This paper investigates how evaluation horizons influence mutual fund managers’ investment decisions, fund performance, and investor behavior, with a particular focus on the final year of the evaluation period. Using a dataset of actively managed U.S. equity mutual funds, I document that managers of portfolios projected to underperform ("losers") significantly increase portfolio volatility during the final year of the evaluation horizon compared to managers of portfolios expected to outperform ("winners"). Funds with long-horizon evaluation contracts exhibit lower flow-performance sensitivity relative to those with short-horizon contracts, as investors adjust their behavior, demonstrating greater patience toward short-term underperformance. The analysis further identifies that older and larger funds, funds with lower turnover ratios, and funds with lower flow-performance sensitivity are more likely to adopt long-horizon evaluation contracts. These findings provide new insights into how evaluation horizons shape managerial risk-taking, investor behavior, and the design of optimal fund governance structures.