NOTE 1 - ORGANIZATION
The O'Shaughnessy Cornerstone Growth Fund and O'Shaughnessy Cornerstone Value Fund (the "Funds") are
each a series of shares of O'Shaughnessy Funds, Inc., which is registered under the Investment Company Act of
1940 as a diversified, open-end management investment company. The Funds began operations on November 1,
1996. Cornerstone Growth Fund seeks long-term capital growth. Cornerstone Value Fund seeks both current
income and long-term capital growth. Each Fund seeks to achieve its objective utilizing distinct processes of
Strategy Indexing(TM) developed by the investment advisor.
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently followed by the Funds. These policies
are in conformity with generally accepted accounting principles.
A. Security Valuation: The Funds' investments are carried at market value. Securities listed on an exchange or
quoted on a national market system are valued at the last sale price. Other securities are valued at the mean
between the last bid and asked prices. Securities for which market quotations are not readily available, if any, are
valued following procedures approved by the Board of Directors. Short-term investments are valued at
amortized cost, which approximates market value.
B. Federal Income Taxes: It is each Fund's policy to comply with the requirements of the Internal Revenue Code
applicable to regulated investment companies and to distribute substantially all of its taxable income to its
shareholders. Therefore, no federal income tax provision is required.
C. Security Transactions, Dividends and Distributions: Security transactions are accounted for on the trade date.
Dividend income and distributions to shareholders are recorded on the ex-dividend date. Realized gains and
losses on securities sold are determined under the identified cost basis.
D. Deferred Organization Costs: The Funds have each incurred expenses of $25,190 in connection with their