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

Interim	31 March 2024
Financial Report

Keystone Positive Change Investment Trust plc

Keystone Positive Change's objective is to generate long-term capital growth with the aim of the NAV total return exceeding that of the MSCI AC World Index in sterling terms by at least 2% per annum over rolling five-year periods; and contribute to a more sustainable and inclusive world by investing in companies whose products or services make a positive social or environmental impact.

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

Keystone Positive Change Investment Trust plc

Summary of unaudited results*

			At
		At	30 September
		31 March	2023
		2024	(audited)	% change
Total assets (before deduction of borrowings)		£174.0m	£162.2m
Borrowings (at book value)		(£15.3m)	(£15.5m)
Shareholders' funds		£158.7m	£146.7m
Net asset value per ordinary share (NAV)		262.3p	237.3p	10.5
Share price		231.0p	204.0p	13.2
Discount†		(11.9%)	(14.0%)
Gross gearing		9.6%	10.6%
Net gearing		8.6%	10.1%
Active share†		97%	97%
		Six months to	Six months to
		31 March 2024	31 March 2023
Revenue earnings per ordinary share		0.41p	0.64p
Total returns to 31 March 2024#†		Six months %	1 year %	3 years %
Net asset value per ordinary share (NAV)		10.7	3.4	(9.1)
Share price		13.5	9.7	(16.0)
Index‡		16.3	21.2	35.5
	Six months to 31 March 2024	Year to 30 September 2023
Period's high and low	High	Low	High	Low
Net asset value per ordinary share (NAV)	265.5p	218.8p	266.8p	218.1p
Share price	231.0p	183.3p	226.0p	187.0p
(Discount)/premium†	(10.8%)	(17.9%)	(10.2%)	(18.0%)

• For a definition of terms, see Glossary of terms and Alternative Performance Measures on pages 21 to 23.

• Alternative performance measure. See Glossary of terms and Alternative Performance Measures on pages 21 to 23.
  # Source: Baillie Gifford/LSEG and relevant underlying index providers. See disclaimer on page 20.
  ‡ The MSCI All Country World Index (in sterling terms) is the principal index against which performance is measured with effect from 11 February 2021. Past performance is not a guide to future performance.

01

Interim Management Report

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.

For a definition of terms, see Glossary of terms and Alternative Performance Measures on pages 21 to 23.

Total return information is sourced from Baillie Gifford/LSEG and relevant underlying index providers. See disclaimer on page 20. Past performance is not a guide to future performance.

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Interim Financial Report 2024

Keystone Positive Change Investment Trust plc

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 return from 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.

1. Hans Rosling, Swedish physician and academic.
2. Third party analyst expectations.
3. These statistics exclude private companies.

03

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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Interim Financial Report 2024

Keystone Positive Change Investment Trust plc

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

4 Henry David Thoreau - American naturalist, essayist, poet, and philosopher.

05

List of investments

as at 31 March 2024

				% of
	Business	Impact theme*	Fair value	total
Name	£'000	assets †
TSMC	Semiconductor manufacturer	Social	12,149	7.0
ASML	Supplier to semiconductor industry	Social	11,427	6.6
MercadoLibre	Ecommerce platform and fintech	Social	11,332	6.5
Dexcom	Continuous glucose monitoring	Healthcare	8,943	5.1
Moderna	Messenger RNA therapeutics	Healthcare	8,364	4.8
Bank Rakyat Indonesia	Bank	Base	8,360	4.8
Xylem	Innovative water solutions	Environment	8,238	4.7
Shopify	Online commerce platform	Social	7,930	4.6
Autodesk	Software products for architecture, engineering,	Environment	7,349	4.2
	construction, and manufacturing industries
Deere	Agricultural equipment	Environment	6,936	4.0
Nu Holdings	Digital banking company	Social	6,630	3.8
Remitly Global	Online money transfer payments for immigrants	Base	5,992	3.4
	and their families
Duolingo	Language learning website and mobile app	Social	5,691	3.3
Ecolab	Water, hygiene and infection prevention services	Environment	5,325	3.1
Illumina	Gene sequencing equipment	Healthcare	5,242	3.0
HDFC Bank	Mortgage provider	Social	5,215	3.0
Alnylam Pharmaceuticals	Biotechnology	Healthcare	5,036	2.9
Sartorius	Biopharmaceutical and laboratory tooling	Healthcare	4,385	2.5
Coursera	Online learning	Social	3,451	2.0
Tesla	Electric cars and renewable energy solutions	Environment	3,406	2.0
Grab#	Superapp in Southeast Asia, providing mobility,	Social	3,388	1.9
	deliveries and digital financial services
Northvolt AB	Battery developer and manufacturer, specialising	Environment	3,333	1.9
	in lithium-ion technology for electric vehicles
Umicore	Global materials technology and recycling	Environment	3,104	1.8
Katitas#	Refurbishes vacant homes in Japan and sells	Environment	3,056	1.8
	to first-time buyers on an affordable basis
Safaricom	Telecommunications and mobile payments	Base	2,415	1.4
10x Genomics	Life science technology	Healthcare	2,116	1.2

• Abbreviated as follows: Healthcare - Healthcare and quality of life; Social - Social inclusion and education; Environment - Environment and resource needs; Base - Base of the pyramid.

• For a definition of terms see Glossary of terms and Alternative Performance Measures on pages 21 to 23.

• New purchase during the period. Complete sales during the period were: Ørsted, Daikin Industries, and M3. Chr Hansen merged with Novozymes to form Novonesis.

Denotes unlisted/private company holding.

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Interim Financial Report 2024

Keystone Positive Change Investment Trust plc

					% of
	Business		Impact theme*	Fair value	total
Name		£'000	assets †
Climeworks	Direct air carbon capture		Environment	1,725	1.0
Boston Electrometallurgical	Novel technology for producing green steel		Environment	1,672	1.0
Corp
PsiQuantum	Silicon photonic quantum computing		Social	1,572	0.9
Discovery Holdings	Life and health insurance provider		Healthcare	1,556	0.9
Joby Aviation	Electric aircraft		Environment	1,459	0.8
AbCellera Biologics	Antibody drug discovery tools		Healthcare	1,445	0.8
WuXi Biologics	Contract research, development and manufacturing	Healthcare	1,433	0.8
	organisation focusing on biologics drugs
Novonesis	Biological solutions		Environment	1,166	0.7
Spiber	Novel protein biomaterials		Environment	901	0.5
Rivian Automotive#	Electric sports utility vechicles and pickup trucks	Environment	618	0.4
Total investments				172,360	99.1
Net liquid assets†				1,594	0.9
Total assets†				173,954	100.0
	Listed	Unlisted	Net liquid	Total
	equities	securities ‡		assets †	assets †
	%	%		%	%
31 March 2024	93.8	5.3		0.9	100.0
30 September 2023	93.7	5.9		0.4	100.0

• Abbreviated as follows: Healthcare - Healthcare and quality of life; Social - Social inclusion and education; Environment - Environment and resource needs; Base - Base of the pyramid.

• For a definition of terms see Glossary of terms and Alternative Performance Measures on pages 21 to 23.

• New purchase during the period. Complete sales during the period were: Ørsted, Daikin Industries, and M3. Chr Hansen merged with Novozymes to form Novonesis.

• Includes holdings in ordinary shares, preference shares and promissory notes. Denotes unlisted/private company holding.

07

Portfolio companies split by impact theme

as at 31 March 2024

Social inclusion and education

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

Holding	Value £'000	%
TSMC	12,149	7.0
ASML	11,427	6.6
MercadoLibre	11,332	6.5
Shopify	7,930	4.6
Nu Holdings	6,630	3.8
Duolingo	5,691	3.3
HDFC Bank	5,215	3.0
Coursera	3,451	2.0
Grab	3,388	1.9
PsiQuantum	1,572	0.9
	68,785	39.6

Environment and resource needs

Improving our resource efficiency and reducing

the environmental impact of our economic activities

Holding	Value £'000	%
Xylem	8,238	4.7
Autodesk	7,349	4.2
Deere	6,936	4.0
Ecolab	5,325	3.1
Tesla	3,406	2.0
Northvolt AB	3,333	1.9
Umicore	3,104	1.8
Katitas	3,056	1.8
Climeworks	1,725	1.0
Boston Electrometallurgical Corp	1,672	1.0
Joby Aviation	1,459	0.8
Novonesis	1,166	0.7
Spiber	901	0.5
Rivian Automotive	618	0.4
	48,288	27.9

• For a definition of terms see Glossary of Terms and Alternative Performance Measures on pages 21 to 23. Denotes unlisted/private company holding.

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Interim Financial Report 2024