##### Table of Contents



UNITED STATES SECURITIES AND
    EXCHANGE COMMISSIONWashington, D.C.
    20549
      Form 10-Q
      þ

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934For the quarterly period ended
    August 31, 2007ORo

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934For the transition period
    from          to   Commission file number:
    814-00725
      KAYNE ANDERSON ENERGY
 DEVELOPMENT COMPANY
 (Exact name of registrant as
    specified in its charter)
  Maryland

20-4991752(State of
    Incorporation)

(I.R.S. Employer
    Identification Number)717 Texas Avenue, Suite 3100
    Houston, Texas(Address of principal
    executive offices)

77002(Zip Code)   Registrants telephone number, including area code:
 (713) 493-2020
      þ o
  Rule 12b-2 o o þ
  Rule 12b-2 o þ




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##### 



TABLE OF
    CONTENTS
  PagePART IItem 1.


Financial Statements


3Consolidated Schedule of Investments as of
    August 31, 2007


3Schedule of Investments as of November 30,
    2006


8Consolidated Statement of Assets and Liabilities
    as of August 31, 2007 and November 30, 2006


11Consolidated Statement of Operations for the
    three and nine months ended August 31, 2007


12Consolidated Statement of Changes in Net Assets
    for the nine months ended August 31, 2007 and for the
    period September 21, 2006 through November 30, 2006


13Consolidated Statement of Cash Flows for the nine
    months ended August 31, 2007


14Notes to Consolidated Financial Statements


15Item 2.


Managements Discussion and Analysis of
    Financial Condition and Results of Operations


29Item 3.


Quantitative and Qualitative Disclosures about
    Market Risk


34Item 4.


Controls and Procedures


35PART IIItem 1.


Legal Proceedings


36Item 1A.


Risk Factors


36Item 2.


Unregistered Sales of Equity Securities and Use
    of Proceeds


36Item 3.


Defaults Upon Senior Securities


36Item 4.


Submission of Matters to a Vote of Security
    Holders


36Item 5.


Other Information


36Item 6.


Exhibits


37EXHIBIT 31.1EXHIBIT 31.2EXHIBIT 32.1   2




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KAYNE
    ANDERSON ENERGY DEVELOPMENT COMPANY
    CONSOLIDATED SCHEDULE OF INVESTMENTS
    AS OF AUGUST 31, 2007
    (amounts in 000s)
    (UNAUDITED)
 No. ofDescription:

Shares/Units


ValueLong-Term Investments  127.0%Equity Investments(a)  91.2%Publicly Traded MLP and MLP Affiliate(b)  38.8%Atlas Energy Resources, LLC  Class D,
    Unregistered(c)


91


$
2,581Atlas Energy Resources, LLC  Unregistered(c)


40



1,154Atlas Pipeline Partners, L.P.


46



2,153BreitBurn Energy Partners L.P.


7



239BreitBurn Energy Partners L.P.  Unregistered(c)


73



2,317Buckeye Partners, L.P.


12



569Calumet Specialty Products Partners, L.P.


108



5,258Capital Product Partners L.P.(d)


18



533Constellation Energy Partners LLC  Class F,
    Unregistered(c)


36



1,421Constellation Energy Partners LLC  Unregistered(c)


29



1,144Copano Energy, L.L.C.


10



405Crosstex Energy, L.P.


24



860DCP Midstream Partners, LP


81



3,661Dorchester Minerals, L.P.


4



87Duncan Energy Partners L.P.


36



860Eagle Rock Energy Partners, L.P.


14



314Enbridge Energy Management, L.L.C.(d)(e)


62



3,227Enbridge Energy Partners L.P.


27



1,364Energy Transfer Equity, L.P.


121



4,461Energy Transfer Partners, L.P.


17



905Enterprise Products Partners L.P.


218



6,419Exterran Partners, L.P.


48



1,638Global Partners LP


101



3,236Hiland Holdings GP, LP


10



313Hiland Partners, LP


31



1,548Inergy, L.P.


44



1,417Kinder Morgan Management, LLC(d)(e)


170



8,161K-Sea Transportation Partners L.P.


10



378Legacy Reserves LP


38



875Magellan Midstream Partners, L.P.


65



2,808MarkWest Energy Partners, L.P.


145



4,623Martin Midstream Partners L.P.


50



1,901NuStar Energy L.P.


12



729ONEOK Partners, L.P.


84



5,350   3




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##### Table of Contents



KAYNE ANDERSON ENERGY DEVELOPMENT COMPANY
  CONSOLIDATED SCHEDULE OF INVESTMENTS (CONTINUED)
 AS OF AUGUST 31, 2007
 (amounts in 000s)
 (UNAUDITED)
  No. ofShares/Units/Description:

Warrants


ValuePublicly
    Traded MLP and MLP Affiliate(b) (continued)Plains All American Pipeline, L.P.


103


$
5,914Regency Energy Partners LP


46



1,472SemGroup Energy Partners, L.P.(f)


40



1,205Spectra Energy Partners, LP(f)


26



679Sunoco Logistics Partners L.P.


3



182Targa Resources Partners LP


65



1,941TC PipeLines, LP


59



2,196Teekay LNG Partners L.P.


59



2,056Teekay Offshore Partners L.P.(d)


29



848TEPPCO Partners, L.P.


57



2,288Williams Partners L.P.


95



4,25295,942Private MLP  52.0%Direct Fuels Partners, L.P.(c)(g)


2,500



45,908Direct Fuels Partners, L.P.  Warrants(c)(h)


2,500



4,275International Resource Partners LP(c)(i)


1,500



30,000Millennium Midstream Partners, LP(c)(j)


2,375



43,397Millennium Midstream Partners, LP  Warrants(c)(k)


2,375



3,040VantaCore Partners LP(c)(l)


91



1,833128,453Other Private Equity  0.4%ProPetro Services, Inc.  Warrants(c)(m)


2,905



853Trident Resources Corp.  Warrants(n)


100



75928Total Equity Investments (Cost $209,531)






225,323   Interest


Maturity


PrincipalRate


Date


AmountFixed Income Investments  35.8%Midstream  7.0%SemGroup, L.P.


8.75
%


11/15/15


$
9,000



8,663Targa Resources, Inc.


9.00



11/01/13



4,580



4,397Targa Resources, Inc.


(o
)


10/31/12



878



843Targa Resources, Inc.


(p
)


10/31/12



3,596



3,45217,355   4




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KAYNE ANDERSON ENERGY DEVELOPMENT COMPANY
  CONSOLIDATED SCHEDULE OF INVESTMENTS (CONTINUED)
 AS OF AUGUST 31, 2007
 (amounts in 000s)
 (UNAUDITED)
  Interest


Maturity


PrincipalDescription:

Rate


Date


Amount


ValueUpstream  5.0%CDX Funding, LLC


(q
)


3/31/13


$
4,550


$
4,413Coldren Resources, Inc.


(r
)


7/14/11



416



409Coldren Resources, Inc.


(s
)


7/14/11



1,850



1,823SandRidge Energy Inc.


(t
)


4/14/12



5,700



5,65712,302Other Energy  23.8%Dresser, Inc.


(u
)


5/04/15



2,500



2,375ProPetro Services, Inc.(c)


(v
)


2/15/13



35,000



32,531Seitel, Inc.


9.75
%


2/15/14



5,000



4,613Stallion Oilfield Services Ltd.


(w
)


7/18/12



5,000



4,875VantaCore Partners LP(c)(x)


9.00



5/21/27



7,000



7,031VantaCore Partners LP(c)


(y
)


5/21/14



7,500



7,50058,925Total Fixed Income Investments (Cost $89,338)














88,582Total Long-Term Investments (Cost $298,869)














313,905Short-Term Investments  11.4%U.S. Treasury Bills  10.3%U.S. Treasury Bills  (Cost $25,376)


4.906



10/25/07



25,559



25,420Repurchase Agreements  1.1%Bear, Stearns & Co. Inc. (Agreements dated 8/31/07 to
    be repurchased at $2,746), collateralized by $2,849 in U.S.
    Treasury Notes (Cost $2,746)


5.15



9/01/07







2,746Total Short-Term Investments (Cost $28,122)














28,166Total Investments  138.4% (Cost $326,991)














342,071Senior Secured Revolving Credit Facility Borrowings














(66,000
)Treasury Secured Revolving Credit Facility Borrowings














(25,000
)Other Liabilities in Excess of Other Assets














(3,852
)Net Assets













$
247,219    5




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KAYNE ANDERSON ENERGY DEVELOPMENT COMPANY
  CONSOLIDATED SCHEDULE OF INVESTMENTS (CONTINUED)
 AS OF AUGUST 31, 2007
 (amounts in 000s)
 (UNAUDITED)
    (a)
    
    Unless otherwise noted, equity investments are common
    units/common shares.(b)
    
    Unless otherwise noted, security is treated as a publicly traded
    partnership for regulated investment company (RIC)
    qualification purposes. To qualify as a RIC for tax purposes,
    the Company may directly invest up to 25% of its total assets in
    equity and debt securities of entities treated as publicly
    traded partnerships. At August 31, 2007, the Company had
    24.1% of its total assets invested in securities treated as
    publicly traded partnerships. It is the Companys intention
    to be treated as a RIC for tax purposes.(c)
    
    Fair valued and restricted security (see Notes 2 and 5).(d)
    
    Security is not treated as a publicly traded partnership for RIC
    qualification purposes.(e)
    
    Distributions are paid in-kind.(f)
    
    Security is currently non-income producing but is expected to
    pay distributions within the next 12 months.(g)
    
    Class B common units are owned directly and indirectly by
    the Companys subsidiaries, KED DF Investment Partners, LP
    and KED DF Investment GP, LLC. The Class B common units are
    redeemable at the option of Direct Fuels Partners, L.P. at the
    price of $20.00 per unit.(h)
    
    Warrants are non-income producing, expire on June 8, 2017
    and provide the Company the right to purchase 2,500 Class A
    common units at a price of $20.00 per unit.(i)
    
    Common units are owned directly and indirectly by the
    Companys subsidiaries, KED LCP Investment Partners, LP and
    KED LCP Investment GP, LLC.(j)
    
    Class B common units are owned directly and indirectly by
    the Companys subsidiaries, KED MME Investment Partners, LP
    and KED MME Investment GP, LLC. The Class B common units
    are redeemable at the option of Millennium Midstream Partners,
    LP at the price of $20.00 per unit.(k)
    
    Warrants are non-income producing, expire on December 28,
    2016 and provide the Company the right to purchase 2,375
    Class A common units at a price of $20.00 per unit.(l)
    
    Common units are owned directly and indirectly by the
    Companys subsidiaries, KED VP Investment Partners, LP and
    KED VP Investment GP, LLC.(m)
    
    Warrants relate to the Companys floating rate senior
    secured second lien term loan facility with ProPetro Services,
    Inc. These warrants are non-income producing and expire on
    February 15, 2017.(n)
    
    Warrants are non-income producing and expire on
    November 30, 2013.(o)
    
    Floating rate letter of credit facility. Security pays interest
    at a rate of LIBOR less 12.5 basis points (5.23% as of
    August 31, 2007).(p)
    
    Floating rate senior secured first lien term loan facility.
    Security pays interest at a rate of LIBOR + 200 basis
    points (7.36% as of August 31, 2007).(q)
    
    Floating rate senior secured second lien term loan facility.
    Security pays interest at a rate of LIBOR + 625 basis
    points (11.57% as of August 31, 2007).(r)
    
    Floating rate letter of credit facility. Security pays interest
    at a rate of LIBOR less 12.5 basis points (5.23% as of
    August 31, 2007).(s)
    
    Floating rate senior secured first lien term loan. Security pays
    interest at a rate of LIBOR + 400 basis points (9.36% as of
    August 31, 2007).(t)
    
    Floating rate unsecured bridge loan facility. Security pays
    interest at a rate of LIBOR + 363 basis points (8.99% as of
    August 31, 2007).   6




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##### Table of Contents



KAYNE ANDERSON ENERGY DEVELOPMENT COMPANY
  CONSOLIDATED SCHEDULE OF INVESTMENTS (CONCLUDED)
 AS OF AUGUST 31, 2007
 (amounts in 000s, except per unit amounts)
 (UNAUDITED)
   (u)
    
    Floating rate senior secured second lien term loan facility.
    Security pays interest at a rate of LIBOR + 575 basis
    points (11.37% as of August 31, 2007).(v)
    
    Floating rate senior secured second lien term loan facility.
    Security pays interest at a rate of LIBOR + 900 basis
    points (14.36% as of August 31, 2007).(w)
    
    Floating rate senior unsecured second lien term loan facility.
    Security pays interest at a rate of LIBOR + 450 basis
    points (9.82% as of August 31, 2007).(x)
    
    Fixed rate subordinated convertible note. Security is
    convertible into 350,000 common units at a conversion price of
    $20.00 per common unit.(y)
    
    Floating rate senior secured second lien term loan facility.
    Security pays interest at a rate of LIBOR + 550 basis
    points (10.86% as of August 31, 2007).   7




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KAYNE
    ANDERSON ENERGY DEVELOPMENT COMPANY
    SCHEDULE OF INVESTMENTS
    AS OF NOVEMBER 30, 2006
    (amounts in 000s)
  No. ofShares/Units/Description:

Warrants


ValueLong-Term Investments  44.0%Equity Investments(a)  26.4%Publicly Traded MLP and MLP Affiliate  26.0%Atlas Pipeline Partners, L.P.


40


$
1,934BreitBurn Energy Partners L.P.(b)


12



259Calumet Specialty Products Partners, L.P.


113



4,294Crosstex Energy, L.P.


9



349DCP Midstream Partners, LP


64



2,141Enbridge Energy Management, L.L.C.(c)(d)


34



1,663Enbridge Energy Partners L.P.


30



1,494Energy Transfer Equity, L.P.


220



6,389Energy Transfer Partners, L.P.


3



175Enterprise Products Partners L.P.


195



5,502Global Partners LP


82



1,935Hiland Holdings GP, LP(b)


21



508Hiland Partners, LP


30



1,603Inergy, L.P.


27



794Kinder Morgan Management, LLC(c)(d)


212



9,746Magellan Midstream Partners, L.P.


30



1,161MarkWest Energy Partners, L.P.


64



3,639MarkWest Hydrocarbon, Inc.(c)


14



584Martin Midstream Partners L.P.


45



1,396Natural Resources Partners L.P.


4



220Natural Resources Partners L.P.  Subordinated Units


8



439ONEOK Partners, L.P.


84



5,101Plains All American Pipeline, L.P.


51



2,596Regency Energy Partners LP


17



469TC PipeLines, LP


18



587Teekay LNG Partners L.P.


47



1,490TEPPCO Partners, L.P.


42



1,646Universal Compression Partners, L.P.(b)


68



1,681Valero L.P.


16



867Williams Partners L.P.


60



2,32162,983Other Equity  0.4%Trident Resources Corp.  Warrants(e)


167



917Total Equity Investments (Cost $57,585)






63,900     8




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##### Table of Contents



KAYNE ANDERSON ENERGY DEVELOPMENT COMPANY
 SCHEDULE OF INVESTMENTS (CONTINUED)
 AS OF NOVEMBER 30, 2006
 (amounts in 000s)
  Interest


Maturity


PrincipalDescription:

Rate


Date


Amount


ValueFixed Income Investments  17.6%United States  11.1%Midstream  6.2%SemGroup, L.P.


8.75
%


11/15/15


$
7,500


$
7,575Targa Resources, Inc.



(f)


10/31/12



486



488Targa Resources, Inc.



(g)


10/31/12



2,004



2,012Targa Resources, Inc.



(h)


10/31/07



4,843



4,84914,924Upstream  4.9%CDX Funding, LLC



(i)


3/31/13



6,300



6,355Coldren Resources, Inc.



(j)


7/14/11



416



419Coldren Resources, Inc.



(k)


7/14/11



2,584



2,603SandRidge Energy Inc.



(l)


11/20/07



2,500



2,50611,883Total United States  (Cost $26,794)














26,807Canada  6.5%Upstream  6.5%Trident Exploration Corp.



(m)


4/26/11



5,500



5,638Trident Resources Corp.



(n)


11/22/11



10,000



10,200Total Canada  (Cost $14,401)














15,838Total Fixed Income Investments (Cost $41,195)














42,645Total Long-Term Investments (Cost $98,780)














106,545Short-Term Investments  55.9%Repurchase Agreement  55.9%Bear, Stearns & Co. Inc. (Agreement dated 11/30/06 to
    be repurchased at $135,154), collateralized by $139,055 in U.S.
    Treasury Strips (Cost $135,134)


5.27



12/01/06







135,134Total Investments  99.9% (Cost $233,914)














241,679Other Assets in Excess of Total Liabilities














235Net Assets













$
241,914     (a)
    
    Unless otherwise noted, equity investments are common
    units/common shares.(b)
    
    Security is currently non-income producing but is expected to
    pay distributions within the next 12 months.(c)
    
    Security is not treated as a publicly traded partnership for
    regulated investment company (RIC) qualification
    purposes. To qualify as a RIC for tax purposes, the Company may
    directly invest up to 25% of its total assets in equity and debt
    securities of entities treated as publicly traded partnerships.
    At November 30, 2006, the    9




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##### Table of Contents



KAYNE
    ANDERSON ENERGY DEVELOPMENT COMPANY
    SCHEDULE OF INVESTMENTS (CONCLUDED)
    AS OF NOVEMBER 30, 2006
    (amounts in 000s)
  Company had 21.1% of its total assets invested in securities
    treated as publicly traded partnerships. It is the
    Companys intention to be treated as a RIC for tax purposes.(d)
    
    Distributions are paid in-kind.(e)
    
    Warrants relate to the floating rate unsecured term loan
    facility with Trident Resources Corp. These warrants are
    non-income producing and expire on November 30, 2013.(f)
    
    Floating rate letter of credit facility. Security pays interest
    at a rate of LIBOR + 225 basis points (7.62% as of
    November 30, 2006).(g)
    
    Floating rate senior secured first lien term loan facility.
    Security pays interest at a rate of LIBOR + 225 basis
    points (7.62% as of November 30, 2006).(h)
    
    Floating rate senior secured first lien bridge loan facility.
    Security pays interest at a rate of LIBOR + 225 basis
    points (7.62% as of November 30, 2006).(i)
    
    Floating rate senior secured second lien term loan facility.
    Security pays interest at a rate of LIBOR + 525 basis
    points (10.62% as of November 30, 2006).(j)
    
    Floating rate letter of credit facility. Security pays interest
    at a rate of LIBOR less 12.5 basis points (5.25% as of
    November 30, 2006).(k)
    
    Floating rate senior secured first lien term loan. Security pays
    interest at a rate of LIBOR + 400 basis points (9.39% as of
    November 30, 2006).(l)
    
    Floating rate senior unsecured bridge loan facility. Security
    pays interest at a rate of LIBOR + 450 basis points (11.00%
    as of November 30, 2006).(m)
    
    Floating rate senior secured second lien term loan facility.
    Security pays interest at a rate of LIBOR + 750 basis
    points (12.88% as of November 30, 2006).(n)
    
    Floating rate unsecured term loan facility. Interest is
    paid-in-kind
    at a rate of LIBOR + 1200 basis points (17.37% as of
    November 30, 2006).    10




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KAYNE
    ANDERSON ENERGY DEVELOPMENT COMPANY
  CONSOLIDATED
    STATEMENT OF ASSETS AND LIABILITIES
 (amounts
    in 000s, except share and per share amounts)
  August 31,2007


November 30,(Unaudited)


2006ASSETSLong-term investments, at fair value (Cost  $298,869
    and $98,780, respectively)

$
313,905


$
106,545U.S. Treasury Bills, at fair value (Cost  $25,376 and
    zero, respectively)


25,420



Repurchase agreements (Cost  $2,746 and $135,134,
    respectively)


2,746



135,134Total investments (Cost  $326,991 and $233,914,
    respectively)


342,071



241,679Deposits with brokers


119



101Receivable for securities sold


50



567Interest, dividends and distributions receivable


1,937



931Receivable for offering costs






200Debt issuance costs


1,249



Prepaid expenses and other assets


16



126Total Assets


345,442



243,604LIABILITIESSenior secured revolving credit facility


66,000



Treasury secured revolving credit facility


25,000



Payable for securities purchased


4,574



Investment management fee payable, net of fee waivers


894



571Accrued directors fees and expenses


75



63Deferred tax liability


569



Accrued expenses and other liabilities


1,111



1,056Total Liabilities


98,223



1,690NET ASSETS

$
247,219


$
241,914NET ASSETS CONSIST OFCommon stock, $0.001 par value (200,000,000 shares
    authorized at August 31, 2007 and November 30, 2006;
    10,027,585 and 10,000,060 shares issued and outstanding at
    August 31, 2007 and November 30, 2006, respectively)

$
10


$
10Paid-in capital


233,970



233,216Undistributed net investment income






864Accumulated (distributions in excess of) net realized gains on
    investments


(942
)


59Net unrealized gains on investments


14,181



7,765NET ASSETS

$
247,219


$
241,914NET ASSET VALUE PER SHARE

$
24.65


$
24.19    11




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##### Table of Contents



KAYNE
    ANDERSON ENERGY DEVELOPMENT COMPANY
    CONSOLIDATED STATEMENT OF OPERATIONS
    FOR THE THREE AND NINE MONTHS ENDED AUGUST 31, 2007
    (amounts in 000s)
    (UNAUDITED)
  Three Months


Nine MonthsEnded


EndedAugust 31, 2007


August 31, 2007INVESTMENT INCOMEIncomeDividends and distributions

$
2,436


$
5,151Return of capital


(2,187
)


(4,625
)Net dividends and distributions


249



526Interest


2,574



8,092Total investment income


2,823



8,618ExpensesBase investment management fees


1,251



3,428Incentive investment management fees


(409
)


Professional fees


299



707Directors fees


73



210Administration fees


59



173Insurance


39



117Custodian fees


21



53Other expenses


126



295Total Expenses  Before Base Investment Management Fee
    Waivers and Interest Expense


1,459



4,983Base investment management fee waivers


(351
)


(973
)Interest expense


944



944Total Expenses


2,052



4,954Net Investment Income  Before Income Taxes


771



3,664Deferred income tax benefit


233



331Net Investment Income


1,004



3,995REALIZED AND UNREALIZED GAINS (LOSSES)Net Realized GainsInvestments


400



3,544Net Change in Unrealized Gains (Losses)Investments


(5,596
)


7,316Deferred income tax expense


(550
)


(900
)Net Change in Unrealized Gains (Losses)


(6,146
)


6,416Net Realized and Unrealized Gains (Losses)


(5,746
)


9,960NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM
    OPERATIONS

$
(4,742
)

$
13,955    12




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##### Table of Contents



KAYNE
    ANDERSON ENERGY DEVELOPMENT COMPANY
  CONSOLIDATED
    STATEMENT OF CHANGES IN NET ASSETS
 (amounts
    in 000s, except share amounts)
  Period EndedNine Months


September 21,Ended


2006* throughAugust 31, 2007


November 30,(Unaudited)


2006OPERATIONSNet investment income

$
3,995


$
864Net realized gains


3,544



59Net change in unrealized gains


6,416



7,765Net Increase in Net Assets Resulting from Operations


13,955



8,688DIVIDENDS AND DISTRIBUTIONSDividends


(8,462
)(1)


Distributions  return of capital


(942
)(1)


Dividends and Distributions


(9,404
)


CAPITAL STOCK TRANSACTIONSProceeds from initial public offering of
    10,000,000 shares of common stock






250,000Issuance of 27,525 shares of common stock from reinvestment
    of dividends


721



Underwriting discount and offering expenses


33



(16,775
)Net Increase in Net Assets from Capital Stock Transactions


754



233,225Total Increase in Net Assets


5,305



241,913NET ASSETSBeginning of period


241,914



1End of period

$
247,219


$
241,914
(2)     *
    
    Commencement of operations(1)
    
    This is a current estimate of the characterization of a portion
    of the total dividends paid to common stockholders for the nine
    months ended August 31, 2007 as either a dividend (ordinary
    income) or distribution (return of capital). This estimate is
    based on the Companys operating results during the period.
    The actual characterization of the common stock dividends made
    during the current year will not be determinable until after the
    end of the calendar year when the Company can determine earnings
    and profits and, therefore, it may differ from the preliminary
    estimates.(2)
    
    Includes undistributed net investment income of $864 as of
    November 30, 2006.   13




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##### Table of Contents



KAYNE
    ANDERSON ENERGY DEVELOPMENT COMPANY
    CONSOLIDATED STATEMENT OF CASH FLOWS
    FOR THE NINE MONTHS ENDED AUGUST 31, 2007
    (amounts in 000s)
    (UNAUDITED)
  CASH FLOWS FROM OPERATING ACTIVITIESNet increase in net assets resulting from operations

$
13,955Adjustments to reconcile net increase in net assets resulting
    from operations to net cash provided by operating activities:Purchase of investments


(274,292
)Proceeds from sale of investments


48,101Sale of short-term investments, net


132,388Realized gains on investments


(3,544
)Return of capital distributions


4,625Unrealized gains on investments


(7,316
)Increase in deferred tax liability


569Accretion of bond discount


(354
)Increase in deposits with brokers


(18
)Decrease in receivable for securities sold


517Increase in interest, dividend and distributions receivables


(1,006
)Decrease in receivable for offering costs


200Increase in debt issuance costs


(1,249
)Decrease in prepaid expenses and other assets


110Increase in payable for securities purchased


4,574Increase in investment management fee payable


323Increase in accrued directors fees and expenses


12Increase in accrued expenses and other liabilities


55Net Cash Used in Operating Activities


(82,350
)CASH FLOWS FROM FINANCING ACTIVITIESBorrowings from senior secured revolving credit facility


66,000Borrowings from treasury secured revolving credit facility


25,000Underwriting discount and offering expenses


33Cash distributions to shareholders


(8,683
)Net Cash Provided by Financing Activities


82,350NET CHANGE IN CASH


CASH  BEGINNING OF PERIOD


CASH  END OF PERIOD

$
     Supplemental disclosure of cash flow information:
       14




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##### Table of Contents



KAYNE
    ANDERSON ENERGY DEVELOPMENT COMPANY
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
    (amounts in 000s, except share, warrant, right and per
    share amounts)
    (UNAUDITED)
  1.
    ORGANIZATION    2.
    SIGNIFICANT
    ACCOUNTING POLICIES  Use of Estimates
  Interim Periods Form 10-Q Form 10-K
  Principles of Consolidation
     15




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##### Table of Contents



KAYNE
    ANDERSON ENERGY DEVELOPMENT COMPANY
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
    (amounts in 000s, except share, warrant, right and per
    share amounts)
    (UNAUDITED)
    Calculation of Net Asset Value
  Investment Valuation
      
    Investment Team Valuation.  The applicable
    investments will initially be valued by the investment
    advisers senior professionals responsible for the
    portfolio investments.
    Investment Team Valuation
    Documentation.  Preliminary valuation conclusions
    will be documented and discussed with senior management of KA
    Fund Advisors, LLC (KAFA), the Companys
    investment adviser. Such valuations will be submitted to the
    Valuation Committee (a committee of the board of directors) on a
    quarterly basis, and until determinations of the Valuation
    Committee are made with respect to such valuations, they will
    stand for intervening periods of time unless a senior officer of
    KAFA determines that adjustments to such preliminary valuations
    are appropriate to avoid valuations that are stale or do not
    represent fair value.
    Valuation Committee.  The Valuation Committee
    shall meet each quarter to consider new valuations presented by
    KAFA, if any, which were made in accordance with the Valuation
    Procedures in such quarter. Between meetings of the Valuation
    Committee, a senior officer of KAFA is authorized to make
    valuation determinations. The Valuation Committees
    valuation determinations will be subject to ratification by the
    board at its next regular meeting. 16




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KAYNE
    ANDERSON ENERGY DEVELOPMENT COMPANY
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
    (amounts in 000s, except share, warrant, right and per
    share amounts)
    (UNAUDITED)
   
    Valuation Firm.  No less frequently than
    quarterly, a third-party valuation firm engaged by the board of
    directors will review the valuation methodologies and
    calculations employed for these securities. Currently, the
    independent third-party valuation firm is Duff &
    Phelps, LLC. Duff &Phelps, LLC, an independent
    valuation firm, provided third-party valuation consulting
    services to the board of directors which consisted of certain
    limited procedures that the Company identified and requested
    them to perform. For the quarter ended August 31, 2007, the
    Company asked Duff & Phelps LLC to perform the limited
    procedures on investments in eight portfolio companies
    comprising approximately 54.1% of the total investments at fair
    value as of August 31, 2007. Upon completion of the limited
    procedures, Duff & Phelps LLC concluded that the fair
    value of those investments subjected to the limited procedures
    did not appear to be unreasonable.
    Board of Directors Determination.  The board of
    directors will consider the valuations provided by KAFA and the
    Valuation Committee and ratify valuations for the applicable
    securities at each quarterly board meeting. The limited
    procedures performed by Duff & Phelps LLC are
    supplementary to the inquiries of the board of directors in
    reviewing and determining in good faith the fair value of the
    applicable portfolio securities.      e.g.
       17




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KAYNE
    ANDERSON ENERGY DEVELOPMENT COMPANY
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
    (amounts in 000s, except share, warrant, right and per
    share amounts)
    (UNAUDITED)
      Repurchase Agreements agreed-upon
  Short Sales
    i.e.
    Option Writing
 18




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KAYNE
    ANDERSON ENERGY DEVELOPMENT COMPANY
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
    (amounts in 000s, except share, warrant, right and per
    share amounts)
    (UNAUDITED)
      Security Transactions
  Investment Income and Return of Capital
    Estimates
    Dividends and Distributions to
    Stockholders
  Partnership Accounting Policy
  Income Taxes
   19




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##### Table of Contents



KAYNE
    ANDERSON ENERGY DEVELOPMENT COMPANY
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
    (amounts in 000s, except share, warrant, right and per
    share amounts)
    (UNAUDITED)
          November 30,2006Undistributed ordinary income

$
997Undistributed capital gains


Unrealized appreciation


7,765Total distributable earnings

$
8,762         August 31,2007


November 30,(Unaudited)


2006Gross unrealized appreciation of investments

$
19,949


$
7,919Gross unrealized depreciation of investments


(4,869
)


(154
)Net unrealized appreciation

$
15,080


$
7,765    20




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KAYNE
    ANDERSON ENERGY DEVELOPMENT COMPANY
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
    (amounts in 000s, except share, warrant, right and per
    share amounts)
    (UNAUDITED)
  Organizational and Offering Costs
  Indemnifications
  3.
    AGREEMENTS
    AND AFFILIATIONS  Investment Management Agreement
    Base Management Fee.
    Incentive Fee.
 21




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##### Table of Contents



KAYNE
    ANDERSON ENERGY DEVELOPMENT COMPANY
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
    (amounts in 000s, except share, warrant, right and per
    share amounts)
    (UNAUDITED)
  payment-in-kind
          Portfolio Companies
 22




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##### Table of Contents



KAYNE
    ANDERSON ENERGY DEVELOPMENT COMPANY
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
    (amounts in 000s, except share, warrant, right and per
    share amounts)
    (UNAUDITED)
          Millennium Midstream Partners, LP 
  VantaCore Partners LP 
  Direct Fuels Partners, L.P. 
 23




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##### Table of Contents



KAYNE
    ANDERSON ENERGY DEVELOPMENT COMPANY
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
    (amounts in 000s, except share, warrant, right and per
    share amounts)
    (UNAUDITED)
    International Resource Partners LP 
  Other Affiliations
  and/or
  4.
    INVESTMENT
    TRANSACTIONS    5.
    RESTRICTED
    SECURITIES   24




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##### Table of Contents



KAYNE
    ANDERSON ENERGY DEVELOPMENT COMPANY
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
    (amounts in 000s, except share, warrant, right and per
    share amounts)
    (UNAUDITED)
    Numberof Units,Warrants, or











Value per


Percent


PercentType of

Principal($)


Acquisition





Fair


Unit/


of Net


of TotalInvestment

Security

Restriction

(in 000s)


Date


Cost


Value


Warrant


Assets


AssetsAtlas Energy Resources, LLC

Class D Common Units

(1)(2)


91



6/29/2007


$
2,256


$
2,581


$
28.35



1.0
%


0.8
%Atlas Energy Resources, LLC

Common Units

(1)(2)


40



6/29/2007



1,014



1,154



29.00



0.5



0.3BreitBurn Energy Partners L.P.

Common Units

(2)


73



5/24/2007



2,300



2,317



31.85



0.9



0.7Constellation Energy Partners LLC

Class F Common Units

(1)(2)


36



7/25/2007



1,255



1,421



39.00



0.6



0.4Constellation Energy Partners LLC

Common Units

(1)(2)


29



7/25/2007



1,015



1,144



39.69



0.5



0.3Direct Fuels Partners, L.P.

Class B Common Units

(3)


2,500



6/11/2007



45,229



45,908



18.36



18.6



13.3Direct Fuels Partners, L.P.

Class A Warrants

(3)


2,500



6/11/2007



4,700



4,275



1.71



1.7



1.2International Resource Partners LP

Class A Common Units

(3)


1,500



6/12/2007



29,820



30,000



20.00



12.1



8.7Millennium Midstream Partners, LP

Class B Common Units

(3)


2,375



12/28/2006



41,851



43,397



18.27



17.6



12.6Millennium Midstream Partners, LP

Class A Warrants

(3)


2,375



12/28/2006



3,919



3,040



1.28



1.2



0.9ProPetro Services, Inc.

Warrants

(3)


2,905



2/15/2007



2,469



853



0.29



0.4



0.2ProPetro Services, Inc.

(4)

(3)

$
35,000



2/15/2007



32,007



32,531



n/a



13.2



9.4VantaCore Partners LP

Common Units

(1)(3)


91



5/22/2007



1,816



1,833



20.09



0.7



0.5VantaCore Partners LP

(5)

(3)

$
7,000



5/22/2007



7,031



7,031



n/a



2.8



2.0VantaCore Partners LP

(6)

(3)

$
7,500



5/22/2007



7,500



7,500



n/a



3.0



2.2$
184,182


$
184,985







74.8
%


53.5
%     (1)
    
    Security subject to lock-up agreement.(2)
    
    Public security that is unregistered.(3)
    
    Private security.(4)
    
    Floating rate senior secured second lien term loan facility
    maturing on February 15, 2013.(5)
    
    Fixed rate subordinated 9% convertible note maturing on
    May 21, 2027.(6)
    
    Floating rate senior secured second lien term loan facility
    maturing on May 21, 2014.  6.
    SENIOR
    SECURED AND TREASURY SECURED REVOLVING CREDIT
    FACILITIES    Senior Secured Revolving Credit Facility (the
    Investment Facility)
 25




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KAYNE
    ANDERSON ENERGY DEVELOPMENT COMPANY
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
    (amounts in 000s, except share, warrant, right and per
    share amounts)
    (UNAUDITED)
      Treasury Secured Revolving Credit Facility (the
    Treasury Facility) 
   26




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KAYNE
    ANDERSON ENERGY DEVELOPMENT COMPANY
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
    (amounts in 000s, except share, warrant, right and per
    share amounts)
    (UNAUDITED)
    7.
    COMMON
    STOCK    Shares outstanding at November 30, 2006


10,000,060Shares issued through reinvestment of dividends and distributions


27,525Shares outstanding at August 31, 2007


10,027,585   8.
    FINANCIAL
    HIGHLIGHTS    August 31,2007


November 30,(Unaudited)


2006Per Share of Common StockNet asset value, beginning of period

$
24.19


$
23.32Income from
    Operations(1)Net investment income


0.40



0.09Net realized and unrealized gain on investments


1.00



0.78Total income from investment operations


1.40



0.87Dividends and
    Distributions(2)Dividends


(0.85
)


Distributions  return of capital


(0.09
)


Total Dividends and Distributions


(0.94
)


Net asset value, end of period

$
24.65


$
24.19Market value per share, end of period

$
25.10


$
22.32Total investment return based on market
    value(3)


16.63
%


(10.72
)% 27




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##### Table of Contents



KAYNE
    ANDERSON ENERGY DEVELOPMENT COMPANY
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONCLUDED)
    (amounts in 000s, except share, warrant, right and per
    share amounts)
    (UNAUDITED)
  August 31,2007


November 30,(Unaudited)


2006Supplemental Data and
    Ratios(4)Net assets, end of period

$
247,219


$
241,914Ratio of expenses to average net assets, including investment
    management fee waivers and deferred income taxes, if any


2.95
%


2.59
%Ratio of expenses to average net assets, excluding investment
    management fee waivers and deferred income taxes, if any


3.17
%


3.09
%Ratio of expenses to average net assets, excluding investment
    management fee waivers, deferred income taxes and
    interest expense, if any


2.66
%


3.09
%Ratio of net investment income to average net assets


2.14
%


1.89
%Net increase in net assets resulting from operations to average
    net assets


5.60
%(5)


3.69
%(5)Portfolio turnover rate


23.85
%(6)


5.56
%(6)Average amount of borrowings outstanding under the Credit
    Facilities

$
14,796
(5)


Average amount of borrowings outstanding per share of common
    stock during the period

$
1.48
(5)


     (1)
    
    Based on average shares of common stock of 10,007,229 for the
    nine months ended August 31, 2007 and 10,000,060 for the
    period of September 21, 2006 through November 30, 2006.(2)
    
    The information presented in this item is a current estimate of
    the characterization of a portion of the total dividends paid to
    common stockholders for the nine months ended August 31,
    2007. The estimate is based on the Companys operating
    results during the period.(3)
    
    Not annualized. Total investment return is calculated assuming a
    purchase of common stock at the market price on the first day
    and a sale at the current market price on the last day of the
    period reported. The calculation also assumes reinvestment of
    dividends, if any, at actual prices pursuant to the
    Companys dividend reinvestment plan.(4)
    
    Unless otherwise noted, ratios are annualized.(5)
    
    Not annualized.(6)
    
    Not annualized. Calculated based on the sales of long-term
    investments of $48,101 and $3,153, respectively, divided by the
    monthly average long-term investment balance of $201,686 and
    $56,730, respectively.  9.
    SUBSEQUENT
    EVENTS     28




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##### Table of Contents



ITEM 2.
    MANAGEMENTS
    DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
    OPERATIONS.  The following discussions should be read together with the
    unaudited consolidated financial statements and the notes
    thereto included in this report and with the audited
    consolidated financial statements and notes thereto included in
    our
    Form 10-K.
  Forward-Looking
    Statements
  Form 10-Q
  
    Our future operating results;
    Our business prospects and the prospects of our portfolio
    companies and their ability to achieve their objectives;
    Our ability to make investments consistent with our investment
    objective;
    The impact of investments that we expect to make;
    Our contractual arrangements and relationships with third
    parties;
    The dependence of our future success on the general economy and
    its impact on the energy industry;
    Our expected debt and equity financings and investments;
    The adequacy of our cash resources and working capital; and
    The timing of cash flows, if any, from the operations of our
    portfolio companies.    Overview
     29




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Portfolio
    and Investment Activity
           30




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##### Table of Contents



Our Top
    Ten Portfolio Investments as of August 31, 2007
    PercentPublic/



Amount


of TotalInvestment

Private

Sector

($ in millions)


Assets1.


Direct Fuels Partners, L.P.(1)

Private

Midstream 
    Specialty Products and Distribution

$
50.2



14.5
%2.


Millennium Midstream Partners, LP(2)

Private

Midstream 
    Gas Gathering and Processing


46.4



13.43.


ProPetro Services, Inc.(3)

Private

Oilfield Services


33.4



9.74.


International Resource Partners LP(4)

Private

Coal


30.0



8.75.


VantaCore Partners LP(5)

Private

Aggregates, Mining and Other


16.4



4.76.


Targa Resources, Inc.

Private

Midstream


8.7



2.57.


SemGroup, L.P.

Private

Midstream


8.7



2.58.


Kinder Morgan Management, LLC

Public

Midstream


8.2



2.49.


Enterprise Products Partners L.P.

Public

Midstream


6.4



1.910.


Plains All American Pipeline, L.P.

Public

Midstream


5.9



1.7TOTAL





$
214.3



62.0
%     (1)
    
    Our investment in Direct Fuels Partners, L.P. (Direct
    Fuels) includes 2,500,000 Class B common units, which
    represents a 38% limited partnership interest; 2,500,000
    Class A warrants and 200 incentive distribution rights.(2)
    
    Our investment in Millennium Midstream Partners, LP
    (Millennium) includes 2,375,000 Class B common
    units, which represents a 39% limited partnership interest;
    2,375,000 Class A warrants and 212 incentive distribution
    rights.(3)
    
    Our investment in ProPetro Services, Inc. includes a senior
    secured second lien term loan ($32.5 million) and 2,904,620
    warrants ($0.9 million).(4)
    
    Our investment in International Resource Partners LP
    (IRI) includes 1,500,000 Class A common units,
    which represents a 28% limited partnership interest and 10
    incentive distribution rights.(5)
    
    Our investment in VantaCore Partners LP includes a senior
    secured second lien term loan ($7.5 million); a
    subordinated convertible note ($7.1 million); 91,250 common
    units ($1.8 million), which represents a 5% limited
    partnership interest, and 1,422 incentive distribution
    rights.  Results
    of Operations
    Investment Income.
  Operating Expenses.
  Net Investment Income.
 31




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##### Table of Contents



Net Realized Gains.
  Net Change in Unrealized Gains (Losses) on
    Investments.
  Net Increase (Decrease) in Net Assets Resulting from
    Operations.
  Liquidity
    and Capital Resources
               32




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##### Table of Contents



Contractual
    Obligations
        Payments by Period ($ in millions)Less than 1





More than 5Total

year

1-3 years

3-5 years

yearsInvestment
    Facility(1)

$
66






$
66







Treasury
    Facility(2)


25







25







     (1)
    
    At August 31, 2007, $34 million remained available for
    borrowing under our Investment Facility.(2)
    
    At August 31, 2007, $75 million remained available for
    borrowing under our Treasury Facility. On September 24,
    2007, we repaid our $25 million outstanding.  Dividends
           33




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##### Table of Contents



Critical
    Accounting Policies
  Form 10-K Form 10-K.
  ITEM 3.
    QUANTITATIVE
    AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.    Interest Rate Risk.
      Portfolio Investment Valuation.
     34




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##### Table of Contents



ITEM 4.  CONTROLS
    AND PROCEDURES.
  Evaluation of Controls and Procedures. Rule 13a-15(e)
 35




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##### Table of Contents



PART II
  ITEM 1.
    LEGAL
    PROCEEDINGS.    ITEM 1A.
    RISK
    FACTORS.  Item 1A. Form 10-K Form 10-K.
  Our internal control over financial reporting may not be
    adequate and our independent auditors may not be able to certify
    as to its adequacy, which could have a significant and adverse
    effect on our business and reputation.
    ITEM 2.
    UNREGISTERED
    SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.    ITEM 3.
    DEFAULTS
    UPON SENIOR SECURITIES.    ITEM 4.
    SUBMISSION
    OF MATTERS TO A VOTE OF SECURITY HOLDERS.    Nominee

For

WithheldAlbert L. Richey


8,745,250



51,978Robert V. Sinnott


8,746,350



50,878     ITEM 5.
    OTHER
    INFORMATION.   36




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ITEM 6.
    EXHIBITS  Form 10-Q:
  ExhibitNumber

Description3
.1

Charter  Form of Articles of Amendment and
    Restatement*3
.2

Amended and Restated Bylaws. *4
.1

Form of Common Stock Certificate. *10
.1

Form of Investment Management Agreement between Registrant and
    KA Fund Advisors, LLC. *10
.2

Form of Administrative Services Agreement between Registrant and
    Bear Stearns Funds Management Inc. *10
.3

Form of Custody Agreement between Registrant and The Custodial
    Trust Company. *10
.4

Form of Dividend Reinvestment Plan. *10
.5

Form of Transfer Agency Agreement between Registrant and
    American Stock Transfer & Trust Company. *10
.6

Form of Accounting Services Agreement between Registrant and
    Ultimus Fund Solutions, LLC. *10
.7

Senior Secured Revolving Credit Agreement between Registrant,
    the lenders party thereto, SunTrust Bank, as administrative
    agent for the lenders, and Citibank, N.A. as syndication agent,
    dated June 4, 2007. **10
.8

Treasury Secured Revolving Credit Agreement between Registrant,
    the lenders party thereto, SunTrust Bank, as administrative
    agent for the lenders, and Citibank, N.A. as syndication agent,
    dated June 4, 2007. **31
.1

Certification by Chief Executive Officer pursuant to Exchange
    Act
    Rule 13a-14(a),
    as adopted pursuant to Section 302 of the Sarbanes-Oxley
    Act of 2002  filed herewith31
.2

Certification by Chief Financial Officer pursuant to Exchange
    Act
    Rule 13a-14(a),
    as adopted pursuant to Section 302 of the Sarbanes-Oxley
    Act of 2002  filed herewith32
.1

Certification by Chief Executive Officer and Chief Financial
    Officer pursuant to 18 U.S.C. Section 1350, as adopted
    pursuant to Section 906 of the Sarbanes-Oxley Act of
    2002  furnished herewith99
.1

Form of Amended Dividend Reinvestment Plan. **99
.2

Form of Fee Waiver Relating to Treasury Credit Investments
    between Registrant and KA Fund Advisors, LLC. **     *
    
    Previously filed as an exhibit to Registrants
    Pre-Effective Amendment No. 5 to its Registration Statement
    on
    Form N-2
    (File
    No. 333-134829)
    as filed with the Securities and Exchange Commission on
    September 18, 2006 and incorporated by reference herein.**
    
    Previously filed as an exhibit to Registrants Quarterly
    Report on
    Form 10-Q
    (File
    No. 814-00725),
    as filed with the Securities and Exchange Commission on
    July 16, 2007 and incorporated by reference herein. 37




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##### Table of Contents



KAYNE
    ANDERSON ENERGY DEVELOPMENT COMPANY
  SIGNATURES
      By:
    /s/  Kevin
    S. McCarthy  Kevin S. McCarthy
 Chairman of the Board of Directors,
 President and Chief Executive Officer
 (Principal Executive Officer)
  Date:
    October 15, 2007
  By:
    /s/  Terry
    A. Hart  Terry A. Hart
 Chief Financial Officer and Treasurer
 (Principal Financial Officer)
  Date:
    October 15, 2007
 38