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<PAGE> PAGE 2
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<PAGE> PAGE 3
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<PAGE> PAGE 4
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<PAGE> PAGE 5
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<PAGE> PAGE 7
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<PAGE> PAGE 10
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SIGNATURE STEVE KEANE
TITLE GEN. COUNSEL
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000799704
<NAME> Federated Equity Income Fund, Inc - Class A
<SERIES>
<NUMBER> 011
<NAME>
<S> <C>
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<FISCAL-YEAR-END> Mar-31-1999
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[AVG-DEBT-OUTSTANDING] 0
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</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000799704
<NAME> Federated Equity Income Fund, Inc - Class B
<SERIES>
<NUMBER> 012
<NAME>
<S> <C>
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[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0.000
0
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000799704
<NAME> Federated Equity Income Fund, Inc - Class C
<SERIES>
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[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0.000
0
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000799704
<NAME> Federated Equity Income Fund, Inc - Class F
<SERIES>
<NUMBER> 014
<NAME>
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> Mar-31-1999
<PERIOD-END> Mar-31-1999
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<EXPENSE-RATIO> 1.36
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0.000
0
</TABLE>
Report of Ernst & Young LLP, Independent Auditors
TO THE DIRECTORS AND SHAREHOLDERS OF
FEDERATED EQUITY INCOME FUND, INC.:
We have audited the accompanying statement of assets and liabilities,
including the portfolio of investments, of Federated Equity Income Fund,
Inc., as of March 31, 1999, the related statement of operations for the
year then ended, the statement of changes in net assets for each of the
two years in the period then ended, and the financial highlights for the
periods presented therein. These financial statements and financial
highlights are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements
and financial highlights 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
and financial highlights are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. Our procedures included
confirmation of securities owned as of March 31, 1999 by correspondence
with the custodian and brokers or other appropriate auditing procedures
where replies from brokers were not received. 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 and financial highlights
referred to above present fairly, in all material respects, the
financial position of Federated Equity Income Fund, Inc. at March 31,
1999, and the results of its operations for the year then ended, the
changes in its net assets for each of the two years in the period then
ended, and the financial highlights for each of the periods presented
therein, in conformity with generally accepted accounting principles.
ERNST & YOUNG LLP
Boston, Massachusetts
May 20, 1999
