SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act
of 1934
(Amendment No. __)
Filed by the registrant [ ]
Filed by a Party other than the Registrant [X]
Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or
Section 240.14a-12
THE YACKTMAN FUNDS, INC.
(Name of Registrant as Specified in its Charter)
YACKTMAN ASSET MANAGEMENT CO.
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11. (Set forth the amount on
which the filing fee is calculated and state how it was
determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by
registration statement number, or the Form or Schedule and date of
its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
<PAGE>
PRELIMINARY PROXY MATERIALS DATED SEPTEMBER 28, 1998
SUBJECT TO COMPLETION
The information included in this revised preliminary proxy
statement is as we expect it to be when we mail the definitive proxy
statement to stockholders of The Yacktman Funds, Inc. We will revise this
proxy statement to reflect actual facts at the time we file the definitive
proxy statement.
NOVEMBER 24, 1998
SPECIAL MEETING OF STOCKHOLDERS
OF
THE YACKTMAN FUNDS, INC.
PROXY STATEMENT OF
YACKTMAN ASSET MANAGEMENT CO.
_____________________
IMPORTANT INFORMATION ABOUT THE SPECIAL MEETING
Why You Were Sent This Proxy Statement
We, Yacktman Asset Management Co. (the investment adviser to The
Yacktman Fund and The Yacktman Focused Fund (the "Funds"), sent you this
Proxy Statement and the enclosed BLUE proxy card because we are soliciting
your proxy to vote at a special meeting of the stockholders of The
Yacktman Funds, Inc. The special meeting, which has been called by your
Funds' former President, Donald Yacktman, 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., Central Standard Time.
This Proxy Statement summarizes the information you need to know
to vote at the special meeting. We will begin sending this Proxy
Statement and the enclosed BLUE proxy card on October __, 1998 to all
stockholders entitled to vote. As discussed in more detail under
"Information About Yacktman Asset Management Co.," we have a financial
interest in the proposals to be voted on at the special meeting due to our
position as the Funds' investment adviser.
What You Are Voting On
At the special meeting we will ask you to vote to:
- Remove all of the current directors of your Funds other
than Ronald Ball and Donald Yacktman;
- Amend your Funds' bylaws to reduce the number of directors
for your Funds from six to five; and
- Elect three nominees as new directors of your Funds.
Who Can Vote at the Special Meeting
Stockholders who owned shares of the Funds at the close of
business on October 25, 1998 are entitled to vote at the special meeting.
On September 14, 1998, there were 550,473,300 issued and outstanding
shares of The Yacktman Fund and 55,536,495 issued and outstanding shares
of The Yacktman Focused Fund.
How Many Votes You Have
Each share of the Funds that you own entitles you to one vote.
The enclosed BLUE proxy card indicates the number of shares of the Funds
that you own as of September 14, 1998. Since the record date is
October 25, 1998, the number of shares you own and can vote at the special
meeting is subject to change.
How to Vote by Proxy
Whether you plan to attend the special meeting or not, we urge
you to complete, sign and date the enclosed BLUE proxy card and to return
it promptly in the envelope provided. Returning the proxy card will not
affect your right to attend the special meeting and vote.
If you properly fill in your proxy card and send it to us in
time to vote, your "proxy" (one of the individuals named on your proxy
card, either Ronald Ball or Donald Yacktman) will vote your shares as you
have directed. If you sign the proxy card but do not make any specific
choices, your proxy will vote your shares as follows:
- "FOR" the removal of all the current directors of your
Funds other than Ronald Ball and Donald Yacktman;
- "FOR" the amendment of your Funds' bylaws to reduce the
number of directors of your Funds from six to five; and
- "FOR" the election of all three of our nominees as new
directors of your Funds.
- "FOR" any proposal to adjourn the special meeting to a
later date that is proposed or recommended by us and
"AGAINST" any proposal to adjourn the special meeting to a
later date that is not proposed or recommended by us.
If any other matter is presented at the special meeting, your
proxy will vote in accordance with his best judgment. At the time this
Proxy Statement was mailed, we knew of no matters which needed to be acted
on at the special meeting, other than those discussed in this Proxy
Statement.
Who You Can Call If You Have Questions
If you have any questions concerning this Proxy Statement or
need assistance in voting your shares, please call:
D. F. KING & CO., INC.
777 Water Street
New York, New York 10005
Banks and Brokers Call: (212) 269-5550 (collect)
All Others Call Toll-Free: (800) 769-5414
How You Can Obtain Your Funds' Reports
If you would like a copy of your Funds' Annual Report for 1997
and/or your Funds' semi-annual report for the period ended June 30, 1998,
you may obtain these reports by calling your Funds' transfer agent,
Firstar Trust Company, at 1-800-457-6033.
How You Can Revoke a Proxy
If you have signed a proxy card and attend the special meeting,
attendance in itself will not revoke a proxy. If you have signed a proxy
card, then you may revoke your proxy at any time before it is exercised by
sending notice of your revocation to us or to your Funds in writing or at
the special meeting. If you have already submitted a proxy card, you may
change your vote by signing, dating and returning another proxy card.
PLEASE NOTE THAT ONLY YOUR LATEST DATED PROXY WILL COUNT.
SPECIAL MEETING PROPOSALS; REQUIRED VOTE
At the special meeting, we will ask you to vote on the proposals
set forth below. As discussed in more detail below, we believe that
certain of the current members of the Board of Directors, namely Jon
Carlson, Thomas Hanson, Stanislaw Maliszewski and Stephen Upton (the
"Carlson/Maliszewski Directors") have not been acting in your best
interests as stockholders of the Funds. The following proposals, if
approved, will remove the Carlson/Maliszewski Directors from your Funds'
Board of Directors and replace them with new directors.
1. PROPOSAL TO REMOVE DIRECTORS
We are asking you to vote to remove the Carlson/Maliszewski
Directors from the Board of Directors because we believe it's in the best
interests of your Funds to do so. Our differences with the
Carlson/Maliszewski Directors on how your Funds' portfolios should be
managed are so great that, in our opinion, they cannot be resolved. We
believe we can do a better job of managing your Funds than they can.
Unfortunately, the Carlson/Maliszewski Directors constitute a majority of
your Funds' Board of Directors. We have asked the Carlson/Maliszewski
Directors to resign, but they have refused. Only by removing them as
directors can you assure yourselves that your Funds will be able to
continue to receive the investment advice you expected to receive when you
invested in the Funds.
How We Disagree On Portfolio Management
Our investment style is simple but disciplined. We buy growth
companies at what we believe to be low prices. We buy companies of any
size market capitalization although, if all else is equal, we prefer
larger companies to smaller companies. We are disciplined investors. If
we cannot find companies that meet our investment requirements, we
increase our cash position. Those of you who would like to read a more
detailed discussion of our investment style should read an article by
Susan Dziubinski in the May 1998 edition of Morningstar Fund Investor
entitled "Is Something Wrong with Don Yacktman?" In that article Ms.
Dziubinski states
"Yacktman hasn't changed an iota since leaving
Selected American in 1992 to start his own firm. The
same investment philosophy that gave him a lock on the
fund manager hall of fame also leads to occasional
performance lulls - and it makes his fund jump around
the style box, too. Yet Yacktman's clear-cut strategy
and stick to-it-iveness are rare finds in the fund
industry, and good times outnumber bad. There's good
reason to stand by him."
The Carlson/Maliszewski Directors have continuously pressured us
to abandon our investment style and become large capitalization value
managers. They want us to change our investment style so that your Funds
are always in the "large cap value" category of the Morningstar, Inc.
style box, irrespective of the investment potential of that style. We
have refused, and will continue to refuse, to do so. We believe our
investment approach has the potential to yield returns superior to those
of traditional large cap value managers. We also believe that as
investors in the Funds you want us to stick to our investment style. We
will continue to do what we do best.
Why We Are Better Portfolio Managers Than The Carlson/Maliszewski
Directors
Our portfolio manager, Donald Yacktman, has managed your Funds
since their inception. His track record as a mutual fund manager speaks
for itself. In 1991, Morningstar named Mr. Yacktman its "Portfolio
Manager of the Year." Mr. Yacktman received a similar award from the
Mutual Fund Letter in 1994. Your Funds' returns are set forth below:
<TABLE>
<CAPTION>
The Yacktman Standard & Poor's
The Yacktman Focused Fund Composite Index of
Fund Average Average Annual 500 Stocks Annual
Time Period Annual Returns Returns Returns
<S> <C> <C> <C>
One Year (7/1/97 - 6/30/98) 8.6% 14.3% 30.2%
Three Years (7/1/95 - 6/30/98) 20.4% N/A 30.2%
Five Years (7/1/93 - 6/30/98) 18.0% N/A 23.1%
Since Inception (7/6/92) 13.6% N/A 21.2%
Since Inception (5/1/97) N/A 20.9% 36.9%
</TABLE>
We recognize that the preceding table reflects that we have
underperformed recently. However there have also been periods of very
good performance. For example, from October 1, 1993 to September 30, 1994
the returns of The Yacktman Fund and the Standard & Poor's Corporation
Index of 500 Stocks ("S&P 500") were:
The Yacktman Fund S&P 500
17% 3.7%
Also for the three years ended April 30, 1997, Micropal, Inc. determined
that on a risk-adjusted basis The Yacktman Fund was the best-performing
U.S. equity growth fund having more than $50 million in assets. Source:
Investment News June 16, 1997. Please remember past performance is not
necessarily an indication of future performance. Your Funds may perform
better or worse in the future.
As of August 21, 1998, Morningstar, Inc. had assigned The
Yacktman Fund a 4-star performance rating. Morningstar's proprietary
ratings reflect historical risk-adjusted performance and are subject to
change every month. Ten percent of the funds in an investment category
receive 5 stars; 22.5% receive 4 stars; and the next 35% receive 3 stars.
Please remember ratings are historical and do not represent future
results. The Yacktman Focused Fund has not been in existence long enough
to be rated by Morningstar, Inc.
Mr. Yacktman's Record at Selected American Shares
Prior to becoming the portfolio manager of your Funds, Mr.
Yacktman was the portfolio manager for the Selected American Shares no
load mutual fund from January 1, 1983 through March 6, 1992. Beginning on
July 1, 1983, Mr. Yacktman used substantially the same investment
objectives, policies and strategies in managing this fund as he has in
managing The Yacktman Fund. (From January 1, 1983 through June 30, 1983
the Selected American Shares mutual fund was a balanced fund.) During
this period, Mr. Yacktman was primarily responsible for the day-to-day
management of the Selected American Shares mutual fund. It was the only
mutual fund he managed during this period. No other person played any
significant role in achieving the performance of the Selected American
Shares mutual fund. In managing the Selected American Shares mutual fund,
Mr. Yacktman had the same degree of investment discretion as he has in
managing your Funds. The support staff, facilities and other resources
available to Mr. Yacktman when he managed the Selected American Shares
mutual fund were comparable to the support staff, facilities and other
resources now available to him. The average annual returns of the
Selected American Mutual Fund from July 1, 1983 through December 31, 1991
and that of the S&P 500 for the same period were:
Selected American Shares S&P 500
17.8% 15.5%
The annual returns of the Selected American Shares mutual fund
and the S&P 500 for this period were:
<TABLE>
<CAPTION>
7/1/83-
12/31/83 1984 1985 1986 1987 1988 1989 1990 1991
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Selected American 8.5% 14.9% 33.3% 17.2% 0.2% 22.0% 20.1% -3.9% 46.3%
Shares
S&P 500 0.3% 6.3% 31.8% 18.7% 5.3% 16.6% 31.7& 3.1% 30.4%
</TABLE>
Source: Lipper Analytical Services, Inc. and CDA/Weisenberger. We do not
have performance information for the period from January 1, 1992-March 6,
1992, but we believe that the presentation of such information would not
materially affect the information presented.
During the period that Mr. Yacktman was the portfolio manager of
the Selected American Shares mutual fund, that fund's expense ratio ranged
from ___% to ___%. This amount is higher then the expense ratio for The
Yacktman Fund. Please remember that the historical performance of the
Selected American Shares mutual fund represents only the performance
achieved while Mr. Yacktman was its portfolio manager. It does not
represent the performance of your Funds and you should not view it as an
indication of the future performance of your Funds. The historical
performance data of the Selected American Shares mutual fund was
calculated in accordance with the requirements of the Securities and
Exchange Commission.
We believe our record demonstrates that we are good, but not
perfect, portfolio managers. In contrast, to our knowledge, the
Carlson/Maliszewski Directors have never had any experience in managing
mutual fund portfolios. Jon Carlson, who is currently unemployed, was,
since 1992 and until June 1998, a marketer of mutual funds and investment
advisory services for us. Stanislaw Maliszewski, who also has no regular
full time employment, provides marketing services. The other
Carlson/Maliszewski Directors are Stephen Upton and Thomas Hanson. Mr.
Upton is a retired business executive. Mr. Hanson, the only one of the
Carlson/Maliszewski Directors that is employed on a full-time basis, is a
business executive. We believe you should consider their lack of
experience in managing investments in deciding whether to remove the
Carlson/Maliszewski Directors from the Board of Directors.
Of course, directors of mutual funds are not expected to be
portfolio managers. Fund directors do have a responsibility to oversee
generally a fund's investment performance, but they are not expected to
play an active role in managing a fund's investments. 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. The cumulative effect of their interference
is to make it more difficult for us to manage your Funds.
Other Factors Influencing The Carlson/Maliszewski Directors
Jon Carlson had been employed by us, Yacktman Asset Management
Co., until we fired him earlier this year. Last year we refused to hire
Stanislaw Maliszewski as an investment adviser solicitor. We had been
negotiating a solicitation agreement with Mr. Maliszewski, but we were
unwilling to pay him as much as he requested. We believe both Mr. Carlson
and Mr. Maliszewski resented the actions we took. As you can imagine, our
estrangement with Mr. Carlson and Mr. Maliszewski has placed an added
strain on communications with the Carlson/Maliszewski Directors.
Mr. Carlson and Mr. Maliszewski are friends with Mr. Hanson.
Mr. Upton is the uncle of Mr. Carlson's wife. Since we fired Jon Carlson,
the Carlson/Maliszewski Directors have consistently voted as a bloc in
opposition to Mr. Ball and Mr. Yacktman, and, in our judgment, in
opposition to the best interests of your Funds.
How The Carlson/Maliszewski Directors Are Harming Your Funds
To date we have resisted the efforts of the Carlson/Maliszewski
Directors to change our investment style. We will not be able to continue
to stop them from taking actions that we believe harm the Funds because
they control the Board of Directors. Please consider the following
actions taken by the Carlson/Maliszewski Directors:
- At the August 14, 1998 meeting of your Funds' Board of
Directors, the Carlson/Maliszewski Directors, over the objection
of Mr. Ball and Mr. Yacktman, adopted an amendment to your
Funds' bylaws. Schedule III to this Proxy Statement sets forth
the relevant section of your Funds' bylaws both before and after
the amendment. This amendment gives the Carlson/Maliszewski
Directors the authority to use your Funds' assets to hire
outside consultants without consulting with Mr. Ball and Mr.
Yacktman and without placing any limits on the amounts the
consultants can spend. Mr. Ball and Mr. Yacktman attempted to
reach a compromise with the Carlson/Maliszewski Directors on
this issue, but the Carlson/Maliszewski Directors would not
accept any limitations on their access to your Funds' assets to
pay outside consultants. Now, money that could be used to
increase your Funds' investments can be used by the
Carlson/Maliszewski Directors to hire consultants we believe to
be unnecessary. We are not aware of what actions, if any, have
been taken by the Carlson/Maliszewski Directors with respect to
hiring such consultants because neither Mr. Ball nor Mr.
Yacktman are members of the Board committee (which consists
solely of the Carlson/Maliszewski Directors) that makes such
decisions. Furthermore, this Board committee is not obligated
to provide timely reports to the full Board of Directors of the
actions that it takes.
- We understand that collectively the Carlson/Maliszewski
Directors have recently significantly reduced their investments
in your Funds. Mr. Carlson and Mr. Maliszewski now own only a
nominal amount of shares of your Funds. While there are many
reasons people redeem shares, in our opinion, these reductions
are evidence that the interests of the Carlson/Maliszewski
Directors and your interests as stockholders of the Funds have
diverged. As you can see on Schedule II to the proxy statement,
although directors of your Funds are not required to own shares
of the Funds, Mr. Yacktman and Mr. Ball, both have made
substantial investments in your Funds and Mr. Yacktman has
recently increased his investment in your Funds.
- In our opinion, the Carlson/Maliszewski Directors have been
unjustly critical of our younger employees. Their criticism and
interference in portfolio management is creating an environment
where it will be unnecessarily difficult for us to attract and
retain the qualified personnel necessary for the success of your
Funds in the future.
What Happens If Our Proposal Is Not Passed
If you do not vote to remove the Carlson/Maliszewski Directors
from the Board of Directors, we believe your Funds' investment advisory
agreements with us will be terminated, possibly either by them or by us as
our disagreements with them have become intolerable. Our relationship
with the Carlson/Maliszewski Directors has deteriorated further following
the filing of this Proxy Statement with the Securities and Exchange
Commission with respect to our proxy solicitation. At a September 22,
1998 special meeting of the Board of Directors, the Carlson/Maliszewski
directors voted to remove Mr. Yacktman and Mr. Ball from their positions
as officers of your Funds and to elect Mr. Carlson as President, Secretary
and Treasurer of your Funds. Therefore, we believe that if the
Carlson/Maliszewski Directors are not removed as directors, you should
assume that we will not be your Funds' investment adviser for very long
after the special meeting.
Required Votes And Other Matters
Please join us in voting to remove the Carlson/Maliszewski
Directors as directors of your Funds by voting for the adoption of the
following resolution:
RESOLVED, that, other than Ronald W. Ball and Donald A.
Yacktman, all of the directors of the Company, including,
without limitation, Jon D. Carlson, Thomas R. Hanson, Stanislaw
Maliszewski and Stephen E. Upton, and any other person who is a
director at the time this resolution takes effect, be, and all
of them hereby are, removed from such office immediately.
We anticipate that some of you may have the following specific
questions concerning this resolution:
Q. How long do the Funds' directors serve as directors?
A. Under your Funds' bylaws each director serves indefinitely since
your Funds, like most mutual funds, do not have annual meeting
of shareholders.
Q. Why does the resolution refer to "any other person who is a
director at the time this resolution takes effect?"
A. It is possible, but unlikely, that a member of the
Carlson/Maliszewski Directors may resign prior to the special
meeting and be replaced by another person chosen by the
Carlson/Maliszewski Directors. It is also possible that the
Carlson/Maliszewski Directors might vote to expand the Board of
Directors by adding another person of their choosing. We
included the quoted text in the resolution because we did not
want the Carlson/Maliszewski Directors to be able to frustrate
your efforts to remove them by taking any of these actions.
Q. How many votes are required to pass the resolution?
A. In order to pass the resolution a majority of the outstanding
shares of the Funds on the record date must vote "FOR" the
proposal to remove the Carlson/Maliszewski Directors as
directors of the Funds. If you do not vote for any reason, or
if you "ABSTAIN" from voting, it will have the same effect as if
you voted "AGAINST" the proposal.
2. PROPOSAL TO AMEND BYLAWS
We are asking you to vote to amend your Funds' bylaws to reduce
the number of directors from six to five. If you amend your Funds' bylaws
as we propose, there will be three vacancies in the Board of Directors
following the removal of the Carlson/Maliszewski Directors. We have
proposed three nominees to fill these vacancies. We discuss their
qualifications later in this proxy statement. If the stockholders do not
vote to remove the Carlson/Maliszewski Directors, we will not ask you to
vote to amend your Funds' bylaws. In other words, this proposal to amend
your Funds' bylaws is contingent upon the proposal to remove the
Carlson/Maliszewski Directors being approved by you.
Each member of the Carlson/Maliszewski Directors, other than Mr.
Carlson, is a director who is not an "interested person" of your Funds.
Mr. Ball, Mr. Yacktman and Mr. Carlson are "interested persons" of your
Funds. Our three nominees are persons who are not "interested persons" of
your Funds. The Investment Company Act of 1940 requires that no more than
60% of the directors of a mutual fund be "interested persons" of the
mutual fund. Our proposals to amend the bylaws and elect our three
nominees satisfies this requirement.
Please join us in voting to amend your Funds' bylaws by voting
for the adoption of the following resolution:
RESOLVED, that Article II, Section 1 of the bylaws be amended to
read as follows:
Number. The number of directors of the corporation
shall be five (5). By vote of a majority of the
entire board of directors, the number of directors
fixed by the charter or these bylaws may be increased
or decreased from time to time to not more than
fifteen nor less than three, but the tenure of office
of a director shall not be affected by any decrease in
the number of directors so made by the board.
We anticipate that some of you may have the following specific
questions concerning this resolution:
Q. How does the proposed amendment change Article II, Section 1?
A. The last word of the first sentence formerly was six (6). No
other change was made.
Q. How many votes are required to pass the resolution?
A. In order to pass the resolution, a majority of the outstanding
shares of the Funds on the record date must vote "FOR" the
proposal to amend your Funds' bylaws. If you do not vote for
any reason, or if you "ABSTAIN" from voting, it will have the
same effect as if you voted "AGAINST" the proposal.
3. PROPOSAL TO ELECT NOMINEES
We are asking you to vote to elect the three persons we have
nominated to serve as new directors of your Funds. If you elect them,
they will hold office until their successors have been elected. If the
stockholders do not vote to remove the Carlson/Maliszewski Directors, we
will not ask you to elect the persons we have nominated to serve as new
directors of your funds. In other words, this proposal to elect our
nominees is contingent on the proposal to remove the Carlson/Maliszewski
Directors being approved by you.
We know of no reason why any nominee may be unable to serve as a
director. If any nominee is unable to serve, your proxy may vote for
another nominee proposed by us. In addition, we reserve the right to
nominate additional nominees to fill any vacant director positions if the
proposal to amend the bylaws to reduce the number of directors from six to
five is not approved. Such nominees may or may not be an "interested
person" of your Funds.
The table set forth below identifies the three nominees for
election as new directors of your Funds and provides information
concerning each of these nominees and the directors of your Funds who will
continue in office.
Business Experience
Name Age During Past Five Years
Ronald W. Ball* 57 Vice President of The Yacktman Funds,
(Continuing Director) Inc. from February 1997 to September 1998
and Secretary of The Yacktman Funds, Inc.
from August 1998 to September 1998;
Director of The Yacktman Funds, Inc.
since February 1998; Senior Vice
President of Yacktman Asset Management
Co.
Bruce B. Bingham 49 Partner in Hamilton Partners (real estate
(Nominee) development firm).
Albert J. Malwitz 61 Owner and Chief Executive Officer of
(Nominee) Arlington Fastener Co. (manufacturer and
distributor of industrial fasteners).
George J. Stevenson III 59 President of Stevenson & Company
(Nominee) (registered business broker); President
of Healthmate Products Co. (fruit juice
concentrate manufacturing company).
Donald A. Yacktman* 56 President and Treasurer of The Yacktman
(Continuing Director) Funds, Inc. from April 1992 to September
1998; Director of the Yacktman Funds,
Inc.; President of Yacktman Asset
Management Co.
______________________________
*Interested person as defined in the Investment Company Act of 1940.
Other than Donald Yacktman, who is a director of 1-800 Contacts,
Inc., none of the nominees or the continuing directors serve as directors
of public companies.
Committees, Meetings and Attendance
The Board of Directors of your Funds had no audit, nominating,
compensation or other similar committees during 1997. The Board of
Directors held four meetings during 1997. Donald Yacktman, the only
nominee or continuing director who was a director of your Funds in 1997,
attended all of the meetings of the Board of Directors, as did each of the
Carlson/Maliszewski Directors. The Board of Directors has held six
meetings in 1998. Each of Donald Yacktman, Ronald Ball and the
Carlson/Maliszewski Directors attended all six meetings.
How Directors Are Compensated
Your Funds only compensate directors who are not "interested
persons" of your Funds. Your Funds' standard method of compensating
directors is to pay each disinterested director an annual fee of $8,000
for services rendered, including attending meetings of the Board of
Directors. Your Funds also may reimburse their directors for travel
expenses incurred in order to attend meetings for the Board of Directors.
The table below sets forth the compensation paid by your Funds to each of
the nominees and the continuing directors during 1997:
Total
Compensation
Pension or from Fund
Retirement Estimated and Fund
Benefits Annual Complex Paid
Aggregate Accrued as Benefits Upon to Director
Compensation Part of Fund Retirement
Name of Person from Company Expenses
Ronald W. Ball $0 n/a n/a $0
Bruce B. Bingham $0 n/a n/a $0
Albert J. Malwitz $0 n/a n/a $0
George J. Stevenson $0 n/a n/a $0
III
Donald A. Yacktman $0 n/a n/a $0
We anticipate that, if you elect the nominees as new directors of your
Funds, then your Funds will compensate the nominees in accordance with the
Funds' standard method of compensating directors during 1999 and at the
rate of $2,000 per meeting during 1998. In accordance with this method of
compensating directors, the continuing directors will not be compensated
for their services during 1998 because they are "interested persons."
Effect of Special Meeting Proposals
The Yacktman Fund has in place a Rule 12b-1 plan. The Rule 12b-
1 plan permits The Yacktman Fund to pay expenses associated with
distributing shares of The Yacktman Fund. Rule 12b-1 under the Investment
Company Act of 1940 provides that payments made pursuant to a Rule 12b-1
plan may be made only if the selection and nomination of those directors
who are not "interested persons" of the investment company are determined
by the directors who are not "interested persons" of your Funds.
Accordingly, The Yacktman Fund will terminate its Rule 12b-1 plan,
effective as of the special meeting date, if you vote to remove the
Carlson/Maliszewski Directors as directors. In the future, The Yacktman
Fund will not be able to reinstate a Rule 12b-1 plan without first
obtaining your approval.
Required Votes And Other Matters
Please join us in voting to elect the three nominees as new
directors of your Funds by voting for the adoption of the following
resolution:
RESOLVED, that the Stockholders of The Yacktman Funds, Inc.
hereby elect Bruce B. Bingham, Albert J. Malwitz and George J.
Stevenson as directors, effective immediately, to hold office
until their respective successors are elected and qualified.
We anticipate that some of you may have the following specific
questions concerning this resolution:
Q. How many votes are required to elect the three nominees as new
directors?
A. The three nominees for director who receive the most votes will
be elected as directors of your Funds. If you do not vote for
any reason, or if you vote to "WITHHOLD AUTHORITY TO VOTE" for a
particular nominee, your vote will not count "FOR" or "AGAINST"
the nominee.
4. PROPOSALS TO ADJOURN THE SPECIAL MEETING
We intend to seek an adjournment of the special meeting to a
later date if we do not have a sufficient number of proxies to adopt the
proposals listed above on the November 24, 1998 scheduled date for the
special meeting but we believe that we will be able to obtain a sufficient
number of proxies to adopt the proposals given more time. We are asking
you to vote for any proposal to adjourn the special meeting to a later
date that is proposed or recommended by us and against any proposal to
adjourn the special meeting to a later date that is not proposed or
recommended by us. In order to pass any such proposal, a majority of the
shares of the Funds present at the special meeting and voting on a
proposal to adjourn the special meeting must vote "FOR" adjournment of
the special meeting.
OTHER INFORMATION
Information About The Calling Of The Special Meeting
The special meeting of stockholders was called by Mr. Yacktman,
in his capacity as the former President of your Funds, on September 14,
1998. At the special meeting of the Board of Directors held on September
22, 1998, the Carlson/Maliszewski Directors stated that the special
meeting of stockholders had been improperly called, but did not state any
authority for their position. The Carlson/Maliszewski Directors then
voted, in the event the special meeting of stockholders had been properly
called, to rescind the calling of the special meeting of stockholders,
thereby seeking to preclude you from voting on the proposals set forth
below. The Carlson/Maliszewski Directors also did not articulate any
authority supporting the purported rescission of the special stockholders
meeting. Donald Yacktman and Ronald Ball, who continue to serve as
directors of your Funds, opposed this action. We believe that the special
meeting was properly called pursuant to provisions of Maryland law and
your Funds' bylaws and that the Carlson/Maliszewski Directors vote to
rescind the calling of the special meeting was invalid. Courts have
stated that only the officer calling a special meeting of shareholders has
the authority to rescind it. The special meeting of stockholders will be
held on November 24, 1998, as scheduled.
How Proxies Will Be Solicited
We may solicit proxies for the special meeting by mail,
advertisement, telephone, telecopier or in person. Certain of our
officers and employees may make solicitations. None of these persons will
receive additional compensation for participating in the solicitation. We
have requested banks, brokerage houses and other custodians, nominees and
fiduciaries to forward all of our solicitation materials to the beneficial
owners of the shares of the Funds they hold. We will reimburse these
record holders for customary clerical and mailing expenses incurred by
them in forwarding these materials to their customers.
Important Instructions For "Street Name" Stockholders
If any of your shares are held in the name of a brokerage firm,
bank, bank nominee or other institution on the record date, only that
entity can vote your shares and only upon its receipt of your specific
instructions. Accordingly, please contact the person responsible for your
account at such entity and instruct that person to execute and return the
BLUE proxy card on your behalf. You should also sign, date and mail your
proxy when you receive it from your broker or banker. Please do this for
each account you maintain to ensure that all of your shares are voted.
Information About The Proxy Solicitor
We have retained D. F. King & Co., Inc. to solicit proxies to be
used at the special meeting. We, not your Funds, will pay D. F. King &
Co., Inc. a fee of $________ and we, not your Funds, will reimburse it for
its reasonable expenses. We, not your Funds, have also agreed to
indemnify D. F. King & Co., Inc. against certain liabilities and expenses,
including liabilities and expenses under the federal securities laws. We
anticipate that D. F. King will employ approximately
70 employees to solicit proxies in connection with the special meeting.
Costs of Soliciting Proxies
Our costs for soliciting proxies include expenditures for
printing, postage, legal and related expenses and are expected to be
approximately $_________. Our total costs incurred to date for this
solicitation are $________. We will pay the costs of soliciting proxies
and we do not intend to seek reimbursement from your Funds for such costs.
Information About Stockholder Proposals
Under the proxy rules of the Securities and Exchange Commission,
you may submit a proposal to be included in your Funds' proxy materials
for a particular meeting of stockholders if the proposal meets tests
contained in those rules. One of the conditions you must comply with
relates to the timely receipt by your Funds of any such proposal. Since
your Funds do not have regular annual meetings of stockholders, under
these rules, proposals you submit for inclusion in the proxy materials for
a particular meeting must be received by your Funds a reasonable time
before the solicitation of proxies for the meeting is made. The fact that
you submit a stockholder proposal in a timely manner does not insure its
inclusion in your Funds' proxy materials since there are other
requirements in the proxy rules relating to such inclusion.
Information About The Yacktman Funds, Inc. And Its Stockholders
The principal executive offices of The Yacktman Funds, Inc. are
located at 303 West Madison Street, Chicago, Illinois 60606. We are not
aware of any person who beneficially owns 5% or more of the outstanding
shares of either Fund.
Information About Yacktman Asset Management Co.
Yacktman Asset Management Co., whose principal executive offices
are located at 303 West Madison Street, Chicago, Illinois 60606, is the
investment adviser to your Funds. Donald Yacktman, our president and sole
stockholder, organized Yacktman Asset Management Co. in April 1992.
Pursuant to investment advisory agreements entered into between
your Funds and us, we furnish continuous investment advisory services to
each of the Funds. For services provided by us under the applicable
advisory agreement during 1997, The Yacktman Fund paid us $6,360,037. For
services provided by us under the applicable advisory agreement during
1997, The Yacktman Focused Fund paid the Adviser $218,380. We reimbursed
The Yacktman Focused Fund $101,060 for operating expenses in excess of
1.25% of such Fund's daily net assets during 1997.
We and Donald Yacktman, as our sole stockholder, have a
financial interest in the outcome of the proposals to be voted on at the
special meeting because we have advisory agreements with each of the Funds
pursuant to which we provide investment advisory services to the Funds and
receive fees for such services. Because each advisory agreement may be
terminated at any time without the payment of any penalty by the Board,
there can be no assurance the Board of Directors will not terminate the
advisory agreements if the proposals to be voted on are not approved.
Other than the directorships contemplated by our proposals for the three
nominees, none of the participants in this solicitation of proxies has any
arrangement or understanding with any person with respect to any future
employment by your Funds or with respect to any future transactions to
which your Funds will or may be a party.
Certain information about the officers and employees of the
Adviser who may participate in the solicitation of proxies is set forth in
Schedule I to this Proxy Statement. Schedule II to this Proxy Statement
sets forth certain information relating to shares of the Funds owned by
such persons.
Information About Your Funds' Administrator and Underwriter
Your Funds' administrator is Sunstone Financial Group, Inc., 207
East Buffalo Street, Suite 400, Milwaukee, Wisconsin 53202-5712. Your
Funds have no principal underwriter.
It is important that you return your proxy promptly. Please
sign and date your BLUE proxy card promptly and return it in the enclosed
envelope to avoid unnecessary expense and delay. No postage is necessary.
October __, 1998 YACKTMAN ASSET MANAGEMENT CO.
Donald A. Yacktman
President
<PAGE>
SCHEDULE I
Participants in the Solicitation
The following table identifies and provides certain information
about each of the participants in the solicitation of proxies pursuant to
this Proxy Statement.
Name and Business Address Principal Occupation or Employment
Ronald W. Ball Vice President of The Yacktman
303 West Madison Street, Funds, Inc. from February 1997 to
Suite 1925 September 1998 and Secretary of The
Chicago, IL 60606 Yacktman Funds, Inc. from August
1998 to September 1998; Senior Vice
President of Yacktman Asset
Management Co.
Bruce B. Bingham Partner in Hamilton Partners (real
230 Park Blvd. estate development firm).
Itasca, IL 60143
Albert J. Malwitz Owner and Chief Executive Officer
1032 West Northwest Way of Arlington Fastener Co.
Barrington, IL 60010 (manufacturer and distributor of
industrial fasteners).
George J. Stevenson, III President of Stevenson & Company
1007 Church Street, Suite 310 (registered business broker);
Evanston, IL 60201 President of Healthmate Products
Co. (fruit juice concentrate
manufacturing company).
Donald A. Yacktman President and Treasurer of the
303 West Madison Street, Yacktman Funds, Inc. from April
Suite 1925 1992 to September 1998; President
Chicago, IL 60606 of Yacktman Asset Management Co.
<PAGE>
SCHEDULE II
Beneficial Ownership of Shares by Participants in the Solicitation
The following table shows, as of August 1, 1998 (except as
otherwise noted), the shares of The Yacktman Fund and The Yacktman Focused
Fund beneficially owned by the participants in the solicitation of proxies
pursuant to this Proxy Statement. Unless otherwise indicated, each
participant has sole voting and investment power over the shares
beneficially owned.
Amount and Nature of Beneficial Ownership
Name of Beneficial Owner The Yacktman Fund The Yacktman Focused Fund
Ronald W. Ball 7,061.00 10,835.00
Bruce B. Bingham 6,141.47(1) 0.00
Albert J. Malwitz 69,025.69(2) 505.19
George J. Stevenson III 1,136.00(3) 1,401.00(3)
Donald A. Yacktman 121,990.31(4) 199,348.42(4)
Yacktman Asset 15,539.53 0.00
Management Co.
__________________
(1) Reflects shares of The Yacktman Fund owned by Bruce Bingham's spouse.
(2) Consists of shares of The Yacktman Fund held by Albert Malwitz as
custodian for his child.
(3) Includes 1,136.00 shares of The Yacktman Fund and 1,401.00 shares of
The Yacktman Focused Fund held by the Stevenson & Company Profit
Sharing Trust, of which George Stevenson is a trustee and
participant.
(4) Includes 2,588.79 shares of The Yacktman Fund and 103,181.46 shares
of The Yacktman Focused Fund owned by Donald Yacktman's spouse and
10,489.08 shares of The Yacktman Fund held by Donald Yacktman's
spouse as custodian for their children. Includes 94,161.96 shares of
The Yacktman Focused Fund purchased on August 27, 1998.
Transactions in Shares by Participants in the Solicitation
The following table sets forth all shares of The Yacktman Fund and
The Yacktman Focused Fund purchased with cash or sold within the past two
years by participants in the solicitation of proxies pursuant to this
Proxy Statement.
Number of
Participant Fund Date Shares Purchased
Ronald W. Ball The Yacktman Fund 4/1/97 1,307.19
7/1/97 150.40
The Yacktman 7/1/97 205.67
Focused Fund
3/31/98 1,726.62
6/30/98 198.35
Albert J. Malwitz The Yacktman Fund 1/20/97 14.74
1/28/97 14.76
2/3/97 14.43
3/3/97 28.39
3/13/97 14.10
3/21/97 14.33
4/9/97 14.51
4/28/97 93.8
4/29/97 14.52
5/2/97 14.26
5/28/97 13.70
6/5/97 13.62
6/23/97 13.34
7/7/97 13.28
7/16/97 13.13
7/30/97 12.90
8/29/97 13.03
9/2/97 12.84
9/4/97 12.86
9/8/97 12.82
9/26/97 12.58
10/6/97 12.36
11/25/97 25.89
12/5/97 12.878
12/26/97 13.30
1/8/98 14.46
1/26/98 15.67
2/4/98 14.34
2/17/98 13.91
2/27/98 13.37
3/16/98 13.00
3/30/98 13.17
4/6/98 13.35
5/14/98 13.39
5/26/98 13.60
6/8/98 13.57
6/24/98 13.82
7/13/98 27.42
7/20/98 13.68
8/3/98 14.39
The Yacktman 10/9/97 210.62
Focused Fund
1/24/97 17.07
12/10/97 17.45
1/8/98 18.20
1/26/98 18.67
2/5/98 17.72
2/20/98 17.21
3/2/98 16.41
3/16/98 15.94
3/30/98 15.96
4/13/98 16.09
5/13/98 15.86
5/26/98 16.25
6/29/98 33.17
7/13/98 16.56
7/20/98 16.47
8/3/98 17.09
8/19/98 17.73
Donald A. Yacktman The Yacktman Fund 4/1/97 1,633.99
The Yacktman 4/30/97 100,000.00
Focused Fund
3/31/98 1,798.56
6/30/98 123.97
8/27/98 94,161.96
<PAGE>
SCHEDULE III
The Yacktman Funds, Inc. Bylaws Prior to August 14, 1998 Amendment
Section 11. Executive and Other Committees. The board of directors may
appoint from among its members an executive and other committees composed
of two (2) or more directors. The board may delegate to such committees
in the intervals between meetings of the board any of the powers of the
board to manage the business and affairs of the corporation, except the
power to: (i) declare dividends or distributions upon the stock of the
corporation; (ii) issue stock of the corporation; (iii) recommend to the
stockholders any action which requires stockholder approval; (iv) amend
the bylaws; (v) approve any merger or share exchange which does not
require stockholder approval; or (vi) take any action required by the
Investment Company Act of 1940 to be taken by the independent directors of
the corporation or by the full board of directors.
The Yacktman Funds, Inc. Bylaws After August 14, 1998 Amendment
Section 11. Committee of the Independent Directors. The independent
directors shall form a committee of the board of directors to be
designated the Committee of the Independent Directors. The Committee of
the Independent Directors shall appoint one of its members to serve as
Lead Independent Director. The Lead Independent Director shall in
consultation with the officers of the corporation and the corporation's
administrator, if any, set the agenda for each meeting of the board of
directors. The Lead Independent Director shall also serve as chairman of
the Committee of the Independent Directors and as such shall (i) preside
at all meetings of the Committee of the Independent Directors; (ii) set
the agenda for each meeting of the Committee of the Independent Directors;
and (iii) report to the full board of directors on the activities of the
Committee of the Independent Directors. The Committee of the Independent
Directors shall establish its own rules and procedures. The Committee of
the Independent Directors shall have two regular meetings each year, which
meetings shall be immediately prior to, during recesses of, and/or
immediately following regular meetings of the board of directors held on
the same day, and such number of special meetings, held at such places and
at such dates and times, as may be called pursuant to the procedures
established by the Committee. The Committee of the Independent Directors,
by action of a majority of the members of the Committee, shall have the
power to call meetings of the board of directors. The presence of a
majority of the members of the Committee of the Independent Directors
shall constitute a quorum. Minutes shall be taken at each meeting of the
Committee of the Independent Directors, which minutes shall be submitted
to the full board of directors. The Committee of the Independent
Directors shall also prepare such reports to the full board of directors
as the full board of directors may request, and shall deliver to the full
board of directors copies of the minutes of the meetings of the Committee
of the Independent Directors. The Committee of the Independent Directors
may request such information and reports from the independent service
providers working for the Corporation as the Committee deems necessary to
perform its duties hereunder, and the Lead Independent Director shall make
any such requests to, and shall receive such information and reports from
service providers, on behalf of the Committee. The Committee of the
Independent Directors may retain such outside consultants as it may deem
necessary to perform its duties hereunder; the Committee shall notify the
full board of directors of the corporation of its engagement of an outside
consultant and shall provide to the board an estimate of the cost expected
to be incurred.
The Committee of the Independent Directors shall serve as an audit
committee of the board of directors. As such, the Committee of the
Independent Directors shall, among other activities,
(a) Annually select the independent public accountants to
serve as the corporation's auditors;
(b) Review the scope and plan of the independent
accountants annual audit and interim examinations;
(c) Approve any other services to be performed by the
independent public accountants;
(d) Approve the audit fee payable to the independent
public accountants;
(e) Review with the independent public accountants the
corporation's internal control structure and the adequacy of its
system of internal controls; and
(f) Review with the independent public accountants the
results of the year-end audit.
The Committee of the Independent Directors shall also serve as a
compliance oversight committee. As such the Committee of the Independent
Directors shall, among other activities, review with the corporation's
administrator and legal counsel:
(a) The corporation's code of ethics and reports filed
thereto;
(b) The brokerage allocation procedures of the
corporation's investment adviser, including any "soft dollar"
practices;
(c) Compliance with prospectus and regulatory
requirements; and
(d) Results of regulatory examinations.
The Committee of the Independent Directors shall also serve as an
investment oversight committee. As such the Committee of the Independent
Directors shall, among other activities, review with the corporation's
investment adviser:
(a) The performance of the corporation's investments;
(b) The investment strategies being employed by the
investment adviser and the reasoning behind the employment of
such strategies;
(c) The use of derivatives by the corporation; and
(d) The staffing employed by the investment adviser in
connection with the services it provides to the corporation.
<PAGE>
[Face of Proxy Card]
PROXY
The Yacktman Funds, Inc.
Special Meeting of Stockholders
To be held on November 24, 1998
The undersigned appoints Ronald W. Ball and Donald A. Yacktman, 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") which the undersigned is entitled to
vote at the Special Meeting of Stockholders of The Yacktman Funds, Inc. to
be held at Goodman Room of the Allegro Hotel, 171 West Randolph Street,
Chicago, Illinois, on Tuesday, November 24, 1998, at 10:00 a.m., Central
Standard Time, and at any adjournments thereof.
This proxy, when properly executed, will be voted in the manner
directed by the undersigned shareholder. If no direction is made, this
proxy will be voted FOR proposals 1, 2, 3 and 4 and AGAINST proposal 5.
This proxy is solicited on behalf of Yacktman Asset Management Co.
PLEASE SIGN, DATE AND RETURN THIS PROXY PROMPTLY IN THE ENCLOSED
ENVELOPE.
-----------------------------------------------------------------------
[Reverse of Proxy Card]
Yacktman Asset Management Co. recommends that you vote FOR items 1,
2, 3 and 4 and AGAINST item 5.
1. To remove all of the current directors of your Funds other than
Ronald Ball and Donald Yacktman.
[__] FOR [__] AGAINST [__] ABSTAIN
2. To amend your Funds' bylaws to reduce the number of directors of your
Funds from six to five.
[__] FOR [__] AGAINST [__] ABSTAIN
3. To elect three nominees as new directors of your Funds.
[__] FOR all nominees listed below [__] WITHHOLD authority to
(except as marked to the contrary vote for all nominees
below) listed below
Bruce B. Bingham, Albert J. Malwitz and George J. Stevenson, III
(INSTRUCTION: To withhold authority to vote for any individual
nominee, write that nominee's name in the space below.)
____________________________________________
4. To adjourn the special meeting to a later date that is proposed or
recommended by Yacktman Asset Management Co.
[__] FOR [__] AGAINST [__] ABSTAIN
5. To adjourn the special meeting to a later date that is not proposed
or recommended by Yacktman Asset Management Co.
[__] FOR [__] AGAINST [__] ABSTAIN
6. To transact such other business as may properly come before the
special meeting or any adjournment thereof.
Please sign your name exactly as it appears on
this card. If you are a joint owner, each owner
should sign. When signing as executor,
administrator, attorney, trustee, or guardian, or
as custodian for a minor, please give your full
title as such. If you are signing for a
corporation, please sign the full corporate name
and indicate the signer's office. If you are a
partner, sign in the partnership name.
__________________________________________
Shareholder sign here Date
__________________________________________
Co-owner sign here Date
If you need assistance in voting your shares, please call D. F. King &
Co., Inc., which is assisting Yacktman Asset Management Co. in its
solicitation of your proxy for the special meeting, at (800) 769-5414.
