MORGAN STANLEY

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Management’s Discussion and Analysis

Investment Management

1. Includes Investments and Trading, Net interest, and Other revenues.

Asset Management and Related Fees

Asset management and related fees of $1,496 million in the current quarter increased 3% from the prior year quarter, primarily driven by higher average AUM on higher market levels and the cumulative impact of positive long-term net flows, partially offset by lower average fee rates, reflecting a change in asset mix.

Asset management revenues are influenced by the level, relative mix of AUM and related fee rates. While higher market levels drove increases in average AUM in the current quarter, there were continued net outflows in the Equity asset class, which may be influenced by the structure and performance of our investment strategies and products relative to their benchmarks, offset by higher net inflows in the Alternatives and Solutions and Fixed Income asset classes, reflecting client preferences. To the extent these conditions continue, we would expect our Asset management revenue to continue to be impacted.

See “Assets Under Management or Supervision” herein.

Performance-based Income and Other

Performance-based income and other revenues of $39 million in the current quarter decreased from the prior year quarter, primarily due to the reversal of accrued carried interest in infrastructure funds, partially offset by higher accrued carried interest in certain private equity and real estate funds.

Non-interest expenses of $1,255 million in the current quarter decreased 2% from the prior year quarter, primarily due to lower Compensation and benefit expenses, partially offset by higher Non-compensation expenses.

•Compensation and benefits expenses decreased in the current quarter, primarily due to lower expenses related to compensation associated with carried interest.

•Non-compensation expenses increased in the current quarter, primarily due to increased technology spend and higher distribution expenses on higher average AUM.

Table of Contents

Management’s Discussion and Analysis

Assets Under Management or Supervision Rollforwards 1

1. During the first quarter of 2026, certain products were reclassified among asset classes to more closely align reporting with underlying investment strategies, primarily reflecting a reclassification of certain tax-managed solutions from Equity to Alternatives and Solutions. These changes had no impact on total AUM. Prior period amounts have been adjusted to conform with the current period presentation.

2. Inflows represent investments or commitments from new and existing clients in new or existing investment products, including client reinvestments. Inflows exclude the gross impact of exchanges, whereby a client changes positions within the same asset class.

3. Outflows represent redemptions from clients’ funds and exclude the gross impact of exchanges, whereby a client changes positions within the same asset class.

4. Distributions represent returns of capital or returns on investments. Amounts for prior periods have been reclassified from ‘Other’ to conform with the current period presentation.

5. Market Impact and Other includes realized and unrealized gains and losses on portfolio investments and the impact of foreign currency changes for non-U.S. dollar denominated funds, and excludes any funds where market impact does not impact management fees.

6. As of March 31, 2026 and March 31, 2025, Alternatives and Solutions includes Parametric Long-Term period-end AUM of $524 billion and $424 billion, respectively. Parametric Long-Term products generally have lower average fee rates than other Alternatives and Solutions products.

Average AUM 1

Average Fee Rates 1,2

1. As a result of the reclassification described above in the “Assets Under Management or Supervision Rollforwards” table, prior period amounts have been adjusted to conform with the current period presentation.

2. Based on Asset management revenues, net of waivers, excluding performance-based fees and other non-management fees. For certain non-U.S. funds, it includes the portion of advisory fees that the advisor collects on behalf of third-party distributors. The payment of those fees to the distributor is included in Non-compensation expenses in the income statement.

For a description of the asset classes in the previous tables, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Business Segments—Investment Management—Assets Under Management or Supervision Rollforwards” in the 2025 Form 10-K.