Rule 497(e)
                                                        Registration No. 2-82710

                             FUNDAMENTAL FUNDS, INC.
                              (NEW YORK MUNI FUND)
                          FUNDAMENTAL FIXED-INCOME FUND
                          (FUNDAMENTAL U.S. GOVERNMENT
                             STRATEGIC INCOME FUND)
                  (FUNDAMENTAL HIGH-YIELD MUNICIPAL BOND FUND)
                    (FUNDAMENTAL TAX-FREE MONEY MARKET FUND)
                            THE CALIFORNIA MUNI FUND

                       SUPPLEMENT DATED AUGUST 12, 1998 TO
                    EACH FUND'S PROSPECTUS DATED MAY 1, 1998


                  The following  descriptions  of actions taken by the Boards of
the  Fundamental  Funds  supplement  and  supersede  any  contrary   information
contained in each Fund's Prospectus.

o    The Boards have adopted resolutions  authorizing the Fundamental Funds (the
     "Funds") to terminate and abandon the Agreement and Plan of  Reorganization
     providing  for  the  transfer  of the  assets  of  the  Funds  to  separate
     newly-created series of The Tocqueville Trust in exchange for shares of the
     Funds. The Boards are in the process of considering  alternative investment
     management  arrangements  for the Funds and intend on or prior to September
     27, 1998 to seek the approval of the Funds'  shareholders  of new permanent
     investment management arrangements.  Tocqueville Asset Management,  L.P. is
     continuing to serve as interim investment manager for each of the Funds.

o    Pursuant to Dr.  Vincent  Malanga's  offer of settlement of  administrative
     proceedings  instituted  by the  Securities  and Exchange  Commission  (the
     "SEC") and the terms of an SEC order barring him from  association with any
     investment  company for a period of twelve months, and prohibiting him from
     working in a supervisory  capacity for two years,  the Boards  accepted Dr.
     Malanga's  resignations  as Chairman of the Board and as a Board  Member of
     the Funds.  Dr. Malanga neither  admitted nor denied the allegations in the
     SEC order in agreeing to the settlement.  The Funds were not a party to the
     SEC administrative proceedings against Dr. Malanga.