<PAGE>
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF
THE SECURITIES EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant /X/
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Check the appropriate box:
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14a-6(e)(2))
/X/ Definitive Proxy Statement
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/ / Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
THE YACKTMAN FUNDS, INC.
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<PAGE>
THE YACKTMAN FUNDS, INC.
1-800-248-5976
OCTOBER 19, 1998
Dear Shareholder:
Your Board of Directors is sending you this proxy statement to respond to
Yacktman Asset Management Co.'s ("Yacktman") proxy statement. Yacktman wants to
replace your Independent Directors with people that it has hand-picked. We urge
you to vote to keep your Funds' current Independent Directors.
WE THINK YOU SHOULD CONSIDER THE FOLLOWING:
- SEC Chairman Levitt has said "BOARD INDEPENDENCE IS CRUCIAL." As
Directors, we take seriously the responsibility placed upon us by
Congress, by the SEC, and, most important, by you, the shareholders. As
your "watchdog" representatives, your Independent Directors have asked
Yacktman questions that we believe you would have asked if you had the
chance. The Independent Directors also have asked questions that counsel
has urged them to ask to protect your interests. Unfortunately, we believe
Yacktman has consistently refused to address the issues that have been
raised, issues that we think have a direct bearing on your investment in
the Funds.
- Yacktman's actions have caused your Funds to depart from the investment
style we think you expected when you invested in the Funds. This, we
believe, has magnified the poor performance and risk of your Funds.
- We believe Yacktman has been unwilling to accept oversight from your
Independent Directors that questions how your investment is managed. In
retaliation for the Independent Directors' efforts to protect your
investment, Donald
<PAGE>
Yacktman wants to oust all of the current Independent Directors and
replace them with a new group of people that Yacktman has selected.
- We view Yacktman's unprecedented attempt to silence the Independent
Directors, your "watchdogs," as a desperate effort to preserve its
lucrative fees from your Funds in the face of worsening investment
performance. In 1997, Yacktman took in more than $6.5 MILLION in
management fees from your Funds. Each of the then three Independent
Directors earned $8,000. Think about it. Who really, to use Donald
Yacktman's term, is motivated to "perpetuate" their current position?
FOR THE REASONS EXPLAINED IN THIS PROXY STATEMENT, WE URGE YOU TO VOTE TO KEEP
YOUR INDEPENDENT DIRECTORS.
By order of the Board of Directors
The Yacktman Funds, Inc.
<PAGE>
October 19, 1998
THE YACKTMAN FUNDS, INC.
IMPORTANT NEWS!
OVER THE LAST SIX YEARS, THE INDEPENDENT DIRECTORS OF THE YACKTMAN FUNDS, INC.
(THE "FUNDS") HAVE SERVED IN THEIR "WATCHDOG" ROLE TO PROTECT YOUR INTERESTS AS
AN INVESTOR IN THE FUNDS. NOW, AFTER THE INDEPENDENT DIRECTORS HAVE BEEN ASKING
THE "TOUGH" QUESTIONS FOR OVER A YEAR AND AFTER THE INVESTMENT PERFORMANCE OF
YOUR FUNDS HAS DETERIORATED DRAMATICALLY, YACKTMAN ASSET MANAGEMENT CO.
("YACKTMAN"), THE INVESTMENT ADVISER TO YOUR FUNDS, WANTS TO REPLACE YOUR
INDEPENDENT DIRECTORS WITH A SLATE OF DIRECTORS THAT IT HAS "HAND-PICKED." THIS
IS AN OVERVIEW OF THE KEY ISSUES. WE ENCOURAGE YOU TO READ THE ENCLOSED PROXY
STATEMENT FOR A FULLER EXPLANATION.
Q&A
---------
QUESTIONS AND ANSWERS
Q. WHAT IS THE DISAGREEMENT BETWEEN THE INDEPENDENT DIRECTORS AND YACKTMAN?
A. We believe Yacktman has not been willing to accept the oversight of the
Independent Directors, as required by law, and wants to remove them because they
have raised the following issues:
- - UNACCEPTABLY POOR INVESTMENT PERFORMANCE RESULTING FROM A CHANGE IN THE
"YACKTMAN STYLE" OF INVESTMENT.
Yacktman has shifted away from investing primarily in large companies and now
focuses on much smaller companies. We believe this change has led to steadily
worsening relative investment performance, greater risk, less liquidity, and
more volatility.
- - YACKTMAN'S FAILURE TO HIRE AN ADEQUATE INVESTMENT STAFF.
Yacktman has only three experienced professionals on its investment staff to
manage more than 100 investment accounts and almost $900 million in assets. We
believe Yacktman's staff is inadequate in terms of depth, experience and
expertise.
<PAGE>
- - THE DAY-TO-DAY MANAGEMENT OF THE PORTFOLIO BY PEOPLE OTHER THAN DONALD
YACKTMAN.
We believe Donald Yacktman has delegated day-to-day portfolio management to
less-qualified, less-experienced members of his staff, most notably his
28-year-old son, Steve.
- - DONALD YACKTMAN'S DISREGARD FOR YOUR FUNDS' CODE OF ETHICS.
Donald Yacktman is flouting your Funds' Code of Ethics by continuing to serve
on the board of a publicly-held company without the permission of your Funds'
Board in violation of your Funds' Code of Ethics.
Q. WHAT IS YACKTMAN'S INVESTMENT PERFORMANCE?
A. Very disappointing. In none of the following measurement periods has either
of the Funds matched the total return of the Standard & Poor's 500 or done well
versus its peer group, as defined by Lipper:
<TABLE>
<CAPTION>
STANDARD &
THE YACKTMAN POOR'S
THE YACKTMAN FOCUSED FUND COMPOSITE INDEX THE YACKTMAN THE YACKTMAN
FUND AVERAGE AVERAGE ANNUAL OF 500 STOCKS FUND LIPPER FOCUSED FUND
TIME PERIOD ANNUAL RETURNS RETURNS ANNUAL RETURNS RANKING* LIPPER RANKING*
- ------------------ --------------- --------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C> <C>
Three Months Ended
9/30/98 -16.4% -16.3% -9.9% 707 OUT OF 827 702 OUT OF 827
Year-to-Date
(1/1/98-9/30/98) -13.3% -9.4% 6.0% 717 OUT OF 763 665 OUT OF 763
One Year
(10/1/97-9/30/98) -15.7% -12.2% 9.0% 676 OUT OF 714 651 OUT OF 714
Three Years
(10/1/95-9/30/98) 10.8% N/A 22.6% 417 OUT OF 449 N/A
Five Years
(10/1/93-9/30/98) 14.7% N/A 19.9% 186 OUT OF 289 N/A
Since Inception
(7/6/92) 9.8% N/A 18.3% N/A N/A
Since Inception
(5/1/97) N/A 3.2% 20.3% 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 periods specified. Source: Lipper Analytical
Services.
N/A means not applicable.
THE RESPECTED INDUSTRY PUBLICATION, FUND WATCH, LAST MONTH SAID IT ALL: THE
"ONCE HIGH-FLYING [YACKTMAN] FUNDS HAVE BEEN PERFORMING ABOMINABLY OF LATE."
<PAGE>
Q. HAVE THE INDEPENDENT DIRECTORS TRIED TO MICRO-MANAGE THE INVESTMENTS OF YOUR
FUNDS?
A. The Independent Directors have never told Yacktman what investments to make
and they don't intend to start now. They have, though, raised questions about
investments that were not consistent with the "Yacktman Style," especially the
growing movement away from stocks of large companies to stocks of smaller, more
risky ones and have questioned whether sufficient professional resources are
being applied to the Funds.
Q. ARE THE INDEPENDENT DIRECTORS SIMPLY TRYING TO PERPETUATE THEMSELVES IN
OFFICE?
A. No. The Independent Directors are acting in a manner dictated by their
fiduciary duties. Each earns $8,000 per year in fees for his service. Compare
that to Yacktman, which earned more than $6.5 MILLION in management fees from
your Funds in 1997, and you can judge for yourself who is simply trying to
perpetuate their current position.
Q. HAVE YOU FIRED DONALD YACKTMAN?
A. Yacktman is still investment adviser to your Funds. Donald Yacktman has been
removed as President of your Funds, due to his inability to work constructively
with the Independent Directors.
Q. WHAT HAPPENS IF I VOTE TO KEEP THE INDEPENDENT DIRECTORS? WILL YOU FIRE
YACKTMAN THEN?
A. Yacktman said in its proxy statement that it might quit if you do not remove
the Independent Directors. In light of that, and of the concerns that your
Independent Directors have about Yacktman, the Independent Directors are
considering a number of alternative courses of action, including hiring another
investment adviser.
Q. WHO ARE THE INDEPENDENT DIRECTORS? WHAT IS THEIR ROLE?
A. Your Independent Directors are distinguished businesspersons who are not
affiliated with Yacktman. The Supreme Court of the United States has stressed
that the Investment Company Act, which regulates mutual funds, "was designed to
place the unaffiliated directors in the role of independent watchdogs, who would
furnish an independent check upon the management of investment
companies . . . Congress entrusted to the independent directors of investment
<PAGE>
companies . . . the primary responsibility for looking after the interests of
the funds' shareholders."
Q. WHAT DO I HAVE TO DO TO KEEP THE INDEPENDENT DIRECTORS IN OFFICE?
A. To keep the Independent Directors, VOTE "AGAINST" YACKTMAN'S PROPOSAL TO
REMOVE THE INDEPENDENT DIRECTORS ON THE ENCLOSED WHITE PROXY CARD.
Q. I RECEIVED ONE PROXY CARD FROM YACKTMAN AND ONE FROM YOU. WHICH ONE DO I SEND
BACK?
A. To keep the Independent Directors, SIGN, DATE, VOTE "AGAINST" YACKTMAN'S
PROPOSAL TO REMOVE THE INDEPENDENT DIRECTORS, AND RETURN THE WHITE PROXY CARD
that is enclosed. You may throw out the blue proxy card that you received from
Yacktman. If you have already voted the blue Yacktman card, sending in our WHITE
card will replace it.
Q. WILL I RECEIVE MORE PROXY CARDS IN THE FUTURE? WHAT DO I DO WITH THEM?
A. Yes, please SIGN, DATE, VOTE "AGAINST" YACKTMAN'S PROPOSAL TO REMOVE THE
INDEPENDENT DIRECTORS, AND RETURN ALL OF THE WHITE PROXY CARDS you receive. You
may throw out any additional blue proxy cards.
Q. WHOM DO I CALL FOR MORE INFORMATION?
A. Please call 1-800-248-5976.
"...INDEPENDENT DIRECTORS...ARE REALLY THE INVESTORS' FIRST LINE OF DEFENSE
AGAINST ABUSES."
--SEC CHAIRMAN LEVITT'S REMARKS TO THE INVESTMENT COMPANY INSTITUTE
(5/19/95)
<PAGE>
THE YACKTMAN FUNDS, INC.
PROXY STATEMENT
OCTOBER 19, 1998
1. YACKTMAN'S PROPOSAL TO REMOVE YOUR FUNDS' INDEPENDENT DIRECTORS
You should ask yourself the following questions:
- What is the role of independent directors?
- Why have the Independent Directors questioned Yacktman?
- Who are the Independent Directors?
- What happens if the Independent Directors are NOT removed?
WHAT IS THE ROLE OF INDEPENDENT DIRECTORS?
As in all corporations, the directors of mutual funds are the representatives of
shareholders and the supervisors of management. However, because of the special
structure of mutual funds and the great power investment advisers have, Congress
and the SEC have placed special responsibility on those directors who are not
affiliated with the investment adviser to represent the shareholders and to
oversee the investment adviser. Some decisions, such as the approval of the
investment advisory contract, must be
"...INDEPENDENT DIRECTORS...ARE REALLY THE INVESTORS' FIRST LINE OF DEFENSE
AGAINST ABUSES."
--SEC CHAIRMAN LEVITT'S REMARKS TO THE INVESTMENT COMPANY INSTITUTE
(5/19/95)
<PAGE>
made by the non-interested directors separately and in addition to the approval
of the entire board of directors.
Arthur Levitt, Chairman of the SEC, has stressed the overall importance of the
role of the Independent Directors:
"Legions of people already look after the interests of management, of the
industry, of the capital markets, of employees, and others. [Independent
Directors] are charged with the responsibility to represent the interests of
investors . . . . Men and women who as directors are passive; who view their
roles as mere advisors; who are pliant and pleasant, but who do not insist
upon a real monitor's role do small service to anyone and deserve little
respect."
The Investment Company Institute, the mutual fund industry's largest trade
group, states:
"A primary responsibility of the directors is to evaluate the investment
performance of the fund's portfolio. That responsibility does not entail
second-guessing of specific portfolio management decisions, but rather a
continuing evaluation of the fund's performance as a whole in light of its
investment objectives and shareholder expectations as to portfolio strategy
and risk."
In short, the role of independent director is that of "WATCHDOG" for the
shareholder, providing an independent check upon the investment adviser and
other service providers.
The Independent Directors understand that, as watchdogs for the shareholders, it
is their responsibility to ensure that Yacktman
"EVEN MORE IMPORTANT: DO BOARD MEMBERS SPEAK THEIR MINDS, OR DO THEY MARCH
IN LOCKSTEP WITH MANAGEMENT? BOARD INDEPENDENCE IS CRUCIAL."
--SEC CHAIRMAN LEVITT'S REMARKS TO THE DIRECTORS' COLLEGE (3/23/95)
2
<PAGE>
acts properly, not only as investment adviser, but as a fiduciary to your Funds.
The Independent Directors have simply been doing what the law requires them to
do when they inquired about Yacktman's investment techniques and its
professional resources as an investment adviser.
The Independent Directors consist of Jon Carlson, Tom Hanson, Stanislaw
Maliszewski, and Steve Upton. Each is unaffiliated with Yacktman. Mr. Carlson,
by virtue of his serving as President, Secretary and Treasurer of the Funds, is
an "interested person" of the Funds as defined by the Investment Company Act of
1940. He is not, however, currently affiliated with Yacktman.
UNFORTUNATELY, IN THE VIEW OF YOUR INDEPENDENT DIRECTORS, YACKTMAN REPEATEDLY
HAS BEEN UNWILLING TO ACCEPT THE OVERSIGHT OF INDEPENDENT DIRECTORS UPON WHICH
INVESTORS HAVE COME TO DEPEND WHEN INVESTING IN MUTUAL FUNDS. RATHER THAN
RESPOND TO THE LEGITIMATE OVERSIGHT OF THE INDEPENDENT DIRECTORS, YACKTMAN NOW
WANTS TO JETTISON THEM.
WHY HAVE THE INDEPENDENT DIRECTORS QUESTIONED YACKTMAN?
Over the last year, four issues have especially concerned the Independent
Directors:
- Worsening investment performance that we believe results from Yacktman's
departure from the "Yacktman Style"
"I ASK [DIRECTORS] TO REMEMBER THAT [THEY] HAVE A CONSTITUENCY, USUALLY
NUMBERING IN THE THOUSANDS. EVERY TIME [THEY] SIT DOWN AT THE TABLE WITH
[THEIR] FELLOW DIRECTORS, THOUSANDS OF INVESTORS SIT WITH [THEM]. EVERY TIME
[DIRECTORS] STAND UP FOR WHAT'S RIGHT, EVEN IF [THEY] THINK [THEY] MAY BE
ALONE, THOUSANDS OF INVESTORS STAND WITH [THEM]."
--SEC CHAIRMAN LEVITT'S REMARKS TO THE DIRECTORS' COLLEGE (3/23/95)
3
<PAGE>
- Donald Yacktman's apparently diminished role in the management of your
Funds' portfolios
- Yacktman's lack of professional resources
- Violations of the Funds' Code of Ethics
DEPARTURE FROM THE "YACKTMAN STYLE," RESULTING IN WORSENING PERFORMANCE
Over the years, Yacktman developed an investment process that has been
characterized as the "Yacktman Style." The Yacktman Style has been described 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." (Fred W. Frailey, "Donald Yacktman: Insider
Interview," KIPLINGER'S PERSONAL FINANCE MAGAZINE, Aug. 1995.) The original 1992
prospectus of The Yacktman Fund stated and still states: "The Fund invests
primarily in companies with large capitalization ($1 billion or more) with long
records of earnings growth and dividends."
In the view of your Independent Directors, Yacktman in recent years has not
maintained its emphasis on what are perceived as large capitalization stocks in
today's market. While the average market capitalization of the Fortune 500
increased from $3.5 billion in 1992 to $16.2 billion as of March 18, 1998 (an
increase of 360%), the average market capitalization of The Yacktman Fund
decreased from $5.2 billion to $2.0 billion (a decrease of 62%). The Independent
Directors are concerned that your Funds are no
"FUNDS WHOSE DIRECTORS FORGET WHOM THEY REPRESENT WON'T BE LONG FOR THE
BUSINESS.... I DO EXPECT [FUND DIRECTORS] TO REMEMBER WHOM THEY SERVE--FUND
SHAREHOLDERS. AND I EXPECT FUND DIRECTORS TO BE TIRELESS IN THE PURSUIT OF
SHAREHOLDER INTERESTS."
--SEC CHAIRMAN LEVITT'S REMARKS TO THE INVESTMENT COMPANY INSTITUTE
(5/15/98)
4
<PAGE>
longer focusing their investments on the large capitalization stocks that we
believe you expect. We think this could lead not only to continued poor
performance, but also to greater risk.
In addition, although The Yacktman Focused Fund can use derivatives, the
Independent Directors questioned how the use of "derivatives" (put options) was
consistent with the equity growth philosophy that Yacktman had previously
espoused. Even though put options have constituted only a small portion of The
Focused Fund's portfolio, the Independent Directors are concerned about what
they view as Donald Yacktman's inability to respond adequately to their
questions regarding the use, benefit and risks of put options in The Focused
Fund's portfolio. A put option gives the purchaser, in return for a premium, the
right, for a specified period of time, to sell the securities subject to the
option to the writer of the put at the specified exercise price.
AT NO TIME DID THE INDEPENDENT DIRECTORS TELL YACKTMAN TO BUY OR SELL A
PARTICULAR SECURITY, ALTHOUGH THEY DID ASK WHY PARTICULAR SECURITIES WERE
APPROPRIATE FUND INVESTMENTS. THEY DID NOT TRY TO "MICRO-MANAGE" YOUR FUNDS'
PORTFOLIOS, BUT MERELY TRIED TO ENSURE THAT SHAREHOLDERS' EXPECTATIONS AS TO
STRATEGY AND RISK WERE BEING FULFILLED.
"THERE ARE TOO MANY BOARDS THAT OVERLOOK MORE THAN THEY OVERSEE; TOO MANY
BOARDS THAT SUBSTITUTE CEO DIRECTIVES FOR BOARD INITIATIVE...."
--SEC CHAIRMAN LEVITT'S REMARKS TO THE DIRECTORS' COLLEGE (3/28/96)
5
<PAGE>
WE BELIEVE YACKTMAN'S DEPARTURE FROM THE
PERFORMANCE. In none of the following measurement periods
Poor's 500 or done well versus its peer group, as defined by Lipper:
<TABLE>
<CAPTION>
THE YACKTMAN
THE YACKTMAN FOCUSED FUND
FUND AVERAGE AVERAGE ANNUAL
TIME PERIOD ANNUAL RETURNS RETURNS
- ------------------------ -------------- --------------
<S> <C> <C>
Three Months Ended
9/30/98 -16.4% -16.3%
Year-to-Date
(1/1/98-9/30/98) -13.3% -9.4%
One Year
(10/1/97-9/30/98) -15.7% -12.2%
Three Years
(10/1/95-9/30/98) 10.8% N/A
Five Years
(10/1/93-9/30/98) 14.7% N/A
The Yacktman Fund Since
Inception (7/6/92) 9.8% N/A
The Yacktman Focused
Fund Since Inception
(5/1/97) N/A 3.2%
</TABLE>
- ------------
* Lipper rankings are out of the total number of funds in the
specified. Source: Lipper Analytical Services.
N/A means not applicable.
6
<PAGE>
YACKTMAN STYLE HAS LED TO YOUR FUNDS' DISMAL
has either of the Funds matched the total return of the Standard &
<TABLE>
<CAPTION>
STANDARD &
POOR'S COM- THE YACKTMAN
POSITE INDEX OF FOCUSED FUND
500 STOCKS THE YACKTMAN FUND LIPPER
ANNUAL RETURNS LIPPER RANKING* RANKING*
- --------------- ----------------- -----------------
<C> <S> <C>
-9.9% 707 OUT OF 827 702 OUT OF 827
6.0% 717 OUT OF 763 665 OUT OF 763
9.0% 676 OUT OF 714 651 OUT OF 714
22.6% 417 OUT OF 449 N/A
19.9% 186 OUT OF 289 N/A
18.3% N/A N/A
20.3% N/A N/A
</TABLE>
Lipper Growth and Income fund category for the time periods
7
<PAGE>
MANAGEMENT OF YOUR FUNDS' PORTFOLIOS
The Funds' prospectus states that Donald Yacktman is the Funds' portfolio
manager. However, your Independent Directors have become increasingly concerned
that, in their view, THE DAY-TO-DAY MANAGEMENT OF YOUR FUNDS HAS BEEN DELEGATED
TO LESS-QUALIFIED, LESS-EXPERIENCED MEMBERS OF YACKTMAN'S STAFF, NOTABLY DONALD
YACKTMAN'S 28-YEAR-OLD SON, STEVE YACKTMAN. This concern is rooted in the
Independent Directors' perception that a change in the investment style of your
Funds has taken place and in the inability of Donald Yacktman to respond with a
convincing degree of knowledge to questions about your Funds' investments and
investment techniques, particularly the use of "derivatives" (put options) by
The Yacktman Focused Fund.
PROFESSIONAL RESOURCES OF YACKTMAN
YOUR INDEPENDENT DIRECTORS HAVE REPEATEDLY EXPRESSED CONCERN THAT YACKTMAN'S
STAFF IS INADEQUATE, IN TERMS OF DEPTH, EXPERIENCE AND EXPERTISE. The
Independent Directors believe Yacktman employs only three experienced investment
professionals. The size of this staff has remained relatively constant in spite
of a large increase in the number of accounts. To the knowledge of the
Independent Directors, none of Yacktman's employees, including Donald Yacktman,
is or is studying to become a Certified Financial Analyst (CFA), a certification
that is a common qualification in the investment management industry. Donald
Yacktman and Ronald Ball are the only Yacktman investment professionals who have
more than six years' experience. Mr. Ball has advised the Independent Directors
that he has not been involved in the investment of your Funds' assets. Other
investment advisers with similar amounts of assets and accounts under management
typically have much larger, more experienced staffs of investment professionals
(especially those advisers that invest in mid-cap and small-cap companies, which
are far greater in number and therefore require more resources to monitor, than
large-cap companies). Finally, in the wake of the departure of a more
experienced investment professional, who left Yacktman in June 1998 to work for
a competitor, Yacktman hired Steve Yacktman's brother-in-law, Russell Wilkins,
who had no prior investment experience.
"ALL INDEPENDENT DIRECTORS MAY BE CALLED UPON TO TAKE SIGNIFICANT ACTION IN
THEIR COMPANIES AT SOME POINT."
--SEC CHAIRMAN LEVITT'S REMARKS TO THE DIRECTORS' COLLEGE (3/23/95)
8
<PAGE>
VIOLATIONS OF YOUR FUNDS' CODE OF ETHICS
The SEC requires every mutual fund to have a code of ethics with which all
employees of the fund and its adviser must comply. Its purpose is to ensure that
the personnel of funds and their advisers do not take advantage of their
positions with the fund for their own personal gain.
Your Funds adopted a Code of Ethics, which prohibits Yacktman's employees from
being on the board of directors of a publicly-held company without prior Board
approval (a common prohibition found in mutual fund codes of ethics). This
prevents a conflict between the loyalty and time commitment that these persons
must give your Funds and the loyalty and time commitment required of them as
directors of the publicly-held companies. It also helps prevent a misuse of
inside information. Donald Yacktman agreed with this when he recently told the
Board that the principles underlying this provision are sound.
In 1996, Steve Yacktman and another Yacktman investment professional
unsuccessfully tried to push their way onto the boards of two publicly-held
companies without getting prior authorization from the Board of Directors of
your Funds. The Funds were signficant shareholders of the two publicly-held
companies. Had Steve Yacktman and the other Yacktman employee successfully used
their influential position with Yacktman to become directors of the
publicly-held companies, they would not only have violated the Code of Ethics,
but also may have caused the Funds to violate one of their fundamental
investment restrictions (one that prohibits your Funds from investing in
companies for the purpose of exercising control of those companies). When the
Independent Directors learned of this situation (from somebody other than
Yacktman), the Board prevented the violation from occurring and held an
extensive discussion of the requirements of the Code of Ethics with Yacktman.
During this conversation, Donald Yacktman admitted that there were supervisory
and management control lapses within the Yacktman organization.
"MEN AND WOMEN WHO AS DIRECTORS ARE PASSIVE; WHO VIEW THEIR ROLES AS MERE
ADVISORS; WHO ARE PLIANT AND PLEASANT, BUT WHO DO NOT INSIST UPON A REAL
MONITOR'S ROLE DO SMALL SERVICE TO ANYONE AND DESERVE LITTLE RESPECT."
--SEC CHAIRMAN LEVITT'S REMARKS TO THE DIRECTORS' COLLEGE (3/23/95)
9
<PAGE>
In February 1998, the Board AGAIN learned from an inadvertent comment by
Yacktman personnel that Donald and Steve Yacktman actually were directors of a
company that had recently gone public, a clear Code of Ethics violation. Donald
and Steve Yacktman had not informed the Board that they were serving as
directors of this company when it was private. Then, when the company went
public, the Yacktmans neither notified the Board nor sought prior Board
authorization, in complete disregard of the Code of Ethics. After consulting
with counsel, the Independent Directors asked, and Yacktman agreed, that all
Yacktman employees review the Code of Ethics with your Funds' counsel to prevent
future violations. The Independent Directors also asked Donald to resign his
board position with the publicly-held company and asked Steve to submit a letter
agreeing to resign from his board position in certain circumstances. Finally,
the Board instructed Steve to review periodically with the Board of Directors
his continued participation on the board of the publicly-held company. AS OF
TODAY, NEITHER DONALD NOR STEVE HAS COMPLIED WITH THESE INSTRUCTIONS NOR HAS THE
BOARD RECEIVED ANY INDICATION THAT YACKTMAN EMPLOYEES HAVE REVIEWED THE CODE OF
ETHICS. IN FACT, AT AN AUGUST 14, 1998 BOARD MEETING, DONALD YACKTMAN TOLD THE
BOARD THAT HE HAD RESIGNED FROM THE BOARD OF THE PUBLICLY-HELD COMPANY. MORE
THAN A FULL MONTH LATER, THE BOARD LEARNED THAT DONALD HAD NOT RESIGNED AND
REMAINS A DIRECTOR OF THE COMPANY.
WHO ARE THE INDEPENDENT DIRECTORS?
The proxy statement solicited by Yacktman makes disparaging remarks about the
Independent Directors. These remarks are clearly intended to give you the
impression that the current Independent Directors are inexperienced and
undistinguished. We disagree, but you be the judge. Each of them has been a
Director of your Funds since inception in 1992. Indeed, in Charles Schwab's Web
site, Yacktman itself has claimed that the Funds have "an outstanding Board of
Directors." Moreover, they each have substantially more experience in investment
management--and the oversight of investment advisers--than the candidates that
Yacktman has selected.
"INDEPENDENCE IS A STATE OF MIND. HOWEVER [DIRECTORS] ARRIVE, WHATEVER
[THEIR] BACKGROUND, INDEPENDENCE IS THE MOST IMPORTANT MEASURE OF [THEIR]
SUCCESS."
--SEC CHAIRMAN LEVITT'S REMARKS TO THE DIRECTORS' COLLEGE (3/23/95)
10
<PAGE>
To acquaint you with your Independent Directors, each of whom also is deemed a
participant in this solicitation under the SEC's proxy rules, below is a summary
of their background and qualifications:
JON D. CARLSON--Mr. Carlson, 57, is the President, Treasurer and Secretary
of your Funds. He was the Executive Vice President of Yacktman Asset
Management Co. from May 1992, until June 1998. Before that, he was a Senior
Vice President of Kemper Securities Group, Inc., which he joined in March
1989. Before joining Kemper, he had been an account and marketing officer
for Chase Manhattan and Manufacturers Hanover Investment Corporation and a
securities broker for institutional investors with Kidder, Peabody & 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. Mr. Carlson currently serves as Chairman of the Board of Directors
of The Career Development Institute, a Chicago area organization that
provides programs and assistance to individuals who are at critical
crossroads in their personal and career lives. From 1986 to 1992, Mr.
Carlson served as a member of the Hinsdale, Illinois Area United Way Board
and on The Budget and Allocation Board of the DuPage County, Illinois United
Way. From 1972 to 1978, Mr. Carlson served on the Employee Benefits
Committee of the Taxation Section of the American Bar Association and on the
Subcommittee for Fiduciary Responsibility. In 1976, Mr. Carlson authored a
narrative outline published by the Practising Law Institute, New York,
entitled, "Structuring Plans to Comply with the Fiduciary Responsibility
Provisions of ERISA." Jon Carlson, by virtue of his serving as President,
Treasurer and Secretary of the Funds, is an interested person of the Funds
as defined by the Investment Company Act of 1940. He is not, however,
currently affiliated with Yacktman.
"LEGIONS OF PEOPLE ALREADY LOOK AFTER THE INTERESTS OF MANAGEMENT, OF THE
INDUSTRY, OF THE CAPITAL MARKETS, OF EMPLOYEES, AND OTHERS. [DIRECTORS] ARE
CHARGED WITH THE RESPONSIBILITY TO REPRESENT THE INTERESTS OF INVESTORS."
--SEC CHAIRMAN LEVITT'S REMARKS TO THE DIRECTORS' COLLEGE (3/23/95)
11
<PAGE>
THOMAS R. HANSON--Mr. Hanson, 60, 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, on the Development Board of Good Samaritan Hospital,
Downers Grove, a major hospital in suburban Chicago, 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. Mr. Hanson served from 1983 to 1989
on the DuPage County, Illinois Easter Seal Board, which he chaired from 1988
to 1989 and as a member of the Board of Directors of Evangelical Health
Systems (EHS), a major Chicago area healthcare corporation, and served as a
member of EHS's Compensation and Executive Committees and chaired its
Strategic Planning Committee.
STANISLAW MALISZEWSKI--Mr. Maliszewski, 54, who has over 27 years of
investment management, investment banking, and real estate experience,
currently is self-employed and engages in pension marketing, private
investing and consulting activities (through a number of entities, including
Gateway Asset Management Inc.). Over the last sixteen years, he has been
responsible for business development and client relations in the investment
management industry, primarily in domestic equity, fixed income, and real
estate. His direct responsibilities have been in business development,
client relations, product development, portfolio management, and reporting.
Since 1993, he has been involved in private investing, consulting, and
representing investment advisors to major institutional investors, including
corporate, public, Taft-Hartley, endowments, and foundations. Previously,
Mr. Maliszewski was a partner of Rosenberg Real Estate Equity Funds and a
Senior Vice President of LaSalle Partners. He is a former member of
"THERE ARE SOME WHO SAY THAT FUND DIRECTORS NEED NOT BE AS STRONG AS
CORPORATE DIRECTORS--THAT THEIR ROLE IS DIFFERENT. THAT IT REQUIRES LESS
EFFORT, LESS INDEPENDENCE OR LESS VIGILANCE. THOSE WHO BUY INTO THIS MYTH
ARE MAKING EXCUSES FOR DIRECTORS WHO DON'T HAVE THE TIME OR THE INTEREST TO
STAND UP FOR SHAREHOLDERS."
--SEC CHAIRMAN LEVITT'S REMARKS TO THE INVESTMENT COMPANY INSTITUTE
(5/15/98)
12
<PAGE>
the National Council of Real Estate Investment Fiduciaries and a former
board member of the Pension Real Estate Association. He has been a frequent
speaker on a variety of issues impacting real estate investment management,
including diversification strategy, performance measurement, and reporting.
Mr. Maliszewski was a member of the Investment Banking Services Department
at Goldman Sachs Co., responsible for maintaining and developing client
relationships. He advised senior management of client and prospective client
companies on the formulation and execution of financial policies and
strategies. He developed and supervised the execution of numerous types of
transactions, including public offerings of common stock, currency swaps,
industrial development revenue bonds, real estate sales, lease financing,
mergers and acquisitions, restricted stock transactions, commercial paper
transactions, and general financial advisory transactions. Mr. Maliszewski
graduated from the Harvard Business School with an MBA and has an AB degree
from Princeton University.
STEPHEN E. UPTON--Mr. Upton, 74, 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
major manufacturer of household appliances. Mr. Upton had been an officer
and employee of Whirlpool since 1955. Mr. Upton is a member of the Board of
Interlochen, Michigan Center for the Arts, a Trustee of the Michigan
Colleges Foundation, and is the Chairman of the Board of Trustees of the
Frederick S. Upton Foundation, which was established in 1954 by his father,
the co-founder of Whirlpool Corporation. He has served as Chairman of the
Board of Trustees of Olivet College in Michigan and continues to serve as a
member of the Board of Trustees and as Chairman Emeritus. He is former
Chairman of the Association of Home Appliance Manufacturers, a former member
of the Board of Directors of the National Association of Manufacturers, a
former member of the Board of the Irving S. Gilmore International Keyboard
Festival, a former member of the Council of Better Business
"THE FORCE OF [DIRECTORS'] EXAMPLE IN LEADERSHIP FAR OUTWEIGHS ANY AUTHORITY
THE SEC MIGHT WIELD."
--SEC CHAIRMAN LEVITT'S REMARKS TO THE DIRECTORS' COLLEGE (3/28/96)
13
<PAGE>
Bureaus, a former Board Member of the Michigan Chamber of Commerce, a former
Board Member of the Board of United Way of Southwest Michigan and former
Chairman of the Consumer Affairs Committee for the United States Chamber of
Commerce. Mr. Upton holds a B.B.A. degree from The University of Michigan
and received an honorary doctor of humane letters degree from Olivet
College.
We believe these individuals, whose only financial interest in the outcome of
this proxy solicitation is the $8,000 yearly salary that each receives from your
Funds, are eminently qualified to continue as your Independent Directors.
WHAT HAPPENS IF I VOTE TO KEEP THE INDEPENDENT DIRECTORS?
Yacktman has stated that, if the Independent Directors are not removed, it
believes "your Funds' investment advisory agreements with [Yacktman] will be
terminated, possibly either by [the Independent Directors] or by [Yacktman] as
our disagreements with [the Independent Directors] have become intolerable." In
view of this statement and of Yacktman's past resistance to addressing the
concerns of the Independent Directors, the Independent Directors are considering
a number of alternative courses of action, including the selection of a
successor to Yacktman as investment adviser of your Funds.
2. YACKTMAN'S PROPOSAL TO AMEND YOUR FUNDS' BYLAWS
Yacktman has asked you to amend your Funds' bylaws to reduce the number of
directors from six to five. We urge you to vote "AGAINST" Yacktman's proposal.
3. YACKTMAN'S PROPOSAL TO ELECT NEW INDEPENDENT DIRECTORS FOR YOUR FUNDS
Yacktman also has asked you to vote to elect the three people that it has
nominated to serve as new directors for your Funds. Your Funds' Independent
Directors have done their best to fulfill their role as your representatives.
However, we believe Yacktman has been unwilling to accept any oversight that
questions its decisions
"IN MANY CASES, IT FALLS TO [INDEPENDENT DIRECTORS] TO SERVE AS THE
COMPANY'S CONSCIENCE."
--SEC CHAIRMAN LEVITT'S REMARKS TO THE DIRECTORS' COLLEGE (3/23/95)
14
<PAGE>
about how to manage your money. YACKTMAN NOW SEEKS TO REPLACE YOUR CURRENT
INDEPENDENT DIRECTORS WITH A NEW GROUP OF ITS OWN HAND-PICKED NOMINEES. As an
investor in the Funds, you should question to what extent a group of people
selected by Yacktman will really be looking out for your interests. Your
Independent Directors have diligently served your Funds since their inception.
We believe replacing your Funds' current Independent Directors with a new group
of directors that Yacktman hand-picked will enable Yacktman to continue to abuse
its position and to disregard the laws under which mutual funds are supposed to
operate. We urge you to "WITHHOLD" your voting authority on Yacktman's proposal
to replace your Funds' Independent Directors with its nominees.
4. YACKTMAN'S PROPOSAL TO ADJOURN THE SPECIAL MEETING
Yacktman said in its proxy statement that it intends to seek an adjournment of
the special meeting to a later date if it does not have a sufficient number of
votes to adopt its proposals on the date that the meeting is scheduled (Proposal
4). Donald Yacktman's purported call of the meeting, however, stated it was for
the purpose of voting upon Proposals 1, 2, and 3, but not Proposal 4. Although
the Funds believe Proposal 4 is not a proper item for the meeting, PLEASE VOTE
"AGAINST" THIS PROPOSAL ON THE ENCLOSED WHITE PROXY CARD.
5. YACKTMAN'S PROPOSAL TO OPPOSE ADJOURNMENT OF THE SPECIAL MEETING
Yacktman also said in its proxy statement that if someone other than Yacktman
seeks an adjournment of the special meeting, then you should vote against such a
proposal (Proposal 5). Again,
"I'VE LEARNED OVER THE YEARS THAT [DIRECTORS WILL] END UP ON THE RIGHT SIDE
OF ALMOST ANY ISSUE [THEY'LL] CONFRONT IN DEALING WITH PUBLIC COMPANIES IF
[THEY] MAKE THE INTERESTS OF INVESTORS [THEIR] TOUCHSTONE."
--SEC CHAIRMAN LEVITT'S REMARKS TO THE DIRECTORS' COLLEGE (3/23/95)
15
<PAGE>
Donald Yacktman's purported call of the meeting stated that it was for the
purpose of voting on Proposals 1, 2, and 3, but not Proposal 5. Although the
Funds believe that Proposal 5 is not a proper item for the meeting, PLEASE VOTE
"FOR" THIS PROPOSAL ON THE ENCLOSED WHITE PROXY CARD.
INFORMATION ABOUT THE CALLING OF THE MEETING
When he was President of your Funds, Donald Yacktman tried to call a meeting of
shareholders to remove your Independent Directors. We believe Donald Yacktman
took this action for his own benefit, and not for your benefit. Because of this,
the Board of Directors revoked the call for a meeting. We have been advised by
your Funds' lawyers that this revocation was effective and that the meeting has
not been validly called. However, if the meeting is held, we are sending you
this proxy statement and asking you to VOTE THE WHITE CARD TO RETAIN YOUR
INDEPENDENT DIRECTORS.
On October 5, 1998, Yacktman and Donald Yacktman filed a lawsuit against the
Funds and the Independent Directors in Baltimore, Maryland. The lawsuit seeks to
force the Funds to hold the shareholder meeting that Donald Yacktman allegedly
called. In addition, it seeks to stop the Funds from using the Funds' own assets
for the Funds' own meeting. On October 16, 1998, a Maryland judge issued a
temporary restraining order enjoining the Funds from using the Funds' own assets
for the Funds' own meeting. Also, on October 16, 1998, the SEC staff issued a
letter to the Funds' counsel and to Yacktman's counsel stating that the judge's
ruling "could undermine the important role of independent directors" of mutual
funds under the Investment Company Act of 1940. The temporary restraining order
also enjoins the Independent Directors from taking any actions to impede the
conduct of the meeting. The temporary restraining order is not a final or
permanent decision of the court. The Funds have directed
"I WOULD CHARACTERIZE THE RELATIONSHIP BETWEEN THE SEC AND INDEPENDENT
DIRECTORS AS A PARTNERSHIP IN THE PUBLIC INTEREST...THE SEC'S ABILITIES AS A
WATCHDOG PALE IN COMPARISON WITH [THAT OF INDEPENDENT DIRECTORS]."
--SEC CHAIRMAN LEVITT'S REMARKS TO THE DIRECTORS' COLLEGE (3/23/95)
16
<PAGE>
their lawyers to take all appropriate action to have the order dissolved.
DATE, TIME, AND PLACE OF THE MEETING
If the meeting is held, it will be held at the Goodman Room of the Allegro
Hotel, 171 West Randolph Street, Chicago, Illinois, on Tuesday, November 24,
1998, at 10:00 a.m., Chicago time.
SHAREHOLDER PROPOSALS
As a Maryland corporation, your Funds are not required to hold annual
shareholders meetings in any year when the election of directors is not required
to be acted upon under the Investment Company Act of 1940. Your Funds hold
special meetings as required or deemed desirable. Since your Funds do not hold
regular shareholders meetings, we cannot provide you with the date when we next
expect to hold a shareholders meeting. To submit a proposal to be included in
your Funds' proxy solicitation material for a special shareholders meeting, your
Funds must receive your proposal within a reasonable time before your Funds
begin soliciting proxies for the meeting. Your proposal also must meet the legal
requirements for shareholder proposals under the SEC's proxy rules.
PROXY SOLICITATION
The costs of preparing, printing, and mailing this Proxy Statement and all other
costs in connection with the solicitation of proxies will be paid by your Funds,
including any additional solicitation made by letter, telephone, or telegraph.
We estimate that $500,000 will be spent on the solicitation. As of October 16,
1998, your Funds have incurred about $70,000 of expenses in connection with this
solicitation.
Your Funds have also retained Shareholder Communications Corporation ("SCC") to
solicit proxies on behalf of your Funds' Board of Directors, the fee for which
will be paid by your Funds. We anticipate that SCC will be paid a fee ranging
from $65,000 to $95,000 and will be reimbursed for its reasonable expenses
(SCC's anticipated fees and expenses are included in the $500,000 estimate given
above). Your Funds have also agreed to indemnify
17
<PAGE>
SCC against certain liabilities and expenses, including liabilities and expenses
under the federal securities laws. We expect that SCC will employ approximately
35 people to solicit proxies in connection with the meeting.
VOTING, QUORUM
If the shareholders' meeting is held and if you own shares of the Funds at the
close of business on October 12, 1998, the record date for this solicitation,
you will be entitled to vote at the special meeting. You do not have cumulative
voting rights, which means that you are entitled to one vote for each share of
the Funds that you own on each matter submitted to a vote at the meeting. Your
proxy will be voted in accordance with your instructions. If other business is
to be voted on at the meeting, the people who are named as your proxies on the
enclosed proxy card will decide how to vote your shares. They will vote your
shares in a way that they decide is in your best interest as a shareholder of
the Funds. Your Funds are currently not aware of any other business that will be
voted on at the meeting.
Proposal 1 (removal of the current Independent Directors of your Funds) and
proposal 3 (election of new Independent Directors for your Funds) each require a
"FOR" vote by the holders of a majority of the votes entitled to be cast.
Proposal 2 (approval of an amendment to your Funds' bylaws to reduce the number
of directors of your Funds from six to five), proposal 4 (adjournment of the
meeting by Yacktman), and proposal 5 (adjournment of the meeting by someone
other than Yacktman) each require a "FOR" vote by not less than a majority of
the shares present or represented by proxy at the meeting.
If you do not mark on your proxy card how you want to vote on one or more of
Yacktman's proposals, your proxy will be voted against proposals 1, 2, and 4,
your vote will be withheld on proposal 3, and your proxy will be voted for
proposal 5. If you send in a signed proxy card, you can revoke it at any time
before it is voted at the meeting, either by writing to your Funds or in person
at the meeting. Proxies given by telephone or electronically transmitted
instruments count as long as certain steps are taken to make sure that the
person giving the proxy has the power to do
18
<PAGE>
so. TO KEEP YOUR FUNDS' CURRENT INDEPENDENT DIRECTORS, VOTE ON THE ENCLOSED
WHITE PROXY CARD AS RECOMMENDED BY YOUR FUNDS' BOARD OF DIRECTORS.
The presence in person or by proxy at the meeting of shareholders entitled to
cast a majority of the votes at the meeting constitutes a quorum. Thus the
meeting could not take place on its scheduled date if less than a majority of
the shareholders entitled to cast votes at the meeting were represented. If a
quorum is not present or represented by proxy at the meeting, the meeting
may--or may not--be adjourned until a later date by the chairman or by the
holders of a majority of the shares present or represented without notice other
than an announcement at the meeting. The meeting may be reconvened from time to
time until a quorum is present. At that time, any business may be transacted
that might have been transacted at the meeting as originally called. However, in
the event that a quorum cannot be attained within 120 days after the original
record date, any matters that were to have been voted on at the meeting will be
treated as if rejected by shareholders.
In tallying shareholder votes, abstentions and "broker non-votes" (i.e., shares
held by brokers or nominees as to which (i) instructions have not been received
from the beneficial owners or persons entitled to vote and (ii) the broker or
nominee does not have discretionary voting power on a particular matter) will
count for purposes of determining whether a quorum is present to convene the
meeting. On each proposal, abstentions and broker non-votes will count as
"AGAINST" votes.
SHARE OWNERSHIP INFORMATION
On October 12, 1998, there were 37,433,033 shares of The Yacktman Fund issued
and outstanding and 4,352,146 shares of The Yacktman Focused Fund issued and
outstanding. We are not aware of any person who beneficially owns 5 percent or
more of the outstanding shares of The Yacktman Fund or of The Yacktman Focused
Fund. As of October 12, 1998, all directors and officers of the Funds as a group
beneficially owned less than one percent of the outstanding shares of The
Yacktman Fund. As of October 12, 1998, all directors and officers of the Funds
as a group beneficially owned approximately 5.56% of The
19
<PAGE>
Yacktman Focused Fund. Details regarding the directors' and officers' holdings
of The Yacktman Focused Fund may be found in Exhibit B.
YOUR FUNDS' SERVICE PROVIDERS
INVESTMENT ADVISER. Your Funds' investment adviser, Yacktman Asset Management
Co., is located at 303 West Madison Street, Chicago, Illinois 60606. The Funds'
advisory contracts with Yacktman Asset Management Co. were last approved by the
Board on February 13, 1998.
ADMINISTRATOR. Sunstone Financial Group, Inc., 207 East Buffalo Street, Suite
400, Milwaukee, Wisconsin 53202, is your Funds' administrator.
YOUR FUNDS' PRINCIPAL EXECUTIVE OFFICE
Your Funds' principal executive office is at 207 East Buffalo Street, Suite 400,
Milwaukee, Wisconsin 53202.
STOCKHOLDER REPORTS
To get a free copy of your Funds' annual and most recent semi-annual report,
write to your Funds in care of Firstar Trust Company, 615 East Michigan Street,
Milwaukee, Wisconsin 53202 or call your Funds at 1-800-457-6033.
RECOMMENDATIONS OF YOUR BOARD
The recommendations that your Board of Directors makes in this Proxy Statement
and in the accompanying proxy card were approved by a majority of the Board,
including all of the Independent Directors. Messrs. Donald Yacktman and Ronald
Ball opposed these actions.
FOR THE REASONS EXPLAINED IN THIS PROXY STATEMENT, WE URGE YOU TO VOTE TO RETAIN
YOUR FUNDS' CURRENT INDEPENDENT DIRECTORS.
By order of the Board of Directors
Jon D. Carlson
Secretary
20
<PAGE>
EXHIBIT A
INFORMATION REGARDING YOUR FUNDS' INDEPENDENT DIRECTORS
<TABLE>
<CAPTION>
PRINCIPAL
OCCUPATION OR PURCHASES (P)/SALES (S) OF SHARES OF THE
NAME AND ADDRESS EMPLOYMENT FUNDS DURING THE PAST TWO YEARS
- ----------------------- ----------------- --------------------------------------------
<S> <C> <C> <C>
Jon D. Carlson President, The Yacktman Fund 01/07/97 1,047 (P)
207 East Buffalo Street Treasurer and 01/17/97 1,433 (P)
Suite 400 Secretary, The 01/17/97 516 (P)
Milwaukee, WI 53202 Yacktman Funds, 12/22/97 2,395 (S)
Inc; 12/26/97 2,009 (S)
Private Investor 05/11/98 1,512 (S)
07/06/98 6,324 (S)
07/06/98 3,071 (S)
07/08/98 1,526 (S)
07/10/98 6,243 (S)
07/10/98 1,945 (S)
The Yacktman 05/09/97 5,894 (P)
Focused Fund 06/19/97 451 (P)
07/09/97 212 (P)
07/11/97 354 (P)
07/11/97 186 (P)
08/01/97 564 (P)
10/06/97 192 (P)
12/23/97 664 (S)
07/06/98 192 (S)
07/18/98 198 (S)
07/10/98 6,526 (S)
Thomas R. Hanson Partner, Fleming/ The Yacktman Fund 10/09/96 19 (P)
3010 Woodcreek Drive Hanson Sales 10/22/96 19 (P)
Downers Grove, IL 60515 (manufacturers' 11/06/96 18 (P)
representative 11/20/96 18 (P)
firm) 01/17/97 19 (P)
02/03/97 18 (P)
02/14/97 18 (P)
02/28/97 18 (P)
03/13/97 18 (P)
03/27/97 18 (P)
04/10/97 18 (P)
04/24/97 19 (P)
05/09/97 18 (P)
05/22/97 17 (P)
06/04/97 18 (P)
06/18/97 17 (P)
07/08/97 17 (P)
07/16/97 17 (P)
08/01/97 19 (P)
08/20/97 15 (P)
</TABLE>
A-1
<PAGE>
<TABLE>
<CAPTION>
PRINCIPAL
OCCUPATION OR PURCHASES (P)/SALES (S) OF SHARES OF THE
NAME AND ADDRESS EMPLOYMENT FUNDS DURING THE PAST TWO YEARS
- ----------------------- ----------------- --------------------------------------------
<S> <C> <C> <C>
08/29/97 16 (P)
09/11/97 16 (P)
09/24/97 15 (P)
10/08/97 15 (P)
10/22/97 15 (P)
11/05/97 16 (P)
11/20/97 15 (P)
12/02/97 15 (P)
12/18/97 16 (P)
12/31/97 17 (P)
01/20/98 20 (P)
01/28/98 20 (P)
02/11/98 19 (P)
02/13/98 294 (S)
03/11/98 18 (P)
03/18/98 17 (P)
03/25/98 18 (P)
04/09/98 18 (P)
04/20/98 5,680 (S)
08/25/98 10,000 (S)
The Yacktman 08/11/97 1,634 (P)
Focused Fund 02/13/98 367 (S)
Stanislaw Maliszewski Pension The Yacktman Fund 12/06/96 84 (P)
Suite 1420 Marketing, 03/10/97 139 (P)
180 North LaSalle Private Investing 04/15/97 1,114 (S)
Street and Consulting 06/16/97 133 (P)
Chicago, IL 60601 08/21/97 2,600 (S)
11/25/97 129 (P)
03/02/98 133 (P)
04/14/98 266 (P)
05/21/98 133 (P)
06/19/98 576 (S)
06/19/98 16,688 (S)
06/19/98 2,664 (S)
06/19/98 5,112 (S)
10/08/98 828 (P)
The Yacktman 08/21/97 3,490 (P)
Focused Fund 09/10/97 172 (P)
04/14/98 264 (P)
06/19/98 93 (S)
07/14/98 166 (P)
09/14/98 192 (P)
Stephen E. Upton Retired Business The Yacktman Fund 05/12/97 21,097 (S)
100 Ridgeway Road Executive 06/22/98 9,719 (S)
St. Joseph, MI 49085
The Yacktman 05/12/97 29,469 (P)
Focused Fund
</TABLE>
A-2
<PAGE>
EXHIBIT B
BENEFICIAL OWNERSHIP OF THE FUNDS' OFFICERS AND DIRECTORS OF SHARES OF THE
YACKTMAN FOCUSED FUND
<TABLE>
<CAPTION>
PERCENT OF
NAME NUMBER OF SHARES CLASS
- ----------------------------------------------------- ----------------- ---------------
<S> <C> <C>
Ronald W. Ball 10,845 0.249%
Jon D. Carlson 500 0.012%
Thomas R. Hanson 1,317 0.030%
Stanislaw Maliszewski 442 0.010%
Stephen E. Upton 29,469 0.677%
Donald A. Yacktman 199,544 4.585%
</TABLE>
B-1
<PAGE>
PROXY
THE YACKTMAN FUNDS, INC.
SPECIAL MEETINGS OF STOCKHOLDERS
TO BE HELD ON NOVEMBER 24, 1998
THIS PROXY IS SOLICITED BY YOUR FUNDS' BOARD OF DIRECTORS IN OPPOSITION TO
YACKTMAN ASSET MANAGEMENT CO.
The undersigned appoints Jon D. Carlson, Thomas R. Hanson, Stanislaw
Maliszewski, and Stephen E. Upton, and each of them, each with full power to act
without the other, and each with full power of substitution, proxies for the
undersigned, to represent and vote, as designated below, all shares of The
Yacktman Fund and The Yacktman Focused Fund (the "Funds") that the undersigned
is entitled to vote at the special meeting of stockholders of the Funds if held,
in the Goodman Room of the Allegro Hotel, 171 West Randolph Street, Chicago,
Illinois, on Tuesday, November 24, 1998, at 10:00 a.m., Chicago time, and at any
adjournments of such meeting.
This proxy, when properly executed, will be voted in the manner directed by the
stockholder signing below. If no direction is given, this proxy will be voted
"AGAINST" proposals 1, 2, and 4, to "WITHHOLD" voting authority on proposal 3,
and voted "FOR" proposal 5.
PLEASE SIGN, DATE, AND RETURN THIS PROXY PROMPTLY IN THE ENCLOSED ENVELOPES
PLEASE SIGN YOUR NAME EXACTLY AS IT APPEARS ON
THIS CARD. IF YOU OWN SHARES OF THE FUNDS
JOINTLY WITH SOMEONE ELSE, EACH OWNER SHOULD
SIGN THIS CARD. IF YOU ARE SIGNING AS EXECUTOR,
ADMINISTRATOR, ATTORNEY, TRUSTEE, GUARDIAN, OR
CUSTODIAN FOR A MINOR, PLEASE INCLUDE THE
CAPACITY IN WHICH YOU ARE SIGNING. IF YOU ARE
SIGNING FOR A CORPORATION, PLEASE SIGN THE FULL
CORPORATE NAME AND GIVE YOUR OFFICE ADDRESS. IF
YOU ARE SIGNING AS A PARTNER, SIGN IN THE
PARTNERSHIP NAME.
-------------------------------------------------------------------------
Stockholder's
Signature Date
<PAGE>
The Funds recommend that you vote "AGAINST" proposals 1, 2 AND 4, "WITHHOLD"
your voting authority on proposal 3, and vote "FOR" proposal 5.
<TABLE>
<S> <C>
1. To remove Jon D. Carlson, Thomas R. Hanson, Stanislaw Maliszewski, and Stephen E. Upton as directors of your Funds.
YOUR BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "AGAINST."
/ / AGAINST / / ABSTAIN / / FOR
2. To amend your Funds' bylaws to reduce the number of directors of your Funds from six to five.
YOUR BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "AGAINST."
/ / AGAINST / / ABSTAIN / / FOR
3. To elect three nominees as new directors of your Funds.
YOUR BOARD OF DIRECTORS RECOMMENDS THAT YOU "WITHHOLD" AUTHORITY.
/ / WITHHOLD authority to vote for all nominees listed below / / FOR all nominees listed below (except as marked to
the contrary below)
Bruce B. Bingham, Albert J. Malwitz, and George J. Stevenson III
To withhold authority to vote for any individual nominee, write that nominee's name in the space below:
--------------------------------------------------------
To adjourn the special meeting to a later date that is proposed or recommended by Yacktman Asset Management Co.
4. ("Yacktman")
YOUR BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "AGAINST."
/ / AGAINST / / ABSTAIN / / FOR
5. To adjourn the special meeting to a later date that is not proposed by Yacktman.
YOUR BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR."
/ / FOR / / ABSTAIN / / AGAINST
6. To transact such other business as may properly come before the meeting or any adjournments of the meeting.
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