Edgar Filing: DTF TAX-FREE INCOME INC

Tax Basis of Investment

Appreciation

Depreciation

Net Unrealized Appreciation

$183,138,167

$14,659,643

$14,210,458

DFT 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		John R. Sagan
DTF Tax-Free Income Inc.		Mayer, Brown, Rowe & Maw 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) 541-5555

Date of fiscal year end: October 31

Date of reporting period: July 31, 2007


Item 1 –		Schedule of Investments

DTF TAX-FREE INCOME INC.

Portfolio of Investments

As of 7/31/2007 (unaudited)


Principal Amount (000)			Description (a)			Value
			LONG-TERM INVESTMENTS	145.9	%
			Alabama	6.1	%
			DCH Health Care Auth. Rev.
$	1,000		5.125%, 6/1/36			$	1,005,930
			Jefferson Cnty. Swr. Rev.
			Capital Impvt.
	3,000	(b)	5.125%, 2/1/29, Ser. A, F.G.I.C.
			Prerefunded 2/1/09 @ $101				3,087,990
	2,100	(b)	5.00%, 2/1/33, Ser. A, F.G.I.C.
			Prerefunded 2/1/09 @ $101				2,157,813
	1,900	(b)	5.00%, 2/1/33, Ser. A, F.G.I.C.
			Prerefunded 2/1/09 @ $101				1,952,307

							8,204,040

			California	21.6	%
			Fresno Swr. Rev., Ser. A-1,
	3,030		6.00%, 9/1/09, A.M.B.A.C.				3,170,683
	2,000		6.25%, 9/1/14, A.M.B.A.C.				2,224,660
			Golden State Tobacco Securitization Corp. Rev.,
	2,000		5.125%, 6/1/47, Ser. A-1				1,864,000
			Los Angeles Wastewtr. Sys. Rev.,
	2,000		5.00%, 6/1/26, Ser. A, M.B.I.A.				2,069,360
			Los Angeles Wtr. & Pwr. Rev.,
	1,000		5.25%, 7/1/21, Ser. A-A-1, F.S.A.				1,040,450
	1,000		5.375%, 7/1/21, Ser. A-A-2, M.B.I.A.				1,050,100
			Metro Wtr. Dist. Southern California
			Waterworks Rev.,
	1,500		5.00%, 10/1/29, Ser. B-3, M.B.I.A.				1,554,720
			Pomona Sngl. Fam. Mtge. Rev.,
	1,375	(b)	7.375%, 8/1/10, Ser. B, GNMA Collateral
			Escrowed to maturity				1,437,590
			Riverside Cnty. Sngl. Fam. Rev.,
	2,500	(b)	7.80%, 5/1/21, Ser. A, GNMA Collateral
			Escrowed to maturity				3,341,875
			San Bernardino Cnty. Residential
			Mtge. Rev.,
	7,840	(b)	9.60%, 9/1/15,
			Escrowed to maturity				10,827,354
			Saratoga Unified Sch. Dist., Gen. Oblig.
	1,040		Zero Coupon, 9/1/20, Ser. A, F.G.I.C.				576,555

							29,157,347

			Connecticut	3.4	%
			Connecticut St. Health & Edl. Facs. Auth. Rev.,
	1,000		5.00%, 7/1/25, Ser. C, Radian				1,011,690
			Mashantucket Western Pequot
			Tribe Spl. Rev., 144A,
	3,500	(c)	5.75%, 9/1/18, Ser. B				3,547,705

							4,559,395

			District of Columbia	1.1	%
			District of Columbia Wtr. & Swr. Auth. Rev.,
	1,500		5.00%, 10/1/33, F.G.I.C.				1,539,090


Principal Amount (000)			Description (a)			Value
			Florida	12.5	%
			Brevard Cnty. Hlth. Fac. Auth. Rev.,
$	1,005		5.00%, 4/1/34			$	1,000,528
			Dade Cnty. Wtr. & Swr. Sys. Rev.,
	3,000		5.25%, 10/1/26, F.G.I.C.				3,035,160
			Escambia Cnty. Hlth. Fac. Auth. Rev.,
	1,170		5.125%, 10/1/19				1,179,945
			Florida Mun. Ln. Council Rev.,
	2,210		5.375%, 8/1/20, Ser. B, M.B.I.A.				2,354,910
			Highlands Cnty. Hlth. Fac. Auth. Rev.,
	2,000		5.125%, 11/15/32, Ser. G				2,012,340
			Miami-Dade Cnty. Stormwater Util. Rev.,
	2,000		5.00%, 4/1/27, M.B.I.A.				2,069,360
			St. Petersburg Public Util. Rev.,
	5,000	(b)	5.00%, 10/1/28, Ser. A, F.S.A.
			Prerefunded 10/1/09 @ $101				5,173,700

							16,825,943

			Georgia	16.5	%
			Atlanta Wtr. & Wastewtr. Rev.,
			Ser. A,
	2,385		5.00%, 11/1/29, F.G.I.C.				2,406,727
	2,615	(b)	5.00%, 11/1/29, F.G.I.C.
			Prerefunded 5/1/09 @ $101				2,680,636
	715		5.00%, 11/1/38, F.G.I.C.				719,555
	785	(b)	5.00%, 11/1/38, F.G.I.C.
			Prerefunded 5/1/09 @ $101				804,703
			De Kalb Cnty. Wtr. & Swr. Rev.,
	4,000	(b)	5.00%, 10/1/24
			Prerefunded 10/1/09 @ $101				4,138,960
			Fulton Cnty. Sch. Dist., Gen. Oblig.
	2,000		5.375%, 1/1/16				2,199,320
			Georgia Mun. Elec. Auth. Pwr. Rev.,
	145	(b)	6.40%, 1/1/13, Ser. Y, A.M.B.A.C.
			Escrowed to maturity				158,952
	2,440		6.40%, 1/1/13, A.M.B.A.C.				2,669,677
	30	(b)	6.40%, 1/1/13, A.M.B.A.C.
			Prerefunded 1/1/11 @ $100				32,476
			Georgia Mun. Elec. Auth. Pwr. Rev.,
	5,500		6.50%, 1/1/20, Ser. X, A.M.B.A.C.				6,465,525

							22,276,531

			Hawaii	1.5	%
			Hawaii Dept. Budget & Fin. Rev.,
	2,000		4.80%, 1/1/25, Ser. A, F.G.I.C.				2,005,360

			Idaho	0.5	%
			Idaho Hsg. Agcy.,
			Sngl. Fam. Mtge. Sr., Rev.,
	415		6.65%, 7/1/14, Ser. B				424,010
	288		6.60%, 7/1/27, Ser. B, F.H.A.				294,131

							718,141

			Illinois	5.0	%
			Chicago Gen. Oblig.,
	4,000		6.25%, 1/1/11, A.M.B.A.C.				4,213,440
			Chicago Multi-Family Hsg. Rev.,
	500		4.90%, 3/20/44, F.H.A.				479,465
			Chicago Park Dist., Gen. Oblig.,
	1,000		5.00%, 1/1/27, Ser. A, A.M.B.A.C.				1,032,400
			Illinois Fin. Auth. Education Rev.,
	1,000		5.375%, 9/1/32, Ser. C., A.C.A.				1,029,370

							6,754,675


Principal Amount (000)			Description (a)			Value
			Indiana	5.7	%
			Indiana Mun. Pwr. Agcy., Pwr.
			Supply Sys. Rev.,
$	5,000		6.00%, 1/1/13, Ser. B, M.B.I.A.			$	5,500,350
			Indianapolis Local Pub. Impvt.
			Bond Bank Waterworks Proj. Rev.,
	2,100	(b)	5.25%, 7/1/33, Ser. A, M.B.I.A.
			Prerefunded 7/1/12 @ $100				2,231,439

							7,731,789

			Iowa	0.7	%
			Des Moines Wtr. Rev.,
	1,000		4.375%, 12/1/26, M.B.I.A.				975,090

			Kentucky	3.0	%
			Louisville & Jefferson Cnty. Met.
			Swr. Dist., Swr. & Drain Sys. Rev.,
	2,000		5.00%, 5/15/30, Ser. A, F.G.I.C.				2,031,980
			Louisville & Jefferson Cnty. Metro. Govt.
			Health Sys. Rev.,
	1,000		5.00%, 10/1/30				990,450
	1,000		5.25%, 10/1/36				1,008,610

							4,031,040

			Massachusetts	6.3	%
			Boston Wtr. & Swr. Comm. Rev.,
	2,000		5.00%, 11/1/28, Ser. D, F.G.I.C.				2,034,320
			Massachusetts St. Dev. Finance Agency,
			Solid Waste Disp. Rev.
	1,500		5.00%, 2/1/36				1,501,080
			Massachusetts St. Tpk. Auth.,
			Metro. Highway Sys. Rev.,
	2,355		5.125%, 1/1/23, Ser. B, M.B.I.A.				2,387,805
	2,500		4.75%, 1/1/34, Ser. A, A.M.B.A.C.				2,503,850

							8,427,055

			Michigan	3.1	%
			Detroit Wtr. Supply Sys. Rev.,
			Ser. A,
	2,000	(b)	5.50%, 7/1/24, F.G.I.C.
			Prerefunded 7/1/11 @ $100				2,121,840
	2,000		5.00%, 7/1/30, F.G.I.C.				2,036,900

							4,158,740

			Nebraska	4.1	%
			Omaha Pub. Pwr. Dist.,
			Elec. Rev., Ser. B,
	2,500	(b)	6.15%, 2/1/12
			Escrowed to maturity				2,654,600
	2,500	(b)	6.20%, 2/1/17
			Escrowed to maturity				2,832,275

							5,486,875

			Nevada	3.4	%
			Las Vegas Valley Wtr. Dist.,
			Gen. Oblig.,
	1,400		5.00%, 6/1/25, Ser. B, M.B.I.A.				1,446,816
	3,000		5.00%, 6/1/32, Ser. A, F.G.I.C.				3,090,720

							4,537,536

			New Jersey	4.0	%
			New Jersey Econ. Dev. Auth. Rev.,
	1,000		4.95%, 3/1/47				982,400
			New Jersey St. Gen. Oblig.,
	2,000		5.25%, 7/1/17, Ser. H				2,169,660
			New Jersey Trans. Trust Fund Auth. Rev.,
	2,000		5.25%, 12/15/22, Ser. A				2,172,000

							5,324,060


Principal Amount (000)			Description (a)			Value
			New York	8.9	%
			Albany Industrial Dev. Agy. Rev.,
$	1,000		5.00%, 4/1/32, Ser. A			$	964,230
			Long Island Pwr. Auth. Elec.
			Sys. Rev.,
	4,000	(b)	5.25%, 12/1/26, Ser. A, M.B.I.A.
			Prerefunded 6/1/08 @ $101				4,092,440
	800		5.00%, 12/1/35, Ser. B				825,312
			Metro. Trans. Auth. Rev.,
	1,000		5.25%, 11/15/31, Ser. A, F.G.I.C.				1,047,820
			New York City Mun. Wtr. Fin. Auth.,
			Wtr. & Swr. Sys. Rev.,
	5,000		5.00%, 6/15/29, Ser. B, F.S.A.				5,104,200

							12,034,002

			Ohio	3.5	%
			Hamilton Elec. Sys. Rev.
	1,000		4.60%, 10/15/20, Ser. A, F.S.A.				1,010,830
			Ohio St. Air Quality Dev. Auth. Rev.,
	1,000		4.80%, 9/1/36, Ser. A, F.G.I.C.				985,000
			Ohio St. Wtr. Dev. Auth. Rev.,
	2,445		5.50%, 6/1/20, Ser. B, F.S.A.				2,757,691

							4,753,521

			Pennsylvania	2.3	%
			Delaware Cnty. Auth. Rev.,
	2,000		5.00%, 6/1/21, Ser. A, Radian				2,033,560
			Pennsylvania Economic Dev. Fin.
			Auth. Res. Recov. Rev.,
	1,000		4.625%, 12/1/18, Ser. F, A.M.B.A.C.				992,450

							3,026,010

			Puerto Rico	0.8	%
			Puerto Rico Elec. Pwr. Auth. Rev.,
	1,000		5.00%, 7/1/25, Ser. PP, F.G.I.C.				1,043,890

			South Carolina	1.2	%
			Spartanburg Waterworks Rev.,
	1,500	(b)	5.25%, 6/1/28, F.G.I.C.
			Prerefunded 6/1/14 @ $100				1,620,360

			Tennessee	1.2	%
			Tennessee Energy Acquisition Corp. Rev.,
	1,500		5.25%, 9/1/20, Ser. A				1,567,920

			Texas	18.8	%
			Alliance Airport Auth. Inc. Rev.,
	1,000		4.85%, 4/1/21				978,430
			Bexar Met. Wtr. Dist.
			Waterworks Sys. Rev.,
	2,500		5.00%, 5/1/25, M.B.I.A.				2,550,625
			Coastal Wtr. Auth. Contract Rev.,
	4,000		5.00%, 12/15/25, F.S.A.				4,051,520
			Dallas Gen. Oblig.
	2,000		4.50%, 2/15/23				1,997,740
			El Paso Wtr. & Swr. Rev.,
	1,555		5.50%, 3/1/12, Ser. A, F.S.A.				1,659,791
			Harris Cnty. Gen. Oblig.,
	1,650		7.00%, 8/15/10, Ser. A				1,794,721
			Houston Wtr. & Swr. Sys. Rev.,
	1,500	(b)	5.25%, 12/1/23, Ser. B, F.G.I.C.
			Prerefunded 12/1/10 @ $100				1,563,120
	3,500	(b)	5.00%, 12/1/28, Ser. A, F.S.A.
			Prerefunded 12/1/09 @ $100				3,591,735
			Lower Colorado River Auth. Rev.,
	2,000		5.00%, 5/15/31, F.S.A.				2,032,960
			San Antonio Elec. & Gas Rev.,
	2,595		5.00%, 2/1/18, Ser. A				2,647,497
	1,405	(b)	5.00%, 2/1/18, Ser. A
			Prerefunded 2/1/09 @ 101				1,443,947
			University North Texas Rev.,
	1,000		4.50%, 4/15/25, F.G.I.C.				985,530

							25,297,616


Principal Amount (000)		Description (a)			Value
		Virginia	4.1	%
		Henrico Cnty. Wtr. & Swr. Rev.,
$	3,985	5.00%, 5/1/28			$	4,081,796
		Virginia St. Hsg. Dev. Auth. Rev.,
	1,500	4.55%, 1/1/24				1,437,270

						5,519,066

		Washington	2.3	%
		Energy Northwest Wind Proj. Rev.,
	500	4.75%, 7/1/21, M.B.I.A.				509,425
		King Cnty. Swr. Rev.,
	2,500	5.00%, 1/1/31, F.G.I.C.				2,562,650

						3,072,075

		West Virginia	1.1	%
		Monongalia Cnty. Building Commission
		Hospital Rev.
	1,500	5.00%, 7/1/30, Ser. A				1,500,900

		Wyoming	3.2	%
		Wyoming St. Farm Loan Brd.
		Cap. Facs. Rev.,
	4,000	5.75%, 10/1/20				4,351,640

		Total long-term investments
		(cost $182,865,237)				196,499,707

	Shares	SHORT-TERM INVESTMENT	0.6	%
	848,918	Goldman Sachs Tax Exempt
		Money Market Fund
		(cost $848,918)			$	848,918


		Total Investments	146.5	%
		(cost $183,714,155)				197,348,625

		Other assets in excess of liabilities	1.8	%		2,375,609

		Liquidation value of remarketed preferred stock	(48.3	%)		(65,000,000	)


		Net Assets Applicable to Common Stock	100.0	%	$	134,724,234


		Net asset value per share of common stock ($134,724,234 / 8,507,456)			$	15.84

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

A.C.A. - ACA Financial Guaranty

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.

P.S.F. - 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 July 31, 2007, these securities amounted to a value of $3,547,705 or 2.6% 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.

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 July 31, 2007 were as follows:

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 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 last fiscal quarter covered by this report 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 26, 2007

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 26, 2007

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

Date		September 26, 2007