KAYNE ANDERSON MUTUAL FUNDS, 497, 1997-10-23

KAYNE ANDERSON MUTUAL FUNDS
497, 1997-10-23

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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


Effective  October  1, 1997,  the  Funds'  advisor,  Kayne  Anderson  Investment
Management,  L.P.,  previously owned by KAIM Traditional,  LLC ("KAIM"),  merged
into and thereby  transferred its investment  advisory  business to KAIM.  KAIM,
which is changing its name to "Kayne Anderson  Investment  Management,  LLC," is
now the  advisor  to the  Funds.  This is a matter  of  internal  organizational
structure only and does not result in a change in principals of KAIM or managers
of the Funds.

         Throughout the prospectus and statement of additional information,  any
         reference  to  the  Advisor   refers  to  Kayne   Anderson   Investment
         Management, LLC.