A Message from the President

Bill Quinn, President of the
American Beacon Funds

September, 2005

Fellow Shareholders:
 
Despite a stormy three months of rising interest rates and increasing oil prices, equity investors ended the quarter with positive returns. For the three months ended September 30, 2005, the S&P 500 Index increased by 3.61%, the EAFE Index jumped 10.38%, while the Dow Jones Industrial Average grew by 3.44%. As equities posted gains, bonds experienced a slight dip as seen by the Lehman Brothers Aggregate Index decrease of 0.67%.
 
For the quarter ended September 30, 2005, the equity American Beacon Funds posted gains ranging from 2.91% to 16.71%. The Large Cap Value Fund-Institutional Class continued its long-term winning streak by again outperforming its Lipper benchmark for the quarter, year-to-date, one-year, three-year, five-year, and ten-year time periods.
 
The Federal Reserve Board continued increasing the Federal Funds rate. During the quarter, this rate increased by 50 basis points to 3.75%. Despite rising rates, the Money Market Fund-Institutional Class continued to surpass its Lipper peer group over all time periods. Additionally, the Short-Term Bond Fund-Institutional Class outperformed its Lipper benchmark for the quarter, three-year, five-year and ten-year time periods (click here for current performance).
 
     

You should carefully consider the investment objectives, risks, fees and expenses of any mutual fund before investing. Such information is available in the Funds' prospectus, which you may obtain by calling 1-800-967-9009 today. Please read the prospectus carefully before investing. The American AAdvantage Funds are distributed by Foreside Fund Services, LLC.