As filed with the Securities and Exchange Commission on January 5, 2006
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
(Address of principal executive offices) (Zip code)
DAVID H. VAN SLOOTEN
225 SOUTH LAKE AVENUE, SUITE 400
PASADENA, CA 91101
(Name and address of agent for service)
(626) 304-9222
Registrant's telephone number, including area code
Date of fiscal year end: OCTOBER 31, 2005
----------------
Date of reporting period: OCTOBER 31, 2005
ITEM 1. REPORT TO STOCKHOLDERS.
[LOGO] PRIMECAP(R)
ODYSSEY FUNDS
[GRAPHIC] ANNUAL REPORT
OCTOBER 31, 2005
PRIMECAP ODYSSEY STOCK FUND
PRIMECAP ODYSSEY GROWTH FUND
PRIMECAP ODYSSEY AGGRESSIVE GROWTH FUND
TABLE OF CONTENTS
Page
Letter to Shareholders .................................................... 1
Performance Graphs ........................................................ 10
Expense Example ........................................................... 13
Sector Breakdown .......................................................... 15
Schedule of Investments ................................................... 17
PRIMECAP Odyssey Stock Fund ............................................ 17
PRIMECAP Odyssey Growth Fund ........................................... 21
PRIMECAP Odyssey Aggressive Growth Fund ................................ 25
Statements of Assets and Liabilities ...................................... 28
Statements of Operations .................................................. 29
Statement of Changes in Net Assets ........................................ 30
PRIMECAP Odyssey Stock Fund ............................................ 30
PRIMECAP Odyssey Growth Fund ........................................... 31
PRIMECAP Odyssey Aggressive Growth Fund ................................ 32
Financial Highlights ...................................................... 33
Notes to Financial Statements ............................................. 34
Report of Independent Registered Public Accounting Firm ................... 39
Additional Notes .......................................................... 40
Management ................................................................ 41
DEAR FELLOW SHAREHOLDERS,
During their inaugural fiscal year, all three PRIMECAP Odyssey Funds
outperformed the Standard & Poor's 500 Composite Stock Price Index (S&P 500).
From November 1, 2004 through October 31, 2005, the PRIMECAP Odyssey Stock,
Growth, and Aggressive Growth Funds produced total returns of 14.80%, 16.20%,
and 12.40%, respectively, outperforming the S&P 500 return of 8.68%. While we
are pleased with these results, our mission is longer term in nature. Although
short-term results are certainly important, our mandate is to generate superior
long-term returns. Just as we evaluate potential investment ideas in the context
of a three to five year time horizon, we will measure our results over a similar
time frame.
Sustained high oil prices and their implications were the most dominant themes
characterizing this year's investment environment. Oil prices began the fiscal
year near $50 per barrel and ended the fiscal year near $60 per barrel. This
rise in oil prices to unprecedented nominal levels affected not only the Energy
sector, but also sectors in which high oil prices can inflate costs, impair or
stimulate demand, and catalyze new investment. Many of our holdings in the
Energy sector benefited from this trend, while certain holdings in the Consumer
and Transportation sectors suffered.
High energy prices are tantamount to a regressive tax on the consumer. Higher
gasoline and oil prices take a larger share of lower income consumers' wallets,
leaving them less discretionary income to spend at retail stores. Retailers
targeting the lower income consumer were most vulnerable, as they were affected
by both lower demand and higher distribution costs. Retailers targeting more
affluent customers saw less curtailment in consumption and therefore fared much
better.
Fuel is also a significant non-labor cost in any industry involved in the
transportation of people or goods. The airline industry saw two bankruptcies,
and most airlines saw modest or negative returns. Finally, energy prices
constitute a significant cost of production for many Materials and Industrial
companies. The fortunes of these companies were mixed, due largely to what
extent these companies could pass on the higher energy prices to their
customers.
As one might expect in this environment, the flow of capital into Energy stocks
during the year from other sectors was substantial, resulting in a 34.9% gain
for the S&P Energy sector. This dwarfed the returns of all sectors except for
Utilities (+23.3%) which benefited from higher energy prices. Given the
exceptional returns of Energy stocks, it would have been difficult for the Funds
to outperform the S&P Index without considerable exposure to the Energy sector.
For the year, the average weighting of the Stock and Growth Funds in the Energy
sector was slightly greater than the sector index, and the Aggressive Growth
Fund slightly trailed the index. In all three Funds, however, our energy
selections proved to be excellent, generating returns of 66.5%, 59.0%, and 42.7%
in the Stock, Growth, and Aggressive Growth Funds, respectively.
1
As important as the contribution of Energy stocks was to the year's results, our
Technology holdings were even more instrumental. The Stock, Growth, and
Aggressive Growth Funds committed 18.7%, 26.4%, and 42.1% of their assets,
respectively, to Technology stocks versus 15.4% for the S&P sector index. Our
selections in the area were excellent, recording gains of 18.7%, 22.7%, and
20.2%, respectively, versus the S&P sector return of 5.1%.
A more detailed discussion of the results of each PRIMECAP Odyssey Fund follows.
PRIMECAP ODYSSEY STOCK FUND
From November 1, 2004 to October 31, 2005, the Odyssey Stock Fund's total return
of 14.80% exceeded the 8.68% return recorded by the unmanaged Standard & Poor's
500 Composite Stock Price Index. The Stock Fund's outperformance was driven
primarily by stock selection, with mixed results from sector allocation.
The Stock Fund benefited substantially from its Energy holdings, which
appreciated 66.5% versus the S&P Energy sector return of 34.9%. Unocal, our
largest investment in this sector, saw a 52.9% gain, fueled by rising oil prices
and takeover bids from CNOOC and Chevron that ultimately resulted in a sale to
Chevron. EOG Resources, up 107.5%, and EnCana Corp., up 84.0%, also contributed
significantly to our Energy sector returns. Both companies benefited
significantly from a growing appreciation of their attractive portfolios of oil
and gas assets.
Our Information Technology (IT) selections in the Stock Fund also contributed
significantly to the Fund's outperformance. Favorable stock selection more than
offset our heavy allocation to this underperforming sector. Our IT investments
appreciated 18.7% versus the S&P IT sector return of 5.1%. Corning, one of our
largest investments in this sector, appreciated 70.7%, owing to robust demand
for its LCD glass products. Other strong contributors to this performance
included NVIDIA, which gained 86.2%, and Texas Instruments, which gained 15.2%.
NVIDIA benefited from increasing penetration of its graphics chips in personal
computers, while Texas Instruments continued its momentum as the leading
provider of semiconductors to the rapidly growing wireless phone industry.
Agilent Technologies, up 29.7%, announced a divestiture of its semiconductor
products group and focused on growing its electronics and bio-analytical
measurement businesses.
2
The Stock Fund also benefited from its Industrial holdings, which appreciated
22.7% versus the S&P Industrial sector return of 4.5%. This was due primarily to
our investment in McDermott International, which gained 156.7%, owing to
significant growth in demand for its offshore drilling and production services.
Our greatest disappointment during the period was the performance of our Health
Care holdings, which was exacerbated by our heavy emphasis of the sector. Health
Care constituted 21.9% of our portfolio and exceeded the benchmark weighting by
9 percentage points. The substantial decline of Biogen Idec caused our Health
Care investments, which appreciated 5.3%, to substantially lag the S&P Health
Care sector return of 10.9%. 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 table below lists the top ten holdings, which collectively represent 22.6%
of the total portfolio at the fiscal year end.
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PRIMECAP ODYSSEY STOCK FUND ENDING % OF
TOP 10 HOLDINGS AS OF 10/31/05 TOTAL PORTFOLIO
================================================================================
Eli Lilly & Co. 3.61
Novartis AG 3.36
Biogen Idec Inc. 2.55
Roche Holding AG 1.99
Southwest Airlines Co. 1.99
Pfizer Inc. 1.93
GlaxoSmithKline PLC 1.90
Medtronic Inc. 1.87
Schlumberger Ltd. 1.76
Avery Dennison Corp. 1.67
================================================================================
TOTAL % OF PORTFOLIO 22.63
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3
PRIMECAP ODYSSEY GROWTH FUND
From November 1, 2004 to October 31, 2005, the Odyssey Growth Fund's total
return of 16.20% exceeded the 8.68% return recorded by the unmanaged Standard &
Poor's 500 Composite Stock Price Index and the 8.92% 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, because of the
Fund's objective of selecting investments with above average growth potential.
The Growth Fund's outperformance was driven primarily by stock selection, with
mixed results from sector allocation.
Our most heavily weighted sectors in this Fund were Health Care and Information
Technology (IT). Together, these two sectors constituted 50.3% 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 outperform over long-term time horizons.
Our IT investments constituted 26.4% of the total portfolio, exceeding the S&P
IT sector weighting by 11 percentage points. Favorable stock selection more than
offset our heavy allocation to this underperforming sector. Our IT investments
appreciated 22.7% versus the S&P IT sector return of 5.1%. Corning, one of our
largest investments in this sector, appreciated 71.7%, owing to robust demand
for its LCD glass products. Other strong contributors included Agilent
Technologies, up 29.7%, Akamai Technologies, up 50.7%, and NVIDIA, up 125.7%.
Agilent Technologies announced a divestiture of its semiconductor products group
and focused on growing its electronics and bio-analytical measurement
businesses. Akamai saw accelerating demand for its Internet content delivery
services, and NVIDIA's graphics chips enjoyed increasing market share in the
personal computer market.
The Growth Fund benefited substantially from its Energy holdings, which
appreciated 59.0% versus the S&P Energy sector return of 34.9%. Unocal, our
largest investment in this sector, saw a 52.0% gain, fueled by rising oil prices
and takeover bids from CNOOC and Chevron that ultimately resulted in a sale to
Chevron. EOG Resources, up 106.2%, and EnCana Corp., up 85.0%, also contributed
significantly to our Energy sector returns. Both companies benefited
significantly from a growing appreciation of their attractive portfolios of oil
and gas assets.
Our Health Care investments constituted 23.9% of the Growth Fund's portfolio and
exceeded the S&P Health Care sector weighting by over 10 percentage points.
Despite favorable performance from Affymetrix, Roche, and Amgen, the substantial
declines of Biogen Idec and Pfizer caused our Health Care investments, which
appreciated 10.3%, to slightly lag the S&P Health Care sector return of 10.9%.
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.
4
The table below lists the top ten holdings, which collectively represent 26.4%
of the total portfolio.
- --------------------------------------------------------------------------------
PRIMECAP ODYSSEY GROWTH FUND ENDING % OF
TOP 10 HOLDINGS AS OF 10/31/05 TOTAL PORTFOLIO
================================================================================
Eli Lilly & Co. 3.42
Biogen Idec Inc. 3.08
Novartis AG 2.99
ASML Holding N.V. 2.93
Roche Holding AG 2.88
Southwest Airlines Co. 2.61
Pall Corp. 2.35
Intuit Inc. 2.23
GlaxoSmithKline PLC 1.99
Pfizer Inc. 1.95
================================================================================
TOTAL % OF PORTFOLIO 26.43
- --------------------------------------------------------------------------------
PRIMECAP ODYSSEY AGGRESSIVE GROWTH FUND
From November 1, 2004 to October 31, 2005, the Odyssey Aggressive Growth Fund's
return of 12.40% exceeded the 8.68% return recorded by the unmanaged Standard &
Poor's 500 Composite Stock Price Index but trailed the 15.94% 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, because of the Fund's objective of selecting mid-cap and small-cap
companies with above average growth potential. The Aggressive Growth Fund's
outperformance, versus the S&P 500, was driven by favorable stock selection
which more than offset unfavorable sector allocation.
Our most heavily weighted sector in this Fund was Information Technology (IT),
which constituted 42.1% of our portfolio and exceeded the S&P IT sector
weighting by 27 percentage points. Our stock selections earned a 20.2% return
versus the S&P IT return of 5.1%, driven primarily by the strong performance of
NVIDIA, up 126.3%, THQ, up 81.4%, Macromedia, up 63.6%, and Akamai, up 47.9%.
NVIDIA benefited from increasing penetration of its graphics chips in personal
computers. THQ enjoyed strong sales of its video games. Macromedia's dominant
position and accelerating business in website animation and design led to a
buyout offer from Adobe Systems. Akamai saw accelerating demand for its Internet
content delivery services.
5
Although the Fund was slightly under-weight in Energy, favorable stock selection
produced a return of 42.7% versus the S&P Energy sector return of 34.9%. Our
strongest contributors in this sector were Arch Coal, up 110.3%, Pioneer Natural
Resources, up 53.5%, and Pride International, up 54.3%. Arch Coal saw strong
demand as well as higher spot and forward prices for its low-sulfur bituminous
coal. Pioneer benefited significantly from a growing appreciation of its
attractive portfolio of oil and gas assets, and Pride saw strong demand for its
offshore drilling services.
Our slightly over-weighted position in Health Care investments returned 9.4%
versus the S&P Health Care Index gain of 10.8%. Our strongest contributors in
this sector were Affymetrix, up 51.6%, and Intuitive Surgical, up 194.2%.
Affymetrix saw significant adoption of its propriety photolithographic genetic
sequence detection technology. Intuitive Surgical saw outstanding growth in
sales of its innovative robotic surgical device, a product for which it has a
dominant market share and little competition. The excellent performance of these
stock selections was offset by disappointing performance from Dendreon, down
50.3%, and Pharmacyclics, down 38.4%. Dendreon has recently submitted an
application to the FDA for a novel prostate cancer drug and has received fast
track status.
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.
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, could enable these types of
investments to recover and ultimately outperform.
6
The table below lists the top ten holdings, which collectively represent 30.5%
of the total portfolio.
- --------------------------------------------------------------------------------
PRIMECAP ODYSSEY AGGRESSIVE GROWTH FUND ENDING % OF
TOP 10 HOLDINGS AS OF 10/31/05 TOTAL PORTFOLIO
================================================================================
ASML Holding N.V. 3.94
Conceptus Inc. 3.50
Akamai Technologies Inc. 3.40
Micromuse Inc. 3.36
THQ Inc. 3.21
RADVISION Ltd. 2.70
Affymetrix Inc. 2.69
JetBlue Airways Corp. 2.63
Dendreon Corp. 2.60
Minerals Technologies Inc. 2.48
================================================================================
TOTAL % OF PORTFOLIO 30.51
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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.
In all three Funds, we generally invested in equities in which our expectations
for earnings growth are greater than consensus, and greater than the overall
market. In our view, current market valuations are undervaluing growth stocks
and, in many cases, overvaluing value stocks. In examining the price-earnings
(P/E) ratios of the S&P 500, we observe that the difference between the P/E
ratios of the top and bottom quartiles is currently near a 15-year low. In other
words, the valuation premium of growth stocks relative to value stocks is small
by historical standards, making growth stocks particularly attractive on a
relative basis, in our judgment.
We are cautiously optimistic about economic growth. We believe the economy will
remain resilient but are concerned by the dual dampeners of increasing
short-term interest rates and stubbornly high energy costs. In our opinion, the
excesses and thus vulnerabilities in our economy rest largely among consumers
and financial institutions. These two pillars of our economy have served as
engines of our economic expansion for the past decade. But, the consumer is now
feeling squeezed. High interest rates are shutting off the spigot of mortgage
refinancing and home equity loans as sources of liquidity.
7
Simultaneously, increasing fuel and heating costs and higher mandated minimum
payments on credit card debt plague the consumer. As the state of the consumer
deteriorates, we expect consumer loans will be of lower quality. Additionally,
in our view, a flatter yield curve makes it more difficult for banks and other
financial institutions to earn high returns simply by investing short-term
deposits and borrowings into longer term investments such as Treasury securities
and mortgage-backed securities. Consequently, the Funds have minimal weighting
in Financial stocks, the largest sector in the S&P 500, and are under-weighted
in the Consumer sectors.
Conversely, significant opportunities exist for companies with technologies and
health care products that will see growing demand in emerging economies. For
example, a majority of the world's literate population has yet to use a wireless
phone, obtain a personal computer, or connect to the Internet. Much of the
global opportunity for these industries exists in countries with current account
surpluses. Global consumers are steadily acquiring the modern technological
devices, hardware, and software tools that have become an essential part of life
in more developed economies. Therefore, the Funds are substantially
over-weighted in Information Technology and Health Care stocks.
In our view, industrial America is healthier today than at any time in the last
decade. In recent years, businesses have been somewhat reluctant to make major
capital investments, choosing instead to improve their balance sheets by
building cash reserves and refinancing and/or retiring debt. As a result, we
believe the Industrial sector is well positioned should an economic slowdown
occur, and poised for investment and growth should economic expansion continue.
Consistent with this view, the Stock and Growth Funds are over-weighted in the
Industrial and Materials sectors.
With Energy stocks soaring and the energy cycle aging, we have taken the
opportunity to reduce our commitment to the area. At the fiscal year end, all of
the Funds were underweighted in Energy stocks.
In closing, we would like to thank you for entrusting your hard-earned capital
with us. We will continue to work diligently to prove worthy of that trust.
Sincerely,
PRIMECAP Management Company
- --------------------------------------------------------------------------------
PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE AND DOES NOT GUARANTEE
FUTURE RESULTS. Performance figures reflect fee waivers in effect and in the
absence of fee waivers, total returns would be lower.
- ----------
NOTE: SECTOR WEIGHTINGS ARE BASED ON AVERAGE WEIGHT FOR THE PERIOD.
8
Short term performance, in particular, is not a good indication of a fund's
future performance, and an investment should not be made based solely on
returns.
The Standard & Poor's Index is a broad based index of 500 stocks, which is
widely recognized as representative of the market in general. The Russell 1000
Growth Index is an index that measures the performance of those Russell 1000
companies with higher price-to-book ratios and higher forecasted growth values.
The Russell MidCap Growth Index measure the performance of those Russell MidCap
companies with higher price-to-book ratios and higher forecasted growth values.
These indices do not incur expenses and are not available for investment.
Price to earnings is calculated by dividing the current price of the stock by
the company's earnings per share.
THE FUNDS INVEST IN SMALLER COMPANIES, WHICH INVOLVES 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. MUTUAL FUND INVESTING
INVOLVES RISK, AND LOSS OF PRINCIPAL IS POSSIBLE.
Please refer to the Schedule of Investments for details of fund holdings. Fund
holdings are subject to change at any time and are not recommendations to buy or
sell any security.
9
PRIMECAP ODYSSEY STOCK FUND
The following chart compares the value of a hypothetical $10,000 investment in
the PRIMECAP Odyssey Stock Fund from November 1, 2004 to October 31, 2005
compared to the S&P 500 Index. This chart illustrates the performance of a
hypothetical $10,000 investment made on the Fund's inception date and is not
intended to imply any future performance. The returns shown do not reflect the
deduction of taxes that a shareholder would pay on fund distributions or the
redemption of fund shares. The chart assumes reinvestment of capital gains and
dividends.
[The following table was represented as a line graph in the printed material.]
PRIMECAP Odyssey Stock Fund
As Of 10/31/05
PRIMECAP Odyssey
Stock Fund S&P 500 Index
11/1/2004 $10,000 $10,000
11/30/2004 $10,360 $10,402
12/31/2004 $10,920 $10,756
1/31/2005 $10,610 $10,493
2/28/2005 $10,900 $10,714
3/31/2005 $10,740 $10,524
4/30/2005 $10,490 $10,324
5/31/2005 $10,940 $10,652
6/30/2005 $10,990 $10,667
7/31/2005 $11,530 $11,064
8/31/2005 $11,610 $10,963
9/30/2005 $11,630 $11,052
10/31/2005 $11,480 $10,868
TOTAL RETURN
PERIOD ENDED OCTOBER 31, 2005
-------------------------------------------
SINCE INCEPTION*
1 MONTH CALENDAR YTD (CUMULATIVE)
------- ------------ ----------------
PRIMECAP Odyssey Stock Fund -1.29% 5.13% 14.80%
S&P 500 Index** -1.67% 1.05% 8.68%
PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE AND DOES NOT GUARANTEE
FUTURE RESULTS. THE INVESTMENT RETURN AND PRINCIPAL VALUE OF AN INVESTMENT WILL
FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS
THAN THEIR ORIGINAL COST. CURRENT PERFORMANCE OF THE FUND MAY BE LOWER OR HIGHER
THAN THE PERFORMANCE QUOTED. PERFORMANCE DATA CURRENT TO THE MOST RECENT MONTH
END MAY BE OBTAINED BY CALLING 1-800-729-2307. THE FUNDS IMPOSE A 2% REDEMPTION
FEE ON SHARES HELD LESS THAN 60 DAYS. Performance figures reflect the fee waiver
in effect; in the absence of fee waivers, total returns would be lower. SHORT
TERM PERFORMANCE, IN PARTICULAR, IS NOT A GOOD INDICATION OF A FUND'S FUTURE
PERFORMANCE, AND AN INVESTMENT SHOULD NOT BE MADE BASED SOLELY ON RETURNS.
- ----------
* The inception date is November 1, 2004.
** The S&P 500 is an unmanaged index composed of 500 common stocks
representative of the stock market as a whole.
10
PRIMECAP ODYSSEY GROWTH FUND
The following chart compares the value of a hypothetical $10,000 investment in
the PRIMECAP Odyssey Growth Fund from November 1, 2004 to October 31, 2005
compared to the S&P 500 Index. This chart illustrates the performance of a
hypothetical $10,000 investment made on the Fund's inception date and is not
intended to imply any future performance. The returns shown do not reflect the
deduction of taxes that a shareholder would pay on fund distributions or the
redemption of fund shares. The chart assumes reinvestment of capital gains and
dividends.
[The following table was represented as a line graph in the printed material.]
PRIMECAP Odyssey Growth Fund
As Of 10/31/05
PRIMECAP Odyssey
Growth Fund S&P 500 Index
11/1/2004 $10,000 $10,000
11/30/2004 $10,410 $10,402
12/31/2004 $10,960 $10,756
1/31/2005 $10,550 $10,493
2/28/2005 $10,810 $10,714
3/31/2005 $10,640 $10,524
4/30/2005 $10,450 $10,324
5/31/2005 $11,060 $10,652
6/30/2005 $11,060 $10,667
7/31/2005 $11,540 $11,064
8/31/2005 $11,560 $10,963
8/31/2005 $11,610 $11,052
10/31/2005 $11,620 $10,868
TOTAL RETURN
PERIOD ENDED OCTOBER 31, 2005
-------------------------------------------
SINCE INCEPTION*
1 MONTH CALENDAR YTD (CUMULATIVE)
------- ------------ ----------------
PRIMECAP Odyssey Growth Fund 0.09% 6.02% 16.20%
S&P 500 Index** -1.67% 1.05% 8.68%
PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE AND DOES NOT GUARANTEE
FUTURE RESULTS. THE INVESTMENT RETURN AND PRINCIPAL VALUE OF AN INVESTMENT WILL
FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS
THAN THEIR ORIGINAL COST. CURRENT PERFORMANCE OF THE FUND MAY BE LOWER OR HIGHER
THAN THE PERFORMANCE QUOTED. PERFORMANCE DATA CURRENT TO THE MOST RECENT MONTH
END MAY BE OBTAINED BY CALLING 1-800-729-2307. THE FUNDS IMPOSE A 2% REDEMPTION
FEE ON SHARES HELD LESS THAN 60 DAYS. Performance figures reflect the fee waiver
in effect and, in the absence of fee waivers, total returns would be lower.
SHORT TERM PERFORMANCE, IN PARTICULAR, IS NOT A GOOD INDICATION OF A FUND'S
FUTURE PERFORMANCE, AND AN INVESTMENT SHOULD NOT BE MADE BASED SOLELY ON
RETURNS.
- ----------
* The inception date is November 1, 2004.
** The S&P 500 is an unmanaged index composed of 500 common stocks
representative of the stock market as a whole.
11
PRIMECAP ODYSSEY AGGRESSIVE GROWTH FUND
The following chart compares the value of a hypothetical $10,000 investment in
the PRIMECAP Odyssey Aggressive Growth Fund from November 1, 2004 to October 31,
2005 compared to the S&P 500 Index. This chart illustrates the performance of a
hypothetical $10,000 investment made on the Fund's inception date and is not
intended to imply any future performance. The returns shown do not reflect the
deduction of taxes that a shareholder would pay on fund distributions or the
redemption of fund shares. The chart assumes reinvestment of capital gains and
dividends.
[The following table was represented as a line graph in the printed material.]
PRIMECAP Odyssey Aggressive Growth Fund
As Of 10/31/05
PRIMECAP Odyssey
Aggressive Growth Fund S&P 500 Index
11/1/2004 $10,000 $10,000
11/30/2004 $10,510 $10,402
12/31/2004 $11,080 $10,756
1/31/2005 $10,500 $10,493
2/28/2005 $10,690 $10,714
3/31/2005 $10,470 $10,524
4/30/2005 $9,890 $10,324
5/31/2005 $10,600 $10,652
6/30/2005 $10,560 $10,667
7/31/2005 $11,220 $11,064
8/31/2005 $11,170 $10,963
9/30/2005 $11,400 $11,052
10/31/2005 $11,240 $10,868
TOTAL RETURN
PERIOD ENDED OCTOBER 31, 2005
-------------------------------------------
SINCE INCEPTION*
1 MONTH CALENDAR YTD (CUMULATIVE)
------- ------------ ----------------
PRIMECAP Odyssey
Aggressive Growth Fund -1.40% 1.44% 12.40%
S&P 500 Index** -1.67% 1.05% 8.68%
PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE AND DOES NOT GUARANTEE
FUTURE RESULTS. THE INVESTMENT RETURN AND PRINCIPAL VALUE OF AN INVESTMENT WILL
FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS
THAN THEIR ORIGINAL COST. CURRENT PERFORMANCE OF THE FUND MAY BE LOWER OR HIGHER
THAN THE PERFORMANCE QUOTED. PERFORMANCE DATA CURRENT TO THE MOST RECENT MONTH
END MAY BE OBTAINED BY CALLING 1-800-729-2307. THE FUNDS IMPOSE A 2% REDEMPTION
FEE ON SHARES HELD LESS THAN 60 DAYS. Performance figures reflect the fee waiver
in effect and, in the absence of fee waivers, total returns would be lower.
SHORT TERM PERFORMANCE, IN PARTICULAR, IS NOT A GOOD INDICATION OF A FUND'S
FUTURE PERFORMANCE, AND AN INVESTMENT SHOULD NOT BE MADE BASED SOLELY ON
RETURNS.
- ----------
* The inception date is November 1, 2004.
** The S&P 500 is an unmanaged index composed of 500 common stocks
representative of the stock market as a whole.
12
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 May 1, 2005 to October 31, 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 an assumed 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.
13
- -------------------------------------------------------------------------------------------------------
BEGINNING ENDING EXPENSES PAID EXPENSE RATIO
ACCOUNT ACCOUNT DURING PERIOD* DURING PERIOD*
VALUE VALUE (05/01/05 TO (05/01/05 TO
(05/01/05) (10/31/05) 10/31/05) 10/31/05)
- -------------------------------------------------------------------------------------------------------
PRIMECAP ODYSSEY STOCK FUND
Actual Performance $1,000.00 $1,094.40 $6.60 1.25%
Hypothetical Performance
(5% return before expenses) $1,000.00 $1,018.90 $6.36 1.25%
- -------------------------------------------------------------------------------------------------------
PRIMECAP ODYSSEY GROWTH FUND
Actual Performance $1,000.00 $1,112.00 $6.65 1.25%
Hypothetical Performance
(5% return before expenses) $1,000.00 $1,018.90 $6.36 1.25%
- -------------------------------------------------------------------------------------------------------
PRIMECAP ODYSSEY AGGRESSIVE GROWTH FUND
Actual Performance $1,000.00 $1,136.50 $6.73 1.25%
Hypothetical Performance
(5% return before expenses) $1,000.00 $1,018.90 $6.36 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 the most recent fiscal half-year period (184), then
divided by the number of days in the fiscal year (365) (to reflect the
one-half year period).
14
PRIMECAP ODYSSEY FUNDS
SECTOR BREAKDOWN
PRIMECAP ODYSSEY STOCK FUND
---------------------------------------
Consumer Discretionary 10.3%
Consumer Staples 0.4%
Energy 7.1%
Financials 7.3%
Health Care 22.1%
Industrials 12.8%
Information Technology 17.5%
Materials 8.9%
Telecommunication Services 0.8%
Short Term Investments 12.8%
=======================================
TOTAL 100.0%
---------------------------------------
PRIMECAP ODYSSEY GROWTH FUND
---------------------------------------
Consumer Discretionary 10.8%
Energy 6.4%
Financials 6.7%
Health Care 25.1%
Industrials 11.4%
Information Technology 26.3%
Materials 3.0%
Telecommunication Services 1.0%
Short Term Investments 9.3%
=======================================
TOTAL 100.0%
---------------------------------------
The tables above list sector allocations as a percentage of each Fund's total
investments as of October 31, 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.
15
PRIMECAP ODYSSEY AGGRESSIVE GROWTH FUND
---------------------------------------
Consumer Discretionary 7.7%
Consumer Staples 1.0%
Energy 6.7%
Financials 2.3%
Health Care 15.8%
Industrials 8.9%
Information Technology 45.2%
Materials 3.1%
Short Term Investments 9.3%
=======================================
TOTAL 100.0%
---------------------------------------
The table above lists sector allocations as a percentage of each Fund's total
investments as of October 31, 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.
16
SCHEDULE OF INVESTMENTS
PRIMECAP ODYSSEY STOCK FUND
OCTOBER 31, 2005
Shares Value
- --------------------------------------------------------------------------------
COMMON STOCKS: 91.2%
CONSUMER DISCRETIONARY: 10.8%
3,200 Blue Nile, Inc. (a) .............................. $ 114,784
9,400 CarMax, Inc. (a) ................................. 252,578
24,000 DIRECTV Group, Inc. (The) (a) .................... 341,280
510 Discovery Holding Co. - Class A (a) .............. 7,186
10,000 Dress Barn, Inc. (a) ............................. 265,700
8,000 Eastman Kodak Co ................................. 175,200
7,500 Kohl's Corp. (a) ................................. 360,975
5,100 Liberty Media Corp. - Class A (a) ................ 40,647
11,000 Mattel, Inc. ..................................... 162,250
3,600 Nordstrom, Inc. .................................. 124,740
8,500 Sony Corp. - ADR ................................. 278,800
1,950 Target Corp ...................................... 108,595
7,150 Time Warner, Inc. ................................ 127,485
14,150 TJX Cos, Inc ..................................... 304,649
15,100 Univision Communications, Inc. (a) ............... 394,714
7,500 Walt Disney Co. (The) ............................ 182,775
-----------
3,242,358
-----------
CONSUMER STAPLES: 0.4%
7,400 Cott Corp. (a) ................................... 109,594
-----------
ENERGY: 7.4%
1,200 Arch Coal, Inc. .................................. 92,484
2,080 Chevron Corp. .................................... 118,706
2,700 Cooper Cameron Corp. (a) ......................... 199,071
4,000 EnCana Corp. ..................................... 183,440
3,800 EOG Resources, Inc. .............................. 257,564
1,400 GlobalSantaFe Corp. .............................. 62,370
2,000 Murphy Oil Corp. ................................. 93,700
4,422 National Oilwell Varco, Inc. (a) ................. 276,242
550 Noble Corp. ...................................... 35,409
1,100 Pioneer Natural Resources Co. .................... 55,055
6,200 Pogo Producing Co. ............................... 313,100
6,100 Schlumberger Ltd. ................................ 553,697
-----------
2,240,838
-----------
FINANCIALS: 7.6%
4,000 American International Group, Inc. ............... 259,200
7,700 Bank of New York Co., Inc. (The) ................. 240,933
168 Berkshire Hathaway, Inc. - Class B (a) ........... 472,920
3,750 Chubb Corp. ...................................... 348,637
3,300 Fannie Mae ....................................... 156,816
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
17
SCHEDULE OF INVESTMENTS
PRIMECAP ODYSSEY STOCK FUND
OCTOBER 31, 2005 - (CONTINUED)
Shares Value
- --------------------------------------------------------------------------------
FINANCIALS (CONTINUED)
3,400 Fifth Third Bancorp .............................. $ 136,578
15,750 Marsh & McLennan Cos, Inc ........................ 459,113
1,850 MBIA, Inc. ....................................... 107,744
3,000 Washington Mutual, Inc. .......................... 118,800
-----------
2,300,741
-----------
HEALTH CARE: 23.1%
4,300 Affymetrix, Inc. (a) ............................. 195,349
1,200 Amgen, Inc. (a) .................................. 90,912
19,750 Biogen Idec, Inc. (a) ............................ 802,442
22,800 Eli Lilly & Co. .................................. 1,135,212
11,500 GlaxoSmithKline PLC - ADR ........................ 597,885
7,700 Guidant Corp. .................................... 485,100
10,400 Medtronic, Inc. .................................. 589,264
19,650 Novartis AG - ADR ................................ 1,057,563
28,000 Pfizer, Inc. ..................................... 608,720
4,400 Pharmacyclics, Inc. (a) .......................... 32,560
4,200 Roche Holding AG - CHF ........................... 627,386
6,700 Sepracor, Inc. (a) ............................... 376,875
10,000 Waters Corp. (a) ................................. 362,000
-----------
6,961,268
-----------
INDUSTRIALS: 13.4%
3,000 3M Co ............................................ 227,940
4,500 Alaska Air Group, Inc. (a) ....................... 141,885
9,300 Avery Dennison Corp .............................. 526,845
2,200 Burlington Northern Santa Fe Corp. ............... 136,532
1,800 Canadian National Railway Co. .................... 130,464
8,200 Caterpillar, Inc. ................................ 431,238
10,000 Chicago Bridge & Iron Co. N.V .................... 223,000
2,050 Fluor Corp. ...................................... 130,380
7,000 JetBlue Airways Corp. (a) ........................ 130,270
11,400 McDermott International, Inc. (a) ................ 414,162
14,100 Pall Corp ........................................ 368,856
1,100 Raytheon Co. ..................................... 40,645
39,200 Southwest Airlines Co. ........................... 627,592
2,300 Thomas & Betts Corp. (a) ......................... 89,516
5,800 Union Pacific Corp ............................... 401,244
-----------
4,020,569
-----------
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
18
SCHEDULE OF INVESTMENTS
PRIMECAP ODYSSEY STOCK FUND
OCTOBER 31, 2005 - (CONTINUED)
Shares Value
- --------------------------------------------------------------------------------
INFORMATION TECHNOLOGY: 18.3%
5,050 Accenture Ltd. - Class A ......................... $ 132,866
14,100 Agilent Technologies, Inc. (a) ................... 451,341
6,000 Applied Materials, Inc. .......................... 98,280
26,500 ASML Holding N.V. (a) ............................ 449,970
3,100 Comverse Technology, Inc. (a) .................... 77,810
25,950 Corning, Inc. (a) ................................ 521,335
2,400 Emulex Corp. (a) ................................. 44,424
1,000 First Data Corp. ................................. 40,450
496 Freescale Semiconductor, Inc. - Class B (a) ...... 11,844
12,000 Intel Corp. ...................................... 282,000
11,300 Intuit, Inc. (a) ................................. 519,009
3,200 KLA-Tencor Corp. ................................. 148,128
6,000 L.M. Ericsson Telephone Co. - ADR ................ 196,860
19,500 Microsoft Corp. .................................. 501,150
6,000 Motorola, Inc. ................................... 132,960
85,000 Nortel Networks Corp. (a) ........................ 276,250
6,000 Nvidia Corp. (a) ................................. 201,300
31,500 Oracle Corp. (a) ................................. 399,420
4,800 Paychex, Inc. .................................... 186,048
2,400 Research In Motion Ltd. (a) ...................... 147,576
1,600 Silicon Laboratories, Inc. (a) ................... 51,472
8,400 Symantec Corp. (a) ............................... 200,340
15,300 Texas Instruments, Inc. .......................... 436,815
-----------
5,507,648
-----------
MATERIALS: 9.3%
11,000 Alcoa, Inc. ...................................... 267,190
10,750 Dow Chemical Co. (The) ........................... 492,995
6,500 Inco Ltd. ........................................ 261,430
2,000 Minerals Technologies, Inc. ...................... 106,920
5,450 Monsanto Co. ..................................... 343,404
3,000 Newmont Mining Corp .............................. 127,800
2,000 Phelps Dodge Corp. ............................... 240,940
2,000 Potash Corp. of Saskatchewan ..................... 164,640
2,750 Praxair, Inc. .................................... 135,878
5,000 Vulcan Materials Co .............................. 325,000
5,200 Weyerhaeuser Co. ................................. 329,368
-----------
2,795,565
-----------
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
19
SCHEDULE OF INVESTMENTS
PRIMECAP ODYSSEY STOCK FUND
OCTOBER 31, 2005 - (CONTINUED)
Shares Value
- --------------------------------------------------------------------------------
TELECOMMUNICATION SERVICES: 0.9%
11,450 Sprint Corp. ..................................... $ 266,900
-----------
TOTAL COMMON STOCKS
(cost $25,754,714) ........................................... 27,445,481
-----------
Principal
Amount
- --------------------------------------------------------------------------------
SHORT-TERM INVESTMENTS: 13.4%
$4,040,583 Dreyfus Institutional US Treasury
Money Market Fund .............................. $ 4,040,583
-----------
TOTAL SHORT-TERM INVESTMENTS
(cost $4,040,583) ............................................ 4,040,583
-----------
TOTAL INVESTMENTS
(cost $29,795,297) 104.6% .................................... 31,486,064
Liabilities in Excess of Other Assets (4.6)% ................... (1,376,107)
-----------
TOTAL NET ASSETS: 100.0% ....................................... $30,109,957
===========
- ----------
Percentages are stated as a percent of net assets.
ADR - American Depository Receipt.
CHF - Swiss Security.
(a) Non Income Producing.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
20
SCHEDULE OF INVESTMENTS
PRIMECAP ODYSSEY GROWTH FUND
OCTOBER 31, 2005
Shares Value
- --------------------------------------------------------------------------------
COMMON STOCKS: 92.9%
CONSUMER DISCRETIONARY: 11.0%
16,050 CarMax, Inc. (a) ................................. $ 431,263
32,000 DIRECTV Group, Inc. (The) (a) .................... 455,040
510 Discovery Holding Co. - Class A (a) .............. 7,186
18,000 Dress Barn, Inc. (a) ............................. 478,260
21,000 Gentex Corp. ..................................... 395,220
9,750 Kohl's Corp. (a) ................................. 469,267
10,000 Liberty Media Corp. - Class A (a) ................ 79,700
22,000 Mattel, Inc. ..................................... 324,500
6,700 Nordstrom, Inc. .................................. 232,155
10,600 Sony Corp. - ADR ................................. 347,680
3,050 Target Corp ...................................... 169,855
11,250 Time Warner, Inc. ................................ 200,588
21,850 TJX Cos, Inc ..................................... 470,430
25,700 Univision Communications, Inc. (a) ............... 671,798
3,500 Walt Disney Co. (The) ............................ 85,295
6,350 Yum! Brands, Inc. ................................ 323,025
-----------
5,141,262
-----------
ENERGY: 6.6%
3,129 Chevron Corp. .................................... 178,572
3,000 Cooper Cameron Corp. (a) ......................... 221,190
5,600 EnCana Corp. ..................................... 256,816
5,200 EOG Resources, Inc. .............................. 352,456
8,000 Murphy Oil Corp. ................................. 374,800
3,200 National Oilwell Varco, Inc. (a) ................. 199,904
2,000 Noble Corp. ...................................... 128,760
5,600 Pogo Producing Co. ............................... 282,800
10,250 Schlumberger Ltd. ................................ 930,393
2,400 Transocean, Inc. (a) ............................. 137,976
-----------
3,063,667
-----------
FINANCIALS: 6.8%
6,650 American International Group, Inc. ............... 430,920
1,600 Bank of New York Co., Inc. (The) ................. 50,064
180 Berkshire Hathaway, Inc. - Class B (a) ........... 506,700
5,442 Chubb Corp. ...................................... 505,943
5,000 Fifth Third Bancorp .............................. 200,850
25,050 Marsh & McLennan Cos, Inc ........................ 730,207
3,000 MBIA, Inc. ....................................... 174,720
10,600 State Street Corp. ............................... 585,438
-----------
3,184,842
-----------
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
21
SCHEDULE OF INVESTMENTS
PRIMECAP ODYSSEY GROWTH FUND
OCTOBER 31, 2005 - (CONTINUED)
Shares Value
- --------------------------------------------------------------------------------
HEALTH CARE: 25.7%
11,300 Affymetrix, Inc. (a) ............................. $ 513,359
3,000 Amgen, Inc. (a) .................................. 227,280
36,150 Biogen Idec, Inc. (a) ............................ 1,468,774
12,500 Chiron Corp. (a) ................................. 551,750
32,800 Eli Lilly & Co. .................................. 1,633,112
18,300 GlaxoSmithKline PLC - ADR ........................ 951,417
5,300 Guidant Corp. .................................... 333,900
14,100 Medtronic, Inc. .................................. 798,906
26,550 Novartis AG - ADR ................................ 1,428,921
42,850 Pfizer, Inc. ..................................... 931,559
9,200 Roche Holding AG - CHF ........................... 1,374,274
10,200 Sepracor, Inc. (a) ............................... 573,750
16,000 SurModics, Inc. (a) .............................. 632,320
15,000 Waters Corp. (a) ................................. 543,000
-----------
11,962,322
-----------
INDUSTRIALS: 11.7%
4,000 3M Co ............................................ 303,920
14,150 Avery Dennison Corp .............................. 801,597
4,700 Caterpillar, Inc. ................................ 247,173
6,000 FedEx Corp. ...................................... 551,580
10,150 Fluor Corp. ...................................... 645,540
14,000 JetBlue Airways Corp. (a) ........................ 260,540
5,200 Kirby Corp. (a) .................................. 268,684
42,900 Pall Corp ........................................ 1,122,264
77,800 Southwest Airlines Co. ........................... 1,245,578
-----------
5,446,876
-----------
INFORMATION TECHNOLOGY: 27.0%
4,950 Accenture Ltd. - Class A ......................... 130,235
20,950 Agilent Technologies, Inc. (a) ................... 670,609
27,200 Akamai Technologies, Inc. (a) .................... 471,648
6,000 AMIS Holdings, Inc. (a) .......................... 66,840
12,200 Applied Materials, Inc. .......................... 199,836
82,350 ASML Holding N.V. (a) ............................ 1,398,303
2,800 Autodesk, Inc. ................................... 126,364
6,000 Avid Technology, Inc. (a) ........................ 295,380
9,800 Avocent Corp. (a) ................................ 300,468
18,200 Comverse Technology, Inc. (a) .................... 456,820
28,900 Corning, Inc. (a) ................................ 580,601
12,000 Cymer, Inc. (a) .................................. 418,200
1,100 First Data Corp. ................................. 44,495
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
22
SCHEDULE OF INVESTMENTS
PRIMECAP ODYSSEY GROWTH FUND
OCTOBER 31, 2005 - (CONTINUED)
Shares Value
- --------------------------------------------------------------------------------
INFORMATION TECHNOLOGY (CONTINUED)
220 Freescale Semiconductor, Inc. - Class B (a) ...... $ 5,254
16,000 Intel Corp. ...................................... 376,000
23,200 Intuit, Inc. (a) ................................. 1,065,576
6,800 KLA-Tencor Corp. ................................. 314,772
8,500 L.M. Ericsson Telephone Co. - ADR ................ 278,885
2,600 Macromedia, Inc. (a) ............................. 114,192
2,250 McAfee, Inc. (a) ................................. 67,567
30,600 Micron Technology, Inc. (a) ...................... 397,494
31,700 Microsoft Corp. .................................. 814,690
5,000 Motorola, Inc. ................................... 110,800
131,700 Nortel Networks Corp. (a) ........................ 428,025
9,200 Nvidia Corp. (a) ................................. 308,660
71,300 Oracle Corp. (a) ................................. 904,084
6,300 Paychex, Inc. .................................... 244,188
6,050 Research In Motion Ltd. (a) ...................... 372,014
12,050 Silicon Laboratories, Inc. (a) ................... 387,649
21,400 Symantec Corp. (a) ............................... 510,390
13,000 Texas Instruments, Inc. .......................... 371,150
5,900 Trimble Navigation Ltd. (a) ...................... 170,333
6,400 VeriSign, Inc. (a) ............................... 151,232
-----------
12,552,754
-----------
MATERIALS: 3.0%
9,500 Minerals Technologies, Inc. ...................... 507,870
5,600 Monsanto Co. ..................................... 352,856
11,300 Praxair, Inc. .................................... 558,333
-----------
1,419,059
-----------
TELECOMMUNICATION SERVICES: 1.1%
21,850 Sprint Corp. ..................................... 509,324
-----------
TOTAL COMMON STOCKS
(cost $41,674,716) ........................................... 43,280,106
-----------
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
23
SCHEDULE OF INVESTMENTS
PRIMECAP ODYSSEY GROWTH FUND
OCTOBER 31, 2005 - (CONTINUED)
Principal
Amount Value
- --------------------------------------------------------------------------------
SHORT-TERM INVESTMENTS: 9.6%
$4,458,622 Dreyfus Institutional US Treasury
Money Market Fund .............................. $ 4,458,622
-----------
TOTAL SHORT-TERM INVESTMENTS
(cost $4,458,622) ............................................ 4,458,622
-----------
TOTAL INVESTMENTS
(cost $46,133,338): 102.5% ................................... 47,738,728
Liabilities in Excess of Other Assets: (2.5%) .................. (1,173,123)
-----------
TOTAL NET ASSETS: 100.0% ....................................... $46,565,605
===========
- ----------
Percentages are stated as a percent of net assets.
ADR - American Depository Receipt.
CHF - Swiss Security.
(a) Non Income Producing.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
24
SCHEDULE OF INVESTMENTS
PRIMECAP ODYSSEY AGGRESSIVE GROWTH FUND
OCTOBER 31, 2005
Shares Value
- --------------------------------------------------------------------------------
COMMON STOCKS: 93.3%
CONSUMER DISCRETIONARY: 7.9%
6,600 99 Cents Only Stores (a) ......................... $ 63,690
15,900 Blue Nile, Inc. (a) .............................. 570,333
6,500 California Pizza Kitchen, Inc. (a) ............... 208,065
12,700 CarMax, Inc. (a) ................................. 341,249
12,300 DIRECTV Group, Inc. (The) (a) .................... 174,906
5,000 eBay, Inc. (a) ................................... 198,000
10,000 Gentex Corp. ..................................... 188,200
1,550 Tiffany & Co. .................................... 61,070
-----------
1,805,513
-----------
CONSUMER STAPLES: 1.0%
17,300 American Italian Pasta Co. - Class A ............. 111,585
7,900 Cott Corp. (a) ................................... 116,999
-----------
228,584
-----------
ENERGY: 6.9%
1,800 Arch Coal, Inc. .................................. 138,726
25,000 Hanover Compressor Co. (a) ....................... 321,500
4,200 National Oilwell Varco, Inc. (a) ................. 262,374
1,900 Noble Corp. ...................................... 122,322
4,650 Pioneer Natural Resources Co. .................... 232,733
5,350 Pogo Producing Co. ............................... 270,175
8,200 Pride International, Inc. (a) .................... 230,174
-----------
1,578,004
-----------
FINANCIALS: 2.4%
5,800 Advance America Cash Advance Centers, Inc. ....... 70,470
29,000 MarketAxess Holdings, Inc. (a) ................... 357,860
2,050 MBIA, Inc. ....................................... 119,392
-----------
547,722
-----------
HEALTH CARE: 16.2%
13,900 Affymetrix, Inc. (a) ............................. 631,477
79,950 Conceptus, Inc. (a) .............................. 821,086
99,000 Dendreon Corp. (a) ............................... 609,840
3,000 Intuitive Surgical, Inc. (a) ..................... 266,190
65,500 Pharmacyclics, Inc. (a) .......................... 484,700
9,450 Sepracor, Inc. (a) ............................... 531,563
9,000 SurModics, Inc. (a) .............................. 355,680
-----------
3,700,536
-----------
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
25
SCHEDULE OF INVESTMENTS
PRIMECAP ODYSSEY AGGRESSIVE GROWTH FUND
OCTOBER 31, 2005 - (CONTINUED)
Shares Value
- --------------------------------------------------------------------------------
INDUSTRIALS: 9.2%
11,000 Alaska Air Group, Inc. (a) ....................... $ 346,830
5,650 Avery Dennison Corp .............................. 320,072
4,000 Granite Construction, Inc. ....................... 136,440
33,150 JetBlue Airways Corp. (a) ........................ 616,922
19,600 Pall Corp ........................................ 512,736
10,000 Southwest Airlines Co. ........................... 160,100
-----------
2,093,100
-----------
INFORMATION TECHNOLOGY: 46.5%
7,500 Agilent Technologies, Inc. (a) ................... 240,075
46,000 Akamai Technologies, Inc. (a) .................... 797,640
19,900 AMIS Holdings, Inc. (a) .......................... 221,686
54,450 ASML Holding N.V. (a) ............................ 924,561
7,000 Avid Technology, Inc. (a) ........................ 344,610
13,100 Avocent Corp. (a) ................................ 401,646
9,650 Comverse Technology, Inc. (a) .................... 242,215
11,900 Cymer, Inc. (a) .................................. 414,715
2,000 Digital River, Inc. (a) .......................... 56,020
36,000 eSpeed, Inc. - Class A (a) ....................... 272,160
14,000 InPhonic, Inc. (a) ............................... 202,440
7,500 Intuit, Inc. (a) ................................. 344,475
10,000 KLA-Tencor Corp. ................................. 462,900
9,000 Macromedia, Inc. (a) ............................. 395,280
2,800 Macrovision Corp. (a) ............................ 52,752
5,600 McAfee, Inc. (a) ................................. 168,168
110,000 Micromuse, Inc. (a) .............................. 788,700
17,000 Micron Technology, Inc. (a) ...................... 220,830
118,500 Nortel Networks Corp. (a) ........................ 385,125
9,700 Nvidia Corp. (a) ................................. 325,435
66,700 Opsware, Inc. (a) ................................ 342,838
48,700 RADvision Ltd. (a) ............................... 633,100
15,000 Rambus, Inc. (a) ................................. 191,250
2,700 Research In Motion Ltd. (a) ...................... 166,023
8,150 Silicon Laboratories, Inc. (a) ................... 262,185
72,000 SonicWALL, Inc. (a) .............................. 501,120
4,000 Stratasys, Inc. (a) .............................. 94,880
32,550 THQ, Inc. (a) .................................... 754,509
4,000 Trimble Navigation Ltd. (a) ...................... 115,480
12,200 VeriSign, Inc. (a) ............................... 288,286
-----------
10,611,104
-----------
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
26
SCHEDULE OF INVESTMENTS
PRIMECAP ODYSSEY AGGRESSIVE GROWTH FUND
OCTOBER 31, 2005 - (CONTINUED)
Shares Value
- --------------------------------------------------------------------------------
MATERIALS: 3.2%
10,900 Minerals Technologies, Inc. ...................... $ 582,714
2,400 Monsanto Co. ..................................... 151,224
-----------
733,938
-----------
TOTAL COMMON STOCKS
(cost $19,572,835) ........................................... 21,298,501
-----------
Principal
Amount
- --------------------------------------------------------------------------------
SHORT-TERM INVESTMENTS: 9.6%
$2,181,400 Dreyfus Institutional US Treasury
Money Market Fund .............................. $ 2,181,400
-----------
TOTAL SHORT-TERM INVESTMENTS
(cost $2,181,400) ............................................ 2,181,400
-----------
TOTAL INVESTMENTS
(cost $21,754,235): 102.9% ................................... 23,479,901
-----------
Liabilities in Excess of Other Assets: (2.9%) .................. (655,477)
-----------
TOTAL NET ASSETS: 100.0% ....................................... $22,824,424
===========
- ----------
Percentages are stated as a percent of net assets.
ADR - American Depository Receipt.
(a) Non Income Producing.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
27
PRIMECAP ODYSSEY FUNDS
STATEMENTS OF ASSETS AND LIABILITIES
AT OCTOBER 31, 2005*
- --------------------------------------------------------------------------------
PRIMECAP
PRIMECAP PRIMECAP ODYSSEY
ODYSSEY ODYSSEY AGGRESSIVE
STOCK FUND GROWTH FUND GROWTH FUND
------------ ------------ ------------
ASSETS
Investments, at cost ....................................... $ 29,795,297 $ 46,133,338 $ 21,754,235
============ ============ ============
Investments, at value ...................................... $ 31,486,064 $ 47,738,728 $ 23,479,901
Receivables:
Dividends and interest ................................... 22,285 28,480 4,023
Fund shares sold ......................................... 338,150 72,500 217,500
Other assets ............................................... 3,310 3,297 3,307
------------ ------------ ------------
Total Assets ............................................. 31,849,809 47,843,005 23,704,731
------------ ------------ ------------
LIABILITIES
Payable for securities purchased ........................... 1,667,036 1,187,487 806,411
Payable for fund shares redeemed ........................... -- -- 4,244
Due to advisor (Note 3) .................................... 17,514 38,695 15,261
Accrued administration fees (Note 3) ....................... 8,000 8,000 8,000
Accrued trustee fees ....................................... 810 810 810
Other accrued expenses ..................................... 46,492 42,408 45,581
------------ ------------ ------------
Total Liabilities .......................................... 1,739,852 1,277,400 880,307
------------ ------------ ------------
NET ASSETS ................................................... $ 30,109,957 $ 46,565,605 $ 22,824,424
============ ============ ============
Number of shares issued and outstanding
(unlimited shares authorized, $0.01 par value) ............. 2,623,943 4,007,475 2,031,482
============ ============ ============
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE ..... $ 11.48 $ 11.62 $ 11.24
============ ============ ============
COMPONENTS OF NET ASSETS
Paid-in capital ............................................ $ 28,447,880 $ 44,947,191 $ 21,291,212
Accumulated net realized gain/ (loss) on investments ....... (28,690) 13,024 (192,454)
Net unrealized appreciation on investments ................. 1,690,767 1,605,390 1,725,666
------------ ------------ ------------
Net assets ................................................. $ 30,109,957 $ 46,565,605 $ 22,824,424
============ ============ ============
- ----------
* Commenced operations on November 1, 2004.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
28
PRIMECAP ODYSSEY FUNDS
STATEMENTS OF OPERATIONS
FOR THE PERIOD ENDED OCTOBER 31, 2005*
- --------------------------------------------------------------------------------
PRIMECAP
PRIMECAP PRIMECAP ODYSSEY
ODYSSEY ODYSSEY AGGRESSIVE
STOCK FUND GROWTH FUND GROWTH FUND
------------ ------------ ------------
INVESTMENT INCOME
Income
Dividends (net of foreign taxes withheld of $2,247,
$1,810, and $0, respectively) ............................ $ 138,787 $ 106,936 $ 32,682
Interest and other income .................................. 40,237 42,442 34,126
------------ ------------ ------------
Total income ............................................... 179,024 149,378 66,808
------------ ------------ ------------
Expenses
Advisory fees .............................................. 94,324 91,862 92,790
Insurance expense .......................................... 37,864 37,876 37,913
Administration fees ........................................ 32,000 32,000 32,000
Legal fees ................................................. 20,000 15,768 17,944
Registration fees .......................................... 22,112 22,112 22,112
Audit fees ................................................. 19,334 19,334 19,334
Transfer agent fees ........................................ 18,194 17,743 18,598
Custody fees ............................................... 12,906 11,820 12,276
Trustee fees ............................................... 8,333 8,333 8,333
Fund accounting fees ....................................... 8,001 8,001 8,001
Miscellaneous .............................................. 5,115 5,117 5,301
Reports to shareholders .................................... 4,601 4,501 6,701
------------ ------------ ------------
Total expenses ........................................... 282,784 274,467 281,303
Less: fees waived and expenses absorbed (Note 3) ......... (86,276) (83,100) (87,989)
------------ ------------ ------------
Net expenses ............................................. 196,508 191,367 193,314
------------ ------------ ------------
NET INVESTMENT LOSS ...................................... (17,484) (41,989) (126,506)
------------ ------------ ------------
CHANGE IN REALIZED AND UNREALIZED GAIN/(LOSS) ON INVESTMENTS
Net realized gain/(loss) on investments .................... (23,690) 54,943 (192,454)
Net unrealized appreciation on investments ................. 1,690,767 1,605,390 1,725,666
------------ ------------ ------------
Net realized and unrealized gain on investments ............ 1,667,077 1,660,333 1,533,212
------------ ------------ ------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS ..... $ 1,649,593 $ 1,618,344 $ 1,406,706
============ ============ ============
- ----------
* Commenced operations on November 1, 2004.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
29
PRIMECAP ODYSSEY FUNDS
STATEMENT OF CHANGES IN NET ASSETS
FOR THE PERIOD ENDED OCTOBER 31, 2005*
- --------------------------------------------------------------------------------
PRIMECAP
ODYSSEY
STOCK FUND
-----------
INCREASE IN NET ASSETS FROM:
OPERATIONS
Net investment loss ............................................ $ (17,484)
Net realized loss on investments ............................... (23,690)
Net unrealized appreciation on investments ..................... 1,690,767
-----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS ......... 1,649,593
-----------
CAPITAL SHARE TRANSACTIONS
Net increase in net assets derived from net change
in outstanding shares (a) .................................... 28,426,364
-----------
TOTAL INCREASE IN NET ASSETS ............................... 30,075,957
NET ASSETS
Beginning of period ............................................ 34,000
-----------
END OF PERIOD .................................................. $30,109,957
===========
Accumulated net investment income .............................. $ --
===========
(a) A summary of capital share transactions is as follows:
PERIOD ENDED
OCTOBER 31, 2005*
-----------------------------
SHARES VALUE
------------ ------------
Shares sold .................................... 2,646,899 $ 28,719,772
Redemption fee proceeds ........................ -- 11
Shares redeemed ................................ (26,356) (293,419)
------------ ------------
Net increase ................................... 2,620,543 $ 28,426,364
============ ============
- ----------
* Commenced operations on November 1, 2004.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
30
PRIMECAP ODYSSEY FUNDS
STATEMENT OF CHANGES IN NET ASSETS
FOR THE PERIOD ENDED OCTOBER 31, 2005*
- --------------------------------------------------------------------------------
PRIMECAP
ODYSSEY
GROWTH FUND
------------
INCREASE IN NET ASSETS FROM:
OPERATIONS
Net investment loss ........................................... $ (41,989)
Net realized gain on investments .............................. 54,943
Net unrealized appreciation on investments .................... 1,605,390
------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS ........ 1,618,344
------------
CAPITAL SHARE TRANSACTIONS
Net increase in net assets derived from net change
in outstanding shares (a) ................................... 44,913,261
------------
TOTAL INCREASE IN NET ASSETS .............................. 46,531,605
NET ASSETS
Beginning of period ........................................... 34,000
------------
END OF PERIOD ................................................. $ 46,565,605
============
Accumulated net investment income ............................. $ --
============
(a) A summary of capital share transactions is as follows:
PERIOD ENDED
OCTOBER 31, 2005*
-----------------------------
SHARES VALUE
------------ ------------
Shares sold .................................... 4,012,397 $ 45,005,048
Redemption fee proceeds ........................ -- 441
Shares redeemed ................................ (8,322) (92,228)
------------ ------------
Net increase ................................... 4,004,075 $ 44,913,261
============ ============
- ----------
* Commenced operations on November 1, 2004.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
31
PRIMECAP ODYSSEY FUNDS
STATEMENT OF CHANGES IN NET ASSETS
FOR THE PERIOD ENDED OCTOBER 31, 2005*
PRIMECAP
ODYSSEY
AGGRESSIVE
GROWTH FUND
------------
INCREASE IN NET ASSETS FROM:
OPERATIONS
Net investment loss ........................................... $ (126,506)
Net realized loss on investments .............................. (192,454)
Net unrealized appreciation on investments .................... 1,725,666
------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS ........ 1,406,706
------------
CAPITAL SHARE TRANSACTIONS
Net increase in net assets derived from net change
in outstanding shares (a) ................................... 21,383,718
------------
TOTAL INCREASE IN NET ASSETS .............................. 22,790,424
NET ASSETS
Beginning of period ........................................... 34,000
------------
END OF PERIOD ................................................. $ 22,824,424
============
Accumulated net investment income ............................. $ --
============
(a) A summary of capital share transactions is as follows:
PERIOD ENDED
OCTOBER 31, 2005*
-----------------------------
SHARES VALUE
------------ ------------
Shares sold .................................... 2,181,304 $ 23,059,769
Redemption fee proceeds ........................ -- 1,784
Shares redeemed ................................ (153,222) (1,677,835)
------------ ------------
Net increase ................................... 2,028,082 $ 21,383,718
============ ============
- ----------
* Commenced operations on November 1, 2004.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
32
PRIMECAP ODYSSEY FUNDS
FINANCIAL HIGHLIGHTS
FOR A CAPITAL SHARE OUTSTANDING THROUGHOUT THE PERIOD
- --------------------------------------------------------------------------------
THE FOLLOWING INFORMATION SHOULD BE READ IN CONJUNCTION WITH THE FINANCIAL
STATEMENTS AND NOTES THERETO APPEARING ELSEWHERE IN THIS ANNUAL REPORT.
PRIMECAP PRIMECAP PRIMECAP
ODYSSEY ODYSSEY ODYSSEY AGGRESSIVE
STOCK FUND GROWTH FUND GROWTH FUND
------------------- ------------------- -------------------
PERIOD ENDED PERIOD ENDED PERIOD ENDED
OCTOBER 31, 2005(1) OCTOBER 31, 2005(1) OCTOBER 31, 2005(1)
------------------- ------------------- -------------------
Net asset value, beginning of period ....................... $ 10.00 $ 10.00 $ 10.00
---------- ---------- ----------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) ............................. (0.01) (0.01) (0.06)
Net realized and unrealized gain on investments .......... 1.49 1.63 1.30
---------- ---------- ----------
Total from investment operations ........................... 1.48 1.62 1.24
---------- ---------- ----------
Net asset value, end of period ............................. $ 11.48 $ 11.62 $ 11.24
========== ========== ==========
Total return ............................................... 14.80% 16.20% 12.40%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (millions) ..................... $ 30.1 $ 46.6 $ 22.8
RATIO OF EXPENSES TO AVERAGE NET ASSETS:
Before fees waived and expenses absorbed or recouped ..... 1.80% 1.79% 1.82%
After fees waived and expenses absorbed or recouped ...... 1.25% 1.25% 1.25%
RATIO OF NET INVESTMENT LOSS TO AVERAGE NET ASSETS ......... (0.11%) (0.27%) (0.82%)
Portfolio turnover rate .................................... 12.46% 8.84% 7.38%
- ----------
(1) Commenced operations on November 1, 2004.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
33
PRIMECAP ODYSSEY FUNDS
NOTES TO FINANCIAL STATEMENTS
FOR THE PERIOD NOVEMBER 1, 2004 TO OCTOBER 31, 2005
- --------------------------------------------------------------------------------
(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, and 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 accounting principles generally accepted 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 are valued using the NASDAQ Official Closing
Price. 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.
Investments in other funds are valued at their respective net asset
values as determined by those funds, in accordance with the
Investment Company Act of 1940.
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. The result rounded to the nearest cent. The
Funds' shares will not be priced on the days on which the NYSE is
closed for trading.
34
PRIMECAP ODYSSEY FUNDS
NOTES TO FINANCIAL STATEMENTS
FOR THE PERIOD NOVEMBER 1, 2004 TO OCTOBER 31, 2005 (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.
Each Fund has 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 in excess of 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 basis 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.
G. USE OF ESTIMATES.
The preparation of financial statements in conformity with
accounting principles generally accepted 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.
35
PRIMECAP ODYSSEY FUNDS
NOTES TO FINANCIAL STATEMENTS
FOR THE PERIOD NOVEMBER 1, 2004 TO OCTOBER 31, 2005 (CONTINUED)
- --------------------------------------------------------------------------------
H. ORGANIZATIONAL EXPENSES.
The Investment Advisor has agreed to bear all organizational
expenses for the Trust. These organizational expenses included
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%
The Investment Advisor has contractually agreed to reimburse each Fund through
October 31, 2007 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.
36
PRIMECAP ODYSSEY FUNDS
NOTES TO FINANCIAL STATEMENTS
FOR THE PERIOD NOVEMBER 1, 2004 TO OCTOBER 31, 2005 (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 and
accounting will be allocated among the Funds based on average daily net assets,
unless the minimum annual fee applies, in which case they will be allocated
equally among the Funds. 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 October 31, 2005 were as follows:
FUND PURCHASES SALES
- ---- ----------- -----------
PRIMECAP Odyssey Stock Fund ..................... $27,608,506 $ 1,789,505
PRIMECAP Odyssey Growth Fund .................... $42,912,078 $ 1,245,651
PRIMECAP Odyssey Aggressive Growth Fund ......... $20,801,267 $ 1,035,977
37
PRIMECAP ODYSSEY FUNDS
NOTES TO FINANCIAL STATEMENTS
FOR THE PERIOD NOVEMBER 1, 2004 TO OCTOBER 31, 2005 (CONTINUED)
- --------------------------------------------------------------------------------
(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.
As of October 31, 2005, the components of distributable earnings/(accumulated
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 .................. $ 29,823,987 $ 46,133,338 $ 21,795,841
============ ============ ============
Gross tax unrealized appreciation ..................... 2,468,926 2,490,998 2,828,734
Gross tax unrealized depreciation ..................... (806,849) (885,608) (1,144,674)
------------ ------------ ------------
Net tax unrealized appreciation/(depreciation) ........ $ 1,662,077 $ 1,605,390 $ 1,684,060
============ ============ ============
Currently distributable ordinary income ............... $ -- $ 13,024 $ --
Currently distributable long-term capital gain/
(capital loss carryforward) ......................... $ -- $ -- $ (150,848)
As of October 31, 2005, the PRIMECAP Odyssey Aggressive Growth Fund has a
capital loss carryforward available to offset future capital gains, if any, of
$150,848, which expires on October 31, 2013.
38
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Trustees and Shareholders of PRIMECAP Odyssey Funds:
In our opinion, the accompanying statements of assets and liabilities, including
the schedules of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of PRIMECAP Odyssey Stock Fund,
PRIMECAP Odyssey Growth Fund, and PRIMECAP Odyssey Aggressive Growth Fund
(hereafter referred to as the "Funds") at October 31, 2005, and the results of
each of their operations, the changes in each of their net assets and the
financial highlights for the period November 1, 2004 (commencement of
operations) through October 31, 2005, in conformity with accounting principles
generally accepted in the United States of America. These financial statements
and financial highlights (hereafter referred to as "financial statements") are
the responsibility of the Funds' management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these financial statements in accordance with the standards of the
Public Company Accounting Oversight Board (United States). Those standards
require that we plan and perform the audits to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits, which included
confirmation of securities at October 31, 2005 by correspondence with the
custodian and brokers, provide a reasonable basis for our opinion.
PricewaterhouseCoopers LLP
San Francisco, California
December 14, 2005
39
PRIMECAP ODYSSEY FUNDS
ADDITIONAL NOTES - (UNAUDITED)
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.
FORM N-Q DISCLOSURE
The Trust files its complete schedules of portfolio holdings with the SEC for
the first and third quarters of each fiscal year on Form N-Q. The Trust's Form
N-Q is available on the SEC's website at http://www.sec.gov. The Trust's Form
N-Q may be reviewed and copied at the Commission's Public Reference Room in
Washington, DC, and information on the operation of the Public Reference Room
may be obtained by calling 1-800-SEC-0330. This information is also available,
without charge, by calling toll-free 1-800-729-2307.
40
PRIMECAP ODYSSEY FUNDS
MANAGEMENT
PORTFOLIO MANAGERS
PRIMECAP Management Company has five portfolio managers who together have more
than 150 years of investment experience. Each of these five individuals manages
a portion of the PRIMECAP Odyssey Stock Fund and the PRIMECAP Odyssey Growth
Fund. The PRIMECAP Odyssey Aggressive Growth Fund is primarily managed by
Messrs. Schow, Kolokotrones, Fried, and Mordecai. A small portion of each Fund's
assets may be managed by individuals in the Advisor's research department. The
portfolio managers primarily responsible for overseeing the Funds' investments
are:
-------------------------------------------
NAME YEARS OF EXPERIENCE
-------------------------------------------
Howard B. Schow 49
Mitchell J. Milias 41
Theo A. Kolokotrones 35
Joel P. Fried 21
Alfred W. Mordecai 8
-------------------------------------------
OFFICERS AND TRUSTEES
The Trust's officers, who administer the Funds' daily operations, are appointed
by the Board of Trustees. The Trustees are responsible for the overall
management of the Trust, including establishing the Funds' policies and general
supervision and review of their investment activities. The Statement of
Additional Information includes additional information about the Trust's
Trustees and is available, without charge, by calling 1-800-729-2307.
EXECUTIVE OFFICERS. The table below sets forth certain information about each of
the Trust's executive officers.
- -------------------------------------------------------------------------------------------------------------
POSITION(S) TERM OF OFFICE;
NAME, ADDRESS HELD LENGTH OF PRINCIPAL OCCUPATION(S)
(YEAR OF BIRTH) WITH TRUST TIME SERVED DURING PAST 5 YEARS
- -------------------------------------------------------------------------------------------------------------
Howard B. Schow Co-Chief Indefinite; Chairman and Director, Portfolio
225 South Lake Ave., Executive Since 09/04 Manager, Chief Investment Officer and
Suite 400, Pasadena, Officer Principal, PRIMECAP Management
CA 91101-3005 Company
(1927)
- -------------------------------------------------------------------------------------------------------------
Theo A. Kolokotrones Co-Chief Indefinite; President, Director, Portfolio Manager
225 South Lake Ave., Executive Since 09/04 and Principal, PRIMECAP Management
Suite 400, Pasadena, Officer Company
CA 91101-3005
(1946)
- -------------------------------------------------------------------------------------------------------------
41
- -------------------------------------------------------------------------------------------------------------
POSITION(S) TERM OF OFFICE;
NAME, ADDRESS HELD LENGTH OF PRINCIPAL OCCUPATION(S)
(YEAR OF BIRTH) WITH TRUST TIME SERVED DURING PAST 5 YEARS
- -------------------------------------------------------------------------------------------------------------
Joel P. Fried Co-Chief Indefinite; Executive Vice President, Director,
225 South Lake Ave., Executive Since 09/04 Portfolio Manager and Principal,
Suite 400, Pasadena, Officer and PRIMECAP Management Company
CA 91101-3005 Trustee
(1962)
- -------------------------------------------------------------------------------------------------------------
David H. Van Slooten Chief Financial Indefinite; Senior Vice President, Portfolio
225 South Lake Ave., Officer and Since 06/04 Manager, Financial Analyst and
Suite 400, Pasadena, Secretary Principal, PRIMECAP Management
CA 91101-3005 Company
(1963)
- -------------------------------------------------------------------------------------------------------------
Baltej S. Kochar Vice President Indefinite; Financial Analyst, PRIMECAP
225 South Lake Ave., and Chief Since 10/04 Management Company (1/04 - Present);
Suite 400, Pasadena, Administrative Chief Executive Officer, The Share
CA 91101-3005 Officer Group, Inc. (9/01 - 1/03); Chief
(1970) Executive Officer, BetterTomorrow.org
(6/00 - 9/01); President,
GreaterGood.com (4/98 - 1/00)
- -------------------------------------------------------------------------------------------------------------
Karen Chen Vice President Indefinite; Chief Compliance Officer, Director of
225 South Lake Ave., of Compliance Since 10/04 Compliance and Reporting, PRIMECAP
Suite 400, Pasadena, and Chief Management Company (10/04 - Present);
CA 91101-3005 Compliance Team Lead - Legal and Compliance,
(1973) Officer Pacific Investment Management
Company (7/02 - 9/04 and 11/97 - 7/99);
Consultant, Trinity Consulting (9/01 -
2/02); Treasury Intern (6/00 - 10/00)
- -------------------------------------------------------------------------------------------------------------
"INDEPENDENT" TRUSTEES. The table below sets forth certain information about
each of the Trustees of the Trust who is not an "interested person" of the Trust
as defined in the 1940 Act ("Independent Trustees").
- --------------------------------------------------------------------------------------------------------------------
NUMBER OF
TERM OF PORTFOLIOS IN
OFFICE; FUND OTHER
POSITION(S) LENGTH OF PRINCIPAL COMPLEX DIRECTOR-
NAME, ADDRESS HELD TIME OCCUPATION(S) OVERSEEN BY SHIPS HELD
(YEAR OF BIRTH) WITH TRUST SERVED DURING PAST 5 YEARS TRUSTEE BY TRUSTEE
- --------------------------------------------------------------------------------------------------------------------
Benjamin F. Hammon Chairman Indefinite; Retired; Director, 3 None
225 South Lake Ave., of the Since 09/04 Institutional Equity
Suite 400, Pasadena, Board and Sales, Salomon
CA 91101-3005 Trustee Smith Barney Inc.
(1935) (1997-1998)
- --------------------------------------------------------------------------------------------------------------------
42
- --------------------------------------------------------------------------------------------------------------------
NUMBER OF
TERM OF PORTFOLIOS IN
OFFICE; FUND OTHER
POSITION(S) LENGTH OF PRINCIPAL COMPLEX DIRECTOR-
NAME, ADDRESS HELD TIME OCCUPATION(S) OVERSEEN BY SHIPS HELD
(YEAR OF BIRTH) WITH TRUST SERVED DURING PAST 5 YEARS TRUSTEE BY TRUSTEE
- --------------------------------------------------------------------------------------------------------------------
Wayne H. Smith Chairman Indefinite; President, Wayne H. 3 None
225 South Lake Ave., of the Since 09/04 Smith Consulting, Inc.
Suite 400, Pasadena, Audit (2002-Present); Vice
CA 91101-3005 Committee President, Financial
(1941) and Trustee Services, Avery
Denison Corporation
(2001-2002); Vice
President, Financial
Services, and
Treasurer, Avery
Denison Corporation
(1999-2001)
- --------------------------------------------------------------------------------------------------------------------
Stephen M. Rucker Trustee Indefinite; Retired; Executive Vice 3 None
225 South Lake Ave., Since 09/04 President, Credit Suisse
Suite 400, Pasadena, First Boston (1999-
CA 91101-3005 2001)
(1938)
- --------------------------------------------------------------------------------------------------------------------
"INTERESTED" TRUSTEES. The table below sets forth certain information about each
of the Trustees of the Trust who is an "interested person" of the Trust as
defined by the 1940 Act.
- --------------------------------------------------------------------------------------------------------------------
NUMBER OF
TERM OF PORTFOLIOS IN
OFFICE; FUND OTHER
POSITION(S) LENGTH OF PRINCIPAL COMPLEX DIRECTOR-
NAME, ADDRESS HELD TIME OCCUPATION(S) OVERSEEN BY SHIPS HELD
(YEAR OF BIRTH) WITH TRUST SERVED DURING PAST 5 YEARS TRUSTEE BY TRUSTEE
- --------------------------------------------------------------------------------------------------------------------
Joel P. Fried* Co-Chief Indefinite; Executive Vice 3 None
225 South Lake Ave., Executive Since 09/04 President, Director,
Suite 400, Pasadena, Officer and Portfolio Manager and
CA 91101-3005 Trustee Principal, PRIMECAP
(1962) Management Company
- --------------------------------------------------------------------------------------------------------------------
* Mr. Fried is an "interested person" of the Trust, as defined by the 1940
Act, because of his employment with PRIMECAP Management Company, the
investment advisor to the Trust.
43
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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
o
Independent Registered Public Accounting Firm
PRICEWATERHOUSECOOPERS LLP
Three Embarcadero Centre San
Francisco, California 94111
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.
The registrant has adopted a code of ethics that applies to the registrant's
principal executive officer and principal financial officer. The registrant has
not made any amendments to its code of ethics during the period covered by this
report. The registrant has not granted any waivers from any provisions of the
code of ethics during the period covered by this report.
A COPY OF THE REGISTRANT'S CODE OF ETHICS IS FILED HEREWITH.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
The registrant's board of trustees has determined that there is at least one
audit committee financial expert serving on its audit committee. Wayne Smith is
the "audit committee financial expert" and is considered to be "independent" as
each term is defined in Item 3 of Form N-CSR.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
The registrant has engaged its principal accountant to perform audit services,
audit-related services, tax services and other services during the past two
fiscal years. "Audit services" refer to performing an audit of the registrant's
annual financial statements or services that are normally provided by the
accountant in connection with statutory and regulatory filings or engagements
for those fiscal years. "Audit-related services" refer to the assurance and
related services by the principal accountant that are reasonably related to the
performance of the audit. "Tax services" refer to professional services rendered
by the principal accountant for tax compliance, tax advice, and tax planning.
The following table details the aggregate fees billed or expected to be billed
for each of the last two fiscal years for audit fees, audit-related fees, tax
fees and other fees by the principal accountant.
- --------------------------------------------------------------------------------
FYE 10/31/2005 FYE 10/31/2004
- --------------------------------------------------------------------------------
Audit Fees $51,175 N/A
Audit-Related Fees $0 N/A
Tax Fees $6,600 N/A
All Other Fees $0 N/A
- --------------------------------------------------------------------------------
The audit committee has adopted pre-approval policies and procedures that
require the audit committee to pre-approve all audit and non-audit services of
the registrant, including services provided to any entity affiliated with the
registrant. All of the principal accountant's hours spent on auditing the
registrant's financial statements were attributed to work performed by full-time
permanent employees of the principal accountant.
1
The following table indicates the non-audit fees billed or expected to be billed
by the registrant's accountant for services to the registrant and to the
registrant's investment adviser (and any other controlling entity, etc.--not
sub-adviser) for the last two years. The audit committee of the board of
trustees/directors has considered whether the provision of non-audit services
that were rendered to the registrant's investment adviser is compatible with
maintaining the principal accountant's independence and has concluded that the
provision of such non-audit services by the accountant has not compromised the
accountant's independence.
- --------------------------------------------------------------------------------
Non-Audit Related Fees FYE 10/31/2005 FYE 10/31/2004
- --------------------------------------------------------------------------------
Registrant $6,600 N/A
Registrant's Investment Adviser $0 N/A
- --------------------------------------------------------------------------------
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. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
Not applicable to open-end investment companies.
ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASES.
Not applicable to open-end investment companies.
ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
There have been no material changes to the procedures by which shareholders may
recommend nominees to the registrant's board of trustees.
ITEM 11. 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
2
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 control
over financial reporting (as defined in Rule 30a-3(d) under the Act) that
occurred during the second fiscal quarter of the period covered by this
report that has materially affected, or is reasonably likely to materially
affect, the Registrant's internal control over financial reporting.
ITEM 12. 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. Filed herewith.
(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.
3
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 January 4, 2006
----------------------------------------------------------------
By (Signature and Title) /s/ Howard B. Schow
-------------------------------------------
Howard B. Schow, Co-Chief Executive Officer
Date January 4, 2006
----------------------------------------------------------------
By (Signature and Title) /s/ Theo A. Kolokotrones
-------------------------------------------
Theo A. Kolokotrones,
Co-Chief Executive Officer
Date January 4, 2006
----------------------------------------------------------------
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 January 4, 2006
----------------------------------------------------------------
By (Signature and Title)* /s/ Howard B. Schow
-------------------------------------------
Howard B. Schow, Co-Chief Executive Officer
Date January 4, 2006
----------------------------------------------------------------
By (Signature and Title)* /s/ Theo A. Kolokotrones
-------------------------------------------
Theo A. Kolokotrones,
Co-Chief Executive Officer
Date January 4, 2006
----------------------------------------------------------------
By (Signature and Title)* /s/ David H. Van Slooten
-------------------------------------------
David H. Van Slooten,
Chief Financial Officer
Date January 4, 2006
----------------------------------------------------------------
* PRINT THE NAME AND TITLE OF EACH SIGNING OFFICER UNDER HIS OR HER SIGNATURE.