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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, 1996
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 (I.R.S. Employer Identification No.)
Incorporation or Organization)
114 West 47th Street
New York, New York 10036-1332
__________________________________________________________________________
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, Including Area Code: (212) 852-1000
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Not applicable
__________________________________________________________________________
Former name, former address and former fiscal year, if changed since last
report
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___
Indicate the number of shares outstanding of each of Registrant's classes
of common stock as of the latest practicable date. 40,463 shares of common
stock.
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INDEX
UST PRIVATE EQUITY INVESTORS FUND, INC.
PART I FINANCIAL INFORMATION
- ---------------------------------
Item 1. Financial Statements (Unaudited).
Portfolio of Investments as of January 31, 1996 (Unaudited)
and October 31, 1995.
Statement of Assets and Liabilities as of January 31, 1996
(Unaudited) and October 31, 1995.
Statement of Operations for the periods ended January 31,
1996 (Unaudited) and October 31, 1995.
Statement of Changes in Net Assets for the periods ended
January 31, 1996 (Unaudited) and October 31, 1995.
Notes to Financial Statements (Unaudited).
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
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 Security Holders.
Item 5. Other Information.
Item 6. Exhibits and Reports on Form 8-K.
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PART I - FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited).
---------------------------------
<TABLE>
<CAPTION>
UST Private Equity Investors Fund, Inc. Fiscal Year End: October 31, 1995
Portfolio of Investments Quarter Ended: January 31, 1996
- ----------------------------------------------------------------------------------
January 31, 1996 October 31, 1995
---------------- ----------------
PORTFOLIO STRUCTURE
- -------------------
<S> <C> <C> <C> <C>
PORTFOLIO COMPANIES $ 1,985,000 4.93% $ -- --
PRIVATE FUNDS 256,913 0.64% -- --
SHORT-TERM INVESTMENTS:
Commercial Paper 9,527,550 23.65% 9,399,238 23.41%
Certificates of Deposit -- -- 7,000,000 17.43%
Corporate Bonds 10,034,969 24.91% 4,905,479 12.22%
U.S. Government & Agency
Obligations 9,634,347 23.92% 993,890 2.48%
Bank Notes 3,478,333 8.64% 992,428 2.47%
Other Short-term Investments 3,675,768 9.13% 2,619,371 6.52%
Repurchase Agreement 2,327,000 5.78% 3,646,000 9.08%
------------- ------- ------------- -------
TOTAL INVESTMENTS 40,919,880 101.59% 29,556,406 73.61%
OTHER ASSETS & LIABILITIES (NET) (642,181) -1.59% 10,596,033 26.39%
-------------- ------- ------------- -------
NET ASSETS $ 40,277,699 100.00% $ 40,152,439 100.00%
============== ======= ============= =======
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<CAPTION>
UST Private Equity Investors Fund, Inc. Fiscal Year End: October 31, 1995
Statement of Assets and Liabilities Quarter Ended: January 31, 1996
- ---------------------------------------------------------------------------------
ASSETS January 31, 1996 October 31, 1995
- -------------------------------------
<S> <C> <C>
Investment Securities, at Cost $ 40,905,209 $ 29,563,366
============= ==============
Investment Securities, at Value (Note 1) 40,919,880 29,556,406
Cash -- 10,977,421
Interest Receivable 450,208 332,614
Receivable from Managing Investment Adviser -- 104,101
Prepaid Assets 24,091 37,133
Unamortized Organization Costs 21,118 28,489
------------- --------------
TOTAL ASSETS 41,415,297 41,036,164
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LIABILITIES
- -------------------------------------
Payable for Dividends Declared -- 333,081
Payable for Investments Purchased 1,010,990 --
Managing Investment Advisory Fees Payable 14,651 --
Administration Fees Payable 15,082 7,541
Directors' Fees Payable 7,541 30,000
Payable For Offering and Organization Costs -- 407,748
Accrued Expenses and Other Payables 89,334 105,355
------------ ------------
TOTAL LIABILITIES 1,137,598 883,725
------------ ------------
NET ASSETS $ 40,277,699 $ 40,152,439
============ ============
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NET ASSETS CONSIST OF
- ------------------------------------
Accumulated Undistributed Net
Investment Income $ 147,073 $ 42,802
Accumulated Net Realized Loss on Investments (642) --
Net Unrealized Appreciation/(Depreciation)
on Investments 14,671 (6,960)
Par Value 405 405
Paid In Capital in Excess of Par Value 40,116,192 40,116,192
------------ -------------
TOTAL NET ASSETS $ 40,277,699 $ 40,152,439
============ =============
Shares of Common Stock Outstanding 40,463 40,463
------------ -------------
NET ASSET VALUE PER SHARE $995.42 $992.32
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<CAPTION>
UST Private Equity Investors Fund, Inc. Fiscal Year End: October 31, 1995
Statement of Operations Quarter Ended: January 31, 1996
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Quarter Ended <F1>*August 1, 1995 to
INVESTMENT INCOME January 31, 1996 October 31, 1995
<S> <C> <C>
Interest Income $ 572,454 $ 410,496
-------------- --------------
TOTAL INCOME 572,454 410,496
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EXPENSES
Management Investment Advisory Fees 70,429 36,125
Administrative Fees 7,541 7,541
Shareholder Servicing Fees 5,423 4,585
Custodial Fees 1,013 3,523
Legal Fees 12,426 20,000
Audit and Other Professional Service Fees 6,913 27,500
Directors' Fees and Expenses 7,541 30,000
Shareholder Reports 3,628 7,500
Organization Expenses 1,512 1,512
Insurance Expense 18,902 38,065
Miscellaneous Expenses 251 --
-------------- --------------
TOTAL EXPENSES 135,579 176,351
Expenses Reimbursed by
Managing Investment Adviser (56,848) (140,226)
-------------- --------------
NET EXPENSES 78,731 36,125
-------------- --------------
NET INVESTMENT INCOME $ 493,723 $ 374,371
============== ==============
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REALIZED AND UNREALIZED GAIN/(LOSS) ON INVESTMENTS
Net Realized Loss on Security
Transactions $ (642) $ --
Change in Unrealized
Appreciation/(Depreciation)
on Investments 21,631 (6,960)
-------------- --------------
Net Realized and Unrealized
Gain/(Loss) on Investments 20,989 (6,960)
-------------- --------------
Net Increase in Net Assets
Resulting from Operations $ 514,712 $ 367,411
============== ==============
<F1> * commencement of operations </F1>
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<CAPTION>
UST Private Equity Investors Fund, Inc. Fiscal Year End: October 31, 1995
Statement of Changes in Net Assets Quarter Ended: January 31, 1996
- ----------------------------------------------------------------------------------
Quarter Ended <F1>*August 1, 1995 to
January 31, 1996 October 31, 1995
OPERATIONS:
<S> <C> <C>
Net Investment Income $ 493,723 $ 374,371
Net Realized Loss on Investments (642) --
Change in Unrealized
Appreciation/(Depreciation)
on Investments 21,631 (6,960)
-------------- --------------
Net Increase in Net Assets
Resulting From Operations 514,712 367,411
DISTRIBUTIONS TO SHAREHOLDERS:
From Net Investment Income (389,452) (333,081)
CAPITAL SHARE TRANSACTIONS:
Subscriptions -- 40,462,000
Offering Costs -- (344,891)
-------------- ---------------
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Increase in Net Assets from Capital
Share Transactions -- 40,117,109
NET INCREASE IN NET ASSETS 125,260 40,151,439
NET ASSETS:
Beginning of Period 40,152,439 1,000
-------------- ---------------
End of Period (Including
accumulated undistributed
net investment income of
$147,073 and $42,802) $ 40,277,699 $ 40,152,439
============== ==============
<F1> * commencement of operations </F1>
</TABLE>
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UST PRIVATE EQUITY INVESTORS FUND, INC.
NOTES TO FINANCIAL STATEMENTS
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 following is a summary of some of the Fund'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, as circumstances
warrant. Investments in 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 are valued, pursuant
to guidelines adopted by the Managing Investment Adviser, 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
Purchases of securities, excluding short-term investments,
for the Company aggregated $5,260,228. There were no long-term
sales. As of quarter-end, the Company has committed to purchase
an additional $5,758,087 in long-term securities of portfolio
companies and private funds.
Reference is also made to the Company's October 31, 1995 annual
report on Form 10-K as filed with the Securities and Exchange
Commission for the Notes to Financial Statements contained
therein.
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Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
---------------------------------------------------------------
Results of Operations
- ----------------------
UST Private Equity Investors Fund, Inc. (the "Company") incurred net
operating expenses totaling $78,731 for the three months ended January 31,
1996. The Company's net asset value per common share was $995.42 at
January 31, 1996, down $4.58 per share from the initial offering price of
$1,000.00 per share. This decrease is primarily the result of offering and
organizational expenses incurred related to the Company's initial public
offering which was completed on October 31, 1995 and charged against net
asset value.
Realized and Unrealized Gains and Losses from Portfolio Investments
- -------------------------------------------------------------------
For the three months ended January 31, 1996, the Company had a $20,989 net
realized and unrealized gain from investments, comprised of $642 net
realized loss on security transactions related to short-term investments
and a $21,631 increase in net unrealized appreciation of short-term
investments.
Investment Income and Expenses
- -------------------------------
For the three months ended January 31, 1996, the Company had net investment
income of $493,723, compared to net investment income of $374,371 for the
period from August 1, 1995 to October 31, 1995. 1/<F2> The increase in net
investment income for the three months ended January 31, 1996 was primarily
the result of interest from portfolio investments. The increase in interest
from portfolio investments was partially offset by an increase in operating
expenses compared to the 1995 period.
- ---------------------
1/<F2> Public offering period.</F2>
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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 three months ended January 31,
1996, the Managing Investment Adviser earned $70,429 in management fees.
For the same period, the Managing Investment Adviser reimbursed other
operating expenses of the Company in the amount of $56,848 as a result of
expenses incurred in excess of those permitted pursuant to the Company's
Prospectus.
Net Assets
- -----------
At January 31, 1996, the Company's net assets were $40,277,699, an increase
of $125,260 from net assets of $40,152,439 at October 31, 1995. The net
asset value per share of common stock was $995.42, up $3.10 from $992.32
per share at October 31, 1995. Net assets resulting from operations for
the three months ended January 31, 1996 increased $514,712, which was
comprised of $493,723 of net investment income and $20,989 net realized and
unrealized gain from investments.
Liquidity and Capital Resources
- --------------------------------
On October 31, 1995, the Company completed its public offering of common
stock. From July 31, 1995 to October 31, 1995, the Company sold a total of
40,462 shares of common stock at $1,000 per share in the offering. In
addition, the Company's President purchased 1 share of the Company's common
stock during 1994 for $1,000 as part of the formation of the Company.
Gross proceeds received by the Company from the sale of its common stock
during 1994 and 1995 totaled $40,463,000 and net proceeds to the Company
from the public offering, after offering and organizational costs, totaled
$40,117,109.
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 and marketable
securities to provide the liquidity necessary to make portfolio investments
as investment opportunities arise.
On January 31, 1996, the Company held no cash and $38,677,967 in short-term
investments, compared to $10,977,421 in cash and $29,556,406 in investments
at October 31, 1995. These changes from October 31, 1995 were primarily
the result of the Company's investment activities for the three months
ended January 31, 1996. During the quarter, the Company invested
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$1,985,000 in a combination of preferred and common stock of Rental Service
Corporation (a private middle-market company engaged in the equipment
rental business and based in the southern United States). During the
quarter, the Company also committed to invest in three private funds:
Brentwood Associates Buyout Fund II, L.P. (a Los Angeles-based private
equity investment firm) in the amount of $2,000,000; Bruckmann, Rosser &
Sherrill & Co., L.P. (a New York-based buyout fund) in the amount of
$2,000,000; and Morgenthaler Venture Partners IV (a Cleveland-based venture
capital/buyout firm) in the amount of $2,000,000. In connection with the
Company's commitments to these private funds, a total of $256,913,
representing capital calls, was paid by the Company.
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PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
------------------
The Company is not party to any material pending legal
proceedings.
Item 2. Changes in Securities.
----------------------
Not applicable.
Item 3. Defaults Upon Senior Securities.
--------------------------------
Not applicable.
Item 4. Submission of Matters to a Vote of Security Holders.
----------------------------------------------------
No matter was submitted to a vote of security-holders during the
quarter covered by this report.
Item 5. Other Information.
------------------
None.
Item 6. Exhibits and Reports on Form 8-K.
---------------------------------
(a) Exhibits.
(27) Financial Data Schedule
(b) Reports on Form 8-K.
None.
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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.
/s/ David I. Fann
By: David I. Fann, President
(Principal Executive Officer)
/s/ Lisa A. Cummings
By: Lisa A. Cummings, Treasurer and Vice President
(Principal Financial and Accounting Officer)
Date: March 13, 1996
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION FROM UST PRIVATE
EQUITY INVESTORS FUND, INC.'S FORM 10-Q FOR THE PERIOD ENDED
JANUARY 31, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000930454
<NAME> UST PRIVATE EQUITY INVESTORS FUND, INC.
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> OCT-31-1996
<PERIOD-END> JAN-31-1996
<INVESTMENTS-AT-COST> 40,905
<INVESTMENTS-AT-VALUE> 40,920
<RECEIVABLES> 450
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 45
<TOTAL-ASSETS> 41,415
<PAYABLE-FOR-SECURITIES> 1,011
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 126
<TOTAL-LIABILITIES> 1,137
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 40,117
<SHARES-COMMON-STOCK> 40
<SHARES-COMMON-PRIOR> 40
<ACCUMULATED-NII-CURRENT> 147
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (1)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 15
<NET-ASSETS> 40,278
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 572
<OTHER-INCOME> 0
<EXPENSES-NET> 78
<NET-INVESTMENT-INCOME> 494
<REALIZED-GAINS-CURRENT> (1)
<APPREC-INCREASE-CURRENT> 22
<NET-CHANGE-FROM-OPS> 515
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (390)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 125
<ACCUMULATED-NII-PRIOR> 43
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 70
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 136
<AVERAGE-NET-ASSETS> 40,278
<PER-SHARE-NAV-BEGIN> 992.32
<PER-SHARE-NII> 12.20
<PER-SHARE-GAIN-APPREC> 0.52
<PER-SHARE-DIVIDEND> (9.62)
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 995.42
<EXPENSE-RATIO> 0.78
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
