Investment Objective
The Fund seeks to provide current income and competitive total return.
Fee Table
The following table describes the fees and expenses that you may pay if you buy and hold shares of the Fund.
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Shareholder Fees
(fees paid directly from your
investment)
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Institutional
Shares
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Maximum Sales Charge (load) on Purchases (as a % of offering price)
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None
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Maximum Deferred Sales Charge (load) (as a % of the lesser of the cost of your shares or their net asset value at the time of redemption)
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None
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Redemption Fee
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None
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Annual Fund Operating Expenses
(expenses that you pay
each year as
a percentage of the value of your investment)
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Institutional
Shares
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Management Fees
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0.30%
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Distribution and Service (12b-1) Fees
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0.00%
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Other Expenses
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0.26%
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Total Annual Fund Operating Expenses
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0.56%
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Fee Waiver or Expense
Reimbursement
(1)
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0.02%
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Total Annual Fund Operating Expenses After Fee Waiver or Expense
Reimbursement
(1)
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0.54%
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(1)
The Funds Adviser has
contractually agreed to limit the management fees paid by the Fund to 0.28% for the period from February 1, 2014 through January 31, 2015. This contractual limitation may be terminated during this period only by the Fund, and will
automatically terminate upon termination of the Investment Advisory Agreement between the Fund and the Adviser.
Example
This example is intended to help you compare the cost of investing in the Fund with the cost of investing in other mutual funds. The example assumes
that you invest $10,000 in the Fund for the time periods indicated and then redeem all of your shares at the end of those
periods. The example also assumes, that your investment has a 5% return each year and that the Funds operating expenses remain the same, except for the expiration of the current contractual
expense limitation on January 31, 2015. Although your actual costs may be higher or lower, based on these assumptions your costs would be:
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1
Year
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3
Years
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5
Years
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10
Years
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Institutional Shares
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$
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55
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$
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177
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$
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311
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$
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700
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Portfolio Turnover
The Fund pays transaction costs, such as commissions, when it buys and sells securities (or turns over its portfolio). A higher portfolio turnover rate may indicate higher transaction costs and may
result in higher taxes when Fund shares are held in a taxable account. These costs, which are not reflected in annual fund operating expenses or in the example, affect the Funds performance. During the most recent fiscal year, the Funds
portfolio turnover rate was 56.09% of the average value of its portfolio.
Strategy, Risks and Performance
Principal Strategy
To pursue its investment objective, the
Fund invests, under normal circumstances, at least 80% of its net assets plus borrowings for investment purposes in investment grade fixed income securities (bonds).
The Fund invests primarily in the following types of fixed income securities: (i) corporate debt securities, including bonds, notes and debentures, issued by U.S. companies that are investment grade (i.e.,
rated at the time of purchase in one of the four highest rating categories by a nationally recognized statistical rating organization, or are determined by the portfolio manager to be of comparable quality); (ii) securities issued or guaranteed
by the U.S. government or its agencies and instrumentalities, some of which may be subject to repurchase agreements; (iii) investment grade mortgage-backed securities, including collateralized mortgage obligations; (iv) investment grade
asset-backed securities; and (v) U.S. dollar-denominated foreign and emerging market securities. Additionally, the Fund will invest in municipal securities, convertible securities, including convertible bonds and preferred stocks, and cash
equivalents. The Fund may invest up to 15% of its total assets in bonds that are below investment grade, which are commonly referred to as high yield or junk bonds, and non-dollar denominated foreign and emerging market
securities. The Fund will maintain an average duration between 1 and 3 years.
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Summary Prospectus
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1 of 4
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Sterling Capital Short Duration Bond Fund
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The Fund may invest in certain types of derivative instruments for hedging and investment purposes. Although the Fund
may invest in derivatives of any kind, the Fund currently expects to invest in futures contracts and forward foreign currency contracts to gain efficient investment exposures as an alternative to cash investments or to hedge against portfolio
exposures, and credit default swaps and interest rate swaps to gain indirect exposure to interest rates, issuers, or currencies, or to hedge against portfolio exposures.
In managing the portfolio, the portfolio manager uses a top down investment management approach focusing on allocation among sectors, credit risk, and individual securities selection. The portfolio
manager focuses on macro trends in the economy to establish a duration target that reflects the outlook for the future direction of interest rates. For yield curve management, in addition to the trend in interest rates, other factors such as future
inflation expectations, supply factors, and future interest rate expectations are considered. Sector weightings are driven by a combination of the portfolio managers macro view on interest rates and volatility as well as relative spread
analysis. Utilizing fundamental analysis the portfolio manager then selects individual securities consistent with the target by looking for the best relative values within particular sectors. The analysis includes an attempt to understand the
structure and embedded features of potential securities. Features that are analyzed include puts, calls, sinking fund requirements, prepayment and extension risk, and individual company financial data for potential corporate holdings. Scenario
analysis is the primary tool employed for these assessments. The portfolio manager may consider selling a security owned by the Fund to reduce exposure to a particular sector, if the portfolio manager sees a deterioration in the underlying
fundamentals of an issuer or if the actions of the issuer violate the investment thesis of owning the security, when the portfolio managers finds other attractive securities that the portfolio manager believes are less expensive and offer relatively
greater income or growth potential, and in response to macro level adjustments to duration and yield curve contributions.
Principal Risks
All investments carry a certain amount of risk and the Fund cannot guarantee that it will achieve its investment objective. An investment in the
Fund is not a deposit or obligation of any bank, is not endorsed or guaranteed by any bank and is not insured by the Federal Deposit Insurance Corporation (FDIC) or any other government agency. You may lose money by investing in the
Fund. Below are all of the principal risks of investing in the Fund.
Interest Rate Risk:
The possibility that the value of the Funds
investments will decline due to an increase in interest rates. Interest rate risk is generally higher for longer-term bonds and lower for shorter-term bonds.
Income Risk:
The possibility that the Funds income will decline due to a decrease in interest rates. Income risk is generally high for shorter-term bonds and low for longer term bonds.
Liquidity Risk:
The possibility that certain securities may be difficult or impossible to sell at the time and the price that would normally prevail in the
market. The seller may have to lower the price, sell other securities instead or forego an investment opportunity, any of which could have a negative effect on Fund management or performance.
Prepayment/Call Risk:
When mortgages and other obligations are prepaid and when securities are called, the
Fund may have to reinvest in securities with a lower yield or fail to recover additional amounts (
i.e.
, premiums) paid for securities with higher interest rates, resulting in an unexpected capital loss. Call risk is the possibility that,
during periods of declining interest rates, a bond issuer will call or repay higher-yielding bonds before their stated maturity date. In both cases, investors receive their principal back and are typically forced to
reinvest it in bonds that pay lower interest rates.
Estimated Maturity Risk:
The possibility that an underlying security holder will exercise its
right to pay principal on an obligation earlier or later than expected. This may happen when there is a rise or fall in interest rates. These events may shorten or lengthen the duration (
i.e.
, interest rate sensitivity) and potentially reduce
the value of these securities.
U.S. Government Securities Risk:
The Fund invests in securities issued or guaranteed by the U.S. government or its
agencies (such as Fannie Mae or Freddie Mac securities). Although U.S. government securities issued directly by the U.S. government are guaranteed by the U.S. Treasury, other U.S. government securities issued by an agency or instrumentality of the
U.S. government may not be. No assurance can be given that the U.S. government would provide financial support to its agencies and instrumentalities if not required to do so by law.
Credit Risk:
The possibility that an issuer cannot make timely interest and principal payments on its debt securities, such as bonds. The lower a securitys rating, the greater its credit risk.
Mortgage-Backed and Asset-Backed Securities Risk:
Mortgage-backed and other asset-backed securities may be particularly sensitive to changes in
prevailing interest rates. Rising interest rates tend to extend the duration of mortgage-backed securities, making them more sensitive to changes in interest rates, and may reduce the market value of the securities. Mortgage-backed securities are
also subject to pre-payment risk. Due to their often complicated structures, various mortgage-backed and asset-backed securities may be difficult to value and may constitute illiquid securities. Furthermore, debtors may be entitled to the protection
of a number of state and federal consumer protection credit laws with respect to these securities, which may give the debtor the right to avoid or reduce payment.
Counterparty Risk:
The possibility that a counterparty to a contract will default or otherwise become unable to honor a financial obligation.
High-Yield/High-Risk Debt Securities:
High-yield/high-risk debt securities are securities that are rated below investment grade by the primary rating agencies. These securities are considered speculative and
involve greater risk of loss than investment grade debt securities.
Foreign Currency Transaction Risk:
Funds that invest directly in foreign
currencies and in securities that trade in, or receive revenues in, foreign currencies are subject to the risk that those currencies will fluctuate in value relative to the U.S. dollar.
Foreign Investment Risk:
Foreign securities involve risks not typically associated with investing in U.S. securities. Foreign securities may be adversely affected by various factors, including currency
fluctuations and social, economic or political instability. These risks are particularly pronounced for emerging markets.
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Summary Prospectus
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2 of 4
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Sterling Capital Short Duration Bond Fund
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Derivatives Risk:
The possibility that the Fund will suffer a loss from its use of derivatives. The
primary risk with many derivatives is that they can amplify a gain or loss, potentially earning or losing substantially more money than the actual cost of the derivative instrument. It is possible that the Funds liquid assets may be
insufficient to support its obligations under its derivatives positions. The Funds use of derivatives such as futures transactions and swap transactions involves other risks, such as the credit risk relating to the other party to a derivative
contract (which is greater for swaps and other over-the-counter traded derivatives), the risk of difficulties in pricing and valuation, the risk that changes in the value of a derivative may not correlate perfectly with relevant assets, rates or
indices, and the risk of losing more than the initial margin required to initiate derivatives positions. There is also the risk that the Fund may be unable to terminate or sell a derivatives position at an advantageous time or price.
Convertible Securities Risk:
Convertible securities are securities that may be converted or exchanged into shares of an underlying stock or other asset at a
stated exchange ratio or predetermined price. The market value of convertible securities tends to decline as interest rates increase and may be affected by changes in the price of the underlying security.
Preferred Stock Risk:
Preferred stock represents an interest in a company that generally entitles the holder to receive, in preference to the holders of
common stock, dividends and a fixed share of the proceeds resulting from a liquidation of the company. Preferred stocks are generally subordinated in right of payment to all debt obligations and creditors of the issuer.
Active Trading Risk:
The Fund may trade securities actively, which could increase its transaction costs (thereby lowering its performance) and may increase
the amount of taxes that a shareholder pays, by increasing the amount of the Funds realized capital gains and increasing the proportion of the Funds realized capital gains that are short-term capital gains.
For more information about the Funds risks, please see the Additional Investment Strategies and Risks section in this Prospectus.
Performance
The following bar chart and table provide some
indication of the risks of investing in the Fund. The bar chart shows changes in the Funds performance from year to year. The table shows how the Funds average annual returns for 1, 5 and 10 years and since the Funds inception
compared with those of a broad measure of market performance. The Funds past performance (before and after taxes) is not necessarily an indication of how the Fund will perform in the future.
Updated performance information is available at
no cost by visiting www.sterlingcapitalfunds.com or by calling 1-800-228-1872.
Institutional Shares Annual Total Returns for years ended 12/31
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Best quarter:
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2.62%
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12/31/08
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Worst quarter:
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1.32%
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06/30/04
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Average Annual Total Returns
as of December 31, 2013
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1
Year
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5
Years
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10
Years
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Since
Inception
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Institutional Shares
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(11/30/92
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Return Before Taxes
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1.01%
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2.31%
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2.88%
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4.11%
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Return After Taxes on
Distributions
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0.45%
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1.08%
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1.59%
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2.39%
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Return After Taxes
on Distributions and Sale of
Fund Shares
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0.57%
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1.32%
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1.74%
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2.47%
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BofA Merrill Lynch 1-3 Year
U.S. Corporate Government Index
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(11/30/92
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(reflects no deductions for
fees, expenses, or taxes)
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0.70%
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2.07%
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2.90%
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4.47%
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After-tax returns are calculated using the historical highest individual federal marginal income tax rates and do not reflect the
impact of state and local taxes. Actual after-tax returns depend on an investors tax situation and may differ from those shown. After-tax returns are not relevant to investors who hold their Fund shares through tax-deferred arrangements such
as 401(k) plans or individual retirement accounts.
Management
Investment Adviser
Sterling Capital Management LLC (Sterling Capital)
Portfolio Managers
Mark Montgomery, CFA
Managing Director of Sterling Capital and Senior Fixed Income Portfolio Manager
Since February 2011
Richard T. LaCoff
Managing Director of Sterling Capital and Senior Fixed Income Portfolio Manager
Since February 2011
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Summary Prospectus
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3 of 4
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Sterling Capital Short Duration Bond Fund
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Purchase and Sale of Fund Shares
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Account Type
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Minimum
Initial
Investment*
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Minimum
Subsequent
Investment
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Regular Account
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$
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1,000,000
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$
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0
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* Investors and employees of Sterling Capital purchasing shares through Branch Banking and Trust Company, its affiliates or
other financial service providers or intermediaries approved by the Fund are not subject to a minimum initial investment requirement.
You may buy
Institutional Shares of the Fund through procedures established by the Fund in connection with the requirements of fiduciary, advisory, agency, custodial and other similar accounts maintained by or on behalf of customers of Branch Banking and
Trust Company or one of its affiliates or other financial service providers or intermediaries approved by the Fund. These parties are responsible for transmitting orders by close of business. Consult your investment representative or
institution for specific information. Institutional Shares also are available for purchase at www.sterlingcapitalfunds.com.
Tax Information
The Fund normally distributes its net investment income and net realized capital gains, if any, to shareholders. These distributions are generally taxable to you as
ordinary income or capital gains, unless you are investing through a tax-deferred arrangement, such as a 401(k) plan or an individual retirement account.
Payments to Broker-Dealers and Other Financial Intermediaries
If you purchase the Fund through a broker-dealer or other financial intermediary (such as a bank), the Fund and its related companies may pay the intermediary for the sale of Fund shares and related services. These
payments may create a conflict of interest by influencing the broker-dealer or other intermediary and your salesperson to recommend the Fund over another investment. Ask your salesperson or visit your financial intermediarys Web site for more
information.
SDBI-0214
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Summary Prospectus
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4 of 4
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Sterling Capital Short Duration Bond Fund
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