GMO TRUST

                         Supplement dated March 1, 1996
                                       to
                        Prospectus dated January 1, 1996


        Effective March 1, 1996 the Manager has voluntarily undertaken to reduce
its management fee and to bear certain expenses of the Fund until further notice
to the  extent  that the  Fund's  total  annual  operating  expenses  (excluding
brokerage  commissions,  extraordinary  expenses  (including taxes) and transfer
taxes) would otherwise exceed 0.95% of the Fund's average daily net assets.

        Attached hereto is revised Expense  Information that shows the impact of
this agreement to reduce expenses.





PELICAN FUND
EXPENSE INFORMATION

        The following  information is designed to help investors  understand the
various  costs  and  expenses  that  investors  in the Fund  bear  directly  and
indirectly. The expenses are based on annual expenses for the Fund's fiscal year
ended  February  28, 1995 but have been  restated  to reflect the fee  reduction
decribed  in  footnote  2,  which is  effective  March 1,  1996.  The table also
includes a hypothetical  illustration  of the amount of operating  expenses that
would be incurred by an investor who purchases  $1,000 of shares of the Fund and
who redeems the investment at the end of the periods shown. The examples are not
representations of past or future expenses, and actual expenses may be larger or
smaller than those shown.




SHAREHOLDER TRANSACTION EXPENSES:

        Maximum Sales Load Imposed on Purchases                         None
        Maximum Sales Load Imposed on Reinvested Dividends              None
        Deferred Sales Load                                             None

REDEMPTION FEES: 1                                                      None
EXCHANGE FEES:                                                          None
ANNUAL FUND OPERATING EXPENSES:
                   (as a percentage of average net assets)
        Management Fee                                                  0.75%2
        Other Operating Expenses                                        0.20%

TOTAL FUND OPERATING EXPENSES:                                          0.95%2

        1 In order to discourage  frequent  large  movements of money that might
disrupt  the Fund  and  adversely  affect  shareholders,  the Fund may  charge a
redemption fee of 0.50% to corporate or  institutional  investors who make large
redemptions over short periods. See "How to Redeem Shares".

        2 The Manager has  voluntarily  undertaken to reduce its  management fee
and to bear certain  expenses with respect to the Fund until  further  notice to
the extent that the Fund's total annual operating expenses (excluding  brokerage
commissions, extraordinary expenses (including taxes), and transfer taxes) would
otherwise  exceed  0.95% of the Fund's  average  daily net  assets.  Absent such
waiver,  management  fees for the Fund would be 0.90% and Total  Fund  Operating
Expenses would be 1.10%.

EXAMPLE:
        You would pay the  following  expenses  on a $1,000  investment,  if you
assume a 5 percent  annual  return (with or without a  redemption  at the end of
each time period):

        One Year        $  10
        Three Years     $  30
        Five Years      $  53
        Ten Years       $ 117

        The  example  in the table  above is for  informational  purposes  only.
Actual  expenses of the Fund may vary  significantly  from the expenses  assumed
above.