Shares
 
 
 
Fees and Expenses
Lou Holland Fund
Investor Shares
AB Fund
Investor Class
(Pro forma)
 
 
 
Shareholder Fees
(fees paid directly from your investment)
 
Maximum Sales Charge (Load)
Imposed On Purchases
None
None
Maximum Sales Charge (Load)
Imposed On Re-invested Dividends
None
None
Maximum Deferred Sales Charge (Load) Imposed on Redemptions
None
None
Redemption Fee
None
None
Annual Fund Operating Expenses
(expenses that you pay each year as a percentage of the value of your investment)
Management Fee
0.85%
0.45%
Distribution and/or Service (Rule 12b-1) Fees
0.25%
None
Other Expenses(1)
0.69%
0.89%
Total Annual Fund
Operating Expenses
 
1.79%
 
1.34%
Fee Waiver and
Expense Reimbursement
 
(0.44)% (2)
 
(0.07)% (3)
Net Expenses
1.35%
1.27%
 
(1)
Other Expenses include expenses related to administrative service fees, service fees, custody, legal, audit, registration, transfer agency, trustee, shareholder reporting and other fees.
   
(2)
Holland Capital has contractually agreed to reduce a portion of its fee and reimburse Lou Holland Fund expenses to limit Total Annual Fund Operating Expenses (excluding taxes, interest, portfolio transaction expenses and other extraordinary expenses) of Investor Shares to 1.35% through May 1, 2013 (the “Investor Shares Expense Cap”).  The Investor Shares Expense Cap may be changed or eliminated with the consent of the Board of Trustees
   
(3)
The Manager has contractually agreed to waive and/or reimburse the Investor Class of the AB Fund for Other Expenses through April 30, 2014 to the extent that Total Annual Fund Operating Expenses for the AB Fund exceeds 1.27% for the Investor Class (excluding taxes, brokerage commissions, acquired fund fees and expenses and other extraordinary expenses such as litigation). The contractual expense arrangement can be changed by approval of a majority of the AB Fund’s Board of Trustees. The Manager can be reimbursed by the AB 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 reduction or reimbursement and (b) does not cause the Total Annual Fund Operating Expenses of a class to exceed the contractually agreed percentage limit.

 
18

 

Example
 
The Example below is intended to help you compare the cost of investing in Investor Class shares of the Lou Holland Fund with the cost of investing in Investor Class shares of the AB Fund on a pro forma basis.  The Example assumes that you invest $10,000 in each Fund and then redeem all of your shares at the end of each period.  The Example also assumes that your investment has a 5% annual return and that the Lou Holland Fund’s Total Annual Fund Operating Expenses and Net Expenses remain the same. Although your actual costs may be higher or lower, based on these assumptions, your costs would be:
 
 
One Year
Three Years
Five Years
Ten Years
Lou Holland Fund – Investor Shares
$137
$475
$885
$2,030
         
AB Fund – Investor Class (Pro forma)
$129
$418
$727
$1,607

Institutional Shares
 
 
 
Fees and Expenses
Lou Holland Fund
Institutional
Shares
AB Fund
Institutional Class
(Pro forma)
 
 
 
Shareholder Fees
(fees paid directly from your investment)
 
Maximum Sales Charge (Load)
Imposed On Purchases
None
None
Maximum Sales Charge (Load)
Imposed On Re-invested Dividends
None
None
Maximum Deferred Sales Charge (Load) Imposed on Redemptions
None
None
Redemption Fee
None
None
Annual Fund Operating Expenses
(expenses that you pay each year as a percentage of the value of your investment)
Management Fee
0.85%
0.45%
Distribution and/or Service (Rule 12b-1) Fees
None
None
Other Expenses(1)
1.06%
0.42%
Total Annual Fund
Operating Expenses
 
1.91%
 
0.97%
Fee Waiver and
Expense Reimbursement
 
(0.71)% (2)
 
(0.08)% (3)
Net Expenses
1.20%
0.89%
 
(1)
Other Expenses include expenses related to administrative service fees, custody, legal, audit, registration, transfer agency, trustee, shareholder reporting and other fees.
   
(2)
Holland Capital has contractually agreed to reduce a portion of its fee and reimburse Lou Holland Fund expenses to limit Total Annual Fund Operating Expenses (excluding taxes, interest, portfolio transaction expenses and other extraordinary expenses) of Institutional Shares to 1.20% through May 1, 2012 (the
   
 
 
19

 
 
“Institutional Shares Expense Cap”).  The Institutional Shares Expense Cap may be changed or eliminated with the consent of the Board of Trustees
   
(3)
The Manager has contractually agreed to waive and/or reimburse the Institutional Class of the AB Fund for Other Expenses through April 30, 2014 to the extent that Total Annual Fund Operating Expenses for the AB Fund exceeds 0.89% for the Institutional Class (excluding taxes, brokerage commissions, acquired fund fees and expenses and other extraordinary expenses such as litigation). The contractual expense arrangement can be changed by approval of a majority of the AB Fund’s Board of Trustees. The Manager can be reimbursed by the AB 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 reduction or reimbursement and (b) does not cause the Total Annual Fund Operating Expenses of a class to exceed the contractually agreed percentage limit.
 
Example

The Example below is intended to help you compare the cost of investing in Institutional Shares of the Lou Holland Fund with the cost of investing in Institutional Class shares of the AB Fund on a pro forma basis.  The Example assumes that you invest $10,000 in each Fund and then redeem all of your shares at the end of each period.  The Example also assumes that your investment has a 5% annual return and that the Lou Holland Fund’s Total Annual Fund Operating Expenses and Net Expenses remain the same. Although your actual costs may be higher or lower, based on these assumptions, your costs would be:
 
 
One Year
Three Years
Five Years
Ten Years
Lou Holland Fund – Institutional Shares
$122
$531
$966
$2,175
         
AB Fund – Institutional Class (Pro forma)
$91
$301
$529
$1,182

A Shares
 
 
 
Fees and Expenses
Lou Holland Fund
A Shares
AB Fund
A Class
(Pro forma)
 
 
 
Shareholder Fees
(fees paid directly from your investment)
 
Maximum Sales Charge (Load)
Imposed On Purchases
5.75%
5.75%
Maximum Sales Charge (Load)
Imposed On Re-invested Dividends
None
None
Maximum Deferred Sales Charge (Load) Imposed on Redemptions
1.00%(1)
None
Redemption Fee
None
None
Annual Fund Operating Expenses
(expenses that you pay each year as a percentage of the value of your investment)
Management Fee
0.85%
0.45%
Distribution and/or Service (Rule 12b-1) Fees
0.25%
0.25%
Other Expenses(2)
41.71%
0.77%
 
 
20

 
 
 
Fees and Expenses
Lou Holland Fund
A Shares
AB Fund
A Class
(Pro forma)
Total Annual Fund
Operating Expenses
 
42.81%
 
1.47%
Fee Waiver and
Expense Reimbursement
 
(41.41)% (3)
 
(0.08)%(4)
Net Expenses
1.40%
1.39%

(1)
A CDSC of up to 1.00% of the purchase or sales price, whichever is less, is assessed on redemptions of A Shares that were part of a purchase of $1 million or more and that are liquidated in whole or in part within twelve months of purchase for the Lou Holland Fund.
   
(2)
Other Expenses include expenses related to administrative service fees, service fees, custody, legal, audit, registration, transfer agency, trustee, shareholder reporting and other fees.
   
(3)
Holland Capital has contractually agreed to reduce a portion of its fee and reimburse Lou Holland Fund expenses to limit Total Annual Fund Operating Expenses (excluding taxes, interest, portfolio transaction expenses and other extraordinary expenses) of A Shares to 1.40% through May 1, 2012 (the “A Shares Expense Cap”).  The A Shares Expense Cap may be changed or eliminated with the consent of the Board of Trustees
   
(4)
The Manager has contractually agreed to waive and/or reimburse the A Class of the AB Fund for Other Expenses through April 30, 2014 to the extent that Total Annual Fund Operating Expenses for the AB Fund exceeds 1.39% for the A Class (excluding taxes, brokerage commissions, acquired fund fees and expenses and other extraordinary expenses such as litigation). The contractual expense arrangement can be changed by approval of a majority of the AB Fund’s Board of Trustees. The Manager can be reimbursed by the AB 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 reduction or reimbursement and (b) does not cause the Total Annual Fund Operating Expenses of a class to exceed the contractually agreed percentage limit.

Example

The Example below is intended to help you compare the cost of investing in A Shares of the Lou Holland Fund with the cost of investing in A Class shares of the AB Fund on a pro forma basis.  The Example assumes that you invest $10,000 in each Fund and then redeem all of your shares at the end of each period.  The Example also assumes that your investment has a 5% annual return and that the Lou Holland Fund’s Total Annual Fund Operating Expenses and Net Expenses remain the same. Although your actual costs may be higher or lower, based on these assumptions, your costs would be:
 
 
One Year
Three Years
Five Years
Ten Years
Lou Holland Fund – A Shares
$709
$6,207
$8,334
$9,550
         
AB Fund – A Class (Pro forma)
$708
$1,006
$1,324
$2,225


H.
PERFORMANCE INFORMATION
 
The AB Fund’s Investor Class, Institutional Class and A Class shares will adopt, respectively, the performance history of the Lou Holland Fund’s Investor Shares, Institutional Shares and A Shares.  The

 
21

 

bar chart and the performance table below provide some indication of the risks of an investment in the AB Fund by showing the Lou Holland Fund’s performance last year and by showing how the Lou Holland Fund’s average annual returns compare with a broad measure of market performance.  Of course, the Lou Holland Fund’s past performance, before and after taxes, does not necessarily represent how the AB Fund will perform in the future.  The performance information shown for December 31, 2001, through December 31, 2009, reflects the historical performance of the Lou Holland Growth Fund, a series of The Lou Holland Trust (the “Predecessor Fund”).  On January 29, 2010, the Predecessor Fund reorganized into the Lou Holland Fund.  The Predecessor Fund and the Lou Holland Fund have identical investment objectives and strategies that are managed by the same investment adviser.  The performance of the Lou Holland Fund and the Predecessor Fund do not reflect sales charges.  If sales charges were reflected, returns would be lower.  Updated performance information is available by calling (800) 295-9779 or at www.hollandcap.com/lhgf_perf.html.

Lou Holland Fund Investor Shares*
Year-By-Year Total Return
 
 
*
Calendar Year Total Returns in the bar chart do not reflect sales charges.  If sales charges were included, returns would be lower.

 
The Lou Holland Fund’s calendar year-to-date total return for Investor Shares as of September 30, 2011, was _______%.
 
During the period shown in the bar chart, the highest quarterly return was 17.07% (for the quarter ended June 30, 2009) and the lowest quarterly return was (21.57%) (for the quarter ended December 31, 2008).  The Lou Holland Fund commenced investment operations on April 29, 1996.
 
AVERAGE ANNUAL TOTAL RETURN
For the period
Ended December 31, 2010 (Investor Shares)
 
 
One Year
 
 
Five Years
 
 
Ten Years
Since
Inception
(4/29/1996)
Lou Holland Fund Investor Shares
       
Return Before Taxes
14.03%
3.54%
2.24%
6.76%
Return After Taxes on Distributions
13.62%
3.28%
1.95%
6.36%
 
 
22

 
For the period
Ended December 31, 2010 (Investor Shares)
 
 
One Year
 
 
Five Years
 
 
Ten Years
Since
Inception
(4/29/1996)
Return After Taxes on Distributions and Sale of Fund Shares
9.65%
2.99%
1.84%
5.88%
Russell 1000 Growth Index
(Index reflects no deductions for fees, expenses or taxes)
16.71%
3.75%
0.02%
5.30%
 
After-tax returns are calculated using the historical highest individual federal marginal income tax rate in effect at the time of each distribution and assumed sale, but do not reflect the impact of state and local income taxes.

Actual after-tax returns depend on an investor’s tax situation and may differ from those shown.  After-tax returns reflect past tax effects and are not predictive of future tax effects.  After-tax returns may not be relevant to investors who hold their Fund shares in a tax-deferred account (including a 401(k) or individual retirement account), or to investors that are tax-exempt.  After-tax returns are shown for Investor Shares and after-tax returns for other classes may vary.

Portfolio Turnover

Each Fund pays transaction costs, such as commissions, when it buys and sells securities (or “turns over” its portfolio).  A higher portfolio turnover rate may indicate higher transaction costs and may result in larger Fund distributions of net realized capital gains and, therefore, higher taxes for shareholders whose Fund shares are held in a taxable account.  These costs, which are not reflected in Total Annual Fund Operating Expenses or in the Example, affect each Fund’s performance.  The Lou Holland Fund’s portfolio turnover rate during the most recent fiscal year was 18% of the average value of its portfolio.

I.
COMPARISON OF DISTRIBUTION AND PURCHASE, REDEMPTION AND EXCHANGE PROCEDURES
 
Foreside Fund Services, LLC (“Foreside”) is the Lou Holland Fund’s distributor and principal underwriter. Foreside is located at Three Canal Plaza, Suite 100, Portland, Maine 04101. The Lou Holland Fund has adopted a distribution plan for its Investor Shares and A Shares under Rule 12b-1 of the 1940 Act. Rule 12b-1 fees are used to compensate the Distributor and third parties for services and expenses related to the sale and distribution of the Lou Holland Fund’s shares and/or for providing shareholder services. Because Rule 12b-1 fees are paid out of the Lou Holland Fund’s assets on an ongoing basis, over time these fees will increase the cost of your investment and may cost you more than paying other types of sales charges.  Investor Shares and A Shares of the Lou Holland Fund pay 12b-1 fees at the annual rate of 0.25% of the average daily assets of Investor Shares and A Shares, respectively.  A Class shares of the AB Fund will pay a Rule 12b-1 fee of 0.25% per annum of its average daily assets.  Investor Class and Institutional Class shares of the AB Fund will not pay any Rule 12b-1 fees.
Under a Distribution Agreement with the Trust, Foreside acts as the Lou Holland Fund’s agent in connection with the continuous offering of shares of the Lou Holland Fund.  Foreside is a registered broker-dealer and is a member of the Financial Industry Regulatory Authority (“FINRA”).  Foreside continually distributes shares of the Lou Holland Fund on a best efforts basis. Foreside has no obligation to sell any specific quantity of Lou Holland Fund shares.  Foreside may enter into agreements with selected broker-dealers, banks or other financial institutions for distribution and/or servicing of shares of the Lou Holland Fund.  Pursuant to the Distribution Agreement, Foreside receives, and may reallow to

 
23

 

broker-dealers, all or a portion of the sales charge paid by the purchasers of A Shares of the Lou Holland Fund.  Foreside may also retain any portion of the commissions fees that are not paid to the broker-dealers, which may be used to pay distribution related expenses.

Foreside also will be the distributor and principal underwriter of the AB Fund’s shares.  Under a Distribution Agreement with the AB Trust, Foreside will act as the agent of the AB Trust in connection with the continuous offering of shares of the AB Fund.  Foreside will continually distribute shares of the AB Fund on a best efforts basis.  Foreside has no obligation to sell any specific quantity of AB Fund shares.  In addition, pursuant to a Sub-Administration Agreement between Foreside and the Manager, Foreside will receive a separate fee from the Manager for providing administrative services in connection with the marketing and distribution of shares of the AB Funds.  Pursuant to the Distribution Agreement, Foreside receives, and may reallow to broker-dealers, all or a portion of the sales charge paid by the purchasers of A Class shares.  Foreside may also retain any portion of the commission fees that are not paid to the broker-dealers, which may be used to pay distribution related expenses.

The AB Fund has adopted a shareholder services plan (“Service Plan”) for its A Class and Investor Class shares for the payment of certain non-distribution shareholder services provided by financial intermediaries.  The Service Plan authorizes the annual payment of up to 0.25% of the average daily net assets attributable to A Class shares and up to 0.375% of the average daily net assets attributable to Investor Class shares.  The AB Board has authorized the A Class shares and the Investor Class shares to pay the maximum amount of fees permissible under the Service Plan.  The fees, which are included as part of the AB Fund’s “Other Expenses” in the Table of Fees and Expenses in this Proxy Statement, will be payable monthly in arrears without regard to whether the amount of the fee is more or less than the actual expenses incurred in a particular month by the entity for the services provided pursuant to the Service Plan. Thus, the Manager may realize a profit or a loss based upon its actual servicing-related expenditures for the A Class or Investor Class shares.  The primary expenses expected to be incurred under the Service Plan are transfer agency fees and servicing fees paid to financial intermediaries such as plan sponsors and broker-dealers.
 
Purchase, Redemption and Exchange Procedures.
 
Purchase Procedures. The purchase procedures for the Lou Holland Fund and the AB Fund are similar.  Investors may invest by contacting the Funds through a broker or other financial institution who sells the Funds, or by mail, telephone or wire.  Investors may also contact the AB Fund through the internet.

The minimum initial and minimum subsequent investment amounts for the Lou Holland Fund are different than the minimum initial and minimum subsequent investment amounts for the AB Fund.  The minimum initial investment for Investor Shares of the Lou Holland Fund is $1,000 for retail accounts and $250 for retirement accounts; the minimum initial investment for Investor Class shares of the AB Fund is $2,500.  The minimum initial investment for Institutional Shares of the Lou Holland Fund is $100,000 for both retail and retirement accounts; the minimum initial investment for Institutional Class shares of the AB Fund is $250,000.  The minimum initial investment for A Shares of the Lou Holland Fund is $1,000 for retail accounts and $250 for retirement accounts; the minimum initial investment for A Class shares of the AB Fund is $2,500.

The minimum subsequent investment amount for Investor Shares and A Shares of the Lou Holland Fund is $50 for both retail and retirement accounts.  The minimum subsequent investment amount for Institutional Shares of the Lou Holland Fund is $1,000 for retail accounts and $250 for retirement accounts.  The minimum subsequent investment for Investor Class, Institutional Class and A

 
24

 

Class shares of the AB Fund is $50, if the subsequent investment is made by ACH, check or exchange.  If the subsequent investment is made by wire, then the minimum subsequent investment amount of Investor Class and A Class shares of the AB Fund is $500. No minimums apply to subsequent investments by wire for Institutional Class shares of the AB Fund.

Redemption Procedures.  The Lou Holland Fund permits, and the AB Fund will permit, redemptions by mail, wire, and telephone.  The AB Fund will also permit redemptions through the internet.  No redemption fee or contingent deferred sales charge currently applies to the redemption of shares of the Lou Holland Fund other than on redemptions of A Shares that were part of a purchase of $1 million or more that are sold within twelve months of purchase.  The AB Fund will not impose a contingent deferred sales charge on redemptions of the corresponding A Shares of the AB Fund following the Reorganization.

Additionally, each Fund has also reserved the right to redeem shares “in kind.” Additional shareholder account information for the AB Fund is set forth in Appendix C to this Proxy Statement.

Exchange Procedures.  The Lou Holland Fund does not have an exchange feature.  However, shares of any class of the AB Fund may be exchanged for shares of the same class of another American Beacon Fund under certain limited circumstances.  Since an exchange involves a concurrent purchase and redemption, please review the sections titled “Purchase Policies” and “Redemption Policies” in the AB Fund Prospectus for additional limitations that apply to purchases and redemptions.

There is no front-end sales charge on exchanges between A Class shares of an American Beacon Fund for A Class shares of another American Beacon Fund.  Shares subject to a CDSC will not be charged a CDSC in an exchange.  If shares were purchased by check, to exchange out of one American Beacon Fund and into another, a shareholder must have owned shares of the redeeming American Beacon Fund for at least 10 days.

The minimum investment requirement must be met for the American Beacon Fund into which the shareholder is exchanging.  American Beacon Fund shares may be acquired through exchange only in states in which they can be legally sold.  The American Beacon Funds reserve the right to charge a fee and to modify or terminate the exchange privilege at any time.  Please refer to the section titled “Frequent Trading and Market Timing” in the AB Fund Prospectus for information on the American Beacon Funds’ policies regarding frequent purchases, redemptions, and exchanges.

J.    KEY INFORMATION ABOUT THE PROPOSAL
 
The following is a summary of key information concerning the Reorganization.  Keep in mind that more detailed information appears in the Plan, the form of which is attached to this Proxy Statement as Appendix A.
 
1.    SUMMARY OF THE PROPOSED REORGANIZATION
 
At the Special Meeting, the shareholders of the Lou Holland Fund will be asked to approve the Plan to reorganize the Lou Holland Fund into the AB Fund.  The AB Fund is a newly organized series of the AB Trust that will commence operations upon consummation of the Reorganization.  If the Plan is approved by the shareholders of the Lou Holland Fund and the Reorganization is consummated, the Lou Holland Fund will transfer all of its assets to the AB Fund in exchange solely for (1) the number of full and fractional Investor Class, Institutional Class and A Class shares of the AB Fund equal to the number of full and fractional Investor Shares, Institutional Shares and A Shares, respectively, of the Lou Holland

 
25

 

Fund as of the close of business on the closing date referred to below (the “Closing”) and (2) the AB Fund’s assumption of all known and unknown liabilities of the Lou Holland Fund.  Immediately thereafter, the Lou Holland Fund will distribute the AB Fund shares to its shareholders, by the AB Trust’s transfer agent establishing accounts on the AB Fund’s share records in the names of those shareholders and transferring those AB Fund shares to those accounts, by class, in complete liquidation of the Lou Holland Fund.  As a result, each shareholder of the Lou Holland Fund will receive Investor Class, Institutional Class and A Class shares of the AB Fund, as the case may be, having an aggregate NAV equal to the aggregate NAV of the shareholder’s Lou Holland Fund shares. The expenses associated with the Reorganization will not be borne by the Lou Holland Fund’s shareholders; record of ownership will be held in book entry form only.

Until the Closing, shareholders of the Lou Holland Fund will continue to be able to redeem their shares at the NAV per share next determined after receipt by the Lou Holland Fund’s transfer agent of a redemption request in proper form.  Redemption and purchase requests received by the transfer agent after the Closing will be treated as requests received for the redemption of shares of the AB Fund received by the shareholder in connection with the Reorganization or purchase of AB Fund shares.  After the Reorganization, all of the issued and outstanding shares of the Lou Holland Fund will be canceled on the books of the Lou Holland Fund, and the share transfer books of the Lou Holland Fund will be permanently closed.  If the Reorganization is consummated, shareholders will be free to redeem the shares of the AB Fund that they receive in the transaction at their then-current NAV.  Shareholders of the Lou Holland Fund may wish to consult their tax advisors as to any different consequences of redeeming their shares prior to the Reorganization or exchanging such shares for shares of the AB Fund in the Reorganization.

The Reorganization is subject to a number of conditions, including the approval of the Plan by the shareholders of the Lou Holland Fund and the receipt of a legal opinion from counsel to the AB Trust with respect to certain tax matters (see Federal Income Tax Consequences, below). Assuming satisfaction of the conditions in the Plan, the closing date of the Reorganization is expected to be March 23, 2012, or another date agreed to by the Trust and the AB Trust.

The Manager and Holland Capital have agreed to pay all direct costs relating to the Reorganization, including the costs relating to the Special Meeting and to preparing and filing the registration statement that includes this Proxy Statement.  The Manager and Holland Capital also will incur the direct costs associated with the solicitation of proxies, including the cost of copying, printing and mailing proxy materials.

The Plan may be amended by the mutual agreement of the Trust and the AB Trust, notwithstanding approval thereof by the Lou Holland Fund’s shareholders, provided that no such amendment after that approval may have a material adverse effect on those shareholders’ interests.  In addition, the Plan may be terminated at or before the Closing by the mutual agreement of the Trust and the AB Trust or by either of them (1) in the event of the other’s material breach of any representation, warranty or covenant contained in the Plan to be performed at or before the Closing, (2) if a condition to its obligations has not been met and it reasonably appears that that condition will not or cannot be met, (3) if a governmental body issues an order, decree or ruling having the effect of permanently enjoining, restraining or otherwise prohibiting consummation of the Reorganization or (4) if the Closing has not occurred by August 31, 2012, or another date as to which they agree.

 
26

 

2.           DESCRIPTION OF THE AB FUND’S SHARES
 
Investor Class, Institutional Class and A Class shares of the AB Fund issued to the shareholders of the Lou Holland Fund pursuant to the Reorganization will be duly authorized, validly issued, fully paid and non-assessable when issued and will be transferable without restriction and will have no preemptive or conversion rights.  Investor Class, Institutional Class and A Class shares will be sold and redeemed based upon their NAV next determined after receipt of the purchase or redemption request, as described in Appendix C to this Proxy Statement.
 
 
3.
FEDERAL INCOME TAX CONSEQUENCES
 
The Trust believes the Lou Holland Fund has qualified for treatment as a regulated investment company under Part I of Subchapter M of Chapter 1 of Subtitle A of the Code (“Subchapter M”) since its inception. Accordingly, the Trust believes the Lou Holland Fund has been, and expects the Lou Holland Fund to continue through the Closing to be, relieved of any federal income tax liability on its taxable income and net gains it distributes to shareholders to the extent provided for in Subchapter M.
 
The Reorganization is intended to qualify for federal income tax purposes as a tax-free reorganization under section 368(a) of the Code.  As a condition to the Closing, the Trust and the AB Trust will receive an opinion of counsel to the AB Trust substantially to the effect that -- based on certain assumptions and conditioned on the representations set forth in the Plan (and, if such counsel requests, in separate letters from the Trust and the AB Trust) being true and complete at the time of the Closing and the Reorganization’s being consummated in accordance with the Plan (without the waiver or modification of any terms or conditions thereof and without taking into account any amendment thereof that counsel has not approved) -- the Reorganization will qualify as such a reorganization and that, accordingly, for federal income tax purposes:

 
Each Fund will be “a party to a reorganization” (within the meaning of section 368(b) of the Code);
 
The Lou Holland Fund will recognize no gain or loss upon the transfer of its assets to the AB Fund in exchange solely for AB Fund shares and the AB Fund’s assumption of the Lou Holland Fund’s liabilities or on the distribution of those shares to the Lou Holland Fund’s shareholders in exchange for their Lou Holland Fund shares;
 
A shareholder will recognize no gain or loss on the exchange of all of its Lou Holland Fund shares solely for AB Fund shares pursuant to the Reorganization;
 
A shareholder’s aggregate tax basis in the AB Fund shares it receives pursuant to the Reorganization will be the same as the aggregate tax basis in its Lou Holland Fund shares it actually or constructively surrenders in exchange for those AB Fund shares, and its holding period for those AB Fund shares will include, in each instance, its holding period for those Lou Holland Fund shares, provided the shareholder holds them as capital assets as of the time of the Closing;
 
The AB Fund will recognize no gain or loss on its receipt of the Lou Holland Fund’s assets in exchange solely for the AB Fund shares and the AB Fund’s assumption of the Lou Holland Fund’s liabilities;
 
The AB Fund’s basis in each transferred asset will be the same as the Lou Holland Fund’s basis therein immediately before the Reorganization, and the AB Fund’s holding period for each such asset will include the Lou Holland Fund’s holding period therefor (except where the AB Fund’s investment activities have the effect of reducing or eliminating an asset’s holding period); and
 
For purposes of section 381 of the Code, the AB Fund will be treated just as the Lou Holland Fund would have been treated if there had been no Reorganization.  Accordingly,

 
27

 
 
 
the Reorganization will not result in the termination of the Lou Holland Fund’s taxable year, the Lou Holland Fund’s tax attributes enumerated in section 381(c) of the Code will be taken into account by the AB Fund as if there had been no Reorganization, and the part of the Lou Holland Fund’s taxable year before the Reorganization will be included in the AB Fund’s taxable year after the Reorganization.
 
Notwithstanding the above, the opinion of counsel may state that no opinion is expressed as to the effect of the Reorganization of the Funds or any shareholder with respect to any asset as to which any unrealized gain or loss is required to be recognized for federal income tax purposes at the end of a taxable year (or on the termination or transfer thereof) under a mark-to-market system of accounting.
 
Opinions of counsel are not binding upon the Internal Revenue Service (“IRS”) or the courts.  If the Reorganization is consummated but does not qualify as a tax-free reorganization under the Code, the Lou Holland Fund would recognize gain or loss on the transfer of its assets to the AB Fund and each shareholder of the Lou Holland Fund would recognize a taxable gain or loss equal to the difference between its tax basis in the Lou Holland Fund shares and the fair market value of the shares of the AB Fund it receives.
 
Tracking Your Basis and Holding Period; State and Local Taxes.  After the Reorganization, you will continue to be responsible for tracking the adjusted tax basis and holding period of your AB Fund shares for federal income tax purposes.  Pursuant to legislation passed by Congress in 2008, if you want to use the average cost method for determining basis with respect to any AB Fund shares you acquire after December 31, 2011 (“Covered Shares”), you will have to elect to do so in writing (which may be electronic).  If you fail to affirmatively elect that method, the basis determination will be made in accordance with the AB Fund’s default method, which might be a method other than average cost.  If, however, the AB Fund’s default method is average cost and you wish to use a different acceptable method for basis determination (e.g., a specific identification method), you will be able to elect to do so.
 
That legislation also requires the AB Fund (or administrative agent) to report to the IRS and furnish to its shareholders the cost basis information for Covered Shares.  In addition to the current requirement to report the gross proceeds from the redemption of its shares, the AB Fund also will be required to report the cost basis information for Covered Shares and indicate whether they had a short-term or long-term holding period.  You should consult with your tax adviser to determine the best IRS-accepted cost basis method for your tax situation and to obtain more information about how the cost basis reporting law will apply to you.
 
        4.    COMPARISON OF FORMS OF ORGANIZATION AND SHAREHOLDER RIGHTS
 
Set forth below is a discussion of the material differences between the Funds and the rights of their shareholders.

Governing Law.  The Lou Holland Fund is a series of the Trust, which is organized as a Delaware statutory trust.  The AB Fund is a separate series of the AB Trust, which is organized as a Massachusetts business trust.  Each Fund is authorized to issue an unlimited number of shares of beneficial interest.  The Trust’s operations are governed by its Trust Instrument, including any amendments thereto (collectively, “Lou Holland Trust Instrument”) and By-Laws and applicable state

 
28

 

law.  The AB Trust’s operations are governed by its Amended and Restated Declaration of Trust (the “AB Declaration of Trust”) and By-Laws and applicable state law.
 
Shareholder Liability.  Under the Lou Holland Trust Instrument, no shareholder of the Lou Holland Fund shall be personally liable for the debts, liabilities, obligations and expenses incurred by, contracted for, or otherwise existing with respect to, the Trust or by or on behalf of any of its series.  The Lou Holland Fund is required to indemnify shareholders and former shareholders against losses and expenses arising from any personal liability for any obligation of the Lou Holland Fund solely by reason of being or having been a shareholder of the Lou Holland Fund and not because of his or her acts or omissions or for some other reason.

Under the AB Declaration of Trust, any shareholder or former shareholder of the AB Fund shall not be held to be personally liable for any obligation or liability of the AB Trust solely by reason of being or having been a shareholder.  The AB Fund is required to indemnify shareholders and former shareholders against losses and expenses incurred in connection with proceedings relating to his or her being or having been a shareholder of the AB Fund and not because of his or her acts or omissions.

Board of Trustees.  The Reorganization will result in a change in the Board of Trustees because the trustees of the Trust are different from the trustees of the AB Trust.  The Board has four trustees, one of whom is an “interested person,” as that term is defined under the 1940 Act, of the Trust.  For more information, refer to the Statement of Additional Information dated May 1, 2011 for the Lou Holland Fund, which is incorporated by reference into this Proxy Statement.

The AB Board has eight trustees, one of whom is deemed an “interested person” of the AB Trust.  For more information, refer to the Statement of Additional Information to this Proxy Statement, which is incorporated by reference into this Proxy Statement

The Reorganization also will result in a change in the officers because the officers of the Trust are different from the officers of the AB Trust.

Classes.  The Lou Holland Fund offers three classes of shares:  Investor Shares, Institutional Shares and A Shares.  The AB Fund is a separate series of the AB Trust that is expected to offer Investor Class, Y Class, A Class, C Class and Institutional Class shares.  It also is anticipated that shareholders of the Lou Holland Fund will receive Investor Class, Institutional Class and A Class shares of the AB Fund in the Reorganization. Nothing contained herein shall be construed as an offer to purchase or otherwise acquire any other class of shares of the AB Fund.  The AB Board has reserved the right to create and issue additional classes of the AB Fund following the Reorganization.  Each share of a series or class represents an equal proportionate interest in that series or class with each other share of that series or class.  Shares of each series or class generally vote together on fund- or trust-wide matters, except when required under federal securities laws to vote separately on matters that only affect a particular class, such as the approval of a distribution plan for a particular class.  Structurally, there is no difference between Investor Class, Institutional Class and A Class shares of the AB Fund and, respectively, the Lou Holland Fund’s Investor Shares, Institutional Shares and A Shares.
 
        5.    CAPITALIZATION
 
The capitalization of the Lou Holland Fund as of September 30, 2011 and the AB Fund’s pro forma combined capitalization as of that date after giving effect to the Reorganization are as follows:
 
 
29

 
 
 
(unaudited)
Lou Holland Fund
Investor Shares
Pro forma
AB Fund Investor Class
Lou Holland Fund
Institutional Shares
Pro forma
AB Fund
Institutional Class
 
Lou Holland Fund A Shares
 
Pro forma
AB Fund A Class
Net Assets
$51,117,207
$51,117,207
$1,080,648
$1,080,648
$11,633
$11,633
             
Shares Outstanding
2,714,685
2,714,685
57,241
57,241
618
618
             
Net Asset Value per Share
$18.83
$18.83
$18.88
$18.88
$18.82
$18.82


K.   ADDITIONAL INFORMATION ABOUT THE AB FUND
 
         1.    INVESTMENT ADVISER AND SUB-ADVISER
 
The Manager, located at 4151 Amon Carter Boulevard, Fort Worth, Texas 76155, is the AB Fund’s investment adviser.  The Manager is a wholly owned subsidiary of Lighthouse Holdings, Inc. (“Lighthouse”).  Lighthouse is indirectly controlled by investment funds affiliated with Pharos Capital Group, LLC and TPG Capital, L.P.  The Manager is paid a management fee as compensation for providing investment advisory fees and for providing the AB Trust with advisory and asset allocation services. Pursuant to management and administrative services agreements, the Manager provides the AB Trust with office space, office equipment and personnel necessary to manage and administer the AB Trust’s operations. This includes:
 
 
complying with reporting requirements;
 
corresponding with shareholders;
 
maintaining internal bookkeeping, accounting and auditing services and records; and
 
supervising the provision of services to the AB Trust by third parties.

The management agreement provides for the Manager to receive an annualized management fee that is calculated and accrued daily, equal to 0.05% of the net assets of the AB Fund, plus amounts paid by the Manager to the Sub-Adviser.
 
In addition to the management fee, the AB Fund pays the Manager an administrative services fee for providing administrative and management services (other than investment advisory services).  The administrative services fee for the AB Fund is equal to 30% of the net assets of the Investor Class and Institutional Class and 0.40% of the net assets of the A Class.
 
The AB Fund is responsible for expenses not otherwise assumed by the Manager, including the following: audits by independent auditors; transfer agency, custodian, fund accounting, dividend disbursing agent and shareholder recordkeeping services; taxes, if any, and the preparation of the AB Fund’s tax returns; interest; costs of Trustee and shareholder meetings; printing and mailing prospectuses and reports to existing shareholders; fees for filing reports with regulatory bodies and the maintenance of the AB Fund’s existence; legal fees; fees to federal and state authorities for the registration of shares; fees and expenses of Trustees; insurance and fidelity bond premiums; fees paid to consultants providing reports regarding adherence by the Sub-Adviser to the investment style of the AB Fund; fees paid for
 

 
30

 

brokerage commission analysis for the purpose of monitoring best execution practices of the Sub-Adviser; and any extraordinary expenses of a nonrecurring nature.
 
The AB Fund’s assets may be allocated among one or more sub-advisers in the future by the Manager.  The Sub-Adviser has discretion to purchase and sell securities for its segment of the AB Fund’s assets in accordance with the AB Fund’s objectives, policies, restrictions and more specific strategies provided by the Manager.  Pursuant to an exemptive order issued by the Securities and Exchange Commission (“SEC”), the Manager is permitted to enter into new or modified investment advisory agreements with existing or new sub-advisers without approval of the AB Fund’s shareholders, but subject to approval of the AB Board.  The prospectus will be supplemented if additional sub-advisers are retained or the contract with any existing sub-adviser is materially changed or terminated. The AB Fund’s advisory arrangements are set forth above.
 
The Sub-Adviser is a 100% employee-owned Delaware limited liability company.  The Sub-Adviser’s principals have significant investment experience related to the investment management of the Lou Holland Fund and the accounts of private individual and institutional investors. The Sub-Adviser was established in 1991 and had approximately $________ of assets under management as of ____________, 20__.

The SAI to this Proxy Statement, which is incorporated by reference into this Proxy Statement, provides additional information about each portfolio manager’s compensation, other accounts managed by the portfolio managers and the portfolio managers’ ownership of securities in the Lou Holland Fund.
 
        2.    OTHER SERVICE PROVIDERS
 
Foreside Fund Services, LLC (“Foreside”), located at Three Canal Plaza, Suite 100, Portland, Maine 04101, is the distributor and principal underwriter of the AB Fund’s shares.  Pursuant to a Sub-Administration Agreement between Foreside and the Manager, Foreside receives a fee from the Manager for providing administrative services in connection with the marketing and distribution of shares of the series of the American Beacon Funds (including the AB Fund) and the American Beacon Select Funds.
 
        3.    TAX CONSIDERATIONS
 
The AB Fund intends to make annual distributions that may be taxed to its shareholders as ordinary income or net capital gain.  For a discussion of relevant tax matters please refer to Appendix C to this Proxy Statement.
 
        4.    PAYMENTS TO BROKER-DEALERS AND OTHER FINANCIAL INTERMEDIARIES
 
If you purchase the AB Fund through a broker-dealer or other financial intermediary (such as a bank), the AB Fund and its related companies may pay the intermediary for the sale of AB Fund shares and related services.  These payments may create a conflict of interest by influencing the broker-dealer or other intermediary and your salesperson to recommend the AB Fund over another investment.  Ask your salesperson or visit your financial intermediary’s internet site for more information.

 
31

 

II.           VOTING INFORMATION

A.     RECORD DATE, VOTING RIGHTS AND VOTE REQUIRED
 
Proxies are being solicited from the shareholders of the Lou Holland Fund by the Board for the Special Meeting to be held on Wednesday, March 7, 2012, at ______ [a.m.][p.m.] Eastern time at principal executive offices of the Trust located at ____________________, or at such later time made necessary by adjournment.  Unless revoked, all valid proxies will be voted in accordance with the specification thereon or, in the absence of specifications, “FOR” approval of the Plan.

The Board has fixed the close of business on January 11, 2012 (the “Record Date”) as the record date for the determination of shareholders entitled to notice of and to vote at the Meeting and any adjournments thereof.  Shareholders of record as of the Record Date will be entitled to one vote for each share held and to a proportionate fractional vote for each fractional share held.  As of the Record Date, the total number of issued and outstanding shares of beneficial interest of Investor Shares, Institutional Shares and A Shares of the Lou Holland Fund was ____________, _____________ and ___________ respectively.  Shareholders of record who own five percent or more of the Lou Holland Fund as of the Record Date are set forth on Appendix B to this Proxy Statement.  Approval of the Reorganization will require the affirmative vote in favor of the Reorganization by at least 75% of the voted shares of the Lou Holland Fund.

B.    HOW TO VOTE
 
You may vote in one of three ways:

 
complete and sign the enclosed proxy ballot and mail it to us in the prepaid return envelope (if mailed in the United States);
 
vote on the Internet at the website address listed on your proxy ballot; or
 
call the toll-free number printed on your proxy ballot.

PLEASE NOTE, TO VOTE VIA THE INTERNET OR TELEPHONE, YOU WILL NEED THE “CONTROL NUMBER” THAT APPEARS ON YOUR PROXY BALLOT.

C.    PROXIES
 
All proxies solicited by the Board that are properly executed and received by the Secretary prior to the Special Meeting, and are not revoked, will be voted at the Special Meeting. A proxy with respect to shares held in the name of two or more persons is valid if executed by any one of them unless at or prior to its use the Lou Holland Fund receives written notification to the contrary from any one of such persons.  Shares represented by such proxies will be voted in accordance with the instructions thereon. If no specification is made on a proxy, it will be voted FOR the matters specified on the proxy.  All shares that are voted and votes to ABSTAIN will be counted towards establishing a quorum, as will broker non-votes.  Broker non-votes are shares for which the beneficial owner has not voted and the broker holding the shares does not have discretionary authority to vote on the particular matter.

You may revoke a proxy once it is given.  If you desire to revoke a proxy, you must submit a subsequent later dated proxy or a written notice of revocation to the Lou Holland Fund.  You may also give written notice of revocation in person at the Special Meeting.  Attendance by a shareholder at the Special Meeting does not, by itself, revoke a proxy.

 
32

 
 
D.
QUORUM AND ADJOURNMENTS
 
One-third, or thirty-three and one-third percent (331/3%), of the shares of the Lou Holland Fund that are entitled to vote will be considered a quorum for the transaction of business.  If a quorum of shareholders of the Lou Holland Fund is not present at the Special Meeting, or if a quorum is present but sufficient votes to approve the Reorganization described in this Proxy Statement are not received, the persons named as proxies may, but are under no obligation to, propose one or more adjournments of the Special Meeting of the Lou Holland Fund to permit further solicitation of proxies.  Any business that might have been transacted at the Special Meeting with respect to the Lou Holland Fund may be transacted at any such adjourned session(s) at which a quorum is present.  The Special Meeting may be adjourned from time to time by the vote of a majority of the shares voted in person or by proxy.  The persons designated as proxies may use their discretionary authority to vote as instructed by management of the Lou Holland Fund on questions of adjournment and on any other proposals raised at the Special Meeting to the extent permitted by the SEC’s proxy rules, including proposals for which timely notice was not received, as set forth in the SEC’s proxy rules.
 
E.
EFFECT OF ABSTENTIONS AND BROKER “NON-VOTES”
 
        All proxies voted, including abstentions and broker non-votes (shares held by brokers or nominees where the underlying holder has not voted and the broker does not have discretionary authority to vote the shares), will be counted toward establishing a quorum.  In addition, under the rules of the New York Stock Exchange, if a broker has not received instructions from beneficial owners or persons entitled to vote and the proposal to be voted upon may “affect substantially” a shareholder’s rights or privileges, the broker may not vote the shares as to that proposal even if it has discretionary voting power.  As a result, these shares also will be treated as broker non-votes for purposes of proposals that may “affect substantially” a shareholder’s rights or privileges (but will not be treated as broker non-votes for other proposals, including adjournment of the Special Meeting).

Abstentions and broker non-votes will be treated as shares voted against a proposal.  Treating broker non-votes as votes against a proposal can have the effect of causing shareholders who choose not to participate in the proxy vote to prevail over shareholders who cast votes or provide voting instructions to their brokers or nominees. In order to prevent this result, the Lou Holland Fund may request that selected brokers or nominees refrain from returning proxies on behalf of shares for which voting instructions have not been received from beneficial owners or persons entitled to vote.  The Lou Holland Fund also may request that selected brokers or nominees return proxies on behalf of shares for which voting instructions have not been received if doing so is necessary to obtain a quorum.  Abstentions and broker non-votes will not be voted “FOR” or “AGAINST” any adjournment.

F.
SOLICITATION OF PROXIES
 
The Lou Holland Fund expects that the solicitation of proxies will be primarily by mail and telephone. The solicitation also may include facsimile, Internet or oral communications by certain employees of Holland Capital, who will not be paid for these services.  Holland Capital has retained _______________ to tabulate shareholder votes, at an anticipated cost of approximately $_______.  The Manager and Holland Capital will bear the costs of the Special Meeting, including legal costs, the costs of retaining _________________, and other expenses incurred in connection with the solicitation of proxies.

 
33

 

III.           OTHER INFORMATION
 
A.
OTHER BUSINESS
 
The Board knows of no other business to be brought before the Special Meeting.  If any other matters come before the Special Meeting, the Board intends that proxies that do not contain specific restrictions to the contrary will be voted on those matters in accordance with the judgment of the persons named in the enclosed proxy card.

B.
NEXT MEETING OF SHAREHOLDERS
 
The Lou Holland Fund does not hold regular meetings of shareholders.  Shareholders wishing to submit proposals for inclusion in a proxy statement for a subsequent meeting of shareholders should send their written proposals to ____________, Secretary of the Trust, _________________.  Proposals must be delivered to the Secretary of the Trust not later than the tenth day following the day on which public announcement of the date of the Special Meeting was first made by the Trust.  Such shareholder’s proposal shall set forth (a) a brief description of the business desired to be brought before the Special Meeting, the reasons for conducting such business at the Special Meeting and any material interest in such business of such shareholder and of the beneficial owner, if any, on whose behalf the proposal is made, and (b) as to the shareholder submitting the proposal and the beneficial owner, if any, on whose behalf the proposal is made, (i) the name and address of such shareholder, as they appear on the books of the Trust, and of such beneficial owner and (ii) the number of shares of each class of shares of the Lou Holland Fund which are owned beneficially and of record by such shareholder and such beneficial owner. Timely submission of a proposal does not necessarily mean that the proposal will be included.
 
C.
LEGAL MATTERS
 
Certain legal matters concerning the issuance of shares of the AB Fund in connection with the Reorganization and the tax consequences of the Reorganization will be passed upon by K&L Gates LLP.

D.
INFORMATION FILED WITH THE SEC
 
The Trust and the AB Trust are subject to the information requirements of the Securities Exchange Act of 1934 and the 1940 Act and in accordance therewith, file reports and other information, including proxy materials and charter documents, with the SEC.  Reports, proxy statements, registration statements and other information filed by the Trust may be inspected without charge and copied at the public reference facilities maintained by the SEC at 100 F Street, N.E., Washington, DC 20549, and at the following regional offices of the SEC: Northeast Regional Office, 3 World Financial Center, Suite 400, New York, New York 10281; Southeast Regional Office, 801 Brickell Avenue, Suite 1800, Miami, Florida 33131; Midwest Regional Office, 175 West Jackson Boulevard, Suite 900, Chicago, Illinois 60604; Central Regional Office, 1801 California Street, Suite 1500, Denver, Colorado 80202; and Pacific Regional Office, 5670 Wilshire Boulevard, Suite 1100, Los Angeles, California 90036. Copies of such materials may also be obtained from the Public Reference Branch, Office of Consumer Affairs and Information Services, Securities and Exchange Commission, Washington, DC 20549 at prescribed rates.


 
34

 
By Order of the Board of Trustees of Forum Funds,


Lina Bhatnagar
Secretary

______________, 20___

 
35

 


APPENDIX A
 
FORM OF AGREEMENT AND PLAN OF REORGANIZATION AND TERMINATION

 
THIS AGREEMENT AND PLAN OF REORGANIZATION AND TERMINATION (“Agreement”) is made as of ________ __, 2012, among AMERICAN BEACON FUNDS, a Massachusetts business trust, with its principal place of business at 4151 Amon Carter Boulevard, Fort Worth, Texas  76155 (“New Trust”), on behalf of American Beacon Holland Large Cap Growth Fund, a segregated portfolio of assets (“series”) thereof (“New Fund”), FORUM FUNDS, a Delaware statutory trust, with its principal place of business at Three Canal Plaza, Suite 600, Portland, Maine  04101 (“Old Trust”), on behalf of its Lou Holland Growth Fund series (“Old Fund”), and, solely for purposes of paragraphs 4.4, 4.5, and 6, AMERICAN BEACON ADVISORS, INC., New Trust’s investment manager (“AmBeacon Manager”), and HOLLAND CAPITAL MANAGEMENT LLC, Old Fund’s investment adviser and New Fund’s investment sub-adviser (“Holland Capital”).  (Each of New Trust and Old Trust is sometimes referred to herein as an “Investment Company,” and each of New Fund and Old Fund is sometimes referred to herein as a “Fund.”)  Notwithstanding anything to the contrary contained herein, (1) the agreements, covenants, representations, warranties, actions, and obligations of and by each Fund, and of and by each Investment Company, as applicable, on its behalf, shall be the agreements, covenants, representations, warranties, actions, and obligations of that Fund only, (2) all rights and benefits created hereunder in favor of a Fund shall inure to and be enforceable by the Investment Company of which that Fund is a series on that Fund’s behalf, and (3) in no event shall any other series of an Investment Company or the assets thereof be held liable with respect to the breach or other default by a Fund or Investment Company of its agreements, covenants, representations, warranties, actions, and obligations set forth herein.
 
Each Investment Company wishes to effect a reorganization described in section 368(a)(1)(F) of the Internal Revenue Code of 1986, as amended (“Code”) (all “section” references are to the Code, unless otherwise noted), and intends this Agreement to be, and adopts it as, a “plan of reorganization” within the meaning of the regulations under the Code (“Regulations”).  The reorganization will involve Old Fund’s changing its identity, form, and place of organization -- by converting from a series of Old Trust to a series of New Trust -- by (1) transferring all its assets to New Fund (which is being established solely for the purpose of acquiring those assets and continuing Old Fund’s business) in exchange solely for voting shares of beneficial interest (“shares”) in New Fund and New Fund’s assumption of all of Old Fund’s liabilities, (2) distributing those shares pro rata to Old Fund’s shareholders in exchange for their shares therein and in complete liquidation thereof, and (3) terminating Old Fund, all on the terms and conditions set forth herein (all the foregoing transactions being referred to herein collectively as the “Reorganization”).
 
Each Investment Company’s board of trustees (each, a “Board”), in each case including a majority of its members who are not “interested persons” (as that term is defined in the Investment Company Act of 1940, as amended (“1940 Act”)) (“Non-Interested Persons”) of either Investment Company, (1) has duly adopted and approved this Agreement and the transactions contemplated hereby, (2) has duly authorized performance thereof on its Fund’s behalf by all necessary Board action, and (3) has determined that participation in the Reorganization is in the best interests of the Fund that is a series thereof and, in the case of Old Fund, that the interests of the existing shareholders thereof will not be diluted as a result of the Reorganization.
 

 
A-1

 

Old Fund currently offers three classes of shares, designated Investor Shares, Institutional Shares, and A Shares (“Investor Old Fund Shares,” “Institutional Old Fund Shares,” and “A Old Fund Shares,” respectively, and collectively, “Old Fund Shares”).  New Fund will have multiple classes of shares, including three classes designated Investor Class shares, Institutional Class shares, and A Class shares (“Investor Class New Fund Shares,” “Institutional Class New Fund Shares,” and “A Class New Fund Shares,” respectively, and collectively, “New Fund Shares”); New Fund’s other classes of shares (designated Y Class shares and Class C shares) will not be involved in the Reorganization and thus are not included in the term “New Fund Shares.”  The Investor Old Fund Shares, Institutional Old Fund Shares, and A Old Fund Shares have characteristics substantially similar to the Investor Class New Fund Shares, Institutional Class New Fund Shares, and A Class New Fund Shares, respectively.
 
In consideration of the mutual promises contained herein, the Investment Companies agree as follows:
 
1.           PLAN OF REORGANIZATION AND TERMINATION
 
1.1.           Subject to the requisite approval of Old Fund’s shareholders and the terms and conditions set forth herein, Old Fund shall assign, sell, convey, transfer, and deliver all of its assets described in paragraph 1.2 (“Assets”) to New Fund.  In exchange therefor, New Fund shall:
 
 
(a)
issue and deliver to Old Fund the number of full and fractional (all references herein to “fractional” shares meaning fractions rounded to the third decimal place) (1) Investor Class New Fund Shares equal to the number of full and fractional Investor Old Fund Shares then outstanding, (2) Institutional Class New Fund Shares equal to the number of full and fractional Institutional Old Fund Shares then outstanding, and (3) A Class New Fund Shares equal to the number of full and fractional A Old Fund Shares then outstanding, and
 
 
(b)
assume all of Old Fund’s liabilities described in paragraph 1.3 (“Liabilities”).
 
Those transactions shall take place at the Closing (as defined in paragraph 2.1).
 
1.2           The Assets shall consist of all assets and property of every kind and nature -- including all cash, cash equivalents, securities, commodities, futures interests, receivables (including interest and dividends receivable), claims and rights of action, rights to register shares under applicable securities laws, and books and records -- Old Fund owns at the Effective Time (as defined in paragraph 2.1) and any deferred and prepaid expenses shown as assets on Old Fund’s books at that time; and Old Fund has no unamortized or unpaid organizational fees or expenses that have not previously been disclosed in writing to New Trust.
 
1.3           The Liabilities shall consist of all of Old Fund’s liabilities, debts, obligations, and duties existing at the Effective Time, whether known or unknown, whether or not determinable at the Effective Time, and whether contingent, accrued, or otherwise, excluding Reorganization Expenses (as defined in paragraph 3.3(f)) borne by Holland Capital and AmBeacon Manager pursuant to paragraph 6.  Notwithstanding the foregoing, Old Fund will endeavor to discharge all its known liabilities, debts, obligations, and duties before the Effective Time.
 

 
A-2

 

1.4           At or before the Closing, New Fund shall redeem the Initial Shares (as defined in paragraph 5.5) for the amount at which they are issued pursuant to that paragraph.  At the Effective Time (or as soon thereafter as is reasonably practicable), Old Fund shall distribute all the New Fund Shares it receives pursuant to paragraph 1.1(a) to its shareholders of record determined at the Effective Time (each, a “Shareholder”), in proportion to their Old Fund Shares then held of record and in constructive exchange therefor, and shall completely liquidate.  That distribution shall be accomplished by New Trust’s transfer agent’s opening accounts on New Fund’s shareholder records in the Shareholders’ names and transferring those New Fund Shares thereto.  Pursuant to that transfer, each Shareholder’s account shall be credited with the number of full and fractional New Fund Shares equal to the number of full and fractional Old Fund Shares that Shareholder holds at the Effective Time, by class (i.e., the account for each Shareholder that holds Investor Old Fund Shares shall be credited with the number of full and fractional Investor Class New Fund Shares due that Shareholder, the account for each Shareholder that holds Institutional Old Fund Shares shall be credited with the number of full and fractional Institutional Class New Fund Shares due that Shareholder, and the account for each Shareholder that holds A Old Fund Shares shall be credited with the number of full and fractional A Class New Fund Shares due that Shareholder).  The aggregate net asset value (“NAV”) of New Fund Shares to be so credited to each Shareholder’s account shall equal the aggregate NAV of the Old Fund Shares that Shareholder holds at the Effective Time.  All issued and outstanding Old Fund Shares, including any represented by certificates, shall simultaneously be canceled on Old Fund’s shareholder records.  New Trust shall not issue certificates representing the New Fund Shares issued in connection with the Reorganization.
 
1.5           Any transfer taxes payable on the issuance and transfer of New Fund Shares in a name other than that of the registered holder on Old Fund’s shareholder records of the Old Fund Shares actually or constructively exchanged therefor shall be paid by the transferee thereof, as a condition of that issuance and transfer.
 
1.6           Any reporting responsibility of Old Fund to a public authority, including the responsibility for filing regulatory reports, tax returns, and other documents with the Securities and Exchange Commission (“Commission”), any state securities commission, any federal, state, and local tax authorities, and any other relevant regulatory authority, is and shall remain its responsibility up to and including the date on which it is terminated.
 
1.7           After the Effective Time, Old Fund shall not conduct any business except in connection with its termination.  As soon as reasonably practicable after distribution of the New Fund Shares pursuant to paragraph 1.4, but in all events within six months after the Effective Time, (a) Old Fund shall be terminated as a series of Old Trust and (b) Old Trust shall make all filings and take all other actions in connection therewith necessary and proper to effect that termination.
 
2.           CLOSING AND EFFECTIVE TIME
 
2.1           Unless the Investment Companies agree otherwise, all acts necessary to consummate the Reorganization (“Closing”) shall be deemed to take place simultaneously as of immediately after the close of business (4:00 p.m., Eastern Time) on March 23, 2012 (“Effective
 

 
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Time").  The Closing shall be held at New Trust’s offices or at such other place as to which the Investment Companies agree.
 
2.2           Old Trust shall cause the custodian of Old Fund’s assets (“Old Custodian”) (a) to make Old Fund’s portfolio securities available to New Trust (or to its custodian (“New Custodian”), if New Trust so directs), for examination, no later than five business days preceding the Effective Time and (b) to transfer and deliver the Assets at the Effective Time to the New Custodian for New Fund’s account, as follows:  (1) duly endorsed in proper form for transfer in such condition as to constitute good delivery thereof in accordance with the custom of brokers, (2) by book entry, in accordance with the Old Custodian’s customary practices and any securities depository (as defined in Rule 17f-4 under the 1940 Act) in which Old Fund’s assets are deposited, in the case of Old Fund’s portfolio securities and instruments deposited with those depositories, and (3) by wire transfer of federal funds in the case of cash.  Old Trust shall also direct the Old Custodian to deliver at the Closing an authorized officer’s certificate (a) stating that pursuant to proper instructions provided to the Old Custodian by Old Trust, the Old Custodian has delivered all of Old Fund’s portfolio securities, cash, and other Assets to the New Custodian for New Fund’s account and (b) attaching a schedule setting forth information (including adjusted basis and holding period, by lot) concerning the Assets.  The New Custodian shall certify to New Trust that such information, as reflected on New Fund’s books immediately after the Effective Time, does or will conform to that information as so certified by the Old Custodian.
 
2.3           Old Trust shall deliver, or shall direct its transfer agent to deliver, to New Trust at the Closing an authorized officer’s certificate listing the Shareholders’ names and addresses together with the number of full and fractional outstanding Old Fund Shares, by class, each such Shareholder owns, at the Effective Time, certified by Old Trust’s Secretary or Assistant Secretary or by its transfer agent, as applicable.  New Trust shall direct its transfer agent to deliver at or as soon as reasonably practicable after the Closing an authorized officer’s certificate as to the opening of accounts on New Fund’s shareholder records in the names of the listed Shareholders and a confirmation, or other evidence satisfactory to Old Trust, that the New Fund Shares to be credited to Old Fund at the Effective Time have been credited to Old Fund’s account on those records at that time and thereafter transferred to the Shareholders’ accounts in accordance with paragraph 1.4.
 
2.4           Old Trust shall deliver to New Trust and AmBeacon Manager, within five days before the Closing, an authorized officer’s certificate listing each security, by name of issuer and number of shares, that is being carried on Old Fund’s books at an estimated fair market value provided by an authorized pricing vendor for Old Fund.
 
2.5           At the Closing, each Investment Company shall deliver to the other (a) bills of sale, checks, assignments, share certificates, receipts, and/or other documents the other Investment Company or its counsel reasonably requests and (b) a certificate executed in its name by its President or a Vice President in form and substance satisfactory to the recipient, and dated the Effective Time, to the effect that the representations and warranties it made in this Agreement are true and correct at the Effective Time except as they may be affected by the transactions contemplated hereby.
 

 
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3.           REPRESENTATIONS AND WARRANTIES
 
3.1           Old Trust, on Old Fund’s behalf, represents and warrants to New Trust, on New Fund’s behalf, as follows:
 
(a)           Old Trust (1) is a statutory trust that is duly created, validly existing, and in good standing under the laws of the State of Delaware, and its Certificate of Trust dated August 28, 1995, is on file with the office of the Secretary of State of Delaware, (2) is duly registered under the 1940 Act as an open-end management investment company, (3) has the power to own all its properties and assets and to carry on its business as described in its current registration statement on Form N-1A, and (4) before January 1, 1997, “claimed” classification as an association taxable as a corporation and has never elected otherwise;
 
(b)           Old Fund is a duly established and designated series of Old Trust;
 
(c)           The execution, delivery, and performance of this Agreement have been duly authorized at the date hereof by all necessary action on the part of Old Trust’s Board; and this Agreement constitutes a valid and legally binding obligation of Old Trust, with respect to Old Fund, enforceable in accordance with its terms, subject to the effect of bankruptcy, insolvency, fraudulent transfer, reorganization, receivership, moratorium, and other laws affecting the rights and remedies of creditors generally and general principles of equity;
 
(d)           At the Effective Time, Old Trust will have good and marketable title to the Assets for Old Fund’s benefit and full right, power, and authority to sell, assign, transfer, and deliver the Assets hereunder free of any liens or other encumbrances (except securities that are subject to “securities loans,” as referred to in section 851(b)(2), or that are restricted as to resale by their terms); and on delivery and payment for the Assets, New Trust, on New Fund’s behalf, will acquire good and marketable title thereto, subject to no restrictions on the full transfer thereof, including restrictions that might arise under the Securities Act of 1933, as amended (“1933 Act”);
 
(e)           Old Trust, with respect to Old Fund,  is not currently engaged in, and its execution, delivery, and performance of this Agreement and consummation of the Reorganization will not result in, (1) a conflict with or material violation of any provision of Delaware law, Old Trust’s Trust Instrument, dated August 29, 1995, as amended and restated on April 14, 2009 (“Trust Instrument”), or Bylaws (amended as of the latter date), or any agreement, indenture, instrument, contract, lease, or other undertaking (each, an “Undertaking”) to which Old Trust, on Old Fund’s behalf, is a party or by which it is bound or (2) the acceleration of any obligation, or the imposition of any penalty, under any Undertaking, judgment, or decree to which Old Trust, on Old Fund’s behalf, is a party or by which it is bound;
 
(f)           At or before the Effective Time, either (1) all material contracts and other commitments of Old Fund (other than this Agreement and certain investment contracts, including options, futures, forward contracts, and swap agreements) will terminate, or
 

 
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(2) provision for discharge and/or New Fund’s assumption of any liabilities of Old Fund thereunder will be made, without either Fund’s incurring any penalty with respect thereto and without diminishing or releasing any rights Old Trust may have had with respect to actions taken or omitted or to be taken by any other party thereto before the Closing;
 
(g)           No litigation, administrative proceeding, action, or investigation of or before any court, governmental body, or arbitrator is presently pending or, to Old Trust’s knowledge, threatened against Old Trust, with respect to Old Fund or any of its properties or assets attributable or allocable to Old Fund, that, if adversely determined, would materially and adversely affect Old Fund’s financial condition or the conduct of its business; and Old Trust, on Old Fund’s behalf, knows of no facts that might form the basis for the institution of any such litigation, proceeding, action, or investigation and is not a party to or subject to the provisions of any order, decree, judgment, or award of any court, governmental body, or arbitrator that materially and adversely affects Old Fund’s business or Old Trust’s ability to consummate the transactions contemplated hereby;
 
(h)           Old Fund’s Statement of Assets and Liabilities, Schedule of Investments, Statement of Operations, and Statement of Changes in Net Assets (each, a “Statement”) at and for the fiscal year (in the case of the last Statement, for the two fiscal years) ended December 31, 2010, have been audited by BBD, LLP, an independent registered public accounting firm, and are in accordance with generally accepted accounting principles consistently applied in the United States (“GAAP”); and those Statements and Old Fund’s unaudited financial statements at and for the six months ended June 30, 2011 (copies of which Old Trust has furnished to New Trust), present fairly, in all material respects, Old Fund’s financial condition at their respective dates in accordance with GAAP and the results of its operations and changes in its net assets for the periods then ended, and there are no known contingent liabilities of Old Fund required to be reflected on a balance sheet (including the notes thereto) in accordance with GAAP at either such date that are not disclosed therein;
 
(i)           Since December 31, 2010, there has not been any material adverse change in Old Fund’s financial condition, assets, liabilities, or business, other than changes occurring in the ordinary course of business, or any incurrence by Old Fund of indebtedness maturing more than one year from the date that indebtedness was incurred; for purposes of this subparagraph, a decline in NAV per Old Fund Share due to declines in market values of securities Old Fund holds, the discharge of Old Fund liabilities, or the redemption of Old Fund Shares by its shareholders shall not constitute a material adverse change;
 
(j)           All federal and other tax returns, dividend reporting forms, and other tax-related reports (collectively, “Returns”) of Old Fund required by law to have been filed by the Effective Time (including any properly and timely filed extensions of time to file) shall have been filed and are or will be correct in all material respects, and all federal and other taxes shown as due or required to be shown as due on those Returns shall have been paid or provision shall have been made for the payment thereof; to the best of Old Trust’s knowledge, no such Return is currently under audit and no assessment has been asserted with respect to those Returns; and Old Fund is in compliance in all material respects with
 

 
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all applicable Regulations pertaining to the reporting of dividends and other distributions on and redemptions of its shares and to withholding in respect thereof and is not liable for any material penalties that could be imposed thereunder;
 
(k)           Old Fund is not classified as a partnership, and instead is classified as an association that is taxable as a corporation, for federal tax purposes and either has elected the latter classification by filing Form 8832 with the Internal Revenue Service (“Service”) or is a “publicly traded partnership” (as defined in section 7704(b)) that is treated as a corporation; Old Fund is a “fund” (as defined in section 851(g)(2), eligible for treatment under section 851(g)(1)); for each taxable year of its operation (including its current taxable year), Old Fund has met (and for that year will meet) the requirements of Part I of Subchapter M of Chapter 1 of Subtitle A of the Code (“Subchapter M”) for qualification as a regulated investment company (“RIC”) and has been (and for that year will be) eligible to and has computed (and for that year will compute) its federal income tax under section 852; Old Fund has not at any time since its inception been liable for, and is not now liable for, any material income or excise tax pursuant to sections 852 or 4982; and Old Fund has no earnings and profits accumulated in any taxable year in which the provisions of Subchapter M did not apply to it;
 
(l)           All issued and outstanding Old Fund Shares are, and at the Effective Time will be, duly and validly issued and outstanding, fully paid, and non-assessable by Old Trust and have been offered and sold in every state and the District of Columbia in compliance in all material respects with applicable registration requirements of the 1933 Act and state securities laws; all issued and outstanding Old Fund Shares will, at the Effective Time, be held by the persons and in the amounts set forth on Old Fund’s shareholder records, as provided in paragraph 2.3; and Old Fund does not have outstanding any options, warrants, or other rights to subscribe for or purchase any Old Fund Shares, nor are there outstanding any securities convertible into any Old Fund Shares;
 
(m)           Old Fund incurred the Liabilities, which are associated with the Assets, in the ordinary course of its business;
 
(n)           Old Fund is not under the jurisdiction of a court in a “title 11 or similar case” (as defined in section 368(a)(3)(A));
 
(o)           Not more than 25% of the value of Old Fund’s total assets (excluding cash, cash items, and Government securities) is invested in the stock and securities of any one issuer, and not more than 50% of the value of those assets is invested in the stock and securities of five or fewer issuers;
 
(p)           Old Fund’s current prospectus and statement of additional information (1) conform in all material respects to the applicable requirements of the 1933 Act and the 1940 Act and the rules and regulations of the Commission thereunder and (2) at the date on which they were issued did not contain, and as supplemented by any supplement thereto dated prior to or at the Effective Time do not contain, any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to
 

 
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make the statements therein, in light of the circumstances under which they were made, not misleading;
 
(q)           The information to be furnished by Old Trust for use in no-action letters, applications for orders, registration statements, proxy materials, and other documents filed or to be filed with any federal, state, or local regulatory authority (including the Financial Industry Regulatory Authority, Inc. (“FINRA”)) that may be necessary in connection with the transactions contemplated hereby shall be accurate and complete in all material respects and shall comply in all material respects with federal securities laws and other laws and regulations; and the Registration Statement (as defined in paragraph 3.3(a)) (other than written information provided by New Trust for inclusion therein) will, on its effective date, at the Effective Time, and at the time of the Shareholders Meeting (as defined in paragraph 4.1), not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading;
 
(r)           The Trust Instrument permits Old Trust to vary its shareholders’ investment; Old Trust does not have a fixed pool of assets; and each series thereof (including Old Fund) is a managed portfolio of securities, and Holland Capital has the authority to buy and sell securities for Old Fund;
 
(s)           Old Fund’s investment operations from inception to the date hereof have been in compliance in all material respects with the investment policies and investment restrictions set forth in its prospectus, except as previously disclosed in writing to New Trust; and
 
(t)           The New Fund Shares to be delivered hereunder are not being acquired for the purpose of making any distribution thereof, other than in accordance with the terms hereof.
 
3.2           New Trust, on New Fund’s behalf, represents and warrants to Old Trust, on Old Fund’s behalf, as follows:
 
(a)           New Trust (1) is a trust operating under a written instrument or declaration of trust, the beneficial interest in which is divided into transferable shares, that is duly created, validly existing, and in good standing under the laws of the Commonwealth of Massachusetts (“Massachusetts”), and its Amended and Restated Declaration of Trust, as amended by Written Instrument dated March 23, 2005 (“Declaration”) is on file with the Secretary of Massachusetts, (2) is duly registered under the 1940 Act as an open-end management investment company, (3) has the power to own all its properties and assets and to carry on its business as described in its current registration statement on Form N-1A, and (4) before January 1, 1997, “claimed” classification as an association taxable as a corporation and has never elected otherwise;
 
(b)           At the Effective Time, New Fund will be a duly established and designated series of New Trust; New Fund has not commenced operations and will not do so until after the Closing; and, immediately before the Closing, New Fund will be a shell
 

 
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series of New Trust, without assets (except the amount paid for the Initial Shares if they have not already been redeemed by that time) or liabilities, created for the purpose of acquiring the Assets, assuming the Liabilities, and continuing Old Fund’s business;
 
(c)           The execution, delivery, and performance of this Agreement have been duly authorized at the date hereof by all necessary action on the part of New Trust’s Board; and this Agreement constitutes a valid and legally binding obligation of New Trust, with respect to New Fund, enforceable in accordance with its terms, subject to the effect of bankruptcy, insolvency, fraudulent transfer, reorganization, receivership, moratorium, and other laws affecting the rights and remedies of creditors generally and general principles of equity;
 
(d)           Before the Closing, there will be no (1) issued and outstanding New Fund Shares, (2) options, warrants, or other rights to subscribe for or purchase any New Fund Shares, (3) securities convertible into any New Fund Shares, or (4) any other securities issued by New Fund, except the Initial Shares;
 
(e)           No consideration other than New Fund Shares (and New Fund’s assumption of the Liabilities) will be issued in exchange for the Assets in the Reorganization;
 
(f)           New Trust, with respect to New Fund, is not currently engaged in, and its execution, delivery, and performance of this Agreement and consummation of the Reorganization will not result in, (1) a conflict with or material violation of any provision of Massachusetts law, the Declaration or New Trust’s By Laws, or any Undertaking to which New Trust, on New Fund’s behalf, is a party or by which it is bound or (2) the acceleration of any obligation, or the imposition of any penalty, under any Undertaking, judgment, or decree to which New Trust, on New Fund’s behalf, is a party or by which it is bound;
 
(g)           No litigation, administrative proceeding, action, or investigation of or before any court, governmental body, or arbitrator is presently pending or, to New Trust’s knowledge, threatened against New Trust, with respect to New Fund or any of its properties or assets attributable or allocable to New Fund, that, if adversely determined, would materially and adversely affect New Fund’s financial condition or the conduct of its business; and New Trust, on New Fund’s behalf, knows of no facts that might form the basis for the institution of any such litigation, proceeding, action, or investigation and is not a party to or subject to the provisions of any order, decree, judgment, or award of any court, governmental body, or arbitrator that materially and adversely affects New Fund’s business or New Trust’s ability to consummate the transactions contemplated hereby;
 
(h)           New Fund is not (and will not be) classified as a partnership, and instead is (and will be) classified as an association that is taxable as a corporation, for federal tax purposes and either has elected (or will timely elect) the latter classification by filing Form 8832 with the Service or is (and will be) a “publicly traded partnership” (as defined in section 7704(b)) that is treated as a corporation; New Fund has not filed any income

 
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tax return and will file its first federal income tax return after the completion of its first taxable year after the Effective Time as a RIC on Form 1120-RIC; New Fund will be a “fund” (as defined in section 851(g)(2), eligible for treatment under section 851(g)(1)) and has not taken and will not take any steps inconsistent with its qualification as such or its qualification and eligibility for treatment as a RIC under sections 851 and 852; assuming that Old Fund will meet the requirements of Subchapter M for qualification as a RIC for its taxable year in which the Reorganization occurs, New Fund will meet those requirements, and will be eligible to and will compute its federal income tax under section 852, for its taxable year in which the Reorganization occurs; and New Fund intends to continue to meet all those requirements, and to be eligible to and to so compute its federal income tax, for the next taxable year;
 
(i)           The New Fund Shares to be issued and delivered to Old Fund, for the Shareholders’ accounts, pursuant to the terms hereof, (1) will at the Effective Time have been duly authorized and duly registered under the federal securities laws, and appropriate notices respecting them will have been duly filed under applicable state securities laws, and (2) when so issued and delivered, will be duly and validly issued and outstanding New Fund Shares and will be fully paid and non-assessable by New Trust;
 
(j)           There is no plan or intention for New Fund to be dissolved or merged into another business or statutory trust or a corporation or any “fund” thereof (as defined in section 851(g)(2)) following the Reorganization;
 
(k)           Assuming the truthfulness and correctness of Old Trust’s representation and warranty in paragraph 3.1(o), immediately after the Reorganization (1) not more than 25% of the value of New Fund’s total assets (excluding cash, cash items, and Government securities) will be invested in the stock and securities of any one issuer and (2) not more than 50% of the value of those assets will be invested in the stock and securities of five or fewer issuers;
 
(l)           Immediately after the Effective Time, New Fund will not be under the jurisdiction of a court in a “title 11 or similar case” (as defined in section 368(a)(3)(A));
 
(m)           The information to be furnished by New Trust for use in no-action letters, applications for orders, registration statements, proxy materials, and other documents filed or to be filed with any federal, state, or local regulatory authority (including FINRA) that may be necessary in connection with the transactions contemplated hereby shall be accurate and complete in all material respects and shall comply in all material respects with federal securities laws and other laws and regulations; and the Registration Statement (other than written information provided by Old Trust for inclusion therein) will, on its effective date, at the Effective Time, and at the time of the Shareholders Meeting, not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading; and
 
(n)           The Declaration permits New Trust to vary its shareholders’ investment; New Trust does not have a fixed pool of assets; and each series thereof (including New
 

 
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Fund after it commences operations) is (or will be) a managed portfolio of securities, and AmBeacon Manager and each investment sub-adviser thereof have (and Holland Capital, as New Fund’s investment sub-adviser, will have) the authority to buy and sell securities for it.
 
3.3           Each Investment Company, on its Fund’s behalf, represents and warrants to the other Investment Company, on its Fund’s behalf, as follows:
 
(a)              No governmental consents, approvals, authorizations, or filings are required under the 1933 Act, the Securities Exchange Act of 1934, as amended, the 1940 Act, or state securities laws, and no consents, approvals, authorizations, or orders of any court are required, for its execution or performance of this Agreement on its Fund’s behalf, except for (1) New Trust’s filing with the Commission of a registration statement on Form N-14 relating to the New Fund Shares issuable hereunder, and any supplement or amendment thereto, including therein a prospectus and proxy statement (“Registration Statement”), and (2) consents, approvals, authorizations, and filings that have been made or received or may be required after the Effective Time;
 
(b)              The fair market value of the New Fund Shares each Shareholder receives will be approximately equal to the fair market value of its Old Fund Shares it actually or constructively surrenders in exchange therefor;
 
(c)              The Shareholders will pay their own expenses (such as fees of personal investment or tax advisers for advice regarding the Reorganization), if any, incurred in connection with the Reorganization;
 
(d)              The fair market value of the Assets will equal or exceed the Liabilities to be assumed by New Fund and those to which the Assets are subject;
 
(e)              None of the compensation received by any Shareholder who or that is an employee of or service provider to Old Fund will be separate consideration for, or allocable to, any of the Old Fund Shares that Shareholder holds; none of the New Fund Shares any such Shareholder receives will be separate consideration for, or allocable to, any employment agreement, investment advisory agreement, or other service agreement; and the compensation paid to any such Shareholder will be for services actually rendered and will be commensurate with amounts paid to third parties bargaining at arm’s-length for similar services;
 
(f)              No expenses incurred by Old Fund or on its behalf in connection with the Reorganization will be paid or assumed by New Fund, AmBeacon Manager, Holland Capital, or any other third party unless those expenses are solely and directly related to the Reorganization (determined in accordance with the guidelines set forth in Rev. Rul. 73-54, 1973-1 C.B. 187) (“Reorganization Expenses”), and no cash or property other than New Fund Shares will be transferred to Old Fund or any of its shareholders with the intention that it be used to pay any expenses (even Reorganization Expenses) thereof; and
 
(g)              Immediately following consummation of the Reorganization, (1) the Shareholders will own all the New Fund Shares and will own those shares solely by
 

 
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reason of their ownership of the Old Fund Shares immediately before the Reorganization and (2) New Fund will hold the same assets -- except for assets used to pay the Funds’ expenses incurred in connection with the Reorganization -- and be subject to the same liabilities that Old Fund held or was subject to immediately before the Reorganization, plus any liabilities for those expenses; and those excepted assets, together with the amount of all redemptions and distributions (other than regular, normal dividends) Old Fund makes immediately preceding the Reorganization, will, in the aggregate, constitute less than 1% of its net assets.
 
4.           COVENANTS
 
4.1           Old Trust covenants to call a meeting of Old Fund’s shareholders to consider and act on this Agreement and to take all other action necessary to obtain approval of the transactions contemplated hereby (“Shareholders Meeting”).
 
4.2           Old Trust covenants that it will assist New Trust in obtaining information New Trust reasonably requests concerning the beneficial ownership of Old Fund Shares.
 
4.3           Old Trust covenants that it will turn over its books and records pertaining to Old Fund (including all books and records required to be maintained under the 1940 Act and the rules and regulations thereunder) to New Trust at the Closing.
 
4.4           AmBeacon Manager and Holland Capital agree to provide Old Trust’s trustees with tail insurance, or other appropriate program that may be acceptable to the trustees, for a three-year period following the Effective Time, to indemnify those trustees to the same extent they would have been entitled to indemnification under the Trust Instrument with respect to any matters relating to Old Fund.
 
4.5           AmBeacon Manager and Holland Capital covenant that, if the Reorganization is consummated, total annual fund operating expenses of Investor Class New Fund Shares, Institutional Class New Fund Shares, and A Class New Fund Shares will be equal to or less than ____%, ____%, and ____%, respectively, of the average daily net asset value attributable to each class for a period of two years after the Effective Time.
 
4.6           Each Investment Company covenants to cooperate with the other in preparing the Registration Statement in compliance with applicable federal and state securities laws.
 
4.7           Each Investment Company covenants that it will, from time to time, as and when requested by the other, execute and deliver or cause to be executed and delivered all assignments and other instruments, and will take or cause to be taken any further action(s), the other Investment Company deems necessary or desirable in order to vest in, and confirm to, (a) New Trust, on New Fund’s behalf, title to and possession of all the Assets, and (b) Old Trust, on Old Fund’s behalf, title to and possession of the New Fund Shares to be delivered hereunder, and otherwise to carry out the intent and purpose hereof.
 
4.8           New Trust covenants to use all reasonable efforts to obtain the approvals and authorizations required by the 1933 Act, the 1940 Act, and applicable state securities laws it deems appropriate to commence and continue New Fund’s operations after the Effective Time.
 

 
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4.9           Subject to this Agreement, each Investment Company covenants to take or cause to be taken all actions, and to do or cause to be done all things, reasonably necessary, proper, or advisable to consummate and effectuate the transactions contemplated hereby.
 
5.           CONDITIONS PRECEDENT
 
Each Investment Company’s obligations hereunder shall be subject to (a) performance by the other Investment Company of all its obligations to be performed hereunder at or before the Closing, (b) all representations and warranties of the other Investment Company contained herein being true and correct in all material respects at the date hereof and, except as they may be affected by the transactions contemplated hereby, at the Effective Time, with the same force and effect as if made at that time, and (c) the following further conditions that, at or before that time:
 
5.1           This Agreement and the transactions contemplated hereby shall have been duly adopted and approved by both Boards and by Old Fund’s shareholders at the Shareholders Meeting;
 
5.2           All necessary filings shall have been made with the Commission and state securities authorities, and no order or directive shall have been received that any other or further action is required to permit the Investment Companies to carry out the transactions contemplated hereby.  The Registration Statement shall have become effective under the 1933 Act, no stop orders suspending the effectiveness thereof shall have been issued, and, to each Investment Company’s best knowledge, no investigation or proceeding for that purpose shall have been instituted or be pending, threatened, or contemplated under the 1933 Act or the 1940 Act.  The Commission shall not have issued an unfavorable report with respect to the Reorganization under section 25(b) of the 1940 Act nor instituted any proceedings seeking to enjoin consummation of the transactions contemplated hereby under section 25(c) of the 1940 Act.  All consents, orders, and permits of federal, state, and local regulatory authorities (including the Commission and state securities authorities) either Investment Company deems necessary to permit consummation, in all material respects, of the transactions contemplated hereby shall have been obtained, except where failure to obtain same would not involve a risk of a material adverse effect on either Fund’s assets or properties;
 
5.3           At the Effective Time, no action, suit, or other proceeding shall be pending (or, to either Investment Company’s best knowledge, threatened to be commenced) before any court, governmental agency, or arbitrator in which it is sought to enjoin the performance of, restrain, prohibit, affect the enforceability of, or obtain damages or other relief in connection with, the transactions contemplated hereby;
 
5.4           The Investment Companies shall have received an opinion of K&L Gates LLP (“Counsel”) as to the federal income tax consequences mentioned below (“Tax Opinion”).  In rendering the Tax Opinion, Counsel may rely as to factual matters, exclusively and without independent verification, on the representations and warranties made in this Agreement, which Counsel may treat as representations and warranties made to it (that, notwithstanding paragraph 7, shall survive the Closing), and in separate letters, if Counsel requests, addressed to it and any certificates delivered pursuant to paragraph 2.5(b).  The Tax Opinion shall be substantially to the effect that -- based on the facts and assumptions stated therein and
 

 
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conditioned on those representations and warranties’ being true and complete at the Effective Time and consummation of the Reorganization in accordance with this Agreement (without the waiver or modification of any terms or conditions hereof and without taking into account any amendment hereof that Counsel has not approved) -- for federal income tax purposes:
 
(a)           New Fund’s acquisition of the Assets in exchange solely for New Fund Shares and its assumption of the Liabilities, followed by Old Fund’s distribution of those shares pro rata to the Shareholders actually or constructively in exchange for their Old Fund Shares, will qualify as a “reorganization” (as defined in section 368(a)(1)(F)), and each Fund will be “a party to a reorganization” (within the meaning of section 368(b));
 
(b)           Old Fund will recognize no gain or loss on the transfer of the Assets to New Fund in exchange solely for New Fund Shares and New Fund’s assumption of the Liabilities or on the subsequent distribution of those shares to the Shareholders in exchange for their Old Fund Shares;
 
(c)           New Fund will recognize no gain or loss on its receipt of the Assets in exchange solely for New Fund Shares and its assumption of the Liabilities;
 
(d)           New Fund’s basis in each Asset will be the same as Old Fund’s basis therein immediately before the Reorganization, and New Fund’s holding period for each Asset will include Old Fund’s holding period therefor (except where New Fund’s investment activities have the effect of reducing or eliminating an Asset’s holding period);
 
(e)           A Shareholder will recognize no gain or loss on the exchange of all its Old Fund Shares solely for New Fund Shares pursuant to the Reorganization;
 
(f)           A Shareholder’s aggregate basis in the New Fund Shares it receives in the Reorganization will be the same as the aggregate basis in its Old Fund Shares it actually or constructively surrenders in exchange for those New Fund Shares, and its holding period for those New Fund Shares will include, in each instance, its holding period for those Old Fund Shares, provided the Shareholder holds them as capital assets at the Effective Time; and
 
(g)           For purposes of section 381, New Fund will be treated just as Old Fund would have been treated if there had been no Reorganization.  Accordingly, the Reorganization will not result in the termination of Old Fund’s taxable year, Old Fund’s tax attributes enumerated in section 381(c) will be taken into account by New Fund as if there had been no Reorganization, and the part of Old Fund’s taxable year before the Reorganization will be included in New Fund’s taxable year after the Reorganization.
 
Notwithstanding subparagraphs (b) and (d), the Tax Opinion may state that no opinion is expressed as to the effect of the Reorganization on the Funds or any Shareholder with respect to any Asset as to which any unrealized gain or loss is required to be recognized for federal income tax purposes at the end of a taxable year (or on the termination or transfer thereof) under a mark-to-market system of accounting;
 

 
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5.5           Before the Closing, New Trust’s Board shall have authorized the issuance of, and New Trust shall have issued, one Investor Class New Fund Share, one Institutional Class New Fund Share, and one A Class New Fund Share (“Initial Shares”) to AmBeacon Manager or an affiliate thereof, in consideration of the payment of $10.00 each (or other amount that Board determines), to vote on the investment management and sub-advisory contracts, distribution and service plan, and other agreements and plans referred to in paragraph 5.6 and to take whatever action it may be required to take as New Fund’s sole shareholder;
 
5.6           New Trust, on New Fund’s behalf, shall have entered into, or adopted, as appropriate, an investment management contract, a sub-advisory contract, a distribution and service plan pursuant to Rule 12b-1 under the 1940 Act, and other agreements and plans necessary for New Fund’s operation as a series of an open-end management investment company.  Each such contract, plan, and agreement shall have been approved by New Trust’s Board and, to the extent required by law (as interpreted by Commission staff positions), by its trustees who are Non-Interested Persons thereof and by AmBeacon Manager or its affiliate as New Fund’s sole shareholder; and
 
5.7           At any time before the Closing, either Investment Company may waive any of the foregoing conditions (except those set forth in paragraphs 5.1 and 5.4) if, in the judgment of its Board, that waiver will not have a material adverse effect on its Fund’s shareholders’ interests.
 
6.           EXPENSES
 
Subject to complying with the representation and warranty contained in paragraph 3.3(f), each of Holland Capital and AmBeacon Manager shall bear 50% of the total Reorganization Expenses.  The Reorganization Expenses include (1) costs associated with obtaining any necessary order of exemption from the 1940 Act, preparing and filing Old Fund’s prospectus supplements and the Registration Statement, and printing and distributing New Fund’s prospectus and Old Fund’s proxy materials, (2) legal and accounting fees, including fees of counsel to each Fund and its Non-Interested Persons, (3) transfer agent and custodian conversion costs, (4) transfer taxes for foreign securities, (5) proxy solicitation costs, and (6) expenses of holding the Shareholders Meeting (including any adjournments thereof) but exclude brokerage, Holland Capital’s and AmBeacon Manager’s travel expenses, and similar expenses in connection with the Reorganization.  Holland Capital and AmBeacon Manager shall remain liable for their respective shares of the Reorganization Expenses regardless of whether the transactions contemplated by this Agreement occur, and this paragraph 6 shall survive the Closing and any termination of this Agreement pursuant to paragraph 8.  Notwithstanding the foregoing, expenses shall be paid by the Fund directly incurring them if and to the extent that the payment thereof by another person would result in that Fund’s disqualification as a RIC or would prevent the Reorganization from qualifying as a tax-free reorganization.
 
7.           ENTIRE AGREEMENT; NO SURVIVAL
 
Neither Investment Company has made any representation, warranty, or covenant not set forth herein, and this Agreement constitutes the entire agreement between the Investment Companies.  The representations, warranties, and covenants contained herein or in any document delivered pursuant hereto or in connection herewith shall not survive the Closing.

 
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8.           TERMINATION
 
This Agreement may be terminated at any time at or before the Closing:
 
8.1           By either Investment Company (a) in the event of the other Investment Company’s material breach of any representation, warranty, or covenant contained herein to be performed at or before the Closing, (b) if a condition to its obligations has not been met and it reasonably appears that that condition will not or cannot be met, (c) if a governmental body issues an order, decree, or ruling having the effect of permanently enjoining, restraining, or otherwise prohibiting consummation of the Reorganization, or (d) if the Closing has not occurred on or before ________ __, 2012, or such other date as to which the Investment Companies agree; or
 
8.2           By the Investment Companies’ mutual agreement.
 
In the event of termination under paragraphs 8.1(c) or (d) or 8.2, neither Investment Company (nor its trustees, officers, or shareholders) shall have any liability to the other Investment Company.
 
9.           AMENDMENTS
 
The Investment Companies may amend, modify, or supplement this Agreement at any time in any manner they mutually agree on in writing, notwithstanding Old Fund’s shareholders’ approval thereof; provided that, following that approval no such amendment, modification, or supplement shall have a material adverse effect on the Shareholders’ interests.
 
10.           SEVERABILITY
 
Any term or provision hereof that is invalid or unenforceable in any jurisdiction shall, as to that jurisdiction, be ineffective to the extent of that invalidity or unenforceability without rendering invalid or unenforceable the remaining terms and provisions hereof or affecting the validity or enforceability of any of the terms and provisions hereof in any other jurisdiction.
 
11.           MISCELLANEOUS
 
11.1           This Agreement shall be governed by and construed in accordance with the internal laws of Massachusetts, without giving effect to principles of conflicts of laws; provided that, in the case of any conflict between those laws and the federal securities laws, the latter shall govern.
 
11.2           Nothing expressed or implied herein is intended or shall be construed to confer on or give any person, firm, trust, or corporation other than New Trust, on New Fund’s behalf, or Old Trust, on Old Fund’s behalf, and their respective successors and assigns any rights or remedies under or by reason of this Agreement.
 
11.3           Notice is hereby given that this instrument is executed and delivered on behalf of each Investment Company’s trustees solely in their capacities as trustees, and not individually, and that each Investment Company’s obligations under this instrument are not binding on or

 
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enforceable against any of its trustees, officers, shareholders, or series other than its Fund but are only binding on and enforceable against its property attributable to and held for the benefit of its Fund (“Fund’s Property”) and not its property attributable to and held for the benefit of any other series thereof.  Each Investment Company, in asserting any rights or claims under this Agreement on its or its Fund’s behalf, shall look only to the other Fund’s Property in settlement of those rights or claims and not to the property of any other series of the other Investment Company or to those trustees, officers, or shareholders.
 
11.4           This Agreement may be executed in one or more counterparts, all of which shall be considered one and the same agreement, and shall become effective when one or more counterparts have been executed by each Investment Company and delivered to the other Investment Company.  The headings contained herein are for reference purposes only and shall not affect in any way the meaning or interpretation hereof.
 

 
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IN WITNESS WHEREOF, each party has caused this Agreement to be executed and delivered by its duly authorized officer as of the day and year first written above.
 
 
AMERICAN BEACON FUNDS, on behalf of its series,
American Beacon Holland Large Cap Growth Fund
 
By:  ________________________________                                                              
Gene L. Needles, Jr.
President
 
 
FORUM FUNDS, on behalf of its series, Lou Holland Growth Fund
 
By:  ________________________________                                                             
Stacey E. Hong
President
 
 
Solely for purposes of paragraph 6,
 
 
HOLLAND CAPITAL MANAGEMENT LLC
 
By:   _______________________________                                                             
Monica L. Walker
President
 
 
AMERICAN BEACON ADVISORS, INC.
 
By:  ________________________________                                                              
Gene L. Needles, Jr.
President and Chief Executive Officer
 
 
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APPENDIX B
 
OWNERSHIP OF SHARES OF THE LOU HOLLAND FUND
 
As of the Record Date, the Lou Holland Fund’s shareholders of record and/or beneficial owners (to the Trust’s knowledge) who owned 5% or more of each class of the Lou Holland Fund’s shares are set forth below:

 
 
 
 
 
Name and Address
Class
No. of Shares Owned
% of Shares
 
 
 
 
 ________%
 

As of the Record Date, no shareholders may be deemed to “control” the Lou Holland Fund.  “Control” for this purpose is the ownership of more than 25% of the Lou Holland Fund’s voting securities.

As of the Record Date, the Officers and Trustees of the Trust, as a group, owned of record and beneficially less than ______% of the outstanding voting securities of the Lou Holland Fund.


 
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APPENDIX C

VALUATION, PURCHASE, REDEMPTION AND TAX INFORMATION FOR THE AB FUND

 
Valuation of AB Fund Shares
 
The price of the AB Fund’s shares is based on its net asset value (“NAV”) per share. The AB Fund’s NAV is computed by adding total assets, subtracting all of the AB Fund’s liabilities, and dividing the result by the total number of shares outstanding.  Equity securities are valued based on market value.  Debt securities (other than short-term securities) usually are valued on the basis of prices provided by a pricing service.  In some cases, the price of debt securities is determined using quotes obtained from brokers.
 
Securities may be valued at fair value, as determined in good faith and pursuant to procedures approved by the Board of Trustees, 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 AB Fund occurs after the close of a related exchange but before the determination of the AB Fund’s NAV, fair value pricing may be used on the affected security or securities.  The AB Fund may fair value securities as a result of significant events occurring after the close of the foreign markets in which the AB Fund invests.
 
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 AB Fund’s fair valuation procedures.  If any significant discrepancies are found, the Manager may adjust the AB Fund’s fair valuation procedures.
 
The NAV of each class of the AB Fund’s shares is determined based on a pro rata allocation of the AB Fund’s investment income, expenses and total capital gains and losses.  The AB Fund’s NAV per share is determined as of the close of the New York Stock Exchange (“Exchange”), generally 4:00 p.m. Eastern Time, on each day on which it is open for business.
 
Policy on Prohibition of Foreign Shareholders
 
The AB Fund requires that all shareholders be U.S. persons with a valid U.S. taxpayer identification number to open an account with the AB Fund.
 
Portfolio Holdings
 
A description of the AB Funds’ policies and procedures regarding the disclosure of portfolio holdings is available in the Statement of Additional Information to this Proxy Statement, which is incorporated by reference into this Proxy Statement.
 
 
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Redemptions In Kind
 
Although the AB Fund intends to redeem shares in cash, each reserves the right to pay the redemption price in whole or in part by a distribution of securities or other assets. However, shareholders always will be entitled to redeem shares for cash up to the lesser of $250,000 or 1% of the AB Fund’s net asset value during any 90-day period. Redemption in kind is not as liquid as a cash redemption. In addition, to the extent the AB Fund redeems its shares in this manner; the shareholder assumes the risk of a subsequent change in the market value of those securities, the cost of liquidating the securities and the possibility of a lack of a liquid market for those securities.
 
Frequent Trading and Market Timing
 
Frequent trading by AB Fund shareholders poses risks to other shareholders in the AB Fund, including (i) the dilution of the AB Fund’s NAV, (ii) an increase in the AB Fund’s expenses, and (iii) interference with the portfolio manager’s ability to execute efficient investment strategies.  Frequent, short-term trading of AB Fund shares in an attempt to profit from day-to-day fluctuations in the AB Fund’s NAV is known as market timing.
 
The AB Fund’s Board of Trustees has adopted policies and procedures intended to discourage frequent trading and market timing.  Shareholders may transact one “round trip” in the AB Fund in any rolling 90-day period.  A “round trip” is defined as two transactions, each in an opposite direction. A round trip may involve (i) a purchase or exchange into the AB Fund followed by a redemption or exchange out of the same AB Fund or (ii) a redemption or exchange out of the AB Fund followed by a purchase or exchange into the same AB Fund.  If the Manager detects that a shareholder has exceeded one round trip in the AB Fund in any rolling 90-day period, the Manager, without prior notice to the shareholder, will prohibit the shareholder from making further purchases of the AB Fund.  In general, the AB Fund reserves the right to reject any purchase order, terminate the exchange privilege, or liquidate the account of any shareholder that the Manager determines has engaged in frequent trading or market timing, regardless of whether the shareholder’s activity violates any policy stated in this prospectus.
 
The round-trip limit does not apply to the following transaction types:
 
·
shares acquired through the reinvestment of dividends and distributions;
   
·
systematic purchases and redemptions;
   
·
shares redeemed to return excess IRA contributions; or
   
·
certain transactions made within a retirement or employee benefit plan, such as payroll contributions, minimum required distributions, loans, and hardship withdrawals, or other transactions that are initiated by a party other than the plan participant.
   
Financial intermediaries that offer AB Fund shares, such as broker-dealers, third party administrators of retirement plans, and trust companies, will be asked to enforce the AB Fund’s policies to discourage frequent trading and market timing by investors.  However, certain intermediaries that offer AB Fund shares have informed the AB Fund that they are currently unable to enforce the AB Fund’s policies on an automated basis.  In those instances, the Manager will monitor trading activity of the intermediary in an attempt to detect patterns of activity that indicate frequent trading or market timing by underlying investors.  In some cases, intermediaries that offer AB Fund shares have their own policies to deter frequent trading and market timing that differ from the AB Fund’s policies.  The AB Fund may defer to an intermediary’s policies.  For more information, please contact the financial intermediary through which you invest in the AB Fund.
 
The Manager monitors trading activity in the AB Fund to attempt to identify shareholders engaged in frequent trading or market timing.  The Manager may exclude transactions below a certain
 
 
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dollar amount from monitoring and may change that dollar amount from time to time.  The ability of the Manager to detect frequent trading and market timing activity by investors who own shares through an intermediary is dependent upon the intermediary’s provision of information necessary to identify transactions by the underlying investors.  The AB Fund has entered agreements with the intermediaries that service the AB Fund’s investors, pursuant to which the intermediaries agree to provide information on investor transactions to the AB Fund and to act on the AB Fund’s instructions to restrict transactions by investors who the Manager has identified as having violated the AB Fund’s policies and procedures to deter frequent trading and market timing.
 
Wrap programs offered by certain intermediaries may be designated “Qualified Wrap Programs” by the AB Fund based on specific criteria established by the AB Fund and a certification by the intermediary that the criteria have been met.  A Qualified Wrap Program is: (i) a wrap program whose sponsoring intermediary certifies that it has investment discretion over $50 million or more in client assets invested in mutual funds at the time of the certification, (ii) a wrap program whose sponsoring intermediary certifies that it directs transactions in accounts participating in the wrap program(s) in concert with changes in a model portfolio; (iii) managed by an intermediary that agrees to provide the Manager a description of the wrap program(s) that the intermediary seeks to qualify; and (iv) managed by an intermediary that agrees to provide the Manager sufficient information to identify individual accounts in the intermediary’s wrap program(s).  For purposes of applying the round-trip limit, transactions initiated by clients invested in a Qualified Wrap Program will not be matched to transactions initiated by the intermediary sponsoring the Qualified Wrap Program.  For example, a client’s purchase of the AB Fund followed within 90 days by the intermediary’s redemption of the same AB Fund would not be considered a round trip.  However, transactions initiated by a Qualified Wrap Program client are subject to the round-trip limit and will be matched to determine if the client has exceeded the round-trip limit.  In addition, the Manager will monitor transactions initiated by Qualified Wrap Program intermediaries to determine whether any intermediary has engaged in frequent trading or market timing.  If the Manager determines that an intermediary has engaged in activity that is harmful to the AB Fund, the Manager will revoke the intermediary’s Qualified Wrap Program status. Upon termination of status as a Qualified Wrap Program, all account transactions will be matched for purposes of testing compliance with the AB Fund’s frequent trading and market timing policies, including any applicable redemption fees.
 
The AB Fund reserves the right to modify the frequent trading and market timing policies and procedures and grant or eliminate waivers to such policies and procedures at any time without advance notice to shareholders. There can be no assurance that the AB Fund’s policies and procedures to deter frequent trading and market timing will have the intended effect nor that the Manager will be able to detect frequent trading and market timing.
 
Purchase and Redemption of AB Fund Shares
 
Eligibility
 
The A Class, Investor Class and Institutional Class shares offered in this prospectus are available to all investors who meet the minimum initial investment.  American Beacon Funds do not accept accounts registered to foreign individuals or entities, including foreign correspondence accounts. A Class shares are available to retail investors who invest directly through intermediary organizations, such as broker-dealers or other financial intermediaries, or through employee directed benefit plans. Investor Class shares are available for traditional and Roth IRAs investing directly through American Beacon.
 
Our investors include:
 
 
Ø
agents or fiduciaries acting on behalf of their clients (such as employee benefit plans, personal trusts and other accounts for which a trust company or financial advisor acts as agent or fiduciary);
 
 
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Ø
endowment funds and charitable foundations;
     
 
Ø
employee welfare plans that are tax-exempt under Section 501(c)(9) of the Internal Revenue Code of 1986, as amended (“Code”);
     
 
Ø
qualified pension and profit sharing plans;
     
 
Ø
cash and deferred arrangements under Section 401(k) of the Code;
     
 
Ø
corporations; and
     
 
Ø
other investors who make an initial investment of at least the minimum investment amounts.
 
Subject to your eligibility, you may invest in the AB Fund directly through us or through intermediary organizations, such as broker-dealers, insurance companies, plan sponsors, third party administrators and retirement accounts.
 
If you invest directly with the AB Fund, the fees and policies with respect to the AB Fund’s shares that are outlined in this prospectus are set by the AB Fund.
 
If you invest through a financial intermediary, most of the information you will need for managing your investment will come from your financial intermediary.  This includes information on how to buy, sell and exchange shares of the AB Fund. If you establish an account through a financial intermediary, the investment minimums described in this section may not apply.  Investors investing in the AB Fund through a financial intermediary should consult with their financial intermediary to ensure they obtain any proper “breakpoint” discount and regarding the differences between available share classes.   Your broker-dealer or financial intermediary also may charge fees that are in addition to those described in this prospectus. Please contact your intermediary for information regarding investment minimums, how to purchase and redeem shares and applicable fees.
 
Minimum Initial Investment
 
A Class and Investor Class – $2,500
 
Institutional Class – $250,000
 
The Manager may allow a reasonable period of time after opening an account for an Institutional Class investor to meet the initial investment requirement. In addition, for investors such as trust companies and financial advisors who make investments for a group of clients, the minimum initial investment can be met through an aggregated purchase order for more than one client.
 
Opening an Account
 
You may open an account through your broker-dealer or other financial intermediary. Please contact your financial intermediary for more information on how to open an account. Shares you purchase through your broker-dealer will normally be held in your account with that firm.
 
You may also open an account directly through us. A completed, signed application is required. You may download an account application from the AB Fund’s web site at www.americanbeaconfunds.com under “Open An Account”. You also may obtain an application form by calling:
 
1-800-658-5811
 
 
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or, for Institutional shareholders:
 
1-800-967-9009
 
Complete the application, sign it and send it
 
Regular Mail to:
American Beacon Funds
P.O. Box 219643
Kansas City, MO 64121-9643
(or Institutional Class shareholders may)
Fax to:
(816) 374-7408
 
For Overnight Delivery
American Beacon Funds
c/o BFDS
330 West 9th Street
Kansas City, MO 64105
(800) 658-5811
 
 

 
To help the government fight the funding of terrorism and money laundering activities, federal law requires all financial institutions to obtain, verify, and record information that identifies each person who opens an account. When you open an account with the AB Fund or your financial institution, you will be asked for information that will allow the AB Fund or your financial institution to identify you. Non-public corporations and other entities may be required to provide articles of incorporation, trust or partnership agreements, taxpayer identification numbers, and Social Security numbers of persons authorized to provide instructions on the account or other documentation. The AB Fund and your financial institution are required by law to reject your new account application if the required identifying information is not provided.
 
Purchase Policies
 
Shares of the AB Fund are offered and purchase orders are typically accepted until 4:00 p.m. Eastern Time or the close of the New York Stock Exchange (“NYSE”) (whichever comes first) on each day on which the NYSE is open for business. If a purchase order is received by the AB Fund in good order prior to the AB Fund’s deadline, the purchase price will be the net asset value (“NAV”) per share next determined on that day, plus any applicable sales charges. If a purchase order is received in good order after the applicable deadline, the purchase price will be the NAV per share of the following day that the AB Fund is open for business plus any applicable sales charge.
 
The AB Fund has authorized certain third party financial intermediaries, such as broker-dealers, insurance companies, third party administrators and trust companies, to receive purchase and redemption orders on behalf of the AB Fund and to designate other intermediaries to receive purchase and redemption orders on behalf of the AB Fund. The AB Fund is deemed to have received such orders when they are received by the financial intermediaries or their designees. Thus, an order to purchase or sell AB Fund shares will be
 
 
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priced at the AB Fund’s next determined NAV after receipt by the financial intermediary or its designee. You should contact your broker-dealer or other financial intermediary to find out by what time your purchase order must be received so that it can be processed the same day. It is the responsibility of your broker-dealer or financial intermediary to transmit orders that will be received by the AB Fund in proper form and in a timely manner.
 
The AB Fund has the right to reject any purchase order or cease offering shares at any time. Checks to purchase shares are accepted subject to collection at full face value in U.S. funds and must be drawn in U.S. dollars on a U.S. bank. The AB Fund will not accept “starter” checks, credit card checks, money orders, cashier’s checks, official checks, or third party checks.
 
Please refer to the section titled “Frequent Trading and Market Timing” for information on the AB Fund’s policies regarding frequent purchases, redemptions, and exchanges.
 
Redemption Policies
 
If you purchased shares of the AB Fund through your financial intermediary, please contact your broker-dealer or other financial intermediary to sell shares of the AB Fund.
 
If you purchased your shares directly from the AB Fund, your shares may be redeemed by telephone by calling 1-800-658-5811, via the AB Fund’s website, or by mail on any day that the AB Fund is open for business.
 
The redemption price will be the NAV next determined after a redemption request is received in good order, minus any applicable CDSC and/or redemption fees. In order to receive the redemption price calculated on a particular business day, redemption requests must be received in good order by 4:00 p.m. Eastern Time or by the close of the NYSE (whichever comes first). You should contact your broker-dealer or other financial intermediary to find out by what time your order must be received so that it can be processed the same day.
 
You may, within 90 days of redemption, reinvest all or part of the proceeds of your redemption of A Class shares of the AB Fund, without incurring an additional sales charge, in the same class of another American Beacon Fund, by sending a written request and a check to your financial intermediary or directly to the AB Fund. Reinvestment must be into the same account from which you redeemed the shares or received the distribution. Proceeds from a redemption and all dividend payments and capital gain distributions will be reinvested in the same share class from which the original redemption or distribution was made. Reinvestment will be at the NAV next calculated after the AB Fund receives your request. You must notify the AB Fund and your broker-dealer or other financial intermediary at the time of investment if you decide to exercise this privilege.
 
Wire proceeds from redemption requests received in good order by 4:00 p.m. Eastern Time or by the close of the Exchange (whichever comes first) generally are transmitted to shareholders on the next day the AB Fund is open for business.  In any event, proceeds from a redemption request will typically be transmitted to a shareholder by no later than seven days after the receipt of a redemption request in good order.  Delivery of proceeds from shares purchased by check or pre-authorized automatic investment may be delayed until the funds have cleared, which may take up to ten days.
 
The AB Fund reserves the right to suspend redemptions or postpone the date of payment for more than seven days (i) when the Exchange is closed (other than for customary weekend and holiday closings); (ii) when trading on the Exchange is restricted; (iii) when the SEC determines that an emergency exists so that disposal of the AB Fund’s investments or determination of its NAV is not reasonably practicable; or (iv) by order of the SEC for protection of the AB Fund’s shareholders.
 
 
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Although the AB Fund intends to redeem shares in cash, the AB Fund reserves the right to pay the redemption price in whole or in part by a distribution of securities or other assets held by the AB Fund.  To the extent that the AB Fund redeems its shares in this manner, the shareholder assumes the risk of a subsequent change in the market value of those securities, the cost of liquidating the securities and the possibility of a lack of a liquid market for those securities.
 
Please refer to the section titled “Frequent Trading and Market Timing” for information on the AB Fund’s policies regarding frequent purchases, redemptions, and exchanges.
 
Exchange Policies
 
If you purchased shares of the AB Fund through your financial intermediary, please contact your broker-dealer or other financial intermediary to determine if you may take advantage of the exchange policies described in this section and for its policies to effect an exchange.
 
If you purchased shares of the AB Fund directly through us, your shares may be exchanged by calling 1-800-658-5811 to speak to a representative, through our website, www.americanbeaconfunds.com or use the Automated Voice Response System for Investor Class shares.
 
Shares of any class of the AB Fund may be exchanged for shares of the same class of another American Beacon Fund under certain limited circumstances.  Shares of any class of the AB Fund may be exchanged for shares of another class of the same AB Fund under certain limited circumstances.  Since an exchange involves a concurrent purchase and redemption, please review the sections titled “Purchase Policies” and “Redemption Policies” for additional limitations that apply to purchases and redemptions. There is no front-end sales charge on exchanges between A Class shares of the AB Fund for A Class shares of another American Beacon Fund.  Shares otherwise subject to a CDSC will not be charged a CDSC in an exchange. However, when you redeem the shares acquired through the exchange, the shares you redeem may be subject to a CDSC, depending on when you originally purchased the exchanged shares. For purposes of computing the CDSC, the length of time you owned your shares will be measured from the date of original purchase and will not be affected by any exchange.
 
Before exchanging shares, shareholders should consider how the exchange may affect any CDSC that might be imposed on the subsequent redemption of remaining shares.
 
If shares were purchased by check, to exchange out of one AB Fund and into another American Beacon Fund, a shareholder must have owned shares of the redeeming AB Fund for at least ten days.
 
The eligibility and minimum investment requirement must be met for the class into which the shareholder is exchanging.  AB Fund shares may be acquired through exchange only in states in which they can be legally sold.  The AB Fund reserves the right to charge a fee and to modify or terminate the exchange privilege at any time.  The AB Fund reserves the right to refuse exchange purchases if, in the judgment of the AB Fund, the transaction would adversely affect the AB Fund and its shareholders.  For federal income tax purposes, the conversion of shares of one share class for shares of a different share class of the same fund should not result in the realization by the investor of a capital gain or loss.  Please refer to the section titled “Frequent Trading and Market Timing” for information on the AB Fund’s policies regarding frequent purchases, redemptions, and exchanges.
 
Payments to Financial Intermediaries
 
The AB Fund and its affiliates (at their own expense) may pay compensation to financial intermediaries for shareholder-related services and, if applicable, distribution-related services, including administrative, sub-transfer agency, recordkeeping and shareholder communication services. For example, compensation may be paid to make AB Fund shares available to sales representatives and/or customers of a fund
 
 
C-7

 
supermarket platform or similar program sponsor or for services provided in connection with such fund supermarket platforms and programs.
 
The amount of compensation paid to different financial intermediaries may differ. The compensation paid to a financial intermediary may be based on a variety of factors, including average assets under management in accounts distributed and/or serviced by the financial intermediary, gross sales by the financial intermediary and/or the number of accounts serviced by the financial intermediary that invest in the AB Fund. To the extent that the AB Fund pays (a portion) of such compensation, it is designed to compensate the financial intermediary for providing services that would otherwise be provided by the AB Fund or its transfer agent. To the extent the AB Fund affiliate pays such compensation, it would likely include amounts from that affiliate’s own resources and constitute what is sometimes referred to as “revenue sharing.”
 
Compensation received by a financial intermediary from the Manager or another AB Fund affiliate may include payments for marketing and/or training expenses incurred by the financial intermediary, including expenses incurred by the financial intermediary in educating (itself and) its salespersons with respect to AB Fund shares. For example, such compensation may include reimbursements for expenses incurred in attending educational seminars regarding the AB Fund, including travel and lodging expenses. It may also cover costs incurred by financial intermediaries in connection with their efforts to sell AB Fund shares, including costs incurred compensating (registered) sales representatives and preparing, printing and distributing sales literature.
 
Any compensation received by a financial intermediary, whether from the AB Fund or its affiliate(s), and the prospect of receiving it may provide the financial intermediary with an incentive to recommend the shares of the AB Fund, or a certain class of shares of the AB Fund, over other potential investments. Similarly, the compensation may cause financial intermediaries to elevate the prominence of the AB Fund within its organization by, for example, placing it on a list of preferred funds.
 
How to Purchase Shares
 
Through your Broker – Dealer or Other Financial Intermediary
 
Contact your broker-dealer or other financial intermediary to purchase shares of the AB Fund. Your broker-dealer or financial intermediary can help you open a new account, review your financial needs and formulate long-term investment goals and objectives. Your broker-dealer or financial intermediary will transmit your request to the AB Fund and may charge you a fee for this service. The AB Fund will not accept a purchase order of $1,000,000 or more for C Class  shares if the purchase is known to be on behalf of a single investor (not including dealer “street name” or omnibus accounts). Dealers or other financial intermediaries purchasing shares for their customers in omnibus accounts are responsible for determining the suitability of a particular share class for an investor.
 
By Check
 
The minimum initial and subsequent investment requirements for investments by check are:
 
 
Share Class
Minimum Initial
Investment Amount
Minimum Subsequent
Investment Amount
 
 
A  Class
 
$2,500
 
$50
 
 
Investor Class
 
$2,500
 
$50
 
 
Institutional Class
 
$250,000
 
$50


 
C-8

 
Make the check payable to American Beacon Funds.
   
Include the shareholder’s account number, AB Fund name and AB Fund number on the check.
   
Mail the check to:
   
 
American Beacon Funds
 
P.O. Box 219643
 
Kansas City, MO 64121-9643
   
 
For Overnight Delivery:
 
American Beacon Funds
 
c/o BFDS
 
330 West 9th Street
 
Kansas City, MO 64105
   
By Wire
   
The minimum initial and subsequent investment requirements for investments by wire are:
 
 
 
Share Class
Minimum Initial
Investment Amount
Minimum Subsequent
Investment Amount
 
 
A  Class
 
$2,500
 
$500
 
 
Investor Class
 
$2,500
 
$500
 
 
Institutional Class
 
$250,000
 
None
 
If your account has been established, call 1-800-658-5811 to purchase shares by wire.
   
Send a bank wire to State Street Bank and Trust Co. with these instructions:
   
  ABA# 0110-0002-8; AC-9905-342-3,
  Attn: American Beacon Funds
  the AB Fund name and AB Fund number, and
  shareholder account number and registration.
     
By Exchange
 
 
The minimum requirements to establish an account by making an exchange and to make subsequent exchanges are as follows:
 
 
 
Share Class
Minimum Amount to
Establish a New Account
Minimum Subsequent
Exchange Amount
 
 
A Class
 
$2,500
 
$50
 
 
Investor Class
 
$2,500
 
$50
 
 
Institutional Class
 
$250,000
 
$50

 
 
C-9

 
To exchange shares, send a written request to the address above, or call 1-800-658-5811 and speak to a representative.  You may use the Automated Voice Response System for exchanges in the Investor Class only.

You also may exchange shares by visiting www.americanbeaconfunds.com via “My Account.”
   
If you purchased shares through a financial intermediary, please contact your broker-dealer or other financial intermediary to exchange your shares.
   
Via “My Account” on www.americanbeaconfunds.com
 
You may purchase shares of all classes via “My Account” on www.americanbeaconfunds.com.
   
Funds will be transferred automatically from your bank account via Automated Clearing House (“ACH”) if valid bank instructions were included on your application.
   
If not, please call 1-800-658-5811 for assistance with establishing bank instructions.
   
A $50 minimum applies.
   
By Pre-Authorized Automatic Investment (A Class and Investor Class shares only)
 
The minimum account size of $2,500 for A Class and Investor Class shares must be met before establishing an automatic investment plan.
   
Fill in required information on the account application, including amount of automatic investment ($50 minimum). Attach a voided check to the account application.
   
You may also establish an automatic investment plan through www.americanbeaconfunds.com.
   
Funds will be transferred automatically from your bank account via ACH on or about the 5th day of each month or quarter, depending upon which periods you specify.
   
If you establish your automatic investment plan through www.americanbeaconfunds.com, you can choose the date and frequency of transfer.
   
How to Redeem Shares
 
Through your Broker – Dealer or other Financial Intermediary
 
Contact your broker-dealer or other financial intermediary to sell shares of the AB Fund. Your broker-dealer or other financial intermediary is responsible for transmitting your sale request to the transfer agent in proper form and in a timely manner. Your financial intermediary may charge you a fee for selling your shares.
 
 
 
C-10

 
By Telephone
 
Call 1-800-658-5811 to request a redemption.
 
Minimum redemption amounts and applicable class limitations, and policies as to the disposition of the proceeds of telephone redemptions are as follows:
 
Share Class
Minimum
Redemption
Limitations
Disposition of
Redemption Proceeds
A and Investor Classes
$500 by wire or
 
$50 by check or ACH
$50,000 per
account
Mailed to account address of record; or
 
Transmitted to commercial bank designated on the account application form.
       
Institutional Class
 
None
None
Transmitted to commercial bank designated on the account application form.
 
By Mail
 
Write a letter of instruction including:
 
 
the AB Fund name and AB Fund number,
 
 
shareholder account number,
 
 
shares or dollar amount to be redeemed, and
 
 
authorized signature(s) of all persons required to sign for the account.
 
     
 
Mail to:
 
American Beacon Funds
P.O. Box 219643
Kansas City, MO 64121-9643
 
For Overnight Delivery
 
American Beacon Funds
c/o BFDS
330 West 9th Street
Kansas City, MO 64105
 

Proceeds will be mailed to the account address of record or transmitted to the commercial bank designated on the account application form.
   
Minimum redemption amounts are as follows:

 
 
C-11

 
 
 
Share Class
 
Minimum Redemption
 
 
A and Investor Classes
 
$500 by wire, $50 by check or ACH
 
 
Institutional Class
 
None

Supporting documents may be required for redemptions by estates, trusts, guardianships, custodians, corporations, and welfare, pension and profit sharing plans.  Call 1-800-658-5811 for instructions.
 
To protect the AB Fund and your account from fraud, a STAMP 2000 Medallion signature guarantee is required for redemption orders:
 
with a request to send the proceeds to an address or commercial bank account other than the address or commercial bank account designated on the account application, or
   
for an account whose address has changed within the last 30 days if proceeds are sent by check.
 
The AB Fund only accepts STAMP 2000 Medallion signature guarantees, which may be obtained at most banks, broker-dealers and credit unions. A notary public can not provide a signature guarantee. Call 1-800-658-5811 for instructions and further assistance.
 
By Exchange
 
Send a written request to the address above.
   
Call 1-800-658-5811 and use the Automated Voice Response System (for Investor Class only) or speak to a representative to exchange shares.
   
Visit www.americanbeaconfunds.com and select “My Account.”
   
The minimum requirements to redeem shares by making an exchange is $50.
   
If you purchased shares through a financial intermediary, please contact your broker-dealer or other financial intermediary to exchange your shares.
   
Via “My Account” on www.americanbeaconfunds.com
   
If you have established bank instructions for your account, you may request a redemption via ACH or wire by selecting “My Account” on www.americanbeaconfunds.com.
   
If bank instructions were not included on the account application form, please call 1-800-658-5811 to establish bank instructions.
   
Minimum wire, ACH and check redemption amounts and policies as to the disposition of the proceeds of redemptions via “My Account” on www.americanbeaconfunds.com are as follows:
   

 
C-12

 
 
 
Share Class
Minimum
Wire Amount
Minimum ACH or Check Amount
Disposition of
Redemption Proceeds
A and Investor
Classes
$500
$50
Check mailed to account address of record;
 
Wire transmitted to commercial bank designated on the account application form; or
 
Funds transferred via ACH to bank account designated on application form.
 
Institutional
Class
None
Not Available
Transmitted to commercial bank designated on the account application form.
 
By Pre-Authorized Automatic Redemption (A Class and Investor Class shares only)
 
Fill in required information on the account application or establish via www.americanbeaconfunds.com ($50 minimum).
 
Proceeds will be transferred automatically from your AB Fund account to your bank account via ACH.
 
General Policies
 
If a shareholder’s A Class, C Class, Investor Class, Institutional Class or Y Class account balance falls below the following minimum levels, the shareholder may be asked to increase the balance.
 
Share Class
 
Account Balance
 
Institutional Class
 
$75,000
 
A Class
 
$2,500
 
Investor Class
 
$2,500

 
If the account balance remains below the applicable minimum account balance after 45 days, the AB Fund reserves the right to close the account and send the proceeds to the shareholder.  IRA accounts will be charged an annual maintenance fee of $15.00 by the Custodian for maintaining either a Traditional IRA or a Roth IRA.  The AB Fund reserves the authority to modify minimum account balances in its discretion.
 
A Signature Validation Program (“SVP”) stamp may be required in order to change an account’s registration or banking instructions. You may obtain a SVP stamp at banks, broker-dealers and credit unions, but not from a notary public. The SVP stamp is analogous to the STAMP 2000 Medallion guarantee in that it is provided at similar institutions. However, it is used only for non-financial transactions.
 
The following policies apply to instructions you may provide to the AB Fund by telephone:
 
The AB Fund, its officers, trustees, employees, or agents are not responsible for the authenticity of instructions provided by telephone, nor for any loss, liability, cost or expense incurred for acting on them.
 
 
C-13

 
 
The AB Fund employs procedures reasonably designed to confirm that instructions communicated by telephone are genuine.
   
Due to the volume of calls or other unusual circumstances, telephone redemptions may be difficult to implement during certain time periods.
   
The AB Fund reserves the right to:
 
liquidate a shareholder’s account at the current day’s NAV and remit proceeds via check if the AB Fund or a financial institution are unable to verify the shareholder’s identity within three business days of account opening,
   
seek reimbursement from the shareholder for any related loss incurred by the AB Fund if payment for the purchase of AB Fund shares by check does not clear the shareholder’s bank, and
   
reject a purchase order and seek reimbursement from the shareholder for any related loss incurred by the AB Fund if funds are not received by the applicable wire deadline.
 
A shareholder will not be required to pay a CDSC when the registration for C Class or A Class shares is transferred to the name of another person or entity. The transfer may occur by absolute assignment, gift or bequest, as long as it does not involve, directly or indirectly, a public sale of the shares. When C Class and A Class shares are transferred, any applicable CDSC will continue to apply to the transferred shares and will be calculated as if the transferee had acquired the shares in the same manner and at the same time as the transferring shareholder.
 
Unclaimed accounts may be subject to State escheatment laws, where the holdings in an account may be transferred to the appropriate State if no activity occurs in the account within the time period specified by State law. The AB Fund and the Transfer Agent will not be liable to shareholders or their representatives for good faith compliance with those escheatment laws.
 
Distributions and Taxes
 
The AB Fund distributes most or all of their net earnings in the form of dividends from net investment income and distributions of realized net capital gains and net gains from foreign currency transactions. The AB Fund does not have a fixed dividend rate and does not guarantee it will pay any dividends or capital gain distributions in any particular period.  Dividends paid by the AB Fund with respect to each class of shares are calculated in the same manner and at the same time, but dividends on different classes of shares may be different as a result of the service and/or distribution fees applicable to certain classes of shares.  Distributions are paid as follows:
 
 
 
AB Fund
Dividends
Paid
Other
Distributions
Paid
 
American Beacon Bridgeway
Large Cap Value Fund
 
Annually
 
Annually

 
Options for Receiving Dividends and Other Distributions
 
When you open your AB Fund account, you can specify on your application how you want to receive distributions of dividends and capital gains. To change that option, you must notify the Transfer Agent.
 
Unless your account application instructs otherwise, distributions payable to you will be reinvested in additional AB Fund shares of the same class. There are four payment options available:
 
C-14

 
 
Reinvest All Distributions. You can elect to reinvest all dividends and capital gain distributions in additional shares of the same class of the AB Fund.
   
Reinvest Only Dividends or Capital Gains. You can elect to reinvest some types of distributions in AB Fund shares while receiving the other types of distributions by check or having them sent to your bank account by ACH. Different treatment is available for distributions of dividends and net capital gain (as defined in the following table).
   
Receive All Distributions in Cash. You can elect to receive all dividends and capital gain distributions by check or have them sent to your bank by ACH.
   
Reinvest Your Distributions in another American Beacon Fund. You can reinvest all of your dividends and capital gain distributions in shares of another American Beacon Fund that is available for exchanges. You must have an existing account in the same share class in the selected fund.
 
 
Taxes
 
Any dividends and distributions of net realized capital gains are taxable to shareholders other than tax-qualified retirement accounts and other tax-exempt investors.  However, the portion of the AB Fund’s dividends derived from its investments in certain direct U.S. Government obligations is generally exempt from state and local income taxes.  The following table outlines the typical tax liabilities for transactions in taxable accounts:
 
Type of Transaction
Tax Status
Dividends from net investment income*
Ordinary income**
   
Distributions of excess of net short-term capital gain
over net long-term capital loss*
Ordinary income
   
Distributions of net gains from certain foreign
currency transactions*
Ordinary income
   
Distributions of excess of net long-term capital gain
over net short-term capital loss (“net capital gain”)*
Long-term capital gains
   
Redemptions or exchanges
of shares owned for
more than one year
Long-term capital gains or losses
   
Redemptions or exchanges
of shares owned
for one year or less
 
Net gains are taxed at the same rate as ordinary income; net losses are subject to special rules
_________________
*
Whether reinvested or taken in cash.
**
Except for dividends that are attributable to “qualified dividend income” (as described below).
 
To the extent distributions are attributable to net capital gain that the AB Fund recognizes on sales or exchanges of capital assets through its last taxable year beginning before January 1, 2013, they are subject to a 15% maximum federal income tax rate for individual shareholders.
 
 
C-15

 
A portion of the income dividends the AB Fund pays to individuals through the year 2012 may be “qualified dividend income” (“QDI”) and thus eligible for that 15% maximum rate.  QDI is the aggregate of dividends the AB Fund receives from most domestic corporations and certain foreign corporations with respect to which the AB Fund satisfies certain holding period and other restrictions with respect to the shares on which the dividends are paid.  If the AB Fund’s QDI is at least 95% of its gross income (as specially computed), the entire dividend will qualify for the 15% maximum rate.  To be eligible for the 15% rate, a shareholder must meet similar restrictions with respect to his or her AB Fund shares.
 
A portion of the dividends the AB Fund pays may also be eligible for the dividends-received deduction allowed to corporations, subject to similar holding period and other restrictions, but the eligible portion may not exceed the aggregate dividends the AB Fund receives from domestic corporations only.  However, dividends that a corporate shareholder receives and deducts pursuant to the dividends-received deduction may be subject indirectly to the federal alternative minimum tax.
 
A shareholder may realize a taxable gain or loss when redeeming or exchanging shares.  That gain or loss generally is treated as a short-term or long-term capital gain or loss, depending on how long the redeemed or exchanged shares were held.  Any capital gain an individual shareholder recognizes through the year 2012 on a redemption or exchange of AB Fund shares that have been held for more than one year will qualify for the 15% maximum federal income tax rate mentioned above.
 
The Health Care Reform and Education Reconciliation Act of 2010 requires an individual to pay a 3.8% tax on the lesser of (1) the individual’s “net investment income,” which generally includes dividends, interest, and net gains from the disposition of investment property (including dividends and capital gain distributions the AB Fund pays), or (2) the excess of the individual’s “modified adjusted gross income” over a threshold amount ($250,000 for married persons filing jointly and $200,000 for single taxpayers), for taxable years beginning after December 31, 2012.  This tax is in addition to any other taxes due on that income.  A similar tax will apply for those years to estates and trusts.  Shareholders should consult their own tax advisers regarding the effect, if any, this provision may have on their investment in AB Fund shares.
 
The foregoing is only a summary of some of the important federal income tax considerations that may affect AB Fund shareholders, who should consult their tax advisors regarding specific questions as to the effect of federal, state and local income taxes on an investment in the AB Fund.  Each year, the AB Fund’s shareholders will receive tax information from the AB Fund to assist them in preparing their income tax returns.
 
Master-Feeder Structure
 
Under a master-feeder structure, a “feeder” fund invests all of its investable assets in a “master” fund with the same investment objective. The “master” fund purchases securities for investment. The master-feeder structure works as follows:
 
Investor
 
↓     purchases shares of
 
Feeder Fund 
 
↓     which invests in
 
Master Fund 

 
C-16

 
 
↓     which buys
 
Investment Securities

Each Master-Feeder Fund can withdraw its investment in its corresponding portfolio at any time if the Board of Trustees determines that it is in the best interest of the Fund and its shareholders to do so. A change in a portfolio’s fundamental objective, policies and restrictions, which is not approved by the shareholders of its corresponding Fund, could require that Fund to redeem its interest in the portfolio. Any such redemption could result in a distribution in kind of portfolio securities (as opposed to a cash distribution) by the portfolio. Should such a distribution occur, that Fund could incur brokerage fees or other transaction costs in converting such securities to cash. In addition, a distribution in kind could result in a less diversified portfolio of investments for that Fund and could affect adversely the liquidity of the Fund. If a Master-Feeder Fund withdraws its investment in its corresponding portfolio, the Fund’s assets will be invested directly in investment securities or in another master fund, according to the investment policies and restrictions described in this Prospectus.
 
 
C-17

 
APPENDIX D

FINANCIAL HIGHLIGHTS OF THE AB FUND

The AB Fund will adopt the financial statements of the Lou Holland Fund.  The financial highlights table is intended to help you understand the Lou Holland Fund’s financial performance for the past five (5) years, or, if shorter, the period of the Lou Holland Fund’s operation.  Certain information reflects financial results for a single Fund share.  The total returns in the table represent the rate that an investor would have earned (or lost) on an investment in the Lou Holland Fund’s Investor Shares (assuming reinvestment of all dividends and other distributions).

The information for the fiscal period ended December 31, 2010, has been audited by BBD, LLP an independent registered public accounting firm, whose report, along with the Lou Holland Fund’s financial statements, are included in the annual report dated December 31, 2010, which is available upon request. The information for the fiscal years ended December 31, 2006 to December 31, 2009 reflects the historical information of the Lou Holland Growth Fund, a series of The Lou Holland Trust (the “Predecessor Fund”).  On January 29, 2010, the Predecessor Fund reorganized into the Lou Holland Fund.  The information for the Predecessor Fund was audited by the Predecessor Fund’s independent registered public accounting firm.
 
        These financial highlights reflect selected data for a share outstanding throughout each period.
   
(Unaudited)
For the Six Months Ended
 
For the Years Ended December 31,  
 
June 30, 2011
   
2010
     
2009
     
2008
     
2007
     
2006
 
INVESTOR SHARES 
                                             
NET ASSET VALUE, Beginning of Period 
$
19.97
   
$
17.94
   
$
12.90
   
$
19.81
   
$
18.65
   
$
17.99
 
INVESTMENT OPERATIONS
                                             
Net investment income (loss) (a)
 
 (0.03
)
   
 (0.04
)
   
 (0.02
)
   
 (0.04
)
   
 (0.04
)
   
 0.02
 
Net realized and unrealized
                                             
 
gain (loss)
 
 1.51
     
 2.55
     
 5.06
     
 (6.86
)
   
 1.79
     
 0.92
 
Total from Investment Operations
 
 1.48
     
 2.51
     
 5.04
     
 (6.90
)
   
 1.75
     
 0.94
 
DISTRIBUTIONS TO
                                             
SHAREHOLDERS FROM
                                             
Net investment income
 
     
     
     
     
 (0.01
)
   
 (0.01
)
Net realized gain
 
     
 (0.48
)
 
     
 (0.01
)
   
 (0.58
)
   
 (0.27
)
Total Distributions to Shareholders
 
     
 (0.48
)
   
     
 (0.01
)
   
 (0.59
)
   
 (0.28
)
NET ASSET VALUE, End of Period 
$
21.45
   
$
19.97
   
$
17.94
   
$
12.90
   
$
19.81
   
$
18.65
 
TOTAL RETURN 
 
7.46
%(b)
14.03
%
 
39.07
%
 
(34.83
)%
 
9.40
%
 
5.23
%
RATIOS/SUPPLEMENTARY DATA
                                             
Net Assets at End of
                                             
 
Period (000's omitted)
$57,842
   
$54,128
   
$50,341
   
$33,766
   
$55,703
   
$58,993
 
Ratios to Average Net Assets:
                                             
Net investment income (loss) 
 
(0.28
)%(c)
(0.22
)%
 
(0.11
)%
 
(0.25
)%
 
(0.19
)%
 
0.10
%
Net expense 
 
1.35
%(c)
1.35
%
 
1.35
%
 
1.35
%
 
1.35
%
 
1.35
%
 
 
D-1

 
Gross expense (d)
 
1.64
%(c)
1.77
%
 
1.69
%
 
1.71
%
 
1.41
%
 
1.47
%
PORTFOLIO TURNOVER RATE
 
6
%(b)
18
%
 
11
%
 
35
%
 
26
%
 
32
%
                                                 
(a)
Calculated based on average shares outstanding during the period.
(b)
Not annualized.
(c)
Annualized.
(d)
Reflects the expense ratio excluding any waivers and/or reimbursements.
 
 
These financial highlights reflect selected data for a share outstanding throughout each period.
 
   
(Unaudited)
For the Six Months
Ended
 June 30, 2011
 
March 1, 2010 (a)
Through
December 31, 2010
 
INSTITUTIONAL SHARES 
               
NET ASSET VALUE, Beginning of Period
$
20.00
   
$
17.88
   
INVESTMENT OPERATIONS
               
Net investment loss (b)
 
 (0.01
)
   
 (0.01
)
 
    Net realized and unrealized gain (loss)
 
 1.50
     
 2.61
   
Total from Investment Operations
 
 1.49
     
 2.60
   
DISTRIBUTIONS TO SHAREHOLDERS FROM
               
Net realized gain
 
     
 (0.48
)
 
NET ASSET VALUE, End of Period
$
21.49
   
$
20.00
   
TOTAL RETURN 
 
7.50
%(c)
14.58
%(c)
RATIOS/SUPPLEMENTARY DATA
               
Net Assets at End of Period (000's omitted)
$1,229
   
$1,126
   
Ratios to Average Net Assets:
               
Net investment loss 
 
(0.13
)%(d)
(0.06
)%(d)
Net expense 
 
1.20
%(d)
1.20
%(d)