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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549

FORM 10-QSB

(Mark one)x
    
    QUARTERLY REPORT PURSUANT TO
SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For Quarter Ended June 30, 2004oro
    
    TRANSITION REPORT PURSUANT TO
SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the transition
period from ____________ to ____________


Commission File Number:      0-18444

YAGER/KUESTER PUBLIC FUND LIMITED PARTNERSHIP

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


1300 Altura Road           Fort Mill, South Carolina
    
    29708(Address of principal executive office)
    
    (Zip code)


(803) 547-9100

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(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
o





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PART I  FINANCIAL INFORMATION
Item 1. Financial Statements

YAGER/KUESTER PUBLIC FUND LIMITED PARTNERSHIP

CONDENSED BALANCE SHEETS

June 30,
    
    December 31,2004
    
    2003ASSETS
    
    (Unaudited)
    
    (Note)CURRENT ASSETSCash and cash equivalents
    
    $
    275,961
    
    
    $
    208,237Accounts receivable, tenant
    
    
    47,721
    
    
    
    45,962Prepaid expenses
    
    
    2,531
    
    
    
    242Total current assets
    
    
    326,213
    
    
    
    254,441Leased property held for sale
    
    
    2,323,501
    
    
    
    2,323,501$
    2,649,714
    
    
    $
    2,577,942LIABILITIES AND PARTNERS EQUITYCURRENT LIABILITIESCurrent maturities of long-term debt
    
    $
    1,261,000
    
    
    $
    1,303,000Accounts payable
    
    
    5,233
    
    
    
    4,445Accrued expenses
    
    
    23,306
    
    
    
    1,163Deferred revenue
    
    
    7,313
    
    
    
    Total current liabilities
    
    
    1,296,852
    
    
    
    1,308,608Commitment and ContingencyPARTNERS EQUITYGeneral partners
    
    
    (9,706
    )
    
    
    (10,541
    )Limited partners
    
    
    1,362,568
    
    
    
    1,279,8751,352,862
    
    
    
    1,269,334$
    2,649,714
    
    
    $
    2,577,942


Note:
    
    The Condensed Balance Sheet at December 31, 2003 has been taken from the audited
financial statements at that date. See Notes to Condensed Financial Statements.


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YAGER/KUESTER PUBLIC FUND LIMITED PARTNERSHIP
CONDENSED STATEMENTS OF OPERATIONS

Three Months Ended
    
    Six Months EndedJune 30,
    
    June 30,2004
    
    2003
    
    2004
    
    2003(Unaudited)
    
    (Unaudited)Rental income
    
    $
    149,919
    
    
    $
    148,682
    
    
    $
    304,899
    
    
    $
    301,177Operating expenses:Contract labor
    
    
    1,500
    
    
    
    1,500
    
    
    
    3,000
    
    
    
    3,000Repairs and maintenance
    
    
    35,365
    
    
    
    40,288
    
    
    
    68,205
    
    
    
    74,227Management fees
    
    
    4,652
    
    
    
    4,461
    
    
    
    9,314
    
    
    
    8,856Utilities
    
    
    22,447
    
    
    
    20,831
    
    
    
    45,261
    
    
    
    43,847Professional fees
    
    
    17,329
    
    
    
    21,798
    
    
    
    45,583
    
    
    
    40,909Property taxes
    
    
    10,575
    
    
    
    10,665
    
    
    
    21,150
    
    
    
    21,330Miscellaneous
    
    
    1,559
    
    
    
    791
    
    
    
    3,170
    
    
    
    3,73893,427
    
    
    
    100,334
    
    
    
    195,683
    
    
    
    195,907Operating income
    
    
    56,492
    
    
    
    48,348
    
    
    
    109,216
    
    
    
    105,270Nonoperating income (expense):Interest and dividend income
    
    
    294
    
    
    
    1,123
    
    
    
    307
    
    
    
    2,106Interest expense
    
    
    (12,891
    )
    
    
    (14,600
    )
    
    
    (25,995
    )
    
    
    (29,268
    )(12,597
    )
    
    
    (13,477
    )
    
    
    (25,688
    )
    
    
    (27,162
    )Net income
    
    $
    43,895
    
    
    $
    34,871
    
    
    $
    83,528
    
    
    $
    78,108Deduct net income applicable to limited
partners (per limited partner unit for the
quarter ended June 30, 2004 $6.80; 2003 $5.41 and
for the six months ended June 30, 2004 $12.94; 2003 $12.11)
    
    $
    43,456
    
    
    $
    34,522
    
    
    $
    82,693
    
    
    $
    77,327Net income applicable to general partners
(per general partner unit for the quarter ended
June 30, 2004 $8.78; 2003 $6.98 and for the six months
ended June 30, 2004 $16.70; 2003 $15.62)
    
    $
    439
    
    
    $
    349
    
    
    $
    835
    
    
    $
    781


See Notes to Condensed Financial Statements.

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YAGER/KUESTER PUBLIC FUND LIMITED PARTNERSHIP
CONDENSED STATEMENTS OF CASH FLOWS

Six Months EndedJune 30,2004
    
    2003(Unaudited)CASH FLOWS FROM OPERATING ACTIVITIESNet income
    
    $
    83,528
    
    
    $
    78,108Adjustments to reconcile net income to net cash
provided by operating activities:Change in assets and liabilities:(Increase) in prepaids and accounts receivable
    
    
    (4,048
    )
    
    
    (2,226
    )Increase in accounts payable, accrued expenses, and deferred revenue
    
    
    30,244
    
    
    
    8,016Net cash provided by operating activities
    
    
    109,724
    
    
    
    83,898CASH FLOWS FROM INVESTING ACTIVITIESProceeds from sale of securities available for sale
    
    
    
    
    
    
    403Net cash provided by investing activities
    
    
    
    
    
    
    403CASH FLOWS FROM FINANCING ACTIVITIESPrincipal payments on long-term borrowings
    
    
    (42,000
    )
    
    
    (49,000
    )Cash distributions
    
    
    
    
    
    
    (4,388
    )Net cash (used in) financing activities
    
    
    (42,000
    )
    
    
    (53,388
    )Net increase in cash and cash equivalents
    
    
    67,724
    
    
    
    30,913Cash and cash equivalents:Beginning
    
    
    208,237
    
    
    
    124,060Ending
    
    $
    275,961
    
    
    $
    154,973


See Notes to Condensed Financial Statements.

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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 its only other real property holding, the BB&T building
facilities (formerly the UCB building) located in Greenville, South
Carolina.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|  
|2. |  | Basis of Presentation:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|  
|   |  | In the opinion of management, the accompanying unaudited condensed financial
statements contain all adjustments (all of which were normal recurring
adjustments) 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.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|  
|   |  | Leased property held for sale has been recorded following the Statement of
Financial Accounting Standards No. 144, Accounting for the Impairment or
Disposal of Long-Lived Assets. Statement No. 144 requires assets held for
sale to be recorded at the lower of their carrying value or estimated fair
value less cost to sell. The fair market value of the property is subject
to potential significant change based on market conditions.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|  
|3. |  | Statement of Cash Flows:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|  
|   |  | For purposes of reporting the statements of cash flows, the 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, 2003, the cumulative unpaid priority return to the unit
holders was $3,619,173 compared to $3,380,753 one-year prior. This increase
resulted from no distributions being made to partners during the year.
Although no distributions were paid to partners on the priority return, the
Partnership did make distributions in 2003 in the amount of $4,365
representing 2002 Federal and North Carolina tax owed on behalf of foreign
and non-resident partners. 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.

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Item 2. Management 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, 2003 to June 30, 2004. Accrued expenses have increased from
year-end due to the accrual of the 2004 real property taxes and the accrual of
operating expenses.

Liquidity and Capital Resources

During the six months ended June 30, 2004, the Partnership operations continued
to meet working capital requirements and working capital deficit was decreased
by approximately $83,000 since year-end. The working capital deficit as of
June 30, 2004 was $970,639. The large working capital deficit is due to the
classification of the long-term debt as short-term, as the current loan matures
on December 31, 2004. The General Partners will seek refinancing with Wachovia
Bank, N.A. (f/k/a First Union National Bank) for the loan on the EastPark
property; however; no assurance can be given that such refinancing will occur.

Results of Operations

Operating income for the six months ended June 30, 2004 is comparable to the
same period of the prior year. Operating income for the second quarter
improved by approximately $8,000 as compared to the same period of the prior
year. Repairs and maintenance and professional fees were both down in the
second quarter. Rental income has increased slightly from the prior year.
Interest expense continues to be down from the prior year due to the decrease
in interest rates on the floating rate loan and the decreased principal
balance.

Status of EastPark Executive Center

The General Partners remain committed on selling the EastPark facility and
continue to have it listed with a commercial real estate broker. The General
Partners signed an agreement with a new broker in February 2004 as the previous
brokers had shifted their objectives and focus towards retail projects only.
At this time, the facility is not under contract with any potential buyers.
The General Partners are also working towards extending the leases with the
current tenants. Although the facility is 91% leased, the General Services
Administration (GSA) has the election to cancel its lease upon ninety (90) days
written notice and accounts for 85% of the total rental income; accordingly,
the General Partners will focus their lease extension efforts on the GSA. At
this time, the General Partners are still negotiating with the GSA for a lease
extension, but the General Partners have not accepted the lease extension due
to the short-term nature of the offer and are continuing to negotiate a
long-term lease with the GSA. The General Partners will continue to search for
the best offer for the property and manage it at acceptable standards until
such time as the Partnership can sell the property to a qualified buyer.

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. Factors that may
cause actual results to differ materially from those contemplated by such
forward-looking statements include, among others, the following possibilities:



| |  | Inability to sell the building due to current market conditions
|- |  | ---------------------------------------------------------------
| 
| |  | Inability to extend the lease to its major tenant              
| 
| |  | Inability to renew long-term debt                              

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Item 3. Controls and Procedures

The Partnerships General Partner and Principal Accounting Officer have
conducted an evaluation of the Partnerships disclosure procedures as of June
30, 2004. Based on their evaluation, the General Partner and Principal
Accounting Officer have concluded that the Partnerships disclosure controls
and procedures are effective to ensure that information required to be
disclosed by the Partnership in reports that it files or submits under the
Securities Exchange Act of 1934 is recorded, processed, summarized and reported
within the time periods specified in the applicable Securities and Exchange
Commission rules and forms. There were no significant changes in the
Partnerships internal controls or in other factors that could significantly
affect these controls subsequent to the date of the most recent evaluation of
these controls by the Partnerships General Partner and Principal Accounting
Officer, including any corrective actions with regard to significant
deficiencies and material weaknesses.

PART II. OTHER INFORMATION

Item 1.
    
    Legal ProceedingsThe Partnership is not engaged in any legal proceedings of a
material nature at the present time.Item 6.
    
    Exhibit Index(a)
    
    Exhibits:


DesignationNumber UnderExhibit
    
    Item 601 ofNumber
    
    Regulation S-K
    
    Exhibit Description1*
    
    
    4
    
    
    Instrument defining rights of security holders  set forth in the
Limited Partnership Agreement2*
    
    
    10
    
    
    Limited Partnership Agreement3**
    
    
    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 dated February 2,
2004 (EastPark Executive Center)5
    
    
    31.1
    
    
    Certification required by Section 31 of Item 601 of Regulation S-K6
    
    
    31.2
    
    
    Certification required by Section 31 of Item 601 of Regulation S-K7
    
    
    32.1
    
    
    Certification pursuant to Section 1350 of Chapter 63 of Title 18 of the United States Code
(Sarbanes-Oxley Act of 2002.)


(b)
    
    Reports on Form 8-K:No reports on Form 8-K have been filed during the three
months ended June 30, 2004.




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|    |  |                                                                                                                               
|--- |  | ------------------------------------------------------------------------------------------------------------------------------
|*   |  | 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 10.3 of the Partnerships Form
10-K for the year ended December 31, 2003.                

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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 RegistrantDate      08/13/04
    
    
    
    By:
    
    /s/ Dexter R. Yager, Sr.Dexter R. Yager, Sr.
General PartnerDate      08/13/04
    
    
    
    By:
    
    /s/ Thomas K. EmeryThomas K. Emery(Serving in the function of Principal Financial Officer)


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