SOURCE CAPITAL /DE/ — Interim / Quarterly Report 2005

May 24, 2005

N-Q 1 a05-9790_1nq.htm N-Q

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 | |
| --- | --- |
| Source Capital, Inc. | |
| (Exact name of registrant as specified in charter) | |
| 11400 West Olympic Boulevard, Suite 1200, Los Angeles, California | 90064 |
| (Address of principal executive offices) | (Zip code) |
| J. Richard Atwood, Treasurer, Source Capital, Inc., 11400 West Olympic Boulevard, Suite 1200, Los Angeles, California 90064 | |
| (Name and address of agent for service) | |
| Registrant's
telephone number, including area code: | (310) 473-0225 |
| Date of
fiscal year end: | December 31 |
| Date of
reporting period: | March 31,
2005 |

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ITEM 1. Schedule of Investments.

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Source Capital, Inc.

Portfolio of Investments

March 31, 2005 (unaudited)

| COMMON
STOCKS | Shares or Principal Amount | Value |
| --- | --- | --- |
| PRODUCER DURABLE GOODS — 16.2% | | |
| Crane Co. | 390,000 | $ 11,228,100 |
| Diebold, Incorporated | 70,000 | 3,839,500 |
| Graco Inc. | 495,000 | 19,978,200 |
| HNI Corporation | 316,200 | 14,213,190 |
| IDEX Corporation | 495,000 | 19,973,250 |
| Oshkosh Truck Corporation | 180,000 | 14,758,200 |
| Zebra Technologies Corporation (Class A) | 220,000 | 10,447,800 |
| | | $ 94,438,240 |
| ENERGY — 13.0% | | |
| Cal Dive International, Inc. | 629,400 | $ 28,511,820 |
| Noble Corporation | 460,000 | 25,856,600 |
| Tidewater Inc. | 540,000 | 20,984,400 |
| | | $ 75,352,820 |
| BUSINESS SERVICES & SUPPLIES
— 11.3% | | |
| CDW Corporation | 190,000 | $ 10,769,200 |
| Charles River Laboratories International, Inc. | 340,000 | 15,993,600 |
| Invitrogen Corporation* | 152,500 | 10,553,000 |

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Landauer, Inc.	14,300	679,822
Manpower Inc.	300,000	13,056,000
ScanSource, Inc.*	284,000	14,719,720
		$ 65,771,342
HEALTH CARE — 10.9%
Bio-Rad Laboratories, Inc.*	200,300	$ 9,756,613
Health Management Associates, Inc.	535,000	14,006,300
Lincare Holdings Inc.*	430,000	19,018,900
Renal Care Group, Inc.*	550,000	20,867,000
		$ 63,648,813
TECHNOLOGY — 9.4%
Cognex Corporation	600,000	$ 14,928,000
Plantronics, Inc.	465,000	17,707,200
SanDisk Corporation*	800,000	22,240,000
		$ 54,875,200
RETAILING — 9.0%
CarMax, Inc.*	750,006	$ 23,625,189
O’Reilly Automotive, Inc.*	575,000	28,479,750
		$ 52,104,939
FINANCIAL — 8.3%
Brown & Brown, Inc.	251,000	$ 11,568,590
First American Corporation, The	155,000	5,105,700
Arthur J. Gallagher & Co.	440,000	12,672,000
North Fork Bancorporation, Inc.	682,500	18,932,550
		$ 48,278,840
ENTERTAINMENT — 4.8%
Carnival Corporation	536,600	$ 27,801,246
MATERIALS — 2.6%
Engelhard Corporation	505,000	$ 15,165,150
CONSUMER DURABLES — 2.0%
Briggs & Stratton Corporation	315,000	$ 11,469,150
TRANSPORTATION — 1.5%
Heartland Express, Inc.	450,000	$ 8,617,500
TOTAL COMMON STOCKS — 89.0% (Cost
$309,514,942)		$ 517,523,240
PREFERRED STOCKS
REAL ESTATE INVESTMENT TRUST
CBL & Associates Properties, Inc.	100,000	$ 2,550,000
Duke-Weeks Realty Corp. (Series B)	40,000	2,040,000
Pennsylvania Real Estate Investment Trust (Series
A)	59,000	3,448,550
ProLogis (Series G)	120,000	3,000,000
TOTAL PREFERRED STOCKS — 1.9%
(Cost $10,179,446)		$ 11,038,550
CONVERTIBLE BONDS AND DEBENTURES
TECHNOLOGY — 0.7%
BEA Systems, Inc. — 4% 2006	$ 2,000,000	$ 1,980,000
LSI Logic Corporation — 4% 2006	2,000,000	1,975,000
		$ 3,955,000
BUSINESS SERVICES & SUPPLIES
— 0.3%
Pegasus Solutions, Inc. — 3.875% 2023	$ 2,000,000	$ 1,840,000
TOTAL CONVERTIBLE BONDS AND
DEBENTURES — 1.0% (Cost $5,720,000)		$ 5,795,000

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| NON-CONVERTIBLE BONDS AND
DEBENTURES CORPORATE — 6.0% — Central Garden & Pet Company — 9.125% 2013 | $ 2,000,000 | $ 2,150,000 |
| --- | --- | --- |
| HMH Properties, Inc. — 7.875% 2008 | 3,000,000 | 3,071,250 |
| Host Marriott Corporation — 9.25% 2007 | 2,000,000 | 2,150,000 |
| Lear Corporation — 7.96% 2005 | 2,000,000 | 2,052,500 |
| Manitowoc Company, Inc., The — 10.5% 2012 | 1,300,000 | 1,472,250 |
| Metaldyne Corporation — 11% 2012 | 2,000,000 | 1,580,000 |
| OM Group, Inc. — 9.25% 2011 | 4,000,000 | 4,140,000 |
| Orbital Sciences Corporation — 9% 2011 | 3,000,000 | 3,307,500 |
| PolyOne Corporation — 10.625% 2010 | 950,000 | 1,054,500 |
| Realty Income Corporation — 8.25% 2008 | 2,000,000 | 2,192,000 |
| SpectraSite, Inc. — 8.25% 2010 | 2,000,000 | 2,100,000 |
| Unisys Corporation | | |
| — 7.875% 2008 | 1,500,000 | 1,530,000 |
| — 8.125% 2006 | 2,000,000 | 2,080,000 |
| Vicar Operating Inc. — 9.875% 2009 | 3,000,000 | 3,255,000 |
| Windmere Durable Holdings Inc. — 10% 2008 | 3,000,000 | 3,015,000 |
| | | $ 35,150,000 |
| U.S. GOVERNMENT AND AGENCIES —
0.1% | | |
| Federal Home Loan Mortgage Corporation | | |
| — 6.5% 2023 (Interest Only) | $ 83,661 | $ 6,421 |
| — 10.15% 2006 (REMIC) | 190 | 190 |
| Federal National Mortgage Association | | |
| — 6% 2029 (Interest Only) | 1,748,834 | 388,295 |
| Government National Mortgage Association (Mobile
Home) | | |
| — 9.75% 2010 | 328,297 | 334,248 |
| | | $ 729,154 |
| TOTAL NON-CONVERTIBLE BONDS AND DEBENTURES — 6.1% (Cost $35,094,877) | | $ 35,879,154 |
| TOTAL INVESTMENT SECURITIES —
98.0% (Cost $360,509,265) | | $ 570,235,944 |
| SHORT-TERM INVESTMENTS — 1.8%
(Cost $10,494,191) | | |
| Short-term Corporate Note: | | |
| General Electric Capital Corporation — 2.75%
4/15/05 | $ 10,119,000 | $ 10,108,178 |
| State Street Bank Repurchase Agreement — 1.25%
4/01/05 | | |
| Collateralized by U.S. Treasury Bond — 8.875%
2/15/19 market value $386,000) | 386,000 | 386,013 |
| TOTAL SHORT-TERM INVESTMENTS | | $ 10,494,191 |
| TOTAL INVESTMENTS — 99.8% (Cost
$371,003,456)(A) | | $ 580,730,135 |
| Other assets and liabilities, net — 0.2% | | 978,956 |
| TOTAL NET ASSETS — 100% | | $ 581,709,091 |

*Non-income producing securities

| (A)
The cost stated also approximates the aggregate cost for Federal income tax purposes.
Net unrealized appreciation consists of: | |
| --- | --- |
| Gross unrealized appreciation: | $ 212,405,458 |
| Gross unrealized depreciation: | 2,678,779 |
| Net unrealized appreciation: | $ 209,726,679 |

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ITEM 2. CONTROLS AND PROCEDURES.

(a) The Principal Executive Officer and Principal Financial Officer of the registrant have concluded that the registrant’s disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) are effective based on their evaluation of the disclosure controls and procedures as of a date within 90 days of the filing date of this report.

(b) There have been no significant changes in the registrant’s internal controls over financial reporting (as defined in Rule 30a-3(d) under the Investment Company 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 controls over financial reporting.

ITEM 3. EXHIBITS.

(a) Separate certification for the registrant’s principal executive officer and principal financial officer, as required by Rule 30a-2(a) under the Investment Company Act of 1940. Attached hereto.

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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.

| SOURCE CAPITAL,
INC. | |
| --- | --- |
| By: | /s/ ERIC
S. ENDE |
| Eric S. Ende,
President | |
| Date: | May 24, 2005 |

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.

| SOURCE CAPITAL,
INC. | |
| --- | --- |
| By: | /s/ J.
RICHARD ATWOOD |
| J. Richard
Atwood, Treasurer | |
| Date: | May 24, 2005 |

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