By Rodric E. Cummins, CFA , Senior Vice President and Chief Investment Officer

During the first quarter of 2010, global equity markets continued to advance. In the United States, markets sold off mildly in January and early February but resumed their upward climb for the remainder of the quarter. The S&P 500® Index posted a first-quarter return of 5.39%, bringing the one-year trailing return to an impressive 49.77%. The broader U.S. market, as measured by the Russell 3000® Index, gained 5.94% for the quarter and 52.44% for the one-year period.

From a sector perspective, performance was biased to the upside as eight out of ten GICS sectors within the S&P 500® Index were in positive territory for the quarter. The best performing sectors were industrials, financials and consumer discretionary, all of which posted double-digit gains. The worst performing sectors were telecommunication services and utilities, both posting negative returns for the period.

In terms of equity market capitalization and style, everything (small, mid, large; growth, core, value) was up during the first quarter as all equity indexes maintained by Russell Investments experienced positive returns. Small-cap companies outpaced their large-cap counterparts by more than 3% based on Russell 2000® Index and Russell 1000® Index performance. Value outpaced growth across all market capitalization segments and has benefited from the performance of resurgent financial companies during the period. The Russell 1000® Value Index and Russell 1000® Growth Index had quarterly returns of 6.78% and 4.64%, respectively. Over the one-year period, large value has outpaced large growth by about 3.81%.

Despite a difficult start to the year, international equity markets rallied and finished the quarter in positive territory. The MSCI-EAFE Index (Net), a measure of international-developed country returns, posted a first-quarter return of 0.87%, bringing the one-year trailing return to 54.44%. Investors continued to favor equity investments in emerging market countries as the MSCI Emerging Market Index returned 2.40% for the quarter and 81.08% for the one-year period ending March 31.

Although the MSCI-EAFE Index (Net) posted a modest gain for the quarter, only seven markets within the index ended the period in positive territory. The best performing markets were Finland, Denmark and Japan, while the worst performers were Spain, Greece and Portugal. From a sector perspective, the more economically sensitive groups produced positive performance led by information technology, industrials and consumer discretionary. The more defensive sectors such as telecommunication services, utilities and energy produced negative returns for the period. The emerging market countries, with the exception of Taiwan and China, generally posted good returns for the quarter.

You should carefully consider the investment objectives, risks, charges and expenses of GuideStone Funds before investing. For a copy of the prospectus with this and other information about the funds, please call 1-888-98-GUIDE (1-888-984-8433) or download a prospectus. You should read the prospectus carefully before investing.

S&P 500® is a trademark of The McGraw-Hill Companies and has been licensed for use by GuideStone Funds. The Equity Index Fund is not sponsored, endorsed, sold or promoted by Standard & Poor’s and Standard & Poor’s makes no representation regarding the advisability of purchasing the Equity Index Fund.

All indices are unmanaged and not available for direct investment. Index performance assumes no taxes, transaction costs, fees or expenses. This update is prepared for general information only and it is not to be reproduced.

GuideStone Funds shares are distributed by BNY Mellon Distributors Inc., a registered broker-dealer and underwriter of the funds, 760 Moore Road, King of Prussia, PA 19406. GuideStone Capital Management, a controlled affiliate of GuideStone Financial Resources, serves as the investment adviser to GuideStone Funds.