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
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The Yacktman Funds, Inc.
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(Exact name of Registrant as specified in charter)
1110 Lake Cook Road
Suite 385
Buffalo Grove, IL 60089
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(Address of principal executive offices) (Zip code)
Yacktman Asset Management Co.
1110 Lake Cook Road
Suite 385
Buffalo Grove, IL 60089
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(Name and address of agent for service)
Registrant's telephone number, including area code: (847)325-0707
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Date of fiscal year end: December 31
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Date of reporting period: December 31, 2003
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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
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ANNUAL REPORT
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December 31, 2003
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This report is submitted for the general information of shareholders of The
Yacktman Funds. It is not authorized for distribution to prospective investors
unless accompanied or preceded by an effective Prospectus for the Funds, which
contains more information concerning the Funds' investment policies, as well as
fees and expenses and other pertinent information. Read the Prospectus
carefully.
THE YACKTMAN FUNDS, INC.
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MESSAGE TO SHAREHOLDERS
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[PHOTO]
Donald A. Yacktman
[PHOTO]
Stephen Yacktman
Dear Fellow Shareholder:
The Funds continue to do very well and are selling at virtually their all time
highs when adjusted for distributions of income and capital gains. In 2003, for
the fourth year in a row, the Fund outperformed the S&P 500/R Index and did it
in a year when most value funds lagged far behind and technology roared. In
2003, we were able to see three major investments we made last year - Liberty
Media, Qwest and Tyco all do well. In addition, AmeriCredit, which we purchased
early this year, turned out to be a big winner.
For the past three years, the December 31, 2003, cumulative return for The
Yacktman Fund is up 77.06% and The Yacktman Focused Fund is a positive 77.51%
while the S&P 500(R) is down 11.67%. $100 invested in each fund three years ago
would now be $177.06 and $177.51, respectively, compared to $88.33 in the S&P
500(R). We are now ahead of the S&P 500(R) since the inception of each Fund and
over the one, three, five year periods and The Yacktman Fund is also ahead for
the last 10 years. Moreover, we have achieved these results in a risk-averse
manner.
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THE YACKTMAN FUNDS, INC.
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THE THE
YACKTMAN YACKTMAN
FUND(1) S&P 500/R FOCUSED FUND(2) S&P 500/R
TIME ANNUALIZED ANNUALIZED ANNUALIZED ANNUALIZED
PERIOD RETURNS RETURNS RETURNS RETURNS
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One Year 33.03% 28.68% 31.79% 28.68%
Three Years 20.98% (4.05)% 21.08% (4.05)%
Five Years 10.79% (0.57)% 8.09% (0.57)%
Ten Years 13.52% 11.07% N/A 11.07%
Since Inception 11.45% 11.12% 9.03% 6.60%
(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.
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We are becoming increasingly concerned about the difficulty of finding
bargains in the market place. Perhaps our concerns are best portrayed by the
following story. Late last year, Steve Yacktman, and Russell Wilkins of Yacktman
Asset Management Co., attended a conference for financial advisors, where a
keynote speaker indicated that the average investor was expecting a return of
16+% per year and investors who employed advisors were expecting 18+%. Steve and
Russell later sat down to lunch with some advisors and began a friendly
conversation, which turned to market expectations. Steve told one advisor that
his long-term (10 years) expectation for the market was about 6%. The advisor
told Steve to be optimistic. Steve replied, "I was being optimistic by assuming
no wars or major disruptions to the economy." At that point, the advisor turned
his head and would not talk or look at him for the rest of the lunch.
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The NASDAQ 100 is becoming increasingly reminiscent of the speculative bubble
we experienced in 1999 and early 2000. While technology certainly raises the
standard of living in our society, it seems to us that the businesses that
benefit the most are the ones who utilize the technology rather than the
technology companies whose business and stock price in many cases looks like a
shooting star or a roman candle. Thus, we rarely invest in technological capital
goods companies because of the speculative nature of many of their businesses
and the rich valuations given to them by investors most of the time.
Our method is to seek out value first and then obtain the most good business
characteristics and management skills possible. We will also pare back or
ratchet our gains if the valuation can no longer be justified by our valuation
methods. As a director in another mutual fund I managed 20 years ago remarked to
me, "It's better to have to ratchet than have wretched performance." We try to
be as objective as possible when looking forward to obtain what we feel are the
highest rates of return possible within the above framework of desirable
businesses and managements. If our objectivity makes us unpopular at investment
conferences, we are fine with that: especially as the objectivity tends to
translate into strong opportunities and results over time.
We welcome those investors who have joined us in the past year and look
forward to working hard for you in 2004.
Sincerely,
/s/ Donald A. Yacktman /s/ Stephen Yacktman
Donald A. Yacktman Stephen Yacktman
President & Co-Portfolio Manager Co-Portfolio Manager
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THE YACKTMAN FUNDS, INC.
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THE YACKTMAN FUND AVERAGE ANNUAL RETURNS
- ----------------------------------------
One Year (1/1/03 - 12/31/03) 33.03%
Five Years (1/1/98 - 12/31/03) 10.79%
Ten Years (1/1/94 - 12/31/03) 13.52%
Since Inception (7/6/92) 11.45%
Yacktman Fund S&P 500 Stock Index
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1/1/94 10,000 10,000
12/31/94 10,880 10,132
12/31/95 14,190 13,940
12/31/96 17,882 17,140
12/31/97 21,151 22,858
12/31/98 21,286 29,391
12/31/99 17,689 35,575
12/31/00 20,070 32,334
12/31/01 23,975 28,489
12/31/02 26,711 22,196
12/31/02 35,533 28,562
The chart assumes an initial gross investment of $10,000 made on 1/1/94.
THE YACKTMAN FOCUSED FUND AVERAGE ANNUAL RETURNS
- ------------------------------------------------
One Year (1/1/03 - 12/31/03) 31.79%
Five Years (1/1/98 - 12/31/03) 8.09%
Since Inception (5/1/97) 9.03%
Yacktman Focused Fund S&P 500 Stock Index
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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
12/31/02 17,805 15,315
The chart assumes an initial gross investment of $10,000 made on 5/1/97
(inception).
* 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.
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THE YACKTMAN FUND
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TOP TEN EQUITY HOLDINGS
December 31, 2003
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PERCENTAGE OF
NET ASSETS
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Kraft Foods, Inc. 6.9%
Tyco International Ltd. 6.6
Liberty Media Corp. 6.4
Henkel KGaA 6.0
Lancaster Colony Corp. 5.4
AmeriCredit Corp. 5.0
Clorox Co. 3.9
Bristol-Myers Squibb Co. 3.3
Electronic Data Systems Corp. 2.6
Coca-Cola Co. 2.3
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TOTAL 48.4%
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THE YACKTMAN FUND
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EQUITY PURCHASES & SALES
For the Six Months Ended December 31, 2003
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NET SHARES CURRENT
NEW PURCHASES PURCHASED SHARES HELD
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FRIEDMAN'S, INC., CLASS A
A specialty retailer of fine jewelry,
targeting markets of low- to middle-income
consumers through a wide merchandise selection
and a high level of customer service. 380,000 380,000
JOHNSON & JOHNSON
Manufactures health care products and
provides related services for the consumer,
pharmaceutical, and medical devices and
diagnostics markets. 40,000 40,000
NATIONAL BEVERAGE CORP.
A holding company for subsidiaries that
market, manufacture, and distribute a full
line of beverage products. 39,200 39,200
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NET SHARES CURRENT
PURCHASES PURCHASED SHARES HELD
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Clorox Co. 100,000 260,000
Coca-Cola Co. 20,000 150,000
First Health Group Corp. 90,000 350,000
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NET SHARES CURRENT
SALES SOLD SHARES HELD
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Altria Group, Inc. 25,000 100,000
American Express Co. 15,000 25,000
AmeriCredit Corp. 270,000 1,030,000
Apogent Technologies, Inc. 190,000 260,000
Bandag, Inc., Class A 50,000 30,000
Block H&R, Inc. 40,000 90,000
Bristol-Myers Squibb Co. 140,000 380,000
Cadbury Schweppes plc 80,000 200,000
Electronic Data Systems Corp. 220,000 350,000
Federal Home Loan Mortgage Corp. 30,000 100,000
Federal National Mortgage Association 20,000 70,000
First Data Corp. 40,000 130,000
Gemstar-TV Guide International, Inc. 570,000 300,000
Henkel KGaA 10,000 265,000
Home Depot, Inc. 60,000 -
IMS Health, Inc. 170,000 -
Interpublic Group of Cos., Inc. 370,000 480,000
Interstate Bakeries Corp. 180,000 180,000
Kraft Foods, Inc. 300,000 700,000
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THE YACKTMAN FUND
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EQUITY PURCHASES & SALES (Cont'd.)
For the Six Months Ended December 31, 2003
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NET SHARES CURRENT
SALES (CONT'D.) SOLD SHARES HELD
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Kroger Co. 90,000 -
Lancaster Colony Corp. 30,000 390,000
Liberty Media Corp. 1,050,000 1,750,000
Lubrizol Corp. 60,000 40,000
MBIA, Inc. 55,000 40,000
McDonald's Corp. 90,000 -
MGIC Investment Corp. 20,000 50,000
Nicor, Inc. 60,000 140,000
PepsiCo, Inc. 30,000 90,000
Russ Berrie & Co., Inc. 70,000 30,000
ServiceMaster Co. 195,300 -
Tootsie Roll Industries, Inc. 24,720 -
Trizec Properties, Inc. 350,000 400,000
Tupperware Corp. 130,000 170,000
Tyco International Ltd. 1,290,000 810,000
Unilever NV 35,000 65,000
United Technologies Corp. 35,000 -
U.S. Bancorp 100,000 150,000
Washington Mutual, Inc. 80,000 40,000
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THE YACKTMAN FUND
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PORTFOLIO OF INVESTMENTS
December 31, 2003
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NUMBER
OF SHARES VALUE
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COMMON STOCKS - 82.2%
AUTO COMPONENTS - 0.4%
Bandag, Inc., Class A 30,000 $1,212,000
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BANKS - 1.9%
U.S. Bancorp 150,000 4,467,000
Washington Mutual, Inc. 40,000 1,604,800
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6,071,800
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BEVERAGES - 3.8%
Coca-Cola Co. 150,000 7,612,500
National Beverage Corp.* 39,200 638,960
PepsiCo, Inc. 90,000 4,195,800
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12,447,260
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CHEMICALS - 0.4%
Lubrizol Corp. 40,000 1,300,800
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COMMERCIAL SERVICES & SUPPLIES - 1.5%
Block H&R, Inc. 90,000 4,983,300
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DIVERSIFIED FINANCIALS - 8.8%
American Express Co. 25,000 1,205,750
AmeriCredit Corp.* 1,030,000 16,407,900
Federal Home Loan Mortgage Corp. 100,000 5,832,000
Federal National Mortgage Association 70,000 5,254,200
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28,699,850
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FOOD PRODUCTS - 15.0%
Cadbury Schweppes plc 200,000 5,978,000
Interstate Bakeries Corp. 180,000 2,561,400
Kraft Foods, Inc. 700,000 22,554,000
Lancaster Colony Corp. 390,000 17,612,400
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48,705,800
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GAS UTILITIES - 1.5%
Nicor, Inc. 140,000 4,765,600
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HEALTH CARE EQUIPMENT & SUPPLIES - 1.8%
Apogent Technologies, Inc.* 260,000 5,990,400
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HEALTH CARE PROVIDERS & SERVICES - 2.1%
First Health Group Corp.* 350,000 6,811,000
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THE YACKTMAN FUND
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PORTFOLIO OF INVESTMENTS (Cont'd.)
December 31, 2003
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NUMBER
OF SHARES VALUE
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HOUSEHOLD DURABLES - 1.2%
Russ Berrie & Co., Inc. 30,000 $1,017,000
Tupperware Corp. 170,000 2,947,800
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3,964,800
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HOUSEHOLD PRODUCTS - 11.2%
Clorox Co. 260,000 12,625,600
Henkel KGaA 265,000 19,483,913
Unilever NV 65,000 4,218,500
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36,328,013
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INDUSTRIAL CONGLOMERATES - 6.6%
Tyco International Ltd. 810,000 21,465,000
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INSURANCE - 1.6%
MBIA, Inc. 40,000 2,369,200
MGIC Investment Corp. 50,000 2,847,000
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5,216,200
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INTERNET & CATALOG RETAIL - 0.3%
Blair Corp. 40,000 973,600
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IT CONSULTING & SERVICES - 4.3%
Electronic Data Systems Corp. 350,000 8,589,000
First Data Corp. 130,000 5,341,700
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13,930,700
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MEDIA - 9.1%
Gemstar-TV Guide International, Inc.* 300,000 1,515,000
Interpublic Group of Cos., Inc.* 480,000 7,488,000
Liberty Media Corp.* 1,750,000 20,807,500
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29,810,500
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PHARMACEUTICALS - 5.0%
Bristol-Myers Squibb Co. 380,000 10,868,000
Johnson & Johnson 40,000 2,066,400
Pfizer, Inc. 100,000 3,533,000
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16,467,400
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REAL ESTATE - 1.9%
Trizec Properties, Inc. 400,000 6,160,000
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SOFTWARE - 0.8%
Microsoft Corp. 100,000 2,754,000
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SPECIALTY RETAIL - 0.8%
Friedman's, Inc., Class A 380,000 2,549,800
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NUMBER
OF SHARES VALUE
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TEXTILES & APPAREL - 0.5%
Saucony, Inc., Class B 90,000 $1,559,700
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TOBACCO - 1.7%
Altria Group, Inc. 100,000 5,442,000
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Total Common Stocks
(cost $176,915,301) 267,609,523
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THE YACKTMAN FUND
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PORTFOLIO OF INVESTMENTS (Cont'd.)
December 31, 2003
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PRINCIPAL
AMOUNT VALUE
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CORPORATE BONDS - 2.2%
Fleming Cos., Inc., 10.125%, 4/1/08*+ $15,575,000 $3,504,375
Fleming Cos., Inc., 9.25%, 6/15/10*+ 16,175,000 3,639,375
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Total Corporate Bonds
(cost $13,598,741) 7,143,750
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SHORT-TERM INVESTMENTS - 36.7%
COMMERCIAL PAPER - 13.9%
American Express Co., 1.02%, 1/6/04 16,000,000 16,000,000
Dresdner Bank AG, 0.90%, 1/5/04 14,700,000 14,698,530
Federal Home Loan Bank, - 0.50%, 1/2/04 14,500,000 14,499,819
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Total Commercial Paper
(cost $45,198,349) 45,198,349
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DEMAND NOTE (VARIABLE RATE) - 0.3%
U.S. Bank, N.A., 0.87% 1,021,075 1,021,075
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Total Demand Note
(cost $1,021,075) 1,021,075
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PRINCIPAL
AMOUNT VALUE
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OTHER SHORT-TERM INVESTMENT - 22.5%
Securities Lending Investment Account
(cost $73,174,858) $73,174,858
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Total Short-Term Investments
(cost $119,394,282) 119,394,282
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Total Investments - 121.1%
(cost $309,908,324) 394,147,555
Other Assets less Liabilities - 1.4% 4,455,554
Less Liability for Collateral on Securities
Loaned - (22.5)% (73,174,858)
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Net Assets - 100% (equivalent to $15.24
per share based on shares outstanding) $325,428,251
============
* Non-income producing
+ Issue in default
See notes to financial statements
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THE YACKTMAN FOCUSED FUND
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EQUITY PURCHASES & SALES
For the Six Months Ended December 31, 2003
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NET SHARES CURRENT
NEW PURCHASES PURCHASED SHARES HELD
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Coca-Cola Co. 80,000 80,000
Friedman's, Inc., Class A 230,000 230,000
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NET SHARES CURRENT
PURCHASES PURCHASED SHARES HELD
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AmeriCredit Corp. 10,000 460,000
Clorox Co. 20,000 100,000
First Health Group Corp. 90,000 150,000
Liberty Media Corp. 20,000 670,000
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NET SHARES CURRENT
SALES SOLD SHARES HELD
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Altria Group, Inc. 10,000 40,000
Apogent Technologies, Inc. 35,000 120,000
Bristol-Myers Squibb Co. 20,000 140,000
Electronic Data Systems Corp. 20,000 110,000
Federal Home Loan Mortgage Corp. 10,000 85,000
First Data Corp. 30,000 -
Gemstar-TV Guide International, Inc. 310,000 -
Interpublic Group of Cos., Inc. 84,900 193,100
Interstate Bakeries Corp. 10,000 110,000
Kraft Foods, Inc. 50,000 300,000
Lancaster Colony Corp. 16,000 120,000
MBIA, Inc. 15,000 20,000
PepsiCo, Inc. 25,000 -
Russ Berrie & Co., Inc. 13,500 -
Trizec Properties, Inc. 50,000 150,000
Tyco International Ltd. 280,000 360,000
Unilever NV 10,000 40,000
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THE YACKTMAN FOCUSED FUND
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PORTFOLIO OF INVESTMENTS
December 31, 2003
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NUMBER
OF SHARES VALUE
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COMMON STOCKS - 71.5%
BEVERAGES - 3.2%
Coca-Cola Co. 80,000 $4,060,000
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COMMERCIAL SERVICES & SUPPLIES - 1.5%
Block H&R, Inc. 35,000 1,937,950
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DIVERSIFIED FINANCIALS - 9.6%
AmeriCredit Corp.* 460,000 7,327,800
Federal Home Loan Mortgage Corp. 85,000 4,957,200
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12,285,000
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FOOD PRODUCTS - 13.1%
Interstate Bakeries Corp. 110,000 1,565,300
Kraft Foods, Inc. 300,000 9,666,000
Lancaster Colony Corp. 120,000 5,419,200
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16,650,500
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HEALTH CARE EQUIPMENT & SUPPLIES - 2.2%
Apogent Technologies, Inc.* 120,000 2,764,800
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HEALTH CARE PROVIDERS & SERVICES - 2.3%
First Health Group Corp.* 150,000 2,919,000
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HOUSEHOLD PRODUCTS - 10.8%
Clorox Co. 100,000 4,856,000
Henkel KGaA 85,000 6,249,557
Unilever NV 40,000 2,596,000
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13,701,557
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INDUSTRIAL CONGLOMERATES - 7.5%
Tyco International Ltd. 360,000 9,540,000
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INSURANCE - 2.3%
MBIA, Inc. 20,000 1,184,600
MGIC Investment Corp. 30,000 1,708,200
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2,892,800
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IT CONSULTING & SERVICES - 2.1%
Electronic Data Systems Corp. 110,000 2,699,400
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MEDIA - 8.6%
Interpublic Group of Cos., Inc.* 193,100 3,012,360
Liberty Media Corp.* 670,000 7,966,300
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10,978,660
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NUMBER
OF SHARES VALUE
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PHARMACEUTICALS - 3.1%
Bristol-Myers Squibb Co. 140,000 $4,004,000
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REAL ESTATE - 1.8%
Trizec Properties, Inc. 150,000 2,310,000
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SPECIALTY RETAIL - 1.2%
Friedman's, Inc., Class A 230,000 1,543,300
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TEXTILES & APPAREL - 0.5%
Saucony, Inc., Class B 35,000 606,550
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TOBACCO - 1.7%
Altria Group, Inc. 40,000 2,176,800
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Total Common Stocks
(cost $67,024,237) 91,070,317
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THE YACKTMAN FOCUSED FUND
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PORTFOLIO OF INVESTMENTS (Cont'd.)
December 31, 2003
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PRINCIPAL
AMOUNT VALUE
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CORPORATE BONDS - 1.9%
Fleming Cos., Inc., 10.125%, 4/1/08*+ $11,000,000 $2,475,000
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Total Corporate Bonds
(cost $4,560,906) 2,475,000
------------
SHORT-TERM INVESTMENTS - 45.4%
COMMERCIAL PAPER - 24.4%
American Express Co., 1.02%, 1/6/04 6,200,000 6,200,000
Federal Home Loan Bank, - 0.50%, 1/2/04 6,200,000 6,199,922
Galaxy Funding, Inc., 0.80%, 1/2/04 6,200,000 6,200,000
GE Capital, 1.00%, 1/6/04 6,200,000 6,199,139
San Paolo, 1.00%, 1/6/04 6,200,000 6,199,139
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Total Commercial Paper
(cost $30,998,200) 30,998,200
------------
DEMAND NOTE (VARIABLE RATE) - 1.1%
U.S. Bank, N.A., 0.87% 1,411,218 1,411,218
------------
Total Demand Note
(cost $1,411,218) 1,411,218
------------
OTHER SHORT-TERM INVESTMENT - 19.9%
Securities Lending Investment Account
(cost $25,360,405) 25,360,405
------------
Total Short-Term Investments
(cost $57,769,823) 57,769,823
------------
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NUMBER
OF CONTRACTS VALUE
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PUT OPTION PURCHASED - 0.3%
Omnicom Group
Expiring Jan. 2005 @ $100.00 250 $392,500
------------
Total Put Option Purchased
(cost $1,003,500) 392,500
------------
Total Investments - 119.1%
(cost $130,358,466) 151,707,640
Other Assets less Liabilities - 0.8% 1,007,382
Less Liability for Collateral on Securities
Loaned - (19.9)% (25,360,405)
------------
Net Assets - 100% (equivalent to $16.28
per share based on shares outstanding) $127,354,617
============
* Non-income producing
+ Issue in default
See notes to financial statements
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THE YACKTMAN FUNDS, INC.
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STATEMENTS OF ASSETS & LIABILITIES
December 31, 2003
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THE YACKTMAN THE YACKTMAN
FUND FOCUSED FUND
- --------------------------------------------------------------------------------
ASSETS:
Investments at value
(cost $309,908,324 and
$130,358,466, respectively) $394,147,555 $151,707,640
Receivable for fund shares sold 5,353,400 1,147,745
Dividends and interest receivable 589,845 168,970
Prepaid expenses 59,411 38,884
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Total Assets 400,150,211 153,063,239
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LIABILITIES:
Collateral for securities loaned 73,174,858 25,360,405
Payable for fund shares
redeemed 1,246,891 227,726
Accrued investment
advisory fees 175,104 71,771
Other accrued expenses 125,107 48,720
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Total Liabilities 74,721,960 25,708,622
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NET ASSETS $325,428,251 $127,354,617
============= =============
NET ASSETS CONSIST OF:
Capital stock $241,408,040 $105,286,798
Accumulated undistributed
net realized gains (losses) (219,020) 718,645
Net unrealized appreciation
on investments 84,239,231 21,349,174
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Total Net Assets $325,428,251 $127,354,617
============= =============
CAPITAL STOCK, $.0001 par value
Authorized 500,000,000 500,000,000
Issued and outstanding 21,359,334 7,824,621
NET ASSET VALUE, REDEMPTION PRICE AND
OFFERING PRICE PER SHARE $15.24 $16.28
====== ======
See notes to financial statements
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STATEMENTS OF OPERATIONS
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For the Year Ended December 31, 2003
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THE YACKTMAN THE YACKTMAN
FUND FOCUSED FUND
- --------------------------------------------------------------------------------
INVESTMENT INCOME:
Dividend income $5,483,768(1) $1,208,827(2)
Interest income 2,448,704 675,720
Securities lending income
(See Note 5) 76,889 12,672
------------- -------------
8,009,361 1,897,219
------------- -------------
EXPENSES:
Investment advisory fees 2,367,520 1,071,629
Shareholder servicing fees 544,549 165,320
Administration and
accounting fees 204,270 53,581
Custody fees 75,245 23,398
Reports to shareholders 71,561 24,588
Federal and state
registration fees 65,500 68,000
Professional fees 62,810 31,244
Directors' fees and expenses 24,367 6,569
Miscellaneous costs 21,953 4,566
------------- -------------
Total expenses before interest
expense and reimbursements 3,437,775 1,448,895
Interest expense (See Note 6) 1,211 6,924
------------- -------------
Total expenses before
reimbursements 3,438,986 1,455,819
Expense reimbursements
(See Note 4) - (109,359)
------------- -------------
Net expenses 3,438,986 1,346,460
------------- -------------
NET INVESTMENT INCOME 4,570,375 550,759
------------- -------------
REALIZED AND UNREALIZED GAIN:
Net realized gain on investments 28,104,195 5,822,252
Change in unrealized appreciation
on investments 53,078,142 16,265,061
------------- -------------
Net realized and unrealized gain
on investments 81,182,337 22,087,313
------------- -------------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS $85,752,712 $22,638,072
============= =============
(1) Net of $57,267 in foreign withholding taxes
(2) Net of $14,894 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,
2003 2002 2003 2002
- ------------------------------------------------------- ------------------------------- ---------------------------------
OPERATIONS:
Net investment income $4,570,375 $4,385,306 $550,759 $710,014
Net realized gain (loss) on investments 28,104,195 (3,306,371) 5,822,252 661,611
Change in unrealized appreciation
on investments 53,078,142 22,914,495 16,265,061 3,637,913
------------- ------------- ------------- -------------
Net increase in net assets resulting from operations 85,752,712 23,993,430 22,638,072 5,009,538
------------- ------------- ------------- -------------
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold 543,144,776 811,136,747 224,697,014 217,426,498
Proceeds from reinvestment of distributions 21,960,932 3,293,940 1,208,839 685,524
------------- ------------- ------------- -------------
565,105,708 814,430,687 225,905,853 218,112,022
Payments for shares redeemed (723,688,508) (526,903,472) (235,154,944) (116,526,675)
------------- ------------- ------------- -------------
Net increase (decrease) (158,582,800) 287,527,215 (9,249,091) 101,585,347
------------- ------------- ------------- -------------
DISTRIBUTIONS PAID FROM:
Net investment income (3,474,105) (3,427,806) (505,991) (701,196)
Net realized gains (19,559,367) - (778,448) -
------------- ------------- ------------- -------------
Total distributions (23,033,472) (3,427,806) (1,284,439) (701,196)
------------- ------------- ------------- -------------
TOTAL INCREASE (DECREASE) IN NET ASSETS (95,863,560) 308,092,839 12,104,542 105,893,689
NET ASSETS:
Beginning of year 421,291,811 113,198,972 115,250,075 9,356,386
------------- ------------- ------------- -------------
End of year (including undistributed
net investment income of $0, $43,810,
$0 and $7,818, respectively) $325,428,251 $421,291,811 $127,354,617 $115,250,075
============= ============= ============= =============
TRANSACTIONS IN SHARES:
Shares sold 41,725,550 68,681,132 16,379,111 18,239,860
Issued in reinvestment of distributions 1,441,760 270,661 74,344 55,734
Shares redeemed (55,981,024) (44,921,410) (17,865,154) (9,916,158)
------------- ------------- ------------- -------------
Net increase (decrease) (12,813,714) 24,030,383 (1,411,699) 8,379,436
============= ============= ============= =============
See notes to financial statements
- --------------------------------------------------------------------------------
THE YACKTMAN FUNDS, INC.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
THE YACKTMAN FUND THE YACKTMAN FUND
YEAR ENDED DECEMBER 31, YEAR ENDED DECEMBER 31,
- --------------------------------------------------------------------------- --------------------------------------------------
For a Fund share outstanding
throughout each year 2003 2002 2001 2000 1999
- --------------------------------------------------------------------------- --------------------------------------------------
Net asset value, beginning
of year $12.33 $11.16 $9.80 $9.40 $11.61
Income from investment
operations:
Net investment income 0.23 0.13 0.08 0.11 0.12
Net realized and unrealized
gain (loss) on investments 3.84 1.14 1.83 1.16 (2.07)
--------- --------- --------- --------- ---------
Total from investment
operations 4.07 1.27 1.91 1.27 (1.95)
--------- --------- --------- --------- ---------
Less distributions:
From net investment income (0.17) (0.10) (0.05) (0.06) (0.10)
From net realized gains (0.99) - (0.50) (0.81) (0.16)
--------- --------- --------- --------- ---------
Total distributions (1.16) (0.10) (0.55) (0.87) (0.26)
--------- --------- --------- --------- ---------
Net asset value, end
of year $15.24 $12.33 $11.16 $9.80 $9.40
========= ========= ========= ========= =========
Total Return 33.03% 11.41% 19.47% 13.46% (16.90)%
========= ========= ========= ========= =========
Supplemental data and ratios:
Net assets, end of year (000s) $325,428 $421,292 $113,199 $69,800 $109,430
========= ========= ========= ========= =========
Ratio of expenses before expense
reimbursements to average net
assets (See Note 4) 0.94% 0.99% 1.17% 1.23% 0.72%
========= ========= ========= ========= =========
Ratio of net expenses to average
net assets 0.94% 0.99% 1.17% 1.23% 0.71%
========= ========= ========= ========= =========
Ratio of net investment income to
average net assets 1.25% 2.01% 1.06% 1.03% 0.95%
========= ========= ========= ========= =========
Portfolio turnover rate 40.01% 39.19% 42.79% 19.00% 4.80%
========= ========= ========= ========= =========
See notes to financial statements
- --------------------------------------------------------------------------------
THE YACKTMAN FUNDS, INC.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS (Cont'd.)
THE YACKTMAN FOCUSED FUND THE YACKTMAN FOCUSED FUND
YEAR ENDED DECEMBER 31, YEAR ENDED DECEMBER 31,
- --------------------------------------------------------------------------- --------------------------------------------------
For a Fund share outstanding
throughout each year 2003 2002 2001 2000 1999
- --------------------------------------------------------------------------- --------------------------------------------------
Net asset value, beginning
of year $12.48 $10.92 $9.40 $8.96 $11.62
Income from investment
operations:
Net investment income 0.07 0.08 0.09 0.14 0.09
Net realized and unrealized
gain (loss) on investments 3.90 1.56 1.52 0.45 (2.64)
--------- --------- --------- --------- ---------
Total from investment
operations 3.97 1.64 1.61 0.59 (2.55)
--------- --------- --------- --------- ---------
Less distributions:
From net investment income (0.07) (0.08) (0.09) (0.14) (0.09)
From net realized gains (0.10) - - - (0.02)
Return of capital - - - (0.01) -
--------- --------- --------- --------- ---------
Total distributions (0.17) (0.08) (0.09) (0.15) (0.11)
--------- --------- --------- --------- ---------
Net asset value, end
of year $16.28 $12.48 $10.92 $9.40 $8.96
========= ========= ========= ========= =========
Total Return 31.79% 14.99% 17.14% 6.60% (22.02)%
========= ========= ========= ========= =========
Supplemental data and ratios:
Net assets, end of year (000s) $127,355 $115,250 $9,356 $7,606 $9,008
========= ========= ========= ========= =========
Ratio of expenses before expense
reimbursements to average net
assets (See Note 4) 1.36%(1) 1.45% 2.32% 2.50% 1.19%
========= ========= ========= ========= =========
Ratio of net expenses to average
net assets 1.26%(2) 1.25% 1.25% 1.25% 1.19%
========= ========= ========= ========= =========
Ratio of net investment income to
average net assets 0.51% 1.68% 1.06% 1.56% 0.74%
========= ========= ========= ========= =========
Portfolio turnover rate 71.38% 49.95% 51.33% 37.84% 25.36%
========= ========= ========= ========= =========
(1) The ratio of expenses before expense reimbursements to average net assets,
excluding interest expense, is 1.35%
(2) The ratio of expenses to average net assets, excluding interest expense, is
1.25%
See notes to financial statements
- --------------------------------------------------------------------------------
THE YACKTMAN FUNDS, INC.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2003
- --------------------------------------------------------------------------------
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 recognized 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
market quotations are not readily available are valued at their fair value as
determined in good faith by the Adviser under the direction of the Board of
Directors.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
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, 2003.
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.
E) 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.
- --------------------------------------------------------------------------------
THE YACKTMAN FUNDS, INC.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NOTES TO THE FINANCIAL STATEMENTS (Cont'd.)
December 31, 2003
- --------------------------------------------------------------------------------
3. INVESTMENT TRANSACTIONS
For the year ended December 31, 2003, the aggregate purchases and sales of
securities, excluding short-term securities, were $125,811,641 and $248,770,620
for The Yacktman Fund and $57,922,104 and $68,816,603 for The Yacktman Focused
Fund, respectively. For the year ended December 31, 2003, the aggregate
purchases and sales of U.S. Government securities were $20,497,722 and
$20,500,000 for The Yacktman Fund and $12,998,556 and $13,000,000 for The
Yacktman Focused Fund, respectively.
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. 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, 2003, The Yacktman Fund had
on loan securities valued at $70,275,926 and collateral of $73,174,858 and The
Yacktman Focused Fund had on loan securities valued at $24,346,820 and
collateral of $25,360,405.
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, 2004; 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, 2003, The Yacktman Fund and The Yacktman Focused Fund had no
outstanding borrowings under the LOC. During the year ended December 31, 2003,
The Yacktman Fund and The Yacktman Focused Fund had outstanding average daily
balances of $34,126 and $182,118 under the LOC, respectively. The maximum amount
outstanding for The Yacktman Fund and The Yacktman Focused Fund during the
period was $4,152,000 and $18,397,000, respectively. Interest expense for The
Yacktman Fund and The Yacktman Focused Fund amounted to $1,211 and $6,924,
respectively, for the year ended December 31, 2003.
THE YACKTMAN FUNDS, INC.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NOTES TO THE FINANCIAL STATEMENTS (Cont'd.)
December 31, 2003
- --------------------------------------------------------------------------------
7. TAX INFORMATION
The following information for the Funds is presented on an income tax basis as
of December 31, 2003:
THE YACKTMAN THE YACKTMAN
FUND FOCUSED FUND
Cost of investments $310,127,344 $130,869,379
============= =============
Gross unrealized appreciation $ 92,590,846 $ 24,815,492
Gross unrealized depreciation (8,570,635) (3,977,231)
------------- -------------
Net unrealized appreciation
on investments $ 84,020,211 $ 20,838,261
============= =============
The difference between cost amounts for financial statement and federal income
tax purposes is due primarily to timing differences in recognizing certain gains
and losses in security transactions.
The tax character of distributions paid during the years ended December 31, 2003
and 2002 were as follows:
THE YACKTMAN THE YACKTMAN
FUND FOCUSED FUND
2003
Ordinary income $7,771,809 $505,991
Long-term capital gains $15,261,663 $778,448
2002
Ordinary income $3,427,806 $701,196
Long-term capital gains - -
During the year ended December 31, 2003, the Funds utilized $3,218,408 and
$3,653,039 of capital loss carryforwards, for The Yacktman Fund and The Yacktman
Focused Fund, respectively.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
As of December 31, 2003, the components of accumulated earnings on a tax basis
were as follows:
THE YACKTMAN THE YACKTMAN
FUND FOCUSED FUND
Undistributed ordinary income $- $-
Undistributed long-term
capital gains - 1,229,558
------------- -------------
Accumulated earnings - 1,229,558
Net unrealized appreciation
on investments 84,020,211 20,838,261
------------- -------------
Total accumulated earnings $84,020,211 $22,067,819
============= =============
- --------------------------------------------------------------------------------
THE YACKTMAN FUNDS, INC.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NOTES TO THE FINANCIAL STATEMENTS (Cont'd.)
December 31, 2003
- --------------------------------------------------------------------------------
8. ADDITIONAL TAX INFORMATION (UNAUDITED)
For the year ended December 31, 2003, 100% of the dividends paid from net
investment income, not including short-term capital gains (if any), for The
Yacktman Fund and The Yacktman Focused Fund qualify for the dividends received
deduction available to corporate shareholders.
For the year ended December 31, 2003, 82.59% and 100.00% of the dividends paid
from net investment income, not including short-term capital gains (if any), for
The Yacktman Fund and The Yacktman Focused Fund, respectively, are designated as
qualified dividend income.
The Funds hereby designate approximately, $19,658,253 and $847,168 as capital
gain distributions for The Yacktman Fund and The Yacktman Focused Fund,
respectively, for the purposes of the dividends paid deduction. 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.
- --------------------------------------------------------------------------------
THE YACKTMAN FUNDS, INC.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
REPORT OF INDEPENDENT AUDITORS
- --------------------------------------------------------------------------------
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, 2003, and the results of each of their operations,
the changes in each of their net assets and their financial highlights for each
of the periods presented, 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 auditing standards
generally accepted in the United States of America, which 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, 2003 by correspondence with the custodian, provide a reasonable
basis for our opinion.
PRICEWATERHOUSECOOPERS LLP
Milwaukee, Wisconsin
January 30, 2004
- --------------------------------------------------------------------------------
THE YACKTMAN FUNDS, INC.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
DIRECTOR INFORMATION
INDEPENDENT DIRECTORS
- ------------------------------------------------------------------------------------------------------------------------------------
PRINCIPAL NUMBER OF OTHER
OCCUPATION PORTFOLIOS DIRECTORSHIPS
CURRENT TERM OF OFFICE DURING THE PAST OVERSEEN HELD OUTSIDE
POSITION HELD AND LENGTH OF FIVE YEARS WITHIN THE THE FUND
NAME AGE ADDRESS WITH THE FUNDS TIME SERVED FUND COMPLEX COMPLEX
Bruce B. Bingham 55 c/o Yacktman Director Indefinite, Mr. Bingham has been 2 None
Asset Management Co. until a partner in Hamilton
1110 Lake Cook Road, successor Partners, a real estate
Suite 385 elected development firm,
Buffalo Grove, for more than
IL 60089 5 years five years
- ------------------------------------------------------------------------------------------------------------------------------------
Albert J. Malwitz 67 c/o Yacktman Director Indefinite, Mr. Malwitz has been owner 2 None
Asset Management Co. until chief executive officer
1110 Lake Cook Road, successor of Arlington Fastener
Suite 385 elected Co., a manufacturer
Buffalo Grove, and distributor of
IL 60089 5 years industrial fasteners,
for more than five years
- ------------------------------------------------------------------------------------------------------------------------------------
George J. Stevenson, 64 c/o Yacktman Director Indefinite, Mr. Stevenson has been 2 None
III Asset Management Co. until President of Stevenson &
1110 Lake Cook Road, successor Company, a registered
Suite 385 elected business broker, and
Buffalo Grove, President of Healthmate
IL 60089 5 years Products Co., a fruit
juice concentrate
manufacturing company,
for more than five years
INTERESTED DIRECTORS*
- ------------------------------------------------------------------------------------------------------------------------------------
Stephen Yacktman 33 c/o Yacktman Director Indefinite, Mr. Yacktman has been 2 None
Asset Management Co. Vice until Vice President of Yacktman
1110 Lake Cook Road, President successor Asset Management Co.
Suite 385 Secretary elected for more than five years
Buffalo Grove,
IL 60089 1 year
- ------------------------------------------------------------------------------------------------------------------------------------
Donald A. Yacktman 62 c/o Yacktman Asset Director Indefinite, Mr. Yacktman has been 2 None
Management Co. President until President of Yacktman
1110 Lake Cook Road, Treasurer successor Asset Management Co.
Suite 385 elected since April, 1992
Buffalo Grove,
IL 60089 11 years
- ------------------------------------------------------------------------------------------------------------------------------------
* Each of the Interested Directors 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.
- --------------------------------------------------------------------------------
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-408-0204
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 not any 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, 2003 $35,700
Fiscal year ended December 31, 2002 $34,000
(b) Audit-Related Fees. None.
(c) Tax Fees.
Fiscal year ended December 31, 2003 $6,300
Fiscal year ended December 31, 2002 $6,000
(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 2003, all of the non-audit services provided by the
Registrant's principal accountant were pre-approved by the audit committee.
(f) None.
(g) None.
(h) Not applicable.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS
Not applicable.
ITEM 6. [RESERVED]
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 8. [RESERVED]
ITEM 9. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
ITEM 10. 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 of this report.
(b) There were no significant changes in the Registrant's internal controls or
in other factors that could significantly affect these controls subsequent to
the date of their evaluation, including any corrective actions with regard to
significant deficiencies and material weaknesses.
ITEM 11. EXHIBITS.
(1) Code of Ethics - Filed as an attachment to this filing.
(2) Certifications required pursuant to Section 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.
By: /s/ Donald A. Yacktman
----------------------
Donald A. Yacktman
Principal Executive Officer
Date: March 2, 2004
-------------
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.
By: /s/ Donald A. Yacktman
----------------------
Donald A. Yacktman
Principal Executive Officer
Date: March 2, 2004
-------------
By: /s/ Donald A. Yacktman
----------------------
Donald A. Yacktman
Principal Financial Officer
Date: March 2, 2004
-------------