tyf-485bp.htm

for THE YACKTMAN FUNDS, INC.

THE YACKTMAN FUND - (Ticker Symbol: YACKX)

THE YACKTMAN FOCUSED FUND – (Ticker Symbol: YAFFX)

THE YACKTMAN FUNDS, INC.

6300 Bridgepoint Parkway

Building One, Suite 320

Austin, Texas 78730

Call Toll-Free 1-800-525-8258

This Statement of Additional Information is not a prospectus and should be read in conjunction with the Prospectus of The Yacktman Funds, Inc., a Maryland corporation, dated April 30, 2010 (the “Prospectus”), for The Yacktman Fund and The Yacktman Focused Fund (each referred to individually as a “Fund” and collectively as the “Funds”). Requests for copies of the Prospectus should be made by writing to The Yacktman Funds, Inc., Shareholder Services Center, 615 East Michigan Street, 3rd Floor, Milwaukee, Wisconsin 53201-5207, or by calling 1-800-525-8258.

The following financial statements are incorporated by reference to the Annual Report, dated December 31, 2009, of The Yacktman Funds, Inc. (File No. 811-06628), as filed with the Securities and Exchange Commission on March 5 , 2010:

Portfolio of Investments

The Yacktman Fund

The Yacktman Focused Fund

Statement of Assets and Liabilities

Statement of Operations

Statement of Changes in Net Assets

Financial Highlights

Notes to the Financial Statements

Report of Independent Registered Public Accounting Firm

You may request a copy of the Annual Report by writing to The Yacktman Funds, Inc., Shareholder Services Center, 615 East Michigan Street, 3rd Floor, Milwaukee, Wisconsin 53201-5207, or by calling 1-800-525-8258. We will furnish the copy free of charge.

THE YACKTMAN FUNDS, INC.

TABLE OF CONTENTS

	Page

FUND HISTORY AND CLASSIFICATION	1
INVESTMENT RESTRICTIONS AND CONSIDERATIONS	1
DETERMINATION OF NET ASSET VALUE	11
DISCLOSURE OF PORTFOLIO HOLDINGS	12
DIRECTORS AND OFFICERS OF THE COMPANY	14
INVESTMENT ADVISER, ADMINISTRATOR AND FUND ACCOUNTANT	22
PORTFOLIO MANAGERS	25
EXCHANGE PRIVILEGE	26
REDEMPTIONS	27
SYSTEMATIC WITHDRAWAL PLAN	28
AUTOMATIC INVESTMENT PLAN, TELEPHONE PURCHASES AND RETIREMENT PLANS	29
CUSTODIAN	31
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM	31
ALLOCATION OF PORTFOLIO BROKERAGE	31
TAXES	32
STOCKHOLDER MEETINGS	33
CAPITAL STRUCTURE	34
DESCRIPTION OF SECURITIES RATINGS	35

(i)

FUND HISTORY AND CLASSIFICATION

The Yacktman Funds, Inc. (the “Company”) is an open-end, management investment company consisting of a diversified portfolio, The Yacktman Fund, and a non-diversified portfolio, The Yacktman Focused Fund. The Company is registered under the Investment Company Act of 1940, as amended (the “Act”). The Company was incorporated as a Maryland corporation on April 6, 1992.

INVESTMENT RESTRICTIONS AND CONSIDERATIONS

THE YACKTMAN FUND

The Yacktman Fund has adopted the following investment restrictions, which are matters of fundamental policy and cannot be changed without approval of the holders of the lesser of: (i) 67% of The Yacktman Fund’s shares present or represented at a stockholder’s meeting at which the holders of more than 50% of such shares are present or represented; or (ii) more than 50% of the outstanding shares of The Yacktman Fund.

1. The Yacktman Fund will diversify its assets in different companies and will not purchase securities of any issuer if, as a result of such purchase, The Yacktman Fund would own more than 10% of the outstanding voting securities of such issuer or more than 5% of The Yacktman Fund’s assets would be invested in securities of such issuer (except that up to 25% of the value of The Yacktman Fund’s total assets may be invested without regard to this limitation). This restriction does not apply to obligations issued or guaranteed by the United States Government, its agencies or instrumentalities.

2. The Yacktman Fund will not sell securities short, buy securities on margin, purchase warrants, participate in a joint-trading account, or deal in options.

3. The Yacktman Fund will not borrow money, except for temporary or emergency purposes, and then only from banks, in an amount not exceeding 10% of the value of The Yacktman Fund’s total assets. The Yacktman Fund will not borrow money for the purpose of investing in securities, and The Yacktman Fund will not purchase any portfolio securities for so long as any borrowed amounts remain outstanding.

4. The Yacktman Fund will not pledge or hypothecate its assets, except to secure borrowings for temporary or emergency purposes.

5. The Yacktman Fund will not invest more than 5% of The Yacktman Fund’s total assets in securities of any issuer which has a record of less than three (3) years of continuous operation, including the operation of any predecessor business of a company which came into existence as a result of a merger, consolidation, reorganization or purchase of substantially all of the assets of such predecessor business.

6. The Yacktman Fund will not purchase securities of other investment companies (as defined in the Act), except as part of a plan of merger, consolidation, reorganization or acquisition of assets.

7. The Yacktman Fund will not act as an underwriter or distributor of securities other than shares of The Yacktman Fund (except to the extent that The Yacktman Fund may be deemed to be an underwriter within the meaning of the Securities Act of 1933, as amended (the “Securities Act”), in the disposition of restricted securities).

8. The Yacktman Fund will not purchase securities for which there is no established market if, as a result of such purchase, more than 5% of the value of its total assets would be invested in such securities.

9. The Yacktman Fund will not make loans, except it may acquire debt securities from the issuer or others which are publicly distributed or are of a type normally acquired by institutional investors and except that it may make loans of portfolio securities if any such loans are secured continuously by collateral at least equal to the market value of the securities loaned in the form of cash and/or securities issued or guaranteed by the U.S. Government, its agencies or instrumentalities and provided that no such loan will be made if upon the making of that loan more than 30% of the value of The Yacktman Fund’s total assets would be the subject of such loans.

10. The Yacktman Fund will not concentrate 25% or more of its total assets in securities of any one industry. This restriction does not apply to obligations issued or guaranteed by the United States Government, its agencies or instrumentalities.

11. The Yacktman Fund will not make investments for the purpose of exercising control or management of any company.

12. The Yacktman Fund will not purchase or sell real estate or real estate mortgage loans and will not make any investments in real estate limited partnerships.

13. The Yacktman Fund will not purchase or sell commodities or commodity contracts, including futures contracts.

14. The Yacktman Fund will not purchase or sell any interest in any oil, gas or other mineral exploration or development program, including any oil, gas or mineral leases.

The Yacktman Fund has adopted other investment restriction s which are not a matter of fundamental policy and which may be changed by the Company’s Board of Directors without stockholder approval. These additional restriction s are as follows:

1. The Yacktman Fund will not acquire or retain any security issued by a company, an officer or director of which is an officer or director of the Company or an officer, director or other affiliated person of the investment adviser to The Yacktman Fund or The Yacktman Focused Fund, without authorization of the Board of Directors of the Company.

2. The Yacktman Fund will not pledge, mortgage, hypothecate or otherwise encumber any of its assets, except as provided pursuant to its investment restrictions and to the extent permitted by the Act.

3. It is the position of the Securities and Exchange Commission (and an operating although not a fundamental policy of The Yacktman Fund) that The Yacktman Fund may not make certain illiquid investments if thereafter more than 15% of the value of its net assets would be so invested.

The aforementioned percentage restrictions on investment or utilization of assets refer to the percentage at the time an investment is made other than with respect to borrowings and the investment restriction related to illiquid securities . If these restrictions are adhered to at the time an investment is made, and such percentage subsequently changes as a result of changing market values or some similar event, no violation of The Yacktman Fund’s fundamental restrictions will be deemed to have occurred. Any changes in The Yacktman Fund’s investment restrictions made by the Board of Directors will be communicated to stockholders prior to their implementation, which communication may be made in an amendment to the Statement of Additional Information incorporated by reference into the Prospectus.

THE YACKTMAN FOCUSED FUND

The Yacktman Focused Fund has adopted the following investment restrictions, which are matters of fundamental policy and cannot be changed without approval of the holders of the lesser of: (i) 67% of The Yacktman Focused Fund’s shares present or represented at a stockholder’s meeting at which the holders of more than 50% of such shares are present or represented; or (ii) more than 50% of the outstanding shares of The Yacktman Focused Fund.

1. The Yacktman Focused Fund may issue senior securities to the extent permitted under the Act.

2. The Yacktman Focused Fund will not sell securities short, buy securities on margin, purchase warrants or participate in a joint trading account. The Yacktman Focused Fund may invest in and commit its assets to writing and purchasing put and call options on securities and stock indexes to the extent permitted by the Act.

3. The Yacktman Focused Fund may borrow money to the extent permitted by the Act. The Yacktman Focused Fund may pledge or hypothecate its assets to secure its borrowings.

4. The Yacktman Focused Fund will not act as an underwriter or distributor of securities other than shares of The Yacktman Focused Fund (except to the extent that The Yacktman Focused Fund may be deemed to be an underwriter within the meaning of the Securities Act in the disposition of restricted securities).

5. The Yacktman Focused Fund will not concentrate 25% or more of its total assets in securities of any one industry. This restriction does not apply to obligations issued or guaranteed by the United States Government, its agencies or instrumentalities.

6. The Yacktman Focused Fund will not purchase or sell real estate or real estate mortgage loans and will not make any investments in real estate limited partnerships.

7. The Yacktman Focused Fund will not purchase or sell commodities or commodity contracts, including futures contracts.

8. The Yacktman Focused Fund will not make loans, except it may acquire debt securities from the issuer or others which are publicly distributed or are of a type normally acquired by institutional investors and except that it may make loans of portfolio securities if any such loans are secured continuously by collateral at least equal to the market value of the securities loaned in the form of cash and/or securities issued or guaranteed by the U.S. Government, its agencies or instrumentalities and provided that no such loan will be made if upon the making of that loan more than 30% of the value of The Yacktman Focused Fund’s total assets would be the subject of such loans.

9. The Yacktman Focused Fund will not purchase securities of any issuer if, as a result of such purchase, The Yacktman Focused Fund would own more than 10% of the outstanding voting securities of such issuer or more than 5% of The Yacktman Focused Fund’s assets would be invested in securities of such issuer, except that up to 50% of the value of The Yacktman Focused Fund’s total assets may be invested without regard to this limitation. This restriction does not apply to obligations issued or guaranteed by the United States Government, its agencies or instrumentalities.

10. The Yacktman Focused Fund will not purchase securities for which there is no established market if, as a result of such purchase, more than 5% of the value of its total assets would be invested in such securities.

11. The Yacktman Focused Fund will not make investments for the purpose of exercising control or management of any company.

12. The Yacktman Focused Fund will not purchase or sell any interest in any oil, gas or other mineral exploration or development program, including any oil, gas or mineral leases.

The Yacktman Focused Fund has adopted certain other investment restrictions which are not fundamental policies and which may be changed by the Company’s Board of Directors without stockholder approval. These additional restrictions are as follows:

1. The Yacktman Focused Fund will not purchase securities of other investment companies (as defined in the Act), except: (a) as part of a plan of merger, consolidation, reorganization or acquisition of assets; (b) securities of registered open-end investment companies that invest exclusively in high quality, short-term debt securities; or (c) securities of registered investment companies on the open market where no commission results, other than the usual and customary broker’s commission. No purchase described in (b) and (c) will be made if as a

result of such purchases (i) The Yacktman Focused Fund and its affiliated persons would hold more than 3% of any class of securities, including voting securities, of any registered investment company; (ii) more than 5% of The Yacktman Focused Fund’s net assets would be invested in shares of any one registered investment company; and (iii) more than 10% of The Yacktman Focused Fund’s net assets would be invested in shares of registered investment companies.

2. The Yacktman Focused Fund will not acquire or retain any security issued by a company, an officer or director of which is an officer or director of the Company or an officer, director or other affiliated person of the investment adviser to The Yacktman Fund or The Yacktman Focused Fund, without authorization of the Board of Directors of the Company.

3. The Yacktman Focused Fund will not pledge, mortgage, hypothecate or otherwise encumber any of its assets, except as provided pursuant to its investment restrictions and to the extent permitted by the Act.

4. It is the position of the Securities and Exchange Commission (and an operating although not a fundamental policy of The Yacktman Focused Fund) that The Yacktman Focused Fund may not make certain illiquid investments if thereafter more than 15% of the value of its net assets would be so invested.

The aforementioned percentage restrictions on investment or utilization of assets refer to the percentage at the time an investment is made other than with respect to borrowings and the investment restriction related to illiquid securities . If these restrictions are adhered to at the time an investment is made, and such percentage subsequently changes as a result of changing market values or some similar event, no violation of The Yacktman Focused Fund’s fundamental restrictions will be deemed to have occurred. Any changes in The Yacktman Focused Fund’s investment restrictions made by the Board of Directors will be communicated to stockholders prior to their implementation, which communication may be made in an amendment to the Statement of Additional Information incorporated by reference into the Pr ospectus.

Money Market Instruments

Each Fund may invest in money market instruments such as United States Treasury Bills, certificates of deposit of U.S. banks, commercial paper, and commercial paper master notes, which are demand instruments without a fixed maturity bearing interest at rates that are fixed to known lending rates and automatically adjusted when such lending rates change, rated A-2 or better by Standard & Poor’s Corporation (“Standard & Poor’s”) or Prime-2 by Moody’s Investors Service, Inc. (“Moody’s”). The Yacktman Focused Fund may also invest in securities issued by other investment companies that invest in high-quality, short-term debt securities (i.e., money market funds). In addition to the advisory fees and other expenses that The Yacktman Focused Fund bears directly in connection with its own operations, as a stockholder of another investment company, The Yacktman Focused Fund would bear its pro rata portion of the other investment company’s advisory fees and other expenses, and, in turn, The Yacktman Focused Fund’s stockholders would bear such fee and other expenses indirectly.

Each Fund may, in response to adverse market, economic, political or other conditions, take a temporary defensive position. When a Fund takes a temporary defensive position, it will invest some or all of its assets in money market instruments.

Repurchase agreements are agreements under which the seller of a security agrees at the time of sale to repurchase the security at an agreed time and price. None of the Funds will enter into repurchase agreements with entities other than banks or invest over 15% of their net assets in repurchase agreements with maturities of more than seven days. If a seller of a repurchase agreement defaults and does not repurchase the security subject to the agreement, the Fund will look to the collateral security underlying the seller’s repurchase agreement, including the securities subject to the repurchase agreement, for satisfaction of the seller’s obligation to the Fund. In such event, the Fund might incur disposition costs in liquidating the collateral and might suffer a loss if the value of the colla teral declines. In addition, if bankruptcy proceedings are instituted against a seller of a repurchase agreement, realization upon the collateral may be delayed or limited.

Fixed Income and Convertible Securities

Both Funds may invest in U.S. government securities and publicly distributed corporate bonds and debentures.

Fixed income securities purchased by the Funds may include, among others: bonds, notes and debentures issued by corporations and debt securities issued or guaranteed by the U.S. government. The Funds may invest in fixed income securities of any length maturity. The value of fixed income securities will tend to decrease when interest rates rise and increase when interest rates fall. Fixed income securities with shorter maturities, while generally offering lower yields, generally provide greater price stability than longer-term securities and are less affected by changes in interest rates.

The Funds may also invest in convertible securities (debt securities or preferred stocks of corporations which are convertible into or exchangeable for common stocks). The Adviser will select only those convertible securities for which it believes (a) the underlying common stock is a suitable investment for the Fund in question and (b) a greater potential for total return exists by purchasing the convertible security because of its higher yield and/or favorable market valuation.

The Funds have no restrictions regarding the rating or credit quality of the fixed income or convertible securities they may purchase and hold in their portfolios. Corporate obligations rated less than investment grade (hereinafter referred to as “low-rated securities”) are commonly referred to as “junk bonds”, and while generally offering higher yields than investment grade securities with similar maturities, involve greater risks, including the possibility of default or bankruptcy. They are regarded as predominantly speculative with respect to the issuer’s capacity to pay interest and repay principal. Each of the Funds may invest up to an aggregate of 20 % of its net assets in convertible debt securities and low-rated securities (in any proportion provided that the total invested in both does not exceed the 20 % threshold). The special risk considerations in connection with investments in low-rated securities are discussed below:

Effect of Interest Rates and Economic Changes. Interest-bearing securities typically experience appreciation when interest rates decline and depreciation when interest rates rise. The market values of low-rated securities tend to reflect individual corporate developments to a greater extent than do higher rated securities, which react primarily to fluctuations in the general level of interest rates. Low-rated securities also tend to be more sensitive to economic conditions than higher-rated securities. As a result, they generally involve more credit risks than securities in the higher-rated categories. During an economic downturn or a sustained period of rising interest rates, highly leveraged issuers of low-rated se curities may experience financial stress and may not have sufficient revenues to meet their payment obligations. The issuer’s ability to service its debt obligations may also be adversely affected by specific corporate developments, or the issuer’s inability to meet specific projected business forecasts or the unavailability of additional financing. The risk of loss due to default by an issuer of low-rated securities is significantly greater than issuers of higher-rated securities because such securities are generally unsecured and are often subordinated to other creditors. Further, if the issuer of a low-rated security defaulted, the applicable Fund might incur additional expenses in seeking recovery. Periods of economic uncertainty and changes would also generally result in increased volatility in the market prices of low-rated securities and thus in the applicable Fund’s net asset value.

As previously stated, the value of a low-rated security generally will decrease in a rising interest rate market, and accordingly, so normally will the applicable Fund’s net asset value. If such Fund experiences unexpected net redemptions in such a market, it may be forced to liquidate a portion of its portfolio securities without regard to their investment merits. Due to the

limited liquidity of low-rated securities (discussed below), the Fund may be forced to liquidate these securities at a substantial discount. Any such liquidation would reduce the Fund’s asset base over which expenses could be allocated and could result in a reduced rate of return for the Fund.

Payment Expectations. Low-rated securities typically contain redemption, call or prepayment provisions which permit the issuer of securities containing such provisions to, at their discretion, redeem the securities. During periods of falling interest rates, issuers of low-rated securities are likely to redeem or prepay the securities and refinance them with debt securities with a lower interest rate. To the extent an issuer is able to refinance the securities or otherwise redeem them, the applicable Fund may have to replace the securities with a lower yielding security which would result in lower returns for the Fund.

Credit Ratings. Credit ratings issued by credit rating agencies evaluate the safety of principal and interest payments of rated securities. They do not, however, evaluate the market value risk of low-rated securities and therefore may not fully reflect the true risks of an investment. In addition, credit rating agencies may or may not make timely changes in a rating to reflect changes in the economy or in the condition of the issuer that affect the market value of the security. Consequently, credit ratings are used only as a preliminary indicator of investment quality.

Liquidity and Valuation. A Fund may have difficulty disposing of certain low-rated securities because there may be a thin trading market for such securities. Because not all dealers maintain markets in all low-rated securities, there is no established retail secondary market for many of these securities. The Funds anticipate that such securities could be sold only to a limited number of dealers or institutional investors. To the extent a secondary trading market does exist, it is generally not as liquid as the secondary market for higher rated securities. The lack of a liquid secondary market may have an adverse impact on the market price of the security, and accordingly, the net asset value of a particular Fund and its ability to dispose of particular securities when necessary to meet its liquidity needs, or in response to a specific economic event, or an event such as a deterioration in the creditworthiness of the issuer. The lack of a liquid secondary market for certain securities may also make it more difficult for the Funds to obtain accurate market quotations for purposes of valuing their respective portfolios. Market quotations are generally available on many low-rated issues only from a limited number of dealers and may not necessarily represent firm bids of such dealers or prices for actual sales. During periods of thin trading, the spread between bid and asked prices is likely to increase significantly. In addition, adverse publicity and investor perceptions, whether or not based on fundamental analysis, may decrease the values and liquidity of high-yield securities, especially in a thinly-traded market.

Foreign Securities

The Funds may invest in securities of foreign issuers. The Funds may also hold securities of U.S. and foreign issuers in the form of American Depository Receipts (“ADRs”) or American Depository Shares (“ADSs”), and they may each invest in securities of foreign issuers traded directly in the U.S. securities markets. Investments in foreign securities involve special risks and considerations that are not present when a Fund invests in domestic securities.

There is often less information publicly available about a foreign issuer than about a U.S. issuer. Foreign issuers generally are not subject to accounting, auditing and financial reporting standards and practices comparable to those in the United States. The securities of some foreign issuers are less liquid and at times more volatile than securities of comparable U.S. issuers. This is particularly true of securities in emerging markets which can be extremely volatile. Foreign brokerage commissions, custodial expenses and other fees are also generally higher than for securities traded in the United States. There may also be difficulties in enforcing legal rights outside the United States. ;There may be a possibility of nationalization or expropriation of assets, imposition of currency exchange controls, confiscatory taxation, political or financial instability, and diplomatic developments which could affect the value of investments in certain foreign countries. Legal remedies available to investors may be more limited than those available with respect to investments in the United States or in other foreign countries. Income received from foreign investments may be reduced by withholding and other taxes imposed by such countries.

Individual foreign economies may differ favorably or unfavorably from the U.S. economy in such respects as growth or gross national product, inflation rate, capital reinvestment, resource self-sufficiency and balance of payment positions. The economies of countries with emerging markets may be predominately based on only a few industries, may be highly vulnerable to changes in global trade conditions, and may suffer from extreme and volatile debt or inflation rates. Debt obligations of issuers located in, or of, developing countries involve a high degree of risk and may be in default or present the risk of default.

Foreign Currency Transactions. Since the Funds may purchase securities denominated in foreign currencies, changes in foreign currency exchange rates will affect, either directly or indirectly, the value of a Fund’s assets from the perspective of U.S. investors. The Funds may seek to protect themselves against the adverse effects of currency exchange rate fluctuations by entering into currency forward, futures or options contracts. Hedging transactions may not, however, always be fully effective in protecting against adverse exchange rate fluctuations. Furthermore, hedging transactions involve transaction costs and the risk that the registe red investment company might lose money; either because exchange rates move in an unexpected direction, because another party to a hedging contract defaults or for other reasons. Hedging transactions also limit any potential gain which might result if exchange rates moved in a favorable direction. The value of foreign investments and the investment income derived from them may also be affected (either favorably or unfavorably) by exchange control regulations. In addition, the value of foreign fixed-income investments will fluctuate in response to changes in U.S. and foreign interest rates.

To manage the currency risk accompanying investments in foreign securities and to facilitate the purchase and sale of foreign securities, the Funds may engage in foreign currency transactions on a spot (cash) basis at the spot rate prevailing in the foreign currency exchange market or through entering into contracts to purchase or sell foreign currencies at a future date (“forward foreign currency” contracts or “forward” contracts).

A forward foreign currency contract involves an obligation to purchase or sell a specific currency at a future date, which may be any fixed number of days from the date of the contract agreed upon by the parties, at a price set at the time of the contract. These contracts are principally traded in the inter-bank market conducted directly between currency traders (usually large commercial banks) and their customers. A forward contract generally has no deposit requirement and no commissions are charged at any stage for trades.

When a Fund enters into a contract for the purchase or sale of a security denominated in a foreign currency, it may desire to “lock in” the U.S. dollar price of the security. By entering into a forward contract for the purchase or sale of a fixed amount of U.S. dollars equal to the amount of foreign currency involved in the underlying security transaction, the Fund can protect itself against a possible loss, resulting from an adverse change in the relationship between the U.S. dollar and the subject foreign currency during the period between the date the security is purchased or sold and the date on which the payment is made or received.

When the Adviser believes that a particular foreign currency may suffer a substantial decline against the U.S. dollar, it may enter into a forward contract to sell a fixed amount of the foreign currency approximating the value of some or all of a Fund’s portfolio securities denominated in such foreign currency. The precise matching of the forward contract amounts and the value of the securities involved will not generally be possible since the future value of such securities in foreign currencies will change as a consequence of market movements in the value of those securities between the date the forward contract is entered into and the date it matures.& #160; The projection of short-term currency market movement is extremely difficult and the successful execution of a short-term hedging strategy is highly uncertain. The Fund will not enter into such forward contracts or maintain a net exposure to such contracts where the consummation of the contracts would obligate the Fund to deliver an amount of foreign currency in excess of the value of the Fund’s securities or other assets denominated in that currency. The Adviser believes that it is important to have the flexibility to enter into such forward contracts when it determines that the best interests of the Fund will be served.

At the maturity of a forward contract, a Fund may either sell the portfolio securities and make delivery of the foreign currency, or it may retain the securities and terminate its contractual obligation to deliver the foreign currency by purchasing an “offsetting” contract obligating it to purchase, on the same maturity date, the same amount of foreign currency.

If a Fund retains the portfolio securities and engages in an offsetting transaction, the Fund will incur a gain or a loss to the extent that there has been movement in forward contract prices. If the Fund engages in an offsetting transaction, it may subsequently enter into a forward contract to sell the foreign currency. Should forward prices decline during the period when the Fund entered into the forward contract for the sale of a foreign currency and the date it entered into an offsetting contract for the purchase of the foreign currency, the Fund will realize a gain to the extent the price of the currency it has agreed to sell exceeds the price of the currency it has agreed to purchase. Should forward prices increase, the Fund will suffer a loss to the extent that the price of the currency it has agreed to purchase exceeds the price of the currency it has agreed to sell.

Shareholders should note that: (1) foreign currency hedge transactions do not protect against or eliminate fluctuations in the prices of particular portfolio securities (namely, if the price of such securities declines due to an issuer’s deteriorating credit situation); and (2) it is impossible to forecast with precision the market value of securities at the expiration of a forward contract. Accordingly, a Fund may have to purchase additional foreign currency on the spot market (and bear the expense of such purchase) if the market value of the Fund’s securities is less than the amount of the foreign currency upon expiration of the contract. Conversely, the Fund may have to sell some of its foreign currenc y received upon the sale of a portfolio security if the market value of the Fund’s securities exceed the amount of foreign currency the Fund is obligated to deliver. The Fund’s dealings in forward foreign currency exchange contracts will be limited to the transactions described above.

Although each Fund values its assets daily in terms of U.S. dollars, it does not intend to convert its holdings of foreign currencies into U.S. dollars on a daily basis. The Fund will do so from time to time and investors should be aware of the costs of currency conversion. Although foreign exchange dealers do not charge a fee for conversion, they realize a profit based on the difference (the “spread”) between the prices at which they are buying and selling various currencies. Thus, a dealer may offer to sell a foreign currency to the Fund at one rate, while offering a lesser rate of exchange should the Fund desire to resell that currency to the dealer.

A Fund may purchase and sell currency futures and purchase and write currency options to increase or decrease its exposure to different foreign currencies. The uses and risks of currency options and futures are similar to options and futures relating to securities or indices, as discussed above. Currency futures contracts are similar to forward foreign currency contracts, except that they are traded on exchanges (and have margin requirements) and are standardized as to contract size and delivery date. Most currency futures contracts call for payment or delivery in U.S. dollars. The underlying instrument of a currency option may be a foreign currency, which generally is purchased or delivered in exchange fo r U.S. dollars, or may be a futures contract. The purchaser of a currency call obtains the right to purchase the underlying currency, and the purchaser of a currency put obtains the right to sell the underlying currency.

Currency futures and options values can be expected to correlate with exchange rates, but may not reflect other factors that affect the value of a Fund’s investments. A currency hedge, for example, should protect a Yen-dominated security from a decline in the Yen, but will not protect the Fund against a price decline resulting from deterioration in the issuer’s creditworthiness. Because the value of the Fund’s foreign-denominated investments change in response to many factors other than exchange rates, it may not be possible to match the amount of currency options and futures to the value of the Fund’s investments exactly over time.

Investments in ADRs or ADSs. As noted above, each Fund may hold securities of U.S. and foreign issuers in the form of ADRs or ADSs. These securities may not necessarily be denominated in the same currency as the securities for which they may be exchanged. ADRs and ADSs typically are issued by an American bank or trust company and evidence ownership of underlying securities issued by a foreign corporation. Generally, ADRs and ADSs in registered form are designed for use in U.S. securities markets.

ADR facilities may be either “sponsored” or “unsponsored.” While similar, distinctions exist relating to the rights and duties of ADR holders and market practices. A depository may establish an unsponsored facility without the participation by or consent of the issuer of the deposited securities, although a letter of non-objection from the issuer is often requested. Holders of unsponsored ADRs generally bear all the costs of such facility, which can include deposit and withdrawal fees, currency conversion fees and other service fees. The depository of an unsponsored facility may be under no duty to distribute shareholder communications from the issuer or pass through voting rights. Issuers of unsponsored ADRs are not obligated to disclose material information in the U.S. and, therefore, there may not be a correlation between such information and the market value of the ADR. Sponsored facilities enter into an agreement with the issuer that sets out rights and duties of the issuer, the depository and the ADR holder. This agreement also allocates fees among the parties. Most sponsored agreements also provide that the depository will distribute shareholder notices, voting instructions and other communications. Each Fund may invest in sponsored and unsponsored ADRs.

High Yield and Other Securities

Each Fund may invest in corporate debt securities, including bonds and debentures (which are long-term) and notes (which may be short or long-term). These debt securities may be rated investment grade by S&P or Moody’s. Securities rated BBB by S&P or Baa by Moody’s, although investment grade, exhibit speculative characteristics and are more sensitive than higher rated securities to changes in economic conditions. The Fund may also invest in securities that are rated below investment grade. Investments in high yield securities (namely, less than investment grade), while providing greater income and opportunity for gain than investments in higher-rated securities, entail relatively greate r risk of loss of income or principal. Lower-grade obligations are commonly referred to as “junk bonds”. Market prices of high-yield, lower-grade obligations may fluctuate more than market prices of higher-rated securities. Lower grade, fixed income securities tend to reflect short-term corporate and market developments to a greater extent than higher-rated obligations which, assuming no change in their fundamental quality, react primarily to fluctuations in the general level of interest rates.

The high yield market at times is subject to substantial volatility. An economic downturn or increase in interest rates may have a more significant effect on the high yield securities in an underlying registered investment company’s portfolio and their markets, as well as on the ability of securities’ issuers to repay principal and interest. Issuers of high yield securities may be of low creditworthiness and the high yield securities may be subordinated to the claims of senior lenders. During periods of economic downturn or rising interest rates the issuers of high yield securities may have greater potential for insolvency and a higher incidence of high yield bond defaults may be experienced.

The prices of high yield securities have been found to be less sensitive to interest rate changes than higher-rated investments but are more sensitive to adverse economic changes or individual corporate developments. During an economic downturn or substantial period of rising interest rates, highly leveraged issuers may experience financial stress which would adversely affect their ability to service their principal and interest payment obligations, to meet projected business goals, and to obtain additional financing. If the issuer of a high yield security owned by a Fund defaults, the Fund may incur additional expenses in seeking recovery. Periods of economic uncertainty and changes can be expected to result in incr eased volatility of market prices of high yield securities and the Fund’s net asset value. Yields on high yield securities will fluctuate over time. Furthermore, in the case of high yield securities structured as zero coupon or pay-in-kind securities, their market prices are affected to a greater extent by interest rate changes and therefore tend to be more volatile than the market prices of securities which pay interest periodically and in cash.

Certain securities held by a Fund, including high yield securities, may contain redemption or call provisions. If an issuer exercises these provisions in a declining interest rate market, the Fund would have to replace the security with a lower yielding security, resulting in a decreased return for the investor. Conversely, a high yield security’s value will decrease in a rising interest rate market, as will the value of the Fund’s net assets.

The secondary market for high yield securities may at times become less liquid or respond to adverse publicity or investor perceptions making it more difficult for a Fund to value accurately high yield securities or dispose of them. To the extent the Fund owns or may acquire illiquid or restricted high yield securities, these securities may involve special registration responsibilities, liabilities and costs, and liquidity difficulties, and judgment will play a greater role in valuation because there is less reliable and objective data available.

Special tax considerations are associated with investing in high yield bonds structured as zero coupon or pay-in-kind securities. A Fund will report the interest on these securities as income even though it receives no cash interest until the security’s maturity or payment date. Further, the Fund must distribute substantially all of its income to its shareholders to qualify for pass-through treatment under the tax law. Accordingly, the Fund (or a registered investment company in which the Fund invests) may have to dispose of its portfolio securities under disadvantageous circumstances to generate cash or may have to borrow to satisfy distribution requirements.

Credit ratings evaluate the safety of principal and interest payments, not the market value risk of high yield securities. Since credit rating agencies may fail to timely change the credit ratings to reflect subsequent events, the Adviser will monitor the issuers of high yield securities in the portfolio to determine if the issuers will have sufficient cash flow and profits to meet required principal and interest payments, and to attempt to assure the securities’ liquidity so a Fund can meet redemption requests. To the extent that the Fund invests in high yield securities, the achievement of its investment objective may be more dependent on its own credit analysis than is the case for higher quality bonds. The Fund may retain a portfolio security whose rating has been changed.

Name, Address, and Age	Position(s) Held with the Funds	Term of Office and Length of Time Served		Principal Occupation(s) During Past 5 Years	Number of Portfolios in the Fund Complex Overseen by Director	Other Directorships Held by Director
“Interested Persons” (as defined in the Act) of the Funds:
Donald A. Yacktman Age: 68 Address: c/o Yacktman Asset Management Co. 6300 Bridgepoint Parkway Building One, Suite 320 Austin, Texas 78730	Director President Treasurer		Director: Indefinite, until successor elected 18 years Officer: One year term 18 years	Mr. Yacktman has been the President of the Adviser since April, 1992. Mr. Yacktman is an Interested Person of the Funds because of his affiliation with the Adviser.	2	None
Stephen Yacktman Age: 40 Address: c/o Yacktman Asset Management Co. 6300 Bridgepoint Parkway Building One, Suite 320 Austin, Texas 78730	Vice President Secretary		One year term 7 years	Mr. Yacktman has been Vice President of the Adviser for more than five years. Mr. Yacktman is an Interested Person of the Funds because of his affiliation with the Adviser.	N/A	None
Kent A. Arnett Age: 69 Address: c/o Yacktman Asset Management Co. 6300 Bridgepoint Parkway Building One, Suite 320 Austin, Texas 78730	Vice President Chief Compliance Officer		One year term 5 years	Mr. Arnett has been Vice President and Chief Compliance Officer of the Adviser for five years.	N/A	None

Name, Address, and Age	Position(s) Held with the Funds		Term of Office and Length of Time Served	Principal Occupation(s) During Past 5 Years	Number of Portfolios in the Fund Complex Overseen by Director	Other Directorships Held by Director
Jason Subotky Age: 39 Address: c/o Yacktman Asset Management Co. 6300 Bridgepoint Parkway Building One, Suite 320 Austin, Texas 78730	Vice President		One year term 2 years	Mr. Subotky has been Vice President and Portfolio Manager for Yacktman Asset Management for more than five years.	N/A	None

Qualification of Directors

Donald Yacktman has been a director and portfolio manager of the Funds since their inception. His experience and skills as a portfolio manager, as well as his familiarity with the investment strategies utilized by the Adviser and with the Funds’ portfolios, led to the conclusion that he should serve as a director. Each of Bruce Bingham, Albert Malwitz and George Stevenson, III became directors in 1998. They are all experienced businessmen and are familiar with financial statements. Each takes a conservative and thoughtful approach to addressing issues facing the Funds. This combination of skills and attributes led to the conclusion that each of Messrs. Bingham, Malwitz and Stevenson should serve as a director.

Committees

The Company has an Audit Committee whose members are Messrs. Bingham, Malwitz and Stevenson. The primary functions of the Audit Committee are to recommend to the Board of Directors the independent registered public accountants to be retained to perform the annual audit, to review the results of the audit, to review the Funds’ internal controls and to review certain other matters relating to the Funds’ independent registered public accountants and financial records. The Audit Committee met twice in fiscal 2009.

The Company also has a Compliance Committee whose members are Bingham, Malwitz and Stevenson. The Compliance Committee was established for the purpose of overseeing the compliance processes of the Funds. The Compliance Committee met four times in fiscal 2009. The Company’s Board of Directors has no other committees.

Compensation

Effective January 1, 2010, the Funds’ standard method of compensating directors is to pay each disinterested director an annual fee of $20,000 (for fiscal 2009, the annual fee was $10,000) for services rendered, including attending meetings of the Board of Directors. The Funds also may reimburse their directors for travel expenses incurred in order to attend meetings of the Board of Directors. For the fiscal year ended December 31, 2009 the disinterested directors received aggregate fees of $30,000. The table below sets forth

the compensation paid by the Funds to each of the current directors of the Company during the fiscal year ended December 31, 2009.

COMPENSATION TABLE

Name of Person	Aggregate Compensation from Company	Pension or Retirement Benefits Accrued As Part of Funds Expenses	Estimated Annual Benefits Upon Retirement	Total Compensation From Company Paid to Directors

Disinterested Persons of the Funds

Bruce B. Bingham	$10,000	$0	$0	$10,000

Albert J. Malwitz	$10,000	$0	$0	$10,000

George J. Stevenson, III	$10,000	$0	$0	$10,000

Interested Persons of the Funds

Donald A. Yacktman	$0	$0	$0	$0

Code of Ethics

The Company and the Adviser have adopted a code of ethics pursuant to Rule 17j-1 under the Act. This code of ethics permits personnel subject thereto to invest in securities, including securities that may be purchased or held by the Funds. This code of ethics generally prohibits, among other things, persons subject thereto from purchasing or selling securities if they know at the time of such purchase or sale that the security is being considered for purchase or sale by a Fund or is being purchased or sold by a Fund until the Funds have completed their purchases or sales.

Proxy Voting Policy

General Voting Policy. Each Fund has delegated proxy voting decisions on securities held in the Fund’s portfolio to the Adviser. The Adviser has adopted a Proxy Voting Policy (the “Proxy Voting Policy”) that sets forth its proxy voting policy and related procedures and guidelines. When the Adviser votes proxies for the Funds, the Adviser makes voting decisions consistent with the “economic best interests” of the Funds and reviews each proxy on a case by case basis, with the final decision based on the merits. Consistent with its duty of care the Adviser monitors proxy proposals just as it monitors other corporate events affecting the companies in which the Funds invest.

Conflict of Interest. There may be instances where the interests of the Adviser may conflict or appear to conflict with the interests of a Fund. In such situations the Adviser will, consistent with its duty of care and duty of loyalty, vote the securities in accordance with the

Proxy Voting Policy, but only after disclosing any such conflict to the Company’s Board of Directors prior to voting and affording such Fund the opportunity to direct the Adviser in the voting of such securities.

Proxy Voting Records. Information on how the Funds voted proxies relating to their portfolio securities during the most recent twelve-month period ended June 30 is available by calling 800-356-6356 or on the website of the Securities and Exchange Commission at http://www.sec.gov.

Proxy Guidelines. Set forth below are guidelines that the Adviser uses for voting on specific issues:

1.	Routine Matters – The Adviser will tend to vote with management on most routine matters, although it reserves the right to vote otherwise. A partial list includes:

Board of Directors;

Election of Directors;

Independence of Directors;

Separate offices of Chairperson and Chief Executive Officer;

Limiting personal liability; and

Board’s composition and size.

Scheduling of annual meetings;

Appointment of auditors;

Increase in authorized common stock;

Reincorporation;

Employee stock purchase plans;

Charitable, political, or educational contributions; and

Business operations in foreign countries.

2.	Social, Environmental or Political Proposals – The economic interest of the client is the foremost consideration in the evaluation of these proposals. The Adviser will tend to vote with management on most of the following issues:

High-Performance workplace practices;

Restrictive energy or environmental proposals;

Restrictions on military contracting;

Limitations on the marketing of controversial products; and

Limiting or restricting business in countries as a protest against political and moral practices in those countries.

3.	Stockholder Sovereignty – The Adviser will tend to vote against any proposal that limits stockholder influence on management or adversely affects the potential value to be received by stockholders. Issues in this category would include:

Confidential proxy voting practices;

Elimination of cumulative voting;

Greenmail;

“Poison Pills” or “Golden Parachutes”;

Executive compensation plans that exceed the requirement necessary to attract and retain qualified and skilled managers, that are excessively generous, that lack clear and challenging performance goals or that adversely affect employee productivity and morale;

The issuance of securities contingent on a corporate reorganization that offers special voting rights, is dilutive, or in general is not designed to enhance stockholder value; and

Stock option plans.

Share Ownership

As of March 31, 2010, all officers and directors of the Company as a group (7 persons) beneficially owned 257,304 shares of The Yacktman Fund, or 0.21 % of the then outstanding shares, and beneficially owned 603,700 shares of The Yacktman Focused Fund, or 1.02 % of the then outstanding shares.

As of March 31, 2010, the following shareholders owned more than 5% of the outstanding voting securities of:

The Yacktman Fund

Name and Address of Owner	Number of Shares Owned	Percentage Ownership
National Financial Services Corp. * One World Financial Center, 5th Floor 200 Liberty Street Lobby 5 New York, New York 10281 -1003	52,075,475	41.9%
Charles Schwab & Co. * 101 Montgomery Street San Francisco, California 94104 -4151	33,138,721	26.6%
Ameritrade, Inc. * P.O. Box 2226 Omaha, Nebraska 68103-2226	9,500,608	7.6%

____________________

*	All of the shares owned by National Financial Services Corp., Charles Schwab & Co. and Ameritrade, Inc. were owned of record only.

The Yacktman Focused Fund

Name and Address of Owner	Number of Shares Owned	Percentage Ownership
Charles Schwab & Co. * 101 Montgomery Street San Francisco, California 94104 -4151	20,958,875	35.5%
[National Financial Services Corp. * One World Financial Center, 5th Floor 200 Liberty Street Lobby 5 New York, New York 10281 -1003	17,616,527	29.8%
Prudential Investment Management Attn: Pro Choice Unit 100 Mulberry Street 3 Gateway Center, Suite 11 Newark, New Jersey 07102-4000	4,199,231	7.1%
Ameritrade, Inc. * P.O. Box 2226 Omaha, Nebraska 68103-2226	4,004,605	6.8%

__________________________

*	All of the shares owned by Charles Schwab & Co., National Financial Services Corp. and Ameritrade, Inc. were owned of record only.

The following table sets forth the dollar range of equity securities beneficially owned by each current director in The Yacktman Fund and in The Yacktman Focused Fund, as of December 31, 2009, which is also the valuation date:

Name of Director	Dollar Range of Equity Securities in The Yacktman Fund	Dollar Range of Equity Securities in The Yacktman Focused Fund	Dollar Range of Equity Securities in All Funds*

Disinterested Persons

Bruce B. Bingham	$50,001-$100,000	None	$50,001-$100,000

Albert J. Malwitz	Over $100,000	Over $100,000	Over $100,000

George J. Stevenson, III	$10,001-$50,000	Over $100,000	Over $100,000

Interested Persons

Donald A. Yacktman	None	Over $100,000	Over $100,000

*	The Funds form a “Family of Investment Companies” as defined in the Act and are the only funds in the Family of Investment Companies.

INVESTMENT ADVISER, ADMINISTRATOR AND FUND ACCOUNTANT

Investment Adviser

The investment adviser to the Funds is Yacktman Asset Management Co., 6300 Bridgepoint Parkway, Building One, Suite 320, Austin, Texas 78730. Pursuant to the investment advisory agreements entered into between the Company, on behalf of each of the Funds, and the Adviser (each an “Advisory Agreement”, and, collectively, the “Advisory Agreements”), the Adviser furnishes continuous investment advisory services to each of the Funds. The Adviser is controlled by Donald A. Yacktman, its President and sole stockholder.

The benefits derived by the Adviser from soft dollar arrangements are described under the caption “Allocation of Portfolio Brokerage.” None of the directors who are Disinterested Persons, or any members of their immediate family, own shares of the Adviser or companies, other than registered investment companies, controlled by or under common control with the Adviser.

The Adviser supervises and manages the investment portfolios of the Funds and, subject to such policies as the Board of Directors of the Company may determine, directs the purchase or sale of investment securities in the day-to-day management of the Funds’ investment portfolios. Under the Advisory Agreements, the Adviser, at its own expense and without reimbursement from the Funds, furnishes office space and all necessary office facilities, equipment and executive personnel for managing the investments of the Funds and pays the salaries and fees of

all officers (other than a portion of the Chief Compliance Officer’s salary) and directors of the Funds (except the fees paid to directors who are not interested persons of the Adviser). For the foregoing, the Adviser receives a monthly fee from The Yacktman Fund based on The Yacktman Fund’s average daily net assets at the annual rate of .65 of 1% on the first $500,000,000 of average daily net assets, .60 of 1% on the next $500,000,000 of average daily net assets and .55 of 1% on average daily net assets in excess of $1,000,000,000, and a monthly fee from The Yacktman Focused Fund based on The Yacktman Focused Fund’s average daily net assets at the annual rate of 1% on average daily net assets.

The Funds pay all of their own expenses, including, without limitation, the cost of preparing and printing the registration statement required under the Securities Act and any amendments thereto, the expense of registering shares with the Securities and Exchange Commission and in the various states, the printing and distribution costs of prospectuses mailed to existing investors, reports to investors, reports to government authorities and proxy statements, fees paid to directors who are not Interested Persons of the Adviser, interest charges, taxes, legal expenses, association membership dues, auditing services, insurance premiums, brokerage commissions and expenses in connection with portfolio transactions, fees and expenses of the custodian of the Funds’ assets, printing and mailing expenses and charges and expenses of dividen d disbursing agents, accounting services agents, registrars and stock transfer agents.

The Adviser has undertaken to reimburse each Fund to the extent that the aggregate annual operating expenses, including the investment advisory fee and the administration fee but excluding interest, taxes, brokerage commissions and other costs incurred in connection with the purchase or sale of portfolio securities, and extraordinary items, exceed that percentage of the average net assets of such Fund for such year, as determined by valuations made as of the close of each business day of the year, which is the most restrictive percentage provided by the state laws of the various states in which the shares of such Fund are qualified for sale. As of the date of this Statement of Additional Information, no such state law provision was applicable to the Funds. Additionally, the Adviser has voluntarily agreed to reimb urse The Yacktman Focused Fund to the extent aggregate annual operating expenses as described above exceed specified percentages of such Fund’s daily net assets as set forth in the Prospectus. For the fiscal year ended December 31, 2009 such specified percentage was 1.25%. The Funds monitor their expense ratios on a monthly basis. If the accrued amount of the expenses of either Fund exceeds the expense limitation, the Fund creates an account receivable from the Adviser for the amount of such excess. In such a situation the monthly payment of the Adviser’s fee will be reduced by the amount of such excess (and if the amount of such excess in any month is greater than the monthly payment of the Adviser’s fee, the Adviser will pay each Fund the amount of such difference), subject to adjustment month by month during the balance of each Fund’s fiscal year if accrued expenses thereafter fall below this limit.

For services provided by the Adviser under the applicable Advisory Agreement for the fiscal years ended December 31, 2009, 2008 and 2007, The Yacktman Fund paid the Adviser $4,212,748 , $1,745,836 and $2,390,617, respectively. The Adviser was not required to reimburse The Yacktman Fund for excess expenses during such years. For services provided by the Adviser under the applicable Advisory Agreement for the fiscal years ended December 31, 2009, 2008 and 2007, The Yacktman Focused Fund paid the Adviser $2,589,932 , $680,363 and

$767,805, respectively, and the Adviser reimbursed The Yacktman Focused Fund $77,878 , $70,600 and $100,999, respectively, for excess expenses.

Each Advisory Agreement will remain in effect as long as its continuance is specifically approved at least annually (i) by the Board of Directors of the Company or by the vote of a majority (as defined in the Act) of the outstanding shares of the applicable Fund, and (ii) by the vote of a majority of the directors of the Company who are not parties to the Advisory Agreement or interested persons of the Adviser, cast in person at a meeting called for the purpose of voting on such approval. Each Advisory Agreement provides that it may be terminated at any time without the payment of any penalty, by the Board of Directors of the Company or by vote of the majority of the applicable Fund’s stockholders on sixty (60) days’ written notice to the Adviser, and by the Adviser on the same notice to the applicable Fund, and that it shall be automatically terminated if it is assigned.

Administrator

U.S. Bancorp Funds Services, LLC (the “Administrator” or “USBFS”), 615 East Michigan Street, Milwaukee, Wisconsin 53202, an affiliate of U.S. Bank, N.A., serves as administrator and fund accountant to the Funds, subject to the overall supervision of the Company’s Board of Directors. Pursuant to a Fund Administration Servicing Agreement (the “Administration Agreement”), the Administrator provides certain administrative services to the Funds. These services include, but are not limited to, the following: acting as a liaison among the Funds’ service providers; coordinating the Company’s Board of Directors communications; maintaining and managing a regulatory compliance calendar; prepari ng and filing appropriate state securities law filings; maintaining state registrations; preparing and filing annual and semiannual reports on Forms N-CSR, N-PX, N-Q and N-SAR; preparing financial reports for officers, shareholders, tax authorities and independent registered public accountants; monitoring expense accruals; and preparing monthly financial statements.

For the foregoing, the Administrator receives from the Funds a fee, paid monthly at an annual rate of 0.03% of the first $300,000,000 of the Funds’ average net assets, 0.025% of the next $200,000,000 of the Funds’ average net assets, and 0.02% of the Funds' average net assets in excess of $500,000,000. Notwithstanding the foregoing, the minimum annual fee payable to the Administrator is $75,000 .

The Administration Agreement will remain in effect as long as its continuance is approved at least annually by the Board of Directors of the Company and the Administrator. The Administration Agreement may be terminated on not less than 90 days’ notice, without the payment of any penalty, by the Board of Directors of the Company or by the Administrator. For the fiscal years ended December 31, 2009, 2008 and 2007, The Yacktman Fund paid USBFS $137,360 , $73,060 and $97,243, respectively, pursuant to the administration agreement with USBFS. For the fiscal years ended December 31, 2009, 2008 and 2007, The Yacktman Focused Fund paid USBFS $47,275 , $17,473 and $22,181, respectively, pursuant to the administration agreement with USBFS.

The Advisory Agreements and the Administration Agreement provide that the Adviser and the Administrator, as the case may be, shall not be liable to the Funds or its stockholders for

anything other than willful misfeasance, bad faith, gross negligence or reckless disregard of its obligations or duties. The Advisory Agreements and the Administration Agreement also provide that the Adviser and the Administrator, as the case may be, and their officers, directors and employees may engage in other businesses, devote time and attention to any other business whether of a similar or dissimilar nature, and render services to others.

Fund Accountant

The Funds have entered into a Fund Accounting Servicing Agreement with U.S. Bancorp Fund Services, LLC pursuant to which U.S. Bancorp Fund Services, LLC has agreed to maintain the financial accounts and records of each Fund and provide other accounting services to the Funds. For its accounting services, U.S. Bancorp Fund Services, LLC is entitled to receive fees, payable monthly from the Funds at an annual rate of 0.02% of the first $300,000,000 of the Funds’ average net assets, 0.015% of the next $200,000,000 of the Funds’ average net assets, and 0.01% of the Funds average net assets in excess of $500,000,000. Notwithstanding the foregoing, the minimum annual fee payable to the Accountant is $55,000. U.S. Bancorp Fund Services, LLC is also entitled to certain out of pocket expenses, including pri cing expenses. For the fiscal years ended December 31, 2009, 2008 and 2007, the Funds paid USBFS $136,865 , $61,798 and $81,536, respectively, pursuant to the Fund Accounting Servicing Agreement.

PORTFOLIO MANAGERS

The sole investment adviser to the Funds is Yacktman Asset Management Co. The portfolio managers to the Funds may have responsibility for the day-to-day management of accounts other than the Funds. Information regarding these other accounts is set forth below. The number of accounts and assets is shown as of December 31, 2009.

	Number of Other Accounts Managed and Total Assets by Account Type			Number of Accounts and Total Assets for Which Advisory Fee is Performance-Based
Name of Portfolio Managers	Registered Investment Companies	Other Pooled Investment Vehicles	Other Accounts	Registered Investment Companies	Other Pooled Investment Vehicles	Other Accounts
Donald A. Yacktman	1 $177,259,850	-- $--	32 $128,647,515	-- $--	-- $--	-- $--
Stephen Yacktman	2 $2,055,680,713	-- $--	1 $173,719,744	-- $--	-- $--	-- $--
Jason Subotky	-- $--	-- $--	7 $29,519,508	-- $--	-- $--	-- $--

The portfolio managers of the Adviser are often responsible for managing other accounts. The Adviser typically assigns accounts with similar investment strategies to the portfolio managers to mitigate the potentially conflicting investment strategies of accounts. Other than potential conflicts between investment strategies, the side-by-side management of both the Funds

and other accounts may raise potential conflicts of interest due to the interest held by the Adviser or one of its affiliates in an account and certain trading practices used by the portfolio managers (for example, cross trades between a Fund and another account and allocation of aggregated trades). The Adviser has developed policies and procedures reasonably designed to mitigate those conflicts. In particular, the Adviser has adopted policies limiting the ability of portfolio managers to cross securities between Funds and policies designed to ensure the fair allocation of securities purchased on an aggregated basis.

The portfolio managers are compensated in various forms. The following table outlines the forms of compensation paid to each portfolio manager as of December 31, 2009.

Name of Portfolio Managers	Form of Compensation	Source of Compensation	Method Used to Determine Compensation (Including Any Differences in Method Between Account Types)
Donald A. Yacktman	Salary/Bonus	Yacktman Asset Management Co.	Donald Yacktman receives compensation that is a combination of salary and a bonus based on the profitability of Yacktman Asset Management Co., the Adviser.
Stephen Yacktman	Salary/Bonus	Yacktman Asset Management Co.	Stephen Yacktman receives compensation that is a combination of salary and a bonus based on the profitability of Yacktman Asset Management Co., the Adviser.
Jason Subotky	Salary/Bonus	Yacktman Asset Management Co.	Jason Subotky receives compensation that is a combination of salary and a bonus based on the profitability of Yacktman Asset Management Co., the Adviser.

As of December 31, 2009, Donald A. Yacktman did not beneficially own any shares of the Yacktman Fund. As of December 31, 2009, the dollar range of shares of the Yacktman Focused Fund beneficially owned by Donald A. Yacktman is over $1,000,000. As of December 31, 2009, Stephen Yacktman did not beneficially own any shares of the Yacktman Fund. As of December 31, 2009, the dollar range of shares of the Yacktman Focused Fund beneficially owned by Stephen Yacktman is over $1,000,000 . As of December 31, 2009, Jason Subotky did not beneficially own any shares of the Yacktman Fund . As of December 31, 2009, the dollar range of shares of the Yacktman Focused Fund beneficially owned by Jason Subotky is over $1,000,000 .

EXCHANGE PRIVILEGE

Investors may exchange shares of either Fund for shares of the other Fund at their net asset value. Investors who are interested in exercising the exchange privilege should first contact the Funds to obtain instructions and any necessary forms. There is a five dollar ($5) fee for each telephone exchange, and no fee for a written exchange.

The exchange privilege will not be available if (i) the proceeds from a redemption of shares are paid directly to the investor or at his or her discretion to any persons other than the

Funds or (ii) the proceeds from redemption of the shares of the applicable Fund are not immediately reinvested in shares of the other Fund through a subsequent exercise of the exchange privilege. There is currently no limitation on the number of exchanges an investor may make. The exchange privilege may be terminated by the Funds upon at least 60 days prior notice to investors.

For federal income tax purposes, a redemption of shares of a Fund pursuant to the exchange privilege will result in a capital gain if the proceeds received exceed the investor’s tax-cost basis of the shares redeemed. Such a redemption may also be taxed under state and local tax laws, which may differ from the Internal Revenue Code of 1986.

REDEMPTIONS

Frequent purchases and redemptions of any of the Funds’ shares by a shareholder may harm other shareholders of that Fund by interfering with the efficient management of that Fund’s portfolio, increasing brokerage and administrative costs, and potentially diluting the value of their shares. Because there may be less liquidity in the stocks of small capitalization companies in which the Funds may invest, the Funds may be subject to greater risk of market timing activities than if the Funds invested only in large capitalization companies.

The Board of Directors has adopted the market timing policies and procedures below to discourage frequent purchases and redemptions of each Fund’s shares.

Each Fund reserves the right to reject any purchase order for any reason or no reason, including purchase orders from potential investors that a Fund believes might engage in frequent purchases and redemptions of that Fund’s shares based on any unusual trading activity by such investor and/or such investor’s trading history.

·	Each Fund imposes a 2% redemption fee on redemptions that occur less than thirty calendar days after purchase. Any proceeds of the fee will be credited to the assets of the appropriate Fund.

The redemption fee will not apply to (1) shares purchased through reinvested distributions (dividends and capital gains), (2) shares held in retirement plans (other than IRAs), or (3) shares redeemed through any systematic withdrawal plans, but otherwise applies to all investors in the Funds, including those that invest through omnibus accounts at intermediaries such as broker-dealers. The Funds also impose a 2% exchange fee on the value of shares exchanged less than thirty calendar days after purchase.

If inappropriate trading is detected in an omnibus account registered in the name of a nominee, financial intermediary or plan sponsor, a Fund may request that the nominee, financial intermediary or plan sponsor take action to prevent the particular investor or investors from engaging in frequent or short-term trading. If inappropriate trading recurs, a Fund may refuse all future purchases from the plan, including those of plan participants not involved in the inappropriate activity.

In calculating whether a sale of Fund shares (including an exchange) is subject to a redemption fee, a shareholder’s holdings will be viewed on a “first in/first out” basis. This means that, in determining whether any fee is due, the shareholder will be deemed to have sold the shares he or she acquired earliest. The fee will be calculated based on the current price of the shares as of the trade date of the sale or exchange.

The Funds reserve the right to suspend redemptions during any period when the New York Stock Exchange is closed because of financial conditions or any other extraordinary reason and to postpone redemptions for any period during which (a) trading on the New York Stock Exchange is restricted pursuant to rules and regulations of the Securities and Exchange Commission, (b) the Securities and Exchange Commission has by order permitted such suspension or (c) an emergency, as defined by rules and regulations of the Securities and Exchange Commission, exists as a result of which it is not reasonably practicable for a Fund to dispose of its securities or fairly to determine the value of its net assets.

Each of the Funds has reserved the right to pay the redemption price of its shares in assets other than cash. In accordance with Rule 18f-1 under the Act, the Company has filed Form N-18F-1 with the Securities and Exchange Commission pursuant to which each Fund has committed to pay in cash all requests for redemption by any stockholder of record, limited in amount with respect to each stockholder during any ninety-day period to the lesser of (i) $250,000, or (ii) 1% of the net asset value of the Fund at the beginning of the ninety-day period.

SYSTEMATIC WITHDRAWAL PLAN

An investor who owns shares of a Fund worth at least $10,000 at the current net asset value may, by completing an application which may be obtained from the Funds or U.S. Bancorp Fund Services, LLC, create a Systematic Withdrawal Plan from which a fixed sum will be paid to the investor at regular intervals through redemption of shares of such Fund. To establish the Systematic Withdrawal Plan, the investor deposits shares of the Funds with the Company and appoints it as agent to effect redemptions of Fund shares held in the account for the purpose of making monthly or quarterly withdrawal payments of a fixed amount to the investor out of the account. Fund shares deposited by the investor in the account need not be endorsed or accompanied by a stock power if registered in the same name as the account; otherwise, a properly executed endorsement or stock power, obtained from any bank, broker-dealer or the Funds is required. The investor’s signature should be guaranteed by a bank, a member firm of a national stock exchange or other eligible guarantor.

The minimum amount of a withdrawal payment is $100. These payments will be made from the proceeds of periodic redemptions of shares in the account at net asset value. Redemptions can be made monthly, quarterly or annually on any day the investor chooses or, if that day is a weekend day or a holiday, on the following business day. The Funds recommend that investors participating in the Systematic Withdrawal Plan elect to reinvest all income dividends and capital gains distributions payable on the shares held in their accounts in additional shares of the Funds, at net asset value. Investors may deposit additional shares in their accounts at any time.

Withdrawal payments cannot be considered as yield or income on the investor’s investment, since portions of each payment will normally consist of a return of capital. Depending on the size or the frequency of the disbursements requested, and the fluctuation in the value of the applicable Fund’s portfolio, redemptions for the purpose of making such disbursements may reduce or even exhaust the investor’s account.

The investor may vary the amount or frequency of withdrawal payments, temporarily discontinue them, or change the designated payee or payee’s address, by notifying U.S. Bancorp Fund Services, LLC in writing five business days prior to the next transaction. The Funds may terminate the Systematic Withdrawal Plan at any time.

AUTOMATIC INVESTMENT PLAN, TELEPHONE

PURCHASES AND RETIREMENT PLANS

Automatic Investment Plan

The Funds offer an Automatic Investment Plan whereby an investor may automatically make purchases of shares of the Funds on a regular, convenient basis ($100 minimum per transaction). A $500 minimum initial investment must be met before the Automatic Investment Plan may be established. Under the Automatic Investment Plan, an investor’s designated bank or other financial institution debits a preauthorized amount on the investor’s account each month (up to four times per month as long as there are seven days between each debit) and applies the amount to the purchase of shares of the Funds. The Automatic Investment Plan must be implemented with a financial institution that is a member of the Automated Clearing House (“ACH”). No service fee is currently charged by the Fun ds for participating in the Automatic Investment Plan. A $25 fee will be imposed by U.S. Bancorp Fund Services, LLC for any Automatic Investment Plan purchase that cannot be completed. Applications to establish the Automatic Investment Plan are available from the Funds. Investors who wish to make a change in investments made through an automatic investment plan may do so by calling U.S. Bancorp Fund Services, LLC five business days prior to the next transaction, at 1-800-457-6033.

Telephone Purchases

An investor may make additions to the investor’s account by telephone ($100 minimum) using the investor’s bank account to clear the purchase via electronic funds transfer (“EFT”). Only bank accounts held at domestic financial institutions that are ACH members can be used for telephone transactions. Telephone transactions may not be used for initial purchases of shares of the Funds. Fund shares will be purchased at the net asset value determined as of the close of trading on the date that an investor places an order, if the call is received prior to the close of trading on that day. Most transfers are completed within one business day. No fee is currently charged for this service. To establish the telephone purchase option, please complete the app ropriate section of the purchase application. Inquiries concerning this option may be directed to U.S. Bancorp Fund Services, LLC at 1-800-457-6033.

Retirement Plans

The Funds offer the following retirement plans that may be funded with purchases of shares of the Funds and may allow investors to shelter some of their income from taxes:

Individual Retirement Account (“IRA”)

Individual stockholders may establish their own tax-sheltered Individual Retirement Accounts (“IRA”). The minimum initial investment for an IRA is $500. The Funds currently offer a prototype IRA plan and a prototype Roth IRA plan. There is currently no charge for establishing an account, although there is an annual maintenance fee. (See the applicable IRA Custodial Agreement and Disclosure Statement for a discussion of the annual maintenance fee, other fees associated with the account, eligibility requirements and related tax consequences.)

Simplified Employee Pension Plan (“SEP-IRA”)

The Funds also offer a Simplified Employee Pension (“SEP”) plan for employers, including self-employed individuals, who wish to purchase shares of the Funds with tax-deductible contributions. Under the SEP plan, employer contributions are made directly to the IRA accounts of eligible participants.

Savings Incentive Match Plan for Employees of Small Employers (“SIMPLE”)

The Funds also offer a SIMPLE plan for employers, including self-employed individuals, with 100 or fewer employees who wish to purchase shares of the Funds with tax-deductible contributions. A SIMPLE plan allows employees to elect to reduce their compensation and have such amounts contributed to the plan. Under the SIMPLE plan, employer and employee contributions are made directly to the SIMPLE IRA accounts of eligible participants.

Defined Contribution Retirement Plan (Keogh or Corporate Profit-sharing and Money-Purchase Plans)

A prototype defined contribution retirement plan is available for employers, including self-employed individuals, who wish to purchase shares of the Funds with tax-deductible contributions.

Cash or Deferred 401(k) Plan

A prototype cash or deferred 401(k) arrangement is also available as part of the Defined Contribution Retirement Plan for employers who wish to allow employees to elect to reduce their compensation and have such amounts contributed to the plan.

Coverdell Education Savings Account

The Funds also offer a Coverdell Education Savings Account (an “Education IRA”). While contributions to the Education IRA are not tax deductible when made, if amounts contributed and earnings thereon are used for certain educational purposes, neither the contributor nor the beneficiary of the Education IRA are taxed upon distribution. The minimum initial investment for an Education IRA is $500.

A description of applicable service fees and certain limitations on contributions and withdrawals, as well as application forms, are available from the Funds upon request. The IRA documents contain a disclosure statement which the Internal Revenue Service requires to be

furnished to individuals who are considering adopting the IRA. Because a retirement program involves commitments covering future years, it is important that the investment objectives of the Funds be consistent with the participant’s retirement objectives. Premature withdrawals from a retirement plan will result in adverse tax consequences. Consultation with a competent financial and tax adviser regarding the foregoing retirement plans is recommended.

CUSTODIAN

U.S. Bank, N.A., 1555 N. River Center Drive, Suite 302, Milwaukee, Wisconsin 53212, acts as custodian for the Funds. As such, U.S. Bank, N.A. holds all securities and cash of the Funds, delivers and receives payment for securities sold, receives and pays for securities purchased, collects income from investments and performs other duties, all as directed by officers of the Company. U.S. Bank, N.A. does not exercise any supervisory function over the management of the Funds, the purchase and sale of securities or the payment of distributions to stockholders. U.S. Bancorp Fund Services, LLC, an affiliate of U.S. Bank, N.A., acts as each Fund’s transfer agent and dividend disbursing agent.

INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Cohen Fund Audit Services, Ltd., 800 Westpoint Parkway, Suite 1100, Westlake, Ohio 44145 currently serves as the independent registered public accounting firm for the Funds. As such Cohen Fund Audit Services, Ltd. performs an audit of each Fund’s financial statements and considers each Fund’s internal control structure.

ALLOCATION OF PORTFOLIO BROKERAGE

The Funds’ securities trading and brokerage policies and procedures are reviewed by and subject to the supervision of the Board of Directors of the Company. Decisions to buy and sell securities for each Fund are made by the Adviser subject to review by the Company’s Board of Directors. In placing purchase and sale orders for portfolio securities for the Funds, it is the policy of the Adviser to seek the best execution of orders at the most favorable price in light of the overall quality of brokerage and research services provided, as described in this and the following paragraph. Many of these transactions involve payment of a brokerage commission by the Funds. In some cases, transactions are with firms who act as principals of their own accounts. In selecting brokers to effect portfolio transactions, the determination of what is expected to result in best execution at the most favorable price involves a number of largely judgmental considerations. Among these are the Adviser’s evaluation of the broker’s efficiency in executing and clearing transactions, block trading capability (including the broker’s willingness to position securities) and the broker’s reputation, financial strength and stability. The most favorable price to a Fund means the best net price without regard to the mix between purchase or sale price and commission, if any. Over-the-counter securities may be purchased and sold directly with principal market makers who retain the difference in their cost in the security and its selling price (i.e. “markups” when the market maker sells a security and “markdowns” when the market maker buys a security). In many instances, the Adviser feels that better prices are available from non-principal market makers who are paid commissions directly.

In allocating brokerage business for the Funds, the Adviser also takes into consideration the research, analytical, statistical and other information and services provided by the broker, such as general economic reports and information, market quotations, reports or analyses of particular companies or industry groups, market timing and technical information, and the availability of the brokerage firm’s analysts for consultation. While the Adviser believes these services have substantial value, they are considered supplemental to the Adviser’s own efforts in the performance of its duties under the Advisory Agreements. Other clients of the Adviser may indirectly benefit from the availability of these services to the Adviser, and the Funds may indirectly benefit from services available to the Adviser as a result of transactions for other clients. The Advisory Agreements provide that the Adviser may cause a Fund to pay a broker which provides brokerage and research services to the Adviser a commission for effecting a securities transaction in excess of the amount another broker would have charged for effecting the transaction, if the Adviser determines in good faith that such amount of commission is reasonable in relation to the value of brokerage and research services provided by the executing broker viewed in terms of either the particular transaction or the Adviser’s overall responsibilities with respect to the Fund and the other accounts as to which he exercises investment discretion. For the fiscal years ended December 31, 2009, 2008 and 2007, The Yacktman Fund paid brokerage commissions of $1,276,200 , $723,783 and $266,593, respectively, on total transactions of $794,287,036 , $260,647,434 and $182,507,499, respectively. During the fiscal year ended December ;31, 2009, The Yacktman Fund paid brokerage commissions of $673,036 on transactions of $504,683,787 to brokers who provided research services to the Adviser. For the fiscal years ended December 31, 2009, 2008 and 2007, The Yacktman Focused Fund paid brokerage commissions of $683,020 , $267,005 and $95,272, respectively, on total transactions of $413,656,252 , $103,597,439 and $48,413,929, respectively. During the fiscal year ended December 31, 2009, The Yacktman Focused Fund paid brokerage commissions of $299,014 on transactions of $243,345,982 to brokers who provided research services to the Adviser.

TAXES

Each Fund annually will endeavor to qualify for and elect tax treatment applicable to a regulated investment company under Subchapter M of the Internal Revenue Code of 1986 (the “Code”). Each Fund has so qualified in each of its fiscal years. If a Fund fails to qualify as a regulated investment company under Subchapter M in any fiscal year, it will be treated as a corporation for federal income tax purposes. As such the Fund failing to qualify would be required to pay income taxes on its net investment income and net realized capital gains, if any, at the rates generally applicable to corporations. Stockholders of a Fund that did not qualify as a regulated investment company under Subchapter M would not be liable for income tax on the Fund’s net investment income or net rea lized capital gains in their individual capacities. Distributions to stockholders, whether from the Fund’s net investment income or net realized capital gains, would be treated as taxable dividends to the extent of current or accumulated earnings and profits of the Fund.

Each Fund intends to distribute all of its net investment income and net capital gain each fiscal year. Dividends from net investment income (including short-term capital gain) are taxable to investors as ordinary income (although a portion of such dividends may be taxable to investors at the lower rate applicable to dividend income), whereas distributions of net realized

long-term capital gains are taxable as long-term capital gains regardless of the stockholder’s holding period for the shares. Such dividends and distributions are taxable to stockholders, whether received in cash or in additional shares of the respective Fund. A portion of the Funds’ income distributions may be eligible for the 70% dividends-received deduction for domestic corporate stockholders.

From time to time the Funds may elect to treat a portion of earnings and profits included in stockholder redemptions as part of the Funds’ dividends paid deduction.

Any dividend or capital gain distribution paid shortly after a purchase of shares of a Fund will have the effect of reducing the per share net asset value of such shares by the amount of the dividend or distribution. Furthermore, if the net asset value of the shares of a Fund immediately after a dividend or distribution is less than the cost of such shares to the investor, the dividend or distribution will be taxable to the investor even though it results in a return of capital to the investor.

Redemption of shares will generally result in a capital gain or loss for income tax purposes. The tax treatment of such capital gain or loss will depend upon the stockholder’s holding period. However, if a loss is realized on shares held for six months or less, and the stockholder received a capital gain distribution during that period, then such loss is treated as a long-term capital loss to the extent of the capital gain distribution received.

Investors may also be subject to state and local taxes.

Each Fund will be required to withhold federal income tax at a rate of 28% (“backup withholding”) from dividend payments and redemption and exchange proceeds if an investor fails to furnish such Fund with his or her correct social security number or other tax identification number

This section is not intended to be a complete discussion of present or proposed federal income tax laws and the effect of such laws on an investor. Investors are urged to consult with their respective tax advisers for a complete review of the tax ramifications of an investment in a Fund.

STOCKHOLDER MEETINGS

The Maryland General Corporation Law permits registered investment companies, such as the Funds, to operate without an annual meeting of stockholders under specified circumstances if an annual meeting is not required by the Act. The Company has adopted the appropriate provisions in its Bylaws and may, at its discretion, not hold an annual meeting in any year in which the election of directors is not required to be acted on by stockholders under the Act.

The Company’s Bylaws also contain procedures for the removal of directors by its stockholders. At any meeting of stockholders, duly called and at which a quorum is present, the stockholders may, by the affirmative vote of the holders of a majority of the votes entitled to be cast thereon, remove any director or directors from office and may elect a successor or successors to fill any resulting vacancies for the unexpired terms of removed directors.

Upon the written request of the holders of shares entitled to not less than ten percent (10%) of all the votes entitled to be cast at such meeting, the Secretary of the Company shall promptly call a special meeting of stockholders for the purpose of voting upon the question of removal of any director. Whenever ten or more stockholders of record who have been such for at least six months preceding the date of application, and who hold in the aggregate either shares having a net asset value of at least $25,000 or at least one percent (1%) of the total outstanding shares, whichever is less, shall apply to the Company’s Secretary in writing, stating that they wish to communicate with other stockholders with a view to obtaining signatures to a request for a meeting as described above and accompanied by a form of communicat ion and request which they wish to transmit, the Secretary shall within five business days after such application either: (1) afford to such applicants access to a list of the names and addresses of all stockholders as recorded on the books of the Funds; or (2) inform such applicants as to the approximate number of stockholders of record and the approximate cost of mailing to them the proposed communication and form of request.

If the Secretary elects to follow the course specified in clause (2) of the last sentence of the preceding paragraph, the Secretary, upon the written request of such applicants, accompanied by a tender of the material to be mailed and of the reasonable expenses of mailing, shall, with reasonable promptness, mail such material to all stockholders of record at their addresses as recorded on the books unless within five business days after such tender the Secretary shall mail to such applicants and file with the Securities and Exchange Commission, together with a copy of the material to be mailed, a written statement signed by at least a majority of the Board of Directors to the effect that in their opinion either such material contains untrue statements of fact or omits to state facts necessary to make the statements contained therein n ot misleading, or would be in violation of applicable law, and specifying the basis of such opinion.

After opportunity for hearing upon the objections specified in the written statement so filed, the Securities and Exchange Commission may, and if demanded by the Board of Directors or by such applicants shall, enter an order either sustaining one or more of such objections or refusing to sustain any of them. If the Securities and Exchange Commission shall enter an order refusing to sustain any of such objections, or if, after the entry of an order sustaining one or more of such objections, the Securities and Exchange Commission shall find, after notice and opportunity for hearing, that all objections so sustained have been met, and shall enter an order so declaring, the Secretary shall mail copies of such material to all stockholders with reasonable promptness after the entry of such order and the renewal of such tender.

CAPITAL STRUCTURE

The Company’s authorized capital consists of 1,000,000,000 shares of Common Stock, $0.0001 par value. The Common Stock is divisible into an unlimited number of “series,” each of which is a separate fund. Stockholders are entitled: (i) to one vote per full share of Common Stock; (ii) to such distributions as may be declared by the Company’s Board of Directors out of funds legally available; and (iii) upon liquidation, to participate ratably in the assets available for distribution. There are no conversion or sinking fund provisions applicable to the shares, and the holders have no preemptive rights and may not cumulate their votes in the election of directors. Consequently the holders of more than 50% of the shares of Common Stock voting for the election of directors can elect the entire Board of Directors and, in such event, the holders of the

remaining shares voting for the election of directors will not be able to elect any person or persons to the Board of Directors.

Shares of Common Stock are redeemable and are transferable. All shares issued and sold by the Funds will be fully paid and nonassessable. Fractional shares of Common Stock entitle the holder to the same rights as whole shares of Common Stock.

Pursuant to the Company’s Articles of Incorporation, the Board of Directors may classify or reclassify any unissued shares of the Funds and may designate or redesignate the name of any outstanding class of shares of the Funds. As a general matter, shares are voted in the aggregate and not by class, except where class voting is required by Maryland law or the Act (e.g., a change in investment policy or approval of an investment advisory agreement). All consideration received from the sale of shares of any class of the Funds’ shares, together with all income, earnings, profits and proceeds thereof, belong to that class and are charged with the liabilities in respect of that class and of that class’ share of the general liabilities of the Funds in the proportion that the total net assets of the cla ss bear to the total net assets of all classes of the Funds’ shares. The net asset value of a share of any class is based on the assets belonging to that class less the liabilities charged to that class, and dividends may be paid on shares of any class of Common Stock only out of lawfully available assets belonging to that class. In the event of liquidation or dissolution of the Funds, the holders of each class would be entitled, out of the assets of the Funds available for distribution, to the assets belonging to that class.

DESCRIPTION OF SECURITIES RATINGS

Up to 10% of the net assets of each of The Yacktman Fund and The Yacktman Focused Fund may be invested in convertible debt securities and low-rated securities. Otherwise, the Funds have no restrictions regarding the rating or credit quality of the fixed income or convertible securities that they may purchase and hold in their portfolios. The Funds may invest in commercial paper and commercial paper master notes rated A-2 or better by Standard & Poor’s or P-2 by Moody’s. A brief description of the ratings symbols and their meanings follows.

Standard & Poor’s Debt Ratings. A Standard & Poor’s corporate debt rating is a current assessment of the creditworthiness of an obligor with respect to a specific obligation. This assessment may take into consideration obligors such as guarantors, insurers or lessees.

The debt rating is not a recommendation to purchase, sell or hold a security, inasmuch as it does not comment as to market price or suitability for a particular investor.

The ratings are based on current information furnished by the issuer or obtained by Standard & Poor’s from other sources it considers reliable. Standard & Poor’s does not perform any audit in connection with any rating and may, on occasion, rely on unaudited financial information. The ratings may be changed, suspended or withdrawn as a result of changes in, or unavailability of, such information, or for other circumstances.

The ratings are based, in varying degrees, on the following considerations:

I.	Likelihood of default - capacity and willingness of the obligor as to the timely payment of interest and repayment of principal in accordance with the terms of the obligation;

II.	Nature of and provisions of the obligation;

III.	Protection afforded by, and relative position of the obligation in the event of bankruptcy, reorganization or other arrangement under the laws of bankruptcy and other laws affecting creditors’ rights;

Investment Grade

AAA - Debt rated ‘AAA’ has the highest rating assigned by Standard & Poor’s. Capacity to pay interest and repay principal is extremely strong.

AA - Debt rated ‘AA’ has a very strong capacity to pay interest and repay principal and differs from the higher rated issues only in small degree.

A - Debt rated ‘A’ has a strong capacity to pay interest and repay principal although it is somewhat more susceptible to the adverse effects of changes in circumstances and economic conditions than debt in higher rated categories.

BBB - Debt rated ‘BBB’ is regarded as having an adequate capacity to pay interest and repay principal. Whereas it normally exhibits adequate protection parameters, adverse economic conditions or changing circumstances are more likely to lead to a weakened capacity to pay interest and repay principal for debt in this category than in higher rated categories.

Speculative Grade

Debt rated ‘BB’, ‘B’, ‘CCC’, ‘CC’ and ‘C’ is regarded as having predominantly speculative characteristics with respect to capacity to pay interest and repay principal. ‘BB’ indicates the least degree of speculation and ‘C’ the highest. While such debt will likely have some quality and protective characteristics, these are outweighed by large uncertainties or major risk exposures to adverse conditions.

BB - Debt rated ‘BB’ has less near-term vulnerability to default than other speculative issues. However, it faces major ongoing uncertainties or exposure to adverse business, financial, or economic conditions which could lead to inadequate capacity to meet timely interest and principal payments. The ‘BB’ rating category is also used for debt subordinated to senior debt that is assigned an actual or implied ‘BBB-‘ rating.

B - Debt rated ‘B’ has a greater vulnerability to default but currently has the capacity to meet interest payments and principal repayments. Adverse business, financial, or economic conditions will likely impair capacity or willingness to pay interest and repay principal. The ‘B’ rating category is also used for debt subordinated to senior debt that is assigned an actual or implied ‘BB’ or ‘BB-‘ rating.

CCC - Debt rated ‘CCC’ has a currently identifiable vulnerability to default, and is dependent upon favorable business, financial, and economic conditions to meet timely payment of interest and repayment of principal. In the event of adverse business, financial, or economic conditions, it is not likely to have the capacity to pay interest and repay principal. The ‘CCC’ rating category is also used for debt subordinated to senior debt that is assigned an actual or implied ‘B’ or ‘B-‘ rating.

CC - Debt rated ‘CC’ typically is applied to debt subordinated to senior debt that is assigned an actual or implied ‘CCC’ rating.

C - Debt rated ‘C’ typically is applied to debt subordinated to senior debt which is assigned an actual or implied ‘CCC-‘ debt rating. The ‘C’ rating may be used to cover a situation where a bankruptcy petition has been filed, but debt service payments are continued.

CI - The rating ‘CI’ is reserved for income bonds on which no interest is being paid.

D - Debt rated ‘D’ is in payment default. The ‘D’ rating category is used when interest payments or principal payments are not made on the date due even if the applicable grace period has not expired, unless S&P believes that such payments will be made during such period. The ‘D’ rating also will be used upon the filing of a bankruptcy petition if debt service payments are jeopardized.

Moody’s Bond Ratings.

Investment Grade

Aaa - Bonds which are rated Aaa are judged to be of the best quality. They carry the smallest degree of investment risk and are generally referred to as “gilt edged.” Interest payments are protected by a large, or by an exceptionally stable margin and principal is secure. While the various protective elements are likely to change, such changes as can be visualized are most unlikely to impair the fundamentally strong position of such issues.

Aa - Bonds which are Aa are judged to be of high quality by all standards. Together with the Aaa group they comprise what are generally known as high-grade bonds. They are rated lower than the best bonds because margins of protection may not be as large as in Aaa securities or fluctuation of protective elements may be of greater amplitude, or there may be other elements present which make the long-term risks appear somewhat larger than in Aaa securities.

A - Bonds which are rated A possess many favorable investment attributes and are to be considered as upper-medium grade obligations. Factors giving security to principal and interest are considered adequate, but elements may be present which suggest a susceptibility to impairment some time in the future.

Baa - Bonds which are rated Baa are considered as medium-grade obligations (i.e., they are neither highly protected nor poorly secured). Interest payments and principal security appear adequate for the present but certain protective elements may be lacking or may be characteristically unreliable over any great length of time. Such bonds lack outstanding investment characteristics and in fact have speculative characteristics as well.

Speculative Grade

Ba - Bonds which are rated Ba are judged to have speculative elements; their future cannot be considered as well-assured. Often the protection of interest and principal payments may be very moderate, and thereby not well safeguarded during both good and bad times over the future. Uncertainty of position characterizes bonds in this class.

B - Bonds which are rated B generally lack characteristics of the desirable investment. Assurance of interest and principal payments or of maintenance of other terms of the contract over any long period of time may be small.

Caa - Bonds which are rated Caa are of poor standing. Such issues may be in default or there may be present elements of danger with respect to principal or interest.

Ca - Bonds which are rated Ca represent obligations which are speculative in a high degree. Such issues are often in default or have other marked shortcomings.

C - Bonds which are rated C are the lowest rated class of bonds, and issues so rated can be regarded as having extremely poor prospects of ever attaining any real investment standing.

Moody’s applies numerical modifiers 1, 2 and 3 in each of the foregoing generic rating classifications. The modifier 1 indicates that the company ranks in the higher end of its generic rating category; the modifier 2 indicates a mid-range ranking; and the modifier 3 indicates that the company ranks in the lower end of its generic rating category.

Standard & Poor’s Commercial Paper Ratings. A Standard & Poor’s commercial paper rating is a current assessment of the likelihood of timely payment of debt considered short-term in the relevant market. Ratings are graded into several categories, ranging from A-1 for the highest quality obligations to D for the lowest. The three highest categories are as follows:

A-1. This highest category indicates that the degree of safety regarding timely payment is strong. Those issuers determined to possess extremely strong safety characteristics are denoted with a plus sign (+) designation.

A-2. Capacity for timely payment on issues with this designation is satisfactory. However the relative degree of safety is not as high as for issuers designated “A-1”.

A-3. Issues carrying this designation have adequate capacity for timely payment. They are, however, more vulnerable to the adverse effects of changes in circumstances than obligations carrying a higher designation.

Moody’s Commercial Paper Ratings. Among the factors considered by Moody’s in assigning ratings are the following: (1) evaluation of the management of the issuer; (2) economic evaluation of the issuer’s industry or industries which may be inherent in certain areas; (3) evaluation of the issuer’s products in relation to competition and customer acceptance; (4) liquidity; (5) amount and quality of long-term debt; (6) trend of earnings over a period of ten years; (7) financial strength of a parent company and the relationships which exist with the issuer; and (8) recognition by the management of obligations which may be present or may arise as a result of public interest questions and preparations to meet such obligations. Relative differences in these factors determine whether the issuer’s commercial paper is rated P-1, P-2 or P-3.

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933	T

Pre-Effective Amendment No. ___	£

Post-Effective Amendment No. 23	T

and/or

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940	T

Amendment No. 24 T (Check appropriate box or boxes.)

THE YACKTMAN FUNDS, INC. (Exact Name of Registrant as Specified in Charter)

6300 Bridgepoint Parkway, Building One, Suite 320
Austin, Texas		78730
(Address of Principal Executive Offices)		(Zip Code)

(512) 767-6700 (Registrant’s Telephone Number, including Area Code)


	Copy to:

Donald A. Yacktman	Richard L. Teigen
Yacktman Asset Management Co.	Foley & Lardner LLP
6300 Bridgepoint Parkway, Building One, Suite 320	777 East Wisconsin Avenue
Austin, Texas 78730	Milwaukee, Wisconsin 53202
(Name and Address of Agent for Service)

Maximum Sales Charge (Load)
Imposed on Purchases	No Sales Charge
Maximum Deferred
Sales Charge (Load)	No Deferred
	Sales Charge
Maximum Sales Charge (Load)
Imposed on Reinvested
Dividends and Distributions	No Sales Charge
Redemption Fee
(as a percentage of amount
redeemed within 30 calendar days)	2%
Exchange Fee	None

Management Fees	0.64%
Distribution and/or Service (12b-1) Fees	0.00%
Other Expenses	0.29%
Total Annual Fund Operating Expenses	0.93%

	One Year	Three Years	Five Years	Ten Years
	$95	$296	$515	$1,143

Summary Information		3
Investment Objective s, Strategies and Risks		13
Management of the Funds		15
The Funds’ Share Price		15
Purchasing Shares		16
Redeeming Shares		20
Exchanging Shares		24
Dividends, Distributions and Taxes		24
Financial Highlights		26
To Learn More about the Funds		28

	One Year	Five Years	Ten Years
The Yacktman Fund
Return before taxes	59.31%	6.87%	11.90%
Return after taxes
on distributions	58.87%	5.65%	10.40%
Return after taxes
on distributions
and sale of Fund
shares	38.84%	5.60%	9.94%
S&P 500 (reflects no
deductions for fees,
expense, or taxes)	26.46%	0.42%	-0.95%

Management Fees	1.00%
Distribution and/or Service (12b-1) Fees	0.00%
Other Expenses	0.28%
Total Annual Fund Operating Expenses	1.28%
Fee Waiver	0.03%(1)
Total Annual Fund Operating
Expenses After Fee Waiver	1.25%

♦ Individual Retirement Accounts and other retirement plans	$500
♦ Automatic Investment Plan	$500
♦ All other accounts	$2,500

	For the Years Ended December 31,
	2009			2008			2007			2006			2005
Net asset value, beginning of period	$	9.68		$	13.39		$	15.79		$	14.67		$	15.34
O perations:
Net investment income		0.10			0.17			0.35			0.30			0.28
Net realized and unrealized gain (loss)
on investment securities		5.64			(3.66	)		0.21			2.05			(0.48	)
Total from operations		5.74			(3.49	)		0.56			2.35			(0.20	)
Less distributions:
From net investment income		(0.10	)		(0.18	)		(0.34	)		(0.30	)		(0.28	)
From net realized gains		(0.10	)		(0.04	)		(2.62	)		(0.93	)		(0.19	)
Total distributions		(0.20	)		(0.22	)		(2.96	)		(1.23	)		(0.47	)
Net asset value, end of period	$	15.22		$	9.68		$	13.39		$	15.79		$	14.67
Total Return		59.31%			(26.05)%			3.39%			15.95%			(1.30)%
Supplemental data and ratios:
Net assets, end of period (000's)	$	1,401,228		$	296,659		$	291,574		$	429,072		$	438,912
Ratio of net expenses to average net assets		0.93%			0.95%			0.95%			0.96%			0.92%
Ratio of net investment income
to average net assets		1.43%			1.92%			1.71%			1.90%			1.86%
Portfolio turnover rate		14.29%			32.77%			23.82%			17.93%			8.64%

	Year Ended December 31,
	2009			2008			2007			2006			2005
Net asset value, beginning of period	$	9.97		$	14.00		$	16.00		$	14.96		$	15.83
O perations:
Net investment income		0.05			0.15			0.23			0.21			0.22
Net realized and unrealized gain (loss)
on investment securities		6.21			(3.45	)		0.34			2.20			(0.51	)
Total from operations		6.26			(3.30	)		0.57			2.41			(0.29	)
Less distributions:
From net investment income		(0.05	)		(0.16	)		(0.23	)		(0.21	)		(0.22	)
From net realized gains		(0.05	)		(0.57	)		(2.34	)		(1.16	)		(0.36	)
Total distributions		(0.10	)		(0.73	)		(2.57	)		(1.37	)		(0.58	)
Net asset value, end of period	$	16.13		$	9.97		$	14.00		$	16.00		$	14.96
Total Return		62.76%			(23.48)%			3.46%			16.13%			(1.83)%
Supplemental data and ratios:
Net assets, end of period (000's)	$	669,661		$	65,467		$	67,052		$	90,534		$	84,608
Ratio of expenses before expense
reimbursements to average net assets		1.28%			1.35%			1.38%			1.35%			1.32%
Ratio of net expenses to average net assets		1.25%			1.25%			1.25%			1.25%			1.25%
Ratio of net investment income
to average net assets		0.79%			1.31%			1.23%			1.40%			1.30%
Portfolio turnover rate		8.26%			67.11%			30.49%			30.61%			5.62%

Exhibit No.	Description
(a)	Registrant’s Articles of Incorporation, as amended. (2)
(b)	Registrant’s Bylaws. (3)
(c)	(See Articles of Incorporation, as amended, and Bylaws).
(d)(1)	Investment Advisory Agreement with Yacktman Asset Management Co., on behalf of The Yacktman Fund. (2)
(d)(2)	Investment Advisory Agreement with Yacktman Asset Management Co., on behalf of The Yacktman Focused Fund. (1)
(e)	None.
(f)	None.
(g)	Custodian Agreement with First Wisconsin Trust Company (predecessor to U.S. Bank, N.A.). (1)
(h)(1)	Fund Administration Servicing Agreement with U.S. Bancorp Fund Services, LLC. (5)
(h)(2)	Transfer Agent Agreement with First Wisconsin Trust Company (predecessor to U.S. Bancorp Fund Services, LLC). (2)
(h)(3)	Fund Accounting Servicing Agreement with U.S. Bancorp Fund Services, LLC. (5)
(h)(4)	Expense Reimbursement Agreement.
(i)	Opinion of Foley & Lardner LLP, counsel for Registrant.
(j)	Consent of Cohen Fund Audit Services, Ltd.
(k)	None.
(l)	Subscription Agreement. (2)
(m)	None.
(n)	None.
(p)	Code of Ethics of Registrant and Yacktman Asset Management Co. (4)

Name	Title	Date
/s/Donald A. Yacktman Donald A. Yacktman	President and Treasurer (Principal Executive, Financial and Accounting Officer) and a Director	April 30, 2010
/s/Bruce B. Bingham	Director	April 30, 2010
Bruce B. Bingham
/s/Albert J. Malwitz	Director	April 30, 2010
Albert J. Malwitz
/s/George J. Stevenson III	Director	April 30, 2010
George J. Stevenson III

Exhibit No.	Exhibit
(a)	Registrant’s Articles of Incorporation, as amended.*
(b)	Registrant’s Bylaws.*
(c)	(See Articles of Incorporation, as amended, and Bylaws).
(d)(1)	Investment Advisory Agreement with Yacktman Asset Management Co., on behalf of The Yacktman Fund.*
(d)(2)	Investment Advisory Agreement with Yacktman Asset Management Co., on behalf of The Yacktman Focused Fund.*
(e)	None.
(f)	None.
(g)	Custodian Agreement with First Wisconsin Trust Company (predecessor to U.S. Bank, N.A.).*
(h)(1)	Fund Administration Servicing Agreement with U.S. Bancorp Fund Services, LLC.*
(h)(2)	Transfer Agent Agreement with First Wisconsin Trust Company (predecessor to U.S. Bancorp Fund Services, LLC).*
(h)(3)	Fund Accounting Servicing Agreement with U.S. Bancorp Fund Services, LLC.*
(h)(4)	Expense Reimbursement Agreement.
(i)	Opinion of Foley & Lardner LLP, counsel for Registrant.
(j)	Consent of Cohen Fund Audit Services, Ltd.
(k)	None.
(l)	Subscription Agreement.*
(m)	None.
(n)	None.
(p)	Code of Ethics of Registrant and Yacktman Asset Management Co.*