Source Capital, Inc.

Objective:

Source Capital, Inc. (SOR) seeks maximum total return for shareholders from both capital appreciation and investment income to the extent consistent with protection of invested capital.

Important update:

On November 17, 2015, we announced that Eric Ende will be retiring as Source’s Portfolio Manager on December 1, 2015. We are grateful for Eric’s leadership and for the strong long-term results he delivered to shareholders for almost two decades. We wish Eric and his family all the best as he transitions into retirement.

In that same announcement, we informed shareholders about the portfolio management team that will take over for Eric, related changes to Source’s investment program and the implementation of a share repurchase program. You may also refer to the announcement by clicking here.



As of August 31, 2016

Comparative Performance Monthly

Fund/IndexMTDYTDSince 12/1/15*1 Year**5 Years**10 Years**
Source Capital1.48%5.67%2.02%3.50%13.26%7.51%
60% S&P 500/ 40% BC Agg0.04%7.14%5.99%10.09%10.17%6.76%
S&P 5000.14%7.82%6.12%12.55%14.69%7.51%

Periods over one year annualized.
*On December 1, 2015, the Fund transitioned to a balanced strategy and the current portfolio managers assumed management of the Fund on that date.
**Performance prior to December 1, 2015 reflects the performance of the prior portfolio manager and investment strategy. Performance prior to December 1, 2015 is not indicative of performance for any subsequent periods.
Past performance is not indicative of future performance. The returns shown for Source Capital are calculated at net asset value per share, including reinvestment of all distributions. Since Source Capital is a closed-end investment company and its shares are bought and sold on the New York Stock Exchange, your performance may also vary based upon the market price of the common stock. You should consider the Fund’s investment objectives, risks, and charges and expenses carefully before you invest.


As of June 30, 2016

Average Annual Returns

Fund/IndexQTDYTDSince 12/1/15*1 Year**5 Years**10 Years**
Source Capital (NAV)0.70%1.19%-2.31%-4.13%8.51%6.81%
60% S&P 500/ 40% BC Agg2.37%4.52%3.40%5.04%8.90%6.81%
S&P 5002.46%3.84%2.20%3.99%12.10%7.42%

Periods over one year annualized.
*On December 1, 2015, the Fund transitioned to a balanced strategy and the current portfolio managers assumed management of the Fund on that date.
**Performance prior to December 1, 2015 reflects the performance of the prior portfolio manager and investment strategy. Performance prior to December 1, 2015 is not indicative of performance for any subsequent periods.
Past performance is not indicative of future performance. The returns shown for Source Capital are calculated at net asset value per share, including reinvestment of all distributions. Since Source Capital is a closed-end investment company and its shares are bought and sold on the New York Stock Exchange, your performance may also vary based upon the market price of the common stock. You should consider the Fund’s investment objectives, risks, and charges and expenses carefully before you invest.


Asset Allocation*


Top Sectors*


Top Holdings*

Oracle
  6.1%   Alcoa   3.4%
United Technologies   4.2%   Cisco Systems
  3.4%
Aon   3.8%   Microsoft
  3.0%
AIG
  3.8%   Bank of America
  2.5%
Citigroup
  3.6%   TE Connectivity
  2.4%
 
Top 10 Equity Holdings represent 36.1% of Total Net Assets


Portfolio Holdings

Source Capital Audit Committee Charter LLC

Source Capital Nominating and Governance Committee Charter

* As of June 30, 2016. Performance data quoted represents past performance, which is no guarantee of future results. Current performance may vary from the performance quoted. The Fund is managed according to its investment strategy which may differ significantly in terms of security holdings, industry weightings, and asset allocation from those of the benchmark(s). Overall Fund performance, characteristics and volatility will differ from the benchmark(s) shown.

S&P 500 Index includes a representative sample of 500 leading companies in leading industries of the U.S. economy. The index focuses on the large-cap segment of the market, with over 80% coverage of U.S. equities, but is also considered a proxy for the total market. Barclays Aggregate Index provides a measure of the performance of the U.S. investment grade bonds market, which includes investment grade U.S. Government bonds, investment grade corporate bonds, mortgage pass-through securities and asset-backed securities that are publicly offered for sale in the United States. The securities in the Index must have at least 1 year remaining in maturity. In addition, the securities must be denominated in U.S. dollars and must be fixed rate, nonconvertible, and taxable. 60% S&P 500/40% Barclays Aggregate Index is a hypothetical combination of unmanaged indices comprised of 60% S&P 500 Index and 40% Barclays Aggregate Index, representing the Company’s neutral mix of 60% stocks and 40% bonds.

Portfolio composition will change due to ongoing management of the Fund. References to individual securities are for informational purposes only and should not be construed as recommendations by the Fund or the Portfolio Managers. It should not be assumed that recommendations made in the future will be profitable or will equal the performance of the security examples discussed.

Investing in closed-end funds involves risk, including loss of principal. Closed-end fund shares may frequently trade at a discount or premium to their net asset value. In addition, there is no guarantee the Fund’s investment objectives will be achieved. You should consider the Fund’s investment objectives, risks, and charges and expenses carefully before you invest.


As of December 31, 2011
 
(NAV) 1 Year 5 Years 10 Years
Per Common Share -5.21% 2.07% 6.72%

*Past performance is not indicative of future performance. The returns shown for Source Capital are calculated at net asset value per share, including reinvestment of all distributions. Since Source Capital is a closed-end investment company and its shares are bought and sold on the New York Stock Exchange, your performance may also vary based upon the market price of the common stock. The Russell 2500 Index consists of the 2,500 smallest companies in the Russell 3000 total capitalization universe. This index is considered a measure of small to mid capitalization stock performance. The Standard & Poor's 500 Stock Index (S&P 500) is a capitalization-weighted index which covers industrial, utility, transportation and financial service companies, and represents approximately 75% of the New York Stock Exchange (NYSE) capitalization and 30% of NYSE issues. This index is considered a measure of large capitalization stock performance. The Nasdaq Composite Index is a market capitalization, price only, unmanaged index that tracks the performance of domestic common stocks traded on the regular Nasdaq market as well as foreign common stocks and ADRs traded on the national market system. These indices do not reflect any commissions or fees which would be incurred by an investor purchasing the stocks they represent. The performance of the Company and of the Averages is computed on a total return basis which includes reinvestment of all distributions. After tax performance has been calculated on a total return basis, which combines principal and dividend income changes for the periods shown. Principal changes are based on the difference between the beginning and closing net asset values for the period and assume reinvestment of all dividends and distributions paid. Source Capital is a closed-end investment company. Its shares are traded on the New York Stock Exchange, and the Company is not involved in these transactions. Thus, your performance will also vary based upon the market price of Source Capital's common stock.