<LOGO> THE YACKTMAN FUNDS
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1ST QUARTER REPORT
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March 31, 1999
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This report is submitted for the general information of shareholders of The
Yacktman Funds. It is not authorized for distribution to prospective investors
unless accompanied or preceded by an effective Prospectus for the Funds, which
contains more information concerning the Funds' investment policies, as well as
fees and expenses and other pertinent information. Read the Prospectus
carefully.
THE YACKTMAN FUNDS, INC.
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MESSAGE TO SHAREHOLDERS
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<PHOTO>
Dear Fellow Shareholder:
For investors who purchased shares at THE YACKTMAN FUND'S inception in July,
1992 at $10.00 per share, your initial investment, adjusted for dividends and
capital gains, would have grown to $18.80 by the end of the first quarter of
1999 - representing an average annual return of about 9.8%.
For investors who purchased shares at THE YACKTMAN FOCUSED FUND'S inception on
May 1, 1997 at $10.00 per share, your initial investment, adjusted for dividends
and capital gains, would have grown to $10.93 by the end of the first quarter of
1999 - representing an average annual return of about 4.8%.
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THE YACKTMAN THE YACKTMAN
FUND AVERAGE FOCUSED FUND AVERAGE
TIME PERIOD ANNUAL RETURNS ANNUAL RETURNS
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One Year (4/1/98 - 3/31/99) (16.0)% (15.2)%
Three Years (4/1/96 - 3/31/99) 8.5% N/A
Five Years (4/1/94 - 3/31/99) 14.5% N/A
Since Inception (7/6/92
and 5/1/97, respectively) 9.8% 4.8%
The above past performance is not predictive of future results. The investment
return and principal value of the Funds will fluctuate so that an investor's
shares, when redeemed, may be worth more or less than their original cost.
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The past three months have been a nightmare for value investors and a bonanza
for "momentum" (the trend is your friend) investors. In this environment, we
have not looked very bright. However, we have stuck with investing in companies
selling at low price/earnings ratios because we feel confident
in our approach.
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THE YACKTMAN FUNDS, INC.
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An interesting phenomenon has also entered the market the Internet companies.
Because they are viewed as the companies of the future, investors do not seem
to think their earnings are important. Since most of them do not have any
earnings anyway, they have no price/earnings ratios.
However, another way to value businesses is to compare their prices to
revenues. On this basis, some of the Internet companies are selling at 75 - 80
times revenues. Even if they had earnings, they would be selling at several
hundred times earnings. Thus, we have avoided them.
Virtually all the appreciation in the stock market over the past 15 months has
come from price/earnings ratio increases. Essentially none of this appreciation
has come from growing earnings. We have looked at our Funds' portfolios versus
the S&P 500 on both a reported and an estimated earnings basis for several years
and we have never seen the market pay a larger premium for the earnings of the
S&P 500 stocks than it is now.
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DISCOUNT
FROM THE
S&P 500 OUR S&P 500
TIME PRICE/ PRICE/ PRICE/
PERIOD EARNINGS EARNINGS EARNINGS
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December, 1997 19.0 14.2 25%
December, 1998 26.4 13.1 50%
March, 1999 29.9 11.5 62%
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December, 1997 and 1998 price/earnings ratios are based on estimates for 1998
and 1999, respectively. The estimated earnings for the above price/earnings
ratios are provided by Zacks Investment Research, if available, or by internal
estimates.
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If the stocks in our portfolios sold at the same 25% discount
of 15 months ago, our portfolios would be almost double their current prices.
Thus, our investments appear to have enormous upside potential. We see no reason
to change our style of investing, although we recognize the difficulty of being
patient in an impatient world.
Sincerely,
/s/ Donald A. Yacktman
Donald A. Yacktman
President
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THE YACKTMAN FUND
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TOP TEN EQUITY HOLDINGS
March 31, 1999
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PERCENTAGE OF
NET ASSETS
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Department 56, Inc. 12.4%
Philip Morris Cos., Inc. 10.4%
First Data Corp. 10.3%
Dentsply International, Inc. 10.1%
Franklin Covey Co. 5.9%
First Health Group Corp. 5.3%
United Asset Management Corp. 5.0%
Block H&R, Inc. 4.7%
Jostens, Inc. 4.5%
Valassis Communications, Inc. 3.8%
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TOTAL 72.4%
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PURCHASES & SALES
For the Quarter Ended March 31, 1999
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NET SHARES CURRENT
PURCHASES PURCHASED SHARES HELD
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No equity securities were purchased during the quarter ended March 31, 1999.
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NET SHARES CURRENT
SALES SOLD SHARES HELD
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American Media, Inc., Class A 396,800 600,000
Bandag, Inc., Class A 17,700 330,000
Block H&R, Inc. 20,000 210,000
Dentsply International, Inc. 140,000 930,000
First Data Corp. 545,000 515,000
First Health Group Corp. 220,000 700,000
Franklin Covey Co. 31,500 1,398,000
Fruit of the Loom, Inc. 200,000 450,000
Intimate Brands, Inc. 315,200 130,000
Jostens, Inc. 50,000 450,000
King World Productions, Inc. 70,000 130,000
Reebok International Ltd. 422,500 500,000
Rollins, Inc. 200,000 250,000
United Asset Management Corp. 112,000 468,000
Valassis Communications, Inc. 34,000 155,000
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THE YACKTMAN FUND
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PORTFOLIO OF INVESTMENTS
March 31, 1999 (Unaudited)
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NUMBER
OF SHARES VALUE
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COMMON STOCKS - 98.9%
APPAREL/SHOES - 5.9%
Fruit of the Loom, Inc.<F1> 450,000 $ 4,668,750
Reebok International Ltd.<F1> 500,000 7,937,500
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12,606,250
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CONSUMER GOODS - 2.4%
Luxottica Group ADR 400,000 5,150,000
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EDUCATIONAL SERVICES - 10.4%
Franklin Covey Co.<F1> 1,398,000 12,582,000
Jostens, Inc. 450,000 9,562,500
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22,144,500
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FINANCIAL SERVICES - 15.3%
First Data Corp. 515,000 22,016,250
United Asset Management Corp. 468,000 10,588,500
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32,604,750
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FOOD/TOBACCO - 10.4%
Philip Morris Cos., Inc. 630,000 22,168,125
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HOME FURNISHINGS - 12.4%
Department 56, Inc.<F1> 870,000 26,480,625
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HOUSEHOLD PRODUCTS - 5.3%
Clorox Co. 50,000 5,859,375
Tupperware Corp. 300,000 5,400,000
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11,259,375
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MEDIA - 3.4%
American Media, Inc., Class A<F1> 600,000 3,300,000
King World Productions, Inc.<F1> 130,000 3,973,125
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7,273,125
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MEDICAL SERVICES - 5.3%
First Health Group Corp.<F1> 700,000 11,243,750
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NUMBER
OF SHARES VALUE
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MEDICAL SUPPLIES - 10.1%
Dentsply International, Inc. 930,000 $ 21,622,500
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RETAILING - 2.9%
Intimate Brands, Inc. 130,000 6,256,250
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SERVICES - 11.5%
Block H&R, Inc. 210,000 9,948,750
Jenny Craig, Inc.<F1> 750,000 2,296,875
Rollins, Inc. 250,000 4,203,125
Valassis Communications,
Inc.<F1> 155,000 8,021,250
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24,470,000
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TIRES AND RUBBER - 3.6%
Bandag, Inc., Class A 330,000 7,837,500
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Total Common Stocks
(cost $194,453,892) 211,116,750
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<F1> Non-income producing
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THE YACKTMAN FUND
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PORTFOLIO OF INVESTMENTS (Cont'd.)
March 31, 1999 (Unaudited)
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PRINCIPAL
AMOUNT VALUE
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DEMAND NOTES
(VARIABLE RATE) - 1.2%
General Mills, Inc. $1,004,218 $ 1,004,218
Pitney Bowes Credit Corp. 706,115 706,115
Wisconsin Corp. Central
Credit Union 477,100 477,100
Wisconsin Electric Power Co. 358,237 358,237
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Total Demand Notes
(cost $2,545,670) 2,545,670
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Total Investments - 100.1%
(cost $196,999,562) 213,662,420
Liabilities less Other Assets - (0.1)% (275,637)
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Net Assets - 100% (equivalent
to $10.46 per share based on
20,405,815 shares outstanding) $213,386,783
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THE YACKTMAN FOCUSED FUND
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PURCHASES & SALES
For the Quarter Ended March 31, 1999
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NET SHARES CURRENT
PURCHASES PURCHASED SHARES HELD
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Philip Morris Cos., Inc. 5,000 55,000
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NET SHARES CURRENT
SALES SOLD SHARES HELD
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Dentsply International, Inc. 10,000 40,000
Department 56, Inc. 15,000 145,000
First Data Corp. 35,000 40,000
First Health Group Corp. 18,000 63,000
Fruit of the Loom, Inc. 22,000 50,000
Intimate Brands, Inc. 34,800 10,000
Jostens, Inc. 5,000 40,000
Reebok International Ltd. 37,500 50,000
Rollins, Inc. 10,000 40,000
United Asset Management Corp. 10,000 40,000
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THE YACKTMAN FOCUSED FUND
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PORTFOLIO OF INVESTMENTS
March 31, 1999 (Unaudited)
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NUMBER
OF SHARES VALUE
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COMMON STOCKS - 80.1%
APPAREL/SHOES - 6.8%
Fruit of the Loom, Inc.<F1> 50,000 $ 518,750
Reebok International Ltd.<F1> 50,000 793,750
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1,312,500
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EDUCATIONAL SERVICES - 10.5%
Franklin Covey Co.<F1> 130,000 1,170,000
Jostens, Inc. 40,000 850,000
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2,020,000
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FINANCIAL SERVICES - 13.6%
First Data Corp. 40,000 1,710,000
United Asset Management Corp. 40,000 905,000
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2,615,000
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FOOD/TOBACCO - 10.1%
Philip Morris Cos., Inc. 55,000 1,935,313
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HOME FURNISHINGS - 23.0%
Department 56, Inc.<F1> 145,000 4,413,438
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MEDICAL SERVICES - 5.3%
First Health Group Corp.<F1> 63,000 1,011,937
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MEDICAL SUPPLIES - 4.8%
Dentsply International, Inc. 40,000 930,000
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RETAILING - 2.5%
Intimate Brands, Inc. 10,000 481,250
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SERVICES - 3.5%
Rollins, Inc. 40,000 672,500
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Total Common Stocks
(cost $17,250,855) 15,391,938
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<F1> Non-income producing
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PRINCIPAL
AMOUNT VALUE
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DEMAND NOTES
(VARIABLE RATE) - 14.0%
American Family Financial Services $ 11,071 $ 11,071
General Mills, Inc. 952,485 952,485
Pitney Bowes Credit Corp. 506,468 506,468
Sara Lee Corp. 583,165 583,165
Warner Lambert, Inc. 182,272 182,272
Wisconsin Corp. Central
Credit Union 356,989 356,989
Wisconsin Electric Power Co. 81,760 81,760
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Total Demand Notes
(cost $2,674,210) 2,674,210
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NUMBER
OF CONTRACTS VALUE
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PUT OPTIONS PURCHASED - 0.7%
Philip Morris Cos., Inc.
Expiring Jan. 2000 @ $30.00 200 50,000
Expiring Jan. 2000 @ $35.00 200 90,000
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Total Put Options Purchased
(cost $93,550) 140,000
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Total Investments - 94.8%
(cost $20,018,615) 18,206,148
Other Assets less Liabilities - 5.2% 1,000,497
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Net Assets - 100% (equivalent
to $10.50 per share based on
1,829,262 shares outstanding) $19,206,645
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FOR FUND INFORMATION,
CALL 1-800-525-8258
FOR SHAREHOLDER SERVICES,
CALL 1-800-457-6033
WEB SITE: WWW.YACKTMAN.COM
THE YACKTMAN FUNDS, INC.
Shareholder Services Center
615 East Michigan Street, 3rd Floor
Milwaukee, Wisconsin 53202
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YA-412-0499
