<PAGE>
                                                           File No. 2-96520
                                                          File No. 811-4261


                    SECURITIES AND EXCHANGE COMMISSION

                         Washington, D. C.   20549

                                 Form N-1A

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933     X

                      Pre-Effective Amendment No. ____
                      Post-Effective Amendment No. 18

                                  and/or

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT
OF 1940                                                     X

                             Amendment No. 18


UNITED GOLD & GOVERNMENT FUND, INC.
                   (Exact Name as Specified in Charter)

6300 Lamar Avenue, Shawnee Mission, Kansas             66202-4200
         (Address of Principal Executive Office)       (Zip Code)

Registrant's Telephone Number, including Area Code  (913) 236-2000

Sharon K. Pappas, P. O. Box 29217, Shawnee Mission, Kansas  66201-9217
                  (Name and Address of Agent for Service)


It is proposed that this filing will become effective

          _____  immediately upon filing pursuant to paragraph (b)
          __X__  on February 19, 1996 pursuant to paragraph (b)
          _____  60 days after filing pursuant to paragraph (a)(1)
          _____  on (date) pursuant to paragraph (a)(1)
          _____  75 days after filing pursuant to paragraph (a)(2)
          _____  on (date) pursuant to paragraph (a)(2) of Rule 485
          _____  this post-effective amendment designates a new effective
                 date for a previously filed post-effective amendment
    ==================================================================

                DECLARATION REQUIRED BY RULE 24f-2 (a) (1)

     The issuer has registered an indefinite amount of its securities under
the Securities Act of 1933 pursuant to Rule 24f-2(a)(1).  Notice for the
Registrant's fiscal year ended December 31, 1995 will be filed on or about
February 21, 1996.

<PAGE>
                    UNITED GOLD & GOVERNMENT FUND, INC.
                    ===================================

                           Cross Reference Sheet
                           =====================

Part A of
Form N-1A
Item No.                      Prospectus Caption
---------                     ------------------

 1 ........................   Cover Page
 2(a) .....................   Expenses
  (b) .....................   An Overview of the Fund
  (c) .....................   An Overview of the Fund
 3(a) .....................   Financial Highlights
  (b) .....................   *
  (c) .....................   Performance
  (d)......................   Performance; About Your Account
 4(a) .....................   About the Investment Principles of the Fund;
                              About the Management and Expenses of the Fund
  (b) .....................   About the Investment Principles of the Fund
  (c) .....................   An Overview of the Fund; About the Investment
                              Principles of the Fund
 5(a) .....................   About the Management and Expenses of the Fund
  (b)......................   Inside Back Cover; About the Management and
                              Expenses of the Fund
  (c) .....................   About the Management and Expenses of the Fund
  (d) .....................   Inside Back Cover; About the Management and
                              Expenses of the Fund
  (e) .....................   Inside Back Cover; About the Management and
                              Expenses of the Fund
  (f) .....................   About the Management and Expenses of the Fund
  (g)(i)...................   *
  (g)(ii)..................   About the Management and Expenses of the Fund
 5A........................   **
 6(a) .....................   About the Management and Expenses of the Fund
  (b) .....................   *
  (c) .....................   *
  (d) .....................   *
  (e) .....................   About Your Account
  (f)......................   About Your Account
  (g) .....................   About Your Account
  (h) .....................   About the Management and Expenses of the Fund
 7(a) .....................   Inside Back Cover; About Your Account
  (b) .....................   About Your Account
  (c) .....................   About Your Account
  (d) .....................   About Your Account
  (e) .....................   *
  (f) .....................   About the Management and Expenses of the Fund
 8(a) .....................   About Your Account
  (b) .....................   *
  (c) .....................   About Your Account
  (d) .....................   About Your Account
 9 ........................   *


Part B of
Form N-1A
Item No.                      SAI Caption
---------                     -----------

10(a) .....................   Cover Page
  (b) .....................   *
11 ........................   Cover Page
12 ........................   *
13(a) .....................   Goals and Investment Policies
  (b) .....................   Goals and Investment Policies
  (c) .....................   Goals and Investment Policies
  (d) .....................   Goals and Investment Policies
14(a) .....................   Directors and Officers
  (b) .....................   Directors and Officers
  (c) .....................   Directors and Officers
15(a) .....................   *
  (b) .....................   *
  (c) .....................   Directors and Officers
16(a)(i) ..................   Investment Management and Other Services
  (a)(ii) .................   Directors and Officers
  (a)(iii) ................   Investment Management and Other Services
  (b) .....................   Investment Management and Other Services
  (c) .....................   *
  (d) .....................   Investment Management and Other Services
  (e) .....................   *
  (f) .....................   Investment Management and Other Services
  (g) .....................   *
  (h) .....................   Investment Management and Other Services
  (i) .....................   *
17(a) .....................   Portfolio Transactions and Brokerage
  (b) .....................   *
  (c) .....................   Portfolio Transactions and Brokerage
  (d) .....................   Portfolio Transactions and Brokerage
  (e) .....................   *
18(a) .....................   Other Information
  (b) .....................   *
19(a) .....................   Purchase, Redemption and Pricing of Shares
  (b) .....................   Purchase, Redemption and Pricing of Shares
  (c) .....................   Purchase, Redemption and Pricing of Shares
20 ........................   Payments to Shareholders; Taxes
21(a) .....................   Investment Management and Other Services
  (b) .....................   *
  (c) .....................   *
22(a) .....................   *
  (b)(i) ..................   Performance Information
  (b)(ii) .................   Performance Information
  (b)(iii) ................   *
  (b)(iv) .................   Performance Information
23 ........................   Financial Statements

---------------------------------------------------------------------------
*Not Applicable or Negative Answer
**Included in Annual Report to Shareholders

<PAGE>
Please read this Prospectus before investing, and keep it on file for
future reference.  It sets forth concisely the information about the Fund
that you ought to know before investing.

Additional information has been filed with the Securities and Exchange
Commission and is contained in a Statement of Additional Information
("SAI") dated February 19, 1996.  The SAI is available free upon request to
the Fund or Waddell & Reed, Inc., the Fund's underwriter, at the address or
telephone number below.  The SAI is incorporated by reference into this
Prospectus and you will not be aware of all facts unless you read both this
Prospectus and the SAI.

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.  ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

United Gold & Government Fund, Inc.
Class A Shares
This Fund seeks a high total return through investments in precious metals,
minerals-related securities or U.S. Government Securities.

This Prospectus describes one class of shares of the Fund -- Class A
Shares.

Prospectus
February 19, 1996

UNITED GOLD & GOVERNMENT FUND, INC.
6300 Lamar Avenue
P. O. Box 29217
Shawnee Mission, Kansas
66201-9217
913-236-2000

<PAGE>
Table of Contents

AN OVERVIEW OF THE FUND..................   3    

EXPENSES.................................   5    

FINANCIAL HIGHLIGHTS.....................   6    

PERFORMANCE..............................   8    
 Explanation of Terms ...................   8    

ABOUT WADDELL & REED.....................   9    

ABOUT THE INVESTMENT PRINCIPLES OF THE FUND   10    
 Investment Goals and Principles .......   10    
   Risk Considerations .................   12    
 Securities and Investment Practices ...   14    

ABOUT YOUR ACCOUNT......................   27    
 Ways to Set Up Your Account ...........   27    
 Buying Shares .........................   28    
 Minimum Investments ...................   30    
 Adding to Your Account ................   30    
 Selling Shares ........................   31    
 Shareholder Services ..................   33    
   Personal Service ....................   33    
   Reports .............................   33    
   Exchanges ...........................   33    
   Automatic Transactions ..............   33    
 Dividends, Distributions and Taxes ....   34    
   Distributions .......................   34    
   Taxes ...............................   35    

ABOUT THE MANAGEMENT AND EXPENSES OF THE FUND   37    
 WRIMCO and Its Affiliates .............   38    
 Breakdown of Expenses .................   39    
   Management Fee ......................   39    
   Other Expenses ......................   40    

<PAGE>
An Overview of the Fund

The Fund:  This Prospectus describes the Class A shares of United Gold &
Government Fund, Inc., an open-end, diversified management investment
company.

Goals and Strategies:  United Gold & Government Fund, Inc. (the "Fund")
seeks a high total return through investments in precious metals, minerals-
related securities or U.S. Government Securities.  The Fund's portfolio
will generally include minerals-related securities and gold, silver and
platinum during periods of actual or expected inflation or when the
environment for investment in precious metals appears to be favorable, and
U.S. Government Securities during periods of actual or expected
disinflation or low inflation.  See "About the Investment Principles of the
Fund" for further information.

Management:  Waddell & Reed Investment Management Company ("WRIMCO")
provides investment advice to the Fund and manages the Fund's investments.
WRIMCO is a wholly-owned subsidiary of Waddell & Reed, Inc.  WRIMCO,
Waddell & Reed, Inc. and its predecessors have provided investment
management services to registered investment companies since 1940.  See
"About the Management and Expenses of the Fund" for further information
about management fees.

Distributor:  Waddell & Reed, Inc. acts as principal underwriter and
distributor of the shares of the Fund.

Purchases:  You may buy Class A shares of the Fund through Waddell & Reed,
Inc. and its account representatives.  The price to buy a Class A share of
the Fund is the net asset value of a Class A share plus a sales charge.
See "About Your Account" for information on how to purchase Class A shares.

Redemptions:  You may redeem your shares at net asset value.  When you sell
your shares, they may be worth more or less than what you paid for them.
See "About Your Account" for a description of redemption and reinvestment
procedures.

Who May Want to Invest:  The Fund is designed for investors who are willing
to accept significant risks with the opportunity to participate in
potentially high returns.  You should consider whether the Fund fits with
your particular investment objectives.

Risk Considerations: The Fund is subject to significant risks associated
with gold and other minerals-related securities, foreign securities and
precious metals.  The value of the Fund's investments and the income
generated will vary from day to day, generally reflecting changes in
interest rates, market conditions and other company and economic news.
Performance will also depend on WRIMCO's skill in selecting investments.
See "About the Investment Principles of the Fund" for information about the
risks associated with the Fund's investments.

<PAGE>
Expenses

Shareholder transaction expenses are charges you pay when you buy or sell
shares of a fund.

Maximum sales load
on purchases   5.75%
(as a percentage of offering price)

Maximum sales load
on reinvested
dividends      None

Deferred sales load None

Redemption fees     None

Exchange fee   None

Annual Fund operating expenses (as a percentage of average net assets).
   
Management fees     0.71%
12b-1 fees     0.16%
Other expenses 0.79%
Total Fund operating expenses1     1.66%    

Example:  You would pay the following expenses on a $1,000 investment,
assuming (1) 5% annual return2 and (2) redemption at the end of each time
period:
   
 1 year   $ 73
 3 years  $107
 5 years  $143
10 years  $243    

The purpose of this table is to assist you in understanding the various
costs and expenses that a shareholder of the Class A shares of the Fund
will bear directly or indirectly.  The example should not be considered a
representation of past or future expenses; actual expenses may be greater
or lesser than those shown.  For a more complete discussion of certain
expenses and fees, see "Breakdown of Expenses."

                    
1Retirement plan accounts may be subject to a $2 fee imposed by the plan
custodian for use of the Flexible Withdrawal Service.

2Use of an assumed annual return of 5% is for illustration purposes only
and is not a representation of the Fund's future performance, which may be
greater or lesser.

<PAGE>
Financial Highlights

     (Audited)

The following information has been audited by Price Waterhouse LLP, independent
accountants, and should be read in conjunction with the financial statements and
notes thereto, together with the report of Price Waterhouse LLP, which is
included in the SAI.

For a Class A share outstanding throughout each period.3

<TABLE>
                                                              For the fiscal year ended December 31,
                                -----------------------------------------------------------------------------------------------
                                 1995      1994      1993      1992      1991      1990      1989      1988      1987      1986
                                 ----      ----      ----      ----      ----      ----      ----      ----      ----      ----
<S>                             <C>       <C>       <C>       <C>       <C>       <C>       <C>       <C>       <C>       <C>
Net asset value,
  beginning of period .....     $8.19     $9.97     $5.70     $6.63     $6.68     $8.66     $7.47     $7.95     $6.83     $5.07
                                -----     -----     -----     -----     -----     -----     -----     -----     -----     -----
Income from investment
  operations:
  Net investment income ...      0.24      0.05      0.04      0.06      0.15      0.11      0.16      0.17      0.14      0.17
  Net realized and
    unrealized gain
    (loss) on
    investments ...........      0.56     (1.78)     4.27     (0.93)    (0.05)    (1.97)     1.20     (0.48)     1.93      1.89
                                -----     -----     -----     -----     -----     -----     -----     -----     -----     -----
Total from investment
  operations ..............      0.80     (1.73)     4.31     (0.87)     0.10     (1.86)     1.36     (0.31)     2.07      2.06
                                -----     -----     -----     -----     -----     -----     -----     -----     -----     -----
Less distributions:
  Dividends from net
    investment income .....     (0.24)    (0.05)    (0.04)    (0.06)    (0.15)    (0.12)    (0.17)    (0.17)    (0.13)    (0.22)
  Distributions from
    capital gains .........      0.00      0.00      0.00      0.00      0.00      0.00      0.00      0.00     (0.82)    (0.08)
                                -----     -----     -----     -----     -----     -----     -----     -----     -----     -----
Total distributions .......     (0.24)    (0.05)    (0.04)    (0.06)    (0.15)    (0.12)    (0.17)    (0.17)    (0.95)    (0.30)
                                -----     -----     -----     -----     -----     -----     -----     -----     -----     -----
Net asset value,
  end of period ...........     $8.75     $8.19     $9.97     $5.70     $6.63     $6.68     $8.66     $7.47     $7.95     $6.83
                                =====     =====     =====     =====     =====     =====     =====     =====     =====     =====
Total return* .............      9.80%   -17.36%    75.82%   -13.18%     1.47%   -21.59%    18.42%    -3.92%    30.36%    41.48%
Net assets, end of period
  (000 omitted) ...........   $32,733   $37,422   $46,908   $27,136   $40,587   $54,371   $83,154   $99,460  $119,894   $17,695
Ratio of expenses to average
  net assets ..............      1.66%     1.59%     1.69%     1.88%     1.57%     1.56%     1.42%     1.42%     1.20%     1.48%
Ratio of net investment income
  to average net assets ...      2.55%     0.57%     0.48%     0.90%     2.11%     1.43%     1.91%     2.14%     1.81%     3.46%
Portfolio turnover rate** .    164.21%    64.89%    84.00%    61.50%   112.80%    82.42%    89.92%   100.19%   107.00%   159.66%

 *Total return calculated without taking into account the sales load deducted on an initial purchase.
**This rate is, in general, calculated by dividing the average value of the Fund's portfolio securities during the period into the
  lesser of its purchases or sales of securities in the period, excluding short-term securities and bullion.

</TABLE>
                    
3On February 19, 1996, the Fund began offering Class Y shares to the
public.  Fund shares outstanding prior to that date were designated Class A
shares.

<PAGE>
Performance

Mutual fund performance is commonly measured as total return.  The Fund may
also advertise its performance by showing performance rankings.
Performance information is calculated and presented separately for each
class of Fund shares.

Explanation of Terms

Total Return is the overall change in value of an investment in the Fund
over a given period, assuming reinvestment of any dividends and
distributions.  A cumulative total return reflects actual performance over
a stated period of time.  An average annual total return is a hypothetical
rate of return that, if achieved annually, would have produced the same
cumulative total return if performance had been constant over the entire
period.  Average annual total returns smooth out variations in performance;
they are not the same as actual year-by-year results.  Non-standardized
total return may not reflect deduction of the applicable sales charge or
may be for periods other than those required to be presented or may
otherwise differ from standardized total return.  Total return quotations
that do not reflect the applicable sales charge will reflect a higher rate
of return.

Performance Rankings are comparisons of the Fund's performance to the
performance of other selected mutual funds, selected recognized market
indicators such as the Standard & Poor's 500 Stock Index and the Dow Jones
Industrial Average, or non-market indices or averages of mutual fund
industry groups.  The Fund may quote its performance rankings and/or other
information as published by recognized independent mutual fund statistical
services or by publications of general interest.  In connection with a
ranking, the Fund may provide additional information, such as the
particular category to which it relates, the number of funds in the
category, the criteria upon which the ranking is based, and the effect of
sales charges, fee waivers and/or expense reimbursements.

All performance information that the Fund advertises or includes in
information provided to present or prospective shareholders is historical
in nature and is not intended to represent or guarantee future results.
The value of the Fund's shares when redeemed may be more or less than their
original cost.

The Fund's recent performance and holdings will be detailed twice a year in
the Fund's annual and semiannual reports, which are sent to all Fund
shareholders.

<PAGE>
About Waddell & Reed

Since 1937, Waddell & Reed has been helping people make the most of their
financial future by helping them take advantage of various financial
services.  Today, Waddell & Reed has over 2500 account representatives
located throughout the United States.  Your primary contact in your
dealings with Waddell & Reed will be your local account representative.
However, the Waddell & Reed shareholder services department, which is part
of the Waddell & Reed headquarters operations in Overland Park, Kansas, is
available to assist you and your Waddell & Reed account representative.
You may speak with a customer service representative by calling 913-236-
2000.

<PAGE>
About the Investment Principles of the Fund

Investment Goals and Principles

The goal of the Fund is to seek a high total return to investors.  The Fund
seeks to achieve this goal by investing in (i) minerals-related securities
and gold, silver and platinum during periods of actual or expected
inflation, (ii) securities issued or guaranteed by the U.S. Government or
its agencies or instrumentalities ("U.S. Government Securities") during
periods of actual or expected disinflation or low inflation, and (iii)
gold, silver and platinum during periods when the environment for
investment in precious metals appears to be favorable.  Minerals-related
securities are securities that offer an investment participation in the
mining, processing, production, exploration, refining or sales of gold,
platinum, silver or hydrocarbons.  There is no assurance that the Fund will
achieve its goal.

During past inflationary periods, minerals-related securities and precious
metals, such as gold, silver and platinum, generally have increased in
value, while the value of debt securities has tended to decrease due to
rising interest rates.  Conversely, during periods of disinflation or low
inflation, the value of debt securities has generally increased, while the
value of minerals-related securities and precious metals has decreased.
Low inflation is considered to be generally in the 3% to 6% range, as
measured by the Consumer Price Index.  Also, during periods of declining
stock prices, the prices of gold, silver and platinum may increase or
remain stable, while the value of minerals-related securities may be
subject to a general decline experienced by the stock market as a whole.
Based on these historical trends, WRIMCO will attempt to anticipate
inflationary and disinflationary periods and manage the Fund's investments
in a manner designed to achieve the Fund's goal.

As a matter of fundamental policy, the Fund will not invest in other than
(i) those minerals-related securities that are related to the mining,
processing, production, exploration, refining or sales of gold, (ii) U.S.
Government Securities, and/or (iii) gold, silver and platinum if thereafter
less than 65% of its total assets would be invested in these investments.
The Fund may invest in securities other than minerals-related securities,
U.S. Government Securities and gold, silver or platinum, subject to this
65% test and to the other restrictions set forth in this Prospectus and the
SAI.

It is a fundamental policy of the Fund to concentrate its investments
(i.e., invest more than 25% of its assets) in an industry related to gold
and other minerals during periods of actual or anticipated inflation and up
to 100% of its assets may be so invested.  During periods of actual or
expected disinflation or low inflation, up to 100% of the Fund's assets may
be invested in U.S. Government Securities of varying maturities and not
more than 25% of the Fund's assets will be invested in gold and other
minerals-related securities.  When the Fund is invested in minerals-related
securities, it is anticipated that a substantial portion, and up to 100%,
of its assets will be invested in foreign securities.  See "Foreign
Securities."  The securities that the Fund may own include debt securities,
preferred stock, common stock and convertible securities.

WRIMCO believes that this strategy will allow the Fund to achieve a higher
total return than could be achieved if it remained invested in minerals-
related securities and precious metals during periods of low inflation or
disinflation because the income and value of minerals-related securities
and precious metals might decline during periods of disinflation or low
inflation.  During such periods, WRIMCO expects that higher income can be
achieved and that capital will be better preserved by investing in U.S.
Government Securities.  It is expected that, during periods of disinflation
and low inflation, a greater portion of the total return of the Fund will
be attributable to income achieved through investment in U.S. Government
Securities.  It is expected that, during inflationary periods, a greater
portion of the total return of the Fund will be attributable to
appreciation from investment in minerals-related securities and precious
metals.

WRIMCO will evaluate numerous economic and monetary factors in making a
determination as to whether the economy is in or is likely to enter into an
inflationary or disinflationary period.  Among the factors WRIMCO will
evaluate are changes in governmental fiscal and monetary policy, rates of
changes in the Consumer Price Index, and actual and anticipated changes and
rate of change in the value of the U.S. dollar in relation to other key
foreign currencies, short- and long-term interest rates, and the money
supply.  For example, when WRIMCO believes that the economy is in an
inflationary cycle or an inflationary cycle is expected because of rising
interest rates, a decline in the value of the U.S. dollar, and a higher
rate of change in the Consumer Price Index, the Fund generally will
concentrate in minerals-related securities.  On the other hand, when
interest rates are declining, the value of the U.S. dollar is increasing,
and the rate of change in the Consumer Price Index is declining, the Fund
generally will invest in U.S. Government Securities.  However, WRIMCO will
take into account factors other than those given in these examples and
WRIMCO's subjective judgment of all factors it deems relevant precludes the
application of any formulas or mechanical determinations in assessing the
state of the economy.  WRIMCO's evaluation takes into consideration
political instability in certain parts of the world as well as domestic and
international economic factors.

Risk Considerations

There are risks inherent in any investment.  The Fund is subject to varying
degrees of market risk, financial risk and, in some cases, prepayment risk.
Market risk is the potential for fluctuations in the price of the security
or other asset because of market factors.  Because of market risks, you
should anticipate that the share price of the Fund will fluctuate.
Financial risk is based on the financial situation of the issuer.  The
financial risk of the Fund depends on the credit quality of the underlying
securities.  Prepayment risk is the possibility that, during periods of
falling interest rates, a debt security with a high stated interest rate
will be prepaid prior to its expected maturity date.

Because the Fund owns different types of investments, its performance will
be affected by a variety of factors.  The value of the Fund's investments
and the income it generates will vary from day to day, generally reflecting
changes in interest rates, market conditions, and other company and
economic news.

The Fund may also invest in certain derivative instruments, including
options, futures contracts, options on futures contracts, forward currency
contracts, indexed securities, stripped securities and mortgage-backed
securities.  The use of derivative instruments involves special risks.  See
"Risks of Derivative Instruments" for further information on the risks of
investing in these instruments.

Investments in minerals-related securities and precious metals are
considered speculative and involve substantial risks and special
considerations, including the following:

Risk of Price Fluctuations.  Metals and minerals prices are affected by
various factors such as economic conditions, political events, monetary
policies and other factors.  As a result, prices of minerals-related
securities and of gold, silver and platinum may fluctuate sharply.

Concentration of Source of Gold Supply and Control of Gold Sales.  The six
largest producers of gold are the Republic of South Africa, the United
States, Australia, Commonwealth of Independent States (the "CIS," formerly
the Union of Soviet Socialist Republics), Canada and China.  Economic,
social and political conditions and objectives prevailing in these
countries may have a direct effect on the production and marketing of
newly-produced gold and sales of central bank gold holdings.  In South
Africa, the activities of companies engaged in gold mining are subject to
the policies adopted by the Ministry of Mines.  The Reserve Bank of South
Africa, as the sole authorized sales agent for South African gold, has an
influence on the price and timing of sales of South African gold.  As South
Africa is the largest producer of gold, social upheaval and related
economic difficulties in South Africa may, from time to time, influence the
price of gold and the share values of mining companies involved in South
Africa and elsewhere.  Investors should understand the special
considerations and risks related to an investment emphasis in securities of
South African issuers and its potential effects on the Fund's per share
value.  The Fund may invest up to 100% of its assets in securities of South
African issuers.

Unpredictable International Monetary Policies, Economic and Political
Conditions.  There is the possibility that, under unusual international
monetary or political conditions, the Fund's assets might be less liquid or
that the change in value of its assets might be more volatile than would be
the case with other investments.  In particular, the price of gold is
affected by direct and indirect use of it to settle net deficits and
surpluses between nations.  Because the prices of metals and minerals may
be affected by unpredictable international monetary policies and economic
conditions, there may be greater likelihood of a more dramatic impact upon
the market price of the Fund's investments than of other investments.

Foreign Securities.  A major portion of the Fund's assets will usually be
invested in foreign securities during periods of actual or anticipated
inflation.  See "Foreign Securities" below.

Failure to Anticipate Changes in Economic Cycles.  In addition to the risks
discussed above, the Fund's investment success will be dependent to a high
degree on WRIMCO's ability to anticipate the onset and termination of
inflationary and disinflationary cycles.  A failure to anticipate a
disinflationary cycle could result in the Fund's assets being
disproportionately invested in minerals-related securities.  Conversely, a
failure to predict an inflationary cycle could result in the Fund's assets
being disproportionately invested in U.S. Government Securities.  The
Fund's investment success will be dependent to a high degree on the
validity of the premise that the values of minerals-related securities will
move in a different direction than the values of U.S. Government Securities
during periods of inflation or disinflation.  If the values of both types
of securities move down during the same period of time, the value of the
shareholder's investment will decline rather than stabilize or increase, as
anticipated, regardless of whether the Fund is invested in minerals-related
securities or U.S. Government Securities.

Securities and Investment Practices

The following pages contain more detailed information about types of
instruments in which the Fund may invest, and strategies WRIMCO may employ
in pursuit of the Fund's goal.  A summary of risks associated with these
instrument types and investment practices is included as well.

WRIMCO might not buy all of these instruments or use all of these
techniques to the full extent permitted by the Fund's investment policies
and restrictions unless it believes that doing so will help the Fund
achieve its goal.  As a shareholder, you will receive annual and semiannual
reports detailing the Fund's holdings.

Certain of the investment policies and restrictions of the Fund are noted
above; others are stated below.  A fundamental policy of the Fund may not
be changed without the approval of the shareholders of the Fund.  Operating
policies may be changed by the Board of Directors without the approval of
the affected shareholders.  The goal of the Fund is a fundamental policy.
Unless otherwise indicated, the types of securities and other assets in
which the Fund may invest and other policies are operating policies.

Policies and limitations are typically considered at the time of purchase;
the sale of instruments is usually not required in the event of a
subsequent change in circumstances.

Please see the SAI for further information concerning the following
instruments and associated risks and the Fund's investment policies and
restrictions.

Precious Metals.  The ownership of precious metals may allow the Fund to
take advantage of those periods of time when the outlook for the price of
gold, silver and platinum is favorable while the outlook for the share
prices of minerals-related securities may be unfavorable.  For example,
during periods of declining stock prices, the price of gold may increase or
remain stable, while the value of gold-related securities may be subject to
the same general decline experienced by the stock market as a whole.  Under
these or similar circumstances, the ability of the Fund to purchase and
hold gold, silver or platinum will allow it to benefit from a potential
increase in the price of precious metals or stability in the price of such
metals at a time when the value of minerals-related securities may be
declining.

The Fund's ability to purchase platinum may allow the Fund to invest in
platinum without the risks associated with owning shares of South African
and CIS companies engaged in the production of platinum.  While the Fund is
authorized to invest in South African and CIS issuers, investments in South
Africa and in the CIS are subject to the risks associated with the
unsettled political and social conditions prevailing in that country and
neighboring countries.

The Fund anticipates that gold, silver and platinum will be purchased in
the form of bullion or coins or in the form of vault or other negotiable
receipts representing ownership of these metals.  The Fund may incur
expenses for the shipping, storage and insurance of precious metals it
purchases.

Precious metals prices are affected by various factors, such as economic
conditions, political events and monetary policies.  As a result, the price
of gold, silver or platinum may fluctuate widely.  The sole source of
return to the Fund from such investments will be gains realized on sales; a
negative return will be realized if the metal is sold at a loss.
Investments in precious metals do not provide a yield.

Ownership of gold, silver and platinum may be prohibited by any one or more
of the states in which shares of the Fund are sold.  In the event that any
state prohibits such investment, the Fund may elect not to make such
investments.  In addition, the Fund's direct investment in these precious
metals may be limited by tax considerations.  See "Taxes" in the SAI.

Policies and Restrictions:  As a fundamental policy, the Fund may not
invest more than 25% of its total assets in gold, silver and platinum.

Equity Securities.  Equity securities represent an ownership interest in an
issuer.  This ownership interest often gives an investor the right to vote
on measures affecting the issuer's organization and operations.  Although
common stocks and other equity securities have a history of long-term
growth in value, their prices tend to fluctuate in the short term,
particularly those of smaller companies.  The equity securities in which
the Fund invests may include preferred stock that converts to common stock
either automatically or after a specified period of time or at the option
of the issuer.

Debt Securities.  Bonds and other debt instruments are used by issuers to
borrow money from investors.  The issuer pays the investor a fixed or
variable rate of interest, and must repay the amount borrowed at maturity.
Some debt securities, such as zero coupon bonds, do not pay current
interest, but are purchased at a discount from their face values.  The debt
securities in which the Fund invests may include debt securities whose
performance is linked to a specified equity security or securities index.

Debt securities have varying levels of sensitivity to changes in interest
rates and varying degrees of quality.  As a general matter, however, when
interest rates rise, the values of fixed-rate debt securities fall and,
conversely, when interest rates fall, the values of fixed-rate debt
securities rise.  The values of floating and adjustable-rate debt
securities are not as sensitive to changes in interest rates as the values
of fixed-rate debt securities.  Longer-term bonds are generally more
sensitive to interest rate changes than shorter-term bonds.

U.S. Government Securities are high-quality instruments issued or
guaranteed as to principal or interest by the U.S. Treasury or by an agency
or instrumentality of the U.S. Government.  Not all U.S. Government
Securities are backed by the full faith and credit of the United States.
Some are backed by the right of the issuer to borrow from the U.S.
Treasury; others are backed by discretionary authority of the U.S.
Government to purchase the agencies' obligations; while others are
supported only by the credit of the instrumentality.  In the case of
securities not backed by the full faith and credit of the United States,
the investor must look principally to the agency issuing or guaranteeing
the obligation for ultimate repayment.

Zero coupon bonds do not make interest payments; instead, they are sold at
a deep discount from their face value and are redeemed at face value when
they mature.  Because zero coupon bonds do not pay current income, their
prices can be very volatile when interest rates change.  In calculating its
dividends, the Fund takes into account as income a portion of the
difference between a zero coupon bond's purchase price and its face value.

Subject to its investment restrictions, the Fund may invest in debt
securities rated in any rating category of the established rating services,
including securities in the lowest rating category (such as those rated D
by Standard & Poor's Ratings Services ("S&P") and C by Moody's Investors
Service, Inc. ("MIS")).  In addition, the Fund will treat unrated
securities judged by WRIMCO to be of equivalent quality to a rated security
to be equivalent to securities having that rating.  Debt securities rated
at least BBB by S&P or Baa by MIS are considered to be investment grade
securities.  Securities rated BBB or Baa may have speculative
characteristics.  Debt securities rated D by S&P or C by MIS are in payment
default and are regarded as having extremely poor prospects of ever
attaining any real investment standing.  Credit ratings for individual
securities may change from time to time, and the Fund may retain a
portfolio security whose rating has been changed.  See the SAI for
additional information about non-investment grade debt securities.

Policies and Restrictions:  In the case of U.S. Government Securities
issued by an agency or instrumentality that are not backed by the full
faith and credit of the United States, the Fund will invest in such
securities only when WRIMCO is satisfied that the credit risk with respect
to such agency or instrumentality is acceptable.

Preferred Stock.  The Fund may invest in preferred stock rated in any
rating category by an established rating service and unrated preferred
stock judged by WRIMCO to be of equivalent quality.

Convertible Securities.  A convertible security is a bond, debenture, note,
preferred stock or other security that may be converted into or exchanged
for a prescribed amount of common stock of the same or a different issuer
within a particular period of time at a specified price or formula.  A
convertible security entitles the holder to receive interest paid or
accrued on debt or the dividend paid on preferred stock until the
convertible security matures or is redeemed, converted or exchanged.
Convertible securities have unique investment characteristics in that they
generally have higher yields than those of common stocks of the same or
similar issuers, but lower yields than comparable nonconvertible
securities, are less subject to fluctuation in value than the underlying
stock because they have fixed income characteristics, and provide the
potential for capital appreciation if the market price of the underlying
common stock increases.

The value of a convertible security is influenced by changes in interest
rates, with investment value declining as interest rates increase and
increasing as interest rates decline.  The credit standing of the issuer
and other factors also may have an effect on the convertible security's
investment value.

Policies and Restrictions:  The Fund does not intend to invest more than 5%
of its assets in non-investment grade debt securities.  The Fund has no
policy limiting the maturity of the debt instruments in which it invests.

Foreign Securities and foreign currencies can involve significant risks in
addition to the risks inherent in U.S. investments.  The value of
securities denominated in or indexed to foreign currencies, and of
dividends and interest from such securities, can change significantly when
foreign currencies strengthen or weaken relative to the U.S. dollar.
Foreign securities markets generally have less trading volume and less
liquidity than U.S. markets, and prices on some foreign markets can be
highly volatile.  Many foreign countries lack uniform accounting and
disclosure standards comparable to those applicable to U.S. companies, and
it may be more difficult to obtain reliable information regarding an
issuer's financial condition and operations.  In addition, the costs of
foreign investing, including withholding taxes, brokerage commissions and
custodial costs, are generally higher than for U.S. investments.

Foreign markets may offer less protection to investors than U.S. markets.
Foreign issuers, brokers and securities markets may be subject to less
government supervision.  Foreign security trading practices, including
those involving the release of assets in advance of payment, may involve
increased risks in the event of a failed trade or the insolvency of a
broker-dealer, and may involve substantial delays.  It may also be
difficult to enforce legal rights in foreign countries.

Investing abroad also involves different political and economic risks.
Foreign investments may be affected by actions of foreign governments
adverse to the interests of U.S. investors, including the possibility of
expropriation or nationalization of assets, confiscatory taxation,
restrictions on U.S. investment or on the ability to repatriate assets or
convert currency into U.S. dollars, or other government intervention.
There may be a greater possibility of default by foreign governments or
foreign government-sponsored enterprises.  Investments in foreign countries
also involve a risk of local political, economic, or social instability,
military action or unrest, or adverse diplomatic developments.  There is no
assurance that WRIMCO will be able to anticipate these potential events or
counter their effects.

The considerations noted above generally are intensified for investments in
developing countries.  A developing country is a nation that, in WRIMCO's
opinion, is likely to experience long-term gross domestic product growth
above that expected to occur in the United States, the United Kingdom,
France, Germany, Italy, Japan and Canada.  Developing countries may have
relatively unstable governments, economies based on only a few industries
and securities markets that trade a small number of securities.

Certain foreign securities impose restrictions on transfer within the
United States or to U.S. persons.  Although securities subject to transfer
restrictions may be marketable abroad, they may be less liquid than foreign
securities of the same class that are not subject to such restrictions.

When purchasing foreign securities, the Fund may purchase American
Depository Receipts, which are certificates issued by U.S. depositories
representing the right to receive securities of a foreign issuer deposited
with that or another depository, and may also purchase securities of a
foreign issuer directly in the foreign market.

Policies and Restrictions:  The Fund may purchase an unlimited amount of
foreign securities.  The Fund currently intends to limit its investment in
obligations of any single foreign government to less than 25% of its total
assets.

Options, Futures and Other Strategies.  The Fund may use certain options
and indexed securities to attempt to enhance income or yield or may attempt
to reduce the overall risk of its investments by using certain options,
futures contracts, forward currency contracts and certain other strategies
described herein.  The strategies described below may be used in an attempt
to manage certain risks of the Fund's investments that can affect
fluctuation in its net asset value.

The Fund's ability to use these strategies may be limited by market
conditions, regulatory limits and tax considerations.  The Fund might not
use any of these strategies, and there can be no assurance that any
strategy that is used will succeed.  The risks associated with such
strategies are described below.  Also see the SAI for more information on
these instruments and strategies and their risk considerations.

Options.  The Fund may engage in certain strategies involving options to
attempt to enhance the Fund's income or yield or to attempt to reduce the
overall risk of its investments.  A call option gives the purchaser the
right to buy, and obligates the writer to sell, the underlying investment
at the agreed upon exercise price during the option period.  A put option
gives the purchaser the right to sell, and obligates the writer to buy, the
underlying investment at the agreed upon exercise price during the option
period.  Purchasers of options pay an amount, known as a premium, to the
option writer in exchange for the right under the option contract.

Options offer large amounts of leverage, which will result in the Fund's
net asset value being more sensitive to changes in the value of the related
investment.  There is no assurance that a liquid secondary market will
exist for exchange-listed options. The market for options that are not
listed on an exchange may be less active than the market for exchange-
listed options.  The Fund will be able to close a position in an option it
has written only if there is a market for the put or call.  If the Fund is
not able to enter into a closing transaction on an option it has written,
it will be required to maintain the securities subject to the call or the
collateral underlying the put until a closing purchase transaction can be
entered into or the option expires.

Policies and Restrictions:  As a fundamental policy, the Fund may purchase
and write (sell) put and call options only on U.S. Government Securities
(except that the Fund may write call options on securities whether or not
they are U.S. Government Securities) and the options on futures contracts
described below, subject to certain restrictions that are set forth in the
SAI.

As a fundamental policy, the Fund may write calls on securities only if the
calls are covered calls (i.e., the Fund must own the related investments or
other investments acceptable for escrow arrangements).

As a fundamental policy, the Fund may only purchase or write options if
they are listed on a domestic securities or commodities exchange or quoted
on Nasdaq, except the Fund may purchase optional delivery standby
commitments.

The Fund will only write puts on securities when it would be willing to
purchase the underlying security at the exercise price.

Futures Contracts and Options on Futures Contracts.  When the Fund
purchases a futures contract, it incurs an obligation to take delivery of a
specified amount of the obligation underlying the contract at a specified
time in the future for a specified price.  When the Fund sells a futures
contract, it incurs an obligation to deliver the specified amount of the
underlying obligation at a specified time in return for an agreed upon
price.

When the Fund writes an option on a futures contract, it becomes obligated,
in return for the premium paid, to assume a position in a futures contract
at a specified exercise price at any time during the term of the option.
If the Fund has written a call, it assumes a short futures position.  If it
has written a put, it assumes a long futures position.  When the Fund
purchases an option on a futures contract, it acquires a right in return
for the premium it pays to assume a position in a futures contract (a long
position if the option is a call and a short position if the option is a
put).

Policies and Restrictions:  As a fundamental policy, the Fund may only buy
and sell futures contracts relating to U.S. Government Securities ("U.S.
Government Securities Futures") and options thereon.  As a fundamental
policy, the Fund may buy and sell only listed options on U.S. Government
Securities Futures.

Forward Contracts and Currencies.  The Fund may enter into forward currency
contracts for the purchase or sale of a specified currency at a specified
future date either with respect to specific transactions or with respect to
portfolio positions in order to minimize the risk to the Fund from adverse
changes in the relationship between the U.S. dollar and foreign currencies.
For example, when WRIMCO anticipates purchasing or selling a security, the
Fund may enter into a forward contract in order to set the exchange rate at
which the transaction will be made.  The Fund also may enter into a forward
contract to sell an amount of a foreign currency approximating the value of
some or all of the Fund's securities positions denominated in such
currency.  The Fund may also use forward contracts in one currency or a
basket of currencies to attempt to hedge against fluctuations in the value
of securities denominated in a different currency if WRIMCO anticipates
that there will be a correlation between the two currencies.

Successful use of forward currency contracts will depend on WRIMCO's skill
in analyzing and predicting currency values.  Forward contracts may
substantially change the Fund's investment exposure to changes in currency
exchange rates, and could result in losses to the Fund if currencies do not
perform as WRIMCO anticipates.  There is no assurance that WRIMCO's use of
forward currency contracts will be advantageous to the Fund or that it will
hedge at an appropriate time.

Currency conversion involves dealer spreads and other costs, although
commissions usually are not charged.

Policies and Restrictions:  As a fundamental policy, the Fund may not have
more than 15% of the value of its assets committed to the consummation of
forward currency contracts.  As a fundamental policy, the Fund will not
enter into forward currency contracts or maintain a net exposure to forward
currency contracts where the consummation of such contracts would obligate
the Fund to deliver an amount of foreign currency in excess of the value of
its portfolio securities or other assets denominated in that currency.

As a fundamental policy, the Fund may hold foreign currency only in
connection with forward currency contracts, only up to four business days,
as well as in connection with the purchase or sale of foreign securities,
but not otherwise.

Generally, the Fund will not enter into a forward currency contract with a
term of greater than one year.

Indexed Securities.  The Fund may purchase and sell indexed securities,
which are securities whose prices are indexed to the prices of other
securities, securities indices, currencies, precious metals or other
commodities, or other financial indicators.  Indexed securities typically,
but not always, are debt securities or deposits whose value at maturity or
coupon rate is determined by reference to a specific instrument or
statistic.  The performance of indexed securities depends to a great extent
on the performance of the security, currency, or other instrument to which
they are indexed, and may also be influenced by interest rate changes in
the U.S. and abroad.  At the same time, indexed securities are subject to
the credit risks associated with the issuer of the security, and their
values may decline substantially if the issuer's creditworthiness
deteriorates.  Indexed securities may be more volatile than the underlying
instruments.

Mortgage-Backed Securities may include pools of mortgages, such as
collateralized mortgage obligations, and stripped mortgage-backed
securities.  The value of these securities may be significantly affected by
changes in interest rates, the market's perception of the issuers and the
creditworthiness of the parties involved.

The yield characteristics of mortgage-backed securities differ from those
of traditional debt securities.  Among the major differences are that
interest and principal payments are made more frequently on mortgage-backed
securities and that principal may be prepaid at any time because the
underlying mortgage loans generally may be prepaid at any time.  As a
result, if the Fund purchases these securities at a premium, a prepayment
rate that is faster than expected will reduce yield to maturity while a
prepayment rate that is slower than expected will have the opposite effect
of increasing yield to maturity.  Conversely, if the Fund purchases these
securities at a discount, faster than expected prepayments will increase,
while slower than expected prepayments will reduce, yield to maturity.
Accelerated prepayments on securities purchased by the Fund at a premium
also impose a risk of loss of principal because the premium may not have
been fully amortized at the time the principal is repaid in full.

Timely payment of principal and interest on pass-through securities of the
Government National Mortgage Association (but not the Federal Home Loan
Mortgage Corporation or the Federal National Mortgage Association) is
guaranteed by the full faith and credit of the United States.  This is not
a guarantee against market decline of the value of these securities or
shares of the Fund.  It is possible that the availability and marketability
(i.e., liquidity) of these securities could be adversely affected by
actions of the U.S. Government to tighten the availability of its credit.

Stripped Securities are the separate income or principal components of a
debt instrument.  These involve risks that are similar to those of other
debt securities, although they may be more volatile.  The prices of
stripped mortgage-backed securities may be particularly affected by changes
in interest rates.

Risks of Derivative Instruments.  The use of options, futures contracts,
options on futures contracts, and forward contracts, and the investment in
indexed securities, stripped securities and mortgage-backed securities
involve special risks, including (i) possible imperfect or no correlation
between price movements of the portfolio investments (held or intended to
be purchased) involved in the transaction and price movements of the
instruments involved in the transaction, (ii) possible lack of a liquid
secondary market for any particular instrument at a particular time, (iii)
the need for additional portfolio management skills and techniques, (iv)
losses due to unanticipated market price movements, (v) the fact that,
while such strategies can reduce the risk of loss, they can also reduce the
opportunity for gain, or even result in losses, by offsetting favorable
price movements in investments involved in the transaction, (vi) incorrect
forecasts by WRIMCO concerning interest or currency exchange rates or
direction of price fluctuations of the investment involved in the
transaction, which may result in the strategy being ineffective, (vii) loss
of premiums paid by the Fund on options it purchases, and (viii) the
possible inability of the Fund to purchase or sell a portfolio security at
a time when it would otherwise be favorable for it to do so, or the
possible need for the Fund to sell a portfolio security at a
disadvantageous time, due to the need for the Fund to maintain "cover" or
to segregate securities in connection with such transactions and the
possible inability of the Fund to close out or liquidate its position.

For a hedging strategy to be completely effective, the price change of the
hedging instrument must equal the price change of the investment being
hedged.  The risk of imperfect correlation of these price changes increases
as the composition of the Fund's portfolio diverges from instruments
underlying a hedging instrument.  Such equal price changes are not always
possible because the investment underlying the hedging instruments may not
be the same investment that is being hedged.  WRIMCO will attempt to create
a closely correlated hedge but hedging activity may not be completely
successful in eliminating market value fluctuation.

WRIMCO may use derivative instruments, including securities with embedded
derivatives, for hedging purposes to adjust the risk characteristics of the
Fund's portfolio of investments and may use some of these instruments to
adjust the return characteristics of the Fund's portfolio of investments.
An embedded derivative is a derivative that is part of another financial
instrument.  Embedded derivatives typically, but not always, are debt
securities whose return of principal or interest, in part, is determined by
reference to something that is not intrinsic to the security itself.  The
use of derivative techniques for speculative purposes can increase
investment risk.  If WRIMCO judges market conditions incorrectly or employs
a strategy that does not correlate well with the Fund's investments, these
techniques could result in a loss, regardless of whether the intent was to
reduce risk or increase return.  These techniques may increase the
volatility of the Fund and may involve a small investment of cash relative
to the magnitude of the risk assumed.  In addition, these techniques could
result in a loss if the counterparty to the transaction does not perform as
promised or if there is not a liquid secondary market to close out a
position that the Fund has entered into.

The ordinary spreads between prices in the cash and futures markets, due to
the differences in the natures of those markets, are subject to distortion.
Due to the possibility of distortion, a correct forecast of general
interest rate, foreign currency exchange rate or stock market trends by
WRIMCO may still not result in a successful transaction.  WRIMCO may be
incorrect in its expectations as to the extent of various interest or
foreign currency exchange rate movements or stock market movements or the
time span within which the movements take place.

Options and futures transactions may increase portfolio turnover rates,
which results in correspondingly greater commission expenses and
transaction costs and may result in certain tax consequences.

New financial products and risk management techniques continue to be
developed.  The Fund may use these instruments and techniques to the extent
consistent with its goal, investment policies and regulatory requirements
applicable to investment companies.

When-Issued and Delayed-Delivery Transactions are trading practices in
which payment and delivery for the securities take place at a future date.
The market value of a security could change during this period, which could
affect the Fund's yield.

When purchasing securities on a delayed-delivery basis, the Fund assumes
the rights and risks of ownership, including the risk of price and yield
fluctuations.  When the Fund has sold a security on a delayed-delivery
basis, the Fund does not participate in further gains or losses with
respect to the security.  If the other party to a delayed-delivery
transaction fails to deliver or pay for the securities, the Fund could miss
a favorable price or yield opportunity, or could suffer a loss.

Policies and Restrictions:  The Fund may only purchase U.S. Government
Securities on a when-issued or delayed-delivery basis, or sell them on a
delayed-delivery basis.

Repurchase Agreements.  In a repurchase agreement, the Fund buys a security
at one price and simultaneously agrees to sell it back at a higher price.
Delays or losses could result if the other party to the agreement defaults
or becomes insolvent.

Restricted and Illiquid Securities.  Restricted securities are securities
that are subject to legal or contractual restrictions on resale.
Restricted securities may be illiquid due to restrictions on their resale.
Certain restricted securities may be determined to be liquid in accordance
with guidelines adopted by the Fund's Board of Directors.

Illiquid investments may be difficult to sell promptly at an acceptable
price.  Difficulty in selling securities may result in a loss or may be
costly to the Fund.

Policies and Restrictions:  As a fundamental policy, the Fund may not
purchase restricted securities, except that the Fund may invest not more
than 5% of its total assets in restricted foreign securities.

The Fund may not purchase a security if, as a result, more than 10% of its
net assets would consist of illiquid investments.

Diversification.  Diversifying the Fund's investment portfolio can reduce
the risks of investing.  This may include limiting the amount of money
invested in any one issuer or, on a broader scale, in any one industry.  As
described above, however, the Fund intends to concentrate in gold and other
minerals-related securities.

Policies and Restrictions:  As a fundamental policy, the Fund may not buy a
security if, as a result, it would own more than 10% of the voting
securities or any class of securities of an issuer, or if more than 5% of
the Fund's total assets would be invested in securities of that issuer.

As a fundamental policy, the Fund may not buy a security if, as a result,
more than 25% of the Fund's total assets would then be invested in
securities of companies in any one industry; however, the Fund intends to
concentrate in gold and other minerals-related securities.

Borrowing.  If the Fund borrows money, its share price may be subject to
greater fluctuation until the borrowing is paid off.

If the Fund makes additional investments while borrowings are outstanding,
this may be considered a form of leverage.

Policies and Restrictions:  As a fundamental policy, the Fund may not
borrow for investment purposes.  As a fundamental policy, the Fund may
borrow money only from banks, as a temporary measure or for extraordinary
or emergency purposes but only up to 5% of its total assets.  The Fund does
not intend to borrow for temporary measures; however, it may borrow to
cover redemptions or settlements of securities transactions.

Lending.  Securities loans may be made on a short-term or long-term basis
for the purpose of increasing the Fund's income.  This practice could
result in a loss or a delay in recovering the Fund's securities.  Loans
will be made only to parties deemed by WRIMCO to be creditworthy.

Policies and Restrictions:  As a fundamental policy, the Fund may not lend
more than 30% of its assets at any one time, and such loans must be on a
collateralized basis in accordance with applicable regulatory requirements.

Other Instruments may include warrants and securities of closed-end
investment companies.  As a shareholder in an investment company, the Fund
would bear its pro rata share of that investment company's expenses, which
could result in duplication of certain fees, including management and
administrative fees.

Policies and Restrictions:  The Fund may invest up to 2% of its assets in
warrants.  Warrants acquired in units or attached to other securities are
not considered for purposes of computing this limitation.

As a fundamental policy, the Fund may buy shares of other investment
companies that do not redeem their shares only if it does so in a regular
transaction in the open market and only if not more than 10% of the Fund's
total assets would be invested in these shares, or as part of a merger or
consolidation.  The Fund does not intend to invest more than 5% of its
assets in such securities.

The Fund will not purchase securities of unseasoned issuers, including
predecessor companies, which have been in operation for less than three
years, if the value of its investment in such securities would exceed 5% of
its total assets.

<PAGE>
About Your Account

The different ways to set up (register) your account are listed below.

                        Ways to Set Up Your Account

-------------------------------------------------

Individual or Joint Tenants
For your general investment needs

Individual accounts are owned by one person.  Joint accounts have two or
more owners (tenants).

-------------------------------------------------

Business or Organization
For investment needs of corporations, associations, partnerships,
institutions or other groups

-------------------------------------------------

Retirement
To shelter your retirement savings from taxes

Retirement plans allow individuals to shelter investment income and capital
gains from current taxes.  In addition, contributions to these accounts may
be tax deductible.

  Individual Retirement Accounts (IRAs) allow anyone of legal age and
  under 70 1/2 with earned income to invest up to $2,000 per tax year.
  The maximum is $2,250 if the investor's spouse has less than $250 of
  earned income in the taxable year.

  Rollover IRAs retain special tax advantages for certain distributions
  from employer-sponsored retirement plans.

  Simplified Employee Pension Plans (SEP - IRAs) provide small business
  owners or those with self-employed income (and their eligible employees)
  with many of the same advantages as a Keogh, but with fewer
  administrative requirements.

  Keogh Plans allow self-employed individuals to make tax-deductible
  contributions for themselves up to 25% of their annual earned income,
  with a maximum of $30,000 per year.

  401(k) Programs allow employees of corporations of all sizes to
  contribute a percentage of their wages on a tax-deferred basis.  These
  accounts need to be established by the administrator or trustee of the
  plan.

  403(b) Custodial Accounts are available to employees of public school
  systems or certain types of charitable organizations.

  457 Accounts allow employees of state and local governments and certain
  charitable organizations to contribute a portion of their compensation
  on a tax-deferred basis.

-------------------------------------------------

Gifts or Transfers to a Minor
To invest for a child's education or other future needs

These custodial accounts provide a way to give money to a child and obtain
tax benefits.  An individual can give up to $10,000 a year per child
without paying Federal gift tax.  Depending on state laws, you can set up a
custodial account under the Uniform Gifts to Minors Act ("UGMA") or the
Uniform Transfers to Minors Act ("UTMA").

-------------------------------------------------

Trust
For money being invested by a trust

The trust must be established before an account can be opened, or you may
use a trust form made available by Waddell & Reed.  Contact your Waddell &
Reed account representative for the form.

-------------------------------------------------

Buying Shares

You may buy shares of the Fund through Waddell & Reed, Inc. and its account
representatives.  To open your account you must complete and sign an
application.  Your Waddell & Reed account representative can help you with
any questions you might have.

The price to buy a share of the Fund, called the offering price, is
calculated every business day.

The offering price of a Class A share (price to buy one Class A share) is
the Fund's Class A net asset value ("NAV") plus the sales charge shown in
the table below.

                 Sales
          Sales  Charge
         Charge    as
           as   Approx.
         PercentPercent
           of      of
Size of Offering Amount
Purchase  Price Invested
-----------------------
Under
$100,000  5.75%  6.10%

$100,000
to less
than
$200,000  4.75    4.99

$200,000
to less
than
$300,000  3.50    3.63

$300,000
to less
than
$500,000  2.50    2.56

$500,000
to less
than
$1,000,0001.50    1.52

$1,000,000
to less
than
$2,000,0001.00    1.01

$2,000,000
and over  0.00    0.00

The Fund's Class A NAV is the value of a single share.  The Class A NAV is
computed by adding, with respect to that class, the value of the Fund's
investments, cash and other assets, subtracting its liabilities, and then
dividing the result by the number of Class A shares outstanding.

The securities in the Fund's portfolio that are listed or traded on an
exchange are valued primarily using market quotations or, if market
quotations are not available, at their fair value in a manner determined in
good faith by or at the direction of the Board of Directors.  Bonds are
generally valued according to prices quoted by a dealer in bonds that
offers a pricing service.  Short-term debt securities are valued at
amortized cost, which approximates market value.  Other assets are valued
at their fair value by or at the direction of the Board of Directors.

The Fund is open for business each day the New York Stock Exchange (the
"NYSE") is open.  The Fund normally calculates the net asset values of its
shares as of the later of the close of business of the NYSE, normally 4
p.m. Eastern time, or the close of the regular session of any other
securities or commodities exchange on which an option held by the Fund is
traded.

The Fund may invest in securities listed on foreign exchanges which may
trade on Saturdays or on customary U.S. national business holidays when the
NYSE is closed.  Consequently, the NAV of Fund shares may be significantly
affected on days when the Fund does not price its shares and when you have
no access to the Fund.

When you place an order to buy shares, your order will be processed at the
next offering price calculated after your order is received and accepted.
Note the following:

  Orders are accepted only at the home office of Waddell & Reed, Inc.
  All of your purchases must be made in U.S. dollars.
  If you buy shares by check, and then sell those shares by any method
  other than by exchange to another fund in the United Group, the payment
  may be delayed for up to ten days to ensure that your previous
  investment has cleared.

When you sign your account application, you will be asked to certify that
your Social Security or taxpayer identification number is correct and
whether you are subject to  backup withholding for failing to report income
to the IRS.

Waddell & Reed, Inc. reserves the right to reject any purchase orders,
including purchases by exchange, and it and the Fund reserve the right to
discontinue offering Fund shares for purchase.

Lower sales charges are available by combining additional purchases of
Class A shares of any of the funds in the United Group, to the extent
otherwise permitted, except United Municipal Bond Fund, Inc., United Cash
Management, Inc., United Government Securities Fund, Inc. and United
Municipal High Income Fund, Inc., with the net asset value of Class A
shares already held ("rights of accumulation") and by grouping all
purchases of Class A shares made during a thirteen-month period ("Statement
of Intention").  Shares of a corresponding class of another fund purchased
through a contractual plan may not be included unless the plan has been
completed.  Purchases by certain related persons may be grouped.
Additional information and applicable forms are available from Waddell &
Reed account representatives.

Class A shares may be purchased at NAV by the Directors and officers of the
Fund, employees of Waddell & Reed, Inc., employees of their affiliates,
account representatives of Waddell & Reed, Inc. and the spouse, children,
parents, children's spouses and spouse's parents of each such Director,
officer, employee and account representative.  Purchases of Class A shares
in certain retirement plans and certain trusts for these persons may also
be made at NAV.  Purchases of Class A shares in a 401(k) plan having 100 or
more eligible employees and purchases of Class A shares in a 457 plan
having 100 or more eligible employees may be made at NAV.  Shares may also
be issued at NAV in a merger, acquisition or exchange offer made pursuant
to a plan of reorganization to which the Fund is a party.

Minimum Investments

To Open an Account  $500

For certain exchanges    $100

For certain retirement accounts and accounts opened with Automatic
Investment Service  $50

For certain retirement accounts and accounts opened through payroll
deductions for or by employees of WRIMCO, Waddell & Reed, Inc. and their
affiliates     $25

To Add to an Account

For certain exchanges    $100

For Automatic Investment Service   $25


Adding to Your Account

Subject to the minimums described under "Minimum Investments," you can make
additional investments of any amount at any time.

To add to your account, make your check payable to Waddell & Reed, Inc.
Mail the check along with:

  the detachable form that accompanies the confirmation of a prior
  purchase by you or your year-to-date statement; or

  a letter showing your account number, the account registration and
  stating the fund whose shares you wish to purchase.

Mail to Waddell & Reed, Inc. at the address printed on your confirmation or
year-to-date statement.


Selling Shares

You can arrange to take money out of your Fund account at any time by
selling (redeeming) some or all of your shares.

The redemption price (price to sell one Class A share) is the Fund's Class
A NAV.

To sell shares, your request must be made in writing.

Complete an Account Service Request form, available from your Waddell &
Reed account representative, or write a letter of instruction with:

  the name on the account registration;
  the Fund's name,
  the Fund account number;
  the dollar amount or number of shares to be redeemed; and
  any other applicable requirements listed in the table below.

Deliver the form or your letter to your Waddell & Reed account
representative, or mail it to:

Waddell & Reed, Inc.
P. O. Box 29217
Shawnee Mission, Kansas
66201-9217

Unless otherwise instructed, Waddell & Reed will send a check to the
address on the account.

                  Special Requirements for Selling Shares

Account Type     Special Requirements
Individual or    The written instructions must
Joint Tenant     be signed by all persons
                 required to sign for
                 transactions, exactly as their
                 names appear on the account.
Sole             The written instructions must
Proprietorship   be signed by the individual
                 owner of the business.
UGMA, UTMA       The custodian must sign the
                 written instructions
                 indicating capacity as
                 custodian.
Retirement       The written instructions must
Account          be signed by a properly
                 authorized person.
Trust            The trustee must sign the
                 written instructions
                 indicating capacity as
                 trustee.  If the trustee's
                 name is not in the account
                 registration, provide a
                 currently certified copy of
                 the trust document.
Business or      At least one person authorized
Organization     by corporate resolution to act
                 on the account must sign the
                 written instructions.
Conservator,     The written instructions must
Guardian or      be signed by the person
Other Fiduciary  properly authorized by court
                 order to act in the particular
                 fiduciary capacity.

When you place an order to sell shares, your shares will be sold at the
next NAV calculated after receipt of a written request in good order by
Waddell & Reed, Inc. at its home office.  Note the following:

  If more than one person owns the shares, each owner must sign the
  written request.
  If you hold a certificate, it must be properly endorsed and sent to the
  Fund.
  If you recently purchased the shares by check, the Fund may delay
  payment of redemption proceeds.  You may arrange for the bank upon which
  the purchase check was drawn to provide to the Fund telephone or written
  assurance, satisfactory to the Fund, that the check has cleared and been
  honored.  If no such assurance is given, payment of the redemption
  proceeds on these shares will be delayed until the earlier of 10 days or
  the date the Fund is able to verify that your purchase check has cleared
  and been honored.
  Redemptions may be suspended or payment dates postponed on days when the
  NYSE is closed (other than weekends or holidays), when trading on the
  NYSE is restricted or as permitted by the Securities and Exchange
  Commission.
  Payment is normally made in cash, although under extraordinary
  conditions redemptions may be made in portfolio securities.

The Fund reserves the right to require a signature guarantee on certain
redemption requests.  This requirement is designed to protect you and
Waddell & Reed from fraud.  The Fund may require a signature guarantee in
certain situations such as:

  the request for redemption is made by a corporation, partnership or
  fiduciary;
  the request for redemption is made by someone other than the owner of
  record; or
  the check is being made payable to someone other than the owner of
  record.

The Fund will accept a signature guarantee from a national bank, a
federally chartered savings and loan or a member firm of a national stock
exchange or other eligible guarantor in accordance with procedures of the
Fund's transfer agent.  A notary public cannot provide a signature
guarantee.

The Fund reserves the right to redeem at NAV all shares of the Fund owned
or held by you having an aggregate NAV of less than $500.  The Fund will
give you notice of its intention to redeem your shares and a 60-day
opportunity to purchase a sufficient number of additional shares to bring
the aggregate NAV of your shares to $500.

You may reinvest without charge all or part of the amount you redeemed by
sending to the Fund the amount you want to reinvest.  The reinvested
amounts must be received by the Fund within thirty days after the date of
your redemption.  You may do this only once as to Class A shares of the
Fund.

Under the terms of the 401(k) prototype plan which Waddell & Reed, Inc. has
available, the plan may have the right to make a loan to a plan participant
by redeeming Fund shares held by the plan.  Principal and interest payments
on the loan made in accordance with the terms of the plan may be reinvested
by the plan, without payment of a sales charge, in Class A shares of any of
the funds in the United Group in which the plan may invest.

Shareholder Services

Waddell & Reed provides a variety of services to help you manage your
account.

Personal Service

Your local Waddell & Reed account representative is available to provide
personal service.  Additionally, the Waddell & Reed Customer Services staff
is available to respond promptly to your inquiries and requests.

Reports

Statements and reports sent to you include the following:

  confirmation statements (after every purchase, exchange, transfer or
  redemption)
  year-to-date statements (quarterly)
  annual and semiannual reports (every six months)

To reduce expenses, only one copy of annual and semiannual reports will be
mailed to your household, even if you have more than one account with the
Fund.  Call 913-236-2000 if you need copies of annual or semiannual reports
or historical account information.

Exchanges

You may sell your Class A shares and buy Class A shares of other funds in
the United Group.  You may exchange only into funds that are legally
registered for sale in your state of residence.  Note that exchanges out of
the Fund may have tax consequences for you.  Before exchanging into a fund,
read its prospectus.

The Fund reserves the right to terminate or modify these exchange
privileges at any time, upon notice in certain instances.

Automatic Transactions

Flexible withdrawal service lets you set up monthly, quarterly, semiannual
or annual redemptions from your account.

Regular investment plans allow you to transfer money into your Fund account
automatically.  While regular investment plans do not guarantee a profit
and will not protect you against loss in a declining market, they can be an
excellent way to invest for retirement, a home, educational expenses and
other long-term financial goals.

Certain restrictions and fees imposed by the plan custodian may also apply
for retirement accounts.  Speak with your Waddell & Reed account
representative for more information.

                         Regular Investment Plans

Automatic Investment Service
To move money from your bank account to an existing Fund account

          Minimum        Frequency
          $25            Monthly

Funds Plus Service To move money from United Cash Management, Inc. to the
Fund whether in the same or a different account

          Minimum        Frequency
          $100           Monthly

Dividends, Distributions and Taxes

Distributions

The Fund distributes substantially all of its net investment income and net
capital gains to shareholders each year.  Ordinarily, dividends are
distributed from the Fund's net investment income, which includes accrued
interest, earned discount, dividends and other income earned on portfolio
assets less expenses, quarterly in March, June, September and December.
Net capital gains (and any net realized gains from foreign currency
transactions) ordinarily are distributed in December.  The Fund may make
additional distributions if necessary to avoid Federal income or excise
taxes on certain undistributed income and capital gains.

Distribution Options.  When you open an account, specify on your
application how you want to receive your distributions.  The Fund offers
three options:

1.  Share Payment Option.  Your dividend and capital gains distributions
will be automatically paid in additional Class A shares of the Fund.  If
you do not indicate a choice on your application, you will be assigned this
option.

2.  Income-Earned Option.  Your capital gains distributions will be
automatically paid in Class A shares, but you will be sent a check for each
dividend distribution.

3.  Cash Option.  You will be sent a check for your dividend and capital
gains distributions.

For retirement accounts, all distributions are automatically paid in Class
A shares.

Taxes

The Fund has qualified and intends to continue to qualify for treatment as
a regulated investment company under the Internal Revenue Code of 1986, as
amended, so that it will be relieved of Federal income tax on that part of
its investment company taxable income (consisting generally of net
investment income, net short-term capital gain and net gains from certain
foreign currency transactions) and net capital gain (the excess of net
long-term capital gain over net short-term capital loss) that are
distributed to its shareholders.

There are certain requirements that the Fund must follow in order to avoid
Federal taxation.  In its effort to adhere to these requirements, the Fund
may have to limit its investment activity in some types of instruments.

As with any investment, you should consider how your investment in the Fund
will be taxed.  If your account is not a tax-deferred retirement account,
you should be aware of the following tax implications:

Taxes on distributions.  Dividends from the Fund's investment company
taxable income are taxable to you as ordinary income, whether received in
cash or paid in additional Fund shares.  Distributions of the Fund's net
capital gains, when designated as such, are taxable to you as long-term
capital gains, whether received in cash or paid in additional Fund shares
and regardless of the length of time you have owned your shares.  The Fund
notifies you after each calendar year-end as to the amounts of dividends
and other distributions paid (or deemed paid) to you for that year.  Under
certain circumstances, the Fund may elect to permit shareholders to take a
credit or deduction for foreign income taxes paid by the Fund.  The Fund
will notify you of any such election.

A portion of the dividends paid by the Fund, whether received in cash or
paid in additional Fund shares, may be eligible for the dividends-received
deduction allowed to corporations.  The eligible portion may not exceed the
aggregate dividends received by the Fund from U.S. corporations.  However,
dividends received by a corporate shareholder and deducted by it pursuant
to the dividends-received deduction are subject indirectly to the
alternative minimum tax.

Withholding.  The Fund is required to withhold 31% of all dividends,
capital gains distributions and redemption proceeds payable to individuals
and certain other noncorporate shareholders who do not furnish the Fund
with a correct taxpayer identification number.  Withholding at that rate
from dividends and capital gains distributions also is required for such
shareholders who otherwise are subject to backup withholding.

Taxes on transactions.  Your redemption of Fund shares will result in
taxable gain or loss to you, depending on whether the redemption proceeds
are more or less than your adjusted basis for the redeemed shares (which
normally includes any sales charge paid).  An exchange of Fund shares for
shares of any other fund in the United Group generally will have similar
tax consequences.  However, special rules apply when you dispose of Fund
shares through a redemption or exchange within ninety days after your
purchase thereof and subsequently reacquire Fund shares or acquire shares
of another fund in the United Group without paying a sales charge due to
the thirty-day reinvestment privilege or exchange privilege.  See "About
Your Account."  In these cases, any gain on the disposition of the Fund
shares would be increased, or loss decreased, by the amount of the sales
charge you paid when those shares were acquired, and that amount will
increase the adjusted basis of the shares subsequently acquired.  In
addition, if you purchase Fund shares within thirty days before or after
redeeming other Fund shares (regardless of class) at a loss, part or all of
that loss will not be deductible and will increase the basis of the newly
purchased shares.

The foregoing is only a summary of some of the important Federal tax
considerations generally affecting the Fund and its shareholders.  There
may be other Federal, state or local tax considerations applicable to a
particular investor.  You are urged to consult your own tax adviser.

<PAGE>
About the Management and Expenses of the Fund

United Gold & Government Fund, Inc. is a mutual fund:  an investment that
pools shareholders' money and invests it toward a specified goal.  In
technical terms, the Fund is an open-end diversified management investment
company organized as a corporation under Maryland law on February 28, 1985.

The Fund is governed by a Board of Directors, which has overall
responsibility for the management of its affairs.  The majority of
directors are not affiliated with Waddell & Reed, Inc.

The Fund has two classes of shares.  Prior to February 19, 1996, the Fund
offered only one class of shares to the public.  Shares outstanding on that
date were designated as Class A shares, which are offered by this
Prospectus.  In addition, the Fund offers Class Y shares through a separate
prospectus.  Class Y shares are designed for institutional investors.
Class Y shares are not subject to a sales charge on purchases and are not
subject to redemption fees.  Class Y shares are not subject to a Rule 12b-1
fee.  Additional information about Class Y shares may be obtained by
calling 913-236-2000 or by writing to Waddell & Reed, Inc. at the address
on the inside back cover of this Prospectus.

The Fund does not hold annual meetings of shareholders; however, certain
significant corporate matters, such as the approval of a new investment
advisory agreement or a change in a fundamental investment policy, which
require shareholder approval will be presented to shareholders at a meeting
called by the Board of Directors for such purpose.

Special meetings of shareholders may be called for any purpose upon receipt
by the Fund of a request in writing signed by shareholders holding not less
than 25% of all shares entitled to vote at such meeting, provided certain
conditions stated in the Bylaws of the Fund are met.  There will normally
be no meeting of the shareholders for the purpose of electing directors
until such time as less than a majority of directors holding office have
been elected by shareholders, at which time the directors then in office
will call a shareholders' meeting for the election of directors.  To the
extent that Section 16(c) of the Investment Company Act of 1940, as amended
(the "1940 Act"), applies to the Fund, the directors are required to call a
meeting of shareholders for the purpose of voting upon the question of
removal of any director when requested in writing to do so by the
shareholders of record of not less than 10% of the Fund's outstanding
shares.

Each share (regardless of class) has one vote.  All shares of the Fund vote
together as a single class, except as to any matter for which a separate
vote of any class is required by the 1940 Act, and except as to any matter
which affects the interests of one or more particular classes, in which
case only the shareholders of the affected classes are entitled to vote,
each as a separate class.  Shares are fully paid and nonassessable when
purchased.

WRIMCO and Its Affiliates

The Fund is managed by WRIMCO, subject to the authority of the Fund's Board
of Directors.  WRIMCO provides investment advice to the Fund and supervises
the Fund's investments.  Waddell & Reed, Inc. and its predecessors served
as investment manager to each of the registered investment companies in the
United Group of Mutual Funds, except United Asset Strategy Fund, Inc.,
since 1940 or the inception of the company, whichever was later, and to
TMK/United Funds, Inc. since that fund's inception, until January 8, 1992,
when it assigned its duties as investment manager and assigned its
professional staff for investment management services to WRIMCO.  WRIMCO
has also served as investment manager for Waddell & Reed Funds, Inc. since
its inception in September 1992, and United Asset Strategy Fund, Inc. since
it commenced operations in March 1995.

   Michael D. Avery is primarily responsible for the day-to-day management
of the Fund.  Mr. Avery has held his Fund responsibilities since February
1, 1994.  He is Vice President of WRIMCO, Vice President of Waddell & Reed
Asset Management Company, an affiliate of WRIMCO, and Vice President of the
Fund.  Mr. Avery has served as the portfolio manager for investment
companies managed by Waddell & Reed, Inc. and its successor, WRIMCO, since
February 1, 1994, has served as the director of research of Waddell & Reed,
Inc. and its successor, WRIMCO, since August 1987, and has been an employee
of Waddell & Reed, Inc. and its successor, WRIMCO, since June 1981.  Other
members of WRIMCO's investment management department provide input on
market outlook, economic conditions, investment research and other
considerations relating to the Fund's investments.    

Waddell & Reed, Inc. serves as the Fund's underwriter and as underwriter
for each of the other funds in the United Group of Mutual Funds and Waddell
& Reed Funds, Inc., and serves as the distributor for TMK/United Funds,
Inc.

Waddell & Reed Services Company acts as transfer agent ("Shareholder
Servicing Agent") for the Fund and processes the payments of dividends.
Waddell & Reed Services Company also acts as agent ("Accounting Services
Agent") in providing bookkeeping and accounting services and assistance to
the Fund and pricing daily the value of its shares.

WRIMCO and Waddell & Reed Services Company are subsidiaries of Waddell &
Reed, Inc.  Waddell & Reed, Inc. is a direct subsidiary of Waddell & Reed
Financial Services, Inc., a holding company, and an indirect subsidiary of
United Investors Management Company, a holding company, and Torchmark
Corporation, a holding company.

WRIMCO places transactions for the portfolio of the Fund and in doing so
may consider sales of shares of the Fund and other funds it manages as a
factor in the selection of brokers to execute portfolio transactions.

Breakdown of Expenses

Like all mutual funds, the Fund pays fees related to its daily operations.
Expenses paid out of the Fund's assets are reflected in its share price or
dividends; they are neither billed directly to shareholders nor deducted
from shareholder accounts.

The Fund pays a management fee to WRIMCO for providing investment advice
and supervising its investments.  The Fund also pays other expenses, which
are explained below.

Management Fee

The management fee of the Fund is calculated by adding a group fee to a
specific fee.  It is accrued and paid to WRIMCO daily.

The specific fee is computed on the Fund's net asset value as of the close
of business each day at the annual rate of .30 of 1% of its net assets.
The group fee is a pro rata participation based on the relative net asset
size of the Fund in the group fee computed each day on the combined net
asset values of all the funds in the United Group at the annual rates shown
in the following table:

Group Fee Rate

               Annual
Group Net      Group
Asset Level    Fee Rate
(all dollars   For Each
in millions)   Level
------------   --------

From $0
to $750       .51 of 1%

From $750
to $1,500     .49 of 1%

From $1,500
to $2,250     .47 of 1%

From $2,250
to $3,000     .45 of 1%

From $3,000
to $3,750     .43 of 1%

From $3,750
to $7,500     .40 of 1%

From $7,500
to $12,000    .38 of 1%

Over $12,000  .36 of 1%

Growth in assets of the United Group assures a lower group fee rate.

   The combined net asset values of all of the funds in the United Group
were approximately $13.6 billion as of December 31, 1995.  Management fees
for the fiscal year ended December 31, 1995 were 0.71% of the Fund's
average net assets.    

Other Expenses

While the management fee is a significant component of the Fund's annual
operating costs, the Fund has other expenses as well.

The Fund pays the Accounting Services Agent a monthly fee based on the
average net assets of the Fund for accounting services.  With respect to
its Class A shares, the Fund pays the Shareholder Servicing Agent a monthly
fee for each Class A shareholder account that was in existence at any time
during the month, and a fee for each account on which a dividend or
distribution had a record date during the month.

The Fund has adopted a Service Plan pursuant to Rule 12b-1 of the 1940 Act
with respect to its Class A shares.  Under the Plan, the Fund may pay
monthly a fee to Waddell & Reed, Inc. in an amount not to exceed .25% of
the Fund's average annual net assets of its Class A shares.  The fee is to
be paid to reimburse Waddell & Reed, Inc. for amounts it expends in
connection with the provision of personal services to Class A shareholders
and/or maintenance of Class A shareholder accounts.  In particular, the
Service Plan and a related Service Agreement between the Fund and Waddell &
Reed, Inc. contemplate that these expenditures may include costs and
expenses incurred by Waddell & Reed, Inc. and its affiliates in
compensating, training and supporting registered account representatives,
sales managers and/or other appropriate personnel in providing personal
services to Class A shareholders and/or maintaining Class A shareholder
accounts; increasing services provided to Class A shareholders by office
personnel located at field sales offices; engaging in other activities
useful in providing personal services to Class A shareholders and/or the
maintenance of Class A shareholder accounts; and in compensating broker-
dealers who may regularly sell Class A shares, and other third parties, for
providing Class A shareholder services and/or maintaining Class A
shareholder accounts.

   The total expenses for the fiscal year ended December 31, 1995 for the
Fund's Class A shares were 1.66% of the average net assets of the Fund's
Class A shares.    

A portfolio turnover rate is, in general, the percentage computed by taking
the lesser of purchases or sales of portfolio securities for a year and
dividing it by the monthly average of such securities during the year,
excluding certain short-term securities and bullion.  Since the turnover
rate of the Fund will be affected by a number of factors, the Fund is
unable to predict what rate the Fund will have in any particular period or
periods, although such rate is not expected to exceed 100%.  However, the
rate could be substantially higher or lower in any particular period.  The
factors that may affect the rate include moving from a position emphasizing
gold and other minerals-related securities to a position emphasizing U.S.
Government Securities or vice versa and the possible necessary sales of
securities to meet redemptions.  The Fund may engage in short-term trading
and have a high portfolio turnover.

<PAGE>
United Gold & Government Fund, Inc.

Custodian                     Underwriter
  UMB Bank, n.a.                Waddell & Reed, Inc.
  Kansas City, Missouri         6300 Lamar Avenue
                                P. O. Box 29217
Legal Counsel                   Shawnee Mission, Kansas
  Kirkpatrick & Lockhart LLP       66201-9217
  1800 Massachusetts Avenue, N. W. (913) 236-2000
  Washington, D. C.  20036
                              Shareholder Servicing Agent
Independent Accountants         Waddell & Reed
  Price Waterhouse LLP             Services Company
  Kansas City, Missouri         6300 Lamar Avenue
                                P. O. Box 29217
Investment Manager              Shawnee Mission, Kansas
  Waddell & Reed Investment        66201-9217
     Management Company         (913) 236-1579
  6300 Lamar Avenue
  P. O. Box 29217             Accounting Services Agent
  Shawnee Mission, Kansas       Waddell & Reed
     66201-9217                    Services Company
  (913) 236-2000                6300 Lamar Avenue
                                P. O. Box 29217
                                Shawnee Mission, Kansas
                                    66201-9217
                                (913) 236-2000

Our INTERNET address is:
  http://www.waddell.com

<PAGE>
United Gold & Government Fund, Inc.
Class A Shares
PROSPECTUS
February 19, 1996

The United Group of Mutual Funds
United Asset Strategy Fund, Inc.
United Cash Management, Inc.
United Continental Income Fund, Inc.
United Funds, Inc.
     United Bond Fund
     United Income Fund
     United Accumulative Fund
     United Science and Technology Fund
United Gold & Government Fund, Inc.
United Government Securities Fund, Inc.
United High Income Fund, Inc.
United High Income Fund II, Inc.
United International Growth Fund, Inc.
United Municipal Bond Fund, Inc.
United Municipal High Income Fund, Inc.
United New Concepts Fund, Inc.
United Retirement Shares, Inc.
United Vanguard Fund, Inc.

NUP2013(2-96)

printed on recycled paper

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Please read this Prospectus before investing, and keep it on file for
future reference.  It sets forth concisely the information about the Fund
that you ought to know before investing.

Additional information has been filed with the Securities and Exchange
Commission and is contained in a Statement of Additional Information
("SAI") dated February 19, 1996.  The SAI is available free upon request to
the Fund or Waddell & Reed, Inc., the Fund's underwriter, at the address or
telephone number below.  The SAI is incorporated by reference into this
Prospectus and you will not be aware of all facts unless you read both this
Prospectus and the SAI.

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.  ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.


United Gold & Government Fund, Inc.
Class Y Shares
This Fund seeks a high total return through investment s in precious
metals, minerals-related securities or U.S. Government securities.

This Prospectus describes one class of shares of the Fund -- Class Y
Shares.

Prospectus
February 19, 1996

UNITED GOLD & GOVERNMENT FUND, INC.
6300 Lamar Avenue
P. O. Box 29217
Shawnee Mission, Kansas
66201-9217
913-236-2000

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Table of Contents

AN OVERVIEW OF THE FUND..................   3    

EXPENSES.................................   5    

FINANCIAL HIGHLIGHTS.....................   6    

PERFORMANCE..............................   7    
 Explanation of Terms ...................   7    

ABOUT WADDELL & REED.....................   8    

ABOUT THE INVESTMENT PRINCIPLES OF THE FUND   9    
 Investment Goals and Principles ........   9    
   Risk Considerations .................   11    
 Securities and Investment Practices ...   13    

ABOUT YOUR ACCOUNT......................   26    
 Buying Shares .........................   26    
 Minimum Investments ...................   28    
 Adding to Your Account ................   28    
 Selling Shares ........................   28    
 Telephone Transactions ................   30    
 Shareholder Services ..................   30    
   Personal Service ....................   30    
   Reports .............................   30    
   Exchanges ...........................   31    
 Dividends, Distributions and Taxes ....   31    
   Distributions .......................   31    
   Taxes ...............................   31    

ABOUT THE MANAGEMENT AND EXPENSES OF THE FUND   34    
 WRIMCO and Its Affiliates .............   35    
 Breakdown of Expenses .................   36    
   Management Fee ......................   36    
   Other Expenses ......................   37    

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An Overview of the Fund

The Fund:  This Prospectus describes the Class Y shares of United Gold &
Government Fund, Inc., an open-end, diversified management investment
company.

Goals and Strategies:  United Gold & Government Fund, Inc. (the "Fund")
seeks a high total return through investments in precious metals, minerals-
related securities or U.S. Government Securities.  The Fund's portfolio
will generally include minerals-related securities and gold, silver and
platinum during periods of actual or expected inflation or when the
environment for investment in precious metals appears to be favorable, and
U.S. Government Securities during periods of actual or expected
disinflation or low inflation.  See "About the Investment Principles of the
Fund" for further information.

Management:  Waddell & Reed Investment Management Company ("WRIMCO")
provides investment advice to the Fund and manages the Fund's investments.
WRIMCO is a wholly-owned subsidiary of Waddell & Reed, Inc.  WRIMCO,
Waddell & Reed, Inc. and its predecessors have provided investment
management services to registered investment companies since 1940.  See
"About the Management and Expenses of the Fund" for further information
about management fees.

Distributor:  Waddell & Reed, Inc. acts as principal underwriter and
distributor of the shares of the Fund.

Purchases:  You may buy Class Y shares of the Fund through Waddell & Reed,
Inc. and its account representatives.  The price to buy a Class Y share of
the Fund is the net asset value of a Class Y share.  There is no sales
charge incurred upon purchase of Class Y shares of the Fund.  See "About
Your Account" for information on how to purchase Class Y shares.

Redemptions:  You may redeem your shares at net asset value.  When you sell
your shares, they may be worth more or less than what you paid for them.
See "About Your Account" for a description of redemption procedures.

   Who May Want to Invest:  The Fund is designed for investors who are
willing to accept significant risks with the opportunity to participate in
potentially high returns.  You should consider whether the Fund fits with
your particular investment objectives.    

Risk Considerations

The Fund is subject to significant risks associated with gold and other
minerals-related securities, foreign securities and precious metals.  The
value of the Fund's investments and the income generated will vary from day
to day, generally reflecting changes in interest rates, market conditions
and other company and economic news.  Performance will also depend on
WRIMCO's skill in selecting investments.  See "About the Investment
Principles of the Fund" for information about the risks associated with the
Fund's investments.

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Expenses

Shareholder transaction expenses are charges you pay when you buy or sell
shares of a fund.

Maximum sales load
on purchases   None

Maximum sales load
on reinvested
dividends      None

Deferred
sales load     None

Redemption fees     None

Exchange fee   None

Annual Fund operating expenses (as a percentage of average net assets).4
   
Management fees     0.71%
12b-1 fees     None
Other expenses 0.46%
Total Fund operating expenses      1.17%    

Example:  You would pay the following expenses on a $1,000 investment,
assuming (1) 5% annual return5 and (2) redemption at the end of each time
period:
   
1 year    $12
3 years   $37    

The purpose of this table is to assist you in understanding the various
costs and expenses that a shareholder of the Class Y shares of the Fund
will bear directly or indirectly.  The example should not be considered a
representation of past or future expenses; actual expenses may be greater
or lesser than those shown.  For a more complete discussion of certain
expenses and fees, see "Breakdown of Expenses."

                    
4Expense ratios are based on the management fees and other Fund-level
expenses of the Fund for the fiscal year ended December 31, 1995, and the
expenses attributable to the Class Y shares that are anticipated for the
current year.  Actual expenses may be greater or lesser than those shown.
5Use of an assumed annual return of 5% is for illustration purposes only
and is not a representation of the Fund's future performance, which may be
greater or lesser.

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Financial Highlights

Financial Highlights for Class Y shares are not included because the Fund
did not offer Class Y shares during the fiscal year ended December 31,
1995.

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Performance

   Mutual fund performance is commonly measured as total return.  The Fund
may also advertise its performance by showing performance rankings.
Performance information is calculated and presented separately for each
class of Fund shares.    

Explanation of Terms

Total Return is the overall change in value of an investment in the Fund
over a given period, assuming reinvestment of any dividends and
distributions.  A cumulative total return reflects actual performance over
a stated period of time.  An average annual total return is a hypothetical
rate of return that, if achieved annually, would have produced the same
cumulative total return if performance had been constant over the entire
period.  Average annual total returns smooth out variations in performance;
they are not the same as actual year-by-year results.  Non-standardized
total return may be for periods other than those required to be presented
or may otherwise differ from standardized total return.

Performance Rankings are comparisons of the Fund's performance to the
performance of other selected mutual funds, selected recognized market
indicators such as the Standard & Poor's 500 Stock Index and the Dow Jones
Industrial Average, or non-market indices or averages of mutual fund
industry groups.  The Fund may quote its performance rankings and/or other
information as published by recognized independent mutual fund statistical
services or by publications of general interest.  In connection with a
ranking, the Fund may provide additional information, such as the
particular category to which it relates, the number of funds in the
category, the criteria upon which the ranking is based and the effect of
sales charges, fee waivers and/or expense reimbursements.

All performance information that the Fund advertises or includes in
information provided to present or prospective shareholders is historical
in nature and is not intended to represent or guarantee future results.
The value of the Fund's shares when redeemed may be more or less than their
original cost.

The Fund's recent performance and holdings will be detailed twice a year in
the Fund's annual and semiannual reports, which are sent to all Fund
shareholders.

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About Waddell & Reed

Since 1937, Waddell & Reed has been helping people make the most of their
financial future by helping them take advantage of various financial
services.  Today, Waddell & Reed has over 2500 account representatives
located throughout the United States.  Your primary contact in your
dealings with Waddell & Reed will be your local account representative.
However, the Waddell & Reed shareholder services department, which is part
of the Waddell & Reed headquarters operations in Overland Park, Kansas, is
available to assist you and your Waddell & Reed account representative.
You may speak with a customer service representative by calling 913-236-
2000.

<PAGE>
About the Investment Principles of the Fund

Investment Goals and Principles

The goal of the Fund is to seek a high total return to investors.  The Fund
seeks to achieve this goal by investing in (i) minerals-related securities
and gold, silver and platinum during periods of actual or expected
inflation, (ii) securities issued or guaranteed by the U.S. Government or
its agencies or instrumentalities ("U.S. Government Securities") during
periods of actual or expected disinflation or low inflation, and (iii)
gold, silver and platinum during periods when the environment for
investment in precious metals appears to be favorable.  Minerals-related
securities are securities that offer an investment participation in the
mining, processing, production, exploration, refining or sales of gold,
platinum, silver or hydrocarbons.  There is no assurance that the Fund will
achieve its goal.

During past inflationary periods, minerals-related securities and precious
metals, such as gold, silver and platinum, generally have increased in
value, while the value of debt securities has tended to decrease due to
rising interest rates.  Conversely, during periods of disinflation or low
inflation, the value of debt securities has generally increased, while the
value of minerals-related securities and precious metals has decreased.
Low inflation is considered to be generally in the 3% to 6% range, as
measured by the Consumer Price Index.  Also, during periods of declining
stock prices, the prices of gold, silver and platinum may increase or
remain stable, while the value of minerals-related securities may be
subject to a general decline experienced by the stock market as a whole.
Based on these historical trends, WRIMCO will attempt to anticipate
inflationary and disinflationary periods and manage the Fund's investments
in a manner designed to achieve the Fund's goal.

As a matter of fundamental policy, the Fund will not invest in other than
(i) those minerals-related securities that are related to the mining,
processing, production, exploration, refining or sales of gold, (ii) U.S.
Government Securities, and/or (iii) gold, silver and platinum if thereafter
less than 65% of its total assets would be invested in these investments.
The Fund may invest in securities other than minerals-related securities,
U.S. Government Securities and gold, silver or platinum, subject to this
65% test and to the other restrictions set forth in this Prospectus and the
SAI.

It is a fundamental policy of the Fund to concentrate its investments
(i.e., invest more than 25% of its assets) in an industry related to gold
and other minerals during periods of actual or anticipated inflation and up
to 100% of its assets may be so invested.  During periods of actual or
expected disinflation or low inflation, up to 100% of the Fund's assets may
be invested in U.S. Government Securities of varying maturities and not
more than 25% of the Fund's assets will be invested in gold and other
minerals-related securities.  When the Fund is invested in minerals-related
securities, it is anticipated that a substantial portion, and up to 100%,
of its assets will be invested in foreign securities.  See "Foreign
Securities."  The securities that the Fund may own include debt securities,
preferred stock, common stock and convertible securities.

WRIMCO believes that this strategy will allow the Fund to achieve a higher
total return than could be achieved if it remained invested in minerals-
related securities and precious metals during periods of low inflation or
disinflation because the income and value of minerals-related securities
and precious metals might decline during periods of disinflation or low
inflation.  During such periods, WRIMCO expects that higher income can be
achieved and that capital will be better preserved by investing in U.S.
Government Securities.  It is expected that, during periods of disinflation
and low inflation, a greater portion of the total return of the Fund will
be attributable to income achieved through investment in U.S. Government
Securities.  It is expected that, during inflationary periods, a greater
portion of the total return of the Fund will be attributable to
appreciation from investment in minerals-related securities and precious
metals.

WRIMCO will evaluate numerous economic and monetary factors in making a
determination as to whether the economy is in or is likely to enter into an
inflationary or disinflationary period.  Among the factors WRIMCO will
evaluate are changes in governmental fiscal and monetary policy, rates of
changes in the Consumer Price Index, and actual and anticipated changes and
rate of change in the value of the U.S. dollar in relation to other key
foreign currencies, short- and long-term interest rates, and the money
supply.  For example, when WRIMCO believes that the economy is in an
inflationary cycle or an inflationary cycle is expected because of rising
interest rates, a decline in the value of the U.S. dollar, and a higher
rate of change in the Consumer Price Index, the Fund generally will
concentrate in minerals-related securities.  On the other hand, when
interest rates are declining, the value of the U.S. dollar is increasing,
and the rate of change in the Consumer Price Index is declining, the Fund
generally will invest in U.S. Government Securities.  However, WRIMCO will
take into account factors other than those given in these examples and
WRIMCO's subjective judgment of all factors it deems relevant precludes the
application of any formulas or mechanical determinations in assessing the
state of the economy.  WRIMCO's evaluation takes into consideration
political instability in certain parts of the world as well as domestic and
international economic factors.

Risk Considerations

There are risks inherent in any investment.  The Fund is subject to varying
degrees of market risk, financial risk and, in some cases, prepayment risk.
Market risk is the potential for fluctuations in the price of the security
or other asset because of market factors.  Because of market risks, you
should anticipate that the share price of the Fund will fluctuate.
Financial risk is based on the financial situation of the issuer.  The
financial risk of the Fund depends on the credit quality of the underlying
securities.  Prepayment risk is the possibility that, during periods of
falling interest rates, a debt security with a high stated interest rate
will be prepaid prior to its expected maturity date.

Because the Fund owns different types of investments, its performance will
be affected by a variety of factors.  The value of the Fund's investments
and the income it generates will vary from day to day, generally reflecting
changes in interest rates, market conditions, and other company and
economic news.

The Fund may also invest in certain derivative instruments, including
options, futures contracts, options on futures contracts, forward currency
contracts, indexed securities, stripped securities and mortgage-backed
securities.  The use of derivative instruments involves special risks.  See
"Risks of Derivative Instruments" for further information on the risks of
investing in these instruments.

Investments in minerals-related securities and precious metals are
considered speculative and involve substantial risks and special
considerations, including the following:

Risk of Price Fluctuations.  Metals and minerals prices are affected by
various factors such as economic conditions, political events, monetary
policies and other factors.  As a result, prices of minerals-related
securities and of gold, silver and platinum may fluctuate sharply.

Concentration of Source of Gold Supply and Control of Gold Sales.  The six
largest producers of gold are the Republic of South Africa, the United
States, Australia, Commonwealth of Independent States (the "CIS," formerly
the Union of Soviet Socialist Republics), Canada and China.  Economic,
social and political conditions and objectives prevailing in these
countries may have a direct effect on the production and marketing of
newly-produced gold and sales of central bank gold holdings.  In South
Africa, the activities of companies engaged in gold mining are subject to
the policies adopted by the Ministry of Mines.  The Reserve Bank of South
Africa, as the sole authorized sales agent for South African gold, has an
influence on the price and timing of sales of South African gold.  As South
Africa is the largest producer of gold, social upheaval and related
economic difficulties in South Africa may, from time to time, influence the
price of gold and the share values of mining companies involved in South
Africa and elsewhere.  Investors should understand the special
considerations and risks related to an investment emphasis in securities of
South African issuers and its potential effects on the Fund's per share
value.  The Fund may invest up to 100% of its assets in securities of South
African issuers.

Unpredictable International Monetary Policies, Economic and Political
Conditions.  There is the possibility that, under unusual international
monetary or political conditions, the Fund's assets might be less liquid or
that the change in value of its assets might be more volatile than would be
the case with other investments.  In particular, the price of gold is
affected by direct and indirect use of it to settle net deficits and
surpluses between nations.  Because the prices of metals and minerals may
be affected by unpredictable international monetary policies and economic
conditions, there may be greater likelihood of a more dramatic impact upon
the market price of the Fund's investments than of other investments.

Foreign Securities.  A major portion of the Fund's assets will usually be
invested in foreign securities during periods of actual or anticipated
inflation.  See "Foreign Securities" below.

Failure to Anticipate Changes in Economic Cycles.  In addition to the risks
discussed above, the Fund's investment success will be dependent to a high
degree on WRIMCO's ability to anticipate the onset and termination of
inflationary and disinflationary cycles.  A failure to anticipate a
disinflationary cycle could result in the Fund's assets being
disproportionately invested in minerals-related securities.  Conversely, a
failure to predict an inflationary cycle could result in the Fund's assets
being disproportionately invested in U.S. Government Securities.  The
Fund's investment success will be dependent to a high degree on the
validity of the premise that the values of minerals-related securities will
move in a different direction than the values of U.S. Government Securities
during periods of inflation or disinflation.  If the values of both types
of securities move down during the same period of time, the value of the
shareholder's investment will decline rather than stabilize or increase, as
anticipated, regardless of whether the Fund is invested in minerals-related
securities or U.S. Government Securities.

Securities and Investment Practices

The following pages contain more detailed information about types of
instruments in which the Fund may invest, and strategies WRIMCO may employ
in pursuit of the Fund's goal.  A summary of risks associated with these
instrument types and investment practices is included as well.

WRIMCO might not buy all of these instruments or use all of these
techniques to the full extent permitted by the Fund's investment policies
and restrictions unless it believes that doing so will help the Fund
achieve its goal.  As a shareholder, you will receive annual and semiannual
reports detailing the Fund's holdings.

Certain of the investment policies and restrictions of the Fund are noted
above; others are stated below.  A fundamental policy of the Fund may not
be changed without the approval of the shareholders of the Fund.  Operating
policies may be changed by the Board of Directors without the approval of
the affected shareholders.  The goal of the Fund is a fundamental policy.
Unless otherwise indicated, the types of securities and other assets in
which the Fund may invest and other policies are operating policies.

Policies and limitations are typically considered at the time of purchase;
the sale of instruments is usually not required in the event of a
subsequent change in circumstances.

Please see the SAI for further information concerning the following
instruments and associated risks and the Fund's investment policies and
restrictions.

Precious Metals.  The ownership of precious metals may allow the Fund to
take advantage of those periods of time when the outlook for the price of
gold, silver and platinum is favorable while the outlook for the share
prices of minerals-related securities may be unfavorable.  For example,
during periods of declining stock prices, the price of gold may increase or
remain stable, while the value of gold-related securities may be subject to
the same general decline experienced by the stock market as a whole.  Under
these or similar circumstances, the ability of the Fund to purchase and
hold gold, silver or platinum will allow it to benefit from a potential
increase in the price of precious metals or stability in the price of such
metals at a time when the value of minerals-related securities may be
declining.

The Fund's ability to purchase platinum may allow the Fund to invest in
platinum without the risks associated with owning shares of South African
and CIS companies engaged in the production of platinum.  While the Fund is
authorized to invest in South African and CIS issuers, investments in South
Africa and in the CIS are subject to the risks associated with the
unsettled political and social conditions prevailing in that country and
neighboring countries.

The Fund anticipates that gold, silver and platinum will be purchased in
the form of bullion or coins or in the form of vault or other negotiable
receipts representing ownership of these metals.  The Fund may incur
expenses for the shipping, storage and insurance of precious metals it
purchases.

Precious metals prices are affected by various factors, such as economic
conditions, political events and monetary policies.  As a result, the price
of gold, silver or platinum may fluctuate widely.  The sole source of
return to the Fund from such investments will be gains realized on sales; a
negative return will be realized if the metal is sold at a loss.
Investments in precious metals do not provide a yield.

Ownership of gold, silver and platinum may be prohibited by any one or more
of the states in which shares of the Fund are sold.  In the event that any
state prohibits such investment, the Fund may elect not to make such
investments.  In addition, the Fund's direct investment in these precious
metals may be limited by tax considerations.  See "Taxes" in the SAI.

Policies and Restrictions:  As a fundamental policy, the Fund may not
invest more than 25% of its total assets in gold, silver and platinum.

Equity Securities.  Equity securities represent an ownership interest in an
issuer.  This ownership interest often gives an investor the right to vote
on measures affecting the issuer's organization and operations.  Although
common stocks and other equity securities have a history of long-term
growth in value, their prices tend to fluctuate in the short term,
particularly those of smaller companies.  The equity securities in which
the Fund invests may include preferred stock that converts to common stock
either automatically or after a specified period of time or at the option
of the issuer.

Debt Securities.  Bonds and other debt instruments are used by issuers to
borrow money from investors.  The issuer pays the investor a fixed or
variable rate of interest, and must repay the amount borrowed at maturity.
Some debt securities, such as zero coupon bonds, do not pay current
interest, but are purchased at a discount from their face values.  The debt
securities in which the Fund invests may include debt securities whose
performance is linked to a specified equity security or securities index.

Debt securities have varying levels of sensitivity to changes in interest
rates and varying degrees of quality.  As a general matter, however, when
interest rates rise, the values of fixed-rate debt securities fall and,
conversely, when interest rates fall, the values of fixed-rate debt
securities rise.  The values of floating and adjustable-rate debt
securities are not as sensitive to changes in interest rates as the values
of fixed-rate debt securities.  Longer-term bonds are generally more
sensitive to interest rate changes than shorter-term bonds.

U.S. Government Securities are high-quality instruments issued or
guaranteed as to principal or interest by the U.S. Treasury or by an agency
or instrumentality of the U.S. Government.  Not all U.S. Government
Securities are backed by the full faith and credit of the United States.
Some are backed by the right of the issuer to borrow from the U.S.
Treasury; others are backed by discretionary authority of the U.S.
Government to purchase the agencies' obligations; while others are
supported only by the credit of the instrumentality.  In the case of
securities not backed by the full faith and credit of the United States,
the investor must look principally to the agency issuing or guaranteeing
the obligation for ultimate repayment.

Zero coupon bonds do not make interest payments; instead, they are sold at
a deep discount from their face value and are redeemed at face value when
they mature.  Because zero coupon bonds do not pay current income, their
prices can be very volatile when interest rates change.  In calculating its
dividends, the Fund takes into account as income a portion of the
difference between a zero coupon bond's purchase price and its face value.

Subject to its investment restrictions, the Fund may invest in debt
securities rated in any rating category of the established rating services,
including securities in the lowest rating category (such as those rated D
by Standard & Poor's Ratings Services ("S&P") and C by Moody's Investors
Service, Inc. ("MIS")).  In addition, the Fund will treat unrated
securities judged by WRIMCO to be of equivalent quality to a rated security
to be equivalent to securities having that rating.  Debt securities rated
at least BBB by S&P or Baa by MIS are considered to be investment grade
securities.  Securities rated BBB or Baa may have speculative
characteristics.  Debt securities rated D by S&P or C by MIS are in payment
default and are regarded as having extremely poor prospects of ever
attaining any real investment standing.  Credit ratings for individual
securities may change from time to time, and the Fund may retain a
portfolio security whose rating has been changed.  See the SAI for
additional information about non-investment grade debt securities.

Policies and Restrictions:  In the case of U.S. Government Securities
issued by an agency or instrumentality that are not backed by the full
faith and credit of the United States, the Fund will invest in such
securities only when WRIMCO is satisfied that the credit risk with respect
to such agency or instrumentality is acceptable.

Preferred Stock.  The Fund may invest in preferred stock rated in any
rating category by an established rating service and unrated preferred
stock judged by WRIMCO to be of equivalent quality.

Convertible Securities.  A convertible security is a bond, debenture, note,
preferred stock or other security that may be converted into or exchanged
for a prescribed amount of common stock of the same or a different issuer
within a particular period of time at a specified price or formula.  A
convertible security entitles the holder to receive interest paid or
accrued on debt or the dividend paid on preferred stock until the
convertible security matures or is redeemed, converted or exchanged.
Convertible securities have unique investment characteristics in that they
generally have higher yields than those of common stocks of the same or
similar issuers, but lower yields than comparable nonconvertible
securities, are less subject to fluctuation in value than the underlying
stock because they have fixed income characteristics, and provide the
potential for capital appreciation if the market price of the underlying
common stock increases.

The value of a convertible security is influenced by changes in interest
rates, with investment value declining as interest rates increase and
increasing as interest rates decline.  The credit standing of the issuer
and other factors also may have an effect on the convertible security's
investment value.

Policies and Restrictions:  The Fund does not intend to invest more than 5%
of its assets in non-investment grade debt securities.  The Fund has no
policy limiting the maturity of the debt instruments in which it invests.

Foreign Securities and foreign currencies can involve significant risks in
addition to the risks inherent in U.S. investments.  The value of
securities denominated in or indexed to foreign currencies, and of
dividends and interest from such securities, can change significantly when
foreign currencies strengthen or weaken relative to the U.S. dollar.
Foreign securities markets generally have less trading volume and less
liquidity than U.S. markets, and prices on some foreign markets can be
highly volatile.  Many foreign countries lack uniform accounting and
disclosure standards comparable to those applicable to U.S. companies, and
it may be more difficult to obtain reliable information regarding an
issuer's financial condition and operations.  In addition, the costs of
foreign investing, including withholding taxes, brokerage commissions and
custodial costs, are generally higher than for U.S. investments.

Foreign markets may offer less protection to investors than U.S. markets.
Foreign issuers, brokers and securities markets may be subject to less
government supervision.  Foreign security trading practices, including
those involving the release of assets in advance of payment, may involve
increased risks in the event of a failed trade or the insolvency of a
broker-dealer, and may involve substantial delays.  It may also be
difficult to enforce legal rights in foreign countries.

Investing abroad also involves different political and economic risks.
Foreign investments may be affected by actions of foreign governments
adverse to the interests of U.S. investors, including the possibility of
expropriation or nationalization of assets, confiscatory taxation,
restrictions on U.S. investment or on the ability to repatriate assets or
convert currency into U.S. dollars, or other government intervention.
There may be a greater possibility of default by foreign governments or
foreign government-sponsored enterprises.  Investments in foreign countries
also involve a risk of local political, economic, or social instability,
military action or unrest, or adverse diplomatic developments.  There is no
assurance that WRIMCO will be able to anticipate these potential events or
counter their effects.

The considerations noted above generally are intensified for investments in
developing countries.  A developing country is a nation that, in WRIMCO's
opinion, is likely to experience long-term gross domestic product growth
above that expected to occur in the United States, the United Kingdom,
France, Germany, Italy, Japan and Canada.  Developing countries may have
relatively unstable governments, economies based on only a few industries
and securities markets that trade a small number of securities.

Certain foreign securities impose restrictions on transfer within the
United States or to U.S. persons.  Although securities subject to transfer
restrictions may be marketable abroad, they may be less liquid than foreign
securities of the same class that are not subject to such restrictions.

When purchasing foreign securities, the Fund may purchase American
Depository Receipts, which are certificates issued by U.S. depositories
representing the right to receive securities of a foreign issuer deposited
with that or another depository, and may also purchase securities of a
foreign issuer directly in the foreign market.

Policies and Restrictions:  The Fund may purchase an unlimited amount of
foreign securities.  The Fund currently intends to limit its investment in
obligations of any single foreign government to less than 25% of its total
assets.

Options, Futures and Other Strategies.  The Fund may use certain options
and indexed securities to attempt to enhance income or yield or may attempt
to reduce the overall risk of its investments by using certain options,
futures contracts, forward currency contracts and certain other strategies
described herein.  The strategies described below may be used in an attempt
to manage certain risks of the Fund's investments that can affect
fluctuation in its net asset value.

The Fund's ability to use these strategies may be limited by market
conditions, regulatory limits and tax considerations.  The Fund might not
use any of these strategies, and there can be no assurance that any
strategy that is used will succeed.  The risks associated with such
strategies are described below.  Also see the SAI for more information on
these instruments and strategies and their risk considerations.

Options.  The Fund may engage in certain strategies involving options to
attempt to enhance the Fund's income or yield or to attempt to reduce the
overall risk of its investments.  A call option gives the purchaser the
right to buy, and obligates the writer to sell, the underlying investment
at the agreed upon exercise price during the option period.  A put option
gives the purchaser the right to sell, and obligates the writer to buy, the
underlying investment at the agreed upon exercise price during the option
period.  Purchasers of options pay an amount, known as a premium, to the
option writer in exchange for the right under the option contract.

Options offer large amounts of leverage, which will result in the Fund's
net asset value being more sensitive to changes in the value of the related
investment.  There is no assurance that a liquid secondary market will
exist for exchange-listed options. The market for options that are not
listed on an exchange may be less active than the market for exchange-
listed options.  The Fund will be able to close a position in an option it
has written only if there is a market for the put or call.  If the Fund is
not able to enter into a closing transaction on an option it has written,
it will be required to maintain the securities subject to the call or the
collateral underlying the put until a closing purchase transaction can be
entered into or the option expires.

Policies and Restrictions:  As a fundamental policy, the Fund may purchase
and write (sell) put and call options only on U.S. Government Securities
(except that the Fund may write call options on securities whether or not
they are U.S. Government Securities) and the options on futures contracts
described below, subject to certain restrictions that are set forth in the
SAI.

As a fundamental policy, the Fund may write calls on securities only if the
calls are covered calls (i.e., the Fund must own the related investments or
other investments acceptable for escrow arrangements).

As a fundamental policy, the Fund may only purchase or write options if
they are listed on a domestic securities or commodities exchange or quoted
on Nasdaq, except the Fund may purchase optional delivery standby
commitments.

The Fund will only write puts on securities when it would be willing to
purchase the underlying security at the exercise price.

Futures Contracts and Options on Futures Contracts.  When the Fund
purchases a futures contract, it incurs an obligation to take delivery of a
specified amount of the obligation underlying the contract at a specified
time in the future for a specified price.  When the Fund sells a futures
contract, it incurs an obligation to deliver the specified amount of the
underlying obligation at a specified time in return for an agreed upon
price.

When the Fund writes an option on a futures contract, it becomes obligated,
in return for the premium paid, to assume a position in a futures contract
at a specified exercise price at any time during the term of the option.
If the Fund has written a call, it assumes a short futures position.  If it
has written a put, it assumes a long futures position.  When the Fund
purchases an option on a futures contract, it acquires a right in return
for the premium it pays to assume a position in a futures contract (a long
position if the option is a call and a short position if the option is a
put).

Policies and Restrictions:  As a fundamental policy, the Fund may only buy
and sell futures contracts relating to U.S. Government Securities ("U.S.
Government Securities Futures") and options thereon.  As a fundamental
policy, the Fund may buy and sell only listed options on U.S. Government
Securities Futures.

Forward Contracts and Currencies.  The Fund may enter into forward currency
contracts for the purchase or sale of a specified currency at a specified
future date either with respect to specific transactions or with respect to
portfolio positions in order to minimize the risk to the Fund from adverse
changes in the relationship between the U.S. dollar and foreign currencies.
For example, when WRIMCO anticipates purchasing or selling a security, the
Fund may enter into a forward contract in order to set the exchange rate at
which the transaction will be made.  The Fund also may enter into a forward
contract to sell an amount of a foreign currency approximating the value of
some or all of the Fund's securities positions denominated in such
currency.  The Fund may also use forward contracts in one currency or a
basket of currencies to attempt to hedge against fluctuations in the value
of securities denominated in a different currency if WRIMCO anticipates
that there will be a correlation between the two currencies.

Successful use of forward currency contracts will depend on WRIMCO's skill
in analyzing and predicting currency values.  Forward contracts may
substantially change the Fund's investment exposure to changes in currency
exchange rates, and could result in losses to the Fund if currencies do not
perform as WRIMCO anticipates.  There is no assurance that WRIMCO's use of
forward currency contracts will be advantageous to the Fund or that it will
hedge at an appropriate time.

Currency conversion involves dealer spreads and other costs, although
commissions usually are not charged.

Policies and Restrictions:  As a fundamental policy, the Fund may not have
more than 15% of the value of its assets committed to the consummation of
forward currency contracts.  As a fundamental policy, the Fund will not
enter into forward currency contracts or maintain a net exposure to forward
currency contracts where the consummation of such contracts would obligate
the Fund to deliver an amount of foreign currency in excess of the value of
its portfolio securities or other assets denominated in that currency.

As a fundamental policy, the Fund may hold foreign currency only in
connection with forward currency contracts, only up to four business days,
as well as in connection with the purchase or sale of foreign securities,
but not otherwise.

Generally, the Fund will not enter into a forward currency contract with a
term of greater than one year.

Indexed Securities.  The Fund may purchase and sell indexed securities,
which are securities whose prices are indexed to the prices of other
securities, securities indices, currencies, precious metals or other
commodities, or other financial indicators.  Indexed securities typically,
but not always, are debt securities or deposits whose value at maturity or
coupon rate is determined by reference to a specific instrument or
statistic.  The performance of indexed securities depends to a great extent
on the performance of the security, currency, or other instrument to which
they are indexed, and may also be influenced by interest rate changes in
the U.S. and abroad.  At the same time, indexed securities are subject to
the credit risks associated with the issuer of the security, and their
values may decline substantially if the issuer's creditworthiness
deteriorates.  Indexed securities may be more volatile than the underlying
instruments.

Mortgage-Backed Securities may include pools of mortgages, such as
collateralized mortgage obligations, and stripped mortgage-backed
securities.  The value of these securities may be significantly affected by
changes in interest rates, the market's perception of the issuers and the
creditworthiness of the parties involved.

The yield characteristics of mortgage-backed securities differ from those
of traditional debt securities.  Among the major differences are that
interest and principal payments are made more frequently on mortgage-backed
securities and that principal may be prepaid at any time because the
underlying mortgage loans generally may be prepaid at any time.  As a
result, if the Fund purchases these securities at a premium, a prepayment
rate that is faster than expected will reduce yield to maturity while a
prepayment rate that is slower than expected will have the opposite effect
of increasing yield to maturity.  Conversely, if the Fund purchases these
securities at a discount, faster than expected prepayments will increase,
while slower than expected prepayments will reduce, yield to maturity.
Accelerated prepayments on securities purchased by the Fund at a premium
also impose a risk of loss of principal because the premium may not have
been fully amortized at the time the principal is repaid in full.

Timely payment of principal and interest on pass-through securities of the
Government National Mortgage Association (but not the Federal Home Loan
Mortgage Corporation or the Federal National Mortgage Association) is
guaranteed by the full faith and credit of the United States.  This is not
a guarantee against market decline of the value of these securities or
shares of the Fund.  It is possible that the availability and marketability
(i.e., liquidity) of these securities could be adversely affected by
actions of the U.S. Government to tighten the availability of its credit.

Stripped Securities are the separate income or principal components of a
debt instrument.  These involve risks that are similar to those of other
debt securities, although they may be more volatile.  The prices of
stripped mortgage-backed securities may be particularly affected by changes
in interest rates.

Risks of Derivative Instruments.  The use of options, futures contracts,
options on futures contracts, and forward contracts, and the investment in
indexed securities, stripped securities and mortgage-backed securities
involve special risks, including (i) possible imperfect or no correlation
between price movements of the portfolio investments (held or intended to
be purchased) involved in the transaction and price movements of the
instruments involved in the transaction, (ii) possible lack of a liquid
secondary market for any particular instrument at a particular time, (iii)
the need for additional portfolio management skills and techniques, (iv)
losses due to unanticipated market price movements, (v) the fact that,
while such strategies can reduce the risk of loss, they can also reduce the
opportunity for gain, or even result in losses, by offsetting favorable
price movements in investments involved in the transaction, (vi) incorrect
forecasts by WRIMCO concerning interest or currency exchange rates or
direction of price fluctuations of the investment involved in the
transaction, which may result in the strategy being ineffective, (vii) loss
of premiums paid by the Fund on options it purchases, and (viii) the
possible inability of the Fund to purchase or sell a portfolio security at
a time when it would otherwise be favorable for it to do so, or the
possible need for the Fund to sell a portfolio security at a
disadvantageous time, due to the need for the Fund to maintain "cover" or
to segregate securities in connection with such transactions and the
possible inability of the Fund to close out or liquidate its position.

For a hedging strategy to be completely effective, the price change of the
hedging instrument must equal the price change of the investment being
hedged.  The risk of imperfect correlation of these price changes increases
as the composition of the Fund's portfolio diverges from instruments
underlying a hedging instrument.  Such equal price changes are not always
possible because the investment underlying the hedging instruments may not
be the same investment that is being hedged.  WRIMCO will attempt to create
a closely correlated hedge but hedging activity may not be completely
successful in eliminating market value fluctuation.

WRIMCO may use derivative instruments, including securities with embedded
derivatives, for hedging purposes to adjust the risk characteristics of the
Fund's portfolio of investments and may use some of these instruments to
adjust the return characteristics of the Fund's portfolio of investments.
An embedded derivative is a derivative that is part of another financial
instrument.  Embedded derivatives typically, but not always, are debt
securities whose return of principal or interest, in part, is determined by
reference to something that is not intrinsic to the security itself.  The
use of derivative techniques for speculative purposes can increase
investment risk.  If WRIMCO judges market conditions incorrectly or employs
a strategy that does not correlate well with the Fund's investments, these
techniques could result in a loss, regardless of whether the intent was to
reduce risk or increase return.  These techniques may increase the
volatility of the Fund and may involve a small investment of cash relative
to the magnitude of the risk assumed.  In addition, these techniques could
result in a loss if the counterparty to the transaction does not perform as
promised or if there is not a liquid secondary market to close out a
position that the Fund has entered into.

The ordinary spreads between prices in the cash and futures markets, due to
the differences in the natures of those markets, are subject to distortion.
Due to the possibility of distortion, a correct forecast of general
interest rate, foreign currency exchange rate or stock market trends by
WRIMCO may still not result in a successful transaction.  WRIMCO may be
incorrect in its expectations as to the extent of various interest or
foreign currency exchange rate movements or stock market movements or the
time span within which the movements take place.

Options and futures transactions may increase portfolio turnover rates,
which results in correspondingly greater commission expenses and
transaction costs and may result in certain tax consequences.

New financial products and risk management techniques continue to be
developed.  The Fund may use these instruments and techniques to the extent
consistent with its goal, investment policies and regulatory requirements
applicable to investment companies.

When-Issued and Delayed-Delivery Transactions are trading practices in
which payment and delivery for the securities take place at a future date.
The market value of a security could change during this period, which could
affect the Fund's yield.

When purchasing securities on a delayed-delivery basis, the Fund assumes
the rights and risks of ownership, including the risk of price and yield
fluctuations.  When the Fund has sold a security on a delayed-delivery
basis, the Fund does not participate in further gains or losses with
respect to the security.  If the other party to a delayed-delivery
transaction fails to deliver or pay for the securities, the Fund could miss
a favorable price or yield opportunity, or could suffer a loss.

Policies and Restrictions:  The Fund may only purchase U.S. Government
Securities on a when-issued or delayed-delivery basis, or sell them on a
delayed-delivery basis.

Repurchase Agreements.  In a repurchase agreement, the Fund buys a security
at one price and simultaneously agrees to sell it back at a higher price.
Delays or losses could result if the other party to the agreement defaults
or becomes insolvent.

Restricted and Illiquid Securities.  Restricted securities are securities
that are subject to legal or contractual restrictions on resale.
Restricted securities may be illiquid due to restrictions on their resale.
Certain restricted securities may be determined to be liquid in accordance
with guidelines adopted by the Fund's Board of Directors.

Illiquid investments may be difficult to sell promptly at an acceptable
price.  Difficulty in selling securities may result in a loss or may be
costly to the Fund.

Policies and Restrictions:  As a fundamental policy, the Fund may not
purchase restricted securities, except that the Fund may invest not more
than 5% of its total assets in restricted foreign securities.

The Fund may not purchase a security if, as a result, more than 10% of its
net assets would consist of illiquid investments.

Diversification.  Diversifying the Fund's investment portfolio can reduce
the risks of investing.  This may include limiting the amount of money
invested in any one issuer or, on a broader scale, in any one industry.  As
described above, however, the Fund intends to concentrate in gold and other
minerals-related securities.

Policies and Restrictions:  As a fundamental policy, the Fund may not buy a
security if, as a result, it would own more than 10% of the voting
securities or any class of securities of an issuer, or if more than 5% of
the Fund's total assets would be invested in securities of that issuer.

As a fundamental policy, the Fund may not buy a security if, as a result,
more than 25% of the Fund's total assets would then be invested in
securities of companies in any one industry; however, the Fund intends to
concentrate in gold and other minerals-related securities.

Borrowing.  If the Fund borrows money, its share price may be subject to
greater fluctuation until the borrowing is paid off.

If the Fund makes additional investments while borrowings are outstanding,
this may be considered a form of leverage.

Policies and Restrictions:  As a fundamental policy, the Fund may not
borrow for investment purposes.  As a fundamental policy, the Fund may
borrow money only from banks, as a temporary measure or for extraordinary
or emergency purposes but only up to 5% of its total assets.  The Fund does
not intend to borrow for temporary measures; however, it may borrow to
cover redemptions or settlements of securities transactions.

Lending.  Securities loans may be made on a short-term or long-term basis
for the purpose of increasing the Fund's income.  This practice could
result in a loss or a delay in recovering the Fund's securities.  Loans
will be made only to parties deemed by WRIMCO to be creditworthy.

Policies and Restrictions:  As a fundamental policy, the Fund may not lend
more than 30% of its assets at any one time, and such loans must be on a
collateralized basis in accordance with applicable regulatory requirements.

Other Instruments may include warrants and securities of closed-end
investment companies.  As a shareholder in an investment company, the Fund
would bear its pro rata share of that investment company's expenses, which
could result in duplication of certain fees, including management and
administrative fees.

Policies and Restrictions:  The Fund may invest up to 2% of its assets in
warrants.  Warrants acquired in units or attached to other securities are
not considered for purposes of computing this limitation.

As a fundamental policy, the Fund may buy shares of other investment
companies that do not redeem their shares only if it does so in a regular
transaction in the open market and only if not more than 10% of the Fund's
total assets would be invested in these shares, or as part of a merger or
consolidation.  The Fund does not intend to invest more than 5% of its
assets in such securities.

The Fund will not purchase securities of unseasoned issuers, including
predecessor companies, which have been in operation for less than three
years, if the value of its investment in such securities would exceed 5% of
its total assets.

<PAGE>
About Your Account

Class Y shares are designed for institutional investors.  Class Y shares
are available for purchase by:

  participants of employee benefit plans established under section 403(b)
  or section 457, or qualified under section 401, including 401(k) plans,
  of the Internal Revenue Code of 1986, as amended (the "Code"), when the
  plan has 100 or more eligible employees and holds the shares in an
  omnibus account on the Fund's records;

  banks, trust institutions, investment fund administrators and other
  third parties investing for their own accounts or for the accounts of
  their customers where such investments for customer accounts are held in
  an omnibus account on the Fund's records;

  government entities or authorities and corporations whose investment
  within the first twelve months after initial investment is $10 million
  or more; and

  certain retirement plans and trusts for employees and account
  representatives of Waddell & Reed, Inc. and its affiliates.

Buying Shares

You may buy shares of the Fund through Waddell & Reed, Inc. and its account
representatives.  To open your account you must complete and sign an
application.  Your Waddell & Reed account representative can help you with
any questions you might have.

The price to buy a share of the Fund, called the offering price, is
calculated every business day.

The offering price of a Class Y share (price to buy one Class Y share) is
the Fund's Class Y net asset value ("NAV").  The Fund's Class Y shares are
sold without a sales charge.

To purchase by wire, you must first obtain an account number by calling 1-
800-366-2520, then mail a completed application to Waddell & Reed, Inc.,
P. O. Box 29217, Shawnee Mission, Kansas  66201-9217, or fax it to 913-236-
5044.  Instruct your bank to wire the amount you wish to invest to UMB
Bank, n.a., ABA Number 101000695, W&R Underwriter Account Number 0007978,
FBO Customer Name and Account Number.

To purchase by check, make your check payable to Waddell & Reed, Inc.  Mail
the check, along with your completed application, to Waddell & Reed, Inc.,
P.O. Box 29217, Shawnee Mission, Kansas  66201-9217.

The Fund's Class Y NAV is the value of a single share.  The Class Y NAV is
computed by adding, with respect to that class, the value of the Fund's
investments, cash and other assets, subtracting its liabilities, and then
dividing the result by the number of Class Y shares outstanding.

The securities in the Fund's portfolio that are listed or traded on an
exchange are valued primarily using market quotations or, if market
quotations are not available, at their fair value in a manner determined in
good faith by or at the direction of the Board of Directors.  Bonds are
generally valued according to prices quoted by a dealer in bonds that
offers a pricing service.  Short-term debt securities are valued at
amortized cost, which approximates market value.  Other assets are valued
at their fair value by or at the direction of the Board of Directors.

The Fund is open for business each day the New York Stock Exchange (the
"NYSE") is open.  The Fund normally calculates the net asset values of its
shares as of the later of the close of business of the NYSE, normally 4
p.m. Eastern time, or the close of the regular session of any other
securities or commodities exchange on which an option held by the Fund is
traded.

The Fund may invest in securities listed on foreign exchanges which may
trade on Saturdays or on customary U.S. national business holidays when the
NYSE is closed.  Consequently, the NAV of Fund shares may be significantly
affected on days when the Fund does not price its shares and when you have
no access to the Fund.

When you place an order to buy shares, your order will be processed at the
next offering price calculated after your order is received and accepted.
Note the following:

  Orders are accepted only at the home office of Waddell & Reed, Inc.
  All of your purchases must be made in U.S. dollars.
  If you buy shares by check, and then sell those shares by any method
  other than by exchange to another fund in the United Group, the payment
  may be delayed for up to ten days to ensure that your previous
  investment has cleared.
  The Fund does not issue certificates representing Class Y shares of the
  Fund.

When you sign your account application, you will be asked to certify that
your Social Security or taxpayer identification number is correct and
whether you are subject to backup withholding for failing to report income
to the IRS.

Waddell & Reed, Inc. reserves the right to reject any purchase orders,
including purchases by exchange, and it and the Fund reserve the right to
discontinue offering Fund shares for purchase.

Minimum Investments

To Open an Account

For a government entity or authority or for a corporation:  $10 million
              (within
              first
              twelve
              months)

For other
investors:    Any amount

Adding to Your Account

You can make additional investments of any amount at any time.

To add to your account by wire:  Instruct your bank to wire the amount you
wish to invest, along with the account number and registration, to UMB
Bank, n.a., ABA Number 101000695, W&R Underwriter Account Number 0007978,
FBO Customer Name and Account Number.

To add to your account by mail:  Make your check payable to Waddell & Reed,
Inc.  Mail the check along with a letter showing your account number, the
account registration and stating the fund whose shares you wish to purchase
to:

Waddell & Reed, Inc.
P.O. Box 29217
Shawnee Mission, Kansas 66201-9217

Selling Shares

You can arrange to take money out of your Fund account at any time by
selling (redeeming) some or all of your shares.

The redemption price (price to sell one Class Y share) is the Fund's Class
Y NAV.

To sell shares by telephone or fax:  If you have elected this method in
your application or by subsequent authorization, call 1-800-366-5465 or fax
your request to 913-236-5044 and give your instructions to redeem shares
and make payment by wire to your pre-designated bank account or by check to
you at the address on the account.

To sell shares by written request:  Complete an Account Service Request
form, available from your Waddell & Reed account representative, or write a
letter of instruction with:

  the name on the account registration;
  the Fund's name;
  the Fund account number;
  the dollar amount or number of shares to be redeemed; and
  any other applicable requirements listed in the table below.

Deliver the form or your letter to your Waddell & Reed account
representative, or mail it to:

Waddell & Reed, Inc.
P. O. Box 29217
Shawnee Mission, Kansas
66201-9217

Unless otherwise instructed, Waddell & Reed will send a check to the
address on the account.

                  Special Requirements for Selling Shares

Account Type     Special Requirements
Retirement       The written instructions must
Account          be signed by a properly
                 authorized person.
Trust            The trustee must sign the
                 written instructions
                 indicating capacity as
                 trustee.  If the trustee's
                 name is not in the account
                 registration, provide a
                 currently certified copy of
                 the trust document.
Business or      At least one person authorized
Organization     by corporate resolution to act
                 on the account must sign the
                 written instructions.

When you place an order to sell shares, your shares will be sold at the
next NAV calculated after receipt of a written request in good order by
Waddell & Reed, Inc. at its home office.  Note the following:

  If more than one person owns the shares, each owner must sign the
  written request.
  If you recently purchased the shares by check, the Fund may delay
  payment of redemption proceeds.  You may arrange for the bank upon which
  the purchase check was drawn to provide to the Fund telephone or written
  assurance, satisfactory to the Fund, that the check has cleared and been
  honored.  If no such assurance is given, payment of the redemption
  proceeds on these shares will be delayed until the earlier of 10 days or
  the date the Fund is able to verify that your purchase check has cleared
  and been honored.
  Redemptions may be suspended or payment dates postponed on days when the
  NYSE is closed (other than weekends or holidays), when trading on the
  NYSE is restricted, or as permitted by the Securities and Exchange
  Commission.
  Payment is normally made in cash, although under extraordinary
  conditions redemptions may be made in portfolio securities.

The Fund reserves the right to require a signature guarantee on certain
redemption requests.  This requirement is designed to protect you and
Waddell & Reed from fraud.  The Fund may require a signature guarantee in
certain situations such as:

  the request for redemption is made by a corporation, partnership or
  fiduciary;
  the request for redemption is made by someone other than the owner of
  record; or
  the check is being made payable to someone other than the owner of
  record.

The Fund will accept a signature guarantee from a national bank, a
federally chartered savings and loan or a member firm of a national stock
exchange or other eligible guarantor in accordance with procedures of the
Fund's transfer agent.  A notary public cannot provide a signature
guarantee.

The Fund reserves the right to redeem at NAV all shares of the Fund owned
or held by you having an aggregate NAV of less than $500.  The Fund will
give you notice of its intention to redeem your shares and a 60-day
opportunity to purchase a sufficient number of additional shares to bring
the aggregate NAV of your shares to $500.

Telephone Transactions

The Fund and its agents will not be liable for following instructions
communicated by telephone that they reasonably believe to be genuine.  The
Fund will employ reasonable procedures to confirm that instructions
communicated by telephone are genuine.  If the Fund fails to do so, the
Fund may be liable for losses due to unauthorized or fraudulent
instructions.  Current procedures relating to instructions communicated by
telephone include tape recording instructions, requiring personal
identification and providing written confirmations of transactions effected
pursuant to such instructions.

Shareholder Services

Waddell & Reed provides a variety of services to help you manage your
account.

Personal Service

Your local Waddell & Reed account representative is available to provide
personal service.  Additionally, the Waddell & Reed Customer Services staff
is available to respond promptly to your inquiries and requests.

Reports

Statements and reports sent to you include the following:

  confirmation statements (after every purchase, exchange, transfer or
  redemption)
  year-to-date statements (quarterly)
  annual and semiannual reports (every six months)

To reduce expenses, only one copy of most annual and semiannual reports
will be mailed to your household, even if you have more than one account
with the Fund.  Call 913-236-2000 if you need copies of annual or
semiannual reports or historical account information.

Exchanges

You may sell your Class Y shares and buy Class Y shares of other funds in
the United Group.  You may exchange only into funds that are legally
registered for sale in your state of residence.  Note that exchanges out of
the Fund may have tax consequences for you.  Before exchanging into a fund,
read its prospectus.

The Fund reserves the right to terminate or modify these exchange
privileges at any time, upon notice in certain instances.

Dividends, Distributions and Taxes

Distributions

The Fund distributes substantially all of its net investment income and net
capital gains to shareholders each year.  Ordinarily, dividends are
distributed from the Fund's net investment income, which includes accrued
interest, earned discount, dividends and other income earned on portfolio
assets less expenses, quarterly in March, June, September and December.

Net capital gains (and any net realized gains from foreign currency
transactions) ordinarily are distributed in December.  The Fund may make
additional distributions if necessary to avoid Federal income or excise
taxes on undistributed income and capital gains.

Distribution Options.  When you open an account, specify on your
application how you want to receive your distributions.  The Fund offers
three options:

1.  Share Payment Option.  Your dividend and capital gains distributions
will be automatically paid in additional Class Y shares of the Fund.  If
you do not indicate a choice on your application, you will be assigned this
option.

2.  Income-Earned Option.  Your capital gains distributions will be
automatically paid in Class Y shares, but you will be sent a check for each
dividend distribution.

3.  Cash Option.  You will be sent a check for your dividend and capital
gains distributions.

For retirement accounts, all distributions are automatically paid in Class
Y shares.

Taxes

The Fund has qualified and intends to continue to qualify for treatment as
a regulated investment company under the Code so that it will be relieved
of Federal income tax on that part of its investment company taxable income
(consisting generally of net investment income, net short-term capital gain
and net gains from certain foreign currency transactions) and net capital
gain (the excess of net long-term capital gain over net short-term capital
loss) that are distributed to its shareholders.

There are certain requirements that the Fund must follow in order to avoid
Federal taxation.  In its effort to adhere to these requirements, the Fund
may have to limit its investment activity in some types of instruments.

As with any investment, you should consider how your investment in the Fund
will be taxed.  If your account is not a tax-deferred retirement account,
you should be aware of the following tax implications:

   Taxes on distributions.  Dividends from the Fund's investment company
taxable income are taxable to you as ordinary income, whether received in
cash or paid in additional Fund shares.  Distributions of the Fund's net
capital gains, when designated as such, are taxable to you as long-term
capital gains, whether received in cash or paid in additional Fund shares
and regardless of the length of time you have owned your shares.  The Fund
notifies you after each calendar year-end as to the amounts of dividends
and other distributions paid (or deemed paid) to you for that year.  Under
certain circumstances, the Fund may elect to permit shareholders to take a
credit or deduction for foreign income taxes paid by the Fund.  The Fund
will notify you of any such election.    

A portion of the dividends paid by the Fund, whether received in cash or
paid in additional Fund shares, may be eligible for the dividends-received
deduction allowed to corporations.  The eligible portion may not exceed the
aggregate dividends received by the Fund from U.S. corporations.  However,
dividends received by a corporate shareholder and deducted by it pursuant
to the dividends-received deduction are subject indirectly to the
alternative minimum tax.

Withholding.  The Fund is required to withhold 31% of all dividends,
capital gains distributions and redemption proceeds payable to individuals
and certain other noncorporate shareholders who do not furnish the Fund
with a correct taxpayer identification number.  Withholding at that rate
from dividends and capital gains distributions also is required for such
shareholders who otherwise are subject to backup withholding.

Taxes on transactions.  Your redemption of Fund shares will result in
taxable gain or loss to you, depending on whether the redemption proceeds
are more or less than your adjusted basis for the redeemed shares (which
normally includes any sales charge paid).  An exchange of Fund shares for
shares of any other fund in the United Group generally will have similar
tax consequences.  However, special rules apply when you dispose of Fund
shares through a redemption or exchange within ninety days after your
purchase thereof and subsequently reacquire Fund shares or acquire shares
of another fund in the United Group without paying a sales charge due to
the thirty-day reinvestment privilege or exchange privilege.  See "About
Your Account."  In these cases, any gain on the disposition of the Fund
shares would be increased, or loss decreased, by the amount of the sales
charge you paid when those shares were acquired, and that amount will
increase the adjusted basis of the shares subsequently acquired.  In
addition, if you purchase Fund shares within thirty days before or after
redeeming other Fund shares (regardless of class) at a loss, part or all of
that loss will not be deductible and will increase the basis of the newly
purchased shares.

The foregoing is only a summary of some of the important Federal tax
considerations generally affecting the Fund and its shareholders.  There
may be other Federal, state or local tax considerations applicable to a
particular investor.  You are urged to consult your own tax adviser.

<PAGE>
About the Management and Expenses of the Fund

United Gold & Government Fund, Inc. is a mutual fund:  an investment that
pools shareholders' money and invests it toward a specified goal.  In
technical terms, the Fund is an open-end diversified management investment
company organized as a corporation under Maryland law on February 28, 1985.

The Fund is governed by a Board of Directors, which has overall
responsibility for the management of its affairs.  The majority of
directors are not affiliated with Waddell & Reed, Inc.

The Fund has two classes of shares.  In addition to the Class Y shares
offered by this Prospectus, the Fund has issued and outstanding Class A
shares, which are offered by Waddell & Reed, Inc. through a separate
prospectus.  Prior to February 19, 1996, the Fund offered only one class of
shares to the public.  Shares outstanding on that date were designated as
Class A shares.  Class A shares are subject to a sales charge on purchases
but are not subject to redemption fees.  Class A shares are subject to a
Rule 12b-1 fee at an annual rate of up to 0.25% of the Fund's average net
assets attributable to Class A shares.  Additional information about Class
A shares may be obtained by calling 913-236-2000 or by writing to Waddell &
Reed, Inc. at the address on the inside back cover of this Prospectus.

The Fund does not hold annual meetings of shareholders; however, certain
significant corporate matters, such as the approval of a new investment
advisory agreement or a change in a fundamental investment policy, which
require shareholder approval will be presented to shareholders at a meeting
called by the Board of Directors for such purpose.

Special meetings of shareholders may be called for any purpose upon receipt
by the Fund of a request in writing signed by shareholders holding not less
than 25% of all shares entitled to vote at such meeting, provided certain
conditions stated in the Bylaws of the Fund are met.  There will normally
be no meeting of the shareholders for the purpose of electing directors
until such time as less than a majority of directors holding office have
been elected by shareholders, at which time the directors then in office
will call a shareholders' meeting for the election of directors.  To the
extent that Section 16(c) of the Investment Company Act of 1940, as amended
(the "1940 Act"), applies to the Fund, the directors are required to call a
meeting of shareholders for the purpose of voting upon the question of
removal of any director when requested in writing to do so by the
shareholders of record of not less than 10% of the Fund's outstanding
shares.

Each share (regardless of class) has one vote.  All shares of the Fund vote
together as a single class, except as to any matter for which a separate
vote of any class is required by the 1940 Act, and except as to any matter
which affects the interests of one or more particular classes, in which
case only the shareholders of the affected classes are entitled to vote,
each as a separate class.  Shares are fully paid and nonassessable when
purchased.

WRIMCO and Its Affiliates

The Fund is managed by WRIMCO, subject to the authority of the Fund's Board
of Directors.  WRIMCO provides investment advice to the Fund and supervises
the Fund's investments.  Waddell & Reed, Inc. and its predecessors served
as investment manager to each of the registered investment companies in the
United Group of Mutual Funds, except United Asset Strategy Fund, Inc.,
since 1940 or the inception of the company, whichever was later, and to
TMK/United Funds, Inc. since that fund's inception, until January 8, 1992,
when it assigned its duties as investment manager and assigned its
professional staff for investment management services to WRIMCO.  WRIMCO
has also served as investment manager for Waddell & Reed Funds, Inc. since
its inception in September 1992, and United Asset Strategy Fund, Inc. since
it commenced operations in March 1995.

   Michael D. Avery is primarily responsible for the day-to-day management
of the Fund.  Mr. Avery has held his Fund responsibilities since February
1, 1994.  He is Vice President of WRIMCO, Vice President of Waddell & Reed
Asset Management Company, an affiliate of WRIMCO, and Vice President of the
Fund.  Mr. Avery has served as the portfolio manager for investment
companies managed by Waddell & Reed, Inc. and its successor, WRIMCO, since
February 1, 1994, has served as the director of research of Waddell & Reed,
Inc. and its successor, WRIMCO, since August 1987, and has been an employee
of Waddell & Reed, Inc. and its successor, WRIMCO, since June 1981.  Other
members of WRIMCO's investment management department provide input on
market outlook, economic conditions, investment research and other
considerations relating to the Fund's investments.    

Waddell & Reed, Inc. serves as the Fund's underwriter and as underwriter
for each of the other funds in the United Group of Mutual Funds and Waddell
& Reed Funds, Inc., and serves as the distributor for TMK/United Funds,
Inc.

Waddell & Reed Services Company acts as transfer agent ("Shareholder
Servicing Agent") for the Fund and processes the payments of dividends.
Waddell & Reed Services Company also acts as agent ("Accounting Services
Agent") in providing bookkeeping and accounting services and assistance to
the Fund and pricing daily the value of its shares.

WRIMCO and Waddell & Reed Services Company are subsidiaries of Waddell &
Reed, Inc.  Waddell & Reed, Inc. is a direct subsidiary of Waddell & Reed
Financial Services, Inc., a holding company, and an indirect subsidiary of
United Investors Management Company, a holding company, and Torchmark
Corporation, a holding company.

WRIMCO places transactions for the portfolio of the Fund and in doing so
may consider sales of shares of the Fund and other funds it manages as a
factor in the selection of brokers to execute portfolio transactions.

Breakdown of Expenses

Like all mutual funds, the Fund pays fees related to its daily operations.
Expenses paid out of the Fund's assets are reflected in its share price or
dividends; they are neither billed directly to shareholders nor deducted
from shareholder accounts.

The Fund pays a management fee to WRIMCO for providing investment advice
and supervising its investments.  The Fund also pays other expenses, which
are explained below.

Management Fee

The management fee of the Fund is calculated by adding a group fee to a
specific fee.  It is accrued and paid to WRIMCO daily.

The specific fee is computed on the Fund's net asset value as of the close
of business each day at the annual rate of .30 of 1% of its net assets.
The group fee is a pro rata participation based on the relative net asset
size of the Fund in the group fee computed each day on the combined net
asset values of all the funds in the United Group at the annual rates shown
in the following table:

Group Fee Rate

               Annual
Group Net      Group
Asset Level    Fee Rate
(all dollars   For Each
in millions)   Level
------------   --------

From $0
to $750       .51 of 1%

From $750
to $1,500     .49 of 1%

From $1,500
to $2,250     .47 of 1%

From $2,250
to $3,000     .45 of 1%

From $3,000
to $3,750     .43 of 1%

From $3,750
to $7,500     .40 of 1%

From $7,500
to $12,000    .38 of 1%

Over $12,000  .36 of 1%

Growth in assets of the United Group assures a lower group fee rate.

   The combined net asset values of all of the funds in the United Group
were approximately $13.6 billion as of December 31, 1995.  Management fees
for the fiscal year ended December 31, 1995 were 0.71% of the Fund's
average net assets, which during that period consisted only of the Fund's
Class A shares.    

Other Expenses

While the management fee is a significant component of the Fund's annual
operating costs, the Fund has other expenses as well.

The Fund pays the Accounting Services Agent a monthly fee based on the
average net assets of the Fund for accounting services.  With respect to
its Class Y shares, the Fund pays the Shareholder Servicing Agent a monthly
fee based on the average daily net assets of the class for the preceding
month.

The Fund also pays other expenses, such as fees and expenses of certain
directors, audit and outside legal fees, costs of materials sent to
shareholders, taxes, brokerage commissions, interest, insurance premiums,
custodian fees, fees payable by the Fund under Federal or other securities
laws and to the Investment Company Institute, and extraordinary expenses
including litigation and indemnification relative to litigation.

A portfolio turnover rate is, in general, the percentage computed by taking
the lesser of purchases or sales of portfolio securities for a year and
dividing it by the monthly average of such securities during the year,
excluding certain short-term securities and bullion.  Since the turnover
rate of the Fund will be affected by a number of factors, the Fund is
unable to predict what rate the Fund will have in any particular period or
periods, although such rate is not expected to exceed 100%.  However, the
rate could be substantially higher or lower in any particular period.  The
factors that may affect the rate include moving from a position emphasizing
gold and other minerals-related securities to a position emphasizing U.S.
Government Securities or vice versa and the possible necessary sales of
securities to meet redemptions.  The Fund may engage in short-term trading
and have a high portfolio turnover.

<PAGE>
United Gold & Government Fund, Inc.

Custodian                     Underwriter
  UMB Bank, n.a.                Waddell & Reed, Inc.
  Kansas City, Missouri         6300 Lamar Avenue
                                P. O. Box 29217
Legal Counsel                   Shawnee Mission, Kansas
  Kirkpatrick & Lockhart LLP       66201-9217
  1800 Massachusetts Avenue, N. W. (913) 236-2000
  Washington, D. C.  20036
                              Shareholder Servicing Agent
Independent Accountants         Waddell & Reed
  Price Waterhouse LLP             Services Company
  Kansas City, Missouri         6300 Lamar Avenue
                                P. O. Box 29217
Investment Manager              Shawnee Mission, Kansas
  Waddell & Reed Investment        66201-9217
     Management Company         (913) 236-1579
  6300 Lamar Avenue
  P. O. Box 29217             Accounting Services Agent
  Shawnee Mission, Kansas       Waddell & Reed
     66201-9217                    Services Company
  (913) 236-2000                6300 Lamar Avenue
                                P. O. Box 29217
                                Shawnee Mission, Kansas
                                    66201-9217
                                (913) 236-2000

Our INTERNET address is:
  http://www.waddell.com

<PAGE>
United Gold & Government Fund, Inc.
Class Y Shares
PROSPECTUS
February 19, 1996

The United Group of Mutual Funds
United Asset Strategy Fund, Inc.
United Cash Management, Inc.
United Continental Income Fund, Inc.
United Funds, Inc.
     United Bond Fund
     United Income Fund
     United Accumulative Fund
     United Science and Technology Fund
United Gold & Government Fund, Inc.
United Government Securities Fund, Inc.
United High Income Fund, Inc.
United High Income Fund II, Inc.
United International Growth Fund, Inc.
United Municipal Bond Fund, Inc.
United Municipal High Income Fund, Inc.
United New Concepts Fund, Inc.
United Retirement Shares, Inc.
United Vanguard Fund, Inc.

NUP2013-Y(2-96)

printed on recycled paper

<PAGE>
                    UNITED GOLD & GOVERNMENT FUND, INC.

                             6300 Lamar Avenue

                              P. O. Box 29217

                    Shawnee Mission, Kansas  66201-9217

                              (913) 236-2000

                             February 19, 1996



                    STATEMENT OF ADDITIONAL INFORMATION


     This Statement of Additional Information (the "SAI") is not a
prospectus.  Investors should read this SAI in conjunction with a
prospectus ("Prospectus") for the Class A shares or the Class Y shares, as
applicable, of United Gold & Government Fund, Inc. (the "Fund") dated
February 19, 1996, which may be obtained from the Fund or its underwriter,
Waddell & Reed, Inc., at the address or telephone number shown above.


                             TABLE OF CONTENTS

     Performance Information ..........................    2

     Goals and Investment Policies ....................    3

     Investment Management and Other Services .........   25

     Purchase, Redemption and Pricing of Shares .......   29

     Directors and Officers ...........................   44

     Payments to Shareholders .........................   49

     Taxes ............................................   50

     Portfolio Transactions and Brokerage .............   54

     Other Information ................................   56

<PAGE>
                          PERFORMANCE INFORMATION

     Waddell & Reed, Inc., the Fund's underwriter, or the Fund may, from
time to time, publish the Fund's total return information and/or
performance rankings in advertisements and sales materials.

Total Return

     An average annual total return quotation is computed by finding the
average annual compounded rates of return over the one-, five-, and ten-
year periods that would equate the initial amount invested to the ending
redeemable value.  Standardized total return information is calculated by
assuming an initial $1,000 investment and, for Class A shares, from which
the maximum sales load of 5.75% is deducted.  All dividends and
distributions are assumed to be reinvested in shares of the applicable
class at net asset value for the class as of the day the dividend or
distribution is paid.  No sales load is charged on reinvested dividends or
distributions on Class A shares.  The formula used to calculate the total
return for a particular class of the Fund is

              n
      P(1 + T)  =   ERV

     Where :  P =   $1,000 initial payment
              T =   Average annual total return
              n =   Number of years
            ERV =   Ending redeemable value of the $1,000 investment for
                    the periods shown.

     Non-standardized performance information may also be presented.  For
example, the Fund may also compute total return for its Class A shares
without deduction of the sales load in which case the same formula noted
above will be used but the entire amount of the $1,000 initial payment will
be assumed to have been invested.  If the sales charge applicable to Class
A shares were reflected, it would reduce the performance quoted for that
class.

     The average annual total return quotations for Class A shares as of
December 31, 1995, which is the most recent balance sheet included in this
SAI, for the periods shown were as follows:

                                                With    Without
                                             Sales LoadSales Load
                                              Deducted  Deducted
   
One-year period from January 1, 1995 to
  December 31, 1995:                             3.49%     9.80%

Five-year period from January 1, 1990 to
  December 31, 1995:                             5.79      7.05

Period from January 1, 1986 to
  December 31, 1995:                             8.10      8.75    

     Prior to February 19, 1996, the Fund offered only one class of shares
to the public.  Shares outstanding on that date were designated as Class A
shares.  Since that date, Class Y shares of the Fund have been available to
certain institutional investors.

     The Fund may also quote unaveraged or cumulative total return for a
class which reflects the change in value of an investment in that class
over a stated period of time.  Cumulative total returns will be calculated
according to the formula indicated above but without averaging the rate for
the number of years in the period.

Performance Rankings

     Waddell & Reed, Inc. or the Fund also may from time to time publish in
advertisements or sales material performance rankings as published by
recognized independent mutual fund statistical services such as Lipper
Analytical Services, Inc., or by publications of general interest such as
Forbes, Money, The Wall Street Journal, Business Week, Barron's, Fortune,
or Morningstar Mutual Fund Values.  Each class of the Fund may also compare
its performance to that of other selected mutual funds or selected
recognized market indicators such as the Standard & Poor's 500 Stock Index
and the Dow Jones Industrial Average.  Performance information may be
quoted numerically or presented in a table, graph or other illustration.

     All performance information that the Fund advertises or includes in
sales material is historical in nature and is not intended to represent or
guarantee future results.  The value of a Fund's shares when redeemed may
be more or less than their original cost.

                       GOAL AND INVESTMENT POLICIES

     The goal and investment policies of the Fund are described in the
Prospectus, which refers to the following investment methods and practices.

Securities - General

     The Fund may invest in securities including common stock, preferred
stock, debt securities and convertible securities, as described in the
Prospectus.  These securities may include the following described
securities from time to time.

     The Fund may purchase debt securities whose principal amount at
maturity is dependent upon the performance of a specified equity security.
The issuer of such debt securities, typically an investment banking firm,
is unaffiliated with the issuer of the equity security to whose performance
the debt security is linked.  Equity-linked debt securities differ from
ordinary debt securities in that the principal amount received at maturity
is not fixed, but is based on the price of the linked equity security at
the time the debt security matures.  The performance of equity-linked debt
securities depends primarily on the performance of the linked equity
security and may also be influenced by interest rate changes.  In addition,
although the debt securities are typically adjusted for diluting events
such as stock splits, stock dividends and certain other events affecting
the market value of the linked equity security, the debt securities are not
adjusted for subsequent issuances of the linked equity security for cash.
Such an issuance could adversely affect the price of the debt security.  In
addition to the equity risk relating to the linked equity security, such
debt securities are also subject to credit risk with regard to the issuer
of the debt security.  In general, however, such debt securities are less
volatile than the equity securities to which they are linked.

     The Fund may also invest in a type of convertible preferred stock that
pays a cumulative, fixed dividend that is senior to, and expected to be in
excess of, the dividends paid on the common stock of the issuer.  At the
mandatory conversion date, the preferred stock is converted into not more
than one share of the issuer's common stock at the "call price" that was
established at the time the preferred stock was issued.  If the price per
share of the related common stock on the mandatory conversion date is less
than the call price, the holder of the preferred stock will nonetheless
receive only one share of common stock for each share of preferred stock
(plus cash in the amount of any accrued but unpaid dividends).  At any time
prior to the mandatory conversion date, the issuer may redeem the preferred
stock upon issuing to the holder a number of shares of common stock equal
to the call price of the preferred stock in effect on the date of
redemption divided by the market value of the common stock, with such
market value typically determined one or two trading days prior to the date
notice of redemption is given.  The issuer must also pay the holder of the
preferred stock cash in an amount equal to any accrued but unpaid dividends
on the preferred stock.  This convertible preferred stock is subject to the
same market risk as the common stock of the issuer, except to the extent
that such risk is mitigated by the higher dividend paid on the preferred
stock.  The opportunity for equity appreciation afforded by an investment
in such convertible preferred stock, however, is limited, because in the
event the market value of the issuer's common stock increases to or above
the call price of the preferred stock, the issuer may (and would be
expected to) call the preferred stock for redemption at the call price.
This convertible preferred stock is also subject to credit risk with regard
to the ability of the issuer to pay the dividend established upon issuance
of the preferred stock.  Generally, convertible preferred stock is less
volatile than the related common stock of the issuer.

Risk Factors of High-Yield Investing

     As an operating (i.e., nonfundamental) policy, the Fund does not
intend to invest more than 5% of its assets in non-investment grade debt
securities.  Lower-quality debt securities (commonly called "junk bonds")
are considered to be speculative and involve greater risk of default or
price changes due to changes in the issuer's creditworthiness.  The market
prices of these securities may fluctuate more than high-quality securities
and may decline significantly in periods of general economic difficulty.
While the market for high-yield, high-risk corporate debt securities has
been in existence for many years and has weathered previous economic
downturns, the 1980s brought a dramatic increase in the use of such
securities to fund highly leveraged corporate acquisitions and
restructurings.  Past experience may not provide an accurate indication of
the future performance of the high-yield, high-risk bond market, especially
during periods of economic recession.  The market for lower-rated debt
securities may be thinner and less active than that for higher-rated debt
securities, which can adversely affect the prices at which the former are
sold.  Adverse publicity and changing investor perceptions may decrease the
values and liquidity of lower-rated debt securities, especially in a
thinly-traded market.

        Valuation becomes more difficult and judgment plays a greater role
in valuing lower-rated debt securities than with respect to securities for
which more external sources of quotations and last sale information are
available.  Since the risk of default is higher for lower-rated debt
securities, the research and credit analysis of Waddell & Reed Investment
Management Company ("WRIMCO"), the Fund's investment manager, are an
especially important part of managing securities of this type held by the
Fund.  WRIMCO continuously monitors the issuers of lower-rated debt
securities in the Fund's portfolio in an attempt to determine if the
issuers will have sufficient cash flow and profits to meet required
principal and interest payments.    

     The Fund may choose, at its expense or in conjunction with others, to
pursue litigation or otherwise to exercise its rights as a security holder
to seek to protect the interests of security holders if it determines this
to be in the best interest of the Fund's shareholders.

     While credit ratings are only one factor WRIMCO relies on in
evaluating high-yield debt securities, certain risks are associated with
credit ratings.  Credit ratings evaluate the safety of principal and
interest payments, not market value risk.

Specific Securities and Investment Practices

U.S. Government Securities

     Securities issued or guaranteed by the U.S. Government or its agencies
or instrumentalities ("U.S. Government Securities") include Treasury Bills
(which mature within one year of the date they are issued), Treasury Notes
(which have maturities of one to ten years) and Treasury Bonds (which
generally have maturities of more than 10 years).  All such Treasury
securities are backed by the full faith and credit of the United States.

     U.S. Government agencies and instrumentalities that issue or guarantee
securities include, but are not limited to, the Federal Housing
Administration, Federal National Mortgage Association, Farmers Home
Administration, Export-Import Bank of the United States, Small Business
Administration, Government National Mortgage Association, General Services
Administration, Central Bank for Cooperatives, Federal Home Loan Banks,
Federal Home Loan Mortgage Corporation, Farm Credit Banks, Maritime
Administration, the Tennessee Valley Authority, the Resolution Funding
Corporation and the Student Loan Marketing Association.

     Securities issued or guaranteed by U.S. Government agencies and
instrumentalities are not always supported by the full faith and credit of
the United States.  Some, such as securities issued by the Federal Home
Loan Banks, are backed by the right of the agency or instrumentality to
borrow from the Treasury.  Others, such as securities issued by the Federal
National Mortgage Association, are supported only by the credit of the
instrumentality and not by the Treasury.  If the securities are not backed
by the full faith and credit of the United States, the owner of the
securities must look principally to the agency issuing the obligation for
repayment and may not be able to assert a claim against the United States
in the event that the agency or instrumentality does not meet its
commitment.

     U.S. Government Securities may include mortgage-backed securities of
the Government National Mortgage Association ("Ginnie Mae"), the Federal
Home Loan Mortgage Corporation ("Freddie Mac") and the Federal National
Mortgage Association ("Fannie Mae").  These mortgage-backed securities
include "pass-through" securities and "participation certificates."
Another type of mortgage-backed security is a collateralized mortgage
obligation ("CMO").  See "Mortgage-Backed Securities."  Timely payment of
principal and interest on Ginnie Mae pass-throughs is guaranteed by the
full faith and credit of the United States.  Freddie Mac and Fannie Mae are
both instrumentalities of the U.S. Government, but their obligations are
not backed by the full faith and credit of the United States.  It is
possible that the availability and the marketability (i.e., liquidity) of
the securities discussed in this section could be adversely affected by
actions of the U.S. Government to tighten the availability of its credit.

Zero Coupon Bonds

     A broker-dealer creates a derivative zero by separating the interest
and principal components of a U.S. Treasury security and selling them as
two individual securities.  CATS (Certificates of Accrual on Treasury
Securities), TIGRs (Treasury Investment Growth Receipts), and TRs (Treasury
Receipts) are examples of derivative zeros.

     The Federal Reserve Bank creates STRIPS (Separate Trading of
Registered Interest and Principal of Securities) by separating the interest
and principal components of an outstanding U.S. Treasury security and
selling them as individual securities.  Bonds issued by the Resolution
Funding Corporation (REFCORP) and the Financing Corporation (FICO) can also
be separated in this fashion.  Original issue zeros are zero coupon
securities originally issued by the U.S. Government, a government agency or
a corporation in zero coupon form.

Mortgage-Backed Securities

     A mortgage-backed security may be an obligation of the issuer backed
by a mortgage or pool of mortgages or a direct interest in an underlying
pool of mortgages.  Mortgage-backed securities are based on different types
of mortgages including those on commercial real estate or residential
properties.  Some mortgage-backed securities, such as CMOs, make payments
of both principal and interest at a variety of intervals; others make
semiannual interest payments at a predetermined rate and repay principal at
maturity (like a typical bond).  Pass-through securities and participation
certificates represent pools of mortgages that are assembled, with
interests sold in the pool; the assembly is made by an "issuer," such as a
mortgage banker, commercial bank or savings and loan association, which
assembles the mortgages in the pool and passes through payments of
principal and interest for a fee payable to it.  Payments of principal and
interest by individual mortgagors are passed through to the holders of the
interest in the pool.  Monthly or other regular payments on pass-through
securities and participation certificates include payments of principal
(including prepayments on mortgages in the pool) rather than only interest
payments.

        The Fund may purchase mortgage-backed securities issued by both
government and non-government entities such as banks, mortgage lenders, or
other financial institutions.  The Fund may not invest more than 25% of its
total assets in mortgage-backed securities.  Other types of mortgage-backed
securities will likely be developed in the future, and the Fund may invest
in them if WRIMCO determines they are consistent with the Fund's goal and
investment policies.    

     The value of mortgage-backed securities may change due to shifts in
the market's perception of issuers.  In addition, regulatory or tax changes
may adversely affect the mortgage securities market as a whole.  Non-
government mortgage-backed securities may offer higher yields than those
issued by government entities, but also may be subject to greater price
changes than government issues.  Mortgage-backed securities are subject to
prepayment risk.  Prepayment, which occurs when unscheduled or early
payments are made on the underlying mortgages, may shorten the effective
maturities of these securities and may lower their total returns.

Stripped Mortgage-Backed Securities

     Stripped mortgage-backed securities are created when a U.S. Government
agency or a financial institution separates the interest and principal
components of a mortgage-backed security and sells them as individual
securities.  The holder of the "principal-only" security ("PO") receives
the principal payments made by the underlying mortgage-backed security,
while the holder of the "interest-only" security ("IO") receives interest
payments from the same underlying security.

        The prices of stripped mortgage-backed securities may be
particularly affected by changes in interest rates.  As interest rates
fall, prepayment rates tend to increase, which tends to reduce prices of
IOs and increase prices of POs.  Rising interest rates can have the
opposite effect.  The Fund intends to invest less than 5% of its total
assets in stripped securities.    

Variable or Floating Rate Instruments

     Variable or floating rate instruments (including notes purchased
directly from issuers) bear variable or floating interest rates and carry
rights that permit holders to demand payment of the unpaid principal
balance plus accrued interest from the issuers or certain financial
intermediaries.  Floating rate securities have interest rates that change
whenever there is a change in a designated base rate while variable rate
instruments provide for a specified periodic adjustment in the interest
rate.  These formulas are designed to result in a market value for the
instrument that approximates its par value.

Foreign Securities and Currency

        WRIMCO believes that there are investment opportunities as well as
risks in investing in foreign securities.  Individual foreign economies may
differ favorably or unfavorably from the U.S. economy or each other in such
matters as gross national product, rate of inflation, capital reinvestment,
resource self-sufficiency and balance of payments position. Individual
foreign companies may also differ favorably or unfavorably from domestic
companies in the same industry.  Foreign currencies may be stronger or
weaker than the U.S. dollar or than each other.  WRIMCO believes that the
Fund's ability to invest its assets abroad might enable it to take
advantage of these differences and strengths where they are favorable.    

     Further, an investment in foreign securities may also be affected by
changes in exchange control regulations (i.e., currency blockage).  The
Fund may bear a transaction charge in connection with the exchange of
currency.  There may be less publicly available information about a foreign
company than about a domestic company.  Foreign companies are not generally
subject to uniform accounting, auditing and financial reporting standards
comparable to those applicable to domestic companies.  Most foreign stock
markets have substantially less volume than the New York Stock Exchange
(the "NYSE") and securities of some foreign companies are less liquid and
more volatile than securities of comparable domestic companies.  There is
generally less government regulation of stock exchanges, brokers and listed
companies than in the United States.  In addition, with respect to certain
foreign countries, there is a possibility of expropriation or confiscatory
taxation, political or social instability or diplomatic developments that
could adversely affect investments in securities of issuers located in
those countries.  If it should become necessary, the Fund would normally
encounter greater difficulties in commencing a lawsuit against the issuer
of a foreign security than it would against a U.S. issuer.

     When purchasing foreign securities, the Fund will ordinarily purchase
securities that are traded in the U.S. or purchase American Depository
Receipts ("ADRs") which are certificates issued by U.S. depositories
representing the right to receive securities of a foreign issuer deposited
with that depository or a correspondent bank.  However, the Fund may
purchase the securities of a foreign issuer directly in foreign markets so
long as, in WRIMCO's judgment, an established public trading market exists.
Such investments may increase the risk with respect to the liquidity of the
Fund's portfolio and the Fund's ability to meet a large number of
shareholder redemption requests should there be economic, political or
social turmoil in a country in which the Fund has a substantial portion of
its assets invested or should relations between the United States and the
foreign country deteriorate markedly.

Restricted Securities

     The Fund may purchase foreign restricted securities.  However, it will
not purchase such restricted securities if as a result of such purchase
more than 5% of its total assets would consist of restricted securities.
This is a fundamental policy that may only be changed with shareholder
approval.  Restricted securities are subject to legal or contractual
restrictions on resale because they are not registered under the Securities
Act of 1933, as amended (the "1933 Act").

     Restricted securities generally can be sold in privately negotiated
transactions, pursuant to an exemption from registration under the 1933
Act, or in a registered public offering.  Where registration is required,
the Fund may be obligated to pay all or part of the registration expense
and a considerable period may elapse between the time it decides to seek
registration and the time the Fund may be permitted to sell a security
under an effective registration statement.  If, during such a period,
adverse market conditions were to develop, the Fund might obtain a less
favorable price than prevailed when it decided to seek registration of the
security.

     There are risks associated with investment in restricted securities in
that there can be no assurance of a ready market for resale.  Also, the
contractual restrictions on resale might prevent the Fund from reselling
the securities at a time when such sale would be desirable.

     Restricted securities that are traded in foreign markets are often
subject to restrictions that prohibit resale to U.S. persons or entities or
permit sales only to foreign broker-dealers who agree to limit their resale
to such persons or entities.  The buyer of such securities must enter into
an agreement that, usually for a limited period of time, it will resell
such securities subject to such restrictions.  Restricted securities in
which the Fund seeks to invest need not be listed or admitted to trading on
a foreign or domestic exchange and may be less liquid than listed
securities.  See "Illiquid Investments."

Lending Securities

     One of the ways in which the Fund may try to realize income is by
lending its securities.  If the Fund does this, the borrower pays the Fund
an amount equal to the dividends or interest on the securities that the
Fund would have received if it had not loaned the securities.  The Fund
also receives additional compensation.

     Any securities loans that the Fund makes must be collateralized in
accordance with applicable regulatory requirements (the "Guidelines").
This policy can only be changed by shareholder vote.  Under the present
Guidelines, the collateral must consist of cash, U.S. Government Securities
or bank letters of credit at least equal in value to the market value of
the securities loaned on each day that the loan is outstanding.  If the
market value of the loaned securities exceeds the value of the collateral,
the borrower must add more collateral so that it at least equals the market
value of the securities loaned.  If the market value of the securities
decreases, the borrower is entitled to return of the excess collateral.

     There are two methods of receiving compensation for making loans.  The
first is to receive a negotiated loan fee from the borrower.  This method
is available for all three types of collateral.  The second method, which
is not available when letters of credit are used as collateral, is for the
Fund to receive interest on the investment of the cash collateral or to
receive interest on the U.S. Government Securities used as collateral.
Part of the interest received in either case may be shared with the
borrower.

     The letters of credit that the Fund may accept as collateral are
agreements by banks (other than the borrowers of the Fund's securities),
entered into at the request of the borrower and for its account and risk,
under which the banks are obligated to pay to the Fund, while the letter is
in effect, amounts demanded by the Fund if the demand meets the terms of
the letter.  The Fund's right to make this demand secures the borrower's
obligations to it.  The terms of any such letters and the creditworthiness
of the banks providing them (which might include the Fund's custodian bank)
must be satisfactory to the Fund.  Under the Fund's current securities
lending procedure, the Fund may lend securities only to broker-dealers and
financial institutions deemed creditworthy by WRIMCO.  The Fund will make
loans only under rules of the NYSE, which presently require the borrower to
return the securities to the Fund within five business days after the Fund
gives notice to do so.  If the Fund loses its voting rights on securities
loaned, it will have the securities returned to it in time to vote them if
a material event affecting the investment is to be voted on.  The Fund may
pay reasonable finder's, administrative and custodian fees in connection
with loans of securities.

     There may be risks of delay in receiving additional collateral from
the borrower if the market value of the securities loaned goes up, risks of
delay in recovering the securities loaned or even loss of rights in the
collateral should the borrower of the securities fail financially.

     Some, but not all, of these rules are necessary to meet requirements
of certain laws relating to securities loans.  These rules will not be
changed unless the change is permitted under these requirements.  These
requirements do not cover the present rules, which may be changed without
shareholder vote, as to: (i) whom securities may be loaned; (ii) the
investment of cash collateral; or (iii) voting rights.

Repurchase Agreements

     The Fund will not enter into a repurchase transaction that will cause
more than 10% of its net assets to be invested in illiquid investments,
which include repurchase agreements not terminable within seven days.  See
"Illiquid Investments."  A repurchase agreement is an instrument under
which the Fund purchases a security and the seller (normally a commercial
bank or broker-dealer) agrees, at the time of purchase, that it will
repurchase the security at a specified time and price.  The amount by which
the resale price is greater than the purchase price reflects an agreed-upon
market interest rate effective for the period of the agreement.  The return
on the securities subject to the repurchase agreement may be more or less
than the return on the repurchase agreement.

     The majority of the repurchase agreements in which the Fund would
engage are overnight transactions, and the delivery pursuant to the resale
typically will occur within one to five days of the purchase.  The primary
risk is that the Fund may suffer a loss if the seller fails to pay the
agreed-upon amount on the delivery date and that amount is greater than the
resale price of the underlying securities and other collateral held by the
Fund.  In the event of bankruptcy or other default by the seller, there may
be possible delays and expenses in liquidating the underlying securities or
other collateral, decline in their value and loss of interest.  The return
on such collateral may be more or less than that from the repurchase
agreement.  The Fund's repurchase agreements will be structured so as to
fully collateralize the loans, i.e., the value of the underlying
securities, which will be held by the Fund's custodian bank or by a third
party that qualifies as a custodian under Section 17(f) of the Investment
Company Act of 1940, as amended (the "1940 Act"), is and, during the entire
term of the agreement, will remain at least equal to the value of the loan,
including the accrued interest earned thereon.  Repurchase agreements are
entered into only with those entities approved by WRIMCO on the basis of
criteria established by the Board of Directors.

When-Issued and Delayed-Delivery Transactions

     The Fund may purchase U.S. Government Securities on a when-issued or
delayed-delivery basis or sell them on a delayed-delivery basis.  The U.S.
Government Securities so purchased or sold by the Fund are subject to
market fluctuation; their value may be less or more when delivered than the
purchase price paid or received.  For example, delivery to the Fund and
payment by the Fund in the case of a purchase by it, or delivery by the
Fund and payment to it in the case of a sale by the Fund, may take place a
month or more after the date of the transaction.  The purchase or sale
price are fixed on the transaction date.  The Fund will enter into when-
issued or delayed-delivery transactions in order to secure what is
considered to be an advantageous price and yield at the time of entering
into the transaction.  No interest accrues to the Fund until delivery and
payment is completed.  When the Fund makes a commitment to purchase U.S.
Government Securities on a when-issued or delayed-delivery basis, it will
record the transaction and thereafter reflect the value of the securities
in determining its net asset value per share.  The U.S. Government
Securities so sold by the Fund on a delayed-delivery basis are also subject
to market fluctuation; their value when the Fund delivers them may be more
than the purchase price the Fund receives.  When the Fund makes a
commitment to sell U.S. Government Securities on a delayed-delivery basis,
it will record the transaction and thereafter value the U.S. Government
Securities at the sales price in determining the Fund's net asset value per
share.

     Ordinarily the Fund purchases U.S. Government Securities on a when-
issued or delayed-delivery basis with the intention of actually taking
delivery of the securities.  However, before the U.S. Government Securities
are delivered to the Fund and before it has paid for them (the "settlement
date"), the Fund could sell the U.S. Government Securities if WRIMCO
decided it was advisable to do so for investment reasons.  The Fund will
hold aside or segregate cash or other securities, other than those
purchased on a when-issued or delayed-delivery basis, at least equal to the
amount it will have to pay on the settlement date; these other securities
may, however, be sold at or before the settlement date to pay the purchase
price of the when-issued or delayed-delivery securities.

Illiquid Investments

     The Fund has an operating policy, which may be changed without
shareholder approval, which provides that the Fund may not invest more than
10% of its net assets in illiquid investments.  Investments currently
considered to be illiquid include:  (i) repurchase agreements not
terminable within seven days; (ii) fixed time deposits (including insured
deposits) subject to withdrawal penalties other than overnight deposits
(other than deposits payable at principal amount plus accrued interest on
demand or within seven days after demand that, in the opinion of WRIMCO,
have minimal credit risk); (iii) restricted securities not determined to be
liquid pursuant to guidelines established by the Fund's Board of Directors;
(iv) securities for which market quotations are not readily available; and
(v) unlisted options and their underlying collateral.

Indexed Securities

     The Fund may purchase securities whose prices are indexed to the
prices of other securities, securities indices, currencies, precious metals
or other commodities or other financial indicators.  Indexed securities
typically, but not always, are debt securities or deposits whose value at
maturity or coupon rate is determined by reference to a specific instrument
or statistic.  Gold-indexed securities, for example, typically provide for
a maturity value that depends on the price of gold, resulting in a security
whose price tends to rise and fall together with gold prices.  Currency-
indexed securities typically are short-term to intermediate-term debt
securities whose maturity values or interest rates are determined by
reference to the values of one or more specified foreign currencies, and
may offer higher yields than U.S. dollar-denominated securities of
equivalent issuers.  Currency-indexed securities may be positively or
negatively indexed; that is, their maturity value may increase when the
specified currency value increases, resulting in a security that performs
similarly to a foreign-denominated instrument, or their maturity value may
decline when foreign currencies increase, resulting in a security whose
price characteristics are similar to a put on the underlying currency.
Currency-indexed securities may also have prices that depend on the values
of a number of different foreign currencies relative to each other.

        Recent issuers of indexed securities have included banks,
corporations and certain U.S. Government agencies.  Certain indexed
securities that are not traded on an established market may be deemed
illiquid.  The Fund may not invest more than 25% of its total assets in
indexed securities.    

Investment in Warrants

     The Fund may not invest more than 2% of its assets valued at the lower
of cost or market in warrants.  Warrants acquired in units or attached to
other securities are not considered for purposes of computing the 2%
limitation.  Warrants are options to purchase equity securities at specific
prices valid for a specific period of time.  Their prices do not
necessarily move parallel to the prices of the underlying securities.
Warrants have no voting rights, receive no dividends and have no rights
with respect to the assets of the issuer.  Warrants are highly volatile
and, therefore, more susceptible to a sharp decline in value than the
underlying security might be.  They are also generally less liquid than an
investment in the underlying shares.

Securities of Other Investment Companies

     In order to comply with regulations of the State of Ohio, for so long
as such regulations are in effect and applicable to the Fund, the Fund will
not invest in securities of other investment companies, except by purchase
in the open market where no commission or profit to a sponsor or dealer
results from the purchase other than the customary broker's commission, or
except when the purchase is part of a plan of merger, consolidation,
reorganization or acquisition.

Options, Futures and Other Strategies

     General.  As discussed in the Prospectus, WRIMCO may use certain
options to attempt to enhance income or yield or may attempt to reduce
overall risk of its investments by using certain options, futures contracts
(sometimes referred to as "futures"), and forward contracts ("forward
contracts").  Options, futures, and forward contracts are sometimes
referred to collectively as "Financial Instruments."  The Fund's ability to
use a particular Financial Instrument may be limited by its investment
limitations or operating policies.  See "Investment Restrictions."

     Hedging strategies can be broadly categorized as "short hedges" and
"long hedges."  A short hedge is a purchase or sale of a Financial
Instrument intended partially or fully to offset potential declines in the
value of one or more investments held in the Fund's portfolio.  Thus, in a
short hedge the Fund takes a position in a Financial Instrument whose price
is expected to move in the opposite direction of the price of the
investment being hedged.

     Conversely, a long hedge is a purchase or sale of a Financial
Instrument intended partially or fully to offset potential increases in the
acquisition cost of one or more investments that the Fund intends to
acquire.  Thus, in a long hedge the Fund takes a position in a Financial
Instrument whose price is expected to move in the same direction as the
price of the prospective investment being hedged.  A long hedge is
sometimes referred to as an anticipatory hedge.  In an anticipatory hedge
transaction, the Fund does not own a corresponding security and, therefore,
the transaction does not relate to a security the Fund owns.  Rather, it
relates to a security that the Fund intends to acquire.  If the Fund does
not complete the hedge by purchasing the security it anticipated
purchasing, the effect on the Fund's portfolio is the same as if the
transaction were entered into for speculative purposes.

     Financial Instruments on securities generally are used to attempt to
hedge against price movements in one or more particular securities
positions that the Fund owns or intends to acquire.  Financial Instruments
on debt securities may be used to hedge either individual securities or
broad debt market sectors.

     The use of Financial Instruments is subject to applicable regulations
of the Securities and Exchange Commission (the "SEC"), the several
exchanges upon which they are traded, the Commodity Futures Trading
Commission (the "CFTC") and various state regulatory authorities.  In
addition, the Fund's ability to use Financial Instruments will be limited
by tax considerations.  See "Taxes."

     In addition to the instruments, strategies and risks described below
and in the Prospectus, WRIMCO expects to discover additional opportunities
in connection with options, futures contracts, options on futures
contracts, forward contracts and other similar or related techniques.
These new opportunities may become available as WRIMCO develops new
techniques, as regulatory authorities broaden the range of permitted
transactions and as new options, futures contracts, options on futures
contracts, forward contracts or other techniques are developed.  WRIMCO may
utilize these opportunities to the extent that they are consistent with the
Fund's goal and permitted by the Fund's investment limitations and
applicable regulatory authorities.  The Fund's Prospectus or SAI will be
supplemented to the extent that new products or techniques involve
materially different risks than those described below or in the Prospectus.

     Special Risks.  The use of Financial Instruments involves special
considerations and risks, certain of which are described below.  Risks
pertaining to particular Financial Instruments are described in the
sections that follow.

     (1)  Successful use of most Financial Instruments depends upon
WRIMCO's ability to predict movements of the overall securities, currency
and interest rate markets, which requires different skills than predicting
changes in the prices of individual securities.  There can be no assurance
that any particular strategy will succeed.

     (2)  There might be imperfect correlation, or even no correlation,
between price movements of a Financial Instrument and price movements of
the investments being hedged.  For example, if the value of a Financial
Instrument used in a short hedge increased by less than the decline in
value of the hedged investment, the hedge would not be fully successful.
Such a lack of correlation might occur due to factors unrelated to the
value of the investments being hedged, such as speculative or other
pressures on the markets in which Financial Instruments are traded.

     Because there are a limited number of types of exchange-traded options
and futures contracts, it is likely that the standardized contracts
available will not match the Fund's current or anticipated investments
exactly.  The Fund may invest in options and futures contracts based on
securities with different issuers, maturities or other characteristics from
the securities in which it typically invests, which involves a risk that
the options or futures position will not track the performance of the
Fund's other investments.

     Options and futures prices can also diverge from the prices of their
underlying instruments, even if the underlying instruments match the Fund's
investments well.  Options and futures prices are affected by such factors
as current and anticipated short-term interest rates, changes in volatility
of the underlying instrument, and the time remaining until expiration of
the contract, which may not affect security prices the same way.  Imperfect
correlation may also result from differing levels of demand in the options
and futures markets and the securities markets, from structural differences
in how options and futures and securities are traded, or from imposition of
daily price fluctuation limits or trading halts.  The Fund may purchase or
sell options and futures contracts with a greater or lesser value than the
securities it wishes to hedge or intends to purchase in order to attempt to
compensate for differences in volatility between the contract and the
securities, although this may not be successful in all cases.  If price
changes in the Fund's options or futures positions are poorly correlated
with its other investments, the positions may fail to produce anticipated
gains or result in losses that are not offset by gains in other
investments.

     (3)  If successful, the above-discussed strategies can reduce risk of
loss by wholly or partially offsetting the negative effect of unfavorable
price movements.  However, such strategies can also reduce opportunity for
gain by offsetting the positive effect of favorable price movements.  For
example, if the Fund entered into a short hedge because WRIMCO projected a
decline in the price of a security in the Fund's portfolio, and the price
of that security increased instead, the gain from that increase might be
wholly or partially offset by a decline in the price of the Financial
Instrument.  Moreover, if the price of the Financial Instrument declined by
more than the increase in the price of the security, the Fund could suffer
a loss.  In either such case, the Fund would have been in a better position
had it not attempted to hedge at all.

     (4)  As described below, the Fund might be required to maintain assets
as "cover," maintain segregated accounts or make margin payments when it
takes positions in Financial Instruments involving obligations to third
parties (i.e., Financial Instruments other than purchased options).  If the
Fund were unable to close out its positions in such Financial Instruments,
it might be required to continue to maintain such assets or accounts or
make such payments until the position expired or matured.  These
requirements might impair the Fund's ability to sell a portfolio security
or make an investment at a time when it would otherwise be favorable to do
so, or require that the Fund sell a portfolio security at a disadvantageous
time.  The Fund's ability to close out a position in a Financial Instrument
prior to expiration or maturity depends on the existence of a liquid
secondary market or, in the absence of such a market, the ability and
willingness of the other party to the transaction ("counterparty") to enter
into a transaction closing out the position.  Therefore, there is no
assurance that any position can be closed out at a time and price that is
favorable to the Fund.

     Cover.  Transactions using Financial Instruments, other than purchased
options, expose the Fund to an obligation to another party.  The Fund will
not enter into any such transactions unless it owns either (1) an
offsetting ("covered") position in securities or other options, futures
contracts, currencies or forward contracts, or (2) cash, receivables and
short-term debt securities, with a value sufficient at all times to cover
its potential obligations to the extent not covered as provided in (1)
above.  The Fund will comply with SEC guidelines regarding cover for these
instruments and will, if the guidelines so require, set aside cash, U.S.
Government Securities or other liquid, high-grade debt securities in a
segregated account with its custodian in the prescribed amount as
determined daily on a mark-to-market basis.

     Assets used as cover or held in a segregated account cannot be sold
while the position in the corresponding Financial Instrument is open,
unless they are replaced with other appropriate assets.  As a result, the
commitment of a large portion of the Fund's assets to cover or segregated
accounts could impede portfolio management or the Fund's ability to meet
redemption requests or other current obligations.

     Options.  The Fund may write (i.e., sell) call options ("calls") but
only if (i) the investments to which the call relates (the "related
investments") are either securities (whether or not they are U.S.
Government Securities) or futures contracts (see "Futures Contracts and
Options Thereon" below) relating to U.S. Government Securities ("Government
Securities Futures"); (ii) the calls are listed on a domestic securities or
commodities exchange or quoted on the Nasdaq Stock Market ("Nasdaq"); and
(iii) the calls are covered, i.e., the Fund owns the related investments
(or other investments acceptable for escrow arrangements) while the call is
outstanding.

     The Fund may purchase calls but only if (i) the related investments
are either U.S. Government Securities or Government Securities Futures; and
(ii) the calls are listed on a domestic securities or commodities exchange
or quoted on Nasdaq.

     The Fund may purchase put options ("puts") but only if (i) the
investments to which the put relates (the "related investments") are U.S.
Government Securities or Government Securities Futures; and (ii) either (a)
the puts are listed on a domestic securities or commodities exchange or
quoted on Nasdaq; or (b) are "optional delivery standby commitments.

     The Fund may write (i.e., sell) puts but only if (i) the related
investments are U.S. Government Securities or Government Securities
Futures; and (ii) the puts are listed on a domestic securities or
commodities exchange or quoted on Nasdaq.

     The above limitations on the puts and calls the Fund may write or
purchase are fundamental policies, i.e., rules that may only be changed by
a shareholder vote.  The Fund has no fundamental policy as to percentage
limitations on its use of options.

     At the present time, no puts or calls of any kind are quoted on
Nasdaq.  The Fund has undertaken to certain State Securities Commissions
that it will not engage in options trading on Nasdaq listed securities and
that it will not purchase put options or call options if after such
purchase the aggregate premium paid for all such options owned at that time
would exceed 5% of the Fund's total assets.

     The purchase of call options serves as a long hedge, and the purchase
of put options serves as a short hedge.  Writing put or call options can
enable the Fund to enhance income or yield by reason of the premiums paid
by the purchasers of such options.  However, if the market price of the
security underlying a put option declines to less than the exercise price
of the option, minus the premium received, the Fund would expect to suffer
a loss.

     Writing call options can also serve as a limited short hedge, because
declines in the value of the hedged investment would be offset to the
extent of the premium received for writing the option.  However, if the
security appreciates to a price higher than the exercise price of the call
option, it can be expected that the option will be exercised and the Fund
will be obligated to sell the security at less than its market value.

     Writing put options can serve as a limited long hedge because
increases in the value of the hedged investment would be offset to the
extent of the premium received for writing the option.  However, if the
security depreciates to a price lower than the exercise price of the put
option, it can be expected that the put option will be exercised and the
Fund will be obligated to purchase the security at more than its market
value.

     The value of an option position will reflect, among other things, the
current market value of the underlying investment, the time remaining until
expiration, the relationship of the exercise price to the market price of
the underlying investment, the historical price volatility of the
underlying investment and general market conditions.  Options that expire
unexercised have no value.

     The Fund may effectively terminate its right or obligation under an
option by entering into a closing transaction.  For example, the Fund may
terminate its obligation under a call or put option that it had written by
purchasing an identical call or put option; this is known as a closing
purchase transaction.  Conversely, the Fund may terminate a position in a
put or call option it had purchased by writing an identical put or call
option; this is known as a closing sale transaction.  Closing transactions
permit the Fund to realize profits or limit losses on an option position
prior to its exercise or expiration.

     A type of put that the Fund may purchase is an "optional delivery
standby commitment," which is entered into by parties selling U.S.
Government Securities to the Fund.  An optional delivery standby commitment
gives the Fund the right to sell the security back to the seller on
specified terms.  This right is provided as an inducement to purchase the
security.

     Risks of Options on Securities.  The Fund is authorized to purchase
and sell listed options.  Exchange markets for options on debt securities
exist, but these instruments are primarily traded on the over-the-counter
market.  Exchange-traded options in the United States are issued by a
clearing organization affiliated with the exchange on which the option is
listed that, in effect, guarantees completion of every exchange-traded
option transaction.

     The Fund's ability to establish and close out positions in exchange-
listed options depends on the existence of a liquid market.  However, there
can be no assurance that such a market will exist at any particular time.

     If the Fund were unable to effect a closing transaction for an option
it had purchased, it would have to exercise the option to realize any
profit.  The inability to enter into a closing purchase transaction for a
covered call option written by the Fund could cause material losses because
the Fund would be unable to sell the investment used as cover for the
written option until the option expires or is exercised.

     Futures Contracts and Options Thereon.  The Fund may buy and sell
interest rate futures contracts, but only those relating to U.S. Government
Securities ("Government Securities Futures") and options thereon.  This
limitation of the Fund's engaging in interest rate futures contracts and
options on futures contracts to those relating to U.S. Government
Securities is a fundamental policy that may only be changed by a
shareholder vote.  The Fund has no other fundamental policies as to its use
of futures contracts and options on futures contracts and thus no
fundamental policy as to a percentage limit thereon; however, see below for
limitations relating to the CFTC.

     The purchase of futures or call options on futures can serve as a long
hedge, and the sale of futures or the purchase of put options on futures
can serve as a short hedge.  Writing call options on futures contracts can
serve as a limited short hedge, using a strategy similar to that used for
writing call options on securities or indices.  Similarly, writing put
options on futures contracts can serve as a limited long hedge.

     Futures strategies also can be used to manage the average duration of
the Fund's fixed-income portfolio.  If WRIMCO wishes to shorten the average
duration of the Fund's fixed-income portfolio, the Fund may sell a
Government Securities Future or a call option thereon, or purchase a put
option on that Government Security Future.  If WRIMCO wishes to lengthen
the average duration of the Fund's fixed-income portfolio, the Fund may buy
a Government Security Future or a call option thereon, or sell a put option
thereon.

     No price is paid upon entering into a futures contract.  Instead, at
the inception of a futures contract the Fund is required to deposit
"initial margin" consisting of cash or U.S. Government Securities in an
amount generally equal to 10% or less of the contract value.  Margin must
also be deposited when writing a call or put option on a futures contract,
in accordance with applicable exchange rules.  Unlike margin in securities
transactions, initial margin on futures contracts does not represent a
borrowing, but rather is in the nature of a performance bond or good-faith
deposit that is returned to the Fund at the termination of the transaction
if all contractual obligations have been satisfied.  Under certain
circumstances, such as periods of high volatility, the Fund may be required
by an exchange to increase the level of its initial margin payment, and
initial margin requirements might be increased generally in the future by
regulatory action.

     Subsequent "variation margin" payments are made to and from the
futures broker daily as the value of the futures position varies, a process
known as "marking-to-market."  Variation margin does not involve borrowing,
but rather represents a daily settlement of the Fund's obligations to or
from a futures broker.  When the Fund purchases an option on a future, the
premium paid plus transaction costs is all that is at risk.  In contrast,
when the Fund purchases or sells a futures contract or writes a call or put
option thereon, it is subject to daily variation margin calls that could be
substantial in the event of adverse price movements.  If the Fund has
insufficient cash to meet daily variation margin requirements, it might
need to sell securities at a time when such sales are disadvantageous.

     Purchasers and sellers of futures contracts and options on futures can
enter into offsetting closing transactions, similar to closing transactions
in options, by selling or purchasing, respectively, an instrument identical
to the instrument purchased or sold.  Positions in futures and options on
futures may be closed only on an exchange or board of trade that provides a
secondary market.  The Fund intends to enter into futures and options on
futures only on exchanges or boards of trade where there appears to be a
liquid secondary market.  However, there can be no assurance that such a
market will exist for a particular contract at a particular time.  In such
event, it may not be possible to close a futures contract or options
position.

     Under certain circumstances, futures exchanges may establish daily
limits on the amount that the price of a futures or an option on a futures
contract can vary from the previous day's settlement price; once that limit
is reached, no trades may be made that day at a price beyond the limit.
Daily price limits do not limit potential losses because prices could move
to the daily limit for several consecutive days with little or no trading,
thereby preventing liquidation of unfavorable positions.

     If the Fund were unable to liquidate a futures contract or options on
futures position due to the absence of a liquid secondary market or the
imposition of price limits, it could incur substantial losses.  The Fund
would continue to be subject to market risk with respect to the position.
In addition, except in the case of purchased options, the Fund would
continue to be required to make daily variation margin payments and might
be required to maintain the position being hedged by the future or option
or to maintain cash or securities in a segregated account.

     As an operating policy, to the extent that the Fund enters into
futures contracts or options on futures contracts, in each case other than
for bona fide hedging purposes (as defined by the CFTC), the aggregate
initial margin and premiums required to establish those positions
(excluding the amount by which options are "in-the-money" at the time of
purchase) will not exceed 5% of the liquidation value of the Fund's
portfolio, after taking into account unrealized profits and unrealized
losses on any contracts the Fund has entered into.  (In general, a call
option on a futures contract is "in-the-money" if the value of the
underlying futures contract exceeds the strike, i.e., exercise, price of
the call; a put option on a futures contract is "in-the-money" if the value
of the underlying futures contract is exceeded by the strike price of the
put.)  This policy does not limit to 5% the percentage of the Fund's assets
that are at risk in futures contracts and options on futures contracts.

     Foreign Currency Hedging Strategies--Special Considerations.  The Fund
may use foreign currency forward contracts, as described below, to attempt
to hedge against movements in the values of the foreign currencies in which
the Fund's securities are denominated.  Such currency hedges can protect
against price movements in a security that the Fund owns or intends to
acquire that are attributable to changes in the value of the currency in
which it is denominated.  Such hedges do not, however, protect against
price movements in the securities that are attributable to other causes.

     The Fund might seek to hedge against changes in the value of a
particular currency when no forward contracts on that currency are
available or such forward contracts are more expensive than certain other
forward contracts.  In such cases, the Fund may seek to hedge against price
movements in that currency by entering into transactions using forward
contracts on another currency or a basket of currencies, the values of
which WRIMCO believes will have a high degree of positive correlation to
the value of the currency being hedged.  The risk that movements in the
price of the forward contract will not correlate perfectly with movements
in the price of the currency subject to the hedging transaction is
magnified when this strategy is used.

     The value of forward contracts depends on the value of the underlying
currency relative to the U.S. dollar.  Because foreign currency
transactions occurring in the interbank market might involve substantially
larger amounts than those involved in the use of such forward contracts,
the Fund could be disadvantaged by having to deal in the odd lot market
(generally consisting of transactions of less than $1 million) for the
underlying foreign currencies at prices that are less favorable than for
round lots.

     There is no systematic reporting of last sale information for foreign
currencies or any regulatory requirement that quotations available through
dealers or other market sources be firm or revised on a timely basis.
Quotation information generally is representative of very large
transactions in the interbank market and thus might not reflect odd-lot
transactions where rates might be less favorable.

     Settlement of hedging transactions involving foreign currencies might
be required to take place within the country issuing the underlying
currency.  Thus, the Fund might be required to accept or make delivery of
the underlying foreign currency in accordance with any U.S. or foreign
regulations regarding the maintenance of foreign banking arrangements by
U.S. residents and might be required to pay any fees, taxes and charges
associated with such delivery assessed in the issuing country.

     Forward Contracts.  The Fund may enter into forward contracts to
purchase or sell foreign currencies for a fixed amount of U.S. dollars or
another foreign currency.  A forward contract involves an obligation to
purchase or sell a specific currency at a future date, which may be any
fixed number of days (term) from the date of the forward contract agreed
upon by the parties, at a price set at the time of the forward contract.
These forward contracts are traded directly between currency traders
(usually large commercial banks) and their customers.

     Such transactions may serve as long hedges; for example, the Fund may
purchase a forward contract to lock in the U.S. dollar price of a security
denominated in a foreign currency that the Fund intends to acquire.
Forward contract transactions may also serve as short hedges; for example,
the Fund may sell a forward contract to lock in the U.S. dollar equivalent
of the proceeds from the anticipated sale of a security, dividend or
interest payment denominated in a foreign currency.

     The Fund may also use forward contracts to hedge against a decline in
the value of existing investments denominated in foreign currency.  For
example, if the Fund owned securities denominated in pounds sterling, it
could enter into a forward contract to sell pounds sterling in return for
U.S. dollars to hedge against possible declines in the pound's value.  Such
a hedge, sometimes referred to as a "position hedge," would tend to offset
both positive and negative currency fluctuations, but would not offset
changes in security values caused by other factors.  The Fund could also
hedge the position by selling another currency expected to perform
similarly to the pound sterling, for example, by entering into a forward
contract to sell Deutsche Marks or European Currency Units in return for
U.S. dollars.  This type of hedge, sometimes referred to as a "proxy
hedge," could offer advantages in terms of cost, yield or efficiency, but
generally would not hedge currency exposure as effectively as a simple
hedge into U.S. dollars.  Proxy hedges may result in losses if the currency
used to hedge does not perform similarly to the currency in which the
hedged securities are denominated.

     The cost to the Fund of engaging in forward contracts varies with
factors such as the currency involved, the length of the contract period
and the market conditions then prevailing.  Because forward contracts are
usually entered into on a principal basis, no fees or commissions are
involved.  When the Fund enters into a forward contract, it relies on the
counterparty to make or take delivery of the underlying currency at the
maturity of the contract.  Failure by the counterparty to do so would
result in the loss of any expected benefit of the transaction.

     As is the case with futures contracts, purchasers and sellers of
forward contracts can enter into offsetting closing transactions, similar
to closing transactions on futures contracts, by selling or purchasing,
respectively, an instrument identical to the instrument purchased or sold.
Secondary markets generally do not exist for forward contracts, with the
result that closing transactions generally can be made for forward
contracts only by negotiating directly with the counterparty.  Thus, there
can be no assurance that the Fund will in fact be able to close out a
forward contract at a favorable price prior to maturity.  In addition, in
the event of insolvency of the counterparty, the Fund might be unable to
close out a forward contract at any time prior to maturity.  In either
event, the Fund would continue to be subject to market risk with respect to
the position, and would continue to be required to maintain a position in
securities denominated in the foreign currency or to maintain cash or
securities in a segregated account.

     The precise matching of forward contract amounts and the value of the
securities involved generally will not be possible because the value of
such securities, measured in the foreign currency, will change after the
foreign currency contract has been established.  Thus, the Fund might need
to purchase or sell foreign currencies in the spot (cash) market to the
extent such foreign currencies are not covered by forward contracts.  The
projection of short-term currency market movements is extremely difficult,
and the successful execution of a short-term hedging strategy is highly
uncertain.

     Under normal circumstances, consideration of the prospect for currency
parities will be incorporated into the longer term investment decisions
made with regard to overall diversification strategies.  However, WRIMCO
believes that it is important to have the flexibility to enter into such
forward contracts when it determines that the best interests of the Fund
will be served.

     The Fund will enter into forward contracts only for hedging purposes
and has made an undertaking to a State securities commission to this
effect.

     Risks of Futures Contracts and Options Thereon.  The ordinary spreads
between prices in the cash and futures markets (including the options on
futures market), due to differences in the natures of those markets, are
subject to the following factors, which may create distortions.  First, all
participants in the futures market are subject to margin deposit and
maintenance requirements.  Rather than meeting additional margin deposit
requirements, investors may close future contracts through offsetting
transactions, which could distort the normal relationship between the cash
and futures markets.  Second, the liquidity of the futures market depends
on participants entering into offsetting transactions rather than making or
taking delivery.  To the extent participants decide to make or take
delivery, liquidity in the futures market could be reduced, thus producing
distortion.  Third, from the point of view of speculators, the deposit
requirements in the futures market are less onerous than margin
requirements in the securities market. Therefore increased participation by
speculators in the futures market may cause temporary price distortions.
Due to the possibility of distortion, a correct forecast of general
interest trends by WRIMCO may still not result in a successful transaction.
WRIMCO may be incorrect in the expectations as to the extent of various
interest rate movements or the time span within which the movements take
place.

     Combined Positions.  The Fund may purchase and write options in
combination with each other, or in combination with futures contracts, to
adjust the risk and return characteristics of its overall position.  For
example, the Fund may purchase a put option and write a call option on the
same underlying instrument, in order to construct a combined position whose
risk and return characteristics are similar to selling a futures contract.
Another possible combined position would involve writing a call option at
one strike price and buying a call option at a lower price, in order to
reduce the risk of the written call option in the event of a substantial
price increase.  Because combined options positions involve multiple
trades, they result in higher transaction costs and may be more difficult
to open and close out.

     Turnover.  The Fund's options and futures activities may affect its
turnover rate and brokerage commission payments.  The exercise of calls or
puts written by the Fund, and the sale or purchase of futures contracts,
may cause it to sell or purchase related investments, thus increasing its
turnover rate.  Once the Fund has received an exercise notice on an option
it has written, it cannot effect a closing transaction in order to
terminate its obligation under the option and must deliver or receive the
underlying securities at the exercise price.  The exercise of puts
purchased by the Fund may also cause the sale of related investments, also
increasing turnover; although such exercise is within the Fund's control,
holding a protective put might cause it to sell the related investments for
reasons that would not exist in the absence of the put.  The Fund will pay
a brokerage commission each time it buys or sells a put or call or
purchases or sells a futures contract.  Such commissions may be higher than
those that would apply to direct purchases or sales.

Investment Restrictions

     Certain of the Fund's investment restrictions are described in the
Prospectus.  The following are fundamental policies and, together with
certain restrictions described in the Prospectus, cannot be changed without
shareholder approval.  Under these additional restrictions the Fund may
not:

    (i)  Buy real estate nor any nonliquid interest in real estate
         investment trusts;

   (ii)  Buy the securities of any company if it would then own more than
         10% of its voting securities or any class of its securities; or
         buy the securities of any company if more than 5% of the Fund's
         total assets (valued at market value) would then be invested in
         that company; or buy the securities of companies in any one
         industry if more than 25% of the Fund's total assets would then be
         in companies in that industry, except, as stated in the
         Prospectus, the Fund intends to concentrate in gold and other
         minerals-related securities;

  (iii)  Buy shares of other investment companies that redeem their shares.
         The Fund can buy shares of investment companies that do not redeem
         their shares if it does so in a regular transaction in the open
         market and then does not have more than one tenth (i.e., 10%) of
         its total assets in these shares;

   (iv)  Make loans other than certain limited types of loans; the Fund can
         also buy debt securities that have been sold to the public; it can
         also lend its portfolio securities (see "Lending Securities"
         above) and enter into repurchase agreements (see "Repurchase
         Agreements" above);

    (v)  Invest for the purpose of exercising control or management of
         other companies;

   (vi)  Buy or continue to hold securities if the Fund's Directors or
         officers or certain others own too much of the same securities; if
         any of these people owns more than one two-hundredths (i.e., .5 of
         1%) of the shares of a company and if the people who own that much
         or more own one-twentieth (i.e., 5%) of that company's shares, the
         Fund cannot buy that company's shares or continue to own them;

  (vii)  Participate on a joint, or a joint and several, basis in any
         trading account in any securities;

 (viii)  Sell securities short or buy securities on margin, however, the
         Fund may make margin deposits in connection with Government
         Securities Futures contracts and options thereon; also, the Fund
         may not engage in arbitrage transactions;

   (ix)  Engage in the underwriting of securities or invest in restricted
         securities, except up to 5% of total assets taken at the time of
         purchase may be invested in restricted foreign securities;

    (x)  Buy commodities except that it may invest up to 25% of its total
         assets in gold, silver and platinum and may buy put and call
         options and Government Securities Futures.  Put and call options
         and Government Securities Futures may, for various purposes, be
         considered to be "commodities" or "securities" but the Fund may
         buy them whether they are "commodities" or "securities."  The Fund
         may also not buy any minerals-related programs or leases;

   (xi)  Borrow for investment purposes, that is, to purchase securities or
         mortgage or pledge any of its assets; this does not prohibit the
         escrow deposits required by put and call transactions.  The Fund
         may borrow money from banks as a temporary measure or for
         extraordinary or emergency purposes but only up to 5% of its total
         assets.

Portfolio Turnover

     A portfolio turnover rate is, in general, the percentage computed by
taking the lesser of purchases or sales of portfolio securities for a year
and dividing it by the monthly average of the market value of such
securities during the year, excluding certain short-term securities.  The
Fund's turnover rate may vary greatly from year to year as well as within a
particular year and may be affected by cash requirements for the redemption
of its shares.

        The Fund's portfolio turnover rate  for the fiscal years ended
December 31, 1995 and 1994 was 164.21% and _64.89%, respectively.  Due to
economic conditions in 1985, and in accordance with the Fund's fundamental
policies, WRIMCO determined that the portfolio of the Fund should be
invested primarily in U.S. Government Securities.  The increase in the
portfolio turnover rate was due to a shift in the Fund's concentration of
investments from primarily gold and other minerals-related securities to
primarily U.S. Government Securities.  A high turnover rate will increase
transaction costs and commission costs that will be borne by the Fund and
could generate taxable income or loss.    

                 INVESTMENT MANAGEMENT AND OTHER SERVICES

The Management Agreement

     The Fund has an Investment Management Agreement (the "Management
Agreement") with Waddell & Reed, Inc.  On January 8, 1992, subject to the
authority of the Fund's Board of Directors, Waddell & Reed, Inc. assigned
the Management Agreement and all related investment management duties (and
related professional staff) to WRIMCO, a wholly-owned subsidiary of Waddell
& Reed, Inc.  Under the Management Agreement, WRIMCO is employed to
supervise the investments of the Fund and provide investment advice to the
Fund.  The address of Waddell & Reed, Inc. and WRIMCO is 6300 Lamar Avenue,
P.O. Box 29217, Shawnee Mission, Kansas 66201-9217.  Waddell & Reed, Inc.
is the Fund's underwriter.

     The Management Agreement permits Waddell & Reed, Inc. or an affiliate
of Waddell & Reed, Inc. to enter into a separate agreement for transfer
agency services ("Shareholder Servicing Agreement") and a separate
agreement for accounting services ("Accounting Services Agreement") with
the Fund.  The Management Agreement contains detailed provisions as to the
matters to be considered by the Fund's Board of Directors prior to
approving any Shareholder Servicing Agreement or Accounting Services
Agreement.

Torchmark Corporation and United Investors Management Company

     WRIMCO is a wholly-owned subsidiary of Waddell & Reed, Inc.  Waddell &
Reed, Inc. is a wholly-owned subsidiary of Waddell & Reed Financial
Services, Inc., a holding company.  Waddell & Reed Financial Services, Inc.
is a wholly-owned subsidiary of United Investors Management Company.
United Investors Management Company is a wholly-owned subsidiary of
Torchmark Corporation.  Torchmark Corporation is a publicly-held company.
The address of Torchmark Corporation and United Investors Management
Company is 2001 Third Avenue South, Birmingham, Alabama 35233.

     Waddell & Reed, Inc. and its predecessors served as investment manager
to each of the registered investment companies in the United Group of
Mutual Funds, except United Asset Strategy Fund, Inc., since 1940 or the
company's inception date, whichever was later, and to TMK/United Funds,
Inc. since that fund's inception, until January 8, 1992 when it assigned
its duties as investment manager for these funds (and the related
professional staff) to WRIMCO.  WRIMCO has also served as investment
manager for Waddell & Reed Funds, Inc. since its inception in September
1992 and United Asset Strategy Fund, Inc. since it commenced operations in
March 1995.  Waddell & Reed, Inc. serves as principal underwriter for the
investment companies in the United Group of Mutual Funds and Waddell & Reed
Funds, Inc. and serves as the distributor for TMK/United Funds, Inc.

Shareholder Services

     Under the Shareholder Servicing Agreement entered into between the
Fund and Waddell & Reed Services Company (the "Agent"), a subsidiary of
Waddell & Reed, Inc., the Agent performs shareholder servicing functions,
including the maintenance of shareholder accounts, the issuance, transfer
and redemption of shares, distribution of dividends and payment of
redemptions, the furnishing of related information to the Fund and handling
of shareholder inquiries.  A new Shareholder Servicing Agreement, or
amendments to the existing one, may be approved by the Fund's Board of
Directors without shareholder approval.

Accounting Services

    Under the Accounting Services Agreement entered into between the Fund
and the Agent, the Agent provides the Fund with bookkeeping and accounting
services and assistance, including maintenance of the Fund's records,
pricing of the Fund's shares, and preparation of prospectuses for existing
shareholders, proxy statements and certain reports.  A new Accounting
Services Agreement, or amendments to an existing one, may be approved by
the Fund's Board of Directors without shareholder approval.

Payments by the Fund for Management, Accounting and Shareholder Services

     Under the Management Agreement, for WRIMCO's management services, the
Fund pays WRIMCO a fee as described in the Prospectus.

        The management fees paid by the Fund to WRIMCO during the Fund's
fiscal years ended December 31, 1995, 1994 and 1993 were $249,509, $312,911
and $268,796, respectively.  For purposes of calculating the daily fee the
Fund does not include money owed to it by Waddell & Reed, Inc. for shares
which it has sold but not yet paid the Fund.  The Fund accrues and pays
this fee daily.    

     Under the Shareholder Servicing Agreement with respect to Class A
shares, the Fund pays the Agent a monthly fee of $1.0208 for each
shareholder account that was in existence at any time during the prior
month, plus $0.30 for each account on which dividend or distribution, of
cash or shares, had a record date in that month.  For Class Y shares, the
Fund pays the Agent a monthly fee equal to one-twelfth of .15 of 1% of the
average daily net assets of that Class for the preceding month.  The Fund
also pays certain out-of-pocket expenses of the Agent, including long
distance telephone communications costs, microfilm and storage costs for
certain documents; forms, printing and mailing costs; and costs of legal
and special services not provided by Waddell & Reed, Inc., WRIMCO or the
Agent.

     Under the Accounting Services Agreement, the Fund pays the Agent a
monthly fee of one-twelfth of the annual fee shown in the following table.

                          Accounting Services Fee

                  Average
               Net Asset Level                Annual Fee
          (all dollars in millions)      Rate for Each Level
          -------------------------      -------------------

          From $    0 to $   10              $      0
          From $   10 to $   25              $ 10,000
          From $   25 to $   50              $ 20,000
          From $   50 to $  100              $ 30,000
          From $  100 to $  200              $ 40,000
          From $  200 to $  350              $ 50,000
          From $  350 to $  550              $ 60,000
          From $  550 to $  750              $ 70,000
          From $  750 to $1,000              $ 85,000
               $1,000 and Over               $100,000

        Fees paid to the Agent for each of the fiscal years ended December
31, 1995, 1994 and 1993 was $20,000.    

     The State of California imposes limits on the amount of certain
expenses the Fund can pay.  If these expense limitations are exceeded,
WRIMCO is required to reduce the amount by which these expenses exceed the
expense limitation.  In the past, and for future fiscal periods, the state
of California has granted the Fund a variance from the expense limitation
to allow the Fund to exclude from its aggregate annual expenses transfer
agency fees, professional fees, and report costs attributable to the Fund's
average account size being smaller than the average account size for
investment companies with an objective similar to the Fund's and the amount
by which its custodian fee ratio exceeds the average custodian fee ratio
for the domestic portion of portfolio securities of the equity funds in the
United Group.  Other expenses excluded from aggregate annual expenses
include interest, taxes, brokerage commissions and extraordinary expenses,
such as litigation.

     The Fund will notify shareholders of any change in the variance.  For
the fiscal years ended December 31, 1995, 1994 and 1993, no expense
reimbursement by WRIMCO was required.

     Since the Fund pays a management fee for investment supervision and an
accounting services fee for accounting services as discussed above, WRIMCO
and the Agent, respectively, pay all of their own expenses in providing
these services.  Amounts paid by the Fund under the Shareholder Servicing
Agreement are described above.  Waddell & Reed, Inc. and affiliates pay the
Fund's Directors and officers who are affiliated with WRIMCO and its
affiliates.  The Fund pays the fees and expenses of the Fund's other
Directors.

        Waddell & Reed, Inc., under an agreement separate from the
Management Agreement, Shareholder Servicing Agreement and Accounting
Services Agreement, acts as the Fund's underwriter, i.e., sells its shares
on a continuous basis.  Waddell & Reed, Inc. is not required to sell any
particular number of shares, and thus sells shares only for purchase orders
received.  Under this agreement, Waddell & Reed, Inc. pays the costs of
sales literature, including the costs of shareholder reports used as sales
literature, and the costs of printing the prospectus furnished to it by the
Fund.  The aggregate dollar amounts of underwriting commissions for Class A
shares for the fiscal years ended December 31, 1995, 1994 and 1993 were
$58,922, $153,080 and $180,359, respectively.  The amounts retained by
Waddell & Reed, Inc. for these same periods were $27,322, $64,858 and
$79,879, respectively.    

     A major portion of the sales charge for Class A shares is paid to
account representatives and managers of Waddell & Reed, Inc.  Waddell &
Reed. Inc. may compensate its account representatives as to purchases for
which there is no sales charge.

     The Fund pays all of its other expenses.  These include the costs of
materials sent to shareholders, audit and outside legal fees, taxes,
brokerage commissions, interest, insurance premiums, custodian fees, fees
payable by the Fund under Federal or other securities laws and to the
Investment Company Institute and nonrecurring and extraordinary expenses,
including litigation and indemnification relating to litigation.

     Under a Service Plan for Class A shares (the "Plan") adopted by the
Fund pursuant to Rule 12b-1 under the 1940 Act, the Fund may pay Waddell &
Reed, Inc., the principal underwriter for the Fund, a fee not to exceed
 .25% of the Fund's average annual net assets attributable to Class A
shares, paid monthly, to reimburse Waddell & Reed, Inc. for its costs and
expenses in connection with the provision of personal services to Class A
shareholders of the Fund and/or maintenance of Class A shareholder
accounts.

        The Plan and a related Service Agreement between the Fund and
Waddell & Reed, Inc. contemplate that Waddell & Reed, Inc. may be
reimbursed for amounts it expends in compensating, training and supporting
registered account representatives, sales managers and/or other appropriate
personnel in providing personal services to Class A shareholders of the
Fund and/or maintaining Class A shareholder accounts; increasing services
provided to Class A shareholders of the Fund by office personnel located at
field sales offices; engaging in other activities useful in providing
personal service to Class A shareholders of the Fund and/or maintenance of
Class A shareholder accounts; and in compensating broker-dealers, and other
third parties, who may regularly sell shares of the Fund, and other third
parties, for providing shareholder services and/or maintaining shareholder
accounts with respect to Class A shares.  Service fees in the amount of
$54,875 were paid (or accrued) by the Fund with respect to Class A shares
for the fiscal year ended December 31, 1995.    

     The Plan and the Service Agreement were approved by the Fund's Board
of Directors, including the Directors who are not interested persons of the
Fund and who have no direct or indirect financial interest in the
operations of the Plan or any agreement referred to in the Plan (hereafter,
the "Plan Directors").  The Plan was also approved by the affected
shareholders of the Fund.

     Among other things, the Plan provides that (i) Waddell & Reed, Inc.
will provide to the Directors of the Fund at least quarterly, and the
Directors will review, a report of amounts expended under the Plan and the
purposes for which such expenditures were made, (ii) the Plan will continue
in effect only so long as it is approved at least annually, and any
material amendments thereto will be effective only if approved, by the
Directors including the Plan Directors acting in person at a meeting called
for that purpose, (iii) amounts to be paid by the Fund under the Plan may
not be materially increased without the vote of the holders of a majority
of the outstanding Class A shares of the Fund, and (iv) while the Plan
remains in effect, the selection and nomination of the Directors who are
Plan Directors will be committed to the discretion of the Plan Directors.

Custodial and Auditing Services

     The Fund's Custodian is UMB Bank, n.a., Kansas City, Missouri.  In
general, it is responsible for holding the Fund's cash and securities.
Price Waterhouse LLP, Kansas City, Missouri, the Fund's independent
accountants, audits the Fund's financial statements.

                PURCHASE, REDEMPTION AND PRICING OF SHARES

Determination of Offering Price

     The net asset value of each class of the shares of the Fund is the
value of the assets of that class less the class's liabilities, divided by
the total number of outstanding shares of that class.

     Class A shares of the Fund are sold at their next determined net asset
value plus the sales charge described in the Prospectus. The price makeup
as of December 31, 1995 was as follows:
   
     Net asset value per Class A share (Class A net assets divided by Class
A shares outstanding) ...................................    8.75
     Add:  selling commission (5.75% of offering price)..     .53
                                                             ----
     Maximum offering price per Class A share (Class A net asset value
divided by 94.25%) ......................................    9.28
                                                         ====    

     The offering price of a Class A share is its net asset value next
determined following acceptance of a purchase order plus the sales charge.
The offering price of a Class Y share is its net asset value next
determined following acceptance of a purchase order.  The number of shares
you receive for your purchase depends on the next offering price after
Waddell & Reed, Inc. receives and accepts your order at its principal
business office at the address shown on the cover of this SAI.  You will be
sent a confirmation after your purchase which will indicate how many shares
you have purchased. Shares are normally issued for cash only.

     Waddell & Reed, Inc. need not accept any purchase order, and it or the
Fund may determine to discontinue offering Fund shares for purchase.

     The net asset value per share and offering price are ordinarily
computed once daily on each day that the NYSE is open for trading as of the
later of the close of the regular session of the NYSE (ordinarily 4:00 p.m.
Eastern time) or the close of the regular session of any domestic
securities or commodities exchange on which an option or future held by the
Fund is traded.  The NYSE annually announces the days on which it will not
be open for trading.  The most recent announcement indicates that the NYSE
will not be open on the following days:  New Year's Day, Presidents' Day,
Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day
and Christmas Day.  However, it is possible that the NYSE may close on
other days.  The net asset value will change every business day, since the
number of shares outstanding and the value of the assets changes every
business day.

     Except as otherwise noted, the securities in the Fund's portfolio that
are listed or traded on a national securities exchange are valued on the
basis of the last sale price on that day or, lacking any sales at a price
that is the mean between the closing bid and asked prices. Securities that
are traded over-the-counter are valued at the mean between bid and asked
prices provided by Nasdaq.  Bonds, other than U.S. Government Securities
and convertible bonds, are valued using a pricing system provided by a
major dealer in bonds.  Convertible bonds are valued using this pricing
system only on days when there is no sale reported.  Short-term debt
securities are valued at amortized cost, which approximates market.
Foreign securities that are listed or traded only on a foreign securities
exchange will be valued using the last sale price on that exchange prior to
the computation, or, if no sale is reported at that time, the mean between
the bid and asked prices.  Foreign securities represented by American
Depository Receipts listed or admitted to trading on a domestic securities
exchange or traded in the United States over-the-counter market will be
valued in the same manner as domestic exchange listed or over-the-counter
securities. Foreign securities issued or guaranteed by any foreign
government or any subdivision, agency or instrumentality thereof are valued
by the same methods indicated above for the valuation of bonds. As to
foreign securities that are quoted in foreign currencies, such quotation
will be converted to U.S. dollars using foreign exchange rates.  When
market quotations are not readily available, securities and other assets
are valued at fair value as determined in good faith under procedures
established by and under the general supervision and responsibility of the
Fund's Board of Directors.

     As to U.S. Government Securities, the Board of Directors has decided
to use the prices quoted by a dealer in bonds that offers a pricing service
to value U.S. Government Securities.  The Board of Directors believes that
such a service does quote their fair value.  The Board of Directors,
however, may hereafter determine to use another service or use the bid
price quoted by dealers if it should determine that such service or quotes
more accurately reflect the fair value of U.S. Government Securities held
by the Fund.

     Gold and silver bullion will be valued at the last spot settlement
price on the Commodity Exchange, Inc., and platinum bullion will be valued
at the last spot settlement price or, if not available, the settlement
price of the nearest contract month on the New York Mercantile Exchange.
If prices are not available on any of these exchanges, the relevant
precious metal will be valued at prices in the bullion market or markets
approved by the Board of Directors for that purpose; if there is no readily
available market quotation, then bullion will be valued at fair value as
determined in good faith, by the Board of Directors.

     Puts, calls and Government Securities Futures purchased and held by
the Fund are valued at the last sales price thereof on the securities or
commodities exchanges on which they are traded, or, if there are no
transactions, at the mean between bid and asked prices.  Ordinarily, the
close of option trading on national securities exchanges is 4:10 P.M.
Eastern time and the close of commodities exchanges is 4:15 P.M. Eastern
time.  Futures contracts will be valued by reference to established futures
exchanges.  The value of a futures contract purchased by the Fund will be
either the closing price of that contract or the bid price.  Conversely,
the value of a futures contract sold by the Fund will be either the closing
price or the asked price.

     When the Fund writes a put or call, an amount equal to the premium
received is included in the Fund's Statement of Assets and Liabilities as
an asset, and an equivalent deferred credit is included in the liability
section.  The deferred credit is "marked-to-market" to reflect the current
market value of the put or call.  If a call the Fund wrote is exercised,
the proceeds received on the sale of the related investment are increased
by the amount of the premium the Fund received.  If the Fund exercised a
call it purchased, the amount paid to purchase the related investment is
increased by the amount of the premium paid. If a put written by the Fund
is exercised, the amount the Fund pays to purchase the related investment
is decreased by the amount of the premium it received.  If the Fund
exercises a put it purchased, the amount the Fund receives from the sale of
the related investment is reduced by the amount of the premium it paid.  If
a put or call written by the Fund expires, it has a gain in the amount of
the premium; if it enters into a closing purchase transaction, the Fund
will have a gain or loss depending on whether the premium was more or less
than the cost of the closing transaction.

     Foreign currency exchange rates are generally determined prior to the
close of trading of the regular session of the NYSE.  Occasionally events
affecting the value of foreign investments and such exchange rates occur
between the time at which they are determined and the close of the regular
session of trading on the NYSE, which events will not be reflected in a
computation of the Fund's net asset value on that day.  If events
materially affecting the value of such investments or currency exchange
rates occur during such time period, investments will be valued at their
fair value as determined in good faith by or under the direction of the
Board of Directors.  The foreign currency exchange transactions of the Fund
conducted on a spot (that is, cash) basis are valued at the spot rate for
purchasing or selling currency prevailing on the foreign exchange market.
This rate under normal market conditions differs from the prevailing
exchange rate in an amount generally less than one-tenth of one percent due
to the costs of converting from one currency to another.

     Optional delivery standby commitments are valued at fair value under
the general supervision and responsibility of the Fund's Board of
Directors.  They are accounted for in the same manner as exchange-listed
puts.

Minimum Initial and Subsequent Investments

     For Class A shares, initial investments must be at least $500 with the
exceptions described in this paragraph.  A $100 minimum initial investment
pertains to certain exchanges of shares from another fund in the United
Group.  A $50 minimum initial investment pertains to purchases for certain
retirement plan accounts.  A $50 minimum initial investment also pertains
to accounts for which an investor has arranged, at the time of initial
investment, to make subsequent purchases for the account by having regular
monthly withdrawals of $25 or more made from a bank account.  A minimum
initial investment of $25 is applicable to purchases made through payroll
deduction for or by employees of WRIMCO, Waddell & Reed, Inc., their
affiliates, or certain retirement plan accounts.  Except with respect to
certain exchanges and automatic withdrawals from a bank account, a
shareholder may make subsequent investments of any amount.  See "Exchanges
for Shares of Other Funds in the United Group."

     For Class Y shares, investments by government entities or authorities
or by corporations must total at least $10 million within the first twelve
months after initial investment.  There is no initial investment minimum
for other Class Y investors.

Reduced Sales Charges (Applicable to Class A Shares Only)

Account Grouping

     Large purchases of Class A shares are subject to lower sales charges.
The schedule of sales charges appears in the Prospectus for Class A shares.
For the purpose of taking advantage of the lower sales charges available
for large purchases, a purchase in any of categories 1 through 7 listed
below made by an individual or deemed to be made by an individual may be
grouped with purchases in any other of these categories.

1.   Purchases by an individual for his or her own account (includes
     purchases under the United Funds Revocable Trust Form);

2.   Purchases by that individual's spouse purchasing for his or her own
     account (includes United Funds Revocable Trust Form of spouse);

3.   Purchases by that individual or his or her spouse in their joint
     account;

4.   Purchases by that individual or his or her spouse for the account of
     their child under age 21;

5.   Purchase by any custodian for the child of that individual or spouse
     in a Uniform Gift to Minors Act ("UGMA")or Uniform Transfers to Minors
     Act ("UTMA") account;

6.   Purchases by that individual or his or her spouse for his or her
     Individual Retirement Account ("IRA"), Section 457 of the Internal
     Revenue Code of 1986, as amended (the "Code"), salary reduction plan
     account, provided that such purchases are subject to a sales charge
     (see "Net Asset Value Purchases"), tax sheltered annuity account
     ("TSA") or Keogh plan account, provided that the individual and spouse
     are the only participants in the Keogh plan; and

7.   Purchases by a trustee under a trust where that individual or his or
     her spouse is the settlor (the person who establishes the trust).

     Examples:

     A.   Grandmother opens an UGMA account for grandson A; Grandmother has
          an account in her own name; A's father has an account in his own
          name; the UGMA account may be grouped with A's father's account
          but may not be grouped with Grandmother's account;

     B.   H establishes a trust naming his children as beneficiaries and
          appointing himself and his bank as co-trustees; a purchase made
          in the trust account is eligible for grouping with an IRA account
          of W, H's wife;

     C.   H's will provides for the establishment of a trust for the
          benefit of his minor children upon H's death; his bank is named
          as trustee; upon H's death, an account is established in the name
          of the bank, as trustee; a purchase in the account may be grouped
          with an account held by H's wife in her own name.

     D.   X establishes a trust naming herself as trustee and R, her son,
          as successor trustee and R and S as beneficiaries; upon X's
          death, the account is transferred to R as trustee; a purchase in
          the account may not be grouped with R's individual account.  If
          X's spouse, Y, was successor trustee, this purchase could be
          grouped with Y's individual account.

     All purchases of Class A shares made for a participant in a multi-
participant Keogh plan may be grouped only with other purchases made under
the same plan; a multi-participant Keogh plan is defined as a plan in which
there is more than one participant where one or more of the participants is
other than the spouse of the owner/employer.

Example A: H has established a Keogh plan; he and his wife W are the only
           participants in the plan; they may group their purchases made
           under the plan with any purchases in categories 1 through 7
           above.

Example B: H has established a Keogh plan; his wife, W, is a participant
           and they have hired one or more employees who also become
           participants in the plan; H and W may not combine any purchases
           made under the plan with any purchases in categories 1 through 7
           above; however, all purchases made under the plan for H, W or
           any other employee will be combined.

     All purchases of Class A shares made under a "qualified" employee
benefit plan of an incorporated business will be grouped.  A "qualified"
employee benefit plan is established pursuant to Section 401 of the Code.
All qualified employee benefit plans of any one employer or affiliated
employers will also be grouped. An affiliate is defined as an employer that
directly or indirectly controls or is controlled by or is under control
with another employer.

Example:  Corporation X sets up a defined benefit plan; its subsidiary,
          Corporation Y, sets up a 401(k) plan; all contributions made
          under both plans will be grouped.

     All purchases of Class A shares made under a simplified employee
pension plan ("SEP"), payroll deduction plan or similar arrangement adopted
by an employer or affiliated employers (as defined above) may be grouped
provided that the employer elects to have all such purchases grouped at the
time the plan is set up.  If the employer does not make such an election,
the purchases made by individual employees under the plan may be grouped
with the other accounts of the individual employees described above in
"Account Grouping."

     Account grouping as described above is available under the following
circumstances.

One-time Purchases

     A one-time purchase of Class A shares in accounts eligible for
grouping may be combined for purposes of determining the availability of a
reduced sales charge.  In order for an eligible purchase to be grouped, the
investor must advise Waddell & Reed, Inc. at the time the purchase is made
that it is eligible for grouping and identify the accounts with which it
may be grouped.

Example: H and W open an account in the Fund and invest $75,000; at the
         same time, H's parents open up three UGMA accounts for H and W's
         three minor children and invest $10,000 in each child's name; the
         combined purchase of $105,000 of Class A shares is subject to a
         reduced sales load of 4.75% provided that Waddell & Reed, Inc. is
         advised that the purchases are entitled to grouping.

Rights of Accumulation

     If Class A shares are held in any account and an additional purchase
is made in that account or in any account eligible for grouping with that
account, the additional purchase is combined with the net asset value of
the existing account as of the date the new purchase is accepted by Waddell
& Reed, Inc. for the purpose of determining the availability of a reduced
sales charge.

Example: H is a current Class A shareholder who invested in the Fund three
         years ago.  His account has a net asset value of $80,000.  His
         wife, W, now wishes to invest $20,000 in Class A shares of the
         Fund.  W's purchase will be combined with H's existing account and
         will be entitled to a reduced sales charge of 4.75%.  H's original
         purchase was subject to a full sales charge and the reduced charge
         does not apply retroactively to that purchase.

     In order to be entitled to rights of accumulation, the purchaser must
inform Waddell & Reed, Inc. that the purchaser is entitled to a reduced
charge and provide Waddell & Reed, Inc. with the name and number of the
existing account with which the purchase may be combined.

     If a purchaser holds shares which have been purchased under a
contractual plan the shares held under the plan may be combined with the
additional purchase only if the contractual plan has been completed.

Statement of Intention

     The benefit of a reduced sales charge for larger purchases of Class A
shares is also available under a Statement of Intention.  By signing a
Statement of Intention form, which is available from Waddell & Reed, Inc.,
the purchaser indicates an intention to invest, over a 13-month period, a
dollar amount which is sufficient to qualify for a reduced sales charge.
The 13-month period begins on the date the first purchase made under the
Statement of Intention is accepted by Waddell & Reed, Inc.  Each purchase
made from time to time under the Statement of Intention is treated as if
the purchaser were buying at one time the total amount which he or she
intends to invest.  The sales charge applicable to all purchases of Class A
shares made under the terms of the Statement of Intention will be the sales
charge in effect on the beginning date of the 13-month period.

     In determining the amount which the purchaser must invest in
order to qualify for a reduced sales charge under a Statement of Intention,
the investor's Rights of Accumulation (see above) will be taken into
account; that is, Class A shares already held in the same account in which
the purchase is being made or in any account eligible for grouping with
that account, as described above, will be included.

Example:  H signs a Statement of Intention indicating his intent to invest
          in his own name a dollar amount sufficient to entitle him to
          purchase Class A shares at the sales charge applicable to a
          purchase of $100,000.  H has an IRA account and the Class A
          shares held under the IRA in the Fund have a net asset value as
          of the date the Statement of Intention is accepted by Waddell &
          Reed, Inc. of $15,000; H's wife, W, has an account in her own
          name invested in another fund in the United Group which charges
          the same sales load as the Fund, with a net asset value as of the
          date of acceptance of the Statement of Intention of $10,000; H
          needs to invest $75,000 in Class A shares over the 13-month
          period in order to qualify for the reduced sales load applicable
          to a purchase of $100,000.

     A copy of the Statement of Intention signed by a purchaser will be
returned to the purchaser after it is accepted by Waddell & Reed, Inc. and
will set forth the dollar amount of Class A shares which must be purchased
within the 13-month period in order to qualify for the reduced sales
charge.

     If a purchaser holds shares which have been purchased under a
contractual plan, the shares held under the plan will be taken into account
in determining the amount which must be invested under the Statement of
Intention only if the contractual plan has been completed.

     The minimum initial investment under a Statement of Intention is 5% of
the dollar amount which must be invested under the Statement of Intention.
An amount equal to 5% of the purchase required under the Statement of
Intention will be held "in escrow."  If a purchaser does not, during the
period covered by the Statement of Intention, invest the amount required to
qualify for the reduced sales charge under the terms of the Statement of
Intention, he or she will be responsible for payment of the sales charge
applicable to the amount actually invested.  The additional sales charge
owed on purchases of Class A shares made under a Statement of Intention
which is not completed will be collected by redeeming part of the shares
purchased under the Statement of Intention and held "in escrow" unless the
purchaser makes payment of this amount to Waddell & Reed, Inc. within 20
days of Waddell & Reed, Inc.'s request for payment.

     If the actual amount invested is higher than the amount an investor
intends to invest, and is large enough to qualify for a sales charge lower
than that available under the Statement of Intention, the lower sales
charge will apply.

     A Statement of Intention does not bind the purchaser to buy, or
Waddell & Reed, Inc. to sell, the shares covered by the Statement of
Intention.

     With respect to Statements of Intention for $2,000,000 or purchases
otherwise qualifying for no sales charge under the terms of the Statement
of Intention, the initial investment must be at least $200,000, and the
value of any shares redeemed during the 13-month period which were acquired
under the Statement of Intention will be deducted in computing the
aggregate purchases under the Statement of Intention.

     Statements of Intention are not available for purchases made under a
SEP where the employer has elected to have all purchases under the SEP
grouped.

Other Funds in the United Group

     Reduced sales charges for larger purchases of Class A shares apply to
purchases of any of the funds in the United Group which are subject to a
sales charge.  A purchase of, or shares held, in any of the funds in the
United Group which are subject to the same sales charge as the Fund will be
treated as an investment in the Fund for the purpose of determining the
applicable sales charge.  The following funds in the United Group have
shares that are subject to a maximum 5.75% ("full") sales charge as
described in the prospectus of each Fund:  United Funds, Inc., United
International Growth Fund, Inc., United Continental Income Fund, Inc.,
United Vanguard Fund, Inc., United Retirement Shares, Inc., United High
Income Fund, Inc., United New Concepts Fund, Inc., United Gold & Government
Fund, Inc., United High Income Fund II, Inc. and United Asset Strategy
Fund, Inc.  The following funds in the United Group have shares that are
subject to a "reduced" sales charge as described in the prospectus of each
fund:  United Municipal Bond Fund, Inc., United Government Securities Fund,
Inc. and United Municipal High Income Fund, Inc. For the purposes of
obtaining the lower sales charge which applies to large purchases,
purchases in a fund in the United Group of shares that are subject to a
full sales charge may not be grouped with purchases of shares in a fund in
the United Group that are subject to a reduced sales charge; conversely,
purchases of shares in a fund with a reduced sales charge may not be
grouped or combined with purchases of shares of a fund that are subject to
a full sales charge.

     United Cash Management, Inc. is not subject to a sales charge.
Purchases in that fund are not eligible for grouping with purchases in any
other fund.

Net Asset Value Purchases of Class A Shares

     As stated in the Prospectus, Class A shares of the Fund may be
purchased at net asset value by the Directors and officers of the Fund,
employees of Waddell & Reed, Inc., employees of their affiliates, account
representatives of Waddell & Reed, Inc. and the spouse, children, parents,
children's spouse's and parents of each such Director, officer, employee
and account representative.  "Child" includes stepchild; "parent" includes
stepparent.  Purchases of Class A shares in an IRA sponsored by Waddell &
Reed, Inc. established for any of these eligible purchasers may also be at
net asset value.  Purchases in any tax qualified retirement plan under
which the eligible purchaser is the sole participant may also be made at
net asset value.  Trusts under which the grantor and the trustee or a co-
trustee are each an eligible purchaser are also eligible for net asset
value purchases of Class A shares.  "Employees" includes retired employees.
A retired employee is an individual separated from service from Waddell &
Reed, Inc. or affiliated companies with a vested interest in any Employee
Benefit Plan sponsored by Waddell & Reed, Inc. or its affiliated companies.
"Account representatives" includes retired account representatives.  A
"retired account representative" is any account representative who was, at
the time of separation from service from Waddell & Reed, Inc., a Senior
Account Representative.  A custodian under the Uniform Gifts (or Transfers)
to Minors Act purchasing for the child or grandchild of any employee or
account representative may purchase Class A shares at net asset value
whether or not the custodian himself is an eligible purchaser.

     Purchases in a 401(k) plan having 100 or more eligible employees and
purchases in a 457 plan having 100 or more eligible employees may be made
at net asset value.

Reasons for Differences in Public Offering Price of Class A Shares

     As described herein and in the Prospectus, there are a number of
instances in which the Fund's Class A shares are sold or issued on a basis
other than the maximum public offering price, that is, the net asset value
plus the highest sales charge.  Some of these relate to lower or eliminated
sales charges for larger purchases of Class A shares, whether made at one
time or over a period of time as under a Statement of Intention or right of
accumulation.  See the table of sales charges in the Prospectus.  The
reasons for these quantity discounts are, in general, that (i) they are
traditional and have long been permitted in the industry and are therefore
necessary to meet competition as to sales of shares of other funds having
such discounts, (ii) certain quantity discounts are required by rules of
the National Association of Securities Dealers, Inc. (as are elimination of
sales charges on the reinvestment of dividends and distributions), and
(iii) they are designed to avoid an unduly large dollar amount of sales
charges on substantial purchases in view of reduced selling expenses.
Quantity discounts are made available to certain related persons for
reasons of family unity and to provide a benefit to tax-exempt plans and
organizations.

     The reasons for the other instances in which there are reduced or
eliminated sales charges for Class A shares are as follows.  Exchanges at
net asset value are permitted because a sales charge has already been paid
on the shares exchanged.  Sales of Class A shares without sales charge are
permitted to Directors, officers and certain others due to reduced or
eliminated selling expenses and since such sales may aid in the development
of a sound employee organization, encourage incentive, responsibility and
interest in the United Group and an identification with its aims and
policies.  Limited reinvestments of redemptions of Class A shares at no
sales charge are permitted to attempt to protect against mistaken or not
fully informed redemption decisions.  Class A shares may be issued at no
sales charge in plans of reorganization due to reduced or eliminated sales
expenses and since, in some cases, such issuance is exempted by the 1940
Act from the otherwise applicable restrictions as to what sales charge must
be imposed.  In no case in which there is a reduced or eliminated sales
charge are the interests of existing Class A shareholders adversely
affected since, in each case, the Fund receives the net asset value per
share of all shares sold or issued.

Flexible Withdrawal Service for Class A Shareholders

     If you qualify, you may arrange to receive regular monthly, quarterly,
semiannual or annual payments by redeeming Class A shares on a regular
basis through the Flexible Withdrawal Service (the "Service").  The Service
is available not only for Class A shares of the Fund but also for Class A
shares of any of the funds in the United Group.  It would be a disadvantage
to an investor to make additional purchases of Class A shares while a
withdrawal program is in effect as this would result in duplication of
sales charges.

     To qualify for the Service, you must have invested at least $10,000 in
Class A shares which you still own of any of the funds in the United Group;
or, you must own Class A shares having a value of at least $10,000.  The
value for this purpose is not the net asset value but the value at the
offering price, i.e., the net asset value plus the sales charge.

     To start the Service, you must fill out a form (available from Waddell
& Reed, Inc.) advising Waddell & Reed, Inc. of the manner in which you want
your shares redeemed to make the payments.  You have three choices:

     First.  To get a monthly, quarterly, semiannual or annual payment of
$50 or more;

     Second.  To get a monthly payment, which will change each month, equal
to one-twelfth of a percentage of the value of the shares in the Account;
you fix the percentage; or

     Third.  To get a monthly or quarterly payment, which will change each
month or quarter, by redeeming a number of shares fixed by you (at least
five shares).

     Shares are redeemed on the 20th day of the month in which the payment
is to be made, or on the prior business day if the 20th is not a business
day.  Payments are made within five days of the redemption.

     Retirement plan accounts may be subject to a fee imposed by the plan
custodian for use of their service.

     If you have a share certificate for the shares you want to make
available for the Service, you must enclose the certificate with the form
initiating the Service.

     The dividends and distributions on shares you have made available for
the Service are reinvested in additional Class A shares.  All payments are
made by redeeming shares, which may involve a gain or loss for tax
purposes.  To the extent that payments exceed dividends and distributions,
the number of shares you own will decrease.  When all of the shares in an
account are redeemed, you will not receive any further payments.  Thus, the
payments are not an annuity or income or return on your investment.

     You may, at any time, change the manner in which you have chosen to
have shares redeemed.  You can change to any one of the other choices
originally available to you.  For example, if you started out with a $50
monthly payment, you could change to a $200 quarterly payment.  You can at
any time redeem part or all of the shares in your account; if you redeem
all of the shares, the Service is terminated.  The Fund can also terminate
the Service by notifying you in writing.

     After the end of each calendar year, information on shares redeemed
will be sent to you to assist you in completing your Federal income tax
return.

Exchanges for Shares of Other Funds in the United Group

Class A Share Exchanges

     Once a sales charge has been paid on Class A shares of a fund in the
United Group, these shares and any shares added to them from reinvestment
of dividends or distributions may be freely exchanged for Class A shares of
another fund in the United Group.  The shares you exchange must be worth at
least $100 or you must already own shares of the fund in the United Group
into which you want to exchange.

     You may exchange Class A shares you own in another fund in the United
Group for Class A shares of the Fund without charge if (i) a sales charge
was paid on these shares; or (ii) the shares were received in exchange for
shares for which a sales charge was paid; or (iii) the shares were acquired
from reinvestment of dividends and distributions paid on such shares.
There may have been one or more such exchanges so long as a sales charge
was paid on the shares originally purchased.  Also, shares acquired without
a sales charge because the purchase was $2 million or more will be treated
the same as shares on which a sales charge was paid.

     United Municipal Bond Fund, Inc., United Government Securities Fund,
Inc. and United Municipal High Income Fund, Inc. shares are the exceptions
and special rules apply.  Class A shares of these funds may be exchanged
for Class A shares of the Fund only if (i) you have received those shares
as a result of one or more exchanges of shares on which a sales charge was
originally paid, or (ii) the shares have been held from the date of the
original purchase for at least six months.

     Subject to the above rules regarding sales charges, you may have a
specific dollar amount of Class A shares of United Cash Management, Inc.
automatically exchanged each month into Class A shares of the Fund or any
other fund in the United Group.  The shares of United Cash Management, Inc.
which you designate for automatic exchange must be worth at least $100 or
you must own Class A shares of the fund in the United Group into which you
want to exchange.  The minimum value of shares which you may designate for
automatic exchange monthly is $100, which may be allocated among the Class
A shares of different funds in the United Group so long as each fund
receives a value of at least $25.  Minimum initial investment and minimum
balance requirements apply to such automatic exchange service.

     You may redeem your Class A shares of the Fund and use the proceeds to
purchase Class Y shares of the Fund if you meet the criteria for purchasing
Class Y shares.

Class Y Share Exchanges

     Class Y shares of the Fund may be exchanged for Class Y shares of any
other fund in the United Group.

General Exchange Information

     When you exchange shares, the total shares you receive will have the
same aggregate net asset value as the total shares you exchange.  The
relative values are those next figured after we receive your exchange
request in good order.

     These exchange rights and other exchange rights concerning the other
funds in the United Group can in most instances be eliminated or modified
at any time and any such exchange may not be accepted.

Retirement Plans

     As described in the Prospectus for Class A shares, your account may be
set up as a funding vehicle for a retirement plan.  For individual
taxpayers meeting certain requirements, Waddell & Reed, Inc. offers
prototype documents for the following retirement plans.  All of these plans
involve investment in shares of the Fund (or shares of certain other funds
in the United Group).

     Individual Retirement Accounts (IRAs).  Investors having earned income
may set up a plan that is commonly called an IRA.  Under an IRA, an
investor can contribute each year up to 100% of his or her earned income,
up to an annual maximum of $2,000.  The annual maximum is $2,250 if an
investor's spouse has earned income of $250 or less in a taxable year.  If
an investor's spouse has at least $2,000 of earned income in a taxable
year, the annual maximum is $4,000 ($2,000 for each spouse).  The
contributions are deductible unless the investor (or, if married, either
spouse) is an active participant in a qualified retirement plan or if,
notwithstanding that the investor or one or both spouses so participate,
their adjusted gross income does not exceed certain levels.

     An investor may also use an IRA to receive a rollover contribution
which is either (a) a direct rollover from an employer's plan or (b) a
rollover of an eligible distribution paid to the investor from an
employer's plan or another IRA.  To the extent a rollover contribution is
made to an IRA, the distribution will not be subject to Federal income tax
until distributed from the IRA.  A direct rollover generally applies to any
distribution from an employer's plan (including a custodial account under
Section 403(b)(7) of the Code, but not an IRA) other than certain periodic
payments, required minimum distributions and other specified distributions.
In a direct rollover, the eligible rollover distribution is paid directly
to the IRA, not to the investor.  If, instead, an investor receives payment
of an eligible rollover distribution, all or a portion of that distribution
generally may be rolled over to an IRA within 60 days after receipt of the
distribution.  Because mandatory Federal income tax withholding applies to
any eligible rollover distribution which is not paid in a direct rollover,
investors should consult their tax advisers or pension consultants as to
the applicable tax rules.  If you already have an IRA, you may have the
assets in that IRA transferred directly to an IRA offered by Waddell &
Reed, Inc.

     Simplified Employee Pension (SEP) plans and Salary Reduction SEP
(SARSEP) plans.  Employers can make contributions to SEP-IRAs established
for employees.  An employer may contribute up to 15% of compensation, not
to exceed $22,500, per year for each employee.

     Keogh Plans.  Keogh plans, which are available to self-employed
individuals, are defined contribution plans that may be either a money
purchase plan or a profit sharing plan.  As a general rule, an investor
under a defined contribution Keogh plan can contribute each year up to 25%
of his or her annual earned income, with an annual maximum of $30,000.

     457 Plans.  If an investor is an employee of a state or local
government or of certain types of charitable organizations, he or she may
be able to enter into a deferred compensation arrangement in accordance
with Section 457 of the Code.

     TSAs - Custodial Accounts and Title I Plans.  If an investor is an
employee of a public school system or of certain types of charitable
organizations, he or she may be able to enter into a deferred compensation
arrangement through a custodian account under Section 403(b) of the Code.
Some organizations have adopted Title I plans, which are funded by employer
contributions in addition to employee deferrals.

     401(k) Plans.  With a 401(k) plan, employees can make tax-deferred
contributions into a plan to which the employer may also contribute,
usually on a matching basis.  An employee may defer each year up to 25% of
compensation, subject to certain annual maximums, which may be increased
each year based on cost-of-living adjustments.

     More detailed information about these arrangements and applicable
forms are available from Waddell & Reed, Inc.  These plans may involve
complex tax questions as to premature distributions and other matters.
Investors should consult their tax adviser or pension consultant.

Redemptions

        The Prospectus gives information as to redemption procedures.
Redemption payments are made within seven days unless delayed because of
certain emergency conditions determined by the SEC, when the NYSE is closed
other than for weekends or holidays, or when trading on the NYSE is
restricted.  Payment is made in cash, although under extraordinary
conditions redemptions may be made in portfolio securities.  Payment for
redemptions of shares of the Fund may be made in portfolio securities when
the Fund's Board of Directors determines that conditions exist making cash
payments undesirable.  Redemptions made in securities will be made only in
readily marketable securities.  Securities used for payment of redemptions
are valued at the value used in figuring net asset value.  There would be
brokerage costs to the redeeming shareholder in selling such securities.
The Fund, however, has elected to be governed by Rule 18f-1 under the 1940
Act, pursuant to which it is obligated to redeem shares solely in cash up
to the lesser of $250,000 or 1% of its net asset value during any 90-day
period for any one shareholder.    

Reinvestment Privilege

     The Prospectus for Class A shares discusses the reinvestment privilege
for Class A shares under which, if you redeem your Class A shares and then
decide it was not a good idea, you may reinvest.  If Class A shares of the
Fund are then being offered, you can put all or part of your redemption
payment back into Class A shares of the Fund without any sales charge at
the net asset value next determined after you have returned the amount.
Your written request to do this must be received within 30 days after your
redemption request was received.  You can do this only once as to Class A
shares of the Fund.  You do not use up this privilege by redeeming Class A
shares to invest the proceeds at net asset value in a Keogh plan or an IRA.

Mandatory Redemption of Certain Small Accounts

     The Fund has the right to compel the redemption of shares held under
any account or any plan if the aggregate net asset value of such shares
(taken at cost or value as the Board of Directors may determine) is less
than $500.  The Board of Directors has no intent to compel redemptions in
the foreseeable future.  If it should elect to compel redemptions,
shareholders who are affected will receive prior written notice and will be
permitted 60 days to bring their accounts up to the minimum before this
redemption is processed.

                          DIRECTORS AND OFFICERS

     The day-to-day affairs of the Fund are handled by outside
organizations selected by the Board of Directors.  The Board of Directors
has responsibility for establishing broad corporate policies for the Fund
and for overseeing overall performance of the selected experts.  It has the
benefit of advice and reports from independent counsel and independent
auditors.

     The principal occupation during at least the past five years of each
Director and officer of the Fund is given below.  Each of the persons
listed through and including Mr. Wright is a member of the Fund's Board of
Directors.  The other persons are officers but not members of the Board of
Directors.  For purposes of this section, the term "Fund Complex" includes
each of the registered investment companies in the United Group of Mutual
Funds, TMK/United Funds, Inc. and Waddell & Reed Funds, Inc.  Each of the
Fund's Directors is also a Director of each of the funds in the Fund
Complex and each of the Fund's officers, with the exception of Mr. Avery,
is also an officer of one or more of the funds in the Fund Complex.

RONALD K. RICHEY*
2001 Third Avenue South
Birmingham, Alabama 35233
     Chairman of the Board of Directors of the Fund and each of the other
funds in the Fund Complex; Chairman of the Board of Directors of Waddell &
Reed Financial Services, Inc., United Investors Management Company and
United Investors Life Insurance Company; Chairman of the Board of Directors
and Chief Executive Officer of Torchmark Corporation; Chairman of the Board
of Directors of Vesta Insurance Group, Inc.; formerly, Chairman of the
Board of Directors of Waddell & Reed, Inc.  Father of Linda Graves,
Director of the Fund and each of the other funds in the Fund Complex.

KEITH A. TUCKER*
     President of the Fund and each of the other funds in the Fund Complex;
President, Chief Executive Officer and Director of Waddell & Reed Financial
Services, Inc.; Chairman of the Board of Directors of WRIMCO, Waddell &
Reed, Inc., Waddell & Reed Services Company, Waddell & Reed Asset
Management Company and Torchmark Distributors, Inc., an affiliate of
Waddell & Reed, Inc.; Vice Chairman of the Board of Directors, Chief
Executive Officer and President of United Investors Management Company;
Vice Chairman of the Board of Directors of Torchmark Corporation; Director
of Southwestern Life Corporation; formerly, partner in Trivest, a private
investment concern; formerly, Director of Atlantis Group, Inc., a
diversified company.

HENRY L. BELLMON
Route 1
P. O. Box 26
Red Rock, Oklahoma  74651
     Rancher; Professor, Oklahoma State University; formerly, Governor of
Oklahoma.

DODDS I. BUCHANAN
905 13th Street
Boulder, Colorado  80302
     Advisory Director, The Hand Companies; President, Buchanan Ranch
Corporation; formerly, Senior Vice President and Director of Marketing
Services, The Meyer Group of Management Consultants; formerly, Professor of
Marketing, College of Business, University of Colorado.

JAY B. DILLINGHAM
926 Livestock Exchange Building
Kansas City, Missouri  64102
     Retired.

LINDA GRAVES*
1 South West Cedar Crest Road
Topeka, Kansas 66606
     First Lady of Kansas; formerly, partner, Levy and Craig, P.C., a law
firm.  Daughter of Ronald K. Richey, Chairman of the Board of the Fund and
each of the other funds in the Fund Complex.

JOHN F. HAYES*
335 N. Washington
P. O. Box 2977
Hutchinson, Kansas  67504-2977
     Director of Central Bank and Trust; Chairman of Gilliland & Hayes,
P.A., a law firm; formerly, President of Gilliland & Hayes, P.A.

GLENDON E. JOHNSON
7300 Corporate Center Drive
P. O. Box 020270
Miami, Florida  33126-1208
     Director and Chief Executive Officer of John Alden Financial
Corporation and subsidiaries.

JAMES B. JUDD
No. 1 Ward Parkway
Suite 138
Kansas City, Missouri 64112
     Retired; formerly, partner, KPMG Peat Marwick.  A petition relating to
Mr. Judd's property was filed under the Federal bankruptcy laws and is now
final.

WILLIAM T. MORGAN*
1799 Westridge Road
Los Angeles, California 90049
     Retired; formerly, Chairman of the Board of Directors and President of
the Fund and each fund in the Fund Complex then in existence.  (Mr. Morgan
retired as Chairman of the Board of Directors and President of the funds in
the Fund Complex then in existence on April 30, 1993); formerly, President,
Director and Chief Executive Officer of WRIMCO and Waddell & Reed, Inc.;
formerly, Chairman of the Board of Directors of Waddell & Reed Services
Company; formerly, Director of Waddell & Reed Asset Management Company,
United Investors Management Company and United Investors Life Insurance
Company, affiliates of Waddell & Reed, Inc.

DOYLE PATTERSON
1030 West 56th Street
Kansas City, Missouri  64113
     Associated with Republic Real Estate, engaged in real estate
management and investment; formerly, Director of The Vendo Company, a
manufacturer and distributor of vending machines.

ELEANOR B. SCHWARTZ
5100 Rockhill Road
Kansas City, Missouri 64113
     Chancellor, University of Missouri-Kansas City; formerly, Interim
Chancellor, University of Missouri-Kansas City; formerly, Vice Chancellor
for Academic Affairs, University of Missouri-Kansas City.

FREDERICK VOGEL III
1805 West Bradley Road
Milwaukee, Wisconsin  53217
     Retired.

PAUL S. WISE
P. O. Box 5248
8648 Silver Saddle Drive
Carefree, Arizona  85377
     Director of Potash Corporation of Saskatchewan.

LESLIE S. WRIGHT
2302 Brookshire Place
Birmingham, Alabama  35213
     Chancellor of Samford University; formerly, Director of City Federal
Savings and Loan.

Robert L. Hechler
     Vice President and Principal Financial Officer of the Fund and each of
the other funds in the Fund Complex; Vice President, Chief Operations
Officer, Director and Treasurer of Waddell & Reed Financial Services, Inc.;
Executive Vice President, Principal Financial Officer, Director and
Treasurer of WRIMCO; President, Chief Executive Officer, Principal
Financial Officer, Director and Treasurer of Waddell & Reed, Inc.; Director
and Treasurer of Waddell & Reed Asset Management Company; President,
Director and Treasurer of Waddell & Reed Services Company; Vice President,
Treasurer and Director of Torchmark Distributors, Inc.

Henry J. Herrmann
     Vice President of the Fund and each of the other funds in the Fund
Complex; Vice President, Chief Investment Officer and Director of Waddell &
Reed Financial Services, Inc.; Director of Waddell & Reed, Inc.; President,
Chief Executive Officer, Chief Investment Officer and Director of WRIMCO
and Waddell & Reed Asset Management Company; Senior Vice President and
Chief Investment Officer of United Investors Management Company.

Theodore W. Howard
     Vice President, Treasurer and Principal Accounting Officer of the Fund
and each of the other funds in the Fund Complex; Vice President of Waddell
& Reed Services Company.

Sharon K. Pappas
     Vice President, Secretary and General Counsel of the Fund and each of
the other funds in the Fund Complex; Vice President, Secretary and General
Counsel of Waddell & Reed Financial Services, Inc.; Senior Vice President,
Secretary and General Counsel of WRIMCO and Waddell & Reed, Inc.; Director,
Senior Vice President, Secretary and General Counsel of Waddell & Reed
Services Company; Director, Secretary and General Counsel of Waddell & Reed
Asset Management Company; Vice President, Secretary and General Counsel of
Torchmark Distributors, Inc.; formerly, Assistant General Counsel of
WRIMCO, Waddell & Reed Financial Services, Inc., Waddell & Reed, Inc.,
Waddell & Reed Asset Management Company and Waddell & Reed Services
Company.

Michael L. Avery
     Vice President of the Fund; Vice President of WRIMCO; formerly, Vice
President of Waddell & Reed, Inc.

John M. Holliday
     Vice President of the Fund and nine other funds in the Fund Complex;
Senior Vice President of WRIMCO and of Waddell & Reed Asset Management
Company; formerly, Senior Vice President of Waddell & Reed, Inc.

Carl E. Sturgeon
     Vice President of the Fund and eleven other funds in the Fund Complex;
Vice President of WRIMCO; formerly, Vice President of Waddell & Reed, Inc.

     The address of each person is 6300 Lamar Avenue, P.O. Box 29217,
Shawnee Mission, Kansas 66201-9217 unless a different address is given.

     As of the date of this SAI, five of the Fund's Directors may be deemed
to be "interested persons" as defined in the 1940 Act of its underwriter,
Waddell & Reed, Inc., or of WRIMCO.  The Directors who may be deemed to be
"interested persons" are indicated as such by an asterisk.

     The Board of Directors has created an honorary position of Director
Emeritus, which position a director may elect after resignation from the
Board provided the director has attained the age of 75 and has served as a
director of the funds in the United Group for a total of at least five
years.  A Director Emeritus receives fees in recognition of his past
services whether or not services are rendered in his capacity as Director
Emeritus, but has no authority or responsibility with respect to management
of the Fund.  Currently no person serves as Director Emeritus.

        The funds in the United Group (with exception of United Asset
Strategy Fund, Inc.), TMK/United Funds, Inc. and Waddell & Reed Funds, Inc.
pay to each Director a total of $40,000 per year, plus $1,000 for each
meeting of the Board of Directors attended (effective April 1, 1996, the
fee will be $44,000 per year, plus $1,000 for each meeting attended) and
$500 for each committee meeting attended which is not in conjunction with a
Board of Directors meeting, other than Directors who are affiliates of
Waddell & Reed, Inc.  The fees to the Directors who receive them are
divided among the funds in the United Group, TMK/United Funds, Inc. and
Waddell & Reed Funds, Inc. based on their relative size.  The officers are
paid by WRIMCO or its affiliates.    

     During the Fund's fiscal year ended December 31, 1995, the Fund's
Directors received the following fees for service as a director:

                            Compensation Table    

                                         Pension
                                      or Retirement      Total
                         Aggregate       Benefits     Compensation
                        Compensation    Accrued As     From Fund
                            From       Part of Fund     and Fund
Director                    Fund         Expenses       Complex
                        ------------  --------------  ------------
Ronald K. Richey            $  0             $0        $     0
Keith A Tucker                 0              0              0
Henry L. Bellmon             125              0         45,000
Dodds I. Buchanan            125              0         45,000
Jay B. Dillingham            125              0         45,000
Linda Graves                  29              0         12,000
John F. Hayes                125              0         45,000
Glendon E. Johnson           125              0         45,000
James B. Judd                 26              0         11,000
William T. Morgan            125              0         45,000
Doyle Patterson              125              0         45,000
Eleanor B. Schwartz           29              0         12,000
Frederick Vogel III          125              0         45,000
Paul S. Wise                 125              0         45,000
Leslie S. Wright             117              0         42,000

Shareholdings

     As of January 31, 1996, all of the Fund's Directors and officers as a
group owned less than 1% of the outstanding shares of the Fund.  As of such
date no person owned of record or was known by the Fund to own beneficially
5% or more of the Fund's outstanding shares.

                         PAYMENTS TO SHAREHOLDERS

General

     There are three sources for the payments the Fund makes to you as a
shareholder of a class of shares of the Fund, other than payments when you
redeem your shares.  The first source is net investment income, which is
derived from the dividends, interest and earned discount on the securities
the Fund holds, less expenses (which will vary by class).  The second
source is realized capital gains, which are derived from the proceeds
received from the sale of securities at a price higher than the Fund's tax
basis (usually cost) in such securities; these gains can be either long-
term or short-term, depending on how long the Fund has owned the securities
before it sells them.  The third source is net realized gains from foreign
currency transactions.  The payments made to shareholders from net
investment income, net short-term capital gains and net realized gains from
certain foreign currency transactions are called dividends.  Payments, if
any, from long-term capital gains are called distributions.

     The Fund pays distributions only if it has net realized capital gains
(the excess of net long-term capital gains over net short-term capital
losses).  It may or may not have such gains, depending on whether
securities are sold and at what price.  If the Fund has net realized
capital gains, it will ordinarily pay distributions once each year, in the
latter part of the fourth calendar quarter.  Even if the Fund has capital
gains for a year, the Fund does not pay out the gains if it has applicable
prior year losses to offset the gains.

Choices You Have on Your Dividends and Distributions

     On your application form, you can give instructions that (i) you want
cash for your dividends and distributions, (ii) you want your dividends and
distributions paid in shares of the Fund of the same class as that with
respect to which they were paid or (iii) you want cash for your dividends
and want your distributions paid in shares of the Fund of the same class as
that with respect to which they were paid.  You can change your
instructions at any time.  If you give no instructions, your dividends and
distributions will be paid in shares of the Fund of the same class as that
with respect to which they were paid.  All payments in shares are at net
asset value without any sales charge.  The net asset value used for this
purpose is that computed as of the record date for the dividend or
distribution, although this could be changed by the Board of Directors.

     Even if you get dividends and distributions on Class A shares in cash,
you can thereafter reinvest them (or distributions only) in Class A shares
of the Fund at net asset value (i.e., with no sales charge) next determined
after receipt by Waddell & Reed, Inc. of the amount clearly identified as a
reinvestment.  The reinvestment must be within 45 days after the payment.

                                   TAXES

General

     In order to continue to qualify for treatment as a regulated
investment company ("RIC") under the Code, the Fund must distribute to its
shareholders for each taxable year at least 90% of its investment company
taxable income (consisting generally of  net investment income, net short-
term capital gains and net gains from certain foreign currency
transactions) and must meet several additional requirements.  These
requirements include the following:  (1) the Fund must derive at least 90%
of its gross income each taxable year from dividends, interest, payments
with respect to securities loans and gains from the sale or other
disposition of securities or foreign currencies, or other income (including
gains from options, futures or forward contracts) derived with respect to
its business of investing in securities or those currencies ("Income
Requirement"); (2) the Fund must derive less than 30% of its gross income
each taxable year from the sale or other disposition of securities, or any
of the following, that were held for less than three months -- (i) options,
futures or forward contracts (other than those on foreign currencies), or
(ii) foreign currencies (or options, futures or forward contracts thereon)
that are not directly related to the Fund's principal business of investing
in securities (or in options and futures with respect to securities)
("Short-Short Limitation"); (3) at the close of each quarter of the Fund's
taxable year, at least 50% of the value of its total assets must be
represented by cash and cash items, U.S. Government Securities, securities
of other RICs and other securities that are limited, in respect of any one
issuer, to an amount that does not exceed 5% of the value of the Fund's
total assets and that does not represent more than 10% of the issuer's
outstanding voting securities ("50% Diversification Requirement"); and (4)
at the close of each quarter of the Fund's taxable year, not more than 25%
of the value of its total assets may be invested in securities (other than
U.S. Government Securities or the securities of other RICs) of any one
issuer.

     Investments in precious metals would have adverse tax consequences for
the Fund and its shareholders if it either (1) derived more than 10% of its
gross income in any taxable year from the disposition of precious metals
and from other income that does qualify under the Income Requirement or (2)
held precious metals in such quantities that the Fund failed to satisfy the
50% Diversification Requirement for any quarter.  The Fund intends to
manage its portfolio so as to avoid failing to satisfy those requirements
for these reasons.

     Dividends and distributions declared by the Fund in October, November
or December of any year and payable to shareholders of record on a date in
any of those months are deemed to have been paid by the Fund and received
by you on December 31 of that year even if they are paid by the Fund during
the following January.  Accordingly, those dividends and distributions will
be taxed to you for the year in which that December 31 falls.

     If Fund shares are sold at a loss after being held for six months or
less, the loss will be treated as long-term, instead of short-term, capital
loss to the extent of any distributions received on those shares.
Investors also should be aware that if shares are purchased shortly before
the record date for a dividend or distribution, the purchaser will receive
some portion of the purchase price back as a taxable dividend or
distribution.

     The Fund will be subject to a nondeductible 4% excise tax ("Excise
Tax") to the extent it fails to distribute by the end of any calendar year
substantially all of its ordinary income for that year and capital gain net
income for the one-year period ending on October 31 of that year, plus
certain other amounts.

     It is the Fund's policy to pay sufficient dividends and distributions
each year to avoid imposition of the Excise Tax.  The Fund may defer into
the next calendar year net capital losses incurred between each November 1
and the end of the current calendar year.

Income from Foreign Securities

     Dividends and interest received by the Fund may be subject to income,
withholding or other taxes imposed by foreign countries and U.S.
possessions that would reduce the yield on its securities.  Tax conventions
between certain countries and the United States may reduce or eliminate
these foreign taxes, however, and many foreign countries do not impose
taxes on capital gains in respect of investments by foreign investors.

     The Fund may invest in the stock of "passive foreign investment
companies" ("PFICs").  A PFIC is a foreign corporation that, in general,
meets either of the following tests:  (1) at least 75% of its gross income
is passive or (2) an average of at least 50% of its assets produce, or are
held for the production of, passive income.  Under certain circumstances,
the Fund will be subject to Federal income tax on a portion of any "excess
distribution" received on the stock of a PFIC or of any gain on disposition
of the stock (collectively "PFIC income"), plus interest thereon, even if
the Fund distributes the PFIC income as a taxable dividend to its
shareholders.  The balance of the PFIC income will be included in the
Fund's investment company taxable income and, accordingly, will not be
taxable to it to the extent that income is distributed to its shareholders.

     If the Fund invests in a PFIC and elects to treat the PFIC as a
"qualified electing fund" ("QEF"), then in lieu of the foregoing tax and
interest obligation, the Fund would be required to include in income each
year its pro rata share of the QEF's annual ordinary earnings and net
capital gain (the excess of net long-term capital gain over net short-term
capital loss) -- which would have to be distributed to satisfy the
Distribution Requirement and to avoid imposition of the Excise Tax -- even
if those earnings and gain were not received by the Fund.  In most
instances it will be very difficult, if not impossible, to make this
election because of certain requirements thereof.

     Proposed regulations have been published pursuant to which open-end
RICs, such as the Fund, would be entitled to elect to "mark-to-market"
their stock in certain PFICs.  "Marking-to-market," in this context, means
recognizing as gain for each taxable year the excess, as of the end of that
year, of the fair market value of such a PFIC's stock over the adjusted
basis in that stock (including mark-to-market gain for each prior year for
which an election was in effect).

Foreign Currency Gains and Losses

     Gains or losses (1) from the disposition of foreign currencies, (2)
from the disposition of a debt security denominated in a foreign currency
that are attributable to fluctuations in the value of the foreign currency
between the date of acquisition of the security and the date of
disposition, and (3) that are attributable to fluctuations in exchange
rates that occur between the time the Fund accrues interest, dividends or
other receivables or accrues expenses or other liabilities denominated in a
foreign currency and the time the Fund actually collects the receivables or
pays the liabilities, generally are treated as ordinary income or loss.
These gains or losses, referred to under the Code as "section 988" gains or
losses, may increase or decrease the amount of the Fund's investment
company taxable income to be distributed to its shareholders.

Income from Options, Futures and Currencies

     The use of hedging strategies, such as writing (selling) and
purchasing options and futures and entering into forward contracts,
involves complex rules that will determine for income tax purposes the
character and timing of recognition of the gains and losses the Fund
realizes in connection therewith.  Income from foreign currencies (except
certain gains therefrom that may be excluded by future regulations), and
income from transactions in options, futures and forward contracts derived
by the Fund with respect to its business of investing in securities, will
qualify as permissible income under the Income Requirement.  However,
income from the disposition of options, futures and forward contracts
(other than those on foreign currencies) will be subject to the Short-Short
Limitation if they are held for less than three months.  Income from the
disposition of foreign currencies, and options, futures and forward
contracts thereon, that are not directly related to the Fund's principal
business of investing in securities (or options and futures with respect to
securities) also will be subject to the Short-Short Limitation if they are
held for less than three months.

     If the Fund satisfies certain requirements, any increase in value of a
position that is part of a "designated hedge" will be offset by any
decrease in value (whether realized or not) of the offsetting hedging
position during the period of the hedge for purposes of determining whether
the Fund satisfies the Short-Short Limitation.  Thus, only the net gain (if
any) from the designated hedge will be included in gross income for
purposes of that limitation.  The Fund intends that, when it engages in
hedging transactions, they will qualify for this treatment, but at the
present time it is not clear whether this treatment will be available for
all the Fund's hedging transactions.  To the extent this treatment is not
available, the Fund may be forced to defer the closing out of certain
options, futures and forward contracts beyond the time when it otherwise
would be advantageous to do so, in order for the Fund to continue to
qualify as a RIC.

     Any income the Fund earns from writing options is taxed as short-term
capital gain.  If the Fund enters into a closing purchase transaction, it
will have a short-term capital gain or loss based on the difference between
the premium it received for the option it wrote and the premium it pays for
the option it buys.  If an option written by the Fund expires without being
exercised, the premium it received also will be a short-term capital gain.
If such an option is exercised and the Fund thus sells the securities
subject to the option, the premium the Fund receives will be added to the
exercise price to determine the gain or loss on the sale.  The Fund will
not write so many options that it could fail to continue to qualify as a
RIC.

     Certain options and futures contracts in which the Fund may invest may
be "section 1256 contracts."  Section 1256 contracts held by the Fund at
the end of each taxable year, other than section 1256 contracts that are
part of a "mixed straddle" with respect to which the Fund has made an
election not to have the following rules apply, are "marked-to-market"
(that is, treated as sold for their fair market value) for Federal income
tax purposes, with the result that unrealized gains or losses are treated
as though they were realized.  Sixty percent of any net gain or loss
recognized on these deemed sales, and 60% of any net realized gain or loss
from any actual sales of section 1256 contracts, are treated as long-term
capital gain or loss, and the balance is treated as short-term capital gain
or loss.  Section 1256 contracts also may be marked-to-market for purposes
of the Excise Tax and for other purposes.

     Code section 1092 (dealing with straddles) also may affect the
taxation of options and futures contracts in which the Fund may invest.
Section 1092 defines a "straddle" as offsetting positions with respect to
personal property; for these purposes, options and futures contracts are
personal property.  Section 1092 generally provides that any loss from the
disposition of a position in a straddle may be deducted only to the extent
the loss exceeds the unrealized gain on the offsetting position(s) of the
straddle.  Section 1092 also provides certain "wash sale" rules, which
apply to transactions where a position is sold at a loss and a new
offsetting position is acquired within a prescribed period, and "short
sale" rules applicable to straddles.  If the Fund makes certain elections,
the amount, character and timing of the recognition of gains and losses
from the affected straddle positions will be determined under rules that
vary according to the elections made.  Because only a few of the
regulations implementing the straddle rules have been promulgated, the tax
consequences of straddle transactions to the Fund are not entirely clear.

     The Fund may acquire zero coupon or other securities issued with
original issue discount.  As a holder of those securities, the Fund must
include in its income any original issue discount that accrues on the
securities during the year.  Because the Fund annually must distribute
substantially all of its investment company taxable income, including any
original issue discount, in order to satisfy the distribution requirement
required above and avoid imposition of the Excise Tax, it may be required
in a particular year to distribute as a dividend an amount that is greater
than the total amount of cash it actually receives.  Those distributions
will be made from the Fund's cash assets or from the proceeds of sales of
portfolio securities, if necessary.  The Fund may realize capital gains or
losses from those sales, which would increase or decrease its investment
company taxable income and/or net capital gain.  In addition, any such
gains may be realized on the disposition of securities held for less than
three months.  Because of the Short-Short Limitation, any such gains would
reduce the Fund's ability to sell other securities or certain options,
futures or forward contracts held for less than three months that it might
wish to sell in the ordinary course of its portfolio management.

                   PORTFOLIO TRANSACTIONS AND BROKERAGE

     One of the duties undertaken by WRIMCO pursuant to the Management
Agreement is to arrange the purchase and sale of securities for the
portfolio of the Fund.  Transactions in securities other than those for
which an exchange is the primary market are generally done with dealers
acting as principals or market makers.  Brokerage commissions are paid
primarily for effecting transactions in securities traded on an exchange
and otherwise only if it appears likely that a better price or execution
can be obtained.  The individual who manages the Fund may manage other
advisory accounts with similar investment objectives.  It can be
anticipated that the manager will frequently place concurrent orders for
all or most accounts which the manager has responsibility.  Transactions
effected pursuant to such combined orders are averaged as to price and
allocated in accordance with the purchase or sale orders actually placed
for each fund or advisory account.

     To effect the portfolio transactions of the Fund, WRIMCO is authorized
to engage broker-dealers ("brokers") which, in its best judgment based on
all relevant factors, will implement the policy of the Fund to achieve
"best execution" (prompt and reliable execution at the best price
obtainable) for reasonable and competitive commissions.  WRIMCO need not
seek competitive commission bidding but is expected to minimize the
commissions paid to the extent consistent with the interests and policies
of the Fund.  Subject to review by the Board of Directors, such policies
include the selection of brokers which provide execution and/or research
services and other services, including pricing or quotation services
directly or through others ("brokerage services") considered by WRIMCO to
be useful or desirable for its investment management of the Fund and/or the
other funds and accounts over which WRIMCO or its affiliates have
investment discretion.

     Brokerage services are, in general, defined by reference to Section
28(e) of the Securities Exchange Act of 1934 as including (i) advice,
either directly or through publications or writings, as to the value of
securities, the advisability of investing in, purchasing or selling
securities and the availability of securities and purchasers or sellers;
(ii) furnishing analyses and reports; or (iii) effecting securities
transactions and performing functions incidental thereto (such as
clearance, settlement and custody).  "Investment discretion" is, in
general, defined as having authorization to determine what securities shall
be purchased or sold for an account, or making those decisions even though
someone else has responsibility.

     The commissions paid to brokers that provide such brokerage services
may be higher than another qualified broker would charge for effecting
comparable transactions if a good faith determination is made by WRIMCO
that the commission is reasonable in relation to the brokerage services
provided. Subject to the foregoing considerations WRIMCO may also consider
the willingness of particular brokers and dealers to sell shares of the
Fund and other funds managed by WRIMCO and its affiliates as a factor in
its selection.  No allocation of brokerage or principal business is made to
provide any other benefits to WRIMCO or its affiliates.

     The investment research provided by a particular broker may be useful
only to one or more of the other advisory accounts of WRIMCO and its
affiliates and investment research received for the commissions of those
other accounts may be useful both to the Fund and one or more of such other
accounts.  To the extent that electronic or other products provided by such
brokers to assist WRIMCO in making investment management decisions are used
for administration or other non-research purposes, a reasonable allocation
of the cost of the product attributable to its non-research use is made by
WRIMCO.

     Such investment research (which may be supplied by a third party at
the instance of a broker) includes information on particular companies and
industries as well as market, economic or institutional activity areas.  It
serves to broaden the scope and supplement the research activities of
WRIMCO; serves to make available additional views for consideration and
comparisons; and enables WRIMCO to obtain market information on the price
of securities held in the Fund's portfolio or being considered for
purchase.

     In placing transactions for the Fund's portfolio, WRIMCO may consider
sales of shares of the Fund and other funds managed by WRIMCO and its
affiliates as a factor in the selection of brokers to execute portfolio
transactions.  WRIMCO intends to allocate brokerage on the basis of this
factor only if the sale is $2 million or more and there is no sales charge.
This results in the consideration only of sales which by their nature would
not ordinarily be made by Waddell & Reed, Inc.'s direct sales force and is
done in order to prevent the direct sales force from being disadvantaged by
the fact that it cannot participate in Fund brokerage.

        During the Fund's fiscal years ended December 31, 1995, 1994 and
1993, the Fund paid brokerage commissions of $195,504, $69,862 and
$136,655, respectively.  These figures do not include principal
transactions or spreads or concessions on principal transactions, i.e.,
those in which the Fund sells securities to a broker-dealer firm or buys
from a broker-dealer firm securities owned by it.

     During the Fund's fiscal year ended December 31, 1995, the
transactions, other than principal transactions, which were directed to
broker-dealers who provided research as well as execution totaled
$21,231,500 on which $87,980 in brokerage commissions were paid.  These
transactions were allocated to these broker-dealers by the internal
allocation procedures described above.    

     The Fund, WRIMCO and Waddell & Reed, Inc. have adopted a Code of
Ethics which imposes restrictions on the personal investment activities of
their employees, officers and interested directors.

Buying and Selling With Other Funds

     The Fund and one or more of the other funds in the United Group,
TMK/United Funds, Inc. and Waddell & Reed Funds, Inc. or accounts over
which Waddell & Reed Asset Management Company exercises investment
discretion frequently buy or sell the same securities at the same time.  If
this happens, the amount of each purchase or sale is divided.  This is done
on the basis of the amount of securities each fund or account wanted to buy
or sell.  Sharing in large transactions could affect the price the Fund
pays or receives or the amount it buys or sells.  However, sometimes a
better negotiated commission is available.

                             OTHER INFORMATION

The Shares of the Fund

     The Fund offers two classes of shares:  Class A and Class Y.  Prior to
February 19, 1996, the Fund offered only one class of shares to the public.
Shares outstanding on that date were designated as Class A shares.  Each
class represents an interest in the same assets of the Fund and differ as
follows:  each class of shares has exclusive voting rights on matters
pertaining to matters appropriately limited to that class; Class A shares
are subject to an initial sales charge and to an ongoing service fee; each
class may bear differing amounts of certain class-specific expenses; and
each class has a separate exchange privilege.  The Fund does not anticipate
that there will be any conflicts between the interests of holders of the
different classes of shares of the Fund by virtue of those classes.  On an
ongoing basis, the Board of Directors will consider whether any such
conflict exists and, if so, take appropriate action.  Each share of the
Fund is entitled to equal voting, dividend, liquidation and redemption
rights, except that due to the differing expenses borne by the two classes,
dividends and liquidation proceeds of Class A shares are expected to be
lower than for Class Y shares of the Fund.  Each fractional share of a
class has the same rights, in proportion, as a full share of that class.

<PAGE>
THE INVESTMENTS OF
UNITED GOLD & GOVERNMENT FUND, INC.
DECEMBER 31, 1995

                                                Troy
                                              Ounces        Value

BULLION
 Gold*  ..................................     7,447  $ 2,890,449
 Platinum*  ..............................     2,145      854,139

TOTAL BULLION - 11.44%                                $ 3,744,588
 (Cost: $3,772,826)

                                              Shares

COMMON STOCKS
Gold
 Australia - 5.99%
 Acacia Resources Limited*  ..............   300,000      539,636
 Golden Shamrock Mines Limited*  .........   500,000      308,470
 Plutonic Resources Limited  .............   100,000      475,712
 PosGold Limited  ........................   213,000      424,305
 Ranger Minerals NL*  ....................   100,000      211,840
   Total .................................              1,959,963

 Canada - 7.66%
 Agnico-Eagle Mines Limited  .............    45,500      574,438
 Euro-Nevada Mining Corporation Limited  .    13,600      495,569
 Franco-Nevada Mining Corporation Limited      9,800      572,438
 Hemlo Gold Mines Inc.  ..................    35,000      328,125
 Placer Dome Inc.  .......................    15,000      361,875
 TVX Gold Inc.*  .........................    25,000      176,243
   Total .................................              2,508,688

 United States - 9.06%
 Battle Mountain Gold Company  ...........   100,000      850,000
 Homestake Mining Company  ...............    50,000      781,250
 Newmont Gold Company  ...................    30,500    1,334,375
   Total .................................              2,965,625

Total Gold - 22.71%                                     7,434,276

Metals - 1.29%
 United States
 Freeport-McMoRan Copper & Gold Inc.  ....    15,000      421,875


              See Notes to Schedule of Investments on page .

<PAGE>
THE INVESTMENTS OF
UNITED GOLD & GOVERNMENT FUND, INC.
DECEMBER 31, 1995

                                              Shares        Value

COMMON STOCKS (Continued)
Miscellaneous
 Domestic Oil - 0.26%
 Enron Oil & Gas Company  ................     3,500  $    84,000

 Public Utilities - Pipelines - 0.27%
 Sonat Inc.  .............................     2,500       89,063

Total Miscellaneous - 0.53%                               173,063

TOTAL COMMON STOCKS - 24.53%                          $ 8,029,214
 (Cost: $7,335,145)

                                           Principal
                                           Amount in
                                           Thousands

UNITED STATES GOVERNMENT SECURITIES
 United States Treasury:
   6.25%, 5-31-2000 ......................    $1,000    1,033,590
   5.875%, 6-30-2000 .....................     4,000    4,081,240
   7.25%, 8-15-2004 ......................     2,000    2,224,060
   7.875%, 11-15-2004 ....................     4,000    4,630,000
   8.875%, 8-15-2017 .....................     3,000    4,018,110
   8.875%, 2-15-2019 .....................     3,000    4,043,910

TOTAL UNITED STATES GOVERNMENT SECURITIES - 61.19%    $20,030,910
 (Cost: $18,320,775)

TOTAL SHORT-TERM SECURITIES - 1.99%
Repurchase Agreements
 J. P. Morgan Securities, 5.6%
   Repurchase Agreement dated
   12-29-95, to be repurchased
   at $650,404 on 1-2-96** ...............       650  $   650,000
 (Cost: $650,000)

TOTAL INVESTMENTS - 99.15%                            $32,454,712
 (Cost: $30,078,746)

CASH AND OTHER ASSETS, NET OF LIABILITIES - 0.85%         277,916

NET ASSETS - 100.00%                                  $32,732,628


              See Notes to Schedule of Investments on page .

<PAGE>
THE INVESTMENTS OF
UNITED GOLD & GOVERNMENT FUND, INC.
DECEMBER 31, 1995


Notes To Schedule Of Investments

 *Non-income producing.

**Collateralized by $483,000 U.S. Treasury Notes, 8.875% due 2-15-2019,
  market value and accrued interest aggregate $667,211.

See Note 1 to financial statements for security valuation and other
  significant accounting policies concerning investments.

See Note 3 to financial statements for cost and unrealized appreciation and
  depreciation of investments owned for Federal income tax purposes.

<PAGE>
UNITED GOLD & GOVERNMENT FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1995

Assets
 Investments -- at value (Notes 1 and 3):
   Bullion (cost -- $3,772,826) ....................  $ 3,744,588
   Securities (cost -- $26,305,920) ................   28,710,124
                                                      -----------
                                                       32,454,712
 Cash  .............................................        4,914
 Receivable for interest and dividends  ............      421,366
 Prepaid insurance premium  ........................        9,847
                                                      -----------
    Total assets  ..................................   32,890,839
                                                      -----------
Liabilities
 Payable for Fund shares redeemed  .................      114,199
 Accrued transfer agency and dividend disbursing  ..       14,145
 Accrued service fee ...............................        5,888
 Accrued accounting services fee  ..................        1,667
 Other  ............................................       22,312
                                                      -----------
    Total liabilities  .............................      158,211
                                                      -----------
      Total net assets .............................  $32,732,628
                                                      ===========
Net Assets
 $1.00 par value capital stock, authorized --
   100,000,000; shares outstanding -- 3,742,294
   Capital stock ...................................  $ 3,742,294
   Additional paid-in capital ......................   54,740,556
 Accumulated undistributed income (loss):
   Accumulated undistributed net investment income .          420
   Accumulated net realized loss on investment
    transactions  ..................................  (28,126,593)
   Net unrealized appreciation in value of
    investments at end of period  ..................    2,375,951
                                                      -----------
    Net assets applicable to outstanding units
      of capital....................................  $32,732,628
                                                      ===========
Net asset value per share (net assets divided by
 shares outstanding)  ..............................        $8.75
Sales load (offering price x 5.75%) ................          .53
                                                            -----
Offering price per share (net asset value
 divided by 94.25%)  ...............................        $9.28
                                                            =====
                On sales of $100,000 or more the sales load
                is reduced as set forth in the Prospectus.


                    See notes to financial statements.

<PAGE>
UNITED GOLD & GOVERNMENT FUND, INC.
STATEMENT OF OPERATIONS
For the Fiscal Year Ended DECEMBER 31, 1995

Investment Income
 Income:
   Interest ........................................   $1,321,485
   Dividends .......................................      153,409
                                                       ----------
    Total income  ..................................    1,474,894
                                                       ----------
 Expenses (Note 2):
   Investment management fee .......................      249,509
   Transfer agency and dividend disbursing .........      167,663
   Service fee .....................................       54,875
   Accounting services fee .........................       20,000
   Custodian fees ..................................       17,488
   Audit fees ......................................       12,785
   Legal fees ......................................       11,210
   Other ...........................................       47,786
                                                       ----------
    Total expenses  ................................      581,316
                                                       ----------
      Net investment income ........................      893,578
                                                       ----------

Realized and Unrealized Gain (Loss) on Investments
 Realized net gain on bullion  .....................        3,044
 Realized net gain on securities  ..................    3,254,482
 Realized net gain on foreign
   currency transactions ...........................          322
                                                       ----------
   Realized net gain on investments ................    3,257,848
                                                       ----------
 Unrealized depreciation in value of bullion
   during the period ...............................       (7,421)
 Unrealized depreciation in value of securities
   during the period ...............................     (955,881)
                                                       ----------
   Unrealized depreciation in value of investments
    during the period  .............................     (963,302)
                                                       ----------
      Net gain on investments ......................    2,294,546
                                                       ----------
       Net increase in net assets resulting from
         operations ................................   $3,188,124
                                                       ==========


                    See notes to financial statements.

<PAGE>
UNITED GOLD & GOVERNMENT FUND, INC.
STATEMENT OF CHANGES IN NET ASSETS

                                              For the fiscal year
                                               ended December 31,
                                          -----------------------
                                              1995        1994
                                         -----------  -----------
Decrease in Net Assets
 Operations:
   Net investment income ............... $   893,578  $   248,353
   Realized net gain on investments ....   3,257,848    3,604,960
   Unrealized depreciation .............    (963,302)(12,222,484)
                                         -----------  -----------
    Net increase (decrease) in net
      assets resulting from
      operations .......................   3,188,124   (8,369,171)
                                         -----------  -----------
 Dividends to shareholders from
   net investment income* ..............    (900,579)    (249,300)
                                         -----------  -----------
 Capital share transactions:
   Proceeds from sale of shares
    (3,052,102 and 1,361,695 shares,
    respectively) ......................  25,203,531   12,898,882
   Proceeds from reinvestment of
    dividends (102,634 and 28,118
    shares, respectively)  .............     885,915      245,912
   Payments for shares redeemed
    (3,983,888 and 1,522,587 shares,
    respectively) ...................... (33,066,367) (14,012,232)
                                         -----------  -----------
    Net decrease in net assets
      resulting from capital
      share transactions ...............  (6,976,921)    (867,438)
                                         -----------  -----------
      Total decrease ...................  (4,689,376)  (9,485,909)
Net Assets
 Beginning of period  ..................  37,422,004   46,907,913
                                         -----------  -----------
 End of period, including undistributed
   net investment income of $420 and
   $7,099, respectively ................ $32,732,628  $37,422,004
                                         ===========  ===========


                   *See "Financial Highlights" on page .

                    See notes to financial statements.

<PAGE>
UNITED GOLD & GOVERNMENT FUND, INC.
FINANCIAL HIGHLIGHTS
For a Share of Capital Stock Outstanding
Throughout Each Period:

                             For the fiscal year ended December 31,
                           --------------------------------------
                               1995   1994    1993   1992    1991
                             ------ ------  ------ ------  ------
Net asset value,
 beginning of
 period  ...........          $8.19  $9.97   $5.70  $6.63   $6.68
                              -----  -----   -----  -----   -----
Income from investment
 operations:
 Net investment
   income...........           0.24   0.05    0.04   0.06    0.15
 Net realized and
   unrealized gain
   (loss) on
   investments .....           0.56  (1.78)   4.27  (0.93)  (0.05)
                              -----  -----   -----  -----   -----
Total from investment
 operations  .......           0.80  (1.73)   4.31  (0.87)   0.10
                              -----  -----   -----  -----   -----
Less dividends from
 net investment
 income  ...........          (0.24) (0.05)  (0.04) (0.06)  (0.15)
                              -----  -----   -----  -----   -----
Net asset value,
 end of period .....          $8.75  $8.19   $9.97  $5.70   $6.63
                              =====  =====   =====  =====   =====
Total return* ......           9.80%-17.36%  75.82%-13.18%   1.47%
Net assets, end
 of period (000
 omitted)  .........        $32,733$37,422 $46,908$27,136 $40,587
Ratio of expenses
 to average net
 assets  ...........           1.66%  1.59%   1.69%  1.88%   1.57%
Ratio of net invest-
 ment income to average
 net assets  .......           2.55%  0.57%   0.48%   .90%   2.11%
Portfolio turnover
 rate**  ...........         164.21% 64.89%  84.00% 61.50% 112.80%

   *Total return calculated without taking into account the sales
    load deducted on an initial purchase.
  **This rate is, in general, calculated by dividing the average
    value of the Fund's portfolio securities during the period into
    the lesser of its purchases or sales of securities in the period,
    excluding short-term securities and bullion.

                    See notes to financial statements.

<PAGE>
UNITED GOLD & GOVERNMENT FUND, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1995

NOTE 1 -- Significant Accounting Policies

     United Gold & Government Fund, Inc. (the "Fund") is registered under
the Investment Company Act of 1940 as a diversified, open-end management
investment company.  Its investment objective is to seek a high total
return through investments in precious metals, minerals-related securities
or U.S. Government Securities.  The following is a summary of significant
accounting policies consistently followed by the Fund in the preparation of
its financial statements.  The policies are in conformity with generally
accepted accounting principles.

A.   Security valuation -- Each stock and convertible bond is valued at the
     latest sale price thereof on the last business day of the fiscal
     period as reported by the principal securities exchange on which the
     issue is traded or, if no sale is reported for a stock, the average of
     the latest bid and asked prices.  Bonds, other than convertible bonds,
     are valued using a pricing system provided by a major dealer in bonds.
     Convertible bonds are valued using this pricing system only on days
     when there is no sale reported.  Stocks which are traded over-the-
     counter are priced using Nasdaq (National Association of Securities
     Dealers Automated Quotations) which provides information on bid and
     asked or closing prices quoted by major dealers in such stocks.  Gold
     and silver bullion are valued at the last spot settlement price for
     current delivery as calculated by the Commodity Exchange, Inc. as of
     the close of that Exchange.  Platinum bullion is valued at the last
     spot settlement price for current delivery as calculated by the New
     York Mercantile Exchange as of the close of that Exchange.  Securities
     for which quotations are not readily available are valued as
     determined in good faith in accordance with procedures established by
     and under the general supervision of the Fund's Board of Directors.
     Short-term debt securities are valued at amortized cost, which
     approximates market.

B.   Security transactions and related investment income -- Security
     transactions are accounted for on the trade date (date the order to
     buy or sell is executed).  Securities gains and losses are calculated
     on the identified cost basis.  Original issue discount (as defined in
     the Internal Revenue Code), premiums on the purchase of bonds and
     post-1984 market discount are amortized for both financial and tax
     reporting purposes over the remaining lives of the bonds.  Dividend
     income is recorded on the ex-dividend date except that certain
     dividends from foreign securities are recorded as soon as the Fund is
     informed of the ex-dividend date.  Interest income is recorded on the
     accrual basis.  See Note 3 -- Investment Securities Transactions.

C.   Foreign currency translations -- All assets and liabilities
     denominated in foreign currencies are translated into U.S. dollars
     daily.  Purchases and sales of investment securities and accruals of
     income and expenses are translated at the rate of exchange prevailing
     on the date of the transaction.  For assets and liabilities other than
     investments in securities and bullion, net realized and unrealized
     gains and losses from foreign currency translations arise from changes
     in currency exchange rates.  The Fund combines fluctuations from
     currency exchange rates and fluctuations in market value when
     computing net realized and unrealized gain or loss from investments.

D.   Federal income taxes -- It is the Fund's policy to distribute all of
     its taxable income and capital gains to its shareholders and otherwise
     qualify as a regulated investment company under the Internal Revenue
     Code.  In addition, the Fund intends to pay distributions as required
     to avoid imposition of excise tax.  Accordingly, provision has not
     been made for Federal income taxes.  See Note 4 -- Federal Income Tax
     Matters.

E.   Dividends and distributions -- Dividends and distributions to
     shareholders are recorded by the Fund on the record date.  Net
     investment income distributions and capital gains distributions are
     determined in accordance with income tax regulations which may differ
     from generally accepted accounting principles.  These differences are
     due to differing treatments for items such as deferral of wash sales
     and post-October losses, foreign currency transactions, net operating
     losses and expiring capital loss carryforwards.

F.   Repurchase agreements -- Repurchase agreements are collateralized by
     the value of the resold securities which, during the entire period of
     the agreement, remains at least equal to the value of the loan,
     including accrued interest thereon.  The collateral for the repurchase
     agreement is held by the Fund's custodian bank.

G.   The preparation of financial statements in accordance with generally
     accepted accounting principles requires management to make estimates
     and assumptions that affect the reported amounts and disclosures in
     the financial statements.  Actual results could differ from those
     estimates.

NOTE 2 -- Investment Management and Payments to Affiliated Persons

     The Fund pays a fee for investment management services.  The fee is
computed daily based on the net asset value at the close of business.  The
fee consists of two elements: (i) a "Specific" fee computed on net asset
value as of the close of business each day at the annual rate of .30% of
net assets and (ii) a "Group" fee computed each day on the combined net
asset values of all of the funds in the United Group of mutual funds
(approximately $13.6 billion of combined net assets at December 31, 1995)
at annual rates of .51% of the first $750 million of combined net assets,
 .49% on that amount between $750 million and $1.5 billion, .47% between
$1.5 billion and $2.25 billion, .45% between $2.25 billion and $3 billion,
 .43% between $3 billion and $3.75 billion, .40% between $3.75 billion and
$7.5 billion, .38% between $7.5 billion and $12 billion, and .36% of that
amount over $12 billion.  The Fund accrues and pays this fee daily.

     Pursuant to assignment of the Investment Management Agreement between
the Fund and Waddell & Reed, Inc. ("W&R"), Waddell & Reed Investment
Management Company ("WRIMCO"), a wholly-owned subsidiary of W&R, serves as
the Fund's investment manager.

     The Fund has an Accounting Services Agreement with Waddell & Reed
Services Company ("WARSCO"), a wholly-owned subsidiary of W&R.  Under the
agreement, WARSCO acts as the agent in providing accounting services and
assistance to the Fund and pricing daily the value of shares of the Fund.
For these services, the Fund pays WARSCO a monthly fee of one-twelfth of
the annual fee shown in the following table.

                          Accounting Services Fee
                  Average
               Net Asset Level            Annual Fee
          (all dollars in millions) Rate for Each Level
          ------------------------- -------------------
           From $    0 to $   10             $      0
           From $   10 to $   25             $ 10,000
           From $   25 to $   50             $ 20,000
           From $   50 to $  100             $ 30,000
           From $  100 to $  200             $ 40,000
           From $  200 to $  350             $ 50,000
           From $  350 to $  550             $ 60,000
           From $  550 to $  750             $ 70,000
           From $  750 to $1,000             $ 85,000
                $1,000 and Over              $100,000

     At present, the Fund operates under state expense requirements which
limit the amount of aggregate annual expenses, adjusted for certain excess
expenses, that the Fund may incur during its fiscal year.  The Manager will
reimburse the Fund for any expenses in excess of the limitation.  No such
reimbursement is required for the period ended December 31, 1995.

     The Fund pays WARSCO a per account charge for transfer agency and
dividend disbursement services of $1.0208 for each shareholder account
which was in existence at any time during the prior month, plus $0.30 for
each account on which a dividend or distribution of cash or shares had a
record date in that month.  The Fund also reimburses W&R and WARSCO for
certain out-of-pocket costs.

     As principal underwriter for the Fund's shares, W&R received  direct
and indirect gross sales commissions (which are not an expense of the Fund)
of $58,922, out of which W&R paid sales commissions of $31,600 and all
expenses in connection with the sale of Fund shares, except for
registration fees and related expenses.

     Under a Service Plan adopted by the Fund pursuant to Rule 12b-1 under
the Investment Company Act of 1940, the Fund may pay monthly a fee to W&R
in an amount not to exceed .25% of the Fund's average annual net assets.
The fee is to be paid to reimburse W&R for amounts it expends in connection
with the provision of personal services to Fund shareholders and/or
maintenance of shareholder accounts.

     The Fund paid Directors' fees of $1,405.

     W&R is an indirect subsidiary of Torchmark Corporation, a holding
company, and United Investors Management Company, a holding company, and a
direct subsidiary of Waddell & Reed Financial Services, Inc., a holding
company.

NOTE 3 -- Investment Securities Transactions

     Purchases of investment securities, other than U.S. Government and
short-term securities, aggregated $17,108,702 while proceeds from
maturities and sales aggregated $36,577,729.  Purchases of bullion
aggregated $2,347,061 while proceeds from the sale of bullion aggregated
$1,203,168.  Purchases of short-term securities and U.S. Government
securities aggregated $1,317,665,959 and $28,487,500, respectively.
Proceeds from maturities and sales of short-term securities and U.S.
Government securities aggregated $1,325,820,000 and $10,643,984,
respectively.

     For Federal income tax purposes, cost of investments owned at December
31, 1995 was $30,078,746, resulting in net unrealized appreciation of
$2,375,966, of which $2,719,820 related to appreciated securities and
$343,854 related to depreciated securities.

NOTE 4 -- Federal Income Tax Matters

     For Federal income tax purposes, the Fund realized capital gain net
income of $3,604,961 during the year ended December 31, 1994, which was
fully offset by utilization of capital loss carryforwards.  Remaining prior
year capital loss carryforwards of the Fund aggregated $31,384,119 at
December 31, 1994.  This amount is available to offset future realized
capital gain net income for Federal income tax purposes through December
31, 1996; $11,894,711 of this amount is available through December 31,
1997: $11,331,322 is available through December 31, 1998; $6,823,792 is
available through December 31, 1999 and $4,958,441 is available through
December 31, 2000.

<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and Shareholders of
  United Gold & Government Fund, Inc.

In our opinion, the accompanying statement of assets and liabilities,
including the schedule of investments, and the related statements of
operations and of changes in net assets and the financial highlights
present fairly, in all material respects, the financial position of United
Gold & Government Fund, Inc. (the "Fund") at December 31, 1995, the results
of its operations for the year then ended and the changes in its net assets
and the financial highlights for each of the periods indicated, in
conformity with generally accepted accounting principles.  These financial
statements and financial highlights (hereafter referred to as "financial
statements") are the responsibility of the Fund's management; our
responsibility is to express an opinion on these financial statements based
on our audits.  We conducted our audits of these financial statements in
accordance with generally accepted auditing standards which require that we
plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement.  An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements, assessing the accounting principles used and
significant estimates made by management, and evaluating the overall
financial statement presentation.  We believe that our audits, which
included confirmation of portfolio positions at December 31, 1995 by
correspondence with the custodian and brokers, provide a reasonable basis
for the opinion expressed above.



Price Waterhouse LLP
Kansas City, Missouri
February 8, 1996

<PAGE>
                          REGISTRATION STATEMENT

                                  PART C

                             OTHER INFORMATION

24.  Financial Statements and Exhibits
     ---------------------------------

(a)  Financial Statements -- United Gold & Government Fund, Inc.

     Included in Part B:
     -------------------

     As of December 31, 1995
          Statements of Assets and Liabilities

     For the year ended December 31, 1995
          Statements of Operations

     For the two years ended December 31, 1995
          Statement of Changes in Net Assets

     Schedule I -- Investment Securities as of December 31, 1995

     Report of Independent Accountants

     Included in Part C:
     -------------------
     Financial Data Schedule

     Other schedules prescribed by Regulation S-X are not filed because the
     required matter is not present or is insignificant.

<PAGE>

(b)  Exhibits:

     (1)  Articles of Incorporation filed December 21, 1995 as EX-99.B1-
          ggchartr to Post-Effective Amendment No. 17 to the Registration
          Statement on Form N-1A*

          Articles Supplementary filed December 21, 1995 as EX-99.B1-
          ggartsup to Post-Effective Amendment No. 17 to the Registration
          Statement on Form N-1A*

     (2)  By-Laws, as amended, attached hereto as EX-99.B2-ggbylaw

     (3)  Not applicable

     (4)  Article FIFTH and Article SEVENTH of the Articles of
          Incorporation of Registrant, filed December 21, 1995 as EX-99.B1-
          charter to Post-Effective Amendment No. 17 to the Registration
          Statement on Form N-1A*; Article I, Article IV and Article VII of
          the Bylaws of the Registrant attached hereto as EX-99.B2-ggbylaw
          to Post-Effective Amendment No. 17 to the Registration Statement
          on Form N-1A*

     (5)  Investment Management Agreement filed December 21, 1995 as EX-
          99.B5-ggima to Post-Effective Amendment No. 17 to the
          Registration Statement on Form N-1A*

          Assignment of Investment Management Agreement filed December 21,
          1995 as EX-99.B5-ggassign to Post-Effective Amendment No. 17 to
          the Registration Statement on Form N-1A*

     (6)  Underwriting Agreement filed March 29, 1995 as EX-99.B6-ggua to
          Post-Effective Amendment No. 16 to the Registration Statement on
          Form N-1A*

     (7)  Not applicable

     (8)  Custodian Agreement filed December 21, 1995 as EX-99.B8-ggca to
          Post-Effective Amendment No. 17 to the Registration Statement on
          Form N-1A*

     (9)  Shareholder Servicing Agreement filed December 21, 1995 as EX-
          99.B9-ggssa to Post-Effective Amendment No. 17 to the
          Registration Statement on Form N-1A*

          Accounting Services Agreement filed December 21, 1995 as EX-
          99.B9-ggasa to Post-Effective Amendment No. 17 to the
          Registration Statement on Form N-1A*

          Service Agreement filed August 4, 1993 as Exhibit (b)(15) to
          Post-Effective Amendment No. 14 to the Registration Statement on
          Form N-1A*

          Amendment to Service Agreement filed December 21, 1995 as EX-
          99.B9-ggsaa to Post-Effective Amendment No. 17 to the
          Registration Statement on Form N-1A*

          Fund Class A Application filed December 21, 1995 as EX-99.B9-
          ggappca to Post-Effective Amendment No. 17 to the Registration
          Statement on Form N-1A*

          Fund NAV Application filed March 29, 1995 as EX-99.B9-ggappnav to
          Post-Effective Amendment No. 16 to the Registration Statement on
---------------------------------
*Incorporated herein by reference
          Form N-1A*

          Fund Class Y Application filed December 21, 1995 as EX-99.B9-
          ggappcy to Post-Effective Amendment No. 17 to the Registration
          Statement on Form N-1A*

          Fund Class Y Letter of Understanding attached hereto as EX-99.B9-
          gglou

     (10) Not applicable

     (11) Consent of Independent Accountants attached hereto as EX-99.B11-
          ggconsnt

     (12) Not applicable

     (13) Not applicable

     (14)  1.  Qualified Retirement Plan and Trust-Defined Contribution
               Basic Plan Document filed December 16, 1994 as EX-99.B14-1-
               03bpd to Pre-Effective Amendment No. 1 to the Registration
               Statement on Form N-1A of United Asset Strategy Fund, Inc.*
           2.  Qualified Retirement Plan-Summary Plan Description filed
               December 16, 1994 as EX-99.B14-2-03spd to Pre-Effective
               Amendment No. 1 to the Registration Statement on Form N-1A
               of United Asset Strategy Fund, Inc.*
           3.  Employer Contribution 403(b)-Adoption Agreement filed
               December 16, 1994 as EX-99.B14-3-403baa to Pre-Effective
               Amendment No. 1 to the Registration Statement on Form N-1A
               of United Asset Strategy Fund, Inc.*
           4.  IRC Section 457 Deferred Compensation Plan-Adoption
               Agreement filed December 16, 1994 as EX-99.B14-4-457aa to
               Pre-Effective Amendment No. 1 to the Registration Statement
               on Form N-1A of United Asset Strategy Fund, Inc.*
           5.  IRC Section 457-Deferred Compensation Specimen Plan Document
               filed December 16, 1994 as EX-99.B14-5-457bpd to Pre-
               Effective Amendment No. 1 to the Registration Statement on
               Form N-1A of United Asset Strategy Fund, Inc.*
           6.  National Nonstandardized 401(k)Profit Sharing Plan-Adoption
               Agreement filed December 16, 1994 as EX-99.B14-6-ns401aa to
               Pre-Effective Amendment No. 1 to the Registration Statement
               on Form N-1A of United Asset Strategy Fund, Inc.*
           7.  401(k) Nonstandardized Profit Sharing Plan-Summary Plan
               Description filed December 16, 1994 as EX-99.B14-7-ns401gs
               to Pre-Effective Amendment No. 1 to the Registration
               Statement on Form N-1A of United Asset Strategy Fund, Inc.*
           8.  National Nonstandardized Money Purchase Pension Plan-
               Adoption Agreement filed December 16, 1994 as EX-99.B14-8-
               nsmppaa to Pre-Effective Amendment No. 1 to the Registration
               Statement on Form N-1A of United Asset Strategy Fund, Inc.*
           9.  National Nonstandardized Profit Sharing Plan-Adoption
               Agreement filed December 16, 1994 as EX-99.B14-9-nspspaa to
               Pre-Effective Amendment No. 1 to the Registration Statement
               on Form N-1A of United Asset Strategy Fund, Inc.*
          10.  Standardized 401(k) Profit sharing Plan-Adoption Agreement
               filed December 16, 1994 as EX-99.B14-10-s401aa to Pre-
               Effective Amendment No. 1 to the Registration Statement on
               Form N-1A of United Asset Strategy Fund, Inc.*
          11.  401(k) Standardized Profit Sharing Plan-Summary Plan
               Description filed December 16, 1994 as EX-99.B14-11-s401gis
               to Pre-Effective Amendment No. 1 to the Registration
               Statement on Form N-1A of United Asset Strategy Fund, Inc.*
          12.  Universal Simplified Employee Pension Plan-Adoption
               Agreement filed December 16, 1994 as EX-99.B14-12-sepaa to
---------------------------------
*Incorporated herein by reference
               Pre-Effective Amendment No. 1 to the Registration Statement
               on Form N-1A of United Asset Strategy Fund, Inc.*
          13.  Universal Simplified Employee Pension Plan-Basic Plan
               Document filed December 16, 1994 as EX-99.B14-13-sepbpd to
               Pre-Effective Amendment No. 1 to the Registration Statement
               on Form N-1A of United Asset Strategy Fund, Inc.*
          14.  National Standardized Money Purchase Pension Plan-Adoption
               Agreement filed December 16, 1994 as EX-99.B14-14-smppaa to
               Pre-Effective Amendment No. 1 to the Registration Statement
               on Form N-1A of United Asset Strategy Fund, Inc.*
          15.  Standardized Money Purchase pension Plan-Summary Plan
               Description filed December 16, 1994 as EX-99.B14-15-smppgis
               to Pre-Effective Amendment No. 1 to the Registration
               Statement on Form N-1A of United Asset Strategy Fund, Inc.*
          16.  Standardized Profit Sharing Plan-Adoption Agreement filed
               December 16, 1994 as EX-99.B14-16-spspaa to Pre-Effective
               Amendment No. 1 to the Registration Statement on Form N-1A
               of United Asset Strategy Fund, Inc.*
          17.  Standardized Profit Sharing Plan-summary Plan Description
               field December 16, 1994 as EX-99.B14-17-spspgis to Pre-
               Effective Amendment No. 1 to the Registration Statement on
               Form N-1A of United Asset Strategy Fund, Inc.*
          18.  403(b)(7) Tax-sheltered Custodial Account Agreement filed
               December 16, 1994 as EX-99.B14-18-tsa to Pre-Effective
               Amendment No. 1 to the Registration Statement on Form N-1A
               of United Asset Strategy Fund, Inc.*
          19.  Title I 403(b) Plan Document filed December 16, 1994 as EX-
               99.B14-19-ttllpbd to Pre-Effective Amendment No. 1 to the
               Registration Statement on Form N-1A of United Asset Strategy
               Fund, Inc.*

     (15) Service Plan filed December 21, 1995 as EX-99.B15-ggspca to Post-
          Effective Amendment No. 17 to the Registration Statement on Form
          N-1A*

     (16) Schedule for computation of average annual total return
          performance quotations filed August 4, 1993 as Exhibit (b)(16) to
          Post-Effective Amendment No. 14 to the Registration Statement on
          Form N-1A*

     (17) Financial Data Schedule attached hereto as EX-27.B17-ggfds

     (18) Multiple Class Plan attached hereto as EX-99.B18-ggmcp

25.  Persons Controlled by or under common control with Registrant
     -------------------------------------------------------------

     None

26.  Number of Holders of Securities
     -------------------------------

                                        Number of Record Holders as of
     Title of Class                            January 31, 1996
     --------------                     ------------------------------
     Capital Stock                                  10,222

27.  Indemnification
     ---------------

     Reference is made to Section (7)(c) of Article SEVENTH of the Articles
     of Incorporation of Registrant, filed December 21, 1995 as EX-99.B1-
     charter to Post-Effective Amendment No. 17 to the Registration
     Statement on Form N-1A* and to Article IV of the Underwriting
---------------------------------
*Incorporated herein by reference
     Agreement filed March 29, 1995 as EX-99.B6-ggua to Post-Effective
     Amendment No. 16 to the Registration Statement on Form N-1A*, both of
     which provide indemnification.  Also refer to Section 2-418 of the
     Maryland General Corporation Law regarding indemnification of
     directors, officers, employees and agents.

28.  Business and Other Connections of Investment Manager
     ----------------------------------------------------

     Waddell & Reed Investment Management Company is the investment manager
     of the Registrant.  Under the terms of an Investment Management
     Agreement between Waddell & Reed, Inc. and the Registrant, Waddell &
     Reed, Inc. is to provide investment management services to the
     Registrant.  Waddell & Reed, Inc. assigned its investment management
     duties under this agreement to Waddell & Reed Investment Management
     Company on January 8, 1992.  Waddell & Reed Investment Management
     Company is not engaged in any business other than the provision of
     investment management services to those registered investment
     companies as described in Part A and Part B of this Post-Effective
     Amendment.

     Each director and executive officer of Waddell & Reed Investment
     Management Company has had as his sole business, profession, vocation
     or employment during the past two years only his duties as an
     executive officer and/or employee of Waddell & Reed Investment
     Management Company or its predecessors, except as to persons who are
     directors and/or officers of the Registrant and have served in the
     capacities shown in the Statement of Additional Information of the
     Registrant, and except for Mr. Ronald K. Richey.  Mr. Richey is
     Chairman of the Board and Chief Executive Officer of Torchmark
     Corporation, the parent company of Waddell & Reed, Inc., and Chairman
     of the Board of United Investors Management Company, a holding company
     of which Waddell & Reed, Inc. is an indirect subsidiary.  Mr. Richey's
     address is 2001 Third Avenue South, Birmingham, Alabama 35233.  The
     address of the others is 6300 Lamar Avenue, Shawnee Mission, Kansas
     66202-4200.

     As to each director and officer of Waddell & Reed Investment
     Management Company, reference is made to the Prospectus and SAI of
     this Registrant.

29.  Principal Underwriter
     ---------------------

     (a)  Waddell & Reed, Inc. is the principal underwriter to the
          Registrant.  It is also the principal underwriter to the
          following investment companies:

          United Funds, Inc.
          United International Growth Fund, Inc.
          United Continental Income Fund, Inc.
          United Vanguard Fund, Inc.
          United Retirement Shares, Inc.
          United Municipal Bond Fund, Inc.
          United High Income Fund, Inc.
          United Cash Management, Inc.
          United Government Securities Fund, Inc.
          United New Concepts Fund, Inc.
          United Municipal High Income Fund, Inc.
          United High Income Fund II, Inc.
          United Asset Strategy Fund, Inc.
          TMK/United Funds, Inc.
          Waddell & Reed Funds, Inc.

---------------------------------
*Incorporated herein by reference
          and is depositor of the following unit investment trusts:

          United Periodic Investment Plans to acquire shares of United
          Science and Energy Fund

          United Periodic Investment Plans to acquire shares of United
          Accumulative Fund

          United Income Investment Programs

          United International Growth Investment Programs

          United Continental Income Investment Programs

          United Vanguard Investment Programs

     (b)  The information contained in the underwriter's application on
          form BD, under the Securities Exchange Act of 1934, is herein
          incorporated by reference.

     (c)  No compensation was paid by the Registrant to any principal
          underwriter who is not an affiliated person of the Registrant or
          any affiliated person of such affiliated person.

30.  Location of Accounts and Records
     --------------------------------

     The accounts, books and other documents required to be maintained by
     Registrant pursuant to Section 31(a) of the Investment Company Act and
     rules promulgated thereunder are under the possession of Mr. Robert L.
     Hechler and Ms. Sharon K. Pappas, as officers of the Registrant, each
     of whose business address is Post Office Box 29217, Shawnee Mission,
     Kansas 66201-9217.

31.  Management Services
     -------------------

     There is no service contract other than as discussed in Part A and B
     and as listed in Part C (b)(9) of this Post-Effective Amendment and
     listed in response to Item (b)(9) and (b)(15)hereof.

32.  Undertakings
     ------------

     (a)  Not applicable
     (b)  Not applicable
     (c)  The Fund agrees to furnish to each person to whom a prospectus is
          delivered a copy of the Fund's latest annual report to
          shareholders upon request and without charge.
     (d)  To the extent that Section 16(c) of the Investment Company Act of
          1940, as amended, applies to the Fund, the Fund agrees, if
          requested in writing by the shareholders of record of not less
          than 10% of the Fund's outstanding shares, to call a meeting of
          the shareholders of the Fund for the purpose of voting upon the
          question of removal of any director and to assist in
          communications with other shareholders as required by Section
          16(c).

---------------------------------
*Incorporated herein by reference

<PAGE>
                                  SIGNATURES

Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it meets all
of the requirements for effectiveness of this Post-Effective Amendment
pursuant to Rule 485(b) of the Securities Act of 1933 and has duly caused
this Post-Effective Amendment to be signed on its behalf by the
undersigned, thereunto duly authorized, in the city of Overland Park, and
State of Kansas, on the 15th day of February, 1996.


                   UNITED GOLD & GOVERNMENT FUND, INC.

                             (Registrant)

                          By /s/ Keith A. Tucker*
                         ------------------------
                        Keith A. Tucker, President

     Pursuant to the requirements of the Securities Act of 1933, and/or the
Investment Company Act of 1940, this Post-Effective Amendment has been
signed below by the following persons in the capacities and on the date
indicated.

     Signatures          Title
     ----------          -----

/s/Ronald K. Richey*     Chairman of the Board         February 15, 1996
----------------------                                 ----------------
Ronald K. Richey


/s/Keith A. Tucker*      President and Director        February 15, 1996
----------------------   (Principal Executive Officer) ----------------
Keith A. Tucker


/s/Theodore W. Howard*   Vice President, Treasurer     February 15, 1996
----------------------   and Principal Accounting      ----------------
Theodore W. Howard       Officer


/s/Robert L. Hechler*    Vice President and            February 15, 1996
----------------------   Principal Financial           ----------------
Robert L. Hechler        Officer


/s/Henry L. Bellmon*     Director                      February 15, 1996
----------------------                                 ----------------
Henry L. Bellmon


/s/Dodds I. Buchanan*    Director                      February 15, 1996
---------------------                                  ----------------
Dodds I. Buchanan


/s/Jay B. Dillingham*    Director                      February 15, 1996
--------------------                                   ----------------
Jay B. Dillingham


/s/Linda Graves*         Director                      February 15, 1996
------------------                                     ----------------
Linda Graves


/s/John F. Hayes*        Director                      February 15, 1996
-------------------                                    ----------------
John F. Hayes


/s/Glendon E. Johnson*   Director                      February 15, 1996
-------------------                                    ----------------
Glendon E. Johnson


/s/James B. Judd*        Director                      February 15, 1996
------------------                                     ----------------
James B. Judd


/s/William T. Morgan*    Director                      February 15, 1996
-------------------                                    ----------------
William T. Morgan


/s/Doyle Patterson*      Director                      February 15, 1996
-------------------                                    ----------------
Doyle Patterson


                         Director
-------------------                                    ----------------
Eleanor B. Schwartz


/s/Frederick Vogel, III* Director                      February 15, 1996
-------------------                                    ----------------
Frederick Vogel, III


/s/Paul S. Wise*         Director                      February 15, 1996
-------------------                                    ----------------
Paul S. Wise


                         Director
-------------------                                    ----------------
Leslie S. Wright


*By
    Sharon K. Pappas
    Attorney-in-Fact

ATTEST:
   Sheryl Strauss
   Assistant Secretary