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Glossary of Terms

Definitions

An investment strategy involving ongoing buying and selling actions by the investor.

Measures the degree of active management by a portfolio manager represented as a percentage of the fund’s holdings that differ from the benchmark.

Alpha measures performance on a risk-adjusted basis by comparing it to the benchmark index.

Beta attempts to measure the relative risk. A Beta rating above 1.0 indicates greater volatility than the market. A Beta rating below 1.0 indicates lower volatility than the market.

The measurement of a fund’s cumulative return divided by its benchmark’s cumulative return during positive and negative market periods.

The portion of a company’s profit allocated to each outstanding share of common stock. Earnings per share serves as an indicator of a company’s profitability.

A calculation of the average life of individual bonds within a bond fund, and serves as a useful measure of the entire portfolio’s sensitivity to rising and falling interest rates. An Effective Duration of 2.00 means that with a 1% decline in interest rates, the principal value should rise by 2%, and vice versa.

Funds from operations, or FFO, is considered by industry analysts as an appropriate measure of earnings performance for an equity REIT. Generally, FFO adjusts net income for non-cash charges such as depreciation and amortization of rental properties, impairment charges, gains/losses on sales of real estate, and extraordinary items. FFO is not a generally accepted account principle (GAAP), but has been defined by the National Association of Real Estate Investment Trusts (NAREIT) as a standard measure since 1991.

A median ratio used to compare the book value of fund’s stocks with their market value. The price to book ratio indicates how much an investor is paying for a company’s assets based on historical valuations. It does not reflect current market value.

A median ratio used to compare the price of a fund’s stocks with their per-share earnings. A higher price per earnings ratio indicates the market has belief that a company has the ability to increase its earnings.

A median ratio used to compare the price of fund’s stocks with their cash flow. The price to cash flow ratio indicates relative value. It does not reflect current market value.

An investment strategy that aims to maximize returns over the long run by keeping the amount of buying and selling to a minimum.

A measure of how frequently assets within a fund are bought and sold by the managers.

Common stock price.

A statistical measure that represents what amount of a fund’s movements can be explained by movements in its benchmark index. A high R-Squared (between 85 and 100) indicates the fund’s performance patterns have been in line with the index.

Real Estate Net Asset Value, or ReNAV, is a commonly used metric to estimate the adjusted book value of a Real Estate Investment Trust (REIT). NAV is the mark-to-market value of a company’s common equity calculated by applying an estimate of private market values to the company’s real estate and other assets and deducting all liabilities. NAV is often presented on a per-share basis.

An indicator of how profitable a company is relative to its total assets. Calculated by dividing a company’s annual earnings by its total assets.

The amount of net income returned as a percentage of shareholders equity.

SEC Yield is an annualization of the Fund’s total net investment income per share for the 30-day period ended on the last day of the month.

The measurement of a fund’s excess return. This helps determine if a fund’s returns are due to sound investment decisions or excess risk. The greater a fund’s Sharpe ratio, the better its risk-adjusted performance has been.

A statistical measurement showing how widely the returns varied over a certain period of time. When a fund has a high standard deviation, the predicted range of performance implies greater volatility.

A stock market index weighted by the market capitalization of each stock in the index. In such a weighting, larger companies account for a greater portion of the index. Most indexes are constructed in this manner, with the best example being the S&P 500.

A weighted harmonic average ratio used to compare the book value of fund’s stocks with their market value. The price to book ratio indicates how much an investor is paying for a company’s assets based on historical valuations. It does not reflect current market value.

A weighted harmonic average ratio used to compare the price of a fund’s stocks with their per share earnings. A higher price per earnings ratio indicates the market has belief that a company has the ability to increase its earnings.

Yield to maturity (YTM) is the total return anticipated on a bond if the bond is held until it matures. 


Designations

A professional designation awarded by the College for Financial Planning (CFP) to financial professionals who successfully complete a self-study program, pass an exam, and agree to comply with a code of ethics. To keep the privileges associated with the designation, AAMS professionals must complete 16 hours of continuing education every two years.

The Associate of the Society of Actuaries (ASA) is a professional organization for actuaries based in North America. The Society's vision is for actuaries to be recognized as the leading professionals in the modeling and management of financial risk and contingent events. Requirements for membership for the SOA include the actuarial exams, a comprehensive series of competitive exams. Topics covered in the exams include mathematics, finance, insurance, economics, interest theory, life models, and actuarial science. 

A graduate-level investment performance and risk evaluation credential and is awarded by CFA Institute — the largest global association of investment professionals. To earn the CIPM, candidates must: 1) pass two sequential examinations; 2) have at least two years of qualified professional investment experience; 3) join CIPM Association; and 4) commit to comply with the CFA Institute Bylaws and Rules of Procedure. The Certified Public Accountant Licensure (CPA) is a graduate-level accounting license and is awarded by the American Institute of CPAs (AICPA). To earn the CPA licensure, candidates must: 1) have at least two years of public accounting experience; and 2) pass the examination. Please note, every state has its own education and experience requirements that must be met.

The Certified Financial Planner® (CFP) certification is a graduate-level credential awarded by the CFP Board.  To earn the CFP, candidates must: 1) take the required coursework; 2) meet educational requirements; 3) pass the examination; 4) have qualifying experience; and 5) agree to adhere to the CFP Board's standards of ethics and professional conduct.

The Certified Investment Management Analyst® (CIMA) credential is a graduate-level investment certification and is awarded by the Investment Management Consultants Association® (IMCA) - that sets global standards for the investment management consulting profession.   To earn the CIMA designation, candidates must: 1) have at least three years of qualified financial experience; 2) Pass an extensive background check; 3) complete the two-step program of study; 4) pass the qualification and certification examinations; and 5) adhere to the IMCA's Ethics and other ongoing standards.

A graduate-level accounting license and is awarded by the American Institute of CPAs (AICPA). To earn the CPA licensure, candidates must: 1) have at least two years of public accounting experience; and 2) pass the examination. Please note, every state has its own education and experience requirements that must be met.

A graduate-level compliance certification and is awarded by the Financial Industry Regulatory Authority (FINRA). To earn the CRCP designation, candidates must: 1) pass two weeklong residential courses; 2) pass the two consecutive examinations; and 3) meet continuing education requirements.

Recognized as the leading credential in corporate treasury worldwide and awarded by the Association for Financial Professionals® (AFP). To earn the CTP designation, candidates must: 1) pass the examination, 2) have at least two years of qualified work/education/teaching experience, and 3) meet continuing requirements.

A graduate-level alternative investment credential awarded by the CAIA Association - a global provider of Alternative Investment education. To earn the CAIA, candidates must: 1) pass two sequential examinations.

A graduate-level investment credential awarded by the CFA Institute — the largest global association of investment professionals. To earn the CFA charter, candidates must: 1) pass three sequential, six-hour examinations; 2) have at least four years of qualified professional investment experience; 3) join CFA Institute as members; and 4) commit to abide by, and annually reaffirm, their adherence to the CFA Institute Code of Ethics and Standards of Professional Conduct.

A retirement planning credential and is awarded by the College for Financial Planning. To earn the CRPC, candidates must: 1) complete the educational program; 2) pass the final examination; 3) complete the designation application.


Indexes

The Bloomberg Barclays 1-3 Year U.S. Government/Credit Bond Index is an unmanaged index composed of securities that are SEC-registered, taxable, and dollar denominated. The index covers the U.S. investment grade fixed rate bond market, with index components for government and corporate securities. It is not possible to invest in the Barclays 1-3 Year U.S. Government/Credit Bond Index, which is unmanaged and does not incur fees and charges.

Bloomberg Barclays Intermediate U.S. Government/Credit Bond Index is an unmanaged index composed of securities that are SEC-registered, taxable, and dollar denominated. The index covers the U.S. investment grade fixed rate bond market, with index components for government and corporate securities. It is not possible to invest in the Barclays Intermediate U.S. Government/Credit Bond Index, which is unmanaged and does not incur fees and charges.

Bloomberg Barclays U.S. Aggregate Bond Index is an unmanaged index composed of securities that are SEC-registered, taxable, and dollar denominated. The index covers the U.S. investment grade fixed rate bond market, with index components for government and corporate securities, mortgage pass-through securities, and asset-backed securities. It is not possible to invest in the Bloomberg Barclays U.S. Aggregate Bond Index, which is unmanaged and does not incur fees and charges.

Bloomberg Barclays U.S. Aggregate Government-Related Index measures the investment grade, US dollar-denominated, fixed-rate taxable bond market that consists of Agency, Local Authority, Sovereign, and Supranational securities within the Bloomberg Barclays Aggregate Bond Index.

Bloomberg Barclays U.S. Corporate High Yield Index measures the US corporate market of non-investment grade, fixed-rate corporate bonds. Securities are classified as high yield if the middle rating of Moody’s, Fitch, and S&P is Ba1/BB+/BB+ or below.

Bloomberg Barclays U.S. Corporate Investment Grade Index measures the investment grade, fixed-rate, taxable corporate bond market. It includes securities publicly issued by US and non-US industrial, utility and financial issuers.

The Bloomberg Barclays U.S. MBS Index covers the mortgage-backed pass-through securities of Ginnie Mae (GNMA), Fannie Mae (FNMA), and Freddie Mac (FHLMC). It is formed by grouping the universe of individual fixed rate MBS pools into generic aggregates.

Bloomberg Barclays U.S. Treasury Index measures the public obligations of the U.S. Treasury with a remaining maturity of one year or more. Securities must be rated investment-grade (Baa3/BBB- or higher) by at least two of the following ratings agencies: Moody's, S&P, Fitch.

The ICE Bank of America / Merrill Lynch 2-17 Year Municipal Bond Index is an unmanaged index composed of securities that are SEC-registered, tax-exempt, and dollar denominated. The index covers the intermediate U.S. investment grade fixed rate municipal bond market, with index components for municipal securities. It is not possible to invest in the Bank of America / Merrill Lynch 2-17 Year Municipal Bond Index , which is unmanaged and does not incur fees and charges.

MSCI EAFE® Net Index measures the performance of the developed stock markets of Europe, Australasia, and the Far East.

Russell 1000® Growth Index measures the performance of growth style of investing in Large Cap U.S. stocks. The Growth Index contains those securities with greater-than-average growth orientation.

Russell 1000® Value Index measures the performance of value style of investing in Large Cap U.S. stocks. The Value Index contains those Russell 1000 securities with less-than-average growth orientation. Securities in the Value Index generally have lower price-to-book and price-to-earnings ratios than those in the Growth Index.

Russell 2000® Growth Index measures the performance of growth style of investing in small cap U.S. stocks. The Growth Index contains those Russell 2000 securities with greater-than-average growth orientation.

Russell 2000® Value Index measures the performance of value style of investing in small cap U.S. stocks. The Value Index contains those Russell 2000 securities with less-than-average growth orientation. Securities in the Value Index generally have lower price-to-book and price-to-earnings ratios than those in the Growth Index.

The Russell 2500™ is a market cap-weighted index that includes the smallest 2,500 companies covered in the Russell 3000 universe of United States-based listed equities.
 

The Russell Global® Index measures the performance of the global equity market based on all investable equity securities. All securities in the Russell Global Index are classified according to size, region, country, and sector, as a result the Index can be segmented into thousands of distinct benchmarks. The Russell Global Index is constructed to provide a comprehensive and unbiased barometer for the global segment and is completely reconstituted annually to accurately reflect the changes in the market over time. An investor cannot invest directly in an index.

Russell Midcap® Growth Index measures the performance of growth styles of investing in Mid Cap U.S. stocks. The Growth Index contains those Russell Mid Cap securities with greater-than-average growth orientation.

Russell Midcap® Value Index measures the performance of value style of investing in Mid Cap U.S. stocks. The Value Index contains those Russell Mid Cap securities with less-than-average growth orientation. Securities in the Value Index generally have lower price-to-book and price-to-earnings ratios than those in the Growth Index.

S&P 500 is an unmanaged capitalization-weighted index of 500 U.S. stocks designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries.


STERLING CAPITAL FUNDS ARE:

Not a deposit - Not FDIC insured - Not guaranteed by the bank - Not insured by any government agency - May lose value

An investor should consider a fund's investment objectives, risks, and charges and expenses carefully before investing or sending money. This and other important information about the Sterling Capital Funds can be found in the Funds' prospectus. To obtain a prospectus, please call 1 (888) 228-1872 or click here. Please read the prospectus carefully before investing.

Sterling Capital Management LLC, a separate subsidiary of BB&T Corporation, serves as investment adviser to the Sterling Capital Funds and is paid a fee for its services as described in the prospectus. Shares of the Sterling Capital Funds are not deposits or obligations of, or guaranteed or endorsed by, Branch Banking and Trust Company or its affiliates. The Funds are not insured by the FDIC or any other government agency. The Funds are distributed by Sterling Capital Distributors LLC, which is not affiliated with Branch Banking and Trust Company or its affiliates.