http://www.sec.gov/Archives/edgar/data/885980/000089418912001990/yacktman_497e.htmThe Yacktman Funds, Inc.
Supplement to the Prospectus dated April 30, 2011
This Supplement provides new and additional information beyond that contained in the Prospectus and should be read in conjunction with the Prospectus.
On April 18, 2012, Affiliated Managers Group, Inc. (“AMG”) announced that it had reached a definitive agreement to acquire a majority interest in Yacktman Asset Management Co. (“Yacktman Co.”), the investment adviser to The Yacktman Focused Fund and The Yacktman Fund (collectively, the “Funds”).
In connection with the proposed acquisition, on April 4, 2012, the Funds’ Board of Directors approved and recommended submitting to shareholders the following proposals:
1. For shareholders of The Yacktman Focused Fund, to approve or disapprove a proposed Agreement and Plan of Reorganization pursuant to which Yacktman Focused Fund, a series of Managers AMG Funds (the “New Yacktman Focused Fund”), would acquire all of the assets and assume all of the liabilities of The Yacktman Focused Fund in exchange for shares of the New Yacktman Focused Fund to be distributed pro rata by The Yacktman Focused Fund to its shareholders in complete liquidation and termination of The Yacktman Focused Fund; and
2. For shareholders of The Yacktman Fund, to approve or disapprove a proposed Agreement and Plan of Reorganization pursuant to which Yacktman Fund, a series of Managers AMG Funds (the “New Yacktman Fund”), would acquire all of the assets and assume all of the liabilities of The Yacktman Fund in exchange for shares of the New Yacktman Fund to be distributed pro rata by The Yacktman Fund to its shareholders in complete liquidation and termination of The Yacktman Fund.
Shareholders of each of the Funds will vote separately on the proposal to reorganize their respective Fund (the “Proposed Reorganizations”).
The New Yacktman Focused Fund and the New Yacktman Fund have been created to continue the investment operations of The Yacktman Focused Fund and The Yacktman Fund, respectively, and will utilize the same core investment process going forward. The members of the investment team of Yacktman Co. who currently manage the investments of The Yacktman Focused Fund and The Yacktman Fund will manage the New Yacktman Focused Fund and the New Yacktman Fund if the Proposed Reorganizations are approved.
Managers AMG Funds has filed a proxy statement/prospectus on Form N-14 with the Securities and Exchange Commission in connection with the Proposed Reorganizations. The definitive proxy statement/prospectus will be sent to shareholders of the Funds to seek their approval of the reorganization of the Funds. Shareholders are urged to read the definitive proxy statement/prospectus and proxy card when they become available, because they will contain important information about the Proposed Reorganizations.
Comments
Why would they sell out as owning the management would only get more valuable in time?
Prinx
I've always wondered if AMG is a hinderance (my wife holds Tweedy Funds). Royce, for example, has changed radically since their buyout by Legg Mason.
Next time Tweedy, Browne has a conference call I plan to submit a question on this topic.
For what it's worth,
David
http://www.sec.gov/Archives/edgar/data/1089951/000119312512167753/0001193125-12-167753-index.htm
(I don't like paying that additional fee for NTF access; I merely point out that there can be value received for it.)
In addition, there is a new service class being introduced, without the 12b-1 fee, and with "modest" minimums ($25K taxable, $10K IRA). So it may be possible to avoid the fee. Need more details before knowing one way or the other.
Here is an example of the fee increase that I found. Also there appears to be a waiver on management fees until May 1, 2015 or three years (based on footnotes):
http://www.sec.gov/Archives/edgar/data/1089951/000119312512167753/d332631d485apos.htm
From new AMG prospectus on Yacktman Focused Fund:
Investor
Class Service
Class Institutional
Class
Management Fee
[1.00 ]% [1.00 ]% [1.00 ]%
Distribution and Service
(12b-1) Fees
[0.25 ]% [None ] [None ]
Other Expenses1
[0.33 ]% [0.24 %] [0.08 ]%
Total Annual Fund Operating Expenses
[1.58 ]%2 [1.24 %]3 [1.08 ]%2
Footnote 2
2 [Managers Investment Group LLC (the “Investment Manager”) has contractually agreed, through at least [ ], to waive management fees and/or reimburse Fund expenses in order to limit Total Annual Fund Operating Expenses After Fee Waiver and Expense Reimbursements (exclusive of taxes, interest (including interest incurred in connection with bank and custody overdrafts), shareholder servicing fees, distribution and service (12b-1) fees, brokerage commissions and other transaction costs, acquired fund fees and expenses, and extraordinary expenses) of the Investor Class and Institutional Class shares of the Fund to [ ]% and [ ]% of the average daily net assets of the Investor Class and Institutional Class shares, respectively, subject to later reimbursement by the Investor Class and Institutional Class shares in certain circumstances. In general, for a period of up to 36 months from the time of any waiver, reimbursement, or payment pursuant to the Fund’s contractual expense limitation, the Investment Manager may recover from the Investor Class and Institutional Class shares fees waived and expenses paid to the extent that such repayment would not cause the Total Annual Fund Operating Expenses After Fee Waiver and Expense Reimbursements of the Investor Class and Institutional Class shares to exceed the contractual expense limitation amount. Under such arrangement, if the maximum amount of shareholder servicing fees and distribution and service (12b-1) fees were charged to the classes under the current applicable plans, the total annual fund operating expenses (excluding the other items noted in the parenthetical above) of the Investor Class and Institutional Class would be [ ]% and [ ]%, respectively, of the average daily net assets of such classes. The contractual expense limitation may only be terminated upon termination of the Fund’s investment advisory agreement with the Investment Manager or by mutual agreement between the Investment Manager and the Fund’s Board of Trustees.]
Footnote 3
[The Investment Manager has contractually agreed, through at least May 1, 2015, to waive management fees and/or reimburse Fund expenses in order to limit Total Annual Fund Operating Expenses After Fee Waiver and Expense Reimbursements (exclusive of taxes, interest (including interest incurred in connection with bank and custody overdrafts), brokerage commissions and other transaction costs, and extraordinary expenses) of the Service Class shares of the Fund to 1.25% of the average daily net assets of the Service Class shares, subject to later reimbursement by the Service Class shares in certain circumstances. In general, for a period of up to 36 months from the time of any waiver, reimbursement, or payment pursuant to the Fund’s contractual expense limitation, the Investment Manager may recover from the Service Class shares fees waived and expenses paid to the extent that such repayment would not cause the Total Annual Fund Operating Expenses After Fee Waiver and Expense Reimbursements of the Service Class to exceed the contractual expense limitation amount. The contractual expense limitation may only be terminated upon termination of the Fund’s investment advisory agreement with the Investment Manager or by mutual agreement between the Investment Manager and the Fund’s Board of Trustees.]
http://www.sec.gov/Archives/edgar/data/885980/000089853111000195/tyf-485bp.htm
From 4/29/11 prospectus of Yacktman Focused Fund:
Annual Fund Operating Expenses
(expenses that you pay each year as a percentage of the value of your investment)
Management Fees 1.00 %
Distribution and/or Service (12b-1) Fees 0.00 %
Other Expenses 0.27 %
Total Annual Fund Operating Expenses 1.27 %
Fee Waiver 0.02 %(1)
Total Annual Fund Operating
Expenses After Fee Waiver 1.25 %
The three year period you mention (for all share classes) is a recovery period (36 months).
A recovery period is the period of time where the management may claw back fees that it waived. For example, if there's a fee waiver in place so that a fund may not charge more than 1.50%, and the fees for the first year are 1.60%, there's a 0.10% waiver. If the fees for the next year drop to 1.40%, then the fund will still charge 1.50%, using that extra 0.10% to pay back the management company for the prior waiver. The 36 month limitation is that they may not hike fees to recover expenses that were waived more than 36 months prior. It has little to do with how long the fee waiver itself is in place.
For all shares, the waiver may be terminated at any time "by mutual agreement between the Investment Manager and the Fund’s Board of Trustees". That's at the end of both fn 2 (Investor/Institutional shares) and fn 3 (Service class shares).
Finally, the management company is always free to not recover its lost fees. I think that's not unusual, either.
My point wasn't so much that the fees won't drop quickly (though that's a consideration) as the fact that the 36 months didn't refer to the time the fee waiver was in place.
I read the above comments but am still not sure which way to vote. Is the consensus here now to agree to the change? My confidence is in Yacktman managers based on past performance, so I would vote yes if they felt this would help the fund and most people here at least felt it would do no harm.
Cathy
P.S. I'm so sorry I, again, haven't been able to read/participate in this Forum. After completing handling of my Mom's estate, I made the big mistake of having detailed landscaping job done at our house. They are just finishing now after 2 full months of my poor potted plants (over 1500) being crammed in corners so they could work. I've lost over 100 plants alone so far that can't be recovered, and now have at least 50 other plants whose critical id labels I so carefully made got lost out of their pots. So I've been outside all hours of night and day trying to recover the ones that have a chance of surviving. Way too much stress, especially coming so close after Mom's death. But I promised husband no more "projects" for at least a year, and my first goal will be to get back to reading and joining in here.