Directors and Officers

Investment Advisor

Hottinger Capital Corp.

1270 Avenue of the Americas, Suite 400

New York, NY 10020

(212) 332-7930

Administrator

Citi Fund Services Ohio, Inc.

Custodian

Citibank, N.A.

Transfer Agent

American Stock Transfer & Trust Company

59 Maiden Lane

Plaza Level

New York, NY 10038

Legal Counsel

Stroock & Stroock & Lavan LLP

Independent Registered Public Accounting Firm

Deloitte & Touche LLP

The Investment Advisor

The Swiss Helvetia Fund, Inc. (the “Fund”) is managed by Hottinger Capital Corp., which belongs to the Hottinger Group.

The Hottinger Group dates back to Banque Hottinguer, which was formed in Paris in 1786 and is one of Europe’s oldest private banking firms. The Hottinger Group has remained under the control of the Hottinger family through seven generations. Its headquarters are in Zurich with offices in Basel, Brig, Geneva, Lugano, Luxembourg, Sion, Vienna, Zug, London, Paris, New York, Toronto and the Bahamas.

Executive Offices

The Swiss Helvetia Fund, Inc.

1270 Avenue of the Americas, Suite 400

New York, New York 10020

1-888-SWISS-00 (1-888-794-7700)

(212) 332-2760

For inquiries and reports:

1-888-SWISS-00 (1-888-794-7700)

Fax: (212) 332-7931

email: swz@swz.com

Website Address

www.swz.com

The Fund

The Fund is a non-diversified, closed-end investment company whose objective is to seek long-term capital appreciation through investment in equity and equity-linked securities of Swiss companies. The Fund also may acquire and hold equity and equity-linked securities of non-Swiss companies in limited instances.

The Fund is listed on the New York Stock Exchange under the symbol “SWZ”.

Net Asset Value is calculated daily by 6:15 P.M. (Eastern Time). The most recent calculation is available by calling
1-888-SWISS-00 or by accessing our Website. Net Asset Value is also published weekly in Barron’s, the Monday edition of The Wall Street Journal and the Sunday Edition of The New York Times.

Global Market Review

The momentum of the global economic recovery faded during the summer, as indicated by the decline in recent Purchasing Managers’ indices from most regions and the deterioration in leading economic indicators, particularly in the U.S. and Japan. Over the summer, the U.S. economy struggled to show any sign of recovery in either the housing or the labor market, putting in doubt the possibility of reducing the output gap. Positive surprises came from economic developments in the Eurozone. Germany, in particular, showed a sharp increase in exports, helped by a weak euro. Systemic risk in Europe was diminished by the European rescue package and the quantitative easing program of the European Central Bank (ECB), through which the ECB purchased government bonds with a value in excess of 61.5 billion euros. ECB members indicated that the unlimited three-month liquidity operations were likely to be extended until at least the end of the year. Spain was able to raise cash more easily than expected through the issuance of a significant amount of bonds that were purchased, in substantial part, by China. From the standpoint of yield spreads, peripheral European countries continued to face high risk premiums, highlighting uncertainty over their debt levels and fiscal consolidations. However, austerity plans that were implemented by those countries are likely to restrain future growth, particularly in the southern European countries. Developing countries, on the other hand, have benefited from robust economic growth which, more and more, is linked to private consumption and sustained trade activity.

Inflation rates and growth in the money supply have remained extremely contained in the developed economies. The U.S. continues to experience little to no inflation, which has caused Federal Reserve Chairman Bernanke to express concern about declining inflation expectations. Quantitative easing measures (the purchase of government or private debt by central banks in an effort to boost the monetary base) also were discussed as a reaction to the recent deterioration in growth indicators. This would bode well for a continuation of highly expansionary monetary policies in the developed economies. In contrast, higher inflation rates in key emerging markets imply less accommodative monetary policies. For example, both the Chinese and the Brazilian central banks already were well advanced in the tightening cycle.

During the third quarter, investor concerns included a potential second recession in the U.S., a hard landing in China, and ongoing sovereign debt issues in the Eurozone. These concerns led to a flight to quality, particularly in August. Sovereign bonds in countries such as Germany, Switzerland, Norway and Sweden; precious metals, especially gold; and the Swiss franc were regarded as safe havens. The yields on many sovereign bonds have reached all-time lows, offering investors little return against the backdrop of exploding public-sector debt caused by rescue packages and plunging tax revenues.

At the corporate level, second quarter results were higher than expected and balance sheets returned to health. Nonetheless, equities remained volatile in August, as they were affected by the release of weak economic data. On a positive note, September’s market returns were more favorable as investors’ appetites for risk increased due to improved U.S. economic data. As a result, equity prices increased during the third quarter due to a record increase in September. Nonetheless, the MSCI World and MSCI Emerging Market Indices with 2010 price-to-earnings ratios estimated at 13.4x and 12.6x, respectively, continued to trade at a discount to historical valuations.

Currency

Currency is a controversial topic in today’s financial markets. Countries appear to want to use cheap exports or quantitative easing to offset the economic contraction caused by the reduction of private sector investments and spending. Because the U.S. dollar is a reserve currency and because the Chinese yuan is pegged to the dollar, the U.S. monetary policy set by the Federal Reserve Board has the effect of becoming a global monetary policy despite the fact that the economic profiles and interests of countries are quite diverse. The result is an overstimulation of emerging market economies through excessively low interest rates, large capital inflows, a weakening U.S. dollar and a global plunge in interest rates on government bonds. Switzerland, with sound public finance, good economic growth, political

stability and controlled inflation is one of the recipients of these capital inflows, with the result that the Swiss franc continues to strengthen, despite repeated actions by the Swiss National Bank (SNB) to weaken it.

For the year, the Swiss franc has strengthened 12% against the euro and 3% against the U.S. dollar. From the peak of the equity markets in 2007 to the end of the third quarter of 2010, both the U.S. dollar and the euro have fallen 20% against the Swiss franc.

Swiss corporations that report their results in local currencies will suffer from the appreciation of the Swiss franc when their results are translated. As a result, companies with significant exposure to foreign markets, especially markets based on the euro and the U.S. dollar, will appear to be relatively expensive, which could trigger selling pressure. While historically there has not been a significant correlation between the movement of the Swiss franc and the performance of the Swiss market in local currencies, the mismatch between cost and revenues could become problematic.

Companies with transactional exposure usually hedge their foreign cash flows for a certain period of time, therefore, the effect of the strong Swiss franc on operating margins should start to be felt next year. Historically, Swiss corporations have adapted by reducing their local cost base and, in some cases, by moving their production out of Switzerland.

Companies in the healthcare, food and capital goods industries generally have a natural hedge because the location of their cost base is mostly the same as the location of their sales. Companies such as Richemont and Swatch have the greatest exposure from the impact of currency on margins due to their “made in Switzerland” label.

Swiss Economy Review

Switzerland ranked number one in a report released by the International Monetary Fund (IMF) on global competitiveness for 2010-2011, which said that Switzerland was characterized by the capacity for innovation and a very sophisticated business culture. The report noted that Switzerland’s scientific research institutions also are well-ranked globally and that there is strong collaboration between the academic and the business sectors. The IMF noted that these factors, combined with significant corporate spending on research and development, help to ensure the development of marketable products and processes. On a final note, the report stated that the attraction to Switzerland also was linked to governance structures that guaranteed a level playing field, which enhanced business confidence.

Switzerland’s current macroeconomic situation continues to be considered among the most stable in the world. Its 3.6% quarter over quarter annualized growth in gross domestic product (GDP) for the second quarter of 2010 (compared to first quarter GDP growth) and its 3.4% growth for the year, were ahead of market expectations.

These gains were the results of strong investments, particularly in construction. The Swiss export sector continued to show robust growth, while private consumption increased by 4.8% compared to the prior year, helped by a strong expansion (+5.0%) in domestic mortgage credits. Corporate activities are above their long-term trend with continued improvement of business sentiment. The most recent strengthening of the Swiss franc has had only a limited negative effect on corporate results. On the monetary front, the SNB temporarily suspended its intervention due to a substantial increase in its foreign currency reserves (75% of the SNB balance sheet and 40% of Swiss GDP) particularly in euros. During the past year the SNB’s interventions have had a dramatic negative effect on its balance sheet with potential losses amounting to 14 billion Swiss francs. Any attempt by the SNB to support the euro with further purchases can virtually be ruled out for political reasons. The SNB should hold on to its quasi-zero interest rate policy for at least another quarter in view of a very benign outlook for inflation. As a result, the Swiss Government raised its 2010 forecast for GDP growth from 1.8% to 2.7%.

Sector Review

Food

Organic top line growth in the food sector has been moderate on the continuation of subdued consumer sentiment, lower pricing power and increasing pressure on commodities. While Lindt continues to face volatile cocoa prices and the effect of currency

pressures, it is benefitting from reduced competition in the premium segment of chocolate production. The company should grow organically at a high single digit rate for the year, with limited flexibility to increase prices. At Nestlé, its share price might stabilize towards the end of the year with more flexibility for adjustments in selected markets. Strategically, the firm will continue to emphasize its footprint in nutrition, health and wellness. In September, Nestlé announced the creation of Nestlé Health Science and its intention to leverage its technological know-how for the development of new compounds in the prevention of chronic disorders such as diabetes, atherosclerosis and neurodegenerative diseases. This emerging, but still embryonic, activity will not compete directly with the field of prescribed medicines, but will pose a new challenge to distributors of over-the-counter drugs, vitamins and nutritional supplements.

The food sector remains expensive, both historically and in comparison to other sectors. The sector’s valuation premium is partly justified by the superior top line visibility, its healthy balance sheets and the potential for upward revisions in earnings estimates as it returns to normalized mid-cycle growth rates.

Industrials

The decline in economic activity of Switzerland’s traditional trading partners (with the current exception of Germany) is taking place in the midst of austerity measures and

the long-term need to restructure welfare payments in response to demographic changes. At the same time, new markets in the densely populated developing countries, together with an increase in their middle class populations, are major avenues of growth for Swiss exports. Indeed, most companies in the industrial sector, especially mid- and small-capitalization companies, posted earnings far better than expected for the first half of 2010. The upside surprise came not only because of improved margins but, more often than not, from increases in the level of sales and orders. The main drivers behind this momentum included restocking of inventories, growth in demand from emerging markets and gains in market share resulting from strong international networks. In the Swiss engineering sector, an important part of the business comes from recurring revenues, which provides protection against the fluctuations of the business cycle. An estimated 30% of the operating profits for the sector is attributable to services, spare parts and consumables. Sustainability of business is therefore rewarded, as companies can benefit from a large installed customer base that had been built over the years.

Examples of companies with strong business growth include Meyer Burger, Schweiter and Belimo. The Fund’s exposure to mid- and small-capitalization companies in the industrial sector was close to 15% at the end of the quarter and the Fund’s total exposure to the sector was 19%.

Results were more mixed for large-capitalization companies. ABB showed improvement in the early cyclical businesses such as automation, but suffered a setback in power systems as large orders remained scarce. While Management noted that ABB was experiencing some pricing pressure, the efficient programs it has in place should continue to allow it to reduce costs and to help it to offset a tougher pricing environment. Holcim results were disappointing due to weaker than expected activity in Europe and, to some extent, in the Asia Pacific region, both of which triggered some pricing erosion due to excess capacity.

Following strong performance after the bottom in 2009, Swiss industrials traded at average long-term multiples in terms of price to book and price to sales ratios and higher than average in terms of price to earnings ratios.

Healthcare and Chemicals

Healthcare failed to match the performance of global indices despite the consensus view on the attractiveness of the sector and the reasonable valuation of these companies. The MSCI Healthcare Index was up 9.9% during the third quarter compared to 13.8% for the MSCI World Index. The performance of Swiss healthcare stocks displayed a mixed pattern with Roche underperforming the Swiss Performance Index (SPI) to a large extent, while Novartis benefited from a shift away from its competition. Roche faced a number of serious clinical setbacks in its

oncology franchise, including a vote from an advisory panel of experts of the U.S. Food and Drug Administration (FDA) against an extension of a therapeutic indication for the breast cancer drug, Avastin. In addition, in September the company announced what appears to be its largest restructuring plan including measures to revise cost structures. While the market anticipates cost savings in the range of two to four billion Swiss francs, the company plans to disclose more details by the end of the year. Novartis marked an important step forward in the treatment of multiple sclerosis with the FDA approval in September of the first oral treatment for relapsing forms of multiple sclerosis. The introduction of the drug Gilenya will put competitive pressure on existing Interferon-based treatments, including Rebif from Merck KGaA and Avonex from Biogen Idec. As anticipated, Novartis has completed the acquisition from Nestlé of the remaining 52% of Alcon for $28.3 billion giving it a 77% majority ownership.

The generic market has seen the first introduction of a “copy” of the anti-thrombotic drug Lovenox from Sanofi Aventis. The market launch of this generic by Sandoz, a division of Novartis, will be challenged soon by the entry of new competitors such as pure-play generic drug makers Teva and Mylan.

The healthcare sector was very active on the merger and acquisition front, revealing strong interest from the pharmaceutical companies in the biotech sector and its

motivation to externalize part of its research and development. Offers have been at a substantial premium to market prices as indicated by the price paid by Sanofi Aventis for Genzyme, Johnson and Johnson for Crucell, and Bristol-Myers Squibb for Zymogenetics. In that environment, speculation on additional mergers has had an impact on the volatility of the sector and, in particular, on selected Swiss biotech stocks.

Although the dental implant market appeared to be stabilizing in the middle of the year, Management has been reluctant to invest in the sector. Companies focusing on dental implants and in the orthopedic market continued to have disappointing results. Since the beginning of the year, Nobel and Straumann shares have declined by 49% and 25%, respectively.

Swiss specialty companies continued to benefit from the rebound of manufacturing activity in Europe and North America despite the unfavorable strength of the Swiss franc, which will have an increasingly negative effect on company margins. Raw material price increases were transferred to customers to some extent. Companies such as EMS-Chemie saw increased volume and benefited from the demand for plastic from the automotive industry. Growing automotive production in China will continue to trigger expansion of capacity in the specialty chemical sector.

The commoditized agro-chemical business should continue to experience pricing

pressure, which may be partially off-set by volume momentum in the crop protection industry. Syngenta’s crop protection division is known to be cyclical and the current negative pricing environment is not unusual. However, the underlying long-term fundamentals of the crop protection and the seeds industry remain intact.

Financials

One of the key developments during the third quarter was the release of the Basel Committee report on Banking Supervision, which included an agreement to develop a new set of rules aimed at preventing a repeat of the 2008 credit crisis and the subsequent recession. Under the new regulatory regime of Basel III, capital requirements more than tripled, increasing from 2% of assets under the Basel II framework to 7% of assets. Basel III also set an effective target core equity ratio of 7% including a 2.5% conservation buffer. However, the new regime will not be fully implemented until 2019, giving financial institutions over eight years to comply with these new rules.

At the same time, the Swiss Commission of Experts appointed by the Federal Council submitted a package of measures to limit the “too big to fail” risks posed by banks that are systemically important to the Swiss economy. Those recommendations will be the basis for upcoming changes in Swiss banking law. As a result, UBS and Credit Suisse will have to maintain higher capital adequacy ratios than their foreign competitors. Overall, Basel III prescribes common equity of 7% and total

capital of 10.5%, while the Swiss Commission of Experts requires banks to hold 10% of common equity and a total of 19% of total capital (common equity and contingent convertibles). While target leverage ratios were not explicitly mentioned, the other requirements effectively translated into a target leverage ratio of about 5%. The next step in global financial reform will be for the Financial Stability Board to address the “too big to fail” issue at the next G20 meeting.

These measures removed a layer of uncertainty from the future international regulatory environment, where the final outcome for Basel III is likely to be better than expected for banks. However, new global capital requirements under Basel III and “too big to fail” recommendations could structurally depress returns on equity, which reached 18% in the past cycle, to below 13%. Swiss private banks could benefit from a flight-to-safety trend given their low tax environment and strong currency within a stable political environment. The sector is still trading at very attractive valuations with an estimated 2010 price-to-earnings ratio of 10 and an estimated 2010 price-to-book ratio of 1.4, reflecting weaker secular growth, lower revenue quality and declining profitability going forward.

While banks outperformed the SPI in the third quarter the sector has lagged behind the SPI significantly since the beginning of the year. After improved macroeconomic data was released in August, banks have rallied substantially. From a corporate perspective,

UBS surprised investors with ongoing recovery in its core investment banking and wealth management businesses with net new money break-even expected in the fourth quarter. As a key segment in the banking sector, with few exceptions, private banks strongly disappointed investors due to declining profitability. The outlook for results for the third quarter remains cautious as trading conditions have not improved materially from the second quarter. Relative to their European competitors, Swiss banks could benefit from very high capitalization levels and regulation norms that are already ahead of the curve. Nonetheless, relative to the SPI, the Fund remained underweight in the banking sector, even though the underweighting was reduced by an increase in the Fund’s exposure to UBS during the quarter.

Consumer Goods

The luxury goods segment continues to ride on the momentum of emerging market consumers and stabilization in the developed markets. Emerging markets are expected to provide close to 80% of the growth in the industry.

The Fund has maintained a large overweight position in the sector and has benefited from the outperformance of Swatch Group versus the SPI (20.6% versus 3.4%, respectively for the third quarter). Swatch Group and Richemont published very strong results during the quarter with Swatch’s margins being the highest ever for a first half of the year. As a pure play in the watch industry, Swatch was a major beneficiary of the

restoration of inventories as more than 90% of group sales are realized through third parties.

Real Estate

The competitiveness of Switzerland, particularly with the presence of highly qualified staff, a location offering the benefits of certainty in the legal environment, political stability and well functioning institutions, continues to attract many foreigners that may also have a tendency to relocate their business activities to the country.

One sector that has grown in Switzerland is global commodities trading, primarily as a result of Switzerland’s tax climate, good infrastructure and availability of highly qualified personnel. In the future, this sector can be expected to base more trading operations in Switzerland.

Switzerland is witnessing a sustained level of immigration from individuals and from international companies deciding to relocate. This trend is very supportive for real estate which has not suffered much during the financial crisis and which continues to see very good activity. Mounting pressures on transport infrastructure in the major cities will ensure that demand for construction services remains high over the foreseeable future. This will generate further sector growth for real estate developers and reduce vacancy rates for current properties. PSP Property and Mobimo, two relatively large positions in the Fund, have seen their share

prices increase by 21% and 11%, respectively from the beginning of the year to the end of September. In addition, their dividend yields are much higher than the Swiss market.

Private Equity and Other Illiquid Investments

During the third quarter, the Fund made a new direct private investment in EyeSense, a non-listed company, and, together with a new strategic investor, UCB Pharma, a follow-on investment in Synosia. EyeSense, a spinoff from Novartis, has great prospects in the diagnostic field of blood glucose measurement. With more than 220 million diabetics in the world today, blood glucose measurement is one of the largest diagnostic markets. While the Fund made additional investments in Zurmont Madison and Aravis II, both private equity funds, as a result of capital calls made in accordance with the terms of the Fund’s initial limited partnership agreements, it did not make any investments in new private equity funds. The Fund’s total draw downs in these two limited partnerships represented 1.9% of the Fund’s net assets as of September 30, 2010. If the unfunded commitments of 1.5% were included, the total percentage invested in limited partnerships would equal 3.4% of the Fund’s net assets.

Source: Citi Fund Services Ohio, Inc.

Outlook

Management’s strategy at this stage of the economic cycle is to favor growth over value and globally-exposed companies to emerging markets. However, because companies that have slow growth, steady cash flows with high dividend pay-outs and strong domestic exposure suffer much less from the strength of the currency, they are also part of the portfolio mix.

In terms of investment themes, Management favors capital expenditures in the oil sector, consumer growth in emerging markets, infrastructure spending in India and

an upgrade of the Chinese industrial base as its population is aging and its labor costs are increasing.

The challenge for corporate earnings across the board is the relative scarcity of spending power by European and U.S. consumers, a situation which could trigger some deflationary tendencies. On the other hand, because of this situation, both monetary and fiscal policies will need to remain very accommodative as governments step in to compensate for the retrenchment of the private sector which continues to heal from the debt crisis of 2008 and 2009. If governments in developed countries adopt strict fiscal orthodoxy, cut spending, and possibly increase taxes, equity markets should see some increased volatility.

In the meantime, very loose monetary policy in the developed countries and the resumption of quantitative easing will have the potential to greatly stimulate emerging market economies. The actions of central banks in the U.S. and Europe have not only reduced interest rates on their government debt but also put considerable pressure on the yields of the debt of emerging market countries to a level that is below what would be natural at this stage of their development.

Fund’s Performance Review

Despite anemic growth in the developed economies and continued risk averse sentiment, equity markets had positive returns in the third quarter. While the MSCI World Index had a positive return of 13.2% for the

quarter, it remains 4.8% below the market apex in April 2010. With the specter of another episode of recession in the developed equity markets, low growth expectations and the on-going increase in raw materials prices, investors have tactically embraced regions with the prospect of higher growth including countries in Asia. The performance of medium sized industrial companies and those involved in luxury goods revealed that investor appreciation early in the year was too conservative, and several analysts have had to make upward revisions in their forecasts for the year.

During the third quarter, luxury exports continued to benefit from Middle East and emerging market demand. The luxury goods sector has outperformed the European and Swiss indices in the third quarter and in the past twelve months (the sector returned 35% for the year in the SPI). Upward earnings revisions were consistent with the re-rating of the sector, which took place in mid-2009.

Utilities remained out of favor and were the worst performers of the SPI for the quarter. Also, defensive sectors such as healthcare and the consumer non-discretionary sector had poor returns in the third quarter. The construction and materials segment of the SPI displayed large discrepancies in the performance of its component companies. In this industry, Holcim shares ended the quarter with a return of -13.4% due to the effect of weather in India and a slow recovery in U.S. and European

cement demand. In contrast, Belimo and Forbo, in the same segment of the SPI, had stellar performance (17.6% and 24.6%, respectively). Belimo benefited from solid construction activity in the non-residential niche and from the trend towards energy-efficient building. Large performance differences were also observed in the energy sectors. Transocean shares, which the Fund began to accumulate at the end of the second quarter, had a technical rebound of +24.3% in the third quarter (versus -25.1% for Petroplus).

In general, company outlooks remain positive for the end of the year. Margins are at historically high levels and balance sheets have been deleveraged.

Sincerely,

Alexandre de Takacsy

President

Rudolf Millisits

Chief Executive Officer and Chief Financial Officer