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. You may qualify for sales charge discounts if you and
your family invest, or agree to invest in the future, at least $50,000 in the Sterling Capital Funds. More information about these and other discounts is available from your financial professional and in Distribution Arrangements/Sales
Charges on page 145 of the Funds prospectus and in Sales Charges on page 34 of the Funds statement of additional information (SAI).
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Shareholder Fees
(fees paid directly from your investment)
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Class A
Shares
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Class C
Shares
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Maximum Sales Charge (load) on Purchases
(as a % of offering price)
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2.00%
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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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1.00%
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Redemption Fee
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None
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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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Class A
Shares
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Class C
Shares
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Management Fees
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0.30%
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0.30%
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Distribution and Service (12b-1) Fees
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0.25%
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1.00%
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Other Expenses
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0.29%
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0.29%
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Total Annual Fund Operating Expenses
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0.84%
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1.59%
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Fee Waiver or Expense
Reimbursement
(1)
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0.05%
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0.05%
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Total Annual Fund Operating Expenses After Fee Waiver or Expense
Reimbursement
(1)
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0.79%
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1.54%
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(1)
The Funds Adviser has
contractually agreed to limit the management fees paid by the Fund to 0.25% for the period from February 1, 2013 through January 31, 2014. 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 $10,000 in the Fund for the time periods indicated and then redeem all of your shares at the end of those periods.
The example also assumes, that your investment has a 5% return each year and that the Funds operating expenses remain the same, except for the expiration of the current contractual expense limitation on January 31, 2014. Although your
actual costs may be higher or lower, based on these assumptions your costs would be:
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1
Year
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3
Years
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5
Years
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10
Years
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Class A Shares
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$
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279
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$
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458
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$
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652
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$
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1,212
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Class C Shares
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$
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157
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$
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497
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$
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861
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$
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1,885
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You would pay the following expenses if you did not redeem your shares:
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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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Class A Shares
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$
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279
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$
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458
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$
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652
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$
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1,212
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Class C Shares
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$
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157
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$
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497
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$
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861
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$
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1,885
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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 85.13% 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).
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Summary Prospectus
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1 of 4
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Sterling Capital Short-Term Bond Fund
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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. The Funds dollar-weighted average maturity is expected to be
more than 1 year but less than 3 years.
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 high for longer-term bonds and low 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.
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Summary Prospectus
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2 of 4
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Sterling Capital Short-Term Bond Fund
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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.
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. When the Fund uses credit default swaps to gain indirect long
exposure to an issuer or a fixed income security by selling credit protection on such issuer or security, the Fund is exposed to the risk that it will be required to pay the full notional value of the swap contract in the event of a default.
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.
Sales charges are not reflected in the bar chart, and if these charges were included, returns would be less than
those shown.
Class A Shares Annual Total Returns for years ended 12/31
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Best quarter:
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2.45%
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12/31/08
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Worst quarter:
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1.39%
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06/30/04
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Average Annual Total Returns
as of December 31, 2012
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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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Class A Shares
(1)
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(11/30/92
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)
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Return Before Taxes
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1.91%
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2.48%
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2.45%
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3.92%
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Return After Taxes on Distributions
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0.75%
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1.38%
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1.28%
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2.28%
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Return After Taxes on Distributions and Sale of Fund Shares
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1.23%
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1.47%
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1.40%
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2.32%
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BofA Merrill Lynch 1-3 Year US Corporate Government Bond Index
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(11/30/92
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)
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(reflects no deductions for fees, expenses, or taxes)
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1.48%
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2.87%
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3.11%
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4.66%
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(1)
Class C Shares commenced
operations on February 1, 2012. Because Class C Shares do not have a full calendar year of performance, the performance shown is that of the Class A Shares of the Fund. Class C Shares and Class A Shares would have substantially
similar performance because the Shares are invested in the same portfolio of securities and the performance would differ only to the extent that the Classes have different expenses.
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.
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Summary Prospectus
|
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3 of 4
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Sterling Capital Short-Term Bond Fund
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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
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
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$
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0
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Automatic Investment Plan
|
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$
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25
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$
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25
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You may buy or sell Class A or Class C Shares on any business day by contacting your financial representative or contacting the
Fund
(i) by mail at Sterling Capital Funds, P.O. Box 9762, Providence, RI 02940-9762; or (ii) by telephone at 1-800-228-1872. In addition, Class A and Class C Shares 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.
STB-02/13
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Summary Prospectus
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4 of 4
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Sterling Capital Short-Term Bond Fund
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