-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, BUN5lfkVUUpehQUYufBBuQ8bY/KPFXU8V5W6YhPbsKL0DWTnLOlfgKsR8ZnceNza ITulLT23NpyrArpOPgLhLA== 0000948221-05-000036.txt : 20050307 0000948221-05-000036.hdr.sgml : 20050307 20050307165141 ACCESSION NUMBER: 0000948221-05-000036 CONFORMED SUBMISSION TYPE: N-CSR PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20041231 FILED AS OF DATE: 20050307 DATE AS OF CHANGE: 20050307 EFFECTIVENESS DATE: 20050307 FILER: COMPANY DATA: COMPANY CONFORMED NAME: YACKTMAN FUND INC CENTRAL INDEX KEY: 0000885980 IRS NUMBER: 363831621 STATE OF INCORPORATION: MD FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: N-CSR SEC ACT: 1940 Act SEC FILE NUMBER: 811-06628 FILM NUMBER: 05664514 BUSINESS ADDRESS: STREET 1: 303 W MADISON ST CITY: CHICAGO STATE: IL ZIP: 60606 BUSINESS PHONE: 3126412400 MAIL ADDRESS: STREET 1: 803 WEST MICHIGAN STREET STREET 2: SUITE A CITY: MILWAUKEE STATE: WI ZIP: 53233 N-CSR 1 ya19266.txt UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM N-CSR CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES Investment Company Act File Number 811-6628 -------- The Yacktman Funds, Inc. 1110 Lake Cook Road Suite 385 Buffalo Grove, IL 60089 ---------------------------------------- (Address of principal executive offices) Yacktman Asset Management Co. 1110 Lake Cook Road Suite 385 Buffalo Grove, IL 60089 ---------------------------------------- (Name and address of agent for service) Registrant's telephone number, including area code: (847) 325-0707 -------------- Date of fiscal year end: December 31 ----------- Date of reporting period: December 31, 2004 ----------------- ITEM 1. REPORTS TO STOCKHOLDERS The following is a copy of the report transmitted to shareholders pursuant to Rule 30e-1 under the Investment Company Act of 1940 (17 CFR 270.30e-1) [LOGO] THE YACKTMAN FUNDS ---------------------------------- ANNUAL REPORT ---------------------------------- December 31, 2004 This report is submitted for the general information of shareholders of The Yacktman Funds. It is not authorized for distribution to prospective investors unless accompanied or preceded by an effective Prospectus for the Funds, which contains more information concerning the Funds' investment policies, as well as fees and expenses and other pertinent information. Read the Prospectus carefully. THE YACKTMAN FUNDS, INC. - ----------------------------------------- MESSAGE TO SHAREHOLDERS - ----------------------------------------- Dear Fellow Shareholder: The Fund shares are virtually at their all-time highs when adjusted for distributions of income and capital gains. For the past five years, the cumulative return for The Yacktman Fund is up 120.85% and The Yacktman Focused Fund is up 108.07% while the S&P 500/R Index is down 10.98%. If someone invested $100 in each Fund five years ago it would now be $220.85 and $208.07, respectively, compared to $89.02 in the S&P 500/R Index. As you can see from the chart below, our performance versus the S&P 500/R Index has been strong since the inception of the Funds. Moreover, we have achieved these returns in a risk-averse manner. [PHOTO] Donald A. Yacktman [PHOTO] Stephen Yacktman - -------------------------------------------------------------------------------- THE THE YACKTMAN YACKTMAN/R FUND(1) S&P 500/R FOCUSED FUND(2) S&P 500/R TIME ANNUALIZED ANNUALIZED ANNUALIZED Annualized PERIOD RETURNS Returns RETURNS RETURNS - -------------------------------------------------------------------------------- One Year 9.93% 10.88% 9.96% 10.88% Three Years 17.67% 3.59% 18.55% 3.59% Five Years 17.17% (2.30)% 15.78% (2.30)% Ten Years 13.63% 12.07% N/A 12.07% Since Inception 11.33% 11.10% 9.15% 7.15% (1) The Yacktman Fund Inception (7/6/92) (2) The Yacktman Focused Fund Inception (5/1/97) The above past performance is not predictive of future results. The investment return and principal value of the Funds will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost. - -------------------------------------------------------------------------------- THE YACKTMAN FUNDS, INC. - -------------------------------------------------------------------------------- I recently had an interesting experience that gave me a chance to reflect on the past five years. In early 2000, the stock market was at lofty levels and many people thought your portfolio managers were out of touch with the new "tech" era. Well, I have a confession to make. One of the dot-com companies made me an offer I couldn't refuse. For purchasing well-known merchandise, they gave me a significant discount plus free shipping. Being a value buyer, I took advantage of their offer and one of the things bought was a large supply of Neutrogena soap. Well, today I am now down to my last bar. Using the same strategy, my son Steve bought a room full of toys for gifts at 80% off. The supply has slowly depleted over the years. So, we have to admit we participated in the tech boom, with our bargain purchases over the Internet. Simply stated, value principles permeate our lives. The bottom line is when someone is handing out dollar bills for 50 or 75 cents, we want to be a buyer. While our investment results were slightly behind the S&P 500/R Index for the year, we remain far more concerned about our longer-term performance. Our goal is to make money not lose less than others and frankly it was difficult to find many bargains last year. As a result, our cash position was high and it earned a low return causing us to slightly lag the market. Thinking about the price of businesses in today's stock market makes us yearn for the good old days of Enron, Worldcom, Tyco, Qwest Communications, Adelphia Communications and Global Crossings. Not every scandal is a good investment opportunity; however, the general panic these scandals created led to numerous opportunities. Qwest Communications was building a multi-billion dollar long distance telecommunications network in 2000 when they used their overpriced stock during the technology boom to buy US West. By the middle of 2002, they were one of the telecommunications scandals for misstating their financial statements. Their huge long distance network was a black hole, which only added debt to their balance sheet. We bought Qwest's debt that was created from this monstrosity and while we were buying it, Qwest - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- had its rating lowered to just above default. Backing the debt we were buying was basically one phone line per bond. A phone line at that time generated approximately $125 of cash per year and we were able to buy these bonds for less than $500 a piece or less than 50% of face value. The yield-to-maturity at one point on this debt was approximately 30 percent. The risk of capital was minimal yet the returns were huge. Tyco was another great opportunity. The earnings the financial community estimated for this company were grossly overstated. However, the management at Tyco had bought numerous public companies for which accurate financial statements were available allowing us to recreate what Tyco value should be. We estimated at that time the normalized earnings were approximately $2.00 per share and free cash flow in an average year would be around $1.50 per share. On July 25, 2002, we bought 490,000 shares at an average price of $8.41 per share in the Funds. Steve remembers stamping the trade tickets with tears of joy in his eyes as we ate lunch at his desk. $1.50 divided by $8.41 is a 17.8 percent cash yield for a diversified conglomerate of above average, stable, decent businesses. The degree of accuracy of whether the businesses were going to grow at 1, 3, or 5 percent above inflation was not a very important question at that time compared to the 17.8 percent cash yield. At year-end, The Yacktman Funds owned collectively 440,000 shares of Tyco at $35.74 with a calendar year-end earnings estimate of just over $2.00 per share for 2005. Using a $1.60 number for free cash flow gives a free cash yield of 4.5% per year. Now the degree of accuracy of whether the business is going to grow at 1, 3, or 5 percent above inflation is going to have a huge impact when compared to that 4.5 percent number. Uncertainty of the return has gone way up in our minds while the return opportunity has plummeted. Oh, how we long for 2002. At year-end 2004, our largest position was Coca-Cola, which we estimate has an extremely stable cash yield of approximately 5 percent, which is growing at approximately 3 percent above inflation. We hope to achieve extremely stable 8 percent inflation - -------------------------------------------------------------------------------- THE YACKTMAN FUNDS, INC. - -------------------------------------------------------------------------------- adjusted forward returns with this investment. We wish we could find slightly less stable investment opportunities with the 15 to 30 percent projected forward returns that were available in 2002; unfortunately, that is not the case. The market provides investment opportunities, we can't create them, all we can do is wait for and find them. We are now in the same situation we found ourselves in early 2002, which quickly reversed itself in a few months time. Now is the time for patience and a time to build cash balances for the next big opportunities. We welcome our new shareholders and want you to know we are also large shareholders and will continue to utilize the same strategy we have used since the Funds' inception. Sincerely, /s/ Donald A. Yacktman /s/ Stephen Yacktman Donald A. Yacktman Stephen Yacktman President & Co-Portfolio Manager Co-Portfolio Manager - -------------------------------------------------------------------------------- THE YACKTMAN FUND AVERAGE ANNUAL RETURNS - ---------------------------------------- One Year (1/1/04 - 12/31/04) 9.93% Five Years (1/1/99 - 12/31/04) 17.17% Ten Years (1/1/95 - 12/31/04) 13.63% Since Inception (7/6/92) 11.33% The chart assumes an initial gross investment of $10,000 made on 12/31/94. Yacktman S&P 500/R Fund Stock Index* ---- ------------ 1/1/95 10,000 10,000 12/31/95 13,042 13,758 12/31/96 16,436 16,917 12/31/97 19,440 22,560 12/31/98 19,564 29,008 12/31/99 16,258 35,111 12/31/00 18,446 31,913 12/31/01 22,036 28,118 12/31/02 24,550 21,907 12/31/03 32,659 28,190 12/31/04 35,902 31,257 THE YACKTMAN FOCUSED FUND AVERAGE ANNUAL RETURNS - ------------------------------------------------ One Year (1/1/04 - 12/31/04) 9.96% Five Years (1/1/99 - 12/31/04) 15.78% Since Inception (5/1/97) 9.15% The chart assumes an initial gross investment of $10,000 made on 5/1/97 (inception). Yacktman S&P 500/R Focused Fund Stock Index* ------------ ------------ 5/1/97 10,000 10,000 12/31/97 11,538 12,256 12/31/98 12,067 15,759 12/31/99 9,409 19,075 12/31/00 10,031 17,338 12/31/01 11,749 15,278 12/31/02 13,511 11,901 12/31/03 17,805 15,315 12/31/04 19,578 16,981 * The S&P 500/R is an unmanaged but commonly used measure of common stock total return performance. Returns shown include the reinvestment of all dividends, but do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. The above past performance is not predictive of future results. The investment return and principal value of the Funds will fluctuate so that your shares, when redeemed, may be worth more or less than their original cost. - -------------------------------------------------------------------------------- THE YACKTMAN FUNDS, INC. - -------------------------------------------------------------------------------- EXPENSE EXAMPLE For the Six Months Ended December 31, 2004 (Unaudited) - -------------------------------------------------------------------------------- As a shareholder of the Yacktman Funds (the "Funds"), you incur ongoing costs, including management fees and other Fund expenses. If you invest through a financial intermediary, you may also incur additional costs such as a transaction fee charged on the purchase or sale of the Fund or an asset-based management fee. This Example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period from July 1, 2004 to December 31, 2004. ACTUAL EXPENSES The first line of the table on the next page provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during the period. HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES The second line of the table on the next page provides information about hypothetical account values and hypothetical expenses based on the Funds' actual expense ratios and an assumed rate of return of 5% per year before expenses, which is not the Funds' actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any costs that may be associated with investing in the Fund through a financial intermediary. Therefore, the second line of the table is useful in comparing the ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if any costs associated with investing through a financial intermediary were included, your costs would have been higher. THE YACKTMAN FUND - -------------------------------------------------------------------------------- Expenses Beginning Ending paid during account account period value value 7/1/04- 7/1/04 12/31/04 12/31/04(1) - -------------------------------------------------------------------------------- Actual $1,000.00 $1,083.00 $4.99 Hypothetical (5% return before expenses) 1,000.00 1,020.21 4.84 THE YACKTMAN FOCUSED FUND - -------------------------------------------------------------------------------- Expenses Beginning Ending paid during account account period value value 7/1/04- 7/1/04 12/31/04 12/31/04(1) - -------------------------------------------------------------------------------- Actual $1,000.00 $1,089.50 $6.56 Hypothetical (5% return before expenses) 1,000.00 1,018.72 6.34 (1) Yacktman Fund and 1.25% for The Yacktman Focused Fund), multiplied by the average account value over the period, and multiplied by 0.5027 (to reflect the one-half year period). - -------------------------------------------------------------------------------- THE YACKTMAN FUND - -------------------------------------------------------------------------------- TOP TEN EQUITY HOLDINGS (Unaudited) December 31, 2004 - -------------------------------------------------------------------------------- PERCENTAGE OF NET ASSETS - -------------------------------------------------------------------------------- Coca-Cola Co. 7.4% Liberty Media Corp. 7.3 Henkel KGaA 6.0 AmeriCredit Corp. 5.0 Kraft Foods, Inc. 4.8 Lancaster Colony Corp. 4.6 Tyco International Ltd. 3.4 Pfizer, Inc. 3.1 Bristol-Myers Squibb Co. 2.7 Unilever N.V. 2.6 ------ TOTAL 46.9% - -------------------------------------------------------------------------------- SECTOR BREAKDOWN (Unaudited) December 31, 2004 - -------------------------------------------------------------------------------- Banks - 1.7% - ------------------------------------------------ Beverages - 8.7% - ------------------------------------------------ Commercial Services & Supplies - 1.2% - ------------------------------------------------ Diversified Financials - 8.4% - ------------------------------------------------ Food Products - 11.4% - ------------------------------------------------ Health Care Providers &Services - 1.6% - ------------------------------------------------ Household Products - 11.4% - ------------------------------------------------ Industrial Conglomerates - 3.4% - ------------------------------------------------ Insurance - 2.2% - ------------------------------------------------ IT Consulting & Services - 3.4% - ------------------------------------------------ Media - 9.1% - ------------------------------------------------ Pharmaceuticals - 7.0% - ------------------------------------------------ Real Estate - 1.7% - ------------------------------------------------ Software - 0.7% - ------------------------------------------------ Specialty Retail - 0.2% - ------------------------------------------------ Tobacco - 1.5% - ------------------------------------------------ Short-Term Investments less Other Assets - 26.4% - ------------------------------------------------ - -------------------------------------------------------------------------------- THE YACKTMAN FUND - -------------------------------------------------------------------------------- EQUITY PURCHASES & SALES (Unaudited) For the Six Months Ended December 31, 2004 - -------------------------------------------------------------------------------- NET SHARES CURRENT NEW PURCHASES PURCHASED SHARES HELD - -------------------------------------------------------------------------------- CARDINAL HEALTH, INC. Provides complementary products and services to health care providers and manufacturers. 100,000 100,000 COLGATE-PALMOLIVE CO. A consumer products company whose products include toothpaste, shampoos, deodorants, soaps and laundry products, among others. 75,000 75,000 MARSH & MCLENNAN COS., INC. A global professional services firm providing risk and insurance services, investment management and consulting services. 103,500 103,500 - -------------------------------------------------------------------------------- NET SHARES CURRENT PURCHASES PURCHASED SHARES HELD - -------------------------------------------------------------------------------- Coca-Cola Co. 370,000 650,000 Pfizer, Inc. 320,000 420,000 Unilever N.V. 75,000 140,000 - -------------------------------------------------------------------------------- THE YACKTMAN FUND - -------------------------------------------------------------------------------- EQUITY PURCHASES & SALES (Unaudited) (Cont'd.) For the Six Months Ended December 31, 2004 - -------------------------------------------------------------------------------- NET SHARES CURRENT SALES SOLD SHARES HELD - -------------------------------------------------------------------------------- Altria Group, Inc. 10,000 90,000 AmeriCredit Corp. 130,000 750,000 Bandag, Inc., Class A 20,000 - Blair Corp. 40,000 - Clorox Co. 150,000 110,000 First Health Group Corp. 350,000 - Interstate Bakeries Corp. 100,000 80,000 Kraft Foods, Inc. 210,000 490,000 Liberty Media Corp. 160,000 2,440,000 Lubrizol Corp. 40,000 - Nicor, Inc. 140,000 - Trizec Properties, Inc. 70,000 330,000 Tyco International Ltd. 70,000 350,000 - -------------------------------------------------------------------------------- THE YACKTMAN FUND - -------------------------------------------------------------------------------- PORTFOLIO OF INVESTMENTS December 31, 2004 - -------------------------------------------------------------------------------- NUMBER OF SHARES VALUE - -------------------------------------------------------------------------------- COMMON STOCKS - 73.6% BANKS - 1.7% U.S. Bancorp 150,000 $4,698,000 Washington Mutual, Inc. 40,000 1,691,200 ------------- 6,389,200 ------------- BEVERAGES - 8.7% Coca-Cola Co. 650,000 27,059,500 PepsiCo, Inc. 90,000 4,698,000 ------------- 31,757,500 ------------- COMMERCIAL SERVICES & SUPPLIES - 1.2% Block H&R, Inc.(1) 90,000 4,410,000 ------------- DIVERSIFIED FINANCIALS - 8.4% AmeriCredit Corp.*(1) 750,000 18,337,500 Federal Home Loan Mortgage Corp. 100,000 7,370,000 Federal National Mortgage Association(1) 70,000 4,984,700 ------------- 30,692,200 ------------- FOOD PRODUCTS - 11.4% Cadbury Schweppes plc(1) 180,000 6,786,000 Interstate Bakeries Corp.(1) 80,000 512,000 Kraft Foods, Inc.(1) 490,000 17,448,900 Lancaster Colony Corp.(1) 390,000 16,719,300 ------------- 41,466,200 ------------- HEALTH CARE PROVIDERS & SERVICES - 1.6% Cardinal Health, Inc. 100,000 5,815,000 ------------- HOUSEHOLD PRODUCTS - 11.4% Clorox Co.(1) 110,000 6,482,300 Colgate-Palmolive Co. 75,000 3,837,000 Henkel KGaA 265,000 21,932,646 Unilever N.V. 140,000 9,339,400 ------------- 41,591,346 ------------- INDUSTRIAL CONGLOMERATES - 3.4% Tyco International Ltd. 350,000 12,509,000 ------------- INSURANCE - 2.2% Marsh & McLennan Cos., Inc. 103,500 3,405,150 MBIA, Inc.(1) 40,000 2,531,200 MGIC Investment Corp. 30,000 2,067,300 ------------- 8,003,650 ------------- - -------------------------------------------------------------------------------- THE YACKTMAN FUND - -------------------------------------------------------------------------------- PORTFOLIO OF INVESTMENTS (Cont'd.) December 31, 2004 - -------------------------------------------------------------------------------- NUMBER OF SHARES VALUE - -------------------------------------------------------------------------------- IT CONSULTING & SERVICES - 3.4% Electronic Data Systems Corp.(1) 300,000 $6,930,000 First Data Corp. 130,000 5,530,200 ------------- 12,460,200 ------------- MEDIA - 9.1% Interpublic Group of Cos., Inc.*(1) 480,000 6,432,000 Liberty Media Corp.* 2,440,000 26,791,200 ------------- 33,223,200 ------------- PHARMACEUTICALS - 7.0% Bristol-Myers Squibb Co. 380,000 9,735,600 Johnson & Johnson(1) 70,000 4,439,400 Pfizer, Inc. 420,000 11,293,800 ------------- 25,468,800 ------------- REAL ESTATE - 1.7% Trizec Properties, Inc. 330,000 6,243,600 ------------- SOFTWARE - 0.7% Microsoft Corp.(1) 100,000 2,671,000 ------------- SPECIALTY RETAIL - 0.2% Friedman's, Inc., Class A* 465,000 599,850 ------------- TOBACCO - 1.5% Altria Group, Inc. 90,000 5,499,000 ------------- Total Common Stocks (cost $183,463,816) 268,799,746 ------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- PRINCIPAL AMOUNT VALUE - -------------------------------------------------------------------------------- SHORT-TERM INVESTMENTS - 47.1% COMMERCIAL PAPER - 25.7% American Express Co., 2.21%, 1/5/05 $16,000,000 $15,996,071 GE Capital Corp., 2.13%, 1/5/05 16,000,000 15,996,213 Govco., Inc., 2.09%, 1/3/05 15,000,000 14,998,258 Prudential Funding, 2.00%, 1/5/05 16,000,000 15,996,445 Rabobank Financial Corp., 2.09%, 1/3/05 15,000,000 14,998,258 Toyota Motor Corp., 2.19%, 1/5/05 16,000,000 15,996,107 ------------- Total Commercial Paper (cost $93,981,352) 93,981,352 ------------- DEMAND NOTE (VARIABLE RATE) - 0.1% U.S. Bancorp, 2.17% 221,133 221,133 ------------- Total Demand Note (cost $221,133) 221,133 ------------- OTHER SHORT-TERM INVESTMENT - 21.3% Securities Lending Investment Account (cost $77,904,050) 77,904,050 ------------- Total Short-Term Investments (cost $172,106,535) 172,106,535 ------------- Total Investments - 120.7% (cost $355,570,351) 440,906,281 Liabilities less other Assets - (20.7)% (75,598,630) ------------- Net Assets - 100% (equivalent to $15.34 per share based on 23,806,809 shares outstanding) $365,307,651 ============= * Non-income producing (1) All or a portion of the securities have been committed for securities lending (See Note 5). See notes to financial statements - -------------------------------------------------------------------------------- THE YACKTMAN FOCUSED FUND - -------------------------------------------------------------------------------- SECTOR BREAKDOWN (Unaudited) December 31, 2004 - -------------------------------------------------------------------------------- Beverages - 7.9% - ------------------------------------------------ Commercial Services & Supplies - 1.8% - ------------------------------------------------ Diversified Financials - 12.1% - ------------------------------------------------ Food Products - 10.2% - ------------------------------------------------ Health Care Providers &Services - 1.8% - ------------------------------------------------ Household Products - 12.9% - ------------------------------------------------ Industrial Conglomerates - 3.3% - ------------------------------------------------ Insurance - 0.9% - ------------------------------------------------ IT Consulting & Services - 1.9% - ------------------------------------------------ Media - 10.2% - ------------------------------------------------ Pharmaceuticals - 6.5% - ------------------------------------------------ Real Estate - 1.9% - ------------------------------------------------ Specialty Retail - 0.3% - ------------------------------------------------ Tobacco - 1.6% - ------------------------------------------------ Short-Term Investments less Other Assets - 26.7% - ------------------------------------------------ - -------------------------------------------------------------------------------- THE YACKTMAN FOCUSED FUND - -------------------------------------------------------------------------------- EQUITY PURCHASES & SALES (Unaudited) For the Six Months Ended December 31, 2004 - -------------------------------------------------------------------------------- NET SHARES CURRENT NEW PURCHASES PURCHASED SHARES HELD - -------------------------------------------------------------------------------- Cardinal Health, Inc. 30,000 30,000 Colgate-Palmolive Co. 20,000 20,000 Marsh & McLennan Cos., Inc. 26,200 26,200 Pfizer, Inc. 110,000 110,000 - -------------------------------------------------------------------------------- NET SHARES CURRENT PURCHASES PURCHASED SHARES HELD - -------------------------------------------------------------------------------- Coca-Cola Co. 60,000 185,000 Unilever N.V. 10,000 40,000 - -------------------------------------------------------------------------------- NET SHARES CURRENT SALES SOLD SHARES HELD - -------------------------------------------------------------------------------- Altria Group, Inc. 15,000 25,000 AmerCredit Corp. 80,000 300,000 Bristol-Myers Squibb Co. 10,000 130,000 Clorox Co. 55,000 30,000 Electronic Data Systems Corp. 30,000 80,000 First Health Group Corp. 150,000 - Federal Home Loan Mortgage Corp. 25,000 60,000 Interstate Bakeries Corp. 60,000 50,000 Kraft Foods, Inc. 100,000 150,000 Lancaster Colony Corp. 20,000 100,000 Liberty Media Corp. 210,000 670,000 Trizec Properties, Inc. 20,000 100,000 Tyco International Ltd. 50,000 90,000 - -------------------------------------------------------------------------------- THE YACKTMAN FOCUSED FUND - -------------------------------------------------------------------------------- PORTFOLIO OF INVESTMENTS December 31, 2004 - -------------------------------------------------------------------------------- NUMBER OF SHARES VALUE - -------------------------------------------------------------------------------- COMMON STOCKS - 73.3% BEVERAGES - 7.9% Coca-Cola Co. 185,000 $7,701,550 ------------- COMMERCIAL SERVICES & SUPPLIES - 1.8% Block H&R, Inc.(1) 35,000 1,715,000 ------------- DIVERSIFIED FINANCIALS - 12.1% AmeriCredit Corp.*(1) 300,000 7,335,000 Federal Home Loan Mortgage Corp. 60,000 4,422,000 ------------- 11,757,000 ------------- FOOD PRODUCTS - 10.2% Interstate Bakeries Corp.(1) 50,000 320,000 Kraft Foods, Inc. 150,000 5,341,500 Lancaster Colony Corp. 100,000 4,287,000 ------------- 9,948,500 ------------- HEALTH CARE PROVIDERS & SERVICES - 1.8% Cardinal Health, Inc. 30,000 1,744,500 ------------- HOUSEHOLD PRODUCTS - 12.9% Clorox Co.(1) 30,000 1,767,900 Colgate-Palmolive Co. 20,000 1,023,200 Henkel KGaA 85,000 7,035,000 Unilever N.V. 40,000 2,668,400 ------------- 12,494,500 ------------- INDUSTRIAL CONGLOMERATES - 3.3% Tyco International Ltd. 90,000 3,216,600 ------------- INSURANCE - 0.9% Marsh & McLennan Cos., Inc. 26,200 861,980 ------------- IT CONSULTING & SERVICES - 1.9% Electronic Data Systems Corp.(1) 80,000 1,848,000 ------------- MEDIA - 10.2% Interpublic Group of Cos., Inc.*(1) 193,100 2,587,540 Liberty Media Corp.* 670,000 7,356,600 ------------- 9,944,140 ------------- PHARMACEUTICALS - 6.5% Bristol-Myers Squibb Co. 130,000 3,330,600 Pfizer, Inc. 110,000 2,957,900 ------------- 6,288,500 ------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- NUMBER OF SHARES VALUE - -------------------------------------------------------------------------------- REAL ESTATE - 1.9% Trizec Properties, Inc. 100,000 $1,892,000 ------------- SPECIALTY RETAIL - 0.3% Friedman's, Inc., Class A* 260,000 335,400 ------------- TOBACCO - 1.6% Altria Group, Inc.(1) 25,000 1,527,500 ------------- Total Common Stocks (cost $52,013,584) 71,275,170 ------------- - -------------------------------------------------------------------------------- PRINCIPAL AMOUNT VALUE - -------------------------------------------------------------------------------- SHORT-TERM INVESTMENTS - 39.6% COMMERCIAL PAPER - 23.8% American Express Co., 2.21%, 1/5/05 $4,600,000 4,598,871 GE Capital Corp., 2.13%, 1/5/05 4,600,000 4,598,911 Govco., Inc., 2.09%, 1/3/05 4,700,000 4,699,454 Rabobank Financial Corp., 2.09%, 1/3/05 4,700,000 4,699,454 Toyota Motor Corp., 2.19%, 1/5/05 4,600,000 4,598,881 ------------- Total Commercial Paper (cost $23,195,571) 23,195,571 ------------- DEMAND NOTE (VARIABLE RATE) - 1.3% U.S. Bancorp, 2.17% 1,276,690 1,276,690 ------------- Total Demand Note (cost $1,276,690) 1,276,690 ------------- OTHER SHORT-TERM INVESTMENT - 14.5% Securities Lending Investment Account (cost $14,079,922) 14,079,922 ------------- Total Short-Term Investments (cost $38,552,183) 38,552,183 ------------- - -------------------------------------------------------------------------------- THE YACKTMAN FOCUSED FUND - -------------------------------------------------------------------------------- PORTFOLIO OF INVESTMENTS (Cont'd.) December 31, 2004 - -------------------------------------------------------------------------------- NUMBER OF CONTRACTS VALUE - -------------------------------------------------------------------------------- PUT OPTION PURCHASED - 0.4% Omnicom Group Expiring Jan. 2005 @ $100.00 250 $391,250 ------------- Total Put Option Purchased (cost $1,003,500) 391,250 ------------- Total Investments - 113.3% (cost $91,569,267) 110,218,603 Liabilities less other Assets - (13.3)% (12,955,585) ------------- Net Assets - 100% (equivalent to $15.83 per share based on 6,143,285 shares outstanding) $ 97,263,018 ============= * Non-income producing (1) All or a portion of the securities have been committed for securities lending (See Note 5). See notes to financial statements - -------------------------------------------------------------------------------- This page intentionally left blank. THE YACKTMAN FUNDS, INC. - -------------------------------------------------------------------------------- STATEMENTS OF ASSETS & LIABILITIES December 31, 2004 - -------------------------------------------------------------------------------- THE YACKTMAN THE YACKTMAN FUND FOCUSED FUND - -------------------------------------------------------------------------------- ASSETS: Investments at value (cost $355,570,351 and $91,569,267, respectively) $440,906,281 $110,218,603 Receivable for fund shares sold 3,345,978 1,668,719 Dividends and interest receivable 369,300 87,389 Prepaid expenses 47,460 23,000 ------------- ------------- Total Assets 444,669,019 111,997,711 ------------- ------------- LIABILITIES: Collateral for securities loaned 77,904,050 14,079,922 Payable for fund shares redeemed 1,141,023 547,987 Accrued investment advisory fees 196,085 72,561 Other accrued expenses 120,210 34,223 ------------- ------------- Total Liabilities 79,361,368 14,734,693 ------------- ------------- NET ASSETS $365,307,651 $97,263,018 ============= ============= NET ASSETS CONSIST OF: Capital stock $279,991,395 $78,891,993 Undistributed net investment income 2,131 305 Accumulated net realized losses (21,805) (278,616) Net unrealized appreciation on investments 85,335,930 18,649,336 ------------- ------------- Total Net Assets $365,307,651 $97,263,018 ============= ============= CAPITAL STOCK, $.0001 par value Authorized 500,000,000 500,000,000 Issued and outstanding 23,806,809 6,143,285 NET ASSET VALUE, REDEMPTION PRICE AND OFFERING PRICE PER SHARE $15.34 $15.83 ====== ====== See notes to financial statements - -------------------------------------------------------------------------------- STATEMENTS OF OPERATIONS For the Year Ended December 31, 2004 - -------------------------------------------------------------------------------- THE YACKTMAN THE YACKTMAN FUND FOCUSED FUND - -------------------------------------------------------------------------------- INVESTMENT INCOME: Dividend income $4,653,742(1) $1,176,622(2) Interest income 1,101,186 284,222 Securities lending income (See Note 5) 49,150 10,990 ------------- ------------- 5,804,078 1,471,834 ------------- ------------- EXPENSES: Investment advisory fees 2,247,883 1,046,573 Shareholder servicing fees 531,295 156,887 Administration and accounting fees 198,749 52,328 Professional fees 69,378 35,714 Federal and state registration fees 69,302 47,842 Custody fees 63,122 20,429 Reports to shareholders 49,715 17,651 Directors' fees and expenses 21,240 7,496 Miscellaneous costs 37,066 11,419 ------------- ------------- Total expenses before reimbursements 3,287,750 1,396,339 Expense reimbursements (See Note 4) - (88,108) ------------- ------------- Net expenses 3,287,750 1,308,231 ------------- ------------- NET INVESTMENT INCOME 2,516,328 163,603 ------------- ------------- REALIZED AND UNREALIZED GAIN: Net realized gain on investments 28,595,140 10,091,812 Change in unrealized appreciation on investments 1,096,699 (2,699,839) ------------- ------------- Net realized and unrealized gain on investments 29,691,839 7,391,973 ------------- ------------- NET INCREASEIN NET ASSETS RESULTING FROM OPERATIONS $32,208,167 $7,555,576 ============ ============= (1) Net of $81,652 in foreign withholding taxes (2) Net of $29,949 in foreign withholding taxes See notes to financial statements - -------------------------------------------------------------------------------- THE YACKTMAN FUNDS, INC. - -------------------------------------------------------------------------------- STATEMENTS OF CHANGES IN NET ASSETS
THE YACKTMAN THE YACKTMAN FUND FOCUSED FUND - ----------------------------------------------------- ------------------------------ ---------------------------------------- YEAR ENDED DECEMBER 31, YEAR ENDED DECEMBER 31, 2004 2003 2004 2003 - ----------------------------------------------------- ------------------------------ ---------------------------------------- OPERATIONS: Net investment income $2,516,328 $4,570,375 $163,603 $550,759 Net realized gain on investments 28,595,140 28,104,195 10,091,812 5,822,252 Change in unrealized appreciation on investments 1,096,699 53,078,142 (2,699,839) 16,265,061 -------------- -------------- -------------- -------------- Net increase in net assets resulting from operations 32,208,167 85,752,712 7,555,576 22,638,072 -------------- -------------- -------------- -------------- CAPITAL SHARE TRANSACTIONS: Proceeds from shares sold 161,689,854 543,144,776 67,230,026 224,697,014 Proceeds from reinvestment of distributions 27,685,525 21,960,932 10,357,231 1,208,839 -------------- -------------- -------------- -------------- 189,375,379 565,105,708 77,587,257 225,905,853 Payments for shares redeemed (150,792,024) (723,688,508) (103,982,061) (235,154,944) -------------- -------------- -------------- -------------- Net increase (decrease) 38,583,355 (158,582,800) (26,394,804) (9,249,091) -------------- -------------- -------------- -------------- DISTRIBUTIONS PAIDFROM: Net investment income (2,514,053) (3,474,105) (163,233) (505,991) Net realized gains (28,398,069) (19,559,367) (11,089,138) (778,448) -------------- -------------- -------------- -------------- Total distributions (30,912,122) (23,033,472) (11,252,371) (1,284,439) -------------- -------------- -------------- -------------- TOTAL INCREASE (DECREASE) IN NET ASSETS 39,879,400 (95,863,560) (30,091,599) 12,104,542 NET ASSETS: Beginning of year 325,428,251 421,291,811 127,354,617 115,250,075 -------------- -------------- -------------- -------------- End of year (including undistributed net investment income of $2,131, $0, $305 and $0, respectively) $365,307,651 $325,428,251 $97,263,018 $127,354,617 ============== =============- ============= ============= TRANSACTIONS IN SHARES: Shares sold 10,503,672 41,725,550 4,071,851 16,379,111 Issued in reinvestment of distributions 1,802,438 1,441,760 653,453 74,344 Shares redeemed (9,858,635) (55,981,024) (6,406,640) (17,865,154) -------------- -------------- -------------- -------------- Net increase (decrease) 2,447,475 (12,813,714) (1,681,336) (1,411,699) ============== =============- ============= =============
See notes to financial statements - -------------------------------------------------------------------------------- THE YACKTMAN FUNDS, INC. - -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS
THE YACKTMAN FUND THE YACKTMAN FUND - ---------------------------------------------------------------------------------- ----------------------------------------- For a Fund share outstanding YEAR ENDED DECEMBER 31, YEAR ENDED DECEMBER 31, throughout each year 2004 2003 2002 2001 2000 - ---------------------------------------------------------------------------------- ----------------------------------------- Net asset value, beginning of year $15.24 $12.33 $11.16 $9.80 $9.40 Income from investment operations: Net investment income 0.12 0.23 0.13 0.08 0.11 Net realized and unrealized gain on investments 1.40 3.84 1.14 1.83 1.16 ----------- ----------- ----------- ----------- ----------- Total from investment operations 1.52 4.07 1.27 1.91 1.27 ----------- ----------- ----------- ----------- ----------- Less distributions: From net investment income (0.12) (0.17) (0.10) (0.05) (0.06) From net realized gains (1.30) (0.99) - (0.50) (0.81) ----------- ----------- ----------- ----------- ----------- Total distributions (1.42) (1.16) (0.10) (0.55) (0.87) ----------- ----------- ----------- ----------- ----------- Net asset value, end of year $15.34 $15.24 $12.33 $11.16 $9.80 =========== =========== =========== =========== =========== Total Return 9.93% 33.03% 11.41% 19.47% 13.46% =========== =========== =========== =========== =========== Supplemental data and ratios: Net assets, end of year (000s) $365,308 $325,428 $421,292 $113,199 $69,800 =========== =========== =========== =========== =========== Ratio of net expenses to average net assets 0.95% 0.94% 0.99% 1.17% 1.23% =========== =========== =========== =========== =========== Ratio of net investment income to average net assets 0.73% 1.25% 2.01% 1.06% 1.03% =========== =========== =========== =========== =========== Portfolio turnover rate 23.82% 40.01% 39.19% 42.79% 19.00% =========== =========== =========== =========== ===========
See notes to financial statements THE YACKTMAN FUNDS, INC. - -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS (Cont'd.)
THE YACKTMAN FOCUSED FUND THE YACKTMAN FOCUSED FUND - ---------------------------------------------------------------------------------- ----------------------------------------- For a Fund share outstanding YEAR ENDED DECEMBER 31, YEAR ENDED DECEMBER 31, throughout each year 2004 2003 2002 2001 2000 - ---------------------------------------------------------------------------------- ----------------------------------------- Net asset value, beginning of year $16.28 $12.48 $10.92 $9.40 $8.96 Income from investment operations: Net investment income 0.03 0.07 0.08 0.09 0.14 Net realized and unrealized gain on investments 1.59 3.90 1.56 1.52 0.45 ----------- ----------- ----------- ----------- ----------- Total from investment operations 1.62 3.97 1.64 1.61 0.59 ----------- ----------- ----------- ----------- ----------- Less distributions: From net investment income (0.03) (0.07) (0.08) (0.09) (0.14) From net realized gains (2.04) (0.10) - - - Return of capital - - - - (0.01) ----------- ----------- ----------- ----------- ----------- Total distributions (2.07) (0.17) (0.08) (0.09) (0.15) ----------- ----------- ----------- ----------- ----------- Net asset value, end of year $15.83 $16.28 $12.48 $10.92 $9.40 =========== =========== =========== =========== =========== Total Return 9.96% 31.79% 14.99% 17.14% 6.60% =========== =========== =========== =========== =========== Supplemental data and ratios: Net assets, end of year (000s) $97,263 $127,355 $115,250 $9,356 $7,606 =========== =========== =========== =========== =========== Ratio of expenses before expense reimbursements to average net assets (See Note 4) 1.33% 1.36%(1) 1.45% 2.32% 2.50% =========== =========== =========== =========== =========== Ratio of net expenses to average net assets 1.25% 1.26%(2) 1.25% 1.25% 1.25% =========== =========== =========== =========== =========== Ratio of net investment income to average net assets 0.16% 0.51% 1.68% 1.06% 1.56% =========== =========== =========== =========== =========== Portfolio turnover rate 19.26% 71.38% 49.95% 51.33% 37.84% =========== =========== =========== =========== ===========
(1) The ratio of expenses before expense reimbursements to average net assets, excluding interest expense, was 1.35% (2) The ratio of expenses to average net assets, excluding interest expense, was 1.25% See notes to financial statements - -------------------------------------------------------------------------------- THE YACKTMAN FUNDS, INC. - -------------------------------------------------------------------------------- NOTES TO THE FINANCIAL STATEMENTS December 31, 2004 - -------------------------------------------------------------------------------- 1. ORGANIZATION The Yacktman Funds, Inc. (comprised of The Yacktman Fund and The Yacktman Focused Fund, hereafter referred to as the "Funds") is registered as an open-end management investment company under the Investment Company Act of 1940 (the "1940 Act"). The Funds consist of two investment portfolios: The Yacktman Fund is a diversified fund that commenced operations July 6, 1992 and The Yacktman Focused Fund is a non-diversified fund that commenced operations May 1, 1997. The objective of each of the Funds is to produce long-term capital appreciation with current income as a secondary objective. Yacktman Asset Management Co. is the Funds' investment adviser (the "Adviser"). 2. SIGNIFICANT ACCOUNTING POLICIES The following is a summary of significant accounting policies consistently followed by the Funds in the preparation of their financial statements. The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which require management to make certain estimates and assumptions during the reporting period. Actual results could differ from those estimates. (A) INVESTMENT VALUATION - Securities which are traded on a national stock exchange are valued at the last sale price on the securities exchange on which such securities are primarily traded. Securities that are traded on the Nasdaq National Market or the Nasdaq Smallcap Market are valued at the Nasdaq Official Closing Price. Exchange-traded securities for which there were no transactions are valued at the current bid prices. Securities traded on only over-the-counter markets are valued on the basis of closing over-the-counter bid prices. Short- term debt instruments maturing within 60 days are valued by the amortized cost method, which approximates fair value. Options written or purchased by The Yacktman Focused Fund are valued at the last sales price if such last sales price is between the current bid and asked prices. Otherwise, options are valued at the mean between the current bid and asked prices. Any securities for which there are no readily available market quotations and other assets will be valued at their fair value as determined in good faith by the Adviser pursuant to procedures established by and under the supervision of the Board of Directors. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- The fair value of a security is the amount which a Fund might reasonably expect to receive upon a current sale. Valuing securities at fair value involves greater reliance on judgment than valuing securities that have readily available market quotations. There can be no assurance that the Funds could obtain the fair value assigned to a security if they were to sell the security at approximately the time at which the Funds determine their net asset value per share. B) OPTIONS - Premiums received by The Yacktman Focused Fund upon writing options are recorded as an asset with a corresponding liability which is subsequently adjusted to the current market value of the option. Changes between the initial premiums received and the current value of the options are recorded in unrealized gains and losses. When an option expires, is exercised, or is closed, the Fund realizes a gain or loss, and the liability is eliminated. The Fund continues to bear the risk of adverse movements in the price of the underlying security during the period of the option, although any potential loss would be reduced by the amount of option premium received. The Yacktman Focused Fund had no activity in written options for the year ended December 31, 2004. C)FEDERAL INCOME TAXES - It is each Fund's policy to meet the requirements of the Internal Revenue Code applicable to regulated investment companies and to distribute substantially all investment company net taxable income and net capital gains to its shareholders in a manner which results in no tax cost to the Fund. Therefore, no federal income tax provision is recorded. D) DISTRIBUTIONS TO SHAREHOLDERS - Dividends from net investment income and distributions of net realized capital gains, if any, are declared and paid at least annually. Distributions to shareholders are recorded on the ex-dividend date. The character of distributions made during the year from net investment income or net realized gains may differ from the characterization for federal income tax purposes due to differences in the recognition of income, expense and gain items for financial statement and tax purposes. Additionally, the Funds may utilize earnings and profits distributed to shareholders on redemption of shares as part of the dividends paid deduction for income tax purposes. Where appropriate, reclassifications between capital accounts are made for such differences that are permanent in nature. THE YACKTMAN FUNDS, INC. - -------------------------------------------------------------------------------- NOTES TO THE FINANCIAL STATEMENTS (Cont'd.) December 31, 2004 - -------------------------------------------------------------------------------- Accordingly, at December 31, 2004, reclassifications were recorded to increase (decrease) undistributed net investment income by $(144) and $(65), and increase (decrease) undistributed net realized gains (losses) by $144 and $65, for The Yacktman Fund and The Yacktman Focused Fund, respectively. E) GUARANTEES AND INDEMNIFICATIONS - In the normal course of business, the Funds enter into contracts with service providers that contain general indemnification clauses. The Funds' maximum exposure under these arrangements is unknown as this would involve future claims against the Funds that have not yet occurred. Based on experience, the Funds expect the risk of loss to be remote. F) REDEMPTION FEE - Effective April 1, 2005, those who buy and sell the Funds within five calendar days will incur a 2% redemption fee. Please see the Prospectus for more information. G) OTHER - Investment transactions are accounted for on the trade date. The Funds determine the gain or loss realized from investment transactions by comparing the original cost of the security lot sold with the net sale proceeds. Dividend income is recognized on the ex-dividend date and interest income is recognized on an accrual basis. 3. INVESTMENT TRANSACTIONS For the year ended December 31, 2004, the aggregate purchases and sales of securities, excluding short-term securities, were $62,047,129 and $97,692,532 for The Yacktman Fund and $15,550,000 and $45,213,436 for The Yacktman Focused Fund, respectively. For the year ended December 31, 2004, there were no purchases or sales of U.S. Government securities for The Yacktman Fund and The Yacktman Focused Fund. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 4. INVESTMENT ADVISORY AGREEMENT The Funds have agreements with the Adviser, with whom certain officers and directors of the Funds are affiliated, to furnish investment advisory services to the Funds. Under the terms of these agreements, The Yacktman Fund will pay the Adviser a monthly fee at the annual rate of 0.65% on the first $500,000,000 of average daily net assets, 0.60% on the next $500,000,000 of average daily net assets and 0.55% on average daily net assets in excess of $1,000,000,000, and The Yacktman Focused Fund will pay the Adviser a monthly fee at the annual rate of 1% of its average daily net assets. The Adviser has voluntarily agreed to reimburse The Yacktman Focused Fund for all expenses exceeding 1.25% of its average daily net assets (exclusive of interest, taxes, brokerage commissions and extraordinary expenses). 5. SECURITIES LENDING The Funds have entered into a securities lending arrangement with the custodian. Under the terms of the agreement, the custodian is authorized to loan securities on behalf of the Funds to approved brokers against the receipt of cash collateral at least equal to the value of the securities loaned. The cash collateral is invested by the custodian in a money market pooled account approved by the Adviser. Each Fund has an individual interest of cash collateral contributed, although risk is mitigated by the collateral, the Funds could experience a delay in recovering their securities and possible loss of income or value if the borrower fails to return them. The agreement provides that after predetermined rebates to the brokers, the income generated from lending transactions is allocated 60% to the Funds and 40% to the custodian. As of December 31, 2004, The Yacktman Fund had on loan securities valued at $74,752,477 and collateral of $77,904,050 and The Yacktman Focused Fund had on loan securities valued at $13,404,522 and collateral of $14,079,922. - -------------------------------------------------------------------------------- THE YACKTMAN FUNDS, INC. - -------------------------------------------------------------------------------- NOTES TO THE FINANCIAL STATEMENTS (Cont'd.) December 31, 2004 - -------------------------------------------------------------------------------- The cash collateral received by the Funds was pooled and at December 31, 2004, was pooled and invested in the following: SECURITY TYPE SECURITY NAME MARKET VALUE - -------------------------------------------------------------------------------- Commercial Paper Ford Credit Floorplan $ 3,979,400 Commercial Paper Lakeside FDG LLC 5,000,000 Commercial Paper Concord MIN CPTL 5,000,000 Commercial Paper Lehman Brothers 3,000,000 Commercial Paper Morgan Stanley 6,000,000 Commercial Paper Leafs LLC 4,000,000 Commercial Paper Goldman Sachs 4,000,000 Commercial Paper Sigma Finance, Inc. 2,999,400 Corporate Note Rabobank Nederland 4,000,000 Corporate Note Premium Asset Trust 6,000,000 Corporate Note Natexis Banque NY 4,998,235 Corporate Note Bayer Land Bank NY 3,000,000 Corporate Note Metlife Global FDO 7,000,000 Money Markets Merrill Lynch Premier Inst. 6,931 Repurchase Agreement Credit Suisse First Boston 13,000,000 Repurchase Agreement Morgan Stanley 20,000,000 Cash 6 MATURITY MATURITY SECURITY TYPE SECURITY NAME RATE DATE - -------------------------------------------------------------------------------- Commercial Paper Ford Credit Floorplan 2.07% 01/20/05 Commercial Paper Lakeside FDG LLC 2.40% 01/20/05 Commercial Paper Concord MIN CPTL 2.38% 01/11/05 Commercial Paper Lehman Brothers 2.37% 01/19/05 Commercial Paper Morgan Stanley 2.39% 03/07/05 Commercial Paper Leafs LLC 2.42% 04/20/05 Commercial Paper Goldman Sachs 2.39% 04/22/05 Commercial Paper Sigma Finance, Inc. 2.38% 05/17/05 Corporate Note Rabobank Nederland 2.02% 03/02/05 Corporate Note Premium Asset Trust 2.35% 06/01/05 Corporate Note Natexis Banque NY 2.36% 07/12/05 Corporate Note Bayer Land Bank NY 2.41% 11/23/05 Corporate Note Metlife Global FDO 2.46% 04/28/05 Money Markets Merrill Lynch Premier Inst. 2.14% 01/03/05 Repurchase Agreement Credit Suisse First Boston 2.29% 01/03/05 Repurchase Agreement Morgan Stanley 2.34% 01/03/05 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 6. LINE OF CREDIT The Yacktman Fund and The Yacktman Focused Fund have established a line of credit ("LOC") with U.S. Bank, N.A. to be used for temporary or emergency purposes, primarily for financing redemption payments. The LOC will mature, unless renewed, on March 31, 2005; the interest rate paid on borrowings is the Prime Rate minus 1/2%. For The Yacktman Fund, borrowing under the LOC is limited to the lesser of $15,000,000, 10% of the pre-borrowing net assets of the Fund, 10% of the market value of the assets of the Fund, or 10% of the sum of the fair market value of certain assets of the Fund. For The Yacktman Focused Fund, borrowing under the LOC is limited to the lesser of $35,000,000, 50% of the pre- borrowing net assets of the Fund, 50% of the market value of the assets of the Fund, or 50% of the sum of the fair market value of certain assets of the Fund. At December 31, 2004, The Yacktman Fund and The Yacktman Focused Fund had no outstanding borrowings under the LOC and incurred no interest expense. 7. TAX INFORMATION The following information for the Funds is presented on an income tax basis as of December 31, 2004: THE YACKTMAN THE YACKTMAN FUND FOCUSED FUND Cost of investments $355,592,157 $91,847,883 ============= ============= Gross unrealized appreciation $ 89,591,272 $21,187,748 Gross unrealized depreciation (4,277,148) (2,817,028) ------------- ------------- Net tax unrealized appreciation $ 85,314,124 $18,370,720 ============= ============= - -------------------------------------------------------------------------------- THE YACKTMAN FUNDS, INC. - -------------------------------------------------------------------------------- REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM - -------------------------------------------------------------------------------- As of December 31, 2004, the components of accumulated earnings were as follows: THE YACKTMAN THE YACKTMAN FUND FOCUSED FUND Undistributed ordinary income $2,131 $305 Undistributed long-term capital gains - - ------------ ------------ Accumulated earnings 2,131 305 Net unrealized appreciation on investments 85,314,124 18,370,720 ------------ ------------ Total accumulated earnings $85,316,255 $18,371,025 ============ ============ The tax character of distributions paid during the fiscal years ended December 31, 2004 and December 31, 2003 were as follows: THE YACKTMAN THE YACKTMAN FUND FOCUSED FUND 2004 Ordinary income $7,462,696 $1,722,255 Long-term capital gains $23,449,426 $9,530,116 2003 Ordinary income $7,771,809 $505,991 Long-term capital gains $15,261,663 $778,448 - -------------------------------------------------------------------------------- THE YACKTMAN FUNDS, INC. - -------------------------------------------------------------------------------- REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM - -------------------------------------------------------------------------------- TO THE BOARD OF DIRECTORS AND SHAREHOLDERS OF THE YACKTMAN FUNDS, INC. In our opinion, the accompanying statements of assets and liabilities, including the portfolios of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of The Yacktman Fund and The Yacktman Focused Fund (constituting The Yacktman Funds, Inc., hereafter referred to as the "Funds") at December 31, 2004, the results of their operations for the year then ended, the changes in their net assets for each of the two years in the period then ended and the financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as "financial statements") are the responsibility of the Funds' management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities owned at December 31, 2004 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion. /s/ PricewaterhouseCoopers LLP Milwaukee, Wisconsin February 11, 2005 - -------------------------------------------------------------------------------- THE YACKTMAN FUNDS, INC. - -------------------------------------------------------------------------------- ADDITIONAL TAX INFORMATION (Unaudited) - -------------------------------------------------------------------------------- For the year ended December 31, 2004, 100% and 100% of the dividends paid from net investment income, including short-term capital gains, for The Yacktman Fund and The Yacktman Focused Fund, respectively, qualify for the dividends received deduction available to corporate shareholders. For the year ended December 31, 2004, 59.32% and 64.47% of the dividends paid from net investment income, including short-term capital gains, for The Yacktman Fund and The Yacktman Focused Fund, respectively, are designated as qualified dividend income. The Funds hereby designate approximately, $23,449,426 and $8,300,558 as capital gain distributions for The Yacktman Fund and The Yacktman Focused Fund, respectively, for the purposes of the dividends paid deduction. THE YACKTMAN FUNDS, INC. - -------------------------------------------------------------------------------- PROXY VOTING POLICIES AND PROCEDURES - -------------------------------------------------------------------------------- For a description of the policies and procedures that the Funds use to determine how to vote proxies relating to portfolio securities, please call 1-800-525-8258 and request a Statement of Additional Information. One will be mailed to you free of charge. The Statement of Additional Information is also available on the Web site of the Securities and Exchange Commission at http://www.sec.gov. Information on how the Funds voted proxies relating to portfolio securities during the twelve month period ended June 30, 2004, is available without charge, upon request, by calling 1-800-525-8258 or by accessing the Web site of the Securities and Exchange Commission. DISCLOSURE OF PORTFOLIO HOLDINGS - -------------------------------------------------------------------------------- The Funds will file complete schedules of portfolio holdings with the Securities and Exchange Commission for the first and third quarters of each fiscal year on Form N-Q. Each Fund's Form N-Q will be available on the Web site of the Securities and Exchange Commission at http://www.sec.gov. THE YACKTMAN FUNDS, INC. DIRECTOR AND OFFICER INFORMATION (Unaudited) INDEPENDENT DIRECTORS
NUMBER OF OTHER PORTFOLIOS DIRECTORSHIPS CURRENT TERM OF PRINCIPAL OVERSEEN HELD POSITION OFFICE OCCUPATION WITHIN OUTSIDE HELD WITH AND LENGTH OF DURING THE PAST THE FUND THE FUND NAME AGE ADDRESS THE FUNDS TIME SERVED FIVE YEARS COMPLEX COMPLEX Bruce B. Bingham 56 c/o Yacktman Asset Management Co. Director Indefinite, Mr. Bingham has 2 None 1110 Lake Cook Road, Suite 385 until been a partner in Buffalo Grove, IL 60089 successor Hamilton Partners, elected a real estate development firm, 6 years for more than five years - ----------------------------------------------------------------------------------------------------------------------------------- - - Albert J. Malwitz 68 c/o Yacktman Asset Management Co. Director Indefinite, Mr. Malwitz has 2 None 1110 Lake Cook Road, Suite 385 until been owner and chief Buffalo Grove, IL 60089 successor executive officer elected of Arlington Fastener Co., 6 years a manufacturer and distributor of industrial fasteners, for more than five years - ----------------------------------------------------------------------------------------------------------------------------------- - - George J. Stevenson 65 c/o Yacktman Asset Management Co. Director Indefinite, Mr. Stevenson has 2 None 1110 Lake Cook Road, Suite 385 until been President of Buffalo Grove, IL60089 successor Stevenson & Company, elected a registered business broker, and President 6 years of Healthmate Products Co., a fruit juice concentrate manufacturing company, for more than five years INTERESTED DIRECTOR* - ----------------------------------------------------------------------------------------------------------------------------------- - - Donald A. Yacktman 63 c/o Yacktman Asset Management Co. Director Indefinite, Mr. Yacktman has 2 None 1110 Lake Cook Road, Suite 385 President until been President of Buffalo Grove, IL60089 Treasurer successor Yacktman Asset elected Management Co. since April, 1992 12 years OFFICER - ----------------------------------------------------------------------------------------------------------------------------------- Stephen Yacktman 34 c/o Yacktman Asset Management Co. Vice Indefinite, Mr. Yacktman has N/A N/A 1110 Lake Cook Road, Suite 385 President until been Vice President Buffalo Grove, IL60089 Secretary successor of Yacktman Asset elected Management Co. for more than 2 year five years
*The Interested Director serves as director and officer of The Yacktman Funds. Additional information about the Funds' directors is available in the Statement of Additional Information and is available, without charge, upon request, by calling 1-800-525-8258. This page intentionally left blank. This page intentionally left blank. FOR FUND INFORMATION AND SHAREHOLDER SERVICES, CALL 1-800-525-8258 WEB SITE: WWW.YACKTMAN.COM THE YACKTMAN FUNDS, INC. Shareholder Services Center 615 East Michigan Street, 3rd Floor Milwaukee, Wisconsin 53202-5207 - -------------------------------------------------------------------------------- YA-408-0205 ITEM 2. CODE OF ETHICS The Registrant has adopted a code of ethics (the "Code") that applies to its principal executive officer and principal financial officer. A copy of the Code is filed as an exhibit to this Form N-CSR. During the period covered by this report, there were no amendments to the provisions of the Code, nor were there any implicit or explicit waivers to the provisions of the Code. ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT (a) (1) and (a) (2) The Registrant's Board of Directors has determined that the Registrant has at least one audit committee financial expert, Mr. George J. Stevenson, serving on its audit committee. Mr. Stevenson is "independent" within the meaning of Form N-CSR. ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES The aggregate fees for each of the last two fiscal years for professional services rendered by the principal accountant for the audit of the Registrant's annual financial statements or services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements are listed below. (a) Audit Fees. Fiscal year ended December 31, 2004 $38,400 Fiscal year ended December 31, 2003 $35,700 (b) Audit-Related Fees. None. (c) Tax Fees. Fiscal year ended December 31, 2004 $6,700 Fiscal year ended December 31, 2003 $6,300 (d) All Other Fees. None. (e) (1) The Registrant's audit committee has adopted an Audit Committee Charter that requires that the Audit Committee review the scope and plan of the independent public accountants' annual and interim examinations, approve the services (other than the annual audit) to be performed for the Registrant by the independent public accountants and approve the fees and other compensation payable to the independent accountants. (2) During 2004, all of the non-audit services provided by the Registrant's principal accountant were pre-approved by the audit committee. (f) None. (g) See item 4(c). (h) Not applicable. ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS Not applicable. ITEM 6. SCHEDULE OF INVESTMENTS Included as part of the report to shareholders filed under Item I of this Form N-CSR. ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES Not applicable. ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES Not applicable. ITEM 9. PURCHASE OF EQUITY SECURITIES OF CLOSED-END MANAGEMENT INVESTMENT COMPANY AND AFFILIATED PURCHASERS Not applicable. ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS Not applicable. ITEM 11. CONTROLS AND PROCEDURES (a)The Principal Executive and Financial Officers concluded that the Registrant's Disclosure Controls and Procedures are effective based on their evaluation of the Disclosure Controls and Procedures as of a date within 90 days of the filing date of this report. (b)There were no changes in Registrant's internal control over financial reporting that occurred during the Registrant's last fiscal half-year that have materially affected or are reasonably likely to materially affect Registrant's internal control over financial reporting. ITEM 12. EXHIBITS (a) Code of Ethics. (b)Certifications required pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act of 2002 are filed herewith. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. The Yacktman Funds, Inc. /s/ Donald A. Yacktman - ---------------------- Donald A. Yacktman Principal Executive Officer March 2, 2005 Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. /s/ Donald A. Yacktman - --------------------- Donald A. Yacktman Principal Executive Officer March 2, 2005 /s/ Donald A. Yacktman - --------------------- Donald A. Yacktman Principal Financial Officer March 2, 2005 EX-99.CODE ETH 2 codeofethics.txt EXHIBIT 12(A) THE YACKTMAN FUNDS, INC. SARBANES-OXLEY CODE OF ETHICS FOR THE PRINCIPAL EXECUTIVE OFFICER, PRINCIPAL FINANCIAL OFFICER AND PRINCIPAL ACCOUNTING OFFICER (ADOPTED AUGUST 21, 2003) INTRODUCTION The Yacktman Funds, Inc. (the "Fund") expects all of its officers to maintain high ethical standards of conduct and to comply with applicable laws and governmental regulations. Officers include, without limitation, the Fund's principal executive officer, principal financial officer and principal accounting officer) (the principal executive officer, principal financial officer and principal accounting officer of the Fund are collectively referred to herein as the "Senior Financial Officers"). (The Fund anticipates that most of the time the Senior Financial Officers will consist of only one or two persons.) In this regard, the Fund requires all of its officers, including the Senior Financial Officers, to adhere to such other rules, codes and guidelines as the Fund may adopt from time to time, including, without limitation, the Code of Ethics of The Yacktman Funds, Inc. and Yacktman Asset Management Co. (collectively, the "Fund Guidelines"). To deter wrongdoing and to promote honest and ethical conduct, compliance with applicable laws and regulations, avoidance of conflicts of interest and full, fair, accurate, timely and understandable disclosure in the Fund's public filings and communications, the Fund has approved this Sarbanes-Oxley Code of Ethics to codify certain standards to which the Senior Financial Officers will be held accountable and certain specific duties and responsibilities applicable to the Senior Financial Officers. As the professional and ethical conduct of the Senior Financial Officers is essential to the proper conduct and success of the Fund's business, the Senior Financial Officers must adhere to the standards, duties and responsibilities set forth in this Sarbanes-Oxley Code of Ethics in addition to adhering to the Fund Guidelines. To the fullest extent possible, the Fund Guidelines and this Sarbanes-Oxley Code of Ethics should be read to supplement one another. If there is a conflict between the Fund Guidelines and this Sarbanes-Oxley Code of Ethics, then this Sarbanes-Oxley Code of Ethics will control. CODE OF ETHICS - -------------- General Standards The Fund and the Fund's Board of Directors will hold each Senior Financial Officer accountable for adhering to and advocating the following standards to the best of his or her knowledge and ability: A. Act in an honest and ethical manner, including in connection with the handling and avoidance of actual or apparent conflicts of interest between personal and professional relationships; B. Comply with all applicable laws, rules and regulations of federal, state and local governments (both United States and foreign) and other applicable regulatory agencies (collectively, the "Laws"); C. Proactively promote full, fair, accurate, timely and understandable disclosure in reports and documents that the Fund files with, or submits to, the Securities and Exchange Commission (the "SEC") and in other public communications the Fund makes; and D. Proactively promote ethical and honest behavior within the Fund, including, without limitation, the prompt reporting of violations of, and being accountable for adherence to, this Sarbanes-Oxley Code of Ethics. Specific Duties and Responsibilities In adhering to and advocating the standards set forth above, each Senior Financial Officer shall fulfill the following duties and responsibilities to the best of his or her knowledge and ability: 1. Each Senior Financial Officer shall handle all conflicts of interest between his or her personal and professional relationships in an ethical and honest manner, and shall disclose in advance to the Audit Committee of the Fund's Board of Directors ("Audit Committee") the relevant details of any transaction or relationship that reasonably could be expected to give rise to an actual or apparent conflict of interest between the Fund and such Senior Financial Officer. The Audit Committee shall thereafter take such action with respect to the conflict of interest as it shall deem appropriate. It is the general policy of the Fund that conflicts of interest should be avoided whenever practicable. For purposes of this Sarbanes-Oxley Code of Ethics, a "conflict of interest" will be deemed to be present when an individual's private interest interferes in any way, or even appears to interfere, with the interests of the Fund as a whole. 2. Each Senior Financial Officer will use his or her best efforts to ensure the timely and understandable disclosure of information that, in all material respects, is accurate, complete, objective and relevant in all reports and documents the Fund files with, or submits to, the SEC or in other public communications that the Fund makes. As part of this undertaking, each Senior Financial Officer will periodically consider the adequacy and effectiveness of the Fund's "internal controls" and "disclosure controls and procedures" (as such terms are defined or used in rules proposed or adopted by the SEC). 3. Each Senior Financial Officer will use his or her best efforts to ensure compliance in all material respects by such Senior Financial Officer and the Fund with all applicable Laws. 4. Each Senior Financial Officer shall respect the confidentiality of information acquired in the course of his or her work and shall not disclose such information, except when the Senior Financial Officer believes he or she is authorized or legally obligated to disclose the information. No Senior Financial Officer may use confidential information acquired in the course of his or her work for his or her personal advantage. 5. No Senior Financial Officer may take or direct or allow any other person to take or direct any action to fraudulently influence, coerce, manipulate or mislead the Fund's independent auditing firm. 6. No Senior Financial Officer may engage the Fund's auditing firm to perform audit or non-audit services without the Audit Committee's (or its designee's) preapproval in accordance with the Audit Committee's charter. REPORTING VIOLATIONS - -------------------- If any person believes that a Senior Financial Officer has violated this Sarbanes-Oxley Code of Ethics or the Fund has or is about to violate a Law, or a Senior Financial Officer believes that he or she is being asked to violate this Sarbanes-Oxley Code of Ethics or any Law in the performance of his or her duties for the Fund, then the matter should be promptly reported to the Audit Committee. The Audit Committee will take appropriate steps to maintain the confidentiality of the reporting person's identity, to the extent consistent with the Fund's obligations to investigate and remedy the matter and, if appropriate, to report the matter to government officials. Persons may report violations of this Sarbanes-Oxley Code of Ethics on an anonymous basis. No retribution will be taken against a person for reporting, in good faith, a violation or suspected violation of this Sarbanes-Oxley Code of Ethics. INTERPRETATION AND ENFORCEMENT - ------------------------------ The Audit Committee is responsible for overseeing the interpretation and enforcement of this Sarbanes-Oxley Code of Ethics. When the Audit Committee considers any matter relating to this Sarbanes-Oxley Code of Ethics, it shall act in executive session. Each Senior Financial Officer will be held accountable for his or her adherence to this Sarbanes-Oxley Code of Ethics by the Fund's Board of Directors. A Senior Financial Officer's failure to adhere to this Sarbanes-Oxley Code of Ethics will be subject to appropriate disciplinary action, ranging from warnings to possible termination or removal. Only the Audit Committee may waive or amend this Sarbanes-Oxley Code of Ethics. All waivers and amendments of this Sarbanes-Oxley Code of Ethics must be publicly disclosed in a manner that complies with the requirements of the SEC and other applicable Laws. EX-99.CERT 3 cert99.txt EX-99.CERT THE YACKTMAN FUNDS, INC. EXHIBIT 12(B) TO FORM N-CSR CERTIFICATIONS PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 I, Donald A. Yacktman, certify that: 1. I have reviewed this report on Form N-CSR of The Yacktman Funds, Inc.; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and (c) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal half-year (the registrant's second fiscal half-year in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer(s) and I have disclosed to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. /S/ Donald A. Yacktman - ---------------------- Donald A. Yacktman Principal Executive Officer Date: March 2, 2005 I, Donald A. Yacktman, certify that: 1. I have reviewed this report on Form N-CSR of The Yacktman Funds, Inc.; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and (c) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal half-year (the registrant's second fiscal half-year in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer(s) and I have disclosed to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. /S/ Donald A. Yacktman - ----------------------- Donald A. Yacktman Principal Financial Officer Date: March 2, 2005 EX-99.906 4 cert906.txt CERTIFICATIONS PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 I, Donald A. Yacktman, Principal Executive Officer of The Yacktman Funds, Inc., certify to the best of my knowledge that: 1. The N-CSR of the registrant for the period ended December 31, 2004 (the "Report") fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and 2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the registrant. /s/ Donald A. Yacktman - ------------------------ Donald A. Yacktman Principal Executive Officer Date: March 2, 2005 I, Donald A. Yacktman, Principal Financial Officer of The Yacktman Funds, Inc., certify to the best of my knowledge that: 1. The N-CSR of the registrant for the period ended December 31, 2004 (the "Report") fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and 2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the registrant. /s/ Donald A. Yacktman - ------------------------- Donald A. Yacktman Principal Financial Officer Date: March 2, 2005 A signed original of this written statement required by Section 906 has been provided to The Yacktman Funds, Inc. and will be retained by The Yacktman Funds, Inc. and furnished to the Securities and Exchange Commission or its staff upon request. -----END PRIVACY-ENHANCED MESSAGE-----