I think the definition of share dilution is a bit too general.
[...] making each share less valuable.
The above last part should not be there or should at least not be there in such a definite form. A less definite form could be:
[...] sometimes making each share less valuable.
In conclusion, I would agree there is no value dilution because of the market cap increase due to the STEEM added to the fund, but there is definitely some share dilution because the following part of the definition still stands:
When the number of shares outstanding increases, each existing stockholder owns a smaller, or diluted, percentage of the company [...]