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

Following a strong rebound from the depths of the financial crisis almost one year ago, risk assets were quick to retreat at the first sign of alarm as global equity markets gave way to a steady stream of negative headlines during the second quarter. While economic growth remains positive, investors are finding it more and more difficult to clearly identify future economic drivers in the wake of global governmental fiscal and monetary stimulus reductions. The prospects for strong growth in world trade are being dampened by China’s efforts to slow its growth rate and the Eurozone’s sovereign debt crisis which may have significant implications for the future growth of many European countries. In the U.S., economic growth appears to be moderating as the consumer, the largest segment of the economy, remains burdened under the weight of debt and the lack of job growth. As has been written here before, the real test as to the sustainability of economic growth will hinge on the successful transition from a stimulus-driven rebound to a self-sustaining expansion driven by the natural function of the financial system to facilitate capital creation and foster economic growth. It is a transition that is now under way and one that promises to be filled with optimism and fear, and is most certainly fueling a continued volatile market environment.

All major global equity markets declined during the second quarter. U.S. stocks, as represented by the S&P 500® Index, posted a return of -11.43% during the period, while still managing to post a very respectable 12-month return of 14.43%. International-developed stock markets, as measured by the MSCI EAFE Index, returned -13.97% for the quarter. Bolstered by strong performance of U.S. Treasury securities, bonds posted solid gains during the second quarter as the Barclays U.S. Aggregate Bond Index returned 3.49%.

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.