<DOCUMENT>
<TYPE>EX-99.77E LEGAL
<SEQUENCE>3
<FILENAME>legal.txt
<DESCRIPTION>LEGAL PROCEEDINGS
<TEXT>
National Municipal Income Fund, Inc.

April-07

Item 77E
Legal Proceedings

As has been previously reported, the staff of the U.S. Securities
and Exchange Commission (SEC) and the Office of the New York
Attorney General (NYAG) have been investigating practices in the
mutual fund industry identified as market timing and late trading
of mutual fund shares. Certain other regulatory authorities have
also been conducting investigations into these practices within
the industry and have requested that the Adviser provide
information to them. The Adviser has been cooperating and will
continue to cooperate with all of these authorities. The shares
of the Fund are not redeemable by the Fund,but are traded on an
exchange at prices established by the market. Accordingly,the Fund
and its shareholders are not subject to the market timing and late
trading practices that are the subject of the investigations
mentioned above or the lawsuits described below. Please see below
for a description of the agreements reached by the Adviser and the
SEC and NYAG in connection with the investigations mentioned above.

Numerous lawsuits have been filed against the Adviser and certain
other defendants in which plaintiffs make claims purportedly based
on or related to the same practices that are the subject of the SEC
and NYAG investigations referred to above. Some of these lawsuits
name the Fund as a party. The lawsuits are now pending in the United
States District Court for the District of Maryland pursuant to a
ruling by the Judicial Panel on Multidistrict Litigation
transferring and centralizing all of the mutual funds involving
market and late trading in the District of Maryland
(the Mutual Fund MDL). Management of the Adviser believes that these
private lawsuits are not likely to have a material adverse effect
on the results of operations or financial condition of the Fund.

On December 18, 2003, the Adviser confirmed that it had reached
terms with the SEC and the NYAG for the resolution of regulatory
claims relating to the practice of market timing mutual fund shares
in some of the AllianceBernstein Mutual Funds. The agreement with
the SEC is reflected in an Order of the Commission (SEC Order).
The agreement with the NYAG is memorialized in an Assurance of
Discontinuation dated September 1, 2004 (NYAG Order). Among the
key provisions of these agreements are the following:

(i) The Adviser agreed to establish a $250 million fund
(the Reimbursement Fund) to compensate mutual fund shareholders for
the adverse effects of market timing attributable to market timing
relationships described in the SEC Order. According to the SEC
Order, the Reimbursement Fund is to be paid, in order of priority,
to fund investors based on (i) their aliquot share of losses
suffered by the fund due to market timing, and (ii) a proportionate
share of advisory fees paid by such fund during the period of such
market timing;

(ii) The Adviser agreed to reduce the advisory fees it receives
from some of the AllianceBernstein long-term, open-end retail
funds, commencing January 1, 2004, for a period of at least five
years; and

(iii) The Adviser agreed to implement changes to its governance
and compliance procedures. Additionally, the SEC Order contemplates
that the Advisers registered investment company clients, including
the Fund, will introduce governance and compliance changes.



The shares of the Fund are not redeemable by the Fund, but are
traded on an exchange at prices established by the market.
Accordingly, the Fund and its shareholders are not subject to the
market timing practices described in the SEC Order and are not
expected to participate in the Reimbursement Fund. Since the Fund
is a closed-end fund, it will not have its advisory fee reduced
pursuant to the terms of the agreements mentioned above.

On February 10, 2004, the Adviser received (i) a subpoena duces
tecum from the Office of the Attorney General of the State of West
Virginia and (ii) a request for information from West Virginias
Office of the State Auditor, Securities Commission
(the West Virginia Securities Commissioner)
(together, the Information Requests). Both Information Requests
require the Adviser to produce documents concerning, among other
things, any market timing or late trading in the Advisers sponsored
mutual funds. The Adviser responded to the Information Requests and
has been cooperating fully with the investigation.

On April 11, 2005, a complaint entitled The Attorney General of
the State of West Virginia v. AIM Advisors, Inc., et al.
(WVAG Complaint) was filed against the Adviser, Alliance Capital
Management Holding L.P. (Alliance Holding), and various other
defendants not affiliated with the Adviser. The WVAG Complaint was
filed in the Circuit Court of Marshall County, West Virginia by the
Attorney General of the State of West Virginia. The WVAG Complaint
makes factual Allegations generally similar to those in certain of
the complaints related to the Lawsuits discussed above. On October
19, 2005, the WVAG Complaint was transferred to the Mutual Fund MDL.

On August 30, 2005, the West VirginiaSecurities Commissioner signed
a Summary Order to Cease and Desist, and Notice of Right to Hearing
addressed to the Adviser and Alliance Holding. The Summary Order
claims that the Adviser and Alliance Holding violated the West
Virginia Uniform Securities Act, and makes factual allegations
generally similarto those in the SEC Order and the NYAG Order.
On January 25, 2006, the Adviser and Alliance Holding moved to
vacate the Summary Order. In early September 2006, the court denied
this motion, and the Supreme Court of Appeals in West Virginia
denied the defendants petition for appeal. On September 22, 2006,
the Adviser and Alliance Holding filed an answer and moved to
dismiss the Summary Order with the West Virginia Securities
Commissioner.


On June 22, 2004, a purported class action complaint entitled
Aucoin, et al. v. Alliance Capital Management L.P., et al.
(Aucoin Complaint) was filed against the Adviser, Alliance Capital
Management Holding L.P., Alliance Capital Management Corporation,
AXA Financial, Inc., AllianceBernstein Investment Research &
Management, Inc., certain current and former directors of the
AllianceBernstein Mutual Funds, and unnamed Doe defendants. The
Aucoin Complaint names certain of the AllianceBernstein mutual
funds as nominal defendants. The Fund was not named as a defendant
in the Aucoin Complaint. The Aucoin Complaint was filed in the
United States District Court for the Southern District of New York
 by alleged shareholders of an AllianceBernstein mutual fund. The
Aucoin Complaint alleges, among other things, (i) that certain of
the defendants improperly authorized the payment of excessive
commissions and other fees from fund assets to broker-dealers in
exchange for preferential marketing services, (ii) that certain
of the defendants misrepresented and omitted from registration
statements and other reports material facts concerning such
payments, and (iii) that certain defendants caused such conduct as
control persons of other defendants. The Aucoin Complaint asserts
claims for violation of Sections 34(b), 36(b) and 48(a) of the
Investment Company Act, Sections 206 and 215 of the Advisers Act,
breach of common law fiduciary duties, and aiding and abetting
breaches of common law fiduciary duties. Plaintiffs seek an
unspecified amountof compensatory damages and punitive damages,
rescission of their contracts with the Adviser, including
recovery of all fees paid to the Adviser pursuant to such
contracts, an accounting of all fund-related fees, commissions
and soft dollar payments, and restitution of all unlawfully or
discriminatorily obtained fees and expenses.

Since June 22, 2004, nine additional lawsuits making factual
allegations substantially similar to those in the Aucoin
Complaint were filed against the Adviser and certain other
defendants. All nine of the lawsuits (i) were brought as class
actions filed in the United States District Court for the Southern
District of New York, (ii) assert claims substantially identical
to the Aucoin Complaint, and (iii) are brought on behalf of
shareholders of the Funds. On February 2, 2005, plaintiffs filed
a consolidated amended class action complaint
(Aucoin Consolidated Amended Complaint) that asserts claims
substantially similar to the Aucoin Complaint and the nine addition
al lawsuits referenced above. On October 19, 2005, the District
Court dismissed each of the claims set forth in the Aucoin
Consolidated Amended Complaint, except for plaintiffs claim under
Section 36(b) of the Investment Company Act. On January 11, 2006,
the District Court granted defendants motion for reconsideration
and dismissed the remaining Section 36(b) claim. On May 31, 2006
the District Court denied plaintiffs motion for leave to file an
amended complaint. On July 5, 2006, plaintiffs filed a notice of
appeal which was subsequently withdrawn subject to plaintiffs right
to reinstate it at a later date.


The Adviser believes that these matters are not likely to have a
material adverseeffect on the Fund or the Advisers ability to
perform advisory services relating tothe Fund.

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