Edgar Filing: DTF TAX-FREE INCOME INC

DTF Tax-Free Income Inc.

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM N-Q

QUARTERLY SCHEDULE OF PORTFOLIO HOLDINGS OF REGISTERED

MANAGEMENT INVESTMENT COMPANY

Investment Company Act file number 811-06416

DTF Tax-Free Income Inc.

(Exact name of registrant as specified in charter)

55 East Monroe Street, Suite 3600, Chicago, Illinois 60603

(Address of principal executive offices) (Zip code)


Alan M. Meder		Lawrence R. Hamilton
DTF Tax-Free Income Inc.		Mayer Brown LLP
55 East Monroe Street, Suite 3600		71 South Wacker Drive
Chicago, Illinois 60603		Chicago, Illinois 60606

(Name and address of agents for service)

Registrant’s telephone number, including area code: (312) 263-2610

Date of fiscal year end: October 31

Date of reporting period: July 31, 2008

Item 1 – Schedule of Investments

DTF TAX-FREE INCOME INC.

Portfolio of Investments

As of 7/31/2008 (unaudited)


Principal Amount (000)			Description (a)			Value (Note 1)
			LONG-TERM INVESTMENTS	146.4	%
			Alabama	6.2	%
			DCH Health Care Auth. Rev.
$	1,000		5.125%, 6/1/36			$	932,000
			Jefferson Cnty. Swr. Rev.
			Capital Impvt.
	3,000	(b)	5.125%, 2/1/29, Ser. A,
			Prerefunded 2/1/09 @ $101				3,078,000
	2,100	(b)	5.00%, 2/1/33, Ser. A,
			Prerefunded 2/1/09 @ $101				2,153,298
	1,900	(b)	5.00%, 2/1/33, Ser. A,
			Prerefunded 2/1/09 @ $101				1,948,222

							8,111,520

			California	22.6	%
			California St. Gen. Oblig.,
	500		5.50%, 3/1/26				524,260
	1,000		5.00%, 11/1/32				979,280
			California Statewide Communities
			Dev. Auth. Rev.,
	2,000		5.75%, 7/1/47, F.G.I.C.				2,048,620
			Fresno Swr. Rev., Ser. A-1,
	3,030		6.00%, 9/1/09, A.M.B.A.C.				3,161,260
	2,000		6.25%, 9/1/14, A.M.B.A.C.				2,177,080
			Golden State Tobacco Securitization Corp. Rev.,
	1,000		5.75%, 6/1/47, Ser. A-1				817,980
			Los Angeles Wastewtr. Sys. Rev.,
	2,000		5.00%, 6/1/26, Ser. A, M.B.I.A.				2,016,940
			Los Angeles Wtr. & Pwr. Rev.,
	1,000		5.25%, 7/1/21, Ser. A-A-1, F.S.A.				1,039,360
	1,000		5.375%, 7/1/21, Ser. A-A-2, M.B.I.A.				1,046,440
			Pomona Sngl. Fam. Mtge. Rev.,
	1,020	(b)	7.375%, 8/1/10, Ser. B,
			Escrowed to maturity				1,070,021
			Riverside Cnty. Sngl. Fam. Rev.,
	2,500	(b)	7.80%, 5/1/21, Ser. A,
			Escrowed to maturity				3,173,450
			San Bernardino Cnty. Residential
			Mtge. Rev.,
	7,840	(b)	9.60%, 9/1/15,
			Escrowed to maturity				10,853,304
			Saratoga Unified Sch. Dist., Gen. Oblig.
	1,040		Zero Coupon, 9/1/20, Ser. A, F.G.I.C.				567,258

							29,475,253

			Connecticut	3.3	%
			Connecticut St. Health & Edl. Facs. Auth. Rev.,
	1,000		5.00%, 7/1/25, Ser. C, Radian				927,680
			Mashantucket Western Pequot
			Tribe Spl. Rev., 144A,
	3,500	(c)	5.75%, 9/1/18, Ser. B				3,322,690

							4,250,370

			District of Columbia	1.1	%
			District of Columbia Wtr. & Swr. Auth. Rev.,
	1,500		5.00%, 10/1/33, F.G.I.C.				1,453,965


Principal Amount (000)			Description (a)			Value
			Florida	8.8	%
			Brevard Cnty. Hlth. Fac. Auth. Rev.,
$	1,005		5.00%, 4/1/34			$	909,414
			Escambia Cnty. Hlth. Fac. Auth. Rev.,
	1,190		5.125%, 10/1/19				1,160,785
			Florida Mun. Ln. Council Rev.,
	2,210		5.375%, 8/1/20, Ser. B, M.B.I.A.				2,277,383
			Highlands Cnty. Hlth. Fac. Auth. Rev.,
	2,000		5.125%, 11/15/32, Ser. G				1,884,660
			St. Petersburg Public Util. Rev.,
	5,000	(b)	5.00%, 10/1/28, Ser. A,
			Prerefunded 10/1/09 @ $101				5,232,750

							11,464,992

			Georgia	16.9	%
			Atlanta Wtr. & Wastewtr. Rev.,
			Ser. A,
	2,385		5.00%, 11/1/29, F.G.I.C.				2,239,276
	2,615	(b)	5.00%, 11/1/29,
			Prerefunded 5/1/09 @ $101				2,702,786
	715		5.00%, 11/1/38, F.G.I.C.				671,535
	785	(b)	5.00%, 11/1/38,
			Prerefunded 5/1/09 @ $101				811,352
			De Kalb Cnty. Wtr. & Swr. Rev.,
	4,000	(b)	5.00%, 10/1/24
			Prerefunded 10/1/09 @ $101				4,190,960
			Fulton Cnty. Sch. Dist., Gen. Oblig.
	2,000		5.375%, 1/1/16				2,234,720
			Georgia Mun. Elec. Auth. Pwr. Rev.,
	145	(b)	6.40%, 1/1/13, Ser. Y,
			Escrowed to maturity				159,825
	2,440		6.40%, 1/1/13, A.M.B.A.C.				2,688,246
	30	(b)	6.40%, 1/1/13
			Prerefunded 1/1/11 @ $100				32,667
			Georgia Mun. Elec. Auth. Pwr. Rev.,
	5,500		6.50%, 1/1/20, Ser. X, A.M.B.A.C.				6,303,715

							22,035,082

			Hawaii	1.3	%
			Hawaii Dept. Budget & Fin. Rev.,
	2,000		4.80%, 1/1/25, Ser. A, F.G.I.C.				1,759,460

			Idaho	0.4	%
			Idaho Hsg. Agcy.,
			Sngl. Fam. Mtge. Sr., Rev., F.H.A.
	245		6.65%, 7/1/14, Ser. B				253,430
	213		6.60%, 7/1/27, Ser. B				220,016

							473,446

			Illinois	5.9	%
			Chicago Gen. Oblig.,
	4,000		6.25%, 1/1/11, A.M.B.A.C.				4,189,680
	1,000		5.25%, 1/1/33, Ser. A				1,017,800
			Chicago Multi-Family Hsg. Rev.,
	500		4.90%, 3/20/44, F.H.A.				404,010
			Chicago Park Dist., Gen. Oblig.,
	1,000		5.00%, 1/1/27, Ser. A, A.M.B.A.C.				1,007,590
			Illinois Fin. Auth. Education Rev.,
	1,000	(b)	5.375%, 9/1/32, Ser. C,
			Prerefunded 9/1/17 @ $100				1,117,800

							7,736,880


Principal Amount (000)			Description (a)			Value
			Indiana	5.9	%
			Indiana Mun. Pwr. Agcy., Pwr.
			Supply Sys. Rev.,
$	5,000		6.00%, 1/1/13, Ser. B, M.B.I.A.			$	5,460,200
			Indianapolis Local Pub. Impvt.
			Bond Bank Waterworks Proj. Rev.,
	2,100	(b)	5.25%, 7/1/33, Ser. A,
			Prerefunded 7/1/12 @ $100				2,280,600

							7,740,800

			Kentucky	2.9	%
			Louisville & Jefferson Cnty. Met.
			Swr. Dist., Swr. & Drain Sys. Rev.,
	2,000		5.00%, 5/15/30, Ser. A, F.G.I.C.				1,953,160
			Louisville & Jefferson Cnty. Metro. Govt.
			Health Sys. Rev.,
	1,000		5.00%, 10/1/30				893,950
	1,000		5.25%, 10/1/36				898,560

							3,745,670

			Massachusetts	6.2	%
			Boston Wtr. & Swr. Comm. Rev.,
	2,000		5.00%, 11/1/28, Ser. D, F.G.I.C.				2,004,880
			Massachusetts St. Dev. Finance Agency,
			Solid Waste Disp. Rev.
	1,500		5.00%, 2/1/36				1,317,435
			Massachusetts St. Tpk. Auth.,
			Metro. Highway Sys. Rev.,
	2,355		5.125%, 1/1/23, Ser. B, M.B.I.A.				2,371,250
	2,500		4.75%, 1/1/34, Ser. A, A.M.B.A.C.				2,328,900

							8,022,465

			Michigan	3.7	%
			Detroit Wtr. Supply Sys. Rev.,
			Ser. A,
	2,000	(b)	5.50%, 7/1/24,
			Prerefunded 7/1/11 @ $100				2,157,180
	2,000		5.00%, 7/1/30, F.G.I.C.				1,900,300
			Michigan Tobacco Settlement Finance Auth. Rev.,
	1,000		6.00%, 6/1/48, Ser. A				832,040

							4,889,520

			Nebraska	4.2	%
			Omaha Pub. Pwr. Dist.,
			Elec. Rev., Ser. B,
	2,500	(b)	6.15%, 2/1/12
			Escrowed to maturity				2,676,650
	2,500	(b)	6.20%, 2/1/17
			Escrowed to maturity				2,866,425

							5,543,075

			Nevada	3.4	%
			Las Vegas Valley Wtr. Dist.,
			Gen. Oblig.,
	1,400		5.00%, 6/1/25, Ser. B, M.B.I.A.				1,423,338
	3,000		5.00%, 6/1/32, Ser. A, F.G.I.C.				2,954,610

							4,377,948

			New Jersey	4.0	%
			New Jersey Econ. Dev. Auth. Rev.,
	1,025		4.95%, 3/1/47				861,902
			New Jersey St. Gen. Oblig.,
	2,000		5.25%, 7/1/17, Ser. H				2,207,180
			New Jersey Trans. Trust Fund Auth. Rev.,
	2,000		5.25%, 12/15/22, Ser. A				2,128,980

							5,198,062


Principal Amount (000)			Description (a)			Value
			New York	5.9	%
			Albany Industrial Dev. Agy. Rev.,
$	1,000		5.00%, 4/1/32, Ser. A			$	854,190
			Long Island Pwr. Auth. Elec.
			Sys. Rev.,
	800		5.00%, 12/1/35, Ser. B				783,600
			Metro. Trans. Auth. Rev.,
	1,000		5.25%, 11/15/31, Ser. A, F.G.I.C.				1,002,580
			New York City Mun. Wtr. Fin. Auth.,
			Wtr. & Swr. Sys. Rev.,
	5,000		5.00%, 6/15/29, Ser. B, F.S.A.				5,014,750

							7,655,120

			Ohio	6.0	%
			Buckeye Tobacco Settlement Financing Auth.,
	3,000		6.00%, 6/1/42, Ser. A-2				2,490,150
	1,000		6.50%, 6/1/47, Ser. A-2				888,930
			Deerfield Twp. Tax Increment Rev.,
	750		5.00%, 12/1/25				705,990
			Hamilton Elec. Sys. Rev.
	1,000		4.60%, 10/15/20, Ser. A, F.S.A.				1,016,610
			Ohio St. Wtr. Dev. Auth. Rev.,
	2,445		5.50%, 6/1/20, Ser. B, F.S.A.				2,728,693

							7,830,373

			Pennsylvania	3.1	%
			Delaware Cnty. Auth. Rev.,
	2,000		5.00%, 6/1/21, Ser. A, Radian				1,912,200
			East Stroudsburg Area Sch. Dist., Gen. Oblig.
	1,000		7.75%, 9/1/27, Ser. A, F.G.I.C.				1,189,240
			Pennsylvania Economic Dev. Fin.
			Auth. Res. Recov. Rev.,
	1,000		4.625%, 12/1/18, Ser. F, A.M.B.A.C.				912,750

							4,014,190

			Puerto Rico	0.7	%
			Puerto Rico Elec. Pwr. Auth. Rev.,
	1,000		5.00%, 7/1/25, Ser. PP, F.G.I.C.				963,470

			South Carolina	1.3	%
			Spartanburg Waterworks Rev.,
	1,500	(b)	5.25%, 6/1/28,
			Prerefunded 6/1/14 @ $100				1,654,410

			Tennessee	1.8	%
			Tennessee Energy Acquisition Corp. Rev.,
	1,500		5.25%, 9/1/20, Ser. A				1,438,635
	1,000		5.25%, 9/1/21, Ser. A				949,120

							2,387,755

			Texas	20.1	%
			Alliance Airport Auth. Inc. Rev.,
	1,000		4.85%, 4/1/21				866,220
			Bexar Met. Wtr. Dist.
			Waterworks Sys. Rev.,
	2,500		5.00%, 5/1/25, M.B.I.A.				2,494,175
			Coastal Wtr. Auth. Contract Rev.,
	4,000		5.00%, 12/15/25, F.S.A.				4,008,680
			Dallas Area Rapid Trans. Rev.,
	1,000		5.25%, 12/1/48				1,018,130
			Dallas Gen. Oblig.
	2,000		4.50%, 2/15/23				1,997,840
			El Paso Wtr. & Swr. Rev.,
	1,555		5.50%, 3/1/12, Ser. A, F.S.A.				1,684,998
			Everman Indep. Sch. Dist. Gen. Oblig.
	1,000		5.00%, 2/15/36, PSF-GTD				991,110
			Harris Cnty. Gen. Oblig.,
	1,650		7.00%, 8/15/10, Ser. A				1,797,576
			Houston Wtr. & Swr. Sys. Rev.,
	1,500	(b)	5.25%, 12/1/23, Ser. B,
			Prerefunded 12/1/10 @ $100				1,594,740
	3,500	(b)	5.00%, 12/1/28, Ser. A,
			Prerefunded 12/1/09 @ $100				3,637,795
			Lower Colorado River Auth. Rev.,
	2,000		5.00%, 5/15/31, F.S.A.				1,999,840


Principal Amount (000)			Description (a)			Value
			Texas (continued)
			San Antonio Elec. & Gas Rev.,
$	2,595		5.00%, 2/1/18, Ser. A			$	2,648,483
	1,405	(b)	5.00%, 2/1/18, Ser. A
			Prerefunded 2/1/09 @ 101				1,442,008

							26,181,595

			Virginia	4.1	%
			Henrico Cnty. Wtr. & Swr. Rev.,
	3,985		5.00%, 5/1/28				4,006,041
			Virginia St. Hsg. Dev. Auth. Rev.,
	1,500		4.55%, 1/1/24				1,314,735

							5,320,776

			Washington	2.3	%
			Energy Northwest Wind Proj. Rev.,
	500		4.75%, 7/1/21, M.B.I.A.				485,180
			King Cnty. Swr. Rev.,
	2,500		5.00%, 1/1/31, F.G.I.C.				2,503,775

							2,988,955

			West Virginia	1.0	%
			Monongalia Cnty. Building Commission
			Hospital Rev.
	1,500		5.00%, 7/1/30, Ser. A				1,357,290

			Wyoming	3.3	%
			Wyoming St. Farm Loan Brd.
			Cap. Facs. Rev.,
	4,000		5.75%, 10/1/20				4,366,920

			Total long-term investments (cost $182,421,451)				190,999,362


Shares
			SHORT-TERM INVESTMENT	1.8	%
	2,385,131		Goldman Sachs Tax Exempt Money Market Fund (cost $2,385,131)			$	2,385,131

	Total Investments (cost $184,806,582)			148.2	%		193,384,493
	Other assets in excess of liabilities			1.6	%		2,055,827
	Liquidation value of remarketed preferred stock			(49.8	%)		(65,000,000	)

	Net Assets Applicable to Common Stock			100.0	%	$	130,440,320

	Net asset value per share of common stock ($130,440,320 / 8,507,456)					$	15.33

(a)	The following abbreviations are used in portfolio descriptions to indicate providers of credit support, in whole or in part:

A.M.B.A.C. - Ambac Assurance Corporation.

F.G.I.C. - Financial Guaranty Insurance Company.

F.H.A. - Federal Housing Authority.

F.S.A. - Financial Security Assurance Inc.

M.B.I.A. - MBIA Insurance Corporation.

PSF-GTD - Permanent School Fund – Guarantee.

Radian - Radian Asset Assurance Inc.

(b)	Prerefunded and escrowed to maturity issues are secured by escrowed cash, government obligations, or other securities.

(c)	Security is not registered under the Securities Act of 1933. These securities may be resold in transactions in accordance with Rule 144A to qualified institutional buyers. At July 31, 2008, these securities amounted to a value of $3,322,690 or 2.5% of net assets applicable to common stock.

Notes

Securities Valuation:

The Fund values its fixed income securities by using market quotations, prices provided by market makers or estimates of market values obtained from yield data relating to instruments or securities with similar characteristics in accordance with procedures established by the Board of Directors of the Fund. The relative liquidity of some securities in the Fund’s portfolio may adversely affect the ability of the Fund to accurately value such securities. Any securities or other assets for which such current market quotations are not readily available are valued at fair value as determined in good faith under procedures established by and under the general supervision and responsibility of the Fund’s Board of Directors.

Debt securities having a remaining maturity of 60 days or less when purchased and debt securities originally purchased with maturities in excess of 60 days but which currently have maturities of 60 days or less are valued at cost adjusted for amortization of premiums and accretion of discounts, which approximates market value.

The United States federal income tax basis of the Fund’s investments and the net unrealized appreciation as of July 31, 2008 were as follows:

Tax Basis of

Investment

Appreciation

Depreciation

Net

Unrealized

Appreciation

$184,130,950

$13,071,293

$3,817,750

$9,253,543

Other information regarding the Fund is available in the Fund’s most recent Report to Shareholders. This information is available on the Securities and Exchange Commission’s website (www.SEC.gov).

Item 2 – Controls and Procedures

(a) The registrant’s principal executive officer and principal financial officer have concluded that the registrant’s disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940 (the “1940 Act”)) are effective, based on an evaluation of those controls and procedures made as of a date within 90 days of the filing date of this report as required by Rule 30a-3(b) under the 1940 Act and Rule 13a-15(b) under the Securities Exchange Act of 1934 (the “Exchange Act”).

(b) There has been no change in the registrant’s internal control over financial reporting (as defined in Rule 30a-3(d) under the 1940 Act) that occurred during the registrant’s last fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting.

Item 3 – Exhibits

Exhibit 99.CERT- Certifications pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 – Attached hereto.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


(Registrant)		DTF TAX-FREE INCOME INC.

By (Signature and Title)		/S/ ALAN M. MEDER
		Alan M. Meder
		Treasurer
		(Principal Financial and Accounting Officer)

Date		September 25, 2008

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.


By (Signature and Title)		/S/ NATHAN I. PARTAIN
		Nathan I. Partain
		President and Chief Executive Officer

Date		September 25, 2008

By (Signature and Title)		/S/ ALAN M. MEDER
		Alan M. Meder
		Treasurer
		(Principal Financial and Accounting Officer)

Date		September 25, 2008