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First Quarter 2013 Equity Market Review

Following a strong year in 2012, global equity markets continued to advance in the first quarter of 2013. U.S. equities advanced in all three months of the quarter as the “Fiscal Cliff” resolution, better than expected housing data and strong job growth provided a tailwind for the improving U.S. economy. The S&P 500® Index reached an all-time high as it registered a return of 10.61% for the quarter, and 13.96% for the one-year trailing period. The broader U.S. market, as measured by the Russell 3000® Index, gained 11.07% for the quarter, bringing the one-year trailing return to 14.56%.

From a sector perspective, performance was unanimously in positive territory as all sectors within the Russell 3000® Index advanced during the quarter. Seven of nine sectors posted double-digit gains with the best performance coming from the more defensive health care and consumer staples sectors. The weakest performing sectors were the more cyclical technology and materials & processing sectors which still posted solid single-digit gains during the quarter.

Companies with lower quality and lower beta characteristics generally outperformed during the quarter. In terms of equity market capitalization, small-cap companies outperformed their large-cap counterparts as the Russell 2000® Index posted a first-quarter return of 12.39%, while the Russell 1000® Index advanced 10.96%. Style differentiation was evident in the quarter as value-oriented stocks generally outpaced growth-oriented stocks. In the large capitalization segment, the Russell 1000® Value Index and Russell 1000® Growth Index had quarterly returns of 12.31% and 9.54%, respectively.

International equity markets also advanced but not to the same extent as U.S. equities. The MSCI-EAFE Index (Net), a measure of international developed country returns, posted a positive return of 5.13%, bringing the one-year trailing return to 11.26%. Emerging markets underperformed developed markets during the quarter as the MSCI Emerging Markets Index (Net) posted a quarterly return of -1.62%, bringing the one-year trailing performance to 1.96%.

Most regions within the MSCI® All Country World ex-U.S. Index (representing both developed and emerging international markets) ended the quarter in positive territory. The best performing markets were predominantly in Europe and included countries such as Switzerland, Ireland and Greece. Some of the worst performing markets were in the Africa/Mideast region and included countries such as Egypt and South Africa. Japan generated a double-digit gain for the quarter, while the U.K. was positive but finished behind the overall market.

From a sector perspective, seven of ten sectors posted positive results during the period. Health care and consumer staples comfortably outperformed all other sectors, while materials, energy and utilities were the only negative performing sectors.

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 Capital Management, a controlled affiliate of GuideStone Financial Resources, serves as the investment adviser to GuideStone Funds.

You should carefully consider the investment objectives, risks, charges and expenses of the GuideStone Funds before investing. A prospectus with this and other information about the Funds may be obtained by calling 1-888-GS-FUNDS (1-888-473-8637) or downloading one. It should be read carefully before investing.

GuideStone Funds shares are distributed by Foreside Funds Distributors LLC, not an advisor affiliate. Foreside is not a registered investment adviser and does not provide investment advice.