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)

200 S. Wacker Drive, Suite 500, Chicago, Illinois 60606

(Address of principal executive offices) (Zip code)


Alan M. Meder		Lawrence R. Hamilton
DTF Tax-Free Income Inc.		Mayer Brown LLP
200 S. Wacker Drive, Suite 500		71 South Wacker Drive
Chicago, Illinois 60606		Chicago, Illinois 60606

(Name and address of agents for service)

Registrant’s telephone number, including area code: (800) 338-8214

Date of fiscal year end: October 31

Date of reporting period: January 31, 2010

Item 1 – Schedule of Investments

DTF TAX-FREE INCOME INC.

Portfolio of Investments

As of 1/31/2010 (unaudited)


Principal Amount (000)			Description (a)			Value
			LONG-TERM INVESTMENTS	144.2	%
			Arizona	1.6	%
			Arizona St. Trans Brd. Hwy. Rev.,
$	2,000		5.00%, 7/1/30, Ser. B			$	2,134,380

			California	21.8	%
			Bay Area Toll Auth. Rev.,
	2,000		5.125%, 4/1/39, Ser. F-1				2,040,200
			California St. Gen. Oblig.,
	500		5.50%, 3/1/26				512,100
	1,000		6.00%, 4/1/38				1,014,690
			California Statewide Communities
			Dev. Auth. Rev.,
	2,000		5.75%, 7/1/47, FGIC				2,044,460
			Fresno Swr. Rev.
	2,000		6.25%, 9/1/14, Ser. A-1, AMBAC				2,221,280
			Golden State Tobacco Securitization Corp. Rev.,
	3,000		5.75%, 6/1/47, Ser. A-1				2,279,340
			Los Angeles Wastewtr. Sys. Rev.,
	2,000		5.00%, 6/1/26, Ser. A, NRE				2,035,520
			Los Angeles Dept. Wtr. & Pwr. Rev.,
	1,000		5.25%, 7/1/21, Ser. A-A-1, AGM				1,044,470
	1,000		5.375%, 7/1/21, Ser. A-A-2, NRE				1,060,370
			Pomona Sngl. Fam. Mtge. Rev.,
	220	(b)	7.375%, 8/1/10, Ser. B,
			Escrowed to maturity				223,485
			Riverside Cnty. Sngl. Fam. Rev.,
	2,500	(b)	7.80%, 5/1/21, Ser. A,
			Escrowed to maturity				3,474,350
			San Bernardino Cnty. Residential
			Mtge. Rev.,
	7,840	(b)	9.60%, 9/1/15,
			Escrowed to maturity				11,021,237
			Saratoga Unified Sch. Dist., Gen. Oblig.
	1,040		Zero Coupon, 9/1/20, Ser. A, FGIC / NRE				629,366

							29,600,868

			Connecticut	2.4	%
			Connecticut St. Dev. Auth. Rev.,
	1,000		5.25%, 5/1/31				1,007,690
			Connecticut St. Health & Edl. Facs. Auth. Rev.,
	1,000		5.00%, 7/1/25, Ser. C, RAD				884,610
			Mashantucket Western Pequot
			Tribe Spl. Rev., 144A,
	2,500	(c)	5.75%, 9/1/18, Ser. B				1,399,750

							3,292,050

			District of Columbia	1.9	%
			District of Columbia Wtr. & Swr. Auth. Rev.,
	1,500		5.00%, 10/1/33, FGIC / NRE				1,501,890
			Metropolitan Washington DC Airport
	1,000		5.00%, 10/1/18, Ser. A, AGM / AMBAC				1,042,290

							2,544,180

			Florida	9.1	%
			Broward Cnty. Port Fac. Rev.,
	1,500		6.00%, 9/1/23, Ser. A				1,638,525
			Escambia Cnty. Hlth. Fac. Auth. Rev.,
	1,190		5.125%, 10/1/19				1,172,721
	1,000		6.00%, 8/15/36				970,290
			Florida Mun. Ln. Council Rev.,
	2,210		5.375%, 8/1/20, Ser. B, NRE				2,364,744
			Florida St. Bd. of Ed. Gen. Oblig.,
	2,000		5.00%, 6/1/21, Ser. A				2,175,080
			Highlands Cnty. Hlth. Fac. Auth. Rev.,
	70	(b)	5.125%, 11/15/32, Ser. G				82,058
			Prerefunded 11/15/16 @ $100
	1,930		5.125%, 11/15/32, Ser. G				1,905,566
			Orlando and Orange Cnty. Expwy. Auth. Rev.,
	2,000		5.00%, 7/1/35, Ser. B,				2,020,580
			BHAC / AMBAC

							12,329,564


Principal Amount (000)			Description (a)			Value
			Georgia	11.6	%
			Atlanta Wtr. & Wastewtr. Rev.,
			Ser. A,
$	2,385		5.00%, 11/1/29, FGIC / NRE			$	2,314,881
	715		5.00%, 11/1/38, FGIC / NRE				678,413
			Fulton Cnty. Sch. Dist., Gen. Oblig.
	2,000		5.375%, 1/1/16				2,344,680
			Georgia Mun. Elec. Auth. Pwr. Rev., Ser. Y,
	145	(b)	6.40%, 1/1/13,
			Escrowed to maturity				158,746
	2,440		6.40%, 1/1/13, AMBAC				2,659,502
	30	(b)	6.40%, 1/1/13
			Prerefunded 1/1/11 @ $100				31,678
			Georgia Mun. Elec. Auth. Pwr. Rev.,
	5,500		6.50%, 1/1/20, Ser. X, AMBAC				6,533,065
			Metro. Atlanta Rapid Tran. Auth. Rev.,
	1,000		5.00%, 7/1/39, Ser. 3				1,034,910

							15,755,875

			Idaho	0.2	%
			Idaho Hsg. Agcy.,
			Sngl. Fam. Mtge. Sr., Rev.,
	130		6.65%, 7/1/14, Ser. B				134,185
	93		6.60%, 7/1/27, Ser. B				93,589

							227,774

			Illinois	6.8	%
			Chicago Bd. of Ed. Gen. Oblig.,
	1,000		5.50%, 12/1/30, Ser. A, AMBAC				1,105,500
			Chicago Gen. Oblig.,
	1,415		6.25%, 1/1/11, AMBAC				1,472,308
			Chicago Multi-Family Hsg. Rev.,
	500		4.90%, 3/20/44, FHA				474,365
			Chicago Park Dist., Gen. Oblig.,
	1,000		5.00%, 1/1/27, Ser. A, AMBAC				1,033,580
			Illinois Fin. Auth. Education Rev.,
	1,000	(b)	5.375%, 9/1/32, Ser. C,
			Prerefunded 9/1/17 @ $100				1,197,590
			Illinois St. Gen. Oblig.,
	2,000		5.50%, 1/1/29				2,266,640
			Illinois St. Toll Hwy. Auth. Rev.,
	1,500		5.50%, 1/1/33, Ser. B				1,603,095

							9,153,078

			Indiana	8.1	%
			Indiana Fin. Auth. Hospital Rev.,
	1,000		5.875%, 5/1/29, Ser. A				1,020,790
			Indiana Mun. Pwr. Agcy., Pwr.
			Supply Sys. Rev.,
	5,000		6.00%, 1/1/13, Ser. B, NRE				5,604,250
			Indianapolis Local Pub. Impvt.
			Bond Bank Rev.,
	2,100	(b)	5.25%, 7/1/33, Ser. A
			Prerefunded 7/1/12 @ $100				2,325,855
	2,000		5.00%, 2/1/38, Ser. A				2,067,160

							11,018,055


Principal Amount (000)			Description (a)			Value
			Kentucky	1.4	%
			Louisville & Jefferson Cnty. Met.
			Swr. Dist., Swr. & Drain Sys. Rev.,
$	1,895		5.00%, 5/15/30, Ser. A, FGIC / NRE			$	1,897,937

			Massachusetts	11.0	%
			Boston Wtr. & Swr. Comm. Rev.,
	2,000		5.00%, 11/1/28, Ser. D, FGIC / NRE				2,005,280
			Massachusetts Bay Trans. Auth. Rev.,
	3,000		5.50%, 7/1/29, Ser. B, NRE				3,590,010
			Massachusetts St. College Bldg. Auth. Rev.,
	2,000		5.00%, 5/1/40, Ser. B				2,063,040
			Massachusetts St. Dev. Finance Agency,
			Solid Waste Disp. Rev.
	1,500		5.00%, 2/1/36				1,352,865
			Massachusetts St. Gen. Oblig.,
	1,000		5.50%, 8/1/30, Ser. A, AMBAC				1,182,110
			Massachusetts St. Tpk. Auth.,
			Metro. Highway Sys. Rev.,
	2,355		5.125%, 1/1/23, Ser. B, NRE				2,356,272
	2,500		4.75%, 1/1/34, Ser. A, AMBAC				2,396,425

							14,946,002

			Michigan	3.0	%
			Detroit Wtr. Supply Sys. Rev.,
			Ser. A,
	2,000	(b)	5.50%, 7/1/24,
			Prerefunded 7/1/11 @ $100				2,138,560
	2,000		5.00%, 7/1/30, FGIC / NRE				1,908,800

							4,047,360

			Nebraska	3.2	%
			Omaha Pub. Pwr. Dist.,
			Elec. Rev., Ser. B,
	1,270	(b)	6.15%, 2/1/12
			Escrowed to maturity				1,338,834
	2,500	(b)	6.20%, 2/1/17
			Escrowed to maturity				2,966,150

							4,304,984

			Nevada	2.6	%
			Las Vegas Valley Wtr. Dist.,
			Gen. Oblig.,
	1,400		5.00%, 6/1/25, Ser. B, NRE				1,422,848
			Nevada St. Gen. Oblig.,
	2,000		5.00%, 12/1/24, Ser. F, AGM				2,098,120

							3,520,968

			New Jersey	4.8	%
			New Jersey Econ. Dev. Auth. Rev.,
	1,025		4.95%, 3/1/47				900,606
			New Jersey St. Gen. Oblig.,
	2,000		5.25%, 7/1/17, Ser. H				2,333,000
			New Jersey St. Tpk. Auth. Rev.,
	1,000		5.00%, 1/1/36, Ser. H				1,012,890
			New Jersey Trans. Trust Fund Auth. Rev.,
	2,000		5.25%, 12/15/22, Ser. A				2,207,140

							6,453,636

			New York	8.5	%
			Albany Industrial Dev. Agy. Rev.,
	1,000		5.00%, 4/1/32, Ser. A				801,120
			Long Island Pwr. Auth. Elec.
			Sys. Rev.,
	800		5.00%, 12/1/35, Ser. B				807,296
			Metro. Trans. Auth. Rev.,
	1,000		5.25%, 11/15/31, Ser. A, FGIC / NRE				1,014,960
			New York City Mun. Wtr. Fin. Auth.,
			Wtr. & Swr. Sys. Rev.,
	5,000		5.00%, 6/15/29, Ser. B, AGM				5,035,900
			New York St. Dorm. Auth. Rev.,
			Sch. Dist. Rev. Bond Financing Program
	1,500		7.25%, 10/1/28, Ser. C				1,780,320
			New York St. Dorm. Auth. Rev.,
			State Personal Inc. Tax Rev.
	2,000		5.00%, 3/15/30, Ser. F				2,073,020

							11,512,616


Principal Amount (000)			Description (a)			Value
			Ohio	5.9	%
			Buckeye Tobacco Settlement Financing Auth. Rev.,
$	3,000		6.50%, 6/1/47, Ser. A-2			$	2,515,860
			Deerfield Twp. Tax Increment Rev.,
	750		5.00%, 12/1/25				744,277
			Hamilton Elec. Sys. Rev.
	1,000		4.60%, 10/15/20, Ser. A, AGM				1,054,700
			Ohio St. Air Quality Dev. Auth. Rev.,
	750		5.70%, 2/1/14, Ser. A				800,130
			Ohio St. Wtr. Dev. Auth. Rev.,
	2,445		5.50%, 6/1/20, Ser. B, AGM				2,937,790

							8,052,757

			Pennsylvania	3.8	%
			Delaware Cnty. Auth. Rev.,
	2,000		5.00%, 6/1/21, Ser. A, RAD				2,009,160
			East Stroudsburg Area Sch. Dist., Gen. Oblig.
	1,000		7.75%, 9/1/27, Ser. A, FGIC / NRE				1,216,980
			Pennsylvania Economic Dev. Fin.
			Auth. Res. Recov. Rev.,
	1,000		4.625%, 12/1/18, Ser. F, AMBAC				863,060
			Pennsylvania St. Tpk. Comm. Oil Franchise Tax Rev.,
	1,020		5.00%, 12/1/23, Ser. A-2, AGT				1,101,549

							5,190,749

			Puerto Rico	0.7	%
			Puerto Rico Elec. Pwr. Auth. Rev.,
	1,000		5.00%, 7/1/25, Ser. PP, FGIC / NRE				1,002,710

			South Carolina	1.3	%
			Spartanburg Waterworks Rev.,
	1,500	(b)	5.25%, 6/1/28
			Prerefunded 6/1/14 @ $100				1,738,275

			Tennessee	1.9	%
			Tennessee Energy Acquisition Corp. Rev., Ser. A,
	1,500		5.25%, 9/1/20				1,508,400
	1,000		5.25%, 9/1/21				998,230

							2,506,630

			Texas	18.4	%
			Alliance Airport Auth. Inc. Rev.,
	1,000		4.85%, 4/1/21				982,510
			Bexar Met. Wtr. Dist.
			Waterworks Sys. Rev.,
	2,500		5.00%, 5/1/25, NRE				2,503,575
			Coastal Wtr. Auth. Contract Rev.,
	4,000		5.00%, 12/15/25, AGM				4,009,120
			Dallas Area Rapid Transit Rev.,
	1,000		5.25%, 12/1/48				1,029,710
			Dallas Gen. Oblig.
	2,000		4.50%, 2/15/23				2,033,880
			El Paso Wtr. & Swr. Rev.,
	1,555		5.50%, 3/1/12, Ser. A, AGM				1,703,254
			Everman Indep. Sch. Dist. Gen. Oblig.,
	1,000		5.00%, 2/15/36, PSF				1,042,710
			Harris Cnty. Gen. Oblig.,
	1,650		7.00%, 8/15/10, Ser. A				1,709,400
			Houston Wtr. & Swr. Sys. Rev.,
	1,500	(b)	5.25%, 12/1/23, Ser. B
			Prerefunded 12/1/10 @ $100				1,558,350
			Klein Indep. Sch. Dist. Gen. Oblig.,
	1,000		5.00%, 8/1/38, Ser. A, PSF				1,041,470
			Lower Colorado River Auth. Rev.,
	2,000		5.00%, 5/15/31, AGM				2,009,300
			McLennan Cnty. Pub. Fac. Corp. Proj. Rev.,
	2,000		6.625%, 6/1/35				2,129,720
			Pharr-San Juan-Alamo Indep. Sch. Dist. Gen. Oblig.,
	1,975		5.50%, 2/1/33, PSF				2,130,670
			Spring Branch Indep. Sch. Dist. Gen. Oblig.,
	1,000		5.25%, 2/1/38, PSF				1,054,460

							24,938,129


Principal Amount (000)	Description (a)			Value
	Virginia	4.4	%
	Virginia College Bldg. Auth. Rev.,
$2,000	5.00%, 2/1/23, Ser. E-1			$	2,315,380
	Virginia St. Hsg. Dev. Auth. Rev.,
1,500	4.55%, 1/1/24				1,456,260
	Virginia St. Pub. Bldg. Auth. Rev.,
2,050	5.00%, 8/1/29, Ser. B				2,222,590

					5,994,230

	Washington	2.2	%
	Energy Northwest Wind Proj. Rev.,
500	4.75%, 7/1/21, NRE				512,600
	King Cnty. Swr. Rev.,
2,500	5.00%, 1/1/31, FGIC / NRE				2,531,875

					3,044,475

	West Virginia	1.0	%
	Monongalia Cnty. Building Commission
	Hospital Rev.
1,500	5.00%, 7/1/30, Ser. A				1,417,380

	Wisconsin	3.2	%
	Wisconsin St. Gen. Rev.,
2,000	6.00%, 5/1/33, Ser. A				2,237,760
	Wisconsin St. Health & Edl. Facs. Auth. Rev.,
2,000	6.50%, 4/15/33				2,043,200

					4,280,960

	Wyoming	3.4	%
	Wyoming St. Farm Loan Brd.
	Cap. Facs. Rev.,
4,000	5.75%, 10/1/20				4,546,240

	Total long-term investments (cost $185,120,609)				195,451,862


Shares
	SHORT-TERM INVESTMENT	2.8	%
3,750,989	State Street Institutional Tax-Free Money Market Fund (cost $3,750,989)			$	3,750,989

Total Investments (cost $188,871,598)		147.0	%		199,202,851
Other assets in excess of liabilities		1.0	%		1,291,320
Liquidation value of remarketed preferred stock		(48.0	)%		(65,000,000	)

Net Assets Applicable to Common Stock		100.0	%	$	135,494,171

Net asset value per share of common stock ($135,494,171/ 8,507,456)				$	15.93

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

AMBAC - Ambac Assurance Corporation.

AGM - Assured Guaranty Municipal Corporation (formerly FSA).

AGT - Assured Guaranty Corp.

BHAC - Berkshire Hathaway Assurance Corporation.

FGIC - Financial Guaranty Insurance Company.

FHA - Federal Housing Authority.

NRE - National Public Finance Guarantee Corporation (formerly MBIA).

PSF - Texas Permanent School Fund.

RAD - 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 January 31, 2010, these securities amounted to a value of $1,399,750 or 1.0% of net assets applicable to common stock.

Notes

The United States federal income tax basis of the Fund’s investments and the net unrealized appreciation as of January 31, 2010 were as follows:


Tax Basis of Investment		Appreciation		Depreciation		Net Unrealized Appreciation
$	188,592,308	$	12,768,342	$	2,157,799	$	10,610,543

The Fund’s investments are carried at fair value which is defined as the price that the Fund would receive upon selling an investment in a timely transaction to an independent buyer in the principal or most advantageous market of the investment. The three-tier hierarchy of inputs established to classify fair value measurements for disclosure purposes is summarized in the three broad levels listed below.

Level 1 – quoted prices in active markets for identical securities

Level 2 – other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risks, etc.)

Level 3 – significant unobservable inputs (including the Fund’s own assumptions in determining fair value of investments)

The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in these securities. 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. Short-term investments having a maturity of 60 days or less at the time of purchase are valued on an amortized cost basis, which approximates market value.

Investments in mutual funds are valued at their net asset value as of the close of the New York Stock Exchange on the date of valuation.

The following is a summary of the inputs used to value each of the Fund’s investments as of January 31, 2010:


Valuations	Level 1		Level 2		Level 3
Description
Assets:
Municipal Bonds	$	—	$	195,451,862	$	—
Money Market Fund		—		3,750,989		—

Total	$	—	$	199,202,851	$	—

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.

(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		March 22, 2010

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		March 22, 2010

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

Date		March 22, 2010