REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM


To the Shareholders and
Board of Directors of Directors of Source Capital, Inc.

In planning and performing our audit of the financial
statements of Source Capital, Inc. (the Company) as of and
for the year ended December 31, 2005, in accordance with
the standards of the Public Company Accounting Oversight
Board (United States), we considered its internal control
over financial reporting, including control activities for
safeguarding securities, as a basis for designing our
auditing procedures for the purpose of expressing our
opinion on the financial statements and to comply with the
requirements of Form N-SAR, but not for the purpose of
expressing an opinion on the effectiveness of the Companys
internal control over financial reporting.   Accordingly, we
express no such opinion.


The management of the Company is responsible for establishing
and maintaining effective internal control over financial
reporting.  In fulfilling this responsibility, estimates and
judgments by management are required to assess the
expected benefits and related costs of controls.  A
companys internal control over financial reporting is a
process designed to provide reasonable assurance regarding
the reliability of financial reporting and the preparation of
financial statements for external purposes in accordance
with generally accepted accounting principles.  Such
internal control includes policies and procedures that
provide reasonable assurance regarding prevention or
timely detection of unauthorized acquisition, use or
disposition of a companys assets that could have a material
effect on the financial statements.


Because of its inherent limitations, internal control over
financial reporting may not prevent or detect
misstatements. Also, projections of any evaluation of
effectiveness to future periods are subject to the risk that
controls may become inadequate because of changes in
conditions, or that the degree of compliance with the
policies or procedures may deteriorate.


A control deficiency exists when the design or operation of
a control does not allow management or employees, in the
normal course of performing their assigned functions, to
prevent or detect misstatements on a timely basis. A
significant deficiency is a control deficiency, or
combination of control deficiencies, that adversely affects
the companys ability to initiate, authorize, record, process
or report external financial data reliably in accordance with
generally accepted accounting principles such that there is
more than a remote likelihood that a misstatement of the
companys annual or interim financial statements that is
more than inconsequential will not be prevented or
detected. A material weakness is a significant deficiency, or
combination of significant deficiencies, that results in more
than a remote likelihood that a material misstatement of the
annual or interim financial statements will not be prevented
or detected.


Our consideration of the Companys internal control over
financial reporting was for the limited purpose described in
the first paragraph and would not necessarily disclose all
deficiencies in internal control that might be significant
deficiencies or material weaknesses under standards
established by the Public Company Accounting Oversight
Board (United States).  However, we noted no deficiencies
in the Companys internal control over financial reporting and
its operation, including controls for safeguarding securities,
that we consider to be a material weakness as defined
above as of December 31, 2005.


This report is intended solely for the information and use of
management and the Board of Trustees of the Company and the
Securities and Exchange Commission and is not intended to
be and should not be used by anyone other than these
specified parties.


Los Angeles, California
February 6, 2006