OPPENHEIMER MORTGAGE INCOME FUND
Supplement dated April 28, 1995 to the
Prospectus dated January 24, 1995
The Prospectus is amended as follows:
1. Under "Expenses" on page 3, the chart "Shareholder Transaction
Expenses" is amended by deleting the references to the $5.00 fee for
"Exchanges" and inserting "None" on that line under the headings for
Class A Shares and Class B Shares; footnote 2 is amended by substituting
"$10" for "$15"; and footnote 3 is deleted from that chart.
2. The following paragraphs are added at the end of "How the Fund is
Managed" on page 14:
The Board of Trustees of Oppenheimer Mortgage Income Fund
(referred to as "Mortgage Income Fund" or the "Fund") has
determined that it is in the best interest of the Fund's
shareholders that the Fund reorganize with and into Oppenheimer
U.S. Government Trust ("Government Trust"), following Government
Trust's change in fundamental investment policy (as described
below). The Board unanimously approved the terms of an
agreement and plan of reorganization to be entered into between
these funds (the "reorganization plan") and the transactions
contemplated (the transactions are referred to as the
"reorganization"). The Board further determined that the
reorganization should be submitted to the Fund's shareholders
for approval, and recommended that shareholders approve the
reorganization.
Before the reorganization can be completed, several other events
must occur first. In particular, the shareholders of Government
Trust must approve a change in that Fund's fundamental
investment policies that under normal market conditions, it will
invest at least 80% of its total assets in debt instruments
issued or guaranteed by the U.S. Government or its agencies or
instrumentalities. Pursuant to the reorganization plan, (i)
substantially all of the assets of the Fund would be exchanged
for shares of Government Trust, (ii) these shares of Government
Trust would be distributed to the shareholders of the Fund,
(iii) Mortgage Income Fund would be liquidated, and (iv) the
outstanding shares of Mortgage Income Fund would be cancelled.
It is expected that the reorganization will be tax-free,
pursuant to Section 368(a)(1) of the Internal Revenue Code of
1986, as amended, and the Fund will request an opinion of tax
counsel to that effect.
A meeting of the shareholders of Mortgage Income Fund is
expected to be held on or about July 12, 1995 to vote on the
reorganization. Approval of the reorganization requires the
affirmative vote of a majority of the outstanding shares of the
Fund (the term "majority" is defined in the Investment Company
Act as a special majority. It is also explained in the
Statement of Additional Information). There is no assurance
that the shareholders of Government Trust will approve the
proposed change in the fundamental policies of that fund, or
that Mortgage Income Fund's shareholders will approve the
reorganization. Details about the proposed reorganization,
including information concerning the changes to Government Trust
to be voted on by that fund's shareholders, will be contained
in a proxy statement and other soliciting materials to be sent
to Mortgage Income Fund's shareholders of record on May 19,
1995. Persons who become shareholders of the Fund after the
record date for the shareholder meeting will not be entitled to
vote on the reorganization.
3. The third paragraph under the caption "How Much Do You Plan To
Invest?" on page 17 is revised by substituting "$500,000" for "$1 million"
in both sentences.
4. Part (d) of the first sentence of the second paragraph under the
caption "Waivers of Class A Sales Charges" on page 21 is revised to read
as follows: (d) purchased and paid for with the proceeds of shares
redeemed in the prior 12 months for a mutual fund on which an initial
sales charge or contingent deferred sales charge was paid (other than a
Fund managed by the Manager or any of its affiliates); this waiver must
be requested when the purchase order is placed for your shares of the
Fund, and the Distributor may require evidence of your qualification for
this waiver."
5. The fourth sentence of the paragraph captioned "How to Sell Shares -
Selling Shares by Wire" on page 26 is revised by substituting "$10" for
"$15".
6. The second and third sentences of the first paragraph under the
caption "How To Exchange Shares" on page 26 is deleted.
April 28, 1995
