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


689276.1

<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.



        INDEX                                                           PAGE NO.

PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited).

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

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

        Statement of  Operations  for the three month  period ended  January 31,
        1998  (Unaudited)  and the three  month  period  ended  January 31, 1997
        (Unaudited).

        Statement  of Changes in Net Assets  for the three  month  period  ended
        January 31, 1998  (Unaudited)  and the three month period ended  January
        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

SIGNATURES

                                       ii

689276.1

<PAGE>

PART I.      FINANCIAL INFORMATION

Item 1.      Financial Statements.

<TABLE>
<CAPTION>

UST Private Equity Investors Fund, Inc.                                             Fiscal Year End:  October 31, 1998
Portfolio of Investments                                                              Quarter Ended:  January 31, 1998
----------------------------------------------------------------------------------------------------------------------





                                                         January 31, 1998
                                                           (unaudited)                         October 31, 1997
                                                  ------------------------------        ------------------------------

PORTFOLIO STRUCTURE

<S>                                              <C>                      <C>          <C>                      <C>   
    PORTFOLIO COMPANIES                          $       27,436,868       64.72%       $       30,123,440       63.85%

    PRIVATE FUNDS                                         5,964,933       14.07%                5,312,037       11.26%

    SHORT-TERM INVESTMENTS:

      Commercial Paper                                    4,292,968       10.13%                4,497,794        8.48%

      Corporate Bonds                                     1,465,165        3.46%                1,986,001        7.38%

      U.S. Government & Agency Obligations                2,330,000        5.49%                4,049,484        6.46%

      Investment Companies                                  502,700        1.18%                1,047,435        2.22%
                                                  -----------------    ---------        -----------------    ---------

               TOTAL INVESTMENTS                         41,992,634       99.05%               47,016,190       99.65%
           OTHER ASSETS & LIABILITIES (NET)                 402,677        0.95%                  163,281        0.35%
                                                  -----------------    ---------        -----------------    ---------

       NET ASSETS                                $       42,395,311      100.00%       $       47,179,471      100.00%
                                                  =================    =========        =================    =========

</TABLE>


689276.1

<PAGE>


<TABLE>
<CAPTION>


     UST Private Equity Investors Fund, Inc.                                                 Fiscal Year End:  October 31, 1998
     Statement of Assets and Liabilities                                                       Quarter Ended:  January 31, 1998
     --------------------------------------------------------------------------------------------------------------------------

     ASSETS                                                                   January 31, 1998            October 31, 1997
                                                                                 (unaudited)
     --------------------------------------------------

<S>                                                                   <C>                            <C>                       
     Investment Securities, at Cost                                   $         39,853,425           $               41,829,598
                                                                       ===================            =========================

     Investment Securities, at Value                                            41,992,634                           47,016,190


     Cash                                                                          630,104                                   --
     Receivables:
       Interest                                                                     97,915                              207,725
       For Investments Sold                                                             --                              348,462
     Prepaid Assets                                                                 33,340                               37,024
     Unamortized Organization Costs                                                 14,979                               16,490
                                                                       -------------------            -------------------------
               TOTAL ASSETS                                                     42,768,972                           47,625,891
                                                                       -------------------            -------------------------

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

     Managing Investment Advisory  and Incentive Fees Payable                      293,229                              258,424
     Administration & Shareholder Servicing Fees Payable                            15,757                               15,330
     Directors Fees Payable                                                          7,562                               30,000
     Accrued Expenses and Other Payables                                            57,113                              142,666
                                                                       -------------------            -------------------------

               TOTAL LIABILITIES                                                   373,661                              446,420
                                                                       -------------------            -------------------------

     NET ASSETS                                                       $         42,395,311           $               47,179,471
                                                                       ===================            =========================


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

     Accumulated Undistributed Net Investment Income                  $            174,512           $                  229,824
     Accumulated Net Realized Gain(Loss) on Investments                            108,045                            1,767,041
     Net Unrealized Appreciation/(Depreciation) of Investments                   2,139,209                            5,186,592
     Allowance for Management Incentive                                          (144,564)                            (122,095)
     Par Value                                                                         405                                  405
     Paid In Capital in Excess of Par Value                                     40,117,704                           40,117,704
                                                                       -------------------            -------------------------

               TOTAL NET ASSETS                                       $         42,395,311           $               47,179,471
                                                                       ===================            =========================

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

     NET ASSET VALUE PER SHARE                                                   $1,047.76                            $1,165.99

</TABLE>


689276.1

<PAGE>


<TABLE>
<CAPTION>


UST Private Equity Investors Fund, Inc.                                                           Fiscal Year End:  October 31, 1998
Statement of Operations                                                                             Quarter Ended:  January 31, 1998
                                                            -------- --------------- -----------------------------------------------

                                                                            Quarter Ended                   Quarter Ended
     INVESTMENT INCOME                                                    January 31, 1998                 January 31, 1997
                                                                             (unaudited)

<S>                                                                <C>                         <C>                 
     Interest Income                                               $         156,694           $            354,291
                                                                     ---------------             ------------------

               TOTAL INCOME                                                  156,694                        354,291
                                                                     ---------------             ------------------


     EXPENSES

     Management Investment Advisory Fees                                     155,454                        126,337
     Administrative Fees & Shareholder Servicing Fees                         15,178                         15,168
     Custodial Fees                                                            2,144                          2,100
     Legal Fees                                                               12,603                         23,574
     Audit and Other Professional Service Fees                                 6,553                          6,931
     Directors' Fees and Expenses                                              7,562                          7,561
     Shareholder Reports                                                       1,260                          3,025
     Organization Expenses                                                     1,511                          1,511
     Insurance Expense                                                         3,685                         18,955
     Interest Expense                                                         13,772                             --
                                                                     ---------------             ------------------

               TOTAL EXPENSES                                                219,722                        205,162

     Fees Waived and Reimbursed by Advisor                                   (7,716)                       (47,813)
                                                                     ---------------             ------------------

               NET EXPENSES                                                  212,006                        157,349
                                                                     ---------------             ------------------

     NET INVESTMENT INCOME(LOSS)                                   $        (55,312)           $            196,942
                                                                     ---------------             ------------------


     REALIZED AND UNREALIZED GAIN/( LOSS) ON INVESTMENTS


     Net Realized Gain(Loss) on Security Transactions              $         224,690           $           (12,048)

     Change in Unrealized Appreciation / (Depreciation) on Investments   (3,047,383)                        226,150
                                                                     ---------------             ------------------

     NET REALIZED AND UNREALIZED GAIN/(LOSS)
       ON INVESTMENTS                                                    (2,822,693)                        214,102

     Change in Management Incentive Fee                                     (22,469)                          1,204
                                                                     ---------------             ------------------

     NET INCREASE/DECREASE) IN NET ASSETS RESULTING
       FROM OPERATIONS                                             $     (2,900,474)           $            412,248
                                                                     ===============             ==================

------------------ ------------------------------------------------- --------------- ----------- -----------------------------------
</TABLE>


689276.1

<PAGE>



<TABLE>
<CAPTION>

UST Private Equity Investors Fund, Inc.                                                           Fiscal Year End:  October 31, 1998
Statement of Changes in Net Assets                                                                  Quarter Ended:  January 31, 1998
------------------------------------------------------------ -----------------------------------------------------------------------


                                                                           Quarter Ended                            Quarter Ended
                                                                          January 31, 1998                         January 31, 1997
                                                                             (unaudited)
OPERATIONS:

<S>                                                                <C>                                         <C>                
Net Investment Income(Loss)                                        $          (55,312)                         $           196,942
Net Realized Gain(Loss) on Investments                                         224,690                                    (12,048)
Change in Unrealized Appreciation / (Depreciation) on Investments          (3,047,383)                                     226,150
Change in Allowance for Management Incentive                                  (22,469)                                       1,204
                                                                    ------------------                          ------------------

Net Increase/(Decrease) in Net Assets
   Resulting From Operations                                               (2,900,474)                                     412,248

DISTRIBUTIONS TO SHAREHOLDERS:

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

NET DECREASE IN NET ASSETS                                                 (4,784,160)                                 (1,061,184)

NET ASSETS:
   Beginning of Period                                                      47,179,471                                  42,719,620
                                                                    ------------------                          ------------------

   End of Period                                                   $        42,395,311                         $        41,658,436
                                                                    ==================                          ==================

</TABLE>


689276.1

<PAGE>


UST Private Equity Investors Funds, Inc.    Fiscal Year Ended:  October 31, 1998
Notes to Financial Statements                   Quarter Ended:  January 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
January 31, 1998, excluding short-term  investments,  for the Company aggregated
$1,189,033  and  $322,989,  respectively.  At January 31, 1998,  the Company had
outstanding investment commitments totaling $6,035,067.

689276.1

<PAGE>



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

Results of Operations


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

The  Company's  net asset value per common  share was  $1,047.76  at January 31,
1998,  down  $118.23  per share  from the net asset  value per  common  share of
$1,165.99 at October 31, 1997. The decrease  resulted from the  distribution  of
dividends of $1,883,686,  and the write-off of our original  investment in Party
Experience,  Inc. of approximately $2,000,000. The Company's net asset value per
common share was $1,029.54 at January 31, 1997, up $18.22 per share from the net
asset value per common share of $1,055.77 at October 31, 1996.

Realized and Unrealized Gains and Losses from Portfolio Investments

For the three  months  ended  January 31,  1998 and 1997,  the Company had a net
realized  gain/(loss) from investments of $224,690 and ($12,048),  respectively.
For the three  months  ended  January 31,  1998 and 1997,  the Company had a net
change in realized  appreciation/(depreciation)  on investments of  [$3,047,383]
and $226,150,  respectively. The realized gains were primarily the result of the
sale of 14,129 shares of Rental Services. The unrealized loss resulted primarily
from the write-off Party Experience, Inc.

Investment Income and Expenses

For the three months ended January 31, 1998, the Company had interest  income of
$156,694 and net  operating  expenses of $212,006  resulting  in net  investment
income/(loss)  of ($55,312) as compared to interest income of $354,291,  and net
operating  expenses of $157,349,  resulting in net investment income of $196,942
for the quarter  ended January 31, 1997.  The primary  reason for the decline in
interest 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  January  31,  1998 and 1997,  the
Managing  Investment  Adviser earned  $155,454 and $126,337 in management  fees,
respectively. In addition, for the quarters ended January 31, 1998 and 1997, the
change in allowance for the  Management  Incentive Fee was ($22,469) and $1,204,
respectively.  For the same periods,  the Managing Investment Adviser reimbursed
other  operating  expenses of the  Company in the amount of $7,716 and  $47,813,
respectively,  as a result of  expenses  incurred  in excess of those  permitted
pursuant to the Company's Prospectus.

Net Assets

At January 31, 1998,  the Company's net assets were  $42,395,311,  a decrease of
$4,784,160 from net assets of $47,179,471 at October 31, 1997. The Company's net
assets at January 31, 1997 were $41,658,436,  down $1,061,184 from net assets of
$42,719,620 at October 31, 1996.

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.


689276.1

<PAGE>



During  the  quarter  ended  January  31,  1998,   the  Company  made  follow-on
investments in the following companies: (a) Plynetics for $250,000; (b) Neovista
for $37,521; and (c) Commsite for $168,750.

At January 31,  1998,  the Company  held  $630,104  in cash and  $41,992,634  in
investments as compared to $0 in cash and  $47,016,190 in investments at October
31, 1997.  These changes from October 31, 1997 were  primarily the result of the
Company's investment activities for the quarter ended January 31, 1998.

In connection  with the Company's  commitments to private funds in the amount of
$12,000,000 since inception,  a total of $5,964,933  representing capital calls,
has been paid by the Company through January 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.

689276.1

<PAGE>



             None.



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 January 31, 1998:

             None.



689276.1

<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:      March 10, 1998
                                  ---------------------------------------
                                   By: David I. Fann
                                       President and Principal Executive Officer


Date:      March 10, 1998
                                 ----------------------------------------
                                 By: Brian Schmidt
                                     Treasurer and Principal Financial and
                                     Accounting Officer




689276.1

<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:  March 10, 1998             /s/ David I. Fann
                                 ------------------
                                   By: David I. Fann
                                      President and Principal Executive Officer


Date:  March 10, 1998              /s/ Brian Schmidt
                                   -----------------
                                   By: Brian Schmidt
                                       Treasurer and Principal Financial and
                                       Accounting Officer




689276.1