SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

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


                                    FORM 10-Q

              [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

                  For the Quarterly Period Ended July 31, 1998

                                       OR

              [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

                 For the Transition Period from ______ to ______
                         Commission File Number 0-24856


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


                     UST PRIVATE EQUITY INVESTORS FUND, INC.
             (Exact name of Registrant as specified in its charter)


              MARYLAND                                   13-3786385
  (State or other jurisdiction of                       (IRS Employer
   incorporation or organization)                    Identification No.)



                              114 West 47th Street
                             New York, NY 10036-1532
          (Address of principal executive offices, including zip code)

                                 (212) 852-1000
                     (Telephone number, including area code)


Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  registrant  was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days.


                 Yes   |X|                    No   |_|

   As of July 31,  1998,  there were 40,463  shares of the  Registrant's  Common
Stock, $.001 par value, outstanding.


748372.2

<PAGE>

                     UST PRIVATE EQUITY INVESTORS FUND, INC.

This  Quarterly  Report  on  Form  10-Q  contains  historical   information  and
forward-looking  statements.  Statements looking forward in time are included in
this  Form  10-Q  pursuant  to the  "safe  harbor"  provisions  of  the  Private
Securities  Litigation  Reform Act of 1995. They involve known and unknown risks
and  uncertainties  that may cause the Company's  actual  results to differ from
future   performance   suggested  herein.  In  the  context  of  forward-looking
information provided in this Form 10-Q and in other reports, please refer to the
discussion  of risk  factors  detailed  in,  as well  as the  other  information
contained in, the Company's filings with the Securities and Exchange  Commission
during the past 12 months.

<TABLE>
<CAPTION>
               INDEX                                                                                     PAGE NO.

       PART I. FINANCIAL INFORMATION
<S>            <C>
       Item 1. Financial Statements (Unaudited).

               Portfolio  of  Investments  as of July 31, 1998  (Unaudited)  and
               October 31, 1997.  

               Statement  of  Assets  and   Liabilities  as  of  July  31,  1998
               (Unaudited) and October 31, 1997.

               Statement of Operations for the three month period ended July 31,
               1998  (Unaudited),  the  fiscal  year to date  at July  31,  1998
               (Unaudited),   the  three  month   period  ended  July  31,  1997
               (Unaudited)  and the prior  fiscal  year to date at July 31, 1997
               (Unaudited).

               Statement  of Changes in Net  Assets for the three  month  period
               ended July 31, 1998 (Unaudited),  the fiscal year to date at July
               31, 1998 (Unaudited),  the three month period ended July 31, 1997
               (Unaudited)  and the prior  fiscal  year to date at July 31, 1997
               (Unaudited).

               Notes to Financial Statements (Unaudited).

       Item 2. Management's Discussion and Analysis of Financial Condition and Results
               of Operations

       Item 3. Quantitative and Qualitative Disclosures About Market Risk

      PART II. OTHER INFORMATION

       Item 1. Legal Proceedings

       Item 2. Changes in Securities

       Item 3. Defaults upon Senior Securities

       Item 4. Submission of Matters to a Vote of Securityholders

       Item 5. Other Information

       Item 6. Exhibits and Reports on Form 8-K
</TABLE>

SIGNATURES

748372.2

<PAGE>



PART I.      FINANCIAL INFORMATION

Item 1.      Financial Statements.

<TABLE>
UST Private Equity Investors Fund, Inc.                                              Fiscal Year End:  October 31, 1998
Portfolio of Investments                                                                  Quarter Ended:  July 31, 1998
-----------------------------------------------------------------------------------------------------------------------
<CAPTION>

                                                           July 31, 1998                       October 31, 1997
                                                            (Unaudited)
                                                 ---------------------------------     --------------------------------
<S>                                            <C>                         <C>       <C>                        <C>
PORTFOLIO STRUCTURE

PORTFOLIO COMPANIES                             $      23,989,527           58.76%    $        30,123,439        63.85%

PRIVATE FUNDS                                           8,968,861           21.97%              5,312,037        11.26%

SHORT-TERM INVESTMENTS:

      Commercial Paper                                  4,806,467           11.77%              4,497,794         9.54%

   Corporate Bonds                                        609,873            1.49%              1,986,001         4.20%

      U.S. Government & Agency                         10,503,217           25.72%              4,049,484         8.58%
      Obligations

  Investment Companies                                    255,176            0.63%              1,047,435         2.22%

  Demand Notes                                                                                         --            --
                                                 ----------------    -------------     ------------------    ----------

   TOTAL INVESTMENTS                                   49,133,121          120.34%             47,016,190        99.65%
OTHER ASSETS & LIABILITIES (NET)                      (8,305,019)        (-20.34%)                163,281         0.35%
                                                 ----------------    -------------     ------------------    ----------

NET ASSETS                                      $      40,828,102          100.00%    $        47,179,471       100.00%
                                                 ================    =============     ==================    ==========
</TABLE>

748372.2

<PAGE>

<TABLE>
UST Private Equity Investors Fund, Inc.                                              Fiscal Year End:  October 31, 1998
Statement of Assets and Liabilities                                                       Quarter Ended:  July 31, 1998
-----------------------------------------------------------------------------------------------------------------------
<CAPTION>
<S>                                                                       <C>                  <C>

                     ASSETS                                               July 31, 1998          October 31, 1997
--------------------------------------------------------------------
                                                                               (Unaudited)

Investment Securities, at Cost                                         $        50,703,524   $            41,829,598
                                                                        ==================    ======================


Investment Securities, at Value                                                 49,133,121                47,016,190

Cash                                                                             1,901,327                        --

Receivables:

  Interest                                                                          53,164                   207,725
  For Investments Sold                                                                  --                   348,462
Prepaid Assets                                                                      28,196                    37,024
Unamortized Organization Costs                                                          --                    16,490


                                                                         ------------------   ----------------------       
TOTAL ASSETS                                                                    51,115,808                47,625,891
                                                                         -----------------    ----------------------


LIABILITIES
--------------------------------------------------------------------

Loan Payable                                                                    10,000,000                        --
Payable For Investments Purchased                                                  100,000                        --
Managing Investment Advisory Fees Payable                                          106,029                   258,424
Administration & Shareholder Servicing Fees Payable                                 15,672                    15,330
Directors Fees Payable                                                              22,438                    30,000
Accrued Expenses and Other Payables                                                 43,567                   142,666
                                                                        ------------------    ----------------------

TOTAL LIABILITIES                                                               10,287,706                   446,420
                                                                        ------------------    ----------------------

NET ASSETS                                                             $        40,828,102   $            47,179,471
                                                                        ==================    ======================


NET ASSETS CONSIST OF
--------------------------------------------------------------------

Accumulated Undistributed Net Investment Income                        $           121,429   $               229,824
Accumulated Net Realized Gain on Investments                                     2,158,967                 1,767,041
Net Unrealized Appreciation/(Depreciation) of Investments                      (1,570,403)                 5,186,592
Allowance for Management Incentive                                                      --                 (122,095)
Par Value                                                                              405                       405
Paid In Capital in Excess of Par Value                                          40,117,704                40,117,704
                                                                        ------------------    ----------------------

TOTAL NET ASSETS                                                       $        40,828,102   $            47,179,471
                                                                        ==================    ======================

Shares of Common Stock Outstanding                                                  40,463                    40,463
                                                                        ------------------    ----------------------

NET ASSET VALUE PER SHARE                                              $          1,009.02   $              1,165.99
                                                                         =================    ======================
</TABLE>

748372.2

<PAGE>



<TABLE>
UST Private Equity Investors Fund, Inc.                                              Fiscal Year End:  October 31, 1998
Statement of Operations (Unaudited)                                                       Quarter Ended:  July 31, 1998
-----------------------------------------------------------------------------------------------------------------------
<CAPTION>
                                                                               Fiscal                               Prior Fiscal
                                                        Quarter Ended       Year To Date          Quarter Ended     Year To Date
                                                        July 31, 1998      July 31, 1998          July 31, 1997    July 31, 1997

INVESTMENT INCOME
<S>                                                 <C>                 <C>                  <C>                <C> 

Interest Income                                    $          102,933   $           467,991  $          191,471  $          797,416
                                                    -----------------    ------------------   -----------------   -----------------
Dividend Income                                                    --                    --             120,606             120,606
                                                    -----------------    ------------------   -----------------   -----------------

          TOTAL INCOME                                        102,933               467,991             312,077             918,022
                                                    -----------------    ------------------   -----------------   -----------------


EXPENSES

Management Investment Advisory Fees                           127,070               433,055             158,862             421,670
Administrative Fees & Shareholder Servicing Fees               15,179                45,041              15,169              45,011
Custodial Fees                                                  2,061                 6,348               2,274               6,483
Legal Fees                                                     17,602                42,397              22,388              81,223
Audit and Other Professional Service Fees                       6,553                19,446               7,033              20,767
Directors' Fees and Expenses                                    7,562                22,438               7,562              22,438
Shareholder Reports                                             1,260                 3,740                  --               5,951
Organization Expenses                                               0                16,490               1,511               4,483
Insurance Expense                                               3,370                10,315              18,954              56,246
Interest Expense*                                                 415                28,104                  --                  --
                                                    -----------------    ------------------   -----------------   -----------------

   TOTAL EXPENSES                                             181,072               627,374             233,753             664,272

Fees Waived and Reimbursed by Advisor                        (21,857)              (50,988)            (32,047)           (133,577)
                                                    -----------------    ------------------   -----------------   -----------------

   NET EXPENSES                                               159,215               576,386             201,706             530,695
                                                    -----------------    ------------------   -----------------   -----------------

NET INVESTMENT INCOME (LOSS)                       $         (56,282)   $         (108,395)  $          110,371  $          387,327
                                                    -----------------    ------------------   -----------------   -----------------

REALIZED AND UNREALIZED GAIN/( LOSS)
  ON INVESTMENTS

Net Realized Gain (Loss) on Security Transactions  $        1,283,340   $         2,275,612  $        1,127,119  $        1,115,071

Net Change in Unrealized Appreciation /
  (Depreciation) on Investments
                                                            (4,727,150)         (6,756,995)             794,231           2,438,897
                                                  ------------------------   -----------------    ------------------   ------------

NET REALIZED AND UNREALIZED
  GAIN/(LOSS) ON INVESTMENTS
                                                            (3,443,810)         (4,481,383)             1,921,350         3,553,968

Change in Management Incentive Fee                             144,779             122,095               (113,688)        (112,484)
                                                       -----------------    ------------------   -----------------   --------------
NET INCREASE (DECREASE) IN NET
  ASSETS RESULTING FROM OPERATIONS
                                               $            (3,355,313)  $     (4,467,683)    $         1,918,033  $    3,828,811
                                                ========================   =================    ==================   ==============
</TABLE>

748372.2

<PAGE>

<TABLE>
UST Private Equity Investors Fund, Inc.                                              Fiscal Year End:  October 31, 1998
Statement of Changes in Net Assets (Unaudited)                                            Quarter Ended:  July 31, 1998
-----------------------------------------------------------------------------------------------------------------------
<CAPTION>
<S>                                               <C>                 <C>                 <C>                <C>    
                                                                               Fiscal                             Prior Fiscal
                                                     Quarter Ended          Year To Date       Quarter Ended      Year To Date
                                                     July 31, 1998         July 31, 1998       July 31, 1997      July 31, 1997

OPERATIONS:

Net Investment Income (Loss)                         $       (56,282)  $        (108,395)  $        110,371  $             387,327
Net Realized Gain (Loss) on Investments                     1,283,340           2,275,612         1,127,119              1,115,071
Net Change in Unrealized Appreciation /
(Depreciation) on Investments                             (4,727,150)         (6,756,995)           794,231              2,438,897
Change in Allowance for Management Incentive Fee              144,779             122,095         (113,688)              (112,484)
                                                      ---------------   -----------------    --------------    -------------------

Net Increase (Decrease) in Net Assets
   Resulting From Operations                              (3,355,313)         (4,467,683)         1,918,033              3,828,811

DISTRIBUTIONS TO SHAREHOLDERS:

From Net Investment Income                                         --                  --                --            (1,429,792)
From Net Realized Gain on Investments                              --         (1,883,686)                --               (43,640)
                                                      ---------------   -----------------    --------------    -------------------

NET INCREASE (DECREASE) IN NET ASSETS                     (3,355,313)         (6,351,369)         1,918,033              2,355,379

NET ASSETS:
   Beginning of Period                                     44,183,415          47,179,471        43,156,966             42,719,620
                                                      ---------------   -----------------    --------------    -------------------

   End of Period                                     $     40,828,102  $       40,828,102  $     45,074,999  $          45,074,999
                                                      ===============   =================    ==============    ===================
</TABLE>


748372.2

<PAGE>



UST Private Equity Investors Fund, Inc.      Fiscal Year End:  October 31, 1998
Notes to Financial Statements                     Quarter Ended:  July 31, 1998
-------------------------------------------------------------------------------


1.       Significant Accounting Policies

         UST  Private  Equity   Investors   Fund,   Inc.  (the   "Company")  was
incorporated  under the laws of the State of Maryland on September  16, 1994 and
is  registered   under  the   Securities   Act  of  1933,   as  amended,   as  a
non-diversified,  closed-end  management investment company which has elected to
be treated as a business development company under the Investment Company Act of
1940, as amended. The Company commenced operations on August 1, 1995.

         Certain information and footnote  disclosures  normally included in the
financial  statements  prepared in accordance with generally accepted accounting
principles  have been  condensed or omitted.  Reference is made to the Company's
annual report  included in Form 10-K as filed with the  Securities  and Exchange
Commission for the Notes to the Financial Statements that remain unchanged.

         The  following  is a summary of the  Company's  significant  accounting
policies.

         (a)      Portfolio valuation:

         The Company  values  portfolio  securities  quarterly and at other such
times as, in the Board of Directors' view, circumstances warrant. Investments in
unrestricted securities that are traded on a recognized stock exchange or on the
national securities market are valued at the last sale price for such securities
on the valuation date.  Short-term debt instruments with remaining maturities of
60 days or less are valued at amortized cost, which  approximates  market value.
Securities  and  other  assets  for  which  market  quotations  are not  readily
available or that are restricted are valued,  pursuant to guidelines  adopted by
the Investment Advisor, under the supervision of the Board of Directors.

         (b)      Federal income taxes:

         It is the policy of the Company to continue to qualify as a  "regulated
investment  company"  under  Subchapter  M of  the  Internal  Revenue  Code  and
distribute  substantially  all  of  its  taxable  income  to  its  shareholders.
Therefore, no federal income or excise tax provision is required.

2.       Purchases and Sales of Securities

         Purchase and sales of securities  for the three month period ended July
31,  1998,  excluding  short-term   investments,   for  the  Company  aggregated
$1,728,414  and  $1,369,854,  respectively.  At July 31,  1998,  the Company had
outstanding investment commitments totaling $4,378,324.

748372.2

<PAGE>



Item 2.  Management's Discussion and Analysis
         of Financial Condition and Results of Operations.

Results of Operations


THREE-MONTH PERIOD ENDED JULY 31, 1998 AS COMPARED TO THE SIMILAR PERIOD IN 1997

The  Company's  net asset value per common share was $1,009.02 at July 31, 1998,
down $82.93 per share from the net asset value per common  share of $1,091.95 at
April 30, 1998. This decrease is principally the result of a significant decline
in the price of Corsair Communications. The Company's net asset value per common
share was  $1,113.98  at July 31,  1997,  up $47.40 per share from the net asset
value per common share of $1,066.58 at April 30, 1997.

Realized and Unrealized Gains and Losses from Portfolio Investments

For the three  months  ended  July 31,  1998 and  1997,  the  Company  had a net
realized   gain/(loss)   from   investments   of  $1,283,340   and   $1,127,119,
respectively. For the three months ended July 31, 1998 and 1997, the Company had
a  net  change  in  unrealized  appreciation/(depreciation)  on  investments  of
$(4,727,150) and $794,231,  respectively.  The realized gains were primarily the
result of the sale of Cisco Systems Inc. The unrealized loss resulted  primarily
from the decline in the price of Corsair Communications

Investment Income and Expenses

For the three  months  ended July 31,  1998,  the  Company  had total  income of
$102,933 and net  operating  expenses of $159,215  resulting  in net  investment
income/(loss)  of $(56,282)  as compared to total  income of  $312,077,  and net
operating  expenses of $201,706,  resulting in net investment income of $110,371
for the quarter ended July 31, 1997. The primary reason for the decline in total
income was the decline of assets invested in short-term instruments and increase
in assets invested in private companies and private funds.

United  States Trust  Company of New York (the  "Managing  Investment  Adviser")
provides  investment  management and  administrative  services  required for the
operation  of the Company.  In  consideration  of the  services  rendered by the
Managing  Investment  Adviser,  the Company pays a  management  fee based upon a
percentage of the net assets of the Company invested or committed to be invested
in  certain  types  of  investments  and an  incentive  fee  based  in part on a
percentage of realized capital gains of the Company.  Such fee is determined and
payable  quarterly.  For the quarters ended July 31, 1998 and 1997, the Managing
Investment   Adviser   earned   $127,070  and  $158,862  in   management   fees,
respectively.  In addition,  for the quarters  ended July 31, 1998 and 1997, the
change  in  allowance  for  the  Management   Incentive  Fee  was  $144,779  and
$(113,688),  respectively. For the same periods, the Managing Investment Adviser
reimbursed  other  operating  expenses of the Company in the amount of $(21,857)
and $(32,047), respectively, as a result of expenses incurred in excess of those
permitted pursuant to the Company's Prospectus.

Net Assets

At July 31,  1998,  the  Company's  net assets were  $40,828,102,  a decrease of
$3,355,313  from net assets of  $44,183,415 at April 30, 1998. The Company's net
assets at July 31,  1997 were  $45,074,999,  up  $1,918,033  from net  assets of
$43,156,966 at April 30, 1997.

Liquidity and Capital Resources

The  Company  focuses  its  investments  in the  private  equity  securities  of
later-stage  venture  capital  companies and  middle-market  companies which the
Company believes offer significant long-term capital  appreciation.  The Company
may offer  managerial  assistance  to certain of these  companies.  The  Company
invests its available cash in short-term investments of marketable securities to
provide the  liquidity  necessary to make  portfolio  investments  as investment
opportunities  arise.  At July 31, 1998, the Company held $1,901,327 in cash and
$49,133,121 in investments.  At July 31, 1998,  investments included $23,989,527
in portfolio  companies,  $8,968,861 in private funds,  $4,806,467 in commercial
paper,  $609,873 

748372.2

<PAGE>


in corporate bonds,  $10,503,217 in U.S. Government and agency obligations,  and
$255,176 in investment  companies.  At October 31, 1997,  the Company held $0 in
cash and $47,016,190 in investments.  At October 31, 1997,  investments included
$30,123,439 in portfolio companies,  $5,312,037 in private funds,  $4,497,794 in
commercial paper,  $1,986,001 in corporate bonds,  $4,049,484 in U.S. Government
and agency  obligations  and $1,047,435 in investment  companies.  These changes
were primarily the result of the investment activity discussed above.

In connection  with the Company's  commitments to private funds in the amount of
$12,000,000 since inception, a total of $7,734,155,  representing capital calls,
has been paid by the Company through July 31, 1998.

On December 23, 1997,  the Company  distributed  $1,883,686  in capital gains to
shareholders of record as of December 18, 1997.

Other

In 1996, the Managing  Investment Adviser established a Year 2000 Committee with
responsibility  for  developing an effective plan for  identifying,  renovating,
testing  and  implementing  solutions  for Year 2000  processing.  The  Managing
Investment  Adviser is working with Chase Global Fund Services (as administrator
to the Company and as provider of certain of the Managing  Investment  Adviser's
most significant data processing  systems),  as well as other vendors, to ensure
compliance  with  required  systems  changes.  The Managing  Investment  Adviser
presently  believes that with modifications to existing software and compliance,
by vendors who provide significant processing systems to the Managing Investment
Adviser,  the  Managing  Investment  Adviser's  systems  will  continue  without
disruption.  However,  if such  modifications are not made, or are not completed
timely,  the Year 2000 issue could have a material  impact on the  operations of
the Managing Investment Adviser, and consequently, the Company. Specific factors
that might  cause such a material  impact  include,  but are not  limited to the
availability  and cost of personnel  trained in this area, the ability to locate
and correct all relevant computer codes and similar uncertainties.  The Managing
Investment  Adviser's Year 2000 plan  anticipates that software code remediation
and testing of all critical systems will be  substantively  completed by the end
of 1998. The Managing  Investment  Advisers's  total Year 2000 project costs and
its  estimated  time  frame  to  complete  are  based  on  presently   available
information.  However,  there  can be no  guarantee  that the  systems  of other
companies,  on which the Managing  Investment  Adviser's  systems rely,  will be
converted timely, or that a failure to convert by another company would not have
a material adverse effect on the Managing Investment Adviser or the Company.


Item 3.           Quantitative and Qualitative Disclosure About Market Risk.

              Not Applicable.



Part II.      Other Information



Item 1.           Legal Proceedings.

              There are no legal  proceedings  pending or, to the Company's best
knowledge, threatened against the Company.

Item 2.           Changes in Securities.

              None.

Item 3.           Defaults upon Senior Securities.

              None.

748372.2

<PAGE>



Item 4.           Submission of Matters to a Vote of Security Holders.

              None.



Item 5.           Other Information.

              Not applicable.



Item 6.           Exhibits and Reports on Form 8-K.

              (a)          Exhibits.

                           Exhibit No.

                           (27)   Financial  Date  Schedule  (for  EDGAR  filing
                           purposes only).

              (a)          The  following  reports  on Form 8-K  were  filed
                           during the quarter ended July 31, 1998:

                           None.

748372.2

<PAGE>

                                   SIGNATURES


Pursuant to the requirements of the Securities Exchange Act of 1934, as amended,
the  registrant  has duly  caused  this report to be signed on its behalf by the
undersigned thereunto duly authorized.


                                         UST PRIVATE EQUITY INVESTORS FUND, INC.


Date:       September 9, 1998         __________________________________________
                                 By:  David I. Fann
                                      President and Principal Executive Officer


Date:       September 9, 1998          _________________________________________
                                  By:  Brian Schmidt
                                       Chief Financial Officer


748372.2

<PAGE>


                              CONFORMED SIGNATURES



Pursuant to the requirements of the Securities Exchange Act of 1934, as amended,
the  registrant  has duly  caused  this report to be signed on its behalf by the
undersigned thereunto duly authorized.

                                         UST PRIVATE EQUITY INVESTORS FUND, INC.


Date:       September 9, 1998         /s/ David I. Fann
                                      ------------------------------------------
                                 By:  David I. Fann
                                      President and Principal Executive Officer


Date:       September 9, 1998        /s/ Brian Schmidt
                                     -------------------------------------------
                                  By:  Brian Schmidt
                                       Chief Financial Officer

748372.2