American Beacon Stephens Mid-Cap Growth Fund
American Beacon Stephens Small Cap Growth Fund
Supplement dated
each dated
IMPORTANT NOTICE REGARDING CHANGE IN INVESTMENT POLICY
The Board of Trustees of the American Beacon Funds has approved a change to the non-fundamental policy of each of the American Beacon Stephens Mid-Cap Growth Fund and American Beacon Stephens Small Cap Growth Fund (each, a “Fund”) with respect to each Fund’s investment of at least 80% of its net assets (plus the amount of any borrowings for investment purposes), effective May 1, 2025. The policy of each Fund is being revised to state that in addition to meeting the applicable market capitalization requirement, equity securities must be considered by the Fund to have growth characteristics to satisfy the 80% policy. Therefore, effective May 1, 2025, the following changes are made to each Fund’s Prospectus and Summary Prospectus, as applicable:
| I. | American Beacon Stephens Mid-Cap Growth Fund |
| A. | On page 2 of the Prospectus and page 2 of the Summary Prospectus, under the heading “Fund Summary – American Beacon Stephens Mid-Cap Growth Fund - Principal Investment Strategies,” this section is deleted in its entirety and replaced with the following: |
Under normal circumstances, the Fund invests at least 80% of its net assets, plus the amount of any borrowings for investment purposes, in equity securities of medium market capitalization companies that the Fund considers to have growth characteristics.
The Fund considers a company to be a medium market capitalization company if it has a market capitalization between $1 billion and the market capitalization of the largest company in the Russell Midcap® Index, which was $168.4 billion as of December 31, 2024. The Russell Midcap Index measures the performance of the approximately 800 smallest companies in the Russell 1000® Index, which measures the performance of the approximately 1,000 largest U.S. companies based on total market capitalization.
The Fund’s sub-advisor, Stephens Investment Management Group, LLC (“SIMG”), principally invests in companies that it believes to have clear indicators of future earnings growth, or that demonstrate other potential for growth of capital. SIMG primarily employs fundamental research to identify companies with growth potential using year-over-year earnings per share growth rate or sales growth rate. If either such rate for a company is in the top 20% of such rates for companies in the Russell Midcap® Growth Index, then the Fund considers that company to have growth characteristics. The Russell Midcap Growth Index includes those Russell Midcap Index companies with relatively higher price-to-book ratios, earnings per share growth rates and sales growth rates.
The Fund’s equity investments include U.S. common stocks and U.S. dollar denominated foreign stocks traded on U.S. exchanges. In addition to medium market capitalization companies, the Fund may also invest in equity securities of small-capitalization and large-capitalization companies. SIMG will sell a security when appropriate and consistent with the Fund’s investment objective and policies.
Although the Fund seeks investments across a number of sectors, from time to time, the Fund may have significant positions in particular sectors, including the Information Technology sector. However, as the sector composition of the Fund’s portfolio changes over time, the Fund’s exposure to the Information Technology sector may be lower at a future date, and the Fund’s exposure to other market sectors may be higher.
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The Fund may also invest cash balances in other investment companies, including a government money market fund advised by the Manager, with respect to which the Manager receives a management fee. The Fund may seek to earn additional income by lending its securities to certain qualified broker-dealers and institutions.
| B. | On page 12 of the Prospectus, under the heading “Additional Information About the Funds - Additional Information About Investment Policies and Strategies – 80% Investment Policy,” the first bulleted sentence is deleted and replaced with the following: |
The American Beacon Stephens Mid-Cap Growth Fund has a non-fundamental policy to invest under normal circumstances at least 80% of its net assets, plus the amount of any borrowings for investment purposes, in equity securities of medium market capitalization companies that the Fund considers to have growth characteristics.
| II. | American Beacon Stephens Small Cap Growth Fund |
| A. | On page 8 of the Prospectus and page 2 of the Summary Prospectus, under the heading “Fund Summary – American Beacon Stephens Small Cap Growth Fund - Principal Investment Strategies,” this section is deleted in its entirety and replaced with the following: |
Under normal circumstances, the Fund invests at least 80% of its net assets, plus the amount of any borrowings for investment purposes, in equity securities of small market capitalization companies that the Fund considers to have growth characteristics.
The Fund considers a company to be a small market capitalization company if it has a market capitalization similar to the market capitalizations of the companies in the Russell 2000® Index. The Russell 2000 Index measures the performance of the approximately 2,000 smallest U.S. companies based on total market capitalization. As of December 31, 2024, the market capitalizations of the companies in the Russell 2000 Index ranged from $6.1 million to $14.7 billion.
The Fund’s sub-advisor, Stephens Investment Management Group, LLC (“SIMG”), principally invests in companies that it believes to have clear indicators of future earnings growth, or that demonstrate other potential for growth of capital. SIMG primarily employs fundamental research to identify companies with growth potential using year-over-year earnings per share growth rate or sales growth rate. If either such rate for a company is in the top 20% of such rates for companies in the Russell 2000® Growth Index, then the Fund considers that company to have growth characteristics. The Russell 2000 Growth Index includes those Russell 2000 Index companies with relatively higher price-to-book ratios, earnings per share growth rates and sales growth rates.
The Fund’s equity investments include U.S. common stocks, master limited partnerships (“MLPs”) and U.S. dollar-denominated foreign stocks traded on U.S. exchanges. In addition to small market capitalization companies, the Fund may also invest in equity securities of micro-capitalization and mid-capitalization companies. SIMG will sell a security when appropriate and consistent with the Fund’s investment objective and policies.
Although the Fund seeks investments across a number of sectors, from time to time, the Fund may have significant positions in particular sectors, including the Information Technology sector. However, as the sector composition of the Fund’s portfolio changes over time, the Fund’s exposure to the Information Technology sector may be lower at a future date, and the Fund’s exposure to other market sectors may be higher.
The Fund may also invest cash balances in other investment companies, including a government money market fund advised by the Manager, with respect to which the Manager receives a management fee. The Fund may seek to earn additional income by lending its securities to certain qualified broker-dealers and institutions.
| B. | On page 13 of the Prospectus, under the heading “Additional Information About the Funds - Additional Information About Investment Policies and Strategies – 80% Investment Policy,” the second bulleted sentence is deleted and replaced with the following: |
The American Beacon Stephens Small Cap Growth Fund has a non-fundamental policy to invest under normal circumstances at least 80% of its net assets, plus the amount of any borrowings for investment purposes, in equity securities of small market capitalization companies that the Fund considers to have growth characteristics.
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