Rule 497(e)
Registration No. 2-82143
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 SEPTEMBER 29, 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.
At a special meeting on September 25, 1998, 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") approved
Cornerstone Equity Advisors Inc. ("Cornerstone") as interim adviser to the
Funds, effective September 29, 1998, pending Cornerstone's approval by
shareholders as successor adviser. Cornerstone, founded in 1997, is a Nevada
corporation that currently has approximately $20 million of assets under
management. Cornerstone is located at 67 Wall Street, New York, New York 10005.
The Funds' assets are being managed by Mr. Stephen Leslie, Chairman and
Chief Executive Officer of Cornerstone. Mr. Leslie has approximately 17 years of
experience with fixed-income securities and, specifically, municipal bond
portfolios. The interim advisory contracts with Cornerstone were approved by the
Boards at the same fee rate that was established for Fundamental Portfolio
Advisors, Inc. and Tocqueville Asset Management L.P. ("Tocqueville").
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The Boards' selection of Cornerstone resulted from their decision to
abandon the proposed Agreement and Plan of Reorganization (the "Reorganization")
whereby assets of each of the Funds would be transferred to separate
newly-created series of The Tocqueville Trust in exchange for shares of the
Funds. The Boards considered several alternative investment management
arrangements prior to selecting Cornerstone, but decided that Cornerstone's
selection would be in the best interests of the Funds and their shareholders.
In connection with the retention of Cornerstone as interim adviser, the
Boards also appointed Malvina Capital Markets LLC ("Malvina") as interim
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 Tocqueville Securities L.P. Malvina, located at 67 Wall
Street, New York, New York 10005, was organized as a New York limited liability
company in 1997. In addition, the Boards revoked a prior resolution that had
temporarily restricted distribution payments under each Fund's Rule 12b-1 Plan.
During the special meeting the Boards elected Mr. Leslie to serve as
President of the Funds, replacing Mr. Robert W. Kleinschmidt of Tocqueville. The
Boards elected Mr. G. John Fulvio to serve as Treasurer and Chief Financial
Officer of the Funds, replacing Mr. Kieran Lyons of Tocqueville.
