UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT
INVESTMENT COMPANIES
Investment Company Act file number 811-04244
SOUND SHORE FUND, INC.
Three Canal Plaza, Suite 600
Portland, Maine 04101
T. Gibbs Kane, Jr., President
8 Sound Shore Drive
Greenwich, Connecticut 06830
Date of fiscal year end: December 31
Date of reporting period: January 1, 2020 – June 30, 2020
Item 1. Reports to Stockholders.
1
June
30,
2020
Dear
Investor:
The
Sound
Shore
Fund
Investor
Class
(SSHFX)
and
Institutional
Class
(SSHVX)
advanced
17.52%
and
17.57%,
respectively,
in
the
second
quarter
of
2020,
finishing
ahead
of
the
Russell
1000
Value
Index
(Russell
Value)
which
was
up
14.29%
and
trailing
the
Standard
&
Poor’s
500
Index
(S&P
500)
which
was
up
20.54%.
As
long
term
investors,
we
are
proud
to
highlight
that
Sound
Shore’s
20-year
annualized
returns
of
6.67%
and
6.88%,
for
SSHFX
and
SSHVX,
respectively,
were
ahead
of
the
Russell
Value
at
6.32%
and
the
S&P
500
at
5.91%.
We
are
required
by
FINRA
to
say
that:
Past
performance
is
no
guarantee
of
future
results.
Current
performance
may
be
lower
or
higher
than
the
performance
data
quoted.
Investment
return
and
principal
value
will
fluctuate
so
that
an
investor’s
shares,
when
redeemed,
may
be
worth
more
or
less
than
their
original
cost.
For
the
most
recent
month-end
performance,
please
visit
the
Fund’s
website
at
www.soundshorefund.com.
Global
equities
rebounded
strongly
in
the
second
quarter
of
2020
after
a
swift
decline
in
the
first
quarter
due
to
the
COVID-19
pandemic.
Investors
were
encouraged
that
unprecedented
stimulus
from
major
central
banks
—
nearing
$5
trillion
in
aggregate
—
combined
with
economic
“re-openings”
would
lead
to
a
recovery
from
the
current
recession.
It
was
notable
that,
despite
all
the
monetary
and
fiscal
stimulus,
government
treasury
rates
stabilized
in
the
US,
Europe,
and
Japan
after
the
brief
March
fall.
Sound
Shore’s
contrarian
investment
philosophy
has
always focused
on
finding
attractively
valued
companies
with
internally
driven
earnings
that
can
drive
value
for
years
to
come.
Our
long-term
investment
process
looks
forward
to
assess
where
a
company’s
normal
earning
power
will
be.
Developing
a
view
on
what
normalized
earnings
power
will
be
is
highly
uncertain
under
the
current
circumstances.
However
it
is
not
unusual
for
Sound
Shore
to
operate
in
this
environment.
In
fact,
it
is
often
periods
of
uncertainty
which
create
the
best
opportunities
for
our
strategy.
This
leads
us
to
stocks
with
management
teams
employing
strategies
that
are
durable
and
have
sustainable
businesses
we
want
to
partner
with
in
our
portfolio.
The
ability
to
have
a
long-term
view
is
increasingly
rare,
but
will
likely
determine
our
success.
It
is
important
to
note
the
market
dynamics
leading
up
to
the
volatility
of
the
first
six
months
of
2020.
In
previous
letters
we
have
communicated
how
narrow
the
market
has
been
in
the
last
few
years.
To
provide
perspective,
in
the
three
years
ended
June
30,
2020,
the
top
ten
performing
stocks
in
the
Russell
Value
contributed
more
than
100%
of
the
3-year
benchmark
return.
Ten
stocks…over
three
years.
Though
the
market’s
recovery
this
quarter
appeared
broad
at
the
sector
level,
there
were
many
companies
that
were
left
behind,
as
is
often
the
case.
A
late
cycle
market
led
by
a
few
stocks,
which
then
suffers
a
broad
decline
as
a
recession
begins,
is
not
a
new
phenomenon.
But,
this
cycle
has
been
a
big
one.
Market
volatility
is
likely
to
continue
as
the
path
of
the
pandemic
will
drive
sentiment.
Meanwhile,
we
will
be
searching
to
buy
great
companies
at
attractive
prices.
Aptiv,
one
of
our
strongest
second
quarter
contributors,
provides
a
great
case
study.
Formerly
Delphi
Automotive,
Aptiv
is
a
global
technology
supplier
to
the
automotive
sector.
The
company
makes
electrical
and
active
safety
solutions
for
legacy
vehicles
as
well
as
for
the
electric
and
automated
cars
of
the
future.
We
initiated
our
position
in
Aptiv
during
the
market
sell-off
in
March
2020
when
the
stock
pulled
back
more
than
60%.
Our
investment
team
has
been
following
the
company
for
a
number
of
years
and,
given
the
opportunity
to
add
the
name
at
less
than
ten
times
normalized
earnings,
we
acted
quickly.
Aptiv
is
a
THREE
CANAL
PLAZA,
PORTLAND,
ME
04101
1-800-551-1980
2
technology-driven
business
with
excellent
growth
prospects.
As
global
auto
demand
recovers,
Aptiv’s
content
per
vehicle
will
likely
continue
to
increase.
The
investment
is
off
to
a
good
start
and
in
spite
of
the
stock’s
rapid
recovery,
we
see
the
potential
for
further
significant
upside.
Several
of
our
financial
holdings
also
performed
well
in
the
quarter. For
example,
SVB
Financial,
a
specialty
bank
in
Silicon
Valley,
gained
over
40%.
We
believe
the
company
should
continue
to
generate
outsized
growth
and
returns,
focusing
on
the
innovation
economy
globally.
Similarly,
newer
addition
Blackstone,
a
leading
alternative
asset
manager,
was
higher
as
it
continued
to
grow
net
new
assets.
We
were
able
to
purchase
the
stock
an
attractive
eleven
times
earnings
with
a
3%
dividend.
Meanwhile,
property
and
casualty
insurer
Alleghany
was
among
our
detractors.
Alleghany
is
a
conservatively
run
insurer
that
should
benefit
from
stronger
property
and
casualty
pricing.
We
initiated
a
position
in
the
first
half
of
2020
at
an
attractive
one
times
book
value.
The
company
has
grown
book
value
per
share
at
8%
per
year
over
the
past
decade.
The
ultimate
claims
liability
due
to
COVID-19
will
not
be
known
for
a
few
quarters
and
has
held
back
some
of
the
industry
from
participating
in
the
recent
rally.
Given
its
strong
franchise
and
balance
sheet,
we
believe
the
prospect
for
the
company
to
create
value
and
realize
multiple
appreciation
makes
Alleghany
an
attractive
risk/reward
opportunity.
Mark
Twain
is
credited
with
having
proclaimed, “History
doesn’t
repeat
itself,
but
it
does
rhyme.”
While
every
market
cycle
is
different,
looking
back
to
the
post-financial
crisis
period,
we
see
similar
opportunities
to
buy
great
businesses
at
attractive
prices.
It
is
notable
that
during
that
period
we
were
able
to
purchase
Microsoft
at
ten
times
earnings.
At
the
time,
Street
consensus
felt
management
was
ineffective.
They
had
missed
the
consumer
market,
social
media,
mobile
and
their
core,
on-premise
software
franchise
was
at
risk
as
cloud
adoption
was
ramping
up.
Sound
Shore’s
contrarian
view
was
that
Microsoft’s
enterprise
software
unit
was
being
extremely
well
run,
by
current
CEO
Satya
Nadella,
and
was
beginning
to
take
market
share.
Microsoft
turned
out
to
be
an
incredible
long-term
investment
for
our
investors.
With
a
tear
in
our
eye
we
recently
sold
our
position
as
we
believe
Microsoft’s
valuation
reflects
most
of
its
ample
future
growth
prospects.
Against
this
backdrop
of
a
highly
concentrated,
fairly
valued
market,
we
believe
our
portfolio,
with
an
average
twelve
month
forward
P/E
ratio
of
15
times,
has
ample
room
to
run.
Even
more
important
is
what
the
P/E
for
our
portfolio
will
be,
based
on
earnings
after
the
recession.
It
is
likely
to
be
significantly
cheaper
on
earnings
power
out
a
year
or
two
more.
The
table
below
highlights
a
sample
of
holdings
at
reasonable
valuations
that
are
driving
change
in
their
industry
to
create
value.
3
After
a
strong
recovery
in
the
most
recent
quarter,
the
broad
indices
could
mark
time
for
a
bit.
Wall
Street
pundits
will
have
much
to
debate
through
year
end,
including
COVID-19
developments
and
US
elections.
Never
ones
to
predict,
we
remain
focused
on
our
bottom
up
investment
process,
which
continues
to
find
compelling
opportunities
at
attractive
prices.
Many
thanks
as
always
for
your
investment
alongside
ours.
Sincerely,
SOUND
SHORE
FUND
Harry
Burn,
III
John
P.
DeGulis
T.
Gibbs
Kane,
Jr.
Co-Portfolio
Managers
Important
Information
Performance
data
quoted
represents
past
performance
and
is
no
guarantee
of
future
results.
The
Fund’s
Investor
Class
1,
5,
and
10-year
average
annual
total
returns
for
the
period
ended
June
30,
2020
were
-12.20%,
2.44%,
and
9.48%,
respectively.
The
Fund’s
Institutional
Class
1,
5,
and
10-year
average
annual
total
returns
for
the
same
period
were
-12.05%,
2.61%,
and
9.67%,
respectively.
Fund
returns
assume
the
reinvestment
of
all
dividend
and
capital
gain
distributions.
As
stated
in
the
current
prospectus,
the
total
annual
operating
expense
ratio
(gross)
is
0.91%
for
the
Investor
Class
and
0.82%
for
the
Institutional
Class.
The
net
expense
ratio
for
the
Institutional
Class
is
0.75%
pursuant
to
an
expense
limitation
agreement
between
the
Adviser
and
the
Fund.
This
agreement
is
in
effect
until
at
least
May
1,
2021.
The
performance
for
the
Institutional
Class
prior
to
its
inception
on
12/9/13
is
based
on
the
performance
of
the
Investor
Class,
adjusted
to
reflect
the
lower
expense
ratio
of
the
Institutional
Class
(net
of
expense
reimbursements).
The
fund
recently
experienced
significant
negative
short-term
performance
due
to
market
volatility
associated
with
the
COVID-19
pandemic.
4
The
Standard
&
Poor’s
500
Index
is
an
unmanaged
index
representing
the
average
performance
of
500
widely
held,
publicly
traded,
large
capitalization
stocks.
The
Russell
1000
Value
Index
measures
the
performance
of
the
large-cap
value
segment
of
the
U.S.
equity
universe.
It
includes
those
Russell
1000
companies
with
lower
price-to-book
ratios
and
lower
expected
growth
values.
It
is
not
possible
to
invest
directly
in
an
Index.
An
investment
in
the
Fund
is
subject
to
risk,
including
the
possible
loss
of
principal
amount
invested.
Mid
Cap
Risk:
Securities
of
medium
sized
companies
may
be
more
volatile
and
more
difficult
to
liquidate
during
market
downturns
than
securities
of
large,
more
widely
traded
companies.
Foreign
Securities
Risk:
The
Fund
may
invest
in
foreign
securities
primarily
in
the
form
of
American
Depositary
Receipts.
Investing
in
the
securities
of
foreign
issuers
also
involves
certain
special
risks,
which
are
not
typically
associated
with
investing
in
U.S.
dollar-denominated
securities
or
quoted
securities
of
U.S.
issuers
including
increased
risks
of
adverse
issuer,
political,
regulatory,
market
or
economic
developments,
changes
in
currency
rates
and
in
exchange
control
regulations.
The
Fund
is
also
subject
to
other
risks,
including,
but
not
limited
to,
risks
associated
with
value
investing.
The
views
in
this
letter
were
those
of
the
Fund
managers
as
of
6/30/20
and
may
not
necessarily
reflect
their
views
on
the
date
this
letter
is
first
published
or
anytime
thereafter.
5
Sound
Shore
Fund,
Inc.
SCHEDULE
OF
INVESTMENTS
(Unaudited)
June
30,
2020
See
Notes
to
Financial
Statements.
Sector
Weightings
(a)
(as
of
June
30,
2020)
as
a
percentage
of
Net
Assets
(Unaudited)
Share
Amount
Value
Common
Stock
(97.3%)
(a)
Communication
Services
(
7.7%
)
Alphabet,
Inc.,
Class A
(b)
14,065
$
19,944,873
Comcast
Corp.,
Class A
985,300
38,406,994
Verizon
Communications,
Inc.
374,400
20,640,672
78,992,539
Consumer
Discretionary
(
10.4%
)
Aptiv
PLC
288,550
22,483,816
Booking
Holdings,
Inc.
(b)
6,320
10,063,589
Lennar
Corp.,
Class A
418,450
25,784,889
Magna
International,
Inc.
461,550
20,552,821
Whirlpool
Corp.
218,500
28,302,305
107,187,420
6
Sound
Shore
Fund,
Inc.
SCHEDULE
OF
INVESTMENTS
(Unaudited)(Continued)
June
30,
2020
See
Notes
to
Financial
Statements.
Share
Amount
Value
Consumer
Staples
(
4.3%
)
Mondelez
International,
Inc.,
Class A
448,250
$
22,919,023
Walmart,
Inc.
174,450
20,895,621
43,814,644
Energy
(
2.3%
)
Cabot
Oil
&
Gas
Corp.
1,347,450
23,149,191
Financials
(
27.9%
)
Alleghany
Corp.
(b)
59,785
29,243,235
Bank
of
America
Corp.
1,605,000
38,118,750
Berkshire
Hathaway,
Inc.,
Class B
(b)
183,200
32,703,032
Capital
One
Financial
Corp.
528,150
33,056,908
Chubb,
Ltd.
213,700
27,058,694
Citigroup,
Inc.
759,300
38,800,230
Morgan
Stanley
733,300
35,418,390
SVB
Financial
Group
(b)
162,950
35,120,614
The
Blackstone
Group,
Inc.,
Class A
307,150
17,403,119
286,922,972
Health
Care
(
25.2%
)
Cigna
Corp.
132,200
24,807,330
Dentsply
Sirona,
Inc.
447,650
19,723,459
Elanco
Animal
Health,
Inc.
(b)
1,288,400
27,636,180
Henry
Schein,
Inc.
(b)
450,000
26,275,500
Merck
&
Co.,
Inc.
468,800
36,252,304
Perrigo
Co.
PLC
796,400
44,017,028
Pfizer,
Inc.
1,012,950
33,123,465
Thermo
Fisher
Scientific,
Inc.
56,550
20,490,327
UnitedHealth
Group,
Inc.
89,300
26,339,035
258,664,628
Industrials
(
7.6%
)
Eaton
Corp.
PLC
316,650
27,700,542
Sensata
Technologies
Holding
PLC
(b)
741,550
27,607,907
Westinghouse
Air
Brake
Technologies
Corp.
391,000
22,509,870
77,818,319
7
See
Notes
to
Financial
Statements.
Sound
Shore
Fund,
Inc.
SCHEDULE
OF
INVESTMENTS
(Unaudited)(Concluded)
June
30,
2020
Share
Amount
Value
Information
Technology
(
11.9%
)
Applied
Materials,
Inc.
409,800
$
24,772,410
Lam
Research
Corp.
89,950
29,095,227
NXP
Semiconductors
NV
203,950
23,258,458
Oracle
Corp.
815,750
45,086,502
122,212,597
Total
Common
Stock
(97.3%)
(cost
$834,976,823)
998,762,310
Short-Term
Investments
(6.6%)
Money
Market
Fund
(
6.6%
)
Morgan
Stanley
Institutional
Liquidity
Funds
Government
Portfolio,
Institutional
Class,
0.06
%
(c)
67,426,401
67,426,401
Total
Short-Term
Investments
(6.6%)
(cost
$67,426,401)
67,426,401
Investments,
at
value
(103.9%)
(cost
$902,403,224)
$
1,066,188,711
Other
Liabilities
Less
Assets
(-3.9%)
(39,739,310)
Net
Assets
(100.0%)
$
1,026,449,401
(a)
More
narrow
industries
are
utilized
for
compliance
purposes,
whereas
broad
sectors
are
utilized
for
reporting
purposes.
(b)
Non-income
producing
security.
(c)
Percentage
disclosed
reflects
the
money
market
fund’s
institutional
class
shares
30-day
yield
as
of
June
30,
2020.
PLC
Public
Limited
Company
8
Sound
Shore
Fund,
Inc.
STATEMENT
OF
ASSETS
AND
LIABILITIES
(Unaudited)
June
30,
2020
See
Notes
to
Financial
Statements.
16
ASSETS
Investments,
at
value
(Cost
$902,403,224)
$
1,066,188,711
Receivables:
Capital
shares
sold
186,978
Investment
securities
sold
1,156,999
Dividends
1,018,159
Foreign
tax
reclaims
91,136
Prepaid
expenses
47,606
Total
Assets
1,068,689,589
LIABILITIES
Payables:
Capital
shares
redeemed
31,295,443
Investments
purchased
10,221,750
Accrued
liabilities:
Advisory
fees
612,534
Administrator
fees
9,290
Transfer
agent
fees
and
expenses
49,637
Custodian
fees
12,907
Compliance
and
Treasurer
Services
fees
and
expenses
2,127
Professional
fees
24,265
Other
accrued
liabilities
12,235
Total
Liabilities
42,240,188
Net
Assets
$
1,026,449,401
COMPONENTS
OF
NET
ASSETS
Common
stock,
at
Par
Value
$
29,175
Paid-in
Capital
899,352,846
Distributable
earnings
127,067,380
Net
Assets
$
1,026,449,401
NET
ASSET
VALUE
Net
Assets
-
Investor
Class
Shares
$
584,975,613
Shares
Outstanding
-
Investor
Class
(100,000,000
shares
authorized,
par
value
$0.001)
16,668,877
Net
Asset
Value
(offering
&
redemption
price
per
share)
-
Investor
Class
Shares
$
35.09
Net
Assets
-
Institutional
Class
Shares
$
441,473,788
Shares
Outstanding
-
Institutional
Class
(100,000,000
shares
authorized,
par
value
$0.001)
12,505,796
Net
Asset
Value
(offering
&
redemption
price
per
share)
-
Institutional
Class
Shares
$
35.30
9
Sound
Shore
Fund,
Inc.
STATEMENT
OF
OPERATIONS
(Unaudited)
For
the
Six
Months
Ended
June
30,
2020
See
Notes
to
Financial
Statements.
INVESTMENT
INCOME
Income:
Dividend
income
(net
of
foreign
withholding
taxes
of
$257,776)
$
11,798,892
Total
Income
11,798,892
Expenses:
Advisory
fees
(Note
3
)
4,439,494
Administrator
fees
80,522
Transfer
agent
fees
and
expenses
-
Investor
Class
Shares
332,280
Transfer
agent
fees
and
expenses
-
Institutional
Class
Shares
17,357
Custodian
fees
41,282
Compliance
and
Treasurer
Services
fees
and
expenses
(Note
3
)
66,427
Directors'
fees
and
expenses
(Note
3
)
96,954
Professional
fees
44,265
Registration
fees
-
Investor
Class
Shares
11,494
Registration
fees
-
Institutional
Class
Shares
12,124
Printing
and
postage
fees
-
Investor
Class
Shares
26,015
Printing
and
postage
fees
-
Institutional
Class
Shares
17,302
Miscellaneous
41,680
Total
Expenses
5,227,196
Expense
Reimbursements
-
Institutional
Class
Shares
(Note
3
)
(212,544)
Net
Expenses
5,014,652
Net
Investment
Income
6,784,240
REALIZED
AND
UNREALIZED
GAIN
(LOSS)
ON
INVESTMENTS
Net
realized
loss
on
investments
(37,002,031)
Net
change
in
unrealized
ap
preciation
on
investments
(218,954,094)
Net
realized
and
unrealized
loss
on
investments
(255,956,125)
Net
decrease
in
net
assets
from
operations
$
(249,171,885)
10
Sound
Shore
Fund,
Inc.
STATEMENTS
OF
CHANGES
IN
NET
ASSETS
See
Notes
to
Financial
Statements.
For
the
Six
Months
Ended
June
30,
2020
(Unaudited)
For
the
Year
Ended
December
31,
2019
Operations:
Net
investment
income
$
6,784,240
$
17,603,767
Net
realized
gain
(loss)
on
investments
(37,002,031)
116,224,187
Net
change
in
unrealized
appreciation
(depreciation)
on
investments
(218,954,094)
225,693,749
Increase
(decrease)
in
net
assets
from
operations
(249,171,885)
359,521,703
Distributions
to
shareholders:
Investor
Class
Shares
(3,577,242)
(62,466,245)
Institutional
Class
Shares
(3,071,625)
(50,371,253)
Total
dividends/
distributions
to
shareholders
(6,648,867)
(112,837,498)
Net
capital
share
transactions
(Note
6
):
Investor
Class
Shares
(121,372,924)
(226,850,567)
Institutional
Class
Shares
(134,239,323)
(149,111,682)
Total
capital
share
transactions
(255,612,247)
(375,962,249)
Total
decrease
(511,432,999)
(129,278,044)
NET
ASSETS
Beginning
of
the
period
1,537,882,400
1,667,160,444
End
of
the
period
$
1,026,449,401
$
1,537,882,400
11
Sound
Shore
Fund,
Inc.
NOTES
TO
FINANCIAL
STATEMENTS
(Unaudited)
June
30,
2020
1.
Organization
Sound
Shore
Fund,
Inc.
(the
“Fund”)
was
incorporated
under
the
laws
of
the
State
of
Maryland
on
February
19,
1985
and
is
registered
as
a
diversified,
open-end
management
investment
company
under
the
Investment
Company
Act
of
1940
(the
“Act”).
The
investment
objective
of
the
Fund
is
growth
of
capital.
The
Fund
qualifies
as
an
investment
company
as
defined
in
Financial
Accounting
Standards
Codification
946
—
Financial
Services
—
Investment
Companies.
The
total
number
of
shares
of
common
stock
which
the
Fund
is
authorized
to
issue
is
200,000,000,
par
value
$0.001
per
share
of
which
100,000,000
shares
are
designated
to
the
Investor
Class
and
100,000,000
shares
are
designated
to
the
Institutional
Class.
The
Board
of
Directors
(the
“Board”)
may,
without
shareholder
approval,
classify
or
reclassify
any
unissued
shares
into
other
classes
or
series
of
shares.
Each
share
of
the
Fund
has
equal
dividend,
distribution,
liquidation
and
voting
rights
(except
as
to
matters
relating
exclusively
to
one
class
of
shares),
and
fractional
shares
have
those
rights
proportionately.
2.
Significant
Accounting
Policies
These
financial
statements
are
prepared
in
accordance
with
accounting
principles
generally
accepted
in
the
United
States
of
America
(“GAAP”),
which
require
management
to
make
estimates
and
assumptions
that
affect
the
reported
amounts
of
assets
and
liabilities,
disclosure
of
contingent
liabilities,
if
any,
at
the
date
of
the
financial
statements,
and
the
reported
amounts
of
increase
and
decrease
in
net
assets
from
operations
during
the
fiscal
period.
Actual
results
could
differ
from
those
estimates.
The
following
represents
the
significant
accounting
policies
of
the
Fund:
a.
Security
Valuation
Exchange-traded
securities
including
those
traded
on
the
National
Association
of
Securities
Dealers’
Automated
Quotation
system
(“NASDAQ”),
are
valued
at
the
last
quoted
sale
price
or
official
closing
price
as
provided
by
independent
pricing
services
as
of
the
close
of
trading
on
the
system
or
exchange
on
which
they
are
primarily
traded,
on
each
Fund
business
day.
In
the
absence
of
a
sale,
such
securities
are
valued
at
the
mean
of
the
last
bid
and
asked
prices.
Non-exchange-traded
securities
for
which
over-the-counter
market
quotations
are
readily
available
are
generally
valued
at
the
mean
between
the
current
bid
and
asked
prices
provided
by
independent
pricing
services.
Investments
in
other
open-end
regulated
investment
companies
are
valued
at
their
publicly
traded
net
asset
value
(“NAV”).
The
Fund
values
securities
at
fair
value
pursuant
to
procedures
adopted
by
the
Board
if
market
quotations
are
not
readily
available
(including
a
short
and
temporary
lapse
in
the
provision
of
a
price
by
the
regular
pricing
source)
or,
if
in
the
judgment
of
the
Adviser,
as
defined
in
Note
3,
the
prices
or
values
available
do
not
represent
the
fair
value
of
the
instrument.
Factors
which
may
cause
the
Adviser
to
make
such
a
judgment
include,
but
are
not
limited
to,
the
following:
(i)
only
a
bid
price
or
an
asked
price
is
available,
(ii)
the
spread
between
the
bid
price
and
the
asked
price
is
substantial,
(iii)
the
frequency
of
sales,
(iv)
the
thinness
of
the
market,
(v)
the
size
of
reported
trades,
and
(vi)
actions
of
the
securities
markets,
such
as
12
Sound
Shore
Fund,
Inc.
NOTES
TO
FINANCIAL
STATEMENTS
(Unaudited)(Continued)
June
30,
2020
the
suspension
or
limitation
of
trading.
Fair
valuation
is
based
on
subjective
factors
and,
as
a
result,
the
fair
value
price
of
a
security
may
differ
from
the
security’s
market
price
and
may
not
be
the
price
at
which
the
security
may
be
sold.
Fair
valuation
could
result
in
a
NAV
different
from
one
determined
by
using
market
quotations.
Valuation
inputs
used
to
determine
the
value
of
the
Fund’s
investments
are
summarized
in
the
three
broad
levels
listed
below:
Level
1
-
quoted
prices
in
active
markets
for
identical
assets
Level
2
-
other
significant
observable
inputs
(including
quoted
prices
of
similar
securities,
interest
rates,
prepayment
speeds,
credit
risk,
etc.)
Level
3
-
significant
unobservable
inputs
(including
the
Fund’s
own
assumptions
in
determining
the
fair
value
of
investments)
The
inputs
or
methodology
used
for
valuing
securities
are
not
necessarily
an
indication
of
the
risk
associated
with
investing
in
those
securities.
Pursuant
to
the
valuation
procedures
noted
previously,
equity
securities
(including
exchange-traded
securities
and
other
open-end
regulated
investment
companies)
are
generally
categorized
as
Level
1
securities
in
the
fair
value
hierarchy.
Investments
for
which
there
are
no
quotations,
or
for
which
quotations
do
not
appear
reliable,
are
valued
at
fair
value
as
determined
in
good
faith
by
the
Pricing
Committee
under
the
direction
of
the
Board.
These
valuations
are
typically
categorized
as
Level
2
or
Level
3
in
the
fair
value
hierarchy.
The
following
table
summarizes
the
Fund’s
investments
categorized
in
the
fair
value
hierarchy
as
of
June
30,
2020:
At
June
30,
2020
,
all
equity
securities
and
open-end
regulated
investment
companies
were
included
in
Level
1
in
the
table
above.
Please
refer
to
the
Schedule
of
Investments
to
view
equity
securities
categorized
by
sector/industry
type.
b.
Security
Transactions
Security
transactions
are
recorded
on
a
trade
date
basis.
Realized
gain
and
loss
on
investments
sold
are
recorded
on
the
basis
of
identified
cost.
Dividend
income
is
recorded
on
the
ex-dividend
date.
Interest
income
is
recorded
on
an
accrual
basis.
Foreign
dividend
income
is
recorded
on
the
ex-dividend
date
or
as
soon
as
practicable
after
the
Fund
determines
the
existence
of
a
dividend
declaration
after
exercising
reasonable
due
diligence.
Income
and
capital
gains
on
some
foreign
securities
may
be
subject
to
foreign
withholding
tax,
which
is
accrued
as
applicable.
Investment
income,
realized
and
Security
Type
Level
1
Level
2
Level
3
Total
Investments
in
Securities
Common
Stock
$
998,762,310
$
–
$
–
$
998,762,310
Short-Term
Investments
67,426,401
–
–
67,426,401
Total
Investments
$
1,066,188,711
$
–
$
–
$
1,066,188,711
13
Sound
Shore
Fund,
Inc.
NOTES
TO
FINANCIAL
STATEMENTS
(Unaudited)(Continued)
June
30,
2020
unrealized
gains
and
losses
and
certain
Fund-level
expenses
are
allocated
to
each
class
based
on
relative
average
daily
net
assets.
Certain
expenses
are
incurred
at
the
class
level
and
charged
directly
to
that
particular
class.
Class
level
expenses
are
denoted
as
such
on
the
Fund’s
Statement
of
Operations.
c.
Dividends
and
Distributions
to
Shareholders
Dividends
are
declared
separately
for
each
class.
No
class
has
preferential
dividend
rights;
differences
in
per-share
dividend
rates
are
generally
due
to
class-specific
fee
waivers
and
expenses.
Dividends
and
distributions
payable
to
shareholders
are
recorded
by
the
Fund
on
the
ex-dividend
date.
Dividends
from
net
investment
income,
if
any,
are
declared
and
paid
semiannually.
Capital
gains,
if
any,
are
distributed
to
shareholders
at
least
annually.
The
Fund
determines
its
net
investment
income
and
capital
gains
distributions
in
accordance
with
income
tax
regulations,
which
may
differ
from
GAAP.
These
differences
are
due
primarily
to
differing
treatments
of
income
and
gains
on
various
securities
held
by
the
Fund,
timing
differences
and
differing
characterizations
of
distributions
made
by
the
Fund.
To
the
extent
distributions
exceed
net
investment
income
and
net
realized
capital
gains
for
tax
purposes,
they
are
reported
as
a
return
of
capital.
d.
Federal
Taxes
The
Fund
intends
to
qualify
each
year
as
a
regulated
investment
company
and
to
distribute
substantially
all
of
its
taxable
income.
In
addition,
by
distributing
in
each
calendar
year
substantially
all
of
its
net
investment
income,
capital
gain
and
certain
other
amounts,
if
any,
the
Fund
will
not
be
subject
to
federal
taxation.
Therefore,
no
federal
income
or
excise
tax
provision
is
required.
For
all
open
tax
years
and
all
major
taxing
jurisdictions,
management
of
the
Fund
has
concluded
that
there
are
no
significant
uncertain
tax
positions
that
would
require
the
Fund
to
record
a
tax
liability
or
would
otherwise
require
recognition
in
the
financial
statements.
Open
tax
years
are
those
that
are
open
for
examination
by
taxing
authorities
(i.e.,
generally,
the
last
three
tax
year-ends
2017
–
2019,
and
the
interim
tax
period
since
then).
3.
Fees
and
Expenses
Investment
Adviser
The
Fund’s
investment
adviser
is
Sound
Shore
Management,
Inc.
(the
“Adviser”).
Pursuant
to
an
investment
advisory
agreement,
the
Adviser
receives
an
advisory
fee,
accrued
daily
and
paid
monthly
at
an
annual
rate
of
0.75%
of
the
Fund’s
average
daily
net
assets.
Pursuant
to
an
expense
limitation
agreement
between
the
Adviser
and
the
Fund,
the
Adviser
has
agreed
to
reimburse
all
of
the
ordinary
expenses
of
the
Institutional
Class,
excluding
advisory
fees,
interest,
taxes,
brokerage
commissions,
acquired
fund
fees
and
expenses,
extraordinary
expenses
and
all
litigation
costs
until
at
least
May
1,
2021.
This
reimbursement
is
shown
on
the
Statement
of
Operations
as
a
reduction
of
expenses,
and
such
amounts
are
not
subject
to
future
recoupment
by
the
Adviser.
Other
Services
Atlantic
Fund
Administration,
LLC,
a
wholly
owned
subsidiary
of
Apex
US
Holdings
LLC
(d/b/a
Apex
Fund
Services)
(“Apex”)
provides
certain
administration
and
portfolio
accounting
services
to
the
Fund.
MUFG
Union
Bank,
N.A.
(“Union
Bank”)
serves
as
custodian
to
the
Fund.
Apex
provides
transfer
agency
services
to
the
Fund.
14
Sound
Shore
Fund,
Inc.
NOTES
TO
FINANCIAL
STATEMENTS
(Unaudited)(Continued)
June
30,
2020
The
Fund
also
has
agreements
with
various
financial
intermediaries
and
“mutual
fund
supermarkets”
under
which
customers
of
these
intermediaries
may
purchase
and
hold
Fund
shares.
These
intermediaries
effectively
provide
subtransfer
agent
services
that
the
Fund’s
transfer
agent
would
have
otherwise
had
to
provide.
In
recognition
of
this,
the
transfer
agent,
the
Fund
and
the
Fund’s
Adviser
have
entered
into
an
agreement
whereby
the
transfer
agent
agrees
to
pay
financial
intermediaries
a
portion
of
the
amount
denoted
on
the
Statement
of
Operations
as
“Transfer
agent
fees
and
expenses
—
Investor
Class
Shares”
that
it
receives
from
the
Fund
for
its
services
as
transfer
agent
for
the
Investor
Class
and
the
Adviser
agrees
to
pay
the
excess,
if
any,
charged
by
a
financial
intermediary
for
that
class.
Foreside
Fund
Services,
LLC
is
the
Fund’s
distributor
(the
“Distributor”).
The
Distributor
is
not
affiliated
with
the
Adviser,
Apex,
Union
Bank,
or
its
affiliated
companies.
The
Distributor
receives
no
compensation
from
the
Fund
for
its
distribution
services.
Pursuant
to
a
Compliance
Services
Agreement
with
the
Fund,
Foreside
Fund
Officer
Services,
LLC
(“FFOS”),
an
affiliate
of
the
Distributor,
provides
a
Chief
Compliance
Officer
and
Anti-Money
Laundering
Officer
to
the
Fund
as
well
as
some
additional
compliance
support
functions.
Under
a
Treasurer
Services
Agreement
with
the
Fund,
Foreside
Management
Services,
LLC
(“FMS”),
an
affiliate
of
the
Distributor,
provides
a
Treasurer
to
the
Fund.
Neither
the
Distributor,
FFOS,
FMS,
nor
their
employees
that
serve
as
officers
of
the
Fund,
have
any
role
in
determining
the
investment
policies
of
or
securities
to
be
purchased
or
sold
by
the
Fund.
The
Fund
pays
each
director
who
is
not
an
“interested
person”
of
the
Fund,
as
defined
in
Section
2(a)(19)
of
the
Act
(“Independent
Director”),
quarterly
fees
of
$5,000,
plus
$10,000
per
quarterly
in-person
meeting,
$4,000
per
quarterly
meeting
attended
telephonically,
and
$2,000
per
special
meeting
attended
in
person
or
telephonically.
In
addition,
the
Chairman
of
the
Audit
Committee
receives
a
quarterly
fee
of
$2,500.
Certain
Officers
and
Directors
of
the
Fund
are
officers,
directors,
or
employees
of
the
aforementioned
companies.
4.
Purchases
and
Sales
of
Securities
The
cost
of
securities
purchased
and
proceeds
from
sales
of
securities
(excluding
short-term
investments)
for
the
period
ending
June
30,
2020,
aggregated
$558,864,139
and
$780,958,511,
respectively.
5.
Federal
Income
Tax
Cost
for
federal
income
tax
purposes
is
substantially
the
same
as
for
financial
statement
purposes
and
net
unrealized
appreciation
consists
of:
Gross
Unrealized
Appreciation
$
195,807,253
Gross
Unrealized
Depreciation
(32,021,766)
Net
Unrealized
Appreciation
$
163,785,48
7
15
Sound
Shore
Fund,
Inc.
NOTES
TO
FINANCIAL
STATEMENTS
(Unaudited)(Continued)
June
30,
2020
Distributions
during
the
fiscal
years
ended
December
31,
2019
and
December
31,
2018
were
characterized
for
tax
purposes
as
follows:
Components
of
net
assets
on
a
federal
income
tax
basis
at
December
31,
2019,
were
as
follows:
At
December
31,
2019,
the
Fund,
for
federal
income
tax
purposes,
had
no
capital
loss
carryforwards.
6.
Capital
Stock
Transactions
in
capital
stock
for
the
period
ended
June
30,
2020
and
the
year
ended
December
31,
2019,
were
as
follows:
2019
2018
Ordinary
Income
$
15,873,143
$
23,066,133
Long-Term
Capital
Gain
96,964,355
109,462,546
Total
Taxable
Distributions
$
112,837,498
$
132,528,679
Par
Value
+
Paid-in
Capital
$
1,
154
,
994
,
268
Undistributed
Ordinary
Income
133
,
899
Net
Unrealized
Appreciation
382
,
754
,
233
Net
Assets
$
1
,
537
,
882
,
400
For
the
Period
Ended
June
30,
2020
Investor
Class
Institutional
Class
Shares
Amount
Shares
Amount
Sale
of
shares
490,936
$
16,945,391
1,116,042
$
38,480,913
Reinvestment
of
dividends
95,787
3,400,456
84,936
3,033,057
Redemption
of
shares
(4,043,438)
(141,718,771)
(4,741,170)
(175,753,293)
Net
decrease
from
capital
transactions
(3,456,715)
$
(121,372,924)
(3,540,192)
$
(134,239,323)
For
the
Year
Ended
December
31,
2019
Investor
Class
Institutional
Class
Shares
Amount
Shares
Amount
Sale
of
shares
944,830
$
39,192,334
3,303,048
$
136,323,258
Reinvestment
of
dividends
1,409,946
59,929,565
1,150,174
49,152,905
Redemption
of
shares
(7,758,564)
(325,972,466)
(7,818,521)
(334,587,845)
Net
decrease
from
capital
transactions
(5,403,788)
$
(226,850,567)
(3,365,299)
$
(149,111,682)
16
Sound
Shore
Fund,
Inc.
NOTES
TO
FINANCIAL
STATEMENTS
(Unaudited)(Concluded)
June
30,
2020
7.
Risks
As
of
June
30,
2020,
the
Fund
invested
a
significant
portion
of
its
assets
in
securities
in
the
Financials
and
Health
Care
sectors.
Investing
a
significant
portion
of
the
Fund's
assets
in
one
sector
of
the
market
exposes
the
Fund
to
greater
market
risk
and
potential
monetary
losses
than
if
those
assets
were
spread
among
various
sectors.
8.
Subsequent
Events
Subsequent
events
occurring
after
the
date
of
this
report
have
been
evaluated
for
potential
impact
to
this
report
through
the
date
the
report
was
issued.
Management
is
currently
evaluating
the
recent
introduction
of
the
COVID-19
virus
and
its
impact
on
the
financial
services
industry
and
has
concluded
that
while
it
is
reasonably
possible
that
the
virus
could
have
a
negative
effect
on
the
fair
value
of
the
Fund’s
investments
and
results
of
operations,
the
specific
impact
is
not
readily
determinable
as
of
the
date
of
these
financial
statements.
The
financial
statements
do
not
include
any
adjustments
that
might
result
from
the
outcome
of
this
uncertainty.
17
Sound
Shore
Fund,
Inc.
FINANCIAL
HIGHLIGHTS
These
financial
highlights
reflect
selected
data
for
a
share
outstanding
throughout
each
period
.
Six
Months
Ended
June
30,
2020
(unaudited)
For
the
Year
Ended
December
31,
2019
2018
2017
2016
2015
Investor
Class
Shares
Net
Asset
Value,
Beginning
of
Period
$
42.41
$
37.03
$
45.89
$
44.17
$
41.30
$
48.79
Investment
Operations
Net
investment
income
(a)
0.19
0.40
0.50
0.51
0.45
0.39
Net
realized
and
unrealized
gain
(loss)
on
investments
(7.30)
8.20
(6.27)
6.63
5.57
(2.75)
Total
from
Investment
Operations
(7.11)
8.60
(5.77)
7.14
6.02
(2.36)
Distributions
from
Net
investment
income
(0.21)
(0.39)
(0.51)
(0.52)
(0.46)
(0.39)
Net
realized
gains
–
(2.83)
(2.58)
(4.90)
(2.69)
(4.74)
Total
Distributions
(0.21)
(3.22)
(3.09)
(5.42)
(3.15)
(5.13)
Net
Asset
Value,
End
of
Period
$
35.09
$
42.41
$
37.03
$
45.89
$
44.17
$
41.30
Total
Return
(16.76)%(b)
23.26%
(12.62)%
16.22%
14.63%
(5.02)%
Ratios/Supplemental
Data
Net
Assets
at
End
of
Period
(in
thousands)
$584,976
$853,588
$945,244
$1,365,922
$1,464,566
$1,462,946
Ratios
to
Average
Net
Assets:
Expenses
0.92%(c)
0.91%
0.90%
0.90%
0.91%
0.93%
Net
Investment
Income
1.08%(c)
0.95%
1.10%
1.06%
1.05%
0.80%
Portfolio
Turnover
Rate
(d)
49%(b)
46%
56%
44%
46%
39%(e)
(a)
Calculated
based
on
average
shares
outstanding
during
each
period.
(b)
Not
annualized.
(c)
Annualized.
(d)
Portfolio
turnover
is
calculated
on
the
basis
of
the
Fund,
as
a
whole,
without
distinguishing
between
the
classes
of
shares
issued.
(e)
Amount
excludes
redemption
in-kind
of
$30,223,998.
18
Sound
Shore
Fund,
Inc.
FINANCIAL
HIGHLIGHTS
(Concluded)
These
financial
highlights
reflect
selected
data
for
a
share
outstanding
throughout
each
period
.
Six
Months
Ended
June
30,
2020
(unaudited)
For
the
Year
Ended
December
31,
2019
2018
2017
2016
2015
Institutional
Class
Shares
Net
Asset
Value,
Beginning
of
Period
$
42.65
$
37.19
$
46.06
$
44.29
$
41.38
$
48.87
Investment
Operations
Net
investment
income
(a)
0.23
0.47
0.58
0.60
0.52
0.48
Net
realized
and
unrealized
gain
(loss)
on
investments
(7.35)
8.25
(6.32)
6.64
5.58
(2.75)
Total
from
Investment
Operations
(7.12)
8.72
(5.74)
7.24
6.10
(2.27)
Distributions
from
Net
investment
income
(0.23)
(0.43)
(0.55)
(0.57)
(0.50)
(0.48)
Net
realized
gains
–
(2.83)
(2.58)
(4.90)
(2.69)
(4.74)
Total
Distributions
(0.23)
(3.26)
(3.13)
(5.47)
(3.19)
(5.22)
Net
Asset
Value,
End
of
Period
$
35.30
$
42.65
$
37.19
$
46.06
$
44.29
$
41.38
Total
Return
(16.70)%(b)
23.50%
(12.50)%
16.40%
14.80%
(4.84)%
Ratios/Supplemental
Data
Net
Assets
at
End
of
Period
(in
thousands)
$441,474
$684,295
$721,916
$765,297
$499,591
$450,442
Ratios
to
Average
Net
Assets:
Expenses
(gross)
(c)
0.83%(d)
0.82%
0.81%
0.81%
0.82%
0.83%
Expenses
(net)
0.75%(d)
0.75%
0.75%
0.75%
0.75%
0.75%
Net
Investment
Income
1.24%(d)
1.12%
1.27%
1.25%
1.21%
0.98%
Portfolio
Turnover
Rate
(e)
49%(b)
46%
56%
44%
46%
39%(f)
(a)
Calculated
based
on
average
shares
outstanding
during
each
period.
(b)
Not
annualized.
(c)
Reflects
the
expense
ratio
excluding
any
waivers
and/or
reimbursements.
(d)
Annualized.
(e)
Portfolio
turnover
is
calculated
on
the
basis
of
the
Fund,
as
a
whole,
without
distinguishing
between
the
classes
of
shares
issued.
(f)
Amount
excludes
redemption
in-kind
of
$30,223,998.
19
Sound
Shore
Fund,
Inc.
ADDITIONAL
INFORMATION
(Unaudited)
June
30,
2020
Shareholder
Expense
Example
As
a
shareholder
of
the
Fund,
you
incur
ongoing
costs,
including
management
fees
and
other
Fund
expenses.
This
example
is
intended
to
help
you
understand
your
ongoing
costs
(in
dollars)
of
investing
in
the
Fund
and
to
compare
these
costs
with
the
ongoing
costs
of
investing
in
other
mutual
funds.
The
following
example
is
based
on
$1,000
invested
at
the
beginning
of
the
period
and
held
for
the
entire
period
from
January
1,
2020
through
June
30,
2020.
Actual
Expenses
-
The
Actual
Return
lines
of
the
table
below
provide
information
about
actual
account
values
and
actual
expenses
for
each
share
class.
You
may
use
the
information
in
these
lines,
together
with
the
amount
you
invested,
to
estimate
the
expenses
that
you
paid
over
the
period.
Simply
divide
your
account
value
by
$1,000
(for
example,
an
$8,600
account
value
divided
by
$1,000
=
8.6),
then
multiply
the
result
by
the
number
in
the
Actual
Return
line
under
the
heading
entitled
“Expenses
Paid
During
Period”
to
estimate
the
expenses
you
paid
on
your
account
during
this
period.
Hypothetical
Example
for
Comparison
Purposes
-
The
Hypothetical
Return
lines
of
the
table
below
provide
information
about
hypothetical
account
values
and
hypothetical
expenses
based
on
each
class’
actual
expense
ratio
and
an
assumed
rate
of
return
of
5%
per
year
before
expenses,
which
is
not
the
Fund’s
actual
return.
The
hypothetical
account
values
and
expenses
may
not
be
used
to
estimate
the
actual
ending
account
balance
or
expenses
you
paid
for
the
period.
You
may
use
this
information
to
compare
the
ongoing
cost
of
investing
in
the
Fund
and
other
funds.
To
do
so,
compare
this
5%
hypothetical
example
with
the
5%
hypothetical
examples
that
appear
in
the
shareholder
reports
of
other
funds.
Expenses
shown
in
the
table
are
meant
to
highlight
your
ongoing
costs
only
and
do
not
reflect
any
transactional
costs.
Therefore,
the
Hypothetical
Return
lines
of
the
table
are
useful
in
comparing
ongoing
costs
only,
and
will
not
help
you
determine
the
relative
total
costs
of
owning
different
funds.
Beginning
Account
Value
January
1,
2020
Ending
Account
Value
June
30,
2020
Expenses
Paid
During
Period*
Investor
Class
Actual
Return
$
1,000.00
$
832.37
$
4.19
Investor
Class
Hypothetical
Return
$
1,000.00
$
1,020.29
$
4.62
Institutional
Class
Actual
Return
$
1,000.00
$
833.04
$
3.42
Institutional
Class
Hypothetical
Return
$
1,000.00
$
1,021.13
$
3.77
*
Expenses
are
equal
to
the
Investor
Class'
and
Institutional
Class'
annualized
expense
ratios
of
0.92%
and
0.75%
respectively,
multiplied
by
the
average
account
value
over
the
period,
multiplied
by
182/366
to
reflect
the
most
recent
one-half
year
period.
20
Sound
Shore
Fund,
Inc.
ADDITIONAL
INFORMATION
(Unaudited)(Continued)
June
30,
2020
Investment
Advisory
Agreement
Approval
On
January
28,
2020,
the
Independent
Directors
and
the
full
Board
held
a
meeting
and
approved
the
continuance
of
the
Advisory
Agreement.
In
reaching
this
determination,
the
Board
considered
information
about
the
Adviser,
the
performance
of
the
Fund
and
certain
additional
factors
described
below
that
it
deemed
relevant.
The
following
summary
details
the
materials
and
factors
that
the
Board
considered,
among
others,
and
the
conclusions
they
reached,
in
approving
the
continuance
of
the
Advisory
Agreement.
(1)
The
nature,
extent
and
quality
of
services
provided
by
the
Adviser.
The
Board
considered
the
scope
and
quality
of
services
provided
by
the
Adviser,
particularly
the
qualifications,
capabilities
and
experience
of
the
investment,
operational,
compliance,
legal
and
other
personnel
who
are
responsible
for
providing
services
to
the
Fund.
The
Board
also
considered
the
fact
that
the
Adviser
pays
the
costs
of
all
investment
and
management
facilities
necessary
for
the
efficient
conduct
of
its
services
as
well
as
all
distribution
costs
incurred
on
behalf
of
the
Fund
and
all
servicing
costs
to
financial
intermediaries
beyond
the
10
basis
points
borne
by
the
Fund
and
reimbursed
by
the
Fund’s
transfer
agent.
In
addition,
the
Board
considered
that
the
Adviser
manages
the
overall
investment
program
of
the
Fund
and
that
the
Adviser
keeps
the
Board
informed
of
important
developments
affecting
the
Fund,
both
in
connection
with
the
Board’s
annual
review
of
the
Advisory
Agreement
and
at
each
Board
meeting.
The
Board
evaluated
these
factors
based
on
its
direct
experience
with
the
Adviser,
and
in
consultation
with
Counsel
to
the
Fund
and
Counsel
to
the
Independent
Directors.
The
Board
also
considered
the
Adviser’s
effectiveness
in
ensuring
that
the
Fund
is
in
compliance
with
its
investment
policies
and
restrictions
and
the
requirements
of
the
1940
Act
and
related
securities
regulations.
The
Board
further
noted
the
Adviser’s
efforts
to
oversee
the
Fund’s
other
service
providers,
including
those
providing
administrative,
accounting
and
custodial
services.
Based
on
these
factors,
as
well
as
other
factors
discussed
at
the
Meeting,
the
Board
concluded
that
the
nature,
extent
and
quality
of
services
provided
by
the
Adviser
have
been
and
continue
to
be
satisfactory.
(2)
The
performance
of
the
Fund
and
the
Adviser.
The
Board’s
analysis
of
the
Fund’s
performance
included
the
discussion
and
review
of
the
performance
data
of
the
Fund
against
securities
benchmarks
as
well
as
against
a
group
of
comparable
funds,
based
on,
in
part,
information
provided
by
an
independent,
third-party
mutual
fund
data
provider.
The
Board
reviewed
comparative
performance
over
long-,
intermediate-
and
short-term
periods.
In
reviewing
performance,
the
Board
placed
greater
emphasis
on
longer-term
performance
than
on
shorter-term
performance,
taking
into
account
that
over
short
periods
of
time
underperformance
may
be
transitory.
The
Board
further
took
into
account
that
performance
returns
over
longer
periods
can
be
impacted
dramatically
by
the
end
point
date
from
which
performance
is
measured.
In
this
regard
the
Board
noted
that
the
Fund
underperformed
the
S&P
500
Index
for
the
one-,
three-,
five-,
and
10-year
periods
ended
December
31,
2019.
The
Board
further
noted
that
the
Fund
outperformed
the
S&P
500
Index
for
the
20-year
period
ended
December
31,
2019,
and
that
the
Fund’s
performance
since
its
inception
in
1985
continued
21
Sound
Shore
Fund,
Inc.
ADDITIONAL
INFORMATION
(Unaudited)(Continued)
June
30,
2020
to
compare
favorably
with
the
return
of
the
S&P
500
Index.
The
Board
also
considered
the
performance
of
the
Fund
in
the
context
of
whether
the
Fund
was
meeting
the
expectations
of
the
clients
invested
in
the
Fund.
The
Board
also
considered
the
performance
of
the
Fund
against
a
comparative
universe
of
similar
funds
as
well
as
against
similarly
managed
accounts,
if
applicable,
managed
by
the
Adviser.
The
Board
noted
that
the
Fund
had
underperformed
the
Morningstar
Large
Cap
Value
peer
group
for
the
one-,
three-,
and
five-year
periods
ended
December
31,
2019,
and
had
generally
performed
in
line
with
that
peer
group
for
the
10-year
period
and
outperformed
the
peer
group
for
the
20-year
period
ended
December
31,
2019.
The
Board
also
noted
that
the
Fund
had
generally
performed
in
line
with
the
Adviser’s
composite
for
the
one-,
three-,
five-
and
10-year
periods
ended
December
31,
2019.
When
reviewing
performance
against
similarly
managed
accounts,
the
Board
considered,
among
other
things,
differences
in
the
nature
of
such
accounts
from
a
regulatory
and
tax
perspective
and
differences
in
the
investment
mandate
from
that
of
the
Fund.
The
Board
considered
the
Adviser’s
view
as
to
the
reasons
for
the
Fund’s
recent
underperformance,
noting
that
the
Adviser
believed
that
such
underperformance
was
transitory
and
was
not
reflective
of
any
deficiencies
in
the
team
or
the
process.
Based
on
these
factors,
as
well
as
other
factors
discussed
at
the
Meeting,
the
Board
concluded
that
the
performance
of
the
Fund
and
the
Adviser
has
been
and
continues
to
be
satisfactory.
(3)
The
cost
of
the
advisory
services
and
the
profits
to
the
Adviser
from
the
relationship
with
the
Fund.
The
Board’s
consideration
of
the
Fund’s
advisory
fee
and
expenses
included,
among
other
factors,
a
discussion
and
review
of
data
concerning
the
current
advisory
fee
and
expense
ratio
of
the
Fund
compared
to
a
peer
group
of
similar
funds.
The
Board
noted
that
the
Fund’s
advisory
fee
and
expense
ratio
were
generally
higher
than
those
of
a
peer
group
of
funds
with
assets
between
$1
billion
and
$3
billion.
The
Board
considered,
however,
that
the
Fund’s
advisory
fee
and
expense
ratio
were
in-line
with
a
smaller
universe
of
funds
with
fewer
than
10
funds
in
their
fund
family
having
similar
strategies.
The
Board
also
considered
that
the
Institutional
Class
shares
have
a
lower
expense
ratio
than
the
Investor
Class
shares
because
the
Adviser
has
capped
expenses
at
75
basis
points
to
compete
in
the
institutional
market.
Additionally,
the
Board
considered
advisory
fee
data
from
the
Adviser’s
similarly
managed
accounts
and
considered
the
relevance
of
differences
in
the
services
provided
to
separate
accounts
as
they
relate
to
differences
in
the
advisory
fees
charged
in
connection
with
management
of
the
Fund.
The
Board
also
considered
the
profitability
of
the
Fund
to
the
Adviser.
In
this
regard,
the
Board
noted
that
the
Fund,
with
an
advisory
fee
of
75
basis
points
and
assets
of
approximately
$1.5
billion,
did
not
appear
to
generate
“excessive”
fees
to
the
Adviser.
Based
on
this
analysis,
the
Board
concluded
that
the
advisory
fee
for
the
Fund
was
fair
and
reasonable
in
light
of
the
quality
of
services
provided
by
the
Adviser.
(4)
The
extent
to
which
economies
of
scale
will
be
realized
as
the
Fund
grows
and
whether
fee
levels
reflect
those
economies
of
scale.
22
Sound
Shore
Fund,
Inc.
ADDITIONAL
INFORMATION
(Unaudited)(Concluded)
June
30,
2020
In
considering
economies
of
scale,
the
Board
noted
that
at
its
current
relatively
small
size,
there
did
not
appear
to
be
economies
of
scale
applicable
to
the
Fund
at
this
time.
(5)
Ancillary
benefits
and
other
factors.
In
addition
to
the
above
factors,
the
Board
also
discussed
other
benefits
received
by
the
Adviser
from
the
management
of
the
Fund,
such
as
soft-dollar
credits.
The
Board
concluded
that
the
advisory
fee
was
reasonable
in
light
of
these
fall-out
benefits.
Conclusion
The
Board,
including
all
of
the
Independent
Directors,
concluded
that
the
fees
payable
under
the
Advisory
Agreement
were
fair
and
reasonable
with
respect
to
the
services
that
the
Adviser
provides,
in
light
of
the
factors
described
above
that
the
Board
deemed
relevant.
The
Board
based
its
decision
on
an
evaluation
of
all
these
factors
as
a
whole
and
did
not
consider
any
one
factor
as
all-important
or
controlling.
The
Independent
Directors
were
also
assisted
by
the
advice
of
Counsel
to
the
Independent
Directors
in
making
this
determination.
Proxy
Voting
Information
A
description
of
the
policies
and
procedures
that
the
Fund
uses
to
determine
how
to
vote
proxies
relating
to
securities
held
in
the
Fund’s
portfolio
is
available,
without
charge
and
upon
request,
by
calling
(800)
551-1980
or
by
visiting
the
Fund’s
website
at
http://www.soundshorefund.com.
This
information
is
also
available
on
the
Securities
and
Exchange
Commission’s
(“SEC”)
website
at
http://www.sec.gov
under
the
name
of
the
Sound
Shore
Fund.
The
Fund’s
proxy
voting
record
for
the
most
recent
12-month
period
ended
June
30
is
available,
without
charge
and
upon
request,
by
calling
(800)
551-1980
or
by
visiting
the
Fund’s
website
at
http://www.soundshorefund.com.
This
information
is
available
on
the
SEC’s
website
at
http://www.sec.gov
under
the
name
of
the
Sound
Shore
Fund.
Availability
of
Quarterly
Portfolio
Schedule
The
Fund
files
its
complete
schedule
of
portfolio
holdings
with
the
SEC
for
the
first
and
third
quarters
of
each
fiscal
year
on
Form
N-PORT.
This
information
is
available
on
the
SEC’s
website
at
http://www.sec.gov
under
the
name
of
the
Sound
Shore
Fund.
Investment
Adviser
Sound
Shore
Management,
Inc.
Greenwich,
Connecticut
Administrator
Apex
Fund
Services
Portland,
Maine
Distributor
Foreside
Fund
Services,
LLC
Portland,
Maine
www.foreside.com
Transfer
and
Distribution
Paying
Agent
Apex
Fund
Services
Portland,
Maine
Custodian
MUFG
Union
Bank,
N.A.
San
Francisco,
California
Fund
Counsel
Sullivan
and
Worcester
LLP
New
York,
New
York
Independent
Registered
Public
Accounting
Firm
BBD,
LLP
Philadelphia,
Pennsylvania
Semi-Annual
Report
to
Shareholders
(Unaudited)
June
30,
2020
207-SAR-0620
This
report
is
submitted
for
the
general
information
of
the
shareholders
of
the
Fund.
It
is
not
authorized
for
distribution
to
prospective
investors
in
the
Fund
unless
preceded
or
accompanied
by
an
effective
prospectus,
which
includes
information
regarding
the
Fund’s
objectives
and
policies,
experience
of
its
management,
and
other
information.
SOUND
SHORE
FUND,
INC.
Three
Canal
Plaza
Portland,
ME
04101
http://www.soundshorefund.com
(800)
551-1980
Item 2. Code of Ethics.
Not applicable.
Item 3. Audit Committee Financial Expert.
Not applicable.
Item 4. Principal Accountant Fees and Services.
Not applicable.
Item 5. Audit Committee of Listed Registrants.
Not applicable.
Item 6. Schedule of Investments.
(a) | Included as part of the report to stockholders under Item 1. |
(b) | Not applicable. |
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies.
Not applicable.
Item 8. Portfolio Managers of Closed-End Management Investment Companies.
Not applicable.
Item 9. Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers.
Not applicable.
Item 10. Submission of Matters to a Vote of Security Holders.
Not applicable.
Item 11. Controls and Procedures.
(a) The registrant’s principal executive officer and principal financial officer concluded that the registrant’s disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940 (the “Act”)) were effective as of a date within 90 days of the filing date of this report (the “Evaluation Date”) based on their evaluation of the registrant’s disclosure controls and procedures as of the Evaluation Date.
(b) There were no changes in the registrant’s internal control over financial reporting (as defined in Rule 30a-3(d) under the Act) that occurred during the second fiscal quarter of the period covered by this report that have materially affected, or are reasonably likely to materially affect, the registrant’s internal control over financial reporting.
Item 12. Disclosure of Securities Lending Activities for Closed-End Management Investment Companies.
Not applicable.
Item 13. Exhibits.
(a)(1) Not applicable.
(a)(2) Certifications pursuant to Rule 30a-2(a) of the Investment Company Act of 1940 as amended, and Section 302 of the Sarbanes-Oxley Act of 2002 (Exhibit filed herewith).
(a)(3) Not applicable.
(b) Certifications pursuant to Rule 30a-2(b) of the Investment Company Act of 1940, as amended, and Section 906 of the Sarbanes-Oxley Act of 2002 (Exhibit filed herewith).
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.
SOUND SHORE FUND, INC.
By | /s/ T. Gibbs Kane, Jr. | |
T. Gibbs Kane, Jr., President | ||
Date | 8/18/2020 |
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
By | /s/ T. Gibbs Kane, Jr. | |
T. Gibbs Kane, Jr., President | ||
Date | 8/18/2020 |
By | /s/ Charles S. Todd | |
Charles S. Todd, Treasurer | ||
Date | 8/18/2020 |