O SHAUGHNESSY FUNDS INC, 497, 1998-12-10

O SHAUGHNESSY FUNDS INC
497, 1998-12-10

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O'Shaughnessy Funds Inc.

Building New Standards for Investment Success

Aggressive Growth Fund

35 Mason Street, Greenwich, Connecticut 06830
Toll-Free 877-OSFUNDS (673-8637)
www.osfunds.com
NASDAQ Symbol: OSAGX

The Fund

O'Shaughnessy Aggressive Growth Fund (the "Fund") is an investment portfolio or
series of O'Shaughnessy Funds, Inc., an open-end management investment company
with multiple portfolios or series available for investment.

Investment Objective

The investment objective of the Fund is capital appreciation.

Strategy

The Fund seeks to achieve its objective through implementation of proprietary
aggressive growth models developed by O'Shaughnessy Capital Management, Inc.,
the Fund's investment manager (the "Manager").

The Fund's portfolio will generally consist of approximately 45 common stocks
selected by the Manager which meet certain criteria. For a more detailed
description of the Fund, see "About the Fund - Investment Objective and
Policies."

Risk/Reward

Although the stocks in which the Fund may invest have, in the Manager's
judgment, the potential to provide superior return, such stocks are likely to be
subject to greater than average price volatility, which may result in
substantial declines in the Fund's share price. Accordingly, the Fund is
suitable only for the most aggressive investors. For a discussion of the
additional risks associated with an investment in the Fund, see "About the Fund
- - Investment Objective and Policies."

Purchase of Shares

Shares of the Fund will be offered to investors during the continuous offering
at a price equal to the next determined net asset value per share. There are no
fees or charges to purchase or sell shares or to reinvest dividends, however, a
fee applies to certain short-term redemptions, see "Information About Your
Account - Redemption of Shares". There are no Rule 12b-1 fees.

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.

PROSPECTUS

November 30, 1998

This Prospectus contains the information you should know about the Fund before
you invest. Please keep it for future reference. A statement containing
additional information about the Fund, dated November 30, 1998 has been filed
with the Securities and Exchange Commission and is incorporated by reference
into this Prospectus. It is available, at no charge, by calling or by writing
the Fund at the telephone number or address set forth above. The SEC maintains
an internet site (http://www.sec.gov) that contains the SAI, other material
incorporated by reference and other information about companies that file
electronically with the SEC.

O'Shaughnessy Capital Management, Inc.
Manager

First Fund Distributors, Inc.
Distributor

TABLE OF CONTENTS
About the Fund . . . . . . . . . . . . . . . . . .
Financial Highlights . . . . . . . . . . . . . . .
Management and Organization of the Fund . . . . . . .
Information about Your Account . . . . . . . . . .
Information on Distributions and Taxes . . . . . . . .
Performance Information . . . . . . . . . . . . .
Net Asset Value . . . . . . . . . . . . . . . . .
Other Shareholder Services . . . . . . . . . . . .

ABOUT THE FUND
TRANSACTION AND FUND EXPENSES

The following table and example should help you understand the kinds of expenses
you will bear directly or indirectly as a Fund shareholder. In the table,
"Shareholder Transaction Expenses," shows that you pay no sales charges. All the
money you invest in the Fund goes to work for you, subject to the fees noted in
the table. "Annual Fund Operating Expenses" shows how much it would cost to
operate the Fund for a year, based on estimated expenses through the end of the
Fund's first full year. These costs you pay indirectly, because they are
deducted from the Fund's total assets before the daily share price is calculated
and before dividends and other distributions are made. You will not see these
expenses on your account statement.

Fee Table

Shareholder Transaction Expenses:
Maximum Sales Charge Imposed on
Purchases (as a percentage of offering price) . . . . . None
Maximum Sales Charge Imposed on
Dividend Reinvestments. . . . . . . . . . None
Deferred Sales Charge (as a percentage of
original purchase price or redemption proceeds,
whichever is lower). . . . . . . . . . . None
Redemption fee (a)
(on shares held less than 90 days) . . . . 1.50%
Exchange Fee (a) (b)
(on shares held less than 90 days) . . . . 1.50%

Annual Fund Operating Expenses
(as a percentage of average net assets):
Management Fees (c) (d). . . . . . . . . . 0.74%
Rule 12b-1 Fees. . . . . . . . . . . . . None
Other Expenses (d) . . . . . . . . . . . . 1.26%
Total Fund Operating Expenses (d). . . . . 2.00%

(b) Shareholders who effect exchanges of shares of the Fund for shares of
another fund by telephone in accordance with the exchange privilege will be
charged a $5.00 exchange fee in addition to any fees applicable as indicated in
footnote (a). See "Information About Your Account - Exchange Privilege."

(d) To limit the Fund's expenses, the Manager has voluntarily agreed to reduce
its fees or reimburse the Fund through at least September 30, 1999 to ensure
that the Fund's total operating expenses do not exceed 2.00% of average net
assets annually. Any such reductions made by the Manager in its fees or
reimbursement of expenses with respect to the Fund are subject to reimbursement
by the Fund to the Manager (recapture by the Manager), provided the Fund is able
to effect such reimbursement while keeping total operating expenses at or below
2.00% of average net assets annually, and that no reimbursement will be made
after September 30, 2000. Any amounts reimbursed will have the effect of
increasing fees otherwise paid by the Fund. In absence of any reimbursement,
the expense ratio would have been 2.24% for the fiscal period ended September
30, 1998.

Example:

An investor would pay the following expenses on a $1,000 investment assuming:
(1) the operating expense ratio set forth in the table above; (2) a 5% annual
return throughout the period; and (3) redemption at the end of the period:
Cumulative Expenses Paid for the Period of:

One year . . . . . . . . . . . . . . . . . .$ 20
Three years. . . . . . . . . . . . . . . . .$ 63
Five years . . . . . . . . . . . . . . . . $ 108
Ten years. . . . . . . . . . . . . . . . . $ 236

The table and example are intended to assist investors in understanding the
costs and expenses that a shareholder in the Fund will bear directly or
indirectly. The example should not be considered a representation of past or
future expenses or annual rate of return, and actual expenses or annual rate of
return may be more or less than those shown.

FINANCIAL HIGHLIGHTS

The table that follows is included in the Fund's Annual Report and has been
audited by McGladrey & Pullen, LLP, Independent Certified Public Accountants.
Their reports on the financial statements and financial highlights are included
in the Annual Report. The financial statements and financial highlights are
incorporated by reference into (are legally a part of) the Fund's Statement of
Additional Information.

Per Share Operating Performance
(For a share outstanding throughout the period)

Year November 1, 1996*
Ended through
September 30, 1998 September 30, 1997

Net asset value, beginning of period $ 14.29 $ 10.00

Income from investment operations:
Net investment loss (0.15) (.06)
Net realized & unrealized
loss on investments (3.21)* 4.35
Total from investment operations (3.36) 4.29

Less distributions:
From net realized gains (0.20) -

Net asset value, end of period $ 10.73 $ 14.29

Total Return (23.70%) 42.90%**

Ratios/supplemental data:
Net assets, end of period (millions) $ 8.3 $5.6

Ratio of expenses to average net assets:
Before expense reimbursement 2.24% 7.01%+
After expense reimbursement 2.00% 1.98%+

Ratio of net investment loss
to average net assets:
Before expense reimbursement (1.77%) (6.41%)+
After expense reimbursement (1.53%) (1.39%)+

Portfolio turnover rate 206.30% 104.77%

* Commencement of operations.
** Not Annualized.
+Annualized.

INVESTMENT OBJECTIVE AND POLICIES

To help you decide whether the Fund is appropriate for you, this section takes a
closer look at the Fund's investment objective and policies.

What is the Fund's objective? The investment objective of the Fund is capital
appreciation. There can be no assurance that the Fund will achieve its
investment objective.

What is the Fund's investment strategy? The Fund will seek to achieve its
objective through the implementation of proprietary aggressive growth models
developed by O'Shaughnessy Capital Management, Inc., the Fund's investment
manager (the "Manager").

The Fund's portfolio will generally consist of approximately 45 stocks, selected
through implementation of the Manager's proprietary aggressive growth models. At
the time of purchase, such stocks will generally possess the following
characteristics:

- - a market capitalization in excess of $150 million;

- - outstanding price performance during the last six months or one year period
prior to purchase;

- - high earnings gains during the one year period prior to purchase; and

- - expected high future earnings gains in the general consensus of market
analysts.

It is expected that the proprietary aggressive growth models used by the Manager
in selecting stocks for the Fund's portfolio will select stocks for investment
without regard to capitalization, except that the issuers must have market
capitalizations in excess of $150 million. The majority of these stocks will be
common stocks of domestic corporations and American Depository Receipts
("ADRs").

The Manager may invest the Fund's assets in stocks which do not meet all of the
above criteria, if, in the opinion of the Manager, such stocks possess
characteristics similar to stocks meeting such criteria. In addition, the
Manager may continue to hold a stock in the Fund's portfolio which no longer
meets the initial criteria for investment if the Manager believes such
investments are consistent with the Fund's investment objective.

What are the potential risks of investing primarily in common stocks? The
fundamental risk associated with any common stock fund is the risk that the
value of the stocks it holds might decrease. Stock values may fluctuate in
response to the activities of an individual company or in response to general
market and/or economic conditions. Historically, common stocks have provided
greater long-term returns and have entailed greater short-term risks than other
investment choices. Smaller or newer issuers are more likely to realize more
substantial growth as well as suffer more significant losses than larger or more
established issuers. Investments in such companies can be both more volatile and
more speculative.

OTHER INVESTMENT POLICIES AND PRACTICES

This section takes a detailed look at other investment policies and practices of
the Fund. The Fund's investments are subject to further restrictions and risks
described in the Statement of Additional Information.

Shareholder approval is required to change the Fund's investment objective and
certain investment restrictions noted in the following section as "fundamental
policies." The Manager also follows certain "operating policies" which can be
changed without shareholder approval. However, significant changes in operating
policies are discussed with shareholders in Fund reports.

The Fund's holdings in certain kinds of investments cannot exceed maximum
percentages of total assets, which are set forth below. While these restrictions
provide a useful level of detail about the Fund's investments, investors should
not view them as an accurate gauge of the potential risk of such investments.
The net effect of a particular investment depends on its volatility and the size
of its overall return in relation to the performance of all the Fund's other
investments.

Cash and Short-Term Securities. The Fund may temporarily invest a portion of
its total assets in cash or liquid short-term securities pending investment of
such assets in stocks in accordance with the Fund's investment strategy and in
order to meet redemption requests. The Fund may also invest a portion of its
assets in cash or liquid short-term securities for temporary defensive purposes,
but is under no obligation to do so. Short-term securities in which the Fund may
invest include certificates of deposit, commercial paper, notes, obligations
issued or guaranteed by the U.S. Government or any of its agencies or
instrumentalities, and repurchase agreements involving such securities. See
"Repurchase Agreements," below.

The Manager does not expect assets invested in cash or liquid short-term
securities to exceed 5% of the Fund's total assets at any time.

Repurchase Agreements. The Fund may invest in repurchase agreements. The Fund
may only enter into repurchase agreements with a member bank of the Federal
Reserve System or a well-established securities dealer in U.S. government
securities. In the event of a bankruptcy or default by the seller of the
repurchase agreement the Fund may suffer delays and incur costs or possible
losses in liquidating the underlying security which is held as collateral, and
the Fund may incur a loss if the value of the collateral declines during this
period. As a matter of operating policy, the Fund may not invest more than 15%
of its total assets in repurchase agreements maturing in more than seven days.

Illiquid Securities. The Fund may invest up to 15% of its net assets in
illiquid securities. Illiquid securities are securities which cannot be readily
resold because of legal or contractual restrictions or which cannot otherwise be
marketed, redeemed, put to the issuer or a third party, or which do not mature
within seven days, or which the Manager, in accordance with guidelines approved
by the Board of Directors, has not determined to be liquid.

The Fund may purchase, without regard to the above limitation, securities that
are not registered under the Securities Act of 1933 (the "Securities Act") but
that can be offered and sold to "qualified institutional buyers" under Rule 144A
under the Securities Act, provided that the Board of Directors, or the Manager
pursuant to guidelines adopted by the Board, continuously determines, based on
the trading markets for the specific Rule 144A security, that it is liquid.

Lending of Portfolio Securities. Like other mutual funds, the Fund may from
time to time lend securities from its portfolio to banks, brokers and other
financial institutions to earn additional income. The principal risk is that the
borrower may default on its obligation to return borrowed securities, because of
insolvency or otherwise. In this event, the Fund could experience delays in
recovering its securities and capital. In accordance with applicable law, the
Fund may not lend portfolio securities representing in excess of 33 1/3% of its
total assets. The lending policy is a fundamental policy.

Borrowing. The Fund may borrow money from banks in an amount up to 33% of its
total assets for extraordinary or emergency purposes such as meeting anticipated
redemptions, and may pledge assets in connection with such borrowing. The
borrowing policy is a fundamental policy.

Small Cap Stocks. It is anticipated that the Fund's portfolio will include
small cap stocks (i.e., stocks whose issuers have market capitalizations
exceeding $150 million but less than $1 billion). Small cap stocks may present
greater opportunities for capital appreciation and a higher degree of risk; they
tend to be more vulnerable to financial and other risks and thus are more
volatile than stocks of larger, more established companies. Because the Fund may
invest in stocks with greater than average volatility, which may result in
substantial declines in the Fund's share price, it is suitable only for the most
aggressive investors.

Industry Concentration. The Fund may not invest more than 25% of its total
assets in any one industry (excluding U.S. Government securities). The
concentration policy is a fundamental policy.

Foreign Securities. The Fund may invest up to 25% of its total assets in
securities of foreign issuers, either through (i) direct purchase of securities
of foreign issuers or (ii) purchase of American Depository Receipts ("ADRs")
which are dollar-denominated securities of foreign issuers traded in the U.S.
Such investments increase diversification of the Fund's portfolio and may
enhance return, but they also involve some special risks such as exposure to
potentially adverse local political and economic developments, nationalization
and exchange controls; potentially lower liquidity and higher volatility;
possible problems arising from regulatory practices that differ from U.S.
standards; the imposition of withholding taxes on income from such securities;
confiscating taxation; and the chance that fluctuations in foreign exchange
rates will decrease the investment's value (favorable changes can increase its
value). These risks are heightened for investment in developing countries and
there is no limit on the amount of the Fund's foreign investments that may be
invested in such countries.

The Fund may invest in ADRs through both sponsored and unsponsored arrangements.
The issuers of unsponsored ADRs are not obligated to disclose material
information in the United States, and therefore, there may not be a correlation
between such information and the market value of the ADRs.

Hedging and Return Enhancement Strategies. The Fund is permitted to utilize
certain hedging and return enhancement strategies and techniques such as options
on securities and securities indices, futures contracts on securities and
securities indices and options on futures contracts, as described below.

Futures (a type of potentially high-risk derivative) are often used to manage or
hedge risk, because they enable the investor to buy or sell an asset in the
future at an agreed upon price. Options (another potentially high-risk
derivative) give the investor the right, but not the obligation, to buy or sell
an asset at a predetermined price in the future. The Fund may buy and sell
futures and options contracts for any number of reasons, including: to manage
its exposure to changes in securities prices; as an efficient means of adjusting
its overall exposure to certain markets; in an effort to enhance income; and to
protect the value of portfolio securities. The Fund may purchase, sell, or write
call and put options on securities, financial indices and futures.

Futures contracts and options may not always be successful hedges; their prices
can be highly volatile. Using them could lower the Fund's total return, and the
potential loss from the use of futures can exceed the Fund's initial investment
in such contracts.

As a matter of operating policy, initial margin deposits and premiums on options
used for non-hedging purposes will not equal more than 5% of the Fund's net
asset value.

Firm Commitment Agreements and When-Issued Purchases. The Fund may purchase
securities under a firm commitment agreement or on a when-issued basis. Firm
commitment agreements and when-issued purchases call for the purchase of
securities at an agreed-upon price on a specified future date, and would be
used, for example, when a decline in the yield of securities of a given issuer
is anticipated. The Fund as purchaser assumes the risk of any decline in value
of the security beginning on the date of the agreement or purchase. The Fund
will not enter into such transactions for the purpose of leveraging, and
accordingly, will segregate liquid assets with its custodian equal (on a daily
marked-to-market basis) to the amount of its commitment to purchase the
when-issued securities and securities subject to the firm commitment agreement.

Warrants. The Fund may invest in warrants, which are similar to options to
purchase securities at a specific price valid for a specific period of time. The
Fund may not invest more than 5% of its net assets (at the time of investment)
in warrants (other than those attached to other securities). If the market price
of the underlying security never exceeds the exercise price, the Fund will lose
the entire investment in the warrant. Moreover, if a warrant is not exercised
within the specified time period, it will become worthless and the Fund will
lose the purchase price and the right to purchase the underlying security.

Diversification. In order to maintain the Fund's status as a diversified
investment company, with respect to 75% of the Fund's total assets: 1) not more
than 5% of the Fund's assets may be invested in the securities of a single
issuer (excluding U.S. Government securities); and 2) the Fund may not hold more
than 10% of the outstanding voting securities of a single issuer. The
diversification policy is a fundamental policy.

Portfolio Transactions. In executing portfolio transactions, the Fund seeks to
obtain the best net results, taking into account such factors as price
(including the applicable brokerage commission or dealer spread), size of order,
difficulty of execution, operational facilities of the firm involved and the
firm's risk in positioning a block of securities. While the Fund generally seeks
reasonably competitive commission rates, the Fund does not necessarily pay the
lowest commission or spread available. In addition, consistent with the Conduct
Rules of the National Association of Securities Dealers, Inc., the Manager may
consider sales of shares of the Fund as a factor in the selection of brokers or
dealers to execute portfolio transactions for the Fund.

Portfolio Turnover. The Fund anticipates that its annual turnover rate should
not exceed 200% under normal conditions. The portfolio turnover rate is
calculated by dividing the lesser of the Fund's annual sales or purchases of
portfolio securities (exclusive of purchases or sales of securities whose
maturities at the time of acquisition were one year or less) by the monthly
average value of the securities in the portfolio during the year. High portfolio
turnover involves correspondingly greater transaction costs in the form of
brokerage commissions and dealer spreads, which the Fund bears.

MANAGEMENT AND ORGANIZATION OF THE FUND
Management

Who runs the Fund?

General Oversight. O'Shaughnessy Funds, Inc. is governed by a Board of
Directors that meets regularly to review the Fund's investment, performance,
expenses, and other business affairs. The Board elects the Fund's officers.

Manager. O'Shaughnessy Capital Management, Inc. acts as investment manager of
the Fund pursuant to a management agreement with O'Shaughnessy Funds on behalf
of the Fund (the "Management Agreement"). In its capacity as investment manager,
the Manager is responsible for selection and management of the Fund's portfolio
investments. For its services, the Fund pays the Manager a fee each month, at
the annual rate of 0.74% of the Fund's average daily net assets.

The Manager's office is located at 35 Mason Street, Greenwich, Connecticut
06830. O'Shaughnessy Capital Management was incorporated in 1988. The Manager
serves as portfolio consultant to a unit investment trust and provides
investment advisory services to investment companies and individual and
institutional accounts with assets in excess of $800 million.

Portfolio Management. James P. O'Shaughnessy has had the day-to-day
responsibility for managing the Fund's portfolio and developing and executing
the Fund's investment program since commencement of operations of the Fund. For
the past ten years, Mr. O'Shaughnessy has served as Chairman and CEO of the
Manager, and in such capacity, has managed equity accounts for high net worth
individuals and served as portfolio consultant to a unit investment trust. Mr.
O'Shaughnessy is recognized as a leading expert and pioneer in quantitative
equity analysis. He is the author of three financial books, Invest Like the
Best, What Works on Wall Street and How to Retire Rich.

Distributor. First Fund Distributors, Inc. (the "Distributor"), a registered
broker-dealer, acts as the principal distributor of the shares of the Fund. The
address of the Distributor is 4455 E. Camelback Road, Suite 261 E, Phoenix,
Arizona 85018. The Distributor provides distribution services to the Fund at no
cost to the Fund.

Administrator. Pursuant to an Administration Agreement, Investment Company
Administration, LLC (the "Administrator") serves as Administrator of the Fund.
The Administrator provides certain administrative services, including, among
other responsibilities, coordinating relationships with independent contractors
and agents, preparing for signature by officers and filing of certain documents
required for compliance with applicable laws and regulations, preparing
financial statements, and arranging for the maintenance of books and records.
For its services, the Fund pays the Administrator a fee each month, at the
annual rate of 0.10% of the first $100 million of the Fund's average daily net
assets, 0.05% of the next $100 million of such net assets, and 0.03% of such net
assets over $200 million, with a minimum fee of $40,000 annually. The address of
the Administrator is 4455 E. Camelback Rd., Suite 261 E, Phoenix, Arizona 85018.
The Administrator and the Distributor are under common control and are therefore
considered affiliates of each other.

Transfer Agent and Custodian. Firstar Mutual Fund Services, LLC acts as the
Fund's transfer and dividend disbursing agent (the "Transfer Agent"). Firstar
Bank Milwaukee is the Fund's custodian (the "Custodian"). The address of the
Transfer Agent and Custodian is 615 E. Michigan Street, Third Floor, Milwaukee,
Wisconsin 53202.

Year 2000 Risk. Like other business organizations around the world, the Fund
could be adversely affected if the computer systems used by its investment
manager and other service providers do not properly process and calculate
information related to dates beginning January 1, 2000. This is commonly known
as the "Year 2000 Issue." The Fund's manager has taken steps that it believes
are reasonably designed to address the Year 2000 Issue with respect to its own
computer systems and the Fund has obtained assurances from the Fund's other
service providers that they are taking comparable steps. However, there can be
no assurance that these actions will be sufficient to avoid any adverse impact
on the Fund.

How are Fund expenses determined?

The Management Agreement identifies the expenses to be paid by the Fund. In
addition to the fees paid to the Manager, the Fund pays certain additional
expenses, including but not limited to, the following: shareholder service
expenses; custodial, accounting, legal, and audit fees; administrative fees;
costs of preparing and printing prospectuses and reports sent to shareholders;
registration fees and expenses; proxy and annual meeting expenses (if any); and
independent Director fees and expenses. The Manager has voluntarily agreed to
reduce fees payable to it by the Fund or reimburse the Fund to the extent
necessary to limit the Fund's aggregate annual operating expenses to 2.00% of
average net assets (the "expense cap"). Any such reductions made by the Manager
in its fees or reimbursement of expenses with respect to the Fund are subject to
recapture by the Manager provided the Fund is able to effect such recapture
while keeping total operating expenses at or below the annual expense cap, and
that no recapture will be made after September 30, 2000. Any amounts reimbursed
will have the effect of increasing fees otherwise paid by the Fund.

ORGANIZATION
How is the Fund organized?

The Fund is an investment portfolio or series of O'Shaughnessy Funds. There are
three other investment portfolios of O'Shaughnessy Funds, shares of which are
not offered for sale through this Prospectus: O'Shaughnessy Cornerstone Value
Fund, O'Shaughnessy Cornerstone Growth Fund and O'Shaughnessy Dogs of the
Market Fund (the "other O'Shaughnessy Funds"). The charter of O'Shaughnessy
Funds provides that the Board of Directors may issue additional investment
portfolios of shares and/or additional classes of shares for each investment
portfolio. O'Shaughnessy Funds was organized as a corporation in Maryland on May
20, 1996.

What is meant by "shares"?

As with all mutual funds, investors purchase shares when they invest in the
Fund. These shares are a part of a Fund's authorized capital stock, but share
certificates are not generally issued.

Each full share and fractional share entitles the shareholder to: receive a
proportional interest in the Fund's capital gain distributions; and cast one
vote per share on certain Fund matters, including the election of Fund
Directors, changes in fundamental policies, or approval of changes in the Fund's
Management Agreement.

Shareholder inquiries may be addressed to the Fund at the address or telephone
number set forth on the cover page of this Prospectus.

Does the Fund have annual shareholder meetings?

The Fund is not required to hold annual meetings and does not intend to do so
except when certain matters, such as a change in the Fund's fundamental
policies, are to be decided. In addition, shareholders representing at least 10%
of all eligible votes may call a special meeting if they wish, for the purpose
of voting on the removal of any Fund Director. If a meeting is held and you
cannot attend, you can vote by proxy. Before the meeting, the Fund will send you
proxy materials that explain the issues to be decided and include a voting card
for you to mail back.

INFORMATION ABOUT YOUR ACCOUNT
PURCHASE OF SHARES

The minimum initial investment in the Fund is $2,500 for regular accounts and
$250 for Individual Retirement Accounts. For corporate sponsored retirement
plans, there is no minimum initial investment. There is no minimum subsequent
investment requirement for any account, however, a $100 minimum exists for each
additional investment made through the automatic investment plan.

Investors may make an initial purchase of shares and subsequent investments in
the Fund by mail or wire as described below. The Fund reserves the right in its
sole discretion to waive the minimum investment amounts, including in the case
of investments by employees and affiliates of the Manager and family members of
any of the foregoing, and Individual Retirement Accounts ("IRAs") of
shareholders of the Fund, and certain purchase programs made available to
clients of financial intermediaries eligible to sell shares of the Fund.

The Internal Revenue Service requires the correct reporting of social security
numbers or tax identification numbers. The failure to provide this information
will result in the rejection of an investor's Application.

How do I purchase shares by mail?

For initial investments, please send a completed Application, together with a
check payable to O'Shaughnessy Aggressive Growth Fund to O'Shaughnessy Funds,
Inc., c/o Firstar Mutual Fund Services, LLC, at P.O. Box 701, Milwaukee, WI
53201-0701 (for Applications sent by U.S. mail) or 615 E. Michigan Street, Third
Floor, Milwaukee, WI 53202 (for Applications sent via overnight courier).
Subsequent investments must be accompanied by a letter indicating the name(s) in
which the account is registered and the account number or by the remittance
portion of the account statement and mailed to the address stated above.

How do I purchase shares by wire?

If you are wiring funds, call the Fund at 877-OSFUNDS (673-8637) for an account
number if this is an initial investment or to inform the Transfer Agent that a
wire is expected if this is a subsequent investment.

For an initial investment, prior to or immediately after the funds are wired, a
completed Application should be sent to O'Shaughnessy Funds, Inc., c/o Firstar
Mutual Fund Services, LLC, at P.O. Box 701, Milwaukee, WI 53201-0701 (for
Applications sent by U.S. mail) or 615 E. Michigan Street, Third Floor,
Milwaukee, WI 53202 (for Applications sent via overnight courier). Instruct your
bank to wire federal funds to O'Shaughnessy Funds, c/o Firstar Mutual Fund
Services, LLC, ABA# 075000022, DDA # 112952137.

The wire should specify the name of the Fund, the name(s) in which the account
is registered, the shareholder's social security number or employer tax
identification number, the account number and the amount being wired. Please
indicate if this is an initial or subsequent investment. Wire purchases are
normally used only for large purchases (over $5,000). Your bank may charge you a
fee for sending the wire.

What is the purchase price of Fund shares and when do purchases become
effective? Purchases of Fund shares become effective and shares will be priced
at the net asset value per share ("NAV") next determined after the investor's
check or wire is received by the Transfer Agent. NAV for the Fund is calculated
as of the close of business on the New York Stock Exchange ("NYSE") (currently
4:00 pm, Eastern time). If your request is received in correct form before 4:00
pm, Eastern time, your transaction will be priced at that day's NAV. If your
request is received after 4:00 pm, it will be priced at the next business day's
NAV. Orders that request a particular day or price for your transaction or any
other special conditions cannot be accepted.

The time at which transactions and shares are priced and the time until which
orders are accepted may be changed in case of an emergency or if the NYSE closes
at a time other than 4:00 pm, Eastern time.

The purchase order must include the documentation specified above. Please do not
send purchase orders to the Fund; the Fund forwards purchase orders to the
Transfer Agent and a purchase will not become effective until the Transfer Agent
receives all the necessary documentation.

What are the conditions of purchase?

All purchase orders are subject to acceptance or rejection by the Fund or the
Distributor, in their sole discretion. The offering of shares may be suspended
whenever the Fund considers suspension desirable or when required by any order,
rule or regulation of any governmental body having jurisdiction. Checks and
money orders should be drawn on United States banks; the Fund and the
Distributor reserve the right to reject checks drawn on foreign banks.

The Transfer Agent will mail a confirmation of each completed purchase to the
investor. If an order is canceled because an investor's check does not clear,
the investor will be responsible for any loss incurred by the Fund, the
Transfer Agent, the Distributor, the Administrator or the Manager. If the
investor is already a shareholder, the Fund may redeem shares from the account
to cover any loss. If the investor is not a shareholder or if the loss is
greater than the value of the shareholder's account, the Distributor will be
responsible for any loss to the Fund, and will have the right to recover such
amount from the investor.

Who do I contact if I have questions about my account or need additional
information concerning an investment in the Fund?

If you have investment questions about the Fund, or if you would like any
additional information relating to an investment in the Fund, please call
877-OSFUNDS (673-8637) (toll-free), or write to the Distributor at First Fund
Distributors, Inc., 4455 E. Camelback Road, Suite 261 E, Phoenix AZ 85018. If
you are a shareholder and have questions about your account, or if you wish to
arrange for wire transactions, please call the Fund at 877-OSFUNDS (673-8637).
Before telephoning, please be sure to have your account number and social
security number or employer tax identification number readily available.

Will I receive share certificates for shares purchased?

Share certificates will not be issued for shares unless the investor sends a
written request for certificates to O'Shaughnessy Funds, Inc., c/o Firstar
Mutual Fund Services, LLC, at P.O. Box 701, Milwaukee, WI 53201-0701 (for
requests sent via U.S. mail) or 615 E. Michigan Street, Third Floor, Milwaukee,
WI 53202 (for requests sent via overnight courier). Share certificates are
issued only for full shares and may be redeposited in the shareholder's account
at any time. In order to facilitate redemptions and exchanges, most shareholders
elect not to receive certificates, since a shareholder wishing to redeem or
exchange shares represented by a certificate must surrender such certificate,
properly endorsed on the reverse side together with a signature guarantee. (See
"Redemption of Shares - When are signature guarantees required?" below). If a
certificate is lost, the shareholder may incur an expense in replacing it.

Can I purchase shares through broker-dealers other than the Distributor?

O'Shaughnessy Funds may enter into agreements with various outside brokers on
behalf of the Funds through which shareholders may purchase shares. Such shares
may be held by such outside brokers in an omnibus account rather than in the
name of the individual shareholder. The Manager may reimburse the outside
brokers for providing shareholder services to the omnibus accounts in an amount
equal to what the Fund would otherwise have paid to provide shareholder services
to each individual shareholder account. Investors may also arrange to purchase
shares of the Fund through other outside broker-dealers with which O'Shaughnessy
Funds does not have an arrangement, and such broker-dealers may purchase shares
of the Fund by telephone if they have made arrangements in advance with the
Fund. To place a telephone order such broker-dealer should call the Fund at
877-OSFUNDS (673-8637). Purchases by broker-dealers become effective and shares
will be priced as described above. If an investor purchases shares through
broker-dealers other than the Distributor, such broker-dealers may charge the
investor a service fee that is reasonable for the service performed, bearing in
mind that the investor could have acquired or redeemed the Fund's shares
directly without the payment of any fee. No part of any such service fee will be
received by the Distributor, the Manager, the Administrator or the Fund.

EXCHANGE PRIVILEGE

Shares of the Fund may be exchanged for shares of each of the other
O'Shaughnessy Funds (i.e., O'Shaughnessy Cornerstone Value Fund, O'Shaughnessy
Cornerstone Growth Fund and O'Shaughnessy Dogs of the Market Fund).
Prospectuses for the other O'Shaughnessy Funds may be obtained by writing to the
Distributor at 4455 E. Camelback Road, Suite 261 E, Phoenix AZ 85018,
Attention: O'Shaughnessy Funds, Inc. or by calling 877-OSFUNDS (673-8637)
(toll-free).

You may also exchange shares of the Fund for shares of the Firstar Money Market
Fund, a money market mutual fund not affiliated with O'Shaughnessy Funds or the
Manager. Prior to making such an exchange, you should obtain and carefully read
the prospectus for the Firstar Money Market Fund. The exchange privilege does
not constitute an offering or recommendation on the part of the Fund or the
Manager of an investment in the Firstar Money Market Fund.

If you exchange into shares of the Firstar Money Market Fund you may establish
checkwriting privileges on the Firstar Money Market Fund. Contact the Fund at
877-OSFUNDS (673-8637) for a checkwriting application and signature card.

The exchange procedures are described below.

Is there any sales charge or minimum investment applicable to an exchange?
Shareholders of the Fund may exchange their shares of the Fund, without the
payment of any sales or service charge unless the exchange is effected via
telephone instructions for which a $5.00 charge will be levied or on shares held
less than 90 days for which a redemption fee will be charged (see "Information
About Your Account - Redemption of Shares"), for shares of any other fund into
which an exchange is permitted equal in value to the net asset value of the
shares being exchanged. All exchanges are subject to all applicable terms set
forth in the prospectus of the fund into which the exchange is being made. If a
shareholder exchanges shares through a broker-dealer other than the Distributor,
such broker-dealer may charge the shareholder a service fee, no part of which
will be received by the Distributor, the Manager, the Fund, or the fund into
which the exchange is being made.

At what price is an exchange effected? An exchange is effected at the respective
net asset values of the two funds with respect to which shares are being
exchanged as next determined following receipt by the fund into which the
exchange is being made of all necessary documentation in connection with the
redemption of Fund shares as described below under "Redemption of Shares - How
do I redeem shares by mail?"

Do current instructions concerning receipt of dividends and distributions carry
over to exchanged shares?

Dividend and distribution instructions with respect to exchanged shares will
remain the same as those given previously by the shareholders to the fund from
which the shareholder is exchanging the shares, unless the shareholder
designates a change in such instructions by writing to the Transfer Agent.
Please note that such changed instructions (i) must be signed by the registered
owners(s) of the shares, exactly as the account is registered and signature
guaranteed, and (ii) include the name of the account, the account number, and
the name of the fund for which instructions have changed.

What are the conditions applicable to an exchange?

Exchanges involving the redemption of shares recently purchased by personal,
corporate or government check will be permitted only after the Fund has
reasonable belief that the check has cleared, which may take up to fifteen days
after the purchase date. The exchange privilege is available only in states
where shares of the other O'Shaughnessy Funds or the Firstar Money Market Fund
may be sold legally.

The Fund, the other O'Shaughnessy Funds and the Firstar Money Market Fund each
reserves the right to reject any order to acquire its shares through exchange or
otherwise and to restrict or terminate the exchange privilege at any time. If
the exchange privilege is to be permanently terminated, the Fund will provide
its shareholders with written notice of such termination. The Fund reserves the
right to suspend temporarily the telephone exchange privilege in emergency
circumstances or in cases where, in the judgment of the Fund, continuation of
the privilege would be detrimental to the Fund and its shareholders as a whole.
Such temporary suspension can be without prior notification.

How can I make exchanges by telephone?

Shareholders who have completed the section of the Fund's Application entitled
"Shareholder Privileges" are eligible to make telephone requests for exchanges
and may do so by telephoning the Fund at 877-OSFUNDS (673-8637). A shareholder
who has not completed the Shareholder Privileges section of the Application but
who wishes to become eligible to make telephone exchanges should designate a
change in such instructions by writing to the Transfer Agent. Please note that
such changed instructions must (i) be signed by the registered owner(s) of the
shares exactly as the account is registered and signature guaranteed, and (ii)
include the name of the account, the account number and the name of the Fund.
See "Redemption of Shares - How do I redeem shares by telephone?" below, which
describes the time of day at which telephone redemptions and exchanges will be
priced and processed. Telephone requests for exchanges cannot be accepted with
respect to shares represented by certificates. Shares of the other O'Shaughnessy
Funds or the Firstar Money Market Fund acquired pursuant to a telephone request
for exchange will be held under the same account registration as the shares
redeemed through the exchange.

The Fund will employ reasonable procedures to confirm that instructions
communicated by telephone are genuine. Neither the Fund nor any of its service
contractors will be liable for any loss or expense in acting on telephone
instructions that are reasonably believed to be genuine. In attempting to
confirm that telephone instructions are genuine, the Fund will use procedures
that are considered reasonable, including requesting a shareholder to correctly
state the account number, the name(s) in which the account is registered, the
social security number(s) registered to the account, and certain additional
personal identification.

Shareholders should be aware that, at times, the volume of telephone calls or
other factors beyond the Fund's control may make it difficult to reach the
Transfer Agent by telephone. This will be true particularly during periods of
drastic economic market changes. In such cases, shareholders should continue to
telephone or utilize the written exchange procedures described below.

Shareholders who effect exchanges of Fund shares by telephone will be charged a
$5.00 exchange fee.

How do I make exchanges by mail?

To exchange shares by mail, send a written request for exchange signed by the
registered owner(s) of the shares, exactly as the account is registered to
O'Shaughnessy Funds, Inc., c/o Firstar Mutual Fund Services, LLC, at P.O. Box
701, Milwaukee, WI 53201-0701 (for requests sent by U.S. mail) or 615 E.
Michigan Street, Third Floor, Milwaukee, WI 53202 (for requests sent via
overnight courier). The request for exchange should include the following
information: the name of the account, the account number, the number of Fund
shares or the dollar value of Fund shares to be exchanged, the shares of which
other fund (either another O'Shaughnessy Fund or the Firstar Money Market Fund)
that shares of the Fund are to be exchanged for, and the name on the account and
the account number (if already established) with such other fund.

REDEMPTION OF SHARES

Shareholders can redeem their shares by giving instructions to the Transfer
Agent in writing or by telephone. As more fully described below, these
redemption instructions may have to be accompanied by additional documentation,
which may include a signature guarantee.

If a shareholder redeems shares through a broker-dealer other than the
Distributor, such broker-dealer may charge the shareholder a service fee, no
part of which will be received by the Distributor, the Manager, the
Administrator or the Fund.

How do I redeem shares by mail?

To redeem shares by mail, send a written request for redemption signed by the
registered owner(s) of the shares, exactly as the account is registered to
O'Shaughnessy Funds, Inc., c/o Firstar Mutual Fund Services, LLC, at P.O. Box
701, Milwaukee, WI 53201-0701 (for requests sent by U.S. mail) or 615 E.
Michigan Street, Third Floor, Milwaukee, WI 53202 (for requests sent via
overnight courier). The request should include the following: the name of the
account, the account number, the number of shares or the dollar value of shares
to be redeemed and whether proceeds are to be sent by mail or wire, and if by
wire, giving the wire instructions; (ii) duly endorsed share certificates, if
any have been issued for the shares redeemed; (iii) any signature guarantees
that are required as described below; and (iv) any additional documents which
might be required for redemptions by corporations, executors, administrators,
trustees, guardians or other similar shareholders. Except as otherwise directed
by the Fund in its discretion, the Transfer Agent will not redeem shares until
it has received all necessary documents; corporate and institutional investors
and fiduciaries should contact the Transfer Agent to ascertain what additional
documentation is required.

When would I pay a redemption fee?

The Fund can experience substantial price fluctuations and are intended for
long-term investors. Short-term "market timers" who engage in frequent purchases
and redemptions can disrupt the Funds' investment programs and create additional
transaction costs that are borne by all shareholders. For these reasons, the
Fund will assess a 1.5% fee on redemptions (including exchanges) of Fund shares
purchased and held for less than 90 days.

Redemption fees will be paid to the Fund to help offset transaction costs. The
Fund will use the "first-in, first-out" (FIFO) method to determine the 90 day
holding period. Under this method, the date of redemption or exchange will be
compared with the earliest purchse date of shares held in the account. If this
holding period is less than 90 days, the fee will be assessed.

The fee does not apply to any shares purchased through reinvested distributions
(dividends and capital gains) or to shares held in retirement plans such as
401(k), 403(b), 457, Koegh, profit sharing, SIMPLE IRA, SEP-IRA, and money
purchase pension accounts. These exceptions may not apply to shares held in
broker omnibus accounts. The fee does apply to shares held in IRA accounts and
to shares purchased through automatic investment plans (see "Other Shareholder
Services - Automatic Investment Plan").

May I send redemption requests to the Fund?

Please do not send redemption requests to the Fund. The Fund must forward all
redemption requests to the Transfer Agent and instructions for redemption will
not be effective until received by the Transfer Agent. Shares redeemed will be
priced at the net asset value per share next determined after acceptance of a
complete redemption request by the Transfer Agent. Redemption requests received
by the Transfer Agent after the close of the NYSE (currently 4:00 pm, Eastern
time) will be treated as though received on the next business day. The Transfer
Agent cannot accept redemption requests that specify a particular date for
redemption or special redemption conditions.

When are signature guarantees required?

Except as indicated below, all of the signatures on any request for redemption
or share certificates tendered for redemption must be guaranteed by a bank,
broker-dealer, credit union (if authorized under state law), securities exchange
or association, clearing agency or savings association. A notary public cannot
provide a signature guarantee.

The Fund will waive the signature guarantee requirement on a redemption request
that instructs that the proceeds be sent by mail if all of the following
conditions apply: (i) the redemption is for $10,000 or less; (ii) the redemption
check is payable to the shareholder(s) of record; (iii) the redemption check is
mailed to the shareholder(s) at the address of record; and (iv) no shares
represented by certificate are being redeemed. Share certificates submitted for
redemption or exchange must be properly endorsed and contain signature
guarantees. In addition, the Fund in its discretion may waive the signature
guarantee for employees and affiliates of the Manager, the Distributor and the
Administrator, and family members of the foregoing.

The requirement of a guaranteed signature protects against an unauthorized
person redeeming shares and obtaining the redemption proceeds.

How do I redeem shares by telephone?

Shareholders who have completed the section of the Fund's Application entitled
"Shareholder Privileges" are eligible to make telephone requests for redemptions
(without charge) and may do so by telephoning the Fund at 877-OSFUNDS
(673-8637). A shareholder who has not completed the Shareholder Privileges
section of the Application but who wishes to become eligible to make telephone
redemptions, should designate a change in such instructions by writing to the
Transfer Agent. Please note that such changed instructions must (i) be signed by
the registered owner(s) of the shares exactly as the account is registered and
signature guaranteed, and (ii) include the name of the account, the account
number and the name of the Fund.

Telephone redemptions cannot be accepted with respect to shares represented by
certificates or for IRA accounts. In such cases, redemption can only be made by
mail as described above under "Redemption of Shares - How do I redeem shares by
mail?" Telephone requests for redemptions (or exchanges - see "Exchange
Privilege" above) received before the close of business on the NYSE (currently
4:00 pm, Eastern time) on a business day will be priced and processed as of the
close of business on that day; requests received after that time will be
processed as of the close of business on the next business day.

As noted above, the Fund will employ reasonable procedures to confirm that
instructions communicated by telephone are genuine and may, along with their
service contractors, be liable for a failure to use such procedures. See
"Exchange Privilege - How can I make exchanges by telephone?" above.

Shareholders should be aware that, at times, the volume of telephone calls or
other factors beyond the Fund's control may make it difficult to reach the
Transfer Agent by telephone. This will be true particularly during periods of
drastic economic or market changes. In the event of difficulty in reaching the
Transfer Agent, shareholders should continue to telephone or utilize the written
redemption procedures described above under "Redemption of Shares - How do I
redeem shares by mail?"

The Fund reserves the right to terminate the telephone redemption privilege at
any time and, if so terminated, will provide the shareholders with written
notice of such termination. The Fund reserves the right to suspend temporarily
telephone redemptions in emergency circumstances or in cases where, in the
judgment of the Fund, continuation of the privilege would be detrimental to the
Fund and its shareholders as a whole. Such temporary suspension can be without
prior notification.

What options do I have in receiving redemption proceeds?

Redemption proceeds may be sent to shareholders by mail or by wire as described
below. Wire redemptions will only be made if the Transfer Agent has received
appropriate written wire instructions. Because of fluctuations in the value of
the Fund's portfolio, the net asset value of shares redeemed may be more or less
than the investor's cost.

Redemption By Mail. In the case of shareholders who request that their
redemption proceeds be sent by mail, the Transfer Agent mails checks for
redemption proceeds typically within one or two business days, but no later
than seven days, after it receives the request and all the necessary documents.

Redemption By Wire. In the case of shareholders who request that their
redemption proceeds be sent by bank wire, the Transfer Agent typically wires
redemption proceeds the next business day, but no later than seven days, after
it receives the request and all necessary documents.

Wire redemptions will be made only if the Transfer Agent has received
appropriate written instructions from the shareholder either on the Fund's
Application or by separate letter. A shareholder who has not indicated wire
instructions on the Application, but would like to have redemption proceeds
wired to a particular bank for each redemption request, should so designate by
writing to the Transfer Agent. Please note that such instructions must (i) be
signed by the registered owner(s) of the shares exactly as the account is
registered and signature guaranteed, and (ii) include the name of the account,
the account number and the name of the Fund.

A shareholder who would like to change the wire instructions indicated on the
Application should designate a change in such instructions by writing to the
Transfer Agent and complying with the requirements set forth in the preceding
paragraph. There is a $1,000 minimum on redemption proceeds by bank wire.
Shareholders who effect redemptions by wire transfer will pay a $12.00 wire
transfer fee to the Transfer Agent to cover costs associated with the transfer.
In addition, a shareholder's bank may impose a charge for receiving wires.

When would the payment of proceeds be delayed?

Please note that shares paid for by personal, corporate or government check
cannot be redeemed before the Fund has reasonable belief that the check has
cleared, which may take up to fifteen days after payment of the purchase price.
This delay can be avoided by paying for shares by certified check or bank-wire.
An investor will be notified promptly by the Transfer Agent if a redemption
request cannot be accepted.

Would my account ever be involuntarily redeemed?

Due to the relatively high cost to the Fund of maintaining small accounts, we
ask you to maintain an account balance of at least $2,500. If your balance is
below $2,500 for three months or longer due to redemptions, we have the right to
close your account after giving you 60 days in which to increase your balance.

INFORMATION ON DISTRIBUTIONS
and TAXES

DIVIDENDS AND OTHER DISTRIBUTIONS GENERALLY

Dividend and capital gain distributions are reinvested in additional Fund shares
in your account unless you select another option on your Application. The
advantage of reinvesting distributions arises from compounding; that is, you
receive dividends and capital gain distributions on an increasing number of
shares. Distributions not reinvested are paid by check or transmitted to your
bank account.

INCOME DIVIDENDS
The Fund declares and pays dividends (if any) annually.

CAPITAL GAINS

A capital gain or loss is the difference between the purchase and sale price of
a security. If the Fund has net capital gains for the year (after subtracting
any capital losses), they are usually declared and paid in December to
shareholders of record on a specified date that month.

TAX INFORMATION

You need to be aware of the possible tax consequences when: (1) the Fund makes a
distribution to your account; (2) you sell Fund shares; or (3) you exchange
shares of the Fund for shares of one of the other O'Shaughnessy Funds or the
Firstar Money Market Fund. The following summary does not apply to retirement
accounts, such as IRAs, which are tax-deferred until you withdraw money from
them.

Will I pay taxes on redemptions or exchanges of Fund shares? When you sell or
exchange shares in the Fund, you may realize a gain or loss. Unless you are a
dealer in securities, such gain or loss will be capital gain or loss. Consult
your tax advisor concerning the tax rate applicable to your sale or exchange of
Fund shares.

A loss recognized on a sale or exchange of shares of the Fund will be disallowed
if other Fund shares are acquired (whether through automatic reinvestment of
dividends or otherwise) within a 61-day period beginning 30 days before and
ending 30 days after the date that the shares are disposed of. In such case, the
basis of the shares acquired will be adjusted to reflect the disallowed loss. In
addition, if you realize a loss on the sale or exchange of Fund shares held six
months or less, your short-term loss recognized is reclassified to long-term to
the extent of any long-term capital gain distribution received.

Will I pay taxes on Fund distributions?

Distributions of ordinary income and short-term capital gains are taxable as
ordinary income. The dividends of the Fund will be eligible for the 70%
deduction for dividends received by corporations only to the extent the Fund's
income consists of dividends paid by U.S. corporations. Distributions designated
as capital gains dividends are taxable as capital gains regardless of the
length of time shares of the Fund have been held.

What is the tax effect of the Fund's investment in foreign securities?

Pursuant to the Fund's investment objectives, the Fund may invest in foreign
securities through ADRs. Foreign taxes may be paid by the Fund as a result of
tax laws of countries in which the Fund may invest. Income tax treaties between
certain countries and the United States may reduce or eliminate such taxes. It
is impossible to determine in advance the effective rate of foreign tax to which
the Fund will be subject, since the amount of Fund assets to be invested in
various countries is not known. Because the Fund limits its investment in
foreign securities, shareholders will not be entitled to claim foreign tax
credits with respect to their share of foreign taxes paid by the Fund on income
from investments of foreign securities held by the Fund.

What are the tax effects of buying shares before a distribution?

If you buy shares shortly before or on the "record date" - the date that
establishes you as the person to receive the upcoming distribution - you will
receive, in the form of a taxable distribution, a portion of the money you just
invested. Therefore, you may wish to find out the Fund's record date(s) before
investing. Of course, a Fund's share price may, at any time, reflect
undistributed capital gains or unrealized appreciation.

The foregoing is a general and abbreviated summary of the applicable provisions
of the Code and Treasury regulations presently in effect, and does not address
the state and local tax consequences of an investment in the Fund. For the
complete provisions, reference should be made to the pertinent Code sections and
the Treasury regulations promulgated thereunder. The Code and the Treasury
regulations are subject to change by legislative or administrative action either
prospectively or retroactively. For additional information regarding federal
income tax consequences of an investment in the Fund, see "Additional
Information About Dividends and Taxes" in the Statement of Additional
Information.

Shareholders are urged to consult their own tax advisers regarding specific
questions as to Federal, state, local or foreign taxes. Foreign investors should
consider applicable foreign taxes in their evaluation of an investment in the
Fund.

PERFORMANCE INFORMATION

This section should help you understand the terms used to describe Fund
performance. The Fund's annual report will contain additional performance
information and will be available upon request and without charge.

What is total return?

This tells you how much an investment in the Fund has changed in value over a
given time period. It reflects any net increase or decrease in the share price
and assumes that all dividends and capital gains (if any) paid during the period
were reinvested in additional shares. Including reinvested distributions means
that total return numbers include the effect of compounding, i.e, you receive
income and capital gain distributions on an increasing number of shares.

Advertisements for the Fund may include cumulative or compound average annual
total return figures, which may be compared with various indices, other
performance measures, or other mutual funds.

What is cumulative total return?

This is the actual rate of return on an investment for a specified period. A
cumulative return does not indicate how much the value of the investment may
have fluctuated between the beginning and the end of the period specified.

What is average annual total return?

This is always hypothetical. Working backward from the actual cumulative return,
it tells you what constant year-by-year return would have produced the actual,
cumulative return. By smoothing out all the variations in annual performance, it
gives you an idea of the investment's annual contribution to your portfolio
provided you held it for the entire period in question.

NET ASSET VALUE

The price at which the Fund's shares are purchased or redeemed is the Fund's
next determined net asset value per share. The net asset value per share is
calculated as of the close of the NYSE (currently 4:00 pm, Eastern time) on each
day that the NYSE is open for business and on each other day in which there is a
sufficient degree of trading in the Fund's portfolio securities that the current
net asset value of the Fund's shares may be materially affected by changes in
the value of the Fund's portfolio securities.

How is net asset value determined?

The Fund determines the net asset value per share by subtracting the Fund's
total liabilities from the Fund's total assets (the value of the securities the
Fund holds plus cash and other assets), dividing the remainder by the total
number of shares outstanding, and adjusting the result to the nearest full cent.

How are the securities held in the Fund's portfolio valued?

Securities listed on the NYSE, American Stock Exchange or other national
exchanges are valued at the last sale price on such exchange on the day as of
which the net asset value per share is to be calculated. Over-the-counter
securities included in the NASDAQ National Market System are valued at the last
sale price. If there is no sale on a particular security on such day, it is
valued at the mean between the bid and asked prices. Other securities, to the
extent that market quotations are readily available, are valued at market value
in accordance with procedures established by the Board of Directors. Any
securities and other assets for which market quotations are not readily
available are valued in good faith in a manner determined by the Directors of
the Fund best to reflect their fair value.

OTHER SHAREHOLDER SERVICES
Automatic Investment Plan

An Automatic Investment Plan allows a shareholder to make automatic monthly or
quarterly investments into a Fund account, in amounts of at least $100, by
having the Transfer Agent draw an automatic clearing house (ACH) debit
electronically against a shareholder's checking or savings account. A
shareholder may establish an Automatic Investment Plan by completing the
appropriate section on the Application Form for new accounts or by calling the
Fund at 877- OSFUNDS (673-8637) and requesting an Automatic Investment Plan
Application for existing accounts. A shareholder should be aware that a signed
Application should be received by the Transfer Agent at least 15 business days
prior to the initial transaction. The Transfer Agent will assess a $20.00 fee if
the automatic investment cannot be made due to insufficient funds, stop
payment, or for any other reason. The Fund cannot guarantee acceptance by your
bank.

Systematic Cash Withdrawal Plan

When an account of $10,000 or more is opened or when an existing account reaches
that size, a shareholder may participate in the Fund's Systematic Cash
Withdrawal Plan by filling out the appropriate part of the Application. Under
this plan, a shareholder may receive (or designate a third party to receive) a
monthly or quarterly check in a stated amount of not less than $50. Fund shares
will be redeemed as necessary to meet withdrawal payments. All participants must
elect to have their dividends and capital gain distributions reinvested
automatically. A shareholder who decides later to use this service should call
the Fund at 877-OSFUNDS (673-8637).

Reports to Shareholders

Each time a shareholder invests, redeems, transfers or exchanges shares, or
receives a distribution, the Fund will send a confirmation of the transaction
which will include a summary of all of the shareholder's most recent
transactions.

At such time as prescribed by law, the Fund will send to each shareholder the
following reports (if they are applicable), which may be used in completing U.S.
income tax returns:

Form 1099-DIV Report taxable distributions during the preceding calendar year.
(If a shareholder did not receive taxable distributions in the previous year,
such shareholder will not be sent a 1099-DIV.)

Form 1099-B Reports redemption proceeds paid (including those resulting from
exchanges) during the preceding calendar year.

Form 1099-R Report distributions from retirement plan accounts during the
preceding calendar year.

Form 5498 Reports contributions to IRAs for the previous calendar year.

Shareholders will also receive annual and semi-annual reports including the
financial statements of the Funds for the respective periods.

Retirement Plans
Eligible investors may invest in the Fund under the
following prototype retirement plans:
"Education" Individual Retirement Account (IRA)
"Traditional" Individual Retirement Account (IRA)
"Roth" Individual Retirement Account (IRA)
Simplified Employee Pension (SEP) for sole proprietors,
partnerships and corporations
Profit-Sharing and Money Purchase Pension Plans for corporations
and their employees

Automatic Reinvestment Plan

For the convenience of investors, all dividends and distributions are
automatically reinvested in full and fractional shares of the Fund at the net
asset value per share at the close of business on the record date, unless
otherwise specified on the Application or requested by a shareholder in writing.
If the Transfer Agent does not receive a written request for subsequent
dividends and/or distributions to be paid in cash at least three full business
days prior to a given record date, the dividends and/or distributions to be paid
to a shareholder will be reinvested. If a shareholder elects to receive
dividends and distributions in cash and the U.S. Postal Service cannot deliver
the checks, or if the checks remain uncashed for six months, the shareholder's
distribution checks will be reinvested into the shareholder's account at the
then current net asset value.

No person has been authorized to give any information or to make any
representations, other than those contained in this Prospectus, and, if given or
made, such other information or representations must not be relied upon as
having been authorized by the Fund, the Investment Adviser, the Administrator or
the Distributor. This Prospectus does not constitute an offering in any state in
which such offering may not lawfully be made.

INVESTMENT MANAGER
O'Shaughnessy Capital Management, Inc.
35 Mason Street
Greenwich, Connecticut 06830

ADMINISTRATOR
Investment Company Administration, LLC
4455 E. Camelback Road, Suite 261 E
Phoenix, Arizona 85018

DISTRIBUTOR
First Fund Distributors, Inc.
4455 E. Camelback Road, Suite 261 E
Phoenix, Arizona 85018

TRANSFER AGENT
Firstar Mutual Fund Services, LLC
615 E. Michigan Street
Milwaukee, Wisconsin 53202

AUDITORS
McGladrey & Pullen, LLP
555 Fifth Avenue
New York, New York 10017-2416

LEGAL COUNSEL
Swidler Berlin Shereff Friedman, LLP
919 Third Avenue
New York, New York 10022

<PAGE>
O'Shaughnessy Funds Inc.

Building New Standards For Investment Success

Dogs of the Market Fund

35 Mason Street, Greenwich, Connecticut 06830
Toll-Free 877-OSFUNDS (673-8637)
www.osfunds.com
NASDAQ Symbol: OSDGX

The Fund

O'Shaughnessy Dogs of the Market Fund (the "Fund") is an investment portfolio or
series of O'Shaughnessy Funds, Inc., an open-end management investment company
with multiple portfolios or series available for investment.

Investment Objective

The investment objective of the Fund is to seek total return, consisting of
capital appreciation and current income.

Strategy Indexing

The Fund seeks to achieve its investment objective through a process of Strategy
Indexing which is pursued through the implementation of an investment strategy
developed by O'Shaughnessy Capital Management, Inc., the Fund's investment
manager (the "Manager"). The Fund invests substantially all of its assets in
common stocks selected through this strategy.

The investment strategy of the Dogs of the Market Fund (the "Dogs of the Market
Strategy") entails the selection of 30 common stocks from the Dow Jones
Industrial Average and the S&P 400 Industrial Average which are high dividend
yielding common stocks of large well-established companies and meet certain
criteria as described in this prospectus. (The Dogs of the Market Strategy is
referred to as a "Strategy.") For a more detailed description of the Fund's
investment strategy, see "About the Fund - Investment Objective and Policies."

Purchase of Shares

PROSPECTUS
November 31, 1998

O'Shaughnessy Capital Management, Inc.
Manager

First Fund Distributors, Inc.
Distributor

TABLE OF CONTENTS
About the Fund . . . . . . . . . . . . . . . .
Financial Highlights . . . . . . . . . . . . .
Management and Organization of the Fund . . . . .
Information about Your Account . . . . . . . .
Information on Distributions and Taxes . . . . . .
Performance Information . . . . . . . . . . .
Net Asset Value . . . . . . . . . . . . . . .
Other Shareholder Services . . . . . . . . . .

ABOUT THE FUND
TRANSACTION AND FUND EXPENSES

Fee Table
Shareholder Transaction Expenses:
Maximum Sales Charge Imposed on
Purchases (as a percentage of offering price). . . . .None
Maximum Sales Charge Imposed on
Dividend Reinvestments . . . . . . . . . . . . . . . .None
Deferred Sales Charge (as a percentage of original
purchase price or redemption proceeds, whichever is lower) . . . . .None
Redemption fee (a)
(on shares held less than 90 days) . . . . . . . . . 1.50%
Exchange Fee (a) (b)
(on shares held less than 90 days) . . . . . . . . . 1.50%

Annual Fund Operating Expenses
(as a percentage of average net assets):
Management Fees (c) (d). . . . . . . . . . . . . . . 0.74%
Rule 12b-1 Fees. . . . . . . . . . . . . . . . . . . .None
Other Expenses (d) . . . . . . . . . . . . . . . . . 0.72%
Total Fund Operating Expenses (d). . . . . . . . . . 1.46%

1.46% was the Fund's operating expense ratio for the fiscal year ended September
30, 1998. The Advisor is limiting the Fund's operating expense ratio to 1.09%
for the fiscal year ending September 30, 1999.

(d) To limit the Fund's expenses, the Manager has voluntarily agreed to reduce
its fees or reimburse the Fund through at least September 30, 1999 to ensure
that the Fund's total operating expenses do not exceed 1.09% of average net
assets annually. Any such reductions made by the Manager in its fees or
reimbursement of expenses with respect to the Fund are subject to reimbursement
by the Fund to the Manager (recapture by the Manager), provided the Fund is able
to effect such reimbursement while keeping total operating expenses at or below
1.09% of average net assets annually, and that no reimbursement will be made
after September 30, 2000. Any amounts reimbursed will have the effect of
increasing fees otherwise paid by the Fund.

Example:

One year . . . . . . . . . . . . . . . . $ 15
Three years. . . . . . . . . . . . . . . $ 47
Five years . . . . . . . . . . . . . . . $ 80
Ten years. . . . . . . . . . . . . . . .$ 176

FINANCIAL HIGHLIGHTS

Per Share Operating Performance
(For a share outstanding throughout the period)

Year November 1, 1996*
Ended through
September 30, 1998 September 30, 1997
Net asset value, beginning of period $ 11.96 $ 10.00
Income from investment operations:
Net investment income 0.10 0.10
Net realized & unrealized gain
on investments 0.02 1.87
Total from investment operations 0.12 1.97

Less distributions:
From net investment income (0.09) (0.01)
From net capital gains (0.59) (0.00)
Total distributions (0.68) (0.01)

Net asset value, end of period $ 11.40 $ 11.96

Total Return 0.74% 19.74%**

Ratios/supplemental data:
Net assets, end of period (millions) $ 22.6 $7.2

Ratio of expenses to average net assets:
Before expense reimbursement 1.46% 4.28%+
After expense reimbursement 1.46% 1.99%+

Ratio of net investment income
(loss) to average net assets:
Before expense reimbursement 1.24% (0.51%)+
After expense reimbursement 1.24% 1.78%+

Portfolio turnover rate 44.35% 118.44%

* Commencement of operations.
** Not Annualized.
+ Annualized.

INVESTMENT OBJECTIVE AND POLICIES

To help you decide whether the Fund is appropriate for you, this section takes a
closer look at the Fund's investment objective and policies.

What is the Fund's objective?

The investment objective of the Fund is to seek total return, consisting of
capital appreciation and current income. There can be no assurance that the Fund
will achieve its investment objective.

How does the Fund achieve its objective?

The Dogs of the Market Fund seeks to achieve its investment objective through a
process of Strategy Indexing , which is pursued through the implementation of
the Dogs of the Market Strategy. This Strategy was developed by the Manager.

Other than assets temporarily maintained in cash or liquid short-term securities
pending investment to meet redemption requests or to comply with federal tax
laws applicable to mutual funds, the Fund will invest substantially all of its
assets in common stocks selected through the Strategy as described more fully
below.

What is the Dogs of the Market Strategy?

The Dogs of the Market Strategy selects thirty stocks using the following
selection criteria:

1. Ten stocks in the Fund's portfolio will be the highest yielding stocks from
the Dow Jones Industrial Average1 (the "Dow Dogs").

2. Twenty stocks will be the highest yielding stocks from the S&P 400
Industrial Average that also have: a) market capitalization exceeding $1 billion
and (b) an issue of common stock outstanding rated A or higher by Standard &
Poor's.

How does investment through the Dogs of the Market Strategy work?

Upon implementation of the Strategy, the Manager purchased 30 stocks for the
Fund as dictated by the Dogs of the Market Strategy, based on information as of
that date. The Fund's holdings of each stock in its portfolio were initially
weighted equally by dollar amount. Thereafter, the Manager re-balances the
portfolio of the Fund annually in the first month of the succeeding year (the
"Re-Balance Date"), in accordance with the Fund's Strategy, based on information
determined on or about the immediately preceding December 31. That is, on the
Re-Balance Date of each year, stocks meeting the Strategy's criteria based on
information determined on or about immediately preceding December 31 will be
purchased for the Fund to the extent not then held, stocks which no longer meet
the criteria as of such date will be sold, and the holdings of all stocks in the
Fund that continue to meet the criteria will be appropriately increased or
decreased to result in equal weighting of all stocks in the portfolio.

1. "Dow Jones Industrial Average" is a trademark of Dow Jones & Company, Inc.
("Dow Jones"). Neither the Fund nor the Manager is affiliated with, nor is the
Fund sponsored by Dow Jones. Dow Jones has not participated in any way in the
creation of the Fund or in the selection of stocks included in the Fund, nor has
Dow Jones reviewed or approved any information included in this Prospectus.

When the Fund receives new cash flow from the sale of its shares over the course
of the year, such cash will first be used to the extent necessary to meet
redemptions. The balance of any such cash will be invested in the 30 stocks
selected for the Fund pursuant to the Strategy as of the most recent rebalancing
of the Fund's portfolio, in proportion to the current weightings of such stocks
in the portfolio and without any intention to rebalance the portfolio on an
interim basis. It is anticipated that such purchases will generally be made on a
weekly basis, but may be on a more or less frequent basis in the discretion of
the Manager, depending on certain factors, including the size of the Fund and
the amount of cash to be invested. To the extent redemptions exceed new cash
flow into the Fund, the Fund will meet redemption requests by selling securities
on a pro rata basis, based on the current weightings of such securities in the
portfolio. Thus, interim purchases and sales of securities between annual
Re-Balance Dates will be based on current portfolio weightings and will be made
without regard to whether or not a particular security continues to meet the
Strategy's criteria.

Will the Manager deviate from the Strategy?

The Manager is committed to a rigorous, disciplined approach and cannot
presently anticipate any circumstances which would cause it to diverge from the
Strategy described above in managing the Fund.

Is there anything else I should know about the Strategy?

The Fund offers a disciplined approach to investing, based on a buy and hold
philosophy over the course of each year, which ignores market timing and rejects
active management. The Fund will adhere to its Strategy regardless of the
performance of the stock market in a particular period.

The Manager anticipates that the 30 stocks held in the Fund's portfolio will
remain the same throughout the course of a year, despite any adverse
developments concerning an issuer, an industry, the economy or the stock market
generally. However, if during the course of a year it is determined that
earnings or other factual criteria that form the basis for selecting a security
are false or incorrect, the Manager reserves the right to replace such a
security with another meeting the criteria of the Strategy. Also, due to
purchases and redemptions of Fund shares during the year, changes in the market
value of the stock positions held in the Fund's portfolio and compliance with
the federal tax laws, it is likely that stock positions will not be weighted
equally at all times during a year.

The Fund will be substantially fully invested in stocks selected as described
above at all times.

How can I decide if the Fund is an appropriate investment for me?

Consider your investment goals, your time horizon for achieving them, and your
tolerance of risk. The Fund is not an appropriate investment for those who seek
short-term investments, since the Manager expects the benefits of investing in
the Fund to be derived from investing assets in accordance with the Strategy
over the long-term. See "What is the historical performance of the Strategy?"
below. A discussion of the risks associated with investment in the Fund is
contained in "Risk Factors" below.

Is there other information I should review before making a decision?

Be sure to review "Other Investment Policies and Practices" which discusses
certain additional investment practices of the Fund. In addition, historical
information relating to the performance of the Strategy over time is discussed
below.

What is the historical performance of the Strategy?

The following graphs and tables compare the actual performance of the S&P 500
Index (the "S&P 500"), the hypothetical performance of the Strategy for the
historical periods indicated and the actual performance of the Dogs of the
Market Fund for 1997. Returns for the Strategy are the returns on a hypothetical
portfolio of stocks which was rebalanced annually in accordance with the
Strategy for the historical periods indicated. The Strategy has been developed
and tested solely by the Manager.

Actual performance of the Fund may differ from the quoted performance of the
Strategy for the following reasons: the Fund may not be fully invested at all
times; not all stocks in the Fund's portfolio may be weighted equally at all
times due to appreciation or depreciation in a stock's value; purchases and
sales of stocks for the Fund's portfolio are likely to occur between annual
rebalancings due to cash inflows and outflows (from purchases and redemptions of
Fund shares) during the year; in managing the Fund, the Manager may make limited
modifications to the Strategy as necessary to comply with federal tax laws; and
the returns of the Strategy do not reflect the advisory fees, commission costs,
expenses or taxes which would be borne by the Fund.

Because the returns for the Strategy are hypothetical, they do not represent
actual trading or the impact that material economic and market factors might
have had on the Manager's decision-making under actual circumstances. However,
except as described above, the Manager can presently foresee no circumstances
that would cause deviation from the Strategy in managing the Fund. All returns
contained in the graphs and charts below reflect reinvestment of dividends and
other earnings.

Date S&P 500 Dogs of the
Market Fund

31-Dec-74 10,000 10,000
31-Dec-75 13,721 15,052
31-Dec-76 16,993 19,644
31-Dec-77 15,772 19,094
31-Dec-78 16,807 19,881
31-Dec-79 19,906 23,968
31-Dec-80 26,360 29,060
31-Dec-81 25,066 31,154
31-Dec-82 30,432 41,085
31-Dec-83 37,283 54,242
31-Dec-84 39,620 59,476
31-Dec-85 52,362 78,629
31-Dec-86 62,033 98,969
31-Dec-87 65,278 106,714
31-Dec-88 76,251 138,092
31-Dec-89 100,262 178,387
31-Dec-90 97,084 177,564
31-Dec-91 126,743 235,063
31-Dec-92 136,465 267,390
31-Dec-93 150,097 301,552
31-Dec-94 152,064 316,539
31-Dec-95 208,981 433,279
31-Dec-96 257,193 523,270
31-Dec-97 342,993 658,274

O'Shaughnessy Dogs of the Market Strategy Index
vs. the S&P 500* (December 31, 1974 - December 31, 1997)

Year Ending S&P 500 Dogs of the Market Strategy

12/31/75 37.20% 50.52%
12/31/76 23.84% 30.51%
12/31/77 -7.18% -2.80%
12/31/78 6.56% 4.12%
12/31/79 18.44% 20.56%
12/31/80 32.42% 21.25%
12/31/81 -4.91% 7.20%
12/31/82 21.41% 31.88%
12/31/83 22.51% 32.02%
12/31/84 6.27% 9.65%
12/31/85 32.16% 32.20%
12/31/86 18.47% 25.87%
12/31/87 5.23% 7.83%
12/31/88 16.81% 29.40%
12/31/89 31.49% 29.18%
12/31/90 -3.17% -0.46%
12/31/91 30.55% 32.38%
12/31/92 7.67% 13.75%
12/31/93 9.99% 12.78%
12/31/94 1.31% 4.97%
12/31/95 37.43% 36.88%
12/31/96 23.07% 20.77%
12/31/97 33.36% 25.80%

+Returns for 1997 are actual for the Dogs of the Market Fund, net of fees and
expenses.

* This Chart and the Index Performance Statistics and Comparisons represent past
performance of the S&P 500, an unmanaged index of securities, and the Dogs of
the Market Strategy, but not the Dogs of the Market Fund, applied retroactively,
and should not be considered indicative of future results. The performance of
the strategy shown is a hypothetical example of the performance of the strategy
found in the backtest, using an initial $10,000 value, if the Strategy had been
in existence and employed from 1974 through 1996, together with the actual
return of the O'Shaughnessy Dogs of the Market Fund for 1997. Performance of the
Strategy and the S&P 500 do not reflect advisory fees, commissions, expenses or
taxes that the Fund bears. The Strategy's performance as well as that of the S&P
500 would be lower if such fees and expenses were deducted. Read the prospectus
carefully before investing.

Summary results for S&P 500 and Hypothetical Results
for Dogs of the Market Strategy Stocks,
December 31, 1974 December 31, 1997.

These Performance Statistics and Comparisons represent past performance of the
S&P 500, an unmanaged index of securities, and the Dogs of the Market Strategy,
but not the Dogs of the Market Fund, applied retroactively, and should not be
considered indicative of future results. The performance of the strategy shown
is a hypothetical example of the performance of the strategy found in the
backtest, using an initial $10,000 value, if the Strategy had been in existence
and employed from 1974 through 1996, together with the actual return of the
O'Shaughnessy Dogs of the Market Fund for 1997. Performance of the Strategy and
the S&P 500 do not reflect advisory fees, commissions, expenses or taxes that
the Fund bears. The Strategy's performance as well as that of the S&P 500 would
be lower if such fees and expenses were deducted. Read the prospectus carefully
before investing.

Dogs of the
S&P 500 Market Strategy
Arithmetic average 17.43% 20.71%
Standard deviation
of return 13.68% 13.31%
Sharpe risk-adjusted ratio* 76.00 103.00
3-yr compounded** 31.15% 27.64%
5-yr compounded** 20.24% 19.74%
10-yr compounded* 18.05% 19.96%
15-yr compounded** 17.52% 20.31%
20-yr compounded** 16.65% 19.36%
Compound Annual Return 16.61% 19.97%

$10,000 becomes: $342,992.70 $658,274.25

* The Sharpe ratio takes a portfolio's volatility, as measured by its standard
deviation of return, into account. The higher the Sharpe ratio, the better the
portfolio's risk-adjusted return. The Sharpe ratio is calculated by subtracting
the risk free Treasury bill return from the portfolio's return and then dividing
that number by the portfolio's overall standard deviation of return.

** Quoted return is for the most recent period ended December 31, 1997.

+Returns for 1997 are actual for the Dogs of the Market Fund, net of fees and
expenses.

OTHER INVESTMENT POLICIES AND PRACTICES

The Manager does not expect assets invested in cash or liquid short-term
securities to exceed 5% of the Fund's total assets at any time.

Illiquid Securities. The Fund may invest up to 15% of its net assets in
illiquid securities. Illiquid securities are securities which cannot be readily
resold because of legal or contractual restrictions or which cannot otherwise
be marketed, redeemed, put to the issuer or a third party, or which do not
mature within seven days, or which the Manager, in accordance with guidelines
approved by the Board of Directors, has not determined to be liquid.

Industry Concentration. The Fund may not invest more than 25% of its total
assets in any one industry (excluding U.S. Government securities). The
concentration policy is a fundamental policy.

As a matter of operating policy, initial margin deposits and premiums on options
used for non-hedging purposes will not equal more than 5% of the Fund's net
asset value.

Firm Commitment Agreements and When-Issued Purchases. The Fund may purchase
securities under a firm commitment agreement or on a when-issued basis. Firm
commitment agreements and when-issued purchases call for the purchase of
securities at an agreed-upon price on a specified future date, and would be
used, for example, when a decline in the yield of securities of a given issuer
is anticipated. The Fund as purchaser assumes the risk of any decline in value
of the security beginning on the date of the agreement or purchase. The Fund
will not enter into such transactions for the purpose of leveraging, and
accordingly, will segregate liquid assets with its custodian equal (on a daily
market-to-market basis) to the amount of its commitment to purchase the
when-issued securities and securities subject to the firm commitment agreement.

Portfolio Transactions. In executing portfolio transactions, the Fund seeks to
obtain the best net results, taking into account such factors as price
(including the applicable brokerage commission or dealer spread), size of
order, difficulty of execution, operational facilities of the firm involved and
the firm's risk in positioning a block of securities. While the Fund generally
seeks reasonably competitive commission rates, the Fund does not necessarily pay
the lowest commission or spread available. In addition, consistent with the
Conduct Rules of the National Association of Securities Dealers, Inc., the
Manager may consider sales of shares of the Fund as a factor in the selection of
brokers or dealers to execute portfolio transactions for the Fund.

Portfolio Turnover. The Fund anticipates that its annual turnover rate should
not exceed 50% under normal conditions. The portfolio turnover rate is
calculated by dividing the lesser of the Fund's annual sales or purchases of
portfolio securities (exclusive of purchases or sales of securities whose
maturities at the time of acquisition were one year or less) by the monthly
average value of the securities in the portfolio during the year. High portfolio
turnover involves correspondingly greater transaction costs in the form of
brokerage commissions and dealer spreads, which are borne directly by the Fund.

RISK FACTORS

What are some of the potential risks associated with the Strategy?

The Strategy Indexing utilized by the Fund provides a disciplined approach to
investing, based on a buy and hold philosophy during the course of each year,
which ignores market timing and rejects active management. The Fund will adhere
to its Strategy (subject to applicable federal tax requirements relating to
mutual funds), despite any adverse developments concerning an issuer, an
industry, the economy or the stock market generally. This could result in
substantial losses to the Fund, if for example, the stocks selected for the
Fund's portfolio for a given year are experiencing financial difficulty, or are
out of favor in the market because of weak performance, poor earnings forecast,
negative publicity or general market cycles. The Fund is not an appropriate
investment for those who are not comfortable with the Fund's Strategy.

There can be no assurance that the market factors that caused the stocks held in
the Fund's portfolio to meet the Strategy's investment criteria as of
rebalancing in any given year will continue during such year until the next
rebalancing, that any negative conditions adversely affecting a stock's price
will not develop and/or deteriorate during a given year, or that share prices of
a stock will not decline during a given year.

As described above, the Fund's portfolio is rebalanced annually in accordance
with its Strategy. Rebalancing may result in elimination of better performing
assets from the Fund's portfolio and increases in investments in securities with
relatively lower total return.

What are some potential risks associated with investing primarily in common
stocks?

The fundamental risk associated with any common stock fund is the risk that the
value of the stocks it holds might decrease. Stock values may fluctuate in
response to the activities of an individual company or in response to general
market and/or economic conditions. Historically, common stocks have provided
greater long-term returns and have entailed greater short-term risks than other
investment choices. Smaller or newer issuers are more likely to realize more
substantial growth as well as suffer more significant losses than larger or more
established issuers. Investments in such companies can be both more volatile and
more speculative. The Fund is not an appropriate investment for those who are
unable or unwilling to assume the risk involved generally with investment in
common stocks.

Are there any additional risks associated with investment in the Fund?

There is no guarantee that the investment objective of the Fund will be achieved
or that the value of a shareholder's investment in the Fund will not decrease.

MANAGEMENT AND ORGANIZATION OF THE FUND
MANAGEMENT

Who runs the Fund?

Portfolio Management. James P. O'Shaughnessy has had the day-to-day
responsibility for managing the Fund's portfolio and developing and executing
the Fund's investment program since inception of the Fund. For the past ten
years, Mr. O'Shaughnessy has served as Chairman and CEO of the Manager, and in
such capacity, has managed equity accounts for high net worth individuals and
served as portfolio consultant to a unit investment trust. Mr. O'Shaughnessy is
recognized as a leading expert and pioneer in quantitative equity analysis. He
is the author of three financial books, Invest Like the Best, What Works on Wall
Street and How to Retire Rich.

Administrator. Pursuant to an Administration Agreement, Investment Company
Administration, LLC (the "Administrator") serves as administrator of the Fund.
The Administrator provides certain administrative services, including, among
other responsibilities, coordinating relationships with independent contractors
and agents, preparing for signature by officers and filing of certain documents
required for compliance with applicable laws and regulations, preparing
financial statements, and arranging for the maintenance of books and records.
For its services, the Fund pays the Administrator a fee each month, at the
annual rate of 0.10% of the first $100 million of the Fund's average daily net
assets, 0.05% of the next $100 million of such net assets, and 0.03% of such net
assets over $200 million, with a minimum fee of $40,000 annually. The address of
the Administrator is 4455 E. Camelback Rd., Suite 261 E, Phoenix, Arizona 85018.
The Administrator and the Distributor are under common control and are
therefore considered affiliates of each other.

How are Fund expenses determined?

ORGANIZATION
How is the Fund organized?

The Fund is an investment portfolio or series of O'Shaughnessy Funds. There are
three other investment portfolios of O'Shaughnessy Funds, shares of which are
not offered for sale through this Prospectus: O'Shaughnessy Cornerstone Value
Fund, O'Shaughnessy Cornerstone Growth Fund and O'Shaughnessy Aggressive Growth
Fund (the "other O'Shaughnessy Funds"). The charter of O'Shaughnessy Funds
provides that the Board of Directors may issue additional investment portfolios
of shares and/or additional classes of shares for each investment portfolio.
O'Shaughnessy Funds was organized as a corporation in Maryland on May 20, 1996.

What is meant by "shares"?

As with all mutual funds, investors purchase shares when they invest in the
Fund. These shares are a part of a Fund's authorized capital stock, but share
certificates are not generally issued.

Shareholder inquiries may be addressed to the Fund at the address or telephone
number set forth on the cover page of this Prospectus.

Does the Fund have annual shareholder meetings?

INFORMATION ABOUT YOUR ACCOUNT
PURCHASE OF SHARES

How do I purchase shares by mail?

For initial investments, please send a completed Application, together with a
check payable to O'Shaughnessy Dogs of the Market Fund to O'Shaughnessy Funds,
Inc., c/o Firstar Mutual Fund Services, LLC, at P.O. Box 701, Milwaukee, WI
53201-0701 (for Applications sent by U.S. mail) or 615 E. Michigan Street, Third
Floor, Milwaukee, WI 53202 (for Applications sent via overnight courier).
Subsequent investments must be accompanied by a letter indicating the name(s) in
which the account is registered and the account number or by the remittance
portion of the account statement and mailed to the address stated above.

How do I purchase shares by wire?

What is the purchase price of Fund shares and when do purchases become
effective?

Purchases of Fund shares become effective and shares will be priced at the net
asset value per share ("NAV") next determined after the investor's check or wire
is received by the Transfer Agent. NAV for the Fund is calculated as of the
close of business on the New York Stock Exchange ("NYSE") (currently 4:00 pm,
Eastern time). If your request is received in correct form before 4:00 pm
Eastern time, your transaction will be priced at that day's NAV. If your request
is received after 4:00 pm, it will be priced at the next business day's NAV.
Orders that request a particular day or price for your transaction or any other
special conditions cannot be accepted.

What are the conditions of purchase?

The Transfer Agent will mail a confirmation of each completed purchase to the
investor. If an order is canceled because an investor's check does not clear,
the investor will be responsible for any loss incurred by the Fund, the Transfer
Agent, the Distributor, the Administrator or the Manager. If the investor is
already a shareholder, the Fund may redeem shares from the account to cover any
loss. If the investor is not a shareholder or if the loss is greater than the
value of the shareholder's account, the Distributor will be responsible for any
loss to the Fund, and will have the right to recover such amount from the
investor.

Who do I contact if I have questions about my account or need additional
information concerning an investment in the Fund?

If you have investment questions about the Fund, or if you would like any
additional information relating to an investment in the Fund, please call
877-OSFUNDS (673-8637) (toll-free), or write to the Distributor at First Fund
Distributors, Inc., 4455 E. Camelback Road, Suite 261 E, Phoenix, Arizona,
85018. If you are a shareholder and have questions about your account, or if you
wish to arrange for wire transactions, please call the Fund at 877-OSFUNDS
(673-8637). Before telephoning, please be sure to have your account number and
social security number or employer tax identification number readily available.

Will I receive share certificates for shares purchased?

Can I purchase shares through broker-dealers other than the Distributor?

Investors may also arrange to purchase shares of the Fund through other outside
broker-dealers with which O'Shaughnessy Funds does not have an arrangement, and
such broker-dealers may purchase shares of the Fund by telephone if they have
made arrangements in advance with the Fund. To place a telephone order such
broker-dealer should call the Fund at 877-OSFUNDS (673-8637).

Purchases by broker-dealers become effective and shares will be priced as
described above. If an investor purchases shares through broker-dealers other
than the Distributor, such broker-dealers may charge the investor a service fee
that is reasonable for the service performed, bearing in mind that the investor
could have acquired or redeemed the Fund's shares directly without the payment
of any fee. No part of any such service fee will be received by the
Distributor, the Manager, the Administrator or the Fund.

EXCHANGE PRIVILEGE

Shares of the Fund may be exchanged for shares of each of the other
O'Shaughnessy Funds (i.e., O'Shaughnessy Cornerstone Value Fund, O'Shaughnessy
Cornerstone Growth Fund and O'Shaughnessy Aggressive Growth Fund). Prospectuses
for the other O'Shaughnessy Funds may be obtained by writing to the Distributor
at 4455 E. Camelback Road, Suite 261 E, Phoenix AZ 85018, Attention:
O'Shaughnessy Funds, Inc. or by calling 877-OSFUNDS (673-8637) (toll-free).

The exchange procedures are described below.

Is there any sales charge or minimum investment applicable to an exchange?

Shareholders of the Fund may exchange their shares of the Fund, without the
payment of any sales or service charge unless the exchange is effected via
telephone instructions for which a $5.00 charge will be levied or on shares held
less than 90 days for which a redemption fee will be charged (see "Information
About Your Account - Redemption of Shares"), for shares of any other fund into
which an exchange is permitted equal in value to the net asset value of the
shares being exchanged. All exchanges are subject to all applicable terms set
forth in the prospectus of the fund into which the exchange is being made. If a
shareholder exchanges shares through a broker-dealer other than the Distributor,
such broker-dealer may charge the shareholder a service fee, no part of which
will be received by the Distributor, the Manager, the Fund, or the fund into
which the exchange is being made.

At what price is an exchange effected?

An exchange is effected at the respective net asset values of the two funds with
respect to which shares are being exchanged as next determined following receipt
by the fund into which the exchange is being made of all necessary documentation
in connection with the redemption of Fund shares as described below under
"Redemption of Shares - How do I redeem shares by mail?"

Do current instructions concerning receipt of dividends and distributions carry
over to exchanged shares?

What are the conditions applicable to an exchange?

The Fund, the other O'Shaughnessy Funds and the Firstar Money Market Fund each
reserves the right to reject any order to acquire its shares through exchange
or otherwise and to restrict or terminate the exchange privilege at any time. If
the exchange privilege is to be permanently terminated, the Fund will provide
its shareholders with written notice of such termination. The Fund reserves the
right to suspend temporarily the telephone exchange privilege in emergency
circumstances or in cases where, in the judgment of the Fund, continuation of
the privilege would be detrimental to the Fund and its shareholders as a whole.
Such temporary suspension can be without prior notification.

How can I make exchanges by telephone?

Shareholders who have completed the section of the Fund's Application entitled
"Shareholder Privileges" are eligible to make telephone requests for exchanges
and may do so by telephoning the Fund at 877-OSFUNDS (673-8637). A shareholder
who has not completed the Shareholder Privileges section of the Application but
who wishes to become eligible to make telephone exchanges should designate a
change in such instructions by writing to the Transfer Agent. Please note that
such changed instructions must (i) be signed by the registered owner(s) of the
shares exactly as the account is registered and signature guaranteed, and (ii)
include the name of the account, the account number and the name of the Fund.
See "Redemption of Shares - How do I redeem shares by telephone?" below, which
describes the time of day at which telephone redemptions and exchanges will be
priced and processed. Telephone requests for exchanges cannot be accepted with
respect to shares represented by certificates. Shares of the other O'Shaughnessy
Funds or Firstar Money Market Fund acquired pursuant to a telephone request for
exchange will be held under the same account registration as the shares redeemed
through the exchange.

Shareholders who effect exchanges of Fund shares by telephone will be charged a
$5.00 exchange fee.

How do I make exchanges by mail?

To exchange shares by mail, send a written request for exchange signed by the
registered owner(s) of the shares, exactly as the account is registered to
O'Shaughnessy Funds, Inc., c/o Firstar Mutual Fund Services, LLC, at P.O. Box
701, Milwaukee, WI 53201-0701 (for requests sent by U.S. mail) or 615 E.
Michigan Street, Third Floor, Milwaukee, WI 53202 (for requests sent via
overnight courier). The request for exchange should include the following
information: the name of the account, the account number, the number of Fund
shares or the dollar value of Fund shares to be exchanged, the shares of which
other fund (either another O'Shaughnessy Fund or the Firstar Money Market Fund)
shares of the Fund are to be exchanged for, and the name on the account and the
account number (if already established) with such other fund.

REDEMPTION OF SHARES

How do I redeem shares by mail?

When would I pay a redemption fee?

Redemption fees will be paid to the Fund to help offset transaction costs. The
Fund will use the "first-in, first-out" (FIFO) method to determine the 90 day
holding period. Under this method, the date of redemption or exchange will be
compared with the earliest purchase date of shares held in the account. If this
holding period is less than 90 days, the fee will be assessed.

May I send redemption requests to the Fund?

When are signature guarantees required?

The Fund will waive the signature guarantee requirement on a redemption request
that instructs that the proceeds be sent by mail if all of the following
conditions apply: (i) the redemption is for $10,000 or less; (ii) the
redemption check is payable to the shareholder(s) of record; (iii) the
redemption check is mailed to the shareholder(s) at the address of record; and
(iv) no shares represented by certificate are being redeemed. Share certificates
submitted for redemption or exchange must be properly endorsed and contain
signature guarantees. In addition, the Fund in its discretion may waive the
signature guarantee for employees and affiliates of the Manager, the Distributor
and the Administrator, and family members of the foregoing.

The requirement of a guaranteed signature protects against an unauthorized
person redeeming shares and obtaining the redemption proceeds.

How do I redeem shares by telephone?

As noted above, the Fund will employ reasonable procedures to confirm that
instructions communicated by telephone are genuine. As long as such procedures
are followed, neither the Fund nor any of its service providers will be liable
for any loss, expense, or cost arising out of any telephone redemption request,
including any fraudulent or unauthorized requests that are reasonably believed
to be genuine. See "Exchange Privilege - How can I make exchanges by telephone?"
above.

Shareholders should be aware that, at times, the volume of telephone calls or
other factors beyond the Fund's control may make it difficult to reach the
Transfer Agent by telephone. This will be true particularly during periods of
drastic economic or market changes. In the event of difficulty in reaching the
Transfer Agent, shareholders should continue to telephone or utilize the written
redemption procedures described above under "Redemption of Shares - How do I
redeem shares by mail?"

What options do I have in receiving redemption proceeds?

Redemption By Mail. In the case of shareholders who request that their
redemption proceeds be sent by mail, the Transfer Agent mails checks for
redemption proceeds typically within one or two business days, but no later than
seven days, after it receives the request and all the necessary documents.

When would the payment of proceeds be delayed?

Would my account ever be involuntarily redeemed?

INFORMATION ON DISTRIBUTIONS AND TAXES

DIVIDENDS AND OTHER DISTRIBUTIONS GENERALLY

INCOME DIVIDENDS

The Fund declares and pays dividends (if any) annually.

CAPITAL GAINS

TAX INFORMATION

Will I pay taxes on redemptions or exchanges of Fund shares?

When you sell or exchange shares in the Fund, you may realize a gain or loss.
Unless you are a dealer in securities, such gain or loss will be capital gain or
loss. Consult your tax advisor concerning the tax rate applicable to your sale
or exchange of Fund shares.

Will I pay taxes on Fund distributions?

Distributions of ordinary income and short-term capital gains are taxable as
ordinary income. Distributions designated as capital gains dividends are taxable
as capital gains regardless of the length of time shares of the Fund have been
held. The dividends of the Fund will be eligible for the 70% deduction for
dividends received by corporations only to the extent the Fund's income consists
of dividends paid by U.S. corporations.

What is the tax effect of the Fund's investment in foreign securities?

Pursuant to the Fund's investment objectives, the Fund may invest in foreign
securities. Foreign taxes may be paid by the Fund as a result of tax laws of
countries in which the Fund may invest. Income tax treaties between certain
countries and the United States may reduce or eliminate such taxes. It is
impossible to determine in advance the effective rate of foreign tax to which
the Fund will be subject, since the amount of Fund assets to be invested in
various countries is not known. Because the Fund limits its investment in
foreign securities, shareholders will not be entitled to claim foreign tax
credits with respect to their share of foreign taxes paid by the Fund on income
from investments of foreign securities held by the Fund.

What are the tax effects of buying shares before a distribution?

Shareholders are urged to consult their own tax advisers regarding specific
questions as to Federal, state, local or foreign taxes. Foreign investors
should consider applicable foreign taxes in their evaluation of an investment in
the Fund.

PERFORMANCE INFORMATION

What is total return?

This tells you how much an investment in the Fund has changed in value over a
given time period. It reflects any net increase or decrease in the share price
and assumes that all dividends and capital gains (if any) paid during the
period were reinvested in additional shares. Including reinvested distributions
means that total return numbers include the effect of compounding, i.e., you
receive income and capital gain distributions on an increasing number of shares.

Advertisements for the Fund may include cumulative or compound average annual
total return figures, which may be compared with various indices, other
performance measures, or other mutual funds.

What is cumulative total return?

What is average annual total return?

NET ASSET VALUE

How is net asset value determined?

How are the securities held in the Fund's portfolio valued?

Securities listed on the NYSE, American Stock Exchange or other national
exchanges are valued at the last sale price on such exchange on the day as of
which the net asset value per share is to be calculated. Over-the-counter
securities included in the NASDAQ National Market System are valued at the last
sale price. If there is no sale on a particular security on such day, it is
valued at the mean between the bid and asked prices. Other securities, to the
extent that market quotations are readily available, are valued at market value
in accordance with procedures established by the Board of Directors. Any
securities and other assets, for which market quotations are not readily
available are valued in good faith in a manner determined by the Directors of
the Fund best to reflect their fair value.

OTHER SHAREHOLDER SERVICES

Automatic Investment Plan An Automatic Investment Plan allows a shareholder to
make automatic monthly or quarterly investments into a Fund account, in amounts
of at least $100, by having the Transfer Agent draw an automatic clearing house
(ACH) debit electronically against a shareholder's checking or savings account.
A shareholder may establish an Automatic Investment Plan by completing the
appropriate section on the Application for new accounts or by calling the Fund
at 877-OSFUNDS (673-8637) and requesting an Automatic Investment Plan
Application for existing accounts. A shareholder should be aware that a signed
Application should be received by the Transfer Agent at least 15 business days
prior to the initial transaction. The Transfer Agent will assess a $20 fee if
the automatic investment cannot be made due to insufficient funds, stop payment,
or for any other reason. The Fund cannot guarantee acceptance by your bank.

Systematic Cash Withdrawal Plan When an account of $10,000 or more is opened or
when an existing account reaches that size, a shareholder may participate in the
Fund's Systematic Cash Withdrawal Plan by filling out the appropriate part of
the Application. Under this plan, a shareholder may receive (or designate a
third party to receive) a monthly or quarterly check in a stated amount of not
less than $50. Fund shares will be redeemed as necessary to meet withdrawal
payments. All participants must elect to have their dividends and capital gain
distributions reinvested automatically. A shareholder who decides later to use
this service should call the Fund at 877-OSFUNDS (673-8637).

Reports to Shareholders Each time a shareholder invests, redeems, transfers or
exchanges shares, or receives a distribution, the Fund will send a confirmation
of the transaction which will include a summary of all of the shareholder's most
recent transactions.

At such time as prescribed by law, the Fund will send to each shareholder the
following reports (if they are applicable), which may be used in completing U.S.
income tax returns:

Form 1099-B Reports redemption proceeds paid (including those resulting from
exchanges) during the preceding calendar year.

Form 1099-R Report distributions from retirement plan accounts during the
preceding calendar year.

Form 5498 Reports contributions to IRAs for the previous calendar year.

If an investor's shares are held by an outside broker in an omnibus account, it
is the responsibility of such outside broker to provide shareholders whose
shares are held in the omnibus account with any reports prescribed by law which
the shareholders require in order to complete their U.S. income tax returns.
Shareholders will also receive annual and semi-annual reports including the
financial statements of the Funds for the respective periods.

Retirement Plans

Eligible investors may invest in the Fund under the following prototype
retirement plans:

"Education" Individual Retirement Account (IRA)
"Traditional" Individual Retirement Account (IRA)
"Roth" Individual Retirement Account (IRA)
Simplified Employee Pension (SEP) for sole proprietors,
partnerships and corporations
Profit-Sharing and Money Purchase Pension Plans for corporations
and their employees

Automatic Reinvestment Plan For the convenience of investors, all dividends and
distributions are automatically reinvested in full and fractional shares of the
Fund at the net asset value per share at the close of business on the record
date, unless otherwise specified on the Application or requested by a
shareholder in writing. If the Transfer Agent does not receive a written request
for subsequent dividends and/or distributions to be paid in cash at least three
full business days prior to a given record date, the dividends and/or
distributions to be paid to a shareholder will be reinvested. If a shareholder
elects to receive dividends and distributions in cash and the U.S. Postal
Service cannot deliver the checks, or if the checks remain uncashed for six
months, the shareholder's distribution checks will be reinvested into the
shareholder's account at the then current net asset value.

INVESTMENT MANAGER
O'Shaughnessy Capital Management, Inc.
35 Mason Street
Greenwich, Connecticut 06830
November 24, 1998

ADMINISTRATOR
Investment Company Administration, LLC
4455 E. Camelback Road, Suite 261 E
Phoenix, Arizona 85018

DISTRIBUTOR
First Fund Distributors, Inc.
4455 E. Camelback Road, Suite 261 E
Phoenix, Arizona 85018

TRANSFER AGENT
Firstar Mutual Fund Services, LLC
615 E. Michigan Street
Milwaukee, Wisconsin 53202

AUDITORS
McGladrey & Pullen, LLP
555 Fifth Avenue
New York, New York 10017-2416

LEGAL COUNSEL
Swidler Berlin Shereff Friedman, LLP
919 Third Avenue
New York, New York 10022

<PAGE>
O'Shaughnessy Funds Inc.

Building New Standards For Investment Success

Cornerstone Growth Fund
Cornerstone Value Fund

35 Mason Street, Greenwich, Connecticut 06830
Toll-Free 877-OSFUNDS (673-8637)
www.osfunds.com
NASDQ Symbols: OSCGX (Cornerstone Growth Fund)
OSCVX (Cornerstone Value Fund)

The Funds

O'Shaughnessy Cornerstone Growth Fund ("Cornerstone Growth Fund") and
O'Shaughnessy Cornerstone Value Fund ("Cornerstone Value Fund") (each a "Fund,"
and together, the "Funds") are separate investment portfolios or series of
O'Shaughnessy Funds, Inc., an open-end, diversified management investment
company or mutual fund.

Investment Objective

The investment objective of the Cornerstone Growth Fund is to seek long-term
growth of capital. The investment objective of the Cornerstone Value Fund is to
seek total return, consisting of capital appreciation and current income.

Strategy Indexing

Each Fund seeks to achieve its investment objective through a process of
Strategy Indexing which is pursued through the implementation of an investment
strategy developed by O'Shaughnessy Capital Management, Inc., the Funds'
investment manager (the "Manager"). The Funds will invest substantially all of
their assets in common stocks selected through such strategies.

The investment strategy of Cornerstone Growth Fund (the "Cornerstone Growth
Strategy") entails the selection of 50 common stocks from the O'Shaughnessy All
Stocks Universe which meet certain criteria, as described in this prospectus.

The investment strategy of Cornerstone Value Fund (the "Cornerstone Value
Strategy") entails the selection of 50 common stocks from the O'Shaughnessy
Market Leaders Universe which meet certain criteria, as described below. (The
Cornerstone Growth Strategy and the Cornerstone Value Strategy are each referred
to as a "Strategy.")

PROSPECTUS November 30, 1998

This Prospectus contains the information you should know about the Funds before
you invest. Please keep it for future reference. A statement containing
additional information about the Funds, dated November 30, 1998, has been filed
with the Securities and Exchange Commission and is incorporated by reference
into this Prospectus. It is available, at no charge, by calling or by writing
the Funds at the telephone number or address set forth above. The SEC maintains
an internet site (http://www.sec.gov) that contains the SAI, other material
incorporated by reference and other information about companies that file
electronically with the SEC. O'Shaughnessy

Capital Management, Inc. - Manager

First Fund Distributors, Inc. - Distributor

Risk/Reward

Each Fund's Strategy provides a rigorous and disciplined approach to investing,
based on a buy and hold philosophy over the course of each year, and has, in the
Manager's judgment, the potential to provide superior returns. However, each
Fund intends to adhere to its respective Strategy (subject to applicable federal
tax requirements relating to mutual funds) regardless of the performance of the
stock market or other economic factors or indicators in a particular period,
which may result in losses to the Fund.

Purchase of Shares

Shares of the Funds will be offered to investors during the continuous offering
at a price equal to the next determined net asset value per share. There are no
fees or charges to purchase or sell shares or to reinvest dividends, however, a
fee applies to certain short-term redemptions, see "Information About Your
Account - Redemption of Shares". There are no Rule 12b-1 fees.

TABLE OF CONTENTS

About the Funds. . . . . . . . . . . . . . . .
Financial Highlights . . . . . . . . . . . . .
Management and Organization of the Funds . . . . . .
Information about Your Account . . . . . . . .
Information on Distributions and Taxes . . . . . . .
Performance Information . . . . . . . . . . .
Net Asset Value . . . . . . . . . . . . . . .
Other Shareholder Services . . . . . . . . . .

ABOUT THE FUNDS

TRANSACTION AND FUND EXPENSES

The following table and example should help you understand the kinds of expenses
you will bear directly or indirectly as a Fund shareholder. In the table,
"Shareholder Transaction Expenses, shows that you pay no sales charges. All the
money you invest in the Funds goes to work for you, subject to the fees noted in
the table. "Annual Fund Operating Expenses shows how much it would cost to
operate each Fund for a year, based on estimated expenses through the end of
each Fund's first full year. These costs you pay indirectly, because they are
deducted from the Fund's total assets before the daily share price is calculated
and before dividends and other distributions are made. You will not see these
expenses on your account statement.

Fee Table

Shareholder Transaction Expenses:
Cornerstone Cornerstone
Growth Fund Value Fund
Maximum Sales Charge Imposed on
Purchases (as a percentage of
offering price). . . . . . . . . . . . . . . .None . . . . . .None
Maximum Sales Charge Imposed on
Dividend Reinvestments . . . . . . . . . . . .None . . . . . .None
Deferred Sales Charge (as a percentage
of original purchase price or redemption
proceeds, whichever is lower). . . . . . . . .None . . . . . .None
Redemption Fee (a) (on shares held
less than 90 days) . . . . . . . . . . . . . 1.50% . . . . . 1.50%
Exchange Fee (a) (b) (on shares held
less than 90 days) . . . . . . . . . . . . . 1.50% . . . . . 1.50%

Annual Fund Operating Expenses
(as a percentage of average net assets):
Cornerstone Cornerstone
Growth Fund Value Fund

Management Fees (c). . . . . . . . . . . . 0.74% . . . .0.74%
Rule 12b-1 Fees. . . . . . . . . . . . . . .None . . . . None
Other Expenses . . . . . . . . . . . . . . 0.42% . . . .0.71%
Total Fund Operating Expenses. . . . . . . 1.16% . . . .1.45%

(a) A 1.5% redemption fee, payable to the Funds, will be assessed on shares
purchased and held for less than 90 days. Shareholders who effect redemptions of
Fund shares by wire transfer will pay a $12.00 wire transfer fee. See
"Information About Your Account - Redemption of Shares." (b) Shareholders who
effect exchanges of shares of a Fund for shares of another fund by telephone in
accordance with the exchange privilege will be charged a $5.00 exchange fee in
addition to any fees applicable as indicated in footnote (a). See "Information
About Your Account - Exchange Privilege." (c) See "Management and
Organization of the Funds - Management."

Example: An investor would pay the following expenses on a $1,000 investment
assuming: (1) the operating expense ratio set forth in the table above; (2) a 5%
annual return through out the period; and (3) redemption at the end of the
period: Cornerstone

Cornerstone Growth Fund Value Fund
One year . . . . . . . . . . . . . . . . . .$ 12 . . . . . . $ 15
Three years. . . . . . . . . . . . . . . . .$ 37 . . . . . . $ 46
Five years . . . . . . . . . . . . . . . . .$ 64 . . . . . . $ 80
Ten years. . . . . . . . . . . . . . . . . .$142 . . . . . . $176

The table and example are intended to assist investors in understanding the
costs and expenses that a shareholder in each Fund will bear directly or
indirectly. The example should not be considered a representation of past or
future expenses or annual rate of return, and actual expenses or annual rate of
return may be more or less than those shown.

INANCIAL HIGHLIGHTS

CORNERSTONE GROWTH FUND
Per Share Operating Performance
(For a share outstanding throughout the period)

Year November 1, 1996*
Ended through
September 30, 1998 September 30, 1997
Net asset value, beginning of period $ 15.30 $ 10.00
Income from investment operations:
Net investment (loss) income (0.07) (0.02)
Net realized & unrealized (loss) gain
on investments (3.88) 5.32
Total from investment operations (3.95) 5.30

Less distributions:
From net investment income - -
From net realized capital gains (1.78) -
(1.78) -

Net asset value, end of period $ 9.57 $ 15.30

Total Return (27.63%) 53.05%**

Ratios/supplemental data:
Net assets, end of period (millions) $ 80.4 $91.3

Ratio of expenses to average net assets:
Before expense reimbursement 1.16% 1.63%+
After expense reimbursement - 1.56%+

Ratio of net investment income
(loss) to average net assets:
Before expense reimbursement (0.86%) (1.19%)+
After expense reimbursement - (1.12%)+

Portfolio turnover rate 119.98% 15.52%

* Commencement of operations.
**Not Annualized.
+Annualized.

FINANCIAL HIGHLIGHTS
CORNERSTONE Value FUND
Per Share Operating Performance
(For a share outstanding throughout the period)

Year November 1, 1996*
Ended through
September 30, 1998 September 30, 1997
Net asset value, beginning of period $ 11.50 $ 10.00
Income from investment operations:
Net investment (loss) income 0.21 0.15
Net realized & unrealized (loss) gain
on investments (0.70) 1.37
Total from investment operations (0.49) 1.52

Less distributions:
From net investment income (0.17) (0.02)
From net realized capital gains - -
(0.17) (0.02)

Net asset value, end of period $ 10.84 $ 11.50

Total Return (4.32%) 15.21%**

Ratios/supplemental data:
Net assets, end of period (millions) $ 21.9 $13.5

Ratio of expenses to average net assets:
Before expense reimbursement 1.45% 2.66%
After expense reimbursement 1.45% 1.85%

Ratio of net investment income
(loss) to average net assets:
Before expense reimbursement 2.12% 1.93%
After expense reimbursement 2.12% 2.73%

Portfolio turnover rate 51.56% 2.01%

* Commencement of operations.
** Not Annualized.
+ Annualized.

INVESTMENT OBJECTIVE AND STRATEGIES

To help you decide whether either or both of the Cornerstone Growth Fund and
Cornerstone Value Fund are appropriate for you, this section takes a closer look
at each Fund's investment objective and Strategy.

What is each Fund's objective?

How does each Fund achieve its objective?

The Cornerstone Growth Fund seeks to achieve its investment objective through a
process of Strategy Indexing , which is pursued through the implementation of
the Cornerstone Growth Strategy. The Cornerstone Value Fund seeks to achieve
its investment objective through a process of Strategy Indexing , which is
pursued through the implementation of the Cornerstone Value Strategy. Each
Strategy was developed by the Manager.

Other than assets temporarily maintained in cash or liquid short-term securities
pending investment, to meet redemption requests or to comply with federal tax
laws applicable to mutual funds, each Fund will invest substantially all of its
assets in common stocks selected through the respective Strategy, as described
more fully below.

What is the Cornerstone Growth Strategy?

The Cornerstone Growth Strategy selects the 50 stocks with the highest one-year
price appreciation as of the date of purchase from the O'Shaughnessy All Stocks
Universe that also meet the following criteria: (i) annual earnings that are
higher than the previous year, (ii) a price-to-sales ratio below 1.5, and (iii)
historical trading volume sufficient to allow for the Fund to purchase the
required number of shares as of the Re-Balance Date (as defined in this
prospectus). A stock's price-to-sales ratio is computed by dividing the market
value of the stock by the issuer's most recent twelve month sales. See "How does
investment through the Cornerstone Growth Strategy and the Cornerstone Value
Strategy work?

What is the O'Shaughnessy All Stocks Universe?

The O'Shaughnessy All Stocks Universe consists of all the domestic and foreign
common stocks in the Standard & Poor's Compustat ("S&P Compustat") database (the
"COMPUSTAT Database") with market capitalizations exceeding $172 million.
Currently, the COMPUSTAT Database consists of the stocks (including the American
Depository Receipts ("ADRs")) of 9,898 issuers, and the O'Shaughnessy All Stocks
Universe consists of the stocks of 3,762 issuers. What is the Cornerstone Value
Strategy?

The Cornerstone Value Strategy involves the selection of the 50 highest
dividend-yielding common stocks from the O'Shaughnessy Market Leaders Universe
that have historical trading volume sufficient to allow for the Fund to purchase
the required number of shares as of the Re-Balance Date (as defined below). See
"How does investment through the Cornerstone Growth Strategy and the Cornerstone
Value Strategy work?"

What is the O'Shaughnessy Market Leaders Universe ?

The O'Shaughnessy Market Leaders Universe consists of those domestic and foreign
stocks in the COMPUSTAT Database which are not power utility companies and
which have (i) market capitalizations exceeding the average of the COMPUSTAT
Database; (ii) twelve month sales which are fifty percent greater than the
average for the COMPUSTAT Database; (iii) a number of shares outstanding which
exceeds the average for the COMPUSTAT Database; and (iv) cash flow which
exceeds the average for the COMPUSTAT Database. Currently, the O'Shaughnessy
Market Leaders Universe consists of the stocks of 624 issuers.

How does investment through the Cornerstone Growth Strategy and the Cornerstone
Value Strategy work?

Upon commencement of operations of the Cornerstone Growth Fund and Cornerstone
Value Fund, the Manager purchased 50 stocks for each Fund as dictated by the
Cornerstone Growth Strategy and the Cornerstone Value Strategy, respectively,
based on information as of commencement of operations of the Fund. Each Fund's
holdings of each stock in its portfolio were initially be weighted equally by
dollar amount. Thereafter, the Manager re-balances the portfolio of each Fund
annually in the first month of the succeeding year (the "Re-Balance Date"), in
accordance with the Fund's respective Strategy, based on information determined
on or about the immediately preceding December 31. That is, on the Re-Balance
Date of each year, stocks meeting the Strategy's criteria based on information
determined on or about immediately preceding December 31 will be purchased for
the Fund to the extent not then held, stocks which no longer meet the criteria
as of such date will be sold, and the holdings of all stocks in the Fund that
continue to meet the criteria will be appropriately increased or decreased to
result in equal weighting of all stocks in the portfolio.

When a Fund receives new cash flow from the sale of its shares over the course
of the year, such cash will first be used to the extent necessary to meet
redemptions. The balance of any such cash will be invested in the 50 stocks
selected for the Fund pursuant to the applicable Strategy as of the most recent
rebalancing of the Fund's portfolio, in proportion to the current weightings of
such stocks in the portfolio and without any intention to rebalance the
portfolio on an interim basis. It is anticipated that such purchases will
generally be made on a weekly basis, but may be on a more or less frequent basis
in the discretion of the Manager, depending on certain factors, including the
size of the Fund and the amount of cash to be invested. To the extent
redemptions exceed new cash flow into a Fund, the Fund will meet redemption
requests by selling securities on a pro rata basis, based on the current
weightings of such securities in the portfolio. Thus, interim purchases and
sales of securities between annual Re-Balance Dates will be based on current
portfolio weightings and will be made without regard to whether or not a
particular security continues to meet the Strategy's criteria.

Will the Manager deviate from the Strategies?

The Manager is committed to a rigorous, disciplined approach and cannot
presently anticipate any circumstances which would cause it to diverge from the
Strategies described above in managing the Funds.

Is there anything else I should know about the Strategies?

Each Fund offers a disciplined approach to investing, based on a buy and hold
philosophy over the course of each year, which ignores market timing and rejects
active management. Each Fund will adhere to its respective Strategy regardless
of the performance of the stock market in a particular period.

The Manager anticipates that the 50 stocks held in each Fund's portfolio will
remain the same throughout the course of a year, despite any adverse
developments concerning an issuer, an industry, the economy or the stock market
generally. However, if during the course of a year it is determined that
earnings or other factual criteria that form the basis for selecting a security
are false or incorrect, the Manager reserves the right to replace such a
security with another meeting the criteria of the strategy. Also, due to
purchases and redemptions of Fund shares during the year, changes in the market
value of the stock positions held in a Fund's portfolio and compliance with the
federal tax laws, it is likely that stock positions will not be weighted equally
at all times during a year.

The Funds will be substantially fully invested in stocks selected as described
above at all times.

How can I decide if the Funds are an appropriate investment for me?

Consider your investment goals, your time horizon for achieving them, and your
tolerance of risk. The Funds are not appropriate investments for those who seek
short-term investments, since the Manager expects the benefits of investing in
the Funds to be derived from investing assets in accordance with the Cornerstone
Growth Strategy and the Cornerstone Value Strategy over the long-term. See "What
is the historical performance of the Strategies?" below. A discussion of the
risks associated with investment in the Funds is contained in "Risk Factors"
below.

Is there other information I should review before making a decision?

Be sure to review "Other Investment Policies and Practices" which discusses
certain additional investment practices of the Funds. In addition, historical
information relating to the performance of the Cornerstone Growth Strategy and
the Cornerstone Value Strategy over time is discussed below.

What is the historical performance of the Strategies?

The following graphs and tables compare the actual performance of the S&P 500
Index (the "S&P 500"), the hypothetical performance of each the Cornerstone
Growth Strategy and Cornerstone Value Strategy for the historical periods
indicated and the actual performance of the Cornerstone Growth Fund and
Cornerstone Value Fund for 1997. Returns for each Strategy are the returns on a
hypothetical portfolio of stocks which was rebalanced annually in accordance
with such Strategy for the historical periods indicated. The Strategies have
been developed and tested solely by the Manager.

Actual performance of the Funds may differ from the quoted performance of the
Strategies for the following reasons: each Fund may not be fully invested at
all times; not all stocks in the Fund's portfolio may be weighted equally at all
times due to appreciation or depreciation in a stock's value; purchases and
sales of stocks for the Fund's portfolio are likely to occur between annual
rebalancings due to cash inflows and outflows (from purchases and redemptions of
Fund shares) during the year; in managing the Funds, the Manager may make
limited modifications to the Strategies as necessary to comply with federal tax
laws; and the returns of the Strategies do not reflect the advisory fees,
commission costs, expenses or taxes which would be borne by the Funds.

Because the returns for the Strategies are hypothetical, they do not represent
actual trading or the impact that material economic and market factors might
have had on the Manager's decision-making under actual circumstances. However,
except as described above, the Manager can presently foresee no circumstances
that would cause deviation from the Strategies in managing the Funds. All
returns contained in the graphs and charts below reflect reinvestment of
dividends and other earnings.

Date S&P 500 Cornerstone
Growth Fund

31-Dec-52 10,000 10,000
31-Dec-53 9,901 10,040
31-Dec-54 15,111 15,733
31-Dec-55 19,880 20,515
31-Dec-56 21,184 24,208
31-Dec-57 18,900 19,875
31-Dec-58 27,096 30,369
31-Dec-59 30,336 37,688
31-Dec-60 30,479 42,436
31-Dec-61 38,675 64,121
31-Dec-62 35,298 53,093
31-Dec-63 43,346 64,136
31-Dec-64 50,490 83,377
31-Dec-65 56,776 120,146
31-Dec-66 51,064 120,026
31-Dec-67 63,309 220,007
31-Dec-68 70,311 331,110
31-Dec-69 64,335 238,068
31-Dec-70 66,915 231,878
31-Dec-71 76,490 306,311
31-Dec-72 91,008 366,655
31-Dec-73 77,666 265,825
31-Dec-74 57,108 188,470
31-Dec-75 78,352 259,334
31-Dec-76 97,031 343,618
31-Dec-77 90,064 434,333
31-Dec-78 95,973 600,683
31-Dec-79 113,670 833,147
31-Dec-80 150,522 1,355,530
31-Dec-81 143,131 1,233,532
31-Dec-82 173,776 1,691,173
31-Dec-83 212,892 2,244,186
31-Dec-84 226,241 2,199,303
31-Dec-85 299,000 3,134,006
31-Dec-86 354,225 3,688,725
31-Dec-87 372,751 3,489,534
31-Dec-88 435,410 4,525,926
31-Dec-89 572,521 5,603,096
31-Dec-90 554,372 5,418,194
31-Dec-91 723,733 8,203,146
31-Dec-92 779,243 10,294,948
31-Dec-93 857,090 13,414,317
31-Dec-94 868,318 12,703,358
31-Dec-95 1,187,858 15,015,370
31-Dec-96 1,461,897 19,748,214
31-Dec-97 1,949,586 25,929,405

O'Shaughnessy Cornerstone Growth Strategy Index
vs. the S&P 500* (December 31, 1952 - December 31, 1997)

Year Ending S&P 500 Cornerstone Growth Strategy
12/31/53 -0.99% 0.40%
12/31/54 52.62% 56.70%
12/31/55 31.56% 30.40%
12/31/56 6.56% 18.00%
12/31/57 -10.78% -17.90%
12/31/58 43.36% 52.80%
12/31/59 11.96% 24.10%
12/31/60 0.47% 12.60%
12/31/61 26.89% 51.10%
12/31/62 -8.73% -17.20%
12/31/63 22.80% 20.80%
12/31/64 16.48% 30.00%
12/31/65 12.45% 44.10%
12/31/66 -10.06% -0.10%
12/31/67 23.98% 83.30%
12/31/68 11.06% 50.50%
12/31/69 -8.50% -28.10%
12/31/70 4.01% -2.60%
12/31/71 14.31% 32.10%
12/31/72 18.98% 19.70%
12/31/73 -14.66% -27.50%
12/31/74 -26.47% -29.10%
12/31/75 37.20% 37.60%
12/31/76 23.84% 32.50%
12/31/77 -7.18% 26.40%
12/31/78 6.56% 38.30%
12/31/79 18.44% 38.70%
12/31/80 32.42% 62.70%
12/31/81 -4.91% -9.00%

Year Ending S&P 500 Cornerstone Growth Strategy
12/31/82 21.41% 37.10%
12/31/83 22.51% 32.70%
12/31/84 6.27% -2.00%
12/31/85 32.16% 42.50%
12/31/86 18.47% 17.70%
12/31/87 5.23% -5.40%
12/31/88 16.81% 29.70%
12/31/89 31.49% 23.80%
12/31/90 -3.17% -3.30%
12/31/91 30.55% 51.40%
12/31/92 7.67% 25.50%
12/31/93 9.99% 30.30%
12/31/94 1.31% -5.30%
12/31/95 37.43% 18.20%
12/31/96 23.07% 31.52%
12/31/97 33.36% 31.30%

+ Returns for 1997 are actual for the Cornerstone Growth Fund, net of fees and
expenses.

* This Chart and the Index Performance Statistics and Comparisons represent past
performance of the S&P 500, an unmanaged index of securities, and the
Cornerstone Growth Startegy, but not the Cornerstone Growth Fund, applied
retroactively, and should not be considered indicative of future results. The
performance of the strategy shown is a hypothetical example of the performance
of the strategy found in the backtest, using an initial $10,000 value, if the
Strategy had been in existence and employed from 1952 through 1996, together
with the actual return of the O'Shaughnessy Cornerstone Growth Fund for 1997.
Performance of the Strategy and the S&P 500 do not reflect advisory fees,
commissions, expenses or taxes that the Fund bears. The Strategy's performance
as well as that of the S&P 500 would be lower if such fees and expenses were
deducted. Read the prospectus carefully before investing.

Date S&P 500 Cornerstone
Value Fund

31-Dec-51 10,000 10,000
31-Dec-52 11,837 11,430
31-Dec-53 11,720 11,567
31-Dec-54 17,887 17,640
31-Dec-55 23,532 22,597
31-Dec-56 25,076 25,941
31-Dec-57 22,372 22,439
31-Dec-58 32,073 32,514
31-Dec-59 35,909 35,635
31-Dec-60 36,078 35,625
31-Dec-61 45,779 44,317
31-Dec-62 41,783 43,165
31-Dec-63 51,309 51,280
31-Dec-64 59,765 61,690
31-Dec-65 67,205 72,547
31-Dec-66 60,445 65,147
31-Dec-67 74,939 80,587
31-Dec-68 83,227 101,943
31-Dec-69 76,153 86,652
31-Dec-70 79,207 96,443
31-Dec-71 90,541 111,681
31-Dec-72 107,726 127,317
31-Dec-73 91,933 119,805
31-Dec-74 67,599 105,069
31-Dec-75 92,745 166,219
31-Dec-76 114,856 231,377
31-Dec-77 106,609 239,012
31-Dec-78 113,603 246,900
31-Dec-79 134,551 310,106
31-Dec-80 178,173 373,058
31-Dec-81 169,424 420,809
31-Dec-82 205,698 503,288
31-Dec-83 252,001 697,557
31-Dec-84 267,801 730,342
31-Dec-85 353,926 985,961
31-Dec-86 419,296 1,189,070
31-Dec-87 441,225 1,327,002
31-Dec-88 515,395 1,678,657
31-Dec-89 677,693 2,309,832
31-Dec-90 656,210 2,148,144
31-Dec-91 856,683 2,940,809
31-Dec-92 922,390 3,281,943
31-Dec-93 1,014,537 3,951,459
31-Dec-94 1,027,828 4,141,129
31-Dec-95 1,406,068 5,246,810
31-Dec-96 1,730,448 6,395,862
31-Dec-97 2,307,725 7,374,429

O'Shaughnessy Cornerstone Value Strategy Index
vs. the S&P 500* (December 31, 1951 - December 31, 1997)

Year Ending S&P 500 Cornerstone Value Strategy
12/31/52 18.37% 14.30%
12/31/53 -0.99% 1.20%
12/31/54 52.62% 52.50%
12/31/55 31.56% 28.10%
12/31/56 6.56% 14.80%
12/31/57 -10.78% -13.50%
12/31/58 43.36% 44.90%
12/31/59 11.96% 9.60%
12/31/60 0.47% -0.03%
12/31/61 26.89% 24.40%
12/31/62 -8.73% -2.60%
12/31/63 22.80% 18.80%
12/31/64 16.48% 20.30%
12/31/65 12.45% 17.60%
12/31/66 -10.06% -10.20%
12/31/67 23.98% 23.70%
12/31/68 11.06% 26.50%
12/31/69 -8.50% -15.00%
12/31/70 4.01% 11.30%
12/31/71 14.31% 15.80%
12/31/72 18.98% 14.00%
12/31/73 -14.66% -5.90%
12/31/74 -26.47% -12.30%
12/31/75 37.20% 58.20%
12/31/76 23.84% 39.20%
12/31/77 -7.18% 3.30%
12/31/78 6.56% 3.30%
12/31/79 18.44% 25.60%
12/31/80 32.42% 20.30%

Year Ending S&P 500 Cornerstone Value Strategy
12/31/81 -4.91% 12.80%
12/31/82 21.41% 19.60%
12/31/83 22.51% 38.60%
12/31/84 6.27% 4.70%
12/31/85 32.16% 35.00%
12/31/86 18.47% 20.60%
12/31/87 5.23% 11.60%
12/31/88 16.81% 26.50%
12/31/89 31.49% 37.60%
12/31/90 -3.17% -7.00%
12/31/91 30.55% 36.90%
12/31/92 7.67% 11.60%
12/31/93 9.99% 20.40%
12/31/94 1.31% 4.80%
12/31/95 37.43% 26.70%
12/31/96 23.07% 21.90%
12/31/97 33.36% 15.30%

+ Returns for 1997 are actual for the Cornerstone Value Fund, net of fees and
expenses. * This Chart and the Index Performance Statistics and Comparisons
represent past performance of the S&P 500, an unmanged index of securities, and
the Cornerstone Value Strategy, but not the Cornerstone Value Fund, applied
retroactively, and should not be considered indicative of future results. The
performance of the strategy shown is a hypothetical example of the performance
of the strategy found in the backtest, using an intital $10,000 value, if the
Strategy had been in existence and employed from 1951 through 1996, together
with the actual return of the O'Shaughnessy Cornerstone Value Fund for 1997.
Performance of the Strategy and the S&P 500 do not reflect advisory fees,
commissions, expenses or taxes that the Fund bears. The Strategy's performance
as well as that of the S&P 500 would be lower if such fees and expanses were
deducted. Read the prospectus carefully before investing.

Summary results for S&P 500 and Hypothetical Results
for Cornerstone Growth Strategy Stocks,
December 31, 1952 - December 31, 1997.++

Cornerstone
S&P 500
Growth Strategy
Arithmetic average+ 13.74% 21.93%
Standard deviation of return+ 16.91% 25.34%
Sharpe risk-adjusted ratio* 49.00 65.00
1-yr return** 33.36% 31.30%
3-yr compounded**+ 31.15% 26.85%
5-yr compounded**+ 20.24% 20.29%
10-yr compounded**+ 18.05% 22.21%
15-yr compounded**+ 17.52% 19.96%
20-yr compounded**+ 16.65% 22.69%
25-yr compounded**+ 13.06% 18.57%
30-yr compounded**+ 12.12% 17.23%
35-yr compounded**+ 12.16% 19.35%
40-yr compounded**+ 12.30% 19.64%
Compound Annual Return 12.44% 19.09%

$10,000 becomes : $1,958,565 $25,929,405

Maximum return 52.62% 83.30%
Minimum return -26.47% -29.10%

+ Returns for 1997 are actual for Cornerstone Growth Fund, net of fees and
expenses.

* The Sharpe risk-adjusted ratio (the "Sharpe ratio") takes a portfolio's
volatility, as measured by its standard deviation of return, into account. The
higher the Sharpe ratio, the better the portfolio's risk-adjusted return. The
Sharpe ratio is calculated by subtracting the risk free Treasury bill return
from the portfolio's return and then dividing that number by the portfolio's
overall standard deviation of return.

** Quoted return is for the most recent period ended December 31, 1997.

++ These Statistics and Comparisons represent past performance of the S&P 500,
an unmanaged index of securities, and the Cornerstone Growth Strategy, but not
the Cornerstone Growth Fund, applied retroactively, and should not be considered
indicative of future results. The performance of the strategy shown is a
hypothetical example of the performance of the strategy found in the backtest,
using an initial $10,000 value, if the Strategy had been in existence and
employed from 1952 through 1996, together with the actual return of the
O'Shaughnessy Cornerstone Growth Fund for 1997. Performance of the Strategy and
the S&P 500 do not reflect advisory fees, commissions, expenses or taxes that
the Fund bears. The Strategy's performance as well as that of the S&P 500 would
be lower if such fees and expenses were deducted. Read the prospectus carefully
before investing.

Summary results for S&P 500 and Hypothetical Results
for Cornerstone Value Strategy Stocks
December 31, 1951 - December 31, 1997.++

Cornerstone
S&P 500
Value Strategy
Arithmetic average + 13.84% 16.65%
Standard deviation of return+ 16.73% 16.76%
Sharpe risk-adjusted ratio* 51.00 67.00
1-yr return**+ 33.36% 15.30%
3-yr compounded**+ 31.15% 21.21%
5-yr compounded**+ 20.24% 17.58%
10-yr compounded**+ 18.05% 18.71%
15-yr compounded**+ 17.52% 19.60%
20-yr compounded**+ 16.65% 18.70%
25-yr compounded**+ 13.06% 17.63%
30-yr compounded**+ 12.12% 16.25%
35-yr compounded**+ 12.16% 15.82%
40-yr compounded**+ 12.30% 15.59%
Compound Annual Return 12.57% 15.44%

$10,000 becomes+: $2,318,353 $7,374,429

Maximum return 52.62% 58.20%
Minimum return -26.47% -15.00%

+Returns for 1997 are actual for the Cornerstone Value Fund, net of fees and
expenses.

** Quoted return is for the most recent period ended December 31, 1997.

++These Statistics and Comparisons represent past performance of the S&P 500, an
unmanaged index of securities, and the Cornerstone Value Strategy, but not the
Cornerstone Value Fund, applied retroactively, and should not be considered
indicative of future results. The performance of the strategy shown is a
hypothetical example of the performance of the strategy found in the backtest,
using an initial $10,000 value, if the Strategy had been in existence and
employed from 1952 through 1996, together with the actual return of the
O'Shaughnessy Cornerstone Value Fund for 1997. Performance of the Strategy and
the S&P 500 do not reflect advisory fees, commissions, expenses or taxes that
the Fund bears. The Strategy's performance as well as that of the S&P 500 would
be lower if such fees and expenses were deducted. Read the prospectus carefully
before investing.

OTHER INVESTMENT POLICIES AND PRACTICES

This section takes a detailed look at other investment policies and practices of
the Funds. The Funds' investments are subject to further restrictions and risks
described in the Statement of Additional Information.

Shareholder approval is required to change a Fund's investment objective and
certain investment restrictions noted in the following section as "fundamental
policies." The Manager also follows certain "operating policies" which can be
changed without shareholder approval. However, significant changes in operating
policies are discussed with shareholders in Fund reports.

The Funds' holdings in certain kinds of investments cannot exceed maximum
percentages of total assets, which are set forth below. While these restrictions
provide a useful level of detail about a Fund's investments, investors should
not view them as an accurate gauge of the potential risk of such investments.
The net effect of a particular investment depends on its volatility and the size
of its overall return in relation to the performance of all the Fund's other
investments.

Cash and Short-Term Securities. Each Fund may temporarily invest a portion of
its total assets in cash or liquid short-term securities pending investment of
such assets in stocks in accordance with the Fund's Strategy, to meet redemption
requests, and to the extent necessary to comply with the federal tax laws
applicable to regulated investment companies. The Manager will not use
investments in cash and short-term securities for temporary defensive purposes.

Short-term securities in which the Funds may invest include certificates of
deposit, commercial paper, notes, obligations issued or guaranteed by the U.S.
Government or any of its agencies or instrumentalities, and repurchase
agreements involving such securities. See "Repurchase Agreements," below.

The Manager does not expect assets invested in cash or liquid short-term
securities to exceed 5% of the Fund's total assets at any time.

Repurchase Agreements. As described above in "Cash and Short-Term Securities,"
each Fund may invest in short-term securities pursuant to repurchase agreements.
The Funds may only enter into repurchase agreements with a member bank of the
Federal Reserve System or well-established securities dealer in U.S. government
securities. In the event of a bankruptcy or default by the seller of the
repurchase agreement, the Fund may suffer delays and incur costs or possible
losses in liquidating the underlying security which is held as collateral, and
the Fund may incur a loss if the value of the collateral declines during this
period. As a matter of operating policy, the Fund may not invest more than 15%
of a Fund's total assets in repurchase agreements maturing in more than seven
days.

Lending of Portfolio Securities. Like other mutual funds, each Fund may from
time to time lend securities from its portfolio to banks, brokers and other
financial institutions to earn additional income. The principal risk is that the
borrower may default on its obligation to return borrowed securities, because of
insolvency or otherwise. In this event, the Fund could experience delays in
recovering its securities and capital. In accordance with applicable law, each
Fund may not lend portfolio securities representing in excess of 33 1/3% - Note
only - per SAI of its respective total assets. The lending policy is a
fundamental policy.

Borrowing. Each Fund may borrow money in an amount up to 33% of its respective
total assets from banks for extraordinary or emergency purposes such as meeting
anticipated redemptions, and may pledge assets in connection with such
borrowing. The borrowing policy is a fundamental policy.

Industry Concentration. Each Fund may not invest more than 25% of its total
assets in any one industry (excluding U.S. Government securities). If upon
rebalancing, the stocks selected by a Fund's Strategy would result in more than
25% of the Fund's total assets being invested in a single industry, the Manager
will be required to deviate from the Strategy in investing the portfolio so as
not to violate the Fund's concentration policy. The concentration policy is a
fundamental policy.

Futures (a type of potentially high-risk derivative) are often used to manage or
hedge risk, because they enable the investor to buy or sell an asset in the
future at an agreed upon price. Options (another potentially high-risk
derivative) give the investor the right, but not the obligation, to buy or sell
an asset at a predetermined price in the future. The Fund may buy and sell
futures and options contracts for any number of reasons, including: to manage
its exposure to changes in securities prices; as an efficient means of
adjusting its overall exposure to certain markets; in an effort to enhance
income; and to protect the value of portfolio securities. The Fund may purchase,
sell, or write call and put options on securities, financial indices and
futures.

As a matter of operating policy, initial margin deposits and premiums on options
used for nonhedging purpose will not equal more than 5% of the Fund's net asset
value.

Foreign Securities. The Funds may invest in securities of foreign issuers,
either through (i) direct purchase of securities of foreign issuers or (ii)
purchase of American Depository Receipts ("ADRs") which are dollar-denominated
securities of foreign issuers traded in the U.S. Such investments increase
diversification of the Funds' portfolio and may enhance return, but they also
involve some special risks such as exposure to potentially adverse local
political and economic developments, nationalization and exchange controls;
potentially lower liquidity and higher volatility; possible problems arising
from regulatory practices that differ from U.S. standards; the imposition of
withholding taxes on income from such securities; confiscating taxation; and the
chance that fluctuations in foreign exchange rates will decrease the
investment's value (favorable changes can increase its value). These risks are
heightened for investment in developing countries and there is no limit on the
amount of the Fund's foreign investments that may be invested in such countries.

The Funds may invest in ADRs through both sponsored and unsponsored
arrangements. The issuers of unsponsored ADRs are not obligated to disclose
material information in the United States, and therefore, there may not be a
correlation between such information and the market value of the ADRs.

Diversification. In order to maintain each Fund's status as a diversified
investment company, with respect to 75% of the Fund's total assets: 1) not more
than 5% of the Fund's assets may be invested in the securities of a single
issuer (excluding U.S. Government Securities); and 2) the Fund may not hold more
than 10% of the outstanding voting securities of a single issuer. The
diversification policy is a fundamental policy.

Portfolio Transactions. In executing portfolio transactions, the Funds seek to
obtain the best net results, taking into account such factors as price
(including the applicable brokerage commission or dealer spread), size of order,
difficulty of execution, operational facilities of the firm involved and the
firm's risk in positioning a block of securities. While the Funds generally
seek reasonably competitive commission rates, the Funds do not necessarily pay
the lowest commission or spread available. In addition, consistent with the
Conduct Rules of the National Association of Securities Dealers, Inc., the
Manager may consider sales of shares of the Funds as a factor in the selection
of brokers or dealers to execute portfolio transactions for the Funds.

Portfolio Turnover. As described above, in accordance with each Fund's
Strategy, the Fund's portfolio will be rebalanced based on information on or
about December 31 of each year. That is, stocks meeting the respective
Strategy's criteria will be purchased for the portfolio to the extent not then
held, stocks which no longer meet the criteria will be sold, and the holdings of
all stocks in the portfolio that continue to meet the criteria will be
appropriately increased or decreased to result in equal weighting of all stocks
in the portfolio. Under normal conditions, the annual turnover rate should not
exceed 100% and 50% for the Cornerstone Growth Fund and Cornerstone Value Fund,
respectively.

COMPUSTAT Database. Although S&P Compustat obtains information for inclusion in
or for use in the COMPUSTAT Database from sources which S&P Compustat considers
reliable, S&P Compustat does not guarantee the accuracy or completeness of the
COMPUSTAT Database. S&P Compustat makes no warranty, express or implied, as to
the results to be obtained by the Funds, or any other persons or entity from the
use of the COMPUSTAT Database. S&P Compustat makes no express or implied
warranties, and expressly disclaims all warranties of merchantability or fitness
for a particular purpose with respect to the COMPUSTAT Database. "Standard &
Poor's" and "S&P" are trademarks of The McGraw-Hill Companies, Inc. The Funds
are not sponsored, endorsed, sold or promoted by S&P Compustat and S&P Compustat
makes no representation regarding the advisability of investing in the Funds.

RISK FACTORS

The Strategy Indexing utilized by each Fund provides a disciplined approach to
investing, based on a buy and hold philosophy during the course of each year,
which ignores market timing and rejects active management. Each Fund will adhere
to its respective Strategy (subject to applicable federal tax requirements
relating to mutual funds), despite any adverse developments concerning an
issuer, an industry, the economy or the stock market generally. This could
result in substantial losses to a Fund, if for example, the stocks selected for
a Fund's portfolio for a given year are experiencing financial difficulty, or
are out of favor in the market because of weak performance, poor earnings
forecast, negative publicity or general market cycles. The Funds are not
appropriate investments for those who are not comfortable with a Fund's
Strategy.

There can be no assurance that the market factors that caused the stocks held in
a Fund's portfolio to meet a Strategy's investment criteria as of rebalancing in
any given year will continue during such year until the next rebalancing, that
any negative conditions adversely affecting a stock's price will not develop
and/or deteriorate during a given year, or that share prices of a stock will not
decline during a given year.

As described above, each Fund's portfolio is rebalanced annually in accordance
with its respective Strategy. Rebalancing may result in elimination of better
performing assets from a Fund's portfolio and increases in investments in
securities with relatively lower total return.

What are some potential risks associated with investing primarily in common
stocks?

The fundamental risk associated with any common stock fund is the risk that the
value of the stocks it holds might decrease. Stock values may fluctuate in
response to the activities of an individual company or in response to general
market and/or economic conditions. Historically, common stocks have provided
greater long-term returns and have entailed greater short-term risks than other
investment choices. Smaller or newer issuers are more likely to realize more
substantial growth as well as suffer more significant losses than larger or more
established issuers. Investments in such companies can be both more volatile and
more speculative. The Funds are not appropriate investments for those who are
unable or unwilling to assume the risk involved generally with investment in
common stocks.

Are there any additional risks associated with investment in the Funds?

There is no guarantee that the investment objective of a Fund will be achieved
or that the value of a shareholder's investment in the Fund will not decrease.

MANAGEMENT AND ORGANIZATION OF THE FUNDS

MANAGEMENT

Who runs the Funds?

General Oversight. O'Shaughnessy Funds, Inc. is governed by a Board of
Directors that meets regularly to review the Funds' investment, performance,
expenses, and other business affairs. The Board elects the Funds' officers.

Manager. O'Shaughnessy Capital Management, Inc. acts as investment manager of
each Fund pursuant to a management agreement with O'Shaughnessy Funds on behalf
of the Fund (the "Management Agreement"). In its capacity as investment manager,
the Manager is responsible for selection and management of each Fund's portfolio
investments. For its services, each Fund pays the Manager a fee each month, at
the annual rate of 0.74% of the Fund's average daily net assets.

The Manager's office is located at 35 Mason Street, Greenwich, Connecticut
06830. O'Shaughnessy Capital Management, Inc. was incorporated in 1988. The
Manager serves as portfolio consultant to a unit investment trust and provides
investment advisory services to investment companies and individual and
institutional accounts with assets in excess of $800 million.

Portfolio Management. James P. O'Shaughnessy has had the day-to-day
responsibility for managing the portfolio of each Fund and developing and
executing each Fund's investment program since the commencement of operations of
each Fund. For the past ten years, Mr. O'Shaughnessy has served as Chairman and
CEO of the Manager, and in such capacity, has managed equity accounts for high
net worth individuals and served as portfolio consultant to a unit investment
trust. Mr. O'Shaughnessy is recognized as a leading expert and pioneer in
quantitative equity analysis. He is the author of three financial books, Invest
Like the Best, What Works on Wall Street and How to Retire Rich.

Distributor. First Fund Distributors, Inc. (the "Distributor"), a registered
broker-dealer, acts as the principal distributor of the shares of the Funds. The
address of the Distributor is 4455 E. Camelback Road, Suite 261 E, Phoenix,
Arizona 85018. The Distributor provides distribution services to the Funds at no
cost to the Funds.

Administrator. Pursuant to an Administration Agreement, Investment Company
Administration, LLC (the "Administrator") serves as administrator of the Funds.
The Administrator provides certain administrative services, including, among
other responsibilities, coordinating relationships with independent contractors
and agents, preparing for signature by officers and filing of certain documents
required for compliance with applicable laws and regulations, preparing
financial statements, and arranging for the maintenance of books and records.
For its services, each Fund pays the Administrator a fee each month, at the
annual rate of 0.10% of the first $100 million of the Fund's average daily net
assets, 0.05% of the next $100 million of such net assets, and 0.03% of such net
assets over $200 million, with a minimum fee of $40,000 annually per Fund. The
address of the Administrator is 4455 E. Camelback Rd., Suite 261 E, Phoenix,
Arizona 85018. The Administrator and the Distributor are under common control
and are therefore considered affiliates of each other.

Transfer Agent and Custodian. Firstar Mutual Fund Services, LLC acts as the
Funds' transfer and dividend disbursing agent (the "Transfer Agent"). Firstar
Bank Milwaukee is the Funds' custodian (the "Custodian"). The address of the
Transfer Agent and Custodian is 615 E. Michigan Street, Third Floor, Milwaukee,
Wisconsin 53202.

How are expenses of the Funds determined?

The Management Agreement identifies the expenses to be paid by each Fund. In
addition to the fees paid to the Manager, each Fund pays certain additional
expenses, including but not limited to, the following: shareholder service
expenses; custodial, accounting, legal, and audit fees; administrative fees;
costs of preparing and printing prospectuses and reports sent to shareholders;
registration fees and expenses; proxy and annual meeting expenses (if any); and
independent Director fees and expenses.

ORGANIZATION

How are the Funds organized?

The Funds are investment portfolios or series of O'Shaughnessy Funds. There are
two other investment portfolios of O'Shaughnessy Funds, shares of which are not
offered for sale through this Prospectus: O'Shaughnessy Aggressive Growth Fund
and O'Shaughnessy Dogs of the Market Fund (the "other O'Shaughnessy Funds").
The charter of O'Shaughnessy Funds provides that the Board of Directors may
issue additional investment portfolios of shares and/or additional classes of
shares for each investment portfolio. O'Shaughnessy Funds was organized as a
corporation in Maryland on May 20, 1996.

What is meant by "shares"?

As with all mutual funds, investors purchase shares when they invest in the
Funds. These shares are a part of the Funds' authorized capital stock, but share
certificates are not generally issued.

Each full share and fractional share entitles the shareholder to: receive a
proportional interest in the respective Fund's capital gain distributions; and
cast one vote per share on certain Fund matters, including the election of
Directors, changes in fundamental policies, or approval of changes in the
Management Agreement.

Shareholder inquiries may be addressed to each Fund at the address or telephone
number set forth on the cover page of this Prospectus.

Do the Funds have annual shareholder meetings?

The Funds are not required to hold annual meetings and do not intend to do so
except when certain matters, such as a change in a Fund's fundamental policies,
are to be decided. In addition, shareholders representing at least 10% of all
eligible votes may call a special meeting if they wish, for the purpose of
voting on the removal of any Fund Director. If a meeting is held and you cannot
attend, you can vote by proxy. Before the meeting, you will be sent proxy
materials that explain the issues to be decided and include a voting card for
you to mail back.

INFORMATION ABOUT YOUR ACCOUNT

PURCHASE OF SHARES

Investors may make an initial purchase of shares and subsequent investments in a
Fund by mail or wire as described below. The Funds reserve the right in their
sole discretion to waive the minimum investment amounts, including in the case
of investments by employees and affiliates of the Manager and family members of
any of the foregoing, and Individual Retirement Accounts ("IRAs") of
shareholders of the Funds, and certain purchase programs made available to
clients of financial intermediaries eligible to sell shares of the Fund.

How do I purchase shares by mail?

For initial investments, please send a completed Application, together with a
check payable to O'Shaughnessy Cornerstone Value Fund or O'Shaughnessy
Cornerstone Growth Fund, as the case may be, to O'Shaughnessy Funds, Inc., c/o
Firstar Mutual Fund Services, LLC, at P.O. Box 701, Milwaukee, WI 53201-0701
(for Applications sent by U.S. mail) or 615 E. Michigan Street, Third Floor,
Milwaukee, WI 53202 (for Applications sent via overnight courier). Subsequent
investments must be accompanied by a letter indicating the name(s) in which the
account is registered and the account number or by the remittance portion of the
account statement and mailed to the address stated above.

How do I purchase shares by wire?

What is the purchase price of Fund shares and when do purchases become
effective?

Purchases of Fund shares become effective and shares will be priced at the net
asset value per share ("NAV") next determined after the investor's check or wire
is received by the Transfer Agent. NAV for each Fund is calculated as of the
close of business on the New York Stock Exchange ("NYSE") (currently 4:00 pm,
Eastern time). If your request is received in correct form before 4:00 pm,
Eastern time, your transaction will be priced at that day's NAV. If your request
is received after 4:00 pm, it will be priced at the next business day's NAV.
Orders that request a particular day or price for your transaction or any other
special conditions cannot be accepted.

The purchase order must include the documentation specified above. Please do not
send purchase orders to the Funds; the Funds forward purchase orders to the
Transfer Agent and a purchase will not become effective until the Transfer Agent
receives all the necessary documentation.

What are the conditions of purchase?

All purchase orders are subject to acceptance or rejection by the Funds or the
Distributor, in their sole discretion. The offering of shares may be suspended
whenever a Fund considers suspension desirable or when required by any order,
rule or regulation of any governmental body having jurisdiction. Checks and
money orders should be drawn on United States banks; the Funds and the
Distributor reserve the right to reject checks drawn on foreign banks.

The Transfer Agent will mail a confirmation of each completed purchase to the
investor. If an order is canceled because an investor's check does not clear,
the investor will be responsible for any loss incurred by the respective Fund,
the Transfer Agent, the Distributor, the Administrator or the Manager. If the
investor is already a shareholder, the Fund may redeem shares from the account
to cover any loss. If the investor is not a shareholder or if the loss is
greater than the value of the shareholder's account, the Distributor will be
responsible for any loss to the Fund, and will have the right to recover such
amount from the investor.

Who do I contact if I have questions about my account or need additional
information concerning investment in the Funds?

If you have investment questions about the Funds, or if you would like any
additional information relating to an investment in the Funds, please call
877-OSFUNDS (673-8637) (toll-free), or write to the Distributor at First Fund
Distributors, Inc., 4455 E. Camelback Road, Suite 261 E, Phoenix AZ 85018. If
you are a shareholder and have questions about your account, or if you wish to
arrange for wire transactions, please call the Fund at (877-OSFUNDS (673- 8637).
Before telephoning, please be sure to have your account number and social
security number or employer tax identification number readily available.

Will I receive share certificates for shares purchased?

Share certificates will not be issued for shares unless the investor sends a
written request for certificates to O'Shaughnessy Funds, Inc., c/o Firstar
Mutual Fund Services, LLC at P.O. Box 701, Milwaukee, WI 53201-0701 (for
requests sent via U.S. mail) or 615 E. Michigan Street, Third Floor, Milwaukee,
WI 53202 (for requests sent via overnight courier). Share certificates are
issued only for full shares and may be redeposited in the shareholder's account
at any time. In order to facilitate redemptions and exchanges, most shareholders
elect not to receive certificates, since a shareholder wishing to redeem or
exchange shares represented by a certificate must surrender such certificate,
properly endorsed on the reverse side together with a signature guarantee. (See
"Redemption of Shares - When are signature guarantees required?" below). If a
certificate is lost, the shareholder may incur an expense in replacing it.

Can I purchase shares through broker-dealers other than the Distributor?

Investors may also arrange to purchase shares of each Fund through other outside
broker-dealers with which O'Shaughnessy Funds does not have an arrangement, and
such broker-dealers may purchase shares of the Fund by telephone if they have
made arrangements in advance with the Fund. To place a telephone order such
broker-dealer should call the Fund at 877-OSFUNDS (673-8637).

Purchases by broker-dealers become effective and shares will be priced as
described above. If an investor purchases shares through broker-dealers other
than the Distributor, such broker-dealers may charge the investor a service fee
that is reasonable for the service performed, bearing in mind that the investor
could have acquired or redeemed each Fund's shares directly without the payment
of any fee. No part of any such service fee will be received by the Distributor,
the Manager, the Administrator or the Funds.

EXCHANGE PRIVILEGE

Shares of each Fund may be exchanged for shares of each of the other
O'Shaughnessy Funds (i.e., O'Shaughnessy Aggressive Growth Fund and
O'Shaughnessy Dogs of the Market Fund and, as the case may be, O'Shaughnessy
Cornerstone Growth Fund or O'Shaughnessy Cornerstone Value Fund). Prospectuses
for the other O'Shaughnessy Funds may be obtained by writing to the Distributor
at 4455 E. Camelback Road, Suite 261 E, Phoenix AZ 85018, Attention:
O'Shaughnessy Funds, Inc. or by calling 877-OSFUNDS (673-8637) (toll-free).

You may also exchange shares of either Fund for shares of the Firstar Money
Market Fund, a money market mutual fund not affiliated with O'Shaughnessy Funds
or the Manager. Prior to making such an exchange, you should obtain and
carefully read the prospectus for the Firstar Money Market Fund. The exchange
privilege does not constitute an offering or recommendation on the part of the
Funds or the Manager of an investment in the Firstar Money Market Fund.

Is there any sales charge or minimum investment applicable to an exchange?

Shareholders of the Funds may exchange their Fund shares, without the payment of
any sales or service charge unless the exchange is effected via telephone
instructions for which a $5.00 charge will be levied or on shares held less than
90 days for which a redemption fee will be charged (see "Information About Your
Account - Redemption of Shares"), for shares of any other fund into which an
exchange is permitted equal in value to the net asset value of the shares being
exchanged. All exchanges are subject to all applicable terms set forth in the
prospectus of the fund into which the exchange is being made. If a shareholder
exchanges shares through a broker-dealer other than the Distributor, such
broker-dealer may charge the shareholder a service fee, no part of which will be
received by the Distributor, the Manager, the Funds, or the fund into which the
exchange is being made.

At what price is an exchange effected?

Do current instructions concerning receipt of dividends and distributions carry
over to exchanged shares?

What are the conditions applicable to an exchange?

Exchanges involving the redemption of shares recently purchased by personal,
corporate or government check will be permitted only after the respective Fund
has reasonable belief that the check has cleared, which may take up to fifteen
days after the purchase date. The exchange privilege is available only in states
where shares of the other O'Shaughnessy Funds or the Firstar Money Market Fund
may be sold legally.

Each of the Funds, the other O'Shaughnessy Funds and the Firstar Money Market
Fund reserves the right to reject any order to acquire its shares through
exchange or otherwise and to restrict or terminate the exchange privilege at any
time. If the exchange privilege is to be permanently terminated, each Fund will
provide its shareholders with written notice of such termination. Each Fund
reserves the right to suspend temporarily the telephone exchange privilege in
emergency circumstances or in cases where, in the judgment of the Fund,
continuation of the privilege would be detrimental to the Fund and its
shareholders as a whole. Such temporary suspension can be without prior
notification.

How can I make exchanges by telephone?

Shareholders who have completed the section of the Fund's Application entitled
"Shareholder Privileges" are eligible to make telephone requests for exchanges
and may do so by telephoning the Fund at 877-OSFUNDS (673-8637). A shareholder
who has not completed the Shareholder Privileges section of the Application but
who wishes to become eligible to make telephone exchanges should designate a
change in such instructions by writing to the Transfer Agent. Please note that
such changed instructions must (i) be signed by the registered owner(s) of the
shares exactly as the account is registered and signature guaranteed, and (ii)
include the name of the account, the account number and the name of the Fund to
which the exchange instructions relate. See "Redemption of Share - How do I
redeem shares by telephone?" below, which describes the time of day at which
telephone redemptions and exchanges will be priced and processed. Telephone
requests for exchanges cannot be accepted with respect to shares represented by
certificates. Shares of the other O'Shaughnessy Funds or the Firstar Money
Market Fund acquired pursuant to a telephone request for exchange will be held
under the same account registration as the shares redeemed through the exchange.

The Funds will employ reasonable procedures to confirm that instructions
communicated by telephone are genuine. Neither the Funds nor any of their
service contractors will be liable for any loss or expense in acting on
telephone instructions that are reasonably believed to be genuine. In attempting
to confirm that telephone instructions are genuine, the Funds will use
procedures that are considered reasonable, including requesting a shareholder to
correctly state the account number, the names in which the account is
registered, the social security number(s) registered to the account, and certain
additional personal identification..

Shareholders should be aware that, at times, the volume of telephone calls or
other factors beyond a Fund's control may make it difficult to reach the
Transfer Agent by telephone. This will be true particularly during periods of
drastic economic market changes. In such cases, shareholders should continue to
telephone or utilize the written exchange procedures described below.

Shareholders who effect exchanges of Fund shares by telephone will be charged a
$5.00 exchange fee.

How do I make exchanges by mail?

To exchange Fund shares by mail, send a written request for exchange signed by
the registered owner(s) of the shares, exactly as the account is registered, to
O'Shaughnessy Funds, Inc., c/o Firstar Mutual Fund Services, LLC, at P.O. Box
701, Milwaukee, WI 53201-0701 (for requests sent by U.S. mail) or 615 E.
Michigan Street, Third Floor, Milwaukee, WI 53202 (for requests sent via
overnight courier). The request for exchange should include the following
information: the name of the account, the account number, the number of Fund
shares or the dollar value of Fund shares to be exchanged, the shares of which
other fund (either another O'Shaughnessy Fund or the Firstar Money Market Fund)
shares of the Fund are to be exchanged for, and the name on the account and the
account number (if already established) with such other fund.

REDEMPTION OF SHARES

How do I redeem shares by mail?

To redeem shares by mail, send a written request for redemption signed by the
registered owner(s) of the shares, exactly as the account is registered to
O'Shaughnessy Funds, Inc., c/o Firstar Mutual Fund Services, LLC, at P.O. Box
701, Milwaukee, WI 53201-0701 (for requests sent via U.S. mail) or 615 E.
Michigan Street, Third Floor, Milwaukee, WI 53202 (for requests sent via
overnight courier). The request for exchange should include the following: the
name of the account, the account number, the number of shares or the dollar
value of shares to be redeemed and whether proceeds are to be sent by mail or
wire, and if by wire, giving the wire instructions; (ii) duly endorsed share
certificates, if any have been issued for the shares redeemed; (iii) any
signature guarantees that are required as described below; and (iv) any
additional documents which might be required for redemptions by corporations,
executors, administrators, trustees, guardians or other similar shareholders.
Except as otherwise directed by a Fund in its discretion, the Transfer Agent
will not redeem shares until it has received all necessary documents; corporate
and institutional investors and fiduciaries should contact the Transfer Agent to
ascertain what additional documentation is required.

When would I pay a redemption fee?

The Funds can experience substantial price fluctuations and are intended for
long-term investors. Short-term "market timers" who engage in frequent purchases
and redemptions can disrupt the Funds' investment programs and create additional
transaction costs that are borne by all shareholders. For these reasons each
Fund will assess a 1.5% fee on redemptions (including exchanges) of Fund shares
purchased and held for less than 90 days.

Redemption fees will be paid to the Fund to help offset transaction costs. The
Fund will use the "first-in, first-out" (FIFO) method to determine the 90 day
holding period. Under this method, the date of redemption or exchange will be
compared with the earliest purchase date of shares held in the account. If this
holding period is less than 90 days, the fee will be assessed.

May I send redemption requests to the Funds?

Please do not send redemption requests to the Funds. The Funds must forward all
redemption requests to the Transfer Agent and instructions for redemption will
not be effective until received by the Transfer Agent. Shares redeemed will be
priced at the net asset value per share next determined after acceptance of a
complete redemption request by the Transfer Agent. Redemption requests received
by the Transfer Agent after the close of the NYSE (currently 4:00 pm, Eastern
time) will be treated as though received on the next business day. The Transfer
Agent cannot accept redemption requests that specify a particular date for
redemption or special redemption conditions.

When are signature guarantees required?

The Funds will waive the signature guarantee requirement on a redemption request
that instructs that the proceeds be sent by mail if all of the following
conditions apply: (i) the redemption is for $10,000 or less; (ii) the redemption
check is payable to the shareholder(s) of record; (iii) the redemption check is
mailed to the shareholder(s) at the address of record; and (iv) no shares
represented by certificate are being redeemed. Share certificates submitted for
redemption or exchange must be properly endorsed and contain signature
guarantees. In addition, each Fund in its discretion may waive the signature
guarantee for employees and affiliates of the Manager, the Distributor and the
Administrator, and family members of the foregoing.

The requirement of a guaranteed signature protects against an unauthorized
person redeeming shares and obtaining the redemption proceeds.

How do I redeem shares by telephone?

Shareholders who have completed the section of the Fund Application entitled
"Shareholder Privileges" are eligible to make telephone requests for redemptions
(without charge) and may do so by telephoning the Fund at 877-OSFUNDS
(673-8637). A shareholder who has not completed the Shareholder Privileges
section of the Application but who wishes to become eligible to make telephone
redemptions, should designate a change in such instructions by writing to the
Transfer Agent. Please note that such changed instructions must (i) be signed by
the registered owner(s) of the shares exactly as the account is registered and
signature guaranteed, and (ii) include the name of the account, the account
number and the name of the Fund.

Telephone redemptions cannot be accepted with respect to shares represented by
certificates or for IRA accounts. In such cases, redemption can only be made by
mail as described above under "Redemption of Shares - How do I redeem shares by
mail?" Telephone requests for redemptions (or exchanges - see "Exchange
Privilege" above) received before the close of business of the NYSE (currently
4:00 pm, Eastern time) on a business day will be priced and processed as of the
close of business on that day; requests received after that time will be
processed as of the close of business on the next business day.

As noted above, the Funds will employ reasonable procedures to confirm that
instructions communicated by telephone are genuine and may, along with their
service contractors, be liable for a failure to use such procedures. See
"Exchange Privilege - How can I make exchanges by telephone?" above.

Shareholders should be aware that, at times, the volume of telephone calls or
other factors beyond a Fund's control may make it difficult to reach the
Transfer Agent by telephone. This will be true particularly during periods of
drastic economic or market changes. In the event of difficulty in reaching the
Transfer Agent, shareholders should continue to telephone or utilize the written
redemption procedures described above under "Redemption of Shares - How do I
redeem shares by mail?"

The Funds reserve the right to terminate the telephone redemption privilege at
any time and, if so terminated, will provide the shareholders with written
notice of such termination. Each Fund reserves the right to suspend temporarily
telephone redemptions in emergency circumstances or in cases where, in the
judgment of the Fund, continuation of the privilege would be detrimental to the
Fund and its shareholders as a whole. Such temporary suspension can be without
prior notification.

What options do I have in receiving redemption proceeds?

Redemption proceeds may be sent to shareholders by mail or by wire as described
below. Wire redemptions will only be made if the Transfer Agent has received
appropriate written wire instructions. Because of fluctuations in the value of a
Fund's portfolio, the net asset value of shares redeemed may be more or less
than the investor's cost.

Redemption By Mail. In the case of shareholders who request that their
redemption proceeds be sent by mail, the Transfer Agent mails checks for
redemption proceeds typically within one or two business days, but no later than
seven days, after it receives the request and all the necessary documents.

Wire redemptions will be made only if the Transfer Agent has received
appropriate written instructions from the shareholder either on the Fund
Application or by separate letter. A shareholder who has not indicated wire
instructions on the Application, but would like to have redemption proceeds
wired to a particular bank for each redemption request, should so designate by
writing to the Transfer Agent. Please note that such instructions must (i) be
signed by the registered owner(s) of the shares exactly as the account is
registered and signature guaranteed, and (ii) include the name of the account,
the account number and the name of the Fund to which the request relates.

A shareholder who would like to change the wire instructions indicated on the
Fund Application should designate a change in such instructions by writing to
the Transfer Agent and complying with the requirements set forth in the
preceding paragraph. There is a $1,000 minimum on redemption proceeds by bank
wire. Shareholders who effect redemptions by wire transfer will pay a $12.00
wire transfer fee to the Transfer Agent to cover costs associated with the
transfer. In addition, a shareholder's bank may impose a charge for receiving
wires.

When would the payment of proceeds be delayed?

Please note that shares paid for by personal, corporate or government check
cannot be redeemed before the respective Fund has reasonable belief that the
check has cleared, which may take up to fifteen days after payment of the
purchase price. This delay can be avoided by paying for shares by certified
check or bank-wire. An investor will be notified promptly by the Transfer Agent
if a redemption request cannot be accepted.

Would my account ever be involuntarily redeemed?

Due to the relatively high cost to the Funds of maintaining small accounts, we
ask you to maintain an account balance of at least $2,500. If your balance is
below $2,500 for three months or longer due to redemptions, we have the right to
close your account after giving you 60 days in which to increase your balance.

INFORMATION ON DISTRIBUTIONS AND TAXES

DIVIDENDS AND OTHER DISTRIBUTIONS GENERALLY

Dividend and capital gain distributions are reinvested in additional shares of
the Funds in your account unless you select another option on your Application.
The advantage of reinvesting distributions arises from compounding; that is,
you receive dividends and capital gain distributions on an increasing number of
shares. Distributions not reinvested are paid by check or transmitted to your
bank account.

INCOME DIVIDENDS

Each Fund declares and pays dividends (if any) annually.

CAPITAL GAINS

A capital gain or loss is the difference between the purchase and sale price of
a security. If a Fund has net capital gains for the year (after subtracting any
capital losses), they are usually declared and paid in December to shareholders
of record on a specified date that month.

TAX INFORMATION

You need to be aware of the possible tax consequences when: (1) a Fund makes a
distribution to your account; (2) you sell Fund shares; or (3) you exchange
shares of a Fund for shares of one of the other O'Shaughnessy Funds or the
Firstar Money Market Fund. The following summary does not apply to retirement
accounts, such as IRAs, which are tax-deferred until you withdraw money from
them.

Will I pay taxes on redemptions or exchanges of Fund shares?

When you sell or exchange shares in a Fund, you may realize a gain or loss.
Unless you are a dealer in securities, such gain or loss will be capital gain or
loss. Consult your tax advisor concerning the tax rate applicable to your sale
or exchange of Fund shares.

Will I pay taxes on Fund distributions?

Distributions of ordinary income and short-term capital gains are taxable as
ordinary income. The dividends of each Fund will be eligible for the 70%
deduction for dividends received by corporations only to the extent the Fund's
income consists of dividends paid by U.S. corporations. Distributions designated
as capital gains dividends are taxable as capital gains regardless of the length
of time shares of the Fund have been held.

What are the tax effects of buying shares before a distribution?

If you buy shares of a Fund shortly before or on the "record date" - the date
that establishes you as the person to receive the upcoming distribution - you
will receive, in the form of a taxable distribution, a portion of the money you
just invested. Therefore, you may wish to find out the Fund's record date(s)
before investing. Of course, a Fund's share price may, at any time, reflect
undistributed capital gains or unrealized appreciation.

The foregoing is a general and abbreviated summary of the applicable provisions
of the Code and Treasury regulations presently in effect, and does not address
the state and local tax consequences of an investment in the Funds. For the
complete provisions, reference should be made to the pertinent Code sections and
the Treasury regulations promulgated thereunder. The Code and the Treasury
regulations are subject to change by legislative or administrative action either
prospectively or retroactively. For additional information regarding the federal
income tax consequences of an investment in a Fund, see "Additional Information
about Dividends and Taxes" in the Statement of Additional Information.

PERFORMANCE INFORMATION

This section should help you understand the terms used to describe Fund
performance. The Funds' annual report will contain additional performance
information and will be available upon request and without charge.

What is total return?

This tells you how much an investment in a Fund has changed in value over a
given time period. It reflects any net increase or decrease in the share price
and assumes that all dividends and capital gains (if any) paid during the period
were reinvested in additional shares. Including reinvested distributions means
that total return numbers include the effect of compounding, i.e, you receive
income and capital gain distributions on an increasing number of shares.
Advertisements for a Fund may include cumulative or compound average annual
total return figures, which may be compared with various indices, other
performance measures, or other mutual funds.

What is cumulative total return?

What is average annual total return?

NET ASSET VALUE

The price at which each Fund's shares are purchased or redeemed is the Fund's
next determined net asset value per share. The net asset value per share is
calculated as of the close of the NYSE (currently 4:00 pm, Eastern time) on each
day that the NYSE is open for business and on each other day in which there is a
sufficient degree of trading in a Fund's portfolio securities that the current
net asset value of the Fund's shares may be materially affected by changes in
the value of the Fund's portfolio securities.

How is net asset value determined?

Each Fund determines the net asset value per share by subtracting the Fund's
total liabilities from the Fund's total assets (the value of the securities that
the Fund holds plus cash and other assets), dividing the remainder by the total
number of shares outstanding, and adjusting the result to the nearest full cent.

How are the securities held in a Fund's portfolio valued?

Securities listed on the NYSE, American Stock Exchange or other national
exchanges are valued at the last sale price on such exchange on the day as of
which the net asset value per share is to be calculated. Over-the-counter
securities included in the NASDAQ National Market System are valued at the last
sale price. If there is no sale on a particular security on such day, it is
valued at the mean between the bid and asked prices. Other securities, to the
extent that market quotations are readily available, are valued at market value
in accordance with procedures established by the Board of Directors. Any
securities and other assets, for which market quotations are not readily
available, are valued in good faith in a manner determined by the Directors of
the Funds best to reflect their fair value.

OTHER SHAREHOLDER SERVICES

Automatic Investment Plan

An Automatic Investment Plan allows a shareholder to make automatic monthly or
quarterly investments into a Fund account, in amounts of at least $100, by
having the Transfer Agent draw an automatic clearing house (ACH) debit
electronically against a shareholder's checking or savings account. A
shareholder may establish an Automatic Investment Plan by completing the
appropriate section on the Application for new accounts or by calling the Fund
at 877-OSFUNDS (673-8637) and requesting an Automatic Investment Plan
Application for existing accounts. A shareholder should be aware that a signed
Application should be received by the Transfer Agent at least 15 business days
prior to the initial transaction. The Transfer Agent will assess a $20 fee if
the automatic investment cannot be made due to insufficient funds, stop payment,
or for any other reason. The Fund cannot guarantee acceptance by your bank.

Systematic Cash Withdrawal Plan

When an account of $10,000 or more is opened or when an existing account reaches
that size, a shareholder may participate in the Fund's Systematic Cash
Withdrawal Plan by filling out the appropriate part of the Application. Under
this plan, a shareholder may receive (or designate a third party to receive) a
monthly or quarterly check in a stated amount of not less than $50.00. Shares of
the respective Fund will be redeemed as necessary to meet withdrawal payments.
All participants must elect to have their dividends and capital gain
distributions reinvested automatically. A shareholder who decides later to use
this service should call the Fund at 877-OSFUNDS (673-8637).

Reports to Shareholders

At such time as prescribed by law, the Fund will send to each shareholder the
following reports (if they are applicable), which may be used in completing U.S.
income tax returns:

Form 1099-B Reports redemption proceeds paid (including those resulting from
exchanges) during the preceding calendar year.

Form 1099-R Report distributions from retirement plan accounts during the
preceding calendar year. Form 5498 Reports contributions to IRAs for the
previous calendar year.

Shareholders will also receive annual and semi-annual reports including the
financial statements of the Funds for the respective periods.

Retirement Plans

Eligible investors may invest in the Fund under the following prototype
retirement plans:

"Education" Individual Retirement Account (IRA) "Traditional" Individual
Retirement Account (IRA) "Roth" Individual Retirement Account (IRA)
Simplified Employee Pension (SEP) for sole proprietors, partnerships and
corporations Profit-Sharing and Money Purchase Pension Plans for
corporations and their employees

Automatic Reinvestment Plan

INVESTMENT MANAGER
O'Shaughnessy Capital Management, Inc.
35 Mason Street
Greenwich, Connecticut 06830

ADMINISTRATOR
Investment Company Administration, LLC
4455 E. Camelback Road, Suite 261 E
Phoenix, Arizona 85018

DISTRIBUTOR
First Fund Distributors, Inc.
4455 E. Camelback Road, Suite 261 E
Phoenix, Arizona 85018

TRANSFER AGENT
Firstar Mutual Fund Services, LLC
615 E. Michigan Street
Milwaukee, Wisconsin 53202

AUDITORS
McGladrey & Pullen, LLP
555 Fifth Avenue
New York, New York 10017-2416

LEGAL COUNSEL
Swidler Berlin Shereff Friedman, LLP
919 Third Avenue
New York, New York 10022

<PAGE>
O'SHAUGHNESSY FUNDS, INC.
(the "O'Shaughnessy Funds")
O'Shaughnessy Cornerstone Value Fund
O'Shaughnessy Cornerstone Growth Fund
O'Shaughnessy Aggressive Growth Fund
O'Shaughnessy Dogs of the MarketTM Fund
(each, a "Fund," and collectively, the "Funds")

STATEMENT OF ADDITIONAL INFORMATION

DATED NOVEMBER 30, 1998

35 Mason Street
Greenwich, Connecticut 06830
Telephone: 1-877-OSFUNDS

This Statement of Additional Information ("SAI") is not a prospectus and should
be read only in conjunction with the current Prospectus of each Fund (each, a
"Fund Prospectus"), dated November 30, 1998. A copy of each Fund Prospectus may
be obtained by calling or writing to the relevant Fund at the telephone number
or address shown above. This SAI is incorporated by reference into each Fund
Prospectus, as applicable.

TABLE OF CONTENTS

INVESTMENT POLICIES AND LIMITATIONS .............. B-2
DIRECTORS AND OFFICERS ............................ B-9
MANAGEMENT OF THE FUNDS .......................... B-11
PORTFOLIO TRANSACTIONS .............................. B-12
ADDITIONAL PURCHASE AND REDEMPTION INFORMATION....... B-14
VALUATION OF SHARES ................................. B-14
ADDITIONAL INFORMATION ABOUT DIVIDENDS AND TAXES ... B-15
PERFORMANCE INFORMATION .............................. B-16
OTHER INFORMATION .................................... B-18
FINANCIAL STATEMENTS OF THE FUNDS ................ B-19
OPTIONS AND FUTURES ................................ A-20

INVESTMENT POLICIES AND LIMITATIONS

The following supplements the information contained in each Fund Prospectus
concerning the investment policies and limitations of O'Shaughnessy Cornerstone
Growth Fund ("Cornerstone Growth Fund"), O'Shaughnessy Cornerstone Value Fund
("Cornerstone Value Fund"), O'Shaughnessy Aggressive Growth Fund ("Aggressive
Growth Fund") and O'Shaughnessy Dogs of the Market TM Fund ("Dogs of the Market
Fund"). O'Shaughnessy Capital Management, Inc. (the "Manager") serves as
investment advisor to each Fund. See "Management of the Funds."

Special Considerations Relating to Depository Receipts. As noted in the
applicable Fund Prospectus, the Funds may each invest in the securities of
foreign issuers, including American Depository Receipts ("ADRs"). Generally,
ADRs, in registered form, are denominated in U.S. dollars and are designed for
use in the U.S. securities markets. ADRs are receipts typically issued by a U.S.
bank or trust company evidencing ownership of the underlying securities. For
purposes of the Funds' investment policies, ADRs are deemed to have the same
classification as the underlying securities they represent. Thus, an ADR
evidencing ownership of common stock will be treated as common stock.

Many of the foreign securities held in the form of depository receipts by
the Funds are not registered with the Securities and Exchange Commission
("SEC"), nor are the issuers thereof subject to its reporting requirements.
Accordingly, there may be less publicly available information concerning foreign
issuers of securities held by the Funds than is available concerning U.S.
companies. Foreign companies are not generally subject to uniform accounting,
auditing and financial reporting standards or to other regulatory requirements
comparable to those applicable to U.S. companies.

Investment income on certain foreign securities may be subject to foreign
withholding or other taxes that could reduce the return on these securities. Tax
treaties between the United States and foreign countries, however, may reduce or
eliminate the amount of foreign taxes to which a Fund would be subject.

Illiquid Securities. The Aggressive Growth Fund may invest up to 15% of its
net assets in illiquid securities. The term illiquid securities for this purpose
means securities which cannot be readily resold because of legal and contractual
considerations or which cannot otherwise be marketed, redeemed, put to the
issuer or a third party, or which do not mature within seven days, or which the
Manager, in accordance with guidelines established by the Board of Directors,
has not determined to be liquid and includes, among other things, purchased
over-the-counter ("OTC") options and repurchase agreements maturing in more than
seven days. The assets used as cover for OTC options written by a Fund will be
considered illiquid unless the OTC options are sold to qualified dealers who
agree that the Fund may repurchase any OTC option it writes at a maximum price
to be calculated by a formula set forth in the option agreement. The cover for
an OTC option written subject to this procedure will be considered illiquid only
to the extent that the maximum repurchase price under the option formula exceeds
the intrinsic value of the option.

Restricted securities may be sold only in privately negotiated
transactions or in public offerings with respect to which a registration
statement is in effect under the Securities Act of 1933 ("1933 Act"). Where
registration is required, a Fund may be obligated to pay all or part of the
registration expenses and a considerable period may elapse between the time of
the decision to sell and the time the Fund may be permitted to sell a security
under an effective registration statement. If, during such a period, adverse
market conditions were to develop, the Fund might obtain a less favorable price
than prevailed when it decided to sell.

In recent years a large institutional market has developed for certain
securities that are not registered under the 1933 Act, including securities sold
in private placements, repurchase agreements, commercial paper, foreign
securities and corporate bonds and notes. These instruments are often restricted
securities because the securities are sold in transactions not requiring
registration. Institutional investors generally will not seek to sell these
instruments to the general public, but instead will often depend either on an
efficient institutional market in which such unregistered securities can be
readily resold or on an issuer's ability to honor a demand for repayment.
Therefore, the fact that there are contractual or legal restrictions on resale
to the general public or certain institutions is not dispositive of the
liquidity of such investments.

Rule 144A under the 1933 Act establishes a safe harbor from the
registration requirements of the 1933 Act for resales of certain securities to
qualified institutional buyers. Institutional markets for restricted securities
that might develop as a result of Rule 144A could provide both readily
ascertainable values for restricted securities and the ability to liquidate an
investment to satisfy share redemption orders. Such markets might include
automated systems for the trading, clearance and settlement of unregistered
securities of domestic and foreign issuers, such as the PORTAL System sponsored
by the National Association of Securities Dealers, Inc. An insufficient
number of qualified buyers interested in purchasing Rule 144A-eligible
restricted securities held by a Fund, however, could affect adversely the
marketability of such Fund securities and a Fund might be unable to dispose of
such securities promptly or at favorable prices.

The Board of Directors has delegated the function of making day-to-day
determinations of liquidity to the Manager pursuant to guidelines approved by
the Board. The Manager takes into account a number of factors in reaching
liquidity decisions, including but not limited to: (1) the frequency of trades
for the security, (2) the number of dealers that make quotes for the security,
(3) the number of dealers that have undertaken to make a market in the security,
(4) the number of other potential purchasers and (5) the nature of the security
and how trading is effected (e.g., the time needed to sell the security, how
bids are solicited and the mechanics of transfer). The Manager monitors the
liquidity of restricted securities in each Fund and reports periodically on such
decisions to the Board of Directors.

Repurchase Agreements. Each Fund may enter into a repurchase agreement
through which an investor (such as the Fund) purchases a security (known as the
"underlying security") from a well-established securities dealer or bank that is
a member of the Federal Reserve System. Any such dealer or bank will be on the
Fund's approved list. Each Fund intends to enter into repurchase agreements only
with banks and dealers in transactions believed by the Manager to present
minimum credit risks in accordance with guidelines established by the Fund's
Board of Directors. The Manager will review and monitor the creditworthiness of
those institutions under the Board's general supervision.

At the time of entering into the repurchase agreement the bank or
securities dealer agrees to repurchase the underlying security at the same
price, plus specified interest. Repurchase agreements are generally for a short
period of time, often less than a week. Repurchase agreements which do not
provide for payment within seven days will be treated as illiquid securities.
The Fund will only enter into repurchase agreements where (i) the underlying
securities are of the type (excluding maturity limitations) which the Fund's
investment guidelines would allow it to purchase directly, (ii) the market value
of the underlying security will at all times be equal to at least 102% of the
value of the repurchase agreement, and (iii) payment for the underlying security
is made only upon physical delivery or evidence of book-entry transfer to the
account of the Fund's custodian or a bank acting as agent. In the event of a
bankruptcy or other default of a seller of a repurchase agreement, the Fund
could experience both delays in liquidating the underlying security and losses,
including: (a) possible decline in the value of the underlying security during
the period while the Fund seeks to enforce its rights thereto; (b) possible
subnormal levels of income and lack of access to income during this period; and
(c) expenses of enforcing its rights.

Lending of Fund Securities. In accordance with applicable law, each Fund
may lend portfolio securities (representing not more than 33 1/3% of its total
assets) to banks, broker-dealers or financial institutions that the Manager
deems qualified, but only when the borrower maintains with the Fund's custodian
bank collateral either in cash or money market instruments in an amount at least
equal to at least 102% of the market value of the securities loaned, determined
on a daily basis and adjusted accordingly. There may be risks of delay in
recovery of the securities or even loss of rights in the collateral should the
borrower of the securities fail financially. However, loans will only be made to
borrowers deemed by the Manager to be of good standing and when, in the judgment
of the Manager, the consideration which can be earned currently from such
securities loans justifies the attendant risk. All relevant facts and
circumstances, including the creditworthiness of the broker, dealer or
institution, will be considered in making decisions with respect to the lending
of securities, subject to review by the Board of Directors. During the period of
the loan the Manager will monitor all relevant facts and circumstances,
including the creditworthiness of the borrower. A Fund will retain authority to
terminate any loan at any time. A Fund may pay reasonable administrative and
custodial fees in connection with a loan and may pay a negotiated portion of the
interest earned on the cash or money market instruments held as collateral to
the borrower or placing broker. A Fund will receive reasonable interest on the
loan or a flat fee from the borrower and amounts equivalent to any dividends,
interest or other distributions on the securities loaned. A Fund will regain
record ownership of loaned securities to exercise beneficial rights, such as
voting and subscription rights and rights to dividends, interest or other
distributions, when regaining such rights is considered to be in the Fund's
interest.

Hedging and Return Enhancement Strategies. As discussed in the applicable
Fund Prospectus, the Funds may use a variety of financial instruments ("Hedging
Instruments"), including certain options, futures contracts (sometimes referred
to as "futures") and options on futures contracts, to attempt to hedge the
Fund's investments or attempt to enhance the Fund's income. The particular
Hedging Instruments are described in Appendix A to this SAI.

Hedging strategies can be broadly categorized as short hedges and long
hedges. A short hedge is a purchase or sale of a Hedging Instrument intended
partially or fully to offset potential declines in the value of one or more
investments held by a Fund. Thus, in a short hedge a Fund takes a position in a
Hedging Instrument whose price is expected to move in the opposite direction of
the price of the investment being hedged. For example, a Fund might purchase a
put option on a security to hedge against a potential decline in the value of
that security. If the price of the security declines below the exercise price of
the put, the Fund could exercise the put and thus limit its loss below the
exercise price to the premium paid plus transaction costs. In the alternative,
because the value of the put option can be expected to increase as the value of
the underlying security declines, the Fund might be able to close out the put
option and realize a gain to offset the decline in the value of the security.

Conversely, a long hedge is a purchase or sale of a Hedging Instrument
intended partially or fully to offset potential increases in the acquisition
cost of one or more investments that a Fund intends to acquire. Thus, in a long
hedge a Fund takes a position in a Hedging Instrument whose price is expected to
move in the same direction as the price of the prospective investment being
hedged. For example, a Fund might purchase a call option on a security it
intends to purchase in order to hedge against an increase in the cost of the
security. If the price of the security increased above the exercise price of the
call, the Fund could exercise the call and thus limit its acquisition cost to
the exercise price plus the premium paid and transaction costs. Alternatively,
the Fund might be able to offset the price increase by closing out an
appreciated call option and realizing a gain.

Hedging Instruments on securities generally are used to hedge against price
movements in one or more particular securities positions that a Fund owns or
intends to acquire. Hedging Instruments on stock indices, in contrast, generally
are used to hedge against price movements in broad equity market sectors in
which the Fund has invested or expects to invest. Hedging Instruments on debt
securities may be used to hedge either individual securities or broad fixed
income market sectors.

The use of Hedging Instruments is subject to applicable regulations of the
SEC, the several options and futures exchanges upon which they are traded, the
Commodity Futures Trading Commission ("CFTC") and various state regulatory
authorities. In addition, a Fund's ability to use Hedging Instruments will be
limited by tax considerations. See "Additional Information about Dividends and
Taxes" below.

In addition to the products, strategies and risks described below and in
the applicable Fund Prospectus, the Manager expects to discover additional
opportunities in connection with options, futures contracts and other hedging
techniques. The Manager may utilize these opportunities to the extent that they
are consistent with the respective Fund's investment objectives and permitted by
the respective Fund's investment limitations and applicable regulatory
authorities. The applicable Fund Prospectus or this SAI will be supplemented to
the extent that new products or techniques involve materially different risks
than those described below or in the Fund Prospectus.

Special Risks of Hedging Strategies. The use of Hedging Instruments
involves special considerations and risks, as described below. Risks pertaining
to particular Hedging Instruments are described in the sections that follow.

(1) Successful use of most Hedging Instruments depends upon the Manager's
ability to predict movements of the overall securities and interest rate
markets, which requires different skills than predicting changes in the price of
individual securities. While the Manager is experienced in the use of Hedging
Instruments, there can be no assurance that any particular hedging strategy
adopted will succeed.

(2) There might be imperfect correlation, or even no correlation, between
price movements of a Hedging Instrument and price movements of the investments
being hedged. For example, if the value of a Hedging Instrument used in a short
hedge increased by less than the decline in value of the hedged investment, the
hedge would not be fully successful. Such a lack of correlation might occur due
to factors unrelated to the value of the investments being hedged, such as
speculative or other pressures on the markets in which Hedging Instruments are
traded. The effectiveness of hedges using Hedging Instruments on indices will
depend on the degree of correlation between price movements in the index and
price movements in the securities being hedged.

(3) Hedging strategies, if successful, can reduce risk of loss by wholly or
partially offsetting the negative effect of unfavorable price movements in the
investments being hedged. However, hedging strategies can also reduce
opportunity for gain by offsetting the positive effect of favorable price
movements in the hedged investments. For example, if a Fund entered into a short
hedge because the Manager projected a decline in the price of a security held by
a Fund, and the price of that security increased instead, the gain from that
increase might be wholly or partially offset by a decline in the price of the
Hedging Instrument. Moreover, if the price of the Hedging Instrument declined by
more than the increase in the price of the security, the Fund could suffer a
loss. In either such case, the Fund would have been in a better position had it
not hedged at all.

(4) As described below, a Fund might be required to maintain assets as
cover, maintain segregated accounts or make margin payments when it takes
positions in Hedging Instruments involving obligations to third parties (i.e.,
Hedging Instruments other than purchased options). If a Fund were unable to
close out its positions in such Hedging Instruments, it might be required to
continue to maintain such assets or accounts or make such payments until the
position expired or matured. These requirements might impair a Fund's ability to
sell a Fund security or make an investment at a time when it would otherwise be
favorable to do so, or require that a Fund sell a portfolio security at a
disadvantageous time. A Fund's ability to close out a position in a Hedging
Instrument prior to expiration or maturity depends on the existence of a liquid
secondary market or, in the absence of such a market, the ability and
willingness of a contra party to enter into a transaction closing out the
position. Therefore, there is no assurance that any hedging position can be
closed out at a time and price that is favorable to the Fund.

Cover for Hedging Strategies. Transactions using Hedging Instruments, other
than purchased options, expose a Fund to an obligation to another party. A Fund
will not enter into any such transactions unless it owns either (1) an
offsetting covered position in securities, or other options or futures
contracts, or (2) cash, receivables and short-term debt securities, with a value
sufficient at all times to cover its potential obligations to the extent not
covered as provided in (1) above. Each Fund will comply with Securities and
Exchange Commission ("SEC") guidelines regarding cover for hedging transactions
and will, if the guidelines so require, set aside cash, U.S. Government
securities or other liquid, high-grade debt securities in a segregated account
with its custodian in the prescribed amount.

Assets used as cover or held in a segregated account cannot be sold while
the position in the corresponding Hedging Instrument is open, unless they are
replaced with similar assets. As a result, the commitment of a large portion of
a Fund's assets to cover or segregated accounts could impede Fund management or
the Fund's ability to meet redemption requests or other current obligations.

Options. The Funds may purchase put and/or call options, and write (sell)
covered put and call options on equity and stock indices. The purchase of call
options serves as a long hedge, and the purchase of put options serves as a
short hedge. Writing covered put or call options can enable a Fund to enhance
income by reason of the premiums paid by the purchasers of such options.
However, if the market price of the security underlying a covered put option
declines to less than the exercise price of the option, minus the premium
received, the Fund would expect to suffer a loss. Writing covered call options
serves as a limited short hedge, because declines in the value of the hedged
investment would be offset to the extent of the premium received for writing the
option. However, if the security appreciates to a price higher than the exercise
price of the call option, it can be expected that the option will be exercised
and the Fund will be obligated to sell the security at less than its market
value. If the covered call option is an OTC option, the securities or other
assets used as cover would be considered illiquid to the extent described above
under "Investment Policies and Restrictions -- Illiquid Securities."

The value of an option position will reflect, among other things, the
current market value of the underlying investment, the time remaining until
expiration, the relationship of the exercise price to the market price of the
underlying investment, the historical price volatility of the underlying
investment and general market conditions. Options normally have expiration dates
of up to nine months. Options that expire unexercised have no value.

A Fund may effectively terminate its right or obligation under an option by
entering into a closing transaction. For example, a Fund may terminate its
obligation under a call option that it had written by purchasing an identical
call option; this is known as a closing purchase transaction. Conversely, a Fund
may terminate a position in a put or call option it had purchased by writing an
identical put or call option; this is known as a closing sale transaction.

The Funds may purchase or write exchange-traded and/or OTC options.
Currently, many options on equity securities are exchange-traded.
Exchange-traded options in the United States are issued by a clearing
organization affiliated with the exchange on which the option is listed which,
in effect, guarantees completion of every exchange-traded option transaction. In
contrast, OTC options are contracts between the Fund and its contra party
(usually a securities dealer or a bank) with no clearing organization guarantee.
Thus, when the Fund purchases or writes an OTC option, it relies on the party
from whom it purchased the option or to whom it has written the option (the
"contra party") to make or take delivery of the underlying investment upon
exercise of the option. Failure by the contra party to do so would result in the
loss of any premium paid by the Fund as well as the loss of any expected
benefits of the transaction.

A Fund's ability to establish and close out positions in
exchange-listed options depends on the existence of a liquid market. Each Fund
intends to purchase or write only those exchange-traded options for which there
appears to be a liquid secondary market. However, there can be no assurance that
such a market will exist at any particular time. Closing transactions can be
made for OTC options only by negotiating directly with the contra party, or by a
transaction in the secondary market if any such market exists. Although a Fund
will enter into OTC options only with contra parties that are expected to be
capable of entering into closing transactions with the Fund, there is no
assurance that the Fund will in fact be able to close out an OTC option position
at a favorable price prior to expiration. In the event of insolvency of the
contra party, the Fund might be unable to close out an OTC option position at
any time prior to its expiration.

If the Fund were unable to effect a closing transaction for an option it
had purchased, it would have to exercise the option to realize any profit. The
inability to enter into a closing purchase transaction for a covered call option
written by a Fund could cause material losses because the Fund would be unable
to sell the investment used as cover for the written option until the option
expires or is exercised.

Futures. The purchase of futures or call options thereon can serve as a
long hedge, and the sale of futures or the purchase of put options thereon can
serve as a short hedge. Writing covered call options on futures contracts can
serve as a limited short hedge, using a strategy similar to that used for
writing covered call options on securities and indices.

Futures strategies also can be used to manage the average duration of a
Fund. If the Manager wishes to shorten the average duration of a Fund, the Fund
may sell a futures contract or a call option thereon, or purchase a put option
on that futures contract. If the Manager wishes to lengthen the average duration
of a Fund, the Fund may buy a futures contract or a call option thereon.

No price is paid upon entering into a futures contract. Instead, at the
inception of a futures contract a Fund is required to deposit in a segregated
account with its custodian, in the name of the futures broker through whom the
transaction was effected, initial margin consisting of liquid assets in an
amount generally equal to 10% or less of the contract value. Margin must also be
deposited when writing a call option on a futures contract, in accordance with
applicable exchange rules. Unlike margin in securities transactions, initial
margin on futures contracts does not represent a borrowing, but rather is in the
nature of a performance bond or good-faith deposit that is returned to the Fund
at the termination of the transaction if all contractual obligations have been
satisfied. Under certain circumstances, such as periods of high volatility, a
Fund may be required by an exchange to increase the level of its initial margin
payment, and initial margin requirements might be increased generally in the
future by regulatory action.

Subsequent variation margin payments are made to and from the futures
broker daily as the value of the futures position varies, a process known as
marking to market. Variation margin does not involve borrowing, but rather
represents a daily settlement of the Fund's obligations to or from a futures
broker. When a Fund purchases an option on a future, the premium paid plus
transaction costs is all that is at risk. In contrast, when a Fund purchases or
sells a futures contract or writes a call option thereon, it is subject to daily
variation margin calls that could be substantial in the event of adverse price
movements. If the Fund has insufficient cash to meet daily variation margin
requirements, it might need to sell securities at a time when such sales are
disadvantageous.

Holders and writers of futures positions and options on futures can enter
into offsetting closing transactions, similar to closing transactions on
options, by selling or purchasing, respectively, an instrument identical to the
instrument held or written. Positions in futures and options on futures may be
closed only on an exchange or board of trade that provides a secondary market.
Each Fund intends to enter into futures transactions only on exchanges or boards
of trade where there appears to be a liquid secondary market. However, there can
be no assurance that such a market will exist for a particular contract at a
particular time. Secondary markets for options on futures are currently in the
development stage, and no Fund will trade options on futures on any exchange or
board of trade unless, in the Manager's opinion, the markets for such options
have developed sufficiently that the liquidity risks for such options are not
greater than the corresponding risks for futures.

Under certain circumstances, futures exchanges may establish daily limits
on the amount that the price of a future or related option can vary from the
previous day's settlement price; once that limit is reached, no trades may be
made that day at a price beyond the limit. Daily price limits do not limit
potential losses because prices could move to the daily limit for several
consecutive days with little or no trading, thereby preventing liquidation of
unfavorable positions.

If a Fund were unable to liquidate a futures or related options position
due to the absence of a liquid secondary market or the imposition of price
limits, it could incur substantial losses. The Fund would continue to be subject
to market risk with respect to the position. In addition, except in the case of
purchased options, the Fund would continue to be required to make daily
variation margin payments and might be required to maintain the position being
hedged by the future or option or to maintain cash or securities in a segregated
account.

Certain characteristics of the futures market might increase the risk that
movements in the prices of futures contracts or related options might not
correlate perfectly with movements in the prices of the investments being
hedged. For example, all participants in the futures and related options markets
are subject to daily variation margin calls and might be compelled to liquidate
futures or related options positions whose prices are moving unfavorably to
avoid being subject to further calls. These liquidations could increase price
volatility of the instruments and distort the normal price relationship between
the futures or options and the investments being hedged. Also, because initial
margin deposit requirements in the futures market are less onerous than margin
requirements in the securities markets, there might be increased participation
by speculators in the futures markets. This participation also might cause
temporary price distortions. In addition, activities of large traders in both
the futures and securities markets involving arbitrage, program trading and
other investment strategies might result in temporary price distortions.

Limitations on the Use of Futures. The Funds have represented to the CFTC
that they: (1) will use future contracts and options thereon traded on a
commodities exchange solely in bona fide hedging transactions or, alternatively
(2) will not enter into futures contracts and options thereon traded on a
commodities exchange for which the aggregate initial margin and premiums exceed
5% of the liquidation value of a Fund's portfolio (calculated in accordance with
CFTC regulations). As a matter of operating policy, initial margin deposits and
premiums on options used for non-hedging purposes will not equal more than 5% of
a Fund's net asset value.

Investment Limitations. The investment restrictions set forth below are
fundamental policies of each Fund, which cannot be changed with respect to a
Fund without the approval of the holders of a majority of the outstanding voting
securities of that Fund, as defined in the Investment Company Act of 1940 (the
"1940 Act"), as the lesser of: (1) 67% or more of the Fund's voting securities
present at a meeting of shareholders, if the holders of more than 50% of the
Fund's outstanding shares are present in person or by proxy, or (2) more than
50% of the outstanding shares. Unless otherwise indicated, all percentage
limitations apply to each Fund on an individual basis, and apply only at the
time an investment is made; a later increase or decrease in percentage resulting
from changes in values or net assets will not be deemed to be an investment that
is contrary to these restrictions, except for the policies regarding borrowing
and illiquid securities or as otherwise noted. Pursuant to such restrictions and
policies, no Fund may:

(1) make an investment in any one industry if the investment would cause
the aggregate value of the Fund's investment in such industry to exceed 25% of
the Fund's total assets, except that this policy does not apply to obligations
issued or guaranteed by the U.S. Government, its agencies or instrumentalities
("U.S. Government securities"), certificates of deposit and bankers'
acceptances.

(2) purchase securities of any one issuer (except U.S. Government
securities), if as a result at the time of purchase more than 5% of the Fund's
total assets would be invested in such issuer, or the Fund would own or hold 10%
or more of the outstanding voting securities of that issuer, except that 25% of
the total assets of the Fund may be invested without regard to this limitation;

(3) purchase securities on margin, except for short-term credit necessary
for clearance of Fund transactions and except that a Fund that may use options
or futures strategies and may make margin deposits in connection with its use of
options, futures contracts and options on futures contracts;

(4) purchase or sell real estate, except that, to the extent permitted by
applicable law, a Fund may invest in securities secured by real estate or
interests therein or issued by companies which invest in real estate or
interests therein;

(5) purchase or sell commodities or commodity contracts, except to the
extent described in the Fund Prospectus and this SAI with respect to futures and
related options;

(6) make loans, except through loans of Fund securities and repurchase
agreements, provided that for purposes of this restriction the acquisition of
bonds, debentures or other corporate debt securities and investment in
government obligations, short-term commercial paper, certificates of deposit,
bankers' acceptances and other fixed income securities as described in the
applicable Fund Prospectus and this SAI shall not be deemed to be the making of
a loan, and provided further that the lending of Fund securities and repurchase
agreements may be made only in accordance with applicable law and the applicable
Fund Prospectus and this SAI as it may be amended from time to time;

(7) borrow money or issue senior securities, except that each Fund may
borrow in an amount up to 33-1/3% of its respective total assets from banks for
extraordinary or emergency purposes such as meeting anticipated redemptions, and
may pledge its assets in connection with such borrowing. The Fund may not pledge
its assets other than to secure such borrowings or, to the extent permitted by
the Fund's investment policies as set forth in the applicable Fund Prospectus
and this SAI, as they may be amended from time to time, in connection with
hedging transactions, short-sales, when-issued and forward commitment
transactions and similar investment strategies. For purposes of this
restriction, the deposit of initial or maintenance margin in connection with
futures contracts will not be deemed to be a pledge of the assets of a Fund.

(8) underwrite securities of the issuers except insofar as the Fund
technically may be deemed to be an underwriter under the Securities Act of 1933
Act, as amended, in selling portfolio securities.

The following investment restrictions (or operating policies) may be
changed in respect of a Fund by the Board of Directors without shareholder
approval. No Fund may:

(a) make investments for the purpose of exercising control or management;

(b) make short sales of securities or maintain a short position, except to
the extent permitted by applicable law;

(c) purchase securities of other investment companies, except to the extent
such purchases are permitted by applicable law;

(d) invest in securities which cannot be readily resold because of legal or
contractual restrictions or which cannot otherwise be marketed, redeemed or put
to the issuer or a third party, if at the time of acquisition more than 15% of
its net assets would be invested in such securities. This restriction shall not
apply to securities which mature within seven days or securities which the Board
of Directors has otherwise determined to be liquid pursuant to applicable law.
Securities purchased in accordance with Rule 144A under the Securities Act of
1933, as amended (a "Rule 144A security") and determined to be liquid by them
Board of Directors are not subject to the limitations set forth in this
investment restriction (d). The foregoing operating policy applies only to
Aggressive Growth Fund since the Cornerstone Growth Fund, Cornerstone Value
Fund, and Dogs of the Market Fund do not invest in illiquid securities;

(e) write, purchase or sell puts, calls straddles, spreads or combinations
thereof, except to the extent permitted in the applicable Fund Prospectus and
this SAI, as they may be amended from time to time.

DIRECTORS AND OFFICERS

The Directors and officers of O'Shaughnessy Funds, their business addresses and
principal occupations during the past five years are listed below. Unless
otherwise indicated, each person's address is 60 Mason Street, Greenwich,
Connecticut 06830.

Name, Age and Address Position with the Fund Other Business Activities in Past 5 Years

<S> <C> <C>
James P. O'Shaughnessy* Director, President and President of O'Shaughnessy Capital
Age: 38 Treasurer Management,Inc., 1988 - present; author
O'Shaughnessy Capital of "Invest Like the Best", "What Works
Management, Inc. on Wall Street", and "How to Retire Rich."

C. Flemming Heilmann Director President and Director, Danish American,
Age: 59 N.Y.; Former Chairman and
CEO, Brockway Standard, Inc.,
1989-1994; Director: Porter Chadburn,
Inc.; Porter Chadburn, plc; Wheaton,
Inc.; Danish American Chamber of
Commerce, N.Y.; American Friends of
Cambridge University; Trustee: Royal
Wessanen Group U.S. Trust.

Robert E. Ix Director Retired Chairman and Chief Executive
Age: 68 Officer of Cadbury Schweppes, Inc.;
Director, Loctite Corp.

Joseph John McAleer Director Founder and President, MCA Associates,
Age: 68 Inc. (shipbroker), 1983-present; General
Partner, Sixtus Limited Partnership;
President and Director, Salesian Sisters
Partners Circle; Trustee, American
Merchant Marine Museum Foundation

Steven J. Paggioli Vice President and Executive Vice President and Director,
Age 48 Secretary Wadsworth Group since 1986; Vice
President of First Fund Distributors, Inc.
since 1989; Vice President of Investment
Company Administration, LLC since 1990.

</TABLE>

* Interested person, as defined in the 1940 Act.

Pursuant to the terms of the Management Agreement (defined below) with
O'Shaughnessy Funds on behalf of the Funds, the Manager pays the compensation of
all officers and Directors who are affiliated persons of the Manager. Pursuant
to the terms of the Administration Agreement (defined below), the Administrator
pays the compensation of all officers that are affiliated persons of the
Administrator.

O'Shaughnessy Funds pays Directors who are not interested persons of the
O'Shaughnessy Funds (each, a "disinterested Director") fees for serving as
Directors. Specifically, O'Shaughnessy Funds pay each disinterested Director a
$9,750 annual retainer paid quarterly, together with such Director's
out-of-pocket expenses relating to attendance at meetings. Each Fund pays one
quarter of the foregoing fees.

The following table sets forth the aggregate compensation the Funds paid to
the disinterested Directors for the fiscal year ended September 30, 1998.

Aggregate Pension or Retirement
Compensation Benefits Accrued as Total Compensation
Name of Director From Funds* Part of Fund Expenses From Fund Complex*

C. Flemming Heilmann $ 8,124 None $ 8,124
Robert E. Ix $ 8,124 None $ 8,124
Joseph John McAleer $ 8,124 None $ 8,124

During the fiscal period ended September 30, 1998, aggregate directors fees
and expenses in the amount of $24,372 were allocated to the Funds.

Because the Manager and the Administrator perform substantially all of the
services necessary for the operation of the Funds, the Funds require no
employees. No officer, director or employee of the Manager or the Administrator
receives any compensation from the Funds for acting as a Director or officer.

As of the date of this SAI, the officers and Directors of the O'Shaughnessy
Funds as a group (5 persons) owned an aggregate of less than 1% of the
outstanding shares of each Fund.

MANAGEMENT OF THE FUNDS

The Manager. The Manager acts as the investment manager of each Fund
pursuant to a management agreement with O'Shaughnessy Funds on behalf of each
Fund (the "Management Agreement"). Under the Management Agreement, O'Shaughnessy
Funds pays the Manager a fee in respect of each Fund, computed daily and payable
monthly, according to the schedule set forth in the applicable Fund Prospectus.
The Manager is wholly owned and controlled by James P. O'Shaughnessy and his
immediate family.

Pursuant to the Management Agreement, the Manager is responsible for
investment management of each Fund's portfolio, subject to general oversight by
the Board of Directors, and provides the Funds with office space. In addition,
the Manager is obligated to keep certain books and records of the Funds. In
connection therewith, the Manager furnishes each Fund with those ordinary
clerical and bookkeeping services which are not being furnished by the Funds'
custodian, administrator or transfer and dividend disbursing agent.

Under the terms of the Management Agreement, each Fund bears all expenses
incurred in its operation that are not specifically assumed by the Manager,
Investment Company Administration, LLC, the Fund's administrator (the
"Administrator"), or First Fund Distributors, Inc., the Funds' distributor (the
"Distributor"). General expenses of O'Shaughnessy Funds not readily identifiable
as belonging to one of the Funds are allocated among the Funds by or under the
direction of the Board of Directors in such manner as the Board determines to be
fair and equitable. Expenses borne by each Fund include, but are not limited to,
the following (or the Fund's allocated share of the following): (1) the cost
(including brokerage commissions, if any) of securities purchased or sold by the
Fund and any losses incurred in connection therewith; (2) investment management
fees; (3) organizational expenses; (4) filing fees and expenses relating to the
registration and qualification of O'Shaughnessy Funds or the shares of a Fund
under federal or state securities laws and maintenance of such registrations and
qualifications; (5) fees and expenses payable to disinterested Directors; (6)
taxes (including any income or franchise taxes) and governmental fees; (7) costs
of any liability, directors' and officers' insurance and fidelity bonds; (8)
legal, accounting and auditing expenses; (9) charges of custodian, transfer
agents and other agents; (10) expenses of setting in type and providing a
camera-ready copy of the Fund Prospectus and supplements thereto, expenses of
setting in type and printing or otherwise reproducing statements of additional
information and supplements thereto and reports and proxy materials for existing
shareholders; (11) any extraordinary expenses (including fees and disbursements
of counsel) incurred by O'Shaughnessy Funds or the Fund; (12) fees, voluntary
assessments and other expenses incurred in connection with membership in
investment company organizations; and (13) costs of meetings of shareholders.
The Manager may voluntarily waive its management fee or subsidize other Fund
expenses. This may have the effect of increasing a Fund's return.

Under the Management Agreement, the Manager will not be liable for any
error of judgment or mistake of law or for any loss suffered by O'Shaughnessy
Funds or any Fund in connection with the performance of the Management
Agreement, except a loss resulting from willful misfeasance, bad faith or gross
negligence on the part of the Manager in the performance of its duties or from
reckless disregard of its duties and obligations thereunder.

The Management Agreement has an initial term of two years and may be
renewed from year to year thereafter so long as such continuance is specifically
approved at least annually in accordance with the requirements of the 1940 Act.
The Management Agreement provides that it will terminate in the event of its
assignment (as defined in the 1940 Act). The Management Agreement may be
terminated by O'Shaughnessy Funds in respect of a Fund or by the Manager upon 60
days' prior written notice.

During the fiscal year ended September 30, 1997, Aggressive Growth Fund,
Cornerstone Growth Fund, Cornerstone Value Fund and Dogs of the Market Fund paid
$17,218, $92,933, $42,147 and $26,765, respectively, in advisory fees. For the
same period, the Manager waived fees and reimbursed expenses of the Aggressive
Growth Fund, Cornerstone Growth Fund, Cornerstone Value Fund and Dogs of the
Market Fund in the amounts of $87,309, $8,879, $46,300 and $71,199,
respectively.

During the fiscal year ended September 30, 1998, Aggressive Growth Fund,
Cornerstone Growth Fund, Cornerstone Value Fund and Dogs of the Market Fund paid
$93,549, $573,605, $152,188 and $126,357, respectively, in advisory fees. For
the same period, the Manager reimbursed fees and expenses of the Aggressive
Growth Fund in the amount of $22,305.

The Administrator. O'Shaughnessy Funds, on behalf of the Funds, has
retained the Administrator to provide administration services to each Fund.
The Administration Agreement provides that the Administrator will furnish the
Funds with various administrative services including, among others: the
preparation and coordination of reports to the Board of Directors; preparation
and filing of securities and other regulatory filings (including state
securities filings), marketing materials, tax returns and shareholder reports;
review and payment of Fund expenses; monitoring and oversight of the activities
of the Funds' other servicing agents (i.e. transfer agent, custodian,
accountants, etc.); and maintaining books and records of the Funds;
administering shareholder accounts. In addition, the Administrator may provide
personnel to serve as officers of O'Shaughnessy Funds. The salaries and other
expenses of providing such personnel are borne by the Administrator. For its
services, each Fund pays the Administrator a fee each month at the annual rate
of 0.10% of the first $100 million of a Fund's average daily net assets, 0.05%
of the next $100 million of such net assets, and 0.03% of such net assets over
$200 million, with a minimum fee of $40,000 annually per portfolio. During the
fiscal years ended September 30, 1997 and 1998, the Administrator received a
total of $64,377 and $122,789, respectively, in administration fees from the
Funds.

The Distributor. O'Shaughnessy Funds, on behalf of the Funds, has retained
First Fund Distributors, Inc. to provide distribution-related services to each
Fund in connection with the continuous offering of the Fund's shares. The
Distributor provides such services to the Funds at no cost to the Funds. The
Distributor may distribute the shares of the Funds through other broker-dealers
with which it has entered into selected dealer agreements.

Code of Ethics. The Board of Directors of O'Shaughnessy Funds has adopted a
Code of Ethics under Rule 17j-1 of the 1940 Act. The Code restricts the
investing activities of O'Shaughnessy Funds officers, Directors and advisory
persons and, as described below, imposes additional, more onerous restrictions
on Fund investment personnel.

All persons covered by the Code of Ethics are required to preclear any
personal securities investment (with limited exceptions, such as government
securities) and must comply with ongoing requirements concerning record keeping
and disclosure of personal securities investments. The preclearance requirement
and associated procedures are designed to identify any prohibition or limitation
applicable to a proposed investment. In addition, all persons covered by the
Code of Ethics are prohibited from purchasing or selling any security which, to
such person's knowledge, is being purchased or sold (as the case may be), or is
being considered for purchase or sale, by a Fund. Investment personnel are
subject to additional restrictions such as a ban on acquiring securities in an
initial public offering, "blackout periods" which prohibit trading by investment
personnel of a Fund within periods of trading by the Fund in the same security
and a ban on short-term trading in securities.

PORTFOLIO TRANSACTIONS

Subject to policies established by the Board of Directors, the Manager is
responsible for the execution of Fund transactions and the allocation of
brokerage transactions for the respective Funds. As a general matter in
executing Fund transactions, the Manager may employ or deal with such brokers or
dealers as may, in the Manager's best judgment, provide prompt and reliable
execution of the transaction at favorable security prices and reasonable
commission rates. In selecting brokers or dealers, the Manager will consider all
relevant factors, including the price (including the applicable brokerage
commission or dealer spread), size of the order, nature of the market for the
security, timing of the transaction, the reputation, experience and financial
stability of the broker-dealer, the quality of service, difficulty of execution
and operational facilities of the firm involved and in the case of securities,
the firm's risk in positioning a block of securities. Prices paid to dealers in
principal transactions through which most debt securities and some equity
securities are traded generally include a spread, which is the difference
between the prices at which the dealer is willing to purchase and sell a
specific security at that time. Each Fund that invests in securities traded in
the OTC markets will engage primarily in transactions with the dealers who make
markets in such securities, unless a better price or execution could be obtained
by using a broker. A Fund has no obligation to deal with any broker or group of
brokers in the execution of Fund transactions.

The Manager may select broker-dealers which provide it with research
services and may cause a Fund to pay such broker-dealers commissions which
exceed those other broker-dealers may have charged, if in its view the
commissions are reasonable in relation to the value of the brokerage and/or
research services provided by the broker-dealer. Research services furnished by
brokers through which a Fund effects securities transactions may be used by the
Manager in advising other funds or accounts and, conversely, research services
furnished to the Manager by brokers in connection with other funds or accounts
the Manager advises may be used by the Manager in advising a Fund. Information
and research received from such brokers will be in addition to, and not in lieu
of, the services required to be performed by the manager under the Management
Agreement. The Funds may purchase and sell Fund portfolio securities to and from
dealers who provide the Fund with research services. Fund transactions will not
be directed to dealers solely on the basis of research services provided.

Investment decisions for each Fund and for other investment accounts
managed by the Manager are made independently of each other in light of
differing considerations for the various accounts. However, the same investment
decision may be made for a Fund and one or more of such accounts. In such cases,
simultaneous transactions are inevitable. Purchases or sales are then allocated
between the Fund and such other account(s) as to amount according to a formula
deemed equitable to the Fund and such account(s). While in some cases this
practice could have a detrimental effect upon the price or value of the security
as far as a Fund is concerned, or upon its ability to complete its entire order,
in other cases it is believed that coordination and the ability to participate
in volume transactions will be beneficial to the Fund.

The Funds paid the following amounts in portfolio brokerage commissions:

Fiscal Year Fiscal Year
Ended Ended
September 30, 1997 September 30, 1998

Aggressive Growth $ 15,035 $ 56,518
Cornerstone Growth 134,182 313,452
Cornerstone Value 18,816 41,323
Dogs of the Market 12,893 31,508

Portfolio Turnover. For reporting purposes, a Fund's portfolio turnover
rate is calculated by dividing the lesser of purchases or sales of portfolio
securities for the fiscal year by the monthly average of the value of the
portfolio securities owned by the Fund during the fiscal year. In determining
such portfolio turnover, securities with maturities at the time of acquisition
of one year or less are excluded. The Manager will adjust a Fund's assets as it
deems advisable, and portfolio turnover will not be a limiting factor should the
Manager deem it advisable for a Fund to purchase or sell securities.

As described above, the Funds may engage in options transactions. The
options activities of a Fund may affect its turnover rate, the amount of
brokerage commissions paid by a Fund and the realization of net short-term
capital gains. High portfolio turnover (100% or more) involves correspondingly
greater brokerage commissions, other transaction costs, and a possible increase
in short-term capital gains or losses. See "Valuation of Shares" and "Additional
Information about Distributions and Taxes" below.

The exercise of calls written by a Fund may cause the Fund to sell
portfolio securities, thus increasing its turnover rate. The exercise of puts
also may cause a sale of securities and increase turnover; although such
exercise is within the Fund's control, holding a protective put might cause the
Fund to sell the underlying securities for reasons which would not exist in the
absence of the put. A Fund will pay a brokerage commission each time it buys or
sells a security in connection with the exercise of a put or call. Some
commissions may be higher than those which would apply to direct purchases or
sales of portfolio securities. Additional information concerning portfolio
turnover, including anticipated portfolio turnover rates for each Fund, is
contained in the relevant Fund Prospectus.

ADDITIONAL PURCHASE AND REDEMPTION INFORMATION

Reference is made to "Information About Your Account -- Purchase of Shares;
- -- Redemption of Shares" in each Fund Prospectus for additional information
about purchase and redemption of Fund shares. You may purchase and redeem shares
of each Fund on each day on which the New York Stock Exchange, Inc. ("NYSE") is
open for trading ("Business Day"). Currently, the NYSE is closed on New Year's
Day, Martin Luther King. Jr. Day, Presidents' Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Thanksgiving Day and Christmas Day. Such
purchases and redemptions of the shares of each Fund are effected at their
respective net asset values per share determined as of the close of the NYSE
(normally 4:00 P.M., Eastern time) on that Business Day. The time at which the
transactions are priced may be changed in case of an emergency or if the NYSE
closes at a time other than 4:00 P.M., Eastern time.

O'Shaughnessy Funds may suspend redemption privileges of shares of any Fund
or postpone the date of payment during any period (1) when the NYSE is closed or
trading on the NYSE is restricted as determined by the SEC, (2) when an
emergency exists, as defined by the SEC, that makes it not reasonably
practicable for O'Shaughnessy Funds to dispose of securities owned by it or to
determine fairly the value of its assets or (3) as the SEC may otherwise
permit. The redemption price may be more or less than the shareholder's cost,
depending on the market value of the Fund's securities at the time.

O'Shaughnessy Funds will employ reasonable procedures to confirm that
instructions communicated by telephone are genuine. O'Shaughnessy Funds uses
some or all of the following procedures to process telephone redemptions: (1)
requesting a shareholder to correctly state some or all of the following
information: account number, name(s), social security number registered to the
account, personal identification, banking institution, bank account number and
the name in which the bank account is registered; (2) recording all telephone
transactions; and (3) sending written confirmation of each transaction to the
registered owner.

The payment of the redemption price may be made in money or in kind, or
partly in money and partly in kind, as determined by the Directors. However,
each Fund has elected to be governed by Rule 18f-1 under the 1940 Act pursuant
to which the Fund is obligated to redeem shares solely in money up to the lesser
of $250,000 or 1% of the net asset value of the Fund during any 90-day period
for any one shareholder. While the Rule is in effect, such election may not be
revoked without the approval of the SEC. It is contemplated that if the Fund
should redeem in kind, securities distributed would be valued as described below
under "Net Asset Value," and investors would incur brokerage commissions in
disposing of such securities. If a Fund redeems in kind, the Fund will not
distribute depository receipts representing foreign securities.

VALUATION OF SHARES

The net asset value for the shares of each Fund will be determined on each
day the NYSE is open for trading. The net assets of each Fund are valued as of
the close of the NYSE (normally 4:00 P.M., Eastern time) on each Business Day.
Each Fund's net asset value per share is calculated separately.

For all Funds, the net asset value per share is computed by dividing the
value of the securities held by the Fund plus any cash or other assets, less its
liabilities, by the number of outstanding shares of the Fund, and adjusting the
result to the nearest full cent. Securities listed on the NYSE, American Stock
Exchange or other national exchanges are valued at the last sale price on such
exchange on the day as of which the net asset value per share is to be
calculated. Over-the-counter securities included in the NASDAQ National Market
System are valued at the last sale price. Bonds and other fixed-income
securities are valued using market quotations provided by dealers, and also may
be valued on the basis of prices provided by pricing services when the Board of
Directors believes that such prices reflect the fair market value of such
securities. If there is no sale in a particular security on such day, it is
valued at the mean between the bid and asked prices. Other securities, to the
extent that market quotations are readily available, are valued at market value
in accordance with procedures established by the Board of Directors. Any other
securities and other assets for which market quotations are not readily
available are valued in good faith in a manner determined by the Board of
Directors best to reflect their full value.

When market quotations for options and futures positions held by the Funds
are readily available, those positions are valued based upon such quotations.
Market quotations are not generally available for options traded in the OTC
market. When market quotations for options and futures positions, or any other
securities or assets of the Funds, are not available, they are valued at fair
value as determined in good faith by or under the direction of the Board of
Directors. When practicable, such determinations are based upon appraisals
received from a pricing service using a computerized matrix system or appraisals
derived from information concerning the security or similar securities received
from recognized dealers in those securities.

When a Fund writes a put or call option, the amount of the premium is
included in the Fund's assets and an equal amount is included in its
liabilities. The liability thereafter is adjusted to the current market value of
the option. The premium paid for an option purchased by a Fund is recorded as an
asset and subsequently adjusted to market value.

ADDITIONAL INFORMATION ABOUT DIVIDENDS AND TAXES

Each Fund is treated as a separate corporation for federal income tax
purposes. In order to qualify (or to continue to qualify) for treatment as a
regulated investment company ("RIC") under the Internal Revenue Code (the
"Code"), each Fund must distribute to its shareholders each taxable year at
least 90% of its investment company taxable income (consisting generally of net
investment income and net short-term capital gain) for such taxable year and
must meet several additional requirements. With respect to each Fund, these
requirements include the following: (1) the Fund must derive at least 90% of its
gross income each taxable year from dividends, interest, payments with respect
to securities loans and gains from the sale or other disposition of stock or
securities or other income (including gains from options and futures) derived
with respect to its business of investing in stock or securities ("Income
Requirement");(2) at the close of each quarter of the Fund's taxable year, at
least 50% of the value of its total assets must be represented by cash and cash
items, U.S. Government securities, securities of other RICs and other
securities, with these other securities limited, in respect of any one issuer,
to an amount that does not exceed 5% of the value of the Fund's total assets and
that does not represent more than 10% of the outstanding voting securities of
the issuer; (3) at the close of each quarter of the Fund's taxable year, not
more than 25% of the value of its total assets may be invested in securities
(other than U.S. Government securities or the securities of other RICs) of any
one issuer; and (4) the Fund must distribute during its taxable year at least
90% of its investment company taxable income plus 90% of its net tax-exempt
interest income, if any.

The use of hedging and related income strategies, such as writing and
purchasing options and futures contracts, involves complex rules that will
determine for income tax purposes the character and timing of recognition of the
income received in connection therewith by each Fund eligible to use such
strategies. Income from transactions in options and futures derived by a Fund
with respect to its business of investing in securities, will qualify as
permissible income under the Income Requirement. However, income from the
disposition of options and futures contracts will be subject to the 30% Test if
they are held for less than three months.

If a Fund satisfies certain requirements, any increase in value on a
position that is part of a "designated hedge" will be offset by any decrease in
value (whether realized or not) of the offsetting hedging position during the
period of the hedge for purposes of determining whether the Fund satisfies the
30% Test. Thus, only the net gain (if any) from the designated hedge will be
included in gross income for purposes of that Test. Each Fund will consider
whether it should seek to qualify for this treatment for its hedging
transactions. To the extent a Fund does not qualify for this treatment, it may
be forced to defer the closing out of certain options and futures contracts
beyond the time when it otherwise would be advantageous to do so, in order for
the Fund to qualify or continue to qualify as a RIC.

The Code requires a RIC to pay a nondeductible 4% excise tax to the extent
the RIC does not distribute, during each calendar year, 98% of its ordinary
income, determined on a calendar year basis, and 98% of its capital gains,
determined, in general, on an October 31 year end, plus certain undistributed
amounts from previous years. Each Fund anticipates that it will make sufficient
timely distributions to avoid imposition of the excise tax.

Under certain provisions of the Code, some shareholders may be subject to a
31% withholding tax on ordinary income dividends, capital gains distributions
and redemption payments ("backup withholding"). Generally, shareholders
subject to backup withholding will be those for whom a certified taxpayer
identification number is not on file with the respective Fund or who, to that
Fund's knowledge, have furnished an incorrect number. When establishing an
account, an investor must certify under penalty of perjury that such number is
correct and that such shareholder is not otherwise subject to backup
withholding.

Ordinary income dividends paid by a Fund to shareholders who are
non-resident aliens or foreign entities generally will be subject to a 30%
United States withholding tax under existing provisions of the Code applicable
to foreign individuals and entities unless a reduced rate of withholding or a
withholding exemption is provided under applicable treaty law. Non-resident
shareholders are urged to consult their own tax advisers concerning the
applicability of the United States withholding tax.

A shareholder who holds shares as a capital asset generally will recognize
a capital gain or loss upon the sale or exchange of such shares, which capital
gain or loss will be a long-term capital gain or loss if such shares are held
for more than one year. However, any loss realized by a shareholder who held
shares for six months or less will be treated as a long-term capital loss to the
extent of any distributions of net capital gains received by the shareholder
with respect to such shares.

A loss realized on a sale or exchange of shares of a Fund will be
disallowed if other Fund shares are acquired (whether through the automatic
reinvestment of dividends or otherwise) within a 61-day period beginning 30 days
before and ending 30 days after the date that the shares are disposed of. In
such a case, the basis of the shares acquired will be adjusted to reflect the
disallowed loss. Dividends and capital gains distributions may also be subject
to state and local taxes.

The foregoing is only a general summary of some of the important federal
income tax considerations generally affecting the Funds and their shareholders.
No attempt is made to present a complete explanation of the federal tax
treatment of the Funds' activities. See the applicable Fund Prospectus for
further tax information.

Shareholders are urged to consult their own tax advisers regarding specific
questions as to Federal, state and local taxes. Foreign investors should
consider applicable foreign taxes in their evaluation of an investment in a
Fund.

PERFORMANCE INFORMATION

Performance information is computed separately for each Fund in accordance
with the formulas described below. At any time in the future, total return may
be higher or lower than in the past and there can be no assurance that any
historical results will continue.

Certain historical performance information for the Cornerstone Value
Strategy and the Cornerstone Growth Strategy, the respective investment
strategies of the Cornerstone Growth Fund and Cornerstone Value Fund, is
included in the Fund Prospectus relating to the Cornerstone Value and
Cornerstone Growth Funds. See "Performance Information" in the Funds'
Prospectus.

Calculation of Total Return and Average Annual Total Return. Total Return
with respect to the shares of a Fund is a measure of the change in value of an
investment in the Fund over the period covered, which assumes that any dividends
or capital gains distributions are reinvested in that Fund's shares immediately
rather than paid to the investor in cash. The formula for Total Return with
respect to a Fund's shares used herein includes four steps: (1) adding to the
total number of shares purchased by a hypothetical $1,000 investment the number
of shares which would have been purchased if all dividends and distributions
paid or distributed during the period had been immediately reinvested; (2)
calculating the value of the hypothetical initial investment of $1,000 as of the
end of the period by multiplying the total number of shares on the last trading
day of the period by the net asset value per share on the last trading day of
the period; (3) assuming redemption at the end of the period; and (4) dividing
this account value for the hypothetical investor by the initial $1,000
investment. Average Annual Total Return is measured by annualizing Total Return
over the period.

Performance Comparisons. Each Fund may from time to time include the Total
Return and the Average Annual Total Return of its shares in advertisements or in
information furnished to shareholders.

The following are the Funds' average annual total returns for the period
ending September 30, 1998*:

From Inception
(November 1, 1996) One Year

Aggressive Growth 4.62% -23.70%
Cornerstone Growth 5.48 -27.63
Cornerstone Value 5.22 -4.32
Dogs of the Market 10.29 0.74

*Certain expenses of the Aggressive Growth Fund have been waived or reimbursed
from inception through September 30, 1998 and certain expenses of the
Cornerstone Value Fund and Dogs of the Market Fund have been waived or
reimbursed from inception through September 30, 1997. Accordingly return figures
are higher than they would have been had such expenses not been waived or
reimbursed.

Each Fund may from time to time also include the ranking of its performance
figures relative to such figures for groups of mutual funds categorized by
Lipper Analytical Services ("Lipper") as having the same or similar investment
objectives or by similar services that monitor the performance of mutual funds.
Each Fund may also from time to time compare its performance to average mutual
fund performance figures compiled by Lipper in Lipper Performance Analysis.
Advertisements or information furnished to present shareholders or prospective
investors may also include evaluations of a Fund published by nationally
recognized ranking services and by financial publications that are nationally
recognized such as Barron's, Business Week, CDA Technologies, Inc., Changing
Times, Consumer's Digest, Dow Jones Industrial Average, Financial Planning,
Financial Times, Financial World, Forbes, Fortune, Hulbert's Financial Digest,
Institutional Investor, Investors Daily, Money, Morningstar Mutual Funds, The
New York Times, Personal Investor, Stanger's Investment Adviser, Value Line, The
Wall Street Journal, Wiesenberger Investment Company Service and USA Today.

The performance figures described above may also be used to compare the
performance of a Fund's shares against certain widely recognized standards or
indices for stock market performance. The following are the indices against
which the Funds may compare performance:

The Standard & Poor's Composite Index of 500 Stocks (the "S&P 500 Index")
is a market value-weighted and unmanaged index showing the changes in the
aggregate market value of 500 stocks relative to the base period 1941-43. The
S&P 500 Index is composed almost entirely of common stocks of companies listed
on the NYSE, although the common stocks of a few companies listed on the
American Stock Exchange or traded OTC are included. The 500 companies
represented include industrial, transportation and financial services concerns.
The S&P 500 Index represents about 80% of the market value of all issues traded
on the NYSE.

The Wilshire 5000 Equity Index (or its component indices) represents the
return on the market value of all common equity securities for which daily
pricing is available. Comparisons of performance assume reinvestment of
dividends.

The National Association of Securities Dealers Automated Quotation System
(NASDAQ) Composite Index covers 4,500 stocks traded over the counter. It
represents many small company stocks but is heavily influenced by about 100 of
the largest NASDAQ stocks. It is a value-weighted index calculated on price
change only and does not include income.

The Value Line (Geometric) Index is an unweighted index of the
approximately 1,700 stocks followed by the Value Line Investment Survey.

The Russell 2000/Small Stock Index comprises the smallest 2000 stocks in
the Russell 3000 Index, and represents approximately 11% of the Russell 3000
Index's market capitalization. The Russell 3000 Index comprises the 3,000
largest U.S. companies by market capitalization. The smallest company has a
market value of roughly $20 million.

In reports or other communications to shareholders, O'Shaughnessy Funds may
also describe general economic and market conditions affecting the Funds and may
compare the performance of the Funds with: (1) that of mutual funds included in
the rankings prepared by Lipper or similar investment services that monitor the
performance of mutual funds, (2) IBC/Donoghue's Money Fund Report, (3) other
appropriate indices of investment securities and averages for peer universes of
funds which are described in this Statement of Additional Information, or (4)
data developed by the Manager derived from such indices or averages.

OTHER INFORMATION

The Funds are organized as separate investment portfolios or series of the
O'Shaughnessy Funds, a Maryland corporation which was incorporated on May 20,
1996 under the name "O'Shaughnessy Funds, Inc."

The Articles of Incorporation of O'Shaughnessy Funds authorize the Board of
Directors to classify and reclassify any and all shares which are then unissued
into any number of classes, each class consisting of such number of shares and
having such designations, powers, preferences, rights, qualifications,
limitations, and restrictions, as shall be determined by the Board, subject to
the 1940 Act and other applicable law, and provided that the authorized shares
of any class shall not be decreased below the number then outstanding and the
authorized shares of all classes shall not exceed the amount set forth in the
Articles of Incorporation, as in effect from time to time.

Registration Statement. This SAI and the Fund Prospectuses do not contain
all the information included in the Registration Statement filed with the SEC
under the 1933 Act with respect to the securities offered by the Fund
Prospectuses. The Registration Statement, including the exhibits filed
therewith, may be examined at the office of the SEC in Washington, D.C.

Statements contained in this SAI and the Fund Prospectuses as to the
contents of any contract or other document are not complete and, in each
instance, reference is made to the copy of such contract or other document filed
as an exhibit to the Registration Statement of which this SAI and the Fund
Prospectuses form a part, each such statement being qualified in all respects by
such reference.

Counsel. The law firm of Swidler, Berlin, Shereff, Friedman, LLP, 919
Third Avenue, New York, New York 10022, counsel to the Funds, has passed upon
the legality of the shares offered by the Fund Prospectuses. McGladrey &
Pullen, LLP, 555 Fifth Avenue, New York, New York 10017-2416, serves as
independent auditors for the Funds.

Transfer Agent, Custodian and Fund Accountant. Firstar Mutual Fund
Services, LLC ("Firstar"), 615 E. Michigan Street, Milwaukee, Wisconsin 53202,
serves as transfer agent, custodian and fund accountant for the Funds. As
custodian, Firstar will be responsible for, among other things, receipt of and
disbursement funds from the Fund's account, establishment of segregated accounts
as necessary, and transfer, exchange and delivery of Fund portfolio securities.
As fund accountant, Firstar will provide the Funds with various services
including: portfolio and tax accounting, valuation, expense accrual and
payment, compliance control and financial reporting.

As of November 9, 1998, the following shareholders owned more than 5% of the
outstanding voting securities of:

Aggressive Growth:
Charles Schwab & Co., Inc. for Exclusive Benefit of Customers,
San Francisco, CA 94104; 21.43%

Cornerstone Value:
Charles Schwab & Co., Inc. for Exclusive Benefit of Customers,
San Francisco, CA 94104; 42.56%

FINANCIAL STATEMENTS OF THE FUNDS

McGladrey & Pullen, LLP, 555 Fifth Avenue, New York, New York 10017-2416,
serves as independent auditors of the Funds. McGladrey & Pullen, on an annual
basis, will audit the financial statements prepared by the Manager and express
an opinion on such financial statements based on their audits.

The audited financial statements for the Funds for the period ended
September 30, 1998 are incorporated by reference herein and appear in the annual
reports of the Funds, copies of which are available at no charge by calling
1-800-797-0773.

<PAGE>

Appendix A

OPTIONS AND FUTURES

The Funds may use the following Hedging Instruments:

Options on Securities -- A call option is a short-term contract pursuant to
which the purchaser of the option, in return for a premium, has the right to buy
the security underlying the option at a specified price at any time during the
term of the option. The writer of the call option, who receives the premium, has
the obligation, upon exercise of the option during the option term, to deliver
the underlying security against payment of the exercise price. A put option is a
similar contract that gives its purchaser, in return for a premium, the right to
sell the underlying security at a specified price during the option term. The
writer of the put option, who receives the premium, has the obligation, upon
exercise of the option during the option term, to buy the underlying security at
the exercise price.

Options on Securities Indices -- A securities index assigns relative values
to the securities included in the index and fluctuates with changes in the
market values of those securities. A securities index option operates in the
same way as a more traditional stock option, except that exercise of a
securities index option is effected with cash payment and does not involve
delivery of securities. Thus, upon exercise of a securities index option, the
purchaser will realize, and the writer will pay, an amount based on the
difference between the exercise price and the closing price of the securities
index.

Stock Index Futures Contracts -- A stock index futures contract is a
bilateral agreement pursuant to which one party agrees to accept, and the other
party agrees to make, delivery of an amount of cash equal to a specified dollar
amount times the difference between the stock index value at the close of
trading of the contract and the price at which the futures contract is
originally struck. No physical delivery of the stocks comprising the index is
made. Generally, contracts are closed out prior to the expiration date of the
contract.

Interest Rate Futures Contracts -- Interest rates futures contracts are
bilateral agreements pursuant to which one party agrees to make, and the other
party agrees to accept, delivery of a specified type of debt security at a
specified future time and at a specified price. Although such futures contracts
by their terms call for actual delivery or acceptance of debt securities, in
most cases, the contracts are closed out before the settlement date without the
making or taking of delivery.