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, 2009

Item 1 – Schedule of Investments

DTF TAX-FREE INCOME INC.

Portfolio of Investments

As of 1/31/2009 (unaudited)


Principal Amount (000)			Description (a)			Value
			LONG-TERM INVESTMENTS	147.4	%
			Alabama	6.2	%
			DCH Health Care Auth. Rev.
$	1,000		5.125%, 6/1/36			$	780,900
			Jefferson Cnty. Swr. Rev.
			Capital Impvt.
	3,000	(b)	5.125%, 2/1/29, Ser. A,
			Prerefunded 2/1/09 @ $101				3,030,360
	2,100	(b)	5.00%, 2/1/33, Ser. A,
			Prerefunded 2/1/09 @ $101				2,121,252
	1,900	(b)	5.00%, 2/1/33, Ser. A,
			Prerefunded 2/1/09 @ $101				1,919,228

							7,851,740

			California	23.0	%
			California St. Gen. Oblig.,
	500		5.50%, 3/1/26				508,915
	1,000		5.00%, 11/1/32				913,300
			California Statewide Communities
			Dev. Auth. Rev.,
	2,000		5.75%, 7/1/47, F.G.I.C.				1,854,640
			Fresno Swr. Rev., Ser. A-1,
	3,030		6.00%, 9/1/09, A.M.B.A.C.				3,122,566
	2,000		6.25%, 9/1/14, A.M.B.A.C.				2,244,980
			Los Angeles Wastewtr. Sys. Rev.,
	2,000		5.00%, 6/1/26, Ser. A, M.B.I.A.				1,967,980
			Los Angeles Wtr. & Pwr. Rev.,
	1,000		5.25%, 7/1/21, Ser. A-A-1, F.S.A.				1,031,550
	1,000		5.375%, 7/1/21, Ser. A-A-2, M.B.I.A.				1,061,500
			Pomona Sngl. Fam. Mtge. Rev.,
	830	(b)	7.375%, 8/1/10, Ser. B,
			Escrowed to maturity				867,898
			Riverside Cnty. Sngl. Fam. Rev.,
	2,500	(b)	7.80%, 5/1/21, Ser. A,
			Escrowed to maturity				3,378,525
			San Bernardino Cnty. Residential
			Mtge. Rev.,
	7,840	(b)	9.60%, 9/1/15,
			Escrowed to maturity				11,534,757
			Saratoga Unified Sch. Dist., Gen. Oblig.
	1,040		Zero Coupon, 9/1/20, Ser. A, F.G.I.C.				623,147

							29,109,758

			Connecticut	2.7	%
			Connecticut St. Health & Edl. Facs. Auth. Rev.,
	1,000		5.00%, 7/1/25, Ser. C, Radian				753,750
			Mashantucket Western Pequot
			Tribe Spl. Rev., 144A,
	3,500	(c)	5.75%, 9/1/18, Ser. B				2,674,630

							3,428,380

			District of Columbia	1.1	%
			District of Columbia Wtr. & Swr. Auth. Rev.,
	1,500		5.00%, 10/1/33, F.G.I.C.				1,410,840


Principal Amount (000)			Description (a)			Value
			Florida	8.7	%
			Brevard Cnty. Hlth. Fac. Auth. Rev.,
$	1,005		5.00%, 4/1/34			$	699,209
			Escambia Cnty. Hlth. Fac. Auth. Rev.,
	1,190		5.125%, 10/1/19				1,059,481
			Florida Mun. Ln. Council Rev.,
	2,210		5.375%, 8/1/20, Ser. B, M.B.I.A.				2,306,776
			Highlands Cnty. Hlth. Fac. Auth. Rev.,
	70	(b)	5.125%, 11/15/32, Ser. G				83,152
			Prerefunded 11/15/16 @ $100
	1,930		5.125%, 11/15/32, Ser. G				1,598,522
			St. Petersburg Public Util. Rev.,
	5,000	(b)	5.00%, 10/1/28, Ser. A,
			Prerefunded 10/1/09 @ $101				5,198,250

							10,945,390

			Georgia	15.3	%
			Atlanta Wtr. & Wastewtr. Rev.,
			Ser. A,
	2,385		5.00%, 11/1/29, F.G.I.C.				2,078,289
	715		5.00%, 11/1/38, F.G.I.C.				583,333
	785	(b)	5.00%, 11/1/38,
			Prerefunded 5/1/09 @ $101				801,870
			De Kalb Cnty. Wtr. & Swr. Rev.,
	4,000	(b)	5.00%, 10/1/24
			Prerefunded 10/1/09 @ $101				4,160,560
			Fulton Cnty. Sch. Dist., Gen. Oblig.
	2,000		5.375%, 1/1/16				2,374,420
			Georgia Mun. Elec. Auth. Pwr. Rev.,
	145	(b)	6.40%, 1/1/13, Ser. Y,
			Escrowed to maturity				163,731
	2,440		6.40%, 1/1/13, A.M.B.A.C.				2,689,343
	30	(b)	6.40%, 1/1/13
			Prerefunded 1/1/11 @ $100				33,023
			Georgia Mun. Elec. Auth. Pwr. Rev.,
	5,500		6.50%, 1/1/20, Ser. X, A.M.B.A.C.				6,480,320

							19,364,889

			Hawaii	1.1	%
			Hawaii Dept. Budget & Fin. Rev.,
	2,000		4.80%, 1/1/25, Ser. A, F.G.I.C.				1,376,720

			Idaho	0.3	%
			Idaho Hsg. Agcy.,
			Sngl. Fam. Mtge. Sr., Rev.,
	170		6.65%, 7/1/14, Ser. B				174,734
	178		6.60%, 7/1/27, Ser. B				186,418

							361,152

			Illinois	6.4	%
			Chicago Gen. Oblig.,
	2,745		6.25%, 1/1/11, A.M.B.A.C.				2,910,194
	1,000		5.25%, 1/1/33, Ser. A				1,002,780
			Chicago Multi-Family Hsg. Rev.,
	500		4.90%, 3/20/44, F.H.A.				405,585
			Chicago Park Dist., Gen. Oblig.,
	1,000		5.00%, 1/1/27, Ser. A, A.M.B.A.C.				1,005,610
			Illinois Fin. Auth. Education Rev.,
	1,000	(b)	5.375%, 9/1/32, Ser. C,
			Prerefunded 9/1/17 @ $100				1,232,460
			Illinois St. Toll Hwy. Auth. Rev.,
	1,500		5.50%, 1/1/33, Ser. B				1,524,225

							8,080,854


Principal Amount (000)			Description (a)			Value
			Indiana	6.3	%
			Indiana Mun. Pwr. Agcy., Pwr.
			Supply Sys. Rev.,
$	5,000		6.00%, 1/1/13, Ser. B, M.B.I.A.			$	5,653,400
			Indianapolis Local Pub. Impvt.
			Bond Bank Waterworks Proj. Rev.,
	2,100	(b)	5.25%, 7/1/33, Ser. A,
			Prerefunded 7/1/12 @ $100				2,357,775

							8,011,175

			Kentucky	2.7	%
			Louisville & Jefferson Cnty. Met.
			Swr. Dist., Swr. & Drain Sys. Rev.,
	2,000		5.00%, 5/15/30, Ser. A, F.G.I.C.				1,921,340
			Louisville & Jefferson Cnty. Metro. Govt.
			Health Sys. Rev.,
	1,000		5.00%, 10/1/30				735,870
	1,000		5.25%, 10/1/36				722,810

							3,380,020

			Massachusetts	5.5	%
			Boston Wtr. & Swr. Comm. Rev.,
	2,000		5.00%, 11/1/28, Ser. D, F.G.I.C.				1,989,900
			Massachusetts St. Dev. Finance Agency,
			Solid Waste Disp. Rev.
	1,500		5.00%, 2/1/36				1,047,540
			Massachusetts St. Tpk. Auth.,
			Metro. Highway Sys. Rev.,
	2,355		5.125%, 1/1/23, Ser. B, M.B.I.A.				2,108,926
	2,500		4.75%, 1/1/34, Ser. A, A.M.B.A.C.				1,808,700

							6,955,066

			Michigan	3.6	%
			Detroit Wtr. Supply Sys. Rev.,
			Ser. A,
	2,000	(b)	5.50%, 7/1/24,
			Prerefunded 7/1/11 @ $100				2,198,400
	2,000		5.00%, 7/1/30, F.G.I.C.				1,696,500
			Michigan Tobacco Settlement Finance Auth. Rev.,
	1,000		6.00%, 6/1/48, Ser. A				585,570

							4,480,470

			Nebraska	4.5	%
			Omaha Pub. Pwr. Dist.,
			Elec. Rev., Ser. B,
	2,500	(b)	6.15%, 2/1/12
			Escrowed to maturity				2,685,500
	2,500	(b)	6.20%, 2/1/17
			Escrowed to maturity				3,033,650

							5,719,150

			Nevada	3.4	%
			Las Vegas Valley Wtr. Dist.,
			Gen. Oblig.,
	1,400		5.00%, 6/1/25, Ser. B, M.B.I.A.				1,413,328
	3,000		5.00%, 6/1/32, Ser. A, F.G.I.C.				2,911,350

							4,324,678

			New Jersey	4.1	%
			New Jersey Econ. Dev. Auth. Rev.,
	1,025		4.95%, 3/1/47				637,950
			New Jersey St. Gen. Oblig.,
	2,000		5.25%, 7/1/17, Ser. H				2,366,860
			New Jersey Trans. Trust Fund Auth. Rev.,
	2,000		5.25%, 12/15/22, Ser. A				2,109,420

							5,114,230


Principal Amount (000)			Description (a)			Value
			New York	7.1	%
			Albany Industrial Dev. Agy. Rev.,
$	1,000		5.00%, 4/1/32, Ser. A			$	613,240
			Long Island Pwr. Auth. Elec.
			Sys. Rev.,
	800		5.00%, 12/1/35, Ser. B				711,400
			Metro. Trans. Auth. Rev.,
	1,000		5.25%, 11/15/31, Ser. A, F.G.I.C.				963,880
			New York City Mun. Wtr. Fin. Auth.,
			Wtr. & Swr. Sys. Rev.,
	5,000		5.00%, 6/15/29, Ser. B, F.S.A.				4,936,800
			New York St. Dorm. Auth. Rev.,
			Sch. Dist. Program
	1,500		7.25%, 10/1/28, Ser. C				1,725,060

							8,950,380

			Ohio	6.0	%
			Buckeye Tobacco Settlement Financing Auth. Rev.,
	3,000		6.00%, 6/1/42, Ser. A-2				1,749,360
	2,000		6.50%, 6/1/47, Ser. A-2				1,241,980
			Deerfield Twp. Tax Increment Rev.,
	750		5.00%, 12/1/25				590,415
			Hamilton Elec. Sys. Rev.
	1,000		4.60%, 10/15/20, Ser. A, F.S.A.				1,049,780
			Ohio St. Wtr. Dev. Auth. Rev.,
	2,445		5.50%, 6/1/20, Ser. B, F.S.A.				2,929,648

							7,561,183

			Pennsylvania	3.0	%
			Delaware Cnty. Auth. Rev.,
	2,000		5.00%, 6/1/21, Ser. A, Radian				1,729,560
			East Stroudsburg Area Sch. Dist., Gen. Oblig.
	1,000		7.75%, 9/1/27, Ser. A, F.G.I.C.				1,169,440
			Pennsylvania Economic Dev. Fin.
			Auth. Res. Recov. Rev.,
	1,000		4.625%, 12/1/18, Ser. F, A.M.B.A.C.				918,210

							3,817,210

			Puerto Rico	0.7	%
			Puerto Rico Elec. Pwr. Auth. Rev.,
	1,000		5.00%, 7/1/25, Ser. PP, F.G.I.C.				847,220

			South Carolina	1.4	%
			Spartanburg Waterworks Rev.,
	1,500	(b)	5.25%, 6/1/28,
			Prerefunded 6/1/14 @ $100				1,768,155

			Tennessee	1.5	%
			Tennessee Energy Acquisition Corp. Rev.,
	1,500		5.25%, 9/1/20, Ser. A				1,176,720
	1,000		5.25%, 9/1/21, Ser. A				767,740

							1,944,460

			Texas	21.8	%
			Alliance Airport Auth. Inc. Rev.,
	1,000		4.85%, 4/1/21				746,880
			Bexar Met. Wtr. Dist.
			Waterworks Sys. Rev.,
	2,500		5.00%, 5/1/25, M.B.I.A.				2,491,550
			Coastal Wtr. Auth. Contract Rev.,
	4,000		5.00%, 12/15/25, F.S.A.				4,000,120
			Dallas Area Rapid Transit Rev.,
	1,000		5.25%, 12/1/48				966,430
			Dallas Gen. Oblig.
	2,000		4.50%, 2/15/23				2,019,540
			El Paso Wtr. & Swr. Rev.,
	1,555		5.50%, 3/1/12, Ser. A, F.S.A.				1,728,134
			Everman Indep. Sch. Dist. Gen. Oblig.,
	1,000		5.00%, 2/15/36, PSF				982,510
			Harris Cnty. Gen. Oblig.,
	1,650		7.00%, 8/15/10, Ser. A				1,797,147
			Houston Wtr. & Swr. Sys. Rev.,
	1,500	(b)	5.25%, 12/1/23, Ser. B,
			Prerefunded 12/1/10 @ $100				1,616,130
	3,500	(b)	5.00%, 12/1/28, Ser. A,
			Prerefunded 12/1/09 @ $100				3,627,715


Principal Amount (000)		Description (a)			Value
		Texas (continued)
		Klein Indep. Sch. Dist. Gen. Oblig.,
$	1,000	5.00%, 8/1/38, Ser. A, PSF			$	981,830
		Lower Colorado River Auth. Rev.,
	2,000	5.00%, 5/15/31, F.S.A.				1,919,380
		McLennan Cnty. Pub. Fac. Corp. Proj. Rev.,
	1,000	6.625%, 6/1/35				1,042,130
		San Antonio Elec. & Gas Rev.,
	2,595	5.00%, 2/1/18, Ser. A				2,626,036
		Spring Branch Indep. Sch. Dist. Gen. Oblig.,
	1,000	5.25%, 2/1/38, PSF				1,008,450

						27,553,982

		Virginia	4.2	%
		Henrico Cnty. Wtr. & Swr. Rev.,
	3,985	5.00%, 5/1/28				3,993,926
		Virginia St. Hsg. Dev. Auth. Rev.,
	1,500	4.55%, 1/1/24				1,314,420

						5,308,346

		Washington	2.3	%
		Energy Northwest Wind Proj. Rev.,
	500	4.75%, 7/1/21, M.B.I.A.				507,375
		King Cnty. Swr. Rev.,
	2,500	5.00%, 1/1/31, F.G.I.C.				2,356,975

						2,864,350

		West Virginia	0.9	%
		Monongalia Cnty. Building Commission
		Hospital Rev.
	1,500	5.00%, 7/1/30, Ser. A				1,076,970

		Wyoming	3.6	%
		Wyoming St. Farm Loan Brd.
		Cap. Facs. Rev.,
	4,000	5.75%, 10/1/20				4,563,120

		Total long-term investments (cost $182,852,446)				186,169,888


Shares
		SHORT-TERM INVESTMENT	3.3	%
	4,232,248	State Street Institutional Tax-Free Money Market Fund (cost $4,232,248)			$	4,232,248

	Total Investments (cost $187,084,694)		150.7	%		190,402,136
	Other assets in excess of liabilities		0.7	%		932,661
	Liquidation value of remarketed preferred stock		(51.4	)		(65,000,000	)

	Net Assets Applicable to Common Stock		100.0	%	$	126,334,797

	Net asset value per share of common stock ($126,334,797 / 8,507,456)				$	14.85

(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 - Texas Permanent School Fund.

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 January 31, 2009, these securities amounted to a value of $2,674,630 or 2.1% 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. Short-term investments having a maturity of 60 days or less at date 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 United States federal income tax basis of the Fund’s investments and the net unrealized appreciation as of January 31, 2009 were as follows:


Tax Basis of Investment	Appreciation	Depreciation	Net Unrealized Appreciation
$186,404,419	$14,481,180	$10,483,463	$3,997,717

The Fund implemented Financial Accounting Standards Board Statement of Financial Accounting Standards No. 157, Fair Value Measurements (“FAS 157”), effective November 1, 2008. In accordance with FAS 157, fair value 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. FAS 157 establishes a three-tier hierarchy to classify fair value measurements for disclosure purposes. The three tier hierarchy of inputs 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 following is a summary of the inputs used to value each of the Fund’s investments as of January 31, 2009:


Level 1	–	$	-
Level 2	–	$	190,402,136

Total	–	$	190,402,136

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		March 23, 2009

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 23, 2009

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

Date		March 23, 2009