2020 Market Review & OutlookPresentation by Douglas S. Foreman, CFA – Chief Investment Officer

Source: FactSet Research SystemsPast performance is no guarantee of future results. 22

(42.28%)

(26.56%)

(21.95%)

(17.49%)

(9.98%) (8.78%)(5.96%) (5.50%)

(3.06%) (2.12%) (0.62%)

(10.49%)

-50%

-45%

-40%

-35%

-30%

-25%

-20%

-15%

-10%

-5%

0%

S&P 500® INDEX SECTOR RETURNSYEAR-TO-DATE ENDING 4/17/20

Sources: Bureau of Economic Analysis, Bureau of Labor Statistics, Factset Research Systems, S&P 500 and J.P. Morgan Asset Management Data as of March 31, 2020. Past performance is no guarantee of future results. 33

EARNINGS CONTRIBUTION BY INDUSTRYCONTRIBUTION TO 2019 S&P 500® OPERATING EARNINGS

$0

$2

$4

$6

$8

$10

$12

Retail ex. Food & Beverage: $5.36

Restaurants & Bars: $1.38

Entertainment: $1.05

Airline & Cruises: $1.83

Hotels & Tourism: $1.08

Total: $10.71 (7% of Operating Expenses)

Sources: Johns Hopkins CSSE and J.P. Morgan Asset ManagementGrowth in cases is the week-over-week percent change in cumulative cases outside of China. The mortality rate is the number of fatalities reported per the total number of confirmed cases reported outside of China. Data as of April 15, 2020. Past performance is no guarantee of future results. 44

WEEKLY % CHANGE IN COVID-19 CASES & MORTALITY RATE, EX. CHINA

400%

350%

250%

200%

150%

100%

50%

0%

300%

6.0%

5.0%

4.0%

3.0%

2.0%

0.0%

1.0%

Feb-04 Mar-03 Mar-17 Mar-31Feb-18 Apr-14

7.0%Growth in Cases Mortality Rate

Sources: CBO and J.P. Morgan Asset Management Data as of March 31, 2020. 55

CORONAVIRUS AID, RELIEF AND ECONOMIC SECURITY ACT

Amount ($ bn) Measure

$290 One-time stimulus checks amounting to $1,200 per adult and $500 per child up to certain income limits

$260Enhanced, expanded and extended unemployment benefits, adding $600 per week to every unemployment check for 4 months, expanding program to cover contractors and self-employed and extending program to 39 weeks from 26 weeks

$510Loans to distressed businesses, cities and states. Includes $29 billion for airlines, $17 billion for firms deemed important for national security and $454 billion as backstop for loans to other businesses, cities and states.

$377 Small business relief, largely in the form of “forgivable loans” for spending on payroll, rent and utilities

$150 Direct aid to state and municipal governments

$180 Health-related spending

$516 Other spending and tax breaks

$2.283 trillion ~10.8% of GDP

Source: StrategasData as of April 16, 2020. Past performance is no guarantee of future results. 66

0

100

200

300

400

500

600

700

0

200

400

600

800

1,000

1,200

1,400

1,600

1,800

2,000

'97 '99 '01 '03 '05 '07 '09 '11 '13 '15 '17 '19

High Yield

Investment Grade

HIGH YIELD & INVESTMENT GRADEOPTION-ADJUSTED SPREADS (BPS)

Source: FactSet Research SystemsData presented is for the 15 years ending April 17, 2020. Past performance is no guarantee of future results. 77

$0.4

$0.6

$0.8

$1.0

$1.2

$1.4

$1.6

$1.8

$2.0

S&P 500® Index

Russell 2000® Index

RELATIVE PERFORMANCE OF THE S&P 500® INDEX VS. THE RUSSELL 2000® INDEX

S&P 500® INDEX OUTPERFORMING SINCE MID-2018

Exce

ss C

umul

ativ

e Re

turn

Source: BloombergData as of April 20, 2020. Past performance is no guarantee of future results. 88

60

70

80

90

100

110

120

130

82.46

PERFORMANCE OF HIGHLY LEVERAGED EQUITIESJP MORGAN INDEBTED COMPANIES INDEX

Sources: Johns Hopkins CSSE, CBOE and J.P. Morgan Asset ManagementData as of April 5, 2020. Past performance is no guarantee of future results. 99

VIX (VOLATILITY INDEX) VS. COVID-19 CASES

Source: StrategasData as of April 13, 2020. Past performance is no guarantee of future results. 1010

10 BEST WEEKS FOR THE S&P 500® SINCE 1928

Rank Week Ending Weekly Return

1 6/26/1931 16.1%

2 7/29/1932 16.0%

3 6/24/1938 15.3%

4 10/11/1974 14.1%

5 3/17/1933 13.5%

6 8/5/1932 12.8%

7 9/8/1939 12.3%

8 4/10/2020 12.1%

9 11/28/2008 12.0%

10 7/15/1932 11.8%

1111

IMPORTANT DISCLOSURES

Kayne Anderson Rudnick Investment Management, LLC (“KAR”) assumes no obligation to update or supplement this information to reflect subsequent changes. This material is not intended to be relied upon as a forecast, research or investment advice, and is not a recommendation, offer, or solicitation to buy or sell any securities or to adopt any investment strategy. The information and opinions contained in this material are derived from proprietary and non-proprietary sources deemed by KAR to be reliable, are not necessarily all inclusive and are not guaranteed as to accuracy. There is no guarantee that any forecasts made will come to pass. Reliance upon information in this material is at the sole discretion of the reader. The information presented is intended for the sole and exclusive use of the recipient and should only be relied upon by the intended recipient. Past performance is not indicative of future results.

An outbreak of infectious respiratory illness caused by a novel coronavirus known as COVID-19 was first detected in China in December 2019 and has now been detected globally. This coronavirus has resulted in travel restrictions, closed international borders, enhanced health screenings at ports of entry and elsewhere, disruption of and delays in healthcare service preparation and delivery, prolonged quarantines, cancellations, supply chain disruptions, and lower consumer demand, as well as general concern and uncertainty. The impact of COVID-19, and other infectious illness outbreaks that may arise in the future, could adversely affect the economies of many nations or the entire global economy, individual issuers and capital markets in ways that cannot necessarily be foreseen. In addition, the impact of infectious illnesses in emerging market countries may be greater due to generally less established healthcare systems. Public health crises caused by the COVID-19 outbreak may exacerbate other pre-existing political, social and economic risks in certain countries or globally. The duration of the COVID-19 outbreak and its effects cannot be determined with certainty. The future impact of COVID-19 is currently unknown, and it may exacerbate other risks that apply to KAR’s investment strategies.