Annual Report - EuroPacific Growth Fund - American Funds

Approval of Investment Advisory and Service AgreementThe EuroPacific Growth Fund’s boardhas approved the fund’s InvestmentAdvisory and Service Agreement(the “agreement”) with CapitalResearch and Management Company(“CRMC”) for an additional one-yearterm through December 31, 2014.The board approved the agreementfollowing the recommendation ofthe fund’s Contracts Committee (the“committee”), which is composedof all of the fund’s independentboard members. The board and thecommittee determined that the fund’sadvisory fee structure was fair andreasonable in relation to the servicesprovided and that approving theagreement was in the best interests ofthe fund and its shareholders.In reaching this decision, the boardand the committee took into accountinformation furnished to themthroughout the year and otherwiseprovided to them, as well as informationprepared specifically in connection withtheir review of the agreement, and wereadvised by their independent counsel.They considered the following factors,among others, but did not identifyany single issue or particular piece ofinformation that, in isolation, was thecontrolling factor, and each board andcommittee member did not necessarilyattribute the same weight to each factor.1. Nature, extent and quality of servicesThe board and the committee considered the depth and quality of CRMC’s investmentmanagement process, including its global research capabilities; the experience,capability and integrity of its senior management and other personnel; the low turnoverrates of its key personnel; the overall financial strength and stability of it and the Capitalorganization; and the ongoing evolution of CRMC’s organizational structure designed tomaintain and strengthen these qualities. The board and the committee also consideredthe nature, extent and quality of administrative, compliance and shareholder servicesprovided by CRMC to the fund under the agreement and other agreements, as well asthe benefits to fund shareholders from investing in a fund that is part of a large family offunds. The board and the committee concluded that the nature, extent and quality of theservices provided by CRMC have benefited and should continue to benefit the fund andits shareholders.2. Investment resultsThe board and the committee considered the investment results of the fund in lightof its objective of providing long-term growth of capital. They compared the fund’sinvestment results with those of other relevant funds (including funds that form thebasis of the Lipper index for the category in which the fund is included), and data suchas relevant market and fund indexes, over various periods through June 30, 2013. Thisreport, including the letter to shareholders and related disclosures, contains certaininformation about the fund’s investment results. The board and the committee reviewedthe fund’s investment results measured against various indexes, including the LipperInternational Funds Index, the MSCI All Country World ex-U.S. Index and the MSCIEAFE Index. They noted that the investment results of the fund compared favorably tothose of these indexes for the 20-year, 10‐year and five-year periods. The board and thecommittee concluded that the fund’s investment results have been satisfactory and thatCRMC’s record in managing the fund indicated that its continued management shouldbenefit the fund and its shareholders.3. Advisory fees and total expensesThe board and the committee compared the advisory fees and total expense levels ofthe fund to those of other relevant funds. They observed that the fund’s advisory feesand expenses generally compared favorably to those of other similar funds includedin the Lipper International Funds Index category. The board and the committee alsoconsidered the breakpoint discounts in the fund’s advisory fee structure that reducethe level of fees charged by CRMC to the fund as fund assets increase. In addition, theyreviewed information regarding the effective advisory fees charged to non-mutual fundclients by CRMC and its affiliates. They noted that, to the extent there were differencesbetween the advisory fees paid by the fund and the advisory fees paid by those clients,the differences appropriately reflected the investment, operational and regulatorydifferences between advising the fund and the other clients. The board and thecommittee concluded that the fund’s cost structure was fair and reasonable in relationto the services provided, and that the fund’s shareholders receive reasonable value inreturn for the advisory fees and other amounts paid to CRMC by the fund.36 EuroPacific Growth Fund