FORM 10-Q



                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549


           QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES
                              EXCHANGE ACT OF 1934


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

For the quarterly period ended  September 30, 1997

{   }  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
       SECURITIES EXCHANGE ACT OF 1934

For the transition period from                     to


For Quarter Ended  September 30, 1997        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

                                               N/A
                      (Former Name, Former Address, and Former Fiscal Year,
                                 if Changed Since Last Report.)

  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


<PAGE>

              BROWN-FLOURNOY EQUITY INCOME FUND LIMITED PARTNERSHIP




                                      INDEX


                                                                        Page No.
Part I.  Financial Information


     Item 1.     Financial Statements
                 Balance Sheets                                             1
                 Statements of Operations                                   2
                 Statements of Partners' Capital                            3
                 Statements of Cash Flows                                   4
                 Notes to Financial Statements                            5-6


     Item 2.     Management's Discussion and Analysis of
                        Financial Condition and Results of Operations     7-8


Part II.   Other Information

     Item 1. through Item 6.                                                9

     Signatures                                                            10

<PAGE>
BROWN-FLOURNOY EQUITY INCOME FUND LIMITED PARTNERSHIP

Balance Sheets
(Unaudited)
<TABLE>
<CAPTION>

                                                                September 30,       December 31,
                                                                    1997                1996

Assets

<S>                                                           <C>                  <C>
 Investment in real estate                                    $    13,669,417      $ 14,355,212
 Cash and cash equivalents                                          1,589,304         1,467,365
 Other assets
  Accounts receivable                                                  28,671            19,744
  Prepaid expenses                                                     12,994            70,500
  Loan fees, less accumulated amortization
   of $269,023 and $73,434, respectively                                     -           93,761

 Total other assets                                                    41,665           184,005

Total assets                                                  $    15,300,386      $ 16,006,582


Liabilities and Partners' Capital

 Accounts payable and accrued expenses including
  $31,745 and $28,941 due to affiliates, respectively         $       631,116      $    417,042
 Tenant security deposits                                             101,431           110,890
 Mortgage loans payable                                            20,400,000        20,400,000

 Total liabilities                                                 21,132,547        20,927,932


 Partners' Capital
  General Partners                                                   (271,185)         (252,969)
  Limited Partners
   Class A - $1,000 stated value per unit;
    27,000 units outstanding                                       (5,561,076)       (4,668,481)
   Class B                                                                100               100

 Total partners' capital                                           (5,832,161)       (4,921,350)

Total liabilities and partners' capital                       $    15,300,386      $ 16,006,582
</TABLE>



See accompanying notes to financial statements

-1-
<PAGE>
BROWN-FLOURNOY EQUITY INCOME FUND LIMITED PARTNERSHIP

Statements of Operations
(Unaudited)
<TABLE>
<CAPTION>
                                                                 Three Months Ended             Nine Months Ended
                                                             September 30,  September 30,   September 30,  September 30,
                                                                 1997           1996            1997           1996

Revenues
<S>                                                         <C>            <C>             <C>            <C>
 Rental income                                              $   1,199,481  $   1,242,376   $   3,484,336  $   3,585,281
 Interest income                                                   16,872         16,019          47,655         44,308

                                                                1,216,353      1,258,395       3,531,991      3,629,589


Expenses
 Compensation and related benefits                                154,812        128,949         453,550        380,193
 Utilities                                                         76,588         75,295         213,315        213,089
 Property taxes                                                    93,006         90,084         279,019        273,580
 Insurance                                                         19,308         17,897          57,908         53,745
 Advertising                                                       27,495         19,885          83,482         81,154
 Maintenance and repairs                                           66,917        120,271         223,536        336,579
 Property management fee                                           59,974         62,119         174,217        179,264
 Other                                                              7,439          9,099          22,251         25,788
 Administrative and professional fees                              25,011         18,531          72,737         57,828
 Interest expense                                                 495,267        483,783       1,457,750      1,451,548
 Depreciation of property and equipment                           269,062        260,514         796,183        782,551
 Amortization of loan fees                                         60,992         33,936         195,589         71,030

                                                                1,355,871      1,320,363       4,029,537      3,906,349

Net loss                                                    $    (139,518) $     (61,968)  $    (497,546) $    (276,760)


Net loss per unit of Class A limited
 partnership interest                                       $       (5.06) $       (2.25)  $      (18.06) $      (10.05)
</TABLE>


See accompanying notes to financial statements

-2-

<PAGE>
  BROWN-FLOURNOY EQUITY INCOME FUND LIMITED PARTNERSHIP

             Statements of Partners' Capital
         For the nine months ended September 30,
                       (Unaudited)


<TABLE>
<CAPTION>
                                                                        Class A     Class B
                                                            General     Limited     Limited
                                                            Partners    Partner     Partners     Total


<S>                                                       <C>        <C>          <C>        <C>
Balance at December 31, 1996                              $ (252,969)$ (4,668,481)$      100 $ (4,921,350)

Net loss                                                      (9,951)    (487,595)          -    (497,546)

Distributions to partners                                     (8,265)    (405,000)          -    (413,265)


Balance at September 30, 1997                             $ (271,185)$ (5,561,076)$      100 $ (5,832,161)



Balance at December 31, 1995                              $ (234,522)$ (3,764,559)$      100 $ (3,998,981)

Net loss                                                      (5,535)    (271,225)          -    (276,760)

Distributions to partners                                     (8,265)    (405,000)          -    (413,265)


Balance at September 30, 1996                             $ (248,322)$ (4,440,784)$      100 $ (4,689,006)
</TABLE>

      See accompanying notes to financial statements

                           -3-

<PAGE>
BROWN-FLOURNOY EQUITY INCOME FUND LIMITED PARTNERSHIP

Statements  of Cash Flows For the nine months  ended  Septmber  30,  (Unaudited)
<TABLE> <CAPTION>

                                                                    1997                1996


Cash flow from operating activities
<S>                                                           <C>                  <C>
 Net loss                                                     $      (497,546)     $    (276,760)
 Adjustments to reconcile net loss to net
  cash provided by operating activities
   Depreciation of property and equipment                             796,183            782,551
   Amortization of loan fees                                          195,589             71,030
   Changes in assets and liabilities
    Increase in accounts receivable                                    (8,927)              (639)
    Decrease in prepaid expenses                                       57,506             53,214
    Increase  in accounts payable and accrued expenses                214,195            182,671
    Decrease in tenant security deposits                               (9,459)            (6,470)

Net cash provided by operating activities                             747,541            805,597

Cash flows from investing activities-
 additions to investment in real estate                              (110,388)           (96,970)

Cash flows from financing activities
 Decrease in mortgage loans payable                                          -           (90,080)
 Proceeds from mortgage loan refinancing                                     -        20,400,000
 Repayment of mortgage loans                                                 -       (20,110,870)
 Financing costs                                                     (101,828)          (111,679)
 Distributions to investors                                          (413,265)          (413,265)

Net cash used in financing activities                                (515,093)          (325,894)


Net increase in cash and cash equivalents                             122,060            382,733

Cash and cash equivalents
 Beginning of period                                                1,467,365          1,447,679

 End of period                                                $     1,589,425      $   1,830,412

</TABLE>

See accompanying notes to financial statements

-4-

<PAGE>
              BROWN-FLOURNOY EQUITY INCOME FUND LIMITED PARTNERSHIP

                                           Notes to Financial Statements
                                                September 30, 1997
                                                    (Unaudited)


(1)     The Fund and Basis of Preparation

        The accompanying  financial  statements of Brown-Flournoy  Equity Income
        Fund  Limited  Partnership  (the  "Fund")  do  not  include  all  of the
        information  and  note  disclosures   normally   included  in  financial
        statements  prepared in accordance  with generally  accepted  accounting
        principles.  The  unaudited  interim  financial  statements  reflect all
        adjustments which are, in the opinion of management, necessary to a fair
        statement  of the results for the interim  periods  presented.  All such
        adjustments  are of a normal  recurring  nature.  The unaudited  interim
        financial  information  should be read in conjunction with the financial
        statements contained in the 1996 Annual Report.

(2)     Investment in Real Estate

        Investment  in real estate is stated at the lower of fair value or cost,
        net of accumulated depreciation, and is summarized as follows:
<TABLE>
<CAPTION>

                                                            September 30, 1997            December 31, 1996

<S>                                                            <C>                          <C>
              Land                                             $  1,205,950                 $  1,205,950
              Buildings                                          20,417,743                   20,417,743
              Furniture, fixtures and equipment                   2,514,054                    2,403,666

                                                                 24,137,747                   24,027,359
              Less:  accumulated depreciation                    10,468,330                    9,672,147

              Total                                             $13,669,417                  $14,355,212
</TABLE>

(3)     Cash and Cash Equivalents

        The  Fund  considers  all  highly  liquid   investments   with  original
        maturities of three months or less to be cash equivalents. Cash and cash
        equivalents consist of the following, stated at cost, which approximates
        market value.
<TABLE>
<CAPTION>
                                                            September 30, 1997            December 31, 1996

<S>                                                             <C>                          <C>        
        Cash and money market                                   $   618,252                  $   532,655
        Certificates of deposit with interest rates
              ranging from 5.16 to 5.2% in 1997 and
              5.0% to 5.6% in 1996                                  971,052                      934,710

                                                                 $1,589,304                   $1,467,365
</TABLE>

(4)     Related Party Transactions

        Brown  Equity  Income  Properties,   Inc.,  the  Administrative  General
        Partner,  billed  the Fund  $11,443  and  $9,964 in the  quarters  ended
        September 30, 1997 and 1996, respectively, for reimbursement of the cost
        of  administrative  services  and  expenses  made on behalf of the Fund.
        Flournoy  Properties,  Inc.,  an  affiliate of the  Development  General
        Partner,  is  the  managing  agent  for  the  properties  and  earned  a
        management fee of $59,974 and $62,119  representing  5% of gross monthly
        operating  revenues  from  the  properties  during  the  quarters  ended
        September 30, 1997 and 1996, respectively.

                                                      -5-


<PAGE>

              BROWN-FLOURNOY EQUITY INCOME FUND LIMITED PARTNERSHIP

                                           Notes to Financial Statements
                                                September 30, 1997
                                                    (Unaudited)

(5)     Mortgage Loans Payable

        The Fund's General  Partners  secured first  mortgage loans  aggregating
        $20.8  million  on August  30,  1989  which  were  secured  by the land,
        apartment  units  and  all  other  improvements  to the  four  apartment
        properties.  These  loans  were  for an  original  term of 7 years  with
        interest  only  payments  at 9.6%.  Interest  only was  payable  monthly
        through September 1994, and thereafter  monthly payments were based on a
        30- year amortization  schedule with a balloon payment due at the end of
        the 7 year term.

        The mortgage  loans  matured on September 1, 1996.  The Fund  refinanced
        these  loans  with  Columbus  Bank & Trust.  The  terms of the new loans
        provide  for  interest  only  payments  of  prime  plus  1%  in  monthly
        installments for one year. The new loans total  $20,400,000 and provided
        proceeds  sufficient to satisfy the repayment of the old mortgage loans,
        and  all  costs  of the  refinancing.  The  Fund  is  required  to pay a
        commitment   fee  of  one  point   payable  in   advance  in   quarterly
        installments.  Columbus Bank & Trust has agreed to extend these loans to
        December 31, 1997 at no additional cost to the Fund. The Fund intends to
        repay these  balances with proceeds from mortgage  refinancing  or other
        capital transactions.

(6)     Subsequent Event

        The  General  Partners  of the Fund have  executed a  Purchase  and Sale
        Agreement  dated October 14, 1997 with  Mid-America  Apartments  L.P. to
        sell each of the Fund's four apartment  communities  ("Properties")  for
        approximately  $30 million.  A Definitive Proxy Statement has been filed
        with the  Securities  and Exchange  Commission  and the Consent Form and
        Consent  Solicitation  Statement  have been  distributed  to  holders of
        record of Class A Limited  Partnership  interests  ("Unitholders").  The
        sale of the properties is contingent on the consent of a majority of the
        Unitholders.  Upon  consummation  of the  sale,  the Fund  will  receive
        approximately $9,625,000 in cash consideration (sales price less assumed
        debt of $20.4 million),  that along with any other remaining Fund assets
        will be available for distribution to Unitholders.  The General Partners
        estimate that each Unitholder will receive  approximately  $385 per Unit
        (prior to any state or local withholding  requirements) and be allocated
        taxable gain of approximately $588 per unit.

(7)     Net Loss per Unit of Class A Limited Partnership Interest

        Net loss per Class A Limited  Partnership  interest is  disclosed on the
        Statements of Operations and is based upon 27,000 units outstanding.



                                                      -6-

<PAGE>
              BROWN-FLOURNOY EQUITY INCOME FUND LIMITED PARTNERSHIP

                Management's Discussion and Analysis of Financial
                       Condition and Results of Operations

Liquidity and Capital Resources

         At  September  30,  1997,  the Fund had a working  capital  position of
unrestricted  cash and cash  equivalents of $1,487,873 and accounts  payable and
accrued expenses of $631,116.  Restricted cash represents  amounts retained from
tenants for security  deposits and totaled  $101,431 at September 30, 1997.  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  $111,687 during the third quarter
of 1997. This increase represents the net effect of $292,657 in cash provided by
operating   activities,   $43,215   utilized   for  capital   expenditures   and
distributions to investors of $137,755.

         In November 1997 the Fund made a cash  distribution to its investors of
$137,755.  This distribution was derived from unrestricted cash available at the
end of the third quarter.

         On August 27,  1996,  the Fund  closed on  interim  one year loans that
matured in September 1997.  Columbus Bank and Trust,  the lender,  has agreed to
extend these loans to December 31,  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  (8.50%  at  September  30,  1997)  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.

Results of Operations

         Rental  revenues during the third quarter and first nine months of 1997
declined 3% when compared to the same periods in 1996. These decreases in rental
revenues are largely  attributable to the operations at the High Ridge property.
During the first nine months of 1997,  rental  revenue at High Ridge declined 9%
as compared to the same period in 1996.  This  decline in rental  revenue is due
primarily to lower occupancy levels at High Ridge during the first half of 1997.
Improved  occupancy  levels at High Ridge during the third quarter,  reduced the
decline in rental  revenues  during the period to 1% when  compared to the third
quarter of 1996.

         Total  expenses  during the third quarter and first nine months of 1997
increased  3% as  compared to the same  periods in 1996.  These  increases  were
largely  due  to  additional   compensation,   advertising  and   administrative
expenditures.  The  increase in  compensation  expense  relates to the hiring of
additional leasing personnel at certain properties.  Compensation  expenses also
increased due to management's  decision to perform certain landscaping functions
internally at the Park Place property, which had previously been contracted out.
Increased   advertising   expenses  were  largely   attributable   to  increased
expenditures at the High Ridge property.

         Occupancy  for the Fund's  properties  during the third quarter of 1997
remained  consistent with the same period of 1996,  averaging 93%. For the first
nine months of 1997,  occupancy at the Fund's properties averaged 90%, a decline
of 1% from 1996.

         The Park  Place  property,  located  in  Spartanburg,  South  Carolina,
attained an average  occupancy of 92% for third  quarter of 1997, a 1% drop from
the same period of 1996. For the first nine months of 1997 total revenues remain
consistent  with the same period in 1996.  Competition  from recently  completed
apartment   communities   has  minimized   management's   ability  to  implement
substantive  rental rate increases  during the past 12 months.  While management
has been unable to  dramatically  increase base rental rates, it has worked hard
to  secure  corporate  rental  income.  During  the first  nine  months of 1997,
corporate rental income increased approximately $10,000 from 1996.

         Occupancy  at the Hidden Lake  property  averaged  95% during the third
quarter of 1997, a modest decline from 1996.  Rental  revenues  during the third
quarter and first nine months of 1997, remained  essentially  unchanged from the
same periods in 1996.

                                                      -7-

<PAGE>

              BROWN-FLOURNOY EQUITY INCOME FUND LIMITED PARTNERSHIP

                Management's Discussion and Analysis of Financial
                       Condition and Results of Operations
Results of Operations

         During the third  quarter of 1997 the High Ridge  property,  located in
Athens,  Georgia,  achieved an average  occupancy of 94%, a 2% increase from the
same period in 1996. The 94% occupancy attained during the third quarter of 1997
is a  dramatic  increase  from the 80% that was  recorded  during  the first six
months of 1997.  Management  has been  faced  with  certain  leasing  challenges
brought about by the recent  construction  of new apartment  communities.  Total
revenues  declined  approximately  9% during  the first  nine  months of 1997 as
compared  to the same  period in 1996.  This  decline  is  largely  due to lower
occupancy  levels  during  the first half of 1997.  During the third  quarter of
1997,  total revenues  declined 1% from the previous year.  Management is keenly
aware  of the  challenges  brought  about  by the  newly  constructed  apartment
communities,  and  continues to work hard to restore the High Ridge  property to
its historically strong operational levels.

         The  Southland  Station  property,  located in Warner  Robins  Georgia,
attained an average  occupancy of 92%,  during the third  quarter and first nine
months of 1997. This level of occupancy  represents  increases of 1% and 5% from
the third quarter and first nine months of 1996,  respectively.  In spite of the
increased occupancy,  total rental revenue declined  approximately 2% during the
first nine months of 1997,  as compared to 1996.  Management  continues  to face
operational   challenges  brought  about  by  recently   constructed   apartment
communities,  as well as the migration of would- be renters to purchase or build
houses.  In an effort to deal with these  challenges,  management  has  adjusted
rents to be more competitive with the surrounding properties.

         All four properties remain in excellent condition.


Sale of Properties

         The  General  Partners  of the Fund have  executed a Purchase  and Sale
Agreement dated October 14, 1997 with  Mid-America  Apartments L.P. to sell each
of the Fund's four apartment  communities  ("Properties")  for approximately $30
million.  A Definitive  Proxy  Statement has been filed with the  Securities and
Exchange Commission and the Consent Form and Consent Solicitation Statement have
been distributed to holders of record of Class A Limited  Partnership  interests
("Unitholders").  The sale of the  properties  is contingent on the consent of a
majority  of the  Unitholders.  Upon  consummation  of the  sale,  the Fund will
receive approximately $9,625,000 in cash consideration (sales price less assumed
debt of $20.4 million),  that along with any other remaining Fund assets will be
available for distribution to Unitholders.  The General  Partners  estimate that
each Unitholder will receive  approximately $385 per Unit (prior to any state or
local  withholding  requirements) and be allocated taxable gain of approximately
$588 per unit.



                                                      -8-
<PAGE>


              BROWN-FLOURNOY EQUITY INCOME FUND LIMITED PARTNERSHIP


                           PART II. OTHER INFORMATION




Item 1.     Legal Proceedings

                  Inapplicable

Item 2.     Changes in Securities

                  Inapplicable

Item 3.     Defaults upon Senior Securities

                  Inapplicable

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

                  Inapplicable

Item 5.     Other Information

               The  General  Partners of the Fund have  executed a Purchase  and
           Sale  Agreement  dated October 14, 1997 with  Mid-America  Apartments
           L.P.  to  sell  each  of  the  Fund's  four   apartment   communities
           ("Properties")  for  approximately  $30 million.  A Definitive  Proxy
           Statement has been filed with the Securities and Exchange  Commission
           and the Consent  Form and Consent  Solicitation  Statement  have been
           distributed  to  holders  of record  of Class A  Limited  Partnership
           interests  ("Unitholders").  The sale of the properties is contingent
           on the consent of a majority of the Unitholders.

Item 6.     Exhibits and Reports on Form 8-K

                  a)  Exhibits:
                       (10) Purchase and Sale Agreement dated October 14, 1997.

                  b) Reports on Form 8-K: None.

                                       -9-


<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:       11/10/97                       By:     /s/   John M. Prugh
                                                  John M. Prugh
                                   President and Director
                                   Brown Equity Income Properties, Inc.
                                   Administrative General Partner



DATE:       11/10/97                       By:     /s/     Timothy M. Gisriel
                                   Timothy M. Gisriel
                                   Treasurer
                                   Brown Equity Income Properties, Inc.
                                   Administrative General Partner
                                      -10-