YACKTMAN FUND INC, 485APOS, 1997-02-13

YACKTMAN FUND INC
485APOS, 1997-02-13

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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. 6 [X]
and/or

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [X]

Amendment No. 7 [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 will file its required Rule
24f-2 Notice for Registrant's fiscal year ending December 31, 1996 prior
to February 28, 1997.

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)

[_] on (date) 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)

[X] on April 30, 1997 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.

<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. Condensed Financial Financial Highlights
Information

4. General Description of The Funds; Objective and
Registrant Investment Approach

5. Management of the Fund Objective and Investment
Approach; Management of the
Funds; 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 and
Policies Considerations

14. Management of the Fund Directors and Officers of
the Company

15. Control Persons and Directors and Officers of
Principal Holders of the Company; 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

P R O S P E C T U S

April 30, 1997

THE YACKTMAN FUNDS, INC.
303 West Madison Street
Chicago, Illinois 60606
1-800-525-8258

The Yacktman Funds, Inc. (the "Company") is an open-end management investment
company, commonly known as a mutual fund. The Company presently consists of two
investment portfolios designed to offer investors a choice of equity-oriented
investment opportunities. Each investment portfolio is individually referred to
as a "Fund" and collectively as the "Funds."

The Yacktman Fund seeks long-term growth of capital, with current income as a
secondary objective. The Yacktman Fund is diversified and invests primarily in
equity securities of companies with market capitalizations of $1 billion or
more.

The Yacktman Focused Fund seeks long-term growth of capital, with current income
as a secondary income. The Yacktman Focused Fund is non-diversified and invests
primarily in equity securities of companies with market capitalizations of $1
billion or more. At any time The Yacktman Focused Fund may be invested in a
relatively limited number of securities.

This Prospectus sets forth concisely the information about the Funds 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 Funds have filed with the Securities and Exchange
Commission.

A Statement of Additional Information, dated April 30, 1997, 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 30, 1997 AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATIONS MAY NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY THE YACKTMAN FUNDS, 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
Expense Summary......................................................3
Shareholder and Fund Expenses........................................4
Financial Highlights.................................................5
The Funds............................................................6
Objective and Investment Approach....................................6
Management of the Funds.............................................12
Purchase of Shares..................................................13
Retirement Plans....................................................16
Exchange Privilege..................................................17
Redemption of Shares................................................17
Systematic Withdrawal Plan..........................................20
Determination of Net Asset Value....................................20
Dividends and Distributions.........................................21
Taxes...............................................................22
Capital Structure...................................................22
Shareholder Reports.................................................23
Fund Performance....................................................24

- - -------------------------------------------------------------------------------
S U M M A R Y

INVESTMENT OBJECTIVE
The investment objective of each Fund is to produce long-term growth of
capital, with current income as a secondary objective. Each Fund seeks to obtain
its primary investment objective by investing in common stocks, convertible
securities, American Depository Receipts and fixed income securities. The
Yacktman Focused Fund may also invest in options on securities and stock
indexes. Each Fund seeks to obtain its secondary investment objective by
investing in dividend paying common stocks, convertible securities, fixed income
securities and short-term money market instruments. Each Fund may lend its
portfolio securities and The Yacktman Focused Fund may write options. In periods
when management believes the markets are favorable for common stocks, the
greater portion of a Fund's investments will usually be in that type of
security. A 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 Funds. 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 FUNDS."

PURCHASES AND REDEMPTIONS
Shares of the Funds 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 Funds 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 Funds may be directed to the Fund at 1-800-525-8258.
Inquiries regarding an investor's account should be directed to the Funds'
transfer Agent at 1-800-457-6033.

- - -------------------------------------------------------------------------------
E X P E N S E S U M M A R Y

The following table is intended to assist you in understanding the various
expenses that an investor bears, directly or indirectly, by being a shareholder
of the Funds. 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 FUNDS" 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 Funds.

- - -------------------------------------------------------------------------------
S H A R E H O L D E R A N D F U N D E X P E N S E S

The Yacktman The Yacktman
Fund Focused Fund
------------ ------------

SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Load Imposed on Purchases.......... None None
Maximum Sales Load Imposed on Reinvested
Dividends...................................... None None
Deferred Sales Load.............................. None None
Redemption Fees<F1>.............................. None None
Exchange Fee<F2>................................. None None

ANNUAL OPERATING EXPENSES<F3>
(AS A PERCENTAGE OF AVERAGE NET ASSETS)
Management Fees.................................. 0.54% 1.00%
12b-1 Fees....................................... 0.07%<F4> None
Other Expenses................................... 0.24% 0.40%
Total Fund Operating Expenses before
Expense Reductions............................. 0.96%<F5><F6> 1.40%<F5>
Total Fund Operating Expenses after Expense
Reductions..................................... 0.90%<F5><F6> 1.40%

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 $15
3 years......................................... 31 46
5 years......................................... 55 79
10 years........................................ 121 173

<F1> A fee of $12.00 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, 1996 for The Yacktman Fund. For The
Yacktman Focused Fund "Other Expenses" are estimated as The Yacktman
Focused Fund did not commence operations until April 30, 1997.

<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 will waive its management fees to the extent
necessary to insure that Total Fund Operating Expenses before Expense
Reductions for The Yacktman Focused Fund do not exceed the following
percentages of average net assets:

Average Net Percentage Average Net Percentage
Assets Limitation Assets Limitation
- - ---------------------------- ---------- ---------------------------- ----------
Less than $100 million 1.40% $700 million to $800 million 1.15%
$100 million to $200 million 1.30% $800 million to $900 million 1.10%
$200 million to $600 million 1.25% $900 million to $1 billion 1.05%
$600 million to $700 million 1.20% Greater than $1 billion 1.00%

Absent reimbursement "Other Expenses" for The Yacktman Focused Fund are
estimated to be 0.50% of average net assets.

<F6> The Adviser has directed certain portfolio trades of The Yacktman Fund to a
broker at best price and execution and has generated soft dollar credits to
be used against sub-transfer agency fees.

- - -------------------------------------------------------------------------------
F I N A N C I A L H I G H L I G H T S

The financial information for a share of The Yacktman Fund outstanding
during the periods specified in the following table has been derived from the
financial records of The Yacktman Fund which have been audited by Price
Waterhouse LLP, independent accountants, whose report thereon was unqualified
and is included in the 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
Funds is also contained in the Annual Report to Shareholders, copies of which
may be obtained without charge upon request.

<TABLE>

<CAPTION>
July 6, 1992<F7>
Year Ended Year Ended Year Ended Year Ended through
Dec. 31, 1996 Dec. 31, 1995 Dec. 31, 1994 Dec. 31, 1993 Dec. 31, 1992
- - ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period.................. $ 12.09 $ 10.05 $ 9.56 $ 10.39 $ 10.00
Income from investment operations:
Net investment income............................. 0.24 0.22 0.22 0.14 0.05
Net realized and unrealized gains
(losses) on investments........................ 2.90 2.81 0.61 (0.83) 0.42
--------- -------- -------- -------- --------
Total from investment operations.................. 3.14 3.03 0.83 (0.69) 0.47
--------- -------- -------- -------- --------
Less distributions:
Dividends from net investment income.............. (0.24) (0.22) (0.22) (0.14) (0.05)
Distributions from net realized gains............. (1.65) (0.77) (0.12) -- (0.03)
--------- -------- -------- -------- --------
Total distributions............................... (1.89) (0.99) (0.34) (0.14) (0.08)
--------- -------- -------- -------- --------
Net asset value, end of period.................... $ 13.34 $ 12.09 $ 10.05 $ 9.56 $ 10.39
========= ======== ======== ======== ========

Total Return.......................................... 26.02% 30.42% 8.80% (6.58)% 4.72%<F8>
========= ======== ======== ======== ========

Supplemental data and ratios:
Net assets, end of period (000s).................. $ 755,617 $566,723 $295,133 $143,024 $74,666
========= ======== ======== ======== ========
Ratio of expenses to average net assets <F9>...... 0.96% 0.99% 1.07% 1.18% 1.18%<F10>
========= ======== ======== ======== ========

Ratio of expenses to average net assets after
expense reductions<F9>......................... 0.90% 0.91% 1.07% 1.18% 1.18%<F10>
========= ======== ======== ======== ========

Ratio of net income to average net assets after
expense reductions<F9>......................... 1.80% 2.02% 2.49% 1.61% 1.49%<F10>
========= ======== ======== ======== ========

Portfolio turnover rate........................... 58.54% 55.37% 49.44% 61.14% 30.94%
========= ======== ======== ======== ========

Average commission rate paid per share............ $ 0.0550 N/A N/A N/A N/A
========= ======== ======== ======== ========
<FN>

<F7> Commencement of operations

<F8> Not annualized for the period July 6, 1992 through December 31, 1992.

<F9> The Adviser has directed certain portfolio trades of The Yacktman Fund 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 Yacktman Fund do not include
such sub-transfer agency fees.

<F10> Annualized

</TABLE>

- - -------------------------------------------------------------------------------
T H E F U N D S

The Yacktman Funds, Inc. (the "Company"), a Maryland corporation, was
organized on April 6, 1992. The Company is an open-end, management investment
company registered under the Investment Company Act of 1940 (the "Act"). The
Company presently consists of two portfolios: The Yacktman Fund (diversified)
and The Yacktman Focused Fund (non-diversified) (each investment portfolio is
individually referred to as a "Fund" and collectively as the "Funds"). The Funds
offer a choice of equity-oriented opportunities.

Each Fund obtains its assets by continuously selling its shares to the
public. Proceeds from such sales are invested by the Funds 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 the investments of the
Funds. The Funds will redeem any of their outstanding shares on demand of the
owner at the next determined net asset value. Registration of the Funds under
the Act does not involve supervision of the Funds' 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

GENERAL
The investment objective of each of the Funds is to produce long-term growth
of capital, with current income as a secondary objective. Each Fund pursues its
primary investment objective by investing primarily in common stocks,
convertible securities, American Depository Receipts and fixed income
securities. The Yacktman Focused Fund may also invest in options on securities
and stock indexes. Each Fund pursues its secondary investment objective by
investing in dividend paying common stocks, convertible securities, fixed income
securities and short-term money market instruments. Each Fund may lend its
portfolio securities and The Yacktman Focused Fund may write options subject to
certain separate investment policies described below.
Because shares of each Fund represent an investment in securities with
fluctuating market prices, the net asset value per share of each Fund will vary
as the aggregate value of a Fund's portfolio securities increases or decreases.
An investment in the Funds should be considered a long-term investment. The
Funds are not designed to meet investors' short-term financial needs, nor is any
single Fund or a combination of the Funds intended to provide a complete or
balanced investment program.
The investment objectives, policies and practices of each Fund, unless
otherwise stated, are not fundamental and may be changed by the Board of
Directors without shareholder approval. Because of the risks inherent in all
investments, there can be no assurance that the objectives of the Funds will be
met. The descriptions that follow are designed to help choose the Fund that best
fits an investor's investment objectives.

THE YACKTMAN FUND
The investment objective of The Yacktman Fund is long-term growth of
capital, with current income as a secondary objective. The Yacktman Fund invests
primarily in companies with large capitalization ($1 billion or more) with long
records of earnings growth and dividends. In managing the investment portfolio
for The Yacktman Fund, the Adviser will diversify The Yacktman Fund's holdings
among many companies and industries.

THE YACKTMAN FOCUSED FUND
The investment objective of The Yacktman Focused Fund is long-term growth of
capital, with current income as a secondary objective. The Yacktman Focused Fund
also invests primarily in companies with large capitalization ($1 billion or
more) with long records of earnings growth and dividends. However, in managing
the investment portfolio for The Yacktman Focused Fund, the Adviser may focus on
a relatively limited number of securities (i.e., generally 25 or less, other
than money market instruments). The Adviser believes that this focused
investment strategy has the potential for higher total returns than an
investment strategy calling for investment in a larger number of securities.
However, the use of this focused investment strategy may increase the volatility
of The Yacktman Focused Fund's investment performance. If the securities in
which The Yacktman Focused Fund invests perform poorly, this Fund could incur
greater losses than it would have had it invested in a greater number of
securities.

OTHER INVESTMENT POLICIES AND RISKS
In addition to the investment policies described above (and subject to
certain restrictions described below), each of the Funds (unless indicated to
the contrary) may invest in the following securities and employ the following
investment techniques, some of which may present special risks as described
below. A more complete discussion of certain of these securities and investment
techniques and the associated risks is contained in the Statement of Additional
Information. Unless indicated to the contrary, there is no limitation on the
percentage of assets which may be invested in any particular type of security.

MONEY MARKET INSTRUMENTS
In times when the Adviser believes that adverse economic or market
conditions justify such action, substantial portions of a Fund's assets may be
held in 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-2 or better by Standard &
Poor's Corporation ("Standard & Poor's") or Prime-2 by Moody's Investors
Service, Inc. ("Moody's"). The Yacktman Focused Fund may also invest in
securities issued by other investment companies that invest in high quality,
short-term debt securities (i.e., money market funds). In addition to the
advisory fees and other expenses The Yacktman Focused Fund bears directly in
connection with its own operations, as a shareholder of another investment
company, The Yacktman Focused Fund would bear its pro rata portion of the other
investment company's advisory fees and other expenses and such fees and other
expenses will be borne indirectly by The Yacktman Focused Fund's shareholders. A
Fund may also invest in money market instruments in amounts as the Adviser
believes are reasonable to satisfy anticipated redemption requests and to
generate current income.

FIXED INCOME SECURITIES
Both Funds may invest in U.S. government securities and publicly distributed
corporate bonds and debentures to generate current income and 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 Yacktman 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 Yacktman 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). The Yacktman Focused Fund will limit
its investment in bonds and debentures to those which have been assigned a
rating of at least investment grade. Securities rated BBB by Standard & Poor's
or Baa by Moody's, although investment grade, exhibit speculative
characteristics and are more sensitive than higher rated securities to changes
in economic conditions. If a bond or debenture is downgraded after investment
grade, both Funds 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 Yacktman Fund will normally
have short-term maturities, although The Yacktman Fund may invest in obligations
having maturities as long as five years. The Yacktman Focused Fund may invest in
fixed-income securities of any length maturity.

CONVERTIBLE SECURITIES
The Funds 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
each 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. Each Fund may invest up to 5% of its net assets in convertible debt
securities rated less than investment grade. Debt securities rated less than
investment grade are commonly referred to as "junk bonds."

FOREIGN SECURITIES
The Funds 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.

OPTIONS ON SECURITIES AND INDEX OPTION TRANSACTIONS
The Yacktman Fund may not buy and sell put or call options on securities or
stock indexes.
The Yacktman Focused Fund may buy put and call options and write (sell) call
options on securities. By writing a call option and receiving a premium, The
Yacktman Focused Fund may become obligated during the term of the option to
deliver the securities underlying the option at the exercise price if the option
is exercised. By buying a put option, The Yacktman Focused Fund has the right,
in return for a premium paid during the term of the option, to sell the
securities underlying the option at the exercise price. By buying a call option,
The Yacktman Focused Fund has the right, in return for a premium paid during the
term of the option, to purchase the securities underlying the option at the
exercise price. Options on securities written by The Yacktman Focused Fund will
be traded on recognized securities exchanges.
The Yacktman Focused Fund will realize a gain (or a loss) on a closing
purchase transaction with respect to a call option previously written by The
Yacktman Focused Fund if the premium, plus commission costs, paid by The
Yacktman Focused Fund to purchase the put option is less (or greater) than the
premium, less commission costs, received by The Yacktman Focused Fund on the
sale of the call option. The Yacktman Focused Fund also will realize a gain if a
call option which The Yacktman Focused Fund has written lapses unexercised,
because The Yacktman Focused Fund would retain the premium.
The Yacktman Focused Fund will realize a gain (or a loss) on a closing sale
transaction with respect to a call or put option previously purchased by The
Yacktman Focused Fund if the premium, less commission costs, received by The
Yacktman Focused Fund on the sale of the call or the put option is greater (or
less) than the premium, plus commission costs, paid by The Yacktman Focused Fund
to purchase the call or the put option. If a put or call option which The
Yacktman Focused Fund has purchased expires out-of-the-money, the option will
become worthless on the expiration date, and The Yacktman Focused Fund will
realize a loss in the amount of the premium paid, plus commission costs.
The Yacktman Focused Fund may purchase put and call options and write call
options on stock indexes. A stock index fluctuates with changes in the market
values of the stocks included in the index. Options on stock indexes give the
holder the right to receive an amount of cash upon exercise of the options.
Receipt of this cash amount will depend upon the closing level of the stock
index upon which the option is based being greater than (in the case of a call)
or less than (in case of a put) the exercise price of the option. The amount of
cash received, if any, will be the difference between the closing price of the
index and the exercise price of the option, multiplied by a specified dollar
multiple. The writer (seller) of the option is obligated, in return for the
premiums received from the purchaser of the options, to make delivery of this
amount to the purchaser. Unlike the options on securities discussed above, all
settlements of index options transactions are in cash. Stock index options may
be based on a broad market index such as the S&P 500 Index, the NYSE Composite
Index or the AMEX Major Market Index, or on a narrower index such as the
Philadelphia Stock Exchange Over-The-Counter Index.
The Yacktman Focused Fund generally will utilize options as a technique to
hedge against a loss in its stock portfolio caused by a general decline in the
stock market or a decline in a particular stock held by The Yacktman Focused
Fund. In connection therewith, it may purchase put options on stock indexes or
on securities or write call options on securities it holds or on stock indexes.
The Yacktman Focused Fund may write call options to generate current income. At
any time no more than 30% of The Yacktman Focused Fund's assets will be invested
in put options or used to cover call options. The Yacktman Focused Fund may also
invest up to 5% of its assets in call options on stock indexes or securities.
Such options would be utilized as a technique to leverage the portfolio of The
Yacktman Focused Fund.
If the Adviser is correct in its assessment of the future direction of stock
prices, the share price of The Yacktman Focused Fund will be enhanced. If the
Adviser has The Yacktman Focused Fund take a position in options and stock
prices move in a direction contrary to the Adviser's forecast however, The
Yacktman Focused Fund could incur losses greater than The Yacktman Focused Fund
would have incurred without the options position. Although certain securities
exchanges attempt to provide continuously liquid markets in which holders and
writers of options can close out their positions at any time prior to the
expiration of the option, no assurance can be given that a market will exist at
all times for all outstanding options purchased or sold by The Yacktman Focused
Fund. In such event, The Yacktman Focused Fund would be unable to realize its
profits or limit its losses until The Yacktman Focused Fund would exercise
options it holds and The Yacktman Focused Fund would remain obligated until
options it wrote were exercised or expired. Participation in the options markets
by The Yacktman Focused Fund involves investment risks and transaction costs to
which The Yacktman Focused Fund would not be subject absent the use of these
strategies. Risks inherent in the use of options include: (1) adverse changes in
the value of such instruments; (2) imperfect correlation between the price of
options and movements in the price of the underlying securities or indices; (3)
the fact that the skills needed to use these strategies are different from those
needed to select portfolio securities; and (4) the possible absence of a liquid
secondary market for any particular instrument at any time.

PORTFOLIO TURNOVER
The Funds do not trade actively for short-term profits. However, if the
objectives of the Funds would be better served, short-term profits or losses may
be realized from time to time. For the fiscal year ended December 31, 1996, the
PORTFOLIO TURNOVER RATE WAS APPROXIMATELY 60% FOR THE YACKTMAN FUND. THE
PORTFOLIO TURNOVER RATE FOR THE YACKTMAN FOCUSED FUND GENERALLY IS NOT EXPECTED
TO EXCEED 65%. 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.

LENDING SECURITIES
For income purposes, a Fund may lend its portfolio securities. The Funds'
investment restrictions provide that no such loan may be made if thereafter more
than 30% of the value of a 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, a 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
Funds' 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, a
Fund may utilize the services of a loan broker and pay a fee therefor. A Fund
may incur additional custodian fees for services in connection with lending of
securities.

BORROWING
Both Funds may borrow money from banks for temporary or emergency purposes
such as to meet redemption requests when liquidation of portfolio instruments
would be inconvenient or disadvantageous. The Yacktman Fund will borrow only for
such purposes and in an amount not exceeding 10% of the value of its total
assets. The Yacktman Fund will not purchase portfolio securities while any
borrowed amounts remain outstanding. The Yacktman Focused Fund may borrow money
for investment purposes. Borrowing for investment purposes is known as
leveraging. Leveraging investments, by purchasing securities with borrowed
money, is a speculative technique which increases investment risk, but also
increases investment opportunity. Since substantially all of The Yacktman
Focused Fund's assets will fluctuate in value, whereas the interest obligations
on borrowings may be fixed, the net asset value per share of The Yacktman
Focused Fund when it leverages its investments will increase more when The
Yacktman Focused Fund's assets increase in value and decrease more when the
portfolio assets decrease in value than would otherwise be the case.
Interest costs on borrowings may partially offset or exceed the returns on the
borrowed funds. Under adverse conditions, The Yacktman Focused Fund might have
to sell portfolio securities to meet interest or principal payments at a time
investment considerations would not favor such sales. As required by the Act,
The Yacktman Focused Fund must maintain continuous asset coverage (total assets,
including assets acquired with borrowed funds, less liabilities exclusive of
borrowings) of 300% of all amounts borrowed. If, at any time, the value of The
Yacktman Focused Fund's assets should fail to meet this 300% coverage test, The
Yacktman Focused Fund within three business days, will reduce the amount of The
Yacktman Focused Fund's borrowings to the extent necessary to meet this 300%
coverage. Maintenance of this percentage limitation may result in the sale of
portfolio securities at a time when investment considerations otherwise indicate
that it would be disadvantageous to do so.

BROKER PRACTICES
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.

INVESTMENT LIMITATIONS
Each Fund has adopted certain fundamental investment restrictions that may
be changed only with the approval by a majority of a Fund's outstanding shares.
A list of the Funds' policies and restrictions, both fundamental and
nonfundamental, is set forth in the Statement of Additional Information. In
order to provide a degree of flexibility, the Funds' investment objectives, as
well as other policies which are not deemed fundamental, may be modified by the
Board of Directors without shareholder approval. Any change in a Fund's
investment objective may result in the Fund having investment objectives
different from the objectives which the shareholder considered appropriate at
the time of investment in the Fund.

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M A N A G E M E N T
O F T H E F U N D S

As a Maryland corporation, the business and affairs of the Company are
managed by its Board of Directors. The Company, on behalf of each of the Funds,
has entered into Investment Advisory Agreements (the "Advisory Agreements")
with Yacktman Asset Management Co., 303 West Madison Street, Chicago, Illinois
60606. Pursuant to such Advisory Agreements, the Adviser furnishes continuous
investment advisory services to each of the Funds. 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 each
of the Funds and, as such, is responsible for the day-to-day management of their
portfolios. Mr. Yacktman has managed each of the Funds' portfolios since
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 portfolios of the Funds
and, subject to such policies as the Board of Directors of the Company may
determine, directs the purchase or sale of investment securities in the day-to-
day management of the Funds' investment portfolios. Under the Advisory
Agreements, the Adviser, at its own expense and without reimbursement from the
Funds, furnishes office space and all necessary office facilities, equipment and
executive personnel for managing the investments of the Funds and pays the
salaries and fees of all officers and directors of the Funds (except the fees
paid to directors who are not interested persons of the Adviser). For the
foregoing, the Adviser receives a monthly fee from The Yacktman Funds based on
The Yacktman Funds' 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 and a monthly fee from The Yacktman Focused
Fund based on The Yacktman Focused Fund's average daily net assets at the annual
rate of 1.00 of 1% on average daily net assets. The Adviser may voluntarily
waive all or a portion of the advisory fee otherwise payable by the Funds. 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, 1996 by The Yacktman Fund were
equal to .64% of The Yacktman Fund's average net assets.
Pursuant to an Administration and Fund Accounting Agreement (the
"Administration Agreement"), Sunstone Financial Group, Inc. (the
"Administrator"), 207 East Buffalo Street, Suite 400, Milwaukee, Wisconsin
53202, acts as administrator and fund accountant. As administrator, the
Administrator provides clerical, compliance, regulatory and other administrative
services. As fund accountant, the Administrator calculates each Fund's net asset
value. For administrative services, the Administrator receives from The Yacktman
Fund a fee, computed daily and payable monthly, based on The Yacktman 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. And for fund accounting services, the Administrator receives from
The Yacktman Fund a fee, computed daily and payable monthly, based on The
Yacktman 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.
For administrative and fund accounting services, The Yacktman Focused Fund
pays the Administrator a fee, computed daily and payable monthly, at the annual
rate of .05% of The Yacktman Focused Fund's average daily net assets.
The Funds pay all of their own expenses, including, without limitation, the
cost of preparing and printing the registration statement required under the
Securities Act of 1933 and the Act and any amendments thereto, the expense of
registering 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 Funds' assets, printing and mailing expenses and charges and expenses of
dividend disbursing agents, accounting services agents, registrars and stock
transfer agents.

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P U R C H A S E O F S H A R E S

INITIAL INVESTMENT
Shares of the Funds 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
Company 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 Funds. (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 Funds, 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 Funds, Inc.
Shareholder Services Center, 3rd Floor
615 East Michigan Street
Milwaukee, Wisconsin 53202

The U.S. Postal Service or other independent delivery services are not agents of
the Funds. Therefore, deposit in the mail or with such services, does not
constitute receipt by Firstar Trust Company or the Funds. 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 Funds, 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 Funds as a result. When a purchase
is made by check and a redemption is made shortly thereafter, Firstar Trust
Company, the Funds' 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 Funds, 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 Funds 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 shares of the Funds are subject to acceptance
by the Funds and are not binding until so accepted. The Funds do not, except as
indicated in the following sentence, accept telephone orders for the purchase of
shares, and they reserve the right to reject applications in whole or in part.
The Funds may accept telephone orders from broker-dealers who have been
previously approved by the Funds. It is the responsibility of such broker-
dealers promptly to forward purchase or redemption orders to the Funds. Although
there is no sales charge levied directly by the Funds, 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 Funds or the Adviser.
In order to relieve the investor of responsibility for safekeeping and
delivery of stock certificates, the Funds do 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 Funds 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 Funds offer an Automatic Investment Plan whereby an investor may
automatically make purchases of shares of the Funds 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 shares of the Funds. The Automatic Investment Plan
must be implemented with a financial institution that is a member of the
Automated Clearing House ("ACH"). In addition, the Funds must have a
currently effective registration in those states in which it is required. No
service fee is currently charged by the Funds 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 Funds. 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 Funds nor redemption
charges on redemptions of shares. The Yacktman Fund has adopted a Distribution
Plan (the "Plan") pursuant to Rule 12b-1 under the Act. THE EFFECTIVE 12B-1
FEE FOR THE YACKTMAN FUND WAS 0.07% FOR THE FISCAL YEAR ENDED DECEMBER 31, 1996.
THE YACKTMAN FOCUSED FUND HAS NOT ADOPTED A DISTRIBUTION PLAN. Payments under
the Plan in any year are limited to 0.25% of the average daily net assets of The
Yacktman Fund. The Plan permits The Yacktman Fund to employ one or more
distributors of its shares. PAYMENTS UNDER THE PLAN, HOWEVER, MAY BE MADE ONLY
TO DISTRIBUTORS EMPLOYED BY THE YACKTMAN FUND WITH RESPECT TO SHARES
BENEFICIALLY OWNED BY EACH SUCH DISTRIBUTOR'S BROKERAGE CLIENTS WHO ESTABLISHED
THEIR YACKTMAN FUND ACCOUNTS PRIOR TO DECEMBER 31, 1992. Such fees may decline
as a percentage of net assets as assets of The Yacktman Fund increase and/or as
the clients of distributors employed by The Yacktman Fund who established their
accounts prior to December 31, 1992 redeem their shares. The Yacktman Funds pay
to each distributor a monthly fee for distribution of The Yacktman Funds' 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 Yacktman
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 shares of The Yacktman Fund. 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 Yacktman Fund were to have a front-end sales
charge.

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R E T I R E M E N T P L A N S

The Funds offer the following retirement plans that may be funded with
purchases of shares of the Funds 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 Funds
offer 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 Funds also offer a simplified employee pension (SEP) plan for employers,
including self-employed individuals, who wish to purchase shares of the Funds
with tax-deductible contributions. Under the SEP plan, employer contributions
are made directly to the IRA accounts of eligible participants.

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 shares of the Funds
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 Funds 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
Funds 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.

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E X C H A N G E P R I V I L E G E

The Company generally permits shareholders to exchange shares of The
Yacktman Fund for shares of The Yacktman Focused Fund. Additionally all or part
of the shares of the Funds 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 Funds. 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 Funds. Use of the
exchange privilege is subject to the minimum purchase and redemption amounts set
forth in this Prospectus and 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 prospectuses for any Portico Money Fund from the Funds 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 Funds or their 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 Funds, Inc., Shareholder Services Center,
P.O. Box 701, Milwaukee, Wisconsin 53201-0701. Except as stated above, the Funds
currently do 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 one
Fund and the investment of the redemption proceeds in shares of the other Fund
or 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 Fund or 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
Funds' Statement of Additional Information.

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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 Funds by telephone. To redeem shares by
telephone, an investor must check the appropriate box on the share purchase
application as the Funds do 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 Funds 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 $12.00 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 Funds reserve the right to refuse a telephone redemption if they
believe it is advisable to do so. Procedures for redeeming shares of the Funds
by telephone may be modified or terminated by the Funds at any time. Neither the
Funds 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 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, The Yacktman Focused 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 Funds, Inc.
Shareholder Services Center
615 East Michigan Street
Milwaukee, WI 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 Funds 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 each 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 such 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 Funds 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 Funds recommend that all purchases be made by direct
wire transfer.

To relieve the Funds of the cost of maintaining uneconomical accounts, the
Funds reserve 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 any
Fund's net asset value. Any such involuntary redemption would be at net asset
value.

The right to redeem shares of the Funds 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 a
Fund to dispose of its securities or fairly to determine the value of its net
assets.

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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 Funds offer 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 SHARES OF THE FUNDS 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 Funds may not be as great as the
amount withdrawn. A more complete discussion of the Systematic Withdrawal Plan
is included in the Funds' Statement of Additional Information. The Systematic
Withdrawal Plan does not apply to shares of the Funds held in IRAs or other
retirement plans. An application for participation in the Systematic Withdrawal
Plan can be obtained from the Funds. 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 shares of the Funds, and the price
investors receive when redeeming shares of the Funds, is the net asset value of
the shares. No sales charge or commission of any kind is added by the Funds
upon a purchase and no charge is deducted upon a redemption.
The per share net asset value of a 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 Funds 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 FUNDS PAY 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 Funds 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 Funds,
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 Funds 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
Funds 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 Funds 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

Each Fund intends to qualify annually for and elect tax treatment applicable
to a "regulated investment company" under Subchapter M of the Code. Each Fund
intends to distribute all of its taxable net income and realized net gains to
investors so that each 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 Funds from U.S. corporations may, subject to certain
limitations, qualify for the dividends received deduction, which is available
only to certain corporations.

If a Fund distributes less than the amount it is required to distribute
during any year, such Fund will be subject to a 4% excise tax on the under-
distributed amount. Each Fund intends to declare and distribute dividends during
each year sufficient to prevent imposition of the excise tax.
A 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 SUCH 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 Funds.

- - -------------------------------------------------------------------------------
C A P I T A L S T R U C T U R E

The Company's authorized capital consists of 1,000,000,000 shares of Common
Stock, $0.0001 par value. The common stock is divisible into an unlimited number
of "series," each of which is a separate Fund. Shareholders are entitled: (i) to
one vote per full share of Common Stock; (ii) to such distributions as may be
declared by the Company'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 Company, to operate without
an annual meeting of shareholders under specified circumstances if an annual
meeting is not required by the Act. The Company 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 Company 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 Funds 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 Funds 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 Funds and acts as the Funds' dividend disbursing agent.

Pursuant to the Company's Articles of Incorporation, the Board of Directors
may classify or reclassify any unissued shares of the Funds and may designate or
redesignate the name of any outstanding class of shares of the Funds. As a
general matter, shares are voted in the aggregate and not by class, except where
class voting is 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 Funds'
shares, together with all income, earnings, profits and proceeds thereof, belong
to that class and are charged with the liabilities in respect of that class and
of that class' share of the general liabilities of the Funds in the proportion
that the total net assets of the class bear to the total net assets of all
classes of the Funds' shares. The net asset value of a share of any class is
based on the assets belonging to that class less the liabilities charged to that
class, and dividends may 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 Funds, the holders of each class would be
entitled, out of the assets of the Funds 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 each
Fund's portfolio and other information and annually after the close of the
Funds' 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 Funds. Each investor
will also receive an annual statement after the end of the calendar year listing
all transactions in shares of the Funds 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 Funds 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 Funds, 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

Each 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 each 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,
a 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. A 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.

- - -------------------------------------------------------------------------------
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

<F11> Director who is an "interested" person of the Fund (as defined in the
Investment Company Act of 1940).

FOR FUND INFORMATION AND
SHAREHOLDER SERVICES,
CALL 1-800/525-8258

THE YACKTMAN FUNDS, INC.
Shareholder Services Center
615 East Michigan Street
P.O. Box 701
Milwaukee, WI 53201-0701

STATEMENT OF ADDITIONAL INFORMATION April 30, 1997

THE YACKTMAN FUNDS, 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 Funds,
Inc. (the "Company") dated April 30, 1997 (the "Prospectus"), for The
Yacktman Fund and The Yacktman Focused Fund (each referred to individually
as a "Fund" and collectively as the "Funds"). Requests for copies of the
Prospectus should be made by writing to The Yacktman Funds, Inc., 303 West
Madison Street, Chicago, Illinois 60606, Attention: Corporate Secretary,
or by calling 1-800-525-8258.

<PAGE>

THE YACKTMAN FUNDS, INC.

TABLE OF CONTENTS

Page

INVESTMENT RESTRICTIONS AND CONSIDERATIONS . . . . . . . . . . . . . . 1

DETERMINATION OF NET ASSET VALUE . . . . . . . . . . . . . . . . . . . 7

DIRECTORS AND OFFICERS OF THE COMPANY . . . . . . . . . . . . . . . . . 8

INVESTMENT ADVISER AND ADMINISTRATOR . . . . . . . . . . . . . . . . . 10

EXCHANGE PRIVILEGE . . . . . . . . . . . . . . . . . . . . . . . . . . 12

SYSTEMATIC WITHDRAWAL PLAN . . . . . . . . . . . . . . . . . . . . . . 13

CUSTODIAN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

INDEPENDENT ACCOUNTANTS . . . . . . . . . . . . . . . . . . . . . . . . 14

DISTRIBUTION PLAN . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

ALLOCATION OF PORTFOLIO BROKERAGE . . . . . . . . . . . . . . . . . . . 15

TAXES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

STOCKHOLDER MEETINGS . . . . . . . . . . . . . . . . . . . . . . . . . 19

PERFORMANCE INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . 20

FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . 22

DESCRIPTION OF SECURITIES RATINGS . . . . . . . . . . . . . . . . . . . 22

<PAGE>

INVESTMENT RESTRICTIONS AND CONSIDERATIONS

THE YACKTMAN FUND

As set forth in the Prospectus under the caption "OBJECTIVE AND
INVESTMENT APPROACH," the investment objective of The Yacktman Fund is to
produce long-term growth of capital, with current income as a secondary
objective. Consistent with this investment objective, The Yacktman 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 Yacktman 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 Yacktman Fund.

1. The Yacktman Fund will diversify its assets in
different companies and will not purchase securities of any
issuer if, as a result of such purchase, The Yacktman Fund would
own more than 10% of the outstanding voting securities of such
issuer or more than 5% of The Yacktman Fund's assets would be
invested in securities of such issuer (except that up to 25% of
the value of The Yacktman 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 Yacktman Fund will not sell securities short, buy
securities on margin, purchase warrants, participate in a joint-
trading account, or deal in options.

3. The Yacktman 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 Yacktman Fund's
total assets. The Yacktman Fund will not borrow money for the
purpose of investing in securities, and The Yacktman Fund will
not purchase any portfolio securities for so long as any
borrowed amounts remain outstanding.

4. The Yacktman Fund will not pledge or hypothecate its
assets, except to secure borrowings for temporary or emergency
purposes.

5. The Yacktman Fund will not invest more than 5% of The
Yacktman 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 Yacktman 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 Yacktman Fund will not act as an underwriter or
distributor of securities other than shares of The Yacktman Fund
(except to the extent that The Yacktman Fund may be deemed to be
an underwriter within the meaning of the Securities Act of 1933,
as amended (the "Securities Act"), in the disposition of
restricted securities).

8. The Yacktman 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 Yacktman 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
Yacktman Fund's total assets would be the subject of such loans.

10. The Yacktman 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 Yacktman Fund will not make investments for the
purpose of exercising control or management of any company.

12. The Yacktman 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 Yacktman Fund will not purchase or sell
commodities or commodity contracts, including futures contracts.

14. The Yacktman 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 Yacktman Fund has adopted certain other investment
restrictions which are not fundamental policies and which may be changed
by the Company's Board of Directors without stockholder approval. These
additional restrictions are as follows:

1. The Yacktman 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 Yacktman Fund or an officer,
director or other affiliated person of The Yacktman Fund's
investment adviser, without authorization of the Board of
Directors of the Company.

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 Yacktman Fund's
fundamental restrictions will be deemed to have occurred. Any changes in
The Yacktman Fund's investment restrictions made by the Board of Directors
will be communicated to stockholders prior to their implementation, which
communication may be made in an amendment to the Statement of Additional
Information incorporated by reference into the Prospectus.

THE YACKTMAN FOCUSED FUND

As set forth in the Prospectus under the caption "OBJECTIVE AND
INVESTMENT APPROACH," the investment objective of The Yacktman Focused
Fund is to produce long-term growth of capital, with current income as a
secondary objective. Consistent with this investment objective, The
Yacktman Focused 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 Yacktman Focused
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 Yacktman Focused Fund.

1. The Yacktman Focused Fund may issue senior securities to
the extent permitted under the Act.

2. The Yacktman Focused Fund will not sell securities
short or buy securities on margin. The Yacktman Focused Fund
may invest in and commit its assets to writing and purchasing
put and call options on securities and stock indexes to the
extent permitted by the Act.

3. The Yacktman Focused Fund may borrow money to the
extent permitted by the Act. The Yacktman Focused Fund may
pledge or hypothecate its assets to secure its borrowings.

4. The Yacktman Focused Fund will not act as an
underwriter or distributor of securities other than shares of
The Yacktman Focused Fund (except to the extent that The
Yacktman Focused Fund may be deemed to be an underwriter within
the meaning of the Securities Act in the disposition of
restricted securities).

5. The Yacktman Focused 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.

6. The Yacktman Focused Fund will not purchase or sell
real estate or real estate mortgage loans and will not make any
investments in real estate limited partnerships.

7. The Yacktman Focused Fund will not purchase or sell
commodities or commodity contracts, including futures contracts.

8. The Yacktman Focused 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
Yacktman Focused Fund's total assets would be the subject of
such loans.

9. The Yacktman Focused Fund will not purchase securities
of any issuer if, as a result of such purchase, The Yacktman
Focused Fund would own more than 10% of the outstanding voting
securities of such issuer or more than 5% of The Yacktman
Focused Fund's assets would be invested in securities of such
issuer, except that up to 50% of the value of The Yacktman
Focused 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.

The Yacktman Focused Fund has adopted certain other investment
restrictions which are not fundamental policies and which may be changed
by the Company's Board of Directors without stockholder approval. These
additional restrictions are as follows:

1. The Yacktman Focused Fund will not purchase securities
of other investment companies (as defined in the Act), except:
(a) as part of a plan of merger, consolidation, reorganization
or acquisition of assets; (b) securities of registered open-end
investment companies that invest exclusively in high quality,
short-term debt securities; or (c) securities of registered
investment companies on the open market where no commission
results, other than the usual and customary broker's commission.
No purchase described in (b) and (c) will be made if as a result
of such purchases (i) The Yacktman Focused Fund and its
affiliated persons would hold more than 3% of any class of
securities, including voting securities, of any registered
investment company; (ii) more than 5% of The Yacktman Focused
Fund's net assets would be invested in shares of any one
registered investment company; and (iii) more than 10% of The
Yacktman Focused Fund's net assets would be invested in shares
of registered investment companies.

2. The Yacktman Focused Fund will not purchase securities
for which there is no established market if, as a result of such
purchase, more than 5% of the value of its total assets would be
invested in such securities.

3. The Yacktman Focused Fund will not make investments
for the purpose of exercising control or management of any
company.

4. The Yacktman Focused 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.

5. The Yacktman Focused 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 Yacktman Focused Fund or an officer,
director or other affiliated person of The Yacktman Focused Fund's
investment adviser, without authorization of the Board of Directors
of the Company.

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 Yacktman Focused
Fund's fundamental restrictions will be deemed to have occurred. Any
changes in The Yacktman Focused Fund's investment restrictions made by the
Board of Directors will be communicated to stockholders prior to their
implementation, which communication may be made in an amendment to the
Statement of Additional Information incorporated by reference into the
Prospectus.

High Yield Convertible Securities

Each Fund may invest up to five percent of its net assets in
convertible securities rated less than investment grade. Investments in
such securities are subject to the risk factors outlined below. The
market for high yield convertible securities is subject to substantial
volatility. Issuers of high yield convertible securities may be of low
creditworthiness and the high convertible securities are likely to be
subordinated to the claims of senior lenders. The secondary market for
high yield convertible debt securities may at times become less liquid or
respond to adverse publicity or investor perceptions making it more
difficult for the Funds to value accurately such securities or dispose of
them.

Options on Securities and Index Option Transactions

When writing call options on securities, The Yacktman Focused
Fund may cover its position by owning the underlying security on which the
option is written. Alternatively, The Yacktman Focused Fund may cover its
position by owning a call option on the underlying security, on a share
for share basis, which is deliverable under the option contract at a price
no higher than the exercise price of the call option written by The
Yacktman Focused Fund or, if higher, by owning such call option and
depositing and maintaining in a segregated account cash or liquid
securities equal in value to the difference between the two exercise
prices. In addition, The Yacktman Focused Fund may cover its position by
depositing and maintaining in a segregated account cash or liquid
securities equal in value to the exercise price of the call option written
by The Yacktman Focused Fund.

When The Yacktman Focused Fund wishes to terminate The Yacktman
Focused Fund's obligation with respect to an option it has written, The
Yacktman Focused Fund may effect a "closing purchase transaction." The
Yacktman Focused Fund accomplishes this by buying an option of the same
series as the option previously written by The Yacktman Focused Fund. The
effect of the purchase is that the writer's position will be canceled.
However, a writer may not effect a closing purchase transaction after the
writer has been notified of the exercise of an option. When The Yacktman
Focused Fund is the holder of an option, it may liquidate its position by
effecting a "closing sale transaction." The Yacktman Focused Fund
accomplishes this by selling an option of the same series as the option
previously purchased by The Yacktman Focused Fund. There is no guarantee
that either a closing purchase or a closing sale transaction can be
effected. If any call or put option is not exercised or sold, the option
will become worthless on its expiration date.

Exchanges generally have established limitations governing the
maximum number of call or put options on the same index which may be
bought or written (sold) by a single investor, whether acting alone or in
concert with others (regardless of whether such options are written on the
same or different exchanges or are held or written on one or more accounts
or through one or more brokers). Under these limitations, options
positions of certain other accounts advised by the same investment adviser
are combined for purposes of these limits. Pursuant to these limitations,
an exchange may order the liquidation of positions and may impose other
sanctions or restrictions. These position limits may restrict the number
of listed options which The Yacktman Focused Fund may buy or sell;
however, the Adviser intends to comply with all limitations.

The Yacktman Focused Fund will not enter into an index option
position that exposes The Yacktman Focused Fund to an obligation to
another party, unless The Yacktman Focused Fund either (i) owns an
offsetting position in securities or other options; and/or (ii) maintains
with The Yacktman Focused Fund's custodian bank (and marks-to-market, on a
daily basis) a segregated account consisting of cash or liquid securities
that, when added to the premiums deposited with respect to the option, are
equal to the market value of the underlying stock index not otherwise
covered.

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 Funds 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 COMPANY

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 Company are as follows:

*Jon D. Carlson -- Director, Vice President and Secretary. Mr.
Carlson, 55, has been the Executive Vice President of Yacktman Asset
Management Co. (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, 59, 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, 52, 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, 72, 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, 55, 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 Funds
(as defined in the Act).

The Funds' 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 Funds also
may reimburse their directors for travel expenses incurred in order to
attend meetings of the Board of Directors. For the fiscal year ended
December 31, 1996 the disinterested directors received aggregate fees
(excluding $347 in reimbursements of travel expenses) of $15,000. The
table below sets forth the compensation paid by The Yacktman Fund to each
of the current directors of the Company during the fiscal year ended
December 31, 1996:

COMPENSATION TABLE

Pension or Total
Retirement Compen-
Aggregate Benefits Estimated sation
Compen- Accrued As Annual from
sation Part of Benefits Company
from Fund Upon Paid to
Name of Person Company* Expenses Retirement Directors*

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

________________________

*The Yacktman Focused Fund did not commence operations until April
30, 1997.

As of January 31, 1997, all officers and directors of The
Yacktman Fund as a group beneficially owned 319,705 shares of The Yacktman
Fund or 0.55% of the then outstanding shares. At such date, Charles
Schwab & Co., 101 Montgomery Street, San Francisco, California 94104,
owned of record 32,420,301 shares of The Yacktman Fund, or 55.55% of the
then outstanding shares and National Financial Services Corp., c/o
Fidelity Investments, 82 Devonshire Street R20A, Boston, Massachusetts
02109, owned of record 4,174,660 shares of The Yacktman Fund, or 7.15% of
the then outstanding shares. All of the shares owned by Charles Schwab &
Co. and National Financial Services Corp. were owned of record only.
Other than the foregoing, The Yacktman Fund was not aware of any person
who, as of January 31, 1997, owned of record or beneficially 5% or more of
the shares of The Yacktman Fund. The Yacktman Focused Fund did not
commence operations until April 30, 1997.

INVESTMENT ADVISER AND ADMINISTRATOR

As set forth in the Prospectus under the caption "MANAGEMENT OF
THE FUNDS," the investment adviser to the Funds is Yacktman Asset
Management Co., 303 West Madison Street, Chicago, Illinois 60606 (the
"Adviser"). Pursuant to the investment advisory agreements entered into
between the Company, on behalf of each of the Funds, and the Adviser (the
"Advisory Agreements"), the Adviser furnishes continuous investment
advisory services to each of the Funds.

The Adviser has undertaken to reimburse each 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 such 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 such Fund are qualified for
sale. As of the date of this Statement of Additional Information, no such
state law provision was applicable to the Funds. Additionally, the
Adviser has voluntarily agreed to reimburse The Yacktman Focused Fund to
the extent aggregate annual operating expenses as described above do not
exceed specified percentages of such Fund's daily net assets as set forth
in the Prospectus. The Funds monitor their expense ratios on a monthly
basis. If the accrued amount of the expenses of either 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 each Fund the amount of
such difference), subject to adjustment month by month during the balance
of each 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, 1996, 1995 and 1994 The
Yacktman Fund paid the Adviser $4,086,939, $3,400,202 and $1,207,294,
respectively. The Adviser was not required to reimburse The Yacktman Fund
for excess expenses during such years. The Yacktman Focused Fund did not
commence operations until April 30, 1997.

Each 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 Company or by the vote of a majority (as defined in the
Act) of the outstanding shares of the applicable Fund, and (ii) by the
vote of a majority of the directors of the Company 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.
Each Advisory Agreement provides that it may be terminated at any time
without the payment of any penalty, by the Board of Directors of the
Company or by vote of the majority of the applicable Fund's stockholders
on sixty (60) days' written notice to the Adviser, and by the Adviser on
the same notice to the applicable Fund, and that it shall be automatically
terminated if it is assigned.

As set forth in the Prospectus under the caption "MANAGEMENT OF
THE FUNDS," the administrator to the Funds is Sunstone Financial Group,
Inc. (the "Administrator"). The administration agreement entered into
between the Funds and the Administrator (the "Administration Agreement")
will remain in effect as long as its continuance is approved at least
annually by the Board of Directors of the Company and the Administrator.
The Administration Agreement may be terminated on not less than 90 days'
notice, without the payment of any penalty, by the Board of Directors of
the Company or by the Administrator. For the fiscal years ended December
31, 1996, 1995 and 1994, The Yacktman Fund paid the Administrator
$235,034, $206,258 and $121,247, respectively, pursuant to the
Administration Agreement. 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. The Yacktman Focused Fund did not commence
operations until April 30, 1997.

The Advisory Agreements and the Administration Agreement provide
that the Adviser and Administrator, as the case may be, shall not be
liable to the Funds or its stockholders for anything other than willful
misfeasance, bad faith, gross negligence or reckless disregard of its
obligations or duties. The Advisory Agreements 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 either Fund 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 Funds at net asset value. Investors who are
interested in exercising the exchange privilege should first contact the
Funds 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 Funds 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 are paid directly to the investor or at his or
her discretion to any persons other than the Funds or (ii) the proceeds
from redemption of the shares of the Portico Money Market Fund are not
immediately reinvested in shares of the Funds 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 Funds upon at least 60
days prior notice to investors.

For federal income tax purposes, a redemption of shares of a
Fund 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
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 shares of a Fund worth at least $10,000 at
the current net asset value may, by completing an application which may be
obtained from the Funds or Firstar Trust Company, create a Systematic
Withdrawal Plan from which a fixed sum will be paid to the investor at
regular intervals through redemption of shares of such Fund. To establish
the Systematic Withdrawal Plan, the investor deposits shares of the Funds
with the Company 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 Funds 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
shares of the Funds, at net asset value, all income dividends and capital
gains distributions payable by the applicable Fund on shares held in such
account, and shares so acquired will be added to such account. The
investor may deposit additional 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
applicable 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 Funds. As such, Firstar Trust
Company holds all securities and cash of the Funds, 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 Company. Firstar Trust Company does not
exercise any supervisory function over the management of the Funds, the
purchase and sale of securities or the payment of distributions to
stockholders. Firstar Trust Company also acts as each Fund's transfer
agent and dividend disbursing agent.

INDEPENDENT ACCOUNTANTS

Price Waterhouse LLP, 100 East Wisconsin Avenue, Milwaukee,
Wisconsin 53202, serves as the independent accountants for the Funds.

DISTRIBUTION PLAN

As set forth in the Prospectus under the caption "PURCHASE OF
SHARES," The Yacktman Fund has adopted a Distribution Plan (the "Plan")
pursuant to Rule 12b-1 under the Act. The Plan permits The Yacktman Fund
to employ one or more distributors of its shares. Payments under the Plan
may be made only to distributors so employed by The Yacktman Fund.
Payments under the Plan in any year are limited to 0.25% of the average
daily net assets of The Yacktman Fund. Under the Plan, The Yacktman Fund
paid distributors fees for the fiscal year ended December 31, 1996
totaling $476,920, representing 0.07% of The Yacktman Fund's average net
assets.

The Yacktman Fund will pay to each distributor a monthly fee for
distribution of The Yacktman Fund's shares at the rate of 0.65% per annum
of the aggregate average daily net asset value of The Yacktman Fund shares
beneficially owned by such distributor's existing brokerage clients who
established their Yacktman 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 Yacktman Fund account was established prior to December 31, 1992 if
the client beneficially owned shares of The Yacktman Fund 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 Yacktman 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 shares of The Yacktman Fund are
beneficially owned by a client whose Yacktman 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 Yacktman Fund will
benefit from the Plan through increased sales of its shares, thereby
reducing The Yacktman 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 Company who
are not interested persons of the Company 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 Funds provided for in the Plan requires approval of the stockholders
and the Board of Directors of each Fund, 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 Company will be committed
to the discretion of the directors of the Company who are not interested
persons of the Company. The Board of Directors of the Company 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 Company.
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 of the Company, including the Rule 12b-1 Directors.

ALLOCATION OF PORTFOLIO BROKERAGE

The Funds' securities trading and brokerage policies and
procedures are reviewed by and subject to the supervision of the Board of
Directors of the Company. Decisions to buy and sell securities for each
Fund are made by the Adviser subject to review by the Company's Board of
Directors. In placing purchase and sale orders for portfolio securities
for the Funds, 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 Funds. 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 a 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 Funds do
not initially intend to market their shares through intermediary broker-
dealers, the Funds may place portfolio orders with broker-dealers who
recommend the purchase of shares of the Funds 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 Funds, 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 Agreements. Other clients of the Adviser
may indirectly benefit from the availability of these services to the
Adviser, and the Funds may indirectly benefit from services available to
the Adviser as a result of transactions for other clients. The Advisory
Agreements provide 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, 1996, 1995 and 1994 The Yacktman Fund paid
brokerage commissions of $998,728, $1,170,042 and $506,695, respectively,
on total transactions of $652,310,636, $652,217,150 and $296,409,925,
respectively. All of the brokers to whom commissions were paid during
such fiscal years provided research services to the Adviser. The Yacktman
Focused Fund did not commence operations until April 30, 1997.

In the fiscal year ended December 31, 1996 and 1995, the Adviser
allocated brokerage to a broker that provides sub-transfer agency services
to The Yacktman Fund. Pursuant to a directed brokerage arrangement, this
broker reduced its sub-transfer agency fees by $363,016 and $422,748,
respectively, in the fiscal years ended December 31, 1996 and 1995, as a
result of Fund brokerage allocated to it.

TAXES

As set forth in the Prospectus under the caption "TAXES," each
Fund will endeavor to qualify annually for and elect tax treatment
applicable to a regulated investment company under Subchapter M of the
Code.

Any dividend or capital gain distribution paid shortly after a
purchase of shares of a 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 a
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.

Each 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 such 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 a Fund.

STOCKHOLDER MEETINGS

The Maryland General Corporation Law permits registered
investment companies, such as the Funds, to operate without an annual
meeting of stockholders under specified circumstances if an annual meeting
is not required by the Act. The Company 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 Company'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 Company 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 Company'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 Funds; 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 a Fund's
investment portfolio. A 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 Yacktman Fund's average annual compounded returns for the
one-year period ended December 31, 1996 and for the period from the Fund's
commencement of operations (July 6, 1992) through December 31, 1996 were
26.02% and 13.25%, respectively. Such performance results 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. The Yacktman Focused Fund did not commence operations until
April 30, 1997. The foregoing performance results are based on historical
earnings and should not be considered as representative of the performance
of the Funds in the future. An investment in either 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, 1996, of the Company
(File No. 811-06628), as filed with the Securities and Exchange Commission
on February 3, 1997:

- 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 Yacktman 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 Yacktman Focused Fund may
invest in bonds and debentures assigned at least an investment grade by
Standard & Poor's or Moody's (or unrated but deemed by the Adviser to be
of comparable quality), and up to 10% of The Yacktman Focused Fund's
assets may be invested in bonds and debentures rated below investment
grade. As also set forth therein, the Funds may invest in commercial
paper and commercial paper master notes rated A-2 or better by Standard &
Poor's or P-2 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;

Investment Grade

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.

A - Debt rated 'A' has a strong capacity to pay interest and
repay principal although it is somewhat more susceptible to the adverse
effects of changes in circumstances and economic conditions than debt in
higher rated categories.

BBB - Debt rated 'BBB' is regarded as having an adequate
capacity to pay interest and repay principal. Whereas it normally
exhibits adequate protection parameters, adverse economic conditions or
changing circumstances are more likely to lead to a weakened capacity to
pay interest and repay principal for debt in this category than in higher
rated categories.

Speculative Grade

Debt rated 'BB', 'B', 'CCC', 'CC' and 'C' is regarded as having
predominantly speculative characteristics with respect to capacity to pay
interest and repay principal. 'BB' indicates the least degree of
speculation and 'C' the highest. While such debt will likely have some
quality and protective characteristics, these are outweighed by large
uncertainties or major risk exposures to adverse conditions.

BB - Debt rated 'BB' has less near-term vulnerability to default
than other speculative issues. However, it faces major ongoing
uncertainties or exposure to adverse business, financial, or economic
conditions which could lead to inadequate capacity to meet timely interest
and principal payments. The 'BB' rating category is also used for debt
subordinated to senior debt that is assigned an actual or implied 'BBB-'
rating.

B - Debt rated 'B' has a greater vulnerability to default but
currently has the capacity to meet interest payments and principal
repayments. Adverse business, financial, or economic conditions will
likely impair capacity or willingness to pay interest and repay principal.
The 'B' rating category is also used for debt subordinated to senior debt
that is assigned an actual or implied 'BB' or 'BB-' rating.

CCC - Debt rated 'CCC' has a currently identifiable
vulnerability to default, and is dependent upon favorable business,
financial, and economic conditions to meet timely payment of interest and
repayment of principal. In the event of adverse business, financial, or
economic conditions, it is not likely to have the capacity to pay interest
and repay principal. The 'CCC' rating category is also used for debt
subordinated to senior debt that is assigned an actual or implied 'B' or
'B-' rating.

CC - Debt rated 'CC' typically is applied to debt subordinated
to senior debt that is assigned an actual or implied 'CCC' rating.

C - Debt rated 'C' typically is applied to debt subordinated to
senior debt which is assigned an actual or implied 'CCC-' debt rating.
The 'C' rating may be used to cover a situation where a bankruptcy
petition has been filed, but debt service payments are continued.

CI - The rating 'CI' is reserved for income bonds on which no
interest is being paid.

D - Debt rated 'D' is in payment default. The 'D' rating
category is used when interest payments or principal payments are not made
on the date due even if the applicable grace period has not expired,
unless S&P believes that such payments will be made during such period.
The 'D' rating also will be used upon the filing of a bankruptcy petition
if debt service payments are jeopardized.

Moody's Bond Ratings.

Investment Grade

Aaa - Bonds which are rated Aaa are judged to be of 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.

A - Bonds which are rated A possess many favorable investment
attributes and are to be considered as upper-medium grade obligations.
Factors giving security to principal and interest are considered adequate,
but elements may be present which suggest a susceptibility to impairment
some time in the future.

Baa - Bonds which are rated Baa are considered as medium-grade
obligations (i.e., they are neither highly protected nor poorly secured).
Interest payments and principal security appear adequate for the present
but certain protective elements may be lacking or may be
characteristically unreliable over any great length of time. Such bonds
lack outstanding investment characteristics and in fact have speculative
characteristics as well.

Speculative Grade

Ba - Bonds which are rated Ba are judged to have speculative
elements; their future cannot be considered as well-assured. Often the
protection of interest and principal payments may be very moderate, and
thereby not well safeguarded during both good and bad times over the
future. Uncertainty of position characterizes bonds in this class.

B - Bonds which are rated B generally lack characteristics of
the desirable investment. Assurance of interest and principal payments or
of maintenance of other terms of the contract over any long period of time
may be small.

Caa - Bonds which are rated Caa are of poor standing. Such
issues may be in default or there may be present elements of danger with
respect to principal or interest.

Ca - Bonds which are rated Ca represent obligations which are
speculative in a high degree. Such issues are often in default or have
other marked shortcomings.

C - Bonds which are rated C are the lowest rated class of bonds,
and issues so rated can be regarded as having extremely poor prospects of
ever attaining any real investment standing.

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, 1996 (File No. 811-06628), of The Yacktman Fund,
Inc. (as filed with the Securities and Exchange Commission on
February 3, 1996)).

Report of Independent Accountants

Portfolio of Investments at December 31, 1996

Statement of Assets & Liabilities as of December 31, 1996

Statement of Operations for the year ended December 31, 1996

Statement of Changes in Net Assets for the years ended
December 31, 1996 and December 31, 1995

Financial Highlights

Notes to Financial Statements

(b.) Exhibits

(1.1) 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.

(1.2) Articles of Amendment.

(1.3) Articles Supplementary.

(1.4) Articles Supplementary.

(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.

(5.1) 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.

(5.2) Investment Advisory Agreement with Yacktman Asset
Management Co., on behalf of The Yacktman Focused Fund.

(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) Amended and Restated Administration Agreement and Fund
Accounting Agreement.

(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.

(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;
Exhibit 16 to Amendment No. 6 to Registrant's
Registration Statement on Form N-1A is incorporated by
reference pursuant to Rule 411 under the Securities Act
of 1933.

(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 January 31, 1997

Class A Common Stock (The 12,945
Yacktman Fund)
Class B Common Stock (The 0
Yacktman Focused Fund)

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 canceled:

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 10 through 14 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.

With respect to stockholder meetings, Registrant undertakes to
call stockholder meetings in accordance with the provisions of Article I
of its Bylaws, which are discussed in Parts A and B of this Registration
Statement.

<PAGE>
SIGNATURES

Pursuant to the requirements of the Securities Act of 1933 and
the Investment Company Act of 1940, the Registrant 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 11th day of February, 1997.

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 February 11, 1997
Donald A. Yacktman (Principal Executive,
Financial and Accounting
Officer) and a Director

/s/ Jon D. Carlson Director February 11, 1997
Jon D. Carlson

/s/ Thomas R. Hanson Director February 11, 1997
Thomas R. Hanson

/s/ Stanislaw Maliszewski Director February 11, 1997
Stanislaw Maliszewski

/s/ Stephen E. Upton Director February 13, 1997
Stephen E. Upton

<PAGE>
EXHIBIT INDEX

Exhibit No. Exhibit Page No.

(1.1) Registrant's Articles of
Incorporation*

(1.2) Articles of Amendment

(1.3) Articles Supplementary

(1.4) Articles Supplementary

(2) Registrant's Bylaws*

(3) None

(4) Specimen Stock Certificate*

(5.1) Investment Advisory Agreement with
Yacktman Asset Management Co.*

(5.2) Investment Advisory Agreement with
Yacktman Asset Management Co., on
behalf of The Yacktman Focused
Fund

(6) None

(7) None

(8) Custodian Agreement with First
Wisconsin Trust Company*

(9.1) Amended and Restated
Administration and Fund Accounting
Agreement with Sunstone Financial
Group, Inc.

(9.2) Transfer Agent Agreement with
First Wisconsin Trust Company*

(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

ARTICLES OF AMENDMENT
TO
ARTICLES OF INCORPORATION
OF
THE YACKTMAN FUND, INC.

Pursuant to Section 2-607 of the Maryland General Corporation
Law (the "MGCL"), The Yacktman Fund, Inc., having its registered office in
Baltimore, Maryland (the "Company"), does hereby certify to the State
Department of Assessments and Taxation of Maryland (the "Department")
that:

FIRST: The Company is registered as an open-end investment
company under the Investment Company Act of 1940.

SECOND: Pursuant to Section 2-605(a)(4) of the MGCL, the Board
of Directors of the Company duly adopted on February 14, 1997, resolutions
amending Article I of the Company's Articles of Incorporation to provide
as follows:

The name of the corporation (hereinafter called "Corporation")
is:

THE YACKTMAN FUNDS, INC.

THIRD: Pursuant to Section 2-605(a)(4) of the MGCL, the Board
of Directors of the Company duly adopted on February 14, 1997 resolutions
redesignating its previously authorized shares of Common Stock, $.0001 par
value, as follows:

Class Fund Shares

A The Yacktman Fund 500,000,000

FOURTH: These Articles of Amendment shall become effective as
of the time they are accepted by the Department for record.

IN WITNESS WHEREOF, the Company has caused these presents to be
signed in its name and on behalf by its President and attested by its
Secretary as of this ____ day of __________, 1997.

THE YACKTMAN FUND, INC.

By: _______________________________
Donald A. Yacktman, President

Attest: ____________________________
Jon D. Carlson, Secretary

ARTICLES SUPPLEMENTARY
TO
ARTICLES OF INCORPORATION
OF
THE YACKTMAN FUNDS, INC.

Pursuant to Section 2-208.1 of the Maryland General Corporation
Law (the "MGCL"), The Yacktman Funds, Inc., having its registered office
in Baltimore, Maryland (the "Company"), does hereby certify to the State
Department of Assessments and Taxation of Maryland (the "Department")
that:

FIRST: The Company is registered as an open-end investment
company under the Investment Company Act of 1940.

SECOND: Pursuant to Section 2-105(c) of the MGCL and Article IV
of the Company's Articles of Incorporation, the Board of Directors of the
Company duly adopted on February 14, 1997, resolutions: (a) increasing the
total number of shares of Common Stock, $0.0001 par value, that the
Company has authority to issue pursuant to Article IV of the Company's
Articles of Incorporation from 500,000,000 shares to 1,000,000,000 shares;
and (b) authorizing and directing the filing of these Articles
Supplementary for record with the Department.

THIRD: (a) The total number of shares of stock which the
Company was heretofore authorized to issue was 500,000,000 shares of
Common Stock, $0.0001 par value, of which 500,000,000 shares were
designated as follows and no shares were undesignated:

Class Fund Shares

A The Yacktman Fund 500,000,000

(b) The total number of shares of stock which the Company shall
be authorized to issue upon the filing of these Articles Supplementary for
record with the Department is 1,000,000,000 shares of Common Stock,
$0.0001 par value, of which 500,000,000 shares shall be designated as
follows and 500,000,000 shares shall be undesignated:

Class Fund Shares

A The Yacktman Fund 500,000,000

FOURTH: These Articles Supplementary shall become effective as
of the time they are accepted by the Department for record.

IN WITNESS WHEREOF, the Company has caused these presents to be
signed in its name and on behalf by its President and attested by its
Secretary as of this ____ day of __________, 1997.

THE YACKTMAN FUNDS, INC.

By: _______________________________
Donald A. Yacktman, President

Attest: ____________________________
Jon D. Carlson, Secretary

ARTICLES SUPPLEMENTARY
TO
ARTICLES OF INCORPORATION
OF
THE YACKTMAN FUNDS, INC.

Pursuant to Section 2-208 of the Maryland General Corporation
Law (the "MGCL"), The Yacktman Funds, Inc., having its registered office
in Baltimore, Maryland (the "Company"), does hereby certify to the State
Department of Assessments and Taxation of Maryland (the "Department")
that:

FIRST: The Company is registered as an open-end investment
company under the Investment Company Act of 1940.

SECOND: Pursuant to Section 2-105(a)(9) of the MGCL and Article
IV of the Company's Articles of Incorporation, the Board of Directors of
the Company duly adopted on February 14, 1997, resolutions: (a)
designating 200,000,000 shares of the Company's previously undesignated
Common Stock, $.0001 par value, as set forth below; and (b) authorizing
and directing the filing of these Articles Supplementary for record with
the Department.

Class Fund Shares

B The Yacktman Focused Fund 200,000,000

THIRD: The respective preferences, conversion and other rights,
voting powers, restrictions, limitations as to dividends, qualifications
and term and conditions of redemption of each class of the Company's
Common Stock, $.0001 par value, are as set forth in Section B of Article
IV of the Company's Articles of Incorporation.

FOURTH: These Articles Supplementary shall become effective as
of the time they are accepted by the Department for record.

IN WITNESS WHEREOF, the Company has caused these presents to be
signed in its name and on behalf by its President and attested by its
Secretary as of this ____ day of __________, 1997.

THE YACKTMAN FUNDS, INC.

By: _______________________________
Donald A. Yacktman, President

Attest: ____________________________
Jon D. Carlson, Secretary

INVESTMENT ADVISORY AGREEMENT

Agreement made this 30th day of April, 1997 between THE YACKTMAN
FUNDS, INC., a Maryland corporation (the "Company"), on behalf of THE
YACKTMAN FOCUSED FUND (the "Fund"), and YACKTMAN ASSET MANAGEMENT COMPANY,
an Illinois corporation (the "Advisor").

W I T N E S S E T H :

WHEREAS, the Company is in the process of registering the Fund
with the Securities and Exchange Commission as an open-end management
investment company under the Investment Company Act of 1940 (the "Act");
and

WHEREAS, the Fund desires to retain the Adviser, which is an
investment adviser registered under the Investment Advisers Act of 1940,
as its investment adviser.

NOW, THEREFORE, the Company, on behalf of the Fund, and the
Adviser do mutually promise and agree as follows:

1. Employment. The Company hereby employs the Adviser to
manage the investment and reinvestment of the assets of the Fund for the
period and on the terms set forth in this Agreement. The Adviser hereby
accepts such employment for the compensation herein provided and agrees
during such period to render the services and to assume the obligations
herein set forth.

2. Authority of the Adviser. The Adviser shall supervise and
manage the investment portfolio of the Fund, and, subject to such policies
as the board of directors of the Company may determine, direct the
purchase and sale of investment securities in the day-to-day management of
the Fund. The Adviser shall for all purposes herein be deemed to be an
independent contractor and shall, unless otherwise expressly provided or
authorized, have no authority to act for or represent the Company or the
Fund in any way or otherwise be deemed an agent of the Company or the
Fund. However, one or more shareholders, officers, directors or employees
of the Adviser may serve as directors and/or officers of the Company, but
without compensation or reimbursement of expenses for such services from
the Fund. Nothing herein contained shall be deemed to require the Company
or the Fund to take any action contrary to the Company's Articles of
Incorporation, as amended or supplemented, or any applicable statute or
regulation, or to relieve or deprive the board of directors of the Company
of its responsibility for and control of the affairs of the Fund.

3. Expenses. The Adviser, at its own expense and without
reimbursement from the Fund, shall furnish office space, and all necessary
office facilities, equipment and executive personnel for managing the
investments of the Fund. The Adviser shall not be required to pay any
expenses of the Fund except as provided herein if the total expenses borne
by the Fund, including the Adviser's fee and the fees paid to the Fund's
Administrator but excluding all federal, state and local taxes, interest,
brokerage commissions and extraordinary items, in any year 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, which
is the most restrictive percentage provided by the state laws of the
various states in which the Fund's shares are qualified for sale or, if
the states in which the Fund's shares are qualified for sale impose no
such restrictions, 2%. The expenses of the Fund's operations borne by the
Fund include by way of illustration and not limitation, directors fees
paid to those directors who are not officers of the Company, the costs of
preparing and printing registration statements required under the
Securities Act of 1933 and the Act (and amendments thereto), the expense
of registering its shares with the Securities and Exchange Commission and
in the various states, the printing and distribution cost of prospectuses
mailed to existing shareholders, the cost of stock certificates (if any),
director and officer liability insurance, reports to shareholders, reports
to government authorities and proxy statements, interest charges, taxes,
legal expenses, salaries of administrative and clerical personnel,
association membership dues, auditing and accounting services, insurance
premiums, brokerage and other expenses connected with the execution of
portfolio securities transactions, fees and expenses of the custodian of
the Fund's assets, expenses of calculating the net asset value and
repurchasing and redeeming shares, printing and mailing expenses, charges
and expenses of dividend disbursing agents, registrars and stock transfer
agents and the cost of keeping all necessary shareholder records and
accounts.

The Fund shall monitor its expense ratio on a monthly basis. If
the accrued amount of the expenses of the Fund exceeds the expense
limitation established herein, the Fund shall create an account receivable
from the Adviser in 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, subject to adjustment month-by-month during the balance of the
Fund's fiscal year if accrued expenses thereafter fall below the expense
limitation.

4. Compensation of the Adviser. For the services to be
rendered by the Adviser hereunder, the Fund shall pay to the Adviser an
advisory fee, paid monthly, based on the average net assets of the Fund,
as determined by valuations made as of the close of each business day of
the month. The advisory fee shall be 1/12 of 1.00% (1.00% per annum) on
the average net assets of the Fund. For any month in which this Agreement
is not in effect for the entire month, such fee shall be reduced
proportionately on the basis of the number of calendar days during which
it is in effect and the fee computed upon the average net assets of the
business days during which it is so in effect.

5. Ownership of Shares of the Fund. The Adviser shall not
take an ownership position in the Fund, and shall not permit any of its
shareholders, officers, directors or employees to take a long or short
position in the shares of the Fund, except for the purchase of shares of
the Fund for investment purposes at the same price as that available to
the public at the time of purchase or in connection with the initial
capitalization of the Fund.

6. Exclusivity. The services of the Adviser to the Fund
hereunder are not to be deemed exclusive and the Adviser shall be free to
furnish similar services to others as long as the services hereunder are
not impaired thereby. Although the Adviser has agreed to permit the Fund
to use the name "Yacktman," if it so desires, it is understood and agreed
that the Adviser reserves the right to use and to permit other persons,
firms or corporations, including investment companies, to use such name,
and that the Fund will not use such name if the Adviser ceases to be the
Fund's sole investment adviser. During the period that this Agreement is
in effect, the Adviser shall be the Fund's sole investment adviser.

7. Liability. In the absence of willful misfeasance, bad
faith, gross negligence or reckless disregard of obligations or duties
hereunder on the part of the Adviser, the Adviser shall not be subject to
liability to the Fund or to any shareholder of the Fund for any act or
omission in the course of, or connected with, rendering services
hereunder, or for any losses that may be sustained in the purchase,
holding or sale of any security.

8. Brokerage Commissions. The Adviser may cause the Fund to
pay a broker-dealer which provides brokerage and research services, as
such services are defined in Section 28(e) of the Securities Exchange Act
of 1934 (the "Exchange Act"), to the Adviser a commission for effecting a
securities transaction in excess of the amount another broker-dealer would
have charged for effecting such 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-
dealer viewed in terms of either that particular transaction or his
overall responsibilities with respect to the accounts as to which he
exercises investment discretion (as defined in Section 3(a)(35) of the
Exchange Act).

9. Amendments. This Agreement may be amended by the mutual
consent of the parties; provided, however, that in no event may it be
amended without the approval of the board of directors of the Company in
the manner required by the Act, and, if required by the Act, by the vote
of the majority of the outstanding voting securities of the Fund, as
defined in the Act.

10. Termination. This Agreement may be terminated at any time,
without the payment of any penalty, by the board of directors of the
Company or by a vote of the majority of the outstanding voting securities
of the Fund, as defined in the Act, upon giving sixty (60) days' written
notice to the Adviser. This Agreement may be terminated by the Adviser at
any time upon the giving of sixty (60) days' written notice to the Fund.
This Agreement shall terminate automatically in the event of its
assignment (as defined in Section 2(a)(4) of the Act). Subject to prior
termination as hereinbefore provided, this Agreement shall continue in
effect for an initial period beginning as of the date hereof and ending
April 30, 1999 and indefinitely thereafter, but only so long as the
continuance after such initial period is specifically approved annually by
(i) the board of directors of the Company or by the vote of the majority
of the outstanding voting securities of the Fund, as defined in the Act,
and (ii) the board of directors of the Fund in the manner required by the
Act, provided that any such approval may be made effective not more than
sixty (60) days thereafter.

IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed on the day first above written.

YACKTMAN ASSET MANAGEMENT COMPANY
(the "Adviser")

By:
President

Attest:
Secretary

On Behalf of THE YACKTMAN FOCUSED FUND:

THE YACKTMAN FUNDS, INC.
(the "Company")

By:
President

Attest:
Secretary

AMENDED AND RESTATED
ADMINISTRATION AND FUND ACCOUNTING AGREEMENT

THIS AGREEMENT is made as of this 30th day of April, 1997, by and
between The Yacktman Funds, Inc., a Maryland corporation (the
"Corporation"), and Sunstone Financial Group, Inc., a Wisconsin
corporation (the "Administrator").

WHEREAS, the Corporation is an open-end investment company registered
under the Investment Company Act of 1940, as amended (the "1940 Act") and
is authorized to issue shares of common stock (the "Shares") in separate
series with each such series representing interests in a separate
portfolio of securities and other assets; and

WHEREAS, the Corporation and the Administrator desire to enter into
an agreement pursuant to which the Administrator shall provide
administration and fund accounting services to such investment portfolios
of the Corporation as are listed on Schedule A hereto and any additional
investment portfolios the Corporation and Administrator may agree upon and
include on Schedule A as such Schedule may be amended from time to time
(such investment portfolios and any additional investment portfolios are
individually referred to as a "Fund" and collectively the "Funds").

NOW, THEREFORE, in consideration of the mutual promises and
agreements herein contained and other good and valuable consideration, the
receipt of which is hereby acknowledged, the parties hereto, intending to
be legally bound, do hereby agree as follows:

1. Appointment

The Corporation hereby appoints the Administrator as administrator and
fund accountant of the Funds for the period and on the terms set forth in
this Agreement. The Administrator accepts such appointment and agrees to
render the services herein set forth, for the compensation herein
provided.

2. Services as Administrator

(a) Subject to the direction and control of the Corporation's Board
of Directors and utilizing information provided by the Corporation and its
agents, the Administrator will: (1) provide office space, facilities,
equipment and personnel to carry out its services hereunder; (2) compile
data for and prepare with respect to the Funds timely Notices to the
Securities and Exchange Commission (the "Commission") required pursuant to
Rule 24f-2 under the 1940 Act and Semi-Annual Reports on Form N-SAR; (3)
assist in the preparation for execution by the Corporation and file all
federal income and excise tax returns and state income tax returns (and
such other required tax filings as may be agreed to by the parties) other
than those required to be made by the Corporation's custodian or transfer
agent, subject to review and approval of the Corporation and the
Corporation's independent accountants; (4) prepare the financial
statements for the Annual and Semi-Annual Reports required pursuant to
Section 30(d) under the 1940 Act; (5) assist the Corporation's legal
counsel in the preparation of the Registration Statement for the
Corporation (on Form N-1A or any replacement therefor) and any amendments
thereto; (6) determine and periodically monitor each Fund's income and
expense accruals and cause all appropriate expenses to be paid from
Corporation assets on proper authorization from the Corporation; (7)
calculate daily net asset values and income factors of each Fund; (8)
maintain all general ledger accounts and related subledgers; (9) perform
security valuations; (10) assist in the acquisition of the Corporation's
fidelity bond required by the Act, monitor the amount of the bond and make
the necessary Commission filings related thereto; (11) from time to time
as the Administrator deems appropriate, check each Fund's compliance with
the policies and limitations of each Fund relating to the portfolio
investments as set forth in the Prospectus and Statement of Additional
Information and monitor each Fund's status as a regulated investment
company under Subchapter M of the Internal Revenue Code of 1986, as
amended (but these functions shall not relieve the Corporation's
investment adviser of its primary day-to-day responsibility for assuring
such compliance); (12) maintain, and/or coordinate with the other service
providers the maintenance of, the accounts, books and other documents
required pursuant to Rule 31a-1(a) and (b) under the 1940 Act; (13)
prepare and/or file securities registration compliance filings with the
states identified by the Corporation to maintain the Funds' securities
registrations, with the advice of the Corporation's legal counsel; (14)
develop with legal counsel and secretary of the Corporation an agenda for
each board meeting and, if requested by the Directors, attend board
meetings and prepare minutes; (15) prepare Form 1099s for directors and
other fund vendors; (16) calculate dividend and capital gains
distributions subject to review and approval by the Corporation and its
independent accountants; and (17) generally assist in the Corporation's
administrative operations as mutually agreed to by the parties. The duties
of the Administrator shall be confined to those expressly set forth
herein, and no implied duties are assumed by or may be asserted against
the Administrator hereunder.

(b) The Directors of the Corporation shall cause the officers,
investment adviser, legal counsel, independent accountants, transfer agent
and custodian for the Funds to cooperate with the Administrator and to
provide the Administrator, upon request, with such information, documents
and advice relating to the Funds and the Corporation as is within the
possession or knowledge of such persons, in order to enable the
Administrator to perform its duties hereunder. In connection with its
duties hereunder, the Administrator shall be entitled to rely, and shall
be held harmless by the Corporation when acting in reliance, upon the
instruction, advice, information or any documents relating to the Funds
provided to the Administrator by an officer or representative of the Funds
or by any of the aforementioned persons The Administrator shall be
entitled to rely on any document which it reasonably believes to be
genuine and to have been signed or presented by the proper party. Fees
charged by such persons shall be an expense of the Corporation. The
Administrator shall be entitled to rely on any document which it
reasonably believes to be genuine and to have been signed or presented by
the proper party. The Administrator shall not be held to have notice of
any change of authority of any officer, agent, representative or employee
of the Corporation until receipt of written notice thereof from the
Corporation.

(c) In compliance with the requirements of Rule 31a-3 under the 1940
Act, the Administrator hereby agrees that all records which it maintains
for the Corporation are the property of the Corporation and further agrees
to surrender promptly to the Corporation any of such records upon the
Corporation's request. Subject to the terms of Section 6, the
Administrator further agrees to preserve for the periods prescribed by
Rule 31a-2 under the 1940 Act the records described in (a) above which are
maintained by the Administrator for the Corporation.

(d) It is understood that in determining security valuations, the
Administrator employs one or more pricing services to determine valuations
of portfolio securities for purposes of calculating net asset values of
the Funds. The Administrator shall identify to the Corporation and the
Board of Directors any such pricing service utilized on behalf of the
Corporation. The Administrator is authorized to rely on the prices
provided by such service(s) or by the Funds' investment adviser or other
authorized representative of the Funds, and shall not be liable for losses
to the Corporation or its securityholders as a result of its reliance on
the valuations provided by the approved pricing service(s) or the
representative.

(e) The Corporation's Board of Directors and the Funds' investment
adviser have and retain primary responsibility for all compliance matters
relating to the Funds including but not limited to compliance with the
Investment Company Act of 1940, as amended, the Internal Revenue Code of
1986, as amended, and the policies and limitations of each Fund relating
to the portfolio investments as set forth in the Prospectus and Statement
of Additional Information.

3. Fees; Delegation; Expenses

(a) In consideration of the services rendered pursuant to this
Agreement, the Corporation will pay the Administrator a fee, computed
daily and payable monthly, as provided in Schedule B hereto, plus out-of-
pocket expenses. The Corporation shall also pay the Administrator for
organizational start-up services provided on behalf of the Funds as
specified in Schedule B. Out-of-pocket expenses include, but are not
limited to, travel, lodging and meals in connection with travel on behalf
of the Corporation, programming and related expenses (previously incurred
or to be incurred by Administrator) in connection with providing
electronic transmission of data between the Administrator and the Funds'
other service providers, brokers, dealers and depositories, fees and
expenses of pricing services, and photocopying, postage and overnight
delivery expenses. Fees shall be paid by each Fund at a rate that would
aggregate at least the applicable minimum fee for each Fund.

(b) For the purpose of determining fees payable to the
Administrator, net asset value shall be computed in accordance with the
Corporation's Prospectuses and resolutions of the Corporation's Board of
Directors. The fee for the period from the day of the month this Agreement
is entered into until the end of that month shall be pro-rated according
to the proportion which such period bears to the full monthly period.
Upon any termination of this Agreement before the end of any month, the
fee for such part of a month shall be pro-rated according to the
proportion which such period bears to the full monthly period and shall be
payable upon the date of termination of this Agreement. Should the
Corporation be liquidated, merged with or acquired by another fund or
investment company, any accrued fees shall be immediately payable. Such
fee as is attributable to each Fund shall be a separate charge to each
Fund and shall be the several (and not joint or joint and several)
obligation of each such Fund.

(c) The Administrator will bear all expenses in connection with the
performance of its services under this Agreement except as otherwise
provided herein. Other costs and expenses to be incurred in the operation
of the Funds, including, but not limited to: taxes; interest; brokerage
fees and commissions, if any; salaries, fees and expenses of officers and
Directors; Commission fees and state Blue Sky fees; advisory fees; charges
of custodians, transfer agents, dividend disbursing and accounting
services agents; security pricing services; insurance premiums; outside
auditing and legal expenses; costs of organization and maintenance of
corporate existence; typesetting, printing, proofing and mailing of
prospectuses, statements of additional information, supplements, notices
and proxy materials for regulatory purposes and for distribution to
current shareholders; typesetting, printing, proofing and mailing and
other costs of shareholder reports; expenses in connection with the
electronic transmission of documents and information including electronic
filings with the Commission and the states: expenses incidental to holding
meetings of the Fund's shareholders and Directors; and any extraordinary
expenses; will be borne by the Funds or their investment adviser.
Expenses incurred for distribution of shares, including the typesetting,
printing, proofing and mailing of prospectuses for persons who are not
shareholders of the Corporation, will be borne by the investment adviser,
except for such expenses permitted to be paid by the Corporation under a
distribution plan adopted in accordance with applicable laws.

4. Proprietary and Confidential Information

The Administrator agrees on behalf of itself and its employees to
treat confidentially and as proprietary information of the Corporation all
records relative to the Funds and prior, present or potential shareholders
of the Corporation (and clients of said shareholders), and not to use such
records and information for any purpose other than performance of its
responsibilities and duties hereunder, except after prior notification to
and approval in writing by the Corporation, which approval shall not be
unreasonably withheld and may not be withheld where the Administrator may
be exposed to civil or criminal proceedings for failure to comply, when
requested to divulge such information by duly constituted authorities,
when subject to governmental or regulatory audit or investigation, or when
so requested by the Corporation. Records and information which have become
known to the public through no wrongful act of the Administrator or any of
its employees, agents or representatives shall not be subject to this
paragraph.

5. Limitation of Liability

(a) The Administrator shall not be liable for any error of
judgment or mistake of law or for any loss suffered by the Funds in
connection with the matters to which this Agreement relates, except for a
loss resulting from the Administrator's willful misfeasance, bad faith or
gross negligence in the performance of its duties or from reckless
disregard by it of its obligations and duties under this Agreement.
Furthermore, the Administrator shall not be liable for any action taken or
omitted to be taken in accordance with instructions received by the
Administrator from an officer or representative of the Corporation.

(b) The Administrator assumes no responsibility hereunder, and
shall not be liable, for any damage, loss of data, errors, delay or any
other loss whatsoever caused by events beyond its reasonable control. The
Administrator will, however, take all reasonable steps to minimize service
interruptions for any period that such interruption continues beyond its
control.

6. Term

(a) This Agreement shall become effective with respect to each Fund
listed on Schedule A hereof as of the date hereof and, with respect to
each Fund not in existence on that date, on the date an amendment to
Schedule A to this Agreement relating to that Fund is executed. If not
terminated as provided herein, this Agreement shall continue in effect
with respect to each Fund until April 1, 1998. Thereafter, if not
terminated as provided herein, this Agreement shall continue automatically
in effect as to each Fund for successive annual periods.

(b) This Agreement may be terminated with respect to any one or more
particular Funds without penalty (i) upon mutual consent of the parties,
or (ii) by either party upon not less than ninety (90) days' written
notice to the other party (which notice may be waived by the party
entitled to the notice). The terms of this Agreement shall not be waived,
altered, modified, amended or supplemented in any manner whatsoever except
by a written instrument signed by the Administrator and the Corporation.

(c) Notwithstanding anything herein to the contrary, upon the
termination of this Agreement or the liquidation of a Fund or the
Corporation, the Administrator shall deliver the records of the Fund(s)
and/or Corporation as the case may be to the Corporation or person(s)
designated by the Corporation and thereafter the Corporation or its
designee shall be solely responsible for preserving the records for the
periods required by all applicable laws, rules and regulations. In
addition, in the event of termination of this Agreement, or the proposed
liquidation or merger of the Corporation or a Fund(s), and the Corporation
requests the Administrator to provide services in connection therewith,
the Administrator shall provide such services and be entitled to such
compensation as the parties may mutually agree.

7. Non-Exclusivity

The services of the Administrator rendered to the Corporation are not
deemed to be exclusive. The Administrator may render such services and
any other services to others, including other investment companies. The
Corporation recognizes that from time to time directors, officers and
employees of the Administrator may serve as trustees, directors, officers
and employees of other entities (including other investment companies),
that such other entities may include the name of the Administrator as part
of their name and that the Administrator or its affiliates may enter into
investment advisory or other agreements with such other entities.

8. Governing Law; Invalidity

This Agreement shall be governed by and construed in accordance with
the laws of the State of Illinois. To the extent that the applicable laws
of the State of Illinois, or any of the provisions herein, conflict with
the applicable provisions of the 1940 Act, the latter shall control, and
nothing herein shall be construed in a manner inconsistent with the 1940
Act or any rule or order of the Commission thereunder. Any provision of
this Agreement which may be determined by competent authority to be
prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.

9. Notices

Any notice required or to be permitted to be given by either party to
the other shall be in writing and shall be deemed to have been given when
sent by registered or certified mail, postage prepaid, return receipt
requested, or by facsimile and followed within two business days by
registered or certified mail, postage prepaid, return receipt requested,
as follows: Notice to the Administrator shall be sent to Sunstone
Financial Group, Inc., 207 East Buffalo Street, Suite 400, Milwaukee, WI,
53202, Attention Miriam M. Allison, and notice to the Corporation shall be
sent to The Yacktman Funds, Inc., 303 West Madison Street, Chicago,
Illinois 60606, Attention: Donald Yacktman.

10. Entire Agreement

This Agreement constitutes the entire Agreement of the parties hereto.

11. Counterparts

This Agreement may be executed in any number of counterparts, each of
which shall be deemed to be an original agreement but such counterparts
shall together constitute but one and the same instrument.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by a duly authorized officer as of the day and year first
above written.

THE YACKTMAN FUNDS, INC.

By:____________________________
President

SUNSTONE FINANCIAL GROUP, INC.

By:____________________________
President

<PAGE>

Schedule A
to the
Administration and Fund Accounting Agreement
by and between
THE YACKTMAN FUNDS, INC.
and
Sunstone Financial Group, Inc.

Name of Funds

Yacktman Fund
Yacktman Focused Fund

<PAGE>

Schedule B
to the
Administration and Fund Accounting Agreement
by and between
THE YACKTMAN FUNDS, INC.
and
Sunstone Financial Group, Inc.

YACKTMAN FUND

Administration

Average Net Assets Annual Fees

Up to $50 Million 15.0 basis points
$50 Million to $100 Million 5.0 basis points
Over $100 Million 2.5 basis points

Fund Accounting

Up to $100 Million $20,000
$100 Million to $200 Million 1.0 basis point
Over $200 Million 0.5 basis point

YACKTMAN FOCUSED FUND

For administration and fund accounting services, Yacktman Focused Fund
shall pay Administrator an annual fee computed daily and payable monthly,
at the annual rate of Five One-Hundredths of One Percent (0.05%) on the
average daily net assets of the Yacktman Focused Fund, subject to a
minimum annual fee of $50,000.

The Trust shall also pay/reimburse the Administrator's out-of-pocket
expenses as described in the Agreement. The foregoing fee schedule assumes
a single class of shares for each Fund.

CONSENT OF INDEPENDENT ACCOUNTANTS

We hereby consent to the incorporation by reference in the Prospectus and
Statement of Additional Information constituting parts of this Post-
Effective Amendment No. 6 to the registration statement on Form N-1A (the
"Registration Statement") of our report dated January 17, 1997, relating
to the financial statements and financial highlights appearing in the
December 31, 1996 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
February 12, 1997

<ARTICLE> 6
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