Item 1. |
Reports to Shareholders. |
![]() |
Annual Report |
December 31, 2022 |
1 | ||||
2 | ||||
8 | ||||
9 | ||||
10 | ||||
10 | ||||
11 | ||||
12 | ||||
13 | ||||
14 | ||||
21 | ||||
24 | ||||
25 | ||||
27 | ||||
28 | ||||
28 | ||||
FUND |
1 YR |
3 YR |
5 YR |
10 YR |
15 YR |
20 YR |
SINCE INCEPTION |
INCEPTION DATE |
||||||||||||||||||||||||
Sprott Focus Trust |
-0.91 | 11.63 | 8.90 | 9.55 | 5.66 | 10.70 | 10.01 | 11/1/96 | 1 | |||||||||||||||||||||||
INDEX |
||||||||||||||||||||||||||||||||
Russell 3000 TR Index 2 |
-19.21 | 7.07 | 8.79 | 12.13 | 8.66 | 9.88 | 8.69 |
1 |
Royce & Associates, LLC served as investment adviser of the Fund from November 1, 1996 to March 6, 2015. After the close of business on March 6, 2015, Sprott Asset Management LP and Sprott Asset Management USA Inc. became the investment adviser and investment sub-adviser, respectively, of the Fund. |
2 |
Russell Investment Group is the source and owner of the trademarks, service marks, and copyrights related to the Russell Indexes. Russell ® is a trademark of Russell Investment Group. The Russell 3000 Total Return index measures the performance of the largest 3,000 U.S. companies. The performance of an index does not represent exactly any particular investment, as you cannot invest directly in an index. |
MANAGER’S DISCUSSION (Unaudited) | ||
![]() |
MANAGER’S DISCUSSION (Unaudited) |
Helmerich & Payne, Inc. |
3.73 | |||
Cal-Maine Foods, Inc. |
2.02 | |||
Pason Systems Inc. |
1.44 | |||
Nucor Corporation |
1.35 | |||
Reliance Steel & Aluminum Co. |
1.26 |
1 |
Includes dividends. |
Western Digital Corporation |
-2.10 | |||
Kennedy-Wilson Holdings, Inc. |
-1.57 | |||
Schnitzer Steel Industries, Inc. Class A |
-1.52 | |||
Artisan Partners Asset Management, Inc. Class A |
-1.51 | |||
THOR Industries, Inc. |
-0.93 |
1 |
Net of dividends. |
MANAGER’S DISCUSSION (Unaudited) |
The Buckle, Inc. |
4.7 | |||
Federated Hermes, Inc. Class B |
4.6 | |||
Helmerich & Payne, Inc. |
4.6 | |||
Reliance Steel & Aluminum Co. |
4.6 | |||
Pason Systems Inc. |
4.5 | |||
Steel Dynamics, Inc. |
4.4 | |||
Nucor Corporation |
4.4 | |||
Westlake Corporation |
4.2 | |||
AerSale Corporation |
4.2 | |||
Vishay Intertechnology, Inc. |
4.1 |
Materials |
37.4 | |||
Financials |
15.0 | |||
Energy |
12.3 | |||
Consumer Discretionary |
8.7 | |||
Real Estate |
8.3 | |||
Industrials |
5.7 | |||
Technology |
5.5 | |||
Consumer Staples |
4.0 | |||
Cash & Cash Equivalents |
3.1 |
Fund Net Assets |
$254 million | |||
Number of Holdings |
34 | |||
2022 Annual Turnover Rate |
19.65% | |||
Net Asset Value |
$8.49 | |||
Market Price |
$7.97 | |||
Average Market Capitalization 1 |
$3,330 million | |||
Weighted Average P/E Ratio 2,3 |
8.82x | |||
Weighted Average P/B Ratio 2 |
1.69x | |||
Weighted Average Yield |
2.67% | |||
Weighted Average ROIC |
27.63% | |||
Weighted Average Leverage Ratio |
1.90x | |||
Holdings ≥ 75% of Total Investments |
19 | |||
U.S. Investments (% of Net Assets) |
74.18% | |||
Non-U.S. Investments (% of Net Assets) |
25.82% |
1 |
Geometric Average. This weighted calculation uses each portfolio holding’s market cap in a way designed to not skew the effect of very large or small holdings; instead, it aims to better identify the portfolio’s center, which Sprott believes offers a more accurate measure of average market cap than a simple mean or median. |
2 |
Harmonic Average. This weighted calculation evaluates a portfolio as if it were a single stock and measures it overall. It compares the total market value of the portfolio to the portfolio’s share in the earnings or book value, as the case may be, of its underlying stocks. |
3 |
The Fund’s P/E ratio calculation excludes companies with zero or negative earnings (6.91% of holdings as of 12/31/2022). |
MANAGER’S DISCUSSION (Unaudited) |
PERFORMANCE REVIEW (Unaudited) | SYMBOLS MARKET PRICE: NAV: |
Growth of $10,000 (as of December 31, 2022)
Comparison of Change in Value of $10,000 Investment in the Fund and the performance of the Fund’s benchmark index
This chart assumes an initial gross investment of $10,000 made on 10/31/1996. Returns shown do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. Returns shown include the reinvestment of all dividends and other distributions. Past performance is not predictive of future performance. Investment return and principal value will fluctuate so that your shares, when redeemed, may be worth more or less than their original cost. The performance included in the chart does not reflect the deduction of taxes on Fund distributions.
The Russell 3000 Index is a capitalization-weighted index measuring the performance of the largest 3,000 U.S. companies representing approximately 98% of the investable U.S. equity market. The Russell 3000 Index is constructed to provide a comprehensive, unbiased and stable barometer of the broad market and is completely reconstituted annually to ensure new and growing equities are reflected. Returns include the reinvestment of all dividends. The performance of an index does not represent exactly any particular investment, as you cannot invest directly in an index.
YEAR |
FUND (NAV) |
|||
2022 |
0.1 | |||
2021 |
22.9 | |||
2020 |
6.8 | |||
2019 |
32.7 | |||
2018 |
-17.0 | |||
2017 |
18.5 | |||
2016 |
24.8 | |||
2015 |
-11.1 | |||
2014 |
0.3 | |||
2013 |
19.7 | |||
2012 |
11.4 | |||
2011 |
-10.5 |
YEAR |
FUND (NAV) |
|||
2010 |
21.8 | |||
2009 |
54.0 | |||
2008 |
-42.7 | |||
2007 |
12.2 | |||
2006 |
15.8 | |||
2005 |
13.7 | |||
2004 |
29.3 | |||
2003 |
54.3 | |||
2002 |
-12.5 | |||
2001 |
10.0 | |||
2000 |
20.9 | |||
1999 |
8.7 |
HISTORY |
AMOUNT REINVESTED |
PURCHASE PRICE 1 |
SHARES |
NAV VALUE 2 |
MARKET VALUE 2 |
|||||||||||||||||
10/31/96 | Initial Purchase |
$ | 4,375 | $ | 4.375 | 1,000 | $ | 5,280 | $ | 4,375 | ||||||||||||
12/31/96 | 5,520 | 4,594 | ||||||||||||||||||||
12/5/97 | Distribution $0.53 |
5.250 | 101 | 6,650 | 5,574 | |||||||||||||||||
12/31/98 | 6,199 | 5,367 | ||||||||||||||||||||
12/6/99 | Distribution $0.15 |
4.750 | 34 | 6,742 | 5,356 | |||||||||||||||||
12/6/00 | Distribution $0.34 |
5.563 | 69 | 8,151 | 6,848 | |||||||||||||||||
12/6/01 | Distribution $0.15 |
6.010 | 28 | 8,969 | 8,193 | |||||||||||||||||
12/6/02 | Distribution $0.09 |
5.640 | 19 | 7,844 | 6,956 | |||||||||||||||||
12/8/03 | Distribution $0.62 |
8.250 | 94 | 12,105 | 11,406 | |||||||||||||||||
2004 | Annual distribution total $1.74 |
9.325 | 259 | 15,639 | 16,794 | |||||||||||||||||
5/6/05 | Rights offering |
2,669 | 8.340 | 320 | ||||||||||||||||||
2005 | Annual distribution total $1.21 |
9.470 | 249 | 21,208 | 20,709 | |||||||||||||||||
2006 | Annual distribution total $1.57 |
9.860 | 357 | 24,668 | 27,020 | |||||||||||||||||
2007 | Annual distribution total $2.01 |
9.159 | 573 | 27,679 | 27,834 | |||||||||||||||||
2008 | Annual distribution total $0.47 3 |
6.535 | 228 | 15,856 | 15,323 | |||||||||||||||||
3/11/09 | Distribution $0.09 3 |
3.830 | 78 | 24,408 | 21,579 | |||||||||||||||||
12/31/10 | 29,726 | 25,806 | ||||||||||||||||||||
2011 | Annual distribution total $0.41 3 |
6.894 | 207 | 26,614 | 22,784 | |||||||||||||||||
2012 | Annual distribution total $0.46 |
6.686 | 255 | 29,652 | 25,549 | |||||||||||||||||
2013 | Annual distribution total $0.40 |
7.222 | 219 | 35,501 | 31,166 | |||||||||||||||||
2014 | Annual distribution total $0.42 |
7.890 | 222 | 35,617 | 31,348 | |||||||||||||||||
2015 | Annual distribution total $0.44 |
6.655 | 296 | 31,657 | 26,726 | |||||||||||||||||
2016 | Annual distribution total $0.40 |
6.609 | 287 | 36,709 | 31,423 | |||||||||||||||||
2017 | Annual distribution total $0.52 |
7.603 | 345 | 46,794 | 41,502 | |||||||||||||||||
2018 | Annual distribution total $0.69 |
6.782 | 565 | 38,836 | 33,669 | |||||||||||||||||
2019 | Annual distribution total $0.46 |
6.870 | 403 | 51,523 | 45,688 | |||||||||||||||||
2020 | Annual distribution total $0.55 |
6.038 | 603 | 55,033 | 46,996 | |||||||||||||||||
2021 | Annual distribution total $0.76 |
8.183 | 633 | 67,517 | 64,018 | |||||||||||||||||
2022 | Year-to-date |
7.965 | 500 | 67,448 | 63,317 | |||||||||||||||||
12/31/2022 |
$ |
7,044 |
7,944 |
1 |
The purchase price used for annual distribution totals is a weighted average of the distribution reinvestment prices for the year. |
2 |
Values are stated as of December 31 of the year indicated, after reinvestment of distributions. |
3 |
Includes a return of capital. |
Sprott Focus Trust |
December 31, 2022 |
Schedule of Investments |
||||||||
Common Stocks – 96.9% |
||||||||
SHARES |
VALUE |
|||||||
CONSUMER DISCRETIONARY – 8.7% |
||||||||
AUTOMOBILES – 4.0% |
||||||||
Thor Industries, Inc. 1 |
135,000 | $ |
10,191,150 |
|||||
SPECIALTY RETAIL – 4.7% |
||||||||
Buckle, Inc. (The) |
265,000 | 12,017,750 |
||||||
Total (Cost $16,512,309) |
22,208,900 |
|||||||
CONSUMER STAPLES – 4.0% |
||||||||
FOOD PRODUCTS – 4.0% |
||||||||
Cal-Maine Foods, Inc. |
185,000 | 10,073,250 |
||||||
Total (Cost $6,500,639) |
10,073,250 |
|||||||
ENERGY – 12.3% |
||||||||
ENERGY EQUIPMENT & SERVICES – 9.7% |
||||||||
Helmerich & Payne, Inc. |
235,000 | 11,648,950 | ||||||
Pason Systems, Inc. 1 |
980,000 | 11,537,075 | ||||||
Smart Sand, Inc. 2 |
750,000 | 1,342,500 | ||||||
24,528,525 |
||||||||
OIL, GAS & CONSUMABLE FUELS – 2.6% |
||||||||
Exxon Mobil Corp. |
60,000 | 6,618,000 |
||||||
Total (Cost $17,607,391) |
31,146,525 |
|||||||
FINANCIALS – 15.0% |
||||||||
CAPITAL MARKETS – 11.4% |
||||||||
Artisan Partners Asset Management, Inc. |
305,000 | 9,058,500 | ||||||
Ashmore Group plc |
1,500,000 | 4,341,340 | ||||||
Federated Hermes, Inc. |
325,000 | 11,800,750 | ||||||
Value Partners Group Ltd. |
10,000,000 | 3,689,729 | ||||||
28,890,319 |
||||||||
DIVERSIFIED FINANCIAL SERVICES – 3.6% |
||||||||
Berkshire Hathaway, Inc. 2 |
30,000 | 9,267,000 |
||||||
Total (Cost $34,413,931) |
38,157,319 |
|||||||
INDUSTRIALS – 5.7% |
||||||||
AEROSPACE & DEFENSE – 4.2% |
||||||||
AerSale Corp. 2 |
655,000 | 10,624,100 |
||||||
MARINE – 1.5% |
||||||||
Clarkson plc |
100,000 | 3,910,954 |
||||||
Total (Cost $9,013,316) |
14,535,054 |
|||||||
INFORMATION TECHNOLOGY – 5.5% |
||||||||
ELECTRONIC EQUIPMENT, INSTRUMENTS & COMPONENTS – 4.1% |
||||||||
Vishay Intertechnology, Inc. |
480,000 | 10,353,600 |
||||||
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT – 1.4% |
||||||||
Cirrus Logic, Inc. 2 |
45,000 | 3,351,600 | ||||||
Lam Research Corp. |
500 | 210,150 | ||||||
3,561,750 |
||||||||
Total (Cost $12,727,831) |
13,915,350 |
Schedule of Investments |
||||||||
SHARES |
VALUE |
|||||||
MATERIALS – 37.4% |
||||||||
CHEMICALS – 4.2% |
||||||||
Westlake Chemical Corp. |
105,000 | $ |
10,766,700 |
|||||
METALS & MINING – 33.2% |
||||||||
Agnico Eagle Mines Ltd. |
160,000 | 8,318,400 | ||||||
Barrick Gold Corp. |
250,000 | 4,295,000 | ||||||
Centamin plc |
3,200,000 | 4,367,695 | ||||||
DDH1 Ltd. |
12,000,000 | 7,271,480 | ||||||
Gemfields Group Ltd. 1 |
13,500,000 | 3,058,927 | ||||||
Major Drilling Group International, Inc. 2 |
1,000,000 | 7,769,572 | ||||||
Nucor Corp. 1 |
85,000 | 11,203,850 | ||||||
Pan American Silver Corp. |
200,000 | 3,268,000 | ||||||
Reliance Steel & Aluminum Co. |
57,500 | 11,640,300 | ||||||
Schnitzer Steel Industries, Inc. |
260,000 | 7,969,000 | ||||||
Seabridge Gold, Inc. 2 |
300,000 | 3,774,000 | ||||||
Sims Ltd. 1 |
13,500 | 120,316 | ||||||
Steel Dynamics, Inc. |
115,000 | 11,235,500 | ||||||
84,292,040 |
||||||||
Total (Cost $74,312,792) |
95,058,740 |
|||||||
REAL ESTATE – 8.3% |
||||||||
REAL ESTATE MANAGEMENT & DEVELOPMENT – 8.3% |
||||||||
FRP Holdings, Inc. 2 |
120,000 | 6,463,200 | ||||||
Kennedy-Wilson Holdings, Inc. |
580,000 | 9,123,400 | ||||||
Marcus & Millichap, Inc. |
160,000 | 5,512,000 | ||||||
21,098,600 |
||||||||
Total (Cost $17,022,129) |
21,098,600 |
|||||||
TOTAL COMMON STOCKS |
||||||||
(Cost $188,110,338) |
246,193,738 |
|||||||
REPURCHASE AGREEMENT – 2.9% |
||||||||
Fixed Income Clearing Corporation, 1.28 % dated 12/30/22, due 01/03/23, maturity value $7,501,957.10 (collateralized by obligations of various U.S. Treasury Note, 0.25% due 07/31/25, valued at $7,650,954.52) | 7,500,890 | |||||||
Total (Cost $7,500,890) |
7,500,890 |
|||||||
SECURITIES LENDING COLLATERAL – 0.3% |
||||||||
State Street Navigator Securities Lending Government Money Market Portfolio 3 |
840,210 | 840,210 | ||||||
Total (Cost $840,210) |
840,210 |
|||||||
TOTAL INVESTMENTS – 100.1% |
||||||||
(Cost $196,451,438) |
254,534,838 | |||||||
LIABILITIES IN EXCESS OF OTHER ASSETS – (0.1)% |
(340,753 | ) | ||||||
NET ASSETS – 100.0% |
$ |
254,194,085 |
1 |
Security (or a portion of the security) is on loan. As of December 31, 2022, the market value of securities loaned was $22,277,825. The loaned securities were secured with cash collateral of $840,210 and non-cash collateral with a value of $22,067,000. The non-cash collateral received consists of equity securities, and is held for the benefit of the Fund at the Fund’s custodian. The Fund cannot repledge or resell this collateral. Collateral is calculated based on prior day’s prices. |
2 |
Non-Income producing. |
3 |
Represents an investment of securities purchased from cash collateral received from lending of portfolio securities. |
10 | 2022 Annual Report to Stockholders |
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS |
Sprott Focus Trust |
December 31, 2022 |
ASSETS: |
||||
Investments at value (cost $188,950,548) |
$ | 247,033,948 | ||
Repurchase agreements (cost $7,500,890) |
7,500,890 | |||
Foreign currency at value (cost $345,341) |
355,030 | |||
Cash |
25,000 | |||
Receivable for investments sold |
674,839 | |||
Receivable for dividends and interest |
283,796 | |||
Receivable for securities lending income |
3,522 | |||
Total Assets |
255,877,025 |
|||
LIABILITIES: |
||||
Obligation to return securities lending collateral |
840,210 | |||
Payable for investments purchased |
536,275 | |||
Payable for investment advisory fee |
223,418 | |||
Audit fees |
37,200 | |||
Legal fees |
5,535 | |||
Administration fees |
4,505 | |||
Accrued expenses |
35,797 | |||
Total Liabilities |
1,682,940 |
|||
Net Assets |
$ |
254,194,085 |
||
ANALYSIS OF NET ASSETS: |
||||
Paid-in capital - $0.001 par value per share; shares outstanding ( shares authorized) |
$ | 194,365,177 | ||
Distributable earnings |
59,828,908 | |||
Net Assets (net asset value per share $8.49) |
$ |
254,194,085 |
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS |
2022 Annual Report to Stockholders | 11 |
Sprott Focus Trust |
Year Ended December 31, 2022 |
INVESTMENT INCOME: |
| |||
INCOME: |
| |||
Dividends 1 |
$ | 6,733,438 | ||
Interest |
29,545 | |||
Securities lending |
28,974 | |||
Total Income |
6,791,957 |
|||
EXPENSES: |
| |||
Investment advisory fees |
2,566,845 | |||
Other expenses |
103,987 | |||
Custody and transfer agent fees |
68,043 | |||
Stockholders reports |
66,655 | |||
Administrative fees |
39,454 | |||
Audit fees |
37,181 | |||
Legal fees |
32,769 | |||
Directors’ fees |
20,968 | |||
Total expenses |
2,935,902 |
|||
Compensating balance credits |
(355 | ) | ||
Net expenses |
2,935,547 |
|||
Net Investment Income (loss) |
3,856,410 |
|||
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCY: |
| |||
NET REALIZED GAIN (LOSS): |
| |||
Investments |
8,981,710 | |||
Foreign currency transactions |
(34,563 | ) | ||
NET CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION): |
| |||
Investments and foreign currency translations |
(13,614,592 | ) | ||
Other assets and liabilities denominated in foreign currency |
(39 | ) | ||
Net realized and unrealized gain (loss) on investments and foreign currency |
(4,667,484 |
) | ||
NET INCREASE (DECREASE) IN NET ASSETS FROM INVESTMENT OPERATIONS |
$ |
(811,074 |
) |
1 |
Net of foreign taxes withheld of $120,904. |
12 | 2022 Annual Report to Stockholders |
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS |
Sprott Focus Trust |
December 31, 2022 |
YEAR ENDED DEC. 31, 2022 |
YEAR ENDED DEC. 31, 2021 |
|||||||
INVESTMENT OPERATIONS: |
||||||||
Net investment income (loss) |
$ | 3,856,410 | $ | 4,587,687 | ||||
Net realized gain (loss) on investments and foreign currency |
8,947,147 | 21,186,398 | ||||||
Net change in unrealized appreciation (depreciation) on investments and foreign currency |
(13,614,631 | ) | 25,916,794 | |||||
Net increase (decrease) in net assets from investment operations |
(811,074 |
) |
51,690,879 |
|||||
DISTRIBUTIONS: |
||||||||
Total Distributions |
(15,842,950 |
) |
(22,028,451 |
) | ||||
CAPITAL SHARE TRANSACTIONS: |
||||||||
Reinvestment of distributions |
7,095,171 | 13,406,853 | ||||||
Shares Redeemed |
(4,934,619 | ) | (17,282,698 | ) | ||||
Total capital stock transactions |
2,160,552 |
(3,875,845 |
) | |||||
Net increase (decrease) in Net Assets |
(14,493,472 |
) |
25,786,583 |
|||||
NET ASSETS |
||||||||
Beginning of period |
268,687,557 |
242,900,974 |
||||||
End of period |
$ |
254,194,085 |
$ |
268,687,557 |
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS |
2022 Annual Report to Stockholders | 13 |
Sprott Focus Trust |
December 31, 2022 |
YEAR ENDED DEC. 31, 2022 |
YEAR ENDED DEC. 31, 2021 |
YEAR ENDED DEC. 31, 2020 |
YEAR ENDED DEC. 31, 2019 |
YEAR ENDED DEC. 31, 2018 |
||||||||||||||||
Net Asset Value, Beginning of Period |
$ |
9.07 |
$ |
8.08 |
$ |
8.30 |
$ |
6.69 |
$ |
8.93 |
||||||||||
INVESTMENT OPERATIONS: |
| |||||||||||||||||||
Net investment income (loss) 1 |
0.13 | 0.16 | 0.15 | 0.12 | 0.17 | |||||||||||||||
Net realized and unrealized gain (loss) on investments and foreign currency |
(0.16 | ) | 1.57 | 0.24 | 1.99 | (1.67 | ) | |||||||||||||
Total investment operations |
(0.03 |
) |
1.73 |
0.39 |
2.11 |
(1.50 |
) | |||||||||||||
DISTRIBUTIONS TO COMMON STOCKHOLDERS: |
| |||||||||||||||||||
Net investment income 1 |
(0.10 | ) | (0.35 | ) | (0.33 | ) | (0.07 | ) | (0.24 | ) | ||||||||||
Net realized gain on investments and foreign currency 1 |
(0.44 | ) | (0.41 | ) | (0.22 | ) | (0.39 | ) | (0.45 | ) | ||||||||||
Total distributions to Common Stockholders |
(0.54 |
) |
(0.76 |
) |
(0.55 |
) |
(0.46 |
) |
(0.69 |
) | ||||||||||
CAPITAL STOCK TRANSACTIONS: |
| |||||||||||||||||||
Effect of share repurchase program |
0.01 | 0.06 | 0.00 | 2 |
— | — | ||||||||||||||
Effect of reinvestment of distributions by Common Stockholders 1 |
(0.02 | ) | (0.04 | ) | (0.06 | ) | (0.04 | ) | (0.05 | ) | ||||||||||
Total capital stock transactions |
(0.01 |
) |
0.02 |
(0.06 |
) |
(0.04 |
) |
(0.05 |
) | |||||||||||
Net Asset Value, End of Period |
$ |
8.49 |
$ |
9.07 |
$ |
8.08 |
$ |
8.30 |
$ |
6.69 |
||||||||||
Market Value, End of Period |
$ |
7.97 |
$ |
8.60 |
$ |
6.90 |
$ |
7.36 |
$ |
5.78 |
||||||||||
TOTAL RETURN: 3 |
| |||||||||||||||||||
Net Asset Value |
0.08 | % | 22.93 | % | 6.80 | % | 32.67 | % | (17.01 | )% | ||||||||||
Market Value |
(0.91 | )% | 36.49 | % | 2.86 | % | 36.17 | % | (19.15 | )% | ||||||||||
RATIOS BASED ON AVERAGE NET ASSETS APPLICABLE TO COMMON STOCKHOLDERS: |
||||||||||||||||||||
Investment Advisory fee expense |
1.00 | % | 1.00 | % | 1.00 | % | 1.00 | % | 1.00 | % | ||||||||||
Other operating expenses |
0.14 | % | 0.12 | % | 0.18 | % | 0.11 | % | 0.24 | % | ||||||||||
Net expenses |
1.14 |
% |
1.12 |
% |
1.18 |
% |
1.11 |
% |
1.20 |
% | ||||||||||
Expenses prior to balance credits |
1.14 | % | 1.12 | % | 1.18 | % | 1.11 | % | 1.24 | % | ||||||||||
Net investment income (loss) |
1.50 | % | 1.70 | % | 2.04 | % | 1.57 | % | 2.00 | % | ||||||||||
SUPPLEMENTAL DATA: |
| |||||||||||||||||||
Net Assets Applicable to Common Stockholders, End of Period (in thousands) |
$ | 254,194 | $ | 268,688 | $ | 242,901 | $ | 235,322 | $ | 181,749 | ||||||||||
Portfolio Turnover Rate |
20 | % | 22 | % | 35 | % | 30 | % | 31 | % |
1 |
Calculated using average shares outstanding during the period. |
2 |
Represents less than $0.005. |
3 |
The Net Asset Value Total Return is calculated assuming a purchase of Common Stock on the opening of the first business day and a sale on the closing of the last business day of each period using net asset value. Dividends and distributions are assumed for the purposes of this calculation to be reinvested at prices obtained under the Fund’s Distribution Reinvestment and Cash Purchase Plan. Market Value Total Return is calculated on the same basis, except that the Fund’s market value is used on the purchase and sale dates instead of net asset value. |
14 | 2022 Annual Report to Stockholders |
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS |
Level 1 |
quoted prices in active markets for identical securities. |
Level 2 |
other significant observable inputs (including quoted prices for similar securities, foreign securities that may be fair valued and repurchase agreements). |
Level 3 |
significant unobservable inputs (including last trade price before trading was suspended, or at a discount thereto for lack of marketability or otherwise, market price information regarding other securities, information received from the company and/or published documents, including SEC filings and financial statements, or other publicly available information). |
Level 1 |
Level 2 |
Level 3 |
Total |
|||||||||||||
Common Stocks |
$ | 246,193,738 | $ | — | $ | — | $ | 246,193,738 | ||||||||
Repurchase Agreements |
— | 7,500,890 | — | 7,500,890 | ||||||||||||
Securities Lending Collateral |
840,210 | — | — | 840,210 | ||||||||||||
Total |
$ | 247,033,948 | $ | 7,500,890 | $ | — | $ | 254,534,838 |
For year ended December 31, 2022 |
For year ended December 31, 2021 |
|||||||
Dollar amount repurchased |
$ | 4,934,619 | $ | 17,282,698 | ||||
Shares repurchased |
563,212 | 2,099,831 | ||||||
Average price per share (including commission) |
$ | 8.68 | $ | 8.29 | ||||
Weighted average discount to NAV |
5.09 | % | 9.89 | % |
DISTRIBUTIONS PAID FROM INCOME: |
2022 |
2021 |
||||||
Ordinary Income |
$ | 5,414,264 | $ | 15,255,974 | ||||
Long-term capital gain |
10,428,686 | 6,772,477 | ||||||
$ | 15,842,950 | $ | 22,028,451 |
Net unrealized appreciation (depreciation) |
$ | 58,989,398 | ||
Undistributed long-term capital gain |
839,510 | |||
$ | 59,828,908 |
Market Value of Loaned Securities |
Market Value of Cash Collateral |
Market Value of Non Cash Collateral |
Total Collateral |
|||||||||
$22,277,825 | $ | 840,210 | $ | 22,067,000 | $ | 22,907,210 |
Gross Asset Amounts Presented in Statement of Assets and Liabilities (a) |
Financial Instrument |
Collateral Received (b) |
Net Amount (not less than $0) |
|||||||||
$22,277,825 | $ | — | $ | (22,277,825 | ) | $ | — |
(a) |
Represents market value of loaned securities at year end. |
(b) |
The actual collateral received is greater than the amount shown here due to collateral requirements of the security lending agreement. |
1 |
Mr. George is an “interested person”, as defined in Section 2(a)(19) of the 1940 Act, of the Fund due to several relationships including his position as President of Sprott, Inc., the parent company of Sprott Asset Management USA Inc., the Fund’s sub-adviser. |
• | nature, extent and quality of services to be provided by the Advisers, including background information on the qualifications and experience of key professional of the Advisers personnel that provide services to the Fund; |
• | investment performance of the Fund, including comparative performance information for registered investment companies similar to the Fund; |
• | fees charged to and expenses of the Fund, including comparative fee and expense information for registered investment companies similar to the Fund; |
• | costs of the services provided, and profits realized by the Advisers; |
• | and economies of scale. |
• | Whitney George’s long portfolio management tenure with the Fund and its historical investment performance; |
• | Mr. George’s significant ownership and, thus, stake in the Fund; and |
• | the Advisers’ experience in managing pooled investment vehicles and accounts. |
• | the Fund’s future operating results |
• | the prospects of the Fund’s portfolio companies |
• | the impact of investments that the Fund has made or may make |
• | the dependence of the Fund’s future success on the general economy and its impact on the companies and industries in which the Fund invests, and |
• | the ability of the Fund’s portfolio companies to achieve their objectives. |
Proposal 1: To elect two Directors to the Fund’s Board of Directors: W. Whitney George and James R. Pierce.
FOR | AGAINST | ABSTAIN | BROKER NON-VOTES | |
W. Whitney George | 25,352,898 | 577,328 | 0 | 0 |
James R. Pierce | 25,352,898 | 577,328 | 0 | 0 |
At the annual meeting of stockholders of Sprott Focus Trust, Inc., held on September 7, 2022, stockholders of record as of the close of business on August 4, 2022, voted to approve the following proposal:
Proposal 1: To elect two Directors to the Fund’s Board of Directors: Leslie Barrett and Michael Clark.
FOR | AGAINST | ABSTAIN | BROKER NON-VOTES | |
Leslie Barrett | 20,195,500 | 112,044 | 0 | 0 |
Michael Clark | 20,209,858 | 97,686 | 0 | 0 |
The Director terms of W. Whitney George, James R. Pierce and Peyton Tansill Muldoon expire in 2023, 2024 and 2024, respectively.
DISTRIBUTION INFORMATION
The following 19(a) Notice presents the Funds’ most current distribution information as of November 30, 2022 as required by a certain exempted regulatory relief the Fund has received.
Because the ultimate tax character of your distributions depends on the Funds’ performance for its entire fiscal year (which is the calendar year for the Funds) as well as certain fiscal year-end (FYE) tax adjustments, estimated distribution source information you receive with each distribution may differ from the tax information reported to you on your Funds’ IRS Form 1099 statement.
DISTRIBUTION INFORMATION – AS OF DECEMBER 31, 2022
This notice provides shareholders with information regarding fund distributions, as required by current securities laws. You should not draw any conclusions about the Fund's investment performance from the amount of this distribution or from the terms of the Funds’ Managed Distribution Policy.
Each Fund may in certain periods distribute more than its income and net realized capital gains, and the Funds currently estimate that they have done so for the fiscal year-to-date period. In such instances, a portion of the distribution may be a return of capital. A return of capital may occur, for example, when some or all of the money that you invested in the Fund is paid back to you. A return of capital distribution does not necessarily reflect the Fund's investment performance. For example, if the Fund generates a positive total return during a reporting period that is commensurate with its distribution rate, and realizes net gains by selling portfolio securities, a substantial portion of its distribution will likely be characterized as capital gains; but if the Fund generated such commensurate returns but instead did not realize net gains by selling portfolio securities during that period, then a substantial portion of its distributions in most cases would largely be characterized as a “return of capital”, despite the fact that the distributions were commensurate with those positive returns. Neither a capital gain distribution nor a return of capital distribution should be confused with “yield” or “income.”
The amounts and sources of distributions set forth below are only estimates and are not being provided for tax reporting purposes. The actual amounts and sources of the amounts for tax reporting purposes will depend upon the Fund's investment experience during the remainder of its fiscal year and may be subject to changes based on tax regulations. The Fund will send you a Form 1099-DIV for the calendar year that will tell you how to report these distributions for federal income tax purposes. More details about the Funds’ distributions and the basis for these estimates are available on www.sprott.com.
[The following table provides estimates of the Fund's distribution sources, reflecting year-to-date cumulative experience through the latest month-end. The Fund attributes these estimates equally to each regular distribution throughout the year. Consequently, the estimated information shown below is for the current distribution, and also represents an updated estimate for all prior months in the year.]
APPENDIX
2022 19(a) Notices
SPROTT FOCUS TRUST, INC.
Sprott
Asset Management LP Suite 2600, South Tower Royal Bank Plaza 200 Bay Street Toronto, Ontario Canada M5J 2J1 Tel: (855) 943-8099 Tel: (203) 636-0977 |
Notification
of Sources of Distributions Pursuant to Section 19(a) of the Investment Company Act of 1940 |
Quarterly Distribution for Sprott Focus Trust, Inc.
Sprott
Focus Trust, Inc. (NASDAQ-FUND) CUSIP 85208J109 |
Quarterly distributions in amounts listed in the table below are to be paid on the Common Stock of Sprott Focus Trust, Inc. (the “Fund” or “FUND”). The distribution, optionally payable in additional shares of Common Stock, or in cash by specific stockholder election, is to be paid on March 25, 2022 to stockholders of record at the close of business on March 14, 2022 (ex-dividend on March 11, 2022). The price of shares issued for reinvestment will be determined on March 18, 2022.
Distribution | |
Per Share | |
FUND | $0.1359 |
The reinvestment price is determined on the valuation date by the lower of the last reported sale price at the close of regular trading on the Fund’s listing Exchange or the net asset value (“NAV”) per share on the valuation date (but not less than 95% of the last reported sale price on that date).
The Fund’s estimated sources of the distribution to be paid on March 25, 2022 and for 2022 year-to-date are as follows:
Estimated Allocations as of February 28, 2022
Distribution | Net Investment | Net Realized | Net Realized | ||
Per Share | Income | Short-Term Gains | Long-Term Gains | Return of Capital | |
FUND | $ 0.1359 | $ 0.0066 (5%) | $ 0.0000 (0%) | $ 0.1293 (95%) | $ 0.0000 (0%) |
Estimated Allocations for 2022 through February 28, 2022
Distribution | Net Investment | Net Realized | Net Realized | ||
Per Share | Income | Short-Term Gains | Long-Term Gains | Return of Capital | |
FUND | $ 0.1359 | $ 0.0066 (5%) | $ 0.0000 (0%) | $ 0.1293 (95%) | $ 0.0000 (0%) |
You should not draw any conclusions about the Fund’s investment performance from the amount of the current distribution or from the terms of the Fund’s Distribution Policy. The amounts and sources of distributions reported herein are only estimates and are not being provided for tax reporting purposes. The actual amounts and sources of the amounts for tax reporting purposes will depend upon the Fund’s investment experience during the remainder of its fiscal year and may be subject to changes based on tax regulations. The Fund will send you a Form 1099-DIV for the calendar year that will tell you how to report these distributions for federal income tax purposes.
Fund Performance and Distribution Rate Information:
Average Annual Total | Annualized Current | Cumulative Total Return | Cumulative Fiscal Year | |
Return (in relation to NAV | Distribution Rate | (in relation to NAV for the | Distribution Rate (as a | |
for the 5-year Period | (expressed as a Percentage | Fiscal Year through | Percentage of NAV as of | |
Ending on 2/28/2022)1 | of NAV as of 2/28/2022)2 | 2/28/2022)3 | 2/28/2022)4 | |
FUND | 10.53% | 5.95% | 0.77% | 1.49% |
1 | Average Annual Total Return in relation to NAV represents the compound average of the Annual NAV Total Returns of the Fund for the five year period ended February 28, 2022. Annual NAV Total Return is the percentage change in the Fund’s NAV over a year, assuming reinvestment of distributions paid. |
2 | The annualized Current Distribution Rate is the current fiscal period’s distribution rate annualized as a percentage of the Fund’s NAV as of February 28, 2022. |
3 | Cumulative Total Return is the percentage change in the Fund’s NAV from December 31, 2021 to February 28, 2022, assuming reinvestment of distributions paid. |
4 | The Cumulative Fiscal Year Distribution Rate is the dollar value of distributions for the fiscal year period (January 1, 2022 to February 28, 2022), as a percentage of the Fund’s NAV as of February 28, 2022. |
SPROTT FOCUS TRUST, INC.
Sprott
Asset Management LP Suite 2600, South Tower Royal Bank Plaza 200 Bay Street Toronto, Ontario Canada M5J 2J1 Tel: (855) 943-8099 Tel: (203) 636-0977 |
Notification
of Sources of Distributions Pursuant to Section 19(a) of the Investment Company Act of 1940 |
Quarterly Distribution for Sprott Focus Trust, Inc.
Sprott
Focus Trust, Inc. (NASDAQ-FUND) CUSIP 85208J109 |
Quarterly distributions in amounts listed in the table below are to be paid on the Common Stock of Sprott Focus Trust, Inc. (the “Fund” or “FUND”). The distribution, optionally payable in additional shares of Common Stock, or in cash by specific stockholder election, is to be paid on June 24, 2022 to stockholders of record at the close of business on June 13, 2022 (ex-dividend on June 10, 2022). The price of shares issued for reinvestment will be determined on June 17, 2022.
Distribution | |
Per Share | |
FUND | $0.1389 |
The reinvestment price is determined on the valuation date by the lower of the last reported sale price at the close of regular trading on the Fund’s listing Exchange or the net asset value (“NAV”) per share on the valuation date (but not less than 95% of the last reported sale price on that date).
The Fund’s estimated sources of the distribution to be paid on June 24, 2022 and for 2022 year-to-date are as follows:
Estimated Allocations as of May 31, 2022
Distribution | Net Investment | Net Realized | Net Realized | ||
Per Share | Income | Short-Term Gains | Long-Term Gains | Return of Capital | |
FUND | $ 0.1389 | $ 0.0506 (36%) | $ 0.0688 (50%) | $ 0.0195 (14%) | $ 0.0000 (0%) |
Estimated Allocations for 2022 through May 31, 2022
Distribution | Net Investment | Net Realized | Net Realized | ||
Per Share | Income | Short-Term Gains | Long-Term Gains | Return of Capital | |
FUND | $ 0.2748 | $ 0.0571 (21%) | $ 0.0687 (25%) | $ 0.1490 (54%) | $ 0.0000 (0%) |
You should not draw any conclusions about the Fund’s investment performance from the amount of the current distribution or from the terms of the Fund’s Distribution Policy. The amounts and sources of distributions reported herein are only estimates and are not being provided for tax reporting purposes. The actual amounts and sources of the amounts for tax reporting purposes will depend upon the Fund’s investment experience during the remainder of its fiscal year and may be subject to changes based on tax regulations. The Fund will send you a Form 1099-DIV for the calendar year that will tell you how to report these distributions for federal income tax purposes.
Fund Performance and Distribution Rate Information:
Average Annual Total | Annualized Current | Cumulative Total Return | Cumulative Fiscal Year | |
Return (in relation to NAV | Distribution Rate | (in relation to NAV for the | Distribution Rate (as a | |
for the 5-year Period | (expressed as a Percentage | Fiscal Year through | Percentage of NAV as of | |
Ending on 5/31/2022)1 | of NAV as of 5/31/2022)2 | 5/31/2022)3 | 5/31/2022)4 | |
FUND | 10.60% | 6.07% | 2.43% | 3.00% |
1 | Average Annual Total Return in relation to NAV represents the compound average of the Annual NAV Total Returns of the Fund for the five year period ended May 31, 2022. Annual NAV Total Return is the percentage change in the Fund’s NAV over a year, assuming reinvestment of distributions paid. |
2 | The annualized Current Distribution Rate is the current fiscal period’s distribution rate annualized as a percentage of the Fund’s NAV as of May 31, 2022. |
3 | Cumulative Total Return is the percentage change in the Fund’s NAV from December 31, 2021 to May 31, 2022, assuming reinvestment of distributions paid. |
4 | The Cumulative Fiscal Year Distribution Rate is the dollar value of distributions for the fiscal year period (January 1, 2022 to May 31, 2022), as a percentage of the Fund’s NAV as of May 31, 2022. |
SPROTT FOCUS TRUST, INC.
Sprott
Asset Management LP Suite 2600, South Tower Royal Bank Plaza 200 Bay Street Toronto, Ontario Canada M5J 2J1 Tel: (855) 943-8099 Tel: (203) 636-0977 |
Notification
of Sources of Distributions Pursuant to Section 19(a) of the Investment Company Act of 1940 |
Quarterly Distribution for Sprott Focus Trust, Inc.
Sprott
Focus Trust, Inc. (NASDAQ-FUND) CUSIP 85208J109 |
Quarterly distributions in amounts listed in the table below are to be paid on the Common Stock of Sprott Focus Trust, Inc. (the “Fund” or “FUND”). The distribution, optionally payable in additional shares of Common Stock, or in cash by specific stockholder election, is to be paid on September 23, 2022 to stockholders of record at the close of business on September 12, 2022 (ex-dividend on September 9, 2022). The price of shares issued for reinvestment will be determined on September 16, 2022.
Distribution | |
Per Share | |
FUND | $0.1334 |
The reinvestment price is determined on the valuation date by the lower of the last reported sale price at the close of regular trading on the Fund’s listing Exchange or the net asset value (“NAV”) per share on the valuation date (but not less than 95% of the last reported sale price on that date).
The Fund’s estimated sources of the distribution to be paid on September 23, 2022 and for 2022 year-to-date are as follows:
Estimated Allocations as of August 31, 2022
Distribution | Net Investment | Net Realized | Net Realized | ||
Per Share | Income | Short-Term Gains | Long-Term Gains | Return of Capital | |
FUND | $ 0.1334 | $ 0.0195 (15%) | $ 0.0019 (1%) | $ 0.0107 (8%) | $ 0.1013 (76%) |
Estimated Allocations for 2022 through August 31, 2022
Distribution | Net Investment | Net Realized | Net Realized | ||
Per Share | Income | Short-Term Gains | Long-Term Gains | Return of Capital | |
FUND | $ 0.4082 | $ 0.0767 (19%) | $ 0.0707 (17%) | $ 0.1595 (39%) | $ 0.1013 (25%) |
You should not draw any conclusions about the Fund’s investment performance from the amount of the current distribution or from the terms of the Fund’s Distribution Policy. The amounts and sources of distributions reported herein are only estimates and are not being provided for tax reporting purposes. The actual amounts and sources of the amounts for tax reporting purposes will depend upon the Fund’s investment experience during the remainder of its fiscal year and may be subject to changes based on tax regulations. The Fund will send you a Form 1099-DIV for the calendar year that will tell you how to report these distributions for federal income tax purposes.
Fund Performance and Distribution Rate Information:
Average Annual Total | Annualized Current | Cumulative Total Return | Cumulative Fiscal Year | |
Return (in relation to NAV | Distribution Rate | (in relation to NAV for the | Distribution Rate (as a | |
for the 5-year Period | (expressed as a Percentage | Fiscal Year through | Percentage of NAV as of | |
Ending on 8/31/2022)1 | of NAV as of 8/31/2022)2 | 8/31/2022)3 | 8/31/2022)4 | |
FUND | 8.07% | 6.48% | -6.16% | 4.96% |
1 | Average Annual Total Return in relation to NAV represents the compound average of the Annual NAV Total Returns of the Fund for the five year period ended August 31, 2022. Annual NAV Total Return is the percentage change in the Fund’s NAV over a year, assuming reinvestment of distributions paid. |
2 | The annualized Current Distribution Rate is the current fiscal period’s distribution rate annualized as a percentage of the Fund’s NAV as of August 31, 2022. |
3 | Cumulative Total Return is the percentage change in the Fund’s NAV from December 31, 2021 to August 31, 2022, assuming reinvestment of distributions paid. |
4 | The Cumulative Fiscal Year Distribution Rate is the dollar value of distributions for the fiscal year period (January 1, 2022 to August 31, 2022), as a percentage of the Fund’s NAV as of August 31, 2022. |
SPROTT FOCUS TRUST, INC.
Sprott
Asset Management LP Suite 2600, South Tower Royal Bank Plaza 200 Bay Street Toronto, Ontario Canada M5J 2J1 Tel: (855) 943-8099 Tel: (203) 636-0977 |
Notification
of Sources of Distributions Pursuant to Section 19(a) of the Investment Company Act of 1940 |
Quarterly Distribution for Sprott Focus Trust, Inc.
Sprott
Focus Trust, Inc. (NASDAQ-FUND) CUSIP 85208J109 |
Quarterly distributions in amounts listed in the table below are to be paid on the Common Stock of Sprott Focus Trust, Inc. (the “Fund” or “FUND”). The distribution, optionally payable in additional shares of Common Stock, or in cash by specific stockholder election, is to be paid on December 22, 2022 to stockholders of record at the close of business on December 12, 2022 (ex-dividend on December 9, 2022). The price of shares issued for reinvestment will be determined on December 15, 2022.
Distribution | |
Per Share | |
FUND | $0.1276 |
The reinvestment price is determined on the valuation date by the lower of the last reported sale price at the close of regular trading on the Fund’s listing Exchange or the net asset value (“NAV”) per share on the valuation date (but not less than 95% of the last reported sale price on that date).
The Fund’s estimated sources of the distribution to be paid on December 22, 2022 and for 2022 year-to-date are as follows:
Estimated Allocations as of November 30, 2022
Distribution | Net Investment | Net Realized | Net Realized | ||
Per Share | Income | Short-Term Gains | Long-Term Gains | Return of Capital | |
FUND | $ 0.1276 | $ 0.0000 (0%) | $ 0.0000 (0%) | $ 0.1276 (100%) | $ 0.0000 (0%) |
Estimated Allocations for 2022 through November 30, 2022
Distribution | Net Investment | Net Realized | Net Realized | ||
Per Share | Income | Short-Term Gains | Long-Term Gains | Return of Capital | |
FUND | $ 0.5358 | $ 0.1454 (27%) | $ 0.0687 (13%) | $ 0.3218 (60%) | $ 0.0000 (0%) |
You should not draw any conclusions about the Fund’s investment performance from the amount of the current distribution or from the terms of the Fund’s Distribution Policy. The amounts and sources of distributions reported herein are only estimates and are not being provided for tax reporting purposes. The actual amounts and sources of the amounts for tax reporting purposes will depend upon the Fund’s investment experience during the remainder of its fiscal year and may be subject to changes based on tax regulations. The Fund will send you a Form 1099-DIV for the calendar year that will tell you how to report these distributions for federal income tax purposes.
Fund Performance and Distribution Rate Information:
Average Annual Total | Annualized Current | Cumulative Total Return | Cumulative Fiscal Year | |
Return (in relation to NAV | Distribution Rate | (in relation to NAV for the | Distribution Rate (as a | |
for the 5-year Period | (expressed as a Percentage | Fiscal Year through | Percentage of NAV as of | |
Ending on 11/30/2022)1 | of NAV as of 11/30/2022)2 | 11/30/2022)3 | 11/30/2022)4 | |
FUND | 8.37% | 5.73% | 3.26% | 6.02% |
1 | Average Annual Total Return in relation to NAV represents the compound average of the Annual NAV Total Returns of the Fund for the five year period ended November 30, 2022. Annual NAV Total Return is the percentage change in the Fund’s NAV over a year, assuming reinvestment of distributions paid. |
2 | The annualized Current Distribution Rate is the current fiscal period’s distribution rate annualized as a percentage of the Fund’s NAV as of November 30, 2022. |
3 | Cumulative Total Return is the percentage change in the Fund’s NAV from December 31, 2021 to November 30, 2022, assuming reinvestment of distributions paid. |
4 | The Cumulative Fiscal Year Distribution Rate is the dollar value of distributions for the fiscal year period (January 1, 2022 to November 30, 2022), as a percentage of the Fund’s NAV as of November 30, 2022. |
Item 2. Code(s) of Ethics. As of the end of the period covered by this report, the Registrant had adopted a code of ethics, as defined in Item 2 of Form N-CSR, applicable to its principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions. A copy of this code of ethics is filed as an exhibit to this Form N-CSR. No substantive amendments were approved or waivers were granted to this code of ethics during the period covered by this report.
Item 3. Audit Committee Financial Expert.
(a)(1) The Board of Directors of the Registrant has determined that it has an audit committee financial expert.
(a)(2) Michael W. Clark is designated by the Board of Directors as the Registrant’s Audit Committee Financial Expert. Mr. Clark is “independent” as defined under Item 3 of Form N-CSR.
Item 4. Principal Accountant Fees and Services.
(a) Audit Fees:
Year ended December 31, 2022 – $30,000
Year ended December 31, 2021 – $30,000
(b) Audit-Related Fees:
Year ended December 31, 2022 – $0
Year ended December 31, 2021 – $0
(c) Tax Fees:
Year ended December 31, 2022 – $7,200 – Preparation of tax returns
Year ended December 31, 2021 – $7,200 – Preparation of tax returns
(d) All Other Fees:
Year ended December 31, 2022 – $0
Year ended December 31, 2021 – $0
(e)(1) The Registrant has adopted policies and procedures requiring the pre-approval by the Audit Committee of audit and non-audit services provided to the Registrant by the Registrant’s independent registered public accounting firm, and the pre-approval of all audit and non-audit services provided to the Registrant’s investment adviser and any and any entity controlling, controlled by, or under common control with the investment adviser that provides ongoing services to the Registrant, to the extent that such services are directly related to the operations or financial reporting of the Registrant.
(e)(2) Not Applicable
(f) Not Applicable
(g) Year ended December 31, 2022 – $7,200
Year ended December 31, 2021 – $7,200
(h) No such services were rendered during 2022 or 2021.
Item 5. Audit Committee of Listed Registrants. The Registrant has a separately designated standing audit committee established in accordance with Section 3(a)(58)(A) of the Securities Exchange Act of 1934. Michael W. Clark, Peyton T. Muldoon, James R. Pierce, Jr., and Leslie Barrett are members of the Registrant’s audit committee.
Item 6. Investments.
(a) See Item 1.
(b) Not applicable.
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies. The Registrant’s Board has delegated all proxy voting decisions to Sprott Asset Management LP, the investment adviser to the Registrant (the “Adviser”). The Adviser has adopted written proxy voting policies and procedures for itself, the Fund, and any other client accounts for which the Adviser is responsible for voting proxies. From time to time, a vote may present a conflict between the interests of the Registrant’s shareholders, on the one hand, and those of the Adviser, or any affiliated person of the Registrant or the Adviser, on the other. If the Adviser becomes aware of any material conflict of interest in voting proxies with respect to the Registrant, the Adviser shall notify the Board of Directors of the Registrant and request the Board’s recommendations for protecting the best interests of Registrant’s shareholders.
PROXY VOTING POLICY AND PROCEDURES
I. | STATEMENT OF POLICY |
Proxy voting is an important right of shareholders and reasonable care and diligence must be undertaken to ensure that such rights are properly and timely exercised. When the Adviser has discretion to vote the proxies of its clients, it will vote those proxies in the best interest of its clients and in accordance with these policies and procedures.
II. | VOTING GUIDELINES |
In the absence of specific voting guidelines from the client, the Adviser will vote proxies in the best interests of each particular client, which may result in different voting results for proxies for the same issuer. The Adviser believes that voting proxies in accordance with the following guidelines is in the best interests of its clients.
Generally speaking, the Adviser will vote in favor of the following proxy proposals:
(i) | electing and fixing number of directors |
(ii) | appointing auditors |
(iii) | ratifying director actions |
(iv) | approving private placements exceeding a 25% threshold |
(v) | changing a registered address |
(vi) | authorizing directors to fix remuneration of auditors |
(vii) | approving private placements to insiders exceeding a 10% threshold |
(viii) | approving special resolutions to change the authorized capital of the company to an unlimited number of common shares without par value. |
The Adviser will generally vote against any proposal relating to stock option plans that:
(i) | exceed 5% of the common shares issued and outstanding at the time of grant over a three year period (on a non-diluted basis); |
(ii) | provide that the maximum number of common shares issuable pursuant to such plan be a “rolling” maximum that exceed 5% of the outstanding common shares at the date of the grant of applicable options; or |
(iii) | reprices the stock option. |
In certain cases, proxy votes may not be cast when the Adviser determines that it is not in the best interests of the client to vote such proxies.
The Adviser retains the discretion to depart from these polices on any particular proxy vote depending upon the facts and circumstances.
Item 8. Portfolio Managers of Closed-End Management Investment Companies.
(a)(1) Portfolio Managers of Closed-End Management Investment Companies (information as of March 10, 2023)
Name |
Title |
Length of Service |
Principal Occupation(s) During Past 5 Years | |||
W. Whitney George | Senior Portfolio Manager of Sprott Asset Management USA Inc.; Director of the Registrant |
Since July 2002 | Chief Executive Officer of Sprott Inc. since June 2022; President of Sprott Inc. January 2019 to June 2022; Executive Vice President of Sprott Inc. from January 2016 to January 2019; Chief Investment Officer of Sprott Asset Management, LP, a registered investment adviser, since April 2018; Senior Portfolio Manager since March 2015 and Chairman since January 2017, Sprott Asset Management USA Inc. |
(a)(2) Other Accounts Managed by Portfolio Manager and Potential Conflicts of Interest (information as of December 31, 2022)
Other Accounts
Type of Account |
Number of Accounts Managed |
Total Assets Managed |
Number of Accounts Managed for which Advisory Fee is Performance- Based |
Value of Managed Accounts for which Advisory Fee is Performance Based |
||||||||||||
Registered investment companies |
0 | $ | 0 | 0 | $ | 0 | ||||||||||
Private pooled investment vehicles |
0 | $ | 0 | 0 | $ | 0 | ||||||||||
Other accounts |
0 | $ | 0 | 0 | 0 |
Conflicts of Interest
The Portfolio Manager has day-to-day management responsibility for more than one account. This may create actual, potential or apparent conflicts of interest, as the Portfolio Manager may not be able to devote the same amount of time and attention to each account, or may give preferential treatment of one account over others in terms of allocation of resources or investment opportunities. The Portfolio Manager is subject to the policies and procedures of Sprott Asset Management USA Inc., the sub-adviser to the Registrant (the “Sub-Adviser”), that are intended to address conflicts of interest relating to the management of multiple accounts, including accounts that have different fee arrangements, and the allocation of investment opportunities. The Sub-Adviser reviews investment decisions of its investment personnel, including the Portfolio Manager, for the purpose of ensuring that all accounts with substantially similar investment objectives are treated equitably. The performance of similarly managed accounts is also compared to determine whether there are any unexplained significant discrepancies. In addition, the Sub-Adviser’s procedures relating to the allocation of investment opportunities require that similar client accounts that are managed using the same investment strategy participate in investment opportunities generally based on available cash as a percentage of total assets under management in the account, subject to certain considerations and clients’ respective investment guidelines and restrictions. The Portfolio Manager’s compensation is generally not based on, or linked to, the specific performance of a particular client or the level of assets under management.
(a)(3) Description of Portfolio Manager Compensation Structure (information as of December 31, 2022)
The Portfolio Manager receives a fixed salary, plus a discretionary bonus that is determined based on a variety of factors, including the Portfolio Manager’s contribution to the overall growth of the Sub-Adviser and its affiliates, leadership and other contributions to the Sub-Adviser. The Portfolio Manager’s compensation is not specifically linked to the performance of the Registrant or any other particular client account, or the value of the assets held in the portfolio of the Registrant or any other particular client account.
(a)(4) Dollar Range of Equity Securities in Registrant Beneficially Owned by Portfolio Manager (information as of December 31, 2022)
The following table shows the dollar range of the Registrant’s shares owned beneficially and of record by the Portfolio Manager, including investments by his immediate family members sharing the same household and amounts invested through any retirement and deferred compensation plans.
Dollar Range of Registrant’s Shares Beneficially Owned
Over $1,000,000
(b) Not Applicable.
Item 9. Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers.
Period – as indicated by Trade Date.1, 3 |
(a) Total Number of Shares (or Units) Purchased2 |
(b) Average Price Paid per Share (or Unit) |
(c) Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs |
(d) Maximum Number (or Approximate Dollar Value) of Shares (or Units) that May Yet Be Purchased Under the Plans or Programs5 |
||||||||||||
Month #1 Jan 1 to Jan 31, 2022 |
135,118 | $ | 8.7503 | 135,118 | ||||||||||||
Month #2 Feb 1 to Feb 28, 2022 |
– | — | — | |||||||||||||
Month #3 Mar 1 to Mar 31, 2022 |
70,871 | $ | 9.0543 | 70,871 | ||||||||||||
Month #4 Apr 1 to Apr 30, 2022 |
167,026 | $ | 9.0446 | 167,026 | ||||||||||||
Month #5 May 1 to May 31, 2022 |
74,495 | $ | 8.6794 | 74,495 | ||||||||||||
Month #6 June 1 to June 30, 2022 |
— | — | — | |||||||||||||
Month #7 July 1 to July 31, 2022 |
— | — | — | |||||||||||||
Month #8 Aug 1 to Aug 31, 2022 |
— | — | — | |||||||||||||
Month #9 Sept 1 to Sept 30, 2022 |
— | — | — | |||||||||||||
Month #10 Oct 1 to Oct 31, 2022 |
2,070 | $ | 7.2853 | 2,070 | ||||||||||||
Month #11 Nov 1 to Nov 30, 2022 |
38,604 | $ | 8.2714 | 38,604 | ||||||||||||
Month #12 Dec 1 to Dec 31, 2022 |
75,028 | $ | 8.2257 | 75,028 | ||||||||||||
Total |
563,212 | 563,212 |
1. | The share repurchase program was announced on November 20, 2020. |
2. | The dollar amount approved under the repurchase program is $50,000,000. |
3. | The expiration date of the program was initially December 31, 2021; the program was reauthorized by the Board on June 4, 2021 to run through December 31, 2022. The Board reauthorized an additional 5% repurchase of shares for Sprott Focus Trust on June 3rd, 2022 until December 31, 2023. |
4. | No plans have expired during the period. |
5. | No limit has been placed on the number of shares to be repurchased by the Registrant other than those imposed by federal securities laws. |
Item 10. Submission of Matters to a Vote of Security Holders. There have been no material changes to the procedures by which shareholders may recommend nominees to the Registrant’s Board implemented after the Registrant last provided disclosure in response to this Item.
Item 11. Controls and Procedures.
(a) Disclosure Controls and Procedures. The Principal Executive and Financial Officers concluded that the Registrant’s Disclosure Controls and Procedures are effective based on their evaluation of the Disclosure Controls and Procedures as of a date within 90 days of the filing date of this report.
(b) Internal Control over Financial Reporting. There was no change in the Registrant’s internal control over financial reporting that occurred during the period covered by this report that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting.
Item 12. Exhibits. Disclosure of Securities Lending Activities for Closed-End Management Investment Companies.
During Sprott Focus Trust (the “Fund”) most recent fiscal year to date as of December 31, 2022, State Street Bank and Trust Company (“State Street”) served as the Fund’s securities lending agent.
As a securities lending agent, State Street is responsible for the implementation and administration of a Fund’s securities lending program. Pursuant to its respective Securities Lending Authorization Agreement (“Securities Lending Agreement”) with the Fund, State Street, as a general matter, performs various services, including the following:
• | lend available securities to institutions that are approved borrowers |
• | determine whether a loan shall be made and negotiate and establish the terms and conditions of the loan with the borrower |
• | ensure that all dividends and other distributions paid with respect to loaned securities are credited to the fund’s relevant account |
• | receive and hold, on the fund’s behalf, or transfer to a fund account, upon instruction by the fund, collateral from borrowers to secure obligations of borrowers with respect to any loan of available securities |
• | mark-to-market the market value of loaned securities relative to the market value of the collateral each business day |
• | obtain additional collateral, as needed, in order to maintain the value of the collateral relative to the market value of the loaned securities at the levels required by the Securities Lending Agreement |
• | at the termination of a loan, return the collateral to the borrower upon the return of the loaned securities |
• | in accordance with the terms of the Securities Lending Agreement, invest cash collateral in permitted investments, including investments managed by the fund’s investment adviser |
• | maintain records relating to the fund’s securities lending activity and provide to the fund a monthly statement describing, among other things, the loans made during the period, the income derived from the loans (or losses incurred) and the amounts of any fees or payments paid with respect to each loan |
State Street is compensated for the above-described services from its securities lending revenue split. The tables below show the Fund earned and the fees and compensation it paid to service providers in connections with its securities lending activities during its most recent fiscal year.
Securities Lending Activities Income and Fees for Fiscal Year 2022 |
||||
Gross income from securities lending activities (including income from cash collateral reinvestment) |
$ | 46,415 | ||
|
|
|||
Fees and/or compensation for securities lending activities and related services |
||||
Fees paid to securities lending agent from a revenue split |
$ | 7,292 | ||
|
|
|||
Fees paid for any cash collateral management service (including fees deducted from a pooled cash collateral reinvestment vehicle) that are not included in the revenue split |
$ | — | ||
|
|
|||
Administrative fees not included in revenue split |
— | |||
Indemnification fee not included in revenue split |
— | |||
|
|
|||
Rebate (paid to borrower) |
$ | 10,149 | ||
|
|
|||
Other fees not included in revenue split |
— | |||
|
|
|||
Aggregate fees/compensation for securities lending activities and related services |
$ | 17,441 | ||
|
|
|||
Net income from securities lending activities |
$ | 28,974 |
Item 13. Exhibits. Attached hereto.
(a)(1) The Registrant’s code of ethics pursuant to Item 2 of Form N-CSR.
(a)(3) Not applicable
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.
SPROTT FOCUS TRUST, INC.
By: | /s/ Thomas W. Ulrich | |
Thomas W. Ulrich | ||
President |
Date: June 28, 2023
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.
SPROTT FOCUS TRUST, INC. | SPROTT FOCUS TRUST, INC. | |||||||
By: | /s/ Thomas W. Ulrich | By: | /s/ Varinder Bhathal | |||||
Thomas W. Ulrich | Varinder Bhathal | |||||||
(Principal Executive Officer) | (Principal Financial Officer) | |||||||
Date: June 28, 2023 | Date: June 28, 2023 |