N-CSRS 1 t303510.txt As filed with the Securities and Exchange Commission on June 28, 2007 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, 2007 Date of reporting period: APRIL 30, 2007 ITEM 1. REPORT TO STOCKHOLDERS. SEMIANNUAL REPORT FOR THE SIX MONTHS ENDED APRIL 30, 2007 LOGO PRIMECAP(r) -----ODYSSEY FUNDS PRIMECAP ODYSSEY STOCK FUND PRIMECAP ODYSSEY GROWTH FUND PRIMECAP ODYSSEY AGGRESSIVE GROWTH FUND (GRAPHIC) TABLE OF CONTENTS PRIMECAP ODYSSEY FUNDS -------------------------------------------------------------------- Letter to Shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 Performance Graphs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 Expense Example . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 Sector Breakdown . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14 Schedule of Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 PRIMECAP Odyssey Stock Fund . . . . . . . . . . . . . . . . . . . . . . 16 PRIMECAP Odyssey Growth Fund . . . . . . . . . . . . . . . . . . . . . .20 PRIMECAP Odyssey Aggressive Growth Fund . . . . . . . . . . . . . . . . 24 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 PRIMECAP Odyssey Stock Fund . . . . . . . . . . . . . . . . . . . . . . 33 PRIMECAP Odyssey Growth Fund . . . . . . . . . . . . . . . . . . . . . .34 PRIMECAP Odyssey Aggressive Growth Fund . . . . . . . . . . . . . . . . 35 Notes to Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . 36 Additional Information . . . . . . . . . . . . . . . . . . . . . . . . . . . .42 Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .43 1 (GRAPHIC) LETTER TO SHAREHOLDERS PRIMECAP ODYSSEY FUNDS -------------------------------------------------------------------- DEAR FELLOW SHAREHOLDERS, From November 1, 2006 through April 30, 2007, the PRIMECAP Odyssey Stock, Growth, and Aggressive Growth Funds produced total returns of 8.49%, 7.82%, and 9.77%, respectively. The Standard & Poor's 500 Composite Stock Index (S&P 500) produced a total return of 8.60% during the same period. The last six months were disappointing for the Stock and Growth Funds. All three PRIMECAP Odyssey Funds have been and continue to be heavily weighted in growth stocks and underweighted in value stocks. During the last six months, this was an impediment to the performance of the Funds, as value stock returns have continued to outpace growth returns. While several value-heavy indices reached record highs, the NASDAQ and other growth-heavy indices remain significantly below their peak levels of early 2000. We are now in the seventh year of a relative bear market for growth stocks. For us, the period represented a stubborn continuity of a market in which investors have been favoring stocks with high relative free cash flow and dividend yields and disfavoring stocks that, in our view, have compelling growth prospects. The valuation differential between growth and value stocks remains near a 20-year low. In other words, growth stocks, relative to value stocks, have not been this cheap in 20 years. The favoritism investors evinced towards value manifested itself most acutely in the performance delivered by the S&P Utilities sector, which produced a total return of 18.0% during the period. Utilities, which boast the highest average dividend yield of all of S&P sectors, have attracted significant capital from aging baby boomers seeking tax efficient yields. All three PRIMECAP Odyssey Funds suffered from our 0% allocation to this sector. This sector, which has traditionally traded at a discount to the S&P 500, now trades at a premium to the overall index. The S&P Materials sector returned 16.6% during the period, as commodity prices continued to remain high relative to historical levels. Several mergers and acquisitions in the sector fueled investor interest and multiple expansion. While our stock selections in all three Funds outperformed the S&P Materials sector, our allocation to this sector was not sufficient to make up for our other shortfalls during the period. Persistently high oil prices enabled the S&P Energy sector to deliver outstanding returns during the period. While our stock selections in all three Funds outpaced the benchmark's sector return of 14.3%, our significant under-allocation to this sector did not allow the Funds to benefit substantively. All three Funds suffered from our substantial weighting in Information Technology (IT), which produced gains that trailed most other sectors. While the S&P Health Care sector produced a respectable 9.3% gain, our stock selections in the Stock and Growth Funds hurt us, and we saw much more modest returns. A more detailed discussion of the results of each PRIMECAP Odyssey Fund follows. 2 LETTER TO SHAREHOLDERS PRIMECAP ODYSSEY FUNDS -------------------------------------------------------------------------------- PRIMECAP ODYSSEY STOCK FUND From November 1, 2006 through April 30, 2007, the PRIMECAP Odyssey Stock Fund's total return of 8.49% trailed the 8.60% return recorded by the unmanaged S&P 500 Index. The Stock Fund's underperformance was primarily attributable to disappointing sector allocation, with mixed results from stock selection. Our most heavily weighted sector in the Stock Fund was Health Care, which constituted 24.3% of the portfolio and exceeded the S&P Health Care sector weighting by over 12 percentage points. Our Health Care investments returned 3.2% during the period, trailing the benchmark return of 9.3%. Positive results from Eli Lilly, Medtronic, and GlaxoSmithKline were not substantial enough to offset declines from Amgen, Novartis, and Boston Scientific. Our Information Technology investments appreciated 6.4% versus the S&P IT sector return of 6.5%. Strong results from Texas Instruments, EMC, ASML, and Corning were not sufficient to offset pullbacks from Motorola, Intuit, Symantec, and NVIDIA. Our strongest returns this period came from our Consumer Discretionary holdings. Sony, Amazon, Whirlpool, and Chico's delivered exceptional returns. Our airlines, particularly Alaska and Jet Blue, saw sharp declines during the period. The table on the following page lists the top ten holdings, which collectively represent 28.0% of the total portfolio at the period end. Four of our five most heavily weighted investments are in the Health Care sector. We continue to believe that longer lifespans and baby-boomer retirements will drive significant long-term growth in the use of pharmaceutical products, biotechnology products, and medical devices. While safety issues and negative press have depressed returns among several of our Health Care holdings, we believe that the therapeutic benefits of the drugs and devices in which we are invested more than offset the safety issues that have arisen. Health Care valuations, in our assessment, are extremely compelling and are pricing in almost none of the long-term growth that we believe will occur in this sector. 3 LETTER TO SHAREHOLDERS PRIMECAP ODYSSEY FUNDS -------------------------------------------------------------------------------- PRIMECAP ODYSSEY STOCK FUND ENDING % OF TOP 10 HOLDINGS AS OF 4/30/07 TOTAL PORTFOLIO* ----------------------------------------------------------------------- Eli Lilly & Co. 4.33 Novartis AG (ADS) 3.60 Amgen Inc. 3.45 Medtronic Inc. 3.06 Southwest Airlines Co. 2.54 GlaxoSmithKline PLC (ADS) 2.32 Sony Corp. (ADS) 2.24 KLA-Tencor Corp. 2.22 Boston Scientific Corp. 2.18 Texas Instruments Inc. 2.05 ----------------------------------------------------------------------- TOTAL % OF PORTFOLIO 27.99 ----------------------------------------------------------------------- * The percentage is calculated by using the ending market value of the security divided by the total investments of the Fund. PRIMECAP ODYSSEY GROWTH FUND From November 1, 2006 through April 30, 2007, the PRIMECAP Odyssey Growth Fund's total return of 7.82% trailed the 8.60% return recorded by the unmanaged S&P 500 Index and the 8.42% return recorded by the Russell 1000 Growth Index. The Growth Fund's underperformance was driven primarily by unfavorable sector allocation, with mixed results from stock selection. Our IT investments constituted 31.2% of the total portfolio, exceeding the S&P IT sector weighting by over 15 percentage points. Our IT investments appreciated approximately 7.4% versus the S&P IT sector return of 6.5%. Strong returns from ASML Holdings, Stratasys, VeriSign, and Texas Instruments offset disappointments from Intuit, Motorola, and Micron Technology. Although our IT selections outperformed the S&P IT sector, they were not sufficient to beat the overall market. As a result, our heavy allocation to this underperforming sector accounted for much of the Fund's disappointing results. Our Health Care investments constituted 26.6% of the Growth Fund's portfolio and exceeded the S&P Health Care sector weighting by over 14 percentage points. Our Health Care investments returned approximately 6.9% during the period, trailing the benchmark return of 9.3%. Strong returns from Possis Medical and Kinetic Concepts were offset by declines from Amgen, Boston Scientific, and Novartis. 4 LETTER TO SHAREHOLDERS PRIMECAP ODYSSEY FUNDS -------------------------------------------------------------------------------- The Growth Fund benefited substantially from its Consumer Discretionary holdings, which appreciated approximately 14.6% versus the S&P Consumer Discretionary sector return of 5.3%. Excellent returns from Sony, Chico's, and Amazon offset disappointing results from Dress Barn and Harman International. Our airline investments also detracted from the Fund's returns. While our selections in Materials and Energy outperformed their benchmarks, our weightings in these sectors were not sufficient to contribute meaningfully to the Growth Fund's returns. The table below lists the top ten holdings, which collectively represent 24.4% of the total portfolio at the period end. Our five most heavily weighted investments are in the Health Care sector. We continue to believe that longer lifespans and baby-boomer retirements will drive significant long-term growth in the use of pharmaceutical products, biotechnology products, and medical devices. While safety issues and negative press have depressed returns among several of our Health Care holdings, we believe that the therapeutic benefits of the drugs and devices in which we are invested more than offset the safety issues that have arisen. Health care valuations, in our assessment, are extremely compelling and are pricing in almost none of the long-term growth that we believe will occur in this sector. PRIMECAP ODYSSEY GROWTH FUND ENDING % OF TOP 10 HOLDINGS AS OF 4/30/07 TOTAL PORTFOLIO* ----------------------------------------------------------------------- Eli Lilly & Co. 4.08 Medtronic Inc. 2.79 Novartis AG (ADS) 2.72 Amgen Inc. 2.55 Affymetrix Inc. 2.34 Sony Corp. (ADS) 2.23 Southwest Airlines Co. 2.15 Roche Holding AG 1.95 FormFactor Inc. 1.81 Texas Instruments Inc. 1.74 ----------------------------------------------------------------------- TOTAL % OF PORTFOLIO 24.36 ----------------------------------------------------------------------- * The percentage is calculated by using the ending market value of the security divided by the total investments of the Fund. 5 LETTER TO SHAREHOLDERS PRIMECAP ODYSSEY FUNDS -------------------------------------------------------------------------------- PRIMECAP ODYSSEY AGGRESSIVE GROWTH FUND From November 1, 2006 through April 30, 2007, the PRIMECAP Odyssey Aggressive Growth Fund's return of 9.77% exceeded the 8.60% return recorded by the unmanaged S&P 500 Index but trailed the 11.77% return recorded by the Russell MidCap Growth Index. Our most heavily weighted sector in this Fund was Information Technology (IT), which constituted 41.1% of our portfolio and exceeded the S&P IT sector weighting by over 25 percentage points. Our stock selections returned approximately 9.5% versus the S&P IT return of 6.5%, driven by strong returns from Stratasys, Altera, ASML Holdings, FARO Technologies, and VeriSign, which more than offset disappointing results from Avocent, Intuit, Micron Technology, and Cymer. Although the Fund was substantially underweight in Energy, favorable stock selection produced a return of approximately 19.8% versus the S&P Energy sector return of 14.3%. Our strongest contributors in this sector were National Oilwell Varco, EOG Resources, and Transocean Inc. Our overweight position in Health Care returned approximately 11.7% versus the S&P Health Care sector return of 9.3%. Returns from Kinetic Concepts, Affymetrix, and Possis Medical offset losses from Pharmacyclics, Boston Scientific, and Dyax. The Fund benefited substantially from its Consumer Discretionary holdings, which appreciated approximately 16.7% versus the S&P Consumer Discretionary sector return of 5.3%. Strong returns from Amazon and Chico's accounted for the majority of the sector's outperformance. Our largest disappointment in the Aggressive Growth Fund came from our investments in the Industrials sector. Our Industrials holdings produced a return of -9.3% vs. the S&P Industrials return of 9.7%. Sharp declines among our airlines accounted for this detraction. The table on the following page lists the top ten holdings, which collectively represent 26.6% of the total portfolio at the period end. 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 LETTER TO SHAREHOLDERS PRIMECAP ODYSSEY FUNDS -------------------------------------------------------------------------------- PRIMECAP ODYSSEY AGGRESSIVE GROWTH FUND ENDING % OF TOP 10 HOLDINGS AS OF 4/30/07 TOTAL PORTFOLIO* ----------------------------------------------------------------------- Altera Corp. 3.12 Avocent Corp. 3.11 Boston Scientific Corp. 2.78 MarketAxess Holdings Inc. 2.75 Roche Holding AG 2.73 Affymetrix Inc. 2.56 Avid Technology Inc. 2.49 Quiksilver Inc. 2.38 FormFactor Inc. 2.36 American Italian Pasta Co. (Cl A) 2.28 ----------------------------------------------------------------------- TOTAL % OF PORTFOLIO 26.56 ----------------------------------------------------------------------- * The percentage is calculated by using the ending market value of the security divided by the total investments of the Fund. STRUCTURE OF PORTFOLIO, POSITIONING, AND OUTLOOK FOR THE PRIMECAP ODYSSEY FUNDS We feel that the current equity investment environment has given us opportunities to buy equities with exciting prospects at reasonable prices. Even if the unusually narrow valuation differential between growth and value stocks were to persist, we would expect growth companies to outperform the broad market by virtue of their superior earnings growth. If growth stocks' recent valuation compression reverses and the historical premium awarded to earnings growth begins to return, growth investors should see even stronger returns. While the PRIMECAP Odyssey Growth and Aggressive Growth Funds are growth products and, as such, have a growth bias in their charter, we have also heavily weighted growth equities in the PRIMECAP Odyssey Stock Fund. Many traditional growth stocks are now trading at discounts to traditional value stocks. The P/E ratios of many health care and information technology companies are lower than many utilities, for example. For many stocks in the S&P 500, investors are now paying a premium for value and a discount for growth. We continue to believe that the emergence of a global middle class will produce significant demand for the drugs, chips, consumer products, and software in which we are heavily invested. At the same time, the valuations of many of these companies would imply that minimal growth is ahead. We believe that the coming years will resolve this paradox in our favor. 7 LETTER TO SHAREHOLDERS PRIMECAP ODYSSEY FUNDS -------------------------------------------------------------------------------- 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 -------------------------------------------------------------------------------- THE FUNDS INVEST IN SMALLER COMPANIES, WHICH INVOLVES ADDITIONAL RISKS SUCH AS LIMITED LIQUIDITY AND GREATER VOLATILITY THAN LARGER COMPANIES. 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. Growth stocks typically are more volatile than value stocks; however, value stocks have a lower expected growth rate in earnings and sales. PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE AND DOES NOT GUARANTEE FUTURE RESULTS. The advisor has a contractual agreement in place to waive fees through October 31, 2007. Currently, the expense limitations have not been exceeded. Opinions expressed are those of the advisor and are subject to change, are not guaranteed and should not be considered investment advice. The Standard & Poor's 500 Composite Stock 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. The NASDAQ Composite Index measures all NASDAQ domestic and non-US based common stocks listed on The NASDAQ Stock Market. The Index is market value weighted. The NASDAQ Stock Market is an electronic screen-based securities market with approximately 3200 listed companies. 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. Free cash flow is net income plus amortization/depreciation less changes in working capital and capital expenditures. Dividend yield is annual dividends per share divided by price per share. Please refer to the Schedule of Investments for details of Fund holdings. Fund holdings and sector allocations are subject to change at any time and are not recommendations to buy or sell any security. (06/07) ------------ NOTE: SECTOR WEIGHTINGS ARE BASED ON AVERAGE WEIGHT FOR THE PERIOD. 8 (GRAPHIC) PERFORMANCE GRAPHS 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 (inception) to April 30, 2007 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. (GRAPH OMITTED) PRIMECAP Odyssey S&P 500 Date Stock Fund Index ------------------------------------------------------------- 11/1/04 $10,000 $10,000 1/31/05 10,610 10,493 4/30/05 10,490 10,324 7/31/05 11,530 11,064 10/31/05 11,480 10,868 1/31/06 12,767 11,581 4/30/06 13,047 11,914 7/31/06 12,496 11,658 10/31/06 13,487 12,643 1/31/07 14,158 13,261 4/30/07 14,632 13,729 TOTAL RETURN PERIOD ENDED APRIL 30, 2007 --------------------------- ANNUALIZED SINCE INCEPTION 1 YEAR (11/01/04) ------ ---------- PRIMECAP Odyssey Stock Fund 12.15% 16.50% S&P 500 Index* 15.24% 13.57% 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 PAST RETURNS. ------------ * The S&P 500 Index is an unmanaged index composed of 500 common stocks weighted by market value; its total return includes reinvestment of dividends and is considered representative of the stock market return as a whole. 9 PERFORMANCE GRAPHS 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 (inception) to April 30, 2007 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. (GRAPH OMITTED) PRIMECAP Odyssey S&P 500 Date Growth Fund Index ------------------------------------------------------------- 11/1/04 $10,000 $10,000 1/31/05 10,550 10,493 4/30/05 10,450 10,324 7/31/05 11,540 11,064 10/31/05 11,620 10,868 1/31/06 12,908 11,581 4/30/06 13,208 11,914 7/31/06 12,688 11,658 10/31/06 13,769 12,643 1/31/07 14,420 13,261 4/30/07 14,845 13,729 TOTAL RETURN PERIOD ENDED APRIL 30, 2007 --------------------------- ANNUALIZED SINCE INCEPTION 1 YEAR (11/01/04) ------ ---------- PRIMECAP Odyssey Growth Fund 12.39% 17.17% S&P 500 Index* 15.24% 13.57% 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 PAST RETURNS. ------------ * The S&P 500 Index is an unmanaged index composed of 500 common stocks weighted by market value; its total return includes reinvestment of dividends and is considered representative of the stock market return as a whole. 10 PERFORMANCE GRAPHS 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 (inception) to April 30, 2007 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. (GRAPH OMITTED) PRIMECAP Odyssey S&P 500 Date Aggressive Growth Fund Index ------------------------------------------------------------- 11/1/04 $10,000 $10,000 1/31/05 10,500 10,493 4/30/05 9,890 10,324 7/31/05 11,220 11,064 10/31/05 11,240 10,868 1/31/06 12,790 11,581 4/30/06 13,110 11,914 7/31/06 12,310 11,658 10/31/06 13,920 12,643 1/31/07 14,915 13,261 4/30/07 15,280 13,729 TOTAL RETURN PERIOD ENDED APRIL 30, 2007 --------------------------- ANNUALIZED SINCE INCEPTION 1 YEAR (11/01/04) ------ ---------- PRIMECAP Odyssey Aggressive Growth Fund 16.55% 18.54% S&P 500 Index* 15.24% 13.57% 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 PAST RETURNS. ---------- * The S&P 500 Index is an unmanaged index composed of 500 common stocks weighted by market value; its total return includes reinvestment of dividends and is considered representative of the stock market return as a whole. 11 (GRAPHIC) EXPENSE EXAMPLE - (UNAUDITED) PRIMECAP ODYSSEY FUNDS -------------------------------------------------------------------- As a shareholder of one or more 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 October 31, 2006 to April 30, 2007. 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 adjacent to 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 adjacent to 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 transactional costs were included, your costs would have been higher. 12 EXPENSE EXAMPLE - (UNAUDITED) PRIMECAP ODYSSEY FUNDS --------------------------------------------------------------------------------
BEGINNING ENDING EXPENSES PAID EXPENSE RATIO ACCOUNT ACCOUNT DURING PERIOD* DURING PERIOD* VALUE VALUE (10/31/06 TO (10/31/06 TO (10/31/06) (04/30/07) 04/30/07) 04/30/07) -------------------------------------------------------------------------------------------------------- PRIMECAP ODYSSEY STOCK FUND Actual Performance $1,000.00 $1,084.90 $4.31 0.83% Hypothetical Performance (5% return before expenses) $1,000.00 $1,020.66 $4.17 0.83% -------------------------------------------------------------------------------------------------------- PRIMECAP ODYSSEY GROWTH FUND Actual Performance $1,000.00 $1,078.20 $3.92 0.76% Hypothetical Performance (5% return before expenses) $1,000.00 $1,021.02 $3.81 0.76% -------------------------------------------------------------------------------------------------------- PRIMECAP ODYSSEY AGGRESSIVE GROWTH FUND Actual Performance $1,000.00 $1,097.70 $4.09 0.79% Hypothetical Performance (5% return before expenses) $1,000.00 $1,020.89 $3.94 0.79% -------------------------------------------------------------------------------------------------------- ------------- * 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 (181), then divided by the number of days in the fiscal year (365) to reflect the one-half year period.
13 (GRAPHIC) SECTOR BREAKDOWN PRIMECAP ODYSSEY FUNDS -------------------------------------------------------------------- PRIMECAP ODYSSEY STOCK FUND -------------------------------------------------------------------- Consumer Discretionary 16.0% Consumer Staples 0.1% Energy 5.4% Financials 7.6% Health Care 25.6% Industrials 11.9% Information Technology 17.2% Materials 5.2% Telecommunication Services 1.8% Short Term Investments 9.2% -------------------------------------------------------------------- TOTAL 100.0% -------------------------------------------------------------------- PRIMECAP ODYSSEY GROWTH FUND -------------------------------------------------------------------- Consumer Discretionary 13.2% Energy 4.8% Financials 5.5% Health Care 27.3% Industrials 7.8% Information Technology 32.2% Materials 0.9% Telecommunication Services 1.5% Short Term Investments 6.8% -------------------------------------------------------------------- TOTAL 100.0% -------------------------------------------------------------------- The tables above list sector allocations as a percentage of each Fund's total investments as of April 30, 2007. 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. 14 SECTOR BREAKDOWN PRIMECAP ODYSSEY FUNDS -------------------------------------------------------------------------------- PRIMECAP ODYSSEY AGGRESSIVE GROWTH FUND -------------------------------------------------------------------- Consumer Discretionary 7.4% Consumer Staples 2.6% Energy 3.6% Financials 4.4% Health Care 23.3% Industrials 6.4% Information Technology 40.3% Materials 0.4% Telecommunication Services 1.4% Short Term Investments 10.2% -------------------------------------------------------------------- TOTAL 100.0% -------------------------------------------------------------------- The table above lists sector allocations as a percentage of the Fund's total investments as of April 30, 2007. 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 (GRAPHIC) SCHEDULE OF INVESTMENTS PRIMECAP ODYSSEY STOCK FUND -------------------------------------------------------------------- APRIL 30, 2007 - (UNAUDITED) Shares Value -------------------------------------------------------------------------------- COMMON STOCKS: 90.4% CONSUMER DISCRETIONARY: 15.9% 43,000 Amazon.com, Inc. (a) ......................... $ 2,637,190 54,200 Bed Bath & Beyond, Inc. (a) .................. 2,208,108 32,800 CarMax, Inc. (a) ............................. 817,376 57,400 Chico's FAS, Inc. (a) ........................ 1,513,064 30,000 Comcast Corp. - Class A (a) .................. 799,800 45,100 DIRECTV Group, Inc. (The) (a) ................ 1,075,184 35,000 Dow Jones & Co, Inc. ......................... 1,271,550 60,000 Dress Barn, Inc. (a) ......................... 1,194,600 30,000 Eastman Kodak Co. ............................ 747,300 15,900 Kohl's Corp. (a) ............................. 1,177,236 20,000 Mattel, Inc. ................................. 566,000 7,000 Men's Wearhouse, Inc. ........................ 302,890 3,600 Nordstrom, Inc. .............................. 197,712 68,500 Sony Corp. - ADR ............................. 3,648,310 4,050 Target Corp. ................................. 240,449 93,950 TJX Cos, Inc. ................................ 2,620,265 13,000 Viacom, Inc. - Class B (a) ................... 536,250 45,500 Walt Disney Co. (The) ........................ 1,591,590 28,000 Whirlpool Corp. .............................. 2,968,840 ------------ 26,113,714 ------------ CONSUMER STAPLES: 0.1% 10,700 Cott Corp. (a) ............................... 173,233 ------------ ENERGY: 5.4% 17,400 Arch Coal, Inc. .............................. 627,618 2,000 ConocoPhillips ............................... 138,700 29,000 EnCana Corp. ................................. 1,521,050 19,500 EOG Resources, Inc. .......................... 1,432,080 1,400 GlobalSantaFe Corp. .......................... 89,502 8,000 Murphy Oil Corp. ............................. 443,520 13,422 National Oilwell Varco, Inc. (a) ............. 1,138,857 550 Noble Corp. .................................. 46,315 27,000 Peabody Energy Corp. ......................... 1,295,460 1,100 Pioneer Natural Resources Co. ................ 55,220 6,200 Pogo Producing Co. ........................... 299,212 23,600 Schlumberger Ltd. ............................ 1,742,388 ------------ 8,829,922 ------------ THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 16 SCHEDULE OF INVESTMENTS PRIMECAP ODYSSEY STOCK FUND -------------------------------------------------------------------------------- APRIL 30, 2007 - (UNAUDITED), (CONTINUED) Shares Value -------------------------------------------------------------------------------- FINANCIALS: 7.6% 38,300 American International Group, Inc. ........... $ 2,677,553 47,100 Bank of New York Co., Inc. (The) ............. 1,906,608 570 Berkshire Hathaway, Inc. - Class B (a) ....... 2,067,960 10,000 Chubb Corp. .................................. 538,300 22,000 Fannie Mae ................................... 1,296,240 5,500 Fifth Third Bancorp .......................... 223,245 84,950 Marsh & McLennan Cos, Inc. ................... 2,698,012 4,950 MBIA, Inc. ................................... 344,322 12,000 Travelers Cos, Inc. .......................... 649,200 ------------ 12,401,440 ------------ HEALTH CARE: 25.5% 93,100 Affymetrix, Inc. (a) ......................... 2,445,737 87,700 Amgen, Inc. (a) .............................. 5,625,078 59,050 Biogen Idec, Inc. (a) ........................ 2,787,750 229,656 Boston Scientific Corp. (a) .................. 3,545,889 119,400 Eli Lilly & Co. .............................. 7,060,122 65,500 GlaxoSmithKline PLC - ADR .................... 3,784,590 94,300 Medtronic, Inc. .............................. 4,991,299 101,050 Novartis AG - ADR ............................ 5,869,994 2,400 Pfizer, Inc. ................................. 63,504 15,900 Roche Holding AG - CHF ....................... 3,004,248 24,500 Sepracor, Inc. (a) ........................... 1,315,160 19,900 Waters Corp. (a) ............................. 1,182,657 ------------ 41,676,028 ------------ INDUSTRIALS: 11.8% 10,000 3M Co. ....................................... 827,700 35,000 Alaska Air Group, Inc. (a) ................... 1,036,000 15,000 Alexander & Baldwin, Inc. .................... 801,750 78,000 AMR Corp. (a) ................................ 2,035,020 23,800 Avery Dennison Corp. ......................... 1,480,360 4,100 Boeing Co. ................................... 381,300 2,200 Burlington Northern Santa Fe Corp. ........... 192,588 16,000 Canadian National Railway Co. ................ 803,840 15,200 Caterpillar, Inc. ............................ 1,103,824 18,000 Chicago Bridge & Iron Co. N.V ................ 623,340 2,000 Deere & Co. .................................. 218,800 2,050 Fluor Corp. .................................. 196,021 THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 17 SCHEDULE OF INVESTMENTS PRIMECAP ODYSSEY STOCK FUND -------------------------------------------------------------------------------- APRIL 30, 2007 - (UNAUDITED), (CONTINUED) Shares Value -------------------------------------------------------------------------------- INDUSTRIALS (CONTINUED) 24,000 General Electric Co. ......................... $ 884,640 29,600 JetBlue Airways Corp. (a) .................... 293,336 37,100 McDermott International, Inc. (a) ............ 1,990,786 5,200 Norfolk Southern Corp. ....................... 276,848 24,700 Pall Corp. ................................... 1,036,165 288,300 Southwest Airlines Co. ....................... 4,137,105 2,300 Thomas & Betts Corp. (a) ..................... 125,304 7,800 Union Pacific Corp. .......................... 891,150 ------------ 19,335,877 ------------ INFORMATION TECHNOLOGY: 17.1% 16,250 Accenture Ltd. - Class A ..................... 635,375 9,300 Agilent Technologies, Inc. (a) ............... 319,641 64,300 Applied Materials, Inc. ...................... 1,235,846 55,700 ASML Holding N.V. - ADR (a) .................. 1,517,825 6,400 Comverse Technology, Inc. (a) ................ 145,152 65,000 Corning, Inc. (a) ............................ 1,541,800 108,900 EMC Corp. (a) ................................ 1,653,102 80,000 Intel Corp. .................................. 1,720,000 76,000 Intuit, Inc. (a) ............................. 2,162,200 65,000 KLA-Tencor Corp. ............................. 3,610,750 16,000 L.M. Ericsson Telephone Co. - ADR ............ 610,720 65,000 Microsoft Corp. .............................. 1,946,100 27,500 Motorola, Inc. ............................... 476,575 33,200 Nortel Networks Corp. (a) .................... 759,616 18,000 NVIDIA Corp. (a) ............................. 592,020 86,500 Oracle Corp. (a) ............................. 1,626,200 7,200 Paychex, Inc. ................................ 267,120 6,800 Research In Motion Ltd. (a) .................. 894,744 142,100 Symantec Corp. (a) ........................... 2,500,960 97,000 Texas Instruments, Inc. ...................... 3,333,890 1,138 Verigy Ltd (a) ............................... 28,757 13,000 Yahoo!, Inc. (a) ............................. 364,520 ------------ 27,942,913 ------------ MATERIALS: 5.2% 24,500 Alcoa, Inc. .................................. 869,505 87,780 Domtar Corp. (a) ............................. 855,855 3,000 Dow Chemical Co. (The) ....................... 133,830 18,000 Freeport-McMoRan Copper & Gold, Inc. ......... 1,208,880 THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 18 SCHEDULE OF INVESTMENTS PRIMECAP ODYSSEY STOCK FUND -------------------------------------------------------------------------------- APRIL 30, 2007 - (UNAUDITED), (CONTINUED) Shares Value -------------------------------------------------------------------------------- MATERIALS (CONTINUED) 18,000 MeadWestvaco Corp. ........................... $ 600,480 2,000 Minerals Technologies, Inc. .................. 127,240 14,300 Monsanto Co. ................................. 843,557 18,000 Newmont Mining Corp. ......................... 750,600 7,000 Potash Corp. of Saskatchewan ................. 1,256,640 5,950 Praxair, Inc. ................................ 384,072 8,000 Vulcan Materials Co. ......................... 989,360 6,525 Weyerhaeuser Co. ............................. 516,911 ------------ 8,536,930 ------------ TELECOMMUNICATION SERVICES: 1.8% 148,350 Sprint Corp. ................................. 2,971,451 ------------ TOTAL COMMON STOCKS (cost $130,005,216) ................................ 147,981,508 ------------ Principal Amount -------------------------------------------------------------------------------- SHORT-TERM INVESTMENTS: 9.1% $14,898,172 Dreyfus Treasury Cash Management ............. $ 14,898,172 (cost $14,898,172) ------------ TOTAL INVESTMENTS (cost $144,903,388): 99.5% ......................... 162,879,680 Other Assets in Excess of Liabilities: 0.5% ................... 742,026 ------------ TOTAL NET ASSETS: 100.0% ...................................... $163,621,706 ============ ------------ Percentages are stated as a percent of net assets. ADR - American Depository Receipt. CHF - Swiss Security. (a) Non Income Producing. THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 19 (GRAPHIC) SCHEDULE OF INVESTMENTS PRIMECAP ODYSSEY GROWTH FUND -------------------------------------------------------------------- APRIL 30, 2007 - (UNAUDITED) Shares Value -------------------------------------------------------------------------------- COMMON STOCKS: 94.0% CONSUMER DISCRETIONARY: 13.3% 220,000 99 Cents Only Stores (a) ..................... $ 3,146,000 34,000 Amazon.com, Inc. (a) ......................... 2,085,220 119,200 Bed Bath & Beyond, Inc. (a) .................. 4,856,208 74,900 CarMax, Inc. (a) ............................. 1,866,508 158,300 Chico's FAS, Inc. (a) ........................ 4,172,788 37,500 Comcast Corp. - Class A (a) .................. 999,750 54,800 DIRECTV Group, Inc. (The) (a) ................ 1,306,432 96,000 Dress Barn, Inc. (a) ......................... 1,911,360 157,000 Gentex Corp. ................................. 2,794,600 17,850 Kohl's Corp. (a) ............................. 1,321,614 60,000 Mattel, Inc. ................................. 1,698,000 20,000 Men's Wearhouse, Inc. ........................ 865,400 6,700 Nordstrom, Inc. .............................. 367,964 420,000 Quiksilver, Inc. (a) ......................... 5,586,000 144,000 Sony Corp. - ADR ............................. 7,669,440 7,450 Target Corp. ................................. 442,307 108,250 TJX Cos, Inc. ................................ 3,019,092 30,000 Viacom, Inc. - Class B (a) ................... 1,237,500 3,500 Walt Disney Co. (The) ........................ 122,430 450 Yum! Brands, Inc. ............................ 27,837 ------------- 45,496,450 ------------- ENERGY: 4.8% 112,000 Arch Coal, Inc. .............................. 4,039,840 1,196 Chevron Corp. ................................ 93,037 21,600 EnCana Corp. ................................. 1,132,920 43,000 EOG Resources, Inc. .......................... 3,157,920 10,000 Murphy Oil Corp. ............................. 554,400 30,000 National Oilwell Varco, Inc. (a) ............. 2,545,500 2,000 Noble Corp. .................................. 168,420 5,600 Pogo Producing Co. ........................... 270,256 4,000 Pride International, Inc. (a) ................ 131,240 55,600 Schlumberger Ltd. ............................ 4,104,948 2,400 Transocean, Inc. (a) ......................... 206,880 ------------- 16,405,361 ------------- FINANCIALS: 5.6% 38,750 American International Group, Inc. ........... 2,709,012 108,700 Bank of New York Co., Inc. (The) ............. 4,400,176 THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 20 SCHEDULE OF INVESTMENTS PRIMECAP ODYSSEY GROWTH FUND -------------------------------------------------------------------------------- APRIL 30, 2007 - (UNAUDITED), (CONTINUED) Shares Value -------------------------------------------------------------------------------- FINANCIALS (CONTINUED) 1,000 Berkshire Hathaway, Inc. - Class B (a) ....... $ 3,628,000 20,000 Chubb Corp. .................................. 1,076,600 6,000 Fifth Third Bancorp .......................... 243,540 100,000 Hanmi Financial Corp. ........................ 1,641,000 131,250 Marsh & McLennan Cos, Inc. ................... 4,168,500 10,700 MBIA, Inc. ................................... 744,292 4,600 State Street Corp. ........................... 316,802 ------------- 18,927,922 ------------- HEALTH CARE: 27.5% 306,150 Affymetrix, Inc. (a) ......................... 8,042,560 14,000 Alcon, Inc. .................................. 1,889,020 137,000 Amgen, Inc. (a) .............................. 8,787,180 88,000 Biogen Idec, Inc. (a) ........................ 4,154,480 362,200 Boston Scientific Corp. (a) .................. 5,592,368 136,000 Conceptus, Inc. (a) .......................... 2,812,480 237,500 Eli Lilly & Co. .............................. 14,043,375 95,000 GlaxoSmithKline PLC - ADR .................... 5,489,100 50,000 Kinetic Concepts, Inc. (a) ................... 2,500,000 181,400 Medtronic, Inc. .............................. 9,601,502 161,350 Novartis AG - ADR ............................ 9,372,822 370,000 Possis Medical, Inc. (a) ..................... 4,787,800 35,500 Roche Holding AG - CHF ....................... 6,707,597 82,400 Sepracor, Inc. (a) ........................... 4,423,232 77,000 SurModics, Inc. (a) .......................... 3,128,510 44,000 Waters Corp. (a) ............................. 2,614,920 ------------- 93,946,946 ------------- INDUSTRIALS: 7.8% 17,800 3M Co. ....................................... 1,473,306 145,000 AMR Corp. (a) ................................ 3,783,050 31,550 Avery Dennison Corp. ......................... 1,962,410 13,700 Caterpillar, Inc. ............................ 994,894 10,500 FedEx Corp. .................................. 1,107,120 18,750 Fluor Corp. .................................. 1,792,875 146,250 JetBlue Airways Corp. (a) .................... 1,449,337 10,400 Kirby Corp. (a) .............................. 393,120 64,000 McDermott International, Inc. (a) ............ 3,434,240 68,400 Pall Corp. ................................... 2,869,380 514,700 Southwest Airlines Co. ....................... 7,385,945 ------------- 26,645,677 ------------- THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 21 SCHEDULE OF INVESTMENTS PRIMECAP ODYSSEY GROWTH FUND -------------------------------------------------------------------------------- APRIL 30, 2007 - (UNAUDITED), (CONTINUED) Shares Value -------------------------------------------------------------------------------- INFORMATION TECHNOLOGY: 32.5% 31,550 Accenture Ltd. - Class A ..................... $ 1,233,605 40,000 Adobe Systems, Inc. (a) ...................... 1,662,400 3,800 Agilent Technologies, Inc. (a) ............... 130,606 198,000 Altera Corp. (a) ............................. 4,462,920 70,500 Applied Materials, Inc. ...................... 1,355,010 191,250 ASML Holding N.V. - ADR (a) .................. 5,211,562 2,800 Autodesk, Inc. (a) ........................... 115,556 149,800 Avid Technology, Inc. (a) .................... 4,980,850 80,300 Avocent Corp. (a) ............................ 2,249,203 100,000 Comverse Technology, Inc. (a) ................ 2,268,000 151,900 Corning, Inc. (a) ............................ 3,603,068 75,500 Cymer, Inc. (a) .............................. 3,058,505 276,700 EMC Corp. (a) ................................ 4,200,306 150,700 FormFactor, Inc. (a) ......................... 6,222,403 6,500 Google, Inc. - Class A (a) ................... 3,063,970 110,000 Intel Corp. .................................. 2,365,000 60,000 Intersil Corp. - Class A ..................... 1,787,400 196,000 Intuit, Inc. (a) ............................. 5,576,200 85,000 KLA-Tencor Corp. ............................. 4,721,750 48,000 L.M. Ericsson Telephone Co. - ADR ............ 1,832,160 49,000 McAfee, Inc. (a) ............................. 1,592,010 127,200 Micron Technology, Inc. (a) .................. 1,458,984 118,600 Microsoft Corp. .............................. 3,550,884 90,000 Motorola, Inc. ............................... 1,559,700 157,900 NAVTEQ Corp. (a) ............................. 5,583,344 49,670 Nortel Networks Corp. (a) .................... 1,136,450 150,000 Nuance Communications, Inc. (a) .............. 2,311,500 60,000 NVIDIA Corp. (a) ............................. 1,973,400 189,600 Oracle Corp. (a) ............................. 3,564,480 14,000 Paychex, Inc. ................................ 519,400 50,600 QUALCOMM, Inc. ............................... 2,216,280 200,000 Rambus, Inc. (a) ............................. 3,962,000 12,750 Research In Motion Ltd. (a) .................. 1,677,645 8,400 Silicon Laboratories, Inc. (a) ............... 275,604 60,000 Stratasys, Inc. (a) .......................... 2,851,800 164,800 Symantec Corp. (a) ........................... 2,900,480 173,800 Texas Instruments, Inc. ...................... 5,973,506 24,000 Trimble Navigation Ltd. (a) .................. 688,320 THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 22 SCHEDULE OF INVESTMENTS PRIMECAP ODYSSEY GROWTH FUND -------------------------------------------------------------------------------- APRIL 30, 2007 - (UNAUDITED), (CONTINUED) Shares Value -------------------------------------------------------------------------------- INFORMATION TECHNOLOGY (CONTINUED) 1,554 Verigy Ltd (a) ............................... $ 39,270 110,000 VeriSign, Inc. (a) ........................... 3,008,500 138,600 Yahoo!, Inc. (a) ............................. 3,886,344 ------------- 110,830,375 ------------- MATERIALS: 1.0% 9,500 Minerals Technologies, Inc. .................. 604,390 18,800 Monsanto Co. ................................. 1,109,012 23,800 Praxair, Inc. ................................ 1,536,290 ------------- 3,249,692 ------------- TELECOMMUNICATION SERVICES: 1.5% 69,000 Neustar, Inc. - Class A (a) .................. 1,984,440 163,750 Sprint Corp. ................................. 3,279,913 ------------- 5,264,353 ------------- TOTAL COMMON STOCKS (cost $286,271,571) ....................................... 320,766,776 ------------- Principal Amount -------------------------------------------------------------------------------- SHORT-TERM INVESTMENTS: 6.8% $ 23,239,174 Dreyfus Treasury Cash Management ............. $ 23,239,174 (cost $23,239,174) ------------- TOTAL INVESTMENTS (cost $309,510,745): 100.8% ............................... 344,005,950 Liabilities in Excess of Other Assets: (0.8)% ................. (2,880,463) ------------- TOTAL NET ASSETS: 100.0% ...................................... $ 341,125,487 ============= ------------ Percentages are stated as a percent of net assets. ADR - American Depository Receipt. CHF - Swiss Security. (a) Non Income Producing. THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 23 (GRAPHIC) SCHEDULE OF INVESTMENTS PRIMECAP ODYSSEY AGGRESSIVE GROWTH FUND -------------------------------------------------------------------- APRIL 30, 2007 - (UNAUDITED) Shares Value -------------------------------------------------------------------------------- COMMON STOCKS: 90.5% CONSUMER DISCRETIONARY: 7.5% 17,800 99 Cents Only Stores (a) ...................... $ 254,540 31,000 AC Moore Arts & Crafts, Inc. (a) .............. 636,430 53,000 Amazon.com, Inc. (a) .......................... 3,250,490 6,000 Blue Nile, Inc. (a) ........................... 282,360 6,500 California Pizza Kitchen, Inc. (a) ............ 217,165 44,800 CarMax, Inc. (a) .............................. 1,116,416 188,200 Chico's FAS, Inc. (a) ......................... 4,960,952 57,500 DIRECTV Group, Inc. (The) (a) ................. 1,370,800 142,000 Gentex Corp. .................................. 2,527,600 518,100 Quiksilver, Inc. (a) .......................... 6,890,730 ------------- 21,507,483 ------------- CONSUMER STAPLES: 2.6% 618,800 American Italian Pasta Co. - Class A (a) ...... 6,621,160 56,100 Cott Corp. (a) ................................ 908,259 ------------- 7,529,419 ------------- ENERGY: 3.6% 53,600 Arch Coal, Inc. ............................... 1,933,352 34,000 EOG Resources, Inc. ........................... 2,496,960 29,000 Hanover Compressor Co. (a) .................... 627,270 20,000 National Oilwell Varco, Inc. (a) .............. 1,697,000 1,900 Noble Corp. ................................... 159,999 4,650 Pioneer Natural Resources Co. ................. 233,430 5,350 Pogo Producing Co. ............................ 258,191 38,200 Pride International, Inc. (a) ................. 1,253,342 20,000 Transocean, Inc. (a) .......................... 1,724,000 ------------- 10,383,544 ------------- FINANCIAL: 4.4% 103,000 Advance America Cash Advance Centers, Inc. .... 1,765,420 134,000 Hanmi Financial Corp. ......................... 2,198,940 486,520 MarketAxess Holdings, Inc. (a) ................ 7,969,197 12,650 MBIA, Inc. .................................... 879,934 ------------- 12,813,491 ------------- HEALTH CARE: 23.5% 178,200 Abiomed, Inc. (a) ............................. 2,284,524 282,500 Affymetrix, Inc. (a) .......................... 7,421,275 8,000 Alcon, Inc. ................................... 1,079,440 THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 24 SCHEDULE OF INVESTMENTS PRIMECAP ODYSSEY AGGRESSIVE GROWTH FUND -------------------------------------------------------------------------------- APRIL 30, 2007 - (UNAUDITED), (CONTINUED) Shares Value -------------------------------------------------------------------------------- HEALTH CARE (CONTINUED) 30,000 Biogen Idec, Inc. (a) ......................... $ 1,416,300 20,000 BioMarin Pharmaceuticals, Inc. (a) ............ 323,200 521,700 Boston Scientific Corp. (a) ................... 8,055,048 490,000 Cardica, Inc. (a) ............................. 3,052,700 171,950 Conceptus, Inc. (a) ........................... 3,555,926 219,000 Dendreon Corp. (a) ............................ 3,291,570 450,000 Dyax Corp. (a) ................................ 2,070,000 21,600 Greatbatch, Inc. (a) .......................... 627,048 60,000 Kinetic Concepts, Inc. (a) .................... 3,000,000 412,700 Medarex, Inc. (a) ............................. 5,649,863 1,015,500 Pharmacyclics, Inc. (a) ....................... 3,330,840 267,400 Possis Medical, Inc. (a) ...................... 3,460,156 41,900 Roche Holding AG - CHF ........................ 7,916,854 252,000 Senomyx, Inc. (a) ............................. 3,394,440 75,150 Sepracor, Inc. (a) ............................ 4,034,052 90,000 SurModics, Inc. (a) ........................... 3,656,700 ------------- 67,619,936 ------------- INDUSTRIALS: 6.5% 103,000 Alaska Air Group, Inc. (a) .................... 3,048,800 185,000 AMR Corp. (a) ................................. 4,826,650 6,950 Avery Dennison Corp. .......................... 432,290 4,000 Granite Construction, Inc. .................... 240,960 116,325 JetBlue Airways Corp. (a) ..................... 1,152,781 56,400 Pall Corp. .................................... 2,365,980 286,300 Southwest Airlines Co. ........................ 4,108,405 67,000 US Airways Group, Inc. (a) .................... 2,474,980 ------------- 18,650,846 ------------- INFORMATION TECHNOLOGY: 40.6% 46,900 Adobe Systems, Inc. (a) ....................... 1,949,164 4,200 Agilent Technologies, Inc. (a) ................ 144,354 12,000 Akamai Technologies, Inc. (a) ................. 528,960 401,600 Altera Corp. (a) .............................. 9,052,064 216,350 ASML Holding N.V. - ADR (a) ................... 5,895,538 217,300 Avid Technology, Inc. (a) ..................... 7,225,225 322,000 Avocent Corp. (a) ............................. 9,019,220 156,400 Brocade Communications Systems, Inc. (a) ...... 1,528,028 28,050 Comverse Technology, Inc. (a) ................. 636,174 138,600 Cymer, Inc. (a) ............................... 5,614,686 THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 25 SCHEDULE OF INVESTMENTS PRIMECAP ODYSSEY AGGRESSIVE GROWTH FUND -------------------------------------------------------------------------------- APRIL 30, 2007 - (UNAUDITED), (CONTINUED) Shares Value -------------------------------------------------------------------------------- INFORMATION TECHNOLOGY (CONTINUED) 90,000 eBay, Inc. (a) ................................ $ 3,054,600 77,500 Emulex Corp. (a) .............................. 1,625,950 8,500 eSpeed, Inc. - Class A (a) .................... 78,710 64,000 Faro Technologies, Inc. (a) ................... 2,046,720 165,800 FormFactor, Inc. (a) .......................... 6,845,882 4,000 Google, Inc. (a) .............................. 1,885,520 3,010 Guidance Software, Inc. (a) ................... 39,160 62,400 Intermec, Inc. (a) ............................ 1,393,392 184,200 Intuit, Inc. (a) .............................. 5,240,490 116,900 KLA-Tencor Corp. .............................. 6,493,795 85,300 McAfee, Inc. (a) .............................. 2,771,397 156,500 Micron Technology, Inc. (a) ................... 1,795,055 166,700 NAVTEQ Corp. (a) .............................. 5,894,512 65,850 Nortel Networks Corp New (a) .................. 1,506,648 135,000 Nuance Communications, Inc. (a) ............... 2,080,350 59,700 NVIDIA Corp. (a) .............................. 1,963,533 442,300 Opsware, Inc. (a) ............................. 3,551,669 51,250 RADVISION Ltd. (a) ............................ 1,133,137 230,000 Rambus, Inc. (a) .............................. 4,556,300 17,100 Research In Motion Ltd. (a) ................... 2,250,018 6,000 Silicon Laboratories, Inc. (a) ................ 196,860 232,000 SonicWALL, Inc. (a) ........................... 1,893,120 107,000 Stratasys, Inc. (a) ........................... 5,085,710 123,100 Symantec Corp. (a) ............................ 2,166,560 20,900 THQ, Inc. (a) ................................. 697,433 32,000 Trimble Navigation Ltd. (a) ................... 917,760 514 Verigy Ltd (a) ................................ 12,989 100,700 VeriSign, Inc. (a) ............................ 2,754,145 186,200 Yahoo!, Inc. (a) .............................. 5,221,048 ------------- 116,745,876 ------------- MATERIALS: 0.4% 11,400 Minerals Technologies, Inc. ................... 725,268 4,800 Monsanto Co. .................................. 283,152 ------------- 1,008,420 ------------- THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 26 SCHEDULE OF INVESTMENTS PRIMECAP ODYSSEY AGGRESSIVE GROWTH FUND -------------------------------------------------------------------------------- APRIL 30, 2007 - (UNAUDITED), (CONTINUED) Shares Value -------------------------------------------------------------------------------- TELECOMMUNICATION SERVICES: 1.4% 153,000 InPhonic, Inc. (a) ............................ $ 1,459,620 92,500 Neustar, Inc. - Class A (a) ................... 2,660,300 ------------- 4,119,920 ------------- TOTAL COMMON STOCKS (cost $233,868,752) ....................................... 260,378,935 ------------- Principal Amount -------------------------------------------------------------------------------- SHORT-TERM INVESTMENTS: 10.3% $ 29,710,326 Dreyfus Treasury Cash Management .............. $ 29,710,326 (cost $29,710,326) ------------- TOTAL INVESTMENTS (cost $263,579,078): 100.8% ................................. 290,089,261 Liabilities in Excess of Other Assets: (0.8)% ................. (2,231,837) ------------- TOTAL NET ASSETS: 100.0% ...................................... $ 287,857,424 ============= Percentages are stated as a percent of net assets. ADR - American Depository Receipt. CHF - Swiss Security. (a) Non Income Producing. THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 27
(GRAPHIC) STATEMENTS OF ASSETS AND LIABILITIES PRIMECAP ODYSSEY FUNDS ------------------------------------------------------------------------------ APRIL 30, 2007 - (UNAUDITED) PRIMECAP PRIMECAP PRIMECAP ODYSSEY ODYSSEY ODYSSEY AGGRESSIVE STOCK FUND GROWTH FUND GROWTH FUND ------------ ------------ ------------ ASSETS Investments, at cost ............ $144,903,388 $309,510,745 $263,579,078 ============ ============ ============ Investments, at value ........... $162,879,680 $344,005,950 $290,089,261 Receivables: Dividends and interest ........ 171,141 205,475 150,958 Fund shares sold .............. 1,312,695 1,796,810 5,561,988 Other assets .................... 30,571 45,406 42,496 ------------ ------------ ------------ Total assets .................. 164,394,087 346,053,641 295,844,703 ------------ ------------ ------------ LIABILITIES Payable for securities purchased 461,809 4,229,480 6,943,289 Payable for fund shares redeemed 65,353 43,104 352,212 Due to advisor (Note 5) ......... 199,278 426,214 323,665 Payable to the custodian ........ -- 156,591 313,218 Accrued administration fees ..... 15,857 30,887 23,647 Other accrued expenses .......... 30,084 41,878 31,248 ------------ ------------ ------------ Total liabilities ............. 772,381 4,928,154 7,987,279 ------------ ------------ ------------ NET ASSETS ........................ $163,621,706 $341,125,487 $287,857,424 ============ ============ ============ Number of shares issued and outstanding (unlimited shares authorized, $0.01 par value) .... 11,284,961 23,259,473 19,107,602 ============ ============ ============ NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE ...... $ 14.50 $ 14.67 $ 15.07 ============ ============ ============ COMPONENTS OF NET ASSETS Paid-in capital ................... $144,487,867 $304,954,990 $261,049,994 Undistributed net investment income ........................ 370,467 395,620 -- Accumulated net realized gain on investments .................. 787,080 1,279,672 297,247 Net unrealized appreciation on investments .................. 17,976,292 34,495,205 26,510,183 ------------ ------------ ------------ Net assets ...................... $163,621,706 $341,125,487 $287,857,424 ============ ============ ============ THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 28
(GRAPHIC) STATEMENTS OF OPERATIONS PRIMECAP ODYSSEY FUNDS ------------------------------------------------------------------------------ FOR THE SIX MONTHS ENDED APRIL 30, 2007 - (UNAUDITED) PRIMECAP PRIMECAP PRIMECAP ODYSSEY ODYSSEY ODYSSEY AGGRESSIVE STOCK FUND GROWTH FUND GROWTH FUND ------------ ------------ ------------ INVESTMENT INCOME Income Dividends (net of foreign taxes withheld of $25,194, $52,386, and $12,110, respectively) ... $ 607,902 $ 1,007,686 $ 171,124 Interest and other income ..... 323,351 532,581 538,303 ------------ ------------ ------------ Total income ................. 931,253 1,540,267 709,427 ------------ ------------ ------------ Expenses Advisory fees ................... 347,589 774,810 549,625 Administration fees ............. 36,440 85,416 60,837 Transfer agent fees and expenses 20,107 35,606 30,323 Audit fees ...................... 14,450 14,927 15,377 Registration fees ............... 14,294 16,111 16,660 Insurance ....................... 13,058 29,721 13,904 Custody fees .................... 10,906 18,672 15,518 Fund accounting fees ............ 9,672 26,037 16,578 Trustee fees .................... 8,708 8,335 8,716 Legal fees ...................... 6,710 16,447 10,333 Printing and mailing ............ 4,584 5,032 8,681 Other expenses .................. 2,481 5,965 4,347 ------------ ------------ ------------ Net expenses .................. 488,999 1,037,079 750,899 ------------ ------------ ------------ NET INVESTMENT INCOME (LOSS) .. 442,254 503,188 (41,472) ------------ ------------ ------------ CHANGE IN REALIZED AND UNREALIZED GAIN ON INVESTMENTS Net realized gain on investments 827,037 1,279,899 343,524 Net unrealized appreciation on investments ................ 8,699,151 17,829,571 15,065,804 ------------ ------------ ------------ Net realized and unrealized gain on investments ......... 9,526,188 19,109,470 15,409,328 ------------ ------------ ------------ NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS .... $ 9,968,442 $ 19,612,658 $ 15,367,856 ============ ============ ============ THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 29
(GRAPHIC) STATEMENT OF CHANGES IN NET ASSETS PRIMECAP ODYSSEY STOCK FUND ---------------------------------------------------------------------------------- SIX MONTHS ENDED YEAR ENDED APRIL 30, 2007(1) OCTOBER 31, 2006 ----------------- ------------------ INCREASE (DECREASE) IN NET ASSETS FROM: OPERATIONS Net investment income ............................... $ 442,254 $ 223,921 Net realized gain on investments .................... 827,037 542,921 Net unrealized appreciation on investments .......... 8,699,151 7,586,374 ------------- ------------- NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS 9,968,442 8,353,216 ------------- ------------- DISTRIBUTIONS TO SHAREHOLDERS Net investment income ............................... (283,401) (12,410) Realized gain on investments ........................ (549,042) (5,043) ------------- ------------- TOTAL DISTRIBUTIONS TO SHAREHOLDERS ................ (832,443) (17,453) ------------- ------------- CAPITAL SHARE TRANSACTIONS Proceeds from shares sold ........................... 68,517,065 53,541,677 Proceeds from reinvestment of distribution .......... 794,364 15,443 Cost of shares redeemed ............................. (3,182,053) (3,649,793) Redemption fee proceeds ............................. 2,216 1,068 ------------- ------------- NET INCREASE FROM CAPITAL SHARE TRANSACTIONS ....... 66,131,592 49,908,395 ------------- ------------- TOTAL INCREASE IN NET ASSETS ....................... 75,267,591 58,244,158 NET ASSETS Beginning of period ................................. 88,354,115 30,109,957 ------------- ------------- END OF PERIOD (including undistributed net investment income of $370,467 and $211,614, respectively) ........................... $ 163,621,706 $ 88,354,115 ============= ============= CHANGE IN CAPITAL SHARES Shares sold ......................................... 4,901,992 4,216,481 Shares issued on reinvestment of distributions ..................................... 57,688 1,280 Shares redeemed ..................................... (227,812) (288,611) ------------- ------------- NET INCREASE IN CAPITAL SHARES ..................... 4,731,868 3,929,150 ============= ============= ----------- (1) Unaudited. THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 30
(GRAPHIC) STATEMENT OF CHANGES IN NET ASSETS PRIMECAP ODYSSEY GROWTH FUND ------------------------------------------------------------------------------------- SIX MONTHS ENDED YEAR ENDED APRIL 30, 2007(1) OCTOBER 31, 2006 ----------------- ----------------- INCREASE (DECREASE) IN NET ASSETS FROM: OPERATIONS Net investment income ................................ $ 503,188 $ 224,813 Net realized gain on investments ..................... 1,279,899 2,386,453 Net unrealized appreciation on investments ........... 17,829,571 15,060,244 ------------- ------------- NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS 19,612,658 17,671,510 ------------- ------------- DISTRIBUTIONS TO SHAREHOLDERS Net investment income ................................ (330,728) (1,837) Realized gain on investments ......................... (2,361,145) (38,375) ------------- ------------- TOTAL DISTRIBUTIONS TO SHAREHOLDERS ................ (2,691,873) (40,212) ------------- ------------- CAPITAL SHARE TRANSACTIONS Proceeds from shares sold ............................ 142,363,531 147,754,093 Proceeds from reinvestment of distribution ........... 2,668,390 39,926 Cost of shares redeemed .............................. (23,050,610) (9,787,774) Redemption fee proceeds .............................. 14,176 6,067 ------------- ------------- NET INCREASE FROM CAPITAL SHARE TRANSACTIONS ....... 121,995,487 138,012,312 ------------- ------------- TOTAL INCREASE IN NET ASSETS ....................... 138,916,272 155,643,610 NET ASSETS Beginning of period .................................. 202,209,215 46,565,605 ------------- ------------- END OF PERIOD (including undistributed net investment income of $395,620 and $223,160, respectively) ............................ $ 341,125,487 $ 202,209,215 ============= ============= CHANGE IN CAPITAL SHARES Shares sold .......................................... 9,997,488 11,461,405 Shares issued on reinvestment of distributions ...................................... 191,009 3,259 Shares redeemed ...................................... (1,619,667) (781,496) ------------- ------------- NET INCREASE IN CAPITAL SHARES ..................... 8,568,830 10,683,168 ============= ============= ----------- (1) Unaudited. THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 31
(GRAPHIC) STATEMENT OF CHANGES IN NET ASSETS PRIMECAP ODYSSEY AGGRESSIVE GROWTH FUND --------------------------------------------------------------------------------------- SIX MONTHS ENDED YEAR ENDED APRIL 30, 2007(1) OCTOBER 31, 2006 ----------------- ------------------ INCREASE (DECREASE) IN NET ASSETS FROM: OPERATIONS Net investment loss .................................. $ (41,472) $ (191,176) Net realized gain on investments ..................... 343,524 2,471,127 Net unrealized appreciation on investments ........... 15,065,804 9,718,713 ------------- ------------- NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS 15,367,856 11,998,664 ------------- ------------- DISTRIBUTIONS TO SHAREHOLDERS Net investment income ................................ -- -- Realized gain on investments ......................... (2,133,775) -- ------------- ------------- TOTAL DISTRIBUTIONS TO SHAREHOLDERS ................ (2,133,775) -- ------------- ------------- CAPITAL SHARE TRANSACTIONS Proceeds from shares sold ............................ 162,658,522 89,190,276 Proceeds from reinvestment of distribution ........... 2,101,368 -- Cost of shares redeemed .............................. (10,038,382) (4,130,146) Redemption fee proceeds .............................. 10,037 8,580 ------------- ------------- NET INCREASE FROM CAPITAL SHARE TRANSACTIONS ....... 154,731,545 85,068,710 ------------- ------------- TOTAL INCREASE IN NET ASSETS ....................... 167,965,626 97,067,374 NET ASSETS Beginning of period .................................. 119,891,798 22,824,424 ------------- ------------- END OF PERIOD ........................................ $ 287,857,424 $ 119,891,798 ============= ============= CHANGE IN CAPITAL SHARES Shares sold .......................................... 11,032,044 6,910,316 Shares issued on reinvestment of distributions ....... 145,928 -- Shares redeemed ...................................... (684,820) (327,348) ------------- ------------- NET INCREASE IN CAPITAL SHARES ..................... 10,493,152 6,582,968 ========== ========= ---------- (1) Unaudited. THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 32
(GRAPHIC) FINANCIAL HIGHLIGHTS PRIMECAP ODYSSEY STOCK FUND -------------------------------------------------------------------- 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 SEMIANNUAL REPORT. SIX MONTHS YEAR PERIOD ENDED ENDED ENDED APRIL 30, OCTOBER 31, OCTOBER 31, 2007(1) 2006 2005(5) ---------- --------- --------- Net asset value, beginning of period ... $ 13.48 $ 11.48 $ 10.00 ---------- --------- --------- INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss) ......... 0.04 0.03 (0.01) Net realized and unrealized gain on investments ...................... 1.10 1.97 1.49 ---------- --------- --------- Total from investment operations ....... 1.14 2.00 1.48 ---------- --------- --------- LESS DISTRIBUTIONS: Dividends from net investment income . (0.04) 0.00(4) 0.00 Distributions from realized gain ..... (0.08) 0.00(4) 0.00 ---------- --------- --------- Total distributions .................... (0.12) 0.00 0.00 ---------- --------- --------- Redemption fee proceeds ................ 0.00(4) 0.00(4) 0.00(4) ---------- --------- --------- Net asset value, end of period ......... $ 14.50 $ 13.48 $ 11.48 ========== ========= ========= Total return ........................... 8.49%(3) 17.48% 14.80% RATIOS/SUPPLEMENTAL DATA: Net assets, end of period (millions) . $ 163.6 $ 88.4 $ 30.1 RATIO OF EXPENSES TO AVERAGE NET ASSETS: Before fees waived and expenses absorbed or recouped ............... 0.83%(2) 0.99% 1.80% After fees waived and expenses absorbed or recouped ............... 0.83%(2) 0.99% 1.25% RATIO OF NET INVESTMENT INCOME (LOSS) TO AVERAGE NET ASSETS ......... 0.75%(2) 0.41% (0.11%) Portfolio turnover rate ................ 3.88%(3) 4.09% 12.46% ---------- (1) Unaudited. (2) Annualized. (3) Not Annualized. (4) Amount represents less than $0.01 per share. (5) Commenced operations on November 1, 2004. THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 33
(GRAPHIC) FINANCIAL HIGHLIGHTS PRIMECAP ODYSSEY GROWTH FUND -------------------------------------------------------------------- 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 SEMIANNUAL REPORT. SIX MONTHS YEAR PERIOD ENDED ENDED ENDED APRIL 30, OCTOBER 31, OCTOBER 31, 2007(1) 2006 2005(5) ---------- ---------- --------- Net asset value, beginning of period ... $ 13.76 $ 11.62 $ 10.00 ---------- ---------- --------- INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss) ......... 0.02 0.01 (0.01) Net realized and unrealized gain on investments ..................... 1.05 2.14 1.63 ---------- ---------- --------- Total from investment operations ....... 1.07 2.15 1.62 ---------- ---------- --------- LESS DISTRIBUTIONS: Dividends from net investment income . (0.02) 0.00(4) 0.00 Distributions from realized gain ..... (0.14) (0.01) 0.00 ---------- ---------- --------- Total distributions .................... (0.16) (0.01) 0.00 ---------- ---------- --------- Redemption fee proceeds ................ 0.00(4) 0.00(4) 0.00(4) ---------- ---------- --------- Net asset value, end of period ......... $ 14.67 $ 13.76 $ 11.62 ========== ========== ========= Total return ........................... 7.82%(3) 18.49% 16.20% RATIOS/SUPPLEMENTAL DATA: Net assets, end of period (millions) . $ 341.1 $ 202.2 $ 46.6 RATIO OF EXPENSES TO AVERAGE NET ASSETS: Before fees waived and expenses absorbed or recouped ............... 0.76%(2) 0.89% 1.79% After fees waived and expenses absorbed or recouped ............... 0.76%(2) 0.89% 1.25% RATIO OF NET INVESTMENT INCOME (LOSS) TO AVERAGE NET ASSETS ......... 0.37%(2) 0.19% (0.27%) Portfolio turnover rate ................ 3.95%(3) 6.87% 8.84% ----------- (1) Unaudited. (2) Annualized. (3) Not Annualized. (4) Amount represents less than $0.01 per share. (5) Commenced operations on November 1, 2004. THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 34
(GRAPHIC) FINANCIAL HIGHLIGHTS PRIMECAP ODYSSEY AGGRESSIVE GROWTH FUND -------------------------------------------------------------------- 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 SEMIANNUAL REPORT. SIX MONTHS YEAR PERIOD ENDED ENDED ENDED APRIL 30, OCTOBER 31, OCTOBER 31, 2007(1) 2006 2005(5) ---------- ---------- --------- Net asset value, beginning of period ... $ 13.92 $ 11.24 $ 10.00 ---------- ---------- --------- INCOME FROM INVESTMENT OPERATIONS: Net investment loss .................. (0.00)(4) (0.02) (0.06) Net realized and unrealized gain on investments ..................... 1.35 2.70 1.30 ---------- ---------- --------- Total from investment operations ....... 1.35 2.68 1.24 ---------- ---------- --------- LESS DISTRIBUTIONS: Distributions from realized gain ..... (0.20) 0.00 0.00 ---------- ---------- --------- Total distributions .................... (0.20) 0.00 0.00 ---------- ---------- --------- Redemption fee proceeds ................ 0.00(4) 0.00(4) 0.00(4) ---------- ---------- --------- Net asset value, end of period ......... $ 15.07 $ 13.92 $ 11.24 ========== ========== ========= Total return ........................... 9.77%(3) 23.84% 12.40% RATIOS/SUPPLEMENTAL DATA: Net assets, end of period (millions) . $ 287.9 $ 119.9 $ 22.8 RATIO OF EXPENSES TO AVERAGE NET ASSETS: Before fees waived and expenses absorbed or recouped ............... 0.79%(2) 0.99% 1.82% After fees waived and expenses absorbed or recouped ............... 0.79%(2) 0.99% 1.25% RATIO OF NET INVESTMENT LOSS TO AVERAGE NET ASSETS ................... (0.04%)(2) (0.33%) (0.82%) Portfolio turnover rate ................ 1.54%(3) 12.30% 7.38% --------- (1) Unaudited. (2) Annualized. (3) Not Annualized. (4) Amount represents less than $0.01 per share. (5) Commenced operations on November 1, 2004. THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 35
(GRAPHIC) NOTES TO FINANCIAL STATEMENTS PRIMECAP ODYSSEY FUNDS -------------------------------------------------------------------- FOR THE SIX MONTHS ENDED APRIL 30, 2007 - (UNAUDITED) (1) ORGANIZATION PRIMECAP Odyssey Funds (the "Trust") was organized on June 8, 2004 as a Delaware statutory trust and is registered as an open-end management investment company under the Investment Company Act of 1940, as amended (the "1940 Act"). The Trust is comprised of three series: PRIMECAP Odyssey Stock Fund, PRIMECAP Odyssey Growth Fund, and PRIMECAP Odyssey Aggressive Growth Fund (the "Funds"), each of which is diversified within the meaning of the 1940 Act. PRIMECAP Management Company (the "Investment Advisor") serves as investment advisor to the Funds. The Funds commenced operations on November 1, 2004. Each Fund's investment objective is to provide long-term capital appreciation. Each Fund is authorized to issue unlimited shares of beneficial interest. All shares within each Fund have equal rights with respect to voting. (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 Global Market, the NASDAQ Global Select Market, and the NASDAQ Capital Market are valued using the NASDAQ Official Closing Price, which may not necessarily represent the last sale price. Quotations of foreign securities in a foreign currency shall be valued daily in U.S. dollars on the basis of the foreign currency exchange rates prevailing at the time such valuation is determined. Foreign currency exchange rates generally shall be determined prior to the close of the New York Stock Exchange (the "NYSE"). 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 a valuation committee of the Investment Advisor in accordance with procedures approved by the Board of Trustees. In determining fair value, the Funds take into account all relevant factors and available information. Consequently, the price of the security used by the Fund to calculate its NAV may differ from quoted or published prices for the same security. Fair value pricing involves subjective judgments and there is no single standard for determining a security's fair value. As a result, different mutual funds could reasonably arrive at a different fair value for the same security. It is possible that the fair value determined for a security is materially different from the value that could be realized upon the sale of that security or from the values that other mutual funds may determine. 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. 36 NOTES TO FINANCIAL STATEMENTS PRIMECAP ODYSSEY FUNDS -------------------------------------------------------------------------------- FOR THE SIX MONTHS ENDED APRIL 30, 2007 - (UNAUDITED), (CONTINUED) 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. 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 is rounded to the nearest cent. The Funds' shares will not be priced on the days on which the NYSE is closed for trading. 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. ALLOCATION OF EXPENSES. Each Fund is charged for those expenses directly attributable to it. Expenses that are not directly attributable to a Fund are allocated among the Funds in proportion to their respective assets or another appropriate method. F. 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. Premiums and discounts on the purchase of securities are amortized/accreted 37 NOTES TO FINANCIAL STATEMENTS PRIMECAP ODYSSEY FUNDS -------------------------------------------------------------------------------- FOR THE SIX MONTHS ENDED APRIL 30, 2007 - (UNAUDITED), (CONTINUED) using the effective interest method. Accounting principles generally accepted in the United States of America require that permanent financial reporting and tax differences be reclassified in the capital accounts. 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. H. 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. Based on experience, the Funds would expect the risk of loss to be remote. (3) INVESTMENT TRANSACTIONS The cost of purchases and the proceeds from sales of securities, excluding short-term investments, for the six months ended April 30, 2007 were as follows: FUND PURCHASES SALES ---- --------- ----- PRIMECAP Odyssey Stock Fund $ 60,616,178 $ 4,167,464 PRIMECAP Odyssey Growth Fund $ 125,167,567 $ 10,043,133 PRIMECAP Odyssey Aggressive Growth Fund $ 141,376,727 $ 2,689,210 (4) 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, 2006, the components of distributable earnings/(accumulated losses) on a tax basis were as follows: 38 NOTES TO FINANCIAL STATEMENTS PRIMECAP ODYSSEY FUNDS -------------------------------------------------------------------------------- FOR THE SIX MONTHS ENDED APRIL 30, 2007 - (UNAUDITED), (CONTINUED)
PRIMECAP PRIMECAP PRIMECAP ODYSSEY ODYSSEY ODYSSEY AGGRESSIVE STOCK FUND GROWTH FUND GROWTH FUND ------------- ------------- ------------------ Cost of investments for tax purposes .......... $ 80,583,871 $ 189,860,354 $ 110,778,193 ============= ============= ============= Gross tax unrealized appreciation .............. 11,126,645 21,862,756 15,342,501 Gross tax unrealized depreciation .............. (1,889,401) (5,197,122) (3,924,309) ------------- ------------- ------------- Net tax unrealized appreciation .............. $ 9,237,244 $ 16,665,634 $ 11,418,192 ============= ============= ============= Currently distributable ordinary income ........... $ 334,889 $ 1,530,228 $ 1,122,106 Currently distributable long-term capital gain .... 425,707 1,053,850 991,579 ------------- ------------- ------------- Currently total distributable earnings .... $ 760,596 $ 2,584,078 $ 2,113,685 ------------- ------------- ------------- Total accumulated earnings .. $ 9,997,840 $ 19,249,712 $ 13,531,877 ============= ============= =============
Because tax adjustments are calculated annually, the above table reflects the components of distributable earning at the Funds' previous fiscal year end. Tax components of dividends paid during the six months ended April 30, 2007 and the year ended October 31, 2006 were as follows: APRIL 30, 2007 ------------------------------- ORDINARY LONG-TERM INCOME CAPITAL GAIN DISTRIBUTIONS DISTRIBUTIONS ------------- ------------- PRIMECAP Odyssey Stock Fund ................ $ 406,744 $ 425,699 PRIMECAP Odyssey Growth Fund ............... $1,637,945 $1,053,928 PRIMECAP Odyssey Aggressive Growth Fund .............................. $1,122,121 $1,011,654 OCTOBER 31, 2006 ------------------------------- ORDINARY LONG-TERM INCOME CAPITAL GAIN DISTRIBUTIONS DISTRIBUTIONS ------------- ------------- PRIMECAP Odyssey Stock Fund ................ $ 17,453 $ -- PRIMECAP Odyssey Growth Fund ............... $ 40,212 $ -- PRIMECAP Odyssey Aggressive Growth Fund .............................. $ -- $ -- 39 NOTES TO FINANCIAL STATEMENTS PRIMECAP ODYSSEY FUNDS -------------------------------------------------------------------------------- FOR THE SIX MONTHS ENDED APRIL 30, 2007 - (UNAUDITED), (CONTINUED) (5) INVESTMENT ADVISORY AND OTHER AGREEMENTS The Trust has entered into an investment management agreement with the Investment Advisor on behalf of each Fund. Under the terms of the agreement, each of the Funds will pay a fee equal to the following annual percentages of average net assets: ASSETS IN FOR THE FIRST 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 waive its fees and/or 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: 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. The Investment Advisor did not seek reimbursement for fees waived or expenses paid under this agreement. Mellon Bank, N.A. serves as the Funds' Custodian. U.S. Bancorp Fund Services, LLC ("USBFS") serves as the Administrator, Fund Accountant, and Transfer Agent to the Funds. Quasar Distributors, LLC, an affiliate of USBFS, serves as the Funds' Distributor. (6) ACCOUNTING PRONOUNCEMENTS In September, 2006, the Financial Accounting Standards Board ("FASB") released Financial Accounting Standard Board Statement No. 157 Fair Value Measurements ("SFAS 157"). SFAS 157 establishes a fair valuation hierarchy to increase consistency and comparability in fair value measurements and related disclosures. The fair value hierarchy prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). SFAS 157 is effective for financial statements issued for fiscal years beginning after November 15, 2007. At this time, management is evaluating the implications of SFAS 157 and its impact on the financial statements has not yet been determined. 40 NOTES TO FINANCIAL STATEMENTS PRIMECAP ODYSSEY FUNDS -------------------------------------------------------------------------------- FOR THE SIX MONTHS ENDED APRIL 30, 2007 - (UNAUDITED), (CONTINUED) On July 13, 2006, the Financial Accounting Standards Board ("FASB") released FASB Interpretation No. 48 "Accounting for Uncertainty in Income Taxes" ("FIN 48"). FIN 48 provides guidance for how uncertain tax positions should be recognized, measured, presented, and disclosed in the financial statements. FIN 48 requires the evaluation of tax positions taken or expected to be taken in the course of preparing the Fund's tax returns to determine whether the tax positions are "more-likely-than-not" of being sustained by the applicable tax authority. Tax positions not deemed to meet the more-likely-than-not threshold would be recorded as a tax benefit or expense in the current year. Adoption of FIN 48 is required for fiscal years beginning after December 15, 2006 and is to be applied to all open tax years as of the effective date. At this time, management is evaluating the implications of FIN 48 and its impact in the financial statements has not yet been determined. 41 (GRAPHIC) ADDITIONAL INFORMATION - (UNAUDITED) PRIMECAP ODYSSEY FUNDS -------------------------------------------------------------------- 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. PROXY VOTING RECORD Information regarding how the Funds voted proxies relating to the portfolio securities during the most recent 12-month period ended June 30 is available without charge, upon request, by calling toll-free 1-800-729-2307. This information is also available through the Securities and Exchange Commission's 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 1-202-551-8090. 42 (GRAPHIC) MANAGEMENT - (UNAUDITED) PRIMECAP ODYSSEY FUNDS -------------------------------------------------------------------- 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 Growth Fund and the PRIMECAP Odyssey Stock 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 51 Mitchell J. Milias 43 Theo A. Kolokotrones 37 Joel P. Fried 22 Alfred W. Mordecai 10 ------------------------------------------------------------- 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 or the Fund's web site at www.odysseyfunds.com. 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 Manager, 225 South Lake Ave., Executive Since 09/04 Chief Investment Officer, and Principal Suite 400, Pasadena, Officer PRIMECAP Management Company CA 91101-3005 (1927) ---------------------------------------------------------------------------------------------------------------- Theo A. Kolokotrones Co-Chief Indefinite; President, Director, Portfolio 225 South Lake Ave., Executive Since 09/04 Manager, and Principal Suite 400, Pasadena, Officer PRIMECAP Management Company CA 91101-3005 (1946) ----------------------------------------------------------------------------------------------------------------
43 MANAGEMENT - (UNAUDITED) PRIMECAP ODYSSEY FUNDS --------------------------------------------------------------------------------
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 Officer Since 09/04 Portfolio Manager, and Principal Suite 400, Pasadena, and Trustee PRIMECAP Management Company CA 91101-3005 (1962) ---------------------------------------------------------------------------------------------------------------- David H. Van Slooten Chief Financial Indefinite; Senior Vice President, Portfolio Manager, 225 South Lake Ave., Officer and Since 06/04 Financial Analyst, and Principal Suite 400, Pasadena, Secretary PRIMECAP Management Company CA 91101-3005 (1963) ---------------------------------------------------------------------------------------------------------------- Baltej S. Kochar Vice President and Indefinite; Vice President and Financial Analyst, 225 South Lake Ave., Chief Since 10/04 PRIMECAP Management Company (1/04 - Suite 400, Pasadena, Administrative Present); Chief Executive Officer, CA 91101-3005 Officer The Share Group, Inc. (9/01 - 1/03) (1970) ---------------------------------------------------------------------------------------------------------------- Karen Chen Vice President of Indefinite; Chief Compliance Officer, Director of 225 South Lake Ave., Compliance and Since 10/04 Compliance and Reporting, PRIMECAP Suite 400, Pasadena, Chief Compliance Management Company (10/04 - Present); CA 91101-3005 Officer and Team Lead - Legal and Compliance, Pacific (1973) AML Officer Investment Management Company (7/02 - 9/04 and 11/97 - 7/99); Consultant, Trinity Consulting (9/01 - 2/02) ----------------------------------------------------------------------------------------------------------------
44 MANAGEMENT - (UNAUDITED) PRIMECAP ODYSSEY FUNDS -------------------------------------------------------------------------------- "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 PORTFOLIOS TERM OF IN FUND OTHER POSITION(S) OFFICE; COMPLEX DIRECTOR- NAME, ADDRESS HELD LENGTH OF PRINCIPAL OCCUPATION(S) OVERSEEN BY SHIPS HELD (YEAR OF BIRTH) WITH TRUST TIME SERVED DURING PAST 5 YEARS TRUSTEE(1) BY TRUSTEE ------------------------------------------------------------------------------------------------------------------- Benjamin F. Hammon Chairman of Indefinite; Retired; Director, 3 None 225 South Lake Ave., the Board Since 09/04 Institutional Equity Sales, Suite 400, Pasadena, CA and Trustee Salomon Smith Barney 91101-3005 Inc. (1997-1998) (1935) ------------------------------------------------------------------------------------------------------------------- Wayne H. Smith Chairman of Indefinite; Retired; President, Wayne 3 None 225 South Lake Ave., the Audit Since 09/04 H. Smith Consulting, Inc. Suite 400, Pasadena, Committee (2002-2007); Vice CA 91101-3005 and Trustee President, Financial (1941) Services, Avery Dennison Corporation (2001-2002); Vice President, Financial Services, and Treasurer, Avery Dennison Corporation (1999-2001) ------------------------------------------------------------------------------------------------------------------- (1) Fund Complex includes any funds, series of funds, or trusts that share the same advisor or that hold themselves out to investors as related companies.
45 MANAGEMENT - (UNAUDITED) PRIMECAP ODYSSEY FUNDS -------------------------------------------------------------------------------- "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 PORTFOLIOS TERM OF IN FUND OTHER POSITION(S) OFFICE; COMPLEX DIRECTOR- NAME, ADDRESS HELD LENGTH OF PRINCIPAL OCCUPATION(S) OVERSEEN BY SHIPS HELD (YEAR OF BIRTH) WITH TRUST TIME SERVED DURING PAST 5 YEARS TRUSTEE(2) BY TRUSTEE ------------------------------------------------------------------------------------------------------------------- Joel P. Fried(1) Co-Chief Indefinite; Executive Vice President, 3 None 225 South Lake Ave., Executive Since 09/04 Director, Portfolio Suite 400, Pasadena, Officer and Manager, and Principal CA 91101-3005 Trustee PRIMECAP (1962) Management Company (1) Mr. Fried is an "interested person" of the Trust, as defined by the 1940 Act, because of his employ- ment with PRIMECAP Management Company, the investment advisor to the Trust. (2) Fund Complex includes any funds, series of funds, or trusts that share the same advisor or that hold themselves out to investors as related companies.
46 This page intentionally left blank. This page intentionally left blank. Investment Advisor PRIMECAP MANAGEMENT COMPANY 225 South Lake Avenue, Suite 400 Pasadena, California 91101 o Distributor QUASAR DISTRIBUTORS, LLC 615 East Michigan Street, 4th 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 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. PRIMECAP, PRIMECAP ODYSSEY, AND THE PRIMECAP ODYSSEY LOGO ARE TRADEMARKS OF PRIMECAP MANAGEMENT COMPANY. ITEM 2. CODE OF ETHICS. Not applicable for semi-annual reports. ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT. Not applicable for semi-annual reports. ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES. Not applicable for semi-annual reports. ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS. Not applicable to registrants who are not listed issuers (as defined in Rule 10A-3 under the Securities Exchange Act of 1934). 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 Co-Chief Executive Officers and Chief Financial Officer have reviewed the Registrant's disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940 (the "Act")) as of a date within 90 days of the filing of this report, as required by Rule 30a-3(b) under the Act and Rules 13a-15(b) or 15d-15(b) under the Securities Exchange Act of 1934. Based on their review, such officers have concluded that the disclosure controls and procedures are effective in ensuring that information required to be disclosed in this report is appropriately recorded, processed, summarized and reported and made known to them by others within the Registrant and by the Registrant's service provider. (b) There were no 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. Not applicable. (2) CERTIFICATIONS PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002. Filed herewith. (3) ANY WRITTEN SOLICITATION TO PURCHASE SECURITIES UNDER RULE 23C-1 UNDER THE ACT SENT OR GIVEN DURING THE PERIOD COVERED BY THE REPORT BY OR ON BEHALF OF THE REGISTRANT TO 10 OR MORE PERSONS. Not applicable to open-end investment companies. (B) CERTIFICATION PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002. Furnished herewith. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. PRIMECAP Odyssey Funds By /s/ Joel P. Fried -------------------------------------------------------------- Joel P. Fried, Co-Chief Executive Officer Date 6/21/2007 -------------------------------------------------------------- By /s/ Howard B. Schow ------------------------------------------------------------- Howard B. Schow, Co-Chief Executive Officer Date 6/21/2007 -------------------------------------------------------------- By /s/ Theo A. Kolokotrones -------------------------------------------------------------- Theo A. Kolokotrones, Co-Chief Executive Officer Date 6/21/2007 -------------------------------------------------------------- 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 /s/ Joel P. Fried -------------------------------------------------------------- Joel P. Fried, Co-Chief Executive Officer Date 6/21/2007 -------------------------------------------------------------- By /s/ Howard B. Schow -------------------------------------------------------------- Howard B. Schow, Co-Chief Executive Officer Date 6/21/2007 -------------------------------------------------------------- By /s/ Theo A. Kolokotrones -------------------------------------------------------------- Theo A. Kolokotrones, Co-Chief Executive Officer Date 6/21/2007 -------------------------------------------------------------- By /s/ David H. Van Slooten ------------------------------------------------------------- David H. Van Slooten, Chief Financial Officer Date 6/21/2007 --------------------------------------------------------------