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, 2021 – June 30, 2021
Item 1. Reports to Stockholders.
June
30,
2021
Dear
Investor:
The
Sound
Shore
Fund
Investor
Class
(SSHFX)
and
Institutional
Class
(SSHVX)
advanced
5.61%
and
5.66%,
respectively,
in
the
second
quarter
of
2021,
finishing
ahead
of
the
Russell
1000
Value
Index
(Russell
Value)
which
was
up
5.21%
and
behind
the
Standard
&
Poor’s
500
Index
(S&P
500)
which
was
up
8.55%.
Year-to-date
returns
for
SSHFX
of
17.57%
and
for
SSHVX
of
17.64%
were
slightly
ahead
the
Russell
Value’s
17.05%
and
the
S&P
500’s
15.25%.
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.
Strong
corporate
profits
and
resurgent
consumer
spending
helped
drive
our
strong
performance
in
the
second
quarter.
Investor
confidence
remained
strong
due
to
reopening
economies
and
despite
interest
rate
and
inflation
concerns.
However,
performance
narrowed
vs.
the
S&P
500
during
June,
favoring
growth
stocks,
after
the
US
Federal
Reserve
indicated
it
could
be
tightening
as
soon
as
2022.
The
current
environment
is
yielding
ample
investment
opportunities
for
Sound
Shore's
bottom
up,
contrarian
strategy.
Sound
Shore's
process,
time-tested
over
the
last
43
years,
starts
with
a
screen
to
identify
the
least
expensive
stocks
based
upon
earnings
and
cash
flow.
We
then
conduct
thorough
fundamental
research
to
determine
the
company-specific
drivers
that
will
grow
value
ahead
of
low
consensus
expectations.
Realizing
or
exceeding
our
outlook
for
earnings
and
cash
flow
is
crucial,
and
we
assemble
financial
models
to
track
a
company's
progress.
When
we
get
it
right,
a
company’s
future
earnings
and
cash
flow
are
higher
than
Wall
Street
(the
“Street”)
had
estimated.
A
couple
of
our
holdings
in
the
financials
sector
were
top
performers
for
the
quarter
and
provide
good
examples.
The
most
recent
Federal
Reserve
stress
test
results,
we
believe,
provides
confirmation
that
our
holdings’
business
models
are
more
resilient,
over-capitalized
and
underappreciated
by
the
market.
The
Comprehensive
Capital
Analysis
and
Review,
often
referred
to
as
“CCAR,”
is
an
analysis
conducted
under
hypothetical
scenarios
designed
to
determine
whether
a
bank
has
enough
capital
to
withstand
a
negative
economic
shock.
Card
issuer
Capital
One’s
latest
stress
test
capital
buffer
declined
by
more
than
3
percentage
points.
This
equates
to
approximately
$10
billion
in
incremental
capital
capacity
to
distribute
to
shareholders.
Based
on
our
estimate
of
excess
capital
and
excess
reserves
the
company
could
return
more
than
30%
of
their
total
market
cap
over
the
next
12
months.
While
we
are
not
anticipating
that
to
happen
in
such
a
short
period
of
time,
we
do
expect
increased
dividends
and
share
repurchases,
which
should
accelerate
shareholder
value.
The
results
substantiate
our
suspicion
that
the
market
has
underestimated
the
resilience
of
Capital
One’s
credit
card
underwriting.
We
believe
that
Capital
One’s
seasoned
management
team
is
keeping
the
company
on
its
front
foot
through
strong
credit
management
and
advanced
technology
platforms.
Currently
valued
at
9.5
times
2022
consensus
earnings
it
remains
a
holding.
Already
a
top
tier
investment
bank,
fellow
financial
holding
Morgan
Stanley’s
very
capable
management
team
continues
to
drive
even
faster
growth
in
its
highly
profitable
wealth
and
asset
management
franchises.
By
continuing
to
build
out
these
businesses
THREE
CANAL
PLAZA,
PORTLAND,
ME
04101
1-800-551-1980
both
organically
and
via
acquisition
(E*Trade,
Eaton
Vance),
Morgan
Stanley’s
business
model
is
stronger
than
it
has
ever
been.
Again,
the
stress
test
results
highlight
this.
In
fact,
the
company
just
announced
on
June
28,
2021
that
it
is
doubling
its
dividend
from
$1.40
to
$2.80
per
share!
That
gives
investors
a
very
attractive
3.1%
dividend
yield
for
a
company
that
is
winning
share,
continues
to
grow
and
is
well
prepared
for
the
digital
future.
We
believe
that
the
Street
has
underestimated
Morgan
Stanley’s
earnings
power
and
that
the
company’s
performance
in
wealth
management
will
help
drive
a
re-rating
of
the
stock
higher.
On
the
detractor
side,
electronic
payments
processor
Fiserv
pulled
back
after
a
strong
performance
in
the
first
quarter.
Concern
over
increased
competition
in
the
fintech
space
contributed
to
the
weakness.
Another
hangover
in
recent
years
has
been
private
equity
firm
KKR’s
large
ownership
stake
in
Fiserv
from
a
prior
leveraged
buyout.
As
KKR
has
been
winding
down
its
position,
the
stock
has
lagged.
That
divestiture
is
largely
complete
and
KKR
now
holds
less
than
10%
of
the
outstanding
shares.
Despite
the
recent
multiple
compression,
our
view
is
that
the
company
will
continue
delivering
double
digit
earnings
growth
and
we
added
to
our
position
on
the
recent
weakness.
Fiserv
is
attractively
valued
and
trading
at
16.7
times
2022
earnings,
with
a
5%
free
cash
flow
yield,
approximately
a
30%
discount
to
the
S&P
500.
Meanwhile
Fiserv’s
Clover
point
of
sale
solution
is
underappreciated,
based
on
the
very
high
valuations
of
some
digital
payments
peers.
The
move
from
cash
to
credit
and
digital
will
certainly
continue
from
here.
We
believe
that
led
by
a
seasoned
management
team,
Fiserv
is
well
positioned
to
capitalize
on
that
trend.
Sound
Shore
continues
to
uncover
companies
with
durable
earnings
power
like
those
discussed
above.
We
are
encouraged
that
stock
performance
based
upon
company-specific
fundamentals
seems
to
be
more
characteristic
of
recent
markets.
Investors
will
be
keeping
a
close
eye
on
the
emergence
of
variant
strains
and
the
progress
of
COVID-19
vaccinations
around
the
world.
Many
regions
have
lagged
the
US,
which
has
hampered
reopening
of
global
economies.
As
mentioned
earlier,
Fed
activity,
interest
rates
and
inflation
are
all
being
closely
watched
as
the
possibility
of
more
persistent
inflationary
pressure
beyond
2021
is
debated.
Our
focus
remains
on
the
earnings
power
of
our
holdings
and
we
note
that
at
June
30,
2021,
Sound
Shore’s
portfolio
had
a
forward
price-earnings
multiple
of
13.8
times
consensus,
a
meaningful
discount
to
the
S&P
500
at
21.1
times
and
the
Russell
Value
at
16.5
times,
despite
strong
balance
sheets
and
better
free
cash
flow.
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,
2021
were
52.23%,
12.20%,
and
11.43%,
respectively.
The
Fund’s
Institutional
Class
1,
5,
and
10-year
average
annual
total
returns
for
the
same
period
were
52.49%,
12.38%,
and
11.62%,
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
0.93%
for
the
Investor
Class
and
0.84%
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,
2022.
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
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.
The
Standard
&
Poor’s
500
Index
is
an
unmanaged
index
representing
the
average
performance
of
500
widely
held,
publicly
traded,
large
capitalization
stocks.
It
is
not
possible
to
invest
directly
in
an
Index.
Data
presented
reflects
that
of
the
underlying
holdings
of
the
Fund,
not
of
the
Fund
itself.
FCF
(Free
Cash
Flow)
represents
the
cash
that
a
company
is
able
to
generate
after
laying
out
the
money
required
to
maintain
or
expand
its
asset
base.
Forward
P/E
(estimated
price-to-earnings)
is
a
measure
of
the
P/E
using
forecasted
earnings
for
the
P/E
calculation.
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
6/30/21
and
may
not
necessarily
reflect
their
views
on
the
date
this
letter
is
first
published
or
anytime
thereafter.
Sound
Shore
Fund,
Inc.
SCHEDULE
OF
INVESTMENTS
(Unaudited)
June
30,
2021
See
Notes
to
Financial
Statements.
Sector
Weightings
(a)
(as
of
June
30,
2021)
as
a
percentage
of
Net
Assets
(Unaudited)
Share
Amount
Value
Common
Stock
(97.8%)
(a)
Communication
Services
(
6.5%
)
Alphabet,
Inc.,
Class A
(b)
10,815
$
26,407,959
Comcast
Corp.,
Class A
554,900
31,640,398
Verizon
Communications,
Inc.
447,700
25,084,631
83,132,988
Consumer
Discretionary
(
4.7%
)
Lennar
Corp.,
Class A
245,450
24,385,457
Magna
International,
Inc.
389,350
36,069,384
60,454,841
Consumer
Staples
(
2.6%
)
Conagra
Brands,
Inc.
928,200
33,767,916
Sound
Shore
Fund,
Inc.
SCHEDULE
OF
INVESTMENTS
(Unaudited)(Continued)
June
30,
2021
See
Notes
to
Financial
Statements.
Share
Amount
Value
Energy
(
5.8%
)
Baker
Hughes
Co.
1,040,400
$
23,793,948
Cabot
Oil
&
Gas
Corp.
1,476,550
25,780,563
EOG
Resources,
Inc.
288,650
24,084,956
73,659,467
Financials
(
25.3%
)
Alleghany
Corp.
(b)
64,860
43,266,160
Bank
of
America
Corp.
802,400
33,082,952
Berkshire
Hathaway,
Inc.,
Class B
(b)
112,805
31,350,766
Capital
One
Financial
Corp.
235,200
36,383,088
Chubb,
Ltd.
164,250
26,105,895
Morgan
Stanley
415,600
38,106,364
RenaissanceRe
Holdings,
Ltd.
216,800
32,264,176
SVB
Financial
Group
(b)
44,445
24,730,531
The
Blackstone
Group,
Inc.,
Class A
240,900
23,401,026
Wells
Fargo
&
Co.
740,700
33,546,303
322,237,261
Health
Care
(
26.0%
)
Anthem,
Inc.
74,240
28,344,832
Cigna
Corp.
166,995
39,589,505
DENTSPLY
SIRONA,
Inc.
549,050
34,732,903
Elanco
Animal
Health,
Inc.
(b)
782,050
27,129,314
Henry
Schein,
Inc.
(b)
438,200
32,510,058
Merck
&
Co.,
Inc.
440,600
34,265,462
Organon
&
Co.
(b)
848,410
25,672,887
Perrigo
Co.
PLC
1,085,400
49,765,590
Pfizer,
Inc.
902,650
35,347,774
UnitedHealth
Group,
Inc.
60,100
24,066,444
331,424,769
Industrials
(
6.5%
)
Eaton
Corp.
PLC
153,000
22,671,540
Sensata
Technologies
Holding
PLC
(b)
578,850
33,555,935
Westinghouse
Air
Brake
Technologies
Corp.
328,800
27,060,240
83,287,715
See
Notes
to
Financial
Statements.
Sound
Shore
Fund,
Inc.
SCHEDULE
OF
INVESTMENTS
(Unaudited)(Concluded)
June
30,
2021
Share
Amount
Value
Information
Technology
(
14.9%
)
Fiserv,
Inc.
(b)
340,300
$
36,374,667
Flex,
Ltd.
(b)
3,079,400
55,028,878
NXP
Semiconductors
NV
197,700
40,670,844
Oracle
Corp.
409,250
31,856,020
Vontier
Corp.
797,250
25,974,405
189,904,814
Materials
(
2.0%
)
International
Paper
Co.
408,100
25,020,611
Utilities
(
3.5%
)
Vistra
Corp.
2,384,000
44,223,200
Total
Common
Stock
(97.8%)
(cost
$913,128,402)
1,247,113,582
Short-Term
Investments
(2.2%)
Money
Market
Fund
(
2.2%
)
Morgan
Stanley
Institutional
Liquidity
Funds
Government
Portfolio,
Institutional
Class,
0.03
%
(c)
28,164,159
28,164,159
Total
Short-Term
Investments
(2.2%)
(cost
$28,164,159)
28,164,159
Investments,
at
value
(100.0%)
(cost
$941,292,561)
$
1,275,277,741
Other
Liabilities
Less
Assets
(0.0%)
(268,429)
Net
Assets
(100.0%)
$
1,275,009,312
(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,
2021.
PLC
Public
Limited
Company
Sound
Shore
Fund,
Inc.
STATEMENT
OF
ASSETS
AND
LIABILITIES
(Unaudited)
June
30,
2021
See
Notes
to
Financial
Statements.
16
ASSETS
Investments,
at
value
(Cost
$941,292,561)
$
1,275,277,741
Receivables:
Capital
shares
sold
768,501
Dividends
598,470
Foreign
tax
reclaims
91,136
Prepaid
expenses
39,806
Total
Assets
1,276,775,654
LIABILITIES
Payables:
Capital
shares
redeemed
845,214
Accrued
liabilities:
Advisory
fees
756,039
Administrator
fees
15,094
Transfer
agent
fees
and
expenses
61,560
Custodian
fees
14,513
Compliance
and
Treasurer
Services
fees
and
expenses
13,061
Professional
fees
31,610
Other
accrued
liabilities
29,251
Total
Liabilities
1,766,342
Net
Assets
$
1,275,009,312
COMPONENTS
OF
NET
ASSETS
Common
stock,
at
Par
Value
$
25,642
Paid-in
Capital
768,128,587
Distributable
earnings
506,855,083
Net
Assets
$
1,275,009,312
NET
ASSET
VALUE
Net
Assets
-
Investor
Class
Shares
$
695,763,186
Shares
Outstanding
-
Investor
Class
(100,000,000
shares
authorized,
par
value
$0.001)
14,039,302
Net
Asset
Value
(offering
&
redemption
price
per
share)
-
Investor
Class
Shares
$
49.56
Net
Assets
-
Institutional
Class
Shares
$
579,246,126
Shares
Outstanding
-
Institutional
Class
(100,000,000
shares
authorized,
par
value
$0.001)
11,602,442
Net
Asset
Value
(offering
&
redemption
price
per
share)
-
Institutional
Class
Shares
$
49.92
Sound
Shore
Fund,
Inc.
STATEMENT
OF
OPERATIONS
(Unaudited)
FOR
THE
SIX
MONTHS
ENDED
JUNE
30,
2021
See
Notes
to
Financial
Statements.
INVESTMENT
INCOME
Income:
Dividend
income
(net
of
foreign
withholding
taxes
of
$74,098)
$
9,443,320
Total
Income
9,443,320
Expenses:
Advisory
fees
(Note
3
)
4,611,443
Administrator
fees
86,670
Transfer
agent
fees
and
expenses
-
Investor
Class
Shares
342,041
Transfer
agent
fees
and
expenses
-
Institutional
Class
Shares
19,883
Custodian
fees
43,437
Compliance
and
Treasurer
Services
fees
and
expenses
(Note
3
)
75,560
Directors'
fees
and
expenses
(Note
3
)
96,149
Professional
fees
51,610
Registration
fees
-
Investor
Class
Shares
13,041
Registration
fees
-
Institutional
Class
Shares
14,252
Printing
and
postage
fees
-
Investor
Class
Shares
31,527
Printing
and
postage
fees
-
Institutional
Class
Shares
22,037
Miscellaneous
45,778
Total
Expenses
5,453,428
Expense
Reimbursements
-
Institutional
Class
Shares
(Note
3
)
(235,317)
Net
Expenses
5,218,111
Net
Investment
Income
4,225,209
REALIZED
AND
UNREALIZED
GAIN
(LOSS)
ON
INVESTMENTS
Net
realized
gain
on
investments
180,464,385
Net
change
in
unrealized
appreciation
(depreciation)
on
investments
12,064,950
Net
realized
and
unrealized
gain
on
investments
192,529,335
Net
increase
in
net
assets
from
operations
$
196,754,544
Sound
Shore
Fund,
Inc.
STATEMENTS
OF
CHANGES
IN
NET
ASSETS
See
Notes
to
Financial
Statements.
For
the
Six
Months
Ended
June
30,
2021
(Unaudited)
For
the
Year
Ended
December
31,
2020
Operations:
Net
investment
income
$
4,225,209
$
10,085,798
Net
realized
gain
on
investments
180,464,385
87,465,213
Net
change
in
unrealized
appreciation
(depreciation)
on
investments
12,064,950
(60,819,351)
Increase
in
net
assets
from
operations
196,754,544
36,731,660
Distributions
to
shareholders:
Investor
Class
Shares
(2,240,056)
(49,691,231)
Institutional
Class
Shares
(2,089,436)
(38,692,117)
Total
dividends/distributions
to
shareholders
(4,329,492)
(88,383,348)
Net
capital
share
transactions
(Note
6
):
Investor
Class
Shares
(51,644,294)
(180,071,640)
Institutional
Class
Shares
(24,385,065)
(147,545,453)
Total
capital
share
transactions
(76,029,359)
(327,617,093)
Total
increase
(decrease)
116,395,693
(379,268,781)
NET
ASSETS
Beginning
of
the
period
1,158,613,619
1,537,882,400
End
of
the
period
$
1,275,009,312
$
1,158,613,619
Sound
Shore
Fund,
Inc.
NOTES
TO
FINANCIAL
STATEMENTS
(Unaudited)
June
30,
2021
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
Sound
Shore
Fund,
Inc.
NOTES
TO
FINANCIAL
STATEMENTS
(Unaudited)(Continued)
June
30,
2021
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,
2021:
At
June
30,
2021
,
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
$
1,247,113,582
$
–
$
–
$
1,247,113,582
Short-Term
Investments
28,164,159
–
–
28,164,159
Total
Investments
$
1,275,277,741
$
–
$
–
$
1,275,277,741
Sound
Shore
Fund,
Inc.
NOTES
TO
FINANCIAL
STATEMENTS
(Unaudited)(Continued)
June
30,
2021
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
2018
–
2020,
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,
2022.
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.
US
Bank,
N.A.
(“US
Bank”)
serves
as
custodian
to
the
Fund.
Apex
provides
transfer
agency
services
to
the
Fund.
Sound
Shore
Fund,
Inc.
NOTES
TO
FINANCIAL
STATEMENTS
(Unaudited)(Continued)
June
30,
2021
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,
US
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,
2021,
aggregated
$332,553,520
and
$401,097,212,
respectively.
Sound
Shore
Fund,
Inc.
NOTES
TO
FINANCIAL
STATEMENTS
(Unaudited)(Continued)
June
30,
2021
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:
Distributions
during
the
fiscal
years
ended
December
31,
2020
and
December
31,
2019
were
characterized
for
tax
purposes
as
follows:
Components
of
net
assets
on
a
federal
income
tax
basis
at
December
31,
2020,
were
as
follows:
At
December
31,
2020,
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,
2021
and
the
year
ended
December
31,
2020,
were
as
follows:
Gross
Unrealized
Appreciation
$
352,343,598
Gross
Unrealized
Depreciation
(18,358,418)
Net
Unrealized
Appreciation
$
333,985,180
2020
2019
Ordinary
Income
$
9,7
59
,
607
$
15,87
2
,
683
Long-Term
Capital
Gain
78,6
31,157
96,9
57,399
Total
Taxable
Distributions
$
88,390,764
$
112,83
0
,
082
Par
Value
+
Paid-in
Capital
$
844,183
,
58
8
Undistributed
Ordinary
Income
1
85
,
286
Net
Unrealized
Appreciation
314,
244
,
745
Net
Assets
$
1,158,613,619
For
the
Period
Ended
June
30,
2021
Investor
Class
Institutional
Class
Shares
Amount
Shares
Amount
Sale
of
shares
219,275
$
10,224,286
505,163
$
24,014,152
Reinvestment
of
dividends
42,832
2,109,927
41,503
2,059,364
Redemption
of
shares
(1,382,281)
(63,978,507)
(1,094,743)
(50,458,581)
Net
decrease
from
capital
transactions
(1,120,174)
$
(51,644,294)
(548,077)
$
(24,385,065)
Sound
Shore
Fund,
Inc.
NOTES
TO
FINANCIAL
STATEMENTS
(Unaudited)(Concluded)
June
30,
2021
7.
Risks
As
of
June
30,
2021,
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.
The
global
outbreak
of
the
COVID-19
virus
has
caused
negative
effects
on
many
companies,
sectors,
countries,
regions,
and
financial
markets
in
general,
and
uncertainty
exists
as
to
its
long-term
implications.
The
effects
of
the
pandemic
may
adversely
impact
the
Fund’s
assets
and
performance.
The
financial
statements
do
not
include
any
adjustments
that
might
result
from
the
outcome
of
this
uncertainty.
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.
Effective
July
31,
2021,
following
the
acquisition
of
MUFG
Union
Bank,
N.A.
by
US
Bank,
US
Bank
serves
as
the
Fund’s
custodian.
For
the
Year
Ended
December
31,
2020
Investor
Class
Institutional
Class
Shares
Amount
Shares
Amount
Sale
of
shares
806,992
$
29,483,742
1,974,391
$
71,800,543
Reinvestment
of
dividends
1,145,887
47,315,602
919,562
38,179,171
Redemption
of
shares
(6,918,995)
(256,870,984)
(6,789,422)
(257,525,167)
Net
decrease
from
capital
transactions
(4,966,116)
$
(180,071,640)
(3,895,469)
$
(147,545,453)
Sound
Shore
Fund,
Inc.
FINANCIAL
HIGHLIGHTS
These
financial
highlights
reflect
selected
data
for
a
share
outstanding
throughout
each
period
.
Six
Months
Ended
June
30,
2021
(unaudited)
For
the
Year
Ended
December
31,
2020
2019
2018
2017
2016
Investor
Class
Shares
Net
Asset
Value,
Beginning
of
Period
$
42.29
$
42.41
$
37.03
$
45.89
$
44.17
$
41.30
Investment
Operations
Net
investment
income
(a)
0.14
0.30
0.40
0.50
0.51
0.45
Net
realized
and
unrealized
gain
(loss)
on
investments
7.29
2.90
8.20
(6.27)
6.63
5.57
Total
from
Investment
Operations
7.43
3.20
8.60
(5.77)
7.14
6.02
Distributions
from
Net
investment
income
(0.16)
(0.32)
(0.39)
(0.51)
(0.52)
(0.46)
Net
realized
gains
–
(3.00)
(2.83)
(2.58)
(4.90)
(2.69)
Total
Distributions
(0.16)
(3.32)
(3.22)
(3.09)
(5.42)
(3.15)
Net
Asset
Value,
End
of
Period
$
49.56
$
42.29
$
42.41
$
37.03
$
45.89
$
44.17
Total
Return
17.57%(b)
7.78%
23.26%
(12.62)%
16.22%
14.63%
Ratios/Supplemental
Data
Net
Assets
at
End
of
Period
(in
thousands)
$695,763
$641,165
$853,588
$945,244
$1,365,922
$1,464,566
Ratios
to
Average
Net
Assets:
Expenses
0.93%(c)
0.93%
0.91%
0.90%
0.90%
0.91%
Net
Investment
Income
0.61%(c)
0.80%
0.95%
1.10%
1.06%
1.05%
Portfolio
Turnover
Rate
(d)
28%(b)
77%
46%
56%
44%
46%
(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.
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,
2021
(unaudited)
For
the
Year
Ended
December
31,
2020
2019
2018
2017
2016
Institutional
Class
Shares
Net
Asset
Value,
Beginning
of
Period
$
42.59
$
42.65
$
37.19
$
46.06
$
44.29
$
41.38
Investment
Operations
Net
investment
income
(a)
0.19
0.37
0.47
0.58
0.60
0.52
Net
realized
and
unrealized
gain
(loss)
on
investments
7.32
2.93
8.25
(6.32)
6.64
5.58
Total
from
Investment
Operations
7.51
3.30
8.72
(5.74)
7.24
6.10
Distributions
from
Net
investment
income
(0.18)
(0.36)
(0.43)
(0.55)
(0.57)
(0.50)
Net
realized
gains
–
(3.00)
(2.83)
(2.58)
(4.90)
(2.69)
Total
Distributions
(0.18)
(3.36)
(3.26)
(3.13)
(5.47)
(3.19)
Net
Asset
Value,
End
of
Period
$
49.92
$
42.59
$
42.65
$
37.19
$
46.06
$
44.29
Total
Return
17.6
4
%(b)
7.98%
23.50%
(12.50)%
16.40%
14.80%
Ratios/Supplemental
Data
Net
Assets
at
End
of
Period
(in
thousands)
$579,246
$517,449
$684,295
$721,916
$765,297
$499,591
Ratios
to
Average
Net
Assets:
Expenses
(gross)
(c)
0.84%(d)
0.84%
0.82%
0.81%
0.81%
0.82%
Expenses
(net)
0.75%(d)
0.75%
0.75%
0.75%
0.75%
0.75%
Net
Investment
Income
0.79%(d)
0.98%
1.12%
1.27%
1.25%
1.21%
Portfolio
Turnover
Rate
(e)
28%(b)
77%
46%
56%
44%
46%
(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.
Sound
Shore
Fund,
Inc.
ADDITIONAL
INFORMATION
(Unaudited)
June
30,
2021
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,
2021
through
June
30,
2021.
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,
2021
Ending
Account
Value
June
30,
2021
Expenses
Paid
During
Period*
Investor
Class
Actual
Return
$
1,000.00
$
1,
175.66
$
5.
0
2
Investor
Class
Hypothetical
Return
$
1,000.00
$
1,020.
1
8
$
4.
66
Institutional
Class
Actual
Return
$
1,000.00
$
1,
176
.
41
$
4.
05
Institutional
Class
Hypothetical
Return
$
1,000.00
$
1,021.
08
$
3.
76
*
Expenses
are
equal
to
the
Investor
Class'
and
Institutional
Class'
annualized
expense
ratios
of
0.93%
and
0.75%
respectively,
multiplied
by
the
average
account
value
over
the
period,
multiplied
by
181/365
to
reflect
the
most
recent
one-half
year
period.
Sound
Shore
Fund,
Inc.
ADDITIONAL
INFORMATION
(Unaudited)(Continued)
June
30,
2021
Investment
Advisory
Agreement
Approval
On
January
28,
2021,
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
remains
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
relevant
securities
benchmarks
as
well
as
against
a
group
of
comparable
funds,
based,
in
part,
on
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,
noting
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
observed
that
the
Fund
outperformed
the
Russell
1000
Value
Index,
for
the
one-
and
20-year
periods
ended
December
31,
2020,
and
underperformed
the
Russell
1000
Value
Index
for
the
three-,
five-,
and
10-year
periods
ended
December
31,
2020.
The
Board
also
observed
that
the
Fund
underperformed
the
S&P
500
Index
Sound
Shore
Fund,
Inc.
ADDITIONAL
INFORMATION
(Unaudited)(Continued)
June
30,
2021
for
the
one-,
three-,
five-,
10-,
and
20-year
periods
ended
December
31,
2020,
noting
that
the
Fund’s
performance
more
closely
approximated
that
of
the
Russell
1000
Value
Index
during
each
of
those
periods.
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
outperformed
the
Morningstar
Large
Cap
Value
peer
group
for
each
of
the
one-,
10-,
and
20-year
periods
ended
December
31,
2020,
and
underperformed
the
Morningstar
Large
Cap
Value
peer
group
for
the
three-
year
period
ended
December
31,
2020,
and
performed
in
line
with
the
Morningstar
Large
Cap
Value
peer
group
for
the
five
year
period
ended
December
31,
2020.
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
principle
drivers
of
Fund
performance.
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
funds
with
assets
between
$500
million
and
$2
billion
identified
by
Broadridge
Financial
Solutions,
Inc.
(“Broadridge”)
believed
to
have
characteristics
similar
to
those
of
the
Fund.
The
Board
observed
that,
although
the
Fund’s
advisory
fee
rate
was
higher
than
the
median
of
the
Broadridge
peers,
the
Fund’s
actual
expense
ratio
was
lower
than
the
median
of
the
Broadridge
peers.
The
Board
also
observed
that
the
Fund’s
advisory
fee
rate
and
total
expense
ratio
were
each
less
than
the
median
of
those
Broadridge
peers
categorized
as
“small
fund
families,”
comprised
of
fewer
than
10
funds,
which
the
Adviser
believed
to
be
a
more
meaningful
comparison
than
the
Broadridge
group
as
a
whole.
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
$1.2
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.
Sound
Shore
Fund,
Inc.
ADDITIONAL
INFORMATION
(Unaudited)(Concluded)
June
30,
2021
(4)
The
extent
to
which
economies
of
scale
will
be
realized
as
the
Fund
grows
and
whether
fee
levels
reflect
those
economies
of
scale.
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
US
Bank,
N.A.
Milwaukee,
Wisconsin
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)
207-SAR-0621
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. |
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.
(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).
(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 | 8/12/2021 | |
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 | 8/12/2021 | |
| By | /s/ Charles S. Todd | |
| | Charles S. Todd, Treasurer | |
| | | |
| Date | 8/12/2021 | |
