SEC Form N-CSRS filed by Sprott Focus Trust Inc.

Semi-Annual Report

June 30, 2024

Table of Contents

Sprott Focus Trust

Performance (Unaudited)

Average Total Returns
As of June 30, 2024 (%)

¹ Not annualized; cumulative year-to-date.

²The return shown is based on the net asset value calculated for shareholder transactions and may differ from the return shown in the Financial Highlights, which reflects adjustments made to the net asset value in accordance with accounting principles generally accepted in the United States of America.

³ 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. On July 1, 2023, Sprott Asset Management LP became the sponsor of the Fund and no longer serves as investment adviser, and Sprott Asset Management USA, Inc. commenced acting as investment adviser to the Fund and continues to serve as such.

⁴ 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.

Past performance does not predict future performance and the table does not reflect the deduction of taxes that a shareholder would pay on fund distributions or the sale of fund shares.

Important Performance and Risk Information

All performance information reflects past performance, is presented on a total return basis, net of the Fund’s investment advisory fee and reflects the reinvestment of distributions. Past performance is no guarantee of future results. Current performance may be higher or lower than performance quoted. Returns as of the most recent month-end may be obtained at www.sprottfocustrust.com. The market price of the Fund’s shares will fluctuate, so shares may be worth more or less than their original cost when sold.

The Fund is a closed-end registered investment company whose shares of common stock may trade at a discount to their net asset value. Shares of the Fund’s common stock are also subject to the market risks of investing in the underlying portfolio securities held by the Fund.

The Fund’s shares of common stock trade on the Nasdaq Select Market. Closed-end funds, unlike open-end funds, are not continuously offered. After the initial public offering, shares of closed-end funds are sold on the open market through a stock exchange. For additional information, contact your financial advisor or call 203.656.2430. Investment policies, management fees and other matters of interest to prospective investors may be found in the closed-end fund prospectus used in its initial public offering, as revised by subsequent stockholder reports.

Sprott Focus Trust

Manager’s Discussion of Fund Performance (Unaudited)

Whitney George

Dear Fellow Shareholders,

For the first six months of 2024, Sprott Focus Trust (FUND) declined 0.98% based on Net Asset Value (NAV). In terms of market price, FUND declined 3.29% due to the widening of the trading discount to NAV. This compared to a return of 13.56% for the Russell 3000 Total Return Index.

Unfortunately, this was the worst first-half performance for small companies on a relative basis in 25 years. One needs only to look back to the late 1990s, at the peak of the dot-com bubble, to find such a divergence. Fortunately, what followed that crisis was a decade of strong outperformance. One of our favorite technical analysts, Carter Worth, points out that the technology-heavy Nasdaq Composite Index has just recently recovered all its relative losses to the Russell 2000 Index associated with the dot-com bust 24 years ago. We own many small-capitalization stocks (FUND’s weighted average market capitalization was $3.36 billion as of June 30, 2024). James Furey of Furey Research, a small-cap specialist, points out that the total market cap of the Russell 2000 Index as a percentage of the total market cap of the S&P 500 Index, currently at 6%, has never been lower. This is about one-half of the historical average and one-third of its peak. Further, relative valuations and 10-year relative returns are at historic lows. While we are certainly disappointed in our short-term performance, we remain optimistic about what lies ahead.

Given our lackluster performance thus far in 2024, it should not be surprising that FUND continued to trade at a relatively wide discount to its NAV (12.31% at quarter-end versus 10.21% as of year-end 12/31/2023). During the first six months, we repurchased 606,870 shares at an average price of $7.79. We also carefully considered converting FUND to an actively managed ETF. As the largest shareholders, the short-term financial benefits are very clear to us. However, given our contrarian value discipline, the longer-term benefits of our closed-end structure outweigh the one-time gain we could achieve with a transition. We generally like to buy when others are selling, and we don’t wish to attract new partners after periods of strong performance. For now, we are happy with our existing structure and will continue to invest in our portfolio of quality discounted companies.

As we noted in our last letter, we expected inflation and, therefore, interest rates to remain higher for longer due to structural changes in global trade and increased geopolitical turmoil. Check! While expectations were for seven interest rate cuts at the beginning of the year, the consensus moved down to zero and is now back up to one or two later this year, despite a visibly softening economy. We also expected fiscal deficits to remain at record levels. Check! The Office of Management and Budget recently increased its projected deficit forecast by 27% for fiscal year 2024, up to $1.9 trillion from $1.5 trillion just last February. Finally, we believed that commodities, especially precious metals, would do better as long-term supply/demand fundamentals became better understood. Check! Gold prices broke out of their multi-year trading range, setting new highs this past spring. Interest in critical materials like uranium, copper and silver increased dramatically during the first half. And while they have traded off a bit recently, we expect they will likely perform positively for the remainder of 2024.

What did we miss in our year-end predictions for 2024? Simply put, it was artificial intelligence (AI). Just when we thought the markets could not continue to be dominated by a handful of mega-capitalization technology companies, the world woke up to the productivity dream of AI, concentrating even more capital into a handful of companies counting on significant future profit growth to meet current valuations. We don’t know when this speculative behavior will end, but our experience tells us it won’t be pretty when it does.

Positioning & Portfolio Activity

As of June 30, 2024, Sprott Focus Trust was invested in 34 equity positions (down from 36 at year-end 2023) and held 4.8% in cash and cash equivalents (up from 2.6% on 12/31/2023). Cash is a by-product of the opportunity set we perceive in markets today, and our increased cash position when compared to year-end 2023 reflects the elevated state of markets generally and the dearth of compelling new ideas available in markets today.

As shown in Figure 2, the Materials sector was FUND’s greatest exposure at 38.9%. We continue to believe in the secular mining upcycle in both precious and base metals. However, we are closely watching economic activity for signs of a significant slowdown that might delay or derail the benefit to miners and drilling contractors. The Energy sector, at 14.7%, was the second largest exposure and is comprised of very high-quality companies in both production (Exxon Mobil Corporation) and services (Pason Systems Inc., Helmerich & Payne, Inc.). Financial Services remains a significant exposure at 14.0% and is concentrated in asset managers. Six of the previous period’s 10 largest positions remain, with the current top 10 comprising 43.1% of FUND’s net assets, down slightly from 45% six months ago (see Figure 1).

Figure 1

Holdings may vary, and this list is not a recommendation to buy or sell any security.

Sprott Focus Trust

Manager’s Discussion of Fund Performance (Unaudited)

Figure 2

Typical for the late stages of a bull market, as value investors we were better sellers of portfolio positions than buyers during the first half of 2024. Only one new position was initiated, while three positions were liquidated. FUND has long held a position in Hong Kong-listed Value Partners Group Limited but having much greater conviction in other asset managers in the portfolio, we decided it was time to move on. Value Partners Group has encountered significant challenges in recent years, but its recovery in the eyes of investors is exacerbated by the deterioration in Sino-U.S. relations. The escalating tensions between the two economic giants have increased market uncertainty, affecting investor confidence and asset valuations in China and the rest of Asia. As a result, global financial markets, including those in Hong Kong, have experienced heightened risk aversion and extremely poor investor sentiment. Moreover, the geopolitical tensions have prompted regulatory and policy changes, complicating business operations and strategic planning for firms like Value Partners Group and the companies they invest in. The company’s assets under management (AUM) have declined as its value-driven strategies have struggled against the tide of growth and momentum-driven investing. Value Partners’ specific focus on China and the Asia-Pacific region generally have been additional challenges as investors have shunned Chinese equities amid the deteriorating relationship with the United States. Geopolitics notwithstanding, the challenges to Value Partners’ business have been too great to overcome, and with Sino-U.S. relations likely to remain poor, Asian markets will likely continue to struggle.

We have written in the past about initiating starter positions in companies that seem to meet our test of quality and undervaluation but require a greater degree of understanding and analysis to become a full-sized position in FUND’s portfolio. Sometimes, however, during further research we occasionally conclude that the starter position should be liquidated for a variety of reasons. This was the case with Sims Limited, the Australian-listed metal recycling company. Further on in this letter, we describe the challenges that Sims’ competitor Radius Recycling, Inc. has faced as metal spreads compressed, severely impacting margins of both companies similarly. Although the scrap steel processed by Sims and Radius is a critical feedstock for steel production, neither company provides the type of direct exposure to structural drivers of steel demand in the U.S. that we desire. The recycling business at Sims is one large degree of separation away from the pricing and demand dynamics we believe will be most beneficial to investors in the steel sector. We have significant exposure to this via our participation in Nucor Corporation and Steel Dynamics, Inc. and consider our existing exposure to Radius Recycling as sufficient, thus deciding to liquidate the starter position in Sims during the period.

The third position that was sold (alongside the only purchase during the period) can be considered a switch within our basket of gold mining companies as we liquidated Barrick Gold Corporation and entered Alamos Gold Inc. Barrick Gold, while being one of the largest and most established gold mining companies in the world, has been facing challenges such as operational issues, geopolitical risks in certain regions where it operates and fluctuating production costs. These factors have impacted Barrick’s profitability and share price performance, even as it has benefited modestly from the recent strength in the spot price of gold. After missing its guidance for the last two years, there exist better opportunities among Barrick’s peer group, including Alamos Gold.

Alamos Gold has shown strong operational performance, lower geopolitical risk exposure and a robust pipeline of development projects. According to the company, 89% of its net asset value is derived from Canadian assets. As an intermediate gold producer in low-risk jurisdictions, Alamos has fully funded plans to grow gold production from ~500,000 ounces targeted in 2024 to ~900,000 ounces in the future. In addition, all-in sustaining costs (AISC) are forecast to fall from approximately $1,159 per ounce to approximately $1,025 as production scales. Alamos’ 2024 acquisition of Argonaut Gold Inc. is central to its plans to become one of Canada’s largest and lowest-cost gold producers. Alamos’ performance on environmental issues such as water efficiency and greenhouse gas emissions per ounce of gold produced is well ahead of industry averages, and the company has been recognized for superior health and safety management systems, earning the Silver Helmet Award. On balance, and when compared to Barrick Gold, Alamos’ focus on increasing production and reducing costs provides a more attractive growth profile, offering better potential returns with less perceived risk in the current market environment.

Figure 3

¹Geometric 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 management believes offers a more accurate measure of average market cap than a simple mean or median.

Sprott Focus Trust

Manager’s Discussion of Fund Performance (Unaudited)

²Harmonic 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.

³The Fund’s P/E ratio calculation excludes companies with zero or negative earnings.

Performance Contributors and Detractors

Figure 4 shows which positions contributed and detracted the most from FUND’s aggregate performance so far in 2024.

Figure 4

Top Contributors to Performance

Clarkson PLC shares returned 33% (in local currency), contributing 0.8% to FUND’s total return for the period. The company is the world’s largest shipbroker, acting as an intermediary in ship charter transactions and arranging purchases and sales of ships and other maritime assets. While Clarkson’s shipbroking business is the dominant driver, ancillary services, including project finance, investment banking and support services (such as stevedoring and logistics), are informed by proprietary research, making Clarkson PLC best-in-class in servicing the global shipping sector. Although charter shipping transactions are a key focus for investors and the typical driver of Clarkson’s share price in the short term, second-hand purchase and sale transaction activity has been the reason for the recent strength in company shares in 2024. Exxon Mobil Corporation shares advanced 17% year-to-date and contributed 0.7% to FUND’s overall performance despite disappointing Q1 earnings. The market appears more focused on Exxon Mobil’s longer-term value creation potential from upstream volume growth in the Permian basin, Guyana and Brazil; downstream volume expansion initiatives; its forecasted $5B in cost savings by 2027; low carbon investments in biofuels, hydrogen and lithium; and finally the potential for significant capital returns to shareholders as a result of its recently deleveraged balance sheet and solid free cash flow generation, even in a tepid oil price environment.

Agnico Eagle Mines Limited is a senior gold producer with assets and operations located in the politically safe jurisdictions of Canada, Australia, Mexico and Finland. The spot price of gold increased 12% in U.S. dollars (USD) during the first half of 2024, outpacing most major asset classes and the best six month start since 2020. Agnico Eagle shares advanced nearly 21% over the same time frame, exhibiting the expected operational leverage in such a pricing environment; it contributed 0.67% to FUND’s performance in the first half. Several factors explain gold’s rise this year including central bank buying, Asian investment flows, geopolitical uncertainty (safe haven buying) and evolving investor views on the timing and pace of U.S. Federal Reserve interest rate cuts as economic growth decelerates. We trust that gold will continue to provide ballast in FUND’s portfolio as markets continue to reflect the uncertainties present in the world today. Steel Dynamics also contributed to portfolio performance in 2024 as shares advanced 10% through June 30. Quarterly results exceeded investor expectations and the company remarked that the underlying demand environment for steel remains firm, especially in the non-residential end market. This resulted in near-record steel shipments and higher average realized prices as Steel Dynamics continue to pursue various growth initiatives that should drive higher through-cycle operating margins. Rounding out the top five contributors, Berkshire Hathaway Inc. shares advanced 14% in the first six months of 2024 as expectations for improving underwriting margins across Berkshire’s insurance businesses amid the favorable property/casualty insurance and reinsurance market environment. Earned rate increases, combined with lower claims frequency and lower claims severity are helping to bolster margins. In addition, Berkshire’s equity portfolio continued to benefit from appreciation in its largest position, Apple Inc., increasing book value per share.

Top Detractors to Performance

Recently renamed Radius Recycling (formerly Schnitzer Steel Industries, Inc.) led the top detractors during the period as its shares fell by nearly half through June 30, 2024, detracting 1.79% from FUND’s overall performance. The business of metal recycling captures the spread between the price Radius pays to acquire scrap steel (in the form of old automobiles, appliances and various other end-of-life steel products) and the price that scrap steel manufacturers pay Radius for processed recycled material, which they use as feedstock to melt and reformulate into new finished steel products using electric arc furnace (EAF) technology. Approximately 70% of steel production in the U.S. is of the EAF variety, which has a 40-60% lower carbon footprint, a significant positive for the environment in this hard-to-abate sector. Recycled steel plays a direct and critical role in the supply chain for EAF steel production. When there is a shortage of used automobiles and other scrap items, the prices Radius pays can remain high. And when demand for finished steel products stalls, selling prices for processed recycled material can decline, compressing the spread (akin to gross margin). This has been true for Radius recently but explains only part of its story this year. Increased Chinese exports of finished steel products have satiated global steel demand that otherwise might have been supplied by domestic U.S. scrap steel producers. This has exacerbated the price decline, as seen with hot rolled coil (HRC) pricing this year (approximately -40% according to industry sources). Demand for steel is expected to strengthen due to continued onshoring of manufacturing, fixed asset

Sprott Focus Trust

Manager’s Discussion of Fund Performance (Unaudited)

investment derived from public funding in infrastructure projects, as well as continued increased demand for non-residential construction such as data centers and other industrial construction needs.

Marcus & Millichap, Inc. (MMI) is the leader in the private-client market for commercial real estate brokerage, involving transactions between $1 million and $10 million. It will come as no surprise to readers that commercial real estate transaction volumes have been negatively affected by higher interest rates. 2023 revenues declined by 50% versus 2022 and resulted in an operating loss for the full year, driving shares 27% lower during the period under review and detracting 0.79% from FUND’s performance. With net cash comprising more than 20% of its market capitalization on June 30, 2024, we are happy the company continues to opportunistically repurchase its shares as we believe they trade at a material discount to fair value. Pent-up demand in the private-client market and a potential U.S. Federal Reserve shift in interest rates are catalysts for recovery in MMI’s business and share price.

Shares in specialty retailer The Buckle, Inc. detracted 0.75% from performance during the first half as declining sales of its high-quality, on-trend apparel, accessories and footwear negatively impacted margins and profitability. Although consumer spending has been trending down recently, The Buckle continues to open new stores and remodel others with the expectation that the current environment is not severe, and its unique retail offering will retain its consumer appeal through the current downturn. We are encouraged by its net cash balance sheet which should enable the company to withstand this garden-variety downturn in great shape, as it has done through several previous downturns.

AerSale Corporation shares declined 45% during the last six months as investors lost confidence in the commercial prospects of its revolutionary Enhanced Flight Vision System (EFVS) for the Boeing 737 product line. After finally getting FAA approval in December 2023, further FAA delays related to validating the company’s flight training program were revealed, inhibiting the ongoing sales process with key initial customers. We have little reason to doubt the efficacy of the technology, based upon flight test data and the FAA’s approval, but the constant delay in roll-out of the product is indeed a frustration. Given the low expectations embedded in the company’s valuation, it is likely to benefit from any shred of incremental progress toward the commerciality of AerAware or the success of its core businesses.

Finally, THOR Industries, Inc. shares detracted 0.52% from performance amidst the soft retail environment for its recreational vehicles (RVs). The company stated recently that it expects the softness to persist into 2025. THOR remains disciplined on price, as they have a history of doing, as well as focusing on matters within its control such as supply-chain efficiencies and cost-savings. THOR has successfully navigated many soft retail environments through the years and has emerged stronger from such periods. Despite losing modest market share to aggressive discounting by competitors, we believe THOR’s long-term drivers of product differentiation and its ability to scale up in a more normalized economic environment should preserve its strong competitive position. Demand for RVs in Europe has been a strength for THOR as both unit increases and price strength have partially offset weakness in North America.

Outlook

As of this writing, little has changed from the outlook we presented at the start of 2024. As expected, inflation remained a bit stickier than most had hoped in the first half. Short-term interest rates are unchanged although expectations have fluctuated wildly over the last six months, as mentioned earlier. Despite a strong economic environment, fiscal deficits remain severe, and federal debt as a percentage of GDP (gross domestic product) is nearing the historic peak seen just after World War II.

Fiscal deficits continue to grow to non-recessionary records as a percent of our GDP. Two wars continue with no feasible end in sight. And elections both here and abroad are characterized by highly unpopular choices and results that reflect a desire to throw the incumbents out.

Fortunately, gold prices responded favorable to these difficult fundamentals, setting new highs almost daily. Our investments in precious metals miners have started to respond to this but only recently and less dramatically than we would expect. This sector is virtually unowned. It will not take much of a re-allocation from mega-Cap technology and artificial intelligence stocks to create strong performance within this group. We can also look forward to the inevitable mean reversion that will benefit our investments in smaller companies. We continue to own a collection of conservatively capitalized businesses which earn high returns on its own capital and share those returns with its shareholders generously.

Once again, I would like to thank you all my colleagues at Sprott. I am very proud of the evolution of this organization and how we are positioned today. I would also like to thank Matt Haynes for his extensive contribution to this letter. And most importantly, thank you to our loyal and patient shareholder partners. Please feel free to call us anytime 1.203.656.2430.

Sincerely,

W. Whitney George

Senior Portfolio Manager

July 23, 2024

Sprott Focus Trust

Performance Review (Unaudited)

Important Performance and Risk Information

All performance information reflects past performance, is presented on a total return basis, and reflects the reinvestment of distributions. Past performance is no guarantee of future results. Current performance may be higher or lower than performance quoted. Returns as of the most recent month-end may be obtained at www.sprottfocustrust.com. The market price of the Fund’s shares will fluctuate, so shares may be worth more or less than their original cost when sold. The Fund normally invests primarily in small-/mid-cap companies, which may involve considerably more risk than investing in larger-cap companies. The Fund also generally invests a significant portion of its assets in a limited number of stocks, which may involve considerably more risk than a broadly diversified portfolio because a decline in the value of any one of these stocks would cause the Fund’s overall value to decline to a greater degree. Regarding the “Top Contributors” and “Top Detractors” tables shown on page 4, the sum of all contributors to, and all detractors from, performance for all securities in the portfolio would approximate the Fund’s performance for 2024 to date.

Calendar Year Total Returns (%)

Past performance does not predict future performance and the table does not reflect the deduction of taxes that a shareholder would pay on fund distributions or the sale of fund shares.

Sprott Focus Trust

History Since Inception (Unaudited)

The following table details the share accumulations by an initial investor in the Fund who reinvested all distributions and participated fully in primary subscriptions for each of the rights offerings. Full participation in distribution reinvestments and rights offerings can maximize the returns available to a long-term investor. This table should be read in conjunction with the Performance Review of the Fund.

1The purchase price used for annual distribution totals is a weighted average of the distribution reinvestment prices for the year.

2Values are stated as of December 31 of the year indicated, after reinvestment of distributions, unless otherwise indicated.

3Includes a return of capital.

Sprott Focus Trust

Distribution Reinvestment and Cash Purchase Options (Unaudited)

Sprott Focus Trust

Schedule of InvestmentsJune 30, 2024 (Unaudited)​

See Notes to Financial Statements.

Sprott Focus Trust

Schedule of InvestmentsJune 30, 2024 (Unaudited)​

See Notes to Financial Statements.

Sprott Focus Trust

Statement of Assets and LiabilitiesJune 30, 2024 (Unaudited)​

See Notes to Financial Statements.

See Notes to Financial Statements.

Sprott Focus Trust

Statement of OperationsFor the Period January 1, 2024 Through June 30, 2024 (Unaudited)​

^(a)Net of foreign tax withholding in the amount of $83,229.

See Notes to Financial Statements.

Sprott Focus Trust

Statements of ChangesJune 30, 2024​

Sprott Focus Trust

Financial Highlights

This table is presented to show selected data for a share of Common Stock outstanding throughout each period, and to assist stockholders in evaluating the Fund’s performance for the periods presented.

(a)Calculated using average shares outstanding during the period.

(b)Represents less than $0.005.

(c)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.

(d)Not annualized.

(e)Annualized.

See Notes to Financial Statements.

Sprott Focus Trust

Notes to Financial Statements (Unaudited)June 30, 2024​

1. ORGANIZATION

Sprott Focus Trust, Inc. (the “Fund”) is a diversified closed-end investment company incorporated under the laws of the State of Maryland. The Fund commenced operations on March 2, 1988, and Sprott Asset Management LP and Sprott Asset Management USA, Inc. assumed investment management responsibility for the Fund after the close of business on March 6, 2015. Royce & Associates, LLC was the Fund’s previous investment manager. After March 6, 2015, Sprott Asset Management LP was the investment adviser, and Sprott Asset Management USA, Inc. was the sub-adviser of the Fund. On July 1, 2023, Sprott Asset Management LP became the sponsor of the Fund and no longer serves as investment adviser, and Sprott Asset Management USA, Inc. (the “Adviser”) commenced acting as investment adviser to the Fund and continues to serve as such.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The following is a summary of significant accounting policies consistently followed by the Fund. These policies are in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”).

At June 30, 2024, officers, employees of Sprott Inc. and its subsidiaries, Fund directors, and other affiliates owned approximately 51% of the Fund.

A. Use of Estimates

The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of income and expenses for the period. Actual results could differ from these estimates.

B. Portfolio Valuation and Methodologies

Securities are valued as of the close of trading on the New York Stock Exchange (NYSE) (generally 4:00 p.m. Eastern time) on the valuation date. All exchange traded securities are valued using the last trade or closing sale price from the primary publicly recognized exchange. If no current closing sale price is available, the mean of the closing bid and ask price is used. If no current day price quotation is available, the previous business day’s closing sale price is used. Investments in open-end mutual funds such as money market funds are valued at the closing NAV. Repurchase agreements are valued at contract amount plus accrued interest, which approximates market value. The Fund values its non-U.S. dollar denominated securities in U.S. dollars daily at the prevailing foreign currency exchange rates as quoted by a major bank. If events (e.g., market volatility, company announcement or a natural disaster) occur that are expected to materially affect the value of the Fund’s investment, or in the event that it is determined that valuation results in a price for an investment that is deemed not to be representative of the market value of such investment, or if a price is not available, the investment will be valued in accordance with the Adviser’s policies and procedures as reflecting fair value (“Fair Value Policies and Procedures”). U.S. GAAP defines fair value as the price a fund would receive to sell an asset or pay to transfer a liability in an orderly transaction between market participants at the measurement date. The Board of Directors of the Fund (the “Board”) has approved the designation of the Adviser of the Fund as the valuation designee for the Fund. If a security’s market price is not readily available or does not otherwise accurately represent the fair value of the security, the security will be valued in accordance with the Fair Value Policies and Procedures as reflecting fair value. The Adviser has formed a committee (the “Valuation Committee”) to develop pricing policies and procedures and to oversee the pricing function for all financial instruments.

C. Fair Value Hierarchy

The fair valuation approaches that may be used by the Valuation Committee include market approach, income approach and cost approach. Valuation techniques such as discounted cash flow, use of market comparables and matrix pricing are types of valuation approaches and are typically used in determining fair value. When determining the price for fair valued investments, the Valuation Committee seeks to determine the price that the Fund might reasonably expect to receive or pay from the current sale or purchase of that asset or liability in an arm’s-length transaction. Fair value determinations shall be based upon all available factors that the Valuation Committee deems relevant and consistent with the principles of fair value measurement.

Various inputs are used in determining the value of the Fund’s investments, as noted above. These inputs are summarized in the three broad levels below:

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.

The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities.

Sprott Focus Trust

Notes to Financial Statements (Unaudited)June 30, 2024​

The following is a summary of the Fund’s investments as of June 30, 2024 based on the inputs used to value them. For a detailed breakout of common stocks by sector classification, please refer to the Schedule of Investments.

There were no transfers between levels for investments held at the end of the period.

D. Investment Transactions and Related Investment Income

Investment transactions are accounted for on the trade date. Dividend income is recorded on the ex-dividend date. Non-cash dividend income is recorded at the fair market value of the securities received. Interest income is recorded on an accrual basis. Premium and discounts on debt securities are amortized using the effective yield-to-maturity method. Realized gains and losses from investment transactions are determined on the basis of identified cost for book and tax purposes.

Income received from foreign sources may result in withholding tax. Withholding taxes are accrued at the same time as the related income if the tax rate is fixed and known, unless a tax withheld is reclaimable from the local tax authorities in which case it is recorded as receivable. If the tax rate is not known or estimable, such expense or reclaim receivable is recorded when the net proceeds are received.

E. Expenses

The Fund incurs direct and indirect expenses. Expenses directly attributable to the Fund are charged to the Fund’s operations, while expenses applicable to more than one fund managed by the Adviser are allocated equitably.

F. Compensating Balance Credits

The Fund has an arrangement with its custodian bank, whereby a portion of the custodian’s fee is paid indirectly by credits earned on the Fund’s cash on deposit with the bank. This deposit arrangement is an alternative to purchasing overnight investments. Conversely, the Fund pays interest to the custodian on any cash overdrafts, to the extent they are not offset by credits earned (interest accrued) on positive cash balances. The amount of credits earned on the Fund’s cash on deposit amounted to $675 for the six months ended June 30, 2024.

Sprott Focus Trust

Notes to Financial Statements (Unaudited)June 30, 2024​

4. TAXES

As a qualified regulated investment company under Subchapter M of the Internal Revenue Code, the Fund is not subject to income taxes to the extent that it distributes substantially all of its taxable income for its fiscal year.

5. DISTRIBUTIONS

The Fund pays quarterly distributions on the Fund’s Common Stock at the annual rate of 6% of the rolling average of the prior four calendar quarter-end NAVs of the Fund’s Common Stock, with the fourth quarter distribution being the greater of 1.5% of the rolling average or the distribution required by IRS regulations. Distributions are recorded on ex-dividend date and to the extent that distributions are not paid from long-term capital gains, net investment income or net short-term capital gains, they will represent a return of capital. Distributions are determined in accordance with income tax regulations that may differ from accounting principles generally accepted in the United States of America. Permanent book and tax differences relating to stockholder distributions will result in reclassifications within the capital accounts. Undistributed net investment income may include temporary book and tax basis differences, which will reverse in a subsequent period. Any taxable income or gain remaining undistributed at fiscal year-end is distributed in the following year.

7. INVESTMENT ADVISORY AGREEMENT

The Investment Advisory Agreement between the Adviser and the Fund provides for fees to be paid at an annual rate of 1.0% of the Fund’s average daily net assets. The Fund accrued investment advisory fees totaling $1,286,186 to the Adviser for the six-month period ended June 30, 2024.

8. PURCHASES AND SALES OF INVESTMENT SECURITIES

For the six months ended June 30, 2024, the costs of purchases and proceeds from sales of investment securities, other than short-term securities, amounted to $20,009,009 and $30,206,816, respectively.

9. LENDING OF PORTFOLIO SECURITIES

The Fund, using State Street Bank and Trust Company (“State Street”) as its lending agent, may loan securities to qualified brokers and dealers in exchange for negotiated lenders’ fees. The Fund receives cash collateral, which may be invested by the lending agent in short-term instruments. Collateral for securities on loan is at least equal to 102% (for loans of U.S. securities) or 105% (for loans of non-U.S. securities) of the market value of the loaned securities at the inception of each loan. The market value of the loaned securities is determined at the close of business of the Fund and any additional required collateral is delivered to the Fund on the next business day. As of June 30, 2024, the cash collateral received by the Fund was invested in the State Street Navigator Securities Lending Government Money Market Portfolio, which is a 1940 Act registered money market fund. To the extent that advisory or other fees paid by the State Street Navigator Securities Lending Government Money Market Portfolio are for the same or similar services as fees paid by the Fund, there will be a layering of fees, which would increase expenses and decrease returns. Information regarding the value of the securities loaned and the value

Sprott Focus Trust

Notes to Financial Statements (Unaudited)June 30, 2024​

of the collateral at period end is included in the Schedule of Investments. The Fund could experience a delay in recovering its securities, a possible loss of income or value and record realized gain or loss on securities deemed sold due to a borrower’s inability to return securities on loan. These loans involve the risk of delay in receiving additional collateral in the event that the collateral decreases below the value of the securities loaned and the risks of the loss of rights in the collateral should the borrower of the securities experience financial difficulties.

Pursuant to the current securities lending agreement, the Fund retains 80% of securities lending income (which excludes collateral investment expenses). Securities lending income is generally equal to the total of income earned from the reinvestment of cash collateral (and excludes collateral investment fees), and any fees or other payments to and from borrowers of securities. State Street bears all operational costs directly related to securities lending.

As of June 30, 2024, the Fund had outstanding loans of securities to certain approved brokers for which the Fund received collateral:

The following table presents financial instruments, net of the related collateral received by the Portfolio as of June 30, 2024.

(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.

All securities on loan are classified as Common Stock in the Fund’s Schedule of Investments as of June 30, 2024, with a contractual maturity of overnight and continuous.

Other information regarding the Fund is available in the Fund’s most recent Report to Stockholders. This information is available through Sprott Asset Management’s website (www.sprottfocustrust.com) and on the Securities and Exchange Commission’s website (www.sec.gov).

10. SUBSEQUENT EVENTS

The Fund has evaluated the need for disclosures and/or adjustments resulting from subsequent events that occurred between June 30, 2024 and the date the financial statements were issued. Based on this evaluation, no adjustments were required to the financial statements.

Sprott Focus Trust

Directors and Officers (Unaudited)

All Directors and Officers may be reached c/o Sprott Asset Management USA, Inc. 320 Post Road, Suite 230, Darien, CT 06820.

¹Mr. 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 Chief Executive Officer of Sprott, Inc., the parent company of Sprott Asset Management USA, Inc., the Fund’s adviser.

The Statement of Additional Information has additional information about the Fund’s Directors and is available without charge, upon request, by calling (203) 656-2430.

Sprott Focus Trust

Notes to Performance and Other Important Information (Unaudited)

Sprott Focus Trust

Notes to Performance and Other Important Information (Unaudited)

Sprott Focus Trust

Board Review and Approval of Investment Advisory and Agreement (Unaudited)

Board Approval of Investment Advisory Agreement for Sprott Focus Trust, Inc.

The Board of Directors (the “Board”) of Sprott Focus Trust, Inc. (the “Fund”) met in person at a regularly scheduled meeting on June 7, 2024, in Watch Hill, Rhode Island, for purposes of, among other things, considering whether it would be in the best interest of the Fund and its stockholders for the Board to approve the renewal of the Amended Investment Advisory Agreement (the “Advisory Agreement”) by and between the Fund and Sprott Asset Management USA, Inc. (the “Adviser”).

In connection with the Board’s review of the Agreement, the directors who were not “interested persons” of the Fund within the meaning of the Investment Company Act of 1940, as amended (the “1940 Act”) (collectively, the “Independent Directors”) requested, and the Adviser provided the Board with, information about a variety of matters, including, without limitation, the following information:

•nature, extent and quality of services to be provided by the Adviser, including background information on the qualifications and experience of key professional of the Adviser 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 Adviser; and

•economies of scale.

In connection with the Board’s review of the Agreement, the Independent Directors considered the matters set forth above along with the following information:

•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 Adviser’s experience in managing registered investment companies, private investment vehicles and separately managed accounts.

At the June 7, 2024 meeting, the Board and the Independent Directors determined that the continuation of the Agreement was in the best interests of the Fund in light of the services, personnel, expenses and such other matters as the Board considered to be relevant in the exercise of its reasonable business judgment and approved them.

To reach this determination, the Board considered its duties under the 1940 Act as well as under the general principles of state law in reviewing and approving advisory contract; the fiduciary duty of investment adviser with respect to advisory agreement and the receipt of investment advisory compensation; the standards used by courts in determining whether investment company boards have fulfilled their duties; and the factors to be considered by the Board in voting on such agreement. To assist the Board in its evaluation of the Agreement, the Independent Directors received materials in advance of the Board meeting from the Adviser. The Independent Directors also met with Mr. George. The Board applied its business judgment to determine whether the arrangement by and between the Fund and the Adviser are reasonable business arrangements from the Fund’s perspective as well as from the perspective of its stockholders.

Nature, Extent and Quality of Services Provided Sprott Asset Management USA, Inc.

The Board reviewed materials provided by the Adviser related to the proposed approval of the Advisory Agreement. The Board noted that the Adviser manages approximately $4.6 billion in assets of December 31, 2023 and provides investment management services on a discretionary basis to its clients, which include individuals and institutional with separately managed accounts.

The Board further noted that the Adviser and the predecessor investment adviser of the Fund were each wholly-owned subsidiaries of Sprott, Inc. and both entities shared personnel and resources as they were part of the same organization. The Board reviewed the credentials of the key investment personnel. that continue to be responsible for servicing the Fund, noting that each has considerable experience in the asset management industry. The Board reviewed the credentials of the key investment personnel that are responsible for servicing the Fund, noting Mr. George’s long tenure as the Fund’s portfolio manager. The Board also considered the significant experience and background of senior management of the Adviser. The Board discussed the services that are provided to the Fund, which include portfolio management, research, compliance and analysis. Additionally, the Board received satisfactory responses from the representatives of the Adviser with respect to whether the Adviser was involved in any lawsuits or pending regulatory

Sprott Focus Trust

Board Review and Approval of Investment Advisory Agreement (Unaudited)

actions. The Board reviewed the best-execution practices of the Adviser and discussed the various factors considered by the Adviser when selecting brokers. The Board concluded that based on the responses in this questionnaire and questions at the meeting, and their experience with the Adviser, they could expect the Adviser to continue to provide high quality service to the Fund and its shareholders.

Investment Performance

The Board observed that the Fund outperformed the peer group, for the 3-year, 5-year and since inception while underperforming in the 1-year time period. The Board further noted that the Fund outperformed its benchmark index for the 3-year and since inception periods while underperforming in the 1-year and 5-year time periods. The Board considered the Adviser’s explanations noting the performance differential over longer period is likely to be from the Fund’s disciplined valuation framework driving portfolio activity and the longstanding underperformance of similarly disciplined value strategies vs. growth-oriented strategies. After further discussion, the Board concluded that the Adviser had the potential to continue to provide reasonable returns for the Fund.

Fees and Expenses

The Board noted that the Fund’s advisory fee of 1.00% was slightly below the peer group and Morningstar category medians. The Board reviewed the Fund’s net expense ratio of 1.15% and acknowledged it was below the peer group and Morningstar category averages and medians. After further discussion, the Board concluded that the advisory fee for the Fund was not unreasonable.

Profitability

The Board reviewed the profitability analysis provided by the Adviser and noted that the Adviser realized a profit in managing the Fund. The Board acknowledged the effort required to maintain and manage the Fund’s complex investment program and determined the Adviser’s profitability was not excessive.

Economies of Scale

The Board considered the existence of any economies of scale in the provision of services by the Adviser and whether those economies were shared with the Fund through breakpoints in its management fees or other means, such as expense caps or fee waivers. The Board noted that the assets of the Fund were too small to meaningfully consider economies of scale and the necessity of breakpoints. The Board concluded that the current fee structure for the Fund was reasonable and that no changes were currently necessary.

Conclusion

Having requested and received such information from the adviser as the Board believed to be reasonably necessary to evaluate the terms of the Advisory Agreement, the Board concluded that renewal of the Advisory Agreement was in the best interests of the Fund and its shareholders.

Sprott Focus Trust

APPENDIX

2024 19(a) Notices

The 19(a) Notices set forth in this Appendix may be found at https://sprott.com/investment-strategies/focus-trust.

www.sprott.com