Atlanta Capital Horizon Growth Fund (A) Share
Class

A

• A
• B
• 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 Horizon Growth Fund (the Fund) underperformed its benchmark, the Russell Midcap Growth Index (the Index),¹² for the quarter ended March 31, 2013, returning 9.54% for Class A shares at net asset value versus the Index’s 11.51% return.

• Mid-cap stocks (as represented by the Russell Midcap Index)¹³ generally performed in line with large-cap stocks (as represented by the Russell 1000 Index)¹⁴ during the quarter. Energy, consumer staples and utilities were the best-performing sectors within the mid-cap space, while telecommunication services, materials and information technology lagged. Only telecommunication services posted a negative return for the quarter.
• Stock selection in the materials and financials sectors contributed to the Fund’s performance versus the Index, while stock selection in consumer discretionary, industrials and energy generated the majority of the Fund’s underperformance.
• Sector attribution overall was a modest positive for relative performance during the quarter, as the Fund’s overweight in energy and its lack of exposure to telecommunication services proved beneficial.
• Given its growth bias, the Fund had no exposure to the utilities or telecommunication services sectors during the quarter.

Contributors 

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

• Sector allocation helped relative performance during the quarter, particularly the Fund’s overweight in the energy sector. Stock selection in financials, materials and consumer staples also aided relative performance.
• Industrial company Chicago Bridge & Iron was the Fund’s largest individual contributor to relative performance during the quarter.
• Financial company Intercontinental Exchange was also one of the Fund’s top performance contributors during the quarter.
• Energy name Core Laboratories was another of the Fund’s leading performance contributors during the quarter.

Detractors 

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

• Stock selection in the consumer discretionary, industrials, and energy and information technology sectors detracted from the Fund’s relative performance during the quarter. The Fund’s underweight position in consumer staples also detracted from relative performance.
• Industrial company C.H. Robinson Worldwide was the Fund’s biggest individual detractor from relative performance during the quarter.
• Consumer discretionary names Ulta Cosmetics and Lululemon Athletica were also key detractors from the Fund’s relative performance during the quarter.

Investment Outlook And Fund Positioning 

As of quarter-end, the Fund was well diversified by sector, with overweights in energy, information technology and industrials and underweights in consumer discretionary, materials and consumer staples. We believe that the recent underlying economic activity in the U.S. is likely sustainable in the near term, which may support continued revenue and earnings growth for the equity market as a whole.

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.

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. Smaller companies are generally subject to greater price fluctuations, limited liquidity, higher transaction costs and higher investment risk than larger, established companies. Investments in foreign instruments or currencies can involve greater risk and volatility than U.S. investments because of adverse market, economic, political, regulatory, geopolitical or other conditions. Derivatives instruments can be used to take both long and short positions, be highly volatile, result in economic leverage (which can magnify losses), and involve risks in addition to the risks of the underlying instrument on which the derivative is based, such as counterparty, correlation and liquidity risk. If a counterparty is unable to honor its commitments, the value of Fund shares may decline and/or the Fund could experience delays in the return of collateral or other assets held by the counterparty. 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.

No attribution information is available.

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. Smaller companies are generally subject to greater price fluctuations, limited liquidity, higher transaction costs and higher investment risk than larger, established companies. Investments in foreign instruments or currencies can involve greater risk and volatility than U.S. investments because of adverse market, economic, political, regulatory, geopolitical or other conditions. Derivatives instruments can be used to take both long and short positions, be highly volatile, result in economic leverage (which can magnify losses), and involve risks in addition to the risks of the underlying instrument on which the derivative is based, such as counterparty, correlation and liquidity risk. If a counterparty is unable to honor its commitments, the value of Fund shares may decline and/or the Fund could experience delays in the return of collateral or other assets held by the counterparty. 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.