SOURCE CAPITAL /DE/ — Interim / Quarterly Report 2006

Nov 20, 2006

N-Q 1 a06-22938_1nq.htm QUARTERLY SCHEDULE OF PORTFOLIO HOLDINGS

*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:	September 30, 2006

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ITEM 1. Schedule of Investments.

Source Capital, Inc.

Portfolio of Investments

September 30, 2006 (unaudited)

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COMMON STOCKS	Shares or Principal Amount	Value
BUSINESS SERVICES &
SUPPLIES — 22.2%
Brady Corporation	421,600	$ 14,823,456
CDW Corporation	353,900	21,828,552
Charles River
Laboratories International, Inc.*	455,000	19,751,550
CLARCOR Inc.	320,000	9,756,800
Copart, Inc.*	170,000	4,792,300
Invitrogen Corporation*	270,000	17,120,700
Manpower Inc.	300,000	18,381,000
ScanSource, Inc. *	850,000	25,780,500
		$ 132,234,858
PRODUCER DURABLES — 15.7%
Franklin Electric Co.,
Inc.	66,100	$ 3,512,554
Graco Inc.	495,000	19,334,700
HNI Corporation	352,300	14,648,634
IDEX Corporation	495,000	21,309,750
Oshkosh Truck
Corporation	360,000	18,169,200
Zebra Technologies
Corporation (Class A)*	465,000	16,619,100
		$ 93,593,938
RETAILING — 10.5%
CarMax, Inc.*	700,006	$ 29,197,250
O’Reilly Automotive,
Inc.*	1,000,000	33,210,000
		$ 62,407,250
ENERGY — 10.1%
Helix Energy Solutions
Group, Inc.*	695,000	$ 23,213,000
Noble Corporation	460,000	29,522,800
Tidewater Inc.	165,000	7,291,350
		$ 60,027,150
TECHNOLOGY — 9.9%
Cognex Corporation	720,000	$ 18,187,200
Maxim Integrated
Products, Inc.	180,000	5,052,600
Microchip Technology
Incorporated	340,000	11,022,800
Plantronics, Inc.	751,100	13,166,783
SanDisk Corporation*	215,000	11,511,100
		$ 58,940,483
HEALTH CARE — 7.2%
AmSurg Corporation*	320,500	$ 7,134,330
Bio-Rad Laboratories,
Inc.*	200,300	14,167,219
Health Management Associates,
Inc.	250,100	5,227,090
Lincare Holdings Inc.*	465,000	16,107,600
		$ 42,636,239
FINANCIAL — 4.7%
Brown & Brown, Inc.	580,000	$ 17,724,800
First American
Corporation	235,000	9,949,900
		$ 27,674,700
TRANSPORATION — 4.5%
Heartland Express, Inc.	992,300	$ 15,559,264
Knight Transporation,
Inc.	675,000	11,441,250
		$ 27,000,514
ENTERTAINMENT — 4.2%
Carnival Corporation	536,600	$ 25,236,298
CONSUMER DURABLES — 2.3%
Briggs & Stratton
Corporation	58,400	$ 1,608,920
Polaris Industries Inc.	295,000	12,139,250
		$ 13,748,170

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| TOTAL COMMON STOCKS — 91.3%
(Cost $341,715,092) | | $ |
| --- | --- | --- |
| PREFERRED STOCKS | | |
| REAL ESTATE INVESTMENT TRUST | | |
| CBL & Associates
Properties, Inc. | 100,000 | $ 2,590,000 |
| Duke-Weeks Realty Corp.
(Series B) | 40,000 | 2,050,000 |
| Pennsylvania Real
Estate Investment Trust (Series A) | 59,000 | 3,256,800 |
| ProLogis (Series G) | 120,000 | 3,000,000 |
| TOTAL PREFERRED STOCKS — 1.8%
(Cost $10,179,446) | | $ 10,896,800 |
| CONVERTIBLE BONDS AND
DEBENTURES TECHNOLOGY | | |
| BEA Systems, Inc. — 4%
2006 | $ 2,000,000 | $ 1,990,000 |
| International Rectifier
Corp. — 4.25% 2007 | 2,000,000 | 1,965,000 |
| LSI Logic Corporation —
4% 2006 | 2,000,000 | 1,997,500 |
| TOTAL CONVERTIBLE BONDS AND
DEBENTURES — 1.0% (Cost $5,810,000) | | $ 5,952,500 |
| NON-CONVERTIBLE BONDS AND
DEBENTURES CORPORATE — 4.3% | | |
| Central Garden &
Pet Company — 9.125% 2013 | $ 3,000,000 | $ 3,120,000 |
| Host Marriott
Corporation — 9.25% 2007 | 2,000,000 | 2,077,500 |
| JLG Industries, Inc. —
8.25% 2008 | 2,000,000 | 2,060,000 |
| Manitowoc Company,
Inc., The — 10.5% 2012 | 1,300,000 | 1,408,875 |
| Metaldyne Corporation —
11% 2012 | 2,000,000 | 1,795,000 |
| OM Group, Inc. — 9.25%
2011 | 4,000,000 | 4,180,000 |
| Orbital Sciences
Corporation — 9% 2011 | 3,000,000 | 3,195,000 |
| PolyOne Corporation —
10.625% 2010 | 950,000 | 1,026,000 |
| Realty Income
Corporation — 8.25% 2008 | 2,000,000 | 2,083,200 |
| Unisys Corporation —
7.875% 2008 | 1,500,000 | 1,503,750 |
| Windmere Durable
Holdings Inc. — 10% 2008 | 3,000,000 | 3,000,000 |
| | | $ 25,449,325 |
| U.S. GOVERNMENT AND AGENCIES —
0.0% | | |
| Federal Home Loan
Mortgage Corporation — 6.5% 2023 (Interest Only) | $ 30,644 | $ 1,197 |
| Government National
Mortgage Association (Mobile Home) — 9.75% 2010 | 180,947 | 190,107 |
| | | $ 191,304 |
| TOTAL NON-CONVERTIBLE BONDS AND DEBENTURES — 4.3% (Cost $25,220,863) | | $ 25,640,629 |
| TOTAL INVESTMENT SECURITIES —
98.4% (Cost $382,925,401) | | $ 585,989,529 |
| SHORT-TERM INVESTMENTS — 1.6%
(Cost $9,368,215) | | |
| Short-term Corporate
Note: | | |
| Rabobank USA
Financial Corporation — 5.35% 10/2/06 | $ 9,371,000 | $ 9,368,215 |
| TOTAL INVESTMENTS — 100.0%
(Cost $392,293,616)(A) | | $ 595,357,744 |
| Other assets and
liabilities, net — 0.0% | | 233,237 |
| TOTAL NET ASSETS — 100.0% | | $ 595,590,981 |

*Non-income producing security

| (A) The cost stated also
approximates the aggregate cost for Federal income tax purposes. Net
unrealized appreciation consists of: — Gross unrealized
appreciation: | $ 212,486,559 | |
| --- | --- | --- |
| Gross
unrealized depreciation: | (9,422,431 | ) |
| Net unrealized appreciation: | $ 203,064,128 | |

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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 of 1940) 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:
Eric S. Ende,
President

Date: November 20, 2006

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:
J. Richard
Atwood, Treasurer

Date: November 20, 2006

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