THE YACKTMAN FUNDS, INC.
THROUGH YACKTMAN'S SMOKESCREEN TO THE FUTURE
November 12, 1998
Dear Fellow Shareholder,
In representing your interests, the Independent Directors must be prepared to
make important decisions. Therefore, to assist their evaluation of Yacktman
Asset Management Co. ("Yacktman"), the Independent Directors retained the
services of a leading mutual funds consulting firm, Management Practice, Inc. of
New York City.
The consultants examined The Yacktman Funds Inc. (the "Funds"), in detail and
also identified twenty leading investment advisers with strong performance
records and investment styles similar to those ascribed to Yacktman in the
Funds' prospectuses and public statements. The Independent Directors have
evaluated these alternatives. This means that, if circumstances require us to
replace Yacktman, we expect the new investment adviser to have:
o A highly competitive performance record and name recognition
o A deep and experienced professional investment staff
o An investment approach that would be consistent with the expectations
of our shareholders
YACKTMAN NEEDS A SCAPEGOAT AND HAS PICKED
YOUR INDEPENDENT DIRECTORS
Nowhere in Yacktman's proxy materials does Donald Yacktman address what we see
as the real issue in HIS proxy contest, which is THE FUNDS' POOR INVESTMENT
PERFORMANCE, and their DESCENT TO THE LOWEST DEPTHS of the Lipper Mutual Fund
ranking charts during a period in which the stock market has reached RECORD
LEVELS.
We believe Yacktman is deliberately avoiding this issue because it is attempting
to use the Independent Directors as its scapegoat for the Funds' poor
performance. We think this is YACKTMAN'S REASON FOR STARTING THIS COSTLY PROXY
CONTEST. We also think it is clear that Yacktman has had difficulty facing up to
your Independent Directors' probing questions, which began well over a year ago,
and their belief that the Funds' extremely poor performance and lowly rankings
reflect the following:
o Yacktman's inexperienced and almost skeletal staff
o Movement away from the Funds' long-standing and publicly stated focus
on large capitalization companies
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o Yacktman's propensity toward taking greater portfolio risks with
investments in smaller companies
o Rebellious lack of regard for the Funds' rules and investment mandate
YACKTMAN BEARS FULL RESPONSIBILITY FOR
YOUR FUNDS' POOR INVESTMENT RETURNS
The inescapable TRUTH is that YACKTMAN IS RESPONSIBLE FOR THE INVESTMENT RETURNS
of the Funds and NOT the INDEPENDENT DIRECTORS. Donald Yacktman in his own
recent letter to shareholders said, "ONLY I MANAGE THE FUND'S PORTFOLIOS. IT
WOULD BE IMPROPER AND, . . . ILLEGAL FOR ME TO ALLOW OTHERWISE." We believe that
even this statement in Yacktman's letter is deceiving. The truth is, and we have
reported to all shareholders, we believe that with over 100 separately managed
accounts and 2 mutual funds and realistically no other professional staff on
which to rely, we are concerned that Donald Yacktman has delegated day-to-day
portfolio management to his 28-year-old son. How can Donald Yacktman blame your
Independent Directors for his shortcomings and make a statement like this?
Yacktman's proxy statement contains several contradictions. Donald Yacktman
shoots himself in the foot by saying: "We believe the Carlson/Maliszewski
directors have crossed the line that divides oversight from micro-management
because they have continuously pressured us to change our investment style."
Come on, Donald, you can't have it both ways. THE TRUTH IS THAT YACKTMAN, AND
NOT THE INDEPENDENT DIRECTORS, MANAGES THE FUNDS AND IS DIRECTLY RESPONSIBLE FOR
THE FUNDS' POOR PERFORMANCE. PLAIN AND SIMPLE.
YACKTMAN INITIATED THIS COSTLY PROXY CONTEST
When you cut through Yacktman's veil of smoke, the real facts become crystal
clear. There is no way of mistaking that Yacktman brought on this costly proxy
contest. One only has to read Donald Yacktman's own words in his letter to
shareholders, dated October 28, 1998. In it, he admits that he ". . .CALLED FOR
A SPECIAL STOCKHOLDERS' MEETING. . .TO ELECT NEW DIRECTORS," an UNPRECEDENTED
move in the mutual fund industry; all to retain his lucrative fees.
INDEPENDENT DIRECTORS' QUESTIONS ARE A THREAT TO YACKTMAN
We believe the Independent Directors became a threat to Yacktman over a year ago
when they began to seriously question Don Yacktman in Board meetings and in
private conferences with respect to the Funds' investment style shift, rapidly
deteriorating performance, Code of Ethics and investment guideline violations
and professional staff inadequacies.
THE FUND'S PERFORMANCE TRAILS YACKTMAN'S FALLING STAR
As Donald Yacktman apparently began to believe more and more of his own star
status press, your Independent Directors found him increasingly difficult to
deal with. As we previously mentioned,
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he had CODE OF ETHICS AND INVESTMENT GUIDELINE PROBLEMS, HE SHIFTED THE FUNDS'
INVESTMENT STYLE AND EXHIBITED A WHOLE HOST OF OTHER PROBLEMS THAT DEEPLY
CONCERNED THE INDEPENDENT DIRECTORS. UNFORTUNATELY, IN THE VIEW OF YOUR
INDEPENDENT DIRECTORS, DONALD 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, DONALD YACKTMAN NOW WANTS TO JETTISON THEM. IN OUR
OPINION, HE IS JUST NOT A TEAM PLAYER, AND HIS ACTIONS AND PERFORMANCE
DEMONSTRATE HE DOES NOT SHARE THE INDEPENDENT DIRECTORS' CONCERN FOR
SHAREHOLDERS.
Yacktman's track record and star status LEAVE A LOT TO BE DESIRED, according to
the Lipper performance chart we highlighted in our letter, dated October 29,
1998. Yacktman's investment performance with your Funds' assets is not appealing
by any measure.
DON'T BE MISLED BY YACKTMAN'S SMOKESCREEN
Please carefully consider the important facts that we have sent you in our proxy
materials. We believe your choice is clear. Your Independent Directors have done
nothing but act in GOOD FAITH on your behalf while fulfilling their jobs as
"Watchdogs" for your Funds. In our opinion, the Independent Directors have
served the Funds and their shareholders well by not buckling-under to the
pressures of the investment management firm. We would appreciate your support by
voting against Yacktman's proposal to replace the Independent Directors.
Protect your investment in the Funds by voting AGAINST proposals 1, 2 and 4, to
WITHHOLD your voting authority on proposal 3, and voting FOR proposal 5, on the
WHITE proxy card. Sign, date, and return it to The Yacktman Funds as soon as
possible. For more information please call at 1-800-248-5976.
The Board of Directors*
The Yacktman Funds, Inc.
* Messrs. Yacktman and Ball dissenting.
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