UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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THE YACKTMAN FUNDS, INC.
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<PAGE>
THE YACKTMAN FUNDS, INC.
November 16, 1998
Financial advisors and institutional investors have indicated to us their
concern about the SHIFTING INVESTMENT "STYLE" of The Yacktman Funds, Inc. (the
"Funds").
As noted previously, there has clearly been a movement away from the Funds' long
standing and publicly stated focus on large capitalization companies. The
traditional focus of The Yacktman Fund was summarized in an "Insider Interview"
in the August, 1995 Kiplinger's Personal Finance Magazine as:
"Buy[ing] big, growing, boring, companies when they're beaten down
in price and sell[ing] them when prices approach peak valuations . . .
the quintessential large-company growth fund."
Many professional investors purchased shares of the Yacktman Funds for clients
assuming they were making a fund investment similar to the type described by
Kiplinger's. Unfortunately, the attached chart shows that neither of the Funds
appears any longer to be a "large-company growth fund."
These professional investors have indicated that they CANNOT IGNORE an
investment "style" shift because it directly impacts a number of other issues.
As fiduciaries and "watchdogs" for shareholder interests, the Independent
Directors and their consultant share the concerns of these professionals over
what this "shift" could mean with respect to:
* PROSPECTIVE RISK for the investors. The smaller capitalization stocks
have potentially greater economic and market risk plus greater
volatility.
* PROFESSIONAL STAFFING OF THE INVESTMENT ADVISER. The inexperienced
and almost skeletal professional staff at Yacktman Asset Management
Co. must now follow for investment purposes an "all-market cap"
universe of conceivably as many as 2,000 companies.
* REASONS for the "style" shift (i.e., is someone other than Donald
Yacktman involved in the day-to-day management of the Funds?).
* DETERIORATING AND NONCOMPETITIVE PERFORMANCE. Please see attached
chart for comparisons to overall market and other Growth & Income
mutual funds.
Instead of responding to the legitimate questions of the Independent Directors
on these issues, Donald Yacktman initiated this costly proxy fight. It appears
to us that he hopes to replace the current board with directors, who will look
the other way when tough questions need to be asked. Therefore, if the concerns
raised by the Independent Directors are to be addressed in an effective and
meaningful manner, you and your clients should support the independent
Directors, by VOTING the WHITE PROXY CARD.
For additional Information, please call either Jon Carlson at 1-630-734-3792 or
Stanislaw (Stas') Maliszewski at 1-312-780-1933.
The Board of Directors*
The Yacktman Funds, Inc.
*Messrs. Ball and Yacktman dissenting
<PAGE>
COMPARATIVE PERFORMANCE
-----------------------
<TABLE>
<CAPTION>
THE S&P'S
YACKTMAN COMPOSITE PERCENT OF
FUND AVERAGE INDEX OF 500 THE YACKTMAN FUNDS
ANNUAL STOCKS ANNUAL FUND LIPPER OUTPERFORMING THE
TIME PERIOD RETURNS RETURNS RANKINGS* YACKTMAN FUND*
- ----------- ------- ------- --------- --------------
<S> <C> <C> <C> <C>
Three Months
Ended 9/30/98 .......................................... -16.4% -9.9% 707 OUT OF 827 85%
Year-to-date
(1/1/98-9/30/98) ....................................... -13.3% 6.0% 717 OUT OF 763 94%
One Year
(10/1/97-9/30/98) ...................................... -15.7% 9.0% 676 OUT OF 714 95%
Three Years
(10/1/95-9/30/98) ...................................... 10.8% 22.6% 417 OUT OF 449 93%
Five Years
(10/1/93-9/30/98) ...................................... 14.7% 19.9% 186 OUT OF 289 64%
Since Inception
(7/6/92) ............................................... 9.8% 18.3% N/A N/A
</TABLE>
* Lipper rankings are out of the total number of funds in the Lipper Growth and
Income fund category for the time period specified. Source: Lipper
Analytical Services
N/A means not applicable.
MARKET CAPITALIZATIONS* - AS OF 9/30/98
<TABLE>
<CAPTION>
PERCENTAGE OF
PERCENTAGE OF THE YACKTMAN
SIZE RANGE THE YACKTMAN FUND FOCUSED FUND
---------- ----------------- ------------
<S> <C> <C>
Above $15 B................ 13.5% 14.47%
Between $10 an 15 B........ 0.98% 0.00%
Between $5 and 10 B........ 15.44% 9.39%
Between $4 and 5 B......... 0.00% 0.00%
Between $3 and 4 B......... 3.23% 0.00%
Between $2 and 3 B......... 0.00% 0.00%
Between $1.5 and 2 B....... 6.70% 4.85%
Between $1.0 and 1.5 B..... 14.45% 9.19%
Between $0.5 and $1.0 B.... 26.13% 17.73%
Less than $0.5 B........... 17.66% 26.18%
Cash equivalents........... 1.95% 18.19%
</TABLE>
*The market capitalizations of the companies will fluctuate over time and may at
a specific date be lower or higher than the historic average.
