KAYNE ANDERSON MUTUAL FUNDS, 497, 1997-09-26

KAYNE ANDERSON MUTUAL FUNDS
497, 1997-09-26

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                           KAYNE ANDERSON MUTUAL FUNDS
                          SUPPLEMENT TO THE PROSPECTUS
                     AND STATEMENT OF ADDITIONAL INFORMATION
                                DATED MAY 1, 1997

                        SUPPLEMENT DATED OCTOBER 1, 1997


The Funds' adviser,  Kayne Anderson  Investment  Management,  L.P., 97% owned by
KAIM Traditional,  LLC ("KAIM"),  is transferring all of its investment advisory
business to KAIM. Effective October 1, 1997, KAIM will become the adviser to the
Funds. This is a matter of internal  organizational  structure only and does not
result in a change in the principals of KAIM or managers of the Funds.

         Throughout the prospectus and statement of additional information,  any
         reference to the Adviser refers to KAIM Traditional, LLC.