THE YACKTMAN FUNDS, INC.
IMPORTANT
October 9, 1998
Dear Fellow Yacktman Funds Shareholder:
It is unfortunate that the Yacktman Asset Management Company
("Yacktman"), investment adviser to The Yacktman Funds, Inc., in an effort to
protect its $6.5 million management fees, has launched a costly proxy fight to
oust your Independent Directors at a proposed Special Meeting of Shareholders on
November 24, 1998.
THE SUPREME COURT OF THE UNITED STATES
ON INDEPENDENT DIRECTORS
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, which would furnish
AN INDEPENDENT CHECK UPON THE MANAGEMENT OF INVESTMENT COMPANIES . . . Congress
entrusted to the independent directors of investment companies . . . the primary
responsibility for LOOKING AFTER THE INTEREST OF THE FUNDS' SHAREHOLDERS."
SEC CHAIRMAN ARTHUR LEVITT
ON INDEPENDENT DIRECTORS
SEC Chairman Arthur Levitt has described 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 [to that of the independent
directors]."
YOUR INDEPENDENT DIRECTORS' FIDUCIARY RESPONSIBILITIES
The Independent Directors of your Funds have held their positions since
the Funds' inception. They have fulfilled their fiduciary responsibilities as
your representatives according to the U.S. Supreme Court's mandate for
independent directors. Unfortunately, Yacktman has not been willing to accept
the oversight of your Independent Directors and now wants to remove them because
they've raised the following concerns:
1. The Funds' DISMAL INVESTMENT PERFORMANCE as a result of
Yacktman's departure from the "Yacktman Style." For the year
ended September 30, 1998, for example, returns for The
Yacktman Fund and The Yacktman Focused Fund were a 15.7% LOSS
and a 12.2% LOSS respectively, versus a 9.0% GAIN for the S&P
500 index.
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2. Yacktman's LACK OF PROFESSIONAL RESOURCES (only 3 experienced
investment professionals to manage 100+ accounts and $900+
million).
3. DON YACKTMAN'S APPARENT RELINQUISHMENT of day-to-day
involvement in managing your Funds' portfolios.
4. Yacktman's repeated FLAUNTING OF THE FUNDS' CODE OF ETHICS.
As your representatives, the Independent Directors sought answers from
Yacktman on questions that we believe any shareholder would ask. In response to
these inquiries, YACKTMAN HAS REFUSED TO ANSWER the issues raised, and has now
threatened to replace the very Independent Directors that they appointed.
DISCARD YACKTMAN'S BLUE PROXY CARD AND MATERIAL
At this time, your board representatives are asking you to please
discard any BLUE proxy card and material that you may receive from Yacktman.
Support YOUR Independent Directors who are under mandate from the United States
Supreme Court to protect YOUR interest. In a short time the Board of Directors
will be sending you a WHITE proxy card and proxy material that will really
explain the position of your Independent Directors. At that time we will ask you
to please sign, date, vote AGAINST Yacktman's proposals and return the WHITE
proxy card. DO NOT DO ANYTHING UNTIL YOU RECEIVE THE PROXY MATERIAL FROM THE
BOARD OF DIRECTORS.
Thank you for your time and continued support. We will keep you
informed as further developments occur. For further information please call your
Funds at 1-800-248-5976.
The Board of Directors
of The Yacktman Funds
