Atlanta Capital Focused Growth Fund (A) Share
Class

A

• A
• C
• I

A Word On The Markets  as of Mar 31, 2013

Global equity markets surged ahead in the first quarter of 2013, as the major U.S. stock indexes achieved record closing highs. Positive economic trends overcame headwinds ranging from recent tax hikes to renewed turmoil in Europe. In the U.S., encouraging news on the jobs front helped drive the prices of many equity securities higher. Unemployment fell to 7.7% in February, its lowest level in more than four years, as employers added 236,000 jobs. In addition, surprisingly strong U.S. retail sales helped ease concerns that consumers might spend less amid higher taxes and still-high energy prices. In the housing market, rising demand and more limited supply lifted home values, helping to boost consumer confidence and spending.

Mandatory government spending cuts under the so-called “sequester” barely hampered U.S. stocks' advance. Equities continued to draw support from the U.S. Federal Reserve, which reiterated its intention to maintain stimulus policies until its unemployment and growth targets are met. Global equities also demonstrated a degree of resiliency, with European stocks declining only modestly in response to Cyprus’ banking crisis in late March.

Reflecting the breadth of the first-quarter rally, major stock market indexes recorded strong gains across geographies and equity categories. In the U.S., the Dow Jones Industrial Average⁹ returned 11.93% and hit an all-time closing high during the quarter. The broader S&P 500 Index¹⁰ also reached a new high on the quarter’s final trading day, rising 10.61% for the period. Globally, the MSCI EAFE Index¹¹ gained 5.13%. Small-cap stocks generally fared better than their large-cap counterparts during the quarter. Among large caps, value stocks outpaced growth stocks, while the reverse was true among small caps.

Performance Summary 

Eaton Vance Atlanta Capital Focused Growth Fund (the Fund) underperformed its benchmark, the Russell 1000 Growth Index (the Index),¹ for the quarter ended March 31, 2013, returning 6.40% for Class A shares at net asset value versus the Index’s 9.54% return.

• All of the 10 sectors in the Index had positive returns for the quarter. The more defensive health care, utilities, energy and consumer staples sectors were the best performers in the Index, while the more cyclical information technology, materials and financials sectors were the worst performers.
• The Fund’s relative underperformance versus the Index for the quarter was driven by both stock selection and sector allocation.
• In particular, the Fund’s stock selection results within the consumer discretionary, energy and industrials sectors detracted from relative performance.
• The Fund’s overweight positions in the information technology and materials sectors also detracted from relative performance, as did its underweights in consumer staples and health care.

Contributors 

Factors contributing to the Fund’s relative performance compared to the Index during the quarter:

• Stock selection in the health care, financials, materials and information technology sectors aided the Fund’s relative performance for the quarter. The Fund’s overweight position in the energy sector also benefited relative performance.
• At the individual stock level, two of the top contributors to the Fund’s relative performance were health care companies Gilead Sciences and Allergan.
• Industrial company Union Pacific and information technology name Texas Instruments also helped the Fund’s relative performance.
• Materials company Monsanto was also another leading contributor to relative Fund performance.

Detractors 

Factors detracting from the Fund’s relative performance compared to the Index during the quarter:

• Stock selection in the consumer discretionary, energy and industrials sectors detracted from the Fund’s relative performance for the quarter. Also detracting were the Fund’s overweight positions in the information technology and materials sectors, as well as its underweights in consumer staples and health care.
• Consumer discretionary company Coach and health care name Edwards Lifesciences were among the top detractors from the Fund’s relative performance for the quarter.
• Industrial firm Expeditors International and energy company Suncor Energy also detracted from the Fund’s relative performance.
• Information technology company Juniper Networks also hurt the Fund’s relative performance.

Investment Outlook And Fund Positioning 

We believe the U.S. economy is in generally better shape than much of the rest of the world. An increasingly healthy private sector—roughly 80% of the U.S. economy—has been driving economic growth. The equity market’s strong first-quarter performance exceeded many observers’ expectations, including ours. However, we believe a more labored and correction-prone market advance is likely over the balance of 2013.

As of quarter-end, the Fund held 29 stocks representing eight of the 10 economic sectors comprising the Russell 1000 Growth Index. Relative to the sector weights in the Index, the Fund was overweight the energy, information technology, industrials and materials sectors. The Fund was underweight consumer discretionary, consumer staples, financials and health care sectors and had no exposure to utilities or telecommunication services.

The views expressed in this report are those of portfolio manager(s) and are current only through the date stated at the top of this page. These views are subject to change at any time based upon market or other conditions, and Eaton Vance disclaims any responsibility to update such views. These views may not be relied upon as investment advice and, because investment decisions are based on many factors, may not be relied upon as an indication of trading intent on behalf of any Eaton Vance fund. This commentary may contain statements that are not historical facts, referred to as "forward looking statements". The Fund's actual future results may differ significantly from those stated in any forward-looking statement, depending on factors such as changes in securities or financial markets or general economic conditions, the volume of sales and purchases of Fund shares, the continuation of investment advisory, administrative and service contracts, and other risks discussed from time to time in the Fund's filings with the Securities and Exchange Commission. Prior to 7/20/2012, the Fund invested in an affiliated investment company (Portfolio) with the same objective(s) and policies as the Fund. References to investments are to the Portfolio’s holdings.

Portfolio profile subject to change due to active management. Percentages may not total 100% due to rounding.

About Risk 

Fund share values are sensitive to stock market volatility. A non-diversified fund may be subject to greater risk by investing in a smaller number of investments than a diversified fund. No Fund is a complete investment program and you may lose money investing in a Fund. The Fund may engage in other investment practices that may involve additional risks and you should review the Fund prospectus for a complete description.

Additional Notes 

Source: Factset.

Attribution analysis shows the contribution of indicated factor exposures to a portfolio's relative total return versus a designated benchmark. Results are based on each day's ending holdings, and linked to generate attribution over longer periods. Portfolio returns do not reflect applicable expenses and trading costs, or variations in transaction prices from end of day values.

Allocation Effect 

Measures portfolio's excess return due to over or under-weighting a sector.

Selection Effect 

Measures portfolio's excess return from selecting individual stocks within each sector.

Portfolio profile subject to change due to active management. Percentages may not total 100% due to rounding.

About Risk 

Fund share values are sensitive to stock market volatility. A non-diversified fund may be subject to greater risk by investing in a smaller number of investments than a diversified fund. No Fund is a complete investment program and you may lose money investing in a Fund. The Fund may engage in other investment practices that may involve additional risks and you should review the Fund prospectus for a complete description.