Keystone Positive Change Investment Trust Interim Financial Report to 31 March 2024

Comparative index

The principal index against which performance is measured is the MSCI All Country World Index (in sterling terms).

Principal risks and uncertainties

The principal and emerging risks facing the Company are: the risk that the Company's strategy and business model are unsuccessful in achieving its investment objective; discount/premium risk; financial risk; gearing risk; operational risk; custody and depositary risk; climate and governance

risk; political and associated economic risk; and regulatory risk. An explanation of these risks and how they are managed is set out on pages 41 to

45 of the Company's Annual Report and Financial Statements for the year to 30 September 2023 which is available on the Company's website: keystonepositivechange.com. The principal risks and uncertainties have not changed materially since the date of that report.

Responsibility statement

We confirm that to the best of our knowledge:

1. the condensed set of Financial Statements has been prepared in accordance with FRS
   104 'Interim Financial Reporting';
2. the Interim Management Report includes a fair review of the information required by Disclosure Guidance and Transparency Rule 4.2.7R (indication of important events during
   the first six months, their impact on the Financial
   Statements and a description of the principal risks and uncertainties for the remaining six months of the year); and
3. the Interim Financial Report includes a fair review of the information required by Disclosure Guidance and Transparency Rule 4.2.8R (disclosure of related party transactions and changes therein).

On behalf of the Board Karen Brade

Chair

2 May 2024

Much has happened in the three years since we took on the management of Keystone Positive Change Investment Trust, including the outbreak of war in Ukraine and the Middle East; supply chain challenges as the world re-openedpost-pandemic; the end of easy monetary policy and the sharpest rise in interest rates in four decades; and increasing evidence of the devastation caused by global warming.

Against this dynamic and complex back-drop we have remained resolutely committed to delivering on Keystone's dual objectives of generating attractive long-term investment returns and contributing towards a more sustainable and inclusive world.

We continue to believe that capital owners and allocators can play a valuable role in addressing global challenges by channelling capital towards businesses that are intent on developing, scaling production of, and successfully selling products and services that will help create a more inclusive, healthier and more environmentally stable world.

Performance

Following eleven consecutive interest rate increases in the US and fourteen in the UK, we seem to be in a period of greater calm on this front with no changes in recent months and an expectation that rates will remain stable or even fall from here. Performance in a rising interest rate environment has been more challenging for the Company which invests in 'long duration growth stocks', i.e., companies whose share prices are skewed towards cash flows generated in the future. The more stable interest rate environment is helpful for long-term growth investors. But what matters more is the strong operational progress being made by portfolio holdings as we believe it is fundamental progress in earnings that drives share prices over the long term.

Over the six months to 31 March 2024 the benchmark increased by 16.3%, the Company's share price rose by 13.5% and NAV grew by 10.7%.

Two of the larger holdings in the portfolio, TSMC and ASML, were among the top positive contributors to performance over the period, despite 2023 being a challenging year for the semiconductor industry. ASML grew revenues by 30% and TSMC outperformed its competitors, testament to the technological leadership of these companies and their willingness to invest in both capacity expansion and R&D so they can remain at the vanguard of their industries. Both companies are cautiously optimistic that end-market demand has bottomed and will recover thanks not just to demand for advanced chips enabling AI and advanced computing, but also the growing need for chips in the energy transition, for electrification and for digitalisation. Nu Holdings, the Brazilian digital bank providing access to financial services to a hundred million people in Latin America, reported phenomenal results, outpacing our predictions when we took a position when it listed in 2021. In 2023 the company grew its customer base by 26% and its average revenue per customer by 23% while achieving positive net profits for the first time. Duolingo,

the leading digital language learning app, beat expectations by growing revenues by 45% with its monthly active users increasing to 88m and the percentage of paying subscribers continuing on a positive trajectory.

Detractors to performance included WuXi and Remitly. WuXi, the global leader in outsourced research and development services to many of the world's biotech and pharma companies, has been subject to tension between the US and China. The emergence of draft bills related to the BioSecure Act in the US resulted in significant share price falls.

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We have spoken with the CEO and some of WuXi's customers and understand the company has minimal reliance on projects at risk and that customers are not overly concerned. Geopolitical uncertainty is likely to persist with the pending US election, and we are closely monitoring the situation. However, we take comfort from steps WuXi has taken to establish its manufacturing footprint outside China to minimise geopolitical risk.

The mobile remittance provider, Remitly, was also a detractor to performance over the six-month period, despite it performing extremely well operationally, growing its customer base and revenues by over 40% in 2023 and improving profitability as its network scales and its data advantage grows. The market seems worried about Remitly's increased marketing spending, but we see it as a necessary investment for long-term growth, as long as

the retufrom that marketing spend remains attractive. Remitly ended the year with just under

6m customers benefiting from its fast, secure and affordable means of sending money to their families and friends in low-andmiddle-income countries.

One of the attractive features of the Company is its ability to invest in private companies. At the end of March 2024, 5.3% of the portfolio was invested across five private companies that are developing exciting new technologies from quantum computing to carbon removal solutions. In terms of operational progress, Boston Metal, which is commercialising a novel technology to decarbonise steel production and recover high-value metal from mining waste, was selected by the US Department of Energy to enter into negotiations for $50m of federal funding for a manufacturing plant in West Virginia; and in March 2024 it inaugurated its first facility in Brazil where it will start recovering high-value metal from mining waste at commercial scale.

Carbon removal company, Climeworks, continues to sign new carbon removal agreements with customers from a range of industries, from airlines to toy manufacturers, as it works towards the launch of its new plant in Iceland in early summer. Operational progress at Swedish battery developer and manufacturer, Northvolt, has been slower than expected in a higher cost environment and for the sheer scale of what the company is trying to achieve. On a more positive note, its progress in securing long-term contracts to the value of over $55bn with esteemed partners is helping it secure financing

to fund its expansion of Europe's first home-grown gigafactory and realise its plans for battery recycling.

Interest rates and geopolitical fragility dominate the headlines, often masking the 'secret silent miracle of human progress'1. We endeavour to find the companies contributing to human progress through products and services that address global challenges; we believe that these companies will thrive in the long term; and we believe that share prices follow fundamentals. With this in mind, it is worth highlighting the strong fundamentals of the portfolio: companies within the portfolio have delivered 10.9% annual earnings growth over the last five years compared to 8.0% for the index and are forecast to deliver 16.8% per annum2 for the next three years compared to 9.4% for the index; portfolio companies have stronger balance sheets than the index with net debt/EBITDA of 1x compared to 1.6x for the index; and the portfolio holdings are investing in their future more than index constituents with capex and R&D spend equating to 19% of revenues compared to 10% for the benchmark.

For these superior fundamental characteristics - faster growth, stronger balance sheets and more investment - the portfolio is on a one year forward PE of 27x, a premium of 55% to the benchmark3. This compares to a premium of 63% to the index three years ago.

Portfolio

We have made three complete sales and three new purchases for the Company over the past six months. The sale of Daikin, a leading player in the heating, ventilation and air conditioning industry, due to the emergence of new information related to its involvement in the production of white phosphorous smoke bombs used by the Japanese Ministry of Defence for training purposes, was addressed

in the full year statement. Danish offshore wind operator Ørsted has faced operational challenges. Rising material costs, higher interest rates and changes to government support for projects in the US led to significant write-downs to projects there, undermining our confidence in the management team's ability to allocate capital: we have decided to move on. M3, a Japanese provider of digital services for the healthcare system, is growing in complexity as it acquires more and bigger businesses in different geographies. We think this comes with execution risk, so the position was sold. In both cases we sold at a lower price to when we purchased shares in February 2021; both companies were among the bigger detractors to performance since then.

We are excited to have taken three new holdings, all quite different in terms of their business model and how they are driving change. Katitas is a Japanese company that refurbishes vacant homes to sell to first-time buyers at affordable prices. It is poised to benefit from structural changes with new homes being unsustainable, expensive and in short supply, while younger generations are more open to secondhand purchases. Its scale and unique expertise mean it dominates the pre-owned market. We are excited about its ability to grow in this niche market while contributing to greater circularity.

Despite a weakening of demand for electric vehicles due to higher interest rates and weaker economies, we remain excited about investment opportunities associated with electrification of transportation. Rivian is a US company that makes electric SUVs, pick-up trucks and commercial vans. It is well poised to contribute to the electrification of the automotive sector with its strong brand, vertically integrated manufacturing business model and strong commitment to reducing carbon emissions.

Grab, South East Asia's leading platform for ride- hailing and food delivery services, is the third new holding. We expect demand for its services to grow as the region's economy expands and admire the competitive edge it has carved out through its network, scale and technology. We believe that its digital platform is playing a pivotal role in helping micro, small and medium sized enterprise (SME) owners scale their businesses, enhance their financial resilience and, importantly, improve their quality of life.

Positive Conversations

We recently published Positive Conversations, an annual report that focuses on the business practices of portfolio holdings, including the carbon footprint, outlines progress towards Net Zero alignment, and provides a record of our engagements with portfolio holdings. Through our engagements we aim to grow our understanding, build relationships with management teams and seek to influence where we think engagement can be of value to companies and society. The report includes detail on positive conversations with Illumina on strategy, governance and remuneration; with Moderna on vaccine equality; and with Tesla on supply chains.

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This report complements the Annual Impact Report which details how portfolio holdings are contributing towards a more sustainable and inclusive world across the four impact themes.

Outlook

'It's not what you look at that matters, it's what you see'4.

We can all look at inflation figures and the US Federal Reserve's most recent meeting minutes; or at the horrendous footage of the conflicts in Ukraine and the Middle East; anyone can look at charts illustrating the rise in global temperatures or the exponential spread of viruses.

Looking around us we see a world facing significant environmental and social challenges; we see individuals and businesses innovating and developing new products and services or new business models that have the potential to address these global challenges. We see investment opportunities in businesses that are challenging the status quo. What we see is encapsulated in our dual objectives: to contribute towards a more sustainable, inclusive and healthier world while generating attractive investment returns for shareholders. To do this we endeavour to see what matters most, rather than being distracted by trying to predict short-term sentiment on interest rates or geopolitics.

It could be said that society is at a watershed moment in time, faced with the choice of continuing along the path we are on, or having the bravery, ambition and determined optimism needed to help steer us onto

a more sustainable and inclusive trajectory.

This watershed moment is rich with investment opportunities for the brave and ambitious. Some interesting areas we are exploring include the electrification of mining equipment, new treatments for obesity, and companies helping improve access to medication.

Thank you for seeing what we see in our philosophy; thank you for believing that we see things that others don't, and for sharing our excitement in that.

Kate Fox and Lee Qian

Portfolio Managers

2 May 2024

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Social inclusion and education

Building a more inclusive society and/or improving the quality and accessibility of education

Environment and resource needs

Improving our resource efficiency and reducing

the environmental impact of our economic activities

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