<PAGE>
 
                                 UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION

                          Washington, D.C. 20549-1004

                                   FORM 10-K
 
[X]  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
     EXCHANGE ACT OF 1934
 
     For the fiscal year ended                   December 31, 1996
                            ----------------------------------------------------

                                      OR
 
[_]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
     EXCHANGE ACT OF 1934
 
     For the transition period from                       to
                                    ---------------------    -------------------

     Commission File Number                               0-17611
                                    --------------------------------------------

      FIRST CAPITAL GROWTH FUND - XIV, A REAL ESTATE LIMITED PARTNERSHIP
--------------------------------------------------------------------------------
            (Exact name of registrant as specified in its charter)
 
          Illinois                                               36-3552804
-------------------------------                              -------------------
(State or other jurisdiction of                               (I.R.S. Employer
 incorporation or organization)                              Identification No.)

Two North Riverside Plaza, Suite 1100, Chicago, Illinois          60606-2607
--------------------------------------------------------     -------------------
(Address of principal executive offices)                          (Zip Code)

Registrant's telephone number, including area code              (312) 207-0020
                                                             -------------------

Securities registered pursuant to Section 12(b) of the Act:          NONE
                                                             -------------------

                                                             Limited Partnership
Securities registered pursuant to Section 12(g) of the Act:    Assignee Units
                                                             -------------------

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

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 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]

DOCUMENTS INCORPORATED BY REFERENCE:

The First Amended and Restated Certificate and Agreement of Limited Partnership
filed as Exhibit A to the definitive Prospectus dated December 8, 1988, included
in the Registrant's Registration Statement on Form S-11 (Registration No. 
33-19365), is incorporated herein by reference in Part IV of this report.

EXHIBIT INDEX - PAGE A-1
------------------------

<PAGE>
 
                                    PART I

ITEM 1.  BUSINESS
-------  --------

The registrant, First Capital Growth Fund - XIV, A Real Estate Limited
Partnership (the "Partnership"), is a limited partnership organized in 1987
under the Revised Uniform Limited Partnership Act of the State of Illinois. The
Partnership sold 145,182 Limited Partnership Assignee Units (the "Units") to the
public from December 1988 to September 1990, pursuant to a Registration
Statement on Form S-11 filed with the Securities and Exchange Commission
(Registration No. 33-19365). Unless otherwise disclosed herein, capitalized
terms used in this report have the same meaning as those terms have in the
Partnership's Registration Statement.

The business of the Partnership is to invest on a leveraged basis in a
diversified portfolio of primarily institutional-quality, income-producing real
estate, such as shopping centers, office buildings, apartments, warehouses,
manufactured housing or any one or more of these categories. In December 1988,
the Partnership purchased a 25% interest in one joint venture which was formed
with an Affiliated partnership for the purpose of acquiring a 100% interest in
certain real property and in March 1991, the Partnership purchased a 50%
interest in one joint venture which was formed with the same Affiliated
partnership for the purpose of acquiring a 100% interest in certain real
property. These joint ventures, prior to dissolution, are operated under the
common control of First Capital Fund - XIV, Inc. (the "General Partner") and an
Affiliate. During 1993, the joint venture in which the Partnership had a 25%
interest surrendered title to its property to the mortgage holder through
foreclosure and subsequently dissolved the joint venture.

Property management services for the Partnership's real estate investment is
provided by an Affiliate of the General Partner for fees calculated as a
percentage of gross rents received from the property.

The real estate business is highly competitive. The results of operations of the
Partnership will depend upon the availability of suitable tenants, real estate
market conditions and general economic conditions which may impact the success
of these tenants. The property owned by the Partnership frequently competes for
tenants with similar properties owned by others.

As of March 1, 1997, the Partnership employed, through its joint venture, three
people for on-site property maintenance and administration.

ITEM 2.  PROPERTY
-------  --------

As of December 31, 1996, the Partnership owned a 50% interest in a joint venture
which owned, in fee simple, the 1800 Sherman Office Building ("the Property"),
located in Evanston, Illinois. The Property has 134,541 net leasable square feet
of which 94%, 97%, 97%, 94%, and 88%, was occupied as of December 31, 1996,
1995, 1994, 1993, and 1992, respectively. The average annual rental per square
foot, as computed by dividing the property's base revenues by its average
occupied square footage, for the years ended December 31, 1996, 1995, 1994,
1993, and 1992 was $21.27, $21.14, $20.58, $20.20, and $19.67, respectively.

For federal income tax purposes, the Partnership depreciates the portion of the
acquisition costs of the Property allocable to real property (exclusive of
land), and all improvements, over a useful life of 40 years, utilizing the
straight-line method. In the opinion of the General Partner, the Property is
adequately insured and serviced by all necessary utilities. The Partnership's
share of 1996 real estate taxes for the Property was $464,800.

                                       2
<PAGE>
 
ITEM 2.  PROPERTY (continued)
-------  --------            

As of December 31, 1996 there were 29 tenants at the Property. The tenants which
occupy ten percent or more of the rentable square footage of the Property are ZS
Associates ("ZS"), a sales-force life insurance company, occupying 22% of the
net leasable square footage of the Property, and The Sachs Group ("Sachs"),
health care information specialists occupying 11% of the net leasable square
footage of the Property. The Partnership's 50% interest in the per annum base
rents provided for in the ZS lease, which expires on December 31, 2004 and has
one five-year renewal option, will be $276,100 during 1997 and $317,200 during
the last twelve months of the current lease. The Partnership's 50% interest in
the per annum base rents provided for in the Sachs lease, which expires on June
30, 2004 and also has one five-year renewal option, will be $172,200 during 1997
and $206,600 during the last twelve months of the current lease. The
Partnership's share of per annum base rents for the ZS and Sachs leases for each
of the years between 1997 and the final twelve months of each of the leases is
no lesser or greater than the amounts mentioned above.

The amounts in the following table represent the Partnership's portion of leases
in the year of expiration (assuming no lease renewals) for the Property through
the year ending December 31, 2006:
<TABLE>
<CAPTION>


               Number                        Base Rents in Year     % of Total Base
   Year      of Tenants    Square Feet       of Expiration (a)         Rents (b)
   ----      ----------    -----------       ------------------     ---------------
<S>          <C>           <C>               <C>                    <C>
   1997           3           7,530               $ 57,500                4.28%

   1998           7          12,867               $121,200                9.34%

   1999           4           7,914               $ 64,700                5.43%

   2000           6          23,723               $166,600               15.99%

   2001           2           4,626               $ 45,500                5.23%

   2002           1           2,204               $  2,500                0.31%

   2003           3          17,246               $128,600               17.82%

   2004           2          45,042               $420,500               84.27%

   2005         None           None                   None                None

   2006           1           6,681               $ 52,300                 100%
</TABLE>

     (a)  Represents the Partnership's portion of base rents to be collected 
          each year on expiring leases.

     (b)  Represents the Partnership's portion of base rents to be collected
          each year on expiring leases as a percentage of the Partnership's
          portion of the total base rents to be collected on leases in effect as
          of December 31, 1996.

ITEM 3.  LEGAL PROCEEDINGS
-------  -----------------

(a & b)  The Partnership and its property were not a party to, nor the subject 
of, any material pending legal proceedings, nor were any such proceedings 
terminated during the quarter ended December 31, 1996. Ordinary routine 
litigation incidental to the business which is not deemed material was pursued 
during the quarter ended December 31, 1996.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
-------  ---------------------------------------------------

(a, b, c & d) None.

                                       3
<PAGE>
 
                                    PART II

ITEM 5.  MARKET FOR THE REGISTRANT'S EQUITY AND RELATED SECURITY HOLDER MATTERS
-------  ----------------------------------------------------------------------

There has not been, nor is there expected to be, a public market for Units.

As of March 1, 1997, there were 1,371 Holders of Units.

                                       4
<PAGE>
 
ITEM 6. SELECTED FINANCIAL DATA
 
<TABLE>
<CAPTION>
                                      For the Years Ended December 31,
                          ----------------------------------------------------------
                             1996       1995        1994       1993         1992
-------------------------------------------------------------------------------------
<S>                       <C>        <C>         <C>        <C>          <C>
Total revenues            $1,654,200 $1,663,200  $1,597,900 $ 2,244,300  $ 3,133,000
Net income (loss)         $  428,900 $ (856,800) $  410,400 $(1,612,900) $(1,642,400)
Net income (loss)
 allocated to Limited
 Partners (a)             $  386,000 $ (865,800) $  376,100 $(1,572,700) $(1,624,700)
Net income (loss)
 allocated to Limited
 Partners per Unit
 (145,182 Units
 outstanding) (a)         $     2.66 $    (5.96) $     2.59 $    (10.83) $    (11.19)
Total assets              $8,426,500 $8,535,600  $9,774,200 $ 9,816,900  $17,555,700
Mortgage loans payable          None       None        None        None  $ 6,180,200
Distributions to Limited
 Partners per Unit
 (145,182 Units
 outstanding)             $     3.20 $     3.00  $     2.08        None  $      1.45
Return of capital to
 Limited Partners per
 Unit (145,182 Units
 outstanding) (b)         $     0.54 $     3.00        None        None  $      1.45
OTHER DATA:
Investment in commercial
 rental properties (net
 of accumulated
 depreciation and
 amortization)            $5,923,200 $6,138,800  $7,422,300 $ 7,467,000  $13,653,600
Number of real property
 interests owned at
 December 31                       1          1           1           1            2
-------------------------------------------------------------------------------------
</TABLE>
(a) Net (loss) allocated to Limited Partners for 1993 included an extraordinary
    gain on extinguishment of debt.
(b) For the purposes of this table, return of capital represents either: the
    amount by which distributions, if any, exceed net income for the respective
    year or; total distributions, if any, when Partnership incurs a net loss
    for the respective year. Pursuant to the Partnership Agreement, Capital
    Investment is only reduced by distributions of Sale or Refinancing
    Proceeds. Accordingly, return of capital as used in the above table does
    not impact Capital Investment.
 
The following table includes a reconciliation of Cash Flow (as defined in the
Partnership Agreement) to cash flow provided by operating activities as
determined by generally accepted accounting principles ("GAAP"):
 
<TABLE>
<CAPTION>
                                  For the Years Ended December 31,
                          -----------------------------------------------------
                            1996       1995       1994       1993       1992
--------------------------------------------------------------------------------
<S>                       <C>        <C>        <C>        <C>        <C>
Cash Flow (as defined in
 the Partnership
 Agreement) (a)           $ 679,400  $ 600,200  $ 645,800  $ 537,200  $ 707,900
Items of reconciliation:
 Principal payments on
  mortgage loans payable                                      17,000     38,100
 Changes in current
  assets and
  liabilities:
  Decrease in current
   assets                    11,300     17,900     30,400    199,300    141,700
  (Decrease) increase in
   current liabilities      (30,200)    72,200   (202,100)   154,500     71,400
--------------------------------------------------------------------------------
Net cash provided by
 operating activities     $ 660,500  $ 690,300  $ 474,100  $ 908,000  $ 959,100
--------------------------------------------------------------------------------
Net cash (used for)
 investing activities     $(531,200) $(173,500) $(190,700) $(686,000) $(250,200)
--------------------------------------------------------------------------------
Net cash (used for)
 financing activities     $(507,800) $(454,000) $(251,000) $ (14,500) $(390,900)
--------------------------------------------------------------------------------
</TABLE>
(a) Cash Flow is defined in the Partnership Agreement as Partnership cash
    revenues earned from operations (excluding tenant deposits and proceeds
    from a Major Capital Event), minus all cash expenses incurred (including
    Operating Expenses, payments of principal and interest on any Partnership
    indebtedness, and any reserves of revenues from operations deemed
    reasonably necessary by the General Partner), except capital expenditures
    and lease acquisition expenditures.
 
The above selected financial data should be read in conjunction with the
financial statements and the related notes appearing on pages A-1 through A-12
in this report and the supplemental schedule on pages A-7 and A-8.
 
                                                                               5
<PAGE>
 
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 
The ordinary business of the Partnership is expected to pass through its life
cycle in three phases: (i) the Offering of Units and Investment in Properties;
(ii) the operation of properties and (iii) the sale or other disposition of
properties.
 
The Partnership commenced the Offering of Units on December 8, 1988 and began
operations on February 1, 1989 after reaching the required minimum subscription
level. On September 28, 1990, the Offering was Terminated upon the sale of
145,182 units. In July 1989, the Partnership purchased a 25% interest in one
joint venture which was formed with an Affiliated partnership for the purpose
of acquiring a 100% interest in certain real property and in March 1991,
purchased a 50% interest in one joint venture which was formed with the same
Affiliated partnership for the purpose of acquiring a 100% interest in certain
real property. During 1993, the joint venture in which the Partnership had a
25% interest, surrendered title to the property to the mortgage holder through
foreclosure and subsequently dissolved the joint venture.
 
1800 Sherman Office Building's ("1800 Sherman") operations are expected to be
adversely affected by a potential leveling or reduction in rental rates
resulting from an increased supply of vacant office space in its local area.
The General Partner has learned that a competitive office property will shortly
be vacated by its sole tenant. This event may cause an imbalance in the supply
of office space available versus the demand for such space.
 
OPERATIONS
The table below is a recap of certain operating results of the Partnership's
property for the years ended December 31, 1996, 1995 and 1994. The discussion
following the table should be read in conjunction with Financial Statements and
Notes thereto appearing in this report.
 
<TABLE>
<CAPTION>
                                     Comparative Operating Results
                                                  (a)
                                    For the Years Ended December 31,
                                    --------------------------------
                                       1996       1995       1994
--------------------------------------------------------------------
<S>                                 <C>        <C>        <C>
1800 SHERMAN OFFICE BUILDING (50%)
Rental revenues                     $1,533,100 $1,538,200 $1,496,900
--------------------------------------------------------------------
Property net income                 $  380,600 $  316,000 $  388,900
--------------------------------------------------------------------
Average occupancy                          95%        97%        95%
--------------------------------------------------------------------
</TABLE>
(a) Excludes certain income and expense items which are either not directly
    related to individual property operating results such as interest income,
    general and administrative expenses and provision for value impairment or
    are related to the property disposed of by the Partnership prior to the
    periods under comparison.
 
COMPARISON OF THE YEAR ENDED DECEMBER 31, 1996 TO THE YEAR ENDED DECEMBER 31,
1995
Net income improved by $1,285,700 for the year ended December 31, 1996 when
compared to the year ended December 31, 1995. The difference is the result of
the recognition of a provision for value impairment of $1,200,000 during 1995
on 1800 Sherman. Exclusive of the provision of value impairment, net income
increased by $85,700 for the comparable periods. The increase in net income was
primarily the result of a decrease in real estate taxes and general and
administrative expenses.
 
The decrease in general and administrative expenses was the result of a
reduction in the costs associated with printing and mailing. Partially
offsetting the increase in net income for the years under comparison was an
increase in repair and maintenance expenses and property operating expenses.
 
Rental revenues remained stable for the year ended December 31, 1996 when
compared to the year ended December 31, 1995.
 
Real estate tax expense decreased by $89,600 for the years under comparison.
This decrease was primarily due to the successful appeal for a reduction of the
assessed value of 1800 Sherman for the 1995 tax year.
 
Property operating expenses increased by $12,600 for the year ended December
31, 1996 when compared to the year ended December 31, 1995. The increase was
primarily the result of an increase in management fees due to the fact that
leasing related costs paid in 1995, which are ordinarily paid to and provided
by an Affiliate of the General Partner as part of its property management fee,
were paid to outside brokers and the expenditures were capitalized as lease
commissions and amortized over the respective lease terms of new tenants.
 
Repairs and maintenance expenses increased by $10,000 for the year ended
December 31, 1996 when compared to the year ended December 31, 1995. The
increase was primarily due to increased costs resulting from hiring a more
thorough and dependable contractor for the cleaning of the building. In
addition, snow fall in 1996 was significantly higher than in 1995 resulting in
an increase in snow removal costs.
 
COMPARISON OF THE YEAR ENDED DECEMBER 31, 1995 TO THE YEAR ENDED DECEMBER 31,
1994
Net income for the year ended December 31, 1995 decreased by $1,267,200, when
compared to the year ended December 31, 1994, primarily due to a provision for
value impairment of $1,200,000 during 1995 on 1800 Sherman. In addition,
operating results decreased $72,900 at 1800 Sherman and general and
administrative expenses increased $12,800. The increase in general &
administrative expenses was primarily due to an increase in printing and
mailing costs which were partially offset by a decrease in data processing
costs. Partially offsetting the decrease in net income was an increase of
$47,100 in interest income earned on short-term investments primarily due to an
increase in the average interest rate earned on these investments.
 
Rental revenues at 1800 Sherman increased $41,300 or 2.7% for the year ended
December 31, 1995 when compared to the year ended December 31, 1994, primarily
due to increases in the base rental rate and average occupancy. Partially
offsetting the 1995 increase was a decrease of $20,500 in tenant expense
reimbursements as a result of an overestimate of prior year reimbursements.
 
Real estate tax expense at 1800 Sherman increased by $55,200 for the year ended
December 31, 1995 when compared to the year ended December 31, 1994, primarily
due to a projected increase in the tax rate as well as an underestimate of 1994
real estate taxes which were paid in 1995.
 
Property operating expenses at 1800 Sherman increased by $34,900 for the year
ended December 31, 1995 when compared to the year ended December 31, 1994. The
increase was primarily due to an increase in property
management and leasing fees, as a result of the increase in
rental income which determines the amount of property management and leasing
fees to be paid, and an increase in utility costs. Partially offsetting the
increase was a decrease in professional service fees.
 
6
<PAGE>
 
ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF
         FINANCIAL CONDITION AND RESULTS OF OPERATIONS--(CONTINUED)
 
 
Depreciation and amortization increased by $21,600 for the years under
comparison. The increase was due to the fact that the periodic depreciation and
amortization expense for depreciable and amortizable assets placed in service
during 1995 exceeded the periodic depreciation and amortization expense for
certain assets in which the depreciable and amortizable lives expired during
1995.
 
To maintain the occupancy level at 1800 Sherman, the General Partner, through
its Affiliated asset and property management group, continues to take the
following actions: 1) implementation of marketing programs, including hiring of
third-party leasing agents or providing on-site leasing personnel, advertising,
direct mail campaigns and development of building brochures; 2) early renewal
of existing tenant's leases and addressing any expansion needs these tenants
may have; 3) promotion of local broker events and networking with local
brokers; 4) cold-calling other businesses and tenants in the market area; and
5) providing rental concessions or competitively pricing rental rates depending
on market conditions.
 
The rate of inflation has remained relatively stable during the years under
comparison and has had a minimal impact on the operating results of the
Partnership. The nature of various tenant lease clauses protects the
Partnership, to some extent, from increases in the rate of inflation. Certain
of the lease clauses provide for the following: (1) annual rent increases based
on the Consumer Price Index or graduated rental increases; (2) total or partial
tenant reimbursement of property operating expenses (e.g., common area
maintenance, real estate taxes, etc.).
 
LIQUIDITY AND CAPITAL RESOURCES
A primary objective of the Partnership is to provide cash distributions to
Partners from Partnership operations. Cash Flow (as defined in the Partnership
Agreement) is generally not equal to Partnership net income or cash flows as
defined by GAAP, since certain items are treated differently under the
Partnership Agreement than under GAAP. The General Partner believes that to
facilitate a clear understanding of the Partnership's operations, an analysis
of Cash Flow (as defined in the Partnership Agreement) should be examined in
conjunction with an analysis of net income or cash flows as defined by GAAP.
The second table in Selected Financial Data of this report included a
reconciliation of Cash Flow (as defined in the Partnership Agreement) to cash
flows provided by operating activities as determined by GAAP. Such amounts are
not indicative of actual distributions to Partners and should not necessarily
be considered as an alternative to the results disclosed in the Statements of
Income and Expenses and Statements of Cash Flows.
 
The increase in Cash Flow (as defined in the Partnership Agreement) of $79,200
for the year ended December 31, 1996 when compared to the year ended December
31, 1995 was primarily due to the increase in net income, as previously
discussed, exclusive of depreciation and amortization expense and provision for
value impairment.
 
The decrease in the Partnership's cash position of $378,500 was primarily the
result of investments in debt securities, distributions paid to Partners and
expenditures for capital
and tenant improvements exceeding net cash provided by operating activities.
 
Net cash provided by operating activities decreased by $29,800 for the year
ended December 31, 1996 when compared to the year ended December 31, 1995. The
decrease was primarily due to the timing of the payment of certain Partnership
expenses.
 
Net cash used for investing activities increased by $357,700 for the year ended
December 31, 1996 when compared to the year ended December 31, 1995. The
increase was primarily the result of an increase in investments in debt
securities. The increase in investments in debt securities is a result of the
extension of the maturities of certain of the Partnership's short-term
investments in an effort to maximize the return on these amounts while they are
held for working capital purposes. These investments are of investment-grade
and mature less than one year from their date of purchase. Partially offsetting
the increase was a decrease in expenditures for capital and tenant improvement
and leasing costs. The Partnership maintains working capital reserves to pay
for capital expenditures. The Partnership has budgeted to spend approximately
$100,000 at 1800 Sherman during 1997. The General Partner believes these
improvements and leasing costs are necessary in order to increase and/or
maintain occupancy in a very competitive market and to maximize rental rates
charged to new and renewing tenants.
 
Net cash used for financing activities increased by $53,800 for the year ended
December 31, 1996 when compared to the year ended December 31, 1995. The
increase was primarily due to an increase in cash distributions paid to
Partners.
 
The General Partner continues to take a conservative approach to projections of
future rental income and to maintain higher levels of cash reserves. The
General Partner believes that Cash Flow (as defined in the Partnership
Agreement) is one of the best and least expensive sources of cash. As a result
of this, cash continues to be retained to supplement working capital reserves.
For the year ended December 31, 1996, Cash Flow (as defined in the Partnership
Agreement) retained to supplement working capital reserves was $163,200.
 
Distributions to Limited Partners for the quarter ended December 31, 1996, were
declared in the amount of $116,200 or $0.80 per Unit. Cash distributions are
made 60 days after the last day of each fiscal quarter. The amount of future
distributions to Partners will ultimately be dependent upon the performance of
1800 Sherman as well as the General Partner's determination of the amount of
cash necessary to supplement working capital reserves to meet future liquidity
requirements of the Partnership. Accordingly, there can be no assurance as to
the amount of cash for distributions to Partners.
 
Based upon the current estimated value of its assets, net of its outstanding
liabilities, together with its expected operating results and capital
expenditure requirements, the General Partner believes that the Partnership's
cumulative distributions to its Limited Partners from inception through the
termination of the Partnership will be less than such Limited Partners'
original Capital Contributions.
 
                                                                               7
<PAGE>
 
ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
-------  -----------------------------------------------------------------------
         OF OPERATIONS  (CONTINUED)
         -------------             


ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
-------  -------------------------------------------

The response to this item is submitted as a separate section of this report.
See page A-1 "Index of Financial Statements, Schedule and Exhibits."

ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
-------  ---------------------------------------------------------------
         FINANCIAL DISCLOSURE
         --------------------

None.

                                       9
<PAGE>
 
                                   PART III

ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
--------  --------------------------------------------------


(a)  Directors 
     ---------

     The Partnership has no directors. First Capital Fund - XIV, Inc. is the
     General Partner. The directors of First Capital Fund - XIV, Inc., as of
     March 28, 1997, are shown in the table below. Directors serve for one year
     or until their successors are elected. The next annual meeting of First
     Capital Fund - XIV, Inc. will be held in June 1997.

          Name                                                  Office
          ----                                                  ------

     Samuel Zell.........................................Chairman of the Board
     Douglas Crocker II..................................Director
     Sheli Z. Rosenberg..................................Director

     Samuel Zell, 55, has been a Director of the General Partner since 1983
     (Chairman of the Board since December 1985) and is Chairman of the Board of
     Equity Financial and Management Company ("EFMC") and Equity Group
     Investments, Inc. ("EGI"), and is a trustee and beneficiary of a general
     partner of Equity Holdings Limited, an Illinois Limited Partnership, a
     privately owned investment partnership. He is also Chairman of the Board of
     Directors of Anixter International Inc., American Classic Voyages Co. and
     Manufactured Home Communities, Inc. ("MHC") He is Chairman of the Board of
     Trustees of Equity Residential Properties Trust. He is a director of Chart
     House Enterprises, Inc., Ramco Energy plc, TeleTech Holdings Inc., Quality
     Food Centers, Inc. ("QFC") and Sealy Corporation. He is Chairman of the
     Board of Directors and Chief Executive Officer of Capsure Holdings Corp.
     and Co-Chairman of the Board of Revco D.S., Inc.

     Douglas Crocker II, 56, has been President and Chief Executive Officer
     since December 1992 and a Director since January 1993 of the General
     Partner. Mr. Crocker has been an Executive Vice President of EFMC since
     November 1992. Mr. Crocker has been President, Chief Executive Officer and
     trustee of Equity Residential Properties Trust since March 31, 1993. He was
     President of Republic Savings Bank, F.S.B. ("Republic") from 1989 to June,
     1992 at which time the Resolution Trust Company took control of Republic.
     Mr. Crocker is a member of the Board of Directors of Horizon Group, Inc.

     Sheli Z. Rosenberg, 55, was President and Chief Executive Officer of the
     General Partner from December 1990 to December 1992 and has been a Director
     of the General Partner since September 1983; was Executive Vice President
     and General Counsel for EFMC from October 1980 to November 1994; has been
     President and Chief Executive Officer of EFMC and EGI since November 1994;
     has been a Director of Great American Management and Investment, Inc.
     ("Great American") since June 1984 and is a director of various
     subsidiaries of Great American. She is also a Director of Anixter
     International Inc., Capsure Holdings Corp., American Classic Voyages Co.,
     Jacor Communications, Inc., Revco D.S., Inc., Sealy Corporation, QFC and
     MHC. She is also a trustee of Equity Residential Properties Trust. Ms.
     Rosenberg is a Principal of Rosenberg & Liebentritt, P.C., counsel to the
     Partnership, the General Partner and certain of their Affiliates. She had
     been Vice President of First Capital Benefit Administrators, Inc. ("Benefit
     Administrators") since July 22, 1987 until its liquidation in November
     1995. Benefit Administrators filed for protection under the Federal
     bankruptcy laws on January 3, 1995.


                                      11
<PAGE>

(b, c & e)  EXECUTIVE OFFICERS
           ------------------

     The Partnership does not have any executive officers. The executive
     officers of the General Partner as of March 28, 1997 are shown in the
     table. All officers are elected to serve for one year or until their
     successors are elected and qualified.

          Name                                           Office
          ----                                           ------

     Douglas Crocker II..................President and Chief Executive Officer
     Gus J. Athas........................Senior Vice President
     Norman M. Field.....................Vice President - Finance and Treasurer

     PRESIDENT AND CEO - See Table of Directors above.
     -----------------                                

     Gus J. Athas, 60, has been Senior Vice President of the General Partner
     since March 1995. Mr. Athas has served as Senior Vice President, General
     Counsel and Assistant Secretary of Great American since March 1995. Mr.
     Athas has served as Senior Vice President, General Counsel and Secretary of
     Falcon Building Products, Inc. since March 1994 and served as Vice
     President and Secretary from January 1994 to March 1994. Mr. Athas has
     served as Senior Vice President, General Counsel and Secretary of Eagle
     Industries, Inc. ("Eagle") since May 1993. From September 1992 to May 1993,
     Mr. Athas was Vice President, General Counsel and Secretary of Eagle. From
     November 1987 to September 1992, Mr. Athas served as Vice President,
     General Counsel and Assistant Secretary of Eagle.

     Norman M. Field, 48, has been Vice President of Finance and Treasurer of
     the General Partner since February 1984, and also served as Vice President
     and Treasurer of Great American from July 1983 until March 1995. Mr. Field
     had been Treasurer of Benefit Administrators since July 22, 1987 until its
     liquidation in November 1995. Benefit Administrators filed for protection
     under the Federal bankruptcy laws on January 3, 1995. He was Chief
     Financial Officer of Equality Specialties, Inc. ("Equality"), a subsidiary
     of Great American, from August 1994 to April 1995. Equality was sold in
     April 1995.

(d)  FAMILY RELATIONSHIPS
     --------------------

     There are no family relationships among any of the foregoing directors and
     officers.

(f)  INVOLVEMENT IN CERTAIN LEGAL PROCEEDINGS
     ----------------------------------------

     With the exception of the bankruptcy matter disclosed under Items 10 (a),
     (b), (c) and (e), there are no involvements in certain legal proceedings
     among any of the foregoing directors and officers.


<PAGE>
 
ITEM 11.  EXECUTIVE COMPENSATION
--------  ----------------------

(a, b, c & d) As stated in Item 10, the Partnership has no officers or
directors. Neither the General Partner, nor any director or officer of the
General Partner, received any direct compensation from the Partnership during
the year ended December 31, 1996. Affiliates of the General Partner do
compensate directors and officers of the General Partner. For additional
information see Item 13 (a) Certain Relationships and Related Transactions.

(e)  None.

ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
--------  --------------------------------------------------------------

(a)  As of March 1, 1997, no person of record owned or was known by the
     Partnership to own beneficially more than 5% of the Partnership's 145,182
     Units then outstanding.

(b)  The Partnership has no directors or executive officers. As of March 1,
     1997, the executive officers and directors of the General Partner did not
     own any Units.

(c)  None.

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
--------  ----------------------------------------------

(a)  Affiliates of the General Partner provide leasing, property management and
     supervisory services to the Partnership. Compensation for these property
     management services may not exceed 6% of the gross receipts from a property
     being managed where the General Partner or its Affiliates provide leasing,
     re-leasing and leasing-related services, or 3% of gross receipts where the
     General Partner or its Affiliates do not perform leasing, re-leasing and
     leasing-related services. Affiliates were entitled to property management
     and supervisory fees of $97,300 during 1996. In addition, other Affiliates
     of the General Partner were entitled to fees and compensation of $30,900
     for insurance and personnel services for 1996. In accordance with the
     Partnership Agreement, these services were provided at a price which did
     not exceed the lesser of the cost of such services to the General Partner
     or its Affiliates or 90% of the competitive price which would be charged by
     non-affiliated persons rendering similar services in the same or comparable
     geographic location. As of December 31, 1996, total fees and reimbursements
     of $7,000 were due to Affiliates.

     In accordance with the Partnership Agreement, commencing with the fiscal
     quarter in which the Minimum Subscription Closing Date occurred (the
     quarter ended March 31, 1989), distributable Cash Flow (as defined in the
     Partnership Agreement), if any, is distributed 90% to the Limited Partners
     and 10% to the General Partner. For the year ended December 31, 1996, the
     General Partner was entitled to distributable Cash Flow (as defined in the
     Partnership Agreement) of $51,600.

     In accordance with the Partnership Agreement, Losses (exclusive of Losses
     from a Major Capital Event) are allocated 1% to the General Partner and 99%
     to the Limited Partners as a group. Losses from a Major Capital Event,
     including any provisions for value impairment, are allocated prior to
     giving effect to any distribution of Sale or Refinancing Proceeds from such
     Major Capital Event: first, to the General Partner and Limited Partners
     with positive balances in their Capital Accounts, in proportion to and to
     the extent of such positive balances; and second, the balance, if any, 1%
     to the General Partner and 99% to the Limited Partners as a group. Profits
     (exclusive of Profits from a Major Capital Event) are allocated: first, in
     accordance with the ratio in which Cash Flow (as defined in the Partnership
     Agreement) was distributable among the Partners for such


                                      13
<PAGE>

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS (Continued)
--------  ----------------------------------------------

     fiscal year, to the extent of such Cash Flow (as defined in the Partnership
     Agreement), provided, however, that if the Partnership makes no
     distributions of Cash Flow (as defined in the Partnership Agreement) for
     such fiscal year, then such Profits are allocated 1% to the General Partner
     and 99% to the Limited Partners as a group; and second, the balance, if
     any, 1% to the General Partner and 99% to the Limited Partners as a group.
     Profits from a Major Capital Event are allocated prior to giving effect to
     any distribution of Sale or Refinancing Proceeds from such Major Capital
     Event: first, to the General Partner and Limited Partners with negative
     balances in their Capital Accounts, in proportion to and to the extent of
     such negative balances; second, in proportion to and to the extent of the
     amounts, if any, necessary to make the positive balance in the Capital
     Account of each Limited Partner equal to the Capital Investment of such
     Limited Partner; third, in proportion to and to the extent of the amounts,
     if any, necessary to make the positive balance in the Capital Account of
     each Limited Partner equal to the Capital Investment of such Limited
     Partner, plus an amount equal to a cumulative, simple return of 6% per
     annum on the Capital Investment from time to time of such Limited Partner
     from the date on which the investment in the Partnership was made (less
     amounts previously returned by way of Cash Flow (as defined in the
     Partnership Agreement) and Sale or Refinancing Proceeds in payment of said
     cumulative return); and fourth, any remaining Profits are allocated 17% to
     the General Partner and 83% to the Limited Partners as a group.
     Notwithstanding anything to the contrary, the interest of the General
     Partner in each material item of Partnership income, gain, loss, deduction
     or credit will be equal to at least 1% of each such item at all times
     during the existence of the Partnership. For the year ended December 31,
     1996, the General Partner was allocated Profits of $42,900.

(b)  Rosenberg & Liebentritt, P.C. ("Rosenberg"), serves as legal counsel to the
     Partnership, the General Partner and certain of their Affiliates. Sheli Z.
     Rosenberg, President and Chief Executive Officer of the General Partner
     from December 1990 to December 1992 and a director of the General Partner
     since December 1983, is a Principal of Rosenberg. For the year ended
     December 31, 1996, Rosenberg was entitled to $2,100 for legal fees from the
     Partnership. As of December 31, 1996, all fees due to Rosenberg have been
     paid. Compensation for these services are on terms which are fair,
     reasonable and no less favorable to the Partnership than reasonably could
     be obtained from unaffiliated persons.

(c)  No management person is indebted to the Partnership.

(d)  None.





                                      14
<PAGE>
 
                                    PART IV

ITEM 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
--------  ----------------------------------------------------------------

(a, c & d)  See Index of Financial Statements, Schedule and Exhibits on page A-1
of Form 10-K.

(b)  Reports on Form 8-K:

There were no reports filed on Form 8-K for the quarter ended December 31, 1996.

                                      15
<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.


                                 FIRST CAPITAL GROWTH FUND - XIV,
                                 A REAL ESTATE LIMITED PARTNERSHIP

                                 BY:  FIRST CAPITAL FUND - XIV, INC.
                                      GENERAL PARTNER

Dated:    March 28, 1997         By:  /s/   DOUGLAS CROCKER II
          --------------              ------------------------------------------
                                            DOUGLAS CROCKER II
                                      President and Chief Executive Officer

      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 dates indicated.

<TABLE>
<CAPTION>

<S>                      <C>              <C> 
/s/ SAMUEL ZELL          March 28, 1997   Chairman of the Board and         
----------------------   --------------   Director of the General Partner 
    SAMUEL ZELL                              
                        
/s/ DOUGLAS CROCKER II   March 28, 1997   President, Chief Executive Officer and
----------------------   --------------   Director of the General Partner
    DOUGLAS CROCKER II                 
                        
                        
/s/ SHELI Z. ROSENBERG   March 28, 1997   Director of the General Partner
----------------------   --------------
    SHELI Z. ROSENBERG  
                        
/s/ GUS J. ATHAS         March 28, 1997   Senior Vice President
----------------------   --------------
    GUS J. ATHAS        
                        
/s/ NORMAN M. FIELD      March 28, 1997   Vice President - Finance and Treasurer
----------------------   --------------
    NORMAN M. FIELD

</TABLE>


                                      16
<PAGE>
 
              INDEX OF FINANCIAL STATEMENTS, SCHEDULE AND EXHIBITS

               FINANCIAL STATEMENTS FILED AS PART OF THIS REPORT
<TABLE>
<CAPTION>
 
                                                            Pages
                                                       ---------------
<S>                                                      <C>
 
Report of Independent Auditors                               A-2
 
Balance Sheets at December 31, 1996 and 1995                 A-3
 
Statements of Partners' Capital for the
 Years Ended December 31, 1996, 1995, 1994                   A-4
 
Statements of Income and Expenses for
 the Years Ended December 31, 1996, 1995, 1994               A-4
 
Statements of Cash Flows for the Years
 Ended December 31, 1996, 1995, 1994                         A-4
 
Notes to Financial Statements                            A-5 to A-6 
 
SCHEDULE FILED AS PART OF THIS REPORT
 
III - Real Estate and Accumulated                       A-7 and A-8
 Depreciation as of December 31, 1996
</TABLE>

All other schedules have been omitted as inapplicable, or for the reason that
the required information is shown in the financial statements or notes thereto.

EXHIBITS FILED AS PART OF THIS REPORT

EXHIBITS (3 & 4)  First Amended and Restated Certificate and Agreement of
Limited Partnership as set forth on pages A-1 through A-38 of the Partnership's
definitive Prospectus dated December 8, 1988, included in the Partnership's
Registration Statement on Form S-11 (Registration No. 33-19365), filed pursuant
to Rule 424(b), is incorporated herein by reference.

EXHIBIT (13)  Annual Report to Security Holders.

The 1995 Annual Report to Limited Partners is being sent under separate cover,
not as a filed document and not via EDGAR, for the information of the
Commission.

EXHIBIT (27)  Financial Data Schedule
   
                                      A-1
<PAGE>
 
                        REPORT OF INDEPENDENT AUDITORS



Partners
First Capital Growth Fund - XIV,
A Real Estate Limited Partnership
Chicago, Illinois


We have audited the accompanying balance sheets of First Capital Growth Fund -
XIV, A Real Estate Limited Partnership as of December 31, 1996 and 1995, and the
related statements of income and expenses, partners' capital and cash flows for
each of the three years in the period ended December 31, 1996, and the financial
statement schedule listed in the accompanying index.  These financial statements
and schedule are the responsibility of the Partnership's management.  Our
responsibility is to express an opinion on these financial statements and
schedule 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 First Capital Growth Fund -
XIV, A Real Estate Limited Partnership at December 31, 1996 and 1995, and the
results of its operations and its cash flows for each of the three years in the
period ended December 31, 1996, in conformity with generally accepted accounting
principles.  Also, in our opinion, the related financial statement schedule,
when considered in relation to the basic financial statements taken as a whole,
presents fairly in all material respects the information set forth therein.



                                  Ernst & Young LLP


Chicago, Illinois
March 14, 1997

                                      A-2
<PAGE>
 
       FIRST CAPITAL GROWTH FUND--XIV, A REAL ESTATE LIMITED PARTNERSHIP
BALANCE SHEETS
December 31, 1996 and 1995
(All dollars rounded to nearest 00s)
 
<TABLE>
<CAPTION>
                                                  1996        1995
----------------------------------------------------------------------
<S>                                            <C>         <C>
ASSETS
Investment in commercial rental property:
 Land                                          $1,319,000  $1,319,000
 Building and improvements                      5,842,200   5,807,300
----------------------------------------------------------------------
                                                7,161,200   7,126,300
 Accumulated depreciation and amortization     (1,238,000)   (987,500)
----------------------------------------------------------------------
 Total investment property, net of accumulated
  depreciation and amortization                 5,923,200   6,138,800
Cash and cash equivalents                       1,986,300   2,364,800
Investments in debt securities                    496,300
Rents receivable                                    4,500       6,000
Other assets                                       16,200      26,000
----------------------------------------------------------------------
                                               $8,426,500  $8,535,600
----------------------------------------------------------------------
LIABILITIES AND PARTNERS' CAPITAL
Liabilities:
 Accrued real estate taxes                     $  515,200  $  550,500
 Distributions payable                            129,000     121,000
 Accounts payable and accrued expenses             66,700      97,300
 Due to Affiliates                                  7,000       4,200
 Prepaid rent                                      18,200
 Security deposits                                 38,500      38,100
 Other liabilities                                 34,400      19,700
----------------------------------------------------------------------
                                                  809,000     830,800
----------------------------------------------------------------------
Partners' capital:
 General Partner                                  154,700     163,400
 Limited Partners (145,182 Units issued and
  outstanding)                                  7,462,800   7,541,400
----------------------------------------------------------------------
                                                7,617,500   7,704,800
----------------------------------------------------------------------
                                               $8,426,500  $8,535,600
----------------------------------------------------------------------
</TABLE>
STATEMENTS OF PARTNERS' CAPITAL
For the years ended December 31, 1996, 1995 and 1994
(All dollars rounded to nearest 00s)
 
<TABLE>
<CAPTION>
                                      General    Limited
                                      Partner    Partners     Total
-----------------------------------------------------------------------
<S>                                   <C>       <C>         <C>
Partners' capital, January 1, 1994    $202,100  $8,768,600  $8,970,700
Net income for the year ended
 December 31, 1994                      34,300     376,100     410,400
Distributions for the year ended
 December 31, 1994                     (33,600)   (302,000)   (335,600)
-----------------------------------------------------------------------
Partners' capital, December 31, 1994   202,800   8,842,700   9,045,500
Net income (loss) for the year ended
 December 31, 1995                       9,000    (865,800)   (856,800)
Distributions for the year ended
 December 31, 1995                     (48,400)   (435,500)   (483,900)
-----------------------------------------------------------------------
Partners' capital, December 31, 1995   163,400   7,541,400   7,704,800
Net income for the year ended
 December 31, 1996                      42,900     386,000     428,900
Distributions for the year ended
 December 31, 1996                     (51,600)   (464,600)   (516,200)
-----------------------------------------------------------------------
Partners' capital, December 31, 1996  $154,700  $7,462,800  $7,617,500
-----------------------------------------------------------------------
</TABLE>
    The accompanying notes are an integral part of the financial statements.
                                                                             A-3
<PAGE>
 
       FIRST CAPITAL GROWTH FUND--XIV, A REAL ESTATE LIMITED PARTNERSHIP
STATEMENTS OF INCOME AND EXPENSES
For the years ended December 31, 1996, 1995 and 1994
(All dollars rounded to nearest 00s
except per Unit amounts)
 
<TABLE>
<CAPTION>
                                            1996       1995        1994
--------------------------------------------------------------------------
<S>                                      <C>        <C>         <C>
Income:
 Rental                                  $1,533,100 $1,530,500  $1,512,300
 Interest                                   121,100    132,700      85,600
--------------------------------------------------------------------------
                                          1,654,200  1,663,200   1,597,900
--------------------------------------------------------------------------
Expenses:
 Depreciation and amortization              250,500    257,000     235,400
 Property operating:
  Affiliates                                 98,600     87,900      61,300
  Nonaffiliates                             151,400    149,500     139,700
 Real estate taxes                          464,800    554,400     499,200
 Insurance--Affiliate                        12,700     12,700       9,900
 Repairs and maintenance                    175,900    165,900     162,200
 General and administrative:
  Affiliates                                 19,000     20,400      21,500
  Nonaffiliates                              52,400     72,200      58,300
 Provision for value impairment                      1,200,000
--------------------------------------------------------------------------
                                          1,225,300  2,520,000   1,187,500
--------------------------------------------------------------------------
Net income (loss)                        $  428,900 $ (856,800) $  410,400
--------------------------------------------------------------------------
Net income allocated to General Partner  $   42,900 $    9,000  $   34,300
--------------------------------------------------------------------------
Net income (loss) allocated to Limited
 Partners                                $  386,000 $ (865,800) $  376,100
--------------------------------------------------------------------------
Net income (loss) allocated to Limited
 Partners per Unit (145,182 Units
 outstanding)                            $     2.66 $    (5.96) $     2.59
--------------------------------------------------------------------------
</TABLE>
 
STATEMENTS OF CASH FLOWS
For the years ended December 31, 1996, 1995 and 1994
(All dollars rounded to nearest 00s)
 
<TABLE>
<CAPTION>
                                                1996        1995        1994
--------------------------------------------------------------------------------
<S>                                          <C>         <C>         <C>
Cash flows from operating activities:
 Net income (loss)                           $  428,900  $ (856,800) $  410,400
 Adjustments to reconcile net income (loss)
  to net cash provided by operating
  activities:
  Depreciation and amortization                 250,500     257,000     235,400
  Provision for value impairment                          1,200,000
  Changes in assets and liabilities:
   Decrease in rents receivable                   1,500       5,600       9,200
   Decrease in other assets                       9,800      12,300      21,200
   (Decrease) increase in accrued real
    estate taxes                                (35,300)     50,100      20,900
   (Decrease) increase in accounts payable
    and accrued expenses                        (30,600)     32,200      (4,400)
   Increase (decrease) in due to Affiliates       2,800     (11,700)      1,600
   Increase (decrease) in prepaid rent           18,200     (18,100)   (115,200)
   Increase (decrease) in other liabilities      14,700      19,700    (105,000)
--------------------------------------------------------------------------------
    Net cash provided by operating
     activities                                 660,500     690,300     474,100
--------------------------------------------------------------------------------
Cash flows from investing activities:
 Payments for capital and tenant
  improvements                                  (34,900)   (173,500)   (190,700)
 (Increase) in investments in debt
  securities                                   (496,300)
--------------------------------------------------------------------------------
    Net cash (used for) investing activities   (531,200)   (173,500)   (190,700)
--------------------------------------------------------------------------------
Cash flows from financing activities:
 Distributions paid to Partners                (508,200)   (446,800)   (251,700)
 Increase (decrease) in security deposits           400      (7,200)        700
--------------------------------------------------------------------------------
    Net cash (used for) financing activities   (507,800)   (454,000)   (251,000)
--------------------------------------------------------------------------------
Net (decrease) increase in cash and cash
 equivalents                                   (378,500)     62,800      32,400
Cash and cash equivalents at the beginning
 of the year                                  2,364,800   2,302,000   2,269,600
--------------------------------------------------------------------------------
Cash and cash equivalents at the end of the
 year                                        $1,986,300  $2,364,800  $2,302,000
--------------------------------------------------------------------------------
</TABLE>
A-4
    The accompanying notes are an integral part of the financial statements
<PAGE>
 
       FIRST CAPITAL GROWTH FUND--XIV, A REAL ESTATE LIMITED PARTNERSHIP
 
NOTES TO FINANCIAL STATEMENTS
December 31, 1996
 
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
 
DEFINITION OF SPECIAL TERMS:
Capitalized terms used in this report have the same meaning as those terms have
in the Partnership's Registration Statement filed with the Securities and
Exchange Commission on Form S-11. Definitions of these terms are contained in
Article III of the First Amended and Restated Agreement of Limited Partnership,
which is included in the Registration Statement and incorporated herein by
reference.
 
ORGANIZATION:
The Partnership was formed on December 29, 1987, by the filing of a Certificate
and Agreement of Limited Partnership with the Recorder of Deeds of Cook County,
Illinois, and commenced the Offering of Units on December 8, 1988. On February
1, 1989, the required minimum subscription level was reached, and the
Partnership commenced operations. The Offering was Terminated on September 28,
1990 with 145,182 Units sold. The Partnership was formed to invest primarily in
existing, improved, income-producing real estate on a leveraged basis.
 
The Partnership Agreement provides that the Partnership will be dissolved on or
before December 31, 2018. The Limited Partners, by a majority vote, may
dissolve the Partnership at any time.
 
ACCOUNTING POLICIES:
The financial statements have been prepared in accordance with generally
accepted accounting principles ("GAAP"). Under this method of accounting,
revenues are recorded when earned and expenses are recorded when incurred.
 
Preparation of the Partnership's financial statements in conformity with GAAP
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual results could differ
from those estimates.
 
The financial statements include the Partnership's 50% interest in a joint
venture with an Affiliated partnership. This joint venture was formed for the
purpose of acquiring a 100% interest in 1800 Sherman Office Building and is
operated under the common control of the General Partner and an Affiliate of
the General Partner. Accordingly, the Partnership's pro rata share of the
venture's revenues, expenses, assets, liabilities and Partners' capital is
included in the financial statements.
 
The Partnership is not liable for federal income taxes as the Partners
recognize their proportionate share of the Partnership income or loss in their
individual tax returns; accordingly, no provision for income taxes is made in
the financial statements of the Partnership. In addition, it is not practicable
for the Partnership to determine the aggregate tax bases of the individual
Partners; therefore, the disclosure of the differences between the tax bases
and the reported assets and liabilities of the Partnership would not be
meaningful.
 
Commercial rental property is recorded at cost, net of any provisions for value
impairment, and depreciated (exclusive of amounts allocated to land) on the
straight-line method over its estimated useful life. Upon classifying a
commercial rental property as held for disposition, no further depreciation or
amortization of the property is provided for in the financial statements. Lease
acquisition fees are recorded at cost and amortized on a straight-line method
over the life of each respective lease. Repair and maintenance costs are
expensed as incurred; expenditures for improvements are capitalized and
depreciated on the straight-line method over the estimated life of the
improvements.
 
During the first quarter of 1996, the Partnership adopted Financial Accounting
Standards Board Statement No. 121 "Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to be Disposed Of" (the "Standard"). The
Standard established guidance for determining if the value of defined assets is
impaired, and if so, how impairment losses should be measured and reported in
the financial statements. Management is not aware of any indicator that would
result in any significant impairment loss. The Standard also addressed the
accounting for long-lived assets to be disposed of.
 
Cash equivalents are considered all highly liquid investments with a maturity
of three months or less when purchased.
 
Investments in debt securities are comprised of obligations of the United
States government totaling $496,300 and are classified as held-to-maturity.
These investments are carried at their amortized cost basis in the financial
statements which approximated fair market value. All of these securities had a
maturity of less than one year when purchased.
 
The Partnership's financial statements include financial instruments, including
receivables and trade liabilities. The fair value of financial instruments,
including cash and cash equivalents, included in the financial statements, was
not materially different from their carrying value at December 31, 1996 and
1995.
 
2. RELATED PARTY TRANSACTIONS:
 
In accordance with the Partnership Agreement, commencing with the fiscal
quarter in which the Minimum Subscription Closing Date occurred (the quarter
ended March 31, 1989), distributable Cash Flow (as defined in the Partnership
Agreement), if any, is distributed 90% to the Limited Partners and 10% to the
General Partner. For the years ended December 31, 1996, 1995 and 1994, the
General Partner was entitled to and received distributable Cash Flow (as
defined in the Partnership Agreement) of $51,600, $48,400 and $33,600,
respectively.
 
In accordance with the Partnership Agreement, Losses (exclusive of Losses from
a Major Capital Event) are allocated 1% to the General Partner and 99% to the
Limited Partners as a group. Losses from a Major Capital Event, including any
provisions for value impairment, are allocated prior to giving effect to any
distribution of Sale or Refinancing Proceeds from such Major Capital Event:
first, to the General Partner and Limited Partners with positive balances in
their Capital Accounts, in proportion to and to the extent of such positive
balances; and second, the balance, if any, 1% to the General Partner and 99%
 
                                                                             A-5
<PAGE>
 
       FIRST CAPITAL GROWTH FUND--XIV, A REAL ESTATE LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
 
to the Limited Partners as a group. Profits (exclusive of Profits from a Major
Capital Event) are allocated: first, in accordance with the ratio in which Cash
Flow (as defined in the Partnership Agreement) was distributable among the
Partners for such fiscal year, to the extent of such Cash Flow (as defined in
the Partnership Agreement), provided, however, that if the Partnership makes no
distributions of Cash Flow (as defined in the Partnership Agreement) for such
fiscal year, then such Profits are allocated 1% to the General Partner and 99%
to the Limited Partners as a group; and second, the balance, if any, 1% to the
General Partner and 99% to the Limited Partners as a group. Profits from a
Major Capital Event are allocated prior to giving effect to any distribution of
Sale or Refinancing Proceeds from such Major Capital Event: first, to the
General Partner and Limited Partners with negative balances in their Capital
Accounts, in proportion to and to the extent of such negative balances; second,
in proportion to and to the extent of the amounts, if any, necessary to make
the positive balance in the Capital Account of each Limited Partner equal to
the Capital Investment of such Limited Partner; third, in proportion to and to
the extent of the amounts, if any, necessary to make the positive balance in
the Capital Account of each Limited Partner equal to the Capital Investment of
such Limited Partner, plus an amount equal to a cumulative, simple return of 6%
per annum on the Capital Investment from time to time of such Limited Partner
from the date on which the investment in the Partnership was made (less amounts
previously returned by way of Cash Flow (as defined in the Partnership
Agreement) and Sale or Refinancing Proceeds in payment of said cumulative
return); and fourth, any remaining Profits are allocated 17% to the General
Partner and 83% to the Limited Partners as a group. Notwithstanding anything to
the contrary, the interest of the General Partner in each material item of
Partnership income, gain, loss, deduction or credit will be equal to at least
1% of each such item at all times during the existence of the Partnership. For
the year ended December 31, 1996, the General Partner was allocated Profits of
$42,900. For the year ended December 31, 1995, the General Partner was
allocated Profits of $9,000, which included a (loss) from a provision for value
impairment of $(25,300). For the year ended December 31, 1994, the General
Partner was allocated Profits of $34,300.
 
Fees and reimbursements paid and payable by the Partnership to Affiliates were
as follows:
 
<TABLE>
<CAPTION>
                                    For the Years Ended December 31,
                            -------------------------------------------------
                                  1996             1995            1994
                            ---------------- ---------------- ---------------
                              Paid   Payable   Paid   Payable  Paid   Payable
-----------------------------------------------------------------------------
<S>                         <C>      <C>     <C>      <C>     <C>     <C>
Property management and
 leasing fees               $ 92,200 $5,500  $100,800 $  400  $45,300 $13,600
Reimbursement of property
 insurance premiums, at
 cost                         12,700   None    12,700   None   10,000    None
Reimbursement of expenses,
 at cost:
 --Accounting                 12,900  1,200     8,600  2,400   12,100   1,300
 --Investor communication      7,600    300     9,300  1,400    9,000   1,000
 --Legal                       2,100   None     2,100   None   14,900    None
-----------------------------------------------------------------------------
                            $127,500 $7,000  $133,500 $4,200  $91,300 $15,900
-----------------------------------------------------------------------------
</TABLE>
 
On site property management for the Partnership's property is provided by an
Affiliate of the General Partner, for fees based on a percentage of gross rents
received from the property. These fees range from 3% to 6%, based upon the
terms of the property management agreement.
 
3. FUTURE MINIMUM RENTALS:
 
The Partnership's share of future minimum rental income due on noncancelable
leases for the next five years and thereafter as of December 31, 1996 was as
follows:
 
<TABLE>
                    <S>         <C>
                    1997        $1,341,700
                    1998         1,298,000
                    1999         1,190,700
                    2000         1,042,100
                    2001           870,900
                    Thereafter   2,166,400
                             -------------
                                $7,909,800
                             -------------
</TABLE>
 
The Partnership is subject to the usual business risks associated with the
collection of the above scheduled rentals. In addition to the amounts scheduled
above, the Partnership expects to receive rental revenue from operating expense
and real estate tax expense reimbursements and percentage rents. Percentage
rents earned for the years ended December 31, 1996, 1995, and 1994 were $1,700,
$2,000 and $2,100, respectively.
 
4. INCOME TAX:
 
The Partnership utilizes the accrual basis of accounting for both income tax
reporting and financial statement purposes. The results for financial statement
purposes will differ from the results for income tax reporting purposes due to
the use of differing depreciation lives and methods, the recognition of rents
paid in advance as taxable income and the Partnership's provision for value
impairment. The net effect of these accounting differences for the year ended
December 31, 1996, was that the net income for tax reporting purposes was
greater than the net income for financial statement purposes by $72,400. The
aggregate cost of commercial rental property for federal income tax purposes at
December 31, 1996 was $8,361,200.
 
5. PROVISION FOR VALUE IMPAIRMENT:
 
Due to regional factors and other matters affecting the Partnership's remaining
property it was deemed appropriate to reduce the basis of 1800 Sherman Office
Building by recording a provision for value impairment of $(1,200,000) during
the year ended December 31, 1995. The provision for value impairment was
considered a non-cash event for the purpose of the Statement of Cash Flows and
was not utilized in the determination of Cash Flow (as defined in the
Partnership Agreement).
 
A-6
<PAGE>
                       FIRST CAPITAL GROWTH FUND - XIV,
                       A REAL ESTATE LIMITED PARTNERSHIP

            SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
                            AS OF DECEMBER 31, 1996
<TABLE>
<CAPTION>

 Column A             Column C                    Column D                          Column E                   Column F
------------   ----------------------  ------------------------------ -------------------------------------   -----------
                    Initial cost             Costs capitalized                Gross amount at which
                   to Partnership        subsequent to acquisition         carried at close of period
               ----------------------  ------------------------------ -------------------------------------
                           Buildings                                                Buildings                   Accumu-
                              and                                                      and                       lated
                            Improve-    Improve-            Carrying                Improve-                   Deprecia-
Description       Land       ments       ments              Costs (1)    Land         ments    Total (2)(3)    tion (2)
------------   ----------- ----------  ----------           --------- -----------  ----------- ------------   -----------
<S>            <C>         <C>         <C>                  <C>       <C>          <C>         <C>            <C> 
Office Building:
----------------

1800 Sherman
 (Evanston, IL)
 (50% Interest)$ 1,319,000 $ 6,147,100 $  868,200           $ 26,900  $ 1,319,000  $ 5,842,200 $ 7,161,200 (4)$ 1,238,000
               =========== =========== ==========           ========  ===========  =========== ===========    ===========
</TABLE> 


<TABLE> 
<CAPTION> 
                Column G    Column H    Column I
               ----------- ----------- -----------
                                         Life on
                                          which
                                        deprecia-
                                       tion in lat-
                                       est income
                 Date of               statements
                construc-     Date       is com-
                  tion      Acquired      puted
               ----------- ----------- -----------
<S>            <C>         <C>         <C> 


                             March        35(5)
                  1986        1991       3-10(6)

</TABLE>

Column B - Not Applicable

                   See accompanying notes on following page

                                      A-7
<PAGE>
                       FIRST CAPITAL GROWTH FUND - XIV,
                       A REAL ESTATE LIMITED PARTNERSHIP

                             NOTES TO SCHEDULE III

Note 1. Consists of legal fees, appraisal fees, title costs and other related
        professional fees.

Note 2. The following is a reconciliation of activity in Columns E and F:
<TABLE>
<CAPTION>
                         December 31, 1996                 December 31, 1995                 December 31, 1994
                    ---------------------------      -----------------------------      ----------------------------
                                    Accumulated                        Accumulated                      Accumulated
                       Cost        Depreciation          Cost         Depreciation         Cost        Depreciation
                    -----------    ------------      -------------    ------------      -----------    -------------
<S>                 <C>            <C>               <C>              <C>               <C>            <C>
Balance at
  beginning
  of the
  year              $ 7,126,300    $    987,500      $   8,152,800     $    730,500     $ 7,962,100    $     495,100

Additions
  during the
  year:

Improvements             34,900                            173,500                          190,700

Provisions
  for
  depreciation                          250,500                             257,000                          235,400

Deductions
  during the
  year:

Cost of
  real estate
  disposed

Accumulated
  depreciation
  on real
  estate
  disposed

Provision
  for value
  impairment                                            (1,200,000)
                    -----------    ------------      -------------     ------------     -----------     ------------

Balance at
  end of the
  year              $ 7,161,200    $  1,238,000      $   7,126,300     $    987,500     $ 8,152,800     $    730,500
                    ===========    ============      =============     ============     ===========     ============
</TABLE>
Note 3.  The aggregate cost for federal income tax purposes as of December 31, 
         1996 was $8,361,200

Note 4.  Included provision for value impairment of $1,200,000. See Note 5 of
         Notes to Financial Statements for more information.

Note 5.  Estimated useful life for building in years.

Note 6.  Estimated useful life for improvements in years.

                                     A - 8