<PAGE>
UNITED
GOLD &
GOVERNMENT
FUND, INC.
SEMIANNUAL
REPORT
--------------------------------------
For the six months ended June 30, 1995
<PAGE>
To all IRA Planholders:
As required by law, income tax will automatically be withheld from any
distribution or withdrawal from an 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
Ronald K. Richey, Birmingham, Alabama, Chairman of the Board
Henry L. Bellmon, Red Rock, Oklahoma
Dodds I. Buchanan, Boulder, Colorado
Jay B. Dillingham, Kansas City, Missouri
Linda Graves, Topeka, Kansas
John F. Hayes, Hutchinson, Kansas
Glendon E. Johnson, Miami, Florida
James B. Judd, Kansas City, Missouri
William T. Morgan, Los Angeles, California
Doyle Patterson, Kansas City, Missouri
Eleanor B. Schwartz, Kansas City, Missouri
Keith A. Tucker, Overland Park, Kansas
Frederick Vogel III, Milwaukee, Wisconsin
Paul S. Wise, Carefree, Arizona
Leslie S. Wright, Birmingham, Alabama
OFFICERS
Keith A. Tucker, President
Michael L. Avery, Vice President
Robert L. Hechler, 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
Carl E. Sturgeon, Vice President
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, 1995
Dear Shareholder:
As President of your Fund, I would like to thank you for your continued
confidence in our products and services. We strive to provide the best service
possible to our shareholders: from the Fund's manager, to Waddell & Reed's
customer service representatives, to your personal account representative and
the Waddell & Reed office nearest you.
While personalized service has become increasingly rare in the investment
industry, we remain committed to locally based account representatives who
provide the personal service you need. They are ready to assist you through
regular reviews of your financial plan and to answer any financial questions
you may have. Your account representative is anxious to help you plan for your
retirement, fund a child's education or make plans for other long-term
financial goals.
We want to help you open the door to a better financial future. We will
continue to help you meet your specific financial needs through quality
investment products and personalized service that makes the investment process
more convenient and accessible for you.
Should you have any questions about your account or other financial
issues, contact your personal account representative or your local Waddell &
Reed office. They're ready to help you make the most of your financial future.
Respectfully,
Keith A. Tucker
President
<PAGE>
SHAREHOLDER SUMMARY
- ----------------------------------------------------------------------
UNITED GOLD & GOVERNMENT FUND, INC.
PORTFOLIO STRATEGY:
Inflationary strategies: OBJECTIVE: High total return (income plus
appreciation of share value).
Up to 100% in minerals-related
securities.
Minimum of 25% so invested. STRATEGY: Invests in precious metals
Up to 100% in foreign securities. and minerals-related securities during
periods of
Disinflationary strategies: actual or expected inflation or when
the investment
Up to 100% in U.S. Government environment appears favorable;
Securities. invests in U.S. Government
Maximum of 25% in minerals- Securities during periods of
related securities. disinflation or low inflation.
(May purchase securities subject to
repurchase agreements. May invest in
certain options and futures.)
FOUNDED: 1985
SCHEDULED DIVIDEND FREQUENCY: QUARTERLY (March, June, September,
December)
PERFORMANCE SUMMARY
PER SHARE DATA
For the Six Months Ended June 30, 1995
- --------------------------------------
DIVIDENDS PAID $0.02
=====
NET ASSET VALUE ON
6/30/95 $8.45
12/31/94 8.19
-----
CHANGE PER SHARE $0.26
======
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 6-30-95 -10.85% -5.41%
5-year period ended 6-30-95 3.38% 4.61%
Period from 9-4-85(+)
through 6-30-95 7.75% 8.40%
(+)Initial public offering of the Fund.
*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, 1995, United Gold & Government Fund, Inc. had net assets totaling
$35,358,774 invested in a diversified portfolio of:
40.52% Common Stocks
33.05% Cash and Cash Equivalents
22.27% United States Government Securities
4.16% Bullion
As a shareholder of United Gold & Government Fund, Inc. for every $100 you had
invested on June 30, 1995, your Fund owned:
Cash and Cash Equivalents $33.05
Foreign Mining Stocks 26.73
U.S. Government
Securities 22.27
U.S. Mining Stocks 13.79
Bullion 4.16
Not all holdings will be represented in the portfolio at all times.
<PAGE>
THE INVESTMENTS OF
UNITED GOLD & GOVERNMENT FUND, INC.
JUNE 30, 1995
Troy
Ounces Value
BULLION
Gold* .................................. 1,401 $ 539,245
Platinum* .............................. 2,145 930,930
TOTAL BULLION - 4.16% $ 1,470,175
(Cost: $1,425,764)
Shares
COMMON STOCKS AND WARRANTS
Gold
Australia - 13.18%
Acacia Resources Limited* .............. 300,000 528,835
Gold Mines of Kalgoorlie Limited . ...... 331,660 297,037
Golden Shamrock Mines Limited* ......... 500,000 376,724
Newcrest Mining Limited* ............... 250,000 1,060,869
Normandy Mining Limited ................ 297,900 368,440
Nuigini Mining Ltd. .................... 309,900 804,010
Nuigini Mining Ltd., Warrants* ......... 77,475 79,850
Plutonic Resources Limited ............. 100,000 405,156
PosGold Limited ........................ 250,000 502,891
Ranger Minerals NL* .................... 100,000 234,564
Total ................................. 4,658,376
Canada - 13.55%
Agnico-Eagle Mines Limited ............. 45,500 602,875
Cambior Inc. ........................... 61,600 762,487
Euro-Nevada Mining Corporation Limited . 17,200 525,994
Franco-Nevada Mining Corporation Limited 11,800 614,315
Hemlo Gold Mines Inc. .................. 25,200 267,750
Prime Resources Corporation* ........... 100,000 691,714
Royal Oak Mines Inc.* .................. 100,000 312,500
TVX Gold Inc.* ......................... 139,700 1,012,825
Total ................................. 4,790,460
United States - 13.79%
Amax Gold Inc.* ........................ 60,000 330,000
Barrick Gold Corporation ............... 33,000 833,250
Battle Mountain Gold Company ........... 100,000 962,500
Coeur d'Alene Mines Corporation ........ 20,000 347,500
Hecla Mining Company* .................. 30,000 311,250
Homestake Mining Company ............... 50,000 825,000
Newmont Gold Company ................... 31,500 1,267,875
Total ................................. 4,877,375
TOTAL COMMON STOCKS AND WARRANTS - 40.52% $14,326,211
(Cost: $13,115,272)
See Notes to Schedule of Investments on page 7.
<PAGE>
THE INVESTMENTS OF
UNITED GOLD & GOVERNMENT FUND, INC.
JUNE 30, 1995
Principal
Amount in
Thousands Value
UNITED STATES GOVERNMENT SECURITIES
United States Treasury:
5.875%, 6-30-2000 ..................... $2,000 $ 1,991,240
7.25%, 8-15-2004 ...................... 2,000 2,137,180
8.875%, 8-15-2017 ..................... 1,000 1,245,000
8.875%, 2-15-2019 ..................... 2,000 2,500,320
TOTAL UNITED STATES GOVERNMENT SECURITIES - 22.27% $ 7,873,740
(Cost: $7,289,369)
TOTAL SHORT-TERM SECURITIES
Repurchase Agreements - 14.14%
J. P. Morgan Securities, 5.75%
Repurchase Agreement dated
6-30-95, to be repurchased
at $5,002,396 on 7-3-95** ............. 5,000 $ 5,000,000
United States Government Securities - 18.93%
United States Treasury Bills:
5.9%, 7-5-95 .......................... 5,000 4,996,722
5.91%, 7-7-95 ......................... 1,700 1,698,326
Total ................................. 6,695,048
TOTAL SHORT-TERM SECURITIES - 33.07% $11,695,048
(Cost: $11,695,048)
TOTAL INVESTMENTS - 100.02% $35,365,174
(Cost: $33,525,453)
LIABILITIES, NET OF CASH AND OTHER ASSETS - (0.02%) (6,400)
NET ASSETS - 100.00% $35,358,774
Notes To Schedule Of Investments
*Non-income producing.
**Collateralized by $5,044,000 U.S. Treasury Notes, 5.625% due 8-31-97, market
value and accrued interest aggregate $5,120,448.
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, 1995
Assets
Investments -- at value (Notes 1 and 3):
Bullion (cost -- $1,425,764) .................... $ 1,470,175
Securities (cost -- $32,099,689) ................ 33,894,999
-----------
35,365,174
Cash ............................................. 3,751
Receivables:
Interest and dividends .......................... 169,208
Fund shares sold ................................ 4,866
Prepaid insurance premium ........................ 11,523
-----------
Total assets .................................. 35,554,522
-----------
Liabilities
Payable for Fund shares redeemed ................. 149,878
Accrued transfer agency and dividend disbursing .. 16,270
Accrued service fee ............................... 7,993
Accrued accounting services fee .................. 1,667
Other ............................................ 19,940
-----------
Total liabilities ............................. 195,748
-----------
Total net assets ............................. $35,358,774
===========
Net Assets
$1.00 par value capital stock, authorized --
100,000,000; shares outstanding -- 4,186,616
Capital stock ................................... $ 4,186,616
Additional paid-in capital ...................... 58,180,356
Accumulated undistributed income (loss):
Accumulated undistributed net investment income . 287,220
Accumulated net realized loss on investment
transactions .................................. (29,135,150)
Net unrealized appreciation in value of
investments at end of period .................. 1,839,732
-----------
Net assets applicable to outstanding units
of capital.................................... $35,358,774
===========
Net asset value per share (net assets divided by
shares outstanding) .............................. $8.45
=====
See notes to financial statements.
<PAGE>
UNITED GOLD & GOVERNMENT FUND, INC.
STATEMENT OF OPERATIONS
For the Six Months Ended JUNE 30, 1995
Investment Income
Income:
Interest ........................................ $ 577,119
Dividends ....................................... 105,314
----------
Total income .................................. 682,433
----------
Expenses (Note 2):
Investment management fee ....................... 126,865
Transfer agency and dividend disbursing ......... 90,856
Service fee ..................................... 30,964
Accounting services fee ......................... 10,000
Custodian fees .................................. 9,174
Audit fees ...................................... 9,056
Legal fees ...................................... 751
Other ........................................... 30,193
----------
Total expenses ................................ 307,859
----------
Net investment income ........................ 374,574
----------
Realized and Unrealized Gain (Loss) on Investments
Realized net gain on bullion ..................... 2,972
Realized net gain on securities .................. 2,245,997
Realized net loss on foreign
currency transactions ........................... (5,785)
----------
Realized net gain on investments ................ 2,243,184
----------
Unrealized appreciation in value of bullion
during the period ............................... 65,228
Unrealized depreciation in value of securities
during the period ............................... (1,564,749)
----------
Unrealized depreciation in value of investments
during the period ............................. (1,499,521)
----------
Net gain on investments ...................... 743,663
----------
Net increase in net assets resulting from
operations ................................ $1,118,237
==========
See notes to financial statements.
<PAGE>
UNITED GOLD & GOVERNMENT FUND, INC.
STATEMENT OF CHANGES IN NET ASSETS
For the For the
six months fiscal year
ended ended
June 30, December 31,
1995 1994
----------- -----------
Decrease in Net Assets
Operations:
Net investment income ............... $ 374,574 $ 248,353
Realized net gain on investments .... 2,243,184 3,604,960
Unrealized depreciation ............. (1,499,521)(12,222,484)
----------- -----------
Net increase (decrease) in net
assets resulting from
operations ....................... 1,118,237 (8,369,171)
----------- -----------
Dividends to shareholders from
net investment income* .............. (88,668) (249,300)
----------- -----------
Capital share transactions:
Proceeds from sale of shares
(2,416,123 and 1,361,695 shares,
respectively) ...................... 19,666,686 12,898,882
Proceeds from reinvestment of
dividends (10,588 and 28,118
shares, respectively) ............. 87,254 245,912
Payments for shares redeemed
(2,811,541 and 1,522,587 shares,
respectively) ...................... (22,846,739) (14,012,232)
----------- -----------
Net decrease in net assets
resulting from capital
share transactions ............... (3,092,799) (867,438)
----------- -----------
Total decrease ................... (2,063,230) (9,485,909)
Net Assets
Beginning of period .................. 37,422,004 46,907,913
----------- -----------
End of period, including undistributed
net investment income of $287,220 and
$7,099, respectively ................ $35,358,774 $37,422,004
=========== ===========
*See "Financial Highlights" on page 11.
See notes to financial statements.
<PAGE>
UNITED GOLD & GOVERNMENT FUND, INC.
FINANCIAL HIGHLIGHTS
For a Share of Capital Stock Outstanding
Throughout Each Period:
For the
six months For the fiscal year ended December 31,
ended --------------------------------------
6/30/95 1994 1993 1992 1991 1990
---------- ------ ------ ------ ------ ------
Net asset value,
beginning of
period ........... $8.19 $9.97 $5.70 $6.63 $6.68 $8.66
----- ----- ----- ----- ----- -----
Income from investment
operations:
Net investment
income........... .09 .05 .04 .06 .15 .11
Net realized and
unrealized gain
(loss) on
investments ..... .19 (1.78) 4.27 (0.93) (0.05) (1.97)
----- ----- ----- ----- ----- -----
Total from investment
operations ....... .28 (1.73) 4.31 (0.87) .10 (1.86)
----- ----- ----- ----- ----- -----
Less dividends from
net investment
income ........... (0.02) (0.05) (0.04) (0.06) (0.15) (0.12)
----- ----- ----- ----- ----- -----
Net asset value,
end of period ..... $8.45 $8.19 $9.97 $5.70 $6.63 $6.68
===== ===== ===== ===== ===== =====
Total return* ...... 3.42% -17.36% 75.82% -13.18% 1.47% -21.59%
Net assets, end
of period (000
omitted) .........$35,359 $37,422$46,908 $27,136$40,587 $54,371
Ratio of expenses
to average net
assets ........... 1.74%** 1.59% 1.69% 1.88% 1.57% 1.56%
Ratio of net invest-
ment income to average
net assets ....... 2.11%** 0.57% 0.48% .90% 2.11% 1.43%
Portfolio turnover
rate*** .......... 219.47%**64.89% 84.00% 61.50%112.80% 82.42%
*Total return calculated without taking into account the sales
load deducted on an initial purchase.
**Annualized.
***This rate is, in general, calculated by dividing the average
value of the Fund's portfolio securities during the period into
the lesser of its purchases or sales of securities in the period,
excluding short-term securities and bullion.
See notes to financial statements.
<PAGE>
UNITED GOLD & GOVERNMENT FUND, INC.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1995
NOTE 1 -- Significant Accounting Policies
United Gold & Government Fund, Inc. (the "Fund") is registered under the
Investment Company Act of 1940 as a diversified, open-end management investment
company. The following is a summary of significant accounting policies
consistently followed by the Fund in the preparation of its financial
statements. The policies are in conformity with generally accepted accounting
principles.
A. Security valuation -- Each stock and convertible bond is valued at the
latest sale price thereof on the last business day of the fiscal period as
reported by the principal securities exchange on which the issue is traded
or, if no sale is reported for a stock, the average of the latest bid and
asked prices. Bonds, other than convertible bonds, are valued using a
pricing system provided by a major dealer in bonds. Convertible bonds are
valued using this pricing system only on days when there is no sale
reported. Stocks which are traded over-the-counter are priced using
Nasdaq (National Association of Securities Dealers Automated Quotations)
which provides information on bid and asked or closing prices quoted by
major dealers in such stocks. Gold and silver bullion are valued at the
last spot settlement price for current delivery as calculated by the
Commodity Exchange, Inc. as of the close of that Exchange. Platinum
bullion is valued at the last spot settlement price for current delivery
as calculated by the New York Mercantile Exchange as of the close of that
Exchange. Securities for which quotations are not readily available are
valued as determined in good faith in accordance with procedures
established by and under the general supervision of the Fund's Board of
Directors. Short-term debt securities are valued at amortized cost, which
approximates market.
B. Security transactions and related investment income -- Security
transactions are accounted for on the trade date (date the order to buy or
sell is executed). Securities gains and losses are calculated on the
identified cost basis. Original issue discount (as defined in the
Internal Revenue Code), premiums on the purchase of bonds and post-1984
market discount are amortized for both financial and tax reporting
purposes over the remaining lives of the bonds. Dividend income is
recorded on the ex-dividend date except that certain dividends from
foreign securities are recorded as soon as the Fund is informed of the ex-
dividend date. Interest income is recorded on the accrual basis. See
Note 3 -- Investment Securities Transactions.
C. Foreign currency translations -- All assets and liabilities denominated in
foreign currencies are translated into U.S. dollars daily. Purchases and
sales of investment securities and accruals of income and expenses are
translated at the rate of exchange prevailing on the date of the
transaction. The Fund combines fluctuations from currency exchange rates
and fluctuations in market value when computing net realized and
unrealized gain or loss from investments.
D. Federal income taxes -- It is the Fund's policy to distribute all of its
taxable income and capital gains to its shareholders and otherwise qualify
as a regulated investment company under the Internal Revenue Code. In
addition, the Fund intends to pay distributions as required to avoid
imposition of excise tax. Accordingly, provision has not been made for
Federal income taxes. See Note 4 -- Federal Income Tax Matters.
E. Dividends and distributions -- Dividends and distributions to shareholders
are recorded by the Fund on the record date. Net investment income
distributions and capital gains distributions are determined in accordance
with income tax regulations which may differ from generally accepted
accounting principles. These differences are due to differing treatments
for items such as deferral of wash sales and post-October losses, foreign
currency transactions, net operating losses and expiring capital loss
carryforwards.
F. Repurchase agreements -- Repurchase agreements are collateralized by the
value of the resold securities which, during the entire period of the
agreement, remains at least equal to the value of the loan, including
accrued interest thereon. The collateral for the repurchase agreement is
held by the Fund's custodian bank.
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 $12.1 billion of
combined net assets at June 30, 1995) at annual rates of .51% of the first $750
million of combined net assets, .49% on that amount between $750 million and
$1.5 billion, .47% between $1.5 billion and $2.25 billion, .45% between $2.25
billion and $3 billion, .43% between $3 billion and $3.75 billion, .40% between
$3.75 billion and $7.5 billion, .38% between $7.5 billion and $12 billion, and
.36% of that amount over $12 billion. The Fund accrues and pays this fee
daily.
Pursuant to assignment of the Investment Management Agreement between the
Fund and Waddell & Reed, Inc. ("W&R"), Waddell & Reed Investment Management
Company ("WRIMCO"), a wholly-owned subsidiary of W&R, serves as the Fund's
investment manager.
The Fund has an Accounting Services Agreement with Waddell & Reed Services
Company ("WARSCO"), a wholly-owned subsidiary of W&R. Under the agreement,
WARSCO acts as the agent in providing accounting services and assistance to the
Fund and pricing daily the value of shares of the Fund. For these services,
the Fund pays WARSCO a monthly fee of one-twelfth of the annual fee shown in
the following table.
Accounting Services Fee
Average
Net Asset Level Annual Fee
(all dollars in millions) Rate for Each Level
------------------------- -------------------
From $ 0 to $ 10 $ 0
From $ 10 to $ 25 $ 10,000
From $ 25 to $ 50 $ 20,000
From $ 50 to $ 100 $ 30,000
From $ 100 to $ 200 $ 40,000
From $ 200 to $ 350 $ 50,000
From $ 350 to $ 550 $ 60,000
From $ 550 to $ 750 $ 70,000
From $ 750 to $1,000 $ 85,000
$1,000 and Over $100,000
At present, the Fund operates under state expense requirements which limit
the amount of aggregate annual expenses, adjusted for certain excess expenses,
that the Fund may incur during its fiscal year. The Manager will reimburse the
Fund for any expenses in excess of the limitation. No such reimbursement is
required for the period ended June 30, 1995.
The Fund pays WARSCO a per account charge for transfer agency and dividend
disbursement services of $1.0208 for each shareholder account which was in
existence at any time during the prior month, plus $0.30 for each account on
which a dividend or distribution of cash or shares had a record date in that
month. The Fund also reimburses W&R and WARSCO for certain out-of-pocket
costs.
As principal underwriter for the Fund's shares, W&R received direct and
indirect gross sales commissions (which are not an expense of the Fund) of
$37,358, out of which W&R paid sales commissions of $20,144 and all expenses in
connection with the sale of Fund shares, except for registration fees and
related expenses.
Under a Service Plan adopted by the Fund pursuant to Rule 12b-1 under the
Investment Company Act of 1940, the Fund may pay monthly a fee to W&R in an
amount not to exceed .25% of the Fund's average annual net assets. The fee is
to be paid to reimburse W&R for amounts it expends in connection with the
provision of personal services to Fund shareholders and/or maintenance of
shareholder accounts.
The Fund paid Directors' fees of $667.
W&R is an indirect subsidiary of Torchmark Corporation, a holding company,
and United Investors Management Company, a holding company, and a direct
subsidiary of Waddell & Reed Financial Services, Inc., a holding company.
NOTE 3 -- Investment Securities Transactions
Purchases of investment securities, other than U.S. Government and short-
term securities, aggregated $14,242,612 while proceeds from maturities and
sales aggregated $26,934,038. Proceeds from the sale of bullion aggregated
$1,203,168. Purchases of short-term securities and U.S. Government securities
aggregated $694,630,392 and $16,435,156, respectively. Proceeds from
maturities and sales of short-term securities and U.S. Government securities
aggregated $691,720,000 and $9,630,156, respectively.
For Federal income tax purposes, cost of investments owned at June 30,
1995 was $33,525,453, resulting in net unrealized appreciation of $1,839,721,
of which $2,629,542 related to appreciated securities and $789,821 related to
depreciated securities.
NOTE 4 -- Federal Income Tax Matters
For Federal income tax purposes, the Fund realized capital gain net income
of $3,604,961 during the year ended December 31, 1994, which was fully offset
by utilization of capital loss carryforwards. Remaining prior year capital
loss carryforwards of the Fund aggregated $31,384,119 at December 31, 1994.
This amount is available to offset future realized capital gain net income for
Federal income tax purposes through December 31, 1996; $11,894,711 of this
amount is available through December 31, 1997: $11,331,322 is available through
December 31, 1998; $6,823,792 is available through December 31, 1999 and
$4,958,441 is available through December 31, 2000.
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholders of
United Gold & Government Fund, Inc.
In our opinion, the accompanying statement of assets and liabilities, including
the schedule of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of United Gold & Government Fund,
Inc. (the "Fund") at June 30, 1995, the results of its operations for the six
months then ended and the changes in its net assets and the financial
highlights for the periods indicated, in conformity with generally accepted
accounting principles. These financial statements and financial highlights
(hereafter referred to as "financial statements") are the responsibility of the
Fund's management; our responsibility is to express an opinion on these
financial statements based on our audits. We conducted our audits of these
financial statements in accordance with generally accepted auditing standards
which require that we plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits, which included
confirmation of portfolio positions at June 30, 1995 by correspondence with the
custodian, provide a reasonable basis for the opinion expressed above.
Price Waterhouse LLP
Kansas City, Missouri
August 4, 1995
<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
(913) 236-1303
NUR1013SA(6-95)
printed on recycled paper
