RULE: 497(e)
                                                    REGISTRATION NUMBER: 2-82710



                             FUNDAMENTAL FUNDS, INC.
                               NEW YORK MUNI FUND

                          SUPPLEMENT DATED MAY 27, 1997
                       TO PROSPECTUS DATED APRIL 30, 1997


         The independent  directors are in the process of considering other fund
organizations  willing to manage the Fundamental Funds and it is expected that a
new manager will be selected.  In any event,  it is unlikely  that a majority of
the Fund's independent  directors will approve the current Investment Management
Agreement beyond December 31, 1997.



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