THE YACKTMAN FUNDS, INC.
AND
YACKTMAN ASSET MANAGEMENT CO.
CODE OF ETHICS
Amended effective as of February 20, 2004
I. DEFINITIONS
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A. "Access person" means any director, officer or advisory person of
the Fund or of the Adviser.
B. "Act" means the Investment Company Act of 1940, as amended.
C. "Adviser" means Yacktman Asset Management Co.
D. "Advisory person" means: (i) any employee of the Fund or Adviser or
of any company in a control relationship to the Fund or Adviser, who,
in connection with his or her regular functions or duties, makes,
participates in, or obtains information regarding the purchase or sale
of Covered Securities by the Fund or Managed Accounts, or whose
functions relate to the making of any recommendations with respect to
such purchases or sales; and (ii) any natural person in a control
relationship to the Fund or Adviser who obtains information concerning
recommendations made to the Fund or Managed Accounts with regard to the
purchase or sale of Covered Securities by the Fund or Managed Accounts.
E. A Covered Security is "being considered for purchase or sale" when a
recommendation to purchase or sell the Covered Security has been made
and communicated and, with respect to the person making the
recommendation, when such person seriously considers making such a
recommendation.
F. "Beneficial ownership" shall be interpreted in the same manner as it
would be under Rule 16a-1(a)(2) under the Securities Exchange Act of
1934 in determining whether a person is the beneficial owner of a
security for purposes as such Act and the rules and regulations
promulgated thereunder.
G. "Control" has the same meaning as that set forth in Section 2(a)(9) of
the Act.
H. "Covered Security" means a security as defined in Section 2(a)(36) of
the Act, except that it does not include:
(i) Direct obligations of the Government of the United States;
(ii) Bankers' acceptances, bank certificates of deposit, commercial
paper and high quality short-term debt instruments, including
repurchase agreements; and
(iii) Shares issued by open-end registered investment
companies.
I. "Disinterested director" means a director of the Fund who is not an
"interested person" of the Fund within the meaning of Section 2(a)(19)
of the Act and the rules and regulations promulgated thereunder.
J. "Fund" means The Yacktman Funds, Inc. or any series thereof.
K. "Initial Public Offering" means an offering of securities registered
under the Securities Act of 1933, the issuer of which, immediately
before the registration, was not subject to the reporting requirements
of Section 13 or 15(d) of the Securities Exchange Act of 1934.
L. "Investment personnel" means: (i) any employee of the Fund or Adviser
or of any company in a control relationship to the Fund or Adviser who,
in connection with his or her regular functions or duties, makes or
participates in making recommendations regarding the purchase or sale
of securities by the Fund or Managed Accounts; and (ii) any natural
person who controls the Fund or Adviser and who obtains information
concerning recommendations made to the Fund or Managed Accounts
regarding the purchase or sale of securities by the Fund or Managed
Accounts.
M. A "Limited Offering" means an offering that is exempt from registration
under the Securities Act of 1933 pursuant to Section 4(2) or Section
4(6) thereof or pursuant to Rule 504, Rule 505 or Rule 506 thereunder.
N. "Managed Accounts" include any client account for which the Adviser
provides investment management services.
O. "Purchase or sale of a Covered Security" includes, among other things,
the writing of an option to purchase or sell a Covered Security.
II. APPROVAL OF CODE OF ETHICS
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A. The Board of Directors of the Fund, including a majority of the
Disinterested directors, shall approve this Code of Ethics and any
material changes thereto. Prior to approving this Code of Ethics and
any material changes thereto, the Board of Directors must determine
that this Code of Ethics contains provisions reasonably necessary to
prevent access persons from violating Rule 17j-1(b) of the Act and
shall receive a certification from the Adviser that it has adopted
such procedures as are reasonably necessary to prevent access persons
of the Adviser from violating this Code of Ethics.
B. No less frequently than annually, the officers of the Fund and the
officers of the Adviser shall furnish a report to the Board of
Directors of the Fund:
1. Describing issues arising under the Code of Ethics since the last
report to the Board of Directors, including, but not limited to,
information about material violations of the Code of Ethics and
sanctions imposed in response to such material violations. Such
report shall also include a list of access persons under the Code
of Ethics.
2. Certifying that the Fund and Adviser have adopted such procedures
as are reasonably necessary to prevent access persons from
violating the Code of Ethics.
C. This Code of Ethics, the certifications required by Sections II.A. and
II.B.(2), and the reports required by Sections II.B. shall be
maintained by the Fund's Administrator. The reports required by
Section V shall be maintained by the Fund's President or designee.
III. EXEMPTED TRANSACTIONS
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The prohibitions of Section IV of this Code of Ethics shall not apply to:
(a) Purchases or sales effected in any account over which the access
person has no direct or indirect influence or control.
(b) Purchases or sales of Covered Securities which are not eligible
for purchase or sale by any Fund or any Managed Account;
provided, however, that the prohibitions of Section IV.B of this
Code of Ethics shall apply to such purchases and sales.
(c) Purchases or sales which are non-volitional on the part of either
the access person or the Fund or Managed Account.
(d) Purchases which are part of an automatic dividend reinvestment
plan.
(e) Purchases effected upon the exercise of rights issued by an
issuer pro rata to all holders of a class of its securities, to
the extent such rights were acquired from such issuer, and sales
of such rights so acquired.
IV. PROHIBITED ACTIVITIES
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A. Except in a transaction exempted by Section III of this Code, no access
person (other than the President of the Fund) shall purchase or sell,
directly or indirectly, any Covered Security in which he has, or by
reason of such
transaction acquires, any direct or indirect beneficial ownership
unless such purchase or sale has been "precleared" by the President of
the Fund. No transaction shall be "precleared" if, at the time of such
purchase or sale, such security is being considered for purchase or
sale by a Fund or a Managed Account or is being purchased or sold by a
Fund or a Managed Account, unless all transactions in such security by
the Fund and Managed Accounts have been completed at the existing
price level on a day prior to the day of the transaction requiring
preclearance. Notwithstanding the foregoing, Disinterested directors
are not required to "preclear" transactions unless the Disinterested
director knows or should have known at the time of such purchase or
sale, such security is being considered for purchase or sale by a Fund
or is being purchased or sold by a Fund.
Except in a transaction exempted by Section III of this Code, no
access person (other than the President of the Fund) shall purchase
or redeem, directly or indirectly, any shares of the Fund in which
he has, or by reason of such transaction acquires, any direct or
indirect beneficial ownership unless such purchase or redemption has
been "precleared" by the President of the Fund. No such transaction
shall be "precleared" if the President of the Fund determines, in
his sole discretion, that such transaction would be detrimental to
the Fund because of the timing of the proposed purchase or
redemption. Disinterested directors are not required to "preclear"
transactions in shares of the Fund.
B. Investment personnel may not acquire any securities in an Initial
Public Offering.
C. Except in a transaction exempted by Section III of this Code of Ethics,
Investment Personnel (other than the Fund's President) must obtain
approval from the Fund's President before directly or indirectly
acquiring beneficial ownership in any securities in a Limited Offering.
The Fund's President must obtain approval from a Disinterested director
before directly or indirectly acquiring beneficial ownership in any
securities in a Limited Offering. Prior approval shall not be given if
the Fund's President or the Disinterested director, as applicable,
believes that the investment opportunity should be reserved for the
Fund or a Managed Account or is being offered to the individual by
reason of his or her position with the Fund or the Adviser.
D. Except in a transaction exempted by Section III of this Code of Ethics,
no access person shall purchase or sell, directly or indirectly, any
security in which he has, or by reason of such transaction acquires,
any direct or indirect beneficial ownership on a day during which the
Fund or a Managed Account has a pending "buy" or "sell" order in the
same security until that order is executed or withdrawn.
Notwithstanding the foregoing, Disinterested directors are not subject
to this prohibition unless he or she knows or should have known
at the time of such purchase or sale that the Fund has such a pending
"buy" or "sell" order in the same security.
E. Investment Personnel shall not receive any gift or other thing of more
than de minimis value from any person or entity that does business with
or on behalf of the Fund. The annual receipt of gifts from the same
source valued at $100 or less shall be considered de minimis.
Additionally, the receipt of an occasional dinner, a ticket to a
sporting event or the theater, or comparable entertainment also shall
be considered to be of de minimis value.
F. Except for service which began prior to the effective date hereof,
Investment Personnel shall not serve on the board of directors of
publicly traded companies absent prior authorization of the Board of
Directors of the Fund. The Board of Directors of the Fund may so
authorize such board service only if it determines that such board
service is consistent with the interests of the Fund and its
shareholders.
V. REPORTING AND COMPLIANCE PROCEDURES
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A. Except as provided in Section V.B. of this Code of Ethics, every access
person shall report to the Fund the information described in Section
V.C., Section V.D. and Section V.E. of this Code of Ethics. All reports
shall be filed with the Fund's President or designee.
B. 1. A Disinterested director of the Fund need not make a report
pursuant to Section V.C. and V.E. of this Code of Ethics and need
only report a transaction in a Covered Security pursuant to
Section V.D. of this Code of Ethics if such Disinterested
director, at the time of such transaction, knew or, in the
ordinary course of fulfilling his official duties as a director
of the Fund, should have known that, during the 15-day period
immediately preceding the date of the transaction by the
director, such Covered Security was purchased or sold by the Fund
or was being considered by the Fund or the Adviser for purchase
or sale by the Fund.
2. An access person need not make a report with respect to
transactions effected for, and Covered Securities held in, any
account over which the person has no direct or indirect influence
or control.
3. An access person need not make a quarterly transaction report
pursuant to Section V.D. of this Code of Ethics if the report
would duplicate information contained in broker trade
confirmations or account statements received by the Fund's
President or designee with respect to the access person in the
time period required by Section V.D., provided that all of the
information required by Section V.D. is contained in the broker
trade confirmations or account statements or in the records of
the Fund.
C. Every access person shall, no later than ten (10) days after the
person becomes an access person, file an initial holdings report
containing the following information:
1. The number of shares of the Fund and the title, number of shares
and principal amount of each Covered Security in which the access
person had any direct or indirect beneficial ownership when the
person becomes an access person;
2. The name of any broker, dealer or bank with whom the access
person maintained an account in which any securities were held
for the direct or indirect benefit of the access person; and
3. The date that the report is submitted by the access person.
D. Every access person shall, no later than ten (10) days after the end
of a calendar quarter, file a quarterly transaction report containing
the following information:
1. With respect to any transaction during the quarter in shares of
the Fund or in a Covered Security in which the access person had
any direct or indirect beneficial ownership:
(a) The date of the transaction, the title and the number of
shares, and the principal amount of each security involved;
(b) The nature of the transaction (i.e., purchase, sale or any
other type of acquisition or disposition);
(c) The price of the Covered Security at which the transaction
was effected;
(d) The name of the broker, dealer or bank with or through whom
the transaction was effected; and
(e) The date that the report is submitted by the access person.
2. With respect to any account established by the access person in
which any securities were held during the quarter for the direct
or indirect benefit of the access person:
(a) The name of the broker, dealer or bank with whom the access
person established the account;
(b) The date the account was established; and
(c) The date that the report is submitted by the access person.
E. Every access person shall, no later than January 30 each year, file an
annual holdings report containing the following information as of the
preceding December 31:
1. The number of shares of the Fund and the title, number of shares
and principal amount of each Covered Security in which the access
person had any direct or indirect beneficial ownership;
2. The name of any broker, dealer or bank with whom the access
person maintains an account in which any securities are held for
the direct or indirect benefit of the access person; and
3. The date that the report is submitted by the access person.
F. Any report filed pursuant to Section V.C., Section V.D. or Section
V.E. of this Code of Ethics may contain a statement that the report
shall not be construed as an admission by the person making such
report that he has any direct or indirect beneficial ownership in
the security to which the report relates.
G. The Fund's President and the Fund's Administrator shall review all
reports filed pursuant to Section V.C., Section V.D. or Section V.E. of
this Code of Ethics. The Fund's President and the Fund's Administrator
shall submit to the Board of Directors of the Fund for its review the
quarterly reports filed by the Fund's President pursuant to Section
V.D. of this Code of Ethics. The Fund's President or designee shall
identify all access persons who are required to file reports pursuant
to this Section V of this Code of Ethics and must inform such access
persons of their reporting obligation.
H. Each year access persons shall certify to the Fund that (i) they have
read and understand this Code of Ethics and recognize that they are
subject thereto, and (ii) they have complied with the requirements of
this Code of Ethics and that they have disclosed or reported all
personal securities transactions required to be disclosed or reported
pursuant to the requirements of this Code of Ethics.
VI. SANCTIONS
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Upon discovering a violation of this Code of Ethics, the Board of Directors of
the Fund or the Adviser, as applicable, may impose such sanctions as it deems
appropriate.