<PAGE>
 
                      SECURITIES AND EXCHANGE COMMISSION

                               Washington, D.C.

                                   Form 10-K


                 Annual Report Pursuant to Section 13 or 15(d)
                         of the Securities Act of 1934

For the Fiscal Year Ended                        Commission File Number
December 31, 1997                                      #33-06419-A

                       Condev Land Growth Fund '86, Ltd
                       --------------------------------
                         (Exact Name of Registrant as
                           specified in its charter)

     Florida                       #59-2766359
 -------------------------------   ----------------------------
(State or other jurisdiction       (IRS Employer ID #)
 of incorporation or
 organization)



2479 Aloma Avenue
Winter Park, Florida                32792
-------------------------------   ---------------
(Address of principal executive    (Zip Code)
 offices)

Registrant's telephone number, including area code (407) 679-1748
                                                   --------------

Securities registered pursuant to Section 12(b) of the Act:

                                     None
                                     ----

Securities registered pursuant to Section 12(g) of the Act:

                                     None
                                     ----

Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by

Section 13 of 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 the 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 ]

State the aggregate market value of the voting stock held by non-affiliates of
the Registrant:

                                Not Applicable
                                --------------
<PAGE>
 
                       CONDEV LAND GROWTH FUND '86, LTD.

                               Table of Contents
<TABLE>
<CAPTION>
                                                                        Page No.
                                                                        --------
<S>           <C>                                                       <C>
Part I
   Item 1.    Business                                                       1
   Item 2.    Properties                                                     2
   Item 3.    Legal Proceedings                                              4
   Item 4.    Submission of Matters to a Vote of Security 
              Holders                                                        4
 
Part II
   Item 5.    Market for Registrant's Common Equity and Related Security 
              Holder Matters                                                 5
   Item 6.    Selected Financial Data                                        5
   Item 7.    Management's Discussion and Analysis of Financial Condition 
              and Results of Operations                                      5
   Item 8.    Financial Statements and Supplementary Data                    9
   Item 9.    Changes in and Disagreements with Accountants on Accounting 
              and Financial Disclosure                                      29
 
Part III
   Item 10.  Directors and Executive Officers of the Registrant             29
   Item 11.  Executive Compensation                                         29
   Item 12.  Security Ownership of Certain Beneficial Owners and 
             Management                                                     30
   Item 13.  Certain Relationships and Related Transactions                 30
 
Part IV
   Item 14.  Exhibits, Financial Statement Schedules, and Reports on Form 
             8-K                                                            31

Signatures                                                                  32

Annual Report to Limited Partners                                           33
</TABLE>
<PAGE>
 
                                    PART I

Item 1.

          Business:
          -------- 

          Condev Land Growth Fund '86, Ltd. (the "Partnership") is a Florida
          limited partnership formed on April 17, 1986 under the Florida Uniform
          Partnership Act. The Partnership was formed for the purpose of
          acquiring and holding for investment pre-development land in Central
          Florida. The Partnership registered with the Securities and Exchange
          Commission and sold to investors a total of 7,500 units of limited
          partnership interest at an initial offering price of $1,000 per unit.
          The partnership had collected $7.5 million in Partnership Capital as
          of December 31, 1987.

          As provided under the terms of the Partnership Agreement the
          Partnership was to be in existence until December 31, 1993. In
          accordance with the Florida Limited Partnership Law and the
          Partnership Agreement, after December 31, 1993 the Partnership has
          been in liquidation with no change in the status of the limited
          partners or General Partner.

          The Partnership has purchased nine properties to be held for
          investment in the Central Florida area. The Partnership purchased the
          last parcel on February 6, 1989. Refer to Item 2. Properties for full
          details. Properties are sold as market conditions and demand permit.
          As of December 31, 1997, the Partnership had sold all of 5 parcels and
          part of another parcel. As of the same date, the Partnership had an
          interest in 4 remaining parcels of land.

          Since the Partnership is in liquidation, the primary objective of the
          Partnership is to sell properties at current market prices and
          distribute the net proceeds to partners. To this end, the General
          Partner is constantly monitoring area developments which are likely to
          effect the salability of each property. This includes area commercial
          and residential development, comparable sales transactions, road and
          highway improvements, requests for zoning or comprehensive land use
          changes, and changes in the availability of utilities. The General
          Partner or its representatives attend county commission meetings,
          planning and zoning hearings and community information meetings as
          part of this endeavor. Properties are priced after consideration is
          given to all of these factors.

          Properties are marketed through a combination of direct advertising,
          including "For Sale" signs located on each property, constant contact
          with the local, national and international brokerage communities, and
          direct contact with potential purchasers. Extensive marketing
          materials and relevant development information is maintained and
          constantly updated for use by potential buyers.

          In addition to trying to sell the portfolio properties, the
          Partnership must manage the properties in the best interest of the
          partners. This includes traditional property maintenance such as
          insuring the property against liability, paying and appealing for
          adjustment, when appropriate, real estate taxes, mowing and trash
          removal. It also entails reacting promptly to area developments to
          insure that vested development rights are preserved or marketability
          of the property is enhanced. In some cases, it is necessary to retain
          consultants to assist with this effort. In other cases, expenditure of
          partnership reserves is required to keep the property properly
          positioned for sale.

          The Partnership has no employees. Messrs. Robert N. Gardner and Joseph
          J. Gardner are the general partners of Condev Associates, a Florida
          general partnership, which is the General Partner of the Partnership
          (the "General Partner").

                                       1
<PAGE>
 
Item 2.

          Properties:
          ---------- 
 
          Since its inception, the Partnership has acquired nine properties for
          investment in the Central Florida Area. Five of these properties and a
          portion of one additional property have been sold. As of December 31,
          1997, the Partnership owned or had an investment in four remaining
          properties.

          The following is a summary of all parcels acquired by the Partnership:

          Parcel 1:
          -------- 

          The Partnership purchased a 1.79-acre commercial parcel of vacant land
          in St. Cloud, Florida on November 30, 1987 at a price of $328,100 plus
          acquisition costs of $40,741. On the same date it sold this parcel to
          Barnett Bank of Central Florida, N.A. for $476,454.

          Parcel 2:
          -------- 

          This is a 2.83-acre parcel of vacant land located at the southeast
          corner of Curry Ford Road and Chickasaw Trail in southeast Orange
          County, Florida. In addition to the land purchase price, necessary
          sewer capacity was acquired and a sewer lift station was built in
          conjunction with neighboring properties.

          Date of Purchase:                        July 1, 1987
          Purchase Price:                          $ 247,250
          Additional Capitalized Costs:            $  83,776

          On June 27, 1997, the Partnership executed an Option contract
          providing for Amoco Oil Company to acquire this parcel. The Option
          provides for an inspection period to mature on November 25, 1997, at
          which time an additional $2,000 deposit was received extending the
          Option to February 24, 1998. Amoco has made an additional $5,000
          option payment to further extend the closing date until May 4, 1998.
          This additional deposit, together with the previous payments, are non-
          refundable to Amoco but will be applied to the purchase price at
          closing.

          Parcel 3:
          -------- 

          This is a 12.54-acre parcel of vacant land located in St. Cloud,
          Florida. The Partnership acquired this parcel in November of 1987 for
          $871,900. St. Cloud is approximately 20 miles southeast of downtown
          Orlando.
 
          On August 3, 1995 the Partnership sold this property to Wal-Mart
          Stores. The gross sales price was $1,480,199. After closing expenses,
          the Partnership received $1,363,110. A total of $1,350,000 was
          distributed to limited partners in October 1995.

          Parcel 4:
          -------- 

          In February, 1988, the Partnership acquired a 6.6 acre parcel of
          vacant land located at the southwest corner of State Road 50 and
          Woodbury Road in East Orange County. The site is approximately 1/2
          mile east of Alafaya Trail. The parcel has been zoned for commercial
          use and is located near the terminus of the eastern extension of the
          East/West Expressway.
 
          Date of Purchase:                      February 1, 1988
          Purchase Price:                            $  719,535
          Additional Capitalized Costs:              $   60,402
          Less: Partial sale:                       ($   81,013)
                                                     ----------
          Balance:                                   $  698,924

          On July 26, 1996, the Partnership sold approximately 1-acre of land on
          the northeast corner of this parcel. The purchase price for the 1-acre
          site was $360,000 or $8.00 per square foot. As part of the sale, the
          buyer agreed to construct a master drainage and retention system for
          the entire site, as well as access roads both on Colonial Drive and
          Woodbury Road to service the entire site. The Partnership agreed to
          pay $34,135 as its share of these expenditures which exceeded $104,000
          in total. After expenses of the sale, the Partnership realized net
          cash proceeds of $284,244, of which $280,000 was distributed to
          limited partners in October 1996. The balance was added to Partnership
          reserves. The Partnership retains approximately 5.39 acres of land at
          this location.

                                       2
<PAGE>
 
          During the third quarter of 1997, the Partnership entered into two
          contracts for the sale of the remaining 5.39 acres. Both buyers intend
          to develop their portion of the site. These contracts are expected to
          close during the second quarter of 1998.

          Parcel 5:
          -------- 

          In March, 1988, the Partnership acquired a 33.5-acre parcel of vacant
          land located on the south side of State Road 50 in East Orange County
          for $1,200,000. This site is approximately 1/4 mile east of Alafaya
          Trail.

          On December 2, 1993, the Partnership sold approximately 15 acres of
          this parcel to Cricket Club Affordable Housing Partners, L.P. for a
          gross price of $1,068,750. After costs of the sale, the Partnership
          received $988,977.38 of net sales proceeds.

          During the first quarter of 1994, the Partnership sold the remaining
          18.5-acre parcel at a price of $1,400,000. At closing the Partnership
          took back a one-year mortgage for the entire purchase price. The
          mortgage was subsequently reduced to $1,375,000 and the entire balance
          of the note was repaid in May, 1995.

          Parcel 6:
          -------- 

          The Partnership acquired a 7-acre parcel of vacant land located
          approximately 1,800 feet east of I-95/S.R. 405 interchange on the
          south side of State Road 405. The property is zoned for commercial use
          in the City of Titusville, Florida. The Kennedy Space Center is 4.5
          miles from the property on State Road 405. In early 1995, WalMart
          Stores opened a new outlet directly across S. R. 405 from this
          property.
 
               Date of Purchase:                    June 10, 1988
               Purchase price:                       $    400,000
               Additional Capitalized Costs:         $     20,503

          In October, 1997, the Partnership entered into a contract for sale of
          a 200' x 210' parcel on the corner of this site with a nationally
          known fast food restaurant. The inspection period has elapsed, and the
          buyer has made an additional deposit on the property. Closing is
          anticipated during the second quarter of 1998.

          In February, 1998, the Partnership entered into a Sales Contract
          providing for the sale of the balance of this property to a nationally
          recognized developer of retail shopping centers. The initial deposit
          has been received, and the Buyer is currently inspecting the property
          for suitability.

          Parcel 7:
          -------- 

          The Partnership acquired a 59% interest in West 50 Joint Venture,
          which purchased a 132.7-acre parcel located in southeast Lake County.
          The property was purchased at a price of $2,518,010. The property is
          approximately 1 1/2 miles west of the Florida Turnpike interchange
          with State Road 50. The site has 4,700 front feet on State Road 50.
          The site is currently zoned commercial (26 acres) and industrial
          (106.7 acres).

               Date of Purchase:                            June 1, 1988
               Total Purchase Price:                         $2,518,010
               Additional Capitalized Costs:                 $   80,354
               Partnership Share (59% Interest):             $1,533,035

          During 1997, the Partnership focused its attention on grading this
          site and bringing sewer and water utilities to the site to better
          position the property for sale. Grading permits are anticipated in
          early 1998, and the City of Clermont has advised the Partnership that
          it intends to extend sewer and water service to the site in the same
          time frame. The General Partner has reached an agreement with the City
          of Clermont whereby these facilities will be upgraded to serve the
          Joint Venture's property for future development. West 50 Joint Venture
          has arranged a $500,000 secured line of credit with a commercial bank
          to finance the necessary improvements in anticipation of future sales.
          It is felt that these improvements will make the property more
          attractive to prospective purchasers at higher selling prices. West 50
          Joint Venture's termination date was December 31, 1998. In February
          1998, the termination date was extended by action of the venturers to
          December 31, 2003.

          Parcel 8:
          -------- 

          The Partnership purchased a 1.04-acre parcel of vacant land located in
          Seminole County, Florida for $300,000.

                                       3
<PAGE>
 
          During the first quarter of 1994 the Florida Department of
          Transportation (FDOT) condemned and took title to this entire parcel.
          The FDOT paid $455,000 for the parcel. The Partnership filed suit
          against the FDOT for additional compensation for the taking of the
          property and for legal fees. This suit was settled by mediation which
          resulted in an additional $230,000 cash payment by FDOT to the
          Partnership. Of this amount $57,500 was used to pay legal fees and
          $172,500 was retained by the Partnership. Legal fees totaling $103,000
          were recovered in the first quarter of 1995.

          Parcel 9:
          -------- 

          On February 6, 1989, the Partnership purchased, in joint venture with
          an affiliated partnership, Condev Land Fund II, Ltd., a 19+ acre tract
                                                                    -  
          located immediately north of the University of Central Florida for
          $737,355.

          On April 22, 1996, the joint venture sold this property to Royal
          Apartments USA based in Champaign, Illinois. The purchase price for
          this parcel was $1,190,000, which included $35,000 paid by the
          purchaser as additional consideration to extend the closing date.
          After expenses of the sale, the net proceeds realized by the Joint
          Venture were $1,104,330. A total of $1,080,000 was distributed to
          limited partners in May, 1993, $540,000 to limited partners of Condev
          Land Growth Fund '86, Ltd., and $540,000 to limited partners of Condev
          Land Fund II, Ltd. The balance was added to Partnership reserves.

Item 3.

          Legal Proceedings:
          ----------------- 

          As of December 31, 1997, the Partnership is not subject to any pending
          legal proceedings.


Item 4.
 
          Submission of Matters to a Vote of Security Holders:
          --------------------------------------------------- 

          No matter was submitted to Unit Holders for a vote during the fourth
          quarter of the year ended December 31, 1997.

                                       4
<PAGE>
 
                                    PART II


Item 5.

          Markets for Registrant's Common Equity and Related Security Holder
          ------------------------------------------------------------------
          Matters:
          ------- 

          (a) All Units of the Partnership have been sold; there has not been a
          public secondary market and it is not anticipated that a public
          secondary market for the Units will develop.

          (b) As of December 31, 1997, there were approximately 645 holders of
          record of the Units of the Partnership.

          (c) There are no regularly scheduled distributions to limited
          partners. Distributions are made subsequent to sale of Partnership
          properties after provision has been made for adequate reserves to
          cover anticipated future expenses of the Partnership. Unit holders
          received cash distributions totaling $-0-, $840,000 and $2,625,000
          during the years ended December 31, 1997, 1996, and 1996,
          respectively.

Item 6.

          Selected Financial Data:
          ----------------------- 

<TABLE> 
<CAPTION> 
                                        Years Ending December 31,
                                        -------------------------

                              1997                1996            1995             1994         1993    
                              ----                ----            ----             ----         ----    
          <S>                 <C>              <C>             <C>             <C>            <C>              
          Total Revenue       $    4,549       $  349,807       $1,157,261     $  376,468     $  402,346       
                                                                                                               
          Net Income                                                                                           
           (Loss)                (46,136)         288,717        1,056,790        282,234        286,511       
                                                                                                               
          Total Assets         3,025,026        3,067,820        3,619,103      5,207,313      5,482,579       
                                                                                                               
          Partners'                                                                                            
           Capital             3,021,684        3,067,820        3,619,103      5,482,579      5,482,578        
 </TABLE>

          The above selected financial data should be read in conjunction with
          the financial statements and related notes appearing elsewhere in this
          annual report.

Item 7.

          Management's Discussion and Analysis of Financial Condition and 
          ----------------------------------------------------------------  
          Results of Operations:
          --------------------- 

          January 1, 1997 through December 31, 1997

          During 1997, the General Partner continued in its effort to sell the
          portfolio properties while at the same time managing the properties to
          protect existing development rights and enhance the likely salability
          of each parcel. While no sales of land were concluded during 1997, at
          year-end the Partnership held four contracts which are expected to
          close during 1998. In addition, a fifth contract was signed in
          February, 1998.

          In April, the Partnership entered into an agreement with a nationally
          recognized developer of retail sites for the sale of its 7-acre parcel
          located on State Road 405 in Titusville. This contract was canceled by
          the Buyer in July when the anticipated user for the site deferred its
          development plans until 1998. The property was placed back on the
          market at that time.

          In June the Partnership executed an option contract providing for
          Amoco Oil Company to acquire the Partnership's 2.84-acre parcel at
          Curry Ford Road and Chickasaw Trail in Orange County, Florida. The
          option is contingent upon the Partnership reaching an agreement with
          Orange County Department of Transportation regarding proposed changes
          to this intersection. The Partnership retained a traffic consultant to
          propose a revised access plan for this property and met with Orange
          County officials and adjoining property owners. While we are still
          working on a final agreement, the County has agreed in principle with
          our proposal. The Amoco option has been extended during this process.
          Amoco has made an additional $5,000 option payment to extend the
          closing date until May 4, 1998. This additional deposit, together with
          the previous payments, are non-refundable to Amoco but will be applied
          to the purchase price at closing.

                                       5
<PAGE>
 
     During the third quarter of 1997, the Partnership entered into two
     contracts for the sale of the remaining 5.39 acres of Parcel #4. See Item
     2. Properties. Both buyers intend to develop their portion of the site.
     These contracts are expected to close during the second quarter of 1998.

     In October, the Partnership entered into a contract for sale of a 200' x
     210' parcel on the corner of its site in Titusville, Florida with a
     nationally known fast food restaurant.  The inspection period has elapsed,
     and the buyer has made an additional deposit on the property.  Closing is
     anticipated during the second quarter of 1998.

     In February, 1998, the Partnership entered into a Sales Contract providing
     for the sale of the balance of the Titusville site property to a nationally
     recognized developer of retail shopping centers. The initial deposit has
     been received, and the Buyer is currently inspecting the property for
     suitability.

     For the year ended December 31, 1997, the Partnership reported total
     revenues of $4,549, consisting primarily of interest income earned on 
     short-term deposits. There were no sales of property during 1997. In 1996,
     there were two sales of property producing $193,002 in land sale gains and
     $127,712 in profits in the Partnership's joint venture. In addition, the
     Partnership had $20,000 in income from a forfeited deposit on land during
     1996. The combined result is a drop in total revenues from $349,807 in 1996
     to only $4,549 in 1997.

     Expenses declined from $61,090 for the year ended December 31, 1996 to
     $50,685 for the year ended December 31, 1997. This was almost entirely due
     to a reduction in taxes and permits, which fell from $32,399 in 1996 to
     $22,775 in 1997. Taxes can be expected to decline as properties are sold.
     Other expense categories remained relatively unchanged.

     The net loss for 1997 was $46,136 compared to a profit of $288,717 for
     1996.  Future profitability will depend on the Partnership's ability to
     sell portfolio properties at or near current market prices.

     Total assets remained relatively constant between December 31, 1996
     and December 31, 1997.  This is to be anticipated, given the fact that no
     properties were sold during the year.  However, the Partnership's liquidity
     was substantially diminished, as the Partnership funded both operating
     losses and investment in its property at Woodbury Road in conjunction with
     the sale to Miller Enterprises.  As part of that transaction, the
     Partnership shared in the costs of access roads and a water retention
     system which benefit the entire parcel.  The cost of these improvements
     were withheld in escrow from the net sales proceeds at the time of closing.
     These expenditures will be recovered from future sales. Likewise, the
     Partnership committed resources to West 50 Joint Venture for engineering
     and other related expenses to protect development rights and better
     position the property held by the joint venture for sale.  The result of
     these necessary expenditures has been to reduce liquidity in the
     Partnership to only $19,062, or about four months of operating capital. It
     is anticipated that reserves will be restored to satisfactory levels from
     sales which are expected in the first and second quarter of 1998.  In
     addition, West 50 Joint Venture has arranged a $500,000 secured line of
     credit from a commercial bank to provide for future expenses in the joint
     venture if required.

     For 1998, the General Partner estimates that approximately $20,000 will be
     required to pay real estate taxes on the remaining properties held by the
     Partnership.  In addition, the General Partner estimates that property
     associated holding costs will total approximately $12,000 during 1998 and
     the costs of administration, legal and accounting will require
     approximately $14,500. These three categories of expense, totaling $46,500,
     will be paid from Partnership reserves which were $19,062 at 1997 year end.
     Should the Partnership not successfully conclude a property sale in 1998
     and add to reserves, reserves would be depleted before year-end 1998. In
     this event, the General Partner may elect to advance operating funds to the
     Partnership, although it is not required to do so by the Partnership
     Agreement. At the level of costs associated with the Partnership's business
     as set out above, the Partnership has reserves at year end 1997 to fund
     four months of costs.

     The General Partner estimates that two properties and part of a third
     parcel will be sold in 1998 resulting in cash to the Partnership in the
     approximate amount of $1,500,000.  If concluded as estimated, the sale and
     collection proceeds would result in a distribution to the limited partners
     in the approximate amount of $1,400,000.  The General Partner feels that
     the present level of reserves are inadequate to fund future expenses and
     plans to restore reserves to adequate levels by retaining part of the
     proceeds of future anticipated sales. However the General Partner feels the
     majority of net sale proceeds could be distributed. If the sale and
     distribution are concluded as estimated above, Partnership assets and
     Partner's Capital would fall to $2,019,137.

     In addition to the projected sales above, the General Partner reasonably
     expects to place two more Partnership properties under contract in 1998.
     However, it is expected that these contracts would not close until 1999. It
     is estimated that it will require another three 

                                       6
<PAGE>
 
     (3) years to complete the sale of properties held by West 50 Joint Venture
     in which the Partnership is a 59% participant.

     January 1, 1996 through December 31, 1996

     During 1996, the General Partner continued to manage the affairs of the
     Partnership and placed increased emphasis on the sale of portfolio
     properties. The General Partner also took steps to improve the properties
     chances for sale in the immediate future and to preserve development rights
     associated with each property.

     In January, the Partnership entered into a Contract for Sale of its 7-acre
     parcel located on Rt. 405 in Titusville, Brevard County, Florida, with a
     developer who intended to build a retail center for a nationwide building
     supplies retailer. This Contract was terminated in September, and the
     buyer's $20,000 deposit on the property was paid to the Partnership. The
     Partnership distributed this amount to limited partners in October, 1996.

     In May 1996, the Partnership distributed $540,000 to limited partners.
     Funds for this distribution came from sale of Condev/McCulloch Road Joint
     Venture's property on McCulloch Road in Seminole County. The Partnership
     held a 50.1% interest in Condev/McCulloch Road Joint Venture. Please see
     Item 2. Properties, Parcel #9. Upon sale of this property and payment of
     all related expenses, Condev/McCulloch Road Joint Venture was terminated as
     an entity as it had no assets or liabilities.

     In July, 1996, the Partnership sold part of Property #4 located on State
     Road 50 at Woodbury Road in Orange County, Florida. Please see Item 2.
     Properties.  The Partnership realized net proceeds of $284,244 from this
     sale. In October, the Partnership distributed $280,000 to the limited
     partners, together with the $20,000 forfeited escrow deposit mentioned in
     the above paragraph for a total distribution of $300,000.

     For the year ended December 31, 1996, the Partnership reported total
     revenue of $349,807, including $193,002 recognized gain on the sale of
     land, $127,7112 equity in income of joint ventures, and $29,093 in interest
     and other income. This compares to $1,119,841 recognized gain on the sale
     of land and $37,420 in interest and other income for the year ended
     December 31, 1995. The 1996 gain on sale of land was the result of the sale
     of part of the Partnership's land on State Road 50 and Woodbury Road in
     Orange County.  The equity in income of joint ventures was the combined
     effect of the sale of Condev/McCulloch Road Joint Venture's 19.10 acre
     parcel of land in Seminole County, Florida offset by expenses in the two
     joint ventures of the Partnership. Total income decreased $807,454 from
     $1,157,261 in 1995 to $349,807 in 1996, or 69.8%, reflecting a lower level
     of property sales for 1996.

     Operating expenses totaled $61,090 for the year ended December 31, 1996,
     compared to $100,471 the previous year. The primary reason for the decrease
     was the reported equity in income of joint ventures during 1996 of $127,712
     as opposed to an equity loss of $23,947 in 1995.  Other changes included
     reduced property taxes in 1996, which decreased from $43,964 in 1995 to
     $32,399 in 1996, and a decrease in amortization, which decreased from
     $10,420 in 1995 to $3,375 in 1996. Property taxes will continue to decrease
     as portfolio properties are sold. Organization costs are allocated to each
     parcel of land.  As sales occur, the related amortization is recognized.
     The lower level of amortization recognized in 1996 reflects the lower level
     of land sales. All other expense categories remained essentially level in
     1996 from 1995.

     Net income reported for the year ended December 31, 1996 was $288,217, a
     decrease of 82.1% from the net profit reported for the year ended December
     31, 1995 of $1,056,790.

     At year-end 1996, total assets of the Partnership were $3,067,830, compared
     with $3,619,103 at year-end 1995. This decrease reflects the sale of
     Condev/McCulloch Road Joint Venture's 19.10 acre parcel of land in Seminole
     County, Florida and part of the Partnership's parcel located on State Road
     50 at Woodbury Road in Orange County, Florida. As the Partnership is
     currently in the liquidation stage, assets will continue to decrease as
     properties are sold. the Partnership had no liabilities at December 31,
     1996.  Partners' Capital declined from $3,619,103 at December 31, 1995 to
     $3,067,820 at December 31, 1996, a decrease of $551,283. This decline
     resulted from $840,000 in distributions to limited partners offset by
     Partnership income of $288,717 for the year.

     January 1, 1995 through December 31, 1995:

     During the year, the General Partner continued to manage the affairs of the
     Partnership and to emphasize the sale of portfolio properties.

                                       7
<PAGE>
 
     In July 1995, the Partnership distributed $1,275,000 to the Limited
     Partners.  Funds for this distribution came from repayment of the
     outstanding $1,375,000 mortgage note relating to Parcel #5. The balance was
     added to Partnership reserves.

     In August 1995, the Partnership sold Property #3 in St. Cloud, Florida to
     WalMart Stores, Inc. The Partnership realized net proceeds of $1,363,110
     from this sale.  In October, the Partnership distributed $1,350,000 to the
     Limited Partners. The balance was added to Partnership reserves.

     For the year ended December 31, 1995, the Partnership reported total
     revenue of $1,157,261, including $1,119,841 recognized gain on the sale of
     land and $37,420 in interest and other income. This compares to $369,702
     recognized gain on the sale of land and $6,767 in interest and other income
     for the year ended December 31, 1994.  The 1995 gain on sale of land was
     the combined result of the sale relating to the Partnership's 12.54 acre
     parcel of land in St. Cloud, Florida and the repayment of the mortgage note
     relating to the Partnership's multi-family land in Orange County, Florida.
     Refer to Item 2, Properties, Parcels 3 and 5. Total income increased
     $780,792 from $376,469 in 1994 to $1,157,261 in 1995, or 207%, reflecting a
     higher level of property sales for 1995.

     Operating expenses totaled $100,471 for the year ended December 31, 1995,
     compared to $94,235 the previous year.  The primary reason for the increase
     was an increase in amortization, which increased by $8,216 from $2,024 in
     1994 to $10,240 in 1995, and a small increase in professional fees which
     rose by $1,773.  As explained in Note 1 of the accompanying financial
     statements, organization costs are allocated to each parcel of land.  As
     sales occur, the related amortization is recognized.  The higher level of
     amortization recognized in 1995 reflects the higher level of land sales.
     All other expense categories declined slightly in 1995 from 1994.

     Net income reported for the year ended December 31, 1995 was $1,056,790, an
     increase of 274.4% from the net profit reported for the year ended December
     31, 1994 of $282,234.

     At year-end 1995, total assets of the Partnership were $3,619,103, compared
     with $5,207,313 at year-end 1994.  This decrease reflects the sale of the
     Partnership's 12.54 acre parcel of land in St. Cloud, Florida and the
     repayment of the mortgage note relating to parcel #5.  On the advise of the
     Partnership's auditors, the profit on Parcel #5 was deferred until
     repayment of the mortgage note because the agreement had a provision for
     return of the land to the Partnership under certain circumstances. As the
     Partnership is currently in the liquidation stage, assets will continue to
     decrease as properties are sold.  The Partnership had no liabilities at
     December 31, 1995. Partners capital declined from $5,187,313 at December
     31, 1994 to $3,619,103 at December 31, 1995, a decrease of $1,568,210. This
     decline resulted from $2,625,000 in distributions to Limited Partners
     offset by Partnership income of $1,056,790 for the year.

                                       8
<PAGE>
 
Item 8.

          Financial Statements and Supplementary Data:
          ------------------------------------------- 

          I. Condev Land Growth Fund '86, Ltd.
          ----------------------------------- 
 
                                                                          Page
                                                                             
               INDEPENDENT AUDITORS' REPORT                                10

               FINANCIAL STATEMENTS
                    Balance sheets                                         11
                    Statements of operations                               12
                    Statements of partners' capital                        13
                    Statements of cash flows                               14
                    Notes to financial statements                       15-20


          II. West 50 Joint Venture
          -------------------------

               INDEPENDENT AUDITORS' REPORT                                21

                FINANCIAL STATEMENTS
                    Balance sheets                                         22
                    Statements of operations                               23
                    Statements of partners' capital                        24
                    Statements of cash flows                               25
                    Notes to financial statements                       26-27

                                       9
<PAGE>
 
                       CONDEV LAND GROWTH FUND '86, LTD.


                          INDEPENDENT AUDITORS' REPORT
                          ----------------------------



The Partners
Condev Land Growth Fund '86, Ltd.
Winter Park, Florida


    We have audited the accompanying balance sheets of Condev Land Growth Fund
'86, Ltd. (a Florida Limited Partnership) as of December 31, 1997 and 1996, and
the related statements of operations, partners' capital, and cash flows for each
of the three years in the period ended December 31, 1997. These financial
statements are the responsibility of the General Partner. Our responsibility is
to express an opinion on these financial statements based on our audits.

    We conducted our audits in accordance with generally accepted auditing
standards.  Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  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 referred to above present fairly,
in all material respects, the financial position of Condev Land Growth Fund '86,
Ltd. as of December 31, 1997 and 1996, and the results of its operations and its
cash flows for each of the three years in the period ended December 31, 1997, in
conformity with generally accepted accounting principles.



                                    OSBURN, HENNING AND COMPANY

Orlando, Florida
January 13, 1998

                                       10
<PAGE>
 
                       CONDEV LAND GROWTH FUND '86, LTD.
                        (A Florida Limited Partnership)

                                BALANCE SHEETS
                          December 31, 1997 and 1996

<TABLE>
<CAPTION>
                                                            1997            1996          
                                                         ----------      ----------       
<S>                                                      <C>             <C>               
      ASSETS                                                                              
                                                                                           
Cash and cash equivalents                                $   19,062      $  144,871       
Due from related entity                                       1,682               -       
Land, at cost (Note 2)                                    1,450,453       1,401,236       
Investment in joint venture (Note 3)                      1,533,035       1,500,919       
Organization costs, less accumulated                                                      
  amortization of $21,954 in 1997 and 1996                   20,794          20,794       
                                                         ----------      ----------       
                                                                                          
                                                         $3,025,026      $3,067,820       
                                                         ==========      ==========        

      LIABILITIES AND PARTNERS' CAPITAL

Accounts payable                                         $    1,242      $        -  
Deposits on land                                              2,100               - 
                                                         ----------      ---------- 
                                                              3,342               - 
                                                         ----------      ---------- 
                                                                                    
Partners' capital                                             3,505           3,966                             
  General partner                                         3,018,179       3,063,854  
                                                         ----------      ----------  
  Limited partners                                        3,021,684       3,067,820  
          Total partners' capital                        ----------      ----------  
                                                                                     
                                                         $3,025,026      $3,067,820  
                                                         ==========      ==========   
</TABLE>


The Notes to Financial Statements are an integral part of these statements.

                                       11
<PAGE>
 
                       CONDEV LAND GROWTH FUND '86, LTD.
                        (A Florida Limited Partnership)

                           STATEMENTS OF OPERATIONS
                 Years Ended December 31, 1997, 1996 and 1995

<TABLE>
<CAPTION>
                                   1997          1996            1995    
                               ----------     ---------      ---------- 
<S>                            <C>            <C>            <C>        
Revenue:                                                                
  Gain on land sale             $      -       $193,002      $1,119,841 
  Equity in income of joint                                             
    ventures                         904        127,712               - 
  Interest income                  3,645          7,968          36,395 
  Forfeited deposits                   -         20,000               - 
  Other income                         -          1,125           1,025 
                                --------       --------      ---------- 
                                   4,549        349,807       1,157,261 
                                --------       --------      ---------- 
Expenses:                                                               
  Taxes and permits               22,775         32,399          43,964 
  Office expenses                 14,420         13,035          11,837 
  Professional fees               11,758         11,821          10,241 
  Amortization                         -          3,375          10,240 
  Other expenses                   1,732            460             242 
  Equity in losses of joint                                             
    ventures                           -              -          23,947 
                                --------       --------      ---------- 
                                  50,685         61,090         100,471 
                                --------       --------      ---------- 
                                                                        
          Net income (loss)     $(46,136)      $288,717      $1,056,790 
                                ========       ========      ==========  
</TABLE>

The Notes to Financial Statements are an integral part of these statements.

                                       12
<PAGE>
 
                       CONDEV LAND GROWTH FUND '86, LTD.
                        (A Florida Limited Partnership)

                        STATEMENTS OF PARTNERS' CAPITAL
                 Years Ended December 31, 1997, 1996 and 1995


<TABLE>
<CAPTION>
                               General        Limited                  
                               Partner        Partners          Total      
                               --------     ------------     ------------  
<S>                            <C>          <C>              <C>           
Balances, December 31, 1994     $5,147      $ 5,182,166      $ 5,187,313   
                                                                           
  Net income (loss)               (631)       1,057,421        1,056,790   
                                                                           
  Distributions                      -       (2,625,000)      (2,625,000)  
                                ------      -----------      -----------   
                                                                           
Balances, December 31, 1995      4,516        3,614,587        3,619,103   
                                                                           
  Net income (loss)               (550)         289,267          288,717   
                                                                           
  Distributions                      -         (840,000)        (840,000)  
                                ------      -----------      -----------   
                                                                           
Balances, December 31, 1996      3,966        3,063,854        3,067,820   
                                                                           
  Net income (loss)               (461)         (45,675)         (46,136)  
                                ------      -----------      -----------   
                                                                           
Balances, December 31, 1997     $3,505      $ 3,018,179      $ 3,021,684   
                                ======      ===========      ===========    
</TABLE>

The Notes to Financial Statements are an integral part of these statements.

                                       13
<PAGE>
 
                       CONDEV LAND GROWTH FUND '86, LTD.
                        (A Florida Limited Partnership)

                           STATEMENTS OF CASH FLOWS
                 Years Ended December 31, 1997, 1996 and 1995

<TABLE>
<CAPTION>
                                                   1997                 1996                1995   
                                               ----------        --------------       ------------ 
<S>                                            <C>               <C>                  <C>          
CASH FLOWS FROM OPERATING ACTIVITIES:                                                              
  Net income (loss)                            $ (46,136)  $        288,717           $ 1,056,790  
  Adjustments to reconcile net income                                                              
    (loss) to net cash provided by                                                                 
    (used in) operating activities:                                                                
      Gain on land sale                                -           (193,002)           (1,119,841) 
      Equity in (income) losses of                                                                 
        joint ventures                              (904)          (127,712)               23,947  
      Amortization                                     -              3,375                10,240  
      (Increase) decrease in:                                                                      
        Due from related entity                   (1,682)                 -                     -  
      Increase (decrease) in:                                                                      
        Accounts payable                           1,242                  -                     -  
        Deposits on land                           2,100                  -               (20,000) 
                                               ---------         ----------           -----------  
                                                                                                   
          Net cash provided by                                                                     
            (used in) operating                                                                    
            activities                           (45,380)           (28,622)              (48,864) 
                                               ---------         ----------           -----------  
                                                                                                   
CASH FLOWS FROM INVESTING ACTIVITIES:                                                              
  Proceeds from land sales, net of                                                                 
    closing costs                                      -            308,149             2,790,092  
  Land acquisitions and related costs            (49,217)           (34,135)               (1,435) 
  Investment in joint ventures                   (31,212)            (8,737)              (28,329) 
  Distributions from joint ventures                    -            551,402                     -  
                                               ---------         ----------           -----------  
                                                                                                   
          Net cash provided by                                                                     
            (used in) investing                                                                    
            activities                           (80,429)           816,679             2,760,328  
                                               ---------         ----------           -----------   
                                                                                                   
CASH FLOWS FROM FINANCING ACTIVITIES:                                                              
  Distributions to partners                            -           (840,000)           (2,625,000) 
                                               ---------         -----------          -----------  
                                                                                                   
          Net increase (decrease) in                                                               
            cash and cash equivalents           (125,809)           (51,943)               86,464  
                                                                                                   
CASH AND CASH EQUIVALENTS, BEGINNING             144,871            196,814               110,350  
                                               ---------         -----------          -----------  
                                                                                                   
CASH AND CASH EQUIVALENTS, ENDING              $  19,062         $  144,871           $   196,814  
                                               =========         ===========          ===========   
</TABLE>


The Notes to Financial Statements are an integral part of these statements.

                                       14
<PAGE>
 
                       CONDEV LAND GROWTH FUND '86, LTD.
                        (A Florida Limited Partnership)

                         NOTES TO FINANCIAL STATEMENTS



Note 1.  Summary of Significant Accounting Policies

         Organization
         ------------

               Condev Land Growth Fund '86, Ltd. (the Partnership) is a Florida
               Limited Partnership formed on April 17, 1986 under the Florida
               Uniform Partnership Act.  The Partnership was formed for the
               purpose of acquiring and holding predevelopment land in Central
               Florida for investment.  The Partnership was formed with an
               initial capital contribution of $1,000 from the general partner,
               Condev Associates, and the issuance of 7,500 units of limited
               partnership interest at $1,000 per unit.

               The terms of the partnership agreement provided that the
               Partnership would continue in existence until December 31, 1993.
               However, the Partnership's operation will continue until all
               investments of the Partnership are sold and proceeds distributed
               to the partners.

         Use of Estimates
         ----------------

               In preparing the financial statements, management is required to
               make estimates and assumptions that affect the reported amounts
               of assets and liabilities as of the date of the financial
               statements and revenues and expenses for the period. Actual
               results may differ significantly from those estimates.

         Cash and Cash Equivalents
         -------------------------

               The Partnership considers all highly liquid debt instruments
               purchased with a maturity of three months or less to be cash
               equivalents. At December 31, 1997, cash and cash equivalents
               include $15,934 invested in Goldman FS Federal Admin.

         Organization Costs
         ------------------

               The Partnership has capitalized all organization costs. Upon sale
               of land, each parcel is allocated a portion of these costs based
               on the ratio of total acquisition cost to the net proceeds of the
               offering available to purchase properties for investment. The
               accompanying statements of operations include $-0-, $3,375 and
               $10,240 of amortization of organization costs resulting from the
               sales of land during the years ended December 31, 1997, 1996 and
               1995, respectively. For tax purposes, the Partnership amortized
               organization costs over five years.


CONTINUED ON NEXT PAGE

                                       15
<PAGE>
 
                       CONDEV LAND GROWTH FUND '86, LTD.
                        (A Florida Limited Partnership)

                         NOTES TO FINANCIAL STATEMENTS



Note 1.   Summary of Significant Accounting Policies - (Continued)

          Land
          ----

             Land, held for investment, is stated at the lower of cost or fair
             value. Land is assessed for impairment when the Partnership
             believes events or changes in circumstances indicate that its
             carrying amount may not be recoverable. Costs that clearly relate
             to land development projects are capitalized. Interest costs, real
             estate taxes and insurance are capitalized while development is in
             progress. When development is complete, these costs are expensed.

          Investments in Joint Venture
          ----------------------------

             Investments in joint ventures are accounted for using the equity
             method.

          Income Taxes
          ------------

             Rather than being a taxable entity, the Partnership functions as a
             conduit for income tax purposes. As such, the Partnership files an
             information tax return on which it allocates its revenue and
             expenses among the partners as required by the partnership
             agreement. The partners are required to report such items on their
             individual income tax returns.

 
Note 2.   Land

          At December 31, 1997 and 1996, land consisted of the following:

<TABLE> 
<CAPTION> 
                                                        1997           1996   
                                                     ----------     ----------
            <S>                                      <C>            <C>       
            2.83 acre parcel, in 1997 and 1996,                               
             (zoned commercial) in southeast                                  
             Orange County, Florida                  $  331,026     $  322,791
            7 acre parcel, in 1997 and 1996,                                  
             (zoned commercial) in Brevard                                    
             County, Florida                            420,503        420,503
            5.39 acre parcel, in 1997 and 1996,                               
             (zoned commercial) in Orange                                     
             County, Florida                            698,924        657,942
                                                     ----------     ----------
                                                                              
                                                     $1,450,453     $1,401,236
                                                     ==========     ========== 
</TABLE>

                                       16
<PAGE>
 
                       CONDEV LAND GROWTH FUND '86, LTD.
                        (A Florida Limited Partnership)

                         NOTES TO FINANCIAL STATEMENTS



Note 3.   Investment in Joint Ventures

          The Partnership is a party to two joint ventures, which have
          investments in land. The Partnership's investment in the joint
          ventures as of December 31, and its equity in income (losses) of the
          joint ventures for the years then ended are as follows:

<TABLE>
<CAPTION>
                                                     Condev/
                                                    McCulloch
                                         West 50       Road
                                          Joint       Joint
                                         Venture     Venture       Total
                                       -----------  ----------  -----------
         <S>                           <C>          <C>         <C>
         Investment:
            1997                       $1,533,035    $      -   $1,530,086
            1996                        1,500,919           -    1,500,919
            1995                        1,515,009     400,862    1,915,871
 
         Equity in income (losses):
            1997                       $      904    $      -   $   (2,046)
            1996                          (19,675)    147,388      127,712
            1995                          (18,802)     (5,145)     (23,947)
</TABLE>

          The Partnership owns a 59% interest in West 50 Joint Venture (a
          Florida Joint Venture) (the Joint Venture) whose purpose is to acquire
          and hold a 133 acre parcel of land in Lake County, Florida for
          investment purposes. The remaining 41% interest is owned by Condev
          West 50, Ltd., an affiliate of the Partnership's general partner. The
          Partnership's investment is carried at its equity in the net
          underlying assets. A summary of the assets, liabilities, and
          venturers' capital of the Joint Venture at December 31, 1997 and 1996
          is as follows:

<TABLE>
<CAPTION>
                                                        1997        1996     
                                                     ----------  ----------
              Assets                                                       
              ------                                                       
            <S>                                      <C>         <C>       
            Cash                                     $    6,693  $    6,050
            Investment in land                        2,610,375   2,575,294
                                                     ----------  ----------
                                                                           
                                                     $2,617,068  $2,581,344
                                                     ==========  ==========
               Liabilities and Venturers' Capital                          
               ----------------------------------                          
                                                                           
            Liabilities                              $   18,703  $   37,413
            Venturers' capital                        2,598,365   2,543,931
                                                     ----------  ----------
                                                                           
                                                     $2,617,068  $2,581,344
                                                     ==========  ========== 
</TABLE>

          The Joint Venture had revenue of $6,000, $6,300 and $7,950 during the
          years ended December 31, 1997, 1996 and 1995, respectively, and net
          income (loss) of $1,532, $(33,348) and $(31,868) respectively.

CONTINUED ON NEXT PAGE

                                       17
<PAGE>
 
                       CONDEV LAND GROWTH FUND '86, LTD.
                        (A Florida Limited Partnership)

                         NOTES TO FINANCIAL STATEMENTS



Note 3.   Investment in Joint Ventures - (Continued)

          The Partnership owned a 50.1% interest in Condev/McCulloch Road Joint
          Venture (a Florida Joint Venture) (the Joint Venture) whose purpose
          was to acquire and hold a 19 acre parcel of land in Seminole County,
          Florida for investment purposes. Condev Land Fund II, LTD., an
          affiliate of the Partnership's general partner, owned the remaining
          49.9% interest. The Partnership's investment was carried at its equity
          in the net underlying assets.

          During the year ended December 31, 1996, the Joint Venture sold its
          parcel of land and recognized a gain of $300,900. The Joint Venture
          made a complete distribution to its venturers of $1,100,602, of which
          the Partnership received $551,402, thereby terminating the Joint
          Venture.

          Thus, the Joint Venture had no assets, liabilities and venturers'
          capital at December 31, 1997 and 1996.

          The Joint Venture had revenue of $300,900 and net income of $295,826
          during the year ended December 31, 1996. The Joint Venture had no
          revenue during the year ended December 31, 1995 and the net loss for
          the year was $10,270.


Note 4.   Allocations and Distributions to Partners

          Operations (excluding land sales)
          ---------------------------------

          Pursuant to the partnership agreement, cash flow and profits and
          losses from operations are allocated and distributed 99% to the
          limited partners and 1% to the general partner. No distributions
          attributable to cash flow were made during the years ended December
          31, 1997, 1996 or 1995.


CONTINUED ON NEXT PAGE

                                       18
<PAGE>
 
                       CONDEV LAND GROWTH FUND '86, LTD.
                        (A Florida Limited Partnership)

                         NOTES TO FINANCIAL STATEMENTS



Note 4.   Allocations and Distributions to Partners - (Continued)

          Land sales
          ----------

          With respect to disposition of parcels of land, the allocations and
          distributions shall be made as follows:

          1.   To the limited partners, an amount equal to the Partnership's
                  cost of the parcel disposed of;

          2.   To the limited partners, an amount equal to real estate taxes,
                  and organization and syndication expenses allocable to the
                  parcel disposed of;

          3.   To the limited partners, an amount equal to 10% per year non-
                  compounded return on such distributions minus previous
                  distributions of cash flows;

          4.   To the general partner and limited partners, 20% and 80%,
                  respectively, of the net cash proceeds after the above
                  distributions.

          For the purposes of making the above described computations, the
          Partnership books will be deemed to close as of the month-end closest
          to the date of sale.

          The limited partners received distributions of $-0-, $840,000 and
          $2,625,000 attributable to net cash proceeds from the sales of land
          during the years ended December 31, 1997, 1996 and 1995, respectively.


Note 5.   Related Party Transactions

          The partnership agreement permits the general partner or its
          affiliates to receive an acquisition fee or a real estate commission
          from sellers in an amount not to exceed 5% of the gross purchase price
          of land purchased by the Partnership, so long as the total acquisition
          fee, including that paid to unaffiliated parties, does not exceed 10%
          of the gross purchase price. No acquisition fees were paid in 1997,
          1996 or 1995, as no properties were purchased.


CONTINUED ON NEXT PAGE

                                       19
<PAGE>
 
                       CONDEV LAND GROWTH FUND '86, LTD.
                        (A Florida Limited Partnership)

                         NOTES TO FINANCIAL STATEMENTS



Note 5.   Related Party Transactions - (Continued)

          When properties are sold, an affiliate of the general partner may be
          paid real estate commissions in amounts customarily charged by others
          rendering similar services, with such commissions, plus commissions
          paid to nonaffiliates, not to exceed 10% of the gross sales price. In
          connection with the sale of land during 1996, real estate commissions
          of 5% each were paid to two nonaffiliates. In connection with the two
          sales of land during 1995, real estate commissions of 5% and 6%,
          respectively, were paid to nonaffiliates. No real estate commissions
          were paid in 1997, as no sales occurred.

          The general partner is obligated to loan up to $100,000 to the
          Partnership during its term to meet working capital requirements.
          There is no balance due on this loan at December 31, 1997 or 1996.

          The general partner earned certain fees for administration and
          management services provided, pursuant to the Partnership agreement.
          Such fees amounted to $9,096, $7,740 and $7,740 for each of the years
          ended December 31, 1997, 1996 and 1995.

                                       20
<PAGE>
 
                         INDEPENDENT AUDITORS' REPORT
                         ----------------------------


The Venturers
West 50 Joint Venture
Winter Park, Florida


     We have audited the accompanying balance sheets of West 50 Joint Venture (a
Florida Joint Venture) as of December 31, 1997 and 1996, and the related
statements of operations, venturers' capital and cash flows for each of the
three years in the period ended December 31, 1997. These financial statements
are the responsibility of the Joint Venture's management. Our responsibility is
to express an opinion on these financial statements based on our audits.

     We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. 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 referred to above present fairly,
in all material respects, the financial position of West 50 Joint Venture as of
December 31, 1997 and 1996, and the results of its operations and its cash flows
for each of the three years in the period ended December 31, 1997, in conformity
with generally accepted accounting principles.



                                            OSBURN, HENNING AND COMPANY


Orlando, Florida
January 14, 1998

                                       21
<PAGE>
 
                             WEST 50 JOINT VENTURE
                           (A Florida Joint Venture)

                                BALANCE SHEETS
                          December 31, 1997 and 1996

<TABLE>
<CAPTION>
                                               1997        1996
                                            ----------  ----------
      ASSETS
<S>                                         <C>         <C> 
Cash                                        $    6,693  $    6,050
Land, at cost                                2,610,375   2,575,294
                                            ----------  ----------
 
                                            $2,617,068  $2,581,344
                                            ==========  ==========
 
      LIABILITIES AND VENTURERS' CAPITAL
 
Liabilities
  Accounts payable                          $   17,703  $   37,413
  Deposit on land                                1,000           -
                                            ----------  ----------
                                                18,703      37,413
 
Venturers' capital                           2,598,365   2,543,931
                                            ----------  ----------
 
                                            $2,617,068  $2,581,344
                                            ==========  ==========
</TABLE>



 


The Notes to Financial Statements are an integral part of these statements.

                                       22
<PAGE>
 
                             WEST 50 JOINT VENTURE
                           (A Florida Joint Venture)

                           STATEMENTS OF OPERATIONS
                 Years Ended December 31, 1997, 1996 and 1995


<TABLE>
<CAPTION>
                                         1997          1996           1995    
                                        -------     ----------     ---------- 
<S>                                     <C>         <C>            <C>        
Revenue                                                                       
  Other income                           $6,000      $  6,300       $  7,950  
                                         ------      --------       --------  
                                                                              
Expenses:                                                                     
  Real estate taxes                         764        37,413         37,683  
  Professional fees                       3,000         1,500          1,700  
  Insurance                                 704           435            435  
  Office expense                              -           300              -  
                                         ------      --------       --------  
                                          4,468        39,648         39,818  
                                         ------      --------       --------  
                                                                              
          Net income (loss)              $1,532      $(33,348)      $(31,868) 
                                         ======      ========       ========  
</TABLE>

The Notes to Financial Statements are an integral part of these statements.

                                      23
<PAGE>
 
                             WEST 50 JOINT VENTURE
                           (A Florida Joint Venture)

                       STATEMENTS OF VENTURERS' CAPITAL
                 Years Ended December 31, 1997, 1996 and 1995

<TABLE>
<CAPTION>
                                 Condev Land
                                 Growth Fund       Condev
                                  '86, Ltd.    West 50, Ltd.      Total
                                 -----------   -------------   ----------
<S>                              <C>           <C>             <C>
Balances at December 31, 1994     $1,510,318      $1,049,545   $2,559,863
 
  Contributions                       23,493          16,325       39,818
 
  Net income (loss)                  (18,802)        (13,066)     (31,868)
                                  ----------      ----------   ----------
Balances at December 31, 1995      1,515,009       1,052,804    2,567,813
 
  Contributions                        5,585           3,881        9,466
 
  Net income (loss)                  (19,675)        (13,673)     (33,348)
                                  ----------      ----------   ----------
Balances at December 31, 199       1,500,919       1,043,012    2,543,931
 
  Contributions                       31,212          21,690       52,902
 
  Net income (loss)                      904             628        1,532
                                  ----------      ----------   ----------
Balances at December 31, 1997     $1,533,035      $1,065,330   $2,598,365
                                  ==========      ==========   ==========
</TABLE>

The Notes to Financial Statements are an integral part of these statements.

                                      24
<PAGE>
 
                             WEST 50 JOINT VENTURE
                           (A Florida Joint Venture)

                           STATEMENTS OF CASH FLOWS
                 Years Ended December 31, 1997, 1996 and 1995


<TABLE>
<CAPTION>
                                            1997        1996        1995
                                          ---------  ----------  ----------
<S>                                       <C>        <C>         <C>
 
CASH FLOWS FROM OPERATING ACTIVITIES
  Net income (loss)                       $  1,532    $(33,348)   $(31,868)
  Adjustments to reconcile net income
    (loss) to net cash provided by
    (used in) operating activities:
      Increase (decrease) in:
        Accounts payable                   (19,710)     37,413           -
        Deposit on land                      1,000           -           -
                                          --------    --------    --------
            Net cash provided by (used
              in) operating activities     (17,178)      4,065     (31,868)
 
CASH FLOWS FROM INVESTING ACTIVITIES
  Land acquisition and related costs       (36,367)    (17,462)          -
 
CASH FLOWS FROM FINANCING ACTIVITIES
  Capital contributions                     52,902       9,466      41,439
                                          --------    --------    --------
 
          Net increase (decrease)
            in cash                            643      (3,931)      9,571
 
Cash, beginning                              6,050       9,981         410
                                          --------    --------    --------
Cash, ending                              $  6,693    $  6,050    $  9,981
                                          ========    ========    ========
</TABLE>

The Notes to Financial Statements are an integral part of these statements.

                                      25
<PAGE>
 
                            WEST 50 JOINT VENTURE 
                          (A Florida Joint Venture) 

                         NOTES TO FINANCIAL STATEMENTS



Note 1.   Summary of Significant Accounting Policies

          Organization/Business Interest
          ------------------------------

               On May 31, 1988, Condev Land Growth Fund '86 (the Fund) and
               Condev West 50, Ltd. (West 50, Ltd.) ( collectively, the
               Venturers), both of which are Florida Limited Partnerships in
               which Condev Associates is the general partner, entered into an
               agreement to form West 50 Joint Venture (the Joint Venture). The
               Joint Venture has acquired a 133 acre parcel of land in Lake
               County, Florida that will be held for investment purposes.

               The terms of the joint venture agreement provided that the Joint
               Venture was to continue in existence until December 31, 1993. The
               Venturers have approved a five year extension until December 31,
               1998.

          Use of Estimates
          ----------------

               In preparing the financial statements, management is required to
               make estimates and assumptions that affect the reported amounts
               of assets and liabilities as of the date of the financial
               statements and revenues and expenses for the period. Actual
               results could differ significantly from those estimates.

          Funding
          -------

               The Fund and West 50, Ltd. are required to contribute 59% and
               41%, respectively, to the capital of the Joint Venture from time
               to time as required for the Joint Venture's operations. It is the
               intent of the Venturers that all cash requirements of the Joint
               Venture shall come from the Venturers and, therefore, the Joint
               Venture shall not be required to borrow funds.

          Land
          ----

               Land held for investment, is stated at the lower of cost or fair
               value. Land is assessed for impairment when the Joint Venture
               believes that events or changes in circumstances indicate that
               its carrying amount may not be recoverable. Costs that clearly
               relate to land development projects are capitalized. Interest
               costs, real estate taxes and insurance are capitalized while
               development is in progress. When development is complete, these
               costs are expensed.


CONTINUED ON NEXT PAGE

                                      26
<PAGE>
 
                             WEST 50 JOINT VENTURE
                           (A Florida Joint Venture)

                         NOTES TO FINANCIAL STATEMENTS



Note 1.   Summary of Significant Accounting Policies - (Continued)

          Allocations
          -----------

               Profits shall be allocated 59% to the Fund and 41% to West 50,
               Ltd. after certain allocations to reduce any negative capital
               balance and to distribute any net cash flow generated from the
               Joint Venture. Losses are allocated 59% to the Fund and 41% to
               West 50, Ltd. after a proportionate allocation to the Venturers
               with positive capital balances.

          Distributions
          -------------

               Cash flow generated from the Joint Venture shall be distributed
               59% to the Fund and 41% to West 50, Ltd.

          Income Taxes
          ------------

               Rather than being a taxable entity, the Joint Venture functions
               as a conduit for income tax purposes. As such, the Joint Venture
               files an information tax return on which it allocates its revenue
               and expenses among the Venturers as required by the joint venture
               agreement. The Venturers are required to report such items on
               their respective income tax returns.


Note 2.   Related Party Transactions

          The joint venture agreement permits the general partner of the
          Venturers or an affiliate to receive an acquisition fee or a real
          estate commission from sellers in an amount not to exceed 5% of the
          gross purchase price of land purchased by the Joint Venture, so long
          as the total acquisition fee, including that paid to unaffiliated
          parties, does not exceed 10% of the gross purchase price. No
          acquisition fees were paid in 1997, 1996 or 1995, as no properties
          were purchased.

          When properties are sold, an affiliate of the general partner of the
          Venturers may be paid real estate commissions in the amounts
          customarily charged by others rendering similar services. Such
          commissions plus commissions paid to nonaffiliates are not to exceed
          10% of the gross sales price. No real estate commissions were paid in
          1997, 1996 or 1995, as no sales occurred.

                                      27
<PAGE>
 
Item 9.

          Changes in and Disagreements with Accountants on Accounting and 
          ---------------------------------------------------------------
          Financial Disclosure:
          -------------------- 

          There were no disagreements on accounting and financial disclosures
          required to be disclosed by Item 304 of Regulation S-K.


                                   PART III


Item 10.

          Directors and Executive Officers of the Registrant
          --------------------------------------------------

          (a)  The Registrant does not have a Board of Directors. Condev
          Associates, A Florida general partnership consisting of Messrs. Robert
          N. Gardner and Joseph J. Gardner, is the General Partner of the
          Partnership.

          (b), (c), (d) and (e)

          Robert N. Gardner and Joseph J. Gardners are brothers. The background
          and experience of the partners of the General Partner are as follows:

          Robert N. Gardner, age 63 has been president, a director and 
          -----------------                                            
          shareholder of Condev Corporation and it's predecessors since 1961. A
          Florida licensed real estate broker and Class A Contractor, he serves
          on the boards of directors of Nations Bank of Central Florida, N.A.,
          and Schroeder-Manatee, Inc.

          Joseph J. Gardner, age 60 has been an officer, a director and 
          -----------------                                             
          shareholder of Condev Corporation and its predecessors since 1961.
          Prior to joining Condev Corporation, he was employed in the land
          department of Continental Oil Company. Mr. Gardner is a licensed real
          estate broker.

          Condev Corporation, which has its offices located at the same address
          of the General Partner and Partnership, has been operating in the
          Florida real estate market since 1961. It has two active affiliates.
          PCD, Inc. is a development company specializing in horizontal land
          development. Condev Realty, Inc. is a Florida licensed real estate
          broker which concentrates on site acquisition, land assemblage and
          land investment.


Item 11.

          Executive Compensation
          ----------------------

          (a), (b), (c) and (d)

          The Registrant has not paid and does not plan to pay any executive
          compensation to the General Partners or their affiliates (other than
          described in Item 13 below).

                                      28
<PAGE>
 
Item 12.

          Security Ownership of Certain Beneficial Owners and Management:
          -------------------------------------------------------------- 

          (a)  The following is a list of persons who are known to the
          Registrant to be the beneficial owners of more than 5% of the total
          units outstanding as of December 31, 1997:

<TABLE>
<CAPTION>
                          Name and Address of          Amount & Nature    Percent of           
          Title of Class  Beneficial Owner           of Beneficial Owner    Class              
          --------------  -------------------        -------------------  ----------           
          <S>             <C>                        <C>                  <C>                  
          Unit Holder     Jody B. Burgoon Trust            25 units                            
                          Richard A. Burgoon, TTEE                                             
                                                                                               
                          Susan A. Burgoon Trust           60 units                            
                          Richard A. Burgoon, TTEE                                             
                                                                                               
                          Richard A. Burgoon               60 units                            
                                                                                               
                          Richard A. Burgoon CUST FBO      70 units                            
                          Richard Burgoon, FL UGMA                                             
                                                                                               
                          Richard R. Burgoon and          440 units                            
                          Patricia B. Burgoon, JTWRS                                           
                          393 Whooping Loop #1403                                              
                          Altamonte Springs, FL 32701                                          
                                                          ---------                            
                                                          655 units          8.73%             
                                                                                               
                                                                                               
          Unit Holder     Bishop Norbert M. Dorsey        500 units          6.67%             
                          TTEE, FBO Diocese of Orlando                                         
                          Pension Plan #02132-66-0                                             
                          Post Office Box 1800                                                 
                          Orlando, FL  32802                                                    




          (b)  The following is a list of units beneficially owned by all
          partners of the General Partner as of December 31, 1997:

          Unit Holder     Robert N. and Patricia           30 units           .04%
                          Gardner
                          1014 Temple Grove
                          Winter Park, FL  32789
</TABLE> 

          (c)  There are no arrangements known to the registrant, including any
          pledge by any person of securities of the registrant or any of its
          parents or affiliates, the operation of which may at a subsequent date
          result in a change in control of the registrant.

Item 13.

          Certain Relationships and Related Transactions
          ----------------------------------------------

          (a), and (b)

          The partnership agreement permits the General Partner or affiliate to
          receive an acquisition fee or a real estate commission from sellers in
          an amount not to exceed 5% of the gross purchase price of land
          purchased by the partnership, so long as the total acquisition fee,
          including that paid to unaffiliated parties, does not exceed 10% of
          the gross purchase price. No acquisition fees were paid during the
          years ended December 31, 1997, 1996 or 1995 as no properties were
          purchased.

          When properties are sold, an affiliate of the General Partner may be
          paid real estate commissions in amounts customarily charged by others
          rendering similar services, with such commissions, plus commissions
          paid to non-affiliates, not to exceed 10% of the gross sales price. No
          real estate commissions were paid to a General Partner affiliate
          during the years ended December 31, 1997, 1996, or 1995.
          
          The General Partner is obligated to loan up to $100,000 to the
          Partnership during its term to make working capital requirements.
          During the years ended December 31, 1992, and 1991

                                      29
<PAGE>
 
          such loans amounted to $133,263, and $18,000 respectively. From
          proceeds of the 1993 land sale, these amounts, plus accrued interest
          at prime plus 1%, were repaid. No loans were made to the Partnership
          during the years ended December 31, 1997, 1996, or 1995.

          Pursuant to the Partnership agreement, the General Partner earned
          certain fees for administration and management services provided. Such
          fees amounted to $9,096, $7,740 and $7,740 for each of the years ended
          December 31, 1997, 1996 and 1995.

          (c) No management person in indebted to the Registrant.

          (d) Not applicable.

                                      30
<PAGE>
 
                                    PART IV


Item 14.

          Exhibits, Financial Statement, Schedules, and Reports on Form 8-K:
          ----------------------------------------------------------------- 

          (a) The following financial statements and supplementary data are
              included in Part II Item 8:

                                                                            Page
              (1) Condev Land Growth Fund '86, Ltd.
                  -------------------------------- 

                  Independent Auditor's Report                               10
 
                  Financial Statements
                    Balance Sheets - December 31, 1997 and 1996              11
 
                  Statements of Operations - Years ended
                    December 31, 1997, 1996 and 1995                         12
 
                  Statements of Partners' Capital -
                    Years ended December 31, 1997, 1996 and 1995             13
 
                  Statements of Cash Flows -
                    Years ended December 31, 1997, 1996 and 1995             14
 
                  Notes to Financial Statements                           15-20

              (2) West 50 Joint Venture
                  ---------------------

                  Independent Auditor's Report                               10
 
                  Financial Statements
                    Balance Sheets - December 31, 1997 and 1996              11
 
                  Statements of Operations - Years ended
                    December 31, 1997, 1996 and 1995                         12
 
                  Statements of Partners' Capital -
                    Years ended December 31, 1997, 1996 and 1995             13
 
                  Statements of Cash Flows -
                    Years ended December 31, 1997, 1996 and 1995             14
 
                  Notes to Financial Statements

              (3) Exhibits included herein:
                    13 - Annual Report to Unit Holders                       26

          (b)     Reports on Form 8-K
                    No reports on Form 8-K have been filed by the Registrant
                    during the last quarter of the period covered by this
                    report.

                                      31
<PAGE>
 
                                  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.

                                   CONDEV ASSOCIATES, General Partner


Date:____________________    By: /s/ Robert N. Gardner
                                ----------------------------
                                Robert N. Gardner, Partner

Date:____________________    By: /s/ Joseph J. Gardner
                                ---------------------------
                                Joseph J. Gardner, Partner


     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 date indicated.

CONDEV ASSOCIATES, General Partner


/s/ Robert N. Gardner                ___________________________
---------------------------------                               
Robert N. Gardner, Partner           Date


/s/ Joseph J. Gardner                ___________________________
---------------------------------                               
Joseph J. Gardner, Partner           Date

                                      32
<PAGE>
 
Condev Land Growth Fund '86, Ltd.                               February 6, 1998
1997 Annual Report

Dear Limited Partner:

Enclosed is your Schedule K-1 (Form 1065) relating to the Fund's operations for
the year ended December 31, 1997.  This Schedule is for your use in preparing
your 1997 income tax return.

The financial statement, on the reverse side hereof, shows a net loss for the
year ended December 31, 1997 of $46,136.  This represents the normal costs of
operating the partnership and managing the portfolio properties.  There were no
sales of property during 1997. As of December 31, 1997, the net asset value per
unit of limited partner interest was $402.42.  The following is a brief
description of the status of each of the partnership's four remaining
properties:

Curry Ford Road/Chickasaw Trail.  This is a 2.84-acre parcel of commercially
-------------------------------                                             
zoned land located at the southeast corner of this intersection in Orange
County.  The Partnership has entered into an agreement with AMOCO Oil Company
whereby AMOCO will acquire this parcel from the Partnership.  AMOCO is in the
process of applying for the necessary development permits.  The Partnership is
simultaneously working with Orange County Department of Transportation to
finalize details of access to the property in conjunction with planned
intersection improvement.

Woodbury Road/East Colonial Drive.  This parcel consists of 5.39 acres, which is
---------------------------------                                               
the remainder of the original parcel after the sale during 1996.  The
Partnership has two contracts for sale of the entire remaining land.  These
contracts have both passed the inspection period and are in the final stages of
permitting.  Closings are expected in the second quarter of 1998.

NASA Causeway, Titusville.  This is a 7-acre parcel located on State Road 405
-------------------------                                                    
across from a new Wal-Mart near Interstate 95 and State Road 50 near Cape
Canaveral.  The Partnership has contracted with a nationally known retailer of
fast food for a 1-acre portion of this tract.  The inspection period has passed,
and the prospective purchaser is in the final permitting stage. Closing is
expected in the second quarter of 1998.

West Hwy 50, Lake County.  This 133-acre property located just West of the
------------------------                                                  
Orange/Lake County line is owned by West 50 Joint Venture, in which the
Partnership holds a 59% controlling interest.  The City of Clermont is in the
process of extending sewer and water facilities to the site, and the Partnership
is working with the City of Clermont to insure that the new service is adequate
to service this property.  Grading of the property is expected to begin in the
first quarter of 1998. West 50 Joint Venture has arranged a $500,000 line of
credit with a commercial bank to finance the necessary improvements in
anticipation of future sales. It is felt that these improvements will make the
property more attractive to prospective buyers at higher selling prices.

Sincerely yours,

CONDEV ASSOCIATES

                                      33