Example
This Example is intended to help you compare the cost of investing in the Fund with the cost of investing in other mutual funds. The Example assumes that you invest $10,000 in the Fund for the time periods indicated and then redeem all of your shares at the end of those periods. The Example also assumes that your investment has a 5% return each year and that the Fund’s operating expenses remain the same. Although your actual costs may be higher or lower, based on these assumptions, your costs would be:
|
Share classes
|
|
1 year
|
|
3 years
|
|
5 years
|
|
10 years
|
|
A
|
|
$364
|
|
$635
|
|
$926
|
|
$1,756
|
|
C
|
|
$300
|
|
$635
|
|
$1,096
|
|
$2,373
|
|
Y
|
|
$83
|
|
$274
|
|
$481
|
|
$1,078
|
|
Investor
|
|
$115
|
|
$359
|
|
$622
|
|
$1,374
|
Assuming no redemption of shares:
|
Share class
|
|
1 year
|
|
3 years
|
|
5 years
|
|
10 years
|
|
C
|
|
$200
|
|
$635
|
|
$1,096
|
|
$2,373
|
Portfolio Turnover
The Fund pays transaction costs, such as commissions, when it buys and sells securities (or “turns over” its portfolio). A higher portfolio turnover rate may indicate higher transaction costs and may result in higher taxes when fund shares are held in a taxable account. These costs, which are not reflected in annual fund operating expenses or in the example, affect the Fund’s performance. During the most recent fiscal year, the Fund’s portfolio turnover rate was 42% of the average value of its portfolio.
|
Summary Prospectus | February 28, 2013
|
1
|
American Beacon Retirement Income and Appreciation Fund
|
Principal Investment Strategies
Under normal circumstances, approximately 75% of the Fund’s total assets are invested in fixed-income securities considered by the Manager or sub-advisor to be investment grade at the time of purchase. These securities may include obligations of the U.S. Government, its agencies and instrumentalities, including government-sponsored enterprises (some of which are not backed by the full faith and credit of the U.S. Government); corporate debt securities, master demand notes, medium-term notes, funding agreements, mortgage-backed securities, asset-backed securities and other debt securities (collectively referred to as “investment grade fixed-income securities”). If an investment held by the Fund is downgraded below investment grade, the Manager or sub-advisor will take action that they believe to be advantageous to the Fund. In an attempt to enhance the return of the Fund beyond the income offered by investment grade fixed-income securities, the Fund’s remaining total assets are invested in convertible and non-convertible debt obligations without regard to credit quality, as well as equity securities. The Fund seeks capital appreciation by investing in debt securities and convertible and equity securities of corporate issuers whose relative value is expected to increase over time.
The Manager currently allocates the Fund’s assets between itself and a sub-advisor. The Manager makes investment decisions regarding a portion of the Fund’s fixed-income securities. In determining which securities to buy and sell, the Manager employs a top-down fixed-income investment strategy, as follows:
|
●
|
Develop an overall investment strategy, including a portfolio duration target, by examining the current trends in the U.S. economy.
|
|
●
|
Set desired portfolio maturity structure by comparing the differences between corporate and U.S. Government securities of similar duration to judge their potential for optimal return in accordance with the target duration benchmark.
|
|
●
|
Determine the weightings of each security type by analyzing the difference in yield spreads between corporate and U.S. Government securities.
|
|
●
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Select specific debt securities within each security type.
|
|
●
|
Review and monitor portfolio composition for changes in credit, risk-return profile and comparisons with benchmarks.
|
Under normal circumstances, the Manager seeks to maintain a weighted average duration of three to seven years in the investment grade fixed-income portion of the Fund. A duration of “one year” means that a security’s price would be expected to decrease by approximately 1% with a 1% increase in interest rates.
The sub-advisor invests in convertible securities but may invest up to 60% of its portion of the Fund’s total assets in non-convertible fixed-income securities. The sub-advisor may invest in investment grade fixed-income securities and securities rated below-investment grade or not rated, commonly referred to as “high-yield bonds” or “junk bonds.” The average term to maturity of the fixed-income securities held in the portion of the Fund’s portfolio managed by the sub-advisor will typically range from three to ten years.
The sub-advisor also may invest up to 40% of its portion of the Fund’s total asset in non-convertible equity securities, common stocks, preferred stocks, American Depositary Receipts (“ADRs”) and U.S. dollar-denominated foreign stocks traded on U.S. exchanges (collectively referred to as “stocks”). Historically, the sub-advisor’s investment process has led it to invest primarily in convertible securities of small- to mid-capitalization companies that, in its opinion, provide opportunities for long-term capital appreciation. However, the Fund may invest in issuers of all market capitalizations.
In selecting securities, the sub-advisor may take into consideration such quantitative factors as an issuer’s present and potential liquidity, profitability, internal capability to generate funds, debt/equity ratio and debt servicing capabilities, and such qualitative factors as an assessment of management, industry characteristics, accounting methodology, and foreign business exposure. The sub-advisor utilizes credit ratings by any rating organizations as preliminary indicators of investment quality, in addition to its own credit research and analysis.
The Fund may also invest cash balances in other investment companies to gain market exposure on cash balances or reduce market exposure in anticipation of liquidity needs.
Principal Risks
There is no assurance that the Fund will achieve its investment objective and you could lose part or all of your investment in the Fund. The Fund is not designed for investors who need an assured level of income and is intended to be a long-term investment. The Fund is not a complete investment program and may not be appropriate for all investors. Investors should carefully consider their own investment goals and risk tolerance before investing in the Fund. The principal risks of investing in the Fund are:
Convertible Securities Risk
The value of a convertible security is influenced by both the yield of non-convertible securities of comparable issuers and by the value of the underlying common stock. The investment value of a convertible is strictly based on its yield and tends to decline as interest rates increase. Convertible securities may also be subject to credit risk, market risk and interest rate risk.
Credit Risk
The Fund is subject to the risk that the issuer of a bond will fail to make timely payment of interest or principal. A decline in an issuer’s credit rating can cause the price of its bonds to go down. For the portion of Fund assets invested in lower-quality debt securities, this risk will be substantial.
|
Summary Prospectus | February 28, 2013
|
2
|
American Beacon Retirement Income and Appreciation Fund
|
Equity Investments Risk
Equity securities generally are subject to market risk. The Fund’s investments in equity securities may include common stocks, preferred stocks, ADRs, and U.S. dollar-denominated foreign stocks traded on U.S. exchanges. Such investments may expose the Fund to additional risks.
Common stock generally is subordinate to preferred stock upon the liquidation or bankruptcy of the issuing company. Preferred stock is sensitive to movements in interest rates. Investments in ADRs and U.S. dollar-denominated foreign stocks traded on U.S. exchanges are subject to certain of the risks associated with investing directly in foreign securities.
Foreign Exposure Risk
The Fund may invest in securities issued by foreign companies through ADRs and U.S. dollar-denominated foreign stocks traded on U.S. exchanges. These securities are subject to many of the risks inherent in investing in foreign securities, including, but not limited to, currency fluctuations and political and financial instability in the home country of a particular ADR or foreign stock.
Non-U.S. investments carry potential risks not associated with U.S. investments. Such risks include, but are not limited to: (1) currency exchange rate fluctuations, (2) political and financial instability, (3) less liquidity and greater volatility, (4) lack of uniform accounting, auditing and financial reporting standards, (5) increased price volatility, and (6) less government regulation and supervision of foreign stock exchanges, brokers and listed companies.
Government-Sponsored Enterprises Risk
Securities held by the Fund that are issued by government-sponsored enterprises, such as the Federal National Mortgage Association (“Fannie Mae”), the Federal Home Loan Mortgage Corporation (“Freddie Mac”), Federal Farm Credit Banks, and the Tennessee Valley Authority are not guaranteed by the U.S. Treasury and are not backed by the full faith and credit of the U.S. Government. They are also subject to credit risk and interest rate risk.
Interest Rate Risk
The Fund is subject to the risk that the market value of the bonds it holds will decline due to rising interest rates. When interest rates rise, the prices of most bonds go down. The price of a bond is also affected by its maturity. Bonds with longer maturities generally have greater sensitivity to changes in interest rates.
Investment Risk
An investment in the Fund is not a deposit of a bank and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. 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.
Issuer Risk
The value of a security may decline for a number of reasons which directly relate to the issuer, such as management performance, financial leverage and reduced demand for the issuer’s goods or services, as well as the historical and prospective earnings of the issuer and the value of its assets.
Market Events Risk
Turbulence in financial markets and reduced liquidity in equity, credit and fixed-income markets may negatively affect many issuers worldwide which could adversely affect the Fund.
Market Risk
Market risks, including political, regulatory, market and economic developments, and developments that impact specific economic sectors, industries or segments of the market, can affect the value of the Fund’s shares. The Fund’s equity investments are subject to stock market risk, which involves the possibility that the value of the Fund’s investments in stocks will decline due to drops in the stock market. The Fund’s fixed-income investments are subject to the risk that the lack of liquidity or other adverse credit market conditions may hamper the Fund’s ability to purchase and sell the securities. From time to time, certain investments held by the Fund may have limited marketability and may be difficult to sell at favorable times or prices. If the Fund is forced to sell such holdings to meet redemption requests or other cash needs, the Fund may have to sell them at a loss.
Other Investment Companies Risk
The Fund may invest in shares of other registered investment companies, including open-end funds, exchange-traded funds (“ETFs”) and money market funds. To the extent that the Fund invests in shares of other registered investment companies, you will indirectly bear fees and expenses charged by the underlying funds in addition to the Fund’s direct fees and expenses and will be subject to the risks associated with investments in those funds.
Prepayment and Extension Risk
The Fund’s investments in asset-backed and mortgage-backed securities are subject to the risk that the principal amount of the underlying collateral may be repaid prior to the bond’s maturity date. If this occurs, no additional interest will be paid on the investment and the Fund may have to invest at a lower rate. Conversely, a decrease in expected prepayments may result in the extension of a security’s effective maturity and a decline in its price.
Securities Selection Risk
Securities selected by the Manager or a sub-advisor for the Fund may not perform to expectations. This could result in the Fund’s underperformance compared to other funds with similar investment objectives.
|
Summary Prospectus | February 28, 2013
|
3
|
American Beacon Retirement Income and Appreciation Fund
|
U.S. Government Securities Risk
A security backed by the U.S. Treasury or the full faith and credit of the United States is guaranteed only as to the timely payment of interest and principal when held to maturity. The market prices for such securities are not guaranteed and will fluctuate. They are also subject to credit risk and interest rate risk.
Fund Performance
The bar chart and table below provide an indication of risk by showing how the Fund’s performance has varied from year to year. The table shows how the Fund’s performance compares to the Barclays Capital U.S. Aggregate Bond Index, which is the Fund’s primary benchmark. The table also shows how the Fund’s returns compare to the BofA Merrill Lynch All U.S. Convertibles Index, which tracks the performance of domestic securities of all quality grades that are convertible into U.S. dollar-denominated common stock, ADRs or cash equivalents. The Retirement Income and Appreciation Composite Index is composed of the Linked Barclays Capital U.S. Aggregate Bond Index (75%) and the BofA Merrill Lynch All U.S. Convertibles Index (25%) to reflect the Fund’s allocation of its assets between fixed-income securities and convertible securities. The Lipper Intermediate Investment Grade Debt Funds Index shows how the Fund’s performance compares to a composite of mutual funds with similar investment objectives.
The chart and the table below show the performance of the Fund’s Investor Class shares for all periods. The Fund began operations of Y Class shares on March 1, 2010, A Class shares on May 17, 2010 and C Class shares on September 1, 2010. In the table below, the performance of the Investor Class shares is shown for the Y Class, A Class and C Class shares for all periods prior to the inception of each class. The Investor Class shares class would have had similar returns to the newer classes of shares because the shares are invested in the same portfolio securities. However, because the Investor Class had a different expense structure, its performance was different than the newer classes of shares would have realized in the same period. You may obtain updated performance information on the Fund’s website at
www.americanbeaconfunds.com
. Past performance (before and after taxes) is not necessarily an indication of how the Fund will perform in the future
.
Sales charges are not reflected in the bar chart and table below. If those charges were included, returns of A Class shares would be less than those shown.
Calendar year total returns for Investor Class shares
|
Total Return for the Calendar Year Ended 12/31 of each Year
|
|
|
|
|
Highest Quarterly Return:
|
6.61%
|
|
(1/1/04 through 12/31/12)
|
(3rd Quarter 2009)
|
|
Lowest Quarterly Return:
|
-4.19%
|
|
(1/1/04 through 12/31/12)
|
(3rd Quarter 2008)
|
|
|
Average Annual Total Returns
1
|
|
|
For the periods ended December 31, 2012
|
|
|
Inception Date
of Class
|
|
|
|
|
Investor Class
|
6/30/2003
|
1 Year
|
5 Years
|
Since
Inception
|
|
Return Before Taxes
|
|
7.19%
|
5.22%
|
4.86%
|
|
Return After Taxes on Distributions
|
|
6.07%
|
4.10%
|
3.63%
|
|
Return After Taxes on Distributions and Sale of Fund Shares
|
|
4.78%
|
3.85%
|
3.48%
|
|
Summary Prospectus | February 28, 2013
|
4
|
American Beacon Retirement Income and Appreciation Fund
|
|
Share class
(before taxes)
|
Inception Date
of Class
|
1 Year
|
5 Years
|
Since
Inception
|
|
A
|
5/17/2010
|
7.10%
|
5.20%
|
4.85%
|
|
C
|
9/1/2010
|
6.08%
|
4.76%
|
4.62%
|
|
Y
|
3/1/2010
|
7.41%
|
5.34%
|
4.93%
|
|
Indices
(reflects no deduction of
fees, expenses or taxes)
|
1 Year
|
5 Years
|
Since
Inception
|
|
Barclays Capital U.S. Aggregate Bond Index
|
4.21%
|
5.96%
|
5.03%
|
|
Linked Barclays Capital U.S. Aggregate Bond Index
|
4.21%
|
6.19%
|
5.95%
|
|
BofA Merrill Lynch All U.S. Convertibles Index
|
14.96%
|
4.06%
|
6.23%
|
|
Retirement Income and Appreciation Composite Index
|
6.89%
|
5.73%
|
5.30%
|
|
Lipper Intermediate Investment Grade Debt Funds Index
|
7.82%
|
6.28%
|
5.08%
|
|
1
|
After-tax returns are shown only for Investor Class shares; after-tax returns for other share classes will vary. After-tax returns are calculated using the historical highest individual federal marginal income tax rates and do not reflect the impact of state and local taxes. Actual after-tax returns depend on an investor’s tax situation and may differ from those shown. If you hold your Fund shares through a tax-deferred arrangement, such as an IRA or a 401(k), the after-tax returns do not apply to your situation.
|
Management
The Fund’s assets are currently allocated among the Manager and one investment sub-advisor, Calamos Advisors LLC.
The Manager
The Fund has retained American Beacon Advisors, Inc. to serve as its Manager.
Sub-Advisor
Portfolio Managers
|
|
|
|
American Beacon Advisors, Inc.
|
|
Gene L. Needles, Jr.
President & Chief Executive Officer
|
Since 2012
|
|
Wyatt L. Crumpler
Chief Investment Officer
|
Since 2007
|
|
Cynthia M. Thatcher
Portfolio Manager
|
Since Fund Inception (2003)
|
|
Michael W. Fields
Chief Fixed Income Officer
|
Since Fund Inception (2003)
|
|
Patrick A. Sporl
Senior Portfolio Manager
|
Since Fund Inception (2003)
|
|
Erin Higginbotham
Senior Portfolio Manager
|
Since 2011
|
|
|
|
Calamos Advisors LLC
|
|
John P. Calamos, Sr.
Chairman, CEO, Global Co-Chief Investment Officer
|
Since Fund Inception (2003)
|
|
Gary D. Black
Executive Vice President, Global Co-Chief Investment Officer and Chief Investment Officer, Alternative Investments
|
Since 2012
|
Purchase and Sale of Fund Shares
You may purchase, redeem or exchange shares of the Fund on any business day, which is any day the New York Stock Exchange is open for business. You may purchase, redeem or exchange Investor Class and Y Class shares directly from the Fund by calling 1-800-658-5811, writing to the Fund at P.O. Box 219643, Kansas City, MO 64121, or visiting
www.americanbeaconfunds.com
. For overnight delivery, please mail your request to American Beacon Funds, c/o BFDS, 330 West 9
th
Street, Kansas City, MO 64105. You also may purchase, redeem or exchange all classes of shares offered in this prospectus through a broker-dealer or other financial intermediary. The minimum initial purchase or exchange into the Fund is $100,000 for Y Class shares, $2,500 for A Class, and Investor Class shares, and $1,000 for C Class shares. The minimum subsequent investment by wire is $500 for A Class, C Class and Investor Class shares. No minimums apply to subsequent investments by wire for Y Class shares. For all classes, the minimum subsequent investment is $50 if the investment is made by ACH, check or exchange.
Tax Information
Dividends and capital gain distributions, if any, which you receive from the Fund are subject to federal income tax and may also be subject to state and local taxes, unless your account is tax-exempt or tax deferred (in which case you may be taxed later, upon the withdrawal of your investment from such account).
|
Summary Prospectus | February 28, 2013
|
5
|
American Beacon Retirement Income and Appreciation Fund
|
Payments to Broker-Dealers and Other Financial Intermediaries
If you purchase shares of the Fund through a broker-dealer or other financial intermediary (such as a bank), the Fund and the Fund’s distributor or the Manager may pay the intermediary for the sale of Fund shares and related services. These payments may create a conflict of interest by influencing the broker-dealer or other intermediary and your individual financial adviser to recommend the Fund over another investment. Ask your individual financial adviser or visit your financial intermediary’s website for more information.
|
Summary Prospectus | February 28, 2013
|
6
|
American Beacon Retirement Income and Appreciation Fund
|
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