N-CSRS 1 t305956.txt PRIMECAP ODYSSEY As filed with the Securities and Exchange Commission on June 30, 2010 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 Date of reporting period: APRIL 30, 2010 ITEM 1. REPORTS TO STOCKHOLDERS. SEMIANNUAL REPORT FOR THE SIX MONTHS ENDED APRIL 30, 2010 LOGO PRIMECAP(R) ---------------ODYSSEY FUNDS PRIMECAP ODYSSEY STOCK FUND PRIMECAP ODYSSEY GROWTH FUND PRIMECAP ODYSSEY AGGRESSIVE GROWTH FUND 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 ........................................ 27 Statements of Operations .................................................... 28 Statement of Changes in Net Assets .......................................... 29 PRIMECAP Odyssey Stock Fund ......................................... 29 PRIMECAP Odyssey Growth Fund ........................................ 30 PRIMECAP Odyssey Aggressive Growth Fund ............................. 31 Financial Highlights ........................................................ 32 PRIMECAP Odyssey Stock Fund ......................................... 32 PRIMECAP Odyssey Growth Fund ........................................ 33 PRIMECAP Odyssey Aggressive Growth Fund ............................. 34 Notes to Financial Statements ............................................... 35 Additional Information ...................................................... 43 Management .................................................................. 44 1 LETTER TO SHAREHOLDERS PRIMECAP ODYSSEY FUNDS ---------------------------------------------------------------- DEAR FELLOW SHAREHOLDERS, For the six months ended April 30, 2010, each of the three PRIMECAP Odyssey Funds outperformed the unmanaged Standard & Poor's 500 Composite Stock Price Index (S&P 500). The PRIMECAP Odyssey Stock Fund, PRIMECAP Odyssey Growth Fund, and PRIMECAP Odyssey Aggressive Growth Fund produced total returns of +17.18%, +19.81%, and +28.63%, respectively. By comparison, the unmanaged S&P 500 produced a total return of +15.66% for the period. During the six months ended April 30, 2010, the stock market continued its recovery from the financial crisis that began in mid-2007. The S&P 500 was up almost 80% from its low point in March 2009, but it was still down almost 20% from its peak in October 2007. The two best performing sectors in the S&P 500 during the six months ended April 30, 2010 were the consumer discretionary and industrial sectors, which benefited from the improvement in retail sales and the rebuilding of inventory levels as the economy recovered from the recession that began in late 2007. The PRIMECAP Odyssey Funds are focused on investing in high quality companies that, in our judgment, offer better growth prospects than are anticipated by the market. We remain overweight in the health care sector and underweight in the financials, consumer staples, and energy sectors in each of the three PRIMECAP Odyssey Funds. We are also overweight in the information technology sector in both the PRIMECAP Odyssey Growth Fund and PRIMECAP Odyssey Aggressive Growth Fund. During the first six months of this fiscal year, relative returns in the PRIMECAP Odyssey Stock Fund benefited from favorable stock selection and an overweight position in the industrials sector. Stock selection in the health care and information technology sectors were the largest contributors to relative returns in the PRIMECAP Odyssey Growth Fund and PRIMECAP Odyssey Aggressive Growth Fund. Each of the PRIMECAP Odyssey Funds also benefited from underweight positions in the consumer staples and energy sectors. A more detailed discussion of the results of each PRIMECAP Odyssey Fund follows. 2 LETTER TO SHAREHOLDERS PRIMECAP ODYSSEY FUNDS -------------------------------------------------------------------------------- CONTINUED PRIMECAP ODYSSEY STOCK FUND From November 1, 2009 to April 30, 2010, the Stock Fund's total return of +17.18% exceeded the S&P 500's total return of +15.66%. On a relative basis, our overweight position and stock selection in the industrials sector and our underweight position in the energy and consumer staples sectors benefited the fund. This benefit was partially offset by our overweight position and poor stock selection in the health care sector. Five industrial companies were among the top 10 contributors to fund results, including Boeing, Southwest Airlines, and Rockwell Automation. Boeing (+53.9%) appears well-positioned to benefit from the expected growth in global air travel, particularly in the emerging markets. The company is in the process of introducing its new "787 Dreamliner" aircraft, which is more fuel-efficient than current passenger planes. Earnings at Southwest Airlines (+57.0%) have rebounded as air travel volumes recovered. Rockwell Automation (+50.1%), a provider of industrial automation control and information solutions, has benefited from the recovery in industrial production. Other top contributors included Whirlpool (+53.8%), Dress Barn (+53.1%), and Medtronic (+23.5%). On the negative side were Boston Scientific, Symantec, and GlaxoSmithKline. Boston Scientific (-15.3%) earnings suffered from a 30-day recall of its implantable cardiac defibrillators; the company had failed to receive approval from the Food and Drug Administration for changes in its manufacturing process. Symantec, a provider of security and storage software solutions, declined 4.6%. GlaxoSmithKline, a pharmaceutical company, was down 6.9%. 3 LETTER TO SHAREHOLDERS PRIMECAP ODYSSEY FUNDS -------------------------------------------------------------------------------- CONTINUED The top 10 holdings, which collectively represent 27.3% of the portfolio at the period end, are listed below: PRIMECAP ODYSSEY STOCK FUND ENDING % OF TOP 10 HOLDINGS AS OF 4/30/10 TOTAL PORTFOLIO* -------------------------------------------------------------- Eli Lilly & Co. 3.7 Roche Holding AG 3.6 Amgen Inc. 3.2 Marsh & McLennan Cos. 2.9 Medtronic Inc. 2.7 Whirlpool Corp. 2.5 Boeing Co. 2.4 Novartis AG (ADS) 2.3 Waters Corp. 2.1 Honeywell International Inc. 2.0 -------------------------------------------------------------- TOTAL % OF PORTFOLIO 27.3% -------------------------------------------------------------- * The percentage is calculated by using the ending market value of the security divided by the total investments of the fund. The total percentage of portfolio may not sum due to rounding. PRIMECAP ODYSSEY GROWTH FUND From November 1, 2009 to April 30, 2010, the Growth Fund's total return was +19.81% compared with the S&P 500's total return of +15.66% and the Russell 1000 Growth Index's total return of +15.79%. Positive stock selection in the health care and information technology sectors was a major contributor to fund returns. The fund also benefited from its underweight position in the consumer staples and energy sectors. Favorable stock selection in the energy sector further helped results. Three of the top five contributors were in the health care sector: Dendreon (+113.9%), Cepheid (+50.7%), and Immunogen (+24.2%). Dendreon received approval from the Food and Drug Administration for Provenge, a new therapy for certain men with advanced prostate cancer that uses their own immune systems to fight the disease. Immunogen is a biotechnology company that is focused on developing targeted anti-cancer therapies using its expertise in monoclonal antibodies. Southwest Airlines (+57.0%) and LED lighting manufacturer Cree Inc. (+73.9%) were the other top five contributors. 4 LETTER TO SHAREHOLDERS PRIMECAP ODYSSEY FUNDS -------------------------------------------------------------------------------- CONTINUED Although our selections in the health care sector made a positive contribution to returns for the six-month period, certain health care stocks were among the largest detractors from the fund's results, including Boston Scientific (-15.3%), SurModics (-27.4%), and Charles River Laboratories (-8.3%). FormFactor (-11.7%) and Motorola (-17.5%) also hurt the fund's returns. The top 10 holdings, which collectively represent 27.3% of the portfolio at the period end, are listed below: PRIMECAP ODYSSEY GROWTH FUND ENDING % OF TOP 10 HOLDINGS AS OF 4/30/10 TOTAL PORTFOLIO* -------------------------------------------------------------- Immunogen Inc. 4.0 Amgen Inc. 3.6 Roche Holding AG 3.3 Conceptus Inc. 2.7 Eli Lilly & Co. 2.7 Electronic Arts Inc. 2.5 Dendreon Corp. 2.3 Cepheid 2.2 Altera Corp. 2.1 Medtronic Inc. 1.9 -------------------------------------------------------------- Total % of Portfolio 27.3% -------------------------------------------------------------- * The percentage is calculated by using the ending market value of the security divided by the total investments of the fund. The total percentage of portfolio may not sum due to rounding. PRIMECAP ODYSSEY AGGRESSIVE GROWTH FUND From November 1, 2009 to April 30, 2010, the Aggressive Growth Fund's total return was +28.63%. This compares favorably to the S&P 500's total return of +15.66% and the Russell Midcap Growth Index's total return of +23.23%. Much of the outperformance in the Aggressive Growth Fund came from the fund's positions in the health care sector. Biotechnology companies Dendreon (+113.9%) and Pharmacyclics (+289.2%) along with medical diagnostic tool companies Cepheid (+50.7%) and OraSure Technologies (+94.5%) were among the top five contributors to returns. The other top five contributor was American Italian Pasta (+44.8%), which was the fund's largest position at the beginning of the period. The company, which is the largest producer of private label dried pasta in the country, has continued to experience strong profit growth. 5 LETTER TO SHAREHOLDERS PRIMECAP ODYSSEY FUNDS -------------------------------------------------------------------------------- CONTINUED The fund's overweight position in the information technology sector and underweight position in the financials sector also helped results. Favorable stock selection in the consumer discretionary, information technology, and financials sectors also contributed positively to fund returns. On the negative side, an underweight position in consumer discretionary stocks hurt the fund's results. Boston Scientific (-15.3%), SurModics (-27.4%), and Monsanto (-5.5%) were among the biggest detractors from the fund's returns. Monsanto, the leading producer of agricultural seeds and herbicides, has seen earnings growth slow due to lower prices for its Roundup herbicide as well as slower adoption of its next-generation seed technologies. The top 10 holdings, which collectively represent 32.1% of the portfolio at the period end, are listed below: PRIMECAP ODYSSEY AGGRESSIVE GROWTH FUND ENDING % OF TOP 10 HOLDINGS AS OF 4/30/10 TOTAL PORTFOLIO* -------------------------------------------------------------- Dendreon Corp. 4.6 Immunogen 4.5 American Italian Pasta Co. (Cl A) 4.5 Cepheid 3.7 Roche Holding AG 3.6 Conceptus Inc. 3.1 Electronic Arts Inc. 2.6 Altera Corp. 1.9 BioMarin Pharmaceutical Inc. 1.9 Dyax Corp. 1.8 -------------------------------------------------------------- Total % of Portfolio 32.1% -------------------------------------------------------------- * The percentage is calculated by using the ending market value of the security divided by the total investments of the fund. The total percentage of portfolio may not sum due to rounding. 6 LETTER TO SHAREHOLDERS PRIMECAP ODYSSEY FUNDS -------------------------------------------------------------------------------- CONTINUED OUTLOOK We are mixed in our outlook after the strong recovery in the stock market over the past year. While economic activity has improved and the financial markets have stabilized significantly from a year ago, we are concerned that current valuations in the stock market may be anticipating a stronger recovery than is likely to occur. Much of the improvement in economic activity has been due to a rebuilding of inventory levels and a rebound in consumer spending from its nadir in the midst of the worst financial crisis since the Great Depression. The recovery has been further aided by various government programs to stimulate the purchase of homes and automobiles. We fear that some of these actions are only pulling forward future demand into the current period. Given the current high rate of unemployment, flat home prices after major declines, anemic income growth, and the likelihood of higher tax rates, it is uncertain that the current rate of growth in the economy is sustainable. Similarly, the stabilization of the financial markets resulted from dramatic and unprecedented actions taken by the government along with the Federal Reserve's near-zero interest rate policy. It is not clear to us that the rate of improvement in the financial markets will be sustained once the numerous government programs end and the Federal Reserve raises short-term interest rates. We are also concerned about the fiscal and monetary policies of governments both abroad and in the United States. The recent problems in Greece and other countries in Europe demonstrate the challenges of funding increases in government spending that exceeds the growth rate of the broader economy. At home, many state and municipal governments continue to face fiscal crises due to their inability to fund their budgets. The federal government continues to embark on broad programs that intervene with not only the financial markets but also the broader economy at large. The extensive spending required to pay for these programs may lead to a rise in inflation and a weaker U.S. dollar in the future. Despite these concerns about the economic environment, we believe there are attractive investment opportunities in the equities market. Corporate earnings have rebounded strongly from 2008-2009 levels, and many companies appear poised to continue to grow earnings rapidly after paring expenses and strengthening their balance sheets over the past few years. Also, despite the current issues in Europe, we are also positive about the long-term impact of globalization and the continued development of emerging markets, which we believe will increase the size of global markets for goods and services. Finally, we remain enthusiastic about the potential for innovation. We believe 7 LETTER TO SHAREHOLDERS PRIMECAP ODYSSEY FUNDS -------------------------------------------------------------------------------- CONTINUED that companies that develop new technologies or intellectual capital that increase productivity and improve the longevity and quality of life can grow sales and profits more rapidly than anticipated by the market. In particular, we remain positive about our extensive investments in the health care and information technology sectors. These two sectors also represent areas where the United States has a strong competitive advantage relative to the rest of the world. We will continue to work diligently to identify the companies that we believe will benefit more than expected from innovation, globalization, and restructuring. Sincerely, PRIMECAP Management Company -------------------------------------------------------------------------------- THE FUNDS INVEST IN SMALLER COMPANIES, WHICH INVOLVE ADDITIONAL RISKS SUCH AS LIMITED LIQUIDITY AND GREATER VOLATILITY. ALL FUNDS MAY INVEST IN FOREIGN SECURITIES, WHICH INVOLVE 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. PAST PERFORMANCE IS NOT A GUARANTEE OF FUTURE RESULTS. 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. Current and future portfolio holdings are subject to risk. The STANDARD & POOR'S 500 COMPOSITE STOCK PRICE 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 measures the performance of those Russell Midcap companies with higher price-to-book ratios and higher forecasted growth values. These indices do not incur expenses and are not available for investment. THE INFORMATION PROVIDED HEREIN REPRESENTS THE OPINIONS OF PRIMECAP MANAGEMENT COMPANY AND IS NOT INTENDED TO BE A FORECAST OF FUTURE EVENTS, A GUARANTEE OF FUTURE RESULTS, NOR INVESTMENT ADVICE. (5/10) 8 PERFORMANCE GRAPH 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, 2010, 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. CHART OMITTED PRIMECAP ODYSSEY S&P 500 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 7/31/07 14,673 13,539 10/31/07 15,359 14,483 1/31/08 13,769 12,955 4/30/08 13,799 13,088 7/31/08 13,544 12,038 10/31/08 10,332 9,256 1/31/09 9,116 7,950 4/30/09 10,095 8,465 7/31/09 11,496 9,633 10/31/09 12,042 10,161 1/31/10 12,793 10,583 4/30/10 14,110 11,752 TOTAL RETURN PERIOD ENDED APRIL 30, 2010 -------------------------------- ANNUALIZED SINCE INCEPTION 1 YEAR 5 YEAR (11/01/04) ------- ------- -------------- PRIMECAP Odyssey Stock Fund 39.78% 6.11% 6.47% S&P 500 Index* 38.84% 2.63% 2.99% 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 GRAPH 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, 2010, 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. CHART OMITTED PRIMECAP ODYSSEY S&P 500 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 7/31/07 14,764 13,539 10/31/07 15,898 14,483 1/31/08 13,807 12,955 4/30/08 13,919 13,088 7/31/08 13,359 12,038 10/31/08 10,246 9,256 1/31/09 9,200 7,950 4/30/09 10,262 8,465 7/31/09 12,039 9,633 10/31/09 12,437 10,161 1/31/10 13,274 10,583 4/30/10 14,901 11,752 TOTAL RETURN PERIOD ENDED APRIL 30, 2010 -------------------------------- ANNUALIZED SINCE INCEPTION 1 YEAR 5 YEAR (11/01/04) ------- ------- -------------- PRIMECAP Odyssey Growth Fund 45.20% 7.35% 7.53% S&P 500 Index* 38.84% 2.63% 2.99% 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 GRAPH 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, 2010, 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. CHART OMITTED PRIMECAP ODYSSEY S&P 500 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 7/31/07 14,915 13,539 10/31/07 16,253 14,483 1/31/08 13,205 12,955 4/30/08 13,134 13,088 7/31/08 12,685 12,038 10/31/08 9,654 9,256 11/30/08 8,623 8,591 12/31/08 9,491 8,682 1/31/09 9,174 7,950 4/30/09 10,113 8,465 7/31/09 12,276 9,633 10/31/09 12,583 10,161 1/31/10 13,838 10,583 4/30/10 16,185 11,752 TOTAL RETURN PERIOD ENDED APRIL 30, 2010 -------------------------------- ANNUALIZED SINCE INCEPTION 1 YEAR 5 YEAR (11/01/04) ------- ------- -------------- PRIMECAP Odyssey Aggressive Growth Fund 60.04% 10.35% 9.16% S&P 500 Index* 38.84% 2.63% 2.99% 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 EXPENSE EXAMPLE PRIMECAP ODYSSEY FUNDS ---------------------------------------------------------------- (UNAUDITED) As a shareholder of one or more of the funds, you incur ongoing costs, including management fees and other fund expenses. This expense 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 expense example is based on an investment of $1,000 invested for a six month period beginning October 31, 2009 and held through April 30, 2010. ACTUAL EXPENSES The information in the table adjacent to 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 column 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 PRIMECAP ODYSSEY FUNDS -------------------------------------------------------------------------------- (UNAUDITED) - CONTINUED EXPENSES EXPENSE PAID RATIO DURING DURING BEGINNING ENDING PERIOD* PERIOD* ACCOUNT ACCOUNT (10/31/09 (10/31/09 VALUE VALUE TO TO (10/31/09) (04/30/10) 04/30/10) 04/30/10) -------------------------------------------------------------------------------- PRIMECAP ODYSSEY STOCK FUND Actual Performance $1,000.00 $1,171.80 $3.87 0.72% Hypothetical Performance (5% return before expenses) $1,000.00 $1,021.23 $3.60 0.72% PRIMECAP ODYSSEY GROWTH FUND Actual Performance $1,000.00 $1,198.10 $3.67 0.67% Hypothetical Performance (5% return before expenses) $1,000.00 $1,021.45 $3.38 0.67% PRIMECAP ODYSSEY AGGRESSIVE GROWTH FUND Actual Performance $1,000.00 $1,286.30 $4.03 0.71% Hypothetical Performance (5% return before expenses) $1,000.00 $1,021.27 $3.56 0.71% -------------------------------------------------------------------------------- ------------- * Expenses are equal to a fund's 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 SECTOR BREAKDOWN PRIMECAP ODYSSEY FUNDS ---------------------------------------------------------------- PRIMECAP ODYSSEY STOCK FUND ---------------------------------------------------------------- Consumer Discretionary 13.1% Consumer Staples 1.5% Energy 5.5% Financials 5.4% Health Care 22.6% Industrials 15.0% Information Technology 18.4% Materials 7.4% Telecommunication Services 0.1% Short Term Investments and Other Net Assets 11.0% ---------------------------------------------------------------- TOTAL 100.0% ---------------------------------------------------------------- PRIMECAP ODYSSEY GROWTH FUND ---------------------------------------------------------------- Consumer Discretionary 7.4% Consumer Staples 0.1% Energy 5.1% Financials 2.9% Health Care 37.0% Industrials 8.5% Information Technology 27.4% Materials 2.5% Telecommunication Services 0.1% Short Term Investments and Other Net Assets 9.0% ---------------------------------------------------------------- TOTAL 100.0% ---------------------------------------------------------------- The tables above list sector allocations as a percentage of each fund's total investments as of April 30, 2010. 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 -------------------------------------------------------------------------------- CONTINUED PRIMECAP Odyssey Aggressive Growth Fund ---------------------------------------------------------------- Consumer Discretionary 3.6% Consumer Staples 4.7% Energy 2.9% Financials 1.5% Health Care 40.2% Industrials 8.4% Information Technology 27.0% Materials 1.7% Telecommunication Services 0.2% Short Term Investments and Other Net Assets 9.8% ---------------------------------------------------------------- Total 100.0% ---------------------------------------------------------------- The table above lists sector allocations as a percentage of the fund's total investments as of April 30, 2010. 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
SCHEDULE OF INVESTMENTS PRIMECAP ODYSSEY STOCK FUND ---------------------------------------------------------------- APRIL 30, 2010 (UNAUDITED) Shares Value -------------------------------------------------------------------------------- COMMON STOCKS - 89.0% CONSUMER DISCRETIONARY - 13.1% 30,500 Amazon.com, Inc. (a) ................................... $ 4,180,330 70,700 Bed Bath & Beyond, Inc. (a) ............................ 3,249,372 171,900 CarMax, Inc. (a) ....................................... 4,223,583 145,400 Collective Brands, Inc. (a) ............................ 3,409,630 64,500 DIRECTV Group, Inc. (The) (a) .......................... 2,336,835 199,300 Dress Barn, Inc. (a) ................................... 5,516,624 32,200 Kohl's Corp. (a) ....................................... 1,770,678 72,200 Mattel, Inc............................................. 1,664,210 8,100 Men's Wearhouse, Inc.................................... 191,403 59,900 Sony Corp. - ADR ....................................... 2,049,778 61,000 TJX Cos, Inc............................................ 2,826,740 55,000 Walt Disney Co. (The) .................................. 2,026,200 71,400 Whirlpool Corp.......................................... 7,773,318 ----------- 41,218,701 ----------- CONSUMER STAPLES - 1.5% 27,000 Kellogg Co.............................................. 1,483,380 25,000 PepsiCo, Inc............................................ 1,630,500 24,000 Procter & Gamble Co..................................... 1,491,840 ----------- 4,605,720 ----------- ENERGY - 5.5% 40,000 Cenovus Energy, Inc..................................... 1,172,000 46,000 EnCana Corp............................................. 1,521,220 43,500 EOG Resources, Inc...................................... 4,877,220 44,000 National Oilwell Varco, Inc............................. 1,937,320 20,000 Noble Energy, Inc....................................... 1,528,000 60,000 Range Resources Corp.................................... 2,865,600 49,134 Schlumberger Ltd........................................ 3,509,150 ----------- 17,410,510 ----------- FINANCIALS - 5.4% 45,000 Berkshire Hathaway, Inc. - Class B (a) ................. 3,465,000 54,000 Chubb Corp.............................................. 2,854,980 111,100 Discover Financial Services ............................ 1,717,606 371,750 Marsh & McLennan Cos, Inc............................... 9,003,785 ----------- 17,041,371 ----------- THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 16 SCHEDULE OF INVESTMENTS PRIMECAP ODYSSEY STOCK FUND -------------------------------------------------------------------------------- APRIL 30, 2010 (UNAUDITED) -- CONTINUED Shares Value -------------------------------------------------------------------------------- HEALTH CARE - 22.6% 75,000 Affymetrix, Inc. (a) ................................... $ 520,500 176,600 Amgen, Inc. (a) ........................................ 10,129,776 109,800 Biogen Idec, Inc. (a) .................................. 5,846,850 367,700 Boston Scientific Corp. (a) ............................ 2,529,776 330,100 Eli Lilly & Co.......................................... 11,543,597 84,000 GlaxoSmithKline PLC - ADR .............................. 3,132,360 46,000 Johnson & Johnson ...................................... 2,957,800 197,700 Medtronic, Inc.......................................... 8,637,513 140,950 Novartis AG - ADR ...................................... 7,167,308 17,000 Pfizer, Inc............................................. 284,240 71,616 Roche Holding AG - CHF ................................. 11,319,873 16,500 Sanofi Aventis - ADR ................................... 562,815 93,400 Waters Corp. (a) ....................................... 6,723,866 ----------- 71,356,274 ----------- INDUSTRIALS - 15.0% 23,800 Alaska Air Group, Inc. (a) ............................. 985,558 50,000 Alexander & Baldwin, Inc................................ 1,779,000 253,000 AMR Corp. (a) .......................................... 1,867,140 45,000 Arkansas Best Corp...................................... 1,370,700 103,800 Boeing Co............................................... 7,518,234 23,500 Caterpillar, Inc........................................ 1,600,115 7,500 Deere & Co.............................................. 448,650 16,000 FedEx Corp.............................................. 1,440,160 133,300 Honeywell International, Inc............................ 6,327,751 23,500 JetBlue Airways Corp. (a) .............................. 131,365 140,000 McDermott International, Inc. (a) ...................... 3,837,400 6,200 Norfolk Southern Corp................................... 367,846 38,800 Pall Corp............................................... 1,512,812 55,300 Ritchie Bros. Auctioneers, Inc.......................... 1,294,020 74,000 Rockwell Automation, Inc................................ 4,493,280 427,400 Southwest Airlines Co................................... 5,633,132 1,900 Thomas & Betts Corp. (a) ............................... 79,686 24,000 Union Pacific Corp...................................... 1,815,840 68,400 United Parcel Service, Inc.............................. 4,729,176 ---------- 47,231,865 ----------- THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 17 SCHEDULE OF INVESTMENTS PRIMECAP ODYSSEY STOCK FUND -------------------------------------------------------------------------------- APRIL 30, 2010 (UNAUDITED) -- CONTINUED Shares Value -------------------------------------------------------------------------------- INFORMATION TECHNOLOGY - 18.4% 20,550 Accenture Ltd. - Class A ............................... $ 896,802 180,000 Altera Corp............................................. 4,564,800 131,700 Applied Materials, Inc.................................. 1,814,826 40,321 ASML Holding N.V. - ADR ................................ 1,316,884 50,600 Corning, Inc............................................ 974,050 265,100 Electronic Arts, Inc. (a) .............................. 5,134,987 246,800 EMC Corp. (a) .......................................... 4,691,668 1,000 Google, Inc. (a) ....................................... 525,440 41,500 Hewlett-Packard Co...................................... 2,156,755 101,500 Intel Corp.............................................. 2,317,245 49,400 Intersil Corp........................................... 735,072 66,000 Intuit, Inc. (a) ....................................... 2,386,560 33,100 KLA-Tencor Corp......................................... 1,127,386 460,000 L.M. Ericsson Telephone Co. - ADR ...................... 5,290,000 156,100 Microsoft Corp.......................................... 4,767,294 112,900 Motorola, Inc........................................... 798,203 54,800 NeuStar, Inc. - Class A (a) ............................ 1,340,956 142,000 NVIDIA Corp. (a) ....................................... 2,232,240 88,500 Oracle Corp............................................. 2,286,840 22,200 Research In Motion Ltd. (a) ............................ 1,580,418 205,700 Symantec Corp. (a) ..................................... 3,449,589 235,500 Texas Instruments, Inc.................................. 6,125,355 47,400 Xilinx, Inc............................................. 1,221,972 24,800 Yahoo!, Inc. (a) ....................................... 409,944 ----------- 58,145,286 ----------- MATERIALS - 7.4% 9,725 Domtar Corp. (a) ....................................... 688,919 24,300 Freeport-McMoRan Copper & Gold, Inc..................... 1,835,379 77,200 Monsanto Co............................................. 4,868,232 40,000 Newmont Mining Corp..................................... 2,243,200 21,400 Potash Corp. of Saskatchewan ........................... 2,364,700 20,000 Schweitzer-Mauduit International, Inc................... 1,138,400 109,993 Vulcan Materials Co..................................... 6,300,399 80,000 Weyerhauser Co.......................................... 3,961,600 ----------- 23,400,829 ----------- THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 18 SCHEDULE OF INVESTMENTS PRIMECAP ODYSSEY STOCK FUND -------------------------------------------------------------------------------- APRIL 30, 2010 (UNAUDITED) -- CONTINUED Shares Value -------------------------------------------------------------------------------- TELECOMMUNICATION SERVICES - 0.1% 115,750 Sprint Nextel Corp. (a) ............................. $ 491,938 ----------- TOTAL COMMON STOCKS (Cost $244,471,558) ........................................... $ 280,902,494 ------------- Principal Amount -------------------------------------------------------------------------------- SHORT TERM INVESTMENTS - 10.9% $34,488,413 Dreyfus Treasury Prime Cash Management ........... $ 34,488,413 ------------ TOTAL SHORT TERM INVESTMENTS (Cost $34,488,413) ............................................ 34,488,413 ------------ TOTAL INVESTMENTS (Cost $278,959,971) - 99.9% ................................... 315,390,907 Other Assets in Excess of Liabilities - 0.1% .................... 244,838 ------------- TOTAL NET ASSETS: 100.0% ........................................ $ 315,635,745 ============= ---------------- 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 SCHEDULE OF INVESTMENTS PRIMECAP ODYSSEY GROWTH FUND -------------------------------------------------------------------------------- APRIL 30, 2010 (UNAUDITED) Shares Value -------------------------------------------------------------------------------- COMMON STOCKS - 91.0% CONSUMER DISCRETIONARY - 7.4% 250,000 99 Cents Only Stores (a) ............................ $ 3,880,000 77,900 Amazon.com, Inc. (a) ................................ 10,676,974 213,600 Bed Bath & Beyond, Inc. (a) ......................... 9,817,056 717,000 CarMax, Inc. (a) .................................... 17,616,690 60,000 Carnival Corp........................................ 2,502,000 166,200 DIRECTV Group, Inc. (The) (a) ....................... 6,021,426 357,900 Dress Barn, Inc. (a) ................................ 9,906,672 228,500 Gentex Corp.......................................... 4,910,465 55,850 Kohl's Corp. (a) .................................... 3,071,191 200,000 Mattel, Inc.......................................... 4,610,000 343,800 Quiksilver, Inc. (a) ................................ 1,832,454 252,100 Sony Corp. - ADR .................................... 8,626,862 63,000 TJX Cos, Inc......................................... 2,919,420 -------------- 86,391,210 -------------- CONSUMER STAPLES - 0.1% 25,000 Procter & Gamble Co.................................. 1,554,000 -------------- Energy - 5.1% 70,000 Cenovus Energy, Inc.................................. 2,051,000 120,000 EnCana Corp.......................................... 3,968,400 115,400 EOG Resources, Inc................................... 12,938,648 60,000 Hess Corp............................................ 3,813,000 140,000 National Oilwell Varco, Inc.......................... 6,164,200 50,000 Noble Energy, Inc.................................... 3,820,000 170,000 Oceaneering International, Inc. (a) ................. 11,135,000 100,000 Range Resources Corp................................. 4,776,000 148,100 Schlumberger Ltd..................................... 10,577,302 -------------- 59,243,550 -------------- FINANCIALS - 2.9% 29,000 Bank of New York Mellon Corp. (The) ................. 902,770 88,950 Berkshire Hathaway, Inc. - Class B (a) .............. 6,849,150 120,000 Chubb Corp........................................... 6,344,400 707,150 Marsh & McLennan Cos, Inc............................ 17,127,173 120,000 Progressive Corp. (The) ............................. 2,410,800 -------------- 33,634,293 -------------- THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 20 SCHEDULE OF INVESTMENTS PRIMECAP ODYSSEY GROWTH FUND -------------------------------------------------------------------------------- APRIL 30, 2010 (UNAUDITED) -- CONTINUED Shares Value -------------------------------------------------------------------------------- HEALTH CARE - 37.0% 810,000 Abiomed, Inc. (a) ................................... $ 7,808,400 1,610,000 Accuray, Inc. (a) ................................... 10,368,400 281,000 Affymetrix, Inc. (a) ................................ 1,950,140 727,200 Amgen, Inc. (a) ..................................... 41,712,192 232,300 Biogen Idec, Inc. (a) ............................... 12,369,975 298,200 BioMarin Pharmaceutical, Inc. (a) ................... 6,968,934 1,121,300 Boston Scientific Corp. (a) ......................... 7,714,544 1,320,100 Cepheid, Inc. (a) ................................... 26,388,799 140,000 Cerner Corp. (a) .................................... 11,887,400 43,248 Charles River Laboratories International, Inc. (a) .. 1,447,943 1,669,500 Conceptus, Inc. (a) ................................. 31,620,330 869,200 Crucell N.V. - ADR .................................. 18,261,892 505,000 Dendreon Corp. (a) .................................. 27,381,100 902,200 Eli Lilly & Co....................................... 31,549,934 88,800 GlaxoSmithKline PLC - ADR ........................... 3,311,352 220,000 Illumina, Inc. (a) .................................. 9,211,400 4,700,000 Immunogen, Inc. (a) ................................. 46,577,000 100,000 Johnson & Johnson ................................... 6,430,000 200,000 Kinetic Concepts, Inc. (a) .......................... 8,660,000 509,100 Medtronic, Inc....................................... 22,242,579 293,149 Micrus Endovascular Corp. (a) ....................... 5,886,432 1,190,000 Nektar Therapeutics (a) ............................. 6,612,400 260,800 Novartis AG - ADR ................................... 13,261,680 120,000 NuVasive, Inc. (a) .................................. 4,992,000 160,000 OraSure Technologies, Inc. (a) ...................... 1,014,400 247,632 Roche Holding AG - CHF .............................. 39,141,572 136,200 SurModics, Inc. (a) ................................. 2,533,320 146,500 Waters Corp. (a) .................................... 10,546,535 215,000 Wright Medical Group, Inc. (a) ...................... 4,037,700 -------------- 431,888,353 -------------- INDUSTRIALS - 8.5% 1,617,300 AMR Corp. (a) ....................................... 11,935,674 280,000 C. H. Robinson Worldwide, Inc........................ 16,884,000 136,000 Caterpillar, Inc..................................... 9,260,240 187,565 Colfax Corp. (a) .................................... 2,447,723 180,000 Expeditors International Washington, Inc............. 7,333,200 50,600 FedEx Corp........................................... 4,554,506 284,550 JetBlue Airways Corp. (a) ........................... 1,590,635 THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 21 SCHEDULE OF INVESTMENTS PRIMECAP ODYSSEY GROWTH FUND -------------------------------------------------------------------------------- APRIL 30, 2010 (UNAUDITED) -- CONTINUED Shares Value -------------------------------------------------------------------------------- INDUSTRIALS (CONTINUED) 260,000 McDermott International, Inc. (a) ................... $ 7,126,600 107,800 Pall Corp............................................ 4,203,122 221,700 Ritchie Bros. Auctioneers, Inc....................... 5,187,780 33,100 Rockwell Automation, Inc............................. 2,009,832 1,426,900 Southwest Airlines Co................................ 18,806,542 122,100 United Parcel Service, Inc........................... 8,441,994 -------------- 99,781,848 -------------- INFORMATION TECHNOLOGY - 27.4% 57,850 Accenture Ltd. - Class A ............................ 2,524,574 84,000 Adobe Systems, Inc. (a) ............................. 2,821,560 200,000 Akamai Technologies, Inc. (a) ....................... 7,766,000 960,000 Altera Corp.......................................... 24,345,600 289,300 Applied Materials, Inc............................... 3,986,554 167,944 ASML Holding N.V. - ADR ............................. 5,485,051 138,000 Avid Technology, Inc. (a) ........................... 2,014,800 30,000 Cisco Systems, Inc. (a) ............................. 807,600 198,800 Corning, Inc......................................... 3,826,900 194,700 Cree, Inc. (a) ...................................... 14,253,987 37,000 Cymer, Inc. (a) ..................................... 1,263,550 1,488,500 Electronic Arts, Inc. (a) ........................... 28,832,245 783,700 EMC Corp. (a) ....................................... 14,898,137 1,360,000 Flextronics International Ltd. (a) .................. 10,540,000 629,700 FormFactor, Inc. (a) ................................ 9,451,797 39,410 Google, Inc. - Class A (a) .......................... 20,707,590 90,000 Hewlett-Packard Co................................... 4,677,300 185,500 Intel Corp........................................... 4,234,965 170,000 Intersil Corp. - Class A ............................ 2,529,600 390,400 Intuit, Inc. (a) .................................... 14,116,864 191,300 KLA-Tencor Corp...................................... 6,515,678 1,200,000 L.M. Ericsson Telephone Co. - ADR ................... 13,800,000 49,000 McAfee, Inc. (a) .................................... 1,702,750 42,000 Micron Technology, Inc. (a) ......................... 392,700 343,900 Microsoft Corp....................................... 10,502,706 208,200 Motorola, Inc. (a) .................................. 1,471,974 195,900 NeuStar, Inc. - Class A (a) ......................... 4,793,673 1,090,000 Nuance Communications, Inc. (a) ..................... 19,914,300 380,000 NVIDIA Corp. (a) .................................... 5,973,600 231,100 Oracle Corp.......................................... 5,971,624 70,000 QUALCOMM, Inc........................................ 2,711,800 THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 22 SCHEDULE OF INVESTMENTS PRIMECAP ODYSSEY GROWTH FUND -------------------------------------------------------------------------------- APRIL 30, 2010 (UNAUDITED) -- CONTINUED Shares Value -------------------------------------------------------------------------------- INFORMATION TECHNOLOGY (CONTINUED) 409,800 Rambus, Inc. (a) .................................... $ 9,888,474 105,750 Research In Motion Ltd. (a) ......................... 7,528,343 151,800 SanDisk Corp. (a) ................................... 6,055,302 601,600 Stratasys, Inc. (a) ................................. 14,342,144 442,100 Symantec Corp. (a) .................................. 7,414,017 371,300 Texas Instruments, Inc............................... 9,657,513 200,000 Trimble Navigation Ltd. (a) ......................... 6,542,000 207,000 Xilinx, Inc.......................................... 5,336,460 -------------- 319,599,732 -------------- MATERIALS - 2.5% 308,000 Monsanto Co.......................................... 19,422,480 17,250 Praxair, Inc......................................... 1,445,033 146,600 Vulcan Materials Co.................................. 8,397,248 -------------- 29,264,761 -------------- TELECOMMUNICATION SERVICES - 0.1% 292,450 Sprint Nextel Corp. (a) ............................. 1,242,913 -------------- TOTAL COMMON STOCKS (Cost $941,652,163) ........................................... $1,062,600,660 -------------- Principal Amount SHORT TERM INVESTMENTS - 9.5% $110,376,292 Dreyfus Treasury Prime Cash Management ........ $ 110,376,292 -------------- TOTAL SHORT TERM INVESTMENTS (Cost $110,376,292) ......................................... 110,376,292 -------------- TOTAL INVESTMENTS (Cost $1,052,028,455) - 100.5% ................................ 1,172,976,952 Liabilities in Excess of Other Assets - (0.5)% .................. (5,716,994) -------------- TOTAL NET ASSETS: 100.0% $1,167,259,958 ============== 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 SCHEDULE OF INVESTMENTS PRIMECAP ODYSSEY AGGRESSIVE GROWTH FUND -------------------------------------------------------------------------------- APRIL 30, 2010 (UNAUDITED) -- CONTINUED Shares Value -------------------------------------------------------------------------------- COMMON STOCKS - 90.2% CONSUMER DISCRETIONARY - 3.6% 63,000 Amazon.com, Inc. (a) ................................. $ 8,634,780 293,400 CarMax, Inc. (a) ..................................... 7,208,838 74,700 DIRECTV Group, Inc. (The) (a) ........................ 2,706,381 140,000 Gentex Corp........................................... 3,008,600 229,000 Quiksilver, Inc. (a) ................................. 1,220,570 ------------- 22,779,169 ------------- CONSUMER STAPLES - 4.7% 736,866 American Italian Pasta Co. - Class A (a) ............. 28,907,253 152,405 Smart Balance, Inc. (a) .............................. 1,013,494 ------------- 29,920,747 ------------- ENERGY - 2.9% 120,000 Cabot Oil & Gas Corp.................................. 4,335,600 32,000 EOG Resources, Inc.................................... 3,587,840 60,000 National Oilwell Varco, Inc........................... 2,641,800 74,000 Oceaneering International, Inc. (a) .................. 4,847,000 66,000 Range Resources Corp.................................. 3,152,160 ------------- 18,564,400 ------------- FINANCIALS - 1.5% 605,820 MarketAxess Holdings, Inc............................. 9,523,490 ------------- HEALTH CARE - 40.2% 1,034,673 Abiomed, Inc. (a) .................................... 9,974,248 915,000 Accuray, Inc. (a) .................................... 5,892,600 222,000 Affymetrix, Inc. (a) ................................. 1,540,680 82,000 Biogen Idec, Inc. (a) ................................ 4,366,500 510,300 BioMarin Pharmaceutical, Inc. (a) .................... 11,925,711 1,069,800 Boston Scientific Corp. (a) .......................... 7,360,224 591,600 Cardica, Inc. (a) .................................... 1,419,840 1,172,800 Cepheid, Inc. (a) .................................... 23,444,272 1,053,850 Conceptus, Inc. (a) .................................. 19,959,919 536,407 Crucell N.V. (a) ..................................... 11,269,911 540,300 Dendreon Corp. (a) ................................... 29,295,066 3,225,000 Dyax Corp. (a) ....................................... 11,287,500 2,944,512 Immunogen, Inc. (a) .................................. 29,180,114 115,000 InterMune, Inc. (a) .................................. 4,894,400 198,500 Kinetic Concepts, Inc. (a) ........................... 8,595,050 476,300 Luminex Corp. (a) .................................... 7,744,638 THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 24 SCHEDULE OF INVESTMENTS PRIMECAP ODYSSEY AGGRESSIVE GROWTH FUND -------------------------------------------------------------------------------- APRIL 30, 2010 (UNAUDITED) -- CONTINUED Shares Value -------------------------------------------------------------------------------- HEALTH CARE (CONTINUED) 320,087 Micrus Endovascular Corp. (a) ........................ $ 6,427,347 641,800 Nektar Therapeutics (a) .............................. 8,959,528 115,000 NuVasive, Inc. (a) ................................... 4,784,000 1,642,600 OraSure Technologies, Inc. (a) ....................... 10,414,084 1,233,539 Pharmacyclics, Inc. (a) .............................. 9,362,561 147,700 Roche Holding AG - CHF ............................... 23,345,974 116,000 SurModics, Inc. (a) .................................. 2,157,600 220,000 Wright Medical Group, Inc. (a) ....................... 4,131,600 ------------- 257,733,367 ------------- INDUSTRIALS - 8.4% 195,000 Alaska Air Group, Inc. (a) ........................... 8,074,950 1,207,500 AMR Corp. (a) ........................................ 8,911,350 116,000 C. H. Robinson Worldwide, Inc......................... 6,994,800 441,210 Colfax Corp. (a) ..................................... 5,757,790 745,425 JetBlue Airways Corp. (a) ............................ 4,166,926 53,000 Monster Worldwide, Inc. (a) .......................... 923,790 82,600 Pall Corp............................................. 3,220,574 155,400 Ritchie Bros. Auctioneers, Inc........................ 3,636,360 320,600 Southwest Airlines Co................................. 4,225,508 234,000 US Airways Group, Inc. (a) ........................... 1,654,380 400,000 Vitran Corp, Inc. (a) ................................ 6,076,000 ------------- 53,642,428 ------------- INFORMATION TECHNOLOGY - 27.0% 140,000 3PAR, Inc. (a) ....................................... 1,306,200 180,000 Akamai Technologies, Inc. (a) ........................ 6,989,400 490,000 Altera Corp........................................... 12,426,400 214,588 ASML Holding N.V. - ADR .............................. 7,008,444 115,000 Avid Technology, Inc. (a) ............................ 1,679,000 145,600 Cree, Inc. (a) ....................................... 10,659,376 96,500 Cymer, Inc. (a) ...................................... 3,295,475 846,500 Electronic Arts, Inc. (a) ............................ 16,396,705 200,000 EMC Corp. (a) ........................................ 3,802,000 230,000 FARO Technologies, Inc. (a) .......................... 5,798,300 573,800 FormFactor, Inc. (a) ................................. 8,612,738 17,100 Google, Inc. (a) ..................................... 8,985,024 552,100 Guidance Software, Inc. (a) .......................... 3,246,348 113,800 Intermec, Inc. (a) ................................... 1,305,286 80,000 Internet Brands, Inc. (a) ............................ 828,000 255,000 Intuit, Inc. (a) ..................................... 9,220,800 THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 25 SCHEDULE OF INVESTMENTS PRIMECAP ODYSSEY AGGRESSIVE GROWTH FUND -------------------------------------------------------------------------------- APRIL 30, 2010 (UNAUDITED) -- CONTINUED Shares Value -------------------------------------------------------------------------------- INFORMATION TECHNOLOGY (CONTINUED) 165,300 KLA-Tencor Corp....................................... $ 5,630,118 57,500 McAfee, Inc. (a) ..................................... 1,998,125 40,000 Micron Technology, Inc. (a) .......................... 374,000 149,200 NeuStar, Inc. - Class A (a) .......................... 3,650,924 440,000 Nuance Communications, Inc. (a) ...................... 8,038,800 286,550 NVIDIA Corp. (a) ..................................... 4,504,566 311,800 Rambus, Inc. (a) ..................................... 7,523,734 135,100 Research In Motion Ltd. (a) .......................... 9,617,769 111,700 SanDisk Corp. (a) .................................... 4,455,713 214,300 SonicWall, Inc. (a) .................................. 2,170,859 472,200 Stratasys, Inc. (a) .................................. 11,257,248 207,800 Symantec Corp. (a) ................................... 3,484,806 120,000 Trimble Navigation Ltd. (a) .......................... 3,925,200 200,000 Websense, Inc. (a) ................................... 4,554,000 25,000 Yahoo!, Inc. (a) ..................................... 413,250 ------------- 173,158,608 ------------- MATERIALS - 1.7% 173,500 Monsanto Co........................................... 10,940,910 ------------- TELECOMMUNICATION SERVICES - 0.2% 296,700 Sprint Nextel Corp. (a) .............................. 1,260,975 ------------- TOTAL COMMON STOCKS (Cost $476,190,986) .................................... $ 577,524,094 ------------- Principal Amount -------------------------------------------------------------------------------- SHORT TERM INVESTMENTS - 10.1% 64,647,259 Dreyfus Treasury Prime Cash Management ............... $ 64,647,259 ------------- TOTAL SHORT TERM INVESTMENTS (Cost $64,647,259) ..................................... 64,647,259 ------------- TOTAL INVESTMENTS (Cost $540,838,245) - 100.3% ......................... 642,171,353 Liabilities in Excess of Other Assets - (0.3)% .................. (1,650,172) ------------- TOTAL NET ASSETS: 100.0% ........................................ $ 640,521,181 ============= 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. 26
STATEMENTS OF ASSETS AND LIABILITIES PRIMECAP ODYSSEY FUNDS ---------------------------------------------------------------- APRIL 30, 2010 (UNAUDITED) PRIMECAP PRIMECAP PRIMECAP Odyssey Odyssey Odyssey Aggressive Stock Fund Growth Fund Growth Fund ----- ---- ------ ---- ------ ---- ASSETS Investments, at cost ................. $278,959,971 $1,052,028,455 $540,838,245 ============ ============== ============ Investments, at value ................ $315,390,907 $1,172,976,952 $642,171,353 Receivables: Securities sold .................... -- 3,930,719 -- Dividends and interest ............. 375,308 854,531 215,934 Fund shares sold ................... 1,181,758 7,682,432 3,714,031 Prepaid expenses and other assets .... 23,812 48,892 31,160 ------------ -------------- ------------ Total assets ....................... 316,971,785 1,185,493,526 646,132,478 ------------ -------------- ------------ LIABILITIES Payable for securities purchased ... 438,069 11,003,284 4,514,850 Payable for fund shares repurchased 395,605 287,522 220,864 Payable to advisor (Note 6) ........ 403,945 1,373,848 751,282 Payable to the custodian ........... -- 5,354,125 -- Other accrued expenses & liabilities 98,421 214,789 124,301 ------------ -------------- ------------ Total liabilities ................. 1,336,040 18,233,568 5,611,297 ------------ -------------- ------------ NET ASSETS ........................... $315,635,745 $1,167,259,958 $640,521,181 ============ ============== ============ Number of shares issued and outstanding (unlimited shares authorized, $0.01 par value) ....... 23,205,864 80,163,758 40,387,670 ============ ============== ============ NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE ......... $ 13.60 $ 14.56 $ 15.86 ============ ============== ============ COMPONENTS OF NET ASSETS Paid-in capital .................... $312,317,383 $1,058,378,971 $551,656,845 Undistributed net investment income ............................ 851,489 1,199,721 -- Accumulated net realized loss on investments .................... (33,968,680) (13,277,831) (12,475,879) Accumulated net unrealized appreciation on investments ....... 36,435,553 120,959,097 101,340,215 ------------ -------------- ------------ Net assets ........................ $315,635,745 $1,167,259,958 $640,521,181 ============ ============== ============ The accompanying notes are an integral part of these financial statements. 27
STATEMENTS OF OPERATIONS PRIMECAP ODYSSEY FUNDS ---------------------------------------------------------------- FOR THE SIX MONTHS ENDED APRIL 30, 2010 (UNAUDITED) PRIMECAP PRIMECAP PRIMECAP Odyssey Odyssey Odyssey Aggressive Stock Fund Growth Fund Growth Fund INVESTMENT INCOME Income Dividends (net of foreign taxes withheld of $119,891, $282,736, and $95,254, respectively) ..... $ 2,250,876 $ 4,824,771 $ 917,657 Interest income .................. 5 13 8 ----------- ------------ ------------ Total income .................... 2,250,881 4,824,784 917,665 ----------- ------------ ------------ Expenses Advisory fees ................... 754,868 2,516,931 1,346,496 Fund administration and accounting costs ............... 64,694 229,320 117,690 Professional fees ............... 31,272 34,939 33,421 Shareholder servicing fees and expenses ................... 44,597 143,760 106,613 Federal and state registration fees .............. 16,147 16,509 14,373 Custody fees .................... 11,562 40,861 27,169 Trustee fees and expenses ....... 14,649 14,949 14,799 Printing and mailing ............ 7,293 21,025 23,272 Other expenses .................. 9,054 36,944 24,291 ----------- ------------ ------------ Total expenses ................. 954,136 3,055,238 1,708,124 ----------- ------------ ------------ NET INVESTMENT INCOME (LOSS) ... 1,296,745 1,769,546 (790,459) ----------- ------------ ------------ CHANGE IN REALIZED AND UNREALIZED GAIN ON INVESTMENTS Net realized gain on investments 1,353,194 2,187,864 1,400,804 ----------- ------------ ------------ Net unrealized appreciation on investments ................. 35,986,474 153,072,991 115,674,216 ----------- ------------ ------------ Net realized and unrealized gain on investments ................. 37,339,668 155,260,855 117,075,020 ----------- ------------ ------------ NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS ...... $38,636,413 $157,030,401 $116,284,561 =========== ============ ============ The accompanying notes are an integral part of these financial statements. 28
STATEMENT OF CHANGES IN NET ASSETS PRIMECAP ODYSSEY STOCK FUND ----------------------------------------------------------------------------- SIX MONTHS ENDED YEAR ENDED APRIL 30, 2010(1) OCTOBER 31, 2009 ----------------------------------- INCREASE (DECREASE) IN NET ASSETS FROM: OPERATIONS Net investment income .................................. $ 1,296,745 $ 1,659,313 Net realized income (loss) on investments .............. 1,353,194 (28,008,473) Net unrealized appreciation on investments ............. 35,986,474 47,825,757 ------------ ------------- NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS 38,636,413 21,476,597 ------------ ------------- DISTRIBUTIONS TO SHAREHOLDERS Net investment income .................................. (1,831,079) (1,193,169) ------------ ------------- TOTAL DISTRIBUTIONS TO SHAREHOLDERS ................... (1,831,079) (1,193,169) ------------ ------------- CAPITAL SHARE TRANSACTIONS Proceeds from shares sold .............................. 111,118,033 100,416,214 Proceeds from reinvestment of distribution ............. 1,822,043 1,191,178 Cost of shares redeemed ................................ (13,783,915) (129,262,401) Redemption fee proceeds ................................ 2,100 72,580 ------------ ------------- NET INCREASE (DECREASE) FROM CAPITAL SHARE TRANSACTIONS 99,158,261 (27,582,429) ------------ ------------- TOTAL INCREASE (DECREASE) IN NET ASSETS ............... 135,963,595 (7,299,001) NET ASSETS Beginning of period .................................... 179,672,150 186,971,151 ------------ ------------- End of period (includes undistributed net investment income of $851,489 and $1,385,823, respectively) ...... $315,635,745 $ 179,672,150 ============ ============= CHANGE IN CAPITAL SHARES Shares outstanding, beginning of period ................ 15,370,380 18,503,767 ------------ ------------- Shares sold ............................................ 8,762,395 10,460,306 Shares issued on reinvestment of distributions ......... 144,721 129,476 Shares repurchased ..................................... (1,071,632) (13,723,169) ------------ ------------- Net increase in capital shares ........................ 7,835,484 (3,133,387) ------------ ------------- Shares outstanding, end of period ...................... 23,205,864 15,370,380 ============ ============= ----------- (1) Unaudited. The accompanying notes are an integral part of these financial statements. 29
STATEMENT OF CHANGES IN NET ASSETS PRIMECAP ODYSSEY GROWTH FUND --------------------------------------------------------------------------- SIX MONTHS ENDED YEAR ENDED APRIL 30, 2010(1) OCTOBER 31, 2009 ------------------------------------ INCREASE (DECREASE) IN NET ASSETS FROM: OPERATIONS Net investment income ............................... $ 1,769,546 $ 1,697,113 Net realized income (loss) on investments ........... 2,187,864 (13,802,550) Net unrealized appreciation on investments .......... 153,072,991 114,126,729 -------------- ------------- NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS 157,030,401 102,021,292 -------------- ------------- DISTRIBUTIONS TO SHAREHOLDERS Net investment income ............................... (1,825,837) (1,291,445) -------------- ------------- TOTAL DISTRIBUTIONS TO SHAREHOLDERS ................ (1,825,837) (1,291,445) -------------- ------------- CAPITAL SHARE TRANSACTIONS Proceeds from shares sold ........................... 376,267,135 371,086,180 Proceeds from reinvestment of distribution .......... 1,740,542 1,224,200 Cost of shares redeemed ............................. (72,466,926) (178,976,597) Redemption fee proceeds ............................. 24,866 46,291 -------------- ------------- NET INCREASE FROM CAPITAL SHARE TRANSACTIONS ....... 305,565,617 193,380,074 -------------- ------------- TOTAL INCREASE IN NET ASSETS ....................... 460,770,181 294,109,921 NET ASSETS Beginning of period ................................. 706,489,777 412,379,856 -------------- ------------- End of year (including undistributed net investment income of $1,199,721 and $1,256,012, respectively) $1,167,259,958 $ 706,489,777 ============== ============= CHANGE IN CAPITAL SHARES Shares outstanding, beginning of period ............. 57,986,448 40,960,083 -------------- ------------- Shares sold ........................................ 27,360,244 35,350,990 Shares issued on reinvestment of distributions ..... 132,765 132,203 Shares repurchased ................................. (5,315,699) (18,456,828) -------------- ------------- Net increase in capital shares .................... 22,177,310 17,026,365 -------------- ------------- Shares outstanding, end of period ................... 80,163,758 57,986,448 ============== ============= ------------ (1) Unaudited. The accompanying notes are an integral part of these financial statements. 30
STATEMENT OF CHANGES IN NET ASSETS PRIMECAP ODYSSEY AGGRESSIVE GROWTH FUND ------------------------------------------------------------------------- Six Months Ended Year Ended April 30, 2010(1) October 31, 2009 ---------------------------------- INCREASE (DECREASE) IN NET ASSETS FROM: OPERATIONS Net investment loss ................................. $ (790,459) $ (1,419,736) Net realized income (loss) on investments ........... 1,400,804 (10,430,012) Net unrealized appreciation on investments .......... 115,674,216 85,726,892 ------------ ------------ NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS 116,284,561 73,877,144 ------------ ------------ CAPITAL SHARE TRANSACTIONS Proceeds from shares sold ........................... 194,182,629 125,071,901 Cost of shares repurchased .......................... (33,811,236) (60,586,982) Redemption fee proceeds ............................. 34,435 40,419 ------------ ------------ NET INCREASE FROM CAPITAL SHARE TRANSACTIONS ....... 160,405,828 64,525,338 ------------ ------------ TOTAL INCREASE IN NET ASSETS ....................... 276,690,389 138,402,482 NET ASSETS Beginning of period ................................. 363,830,792 225,428,310 ------------ ------------ End of period ....................................... $640,521,181 $363,830,792 ============ ============ CHANGE IN CAPITAL SHARES Shares outstanding, beginning of period ............. 29,505,941 23,820,611 ------------ ------------ Shares sold ........................................ 13,230,773 12,038,983 Shares repurchased ................................. (2,349,044) (6,353,653) ------------ ------------ Net increase in capital shares .................... 10,881,729 5,685,330 ------------ ------------ Shares outstanding, end of period ................... 40,387,670 29,505,941 ============ ============ ------------ (1) Unaudited. The accompanying notes are an integral part of these financial statements. 31
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 Year Year Year Year Ended Ended Ended Ended Ended Ended Apr. 30, Oct. 31, Oct. 31, Oct. 31, Oct. 31, Oct. 31, 2010(1) 2009 2008 2007 2006 2005(5) ------ ------ -------- ------ ------ ------- Net asset value, beginning of period ... $11.69 $10.10 $ 15.22 $13.48 $11.48 $ 10.00 ------ ------ -------- ------ ------ ------- Income from investment operations: Net investment income (loss) ......... 0.04 0.10 0.06 0.07 0.03 (0.01) Net realized and unrealized gain (loss) on investments .......... 1.96 1.55 (4.99) 1.79 1.97 1.49 ------ ------ -------- ------ ------ ------- Total from investment operations ....... 2.00 1.65 (4.93) 1.86 2.00 1.48 ------ ------ -------- ------ ------ ------- LESS DISTRIBUTIONS: Dividends from net investment income . (0.09) (0.06) (0.07) (0.04) 0.00(4) 0.00 Distributions from realized gain ..... 0.00 0.00 (0.12) (0.08) 0.00(4) 0.00 ------ ------ -------- ------ ------ ------- Total distributions .................... (0.09) (0.06) (0.19) (0.12) 0.00 0.00 ------ ------ -------- ------ ------ ------- Redemption fee proceeds ................ 0.00(4) 0.00(4) 0.00(4) 0.00(4) 0.00(4) 0.00(4) ------ ------ -------- ------ ------ ------- Net asset value, end of period ......... $13.60 $11.69 $ 10.10 $15.22 $13.48 $ 11.48 ====== ====== ======== ====== ====== ======= Total return ........................... 17.18%(3) 16.55% (32.73%) 13.88% 17.48% 14.80% RATIOS/SUPPLEMENTAL DATA: Net assets, end of period (millions) . $315.6 $179.7 $ 187.0 $216.4 $ 88.4 $ 30.1 RATIO OF EXPENSES TO AVERAGE NET ASSETS: Before fees waived and expenses absorbed or recouped ................ 0.72%(2) 0.80% 0.79% 0.81% 0.99% 1.80% After fees waived and expenses absorbed or recouped ................ 0.72%(2) 0.80% 0.79% 0.81% 0.99% 1.25% RATIO OF NET INVESTMENT INCOME (LOSS) TO AVERAGE NET ASSETS ......... 0.98%(2) 0.96% 0.51% 0.59% 0.41% (0.11%) Portfolio turnover rate ................ 2.75%(3) 33.55% 9.66% 5.87% 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. 32
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 Year Year Year Year Ended Ended Ended Ended Ended Ended Apr. 30, Oct. 31, Oct. 31, Oct. 31, Oct. 31, Oct. 31, 2010(1) 2009 2008 2007 2006 2005(5) -------- ------ -------- ------ ------ ------- Net asset value, beginning of period ... $ 12.18 $10.07 $ 15.71 $13.76 $11.62 $ 10.00 -------- ------ -------- ------ ------ ------- INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss) ......... 0.02 0.03 0.03 0.04 0.01 (0.01) Net realized and unrealized gain (loss) on investments .......... 2.39 2.11 (5.59) 2.07 2.14 1.63 -------- ------ -------- ------ ------ ------- Total from investment operations ....... 2.41 2.14 (5.56) 2.11 2.15 1.62 -------- ------ -------- ------ ------ ------- LESS DISTRIBUTIONS: Dividends from net investment income (0.03) (0.03) (0.04) (0.02) 0.00(4) 0.00 Distributions from realized gain ..... 0.00 0.00 (0.04) (0.14) (0.01) 0.00 -------- ------ -------- ------ ------ ------- Total distributions .................... (0.03) (0.03) (0.08) (0.16) (0.01) 0.00 -------- ------ -------- ------ ------ ------- Redemption fee proceeds ................ 0.00(4) 0.00(4) 0.00(4) 0.00(4) 0.00(4) 0.00(4) -------- ------ -------- ------ ------ ------- Net asset value, end of period ......... $ 14.56 $12.18 $ 10.07 $15.71 $13.76 $ 11.62 ======== ====== ======== ====== ====== ======= Total return ........................... 19.81%(3) 21.39% (35.55%) 15.46% 18.49% 16.20% RATIOS/SUPPLEMENTAL DATA: Net assets, end of period (millions) $1,167.3 $706.5 $ 412.4 $512.0 $202.2 $ 46.6 RATIO OF EXPENSES TO AVERAGE NET ASSETS: Before fees waived and expenses absorbed or recouped ................ 0.67%(2) 0.71% 0.71% 0.75% 0.89% 1.79% After fees waived and expenses absorbed or recouped ................ 0.67%(2) 0.71% 0.71% 0.75% 0.89% 1.25% RATIO OF NET INVESTMENT INCOME (LOSS) TO AVERAGE NET ASSETS ......... 0.39%(2) 0.35% 0.26% 0.30% 0.19% (0.27%) Portfolio turnover rate ................ 2.31%(3) 12.49% 12.72% 4.83% 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. 33
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 Year Year Year Year Ended Ended Ended Ended Ended Ended Apr. 30, Oct. 31, Oct. 31, Oct. 31, Oct. 31, Oct. 31, 2010(1) 2009 2008 2007 2006 2005(5) ---------- ------- -------- ------- ------- ------- Net asset value, beginning of period ... $ 12.33 $ 9.46 $ 16.03 $ 13.92 $ 11.24 $ 10.00 ---------- ------- -------- ------- ------- ------- INCOME FROM INVESTMENT OPERATIONS: Net investment loss .................. (0.02) (0.05) (0.06) (0.03) (0.02) (0.06) Net realized and unrealized gain (loss) on investments .......... 3.55 2.92 (6.42) 2.34 2.70 1.30 ---------- ------- -------- ------- ------- ------- Total from investment operations ....... 3.53 2.87 (6.48) 2.31 2.68 1.24 ---------- ------- -------- ------- ------- ------- LESS DISTRIBUTIONS: Distributions from realized gain ..... 0.00 0.00 (0.09) (0.20) 0.00 0.00 ---------- ------- -------- ------- ------- ------- Redemption fee proceeds ................ 0.00(4) 0.00(4) 0.00(4) 0.00(4) 0.00(4) 0.00(4) ---------- ------- -------- ------- ------- ------- Net asset value, end of period ......... $ 15.86 $ 12.33 $ 9.46 $ 16.03 $ 13.92 $ 11.24 ========== ======= ======== ======= ======= ======= Total return ........................... 28.63%(3) 30.34% (40.60%) 16.76% 23.84% 12.40% RATIOS/SUPPLEMENTAL DATA: Net assets, end of period (millions) $ 640.5 $ 363.8 $ 225.4 $ 375.2 $ 119.9 $ 22.8 RATIO OF EXPENSES TO AVERAGE NET ASSETS: Before fees waived and expenses absorbed or recouped ................ 0.71%(2) 0.77% 0.78% 0.78% 0.99% 1.82% After fees waived and expenses absorbed or recouped ................ 0.71%(2) 0.77% 0.78% 0.78% 0.99% 1.25% RATIO OF NET INVESTMENT LOSS TO AVERAGE NET ASSETS ................ (0.33%)(2) (0.54%) (0.46%) (0.25%) (0.33%) (0.82%) Portfolio turnover rate ................ 2.55%(3) 19.70% 24.32% 6.02% 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. 34
NOTES TO FINANCIAL STATEMENTS PRIMECAP ODYSSEY FUNDS ---------------------------------------------------------------- FOR THE SIX MONTHS ENDED APRIL 30, 2010 (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 are 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 are 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 Trust's board of trustees. In determining fair value, the Funds take into account all relevant factors and available information. Consequently, the price of a security used by a Fund to calculate its net asset value per share ("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 1940 Act. 35 NOTES TO FINANCIAL STATEMENTS PRIMECAP ODYSSEY FUNDS -------------------------------------------------------------------------------- FOR THE SIX MONTHS ENDED APRIL 30, 2010 (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. SHARE VALUATION The net asset value 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. There is no tax liability resulting from unrecognized tax benefits relating to uncertain income tax positions taken or expected to be taken on the tax return for the fiscal year-end October 31, 2009, or for any other tax years which are open for exam. As of October 31, 2009, open tax years include the tax years ended October 31, 2006 through 2009. The Funds are also not aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next six months. The Funds recognize interest and penalties, if any, related to unrecognized tax benefits as income tax expense in the Statement of Operations. During the period, the Funds did not incur any interest or penalties. 36 NOTES TO FINANCIAL STATEMENTS PRIMECAP ODYSSEY FUNDS -------------------------------------------------------------------------------- FOR THE SIX MONTHS ENDED APRIL 30, 2010 (UNAUDITED) - CONTINUED 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 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 Trust's 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, 2010 were as follows: FUND PURCHASES SALES ---- --------- ----- PRIMECAP Odyssey Stock Fund ............... $ 80,396,334 $ 6,468,164 PRIMECAP Odyssey Growth Fund .............. $262,972,156 $19,314,883 PRIMECAP Odyssey Aggressive Growth Fund ... $132,955,229 $11,223,643 37 NOTES TO FINANCIAL STATEMENTS PRIMECAP ODYSSEY FUNDS -------------------------------------------------------------------------------- FOR THE SIX MONTHS ENDED APRIL 30, 2010 (UNAUDITED) - CONTINUED (4) FAIR VALUE OF FINANCIAL INSTRUMENTS The Funds follow a fair value hierarchy that distinguishes between market data obtained from independent sources (observable inputs) and each Fund's own market assumptions (unobservable inputs). These inputs are used in determining the value of each Fund's investments and are summarized in the following fair value hierarchy: Level 1 - Quoted prices in active markets for identical securities. Level 2 - Other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.). Level 3 - Significant unobservable inputs (including the Fund's own assumptions in determining the fair value of investments). The inputs or methodology used for valuing securities are not an indication of the risk associated with investing in those securities. The following is a summary of the inputs used as of April 30, 2010, in valuing the Fund's investments carried at fair value:
Quoted prices Significant in active other Significant markets for observable unobservable identical assets inputs inputs Fund Description (Level 1) (Level 2) (Level 3) Total ---- ----------- --------- --------- --------- ----- PRIMECAP Common Stock $ 280,902,494 $ -- $ -- $ 280,902,494 Odyssey Stock Short-Term Investments $ 34,488,413 $ -- $ -- $ 34,488,413 (Fund) Total Investments in Securities $ 315,390,907 $ -- $ -- $ 315,390,907 PRIMECAP Common Stock $1,062,600,660 $ -- $ -- $1,062,600,660 Odyssey Growth Short-Term Investments $ 110,376,292 $ -- $ -- $ 110,376,292 (Fund) Total Investments in Securities $1,172,976,952 $ -- $ -- $1,172,976,952 PRIMECAP Common Stock $ 577,524,094 $ -- $ -- $ 577,524,094 Odyssey Short-Term Investments $ 64,647,259 $ -- $ -- $ 64,647,259 (Aggressive) Total Investments (Growth Fund) in Securities $ 642,171,353 $ -- $ -- $ 642,171,353
--------- Refer to each Fund's respective Schedule of Investments for the breakdown of major categories. 38 NOTES TO FINANCIAL STATEMENTS PRIMECAP ODYSSEY FUNDS -------------------------------------------------------------------------------- FOR THE SIX MONTHS ENDED APRIL 30, 2010 (UNAUDITED) - CONTINUED (5) DISTRIBUTION TO SHAREHOLDERS Net investment income and net realized gains differ for financial statement and tax purposes due to differing treatments of deferred wash sale losses. As of October 31, 2009, the components of capital on a tax basis were as follows:
PRIMECAP PRIMECAP PRIMECAP Odyssey Odyssey Odyssey Aggressive Stock Fund Growth Fund Growth Fund Cost of investments for tax purposes .............. $ 183,468,929 $ 742,113,539 $ 379,523,723 ============= ============= ============= Gross tax unrealized appreciation .................. 21,373,303 75,226,142 54,692,911 Gross tax unrealized depreciation .................. (25,676,185) (111,380,245) (69,071,735) ------------- ------------- ------------- Net tax unrealized depreciation $ (4,302,882) $ (36,154,103) $ (14,378,824) ============= ============= ============= Currently distributable ordinary income ............... $ 1,385,823 $ 1,256,012 $ -- Currently distributable long-term capital gain .................. -- -- -- ------------- ------------- ------------- Currently total distributable earnings ...................... $ 1,385,823 $ 1,256,012 $ -- ------------- ------------- ------------- Other accumulated loss .......... $ (30,569,914) $ (11,425,486) $ (13,831,859) ------------- ------------- ------------- Total accumulated loss .......... $ (33,486,973) $ (46,323,577) $ (28,210,683) ============= ============= =============
39 NOTES TO FINANCIAL STATEMENTS PRIMECAP ODYSSEY FUNDS -------------------------------------------------------------------------------- FOR THE SIX MONTHS ENDED APRIL 30, 2010 (UNAUDITED) - CONTINUED U.S. Generally Accepted Accounting Principles (GAAP) require that certain components of net assets relating to permanent differences be reclassified between financial and tax reporting. These reclassifications have no effect on net assets or net asset value per share. During the fiscal year ended October 31, 2009, the reclassifications were as follows: UNDISTRIBUTED ACCUMULATED NET INVESTMENT NET REALIZED INCOME LOSS PAID IN CAPITAL -------------- ------------ --------------- PRIMECAP Odyssey Stock Fund ............... 26,346 (2,388,622) 2,362,276 PRIMECAP Odyssey Growth Fund .............. (23,664) 23,664 -- PRIMECAP Odyssey Aggressive Growth Fund ... 1,419,736 (1,446) (1,418,290) The permanent differences relate to net operating loss and foreign currency adjustments and in-kind transfers of securities with differing book and tax methods of accounting. During the year ended October 31, 2009, the PRIMECAP Odyssey Stock Fund realized a $2,362,276 gain resulting from an in-kind transfer of securities to the PRIMECAP Odyssey Growth Fund in connection with a shareholder redemption. Because such gains are not taxable, the transaction resulted in a permanent book-to-tax difference for the PRIMECAP Odyssey Stock Fund. At October 31, 2009, the PRIMECAP Odyssey Stock Fund, PRIMECAP Odyssey Growth Fund, and PRIMECAP Odyssey Aggressive Growth Fund had capital loss carryovers of $30,569,914, $11,425,486, and $13,831,859, respectively, of which $4,884,883, $1,686,809, and $3,399,678 expire on October 31, 2016, and $25,685,031, $9,738,677, and $10,432,181 expire on October 31, 2017, respectively. Tax components of dividends paid during the six months ended April 30, 2010 and the year ended October 31, 2009 were as follows: APRIL 30, 2010 ------------------------------ Ordinary Long-Term Income Capital Gain Distributions Distributions ------------- ------------- PRIMECAP Odyssey Stock Fund ................ $ 1,831,079 $ -- PRIMECAP Odyssey Growth Fund ............... $ 1,825,837 $ -- PRIMECAP Odyssey Aggressive Growth Fund .... $ -- $ -- OCTOBER 30, 2010 ------------------------------ Ordinary Long-Term Income Capital Gain Distributions Distributions ------------- ------------- PRIMECAP Odyssey Stock Fund ................ $ 1,193,169 $ -- PRIMECAP Odyssey Growth Fund ............... $ 1,291,445 $ -- PRIMECAP Odyssey Aggressive Growth Fund .... $ -- $ -- 40 NOTES TO FINANCIAL STATEMENTS PRIMECAP ODYSSEY FUNDS -------------------------------------------------------------------------------- FOR THE SIX MONTHS ENDED APRIL 30, 2010 (UNAUDITED) - CONTINUED The Funds designated as long-term capital gain dividends, pursuant to Internal Revenue Code Section 852(b)(3), the amounts necessary to reduce the earnings and profits of the Funds related to net capital gains to zero for the tax year ended October 31, 2009. (6) 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 Bank of New York Mellon Corporation 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. (7) OTHER AFFILIATES Certain of the Funds' investments are in companies that are considered affiliated companies of a Fund because the Fund owns more than 5% of the outstanding voting securities of the company. Transactions during the period in securities of these companies were as follows:
PRIMECAP ODYSSEY GROWTH FUND MARKET PROCEEDS MARKET VALUE AS OF FROM VALUE AT OCTOBER 31, PURCHASES SECURITIES DIVIDEND REALIZED APRIL 30, Common Stock 2009 at Cost Sold Income Gain (Loss) 2010 ----------------------------------------------------------------------------------------------- Conceptus, Inc. ... 20,202,572 9,891,971 -- -- -- 31,620,330 Immunogen, Inc. ... -- 36,919,843 -- -- -- 46,577,000 Total ............. $20,202,572 $46,811,814 -- -- -- $78,197,330 PRIMECAP ODYSSEY AGGRESSIVE GROWTH FUND MARKET PROCEEDS MARKET VALUE AS OF FROM VALUE AT OCTOBER 31, PURCHASES SECURITIES DIVIDEND REALIZED APRIL 30, Common Stock 2009 at Cost Sold Income Gain (Loss) 2010 ----------------------------------------------------------------------------------------------- Immunogen, Inc. ... 3,928,368 18,277,027 -- -- -- 29,180,114 Total ............. $ 3,928,368 $18,277,027 -- -- -- $29,180,114
42 NOTES TO FINANCIAL STATEMENTS PRIMECAP ODYSSEY FUNDS -------------------------------------------------------------------------------- FOR THE SIX MONTHS ENDED APRIL 30, 2010 (UNAUDITED) - CONTINUED (8) SUBSEQUENT EVENTS In preparing the financial statements as of April 30, 2010, management considered the impact of subsequent events for potential recognition or disclosure in these financial statements. (9) ACCOUNTING PRONOUNCEMENTS In January 2010, the Financial Accounting Standards Board issued Accounting Standards Update (ASU) No. 2010-6, Fair Value Measurements and Disclosures (Topic 820): Improving Disclosures and Fair Value Measurements. ASU No. 2010-6 enhances and clarifies existing fair value measurement disclosure requirements and is effective for interim and annual periods beginning after December 15, 2009. The Funds are currently evaluating the impact, if any, of applying the provisions of ASU No. 2010-6. 42 ADDITIONAL INFORMATION PRIMECAP ODYSSEY FUNDS ---------------------------------------------------------------- (UNAUDITED) PROXY VOTING PROCEDURES The Investment Advisor votes proxies relating to portfolio securities in accordance with procedures that have been approved by the Trust's board of trustees. You may obtain a description of these procedures, free of charge, by calling toll-free 1-800-729-2307. This information is also available through the Securities and Exchange Commission's ("SEC") website at http://www.sec.gov. 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 SEC'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 1-800-SEC-0330. This information is also available, without charge, by calling toll-free 1-800-729-2307. 43 MANAGEMENT PRIMECAP ODYSSEY FUNDS ---------------------------------------------------------------- (UNAUDITED) PORTFOLIO MANAGERS PRIMECAP Management Company has five portfolio managers who together have more than 170 years of investment experience. Each of these five individuals manages a portion of the PRIMECAP Odyssey Stock Fund and the PRIMECAP Odyssey Growth Fund. The PRIMECAP Odyssey Aggressive Growth Fund is primarily managed by Messrs. Schow, Kolokotrones, Fried, and Mordecai. A small portion of each Fund's assets may be managed by individuals in the Investment Advisor's research department. The portfolio managers primarily responsible for overseeing the Funds' investments are: NAME YEARS OF EXPERIENCE -------------------------------------------- Howard B. Schow 53 Mitchell J. Milias 45 Theo A. Kolokotrones 39 Joel P. Fried 24 Alfred W. Mordecai 12 -------------------------------------------- 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 at the Funds' 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, CA Officer PRIMECAP Management Company 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, CA Officer PRIMECAP Management Company 91101-3005 (1946) ---------------------------------------------------------------------------------------------------
44 MANAGEMENT PRIMECAP ODYSSEY FUNDS -------------------------------------------------------------------------------- (UNAUDITED) - CONTINUED
POSITION(S) TERM OF OFFICE; NAME, ADDRESS HELD LENGTH OF PRINCIPAL OCCUPATION(S) (YEAR OF BIRTH) WITH TRUST TIME SERVED DURING PAST 5 YEARS --------------------------------------------------------------------------------------------------- Joel P. Fried Co-Chief Indefinite; Executive Vice President, Director, 225 South Lake Ave., Executive Since 09/04 Portfolio Manager, and Principal Suite 400, Pasadena, CA Officer and Trustee PRIMECAP Management Company 91101-3005 (1962) --------------------------------------------------------------------------------------------------- David H. Van Slooten Chief Financial Indefinite; Executive Vice President, Portfolio 225 South Lake Ave., Officer and Since 06/04 Manager, Financial Analyst, and Principal Suite 400, Pasadena, CA Secretary PRIMECAP Management Company 91101-3005 (1963) Chief Indefinite; Administrative Since 02/09 Officer --------------------------------------------------------------------------------------------------- Karen Chen Vice President Indefinite; Chief Compliance Officer, Director of 225 South Lake Ave., of Compliance Since 10/04 Compliance and Reporting, PRIMECAP Suite 400, Pasadena, CA and Chief Management Company 91101-3005 Compliance (1973) Officer and AML Officer --------------------------------------------------------------------------------------------------- "INDEPENDENT" TRUSTEES. The table below sets forth certain information about each of the trustees of the Trust who is not an "interested person" of the Trust as defined in the 1940 Act ("Independent Trustees"). NUMBER OF TERM OF PORTFOLIOS OTHER POSITION(S) OFFICE; IN FUND DIRECTOR- NAME, ADDRESS HELD LENGTH OF PRINCIPAL OCCUPATION(S) COMPLEX BY SHIPS HELD (YEAR OF BIRTH) WITH TRUST TIME SERVED DURING PAST 5 YEARS TRUSTEE(1) BY TRUSTEE --------------------------------------------------------------------------------------------------- Benjamin F. Hammon Chairman Indefinite; Retired; Director, 3 None 225 South Lake Ave., of the Since 09/04 Institutional Equity Suite 400, Pasadena, CA Board and Sales, Salomon Smith 91101-3005 Trustee Barney Inc. (1963-1998) (1935) --------------------------------------------------------------------------------------------------- Wayne H. Smith Chairman Indefinite; Retired; President, 3 None 225 South Lake Ave., of the Audit Since 09/04 Wayne H. Smith Suite 400, Pasadena, CA Committee Consulting, Inc. (2002- 91101-3005 and Trustee 2007); Vice President, (1941) Financial Services, Avery Dennison Corporation (2001-2002); Vice President, Financial Services, and Treasurer, Avery Dennison Corporation (1999-2001) ---------------------------------------------------------------------------------------------------
45 Management PRIMECAP Odyssey Funds -------------------------------------------------------------------------------- (Unaudited) - continued
NUMBER OF TERM OF PORTFOLIOS OTHER POSITION(S) OFFICE; IN FUND DIRECTOR- NAME, ADDRESS HELD LENGTH OF PRINCIPAL OCCUPATION(S) COMPLEX BY SHIPS HELD (YEAR OF BIRTH) WITH TRUST TIME SERVED DURING PAST 5 YEARS TRUSTEE(1) BY TRUSTEE ------------------------------------------------------------------------------------------------------ Joseph G. Uzelac Trustee Indefinite; Retired; Managing 3 None 225 South Lake Ave., Since 10/07 Director, Lehman Suite 400, Pasadena, CA Brothers Global 91101-3005 Investment Bank (1944) (1988-2007) ------------------------------------------------------------------------------------------------------ Elizabeth D. Obershaw Trustee Indefinite; Managing Director, 3 None 225 South Lake Ave., Since 06/08 Horsley Bridge Suite 400, Pasadena, CA Partners, a California- 91101-3005 based investment advisor (1960) (2007-present); Vice President and Chief Investment Officer, Hewlett-Packard Company (1991-2007); Hewlett-Packard Company (1983-1991) ------------------------------------------------------------------------------------------------------ (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. "INTERESTED" TRUSTEES. The table below sets forth certain information about each of the trustees of the Trust who is an "interested person" of the Trust as defined by the 1940 Act. NUMBER OF TERM OF PORTFOLIOS OTHER POSITION(S) OFFICE; IN FUND DIRECTOR- NAME, ADDRESS HELD LENGTH OF PRINCIPAL OCCUPATION(S) COMPLEX BY SHIPS HELD (YEAR OF BIRTH) WITH TRUST TIME SERVED DURING PAST 5 YEARS TRUSTEE(1) BY TRUSTEE ------------------------------------------------------------------------------------------------------ Joel P. Fried(1) Co-Chief Indefinite; Executive Vice 3 None 225 South Lake Ave., Executive Since 09/04 President, Director, Suite 400, Pasadena, Officer and Portfolio Manager, and CA 91101-3005 Trustee Principal (1962) PRIMECAP 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.
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Investment Advisor PRIMECAP MANAGEMENT COMPANY 225 South Lake Avenue, Suite 400 Pasadena, California 91101 o Distributor QUASAR DISTRIBUTORS, LLC 615 East Michigan Street, 4th Floor Milwaukee, Wisconsin 53202 o Custodian THE BANK OF NEW YORK MELLON CORPORATION One Wall Street New York, New York 10286 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 BINGHAM McCUTCHEN LLP 355 South Grand Avenue, Suite 4400 Los Angeles, California 90071 o Independent Registered Public Accounting Firm PRICEWATERHOUSECOOPERS LLP Three Embarcadero Center 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. 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 PURCHASERS. 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 directors/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 THE 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) A SEPARATE CERTIFICATION FOR EACH PRINCIPAL EXECUTIVE AND PRINCIPAL FINANCIAL OFFICER 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) CERTIFICATIONS 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 June 30, 2010 By /s/ Howard B. Schow Howard B. Schow, Co-Chief Executive Officer Date June 30, 2010 By /s/ Theo A. Kolokotrones Theo A. Kolokotrones, Co-Chief Executive Officer Date June 30, 2010 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 June 30, 2010 By /s/ Howard B. Schow Howard B. Schow, Co-Chief Executive Officer Date June 30, 2010 By /s/ Theo A. Kolokotrones Theo A. Kolokotrones, Co-Chief Executive Officer Date June 30, 2010 By /s/ David H. Van Slooten David H. Van Slooten, Chief Financial Officer Date June 30, 2010 PRINT THE NAME AND TITLE OF EACH SIGNING OFFICER UNDER HIS OR HER SIGNATURE.