FUNDAMENTAL FIXED INCOME FUND, N-30D, 1997-10-01

FUNDAMENTAL FIXED INCOME FUND
N-30D, 1997-10-01

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FUNDAMENTAL FIXED INCOME FUND
U.S. GOVERNMENT STRATEGIC INCOME FUND

Dear Shareholder:

The first half of 1997 was a difficult one for fixed income investors. The
Fundamental U.S. Government Strategic Income Fund saw its share price drop from
$1.43 per share to $1.40 per share in the January-June period. Nevertheless, the
Fund registered a total return of 1.71% for the period. For the twelve month
period ending June, the Fund's total return was 9.48%, placing it in the top 1%
of Government bond funds according to Morningstar Inc.

The year began on a sour note as strength in the economy triggered a new round
of inflation jitters. Even the Federal Reserve was affected by inflation fears
because in late March the Federal Open Market Committee decided that tighter
credit was necessary. The Federal Reserve hiked interest rates modestly, and
made it clear that additional increases would be forthcoming unless demand
conditions in the economy eased. We have fought this view continuously in recent
years, arguing that inflation would remain calm even in the face of steady
economic growth.

The U. S. Government Strategic Income Fund regularly uses leverage to enhance
the Fund's yield. That is, the Fund borrows in the short end of the market and
buys additional higher yielding long term government bonds. It then sells
futures and options on government bonds to reduce the Fund's duration. This
approach is particularly effective and advantageous when the spread between long
and short term interest rates is large, and it is less advantageous as yield
differentials narrow. Thus, our strategy became less effective this spring as
long term interest rates stabilized while short term rates went up.

Nevertheless, The Fund's yield remained higher than yields offered by ordinary
unhedged government bond funds. Going forward, our view is that short term
interest rates will remain steady while long term interest rates fluctuate in a
fairly narrow range. Thus, the Fund's yield advantage will not expand near term.
However, we expect that the economies of scale and reduction in expenses that
are likely to accompany the Fund's pending merger with the Tocqueville Family of
Funds will result in substantially higher dividends down the road.

Looking ahead then, we expect a relatively calm bond market environment with
relatively stable interest rates. We are looking forward to the upcoming merger
with the Tocqueville Fund Family, and we thank you for your continued trust.

Sincerely,

Dr. Vincent J. Malanga
President

<PAGE>

FUNDAMENTAL U.S. GOVERNMENT STRATEGIC INCOME FUND

STATEMENT OF ASSETS AND LIABILITIES
June 30, 1997
(Unaudited)
- --------------------------------------------------------------------------------

ASSETS
Cash ............................................. $ 86,600
Investment in securities, at value
(cost $16,393,038) (Notes 5 and 6) .............. 17,650,955
Receivables:
Interest ....................................... 115,347
Variation margin ............................... 11,810
-----------
Total assets ............................... 17,864,712
-----------

LIABILITIES
Options written at value
(premiums received $79,026) (Note 5) ............ 81,562
Securities sold subject to repurchase (Note 6) ... 5,737,312
Payables:
Dividends declared ............................. 17,781
Accrued expenses ............................... 68,364
-----------
Total liabilities .......................... 5,905,019
-----------

NET ASSETS consisting of:
Accumulated net realized loss .................... $(17,012,958)
Unrealized appreciation of securities ............ 1,257,917
Unrealized depreciation of options written ....... (2,536)
Unrealized depreciation of open future contracts . (258,971)
Paid-in-capital applicable to 8,566,774 shares
of beneficial interest .......................... 27,976,241
-----------
$11,959,693
===========
NET ASSET VALUE PER SHARE .......................... $1.40
=====

See Notes to Financial Statements.

2
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FUNDAMENTAL U.S. GOVERNMENT STRATEGIC INCOME FUND

STATEMENT OF OPERATIONS
Six Months Ended June 30, 1997
(Unaudited)
- --------------------------------------------------------------------------------
INVESTMENT INCOME
Interest income, net of $162,140 of interest expense . $ 839,433

EXPENSES (Notes 2, 3 and 6)
Investment advisory fees .............................$ 46,455
Custodian and accounting fees ........................ 33,262
Transfer agent fees .................................. 34,659
Professional fees .................................... 287,066
Trustees' fees ....................................... 1,840
Printing and postage ................................. 10,873
Interest on bank borrowing ........................... 4,342
Distribution expenses ................................ 15,485
Other ................................................ 874
434,856
---------
Fees waived and expenses reimbursed by manager
and others ........................................... (73,416)
---------
Total expenses ................................. 361,440
-----------
Net investment income .......................... 477,993
-----------

REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain on:
Investments .......................................... 424,174
Future and options on futures ........................ 467,443 891,617
---------
Change in unrealized appreciation (depreciation)
of investments, options and futures contracts
for the period:
Investments ........................................ (675,478)
Open option contracts written ...................... (11,024)
Open futures contracts ............................. (495,427) (1,181,929)
--------- -----------
Net loss on investments ............................... (290,312)
-----------

NET INCREASE IN NET ASSETS FROM OPERATIONS ............. $ 187,681
===========

See Notes to Financial Statements.

3
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FUNDAMENTAL U.S. GOVERNMENT STRATEGIC INCOME FUND

STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
Six Months
Ended
June Year Ended
30, 1997 December
(Unaudited) 31, 1996
----------- ----------
INCREASE (DECREASE) IN NET ASSETS FROM:
OPERATIONS
Net investment income ....................... $ 477,993 $ 1,254,448
Net realized gain on investments ............ 891,617 433,173
Unrealized appreciation (depreciation)
on investments, options and futures
contracts ................................. (1,181,929) (1,070,217)
----------- -----------
Net increase in net assets from
operations ....................... 187,681 617,404

DIVIDENDS PAID TO SHAREHOLDERS FROM
Investment income ........................... (477,993) (1,254,448)

CAPITAL SHARE TRANSACTIONS (Note 4) ........... (974,362) (1,332,818)
----------- -----------
Total decrease ..................... (1,264,674) (1,969,862)

NET ASSETS
Beginning of period ......................... 13,224,367 15,194,229
----------- -----------
End of period ............................... $11,959,693 $13,224,367
=========== ===========

See Notes to Financial Statements.

4
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FUNDAMENTAL U.S. GOVERNMENT STRATEGIC INCOME FUND

STATEMENT OF CASH FLOWS
Six Months Ended June 30, 1997
(Unaudited)
- --------------------------------------------------------------------------------
INCREASE (DECREASE) IN CASH
CASH FLOWS FROM OPERATING ACTIVITIES
Net increase in net assets from operations ............ $ 187,681
Adjustments to reconcile net increase in net
assets from operations to net cash provided
by operating activities:
Purchase of investment securities ..................... (1,654,959)
Proceeds on sale of securities ........................ 3,683,345
Premiums received for options written ................. 308,455
Premiums paid to close options written ................ (270,060)
Increase in interest receivable ....................... (18,683)
Decrease in variation margin receivable ............... 165,418
Decrease in accrued expenses .......................... (48,125)
Net accretion of discount on securities ............... (101,627)
Net realized (gain) loss:
Investments ......................................... (426,612)
Options written ..................................... (12,857)
Unrealized depreciation on securities and options
written for the period ............................... 686,502
----------
Total adjustments ................................. 2,310,797
----------
Net cash provided by operating activities ......... 2,498,478
----------
CASH FLOWS FROM FINANCING ACTIVITIES:*
Net repayments on sale of securities sold subject to
repurchase ............................................ (624,676)
Net repayments on note payable ....................... (275,188)
Proceeds on shares sold ................................ 330,033
Payment on shares repurchased ......................... (1,659,779)
Cash dividends paid .................................. (182,268)
----------
Net cash provided by financing activities ........ (2,411,878)
----------
Net increase in cash ............................. 86,600
CASH AT BEGINNING OF PERIOD ........................... 0
----------
CASH AT END OF PERIOD ................................... $ 86,600
==========
*Non-cash financing activities not included herein consist of
reinvestment of dividends of $355,384.
Cash payments for interest expense totaled $5,865 for the period.

STATEMENT OF OPTIONS WRITTEN
June 30, 1997
(Unaudited)
- --------------------------------------------------------------------------------
Number of Expiration
Contracts++ Options Written Month Value
- ----------- --------------- ---------- -----
20 U.S. Treasury Bonds, Call @ $110 .... September 1997 $39,375
45 U.S. Treasury Bonds, Call @ $112 .... September 1997 42,187
-------
$81,562
=======

++Each contract represents $100,000 face value of U.S. Treasury Bond Futures.

See Notes to Financial Statements.

5
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FUNDAMENTAL U.S. GOVERNMENT STRATEGIC INCOME FUND

STATEMENT OF INVESTMENTS
June 30, 1997
(Unaudited)
- --------------------------------------------------------------------------------
Principal Interest Maturity
Amount Rate@ Date Value
------ ------ ------ -----
United States Treasury Securities-55.82%

United States Treasury Bonds
1,000,000* 6.62% 02/15/27 $ 978,438
5,250,000+ 9.00% 11/15/18 6,491,956
4,300,000 0.00% PS 11/15/06 2,327,022
85,000* 0.00% ZCS 11/15/03 56,128
-----------
(Cost $9,155,827) 9,853,544
-----------

United States Agency Backed Securities-44.18%

Federal Home Loan Mortgage Corporation
588,235x* 20.40% TTIB 09/15/26 603,050
241,808* 14.80% IFRN 05/25/24 252,178
750,000 13.12% IFRN 05/15/24 728,933
843,717+ 9.25% 08/15/23 910,254
276,031+ 6.50% Z Bond 12/15/23 227,828

FNMA-Federal National Mortgage Assoc.
3,671,204+x 15.33% TTIB 03/25/23 3,873,450
356,450+x 15.50% TTIB 03/25/23 367,076
490,760x 14.49% TTIB 05/25/23 509,134

Department of Navy, FNMA Guaranteed
100,000+ 0.00% ZCS 04/01/09 35,341
-----------
(Cost $7,008,366) 7,507,244
-----------

6
<PAGE>

FUNDAMENTAL U.S. GOVERNMENT STRATEGIC INCOME FUND

STATEMENT OF INVESTMENTS (continued)
June 30, 1997
(Unaudited)
- --------------------------------------------------------------------------------
Principal Interest Maturity
Amount Rate@ Date Value
------ ------ ------ -----
FICO-Financing Corporation (U.S. Government
100,000 08/03/18 $ 22,041
205,000+* 04/06/17 49,787
200,000 04/06/17 48,572
208,000 02/03/16 55,145
182,000 06/06/15 50,666
100,000 05/02/14 30,203
100,000 11/02/12 33,753
-----------
(Cost $228,845) 290,167
-----------
Total investments (Cost $16,393,038)++ $17,650,955
===========

+Collateral or partial collateral for securities sold subject to repurchase
(Note 6)
*Segregated, in whole or part, as initial margin for futures contracts (Note 5)
++Cost is the same for Federal income tax purposes
xThe Fund owns 100% of the security or tranche. See Note 5 to the financial
statements.

(degree)Legend

IFRN: Inverse Floating Rate Notes are instruments whose interest rates bear an
inverse relationship to the interest rate on another security or the
value of an index. Rates shown are at June 30, 1997.

TTIB: Two-Tiered Index Floating Rate Bonds are instruments with two coupon
levels. The "first tier" coupon is at a fixed rate, effective as long as
the underlying index is at or below the strike level. At the strike
level, the "second tier" coupon resets the bond to an inverse floating
rate note. See discussion above. Coupons shown are at June 30, 1997.
ZCS: Zero Coupon Securities are instruments whose interest and principal are
paid at maturity.
Z Bond: A Z Bond is an instrument whose monthly interest coupon is paid at a
fixed rate in additional principal. Principal is paid at maturity.
PS: Principal Stripped Bonds are instruments whose principle and coupon have
been separated and sold separately.

See Notes to Financial Statements.

7
<PAGE>

FUNDAMENTAL U.S. GOVERNMENT STRATEGIC INCOME FUND

NOTES TO FINANCIAL STATEMENTS
June 30, 1997
(Unaudited)
- --------------------------------------------------------------------------------

1. Significant Accounting Policies

Fundamental Fixed-Income Fund (the Fund) is an open-end management
investment company registered under the Investment Company Act of 1940. The Fund
operates as a series company currently issuing three classes of shares of
beneficial interest, the Tax-Free Money Market Series, the High-Yield Municipal
Bond Series and the U.S. Government Strategic Income Fund (the Series). The
objective of the Series is to provide high current income with minimum risk of
principal and relative stability of net asset value. The Series seeks to achieve
its objective by investing primarily in U.S. Government Obligations. U.S.
Government Obligations consist of marketable securities issued or guaranteed by
the U.S. Government, its agencies or instrumentalities (hereunder collectively
referred to as "Government Securities"). The Series also uses leverage in
seeking to achieve its investment objective. Each series is considered a
separate entity for financial reporting and tax purposes.

Valuation of Securities-The Series portfolio securities are valued on
the basis of prices provided by an independent pricing service when, in the
opinion of persons designated by the Fund's trustees, such prices are
believed to reflect the fair market value of such securities. Prices of
non-exchange traded portfolio securities provided by independent pricing
services are generally determined without regard to bid or last sale prices
but take into account institutional size trading in similar groups of
securities, yield, quality, coupon rate, maturity, type of issue, trading
characteristics and other market data. Securities traded or dealt in upon a
securities exchange and not subject to restrictions against resale as well
as options and futures contracts listed for trading on a securities exchange
or board of trade are valued at the last quoted sales price, or, in the
absence of a sale, at the mean of the last bid and asked prices. Options not
listed for trading on a securities exchange or board of trade for which
over-the-counter market quotations are readily available are valued at the
mean of the the current bid and asked prices. Money market and short-term
debt instruments with a remaining maturity of 60 days or less will be valued
on an amortized cost basis. Securities not priced in a manner described
above and other assets are valued by persons designated by the Fund's
trustees using methods which the trustees believe reflect fair value.

Futures Contracts-Initial margin deposits with respect to these
contracts are maintained by the Fund's custodian in segregated asset
accounts. Subsequent changes in the daily valuation of open contracts are
recognized as unrealized gains or losses. Variation margin payments are made
or received as daily appreciation or depreciation in the value of these
contracts occurs. Realized gains or losses are recorded when a contract is
closed.

Repurchase Agreements-The Series may invest in repurchase agreements,
which are agreements pursuant to which securities are acquired from a third
party with the commitment that they will be repurchased by the seller at a
fixed price on an agreed upon date. The Series may enter into repurchase
agreements with banks or lenders meeting the creditworthiness standards
established by the Board of Trustees. The resale price reflects the purchase
price plus an agreed upon market rate of interest which is

8
<PAGE>

FUNDAMENTAL U.S. GOVERNMENT STRATEGIC INCOME FUND

NOTES TO FINANCIAL STATEMENTS (continued)
June 30, 1997
(Unaudited)
- --------------------------------------------------------------------------------

unrelated to the coupon rate or date of maturity of the purchased
security. The Series' repurchase agreements will at all times be fully
collateralized in an amount equal to the purchase price including accrued
interest earned on the underlying security.

Reverse Repurchase Agreements-The Series may enter into reverse
repurchase agreements with the same parties with whom it may enter into
repurchase agreements. Under a reverse repurchase agreement, the Series
sells securities and agrees to repurchase them at a mutually agreed upon
date and price. Under the Investment Company Act of 1940 reverse repurchase
agreements are generally regarded as a form of borrowing. At the time the
Series enters into a reverse repurchase agreement it will establish and
maintain a segregated account with its custodian containing securities from
its portfolio having a value not less than the repurchase price including
accrued interest.

Federal Income Taxes-It is the Series' policy to comply with the
requirements of the Internal Revenue Code applicable to "regulated
investment companies" and to distribute all of its taxable and tax exempt
income to its shareholders. Therefore, no provision for federal income tax
is required.

Distributions-The Series declares dividends daily from its net
investment income and pays such dividends on the last business day of each
month. Distributions of net capital gain, if any, realized on sales of
investments are anticipated to be made before the close of the Series'
fiscal year, as declared by the Board of Trustees. Dividends are reinvested
at the net asset value unless shareholders request payment in cash.

General-Securities transactions are accounted for on a trade date basis.
Interest income is accrued as earned. Realized gain and loss from the sale
of securities are recorded on an identified cost basis. Discounts and
premiums are amortized over the life of the respective securities. Premiums
are charged against interest income and discounts are accreted to interest
income.

Accounting Estimates-The preparation of financial statements in
conformity with generally accepted accounting principles requires management
to make estimates and assumptions that affect the reported amounts of assets
and liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of increases and
decreases in net assets from operations during the reporting period. Actual
results could differ from those estimates.

2. Investment Advisory Fees and Other Transactions With Affiliates

The Series has a Management Agreement with Fundamental Portfolio Advisors,
Inc. (the Manager). Pursuant to the agreement the Manager serves as investment
adviser to the Series and is responsible for the overall management of the
business affairs and assets of the Series subject to the authority of the Fund's
Board of Trustees. In compensation for the services provided by the Manager, the
Series will pay an annual management fee in an amount equal to .75% of the
Series' average daily net assets up to $500 million, .725% on the next $500
million, and .70% per annum on assets over $1 billion. The Manager is required
to reimburse the Series for its

9
<PAGE>

FUNDAMENTAL U.S. GOVERNMENT STRATEGIC INCOME FUND

NOTES TO FINANCIAL STATEMENTS (continued)
June 30, 1997
(Unaudited)
- --------------------------------------------------------------------------------

expenses (excluding interest, taxes, brokerage fees and extraordinary expenses)
to the extent that such expense, including the management fees, exceed the
limits on investment company expenses prescribed in any state in which the
Series' shares are qualified for sale. The manager voluntarily waived all of its
fees and reimbursed expenses which totalled $57,931 for the six months ended
June 30, 1997.

The Series has adopted a Distribution and Marketing Plan, pursuant to Rule
12b-1, promulgated under the Investment Company Act of 1940, under which the
Series pays to Fundamental Service Corporation (FSC), an affiliate of the
Manager, a fee which is accrued daily and paid monthly at an annual rate of
0.25% of the Series' average daily net assets. Amounts paid under the plan are
to compensate FSC for the services it provides and the expenses it bears in
distributing the Series' shares to investors. The amount incurred by the Series
pursuant to the agreement for the six months ended June 30, 1997 is set forth in
the statement of operations. FSC has waived all of its fees in the amount of
$15,485.

The Series compensates Fundamental Shareholders Services, Inc. (FSSI), an
affiliate of the Manager, for services it provides under a Transfer Agent and
Service Agreement. The amount incurred by the Series pursuant to the agreement
for the six months ended June 30, 1997 is set forth in the Statement of
Operations.

The Series effects a significant portion of its futures and options
transactions through LAS Investments, Inc. (LAS), an affiliated broker-dealer.
Commissions paid to LAS amounted to approximately $1,800 for the six months
ended June 30, 1997.

3. Trustees' Fees

All of the Trustees of the Fund are also directors or trustees of two other
affiliated mutual funds for which the Manager acts as investment adviser. For
services and attendance at board meetings and meetings of committees which are
common to each fund, each Trustee who is not affiliated with the Manager is
compensated at the rate of $6,500 per quarter pro rated among the funds based on
their respective average net assets.

4. Shares of Beneficial Interest

As of June 30, 1997 there were an unlimited number of shares of beneficial
interest (no par value) authorized and capital paid-in amounted to $27,976,241.
Transactions in shares of beneficial interest were as follows:

Six Months Ended Year Ended
June 30, 1997 December 31, 1996
------------------- -------------------
Shares Amount Shares Amount
------ ------ ------ ------
Shares sold 233,779 $ 330,033 1,209,491 $1,721,466
Shares issued on
reinvestment of dividends 285,768 355,384 605,897 860,888
Shares redeemed (1,209,801) (1,659,779) (2,749,791) (3,915,172)
---------- ---------- ---------- ----------
Net decrease (690,254) ($ 974,362) (934,403) ($1,332,818)
========== ========== ========== ==========

10
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FUNDAMENTAL U.S. GOVERNMENT STRATEGIC INCOME FUND

NOTES TO FINANCIAL STATEMENTS (continued)
June 30, 1997
(Unaudited)
- --------------------------------------------------------------------------------

5. Complex Services, Off Balance Sheet Risks and Investment Transactions

Two-Tiered Index Floating Rate Bonds (TTIB):
The Fund invests in Two-Tiered Index Floating Rate Bonds. The term
two-tiered refers to the two coupon levels that the TTIB's coupon can reset to.
The "first tier" is the TTIB's fixed rate coupon, effective as long as the
underlying index is at or below the strike level. Above the strike, the TTIB
coupon resets to a formula similar to an inverse floating rate note. See
discussion of inverse floating rate notes below. Changes in interest rate on the
underlying security or index affect the rate paid on the TTIB, and the TTIB's
price will be more volatile than that of a fixed-rate bond.

Additionally the Fund owns 100% of several securities as indicated in the
Statement of Investments. As a result of its ownership position there is no
active market in these securities. Valuations of these securities are provided
by a pricing service and are believed by the Manager to reflect fair value. The
market value of securities owned 100% by the Fund was approximately $5,350,000
(or 45% of net assets) as of June 30, 1997.

Inverse Floating Rate Notes (IFRN):
The Fund invests in variable rate securities commonly called "inverse
floaters". The interest rates on these securities have an inverse relationship
to the interest rate of other securities or the value of an index. Changes in
interest rate on the other security or index inversely affect the rate paid on
the inverse floater, and the inverse floater's price will be more volatile than
that of a fixed-rate bond. Certain interest rate movements and other market
factors can substantially affect the liquidity of IFRN's.

Futures Contracts and Options on Futures Contracts:
The Fund invests in futures contracts consisting primarily of US Treasury
Bond Futures. A futures contract is an agreement between two parties to buy and
sell a security for a set price on a future date. Futures contracts are traded
on designated "contract markets" which through their clearing corporations,
guarantee performance of the contracts. In addition the fund invests in options
on US Treasury Bond Futures which gives the holder a right to buy or sell
futures contracts in the future. Unlike a futures contract which requires the
parties to the contract to buy and sell a security on a set date, an option on a
futures contract entitles its holder to decide before a future date whether to
enter into such a futures contract. Both types of contracts are marked to market
daily and changes in valuation will affect the net asset value of the Fund.

The Fund's principal objective in holding or issuing derivative financial
instruments is as a hedge against interest-rate fluctuations in its municipal
bond portfolio, and to enhance its total return. The Fund's principal objective
is to maximize the level of interest income while maintaining acceptable levels
of interest-rate and liquidity risk. To achieve this objective, the Fund uses a
combination of derivative financial instruments principally

11
<PAGE>

FUNDAMENTAL U.S. GOVERNMENT STRATEGIC INCOME FUND

NOTES TO FINANCIAL STATEMENTS (continued)
June 30, 1997
(Unaudited)
- --------------------------------------------------------------------------------

consisting of US Treasury Bond Futures and Options on US Treasury Bond Futures.
Typically the Fund sells treasury bond futures contracts or writes treasury bond
option contracts. These activities create off balance sheet risk since the Fund
may be unable to enter into an offsetting position and under the terms of the
contract deliver the security at a specified time at a specified price. The cost
to the Fund of acquiring the security to deliver may be in excess of recorded
amounts and result in a loss to the Fund. For the year ended June 30, 1997, the
Fund had daily average notional amounts outstanding of approximately $16,235,000
and $75,200 of short positions on US Treasury Bond Futures and Options Written
on US Treasury Bond Futures respectively. Realized gains and losses from these
transactions are stated separately in the Statement of Operations.

The Fund had the following open futures contracts at June 30, 1997.

Principal Expiration Unrealized
Type Amount Position Month Loss
---- --------- -------- ---------- ----------
U.S. Treasury Bond .... $10,500,000 Short 9/97 ($258,971)

Portfolio securities with an aggregate value of approximately $936,800 have
been segregated as initial margin as of June 30, 1997.

In addition, the following table summarizes option contracts written by the
Series for the six months ended June 30, 1997:

Number of Premiums Realized
Contracts Received Cost Loss
--------- -------- ---- ------
Contracts outstanding
December 31, 1996 40 $ 53,488
Options written 270 308,455
Contracts closed or expired (245) (282,917) $270,060 ($12,857)
----- --------
Contracts outstanding
June 30, 1997 65 $ 79,026
===== ========

Other Investment Transactions

For the six months ended June 30, 1997, the cost of purchases and proceeds
from sales of investment securities, other than short-term obligations, were
$1,654,959 and $3,682,508, respectively.

As of June 30, 1997, net unrealized appreciation of portfolio securities
amounted to $1,257,917 composed of unrealized appreciation of $1,267,624 and
unrealized depreciation of $9,707. Net unrealized depreciation of options
written amounted to $2,536 composed of unrealized appreciation of $5,444 and
unrealized depreciation of $2,908.

12
<PAGE>

FUNDAMENTAL U.S. GOVERNMENT STRATEGIC INCOME FUND

NOTES TO FINANCIAL STATEMENTS (continued)
June 30, 1997
(Unaudited)
- --------------------------------------------------------------------------------

The Fund has capital loss carryforwards to offset future capital gains as
follows:
Amount Expiration
------ ----------
$13,909,383 12/31/2002
637,000 12/31/2004
-----------
$14,546,383
===========

6. Borrowing
The Fund has a line of credit agreement with its custodian bank
collateralized by cash and portfolio securities to the extent of the amounts
borrowed. Borrowings under this agreement bear interest linked to the bank's
prime rate.

The Series enters into reverse repurchase agreements collateralized by
portfolio securities equal in value to the repurchase price. Portfolio
securities with an aggregate value of approximately $6,674,795 have been
segregated as collateral for securities sold subject to repurchase as of June
30, 1997.

The maximum month-end and the average amount of borrowing outstanding under
these arrangements during the six months ended June
30, 1997 were approximately $5,914,000 and $4,977,000.

7. Regulatory Matters
Management and the Fund's Trustees cooperated in an investigation conducted
by the Securities and Exchange Commission ("Commission") concerning the Fund,
the Fund's Trustees, the Manager and certain associated persons and affiliated
entities of the Manager. Among other things, the investigation concerned the
sufficiency of disclosures set forth in the Fund's prior advertising and
prospectus, the consistency of the Fund's practices with those disclosures, the
Fund's investment in inverse floating rate notes between 1993 and 1994, the
method by which the Fund's portfolio securities were valued, the calculation of
the Fund's duration, and the Manager's designation of brokerage commissions or
fees on portfolio transactions effected on behalf of the Fund and its affiliates
in consideration of the receipt of research services. The Commission's staff has
indicated the Commission has authorized the commencement of certain proceedings
(but not against the Fund or the Fund's Trustees). All parties intend to
vigorously contest any charges.

In addition, the National Association of Securities Dealers, Inc. ("NASD")
is conducting an investigation concerning alleged violations of the NASD Rules
of Conduct by the Fund's Distributor and certain associated persons. Among other
things, the investigation concerns representations made in certain advertising
materials and sales literature for the Fund at various times between 1992 and
1994. The NASD's staff indicated an intention to recommend the commencement of
certain proceedings (but not against the Fund). All parties are in the process
of settlement discussions with the NASD.

13
<PAGE>

FUNDAMENTAL U.S. GOVERNMENT STRATEGIC INCOME FUND

NOTES TO FINANCIAL STATEMENTS (continued)
June 30, 1997
(Unaudited)
- --------------------------------------------------------------------------------

8. Subsequent Transfer
On July 16, 1997 each of Fundamental's mutual funds (consisting of: The New
York Muni Fund, The California Muni Fund, Fundamental Fixed Income Fund: Tax
Free Money Market Series, High Yield Municipal Bond Series, and Fundamental U.S.
Government Strategic Income Fund) have adopted, subject to shareholder approval,
an Agreement and Plan of Reorganization (the "Plan") under which each fund (the
"Fundamental Fund") will transfer all of its assets and liabilities to a
newly-created corresponding series of The Tocqueville Trust (the "Tocqueville
Fund") in exchange for shares of the Tocqueville Fund. Shareholders of each
Fundamental Fund will receive shares of the corresponding Tocqueville Fund equal
in value to their shares in the Fundamental Fund. Shareholders will not have to
pay a sales load upon receiving shares of the Tocqueville Fund.

The corresponding Tocqueville Fund will have investment objectives, policies
and restrictions substantially identical to those of the Fundamental Fund. The
Board of Trustees of the Tocqueville Funds is comprised of individuals other
than those who currently serve as Directors (Trustees) of the Fundamental Funds.
Tocqueville Asset Management L.P. is the investment adviser to the Tosqueville
Funds.

Fundamental's Board Members determined that the Plan would be in the best
interests of shareholders of the Fundamental Funds and recommended that
shareholders of each of the Fundamental Funds approve the Plan at a meeting
anticipated to be held in the Fall of 1997.

Tocqueville Asset Management L.P. serves as investment adviser to four
mutual funds and a number of private accounts. Tocqueville Asset Management L.P.
has approximately $720 million in assets under management.

14
<PAGE>

FUNDAMENTAL U.S. GOVERNMENT STRATEGIC INCOME FUND

NOTES TO FINANCIAL STATEMENTS (continued)
June 30, 1997
(Unaudited)
- --------------------------------------------------------------------------------

9. Selected Financial Information

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Six Months Years Ended December 31,
Ended ---------------------------------------------
June 30, 1997 1996 1995 1994 1993
------------- ---- ---- ---- ----
Per share operating performance
(for a share outstanding throughout
the period)
Net asset value, beginning of period ....... $ 1.43 $ 1.49 $ 1.37 $ 2.01 $ 2.02
------ ------ ------ ------ ------
Income from investment
operations
Net investment income 0.05 0.13 0.08 0.14 0.16
Net realized and unrealized gain/(loss) on
investments (0.03) (0.06) 0.12 (0.64) -
------ ------ ------ ------ ------
Total from investment
operations 0.02 0.07 0.20 (0.50) 0.16
------ ------ ------ ------ ------
Less distributions
Dividends from net investment
income (0.05) (0.13) (0.08) (0.14) (0.16)
Dividends from net realized gains - - - - (0.01)
------ ------ ------ ------ ------
Net asset value, end of period $ 1.40 $ 1.43 $ 1.49 $ 1.37 $ 2.01
====== ====== ====== ====== ======
Total return 1.71% 5.02% 15.43% (25.57%) 8.14%

Ratios/supplemental data:
Net assets, end of period
(000 omitted) 11,960 13,224 15,194 19,020 63,182
Ratios to average net assets
Interest expense 0.07% 0.12% 0.20% 0.12% 0.05%
Operating expenses 5.78% 3.41% 3.05% 2.16% 1.39%
------ ------ ------ ------ ------
Total expenses+ 5.85%** 3.53% 3.25% 2.28% 1.44%
====== ====== ====== ====== ======
Net investment income+ 7.74%** 9.01% 5.91% 8.94% 7.85%
Portfolio turnover rate 8.83% 12.65% 114.36% 60.66% 90.59%

Borrowings
Amount outstanding at end of
period (000 omitted) $5,737 $6,610 $ 7,481 $ 9,674 $31,072
Average amount of debt outstanding
during the period (000 omitted) $4,977 $6,577 $ 7,790 $16,592 $28,756
Average number of shares outstanding
during the period (000 omitted) 8,883 9,764 11,571 21,436 28,922
Average amount of debt per share
during the period $ .56 $ .67 $ .67 $ .77 $ .99

</TABLE>
*Commencement of operations.
**Annualized
+These ratios are after expense reimbursement of 1.19% for the period June 30,
1997 and 2.02%, 1.0% and .13% for the years ended December 31, 1996, 1995
and 1993, respectively, and 1.05% for the period February 18, 1992 to December
31, 1992.

15
<PAGE>

FUNDAMENTAL
U.S. GOVERNMENT
STRATEGIC INCOME FUND
90 Washington Street
New York NY 10006
1-800-322-6864

This report and the financial statements contained
herein are submitted for the general information of
the shareholders of the Fund. The report is not
authorized for distribution to prospective investors
in the Fund unless preceded or accompanied by an
effective prospectus.

(right column)

Semi Annual Report
June 30, 1997
(Unaudited)

FUNDAMENTAL
logo U.S. GOVERNMENT
STRATEGIC INCOME FUND

logo FUNDAMENTAL
Fundamental Family of Funds

<PAGE>

(left column)

FUNDAMENTAL FIXED-INCOME FUND
TAX-FREE MONEY MARKET SERIES

STATEMENT OF ASSETS AND LIABILITIES
June 30, 1997
(Unaudited)
- ------------------------------------------------------------
ASSETS
Investment in securities at value
(cost $90,003,072) ........................ $90,003,072
Cash ........................................ 532,954
Receivables:
Interest .................................. 284,567
Capital shares sold ....................... 422,122
-----------
Total assets .................... 91,242,715
-----------

LIABILITIES
Payables:
Capital shares redeemed ................... 15,000
Dividends ................................. 438
Accrued expenses ............................ 76,930
-----------
Total liabilities ............... 92,368
-----------

NET ASSETS equivalent to $1.00 per share on
91,159,235 shares of beneficial interest
outstanding (Note 4) ........................ $91,150,347
===========

(right column)

STATEMENT OF OPERATIONS
Six Months Ended June 30, 1997
(Unaudited)
- ------------------------------------------------------------
INVESTMENT INCOME
Interest income ..................... $ 973,763

EXPENSES (Notes 2 and 3)
Investment advisory fees ............ $138,225
Custodian and accounting fees ....... 39,542
Transfer agent fees ................. 11,469
Trustees' fees ...................... 9,549
Professional fees ................... 10,735
Distribution fees ................... 138,225
Other ............................... 8,950
--------
356,695
Less: Expenses offset (Note 6) ........ (39,543)
--------
Total expenses .......... 317,153
---------
NET INCREASE IN NET ASSETS FROM
OPERATIONS .......................... $ 656,610
=========

STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------

Six Months
Ended Year Ended
June 30, 1997 December 31,
(Unaudited) 1996
----------- -----------

INCREASE (DECREASE) IN NET ASSETS FROM:
OPERATIONS
Net investment income ............................. $ 656,610 $ 1,161,235
----------- -----------
Net increase in net assets from operations 656,610 1,161,235

DIVIDENDS PAID TO SHAREHOLDERS FROM
Investment income ................................. (656,610) (1,161,235)
CAPITAL SHARE TRANSACTIONS (Note 4) ................. 86,529,583 (6,629,783)
----------- -----------
Total (decrease) increase ................ 86,529,583 (6,629,783)
NET ASSETS:
Beginning of period ............................... 4,620,764 11,250,547
----------- -----------
End of period ..................................... $91,150,347 $ 4,620,764
=========== ===========

See Notes to Financial Statements.

1
<PAGE>

FUNDAMENTAL FIXED-INCOME FUND
TAX-FREE MONEY MARKET SERIES

STATEMENT OF INVESTMENTS
June 30, 1997
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal
Amount Issue(degree) Value
------ ----- -----
<S> <C> <C>
$ 235,000 Austin, TX, Electric Light & Power, Waterworks & Sewer, ETM, 3.00%, 10/1/97 ............... $ 233,403

3,800,000 Burke County, GA, Development Authority, Georgia Power Company, Vogtle
Project, VRDN*, 4.05%, 9/1/26 ............................................................ 3,800,000

80,000 Cuyahoga County, OH, IDR, S & R Playhouse Realty, VRDN*, LOC Marine
Midland Bank, 3.85%, 12/1/09 ............................................................ 80,000

100,000 Decatur, AL, Industrial Development Board, Solid Waste Disposal, RB, Amoco
Chemical Co Project, VRDN*, 4.30, 5/1/25 ................................................ 100,000

200,000 Delaware County, PA, SWDF, Scott Paper Project, Kimberly-Clark Corp
Guaranty, VRDN*, 4.15%, 12/1/18 ......................................................... 200,000

1,800,000 District of Columbia, General Recovery Fund, LOC Landesbank Hessen-
Thuringen, VRDN*, 4.10, 6/1/03 .......................................................... 1,800,000

200,000 Fulton County, GA, PCR, General Motors Project, VRDN*, 4.25, 4/1/10 ....................... 200,000

125,000 Genesee County, NY, IDR, Orcon Industries, AMT, LOC Fleet Bank, VRDN*,
4.50, 12/1/98 ........................................................................... 125,000

6,500,000 Gulf Coast, TX, Waste Disposal Authority, PCR, Amoco Oil Company Project,
VRDN*, 4.00, 10/1/17 .................................................................... 6,500,000

600,000 Harris County, TX, Industrial Development Corp, PCR, Enon Corporation
Project, VRDN*, 4.05, 3/1/24 ............................................................ 600,000

300,000 Illinois Educational Facility Authority, RB, Art Institute of Chicago, Northern Trust
Liquidity, VRDN*, 4.20, 3/1/27 .......................................................... 300,000

300,000 Illinois HFAR, Franciscan Sisters Project, LOC Toronto Dominion Bank, VRDN*,
4.15, 9/1/15 ............................................................................ 300,000

200,000 Illinois HFAR, West Suburban Hospital Medical Center, LOC First Chicago Bank,
VRDN*, 4.15, 7/1/05 ..................................................................... 200,000

5,700,000 Indiana Development Authority, Educational Fadlities RB, Lutheran High School
Proj, LOC First America-lndiana, VRDN*, 4.40, 10/1/17 ................................... 5,700,000

7,000,000 Jackson County, MS, PCR, Chevron USA Inc Project, VRDN*, 4.00, 12/1/16 .................... 7,000,000

5,900,000 Jacksonville, FL, PCR Refunding Bonds, Florida Power & Light Company
Project, VRDN*, 4.00, 5/1/29 ............................................................ 5,900,000

3,000,000 Jasper County, IN, PCR, Northern Indiana Public Service Project, Series B,
4.05, 6/01/13 ........................................................................... 3,000,000

1,200,000 Los Angeles, CA, Regional Airports Improvement Corp, LOC Societe Generate,
VRDN*, 4.10, 12/1/25 .................................................................... 1,200,000

200,000 McIntosh, AL, PCR, Ciba Geigy Project, LOC Swiss Bank Corp. VRDN*, 4.10,
12/1/03 ................................................................................. 200,000

200,000 Missouri, Third Street Building Project, SPA First Chicago, VRDN*, 4.45, 8/1/99 ........... 200,000

300,000 Missouri, PCR, Monsanto Project, VRDN*, 4.15, 2/1/09 ...................................... 300,000

1,100,000 Missouri State Environmental Improvement & Energy Resources Authority,
Bayer Corp Project, VRDN*, 4.00, 3/1/09 ................................................. 1,100,000

300,000 Montgomery, AL, Baptist Medical Ctr, Special Care Facilities Financing Auth,
AMBAC Insured, Mellon Bank Liquidity VRDN*, 4.20, 12/1/30 ............................... 300,000

200,000 Morris County, NJ, BANS, 3.57, 12/11/97 ................................................... 199,610

200,000 Nebraska Higher Education Loan Program, SPA SLMA, MBIA Insured, VRDN*,
4.20, 12/1/15 ........................................................................... 200,000

</TABLE>

2
<PAGE>

<TABLE>
<CAPTION>
Principal
Amount Issue(degree) Value
------ ----- -----
<S> <C> <C>
$ 1,100,000 New York City, NY, GO, LOC Chase Manhattan Bank, VRDN*, 3.90, 8/1/23 ...................... $1,100,000

4,900,000 New York City, NY, GO, MBIA Insured, National Westminster Liquidity, VRDN*,
4.15, 8/15/23 ........................................................................... 4,900,000

11,800,000 New York City, NY, Municipal Water Finance Authority, FGIC Insured, VRDN*,
4.05, 6/15/24 ........................................................................... 11,800,000

6,700,000 New York City, NY, Municipal Water Finance Authority, FGIC Insured, VRDN*,
4.15, 6/15/22 ........................................................................... 6,700,000

40,000 New York City, NY, New Public Housing Authority, 3.38, 1/1/98 39,740
6,800,000 New York State Dormitory Authority, RB, CoMell University, Morgan Guaranty
Uquidity, VRDN*, 4.00, 7/1/25 ........................................................... 6,800,000

3,400,000 New York State Local Government Assistance Corp Series D, LOC Societe
General, VRDN*, 4.05, 4/1/25 ............................................................ 3,400,000

5,700,000 Sabine River Authority, TX, PCR, Texas Wities Electric Co Project, AMBAC
Insured, Bank of New York Liquidity, VRDN*, 4.10, 3/1/26 ................................ 5,700,000

125,000 Scioto County, OH, HFR, VHA Central Capital Project, AMBAC Insured, Mellon
Bank Liquidity, VRDN*, 3.90, 12/1/25 .................................................... 125,000

4,500,000 Sweetwater County, WY, PCR, Idaho Power Company Project, VRDN*, 4.05,
7/15/26 ................................................................................. 4,500,000

200,000 Texas State, TRANS, 4.75, 8/29/97 ......................................................... 200,319

200,000 Wake County, NC, PCR, Carolina Power & Light Project, LOC Sumitomo Bank,
VRDN*, 4.30, 10/1/15 .................................................................... 200,000

1,300,000 West Baton Rouge Parish, LA, Industrial District Number 3 RB,Dow Chemical
Company Project, 4.15, 12/1/16 .......................................................... 1,300,000

3,500,000 Wisconsin Health & Education Faciliites Authority, Wheaton Franciscan
Services, LOC Toronto Dominion, VRDN*, 4.20, 8/15/16 .................................... 3,500,000
-----------
Total Investments (Cost $90,003,072)** ....................................................$90,003,072
===========

</TABLE>

*Variable Rate Demand Notes (VRDN) are instruments whose interest rate
changes on a specific date and/or whose interest rates vary with changes in
a designated base rate. Rates shown are as of June 30, 1997.

**Cost is the same for Federal income tax purposes.

Legend
(left column)

(degree)Issue AMBAC American Municipal Bond
Assurance Corporation

AMT Alternative Minimum Tax

BANS Bond Anticipation Notes

GO General Obligation

ETM Escrowed to Maturity

FGIC Financial Guaranty Insurance Corporation

HFAR Health Facilities Authority Revenue

HFR Hospital Facilities Revenue

IDR Industrial Development Revenue

(right column)

(degree)Issue LOC Letter of Credit

MBIA Municipal Bond Insurance Assurance Corporation

PCR Pollution Control Revenue

RB Revenue Bond

SLMA Student Loan Marketing Association

SPA Stand By Bond Purchase Agreement

SWDF Solid Waste Disposal Facility

TRANS Tax Revenue Anticipation Notes

VHA Voluntary Health Administration

See Notes to Financial Statements.

3
<PAGE>

FUNDAMENTAL FIXED-INCOME FUND
TAX-FREE MONEY MARKET SERIES

NOTES TO FINANCIAL STATEMENTS
June 30, 1997
(Unaudited)
- --------------------------------------------------------------------------------
1. Significant Accounting Policies

Fundamental Fixed-Income Fund (the Fund) is an open-end management
investment company registered under the Investment Company Act of 1940. The Fund
acts as a series company currently issuing three classes of shares of beneficial
interest, the Tax-Free Money Market Series, the High-Yield Municipal Bond Series
and the U.S. Government Strategic Income Fund. Each series is considered a
separate entity for financial reporting and tax purposes. The Fund's investment
objective is to provide as high a level of current income exempt from federal
income tax as is consistent with the preservaton of capital and liquidity. The
following is a summary of significant accounting policies followed in the
preparation of the Series' financial statements:

Valuation of Securities:

Investments are stated at amortized cost. Under this valuation method, a
portfolio instrument is valued at cost and any premium or discount is
amortized on a constant basis to the maturity of the instrument.
Amortization of premium is charged to income, and accretion of market
discount is credited to unrealized gains. The maturity of investments is
deemed to be the longer of the period required before the Fund is entitled
to receive payment of the principal amount or the period remaining until
the next interest adjustment.

Federal Income Taxes:

It is the Series' policy to comply with the requirements of the Internal
Revenue Code applicable to "regulated investment companies" and to
distribute all of its taxable and tax exempt income to its shareholders.
Therefore, no provision for federal income tax is required.

Distributions:

The Series declares dividends daily from its net investment income and
pays such dividends on the last business day of each month. Distributions
of net capital gains are made annually, as declared by the Fund's Board of
Trustees. Dividends are reinvested at the net asset value unless
shareholders request payment in cash.

General:

Securities transactions are accounted for on a trade date basis. Interest
income is accrued as earned. Realized gains and losses from the sale of
securities are recorded on an identified cost basis.

Accounting Estimates:

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of increases and decreases
in net assets from operations during the reporting period. Actual results
could differ from those estimates.

2. Investment Advisory Fees and Other Transactions with Affiliates

The Fund has a Management Agreement with Fundamental Portfolio Advisors,
Inc. (the Manager). Pursuant to the agreement, the Manager serves as investment
adviser to the Tax-Free Money Market Series and is responsible for the overall
management of the business affairs and assets of the Series subject to the
authority of

4
<PAGE>

FUNDAMENTAL FIXED-INCOME FUND
TAX-FREE MONEY MARKET SERIES

NOTES TO FINANCIAL STATEMENTS (continued)
June 30, 1997
(Unaudited)
- --------------------------------------------------------------------------------

the Fund's Board of Trustees. In compensation for the services provided by the
Manager the Series will pay an annual management fee in an amount equal to 0.5%
of the Series' average daily net assets up to $100 million and decreasing by
.02% for each $100 million increase in net assets down to 0.4% of net assets in
excess of $500 million.

The Manager has cooperated in an investigation conducted by the Securities
and Exchange Commission concerning an affiliated fund. The Commission's staff
indicated that the Commission has authorized the commencement of certain
proceedings against the Manager, the Distributor and two individuals associated
with the Manager. All parties intend to vigorously contest any charges.

The Fund has adopted a Plan of Distribution, pursuant to Rule 12b-1
promulgated under the Investment Company Act of 1940, under which the Series
pays to Fundamental Service Corporation (FSC), an affiliate of the Manager, a
fee, which is accrued daily and paid monthly, at an annual rate of 0.5% of the
Series' average daily net assets. The amounts paid under the plan compensate FSC
for the services it provides and the expenses it bears in distributing the
Series' shares to investors. Distribution fees for the six months ended June 30,
1997 are set forth in the Statement of Operations.

The Fund compensates Fundamental Shareholder Services, Inc., an affiliate of
the Manager, for the services it provides under a Transfer Agent and Service
Agreement. Transfer agent fees for the six months ended June 30, 1997 are set
forth in the Statement of Operations.

3. Trustees' Fees

All of the Trustees of the Fund are also directors or trustees of two other
affiliated mutual funds for which the Manager acts as investment adviser. For
services and attendance at board meetings and meetings of committees which are
common to each Fund, each Trustee who is not affiliated with the Manager is
compensated at the rate of $6,500 per quarter pro rated among the funds based on
their respective average net assets.

4. Shares of Beneficial Interest

As of June 30, 1997 there were an unlimited number of shares of beneficial
interest (no par value) authorized and capital paid in amounted to $91,159,235.
Transactions in shares of beneficial interest, all at $1.00 per share were as
follows:

Six Months Year ended
Ended December 31,
June 30, 1997 1996
-------------- --------------
Shares sold .............................. $1,495,705,940 $3,547,580,681

Shares issued on reinvestment of dividends 760,069 1,042,865

Shares redeemed .......................... (1,409,936,426) (3,555,253,329)
-------------- --------------
Net (decrease) increase ............... $ 86,529,583 $ (6,629,783)
============== ==============

5. Line of Credit

The Fund has a line of credit agreement with its custodian bank
collateralized by cash and portfolio securities for $700,000. Borrowings under
this agreement bear interest linked to the bank's prime rate. There were no
borrowings outstanding at June 30, 1997.

5
<PAGE>

FUNDAMENTAL FIXED-INCOME FUND
TAX-FREE MONEY MARKET SERIES

NOTES TO FINANCIAL STATEMENTS (continued)
June 30, 1997
(Unaudited)
- --------------------------------------------------------------------------------

6. Expense Offset Arrangement

The Fund has an arrangement with its custodian whereby credits earned on
cash balances maintained at the custodian are used to offset custody charges.
These credits amounted to approximately $40,000 for the year ended June 30,
1997.

7. Subsequent Transfer

On July 16, 1997 each of Fundamental's mutual funds (consisting of: The New
York Muni Fund, The California Muni Fund, Fundamental Fixed Income Fund: Tax
Free Money Market Series, High Yield Municipal Bond Series, and Fundamental U.S.
Government Strategic Income Fund) have adopted, subject to shareholder approval,
an Agreement and Plan of Reorganization (the "Plan") under which each fund (the
"Fundamental Fund") will transfer all of its assets and liabilities to a
newly-created corresponding series of The Tocqueville Trust (the "Tocqueville
Fund") in exchange for shares of the Tocqueville Fund. Shareholders of each
Fundamental Fund will receive shares of the corresponding Tocqueville Fund equal
in value to their shares in the Fundamental Fund. Shareholders will not have to
pay a sales load upon receiving shares of the Tocqueville Fund.

6
<PAGE>

FUNDAMENTAL FIXED-INCOME FUND
TAX-FREE MONEY MARKET SERIES

NOTES TO FINANCIAL STATEMENTS (continued)
June 30, 1997
(Unaudited)
- --------------------------------------------------------------------------------

8. Selected Financial Information
<TABLE>
<CAPTION>

Six Months
Ended Years Ended December 31,
June 30, ----------------------------------------
1997 1996 1995 1994 1993
-------- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
PER SHARE DATA AND RATIOS
(for a share outstanding throughout the period)
Net Asset Value, Beginning of Period ................................... $1.00 $1.00 $1.00 $1.00 $1.00
------ ------ ------ ------ ------
Income from investment operations:
Net investment income .................................................. 0.012 0.023 0.026 0.017 0.014
------ ------ ------ ------ ------

Less Distributions:
Dividends from net investment income ................................... (0.012) (0.023) (0.026) (0.017) (0.014)
------ ------ ------ ------ ------
Net Asset Value, End of Period ......................................... $1.00 $1.00 $1.00 $1.00 $1.00
====== ====== ====== ====== ======
Total Return ........................................................... 1.25% 2.28% 2.60% 1.69% 1.62%

RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Period (000 omitted) ................................ 91,150 4,621 11,251 9,004 5,830

Ratios to Average Net Assets
Expenses ............................................................. 1.28%(DD) 1.54%(DD) 1.53%(DD) 0.91%+ .95%+
Net investment income ................................................ 2.38%* 2.04% 2.43% 1.55% 1.25%

BANK LOANS
Amount outstanding at end of period
(000 omitted) ........................................................ $ - $ 218 $ - $ 451 $ 290

Average amount of bank loans outstanding during the period
(000 omitted) ........................................................ $ - $ - $ 41 $ 53 $ 111

Average number of shares outstanding during the period
(000 omitted) ........................................................ 56,363 56,876 44,432 56,267 25,786

Average amount of debt per share during the period ..................... $ - $ - $ .001 $ .001 $ .004
</TABLE>

+These ratios are after expense reimbursement of .44%, .67% and 1.66%, for
each of the years ended December 31, 1994, 1993 and 1992, respectively.

(DD)These ratios would have been 1.14%, 1.40% and 1.26% net of expense offsets
of .14%, .14% and .18% for the periods ended June 30, 1997, December 1996
and 1995 respectively.

*Annualized

<PAGE>

(left column)

FUNDAMENTAL FIXED-INCOME FUND
90 Washington Street
New York, NY 10006
1-800-322-6864

(right column)

--------------------------
Semi-Annual Report
June 30, 1997
(Unaudited)

FUNDAMENTAL
FIXED-INCOME FUND

Tax-Free
Money Market Series

(LOGO)

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

<PAGE>

FUNDAMENTAL FIXED-INCOME FUND
HIGH-YIELD MUNICIPAL BOND SERIES
- --------------------------------------------------------------------------------

Dear Fellow Shareholder:

By late April it seems that market psychology may have finally begun shifting
toward a benign view of inflation. Economic growth is continuing unabated, and
with signs of inflation still totally absent, the fixed income investment arena
has begun to improve. Thus, the Fundamental High Yield Municipal Bond Fund
registered a 4.45% total return for the six months ended June 30, 1997. This
placed the Fund in the top 1% of national municipal bond funds according to
Morningstar.

Looking ahead then we expect a relatively calm bond market environment with
relatively stable interest rates. Municipal bonds modestly outperformed Treasury
bonds in the first half of the year, and over the next six months we would
expect both sectors to move similarly. We are looking forward to the upcoming
merger with the Tocqueville Fund Family, and we thank you for your continued
trust.

Sincerely,

Dr. Vincent J. Malanga
President

<PAGE>

FUNDAMENTAL FIXED-INCOME FUND
HIGH-YIELD MUNICIPAL BOND SERIES

STATEMENT OF ASSETS AND LIABILITIES
June 30, 1997 (Unaudited)
- --------------------------------------------------------------------------------
ASSETS
Investment in securities at value (Note 5) (cost $1,829,892) ..... $1,766,751
Interest receivable .............................................. 31,661
Receivable for investment securities sold ........................ 384
----------
Total assets ............................................. 1,798,796
----------

LIABILITIES
Bank overdraft payable ........................................... 366,735
Dividend payable ................................................. 1,409
Accrued expenses ................................................. 20,086
----------
Total liabilities ........................................ 388,230
----------

NET ASSETS consisting of:
Accumulated net realized loss ....................... $(162,753)
Unrealized depreciation of securities ............... (63,141)
Paid-in-capital applicable to 202,657 shares
of beneficial interest (Note 4) ................... 1,636,460
----------

$1,410,566
==========
NET ASSET VALUE PER SHARE .......................................... $ 6.96
==========

See Notes to Financial Statements.

2
<PAGE>

FUNDAMENTAL FIXED-INCOME FUND
HIGH-YIELD MUNICIPAL BOND SERIES

STATEMENT OF OPERATIONS
Six Months Ended June 30, 1997 (Unaudited)
- --------------------------------------------------------------------------------
INVESTMENT INCOME
Interest income ....................................... $ 68,937

EXPENSES (Notes 2 and 3)
Investment advisory fees .............................. $ 6,695
Custodian and accounting fees ......................... 10,437
Transfer agent fees ................................... 4,105
Trustee fees .......................................... 1,205
Distribution fees ..................................... 4,185
Professional fees ..................................... 48,196
Postage and printing .................................. 11,942
Other ................................................. 962
--------
87,727

Less: Expenses waived or reimbursed by the manager
and affiliates .................................. (66,780)
--------
Total expenses ........................... 20,947
--------
Net investment income .................... 47,990

REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain on investments ...................... 13,852
Change in unrealized depreciation of investments
for the year ........................................ 10,904
--------
Net gain on investments ................... 24,756
--------

NET INCREASE IN NET ASSETS FROM
OPERATIONS ............................................ $ 72,746
========

See Notes to Financial Statements.

3
<PAGE>

FUNDAMENTAL FIXED-INCOME FUND
HIGH-YIELD MUNICIPAL BOND SERIES

STATEMENTS OF CHANGES IN NET ASSETS
- -------------------------------------------------------------------------------
For the Six For the Year
Months Ended Ended
June 30,1997 December 31,
(Unaudited) 1996
---------- ----------
INCREASE (DECREASE) IN NET ASSETS FROM:
OPERATIONS
Net investment income ............................. $ 47,990 $ 108,670
Net realized gain (loss) on investments ........ 13,852 22,294
Unrealized appreciation (depreciation) of
investments for the period ...................... 10,904 (22,733)
---------- ----------
Net increase in net assets from operations .. 72,746 108,231

DIVIDENDS PAID TO SHAREHOLDERS FROM
Net investment income ............................. (47,990) (108,670)

CAPITAL SHARE TRANSACTIONS (Note 4) ................. (472,402) 401,216
---------- ----------
Total increase (decrease) ................... (447,646) 400,777

NET ASSETS:
Beginning of period ............................... 1,858,212 1,457,435
---------- ----------
End of period ..................................... $1,410,566 $1,858,212
========== ==========

See Notes to Financial Statements.

4
<PAGE>

FUNDAMENTAL FIXED-INCOME FUND
HIGH-YIELD MUNICIPAL BOND SERIES

STATEMENT OF INVESTMENTS
June 30, 1997
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal
Amount Issue(degree) Value
------ ------------- -----
<S> <C> <C>
$ 40,000 Allegheny County, PA, IDA, AFR, USAir Inc., 8.87%, 3/1/21 .................................... $ 40,324
40,000 Brookhaven, NY, IDA, CFR, Dowling College, 6.75%, 3/1/23 ..................................... 41,843
90,000 California Health Facilities Authority, Valley Presbyterian Hospital Project, RB, Series A,
9.00%, 5/1/12 ............................................................................. 90,386
250,000 Colorado Health Facilities Authority, RHR, Liberty Heights Project, ETM, CAB, 7/15/24 .. 47,335
100,000 Corona, CA, COP, Vista Hospital Systems Inc, 8.37%, 7/1/11 ............................. 106,388
70,000 Florence County, SC, IDA, RB, Stone Container Corporation, 7.37%, 2/1/07 .................... 72,225
500,000 Foothill / Eastern TCA, Toll Road Revenue, CAB, 1/1/26 .................................... 88,215
25,000 Hildago County, TX, Health Services, Mission Hospital Inc Project, 6.87%, 8/15/26 ..... 25,702
50,000++ Illinois Development Financial Authority, Solid Waste Disposal, RB, Ford Heights Waste
Tire Project, 7.87%, 4/1/11 ............................................................... 19,335
45,000 Illinois Health Facilities Authority, Midwest Physician Group Ltd Project, RB, 8.12%,
11/15/19 ................................................................................... 47,876
35,000 Indianapolis, IN, RB, Robin Run Village Project, 7.62%, 10/1/22 ............................ 37,751
50,000 Joplin, MO, IDA, Hospital Facilities Revenue, Tri State Osteopathic, 8.25%, 12/15/14 ..... 52,618
50,000 Los Angeles, CA, Regional Airport, Continental Airlines, AMT, 9.25%, 8/1/24 ................ 55,184
630,000 Marengo County, AL, Port Authority Facilities, RB, CAB, Series A, 3/1/19 ..................... 119,020
75,000 Maryland Economic Development Corporation, Nursing Facilities, Mortgage RB,
Ravenwood Healthcare, Series A, 8.37%, 8/1/26 ............................................ 74,425
90,000 Montgomery County, TX, Health Facilities Development Corp., The Woodlands Medical
Center, 8.85%, 8/15/14 ................................................................... 100,259
100,000+ Niagara Falls, NY, URA, Old Falls Street Improvement Project, 11.00%, 5/1/99 ............ 35,795
50,000 Northeast, TX, Hospital Authority Revenue, Northeast Medical Center, 7.25%, 7/1/22 ....... 57,261
75,000 Perdido, FL, Housing Corporation, RB, Series B, 9.25%, 11/1/16 .............................. 75,050
30,000 Philadelphia, PA, HEHA, Graduate Health Systems Project, 7.25%, 7/1/18 .................... 30,927
60,000 Port Chester, NY, IDA, Nadal Industries Inc Project, 7.00%, 2/1/16 ......................... 60,000
75,000 San Antonio, TX, HFC, Multi Family Housing, RB, Agape Metro Housing Project, Series
A, 8.62%, 12/1/26 .......................................................................... 75,151
75,000 San Bernardino, CA, San Bernardino Community Hospital, RB, 7.87%, 12/1/19 .................... 76,810

</TABLE>

5
<PAGE>

FUNDAMENTAL FIXED-INCOME FUND
HIGH-YIELD MUNICIPAL BOND SERIES

STATEMENT OF INVESTMENTS (continued)
June 30, 1997
(Unaudited)
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal
Amount Issue(degree) Value
------ ------------- -----
<S> <C> <C>
$100,000 San Bernardino County, CA, COP, IFRN*, 9.97%, 7/1/16 ......................................... $ 98,783
40,000 San Joaquin Hills, CA, TCA, Toll Road Revenue, 7.00%, 1/1/30 42,857
60,000 San Jose, CA, Redevelopment Agency, Tax Allocation Bonds, IFRN*, MBIA Insured, 7.17%, 8/1/16 . 52,587
150,000 Savannah, GA, Economic Development Authority Revenue, ETM, CAB, 12/1/21 ...................... 29,513
45,000 Schuylkill County, PA, IDA Resouce Recovery, Schuylkill Energy Res lnc, AMT, 6.50%, 1/1/10 ... 45,204
15,000+ Troy, NY, IDA, Hudson River Project, 11.00%, 12/1/14 ......................................... 6,150
75,000@ Villages at Castle Rock, CO, Metropolitan District #4, 2.88%, 6/1/31 ......................... 35,735
25,000 Wayne MI, AFR, Northwest Airlines Inc. 6.75%, 12/1/15 ........................................ 26,042
----------
Total Investments (Cost $1,829,892**) ........................................................ $1,766,751
==========
</TABLE>

**Cost is approximately the same for income tax purposes.
*Inverse Floating Rate Notes (IFRN) are instruments whose rates bear an
inverse relationship to the interest rate on another security or the value
of an index. Coupons shown are as of June 30, 1997.
+The value of this non-income producing security has been estimated by
persons designated by the Fund's Board of Trustees using methods the
Trustees believe reflect fair value. See note 5 to the financial statements.
++Non-income producing security.
@Security in default. Interest paid on cash flow basis. Rate shown as at June
30, 1997. Rate varies according.

Legend
(degree)Issue AFR Airport Facilities Revenue
AMT Subject to Alternative Minimum Tax
CAB Capital Appreciation Bond
COP Certificate of Participation
CFR Civic Facility Revenue
HEHA Higher Education and Health Authority
HFC Housing Finance Corporation
IDA Industrial Development Authority
MBIA Municipal Bond Insurance Assurance Corporation
RB Revenue Bond
TCA Transportation Corridor Agency
URA Urban Renewal Agency

See Notes to Financial Statements.

6
<PAGE>

FUNDAMENTAL FIXED-INCOME FUND
HIGH-YIELD MUNICIPAL BOND SERIES

NOTES TO FINANCIAL STATEMENTS
June 30, 1997
(Unaudited)
- --------------------------------------------------------------------------------

1. Significant Accounting Policies

Fundamental Fixed-Income Fund (the Fund) is an open-end management
investment company registered under the Investment Company Act of 1940. The Fund
operates as a series company currently issuing three classes of shares of
beneficial interest, the Tax-Free Money Market Series, the High-Yield Municipal
Bond Series and the U.S. Government Strategic Income Fund (the Series). Each
series is considered a separate entity for financial reporting and tax purposes.
The Series seeks to provide a high level of current income exempt from federal
income tax through investment in a portfolio of lower quality municipal bonds,
generally referred to as "junk bonds." These bonds are considered speculative
because they involve greater price volatility and risk than higher rated bonds.
The following is a summary of significant accounting policies followed in the
preparation of the Series' financial statements:

Valuation of Securities: The Fund's portfolio securities are valued on the basis
of prices provided by an independent pricing service when, in the opinion of
persons designated by the Fund's trustees, such prices are believed to reflect
the fair market value of such securities. Prices of non-exchange traded
portfolio securities provided by independent pricing services are generally
determined without regard to bid or last sale prices but take into account
institutional size trading in similar groups of securities, yield, quality,
coupon rate, maturity, type of issue, trading characteristics and other market
data. Securities traded or dealt in upon a securities exchange and not subject
to restrictions against resale as well as options and futures contracts listed
for trading on a securities exchange or board of trade are valued at the last
quoted sales price, or, in the absence of a sale, at the mean of the last bid
and asked prices. Options not listed for trading on a securities exchange or
board of trade for which over-the-counter market quotations are readily
available are valued at the mean of the current bid and asked prices. Money
market and short-term debt instruments with a remaining maturity of 60 days or
less will be valued on an amortized cost basis. Securities not priced in a
manner described above and other assets are valued by persons designated by the
Fund's trustees using methods which the trustees believe accurately reflects
fair value.

Federal Income Taxes: It is the Series' policy to comply with the requirements
of the Internal Revenue Code applicable to "regulated investment companies" and
to distribute all of its taxable and tax exempt income to its shareholders.
Therefore, no provision for federal income tax is required.

Distributions: The Series declares dividends daily from its net investment
income and pays such dividends on the last business day of each month.
Distributions of net capital gain, if any, realized on sales of investments are
anticipated to be made before the close of the Series' fiscal year, as declared
by the Board of Trustees. Dividends are reinvested at the net asset value unless
shareholders request payment in cash.

General: Securities transactions are accounted for on a trade date basis.
Interest income is accrued as earned. Realized gain and loss from the sale of
securities are recorded on an identified cost basis. Original issue discounts
and premiums are amortized over the life of the respective securities. Premiums
are amortized and charged against interest income and original issue discounts
are accreted to interest income.

7
<PAGE>

FUNDAMENTAL FIXED-INCOME FUND
HIGH-YIELD MUNICIPAL BOND SERIES

NOTES TO FINANCIAL STATEMENTS (continued)
June 30, 1997
(Unaudited)
- --------------------------------------------------------------------------------

Accounting Estimates: The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of increases and decreases in net assets
from operations during the reporting period. Actual results could differ from
those estimates.

2. Investment Advisory Fees and Other Transactions with Affiliates

The Fund has a Management Agreement with Fundamental Portfolio Advisors,
Inc. (the Manager). Pursuant to the agreement, the Manager serves as investment
adviser to the High-Yield Municipal Bond Series and is responsible for the
overall management of the business affairs and assets of the Series subject to
the authority of the Funds' Board of Trustees. In compensation for the services
provided by the Manager, the Series will pay an annual management fee in an
amount equal to 0.8% of the Series' average daily net assets up to $100 million
and decreasing by .02% for each $100 million increase in net assets down to 0.7%
of net assets in excess of $500 million. The Manager voluntarily waived fees and
reimbursed expenses of $62,596 for the six months ended June 30, 1997.

The Fund has adopted a Plan of Distribution, pursuant to Rule 12b-1
promulgated under the Investment Company Act of 1940, under which the Series
pays to Fundamental Service Corporation (FSC), an affiliate of the Manager, a
fee, which is accrued daily and paid monthly, at an annual rate of 0.5% of the
Series' average daily net assets. Amounts paid under the plan are to compensate
FSC for the services it provides and the expenses it bears in distributing the
Series' shares to investors. FSC has waived all fees in the amount of $4,184 for
the six months ended June 30, 1997.

3. Trustees' Fees

4. Shares of Beneficial Interest

As of June 30, 1997, there were an unlimited number of shares of beneficial
interest (no par value) authorized and capital paid in amounted to $1,636,460.
Transactions in shares of beneficial interest were as follows:

8
<PAGE>

FUNDAMENTAL FIXED-INCOME FUND
HIGH-YIELD MUNICIPAL BOND SERIES

NOTES TO FINANCIAL STATEMENTS (continued)
June 30, 1997
(Unaudited)
- --------------------------------------------------------------------------------

For the Six Months Ended
June 30, 1997 Year Ended
(Unaudited) December 31, 1996
------------------ ------------------
Shares Amount Shares Amount
------ ------ ------ ------
Shares sold ................... 1,573,662 $10,667,881 1,912,593 $12,834,095
Shares issued on reinvestment
of dividends ............... 6,556 44,664 11,925 80,347
Shares redeemed ...............(1,648,380) (11,184,947) (1,859,933)(12,513,226)
--------- ----------- ------- --------
Net increase (decrease) ... (68,162) $ (472,402) 64,585 $ 401,216
========= =========== ======= ========

5. Investment Transactions

The Fund invests in variable rate securities commonly called "inverse
floaters." The interest rates on these securities have an inverse relationship
to the interest rate of other securities or the value of an index. Changes in
interest rate on the other security or index inversely affect the rate paid on
the inverse floater, and the inverse floater's price will be more volatile than
that of a fixed-rate bond. Certain interest rate movements and other market
factors can substantially affect the liquidity of IFRN's.

The Fund invests in lower rated or unrated ("junk") securities which are
more likely to react to developments affecting market risk and credit risk than
would higher rated securities which react primarily to interest rate
fluctuations. The Fund held securities in default with an aggregate value of $
at June 30, 1997 ( % of net assets). As indicated in the Statement of
Investments, the Troy, NY Industrial Revenue Bond, 11% due December 1, 2014 with
a par value of $15,000 and a value of $6,150 at June 30, 1997 has been estimated
in good faith under methods determined by the Board of Trustees.

The Fund owns 1.7% of a Niagara Falls New York Urban Renewal Agency 11% Bond
("URA Bond") due to mature on May 1, 2009 which has missed interest and sinking
fund payments. An affiliated investment company owns 98.3% of this bond issue.
During the period, the Fund was party to an agreement whereby certain related
bonds owned by an affiliate are subject to repayment under a debt assumption
agreement. The agreement allows the affiliate to allocate a portion of the debt
services it receives to the URA Bond. In exchange the Fund forfeits certain
rights it had as holder of the URA bond. There is uncertainty as to the timing
and amounts of debt assumption payments. The value of this bond was $35,795. The
bond is valued at 35.80% of face value at June 30, 1997 under methods determined
by the Board of Trustees.

During the six months ended June 30, 1997, the cost of purchases and
proceeds from sales of investment securities, other than short-term obligations,
were $600,000 and $842,350, respectively.

As of June 30, 1997 net unrealized depreciation of portfolio securities
amounted to $63,141, composed of unrealized appreciation of $91,618 and
unrealized depreciation of $154,759.

The Fund has capital loss carryforwards to offset future capital gains as
follows:
Amount Expiration
------- ----------
$ 19,648 12/31/1998
17,500 12/31/1999
33,100 12/31/2000
54,300 12/31/2002
40,000 12/31/2003
--------
$164,548
========

9
<PAGE>

FUNDAMENTAL FIXED-INCOME FUND
HIGH-YIELD MUNICIPAL BOND SERIES

NOTES TO FINANCIAL STATEMENTS (continued)
June 30, 1997
(Unaudited)
- --------------------------------------------------------------------------------

6. Subsequent Transfer

10
<PAGE>

FUNDAMENTAL FIXED-INCOME FUND
HIGH-YIELD MUNICIPAL BOND SERIES

NOTES TO FINANCIAL STATEMENTS (continued)
June 30, 1997
(Unaudited)
- --------------------------------------------------------------------------------

7. Selected Financial Information

<TABLE>
<S> <C> <C> <C> <C> <C>
Six Months
Ended Years Ended December 31,
June 30, ---------------------------------------
1997 1996 1995 1994 1993
---- ---- ---- ---- ----
PER SHARE OPERATING PERFORMANCE
(for a share outstanding throughout the period)
Net asset value, beginning of period ...................... $6.86 $7.07 $5.92 $7.27 $7.30
----- ----- ----- ----- -----
Income from investment operations:
Net investment income ................................... 0.20 0.47 0.34 0.43 0.39
Net realized and unrealized gains (losses) on investments 0.10 (0.21) 1.15 (1.35) (0.03)
----- ----- ----- ----- -----
Total from investment operations ........................ 0.30 0.26 1.49 (0.92) 0.36
----- ----- ----- ----- -----
Less distributions:
Dividends from net investment income ...................... (0.20) (0.47) (0.34) (0.43) (0.39)
----- ----- ----- ----- -----
Net asset value, end of period ............................ $6.96 $6.86 $7.07 $5.92 $7.27
===== ===== ===== ===== =====
Total Return .............................................. 4.45% 4.05% 25.70% (12.92%) 5.11%

RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) ................... 1,411 1,858 1,457 979 1,087
Ratios to average net assets:
Expenses .............................................. 2.51%+ 2.49%* 2.50%* 2.50%* 2.50%*
Net investment income ................................. 5.75%+ 6.85%* 5.15%* 6.70%* 5.40%*
Portfolio turnover rate ................................... 33.20% 139.26% 43.51% 75.31% 84.89%

BANK LOANS
Amount outstanding at end of period
(000 omitted) ........................................... $ 367 $ 228 $ 379 $ - $ -
Average amount of bank loans outstanding during the period
(000 omitted) ........................................... $ - $ - $ 61 $ - $ -
Average number of shares outstanding during the period
(000 omitted) ........................................... $ 249 $ 237 $ 183 $ 156 $ 145
Average amount of debt per share during
the period .............................................. $ - $ - $0.33 $ - $ -

</TABLE>

*These ratios are after expense reimbursements of 7.96%, 4.59%, 6.22%, 6.20%
and 5.76%, for the periods ended June 30, 1997, December 31, 1996, 1995, 1994
and 1993, respectively.
+Annualized.

11
<PAGE>
Right column

----------------------------
Semi-Annual Report
June 30, 1997
(Unaudited)

FUNDAMENTAL
FIXED-INCOME FUND

High-Yield
Municipal Bond Series

FUNDAMENTAL
Fundamental Family of Funds
----------------------------

Left column

FUNDAMENTAL FIXED-INCOME FUND
90 Washington Street
New York, New York 10006
1-800-322-6864

This report and the financial statements contained
herein are submitted for the general information of
the shareholders of the Fund. This report is not
authorized for distribution to prospective investors
in the Fund unless preceded or accompanied by an
effective prospectus.