DUFF & PHELPS UTILITIES TAX FREE INCOME INC, N-30D, 2000-07-07

DUFF & PHELPS UTILITIES TAX FREE INCOME INC
N-30D, 2000-07-07

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<PAGE>

Duff & Phelps
Utilities
Tax-Free
Income Inc.
------------------------------------------------------------
Semi-Annual Report
April 30, 2000

<PAGE>

Letter to Shareholders

May 1, 2000

Dear Shareholder:

Fund Performance
Duff & Phelps Utilities Tax-Free Income Fund (DTF)
continued to provide a very attractive level of
tax-free income over the past six months ending
April 30, 2000. On April 30, the stock closed at
$13.06. Our $.0775 cent monthly dividend
translates to a tax-free yield of 7.12%. This
attractive level of income continues to be
generated by a high quality, well diversified
investment portfolio.

DTF's net asset value total return for its one,
three and five year periods is compared to its
Lipper Leveraged Municipal Peer Group below:

ANNUALIZED TOTAL RETURN
(4/30/00)
One Year Three Year Five Year
DTF1 -3.27% 4.56% 5.61%
Lipper Leveraged
Municipal Peer Group -5.73 3.90 5.64

1Source Lipper Analytical Services, Inc. Total
return of the Fund as calculated for the period
ended April 30, 2000 is based on the net asset
value and assumes the reinvestment of dividends and
distributions. Shares of the Fund are traded on the
NYSE. Past performance is no guarantee of future
results.

The Fund's call protection and diversified sector
holdings contributed to this strong relative
performance over these periods. The Fund's
diversification by market sector is shown below:

FUND DIVERSIFICATION
Market Sectors
Electric Utilities 20%
Pollution Control 17
Water/Sewer Revenue 16
Pre-Refunded Utilities 15
Non-Utilities 32

As you will recall from previous reports, that
while the Fund was not earning its dividend on a
current basis, it still had retained earnings from
previous years to support its above market
dividend. Unfortunately, this level of retained
earnings has depleted faster than expected due to
the

1
<PAGE>

significant rise in the Fund's Remarketed
Preferred Stock (RP) dividend rate.
This rapid rise in the RP dividend rate has been in
response to six interest rate increases by the
Federal Reserve (Fed) over the past 12 months.
Like most Closed-End Municipal Bond funds that
employ leverage, this increase in short-term
interest rates has negatively impacted the Fund's
earnings and its ability to support the current
dividend. Under this current interest rate
environment, the Fund is not able to earn the
$.0775 monthly dividend. As such, on May 31, 2000,
the Board of Directors reduced the dividend to
$.0625 per month. Hopefully, the Fed's recent
actions will be successful in reducing the
economy's inflationary pressures allowing short-
term interest rates to return to lower levels.
Your management team and the Board of Directors
will continue to monitor this situation and keep
you apprised.

General Economic Commentary
The bond market's volatility has continued into
2000 as short-term U.S. Treasury rates have
increased significantly due to six interest rate
increases (tightening) by the Fed as the U.S.
economy remains strong and inflation fears
continue. Over the past 6 months ending April 30,
2000, 2-year U.S. Treasury rates have increased by
86 basis points while 5-year U.S. Treasury rates
have risen by 57 basis points. Conversely, 30-year
U.S. Treasury rates declined during this period in
response to the U.S. Treasury announcing plans in
February to buyback up to $30 billion of longer-
term U.S. Treasury debt with a portion of the
growing federal budget surplus. This decline in
longer-term rates associated with the Treasury
buyback and rise in shorter-term rates associated
with the Fed's interest rate increases caused the
U.S. Treasury yield curve to invert during the
first quarter. We expect the U.S. Treasury curve
to remain inverted over the near term as the threat
of further Fed tightenings should keep short-term
yields high, while the Treasury buyback program
should keep longer-dated Treasury yields below
short-term yields.

The U.S. economy has set a post war record of nine
years of uninterrupted economic expansion. The job
market remains tight, while signs of inflation have
begun to appear. The national unemployment rate,
which ended the first quarter of 2000 at 3.9%, is
the lowest the country has seen in 30 years.
Inflation, as measured by the Consumer Price Index
(CPI), ended the first quarter at approximately
3.0%. CPI has increased by more than 1% over the
last 12 months, and the Federal Reserve (Fed) has
responded by raising the Fed Funds rate six times
for a total of 1 3/4 %. Despite the recent
tightening, the economy remains resilient as labor
markets are tight and consumer spending is strong.
Labor markets are being stretched to capacity,
which could force labor costs higher and put
further pressure on prices. The willingness of
consumers to borrow and spend is providing the
economy the necessary fuel to stay healthy. We
expect the Fed to remain vigilant to ensure that
inflation does not overheat and disrupt the
financial markets.

2
<PAGE>

The Municipal Market and Your Fund
The municipal bond market underperformed the U.S.
Treasury market over the past twelve months due
primarily to poor demand from institutional
investors in the face of rising interest rates.
Municipal yields have risen by 70 basis points for
30-year bonds and over 100 basis points for
shorter-term 5-year securities. Issuance of
municipal bonds is down approximately 29% year-to-
date, driven by refundings which are off 80% as
higher interest rates have made it less economical
for issuers to refinance older, higher cost debt.
As such, full year 2000 issuance is projected to be
20% lower than last year, which should bode well
for the market. On the demand side, retail buying
has picked up as municipal yields exceed 6%, while
institutional buying, which includes mutual funds
and insurance companies, has been poor. With
yields on longer-term municipal bonds greater than
yields of longer term U.S. Treasury bonds,
municipals appear very attractive on a relative
value basis.

Within the DTF Fund, we continue to emphasize
higher quality issues, as the yield premium between
higher quality bonds and lower quality bonds
remains narrow by historical standards. The Fund
currently has an average quality rating of AA/Aa
with over 86% of its issues rated AA or higher.
Within the utility segment of the portfolio, the
Fund is well diversified between electric utility,
pollution control, and water/sewer issues. The
electric utility sector continues to be an area of
close focus due to the uncertainty surrounding
electric deregulation and its ultimate impact on
valuations. While numerous states have adopted
various forms of electric utility deregulation, the
federal government has been unable to pass a
national deregulation plan despite extensive
debate. As a result, the portfolio remains well
diversified in an effort to minimize exposure to
any one sector, with electric utility exposure
currently at 20%, which historically is a low level
of exposure for the DTF fund.

Outlook
As we move forward into the second half of 2000,
factors that could drive the relative value of
municipal bonds over the year include: the U.S.
inflation outlook and its impact on the U.S.
Treasury rates, additional Federal Reserve
tightenings, legislative developments in the
electric utility industry that could change the
current tax laws for municipal utility bonds, and
lastly, the amount of new municipal supply that the
market will experience, especially in light of the
significant decline in new issue supply the market
has enjoyed through the first four months of 2000.
Finally, should the U.S. stock market continue to
experience the same level of volatility and
negative returns that it has experienced over the
past few months, nervous investors could move money
into tax-exempt issues, which could be positive for
the market. In spite of these potential risks, we
believe the municipal market represents good
relative value at current levels.

3
<PAGE>

We continue to appreciate your interest in the Duff
& Phelps Utilities Tax-Free Income Fund and look
forward to being of continued service in the
future.

Sincerely,

Francis E. Jeffries, CFA
Chairman of the Board
President and Chief Executive Officer

<PAGE>
----------------------------------------------------------
DUFF & PHELPS UTILITIES
TAX-FREE INCOME INC.
Portfolio of Investments
April 30, 2000 (Unaudited)
<TABLE>
<CAPTION>
----------------------------------------------------------
Moody's Principal
Rating Amount Value
(Unaudited) (000) Description (a) (Note 1)
----------------------------------------------------------
<C> <C> <S> <C>
LONG-TERM INVESTMENTS--98.1%
Alabama--2.9%
Jefferson Cnty. Alabama
Swr. Rev. Capital
Impvt.
Aaa $ 3,000 5.75%, 2/1/38, Ser. A,
F.G.I.C................ $ 2,883,780
Aaa 3,000 5.125%, 2/1/29, Ser. A,
F.G.I.C................ 2,613,030
------------
5,496,810
------------
California--16.0%
Foothill/Eastern Trans.
Corr. Agency California
Toll Road Rev.
Aaa 5,640(c) 6.00%, 1/1/34, Ser. A
Prerefunded 1/1/07
@$100.................. 6,002,314
Fresno Swr. Rev.,
Aaa 3,030 6.00%, 9/1/09,
A.M.B.A.C.............. 3,260,735
Aaa 2,000 6.25%, 9/1/14,
A.M.B.A.C.............. 2,206,000
Pomona California Sngl.
Fam. Mtge. Rev.,
Aaa 2,705 7.375%, 8/1/10
Escrowed to maturity... 3,002,171
Riverside Cnty.
California Sngl. Fam.
Rev., Mtge. Backed
Aaa 2,500 7.80%, 5/1/21, Ser. A
Escrowed to maturity... 3,070,525
San Bernardino Cnty.
California Residential
Mtge. Rev.,
Aaa 7,840 9.60%, 9/1/15
Escrowed to maturity... 11,034,878
Santa Monica Waste Wtr.
Enterprise Rev.,
Hyperion Proj.,
A1 2,000(c) 6.70%, 1/1/22, Ser. A,
Prerefunded 1/1/02
@$102.................. 2,105,520
------------
30,682,143
------------
Colorado--2.2%
Colorado Hsg. Fin. Auth.,
Sngl. Fam. Prog.,
Aa2 1,205 8.00%, 6/1/25............ 1,259,298
Aa2 470 8.125%, 6/1/25........... 503,459
Colorado Springs Utils.
Rev.,
Aa2 2,300 6.50%, 11/15/15, Ser.
A...................... 2,401,361
------------
4,164,118
------------
----------------------------------------------------------
Moody's Principal
Rating Amount Value
(Unaudited) (000) Description (a) (Note 1)
----------------------------------------------------------
Connecticut--1.7%
Connecticut St. Airport
Rev.
Aaa $ 3,000 7.65%, 10/1/12,
F.G.I.C................ $ 3,303,210
------------
Delaware--1.9%
Delaware St., Econ. Dev.
Auth. Rev., Delmarva
Pwr. Ser. B
Aaa 3,500 6.75%, 5/1/19,
A.M.B.A.C.............. 3,663,275
------------
Florida--6.1%
Dade Cnty. Wtr. & Swr.
Sys. Rev.,
Aaa 3,000 5.25%, 10/1/26,
F.G.I.C................ 2,725,560
Florida St. Bd. Ed. Cap.
Outlay, Pub. Ed.
Aa2 5,000 5.25%, 6/1/23, Ser. D.... 4,569,200
St. Petersburg Florida
Pub. Utils. Rev.
Aaa 5,000 5.00%, 10/1/28, Ser. A,
F.S.A.................. 4,328,350
------------
11,623,110
------------
Georgia--9.1%
Atlanta Georgia Wtr. &
Waste Rev.
Aaa 5,000 5.00%, 11/1/29, Ser. A,
F.G.I.C................ 4,281,700
Aaa 1,500 5.00%, 11/1/38, Ser. A,
F.G.I.C................ 1,256,250
GA Mun. Elec. Auth. Pwr.
Rev., Ser. Y,
Aaa 2,615 6.40%, 1/1/13,
A.M.B.A.C.............. 2,856,548
GA Mun. Elec. Auth. Rev.,
Ser. X,
Aaa 2,750 6.50%, 1/1/20,
M.B.I.A................ 2,997,665
Aaa 5,500 6.50%, 1/1/20,
A.M.B.A.C.............. 5,995,330
------------
17,387,493
------------
Idaho--3.5%
Idaho Hsg. Agcy.,
Sngl. Fam. Mtge. Sr.,
Aa1 3,765 6.65%, 7/1/14, Ser. B.... 3,826,821
Aaa 2,800 6.60%, 7/1/27, Ser. B.... 2,834,244
------------
6,661,065
------------
</TABLE>

See Notes to Financial Statements.
4

<PAGE>
<TABLE>
<CAPTION>
----------------------------------------------------------
<C> <C> <S> <C>
Moody's Principal
Rating Amount Value
(Unaudited) (000) Description (a) (Note 1)
----------------------------------------------------------
Illinois--7.1%
Chicago Gas Supply Rev.,
(People's Gas, Lt. &
Coke Co.),
Aa3 $ 4,600 6.875%, 3/1/15........... $ 4,816,936
Chicago Illinois
Aaa 4,000 6.25%, 1/1/11,
A.M.B.A.C.............. 4,309,800
Chicago Illinois Sales
Tax Rev.,
Aaa 5,000 5.375%, 1/1/27,
F.G.I.C................ 4,555,450
------------
13,682,186
------------
Indiana--2.7%
Indiana Mun. Pwr. Agcy.,
Pwr. Supply Sys. Rev.,
Aaa 5,000 6.00%, 1/1/13,
M.B.I.A................ 5,258,250
------------
Louisiana--0.7%
St. Charles Parish, Poll.
Ctrl. Rev.,
(Louisiana Pwr. & Lt.
Co.),
Aaa 1,250 7.00%, 12/1/22, F.S.A.... 1,323,200
------------
Massachusetts--3.0%
Massachusetts St., Wtr.
Res. Auth., Ser. A,
Aaa 5,330(c) 7.00%, 8/1/13, M.B.I.A.
Prerefunded 8/1/04
@$101 1/2.............. 5,802,824
------------
Nebraska--2.8%
Omaha Pub. Pwr. Dist.,
Elec. Rev.,
Aa2 2,500 6.15%, 2/1/12, Ser. B,
Escrowed to maturity... 2,638,150
Aa2 2,500 6.20%, 2/1/17, Ser. B,
Escrowed to maturity... 2,649,300
------------
5,287,450
------------
New York--8.9%
New York City Mun. Wtr.
Fin. Auth., Wtr. & Swr.
Sys. Rev.,
Aaa 3,760(c) 7.10%, 6/15/12
Prerefunded 6/15/01
@$101.................. 3,902,203
New York St. Dorm. Auth.
Rev., Comsewogue Pub.
Lib. Insd.
Aaa 2,585 6.00%, 7/1/15,
M.B.I.A................ 2,651,305
New York St. Energy
Research & Dev. Auth.
Facs. Rev.,
(Con Edison Co. of
N.Y.)
A1 4,000 7.125%, 12/1/29.......... 4,306,960
New York St. Envir. Fac.
Corp. Poll. Ctrl. Rev.,
Aaa 5,000 6.90%, 11/15/15.......... 5,385,550
Suffolk Cnty. New York
Ind. Dev. Agcy. Ind.
Dev. Rev.,
NR 1,000 5.50%, 1/1/23............ 851,200
------------
17,097,218
------------
----------------------------------------------------------
Moody's Principal
Rating Amount Value
(Unaudited) (000) Description (a) (Note 1)
----------------------------------------------------------
Pennsylvania--1.6%
Montgomery Cnty. Ind.
Dev. Auth., Poll. Ctrl.
Rev., (Philadelphia
Elec. Co.),
Aaa $ 3,000 6.70%, 12/1/21,
M.B.I.A................ $ 3,129,090
------------
Tennessee--1.7%
Tennessee Hsg. Dev.
Agcy.,
Mtge. Finance
A3 3,135 6.15%, 7/1/15, Ser. B,
M.B.I.A................ 3,199,832
------------
Texas--9.0%
Brazos River Auth., Poll.
Ctrl. Rev., (Texas
Utils. Elec.),
A3 8,000 7.875%, 3/1/21........... 8,290,000
Coastal Wtr. Auth. Texas
Cont. Rev., City Of
Houston Proj.,
Aaa 4,000 5.00%, 12/15/25,
F.S.A.................. 3,451,520
Harris Cnty. Texas
Toll Road Sub. Lien
Aa1 1,650 7.00%, 8/15/10, Ser. A... 1,868,823
San Antonio Texas Elec. &
Gas Rev.
Aa1 4,000 5.00%, 2/1/18, Ser. A.... 3,586,440
------------
17,196,783
------------
Virginia--1.8%
Henrico Cnty. Virginia
Wtr. & Swr. Rev.,
Aa2 3,985 5.00%, 5/1/28............ 3,441,366
------------
Washington--13.3%
Conservation & Renewable
Energy Sys.
Conservation Proj.
Rev.,
Aa1 2,600 6.875%, 10/1/11.......... 2,793,284
Lewis Cnty. Pub. Utils.
Dist. No. 1, Cowlitz
Falls
Hydroelectric Proj.
Rev.,
Aaa 5,000(c) 7.00%, 10/1/22
Prerefunded 10/1/01
@$102.................. 5,255,050
Snohomish Cnty., Pub.
Utils. Dist. No. 1
Elec. Rev.,
A1 1,500 6.90%, 1/1/06, Ser. A.... 1,550,610
A1 8,000 5.80%, 1/1/24............ 7,434,480
</TABLE>

See Notes to Financial Statements.
5

---------------
(a) The following abbreviations are used in portfolio descriptions:
A.M.B.A.C.--American Municipal Bond Assurance Corporation.
F.G.I.C.--Financial Guarantee Insurance Company.
F.S.A.--Financial Security Assurance Inc.
M.B.I.A.--Municipal Bond Insurance Association.
F.R.D.D--Floating Rate Daily Demand Note(b).
(b) For purposes of amortized cost valuation, the maturity date of Floating Rate
Demand Notes is considered to be the later of the next date on which the
security can be redeemed at par or the next date on which the rate of
interest is adjusted.
(c) Prerefunded issues are secured by escrowed cash and/or direct U.S.
guaranteed obligations.
* Standard & Poor's rating.
NR--Not Rated by Moody's or Standard & Poor's.
----------------------------------------------------------
DUFF & PHELPS UTILITIES
TAX-FREE INCOME INC.
Statement of Assets and Liabilities
April 30, 2000 (Unaudited)
----------------------------------------------------------
<TABLE>
<S> <C>
Assets
Investments, at value (cost
$182,631,967)........................ $188,591,266
Interest receivable.................... 3,434,439
Receivable for investments sold........ 25,841
------------
Total assets......................... 192,051,546
------------
Liabilities
Bank overdraft......................... 269,198
Accrued expenses....................... 190,066
Advisory fee payable (Note 2).......... 73,648
Dividends payable...................... 84,199
Administration fee payable (Note 2).... 22,094
------------
Total liabilities.................... 639,205
------------
Net Assets............................. $191,412,341
------------
------------
Capital
Remarketed preferred stock ($.01 par
value; 1,300
preferred shares, issued and
outstanding, liquidation preference
$50,000 per share; Note 4)........... $ 65,000,000
------------
Common stock at par ($.01 par value;
600,000,000
shares authorized and 8,507,456
issued and outstanding).............. 85,075
Paid-in capital........................ 120,408,778
Undistributed net investment income.... 124,502
Accumulated net realized loss on
investments.......................... (165,313)
Net unrealized appreciation on
investments.......................... 5,959,299
------------
Net assets applicable to common stock
(equivalent to $14.86 per share
based on 8,507,456 shares
outstanding)....................... 126,412,341
------------
Total capital (Net assets)........... $191,412,341
------------
------------
</TABLE>

See Notes to Financial Statements. See Notes to Financial Statements.
6

<PAGE>
----------------------------------------------------------
DUFF & PHELPS UTILITIES
TAX-FREE INCOME INC.
Statement of Operations
Six Months Ended April 30, 2000 (Unaudited)
----------------------------------------------------------
<TABLE>
<S> <C>
Net Investment Income
Income
Interest............................... $5,668,578
----------
Expenses
Investment advisory fee................ 479,903
Administration fee..................... 143,971
Remarketing expense.................... 81,000
Directors' fees and expenses........... 62,000
Custodian's fees and expenses.......... 30,000
Audit fee and expenses................. 21,000
Reports to shareholders................ 19,000
Legal fees and expenses................ 13,000
Transfer agent's fees and expenses..... 11,000
Registration expenses.................. 8,000
Miscellaneous.......................... 3,605
----------
Total expenses....................... 872,479
----------
Net investment income.................... 4,796,099
----------
Realized and Unrealized Gain (Loss)
on Investments
Net realized gain on investment
transactions........................... 71,849
Net change in unrealized depreciation on
investments............................ (434,814)
----------
Net realized and unrealized loss on
investments............................ (362,965)
----------
Net Increase in Net Assets
Resulting from Operations................ $4,433,134
----------
----------
</TABLE>

----------------------------------------------------------
DUFF & PHELPS UTILITIES
TAX-FREE INCOME INC.
Statement of Changes
In Net Assets
(Unaudited)
----------------------------------------------------------
<TABLE>
<CAPTION>
Six Months
Ended Year Ended
Increase (Decrease) April 30, October 31,
in Net Assets 2000 1999
------------ ------------
<S> <C> <C>
Operations:
Net investment income...... 4,796,099 $ 9,666,246
Net realized gain (loss) on
investment
transactions............. 71,849 (123,315)
Net change in unrealized
depreciation of
investments.............. (434,814) (13,390,205)
------------ ------------
Net increase (decrease) in
net assets resulting from
operations............... 4,433,134 (3,847,274)
Dividends and distributions:
Dividends to common
shareholders from net
investment income........ (3,955,967) (8,157,027)
Dividends to preferred
shareholders from net
investment income........ (1,303,822) (2,110,264)
Capital share transactions
(Note 4):
Value of Fund shares issued
to shareholders in
reinvestment of
dividends................ -- 888,334
------------ ------------
Total decrease............... (826,655) (13,226,231)
Net Assets
Beginning of period.......... 192,238,996 205,465,227
------------ ------------
End of period(a)............. $191,412,341 $192,238,996
------------ ------------
------------ ------------
</TABLE>

---------------
(a) Includes $65,000,000 in preferred stock.
See Notes to Financial Statements. See Notes to Financial Statements.
7

<PAGE>
--------------------------------------------------------------------------------
DUFF & PHELPS UTILITIES TAX-FREE INCOME INC.
Financial Highlights
(Unaudited)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months
Ended Year Ended October 31,
PER SHARE OPERATING PERFORMANCE OF COMMON April 30, ------------------------------------------------------------
SHAREHOLDERS: 2000 1999 1998 1997 1996 1995
---------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period............. $ 14.96 $ 16.62 $ 16.28 $ 15.84 $ 15.90 $ 14.23
---------- -------- -------- -------- -------- --------
Net investment income(d)....................... .56 1.14 1.17 1.18 1.21 1.24
Net realized and unrealized gain (loss) on
investments(d)................................. (.05) (1.59) .41 .50 -- 1.70
---------- -------- -------- -------- -------- --------
Net increase (decrease) from investment
operations..................................... .51 (.45) 1.58 1.68 1.21 2.94
---------- -------- -------- -------- -------- --------
Dividends from net investment income to:
Preferred shareholders......................... (.15) (.25) (.28) (.28) (.27) (.31)
---------- -------- -------- -------- -------- --------
Common shareholders............................ (.46) (.96)(e) (.96) (.96) (.96) (.96)
---------- -------- -------- -------- -------- --------
Distributions from net realized gains to:
Preferred shareholders......................... -- -- -- -- (.01) --
---------- -------- -------- -------- -------- --------
Common shareholders............................ -- -- -- -- (.03) --
---------- -------- -------- -------- -------- --------
Net asset value, end of period(a)................ $ 14.86 $ 14.96 $ 16.62 $ 16.28 $ 15.84 $ 15.90
---------- -------- -------- -------- -------- --------
Per share market value, end of period(a)......... $ 13.06 $ 14.13 $ 17.31 $ 16.00 $ 15.13 $ 14.38
---------- -------- -------- -------- -------- --------
TOTAL INVESTMENT RETURN OF COMMON
SHAREHOLDERS(b).................................. (4.21)% (13.34)% 11.41% 12.42% 12.19% 16.05%
RATIOS TO AVERAGE NET ASSETS OF COMMON
SHAREHOLDERS:(c)
Operating expenses............................... 1.39%(f) 1.39% 1.34% 1.35% 1.35% 1.37%
Net investment income............................ 7.62%(f) 7.10% 7.18% 7.46% 7.69% 8.15%
SUPPLEMENTAL DATA:
Average net assets of common shareholders
(000).......................................... $ 126,575 $136,111 $137,680 $133,055 $132,361 $127,112
Portfolio turnover rate.......................... 10% 6% 0% 5% 10% 66%
Net assets of common shareholders, end of year
(000).......................................... $ 126,412 $127,239 $140,465 $136,817 $132,678 $133,124
Asset coverage per share of preferred stock, end
of period...................................... $ 147,240 $147,876 $158,050 $155,243 $152,126 $152,403
Preferred stock outstanding (000)................ $ 65,000 $ 65,000 $ 65,000 $ 65,000 $ 65,000 $ 65,000
</TABLE>

---------------
(a) NAV and market value are published in The Wall Street Journal each Monday.
(b) Total investment return is calculated assuming a purchase of common stock at
the current market value on the first day and a sale at the current market
value on the last day of each period reported. Dividends are assumed, for
purposes of this calculation, to be reinvested at prices obtained under the
Fund's dividend reinvestment plan. Brokerage commissions are not reflected.
Total return for periods of less than a full year are not annualized.
(c) Ratios calculated on the basis of income and expenses applicable to both the
common and preferred shares relative to the average net assets of common
shareholders. Ratios do not reflect the effect of dividend payments to
preferred shareholders.
(d) Calculated based upon weighted average shares outstanding during the period.
(e) The unrounded amount is $0.955.
(f) Annualized.
See Notes to Financial Statements.
8

<PAGE>
----------------------------------------------------------
DUFF & PHELPS UTILITIES
TAX-FREE INCOME INC.
Notes to Financial Statements
(Unaudited)
----------------------------------------------------------
Duff & Phelps Utilities Tax-Free Income Inc. (the 'Fund') was organized in
Maryland on September 24, 1991 as a diversified, closed-end management
investment company. The Fund had no operations until November 20, 1991 when it
sold 8,000 shares of common stock for $112,400 to Duff & Phelps Corporation.
Investment operations commenced on November 29, 1991.
The Fund's investment objective is current income exempt from regular federal
income tax consistent with preservation of capital. The Fund will seek to
achieve its investment objective by investing primarily in a diversified
portfolio of investment grade tax-exempt utility obligations. The ability of the
issuers of the securities held by the Fund to meet their obligations may be
affected by economic developments in a specific state, industry or region.

Note 1. Significant The following is a summary of
Accounting Policies significant accounting policies
followed by the Fund in the preparation of its
financial statements.
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.
Securities Transactions and Investment Income: Securities transactions are
recorded on the trade date. Realized gains and losses on sales of securities are
calculated on the identified cost basis. Interest income is recorded on the
accrual basis. The Fund amortizes premiums and accretes original issue discount
on securities using the effective interest method.
Federal Income Taxes: It is the Fund's intention to meet the requirements of the
Internal Revenue Code applicable to regulated investment companies and to
distribute sufficient net income to shareholders to qualify as a regulated
investment company. For this reason, no federal income tax provision is
required.
Dividends and Distributions: The Fund will declare and pay dividends to common
shareholders monthly from net investment income. Net long-term capital gains, if
any, in excess of loss carryforwards are expected to be distributed annually.
The Fund will make a determination at the end of its fiscal year as to whether
to retain or distribute such gains. Dividends and distributions are recorded on
the ex-dividend date. Dividends to preferred shareholders are accrued on a
weekly basis and are determined as described in Note 4.
Income distributions and capital gain distributions are determined in
accordance with income tax regulations which may differ from investment income
and capital gains recorded in accordance with generally accepted accounting
principles.
Use of Estimates: The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.

Note 2. Agreements The Fund has an Advisory
Agreement with Duff & Phelps Investment Management
Co. (the 'Adviser'), a subsidiary of Phoenix Duff & Phelps Corporation, and an
Administration Agreement with Prudential Investments Fund Management LLC
('PIFM'), a wholly owned subsidiary of The Prudential Insurance Company of
America.
The investment fee paid to the Adviser is computed weekly and payable monthly
at an annual rate of .50% of the Fund's average weekly managed assets. The
administration fee paid to PIFM is also computed weekly and payable monthly at
an annual rate of .15% of the Fund's average weekly managed assets.
Pursuant to the agreements, the Adviser provides continuous supervision of
the investment portfolio and pays the compensation of officers of the Fund who
are affiliated persons of the Adviser. PIFM pays occupancy and certain clerical
and
9

<PAGE>
accounting costs of the Fund. The Fund bears all other costs and expenses.

Note 3. Portfolio Purchases and sales of invest-
Securities ment securities, other than
short-term investments, for the six months ended
April 30, 2000 aggregated $18,656,644 and $17,822,500, respectively.
The Federal income tax basis of the Fund's investments at April 30, 2000 was
substantially the same as the basis for financial reporting and, accordingly,
net unrealized appreciation for federal income tax purposes was $5,959,299
(gross unrealized appreciation--$7,657,388; gross unrealized
depreciation--$1,698,089).
The Fund had a capital loss carryforward as of October 31, 1999 of
approximately $237,200, of which $113,800 expires in 2006 and $123,400 expires
in 2007. Accordingly, no capital gains distribution is expected to be paid to
shareholders until net realized gains have been realized in excess of such
amounts.

Note 4. Capital There are 600 million shares
of $.01 par value common stock authorized.
During the six months ended April 30, 2000 the Fund did not issue any common
shares in connection with the reinvestment of dividends. For the year ended
October 31, 1999 the Fund issued 54,970 common shares in connection with the
reinvestment of dividends.
The Fund's Articles of Incorporation authorize the issuance of Remarketed
Preferred Stock ('RP'). Accordingly, the Fund issued 1,300 shares of RP on
February 4, 1992. The RP has a liquidation value of $50,000 per share plus any
accumulated but unpaid dividends.
Dividends on shares of RP are cumulative from their date of original issue
and payable on each dividend payment date. Dividend rates ranged from 3.44% to
5.50% during the six months ended April 30, 2000.
Under the Investment Company Act of 1940, the Fund may not declare dividends
or make other distributions on shares of common stock or purchase any such
shares if, at the time of the declaration, distribution or purchase, asset
coverage with respect to the outstanding preferred stock would be less than
200%.
The RP is redeemable at the option of the Fund, in whole or in part, on any
dividend payment date at $50,000 per share plus any accumulated or unpaid
dividends whether or not declared. The RP is also subject to a mandatory
redemption at $50,000 per share plus any accumulated or unpaid dividends,
whether or not declared, if certain requirements relating to the composition of
the assets and liabilities of the Fund as set forth in the Articles of
Incorporation are not satisfied.
The holders of RP have voting rights equal to the holders of common stock
(one vote per share) and will vote together with holders of shares of common
stock as a single class. However, holders of RP are also entitled to elect two
of the Fund's directors. In addition, the Investment Company Act of 1940
requires that along with approval by shareholders that might otherwise be
required, the approval of the holders of a majority of any outstanding preferred
shares, voting separately as a class would be required to (a) adopt any plan of
reorganization that would adversely affect the preferred shares, and (b) take
any action requiring a vote of security holders, including, among other things,
changes in the Fund's subclassification as a closed-end investment company or
changes in its fundamental investment restrictions.

Note 5. Dividends Subsequent to April 30, 2000,
dividends declared and paid on preferred shares
totalled $237,354. On May 1, 2000, the Board of Directors of the Fund declared a
dividend of $.0775 per common share payable on May 31, to common shareholders of
record on May 15. On May 31, 2000, the Board of Directors approved a dividend of
$.0625 per common share to be declared on June 1, 2000 payable on June 30, to
common shareholders of record on June 15.
10

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OTHER INFORMATION (Unaudited)
--------------------------------------------------------------------------------
Pursuant to certain rules of the Securities and Exchange Commission the
following additional disclosure is required.
Pursuant to the Fund's Dividend Reinvestment Plan (the 'Plan'), common
shareholders may elect to have all distributions of dividends and capital gains
automatically reinvested by State Street Bank & Trust Company (the 'Plan Agent')
in shares of common stock of the Fund ('Fund Shares') pursuant to the Plan;
provided that such election is subject to the power of the Board of Directors to
declare capital gains distributions in the form of stock (if such a declaration
is made by the Board of Directors, all shareholders who do not elect to receive
cash will receive the distribution in the form of stock whether or not they
elect to participate in the Plan). Common shareholders who do not participate in
the Plan will receive all distributions in cash (except as described above) paid
by check in United States dollars mailed directly to the shareholder of record
(or if the shares are held in street or other nominee name, then to the nominee)
by the Custodian, as dividend disbursing agent. Common shareholders who wish to
participate in the Plan should contact the Fund at P.O. Box 8200, Boston,
Massachusetts, 02266 or call toll free (800) 451-6788.
The Plan Agent serves as agent for the common shareholders in administering
the Plan. After the Fund declares a dividend or determines to make a capital
gain distribution, if (1) the market price is lower than net asset value, the
participants in the Plan will receive the equivalent in Fund Shares valued at
the market price determined as of the time of purchase (generally, the payment
date of the dividend or distribution); or if (2) the market price of Fund Shares
on the payment date of the dividend or distribution is equal to or exceeds their
net asset value, participants will be issued Fund Shares at the higher of net
asset value or 95% of the market price. This discount reflects savings in
underwriting and other costs that the Fund otherwise will be required to incur
to raise additional capital. If net asset value exceeds the market price of Fund
Shares on the payment date or the Fund declares a dividend or other distribution
payable only in cash (i.e., if the board of directors precludes reinvestment in
Fund Shares for that purpose), the Plan Agent will, as agent for the
participants, receive the cash payment and use it to buy Fund Shares in the open
market, on the New York Stock Exchange, other national securities exchanges on
which the Fund's common stock is listed or elsewhere, for the participants'
accounts. If, before the Plan Agent has completed its purchases, the market
price exceeds the net asset value of a Fund Share, the average per share
purchase price paid by the Plan Agent may exceed the net asset value of Fund
Shares, resulting in the acquisition of fewer shares than if the dividend or
distribution had been paid in shares issued by the Fund. The Fund will not issue
shares under the Plan below net asset value.
Participants in the Plan may withdraw from the Plan upon written notice to
the Plan Agent and will receive certificates for whole Fund Shares and a cash
payment will be made for any fraction of a Fund Share.
There is no charge to participants for reinvesting dividends or capital gain
distributions, except for certain brokerage commissions, as described below. The
Plan Agent's fees for the handling of the reinvestment of dividends and
distributions will be paid by the Fund. There will be no brokerage commissions
charged with respect to shares issued directly by the Fund. However, each
participant will pay a pro rata share of brokerage commissions incurred with
respect to the Plan Agent's open market purchases in connection with the
reinvestment of dividends and distributions. The automatic reinvestment of
dividends and distributions will not relieve participants of any federal income
tax that may be payable on such dividends or distributions.
Experience under the Plan may indicate that changes are desirable.
Accordingly, the Fund reserves the right to amend or terminate the Plan as
applied to any dividend or distribution paid subsequent to written notice of the
change sent to all shareholders of the Fund at least 90 days before the record
date for the dividend or distribution. The Plan also may be amended or
terminated by the Plan Agent upon at least 90 days written notice to all common
shareholders of the Fund. All correspondence concerning the Plan should be
directed to the Fund at the address on the front of this report.
The Plan has been amended to permit Plan participants periodically to
purchase additional common shares through the Plan by delivering to the Plan
Agent a check for at least $100, but not more than $5,000, in any month. The
Plan Agent will use the funds to purchase shares in the open market or in
private transactions as described above with respect to reinvestment of
dividends and distributions. This amendment to the Plan was approved by the
Board on May 27, 1998 and is effective September 1, 1998. Thereafter, purchases
made pursuant to the Plan will be made commencing at the time of the first
dividend or distribution payment following the second business day after receipt
of the funds for additional purchases, and may be aggregated with
11

<PAGE>
purchases of shares for reinvestment of the dividends and distributions. Shares
will be allocated to the accounts of participants purchasing additional shares
at the average price per share, plus a service charge imposed by the Plan Agent
and brokerage commissions (or equivalent purchase costs) paid by the Plan Agent
for all shares purchased by it, including for reinvestment of dividends and
distributions. Checks drawn on a foreign bank are subject to collection and
collection fees, and will be invested at the time of the next distribution after
funds are collected by the Plan Agent.
The Plan Agent will make every effort to invest funds promptly, and in no
event more than 30 days after the Plan Agent receives a dividend or
distribution, except where postponement is deemed necessary to comply with
applicable provisions of the federal securities laws.
Funds sent to the Plan Agent for voluntary additional share investment may be
recalled by the participant by written notice received by the Plan Agent not
later than two business days before the next distribution payment date. If for
any reason a regular monthly distribution is not paid by the Fund, funds for
voluntary additional share investment will be returned to the participant,
unless the participant specifically directs that they continue to be held by the
Plan Agent for subsequent investment.

12
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Directors
Francis E. Jeffries, Chairman
E. Virgil Conway
William W. Crawford
William N. Georgeson
Philip R. McLoughlin
Everett L. Morris
Eileen A. Moran
Richard A. Pavia
Harry Dalzell-Payne

Officers
Francis E. Jeffries, President & Chief Executive
Officer
James D. Wehr, Vice President & Chief Investment
Officer
Timothy M. Heaney, Vice President
Nancy Engberg, Secretary, Vice President & Counsel
James W. Rosenberger, Treasurer & Assistant
Secretary

Investment Adviser
Duff & Phelps Investment Management Co.
55 East Monroe Street
Suite 3600
Chicago, IL 60603
(312) 368-5500

Administrator
Prudential Investments Fund Management LLC
Gateway Center Three
100 Mulberry Street
Newark, NJ 07102-4077
Call toll free (800) 225-1852

Custodian and Transfer Agent
State Street Bank and Trust Company
One Heritage Drive
North Quincy, MA 02171
Call toll free (800) 451-6788

Independent Auditors
Ernst & Young LLP
233 South Wacker Drive
Chicago, IL 60606

Legal Counsel
Skadden, Arps, Slate, Meagher & Flom (Illinois)
333 West Wacker Drive
Chicago, IL 60606

The accompanying financial statements as of April 30, 2000 were
not audited and accordingly, no opinion is expressed on them.

This report is for stockholder information. This is not a
prospectus intended for use in the purchase or sale of Fund shares.

264325101