American Beacon Advisors

100%

Specialty U.S. stock fund, focusing on value-oriented small capitalization stocks

Russell 2000 Value Index

Actively Managed

VALIC Retirement

Fees and expenses are only one of several factors that should be considered when making investment decisions. More information on fees and expenses can be found in the FAQs on the MyFRS.com website.

The American Beacon Small Cap Value Fund seeks long-term capital appreciation and current income by investing in equity securities of U.S. companies with market capitalizations of $3 billion or less at the time of investment.

There are several characteristics that we believe differentitate the American Beacon Small Cap Value Fund from other mutual funds. These characteristics are:

A Value Investment Approach - We believe that a value-oriented equity approach will outperform other investment styles over the longer term, while minimizing volatility and downside risk during normal market cycles.

Manager Selection and Monitoring Process - We employ a carefully designed process to select outside sub-advisers and provide continuous monitoring of sub-advisers. After a sub-adviser is selected, American Beacon Advisors, Inc. ("American Beacon") follows a disciplined process of oversight and ongoing evaluation. A sub-adviser who underperforms over the long term, or who experiences management or style changes, is replaced with either a back-up from our pool of active pension plan sub-advisers or a sub-adviser that has been carefully selected by American Beacon's personnel and approved by the American Beacon Fund's Board of Trustees. In addition, our manager of manager's approach allows us to have the ability to add more capacity to the Fund by adding another sub-adviser. Therefore, we do not anticipate closing the Fund at this time.

Strong Historical Returns - The combination of selection and monitoring of sub-advisers, below-average expense ratios, and a value investment approach has resulted in strong historical returns.

Keeping Costs Low - Our large asset base and efficient operational structure results in cost effeciencies that are passed on to shareholders.

The fund employs sub-advisors to invest in small market capitalization companies with above average earnings growth prospects and that are also selling at a discount to the market. Barrow, Hanley, Mewhinney & Strauss, Inc., Brandywine Global Investment Management, LLC, Hotchkis and Wiley Capital Management, LLC, Opus Capital Management, Dreman Value Management, Metropolitan West Capital Management, LLC have been selected as sub-advisors to the Fund because of their disciplined value investment process. Dreman, Met West, and SSgA have been hired to provide capacity as the fund's assets grow and are not yet allocated assets.

The sub-advisers seek stocks, which, in their opinion, have most or all of the following characteristics: above-average earnings growth potential, below-average price to earnings ratio, below-average price to book value ratio, and other favorable risk characteristics. Each of the sub-advisers determines the earnings growth prospects of companies based upon a combination of internal and external research using fundamental analysis and considering changing economic trends in order to determine a stock's value. Each sub-adviser is responsible for making security selection decisions based upon his/her economic forecasts, market views, research, and guideline limitations imposed by AMR Investments.

Barrow, Hanley, Mewhinney & Strauss, Inc. (Barrow)
The small cap team comprised of Jim McClure and John Harloe performs the vast majority of their quantitative and qualitative securities analysis internally, on a primary basis. Approximately 80% of the research is generated in-house and the remaining 20% is "street" research. The assumptions and forecasts developed through the quantitative and qualitative analyses are then installed in two real-time models used to ensure consistency and discipline in the investment process. The Cash Flow Yield model documents the "value gap" using prospective free cash flow yields and the Relative Return Model documents under-valuation using relative earnings growth and various historical valuation parameters. Stocks that appear undervalued on both models are candidates for purchase. New investment candidates are evaluated against existing holdings and those holdings with the smallest remaining "value gap" are considered for sale.

Brandywine Global Investment Management, LLC (BGIM)
As lead portfolio managers, Henry Otto and Steve Tonkovich have specific responsibility for the small cap value portfolio. However, investment decisions are made with the entire team that includes Henry Otto and Steve Tonkovich, three dedicated small cap research analysts, a dedicated small cap trader and eleven industry specialists (across the market capitalization spectrum). Investment meetings are held regularly on a formal and informal basis. Individuals are given responsibility for analyzing a portion of the quantitatively screened small cap value universe and their recommendations to hold or to eliminate securities are thoroughly discussed and critiqued.

Hotchkis and Wiley Capital Management, LLC (Hotchkis)
Hotchkis subscribes to a team-oriented investment process, where portfolios are constructed on a bottom-up basis by the investment team. Continual informal investment strategy sessions (weekly formal sessions are also scheduled) allow analysts and portfolio managers to promote current investment ideas within their assigned industries. Their research team of 14 analysts/portfolio managers, led by the small cap managers, debates the merits of each recommendation, taking into account the prevailing market environment, the Fund's current research process is subject to peer review with Jim Miles and David Green having final responsibility for the product.

The Boston Company Asset Management, LLC (TBCAM)
TBCAM believes successful small cap investing is achieved through a program that is focused on valuation, mitigates downside risk, is research driven and has a disciplined repeatable investment process.

Opus Capital Management, Inc.(Opus)
Opus invests in small capitalization stocks that are fundamentally undervalued, financially strong and exhibit strong earnings growth and positive earnings momentum.

Dreman Value Management (Dreman)
Dreman believes the best way to capture higher potential returns in small cap socks is to employ a low P/E value approach that is a direct extension of the value philosophy the firm has employed in large cap stocks for over 25 years.

Metropolitan West Capital Management, LLC (MetWest)
MetWest employs a bottom up, fundamental, research driven style designed to uncover and capitalize on misunderstood, under-followed and mis-priced companies selling at material discounts to their intrinsic values.