I always assumed the Corleone Lodge owned a lot of property on both sides of the cottage, so anybody who might have heard the gunshot might be a mile or more down the shore.

Plus it was a dark, cold and cloudy day so it's not too likely too many people were out on the lake just cruising around for fun. Or, for that matter, sitting on the beach in front of their cottages, either.

There were probably lots of better ways Fredo could have been gotten rid of. Roads get very icy up near Reno in the wintertime; a loosened brake line could have sent Fredo careening off into a canyon and that would have been it.

Also, Fredo was known to be a boozer (all the way back to the opening of GF I) and probably popped pills too. Neri could have dosed a drink with knockout pills and as soon as Fredo passed out, go throw him off the dock into the lake.

Fredo then drowns, the body washes up on shore a couple days later, the autopsy shows alcohol and barbituates in his bloodstream, Michael says, "Poor Fredo. He battled the bottle for years and it finally just beat him."