UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

                                   FORM 10-K


(Mark One)
{ X }  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
       SECURITIES EXCHANGE ACT OF 1934 (FEE REQUIRED)

For the fiscal year ended        December 31, 1996
                               ----------------------------

{   }  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 0-15747

              Brown-Flournoy Equity Income Fund Limited Partnership
             (Exact Name of Registrant as Specified in its Charter)


                 Delaware                                         58-1688140
         (State or Other Jurisdiction of                     (I.R.S. Employer
         Incorporation or Organization)                  Identification Number)



     225 East Redwood Street, Baltimore, Maryland                      21202
       (Address of Principal Executive Offices)                     (Zip Code)

        Registrant's Telephone Number, Including Area Code:     (410) 727-4083

          Title of each class      Name of each exchange on which registered

                None

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

                     Class A Limited Partnership Interests
                                (Title of class)

 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

     As of  December  31,  1996,  there  were  26,900  Units of Class A  Limited
Partnership Interests held by non-affiliates of the Registrant. Because there is
not an established  public trading  market for the Units,  the aggregate  market
value  of  the  Units  held  by  non-affiliates  of  the  Registrant  cannot  be
calculated.
                      Documents Incorporated by Reference

The Annual Report for 1996 is incorporated by reference.


<PAGE>
              BROWN-FLOURNOY EQUITY INCOME FUND LIMITED PARTNERSHIP


                                                       INDEX

                                                                  Page(s)
                                                                 --------
Part I

     Item 1.  Business                                              3-4
     Item 2.  Properties                                             4
     Item 3.  Legal Proceedings                                      4
     Item 4.  Submission of Matters to a Vote of Security Holders    4


Part II


     Item 5.  Market for Registrant's Common Equity
                  and Related Stockholder Matters                    5
     Item 6.  Selected Financial Data                                6
     Item 7.  Management's Discussion and Analysis of Financial
                  Condition and Results of Operations               6-7
     Item 8.  Financial Statements and Supplementary Data            8
     Item 9.  Changes in and Disagreements with Accountants on
                  Accounting and Financial Disclosure                8

Part III

     Item 10. Directors and Executive Officers of the Registrant    8-9
     Item 11. Executive Compensation                                9-10
     Item 12. Security Ownership of Certain Beneficial Owners
                  and Management                                    10
     Item 13. Certain Relationships and Related Transactions        10


Part IV


     Item 14. Exhibits, Financial Statement Schedules and
                  Reports on Form 8-K                               10-13

              Signatures                                            14






                                                      -1-


<PAGE>


              BROWN-FLOURNOY EQUITY INCOME FUND LIMITED PARTNERSHIP



                                                      PART I


Item 1.  Business

     Brown-Flournoy  Equity  Income Fund Limited  Partnership  (the "Fund") is a
Delaware limited partnership formed on June 25, 1986 to develop and operate four
residential  apartment  communities in Georgia and South  Carolina.  The capital
raised from the admission of investors  enabled the Fund to acquire the property
and improvements and complete the construction of the four apartment communities
by the end of 1987. See Item 2, Properties, herein.

     The Fund's objectives are to (I) preserve and protect  investors'  capital;
(ii)  obtain  capital  appreciation  through  increases  in  the  value  of  the
Properties;  (iii) provide quarterly cash distributions to investors from income
generated by the Properties'  rental income; and (iv) provide investors with tax
deductions to shelter a portion of cash distributions.

     The General Partners of the Fund are Brown Equity Income Properties,  Inc.,
a Maryland  corporation  (the  "Administrative  General  Partner"),  and John F.
Flournoy (the "Development General Partner").

    A minimum  of 6,455  units and a maximum of 27,000  units  were  registered
under the Securities and Exchange Act of 1933, as amended. During 1986 and 1987,
all 27,000 units were sold,  and the  Registrant's  net proceeds  available  for
investment  aggregated  $25,110,000  (gross proceeds of $27,000,000 less selling
commissions  and offering and promotion  expenses paid of $1,797,300  and volume
discounts of $92,700).

     Funding for the acquisition of the land and  improvements  and construction
of the apartment  units was initially  provided by capital  raised by the Fund's
$27,000,000  equity  offering which commenced in the latter part of 1986 and was
fully subscribed in February,  1987 with the admission of investors  holding the
final Class A Limited  Partnership  interests  (the  "Units").  Each of the four
apartment communities was built within the terms of the fixed price construction
contracts  and  all  were  completed  ahead  of  the  schedule  required  by the
construction contracts.

     The Fund secured first mortgage loans of $20.8 million on its properties on
August 30, 1989.  The loan  proceeds  were used to return  approximately  60% of
original  equity to  investors  (approximately  $16.2  million),  repay  certain
deferred fees and establish reserves. The Fund took on the additional expense of
monthly  debt  service  payments  resulting  in a reduction  of  operating  cash
available for future  distributions.  The Fund's  working  capital not currently
needed for  improvements or other needs was invested,  primarily in certificates
of deposit or money market accounts.

     The mortgage  loans  matured on  September 1, 1996 and the Fund  refinanced
these loans with Columbus  Bank & Trust.  The terms of the new loans provide for
interest  only payments of prime plus 1% (9.25% at the time of  refinancing)  in
monthly  installments  beginning on October 1, 1996. The new loans totaled $20.4
million  and  provided  proceeds  sufficient  to satisfy  the  repayment  of the
existing  mortgage loans, as well as all costs of the  refinancing.  The fund is
required to pay a  commitment  fee of one point  payable in advance in quarterly
installments.  The new loans will mature on August 27, 1997. The Fund intends to
repay these  balances with proceeds from mortgage  refinancing  or other capital
transactions.

     The Fund's residential  apartment communities face competition with similar
properties  in their  locations.  The  competition  is  based on the  properties
proximity to area employers and commercial and retail  facilities.  In addition,
consideration has been given to the comparability of quality,  amenities, rental
rates and unit sizes. The Fund's annual report discusses  operations and current
leasing  information for the properties and is incorporated by reference in Item
14. Exhibits, Financial Statement Schedules and Reports on Form 8-K, herein.

     Pursuant  to the terms of a property  management  agreement  with the Fund,
each of the  Properties is managed by Flournoy  Properties,  Inc.,  the property
manager, and the agreement is now renewable on a year-to-year basis. The
                                                      -3-

<PAGE>

              BROWN-FLOURNOY EQUITY INCOME FUND LIMITED PARTNERSHIP


 Item 1.  Business (continued)

property manager  receives a property  management fee for each Property of 5% of
gross monthly operating revenues of the Property. Under the terms of each of the
property  management  agreements,   the  property  manager  is  responsible  for
performing,  or paying others to perform on its behalf, all  leasing-related and
other  property  management  services for the  properties.  The  management  and
administration  of the Fund is performed by the General Partners or an affiliate
thereof.


Item 2.  Properties

     The Fund owns the land and improvements as described below:

Name and Location of Property


              Description of Property

                    1996 Rental Income

Southland Station
Warner Robins
Houston County,  Georgia A 160-unit  garden  apartment  community  consisting of
twelve two-story  buildings,  a swimming pool,  tennis courts and a clubhouse on
approximately 15 acres of land.
$ 1,110,559



Park Place
Spartanburg County,
South Carolina
A  184-unit  garden  apartment   community   consisting  of  thirteen  two-story
buildings,  a swimming pool, tennis courts and a clubhouse on approximately 14.4
acres of land.
  1,250,520
Hidden Lake - Phase Two
Union City, Fulton County,
Georgia
A  160-unit  garden  apartment   community   consisting  of  thirteen  two-story
buildings.  The property shares two swimming pools, tennis courts, a sport court
and a clubhouse with an existing 160-unit apartment complex adjacent to the site
and is located on approximately 16.2 acres of land.
  1,073,673
High Ridge
Athens, Clarke County,
Georgia
A 160-unit garden apartment community  consisting of eleven  two-and-three-story
buildings,  swimming pools,  tennis courts and a clubhouse on  approximately  18
acres of land.
  1,365,157
     For additional information on the properties,  reference is made to Item 7.
Management's  Discussion  and  Analysis of  Financial  Condition  and Results of
Operations, herein.


Item 3.    Legal Proceedings

     The Fund is not subject to any material pending legal proceedings.


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

     There were no matters  submitted to the security  holders for a vote during
the last quarter of the fiscal year covered by this report.

                                                      -4-


<PAGE>


              BROWN-FLOURNOY EQUITY INCOME FUND LIMITED PARTNERSHIP





                                                      PART II




Item 5.  Market for Registrant's Common Equity and
               Related Stockholder Matters

     An  established  public trading market for the Units does not exist and the
Fund does not anticipate that a public market will develop. Transfer of Units by
an investor and purchase of Units by the Fund may be accommodated  under certain
terms and conditions.  The Partnership  Agreement imposes certain limitations on
the transfer of Units and may restrict,  delay or prohibit a transfer  primarily
if:

o    the transfer of Units would result in 50% or more of all Units having been
     transferred by assignment or otherwise within a 12-month period

o    the transfer of Units would cause the Partnership to be classified other 
     than a partnership for federal income tax purposes

o    the transfer of Units would cause the Partnership to terminate for federal
     income tax purposes


     Any transfer of an Interest by a Limited Partner shall also comply with the
following conditions:

o    no actions may be taken with respect to a fraction of a Unit

o    a Limited  Partner  must  transfer  all of his Units if he would  otherwise
     retain less than five units (or two units in the case of an IRA)

o    all transfers must be made in compliance with minimum purchase requirements
     and all other requirements of applicable  securities laws, the evidence for
     which  compliance  shall be submitted by the Limited Partner to the General
     Partners


     As of  December  31,  1996,  there  were  1,150  holders  of  Units  of the
registrant,  owning an aggregate of 27,000  units.  In 1996,  the Fund made four
quarterly  distributions from operations  totaling  $551,020.  In 1995, the Fund
made four  quarterly  distributions  from  operations  totaling  $551,020  and a
special  distribution from settlement proceeds received in 1994 of $275,511.  In
1994,  the Fund made  four  quarterly  distributions  from  operations  totaling
$551,020,  and a special  distribution of financing  proceeds to Class A Limited
Partners of $800,000.  In 1993, the Fund made four quarterly  distributions from
operations   totaling   $551,020.   In  1992,   the  Fund  made  four  quarterly
distributions  from  operations  of $385,818 and $165,202  from working  capital
reserves, aggregating $551,020.

                                                      -5-


<PAGE>


              BROWN-FLOURNOY EQUITY INCOME FUND LIMITED PARTNERSHIP


Item 6.  Selected Financial Data

     Revenues and net earnings  (loss)  information  furnished  below is for the
years ended December 31:
<TABLE>
<CAPTION>

                              1996              1995           1994             1993            1992
Revenues:
<S>                      <C>             <C>             <C>             <C>             <C>         
Rental income            $  4,799,909    $  4,644,851    $  4,451,569    $  4,244,572    $  4,012,849
Interest income                61,955          67,677          49,805          57,850          77,481
Gain on settlement
   of lawsuit                    --           299,228            --              --              --
Net loss                     (371,349)       (116,742)       (411,601)       (497,282)       (718,240)
Net loss per Unit              (13.48)          (4.24)         (14.94)         (18.05)         (26.07)

Total assets               16,006,582      16,786,004      17,842,224      19,656,345      20,591,485

Mortgage loans
   payable                 20,400,000      20,200,950      20,326,886      20,356,533      20,356,533

Partners'
   capital (deficit)       (4,921,350)     (3,998,981)     (3,005,708)     (1,293,087)       (244,785)
Cash distributions
paid per Unit:
   Operations                   20.00           20.00           20.00           20.00           20.00
   Settlement proceeds                          10.00            --              --              --
   Financing proceeds            --                             29.63            --              --
</TABLE>

     The above selected  financial  data should be read in conjunction  with the
financial  statements and accompanying  notes  incorporated by reference in this
report.


Item 7.  Management's Discussion and Analysis of Financial Condition and 
               Results of Operations

Liquidity and Capital Resources

     At  December  31,  1996,  the  Fund  had  a  working  capital  position  of
unrestricted  cash and cash  equivalents of $1,356,475 and accounts  payable and
accrued expenses of $417,042.  Restricted cash represents  amounts retained from
tenants for  security  deposits and totaled  $110,890 at December 31, 1996.  The
working capital balance represents  reserves for future  contingencies that were
established  from mortgage  loan proceeds and are deemed  sufficient to meet the
Fund's liquidity  requirements even under very pessimistic  operating scenarios.
Reserves may be distributed as the General Partners deem appropriate.

     Cash and cash  equivalents  increased  $19,686  during 1996.  This increase
represents the net effect of $740,244 in cash provided by operating  activities,
$201,394  disbursed  for capital  expenditures,  $121,936 in net  proceeds  from
mortgage refinancing,  $90,080 disbursed as principal payments on first mortgage
debt and distributions to investors of $551,020.

     In February  1997 the Fund made a cash  distribution  to its  investors  of
$137,755. This distribution was derived from cash generated by operations.

     On August 27, 1996, the Fund closed  interim one year,  interest only loans
payable in September  1997.  These loans will serve the  financial  needs of the
Fund until it selects a permanent  financial  solution for the  repayment of its
debt. The terms of the interim  financing  provide for interest only payments of
prime  (8.25% at December  31,  1996) plus 1% in monthly  installments.  The new
loans  totaled  $20,400,000  and  provided  proceeds  sufficient  to satisfy the
repayment  of  the  existing  mortgage  loans,  as  well  as  all  costs  of the
refinancing.

                                                      -6-


<PAGE>


              BROWN-FLOURNOY EQUITY INCOME FUND LIMITED PARTNERSHIP


Item 7.  Management's Discussion and Analysis of
           Financial Condition and Results of Operations (continued)

Results of Operations

     During 1996 and 1995,  rental  income  increased  3% and 4%,  respectively.
These increases can be attributed to rental rate increases that were implemented
during these time periods.

     Interest income totaled $61,955 in 1996,  a 3% decrease from the $67,676 
earned in 1995.  A decrease in interest rates led to this decline.

     Total operating expenses (excluding depreciation, amortization and interest
expenses)  increased  $58,395 in 1996, a 3% increase from 1995. This increase is
due primarily to higher  marketing  expenses and certain costs  associated  with
holding vacant units. In 1995, total operating expenses increased 11% over 1994,
due to higher maintenance and repairs and utility expenses.

     Occupancy  for the Fund's  properties  averaged  93% during  1996, a slight
decrease from the 94% average reported in 1995.  During 1996 and 1995 the Fund's
properties  experienced  heightened  competition  from the  construction  of new
apartment communities. This additional competition placed certain strains on the
Properties'  occupancy and also limited their ability to implement  major rental
rate increases.  While the Fund's occupancy  declined 1% in 1996,  rental income
increased 3%, due largely to the  performance of the Hidden Lake, Park Place and
High  Ridge  properties.  Substantial  market  pressures  led to a 3% decline in
rental income at the Southland Station property.

     In 1996, the High Ridge property,  located in Athens, Georgia,  achieved an
average  occupancy of 93%, a 4% decrease from 1995. This decline is attributable
to  market  pressures  brought  about  by  the  construction  of  new  apartment
communities.  In light of the decrease in occupancy, High Ridge experienced a 3%
increase in rental income due in part to an increase in corporate rentals.

     Occupancy  at the Hidden Lake  property  averaged 97% during 1996, a slight
increase  from  1995's  average  of 96%.  A  marginal  increase  in rents and an
increase  in the number of  corporate  rentals,  led to a 5%  increase in rental
income during 1996.

     The Park Place property, located in Spartanburg, South Carolina experienced
a 6% increase in rental revenue in 1996. This increased  revenue is attributable
to a $25 per unit increase that  management  implemented at the beginning of the
year. While occupancy  experienced a decline falling to 83%,  immediately  after
the rent  increase,  it  finished  the year at 97%.  During  1996 the  occupancy
averaged 92% a slight decline from the 93% recorded in 1995.

     The Southland Station property, achieved an average occupancy of 90% during
1996, a slight  decrease from 1995's  average of 92%. This decrease in occupancy
is due in large part to market  conditions  that have  affected  Warner  Robins,
Georgia.  The decision by the government to hold off certain military operations
has led to a reduction in the number of personnel at the Warner Robins Air Force
base.  This  event  combined  with  the  completion  of  several  new  apartment
communities  has placed  pressure on  management's  ability to keep the Property
leased.  The decline in occupancy  caused  rental income to drop 3% in 1996 from
1995.

     New  apartment  communities  continue  to be built in many  markets  in the
Southeastern  United  States.  In  particular,  the  markets in which the Fund's
properties  are  located  have  experienced  new   competition.   As  these  new
communities  have been built,  management's  ability to  substantially  increase
rental rates has been limited.  In addition,  the increased supply of apartments
has caused certain challenges in the leasing of the properties.  It appears that
the construction of new apartments will continue in certain markets during 1997.
Management  intends to meet these  challenges  in the upcoming  year through its
ongoing  marketing  programs and commitment to high tenant service.  The general
condition of the Fund's  properties is good,  due to the recent  painting of the
properties, allowing them to compete with the new competition.

                                                      -7-


<PAGE>


              BROWN-FLOURNOY EQUITY INCOME FUND LIMITED PARTNERSHIP


Item 8.  Financial Statements and Supplementary Data

     Index to Financial Statements and Financial Statement Schedule

                                                                Page(s)
                                                     Herein       Annual Report

Independent Auditors' Report                            11                 5
Balance Sheets                                                             6
Statements of Operations                                                   7
Statements of Partners' Capital (Deficit)                                  8
Statements of Cash Flows                                                   9
Notes to Financial Statements                                          10-15
Financial Statement Schedule
        Schedule III - Real Estate and
        Accumulated Depreciation                     12-13


     All other  schedules are omitted  because they are not  applicable,  or not
required,  or because the  required  information  is  included in the  financial
statements or notes thereto.


Item 9.  Changes in and Disagreements with Accountants on
             Accounting and Financial Disclosure

     None.


                                                     PART III


Item 10.  Directors and Executive Officers of the Registrant

     The General Partners of the Fund are Brown Equity Income Properties,  Inc.,
the  Administrative  General  Partner,  and John F.  Flournoy,  the  Development
General Partner.  The Fund's principal executive offices are located at 225 East
Redwood Street, Baltimore, Maryland 21202, telephone (410) 727-4083. The General
Partners have primary responsibility for overseeing the performance of those who
contract  with  the  Fund,  as well as  making  decisions  with  respect  to the
financing,  sale and liquidation of the Fund's assets.  The General Partners are
responsible for all reports to and communications with investors and others, all
distributions  and allocations to investors,  the  administration  of the Fund's
business and all filings with the Securities  and Exchange  Commission and other
federal  or state  regulatory  authorities.  The  Fund's  Partnership  Agreement
provides  for the  removal of a General  Partner and the  election of  successor
additional general partners by investors holding a majority of the Units.

     The directors and executive officers of the Fund are as follows:

     The Development General Partner

     John F. Flournoy,  age 56, the Development General Partner, is the majority
shareholder  and Chief  Executive  Officer of Flournoy  Development  Company,  a
Georgia  corporation  that he  organized  in 1967 for the purpose of engaging in
real estate development.  Flournoy  Construction Company, the general contractor
for  the  Properties,  is a  wholly-owned  subsidiary  of  Flournoy  Development
Company.  Mr. Flournoy is also the majority  shareholder of Flournoy Properties,
Inc., the property manager of the properties.

                                                      -8-


<PAGE>


              BROWN-FLOURNOY EQUITY INCOME FUND LIMITED PARTNERSHIP


Item 10.  Directors and Executive Officers of the Registrant (continued)

     The Development General Partner (continued)

     Mr.  Flournoy is a graduate of the  University of North  Carolina  Business
School. In his various capacities as a principal of Flournoy Development Company
and Flournoy  Construction  Company, he participates  actively in all aspects of
real estate development and construction.

     The Administrative General Partner

     Brown Equity Income Properties,  Inc., the Administrative  General Partner,
is a Maryland  corporation and is wholly owned by Alex.  Brown Realty,  Inc. The
Administrative  General Partner is responsible for administering the business of
the Fund including providing clerical services, investor communications services
and reports,  and for making all reports and filings to regulatory  authorities.
The  Administrative  General Partner is reimbursed for such services to the Fund
on a cost basis.

     The following individuals are the directors and principal officers of Brown
Equity Income Properties, Inc.:

     John M. Prugh,  age 48, has been a Director  and  President  of the General
Partner since 1986 and of Alex.  Brown Realty,  Inc. and Armata  Financial Corp.
since  1984.  Mr.  Prugh  graduated  from  Gettysburg  College in 1970,  and was
designated  a  Certified  Property  Manager  by the  Institute  of  Real  Estate
Management in 1979. He has worked in property  management  for H. G. Smithy Co.,
in Washington, D.C., and Dreyfuss Bros., Inc. in Bethesda, Maryland. Since 1977,
Mr. Prugh has been involved in managing,  administering,  developing and selling
real estate investment  projects  sponsored by Alex. Brown Realty,  Inc. and its
subsidiaries.

     Peter E.  Bancroft,  age 44, has been a Director and Vice  President of the
General  Partner since 1986 and a Senior Vice  President of Alex.  Brown Realty,
Inc. and Armata Financial Corp. since 1983. Mr. Bancroft  graduated from Amherst
College in 1974,  attended  the  University  of  Edinburgh,  and received a J.D.
degree from the University of Virginia  School of Law in 1979.  Prior to joining
Alex.  Brown  Realty,  Inc. in 1983,  Mr.  Bancroft  held legal  positions  with
Venable, Baetjer and Howard and T. Rowe Price Associates, Inc.

     Terry F. Hall, age 50, has been the Secretary of the General  Partner and a
Vice President and Secretary of, and Legal Counsel for Alex. Brown Realty,  Inc.
since 1989. Mr. Hall graduated from the University of Nebraska- Lincoln in 1968,
and received a J.D.  degree from the  University of  Pennsylvania  Law School in
1973. Prior to joining Alex. Brown Realty,  Inc. in 1986, Mr. Hall was a Partner
at the law  firm  of  Venable,  Baetjer  and  Howard  from  1981 to 1986  and an
associate at the same firm from 1973 to 1981.

     Timothy M. Gisriel,  age 40, has been the Treasurer of the General  Partner
and of Alex.  Brown Realty,  Inc. and Armata  Financial Corp. since 1990. He was
the Controller of Alex. Brown Realty,  Inc. and Armata Financial Corp. from 1984
through 1990. Mr. Gisriel graduated from Loyola College in 1978 and received his
Masters of Business  Administration  degree from the Robert E. Merrick School of
Business,  University of Baltimore in 1993. Prior to joining Alex. Brown Realty,
Inc. in 1984,  Mr.  Gisriel was an audit  supervisor in the Baltimore  office of
Coopers & Lybrand. He is a Maryland Certified Public Accountant.

     There is no family  relationship  among the Development  General Partner or
the officers and directors of the Administrative General Partner.


Item 11.  Executive Compensation

     The  Development  General  Partner and the  officers  and  directors of the
Administrative General Partner received no compensation from the Partnership.

                                                      -9-


<PAGE>


              BROWN-FLOURNOY EQUITY INCOME FUND LIMITED PARTNERSHIP



Item 11.  Executive Compensation (continued)

     The General Partners are entitled to receive a share of cash  distributions
and a share of  profits  and  losses as  described  in the  Limited  Partnership
Agreement, Article IV. (See Note 8, "Partners Capital (Deficit)" in Item 8.
Financial Statements, herein).

     For a discussion of compensation and fees to which the General Partners are
entitled, see Item 13, Certain Relationships and Related Transactions, herein.


Item 12.   Security Ownership of Certain Beneficial Owners and Management

     No  person  is known to the Fund to own  beneficially  more  than 5% of the
outstanding interests of the Fund.

     The  General  Partners  each  have a 1%  interest  in the  Fund as  General
Partners, but hold no Class A Limited Partnership interest.

     There are no  arrangements,  known to the Fund, the operation of which may,
at a subsequent date, result in a change of control of the registrant.


Item 13.   Certain Relationships and Related Transactions

     The General Partners and their affiliates have engaged in and are permitted
to engage in transactions with the Fund.

     For a summary of fees paid to the General Partners and their affiliates for
the  three  years  ended   December  31,  1996,   see  Note  5,  "Related  Party
Transactions", in Item 8, Financial Statements and Supplementary Data, herein.




                                                     PART IV


     Item 14.  Exhibits, Financial Statement Schedules and Reports on Form 8-K

         (a) 1.  Financial Statements:  See Index to Financial Statements and 
                 Financial Statement Schedule in Item 8 on Page 8.

             2.  Financial Statement Schedule:See Index to Financial Statements
                 and Financial Statement Schedule in Item 8 on Page 8.

             3.  Exhibits:
                 (3, 4)   Limited Partnership Agreement on pages 1 through 32 of
                          Exhibit B to the Fund's Registration Statement on 
                          Form S-11 (File No. 33-6924) included herein by 
                          reference.

                 (13)     Annual Report for 1996.

         (b) Reports on Form 8-K:   None.

                                                      -10-
<PAGE>

                                           INDEPENDENT AUDITORS' REPORT




The Partners
Brown-Flournoy Equity Income Fund
   Limited Partnership:


Under  date  of  January  17,  1997,  we  reported  on  the  balance  sheets  of
Brown-Flournoy  Equity Income Fund Limited  Partnership  as of December 31, 1996
and 1995, and the related statements of operations,  partners' capital (deficit)
and cash flows for each of the years in the three-year period ended December 31,
1996, as contained in the 1996 Annual Report. These financial statements and our
report thereon are  incorporated  by reference in the Annual Report on Form 10-K
for  1996.  In  connection  with  our  audits  of the  aforementioned  financial
statements,  we also have audited the related  financial  statement  schedule as
listed in the  accompanying  index.  This  financial  statement  schedule is the
responsibility  of the Fund's  management.  Our  responsibility is to express an
opinion on the financial statement schedule based on our audits.

In our opinion,  such 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.






                                                     KPMG PEAT MARWICK LLP


Baltimore, Maryland
January 17, 1997


                                                       -11-


<PAGE>
BROWN-FLOURNOY EQUITY INCOME FUND LIMITED PARTNERSHIP
SCHEDULE III.  REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1996
<TABLE>
<CAPTION>

           COLUMN A             COLUMN B              C O L U M N   C        COLUMN D                         C O L U M N   E

                                    COST CAP.
                                                                             SUB. TO   GROSS AMOUNT AT WHICH CARRIED
                                          INITIAL COST TO PARTNERSHIP        ACQUIS.   AT CLOSE OF PERIOD

                                                                   FURN.      FURN.                             FURN.
                               ENCUMBER-                BLDG &     FIX. &     FIX. &                BLDG &      FIX. &
         DESCRIPTION             ANCES        LAND     IMPROVE.    EQUIP.     EQUIP.      LAND     IMPROVE.     EQUIP.      TOTAL

<S>                            <C>            <C>      <C>         <C>         <C>        <C>      <C>           <C>      <C>      
SOUTHLAND STATION              $4,910,000     126,553  5,120,677   413,993     105,236    126,553  5,120,677     519,229  5,766,459
WARNER ROBINS, GEORGIA
160 Unit garden apartment
community on approxmiately
15 acres

PARK PLACE                      5,810,000     582,423  5,555,384   590,632     105,178    582,423  5,555,384     695,810  6,833,617
SPARTANBURG, SOUTH CAROLINA
184 Unit garden apartment
commumity on approximately
14.4 acres

HIDDEN LAKE II                  4,570,000     180,542  4,803,053   496,575     148,156    180,542  4,803,053     644,731  5,628,326
UNION CITY, GEORGIA
160 Unit garden apartment
commumity on approximately
16.2 acres

HIGH RIDGE                      5,110,000     316,432  4,938,629   450,534      93,362    316,432  4,938,629     543,896  5,798,957
ATHENS, GEORGIA
160 Unit garden apartment
community on approximately
18 acres

                              $20,400,000   1,205,950 20,417,743 1,951,734     451,932  1,205,950 20,417,743   2,403,666 24,027,359

</TABLE>
<TABLE>

(1)                                           1996                             1995                              1994

<CAPTION>
                                              REAL       ACCUM                 REAL       ACCUM                  REAL       ACCUM
                                             ESTATE      DEPR.                ESTATE      DEPR.                 ESTATE      DEPR.

<S>                                       <C>          <C>                 <C>          <C>                  <C>          <C>      
        BALANCE AT BEGINNING OF PERIOD    $23,825,965  8,625,140           $23,454,037  7,586,973            $23,683,165  6,567,276
        ADDITIONS                             201,394  1,047,007                88,700  1,038,167                 54,100  1,019,697
        DEDUCTIONS                                                             283,228                          (283,228)

       BALANCE AT CLOSE OF PERIOD         $24,027,359 $9,672,147           $23,825,965 $8,625,140            $23,454,037 $7,586,973
</TABLE>

(2)  AGGREGATE COST FOR FEDERAL INCOME TAX PURPOSES IS $24,027,359 AT
     DECEMBER 31, 1996.

(3)  SEE NOTE 5 OF NOTES TO THE FINANCIAL STATEMENTS FOR INFORMATION CONCERNING
     TRANSACTIONS WITH AFFILIATES.

(4)    SEE NOTE 6 OF NOTES TO THE FINANCIAL STATEMENTS FOR INFORMATION REGARDING
       MORTGAGE  LOAN  AGREEMENTS,  COLLATERALIZED  BY THE  LAND,  BUILDING  AND
       IMPROVEMENTS.

(5)  DEDUCTION IS DUE TO IMPAIRMENT TO ASSETS RESULTING FROM DEFECTIVE MATERIALS
      AND SUBSEQUENT REIMBURSEMENT OF SETTLEMENT PROCEEDS.

             -12-

<PAGE>

BROWN-FLOURNOY EQUITY INCOME FUND LIMITED PARTNERSHIP
SCHEDULE III.  REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1996

           COLUMN A             COLUMN F    COLUMN G   COLUMN H   COLUMN I
<TABLE>
<CAPTION>


                                                                 LIFE ON WHICH
                                                                 DEPRECIATION IN
                                                                 LATEST INCOME
                                 ACCUM      DATE OF      DATE    STATEMENT IS
         DESCRIPTION              DEPR       CONST.    ACQUIRED   COMPUTED

<S>                             <C>        <C>  <C>      <C>                  <C>      
SOUTHLAND STATION               2,440,690  1986/1987     1986    Real Prop. - 25 yr S/L
WARNER ROBINS, GEORGIA                                           Pers. Prop. - 10 yr S/L
160 Unit garden apartment
community on approxmiately
15 acres

PARK PLACE                      2,674,335  1986/1987     1987    Real Prop. - 25 yr S/L
SPARTANBURG, SOUTH CAROLINA                                      Pers. Prop. - 10 yr S/L
184 Unit garden apartment
commumity on approximately
14.4 acres

HIDDEN LAKE II                  2,313,058  1986/1987     1987    Real Prop. - 25 yr S/L
UNION CITY, GEORGIA                                              Pers. Prop. - 10 yr S/L
160 Unit garden apartment
commumity on approximately
16.2 acres

HIGH RIDGE                      2,244,064     1987       1987    Real Prop. - 25 yr S/L
ATHENS, GEORGIA                                                  Pers. Prop. - 10 yr S/L
160 Unit garden apartment
community on approximately
18 acres
                                9,672,147

</TABLE>


             -13-
<PAGE>
              BROWN-FLOURNOY EQUITY INCOME FUND LIMITED PARTNERSHIP


                                                    SIGNATURES

Pursuant to the requirements of Section 13 or 15 (d) of the Securities  Exchange
Act of 1934, as amended, the registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.


                                            BROWN-FLOURNOY EQUITY INCOME FUND
                                                     LIMITED PARTNERSHIP


DATE:         3/18/97                       BY:           /s/ John F.  Flournoy
                                                     John F. Flournoy
                                                     Development General Partner



Pursuant to the requirements of the Securities Exchange Act of 1934, as amended,
this report has been signed by the following in the  capacities and on the dates
indicated.




DATE:         3/19/97                       BY:             /s/ John M.  Prugh
                                           John M. Prugh
                                           President and Director
                                           Brown Equity Income Properties, Inc.
                                           Administrative General Partner


DATE:         3/19/97                       BY:            /s/ P.  E.  Bancroft
                                           Peter E. Bancroft
                                           Vice President and Director
                                           Brown Equity Income Properties, Inc.
                                           Administrative General Partner


DATE:         3/19/97                       BY:           /s/ Terry F.  Hall
                                            Terry F. Hall
                                            Secretary
                                            Brown Equity Income Properties, Inc.
                                            Administrative General Partner



DATE:        3/19/97                        BY:        /s/ Timothy M.  Gisriel
                                            Timothy M. Gisriel
                                            Treasurer
                                            Brown Equity Income Properties, Inc.
                                            Administrative General Partner




                                                       -14-

<PAGE>