SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
FOR ANNUAL AND TRANSITION REPORTS
PURSUANT TO SECTIONS 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended October 31, 2001
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: 000-24856
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 10036-1532
(Address of Principal Executive Offices)
Registrant's telephone number, including area code: (212) 852-1000
Securities registered pursuant to Section 12(b) of the Act: NONE
Securities registered pursuant to Section 12(g) of the Act:
COMMON STOCK $0.01 PAR VALUE PER SHARE
(Title of Class)
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 by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [X]
The registrant's common stock is not listed on any exchange nor does it
trade on any established securities market or other market.
As of December 31, 2001 there were 40,463 shares outstanding of the
registrant's common stock.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the definitive Proxy Statement for the Annual Meeting of
Shareholders to be held on March 22, 2002 are incorporated by reference
into Part III (Items 10, 11 and 12) to this Form 10-K.
TABLE OF CONTENTS
Form 10-K
Report Page
Item No. PART I
1. Business 1
2. Properties 4
3. Legal Proceedings 4
4. Submission of Matters to a Vote of Security Holders 4
PART II
5. Market for Registrant's Common Equity and Related Stockholder
Matters 4
6. Selected Financial Data 5
7. Management's Discussion and Analysis of Financial Condition
and Results of Operations 5
7A. Quantitative and Qualitative Disclosures About Market Risk 6
8. Financial Statements and Supplementary Data 7
9. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure 19
PART III
10. Directors and Executive Officers of the Registrant 19
11. Executive Compensation 19
12. Security Ownership of Certain Beneficial Owners
and Management 19
13. Certain Relationships and Related Transactions 19
PART IV
14. Exhibits, Financial Statement Schedules, and Reports
on Form 8-K 20
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FACTORS THAT MAY AFFECT FUTURE RESULTS
The Company's prospects are subject to certain uncertainties and
risks. This Annual Report on Form 10-K contains certain forward-looking
statements within the meaning of the federal securities laws that also
involve substantial uncertainties and risks. The Company's future results
may differ materially from its historical results and actual results could
differ materially from those projected in the forward-looking statements as
a result of certain risk factors. Readers should pay particular attention
to the considerations described in the section of this report entitled
"Management's Discussion and Analysis of Financial Condition and Results of
Operations." Readers should also carefully review the risk factors
described in the other documents the Company files, or has filed, from time
to time with the Securities and Exchange Commission.
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PART I
ITEM 1. BUSINESS.
Overview
UST Private Equity Investors Fund, Inc. (the "Company" or the
"Fund") is a Maryland corporation organized on September 16, 1994. The
Company is a non-diversified, closed-end management investment company
operating as a business development company under the Investment Company
Act of 1940, as amended, and, in connection with its initial offering of
shares, registered said offering of shares under the Securities Act of
1933, as amended. The Company's investment objective is to achieve
long-term capital appreciation by investing in private later-stage venture
capital and private middle-market companies and in certain venture capital,
buyout and private equity funds that the Managing Investment Adviser
(defined herein) believes offer significant long-term capital appreciation.
United States Trust Company of New York and U.S. Trust Company
(together, the "Managing Investment Adviser" or "U.S. Trust") provide
investment management services to the Company pursuant to a management
agreement dated July 18, 2000 (the "Management Agreement"). The Managing
Investment Adviser is a subsidiary of U.S. Trust Corporation. On May 31,
2000, U.S. Trust Corporation became an indirect wholly owned subsidiary of
The Charles Schwab Corporation. All officers of the Company are employees
and/or officers of the Managing Investment Adviser. The Managing Investment
Adviser is responsible for performing the management and administrative
services necessary for the operation of the Company.
Pursuant to a Registration Statement on Form N-2 (File No.
33-84290) which was declared effective on December 16, 1994, the Company
publicly offered up to 50,000 shares of common stock at $1,000 per share.
The Company held its initial and final closings on each of July 31, 1995
and October 31, 1995 representing over $28.0 million and $12.4 million,
respectively. The Company sold a total of 40,463 shares in the public
offering for gross proceeds totaling $40,463,000 (including one share
purchased for $1,000 as of September 19, 1994 by David I. Fann, the
Company's President and Chief Executive Officer). Shares of the Company
were made available through U.S. Trust Company of California, N.A. (the
"Selling Agent") to clients of U.S. Trust and its affiliates who met the
Company's investor suitability standards.
In connection with the public offering of the Company's shares,
the Managing Investment Adviser paid to the Selling Agent a commission
totaling $10,000. The Company incurred offering costs associated with the
public offering totaling $345,891. Net proceeds to the Company from the
public offering, after offering costs, totaled $40,117,109.
The Company's Articles of Incorporation provide that the duration
of the Company will be ten years from the final closing of the sale of the
shares, subject to the rights of the Managing Investment Adviser and the
investors to extend the term of the Company.
Portfolio Investments
Now in its sixth year, the Company has invested all of the initial
capital raised, and is currently in harvest mode. Through December 2001,
the Company anticipates having distributed approximately 86% of the
investors' original invested capital. The Company intends to continue
making distributions as cash is generated on a regular basis.
Direct Investments
Investments Sold
o Corsair Communications, Inc. (NASDAQ: CAIR), Palo Alto, CA, is a
wireless communication infrastructure company providing prepaid
cellular handset and fraud detection equipment and software. Corsair
completed its initial public offering in July 1997. The Company has
sold all of its shares in the company and has realized a return of
1.55x on its $3.3 million investment.
o Rental Services Corporation (NYSE: RSV), Scottsdale, AZ, is a
consolidator of heavy equipment rental businesses. The Company
invested $1 million in January 1996. In September 1996, Rental
Services Corp. completed its initial public offering. The Company has
sold all of its shares in the company for over $3 million and has
realized a return of 3.1x on its investment.
o CommSite International, Inc., Vienna, VA, is a provider of
wireless towers and construction services. On May 13, 1999, American
Tower Corporation (NYSE: AMT) acquired CommSite. The Company realized
its investment cost of $2.7 million from this transaction.
o Signius Corporation (formerly known as ProCommunications,
Corp.), Somerset, NJ, provides telemessaging services for small and
medium sized businesses. In March 2000, Signius was sold for a
nominal amount.
o Accrue Software, Inc. (NASDAQ: ACRU), Cupertino, CA, a provider of
customer relationship management software, acquired NeoVista Software
for $140 million of Accrue stock. The Company had invested $894,132
in NeoVista. As of October 31, 2001, the Company has liquidated all
of its shares of Accrue. The Company realized a return of 1.3x its
original investment in NeoVista.
o Best Friends Pet Care, Inc., Norwalk, CT, is the largest operator of
pet kennels in the United States. The company's facilities offer a
wide range of pet services, including boarding, grooming and
training. In June 2001, Best Friends was sold to Brynwood Partners IV
L.P. The Company realized net proceeds of $394,377.
Investments Held -- Public
o QuickLogic Corporation (NASDAQ: QUIK), Sunnyvale, CA, designs,
manufactures and markets high-capacity programmable logic
semiconductors, known as field programmable gate arrays, along with
comprehensive design software. The company's products shorten the
design cycle for electronic systems, accelerating time-to-market.
QuickLogic completed its initial public offering in October 1999. The
Company has since sold 30,000 shares of QuickLogic (net proceeds of
$299,947). At October 31, 2001, the Company held 55,170 shares, which
closed at $3.64 per share.
o LogicVision, Inc. (NASDAQ: LGVN), San Jose, CA, is a developer of
built-in self-testing technologies used in semiconductor design,
testing and manufacture. As semiconductors become more complex, i.e.
large systems reduced to customized chips, the need to adopt new
testing technology becomes critical. LogicVision completed its
initial public offering in October 2001. At October 31, 2001, the
Company held 196,166 shares of common stock in LogicVision, which
closed at $9.61 per share.
Investments Written-Off
o AbTox, Inc., Mundelein, IL, manufactured gas plasma sterilizers. The
company filed for bankruptcy due to operating problems arising from
regulatory issues related to one of its products. The Company's
investment has been written-off. During the last quarter of this
fiscal year, the Company received $250,000 as part of the settlement
of claims with the bankruptcy trustee.
o Cardiopulmonary Corporation, Milford, CT, is the manufacturer of a
smart ventilator used in the acute and sub-acute hospital market that
adapts to a patient's changing breathing patterns. The Company's
position has been written-off as a result of the recapitalization of
the company.
o P2 Holdings Corporation (formerly known as Plynetic Express), San
Leandro, CA, was a provider of rapid prototyping and rapid tooling
services. The company filed for bankruptcy in 1998. The Company has
written-off its investment in the company.
o Party Stores Holdings, Inc., Melville, NY, operated the Party
Experience, Paperama and Paper Cutter retail stores, and filed for
bankruptcy in 1998. The Company has written-off its investment in the
company.
Investments in Third-Party Investment Funds
The Company believes that each of its fund investments has largely
completed its portfolio construction and is now in harvest mode. The
Company continues to receive meaningful distributions from each of these
fund investments.
o Allegra Capital Partners III, LP ("Allegra") is a later-stage fund
based in New York City. Allegra invests primarily in companies in the
telecommunications, software and service industries with "Internet
driven" strategies. The Company received cash distributions from
Allegra's sales of Critical Path, Inc. (NASDAQ: CPTH) and Kana
Communications, Inc. (NASDAQ: KANA) stock this year. Allegra has
drawn all of our $2 million commitment. At October 31, 2001, the
total value (fair market value plus distributions) of this investment
was $4.1 million.
o Brentwood Associates Buyout Fund II, LP ("Brentwood") is a
buyout and consolidation fund based in Westwood, CA. Brentwood's
strategy is to identify industries with consolidation
characteristics, develop a strategy for implementation and recruit
management to execute that strategy. Brentwood has drawn all of our
$2 million commitment. At October 31, 2001, the total value (fair
market value plus distributions) of this investment was $2.2 million.
o Bruckmann, Rosser, Sherrill & Co., LP ("BRS") is a leveraged buyout
fund based in New York City. The Company received cash distributions
this year as a result of the sale of Au Bon Pain and California Pizza
Kitchen (NASDAQ: CPKI) stock. BRS has drawn all of our $2 million
commitment. At October 31, 2001, the total value (fair market value
plus distributions) of this investment was $2.7 million.
o Morgenthaler Venture Partners IV, LP ("Morgenthaler") is primarily an
early-stage venture capital fund, investing largely in information
technology and healthcare companies, but also investing in buyouts of
basic businesses. Morgenthaler distributed Nuance Communications,
Inc. (NASDAQ: NUAN) stock to the Company this year. Morgenthaler has
drawn all of our $2 million commitment. At October 31, 2001, the
total value (fair market value plus distributions) of this investment
was $4.3 million.
o Sevin Rosen Fund V, LP ("Sevin Rosen") invests in early-stage
technology companies, focusing specifically on companies in
communications and eBusiness infrastructure and solutions, as well as
companies with Internet-enabled business models. The Company received
distributions of Metawave (NASDAQ: MTWV) and Capstone Turbine
Corporation (NASDAQ: CPST) stock this year. Sevin Rosen has drawn all
of our $2 million commitment. At October 31, 2001, the total value
(fair market value plus distributions) of this investment was $3.2
million.
o Vanguard V, LP ("Vanguard") is an early-stage fund investing in
information technology and healthcare. Vanguard has drawn all of our
$2 million commitment. At October 31, 2001, the total value (fair
market value plus distributions) of this investment was $8.2 million.
For additional information concerning the Company's investments,
see the financial statements beginning on page 9 of this report.
Competition
The Company encounters competition from other entities and
individuals having similar investment objectives. Primary competition for
desirable investments comes from investment partnerships, venture capital
affiliates of large industrial and financial companies, investment
companies and wealthy individuals. Some of the competing entities and
individuals have investment managers or advisers with greater experience,
resources and managerial capabilities than the Company and may therefore be
in a stronger position than the Company to obtain access to attractive
investments. To the extent that the Company can compete for such
investments, it may not be able to do so on terms as favorable as those
obtained by larger, more established investors.
Employees
At October 31, 2001, the Company had no full-time employees. All
personnel of the Company are employed by and compensated by the Managing
Investment Adviser pursuant to the Management Agreement.
ITEM 2. PROPERTIES.
The Company does not own or lease any physical properties.
ITEM 3. LEGAL PROCEEDINGS.
AbTox, Inc. filed for bankruptcy due to operating problems arising
from regulatory issues related to one of its products. The Company,
alongside several other institutional investors, filed a complaint in New
York State Supreme Court against the investment banks involved in the
private placement, in or around March 1999, alleging fraud and deceit,
fraudulent inducement and negligent misrepresentation. On August 10, 1999,
the court dismissed the complaint. On August 31, 2000, the Company, along
with other institutional investors, filed a notice to appeal the court's
order. More recently, the Company and several other investors have been
named in an advisory proceeding brought by the company's bankruptcy trustee
seeking the return of monies paid to the Company pursuant to certain senior
notes in the principal amount of $301,500 issued by the Company. The
Company received $250,000 as part of the settlement of claims on September
10, 2001with the bankruptcy trustee.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS.
The Company has 100,000 authorized shares. As of December 31,
2001, 40,463 shares were issued and outstanding. There is no established
public trading market for the Company's shares.
Dividends
Fiscal Year Ended October 31, 2001. On December 22, 2000, the Company paid
a dividend of $172.84 per share of long-term capital gain.
Fiscal Year Ended October 31, 2000. On May 2, 2000, the Company paid a
dividend of $180.69 per share of long-term capital gain. On May 3, 2000,
the Company paid a dividend of $219.31 per share of return of capital. On
October 31, 2000, the Company paid a dividend of $113.71 per share of
long-term capital gain.
For additional information concerning the payment of dividends,
see "Significant Accounting Policies" in the notes to the financial
statements of the Company included in Item 8 hereof.
ITEM 6. SELECTED FINANCIAL DATA.
The information provided under Item 8 is incorporated by reference
herein.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS.
Liquidity and Capital Resources
At October 31, 2001, the Company held $16,232 in cash and
$13,553,675 in investments as compared to $0 in cash and $33,028,497 in
investments at October 31, 2000 and 4,993 in cash and $47,204,696 in
investments at October 31, 1999. At October 31, 2001, investments included
$249,913 in commercial paper, $1,996,889 in U.S. Government agency
obligations, $8,806,249 in private investment funds, $1,733,075 in public
companies and $767,549 in investment companies. As of October 31, 2001, the
Company had committed $12,000,000 to private investment funds and has no
remaining outstanding commitments.
Results of Operations
Investment Income and Expenses
For the fiscal year ended October 31, 2001, the Company had
interest income of $148,317 and net operating expenses, net of expenses
reimbursed by the Managing Investment Adviser, of $261,411, resulting in
net investment loss of ($113,094). For the fiscal year ended October 31,
2000, the Company had interest income of $510,857 and net operating
expenses, net of expenses reimbursed by the Managing Investment Adviser, of
$560,821, resulting in investment loss of ($49,964). For the fiscal year
ended October 31, 1999, the Company had interest income of $364,937 and net
operating expenses, net of expenses, reimbursed by the Managing Investment
Adviser, of $601,747, resulting in investment loss of ($236,810). The
decrease in the Company's net investment income is primarily attributable
to reduced proceeds from the sale of public securities and the resulting
interest earned on these proceeds. The decrease in net operating expenses
is primarily attributable to the decrease in managing investment advisory
fees, however this decrease was not enough to result in net investment
income.
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. The management fee is determined and payable
quarterly. For the fiscal years ended October 31, 2001, 2000 and 1999, the
Managing Investment Adviser earned $231,165, $448,241 and $468,230 in
management fees, respectively. For the same periods, the Managing
Investment Adviser reimbursed other operating expenses of the Company in
the amount of $295,736, $135,394 and $146,907 as a result of expenses
incurred in excess of those permitted pursuant to the Company's prospectus.
The decrease in the fees earned by the Managing Investment Adviser over
time can be attributed primarily to reduced net assets, resulting in an
increase in unrealized depreciation and the distribution of capital to
shareholders.
Net Assets
The Company's net asset value per common share was $349.34 at
October 31, 2001 down $428.38 per share from the net asset value per common
share of $777.72 at October 31, 2000. This decrease was the net result of
the unrealized depreciation of a number of private funds, the distribution
of $172.84 per share (total of $6,993,802) and the loss realized in
connection with the sale of Accrue Software, Inc. and Best Friends, Inc.
This was offset by a decrease in the allowance for management incentive
fees of $28.08 per share.
For the fiscal year ended October 31, 2001, the Company had a net
decrease in net assets resulting from operations of ($10,339,555)
(($255.54) per share), comprised of net investment loss totaling ($113,094)
(($2.79) per share), a net change in realized and unrealized loss on
investments of ($11,362,833) (($280.83) per share) and a net change in
allowance for the management incentive fee of $1,136,372 ($28.08 per
share), a reduction in accumulated management incentive fees payable to the
Managing Investment Adviser.
For the fiscal year ended October 31, 2001, the Company's net
assets were $14,135,475, a decrease of ($17,333,357) from net assets of
$31,468,832 at October 31, 2000. This decrease was the result of a
($10,339,555) net decrease in net assets resulting from operations and
distributions to shareholders during the period totaling $6,993,802.
Realized and Unrealized Gains and Losses from Portfolio Investments
For the fiscal year ended October 31, 2001, the Company had an
($11,362,833) net realized and unrealized loss from investments, comprised
of a ($2,728,413) net realized loss on investments and an ($8,634,420) net
change in unrealized depreciation of investments as compared to a
$13,344,075 net realized and unrealized gain from investments, comprised of
a $11,935,543 net realized gain on investments and a $1,408,532 net change
in unrealized appreciation of investments for the fiscal year ended October
31, 2000. For the fiscal year ended October 31, 1999, the Company had a
$3,220,212 net realized and unrealized gain from investments, comprised of
a ($2,449,598) net realized loss on investments and a $5,669,810 net
increase in unrealized appreciation of investments. The net realized loss
on investments for the fiscal year ended October 31, 2001 is primarily the
result of sales of Accrue Software, Inc. and Best Friends, Inc., offset by
the receipt and gain on sale of several stock distributions from private
fund investments.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
The following discussion includes forward-looking statements.
Actual results could differ materially from those projected in the
forward-looking statements.
Equity Price Risk
A majority of the Company's investment portfolio consists of
equity securities in private companies and private investment funds which
are not publicly traded. These investments are recorded at fair value as
determined by the Managing Investment Adviser in accordance with valuation
guidelines adopted by the Board of Directors. This method of valuation does
not result in increases or decreases in the fair value of these equity
securities in response to changes in market prices. Thus, these equity
securities are not subject to equity price risk. Nevertheless, the Company
is exposed to equity price risk through its investments in the equity
securities of two public companies. At October 31, 2001, these publicly
traded equity securities were valued at $1,733,075. Thus, there is exposure
to equity price risk, estimated as the potential loss in fair value due to
a hypothetical 10% decrease in quoted market prices, of approximately a
($185,083) decrease in the value of these securities. At October 31, 2000,
publicly traded equity securities were valued at $981,089 and there was
exposure to equity price risk of approximately a ($98,108) decrease in the
value of those securities.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
Independent Auditors' Report
Portfolio of Investments at October 31, 2001
Statement of Assets and Liabilities at October 31, 2001 and October 31, 2000
Statement of Operations for the years ended October 31, 2001, October 31,
2000 and October 31, 1999
Statement of Changes in Net Assets for the years ended October 31, 2001,
October 31, 2000 and October 31, 1999
Statement of Cash Flows for the years ended October 31, 2001, October 31,
2000 and October 31, 1999
Financial Highlights -- Selected Per Share Data and Ratios for the years
ended October 31, 2001, October 31, 2000, October 31, 1999, October 31,
1998 and October 31, 1997
Notes to Financial Statements
Note - All other schedules are omitted because of the absence of conditions
under which they are required or because the required information is
included in the financial statements or the notes thereto.
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
Shareholders and Board of Directors
UST Private Equity Investors Fund, Inc.
We have audited the accompanying statements of assets and liabilities of
UST Private Equity Investors Fund, Inc. (the "Fund") as of October 31, 2001
and 2000, including the portfolio of investments at October 31, 2001, the
related statements of operations, changes in net assets and cash flows for
each of the three years ended October 31, 2001, 2000 and 1999, and the
financial highlights for each of the indicated periods. These financial
statements and financial highlights are the responsibility of the Fund's
management. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements and financial highlights are free of material
misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements and
financial highlights. Our procedures included confirmation of securities
owned as of October 31, 2001 by correspondence with the custodian and
brokers, or other appropriate auditing procedures where replies from
brokers were not received. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position
of the UST Private Equity Investors Fund, Inc. at October 31, 2001 and 2000,
the results of its operations and its cash flows and the changes in its net
assets for the years ended October 31, 2001, 2000, and 1999, and the
financial highlights for each of the indicated periods in conformity with
accounting principles generally accepted in the United States.
/s/ Ernst & Young LLP
New York, New York
December 10, 2001
UST Private Equity Investors Fund, Inc.
Portfolio of Investments at October 31, 2001
Principal Acquisition Coupon Value
Amount/Shares Date## Rate/Yield
COMMERCIAL PAPER -- 1.77%
$250,000 Morgan Stanley, 11/06/01 (Cost $249,913)................. 2.50% $ 249,913
---------
U.S. GOVERNMENT AGENCY OBLIGATIONS-- 14.12%
2,000,000 Federal Farm Credit Discount Notes (Cost $1,996,889)..... 2.24%* 1,996,889
---------
PRIVATE INVESTMENT FUNDS #, @ -- 62.30%
Allegra Capital Partners III, LP......................... 03/96 to 04/00 682,596
Brentwood Associates Buyout Fund II, LP.................. 01/96 to 04/00 758,135
Bruckmann, Rosser, Sherrill & Co., LP.................... 12/95 to 04/00 1,803,166
Morgenthaler Venture Partners IV, LP..................... 12/95 to 04/00 1,021,504
Sevin Rosen Fund V, LP................................... 04/96 to 04/00 1,200,849
Vanguard V, LP ......................................... 05/96 to 02/99 3,339,999
---------
TOTAL PRIVATE INVESTMENT FUNDS (Cost $7,982,123) 8,806,249
---------
PRIVATE COMPANIES #, @ -- 0.00%
Common and Preferred Stocks -- 0.00%
Medical Devices -- 0.00%
1,590,909 AbTox, Inc., Series F.................................... 03/97 --
515,464 +Cardiopulmonary Corp., Series D ....................... 11/96 --
35,294 +Cardiopulmonary Corp., Series F ....................... 07/98 --
---------
TOTAL PRIVATE COMPANIES (Cost $4,700,000)........ --
PUBLIC COMPANIES @ -- 12.26%
Common Stocks and Warrants -- 12.26%
Semiconductors -- 12.26%
196,166 LogicVision, Inc., common stock # ....................... 05/97 to 01/00 1,508,117
18,742 LogicVision, Inc., Class 1 warrant....................... 05/97 24,139
55,170 QuickLogic Corp., common stock ....................... 10/99 200,819
----------
TOTAL PUBLIC COMPANIES (Cost $1,933,482)................ 1,733,075
---------
INVESTMENT COMPANIES -- 5.43%
767,549 Dreyfus Government Cash Management Fund
(Cost $767,549) ......................................... 767,549
TOTAL INVESTMENTS (Cost $17,629,956**).............................. 95.88% 13,553,675
OTHER ASSETS & LIABILITIES (NET).................................... 4.12% 581,800
----- ----------
NET ASSETS.......................................................... 100.00% $ 14,135,475
======= ============
* Discount rate.
** Aggregate cost for federal tax and book purposes.
+ At October 31, 2001, the Fund owned 5% or more of Cardiopulmonary
Corporation's outstanding shares thereby making the Company an
affiliate as defined by the Investment Company Act of 1940. Total
market value of affiliated securities owned at October 31, 2001 was $0.
# Restricted as to public resale. Acquired between November 1, 1996 and
January 31, 2000. Total cost of restricted securities owned at October
31, 2001 aggregated $14,231,622. Total market value of restricted
securities owned at October 31, 2001 was $10,314,366 or 73.0% of net
assets.
## Required disclosure for restricted securities only. @ Non-income
producing security.
@ Non-income producing security.
See Notes to Financial Statements.
UST Private Equity Investors Fund, Inc.
Statement of Assets and Liabilities
Year Ended October 31,
2001 2000
---- ----
ASSETS:
Investments, at value (cost $17,629,956 and $28,470,358,
respectively) (Note 1) $ 13,553,675 $ 33,028,497
Cash..................................................... 16,232 --
Receivable for investments sold............................. -- 225,071
Receivable from investment advisor (Note 2)................. 783,093 --
Interest receivable......................................... 2,363 5,243
Prepaid expenses............................................ 4,854 4,716
------------ -----------
Total Assets.............................................. 14,360,217 33,263,527
LIABILITIES:
Incentive fee payable (Note 2).............................. -- 1,106,346
Deferred incentive fee payable (Note 2)..................... -- 455,814
Management fees payable (Note 2)............................ -- 64,155
Directors' fees payable (Note 2)............................ 67,000 66,689
Administration fees payable (Note 2)........................ 29,067 14,567
Accrued expenses and other payables......................... 128,675 87,124
------------ -----------
Total Liabilities......................................... 224,742 1,794,695
-------------- -------------
NET ASSETS.................................................... $14,135,475 $31,468,832
=========== ===========
NET ASSETS consist of:
Undistributed net investment income......................... $ 694,997 $ 696,749
Accumulated net realized (loss) on investments.............. (2,966,218) (704,632)
Net unrealized appreciation/(depreciation) of investments... (4,076,281) 4,558,139
Allowance for management incentive fee...................... (425,788) (1,562,160)
Par value................................................... 405 405
Paid-in capital in excess of par value...................... 20,908,360 28,480,331
-------------- -----------
Total Net Assets.............................................. $14,135,475 $31,468,832
============== ============
Shares of Common Stock Outstanding ($0.01 par value,
100,000 Authorized)...................................... 40,463 40,463
NET ASSET VALUE PER SHARE..................................... $ 349.34 $ 777.72
========= =========
See Notes to Financial Statements.
UST Private Equity Investors Fund, Inc.
Statement of Operations
Year Ended October 31,
2001 2000 1999
------ ------ ---------
INVESTMENT INCOME:
Interest income............................................... $ 148,317 $ 510,857 $ 364,937
----------- ----------- ---------
EXPENSES:
Managing Investment Adviser fees (Note 2)..................... 231,165 448,241 468,230
Directors' fees and expenses (Note 2)......................... 88,810 66,689 43,501
Administration fees (Note 2).................................. 58,000 58,000 58,000
Interest expense on loans .................................... -- -- 14,306
Legal fees.................................................... 100,000 57,800 100,000
Audit fees.................................................... 30,600 33,199 25,999
Miscellaneous expenses........................................ 48,572 32,286 38,618
---------- ---------- ---------
Total Expenses.............................................. 557,147 696,215 748,654
Expenses reimbursed by Managing Investment Adviser
(Note 2)................................................ (295,736) (135,394) (146,907)
---------- ---------- ---------
Net Expenses................................................ 261,411 560,821 601,747
---------- ---------- ---------
NET INVESTMENT LOSS............................................. (113,094) (49,964) (236,810)
---------- ---------- ---------
NET REALIZED AND UNREALIZED GAIN/(LOSS):
(Note 1)
Net realized gain/(loss) on investments....................... (2,728,413) 11,935,543 (2,449,598)
Net change in unrealized appreciation/(depreciation) of
Investments.............................................. (8,634,420) 1,408,532 5,669,810
----------- ---------- ---------
NET REALIZED AND UNREALIZED GAIN/(LOSS)......................... (11,362,833) 13,344,075 3,220,212
----------- ---------- ---------
Net change in allowance for management incentive fee............. 1,136,372 (1,334,408) (227,752)
----------- ---------- ---------
NET INCREASE/(DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS................................... $(10,339,555) $ 11,959,703 $ 2,755,650
----------- ---------- ---------
See Notes to Financial Statements.
UST Private Equity Investors Fund, Inc.
Statement of Changes in Net Assets
Year Ended October 31,
2001 2000 1999
----------- ------------ ------------
OPERATIONS:
Net investment (loss)......................................... $ (113,094) $ (49,964) $ (236,810)
Net realized gain/(loss) on investments....................... (2,728,413) 11,935,543 (2,449,598)
Net change in unrealized appreciation (depreciation) of
Investments.............................................. (8,634,420) 1,408,532 5,669,810
Net change in allowance for management incentive fee.......... 1,136,372 (1,334,408) (227,752)
----------- ------------ ------------
Net increase/(decrease) in net assets resulting from
Operations............................................... (10,339,555) 11,959,703 2,755,650
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net realized gain............................................. -- (11,207,656) (367,573)
In excess of net realized gain................................ (6,993,802) (704,632) --
Paid-in capital............................................... -- (8,873,852) --
----------- ------------ ------------
Total Distributions...................................... (6,993,802) (20,786,140) (367,573)
----------- ------------ ------------
Net increase/(decrease) in net assets.............................. (17,333,357) (8,826,437) 2,388,077
NET ASSETS:
Beginning of year............................................. 31,468,832 40,295,269 37,907,192
-------------- ------------ ------------
End of year (including undistributed net investment income of
$694,997, $696,749 and $565,764, respectively)..........$ 14,135,475 $ 31,468,832 $ 40,295,269
============== ============ ============
See Notes to Financial Statements.
UST Private Equity Investors Fund, Inc.
Statement of Cash Flows
Year Ended October 31,
2001 2000 1999
---- ---- ----
CASH FLOWS FROM INVESTING
AND OPERATING ACTIVITIES:
Proceeds from Sales of Investments.......................... $ 4,193,030 $ 23,050,959 $ 3,653,921
Purchases of Investments.................................... -- (1,699,403) (2,931,879)
Net Increase in Short-Term Investments...................... 5,210,170 6,380,398 316,094
Investment Income/(Loss).................................... (729,690) 616,072 283,968
Interest Paid............................................... -- (5,315) (14,912)
Management Incentive Fee Paid.............................. (1,106,346) -- --
-----------
Operating Expenses Paid..................................... (557,130) (565,626) (538,166)
Net Cash Provided from Investing and Operating
Activities............................................. 7,010,034 27,777,085 769,026
----------- ------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Distributions Paid.......................................... (6,993,802) (20,786,140) (367,573)
Cash Paid on Borrowings..................................... -- (7,000,000) (1,000,000)
Other....................................................... -- 4,062 --
-- -- --
Net Cash Used by Financing Activities....................... (6,993,802) (27,782,078) (1,367,573)
----------- ------------- ------------
Net Increase/(Decrease) in Cash............................. 16,232 (4,993) (598,547)
.
Cash at Beginning of Year..................................... -- 4,993 603,540
----------- ------------- ------------
Cash at End of Year........................................... $16,232 -- $ 4,993
=========== ============= ===========
.
Reconciliation of Net Investment Loss to
Net Cash Provided from Investing and Operating Activities:
Net Investment Loss......................................... $ (113,094) $ (49,964) $ (236,810)
Proceeds from Sales of Investments.......................... 4,193,030 23,050,959 3,653,921
Purchases of Investments.................................... -- (1,699,403) (2,931,879)
Net Decrease in Short-Term Investments...................... 5,210,170 6,380,398 316,094
Net (Increase)/Decrease in Receivables Related to
Operations............................................. (780,351) 109,038 (70,063)
Net Decrease in Payables Related to Operations.............. (1,401,927) (336,321) (45,800)
Amortization of Organization Costs.......................... -- -- --
Accretion/Amortization of Discounts and Premiums............ (97,794) 322,378 83,563
---------- ------------- -----------
Net Cash Provided from Investing and Operating
Activities............................................ $ 7,010,034 $ 27,777,085 $ 769,026
=========== ============= ===========
See Notes to Financial Statements.
UST Private Equity Investors Fund, Inc.
Financial Highlights--Selected Per Share Data and Ratios
For a Fund share outstanding throughout each period
Year Ended October 31,
2001 2000 1999 1998 1997
-------- -------- ------- ---------- -------
NET ASSET VALUE, BEGINNING OF
PERIOD........................................ $ 777.72 $ 995.85 $ 936.84 $ 1,165.99 $ 1,055.77
-------- -------- -------- ---------- ----------
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income/(Loss).................... (2.79) (1.23) (5.85) (3.97) 5.35
Net Realized and Unrealized Gain/(Loss) on
Investments............................... (280.83) 329.79 79.57 (181.64) 144.20
Net Change in Allowance for Management
Incentive fee............................. 28.08 (32.98) (5.63) 3.01 (2.91)
-------- --------- ------- -------- ----------
Total from Investment Operations.............. (255.54) 295.58 68.09 (182.60) 146.64
--------- ---------- --------- --------- ---------
DISTRIBUTIONS
Net Investment Income........................... -- -- -- -- (35.34)
Net Realized Gain............................... -- (276.99) (9.08) (46.55) (1.08)
In Excess of Net Realized Gain.................. (172.84) (17.41) -- -- --
Paid-in Capital................................. -- (219.31) -- -- --
-------- -------- ------- ----------- ---------
Total Distributions........................... (172.84) (513.71) (9.08) (46.55) (36.42)
--------- --------- -------- ----------- ----------
NET ASSET VALUE, END OF PERIOD.................... $349.34 $ 777.72 $ 995.85 $ 936.84 $ 1,165.99
======== ======== ======== ========== ==========
TOTAL NET ASSET VALUE RETURN+..................... (42.98)% 35.41% 7.33% (16.22)% 14.37%
========= ======= ======= ========== ===========
RATIOS AND SUPPLEMENTAL DATA
Net Assets, End of Period (Thousands)........... $ 14,135 $ 31,469 40,295 $ 37,907 $ 47,179
Ratio of Net Operating Expenses to Average Net
Assets..................................... 1.28% 1.54% 1.62% 1.77% 1.65%
Ratio of Gross Operating Expenses to Average
Net Assets++............................... 2.72% 1.92% 2.01% 1.95% 2.02%
Ratio of Net Investment Income/(Loss) to
Average Net Assets......................... (0.55)% (0.14)% (0.64)% (0.39)% 0.48%
Interest Expense Ratio.......................... N/A 0.01% 0.04% 0.09% N/A
Portfolio Turnover Rate......................... 0% 5% 10% 11% 44%
+ Total investment return based on per share net asset value reflects the
effects of changes in net asset value based on the performance of the
Fund during the period and assumes dividends and distributions, if any,
were reinvested. The Fund's shares were issued in a private placement
and are not traded, therefore market value total investment return is
not calculated.
++ Expense ratio before waiver of fees and reimbursement of expenses by
Managing Investment Adviser.
See Notes to Financial Statements.
UST PRIVATE EQUITY INVESTORS FUND, INC.
NOTES TO FINANCIAL STATEMENTS
1. Significant Accounting Policies
UST Private Equity Investors Fund, Inc. ("the Fund") was incorporated
under the laws of the State of Maryland on September 16, 1994, and is a
non-diversified, closed-end management investment company that 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 the Fund's significant accounting
policies. Such policies are in conformity with generally accepted
accounting principles for investment companies and are consistently
followed in the preparation of the financial statements. Generally accepted
accounting principles require management to make estimates and assumptions
that affect the reported amounts and disclosures in the financial
statements. Actual results could differ from these estimates.
(a) Portfolio valuation:
The Fund values portfolio securities quarterly and at other such
times, as in the Board of Directors' view, circumstances warrant.
Investments in securities for which market quotations are readily
available generally will be valued at the last sale price on the date
of valuation or, if no sale occurred, at the mean of the latest bid
and ask prices; provided that, as to such securities that may have
legal, contractual or practical restrictions on transfer, a discount
of 10% to 40% from the public market price will be applied. Securities
for which no public market exists and other assets will be valued at
fair value as determined in good faith by the Managing Investment
Adviser or a committee of the Board under the supervision of the Board
pursuant to certain valuation procedures summarized below. Securities
having remaining maturities of 60 days or less are valued at amortized
cost.
The value for securities for which no public market exists is
difficult to determine. Generally, such investment will be valued on a
"going concern" basis without giving effect to any disposition costs.
There is a range of values that is reasonable for such investments at
any particular time. Initially, direct investments are valued based
upon their original cost, until developments provide a sufficient
basis for use of a valuation other than cost. Upon the occurrence of
developments providing a sufficient basis for a change in valuation,
direct investments will be valued by the "private market" or
"appraisal" method of valuation. The private market method shall only
be used with respect to reliable third party transactions by
sophisticated, independent investors. The appraisal method shall be
based upon such factors affecting the company such as earnings, net
worth, reliable private sale prices of the company's securities, the
market prices for similar securities of comparable companies, an
assessment of the company's future prospects or, if appropriate,
liquidation value. The values for the investments referred to in this
paragraph will be estimated regularly by the Managing Investment
Adviser or a committee of the Board and, in any event, not less
frequently than quarterly. However, there can be no assurance that
such values will represent the return that might ultimately be
realized by the Fund from the investments.
At October 31, 2001, market quotations were not readily available
for securities valued at $8,806,249. Such securities were valued by
the Managing Investment Adviser, under the supervision of the Board of
Directors. Because of the inherent uncertainty of valuation, the
estimated values may differ significantly from the values that would
have been used had a ready market for the securities existed, and the
differences could be material.
(b) Security transactions and investment income:
Security transactions are recorded on a trade date basis.
Realized gains and losses on investments sold are recorded on the
basis of identified cost. Interest income, adjusted for amortization
of premiums and discounts on investments, is earned from settlement
date and is recorded on the accrual basis. Dividend income is recorded
on the ex-dividend date.
(c) Repurchase agreements:
The Fund enters into agreements to purchase securities and to
resell them at a future date. It is the Fund's policy to take custody
of securities purchased and to ensure that the market value of the
collateral including accrued interest is sufficient to protect the
Fund from losses incurred in the event the counterparty does not
repurchase the securities. If the seller defaults and the value of the
collateral declines or if bankruptcy proceedings are commenced with
respect to the seller of the security, realization of the collateral
by the Fund may be delayed or limited.
(d) Federal income taxes:
It is the policy of the Fund 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.
Dividends from net investment income are declared and paid at
least annually. Any net realized capital gains, unless offset by any
available capital loss carryforwards, are distributed to shareholders
at least annually. Dividends and distributions are determined in
accordance with federal income tax regulations which may differ from
generally accepted accounting principles. These "book/tax" differences
are either considered temporary or permanent. To the extent these
differences are permanent, such amounts are reclassified within the
capital accounts based on their federal tax basis treatment; temporary
differences do not require reclassification. During the current year,
permanent differences, primarily due to net operating losses, resulted
in increases in undistributed net investment income and accumulated
net realized gain on investments and a corresponding decrease in
additional paid-in capital. The reclassification had no effect on net
assets.
The Fund has an unused capital loss carryforward of $2,261,586
available for income tax purposes, to be applied against future net
security profits, if any, realized after October 31, 2001. If not
applied, the carryover expires in fiscal year 2009.
At October 31, 2001, the tax basis of the Fund's investments for
federal income tax purposes amounted to $17,629,956. The net
unrealized depreciation amounted to $4,076,281, which is comprised of
gross unrealized appreciation of $2,598,813 and aggregate gross
unrealized depreciation of $6,675,094.
In November 2000 the American Institute of Certified Public
Accountants (AICPA) issued a revised version of the AICPA Audit and
Accounting Guide for Investment Companies (the Guide). The Guide is
effective for annual financial statements issued for fiscal years
beginning after December 15, 2000. Management of the Company does not
anticipate that the adoption of the Guide will have a significant
effect on the financial statements.
2. Investment Advisory Fee, Administration Fee, and Related Party Transactions
Pursuant to an Investment Management Agreement ("Management
Agreement"), United States Trust Company of New York ("U.S. Trust NY") and
U.S. Trust Company ("U.S. Trust") serve as the Managing Investment Adviser
to the Fund. Under the Management Agreement, for the services provided, the
Managing Investment Adviser is entitled to receive a fee, at the annual
rate of 1.50% of the net assets of the Fund, determined as of the end of
each fiscal quarter, that are invested or committed to be invested in
portfolio companies or private funds and equal to an annual rate of 0.50%
of the net assets of the Fund, determined as of the end of each fiscal
quarter, that are invested in short-term investments and are not committed
to portfolio companies or private funds.
In addition to the management fee, the Fund has agreed to pay the
Managing Investment Adviser an incentive fee in an amount equal to 10% of
the cumulative realized capital gains (net of realized capital losses and
unrealized net capital depreciation), less the aggregate amount of
incentive fee payments in prior years. If the amount of the incentive fee
in any year is a negative number, or cumulative net realized gains less net
unrealized capital depreciation at the end of any year is less than such
amount calculated at the end of the previous year, the Managing Investment
Adviser will be required to repay the Fund all or a portion of the
incentive fee previously paid.
U.S. Trust NY is a New York state-chartered bank and trust company and
a member bank of the Federal Reserve System. U.S. Trust is a Connecticut
state bank and trust company. Each is a wholly-owned subsidiary of U.S.
Trust Corporation, a registered bank holding company. U.S. Trust
Corporation is a wholly-owned subsidiary of The Charles Schwab Corporation.
J.P. Morgan Investor Services, Co., a corporate affiliate of JPMorgan
Chase Bank, (the "Administrator") provides administrative services to the
Fund. For the services provided to the Fund, the Administrator is entitled
to an annual fee of $58,000, which is paid quarterly.
The Managing Investment Adviser has voluntarily agreed to waive or
reimburse other operating expenses of the Fund, exclusive of management
fees, to the extent they exceed 0.42% of the Fund's net assets, and will
waive or reimburse, exclusive of management fees, all such expenses with
respect to that portion of the Fund's net assets, determined as of the end
of each fiscal quarter, that is invested in short-term investments.
Each Director of the Fund receives an annual fee of $9,000, plus a
meeting fee of $1,500 for each meeting attended, and is reimbursed for
expenses incurred for attending meetings. No person who is an officer,
director or employee of the Managing Investment Adviser, or of any parent
or subsidiary thereof, who serves as an officer, director or employee of
the Fund receives any compensation from the Fund.
3. Purchases and Sales of Securities
Excluding short-term investments, the Fund's purchases and sales of
securities for the years ended October 31, 2001, October 31, 2000 and
October 31, 1999 aggregated:
Year Ended
October 31, Purchases ($) Sales ($)
----------- ------------- ---------
2001 -- 1,755,513
2000 1,699,403 21,312,360
1999 2,931,879 4,090,691
4. Transactions with Affiliated Companies
An affiliated company is a company in which the fund has ownership of
at least 5% of the voting securities. The Fund did not receive dividend or
interest income from affiliated companies during the period. There were no
transactions with companies which are or were affiliates during the period.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE.
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
The information set forth under the headings "Election of
Directors" and "Additional Information -- Officers" appearing in the
Company's definitive Proxy Statement for the 2002 Annual Meeting of
Stockholders to be held on March 22, 2002, which will be filed with the
Securities and Exchange Commission not later than 120 days after October
31, 2001, is incorporated herein by reference.
ITEM 11. EXECUTIVE COMPENSATION.
The information set forth under the captions "Election of
Directors" and "Additional Information -- Officers" in the Company's
definitive Proxy Statement for the 2002 Annual Meeting of Stockholders to
be held on March 22, 2002, which will be filed with the Securities and
Exchange Commission not later than 120 days after October 31, 2001, is
incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The information set forth under the caption "Security Ownership of
Certain Beneficial Owners and Management" appearing in the Company's
definitive Proxy Statement for the 2002 Annual Meeting of Stockholders to
be held on March 22, 2002, which will be filed with the Securities and
Exchange Commission not later than 120 days after October 31, 2001, is
incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
None.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.
(a) 1. Financial Statements
The financial statements listed in Item 8, "Financial
Statements and Supplementary Data," beginning on page 9 are
filed as part of this report.
2. Financial Statement Schedules
The financial statement schedules listed in Item 8,
"Financial Statements and Supplementary Data," beginning on
page 9 are filed as part of this report.
3. Exhibits
Exhibit
Number Description
------- -----------
(3)(i) Articles of Incorporation of the Company(1)
(3)(ii) By-Laws of the Company(1)
(10)(a) Form of Management Agreement(2)
(10)(b) Form of Transfer Agency and Custody Agreement(3)
(23) Consent of Independent Auditors
(b) Reports on Form 8-K
None.
- -------------
1 Incorporated by reference to UST Private Equity Investors Fund,
Inc.'s Registration Statement on Form N-2 (File No. 033-84290),
filed with the Securities and Exchange Commission on September 22,
1994.
2 Incorporated by reference to UST Private Equity Investors Fund,
Inc.'s Definitive Proxy Statement for the 2000 Annual Meeting of
Stockholders, filed with the Securities and Echange Commission on
May 25, 2000.
3 Incorporated by reference to UST Private Equity Investors Fund,
Inc.'s Registration Statement on Form N-2/A (File No. 033-84290)
filed with the Securities and Exchange Commission on November 1,
1994.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, 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: January 25, 2002 By: /S/DAVID I. FANN
----------------------------------
David I. Fann, Chief Executive Officer
and President
(principal executive officer)
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons on behalf
of the registrant and in the capacities and on the dates indicated:
Signature Title Date
/S/DAVID I. FANN Chief Executive Officer and President January 25, 2002
- -------------------------------- (principal executive officer)
David I. Fann
/S/BRIAN F. SCHMIDT Chief Financial Officer January 25, 2002
- -------------------------------- (principal financial and accounting officer)
Brian F. Schmidt
/S/JOHN C. HOVER II Chairman of the Board and Director January 29, 2002
- --------------------------------
John C. Hover II
/S/GENE M. BERNSTEIN Director January 29, 2002
- --------------------------------
Gene M. Bernstein
/S/STEPHEN V. MURPHY Director January 29, 2002
- --------------------------------
Stephen V. Murphy
/S/VICTOR F. IMBIMBO, JR. Director January 29, 2002
- --------------------------------
Victor F. Imbimbo, Jr
Exhibit 23
CONSENT OF INDEPENDENT AUDITORS
We consent to the use of our report dated December 10,
2001, included in this Annual Report (Form 10-K No. 000-24856), for the
year ended October 31, 2001, of UST Private Equity Investors Fund, Inc.
ERNST & YOUNG LLP
New York, New York
January 29, 2002