<PAGE>
 
                      SECURITIES AND EXCHANGE COMMISSION
                            WASHINGTON, D.C.  20549

                                   FORM 10-Q

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

                 For the quarterly period ended March 31, 1998
                       Commission File Number 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 of                  (I.R.S. Employer
    incorporation of organization)                 Identification No.)


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

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

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant
was required to file such report), and (2) has been subject to such filing
requirements for the past 90 days.  YES  X     NO       .
                                       ------     ------ 

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

                                     INDEX

PART I.  FINANCIAL INFORMATION:
 
         Statement of Assets, Liabilities and
         Partner's Capital - March 31, 1998
         and December 31, 1997                              1
 
         Statement of Income & Expense -
         Three Months Ended March 31, 1998
         and March 31, 1997                                 2
 
         Statement of Cash Flows -
         Three months ended March 31, 1998
         and March 31, 1997                                 3
 
         Notes to Financial Statements                      4 - 6
                   
         Management's Discussion and Analysis
         of Financial Condition and Results of Operations   6 - 7
 
PART II. OTHER INFORMATION:
 
         Item 1. Legal Proceedings                          8
 
         Item 6. Exhibits and Reports on Form 8-K           8

Signatures                                                  9

First Quarter 1998 report to Limited Partners              10
<PAGE>
 
                        PART I.  FINANCIAL INFORMATION


                       CONDEV LAND GROWTH FUND '86, LTD.
            STATEMENT OF ASSETS, LIABILITIES AND PARTNERS' CAPITAL
                     MARCH 31, 1998 AND DECEMBER 31, 1997
 
                                 ASSETS
                             --------------
                             March 31, 1998   December 31, 1997
                             --------------   -----------------
                              (Unaudited)            *
 
Cash & Cash Equivalents       $   12,264          $   19,062
Accounts Receivable                1,682               1,682
Land, at Cost (Note 2)         1,449,438           1,450,453
Investment in Joint
  Venture  (Note 3)            1,530,093           1,533,035
Organization Costs, Net           20,794              20,794
                              ----------          ----------
 
             Total Assets     $3,014,271          $3,025,026
                              ==========          ==========
 
 
                       LIABILITIES AND PARTNERS' CAPITAL
                       ---------------------------------
 
Deposits on land              $    7,100          $    2,100
Accounts Payable                       -               1,242
                              ----------          ----------
 
    Total Liabilities              7,100               3,342
 
Partners' Capital -
  General Partner                  3,360               3,505
  Limited Partners             3,003,811           3,018,179
                              ----------          ----------
    Total Partners' Capital   $3,007,171          $3,021,684
                              ----------          ----------
Total Liabilities and
          Partners' Capital   $3,014,271          $3,025,026
                              ==========          ==========

* Condensed from audited financial statements

    The accompanying notes are an integral part of these financial statements

                                       1
<PAGE>
 
                       CONDEV LAND GROWTH FUND '86, LTD.
                        STATEMENT OF INCOME AND EXPENSE
             THREE MONTHS ENDED MARCH 31, 1998 AND MARCH 31, 1997
                                  (UNAUDITED)


                              March 31, 1998   March 31, 1997
                              --------------   --------------
INCOME
------

Interest and Other Income           $       43          $     895
                                    ----------          ---------
Total Income                        $       43          $     895
                                    ----------          ---------
 
OPERATING EXPENSES
------------------
 
Professional Services                    9,200              9,554 
                                                                   
Equity in loss of joint venture          1,475              1,561 
                                                                   
Management Fees                          2,124                  0 
                                                                   
Other Expense                            1,279                 91 
                                                                   
Office Expense                             478              2,440 
                                    ----------         ---------- 
                                                                   
Total Operating Expense             $   14,556         $   13,646 
                                    ----------         ---------- 
                                                                   
Net Income/(Loss)                   $  (14,513)        $  (12,751)
                                    ==========         ==========  
                                        
   The accompanying notes are an integral part of these financial statements

                                       2
<PAGE>
 
                       CONDEV LAND GROWTH FUND '86, LTD.
                            STATEMENT OF CASH FLOWS
              THREE MONTHS ENDED MARCH 31, 1998 AND MARCH 31, 1997
<TABLE>
<CAPTION>
 
                                                       March 31, 1998         March 31, 1997
                                                       --------------         --------------
<S>                                                     <C>                   <C>
Cash flows from operating activities:
  Net Income (Loss)                                      $  (14,513)           $   (12,751)
    Adjustments to reconcile net loss
    to net cash used for operating activities:
        Equity in loss of Joint Venture, net                  1,475                  1,561
        Gain on land sale                                         0                      0
  Cash used for changes:
         Deposits on land                                     5,000                      -
         Accounts payable                                    (1,242)                     -
         Accounts Receivable                                     (-)                   (63)
  Net cash used in operating activities:                     (9,280)               (11,253)

Cash flows from investing activities:
  Land development costs                                      1,015                (13,856)
  Investment in Joint Venture                                 1,467                (22,715)
  Proceeds from land sale                                         0                      0
                                                         ----------             ----------
Net cash from investing activities:                           2,482                (36,571)
                                                         ----------

Cash flows from financing activities:
  Distributions to partners                                      (0)                    (0)
Net cash used in financing activities:                           (0)                    (0)

Net increase (decrease) in cash                              (6,798)               (47,824)

Cash and cash equivalents at beginning of year               19,062                144,871
                                                         ----------             ----------

Cash and cash equivalents at end of period               $   12,264             $   97,047
                                                         ==========             ==========
</TABLE>
    The accompanying notes are an integral part of these financial statements

                                       3
<PAGE>
 
                                 CONDEV LAND GROWTH FUND '86, LTD.

                                 NOTES TO FINANCIAL STATEMENTS


Note 1         BASIS OF PRESENTATION
               ---------------------

               The accompanying financial statements, in the opinion of Condev
               Associates, the general partner of Condev Land Growth Fund '86,
               Ltd., reflect all adjustments (which include only normal
               recurring adjustments) necessary to a fair statement of the
               financial position, the results of operations and the changes in
               cash position for the periods presented.  For a full description
               of accounting policies, see notes to financial statements in the
               1996 annual report on Form 10-K.
 
Note 2         INVESTMENT IN LAND:
               -------------------

               At March 31, 1998, land consisted of the following:

                     2.83 acre parcel (zoned commercial) in
                           southeast Orange County, Florida   $  330,011(a)
                     7.00 acre parcel (zoned commercial) in
                           Brevard County, Florida               420,503(b)
                     5.39 acre parcel (zoned commercial) in
                           Orange County, Florida                698,924(c)
                                                             -----------   
                                                             $ 1,449,438
                                                             ===========
 
               (a) On June 27, 1997, the Partnership executed an Option contract
               providing for Amoco Oil Company to acquire this parcel.  The
               Option has been extended to May 4, 1998 upon receipt of an
               additional non-refundable deposit of $5,000.
 
               (b) In October, 1997 the Partnership entered into an Agreement
               with a nationally recognized fast food restaurant franchisee for
               the sale of approximately 1 acre of this parcel. All required
               permits have been applied for, and closing is expected to occur
               on May 14, 1998. In addition, on February 13, 1998 the
               Partnership contracted with developer of retail centers for the
               sale of the balance of this parcel. The contract calls for a 180-
               day inspection period, followed by a 120-day period in which to
               obtain all required development permits.  Subject to extension to
               allow additional time to obtain permits, closing is scheduled for
               December, 1998.

               (c) During the third quarter of 1997, the Partnership entered
               into two contracts for the remaining 5.39 acres at this location.
               Closing on both transactions is scheduled for May, 1998.

                                       4
<PAGE>
 
Note 3         INVESTMENT IN JOINT VENTURE:
               ----------------------------

               The Partnership owns a 59% interest in West 50 Joint Venture (A
               Florida 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 general partner.  The operations of
               West 50 Joint Venture consist primarily of professional services
               and real estate taxes. The Partnership's investment is carried at
               its equity in the net underlying assets.  A summary of the
               assets, liabilities, and venturers' capital of West 50 Joint
               Venture as of March 31, 1998 is as follows:
<TABLE>
<CAPTION>
                                        Assets
                                        ------
               <S>                                              <C>           
               Cash                                            $    9,137  
               Investment in land                               2,664,594  
                                                               ----------  
                                                               $2,673,731  
                                                               ==========  
                                                                  
                            Liabilities and Venturers' Capital                 
                            ----------------------------------                 
                                                                  
                                      Liabilities
                                      -----------
                                                                  
               Mortgage note payable                           $   80,865  
               Other liabilities                                    1,000  
                                                               ----------   

               Total liabilities                                   81,865


                                   Venturers' capital
                                   ------------------
 
               Venturers' capital                               2,594,366
               Current profit (loss)                               (2,500)
                                                               ---------- 

               Total Venturers' capital                         2,591,866

               Total liabilities and venturers' capital        $2,673,731
                                                               ==========

</TABLE> 
Note 4         DISTRIBUTIONS TO PARTNERS:
               --------------------------

               Pursuant to the partnership agreement, cash flow generated each
               year by the Partnership is to be distributed 99% to the limited
               partners and 1% to the general partner.  There were no cash flow
               distributions during the first three months of 1998.

               Pursuant to the partnership agreement, proceeds realized from the
               sale of properties, after the establishment of reserves for
               future operating costs, are to be distributed at least annually.
               During the first three months of 1998 

                                       5
<PAGE>
 
               there were no distributions to limited partners as there were no
               sales of land.


Note 5         RELATED PARTY TRANSACTIONS:
               ---------------------------

               The Partnership Agreement provides for the reimbursement to the
               general partner of administrative expenses incurred in the direct
               operation of the partnership.  For the three months ended March
               31, 1998, $2,124 was reimbursed to the general partner for direct
               expenses incurred.

               When properties are sold, under certain circumstances 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.  No
               real estate commissions have been paid to the general partner or
               any affiliate of the general partner during the first three
               months of 1998.

               The general partner is obligated to loan up to $100,000 to the
               Partnership during its term to meet working capital requirements.
               The General Partner has previously advanced $156,048.27 of
               working capital to the Partnership, which advance was repaid in
               December, 1993.  Since the General Partner has met its obligation
               to advance funds, it is not required to make further advances.

Item 2         MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
               ---------------------------------------------------------------
               RESULTS OF OPERATIONS
               ---------------------

               During the quarter ended March 31, 1998, the Partnership
               continued to manage the portfolio properties with the objective
               of selling the properties at fair market prices.  As of  March
               31, 1998, the Partnership had five contracts for sale of three
               properties.

               Results of Operations
               ---------------------

               Total revenues for the three months ended March 31, 1998 were $
               43, compared with total revenues of $ 895 for the three months
               ended March 31, 1997. Income is generated from short-term cash
               investments, and income can be expected to fluctuate, depending
               on the level of cash reserves in the Partnership and prevailing
               interest rates. Operating expenses (excluding equity in the
               losses of the Partnership's joint venture) for the three  months
               ended March 31, 1998 were $13,081, a slight increase from $12,085
               for the three months ended March 31, 1997. However, management
               fees were not accounted for during the 1997 quarter. Such fees
               totaled $2,124 during the first quarter of 1998. In both periods,
               operating expenses represent the normal costs of operating the
               Partnership and managing the Partnership properties.

                                       6
<PAGE>
 
               West 50 Joint Venture, in which the Partnership holds a 59%
               interest, had a loss of $2,500 for the three months ended March
               31, 1998 compared with a loss of $2,646 for the three months
               ended March 31, 1997.  However, as discussed under Liquidity and
                                                                  -------------
               Capital Resources and West 50 Joint Venture below, the joint
               -----------------     ---------------------                 
               venture has borrowed money under a secured line of credit with a
               commercial bank to pay for engineering, planning and construction
               expenses related to the extension of water and sewer facilities
               to the property. Therefore, future results will be impacted by
               interest charges incurred on outstanding debt. These additional
               expenses are expected to be offset by higher sales prices for the
               Joint Venture's land.

               Liquidity and Capital Resources at March 31, 1998
               -------------------------------------------------
 
               Total assets decreased slightly from $3,025,026 at December 31,
               1997 to $3,014,270 at March 31, 1998.  This reflects the net
               results of operations for the period. Assets can be expected to
               decline in the future as properties are sold and distributions
               are made to limited partners. The Partnership currently holds 5
               contracts for sale of portfolio properties, four of which are
               expected to close during the second quarter of 1998.

               Liquidity remained at a very low level. Cash and equivalents
               decreased  from $19,062 at 1997 year-end to $12,264 at March 31,
               1998. As provided in the Partnership Agreement, the general
               partner intends to add to reserves from the net proceeds of
               closings anticipated during the second quarter of 1998.

               West 50 Joint Venture
               ---------------------

               The area of Lake County, Florida in which the West 50 Joint
               Venture's 132.7-acre parcel is located has experienced heightened
               activity in recent months, with significant new residential
               development beginning in the immediate area. The City of Clermont
               has committed to extend sewer and water facilities to one such
               development which is directly across from the property on the
               south side of State Road 50. In order to insure that the Joint
               Venture's property will have adequate sewer and water capacity
               for future development of its property, the Joint Venture has
               entered into an agreement with the City of Clermont to upgrade
               the facilities being installed. The Joint Venture has paid
               $38,623 to the City of Clermont as its share of the requested
               upgrades. In addition, the Partnership has engaged an engineer to
               design the extension of sewer and water utilities on to the site.
               The Joint Venture has arranged a $500,000 secured line of credit
               with a commercial bank to pay for the Joint Venture's cost of
               these improvements.  Borrowings under the line of credit will be
               repaid from future land sales.

                                       7
<PAGE>
 
                                    PART II


Item 1.  LEGAL PROCEEDINGS
         -----------------

         As of March 31, 1998, there were no legal proceedings in
         process, nor to the knowledge of the general partner, threatened
         against the Partnership

Item 6.  EXHIBITS AND REPORTS ON FORM 8-K:
         ---------------------------------

         (A)  Exhibits

              First Quarter 1998 Report to Limited Partners

         (B)  Reports on Form 8-K

              There were no reports of Form 8-K for the period ended March 31,
              1998

                                       8
<PAGE>
 
                           CONDEV LAND FUND II, LTD.
                                   SIGNATURES



          Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant              has duly caused this report to be signed on its
behalf by the undersigned.


                              CONDEV LAND GROWTH FUND `86, LTD.
                              BY: Condev Associates, General Partner




April 24, 1998                            /s/ Robert N. Gardner
----------------------                    ----------------------------------
    DATE                                  Robert N. Gardner, Partner
                                 
                                 
                                 
April 24, 1998                            /s/ Joseph J. Gardner
----------------------                    ----------------------------------
    DATE                                  Joseph J. Gardner, Partner

                                       9
<PAGE>
 
                                                                  April 14, 1998

Condev Land Growth Fund '86, Ltd.
First Quarter 1998

Dear Limited Partner:

The financial statement, on the reverse side hereof, shows a net loss for the
three months ended March 31, 1998 of $      . This represents the normal income
less costs of operating the partnership and managing the portfolio properties.
There were no sales of property during the first three months of 1998. As of
March 31, 1998, the net asset value per unit of limited partner interest was
$400.51.  The following is a brief description of the status of each of the
partnership's four remaining properties:

Curry Ford Road/Chickasaw Trail. The Option contract providing for Amoco Oil
-------------------------------                                             
Company to acquire this parcel was extended to May 4, 1998 upon receipt of an
additional non-refundable deposit of $5,000. The sale is expected to close on
May 4 or Amoco will forfeit all deposits made to date.

Woodbury Road/East Colonial Drive. As previously reported, this property is
---------------------------------                                          
currently under contract to two separate purchasers. Both projects are in the
final permitting stage, and closings are scheduled for May, 1998.

NASA Causeway, Titusville.  The contract for the sale of approximately 1 acre of
-------------------------                                                       
this site with a nationally known fast food restaurant continues to progress
towards closing.  The current closing date is May 14, 1998, subject to the Buyer
obtaining final development permits by that time.  In February 1998, the
Partnership entered into a contract for the sale of the remaining 6 acres at
this location with a shopping center developer who intends to build a retail
center on the site. The contract calls for a 180-day inspection period, followed
by a 120-day period in which to obtain all required development permits. Subject
to extension to allow additional time to obtain permits, closing is currently
scheduled for December 1998.

West Hwy 50, Lake County.  During the quarter, the Partnership concluded its
------------------------                                                    
negotiations with the City of Clermont to upgrade sewer and water facilities to
meet the future development needs of this site, and the improvements are
currently underway. This has generated considerable purchaser interest in the
site. We are still working with Lake County to agree on a development plan so we
can grade the site and sell smaller parcels to the growing number of potential
users for land in this location.

Sincerely yours,


CONDEV ASSOCIATES


                                      10