1. SEI Investment Management Unit
Commentary
Market & Performance Update
July 2012
A degree of calm returned to the financial markets in July, but disappointing economic data ensured a subdued mood.
The European Central Bank’s “whatever it takes” commitment to save the euro helped buoy sentiment at month end.
Global equities and bonds posted marginal gains.
Economic Backdrop
Leading central banks remained accommodative as part of ongoing efforts to stimulate global growth. The European
Central Bank (ECB) further lowered eurozone interest rates (to 0.75%) and also reduced the deposit rate for banks
placing money with them to 0% to help boost liquidity. This news was positively received, as were comments from the
ECB’s president later in the month. Mario Draghi’s statement on July 26 reiterated a collective drive to support the
eurozone, assuring that the ECB would do “whatever it takes.” While the Bank of England voted to maintain interest rates
at the historic low of 0.50% once again in July, the committee acknowledged the need for further stimulus measures in the
U.K. and agreed to expand the scope of the asset purchase program by a further £50 billion. The Bank of Japan and the
U.S. Federal Reserve (Fed) also kept interest rates low.
For the eurozone as a whole, economic data released during the month painted a gloomy picture. The struggling Spanish
economy remained a problem as a number of local governments were forced to request state financial support even as
the national government was simultaneously planning additional spending cuts and austerity measures. The Spanish
unemployment rate remained high, while the number of jobless in the eurozone marginally increased from May to June.
Advanced readings of service and manufacturing output for the single currency union indicated further declines. The ZEW
Indicator of Economic Sentiment for Germany (a survey which also covers analyst opinions for Europe, the U.K., Japan
and the U.S.) fell again in June. However, eurozone inflation remained steady at 2.4% in June and was estimated to have
maintained this rate during July.
The economic slowdown in the U.K. accelerated as positive data points became fewer and further between. While growth
in the U.K. manufacturing sector improved between May and June (as measured by Markit surveys), it slowed in the
services sector and revised figures for June retail sales showed only a marginal 0.1% growth (month-on-month).
Lackluster consumer confidence surveys further solidified the view that the recession in the U.K. was deepening. This
mood was confirmed by the release of estimated second-quarter growth readings. The advanced reading was far worse
than market participants had expected, with initial figures showing a contraction of 0.7%. One area of positive news for the
U.K. came through the announcement that the annual inflation rate, as measured by the U.K. Consumer Price Index, once
again fell more than expected, from 2.8% in May to 2.4% in June.
U.S. economic data in July was rather mixed, but still pointed to slow yet positive growth. The Fed’s Beige Book described
the U.S. economy as expanding at a modest to moderate pace despite weakness in manufacturing, with strength seen in
retail sales as well as housing, which appears to be stabilizing at depressed levels. The advanced reading of second
quarter gross domestic product (GDP) showed that the economy grew at a tepid pace of 1.5%, albeit surpassing the
consensus rate of 1.4%. The growth rate for first quarter GDP was revised higher to 2.0%. Unemployment held steady at
8.2%, and consumer confidence rebounded more than expected in July, although it remains depressed relative to
historical data.
© 2012 SEI 1

2. Market Impact
Emerging market debt led fixed-income markets, followed by corporate bonds and high-yield debt, which benefited from
increased investor risk appetite towards month end. While government bonds lagged in comparison to other fixed-income
investments, demand for “safe haven” debt continued due to investor uncertainty. Consequently, global government bond
yields (which move inversely to prices) generally fell across the yield curve. Indeed, yields on German government bonds
with short maturity dates (two years or less) declined into negative territory. The government debt of Spain, Italy and
Portugal were notable exceptions and yields for these countries continued to rise. Ten-year Spanish government bond
yields hit a euro-era high during the month.
Global equity markets fell for much of the month, but managed to claw back into positive territory to finish July. Peripheral
eurozone countries struggled the most due to ongoing concerns about the eurozone debt crisis and the impact of austerity
measures on future growth prospects. Spanish equities in particular had a difficult month. Within the MSCI AC World
Index, most sectors were slightly positive, with only Materials and Utilities in negative territory for the month (in U.S. dollar
terms). The Telecommunications, Energy and Consumer Staples sectors performed best.
Index Data
The Dow Jones Industrial Average index returned 1.15%.
The S&P 500 Index climbed 1.39%.
The NASDAQ Composite Index returned 0.20%.
The MSCI AC World Index, used to gauge global equity performance, gained ($) 1.37% over the month.
The Barclays Global Aggregate Index, which represents global bond markets, rose by ($) 1.16% during the period.
The Chicago Board Options Exchange Volatility Index, a measure of implied volatility in the S&P 500 Index that is also
known as the “fear index”, moved from 17.08 to 18.03 during the month, but reached 20.47 on July 24.
WTI Cushing crude oil prices, a key indicator of movements in the oil market, moved from $84.96 a barrel at the end
of June to $88.06 by July 31.
The U.S. dollar strengthened against the euro and sterling during July, but weakened against the Japanese yen. The
euro weakened against most major currencies in the month. The U.S. dollar ended July at $1.57 against sterling,
$1.23 versus the euro and at 78.10 yen.
Portfolio Review
The recent flight to safety has resulted in the market paying a multi-decade-high premium for yield and safety, while
discounting prospects about the future, whether it is mean reversion or future growth. Europe has taken important steps to
improve its crisis, however, more work needs to be done. For large-cap equity, Consumer Staples were the greatest
contributors to relative underperformance as a few names within the food, beverage and tobacco industries sold off. In
small-cap equity, security selection was positive in Consumer Staples and offset by detractors in Information Technology,
including hardware picks, and Consumer Discretionary holdings. Off-benchmark exposure to Canadian and emerging
market stocks was a boost to performance of international equity, but this was offset by an underweight to Australia.
For investment-grade securities, an overweight to Commercial Mortgage-Backed Securities was a positive contributor, as
was an overweight allocation to financials as spreads tightened. A short duration posture modestly detracted from
performance as Treasury yields fell at the intermediate part of the curve. Health Care bonds continued to rally in the wake
of the U.S. Supreme Court decision to uphold the constitutionality of recent health care legislation, helping high-yield
returns. Detracting from performance were underweight allocations to outperforming Energy and Utility sectors. In
emerging markets a short duration position hurt as U.S. interest rates continued to fall, while an underweight to Lebanon,
where bonds posted negative returns on rising concerns in the Middle East, was a positive contributor.
© 2012 SEI 2

3. Contributors Detractors
Large-Cap Equity Energy and Materials – stock Stock Selection in Large-Cap Equity – a few higher
selection within these sectors was strong conviction names underperformed
Health Care in Small-Cap Equity – biotechnology Overweight to Utilities and underweight to Industrials
selections performed well in Small-Cap Equity – the sectors were strong and
Stock Selection in International Equity – Energy and weak performers respectively
Telecommunications picks outperformed Financials and Consumer Staples in International
Regional Allocations in Emerging Markets Debt – Equity – stock selection was negative in these sectors
underweight in Malaysia, which lagged the Security selection within Technology in High-Yield
benchmark given its already rich valuations Debt – telecom equipment providers struggled with a
reduced growth outlook
Manager Positioning and Opportunities
SEI’s portfolio managers rely on investment-manager selection and portfolio construction in an effort to deliver diversified
sources of excess return for our portfolios. In large-cap equity, investment managers are maintaining overweights to IT
and Consumer Discretionary. Fundamental investment managers continue to have a quality bias, believing that the U.S.
economy is in for an extended period of low growth, but not an outright recession. In small-cap equity, the outlook for a
slow growth economic trajectory is reflected in a slightly pro-cyclical posture expressed through overweight positions to
Industrials, particularly in capital goods and commercial and professional services, and to a lesser extent in Energy.
International equity retains off-benchmark allocations to emerging markets and overweights to small and mid-
capitalization stocks. In contrast, investment managers are underweight to the aging economy of Japan. Japan may only
have a few more years before it must confront its staggering fiscal deficit; therefore our managers continue to employ
shrewd stock selection to uncover any pockets of strength in that country.
In investment-grade fixed income, duration was shorter than the benchmark at the end of the month given the low level of
Treasury yields and negative real yields. Spread sector allocations have been and continue to be focused on the
securitized sectors as they represent the greatest fundamental relative value. Within high-yield debt, an allocation to bank
loans has been maintained due to their more defensive positioning and event-driven opportunities. In emerging market
debt, investment managers remain defensive although some strong-conviction positions remain in high-yield sovereign
credits given their attractive valuations. The uncertainty in the market has kept bullishness in check as volatility due to the
European crisis and slower global growth would likely have a negative impact on local currencies.
Our View
SEI continues to hold a neutral view on stocks versus bonds. There is the potential for big surprises – either to the
downside (e.g. further economic weakness, the crumbling of the eurozone) or the upside (e.g. more forceful actions in
Europe, quantitative easing or a breaking of the fiscal logjam in the U.S.). We might be inclined to favor equities if the
markets weaken materially further. This view assumes that the soft patch in the U.S. economy proves temporary; that
Europe muddles through into 2013 without a major break-up; and that the currency depreciation and pro-cyclical monetary
policies in China and other emerging economies start to bear fruit going into year end.
Momentum trends appear to continue to favor U.S. equities versus international, particularly against Europe and the
eurozone. We recognize that this trend has been in place for more than a year. Recession and the possibility of a
eurozone break-up have caused European equities to weaken to an extreme extent. We look for the cycle of panic,
government response, relief and panic to continue in European markets.
We also favor U.S. high-yield debt and other corporate credits versus U.S. Treasurys and the sovereign debt of other
countries. Investor demand remains buoyant for higher yielding assets because central bank policies have compressed
yields to record-low levels around the globe. Issuers also generally remain in good shape, keeping default rates at low
levels. In the near-term, worries about the economy could cause some widening in spreads versus Treasurys. We would
view this as a buying opportunity.
© 2012 SEI 3

4. Benchmark Descriptions
The Dow Jones Industrial Average is a widely followed market indicator based on a price-weighted average of 30 blue-
chip New York Stock Exchange stocks which are selected by editors of the Wall Street Journal.
The S&P 500 Index is a capitalization-weighted index made up of 500 widely held large-cap U.S. stocks in the Industrials,
Transportation, Utilities and Financials sectors
The NASDAQ Composite Index is a market-value-weighted index of all common stocks listed on the National
Association of Securities Dealers Automated Quotations (NASDAQ) system.
The MSCI All Country World Index is a market-capitalization-weighted index composed of over 2,000 companies, and is
representative of the market structure of 48 developed and emerging market countries in North and South America,
Europe, Africa, and the Pacific Rim. The index is calculated with net dividends reinvested in U.S. dollars.
The Barclays Capital Global Aggregate Bond Index (formerly Lehman Brothers Global Aggregate Index), an
unmanaged market-capitalization-weighted benchmark, tracks the performance of investment-grade fixed- income
securities denominated in 13 currencies. The index reflects reinvestment of all distributions and changes in market prices.
The Chicago Board Options Exchange Volatility Index (VIX) tracks the expected volatility in the S&P 500 over the next
30 days. A higher number indicates greater volatility.
© 2012 SEI 4

5. This material represents an assessment of the market environment at a specific point in time and is not intended to be a
forecast of future events, or a guarantee of future results. This information should not be relied upon by the reader as
research or investment advice regarding the Funds or any stock in particular, nor should it be construed as a
recommendation to purchase or sell a security, including futures contracts. There is no assurance as of the date of this
material that the securities mentioned remain in or out of SEI Funds.
For those SEI Funds which employ the ‘manager of managers’ structure, SEI Investments Management Corporation
(SIMC) has ultimate responsibility for the investment performance of the Funds due to its responsibility to oversee the
sub-advisers and recommend their hiring, termination and replacement. SIMC is the adviser to the SEI Funds, which are
distributed by SEI Investments Distribution Co. (SIDCO). SIMC and SIDCO are wholly owned subsidiaries of SEI
Investments Company.
To determine if the Funds are an appropriate investment for you, carefully consider the investment objectives,
risk factors and charges and expenses before investing. This and other information can be found in the Funds’
prospectuses, which can be obtained by calling 1-800-DIAL-SEI. Read them carefully before investing.
There are risks involved with investing, including loss of principal. Current and future portfolio holdings are subject to risks
as well. International investments may involve risk of capital loss from unfavorable fluctuation in currency values, from
differences in generally accepted accounting principles or from economic or political instability in other nations. Narrowly
focused investments and smaller companies typically exhibit higher volatility. Bonds and bond funds will decrease in value
as interest rates rise. High-yield bonds involve greater risks of default or downgrade and are more volatile than
investment-grade securities, due to the speculative nature of their investments. Emerging Markets involve heightened
risks related to the same factors as well as increased volatility and lower trading volume.
Diversification may not protect against market risk. There is no assurance the objectives discussed will be met. Past
performance does not guarantee future results Index returns are for illustrative purposes only and do not represent actual
portfolio performance. Index returns do not reflect any management fees, transaction costs or expenses. One cannot
invest directly in an index.
 Not FDIC Insured
 No Bank Guarantee
 May Lose Value
© 2012 SEI 5