QUESTAR FUNDS INC, N-1A, 2000-07-20

QUESTAR FUNDS INC
N-1A, 2000-07-20

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Registration No. 333-46323
ICA No. 811- 08655

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 19, 2000

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933:

Pre-Effective Amendment No. ___

Post-Effective Amendment No. ___

and/or

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940:

Pre-Effective Amendment No. ___

Post-Effective Amendment No.___

(Check Appropriate Box or Boxes)

QUESTAR FUNDS,INC.
------------------
(Exact Name of Registrant as Specified in Charter)

The Hauppauge Corporate Center
150 Motor Parkway
HAUPPAUGE, NEW YORK 11788
-------------------------
(Address of Principal Executive Offices)(Zip Code)

(631) 951-0500
--------------
(Registrant's Telephone Number, Including Area Code)

Michael Miola
Questar Funds, Inc.
The Hauppauge Corporate Center
150 Motor Parkway
HAUPPAUGE, NEW YORK 11788
-------------------------
(Name and Address of Agent For Service)

WITH A COPY TO:
--------------

Thomas R. Westle, Esq.
Spitzer & Feldman P.C.
405 Park Avenue
New York, NY 10022

AS SOON AS PRACTICABLE AFTER THE EFFECTIVE DATE
-----------------------------------------------
(Approximate Date of Proposed Public Offering)

SHARES OF COMMON STOCK
----------------------
(Title of Securities Being Registered)

<PAGE>

It is proposed that this filing will become effective (check
appropriate box):

[ ] immediately upon filing pursuant to paragraph (b).
[ ] on (date) pursuant to paragraph (b).
[ ] 60 days after filing pursuant to paragraph (a)(1).
[ ] on (date) pursuant to paragraph (a)(1).
[X] 75 days after filing pursuant to paragraph (a)(2).
[ ] on (date) pursuant to paragraph (a)(2) of Rule 485.

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE
OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SECTION 8(A), MAY
DETERMINE.

<PAGE>

AZZAD/DOW JONES ISLAMIC INDEX FUND

(AN ENHANCED SHARI`AH COMPLIANT MUTUAL FUND BASED ON
THE EXTRA LIQUID VERSION OF THE DOW JONES ISLAMIC MARKET INDEX)

PROSPECTUS DATED ________, 2000

[LOGO]

The Azzad/Dow Jones Islamic Index Fund (the "Fund"), a series of Questar Funds,
Inc., seeks to provide investors with annual returns which, after expenses,
match or exceed the annualized performance of the U.S. component securities of
the Dow Jones Islamic Market Extra Liquid Index, a sub-index of the Dow Jones
Islamic Market Index.

This Prospectus, dated __________, 2000, concisely describes the information
about the Fund that you ought to know before investing. Please read it carefully
before investing and retain it for future reference. A Statement of Additional
Information ("SAI") about the Fund, dated ____________, 2000, is available free
of charge. The address of the Company is Questar Funds, Inc., The Hauppauge
Corporate Center, 150 Motor Parkway, Hauppauge, New York 11788 or telephone
(877) XXX-XXXX. The SAI has been filed with the Securities and Exchange
Commission and is incorporated in its entirety by reference in this Prospectus.

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

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<PAGE>

TABLE OF CONTENTS

RISK RETURN SUMMARY............................

PERFORMANCE....................................

FEES AND EXPENSES..............................

INVESTMENT STRATEGIES..........................

COMPLIANCE WITH SHARI`AH LAW...................

MAIN RISKS.....................................

MANAGEMENT.....................................

YOUR ACCOUNT...................................

HOW TO OPEN AN ACCOUNT AND PURCHASE SHARES.....

HOW TO SELL (REDEEM) SHARES....................

WHEN AND HOW NAV IS DETERMINED.................

DISTRIBUTIONS..................................

FEDERAL TAX CONSIDERATIONS.....................

PERFORMANCE COMPARISONS........................

CUSTODIAN, TRANSFER AGENT AND DIVIDEND
DISBURSING AGENT.........................

COUNSEL AND INDEPENDENT AUDITORS...............

FINANCIAL HIGHLIGHTS...........................

ORGANIZATION...................................

FOR MORE INFORMATION...........................

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<PAGE>

RISK RETURN SUMMARY

The following discussion describes the investment objective and principal
investment strategies and risks of the Fund. The investment objective is a
fundamental policy and cannot be changed without the approval of a majority of
the Fund's outstanding shares. As with any mutual fund, there can be no
guarantee that the investment objective of the Fund will be achieved.

[GRAPHIC OMITTED]
INVESTMENT OBJECTIVES

The Fund's investment objective is to provide investors with annual returns
which, after expenses, match or exceed the annualized performance of the U.S.
components of the Dow Jones Islamic Market Extra Liquid Index (the "IMXL")(2),
a sub-index of the Dow Jones Islamic Market Index ("DJIM"). The DJIM is a
globally diversified compilation of equity securities considered by Dow Jones'
Shari`ah Supervisory Board to be compliant with Shari`ah law.

[GRAPHIC OMITTED]
PRINCIPAL INVESTMENT STRATEGIES

The Fund seeks to achieve its investment objective by investing substantially
all of its net assets in the U.S. component securities of the IMXL, an unmanaged
index that tracks the 100 most liquid U.S. and non-U.S. securities listed on the
DJIM. The investment adviser, Azzad Asset Management, Inc., seeks to achieve and
maintain a correlation between the Fund's investment portfolio and the U.S.
component securities of the IMXL of at least 0.95, after expenses. A correlation
of 1.00 would mean that the Fund and U.S. component securities of the IMXL were
perfectly correlated.

The Fund seeks to achieve its investment objective only in strict
conformity with the body of Islamic laws known as SHARI'AH. All component stocks
of the DJIM and IMXL have been screened and approved by Dow Jones' Shari`ah
Supervisory Board to ensure their compliance with Shari`ah law. In addition, the
Fund's management and investment processes are subject to the regular review and
approval of an independent Shari'ah Supervisory Board convened by the Fund to
ensure compliance with these principles.

_________________

(1) "Dow Jones", "Dow Jones Islamic Market Index" and "Dow Jones Islamic Market
Extra Liquid Index " are service marks of Dow Jones & Company, Inc. Dow Jones
has no relationship to the Fund's investment adviser other than the licensing of
the Dow Jones Islamic Market Index and its service marks for use in connection
with the Fund. This Fund is not sponsored, endorsed, sold, or promoted by Dow
Jones and Dow Jones makes no representation regarding the advisability of
investing in the Fund.

(2) All dividend payments to the Fund will be subject to a purification process
(see description of the purification of income from dividends on Page 7)
according to the methodology formulated by Dow Jones and approved by the Azzad
Shari`ah Board. A portion of each dividend may be deemed prohibited as it
relates to interest income earned by a particular company in the IMXL. The
portion of the dividend deemed prohibited will be treated as interest income and
will be segregated to the charitable account.

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TEMPORARY DEFENSIVE POSITIONS

During uncertain market or economic conditions, the Fund may adopt a temporary
defensive position. Because Islamic principles preclude the use of interest
paying instruments, the Fund cannot invest in fixed-income securities frequently
used by mutual funds for this purpose. When markets are unattractive, the
investment adviser will choose between continuing to follow the Fund's
investment policy or converting securities to cash for temporary, defensive
purposes. This choice is based on the investment adviser's evaluation of market
conditions and the Fund's then current portfolio holdings. Accordingly, as a
temporary defensive measure, the Fund may hold up to 100% of its assets in cash
or cash equivalents. During these periods, the Fund may not achieve its
investment objective. These strategies are discussed in greater detail in the
Statement of Additional Information ("SAI").

[GRAPHIC OMITTED]
PRINCIPAL RISKS OF INVESTING IN THE FUND. The Fund is subject to the following
principal investment risks:

-- MARKET RISK. The net asset value of the Fund will fluctuate based on
changes in the underlying value of the U.S. component securities of
the IMXL. The U.S. stock markets are generally susceptible to volatile
fluctuations in market price. Market prices may be adversely affected
by an issuer's having experienced losses or by the lack of earnings or
by the issuer's failure to meet the market's expectations with respect
to new products or services, or even by factors wholly unrelated to
the value or condition of the issuer. The value of the U.S. component
securities of the IMXL is also subject to the risk that a specific
segment of the stock market underperforms the overall market, thereby
decreasing the value of companies comprising such segment. Under any
of these circumstances, the value of the Fund's shares and its total
return will fluctuate and your investment may be worth more or less
than your original cost when you redeem your shares.

-- ISLAMIC SHARI'AH INVESTMENT RISK. It is possible that the restrictions
placed on investments, in particular the prohibition on interest
bearing investments and the cost of donations by the Portfolio of
parts of dividends which are attributable to interest related
activities, may result in the Fund underperforming other mutual funds
with similar investment objectives which are not subject to Islamic
Shari'ah restrictions.

-- IMPERFECT CORRELATION. The correlation between the performance of the
Fund and the U.S. component securities of the IMXL may be affected by
the Fund's expenses, changes in securities markets, changes in the
composition or dividend yield ranking of the IMXL and the timing of
purchases and redemptions of Fund shares.

-- RISKS OF NON-DIVERSIFICATION. Because the Fund is non-diversified, it
may have greater exposure to volatility than other mutual funds.
Because a non-diversified fund may invest a larger percentage of its
assets in the securities of a single company than diversified funds,
the performance of that company can have a substantial impact on the
fund's share price.

-- PASSIVE MANAGEMENT OF PORTFOLIO SECURITIES. Notwithstanding the
allocation of 25% of the Fund's net assets to the 10 U.S. component
securities of the IMXL with the highest dividend yield, the investment
adviser employs a passive investment management approach and does not
intend to change the composition of the Fund's investment portfolio
based on its own economic, financial or market analysis. Therefore,
the Fund may not liquidate these securities if they underperform or
suffer a sharp decline.

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<PAGE>

You could lose money on your investment in the Fund, or the Fund may not perform
as well as other possible investments. The Fund does not constitute a balanced
or complete investment program and the net asset value of its shares will
fluctuate based on the value of the securities held by the Fund.

WHO MAY WANT TO INVEST IN THE FUND

We designed the Azzad/Dow Jones Islamic Index Fund for investors desiring an
investment alternative that is consistent with Islamic principles and who seek
one or more of the following:

-- high long-term growth;
-- a stock fund to complement a portfolio of more conservative
investments;
-- a stock fund that uses an enhanced indexed-oriented investment
strategy; or
-- a stock fund that invests solely in U.S. companies.

The Fund may NOT be suitable for you if:

-- You need regular income or stability of principal;
-- You are pursuing a short-term goal or investing emergency reserves; or
-- You are pursuing an investment strategy that is inconsistent with
Sharia`ah Law.

PERFORMANCE

No prior performance information for the Fund is being presented because, to
date, the Fund has not had annual returns for a full year.

FEE TABLES
This table describes the fees and expenses that you may pay if you buy and hold
Shares of the Fund:

SHARES
------
Shareholder fees (fees paid directly from your investment)
Maximum Sales Charge (Load) Imposed on Purchase
(as a% of offering price) None
Maximum Deferred Sales Charge (Load)
(as a%of lower of original purchase
price or redemption proceeds) None
Maximum Sales Charge (Load) Imposed on Reinvested
Dividends Distributions None
Redemption Fee (as a% of amount redeemed,
if applicable) None
Exchange Fee None

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<PAGE>

ANNUAL FUND OPERATION EXPENSES
(EXPENSES THAT ARE DEDUCTED FROM FUND ASSETS)
Management Fees 1.00%
Distribution and/or Service (12b-1) Fees 0.25%
Other Expenses 1.00%(1)
-----
Total Annual Operating Expenses 2.25%(1)
Fee Waiver and Reimbursement --%
-----
Net Expenses 2.25%
=====

(1) Other Expenses and Total Annual Operating Expenses are estimated.

EXAMPLE

THIS EXAMPLE IS INTENDED TO HELP YOU COMPARE THE COST OF INVESTING IN
THE FUND WITH THE COST OF INVESTING IN OTHER MUTUAL FUNDS.

THE EXAMPLE ASSUMES THAT YOU INVEST $10,000 IN THE FUND FOR THE TIME
PERIODS INDICATED AND THEN REDEEM ALL OF YOUR SHARES AT THE END OF THESE
PERIODS. THE EXAMPLE ALSO ASSUMES THAT YOUR INVESTMENT HAS A 5% RATE OF RETURN
EACH YEAR AND THAT THE FUND'S OPERATING EXPENSES REMAIN THE SAME. ALTHOUGH YOUR
ACTUAL COSTS MAY BE HIGHER OR LOWER, BASED ON THESE ASSUMPTIONS YOUR COST FOR
THE FUND WOULD BE:

1 YEAR 3 YEARS
------ -------
$228 $703

INVESTMENT STRATEGIES

The Fund invests substantially all of its net assets in the U.S. component
securities of the Dow Jones Islamic Market Extra Liquid Index ("IMXL'), an
unmanaged sub-index of the Dow Jones Islamic Market Index ("DJIM"). The IMXL
consists of common stocks of 100 U.S. and non-U.S. companies which represent the
100 most liquid companies listed in the DJIM by Dow Jones & Company, Inc. ("Dow
Jones"). The IMXL is derived from the DJIM through the implementation of
rigorous liquidity requirements intended to filter out the most thinly traded
large capitalization companies and most actively traded small capitalization
companies, such as trading volume and volatility, transaction costs and turnover
rate, as well as tracking error and correlation coefficients relative to the
DJIM. The investment adviser seeks to achieve and maintain a correlation between
the Fund's investment portfolio and the U.S. component securities of the IMXL of
at least 0.95, after expenses. A correlation of 1.00 would mean that the
performances of the Fund and the U.S. component securities of the IMXL were
perfectly correlated.

The investment adviser will allocate 75% of the Fund's net assets to each of the
U.S. component securities of the IMXL according to the weightings assigned to
such securities in the IMXL (after adjustment to reflect the exclusion of all
non-U.S. component stocks). When U.S. companies are eliminated from or added to
the IMXL by Dow Jones, the Fund will adjust the investment portfolio to reflect
these changes. The Fund will sell out the positions of the companies that are
eliminated by Dow Jones from the IMXL, including those affected in the highest
dividend-yield basket, then buy in new positions of the companies added
following notice to the Fund by Dow Jones of changes made to the index. While
the Fund intends to hold portfolio securities for the long term, these changes
to Fund positions will be made, with no regard to any propsed holding period,
within 5 trading days of Dow Jones' notice to the Fund.

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<PAGE>

The investment adviser seeks to enhance the performance of the investment
portfolio by allocating 25% of the Fund's net assets equally among a basket of
the top 10 U.S. component securities of the IMXL with the highest dividend
yield. The list of the 10 highest dividend-yielding stocks of the IMXL will be
reviewed, and adjusted if necessary, on the last trading day of the sixth month
following the prior revision date. The positions in the basket established from
the prior list will remain intact until the last position purchased in the
basket from the prior list reaches its 12 month expiration date. On the trading
day following expiration of the prior list, all daily investment receipts will
be invested in the stocks appearing on the revised list. When the last position
purchased in the basket from the prior list reaches the end of the 12 month
holding period, the positions will be transferred or rolled into the stocks
appearing on the most recently reviewed and revised list. If certain stocks from
the expiring list appear in the revised list, then the related positions will be
held until such a time when they fail to appear on a subsequently revised list.
If certain stocks from the expiring list fail to appear on a revised list, then
the related positions in the basket will be sold on the first trading day of the
month following the change. The proceeds from the sale of these positions will
be allocated equally to the stocks of the revised list on the next trading day.

The Fund intends to invest at least 75% of its net assets in each of the U.S.
component securities of the IMXL according to the weightings assigned to such
securities in the IMXL (after adjustment to reflect the exclusion of all
non-U.S. component stocks), provided that the Fund has a sufficient amount of
assets to do so. If the Fund does not have sufficient assets to replicate the
IMXL, the Fund will invest in a representative sample of the U.S. component of
the IMXL. The purpose of selecting the representative sample is to achieve,
under normal conditions, a correlation between the performance of the Fund's
investment portfolio and the performance of the U.S. component securities of the
IMXL of at least 0.95, after expenses. A correlation of 1.00 would be a perfect
correlation, in which the net asset value of the Fund increases or decreases in
exact proportion to changes in the net asset value of the U.S. component
securities of the IMXL. The Fund will select portfolio securities on the basis
of computer-generated statistical data in order to develop a portfolio that
replicates the entire U.S. component of the IMXL in terms of liquidity, industry
weighting, market capitalization and other characteristics such as beta,
price-to-book ratios, price-to-earnings ratios and dividend yield. This method
of stock selection is generally referred to as the "optimization" method. As the
assets of the Fund grow, it is anticipated the holdings of the Fund will be
increased to include all of the U.S. component securities of the IMXL in exact
proportion to their representation in the IMXL.

TEMPORARY DEFENSIVE STRATEGY

The Fund may also, from time to time, take temporary defensive positions that
are inconsistent with the Fund's principal investment strategies in order to
respond to adverse market, economic, political or other unfavorable conditions.
Under these circumstances, the Fund may invest a substantial portion of its
assets in high quality, short-term debt securities and money market instruments,
provided however, that any interest income earned from such investments are
disgorged and donated to qualified charities in accordance with the purification
policies and procedures established by the Azzad Shari'ah Board (See "Treatment
of Interest Income" on Page 10). These short-term debt securities and money
market instruments include commercial paper, certificates of deposit, bankers'
acceptances, and U.S. Government securities. When the Fund is making such
defensive investments, the Fund may not achieve its investment objective.

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COMPLIANCE WITH SHARI`AH LAW

The Fund is designed to provide investors with an investment alternative that is
consistent with the body of Islamic laws known as Shari`ah. The purpose of the
Fund is to earn HALAL profits or profits which are allowable and in strict
conformity with the precepts of Islamic Shari`ah. Generally, Shari`ah requires
that investors share in profit and loss, that they receive no usury or interest
income (RIBA), and that they do not invest in a business that is not permitted
under Islamic principles.

The general tenets of Shari`ah law were first articulated in the Qur'an and then
given concrete form in the words and practice (the Sunnah) of the Prophet
Muhammad, upon him be peace. Over the centuries, the Islamic laws regulating
business, finance, and the marketplace in general kept apace of developments
and, through an inner dynamic called IJTIHAD, remained relevant and vital. In
recent years, too, Islamic law has been refined and interpreted in light of
the modern business environment, and many of its precepts have been analyzed
with respect to current business practices and capital structures. In the modern
marketplace, compliance with Shari`ah laws has become a complex matter requiring
application of qualitative and quantitative standards, both at the time of
investment and on a continuous basis. It has therefore become imperative that
Islamic financial institutions have a means of keeping abreast with current
Islamic scholarship and interpretations.

DOW JONES SHARI'AH STOCK SELECTION PROCESS AND CRITERIA

All component stocks of the DJIM are carefully screened for compliance with the
principles of Shari`ah law and approved for inclusion in the DJIM by the Dow
Jones Shari`ah Supervisory Board. Accordingly, since the IMXL is a sub-index of
the DJIM, each component stock of the IMXL has been approved by Dow Jones'
Shari`ah Supervisory Board by virtue of its inclusion in the DJIM and are deemed
eligible for investment by the Fund.

Dow Jones' selection process for Shari`ah compliant stocks begins by excluding
those firms who do not meet specific business line and financial requirements.
The criteria and key features established by the Dow Jones Shari`ah Supervisory
Board for the purpose of selecting companies for inclusion in the DJIM and, in
turn, the IMXL, are as follows:

Specifically, Dow Jones excludes firms whose products or services include:

Alcohol
Pork related products
Conventional financial services (banking, insurance, etc.)
Entertainment (hotels, casinos/gambling, cinema, pornography, music, etc.)
Tobacco
Defense

These incompatible lines of business are removed from the "universe" of stocks
considered for the DJIM. Other companies classified in other industry groups may
also be excluded if they are deemed to have a material ownership in or revenues
from prohibited business activities. After removing companies with unacceptable
primary business activities, the remaining universe is tested by three
financial-ratio "filters". The purpose is to remove companies with unacceptable
financial ratios.

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The filters exclude companies if:

-- Total debt divided by total assets is equal to or greater than 33 1/3%.
(Note: total debt = short term debt + current portion of long-term debt
+long-term debt).

-- Accounts receivables divided by total assets is equal to or greater than
47%. (Note: accounts receivables = current receivables + long-term
receivables).

-- Non-operating interest income divided by operating income is equal to or
greater than 9%.

Companies that pass these screens are included in the DJIM investable universe,
from which IMXL components are selected.

DUTIES OF THE DOW JONES SHARI'AH SUPERVISORY BOARD AND THE AZZAD SHARI'AH
SUPERVISORY BOARD

SELECTION OF SECURITIES

The Fund relies solely on the Dow Jones Shari`ah Supervisory Board to set the
criteria used to determine whether common stocks are Shari`ah compliant and to
establish the composition of the DJIM and IMXL. Any changes to the selection
criteria are made in the sole discretion of the Dow Jones Shari`ah Supervisory
Board and the Fund will not alter or deviate from such criteria based on its own
analysis of Shari`ah law. Accordingly, any change by Dow Jones in the
composition of the DJIM, based on noncompliance with Shari`ah law, and which
affects the U.S. component of the IMXL, will also be reflected in the
composition of the Fund's investment portfolio within a reasonable period of
time under then current market conditions.

FUND POLICIES AND BUSINESS PRACTICES

To ensure that the investment policies and general business practices of the
Fund also comply with the precepts of Shari`ah law, the Adviser has convened the
Shari`ah Supervisory Board to supervise and review Fund policies and procedures
(the "Azzad Shari`ah Board"). On a monthly basis, the Azzad Shari`ah Board
monitors the Fund's investment activities and reviews the Fund's management and
compliance procedures based on Islamic financial law (fiqh al mu`amalat) and
current Shari`ah scholarship, interpretations, and practices. The Azzad Shari`ah
Board also meets annually for a more comprehensive review and reports on the
results of their findings annually in a report to the Board of Directors of the
Fund. The Azzad Sharia`ah Board also has primary responsibility for implementing
the Fund's policies in connection with the purification of interest income
(RIBA).

The Azzad Shari`ah Board is comprised of three renowned Shari`ah scholars versed
in modern investment disciplines. The Board is chaired by Shaykh Yusuf Talal
DeLorenzo of the United States of America and also includes Shaykh Dr. Mohamed
Ali EL-Gari of the Kingdom of Saudi Arabia and Shaykh Nizam Yaquby of Bahrain.
Additional biographical information on each Azzad Shari`ah Board member is
provided below:

Shaykh Yusuf Talal DeLorenzo

Shaykh Yusuf Talal DeLorenzo is currently a Shari'ah consultant/advisor and
translator/researcher for the institution of Islamic Banking, London, and
PCS Inc., Reston, Virgina. He holds an M.A. in Islamic Studies from Jami'ah
al Ulum al Islamiyah (Karachi) and is a doctoral candidate at the Hartford
Seminary. Shaykh DeLorenzo produced the first systematic academic
translation in English of legal rulings issued by Shari'ah advisory boards
on the operations of Islamic Bank Rulings on the Operations of Islamic
Banks. He has also authored original research in Islamic studies, including
Islamic banking and law, in English, Arabic and Urdu.

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<PAGE>

Shaykh Dr. Mohamed Ali EL-Gari

Dr. Mohamed Ali EL-Gari is the director of Saudi Arabia the Center for
Research in Islamic Economics at King Abdulaziz University in Jeddah. He is
also a member of the OIC Fiqh Council. Dr. EL-Gari serves as a consultant
to Islamic banks and has served on the consulting committee that counseled
the Government of Pakistan on the Islamization of its banking system. Dr.
EL-Gari holds a Ph.D.in Economics from the University of California.

Shaykh Nizam Yaquby

Shaykh Nizam Yaquby is a renowned Shari'ah scholar and advisor to numerous
Islamic banks and companies, including Abu Dhabi Islamic Bank, Islamic
Investment Company of the Gulf, Bahrain and the Arab Islamic Bank, Bahrain.
He pursued traditional Islamic studies in Mecca, India and Morocco under
the guidance of eminent Islamic scholars, including Shaykh Abdullah
Al-Farisi and Shaykh Muhammad Salah Al-Abbasi. He holds a B.A.in Economics
and Comparative Religion from McGill University, Toronto. He is a Ph.D.
candidate in Islamic Law at the University of Wales. Shaykh Yaquby has
published several books on Islam law and is a frequent speaker at Islamic
conferences.

TREATMENT OF INTEREST INCOME

Shari`ah principles require that an investor receiving any "impure" income
divest the same by distribution to charity. In order to comply with these
requirements, any interest income which has been determined by the Azzad
Sharia`ah Board to be prohibited under the precepts of Shria`ah will be
segregated from the Fund's custody account and maintained in a separate account
for donation to qualified charities. The present policy of the Fund is to
segregate 100% of any interest earned for allocation to the charity account. The
purification of income from dividends will be carried out in accordance with a
methodology formulated by Dow Jones and approved by the Azzad Shari`ah Board
that is based on precise data that is maintained and provided by Dow Jones to
the Fund on a daily basis.

MAIN RISKS

MARKET RISK. The net asset value of the Fund can be expected to
fluctuate based on changes in the value of the securities in the Fund's
investment portfolio. The stock market is generally susceptible to volatile
fluctuations in market price. Market prices of securities in which the Fund
invests may be adversely affected by an issuer's having experienced losses or by
the lack of earnings or by the issuer's failure to meet the market's
expectations with respect to new products or services, or even by factors wholly
unrelated to the value or condition of the issuer. The value of the securities
held by the Fund are also subject to the risk that a specific segment of the
stock market does not perform as well as the overall market. Under any of these
circumstances, the value of the Fund's shares and total return will fluctuate,
and your investment may be worth more or less than your original cost when you
redeem your shares.

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RESTRICTIONS ON INVESTMENTS. The IMXL and Fund's restricted ability
to invest in certain market sectors, such as financial companies and
fixed-income securities limits opportunities and may increase the risk of loss
during economic downturns. Also, because Islamic principles preclude the use of
interest paying instruments, the Fund does not maximize current income since
reserves remain in cash.

PASSIVE MANAGEMENT OF FUND. With regard to the purchase of U.S.
component securities of IMXL and the Fund's replication of the U.S. component of
the IMXL, the investment adviser employs a passive investment management
approach and does not change the composition of the portfolio's equity position
based on its own economic, financial or market analysis. The inclusion of a
security in the Fund's portfolio does not reflect an opinion by the investment
adviser regarding the particular security's attractiveness as an investment. In
the event that a particular portfolio security underperforms or suffers a sharp
decline in market value, the Fund may not liquidate the investment unless such
liquidation is initiated by Dow Jones and reflected in the IMXL. Under these
circumstances, the net asset value of the Fund may decline, negatively impacting
the value of your investment.

RISK OF INVESTING IN INDUSTRIES REPRESENTED IN THE U.S. COMPONENT
SECURITIES OF THE IMXL. Investing in the various industries represented in the
IXML will expose the Fund to a broad variety of risk factors. The risks that
could adversely affect the value of your investment in the Fund include: changes
in economic conditions and interest rates, the exposure of companies within
these industries to foreign economic and political developments and currency
fluctuations, the ability of companies to pass their products through regulatory
bodies, changes in the spending patterns of consumers, the creation of new
technology which might make obsolete the technology sold, serviced, utilized, or
otherwise relied upon by companies held by the Fund, and the fluctuation of
energy prices.

MANAGEMENT

BOARD OF DIRECTORS AND AZZAD SHARI`AH BOARD

The business of the Fund is managed under the direction of the Board of
Directors (the "Board") of the Company in conjunction with the Azzad Shari`ah
Board. The Board formulates the general policies of the Fund and meets
periodically to review the Fund's performance, monitor investment activities and
practices, and discuss other matters affecting the Fund. The Azzad Shari`ah
Board ensures that the Fund's policies, procedures and general business
practices are conducted in strict conformity to the principles of Shari`ah law.

THE ADVISER

Azzad Asset Management, Inc. (the "Adviser"), 8201 Greensboro Drive, Suite 1000,
McLean, Virginia 22102, serves as investment adviser to the Fund. Subject to the
general supervision and control of the Azzad Shari`ah Board and the Board, the
Adviser makes investment decisions for the Fund. The Adviser is a privately held
corporation that is registered as an investment adviser with the U.S. Securities
& Exchange Commission. The Adviser was incorporated in the State of Delaware on
June 9, 2000. The company was initially formed as Zad Asset Management, LLC in
the State of Virginia on August 4, 1997 and was converted into a corporation
under Delaware in June, 2000 under the current name.

-11-
<PAGE>

The Adviser has been the investment advisor and manager to the Azzad Growth
Fund, LP since 1997. The Azzad Growth Fund, LP is a private placement Delaware
limited partnership. The partnership had assets of $6,234,422 (as audited by
Ernst & Young, LLP) as of December 31, 1999 and is styled as a
small-capitalization portfolio of common stocks. Azzad Growth Fund, LP was
formed on October 15, 1997 and commenced operations on February 12, 1998. The
partnership is structured as the "master" component of a "master/feeder" fund
structure, with an offshore feeder fund named Azzad Investments, Ltd. domiciled
in the Cayman Islands and a domestic U.S. feeder, the Azzad Growth Fund, LP, a
Delaware limited partnership.

Under the terms of its investment advisory agreement with the Fund, the Adviser
is responsible for formulating the Fund's investment programs and for making
day-to-day investment decisions and engaging in portfolio transactions. The
Adviser also furnishes corporate officers, provides office space, services and
equipment and supervises all matters relating to the Fund's operations. For its
services, the Adviser receives an advisory fee at an annual rate of 1.00% of the
average daily net assets of the Fund.

PORTFOLIO MANAGER

F. SCOTT VALPEY is the Executive Vice President of Azzad Management, Inc., the
investment advisor to the fund. Mr. Valpey practiced as a professional pension
and investment consultant from 1983 to 1999, and was registered as a general
securities principal (NASD Series 24) with Raymond James Financial Services,
Inc., member NASD/SIPC, a division of Raymond James Financial, member New York
Stock Exchange, a publicly traded company (symbol RJF/NYSE.) Previously, Mr.
Valpey was Director of Pension Services for Johnston, Lemon & Company,
Incorporated, an investment-banking firm in Washington, D.C. Mr. Valpey has over
17 years of investment management and financial services experience. He has
professionally managed investments and portfolios for private individuals,
corporations, pension funds, institutions and foreign investors.

ADMINISTRATOR

American Data Services, Inc. ("ADS"), The Hauppauge Corporate Center, 150 Motor
Parkway, Hauppauge, New York 11788, provides various services to the Fund. As of
the date of this Prospectus, ADS provided administrative, fund accounting and
stock transfer services to retail and institutional mutual funds with
approximately $4 billion of total assets through its offices in New York,
Denver, and Los Angeles.

ADS provides all administrative services necessary for the Fund, subject to the
supervision of the Board.

DISTRIBUTOR

AmeriMutual Fund Distributors, Inc. ("the Distributor"), an affiliate of ADS, is
a registered broker-dealer and member of the National Association of Securities
Dealers, Inc. Under its Distribution Agreement with the Fund, the Distributor
acts as the Fund's agent in connection with the offering of its shares. The
Distributor may enter into arrangements with banks, broker-dealers or other
financial institutions through which investors may purchase or redeem shares and
may, at its own expense, compensate persons who provide services in connection
with the sale or expected sale of shares of the Fund.

-12-
<PAGE>

YOUR ACCOUNT
[GRAPHIC OMITTED]

TYPES OF ACCOUNTS

If you are making an initial investment in the Fund, you will need to open an
account. You may establish the following types of accounts:

INDIVIDUAL, SOLE PROPRIETORSHIP AND JOINT ACCOUNTS. Individual and sole
proprietorship accounts are owned by one person; joint accounts can have two or
more owners. All owners of the joint account must sign written instructions to
purchase or redeem shares or to change account information exactly as their
names appear on the account. If you elect telephone privileges, however,
redemption requests by telephone may be made by any one of the joint account
owners.

UNIFORM GIFT OR TRANSFER TO MINOR ACCOUNTS (UGMA, UTMA). Depending on the laws
of your state, you can set up a custodial account under the Uniform Gift (or
Transfers) to Minors Act. These custodial accounts provide a way to give money
to a child and obtain tax benefits. To open a UGAM or UTMA account, you must
include the minor's social security number on the application and the custodian,
or trustee, of the UGMA or UTMA must sign instructions in a manner indicating
trustee capacity.

CORPORATE AND PARTNERSHIP ACCOUNTS. To open a corporate or partnership account,
or to send instructions to the Fund, the following documents are required:

-- For corporations, a corporate resolution signed by an authorized
person with a signature guarantee.

-- For partnerships, a certification for a partnership agreement, or the
pages from the partnership agreement that identify the general
partners.

An authorized officer of the corporation or other legal entity must sign the
application.

TRUST ACCOUNTS. The trust must be established before you can open a trust
account. To open the account you must include the name of each trustee, the name
of the trust and provide a certification for trust, or the pages from the trust
document that identify the trustees.

RETIREMENT ACCOUNTS. The Fund offers IRA accounts, including traditional IRA,
Roth IRA, Rollover IRA, SEP-IRA, SIMPLE IRA and Keogh accounts. Fund shares may
also be an appropriate investment for other retirement plans. Before investing
in any IRA or other retirement plan, you should consult your tax advisor.
Whenever making an investment in an IRA be sure to indicate the year in which
the contribution is made.

DISTRIBUTION AND SERVICE (RULE 12B-1) PLAN

The Fund has adopted a Distribution and Service Plan (the "Plan"), pursuant to
Rule 12b-1 under the Act (the "Rule") that allows the Fund to pay distribution
fees for the sale and distribution of its shares. The Rule provides that an
investment company which bears any direct or indirect expense of distributing
its shares must do so only in accordance with a plan permitted by the Rule. The
Plan provides that the Fund will compensate the Distributor by paying the
Distributor a monthly fee equal to 0.25% of its average daily net assets, on an
annual basis, to enable it to provide marketing and promotional support to the
Fund, shareholder servicing and maintaining shareholder accounts and to make
payments to broker-dealers and other financial institutions with which it has
written agreements and whose clients are Fund shareholders for providing
distribution assistance. Fees paid under the Plan may not be waived for
individual shareholders. Because these fees are paid out of the Fund's assets on
an on-going basis, over time these fees will increase the cost of your
investment and may cost you more than paying other types of sales charges.

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<PAGE>

Shareholder servicing agents and broker-dealers may charge investors a fee in
connection with their use of specialized purchase and redemption procedures
offered to investors by the shareholder servicing agents and broker-dealers. In
addition, shareholder servicing agents and broker-dealers offering purchase and
redemption procedures similar to those offered to shareholders who invest in the
Fund directly may impose charges, limitations, minimums and restrictions in
addition to or different from those applicable to shareholders who invest in the
Fund directly. Accordingly, the net return to investors who invest through
shareholder servicing agents and broker-dealers may be less than by investing in
the Fund directly. An investor should read the Prospectus in conjunction with
the materials provided by the shareholder servicing agent and broker-dealer
describing the procedures under which Fund shares may be purchased and redeemed
through the shareholder servicing agent and broker-dealer.

BECAUSE THESE DISTRIBUTION AND SHAREHOLDER SERVICE FEES ARE
PAID OUT OF THE FUND'S ASSETS ON AN ONGOING BASIS, THE FEES MAY,
OVER TIME, INCREASE THE COST OF INVESTING IN THE FUND AND MAY COST INVESTORS
MORE THAN OTHER TYPES OF SALES LOADS.

HOW TO OPEN AN ACCOUNT AND PURCHASE SHARES

Once you have chosen the type of account and a class of shares, you are ready to
establish an account.

GENERAL INFORMATION

The Fund does not issue share certificates.

You will receive quarterly statements and a confirmation of each transaction.
You should verify the accuracy of all transactions in your account as soon as
you receive your confirmation.

During unusual market conditions, the Fund may temporarily suspend or
discontinue any service or privilege.

MINIMUM INITIAL PURCHASES

The Fund accepts investments in the following minimum amounts:

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<PAGE>
<TABLE>
<CAPTION>

----------------------------------------- ----------------------- --------------------------
MINIMUM INITIAL MINIMUM SUBSEQUENT
TYPE OF ACCOUNT INVESTMENT INVESTMENT
----------------------------------------- ----------------------- --------------------------

Individual, Sole proprietorship or
<S> <C> <C>
Joint accounts $1,000 $250

----------------------------------------- ----------------------- --------------------------
Corporate, partnership or trust accounts
$1,000 $250
----------------------------------------- ----------------------- --------------------------

Uniform Gift or Transfer to a Minor
Accounts (ugma, utma) $500 $100

----------------------------------------- ----------------------- --------------------------

Individual Retirement Accounts (IRA)
$500 $100
----------------------------------------- ----------------------- --------------------------
</TABLE>

The Fund or Adviser may waive or lower these minimums in certain cases. YOU MUST
COMPLETE AND SIGN AN APPLICATION FOR EACH ACCOUNT YOU OPEN WITH THE FUND.

The price for Fund shares is the Fund's net asset value per share (NAV) plus any
applicable sales charge. We determine the NAV as of the close of trading on the
New York Stock Exchange (normally 4:00 p.m. Eastern time) every day that the
Exchange is open. We will price your order at the next NAV calculated after the
Fund accepts your order. For more information on how we price shares, see "WHEN
AND HOW NAV IS DETERMINED" on page 22.

METHOD OF PURCHASE

BY TELEPHONE

To open an account by telephone, call (877) XXX-XXXX to obtain an account number
and instructions. We will take information necessary to open your account,
including social security or tax identification number, over the phone.

After you have obtained an account number, you may purchase shares of the Fund
by wiring federal funds. Your bank may charge a fee for doing this. You should
instruct your bank to wire funds to:

Union Bank of California
ABA # 122000496
Attention: DOMESTIC CUSTODY
Account # XXXXXXXXXX
F/B/O: Azzad/Dow Jones Islamic Index Fund
Shareholder Account No. ___________________

-15-
<PAGE>

You will then need to mail a signed account application to:

Azzad/Dow Jones Islamic Index Fund
c/o American Data Services, Inc.
P.O. Box 5536
Hauppauge, NY 11788-0132

BY MAIL

You may also open an account by mailing a completed and signed account
application, together with a check, to:

Azzad/Dow Jones Islamic Index Fund
c/o American Data Services, Inc.
P.O. Box 5536
Hauppauge, NY 11788-0132

AUTOMATIC INVESTMENT PLANS

You may invest a specified amount of money in the Fund once or twice a month on
specified dates. These payments are taken from your bank account by automated
clearinghouse ("ACH") payment.

To open an Automatic Investment Plan account ("AIP"), call or write to us to
request and "Automatic Investment" form. Complete and sign the form, and return
it to us along with a voided check for the bank account from which payments will
be made.

TRANSACTIONS THROUGH THIRD PARTIES

If you invest through a broker or other financial institution, the policies and
fees charged by that institution may be different than those of the Fund. Banks,
brokers, retirement plans and financial advisors may charge transaction fees and
may set different minimum investments or limitations on buying or selling
shares. Consult a representative of your financial institution or retirement
plan for further information.

HOW TO PAY FOR YOUR PURCHASE OF SHARES

You may purchase shares of the Fund by check, automated clearinghouse payment,
or wire. All payments must be in U.S. dollars.

CHECKS. All checks must be drawn on U.S. banks and made payable to "Azzad/Dow
Jones Islamic Index Fund." No other method of check payment is acceptable (for
instance, you may not pay by travelers check).

ACH PAYMENTS. Instruct your financial institution to make an ACH (automated
clearinghouse) payment to us. These payments typically take two days. Your
financial institution may charge you a fee for this service.

WIRES. Instruct your financial institution to make a Federal funds wire payment
to us. Your financial institution may charge you a fee for this service.

-16-
<PAGE>

LIMITATIONS ON PURCHASES

The Fund reserves the right to refuse any purchase request, particularly
requests that could adversely affect the Fund or its operations. This includes
those from any individual or group who, in the Fund's view, is likely to engage
in excessive trading (usually defined as more than four exchanges out of the
Fund within a calendar year).

CANCELED OR FAILED PAYMENTS

The Fund accepts checks and ACH transfers at full value subject to collection.
If your payment for shares is not received or you pay with a check or ACH
transfer that does not clear, your purchase will be canceled. You will be
responsible for any losses or expenses incurred by the Fund or the Transfer
Agent, and the Fund may redeem other shares you own in the account as
reimbursement. The Fund and its agents have the right to reject or cancel any
purchase, exchange, or redemption due to nonpayment.. IF WE CANCEL YOUR PURCHASE
DUE TO NON-PAYMENT, YOU WILL BE RESPONSIBLE FOR ANY LOSS THE FUND INCURS. WE
WILL NOT ACCEPT CASH OR THIRD-PARTY CHECKS FOR THE PURCHASE OF SHARES.

HOW TO SELL (REDEEM) SHARES OF THE FUND

You have the right to sell ("redeem") all or any part of your shares subject to
certain restrictions. Selling your shares in the Fund is referred to as a
"redemption" because the Fund buys back its shares. We will redeem your shares
at the net asset value next computed following receipt of your redemption
request in proper form. See "Redemption Procedures - By Mail" below.

We will mail your redemption proceeds to your current address or transmit them
electronically to your designated bank account. Except under certain emergency
conditions, we will send your redemption to you within seven days after we
receive your redemption request. During unusual market conditions, the Fund may
suspend redemptions or postpone the payment of redemption proceeds, to the
extent permitted under the Federal securities laws. Delays may occur in cases of
very large redemptions, excessive trading or during unusual market conditions.
If you purchase your shares by check, the Fund may delay sending the proceeds
from your redemption request until your check has cleared. This could take up to
15 calendar days.

The Fund cannot accept requests that specify a certain date for redemption or
which specify any other special conditions. Please call 1-877- XXX-XXXX for
further information. WE WILL NOT PROCESS YOUR REDEMPTION REQUEST IF IT IS NOT IN
PROPER FORM ("REDEMPTION PROCEDURES - BY MAIL"). WE WILL NOTIFY YOU IF YOUR
REDEMPTION REQUEST IS NOT IN PROPER FORM.

REDEMPTION PROCEDURES

BY MAIL

To redeem shares by mail, prepare a written request including:

-- Your name(s) and signature(s)
-- The name of the Fund, and your account number
-- The dollar amount or number of shares you want to redeem
-- How and where to send your proceeds
-- A signature guarantee, if required (see "Signature Guarantee
Requirements" below)
-- Any other legal documents required for redemption requests by
corporations, partnerships or trusts.

-17-
<PAGE>

Mail your request and documentation to:

Azzad/Dow Jones Islamic Index Fund
c/o American Data Services, Inc.
P.O. Box 5536
Hauppauge, NY 11788-0132

BY WIRE

You may only request payment of your redemption proceeds by wire if you have
previously elected wire redemption privileges on your account application or a
separate form.

Wire requests are only available if your redemption is for $10,000 or more.

To request a wire redemption, mail or call us with your request (See "By Mail").
If you wish to make your wire request by telephone, however, you must have
previously elected telephone redemption privileges.

BY TELEPHONE

We accept redemption requests by telephone only if you have elected telephone
redemption privileges on your account application or a separate form.

To redeem shares by telephone, call us with your request. You will need to
provide your account number and the exact name(s) in which the account is
registered. We may also require a password or additional forms of
identification.

Your proceeds will be mailed to you or wired to you (if you have elected wire
redemption privileges - See "By Wire" above)

Telephone redemptions are easy and convenient, but this account option involves
a risk of loss from unauthorized or fraudulent transactions. We will take
reasonable precautions to protect your account from fraud. You should do the
same by keeping your account information private and by reviewing immediately
any account statement and transaction confirmations that you receive. Neither
the Fund nor the Transfer Agent will be responsible for any losses due to
telephone fraud, so long as we have taken reasonable steps to verify the
caller's identity.

AUTOMATIC REDEMPTION

If you own shares of the Fund with an aggregated value of at least $10,000, you
may request a specified amount of money from your account once a month or once a
quarter on a specified date. These payments are sent from your account to a
designated bank account by ACH payment. Automatic requests must be for at least
$100.

To set up periodic redemptions automatically, call or write us for an "Automatic
Redemption" form. You should complete the form and mail it to us with a voided
check for the account into which you would like the redemption proceeds
deposited.

-18-
<PAGE>

SIGNATURE GUARANTEE REQUIREMENTS

To protect you and the Fund against fraud, signatures on certain requests must
have a "signature guarantee." For requests made in writing a signature guarantee
is required for any of the following:

-- Redemption of over $5,000 worth of shares
-- Changes to a record name or address of an account
-- Redemption from an account for which the address or account
registration has changed within the last 30 days
-- Sending proceeds to any person, address, brokerage firm or bank
account not on record
-- Sending proceeds to an account with a different registration (name or
ownership) from yours
-- Changes to automatic investment or redemption programs, distribution
options, telephone or wire redemption privileges, any other election
in connection with your account. A signature guarantee verifies the
authenticity of your signature. You can obtain one from most banking
institutions or securities brokers, but NOT from a notary public.

SMALL ACCOUNTS

If the value of your account falls below $500 ($250 for UGMA and IRA accounts),
the Fund may ask you to increase your balance. If the account value is still
below $500 after 30 days, the Fund may close your account and send you the
proceeds. The Fund will not close your account if it falls below $500 solely as
a result of a reduction in your account's market value.

REDEMPTION IN KIND

The Fund reserves the right to make redemptions "in kind" -- payment of
redemption proceeds in portfolio securities rather than cash -- if the amount
requested is large enough to affect Fund operations (for example, if the amount
of the redemption is the greater of $250,000 or 1% of the Fund's net assets).

TRANSFERRING REGISTRATION

You can transfer the registration of your shares in the Azzad/Dow Jones Islamic
Index Fund to another owner by completing a transfer form and sending to
Azzad/Dow Jones Islamic Index Fund c/o American Data Services, Inc., P.O. Box
5536, Hauppage, New York 11788-0132.

LOST ACCOUNTS

The Transfer Agent will consider your account "lost" if correspondence to your
address of record is returned as undeliverable, unless the Transfer Agent
determines your new address. When an account is "lost," all distributions on the
account will be reinvested in additional shares of the Fund. In addition, the
amount of any outstanding (unpaid for six months or more) checks for
distributions that have been returned to the Transfer Agent will be reinvested
and the checks will be canceled.

-19-
<PAGE>

HOW TO CONTACT THE FUND

For more information about the Fund or your account, you may write to us at:

Azzad/Dow Jones Islamic Index Fund
c/o American Data Services, Inc.
P.O. Box 5536
Hauppauge, NY 11788-0132

Or you may call us toll free at 1-877- XXX-XXXX

WHEN AND HOW NAV IS DETERMINED

The value of a single share of the Fund is known as its "net asset value" per
share or "NAV." The Fund's NAV per share is normally calculated by the
administrator of the Fund as of the close of the regular session of trading on
the New York Stock Exchange ("NYSE") (normally 4:00 p.m., Eastern time) on each
weekday except days when the NYSE is closed. The Fund's NAV may be calculated
earlier, however, if trading on the NYSE is restricted or as permitted by the
Securities and Exchange Commission (SEC).

If a security or securities that the Fund owns are traded when the NYSE is
closed (for example, on a foreign exchange or in an after-hours market) the
value of the Fund's assets may be affected on days when the Fund is not open for
business. In addition, trading in some of the Fund's assets may not occur on
days when the Fund is open for business.

The Fund's NAV is determined by taking the market value of all securities owned
by the Fund (plus all other assets such as cash), subtracting all liabilities
and then dividing the result (net assets) by the number of shares outstanding.

The Fund's securities are valued primarily on the basis of market quotations.
Certain short-term securities are valued on the basis of amortized cost. If
market quotations are not readily available for a security or if a security's
value has been materially affected by events occurring after the close of the
exchange or market on which the security is principally traded (for example, a
foreign exchange or market), that security may be valued by another method that
the Board of Directors believes accurately reflects fair value. A security's
valuation may differ depending on the method used for determining value.

DISTRIBUTIONS

As a shareholder, you are entitled to your share of the Fund's net income and
capital gains on its investments. The Fund passes substantially all of its
earnings along to its investors as distributions, except for interest income,
100% of which is donated by the Fund to qualified charities in accordance with
policies and procedures established by the Azzad Shari'ah Board. Consistent with
the principles of the Shari'ah Supervisory Board. When the Fund earns dividends
from stocks and interest from bonds and other debt securities and distributes
these earnings to shareholders, it is called a dividend distribution. The Fund
realizes capital gains when it sells securities for a higher price than it paid.
When net long-term capital gains are distributed to shareholders, it is called a
capital gain distribution. Net short-term capital gains are considered ordinary
income and are included in dividend distributions.

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<PAGE>

LONG-TERM VS. SHORT-TERM CAPITAL GAINS:
---------------------------------------

-- Long-term capital gains are realized on securities held for more than
one year and are part of your capital gain distribution.

-- Short-term capital gains are realized on securities held less then one
year and are part of your dividend distributions

The Fund distributes dividends and capital gains, if any, annually. All
distributions are reinvested in additional shares, unless you elect to receive
distributions in cash. For Federal income tax purposes, distributions are
treated the same whether they are received in cash or reinvested. Shares become
entitled to receive distributions on the day after the shares are issued.

If you have elected to receive distributions in cash, and the postal or other
delivery service returns your check to the Fund as undeliverable, you will not
receive interest on amounts represented by the uncashed checks.

FEDERAL TAX CONSIDERATIONS

Your investment will have tax consequences that you should consider. Some of the
more common federal tax consequences are described here but you should consult
your tax consultant about your particular situation. Although it is not an
investment objective, the fund's adviser will attempt to take into account the
tax consequences of its investment decisions. However, there may be occasions
when the Adviser's investment decisions will result in a negative tax
consequence for the Fund's shareholders.

TAXES ON DISTRIBUTIONS. The Fund operates in a manner such that it will not be
liable for Federal income or excise tax. Distributions of net investment income
or short-term capital gain are taxable to you as ordinary income. Distributions
of long-term capital gain are taxable to you as long-term capital gain,
regardless of how long you have held your shares. Distributions may also be
subject to state and local taxes.

The Fund will mail reports containing information about the Fund's distributions
during the year to you after December 31 of each year (by January 31st). Consult
your tax advisor about the Federal, state and local tax consequences in your
particular circumstances.

TAXES ON REDEMPTIONS OF SHARES. The sale of Fund shares is a taxable transaction
for Federal income tax purposes. Your taxable gain or loss is computed by
subtracting your tax basis in the shares from the redemption proceeds. Because
your tax basis depends on the original purchase price and on the price at which
any dividends may have been reinvested, you should keep your account statement
so that you or your tax preparer will be able to determine whether a sale will
result in a taxable gain or loss.

"BUYING A DIVIDEND." All distributions reduce the net asset value of the Fund's
shares by the amount of the distribution. Unless your investment is in a
tax-deferred account, you may wish to avoid buying shares of the Fund shortly
before a distribution. If you do, you will pay the full pre-distribution price
for your shares and then receive part of your investment back as a taxable
distribution.

-21-
<PAGE>

TAX WITHHOLDING. The Fund may be required to withhold U.S. federal income tax at
the rate of 31 percent from all taxable distributions and form proceeds from
certain sales payable to shareholders who fail to provide the Fund with their
correct taxpayers identification number or to make required certifications, or
who have been notified by the IRS that they are subject to backup withholding.
Any such withheld amounts may be credited against the shareholder's U.S. federal
income tax liability.

PERFORMANCE COMPARISONS

Advertisements and other sales literature may refer to the Fund's total return.
The total return for the one, five and ten-year periods (or for the life of the
Fund until the Fund is in existence for such longer periods) through the most
recent calendar quarter represents the average annual compounded rate of return
on an investment of $1,000 in the Fund invested at the public offering price,
plus any applicable sales load. Total return may also be presented for other
periods. All data are based on past investment results and do not predict future
performance. Investment performance, which will vary, is based on many factors,
including market conditions, portfolio composition and Fund operating expenses.
Investment performance also often reflects the risks associated with the Fund's
investment objectives and strategies. These factors should be considered when
comparing the Fund's investment results with those of other mutual funds and
other investment vehicles.

Quotations of investment performance for any period when an expense limitation
is in effect will be greater than if the limitation had not been in effect. Fund
performance may be compared to that of various indexes.

CUSTODIAN, TRANSFER AGENT AND DIVIDEND DISBURSING AGENT

Union Bank of California, located at 350 California Street, San Francisco,
California 94104, serves as custodian for the Fund's cash and securities. The
Custodian does not assist in, and is not responsible for, investment decisions
involving assets of the Fund. American Data Services, Inc., the Fund's
Administrator, located at The Hauppauge Corporate Center, 150 Motor Parkway,
Hauppauge, New York 11788, also serves as the Fund's transfer and dividend
disbursing agent. The Fund pays the Administrator the greater of $900 per month
or $9.00 per year per account, plus out-of-pocket expenses, for rendering such
transfer and dividend agency services.

COUNSEL AND INDEPENDENT AUDITORS

Legal matters in connection with the issuance of shares of common stock of the
Fund are passed upon by Spitzer & Feldman P.C., 405 Park Avenue, New York, New
York 10022. McCurdy & Associates, CPAs, Inc., 27955 Clemens Road, Westlake, Ohio
44145, have been selected as independent auditors for the Fund.

FINANCIAL HIGHLIGHTS

Because the Fund has been in operation for less than a year, no financial
highlights are being reported for the Fund at this time.

-22-
<PAGE>

ORGANIZATION

The Azzad/Dow Jones Islamic Index Fund is a series of Questar Funds, Inc., a
Maryland corporation that is registered with the SEC as an open-end, management
investment company. It is not intended that meetings of the Fund's shareholders
be held except when required by Federal or Maryland state law. All shareholders
of the Fund are entitled to vote at shareholders' meetings. From time to time,
large shareholders may control the Fund.

-23-
<PAGE>

FOR MORE INFORMATION

ADVISER AZZAD ASSET MANAGEMENT, INC.
8201 GREENSBORO DRIVE, SUITE 1000
MCLEAN, VIRGINIA 22102

LEGAL COUNSEL STEPHANIE DJINIS
LAW OFFICES OF STEPHANIE DJINIS
2918 JONES BRANCH DRIVE
SUITE 600
MCLEAN, VA 22102

INDEPENDENT AUDITORS MCCURDY AND ASSOCIATES CPA'S, INC.
27955 CLEMENS ROAD
WESTLAKE, OH 44145

ADMINISTRATOR, TRANSFER AGENT AND FUND AMERICAN DATA SERVICES, INC.
ACCOUNTANT 105 MOTOR PARKWAY
HAUPPAUGE, NEW YORK 11788

CUSTODIAN UNION BANK OF CALIFORNIA, N.A.
350 CALIFORNIA STREET
SAN FRANCISCO, CALIFORNIA 94104

The following documents are available free upon request:

ANNUAL/SEMI-ANNUAL REPORTS. Additional information about the Fund's
investments is available in the Fund's annual and semi-annual reports
to shareholders. In the Fund's annual report, you will find a
discussion of the market conditions and investment strategies that
significantly affected the Fund's performance during its last fiscal
year.

STATEMENT OF ADDITIONAL INFORMATION ("SAI"). The SAI provides more
detailed information about the Fund and is incorporated by reference
into this Prospectus.

You may obtain free copies of both reports and the SAI, request other
information and discuss your questions about the Fund by contacting the Fund at:

AZZAD/DOW JONES ISLAMIC INDEX FUND
C/O AMERICAN DATA SERVICES, INC.
P.O. BOX 5536
HAUPPAUGE, NEW YORK 11788-0132
1-877-XXX-XXXX

You can also review the Fund's reports and SAI by visiting the Public Reference
Room of the Securities and Exchange Commission at 450 Fifth Street, NW,
Washington, DC 20549. Please call 800-SEC-0330 to learn the Public Reference
Room's business hours. You may request copies of the Fund's reports and SAI, for
a fee, by writing to the Public Reference Room at this address, or by e-mailing
your request to [email protected]. You may also download a free, text-only
version from the Commission's Internet website at www.sec.gov.

Investment Company Act File Number: 811-08655

-24-
<PAGE>

QUESTAR FUNDS, INC.

AZZAD/DOW JONES ISLAMIC INDEX FUND

(AN ENHANCED SHARI`AH COMPLIANT MUTUAL FUND BASED ON THE
EXTRA LIQUID VERSION OF THE DOW JONES ISLAMIC MARKET INDEX)

STATEMENT OF ADDITIONAL INFORMATION

_______________________, 2000

TABLE OF CONTENTS

PAGE

Investment Objective, Policies and Restrictions.............................. 2
Directors and Executive Officers.............................................15
Investment Advisory and Other Services.......................................16
Shareholder Servicing & Distribution Plan....................................18
Portfolio Transactions and Allocation of Brokerage...........................20
Taxation.....................................................................21
Ownership of Shares..........................................................22
Purchase of Shares...........................................................22
Dividends and Distributions..................................................22
Net Asset Value .............................................................22
Performance Comparisons......................................................23
Redemption of Shares.........................................................24
Counsel and Independent Auditors.............................................25
Other Information............................................................25
Appendix.....................................................................25

This Statement of Additional Information is not a prospectus, but should be read
in conjunction with the Fund's Prospectus dated _______________, 2000. Copies of
the Prospectus may be obtained from the Fund by writing the Fund's Administrator
at American Data Services, Inc., The Hauppauge Corporate Center, 150 Motor
Parkway, Hauppauge, New York 11788 or by calling (631) 951-0500.

<PAGE>

GLOSSARY

As used in this SAI, the following terms have the meanings listed.

"ADS" means American Data Services, Inc., the administrator, fund accountant,
and transfer and distribution disbursing agent of the Fund.

"Adviser" means Azzad Asset Management, Inc.

"Board" means the Board of Directors of the Company.

"Code" means the Internal Revenue Code of 1986, as amended.

"Corporation" means the Questar Funds, Inc., a Maryland corporation that is
registered with the SEC as an open-end, management investment company, commonly
referred to as a "mutual fund".

"Custodian" means the custodian of the Fund's assets.

"Fund" means the Azzad/Dow Jones Islamic Index Fund, a separate series of the
Company.

"Moody's" means Moody's Investors Service.

"NRSRO" means a nationally recognized statistical rating organization.

"NAV" means net asset value.

"SEC" means the U.S. Securities and Exchange Commission.

"S&P" means Standard & Poor's.

"U.S. Government Securities" means obligations issued or guaranteed by the U.S.
Government, its agencies or instrumentalities.

"1933 Act" means the Securities Act of 1933, as amended.

"1940 Act" means the Investment Company Act of 1940, as amended.

INVESTMENT OBJECTIVE, POLICIES AND RESTRICTIONS

The Fund's investment objective is to provide investors with annual returns
which, after expenses, match or exceed the annualized performance of the U.S.
components of the Dow Jones Islamic Market Extra Liquid Index (the "Index")1, a
sub-index of the Dow Jones Islamic Market Index ("DJIM"). The DJIM is a globally
diversified compilation of equity securities considered by Dow Jones' Shari`ah
Supervisory Board to be compliant with Shari`ah law.

___________

-2-
<PAGE>

The Fund seeks to achieve its investment objective by investing substantially
all of its net assets in the U.S. component securities of the IMXL, an unmanaged
index that tracks the 100 most liquid U.S. and non-U.S. securities listed on the
DJIM. The investment adviser seeks to achieve and maintain a correlation between
the Fund's investment portfolio and the U.S. component securities of the IMXL of
at least 0.95, after expenses. A correlation of 1.00 would mean that the Fund
and U.S. component securities of the IMXL were perfectly correlated.

The Fund seeks to achieve its investment objective only in strict
conformity with the body of Islamic laws known as SHARI'AH. All component stocks
of the DJIM and IMXL have been screened and approved by Dow Jones' Shari`ah
Supervisory Board to ensure their compliance with Shari`ah law. In addition, the
Fund's management and investment processes are subject to the regular review and
approval of an independent SHARI'AH Supervisory Board convened by the Fund to
ensure compliance with these principles.

TEMPORARY DEFENSIVE STRATEGY

The Fund may also, from time to time, take temporary defensive
positions that are inconsistent with the Fund's principal investment strategies
in order to respond to adverse market, economic, political or other unfavorable
conditions. Under these circumstances, the Fund may invest a substantial portion
of its assets in high quality, short-term debt securities and money market
instruments, provided however, that any interest income earned from such
investments are disgorged and donated to qualified charities in accordance with
the purification policies and procedures established by the Azzad Shari'ah Board
(See "Treatment of Interest Income" on Page 10). These short-term debt
securities and money market instruments include commercial paper, certificates
of deposit, bankers' acceptances, and U.S. Government securities. When the Fund
is making such defensive investments, the Fund may not achieve its investment
objective.

A summary of the Fund's investment policies is set forth in the
Prospectus. Additional information regarding the Fund's investment risks,
policies and restrictions is set forth below.

INVESTMENT POLICIES AND ASSOCIATED RISKS

The following discussion supplements the disclosure in the prospectus
about the Fund's investment techniques, strategies and risks. The Fund is
designed for investment of that portion of an investor's funds which can
appropriately bear the special risks associated with certain types of
investments (e.g., investments in common stocks pursuant to an enhanced
indexed-oriented investment strategy consistent with the body of Islamic laws
known as Shari`ah). Unless otherwise noted, the policies described in this
Statement of Additional Information are not fundamental and may be changed by
the Board of Directors. As all investment securities are subject to inherent
market risks and fluctuations in value due to earnings, economic and political
conditions and other factors, the Fund can give no assurance that its investment
objective will be achieved.

_________________

(2) All dividend payments to the Fund will be subject to a
purification process (see description of the purification of income from
dividends on Page 7) according to the methodology formulated by Dow Jones and
approved by the Azzad Shari`ah Board. A portion of each dividend may be deemed
prohibited as it relates to interest income earned by a particular company in
the IMXL. The portion of the dividend deemed prohibited will be treated as
interest income and will be segregated to the charitable account.

-3-
<PAGE>

RISKS OF INVESTING IN PORTFOLIO SECURITIES

The Fund will invest solely in the U.S. component securities of the Dow Jones
Islamic Market Extra Liquid Index which are all common stocks. The Fund will not
invest in any other type of equity security. Common stock represents the
residual ownership interest in an issuer and is entitled to the income and
increase in the value of the assets and business of the entity after all of its
obligations and preferred stock are satisfied.

An investment in the Fund should be made with an understanding of the risks
inherent in an investment in equity securities, including the risk that the
general condition of the stock market may deteriorate. Common stocks are
susceptible to general stock market fluctuations and to volatile increases and
decreases in value according to various unpredictable factors including
expectations regarding government, economic, monetary and fiscal policies,
inflation and interest rates, economic expansion or contraction and global or
regional political, economic and banking crises. In addition to the general
risks and considerations of equity investing, the Fund is subject to the
specific risks associated with the specific investments discussed below.

FUNDAMENTAL INVESTMENT RESTRICTIONS

The Fund is operated under the following investment restrictions
which are deemed fundamental policies and may be changed only with the approval
of the holders of a "majority of the outstanding voting securities" as defined
in the Investment Company Act of 1940, as amended (the "1940 Act"), of the Fund.
As used in this Part B, the term "majority of the outstanding voting securities"
as defined in the 1940 Act currently means the vote of (i) 67% or more of the
voting securities present at a meeting, if the holders of more than 50% of the
outstanding voting securities are present in person or represented by proxy; or
(ii) more than 50% of the outstanding voting securities, whichever is less.

The Fund may not:

(1) Borrow money or pledge its assets except in an amount not to
exceed 1/3 of the current value of its net assets and in a manner not to
contravene the policies and procedures of Islamic Shari'ah principles, it may
borrow money as a temporary measure for extraordinary or emergency purposes, and
except that it may pledge, mortgage or hypothecate not more than 1/3 of such
assets to secure such borrowings (it is intended that money will be borrowed
only from banks and only to accommodate requests for the redemption of Fund
shares, while effecting an orderly liquidation of investment portfolio
securities or to maintain liquidity in the event of an unanticipated failure to
complete a portfolio security transaction or other similar situations).

(2) Earn interest on its capital except as permitted by the policies and
procedures established by the Azzad Shari'ah Board;

(3) Purchase any security which is not included in the U.S. component of the Dow
Jones Islamic Market Extra Liquid Index;

(4) Hold uninvested cash in interest bearing deposits or invest such uninvested
cash in a manner that would not be in compliance with Shari'ah law principles;

(5) Acquire the securities of one issuer if upon such purchase the value of the
Fund's holdings of such securities would exceed 10% of its net assets;

(6) Invest in fixed income investments except as permitted by the policies and
procedures established by the Azzad Shari'ah Board;

-4-
<PAGE>

(7) Underwrite securities issued by other persons except insofar as it may
technically be deemed an underwriter under the Securities Act of 1933, as
amended (the "1933 Act") in selling a portfolio security;

(8) Purchase or sell real estate (including limited partnership interests but
excluding securities secured by real estate or interests therein), interests in
oil, gas or mineral leases, commodities or commodity contracts in the ordinary
course of business (the freedom of action to hold and to sell real estate
acquired as a result of the ownership of securities is reserved);

(9) Concentrate its investments in any particular industry unless such
concentration is reflected in the U.S. component of the Dow Jones Islamic Market
Extra Liquid Index;

(10) Issue any senior security (as that term is defined in the 1940 Act) if such
issuance is specifically prohibited by the 1940 Act or the rules and regulations
promulgated thereunder or if such issuance is prohibited by Shari'ah law.

Except as required by the 1940 Act or the Code, if any percentage
restriction on investment or utilization of assets is adhered to at the time an
investment is made, a later change in percentage resulting from a change in the
market values of the Fund's assets or purchases and redemptions of shares will
not be considered a violation of the limitation.

DIRECTORS AND EXECUTIVE OFFICERS

The following table contains information concerning the directors and officers
of Questar Funds, Inc., (the "Company"), and their principal occupations during
the past five years. Directors who are interested persons, as defined by the
1940 Act, are indicated by asterisk.
<TABLE>
<CAPTION>

----------------------------------------- ----------------------------------------------------- ---------------------

NAME (AGE) AND PRINCIPAL OCCUPATION AND OTHER
ADDRESS BUSINESS EXPERIENCE DURING THE POSITIONS HELD WITH THE
PAST FIVE (5) YEARS COMPANY
----------------------------------------- ----------------------------------------------------- ---------------------

<S> <C> <C>
DANIEL ABRAMSON (49) President and Chief Executive Officer, Director
c/o Dunhill Staffing Systems, Inc. Dunhill Staffing Systems, Inc.(1994-
150 Motor Parkway Present), having joined Dunhill in 1986
Hauppauge, NY 11788 as a franchise owner in Providence, RI.
He served as Franchise Advisory Council
President (1990-1992) and is a member of the
National Association of Personnel
Services, a trade organization.
----------------------------------------- ----------------------------------------------------- ---------------------

PHILIP A. CAPALONGO (44) Managing Director in Capital Investments Director
211 Mill River Road Partners, an investment banking firm.
Oyster Bay, NY 11771 Prior thereto, he served in a number of
senior management positions at
TeleTechnologies, a technology company,
and Michaels, Edgar & Phillips, an
investment banking firm.

----------------------------------------- ----------------------------------------------------- ---------------------

ANTHONY J. HERTL, (50) Chief Financial and Administrative Director
Colobaugh Pond Road Officer for Marymount College, Tarrytown,
Croton-on-Hudson, NY 10520 New York since 1996. Prior thereto, he
served in a number of senior management
positions at Prudential Securities Inc.
from 1983-1996. Mr. Hertl spent ten
(10) years at Arthur Andersen & Co.
and is a Certified Public Accountant.
----------------------------------------- ----------------------------------------------------- ---------------------

*MICHAEL MIOLA (48) Chief Executive Officer of American Chief Executive Officer,
The Hauppauge Corporate Center Data Services, Inc. President and Director
150 Motor Parkway
Hauppauge, New York 11788
----------------------------------------- ----------------------------------------------------- ---------------------

DONALD SMITH (52) President, Don Smith Realty (1971-1999). Director
Don Smith Realty Director of Avalon Capital, Inc., a
81 North Maple Avenue closed-end investment company.
Ridgewood, NJ 07450
----------------------------------------- ----------------------------------------------------- ---------------------
</TABLE>

-5-
<PAGE>

In addition to Mr. Miola as Chief Executive Officer and President, the
other officers of the Corporation are Michael Wagner, Treasurer and James
Colantino, Secretary. Each of the officers is employed by the Administrator.

The members of the Audit Committee of the Board of Directors are
Messrs. Hertl, Smith and Abramson. Mr. Hertl acts as the chairperson of such
committee. The Audit Committee oversees the Fund's financial reporting process;
reviews audit results and recommends annually to the Company a firm of
independent certified public accountants.

Those Directors who are officers or employees of the Administrator or
its affiliates receive no remuneration from the Fund. Each disinterested
Director receives a fee from the Fund for each regular quarterly and in-person
special meeting of the Board of Directors attended. Members of the Board who are
not affiliated with the Adviser or the Administrator receive an annual fee of
$1,000 plus $500 for each Board meeting attended. The Fund will pay a pro rata
portion of the Directors' fees and expenses based on the net assets of the Fund
and the other series of the Company. In addition, each Director who is not
affiliated with the Adviser or the Administrator is reimbursed for expenses
incurred in connection with attending meetings.

The following table sets forth the compensation received by each
Director of the Company during the Fund's fiscal year ending February 29, 2000.
Directors who are interested persons of the Company, as defined by the 1940 Act,
are indicated by asterisk.

-6-
<PAGE>

--------------------------------- ------------------------- --------------------- ----------------------- ----------------------

(1) (2) (3) (4) (5)
--------------------------------- ------------------------- --------------------- --------------------- -----------------------

PENSION OR TOTAL COMPENSATION FROM
AGGREGATE COMPENSATION RETIREMENT BENEFITS ESTIMATED ANNUAL FUND AND FUND COMPLEX
NAME OF PERSON, POSITION FROM EACH FUND(3) ACCRUED AS PART OF BENEFITS UPON PAID TO DIRECTORS
FUND EXPENSES RETIREMENT
--------------------------------- ------------------------- --------------------- --------------------- -----------------------

<S> <C> <C> <C> <C>
Daniel Abramson NONE NONE NONE NONE
Director
--------------------------------- ------------------------- --------------------- --------------------- -----------------------

Philip A. Capalongo NONE NONE NONE NONE
Director
--------------------------------- ------------------------- --------------------- --------------------- -----------------------

Anthony Hertl NONE NONE NONE NONE
Director
--------------------------------- ------------------------- --------------------- --------------------- -----------------------

Donald Smith NONE NONE NONE NONE
Director
--------------------------------- ------------------------- --------------------- --------------------- -----------------------

*Michael Miola
Director NONE NONE NONE NONE
--------------------------------- ------------------------- --------------------- --------------------- -----------------------
<FN>

(1.) The Officers and Directors of the Fund as a group own less than 1% of all
of the Fund's equity securities.

</FN>
</TABLE>

AZZAD SHARI`AH BOARD

To ensure that the investment policies and general business practices
of the Fund comply with the precepts of Shria`ah law, the Fund has convened an
independent Shari`ah Supervisory Board to supervise and review Fund policies and
procedures (the "Azzad Shari`ah Board"). On a monthly basis, the Azzad Shari`ah
Board monitors the Fund's investment activities and reviews the Fund's
management and compliance procedures based on Islamic financial law (fiqh al
mu`amalat) and current Shari`ah scholarship, interpretations, and practices. The
Azzad Shari`ah Board also meets annually for a more comprehensive review and
reports on the results of their findings annually in a report to the Board of
Directors of the Fund. The Azzad Sharia`ah Board also has primary responsibility
for implementing the Fund's policies in connection with the purification of
interest income (RIBA).

The Azzad Shari`ah Board is comprised of three renowned Shari`ah
scholars versed in modern investment disciplines. The Board is chaired by Shaykh
Yusuf Talal DeLorenzo of the United States of America and also includes Shaykh
Dr. Mohamed Ali EL-Gari of the Kingdom of Saudi Arabia and Shaykh Nizam Yaquby
of Bahrain. Additional biographical information on each Azzad Shari`ah Board
member is provided below:

-7-
<PAGE>

Shaykh Yusuf Talal DeLorenzo

Shaykh Yusuf Talal DeLorenzo is currently a Shari'ah consultant/advisor and
translator/researcher for the institution of Islamic Banking, London, and
PCS Inc., Reston, Virginia. He holds an M.A. in Islamic Studies from
Jami'ah al Ulum al Islamiyah (Karachi) and is a doctoral candidate at the
Hartford Seminary. Shaykh DeLorenzo produced the first systematic academic
translation in English of legal rulings issued by Shari'ah advisory boards
on the operations of Islamic Bank Rulings on the Operations of Islamic
Banks. He has also authored original research in Islamic studies, including
Islamic banking and law, in English, Arabic and Urdu.

Shaykh Dr. Mohamed Ali EL-Gari

Shaykh Mizam Yaquby

Shaykh Mizam Yaquby is a renowned Shari'ah scholar and advisor to numerous
Islamic banks and companies, including Abu Dhabi Islamic Bank, Islamic
Investment Company of the Gulf, Bahrain and the Arab Islamic Bank, Bahrain.
He pursued traditional Islamic studies in Mecca, India and Morocco under
the guidance of eminent Islamic scholars, including Shaykh Abdullah
Al-Farisi and Shaykh Muhammad Salah Al-Abbasi. He holds a B.A.in Economics
and Comparative Religion from McGill University, Toronto. He is a Ph.D.
candidate in Islamic Law at the University of Wales. Shaykh Yaquby has
published several books on Islam law and is a frequent speaker at Islamic
conferences.

INVESTMENT ADVISORY AND OTHER SERVICES

The investment adviser for the Fund is Azzad Asset Management, Inc.
(the "Adviser"). The Adviser will act as such pursuant to a written agreement
which, after its initial two-year period, must be annually re-approved by the
Board of Directors. The address of the Adviser is 8201 Greensboro Drive, Suite
1000, McLean, Virginia 22102. The Adviser can also be contacted by telephone at
(703) 847-8127.

CONTROL OF THE ADVISER

_____________________________ each own __________% of the issued and
outstanding shares of common stock of the Adviser.

INVESTMENT ADVISORY AGREEMENT

The Adviser acts as the investment adviser of the Fund under an
Investment Advisory Agreement approved by the Board of Directors (including a
majority of the Directors who are not parties to the agreement, or interested
persons of any such party).

-8-
<PAGE>

The Investment Advisory Agreement will terminate automatically in the
event of its assignment. In addition, the Agreement is terminable at any time,
without penalty, by the Board of Directors of the Company or by vote of a
majority of the Fund's outstanding voting securities on not more than 60 days'
written notice to the Adviser, and by the Adviser on 60 days' written notice to
the Company. Unless sooner terminated, the Agreement shall continue in effect
for more than two years after its execution only so long as such continuance is
specifically approved at least annually by either the Board of Directors or by a
vote of a majority of the outstanding shares of the Fund, provided that in
either event such continuance is also approved by a vote of a majority of the
Directors who are not parties to such Agreement, or interested persons of such
parties, cast in person at a meeting called for the purpose of voting on such
approval.

Under the Investment Advisory Agreement, the Adviser provides the
Fund with advice and assistance in the acquisition and disposition of the Fund's
investments. All investment decisions are subject to review by the Board of
Directors of the Company and the Azzad Shari`ah Board. The Adviser is obligated
to pay the salaries and fees of any affiliates of the Adviser serving as
officers of the Company or the Fund.

The same security may be suitable for the Fund or other private
accounts managed by the Adviser. If and when the Fund or two or more accounts
simultaneously purchase or sell the same security, the transactions will be
allocated as to price and amount in accordance with arrangements equitable to
the Fund or account. The simultaneous purchase or sale of the same securities by
the Fund and other accounts may have a detrimental effect on the Fund, as this
may affect the price paid or received by the Fund or the size of the position
obtainable or able to be sold by the Fund.

CODE OF ETHICS

Personnel of the Adviser may invest in securities for their own account
pursuant to a Code of Ethics which has been adopted by the Company and the
Adviser that sets forth all employees' fiduciary responsibilities regarding the
Fund, establishes procedures for personal investing and restricts certain
transactions. For example, all personal trades in most securities require
pre-clearance, and participation in initial public offerings is prohibited. In
addition, restrictions on the timing of personal investing in relation to trades
by the Fund and on short-term trading have been adopted.

ADMINISTRATOR

The Administrator for the Fund is American Data Services, Inc. (the
"Administrator"), which has its principal office at The Hauppauge Corporate
Center, 150 Motor Parkway, Hauppauge, New York 11788, and is primarily in the
business of providing administrative, fund accounting and stock transfer
services to retail and institutional mutual funds through its offices in New
York, Denver and Los Angeles.

Pursuant to an Administrative Service Agreement with the Fund, the
Administrator provides all administrative services necessary for the Fund,
subject to the supervision of the Board of Directors. The Administrator will
provide persons to serve as officers of the Fund. Such officers may be
directors, officers or employees of the Administrator or its affiliates.

The Administrative Service Agreement is terminable by the Board of
Directors of the Company or the Administrator on sixty days' written notice and
may be assigned provided the non-assigning party provides prior written consent.
The Agreement shall remain in effect for two years from the date of its initial
approval, and subject to annual approval of the Board of Directors for one-year
periods thereafter. The Agreement provides that in the absence of willful
misfeasance, bad faith or gross negligence on the part of the Administrator or
reckless disregard of its obligations thereunder, the Administrator shall not be
liable for any action or failure to act in accordance with its duties
thereunder.

-9-
<PAGE>

Under the Administrative Service Agreement, the Administrator
provides all administrative services, including, without limitation: (i)
provides services of persons competent to perform such administrative and
clerical functions as are necessary to provide effective administration of the
Fund; (ii) overseeing the performance of administrative and professional
services to the Fund by others, including the Fund's Custodian; (iii) preparing,
but not paying for, the periodic updating of the Fund's Registration Statement,
Prospectus and Statement of Additional Information in conjunction with Fund
counsel, including the printing of such documents for the purpose of filings
with the Securities and Exchange Commission and state securities administrators,
preparing the Fund's tax returns, and preparing reports to the Fund's
shareholders and the Securities and Exchange Commission; (iv) preparing in
conjunction with Fund counsel, but not paying for, all filings under the
securities or "Blue Sky" laws of such states or countries as are designated by
the Distributor, which may be required to register or qualify, or continue the
registration or qualification, of the Fund and/or its shares under such laws;
(v) preparing notices and agendas for meetings of the Board of Directors and
minutes of such meetings in all matters required by the 1940 Act to be acted
upon by the Board; and (vi) monitoring daily and periodic compliance with
respect to all requirements and restrictions of the Investment Company Act, the
Internal Revenue Code and the Prospectus.

The Administrator, pursuant to the Fund Accounting Service Agreement,
provides the Fund with all accounting services, including, without limitation:
(i) daily computation of net asset value; (ii) maintenance of security ledgers
and books and records as required by the Investment Company Act; (iii)
production of the Fund's listing of portfolio securities and general ledger
reports; (iv) reconciliation of accounting records; (v) calculation of yield and
total return for the Fund; (vi) maintaining certain books and records described
in Rule 31a-1 under the 1940 Act, and reconciling account information and
balances among the Fund's Custodian and Adviser; and (vii) monitoring and
evaluating daily income and expense accruals, and sales and redemptions of
shares of the Fund.

ADMINISTRATOR'S FEES

For the services rendered to the Fund by the Administrator, the Fund
pays the Administrator a monthly fee based on the Fund's average net assets. The
Fund also pays the Administrator for any out-of-pocket expenses. These fees are
set forth in the Fund's Prospectus.

In return for providing the Fund with all accounting related
services, the Fund pays the Administrator a monthly fee based on the Fund's
average net assets, plus any out-of-pocket expenses for such services.

CUSTODIAN, TRANSFER AGENT AND DIVIDEND AGENT

Union Bank of California serves as custodian for the Fund's cash and
securities (the "Custodian"). Pursuant to a Custodian Agreement, it is
responsible for maintaining the books and records of the Fund's portfolio
securities and cash. The Custodian does not assist in, and is not responsible
for, investment decisions involving assets of the Fund. American Data Services,
Inc., the Administrator, also acts as the Fund's transfer and dividend agent.

DISTRIBUTOR

Pursuant to a Distribution Agreement, AmeriMutual Funds Distributors,
Inc. (the "Distributor") has agreed to act as the principal underwriter for the
Fund in the sale and distribution to the public of shares of the Fund, either
through dealers or otherwise. The Distributor has agreed to offer such shares
for sale at all times when such shares are available for sale and may lawfully
be offered for sale and sold.

-10-
<PAGE>

SHAREHOLDER SERVICING AND DISTRIBUTION PLAN

The Fund has adopted a Distribution and Service Plan (the "Plan"),
which was reviewed and approved by a majority of the disinterested directors of
the Company, pursuant to Rule 12b-1 under the Act (the "Rule"). The Rule
provides that an investment company which bears any direct or indirect expense
of distributing its shares must do so only in accordance with a plan permitted
by the Rule. The Plan provides that the Fund will compensate the Distributor for
certain expenses and costs incurred in connection with providing marketing and
promotional support to the Fund, shareholder servicing and maintaining
shareholder accounts, to compensate parties with which it has written agreements
and whose clients own shares of the Fund for providing servicing to their
clients ("shareholder servicing") and financial institutions with which it has
written agreements and whose clients are Fund shareholders (each a
"broker-dealer") for providing distribution assistance and promotional support
to the Fund, which is subject to a maximum of 0.25% per annum of each Fund's
average daily net assets. Fees paid under the Plan may not be waived for
individual shareholders.

Each shareholder servicing agent and broker-dealer will, as agent for
its customers, among other things: answer customer inquiries regarding account
status and history, the manner in which purchases and redemptions of shares of
each may be effected and certain other matters pertaining to the Fund; assist
shareholders in designating and changing dividend options, account designations
and addresses; provide necessary personnel and facilities to establish and
maintain shareholder accounts and records; assist in processing purchase and
redemption transactions; arrange for the wiring of funds; transmit and receive
funds in connection with customer orders to purchase or redeem shares; verify
and guarantee shareholder signatures in connection with redemption orders and
transfers and changes in shareholder designated accounts; furnish quarterly and
year-end statements and confirmations within five business days after activity
in the account; transmit to shareholders of the Fund proxy statements, annual
reports, updated prospectuses and other communications; receive, tabulate and
transmit proxies executed by shareholders with respect to meetings of
shareholders of the Fund; and provide such other related services as either the
Fund or a shareholder thereof may request.

The Plan, the shareholder servicing agreements and the form of
distribution agreement each provide that the Adviser or the Distributor may make
payments from time to time from their own resources which may include the
advisory fee and the asset based sales charges and past profits for the
following purposes: (i) to defray the costs of and to compensate others,
including financial intermediaries with whom the Distributor has entered into
written agreements, for performing shareholder servicing and related
administrative functions of the Fund; to compensate certain financial
intermediaries for providing assistance in distributing the Fund's shares; (ii)
to pay the costs of printing and distributing the Fund's Prospectus to
prospective investors; and (iii) to defray the cost of the preparation and
printing of brochures and other promotional materials, mailings to prospective
shareholders, advertising, and other promotional activities, including the
salaries and/or commissions of sales personnel in connection with the
distribution of the Fund's shares. The Distributor will determine the amount of
such payments made pursuant to the Plan with the shareholder servicing agents
and broker-dealers with whom it has contracted, provided that such payments made
pursuant to the Plan will not increase the amount which the Fund is required to
pay the Distributor for any fiscal year under the shareholder servicing
agreement or otherwise.

Shareholder servicing agents and broker-dealers may charge investors a
fee in connection with their use of specialized purchase and redemption
procedures offered to investors by the shareholder servicing agents and
broker-dealers. In addition, shareholder servicing agents and broker-dealers
offering purchase and redemption procedures similar to those offered to
shareholders who invest in the fund directly may impose charges, limitations,
minimums and restrictions in addition to or different from those applicable to
shareholders who invest in the Fund directly. Accordingly, the net yield to
investors who invest through shareholder servicing agents and broker-dealers may
be less than realized by investing in the Fund directly. An investor should read
the Prospectus in conjunction with the materials provided by the shareholder
servicing agent and broker-dealer describing the procedures under which Fund
shares may be purchased and redeemed through the shareholder servicing agent and
broker-dealer.

-11-
<PAGE>

In accordance with the Rule, the Plan provides that all written
agreements relating to the Plan entered into by the Fund, the Distributor or the
Adviser, and the shareholder servicing agents, broker-dealers, or other
organizations, must be in a form satisfactory to the Board of Directors. In
addition, the Plan requires the Fund and the Distributor of the Fund to prepare,
at least quarterly, written reports setting forth all amounts expended for
distribution purposes by the Fund and the Distributor pursuant to the Plan and
identifying the distribution activities for which those expenditures were made
for review by the Board of Directors.

OTHER EXPENSES

The Fund pays certain operating expenses that are not assumed by the
Adviser, the Administrator or any of their respective affiliates. These
expenses, together with fees paid to the Adviser, the Administrator and the
Transfer Agent, are deducted from the income of the Fund, respectively, before
dividends are paid. These expenses include, but are not limited to,
organizational costs and expenses of officers and Directors who are not
affiliated with the Adviser, the Administrator or any of their respective
affiliates, taxes, interest, legal fees, custodian fees, audit fees, brokerage
fees and commissions, fees and expenses of registering and qualifying the Fund
and their shares for distribution under federal and various state securities
laws, the expenses of reports to shareholders, shareholders' meetings and proxy
solicitations.

PORTFOLIO TRANSACTIONS AND ALLOCATION OF BROKERAGE

The Fund's assets are invested by the Adviser in a manner consistent
with its investment objective, policies, and restrictions and with any
instructions the Board of Directors may issue from time to time. Within this
framework, the Adviser is responsible for making all determinations as to the
purchase and sale of portfolio securities and for taking all steps necessary to
implement securities transactions on behalf of the Fund.

U.S. Government securities generally are traded in the
over-the-counter market through broker-dealers. A broker-dealer is a securities
firm or bank that makes a market for securities by offering to buy at one price
and sell at a slightly higher price. The difference between the prices is known
as a spread.

In placing orders for the purchase and sale of portfolio securities
for the Fund, the Adviser will use its best efforts to obtain the best possible
price and execution and will otherwise place orders with broker-dealers subject
to and in accordance with any instructions the Board of Directors may issue from
time to time. The Adviser will select broker-dealers including, the Distributor,
to execute portfolio transactions on behalf of the Fund primarily on the basis
of best price and execution.

When consistent with the objectives of prompt execution and favorable
net price, business may be placed with broker-dealers who furnish investment
research or services to the Adviser. Such research or services include advice,
both directly and in writing, as to the value of securities; the advisability of
investing in, purchasing or selling securities; and the availability of
securities, or purchasers or sellers of securities; as well as analyses and
reports concerning issues, industries, securities, economic factors and trends,
portfolio strategy and the performance of accounts. To the extent portfolio
transactions are effected with broker-dealers who furnish research services to
the Adviser, the Adviser receives a benefit, not capable of evaluation in dollar
amounts, without providing any direct monetary benefit to the Fund from these
transactions. The Adviser believes that most research services obtained by it
generally benefit several or all of the investment companies and private
accounts which it manages, as opposed to solely benefiting one specific managed
fund or account.

-12-
<PAGE>

Transactions on U.S. stock exchanges, commodities markets and futures
markets and other agency transactions involve the payment by the Fund of
negotiated brokerage commissions. Such commissions vary among different brokers.
A particular broker may charge different commissions according to such factors
as the difficulty and size of the transaction. Transactions in foreign
investments often involve the payment of fixed brokerage commissions, which may
be higher than those in the United States. There is generally no stated
commission in the case of securities traded in the over-the-counter markets, but
the price paid by the Fund usually includes an undisclosed dealer commission or
mark-up. In underwritten offerings, the price paid by the Fund includes a
disclosed, fixed commission or discount retained by the underwriter or dealer.

It has for many years been a common practice in the investment
advisory business for advisers of investment companies and other institutional
investors to receive brokerage and research services (as defined in the
Securities Exchange Act of 1934, as amended (the "1934 Act")) from
broker-dealers that execute portfolio transactions for the clients of such
advisers and from third parties with which such broker-dealers have
arrangements. Consistent with this practice, the Adviser may receive brokerage
and research services and other similar services from many broker-dealers with
which the Adviser may place the Fund's portfolio transactions and from third
parties with which these broker-dealers have arrangements. These services
include such matters as general economic and market reviews, industry and
company reviews, evaluations of investments, recommendations as to the purchase
and sale of investments, newspapers, magazines, pricing services, quotation
services, news services and personal computers utilized by the Adviser. Where
the services referred to above are not used exclusively by the Adviser for
research purposes, the Adviser, based upon its own allocations of expected use,
bears that portion of the cost of these services which directly relates to their
non-research use. Some of these services are of value to the Adviser and its
affiliates in advising various of their clients (including the Fund), although
not all of these services are necessarily useful and of value in managing the
Fund. The management fee paid by the Fund is not reduced because the Adviser and
its affiliates receive these services even though the Adviser might otherwise be
required to purchase some of these services for cash.

As permitted by Section 28(e) of the 1934 Act, the Adviser may cause
the Fund to pay a broker-dealer which provides "brokerage and research services"
(as defined in the 1934 Act) to the Adviser an amount of disclosed commission
for effecting securities transactions on stock exchanges and other transactions
for the Fund on an agency basis in excess of the commission which another
broker-dealer would have charged for effecting that transaction. The Adviser's
authority to cause the Fund to pay any such greater commissions is also subject
to such policies as the Directors may adopt from time to time. The Adviser does
not currently intend to cause any Fund to make such payments. It is the position
of the staff of the Securities and Exchange Commission that Section 28(e) does
not apply to the payment of such greater commissions in "principal"
transactions. Accordingly, the Adviser will use its best effort to obtain the
most favorable price and execution available with respect to such transactions,
as described above.

Consistent with the Conduct Rules of the National Association of
Securities Dealers, Inc. and subject to seeking the most favorable price and
execution available and such other policies as the Directors may determine, the
Adviser may consider sales of shares of the Fund as a factor in the selection of
broker-dealers to execute portfolio transactions for the Fund.

TAXATION

The Fund intends to qualify each year as a "regulated investment
company" under Subchapter M of the Code. By so qualifying, the Fund will not
incur federal income or state taxes on its net investment income and on net
realized capital gains to the extent distributed as dividends to shareholders.

Amounts not distributed on a timely basis in accordance with a
calendar year distribution requirement are subject to a nondeductible 4% excise
tax at the Fund level. To avoid the tax, the Fund must distribute during each
calendar year an amount equal to the sum of (a) at least 98% of its ordinary
income (not taking into account any capital gains or losses) for the calendar
year, (b) at least 98% of its capital gains in excess of capital losses
(adjusted for certain ordinary losses) for a one-year period generally ending on
October 31st of the calendar year, and (c) all ordinary income and capital gains
for previous years that were not distributed during such years.

-13-
<PAGE>

Under the Code, dividends derived from interest, and any short-term
capital gains, are taxable to shareholders as ordinary income for federal and
state tax purposes, regardless of whether such dividends are taken in cash or
reinvested in additional shares. Distributions made from the Fund's net realized
long-term capital gains (if any) and designated as capital gain dividends are
taxable to shareholders as long-term capital gains, regardless of the length of
time Fund shares are held. Corporate investors are not eligible for the
dividends-received deduction with respect to distributions derived from interest
on short-or long-term capital gains from the Fund but may be entitled to such a
deduction in respect to distributions attributable to dividends received by the
Fund. A distribution will be treated as paid on December 31st of a calendar year
if it is declared by the Fund in October, November or December of the year with
a record date in such a month and paid by the Fund during January of the
following year. Such distributions will be taxable to shareholders in the
calendar year the distributions are declared, rather than the calendar year in
which the distributions are received.

Distributions paid by the Fund from net long-term capital gains
(excess of long-term capital gains over long-term capital losses), if any,
whether received in cash or reinvested in additional shares, are taxable as
long-term capital gains, regardless of the length of time you have owned shares
in the Fund. Distributions paid by the Fund from net short-term capital gains
(excess of short-term capital gains over short-term capital losses), if any,
whether received in cash or reinvested in additional shares are taxable as
ordinary income. Capital gains distributions are made when the Fund realizes net
capital gains on sales of portfolio securities during the year. Realized capital
gains are not expected to be a significant or predictable part of the Fund's
investment return.

Any redemption of the Fund shares is a taxable event and may result
in a capital gain or loss. A capital gain or loss may be realized from an
ordinary redemption of shares.

Dividend distributions, capital gains distributions, and capital
gains or losses from redemptions and exchanges may also be subject to state and
local taxes.

Ordinarily, distributions and redemption proceeds paid to Fund
shareholders are not subject to withholding of federal income tax. However, 31%
of the Fund's distributions and redemption proceeds must be withheld if a Fund
shareholder fails to supply the Fund or its agent with such shareholder's
taxpayer identification number or if the Fund shareholder who is otherwise
exempt from withholding fails to properly document such shareholder's status as
an exempt recipient.

The information above is only a summary of some of the tax
considerations generally affecting the Fund and its shareholders. No attempt has
been made to discuss individual tax consequences. To determine whether the Fund
is a suitable investment based on his or her tax situation, a prospective
investor may wish to consult a tax advisor.

VOTING AND OWNERSHIP OF SHARES

Each share of the Fund has one vote in the election of Directors.
Cumulative voting is not authorized for the Fund. This means that the holders of
more than 50% of the shares voting for the election of Directors can elect 100%
of the Directors if they choose to do so, and, in that event, the holders of the
remaining shares will be unable to elect any Directors.

-14-
<PAGE>

Shareholders of the Fund and any other future series of the Company will
vote in the aggregate and not by series except as otherwise required by law or
when the Board of Directors determines that the matter to be voted upon affects
only the interest of the shareholders of a particular series. Pursuant to Rule
18f-2 under the 1940 Act, the approval of an investment advisory agreement or
any change in a fundamental policy would be acted upon separately by the series
affected. Matters such as ratification of the independent public accountants and
election of Directors are not subject to separate voting requirements and may be
acted upon by shareholders of the Company voting without regard to series.

PURCHASE OF SHARES

Shares of the Fund may be purchased at the net asset value per share
next determined after receipt of an order by the Fund's Distributor in proper
form with accompanying check or other bank wire payment arrangements
satisfactory to the Fund. The Fund's minimum initial investment is $2,000
(except for retirement accounts for which the minimum initial investment is
$1,000) and the minimum subsequent investment is $100.

DIVIDENDS AND DISTRIBUTIONS

Net investment income, if any, is declared as dividends and paid
annually. Substantially all the realized net capital gains for the Fund, if any,
are also declared and paid on an annual basis. Dividends and distributions are
payable to shareholders of record at the time of declaration.

Distributions are automatically reinvested in additional Fund shares
unless the shareholder has elected to have them paid in cash.

The net investment income of the Fund for each business day is
determined immediately prior to the determination of net asset value. Net
investment income for other days is determined at the time net asset value is
determined on the prior business day. See "Purchase of Shares" and "Redemption
of Shares" in the Prospectus.

NET ASSET VALUE

The method for determining the Fund's net asset value is summarized
in the Prospectus in the text following the heading "Valuation of Shares." The
net asset value of the Fund's shares is determined on each day on which the New
York Stock Exchange is open, provided that the net asset value need not be
determined on days when no Fund shares are tendered for redemption and no order
for Fund shares is received. The New York Stock Exchange is not open for
business on the following holidays (or on the nearest Monday or Friday if the
holiday falls on a weekend): New Year's Day, President's Day, Good Friday,
Memorial Day, Independence Day, Labor Day, Thanksgiving and Christmas.

PERFORMANCE COMPARISONS

Total return quoted in advertising and sales literature reflects all
aspects of the Fund's return, including the effect of reinvesting dividends and
capital gain distributions and any change in the Fund's net asset value during
the period.

The Fund's total return must be displayed in any advertisement
containing the Fund's yield. Total return is the average annual total return for
the 1-, 5- and 10-year period ended on the date of the most recent balance sheet
included in the Statement of Additional Information, computed by finding the
average annual compounded rates of return over 1-, 5- and 10-year periods that
would equate the initial amount invested to the ending redeemable value
according to the following formula:

-15-
<PAGE>

P(1 + T)n = ERV

Where:

P = a hypothetical initial investment of $1000

T = average annual total return

n = number of years

ERV = ending redeemable value of a hypothetical $1000 payment made at the
beginning of the 1-, 5- or 10-year periods at the end of the 1-, 5-or 10-year
periods (or fractions thereof).

Because the Fund has not had a registration in effect for a full
year, the period during which the registration has been effective shall be
substituted.

Average annual total return is calculated by determining the growth
or decline in value of a hypothetical historical investment in the Fund over a
stated period and then calculating the annual compounded percentage rate that
would have produced the same result if the rate of growth or decline in value
had been constant throughout the period. For example, a cumulative total return
of 100% over 10 years would produce an average annual total return of 7.18%,
which is the steady annual rate that would result in 100% growth on a compounded
basis in 10 years. While average annual total returns are a convenient means of
comparing investment alternatives, investors should realize that the Fund's
performance is not constant over time, but changes from year to year, and that
average annual total returns represent averaged figures as opposed to actual
year-to-year performance.

In addition to average annual total returns, the Fund may quote
unaveraged or cumulative total returns reflecting the simple change in value of
an investment over a stated period. Average annual and cumulative total returns
may be quoted as a percentage or as a dollar amount and may be calculated for a
single investment, a series of investments, or a series of redemptions over any
time period. Performance information may be quoted numerically or in a table,
graph, or similar illustration.

The Fund's performance may be compared with the performance of other
funds with comparable investment objectives, tracked by fund rating services or
with other indexes of market performance. Sources of economic data that may be
considered in making such comparisons may include, but are not limited to,
rankings of any mutual fund or mutual fund category tracked by Lipper Analytical
Services, Inc. or Morningstar, Inc.; data provided by the Investment Company
Institute; major indexes of stock market performance; and indexes and historical
data supplied by major securities brokerage or investment advisory firms. The
Fund may also utilize reprints from newspapers and magazines furnished by third
parties to illustrate historical performance.

The agencies listed below measure performance based on their own
criteria rather than on the standardized performance measures described in the
preceding section.

Lipper Analytical Services, Inc. distributes mutual fund rankings
monthly. The rankings are based on total return performance calculated by
Lipper, generally reflecting changes in net asset value adjusted for
reinvestment of capital gains and income dividends. They do not reflect
deduction of any sales charges. Lipper rankings cover a variety of performance
periods, including year-to-date, 1-year, 5-year, and 10-year performance. Lipper
classifies mutual funds by investment objective and asset category.

-16-
<PAGE>

Morningstar, Inc. distributes mutual fund ratings twice a month. The
ratings are divided into five groups: highest, above average, neutral, below
average and lowest. They represent the fund's historical risk/reward ratio
relative to other funds in its broad investment class as determined by
Morningstar, Inc. Morningstar ratings cover a variety of performance periods,
including 1-year, 3-year, 5-year, 10-year and overall performance. The
performance factor for the overall rating is a weighted-average assessment of
the fund's 1-year, 3-year, 5-year, and 10-year total return performance (if
available) reflecting deduction of expenses and sales charges. Performance is
adjusted using quantitative techniques to reflect the risk profile of the fund.
The ratings are derived from a purely quantitative system that does not utilize
the subjective criteria customarily employed by rating agencies such as Standard
& Poor's and Moody's Investor Service, Inc.

CDA/Weisenberger's Management Results publishes mutual fund rankings
and is distributed monthly. The rankings are based entirely on total return
calculated by Weisenberger for periods such as year-to-date, 1-year, 3-year,
5-year and 10-year. Mutual funds are ranked in general categories (e.g.,
international bond, international equity, municipal bond, and maximum capital
gain). Weisenberger rankings do not reflect deduction of sales charges or fees.

Independent publications may also evaluate the Fund's performance.
The Fund may from time to time refer to results published in various
periodicals, including Barrons, Financial World, Forbes, Fortune, Investor's
Business Daily, Kiplinger's Personal Finance Magazine, Money, U.S. News and
World Report and The Wall Street Journal.

REDEMPTION OF SHARES

Redemption of shares, or payment for redemptions, may be suspended at
times (a) when the New York Stock Exchange is closed for other than customary
weekend or holiday closings, (b) when trading on said Exchange is restricted,
(c) when an emergency exists, as a result of which disposal by the Fund of
securities owned by it is not reasonably practicable, or it is not reasonably
practicable for the Fund fairly to determine the value of its net assets, or (d)
during any other period when the Securities and Exchange Commission, by order,
so permits, provided that applicable rules and regulations of the Securities and
Exchange Commission shall govern as to whether the conditions prescribed in (b)
or (c) exist.

Shareholders who purchased shares through a broker-dealer other than
the Distributor may also redeem such shares by written request to the Transfer
Agent which shares are held by the Transfer Agent at the address set forth in
the Prospectus. To be considered in "good order", written requests for
redemption should indicate the dollar amount or number of shares to be redeemed,
refer to the shareholder's Fund account number, including either the social
security or tax identification number. The request should be signed in exactly
the same way the account is registered. If there is more than one owner of the
shares, all owners must sign. If shares to be redeemed have a value of $5,000 or
more or redemption proceeds are to be paid by someone other than the shareholder
at the shareholder's address of record, the signature(s) must be guaranteed by
an "eligible guarantor institution," which includes a commercial bank that is a
member of the Federal Deposit Insurance Corporation, a trust company, a member
firm of a domestic stock exchange, a savings association or a credit union that
is authorized by its charter to provide a signature guarantee. The Transfer
Agent may reject redemption instructions if the guarantor is neither a member of
nor a participant in a signature guarantee program. Signature guarantees by
notaries public are not acceptable. The purpose of a signature guarantee is to
protect shareholders against the possibility of fraud. Further documentation
will be requested from corporations, administrators, executors, personal
representatives, trustees and custodians. Redemption requests given by facsimile
will not be accepted. Unless other instructions are given in proper form, a
check for the proceeds of the redemption will be sent to the shareholder's
address of record.

Share purchases and redemptions are governed by Maryland law.

-17-
<PAGE>

COUNSEL AND INDEPENDENT ACCOUNTANTS

Legal matters in connection with the issuance of shares of common
stock of the Fund are passed upon by Spitzer & Feldman P.C., 405 Park Avenue,
New York, New York 10022. McCurdy & Associates, CPAs, Inc., 27955 Clemens Road,
Westlake, Ohio 44145, have been selected as independent accountants for the
Fund.

OTHER INFORMATION

The Adviser has been continuously registered with the Securities
Exchange Commission (SEC) under the 1940 Act since ______________. The Company
has filed a registration statement under the Securities Act of 1933 and the 1940
Act with respect to the shares offered. Such registrations do not imply approval
or supervision of the Fund or the Adviser by the SEC.

For further information, please refer to the registration statement
and exhibits on file with the SEC in Washington, D.C. These documents are
available upon payment of a reproduction fee. Statements in the Prospectus and
in this Statement of Additional Information concerning the contents of contracts
or other documents, copies of which are filed as exhibits to the registration
statement, are qualified by reference to such contracts or documents.

-18-
<PAGE>

PART C
------

------------------------------- ------------------------------------------------
ITEM 23.
EXHIBIT NO. DESCRIPTION OF EXHIBIT
------------------------------- ------------------------------------------------
(a) Articles of Incorporation (See Note 1)
------------------------------- ------------------------------------------------
(b) Bylaws (See Note 1)
------------------------------- ------------------------------------------------
(c) Not Applicable.
------------------------------- ------------------------------------------------
(d)(1) Investment Advisory Agreement (Imperial
Financial Services Fund) (See Note 2)
------------------------------- ------------------------------------------------
(d)(2) Form of Investment Advisory Agreement (Aii
Aggressive Trading Fund) (See Note 2)
------------------------------- ------------------------------------------------
(d)(3) Form of Investment Advisory Agreement
(MacroTrends Fund; Pheonix Management Fund;
and Kaminski Poland Fund)(See Note 3)
------------------------------- ------------------------------------------------
(d)(4) Form of Investment Advisory Agreement (Azzad/
Dow Jones Islamic Index Fund)(See Note 4)
------------------------------- ------------------------------------------------
(e)
------------------------------- ------------------------------------------------
(f) Not Applicable.
------------------------------- ------------------------------------------------
(g) Form of Custody Agreement (See Note 5)
------------------------------- ------------------------------------------------
(h) Administrative Service Agreement (Imperial
Financial Services Fund) (Aii Aggressive Trading
Fund (See Note 2)
------------------------------- ------------------------------------------------
(h)(1) Form of Administrative Service Agreement
(MacroTrends Fund; Pheonix Management Fund
(See Note 5)
------------------------------- ------------------------------------------------
(h)(2) Form of Transfer Agency Agreement (See Note 2)
------------------------------- ------------------------------------------------
(i) Opinion of Spitzer & Feldman P.C. as to the
legality of the securities being registered,
including their consent to the filing thereof
and as to the use of their names in the
Prospectus (Imperial Financial Services Fund)
(See Note 1)
------------------------------- ------------------------------------------------
(i)(1) Consent of Spitzer & Feldman P.C. (Aii
Aggressive Trading Fund)(See Note 2)
------------------------------- ------------------------------------------------
(i)(2) Consent of Spitzer & Feldman P.C. (MacroTrends
Fund) (See Note 3)
------------------------------- ------------------------------------------------
(i)(3) Consent of Spitzer & Feldman P.C. (Pheonix
Management Fund) (See Note 3)
------------------------------- ------------------------------------------------
(i)(4) Consent of Spitzer & Feldman P.C. (Kaminski
Poland Fund) (See Note 3)
------------------------------- ------------------------------------------------
(j) Consent of McCurdy & Associates, CPAs, Inc.,
independent auditors (Imperial Financial
Services Fund) (See Note 2)
------------------------------- ------------------------------------------------
(j)(1) Consent of McCurdy & Associates (Aii Aggressive
Trading Fund) (See Note 3)
------------------------------- ------------------------------------------------
(j)(2) Consent of McCurdy & Associates (MacroTrends
Fund)(See Note 3)
------------------------------- ------------------------------------------------
(j)(3) Consent of McCurdy & Associates (Pheonix
Management Fund) (See Note 3)
------------------------------- ------------------------------------------------
(j)(4) Consent of McCurdy & Associates (Kaminski
Poland Fund))(See Note 3)
------------------------------- ------------------------------------------------
(k) Not Applicable.
------------------------------- ------------------------------------------------
(l) Subscription Letter (See Note 2)
------------------------------- ------------------------------------------------
(m) Distribution (12b-1) Plan (Imperial Financial
Services Fund)(See Note 2)
------------------------------- ------------------------------------------------
(m)(1) Distribution (12b-1) Plan ((Aii Agressive
Trading Fund)(See Note 2)
------------------------------- ------------------------------------------------
(m)(2) Distribution (12b-1) Plan (MacroTrends Fund;
Pheonix Management Fund (See Note 5)
------------------------------- ------------------------------------------------
(m)(3) Distribution (12b-1) Plan (Azzad/Dow Jones
Islamic Index Fund)(See Note 4)
------------------------------- ------------------------------------------------
(n) Not Applicable.
------------------------------- ------------------------------------------------
(n) Rule 18f-3 Plan (See Note 5)
------------------------------- ------------------------------------------------
Other Exhibits Not Applicable
------------------------------- ------------------------------------------------

C-0

Notes to Exhibits:

(1) Filed with the Securities and Exchange Commission as an Exhibit to the
Registrant's Registration Statement (Reg. No. 333-46323) on February 13,
1998.

(2) Filed with the Securities and Exchange Commission as an Exhibit to
Pre-Effective Amendment No. 2 to the Registration Statement (Reg. No.
333-46323) on January 25, 1999.

(3) Filed with the Securities and Exchange Commission as an Exhibit to
Post-Effective Amendment No. 4 to the Registration Statement (Reg. No.
333-46323) on December 10, 1999.

(4) File Herewith

(5) To Be Filed by Future Amendment

ITEM 24. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT.

Not applicable.

ITEM 25. INDEMNIFICATION.

(a) In accordance with Section 2-418 of the General Corporation Law
of the State of Maryland, Article NINTH of the Registrant's Articles
of Incorporation provides as follows:

"NINTH:(1) The Corporation shall indemnify (i) its currently acting
and former directors and officers, whether serving the Corporation or
at its request any other entity, to the fullest extent required or
permitted by the General Laws of the State of Maryland now or
hereafter in force, including the advance of expenses under the
procedures and to the fullest extent permitted by law, and (ii) other
employees and agents to such extent as shall be authorized by the
Board of Directors or the By-Laws and as permitted by law. Nothing
contained herein shall be construed to protect any director or
officer of the Corporation against any liability to the Corporation
or its security holders to which he would otherwise be subject by
reason of willful misfeasance, bad faith, gross negligence, or
reckless disregard of the duties involved in the conduct of his
office. The foregoing rights of indemnification shall not be
exclusive of any other rights to which those seeking indemnification
may be entitled. The Board of Directors may take such action as is
necessary to carry out these indemnification provisions and is
expressly empowered to adopt, approve and amend from time to time
such by-laws, resolutions or contracts implementing such provisions
or such indemnification arrangements as may be permitted by law. No
amendment of the charter of the Corporation or repeal of any of its
provisions shall limit or eliminate the right of indemnification
provided hereunder with respect to acts or omissions occurring prior
to such amendment or repeal.

(2) To the fullest extent permitted by Maryland statutory or
decisional law, as amended or interpreted, and the Investment Company
Act of 1940, no director or officer of the Corporation shall be
personally liable to the Corporation or its stockholders for money
damages; provided, however, that nothing herein shall be construed to
protect any director or officer of the Corporation against any
liability to the Corporation or its security holders to which he
would otherwise be subject by reason of willful misfeasance, bad
faith, gross negligence, or reckless disregard of the duties involved
in the conduct of his office. No amendment of the charter of the
Corporation or repeal of any of its provisions shall limit or
eliminate the limitation of liability provided to directors and
officers hereunder with respect to any act or omission occurring
prior to such amendment or repeal."

C-1

<PAGE>

ITEM 26. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISERS.

(a) Retirement Planning Company of New England, Inc. serves as
investment adviser to Imperial Financial Services Fund. The
description of Retirement Planning Company of New England, Inc.,
under the Caption "Management - The Adviser" and "Management - The
Adviser" in the Prospectus and Statement of Additional Information,
constituting certain of Parts A and B, respectively, of this
Registration Statement, are incorporated by reference herein.

Retirement Planning Company of New England, Inc. is: One Richmond
Square, Providence, RI 02906. The following are the directors and officers of
Retirement Planning Company of New England, Inc., including any business
connections of a substantial nature that they have had in the past two years.
Unless other indicated, the address of any other business connection is also:
One Richmond Square, Providence, RI 02906. Set forth below are the names of the
directors and officers of the Adviser:

NAME TITLE BUSINESS CONNECTION
---- ----- -------------------

David W. Allaire President, CEO, and Director

Michael R. Laliberte CFO and Director

(b) Pheonix Investment Management, Inc. serves as investment adviser to the
Pheonix Management Fund. The description of Pheonix Investment Management, Inc.,
under the Caption "Management - The Adviser" and "Management - The Adviser" in
the Prospectus and Statement of Additional Information, constituting certain of
Parts A and B, respectively, of this Registration Statement, are incorporated by
reference herein.

The address of Pheonix Investment Management, Inc. is: 2090 Palm
Beach Lakes Blvd., Suite 700, West Palm Beach, FL 33409. The following are the
directors and officers of Pheonix Investment Management, Inc., including any
business connections of a substantial nature that they have had in the past two
years. Unless other indicated, the address of any other business connection is
also: 2090 Palm Beach Lakes Blvd., Suite 700, West Palm Beach, FL 33409.

NAME TITLE BUSINESS CONNECTION
---- ----- -------------------

Michael W. Burnick President and CEO Pheonix Investments, Inc.

Michael S. Robinson Executive Vice-president Contractors Success Group,
Brentwood, TN ; Service
Experts, Inc., Brentwood,
TN

Thomas D. Abrams Director Pheonix Investments, Inc.
(2/97 - Present); Capital
Research Corp. (2/97 -
6/98)

(c) Yale Research and Management Co., Inc., serves as investment adviser to
MacroTrends Funds. The description of Yale Research and Management Co., Inc.,
under the Caption "Management - The Adviser" and "Management - The Advisor" in
the Prospectus and Statement of additional Information, constituting certain of
Parts A and B, respectively, of this Registration Statement, are incorporated by
reference herein.

C-2

<PAGE>

The address of YaleFunds Management and Research Co. is 3980 Howard
Hughes Parkway, Suite 400, Las Vegas, NV 89109. The following are the directors
and officers of YaleFunds Management and Research Co., including any business
connections of a substantial nature that they have had in the past two years.
Unless otherwise indicated, the address of any other business connection is also
3980 Howard Hughes Parkway, Suite 400, Las Vegas, NV 89109.

NAME TITLE BUSINESS CONNECTION
---- ----- -------------------

Yi Yale Wang President American Fronteer Financial
Corp. 3800 Paradise Road, Las Begas,
NV 89109 (3/98 -8/99); Presidential
Brokerage, Inc. 3753 Howard
Hughes Pkwy, Las Vegas, NV 89109
(3/97 - 3/98)

(d) Azzad Asset Management, Inc. serves as investment adviser to the Azzad/Dow
Jones Islamic Index Fund. The description of Azzad Asset Management, Inc., under
the Caption "Management - The Adviser" and "Management - The Adviser" in the
Prospectus and Statement of Additional Information, constituting certain of
Parts A and B, respectively, of this Registration Statement, are incorporated by
reference herein.

The address of Azzad Asset Management, Inc. is 8201 Greensboro Drive,
Suite 1000, McLean, VA 22102. The following are the directors and officers of
Azzad Asset Management, Inc., including any business connections of a
substantial nature that they have had in the past two years.

NAME TITLE BUSINESS CONNECTION
---- ----- -------------------

<S> <C> <C>
Bashar Qasem President, Chief Executive Azzad Asset Management, LLC,
Officer, Director 8201 Greensboro Drive, Suite
1000, McLean, VA 22102;
Founder, Ideal Network
Systems, Fairfax, VA

F. Scott Valpey Executive Vice President Azzad Asset Management, LLC,
Investment Advisor 8201 Greensboro Drive, Suite
Director, Officer 1000, McLean, VA 22102;
professional pension &
investment consultant, general
securities principal (NASD
Series 24), Raymond James
Financial Svcs, Inc. (1983-99)

Khalid Al-Subaihi Director Al-Irshad Trade Corporation &
Al-Fajer Printing Press
Company (1995-present)

Ziad Bassam Director Chairman, Dar Al-Balagh
Mohammed AlBassam Broadcasting Group, Info-Win
Company and the Internet
Society

Khalid Hamed Zainy Director President, Petrostar Co. Ltd.,
(1975-present); President, Star
Navigation Co., Ltd.,
Arabian Marine &
Terminal Services Co., Ltd.,
And Middle East Marine &
General Insurance Co., Jeddah.
</TABLE>

C-3

<PAGE>

ITEM 27. PRINCIPAL UNDERWRITERS.

(a) The principal underwriter of the Company's shares, AmeriMutual
Funds Distributors, Inc., currently acts as a principal underwriter,
depositor or investment adviser for the following other investment
companies:

iMillennium Capital Trust

AmeriMutual Funds Distributors, Inc., is registered with the
Securities and Exchange Commission as a broker-dealer and is a member
of the National Association of Securities Dealers. AmeriMutual Funds
Distributors, Inc., is an indirect wholly-owned subsidiary of Orbitex
Financial Services Group, Inc.

(b) The following table contains information with respect to each
director, officer or partner AmeriMutual Funds Distributors, Inc.,.
<TABLE>
<CAPTION>

--------------------------------------------------------------------------
Name and Principal Positions and Offices Positions and Offices
Business ADDRESS* with UNDERWRITER with REGISTRANT
--------------------------------------------------------------------------
<S> <C> <C>
Christopher Klutch Director, President, CEO None

--------------------------------------------------------------------------
Vali Nasr General Principal, Financial None
and Operations Principal
--------------------------------------------------------------------------
Nathan O'Steen Vice President, General None
Principal, Chief Compliance
Officer

--------------------------------------------------------------------------
Richard E. Stierwalt Director, Chief Operations None
Officer
--------------------------------------------------------------------------
<FN>

* Unless otherwise indicated, all addresses are: The Hauppauge
Corporate Center, 150 Motor Parkway, Hauppauge, NY 11788
</FN>
</TABLE>

C-4

<PAGE>

ITEM 28. LOCATION OF ACCOUNTS AND RECORDS

The accounts and records of the Company required to be maintained by Section
31(a) of the 1940 Act and the rules promulgated thereunder are located, in whole
or in part, at the office of the Administrator, American Data Services, Inc.,
The Hauppauge Corporate Center, 150 Motor Parkway, Hauppauge, New York 11788 and
custodial records which are maintained at the offices of the Custodian for the
Imperial Financial Services Fund at Firstar Bank, N.A. at 615 East Michigan
Street, Milwaukee, Wisconsin 53202 and at the offices of the Custodian for
MacroTrends Fund, Phoenix Management Fund and Azzad/Dow Jones Islamic Index Fund
at Union Bank of California, N.A. at 350 California Street, San Francisco
California 94104.

ITEM 29. MANAGEMENT SERVICES

Not applicable.

ITEM 30. UNDERTAKINGS.

Not applicable.

C-5

<PAGE>

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940 the registrant has duly caused this registration statement
to be signed on its behalf by the undersigned, thereunto duly authorized, in the
City of Hauppauge and State of New York, on the 19th day of July, 2000.

QUESTAR FUNDS, INC.

By:/S/ MICHAEL MIOLA
--------------------
Michael Miola, President

Pursuant to the requirements of the Securities Act of 1933, this registration
statement has been signed below by the following persons in the capacities and
on the date indicated.

/S/ MICHAEL MIOLA Director, Chairman of the July 19, 2000
-----------------
Michael Miola Board and
Chief Executive Officer

/S/ DANIEL ABRAMSON Director July 19, 2000
-------------------
Daniel Abramson

/S/ PHILIP CAPALONGO Director July 19, 2000
--------------------
Philip Capalongo

/S/ ANTHONY HERTL Director July 19, 2000
-----------------
Anthony Hertl

/S/ DONALD SMITH Director July 19, 2000
----------------
Donald Smith

The above persons signing as Directors are all of the members of the Company's
Board of Directors.

<PAGE>