UNITED GOVERNMENT SECURITIES FUND INC, 497, 1995-08-04

UNITED GOVERNMENT SECURITIES FUND INC
497, 1995-08-04

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<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 July 31, 1995. 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 Government Securities Fund, Inc.
Class A Shares
This Fund seeks to provide as high a current income as is consistent with safety
of principal by investing in a portfolio of debt securities issued or guaranteed
by the U.S. Government or its agencies or instrumentalities. Neither the United
States, nor any agency of the United States, has guaranteed, sponsored or
approved the Fund or its shares.

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

Prospectus
July 31, 1995

UNITED GOVERNMENT SECURITIES 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 GOAL AND PRINCIPLES......................................10
Risk Considerations ...............................................10
SECURITIES AND INVESTMENT PRACTICES AND ASSOCIATED RISKS............10

ABOUT YOUR ACCOUNT..................................................18
WAYS TO SET UP YOUR ACCOUNT.........................................18
BUYING SHARES.......................................................19
MINIMUM INVESTMENTS.................................................21
ADDING TO YOUR ACCOUNT..............................................21
SELLING SHARES......................................................22
SHAREHOLDER SERVICES................................................24
Personal Service ..................................................24
Reports ...........................................................25
Exchanges .........................................................25
Automatic Transactions ............................................25
DIVIDENDS, DISTRIBUTIONS AND TAXES..................................26
Distributions .....................................................26
Taxes .............................................................27

ABOUT THE MANAGEMENT AND EXPENSES OF THE FUND.......................29
WRIMCO AND ITS AFFILIATES...........................................30
BREAKDOWN OF EXPENSES...............................................31
Management Fee ....................................................31
Other Expenses ....................................................32

<PAGE>
An Overview of the Fund

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

Goals and Strategies: United Government Securities Fund, Inc. (the "Fund")
seeks as high a current income as is consistent with safety of principal. The
Fund seeks to achieve this goal by investing in a portfolio of debt securities
issued or guaranteed by the U.S. Government or its agencies or
instrumentalities. 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.

Risk Considerations: The value of the Fund's investments and the income
generated will vary from day to day, generally reflecting changes in interest
rates. 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 4.25%
(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 0.42%
12b-1 fees 0.11%
Other expenses 0.29%
Total Fund operating expenses1 0.82%

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 $ 51
3 years $ 68
5 years $ 86
10 years $140

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, included in the
SAI.

For a Class A share outstanding throughout each period.*

<TABLE>
For the fiscal year ended March 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 .... $5.23 $5.44 $5.01 $4.85 $4.76 $4.71 $4.91 $5.70 $6.17 $5.13
----- ----- ----- ----- ----- ----- ----- ----- ----- -----
Income from investment
operations:
Net investment income .. .32 .30 .33 .37 .39 .41 .39 .40 .46 .54
Net realized and unrealized
gain (loss) on
investments .......... (0.10) (0.21) .43 .16 .09 .05 (0.20) (0.60) .04 1.08
----- ----- ----- ----- ----- ----- ----- ----- ----- -----
Total from investment
operations ............. .22 .09 .76 .53 .48 .46 .19 (0.20) .50 1.62
----- ----- ----- ----- ----- ----- ----- ----- ----- -----
Less distributions:
Dividends declared
from net investment
income ............... (0.32) (0.30) (0.33) (0.37) (0.39) (0.41) (0.39) (0.40) (0.46) (0.54)
Distribution from
capital gains ........ 0.00 0.00 0.00 0.00 0.00 0.00 0.00 (0.19) (0.51) (0.04)
----- ----- ----- ----- ----- ----- ----- ----- ----- -----
Total distributions ...... (0.32) (0.30) (0.33) (0.37) (0.39) (0.41) (0.39) (0.59) (0.97) (0.58)
----- ----- ----- ----- ----- ----- ----- ----- ----- -----
Net asset value,
end of period .......... $5.13 $5.23 $5.44 $5.01 $4.85 $4.76 $4.71 $4.91 $5.70 $6.17
===== ===== ===== ===== ===== ===== ===== ===== ===== =====
Total return** ........... 4.49% 1.56% 15.62% 11.22% 10.68% 10.06% 4.12% -3.05% 9.36% 33.86%
Net assets, end
of period (000
omitted) ............... $149,533 $176,649 $177,167 $138,753 $118,703 $104,045 $112,684 $146,993 $191,434 $123,600
Ratio of expenses to
average net assets ..... 0.82% 0.75% 0.71% 0.75% 0.80% 0.78% 0.76% 0.77% 0.72% 0.87%
Ratio of net investment
income to average
net assets ............. 6.30% 5.50% 6.29% 7.40% 8.27% 8.55% 8.15% 8.12% 8.15% 9.70%
Portfolio turnover
rate ................... 41.57% 122.62% 81.41% 124.51% 187.55% 257.18% 205.79% 234.57% 240.25% 380.21%

*On July 31, 1995, the Fund began offering Class Y shares to the public. Fund hares outstanding prior to that date were
designated Class A shares.
**Total return calculated without taking into account the sales load deducted on an initial purchase.
</TABLE>
<PAGE>
Performance

Mutual fund performance is commonly measured as total return. The Fund may also
advertise its performance by showing yield and 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.

Yield refers to the income generated by an investment in the Fund over a given
period of time, expressed as an annual percentage rate. The Fund's yield is
based on a 30-day period ending on a specific date and is computed by dividing
the Fund's net investment income per share earned during the period by the
Fund's maximum offering price per share on the last day of the period.

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 Goal and Principles

The goal of the Fund is to seek as high a current income as is consistent with
safety of principal. The Fund seeks to achieve this goal by investing in a
portfolio of debt securities issued or guaranteed by the U.S. Government or its
agencies or instrumentalities ("U.S. Government Securities"). There is no
assurance that the Fund will achieve its goal.

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
because of market factors. Because of market risk, 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.

The Fund may also invest in certain derivative instruments, including options,
futures contracts, options on futures 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.

Securities and Investment Practices and Associated Risks

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 investment 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 also 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 and types of securities in which the Fund may invest are matters of
fundamental policy. Unless otherwise indicated, the types of 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.

U.S. Government Securities. 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. The Fund
will invest in securities of agencies and instrumentalities only when WRIMCO is
satisfied that the credit risk is acceptable.

Securities issued or guaranteed by the U.S. Government include a variety of
Treasury securities that differ only in their interest rates, maturities and
dates of issuance. These 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.

The value of the U.S. Government Securities in which the Fund invests will
fluctuate depending in large part on changes in prevailing interest rates. If
these rates go up after the Fund buys a security, the value of the security may
go down; if these rates go down, the value of the security may go up. Changes
in value and yield based on changes in prevailing interest rates may have
different effects on short-term debt obligations than on long-term obligations.
Long-term obligations (which often have higher yields) may fluctuate in value
more than short-term ones. The Fund has no policy limiting the maturity of the
U.S. Government Securities in which it may invest.

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") are among the U.S.
Government Securities in which the Fund may invest. Mortgage-backed securities
may include pools of mortgages, such as collateralized mortgage-backed
securities 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 Ginnie
Mae (but not Freddie Mac or Fannie Mae) 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.

Bank Deposits. The Fund may invest in deposits in banks (represented by
certificates of deposit or other evidence of deposit of varying maturities
issued by such banks) to the extent that the principal of such deposits is
insured by the Federal Deposit Insurance Corporation ("Insured Deposits"). Such
insurance (and accordingly, the Fund's investment) is currently limited to
$100,000 per bank; interest earned above that amount is not insured. Insured
Deposits have limited marketability.

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. The Fund may only invest in stripped securities that are issued by or
guaranteed by the U.S. Government or its agencies or instrumentalities.

Options and Futures Strategies. The Fund may use certain options to attempt to
enhance income or yield or may attempt to reduce the overall risk of its
investments by using certain options, futures 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 has no fundamental policy as to percentage limitations on its use of
options or on the purchase or sale of futures contracts.

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 put and call options (including optional delivery standby commitments)
only on U.S. Government Securities.

As a fundamental policy, calls written by the Fund on U.S. Government Securities
must be covered (i.e., the Fund must own the related investments or other
investments acceptable for escrow arrangements).

As a fundamental policy, the Fund may write puts only if they are listed on a
domestic securities or commodities exchange or quoted on NASDAQ.

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 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 buy and sell
futures contracts but only those relating to U.S. Government Securities and
options thereon.

The Fund intends to use futures contracts and options thereon only for purposes
of hedging.

Indexed Securities 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. The Fund may invest in indexed securities only
if they are issued or guaranteed by the U.S. Government or its agencies or
instrumentalities.

Risks of Derivative Instruments. The use of options, futures contracts and
options on futures 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 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. The use of
derivative instruments 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
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 rate
movements or the time span within which the movements take place.

Options and futures contracts may increase portfolio turnover rates, which
results in correspondingly greater commission expenses and transactions 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 investment goal and regulatory requirements applicable to investment
companies.

When-Issued and Delayed-Delivery Transactions are trading practices in which the
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. The Fund may 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.

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

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 borrow only
from banks to meet redemptions, for temporary or emergency purposes, but only up
to 10% of its total assets.

As a fundamental policy, the Fund will not purchase securities while outstanding
borrowings exceed 5% of the Fund's assets.

Lending. Securities loans may be made on a short-term or a 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 will 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.

<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 can 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 (UGMA, UTMA)
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.
Percent Percent
of of
Size of Offering Amount
Purchase Price Invested
- -------- -------- --------
Under
$100,000 4.25% 4.44%

$100,000
to less
than
$300,000 3.25 3.36

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

$500,000
to less
than
$1,000,000 1.75 1.78

$1,000,000
to less
than
$2,000,000 1.00 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. U.S. Government Securities are generally
valued according to prices quoted by a dealer in U.S. Government Securities that
offers a pricing service. Short-term U.S. Government 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 ("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.

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 the Fund or shares of a corresponding class of United Municipal Bond
Fund, Inc. or 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"). 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 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 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 net
asset value. 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 net asset value. Shares may also be
issued at net asset value 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 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 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.

To sell shares by check: If you have elected this method in your application or
by subsequent authorization, the Fund will provide you with forms of checks
drawn on UMB Bank, n.a. You may make these checks payable to the order of any
payee in any amount of $250 or more.

Special Requirements for Selling Shares

Account Type Special
Requirements
Individual or Joint The written
Tenant instructions must be
signed by all persons
required to sign for
transactions, exactly
as their names appear
on the account.
Sole Proprietorship The written
instructions must be
signed by the
individual owner of
the business.
UGMA, UTMA The custodian must
sign the written
instructions
indicating capacity as
custodian.
Retirement account The written
instructions must 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
Organization authorized by
corporate resolution
to act on the account
must sign the written
instructions.
Conservator, Guardian The written
or Other Fiduciary instructions must be
signed by the person
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 your request is received and accepted by Waddell & Reed, Inc.
at its home office. Note the following:

Written requests for redemption must be in good order, which requires that.
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.
. There is an initial charge of $10 for establishing the check writing
privilege, but there are no additional charges for the maintenance of the
privilege or for processing checks.
. The check writing privilege is not available for shares represented by
certificates or for retirement plan accounts.
. If you have elected the check writing privilege, UMB Bank, n.a. ("Bank")
will request that the Fund redeem a sufficient number of full and fractional
shares in your account to cover the amount of the check when a check is
presented to the Bank for payment. You will continue to receive dividends on
those shares equaling the amount being redeemed until such time as the check is
presented to the Bank for payment. No "stop-payment" order can be placed
against the checks. Checks may be dishonored if shares were recently purchased
as discussed above or if the net asset value per share has declined so that
there are insufficient shares to be redeemed to cover the amount of the check.
. As with any redemption of shares, redemption by check writing will, for
Federal income tax purposes, result in a capital gain or loss on shares
redeemed.

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 shares of a corresponding class 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 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 A shares and buy corresponding shares of other funds in
the United Group.

You may exchange any Class A shares of the Fund that you have held for at least
six months and any Class A shares of the Fund acquired by reinvestment of a
dividend or distribution for corresponding shares of any other fund in the
United Group. You may exchange any Class A shares of the Fund that you have
held for less than six months only for corresponding shares of United Municipal
Bond Fund, Inc. or United Municipal High Income Fund, Inc.

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 income and capital gains to
shareholders each year. Dividends are declared daily from the Fund's net
investment income, which includes accrued interest, earned discount, dividends
and other income earned on portfolio assets less expenses. Ordinarily,
dividends are distributed monthly on the 27th day of each month or on the last
business day prior to the 27th if the 27th falls on a weekend or holiday. When
shares are redeemed, any declared but unpaid dividends on those shares will be
paid with the next regular dividend payment and not at the time of redemption.
Net capital gains 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 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
(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 gains and net gains from certain foreign currency
transactions) and net capital gains (the excess of net long-term capital gain
over net short-term capital loss) that are distributed to its shareholders.

There are tax 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 realized net capital gains,
when designated as such, are taxable to you as long-term capital gains, whether
received in cash or reinvested 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 distributions paid (or
deemed paid) to you for that year.

No portion of the dividends paid by the Fund will be eligible for the dividends-
received deduction allowed to corporations.

Withholding. The Fund is required to withhold 31% of all dividends,
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
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 Class A shares of the Fund within thirty days before
or after redeeming other Class A shares of the Fund 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 Government Securities 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 management investment company organized as a
corporation under Maryland law on March 26, 1982.

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 July 31, 1995, 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 the 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 ("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, Torchmark
Government Securities Fund, Inc. and Torchmark Insured Tax-Free Fund, Inc. since
each commenced operations in February 1993 and United Asset Strategy Fund, Inc.
since it commenced operations in March 1995.

John E. Sundeen, Jr. is primarily responsible for the day-to-day management of
the Fund. Mr. Sundeen has held his Fund responsibilities since February 1991.
He is Vice President of WRIMCO and Vice President of Waddell & Reed Asset
Management Company, an affiliate of WRIMCO. He is Vice President of the Fund
and Vice President of other investment companies for which WRIMCO serves as
investment manager. Mr. Sundeen has served as the portfolio manager for
investment companies managed by Waddell & Reed, Inc. and its successor, WRIMCO,
since January 1991 and has been an employee of Waddell & Reed, Inc. and its
successor, WRIMCO, since June 1983. 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 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 dollarsFor 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 management fee is accrued and paid to WRIMCO daily.

The combined net asset values of all of the funds in the United Group were
approximately $11.5 billion as of March 31, 1995. Management fees for the
fiscal year ended March 31, 1995 were 0.42% 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 March 31, 1995 for the Fund's Class
A shares were 0.82% of the average net assets of the Fund's Class A shares.

The Fund cannot precisely predict what its portfolio turnover rate will be, but
the Fund may have a high portfolio turnover. A higher turnover will increase
transaction and commission costs and could generate taxable income or loss.

<PAGE>
United Government Securities 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 M Street, N. W. (913) 236-2000
Washington, D. C. 20036
Shareholder Servicing
Independent Accountants Agent
Price Waterhouse LLP Waddell & Reed
Kansas City, Missouri Services Company
6300 Lamar Avenue
Investment Manager P. O. Box 29217
Waddell & Reed Investment Shawnee Mission, Kansas
Management Company 66201-9217
6300 Lamar Avenue (913)236-2000
P. O. Box 29217
Shawnee Mission, Kansas Accounting Services
66201-9217 Agent
(913) 236-2000 Waddell & Reed Services
Company
6300 Lamar Avenue
P. O. Box 29217
Shawnee Mission, Kansas
66201-9217
(913) 236-2000

<PAGE>
United Government Securities Fund, Inc.
Class A Shares
PROSPECTUS
July 31, 1995

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.

NUP2011(7-95)

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.

United Government Securities Fund, Inc.
Class Y Shares
This Fund seeks to provide as high a current income as is consistent with safety
of principal by investing in a portfolio of debt securities issued or guaranteed
by the U.S. Government or its agencies or instrumentalities. Neither the United
States, nor any agency of the United States, has guaranteed, sponsored or
approved the Fund or its shares.

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

Prospectus
July 31, 1995

UNITED GOVERNMENT SECURITIES 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.............................................................4

FINANCIAL HIGHLIGHTS.................................................5

PERFORMANCE..........................................................6
EXPLANATION OF TERMS.................................................6

ABOUT WADDELL & REED.................................................7

ABOUT THE INVESTMENT PRINCIPLES OF THE FUND..........................8
INVESTMENT GOALS AND PRINCIPLES......................................8
Risk Considerations ................................................8
SECURITIES AND INVESTMENT PRACTICES AND ASSOCIATED RISKS.............8

ABOUT YOUR ACCOUNT..................................................16
BUYING SHARES.......................................................16
MINIMUM INVESTMENTS.................................................17
ADDING TO YOUR ACCOUNT..............................................17
SELLING SHARES......................................................18
TELEPHONE TRANSACTIONS..............................................20
SHAREHOLDER SERVICES................................................20
Personal Service ..................................................20
Reports ...........................................................20
Exchanges .........................................................20
DIVIDENDS, DISTRIBUTIONS AND TAXES..................................20
Distributions .....................................................20
Taxes .............................................................21

ABOUT THE MANAGEMENT AND EXPENSES OF THE FUND.......................23
WRIMCO AND ITS AFFILIATES...........................................24
BREAKDOWN OF EXPENSES...............................................25
Management Fee ....................................................25
Other Expenses ....................................................26

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An Overview of the Fund

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

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.

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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).3

Management fees0.42%
12b-1 fees None
Other expenses 0.24%
Total Fund operating expenses 0.66%

Example: You would pay the following expenses on a $1,000 investment, assuming
(1) 5% annual return4 and (2) redemption at the end of each time period:

1 year $ 7
3 years $21

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."

3Expense ratios are based on the management fees and other Fund-level expenses
of the Fund for the fiscal year ended March 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.

4Use 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 March 31, 1995.

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Performance

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.

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

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About the Investment Principles of the Fund

Investment Goals and Principles