Sustainable Funds Outperformed Traditional Peers in First Half 2026

Disclosures

This material was published in September 2026 and has been prepared for informational purposes only and is not a solicitation of any offer to buy or sell any security or other financial instrument or to participate in any trading strategy. This material was not prepared by the Morgan Stanley Research Department and is not a Research Report as defined under FINRA regulations. This material does not provide individually tailored investment advice. It has been prepared without regard to the individual financial circumstances and objectives of persons who receive it.

Morgan Stanley Smith Barney LLC and Morgan Stanley & Co. LLC (collectively, “Morgan Stanley”), Members SIPC, recommend that recipients should determine, in consultation with their own investment, legal, tax, regulatory and accounting advisors, the economic risks and merits, as well as the legal, tax, regulatory and accounting characteristics and consequences, of the transaction or strategy referenced in any materials. The appropriateness of a particular investment or strategy will depend on an investor’s individual circumstances and objectives. Morgan Stanley, its affiliates, employees and Morgan Stanley Financial Advisors do not provide tax, accounting or legal advice. Individuals should consult their tax advisor for matters involving taxation and tax planning, and their attorney for matters involving legal matters.

Past performance is not a guarantee or indicative of future performance. Historical data shown represents past performance and does not guarantee comparable future results. Certain statements herein may be “forward-looking statements” within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements are not historical facts or statements of current conditions, but instead are based on management’s current expectations and are subject to uncertainty and changes in circumstances. These statements are not guarantees of future results or occurrences and involve certain known and unknown risks, uncertainties and assumptions that are difficult to predict and are often beyond our control. In addition, this report contains statements based on hypothetical scenarios and assumptions, which may not occur or differ significantly from actual events, and these statements should not necessarily be viewed as being representative of current or actual risk or forecasts of expected risk. Actual results and financial conditions may differ materially from those included in these statements due to a variety of factors. Any forward-looking statements made by or on behalf of Morgan Stanley speak only as to the date they are made, and Morgan Stanley does not undertake to update forward-looking statements to reflect the impact of circumstances or events that arise after the date the forward-looking statements were made. Because of their narrow focus, sector investments tend to be more volatile than investments that diversify across many sectors and companies.

Certain portfolios may include investment holdings that integrate one or more sustainability factors (referred to as "sustainable investments"). Sustainability refers to the integration of certain environmental and/or social considerations into economic, strategic, and business decisions. While individual activities will be evaluated as appropriate on a case-by-case basis, Morgan Stanley’s sustainability efforts generally entail the integration of the following considerations: Climate / Carbon Emissions, Ethics & Business Conduct, Supply Chains, Climate, Environmental and Social Risk Management, Financial & Economic Inclusion, Workforce (including wellness and inclusion practices), Community Engagement, Human Rights, Shareholder Engagement, Corruption & Bribery, Nature and Biodiversity, and Waste.

You should carefully review an investment product’s prospectus or other offering documents, disclosures and/or marketing material to learn more about how it incorporates sustainability factors into its investment strategy.

Sustainability considerations may include, but are not limited to, environmental factors (e.g., climate change, biodiversity), social factors (e.g., human capital, data privacy, diversity & inclusion), and governance factors (e.g., board oversight, business ethics, risk management). You should carefully review an investment product's prospectus or other offering documents, disclosures and/or marketing material to learn more about how it incorporates sustainability factors into its investment strategy.

Sustainable investments may also be referred to as impact aware investments, socially responsible investments, Environmental, Social and Governance ("ESG") investments, or diversity and inclusion ("D&I") investments. It is important to understand that sustainability definitions and criteria used within the industry can vary, and ESG ratings of the same subject companies and/or securities can vary among different ESG ratings providers for several reasons including, differences in definitions, methodologies, processes, data sources and subjectivity among ESG rating providers when determining a rating. Certain issuers of investments including, but not limited to, separately managed accounts ("SMAs"), mutual funds and exchange traded funds ("ETFs") may have differing and inconsistent views concerning sustainability criteria, and the sustainability claims made in offering documents or other literature may overstate sustainability impact. As a result, it is difficult to compare sustainable investment products. Further, socially responsible norms vary by region, and an issuer's sustainability practices or Morgan Stanley's assessment of an issuer's sustainability practices can change over time.

Portfolios that include investment holdings deemed sustainable investments or that employ sustainability screening criteria as part of an overall strategy may experience performance that is lower or higher than a portfolio not employing such practices. Portfolios with sustainability restrictions and strategies as well as sustainable investments may not be able to take advantage of the same opportunities or market trends as portfolios where sustainability criteria are not applied. There is no assurance that a sustainable investing strategy or technique employed will be successful. Past performance is not a guarantee or a dependable measure of future results. For risks related to a specific fund, please refer to the fund's prospectus or summary prospectus.

Investment managers can have different approaches to sustainability and can offer strategies that differ from the strategies offered by other investment managers with respect to the same theme or topic. Additionally, when evaluating investments, an investment manager is dependent upon information and data that may be incomplete, inaccurate, or unavailable, which could cause the manager to incorrectly assess an investment's sustainability characteristics or performance. Such data or information may be obtained through voluntary or third-party reporting. Morgan Stanley does not verify that such information and data is accurate and makes no representation or warranty as to its accuracy, timeliness, or completeness when evaluating an issuer.

Morgan Stanley's assessment of an issuer's sustainability practices or a sustainability portfolio is as of the date of this material. No assurance is provided that the underlying assets have maintained or will maintain any applicable sustainability designations or any stated sustainability compliance, or that the underlying assets have been operated or will be operated in a sustainability-compliant manner. The sustainability impacts of the securities and any underlying assets may vary over time.

This can cause Morgan Stanley to incorrectly assess an issuer's business practices with respect to its sustainability practices. As a result, it is difficult to compare sustainable investment products.

Morgan Stanley makes no representation as to the compliance of any fund or portfolio with any laws or regulatory guidelines, recommendations, requirements or similar standards relating to sustainability; or in connection with or to meet any of your investing sustainability objectives, metrics, or criteria; or otherwise.

The appropriateness of a particular sustainable investment or strategy will depend on an investor's individual circumstances and objectives. Principal value and return of an investment will fluctuate with changes in market conditions.

This material may provide the addresses of, or contain hyperlinks to, websites. Except to the extent to which the material refers to website material of Morgan Stanley Wealth Management, the firm has not reviewed the linked site. Equally, except to the extent to which the material refers to website material of Morgan Stanley Wealth Management, the firm takes no responsibility for, and makes no representations or warranties whatsoever as to, the data and information contained therein. Such address or hyperlink (including addresses or hyperlinks to website material of Morgan Stanley Wealth Management) is provided solely for your convenience and information and the content of the linked site does not in any way form part of this document. Accessing such website or following such link through the material or the website of the firm shall be at your own risk and we shall have no liability arising out of, or in connection with, any such referenced website. Morgan Stanley Wealth Management is a business of Morgan Stanley Smith Barney LLC.

Credit quality is a measure of a bond issuer’s creditworthiness, or ability to repay interest and principal to bondholders in a timely manner. The credit rating shown are based on each fund’s security rating as provided by Standard & Poor’s, Moody’s and/or Fitch, as applicable. Credit ratings are issued by the rating agencies for the underlying securities in the fund and not the fund itself, and the credit quality of the securities in the fund does not represent the stability or safety of the fund. Credit ratings shown range from AAA, being the highest, to D, being the lowest based on S&P and Fitch’s classification (the equivalent of Aaa and C, respectively, by Moody(s). Ratings of BBB or higher by S&P and Fitch (Baa or higher by Moody’s) are considered to be investment grade-quality securities. If two or more of the agencies have assigned different ratings to a security, the highest rating is applied. Securities that are not rated by all three agencies are listed as “NR”. Credit ratings are subject to change.  

Indices are unmanaged and an investment cannot be made directly into an index.

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