<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, 1999
                       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, 1999
          and December 31, 1998                                          1
 
          Statement of Income & Expense -
          Three Months Ended March 31, 1999
          and March 31, 1998                                             2
 
          Statement of Cash Flows -
          Three months ended March 31, 1999
          and March 31, 1998                                             3
 
          Notes to Financial Statements                                  4 - 6
 
          Management's Discussion and Analysis
          of Financial Condition and Results of Operations               6 - 8
 
PART II.  OTHER INFORMATION:
 
Item 1.   Legal Proceedings                                              8
 
Item 6    Exhibits and Reports on Form 8-K                               8


Signatures                                                               9

First Quarter 1999 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, 1999 AND DECEMBER 31, 1998
 
                                    ASSETS
                                    ------

                             March 31, 1999   December 31, 1998
                             --------------   -----------------
                             (Unaudited)              *

Cash & Cash Equivalents          $   26,513          $   39,457
Accounts Receivable                   7,300               7,300
Land, at Cost (Note 2)              310,615             308,857
Investment in Joint
  Venture  (Note 3)               1,530,707           1,532,361
Organization Costs, Net              13,439              13,439
                                 ----------          ----------
 
             Total Assets        $1,888,574          $1,901,414
                                 ==========          ==========


                       LIABILITIES AND PARTNERS' CAPITAL
                       ---------------------------------

Accounts Payable                 $        -          $        -
                                 ----------          ----------
                                           
    Total Liabilities            $        -          $        -
                                 ----------          ----------
                                           
Partners' Capital -                        
  General Partner                     2,899               3,027
  Limited Partners                1,885,675           1,898,387
                                 ----------          ----------
                                           
    Total Partners' Capital      $1,888,574          $1,901,414
                                 ----------          ----------
                                           
Total Liabilities and                      
          Partners' Capital      $1,888,574          $1,901,414
                                 ==========          ==========

* 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, 1999 AND MARCH 31, 1998
                                  (UNAUDITED)


<TABLE> 
<CAPTION> 
                                   March 31, 1999     March 31, 1998
                                   --------------     --------------
<S>                                <C>                <C> 
INCOME
------

Interest and Other Income           $      366             $      43
                                    ----------             ---------

Total Income                        $      366             $      43
                                    ----------             ---------
 

OPERATING EXPENSES
-------------------
 
Professional Services                    9,000                 9,200
                                              
Equity in loss of joint venture          1,655                 1,475
                                              
Management Fees                          2,124                 2,124
                                              
Other Expense                                -                 1,279
                                              
Office Expense                             428                   478
                                    ----------            ----------
                                              
Total Operating Expense             $   13,207            $   14,556
                                    ----------            ----------
                                              
Net Income/(Loss)                   $  (12,841)           $  (14,512)
                                    ==========            ==========
</TABLE> 

   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, 1999 AND MARCH 31, 1998

<TABLE>
<CAPTION>
                                                                     March 31, 1999       March 31, 1998
                                                                     --------------       --------------
<S>                                                                  <C>                  <C>            
Cash flows from operating activities:
  Net Income (Loss)                                                   $    (12,841)        $     (14,513)
    Adjustments to reconcile net loss
    to net cash used for operating activities:
        Equity in loss of Joint Venture, net                                 1,655                 1,475
        Gain on land sale                                                        -                     -   
  Cash used for changes:
         Deposits on land                                                        -                 5,000
         Accounts payable                                                       (-)               (1,242)
         Accounts Receivable                                                    (-)                   (-)
                                                                      ------------         -------------
  Net cash used in operating activities:                                   (11,186)               (9,280)
                                                                      ------------         -------------

Cash flows from investing activities:
  Land development costs                                                    (1,758)                1,015
  Investment in Joint Venture                                                    -                 1,467
  Proceeds from land sale                                                        -                     -
                                                                      ------------         -------------
Net cash from investing activities:                                         (2,482)                2,482
                                                                      ------------         -------------
 
Cash flows from financing activities:
  Distributions to partners                                                     (-)                   (-)
Net cash used in financing activities:                                          (-)                   (-)
                                                                      ------------         -------------
Net increase (decrease) in cash                                            (12,944)               (6,798)
 
Cash and cash equivalents at beginning of year                              39,457                19,062
                                                                      ------------         -------------
 
Cash and cash equivalents at end of period                            $     26,513         $      12,264
                                                                      ============         =============
</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
               1998 annual report on Form 10-K.
 
Note 2         INVESTMENT IN LAND:
               -------------------

               At March 31, 1999, land consisted of the following:

                  6.00 acre parcel (zoned commercial) in
                         Brevard County, Florida              $310,615
 
               On October 10, 1998, the Partnership contracted with a developer
               of retail centers for the sale of this parcel. The contract calls
               for a 180-day inspection period, with appropriate performance
               standards, and a closing following issuance of required
               development permits. The inspection period has been extended to
               May 10, 1999.

               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.

                                       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, 1999 is as follows:

                                    Assets
                                    ------

               Cash                                         $    4,005 
               Investment in land                            2,726,278 
                                                            ---------- 
                                                            $2,730,283 
                                                            ========== 
                                                                       
                      Liabilities and Venturers' Capital               
                     ------------------------------------              
                                                                       
                                  Liabilities                          
                                  -----------                          
                                                                       
               Mortgage note payable                        $  135,865 
               Other liabilities                                     - 
                                                            ---------- 
                                                                       
               Total liabilities                            $  135,865 
                                                                       
                                                                       
                              Venturers' capital                       
                              ------------------                       
                                                                       
               Venturers' capital                           $ 2,597,223
               Current profit (loss)                             (2,805)
                                                            ----------- 
                                                                       
               Total Venturers' capital                       2,594,418
                                                                       
               Total liabilities and venturers' capital     $ 2,730,283
                                                            =========== 

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 1999.

               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 1999 

                                       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, 1999, $334 as 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 1999.

               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, 1999, the Partnership
               continued to manage the portfolio properties with the objective
               of selling the properties at fair market prices.  As of  March
               31, 1999, the Partnership had one contract for sale of one of its
               two remaining properties.

               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. Work on
               modifying the computer system has begun and is expected to be
               completed by June, 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. 

                                       6
<PAGE>
 
               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.

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

               Total revenues for the three months ended March 31, 1999 were
               $366, compared with total revenues of $ 43 for the three months
               ended March 31, 1999. 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, 1999 were $13,207, a slight decrease from $14,456
               for the three months ended March 31, 1998. In both periods,
               operating expenses represent the normal costs of operating the
               Partnership and managing the Partnership properties.

               West 50 Joint Venture, in which the Partnership holds a 59%
               interest, had a loss of $2,805 for the three months ended March
               31, 1999 compared with a loss of $2,500 for the three months
               ended March 31, 1998.  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, 1999
               -------------------------------------------------
 
               Total assets decreased slightly from $1,901,414 at December 31,
               1998 to $1,888,574 at March 31, 1999.  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 one
               contract for sale of portfolio property which is expected to
               close during the third quarter of 1999.

               Liquidity remained at a relatively low level. Cash and
               equivalents decreased  from $39,457 at 1998 year-end to $26,513
               at March 31, 1999. As provided in the Partnership Agreement, the
               general partner intends to add to reserves from the net proceeds
               of closings anticipated during the third quarter of 1999.

                                       7
<PAGE>
 
               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 extended sewer facilities to one such development which is
               directly across from the property on the south side of State Road
               50. Water service has been extended to the Joint Venture's
               property. In order to insure that the Joint Venture's property
               will have adequate sewer capacity for future development of its
               property, the Joint Venture has paid $38,623 to the City of
               Clermont to upgrade the facilities which have been installed. The
               Partnership has engaged an engineer to design and permit the
               extension of sewer utilities under SR 50 to the site and to
               design and permit the construction of access points and related
               highway improvements from SR 50 to the site. The general partner
               is in the process of bidding the related construction contracts.
               In addition, the Joint Venture has entered into a contract with
               an excavation and grading company to remove up to 366,000 yards
               of fill from the site and to grade a majority of 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 which exceed fill sales. Borrowings under the line
               of credit will be repaid from future land sales.


                                    PART II


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

             As of March 31, 1999, 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 1999 Report to Limited Partners

          (B) Reports on Form 8-K

              There were no reports of Form 8-K for the period ended March 31,
              1999

                                       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 19, 1999                     /s/ Robert N. Gardner
----------------------             ----------------------------------
      DATE                         Robert N. Gardner, Partner



April 19, 1999                     /s/ Joseph J. Gardner
----------------------             ----------------------------------
      DATE                         Joseph J. Gardner, Partner

                                       9
<PAGE>
 
                                                                  April 13, 1999

Condev Land Growth Fund '86, Ltd.
First Quarter 1999

Dear Limited Partner:

The financial statements of the Partnership for the first quarter of 1999 are on
the reverse side hereof. There were no sales of property and no distributions to
limited partners during the quarter. As of March 31, 1999, the net asset value
(book value) per unit of limited partner interest was $251.42. As of March 31,
1999, 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 a planned retail development. The buyer
is required to make an additional non-refundable deposit on or before May 10,
1999 if he elects to proceed with the purchase. Closing is scheduled for
September 6, 1999.

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, and the general partner is in the process of bringing
sewer service under SR 50 to the property and constructing the access points on
SR 50 to insure that access to the property will be preserved. In addition, the
Partnership has entered into a contract for grading part of the site and selling
the excess fill produced as we balance the site for future development. Proceeds
from the sale of excess fill will be used to pay for expenses incurred in
engineering and making improvements to the site.

Please feel free to contact the Investor Relations office if you have any
questions or would like additional information concerning your investment.


Sincerely yours,


CONDEV ASSOCIATES

                                       10