<PAGE>   1

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549

                                    FORM 10-Q
(Mark one)
[X]      QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
         EXCHANGE ACT OF 1934

For Quarter Ended June 30, 1999

                                       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:  0-18444

                  YAGER/KUESTER PUBLIC FUND LIMITED PARTNERSHIP
--------------------------------------------------------------------------------
             (Exact name of registrant as specified in its charter)

          North Carolina                                       56-1560476
--------------------------------------------------------------------------------
(State or other jurisdiction of                             (I.R.S. Employer
incorporation or organization)                           Identification Number)

1300 Altura Road    Fort Mill,  South Carolina                 29715-9201
--------------------------------------------------------------------------------
(Address of principal executive office)                        (Zip code)

                                 (803) 547-9100
--------------------------------------------------------------------------------
              (Registrant's telephone number, including area code)

              (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 [ ]

                APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
                     PROCEEDINGS DURING THE PAST FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Section 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court.
                              Yes [ ]     No [ ]

                      APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.




<PAGE>   2

PART I -- FINANCIAL INFORMATION
Item 1. Financial Statements


                  YAGER/KUESTER PUBLIC FUND LIMITED PARTNERSHIP
                            CONDENSED BALANCE SHEETS
<TABLE>
<CAPTION>
                                                                    June 30,            December 31,
                                                                      1999                  1998
                                                                 --------------        --------------
   ASSETS                                                         (Unaudited)              (Note)
<S>                                                                   <C>                   <C>
CURRENT ASSETS
 Cash and cash equivalents                                         $    27,862           $    45,738
 Accounts receivable, tenant                                            38,941                39,695
 Prepaid expenses                                                        1,724                   -
 Securities available for sale                                         121,894               118,779
                                                                 --------------        --------------

        Total current assets                                           190,421               204,212
                                                                 --------------        --------------

INVESTMENTS AND NONCURRENT RECEIVABLES
 Properties on operating leases and properties held
   for lease, net of accumulated depreciation
   1999 $705,480; 1998 $705,480                                      2,368,831             2,333,320

OTHER ASSETS
 Deferred charges, net of accumulated amortization
   1999 $12,190; 1998 $12,190                                            2,810                 2,810
 Deferred leasing commissions, net of accumulated
   amortization 1999 $19,265; 1998 $19,265                              33,122                29,670
                                                                 --------------        --------------

                                                                   $ 2,595,184           $ 2,570,012
                                                                 ==============        ==============

   LIABILITIES AND PARTNERS' EQUITY

CURRENT LIABILITIES
 Note payable, bank                                                $   500,000           $   500,000
 Current maturities of long-term debt                                1,115,064             1,145,441
 Accounts payable                                                       10,573                 5,997
 Accrued expenses                                                       38,492                18,296
 Deferred revenue                                                        2,179                   -
                                                                 --------------        --------------

        Total current liabilities                                    1,666,308             1,669,734
                                                                 --------------        --------------

LONG-TERM DEBT, less current maturities                                    -                     -
                                                                 --------------        --------------

COMMITMENT AND CONTINGENCY (Note 4)

PARTNERS' EQUITY
 General partners                                                      (13,961)              (14,202)
 Limited partners                                                      945,552               921,681
 Unrealized gain on investment securities                               (2,715)               (7,201)
                                                                 --------------        --------------

        Total partner's equity                                         928,876               900,278
                                                                 --------------        --------------

                                                                   $ 2,595,184           $ 2,570,012
                                                                 ==============        ==============
</TABLE>


Note: The Condensed Balance Sheet at December 31, 1998 has been taken from the
      audited financial statements at that date. See Notes to Condensed
      Financial Statements.


                                       2




<PAGE>   3

                  YAGER/KUESTER PUBLIC FUND LIMITED PARTNERSHIP
                       CONDENSED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
                                                  Three Months Ended                            Six Months Ended
                                                       June 30,                                     June 30,
                                          -----------------------------------          ------------------------------------
                                              1999                 1998                     1999                 1998
                                          --------------       --------------          ---------------      ---------------
                                            (Unaudited)         (Unaudited)                (Unaudited)       (Unaudited)
<S>                                           <C>                  <C>                      <C>                  <C>
Rental income                                 $ 140,200            $ 137,115                $ 275,132            $ 433,775

Operating expenses:
 Wages and contract labor                         2,004                2,100                    3,504                5,400
 Depreciation and amortization                      -                 75,999                      -                141,143
 Repairs and maintenance                         28,436               31,896                   55,852               79,786
 Management fees                                  4,122                5,168                    8,277               13,802
 Utilities                                       21,962               30,168                   43,559               66,069
 Professional fees                               28,025               22,402                   43,345               49,178
 Property taxes                                   8,994               12,226                   17,989               35,107
 Miscellaneous                                    2,328                3,457                    3,228                9,638
                                          --------------       --------------          ---------------      ---------------

                                                 95,871              183,416                  175,754              400,123
                                          --------------       --------------          ---------------      ---------------

        Operating income                         44,329              (46,301)                  99,378               33,652
                                          --------------       --------------          ---------------      ---------------

Nonoperating income (expense):
 Interest and dividend income                     2,269                5,750                    4,923               10,833
 Interest expense                               (39,201)             (62,285)                 (78,695)            (166,324)
 Other                                           (1,494)                (145)                  (1,494)               1,210
 Loss on Sale of properties held for lease          -               (175,712)                     -               (175,712)
                                          --------------       --------------          ---------------      ---------------

                                              $ (38,426)           $(232,392)               $ (75,266)            (329,993)
                                          --------------       --------------          ---------------      ---------------

        Net income                            $   5,903            $(278,694)               $  24,112            $(296,341)
                                          ==============       ==============          ===============      ===============

        Net income per limited
          partnership unit                    $    0.93            $  (43.75)               $    3.79            $  (46.52)
                                          ==============       ==============          ===============      ===============
</TABLE>


See Notes to Condensed Financial Statements.


                                       3



<PAGE>   4

                  YAGER/KUESTER PUBLIC FUND LIMITED PARTNERSHIP
                       CONDENSED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
                                                                                               Six Months Ended
                                                                                                   June 30,
                                                                                    ----------------------------------------
                                                                                         1999                    1998
                                                                                    ----------------        ----------------
                                                                                                  (Unaudited)
<S>                                                                                        <C>                   <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss)                                                                       $    24,112           $    (296,341)
 Adjustments to reconcile net income to net cash
   provided (used) by operating activities:
   Depreciation and amortization                                                                -                   141,143
   Loss(Gain) on sale of securities available for sale                                        1,494                  (1,210)
   Loss on sale of properties held for lease                                                    -                   175,712
 Change in assets and liabilities:
   (Increase) Decrease in prepaids, deferrals and
      other receivables                                                                        (970)                 31,356
   Increase (Decrease) in accounts payable and accrued expenses                              26,951                (107,319)
                                                                                    ----------------        ----------------

        Net cash provided (used) by operating activities                                     51,587                 (56,659)
                                                                                    ----------------        ----------------

CASH FLOWS FROM INVESTING ACTIVITIES
 Sale of securities available for sale                                                       20,138                 404,092
 Purchase of securities available for sale                                                  (20,261)               (317,906)
 Proceeds from sale of properties held for lease                                                -                 3,241,214
 Improvements in investment property                                                        (35,511)                    -
 Disbursements for deferred leasing commissions                                              (3,452)                (19,777)
                                                                                    ----------------        ----------------

        Net cash (used) provided in investing activities                                    (39,086)              3,307,623

CASH FLOWS FROM FINANCING ACTIVITIES
 Principal payments on long-term borrowings                                                 (30,377)             (3,306,161)
                                                                                    ----------------        ----------------

        Net cash (used) in financing activities                                             (30,377)             (3,306,161)

        Net (decrease) in cash and cash equivalents                                         (17,876)                (55,197)

Cash and cash equivalents:
 Beginning                                                                                   45,738                  92,544
                                                                                    ----------------        ----------------

 Ending                                                                                 $    27,862             $    37,347
                                                                                    ================        ================
</TABLE>


See Notes to Condensed Financial Statements.


                                       4



<PAGE>   5

                  YAGER/KUESTER PUBLIC FUND LIMITED PARTNERSHIP
                     NOTES TO CONDENSED FINANCIAL STATEMENTS
                                   (UNAUDITED)



1.    Nature of Business:

      The Partnership was formed in July 1986 to acquire, operate, hold for
      investment and sell real estate. The Partnership currently owns the
      EastPark Executive Center in Charlotte, North Carolina. On April 24, 1998,
      the Partnership sold the BB&T building facilities (formerly the UCB
      building) in Greenville, South Carolina.

2.    Opinion of Management:

      In the opinion of management, the accompanying unaudited condensed
      financial statements contain all adjustments (all which were normal
      recurring accruals) necessary for a fair presentation. The results of
      operations for the interim periods are not necessarily indicative of the
      results which may be expected for an entire year.

3.    Statement of Cash Flows:

      For purposes of reporting the statements of cash flows, the Limited
      Partnership includes all cash accounts, which are not subject to
      withdrawal restrictions or penalties, and all highly liquid debt
      instruments purchased with a maturity of three months or less as cash and
      cash equivalents on the accompanying condensed balance sheets.

4.    Priority Return:

      At December 31, 1998, the cumulative unpaid priority return to the unit
      holders was $2,409,617 compared to $2,166,833 one year prior. This
      increase resulted from no distributions being made to partners during the
      year. Based on the current and projected commercial real estate market
      conditions, the General Partners believe that it is reasonably unlikely
      that a sale of the remaining Partnership property would produce net sale
      proceeds sufficient to pay any of such priority return. Furthermore, the
      General Partners believe that it is reasonably unlikely that the
      Partnership's operating income or any refinancing of Partnership debt
      would generate sufficient funds to pay any portion of the priority return.


                                       5


<PAGE>   6

                  YAGER/KUESTER PUBLIC FUND LIMITED PARTNERSHIP
           MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                            AND RESULTS OF OPERATIONS

Changes in Financial Condition

There have not been any significant changes in financial condition from December
31, 1998 to June 30, 1999. The Partnership had approximately $35,000 in
additional upfit costs during the first quarter of 1999. These upfit costs were
for a new tenant that moved in February 1, 1999. The Partnership also paid
approximately $3,500 in commissions relating to this new lease.

Liquidity and Capital Resources

During the quarter ended June 30, 1999, the Partnership continued to fund
working capital requirements, and the working capital deficit was increased by
approximately $10,000 from December 31, 1998. The working capital deficit at
June 30, 1999 was $1,475,887. The loans on the EastPark facility with First
Union and United of Omaha matured on June 30, 1999 and July 1, 1999,
respectively. These two loans were refinanced with one loan of $1,625,000 with
First Union National Bank. Although the new loan terms require interest only
payments, the Partnership will continue to pay essentially the same level of
debt service as before the refinance. The interest rate on the new loan is the
prime rate of First Union, which is currently 8%. The loan will mature on
September 30, 1999. The General Partners will renew the loan if the EastPark
facility is not sold before this date. (See "Status of EastPark Executive
Center" below).

Results of Operations

Rental income for the three months ended June 30, 1999 is comparable to the same
period of the prior year and down approximately $158,000 for the six months
ended June 30, 1999 as compared to the same period of the prior year. The main
cause for this decrease is related to the sale of the BB&T building in April of
the prior year. Operating expenses are down approximately $224,000 for the year.
The main factor for this increase is due to the fact that depreciation and
amortization expense was not taken during the year. Generally accepted
accounting principles ("GAAP") do not allow for depreciation to be taken after
the building was written down to current market value in the prior year. The
occupancy rate at the EastPark facility is currently 91%.

Status of EastPark Executive Center

The EastPark Executive Center is now under contract to be sold to Four Dan, LLC,
a North Carolina Limited Liability Company, for a sales price of $2,525,000. The
due diligence period is scheduled to end on September 2, 1999, with an
anticipated closing to occur within 30 days after the end of the due diligence
period. The sale of the EastPark Executive Center is contingent upon receiving
the consent of Limited Partners holding a majority of the Limited Partnership
Units. The prior contract on the EastPark Executive Center with Cap Care Group,
Inc. was terminated on May 18, 1999. CAP Care Group, Inc. terminated the
contract by its exercise of an early termination right.

Risks Associated with Year 2000

The Partnership, in its day to day operations, relies upon various computer
software and hardware that may be adversely affected by the change in the
millennium, from 1999 to 2000. In general, information system experts have
predicted that a wide variety of problems, from systems failures to data entry
and transfer errors, will result from the turn of the century. Repeated systems
failures, data entry and transfer errors and similar computer problems would
result in a material adverse effect on the Partnership and its operations.
However, the Partnership has examined its commuter software and hardware and,
based on such examination, does not reasonably anticipate any significant
internal problems as a result of the change in the millennium. The Partnership
may, however, be materially and adversely affected by external systems problems,
problems over which the Partnership has minimal control. The costs associated
with bringing the Partnership's computer systems in compliance will be minimal
as the management


                                       6

<PAGE>   7

company of the Partnership will be responsible for the majority of these costs.
In the worst case scenario, this single-property company would be able to
operate on a manual accounting system which would not have an adverse affect on
the day to day operations of the Partnership.

Forward-Looking Statements

This report contains certain forward-looking statements with respect to the
financial condition, results of operations, plans, objectives, future
performance and business of the Partnership. These forward-looking statements
involve certain risks and uncertainties. Actual results may differ materially
from those contemplated by such forward-looking statements.


PART II.   OTHER INFORMATION

               Item 1.     Legal Proceedings

                           The Partnership is not engaged in any legal
                           proceedings of a material nature at the present time.

               Item 6.     Exhibit Index

                           (a) Exhibits:
<TABLE>
<CAPTION>
                           Designation
                           Number Under
               Exhibit     Item 601 of                                                                             Page
               Number      Regulation S-K   Exhibit Description                                                   Number
               -------     --------------   -------------------                                                   ------
               <C>         <C>              <S>                                                                   <C>
                    1*         4            Instrument defining rights of security holders - set forth in the
                                            Limited Partnership Agreement

                    2*         10           Limited Partnership Agreement

                    3**        10.1         Exclusive Leasing and Management Agreement dated October 1, 1994
                                            (EastPark Executive Center)

                    4***       10.2         Listing  Agreement of Property For Lease and/or Sale
                                            (EastPark Executive Center)

                    5          10.3         Offer to Purchase Contract by and between the Partnership and Four
                                            Dan, LLC dated July 19, 1999.

                               27           Financial Data Schedule (for SEC use only)
</TABLE>

                           (b) Reports on Form 8-K:

                  1.       Termination of the Offer to Purchase Contract dated
                           April 16, 1999 for the EastPark Executive Center, by
                           and between the Partnership and CAP Care Group, Inc.
                           (incorporated by reference to report Form 8-K dated
                           May 18, 1999.)

--------------------------
               *  Incorporated by reference to Exhibit A of the Partnership's
                  Prospectus dated December 1, 1987, Registration Number
                  33-07056-A.

              **  Incorporated by reference to Exhibit 3 of the
                  Partnership's Form 10-K for the year ended December 31, 1995.

             ***  Incorporated by reference to Exhibit 4 of the Partnership's
                  Form 10-Q for the quarter ended September 30, 1997.


                                       7

<PAGE>   8

SIGNATURES

Pursuant to the requirements 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.

                                       YAGER/KUESTER PUBLIC FUND
                                       LIMITED PARTNERSHIP
                                       (Registrant)

                                       By:   DRY Limited Partnership,
                                             General Partner of Registrant


Date   08/13/99                        By:   /s/ Dexter R. Yager, Sr.
       ------------------------              -----------------------------------
                                                 Dexter R. Yager, Sr.
                                                 General Partner

Date   08/13/99                        By:   /s/ Jerry R. Haynes
       ------------------------              -----------------------------------
                                                 Jerry R. Haynes
                                                 Chief Financial Officer



                                       8