N-CSR 1 d361358dncsr.htm N-CSR N-CSR

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM N-CSR

 

 

CERTIFIED SHAREHOLDER REPORT OF REGISTERED

MANAGEMENT INVESTMENT COMPANIES

Investment Company Act file number: 811-4984

 

 

AMERICAN BEACON FUNDS

(Exact name of registrant as specified in charter)

 

 

220 East Las Colinas Boulevard, Suite 1200

Irving, Texas 75039

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

 

 

GENE L. NEEDLES, JR., PRESIDENT

220 East Las Colinas Boulevard, Suite 1200

Irving, Texas 75039

(Name and address of agent for service)

 

 

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

Date of fiscal year end: January 31, 2017

Date of reporting period: January 31, 2017

 

 

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

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

 

 

 


ITEM 1. REPORTS TO STOCKHOLDERS.


LOGO

American Beacon(R)
FUNDS
2017 ANNUAL REPORT
January 31, 2017
CRESCENT SHORT DURATION HIGH INCOME FUND


About American Beacon Advisors

 

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

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

CRESCENT SHORT DURATION HIGH INCOME FUND

The Fund’s investments in high yield securities, including loans, restricted securities and floating rate securities are subject to greater levels of credit, interest rate, market and liquidity risks than investment-grade securities. Investing in foreign securities may involve heightened risk due to currency fluctuations and economic and political risks. Please see the prospectus for a complete discussion of the Fund’s risks. There can be no assurances that the investment objectives of this Fund will be met.

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

 

American Beacon Funds    January 31, 2017


Contents

 

 

President’s Message

     1  

Market and Performance Overviews

     2  

Expense Examples

     5  

Report of Independent Registered Public Accounting Firm

     7  

Schedule of Investments:

  

American Beacon Crescent Short Duration High Income Fund

     8  

Financial Statements

     16  

Notes to Financial Statements

     19  

Financial Highlights:

  

American Beacon Crescent Short Duration High Income Fund

     35  

Federal Tax Information

     38  

Trustees and Officers of the American Beacon Funds

     39  

Privacy Policy

     42  

Additional Fund Information

     Back Cover  


President’s Message

 

 

LOGO   

Dear Shareholders,

 

In the weeks ahead of the U.S. presidential election on November 8, 2016, uncertainty about the outcome caused many investors to stay on the sidelines. Some investors questioned whether the election’s result would have negative consequences for their portfolios, although elections have rarely had a lasting effect on the market.

 

Following the election, the markets responded positively to aspects of the incoming administration’s proposed plans for economic growth; i.e., repatriating jobs from overseas, relaxing regulations, lowering taxes and increasing infrastructure spending. From Election Day 2016 to Inauguration Day 2017, the S&P 500 Index - a broad measure of the performance of large U.S. companies - climbed approximately 6%.

In December 2016, the Federal Reserve increased short-term interest rates by 0.25% to a range of 0.50% and 0.75%, signifying the Federal Open Market Committee’s confidence in an improving economy. It was the second rate increase in a decade; the first rate increase occurred in December 2015. Economists anticipate more rate increases this year.

For the 12-month period that ended January 31, 2017, the Dow Jones Industrial Average - which follows the performance of 30 significant stocks trading on the New York Stock Exchange and The NASDAQ Stock Market - gained 23.89%. The S&P 500 Index, a domestic equity bellwether, grew 20.04%. The MSCI EAFE Index, which measures the world’s developed markets, increased 12.03%. The BofA Merrill Lynch U.S. High Yield Cash Pay BB-B 1-5 Year Index climbed 14.81%.

For the 12 months ended January 31, 2017:

 

  American Beacon Crescent Short Duration High Income Fund (Investor Class) returned 11.96%.

At American Beacon Advisors, we are proud to offer a broad range of global equity and fixed-income funds sub-advised by experienced asset managers who employ distinctive investment processes to manage assets through a variety of economic and market conditions. Together, we work diligently to help our shareholders meet their long-term financial goals.

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

 

Best Regards,

LOGO

Gene L. Needles, Jr.

President

American Beacon Funds

 

1


High Yield Bond Market Overview

January 31, 2017 (Unaudited)

 

The global bond market produced mixed results during the period as high-quality government issuers posted low or negative returns and high-yield outperformed. The Bloomberg Barclays Global Treasury Index returned 1.8% while the Bloomberg Barclays Global High Yield Index returned 18.2%.

The period began with a weak economic outlook as equity markets declined, commodity prices softened and interest rates drifted lower. Central banks across the globe emphasized their commitment to economic recovery and followed with a variety of accommodative actions.

In the summer of 2016, the markets were again tested as the U.K.’s Brexit vote to leave the European Union sent shockwaves through the markets. Record amounts of government bonds (primarily in Europe and Japan) traded into negative yields, and safe-haven U.S. Treasury yields dropped below the levels seen during the financial crisis of 2008 and the European debt crisis of 2012. As a result, total returns from government bonds were very strong during the first half of the period.

The volatility was short lived, however, as policy makers remained accommodative and hints of improved economic growth eventually began to surface. Commodity prices stabilized as equity markets regained their footing.

The final months of the year proved most pivotal as Donald Trump’s surprise victory in the U.S. presidential election provoked a risk-on rally into year end. Developed market equities rose sharply in hopes of growth-friendly initiatives from the new president, and government bond prices rolled over (yields rose). Emerging market bonds weakened against criticism of trade and immigration policies, but they still managed to finish the year with solid returns overall. The JPMorgan Emerging Market Bond Indexes (both hard and local currency) returned 12.0%. Mexico was particularly hard hit (down 1.8%) as talk of building walls and limiting trade was most pronounced.

The smaller, frontier economies also produced strong results as their commodity-export economies were viewed as less susceptible to trade sanctions, as compared to manufacturing exporters, and they avoided the mainstream selling in emerging markets. The JPMorgan NEXGEM Index returned 19.2%.

U.S. high-yield bonds outperformed investment-grade bonds as investors sought greater income and protection from rising interest rates. The rising stock markets were also helpful for high-yield bonds as they tend to be positively correlated. The Energy and Materials sectors led with returns of more than 50.0%, according to the Bloomberg Barclays High Yield Index. By comparison, investment-grade corporate bonds returned 6.1%, according to the Bloomberg Barclays Corporate Bond Index.

The period ended with optimism that the U.S. would continue to recover, Europe would pull out of its malaise and the worst of the commodity rout was behind. The Federal Reserve had already begun to reduce its monetary policy accommodation. Investors, however, were also beginning to look cautiously at the upcoming elections in Europe and at central bank actions in Japan and China. Likewise, the non-traditional administration in the U.S. was likely to have a few surprises of its own.

 

 

2


American Beacon Crescent Short Duration High Income FundSM

Performance Overview

January 31, 2017 (Unaudited)

 

The Investor Class of the American Beacon Crescent Short Duration High Income Fund (the “Fund”) returned 11.96% for the twelve-month period ended January 31, 2017, underperforming the Bank of America Merrill Lynch U.S. High Yield Cash Pay BB-B 1-5 Year Index (the “Index”) return of 14.81%. For further comparison, the Bank of America U.S. High Yield Master II Index returned 20.98% and the Credit Suisse Leveraged Loan Index returned 11.27% during the period.

Comparison of Change in Value of a $10,000 Investment for the period from 10/1/2014 through 1/31/2017

 

 

LOGO

Total Returns for the Period ended January 31, 2017

 

     Ticker      1 Year     Since Inception
10/1/2014
    Value of $10,000
10/1/2014-
1/31/2017
 

Institutional Class (1,3)

     ACHIX        12.38     3.38   $ 10,806  

Y Class (1,3)

     ACHYX        12.27     3.25   $ 10,775  

Investor Class (1,3)

     ACHPX        11.96     3.00   $ 10,714  

A without Sales Charge (1,3)

     ACHAX        11.94     2.93   $ 10,697  

A with Sales Charge (1,3)

     ACHAX        9.15     1.80   $ 10,426  

C without Sales Charge (1,3)

     ACHCX        10.98     2.17   $ 10,515  

C with Sales Charge (1,3)

     ACHCX        9.98     2.17   $ 10,515  

BofA Merrill Lynch U.S High Yield Cash Pay BB-B 1-5 Year Index (2)

        14.81     3.89   $ 10,933  

 

1. Performance shown is historical and is not indicative of future returns. Investment returns and principal value will vary, and shares may be worth more or less at redemption than at original purchase. Performance shown is calculated based on the published end of day net asset values as of the date indicated and current performance may be lower or higher than the performance data quoted. To obtain performance as of the most recent month end, please visit www.americanbeaconfunds.com or call 1-800-967-9009. Fund performance in the table above does not reflect the deduction of taxes a shareholder would pay on distributions or the redemption of shares. Generally accepted accounting principles require adjustments to be made to the net assets of the Fund at period end for financial reporting purposes only, and as such, the total return based on the unadjusted net asset value per share may differ from the total return reported in the financial highlights. A portion of the fees charged to each Class of the Fund has been waived since inception. Performance prior to waiving fees was lower than the actual returns shown since inception. A Class shares have a maximum sales charge of 2.50%. The maximum contingent deferred sales charge for the C Class is 1.00% for shares redeemed within one year of the date of purchase.

 

 

3


American Beacon Crescent Short Duration High Income FundSM

Performance Overview

January 31, 2017 (Unaudited)

 

 

2. The BofA Merrill Lynch U.S. High Yield Cash Pay BB-B 1-5 Year Index is an unmanaged index that generally tracks the performance of BB-B rated U.S. dollar-denominated corporate bonds publicly issued in the U.S. domestic market with maturities of 1 to 5 years. One cannot directly invest in an index.
3. The Total Annual Fund Operating Expense ratios set forth in the most recent Fund prospectus for the Institutional, Y, Investor, A, and C Class shares was 1.28%, 1.30%, 1.47%, 1.56%, and 2.37%, respectively. The expense ratios above may vary from the expense ratios presented in other sections of this report that are based on expenses incurred during the period covered by this report.

The Fund’s sub-advisor actively allocates among traditional high-yield, floating-rate bank loan and private debt sectors of the bond market to seek attractive risk-adjusted returns with lower volatility than that of the high-yield market overall. This flexibility also allows for opportunity to invest in securities outside of the traditional indices. On average during the period, the Fund held approximately 65% of assets in traditional high yield, 25% in floating-rate bank loans and 10% in private debt.

The Fund underperformed the Index due primarily to its exposure to floating-rate bank loans and underweight position in the commodity sectors (including energy and metals). The Fund actively seeks investments in floating-rate bank loans due to their attractive risk-adjusted characteristics, but loans underperformed during the period as interest rates declined and high yield spreads narrowed. Near period end, however, in response to the improving U.S. economy, surprise election results and Fed rate hike, interest rates rose markedly contributing to a strong finish for loans.

The Fund also held underweight positions in the energy and metals sectors, which detracted from results as those were the best performing sectors during the period. Commodity prices stabilized early in the period, and the improving economic outlook encouraged investors to look for opportunity. The Fund, however, has been underweight commodities since 2014 when they began to roll over. As such, the Fund’s two-year returns, which are in line with the index and peer group, are more reflective of its longer-term approach to add value over the cycle.

To a lesser extent, the Fund’s underweight position in financials detracted somewhat from returns as the banking sector posted a strong finish based on expectations of the Trump administration’s easing of the regulatory burden.

Overall, the Fund performed as expected during the period and delivered attractive risk-adjusted returns.

 

Top Ten Holdings (% Net Assets)

     

T-Mobile USA, Inc., 6.625%, Due 4/1/2023

        1.7  

Sprint Corp., 7.25%, Due 9/15/2021

        1.3  

HCA, Inc., 5.875%, Due 5/1/2023

        0.9  

Post Holdings, Inc., 6.00%, Due 12/15/2022, 144A

        0.8  

Fly Leasing Ltd., 6.75%, Due 12/15/2020

        0.8  

First Data Corp., 7.00%, Due 12/1/2023, 144A

        0.7  

Ally Financial, Inc., 3.75%, Due 11/18/2019

        0.7  

Cott Beverages, Inc., 5.375%, Due 7/1/2022

        0.7  

Block Communications, Inc., 7.25%, Due 2/1/2020, 144A

        0.7  

Universal Hospital Services, Inc., 7.625%, Due 8/15/2020

        0.7  

Total Fund Holdings

     346     

 

Sector Weightings (% Investments)

     

Service

        32.8  

Manufacturing

        27.3  

Energy

        12.8  

Finance

        10.0  

Telecom

        6.7  

Consumer

        6.1  

Transportation

        2.2  

Utilities

        2.0  

 

 

4


American Beacon FundsSM

Expense Example

January 31, 2017 (Unaudited)

 

Fund Expense Example

As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments and redemption fees if applicable, and (2) ongoing costs, including management fees, administrative service fees, distribution (12b-1) fees, and other Fund expenses. The Examples below are intended to help you understand the ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. The Examples are based on an investment of $1,000 invested at the beginning of the period (or the inception date of the Fund) in each Class and held for the entire period from August 1, 2016 through January 31, 2017.

Actual Expenses

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

Hypothetical Example for Comparison Purposes

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

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

 

 

5


American Beacon FundsSM

Expense Example

January 31, 2017 (Unaudited)

 

 

Crescent Short Duration High Income Fund

 

     Beginning Account Value
8/1/2016
     Ending Account Value
1/31/2017
     Expenses Paid During
Period
8/1/2016-1/31/2017*
 

Institutional Class

        

Actual

   $ 1,000.00      $ 1,046.88      $ 4.37  

Hypothetical**

   $ 1,000.00      $ 1,020.87      $ 4.32  

Y Class

        

Actual

   $ 1,000.00      $ 1,045.28      $ 4.88  

Hypothetical**

   $ 1,000.00      $ 1,020.36      $ 4.82  

Investor Class

        

Actual

   $ 1,000.00      $ 1,043.76      $ 6.32  

Hypothetical**

   $ 1,000.00      $ 1,018.95      $ 6.24  

A Class

        

Actual

   $ 1,000.00      $ 1,043.70      $ 6.42  

Hypothetical**

   $ 1,000.00      $ 1,018.85      $ 6.34  

C Class

        

Actual

   $ 1,000.00      $ 1,039.75      $ 10.25  

Hypothetical**

   $ 1,000.00      $ 1,015.06      $ 10.13  

 

* Expenses are equal to the Fund’s annualized net expense ratios for the six-month period of 0.85%, 0.95%, 1.23%, 1.25% and 2.00% for the Institutional, Y, Investor, A and C Classes, respectively, multiplied by the average account value over the period, multiplied by the number derived by dividing the number of days in the most recent fiscal half-year (184) by days in the year (366) to reflect the half-year period.
** 5% return before expenses.

 

 

6


American Beacon FundsSM

Report of Independent Registered Public Accounting Firm

 

To the Board of Trustees of American Beacon Funds and Shareholders of American Beacon Crescent Short Duration High Income Fund

In our opinion, the accompanying statement of assets and liabilities, including the schedule of investments as of January 31, 2017, and the related statements of operations and of changes in net assets and the financial highlights for the year then ended present fairly, in all material respects, the financial position of the American Beacon Crescent Short Duration High Income Fund (a series constituting American Beacon Funds, hereafter referred to as the “Fund”), as of January 31, 2017, the results of its operations, the changes in its net assets and its financial highlights for the year then ended, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as “financial statements”) are the responsibility of the Fund’s management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audit, which included confirmation of securities as of January 31, 2017 by correspondence with the custodian, agent banks and brokers or by other appropriate auditing procedures where replies were not received, provide a reasonable basis for our opinion. The financial statements as of and for the year ended January 31, 2016 and the financial highlights for each of the periods ended on or prior to January 31, 2016 (not presented herein, other than the statement of changes in net assets and the financial highlights) were audited by other auditors whose report dated March 31, 2016 expressed an unqualified opinion on those financial statements and financial highlights.

PricewaterhouseCoopers

Boston, Massachusetts

March 30, 2017

 

 

7


American Beacon Crescent Short Duration High Income FundSM

Schedule of Investments

January 31, 2017

 

 

     Shares      Fair Value  

COMMON STOCKS - 0.01% (Cost $26,255)

     

ENERGY- 0.00%

     

Oil & Gas - 0.00%

     

Energy & Exploration Partners, Inc.A

     3      $ 1,050  
     

 

 

 

HEALTH CARE- 0.01%

     

Pharmaceuticals - 0.01%

     

Millennium Health, LLCA B

     4,651        4,944  
     

 

 

 

Total Common Stocks (Cost $26,255)

        5,994  
     

 

 

 
     Principal Amount         

BANK LOAN OBLIGATIONS - 24.47%

     

Consumer - 2.38%

     

Albertsons LLC, 2016 First Lien Term Loan B4, VR, 3.778%, Due 8/22/2021C D

   $ 94,940        95,325  

Anchor Glass Container Corp., First Lien Term Loan, VR, 4.25%, Due 12/7/2023C D

     170,568        172,061  

Anchor Glass Container Corp., Second Lien Term Loan, VR, 8.75%, Due 12/7/2024C D

     27,185        27,547  

B & G Foods, Inc., 2015 Term Loan B, VR, 3.771%, Due 11/2/2022C D

     114,011        115,008  

Dell International LLC, Term Loan A2, VR, 3.03%, Due 9/7/2021B C D

     54,042        54,062  

Dell International LLC, Term Loan B, VR, 4.03%, Due 9/7/2023B C D

     80,533        80,875  

JBS USA, LLC, Term Loan B, 3.25%, Due 10/30/2022B D

     125,000        125,000  

Maple Holdings Acquisition Corp., Term Loan B, VR, 5.313%, Due 3/3/2023C D

     56,019        56,778  

NVA Holdings, Inc., First Lien Term Loan, VR, 4.75%, Due 8/14/2021C D

     185,135        185,946  

Pinnacle Foods Finance LLC, 2017 Term Loan B, VR, 2.00%, Due 1/27/2024 B D

     23,374        23,418  

Prestige Brands, Inc., Term Loan B4, VR, 3.50%, Due 1/26/2024 D

     30,000        30,263  

Revlon Consumer Products Corp., New Term Loan, VR, 4.278%, Due 9/7/2023C D

     57,841        58,296  

RSC Acquisition, Inc., Term Loan, VR, 6.25%, Due 11/30/2022D

     247,521        243,809  

Shearers Foods LLC, First Lien Term Loan, VR, 4.938%, Due 6/30/2021 B D

     89,845        89,958  

Shearers Foods, Inc., Incremental Term Loan, VR, 5.25%, Due 6/30/2021C D

     9,900        9,894  

Spectrum Brands, Inc., Term Loan, VR, 3.313%, Due 6/23/2022C D

     36,584        36,989  

Varsity Brands, Inc. First Lien Term Loan, VR, 5.00%, Due 12/11/2021D

     77,716        78,737  
     

 

 

 
        1,483,966  
     

 

 

 

Energy - 0.67%

     

Chief Exploration & Development LLC, 2nd Lien Term Loan, VR, 6.50%, Due 5/16/2021B D

     250,000        246,875  

CITGO Petroleum Corp., Term Loan B, VR, 4.50%, Due 7/29/2021C D

     125,000        125,039  

Energy & Exploration Partners, Inc., 2016 2nd Lien PIK Term Loan, VR, 5.00%, Due 5/13/2022D

     6,195        2,788  

MEG Energy Corp., 2017 Term Loan B, VR, 4.50%, Due 12/31/2023 D

     40,499        40,626  
     

 

 

 
        415,328  
     

 

 

 

Finance - 3.24%

     

Acrisure LLC, 2016 Term Loan B, VR, 5.75%, Due 10/28/2023 B D J

     58,451        59,123  

Americold Realty Operating Partnership, L.P., Term Loan B, 4.75%, Due 12/1/2022C D E

     75,064        76,284  

Ascensus, Inc., Term Loan, VR, 5.50%, Due 12/3/2022C D

     45,872        45,814  

AssuredPartners Inc., First Lien Term Loan, VR, 5.25%, Due 10/21/2022 D

     173,255        175,248  

Asurion LLC, Term Loan B4, VR, 4.25%, Due 8/4/2022B C D

     170,406        172,182  

Capital Automotive LP, Second Lien Term Loan, VR, 6.00%, Due 4/30/2020D E

     250,000        251,668  

Cision US Inc., Term Loan B, VR, 7.00%, Due 6/16/2023D

     99,500        99,314  

DTZ U. S. Borrower LLC, First Lien Term Loan, VR, 4.25%, Due 11/4/2021B C D

     246,250        247,597  

Higginbotham & Associates LLC, Term Loan, VR, 6.00%, Due 11/25/2021B D

     208,025        208,545  

IG Investment Holdings LLC, Term Loan B, VR, 6.00%, Due 10/29/2021B D

     244,898        246,122  

iStar, Inc., 2016 Term Loan B, VR, 5.50%, Due 7/1/2020C D

     79,391        79,987  

iStar, Inc., 2017 Term Loan B, VR, 4.75%, Due 7/1/2020 D

     5,649        5,649  

MPH Acquisition Holdings LLC, 2016 Cov-Lite First Lien Term Loan, VR, 5.00%, Due 6/7/2023B D

     105,591        107,065  

RPI Finance Trust, Term Loan B5, VR, 3.498%, Due 10/14/2022C D

     80,491        81,114  

Travelport Finance Luxembourg Sarl, 2017 Term Loan B, VR, 5.00%, Due 9/2/2021 D

     163,376        163,580  
     

 

 

 
        2,019,292  
     

 

 

 

Manufacturing - 7.12%

     

American Bath Group LLC, 2017 First Lien Add On Term Loan, VR, 6.25%, Due 9/30/2023 B D

     226,415        227,547  

American Bath Group LLC, Delayed Draw Term Loan, VR, 6.25%, Due 9/30/2023 B D

     23,585        23,762  

 

See accompanying notes

 

8


American Beacon Crescent Short Duration High Income FundSM

Schedule of Investments

January 31, 2017

 

 

     Principal Amount      Fair Value  

Manufacturing - 7.12% (continued)

     

Avast Software BV, Initial Dollar Term Loan, VR, 5.00%, Due 9/30/2022C D

   $ 103,441      $ 104,863  

BMC Software Finance, Inc., US Borrower Term Loan, VR, 5.00%, Due 9/10/2020D

     128,569        128,208  

Builders FirstSource, Inc., First LienTerm Loan B, VR, 4.75%, Due 7/31/2022C D

     155,883        155,688  

Chromaflo Technologies Corp., 2016 First Lien Term Loan, VR, 5.00%, Due 11/18/2023 D

     54,340        54,680  

Chromaflo Technologies Corp., 2016 Term Loan B2, VR, 5.00%, Due 11/18/2023 D

     70,660        71,101  

Computer Sciences Government Services, Inc., Term Loan B, VR, 3.435%, Due 11/28/2022C D

     21,758        21,894  

Compuware Corp., Term Loan B2, VR, 6.25%, Due 12/15/2021C D

     108,681        108,763  

Cortes NP Acquisition Corp. (aka Vertiv Co.), First Lien Term Loan, VR, 6.039%, Due 11/30/2023 D

     64,815        65,139  

CPG Merger Sub LLC, First Lien Term Loan, VR, 4.75%, Due 9/30/2020 D

     147,781        148,983  

Doosan Infracore International, Inc., Term Loan B, VR, 4.50%, Due 5/28/2021D

     55,964        56,629  

Electrical Components International, Inc., First Lien Term Loan B, VR, 5.75%, Due 5/30/2021C D

     100,000        100,125  

Emerald Performance Materials LLC, First Lien Term Loan, VR, 4.50%, Due 8/1/2021 B D

     124,960        125,467  

Engility Corp., Term Loan B2, VR, 5.75%, Due 8/12/2023C D

     35,765        35,820  

Epicor Software Corp., 1st Lien Bridge Loan, VR, 4.75%, Due 6/1/2022C D

     233,012        233,886  

First Data Corp., 2021 C New USD Term Loan, VR, 3.775%, Due 3/24/2021C D

     11,173        11,238  

First Data Corp., 2022C Dollar Term Loan, VR, 3.775%, Due 7/10/2022 D

     93,295        93,918  

Flex Acquisition Co. Inc., First Lien Term Loan, VR, 4.25%, Due 12/29/2023C D

     125,000        126,016  

Global Brass & Copper, Inc., Term Loan B, VR, 5.25%, Due 7/18/2023D

     48,260        48,743  

Huntsman International LLC, First Lien Term Loan B, VR, 3.963%, Due 4/1/2023 B D

     99,251        100,150  

Informatica Corp., Term Loan, VR, 4.50%, Due 8/5/2022C D

     70,575        70,275  

Jeld-Wen, Inc., First Lien Incremental Term Loan B2, VR, 4.75%, Due 7/1/2022 D

     94,719        95,232  

MacDermid, Inc., Term Loan Tranche B4, VR, 5.00%, Due 6/7/2023 D

     24,130        24,439  

MacDermid, Inc., Term Loan Tranche B5, VR, 4.50%, Due 6/7/2020C D

     42,813        43,337  

Magic Newco LLC, Term Loan, VR, 5.00%, Due 12/12/2018B D

     239,185        239,732  

Munters Corp., Term Loan, VR, 6.25%, Due 5/5/2021C D

     36,794        36,932  

Murray Energy Corp., 2015 Term Loan B, VR, 8.25%, Due 4/16/2020C D

     96,217        91,166  

Netsmart Technologies, Inc., 1st Lien Term Loan, VR, 5.75%, Due 4/19/2023C D

     40,000        40,300  

Netsmart Technologies, Inc.,Term Loan C 1, VR, 5.50%, Due 4/19/2023C D

     39,900        40,049  

Omnitracs LLC, First Lien Term Loan, VR, 4.75%, Due 11/25/2020B C D

     62,151        62,578  

PQ Corp., First Lien Term Loan B1, VR, 5.289%, Due 11/4/2022 D

     141,788        143,591  

Press Ganey Holdings, Inc., First Lien Term Loan, VR, 4.25%, Due 10/21/2023C D

     37,667        37,738  

Quickcrete Holdings, Inc., First Lien Term Loan, VR, 4.017%, Due 11/15/2023D

     125,000        126,476  

Reynolds Group Holdings, Inc., Term Loan, VR, 4.25%, Due 2/5/2023C D

     109,725        109,988  

Riverbed Technology, Inc., First Amendment Term Loan, VR, 4.25%, Due 4/24/2022C D

     17,558        17,677  

Road Infrastructure Investment Holdings, Term Loan, VR, 5.00%, Due 6/13/2023C D

     77,809        78,315  

Royal Holdings, Inc., 2015 First Lien Term Loan, VR, 4.50%, Due 6/19/2022C D

     88,650        89,056  

Shoes For Crews, LLC, Term Loan, VR, 6.00%, Due 10/27/2022B D

     247,500        246,263  

SI Organization Vencore, Inc., First Lien Term Loan, VR, 5.75%, Due 11/23/2019C D

     74,606        75,538  

Sophia LP, 2015 First Lien Closing Date Term Loan B, VR, 4.75%, Due 9/30/2022C D E

     96,934        97,055  

SS&C Technologies, Inc., 2015 First LienTerm Loan B1, VR, 4.028%, Due 7/8/2022C D

     30,092        30,366  

SS&C Technologies, Inc., 2015 First LienTerm Loan B2, VR, 4.028%, Due 7/8/2022C D

     2,893        2,919  

Strategic Partners Acquisition Corp., First Lien Term Loan, VR, 6.25%, Due 6/30/2023C D

     119,700        120,299  

Systems Maintenance Services I, First Lien Term Loan, VR, 6.00%, Due 10/11/2023D

     35,000        34,810  

Tank Intermediate Holding Corp., Term Loan A, VR, 5.25%, Due 3/16/2022D

     90,217        89,451  

USIC Holdings, Inc., 2016 First Lien Term Loan, VR, 4.75%, Due 12/8/2023 D

     132,021        132,956  

UTEX Industries, Inc., First Lien Term Loan, VR, 5.00%, Due 5/22/2021D

     48,030        45,148  

Western Digital Corp., Term Loan B1, VR, 4.526%, Due 4/29/2023C D

     17,876        18,010  

Zebra Technologies Corp., Term Loan B, VR, 3.434%, Due 10/27/2021C D

     160,928        162,226  
     

 

 

 
        4,444,542  
     

 

 

 

Service - 8.96%

     

Academy Ltd., 2015 Term Loan B, VR, 5.00%, Due 7/1/2022C D

     237,497        207,019  

Acosta Holdco, Inc., 2015 Term Loan, VR, 4.289%, Due 9/26/2021D

     121,812        117,548  

Affordable Care Holdings Corp., 2015 1st Lien Term Loan, VR, 5.75%, Due 10/22/2022C D

     49,500        49,500  

Amneal Pharmaceuticals LLC, Second Incremental First Lien Term Loan, 4.50%, Due 11/1/2019B C D

     65,507        65,384  

Aspen Dental - ADMI Corp., 2015 Term Loan B, VR, 5.25%, Due 4/30/2022 D

     41,560        41,854  

ATI Holdings Acquisition, Inc., First Lien Iniitial Term Loan, VR, 7.25%, Due 5/10/2023D

     100,394        101,649  

Bass Pro Group LLC, Term Loan B, VR, 5.970%, Due 12/16/2023 B D

     51,028        49,409  

BioClinica, Inc., First Lien Term Loan, VR, 5.25%, Due 10/20/2023D

     86,678        87,436  

BJ’s Wholesale Club, Inc., 2017 First Lien Term Loan, VR, 4.75%, Due 1/26/2024 D

     138,292        137,904  

 

See accompanying notes

 

9


American Beacon Crescent Short Duration High Income FundSM

Schedule of Investments

January 31, 2017

 

 

     Principal Amount      Fair Value  

Service - 8.96% (continued)

     

BJ’s Wholesale Club, Inc., 2017 Second Lien Term Loan, VR, 8.50%, Due 1/26/2025D

   $ 100,000      $ 101,000  

Brightview Landscapes LLC, Second Lien Term Loan, VR, 7.50%, Due 12/17/2021 B C D

     125,000        125,521  

Burger King - New Red Finance, Inc., 2015 Term Loan B, VR, 3.75%, Due 12/10/2021C D

     35,683        36,004  

California Pizza Kitchen, Inc., 2016 Term Loan, VR, 7.00%, Due 8/23/2022D

     249,375        248,752  

Camelot Finance LP, First Lien Term Loan B, VR, 4.75%, Due 10/3/2023C D E

     67,121        67,680  

Charter Communications Operating LLC, 2016 Term Loan I, VR, 3.026%, Due 1/15/2024 B D

     79,400        79,653  

CHG Healthcare Services, Inc., Term Loan, VR, 4.75%, Due 6/7/2023C D

     145,931        147,354  

CHS/Community Health Systems, Inc., Incremental 2021 First Lien Term Loan H, VR, 4.00%, Due 1/27/2021C D

     110,721        104,608  

CSC Holdings LLC / Neptune Finco Corp., 2016 Term Loan B, VR, 3.767%, Due 10/11/2024B C D

     56,987        57,343  

Curo Health Services LLC, Term Loan, VR, 6.539%, Due 2/7/2022B C D

     115,281        116,146  

ExamWorks Group, Inc., Term Loan, VR, 6.50%, Due 7/27/2023D

     62,656        62,910  

Fort Dearborn Co., 2016 1st Lien Term Loan, VR, 5.00%, Due 10/19/2023D

     67,391        68,234  

Grifols Worldwide Operations USA, Inc., USD Add On Term Loan, VR, 2.25%, Due 12/20/2023 D

     30,000        30,154  

HCA INC., Term Loan B7, VR, 3.528%, Due 2/15/2024D

     33,315        33,538  

inVentiv Health, Inc., 2016 Term Loan B, VR, 4.75%, Due 9/28/2023D

     84,045        84,746  

JC Penney Corp., Inc., Term Loan B, VR, 5.25%, Due 6/23/2023C D

     109,628        109,457  

Jo-Ann Stores LLC, Term Loan B, VR, 6.256%, Due 9/27/2023 B C

     51,644        50,611  

Merrill Communications LLC, Term Loan, VR, 6.289%, Due 6/1/2022B C D

     89,684        89,497  

Mission Broadcasting, Inc., First Lien Term Loan B, VR, 3.00%, Due 1/17/2024C D

     2,331        2,359  

Mister Car Wash Holdings, Inc., Term Loan B, VR, 5.25%, Due 8/20/2021C D

     114,872        114,968  

Mister Car Wash, Inc., Delayed Draw Term Loan, VR, 5.00%, Due 8/20/2021 D J

     10,000        10,008  

MTL Publishing LLC, Term Loan B 4, VR, 2.75%, Due 8/22/2022 B C D

     22,740        22,800  

Neiman Marcus Group Ltd., LLC, Term Loan, VR, 4.25%, Due 10/25/2020B C D

     46,940        38,798  

Nexstar Broadcasting, Inc., First Lien Term Loan B, VR, 3.00%, Due 1/17/2024C D

     89,859        90,692  

NMSC Holdings Inc., 1st Lien Term Loan, VR, 6.00%, Due 4/19/2023D

     73,351        73,901  

Numericable U.S. LLC (SFR Group), Term Loan B7, VR, 5.289%, Due 1/15/2024B C D

     124,005        125,283  

Onex Carestream Health, Inc., First Lien Term Loan, VR, 5.00%, Due 6/7/2019D

     122,324        117,278  

Paradigm Acquisition Corp., Term Loan, VR, 6.00%, Due 6/2/2022C D

     230,264        229,546  

Petco Animal Supplies, Inc., 2016 Term Loan, VR, 5.00%, Due 1/26/2023C D

     69,768        69,063  

Playpower, Inc., First Lien Term Loan, VR, 5.75%, Due 6/23/2021D

     247,487        246,250  

Prime Security Services Borrower LLC, First Lien Term Loan, VR, 4.25%, Due 5/2/2022 B D

     210,964        212,943  

Prospect Medical Holdings, Inc., Term Loan B, VR, 7.00%, Due 6/30/2022C D

     74,625        74,065  

Rentpath, Inc., First Lien Term Loan, VR, 6.25%, Due 12/17/2021D

     120,635        119,830  

Scientific Games International, Inc., Term Loan B 2, VR, 6.00%, Due 10/1/2021D

     149,626        150,655  

Serta Simmons Bedding LLC, First Lien Term Loan, VR, 4.50%, Due 11/8/2023 B C D

     15,452        15,419  

Survey Sampling International LLC, First Lien Term Loan B, VR, 6.00%, Due 12/4/2020B C D

     122,812        122,198  

Survey Sampling International LLC, Second Lien Term Loan, VR, 10.00%, Due 12/4/2021B C D

     125,000        121,250  

Team Health, Inc., First Lien Term Loan, VR, 3.75%, Due 1/17/2024 D

     130,000        129,757  

Tribune Media Company, Term Loan C, VR, 3.75%, Due 1/27/2024 D

     55,601        55,971  

Tribune Media Company, Term Loan, VR, 3.77%, Due 12/27/2020D

     13,350        13,413  

Triple Point Technology, Inc., First Lien Terrm Loan, VR, 5.25%, Due 7/10/2020C D

     85,019        75,454  

USAGM Holdco LLC, 2015 Term Loan, VR, 4.75%, Due 7/28/2022B C D

     163,350        163,912  

Valeant Pharmaceuticals International, Inc., Term Loan Series E Tranche B, VR, 5.25%, Due 8/5/2020C D

     9,505        9,526  

Valeant Pharmaceuticals International, Term Loan B, VR, 5.50%, Due 4/1/2022C D

     86,182        86,516  

Vestcom Parent Holdings, Inc., First Lien Term Loan, VR, 5.25%, Due 12/19/2023 D

     126,563        127,828  

Virgin Media Investment Holdings Ltd., USD Term Loan I, VR, 3.517%, Due 1/31/2025 D

     107,500        108,105  

Vistage Worldwide, Inc., Term Loan B, VR, 6.50%, Due 8/19/2021 D

     100,000        100,250  

WEX Inc., Term Loan B, VR, 4.278%, Due 7/1/2023C D

     48,231        48,774  

William Morris Endeavor Entertainment LLC, Term Loan B, VR, 5.25%, Due 5/6/2021B D

     121,250        121,614  

Ziggo Secured Finance Partners, USD Term Loan E, VR, 2.50%, Due 4/23/2025 D

     125,000        125,248  
     

 

 

 
        5,594,585  
     

 

 

 

Telecommunications - 0.29%

     

LTS Buyer LLC, Term Loan B, VR, 4.248%, Due 4/13/2020B C D

     24,617        24,740  

Sprint Communications, Inc., First Lien Term Loan B, VR, 3.25%, Due 1/13/2024 D

     125,000        125,000  

Telesat Canada, Term Loan B, VR, 4.78%, Due 11/17/2023D

     32,290        32,290  
     

 

 

 
        182,030  
     

 

 

 

 

See accompanying notes

 

10


American Beacon Crescent Short Duration High Income FundSM

Schedule of Investments

January 31, 2017

 

 

 

     Principal Amount      Fair Value  

Transportation - 1.20%

     

Air Canada, Term Loan B, VR, 3.755%, Due 10/6/2023D

   $ 60,000      $ 60,450  

American Tire Distributors, Inc., 2015 Term Loan, 5.25%, Due 9/1/2021D

     241,900        240,541  

Avolon Holdings Limited, Term Loan B, VR, 3.50%, Due 1/13/2022 D

     179,232        181,537  

Delta Air Lines, Inc., 2015 Term Loan B, VR, 3.276%, Due 8/24/2022D

     49,375        49,800  

Univar, Inc., 2017 Term Loan B, VR, 4.25%, Due 7/1/2022 D

     148,125        148,436  

XPO Logistics, Inc., Term Loan B, VR, 4.25%, Due 11/1/2021C D

     67,530        67,952  
     

 

 

 
        748,716  
     

 

 

 

Utilities - 0.61%

     

Calpine Corp., First Lien Term Loan B5, VR, 3.75%, Due 1/15/2024C D

     59,547        59,813  

TPF II Power LLC, Syndicated Term Loan B, VR, 5.00%, Due 10/2/2021B D

     317,156        320,327  
     

 

 

 
        380,140  
     

 

 

 

Total Bank Loan Obligations (Cost $15,243,561)

        15,268,599  
     

 

 

 

CORPORATE OBLIGATIONS - 73.74%

     

Consumer - 3.79%

     

Avon International Opera, 7.875%, Due 8/15/2022F

     150,000        159,795  

Central Garden & Pet Co., 6.125%, Due 11/15/2023

     225,000        240,750  

Cott Beverages, Inc., 5.375%, Due 7/1/2022

     450,000        460,800  

Dole Food Co., Inc., 7.25%, Due 5/1/2019F

     375,000        382,725  

Post Holdings, Inc., 6.00%, Due 12/15/2022F

     500,000        525,000  

Spectrum Brands, Inc., 5.75%, Due 7/15/2025

     250,000        261,250  

Vector Group Ltd., 6.125%, Due 2/1/2025F

     325,000        333,938  
     

 

 

 
        2,364,258  
     

 

 

 

Energy - 12.17%

     

Archrock Partners LP / Archrock Partners Finance Corp., 6.00%, Due 4/1/2021E

     250,000        247,500  

Bristow Group, Inc., 6.25%, Due 10/15/2022

     100,000        89,375  

Calfrac Holdings LP, 7.50%, Due 12/1/2020E F

     175,000        162,750  

California Resources Corp., 8.00%, Due 12/15/2022F

     400,000        356,000  

Callon Petroleum Co., 6.125%, Due 10/1/2024F

     50,000        52,937  

Carrizo Oil & Gas, Inc., 7.50%, Due 9/15/2020

     250,000        259,375  

Cenovus Energy, Inc., 6.75%, Due 11/15/2039

     100,000        112,341  

Chesapeake Energy Corp.,

     

6.625%, Due 8/15/2020

     95,000        95,475  

8.00%, Due 12/15/2022F

     50,000        53,375  

5.75%, Due 3/15/2023

     225,000        216,000  

Continental Resources, Inc., 4.90%, Due 6/1/2044

     450,000        396,000  

CSI Compressco LP / Compressco Finance, Inc., 7.25%, Due 8/15/2022E

     425,000        408,000  

Denbury Resources, Inc., 5.50%, Due 5/1/2022

     300,000        257,250  

Energy Transfer Equity LP, 7.50%, Due 10/15/2020E

     100,000        112,250  

EP Energy LLC / Everest Acquisition Finance, Inc., 9.375%, Due 5/1/2020B

     300,000        300,000  

FTS International, Inc., 8.46%, Due 6/15/2020C F

     200,000        204,750  

Genesis Energy LP / Genesis Energy Finance Corp., 5.625%, Due 6/15/2024E

     400,000        403,000  

Hilcorp Energy, 5.00%, Due 12/1/2024F

     250,000        246,250  

Jones Energy Holdings LLC / Jones Energy Finance Corp., 6.75%, Due 4/1/2022 B

     350,000        342,125  

Laredo Petroleum, Inc., 5.625%, Due 1/15/2022

     250,000        253,750  

Lonestar Resources America, Inc., 8.75%, Due 4/15/2019F

     150,000        138,000  

Nabors Industries, Inc., 5.50%, Due 1/15/2023F

     75,000        78,375  

Parker Drilling Co., 6.75%, Due 7/15/2022

     150,000        129,750  

Parsley Energy LLC / Parsley Finance Corp., 5.375%, Due 1/15/2025 B F

     200,000        205,000  

QEP Resources, Inc., 6.875%, Due 3/1/2021

     250,000        264,375  

Sanchez Energy Corp., 6.125%, Due 1/15/2023

     150,000        144,000  

SM Energy Co.,

     

5.625%, Due 6/1/2025

     175,000        170,625  

6.75%, Due 9/15/2026

     200,000        208,000  

Southwestern Energy Co., 5.80%, Due 1/23/2020

     150,000        154,875  

Summit Midstream Holdings LLC / Summit Midstream Finance Corp., 5.50%, Due 8/15/2022 B

     125,000        125,313  

Sunoco LP / Sunoco Finance Corp., 6.375%, Due 4/1/2023

     125,000        128,313  

 

See accompanying notes

 

11


American Beacon Crescent Short Duration High Income FundSM

Schedule of Investments

January 31, 2017

 

 

     Principal Amount      Fair Value  

Energy - 12.17% (continued)

     

Tesoro Logistics LP / Tesoro Logistics Finance Corp., 6.25%, Due 10/15/2022 E

   $ 200,000      $ 213,000  

Transocean, Inc., 8.125%, Due 12/15/2021

     250,000        258,750  

Unit Corp., 6.625%, Due 5/15/2021

     300,000        297,750  

Weatherford Bermuda Company, 5.125%, Due 9/15/2020

     250,000        238,750  

WPX Energy, Inc., 7.50%, Due 8/1/2020

     250,000        271,250  
     

 

 

 
        7,594,629  
     

 

 

 

Finance - 6.53%

     

American Equity Investment Life Holding Co., 6.625%, Due 7/15/2021

     250,000        261,828  

CIT Group, Inc., 5.00%, Due 8/1/2023

     300,000        312,750  

Communications Sales & Leasing Inc / CSL Capital LLC, 8.25%, Due 10/15/2023 B

     300,000        325,500  

FelCor Lodging LP, 5.625%, Due 3/1/2023E

     375,000        388,125  

Fly Leasing Ltd., 6.75%, Due 12/15/2020

     500,000        523,125  

Grinding Media Inc / MC Grinding Media Canada, Inc., 7.375%, Due 12/15/2023F

     200,000        211,250  

Icahn Enterprises LP / Icahn Enterprises Finance Corp.,

     

6.00%, Due 8/1/2020E

     300,000        307,350  

6.25%, Due 2/1/2022F

     100,000        100,750  

Ladder Capital Finance Holdings LLLP / Ladder Capital Finance Corp., 5.875%, Due 8/1/2021F H

     90,000        89,325  

OneMain Financial Holdings, Inc., 6.75%, Due 12/15/2019F

     400,000        415,000  

RHP Hotel Properties LP / RHP Finance Corp., 5.00%, Due 4/15/2023E

     350,000        353,500  

Royal Bank of Scotland Group PLC, 4.70%, Due 7/3/2018 G

     250,000        255,373  

Springleaf Finance Corp., 5.25%, Due 12/15/2019

     300,000        301,500  

Starwood Property Trust, Inc., 5.00%, Due 12/15/2021F

     150,000        152,438  

Tervita Escrow Corp., 7.625%, Due 12/1/2021F

     75,000        77,813  
     

 

 

 
        4,075,627  
     

 

 

 

Manufacturing - 19.62%

     

Advanced Micro Devices, Inc., 7.00%, Due 7/1/2024

     400,000        415,500  

Alcoa Nederland Holding BV, 7.00%, Due 9/30/2026F

     200,000        219,000  

Allison Transmission, Inc., 5.00%, Due 10/1/2024F

     150,000        151,125  

Ally Financial, Inc., 3.75%, Due 11/18/2019

     450,000        457,312  

Anixter, Inc., 5.50%, Due 3/1/2023

     175,000        182,437  

ArcelorMittal, 6.50%, Due 3/1/2021C

     250,000        273,125  

Ardagh Packaging Finance PLC / Ardagh Holdings USA, Inc., 4.625%, Due 5/15/2023F G

     50,000        50,469  

Berry Plastics Corp., 5.125%, Due 7/15/2023

     50,000        51,160  

BMC Software Finance, Inc., 8.125%, Due 7/15/2021F

     250,000        241,250  

Bombardier, Inc., 6.00%, Due 10/15/2022F

     350,000        342,125  

CF Industries Holdings, Inc., 7.125%, Due 5/1/2020

     150,000        165,375  

CF Industries, Inc., 5.15%, Due 3/15/2034

     50,000        45,875  

Chemours Co.,

     

6.625%, Due 5/15/2023

     200,000        199,000  

7.00%, Due 5/15/2025

     200,000        199,300  

CONSOL Energy, Inc., 5.875%, Due 4/15/2022

     450,000        435,375  

Constellium N.V., 5.75%, Due 5/15/2024F

     100,000        96,250  

Credit Acceptance Corp., 6.125%, Due 2/15/2021

     375,000        380,625  

Entegris, Inc., 6.00%, Due 4/1/2022F

     250,000        261,250  

Equinix, Inc., 5.375%, Due 1/1/2022

     250,000        264,375  

Fiat Chrysler Automobiles N.V., 5.25%, Due 4/15/2023

     150,000        153,750  

First Data Corp., 7.00%, Due 12/1/2023F

     425,000        450,713  

First Quantum Minerals Ltd., 6.75%, Due 2/15/2020F

     400,000        410,252  

FMG Resources August 2006 Property Ltd.,

     

9.75%, Due 3/1/2022F

     100,000        116,000  

6.875%, Due 4/1/2022F

     100,000        103,625  

Freeport-McMoRan Copper & Gold, Inc., 3.55%, Due 3/1/2022

     450,000        420,750  

Gibraltar Industries, Inc., 6.25%, Due 2/1/2021

     250,000        258,281  

Hexion Inc., 6.625%, Due 4/15/2020

     150,000        139,875  

HudBay Minerals, Inc., 7.25%, Due 1/15/2023F

     400,000        423,000  

Huntsman International Co., 5.125%, Due 11/15/2022

     250,000        258,282  

INEOS Group Holdings S.A., 5.625%, Due 8/1/2024F

     250,000        249,375  

Infor Software Parent, Inc., 7.125%, Due 5/1/2021F

     300,000        308,250  

 

See accompanying notes

 

12


American Beacon Crescent Short Duration High Income FundSM

Schedule of Investments

January 31, 2017

 

 

     Principal Amount      Fair Value  

Manufacturing - 19.62% (continued)

     

Lennar Corp., 4.875%, Due 12/15/2023

   $ 75,000      $ 76,312  

Micron Technology, Inc., 5.50%, Due 2/1/2025

     125,000        125,625  

NCI Building Systems, Inc., 8.25%, Due 1/15/2023F

     250,000        272,500  

New Gold, Inc., 6.25%, Due 11/15/2022F

     400,000        401,000  

Novelis Corp., 5.875%, Due 9/30/2026F

     125,000        126,875  

Open Text Corp., 5.875%, Due 6/1/2026F

     100,000        104,750  

Perstorp Holding AB, 8.50%, Due 6/30/2021F

     225,000        228,656  

Platform Specialty Products Corp., 6.50%, Due 2/1/2022F

     375,000        382,500  

PQ Corp., 6.75%, Due 11/15/2022F

     100,000        108,250  

SBA Communications Corp., 4.875%, Due 7/15/2022

     400,000        405,500  

Solera LLC / Solera Finance, Inc., 10.50%, Due 3/1/2024 B F

     300,000        341,250  

Springs Industries, Inc., 6.25%, Due 6/1/2021

     375,000        388,125  

Standard Industries, Inc., 5.375%, Due 11/15/2024F

     250,000        257,812  

Teck Resources Ltd., 4.50%, Due 1/15/2021

     150,000        152,625  

TransDigm, Inc., 6.00%, Due 7/15/2022

     400,000        403,000  

Tronox Finance LLC, 6.375%, Due 8/15/2020B

     250,000        240,312  

United States Steel Corp.,

     

6.875%, Due 4/1/2021

     21,000        21,394  

8.375%, Due 7/1/2021F

     200,000        222,000  

7.50%, Due 3/15/2022

     50,000        51,626  

Wise Metals Group LLC, 8.75%, Due 12/15/2018B F

     200,000        206,808  
     

 

 

 
        12,240,001  
     

 

 

 

Service - 23.11%

     

Ahern Rentals, Inc., 7.375%, Due 5/15/2023F

     200,000        187,000  

Altice Luxembourg S.A., 7.75%, Due 5/15/2022F

     400,000        424,500  

APX Group, Inc., 8.75%, Due 12/1/2020

     400,000        415,000  

Ashtead Capital, Inc., 5.625%, Due 10/1/2024F

     375,000        393,750  

Block Communications, Inc., 7.25%, Due 2/1/2020F

     450,000        457,875  

Brand Energy and Infrastructure Company, 8.50%, Due 12/1/2021F

     100,000        103,750  

Cable One, Inc., 5.75%, Due 6/15/2022F

     75,000        78,375  

Cablevision Systems Corp.,

     

7.75%, Due 4/15/2018

     250,000        263,125  

5.875%, Due 9/15/2022

     300,000        301,500  

Cardtronics, Inc., 5.125%, Due 8/1/2022

     250,000        253,750  

CEC Entertainment, Inc., 8.00%, Due 2/15/2022

     200,000        209,000  

Cequel Communications Holdings I LLC / Cequel Capital Corp., 5.125%, Due 12/15/2021B F

     150,000        152,062  

CHS/Community Health Systems, Inc., 5.125%, Due 8/15/2018

     100,000        100,312  

Community Health Systems, Inc., 8.00%, Due 11/15/2019

     350,000        311,500  

DaVita, Inc., 5.75%, Due 8/15/2022

     100,000        103,875  

DISH DBS Corp., 5.125%, Due 5/1/2020

     250,000        256,875  

Dollar Tree, Inc., 5.75%, Due 3/1/2023

     250,000        264,750  

EMI Music Publishing Group N. America Holdings, Inc., 7.625%, Due 6/15/2024F

     125,000        136,563  

Endo Ltd / Endo Finance LLC / Endo Finco, Inc., 6.00%, Due 7/15/2023B F

     200,000        170,500  

Guitar Center, Inc., 6.50%, Due 4/15/2019F

     250,000        224,375  

HCA, Inc.,

     

5.875%, Due 5/1/2023

     500,000        532,500  

5.375%, Due 2/1/2025

     250,000        255,000  

HealthSouth Corp., 5.75%, Due 11/1/2024

     400,000        406,500  

Herc Rentals, Inc., 7.50%, Due 6/1/2022F

     300,000        324,000  

Horizon Pharma Financing, Inc., 6.625%, Due 5/1/2023

     40,000        38,500  

IHS Markit, Ltd., 5.00%, Due 11/1/2022F

     325,000        336,781  

JC Penney Corp, Inc., 5.875%, Due 7/1/2023F

     400,000        405,600  

LifePoint Health, Inc.,

     

5.875%, Due 12/1/2023

     25,000        24,875  

5.375%, Due 5/1/2024F

     150,000        143,625  

Mallinckrodt International Finance SA / Mallinckrodt CB LLC, 5.625%, Due 10/15/2023B F

     350,000        310,188  

Mednax, Inc., 5.25%, Due 12/1/2023F

     225,000        232,312  

Midas Intermediate Holdco II LLC / Midas Intermediate Holdco II Finance, Inc., 7.875%, Due 10/1/2022 B F

     100,000        102,750  

 

See accompanying notes

 

13


American Beacon Crescent Short Duration High Income FundSM

Schedule of Investments

January 31, 2017

 

 

 

     Principal Amount      Fair Value  

Service - 23.11% (continued)

     

Monitronics International, Inc., 9.125%, Due 4/1/2020

   $ 325,000      $ 316,062  

Natures Bounty Co., 7.625%, Due 5/15/2021F

     400,000        419,000  

Nielsen Finance LLC / Nielsen Finance Co., 5.00%, Due 4/15/2022B F

     250,000        255,313  

Numericable Group S.A., 6.00%, Due 5/15/2022F

     350,000        360,063  

PetSmart, Inc., 7.125%, Due 3/15/2023F

     375,000        368,437  

Pinnacle Entertainment, Inc., 5.625%, Due 5/1/2024F

     125,000        126,804  

Rite Aid Corp., 6.75%, Due 6/15/2021

     250,000        260,000  

Sabre GLBL, Inc., 5.25%, Due 11/15/2023F

     75,000        75,938  

Scientific Games International, Inc., 10.00%, Due 12/1/2022

     150,000        153,693  

Silversea Cruise Finance Ltd., 7.25%, Due 2/1/2025F

     125,000        128,464  

Sinclair Television Group, Inc.,

     

5.375%, Due 4/1/2021

     250,000        256,875  

6.125%, Due 10/1/2022

     150,000        156,845  

Sirius XM Radio, Inc., 6.00%, Due 7/15/2024F

     250,000        266,095  

Tenet Healthcare Corp.,

     

5.00%, Due 3/1/2019

     250,000        245,938  

4.75%, Due 6/1/2020

     200,000        203,000  

6.75%, Due 6/15/2023

     200,000        189,000  

Tops Holding LLC / Tops Markets II Corp., 8.00%, Due 6/15/2022B F

     200,000        160,000  

United Rentals North America, Inc., 5.50%, Due 5/15/2027

     375,000        378,281  

Universal Health Services, Inc., 4.75%, Due 8/1/2022F

     350,000        352,187  

Universal Hospital Services, Inc., 7.625%, Due 8/15/2020

     450,000        446,625  

Univision Communications, Inc.,

     

5.125%, Due 5/15/2023F

     175,000        173,796  

5.125%, Due 2/15/2025F

     100,000        95,438  

Viking Cruises Ltd., 6.25%, Due 5/15/2025F

     50,000        48,000  

Virgin Media Finance PLC, 6.375%, Due 4/15/2023F G

     250,000        262,500  

VTR Finance BV, 6.875%, Due 1/15/2024F

     290,000        304,500  

Wynn Las Vegas LLC / Wynn Las Vegas Capital Corp., 5.50%, Due 3/1/2025 B F

     350,000        350,875  

Ziggo Bond Finance BV, 6.00%, Due 1/15/2027F

     150,000        148,815  
     

 

 

 
        14,423,612  
     

 

 

 

Telecommunications - 6.28%

     

CenturyLink, Inc.,

     

5.80%, Due 3/15/2022

     125,000        128,555  

7.50%, Due 4/1/2024

     200,000        211,750  

Frontier Communications Corp.,

     

7.125%, Due 3/15/2019

     250,000        266,250  

8.875%, Due 9/15/2020

     75,000        79,875  

11.00%, Due 9/15/2025

     150,000        151,687  

Hughes Satellite Systems Corp., 5.25%, Due 8/1/2026F

     100,000        100,000  

Level 3 Financing, Inc., 5.375%, Due 1/15/2024

     400,000        404,500  

Qwest Corp., 6.75%, Due 12/1/2021

     25,000        27,483  

Sprint Corp., 7.25%, Due 9/15/2021

     750,000        803,625  

Sprint Nextel Corp., 6.00%, Due 11/15/2022

     425,000        431,375  

T-Mobile USA, Inc., 6.625%, Due 4/1/2023

     1,000,000        1,062,700  

Windstream Corp., 6.375%, Due 8/1/2023

     50,000        45,250  

Windstream Services LLC, 7.75%, Due 10/15/2020B

     200,000        204,250  
     

 

 

 
        3,917,300  
     

 

 

 

Transportation - 0.87%

     

Intrepid Aviation Group Holdings LLC / Intrepid Finance Co., 6.875%, Due 2/15/2019B F

     250,000        227,500  

XPO Logistics, Inc., 6.50%, Due 6/15/2022F

     300,000        312,750  
     

 

 

 
        540,250  
     

 

 

 

Utilities - 1.37%

     

AES Corp., 5.50%, Due 3/15/2024

     250,000        253,125  

Calpine Corp., 5.375%, Due 1/15/2023

     300,000        295,500  

 

See accompanying notes

 

14


American Beacon Crescent Short Duration High Income FundSM

Schedule of Investments

January 31, 2017

 

 

     Principal Amount      Fair Value  

Utilities - 1.37% (continued)

     

NRG Energy, Inc., 6.625%, Due 3/15/2023

   $ 300,000      $ 309,000  
     

 

 

 
        857,625  
     

 

 

 

Total Corporate Obligations (Cost $44,787,678)

        46,013,302  
     

 

 

 
     Shares         

SHORT-TERM INVESTMENTS - 4.00% (Cost $2,498,843)

     

American Beacon U.S. Government Money Market Select Fund, Select ClassI

     2,498,843        2,498,843  
     

 

 

 

TOTAL INVESTMENTS - 102.22% (Cost $62,556,337)

        63,786,738  

LIABILITIES, NET OF OTHER ASSETS - (2.22%)

        (1,384,127
     

 

 

 

TOTAL NET ASSETS - 100.00%

      $ 62,402,611  
     

 

 

 

Percentages are stated as a percent of net assets.

     

 

A  Non-income producing security.
B LLC - Limited Liability Company.
C  The coupon rate shown on floating or adjustable rate securities represents the rate at period end. The due date on these types of securities reflects the final maturity date.
D  Term Loan.
E  LP - Limited Partnership.
F  Security exempt from registration under the Securities Act of 1933. These securities may be resold to qualified institutional buyers pursuant to Rule 144A. At the period end, the value of these securities amounted to $18,741,037 or 30.03% of net assets. The Fund has no right to demand registration of these securities.
G  PLC - Public Limited Company.
H  LLLP - Limited Liability Limited Partnership.
I  The Fund is affiliated by having the same investment advisor.
J  Unfunded Loan Commitment. At period end, the amount of unfunded loan commitments was $16,773 or 0.03% of net assets. Of this amount, $6,773 and $10,000 relate to Acrisure LLC and Mister Car Wash, Inc, respectively.

 

See accompanying notes

 

15


American Beacon Crescent Short Duration High Income FundSM

Statement of Assets and Liabilities

January 31, 2017

 

 

Assets:

  

Investments in unaffiliated securities, at fair value A

   $ 61,287,895  

Investments in affiliated securities, at fair value B

     2,498,843  

Dividends and interest receivable

     850,515  

Receivable for investments sold

     1,625,270  

Receivable for fund shares sold

     40,873  

Receivable for expense reimbursement (Note 2)

     30,815  

Prepaid expenses

     25,345  
  

 

 

 

Total assets

     66,359,556  
  

 

 

 

Liabilities:

  

Payable for investments purchased

     3,711,698  

Payable for fund shares redeemed

     13,511  

Dividends payable

     4,133  

Cash due to custodian

     87,297  

Unfunded loan commitments

     16,773  

Management and investment advisory fees payable

     38,565  

Administrative service and service fees payable

     1,939  

Transfer agent fees payable

     590  

Custody and fund accounting fees payable

     9,277  

Professional fees payable

     69,274  

Trustee fees payable

     711  

Payable for prospectus and shareholder reports

     2,586  

Other liabilities

     591  
  

 

 

 

Total liabilities

     3,956,945  
  

 

 

 

Net Assets

   $ 62,402,611  
  

 

 

 

Analysis of Net Assets:

  

Paid-in-capital

   $ 63,948,636  

Undistributed (overdistribution of) net investment income

     310  

Accumulated net realized (loss)

     (2,776,736

Unrealized appreciation of investments

     1,230,401  
  

 

 

 

Net assets

   $ 62,402,611  
  

 

 

 

Shares outstanding at no par value (unlimited shares authorized):

  

Institutional Class

     5,378,958  
  

 

 

 

Y Class

     651,797  
  

 

 

 

Investor Class

     277,946  
  

 

 

 

A Class

     122,895  
  

 

 

 

C Class

     44,421  
  

 

 

 

Net assets:

  

Institutional Class

   $ 51,834,666  
  

 

 

 

Y Class

   $ 6,277,416  
  

 

 

 

Investor Class

   $ 2,679,338  
  

 

 

 

A Class

   $ 1,183,362  
  

 

 

 

C Class

   $ 427,829  
  

 

 

 

Net asset value, offering and redemption price per share:

  

Institutional Class

   $ 9.64  
  

 

 

 

Y Class

   $ 9.63  
  

 

 

 

Investor Class

   $ 9.64  
  

 

 

 

A Class

   $ 9.63  
  

 

 

 

A Class (offering price)

   $ 9.88  
  

 

 

 

C Class

   $ 9.63  
  

 

 

 

A    Cost of investments in unaffiliated securities

   $ 60,057,494  

B    Cost of investments in affiliated securities

   $ 2,498,843  

 

See accompanying notes

 

16


American Beacon Crescent Short Duration High Income FundSM

Statement of Operations

For the year ended January 31, 2017

 

 

Investment income:

  

Dividend income from unaffiliated securities

   $ 954  

Dividend income from affiliated securities

     7,120  

Interest income

     2,861,455  
  

 

 

 

Total investment income

     2,869,529  
  

 

 

 

Expenses:

  

Management and investment advisory fees (Note 2)

     327,233  

Administrative service fees (Note 2):

  

Institutional Class

     34,559  

Y Class

     6,058  

Investor Class

     3,412  

A Class

     998  

C Class

     386  

Transfer agent fees:

  

Institutional Class

     3,515  

Y Class

     360  

Investor Class

     1,716  

A Class

     63  

C Class

     45  

Custody and fund accounting fees

     55,479  

Professional fees

     98,307  

Registration fees and expenses

     69,025  

Service fees (Note 2):

  

Y Class

     6,655  

Investor Class

     8,137  

A Class

     1,675  

C Class

     671  

Distribution fees (Note 2):

  

A Class

     2,793  

C Class

     4,473  

Prospectus and shareholder report expenses

     14,974  

Trustee fees

     4,192  

Other expenses

     7,723  
  

 

 

 

Total expenses

     652,449  
  

 

 

 

Net fees waived and expenses reimbursed (Note 2)

     (201,928
  

 

 

 

Net expenses

     450,521  
  

 

 

 

Net investment income

     2,419,008  
  

 

 

 

Realized and unrealized gain (loss) from investments:

  

Net realized gain (loss) from:

  

Investments

     (1,100,111

Change in net unrealized appreciation (depreciation) of:

  

Investments

     4,409,874  
  

 

 

 

Net gain from investments

     3,309,763  
  

 

 

 

Net increase in net assets resulting from operations

   $ 5,728,771  
  

 

 

 

 

See accompanying notes

 

17


American Beacon Crescent Short Duration High Income FundSM

Statement of Changes in Net Assets

 

 

     Crescent Short Duration High
Income Fund
 
     Year Ended
January 31, 2017
    Year Ended
January 31, 2016
 

Increase (Decrease) in Net Assets:

    

Operations:

    

Net investment income

   $ 2,419,008     $ 2,169,994  

Net realized gain (loss) from investments

     (1,100,111     (1,364,082

Change in net unrealized appreciation (depreciation) from investments

     4,409,874       (2,381,371
  

 

 

   

 

 

 

Net increase (decrease) in net assets resulting from operations

     5,728,771       (1,575,459
  

 

 

   

 

 

 

Net investment income:

    

Institutional Class

     (1,882,382     (1,759,283

Y Class

     (321,091     (271,569

Investor Class

     (147,957     (99,781

A Class

     (50,709     (31,972

C Class

     (16,867     (7,389
  

 

 

   

 

 

 

Net distributions to shareholders

     (2,419,006     (2,169,994
  

 

 

   

 

 

 

Capital Share Transactions:

    

Proceeds from sales of shares

     19,803,117       34,658,888  

Reinvestment of dividends and distributions

     2,333,667       2,130,973  

Cost of shares redeemed

     (13,547,704     (16,928,188
  

 

 

   

 

 

 

Net increase in net assets from capital share transactions

     8,589,080       19,861,673  
  

 

 

   

 

 

 

Net increase in net assets

     11,898,845       16,116,220  
  

 

 

   

 

 

 

Net Assets:

    

Beginning of period

     50,503,766       34,387,546  
  

 

 

   

 

 

 

End of Period *

   $ 62,402,611     $ 50,503,766  
  

 

 

   

 

 

 

*  Includes undistributed (overdistribution of) net investment income

   $ 310     $ 308  
  

 

 

   

 

 

 

 

See accompanying notes

 

18


American Beacon Crescent Short Duration High Income FundSM

Notes to Financial Statements

January 31, 2017

 

 

1. Organization and Significant Accounting Policies

American Beacon Funds (the “Trust”), is organized as a Massachusetts business trust and is registered under the Investment Company Act of 1940, as amended (the “Act”), as a diversified, open-end management investment company. As of January 31, 2017, the Trust consists of twenty-seven active series, one of which is presented in this filing (the “Fund”): American Beacon Crescent Short Duration High Income Fund (“Crescent Short Duration Fund”). The remaining twenty-six active series are reported in separate filings.

American Beacon Advisors, Inc. (the “Manager”) is a wholly-owned subsidiary of Resolute Investment Managers, Inc., which is indirectly owned by investment funds affiliated with Kelso & Company, L.P. and Estancia Capital Management, LLC, and was organized in 1986 to provide business management, advisory, administrative and asset management consulting services to the Trust and other investors.

New Accounting Pronouncements

In October 2016, the SEC adopted amendments to rules under the Investment Company Act of 1940 (“final rules”) intended to modernize the reporting and disclosure of information by registered investment companies.

The final rules amend Regulation S-X and require funds to provide standardized, enhanced derivative disclosure in fund financial statements in a format designed for individual investors. The amendments to Regulation S-X also update the disclosures for other investments and investments in, and advances to affiliates and amend the rules regarding the general form and content of fund financial statements. The compliance date for the amendments to Regulation S-X is August 1, 2017. Management is currently evaluating the amendments and its impact, if any, on the fund’s financial statements.

Class Disclosure

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

 

Class    Eligible Investors    Minimum Initial
Investments
 

Institutional

   Large institutional investors - sold directly or through intermediary channels.    $ 250,000  

Y Class

   Large institutional retirement plan investors - sold directly or through intermediary channels.    $ 100,000  

Investor

   All investors using intermediary organizations such as broker-dealers or retirement plan sponsors - sold directly through intermediary channels.    $ 2,500  

A Class

   All investors who invest through intermediary organizations, such as broker-dealers or third party administrator. Retail investors who invest directly through a financial intermediary such as a broker, bank, or registered investment advisor, which may include a front-end sales charge and a contingent deferred sales charge (“CDSC”).    $ 2,500  

C Class

   Retail investors who invest directly through a financial intermediary such as a broker or employee directed benefit plans with applicable sales charges, which may include CDSC.    $ 1,000  

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

The following is a summary of significant accounting policies, consistently followed by the Fund in the preparation of the financial statements. The Funds are investment companies, and accordingly, follow the investment company accounting and reporting guidance of the Financial Accounting Standards Board Accounting Standard Codification Topic 946, Financial Services - Investment Companies, which is part of U.S. Generally Accepted Accounting Principles (“U.S. GAAP”).

 

 

19


American Beacon Crescent Short Duration High Income FundSM

Notes to Financial Statements

January 31, 2017

 

 

Security Transactions and Investment Income

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

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

Dividends to Shareholders

Dividends from net investment income of the Fund generally will be declared daily and paid monthly. Distributions, if any, of net realized capital gains are generally paid at least annually and recorded on the ex-dividend date. Dividends to shareholders are determined in accordance with federal income tax regulations, which may differ in amount and character from net investment income and realized gains recognized for purposes of U.S. GAAP.

Allocation of Income, Expenses, Gains, and Losses

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

Use of Estimates

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

Other

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

Concentration of Ownership

From time to time, the Fund may have a concentration of one or more accounts constituting a significant percentage of shares outstanding. Investment activities by holders of accounts that represent a controlling ownership of more than 5% of the Fund’s outstanding shares could have a material impact on the Fund. As of January 31, 2017, based on management’s evaluation of the shareholder account base, two accounts have been identified as representing a non-affiliated controlling ownership of approximately 60% of the Fund’s outstanding shares.

 

 

20


American Beacon Crescent Short Duration High Income FundSM

Notes to Financial Statements

January 31, 2017

 

 

2. Transactions with Affiliates

Management Agreement

From February 1, 2016 to May 29, 2016 the Trust and the Manager were parties to a Management Agreement that obligated the Manager to provide or oversee the provision of all investment advisory, fund management, and securities lending services. As compensation for performing the duties required under the Management Agreement, the Manager received from the Fund an annualized fee equal to 0.05% of the average daily net assets. Effective May 29, 2016 the Fund and the Manager entered a Management Agreement that obligates the Manager to provide investment advisory, fund management, and administrative services to the Fund. As compensation for performing the duties under the Management Agreement, the Manager receives from the Fund an annualized fee at the following annual rates as a percentage of average daily net assets: 0.35% of the first $5 billion, 0.325% of the next $5 billion, 0.30% of the next $10 billion, and 0.275% over $20 billion. The Fund also pays the unaffiliated investment advisor hired to direct investment activities of the Fund an annualized investment advisory fee based on a percentage of the Fund’s average daily assets. Management fees paid by the Fund during the year ended January 31, 2017 were as follows:

 

Fund

   Management Fee
Rate
    Management
Fee
     Amounts Paid
to Investment
Advisor
     Amounts Paid
to Manager
 

Crescent Short Duration

     0.75   $ 327,233      $ 198,536      $ 128,697  

Administration Agreement

From February 1, 2016 to May 29, 2016, the Manager and the Trust were parties to an Administration Agreement which obligated the Manager to provide or oversee administrative services to the Fund. As compensation for performing the duties required under the Administration Agreement, the Manager received an annualized fee of 0.30% of the average daily net assets of the Institutional, Y, Investor, A, and C Classes of the Fund.

Distribution Plans

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

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

Service Plans

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

 

 

21


American Beacon Crescent Short Duration High Income FundSM

Notes to Financial Statements

January 31, 2017

 

 

Sub-Transfer Agent Fees

The Manager has entered into agreements, which include servicing agreements, with financial intermediaries that provide recordkeeping, processing, shareholder communications and other services to customers of the intermediaries that hold positions in the Institutional Class of the Fund and has agreed to compensate the intermediaries for providing these services. Intermediaries transact with the Fund primarily through the use of omnibus accounts on behalf of their customers who hold positions in the Fund. Certain services would have been provided by the Fund’s transfer agent and other service providers if the shareholders’ accounts were maintained directly by the Fund’s transfer agent. Accordingly, the Fund, pursuant to the Trust’s Board of Trustees (the “Board”) approval, have agreed to reimburse the Manager for all or a portion of the servicing fees paid to these intermediaries for the Institutional Class. The reimbursement amounts (sub-transfer agent fees) paid to the Manager are subject to a fee limit of up to 0.10% of an intermediaries average net assets in the Institutional Class on an annual basis. For the year ended January 31, 2017, the sub-transfer agent fees, as included in “Transfer agent fees” on the Statement of Operations, were as follows:

 

Fund

   Sub-Transfer Agent Fees  

Crescent Short Duration

   $ 2,234  

As of January 31, 2017, the Fund owes the manager the following reimbursements of sub-transfer agent fees, as included in “Transfer agent fees payable” on the Statement of Assets and Liabilities:

 

Fund

   Reimbursement of
Sub-Transfer Agent Fees
 

Crescent Short Duration

   $ 78  

Investment in Affiliated Funds

The Fund may invest in the American Beacon U.S. Government Money Market Select Fund (the “USG Select Fund”). Cash collateral received by the Fund in connection with securities lending may also be invested in the USG Select Fund. The Fund and the USG Select Fund have the same investment advisor and therefore, are considered to be affiliated. The Manager serves as the investment advisor to the USG Select Fund and receives management and administrative fees totaling 0.10% of the average daily net assets of the USG Select Fund. During the year ended January 31, 2017, the Manager earned fees on the Fund’s direct investments in the USG Select Fund as shown below:

 

Fund

   Direct Investments
in USG Select Fund
 

Crescent Short Duration

   $ 2,499  

Interfund Lending Program

Pursuant to an exemptive order issued by the Securities and Exchange Commission (“SEC”), the Funds, along with other registered investment companies having management contracts with the Manager, may participate in an interfund lending program. This program provides an alternative credit facility allowing the Funds to borrow from other participating Funds. During the year ended January 31, 2017, the Fund did not utilize the credit facility.

 

 

22


American Beacon Crescent Short Duration High Income FundSM

Notes to Financial Statements

January 31, 2017

 

 

Expense Reimbursement Plan

The Manager contractually agreed to reimburse the Fund to the extent that total annual fund operating expenses exceeded a Fund’s expense cap. For the year ended January 31, 2017, the Manager waived or reimbursed expenses as follows:

 

     Class    Expense Cap     Reimbursed
Expenses
     Expiration

Fund

      2/1/2016 to 1/31/2017       

Crescent Short Duration

   Institutional      0.85   $ 157,876      2020

Crescent Short Duration

   Y      0.95     27,055      2020

Crescent Short Duration

   Investor      1.23     10,650      2020

Crescent Short Duration

   A      1.25     4,535      2020

Crescent Short Duration

   C      2.00     1,812      2020

Of these amounts, $30,815 was disclosed as a receivable from the Manager on the Statement of Assets and Liabilities for the Fund at January 31, 2017. The Fund has adopted an Expense Reimbursement Plan whereby the Manager may seek repayment of fees waived or expenses reimbursed for a period of up to three years. However, reimbursement will occur only if the Class’ average net assets have grown or expenses have declined sufficiently to allow reimbursement without causing its expense ratio to exceed the previously agreed upon contractual expense limit. The Fund has not recorded a liability for these potential reimbursements due to the current assessment that reimbursements are unlikely. The carryover of excess expenses potentially reimbursable to the Manager are as follows:

 

Fund

   Recovered
Expenses
     Excess Expense
Carryover
     Expiration of
Reimbursed Expenses

Crescent Short Duration

   $ —        $ 167,017      2018

Crescent Short Duration

     —          180,253      2019

Sales Commissions

The Fund’s distributor, Foreside Fund Services, LLC (“Foreside”), may receive a portion of A Class sales charges from broker dealers and it may be used to offset distribution related expenses. During the year ended January 31, 2017, Foreside collected $118 for the Fund from the sale of Class A Shares.

A CDSC of 0.50% will be deducted with respect to Class A Shares on certain purchases of $1,000,000 or more that are redeemed in whole or part within 18 months of purchase, unless waived as discussed in the Prospectus. Any applicable CDSC will be 0.50% of the lesser of the original purchase price or the value of the redemption of the Class A Shares redeemed. During the year ended January 31, 2017, there were no CDSC fees collected for Class A Shares of the Fund.

A CDSC of 1.00% will be deducted with respect to Class C Shares redeemed within 12 months of purchase, unless waived as discussed in the Prospectus. Any applicable CDSC will be 1.00% of the lesser of the original purchase price or the value of the redemption of the Class C Shares redeemed. During the year ended January 31, 2017, CDSC fees of $290 were collected for the Fund.

Trustee Fees and Expenses

As compensation for their service to the Trust and the American Beacon Select Funds Trust, each Trustee receives an annual retainer of $120,000, plus $5,000 for each Board of Trustee meeting attended in person or via teleconference, $2,500 for attendance by Committee members at meetings of the Audit Committee and the Investment Committee, and $1,500 for attendance by Committee members at meetings of the Nominating and Governance Committee, plus reimbursement of reasonable expenses incurred in attending Board meetings, Committee meetings, and relevant educational seminars. The Trustees also may be compensated for attendance at special Board and/or Committee meetings from time to time. The Board Chairman receives an additional annual retainer of $50,000 as well as a single $5,000 fee each quarter for his attendance at the committee meetings. The chairpersons of the Audit Committee and the Investment Committee each receive an additional annual retainer of $25,000 and the Chairman of the Nominating and Governance Committee receives an additional annual retainer of $10,000. These expenses are allocated on a prorated basis to each Fund of the Trust according to its respective net assets.

 

 

23


American Beacon Crescent Short Duration High Income FundSM

Notes to Financial Statements

January 31, 2017

 

 

3. Security Valuation and Fair Value Measurements

Investments are valued at the close of the New York Stock Exchange (the “Exchange”), normally 4:00 p.m. Eastern Time, each day that the Exchange is open for business. Equity securities, including exchange-traded funds (“ETFs”) for which market quotations are available are valued at the last sale price or official closing price (closing bid price or last evaluated quote if no sale has occurred) on the primary market or exchange on which they trade.

Debt securities are normally valued on the basis of prices provided by an independent pricing service and may take into account appropriate factors such as trading in similar groups of securities, yield, quality, coupon rate, maturity, type of issue, trading characteristics, and other market data. The prices of debt securities may be determined using quotes obtained from brokers.

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

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

For valuation purposes, the last quoted price of non U.S. equity securities may be adjusted under the circumstances described below. If the Fund determines that developments between the close of a foreign market and the close of the Exchange will, in its judgment, materially affect the value of some or all of its portfolio securities, the Fund will adjust the previous closing prices to reflect what it believes to be the fair value of the securities as of the close of the Exchange. In deciding whether it is necessary to adjust closing prices to reflect fair value, the Fund reviews a variety of factors, including developments in foreign markets, the performance of U.S. securities markets, and the performance of instruments trading in U.S. markets that represent foreign securities and baskets of foreign securities. A Fund may also fair value securities in other situations, such as when a particular foreign market is closed but the Fund is open. Adjustments to closing prices to reflect fair value on affected foreign securities may be provided by an independent pricing service.

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

Valuation Inputs

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

 

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

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

Fixed income securities including corporate, convertible and municipal bonds and notes, U.S. government agencies, U.S. treasury obligations, sovereign issues, bank loans, convertible preferred securities, and non-U.S. bonds are normally valued by pricing service providers that use broker dealer quotations, reported trades or valuation estimates from their internal pricing models. The service providers’ internal models use inputs that are

 

 

24


American Beacon Crescent Short Duration High Income FundSM

Notes to Financial Statements

January 31, 2017

 

 

observable such as issuer details, interest rates, yield curves, prepayment speeds, credit risks/spreads, default rates and quoted prices for similar assets. Securities that use similar valuation techniques and inputs as described above are categorized as Level 2 of the fair value hierarchy.

Fixed income securities purchased on a delayed-delivery basis are marked to market daily until settlement at the forward settlement date are categorized as Level 2 of the fair value hierarchy.

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

Investments in registered open-end investment management companies will be valued based upon the NAVs of such investments and are categorized as Level 1 of the fair value hierarchy.

Level 3 trading assets and trading liabilities, at fair value

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

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

Market quotes are considered not readily available in circumstances where there is an absence of current or reliable market-based data (e.g., trade information or broker quotes), including where events occur after the close of the relevant market, but prior to the Exchange close, that materially affect the values of a Fund’s securities or assets. In addition, market quotes are considered not readily available when, due to extraordinary circumstances, the exchanges or markets on which the securities trade, do not open for trading for the entire day and no other market prices are available. The Board has delegated to the Manager the responsibility for monitoring significant events that may materially affect the fair values of a Fund’s securities or assets and for determining whether the value of the applicable securities or assets should be re-evaluated in light of such significant events.

The Board has adopted methods for valuing securities and other assets in circumstances where market quotes are not readily available, and has delegated the responsibility for applying the valuation methods to the Manager. For instances in which daily market quotes are not readily available, investments may be valued, pursuant to guidelines established by the Board. In the event that the security or asset cannot be valued pursuant to one of the valuation methods established by the Board, the fair value of the security or asset will be determined in good faith by the Valuation Committee, generally based upon recommendations provided by the Manager.

When the Fund uses fair valuation methods applied by the Manager that use significant unobservable inputs to determine its NAV, the securities priced using this methodology are categorized as Level 3 of the fair value hierarchy. These methods may require subjective determinations about the value of a security. While the Trust’s policy is intended to result in a calculation of a Fund’s NAV that fairly reflects security values as of the time of pricing, the Trust cannot guarantee that values determined by the Board or persons acting at their direction would accurately reflect the price that a Fund could obtain for a security if it were to dispose of that security as of the time of pricing (for instance, in a forced or distressed sale). The prices used by the Fund may differ from the value that would be realized if the securities were sold.

 

 

25


American Beacon Crescent Short Duration High Income FundSM

Notes to Financial Statements

January 31, 2017

 

 

For fair valuations using significant unobservable inputs, U.S. GAAP requires a reconciliation of the beginning to ending balances for reported fair values that presents changes attributable to total realized and unrealized gains or losses, purchases and sales, and transfers in and out of the Level 3 category during the period. In accordance with the requirements of U.S. GAAP, a fair value hierarchy and Level 3 reconciliation, if any, have been included below.

The Fund’s investments are summarized by level based on the inputs used to determine their values. As of

January 31, 2017, the investments were classified as described below:

 

Crescent Short Duration Fund (1)

   Level 1      Level 2      Level 3      Total  

Common Stock

   $ 5,994      $ —        $ —        $ 5,994  

Bank Loan Obligations

     —          15,268,599        —          15,268,599  

Corporate Obligations

     —          46,013,302        —          46,013,302  

Short-Term Investments - Money Market Funds

     2,498,843        —          —          2,498,843  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total Investments in Securities

   $ 2,504,837      $ 61,281,901      $ —        $ 63,786,738  
  

 

 

    

 

 

    

 

 

    

 

 

 

 

* Refer to the Schedule of Investments for Industry Information.

U.S. GAAP also requires all significant transfers between any levels to be disclosed. The end of period timing recognition has been adopted for the transfers between levels of the Funds’ assets and liabilities. During the year ended January 31, 2017, the Fund transferred out $243,809 in bank loan obligations from Level 3 to Level 2, as this security is being priced by our primary pricing vendor.

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

 

Crescent Short Duration Fund

   Bank Loan Obligations  

Balance as of 1/31/2016

   $ 483,000  

Net purchases

     30,488  

Net sales

     276,842  

Realized gain (loss)

     5,331  

Change in unrealized appreciation (depreciation)

     1,832  

Transfer to Level 3

     —    

Transfer out of Level 3

     243,809  
  

 

 

 

Balance as of 1/31/2017

   $ —    
  

 

 

 

Change in unrealized at period end**

   $ 1,832  
  

 

 

 

 

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

 

4. Securities and Other Investments

Bank Loans and Senior Loans

Loans are typically administered by a bank, insurance company, finance company or other financial institution (the “agent”) for a lending syndicate of financial institutions. In a typical loan, the agent administers the terms of the loan agreement and is responsible for the collection of principal and interest and fee payments from the borrower and the apportionment of these payments to all lenders that are parties to the loan agreement. In addition, an institution (which may be the agent) may hold collateral on behalf of the lenders. Typically, under loan agreements, the agent is given broad authority in monitoring the borrower’s performance and is obligated to use the same care it would use in the management of its own property. In asserting rights against a borrower, the Fund normally will be dependent on the willingness of the lead bank to assert these rights, or upon a vote of all the lenders to authorize the action. If an agent becomes insolvent, or has a receiver, conservator, or similar official appointed for it by the appropriate regulatory authority, or becomes a debtor in a bankruptcy proceeding, the agent’s appointment may be terminated and a successor agent would be appointed. If an appropriate regulator or court determines that assets held by the agent for the benefit of purchasers of loans are subject to the claims

 

 

26


American Beacon Crescent Short Duration High Income FundSM

Notes to Financial Statements

January 31, 2017

 

 

of the agent’s general or secured creditors, the Fund might incur certain costs and delays in realizing payment on a loan or suffer a loss of principal and/or interest. The Fund may be subject to similar risks when it buys a participation interest or an assignment from an intermediary.

Bank loans can be fixed and floating rate loans arranged through private negotiations between a company or a non-U.S. government and one or more financial institutions (lenders). The Fund may invest in senior loans, which are floating rate loans that hold a senior position in the capital structure of U.S. and foreign corporations, partnerships or other business entities that, under normal circumstances, allow them to have priority of claim ahead of other obligations of a borrower in the event of liquidation. Bank loans and senior loans may be collateralized or uncollateralized. They pay interest at rates that float above, or are adjusted periodically based on, a benchmark that reflects current interest rates. The Fund may invest in such loans in the form of participations in loans and assignments of all or a portion of loans from third parties. In connection with purchasing participations in such instruments, the Fund generally will have no right to enforce compliance by the borrower with the terms of the loan agreement relating to the loan, nor any rights of set-off against the borrower, and the Fund may not benefit directly from any collateral supporting the loan in which it has purchased the participation. When the Fund purchases assignments from lenders, the Fund will acquire direct rights against the borrower on the loan.

Corporate debt and other fixed-income securities

Typically, the values of fixed-income securities change inversely with prevailing interest rates. Therefore, a fundamental risk of fixed-income securities is interest rate risk, which is the risk that their value will generally decline as prevailing interest rates rise, which may cause a Fund’s net asset value to likewise decrease, and vice versa. How specific fixed-income securities may react to changes in interest rates will depend on the specific characteristics of each security. For example, while securities with longer maturities tend to produce higher yields, they also tend to be more sensitive to changes in prevailing interest rates and are therefore more volatile than shorter-term securities and are subject to greater market fluctuations as a result of changes in interest rates. Fixed-income securities are also subject to credit risk, which is the risk that the credit strength of an issuer of a fixed-income security will weaken and/or that the issuer will be unable to make timely principal and interest payments and that the security may go into default.

Floating Rate Loan Interests

Floating rate loan interests held by the Fund are typically issued to companies (the “borrower”) by banks, other financial institutions, and privately and publicly offered corporations (the “lender”). Floating rate loan interests are generally non-investment grade, often involve borrowers whose financial condition is troubled or uncertain and companies that are highly leveraged. The Fund may invest in obligations of borrowers who are in bankruptcy proceedings. Floating rate loan interests may include fully funded term loans or revolving lines of credit. Floating rate loan interests are typically senior in the corporate capital structure of the borrower. Floating rate loan interests generally pay interest at rates that are periodically determined by reference to a base lending rate plus a premium. The base lending rates are generally the lending rate offered by one or more European banks, such as the London Interbank Offered Rate (“LIBOR”), the prime rate offered by one or more U.S. banks or the certificate of deposit rate. Floating rate loan interests may involve foreign borrowers, and investments may be denominated in foreign currencies. The Fund considers these investments to be investments in debt securities for purposes of its investment policies.

When the Fund purchases a floating rate loan interest it may receive a facility fee and when it sells a floating rate loan interest, it may pay a facility fee. On an ongoing basis, the Fund may receive a commitment fee based on the undrawn portion of the underlying line of credit amount of a floating rate loan interest. Facility and commitment fees are typically amortized to income over the term of the loan or term of the commitment, respectively. Consent and amendment fees are recorded to income as earned. Prepayment penalty fees, which may be received by the Fund upon the prepayment of a floating rate loan interest by a borrower, are recorded as realized gains. The Fund may invest in multiple series or tranches of a loan. A different series or tranche may have varying terms and carry different associated risks.

 

 

27


American Beacon Crescent Short Duration High Income FundSM

Notes to Financial Statements

January 31, 2017

 

 

Floating rate loan interests are usually freely callable at the borrower’s option. The Fund may invest in such loans in the form of participations in loans (“Participations”) or assignments (“Assignments”) of all or a portion of loans from third parties. Participations typically will result in the Fund having a contractual relationship only with the lender, not with the borrower. The Fund will have the right to receive payments of principal, interest and any fees to which it is entitled only from the lender selling the Participation and only upon receipt by the lender of the payments from the borrower. In connection with purchasing Participations, the Fund generally will have no right to enforce compliance by the borrower with the terms of the loan agreement, nor any rights of offset against the borrower, and the Fund may not benefit directly from any collateral supporting the loan in which it has purchased the Participation. As a result, the Fund will assume the credit risk of both the borrower and the lender that is selling the Participation. The Fund’s investment in Participations involves the risk of insolvency of the financial intermediaries who are parties to the transactions. In the event of the insolvency of the lender selling the Participation, the Fund may be treated as a general creditor of the lender and may not benefit from any offset between the lender and the borrower. Assignments typically result in the Fund having a direct contractual relationship with the borrower, and the Fund may enforce compliance by the borrower with the terms of the loan agreement.

In connection with floating rate loan interests, the Fund may also enter into unfunded floating rate loan interests (“commitments”). In connection with these commitments, the Fund earns a commitment fee, typically set as a percentage of the commitment amount. Such fee income, which is included in “Interest income” in the Statement of Operations, is recognized ratably over the commitment period. Unfunded floating rate loan interests are marked-to-market daily, and any unrealized appreciation (depreciation) is included in the Statement of Assets and Liabilities and Statement of Operations.

High Yield Securities

High yield securities are debt obligations rated below investment grade (such as BB or lower by Standard & Poor’s Ratings Services or Fitch, Inc. and/or Ba or lower by Moody’s Investors Service, Inc.) or not rated, but considered by a subadvisor to be of similar quality. These types of securities are also commonly referred to as “junk bonds”.

Foreign Debt Securities

A Fund may invest in foreign fixed and floating rate income securities (including emerging market securities) all or a portion of which may be non-U.S. dollar denominated and which include: (a) debt obligations issued or guaranteed by foreign national, provincial, state, municipal or other governments with taxing authority or by their agencies or instrumentalities, including Brady Bonds; (b) debt obligations of supranational entities; (c) debt obligations of the U.S. Government issued in non-dollar securities; (d) debt obligations and other fixed income securities of foreign corporate issuers (both dollar and non-dollar denominated); and (e) U.S. corporate issuers (both Eurodollar and non- dollar denominated). There is no minimum rating criteria for a Fund’s investments in such securities. Investing in the securities of foreign issuers involves special considerations that are not typically associated with investing in the securities of U.S. issuers. In addition, emerging markets are markets that have risks that are different and higher than those in more developed markets.

 

 

28


American Beacon Crescent Short Duration High Income FundSM

Notes to Financial Statements

January 31, 2017

 

 

5. Principal Risks

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

Credit Risk

The Fund is subject to the risk that the issuer or guarantor of a debt security, or the counterparty to a derivatives contract or a loan will fail to make timely payment of interest or principal or otherwise honor its obligations or default completely. Credit risk is typically greater for securities with ratings that are below investment grade (commonly referred to as “junk bonds”). Since the Fund can invest significantly in lower-quality debt securities considered speculative in nature, this risk will be substantial.

Floating Rate Securities Risk

The interest rates payable on floating rate securities are not fixed and may fluctuate based upon changes in market rates. The interest rate on a floating rate security is a variable rate which is tied to another interest rate, such as a money-market index or Treasury bill rate. Floating rate securities are subject to interest rate risk and credit risk.

As short-term interest rates decline, interest payable on floating rate securities typically should decrease. Alternatively, during periods of increasing interest rates, changes in the interest rates of floating rate securities may lag behind changes in market rates or may have limits on the maximum increases in interest rates. The value of floating rate securities may decline if their interest rates do not rise as much, or as quickly, as interest rates in general. Conversely, floating rate securities will not generally increase in value if interest rates decline.

Foreign Investing Risk

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

High Yield Securities Risk

Investing in high yield, below investment-grade securities (commonly referred to as “junk bonds”) generally involves significantly greater risks of loss of your money than an investment in investment grade securities. High yield debt securities may fluctuate more widely in price and yield and may fall in price when the economy is weak or expected to become weak. High yield securities are considered to be speculative with respect to an issuer’s ability to pay interest and principal and carry a greater risk that the issuers of lower-rated securities will default on the timely payment of principal and interest. Below investment grade securities may experience greater price volatility and less liquidity than investment grade securities.

Illiquid and Restricted Securities Risk

Securities not registered in the U.S. under the Securities Act of 1933, as amended (the “Securities Act”), including Rule 144A securities, are restricted as to their resale. Such securities may not be listed on an exchange and may have no active trading market. They may be more difficult to purchase or sell at an advantageous time or price because such securities may not be readily marketable in broad public markets, or may have to be held for a certain time period before they can be resold. The Fund may not be able to sell a restricted security when the sub-advisor considers it desirable to do so and/or may have to sell the security at a lower price than the Fund believes is its fair market value. In addition, transaction costs may be higher for restricted securities and the Fund may receive only limited information regarding the issuer of a restricted security. The Fund may have to bear the expense of registering restricted securities for resale and the risk of substantial delays in effecting the registration.

 

 

29


American Beacon Crescent Short Duration High Income FundSM

Notes to Financial Statements

January 31, 2017

 

 

Interest Rate Risk

The Fund is subject to the risk that the market value of fixed income securities it holds will decline due to rising interest rates. As of the date of this Prospectus, interest rates are near historic lows, but may rise substantially and/or rapidly, potentially resulting in substantial losses to the Fund. Generally, the value of investments with interest rate risk, such as fixed income securities, will move in the opposite direction as movements in interest rates. The prices of fixed income securities are also affected by their durations. Fixed income securities with longer duration generally have greater sensitivity to changes in interest rates. For example, if a bond has a duration of three years, a 1% increase in interest rates could be expected to result in a 3% decrease in the value of the bond. Significant upward pressure on domestic interest rates and a corresponding widening of credit spreads could negatively impact the market price of emerging debt investments. An increase in interest rates can impact markets broadly as well.

Investment Risk

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

Liquidity Risk

The Fund is susceptible to the risk that certain investments held by the Fund may have limited marketability or be subject to restrictions on sale, and may be difficult to sell at favorable times or prices. The Fund could lose money if it is unable to dispose of an investment at a time that is most beneficial to the Fund. For example, the Fund may be forced to sell certain investments at unfavorable prices to meet redemption requests or other cash needs.

Loan Interests Risk

Unlike publicly traded common stocks which trade on national exchanges, there is no central place or exchange for loans to trade. Loans trade in an over-the- counter market, and confirmation and settlement, which are effected through standardized procedures and documentation, may take significantly longer than seven days to complete. Extended trade settlement periods may, in unusual market conditions with a high volume of shareholder redemptions, present a risk to shareholders regarding the Fund’s ability to pay redemption proceeds within the allowable time periods stated in its prospectus. The secondary market for floating rate loans also may be subject to irregular trading activity and wide bid/ask spreads. The lack of an active trading market for certain floating rate loans may impair the ability of the Fund to sell its loan interests at a time when it may otherwise be desirable to do so or may require the Fund to sell them at prices that are less than what the Fund regards as their fair market value and may make it difficult to value such loans. Interests in loans made to finance highly leveraged companies or transactions, such as corporate acquisitions, may be especially vulnerable to adverse changes in economic or market conditions. When the Fund’s loan interest is a participation, the Fund is subject to the risk that the party selling the participation interest will not remit the Fund’s pro rata share of loan payments to the Fund and the Fund may have less control over the exercise of remedies than the party selling the participation interest.

Market Risk

Since the financial crisis that started in 2008, the U.S. and many foreign economies continue to experience its after-effects, which have resulted, and may continue to result, in fixed income instruments experiencing unusual liquidity issues, increased price volatility and, in some cases, credit downgrades and increased likelihood of default. These events have reduced the willingness and ability of some lenders to extend credit, and have made it more difficult for some borrowers to obtain financing on attractive terms, if at all. In addition, global economies and financial markets are becoming increasingly interconnected, which increases the possibilities that conditions

 

 

30


American Beacon Crescent Short Duration High Income FundSM

Notes to Financial Statements

January 31, 2017

 

 

in one country or region might adversely impact issuers in a different country or region. The severity or duration of adverse economic conditions may also be affected by policy changes made by governments or quasi-governmental organizations.

In addition, political events within the U.S. and abroad may affect investor and consumer confidence and may adversely impact financial markets and the broader economy, perhaps suddenly and to a significant degree. High public debt in the U.S. and other countries creates ongoing systemic and market risks and policymaking uncertainty. Because the impact on the markets has been widespread, it may be difficult to identify both risks and opportunities using past models of the interplay of market forces, or to predict the duration of these market conditions. Interest rates have been unusually low in recent years in the U.S. and abroad. Because there is little precedent for this situation, it is difficult to predict the impact on various markets of a significant rate increase, whether brought about by U.S. policy makers or by dislocations in world markets. In addition, there is a risk that the prices of goods and services in the U.S. and many foreign economies may decline over time, known as deflation (the opposite of inflation). Deflation may have an adverse effect on stock prices and creditworthiness and may make defaults on debt more likely.

Other Investment Companies Risk

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

Preferred Stock Risk

If interest rates rise, the dividend on preferred stocks may be less attractive, causing the price of preferred stocks to decline. The rights of preferred stock on distribution of a corporation’s assets in the event of its liquidation are generally subordinated to the rights associated with a corporation’s debt securities. Therefore, in the event of an issuer’s bankruptcy, there is substantial risk that there will be nothing left to pay preferred stockholders after payments, if any, to bondholders have been made. Preferred stocks may also be subject to credit risk.

Prepayment and Extension Risk

Prepayment risk is the risk that the principal amount of the underlying collateral may be repaid prior to the bond’s maturity date. Due to a decline in interest rates or excess cash flow, a debt security may be called or otherwise prepaid before maturity. If this occurs, no additional interest will be paid on the investment and the Fund may have to invest at a lower rate, may not benefit from an increase in value that may result from declining interest rates, and may lose any premium it paid to acquire the security. Extension risk is the risk that a decrease in prepayments may, as a result of higher interest rates or other factors, result in the extension of a security’s effective maturity, heighten interest rate risk and increase the potential for a decline in its price.

Unrated Securities Risk

Because the Fund may purchase securities that are not rated by any rating organization, the sub-advisor may internally assign ratings to certain of those securities, after assessing their credit quality, in categories of those similar to those of rating organizations. Some unrated securities may not have an active trading market or may be difficult to value, which means the Fund might have difficulty selling them promptly at an acceptable price.

 

 

31


American Beacon Crescent Short Duration High Income FundSM

Notes to Financial Statements

January 31, 2017

 

 

6. Federal Income and Excise Taxes

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

The Fund does not have any unrecorded tax liabilities in the accompanying financial statements. The tax years ended January 31, 2015, 2016, and 2017 are subject to examination by the Internal Revenue Service. If applicable, the Fund recognizes interest accrued related to unrecognized tax benefits in interest expense and penalties in “Other expenses” on the Statement of Operations.

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

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

The tax character of distributions paid were as follows:

 

Distributions paid from:    Year Ended
January 31,
2017
     Year Ended
January 31,
2016
 

Ordinary Income*

     

Institutional Class

   $ 1,882,382      $ 1,759,283  

Y Class

     321,091        271,569  

Investor Class

     147,957        99,781  

A Class

     50,709        31,972  

C Class

     16,867        7,389  
  

 

 

    

 

 

 

Total distributions paid

   $ 2,419,006      $ 2,169,994  
  

 

 

    

 

 

 

 

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

As of January 31, 2017, the components of distributable earnings (deficits) on a tax basis were as follows:

 

Cost basis of investments for federal income tax purposes

   $ 62,594,773  

Unrealized appreciation

     1,564,674  

Unrealized depreciation

     (372,709
  

 

 

 

Net unrealized appreciation (depreciation)

     1,191,965  

Undistributed ordinary income

     4,443  

Undistributed long-term capital gains

     —    

Accumulated capital and other losses

     (2,738,300

Other temporary differences

     (4,133
  

 

 

 

Distributable earnings (deficits)

   $ (1,546,025
  

 

 

 

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

 

 

32


American Beacon Crescent Short Duration High Income FundSM

Notes to Financial Statements

January 31, 2017

 

 

Due to inherent differences in the recognition of income, expenses and realized gains (losses) under U.S. GAAP and federal income tax regulations, permanent differences between book and tax reporting have been identified and appropriately reclassified on the Statements of Assets and Liabilities. There are no permanent differences as of January 31, 2017.

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

For the year ended January 31, 2017, the Fund has $1,136,714 of short-term capital loss carryforward and $1,601,586 of long-term capital loss carryforwards. The ability to utilize capital loss carryforwards in the future may be limited under the Internal Revenue Code and related regulations based on the results of future transactions.

 

7. Investment Transactions

The aggregate cost of purchases and proceeds from sales and maturities of long-term investments, other than short-term obligations, for the year ended January 31, 2017 were as follows:

 

     Crescent Short
Duration Fund
 

Purchases (excluding U.S. government securities)

   $ 57,429,904  

Sales and Maturities (excluding U.S. government securities)

     44,965,345  

A summary of the Fund’s direct transactions in the USG Select Fund for the year ended January 31, 2017 were as follows:

 

Type of Transaction

   January 31, 2016
Shares/Fair Value
     Purchases      Sales      January 31, 2017
Shares/Fair Value
     Dividend Income  

Direct

   $ —        $ 39,088,928      $ 36,590,085      $ 2,498,843      $ 7,120  

 

8. Capital Share Transactions

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

 

     Institutional Class  
     Year Ended January 31,  
     2017      2016  

Crescent Short Duration High Income Fund

   Shares      Amount      Shares      Amount  

Shares sold

     1,604,936      $ 15,345,755        1,754,507      $ 16,841,437  

Reinvestment of dividends

     199,329        1,878,899        184,571        1,754,659  

Shares redeemed

     (530,776      (4,904,046      (1,334,707      (12,827,294
  

 

 

    

 

 

    

 

 

    

 

 

 

Net increase in shares outstanding

     1,273,489      $ 12,320,608        604,371      $ 5,768,802  
  

 

 

    

 

 

    

 

 

    

 

 

 
     Y Class  
     Year Ended January 31,  
     2017      2016  

Crescent Short Duration High Income Fund

   Shares      Amount      Shares      Amount  

Shares sold

     374,672      $ 3,523,009        1,230,642      $ 11,854,195  

Reinvestment of dividends

     30,309        285,423        28,553        267,579  

Shares redeemed

     (695,631      (6,454,380      (326,905      (3,064,331
  

 

 

    

 

 

    

 

 

    

 

 

 

Net increase (decrease) in shares outstanding

     (290,650    $ (2,645,948      932,290      $ 9,057,443  
  

 

 

    

 

 

    

 

 

    

 

 

 

 

 

33


American Beacon Crescent Short Duration High Income FundSM

Notes to Financial Statements

January 31, 2017

 

 

     Investor Class  
     Year Ended January 31,  
     2017      2016  

Crescent Short Duration High Income Fund

   Shares      Amount      Shares      Amount  

Shares sold

     45,154      $ 424,004        411,947      $ 3,980,643  

Reinvestment of dividends

     11,800        111,013        7,913        73,947  

Shares redeemed

     (174,202      (1,643,102      (44,272      (417,208
  

 

 

    

 

 

    

 

 

    

 

 

 

Net increase (decrease) in shares outstanding

     (117,248    $ (1,108,085      375,588      $ 3,637,382  
  

 

 

    

 

 

    

 

 

    

 

 

 
     A Class  
     Year Ended January 31,  
     2017      2016  

Crescent Short Duration High Income Fund

   Shares      Amount      Shares      Amount  

Shares sold

     26,753      $ 254,321        146,078      $ 1,413,995  

Reinvestment of dividends

     4,742        44,656        3,024        28,318  

Shares redeemed

     (23,427      (221,496      (44,422      (424,009
  

 

 

    

 

 

    

 

 

    

 

 

 

Net increase in shares outstanding

     8,068      $ 77,481        104,680      $ 1,018,304  
  

 

 

    

 

 

    

 

 

    

 

 

 
     C Class  
     Year Ended January 31,  
     2017      2016  

Crescent Short Duration High Income Fund

   Shares      Amount      Shares      Amount  

Shares sold

     27,226      $ 256,028        61,004      $ 568,618  

Reinvestment of dividends

     1,451        13,676        693        6,470  

Shares redeemed

     (34,989      (324,680      (21,075      (195,346
  

 

 

    

 

 

    

 

 

    

 

 

 

Net increase (decrease) in shares outstanding

     (6,312    $ (54,976      40,622      $ 379,742  
  

 

 

    

 

 

    

 

 

    

 

 

 

 

9. Subsequent Events

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

 

 

34


American Beacon Crescent Short Duration High Income FundSM

Financial Highlights

(For a share outstanding throughout the period)

 

 

     Institutional Class  
     Year Ended January 31,    

October 1 A

to

January 31,

 
     2017     2016     2015  

Net asset value, beginning of period

   $ 9.01     $ 9.68     $ 10.00  
  

 

 

   

 

 

   

 

 

 

Income from investment operations:

      

Net investment income

     0.46       0.47       0.16  

Net gains (losses) on investments (both realized and unrealized)

     0.63       (0.67     (0.32
  

 

 

   

 

 

   

 

 

 

Total income (loss) from investment operations

     1.09       (0.20     (0.16
  

 

 

   

 

 

   

 

 

 

Less distributions:

      

Dividends from net investment income

     (0.46     (0.47     (0.16

Distributions from net realized gains

     —         —         —    
  

 

 

   

 

 

   

 

 

 

Total distributions

     (0.46     (0.47     (0.16
  

 

 

   

 

 

   

 

 

 

Net asset value, end of period

   $ 9.64     $ 9.01     $ 9.68  
  

 

 

   

 

 

   

 

 

 

Total return B

     12.38     (2.23 )%      (1.65 )%C 
  

 

 

   

 

 

   

 

 

 

Ratios and supplemental data:

      

Net assets, end of period

   $ 51,834,666     $ 36,971,459     $ 33,903,138  

Ratios to average net assets:

      

Expenses, before reimbursements

     1.26     1.27     2.24 %D 

Expenses, net of reimbursements

     0.85     0.85     0.85 %D 

Net investment income, before expense reimbursements

     4.51     4.41     3.37 %D 

Net investment income, net of reimbursements

     4.93     4.83     4.76 %D 

Portfolio turnover rate

     95     72     31 %E 
     Y Class  
     Year Ended January 31,    

October 1 A

to

January 31,

 
     2017     2016     2015  

Net asset value, beginning of period

   $ 9.00     $ 9.68     $ 10.00  
  

 

 

   

 

 

   

 

 

 

Income from investment operations:

      

Net investment income

     0.45       0.46       0.15  

Net gains (losses) on investments (both realized and unrealized)

     0.63       (0.68     (0.32
  

 

 

   

 

 

   

 

 

 

Total income (loss) from investment operations

     1.08       (0.22     (0.17
  

 

 

   

 

 

   

 

 

 

Less distributions:

      

Dividends from net investment income

     (0.45     (0.46     (0.15

Distributions from net realized gains

     —         —         —    
  

 

 

   

 

 

   

 

 

 

Total distributions

     (0.45     (0.46     (0.15
  

 

 

   

 

 

   

 

 

 

Net asset value, end of period

   $ 9.63     $ 9.00     $ 9.68  
  

 

 

   

 

 

   

 

 

 

Total return B

     12.27     (2.39 )%      (1.68 )%C 
  

 

 

   

 

 

   

 

 

 

Ratios and supplemental data:

      

Net assets, end of period

   $ 6,277,416     $ 8,481,991     $ 98,343  

Ratios to average net assets:

      

Expenses, before reimbursements

     1.36     1.29     7.71 %D 

Expenses, net of reimbursements

     0.95     0.95     0.95 %D 

Net investment income (loss), before expense reimbursements

     4.42     4.80     (2.11 )%D 

Net investment income, net of reimbursements

     4.83     5.14     4.64 %D 

Portfolio turnover rate

     95     72     31 %E 

 

A  October 1, 2014 is the inception date of the Crescent Short Duration High Income Fund.
B  Based on net asset value, which does not reflect the sales charge, redemption fee, or contingent deferred sales charge, if applicable. May include adjustments in accordance with U.S. GAAP and as such, the net asset value for reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns from shareholder transactions.
C  Not annualized.
D  Annualized.
E  Portfolio turnover rate is for the period from October 1, 2014 to January 31, 2015, and is not annualized.

 

 

35


American Beacon Crescent Short Duration High Income FundSM

Financial Highlights

(For a share outstanding throughout the period)

 

 

     Investor Class  
     Year Ended January 31,     October 1 A
to
January 31,
 
     2017     2016     2015  

Net asset value, beginning of period

   $ 9.01     $ 9.69     $ 10.00  
  

 

 

   

 

 

   

 

 

 

Income from investment operations:

      

Net investment income

     0.43       0.44       0.14  

Net gains (losses) on investments (both realized and unrealized)

     0.63       (0.68     (0.31
  

 

 

   

 

 

   

 

 

 

Total income (loss) from investment operations

     1.06       (0.24     (0.17
  

 

 

   

 

 

   

 

 

 

Less distributions:

      

Dividends from net investment income

     (0.43     (0.44     (0.14

Distributions from net realized gains

     —         —         —    
  

 

 

   

 

 

   

 

 

 

Total distributions

     (0.43     (0.44     (0.14
  

 

 

   

 

 

   

 

 

 

Net asset value, end of period

   $ 9.64     $ 9.01     $ 9.69  
  

 

 

   

 

 

   

 

 

 

Total return B

     11.96     (2.67 )%      (1.67 )%C 
  

 

 

   

 

 

   

 

 

 

Ratios and supplemental data:

      

Net assets, end of period

   $ 2,679,338     $ 3,560,159     $ 189,898  

Ratios to average net assets:

      

Expenses, before reimbursements

     1.56     1.46     6.21 %D 

Expenses, net of reimbursements

     1.23     1.23     1.23 %D 

Net investment income (loss), before expense reimbursements

     4.22     4.44     (0.41 )%D 

Net investment income, net of reimbursements

     4.55     4.68     4.57 %D 

Portfolio turnover rate

     95     72     31 %E 
     A Class  
     Year Ended January 31,     October 1 A
to
January 31,
 
     2017     2016     2015  

Net asset value, beginning of period

   $ 9.00     $ 9.68     $ 10.00  
  

 

 

   

 

 

   

 

 

 

Income from investment operations:

      

Net investment income

     0.43       0.43       0.14  

Net gains (losses) on investments (both realized and unrealized)

     0.63       (0.68     (0.32
  

 

 

   

 

 

   

 

 

 

Total income (loss) from investment operations

     1.06       (0.25     (0.18
  

 

 

   

 

 

   

 

 

 

Less distributions:

      

Dividends from net investment income

     (0.43     (0.43     (0.14

Distributions from net realized gains

     —         —         —    
  

 

 

   

 

 

   

 

 

 

Total distributions

     (0.43     (0.43     (0.14
  

 

 

   

 

 

   

 

 

 

Net asset value, end of period

   $ 9.63     $ 9.00     $ 9.68  
  

 

 

   

 

 

   

 

 

 

Total return B

     11.94     (2.71 )%      (1.78 )%C 
  

 

 

   

 

 

   

 

 

 

Ratios and supplemental data:

      

Net assets, end of period

   $ 1,183,362     $ 1,033,329     $ 98,255  

Ratios to average net assets:

      

Expenses, before reimbursements

     1.66     1.55     7.97 %D 

Expenses, net of reimbursements

     1.25     1.25     1.25 %D 

Net investment income (loss), before expense reimbursements

     4.13     4.28     (2.37 )%D 

Net investment income, net of reimbursements

     4.54     4.59     4.36 %D 

Portfolio turnover rate

     95     72     31 %E 

 

A  October 1, 2014 is the inception date of the Crescent Short Duration High Income Fund.
B  Based on net asset value, which does not reflect the sales charge, redemption fee, or contingent deferred sales charge, if applicable. May include adjustments in accordance with U.S. GAAP and as such, the net asset value for reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns from shareholder transactions.
C  Not annualized.
D  Annualized.
E  Portfolio turnover rate is for the period from October 1, 2014 to January 31, 2015, and is not annualized.

 

 

36


American Beacon Crescent Short Duration High Income FundSM

Financial Highlights

(For a share outstanding throughout the period)

 

 

     C Class  
     Year Ended January 31,     October 1 A
to
January 31,
 
     2017     2016     2015  

Net asset value, beginning of period

   $ 9.00     $ 9.68     $ 10.00  
  

 

 

   

 

 

   

 

 

 

Income from investment operations:

      

Net investment income

     0.35       0.36       0.12  

Net gains (losses) on investments (both realized and unrealized)

     0.63       (0.68     (0.32
  

 

 

   

 

 

   

 

 

 

Total income (loss) from investment operations

     0.98       (0.32     (0.20
  

 

 

   

 

 

   

 

 

 

Less distributions:

      

Dividends from net investment income

     (0.35     (0.36     (0.12

Distributions from net realized gains

     —         —         —    
  

 

 

   

 

 

   

 

 

 

Total distributions

     (0.35     (0.36     (0.12
  

 

 

   

 

 

   

 

 

 

Net asset value, end of period

   $ 9.63     $ 9.00     $ 9.68  
  

 

 

   

 

 

   

 

 

 

Total return B

     11.10     (3.40 )%      (2.03 )%C 
  

 

 

   

 

 

   

 

 

 

Ratios and supplemental data:

      

Net assets, end of period

   $ 427,829     $ 456,828     $ 97,911  

Ratios to average net assets:

      

Expenses, before reimbursements

     2.41     2.36     8.70 %D 

Expenses, net of reimbursements

     2.00     2.00     2.00 %D 

Net investment income (loss), before expense reimbursements

     3.37     3.76     (3.12 )%D 

Net investment income, net of reimbursements

     3.78     4.12     3.59 %D 

Portfolio turnover rate

     95     72     31 %E 

 

A  October 1, 2014 is the inception date of the Crescent Short Duration High Income Fund.
B  Based on net asset value, which does not reflect the sales charge, redemption fee, or contingent deferred sales charge, if applicable. May include adjustments in accordance with U.S. GAAP and as such, the net asset value for reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns from shareholder transactions.
C  Not annualized.
D  Annualized.
E  Portfolio turnover rate is for the period from October 1, 2014 to January 31, 2015, and is not annualized.

 

 

37


American Beacon FundsSM

Federal Tax Information

January 31, 2017 (Unaudited)

 

Certain tax information regarding the Fund is required to be provided to shareholders based upon the Fund’s income and distribution for the taxable year ended January 31, 2017. The information and distributions reported herein may differ from information and distributions taxable to the shareholders for the calendar year ended December 31, 2016.

The Fund designated the following items with regard to distributions paid during the year ended December 31, 2016. All designations are based on financial information available as of this annual report and, accordingly, are subject to change. For each item, it is the intention of the Fund to designate the maximum amount permitted under the Internal Revenue Code of 1986, as amended, and the regulations there under.

 

Corporate Dividends Received Deduction

     0.0

Qualified Dividend Income

     0.0

Shareholders received notification in January 2017 of the appropriate tax information necessary to prepare their 2016 income tax returns.

 

 

38


Trustees and Officers of the American Beacon FundsSM

 

The Trustees and officers of the American Beacon Funds (the “Trust”) are listed below, together with their principal occupations during the past five years. Unless otherwise indicated, the address of each person listed below is 220 Las Colinas Boulevard East, Suite 1200, Irving, Texas 75039. Each Trustee oversees twenty-eight funds in the fund complex that includes the Trust and the American Beacon Select Funds. The Trust’s Statement of Additional Information contains additional information about the Trustees and is available without charge by calling 1-800-658-5811.

 

Name, Age and Address

  

Position, Term of

Office and Length

of Time Served

with the Trust

  

Principal Occupation(s) During Past 5 Years

and Current Directorships

INTERESTED TRUSTEES      
   Lifetime of Trust until removal, resignation or retirement*   
Alan D. Feld** (80)    Trustee since 1996    Sole Shareholder of a professional corporation which is a Partner in the law firm of Akin, Gump, Strauss, Hauer & Feld, LLP (law firm) (1960-Present); Trustee, American Beacon Mileage Funds (1996-2012); Trustee, American Beacon Select Funds (1999-Present); Trustee, American Beacon Master Trust (1996-2012).
NON-INTERESTED TRUSTEES    Term   
   Lifetime of Trust until removal resignation or retirement*   
Gilbert G. Alvarado (47)    Trustee since 2015    Director, Kura MD, Inc. (local telehealth organization) (2015-present); Vice President & CFO, Sierra Health Foundation (health conversion private foundation) (2006-Present) Vice President & CFO, Sierra Health Foundation: Center for Health Program Management (California public benefit corporation) (2012-Present); Director, Innovative North State (2012-Present); Director, Sacramento Regional Technology Alliance (2011-Present); Director, Women’s Empowerment (2009-2014); Trustee, American Beacon Select Funds (2015-Present).
Josephe B. Armes (54)    Trustee since 2015    Chairman & CEO, CSW Industrials f/k/a Capital Southwest Corporation (investment company) (2013-Present); President & CEO, JBA Investment Partners (family investment vehicle) (2010-Present); Chief Operating Officer, Hicks Holdings, LLC (Hicks Family assets and investments) (2005-2010); Trustee, Baylor University Board of Regents (2001-2010); Director and Chair of Audit Committee, RSP Permian (oil and gas producer) (2013-Present); Trustee, American Beacon Select Funds (2015-Present).
Gerard J. Arpey (58)    Trustee since 2012    Director, The Home Depot, Inc. (2015-Present); Partner, Emerald Creek Group (private equity firm) (2011-Present); Chairman and Chief Executive Officer, AMR Corp. and American Airlines; Inc. (2003- 2011); Director, S. C. Johnson & Son, Inc. (privately held company) (2008-present); Trustee, American Beacon Select Funds (2012-Present).
Brenda A. Cline (56)    Trustee since 2004    Executive Vice President, Chief Financial Officer, Treasurer and Secretary, Kimbell Art Foundation (1993-Present); Director, Range Resources Corporation (oil and natural gas company) (2015-Present); Director, Tyler Technologies, Inc.(public sector software solutions company) (2014-Present); Trustee, American Beacon Mileage Funds (2004-2012); Trustee, American Beacon Select Funds (2004-Present); Trustee, American Beacon Master Trust (2004-2012).
Eugene J. Duffy (62)    Trustee since 2008    Managing Director, Institutional Services, Intercontinental Real Estate Corporation (2014-Present); Principal and Executive Vice President, Paradigm Asset Management (1994-2014); Director, Sunrise Bank of Atlanta (2008-2013); Trustee, American Beacon Mileage Funds (2008- 2012); Trustee, American Beacon Select Funds (2008-Present); Trustee, American Beacon Master Trust (2008-2012).    

 

 

39


Trustees and Officers of the American Beacon FundsSM

 

 

Name, Age and Address

  

Position, Term of

Office and Length

of Time Served

with the Trust

  

Principal Occupation(s) During Past 5 Years

and Current Directorships

TRUSTEES (CONT.)    Term   
M. Dunning (74)    Trustee since 2008    Chairman Emeritus (2008-Present); Lockton Dunning Benefits (consulting firm in employee benefits); Board Director, Oncor Electric Delivery Company LLC (2007-Present); Board Member, BancTec (2010-Present) (software consulting); Trustee, American Beacon Mileage Funds (2008-2012); Trustee, American Beacon Select Funds (2008-Present); Trustee, American Beacon Master Trust (2008-2012).
Richard M. Massman (73)    Trustee since 2004 Chairman since 2008    Consultant and General Counsel Emeritus (2009-Present) and Senior Vice President and General Counsel (1994-2009), Hunt Consolidated, Inc. (holding company engaged in oil and gas exploration and production, refining, real estate, farming, ranching and venture capital activities); Trustee, American Beacon Mileage Funds (2004- 2012); Trustee, American Beacon Select Funds (2004-Present); Trustee, American Beacon Master Trust (2004-2012).
Barbara J. McKenna, CFA (53)    Trustee since 2012    Managing Principal, Longfellow Investment Management Company (2005- Present); Trustee, American Beacon Select Funds (2012-Present).

R. Gerald Turner (71)

225 Perkins Admin. Bldg. Southern Methodist Univ.

Dallas, Texas 75275

   Trustee since 2001    President, Southern Methodist University (1995-Present); Director, J.C. Penney Company, Inc. (1996-Present); Director, Kronus Worldwide Inc. (chemical manufacturing) (2003-Present); Trustee, American Beacon Mileage Funds (2001- 2012); Trustee, American Beacon Select Funds (2001-Present); Trustee, American Beacon Master Trust (2001-2012).
OFFICERS      
Gene. L. Needles, Jr. (62)    President since 2009 Executive Vice President since 2009    President, CEO and Director, American Beacon Advisors, Inc. (2009-Present); President, CEO and Director, Resolute Investment Managers, Inc. (2015-Present); President, CEO and Director, Resolute Acquisition, Inc.(2015-Present); President, CEO and Director, Resolute Topco, Inc. (2015-Present), President, CEO and Director, Resolute Investment Holdings, LLC. (2015-Present); President, CEO and Director, Lighthouse Holdings, Inc.; (2009-2015); President and CEO, Lighthouse Holdings Parent, Inc. (2009-2015); Manager, President and CEO, American Private Equity Management, L.L.C. (2012-Present); President, American Beacon Cayman Managed Futures Strategy Fund, Ltd. (2014-Present).
Rosemary K. Behan (57)    VP, Secretary and Chief Legal Officer since 2006    Secretary, American Beacon Advisors, Inc. (2006-Present); Secretary, Resolute Investment Managers, Inc. (2015-Present); Secretary, Resolute Acquisition, Inc. (2015- Present); Secretary, Resolute Topco, Inc. (2015-Present); Secretary, Resolute Investment Holdings, LLC. (2015-Present); Secretary, Lighthouse Holdings, Inc. (2008- 2015); Secretary, Lighthouse Holdings Parent, Inc. (2008-2015); Secretary, American Private Equity Management, L.L.C.(2008-Present); Secretary, American Beacon Cayman Managed Futures Strategy Fund, Ltd. (2014-Present).
Brian E. Brett (56)    VP since 2004    Vice President, Director of Sales, American Beacon Advisors, Inc. (2004-Present).
Paul B. Cavazos (47)    VP since 2016    Chief Investment Officer and Vice President, Asset Management, American Beacon Advisors, Inc. (2016-Present); Chief Investment Officer and Assistant Treasurer, DTE Energy (2007-2016);
Erica Duncan (46)    VP since 2011    Vice President, Marketing and Client Services, American Beacon Advisors, Inc. (2011-Present); Supervisor, Brand Marketing, Invesco (2010-2011);

 

 

40


Trustees and Officers of the American Beacon FundsSM

 

 

Name, Age and Address

  

Position, Term of

Office and Length

of Time Served

with the Trust

  

Principal Occupation(s) During Past 5 Years

and Current Directorships

OFFICERS    Term   
Melinda G. Heika (55)    Treasurer since 2010    Treasurer, American Beacon Advisors, Inc. (2010-Present); Treasurer, Resolute Investment Managers, Inc. (2015-Present); Treasurer, Resolute Acquisition, Inc. (2015-Present); Treasurer, Resolute Topco, Inc. (2015-Present); Treasurer, Resolute Investment Holdings, LLC. (2015-Present); Treasurer, Lighthouse Holdings, Inc. (2010-2015); Treasurer, Lighthouse Holdings Parent Inc., (2010-2015); Treasurer, American Private Equity Management, L.L.C. (2012-Present); Director and Treasurer, American Beacon Cayman Managed Futures Strategy Fund, Ltd. (2014-Present).
   One Year   
Terri L. McKinney (53)    VP since 2010    Vice President, Enterprise Services (2009-Present) and Managing Director (2003-2009), American Beacon Advisors, Inc.
Jeffrey K. Ringdahl (41)    VP since 2010    Chief Operating Officer, American Beacon Advisors, Inc. (2010-Present); Manager and Senior Vice President, American Private Equity Management, L.L.C. (2012-Present); Senior Vice President and Director, Resolute Investment Managers, Inc. (2015-Present); Senior Vice President and Director, Resolute Acquisition, Inc. (2015-Present); Senior Vice President and Director, Resolute Topco, Inc. (2015-Present), Senior Vice President and Director, Resolute Investment Holdings, LLC. (2015-Present); Senior Vice President, Lighthouse Holdings, Inc. (2013- 2015); Senior Vice President, Lighthouse Holdings Parent, Inc. (2013- 2015); Director and Vice President, American Beacon Cayman Managed Futures Strategy Fund, Ltd. (2014-Present); Vice President, Product Management, Touchstone Advisors, Inc. (2007-2010).
Samuel J. Silver (53)    VP since 2011    Chief Fixed Income Officer (2016–Present), Vice President, Fixed Income Investments (2011-2016) and Senior Portfolio Manager, Fixed Income Investments (1999-2011), American Beacon Advisors, Inc.
Christina E. Sears (45)    Chief Compliance Officer since 2004 and Asst. Secretary since 1999    Chief Compliance Officer, American Beacon Advisors, Inc. (2004-Present); Chief Compliance Officer, American Private Equity Management, L.L.C. (2012-Present).
Sonia L. Bates (60)    Asst. Treasurer since 2011    Director, Tax and Financial Reporting (2011-Present), Manager, Tax and Financial Reporting (2005-2010), American Beacon Advisors, Inc.; Asst. Treasurer, Resolute Investment Managers, Inc. (2015-Present); Asst. Treasurer, Resolute Acquisition, Inc.(2015-Present); Asst. Treasurer, Resolute Topco, Inc. (2015-Present); Asst. Treasurer, Resolute Investment Holdings, LLC.; Asst. Treasurer, Lighthouse Holdings, Inc. (2011-2015); Asst. Treasurer, Lighthouse Holdings Parent Inc. (2011- 2015); Asst. Treasurer, American Private Equity Management, L.L.C. (2012-Present).
Shelley D. Abrahams (42)    Assistant Secretary since 2008    Assistant Secretary, American Beacon Advisors, Inc. (2008-Present)
Rebecca L. Harris (50)    Assistant Secretary since 2011    Assistant Secretary, American Beacon Advisors, Inc. (2011-Present)
Diana N. Lai (41)    Assistant Secretary since 2012    Assistant Secretary, American Beacon Advisors, Inc. (2012-Present)
Teresa A. Oxford (58)    Assistant Secretary since 2015    Assistant Secretary, American Beacon Advisors, Inc. (2015-Present)

 

* As of 11/12/2014, the Board adopted a retirement plan that requires Trustees to retire no later than the last day of the calendar year in which they reach the age of 75.
** Mr. Feld is deemed to be an “interested person” of the Trusts, as defined by the 1940 Act. Mr. Feld’s law firm of Akin, Gump, Strauss, Hauer & Feld LLP has provided legal services within the past two fiscal years to one or more of the Trust’s sub-advisors.

 

 

41


American Beacon FundsSM

Privacy Policy

January 31, 2017 (Unaudited)

 

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

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

 

    information we receive from you on applications or other forms;

 

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

 

    information we receive from third parties.

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

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

 

 

42


 

 

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43


 

 

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44


LOGO

 

 

Delivery of Documents

eDelivery is NOW AVAILABLE - Stop traditional mail delivery and receive your shareholder reports and summary prospectus on-line. Sign up at www.americanbeaconfunds.com

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

To obtain more information about the Fund:

 

LOGO    LOGO
By E-mail:    On the Internet:
american_beacon.funds@ambeacon.com    Visit our website at www.americanbeaconfunds.com
      

LOGO

 

  

LOGO

 

By Mail:

  
By Telephone:    American Beacon Funds
Institutional, Y, and Investor Classes    P.O. Box 219643
Call (800) 658-5811    Kansas City, MO 64121-9643
      

 

Availability of Quarterly Portfolio Schedules

 

In addition to the Schedule of Investments provided in each semi-annual and annual report, the Fund files a complete schedule of its portfolio holdings with the Securities and Exchange Commission (“SEC”) on Form N-Q as of the first and third fiscal quarters. The Fund’s Forms N-Q are available on the SEC’s website at www.sec.gov. The Forms N-Q may also be reviewed and copied at the SEC’s Public Reference Section, 100 F Street, NE, Washington, D.C. 20549-2736. Information regarding the operation of the SEC’s Public Reference Room may be obtained by calling (800)-SEC-0330. A complete schedule of the Fund’s portfolio holdings is also available at www.americanbeaconfunds.com approximately sixty days after the end of each quarter.

  

 

Availability of Proxy Voting Policy and Records

 

A description of the policies and procedures the Fund uses to determine how to vote proxies relating to portfolio securities is available in the Fund’s Statement of Additional Information, is available free of charge on the Fund’s website www.americanbeaconfunds.com and by calling 1-800-967-9009 or by accessing the SEC’s website at www. sec.gov. The Fund’s proxy voting record for the most recent year ended June 30 is filed annually with the SEC on Form N-PX. The Fund’s Forms N-PX are available on the SEC’s website at www.sec.gov. The Fund’s proxy voting record may also be obtained by calling 1-800-967-9009.

Fund Service Providers:

 

CUSTODIAN

State Street Bank and

Trust

Boston, Massachusetts

 

TRANSFER AGENT

Boston Financial Data

Services

Kansas City, Missouri

 

INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM PricewaterhouseCoopers

LLP

Boston, MA

 

DISTRIBUTOR

Foreside Fund Services,

LLC

Portland, Maine

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

 

American Beacon Funds and American Beacon Crescent Short Duration High Income Fund are service marks of American Beacon Advisors, Inc.

AR 1/17


LOGO

American Beacon®
FUNDS
2017 ANNUAL REPORT
January 31, 2017
ACADIAN EMERGING MARKETS MANAGED VOLATILITY FUND
SGA GLOBAL GROWTH FUND


About American Beacon Advisors

 

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

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

ACADIAN EMERGING MARKETS MANAGED VOLATILITY FUND

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

SGA GLOBAL GROWTH FUND

Investing in foreign and emerging market securities may involve heightened risk due to currency fluctuations and economic and political risks. Growth stocks typically are more volatile than value stocks; however, value stocks have a lower expected growth rate in earnings and sales. Because the Fund may invest in fewer issuers than a more diversified portfolio, the fluctuating value of a single holding may have a greater effect on the value of the Fund. The use of futures contracts for cash management may subject the Fund to losing more money than invested. The Fund may participate in a securities lending program. Please see the prospectus for a complete discussion of the Fund’s risks. There can be no assurances that the investment objectives of this Fund will be met.

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

 

American Beacon Funds

January 31, 2017


Contents

 

 

President’s Message

     1  

Market and Performance Overviews

     2  

Expense Examples

     9  

Report of Independent Registered Public Accounting Firm

     11  

Schedules of Investments:

  

American Beacon Acadian Emerging Markets Managed Volatility Fund

     12  

American Beacon SGA Global Growth Fund

     21  

Financial Statements

     23  

Notes to Financial Statements

     27  

Financial Highlights:

  

American Beacon Acadian Emerging Markets Managed Volatility Fund

     47  

American Beacon SGA Global Growth Fund

     50  

Federal Tax Information

     53  

Trustees and Officers of the American Beacon Funds

     54  

Privacy Policy

     57  

Additional Fund Information

     Back Cover  


President’s Message

 

 

LOGO   

Dear Shareholders,

 

In the weeks ahead of the U.S. presidential election on November 8, 2016, uncertainty about the outcome caused many investors to stay on the sidelines. Some investors questioned whether the election’s result would have negative consequences for their portfolios, although elections have rarely had a lasting effect on the market.

 

Following the election, the markets responded positively to aspects of the incoming administration’s proposed plans for economic growth; i.e., repatriating jobs from overseas, relaxing regulations, lowering taxes and increasing infrastructure spending. From Election Day 2016 to Inauguration Day 2017, the S&P 500 Index – a broad measure of the performance of large U.S. companies – climbed approximately 6%.

For the 12-month period that ended January 31, 2017, the Dow Jones Industrial Average – which follows the performance of 30 significant stocks trading on the New York Stock Exchange and The NASDAQ Stock Market – gained 23.89%. The S&P 500 Index, a domestic equity bellwether, grew 20.04%. Key global equity benchmarks also posted favorable returns for the same period: The MSCI EAFE Index, which measures the world’s developed market, increased 12.03%; the MSCI All Country World Index, which includes the equity market performance of developed and emerging markets, added 17.93%; and the MSCI Emerging Markets Index achieved 25.41%.

For the 12 months ended January 31, 2017:

 

  American Beacon Acadian Emerging Markets Managed Volatility Fund (Investor Class) returned 11.89%.

 

  American Beacon SGA Global Growth Fund (Investor Class) returned 13.20%.

At American Beacon Advisors, we are proud to offer a broad range of global equity and fixed-income funds sub-advised by experienced asset managers who employ distinctive investment processes to manage assets through a variety of economic and market conditions. Together, we work diligently to help our shareholders meet their long-term financial goals.

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

 

Best Regards,
LOGO
Gene L. Needles, Jr.
President
American Beacon Funds

 

1


Global Equity and Emerging Markets Overview

January 31, 2017 (Unaudited)

 

Global equity markets rallied broadly for the 12-month period from February 2016 through January 2017, evidenced by the 17.1% return of the MSCI World Index. This strong performance occurred despite the surprise Brexit election results in the U.K. in late June and the surprise U.S. presidential election results for Donald Trump – along with a majority sweep by the Republican Party in both chambers of Congress – in November. Equity performance was lifted over the course of the year with a broad-based commodity recovery headlined by the doubling of crude oil from a low of almost $26 per barrel in February 2016 to a high of more than $52 per barrel at the end of the period.

Domestic small cap stocks, represented by the Russell 2000 Index, returned a blistering 33.5%. Small caps outperformed large cap stocks despite the S&P 500 Index returning a solid 20.0% for the year. From a sector perspective within the S&P 500 Index, the top performers were the cyclical sectors, including Materials (up 36.5%) and Financials (up 35.0%). On the other hand, those lagging were the more defensive sectors, including Consumer Staples (up 6.4%) and Health Care (up 7.7%). From a style standpoint, value outperformed growth as demonstrated by the Russell 3000 Value Index returning 25.8% versus the Russell 3000 Growth Index return of 17.9%.

International developed markets also performed reasonably well over the period as the MSCI EAFE Index returned 12.0%. In Europe, the MSCI Germany Index returned 16.3% compared to the MSCI United Kingdom Index return of 7.7%. The U.K. market lagged in terms of U.S. dollars due to headwinds from the Brexit vote and the subsequent weakening of the British pound. In Asia, the MSCI Japan Index returned a solid 15.7%.

In the developing world, emerging markets rebounded strongly as rising commodity prices lifted stocks and the MSCI Emerging Market Index returned 25.4%. Leading the way over the period was Brazil, where the MSCI Brazil Index returned a scorching 98.6% as a political regime change instilled confidence in the future direction of the economy. In China, stocks produced a solid return as the MSCI China Index was up 23.5%. President Trump’s protectionist rhetoric was heavily directed at the U.S.’s southern neighbor and a main driver causing the MSCI Mexico Index to return -3.9% for the year.

Overall, global equity investors were rewarded with a very resilient year as stocks steadily marched upward despite political surprises.

 

 

2


American Beacon Acadian Emerging Markets Managed Volatility FundSM

Performance Overview

January 31, 2017 (Unaudited)

 

The Investor Class of the American Beacon Acadian Emerging Markets Managed Volatility Fund (the “Fund”) returned 11.89% for the twelve months ended January 31, 2017. The Fund underperformed the MSCI Emerging Markets Index (the “Index”) return of 25.41% for the period.

Comparison of Changes in Value of a $10,000 Investment for the period 9/27/2013 Through 1/31/2017

 

LOGO

Total Returns for the Period ended January 31, 2017

 

     Ticker      1 Year     3 Years     Since Inception
9/27/2013
    Value of $10,000
9/27/2013-
1/31/2017
 

Institutional Class (1,3)

     ACDIX        12.37     0.02     (1.21 )%    $ 9,602  

Y Class (1,3)

     ACDYX        12.28     (0.10 )%      (1.31 )%    $ 9,568  

Investor Class (1,3)

     ACDPX        11.89     (0.36 )%      (1.58 )%    $ 9,482  

A without Sales Charge (1,3)

     ACDAX        11.84     (0.43 )%      (1.64 )%    $ 9,463  

A with Sales Charge (1,3)

     ACDAX        5.39     (2.36 )%      (3.36 )%    $ 8,919  

C without Sales Charge (1,3)

     ACDCX        11.11     (1.15 )%      (2.37 )%    $ 9,229  

C with Sales Charge (1,3)

     ACDCX        10.11     (1.15 )%      (2.37 )%    $ 9,229  

MSCI Emerging Markets Index (2)

        25.41     1.44     (0.55 )%    $ 9,835  

 

1. Performance shown is historical and is not indicative of future returns. Investment returns and principal value will vary, and shares may be worth more or less at redemption than at original purchase. Performance shown is calculated based on the published end of day net asset values as of the date indicated and current performance may be lower or higher than the performance data quoted. To obtain performance as of the most recent month end, please visit www.americanbeaconfunds.com or call 1-800-967-9009. Fund performance in the table above does not reflect the deduction of taxes a shareholder would pay on distributions or the redemption of shares. Generally accepted accounting principles require adjustments to be made to the net assets of the Fund at period end for financial reporting purposes only, and as such, the total return based on the unadjusted net asset value per share may differ from the total return reported in the financial highlights. A portion of the fees charged to each Class of the Fund has been waived since inception. Performance prior to waiving fees was lower than the actual returns shown since inception. A Class shares have a maximum sales charge of 5.75%. The maximum contingent deferred sales charge for the C Class is 1.00% for shares redeemed within one year of the date of purchase.
2. The MSCI Emerging Markets Index is a market capitalization weighted index composed of companies that are representative of the market structure of developing countries in Latin America, Asia, Eastern Europe, the Middle East and Africa. One cannot directly invest in an index.
3. The Total Annual Fund Operating Expense ratios set forth in the most recent Fund prospectus for the Institutional, Y, Investor, A, and C Class shares was 1.69%, 1.78%, 1.99%, 2.11%, and 2.88%, respectively. The expense ratios above may vary from the expense ratios presented in other sections of this report that are based on expenses incurred during the period covered by this report..

 

 

3


American Beacon Acadian Emerging Markets Managed Volatility FundSM

Performance Overview

January 31, 2017 (Unaudited)

 

 

The Fund underperformed the Index over the one-year period due to stock selection and country allocation.

Stock selections in Brazil and Mexico detracted from relative performance during the period. This was partially offset by strong selections in Thailand. The primary detractors in Brazil were stocks the portfolio did not own, including Itau Unibanco Holding S Pref (up 120.8%) and Banco Bradesco SA Pref (up 163.7%). In Mexico, portfolio holdings in Grupo Lala SAB De Cv (down 35.2%) and Grupo Bimbo SAB Series A (down 21.3%) hurt relative performance. In Thailand, a position in Thai Vegetable Oil PCL (up 93.8%) contributed positively to performance.

Relative contribution from country allocation was negative for the twelve month period. Underweighting Brazil (up 99.2%) and overweighting Malaysia (down 3.4%) were the largest detractors. On the other hand, overweighting Russia (up 56.0%) contributed positively to relative performance during the period.

The Fund’s basic philosophy remains focused on investing in a well-diversified portfolio of low volatility stocks that aims to maximize risk-adjusted returns.

 

Top Ten Holdings (% Net Assets)

     

SK Hynix, Inc.

        1.5  

China Communications Services Corp., Ltd. H

        1.3  

Samsung Electronics Co. Ltd.

        1.3  

Gazprom PJSC, ADR

        1.2  

PetroChina Co., Ltd. H

        1.1  

Agricultural Bank of China H

        1.1  

LG Electronics, Inc.

        1.1  

Severstal, Reg S

        1.1  

Bank of China Ltd. H

        1.1  

Tencent Holdings Ltd.

        1.1  

Total Fund Holdings

     370     

 

Sector Allocation (% Equities)

  

Financials

     16.9  

Consumer Staples

     16.3  

Telecommunication Services

     14.2  

Information Technology

     11.9  

Consumer Discretionary

     11.2  

Utilities

     8.3  

Industrials

     6.8  

Health Care

     5.1  

Materials

     3.6  

Energy

     3.3  

Real Estate

     2.4  

 

 

4


American Beacon Acadian Emerging Markets Managed Volatility FundSM

Performance Overview

January 31, 2017 (Unaudited)

 

 

Country Allocation (% Equities)

  

Hong Kong/China

     20.6  

India

     12.0  

South Korea

     11.6  

Taiwan

     9.3  

Malaysia

     7.4  

Thailand

     6.6  

Russia

     5.7  

Chile

     3.7  

South Africa

     3.5  

Mexico

     3.5  

Poland

     2.8  

Philippines

     2.2  

Brazil

     2.2  

Indonesia

     2.0  

Turkey

     1.7  

Hungary

     1.6  

Czech Republic

     1.5  

Egypt

     1.5  

Colombia

     0.4  

Greece

     0.1  

Peru

     0.1  

 

 

5


American Beacon SGA Global Growth FundSM

Performance Overview

January 31, 2017 (Unaudited)

 

The Investor Class of the American Beacon SGA Global Growth Fund (the “Fund”) returned 13.20% for the twelve months ended January 31, 2017. The Fund underperformed the MSCI All Country World Index (the “Index”) return of 17.93% for the period.

Comparison of Change in Value of a $10,000 Investment for the period from 12/31/2010 through 1/31/2017

 

LOGO

Total Returns for the Period ended January 31, 2017

 

     Ticker      1 Year     3 Years     5 Years     Since Inception
(12/31/2010)
    Value of $10,000
12/31/2010-
1/31/2017
 

Institutional Class (1,7)

     SGAGX        13.66     7.89     9.46     9.12   $ 17,004  

Y Class (1,2,7)

     SGAYX        13.55     7.76     9.38     9.05   $ 16,941  

Investor Class (1,3,7)

     SGAPX        13.20     7.47     9.18     8.88   $ 16,781  

A without Sales Charge (1,4,7)

     SGAAX        13.21     7.45     9.16     8.87   $ 16,772  

A with Sales Charge (1,4,7)

     SGAAX        6.72     5.36     7.88     7.82   $ 11,716  

C without Sales Charge (1,5,7)

     SGACX        12.41     6.64     8.62     8.42   $ 16,356  

C with Sales Charge (1,5,7)

     SGACX        11.41     6.64     8.62     8.42   $ 12,125  

MSCI All Country World Index (6)

        17.93     5.49     8.72     6.76   $ 15,116  

MSCI All Country World Growth Index (6)

        14.42     6.16     9.19     7.22   $ 15,061  

 

1. Performance shown is historical and is not indicative of future returns. Investment returns and principal value will vary, and shares may be worth more or less at redemption than at original purchase. Performance shown is calculated based on the published end of day net asset values as of the date indicated and current performance may be lower or higher than the performance data quoted. To obtain performance as of the most recent month end, please visit www.americanbeaconfunds.com or call 1-800-967-9009. Fund performance in the table above does not reflect the deduction of taxes a shareholder would pay on distributions or the redemption of shares. Generally accepted accounting principles require adjustments to be made to the net assets of the Fund at period end for financial reporting purposes only, and as such, the total return based on the unadjusted net asset value per share may differ from the total return reported in the financial highlights. A portion of the fees charged to each Class of the Fund has been waived since inception. Performance prior to waiving fees was lower than the actual returns shown since inception. A Class shares have a maximum sales charge of 5.75%. The maximum contingent deferred sales charge for the C Class is 1.00% for shares redeemed within one year of the date of purchase.

 

 

6


American Beacon SGA Global Growth FundSM

Performance Overview

January 31, 2017 (Unaudited)

 

 

2. Fund performance for the five-year and since inception periods represent the total returns achieved by the Institutional Class from 12/31/10 up to 10/4/13, the inception date of the Y Class, and the returns of the Y Class since its inception. Expenses of the Y Class are higher than those of the Institutional Class. As a result, total returns shown may be higher than they would have been had the Y Class been in existence since 12/31/10.
3. Fund performance for the five-year and since inception periods represent the total returns achieved by the Institutional Class from 12/31/10 up to 10/4/13, the inception date of the Investor Class, and the returns of the Investor Class since its inception. Expenses of the Investor Class are higher than those of the Institutional Class. As a result, total returns shown may be higher than they would have been had the Investor Class been in existence since 12/31/10.
4. Fund performance for the five-year and since inception periods represent the total returns achieved by the Institutional Class from 12/31/10 up to 10/4/13, the inception date of the A Class, and the returns of the A Class since its inception. Expenses of the A Class are higher than those of the Institutional Class. As a result, total returns shown may be higher than they would have been had the A Class been in existence since 12/31/10. The maximum sales charge for A Class is 5.75%.
5. Fund performance for the five-year and since inception periods represent the total returns achieved by the Institutional Class from 12/31/10 up to 10/4/13, the inception date of the C Class, and the returns of the C Class since its inception. Expenses of the C Class are higher than those of the Institutional Class. As a result, total returns shown may be higher than they would have been had the C Class been in existence since 12/31/10. The maximum contingent deferred sales charge for C Class is 1.00% for shares redeemed within one year of the date of purchase.
6. The MSCI All Country World Index (“ACWI”) is a free float-adjusted, market capitalization weighted index that is designed to measure the equity market performance of developed and emerging markets. The MSCI All Country World Growth Index is designed to measure equity market performance of companies with higher growth values in developed and emerging markets. One cannot directly invest in an index.
7. The Total Annual Fund Operating Expense ratios set forth in the most recent Fund prospectus for the Institutional, Y, Investor, A and C Class shares was 2.63%, 2.73%, 3.09%, 3.06% and 3.77%, respectively. The expense ratios above may vary from the expense ratios presented in other sections of this report that are based on expenses incurred during the period covered by this report.

From a country perspective, stock selection detracted from performance and country allocation added to performance relative to the Index over the one-year period.

Stock selections in South Korea and Denmark detracted from the Fund’s relative performance during the period, including Amorepacific Corp., and LG Household + Health Care (down 18.7% and 22.5%, respectively) in South Korea, and Novo Nordisk A/S B (down 30.4%) in Denmark. Stock selection in the United Kingdom, including ARM Holdings PLC and Aon PLC (up 56.5% and 27.1%, respectively) contributed positively to the Fund.

From a country allocation perspective, overweighting Brazil (up 99.2%) and underweighting the United Kingdom (up 5.8%) aided relative performance, overcoming value lost through overweighting Denmark (down 8.0%).

The Fund’s basic philosophy remains focused on investing in low-risk companies that offer predictable earnings and cash flow growth over the long term.

 

Top Ten Holdings (% Net Assets)

     

Tencent Holdings Ltd.

        4.0  

AIA Group Ltd.

        4.0  

SAP AG, Sponsored ADR

        3.9  

Visa, Inc., Class A

        3.9  

Novo Nordisk A.S., Class B

        3.5  

Regeneron Pharmaceuticals, Inc.

        3.1  

Salesforce.com, Inc.

        3.0  

Apple, Inc.

        2.9  

priceline.com, Inc.

        2.9  

Equinix Inc.

        2.9  

Total Fund Holdings

     35     

 

 

7


American Beacon SGA Global Growth FundSM

Performance Overview

January 31, 2017 (Unaudited)

 

 

Sector Allocation (% Equities)

  

Information Technology

     34.5  

Consumer Staples

     19.5  

Consumer Discretionary

     14.5  

Health Care

     11.2  

Financials

     6.3  

Energy

     6.0  

Real Estate

     5.2  

Industrials

     2.8  

Country Allocation (% Equities)

  

United States

     56.2  

Hong Kong/China

     8.4  

India

     4.6  

Germany

     4.2  

Denmark

     3.7  

United Kingdom

     3.1  

France

     3.1  

Netherlands

     2.9  

South Africa

     2.7  

South Korea

     2.5  

Bermuda

     2.1  

Japan

     2.1  

Mexico

     2.0  

Argentina

     1.4  

Australia

     1.0  

 

 

8


American Beacon FundsSM

Expense Examples

January 31, 2017 (Unaudited)

 

Fund Expense Example

As a shareholder of the Funds, you incur two types of costs: (1) transaction costs, such as sales charges (loads) on purchase payments and redemption fees, and (2) ongoing costs, including management fees, administrative service fees, distribution (12b-1) fees, and other Fund expenses. The Examples are intended to help you understand the ongoing cost (in dollars) of investing in the Funds and to compare these costs with the ongoing costs of investing in other mutual funds. The Examples are based on an investment of $1,000 invested at the beginning of the period in each Class and held for the entire period from August 1, 2016 through January 31, 2017.

Actual Expenses

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

Hypothetical Example for Comparison Purposes

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

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

 

 

9


American Beacon FundsSM

Expense Examples

January 31, 2017 (Unaudited)

 

 

Acadian Emerging Markets Managed Volatility Fund

 

     Beginning Account Value
8/1/2016
     Ending Account Value
1/31/2017
     Expenses Paid During
Period
8/1/2016-1/31/2017*
 

Institutional Class

        

Actual

   $ 1,000.00      $ 993.05      $ 6.76  

Hypothetical**

   $ 1,000.00      $ 1,018.35      $ 6.85  

Y Class

        

Actual

   $ 1,000.00      $ 991.98      $ 7.26  

Hypothetical**

   $ 1,000.00      $ 1,017.85      $ 7.35  

Investor Class

        

Actual

   $ 1,000.00      $ 990.35      $ 8.66  

Hypothetical**

   $ 1,000.00      $ 1,016.44      $ 8.77  

A Class

        

Actual

   $ 1,000.00      $ 990.14      $ 8.75  

Hypothetical**

   $ 1,000.00      $ 1,016.34      $ 8.87  

C Class

        

Actual

   $ 1,000.00      $ 986.43      $ 12.48  

Hypothetical**

   $ 1,000.00      $ 1,012.57      $ 12.65  

 

* Expenses are equal to the Fund’s annualized net expense ratios for the six-month period of 1.35%, 1.45%, 1.73%, 1.75% and 2.50% for the Institutional, Y, Investor, A and C Classes, respectively, multiplied by the average account value over the period, multiplied by the number derived by dividing the number of days in the most recent fiscal half-year (184) by days in the year (366) to reflect the half-year period.
** 5% return before expenses.

SGA Global Growth Fund

 

     Beginning Account Value
8/1/2016
     Ending Account Value
1/31/2017
     Expenses Paid During
Period
8/1/2016-1/31/2017*
 

Institutional Class

        

Actual

   $ 1,000.00      $ 969.90      $ 4.85  

Hypothetical**

   $ 1,000.00      $ 1,020.21      $ 4.98  

Y Class

        

Actual

   $ 1,000.00      $ 969.16      $ 5.30  

Hypothetical**

   $ 1,000.00      $ 1,019.76      $ 5.43  

Investor Class

        

Actual

   $ 1,000.00      $ 967.68      $ 6.63  

Hypothetical**

   $ 1,000.00      $ 1,018.38      $ 6.80  

A Class

        

Actual

   $ 1,000.00      $ 968.27      $ 6.83  

Hypothetical**

   $ 1,000.00      $ 1,018.22      $ 7.00  

C Class

        

Actual

   $ 1,000.00      $ 964.35      $ 10.47  

Hypothetical**

   $ 1,000.00      $ 1,014.47      $ 10.74  

 

* Expenses are equal to the Fund’s annualized net expense ratios for the six-month period of 0.98%, 1.07%, 1.34%, 1.38% and 2.12% for the Institutional, Y, Investor, A and C Classes, respectively, multiplied by the average account value over the period, multiplied by the number derived by dividing the number of days in the most recent fiscal half-year (184) by days in the year (366) to reflect the half-year period.
** 5% return before expenses.

 

 

10


American Beacon FundsSM

Report of Independent Registered Public Accounting Firm

 

To the Board of Trustees of American Beacon Funds and Shareholders of American Beacon Acadian Emerging Markets Managed Volatility Fund and American Beacon SGA Global Growth Fund

In our opinion, the accompanying statements of assets and liabilities, including the schedules of investments, as of January 31, 2017, and the related statements of operations and of changes in net assets and the financial highlights for the year then ended, present fairly, in all material respects, each of the financial positions of American Beacon Acadian Emerging Markets Managed Volatility Fund and American Beacon SGA Global Growth Fund (two of the series constituting American Beacon Funds, hereafter referred to as the “Funds”) as of January 31, 2017, the results of each of their operations, the changes in each of their net assets and each of their financial highlights for the year then ended, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as “financial statements”) are the responsibility of the Funds’ management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities as of January 31, 2017 by correspondence with the custodian and brokers or by other appropriate auditing procedures where replies were not received, provide a reasonable basis for our opinions. The financial statements of each of the Funds as of and for the year ended January 31, 2016 and the financial highlights for each of the periods ended on or prior to January 31, 2016 (not presented herein, other than the statements of changes in net assets and the financial highlights) were audited by other auditors whose report dated March 31, 2016 expressed an unqualified opinion on those financial statements and financial highlights.

PricewaterhouseCoopers

Boston, Massachusetts

March 30, 2017

 

 

11


American Beacon Acadian Emerging Markets Managed Volatility FundSM

Schedule of Investments

January 31, 2017

 

 

     Shares      Fair Value  

Brazil - 2.18%

     

Common Stocks - (Cost $1,745,419)

     

AmBev S.A.

     98,000      $ 534,924  

BRF S.A.

     43,400        612,346  

Dimed SA Distribuidora da MedicamentosA

     300        61,597  

FII BTG Pactual Corp. Office FundB

     2,670        81,512  

Grendene S.A.

     11,200        65,790  

Hypermarcas S.A.

     56,700        502,924  
     

 

 

 

Total Common Stocks

        1,859,093  
     

 

 

 

Preferred Stocks - (Cost $157,964)

     

Centrais Eletricas Santa CatarinaC

     1,100        6,385  

Cia de Gas de Sao Paulo, Class AC

     6,262        92,506  
     

 

 

 

Total Preferred Stocks

        98,891  
     

 

 

 

Total Brazil

        1,957,984  
     

 

 

 

Chile - 3.65%

     

Common Stocks - (Cost $3,372,432)

     

Aguas Andinas S.A., Class A

     78,422        42,577  

AntarChile S.A

     2,356        25,774  

Banco de Chile, ADRD

     2,821        201,166  

Banco de Chile

     4,513        538  

Cencosud S.A

     11,293        57,219  

Compania Cervecerias Unidas S.A., Sponsored ADRD

     32,647        737,496  

Embotelladora Andina S.A., Series B, ADR D

     12,400        266,600  

Empresa Nacional de Electricidad S.A

     210,481        135,416  

Empresa Nacional de Electricidad S.A., Sponsored ADRD

     7,877        152,656  

Enel Americas S.A

     589,347        105,407  

Enel Americas S.A., ADRD

     59,791        539,913  

Enersis Chile S.A

     3,176,390        526,016  

Engie Energia Chile S.A

     44,541        73,482  

Inversiones Aguas Metropolitanas S.A.

     64,069        92,265  

Sigdo Koppers S.A

     16,018        20,499  

Sociedad Matriz del Banco de Chile S.A., Class B

     252,545        85,665  

Vina Concha y Toro S.A.

     111,423        181,245  

Vina Concha y Toro S.A., Sponsored ADRD

     1,112        36,329  
     

 

 

 

Total Chile

        3,280,263  
     

 

 

 

Colombia - 0.43%

     

Common Stocks - (Cost $410,096)

     

Grupo Aval Acciones y Valores S.A., ADR D

     45,923        382,079  
     

 

 

 

Czech Republic - 1.51%

     

Common Stocks - (Cost $1,351,462)

     

CEZ A.S.

     44,493        762,376  

Komercni Banka A.S.

     3,083        109,003  

O2 Czech Republic A.S

     19,874        205,640  

Pegas Nonwovens S.A.

     5,825        190,823  

Philip Morris CR A.S.A

     163        86,114  
     

 

 

 

Total Czech Republic

        1,353,956  
     

 

 

 

Egypt - 1.49%

     

Common Stocks - (Cost $1,395,278)

     

Commercial International Bank Egypt SAE

     154,250        623,430  

Eastern Tobacco

     14,398        148,159  

Egyptian International Pharmaceuticals

     492        2,337  

 

See accompanying notes

 

12


American Beacon Acadian Emerging Markets Managed Volatility FundSM

Schedule of Investments

January 31, 2017

 

 

     Shares      Fair Value  

Egypt - 1.49% (continued)

     

Common Stocks - (Cost $1,395,278) (continued)

     

Elswedy Electric Co.

     11,392      $ 50,377  

Faisal Islamic Bank of Egypt

     1,500        1,316  

Global Telecom Holding SAE

     144,513        53,840  

Sidi Kerir Petrochemicals Co.

     120,679        127,684  

Telecom Egypt

     512,669        331,679  
     

 

 

 

Total Egypt

        1,338,822  
     

 

 

 

Greece - 0.08%

     

Common Stocks - (Cost $72,850)

     

Hellenic Telecommunications Organization S.A.

     7,655        69,662  
     

 

 

 

Hong Kong/China - 20.29%

     

Common Stocks - (Cost $17,214,550)

     

Agricultural Bank of China H

     2,343,000        984,441  

Bank of China Ltd. H

     2,142,000        977,288  

Bank of Chongqing Co., Ltd. H

     181,000        156,764  

Bank of Communications Co., Ltd. H

     613,000        454,285  

Bank of Jinzhou Co. Ltd.

     33,000        40,022  

C.banner International Holdings Ltd.A

     121,000        35,868  

China Communications Services Corp., Ltd. H

     1,682,000        1,146,784  

China Construction Bank H

     1,265,000        945,624  

China Creative Home Group Ltd.

     492,000        22,194  

China Dongxiang Group Co., Ltd.

     1,477,000        276,025  

China Lilang Ltd.

     31,000        18,818  

China Mobile Ltd.

     81,500        922,782  

China Petroleum & Chemical Corp., H

     154,000        123,257  

China Resources Enterprise Ltd.A

     298,000        606,839  

China SCE Property Holdings Ltd.A

     282,000        90,500  

China Shineway Pharmaceutical Group Ltd.

     159,000        182,794  

China Telecom Corp., Ltd. H

     1,726,000        820,856  

China Unicom Hong Kong Ltd.

     808,000        960,157  

China Vanke Co. Ltd.

     101,800        259,784  

China Yuchai International Ltd.

     457        6,357  

CITIC Ltd.

     408,000        606,828  

Cosco International Holdings Ltd.E

     64,000        28,953  

COSCO Shipping Ports Ltd.E

     74,000        73,820  

CSPC Pharmaceutical Group Ltd.

     424,000        478,707  

Dah Chong Hong Holdings Ltd.

     72,000        29,417  

Fuguiniao Co., Ltd. H N

     28,000        13,966  

Goldlion Holdings Ltd.

     46,000        18,320  

Haier Electronics Group Co., Ltd.

     94,000        165,977  

Hengan International Group Co., Ltd.

     100,000        821,637  

Hopewell Highway Infrastructure Ltd.

     654,500        345,854  

Huishang Bank Corp., Ltd. H

     605,000        306,442  

Industrial & Commercial Bank of China Ltd. H

     1,568,000        965,993  

Jinmao China Hotel Investments and Management Ltd.

     45,000        22,909  

K Wah International Holdings Ltd.

     278,000        139,378  

KFM Kingdom Holdings Ltd.

     88,000        12,930  

Kingboard Chemical Holdings Ltd.

     206,000        711,544  

Kingboard Laminates Holdings Ltd.

     63,500        70,056  

Koradior Holdings Ltd.

     200,000        240,240  

NVC Lighting Holding Ltd.

     2,128,000        257,810  

PetroChina Co., Ltd. H

     1,258,000        1,008,488  

Powerlong Real Estate Holdings Ltd.

     72,000        21,158  

Qinqin Foodstuffs Group Cayman Co., Ltd.A

     676,400        214,456  

Road King Infrastructure Ltd.

     140,000        120,713  

Ronshine China Holdings Ltd.A

     545,500        449,258  

 

See accompanying notes