KAYNE ANDERSON MUTUAL FUNDS
Supplement dated September 22, 1998
to Prospectus dated May 1, 1998
For shareholders and prospective shareholders of the
Kayne Anderson Small-Mid Cap Rising Dividends Fund only:
Beginning September 22, 1998, this Fund changed its name to the Kayne
Anderson Small Cap Rising Dividends Fund. This Fund's investment objective of
long-term capital appreciation, with dividend income as a secondary
consideration, has not changed. The Adviser will continue to follow its "rising
dividends" philosophy for the Fund.
Under normal market conditions, the Fund will now seek to maintain a
weighted average market capitalization within the range for small capitalization
companies, but typically at the very highest segment of the range. As stated in
the prospectus, the Adviser currently considers small cap companies to be those
companies having market capitalizations up to approximately $1 billion.
Because the Fund will seek to maintain an average market capitalization
for its portfolio companies of approximately $1 billion, fluctuations in the
market value for some of those portfolio companies may cause this Fund to exceed
(or fall below) that target temporarily. The Fund remains able to invest in
companies having market capitalizations of up to $3 billion (at the time of
investment) while being mindful of its target portfolio average of approximately
$1 billion.
