<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, 1998                                     #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                                       8
   Item 9.    Changes in and Disagreements with Accountants on Accounting and
              Financial Disclosure                                                             27
 
Part III
   Item 10.  Directors and Executive Officers of the Registrant                                27
   Item 11.  Executive Compensation                                                            27
   Item 12.  Security Ownership of Certain Beneficial Owners and Management                    28
   Item 13.  Certain Relationships and Related Transactions                                    28
 
Part IV
   Item 14.  Exhibits, Financial Statement Schedules, and Reports on Form 8-K                  30

Signatures                                                                                     31

Annual Report to Limited Partners                                                              32
</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, 1998, the Partnership had sold all of 7 parcels and part
         of another parcel. As of the same date, the Partnership had an interest
         in 2 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 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. Seven of these properties and a
         portion of one additional property have been sold. As of December 31,
         1998, the Partnership owned or had an investment in two 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 2.83-acre parcel of vacant land located at the southeast corner of
         Curry Ford Road and Chickasaw Trail in southeast Orange County, Florida
         was purchased in July, 1987 for $247,250. In addition to the land
         purchase price, necessary sewer capacity was acquired and a sewer lift
         station was built in conjunction with neighboring properties. In May,
         1998 this parcel was sold to Amoco Oil Company for a gross sales price
         of $475,000. After expenses, the Partnership netted $411,133 on the
         transaction.

         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 for $719,535.

         On July 26, 1996, the Partnership sold approximately 1-acre of land on
         the northeast corner of this parcel. The selling price for the 1-acre
         site was $360,000 or $8.00 per square foot. After expenses of the sale,
         the Partnership realized net cash proceeds of $284,244.

         On April 30, 1998, the Partnership sold approximately 4.6 acres of this
         site to Extended Stay America for $550,000. After closing costs, the
         net proceeds to the Partnership were $486,830.

         On August 26, 1998, the remaining one acre site within this parcel was
         sold to Pebbles Restaurant Properties for $350,000. In addition, the
         Partnership sold part of the sewer capacity which was reserved for
         Parcel 2 for $20,000. After sales expenses, the Partnership realized
         $342,970 on the sale.

         In summary, the three sales relating to this parcel produced gross
         sales proceeds of $1,280,000 and net proceeds of $1,114,044.

         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 net sales proceeds of $988,977.38.

         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.

                                       2
<PAGE>
 
         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.

         The sale of approximately one acre of this site was concluded on June
         15, 1998 with Orlando Restaurants Real Estate Joint Venture. The sale
         price was $310,000, and the net proceeds to the Partnership were
         $272,197.

                  Date of Purchase:                       June 10, 1988
                  Purchase price:                         $  400,000
                  Additional Capitalized Costs:           $   20,503
                  Less: One acre sale                     $ (111,646)
                  Balance:                                $  308,857

         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. This contract was
         terminated by the Buyer in October and the property was immediately
         placed under contract with a different developer. Terms of the new
         contract include an inspection period of up to 180 days, and closing
         following issuance of the required development permits.

         In November, 1998, the general partner received notification from St.
         Johns River Water Management District that this property contains some
         jurisdictional wetlands, and that the area in question had been
         disturbed when the property was cleared of underbrush as part of the
         normal maintenance routine. The general partner engaged an
         environmental consultant to assist in resolving the matter. The area in
         question was flagged and surveyed, and it was determined that
         approximately 1.3 acres of the site are in fact jurisdictional
         wetlands. The General Partner is in the process of working with the
         Water Management District to mitigate the wetlands so the entire site
         will be useable by the prospective buyer. The ultimate cost of such
         mitigation and fines, if any, is unknown at this time, but it is not
         expected to be material in relation to the total value of the parcel.

         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:             $   79,212
                  Partnership Share (59% Interest):         $1,532,361

         During 1998, the City of Clermont extended water service to the site
         and sewer service to a point directly opposite the site on SR 50. The
         Joint Venture paid $38,623 to the City of Clermont to pay for upgrades
         in the sewer capacity to insure that the Partnership's property would
         be adequately served in the future. In December the General Partner
         received preliminary site plan approval from Lake County, along with an
         18-month mining exemption for the site. This will enable the General
         Partner to proceed with initial development of the parcel to make it
         more attractive to potential users. In addition to funds generated from
         sale of excess fill from the site, West 50 Joint Venture has arranged a
         $500,000 secured line of credit with a commercial bank to finance the
         necessary improvements if it is determined to be in the best interests
         of the Partnership to complete these improvements. In the interim, the
         property is being actively marketed to developers of industrial
         properties who might have an interest in acquiring the entire site.
         This would have a negative impact on the gross proceeds anticipated if
         the property is subdivided, but the advantages include the elimination
         of development risk and a dramatic shortening of the anticipated time
         to sell this property.

         Parcel 8:
         -------- 

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

         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 

                                       3
<PAGE>
 
         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, 1998, 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, 1998.

                                       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. In September, LP
         Investors, LLC, an investment company based in Atlanta, Georgia,
         exercised their rights as a limited partner and requested a list of all
         beneficial owners and the number of units owned by each. As required by
         the Partnership Agreement, this information was provided. LP Investors
         paid a fee of $100 to the Partnership in reimbursement of the
         Partnership's costs associated with providing the list. LP Investors
         subsequently wrote to each beneficial owner offering to purchase their
         units for $103.75 per unit, less the $25 transfer fee charged by the
         Partnership. Neither the Partnership, the General Partner, nor any of
         its officers, employees or affiliates is in any way connected with this
         offer

         (b) As of December 31, 1998, there were approximately 619 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 $1,417,500, $-0-, and $840,000 during the
         years ended December 31, 1998, 1997, and 1996, respectively.


Item 6.

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

<TABLE>
<CAPTION> 
                                        Years Ending December 31,
                                        -------------------------
                    1998          1997           1996          1995         1994
                -----------   -----------    -----------   -----------   -----------
<S>             <C>           <C>            <C>           <C>           <C> 
Total Revenue   $   352,567   $     4,549    $   349,807   $ 1,157,261   $   376,468

Net Income
 (Loss)             297,230       (46,136)       288,717     1,056,790       282,234

Total Assets      1,901,414     3,025,026      3,067,820     3,619,103     5,207,313

Partners'
 Capital          1,901,414     3,021,684      3,067,820     3,619,103     5,482,579
</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: 
         ---------------
   
         Year 2000
         ---------

         The Partnership is heavily dependent upon a computer system to
         accurately maintain limited partner records, including name and address
         information, number of units owned, and distribution historical
         records. The Partnership is utilizing a system which was specially
         designed for the Partnership in 1990, and it is possible that the
         system will be affected by the date change which will occur at the end
         of 1999. The Partnership has engaged a computer consultant to evaluate
         the potential problems, and make system changes if necessary so the
         operation of the Partnership will not be affected by the date change.
         Testing on the system is expected to be completed by March, 1999. It is
         anticipated that the cost of evaluating the current system and bringing
         it up to date to be year 2000 compliant will be less than $1,000. The
         Partnership's computer records are backed up on a weekly basis, so all
         of the stored information is available from a secondary source. Even if
         the system were to be completely shut down by the date change at the
         end of 1999, the data necessary to continue operation of the
         Partnership is available and could readily be adapted to a new system
         which is year 2000 compliant, so no significant interruption in the
         operations of the Partnership is anticipated.

                                       5
<PAGE>
 
         January 1, 1998 through December 31, 1998
         -----------------------------------------

         During 1998, the General Partner focused on concluding those contracts
         which were in place at the end of 1997, managing the properties to
         protect existing development rights and obtaining permits which would
         allow limited development of the remaining properties to enhance the
         likely salability of each parcel. Refer to Item 2. Properties for
         details. There were four sales of property during 1998. Distributions
         to limited partners totaled $1,417,500 for the year. At year-end the
         Partnership held one contract which is expected to close during
         September, 1999, and held an interest in one additional parcel (Parcel
         # 7).

         For the year ended December 31, 1998, the Partnership reported total
         revenues of $352,567, consisting of $344,989 gain on land sales and
         interest income earned on short-term deposits. There were four sales of
         property during 1998, generating gross sales proceeds of $1,685,000 and
         net proceeds of $1,513,130. In 1997, there were no sales of property,
         and total revenues were $4,549 consisting primarily of interest income
         from investments.

         Expenses remained relatively constant in 1997 and 1998, increasing
         slightly from $50,685 in 1997 to $55,337 in 1998. The increase is
         attributable to $7,355 in amortization charges taken in 1998 compared
         with $-0- in 1997. Amortization of organization costs is recognized
         only when properties are sold, and there were no sales of property
         during 1997. Other expense categories remained relatively unchanged.

         Net income for 1998 was $297,230 compared to a net loss of $46,136 for
         1997. Future profitability will depend on the Partnership's ability to
         sell portfolio properties at or near current market prices.

         Total assets decreased from $3,025,026 at December 31, 1997 to
         $1,901,414 at December 31, 1998. This is the anticipated result of the
         four property sales during 1998 and subsequent distribution of net
         proceeds to limited partners. The Partnership's liquidity was enhanced
         by withholding reserves for future anticipated costs from net sales
         proceeds. At year-end 1998, the Partnership held $39,457 in cash and
         cash equivalents, compared to $19,062 at year-end 1997.


         Financial projections - 1999
         ----------------------------

         For 1999, the General Partner estimates that approximately $15,000 will
         be required to pay real estate taxes on the remaining property held by
         the Partnership. In addition, the General Partner estimates that
         property associated holding costs will total approximately $12,000
         during 1999 and the costs of administration, legal and accounting will
         require approximately $14,500. These three categories of expense,
         totaling $41,500, will be paid from Partnership reserves which were
         $39,457 at 1998 year end. Should the Partnership not successfully
         conclude a property sale in 1999 and add to reserves, reserves would be
         depleted before year-end 1999. 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 1998 to fund approximately one
         year of costs.

         The General Partner estimates that one property will be sold in 1999
         resulting in cash to the Partnership in the approximate amount of
         $750,000. If concluded as estimated, the sale proceeds would result in
         a distribution to the limited partners in the approximate amount of
         $700,000. 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 Partners' Capital
         would fall to $1,572,807.

         In addition to the projected sale above, the General Partner reasonably
         expects to place the Joint Venture property under contract in 1999.
         However, it is expected that this contract would not close until 2000.
         It is estimated that it will require another two (2) years to complete
         the sale of property held by West 50 Joint Venture in which the
         Partnership has a 59% controlling interest.


         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 ultimately closed
         during 1998.

         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 

                                       6
<PAGE>
 
         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 was 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. Reserves were restored to satisfactory
         levels from sales in 1998. In addition, West 50 Joint Venture arranged
         a $500,000 secured line of credit from a commercial bank to provide for
         future expenses in the joint venture if required.


         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.

         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.

                                       7
<PAGE>
 
Item 8.

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

         I. Condev Land Growth Fund `86, Ltd.
         ----------------------------------- 

<TABLE>
<CAPTION> 
                                                                            Page
          <S>                                                              <C> 
          INDEPENDENT AUDITORS' REPORT                                         9

          FINANCIAL STATEMENTS
            Balance sheets                                                    10
            Statements of operations                                          11
            Statements of partners' capital                                   12
            Statements of cash flows                                          13
            Notes to financial statements                                  14-19


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

          INDEPENDENT AUDITORS' REPORT                                        20

          FINANCIAL STATEMENTS
            Balance sheets                                                    21
            Statements of operations                                          22
            Statements of venturers' capital                                  23
            Statements of cash flows                                          24
            Notes to financial statements                                  25-26
</TABLE> 

                                       8
<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, 1998 and 1997, and
the related statements of operations, partners' capital, and cash flows for each
of the three years in the period ended December 31, 1998. 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, 1998 and 1997, and the results of its operations and its
cash flows for each of the three years in the period ended December 31, 1998, in
conformity with generally accepted accounting principles.



                                    OSBURN, HENNING AND COMPANY

Orlando, Florida
January 14, 1999

                                       9
<PAGE>
 
                       CONDEV LAND GROWTH FUND '86, LTD.
                        (A Florida Limited Partnership)

                                BALANCE SHEETS
                          December 31, 1998 and 1997
<TABLE> 
<CAPTION> 
                                                    1998        1997    
                                                 ----------  ---------- 
<S>                                              <C>         <C>        
      ASSETS                                                            
                                                                        
Cash and cash equivalents                        $   39,457  $   19,062 
Accounts receivable                                   6,078           - 
Due from related entity                               1,222       1,682 
Land, at cost (Note 2)                              308,857   1,450,453 
Investment in joint venture (Note 3)              1,532,361   1,533,035 
Organization costs, less accumulated                                    
  amortization of $29,309 in 1998 and                                   
  $21,954 in 1997                                    13,439      20,794 
                                                 ----------  ---------- 
                                                                        
                                                 $1,901,414  $3,025,026 
                                                 ==========  ========== 
                                                                        
    LIABILITIES AND PARTNERS' CAPITAL                                   
                                                                        
Accounts payable                                 $        -  $    1,242     
Deposits on land                                          -       2,100     
                                                 ----------  ----------     
                                                          -       3,342     
                                                 ----------  ----------     
                                                                        
Partners' capital                                                       
  General partner                                     3,027       3,505     
  Limited partners                                1,898,387   3,018,179     
                                                 ----------  ----------     
          Total partners' capital                 1,901,414   3,021,684     
                                                 ----------  ----------     
                                                                        
                                                 $1,901,414  $3,025,026     
                                                 ==========  ==========      
</TABLE>


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

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

                           STATEMENTS OF OPERATIONS
                 Years Ended December 31, 1998, 1997 and 1996

<TABLE>
<CAPTION>
                                 1998        1997       1996
                               ---------  ----------  ---------
<S>                            <C>        <C>         <C>
Revenue:
  Gain on land sale             $344,989   $      -    $193,002
  Equity in income of joint
    ventures                       1,685        904     127,712
  Interest income                  5,818      3,645       7,968
  Forfeited deposits                   -          -      20,000
  Other income                        75          -       1,125
                                --------   --------    --------
                                 352,567      4,549     349,807
                                --------   --------    --------
Expenses:
  Taxes and permits               21,106     22,775      32,399
  Office expenses                 14,408     14,420      13,035
  Professional fees               10,175     11,758      11,821
  Amortization                     7,355          -       3,375
  Other expenses                   2,293      1,732         460
                                --------   --------    --------
                                  55,337     50,685      61,090
                                --------   --------    --------
 
          Net income (loss)     $297,230   $(46,136)   $288,717
                                ========   ========    ========
</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 PARTNERS' CAPITAL
                 Years Ended December 31, 1998, 1997 and 1996

<TABLE> 
<CAPTION> 
                                        General     Limited
                                        Partners    Partner        Total 
                                        ---------  ----------    ---------- 
<S>                                      <C>       <C>           <C>          
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  
                                                                              
  Net income (loss)                         (478)      297,708       297,230  
                                                                              
  Distributions                                -    (1,417,500)   (1,417,500) 
                                        --------   -----------   -----------  
                                                                              
Balances, December 31, 1998               $3,027   $ 1,898,387   $ 1,901,414  
                                        --------   -----------   -----------   
</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 CASH FLOWS
                 Years Ended December 31, 1998, 1997 and 1996

<TABLE>
<CAPTION>
                                             1998         1997        1996
                                         ------------  ----------  ----------
<S>                                      <C>           <C>         <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net income (loss)                      $   297,230   $ (46,136)  $ 288,717
  Adjustments to reconcile net income
    (loss) to net cash (used in)
    operating activities:
      Gain on land sale                     (344,989)          -    (193,002)
      Equity in (income) losses of
        joint ventures                        (1,685)       (904)   (127,712)
      Amortization                             7,355           -       3,375
      (Increase) decrease in:
        Accounts receivable                   (6,078)          -           -
        Due from related entity                  460      (1,682)          -
      Increase (decrease) in:
        Accounts payable                      (1,242)      1,242           -
        Deposits on land                      (2,100)      2,100           -
                                         -----------   ---------   ---------
 
          Net cash provided by
            (used in) operating
            activities                       (51,049)    (45,380)    (28,622)
                                         -----------   ---------   ---------
 
CASH FLOWS FROM INVESTING ACTIVITIES:
  Proceeds from land sales, net of
    closing costs                          1,487,437           -     308,149
  Land acquisitions and related costs           (853)    (49,217)    (34,135)
  Investment in joint ventures                     -     (31,212)     (8,737)
  Distributions from joint ventures            2,360           -     551,402
                                         -----------   ---------   ---------
 
          Net cash provided by
            (used in) investing
            activities                     1,488,944     (80,429)    816,679
                                         -----------   ---------   ---------
 
CASH FLOWS FROM FINANCING ACTIVITIES:
  Distributions to partners               (1,417,500)          -    (840,000)
                                         -----------   ---------   ---------
 
          Net increase (decrease) in
            cash and cash equivalents         20,395    (125,809)    (51,943)
 
CASH AND CASH EQUIVALENTS, BEGINNING          19,062     144,871     196,814
                                         -----------   ---------   ---------
 
CASH AND CASH EQUIVALENTS, ENDING        $    39,457   $  19,062   $ 144,871
                                         ===========   =========   =========
</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)

                         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, 1998, cash and cash equivalents include
           $31,331 invested in Nations Gov't Money Market Daily Shares.

         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 $7,355, $-0-, and $3,375 of
           amortization of organization costs resulting from the sales of land
           during the years ended December 31, 1998, 1997 and 1996,
           respectively. For tax purposes, the Partnership amortized
           organization costs over five years.


CONTINUED ON NEXT PAGE

                                       14
<PAGE>
 
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, 1998 and 1997, land consisted of the following:

<TABLE>
<CAPTION>
                                                      1997        1996
                                                    ---------  ----------
            <S>                                     <C>        <C>
            2.83 acre parcel, in 1998 and 1997,   
              (zoned commercial) in southeast     
              Orange County, Florida (sold in 1998)         -  $  331,026
            6 acre parcel and 7 acre parcel,      
                   in 1998 and 1997, respectively,
              (zoned commercial) in Brevard       
              County, Florida                         308,857     420,503
            5.39 acre parcel, in 1998 and 1997,   
              (zoned commercial) in Orange        
              County, Florida (sold in 1998)                -     698,924
                                                    ---------  ----------
 
                                                     $308,857  $1,450,453
                                                    =========  ==========
</TABLE>

         The Partnership has a contract to sell the remaining parcel of land for
         $850,000. The contract is scheduled to close in 1999.


 
                                  

                                       15
<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:                                                                  
                  1998                     $ 1,532,361      $       --     $ 1,532,361      
                  1997                       1,533,035              --       1,533,035      
                  1996                       1,500,919              --       1,500,919      
                                                                                          
             Equity in income (losses):                                                   
                  1998                     $     1,685      $       --     $     1,685      
                  1997                             904              --             904      
                  1996                         (19,675)        147,388         127,712
</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, 1998 and 1997
          is as follows:
<TABLE> 
<CAPTION> 
                                                   1998             1997   
                                                 ----------      ----------
             <S>                                <C>              <C> 
                    Assets                                                 
             Cash                               $     21,568     $      6,693
             Investment in land                    2,711,839        2,610,375
                                                ------------     ------------
                                                                          
                                                $  2,733,407     $  2,617,068
                                                ============     ============
                                                                          
                  Liabilities and Venturers' Capital                      
                  ----------------------------------                      
                                                                          
             Liabilities                        $    136,185     $     18,703
             Venturers' capital                    2,597,222        2,598,365
                                                ------------     ------------ 
                                                $  2,733,407     $  2,617,068
                                                ============     ============
</TABLE> 

          The Joint Venture had revenue of $8,250, $6,000 and $6,300 during the
          years ended December 31, 1998, 1997 and 1996, respectively, and net
          income (loss) of $2,857, $1,532, and $(33,348) respectively.


CONTINUED ON NEXT PAGE

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

                         NOTES TO FINANCIAL STATEMENTS


Note 3.  Investment in Joint Ventures - (Continued)

         Pursuant to the joint venture agreement, the Partnership is required to
         contribute funds as needed from time to time to pay operating expenses
         incurred by the Joint Venture. During 1998, 1997 and 1996, the
         Partnership was asked to contribute $-0-, $31,213 and $8,737,
         respectively, to pay real estate taxes and operating expenses incurred
         by the Joint Venture.

         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, 1998 and 1997.

         The Joint Venture had revenue of $300,900 and net income of $295,826
         during the year ended December 31, 1996.

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, 1998, 1997
         or 1996.


CONTINUED ON NEXT PAGE

                                       17
<PAGE>
 
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 $1,417,500, $-0-, and
         $840,000 attributable to net cash proceeds from the sales of land
         during the years ended December 31, 1998, 1997 and 1996, 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 1998, 1997 or
         1996, as no properties were purchased.


CONTINUED ON NEXT PAGE

                                       18
<PAGE>

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 four land sales during 1998, real estate
         commissions of 10% for each sale were paid to nonaffiliates. No real
         estate commissions were paid in 1997, as no sales occurred. In
         connection with the land sale during 1996, real estate commissions of
         5% each were paid to nonaffiliates.

         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, 1998 or 1997.

         The general partner earned certain fees for administration and
         management services provided, pursuant to the Partnership agreement.
         Such fees amounted to $8,496, $9,096, and $7,740 for each of the years
         ended December 31, 1998, 1997 and 1996.


                                  

                                       19
<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, 1998 and 1997, and the related
statements of operations, venturers' capital and cash flows for each of the
three years in the period ended December 31, 1998.  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, 1998 and 1997, and the results of its operations and its cash flows
for each of the three years in the period ended December 31, 1998, in conformity
with generally accepted accounting principles.


                                    OSBURN, HENNING AND COMPANY


Orlando, Florida
January 15, 1999

                                       20
<PAGE>
 
                             WEST 50 JOINT VENTURE
                           (A Florida Joint Venture)

                                BALANCE SHEETS
                          December 31, 1998 and 1997

<TABLE>
<CAPTION>
                                           1998        1997
                                        ----------  ----------
<S>                                     <C>         <C>
     ASSETS
Cash                                    $   21,568  $    6,693
Land, at cost                            2,711,839   2,610,375
                                        ----------  ----------
                                        $2,733,407  $2,617,068
                                        ==========  ==========
 
     LIABILITIES AND VENTURERS' CAPITAL
 
Liabilities
 Accounts payable                       $      320  $   17,703
 Deposit on land                                 -       1,000
 Note Payable                              135,865           -
                                        ----------  ----------
                                           136,185      18,703
 Venturers' capital                      2,597,222   2,598,365
                                        ----------  ----------
                                        $2,733,407  $2,617,068
                                        ==========  ==========
</TABLE>


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

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

                           STATEMENTS OF OPERATIONS
                 Years Ended December 31, 1998, 1997 and 1996

<TABLE>
<CAPTION>
                                1998           1997        1996         
                               -------       -------     --------        
<S>                            <C>           <C>         <C> 
Revenue                                                               
  Other income                 $ 8,250        $ 6,000        6,300    
                               -------        -------    ---------    
Expenses:                                                             
  Real estate taxes                  -            764       37,413    
  Professional fees              4,450          3,000        1,500    
  Insurance                        509            704          435    
  Office expense                   434              -          300    
                               -------        -------    ---------    
                                 5,393          4,468       39,648    
                               -------        -------    ---------    
          Net income (loss)    $ 2,857        $ 1,532    $ (33,348)   
                               =======        =======    =========     
</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 VENTURERS' CAPITAL
                 Years Ended December 31, 1998, 1997 and 1996

<TABLE>
<CAPTION>
                                 Condev Land
                                 Growth Fund       Condev
                                  '86, Ltd.    West 50, Ltd.      Total
                                 ------------  --------------  -----------
<S>                              <C>           <C>             <C>
 
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, 1996      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
 
  Distributions                       (2,360)         (1,640)      (4,000)
 
  Net income (loss)                    1,686           1,171        2,857
                                  ----------      ----------   ----------
Balances at December 31, 1998     $1,532,361      $1,064,861   $2,597,222
                                  ==========      ==========   ==========
 
</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 CASH FLOWS
                 Years Ended December 31, 1998, 1997 and 1996


<TABLE>
<CAPTION>
                                            1998       1997        1996
                                          ---------  ---------  ----------
<S>                                       <C>        <C>        <C>
CASH FLOWS FROM OPERATING ACTIVITIES
  Net income (loss)                       $  2,857   $  1,532    $(33,348)
  Adjustments to reconcile net income
    (loss) to net cash provided by
    (used in) operating activities:
      Increase (decrease) in:
        Accounts payable                   (17,383)   (19,710)     37,413
        Deposit on land                     (1,000)     1,000           -
                                          --------   --------    --------
            Net cash provided by (used
              in) operating activities     (15,506)   (17,178)      4,065
 
CASH FLOWS FROM INVESTING ACTIVITIES
  Land acquisition and related costs       101,464    (36,367)    (17,462)
                                          --------   --------    --------
 
CASH FLOWS FROM FINANCING ACTIVITIES
  Proceeds from line of credit             135,865          -           -
  Capital contributions                          -     52,902       9,466
  Capital distributions                     (4,000)         -           -
                                          --------   --------    --------
            Net cash provided by
              financing activities         131,865     52,902       9,466
                                          --------   --------    --------
 
            Net increase (decrease)
              in cash                       14,875        643      (3,931)
 
CASH, BEGINNING                              6,693      6,050       9,981
                                          --------   --------    --------
 
CASH, ENDING                              $ 21,568   $  6,693    $  6,050
                                          ========   ========    ========
</TABLE>



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

                                       24
<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
               Venture may incur limited development costs to prepare land for
               sale.

               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 two five year extensions until December
               31, 2003.

         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, however certain limited
               development resulted in the Venture obtaining a line of credit
               (See Note 3).

         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

                                       25
<PAGE>
 

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.  Land

         Land consists of a 133-acre parcel located in Lake County, Florida.

Note 3.  Notes payable

         At December 31, 1998, the Venture is obligated to Citrus Bank on a
         $500,000 line of credit in the amount of $135,865. Interest payments
         are due monthly at prime plus .5% (8.25% at December 31, 1998).
         Principal and interest are due on demand. During the year ended
         December 31, 1998, the Venture incurred and capitalized interest of
         $6,396.


Note 4.  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 1998, 1997 or 1996, 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
         1998, 1997 or 1996, as no sales occurred.

                                       26
<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 64 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 NationsBank of Central Florida, N.A., and
         Schroeder-Manatee, Inc.

         Joseph J. Gardner, age 61 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 Director of
         Protection One, Inc.. He 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).

                                       27
<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, 1998:

<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, 1998:

         Unit Holder      Robert N. and Patricia             30 units         0.4%
                          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, 1998, 1997 or 1996 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, 1998, 1997, or 1996.
 
         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 such loans

                                       28
<PAGE>
 
         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, 1998, 1997, or 1996.

         Pursuant to the Partnership agreement, the General Partner earned
         certain fees for administration and management services provided. Such
         fees amounted to $8,496, $9,096, and $7,740 for each of the years ended
         December 31, 1998, 1997 and 1996.

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

         (d)  Not applicable.

                                       29
<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:

<TABLE> 
<CAPTION> 
                                                                                              Page
         <S>                                                                                  <C> 
             (1)  Condev Land Growth Fund '86, Ltd.
                  --------------------------------

                  Independent Auditor's Report                                                    9
                                                                                                  
                  Financial Statements                                                            
                     Balance Sheets - December 31, 1998 and 1997                                 10
                                                                                                  
                  Statements of Operations - Years ended                                          
                       December 31, 1998, 1997 and 1996                                          11
                                                                                                  
                  Statements of Partners' Capital -                                               
                       Years ended December 31, 1998, 1997 and 1996                              12
                                                                                                  
                  Statements of Cash Flows -                                                      
                       Years ended December 31, 1998, 1997 and 1996                              13
                                                                                                  
                  Notes to Financial Statements                                               14-19
                                                                                                  
             (2)  West 50 Joint Venture                                                           
                  ---------------------                                                           
                                                                                                  
                  Independent Auditor's Report                                                   20
                                                                                                  
                  Financial Statements                                                            
                     Balance Sheets - December 31, 1998 and 1997                                 21
                                                                                                  
                  Statements of Operations - Years ended                                          
                       December 31, 1998, 1997 and 1996                                          22
                                                                                                  
                  Statements of Partners' Capital -                                               
                       Years ended December 31, 1998, 1997 and 1996                              23
                                                                                                  
                  Statements of Cash Flows -                                                      
                       Years ended December 31, 1998, 1997 and 1996                              24
                                                                                                  
                  Notes to Financial Statements                                               25-26
                                                                                                  
             (3)  Exhibits included herein:                                                       
                     13 - Annual Report to Unit Holders                                          32

         (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.
</TABLE> 

                                       30
<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:  February 24, 1999           By: /s/ Robert N. Gardner
     --------------------             ----------------------------
                                      Robert N. Gardner, Partner

Date:  February 24, 1999           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                   February 24, 1999
---------------------------------       ---------------------------
Robert N. Gardner, Partner              Date


/s/ Joseph J. Gardner                   February 24, 1999
---------------------------------       ---------------------------
Joseph J. Gardner, Partner              Date

                                       31
<PAGE>
 
                                                                February 8, 1999

Condev Land Growth Fund '86, Ltd.
1998 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, 1998. If your investment is held by a custodian, the
K-1 is for information purposes only. A copy of this form has been sent to your
custodian.

The financial statement, on the reverse side hereof, shows a net profit for the
year ended December 31, 1998 of $297,230. This includes a net gain on the sale
of real estate in the amount of $344,989. The Partnership had four sales and
distributed a total of $1,417,500 to Limited Partners during 1998. As of
December 31, 1998, the net asset value (book value) per unit of limited partner
interest was $253.12. As of December 31, 1998, the Partnership owned or had an
interest in two remaining properties:

NASA Causeway, Titusville. The remaining six acres of this property are under
-------------------------                                                    
contract for sale to a developer who is completing his evaluation of the site
and working with prospective tenants for his planned retail development. The
buyer is required to make an additional non-refundable deposit on or before
April 8, 1999 if he elects to proceed with the purchase. Closing is scheduled
for June 9, 1999, unless delays in obtaining building permits necessitate an
extension of the closing date.

West Hwy 50, Lake County. The City of Clermont has completed the extension of
------------------------                                                     
water to this site and sewer to a point on the south side of State Road 50
directly across from the site. In December, we received preliminary site plan
approval from Lake County, so we are now in a position to develop the parcel if
it is determined that this course of action is in the best interests of the
Partnership, or to market the property with these new permits in place. At a
minimum, the plan is to bring sewer service across SR 50 and to engineer and
construct the access points on SR 50 to insure that access to the property will
be preserved. We are in contact with a number of potential purchasers who have
expressed an interest in this property, both as a whole and in parcels.

We hope that these two remaining parcels will be sold during 1999. If that is
the case, there will be a final distribution to limited partners and the
Partnership will be terminated. We appreciate the patience of the limited
partners while we work to sell the remaining properties consistent with our
objective of obtaining reasonable returns for the investors.

Sincerely yours,


CONDEV ASSOCIATES

                                       32