OPPENHEIMER MORTGAGE INCOME FUND
Supplement dated July 19, 1995 to the
Prospectus dated January 24, 1995
The Prospectus is amended as follows:
1. The supplement dated April 28, 1995 to the Prospectus is replaced by
this supplement.
2. 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.
3. 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"). 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.
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 scheduled for
July 12, 1995 was adjourned to July 19, 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 Mortgage Income
Fund's shareholders will approve the reorganization. Details about
the proposed reorganization were contained in a proxy statement and
other soliciting materials sent to Mortgage Income Fund's
shareholders of record on May 19, 1995. Persons who became
shareholders of the Fund after the record date for the shareholder
meeting will not be entitled to vote on the reorganization.
4. 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.
5. The following is added as the first paragraph under the heading "How
To Buy Shares --How Much Must You Invest" on page 18:
"Shares of the Fund are not available for sale to new
investors, including shares purchased by exchange
from "Eligible Funds" (defined below), lump-sum
purchases, and purchases under an Asset Builder Plan
(described below) or by reinvestment of dividends or
distributions from other "Eligible Funds," or under
the "Reinvestment Privilege," described below.
Existing Fund shareholders may purchase additional
Fund shares through subsequent investments or
reinvestment of Fund dividends or distributions. The
foregoing is subject to the right of the Fund and the
Distributor, in their complete discretion, to modify
or terminate the terms of this offer at any time
without prior notice. The remaining sections of this
Prospectus are hereby amended to conform to the terms
of this offer."
6. 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."
7. 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".
8. The second and third sentences of the first paragraph under the
caption "How To Exchange Shares" on page 26 is deleted.
July 19, 1995 PS0490.001
