PIPER FUNDS INC. II
ADJUSTABLE RATE MORTGAGE SECURITIES FUND
SUPPLEMENT DATED OCTOBER 1, 1996 TO
PROSPECTUS DATED DECEMBER 18, 1995
From October 1, 1996 through December 31, 1996 (the "Special Offering
Period"), shares of the Fund are being offered to the public without an initial
sales charge. See "How to Purchase Shares." For any purchase that would be
subject to a sales charge outside of the Special Offering Period, the Fund will
impose a contingent deferred sales charge of 2% on redemptions during the first
12 months after purchase, and 1% on redemptions during the second 12 months. See
"How to Redeem Shares -- Contingent Deferred Sales Charge." The Adviser will pay
the Distributor, out of its own assets, a fee equal to 2% of the net asset value
of any shares sold during this period that would be subject to a sales charge
outside of the Special Offering Period. This fee also will be paid in connection
with certain sales that are not subject to a sales charge outside of the Special
Offering Period, including (a) purchases by 401(k) plans, by certain plans which
are qualified plans under Section 401(a) of the Internal Revenue Code and by
tax-sheltered annuities, (b) purchases funded by the proceeds from the sale of
shares of any non-money market open-end mutual fund within 30 days after such
sale, (c) purchases of $500,000 or more, (d) exchanges of Fund shares that were
originally acquired in the Merger, and (e) purchases made with distributions
received in connection with the dissolution of American Government Term Trust
Inc., a closed-end fund previously managed by the Adviser. The Distributor will
pay a portion of its 2% fee to Piper Jaffray Investment Executives and other
broker-dealers selling shares of the Fund. Please contact your Piper Jaffray
Investment Executive or other broker-dealer for more information.
PJARX-05F
