As filed with the Securities and Exchange Commission on July 8, 2005
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-21597
PRIMECAP ODYSSEY FUNDS
----------------------
(Exact name of registrant as specified in charter)
225 SOUTH LAKE AVENUE, SUITE 400
PASADENA, CA 91101
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(Address of principal executive offices) (Zip code)
DAVID H. VAN SLOOTEN
225 SOUTH LAKE AVENUE, SUITE 400
PASADENA, CA 91101
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(Name and address of agent for service)
(626) 304-9222
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Registrant's telephone number, including area code
Date of fiscal year end: OCTOBER 31, 2005
Date of reporting period: APRIL 30, 2005
ITEM 1. REPORT TO STOCKHOLDERS.
SEMI-ANNUAL REPORT
APRIL 30, 2005
[LOGO, PRIMECAP ODYSSEY FUNDS]
[GRAPHIC]
PRIMECAP ODYSSEY STOCK FUND
PRIMECAP ODYSSEY GROWTH FUND
PRIMECAP ODYSSEY AGGRESSIVE GROWTH FUND
TABLE OF CONTENTS
Page
Report from PRIMECAP Management Company ................................... 1
Expense Example ........................................................... 8
Sector Breakdown .......................................................... 10
Schedule of Investments ................................................... 12
PRIMECAP Odyssey Stock Fund ............................................. 12
PRIMECAP Odyssey Growth Fund ............................................ 16
PRIMECAP Odyssey Aggressive Growth Fund ................................. 20
Statements of Assets and Liabilities ...................................... 23
Statements of Operations .................................................. 24
Statement of Changes in Net Assets ........................................ 25
PRIMECAP Odyssey Stock Fund ............................................. 25
PRIMECAP Odyssey Growth Fund ............................................ 26
PRIMECAP Odyssey Aggressive Growth Fund ................................. 27
Financial Highlights ...................................................... 28
Notes to Financial Statements ............................................. 29
REPORT FROM PRIMECAP MANAGEMENT COMPANY
In our inaugural letter to our shareholders, we would like to take a moment to
discuss not only the performance of the PRIMECAP Odyssey Funds, but also our
investment philosophy and process. We thank you in advance for taking the time
to peruse this discussion, as it will set the context for a continual, ongoing
dialogue regarding our efforts to achieve superior relative returns on the
capital with which you have entrusted us.
INVESTMENT PHILOSOPHY AND PROCESS
Our singular goal in managing all three Odyssey Funds is the achievement of
superior long-term capital appreciation. We evaluate securities based on their
outlook over a three to five year time horizon, with the intention of holding
them considerably longer if their fundamentals warrant it.
In the Odyssey Stock Fund, we seek to invest in companies whose long-term value,
in our judgment, will substantially exceed their current market capitalizations.
This leads us to a combination of growth and value stocks that we believe are
under-appreciated by the market.
In the Odyssey Growth and Aggressive Growth Funds, we seek to invest in
companies whose long-term growth, in our judgment, will substantially exceed
that suggested by their current market valuations. We are particularly attracted
to companies with substantial unit growth potential, which frequently leads us
to research-intensive companies that stimulate growth through innovation.
For all three Odyssey Funds, fundamental research forms the foundation of our
decision making process. Our purpose in conducting such research is to develop
opinions independent of Wall Street research. Our decisions may be based on more
optimistic expectations we hold for new products, new markets, new management,
changing industry dynamics, and other factors.
We believe that the key to successful investment decisions rests in correctly
appraising the relationship between the fundamental value of a company and the
market price of its stock. A company may be valuable because of its ability to
make money, its assets, or both. However, a company is a good investment only if
it is purchased at the right price. One of PRIMECAP Management Company's
long-held tenets has been that the perception of risk is often inversely
proportional to actual risk. Consequently, our search for new ideas frequently
begins with companies and industries that are currently out of favor among
investors. Patience is critical to our approach. Through our research efforts,
we generate the conviction to buy stocks that may be declining in price or are
generally disliked by analysts. We are comfortable in making investments early,
waiting for our theses to evolve, and waiting for fundamentals to be recognized
by the market.
1
Core to PRIMECAP Management Company's ethos is a belief that individuals, not
committees, generate the best investment ideas. We utilize a multiple counselor
system in which each portfolio manager independently manages a portion of each
mutual fund. Portfolio managers choose only their highest conviction stock
selections in their respective portfolios. Each mutual fund achieves
diversification through aggregation of each portfolio manager's portfolio. Since
portfolio managers choose only their highest conviction ideas for their
portfolios, sector allocation weightings often differ substantially from the S&P
500. While we believe this will provide a superior return over the long term,
our results can differ materially from the S&P 500 in any given year. To the
extent that an individual portfolio manager or financial analyst convinces
others of the merits of a particular investment idea, our weighting in that idea
may become very significant due to the collective ownership by several portfolio
managers. At times, this can lead to a fairly concentrated portfolio. Our top
ten positions often represent more than 25% of each mutual fund.
PRIMECAP ODYSSEY STOCK FUND
From November 1, 2004 to April 30, 2005, the Odyssey Stock Fund's total return
of 4.90% exceeded the 3.24% return recorded by the unmanaged Standard & Poor's
500 Composite Stock Index. The Stock Fund's out-performance was driven primarily
by stock selection, with mixed results from sector allocation.
Our most heavily weighted sector in this Fund was Health Care, which constituted
22% of our portfolio and exceeded the benchmark weighting by 9 percentage
points. Despite favorable performance from Eli Lilly, Roche, Guidant, and
Sepracor, the substantial decline of Biogen Idec caused our Health Care
investments, which appreciated 6.1%, to substantially lag the S&P Health Care
sector performance of 11.6%. Biogen Idec, one of the Fund's largest holdings,
unexpectedly withdrew a promising multiple sclerosis drug after it was linked to
a serious neurological disorder.
The Stock Fund benefited substantially from its Energy holdings, which
appreciated 24.8% versus the S&P Energy sector return of 16.7%. Unocal, our
largest investment in this sector, saw a 29.9% gain, fueled in part by a
proposed takeover and in part by a growing appreciation of Unocal's attractive
portfolio of oil and gas assets.
Our Information Technology (IT) selections in the Stock Fund also contributed to
the relative out-performance of this Fund. In this sector, favorable stock
selection offset our over-allocation to this underperforming sector. Our IT
investments returned -1.1% versus the S&P IT sector return of -4.3%. Corning,
our largest investment in this sector, appreciated 17.8%, owing to an
acceleration in demand for its LCD glass products.
2
The table below lists the top ten holdings, which collectively represent 25% of
the total portfolio.
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PRIMECAP ODYSSEY STOCK FUND TOP 10 HOLDINGS % OF FUND % GAIN
- --------------------------------------------------------------------------------
Eli Lilly & Co. 3.8 7.4
Novartis AG ADR 3.5 3.0
Roche Holding AG-CHF 3.0 16.0
Unocal Corp. 2.3 29.9
Corning Inc. 2.3 17.8
Pfizer Inc. 2.2 (4.4)
Southwest Airlines Inc. 2.1 (3.7)
Medtronic Inc. 2.0 4.3
Biogen Idec 1.9 (37.1)
Guidant Corp. 1.9 18.0
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TOTAL % OF FUND, AVERAGE % GAIN 25.0 5.1
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PRIMECAP ODYSSEY GROWTH FUND
From November 1, 2004 to April 30, 2005, the Odyssey Growth Fund's total return
of 4.50% exceeded the 3.24% return recorded by the unmanaged Standard & Poor's
500 Composite Stock Index and the 1.14% return recorded by the Russell 1000
Growth Index. We feel that it is important to benchmark the Growth Fund against
both the S&P 500 and the Russell 1000 Growth Index, due to the Fund's objective
of selecting investments with above average growth potential. The Growth Fund's
out-performance was driven primarily by stock selection, with mixed results from
sector allocation.
Our most heavily weighted sectors in this Fund are Health Care and Information
Technology (IT). Together, these two sectors constitute 48% of the portfolio. We
have found a number of research-intensive companies that stimulate growth
through innovation. We believe that such companies, when purchased at reasonable
valuations, tend to out-perform over long-term time horizons.
Our IT investments constituted 25% of the total portfolio, exceeding the S&P IT
sector weighting by 9 percentage points. Favorable stock selection more than
offset our heavy allocation to this underperforming sector. Our IT investments
appreciated 0.8% versus the S&P IT sector return of -4.3%. Corning, our largest
investment in this sector, appreciated 17.8%, owing to an acceleration in demand
for its LCD glass products.
3
Our Health Care investments constituted 23% of the Growth Fund's portfolio and
exceeded the S&P Health Care sector weighting by over 10 percentage points.
Despite favorable performance from Eli Lilly, Roche and Sepracor, the
substantial decline of Biogen Idec caused our Health Care investments, which
appreciated 8.5%, to lag the S&P Health Care sector performance of 11.6%. Biogen
Idec, one of the Fund's largest holdings, unexpectedly withdrew a promising
multiple sclerosis drug after it was linked to a serious neurological disorder.
The Growth Fund benefited substantially from its Energy holdings, which
appreciated 23.1% versus the S&P Energy sector return of 16.7%. Unocal, our
largest investment in this sector, saw a 29.9% gain, fueled in part by a
proposed takeover and in part by a growing appreciation of Unocal's attractive
portfolio of oil and gas assets.
The table below lists the top ten holdings, which collectively represent over
27% of the total portfolio.
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PRIMECAP ODYSSEY GROWTH FUND TOP 10 HOLDINGS % OF FUND % GAIN
- --------------------------------------------------------------------------------
Eli Lilly & Co. 3.5 7.4
Roche Holding AG-CHF 3.1 12.9
Novartis AG ADR 3.0 3.0
Unocal Corp. 3.0 29.9
Southwest Airlines Inc. 2.6 (3.7)
Pfizer Inc. 2.6 (4.4)
Sepracor Inc. 2.6 30.4
Biogen Idec 2.5 (37.1)
Corning Inc. 2.3 17.8
Pall Corp. 2.2 3.0
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TOTAL % OF FUND, AVERAGE GAIN 27.4 5.9
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PRIMECAP ODYSSEY AGGRESSIVE GROWTH FUND
From November 1, 2004 to April 30, 2005, the Odyssey Aggressive Growth Fund's
return of -1.10% trailed the 3.24% return recorded by the unmanaged Standard &
Poor's 500 Composite Stock Index and the 4.07% return recorded by the Russell
Midcap Growth Index. We feel that it is important to benchmark the Aggressive
Growth Fund against both the S&P 500 and the Russell Midcap Growth Index, due to
the Fund's objective of selecting mid-cap and small-cap companies with above
average growth potential. The Aggressive Growth Fund's under-performance was
driven by a combination of unfavorable stock selection and sector allocation.
4
Our most heavily weighted sector in this Fund was Information Technology (IT),
which constituted 40% of our portfolio and exceeded the S&P IT sector weighting
by 24 percentage points. While our return of -1.6% was substantially better than
the S&P IT sector return of -4.3%, our extremely heavy concentration in this
sector, and resultant lack of weighting in strong performing sectors,
substantially contributed to this Fund's under-performance. Despite this
setback, we intend to maintain this level of concentration in IT, as we believe
our selections in this sector have significant long-term potential.
While we were only slightly over-weighted in Health Care in the Aggressive
Growth Fund, our selections were extremely unfavorable, producing a return of
- -10.0% versus the S&P Health Care Index gain of 11.6%. Some of our significant
disappointments included Ligand, Conceptus, Dendreon, and Pharmacyclics, which
declined 41%, 31%, 58%, and 40%, respectively. Ligand has suffered from
disappointing data on one of its pipeline drugs and its failure to file its 10K
annual report on time. We believe that Conceptus, Dendreon, and Pharmacyclics
have been hurt by a poor market environment for small capitalization
biotechnology and medical device companies. We remain optimistic about the
long-term prospects for these stocks. We believe all three companies are well on
their way to marketing medical breakthroughs addressing billion dollar market
opportunities in areas including non-incisional permanent birth control,
prostate cancer, and brain metastasis. Even though we saw strong results from
Affymetrix, up 54%, and Sepracor, up 30%, the gains and weightings were not
substantial enough to offset the losses produced by the aforementioned
unfavorable selections.
Finally, while our Energy selections in the Aggressive Growth Fund produced a
return of 11.7%, this return lagged the S&P Energy sector return of 16.7%.
The table below lists the top ten holdings, which collectively represent 33% of
the total portfolio.
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PRIMECAP ODYSSEY AGGRESSIVE GROWTH FUND
TOP 10 HOLDINGS % OF FUND % GAIN
- --------------------------------------------------------------------------------
JetBlue Airways 3.9 (10.1)
Affymetrix, Inc. 3.8 53.7
Minerals Technologies 3.7 10.0
THQ, Inc. 3.6 32.0
RADVision Ltd. 3.4 8.4
Sepracor Inc. 3.4 30.4
ASM Lithography 3.0 2.3
AMIS Holdings Inc. 2.7 (25.5)
Pall Corp. 2.7 3.0
American Italian Pasta 2.6 18.3
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TOTAL % OF FUND, AVERAGE GAIN 32.8 12.2
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5
Many of our selections in the Aggressive Growth Fund have been and will continue
to be volatile, as their valuations are based on expectations of future revenue
streams from innovative new technologies, drugs, and medical devices.
Interestingly, the Aggressive Growth Fund was the top performing Odyssey Fund
from November 1, 2004 to December 31, 2004, after which it gave back all of its
out-performance and more. Expectations of future revenues can change
substantially from quarter to quarter, with little or no new data precipitating
such changes in sentiment. We believe that over long-term time horizons,
sentiment becomes less relevant, and substantial earnings, once they manifest,
enable these types of investments to recover and ultimately out-perform.
STRUCTURE OF PORTFOLIO, POSITIONING, AND OUTLOOK FOR THE PRIMECAP ODYSSEY FUNDS
We select stocks using a bottom-up methodology, with each stock being purchased
based on its own merits; however, there are several themes worthy of discussion.
Generally speaking, all three Odyssey Funds are positioned to benefit from an
improving economy and increased business spending. Over the last few years, the
consumer has done well and camouflaged a difficult business environment. Lower
interest rates, mortgage refinancing, and dramatic automobile manufacturer
rebates have provided the engine for consumers to continue to spend. We are less
optimistic on consumer spending going forward. Business investment, on the other
hand, has lagged. Businesses are reluctant to make major capital investments
until they see clear signs of an economic rebound. In the meantime, businesses
have been strengthening their balance sheets. We are generally optimistic that
the U.S. economy will continue to improve, and our portfolio is positioned
accordingly. For example, Information Technology continues to represent a
substantial sector weighting in all three Funds. Within the S&P 500, Information
Technology was the second-worst performing sector in 2004. The group has not
done well over the last several years, and we expect our stock selections within
this group to benefit from an improving economy.
We are substantially weighted in Health Care in all three Odyssey Funds. The
negative sentiment surrounding pharmaceuticals has never been so great. We
believe that the current pharmaceutical valuations are discounting prevailing
concerns far too heavily. The price-to-earnings ratio of the pharmaceuticals
relative to that of the S&P 500 has only been this low once in the last 40 years
- - during the threat of U.S. health care nationalization in 1993. Analyst
perception of pharmaceutical companies' abilities to fight generic competition
has gone from overly optimistic to overly pessimistic, in our opinion.
Pharmaceutical companies are pursuing new strategies, including selling generic
versions of their own drugs as soon as the first generic equivalents are
approved. Drug re-importation should diminish, not increase, following the
recent Health and Human Services task force pronouncement that drug
re-importation is unsafe and Canadian government actions
6
to stem the flow of drugs back into the U.S. The recently passed Medicare drug
prescription benefit, which does not involve price controls, and
Republican-controlled executive and legislative branches should also bode well
for these stocks. Health Care represented the worst performing sector of the S&P
500 in 2004, which gives us hope that being overweighted in this sector will
help our performance in 2005.
In all three Funds, we are slightly over-weighted in Energy. While this sector
was the best performing sector in 2004 and oil prices have come down from their
highs, we still believe many of these stock prices reflect an even lower price
of oil. The Energy sector's weighting within the S&P 500 peaked in November 1980
at 30%. Over the next two decades, the sector performed poorly, hitting a low of
less than 6% of the S&P 500 in 2003. We feel that its current weighting of 7.9%
of the S&P 500 is still modest relative to the earnings the industry can
generate if oil prices continue to trade in a meaningfully higher band than in
the prior two decades.
In closing, we would like to thank you for entrusting us with your hard-earned
capital. We will continue to work diligently and assiduously to prove worthy of
that trust.
With Warm Regards,
PRIMECAP Management Company
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SHORT TERM PERFORMANCE, IN PARTICULAR, IS NOT A GOOD INDICATION OF THE FUNDS'
FUTURE PERFORMANCE, AND AN INVESTMENT SHOULD NOT BE MADE BASED SOLELY ON
RETURNS.
Performance figures reflect fee waivers in effect and in the absence of fee
waivers, total returns would be lower.
The Standard & Poor's Index is a broad based unmanaged index of 500 stocks,
which is widely recognized as representative of the market in general. This
index does not incur expenses and is not available for investment.
Price to earnings is calculated by dividing the current price of the stock by
the company's earnings per share.
MUTUAL FUND INVESTING INVOLVES RISK AND LOSS OF PRINCIPAL IS POSSIBLE. THE FUNDS
INVEST IN SMALLER COMPANIES, WHICH INVOLVE ADDITIONAL RISKS SUCH AS LIMITED
LIQUIDITY AND GREATER VOLATILITY. ALL FUNDS MAY INVEST IN FOREIGN SECURITIES
WHICH INVOLVES GREATER VOLATILITY AND POLITICAL, ECONOMIC AND CURRENCY RISKS AND
DIFFERENCES IN ACCOUNTING METHODS.
Please refer to the Schedule of Investments for details on fund holdings. Fund
holdings are subject to change at any time and are not recommendations to buy or
sell any security.
7
PRIMECAP ODYSSEY FUNDS
EXPENSE EXAMPLE - (UNAUDITED)
As a shareholder of the Funds, you incur ongoing costs, including management
fees and other fund expenses. This Example is intended to help you understand
your ongoing costs (in dollars) of investing in the Funds and to compare these
costs with the ongoing costs of investing in other mutual funds.
The Example is based on an investment of $1,000 invested at the beginning of the
period and held for the entire period from November 1, 2004 to April 30, 2005.
ACTUAL EXPENSES
The information in the table under the heading "Actual Performance" provides
actual account values and actual expenses. You may use the information in these
columns, together with the amount you invested, to estimate the expenses that
you paid over the period. Simply divide your account value by $1,000 (for
example, an $8,600 account value divided by $1,000 = 8.6), then multiply the
result by the number in the row entitled "Expenses Paid during Period" to
estimate the expenses you paid on your account during this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The information in the table under the heading "Hypothetical Performance (5%
return before expenses)" provides hypothetical account values and hypothetical
expenses based on the Funds' actual expense ratios and assumes rate of return of
5% per year before expenses, which are not the Funds' actual returns. The
hypothetical account values and expenses may not be used to estimate the actual
ending account balance or expenses you paid for the period. You may use this
information to compare the ongoing costs of investing in the Funds and other
mutual funds. To do so, compare these 5% hypothetical examples with the 5%
hypothetical examples that appear in the shareholder reports of the other mutual
funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only. Therefore, the information under the heading "Hypothetical
Performance (5% return before expenses)" is useful in comparing ongoing costs
only, and will not help you determine the relative total costs of owning
different mutual funds. In addition, if these transactional costs were included,
your costs would have been higher.
8
- ---------------------------------------------------------------------------------------------------
BEGINNING ENDING EXPENSES PAID EXPENSE RATIO
ACCOUNT ACCOUNT DURING PERIOD* DURING PERIOD*
VALUE VALUE (11/01/04 TO (11/01/04 TO
(11/01/04) (04/30/05) 04/30/05) 04/30/05)
- ---------------------------------------------------------------------------------------------------
PRIMECAP ODYSSEY STOCK FUND
Actual Performance $1,000 $1,049 $6.32 1.25%
Hypothetical Performance
(5% return before expenses) $1,000 $1,018 $6.22 1.25%
PRIMECAP ODYSSEY GROWTH FUND
Actual Performance $1,000 $1,045 $6.30 1.25%
Hypothetical Performance
(5% return before expenses) $1,000 $1,018 $6.22 1.25%
PRIMECAP ODYSSEY AGGRESSIVE GROWTH FUND
Actual Performance $1,000 $ 989 $6.13 1.25%
Hypothetical Performance
(5% return before expenses) $1,000 $1,018 $6.22 1.25%
- ---------------------------------------------------------------------------------------------------
- ----------
* Expenses are equal to the Funds' annualized expense ratio as indicated,
multiplied by the average account value over the period, multiplied by the
number of days in most recent period inception to date (180), then divided
by the number of days in the fiscal year (365) (to reflect the one year
period).
9
SECTOR BREAKDOWN
PRIMECAP ODYSSEY STOCK FUND
--------------------------------------------
Consumer Discretionary 11.1%
Consumer Staples 1.6%
Energy 8.8%
Financials 7.5%
Health Care 22.9%
Industrials 12.9%
Information Technology 17.6%
Materials 8.3%
Telecommunication Services 0.5%
Cash and Cash Equivalents 8.8%
--------------------------------------------
TOTAL 100.0%
--------------------------------------------
PRIMECAP ODYSSEY GROWTH FUND
--------------------------------------------
Consumer Discretionary 11.1%
Consumer Staples 0.4%
Energy 10.0%
Financials 6.1%
Health Care 25.5%
Industrials 9.8%
Information Technology 24.2%
Materials 3.5%
Telecommunication Services 1.0%
Cash and Cash Equivalents 8.4%
--------------------------------------------
TOTAL 100.0%
--------------------------------------------
The tables above list sector allocations as a percentage of each Fund's total
investments as of April 30, 2005. The management report makes reference to
average allocations during the period. As a result, the sector allocations above
may differ from those discussed in the management report.
10
PRIMECAP ODYSSEY AGGRESSIVE GROWTH FUND
--------------------------------------------
Consumer Discretionary 6.4%
Consumer Staples 3.1%
Energy 8.9%
Financials 2.6%
Health Care 13.8%
Industrials 10.9%
Information Technology 38.8%
Materials 4.6%
Cash and Cash Equivalents 10.9%
--------------------------------------------
TOTAL 100.0%
--------------------------------------------
The table above lists sector allocations as a percentage of each Fund's total
investments as of April 30, 2005. The management report makes reference to
average allocations during the period. As a result, the sector allocations above
may differ from those discussed in the management report.
11
SCHEDULE OF INVESTMENTS
PRIMECAP ODYSSEY STOCK FUND
APRIL 30, 2005 - (UNAUDITED)
Shares Value
- --------------------------------------------------------------------------------
COMMON STOCKS: 90.2%
CONSUMER DISCRETIONARY: 11.0%
1,700 99 Cents Only Stores* .............................. $ 18,836
6,200 Blue Nile, Inc.* ................................... 156,054
3,700 CarMax, Inc.* ...................................... 100,936
4,500 Comcast Corp. - Class A* ........................... 144,495
3,000 Cooper Tire & Rubber Co. ........................... 52,350
12,650 DIRECTV Group, Inc. (The)* ......................... 178,618
6,600 Dress Barn, Inc.* .................................. 113,520
4,000 Eastman Kodak Co. .................................. 100,000
2,000 Kohl's Corp.* ...................................... 95,200
5,100 Liberty Media Corp. - Class A* ..................... 51,204
3,400 Mattel, Inc. ....................................... 61,370
7,500 News Corp. - Class A ............................... 114,600
1,800 Nordstrom, Inc. .................................... 91,494
5,400 Sony Corp. ......................................... 198,234
1,250 Target Corp. ....................................... 58,013
3,850 Time Warner, Inc.* ................................. 64,718
7,150 TJX Cos, Inc. ...................................... 161,947
-----------
1,761,589
-----------
CONSUMER STAPLES: 1.6%
8,100 American Italian Pasta Co. - Class A ............... 191,646
3,100 Cott Corp.* ........................................ 69,409
-----------
261,055
-----------
ENERGY: 8.7%
1,800 Arch Coal, Inc. .................................... 79,812
2,700 Cooper Cameron Corp.* .............................. 148,338
500 EnCana Corp. ....................................... 31,930
2,600 EOG Resources, Inc. ................................ 123,630
3,763 National Oilwell Varco, Inc.* ...................... 149,542
550 Noble Corp. ........................................ 27,995
2,500 Pioneer Natural Resources Co. ...................... 101,650
3,200 Pogo Producing Co. ................................. 144,032
3,300 Schlumberger Ltd. .................................. 225,753
6,550 Unocal Corp. ....................................... 357,302
-----------
1,389,984
-----------
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
12
SCHEDULE OF INVESTMENTS
PRIMECAP ODYSSEY STOCK FUND
APRIL 30, 2005 - (UNAUDITED), (CONTINUED)
Shares Value
- --------------------------------------------------------------------------------
FINANCIALS: 7.4%
3,500 American International Group, Inc. ................. $ 177,975
7,200 Bank of New York Co., Inc. (The) ................... 201,168
100 Berkshire Hathaway, Inc. - Class B* ................ 279,801
2,750 Chubb Corp. ........................................ 224,895
1,600 Fannie Mae ......................................... 86,320
5,750 Marsh & McLennan Cos, Inc. ......................... 161,173
1,150 MBIA, Inc. ......................................... 60,237
-----------
1,191,569
-----------
HEALTH CARE: 22.7%
4,300 Affymetrix, Inc.* .................................. 198,273
1,200 Amgen, Inc.* ....................................... 69,852
8,450 Biogen Idec, Inc.* ................................. 306,228
10,300 Eli Lilly & Co. .................................... 602,241
2,800 GlaxoSmithKline PLC ................................ 141,540
4,000 Guidant Corp. ...................................... 296,320
6,000 Medtronic, Inc. .................................... 316,200
11,450 Novartis AG ........................................ 557,959
12,800 Pfizer, Inc. ....................................... 347,776
4,400 Pharmacyclics, Inc.* ............................... 31,592
3,900 Roche Holding AG ................................... 468,515
4,900 Sepracor, Inc.* .................................... 293,608
-----------
3,630,104
-----------
INDUSTRIALS: 12.7%
1,000 3M Co. ............................................. 76,470
2,700 Alaska Air Group, Inc.* ............................ 72,009
4,500 Avery Dennison Corp. ............................... 235,575
2,200 Burlington Northern Santa Fe Corp. ................. 106,150
1,200 Canadian National Railway Co. ...................... 68,652
2,000 Caterpillar, Inc. .................................. 176,100
6,400 Chicago Bridge & Iron Co. N.V ...................... 143,232
950 Fluor Corp. ........................................ 48,982
6,300 JetBlue Airways Corp.* ............................. 126,315
9,600 McDermott International, Inc.* ..................... 194,976
5,600 Pall Corp. ......................................... 150,248
1,100 Raytheon Co. ....................................... 41,371
21,800 Southwest Airlines Co. ............................. 324,384
1,500 Thomas & Betts Corp.* .............................. 46,680
3,600 Union Pacific Corp. ................................ 230,148
-----------
2,041,292
-----------
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
13
SCHEDULE OF INVESTMENTS
PRIMECAP ODYSSEY STOCK FUND
APRIL 30, 2005 - (UNAUDITED), (CONTINUED)
Shares Value
- --------------------------------------------------------------------------------
INFORMATION TECHNOLOGY: 17.4%
4,050 Accenture Ltd. - Class A* .......................... $ 87,885
11,000 Agilent Technologies, Inc.* ........................ 228,250
1,900 AMIS Holdings, Inc.* ............................... 21,394
2,200 Applied Materials, Inc. ............................ 32,714
13,000 ASML Holding N.V.* ................................. 188,370
3,100 Comverse Technology, Inc.* ......................... 70,649
25,950 Corning, Inc.* ..................................... 356,813
2,400 Emulex Corp.* ...................................... 37,272
8,500 eSpeed, Inc. - Class A* ............................ 73,440
1,000 First Data Corp. ................................... 38,030
496 Freescale Semiconductor, Inc. - Class B* ........... 9,355
5,400 Intel Corp. ........................................ 127,008
5,900 Intuit, Inc.* ...................................... 237,770
1,400 KLA-Tencor Corp. ................................... 54,628
3,770 L.M. Ericsson Telephone Co. ........................ 111,026
7,900 Microsoft Corp. .................................... 199,870
6,000 Motorola, Inc. ..................................... 92,040
35,000 Nortel Networks Corp.* ............................. 87,150
3,400 Nvidia Corp.* ...................................... 74,596
8,500 Oracle Corp.* ...................................... 98,260
3,000 Paychex, Inc. ...................................... 91,800
1,400 Research In Motion Ltd.* ........................... 90,174
1,600 Silicon Laboratories, Inc.* ........................ 40,640
5,000 Symbol Technologies, Inc. .......................... 66,850
10,800 Texas Instruments, Inc. ............................ 269,568
-----------
2,785,552
-----------
MATERIALS: 8.2%
5,000 Alcoa, Inc. ........................................ 145,100
3,350 Dow Chemical Co. (The) ............................. 153,866
3,150 Inco Ltd. .......................................... 112,581
1,800 International Paper Co. ............................ 61,722
1,000 Minerals Technologies, Inc. ........................ 65,320
2,550 Monsanto Co. ....................................... 149,481
1,700 Newmont Mining Corp. ............................... 64,549
1,000 Potash Corp. of Saskatchewan ....................... 84,140
650 Praxair, Inc. ...................................... 30,439
3,600 Vulcan Materials Co. ............................... 190,944
3,700 Weyerhaeuser Co. ................................... 253,857
-----------
1,311,999
-----------
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
14
SCHEDULE OF INVESTMENTS
PRIMECAP ODYSSEY STOCK FUND
APRIL 30, 2005 - (UNAUDITED), (CONTINUED)
Shares Value
- --------------------------------------------------------------------------------
TELECOMMUNICATION SERVICES: 0.5%
3,950 Sprint Corp. ....................................... $ 87,927
-----------
TOTAL COMMON STOCKS
(cost $14,391,016) ........................................... 14,461,071
-----------
Principal
Amount
- --------------------------------------------------------------------------------
SHORT-TERM INVESTMENT: 8.7%
$1,393,794 Dreyfus Institutional US Treasury
Money Market Fund ................................ $ 1,393,794
-----------
TOTAL SHORT-TERM INVESTMENT
(cost $1,393,794) ............................................ 1,393,794
-----------
TOTAL INVESTMENTS IN SECURITIES
(cost $15,784,810): 98.9% .................................... 15,854,865
Other Assets less Liabilities: 1.1% ............................. 166,074
-----------
NET ASSETS: 100.0% .............................................. $16,020,939
===========
- ----------
* Non-income producing security.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
15
SCHEDULE OF INVESTMENTS
PRIMECAP ODYSSEY GROWTH FUND
APRIL 30, 2005 - (UNAUDITED)
Shares Value
- --------------------------------------------------------------------------------
COMMON STOCKS: 92.1%
CONSUMER DISCRETIONARY: 11.1%
6,000 99 Cents Only Stores* .............................. $ 66,480
4,550 CarMax, Inc.* ...................................... 124,124
4,000 Comcast Corp. - Class A* ........................... 128,440
13,100 DIRECTV Group, Inc. (The)* ......................... 184,972
4,000 Gentex Corp. ....................................... 129,840
1,200 Kohl's Corp.* ...................................... 57,120
5,100 Liberty Media Corp. - Class A* ..................... 51,204
5,500 Mattel, Inc. ....................................... 99,275
11,800 News Corp. - Class A ............................... 180,304
1,600 Nordstrom, Inc. .................................... 81,328
2,800 Sony Corp. ......................................... 102,788
1,050 Target Corp. ....................................... 48,731
2,400 Time Warner, Inc.* ................................. 40,344
5,750 TJX Cos, Inc. ...................................... 130,238
1,850 Yum! Brands, Inc. .................................. 86,876
-----------
1,512,064
-----------
CONSUMER STAPLES: 0.4%
2,500 Cott Corp.* ........................................ 55,975
-----------
ENERGY: 10.0%
1,000 Cooper Cameron Corp.* .............................. 54,940
2,800 EnCana Corp. ....................................... 178,808
3,000 EOG Resources, Inc. ................................ 142,650
1,000 Murphy Oil Corp. ................................... 89,090
2,000 Pioneer Natural Resources Co. ...................... 81,320
3,200 Pogo Producing Co. ................................. 144,032
3,150 Schlumberger Ltd. .................................. 215,492
900 Transocean, Inc.* .................................. 41,733
7,500 Unocal Corp. ....................................... 409,125
-----------
1,357,190
-----------
FINANCIALS: 6.1%
2,150 American International Group, Inc. ................. 109,328
7,250 Bank of New York Co., Inc. (The) ................... 202,565
40 Berkshire Hathaway, Inc. - Class B* ................ 111,920
1,942 Chubb Corp. ........................................ 158,817
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
16
SCHEDULE OF INVESTMENTS
PRIMECAP ODYSSEY GROWTH FUND
APRIL 30, 2005 - (UNAUDITED), (CONTINUED)
Shares Value
- --------------------------------------------------------------------------------
FINANCIALS (CONTINUED)
3,650 Marsh & McLennan Cos, Inc. ......................... $ 102,309
950 MBIA, Inc. ......................................... 49,760
2,000 State Street Corp. ................................. 92,460
-----------
827,159
-----------
HEALTH CARE: 25.6%
5,600 Affymetrix, Inc.* .................................. 258,216
1,500 Amgen, Inc.* ....................................... 87,315
9,450 Biogen Idec, Inc.* ................................. 342,468
5,200 Chiron Corp.* ...................................... 177,580
8,200 Eli Lilly & Co. .................................... 479,454
1,800 GlaxoSmithKline PLC ................................ 90,990
3,700 Guidant Corp. ...................................... 274,096
4,500 Medtronic, Inc. .................................... 237,150
8,450 Novartis AG ........................................ 411,769
12,950 Pfizer, Inc. ....................................... 351,852
3,500 Roche Holding AG ................................... 420,463
5,800 Sepracor, Inc.* .................................... 347,535
-----------
3,478,888
-----------
INDUSTRIALS: 9.9%
1,200 3M Co. ............................................. 91,764
2,650 Avery Dennison Corp. ............................... 138,728
700 Caterpillar, Inc. .................................. 61,635
700 FedEx Corp. ........................................ 59,465
2,700 Fluor Corp. ........................................ 139,212
6,600 JetBlue Airways Corp.* ............................. 132,330
1,400 Kirby Corp.* ....................................... 57,036
11,200 Pall Corp. ......................................... 300,496
24,100 Southwest Airlines Co. ............................. 358,607
-----------
1,339,273
-----------
INFORMATION TECHNOLOGY: 24.4%
3,350 Accenture Ltd. - Class A* .......................... 72,695
10,750 Agilent Technologies, Inc.* ........................ 223,063
11,000 AMIS Holdings, Inc.* ............................... 123,860
3,500 Applied Materials, Inc. ............................ 52,045
16,050 ASML Holding N.V.* ................................. 232,565
1,800 Autodesk, Inc. ..................................... 57,294
8,700 Comverse Technology, Inc.* ......................... 198,273
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
17
SCHEDULE OF INVESTMENTS
PRIMECAP ODYSSEY GROWTH FUND
APRIL 30, 2005 - (UNAUDITED), (CONTINUED)
Shares Value
- --------------------------------------------------------------------------------
INFORMATION TECHNOLOGY (CONTINUED)
23,200 Corning, Inc.* ..................................... $ 319,000
2,650 Cymer, Inc.* ....................................... 65,694
1,100 First Data Corp. ................................... 41,833
220 Freescale Semiconductor, Inc. - Class B* ........... 4,149
4,500 Intel Corp. ........................................ 105,840
4,500 Intuit, Inc.* ...................................... 181,350
2,300 KLA-Tencor Corp. ................................... 89,746
3,000 L.M. Ericsson Telephone Co. ........................ 88,350
2,600 Macromedia, Inc.* .................................. 102,986
2,150 McAfee, Inc.* ...................................... 44,957
7,650 Microsoft Corp. .................................... 193,545
5,000 Motorola, Inc. ..................................... 76,700
45,200 Nortel Networks Corp.* ............................. 112,548
4,200 Nvidia Corp.* ...................................... 92,148
5,000 Oracle Corp.* ...................................... 57,800
3,000 Paychex, Inc. ...................................... 91,800
1,300 Research In Motion Ltd.* ........................... 83,733
4,550 Silicon Laboratories, Inc.* ........................ 115,570
2,700 Symantec Corp.* .................................... 50,706
7,100 Texas Instruments, Inc. ............................ 177,216
2,800 Trimble Navigation Ltd.* ........................... 96,376
5,800 VeriSign, Inc.* .................................... 153,467
-----------
3,305,309
-----------
MATERIALS: 3.6%
3,100 Minerals Technologies, Inc. ........................ 202,492
2,850 Monsanto Co. ....................................... 167,067
2,400 Praxair, Inc. ...................................... 112,391
-----------
481,950
-----------
TELECOMMUNICATION SERVICES: 1.0%
6,350 Sprint Corp. ....................................... 141,351
-----------
TOTAL COMMON STOCKS
(cost $12,420,272) ........................................... 12,499,159
-----------
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
18
SCHEDULE OF INVESTMENTS
PRIMECAP ODYSSEY GROWTH FUND
APRIL 30, 2005 - (UNAUDITED), (CONTINUED)
Principal
Amount Value
- --------------------------------------------------------------------------------
SHORT-TERM INVESTMENT: 8.5%
$1,150,991 Dreyfus Institutional US Treasury
Money Market Fund ................................ $ 1,150,991
-----------
TOTAL SHORT-TERM INVESTMENT
(cost $1,150,991) ............................................ 1,150,991
-----------
TOTAL INVESTMENTS IN SECURITIES
(cost $13,571,263): 100.6% ................................... 13,650,150
Other Assets less Liabilities: (0.6%) ........................... (78,879)
-----------
NET ASSETS: 100.0% .............................................. $13,571,271
===========
- ----------
* Non-income producing security.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
19
SCHEDULE OF INVESTMENTS
PRIMECAP ODYSSEY AGGRESSIVE GROWTH FUND
APRIL 30, 2005 - (UNAUDITED)
Shares Value
- --------------------------------------------------------------------------------
COMMON STOCKS: 89.2%
CONSUMER DISCRETIONARY: 6.4%
6,600 99 Cents Only Stores* .............................. $ 73,128
15,500 Blue Nile, Inc.* ................................... 390,135
5,000 California Pizza Kitchen, Inc.* .................... 114,000
6,600 CarMax, Inc.* ...................................... 180,048
5,000 Gentex Corp. ....................................... 162,300
1,550 Tiffany & Co. ...................................... 46,732
-----------
966,343
-----------
CONSUMER STAPLES: 3.1%
16,500 American Italian Pasta Co. - Class A ............... 390,390
3,800 Cott Corp.* ........................................ 85,082
-----------
475,472
-----------
ENERGY: 8.9%
1,800 Arch Coal, Inc. .................................... 79,812
25,000 Hanover Compressor Co.* ............................ 259,250
3,345 National Oilwell Varco, Inc.* ...................... 132,930
1,900 Noble Corp. ........................................ 96,710
9,400 Pioneer Natural Resources Co. ...................... 382,204
4,950 Pogo Producing Co. ................................. 222,800
8,200 Pride International, Inc.* ......................... 182,860
-----------
1,356,566
-----------
FINANCIALS: 2.7%
5,800 Advance America Cash Advance Centers, Inc. ......... 80,794
19,700 MarketAxess Holdings, Inc.* ........................ 241,522
1,550 MBIA, Inc. ......................................... 81,189
-----------
403,505
-----------
HEALTH CARE: 13.8%
12,600 Affymetrix, Inc.* .................................. 580,986
51,950 Conceptus, Inc.* ................................... 317,414
54,000 Dendreon Corp.* .................................... 249,480
3,000 Intuitive Surgical, Inc.* .......................... 128,820
43,000 Pharmacyclics, Inc.* ............................... 308,740
8,450 Sepracor, Inc.* .................................... 506,324
-----------
2,091,764
-----------
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
20
SCHEDULE OF INVESTMENTS
PRIMECAP ODYSSEY AGGRESSIVE GROWTH FUND
APRIL 30, 2005 - (UNAUDITED), (CONTINUED)
Shares Value
- --------------------------------------------------------------------------------
INDUSTRIALS: 10.9%
8,000 Alaska Air Group, Inc.* ............................ $ 213,360
4,650 Avery Dennison Corp. ............................... 243,428
4,000 Granite Construction, Inc. ......................... 90,320
29,450 JetBlue Airways Corp.* ............................. 590,472
15,000 Pall Corp. ......................................... 402,450
7,700 Southwest Airlines Co. ............................. 114,576
-----------
1,654,606
-----------
INFORMATION TECHNOLOGY: 38.8%
6,900 Agilent Technologies, Inc.* ........................ 143,175
36,400 AMIS Holdings, Inc.* ............................... 409,864
31,450 ASML Holding N.V.* ................................. 455,711
9,650 Comverse Technology, Inc.* ......................... 219,924
10,800 Cymer, Inc.* ....................................... 267,732
41,500 eSpeed, Inc. - Class A* ............................ 358,560
6,000 InPhonic, Inc.* .................................... 92,520
6,700 Intuit, Inc.* ...................................... 270,010
6,500 KLA-Tencor Corp. ................................... 253,630
9,000 Macromedia, Inc.* .................................. 356,490
2,800 Macrovision Corp.* ................................. 57,260
5,600 McAfee, Inc.* ...................................... 117,096
88,500 Nortel Networks Corp.* ............................. 220,365
9,100 Nvidia Corp.* ...................................... 199,654
50,700 Opsware, Inc.* ..................................... 242,346
42,200 RADVision Ltd.* .................................... 511,886
11,000 Rambus, Inc.* ...................................... 156,420
2,200 Research In Motion Ltd.* ........................... 141,702
6,750 Silicon Laboratories, Inc.* ........................ 171,450
57,000 SonicWALL, Inc.* ................................... 292,980
21,700 THQ, Inc.* ......................................... 547,274
3,000 Trimble Navigation Ltd.* ........................... 103,260
11,350 VeriSign, Inc.* .................................... 300,321
-----------
5,889,630
-----------
MATERIALS: 4.6%
8,500 Minerals Technologies, Inc. ........................ 555,220
2,400 Monsanto Co. ....................................... 140,688
-----------
695,908
-----------
TOTAL COMMON STOCKS
(cost $14,244,411) ........................................... 13,533,794
-----------
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
21
SCHEDULE OF INVESTMENTS
PRIMECAP ODYSSEY AGGRESSIVE GROWTH FUND
APRIL 30, 2005 - (UNAUDITED), (CONTINUED)
Principal
Amount Value
- --------------------------------------------------------------------------------
SHORT-TERM INVESTMENT: 10.9%
$1,658,407 Dreyfus Institutional US Treasury
Money Market Fund ................................ $ 1,658,407
-----------
TOTAL SHORT-TERM INVESTMENT
(cost $1,658,407) ............................................ 1,658,407
-----------
TOTAL INVESTMENTS IN SECURITIES
(cost $15,902,818): 100.1% ................................... 15,192,201
Other Assets less Liabilities: (0.1%) ........................... (23,254)
-----------
NET ASSETS: 100.0% .............................................. $15,168,947
===========
- ----------
* Non-income producing security.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
22
PRIMECAP ODYSSEY FUNDS
STATEMENTS OF ASSETS AND LIABILITIES
APRIL 30, 2005 - (UNAUDITED)
- --------------------------------------------------------------------------------
PRIMECAP PRIMECAP PRIMECAP
ODYSSEY ODYSSEY ODYSSEY AGGRESSIVE
STOCK FUND GROWTH FUND GROWTH FUND
------------ ------------ ------------
ASSETS
Investments in
securities, at cost .............. $ 15,784,810 $ 13,571,263 $ 15,902,818
============ ============ ============
Investments in equity
securities, at value ............. $ 14,461,071 $ 12,499,159 $ 13,533,794
Cash and cash equivalents .......... 1,392,673 1,150,099 1,658,407
Receivables:
Securities sold .................. 5,805 -- --
Dividends and interest ........... 11,674 9,709 4,852
Fund shares sold ................. 224,000 -- 100,500
Other assets ....................... 34,332 34,340 34,367
------------ ------------ ------------
Total Assets ..................... 16,129,555 13,693,307 15,331,920
------------ ------------ ------------
LIABILITIES
Payable for securities purchased ... 44,800 59,262 92,246
Due to adviser (Note 3) ............ 25,089 23,898 32,822
Accrued administration
fees (Note 3) .................... 5,202 5,202 5,202
Accrued trustee fees ............... 4,089 4,089 4,089
Accrued legal fees ................. 11,213 11,196 10,374
Other accrued expenses ............. 18,223 18,389 18,240
------------ ------------ ------------
Total Liabilities ................ 108,616 122,036 162,973
------------ ------------ ------------
NET ASSETS ........................... $ 16,020,939 $ 13,571,271 $ 15,168,947
============ ============ ============
Number of shares issued and
outstanding (unlimited shares
authorized, $0.01 par value) ....... 1,527,908 1,298,778 1,533,575
============ ============ ============
NET ASSET VALUE, OFFERING AND
REDEMPTION PRICE PER SHARE ......... $ 10.49 $ 10.45 $ 9.89
============ ============ ============
COMPONENTS OF NET ASSETS
Paid-in capital .................... $ 15,923,539 $ 13,505,187 $ 15,973,801
Accumulated net investment loss .... (5,382) (4,317) (47,401)
Accumulated net realized gain
(loss) on investments ............ 32,727 (8,486) (46,836)
Net unrealized appreciation
(depreciation) on investments .... 70,055 78,887 (710,617)
------------ ------------ ------------
Net assets ....................... $ 16,020,939 $ 13,571,271 $ 15,168,947
============ ============ ============
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
23
PRIMECAP ODYSSEY FUNDS
STATEMENTS OF OPERATIONS
FOR THE PERIOD ENDED APRIL 30, 2005* - (UNAUDITED)
- --------------------------------------------------------------------------------
PRIMECAP PRIMECAP PRIMECAP
ODYSSEY ODYSSEY ODYSSEY AGGRESSIVE
STOCK FUND GROWTH FUND GROWTH FUND
------------ ------------ ------------
INVESTMENT INCOME
Income
Dividends (net of foreign taxes
withheld of $1,816, $0, and
$2,036, respectively) ............ $ 51,012 $ 51,017 $ 14,737
Interest & Other Income .............. 8,953 9,473 11,914
------------ ------------ ------------
Total income ....................... 59,965 60,490 26,651
------------ ------------ ------------
Expenses
Advisory fees ...................... 31,366 31,107 35,545
Insurance expense .................. 17,519 17,522 17,531
Administration fees ................ 15,868 15,868 15,868
Legal fees ......................... 15,439 15,466 15,447
Registration fees .................. 10,650 10,650 10,650
Audit fees ......................... 9,587 9,587 9,587
Transfer agent fees ................ 8,857 9,147 9,186
Trustee fees ....................... 6,612 6,612 6,612
Custody fees ....................... 5,703 6,036 6,327
Reports to shareholders ............ 3,968 3,968 3,968
Fund accounting fees ............... 3,968 3,967 3,967
Miscellaneous ...................... 1,488 1,488 1,488
------------ ------------ ------------
Total expenses ................... 131,025 131,418 136,176
Less: fees waived and expenses
absorbed (Note 3) .............. (65,678) (66,611) (62,124)
------------ ------------ ------------
Net expenses ..................... 65,347 64,807 74,052
------------ ------------ ------------
NET INVESTMENT LOSS ............ (5,382) (4,317) (47,401)
------------ ------------ ------------
CHANGE IN REALIZED AND
UNREALIZED GAIN/(LOSS)
ON INVESTMENTS
Net realized gain
(loss) on investments .............. 32,727 (8,486) (46,836)
Net unrealized appreciation
(depreciation) on investments ...... 70,055 78,887 (710,617)
------------ ------------ ------------
Net realized and unrealized gain
(loss) on investments ............ 102,782 70,401 (757,453)
------------ ------------ ------------
NET INCREASE/(DECREASE)
IN NET ASSETS RESULTING
FROM OPERATIONS ................ $ 97,400 $ 66,084 $ (804,854)
============ ============ ============
- ----------
* Commenced operations on November 1, 2004.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
24
PRIMECAP ODYSSEY FUNDS
STATEMENT OF CHANGES IN NET ASSETS
FOR THE PERIOD ENDED APRIL 30, 2005* - (UNAUDITED)
- --------------------------------------------------------------------------------
PRIMECAP
ODYSSEY
STOCK FUND
-----------
INCREASE (DECREASE) IN NET ASSETS FROM:
OPERATIONS
Net investment loss ............................................ $ (5,382)
Net realized gain on investments ............................... 32,727
Net unrealized appreciation on investments ..................... 70,055
-----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS ......... 97,400
-----------
CAPITAL SHARE TRANSACTIONS
Net increase in net assets derived from net change
in outstanding shares (a) .................................... 15,923,539
-----------
TOTAL INCREASE IN NET ASSETS ............................... 16,020,939
NET ASSETS
Beginning of period ............................................ --
-----------
END OF PERIOD .................................................. $16,020,939
===========
Accumulated net investment loss ................................ $ (5,382)
===========
(a) A summary of capital share transactions is as follows:
PERIOD ENDED
APRIL 30, 2005*
---------------------------
SHARES VALUE
------------ -----------
Shares sold ...................................... 1,535,670 $16,007,345
Shares issued on reinvestment of distributions ... -- --
Shares redeemed .................................. (7,762) (83,806)
------------ -----------
Net increase ..................................... 1,527,908 $15,923,539
============ ===========
- ----------
* Commenced operations on November 1, 2004.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
25
PRIMECAP ODYSSEY FUNDS
STATEMENT OF CHANGES IN NET ASSETS
FOR THE PERIOD ENDED APRIL 30, 2005* - (UNAUDITED)
- --------------------------------------------------------------------------------
PRIMECAP
ODYSSEY
GROWTH FUND
-----------
INCREASE IN NET ASSETS FROM:
OPERATIONS
Net investment loss ............................................ $ (4,317)
Net realized loss on investments ............................... (8,486)
Net unrealized appreciation on investments ..................... 78,887
-----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS ......... 66,084
-----------
CAPITAL SHARE TRANSACTIONS
Net increase in net assets derived from net change
in outstanding shares (a) .................................... 13,505,187
-----------
TOTAL INCREASE IN NET ASSETS ............................... 13,571,271
NET ASSETS
Beginning of period ............................................ --
-----------
END OF PERIOD .................................................. $13,571,271
===========
Accumulated net investment loss ................................ $ (4,317)
===========
(a) A summary of capital share transactions is as follows:
PERIOD ENDED
APRIL 30, 2005*
---------------------------
SHARES VALUE
------------ -----------
Shares sold ...................................... 1,302,165 $13,541,213
Shares issued on reinvestment of distributions ... -- --
Shares redeemed .................................. (3,387) (36,026)
------------ -----------
Net increase ..................................... 1,298,778 $13,505,187
============ ===========
- ----------
* Commenced operations on November 1, 2004.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
26
PRIMECAP ODYSSEY FUNDS
STATEMENT OF CHANGES IN NET ASSETS
FOR THE PERIOD ENDED APRIL 30, 2005* - (UNAUDITED)
- --------------------------------------------------------------------------------
PRIMECAP
ODYSSEY AGGRESSIVE
GROWTH FUND
-----------
INCREASE IN NET ASSETS FROM:
OPERATIONS
Net investment loss ...................................... $ (47,401)
Net realized loss on investments ......................... (46,836)
Net unrealized depreciation on investments ............... (710,617)
-----------
NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS ... (804,854)
-----------
CAPITAL SHARE TRANSACTIONS
Net increase in net assets derived from net change
in outstanding shares (a) .............................. 15,973,801
-----------
TOTAL INCREASE IN NET ASSETS ......................... 15,168,947
NET ASSETS
Beginning of period ...................................... --
-----------
END OF PERIOD ............................................ $15,168,947
===========
Accumulated net investment loss .......................... $ (47,401)
===========
- ----------
(a) A summary of capital share transactions is as follows:
PERIOD ENDED
APRIL 30, 2005*
---------------------------
SHARES VALUE
------------ -----------
Shares sold ...................................... 1,552,122 $16,169,345
Shares issued on reinvestment of distributions ... -- --
Shares redeemed .................................. (18,547) (195,544)
------------ -----------
Net increase ..................................... 1,533,575 $15,973,801
============ ===========
- ----------
* Commenced operations on November 1, 2004.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
27
PRIMECAP ODYSSEY FUNDS
FINANCIAL HIGHLIGHTS
FOR A CAPITAL SHARE OUTSTANDING THROUGHOUT THE PERIOD - (UNAUDITED)
- --------------------------------------------------------------------------------
THE FOLLOWING INFORMATION SHOULD BE READ IN CONJUNCTION WITH THE FINANCIAL
STATEMENTS AND NOTES THERETO APPEARING ELSEWHERE IN THIS SEMI-ANNUAL REPORT.
PRIMECAP PRIMECAP PRIMECAP
ODYSSEY ODYSSEY ODYSSEY AGGRESSIVE
STOCK FUND GROWTH FUND GROWTH FUND
------------ ------------ ------------------
PERIOD ENDED PERIOD ENDED PERIOD ENDED
APRIL 30, APRIL 30, APRIL 30,
2005(1) 2005(1) 2005(1)
---------- ---------- ----------
Net asset value,
beginning of period ............... $ 10.00 $ 10.00 $ 10.00
---------- ---------- ----------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) ...... (0.00) (0.00) (0.03)
Net realized and unrealized gain
(loss) on investments ........... 0.49 0.45 (0.08)
---------- ---------- ----------
Total from investment
operations ........................ 0.49 0.45 (0.11)
---------- ---------- ----------
Net asset value, end of period ...... $ 10.49 $ 10.45 $ 9.89
========== ========== ==========
Total return ........................ 4.90%(3) 4.50%(3) (1.10%)(3)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of
period (millions) ............... $ 16.0 $ 13.6 $ 15.2
RATIO OF EXPENSES TO AVERAGE
NET ASSETS:
Before fees waived and expenses
absorbed or recouped ............ 2.50%(2) 2.54%(2) 2.30%(2)
After fees waived and expenses
absorbed or recouped ............ 1.25%(2) 1.25%(2) 1.25%(2)
RATIO OF NET INVESTMENT LOSS
TO AVERAGE NET ASSETS# ............ (0.10%)(2) (0.08%)(2) (0.80%)(2)
Portfolio turnover rate ............. 4.60%(3) 0.97%(3) 2.61%(3)
- ----------
(1) Commenced operations on November 1, 2004.
(2) Annualized.
(3) Not annualized.
# Net of fees waived.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
28
PRIMECAP ODYSSEY FUNDS
NOTES TO FINANCIAL STATEMENTS
FOR THE PERIOD NOVEMBER 1, 2004 TO APRIL 30, 2005 - (UNAUDITED)
- --------------------------------------------------------------------------------
(1) ORGANIZATION
PRIMECAP Odyssey Funds (the "Trust"), was organized on June 8, 2004 as a
Delaware statutory trust and is authorized to issue unlimited shares of
beneficial interest. The Trust is registered under the Investment Company Act of
1940, as an open-end management investment company comprised of three
diversified series: PRIMECAP Odyssey Stock Fund, PRIMECAP Odyssey Growth Fund,
PRIMECAP Odyssey Aggressive Growth Fund (the "Funds"). The Funds began
operations on November 1, 2004.
Each of the Fund's investment objective is to seek to provide long-term capital
appreciation. The Funds seek to achieve this objective by emphasizing those
companies with above average earnings growth potential that is not reflected in
their current market prices.
(2) SIGNIFICANT ACCOUNTING POLICIES
The Funds consistently follow the accounting policies set forth below which are
in conformity with generally accepted accounting principles in the United States
of America.
A. SECURITY VALUATION.
Securities traded on a national securities exchange are valued at
the last reported sales price at the close of regular trading on
each day the exchanges are open for trading. Securities listed on
the NASDAQ National Market System for which market quotations are
readily available shall be valued using the NASDAQ Official Closing
Price ("NOCP"). Securities traded on an exchange for which there
have been no sales are valued at the mean between the bid and asked
price. Securities for which quotations are not readily available are
stated at their respective fair values as determined in good faith
by the Board of Trustees.
Foreign securities are recorded in the financial statements after
translation to U.S. dollars based on the applicable exchange rate at
the end of the period. The Funds do not isolate that portion of the
results of operations arising as a result of changes in the currency
exchange rate from the fluctuations arising as a result of changes
in the market prices of investments during the period.
Interest income is translated at the exchange rates, which existed
at the dates the income was accrued. Exchange gains and losses
related to interest income are included in interest income on the
accompanying Statement of Operations.
B. SHARES VALUATION.
The net asset value ("NAV") per share of a Fund is calculated by
dividing the sum of the value of the securities held by the Fund,
plus cash or other assets, minus all liabilities (including
estimated accrued expenses) by the total number of shares
outstanding of the Fund, rounded to the nearest cent. The Funds'
shares will not be priced on the days on which the NYSE is closed
for trading.
29
PRIMECAP ODYSSEY FUNDS NOTES TO FINANCIAL
STATEMENTS
FOR THE PERIOD NOVEMBER 1, 2004 TO APRIL 30, 2005 - (UNAUDITED), (CONTINUED)
- --------------------------------------------------------------------------------
C. FOREIGN CURRENCY.
Values of investments denominated in foreign currencies are
converted into U.S. dollars using the spot market rate of exchange
at the time of valuation. Purchases and sales of investments and
dividend and interest income are translated into U.S. dollars using
the spot market rate of exchange prevailing on the respective dates
of such translations. The gain or loss resulting from changes in
foreign exchange rates is included with net realized and unrealized
gain or loss from investments, as appropriate. Foreign securities
and currency transactions may involve certain considerations and
risks not typically associated with those of domestic origin.
D. FEDERAL INCOME TAXES.
The Funds have elected to be treated as a "regulated investment
company" under Subchapter M of the Internal Revenue Code. The Funds
intend to distribute substantially all of their taxable income and
any capital gains less any applicable capital loss carryforwards.
Accordingly, no provision for Federal income taxes has been made in
the accompanying financial statements.
The Funds may be subject to foreign taxes on income, gains on
investments or currency repatriation, a portion of which may be
recoverable. The Funds will accrue such taxes and recoveries as
applicable based upon their current interpretations of the tax rules
and regulations that exist in the markets in which they invest.
E. SECURITY TRANSACTIONS, INVESTMENT INCOME AND DISTRIBUTIONS.
Security transactions are accounted for on the trade date. Dividend
income and distributions to shareholders are recorded on the
ex-dividend date and interest income is recognized on the accrual
basis. Realized gains and losses are evaluated on the bases of
identified costs.
F. INDEMNIFICATION OBLIGATIONS.
Under the Funds' organizational documents, its current and former
officers and trustees are indemnified against certain liabilities
arising out of the performance of their duties to the Funds. In
addition, in the normal course of business, the Funds enter into
contracts that contain a variety of representations and warranties
that provide general indemnifications. The Funds' maximum exposure
under these arrangements is unknown as this would involve future
claims that may be made against the Funds that have not yet occurred
or that would be covered by other parties.
30
PRIMECAP ODYSSEY FUNDS
NOTES TO FINANCIAL STATEMENTS
FOR THE PERIOD NOVEMBER 1, 2004 TO APRIL 30, 2005 - (UNAUDITED), (CONTINUED)
- --------------------------------------------------------------------------------
G. USE OF ESTIMATES.
The preparation of financial statements in conformity with generally
accepted accounting principles in the United States of America
requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from these
estimates.
H. ORGANIZATIONAL EXPENSES.
The Investment Advisor has agreed to bear all organizational
expenses for the Trust. These organizational expenses include
offering costs, administration, legal and audit fees.
(3) FEES AND TRANSACTIONS WITH RELATED PARTIES
The Trust has entered into an investment management agreement with PRIMECAP
Management Company (the "Investment Advisor"). Under the terms of the agreement,
each of the Funds will pay a fee equal to the following annual percentages of
average net assets:
FOR THE FIRST ASSETS IN EXCESS OF
$100,000,000 $100,000,000
PER FUND PER FUND
------------ ------------
PRIMECAP Odyssey
Stock Fund ..................... 0.60% 0.55%
PRIMECAP Odyssey
Growth Fund .................... 0.60% 0.55%
PRIMECAP Odyssey
Aggressive Growth Fund ......... 0.60% 0.55%
Although not required to do so, the Investment Advisor has agreed to reimburse
each Fund to the extent necessary so that its ratio of operating expenses to
average net assets will not exceed the following levels. The Investment Advisor
will not seek reimbursement for fees waived or expenses paid under this
agreement:
PRIMECAP Odyssey
Stock Fund ..................... 1.25%
PRIMECAP Odyssey
Growth Fund .................... 1.25%
PRIMECAP Odyssey
Aggressive Growth Fund ......... 1.25%
THESE PERCENTAGES ARE BASED ON THE AVERAGE DAILY NET ASSETS OF THE FUNDS.
31
PRIMECAP ODYSSEY FUNDS
NOTES TO FINANCIAL STATEMENTS
FOR THE PERIOD NOVEMBER 1, 2004 TO APRIL 30, 2005 - (UNAUDITED), (CONTINUED)
- --------------------------------------------------------------------------------
U.S. Bancorp Fund Services, LLC is the Administrator and Fund Accounting Agent
to the Funds pursuant to a fund administration servicing agreement and fund
accounting servicing agreement. The Funds will pay U.S. Bancorp Fund Services,
LLC, under these agreements, an annual fee equal to 0.10% of the first $250
million of average daily net assets, 0.07% of the next $750 million, and 0.05%
of assets over $1 billion, payable monthly and subject to a minimum annual fee
of $120,000 on a trust level. The Trust's expenses for fund administration will
be allocated between the Funds based on average daily net assets. U.S. Bancorp
Fund Services, LLC also serves as the Transfer Agent. Fees charged for these
services are based on the number of shareholder accounts and activities.
Quasar Distributors, LLC serves as the Distributor to the Funds pursuant to a
Distribution Agreement.
(4) INVESTMENT TRANSACTIONS
The cost of purchases and the proceeds from sales of securities, excluding U.S.
Government securities and short-term investments, for the period November 1,
2004 to April 30, 2005 were as follows:
FUND PURCHASES SALES
- ---- ----------- -----------
PRIMECAP Odyssey
Stock Fund ............................... $14,787,571 $ 429,283
PRIMECAP Odyssey
Growth Fund .............................. $12,516,013 $ 87,255
PRIMECAP Odyssey
Aggressive Growth Fund ................... $14,560,846 $ 269,598
(5) DISTRIBUTION TO SHAREHOLDERS
Net investment income and net realized gains differ for financial statement and
tax purposes due to differing treatments of deferred wash sale losses, foreign
currency transactions and losses realized subsequent to October 31 on the sale
of securities and foreign currencies.
32
PRIMECAP ODYSSEY FUNDS
NOTES TO FINANCIAL STATEMENTS
FOR THE PERIOD NOVEMBER 1, 2004 TO APRIL 30, 2005 - (UNAUDITED), (CONTINUED)
- --------------------------------------------------------------------------------
As of April 30, 2005, the components of distributable accumulated
earnings/(losses) on a tax basis were as follows:
PRIMECAP PRIMECAP PRIMECAP
ODYSSEY ODYSSEY ODYSSEY AGGRESSIVE
STOCK FUND GROWTH FUND GROWTH FUND
------------ ------------ ------------
Cost of investments
for tax purposes $ 15,784,810 $ 13,571,263 $ 15,902,818
============ ============ ============
Gross tax unrealized
appreciation 736,657 717,675 793,534
Gross tax unrealized
depreciation (666,602) (638,789) (1,504,152)
------------ ------------ ------------
Net tax unrealized
appreciation/(depreciation) $ 70,055 $ 78,887 $ (710,617)
============ ============ ============
(6) PROXY VOTING PROCEDURES
The Investment Advisor votes proxies relating to portfolio securities in
accordance with procedures that have been approved by the Trust's Board of
Trustees. You may obtain a description of these procedures, free of charge, by
calling toll-free 1-800-729-2307. This information is also available through the
Securities and Exchange Commission's ("SEC") website at http://www.sec.gov.
(7) FORM N-Q DISCLOSURE
The Funds will file their first and third fiscal quarter complete schedules of
portfolio holdings with the SEC on Form N-Q. The Funds' Form N-Q will be
available without charge, upon request, by calling 1-800-729-2307. Furthermore,
you can obtain the Form N-Q on the SEC's website at www.sec.gov.
33
Investment Advisor
PRIMECAP MANAGEMENT COMPANY
225 South Lake Avenue, Suite 400
Pasadena, California 91101
o
Distributor
QUASAR DISTRIBUTORS, LLC
615 East Michigan Street, 3rd Floor
Milwaukee, Wisconsin 53202
o
Custodian
MELLON BANK, N.A.
One Mellon Center
Pittsburgh, Pennsylvania 15258
o
Transfer Agent
U.S. BANCORP FUND SERVICES, LLC
615 East Michigan Street, 3rd Floor
Milwaukee, Wisconsin 53202
o
Administrator
U.S. BANCORP FUND SERVICES, LLC
2020 East Financial Way, Suite 100
Glendora, California 91741
o
Legal Counsel
PAUL, HASTINGS, JANOFSKY & WALKER LLP
515 South Flower Street, 23rd Floor
Los Angeles, California 90071
[GRAPHIC]
THIS REPORT IS INTENDED FOR THE SHAREHOLDERS OF THE PRIMECAP ODYSSEY FUNDS AND
MAY NOT BE USED AS SALES LITERATURE UNLESS PRECEDED OR ACCOMPANIED BY A CURRENT
PROSPECTUS.
PAST PERFORMANCE RESULTS SHOWN IN THIS REPORT SHOULD NOT BE CONSIDERED A
REPRESENTATION OF FUTURE PERFORMANCE. SHARE PRICE AND RETURNS WILL FLUCTUATE SO
THAT SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST.
STATEMENTS AND OTHER INFORMATION HEREIN ARE DATED AND ARE SUBJECT TO CHANGE.
ITEM 2. CODE OF ETHICS.
Not applicable for semi-annual reports.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
Not applicable for semi-annual reports.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
Not applicable for semi-annual reports.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
Not applicable to open-end investment companies.
ITEM 6. SCHEDULE OF INVESTMENTS.
Schedule of Investments is included as part of the report to shareholders filed
under Item 1 of this Form.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
Not applicable to open-end investment companies.
ITEM 8. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASES.
Not applicable to open-end investment companies.
ITEM 9. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
There have been no material changes to the procedures by which the shareholders
may recommend nominees to the registrant's board of trustees.
ITEM 10. CONTROLS AND PROCEDURES.
(a) The Registrant's Chief Financial Officer and Co-Chief Executive Officers
have reviewed the Registrant's disclosure controls and procedures (as
defined in Rule 30a-3(c) under the Investment Company Act of 1940 (the
"Act")) as of a date within 90 days of the filing of this report, as
required by Rule 30a-3(b) under the Act and Rules 13a-15(b) or 15d-15(b)
under the Securities Exchange Act of 1934. Based on their review, such
officers have concluded that the disclosure controls and procedures are
effective in ensuring that information required to be disclosed in this
report is appropriately recorded, processed, summarized and reported and
made known to them by others within the Registrant and by the Registrant's
service provider.
(b) There were no significant changes in the Registrant's internal controls
over financial reporting that occurred during the Registrant's last fiscal
half-year that has materially affected, or is reasonably likely to
materially affect, the Registrant's internal control over financial
reporting.
ITEM 11. EXHIBITS.
(a) (1) ANY CODE OF ETHICS OR AMENDMENT THERETO, THAT IS SUBJECT OF THE
DISCLOSURE REQUIRED BY ITEM 2, TO THE EXTENT THAT THE REGISTRANT INTENDS
TO SATISFY ITEM 2 REQUIREMENTS THROUGH FILING AN EXHIBIT. Not applicable.
(2) CERTIFICATIONS PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF
2002. Filed herewith.
(3) ANY WRITTEN SOLICITATION TO PURCHASE SECURITIES UNDER RULE 23C-1 UNDER
THE ACT SENT OR GIVEN DURING THE PERIOD COVERED BY THE REPORT BY OR ON
BEHALF OF THE REGISTRANT TO 10 OR MORE PERSONS. Not applicable to open-end
investment companies.
(B) CERTIFICATION PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002.
Furnished herewith.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and
the Investment Company Act of 1940, the registrant has duly caused this report
to be signed on its behalf by the undersigned, thereunto duly authorized.
(Registrant) PRIMECAP ODYSSEY FUNDS
By (Signature and Title) /s/ Joel P. Fried
------------------------------------------------
Joel P. Fried, Co-Chief Executive Officer
Date July 5, 2005
---------------------------------------------------------------------
By (Signature and Title) /s/ Howard B. Schow
------------------------------------------------
Howard B. Schow, Co-Chief Executive Officer
Date July 5, 2005
---------------------------------------------------------------------
By (Signature and Title) /s/ Theo A. Kolokotrones
------------------------------------------------
Theo A. Kolokotrones, Co-Chief Executive Officer
Date July 6, 2005
---------------------------------------------------------------------
Pursuant to the requirements of the Securities Exchange Act of 1934 and
the Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By (Signature and Title)* /s/ Joel P. Fried
------------------------------------------------
Joel P. Fried, Co-Chief Executive Officer
Date July 5, 2005
---------------------------------------------------------------------
By (Signature and Title)* /s/ Howard B. Schow
------------------------------------------------
Howard B. Schow, Co-Chief Executive Officer
Date July 5, 2005
---------------------------------------------------------------------
By (Signature and Title)* /s/ Theo A. Kolokotrones
------------------------------------------------
Theo A. Kolokotrones, Co-Chief Executive Officer
Date July 6, 2005
---------------------------------------------------------------------
By (Signature and Title)* /s/ David H. Van Slooten
------------------------------------------------
David H. Van Slooten, Chief Financial Officer
Date July 5, 2005
---------------------------------------------------------------------
* PRINT THE NAME AND TITLE OF EACH SIGNING OFFICER UNDER HIS OR HER SIGNATURE.