Rule 497(e)
Registration No. 2-82710
FUNDAMENTAL FAMILY OF FUNDS
(collectively, the "Funds")
Fundamental Fixed Income Fund
(Fundamental U.S. Government Strategic Income Fund)
(High-Yield Municipal Bond Series)
(Tax-Free Money Market Series)
The California Muni Fund
Fundamental Funds, Inc.
(New York Muni Fund)
Supplement Dated June 1, 1998 to Each Fund's
Prospectus Dated May 1, 1998
The following information supplements and supersedes any
contrary information contained in each Fund's Prospectus.
The Board of Directors of Fundamental Funds, Inc. and the
Boards of Trustees of The California Muni Fund and Fundamental Fixed Income Fund
(collectively, the "Boards") did not approve the continuance of the Funds'
management agreements in effect with Fundamental Portfolio Advisors, Inc.
("FPA") and, with respect to Fundamental Fixed Income Fund, the distribution
agreements in effect with Fundamental Service Corporation ("FSC"). Consequently,
these agreements expired on May 31, 1998.
On May 30, 1998, at a special joint meeting of the Boards, the
Boards did, however, approve Tocqueville Asset Management L.P. ("Tocqueville")
as manager for the Funds on an interim basis, effective June 1, 1998, pending
approval by shareholders of the Funds of permanent investment management
arrangements. The Funds' assets are being managed by Mr. Drew Rankin of
Tocqueville, who is a senior investment manager with approximately 17 years of
experience in municipal bond portfolios. Tocqueville will manage the Funds'
assets at the same fee rates that were paid to FPA.
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In connection with the retention of Tocqueville as interim
manager, the Boards also appointed Tocqueville Securities L.P. ("Tocqueville
Securities"), an affiliate of Tocqueville, as distributor for three of the Funds
(Fundamental U.S. Government Strategic Income Fund, High-Yield Municipal Bond
Series, and Tax-Free Money Market Series), thereby replacing FSC. Tocqueville
has agreed that, for a period of two years commencing June 1, 1998, it will not
effect portfolio transactions on behalf of the Funds through any affiliated
broker-dealers, including Tocqueville Securities.
The Boards also approved the continuation of the Funds' plans
of distribution under Rule 12b-1 of the Investment Company Act of 1940, as
amended ("12b-1 Plans"). The Boards directed, however, that no payments be made
by the Funds under the 12b-1 Plans at the present time.
The Boards approved amendments to the By-laws of The
California Muni Fund and Fundamental Fixed Income Fund to permit a person other
than a trustee to hold the position as President of The California Muni Fund and
Fundamental Fixed Income Fund. In conjunction with these amendments to the
By-laws, the Boards removed Mr. Vincent J. Malanga as President of the Funds. It
is expected that Tocqueville will recommend a candidate to the Boards to be
elected and to serve as President of the Funds.
The Boards elected Mr. Joe Neuberger as Secretary of the
Funds. Mr. Neuberger serves as Vice President and Manager of Fund Administration
and Compliance Services at Firstar Trust Company, which serves as Administrator,
Transfer Agent, and Custodian for the Funds.
On May 27, 1998, in the United States District Court for the
Southern District of New York, the Funds and Mr. James C. Armstrong sought and
received a temporary
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restraining order preventing FPA, Mr. Vincent J. Malanga, Mr. Lance M. Brofman
and others from holding a special meeting of shareholders scheduled to be held
on May 29, 1998 seeking to replace the current Board Members. The Court has
scheduled a hearing for June 8, 1998 to determine why a preliminary injunction
should not be granted.
