Securities Act Registration No. 33-47044
Investment Company Act Reg. No. 811-6628
________________________________________________________________________
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
__________________________
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]
Pre-Effective Amendment No. __ [_]
Post-Effective Amendment No. 5 [X]
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [X]
Amendment No. 6 [X]
(Check appropriate box or boxes.)
______________________
THE YACKTMAN FUND, INC.
(Exact name of Registrant as Specified in Charter)
303 West Madison Street
Chicago, Illinois 60606
(Address of Principal Executive Offices) (Zip Code)
(312) 201-1200
(Registrant's Telephone Number, including Area Code)
Copy to:
Donald A. Yacktman Richard L. Teigen
Yacktman Asset Management Co. Foley & Lardner
303 West Madison Street 777 East Wisconsin Avenue
Chicago, Illinois 60606 Milwaukee, Wisconsin 53202
(Name and Address of Agent for Service)
Registrant has registered an indefinite number or amount of its Common
Stock under the Securities Act of 1933 and filed its required Rule 24f-2
Notice for Registrant's fiscal year ending December 31, 1995 on January 9,
1996.
Approximate Date of Proposed Public Offering: As soon as practicable
after the Registration Statement becomes effective.
It is proposed that this filing become effective (check appropriate box):
[_] immediately upon filing pursuant to paragraph (b)
[X] on April 29, 1996 pursuant to paragraph (b)
[_] 60 days after filing pursuant to paragraph (a)(1)
[_] on (date) pursuant to paragraph (a)(1)
[_] 75 days after filing pursuant to paragraph (a)(2)
[_] on (date) pursuant to paragraph (a)(2) of Rule 485.
If appropriate, check the following box:
[_] This post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
__________________________________________________________________________
The Exhibit Index is located at page __ of the sequential numbering
system.
Page 1 of __ Pages
<PAGE>
THE YACKTMAN FUND, INC.
CROSS REFERENCE SHEET
(Pursuant to Rule 481 showing the location in the Prospectus and
the Statement of Additional Information of the responses to the Items of
Parts A and B of Form N-1A.)
Caption or Subheading in
Prospectus or Statement of
Item No. on Form N-1A Additional Information
PART A - INFORMATION REQUIRED IN PROSPECTUS
1. Cover Page Cover Page
2. Synopsis Summary
3. Financial Highlights Financial Highlights
4. General Description of The Fund; Objective and
Registrant Investment Approach
5. Management of the Fund Objective and Investment
Approach; Management of the
Fund; Distributor; Capital
Structure
5A. Management's Discussion of Included in Annual Report
Fund Performance to Shareholders
6. Capital Stock and Other Dividends and
Securities Distributions; Taxes;
Capital Structure;
Stockholder Reports
7. Purchase of Securities Being Purchase of Shares;
Offered Determination of Net Asset
Value; Retirement Plans;
Dividends and Distributions
8. Redemption or Repurchase Exchange Privilege;
Redemption of Shares;
Systematic Withdrawal Plan
9. Legal Proceedings *
PART B - INFORMATION REQUIRED IN STATEMENT
OF ADDITIONAL INFORMATION
10. Cover Page Cover Page
11. Table of Contents Table of Contents
12. General Information and *
History
13. Investment Objectives and Investment Restrictions;
Policies Writing Covered Call
Options
14. Management of the Fund Directors and Officers of
the Fund
15. Control Persons and Directors and Officers of
Principal Holders of the Fund; Investment
Securities Adviser and Administrator
16. Investment Advisory and Investment Adviser and
Other Services Administrator; Custodian;
Independent Accountants;
Distribution Plan
17. Brokerage Allocation Allocation of Portfolio
Brokerage
18. Capital Stock and Other Included in Prospectus
Securities under "Capital Structure"
19. Purchase, Redemption and Included in Prospectus
Pricing of Securities Being under "Determination of Net
Offered Asset Value";"Purchase of
Shares"; "Retirement
Plans"; "Dividends and
Distributions";
Determination of Net Asset
Value; Systematic
Withdrawal Plan
20. Tax Status Taxes
21. Underwriters *
22. Calculations of Performance Performance Information
Data
23. Financial Statements Financial Statements
_______________________
* Answer negative or inapplicable
THE YACKTMAN FUND
For Fund information and shareholder services, call 1-800/525-8258.
The Yacktman Fund, Inc.
Shareholder Services Center
615 East Michigan Street
P.O. Box 701
Milwaukee, WI 53201-0701
PROSPECTUS
April 29, 1996
THE YACKTMAN FUND, INC.
303 West Madison Street
Chicago, Illinois 60606
1-800-525-8258
The Yacktman Fund, Inc. (the "Fund") is an open-end, diversified management
investment company, commonly known as a mutual fund. The objective of the Fund
is to produce long-term growth of capital, with current income as a secondary
objective. The Fund seeks to obtain this objective by investing primarily in
common stocks and other equity securities for growth and short-term money market
instruments for income.
This Prospectus sets forth concisely the information about the Fund that
prospective investors should know before investing. Investors are advised to
read this Prospectus and retain it for future reference. This Prospectus does
not set forth all of the information included in the Registration Statement and
Exhibits thereto which the Fund has filed with the Securities and Exchange
Commission.
A Statement of Additional Information, dated April 29, 1996, which is a part of
such Registration Statement, is incorporated herein by reference. A copy of the
Statement of Additional Information may be obtained, without charge, by writing
to the address, or calling the telephone number, stated above.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS AND THE STATEMENT
OF ADDITIONAL INFORMATION DATED APRIL 29, 1996 AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATIONS MAY NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY THE YACKTMAN FUND, INC. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL
SECURITIES IN ANY STATE OR JURISDICTION IN WHICH SUCH OFFERING MAY NOT LAWFULLY
BE MADE.
TABLE OF CONTENTS
Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Financial Highlights. . . . . . . . . . . . . . . . . . . . . . . . . . . 4
The Fund. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Objective and Investment Approach . . . . . . . . . . . . . . . . . . . . 5
Management of the Fund. . . . . . . . . . . . . . . . . . . . . . . . . . 7
Purchase of Shares. . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Retirement Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Exchange Privilege . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Redemption of Shares . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Systematic Withdrawal Plan . . . . . . . . . . . . . . . . . . . . . . . 16
Determination of Net Asset Value . . . . . . . . . . .. . . . . . . . . . 16
Dividends and Distributions . . . . . . . . . . . . . . . . . . . . . . . 17
Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Capital Structure . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Shareholder Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Fund Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
S U M M A R Y
INVESTMENT OBJECTIVE
The investment objective of The Yacktman Fund, Inc. (the "Fund") is to
produce long-term growth of capital, with current income as a secondary
objective. The Fund seeks to obtain this objective by investing primarily in
common stocks and other equity securities for growth and short-term money market
instruments for income. In periods when management believes the markets are
favorable for common stocks, the greater portion of the Fund's investments will
usually be in that type of security. The Fund's investments are subject to
market risk and the value of its shares will fluctuate with changing market
valuations of its portfolio holdings. See "OBJECTIVE AND INVESTMENT APPROACH."
INVESTMENT ADVISER
Yacktman Asset Management Co. is the investment adviser (the "Adviser") of
the Fund. The Adviser was organized in April 1992 and acts as the investment
adviser to individuals and institutional clients with investment portfolios of
approximately $1 billion. See "MANAGEMENT OF THE FUND."
PURCHASES AND REDEMPTIONS
Shares of the Fund are sold and redeemed at net asset value, without the
imposition of any sales or redemption charges. The minimum initial investment is
$2,500 (except for Individual Retirement Accounts and Automatic Investment
Plans, where the minimum is $500). The minimum subsequent investment is $100.
These minimums may be waived in the case of qualified retirement plans. See
"PURCHASE OF SHARES" and "RETIREMENT PLANS." Shares of the Fund may be
exchanged for shares of the Portico Money Market Fund, the Portico U.S.
Government Money Market Fund and the Portico Tax-Exempt Money Market Fund, at
their relative net asset values. See "EXCHANGE PRIVILEGE."
SHAREHOLDER SERVICES
Questions regarding the Fund may be directed to the Fund at 1-800-525-8258.
Inquiries regarding an investor's account should be directed to the Fund's
Transfer Agent at 1-800-457-6033.
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Load Imposed
on Purchases ........................................ None
Maximum Sales Load Imposed
on Reinvested Dividends ............................. None
Deferred Sales Load ...................................... None
Redemption Fees ........................................... None<F1>
Exchange Fee............................................... None<F2>
ANNUAL FUND OPERATING EXPENSES<F3>
(AS A PERCENTAGE OF AVERAGE NET ASSETS)
Management Fees ......................................... 0.65%
12b-1 Fees<F4> ........................................... 0.08%
Other Expenses............................................ 0.26%
Total Fund Operating Expenses before
Expense Reductions<F5><F6> ............................. 0.99%
Total Fund Operating Expenses after Expense
Reductions<F5><F6> ..................................... 0.91%
EXAMPLE:
You would pay the following expenses
on a $1,000 investment, assuming
(i) 5% annual return and (ii) redemption
at the end of each time period
1 year ...................................................$10
3 years .................................................. 32
5 years .................................................. 56
10 years ..................................................125
<F1>A fee of $10.00 is charged for each wire redemption.
<F2>A fee of $5.00 is charged for each telephone exchange.
<F3>For the year ended December 31, 1995.
<F4>In any year, 12b-1 Fees will not exceed 0.25%. Payments under the
12b-1 Plan may be made only with respect to shares beneficially owned by
eligible distributors" brokerage clients who became shareholders PRIOR TO
DECEMBER 31, 1992.
<F5>Total Fund Operating Expenses INCLUDE Management Fees, 12B-1 FEES and Other
Expenses. The Adviser has voluntarily agreed to waive its management fees to the
extent necessary to insure that Total Fund Operating Expenses do not exceed
1.2%.
<F6>The Adviser has directed certain Fund portfolio trades to a broker at best
price and execution and has generated soft dollar credits to be used against
sub-transfer agency fees.
The preceding table is intended to assist you in understanding the various
expenses that an investor bears, directly or indirectly, by being a shareholder
of the Fund. They should not be considered to be a representation of past or
future expenses. Actual expenses may be greater or less than those shown. For an
explanation of management and 12b-1 fees, see "MANAGEMENT OF THE FUND" and
"PURCHASE OF SHARES." The example assumes a 5% annual rate of return pursuant
to the requirement of the Securities and Exchange Commission. This hypothetical
rate of return is not intended to be representative of past or future
performance of the Fund.
F I N A N C I A L H I G H L I G H T S
The financial information for a Yacktman Fund share outstanding during the
periods specified in the following table has been derived from the financial
records of the Fund which have been audited by Price Waterhouse LLP, independent
accountants, whose report thereon was unqualified and is included in the
Fund's Annual Report to Shareholders. The table should be read in conjunction
with the financial statements and related notes included in the Annual Report to
Shareholders. Further information about the performance of the Fund is also
contained in the Fund's Annual Report to Shareholders, copies of which may be
obtained without charge upon request.
JULY 6,
YEAR YEAR YEAR 1992<F7>
ENDED ENDED ENDED THROUGH
DEC. 31, DEC. 31, DEC. 31, DEC. 31,
1995 1994 1993 1992
---- ---- ---- ----
Net asset value, beginning of
period $ 10.05 $ 9.56 $ 10.39 $ 10.00
Income from investment operations:
Net investment income 0.22 0.22 0.14 0.05
Net realized and unrealized gains
(losses) on investments 2.81 0.61 (0.83) 0.42
-------- -------- -------- -------
Total from investment operations 3.03 0.83 (0.69) 0.47
-------- -------- -------- -------
Less distributions:
Dividends from net investment
income (0.22) (0.22) (0.14) (0.05)
Distributions from net realized
gains (0.77) (0.12) -- (0.03)
-------- -------- -------- -------
Total distributions (0.99) (0.34) (0.14) (0.08)
-------- -------- -------- -------
Net asset value, end of period $ 12.09 $ 10.05 $ 9.56 $ 10.39
======== ======== ======== =======
Total Return<F8> 30.42% 8.80% (6.58)% 4.72%
======== ======== ======== =======
Supplemental data and ratios:
Net assets, end of period (000s) $566,723 $295,133 $143,024 $74,666
======== ======== ======== =======
Ratio of expenses to average
net assets<F9> 0.99% 1.07% 1.18% 1.18%<F10>
======== ======== ======== =======
Ratio of expenses to average net
assets after expense
reductions<F9> 0.91% 1.07% 1.18% 1.18%<F10>
======== ======== ======== =======
Ratio of net income to average
net assets after
expense reductions<F9> 2.02% 2.49% 1.61% 1.49%<F10>
======== ======== ======== =======
Portfolio turnover rate 55.37% 49.44% 61.14% 30.94%
======== ======== ======== =======
<F7>Commencement of operations.
<F8>Not annualized for the period July 6, 1992 through December 31, 1992.
<F9>The Adviser has directed certain Fund portfolio trades to a broker at best
price and execution and has generated soft dollar credits to be used against
sub-transfer agency fees. Shareholders benefited under this arrangement as the
net expenses of the Fund do not include such sub-transfer agency fees.
<F10>Annualized.
T H E F U N D
The Yacktman Fund, Inc., a Maryland corporation, was organized on April 6,
1992. The Fund is an open-end, diversified management investment company
registered under the Investment Company Act of 1940 (the "Act"). As an open-
end investment company, it obtains its assets by continuously selling its shares
to the public. Proceeds from such sales are invested by the Fund in securities
of other companies. The resources of many investors are thus combined and each
individual investor has an interest in every one of the securities owned,
thereby providing diversification in a variety of industries. The Adviser
furnishes experienced management to select and watch over its investments. As an
open-end investment company, the Fund will redeem any of its outstanding shares
on demand of the owner at the next determined net asset value. Registration of
the Fund under the Act does not involve supervision of the Fund's management or
policies by the Securities and Exchange Commission.
O B J E C T I V E A N D
I N V E S T M E N T A P P R O A C H
The investment objective of the Fund is to produce long-term growth of
capital, with current income as a secondary objective. The Fund invests
primarily in common stocks and other equity securities (including securities
convertible into equity securities) for growth and short-term money market
instruments for income. Equity securities may also provide income. Additionally,
in times when the Adviser believes that adverse economic or market conditions
justify such action, substantial portions of its assets may be held in fixed-
income securities and money market instruments such as United States Treasury
bills, certificates of deposit of U.S. banks, commercial paper and commercial
paper master notes (which are demand instruments without a fixed maturity
bearing interest at rates which are fixed to known lending rates and
automatically adjusted when such lending rates change) rated A-1 or better by
Standard & Poor's Corporation ("Standard & Poor's") or Prime-1 by Moody's
Investors Service, Inc. ("Moody's"). The Fund may also invest in such
instruments in amounts as the Adviser believes are reasonable to satisfy
anticipated redemption requests. In addition, the Fund will invest in U.S.
Government securities and high-quality publicly distributed corporate bonds and
debentures when the Adviser believes such securities offer opportunities for
long-term growth of capital, such as during periods of declining interest rates
when the market value of such securities generally rises. The Fund will limit
its investment in bonds and debentures to those which have been assigned one of
the two highest ratings of either Standard & Poor's (AAA and AA) or Moody's (Aaa
and Aa). In the event a bond or debenture is downgraded after investment, the
Fund may retain such security unless it is rated less than investment grade
(i.e., less than BBB by Standard & Poor's or Baa by Moody's). If it is
downgraded below investment grade, the Fund will promptly dispose of such bond
or debenture, unless the Adviser believes it disadvantageous to the Fund and its
shareholders to do so. A description of the foregoing ratings is set forth in
the Statement of Additional Information. The fixed-income securities held by the
Fund will normally have short-term maturities, although the Fund may invest in
obligations having maturities as long as five years.
There is no limitation on the percentage of assets which may be invested in
any particular type of security. In periods when the Adviser believes the
markets are favorable for common stocks, the greater portion of its investments
will usually be in that type of security. Since the Fund invests in common
stocks and other securities which fluctuate in value, the price of its shares
will fluctuate.
The Fund diversifies its holdings among many companies and industries.
Although there is no specific requirement to do so, the Fund usually focuses on
the securities of companies with LARGE CAPITALIZATION (e.g., $1 billion or more)
which have long records of earnings growth and dividends. The Fund may also
invest in convertible securities (debt securities or preferred stocks of
corporations which are convertible into or exchangeable for common stocks). The
Adviser will select only those convertible securities for which it believes (a)
the underlying common stock is a suitable investment for the Fund using the
criteria described above and (b) a greater potential for total return exists by
purchasing the convertible security because of its higher yield.
The Fund may also invest in U.S. dollar-denominated securities of foreign
issuers in the form of American Depository Receipts ("ADRs") that are
regularly traded on recognized U.S. exchanges or in the U.S. over-the-counter
("OTC") market. Investments in securities of foreign issuers may involve risks
which are in addition to the usual risks inherent in domestic investments. In
many countries, there is less publicly available information about issuers than
is available in the reports and ratings published about companies in the United
States. Additionally, foreign companies may not be subject to uniform
accounting, auditing and financial reporting standards.
The Fund does not trade actively for short-term profits. However, if the
objectives of the Fund would be better served, short-term profits or losses may
be realized from time to time. For the fiscal year ended December 31, 1995, the
PORTFOLIO TURNOVER RATE WAS APPROXIMATELY 55%. The annual portfolio turnover
rate indicates changes in the Fund's portfolio and is calculated by dividing the
lesser of purchases or sales of portfolio securities (excluding securities
having maturities at acquisition of one year or less) for the fiscal year by the
monthly average of the value of the portfolio securities (excluding securities
having maturities at acquisition of one year or less) owned by
the Fund during the fiscal year. The annual portfolio turnover rate may vary
widely from year to year depending upon market conditions and prospects.
Increased portfolio turnover necessarily results in correspondingly heavier
brokerage costs which the Fund must pay and increased realized gains (or losses)
to investors.
For income purposes, the Fund may lend its portfolio securities. The Fund's
investment restrictions provide that no such loan may be made if thereafter more
than 30% of the value of the Fund's total assets would be subject to such loans.
Income may be earned on collateral received to secure the loans. Cash
collateral would be invested in money market instruments. U.S. Government
securities collateral would yield interest or earn discount. Part of this
income might be shared with the borrower. Alternatively, the Fund could allow
the borrower to receive the income from the collateral and charge the borrower a
fee. In either event, the Fund would receive the amount of dividends or
interest paid on the loaned securities.
Usually these loans would be made to brokers, dealers or financial
institutions. Loans would be fully secured by collateral deposited with the
Fund's custodian in the form of cash and/or securities issued or guaranteed by
the U.S. Government, its agencies or instrumentalities. This collateral must be
increased within one business day in the event that its value shall become less
than the market value of the loaned securities. While there may be delays in
recovery or even loss of rights in the collateral should the borrower fail
financially, the loans will be made only to firms deemed by the Adviser to be of
good standing. Loans will not be made unless, in the judgment of the Adviser,
the consideration which can be earned from such loans justifies the risk.
The borrower, upon notice, must redeliver the loaned securities within 3
business days. In the event that voting rights with respect to the loaned
securities pass to the borrower and a material proposal affecting the securities
arises, the loan may be called or the Fund will otherwise secure or be granted a
valid proxy in time for it to vote on the proposal. In making such loans, the
Fund may utilize the services of a loan broker and pay a fee therefor. The Fund
may incur additional custodian fees for services in connection with lending of
securities.
Subject to an overall policy to seek to place portfolio transactions as
efficiently as possible and at a favorable price, research services, payment of
Fund expenses and placement of orders by securities firms for the Fund's shares
may be taken into account as a factor in placing portfolio transactions.
The Fund has adopted certain fundamental investment restrictions which may
not be changed unless authorized by a vote of the Fund's shareholders. Such
restrictions include a provision which permits the Fund to borrow money from
banks, for temporary or emergency purposes, in an amount not exceeding 10% of
the value of its total assets, and to pledge or hypothecate its assets to secure
such borrowing. In the event the Fund engages in such borrowing, it will not
purchase portfolio securities while any borrowed amounts remain outstanding. The
Fund's investment objective and certain other investment restrictions are not
fundamental policies and may be changed without a vote of the Fund's
shareholders. Such changes may result in the Fund having an investment objective
different from the objective which the investor considered appropriate at the
time of investment in the Fund. At least 30 days prior to any change by the Fund
in its investment objective, the Fund will provide written notice to its
shareholders regarding the proposed change. For further information regarding
the Fund's investment restrictions see the Statement of Additional Information.
M A N A G E M E N T
O F T H E F U N D
As a Maryland corporation, the business and affairs of the Fund are managed
by its Board of Directors. The Fund has entered into an Investment Advisory
Agreement (the "Advisory Agreement") with Yacktman Asset Management Co., 303
West Madison Street, Chicago, Illinois 60606. Pursuant to such Advisory
Agreement, the Adviser furnishes continuous investment advisory services to the
Fund. The Adviser does not advise any other mutual funds, but does act as the
investment adviser to individuals and institutional clients with investment
portfolios of approximately $1 billion. The Adviser was organized in April 1992.
Mr. Donald A. Yacktman, the president and sole stockholder of the Adviser, is
the portfolio manager for the Fund and, as such, is responsible for the day-to-
day management of its portfolio. Mr. Yacktman has managed the Fund's portfolio
since the Fund's inception and was an officer and portfolio manager from April
1982 through March 11, 1992 with Selected Financial Services, Inc.; and a
portfolio manager from 1968 to 1982 with Stein Roe & Farnham, where he was also
a partner from 1974 to 1982.
The Adviser supervises and manages the investment portfolio of the Fund and,
subject to such policies as the Board of Directors of the Fund may determine,
directs the purchase or sale of investment securities in the day-to-day
management of the Fund's investment portfolio. Under the Advisory Agreement, the
Adviser, at its own expense and without reimbursement from the Fund, furnishes
office space and all necessary office facilities, equipment and executive
personnel for managing the investments of the Fund and pays salaries and fees of
all officers and directors of the Fund (except the fees paid to directors who
are not interested persons of the Adviser). For the foregoing, the Adviser
receives a monthly fee based on the Fund's average daily net assets at the
annual rate of .65 of 1% on the first $500,000,000 of average daily net assets,
.60 of 1% on the next $500,000,000 of average daily net assets and .55 of 1% on
average daily net assets in excess of $1,000,000,000. The Adviser may
voluntarily waive all or a portion of the advisory fee otherwise payable by the
Fund. Such a waiver may be terminated at any time at the Adviser's discretion.
The advisory fees paid in the fiscal year ended December 31, 1995 were equal to
.65% of the Fund's average net assets.
Pursuant to an Administration Agreement (the "Administration Agreement"),
Sunstone Financial Group, Inc. (the "Administrator"), 207 East Buffalo Street,
Suite 400, Milwaukee, Wisconsin 53202, oversees the Fund's custodian and
Transfer Agent, prepares and files all federal and state tax returns and
required tax filings (other than those required to be made by the Fund's
custodian or the Transfer Agent), oversees the Fund's insurance relationships,
participates in the preparation of the Fund's registration statement, proxy
statements and reports, prepares compliance filings pursuant to state securities
laws, compiles data for and prepares notices to the Securities and Exchange
Commission, prepares annual and semiannual reports to the Securities and
Exchange Commission and current investors, monitors the Fund's expense accounts,
monitors the Fund's status as a regulated investment company under Subchapter M
of the Internal Revenue Code of 1986, as amended (the "Code"), monitors the
Fund's arrangements with respect to services provided pursuant to the Fund's
Distribution Plan, monitors compliance with the Fund's investment policies and
restrictions and generally assists in the Fund's administrative operations. The
Administrator, at its own expense and without reimbursement from the Fund,
furnishes office space and all necessary office facilities, equipment, supplies
and clerical and executive personnel for performing the services required to be
performed by it under the Administration Agreement. For the foregoing
administrative services, the Administrator receives from the Fund a fee,
computed daily and payable monthly, based on the Fund's average daily net assets
at the annual rate of .15 of 1% on the first $50,000,000 of average daily net
assets, .05 of 1% on the next $50,000,000 of average daily net assets and .025
of 1% on average daily net assets in excess of $100,000,000.
Pursuant to the Administrative Agreement, the Administrator also provides
Fund accounting services including performing portfolio securities valuations
and calculating the Fund's daily net asset value. For these services, the
Administrator receives from the Fund a fee, computed daily and payable monthly,
based on the Fund's average daily net assets at the annual rate of $20,000
on the first $100,000,000 of average daily net assets, .010% on the next
$100,000,000 of average daily net assets, and .005% of average daily net
assets in excess of $200,000,000.
The Fund pays all of its own expenses, including, without limitation, the
cost of preparing and printing its registration statements required under the
Securities Act of 1933 and the Act and any amendments thereto, the expense of
registering its shares with the Securities and Exchange Commission and in the
various states, the printing and distribution costs of prospectuses mailed to
existing investors, reports to investors, reports to government authorities and
proxy statements, fees paid to directors who are not interested persons of the
Adviser, interest charges, taxes, legal expenses, association membership dues,
auditing services, insurance premiums, brokerage commissions and expenses in
connection with portfolio transactions, fees and expenses of the custodian of
the Fund's assets, printing and mailing expenses and charges and expenses of
dividend disbursing agents, accounting services agents, registrars and stock
transfer agents.
P U R C H A S E O F S H A R E S
INITIAL INVESTMENT
Shares of the Fund are sold on a continuous basis at the net asset value
next determined after receipt of a purchase order. The Board of Directors of the
Fund has established $2,500 as the minimum initial purchase and $100 as the
minimum for any subsequent purchase (except for Individual Retirement Accounts
("IRAs") and Automatic Investment Plans, where the initial minimum is $500,
and through dividend reinvestment). Investors will receive written notification
at least 30 days in advance of any changes in such minimum amounts.
BY MAIL
Share purchase applications may be obtained from the Fund. (Please note that
investors must use different forms if investing through an IRA or prototype
retirement plan. See "RETIREMENT PLANS.") Completed share purchase
applications should be mailed directly to:
The Yacktman Fund, Inc.
Shareholder Services Center
P.O. Box 701
Milwaukee, Wisconsin 53201-0701
To purchase shares by OVERNIGHT OR EXPRESS MAIL, please use the following street
address:
The Yacktman Fund, Inc.
Shareholder Services Center, 3rd Floor
615 East Michigan Street
Milwaukee, Wisconsin 53202
The Fund does not consider the U.S. Postal Service or other independent delivery
services to be its agents. Therefore, deposit in the mail or with such
services, or receipt at Firstar Trust Company's Post Office Box of purchase
applications does not constitute receipt by Firstar Trust Company or the Fund.
DO NOT mail letters by overnight courier to the Post Office Box address.
Correspondence mailed by overnight courier should be sent to Firstar Trust
Company, Third Floor, 615 East Michigan Street, Milwaukee, Wisconsin 53202.
All applications must be accompanied by payment in the form of a check made
payable to "The Yacktman Fund, Inc." All purchases must be made in U.S.
dollars and checks must be drawn on U.S. banks. No cash will be accepted.
Firstar Trust Company will charge a $20 fee against an investor's account for
any payment check returned to the custodian for insufficient funds. The investor
will also be responsible for any losses suffered by the Fund as a result. When a
purchase is made by check and a redemption is made shortly thereafter, Firstar
Trust Company, the Fund's transfer agent (the "Transfer Agent"), may delay the
mailing of a redemption check until it is satisfied that the check has cleared.
(It will normally take up to 3 business days to clear local personal or
corporate checks and up to 7 business days to clear other personal and corporate
checks.)
BY WIRE
To avoid redemption delays, purchases may be made by direct wire transfers.
The establishment of a new account by wire transfer should be preceded by a
telephone call to the Transfer Agent at 1-800-457-6033 or 1-414-765-4124. The
investor will be asked to provide his or her name, address, social security or
tax identification number, the amount of his or her investment and the name and
address of the bank that will be wiring the investment. The Transfer Agent will
inform the investor of his or her assigned investor account number at that time.
Funds should be wired through the Federal Reserve System as follows:
Firstar Bank Milwaukee, N.A.
777 East Wisconsin Avenue
Milwaukee, Wisconsin 53202
ABA Number 0750-00022
For credit to Firstar Trust Company
Account Number 112-952-137
For further credit to The Yacktman Fund, Inc.
(investor account number)
(name or account registration)
After wiring funds, the investor will receive in the mail from the Transfer
Agent a share purchase application. Upon receipt, the investor must complete the
application and return it to the Transfer Agent.
Inquiries concerning the Fund or the share purchase application may be
directed to the Transfer Agent. For telephone assistance call toll-free, 1-800-
457-6033.
SUBSEQUENT INVESTMENTS (MINIMUM $100)
Additions to an investor's account may be made BY MAIL ($100 MINIMUM) or BY
WIRE ($1,000 MINIMUM). When adding to an account by mail, the investor should
send to the Transfer Agent his or her remittance, together with the detachable
form sent with the most recent statement from the Transfer Agent. If this form
is unavailable, the investor should send a note giving the full name of the
account and the account number. For additional investments made by wire
transfer, the investor should use the aforementioned wiring instructions. The
investor should notify the Transfer Agent at 1-800-457-6033 prior to wiring
funds. The required minimum investments may be waived in the case of qualified
retirement plans.
GENERAL INFORMATION
All applications to purchase Fund shares are subject to acceptance by the
Fund and are not binding until so accepted. The Fund does not, except as
indicated in the following sentence, accept telephone orders for the purchase of
shares, and it reserves the right to reject applications in whole or in part.
The Fund may accept telephone orders from broker-dealers who have been
previously approved by the Fund. It is the responsibility of such broker-dealers
promptly to forward purchase or redemption orders to the Fund. Although there is
no sales charge levied directly by the Fund, broker-dealers may charge the
investor a transaction-based fee or other fee for their services at either the
time of purchase or the time of redemption. Such charges may vary among broker-
dealers but in all cases will be retained by the broker-dealer and not remitted
to the Fund or the Adviser.
In order to relieve the investor of responsibility for safekeeping and
delivery of stock certificates, the Fund does not issue certificates unless the
investor requests a certificate each time a purchase is made. Instead, shares
purchased are automatically credited to an account maintained for the investor
on the books of the Fund by the Transfer Agent. The investor will receive a
statement showing the details of each transaction. No charge will be imposed for
the issuance of stock certificates.
AUTOMATIC INVESTMENT PLAN
The Fund offers an Automatic Investment Plan whereby an investor may
automatically make purchases of shares of the Fund on a regular, convenient
basis ($100 minimum per transaction). A $500 MINIMUM INITIAL INVESTMENT must be
met before the Automatic Investment Plan may be established. Under the Automatic
Investment Plan, an investor's designated bank or other financial institution
debits a preauthorized amount on the investor's account each month and applies
the amount to the purchase of Fund shares. The Automatic Investment Plan must be
implemented with a financial institution that is a member of the Automated
Clearing House ("ACH"). In addition, the Fund must have a currently effective
registration in those states in which it is required. No service fee is
currently charged by the Fund for participating in the Automatic Investment
Plan. A $20 fee will be imposed by the Transfer Agent if sufficient funds are
not available in the investor's account at the time of the automatic
transaction. Applications to establish the Automatic Investment Plan are
available from the Fund. Investors who wish to make a change in investments
made through an automatic investment plan may do so by calling the Transfer
Agent at 1-800-457-6033.
DISTRIBUTION PLAN
There are no sales loads on purchases of shares of the Fund nor redemption
charges on redemptions of shares. The Fund has adopted a Distribution Plan (the
"Plan") pursuant to Rule 12b-1 under the Act. THE EFFECTIVE 12B-1 FEE FOR THE
FUND WAS 0.08% FOR THE FISCAL YEAR ENDED DECEMBER 31, 1995. Payments under the
Plan in any year are limited to 0.25% of the average daily net assets of the
Fund. The Plan permits the Fund to employ one or more distributors of its
shares. PAYMENTS UNDER THE PLAN, HOWEVER, MAY BE MADE ONLY TO DISTRIBUTORS
EMPLOYED BY THE FUND WITH RESPECT TO SHARES BENEFICIALLY OWNED BY EACH SUCH
DISTRIBUTOR's BROKERAGE CLIENTS WHO ESTABLISHED THEIR FUND ACCOUNTS PRIOR TO
DECEMBER 31, 1992. Such fees may decline as a percentage of net assets as Fund
assets increase and/or as the clients of distributors employed by the Fund who
established their accounts prior to December 31, 1992 redeem their shares. The
Fund pays to each distributor a monthly fee for distribution of the Fund's
shares at the rate of 0.65% per annum of the aggregate average daily net asset
value of the shares in the distributor's accounts. These distribution fees can
be characterized as trail fees. Such fees may be spent by a distributor on any
activities or expenses primarily intended to result in the sale of the Fund's
shares, including but not limited to compensation paid to, and expenses
(including overhead and telephone expenses) of, employees of the distributor who
engage in or support the distribution of Fund shares. See "DISTRIBUTION PLAN"
in the Statement of Additional Information for a more complete description of
the Plan. Long-term shareholders (e.g., in excess of 25 years) may pay more
through the imposition of the distribution fee over time than the economic
equivalent of the maximum front-end sales charge permitted to be charged by
brokers, if the Fund were to have a front-end sales charge.
R E T I R E M E N T P L A N S
The Fund offers the following retirement plans that may be funded with
purchases of Fund shares and may allow investors to shelter some of their income
from taxes:
INDIVIDUAL RETIREMENT ACCOUNT ("IRA")
Individuals who receive compensation or earned income, even if they are
active participants in a qualified retirement plan (or certain similar
retirement plans), may establish their own tax-sheltered Individual Retirement
Account ("IRA"). The MINIMUM INITIAL INVESTMENT for an IRA is $500. The Fund
offers a prototype IRA plan which may be adopted by individuals. There is
currently no charge for establishing an account, although there is an annual
maintenance fee. (See IRA Custodial Agreement and Disclosure Statement.)
Earnings on amounts held in an IRA are not taxed until withdrawal. However,
the amount of deduction, if any, allowed for IRA contributions is limited for
individuals who are active participants in an employer-maintained retirement
plan and whose incomes exceed specific limits.
SIMPLIFIED EMPLOYEE PENSION PLAN ("SEP/IRA")
The Fund also offers a simplified employee pension (SEP) plan for employers,
including self-employed individuals, who wish to purchase Fund shares with tax-
deductible contributions. Under the SEP plan, employer contributions are made
directly to the IRA accounts of eligible participants. An employer may also
provide for salary reduction contributions under a SEP plan.
DEFINED CONTRIBUTION RETIREMENT PLAN (KEOGH OR CORPORATE PROFIT-SHARING AND
MONEY-PURCHASE PLANS)
A prototype defined contribution retirement plan is available for employers,
including self-employed individuals, who wish to purchase Fund shares with tax-
deductible contributions.
CASH OR DEFERRED 401(K) PLAN
A prototype cash or deferred 401(k) arrangement is also available as part of
the Defined Contribution Retirement Plan for employers who wish to allow
employees to elect to reduce their compensation and have such amounts
contributed to the plan.
MODEL 403(B)(7) PLAN
A model 403(b)(7) plan is available for employees of certain charitable,
educational and governmental entities.
A description of applicable service fees and certain limitations on
contributions and withdrawals, as well as application forms, are available from
the Fund upon request. The IRA documents contain a disclosure statement which
the Internal Revenue Service requires to be furnished to individuals who are
considering adopting the IRA. Because a retirement program involves commitments
covering future years, it is important that the investment objective of the Fund
be consistent with the participant's retirement objectives. Premature
withdrawals from a retirement plan will result in adverse tax consequences.
Consultation with a competent financial and tax adviser regarding the foregoing
retirement plans is recommended.
E X C H A N G E P R I V I L E G E
All or part of the Fund shares owned by an investor may be exchanged for
shares of the Portico Money Market Fund, the Portico U.S. Government Money
Market Fund and the Portico Tax-Exempt Money Market Fund (collectively the
"Portico Money Funds"). The Portico Money Funds are described in a separate
prospectus available from the Fund. Firstar Investment Research & Management
Company, an affiliate of Firstar Trust Company, serves as the investment adviser
to each of the Portico Money Funds. Investors may subsequently exchange such
shares and shares purchased with reinvested dividends for shares of the Fund.
Use of the exchange privilege is subject to the minimum purchase and redemption
amounts set forth in the prospectus for the applicable Portico Money Fund, and
is available only if shares of the applicable Portico Money Fund are registered
for sale in the state of residence of the investor. Investors may obtain a copy
of the prospectus for any Portico Money Fund from the Fund and are advised to
read it carefully before authorizing any investment in shares of such fund.
Exchange requests are subject to a $1,000 MINIMUM. Exchange requests may be
subject to other limitations, including those relating to frequency, that may be
established from time to time to ensure that the exchanges do not disadvantage
the Fund or its investors. Investors will be notified at least 60 days in
advance of any changes in such limitations and may obtain the terms of any such
limitations by writing to The Yacktman Fund, Inc., Shareholder Services Center,
P.O. Box 701, Milwaukee, Wisconsin 53201-0701. Except as stated above, the Fund
currently does not impose any limitations on exchanges. There will be a $5.00
FEE charged to the investor's account FOR EACH TELEPHONE EXCHANGE transacted by
the investor. This fee will be charged to the account from which the funds are
being withdrawn prior to effecting the exchange. There is NO FEE FOR A WRITTEN
EXCHANGE REQUEST.
An exchange involves a redemption of all or a portion of the shares in the
Fund and the investment of the redemption proceeds in shares of the applicable
Portico Money Fund. The redemption will be made at the per share net asset value
of the shares to be redeemed next determined after the exchange request is
received as described above. The shares of the Portico Money Fund to be acquired
will be purchased at the per share net asset value of those shares next
determined coincident with or after the time of redemption. For federal income
tax purposes, an exchange of shares is a taxable event and, accordingly, the
investor may realize a capital gain or loss. Before making an exchange request,
the investor should consult a tax or other financial adviser to determine the
tax consequences of a particular exchange. For further information regarding the
exchange privilege, see "EXCHANGE PRIVILEGE" in the Fund's Statement of
Additional Information.
R E D E M P T I O N OF S H A R E S
REDEMPTION BY TELEPHONE
Investors may redeem shares of the Fund by telephone. To redeem shares by
telephone, an investor must check the appropriate box on the share purchase
application as the Fund does not make this feature available to shareholders
automatically. Once this feature has been requested, shares may be redeemed by
phoning the Transfer Agent at 1-800-457-6033 or 1-414-765-4124 and giving:
- the account name,
- the account number, and
- either the number of shares or the dollar amount to be redeemed.
Proceeds redeemed by telephone will be mailed or wired only to an investor's
address or bank of record as shown on the records of the Transfer Agent.
TELEPHONE REDEMPTIONS MUST BE IN AMOUNTS OF $1,000 OR MORE. Any written
redemption request received within 15 days after an address change made by
telephone, must be accompanied by a signature guarantee and no telephone
redemption will be allowed within 15 days of such a change.
Payment of the redemption proceeds for shares of the Fund redeemed by
telephone where an investor requests wire payment will normally be made in
federal funds on the next business day. As stated above, the Transfer Agent will
wire redemption proceeds only to the bank and account designated on the share
purchase application or in written instructions subsequently received by the
Transfer Agent, and only if the bank is a commercial bank located within the
United States. The Transfer Agent currently charges a $10.00 FEE for each
payment made by wire of redemption proceeds, which fee will be deducted from the
investor's account.
In order to arrange for telephone redemptions after a Fund account has been
opened or to change the bank, account or address designated to receive
redemption proceeds, a written request must be sent to the Transfer Agent. The
request must be signed by each registered holder of the account with the
signatures guaranteed by a commercial bank or trust company in the United
States, a member firm of the New York Stock Exchange or other eligible guarantor
institution. Further documentation may be requested from corporations,
executors, administrators, trustees and guardians.
The Fund reserves the right to refuse a telephone redemption if it believes
it is advisable to do so. Procedures for redeeming shares of the Fund by
telephone may be modified or terminated by the Fund at any time. Neither the
Fund nor the Transfer Agent will be liable for following instructions for
telephone redemption transactions which they reasonably believe to be genuine
even if such instructions prove to be unauthorized or fraudulent. They will
employ reasonable procedures to confirm that instructions received by telephone
are genuine, including requiring the shareholder to provide the shareholder's
account number to verify ownership, tape recording all instructions and
providing written confirmation of such instructions, and if they do not, they
may be liable for losses due to unauthorized or fraudulent instructions.
REDEMPTION BY MAIL
Investors may request redemption of part or all of their Fund shares by mail
whenever they wish. For most redemption requests, an investor need only deliver
to the Transfer Agent a written, unconditional request to redeem his or her
shares at net asset value. A request for redemption must include:
- the name of the Fund (i.e., The Yacktman Fund or a Portico money market
fund);
- the account number;
- the dollar amount or number of shares being redeemed;
- the name(s) on the account registration;
- the signatures of all registered account owners; and
- a daytime telephone number.
If stock certificates have been issued, the investor must also deliver the
certificate or certificates in transferable form, duly endorsed or accompanied
by a separate stock power. In certain situations, such as where corporations,
executors, administrators, trustees and guardians are involved, additional
documentation and signature guarantees may be required. Redemptions are effected
only by the Transfer Agent. In case of any questions concerning the nature of
such additional requirements, the Transfer Agent should be contacted in advance.
Redemption requests may be submitted directly to the Transfer Agent at no
cost to the investor. They may also be submitted through securities dealers, in
which case a service fee may be charged by such dealer. If a redemption request
is not sent directly to the Transfer Agent, it will be forwarded to the Transfer
Agent, and the effective date of redemption will be delayed until the request is
received by the Transfer Agent. THUS, TO AVOID DELAY, PLEASE SUBMIT REDEMPTION
REQUESTS DIRECTLY TO THE TRANSFER AGENT at:
The Yacktman Fund, Inc.
Shareholder Services Center
615 East Michigan Street
Milwaukee, WI 53202
The Fund does not consider the U.S. Postal Service or other independent delivery
services to be its agents. Therefore, deposit in the mail or with such
services, or receipt at Firstar Trust Company's Post Office Box of redemption
requests does not constitute receipt by Firstar Trust Company or the Fund. DO
NOT mail letters by overnight courier to the Post Office Box address.
Correspondence mailed by overnight courier should be sent to Firstar Trust
Company, Third Floor, 615 East Michigan Street, Milwaukee, Wisconsin 53202.
SIGNATURE GUARANTEE
Except in certain situations, such as where corporations, executors,
administrators, trustees and guardians are involved, signatures need not be
guaranteed unless:
- the redemption request exceeds $25,000;
- the proceeds of the redemption are requested to be sent by wire transfer
to a person other than the registered holder(s) of the shares to be
redeemed;
- the proceeds of the redemption are to be mailed to other than the address
of record; or
- a change of address request has been received by the Fund or the Transfer
Agent within the last 15 days.
In such cases, each signature on any stock certificate, stock power or
redemption request must be guaranteed by a commercial bank or trust company in
the United States, a member firm of the New York Stock Exchange or other
eligible guarantor institution.
REDEMPTION PRICE
The redemption price per share is the next determined net asset value per
share for the Fund after receipt by the Transfer Agent of the written request
containing the information set forth above, accompanied by all required
documentation. The amount received will depend on the market value of the
investments in the Fund's portfolio at the time of determination of net asset
value and may be more or less than the cost of the shares redeemed. A check in
payment for shares redeemed will be mailed to the holder typically within one or
two days, but no later than the seventh day after receipt of the redemption
request in proper form and of all required documentation (except as indicated
above for certain redemptions of shares purchased by check).
Investors should be aware that during periods of substantial economic or
market change, telephone or wire redemptions may be difficult to implement. If
an investor is unable to contact the Transfer Agent by telephone, shares may
also be redeemed by delivering the redemption request to the Transfer Agent by
mail as described above.
When redemption is requested shortly after shares have been purchased by
personal check, the redemption proceeds will be delayed until the Fund can
verify that the check has cleared. (It will normally take up to 3 days to clear
local personal or corporate checks and up to 7 days to clear other personal and
corporate checks.) Investors may not use a wire transfer to a predesignated
account until the shares being redeemed have been issued for at least 15 days.
To reduce such delay, the Fund recommends that all purchases be made by direct
wire transfer.
To relieve the Fund of the cost of maintaining uneconomical accounts, the
Fund reserves the right to redeem the shares held in any account if, at the time
of any redemption of shares in the account, the net asset value of the remaining
shares in the account falls below $1,000. Before such involuntary redemption
would occur, the investor would be given at least 60 days' written notice and,
during that period, the investor could make an additional investment to restore
the account to at least the minimum amount, in which case there would be no such
redemption. Involuntary redemptions will not be made because the value of shares
in an account falls below the minimum amount solely because of a decline in the
Fund's net asset value. Any such involuntary redemption would be at net asset
value.
The right to redeem shares of the Fund will be suspended for any period
during which the New York Stock Exchange is closed because of financial
conditions or any other extraordinary reason and may be suspended for any period
during which (a) trading on the New York Stock Exchange is restricted pursuant
to rules and regulations of the Securities and Exchange Commission, (b) the
Securities and Exchange Commission has by order permitted such suspension or (c)
an emergency, as defined by rules and regulations of the Securities and Exchange
Commission, exists as a result of which it is not reasonably practicable for the
Fund to dispose of its securities or fairly to determine the value of its net
assets.
S Y S T E M A T I C
W I T H D R A W A L P L A N
To accommodate the current cash needs of investors, the Fund offers a
Systematic Withdrawal Plan, pursuant to which an investor may provide that a
fixed sum be distributed to him or her at regular intervals. AN INVESTOR MUST
OWN FUND SHARES WORTH AT LEAST $10,000 AT CURRENT NET ASSET VALUE IN ORDER TO
PARTICIPATE IN THE PLAN. In electing to participate in the Systematic Withdrawal
Plan, an investor should realize that within any given period the appreciation
of his or her investment in the Fund may not be as great as the amount
withdrawn. A more complete discussion of the Systematic Withdrawal Plan is
included in the Fund's Statement of Additional Information. The Systematic
Withdrawal Plan does not apply to shares of the Fund held in IRAs or other
retirement plans. An application for participation in the Systematic Withdrawal
Plan can be obtained from the Fund. Investors who wish to make a change in
their Systematic Withdrawal Plan may do so by calling the Transfer Agent at 1-
800-457-6033.
D E T E R M I N A T I O N O F
N E T A S S E T V A L U E
The price investors pay when buying Fund shares, and the price investors
receive when redeeming Fund shares, is the net asset value of the shares. No
sales charge or commission of any kind is added by the Fund upon a purchase and
no charge is deducted upon a redemption.
The per share net asset value of the Fund is determined by dividing the
total value of its net assets (meaning its assets less its liabilities excluding
capital and surplus) by the total number of its shares outstanding at that time.
The net asset value is determined as of the close of regular trading (currently
4:00 p.m. Eastern time) on the New York Stock Exchange on each day the New York
Stock Exchange is open for trading. This determination is applicable to all
transactions in shares of the Fund prior to that time and after the previous
time as of which net asset value was determined. Accordingly, purchase orders
accepted or shares tendered for redemption prior to the close of regular trading
on a day the New York Stock Exchange is open for trading will be valued as of
the close of trading, and purchase orders accepted or shares tendered for
redemption after that time will be valued as of the close of the next trading
day.
Securities which are traded on a recognized stock exchange are valued at the
last sale price on the securities exchange on which such securities are
primarily traded or at last sale price on the national securities market.
Exchange-traded securities for which there were no transactions are valued at
the current bid prices. Securities traded on only over-the-counter markets are
valued on the basis of closing over-the-counter bid prices. Debt securities
(other than short-term instruments) are valued at prices furnished by a national
pricing service, subject to review by the Adviser and determination of the
appropriate price whenever a furnished price is significantly different from the
previous day's furnished price. Debt instruments maturing within 60 days are
valued by the amortized cost method. Any securities for which market quotations
are not readily available are valued at their fair value as determined in good
faith by the Board of Directors.
D I V I D E N D S A N D
D I S T R I B U T I O N S
THE FUND PAYS DIVIDENDS QUARTERLY from net investment income. Any NET
REALIZED CAPITAL GAIN not offset by capital loss carryovers is distributed
ANNUALLY. Investors may elect to have all income dividends and capital gains
distributions reinvested in the Fund or paid in cash. See the share purchase
application for further information. If an investor does not specify an
election, all income dividends and capital gains distributions will
automatically be reinvested in full and fractional shares of the Fund,
calculated to the nearest 1,000th of a share. Shares will be purchased at the
net asset value in effect on the business day after the dividend record date and
will be credited to the investor's account on such date. As in the case of other
purchases, stock certificates will not be issued unless requested. Investors
will be advised of the number of shares purchased and the price following each
reinvestment. An election to reinvest or receive dividends and distributions in
cash will apply to all shares of the Fund registered in the same name, including
those previously purchased. Reinvested dividends and distributions receive the
same tax treatment as those paid in cash.
An investor may change his or her election at any time by notifying the Fund
in writing. If such a notice is received between a dividend declaration date and
payment date, it will become effective on the day following the payment date.
The Fund may modify or terminate the dividend reinvestment program at any time
on 30 days' notice to participants.
The Transfer Agent will accept a request to change from cash to reinvest.
The Transfer Agent will also accept a request to change reinvest to cash as long
as the proceeds are sent to the address of record or to a preauthorized wire/EFT
payment address already established on the account. A request to begin EFT of
dividends to a bank not already on the account or to have the check sent to
another address must be received with a signature guarantee.
T A X E S
The Fund intends to qualify annually for and elect tax treatment applicable
to a "regulated investment company" under Subchapter M of the Code. The Fund
intends to distribute all of its taxable net income and realized net gains to
investors so that the Fund will not be required to pay any income taxes. Such
distributions are taxable as ordinary income or capital gain to investors unless
their income is not subject to income tax. Investors may also be subject to
state and local taxes on such distributions. Investors are informed annually of
the amount and nature of such income or gain. Only dividends that represent
dividends received by the Fund from U.S. corporations may, subject to certain
limitations, qualify for the dividends received deduction, which is available
only to certain corporations.
If the Fund distributes less than the amount it is required to distribute
during any year, the Fund will be subject to a 4% excise tax on the under-
distributed amount. The Fund intends to declare and distribute dividends during
each year sufficient to prevent imposition of the excise tax.
THE FUND WILL BE REQUIRED TO WITHHOLD FEDERAL INCOME TAX AT A RATE OF 31%
("backup withholding") from dividend payments and redemption and exchange
proceeds IF AN INVESTOR FAILS TO FURNISH THE FUND WITH HIS SOCIAL SECURITY
NUMBER OR OTHER TAX IDENTIFICATION NUMBER OR FAILS TO CERTIFY UNDER PENALTY OF
PERJURY THAT SUCH NUMBER IS CORRECT OR THAT HE IS NOT SUBJECT TO BACKUP
WITHHOLDING DUE TO THE UNDERREPORTING OF INCOME. This certification is included
as part of the share purchase application and should be completed when the
account is opened.
Investors should consult their tax advisers for a complete review of the tax
ramifications of an investment in the Fund.
C A P I T A L S T R U C T U R E
The Fund's authorized capital consists of 500,000,000 shares of Common
Stock, $0.0001 par value. Shareholders are entitled: (i) to one vote per full
share of Common Stock; (ii) to such distributions as may be declared by the
Fund's Board of Directors out of funds legally available; and (iii) upon
liquidation, to participate ratably in the assets available for distribution.
There are no conversion or sinking fund provisions applicable to the shares, and
the holders have no preemptive rights and may not cumulate their votes in the
election of directors. Consequently the holders of more than 50% of the shares
of Common Stock voting for the election of directors can elect the entire Board
of Directors and, in such event, the holders of the remaining shares voting for
the election of directors will not be able to elect any person or persons to the
Board of Directors. The Maryland General Corporation Law permits registered
investment companies, such as the Fund, to operate without an annual meeting of
shareholders under specified circumstances if an annual meeting is not required
by the Act. The Fund has adopted the appropriate provisions in its Bylaws and
does not anticipate holding an annual meeting in any year in which the election
of directors is not required to be acted on by shareholders under the Act. The
Fund also has adopted provisions in its Bylaws for the removal of directors by
the shareholders.
Shares of Common Stock are redeemable and are transferable. All shares
issued and sold by the Fund will be fully paid and nonassessable. Fractional
shares of Common Stock entitle the holder to the same rights as whole shares of
Common Stock. The Fund will not issue certificates evidencing shares of Common
Stock purchased unless so requested in writing. Where certificates are not
issued, the investor's account will be credited with the number of shares
purchased, relieving investors of responsibility for safekeeping of certificates
and the need to deliver them upon redemption. Written confirmations are issued
for all purchases of Common Stock. Any investor may deliver certificates to
Firstar Trust Company and direct that his or her account be credited with the
shares. Any investor may direct Firstar Trust Company at any time to issue a
certificate for his or her shares of Common Stock without charge. In addition to
serving as the Fund's Transfer Agent, Firstar Trust Company, 615 East Michigan
Street, Milwaukee, Wisconsin 53202, is the custodian for all securities and cash
of the Fund and acts as the Fund's dividend disbursing agent.
Pursuant to the Fund's Articles of Incorporation, the Board of Directors may
classify or reclassify any unissued shares of the Fund and may designate or
redesignate the name of any outstanding class of shares of the Fund. In the
event that the shares of the Fund are so divided into two or more classes, each
share of the Fund outstanding, regardless of class, would still entitle its
holder to one (1) vote. As a general matter, shares would be voted in the
aggregate and not by class, except where class voting would be required by
Maryland law or the Act (e.g., a change in investment policy or approval of an
investment advisory agreement). All consideration received from the sale of
shares of any class of the Fund's shares, together with all income, earnings,
profits and proceeds thereof, would belong to that class and would be charged
with the liabilities in respect of that class and of that class' share of the
general liabilities of the Fund in the proportion that the total net assets of
the class bear to the total net assets of all classes of the Fund's shares. The
net asset value of a share of any class would be based on the assets belonging
to that class less the liabilities charged to that class, and dividends could be
paid on shares of any class of Common Stock only out of lawfully available
assets belonging to that class. In the event of liquidation or dissolution of
the Fund, the holders of each class would be entitled, out of the assets of the
Fund available for distribution, to the assets belonging to that class.
S H A R E H O L D E R R E P O R T S
Investors will be provided at least semi-annually with a report showing the
Fund's portfolio and other information and annually after the close of the
Fund's fiscal year, which ends December 31, with an annual report containing
audited financial statements. An individual account statement will be sent to
the investor by Firstar Trust Company after each purchase, including
reinvestment of dividends, or redemption of shares of the Fund. Each investor
will also receive an annual statement after the end of the calendar year listing
all transactions in shares of the Fund during such year.
Investors who have questions about their respective accounts should call
Firstar Trust Company at 1-800-457-6033 or 1-414-765-4124. In addition,
investors who wish to make a change in their address of record, a change in
investments made through an automatic investment plan or a change in the manner
in which dividends are received may also do so by calling the Transfer Agent at
1-800-457-6033. Investors who have questions regarding the investment strategy
and historical performance of the Fund should call Yacktman Asset Management Co.
at 1-800-525-8258 and ask to speak to a member of the portfolio management
group. Alternatively, investors may also write to The Yacktman Fund, Inc., 303
West Madison Street, Chicago, Illinois 60606, Attention: Corporate Secretary.
F U N D P E R F O R M A N C E
The Fund may provide from time to time in advertisements, reports to
investors and other communications with investors its average annual compounded
rate of return. An average annual compounded rate of return refers to the rate
of return which, if applied to an initial investment at the beginning of a
stated period and compounded over the period, would result in the redeemable
value of the investment at the end of the stated period assuming reinvestment of
all dividends and distributions and reflecting the effect of all recurring fees.
An investor's principal in the Fund and the Fund's return are not guaranteed and
will fluctuate according to market conditions.
In reports or other communications to investors and in advertising material,
the Fund may compare its performance to the Consumer Price Index, the Dow Jones
Industrial Average, the Standard & Poor's 500 Stock Index and to the performance
of mutual fund indexes as reported by Lipper Analytical Services, Inc.
("Lipper"), CDA Investment Technologies, Inc. ("CDA") or Morningstar, Inc.
("Morningstar"), three widely recognized independent mutual fund reporting
services. Lipper, CDA and Morningstar performance calculations include
reinvestment of all capital gain and income dividends for the periods covered by
the calculations. The Consumer Price Index is generally considered to be a
measure of inflation. The Dow Jones Industrial Average and the Standard & Poor's
500 Stock Index are unmanaged indices of common stocks which are considered to
be generally representative of the United States stock market. The market prices
and yields of these stocks will fluctuate. The Fund also may quote performance
information from publications such as The Wall Street Journal, Kiplinger's
Personal Finance Magazine, Money Magazine, Forbes, Smart Money, Barron's, Worth
Magazine, and USA Today.
D I R E C T O R S
<F11>JON D. CARLSON-Director. Executive Vice President of Yacktman Asset
Management Co.
THOMAS R. HANSON-Director. Partner of Fleming/Hanson Sales, a manufacturers
representative firm in the commercial and industrial air conditioning
industry.
STANISLAW MALISZEWSKI-Director. Managing Director of Gateway Asset
Management, Inc., an investment management and marketing company for
large institutional investors.
STEPHEN E. UPTON-Director. Retired President of the Whirlpool Foundation.
<F11>DONALD A. YACKTMAN-Director. President of Yacktman Asset Management Co.
<F11>Director who is an "interested" person of the Fund (as defined in the
Investment Company Act of 1940).
P R I N C I P A L O F F I C E R S
DONALD A. YACKTMAN-President and Treasurer.
JON D. CARLSON-Vice President and Secretary.
I N V E S T M E N T A D V I S E R
YACKTMAN ASSET MANAGEMENT CO.
303 West Madison Street, Suite 1925
Chicago, Illinois 60606
A D M I N I S T R A T O R
SUNSTONE FINANCIAL GROUP, INC.
207 East Buffalo Street, Suite 400
Milwaukee, Wisconsin 53202
C U S T O D I A N , T R A N S F E R
A G E N T A N D D I V I D E N D
D I S B U R S I N G A G E N T
FIRSTAR TRUST COMPANY
615 East Michigan Street
Milwaukee, Wisconsin 53202
1-800-457-6033
1-414-765-4124
I N D E P E N D E N T
A C C O U N T A N T S
PRICE WATERHOUSE LLP
100 East Wisconsin Avenue
Milwaukee, Wisconsin 53202
L E G A L C O U N S E L
FOLEY & LARDNER
777 East Wisconsin Avenue
Milwaukee, Wisconsin 53202
STATEMENT OF ADDITIONAL INFORMATION April 29, 1996
THE YACKTMAN FUND, INC.
303 West Madison Street
Chicago, Illinois 60606
Call Toll-Free 1-800-525-8258
This Statement of Additional Information is not a prospectus and
should be read in conjunction with the Prospectus of The Yacktman Fund,
Inc. dated April 29, 1996. Requests for copies of the Prospectus should
be made by writing to The Yacktman Fund, Inc., 303 West Madison Street,
Chicago, Illinois 60606, Attention: Corporate Secretary, or by calling 1-
800-525-8258.
THE YACKTMAN FUND, INC.
TABLE OF CONTENTS
Page
INVESTMENT RESTRICTIONS . . . . . . . . . . . . . . . . . . . . . . . . 1
DETERMINATION OF NET ASSET VALUE . . . . . . . . . . . . . . . . . . . 3
DIRECTORS AND OFFICERS OF THE FUND . . . . . . . . . . . . . . . . . . 3
INVESTMENT ADVISER AND ADMINISTRATOR . . . . . . . . . . . . . . . . . 6
EXCHANGE PRIVILEGE . . . . . . . . . . . . . . . . . . . . . . . . . . 8
SYSTEMATIC WITHDRAWAL PLAN . . . . . . . . . . . . . . . . . . . . . . 8
CUSTODIAN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
INDEPENDENT ACCOUNTANTS . . . . . . . . . . . . . . . . . . . . . . . 10
DISTRIBUTION PLAN . . . . . . . . . . . . . . . . . . . . . . . . . . 10
ALLOCATION OF PORTFOLIO BROKERAGE . . . . . . . . . . . . . . . . . . 11
TAXES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
STOCKHOLDER MEETINGS . . . . . . . . . . . . . . . . . . . . . . . . 14
PERFORMANCE INFORMATION . . . . . . . . . . . . . . . . . . . . . . . 15
FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . 16
DESCRIPTION OF SECURITIES RATINGS . . . . . . . . . . . . . . . . . . 17
INVESTMENT RESTRICTIONS
As set forth in the Prospectus dated April 29, 1996 of The
Yacktman Fund, Inc. (the "Fund") under the caption "OBJECTIVE AND
INVESTMENT APPROACH," the investment objective of the Fund is to produce
long-term growth of capital, with current income as a secondary objective.
Consistent with this investment objective, the Fund has adopted the
following investment restrictions which are matters of fundamental policy
and cannot be changed without approval of the holders of the lesser of:
(i) 67% of the Fund's shares present or represented at a stockholder's
meeting at which the holders of more than 50% of such shares are present
or represented; or (ii) more than 50% of the outstanding shares of the
Fund.
1. The Fund will diversify its assets in different
companies and will not purchase securities of any issuer if, as
a result of such purchase, the Fund would own more than 10% of
the outstanding voting securities of such issuer or more than 5%
of the Fund's assets would be invested in securities of such
issuer (except that up to 25% of the value of the Fund's total
assets may be invested without regard to this limitation). This
restriction does not apply to obligations issued or guaranteed
by the United States Government, its agencies or
instrumentalities.
2. The Fund will not sell securities short, buy
securities on margin, purchase warrants, participate in a joint-
trading account, or deal in options.
3. The Fund will not borrow money, except for temporary
or emergency purposes, and then only from banks, in an amount
not exceeding 10% of the value of the Fund's total assets. The
Fund will not borrow money for the purpose of investing in
securities, and the Fund will not purchase any portfolio
securities for so long as any borrowed amounts remain
outstanding.
4. The Fund will not pledge or hypothecate its assets,
except to secure borrowings for temporary or emergency purposes.
5. The Fund will not invest more than 5% of the Fund's
total assets in securities of any issuer which has a record of
less than three (3) years of continuous operation, including the
operation of any predecessor business of a company which came
into existence as a result of a merger, consolidation,
reorganization or purchase of substantially all of the assets of
such predecessor business.
6. The Fund will not purchase securities of other
investment companies (as defined in the Investment Company Act
of 1940 (the "Act")), except as part of a plan of merger,
consolidation, reorganization or acquisition of assets.
7. The Fund will not act as an underwriter or distributor
of securities other than shares of the Fund (except to the
extent that the Fund may be deemed to be an underwriter within
the meaning of the Securities Act of 1933, as amended, in the
disposition of restricted securities).
8. The Fund will not purchase securities for which there
is no established market if, as a result of such purchase, more
than 5% of the total value of its total assets would be invested
in such securities.
9. The Fund will not make loans, except it may acquire
debt securities from the issuer or others which are publicly
distributed or are of a type normally acquired by institutional
investors and except that it may make loans of portfolio
securities if any such loans are secured continuously by
collateral at least equal to the market value of the securities
loaned in the form of cash and/or securities issued or
guaranteed by the U.S. Government, its agencies or
instrumentalities and provided that no such loan will be made if
upon the making of that loan more than 30% of the value of the
Fund's total assets would be the subject of such loans.
10. The Fund will not concentrate 25% or more of its total
assets in securities of any one industry. This restriction does
not apply to obligations issued or guaranteed by the United
States Government, its agencies or instrumentalities.
11. The Fund will not make investments for the purpose of
exercising control or management of any company.
12. The Fund will not purchase or sell real estate or real
estate mortgage loans and will not make any investments in real
estate limited partnerships.
13. The Fund will not purchase or sell commodities or
commodity contracts, including futures contracts.
14. The Fund will not purchase or sell any interest in any
oil, gas or other mineral exploration or development program,
including any oil, gas or mineral leases.
The Fund has adopted certain other investment restrictions which
are not fundamental policies and which may be changed by the Fund's Board
of Directors without stockholder approval. These additional restrictions
are as follows:
1. The Fund will not acquire or retain any security
issued by a company, an officer or director of which is an
officer or director of the Fund or an officer, director or other
affiliated person of the Fund's investment adviser.
2. The Fund will not acquire or retain any security issued
by a company if any of the directors or officers of the Fund or
directors, officers or other affiliated persons of the Fund's
investment adviser beneficially own more than 1/2% of such
company's securities and all of the above persons owning more
than 1/2% own together more than 5% of its securities.
The aforementioned percentage restrictions on investment or
utilization of assets refer to the percentage at the time an investment is
made. If these restrictions are adhered to at the time an investment is
made, and such percentage subsequently changes as a result of changing
market values or some similar event, no violation of the Fund's
fundamental restrictions will be deemed to have occurred. Any changes in
the Fund's investment restrictions made by the Board of Directors will be
communicated to stockholders prior to their implementation.
DETERMINATION OF NET ASSET VALUE
As set forth in the Prospectus under the caption "DETERMINATION
OF NET ASSET VALUE," the net asset value of the Fund will be determined as
of the close of regular trading (currently 4:00 p.m. Eastern time) on each
day the New York Stock Exchange is open for trading. The New York Stock
Exchange is open for trading Monday through Friday except New Year's Day,
Washington's Birthday, Good Friday, Memorial Day, Independence Day, Labor
Day, Thanksgiving Day and Christmas Day. Additionally, if any of the
aforementioned holidays falls on a Saturday, the New York Stock Exchange
will not be open for trading on the succeeding Monday, unless unusual
business conditions exist, such as the ending of a monthly or the yearly
accounting period.
DIRECTORS AND OFFICERS OF THE FUND
The name, age, address, principal occupations during the past
five years, and other information with respect to each of the directors
and officers of the Fund are as follows:
*Jon D. Carlson -- Director, Vice President and Secretary. Mr.
Carlson, 54, has been the Executive Vice President of the Adviser since
May 14, 1992. Prior to this date he was a Senior Vice President of the
Kemper Securities Group, Inc., which he joined in March, 1989 from Kidder,
Peabody and Co. A graduate of The University of Michigan and the Michigan
Law School, Mr. Carlson has been admitted to the practice of law in
Michigan, New York and Illinois and served from 1972 to 1978 on the
Employee Benefits Committee of the Taxation Section of the American Bar
Association. His address is c/o Yacktman Asset Management Co., 303 West
Madison Street, Chicago, Illinois 60606.
Thomas R. Hanson -- Director. Mr. Hanson, 58, is a Partner of
Fleming/Hanson Sales, a manufacturers representative firm in the
commercial and industrial air conditioning industry. Prior to
establishing this firm in 1991, Mr. Hanson was President of Thermal Air
Systems, Inc., Bensenville, Illinois. He also serves on the Corporate
Member Board of Advocate Health Care, Inc., Oak Brook, Illinois, and on
the Advisory Board for the College of Engineering of the University of
Iowa from which he earned a B.S. in Mechanical Engineering. His address
is c/o Fleming/Hanson Sales, 3010 Woodcreek Drive, Downers Grove, Illinois
60515.
Stanislaw Maliszewski -- Director. Mr. Maliszewski, 51, has
been a Managing Director of Gateway Asset Management, Inc., an investment
management and marketing company for large institutional investors since
August, 1993. Prior to joining Gateway Asset Management, Inc. Mr.
Maliszewski was President of Princeton Futures Management Incorporated, an
investment advisory firm for large institutional investors. Neither
Gateway Asset Management, Inc. nor Princeton Futures Management
Incorporated is affiliated with, or a service provider to, the Adviser.
Prior to establishing Princeton Futures Management Incorporated in 1991,
Mr. Maliszewski was with the Rosenberg Real Estate Equity Funds, LaSalle
Advisors Ltd., and the Investment Banking Services Group of Goldman Sachs
and Company. He holds an A.B. degree from Princeton University and an MBA
from Harvard University. His address is c/o Gateway Asset Management,
Inc., Suite 1420, 180 North LaSalle Street, Chicago, Illinois 60601.
Stephen E. Upton -- Director. Mr. Upton, 71, is the retired
President of the Whirlpool Foundation, Benton Harbor, Michigan, a position
he held until 1993. He retired in 1988 as a Senior Vice President for
Whirlpool Corporation, a manufacturer of major household appliances. Mr.
Upton had been an officer and employee of Whirlpool since 1955. He has
served as Chairman of the Board of Trustees of Olivet College in Michigan
and as Chairman of the Consumer Affairs Committee for the United States
Chamber of Commerce and is a Trustee of the Michigan Colleges Foundation.
Mr. Upton holds a B.B.A. degree from The University of Michigan. His
address is 100 Ridgeway Road, St. Joseph, Michigan 49085.
*Donald A. Yacktman -- Director, President and Treasurer. Mr.
Yacktman, 54, has been the President of the Adviser since April 24, 1992.
Prior to that time, he was Senior Vice President of Selected Asset
Management, Inc., a Chicago, Illinois investment advisory firm, and the
President and portfolio manager from January 1, 1983 through March 11,
1992 of the Selected American Shares mutual fund. Prior to joining the
predecessor firm of Selected Asset Management, Inc., Mr. Yacktman was a
partner and portfolio manager for fourteen years at Stein Roe & Farnham,
an independent investment counseling firm based in Chicago. Mr. Yacktman
has served as a Bishop in the Church of Jesus Christ of Latter-Day Saints
and is a member of the Financial Analysts Society of Chicago. He holds a
B.S. Magna Cum Laude and Phi Beta Kappa from The University of Utah and an
MBA with distinction from Harvard University. His address is c/o Yacktman
Asset Management Co., 303 West Madison Street, Chicago, Illinois 60606.
______________
* Messrs. Carlson and Yacktman are "interested persons" of the Fund (as
defined in the Act).
The Fund's standard method of compensating directors is to pay
each disinterested director an annual fee of $5,000 for services rendered,
including attending meetings of the Board of Directors. The Fund also may
reimburse its directors for travel expenses incurred in order to attend
meetings of the Board of Directors. For the fiscal year ended December
31, 1995 the disinterested directors received aggregate fees (excluding
$335 in reimbursements of travel expenses) of $15,000. The table below
sets forth the compensation paid by the Fund to each of the current
directors of the Fund during the fiscal year ended December 31, 1995:
<TABLE>
COMPENSATION TABLE
<CAPTION>
Pension or
Retirement Estimated Total
Aggregate Benefits Accrued As Annual Compensation
Name of Compensation Part of Fund Benefits Upon from Fund Paid
Person from Fund Expenses Retirement to Directors
<S> <C> <C> <C> <C>
Jon D. Carlson $0 $0 $0 $0
Thomas R. Hanson $5,000 $0 $0 $5,000
Stanislaw Maliszewski $5,000 $0 $0 $5,000
Stephen E. Upton $5,000 $0 $0 $5,000
Donald A. Yacktman $0 $0 $0 $0
</TABLE>
At April 10, 1996, all officers and directors of the Fund as a
group beneficially owned 225,939 shares of the Fund, or less than 1.0% of
the then outstanding shares. At such date, Charles Schwab & Co., 101
Montgomery Street, San Francisco, California 94104, owned of record
26,995,121 shares of the Fund, or 56.31% of the then outstanding shares,
Integra Trust Co., 300 4th Avenue, Pittsburgh, Pennsylvania 15278, owned
of record 2,633,004 shares of the Fund, or 5.49% of the then outstanding
shares, and National Financial Services Corp., c/o Fidelity Investments,
82 Devonshire Street R20A, Boston, Massachusetts 02109, owned of record
2,506,857 shares of the Fund, or 5.23% of the then outstanding shares.
All of the shares owned by Charles Schwab & Co., Integra Trust Co. and
National Financial Services Corp. were owned of record only. Other than
the foregoing, the Fund was not aware of any person who, as of April 10,
1996, owned of record or beneficially 5% or more of the shares of the
Fund.
INVESTMENT ADVISER AND ADMINISTRATOR
As set forth in the Prospectus under the caption "MANAGEMENT OF
THE FUND," the investment adviser to the Fund is Yacktman Asset Management
Co., 303 West Madison Street, Chicago, Illinois 60606 (the "Adviser").
Pursuant to the investment advisory agreement entered into between the
Fund and the Adviser (the "Advisory Agreement"), the Adviser furnishes
continuous investment advisory services to the Fund.
The Adviser has undertaken to reimburse the Fund to the extent
that the aggregate annual operating expenses, including the investment
advisory fee and the administration fee but excluding interest, taxes,
brokerage commissions and other costs incurred in connection with the
purchase or sale of portfolio securities, and extraordinary items, exceed
that percentage of the average net assets of the Fund for such year, as
determined by valuations made as of the close of each business day of the
year, which is the most restrictive percentage provided by the state laws
of the various states in which the shares of the Fund are qualified for
sale. As of the date of this Statement of Additional Information, the
percentage applicable to the Fund is 2-1/2% on the first $30,000,000 of
its average daily net assets, 2% on average daily the next $70,000,000 of
its average daily net assets and 1-1/2% on average daily net assets in
excess of $100,000,000. Additionally, the Adviser has voluntarily agreed
to reimburse the Fund to the extent aggregate annual operating expenses as
described above, but including any fees paid to distributors pursuant to
the Fund's Distribution Plan, exceed 1.2% of the Fund's daily net assets.
The Fund monitors its expense ratio on a monthly basis. If the accrued
amount of the expenses of the Fund exceeds the expense limitation, the
Fund creates an account receivable from the Adviser for the amount of such
excess. In such a situation the monthly payment of the Adviser's fee will
be reduced by the amount of such excess (and if the amount of such excess
in any month is greater than the monthly payment of the Adviser's fee, the
Adviser will pay the Fund the amount of such difference), subject to
adjustment month by month during the balance of the Fund's fiscal year if
accrued expenses thereafter fall below this limit.
For services provided by the Adviser under the Advisory
Agreement for the fiscal years ended December 31, 1995, 1994 and 1993 the
Fund paid the Adviser $3,400,202, $1,207,294 and (net of waivers of
$12,596) $747,379, respectively.
The Advisory Agreement will remain in effect as long as its
continuance is specifically approved at least annually (i) by the Board of
Directors of the Fund or by the vote of a majority (as defined in the Act)
of the outstanding shares of the Fund, and (ii) by the vote of a majority
of the directors of the Fund who are not parties to the Advisory Agreement
or interested persons of the Adviser, cast in person at a meeting called
for the purpose of voting on such approval. The Advisory Agreement
provides that it may be terminated at any time without the payment of any
penalty, by the Board of Directors of the Fund or by vote of the majority
of the Fund's stockholders on sixty (60) days' written notice to the
Adviser, and by the Adviser on the same notice to the Fund, and that it
shall be automatically terminated if it is assigned.
As set forth in the Prospectus under the caption "MANAGEMENT OF
THE FUND," the administrator to the Fund is Sunstone Financial Group, Inc.
(the "Administrator"). The administration agreement entered into between
the Fund and the Administrator (the "Administration Agreement") will
remain in effect as long as its continuance is specifically approved at
least annually (i) by the Board of Directors of the Fund or by the vote of
a majority (as defined in the Act) of the outstanding shares of the Fund,
and (ii) by a vote of a majority of the directors of the Fund who are not
interested persons (as defined in the Act) of any party to the
Administration Agreement, cast in person at a meeting called for the
purpose of voting on such approval. The Administration Agreement may be
terminated on not less than 180 days' notice, without the payment of any
penalty, by the Board of Directors of the Fund, by a vote of a majority
(as defined in the Act) of the outstanding shares of the Fund, or by the
Administrator. For the fiscal years ended December 31, 1995, 1994 and
1993, the Fund paid the Administrator $206,258, $121,247 and $104,132,
respectively. Effective January 1, 1995, the Administration Agreement was
amended to provide that in addition to the services previously provided by
the Administrator, the Administrator will provide fund accounting services
for the Fund.
The Advisory Agreement and the Administration Agreement provide
that the Adviser and Administrator, as the case may be, shall not be
liable to the Fund or its stockholders for anything other than willful
misfeasance, bad faith, gross negligence or reckless disregard of its
obligations or duties. The Advisory Agreement and the Administration
Agreement also provide that the Adviser and Administrator, as the case may
be, and their officers, directors and employees may engage in other
businesses, devote time and attention to any other business whether of a
similar or dissimilar nature, and render services to others.
EXCHANGE PRIVILEGE
Investors may exchange shares of Common Stock having a value of
$1,000 or more for shares of the Portico Money Market Fund, the Portico
U.S. Government Money Market Fund or the Portico Tax-Exempt Money Market
Fund (collectively the "Portico Money Funds") at their net asset value and
at a later date exchange such shares and shares purchased with reinvested
dividends for shares of the Fund at net asset value. Investors who are
interested in exercising the exchange privilege should first contact the
Fund to obtain instructions and any necessary forms. The exchange
privilege does not in any way constitute an offering of, or recommendation
on the part of the Fund or the Adviser of, an investment in any of the
Portico Money Funds. Any investor who considers making such an investment
through the exchange privilege should obtain and review the Prospectus of
the applicable Portico Money Fund before exercising the exchange
privilege.
The exchange privilege will not be available if (i) the proceeds
from a redemption of shares of Common Stock are paid directly to the
investor or at his or her discretion to any persons other than the Fund or
(ii) the proceeds from redemption of the shares of the Portico Money
Market Fund are not immediately reinvested in shares of the Fund or
another Portico Money Fund through a subsequent exercise of the exchange
privilege. There is currently no limitation on the number of exchanges an
investor may make. The exchange privilege may be terminated by the Fund
upon at least 60 days prior notice to investors.
For federal income tax purposes, a redemption of shares of
Common Stock pursuant to the exchange privilege will result in a capital
gain if the proceeds received exceed the investor's tax-cost basis of the
shares of Common Stock redeemed. Such a redemption may also be taxed
under state and local tax laws, which may differ from the Code.
SYSTEMATIC WITHDRAWAL PLAN
An investor who owns Fund shares worth at least $10,000 at the
current net asset value may, by completing an application which may be
obtained from the Fund or Firstar Trust Company, create a Systematic
Withdrawal Plan from which a fixed sum will be paid to the investor at
regular intervals. To establish the Systematic Withdrawal Plan, the
investor deposits Fund shares with the Fund and appoints it as agent to
effect redemptions of Fund shares held in the account for the purpose of
making monthly or quarterly withdrawal payments of a fixed amount to the
investor out of the account. Fund shares deposited by the investor in the
account need not be endorsed or accompanied by a stock power if registered
in the same name as the account; otherwise, a properly executed
endorsement or stock power, obtained from any bank, broker-dealer or the
Fund is required. The investor's signature should be guaranteed by a
bank, a member firm of a national stock exchange or other eligible
guarantor.
The minimum amount of a withdrawal payment is $100. These
payments will be made from the proceeds of periodic redemptions of shares
in the account at net asset value. Redemptions will be made on the 25th
day of the month or, if that day is a weekend day or a holiday, on the
next preceding business day. Establishment of a Systematic Withdrawal
Plan constitutes an election by the investor to reinvest in additional
Fund shares, at net asset value, all income dividends and capital gains
distributions payable by the Fund on shares held in such account, and
shares so acquired will be added to such account. The investor may
deposit additional Fund shares in his account at any time.
Withdrawal payments cannot be considered as yield or income on
the investor's investment, since portions of each payment will normally
consist of a return of capital. Depending on the size or the frequency of
the disbursements requested, and the fluctuation in the value of the
Fund's portfolio, redemptions for the purpose of making such disbursements
may reduce or even exhaust the investor's account.
The investor may vary the amount or frequency of withdrawal
payments, temporarily discontinue them, or change the designated payee or
payee's address, by notifying Firstar Trust Company in writing prior to
the 15th day of the month preceding the next payment.
CUSTODIAN
Firstar Trust Company, 615 East Michigan Street, Milwaukee,
Wisconsin 53202, acts as custodian for the Fund. As such, Firstar Trust
Company holds all securities and cash of the Fund, delivers and receives
payment for securities sold, receives and pays for securities purchased,
collects income from investments and performs other duties, all as
directed by officers of the Fund. Firstar Trust Company does not exercise
any supervisory function over the management of the Fund, the purchase and
sale of securities or the payment of distributions to stockholders.
Firstar Trust Company also acts as the Fund's transfer agent and dividend
disbursing agent.
INDEPENDENT ACCOUNTANTS
Price Waterhouse LLP, 100 East Wisconsin Avenue, Milwaukee,
Wisconsin 53202, has been selected as the independent accountants for the
Fund.
DISTRIBUTION PLAN
As set forth in the Prospectus under the caption "PURCHASE OF
SHARES," the Fund has adopted a Distribution Plan (the "Plan") pursuant to
Rule 12b-1 under the Act. The Plan permits the Fund to employ one or more
distributors of its shares. Payments under the Plan may be made only to
distributors so employed by the Fund. Pursuant to action by the Fund's
Board of Directors, payments under the Plan in any year are limited to
0.25% of the average daily net assets of the Fund. Under the Plan, the
Fund paid distributors fees for the fiscal year ended December 31, 1995
totaling $413,088, representing 0.08% of the Fund's average net assets.
The Fund will pay to each distributor a monthly fee for
distribution of the Fund's shares at the rate of 0.65% per annum of the
aggregate average daily net asset value of the Fund shares beneficially
owned by such distributor's existing brokerage clients who established
their Fund accounts prior to December 31, 1992. For purposes of the Plan,
a client shall include (a) with respect to individuals, the individual's
spouse, children, trust or retirement accounts for the benefit of any of
the foregoing, the individual's estate and any corporation of which the
individual is an affiliate, (b) with respect to corporations, its
retirement plans and its affiliates, and (c) with respect to clients who
are investment advisers, financial planners or others who exercise
investment discretion or make recommendations concerning the purchase or
sale of securities, accounts for which they exercise investment discretion
or make recommendations concerning the purchase or sale of securities.
Beneficial ownership shall not include ownership solely as a nominee. If
after December 31, 1992, a client ceases to be a client of a distributor
and thereafter becomes a client of another distributor, such client shall
continue to be considered a client whose Fund account was established
prior to December 31, 1992 if the client beneficially owned shares of
Common Stock at all times after ceasing to be a client of the former
distributor and prior to becoming a client of the latter distributor
except as may be necessary to affect a transfer of the account. The Fund
shares owned by a client will be deemed to include all shares purchased
and not redeemed; provided, however, that if at any time no Fund shares
are beneficially owned by a client whose Fund account was established
prior to December 31, 1992, no distribution fees thereafter will be paid
with respect to shares beneficially owned by such client.
The Plan was adopted in anticipation that the Fund will benefit
from the Plan through increased sales of shares of Common Stock, thereby
reducing the Fund's expense ratio and providing an asset size that allows
the Adviser greater flexibility in management. The Plan may be terminated
at any time by a vote of the directors of the Fund who are not interested
persons of the Fund and who have no direct or indirect financial interest
in the Plan or any agreement related thereto (the "Rule 12b-1 Directors")
or by a vote of a majority of the outstanding shares of Common Stock.
Messrs. Hanson, Maliszewski and Upton are currently the Rule 12b-1
Directors. The Plan will be automatically terminated upon the closing of
all Fund accounts established by existing brokerage clients of
distributors prior to December 31, 1992. Any change in the Plan that
would materially increase the distribution expenses of the Fund provided
for in the Plan requires approval of the stockholders and the Board of
Directors, including the Rule 12b-1 Directors.
While the Plan is in effect, the selection and nomination of
directors who are not interested persons of the Fund will be committed to
the discretion of the directors of the Fund who are not interested persons
of the Fund. The Board of Directors of the Fund must review the amount
and purposes of expenditures pursuant to the Plan quarterly as reported to
it by the distributors, if any, or officers of the Fund. Unless otherwise
terminated, the Plan will continue in effect for as long as its
continuance is specifically approved at least annually by the Board of
Directors, including the Rule 12b-1 Directors.
ALLOCATION OF PORTFOLIO BROKERAGE
The Fund's securities trading and brokerage policies and
procedures are reviewed by and subject to the supervision of the Board of
Directors. Decisions to buy and sell securities for the Fund are made by
the Adviser subject to review by the Fund's Board of Directors. In
placing purchase and sale orders for portfolio securities for the Fund, it
is the policy of the Adviser to seek the best execution of orders at the
most favorable price in light of the overall quality of brokerage and
research services provided, as described in this and the following
paragraph. Many of these transactions involve payment of a brokerage
commission by the Fund. In some cases, transactions are with firms who
act as principals of their own accounts. In selecting brokers to effect
portfolio transactions, the determination of what is expected to result in
best execution at the most favorable price involves a number of largely
judgmental considerations. Among these are the Adviser's evaluation of
the broker's efficiency in executing and clearing transactions, block
trading capability (including the broker's willingness to position
securities) and the broker's reputation, financial strength and stability.
The most favorable price to the Fund means the best net price without
regard to the mix between purchase or sale price and commission, if any.
Over-the-counter securities are generally purchased and sold directly with
principal market makers who retain the difference in their cost in the
security and its selling price. In some instances, the Adviser feels that
better prices are available from non-principal market makers who are paid
commissions directly. Although the Fund does not initially intend to
market its shares through intermediary broker-dealers, the Fund may place
portfolio orders with broker-dealers who recommend the purchase of Fund
shares to clients (if the Adviser believes the commissions and transaction
quality are comparable to that available from other brokers) and may
allocate portfolio brokerage on that basis.
In allocating brokerage business for the Fund, the Adviser also
takes into consideration the research, analytical, statistical and other
information and services provided by the broker, such as general economic
reports and information, reports or analyses of particular companies or
industry groups, market timing and technical information, and the
availability of the brokerage firm's analysts for consultation. While the
Adviser believes these services have substantial value, they are
considered supplemental to the Adviser's own efforts in the performance of
its duties under the Advisory Agreement. Other clients of the Adviser may
indirectly benefit from the availability of these services to the Adviser,
and the Fund may indirectly benefit from services available to the Adviser
as a result of transactions for other clients. The Advisory Agreement
provides that the Adviser may cause the Fund to pay a broker which
provides brokerage and research services to the Adviser a commission for
effecting a securities transaction in excess of the amount another broker
would have charged for effecting the transaction, if the Adviser
determines in good faith that such amount of commission is reasonable in
relation to the value of brokerage and research services provided by the
executing broker viewed in terms of either the particular transaction or
the Adviser's overall responsibilities with respect to the Fund and the
other accounts as to which he exercises investment discretion. For the
fiscal years ended December 31, 1995, 1994 and 1993 the Fund paid
brokerage commissions of $1,170,042, $506,695 and $498,934, respectively,
on total transactions of $652,217,150, $296,409,925 and $227,464,154,
respectively. All of the brokers to whom commissions were paid during
such fiscal years provided research services to the Adviser.
In the fiscal year ended December 31, 1995, the Adviser
allocated brokerage to a broker that provides sub-transfer agency services
to the Fund. Pursuant to a directed brokerage arrangement, this broker
reduced its sub-transfer agency fees by $422,748 as a result of Fund
brokerage allocated to it.
TAXES
As set forth in the Prospectus under the caption "TAXES," the
Fund will endeavor to qualify annually for and elect tax treatment
applicable to a regulated investment company under Subchapter M of the
Code.
Dividends from the Fund's earnings and profits, and
distributions of the Fund's net long-term realized capital gains, are
taxable to investors, whether received in cash or in additional shares of
the Fund. Dividends are taxable as ordinary income, whereas capital gain
distributions are taxable as long-term capital gains. The 70% dividends-
received deduction for corporations will apply only to the proportionate
share of the dividend attributable to dividends received by the Fund from
domestic corporations.
Any dividend or capital gain distribution paid shortly after a
purchase of shares of the Fund will have the effect of reducing the per
share net asset value of such shares by the amount of the dividend or
distribution. Furthermore, even if the net asset value of the shares of
the Fund immediately after a dividend or distribution is less than the
cost of such shares to the investor, the dividend or distribution will be
taxable to the investor.
Redemption of shares will generally result in a capital gain or
loss for income tax purposes. Such capital gain or loss will be long term
or short term, depending upon the holding period. However, if a loss is
realized on shares held for six months or less, and the investor received
a capital gain distribution during that period, then such loss is treated
as a long-term capital loss to the extent of the capital gain distribution
received.
Investors may also be subject to state and local taxes.
The Fund will be required to withhold federal income tax at a
rate of 31% ("backup withholding") from dividend payments and redemption
and exchange proceeds if an investor fails to furnish the Fund with his
social security number or other tax identification number or fails to
certify under penalty of perjury that such number is correct or that he is
not subject to backup withholding due to the underreporting of income.
The certification form is included as part of the share purchase
application and should be completed when the account is opened.
This section is not intended to be a full discussion of present
or proposed federal income tax laws and the effect of such laws on an
investor. Investors are urged to consult with their respective tax
advisers for a complete review of the tax ramifications of an investment
in the Fund.
STOCKHOLDER MEETINGS
The Maryland General Corporation Law permits registered
investment companies, such as the Fund, to operate without an annual
meeting of stockholders under specified circumstances if an annual meeting
is not required by the Act. The Fund has adopted the appropriate
provisions in its Bylaws and may, at its discretion, not hold an annual
meeting in any year in which the election of directors is not required to
be acted on by stockholders under the Act.
The Fund's Bylaws also contain procedures for the removal of
directors by its stockholders. At any meeting of stockholders, duly
called and at which a quorum is present, the stockholders may, by the
affirmative vote of the holders of a majority of the votes entitled to be
cast thereon, remove any director or directors from office and may elect a
successor or successors to fill any resulting vacancies for the unexpired
terms of removed directors.
Upon the written request of the holders of shares entitled to
not less than ten percent (10%) of all the votes entitled to be cast at
such meeting, the Secretary of the Fund shall promptly call a special
meeting of stockholders for the purpose of voting upon the question of
removal of any director. Whenever ten or more stockholders of record who
have been such for at least six months preceding the date of application,
and who hold in the aggregate either shares having a net asset value of at
least $25,000 or at least one percent (1%) of the total outstanding
shares, whichever is less, shall apply to the Fund's Secretary in writing,
stating that they wish to communicate with other stockholders with a view
to obtaining signatures to a request for a meeting as described above and
accompanied by a form of communication and request which they wish to
transmit, the Secretary shall within five business days after such
application either: (1) afford to such applicants access to a list of the
names and addresses of all stockholders as recorded on the books of the
Fund; or (2) inform such applicants as to the approximate number of
stockholders of record and the approximate cost of mailing to them the
proposed communication and form of request.
If the Secretary elects to follow the course specified in clause
(2) of the last sentence of the preceding paragraph, the Secretary, upon
the written request of such applicants, accompanied by a tender of the
material to be mailed and of the reasonable expenses of mailing, shall,
with reasonable promptness, mail such material to all stockholders of
record at their addresses as recorded on the books unless within five
business days after such tender the Secretary shall mail to such
applicants and file with the Securities and Exchange Commission, together
with a copy of the material to be mailed, a written statement signed by at
least a majority of the Board of Directors to the effect that in their
opinion either such material contains untrue statements of fact or omits
to state facts necessary to make the statements contained therein not
misleading, or would be in violation of applicable law, and specifying the
basis of such opinion.
After opportunity for hearing upon the objections specified in
the written statement so filed, the Securities and Exchange Commission
may, and if demanded by the Board of Directors or by such applicants
shall, enter an order either sustaining one or more of such objections or
refusing to sustain any of them. If the Securities and Exchange
Commission shall enter an order refusing to sustain any of such
objections, or if, after the entry of an order sustaining one or more of
such objections, the Securities and Exchange Commission shall find, after
notice and opportunity for hearing, that all objections so sustained have
been met, and shall enter an order so declaring, the Secretary shall mail
copies of such material to all stockholders with reasonable promptness
after the entry of such order and the renewal of such tender.
PERFORMANCE INFORMATION
Average annual total return measures both the net investment
income generated by, and the effect of any realized or unrealized
appreciation or depreciation of, the underlying investments in the Fund's
investment portfolio. The Fund's average annual total return figures are
computed in accordance with the standardized method prescribed by the
Securities and Exchange Commission by determining the average annual
compounded rates of return over the periods indicated, that would equate
the initial amount invested to the ending redeemable value, according to
the following formula:
n
P(1 + T) = ERV
Where: P = a hypothetical initial payment of $1,000
T = average annual total return
n = number of years
ERV = ending redeemable value at the end of
the period of a hypothetical $1,000
payment made at the beginning of such
period
This calculation (i) assumes all dividends and distributions are
reinvested at net asset value or the appropriate reinvestment dates as
described in the Prospectus, and (ii) deducts all recurring fees, such as
advisory fees, charged as expenses to all investor accounts.
Total return is the cumulative rate of investment growth which
assumes that income dividends and capital gains are reinvested. It is
determined by assuming a hypothetical investment at the net asset value at
the beginning of the period, adding in the reinvestment of all income
dividends and capital gains, calculating the ending value of the
investment at the net asset value as of the end of the specified time
period, subtracting the amount of the original investment, and dividing
this amount by the amount of the original investment. This calculated
amount is then expressed as a percentage by multiplying by 100.
The Fund's average annual compounded returns for the one-year
period ended December 31, 1995 and for the period from the Fund's
commencement of operations (July 6, 1992) through December 31, 1995 were
30.42% and 9.85%, respectively. The foregoing performance results are
based on historical earnings and should not be considered as
representative of the performance of the Fund in the future. Such
performance results also reflect reimbursements made by the Adviser during
the fiscal year ended December 31, 1993 and the period from July 6, 1992
through December 31, 1992 to keep aggregate annual operating expenses at
or below 1.2% of average daily net assets. An investment in the Fund will
fluctuate in value and at redemption its value may be more or less than
the initial investment.
FINANCIAL STATEMENTS
The following audited financial statements are incorporated by
reference to the Annual Report, dated December 31, 1995, of The Yacktman
Fund, Inc. (File No. 811-06628), as filed with the Securities and Exchange
Commission on February 16, 1996:
- Report of Independent Accountants
- Portfolio of Investments
- Statement of Assets & Liabilities
- Statement of Operations
- Statement of Changes in Net Assets
- Financial Highlights
- Notes to the Financial Statements
DESCRIPTION OF SECURITIES RATINGS
As set forth in the Prospectus under the caption "OBJECTIVE AND
INVESTMENT APPROACH," the Fund may invest in bonds and debentures assigned
one of the two highest ratings of either Standard & Poor's Corporation
("Standard & Poor's") or Moody's Investors Service, Inc. ("Moody's"). As
also set forth therein, the Fund may invest in commercial paper and
commercial paper master notes rated A-1 or better by Standard & Poor's or
P-1 by Moody's. A brief description of the ratings symbols and their
meanings follows.
Standard & Poor's Debt Ratings. A Standard & Poor's corporate
debt rating is a current assessment of the creditworthiness of an obligor
with respect to a specific obligation. This assessment may take into
consideration obligors such as guarantors, insurers or lessees.
The debt rating is not a recommendation to purchase, sell or
hold a security, inasmuch as it does not comment as to market price or
suitability for a particular investor.
The ratings are based on current information furnished by the
issuer or obtained by Standard & Poor's from other sources it considers
reliable. Standard & Poor's does not perform any audit in connection with
any rating and may, on occasion, rely on unaudited financial information.
The ratings may be changed, suspended or withdrawn as a result of changes
in, or unavailability of, such information, or for other circumstances.
The ratings are based, in varying degrees, on the following
considerations:
I. Likelihood of default - capacity and willingness of the
obligor as to the timely payment of interest and repayment
of principal in accordance with the terms of the
obligation;
II. Nature of and provisions of the obligation;
III. Protection afforded by, and relative position of the
obligation in the event of bankruptcy, reorganization or
other arrangement under the laws of bankruptcy and other
laws affecting creditors' rights;
AAA - Debt rated AAA has the highest rating assigned by Standard
& Poor's. Capacity to pay interest and repay principal is extremely
strong.
AA - Debt rated AA has a very strong capacity to pay interest
and repay principal and differs from the higher rated issues only in small
degree.
Moody's Bond Ratings.
Aaa - Bonds which are rated Aaa are judged to be the best
quality. They carry the smallest degree of investment risk and are
generally referred to as "gilt edged." Interest payments are protected by
a large, or by an exceptionally stable margin and principal is secure.
While the various protective elements are likely to change, such changes
as can be visualized are most unlikely to impair the fundamentally strong
position of such issues.
Aa - Bonds which are Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally
known as high-grade bonds. They are rated lower than the best bonds
because margins of protection may not be as large as in Aaa securities or
fluctuation of protective elements may be of greater amplitude, or there
may be other elements present which make the long-term risks appear
somewhat larger than in Aaa securities.
Moody's applies numerical modifiers 1, 2 and 3 in each of the
foregoing generic rating classifications. The modifier 1 indicates that
the company ranks in the higher end of its generic rating category; the
modifier 2 indicates a mid-range ranking; and the modifier 3 indicates
that the company ranks in the lower end of its generic rating category.
Standard & Poor's Commercial Paper Ratings. A Standard & Poor's
commercial paper rating is a current assessment of the likelihood of
timely payment of debt considered short-term in the relevant market.
Ratings are graded into several categories, ranging from A-1 for the
highest quality obligations to D for the lowest. The three highest
categories are as follows:
A-1. This highest category indicates that the degree of safety
regarding timely payment is strong. Those issuers determined to possess
extremely strong safety characteristics are denoted with a plus sign (+)
designation.
A-2. Capacity for timely payment on issues with this
designation is satisfactory. However the relative degree of safety is not
as high as for issuers designated "A-1".
A-3. Issues carrying this designation have adequate capacity
for timely payment. They are, however, more vulnerable to the adverse
effects of changes in circumstances than obligations carrying a higher
designation.
Moody's Commercial Paper Ratings. Among the factors considered
by Moody's in assigning ratings are the following: (1) evaluation of the
management of the issuer; (2) economic evaluation of the issuer's industry
or industries which may be inherent in certain areas; (3) evaluation of
the issuer's products in relation to competition and customer acceptance;
(4) liquidity; (5) amount and quality of long-term debt; (6) trend of
earnings over a period of ten years; (7) financial strength of a parent
company and the relationships which exist with the issuer; and (8)
recognition by the management of obligations which may be present or may
arise as a result of public interest questions and preparations to meet
such obligations. Relative differences in these factors determine whether
the issuer's commercial is rated P-1, P-2 or P-3.
PART C
OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a.) Financial Statements (Financial Highlights included in Part A
and all incorporated by reference to the Annual Report, dated
December 31, 1995 (File No. 811-06628), of The Yacktman Fund,
Inc. (as filed with the Securities and Exchange Commission on
February 16, 1996)).
Report of Independent Accountants
Portfolio of Investments at December 31, 1995
Statement of Assets & Liabilities as of December 31, 1995
Statement of Operations for the year ended December 31, 1995
Statement of Changes in Net Assets for the years ended
December 31, 1995 and December 31, 1994
Financial Highlights
Notes to Financial Statements
(b.) Exhibits
(1) Registrant's Articles of Incorporation; Exhibit 1 to
Registrant's Registration Statement on Form N-1A is
incorporated by reference pursuant to Rule 411 under the
Securities Act of 1933.
(2) Registrant's Bylaws; Exhibit 2 to Registrant's
Registration Statement on Form N-1A is incorporated by
reference pursuant to Rule 411 under the Securities Act
of 1933.
(3) None
(4) Specimen Stock Certificate; Exhibit 4 to Registrant's
Registration Statement on Form N-1A is incorporated by
reference pursuant to Rule 411 under the Securities Act
of 1933.
(5) Investment Advisory Agreement with Yacktman Asset
Management Co.; Exhibit 5 to Registrant's Registration
Statement on Form N-1A is incorporated by reference
pursuant to Rule 411 under the Securities Act of 1933.
(6) None
(7) None
(8) Custodian Agreement with First Wisconsin Trust Company;
Exhibit 8 to Registrant's Registration Statement on Form
N-1A is incorporated by reference pursuant to Rule 411
under the Securities Act of 1933.
(9.1) Administration Agreement with Sunstone Financial Group,
Inc.; Exhibit 9.1 to Registrant's Registration Statement
on Form N-1A is incorporated by reference pursuant to
Rule 411 under the Securities Act of 1933.
(9.2) Transfer Agent Agreement with First Wisconsin Trust
Company; Exhibit 9.2 to Registrant's Registration
Statement on Form N-1A is incorporated by reference
pursuant to Rule 411 under the Securities Act of 1933.
(9.3) Amendment No. 1 to Administration Agreement with
Sunstone Financial Group, Inc.; Exhibit 9.3 to Amendment
No. 5 to Registrant's Registration Statement on Form N-
1A is incorporated by reference pursuant to Rule 411
under the Securities Act of 1933.
(10) Opinion of Foley & Lardner, counsel for Registrant;
Exhibit 10 to Amendment No. 1 to Registrant's
Registration Statement on Form N-1A is incorporated by
reference pursuant to Rule 411 under the Securities Act
of 1933.
(11) Consent of Price Waterhouse LLP
(12) None
(13) Subscription Agreement; Exhibit 13 to Amendment No. 1 to
Registrant's Registration Statement on Form N-1A is
incorporated by reference pursuant to Rule 411 under the
Securities Act of 1933.
(14.1) Individual Retirement Custodial Account; Exhibit 14.1 to
Amendment No. 3 to Registrant's Registration Statement
on Form N-1A is incorporated by reference pursuant to
Rule 411 under the Securities Act of 1933.
(14.2) Simplified Employee Pension Plans; Exhibit 14.2 to
Registrant's Registration Statement on Form N-1A is
incorporated by reference pursuant to Rule 411 under the
Securities Act of 1933.
(14.3) Defined Contribution Retirement Plan; Exhibit 14.3 to
Amendment No. 3 to Registrant's Registration Statement
on Form N-1A is incorporated by reference pursuant to
Rule 411 under the Securities Act of 1933.
(14.4) Model Section 403(b)(7) Plan; Exhibit 14.4 to
Registrant's Registration Statement on Form N-1A is
incorporated by reference pursuant to Rule 411 under the
Securities Act of 1933.
(15) Restated Distribution Plan; Exhibit 15 to Amendment No.
5 to Registrant's Registration Statement on Form N-1A is
incorporated by reference pursuant to Rule 411 under the
Securities Act of 1933.
(15.1) List of Distributors; Exhibit 15.1 to Amendment No. 3 to
Registrant's Registration Statement on Form N-1A is
incorporated by reference pursuant to Rule 411 under the
Securities Act of 1933.
(16) Schedule for Computation of Performance Quotations.
(17) Financial Data Schedule
(18) None
Item 25. Persons Controlled by or under Common Control with Registrant
Registrant is not controlled by any person. Registrant neither
controls any person nor is under common control with any other person.
Item 26. Number of Holders of Securities
Number of Record Holders
Title of Class as of March 31, 1996
Common Stock, $0.0001 par 8,277
value
Item 27. Indemnification
Pursuant to the authority of the Maryland General Corporation
Law, particularly Section 2-418 thereof, Registrant's Board of Directors
has adopted the following bylaw which is in full force and effect and has
not been modified or cancelled:
Article VII
GENERAL PROVISIONS
Section 7. Indemnification.
A. The Corporation shall indemnify all of its corporate
representatives against expenses, including attorneys fees, judgments,
fines and amounts paid in settlement actually and reasonably incurred by
them in connection with the defense of any action, suit or proceeding, or
threat or claim of such action, suit or proceeding, whether civil,
criminal, administrative, or legislative, no matter by whom brought, or in
any appeal in which they or any of them are made parties or a party by
reason of being or having been a corporate representative, if the
corporate representative acted in good faith and in a manner reasonably
believed to be in or not opposed to the best interests of the corporation
and with respect to any criminal proceeding, if he had no reasonable cause
to believe his conduct was unlawful provided that the corporation shall
not indemnify corporate representatives in relation to matters as to which
any such corporate representative shall be adjudged in such action, suit
or proceeding to be liable for gross negligence, willful misfeasance, bad
faith, reckless disregard of the duties and obligations involved in the
conduct of his office, or when indemnification is otherwise not permitted
by the Maryland General Corporation Law.
B. In the absence of an adjudication which expressly absolves the
corporate representative, or in the event of a settlement, each corporate
representative shall be indemnified hereunder only if there has been a
reasonable determination based on a review of the facts that
indemnification of the corporate representative is proper because he has
met the applicable standard of conduct set forth in paragraph A. Such
determination shall be made: (i) by the board of directors, by a majority
vote of a quorum which consists of directors who were not parties to the
action, suit or proceeding, or if such a quorum cannot be obtained, then
by a majority vote of a committee of the board consisting solely of two or
more directors, not, at the time, parties to the action, suit or
proceeding and who were duly designated to act in the matter by the full
board in which the designated directors who are parties to the action,
suit or proceeding may participate; or (ii) by special legal counsel
selected by the board of directors or a committee of the board by vote as
set forth in (i) of this paragraph, or, if the requisite quorum of the
full board cannot be obtained therefor and the committee cannot be
established, by a majority vote of the full board in which directors who
are parties to the action, suit or proceeding may participate.
C. The termination of any action, suit or proceeding by judgment,
order, settlement, conviction, or upon a plea of nolo contendere or its
equivalent, shall create a rebuttable presumption that the person was
guilty of willful misfeasance, bad faith, gross negligence or reckless
disregard to the duties and obligations involved in the conduct of his or
her office, and, with respect to any criminal action or proceeding, had
reasonable cause to believe that his or her conduct was unlawful.
D. Expenses, including attorneys' fees, incurred in the preparation
of and/or presentation of the defense of a civil or criminal action, suit
or proceeding may be paid by the corporation in advance of the final
disposition of such action, suit or proceeding as authorized in the manner
provided in Section 2-418(F) of the Maryland General Corporation Law upon
receipt of: (i) an undertaking by or on behalf of the corporate
representative to repay such amount unless it shall ultimately be
determined that he or she is entitled to be indemnified by the corporation
as authorized in this bylaw; and (ii) a written affirmation by the
corporate representative of the corporate representative's good faith
belief that the standard of conduct necessary for indemnification by the
corporation has been met.
E. The indemnification provided by this bylaw shall not be deemed
exclusive of any other rights to which those indemnified may be entitled
under these bylaws, any agreement, vote of stockholders or disinterested
directors or otherwise, both as to action in his or her official capacity
and as to action in another capacity while holding such office, and shall
continue as to a person who has ceased to be a director, officer, employee
or agent and shall inure to the benefit of the heirs, executors and
administrators of such a person subject to the limitations imposed from
time to time by the Investment Company Act of 1940, as amended.
F. This corporation shall have power to purchase and maintain
insurance on behalf of any corporate representative against any liability
asserted against him or her and incurred by him or her in such capacity or
arising out of his or her status as such, whether or not the corporation
would have the power to indemnify him or her against such liability under
this bylaw provided that no insurance may be purchased or maintained to
protect any corporate representative against liability for gross
negligence, willful misfeasance, bad faith or reckless disregard of the
duties and obligations involved in the conduct of his or her office.
G. "Corporate Representative" means an individual who is or was a
director, officer, agent or employee of the corporation or who serves or
served another corporation, partnership, joint venture, trust or other
enterprise in one of these capacities at the request of the corporation
and who, by reason of his or her position, is, was, or is threatened to be
made, a party to a proceeding described herein.
Insofar as indemnification for and with respect to liabilities
arising under the Securities Act of 1933 may be permitted to directors,
officers and controlling persons of Registrant pursuant to the foregoing
provisions or otherwise, Registrant has been advised that in the opinion
of the Securities and Exchange Commission such indemnification is against
public policy as expressed in the Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities
(other than the payment by Registrant of expenses incurred or paid by a
director, officer or controlling person or Registrant in the successful
defense of any action, suit or proceeding) is asserted by such director,
officer or controlling person in connection with the securities being
registered, Registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question of whether such indemnification is
against public policy as expressed in the Act and will be governed by the
final adjudication of such issue.
Item 28. Business and Other Connections of Investment Adviser
Incorporated by reference to pages 4 through 7 of the Statement
of Additional Information pursuant to Rule 411 under the Securities Act of
1933.
Item 29. Principal Underwriters
Not Applicable.
Item 30. Location of Accounts and Records
The accounts, books and other documents required to be
maintained by Registrant pursuant to Section 31(a) of the Investment
Company Act of 1940 and the rules promulgated thereunder are in the
physical possession of Registrant and Registrant's Administrator as
follows: the documents required to be maintained by paragraphs (5), (6),
(7), (10) and (11) of Rule 31a-1(b) will be maintained by the Registrant;
and all other records will be maintained by the Registrant's
Administrator.
Item 31. Management Services
All management-related service contracts entered into by
Registrant are discussed in Parts A and B of this Registration Statement.
Item 32. Undertakings
Registrant undertakes to provide its Annual Report to
Shareholders upon request without charge to each person to whom a
prospectus is delivered.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and
the Investment Company Act of 1940, the Registrant certifies that it meets
all of the requirements for effectiveness of this Amended Registration
Statement pursuant to Rule 485(b) under the Securities Act of 1933 and has
duly caused this Amended Registration Statement to be signed on its behalf
by the undersigned, thereunto duly authorized, in the City of Chicago and
State of Illinois on the 29th day of April, 1996.
THE YACKTMAN FUND, INC.
(Registrant)
By: /s/ Donald A. Yacktman
Donald A. Yacktman,
President
Pursuant to the requirements of the Securities Act of 1933, this
Amended Registration Statement has been signed below by the following
persons in the capacities and on the date indicated.
Name Title Date
/s/ Donald A. Yacktman President and Treasurer April 29, 1996
Donald A. Yacktman (Principal Executive,
Financial and Accounting
Officer) and a Director
/s/ Jon D. Carlson Director April 29, 1996
Jon D. Carlson
/s/ Thomas R. Hanson Director April 29, 1996
Thomas R. Hanson
/s/ Stanislaw Maliszewski Director April 29, 1996
Stanislaw Maliszewski
/s/ Stephen E. Upton Director April 29, 1996
Stephen E. Upton
<PAGE>
EXHIBIT INDEX
Exhibit No. Exhibit Page No.
(1) Registrant's Articles of
Incorporation*
(2) Registrant's Bylaws*
(3) None
(4) Specimen Stock Certificate*
(5) Investment Advisory Agreement with
Yacktman Asset Management Co.*
(6) None
(7) None
(8) Custodian Agreement with First
Wisconsin Trust Company*
(9.1) Administration Agreement with Sunstone
Financial Group, Inc.*
(9.2) Transfer Agent Agreement with First
Wisconsin Trust Company*
(9.3) Amendment No. 1 to Administration
Agreement with Sunstone Financial
Group, Inc.*
(10) Opinion of Foley & Lardner, counsel
for Registrant*
(11) Consent of Price Waterhouse LLP
(12) None
(13) Subscription Agreement*
(14.1) Individual Retirement Custodial
Account*
(14.2) Simplified Employee Pension Plans*
(14.3) Defined Contribution Retirement Plan*
(14.4) Model Section 403(b)(7) Plan*
(15) Restated Distribution Plan*
(15.1) List of Distributors*
(16) Schedule for Computation of
Performance Quotations
(17) Financial Data Schedule
(18) None
_________________
* Incorporated by reference
EXHIBIT 11
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference into the Prospectus
and Statement of Additional Information constituting parts of this
Post-Effective Amendment No. 5 to the registration statement on Form N-1A
(the "Registration Statement") of our report dated January 19, 1996,
relating to the financial statements and financial highlights appearing in
the December 31, 1995 Annual Report to Shareholders of The Yacktman Fund,
which is also incorporated by reference into the Registration Statement.
We also consent to the references to us under the heading "Financial
Highlights" in the Prospectus and under the heading "Independent
Accountants" in the Statement of Additional Information.
PRICE WATERHOUSE LLP
Milwaukee, Wisconsin
April 26, 1996
EXHIBIT 16
THE YACKTMAN FUND, INC.
Schedule for Computation of Performance Quotations
FOR THE PERIOD FROM JULY 6, 1992
(COMMENCEMENT OF OPERATIONS)
TO DECEMBER 31, 1995
TOTAL RETURN = (ENDING REDEEMABLE VALUE/INITIAL PAYMENT)1/n -
1 of $1,000
Total Return = 9.85%
9.85% = (1,388.14/1,000)1/3.49 - 1
FOR THE ONE YEAR PERIOD ENDED DECEMBER 31, 1995
TOTAL RETURN = (ENDING REDEEMABLE VALUE/INITIAL VALUE) - 1
Total Return = 30.42%
30.42% = (1,388.14/1,064.38) - 1
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<NAME> THE YACKTMAN FUND, INC.
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