UNITED
                    GOLD &
                    GOVERNMENT
                    FUND, INC.

                    SEMIANNUAL
                    REPORT
                    --------------------------------------
                    For the six months ended June 30, 1998
<PAGE>

























This report is submitted for the general information of the shareholders of
United Gold & Government Fund, Inc.  It is not authorized for distribution to
prospective investors in the Fund unless accompanied with or preceded by the
United Gold & Government Fund, Inc. current prospectus.




































<PAGE>
PRESIDENT'S LETTER
JUNE 30, 1998

Dear Shareholder:

As president of your Fund, I would like to thank you for your continued
confidence as an investor.  From every area of Waddell & Reed, including your
personal financial advisor, our goal has been to provide the best service
possible to our shareholders.

While it is impossible to predict the future direction of the markets, there are
some basic principles that we stand by that can help investors achieve their
objectives:

 . Develop a financial plan that helps you pinpoint your financial objectives,
  and identify specific strategies for turning your dreams into reality.  There
  is no better way to plan for your future.
 . Invest on a regular basis.  It can be one of the best ways to invest long
  term and provide a hedge against market volatility.
 . Adopt a long-term view to take advantage of compounding.  The key to
  successful investing is time, not timing.  The power of compounding is
  awesome and, on a long-term basis, can overwhelm any nuances of timing.
 . Review your financial plan regularly.  Financial planning is an ongoing
  process that requires periodic review.

Waddell & Reed is positioned to assist you as you work toward your financial
goals.  We will continue to offer quality investment products and personal
service to make the financial planning and investment process convenient and
accessible to you.  Our locally based financial advisors are ready to assist you
with your total financial plan to help you plan for your retirement, to help you
meet your education funding goals or to achieve other financial objectives.

We look forward to assisting you in the future.  If you have any questions about
your account, wish to review your financial plan or have other financial issues
that are important to you, contact your financial advisor or your local Waddell
& Reed office.

Respectfully,


Robert L. Hechler
President























<PAGE>
SHAREHOLDER SUMMARY
----------------------------------------------------------------------
UNITED GOLD & GOVERNMENT FUND, INC.

PORTFOLIO STRATEGY:
Inflationary strategies:   OBJECTIVE:   High total return (income
                                        plus appreciation of
Up to 100% in minerals-related          share value).
  securities.
Minimum of 25% so invested. STRATEGY:   Invests in precious
Up to 100% in foreign securities.       metals and minerals
                                        -related securities
Disinflationary strategies:             during periods of
                                        actual or expected
Up to 100% in U.S. Government           inflation or when the
  Securities.                           investment environment
Maximum of 25% in minerals-             appears favorable;
  related securities.                   invests in U.S.
                                        Government Securities during periods of
                                        disinflation or low inflation.

                             FOUNDED:   1985

        SCHEDULED DIVIDEND FREQUENCY:   QUARTERLY (March, June, September,
                                        December)








































<PAGE>
PERFORMANCE SUMMARY -- Class A Shares

                 PER SHARE DATA
For the Six Months Ended June 30, 1998
--------------------------------------

NET ASSET VALUE ON
   6/30/98                   $ 6.37
  12/31/97                     6.87
                             ------
CHANGE PER SHARE             $(0.50)
                             ======

Past performance is not necessarily indicative of future results.



TOTAL RETURN HISTORY

                                 Average Annual Total Return
                               -----------------------------
                                   With            Without
Period                          Sales Load*      Sales Load**
------                          ----------       ------------
 1-year period ended 6-30-98    -22.40%             -17.67%
 5-year period ended 6-30-98     -5.72%              -4.59%
10-year period ended 6-30-98     -1.45%              -0.87%

 *Performance data quoted represents past performance and is based on deduction
  of 5.75% sales load on the initial purchase in each of the three periods.

**Performance data quoted in this column represents past performance without
  taking into account the sales load deducted on an initial purchase.

Investment return and principal value will fluctuate and an investor's shares,
when redeemed, may be worth more or less than their original cost.





























<PAGE>
PORTFOLIO HIGHLIGHTS


On June 30, 1998, United Gold & Government Fund, Inc. had net assets totaling
$14,269,315 invested in a diversified portfolio of:

    34.57%     Common Stocks and Warrants
    30.10%     United States Government Securities
    25.95%     Cash and Cash Equivalents
     9.38%     Convertible Preferred Stocks


As a shareholder of United Gold & Government Fund, Inc. for every $100 you had
invested on June 30, 1998, your Fund owned:

 $30.10  U.S. Government Securities
  28.38  Foreign Mining Stocks
  25.95  Cash and Cash Equivalents
   9.38  Convertible Preferred Stocks
   3.71  Miscellaneous Stocks
   2.48  Domestic Mining Stocks


Not all holdings will be represented in the portfolio at all times.









































<PAGE>
THE INVESTMENTS OF
UNITED GOLD & GOVERNMENT FUND, INC.
JUNE 30, 1998

                                              Shares        Value

COMMON STOCKS AND WARRANTS
Gold
 Canada - 28.38%
 Agnico-Eagle Mines Limited  .............    40,000  $   220,000
 Barrick Gold Corporation  ...............    23,000      441,301
 Cambior Inc.  ...........................    73,100      429,649
 Euro-Nevada Mining Corporation
   Limited ...............................    37,400      509,526
 Franco-Nevada Mining Corporation
   Limited ...............................    28,200      558,558
 Goldcorp Inc., Class A*  ................    30,000      140,654
 Greenstone Resources Ltd.*  .............    88,900      335,255
 Kinross Gold Corporation*  ..............   110,000      369,980
 Pangea Goldfields Inc.*  ................    56,000       54,794
 Repadre Capital Corporation*  ...........   140,000      394,782
 TVX Gold Inc.*  .........................   130,000      398,060
 Vengold Inc.*  ..........................   195,000      197,425
   Total .................................              4,049,984

 United States - 2.48%
 Getchell Gold Corporation*  .............    23,000      353,625

Total Gold - 30.86%                                     4,403,609

Miscellaneous
 Nonmetallic Minerals, Except Fuels - 0.90%
 Dayton Mining Corporation*  .............   200,000      129,102

 Stone, Clay and Glass Products - 2.81%
 Geomaque Explorations Ltd.*  ............   294,400      400,082
 Geomaque Explorations Ltd.,
   Warrants* .............................    25,000          170
   Total .................................                400,252

Total Miscellaneous - 3.71%                               529,354

TOTAL COMMON STOCKS AND WARRANTS - 34.57%             $ 4,932,963
 (Cost: $5,565,258)

PREFERRED STOCKS
Gold
 United States
 Amax Gold Inc., $3.75,
   Convertible ...........................    10,000      441,870
 Battle Mountain Gold Company, $3.25,
   Convertible ...........................    10,000      458,750
 Hecla Mining Company, 7.0%,
   Convertible ...........................    10,000      437,500

TOTAL PREFERRED STOCKS - 9.38%                        $ 1,338,120
 (Cost: $1,453,075)
                See Notes to Schedule of Investments on page 8.







<PAGE>
THE INVESTMENTS OF
UNITED GOLD & GOVERNMENT FUND, INC.
JUNE 30, 1998

                                           Principal
                                           Amount in
                                           Thousands        Value

UNITED STATES GOVERNMENT SECURITIES - 30.10%
 United States Treasury:
   7.5%, 11-15-2016 ......................    $1,000  $ 1,200,470
   8.75%, 8-15-2020 ......................     2,250    3,094,448
   Total .................................            $ 4,294,918
 (Cost: $4,259,268)

SHORT-TERM SECURITIES
Repurchase Agreements - 11.77%
 J.P. Morgan Securities, 5.4%
   Repurchase Agreement dated
   6-30-98, to be repurchased
   at $1,680,252 on 7-1-98** .............     1,680    1,680,000

United States Government - 13.98%
 Federal Mortgage Corporation,
   5.45%, 7-20-98 ........................     2,000    1,994,247

TOTAL SHORT-TERM SECURITIES - 25.75%                  $ 3,674,247
 (Cost: $3,674,247)

TOTAL INVESTMENTS - 99.80%                            $14,240,248
 (Cost: $14,951,848)

CASH AND OTHER ASSETS, NET OF LIABILITIES - 0.20%          29,067

NET ASSETS - 100.00%                                  $14,269,315


Notes To Schedule Of Investments

  *No dividends were paid during the preceding 12 months.
 **Collateralized by $1,273,000 U.S. Treasury Notes, 11.625% due      11-15-
  2004, market value and accrued interest aggregate   $1,706,841.

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
JUNE 30, 1998
(In Thousands, Except for Per Share Amounts)

Assets
 Investment securities -- at value (Notes 1 and 3) .      $14,240
 Cash   ............................................            1
 Receivables:
   Interest and dividends ..........................           93
   Fund shares sold ................................            5
 Prepaid insurance premium  ........................           10
                                                          -------
    Total assets  ..................................       14,349
                                                          -------
Liabilities
 Payable to Fund shareholders  .....................           51
 Accrued transfer agency and
   dividend disbursing (Note 2) ....................            9
 Accrued service fee (Note 2)  .....................            7
 Accrued accounting services fee (Note 2)  .........            1
 Other  ............................................           12
                                                          -------
    Total liabilities  .............................           80
                                                          -------
      Total net assets .............................      $14,269
                                                          =======
Net Assets
 $1.00 par value capital stock
   Capital stock ...................................      $ 2,240
   Additional paid-in capital ......................       29,563
 Accumulated undistributed loss:
   Accumulated undistributed net investment loss ...          (20)
   Accumulated net realized loss on investment
    transactions  ..................................      (16,802)
   Net unrealized depreciation in value of
    investments  ...................................         (712)
                                                          -------
    Net assets applicable to outstanding units
      of capital....................................      $14,269
                                                          =======
Capital shares outstanding
 Class A  ..........................................        2,224
 Class Y  ..........................................           16
Capital shares authorized ..........................      100,000
Net asset value per share (net assets divided
 by shares outstanding)
 Class A  ..........................................        $6.37
 Class Y  ..........................................        $6.38


                       See notes to financial statements.













<PAGE>
UNITED GOLD & GOVERNMENT FUND, INC.
STATEMENT OF OPERATIONS
For the Six Months Ended JUNE 30, 1998
(In Thousands)

Investment Income (Loss)
 Income (Note 1B):
   Interest and amortization .......................      $   125
   Dividends .......................................           54
                                                          -------
    Total income  ..................................          179
                                                          -------
 Expenses (Note 2):
   Transfer agency and dividend disbursing - Class A           60
   Investment management fee .......................           57
   Distribution and service fees - Class A .........           28
   Registration fees ...............................           16
   Prospectus printing .............................           14
   Audit fees ......................................            7
   Custodian fees ..................................            7
   Accounting services fee .........................            5
   Legal fees ......................................            2
   Other ...........................................           13
                                                          -------
    Total expenses  ................................          209
                                                          -------
      Net investment loss ..........................          (30)
                                                          -------

Realized and Unrealized Gain (Loss)
 on Investments (Notes 1 and 3)
 Realized net loss on bullion  .....................         (123)
 Realized net gain on securities  ..................          478
 Realized net gain on foreign
   currency transactions ...........................           10
                                                          -------
   Realized net gain on investments ................          365
 Unrealized depreciation in value of investments
   during the period ...............................       (1,532)
                                                          -------
    Net loss on investments  .......................       (1,167)
                                                          -------
      Net decrease in net assets resulting from
       operations  .................................      $(1,197)
                                                          =======


                       See notes to financial statements.

















<PAGE>
UNITED GOLD & GOVERNMENT FUND, INC.
STATEMENT OF CHANGES IN NET ASSETS
(Dollars In Thousands)
                                            For the     For the
                                          six months  fiscal year
                                             ended       ended
                                           June 30,  December 31,
                                              1998        1997
                                         -----------  -----------
Decrease in Net Assets
 Operations:
   Net investment income (loss) ........     $   (30)     $   394
   Realized net gain (loss) on investments       365       (5,222)
   Unrealized depreciation .............      (1,532)      (1,441)
                                             -------      -------
    Net decrease in net assets
      resulting from operations ........      (1,197)      (6,269)
                                             -------      -------
 Dividends to shareholders from
   net investment income (Note 1E):*
   Class A .............................         ---         (380)
   Class Y .............................         ---          (11)
                                             -------      -------
                                                 ---         (391)
                                             -------      -------
 Capital share transactions:
   Proceeds from sale of shares:
    Class A (661,169 and 371,968
      shares, respectively).............       4,951        3,025
    Class Y (463 and 1,959
      shares, respectively) ............           3           16
   Proceeds from reinvestment of
    dividends:
    Class A (0 and 52,977
      shares, respectively) ............         ---          372
    Class Y (0 and 1,544
      shares, respectively) ............         ---           11
   Payments for shares redeemed:
    Class A (948,342 and 1,312,755
      shares, respectively) ............      (6,846)     (10,432)
    Class Y (40,166 and 4,561
      shares, respectively) ............        (267)         (34)
                                             -------      -------
      Net decrease in net assets
       resulting from capital
       share transactions  .............      (2,159)      (7,042)
                                             -------      -------
       Total decrease  .................      (3,356)     (13,702)
Net Assets
 Beginning of period  ..................      17,625       31,327
                                             -------      -------
 End of period  ........................     $14,269      $17,625
                                             =======      =======
   Undistributed net investment
    income (loss)  ....................        $(20)         $---
                                               ====          ====
                 *See "Financial Highlights" on pages 12 - 13.
                       See notes to financial statements.







<PAGE>
UNITED GOLD & GOVERNMENT FUND, INC.
FINANCIAL HIGHLIGHTS
Class A Shares
For a Share of Capital Stock Outstanding
Throughout Each Period:

                  For the
                 six monthsFor the fiscal year ended December 31,
                    ended ---------------------------------------
                   6/30/98     1997   1996    1995   1994    1993
                 ----------  ------ ------  ------ ------  ------
Net asset value,
 beginning of
 period  ...........  $6.87   $9.07  $8.75   $8.19  $9.97   $5.70
                      -----   -----  -----   -----  -----   -----
Income from investment
 operations:
 Net investment
   income (loss)....  (0.01)   0.15   0.06    0.24   0.05    0.04
 Net realized and
   unrealized gain
   (loss) on
   investments .....  (0.49)  (2.20)  0.32    0.56  (1.78)   4.27
                      -----   -----  -----   -----  -----   -----
Total from investment
 operations  .......  (0.50)  (2.05)  0.38    0.80  (1.73)   4.31
                      -----   -----  -----   -----  -----   -----
Less dividends from
 net investment
 income  ...........  (0.00)  (0.15) (0.06)  (0.24) (0.05)  (0.04)
                      -----   -----  -----   -----  -----   -----
Net asset value,
 end of period .....  $6.37   $6.87  $9.07   $8.75  $8.19   $9.97
                      =====   =====  =====   =====  =====   =====
Total return* ......  -7.28% -22.68%  4.33%   9.80%-17.36%  75.82%
Net assets, end
 of period (000
 omitted)  .........$14,166 $17,241$30,811 $32,733$37,422 $46,908
Ratio of expenses
 to average net
 assets  ...........   2.57%***2.11%  1.84%   1.66%  1.59%   1.69%
Ratio of net investment
 income (loss) to average
 net assets  .......  -0.39%***1.60%  0.66%   2.55%  0.57%   0.48%
Portfolio turnover
 rate**  ........... 121.99%  94.00%101.34% 164.21% 64.89%  84.00%
Average commission
 rate paid  ........  $0.0330 $0.0250$0.0294

    *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.
  ***Annualized.

                       See notes to financial statements.







<PAGE>
UNITED GOLD & GOVERNMENT FUND, INC.
FINANCIAL HIGHLIGHTS
Class Y Shares
For a Share of Capital Stock Outstanding
Throughout Each Period:


                    For the        For the        For the
                        six         fiscal         period
                     months           year        from 2/27/96*
                      ended          ended        through
                    6/30/98        12/31/97       12/31/96
                   --------        --------       --------
Net asset value,
 beginning of period  $6.87          $9.07          $9.35
                      -----          -----          -----
Income from investment
 operations:
 Net investment
   income (loss) ...  (0.04)          0.19           0.09
 Net realized and
   unrealized loss
   on investments...  (0.45)         (2.19)         (0.26)
                      -----          -----          -----
Total from investment
 operations ........  (0.49)         (2.00)         (0.17)
                      -----          -----          -----
Less dividends from
 net investment
 income ............  (0.00)         (0.20)         (0.11)
                      -----          -----          -----
Net asset value,
 end of period .....  $6.38          $6.87          $9.07
                      =====          =====          =====
Total return .......  -7.28%        -22.18%         -1.88%
Net assets, end of
 period (000
 omitted)  .........   $103           $384           $516
Ratio of expenses
 to average net
 assets ............   2.05%***       1.44%          1.18%***
Ratio of net
 investment income (loss)
 to average net
 assets ............  -0.44%***       2.31%          1.30%***
Portfolio
 turnover rate**  .. 121.99%         94.00%        101.34%***
Average commission
 rate paid  ........  $0.0330        $0.0250        $0.0294

  *Commencement of operations.
 **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.
 ***Annualized.

                       See notes to financial statements.







<PAGE>
UNITED GOLD & GOVERNMENT FUND, INC.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1998

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 pricing service or 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 the Nasdaq Stock Market, which provides information on bid and
     asked 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 Subchapter M of 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
     dividends 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 carryovers.

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.

     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 $19.9 billion of
combined net assets at June 30, 1998) 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

     For Class A shares, the Fund also pays WARSCO a monthly per account charge
for transfer agency and dividend disbursement services of $1.3125 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.  With respect to Class Y shares, the
Fund pays WARSCO a monthly fee at an annual rate of .15% of the average daily
net assets of the class for the preceding 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 gross sales
commissions for Class A shares (which are not an expense of the Fund) of
$13,541, out of which W&R paid sales commissions of $7,565 and all expenses in
connection with the sale of Fund shares, except for registration fees and
related expenses.

     Under a Distribution and Service Plan for Class A shares adopted by the
Fund pursuant to Rule 12b-1 under the Investment Company Act of 1940, the Fund
may pay monthly a distribution and/or service fee to W&R in an amount not to
exceed .25% of the Fund's Class A average annual net assets.  The fee is to be
paid to reimburse W&R for amounts it expends in connection with the distribution
of the Class A shares and/or provision of personal services to Fund shareholders
and/or maintenance of shareholder accounts.  The Fund incurred $165 and $28,220
in distribution and service fees, respectively.

     The Fund paid Directors' fees of $2,815, which are included in other
expenses.

     W&R is an indirect subsidiary of Torchmark Corporation, a holding company,
and Waddell & Reed Financial, Inc., 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 $11,096,627 while proceeds from maturities and sales
aggregated $7,901,374.  Purchases of bullion aggregated $4,107,010 while
proceeds from the sale of bullion aggregated $3,983,558.  Purchases of short-
term securities and U.S. Government securities aggregated $285,758,494 and
$4,259,922, respectively.  Proceeds from maturities and sales of short-term
securities and U.S. Government securities aggregated $284,275,000 and
$11,256,602, respectively.

     For Federal income tax purposes, cost of investments owned at June 30, 1998
was $14,951,848, resulting in net unrealized appreciation of $711,600, of which
$948,671 related to appreciated investments and $1,660,271 related to
depreciated investments.

NOTE 4 -- Federal Income Tax Matters

     For Federal income tax purposes, the Fund realized capital losses of
$3,445,005 during the year ended December 31, 1997, which included the effect of
certain losses deferred into the next fiscal year, as well as the effect of
losses recognized from the prior year (see discussion below).  The realized
losses are available to offset future realized capital gain net income through
December 31, 2005.  In addition, prior year capital loss carryovers aggregated
$11,331,322 at December 31, 1997, and are available to offset future capital
gain net income as follows: $4,507,530 through December 31, 1998; $1,865,351
through December 31, 1999, and $4,958,441 through December 31, 2000.

     Internal Revenue Code regulations permit the Fund to defer into its next
fiscal year net capital losses or net long-term capital losses incurred between
each November 1 and the end of its fiscal year (``post-October losses'').
From November 1, 1997 through December 31, 1997, the Fund incurred net
capital losses of $2,380,802, which have been deferred to the fiscal year
ending December 31, 1998.  In addition, during the year ended December 31,
1997, the Fund recognized post-October losses of $610,801 that had been
deferred from the year ended

Note 5 -- Multiclass Operations

     On February 19, 1996, the Fund was authorized to offer investors a choice
of two classes of shares, Class A and Class Y, each of which has equal rights as
to assets and voting privileges.  Class Y shares are not subject to a sales
charge on purchases; they are not subject to a Rule 12b-1 Distribution and
Service Plan and have a separate transfer agency and dividend disbursement
services fee structure.  A comprehensive discussion of the terms under which
shares of either class are offered is contained in the prospectus and the
Statement of Additional Information for the Fund. The Fund commenced multiclass
operations on February 27, 1996.

     Income, non-class specific expenses and realized and unrealized gains and
losses are allocated daily to each class of shares based on the value of
relative net assets as of the beginning of each day adjusted for the prior day's
capital share activity.














































<PAGE>
INDEPENDENT AUDITORS' REPORT

The Board of Directors and Shareholders,
United Gold & Government Fund, Inc.:


We have audited the accompanying statement of assets and liabilities, including
the schedule of investments, of United Gold & Government Fund, Inc. (the "Fund")
as of June 30, 1998, and the related statements of operations for the six-month
period then ended and changes in net assets for the six-month period then ended
and the fiscal year ended December 31, 1997, and the financial highlights for
the periods presented.  These financial statements and the financial highlights
are the responsibility of the Fund's management.  Our responsibility is to
express an opinion on these financial statements and the financial highlights
based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards.  Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and the financial
highlights are free of material misstatement.  An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements.  Our procedures included confirmation of securities owned at June
30, 1998 by correspondence with the custodian and broker.  An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation.  We believe that our audits provide a reasonable basis for our
opinion.

In our opinion, such financial statements and financial highlights present
fairly, in all material respects, the financial position of United Gold &
Government Fund, Inc. as of June 30, 1998, the results of its operations, the
changes in its net assets, and the financial highlights for the respective
stated periods in conformity with generally accepted accounting principles.




Deloitte & Touche LLP
Kansas City, Missouri
August 7, 1998

























<PAGE>
To all traditional IRA Planholders:
As required by law, income tax will automatically be withheld from any
distribution or withdrawal from a traditional IRA unless you make a written
election not to have taxes withheld.  The election may be made by submitting
forms provided by Waddell & Reed, Inc. which can be obtained from your Waddell &
Reed representative or by submitting Internal Revenue Service Form W-4P.  Once
made, an election can be revoked by providing written notice to Waddell & Reed,
Inc.  If you elect not to have tax withheld you may be required to make payments
of estimated tax.  Penalties may be imposed by the IRS if withholding and
estimated tax payments are not adequate.













DIRECTORS
Keith A. Tucker, Overland Park, Kansas, Chairman of the Board
James M. Concannon, Topeka, Kansas
John A. Dillingham, Kansas City, Missouri
David P. Gardner, Menlo Park, California
Linda Graves, Topeka, Kansas
John F. Hayes, Hutchinson, Kansas
Glendon E. Johnson, Miami, Florida
William T. Morgan, Coronado, California
Ronald K. Richey, Birmingham, Alabama
Frank J. Ross, Jr., Kansas City, Missouri
Eleanor B. Schwartz, Kansas City, Missouri
Frederick Vogel III, Milwaukee, Wisconsin
Paul S. Wise, Carefree, Arizona

OFFICERS
Robert L. Hechler, President
Michael L. Avery, Vice President
Henry J. Herrmann, Vice President
John M. Holliday, Vice President
Theodore W. Howard, Vice President and Treasurer
Sharon K. Pappas, Vice President and Secretary




















<PAGE>
THE UNITED GROUP OF MUTUAL FUNDS


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












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

FOR MORE INFORMATION:
Contact your representative, or your
local office as listed on your
Account Statement, or contact:
  WADDELL & REED
  CUSTOMER SERVICE
  6300 Lamar Avenue
  P.O. Box 29217
  Shawnee Mission, KS  66201-9217
  (800) 366-5465

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




NUR1013SA(6-98)
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