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: July 31, 2010

Item 1 – Schedule of Investments

DTF TAX-FREE INCOME INC.

Portfolio of Investments

As of 7/31/2010 (Unaudited)

 

            Principal             

Amount

(000)

     Description (a)          Value
   
 

LONG-TERM INVESTMENTS

   144.0%     
 

Arizona

   3.1%     
 

Arizona St. Trans Brd. Hwy. Rev.,

       
    $         2,000     

5.00%, 7/1/30, Ser. B

          $         2,140,160
 

Salt River Proj. Agric. Impvt. & Pwr.

       
 

Dist. Elec. Sys. Rev.,

       
  2,000     

5.00%, 1/1/38, Ser. A

          2,095,820
            
           4,235,980
            
 

California

   21.8%     
 

Bay Area Toll Auth. Rev.,

       
  2,000     

5.125%, 4/1/39, Ser. F-1

          2,080,040
 

California St. Gen. Oblig.,

       
  500     

5.50%, 3/1/26

          531,550
  1,000     

6.00%, 4/1/38

          1,068,850
  500     

5.50%, 3/1/40

          510,810
 

California Statewide Communities

       
 

Dev. Auth. Rev.,

       
  2,000     

5.75%, 7/1/47, FGIC

          2,056,580
 

Fresno Swr. Rev.

       
  2,000     

6.25%, 9/1/14, Ser. A-1, AMBAC

          2,201,360
 

Golden State Tobacco Securitization Corp. Rev.,

     
  3,000     

5.75%, 6/1/47, Ser. A-1

          2,126,550
 

Los Angeles Wastewtr. Sys. Rev.,

       
  2,000     

5.00%, 6/1/26, Ser. A, NRE

          2,106,720
 

Los Angeles Dept. Wtr. & Pwr. Rev.,

       
  1,000     

5.25%, 7/1/21, Ser. A-A-1, AGM

          1,039,180
  440  (b)   

5.375%, 7/1/21, Ser. A-2, NRE

       
 

Prerefunded 7/1/11 @ $100

          461,032
  560     

5.375%, 7/1/21, Ser. A-2, NRE

          581,364
 

Pomona Sngl. Fam. Mtge. Rev.,

       
  220  (b)   

7.375%, 8/1/10, Ser. B,

       
 

Escrowed to maturity

          220,037
 

Riverside Cnty. Sngl. Fam. Rev.,

       
  2,500  (b)   

7.80%, 5/1/21, Ser. A,

       
 

Escrowed to maturity

          3,517,325
 

San Bernardino Cnty. Residential

       
 

Mtge. Rev.,

       
  7,840  (b)   

9.60%, 9/1/15,

       
 

Escrowed to maturity

          11,027,666
 

Saratoga Unified Sch. Dist., Gen. Oblig.

       
  1,040     

Zero Coupon, 9/1/20, Ser. A, FGIC / NRE

        678,267
            
           30,207,331
            
 

Connecticut

   1.6%     
 

Connecticut St. Health & Edl. Facs. Auth. Rev.,

     
  1,000     

5.00%, 7/1/25, Ser. C, RAD

          917,050
 

Mashantucket Western Pequot

       
 

Tribe Spl. Rev., 144A,

       
  2,500  (c)(d)   

5.75%, 9/1/18, Ser. B

          1,275,000
            
           2,192,050
            
 

District of Columbia

   2.7%     
 

District of Columbia Income Tax Rev.,

       
  1,000     

5.00%, 12/1/31, Ser. A

          1,075,550
 

District of Columbia Wtr. & Swr. Auth. Rev.,

       
  1,500     

5.00%, 10/1/33, FGIC / NRE

          1,573,890
 

Metropolitan Washington DC Airport

       
  1,000     

5.00%, 10/1/18, Ser. A, AGM / AMBAC

          1,096,330
            
           3,745,770
            
 

Florida

   8.2%     
 

Broward Cnty. Port Fac. Rev.,

       
  1,500     

6.00%, 9/1/23, Ser. A

          1,678,920
 

Escambia Cnty. Hlth. Fac. Auth. Rev.,

       
  1,000     

6.00%, 8/15/36

          1,008,970
 

Florida Mun. Ln. Council Rev.,

       
  2,210     

5.375%, 8/1/20, Ser. B, NRE

          2,387,927
 

Florida St. Bd. of Ed. Gen. Oblig.,

       
  2,000     

5.00%, 6/1/21, Ser. A

          2,203,980
 

Highlands Cnty. Hlth. Fac. Auth. Rev.,

       
  70  (b)   

5.125%, 11/15/32, Ser. G

          83,900
 

Prerefunded 11/15/16 @ $100

       
  1,930     

5.125%, 11/15/32, Ser. G

          1,952,079
 

Orlando and Orange Cnty. Expwy. Auth. Rev.,

     
  2,000     

5.00%, 7/1/35, Ser. B,

          2,012,320
 

BHAC / AMBAC

       
            
           11,328,096
            

            Principal             

Amount

(000)

      Description (a)          Value
   
  

Georgia

   11.5%     
  

Atlanta Wtr. & Wastewtr. Rev.,

       
  

Ser. A,

       
    $         2,385      

5.00%, 11/1/29, FGIC / NRE

          $         2,386,049
  715      

5.00%, 11/1/38, FGIC / NRE

          712,798
  

Fulton Cnty. Sch. Dist., Gen. Oblig.

       
  2,000      

5.375%, 1/1/16

          2,382,400
  

Georgia Mun. Elec. Auth. Pwr. Rev., Ser. Y,

       
  145  (b)    

6.40%, 1/1/13,

       
  

Escrowed to maturity

          155,689
  2,440      

6.40%, 1/1/13, AMBAC

          2,603,724
  30  (b)    

6.40%, 1/1/13

       
  

Prerefunded 1/1/11 @ $100

          30,777
  

Georgia Mun. Elec. Auth. Pwr. Rev.,

       
  5,500      

6.50%, 1/1/20, Ser. X, AMBAC

          6,628,985
  

Metro. Atlanta Rapid Tran. Auth. Rev.,

       
  1,000      

5.00%, 7/1/39, Ser. 3

          1,052,130
             
            15,952,552
             
  

Idaho

   0.1%     
  

Idaho Hsg. Agcy.,

       
  

Sngl. Fam. Mtge. Sr., Rev.,

       
  100      

6.65%, 7/1/14, Ser. B

          103,266
  93      

6.60%, 7/1/27, Ser. B

          93,548
             
            196,814
             
  

Illinois

   7.4%     
  

Chicago Bd. of Ed. Gen. Oblig.,

       
  1,000      

5.50%, 12/1/30, Ser. A, AMBAC

          1,136,580
  

Chicago Gen. Oblig.,

       
  1,415  (b)    

6.25%, 1/1/11, AMBAC

       
  

Escrowed to maturity

          1,450,573
  

Chicago Multi-Family Hsg. Rev.,

       
  500      

4.90%, 3/20/44, FHA

          495,085
  

Chicago Park Dist., Gen. Oblig.,

       
  1,000      

5.00%, 1/1/27, Ser. A, AMBAC

          1,039,590
  

Illinois Fin. Auth. Education Rev.,

       
  1,000  (b)    

5.375%, 9/1/32, Ser. C,

       
  

Prerefunded 9/1/17 @ $100

          1,228,380
  

Illinois Fin. Auth. Rev.,

       
  1,000      

6.00%, 8/15/38, Ser. A

          1,008,640
  

Illinois St. Gen. Oblig.,

       
  2,000      

5.50%, 1/1/29

          2,190,460
  

Illinois St. Toll Hwy. Auth. Rev.,

       
  1,500      

5.50%, 1/1/33, Ser. B

          1,638,135
             
            10,187,443
             
  

Indiana

   8.0%     
  

Indiana Fin. Auth. Hospital Rev.,

       
  1,000      

5.875%, 5/1/29, Ser. A

          1,025,390
  

Indiana Mun. Pwr. Agcy., Pwr.

       
  

Supply Sys. Rev.,

       
  5,000      

6.00%, 1/1/13, Ser. B, NRE

          5,588,400
  

Indianapolis Local Pub. Impvt.

       
  

Bond Bank Rev.,

       
  2,100  (b)    

5.25%, 7/1/33, Ser. A

       
  

Prerefunded 7/1/12 @ $100

          2,300,928
  2,000      

5.00%, 2/1/38, Ser. A

          2,095,320
             
            11,010,038
             

            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

          $         1,896,023
             
  

Maryland

   1.5%     
  

Maryland St. Trans. Auth. Rev.,

       
  2,000      

5.00%, 7/1/37, AGM

          2,127,560
             
  

Massachusetts

   6.0%     
  

Massachusetts Bay Trans. Auth. Rev.,

       
  3,000      

5.50%, 7/1/29, Ser. B, NRE

          3,624,450
  

Massachusetts St. College Bldg. Auth. Rev.,

       
  2,000      

5.00%, 5/1/40, Ser. B

          2,100,680
  

Massachusetts St. Dev. Finance Agency,

       
  

Solid Waste Disp. Rev.

       
  1,500      

5.00%, 2/1/36

          1,393,935
  

Massachusetts St. Gen. Oblig.,

       
  1,000      

5.50%, 8/1/30, Ser. A, AMBAC

          1,203,640
             
            8,322,705
             
  

Michigan

   3.3%     
  

Detroit Gen. Oblig.,

       
  500      

5.25%, 11/1/35

          500,745
  

Detroit Wtr. Supply Sys. Rev.,

       
  

Ser. A,

       
  2,000  (b)    

5.50%, 7/1/24,

       
  

Prerefunded 7/1/11 @ $100

          2,096,360
  2,000      

5.00%, 7/1/30, FGIC / NRE

          1,980,020
             
            4,577,125
             
  

Nebraska

   4.9%     
  

Omaha Gen. Oblig.,

       
  2,000      

5.25%, 4/1/27

          2,419,280
  

Omaha Pub. Pwr. Dist.,

       
  

Elec. Rev., Ser. B,

       
  1,270  (b)    

6.15%, 2/1/12

       
  

Escrowed to maturity

          1,337,869
  2,500  (b)    

6.20%, 2/1/17

       
  

Escrowed to maturity

          2,950,575
             
            6,707,724
             
  

Nevada

   4.3%     
  

Clark Cnty. Gen. Oblig.,

       
  2,165      

5.00%, 11/1/22, AMBAC

          2,314,861
  

Las Vegas Valley Wtr. Dist.,

       
  

Gen. Oblig.,

       
  1,400      

5.00%, 6/1/25, Ser. B, NRE

          1,467,340
  

Nevada St. Gen. Oblig.,

       
  2,000      

5.00%, 12/1/24, Ser. F, AGM

          2,135,260
             
            5,917,461
             
  

New Jersey

   4.8%     
  

New Jersey Econ. Dev. Auth. Rev.,

       
  1,025      

4.95%, 3/1/47

          953,383
  

New Jersey St. Gen. Oblig.,

       
  2,000      

5.25%, 7/1/17, Ser. H

          2,373,280
  

New Jersey St. Tpk. Auth. Rev.,

       
  1,000      

5.00%, 1/1/36, Ser. H

          1,042,510
  

New Jersey Trans. Trust Fund Auth. Rev.,

       
  2,000      

5.25%, 12/15/22, Ser. A

          2,297,340
             
            6,666,513
             
  

New York

   4.8%     
  

Albany Industrial Dev. Agy. Rev.,

       
  1,000      

5.00%, 4/1/32, Ser. A

          868,630
  

Long Island Pwr. Auth. Elec.

       
  

Sys. Rev.,

       
  800      

5.00%, 12/1/35, Ser. B

          819,456
  

Metro. Trans. Auth. Rev.,

       
  1,000      

5.25%, 11/15/31, Ser. A, FGIC / NRE

          1,029,800
  

New York St. Dorm. Auth. Rev.,

       
  

Sch. Dist. Rev. Bond Financing Program

       
  1,500      

7.25%, 10/1/28, Ser. C

          1,788,315
  

New York St. Dorm. Auth. Rev.,

       
  

State Personal Inc. Tax Rev.

       
  2,000      

5.00%, 3/15/30, Ser. F

          2,090,460
             
            6,596,661
             

            Principal             

Amount

(000)

      Description (a)          Value
   
  

Ohio

   5.8%     
  

Buckeye Tobacco Settlement Financing Auth. Rev.,

     
    $         3,000      

6.50%, 6/1/47, Ser. A-2

          $         2,326,560
  

Deerfield Twp. Tax Increment Rev.,

       
  750      

5.00%, 12/1/25

          756,825
  

Hamilton Elec. Sys. Rev.

       
  1,000      

4.60%, 10/15/20, Ser. A, AGM

          1,077,160
  

Ohio St. Air Quality Dev. Auth. Rev.,

       
  750      

5.70%, 2/1/14, Ser. A

          817,380
  

Ohio St. Wtr. Dev. Auth. Rev.,

       
  2,445      

5.50%, 6/1/20, Ser. B, AGM

          3,019,722
             
            7,997,647
             
  

Pennsylvania

   5.4%     
  

Delaware Cnty. Auth. Rev.,

       
  2,000      

5.00%, 6/1/21, Ser. A, RAD

          2,050,760
  

East Stroudsburg Area Sch. Dist., Gen. Oblig.

     
  1,000      

7.75%, 9/1/27, Ser. A, FGIC / NRE

          1,219,010
  

Pennsylvania Economic Dev. Fin.

       
  

Auth. Res. Recov. Rev.,

       
  1,000      

4.625%, 12/1/18, Ser. F, AMBAC

          953,110
  

Pennsylvania St. Higher Ed. Facs. Auth. Rev.,

     
  2,000      

5.00%, 6/15/28, Ser. AL

          2,171,960
  

Pennsylvania St. Tpk. Comm. Oil Franchise Tax Rev.,

     
  1,020      

5.00%, 12/1/23, Ser. A-2, AGT

          1,133,353
             
            7,528,193
             
  

Puerto Rico

   0.7%     
  

Puerto Rico Elec. Pwr. Auth. Rev.,

       
  1,000      

5.00%, 7/1/25, Ser. PP, FGIC / NRE

          1,014,880
             
  

South Carolina

   1.3%     
  

Spartanburg Waterworks Rev.,

       
  1,500  (b)    

5.25%, 6/1/28

       
  

Prerefunded 6/1/14 @ $100

          1,740,360
             
  

Tennessee

   1.8%     
  

Tennessee Energy Acquisition Corp. Rev., Ser. A,

     
  1,500      

5.25%, 9/1/20

          1,530,540
  1,000      

5.25%, 9/1/21

          1,018,730
             
            2,549,270
             
  

Texas

   18.0%     
  

Alliance Airport Auth. Inc. Rev.,

       
  1,000      

4.85%, 4/1/21

          992,950
  

Bexar Met. Wtr. Dist.

       
  

Waterworks Sys. Rev.,

       
  2,500      

5.00%, 5/1/25, NRE

          2,501,675
  

Coastal Wtr. Auth. Contract Rev.,

       
  4,000      

5.00%, 12/15/25, AGM

          4,014,400
  

Dallas Area Rapid Transit Rev.,

       
  1,000      

5.25%, 12/1/48

          1,052,590
  

Dallas Gen. Oblig.

       
  2,000      

4.50%, 2/15/23

          2,031,780
  

El Paso Wtr. & Swr. Rev.,

       
  1,555      

5.50%, 3/1/12, Ser. A, AGM

          1,678,809
  

Everman Indep. Sch. Dist. Gen. Oblig.,

       
  1,000      

5.00%, 2/15/36, PSF

          1,056,430
  

Harris Cnty. Gen. Oblig.,

       
  1,650      

7.00%, 8/15/10, Ser. A

          1,654,587
  

Houston Wtr. & Swr. Sys. Rev.,

       
  1,500  (b)    

5.25%, 12/1/23, Ser. B

       
  

Prerefunded 12/1/10 @ $100

          1,525,020
  

Klein Indep. Sch. Dist. Gen. Oblig.,

       
  1,000      

5.00%, 8/1/38, Ser. A, PSF

          1,058,780
  

Lower Colorado River Auth. Rev.,

       
  2,000      

5.00%, 5/15/31, AGM

          2,010,180
  

McLennan Cnty. Pub. Fac. Corp. Proj. Rev.,

       
  2,000      

6.625%, 6/1/35

          2,186,380
  

Pharr-San Juan-Alamo Indep. Sch. Dist. Gen. Oblig.,

     
  1,975      

5.50%, 2/1/33, PSF

          2,140,801
  

Spring Branch Indep. Sch. Dist. Gen. Oblig.,

       
  1,000      

5.25%, 2/1/38, PSF

          1,068,000
             
            24,972,382
             

            Principal             

Amount

(000)

      Description (a)          Value
   
    

Utah

   1.5%     
    

Utah Trans. Auth. Sales Tax Rev., Ser A.,

       
    $         1,000     

5.00%, 6/15/32, AGM

          $           1,066,940
  1,000     

5.00%, 6/15/36, AGM

          1,057,930
               
              2,124,870
               
    

Virginia

   4.4%     
    

Virginia College Bldg. Auth. Rev.,

       
  2,000     

5.00%, 2/1/23, Ser. E-1

          2,372,880
    

Virginia St. Hsg. Dev. Auth. Rev.,

       
  1,500     

4.55%, 1/1/24

          1,486,875
    

Virginia St. Pub. Bldg. Auth. Rev.,

       
  2,050     

5.00%, 8/1/29, Ser. B

          2,247,538
               
              6,107,293
               
    

Washington

   2.2%     
    

Energy Northwest Wind Proj. Rev.,

       
  500     

4.75%, 7/1/21, NRE

          531,925
    

King Cnty. Swr. Rev.,

       
  2,500     

5.00%, 1/1/31, FGIC / NRE

          2,532,350
               
              3,064,275
               
    

West Virginia

   1.1%     
    

Monongalia Cnty. Building Commission

       
    

Hospital Rev.

       
  1,500     

5.00%, 7/1/30, Ser. A

          1,452,150
               
    

Wisconsin

   3.1%     
    

Wisconsin St. Gen. Rev.,

       
  2,000     

6.00%, 5/1/33, Ser. A

          2,231,760
    

Wisconsin St. Health & Edl. Facs. Auth. Rev.,

       
  2,000     

6.50%, 4/15/33

          2,048,980
               
              4,280,740
               
    

Wyoming

   3.3%     
    

Wyoming St. Farm Loan Brd.

       
    

Cap. Facs. Rev.,

       
  4,000     

5.75%, 10/1/20

          4,622,240
               
    

Total long-term investments

       
    

(cost $187,733,661)

          199,322,146
               
Shares                  
    

SHORT-TERM INVESTMENT

   1.2%     
    

State Street Institutional Tax-Free

       
    

Money Market Fund

       
  1,685,498     

(cost $1,685,498)

          $ 1,685,498
               

Total Investments (cost $189,419,159)

      145.2%          201,007,644

Other assets in excess of liabilities

      1.8%          2,431,334

Liquidation value of remarketed preferred stock

      (47.0%)          (65,000,000)
                 

Net Assets Applicable to Common Stock

      100.0%          $       138,438,978
                 

Net asset value per share of common stock ($138,438,978/ 8,507,456)

            $ 16.27
                 

 

 

(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.

AGT - Assured Guaranty Corp.

BHAC - Berkshire Hathaway Assurance Corporation.

FGIC - Financial Guaranty Insurance Company.

FHA - Federal Housing Authority.

NRE - National Public Finance Guarantee Corporation.

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 July 31, 2010, these securities amounted to a value of $1,275,000 or 0.92% of net assets applicable to common stock.

 

(d) A portion of this security’s March 1, 2010 interest payment and all of the September 1, 2010 semi-annual interest payment to bondholders was made from a debt service reserve fund maintained by a trustee.

Notes

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

 

        Tax Basis of        

Investment

               Appreciation                        Depreciation                       Net Unrealized             
Appreciation
$189,281,844   $13,519,059   $1,793,259   $11,725,800

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

 

Valuations   Level 1      Level 2      Level 3
 

Description

            

Assets:

            

Money Market Fund

   $                         1,685,498      $ -          $                              -     

Municipal Bonds

     -            199,322,146        -     
 

Total

   $ 1,685,498      $             199,322,146      $ -     
 

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   September 8, 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   September 8, 2010
By (Signature and Title)  

/S/ ALAN M. MEDER

  Alan M. Meder
  Treasurer
  (Principal Financial and Accounting Officer)
Date   September 8, 2010