================================================================================
As filed with the Securities and Exchange Commission on August 31, 2007
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT
INVESTMENT COMPANIES
Investment Company Act file number 811-05128
THE SWISS HELVETIA FUND, INC.
1270 Avenue of the Americas, Suite 400
New York, New York 10020
1-888-SWISS-00
Rodolphe E. Hottinger, President
Hottinger et Cie
3 Place des Bergues
C.P. 395
CH-1201 Geneva
Switzerland
Date of fiscal year end: December 31
Date of reporting period: January 1, 2007 - June 30, 2007
================================================================================
ITEM 1. REPORT TO STOCKHOLDERS
THE SWISS HELVETIA FUND, INC.
--------------------------------------------------------------------------------
Directors and Officers
Samuel B. Witt III, Esq. Eric R. Gabus
CHAIRMAN (NON-EXECUTIVE) DIRECTOR EMERITUS
Jean-Marc Boillat Baron Hottinger
DIRECTOR DIRECTOR EMERITUS
Paul R. Brenner, Esq./1/ Rodolphe E. Hottinger
DIRECTOR PRESIDENT
Alexandre de Takacsy CHIEF EXECUTIVE OFFICER
DIRECTOR Rudolf Millisits
Claude Frey SENIOR VICE PRESIDENT
DIRECTOR CHIEF FINANCIAL OFFICER
R. Clark Hooper Philippe R. Comby,
DIRECTOR CFA, FRM
Paul Hottinguer VICE PRESIDENT
DIRECTOR Edward J. Veilleux
Michael Kraynak, Jr./2/ VICE PRESIDENT
DIRECTOR SECRETARY
Didier Pineau-Valencienne/2,3/ Scot E. Draeger
DIRECTOR ASSISTANT SECRETARY
Stephen K. West, Esq./2/ Glen Fougere
DIRECTOR ASSISTANT TREASURER
Peter R. Guarino, Esq.
CHIEF COMPLIANCE OFFICER
-------------------------------------------------------------------------------
/1/AUDIT COMMITTEE CHAIRMAN /3/GOVERNANCE/NOMINATING COMMITTEE CHAIRMAN
/2/AUDIT COMMITTEE MEMBER
INVESTMENT ADVISOR
Hottinger Capital Corp.
1270 Avenue of the Americas, Suite 400
New York, New York 10020
(212) 332-7930
ADMINISTRATOR
Citigroup Fund Services, LLC
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. It has offices in the Bahamas, Basel, Geneva, London, Lugano,
Luxembourg, New York, Sion, Toronto, Vienna and Zurich.
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.
1
THE SWISS HELVETIA FUND, INC.
--------------------------------------------------------------------------------
Letter to Stockholders
MARKET OVERVIEW
Substantially all equity indices finished the first half of the year with
positive results, with emerging markets and the Eurozone registering double
digit returns.
Liquidity in the global equity markets continued to be created by emerging
market central banks, which maintain massive foreign reserves. These monetary
policies will continue to help support global equity markets, with global
economic growth expected to stay around 5%.
The continued strength of mergers and acquisitions (M&A) activity helped a
majority of the markets. Private equity firms have been heavy contributors to
this activity, accounting for 20% of the total M&A volume in 2006.
However, the first half of the year saw an increase in volatility,
especially in March, on the back of higher interest rates and a combination of
higher inflation expectations coupled with strong economic growth in Asia and
in Europe. China also has added to market volatility, but with mitigated damage
because of the small size of its domestic equity market. High beta assets such
as emerging market equities, small capitalization stocks and cyclical
industrial companies continued to be the star performers for the first half of
2007. A possible deterioration of the credit cycle continues to loom as
investors, searching for yields, continue to underprice risk in certain
structured finance products.
SWISS MARKET OVERVIEW
During the first half of 2007, the continuous strength of the industrial,
biotechnology, food and luxury goods sectors allowed the Swiss Performance
Index (SPI) to increase by 8.01% in US dollar terms, outperforming the
Standard & Poor's 500 average which returned 6.96%.
Year-to-date stock market performance across continental Europe varied.
Germany clearly outperformed the rest of the pack, while Switzerland was
somewhat higher than the average. The SPI return was however also held back by
the strong influence of the pharmaceutical and financial sectors.
The pharmaceutical industry subdued performance was due to pricing pressure
resulting from the production and sale of generic products, (especially from
companies in emerging markets who are becoming increasingly aggressive in their
intellectual property challenges), and from the lack of innovative new
products. The industry, in general, has been too conservative in drug research
and development, overemphasizing different versions of existing products and
over relying on marketing and distribution. Novartis, to some extent, is
impacted by these problems. Roche, on the other hand, is harvesting the fruits
of a more focused approach, benefiting from the strength of its oncology
franchise with Genentech and building up momentum in inflammatory and
autoimmune diseases. Novartis, with its generics division, and Roche, with its
diagnostic business, are also developing strategies against the commoditization
of branded pharmaceuticals.
2
THE SWISS HELVETIA FUND, INC.
--------------------------------------------------------------------------------
Letter to Stockholders (continued)
The mid and small cap companies in the bio-pharmaceutical sector, in sharp
contrast to traditional large cap companies, performed quite well as they
continued to develop and market highly promising drugs.
The financial sector in Switzerland is benefiting from strength in the
private banking and alternative asset management businesses. Performance in the
investment banking business, however, varied from bank to bank. Credit Suisse
has been doing reasonably well in this area while UBS has been struggling to
catch up to its competition and be in the top tier.
The Swiss industrial sector has been very active with excellent performance
in 2007. The energy infrastructure, energy production (including renewable
energy), industrial and agricultural machinery sectors were all very strong,
and the backdrop for these sectors remains positive. Europe, being the largest
trading partner with 62% of exports (including 20% to Germany), is an important
contributor to this performance. For the first time in 15 years, European
growth in domestic demand is outpacing that of the United States. European
growth in non-residential investment has strongly accelerated since mid- 2005
to a pace not seen since 2000. Germany's recovery is an important factor to
European growth; as it emerges from a period of deflation and sees its total
rate of investment increase after bottoming out at an all time low in 2005.
This trend is likely to continue given the large percentage of companies still
owned by the government and likely to get privatized.
Performance in the Swiss utilities sector varied as the development in
wholesale prices for electricity and CO/2/ rights was less favorable than in
the recent past. While the trend favoring strong pricing is still intact,
investors will continue to be concerned by the lack of visibility in government
policies pertaining to the environment for new investments.
Top performing stocks for the first half of the year either had high betas
or were involved in M&A activity. The out-performance of small companies was
evident in the 25% return of the SPI Small Companies Index, as compared to the
6% return of the SPI Large Companies Index. The best sectors were Oil & Gas
(with Petroplus up 70%), and Retail (with Jelmoli, although much more a real
estate player, up 59%, and Galenica up 33%).
SWISS ECONOMIC NOTES
At its last monetary policy assessment of June 14, 2007, the Swiss National
Bank (SNB) raised the target range for the three-month Libor by 25 basis points
to 2.00-3.00%. The Swiss economy developed even better than expected during the
last quarter. (Swiss economic growth accelerated by 0.8% versus consensus of
0.6%). The strongest contributors were household consumption (+0.7%) and
exports (+1.6%). Business activity is near a historic peak. (The Purchasing
Manager Index is at 62.8 versus its peak of 67.7). Capacity utilization rates
are high and employment growth is strong. (The unemployment rate is now at
2.7%). The KOF Swiss economic institute leading economic
3
THE SWISS HELVETIA FUND, INC.
--------------------------------------------------------------------------------
Letter to Stockholders (continued)
indicator of business has increased every month this year starting at 1.74 on
December 29, 2006 and finishing the first six months of 2007 at 1.98. The
consumer confidence indicator has also increased steadily reaching 20 (up from
two in December 2005). Given the healthy economic situation, the SNB increased
its forecast for real GDP growth from 2% to 2.5% for the whole year.
Due to a renewed rise in oil prices, stronger than expected economic
performance and the pressure on the Swiss franc, exercised in part by the carry
trade (funding investment in high yielding currencies by borrowing in low
yielding currencies), the SNB has increased its inflation projection to 0.8%
for 2007 (up from 0.5%); to 1.5% for 2008 (up from 1.4%); and to 1.7% for 2009
(up from 1.6%). With the current high level of capacity utilization, and the
resulting upside bias to wages, there is some likelihood that production costs
will be passed on to consumers. However, this may be offset by an increase in
productivity as a result of an accelerated pace of investment in infrastructure.
Despite continuing increases in short term interest rates, the yield curve
is not flattening, because long term rates also are increasing in response to
the positive economic outlook. The yield on the ten year bond was at 2.5% on
December 29, 2006 and finished at 3.2% on June 29, 2007.
The euro has remained very strong against the Swiss franc, supported by
higher nominal yields. This currency backdrop continues to help Swiss exports
to the Eurozone. The US dollar was especially volatile during the second
quarter. In April, it reached an intermediate low point of 1.19 Swiss francs in
reaction to a report of disappointing US existing homes sales but rebounded
later to 1.24 and ended the second quarter at 1.22.
Despite some improvement in the overall trade balance, the US dollar
continues on its path of weakness. Investors expect interest rate differentials
to narrow between Europe (including Switzerland) and the United States. The
high level of mortgage debt is having a deflationary impact on real estate
prices in the United States and therefore consumer spending is under pressure.
In this context, there is the increased probability that the Federal Reserve
Board's next move will be to cut interest rates. On the other side, the current
level of activity in Europe appears to be sustainable as domestic demand
supported by real wage increases is becoming the second engine of growth after
exports.
FUND PERFORMANCE
Prior to the expiration of the fund's rights offering at the end of the
quarter, the fund's performance was slightly ahead of the SPI. Its relative
performance was helped by its underweight in Novartis and UBS, but hurt by its
underweight in Nestle and industrial companies and its overweight in utilities
and Actelion (which was about flat for the first six months after very good
performance in 2006).
Management's approach of trying to minimize market risk (for example the
exposure to macro factors such as the global
4
THE SWISS HELVETIA FUND, INC.
--------------------------------------------------------------------------------
Letter to Stockholders (continued)
economic cycle and M&A activity) combined with a search for company specific
triggers in its investment choices has led to under-exposing the fund to the
sector that benefited the most from the economic upswing. Since the tide of
global growth has lifted all boats, this selectivity has not yet paid off.
Management expects that more difficult economic conditions and a little less
liquidity in the stock markets, will force investors to discriminate more in
the positions they take, and that should help validate the fund's investment
approach.
SWISS MARKET QUARTERLY CORPORATE NEWS
SWX (Swiss stock exchange group), SIS (clearing specialist group) and
Telekurs (financial data group) announced on May 15, 2007 plans to merge into
and under a single holding company. The transaction is expected to take effect
in early 2008. These three groups are complementary. The main drivers of the
combination are to strengthen Switzerland's financial market infrastructure,
thereby making it a competitive global player, and heighten efficiency and
innovation across the entire value chain. This open multi-provider architecture
should afford unhindered access to possibilities for international
collaboration, enabling the three groups to realize joint projects more rapidly
and to be more internationally anchored.
Credit Suisse and UBS would be holders of approximately 1/3 of the share
capital of the new holding company. The proposal remains to be accepted by the
shareholders at extraordinary general meetings of the three groups. We see this
as positive news for the Swiss market.
CORPORATE NEWS
On May 29, 2007, Jelmoli sold its household electronics and multimedia
unit, Fust, to the Swiss Coop Group for 900 million Swiss francs. Pending
regulatory approval, this sale confirms Jelmoli's strategy to extract value by
focusing on real estate as its sole business.
On June 18, 2007, Adecco announced that it will acquire Tuja Group of
Germany for a total of 800 million euros. This acquisition should significantly
increase Adecco's market position in Germany, where the job market has been
improving significantly with the unemployment rate declining from 12% in March
2005 to 9.1% in June 2007.
On June 26, 2007, Roche launched an unsolicited offer for all outstanding
shares of Ventana Medical systems for $75.00 per share in cash ($3 billion).
Ventana is the leader in histopathology (tissue-based diagnostics). This should
help Roche build a strong position in cancer diagnostics, an area where Roche
has not had much previous exposure.
On June 26, 2007, Galenica's iron replacement product, Ferinject, was
approved by the European Union. It has been submitted for approval in
Switzerland and the US, where such approval is expected later this year.
5
THE SWISS HELVETIA FUND, INC.
--------------------------------------------------------------------------------
Letter to Stockholders (continued)
------------------------------------------------------------------------------------------------------------------------------
PEER GROUP/INDICES PERFORMANCE COMPARISON IN SWISS FRANCS
------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN TOTAL RETURN AS OF YEAR ENDED DECEMBER 31 CUMULATIVE
YTD AS ---------------------------------------------------------------------- PERFORMANCE
OF 6/30/07 2006 2005 2004 2003 2002 2001 2000 1999 1998 1997 12/31/96-6/30/07
------------------------- ------------ ------ ------ ----- ------ ------- ------- ------ ------ ------ ------ ----------------
SWISS HELVETIA FUND 2.47% 20.56% 33.20% 7.75% 22.54% -20.40% -22.91% 14.06% 14.70% 15.57% 53.99% 210.42%
Swiss Performance
Index (SPI) 8.44% 20.67% 35.61% 6.89% 22.06% -25.95% -22.03% 11.91% 11.69% 15.36% 55.19% 199.12%
Swiss Market Index
(SMI) 4.82% 15.85% 33.21% 3.74% 18.51% -27.84% -21.11% 7.47% 5.71% 14.28% 58.93% 133.60%
iShares MSCI
Switzlerland/2
/(Formerly called
Webs Switzerland) 7.09% 20.02% 32.45% 6.34% 19.14% -26.23% -23.12% 7.75% 12.22% 11.74% 47.79% 144.25%
CS EF Swiss Blue
Chips/3,7/ 7.46% 18.78% 32.27% 2.75% 18.13% -28.75% -22.12% 10.97% 7.57% 14.21% 59.90% 147.89%
UBS (CH) Equity Fund/4,7/ 7.38% 18.98% 33.50% 5.00% 18.14% -26.02% -22.04% 7.42% 6.43% 12.75% 55.94% 145.29%
Pictet (CH) -- Swiss
Equities/5,7/ 9.59% 19.37% 37.06% 7.05% 20.10% -27.93% -22.35% 7.34% 9.38% 11.05% 55.65% 161.80%
Saraswiss (Bank
Sarasin)/6,7/ 7.16% 18.69% 33.05% 2.93% 19.64% -28.51% -24.45% 9.72% 7.10% 14.41% 53.57% 132.38%
SOURCES : BLOOMBERG, MANAGEMENT COMPANIES' WEBSITES AND CITIGROUP FUND SERVICES.
/1/ PERFORMANCE OF FUNDS IS BASED ON CHANGES IN THE FUND'S NAV OVER A SPECIFIED
PERIOD. IN EACH CASE TOTAL RETURN IS CALCULATED ASSUMING REINVESTMENT OF ALL
DISTRIBUTIONS. FUNDS LISTED, OTHER THAN ISHARES MSCI SWITZERLAND, ARE NOT
REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION. PERFORMANCE AND
DESCRIPTIVE INFORMATION ABOUT THE FUNDS ARE DERIVED FROM THEIR PUBLISHED
INVESTOR REPORTS AND WEBSITES, WHICH ARE SUBJECT TO CHANGE.
/2/ SHARES OF ISHARES MSCI SWITZERLAND ARE TRADED ON THE NEW YORK STOCK
EXCHANGE AND SEEKS TO PROVIDE INVESTMENT RESULTS THAT CORRESPOND TO THE
PERFORMANCE OF THE SWISS MARKET, AS MEASURED BY THE MSCI SWITZERLAND INDEX.
THESE STOCKS REPRESENT SWITZERLAND'S LARGEST AND MOST ESTABLISHED PUBLIC
COMPANIES, ACCOUNTING FOR APPROXIMATELY 85% OF THE MARKET CAPITALIZATION OF ALL
SWITZERLAND'S PUBLICLY TRADED STOCKS. PERFORMANCE OF SHARES OF ISHARES MSCI
SWITZERLAND IS CALCULATED BASED UPON THE CLOSING PRICES OF THE PERIOD INDICATED
USING THE SWISS FRANC/U.S. DOLLAR EXCHANGE RATE AS OF NOON EACH SUCH DATE, AS
REPORTED BY BLOOMBERG. SUCH EXCHANGE RATES WERE AS FOLLOWS: 12/31/96 = 1.35,
12/31/97 = 1.46, 12/31/98 = 1.38, 12/31/99 = 1.60, 12/31/00 = 1.61, 12/31/01 =
1.67, 12/31/02 = 1.39, 12/31/03 = 1.24, 12/31/04 = 1.14 12/31/05=1.32,
12/31/06=1.22, AND 6/30/07=1.23.
/3/ THIS FUND GIVES INVESTORS ACCESS TO THE SWISS EQUITY MARKET. IT HAS A
BROADLY-DIVERSIFIED PORTFOLIO GEARED TO THE LONG-TERM VALUE GROWTH, WITH A
PREFERENCE TO LARGE CAP STOCKS. STOCK SELECTION IS BASED ON CRITERIA SUCH AS
COMPANY VALUATION, BUSINESS CLIMATE, MARKET POSITIONING AND MANAGEMENT QUALITY.
/4/ THIS FUND INVESTS PRIMARILY IN MAJOR SWISS COMPANIES. QUALITY CRITERIA USED
FOR DETERMINING RELATIVE WEIGHTINGS OF COMPANIES INCLUDE: STRATEGIC
ORIENTATION, STRENGTH OF MARKET POSITION, QUALITY OF MANAGEMENT, SOUNDNESS OF
EARNINGS, GROWTH POTENTIAL AND POTENTIAL FOR IMPROVING SHAREHOLDER VALUE. THE
INVESTMENT OBJECTIVE SEEKS TO PROVIDE RESULTS THAT ARE ALIGNED WITH THE SPI
PERFORMANCE.
/5/ THIS FUND INVESTS IN SHARES OF COMPANIES LISTED IN SWITZERLAND AND INCLUDED
IN THE SPI, MAINLY IN BLUE CHIP STOCKS.
/6/ THIS FUND INVESTS IN SHARES OF SWISS COMPANIES. IT WEIGHTS INDIVIDUAL
SECTORS RELATIVE TO THE SPI ON THE BASIS OF THEIR EXPECTED RELATIVE
PERFORMANCE. IT FOCUSES ON LIQUID BLUE-CHIP STOCKS.
/7/ THESE FUNDS ARE NOT AVAILABLE FOR U.S. RESIDENTS OR CITIZENS.
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS.
6
THE SWISS HELVETIA FUND, INC.
--------------------------------------------------------------------------------
Letter to Stockholders (concluded)
---------------------------------------------------------
YEAR TO DATE
DECEMBER 31, 2006
THROUGH
JUNE 30, 2007
--------------------------------------- -----------------
PERFORMANCE IN SWISS FRANCS
Swiss Performance Index (SPI) 8.44%
Swiss Helvetia Fund
Based on Net Asset Value 2.47%/(1)/
CHANGE IN U. S. DOLLAR VS. SWISS FRANC 0.40%
PERFORMANCE IN U.S. DOLLARS
SWISS HELVETIA FUND PERFORMANCE
Based on Net Asset Value 2.06%/(2)/
Based on Market Price -4.28%
S & P 500 Index 6.96%
MSCI EAFE Index 10.74%
Lipper European Fund Index (10 Largest) 13.78%
Lipper European Fund Universe Average 12.06%
SOURCES: CITIGROUP FUND SERVICES, LLC AND BLOOMBERG
/(1)/ NOT INCLUDING THE RIGHTS OFFERING DILUTION THE NAV PERFORMANCE AS OF
6/30/07 WAS 9.28% IN SWISS FRANC TERMS.
/(2)/ NOT INCLUDING THE RIGHTS OFFERING DILUTION THE NAV PERFORMANCE AS OF
6/30/07 WAS 8.85% IN US DOLLAR TERMS.
OUTLOOK
We believe the Swiss market continues to have upside potential. The recent
performance of the Swiss market has eliminated most of the premium to the rest
of Europe that the market had built up over the preceding four years, pushing
multiples towards the low end of the range during that period. Moreover, in
comparison to companies in Europe and the US, the balance sheets of Swiss
corporations are historically overcapitalized and have become even more so
during the last four years. Investors are increasing pressure on companies to
buy back shares, increase leverage and/or participate in the global M&A market.
Management's recent visits to private and public companies and its
discussions with venture capitalists and private equity investors have
confirmed its view of Switzerland as a center of innovation and
entrepreneurship with leadership in financial, engineering, machinery, new
energy (solar, wind, mini-hydro, geothermal) and healthcare, preserving its
potential for new investments.
Sincerely,
/s/ Rodolphe E. Hottinger
Rodolphe E. Hottinger
PRESIDENT AND CHIEF EXECUTIVE OFFICER
/s/ Rudolf Millisits
Rudolf Millisits
SENIOR VICE PRESIDENT AND CHIEF FINANCIAL OFFICER
June 30, 2007
7
THE SWISS HELVETIA FUND, INC.
--------------------------------------------------------------------------------
Review of Operations (Unaudited)
Trading activity for the six months ended June 30, 2007 involved changes in the
following positions:
--------------------------------------------------------------------------------
NEW INVESTMENTS BY THE FUND
--------------------------------------------------------------------------------
Aare-Tessin AG Fuer Elektrizitaet Olten
Addex Pharmaceuticals SA
ABB Ltd., Expires 12/21/07 -- Call Warrant
ABB Ltd., Expires 6/15/07 -- Call Warrant
Lonza Group, Expires 5/18/07 -- Call Warrant
Lonza Group, Expires 6/15/07 -- Call Warrant
Swiss Market Index, Expires 9/21/07 -- Put Warrant
Dufry Group
EMS -- Chemie Holding AG
Forbo Holding AG
Komax Holding AG
Motor Columbus AG
OC Oerlikon Corp. AG
Partners Group
Petroplus Holdings AG
Raetia Energie AG
Schulthess Group AG
Swatch Group AG, Expires 8/15/07 -- OTC Call Option
Tecan Group AG
Temenos Group AG
UMS Schweizerische Metallwerke Holding
--------------------------------------------------------------------------------
ADDITIONS TO EXISTING INVESTMENTS
--------------------------------------------------------------------------------
Centralschweizerische Kraftwerke
Schmolz and Bickenbach AG
--------------------------------------------------------------------------------
SECURITIES DISPOSED OF
--------------------------------------------------------------------------------
Bank Sarasin & Cie AG
Cie Financ Richmont, Class A
ABB Ltd., Expires 6/15/07 -- Call Warrant
Lonza Group, Expires 5/18/07 -- Call Warrant
Lonza Group, Expires 6/15/07 -- Call Warrant
Sulzer AG
--------------------------------------------------------------------------------
REDUCTIONS IN EXISTING INVESTMENTS
--------------------------------------------------------------------------------
ABB Ltd.
Adecco SA
BKW FMB Energie AG
Jelmoli Holding AG
Julius Baer Holding AG
Kudelski AG
Nestle SA
Novartis AG -- Registered Shares
Roche Holdings -- Genus
Sika AG
Swiss Life Holding
Zurich Financial Services AG
8
THE SWISS HELVETIA FUND, INC.
--------------------------------------------------------------------------------
Schedule of Investments (Unaudited) June 30, 2007
Percent
No. of of Net
Shares Security Value Assets
----------------------------------------------------------------
COMMON STOCKS -- 87.00%
BANKS -- 12.60%
380,000 CREDIT SUISSE GROUP/2/
REGISTERED SHARES $ 27,083,061 4.07%
A global diversified financial
service company with significant
activity in private banking,
investment banking, asset
management and insurance
service.
(Cost $12,095,927)
100,000 EFG INTERNATIONAL
REGISTERED SHARES 4,601,828 0.69%
Holding company of EFG Bank.
Offers private banking and asset
management services.
(Cost $3,249,443)
870,000 UBS AG/2/
REGISTERED SHARES 52,245,431 7.84%
A global diversified financial
service company with significant
activity in private banking,
investment banking, and asset
management.
(Cost $7,403,841)
------------ -----
83,930,320 12.60%
BASIC RESOURCES -- 3.39%
93,236 PRECIOUS WOODS HOLDING AG/1/
REGISTERED SHARES 9,280,999 1.39%
Through subsidiaries, manages
tropical forests using ecologically
sustainable forest management
methods. Harvests tropical trees
and processes them into lumber.
(Cost $8,284,983)
Percent
No. of of Net
Shares Security Value Assets
--------------------------------------------------------------
BASIC RESOURCES -- (CONTINUED)
132,760 SCHMOLZ AND BICKENBACH AG
REGISTERED SHARES $ 11,644,664 1.75%
Manufactures industrial and
construction steel.
(Cost $6,621,317)
75,000 UMS SCHWEIZERISCHE
METALLWERKE/1/
BEARER SHARES 1,636,953 0.25%
Produces profiles and large
dimension rods for electrical
engineering, mechanical
engineering, and construction
companies, lead-free brass wire
for batteries, billets, and small
diameter wire and rods for the
consumer goods and electronics
industries.
(Cost $1,655,850)
------------ ----
22,562,616 3.39%
BIOTECHNOLOGY -- 12.92%
664,655 ACTELION LTD./1, 2/
REGISTERED SHARES 29,637,235 4.45%
Biotechnology company that
develops and markets synthetic
small-molecule drugs against
diseases related to the
endothelium.
(Cost $17,871,161)
155,983 ADDEX PHARMACEUTICALS SA/1/
REGISTERED SHARES 8,325,355 1.25%
Bio-pharmaceutical company that
discovers, develops, and markets
therapeutic compounds for the
treatment of addiction and other
neuropsychiatric conditions.
(Cost $8,889,353)
9
THE SWISS HELVETIA FUND, INC.
--------------------------------------------------------------------------------
Schedule of Investments (Unaudited) June 30, 2007
(continued)
Percent
No. of of Net
Shares Security Value Assets
--------------------------------------------------------------
COMMON STOCKS -- (CONTINUED)
BIOTECHNOLOGY -- (CONTINUED)
156,200 BASILEA PHARMACEUTICA/1,2/
REGISTERED SHARES $ 34,474,625 5.17%
Conducts research into the
development of drugs for the
treatment of infectious diseases
and dermatological problems.
(Cost $21,602,083)
91,903 SPEEDEL HOLDING AG/1/
REGISTERED SHARES 13,647,476 2.05%
Researches and develops
therapies for cardiovascular and
metabolic diseases
(Cost $12,460,344)
------------ -----
86,084,691 12.92%
CHEMICALS -- 3.69%
45,000 EMS -- CHEMIE HOLDING AG
REGISTERED SHARES 5,874,674 0.88%
Manufactures and markets
performance polymers, high-
grade chemical intermediates,
fine chemicals, and protective
bonding, coating and sealing
products.
(Cost $5,881,838)
95,931 SYNGENTA AG/2/
REGISTERED SHARES 18,722,826 2.81%
Produces herbicides, insecticides
and fungicides, and seeds for
field crops, vegetables, and
flowers.
(Cost $7,696,272)
------------ -----
24,597,500 3.69%
Percent
No. of of Net
Shares Security Value Assets
-------------------------------------------------------------
CONSTRUCTION & MATERIALS -- 2.25%
1,141 BELIMO HOLDING AG
REGISTERED SHARES $ 1,227,953 0.18%
World market leader in damper
and volume control actuators for
ventilation and air-conditioning
equipment.
(Cost $231,391)
13,159 FORBO HOLDING AG
REGISTERED SHARES 7,193,644 1.08%
Produces floor coverings,
adhesives, and belts for
conveying and power
transmission.
(Cost $6,835,652)
3,220 SIKA AG
BEARER SHARES 6,568,211 0.99%
Leading producer of
construction chemicals.
(Cost $891,990)
------------ ----
14,989,808 2.25%
FINANCIAL SERVICES -- 3.82%
218,600 JULIUS BAER HOLDING AG/2/
REGISTERED SHARES 15,677,986 2.35%
Offers private banking,
institutional asset management,
mutual fund, securities
brokerage, and corporate finance
services.
(Cost $10,287,329)
10
THE SWISS HELVETIA FUND, INC.
--------------------------------------------------------------------------------
Schedule of Investments (Unaudited) June 30, 2007
(continued)
Percent
No. of of Net
Shares Security Value Assets
---------------------------------------------------------------
COMMON STOCKS -- (CONTINUED)
FINANCIAL SERVICES -- (CONTINUED)
73,000 PARTNERS GROUP
REGISTERED SHARES $ 9,798,058 1.47%
Global alternative asset
management firm in private
equity, private debt, private real
estate, infrastructure and hedge
funds
(Cost $9,419,623)
------------ -----
25,476,044 3.82%
FOOD & BEVERAGES -- 11.09%
2,690 BARRY CALLEBAUT AG
REGISTERED SHARES 2,032,425 0.31%
Manufactures cocoa, chocolate,
and confectionary products.
(Cost $1,399,816)
340 LINDT & SPRUNGLI AG
REGISTERED SHARES 10,072,944 1.51%
Major manufacturer of premium
Swiss chocolates.
(Cost $1,977,813)
162,500 NESTLE SA/2/
REGISTERED SHARES 61,786,064 9.27%
Largest food and beverage
processing company in the
world.
(Cost $9,260,283)
------------ -----
73,891,433 11.09%
Percent
No. of of Net
Shares Security Value Assets
----------------------------------------------------------------
INDUSTRIAL GOODS & SERVICES -- 4.88%
337,457 ABB LTD.
REGISTERED SHARES $ 7,654,458 1.15%
The holding company for ABB
Group which is one of the largest
electrical engineering firms in the
world.
(Cost $2,243,911)
116,000 ADECCO SA
REGISTERED SHARES 8,986,782 1.35%
Leading personnel and temporary
employment company.
(Cost $5,464,982)
6,440 INFICON HOLDING AG
REGISTERED SHARES 1,129,732 0.17%
Manufactures and markets
vacuum instruments used to
monitor and control production
processes. Manufactures on-site
chemical detection and
monitoring system.
(Cost $581,616)
87,215 KOMAX HOLDING AG
REGISTERED SHARES 14,730,340 2.21%
Manufactures wire processing
machines. Produces machines
for cutting and stripping round
and flat wire, crimping and
insertion machines for
processing single wires and
equipment for processing wire
harnesses.
(Cost $14,246,410)
------------ ----
32,501,312 4.88%
11
THE SWISS HELVETIA FUND, INC.
--------------------------------------------------------------------------------
Schedule of Investments (Unaudited) June 30, 2007
(continued)
Percent
No. of of Net
Shares Security Value Assets
-----------------------------------------------------------------
COMMON STOCKS -- (CONTINUED)
INSURANCE -- 1.60%
15,900 SWISS LIFE HOLDING
REGISTERED SHARES $ 4,203,329 0.63%
Offers financial services including
life and property insurance,
institutional investment
management, and private
banking services.
(Cost $2,932,815)
20,800 ZURICH FINANCIAL SERVICES AG
REGISTERED SHARES 6,436,358 0.97%
Offers property, accident, health,
automobile, liability, financial risk
and life insurance and retirement
products.
(Cost $3,338,952)
------------ ----
10,639,687 1.60%
MEDICAL TECHNOLOGY -- 0.60%
32,205 PHONAK HOLDING AG
REGISTERED SHARES 2,890,462 0.43%
Designs and produces analog
and digital hearing aids.
(Cost $1,100,139)
16,500 TECAN AG/1/
REGISTERED SHARES 1,109,334 0.17%
Develops, manufactures and
distributes laboratory automation
components and systems.
(Cost $1,245,059)
------------ ----
3,999,796 0.60%
Percent
No. of of Net
Shares Security Value Assets
-------------------------------------------------------------
OIL &GAS -- 0.77%
50,000 PETROPLUS HOLDINGS AG/1/
REGISTERED SHARES $ 5,132,180 0.77%
Refines, supplies, markets and
distributes petroleum products.
(Cost $4,687,050)
------------ ----
5,132,180 0.77%
PERSONAL & HOUSEHOLD GOODS -- 0.83%
20,950 ADVANCED DIGITAL BROADCAST
HOLDING SA/1/
REGISTERED SHARES 1,239,291 0.19%
Develops equipment and systems
to view and interact with digital
TV broadcast through cable,
satellite, and telecommunication
networks.
(Cost $1,352,807)
20,000 SCHULTHESS GROUP AG
REGISTERED SHARES 2,504,896 0.38%
Develops, manufactures and sells
household appliances and
heating equipment.
(Cost $2,327,602)
6,367 SWATCH GROUP AG
BEARER SHARES 1,813,057 0.26%
Manufactures finished watches,
movements and components.
Produces components necessary
to its eighteen watch brand
companies. Also operates retail
boutiques.
(Cost $859,824)
------------ ----
5,557,244 0.83%
12
THE SWISS HELVETIA FUND, INC.
--------------------------------------------------------------------------------
Schedule of Investments (Unaudited) June 30, 2007
(continued)
Percent
No. of of Net
Shares Security Value Assets
--------------------------------------------------------------
COMMON STOCKS -- (CONTINUED)
PHARMACEUTICALS -- 16.28%
781,300 NOVARTIS AG/2/
REGISTERED SHARES $ 43,986,374 6.60%
One of the leading manufacturers
of branded and generic
pharmaceutical products.
Manufactures nutrition products.
(Cost $8,326,469)
363,600 ROCHE HOLDING AG/2/
NON-VOTING EQUITY SECURITIES 64,496,279 9.68%
Worldwide pharmaceutical
company.
(Cost $6,578,721)
------------ -----
108,482,653 16.28%
RETAILERS -- 5.37%
5,500 DUFRY GROUP
REGISTERED SHARES 620,635 0.09%
Operates duty-free shops in
countries such as Tunisia, Italy,
Mexico, France, Russia, the
United Arab Emirates, Singapore,
the Caribbean and the
United States.
(Cost $572,664)
75,950 GALENICA AG/2/
REGISTERED SHARES 27,824,372 4.18%
Manufactures and distributes
prescription and over-the-
counter drugs, toiletries and
hygiene products.
(Cost $14,745,078)
Percent
No. of of Net
Shares Security Value Assets
---------------------------------------------------------------
RETAILERS -- (CONTINUED)
2,100 JELMOLI HOLDING AG
BEARER SHARES $ 7,359,253 1.10%
Owns and operates department
and retail stores and provides
mail-order catalog and real estate
leasing services.
(Cost $3,707,265)
------------ ----
35,804,260 5.37%
TECHNOLOGY -- 2.26%
123,000 KUDELSKI SA
REGISTERED SHARES 4,315,437 0.65%
Designs and manufactures digital
security products under the
brand name 'Nagra'.
(Cost $3,897,054)
3,500 OC OERLIKON CORP AG
REGISTERED SHARES 1,859,089 0.28%
Manufactures coating machinery,
semiconductor assembly
equipment, and satellite
components.
(Cost $1,774,439)
369,200 TEMENOS GROUP AG/1/
Registered Shares 8,856,463 1.33%
Provides integrated software for
the banking sector.
(Cost $6,572,320)
------------ ----
15,030,989 2.26%
13
THE SWISS HELVETIA FUND, INC.
--------------------------------------------------------------------------------
Schedule of Investments (Unaudited) June 30, 2007
(continued)
Percent
No. of of Net
Shares Security Value Assets
----------------------------------------------------------------
COMMON STOCKS -- (CONTINUED)
UTILITY SUPPLIERS -- 4.65%
500 AARE-TESSIN AG FUR ELEKTRIZITAT
(ATEL)
REGISTERED SHARES $ 1,540,062 0.23%
Generates, transmits, and
distributes electricity in
Switzerland and neighboring
countries.
(Cost $1,275,915)
147,250 BKW FMB ENERGIE AG
REGISTERED SHARES 15,474,707 2.32%
Produces electricity using
nuclear, hydroelectric, solar,
biomass and wind energy.
(Cost $7,675,799)
28,409 CENTRALSCHWEIZERISCHE
KRAFTWERKE AG
REGISTERED SHARES 10,141,104 1.52%
Supplies electric power, operates
and maintains distribution
network facilities, constructs and
installs equipment, and offers
consulting services to its clients.
(Cost $8,525,835)
200 MOTOR-COLUMBUS LTD.
BEARER SHARES 1,824,413 0.27%
Generates, transmits and
distributes electricity
throughout Europe.
(Cost $1,665,611)
Percent
No. of of Net
Shares Security Value Assets
-----------------------------------------------------------------
UTILITY SUPPLIERS -- (CONTINUED)
5,000 RAETIA ENERGIE AG
PARTICIPATION CERTIFICATE $ 2,047,977 0.31%
Generates and distributes electric
power from its own hydroelectric
stations, as well as from outside
nuclear power suppliers of
electric power.
(Cost $2,035,541)
------------ -----
31,028,263 4.65%
TOTAL COMMON STOCKS
(Cost $261,750,187)* $579,708,796 87.00%
CALL WARRANTS -- 0.16%
1,100,000 ABB LTD., EXPIRES 12/21/07 1,059,073 0.16%
------------ -----
TOTAL CALL WARRANTS
(Cost $442,941) 1,059,073 0.16%
OTC CALL OPTION -- 0.07%
17,200 SWATCH GROUP AG 457,928 0.07%
------------ -----
Strike
Price Exp. Date
------ --------- - -
$320 8/13/07
TOTAL OPTION
(Cost $255,574) 457,928 0.07%
------------ -----
14
THE SWISS HELVETIA FUND, INC.
--------------------------------------------------------------------------------
Schedule of Investments (Unaudited) June 30, 2007
(concluded)
Percent
No. of of Net
Shares Security Value Assets
-----------------------------------------------------------------
PUT WARRANTS -- 0.07%
2,250,000 SWISS MARKET INDEX,
EXPIRES 9/21/07 $ 440,601 0.07%
------------ ------
TOTAL PUT WARRANTS
(Cost $1,474,047) 440,601 0.07%
------------ ------
TOTAL INVESTMENTS
(Cost $263,922,749) 581,666,398 87.30%
OTHER ASSETS LESS LIABILITIES, NET 85,068,148 12.70%
------------ ------
NET ASSETS $666,734,546 100.00%
============ ======
PORTFOLIO HOLDINGS
% OF TOTAL INVESTMENTS
Pharmaceuticals 18.65%
Banks 14.42%
Biotechnology 14.80%
Food & Beverages 12.70%
Retailers 6.16%
Industrial Goods & Services 5.59%
Utility Suppliers 5.33%
Chemicals 4.23%
Basic Resources 3.88%
Financial Services 4.38%
Construction & Materials 2.58%
Technology 2.58%
Insurance 1.83%
Personal & Household Goods 0.96%
Oil & Gas 0.88%
Medical Technology 0.69%
Call Warrants 0.18%
OTC Call Option 0.08%
Put Warrants 0.08%
------
100.00%
------
--------------------------------------------------------------------------------
/1/NON-INCOME PRODUCING SECURITY.
/2/ONE OF THE TEN LARGEST PORTFOLIO HOLDINGS.
*COST FOR FEDERAL INCOME TAX PURPOSES IS SUBSTANTIALLY THE SAME AS FOR
FINANCIAL STATEMENT PURPOSES AND NET UNREALIZED APPRECIATION (DEPRECIATION)
CONSISTS OF:
GROSS UNREALIZED APPRECIATION $319,616,395
GROSS UNREALIZED DEPRECIATION (1,872,746)
------------
NET UNREALIZED APPRECIATION $317,743,649
============
15
THE SWISS HELVETIA FUND, INC.
--------------------------------------------------------------------------------
Statement of Assets and Liabilities June 30, 2007
(Unaudited)
ASSETS:
Investments, at value (cost $263,922,749).............................. $581,666,398
Cash................................................................... 76,482,443
Foreign currency (cost $8,016,953)..................................... 8,268,895
Tax reclaims receivable................................................ 3,016,010
Other Receivables...................................................... 153,211
------------
Total assets......................................................... 669,586,957
------------
LIABILITIES:
Payable for securities purchased....................................... 2,523,086
Advisory fees payable (Note 2)......................................... 313,730
Directors' fees and expenses........................................... 15,595
------------
Total liabilities.................................................... 2,852,411
------------
Net assets........................................................... $666,734,546
------------
COMPOSITION OF NET ASSETS:
Paid in capital........................................................ 306,832,144
Distributable earnings
Undistributed net investment income.................................. 3,591,444
Accumulated net realized gain from investment and foreign currency
transactions....................................................... 38,277,198
Net unrealized appreciation on investments and foreign currency...... 318,033,760
-----------
Total distributable earnings........................................... 359,902,402
------------
Net assets................................................................ $666,734,546
------------
NET ASSET VALUE PER SHARE:
($666,734,546 / 32,547,207 shares outstanding, 50 million shares
authorized).......................................................... $ 20.49
============
--------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS.
16
THE SWISS HELVETIA FUND, INC.
--------------------------------------------------------------------------------
Statement of Operations (Unaudited) For the Six Months Ended June 30, 2007
INVESTMENT INCOME:
Dividends (less foreign taxes withheld of $1,172,610)........................... $ 6,644,791
Interest........................................................................ 22,211
-----------
Total income.................................................................. 6,667,002
-----------
EXPENSES:
Investment advisory fees (Note 2)............................................... 1,931,572
Directors' fees & expenses...................................................... 272,688
Professional fees............................................................... 176,669
Administration fees............................................................. 171,143
Custody fees.................................................................... 76,579
Printing and shareholder reports................................................ 71,004
Accounting fees................................................................. 55,387
Transfer agent fees............................................................. 12,926
Interest Expense................................................................ 43,671
Miscellaneous................................................................... 108,697
-----------
Total expenses................................................................ 2,920,336
-----------
Net investment income......................................................... 3,746,666
-----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCY:
Net realized gain (loss) from:
Investment transactions....................................................... 39,001,009
Foreign currency transactions................................................. (428,435)
Net change in unrealized appreciation/depreciation from:
Investment transactions....................................................... 3,603,267
Foreign currency translations................................................. 231,419
-----------
Net Realized and Unrealized Gain (Loss) on Investments and Foreign Currency... 42,407,260
-----------
NET INCREASE IN NET ASSETS FROM OPERATIONS......................................... $46,153,926
===========
--------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS.
17
THE SWISS HELVETIA FUND, INC.
--------------------------------------------------------------------------------
Statement of Changes in Net Assets
For the For the
Six Months Ended Year Ended
June 30, 2007/1/ December 31, 2006
-----------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income.................................... $ 3,746,666 $ 430,342
Net realized gain (loss) from:
Investment transactions................................ 39,001,009 54,274,788
Foreign currency transactions.......................... (428,435) 77,287
Net change in unrealized appreciation/depreciation from:
Investment transactions................................ 3,603,267 70,960,520
Foreign currency translations.......................... 231,419 303,348
------------ ------------
Net increase in net assets from operations............... 46,153,926 126,046,285
------------ ------------
DISTRIBUTIONS TO STOCKHOLDERS FROM:
Net investment income and net realized gains from
foreign currency transactions.......................... -- (685,681)
Net realized capital gains............................... (12,857,564) (47,712,116)
------------ ------------
Total distributions to stockholders.................... (12,857,564) (48,397,797)
------------ ------------
CAPITAL SHARE TRANSACTIONS:
Value of shares issued in connection with rights
offering............................................... 135,360,707 --
Offering costs on rights issuance........................ (4,737,625) --
Value of shares issued in reinvestment of dividends and
distributions.......................................... -- 12,903,159
Value of shares repurchased through stock buyback........ -- (7,550,175)
------------ ------------
Total increase (decrease) from capital share
transactions........................................... 130,623,082 5,352,984
------------ ------------
Total increase in net assets............................. 163,919,444 83,001,472
NET ASSETS:
Beginning of year........................................ 502,815,102 419,813,630
------------ ------------
End of period (including undistributed net investment
income (expenses in excess of income) of $3,591,444
and ($155,222), respectively).......................... $666,734,546 $502,815,102
============ ============
--------------------------------------------------------------------------------
/1/UNAUDITED
SEE NOTES TO FINANCIAL STATEMENTS.
18
THE SWISS HELVETIA FUND, INC.
--------------------------------------------------------------------------------
Financial Highlights
For the
Six Months
Ended For the Years Ended December 31,
June 30, --------------------------------------------------------
2007/1/ 2006 2005 2004 2003 2002
-------------------------------------------------------- ---------- -------- -------- -------- -------- --------
PER SHARE OPERATING PERFORMANCE:
Net asset value at beginning of period................. $ 20.61 $ 17.47 $ 16.79 $ 15.31 $ 11.82 $ 13.16
-------- -------- -------- -------- -------- --------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (expenses in excess of
income)............................................... 0.15/2/ 0.02/2/ 0.05/2/ (0.01) (0.01) (0.02)
Net realized and unrealized gain (loss) on
investments/3/........................................ 1.62 5.14 2.24 2.41 4.24 (0.71)
-------- -------- -------- -------- -------- --------
Total from investment operations....................... 1.77 5.16 2.29 2.40 4.23 (0.73)
-------- -------- -------- -------- -------- --------
Gain from capital share repurchases.................... -- 0.03 0.04 0.02 0.02 0.02
Capital charge resulting from the issuance of fund
shares................................................ (1.36)/6/ (0.07) (0.04) -- (0.06) --
-------- -------- -------- -------- -------- --------
LESS DISTRIBUTIONS:
Dividends from net investment income and net realized
gains from foreign currency transactions.............. 0.00 (0.03) (0.02) (0.10) (0.14) (0.06)
Dividends in excess of net investment income........... -- -- -- (0.01) -- (0.01)
Distributions from net realized capital gains.......... (0.53) (1.95) (1.59) (0.83) (0.56) (0.56)
-------- -------- -------- -------- -------- --------
Total distributions.................................... (0.53) (1.98) (1.61) (0.94) (0.70) (0.63)
-------- -------- -------- -------- -------- --------
Net asset value at end of period....................... $ 20.49 $ 20.61 $ 17.47 $ 16.79 $ 15.31 $ 11.82
======== ======== ======== ======== ======== ========
Market value per share at end of period................ $ 17.80 $ 19.10 $ 15.31 $ 14.95 $ 12.92 $ 9.64
======== ======== ======== ======== ======== ========
TOTAL INVESTMENT RETURN/4/:
Based on market value per share........................ (4.28)% 37.64% 13.11% 23.65% 41.76% (4.46)%
Based on net asset value per share..................... 2.47% 30.16% 14.92% 17.19% 37.00% (6.92)%
RATIOS TO AVERAGE NET ASSETS:
Expenses............................................... 1.10% 1.17% 1.19% 1.14% 1.30% 1.31%
Net investment income (expenses in excess of
income)............................................... 1.42% 0.09% 0.27% (0.08)% (0.07)% (0.14)%
SUPPLEMENTAL DATA:
Net assets at end of period (000's).................... $666,735 $502,815 $419,814 $401,514 $368,986 $279,799
Average net assets during period (000's)............... $533,731 $484,631 $415,074 $378,205 $306,563 $308,018
Stockholders of record/5/.............................. 767 794 740 926 964 1,001
Portfolio turnover rate................................ 14% 34% 37% 41% 89% 83%
--------------------------------------------------------------------------------
/1/UNAUDITED
/2/CALCULATED USING THE AVERAGE SHARES METHOD.
/3/INCLUDES NET REALIZED AND UNREALIZED CURRENCY GAIN (LOSS).
/4/TOTAL INVESTMENT RETURN BASED ON MARKET VALUE DIFFERS FROM TOTAL INVESTMENT
RETURN BASED ON NET ASSET VALUE DUE TO CHANGES IN THE RELATIONSHIP BETWEEN
THE FUND'S MARKET PRICE AND ITS NET ASSET VALUE PER SHARE. NOT ANNUALIZED FOR
PERIODS LESS THAN ONE YEAR.
/5/NOT AUDITED BY DELOITTE & TOUCHE LLP.
/6/ISSUED IN CONNECTION WITH RIGHTS OFFERING.
SEE NOTES TO FINANCIAL STATEMENTS.
19
THE SWISS HELVETIA FUND, INC.
--------------------------------------------------------------------------------
Notes to Financial Statements (Unaudited)
NOTE 1--ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
A. ORGANIZATION
The Swiss Helvetia Fund, Inc. (the "Fund") is registered under the Investment
Company Act of 1940, as amended (the "Act"), as a non-diversified, closed-end
investment management company. The Fund is organized as a corporation under the
laws of the State of Delaware.
The investment objective of the Fund is to seek long-term growth of capital
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, as fully described in its prospectus.
B. VALUATION OF SECURITIES
The Fund values its investments at market value.
When valuing listed equity securities, the Fund uses the last sale price prior
to the calculation of the Fund's net asset value. When valuing equity
securities that are not listed or that are listed but have not traded, the Fund
uses the mean between the bid and asked prices for that day.
When valuing fixed income securities, the Fund uses the last bid price prior to
the calculation of the Fund's net asset value. If a current bid price is not
available, the Fund uses the mean between the latest quoted bid and asked
prices. When valuing fixed income securities that mature within sixty days, the
Fund uses amortized cost.
It is the responsibility of the Fund's Board of Directors (the "Board") to
establish fair valuation procedures. When valuing securities for which market
quotations are not readily available or for which the market quotations that
are available are considered unreliable, the Fund determines a fair value in
good faith in accordance with these procedures. The Fund may use these
procedures to establish the fair value of securities when, for example, a
significant event occurs between the time the market closes and the time the
Fund values its investments. After consideration of various factors, the Fund
may value the securities at their last reported price or at some other value.
There were no fair valued securities on June 30, 2007.
C. SECURITIES TRANSACTIONS AND INVESTMENT INCOME
Securities transactions are recorded on the trade date. Realized gains and
losses are determined by comparing the proceeds of a sale or the cost of a
purchase with a specific offsetting transaction.
Dividend income, net of any foreign taxes withheld, is recorded on the
ex-dividend date. Interest income, including amortization of premiums and
accretion of discounts, is accrued daily. Estimated expenses are also accrued
daily.
The Fund records Swiss withholding tax as a reduction of dividend income, net
of any amount reclaimable from Swiss tax authorities in accordance with the tax
treaty between the United States and Switzerland.
D. DISTRIBUTIONS
The Fund pays dividends at least annually to the extent it has any net
investment income and net realized gains from foreign currency transactions and
makes distributions of any net realized capital gains to the extent they exceed
any capital loss carryforwards. The Fund determines the size and nature of
these distributions in accordance with provisions of the Internal Revenue Code.
Distributions may be paid either in cash or in stock with an option to take
cash. The Fund records dividends and distributions on its books on the
ex-dividend date.
E. FEDERAL INCOME TAXES
The Fund's policy is to continue to comply with the requirements of the
Internal Revenue Code that are applicable to regulated investment companies and
to distribute all its taxable income to its stockholders. Therefore, no federal
income tax provision is required.
Income and capital gain distributions are determined in accordance with federal
income tax regulations, which may differ from generally accepted accounting
principles. See Note 5 for Federal income tax treatment of foreign currency
gain/losses.
F. SECURITIES LENDING INCOME
The Fund may lend securities to financial institutions. The Fund retains
beneficial ownership of the securities it has loaned and continues to receive
amounts equivalent to the dividends paid on these securities and to participate
in any
20
THE SWISS HELVETIA FUND, INC.
--------------------------------------------------------------------------------
Notes to Financial Statements (Unaudited) (continued)
changes in their market value. For the initial transaction, the Fund requires
the borrowers of the securities to establish collateral with the Fund in the
form of cash and/or government securities equal to 105% of the value of the
securities loaned. Subsequent to the initial transaction, the Fund requires the
borrowers to maintain collateral with the Fund equal to 100% of the value of
the securities loaned. The Fund receives fees as compensation for lending its
securities. Either the Fund or the borrower may terminate the securities loan
at any time. There were no securities on loan during the period ended June 30,
2007.
G. FOREIGN CURRENCY TRANSLATION
The Fund maintains its accounting records in U.S. dollars. The Fund determines
the U.S. dollar value of foreign currency denominated assets, liabilities and
transactions by using prevailing exchange rates. The cost basis of foreign
denominated assets & liabilities is determined on the date that they are first
recorded within the Fund and translated to U.S. dollars. These assets and
liabilities are subsequently valued each day at prevailing exchange rates. The
difference between the original cost and current value denominated in U.S.
dollars is recorded as Unrealized Currency Gain/Loss. In valuing assets and
liabilities, the Fund uses the prevailing exchange rate on the valuation date.
In valuing securities transactions, the receipt of income and the payment of
expenses, the Fund uses the prevailing exchange rate on the transaction date.
Net realized and unrealized gains and losses on foreign currency translations
shown on the Fund's financial statements result from the sale of foreign
currencies, from currency gains or losses realized between the trade and
settlement dates on securities transactions, and from the difference between
the amounts of dividends, interest, and foreign withholding taxes recorded on
the Fund's books and the U.S. dollar equivalent of the amounts actually
received or paid.
When calculating realized and unrealized gains or losses on investments in
equity securities, the Fund does not separate the gain or loss attributable to
changes in the foreign currency price of the security from the gain or loss
attributable to the change in the U.S. dollar value of the foreign currency.
Other foreign currency transactions resulting in realized and unrealized gain
(loss) are disclosed separately.
H. ESTIMATES
In preparing its financial statements in conformity with accounting principles
generally accepted in the United States, management makes estimates and
assumptions. Actual results may be different.
NOTE 2--FEES AND TRANSACTIONS WITH AFFILIATES
Hottinger Capital Corp. ("HCC"), which is owned jointly by Hottinger U.S., Inc.
and Hottinger & Cie (Zurich), is the Fund's advisor (the "Advisor"). The Fund
pays the Advisor an annual fee based on its month-end net assets which is
calculated and paid monthly at the following annual rates: 1.00% of the first
$60 million, 0.90% of the next $40 million, 0.80% of the next $100 million,
0.70% of the next $100 million, 0.65% of the next $100 million, 0.60% of the
next $100 million, 0.55% of the next $100 million, and 0.50% of such assets in
excess of $600 million. The Fund paid the Advisor $1,931,572 in investment
advisory fees for the six months ended June 30, 2007. The Fund paid Hottinger &
Cie (Zurich) $9,050 in brokerage commissions for the six months ended June 30,
2007.
The Fund and the Advisor have agreed to share certain common expenses subject
to review and allocation by the Audit Committee (the "Committee") of the Board.
During the six months ended June 30, 2007, the Committee allocated $19,975 of
expenses incurred in connection with publicizing the Fund as follows: $9,987 to
the Fund and $9,988 to the Advisor.
Certain officers and directors of the Fund are also officers or directors of
HCC, Hottinger U.S., Inc. and Hottinger & Cie (Zurich). These persons are not
paid by the Fund for serving in these capacities.
NOTE 3--OTHER FEES
Citigroup Fund Services, LLC ("Citigroup") provides certain administration and
portfolio accounting services to the Fund.
American Stock Transfer & Trust Company is the Fund's transfer agent. The Fund
pays the transfer agent an annual fee, which is accrued daily and paid monthly.
On December 28, 2006, Swiss American Securities, Inc. and Credit Suisse First
Boston commenced transition of custody
21
THE SWISS HELVETIA FUND, INC.
--------------------------------------------------------------------------------
Notes to Financial Statements (Unaudited) (continued)
responsibility to Citibank, N.A. the transfer was completed on January 16,
2007. The Fund pays the custodian an annual fee.
The Fund pays each director who is not an interested person (as such term is
defined in the Act) of the Fund, its Advisor, or Citigroup, approximately
$30,268 per annum in compensation, except for the Chairman of the Board to whom
the Fund pays an annual fee of approximately $42,568 and for the Chairmen of
the Audit Committee and the Governance/Nominating Committee to each of whom the
Fund pays an annual fee of approximately $35,567. In addition, the Fund pays
each disinterested Director $1,300 for each Board meeting attended; each
disinterested Director who is a member of a Committee a fee of $750 for each
Committee meeting attended and each disinterested Director who is a member of
the Ad Hoc Rights Offering Committee a fee of $1,000 for each Committee meeting
attended. Committee meeting fees are paid for only those meetings held
separately from other meetings. In addition, the Fund reimburses directors who
are not employees of or affiliated with the Advisor for out-of-pocket expenses
incurred in conjunction with attendance at meetings.
Directors' fees and expenses payable of $15,595 shown on the Statements of
Assets & Liabilities represents total dollars owed to Directors that have been
accrued and not paid. Directors' fees and expenses of $272,688 shown on the
Statement of Operations represent the portion of Directors' fees and expenses
accrued during the period January 1, 2007 through June 30, 2007. These fees are
calculated by projecting Directors' fees contractually owed and adding
estimates of reimbursable expenses based on historical activity.
NOTE 4--CAPITAL SHARE TRANSACTIONS
The Fund is authorized to issue up to 50 million shares of capital stock. HCC
owned 189,187 of the 32,547,207 shares outstanding on June 30, 2007.
Transactions in capital shares were as follows:
For the Six Months For the Year Ended
Ended June 30, 2007 December 31, 2006
------------------- ------------------
Shares Amount Shares Amount
------ ------ ------ ------
Sales of Shares 8,149,552 $135,360,707 -- --
Dividends
Reinvested -- -- 798,957 $12,903,159/(a)/
Repurchased -- -- (430,800) (7,550,175)
--------- ------------ -------- -----------
Net increase
(decrease) 8,149,552 $135,360,707 368,157 $ 5,352,984
========= ============ ======== ===========
(A)REPRESENTS SHARES ISSUED TO STOCKHOLDERS WHO DID NOT ELECT CASH IN
CONJUNCTION WITH A LONG TERM CAPITAL GAINS DISTRIBUTION OF $1.276 PER SHARE
PAID JANUARY 31, 2006 TO STOCKHOLDERS OF RECORD ON DECEMBER 19, 2005.
NOTE 5--FEDERAL INCOME TAX AND INVESTMENT TRANSACTIONS
Reclassifications are made to the Fund's capital accounts to reflect income and
gains available for distribution (or available capital loss carryforward) under
income tax regulations. The tax character of distributions paid during the year
and the tax components of net assets will be updated at the Fund's fiscal
year-end.
At December 31, 2006, the components of distributable earnings on a tax basis
were as follows:
Ordinary income $ --
Long-term capital gains $ 12,864,471
Capital and other losses $ (155,222)
Unrealized Appreciation $313,896,791
Gains from foreign currency transactions will be treated as ordinary income for
Federal income tax purposes.
For tax purposes, post-October 2006 loss was $155,222. This loss was recognized
for tax purposes on January 2, 2007.
The aggregate cost of purchases and proceeds from sales of investments, other
than short-term obligations, for the six months ended June 30, 2007, were
$80,523,482 and $84,489,917, respectively.
NOTE 6--STOCK REPURCHASE PROGRAM
Pursuant to authorization by the Board, the Fund began open market purchases of
its common stock on the New York Stock Exchange ("NYSE") in 1999 and has
continued purchases in each subsequent year. The principal purpose of the stock
22
THE SWISS HELVETIA FUND, INC.
--------------------------------------------------------------------------------
Notes to Financial Statements (Unaudited) (continued)
repurchase program is to enhance stockholder value by increasing the Fund's net
asset value per share without creating a meaningful adverse effect upon the
Fund's expense ratio. The Board has authorized the Fund to repurchase up to
500,000 shares during 2007. During the six months ended June 30, 2007, the Fund
did not repurchase or retire any shares.
NOTE 7--LINE OF CREDIT
The Fund has entered into a line of credit agreement with the custodian to be
used for temporary purposes. The agreement provides that the Fund may borrow up
to an aggregate amount not to exceed $45,000,000 at any one time. The Fund pays
interest on the unpaid principal amount of each advance made to it from the day
of such advance until such principal amount is paid in full. The interest is
payable in arrears on demand, or if no demand has been made, on the last day of
the interest period for such advance, pursuant to the agreement.
As of June 30, 2007, the Fund had no loans outstanding under the line of
credit. During the six months ended June 30, 2007 the average borrowing was
$20.6 million and the average interest rate was 2.26%.
NOTE 8--RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
In July 2006, the Financial Accounting Standards Board issued Interpretation
No. 48, "Accounting for Uncertainty in Income Taxes--an Interpretation of FASB
Statement No. 109" (the "Interpretation"). The Interpretation establishes for
all entities, a minimum threshold for financial statement recognition of the
benefit of positions taken in filing tax returns (including whether an entity
is taxable in a particular jurisdiction), and requires certain expanded tax
disclosures. The Interpretation is effective for fiscal years beginning after
December 15, 2006, and is required to be implemented by calendar year
closed-end funds by no later than June 29, 2007. Fund management has determined
that the Fund did not have any unrecognized tax benefits as a result of tax
positions taken in the current or prior reporting periods that would require
reporting under FIN 48.
In September 2006, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards ("SFAS") 157, Fair Value Measurements, which
clarifies the definition of fair value and requires companies to expand their
disclosure about the use of fair value to measure assets and liabilities in
interim and annual periods subsequent to initial recognition. Adoption of SFAS
157 requires the use of the price that would be received to sell an asset or
paid to transfer a liability in an orderly transaction between market
participants at the measurement date. SFAS 157 is effective for financial
statements issued for fiscal years beginning after November 15, 2007, and
interim periods within those fiscal years. At this time, the Fund is in the
process of reviewing the impact, if any, of the SFAS on the Fund's financial
statements.
NOTE 9--ADVISORY AGREEMENT APPROVAL
The continuance of the Investment Advisory Agreement between the Fund and HCC
(the "Agreement") was approved by the Board at a meeting on May 24, 2007. The
Independent Directors met with representatives of HCC before the meeting and
evaluated information that they deemed necessary to enable them to determine
that the Investment Advisory Agreement (the "Agreement") would be in the best
interests of the Fund and its stockholders. Their evaluation included
information concerning the Fund's performance and expenses (including the fees
paid to HCC for its services), the nature, extent and quality of the services
HCC provided to the Fund, the financial position and profitability of HCC, and
other benefits that HCC or its parent derived from managing the Fund.
The Independent Directors reviewed the Fund's investment performance,
determining that the relevant measures should be in terms of its net asset
value as measured in Swiss francs because the Fund's portfolio securities and
cash were denominated in Swiss francs and because, as a matter of policy, the
Fund did not hedge its currency exposure. They compared the Fund's investment
performance for first quarter of 2007 and each of the past ten calendar years
with the Swiss Performance Index ("SPI"), with the performance of the Swiss
iShares traded on the New York Stock Exchange, and with the performance of a
peer group of equity investment funds managed by Swiss advisers with publicly
available performance information. In comparing the Fund's performance with the
performance of the SPI, they considered the fact that, unlike the Fund, the
performance of the SPI did not include the impact of any expenses. As a result
of this evaluation, they concluded that the Fund's performance for the three
months of 2007 and each of the ten years ended 2006 was reasonable in relation
to the comparisons and outperformed them for the three-month 2007 period and on
a cumulative basis.
23
THE SWISS HELVETIA FUND, INC.
--------------------------------------------------------------------------------
Notes to Financial Statements (Unaudited) (concluded)
The Independent Directors compared the Fund's one-, three- and five-year
investment performance in U.S. dollar terms with that of other U.S. registered
closed-end European country funds. While the Fund's performance was below that
of most of these other funds, the Independent Directors concluded that this was
due to performance differences of the Swiss market vs. the other European
countries and, to a lesser extent, the effect of the Swiss franc-U.S. dollar
exchange rates vs. the euro-U.S. dollar exchange rates and therefore was not an
indicator of HCC's investment performance.
The Independent Directors also evaluated the fees HCC charged the Fund for
investment advisory services as compared to the fees paid by U.S. registered
closed-end European country funds. They determined that the fees paid to HCC,
even when combined with the seven basis point administration fee paid to the
Fund's unaffiliated administrator, were among the lowest in each group. HCC
also had represented that the combined investment advisory fee and
administration fee was also lower than the fees HCC's parent charged to its
private advisory clients and to a Luxembourg-based fund it managed with similar
investment objectives and strategies.
The Independent Directors separately considered the fees charged by HCC
including breakpoints at various asset levels. They also took note of the
increase in the Fund's net assets that would result from the pending rights
offering, the related increase in advisory fees payable to HCC and where the
new asset level would fall on the breakpoint schedule. They concluded that the
breakpoints (which were voluntarily adjusted by HCC in 1998 to the benefit of
the Fund) allowed the Fund to share in economies of scale as its assets grew.
The Independent Directors evaluated the nature of the Fund, the creativity of
HCC in developing the Fund's investment strategies, and the complexity of the
Swiss securities market. They determined that HCC's services to the Fund were
highly professional and that the qualifications and number of HCC personnel,
the availability of company research and market and financial information from
HCC's parent in Switzerland, and the continuity of HCC personnel over time were
all desirable factors.
The Independent Directors considered the financial condition of HCC, noting
that the advisory fees it received from the Fund comprised the majority of its
income. They concluded that HCC's financial condition was sound and that its
profitability was reasonable for the services it provided to the Fund. They
considered other benefits that HCC or its parent could be considered to derive
from their relationship with the Fund including limited brokerage commissions
from executing Fund transactions, the marketing value of the Fund's performance
in attracting other clients, and the cost benefits to HCC of soft dollar
research and portfolio and financial information services. They determined that
these benefits were relatively minor and did not affect their overall
assessment of the reasonableness of the relationship.
Based on the evaluation of these factors and the assistance of independent
legal counsel, the Independent Directors concluded that the Fund's advisory fee
rate was reasonable in relation to the service to be rendered by HCC and
therefore recommended that the Board approve the continuance of the Agreement.
24
THE SWISS HELVETIA FUND, INC.
--------------------------------------------------------------------------------
Additional Information (Unaudited)
This report is sent to the stockholders of the Fund, for their information.
It is not a prospectus, circular or representation intended for use in the
purchase or sale of shares of the Fund or of any securities mentioned in
this report.
Rights Offering
RESULTS
The Fund successfully concluded a rights offering on June 22, 2007, which
resulted in the issuance of an additional 8,149,552 shares of the Fund's common
stock. The Fund issued one right for every share held on the record date,
May 24, 2007, and three rights were required to subscribe for one additional
share. The final subscription price for a share of the Fund's common stock was
$16.60. The rights were transferable and traded on the New York Stock Exchange
from May 24, 2007 through June 22, 2007. The net proceeds to the Fund were
approximately $130 million after offering fees and expenses of $4.7 million.
The rationale for the rights offering was to allow the Fund to better take
advantage of current and future investment opportunities presented by the
prospects of a continuing positive economic environment and the Fund's
recently-broadened investment parameters. Management believes that it can
utilize the Fund's recently broadened investment strategies to seek attractive
investment opportunities in real estate, private equity and small and medium
sized companies. Management and the Fund's Board of Directors believed that the
rights offering was the most effective way to raise additional assets for the
Fund while offering stockholders the opportunity to buy additional shares of
the Fund at a discounted price.
PROCEEDS
As of August 24, 2007, the Fund has 4.2% of its total assets in cash. Since the
end of June, the Fund has increased its position in small- and mid-cap
industrial companies, including those involved with renewable energy, such as
OC Oerlikon and Komax, and other industrials like Schmolz and Bickenbach in the
high end steel business, and Petroplus in the oil refining business. The Fund
also has increased its position in certain bio-pharmaceutical companies, such
as Addex, and added new portfolio holdings in small- and mid-cap biotechnology
companies such as Bachem and Santhera. With respect to alternative investments,
the Fund has increased its position in an asset manager, Partners Group, and
also made two investments in private equity funds--one in buy-out and one in
venture capital. The Fund has not yet invested in the real estate sector, as
the Advisor is expecting a short-term consolidation in prices as a result of
recent increases in long-term interest rates. The Fund estimates that the
proceeds from the rights offering will be substantially invested in accordance
with its investment objective and policies within four to six months of the
completion of the offering, depending on the public or private nature of the
investment, which is ahead of the six to twelve months originally contemplated
prior to the offering.
Proxy Voting Information
At the Annual Meeting of Stockholders, held on May 24, 2007 shares were voted
as follows on the proposals presented to the Stockholders:
1. To elect three Class I Directors to serve for a three year term:
Withhold
For Authority
--- ---------
Claude W. Frey 17,219,671 3,766,551
Jean-Marc Boillat 17,370,099 3,616,123
Alexandre de Takacsy 16,919,299 4,066,923
25
THE SWISS HELVETIA FUND, INC.
--------------------------------------------------------------------------------
Additional Information (Unaudited) (concluded)
2. To ratify the selection by the Board of Directors of Deloitte & Touche LLP
as the Fund's independent registered public accounting firm for the year ending
December 31, 2007:
For Against Abstain
--- ------- -------
17,619,423 3,119,362 247,436
Availability of Quarterly Portfolio Schedules
The Fund files its complete schedule of portfolio holdings with the SEC for the
first and third quarters of each fiscal year on Form N-Q. The Fund's Form N-Q
is available, without charge and upon request, on the SEC's website at
http://www.sec.gov or may be reviewed and copied at the SEC's Public Reference
Room in Washington, DC. Information on the operation of the Public Reference
Room may be obtained by calling (800) SEC-0330.
Certifications
The Fund's chief executive officer has certified to the NYSE, pursuant to the
requirements of Section 303A.12(a) of the NYSE Listed Company Manual, that, as
of June 8, 2007, he was not aware of any violation by the Fund of applicable
NYSE corporate governance listing standards. The Fund's reports to the
Securities and Exchange Commission on Form N-CSR and Form N-Q contain
certifications by the Fund's chief executive officer and chief financial
officer as required by Rule 30a-2(a) under the Act, including certifications
regarding the quality of the Fund's disclosures in such reports and
certifications regarding the Fund's disclosure controls and procedures and
internal control over financial reporting.
Code of Ethics
The Board of Directors of the Fund and the Advisor have adopted Codes of Ethics
pursuant to provisions of the Investment Company Act of 1940 (the "Codes"). The
Codes apply to the personal investing activities of various individuals
including directors and officers of the Fund and designated officers, directors
and employees of the Advisor. The provisions of the Codes place restrictions on
individuals who are involved in managing the Fund's portfolio, who help execute
the portfolio manager's decisions or who come into possession of
contemporaneous information concerning the investment activities of the Fund.
The fundamental principle of the Codes is that the individuals covered by
the Codes have a fiduciary responsibility to the Fund and its stockholders.
They are therefore required at all times to place the interests of the Fund and
the stockholders first and to conduct all personal securities transactions in a
manner so as to avoid any actual or potential conflict of interest or abuse of
their position of trust.
Portfolio managers and other individuals with knowledge of Fund investment
activities are prohibited from purchasing or selling a security during a
blackout period of 30 calendar days before and after the date on which the Fund
effects a trade in the same or a similar security. They are also prohibited
from engaging in short term trading of Swiss equity or equity linked
securities. Additionally, the Fund's portfolio managers are prohibited from
participating in any initial public offering or private placement of Swiss
equity and equity linked securities and other covered individuals must obtain
prior clearance before doing so.
Any individual who violates the provisions of the Codes is required to
reverse the transaction and to turn over any resulting profits to the Fund. The
Fund and the Advisor have adopted compliance procedures and have appointed
compliance officers to ensure that all covered individuals comply with the
Codes.
26
THE SWISS HELVETIA FUND, INC.
--------------------------------------------------------------------------------
Dividends Reinvestment Plan (Unaudited)
The Plan
The Fund's Dividend Reinvestment Plan (the "Plan") offers a convenient way for
you to reinvest capital gains distributions and ordinary income dividends,
payable in whole or in part in cash, in additional shares of the Fund.
Some of the Plan features are:
. Once you enroll in the Plan, all of your future distributions and
dividends payable in whole or in part in cash will be automatically
reinvested in Fund shares in accordance with the terms of the Plan.
. You will receive shares valued at the lower of the Fund's net asset value
or the Fund's market price as described below. The entire amount of your
distribution or dividend will be reinvested automatically in additional
Fund shares. For any balance that is insufficient to purchase full shares
of the Fund, your account will be credited with fractional shares.
. Your shares will be held in an account with the Plan agent. You will be
sent regular statements for your records.
. You may terminate participation in the Plan at any time.
The following are answers to frequently asked questions about the Plan.
How do I enroll in the Plan?
If you are holding certificates for your shares, contact American Stock
Transfer & Trust Company (AST) at the address shown below. If your shares are
held in a brokerage account, contact your broker. Not all brokerage firms
permit their clients to participate in dividend reinvestment plans such as the
Plan and, even if your brokerage firm does permit participation, you may not be
able to transfer your Plan shares to another broker who does not permit
participation. Your brokerage firm will be able to advise you about its
policies.
How does the Plan work?
The cash portion of any dividends or distributions you receive, payable in
whole or in part in cash, will be reinvested in shares of the Fund. The number
of shares credited to your Plan account as a result of the reinvestment will
depend upon the relationship between the Fund's market price and its net asset
value per share on the record date of the distribution or dividend, as
described below:
. If the net asset value is greater than the market price (the Fund is
trading at a discount), AST, as Plan Agent, will buy Fund shares for your
account on the open market on the New York Stock Exchange or elsewhere.
Your dividends or distributions will be reinvested at the average price
AST pays for those purchases.
. If the net asset value is equal to the market price (the Fund is trading
at parity), the Fund will issue for your account new shares at net asset
value.
. If the net asset value is less than but within 95% of the market price
(the Fund is trading at a premium of less than 5%), the Fund will issue
for your account new shares at net asset value.
. If the net asset value is less than 95% of the market price (the Fund is
trading at a premium of 5% or more), the Fund will issue for your account
new shares at 95% of the market price.
If AST begins to buy Fund shares for your account at a discount to net asset
value but, during the course of the purchases, the Fund's market price
increases to a level above the net asset value, AST will complete its
purchases, even though
27
THE SWISS HELVETIA FUND, INC.
--------------------------------------------------------------------------------
Dividends Reinvestment Plan (Unaudited) (concluded)
the result may be that the average price paid for the purchases exceeds net
asset value.
Will the entire amount of my distribution or dividend be reinvested?
The entire amount of your distribution or dividend, payable in cash, will be
reinvested in additional Fund shares. If a balance remains after the purchase
of whole shares, your account will be credited with any fractional shares
(rounded to three decimal places) necessary to complete the reinvestment.
How can I sell my shares?
You can sell any or all of the shares in your Plan account by contacting AST.
AST charges $15 for the transaction plus $.10 per share for this service. You
can also withdraw your shares from your Plan account and sell them through your
broker.
Does participation in the Plan change the tax status of my distributions or
dividends?
No. The distributions and dividends are paid in cash and their taxability is
the same as if you received the cash. It is only after the payment of
distributions and dividends that AST reinvests the cash for your account.
Can I get certificates for the shares in the Plan?
AST will issue certificates for whole shares upon your request. Certificates
for fractional shares will not be issued.
Is there any charge to participate in the Plan?
There is no charge to participate in the Plan. You will, however, pay a pro
rata share of brokerage commissions incurred with respect to AST's open market
purchases of shares for your Plan account.
How can I discontinue my participation in the Plan?
Contact your broker or AST in writing. If your shares are in a Plan account,
AST will send you a certificate for your whole shares and a check for any
fractional shares.
Where can I direct my questions and correspondence?
Contact your broker, or contact AST as follows:
By mail:
American Stock Transfer & Trust
Company
PO Box 922
Wall Street Station
New York, NY 10269-0560
Through the Internet:
www.amstock.com
Through AST's automated voice response System:
1-888-556-0425
AST will furnish you with a copy of the Terms and Conditions of the Plan
without charge.
28
A SWISS INVESTMENTS FUND
THE SWISS HELVETIA FUND, INC.
EXECUTIVE OFFICES
The Swiss Helvetia Fund, Inc.
1270 Avenue of the Americas
Suite 400
New York, New York 10020
1-888-SWISS-00
(212) 332-2760
www.swz.com
THE SWISS
--------------------------------------------------------------------------------
HELVETIA
--------------------------------------------------------------------------------
FUND, INC.
--------------------------------------------------------------------------------
www.swz.com
SEMI-ANNUAL REPORT
FOR THE
PERIOD ENDED
JUNE 30, 2007
ITEM 2. CODE OF ETHICS
Not Applicable.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT
Not Applicable.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES
Not Applicable.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS
Not Applicable.
ITEM 6. SCHEDULE OF INVESTMENTS
Not Applicable.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES
Not Applicable.
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES
Not Applicable.
ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS
(d) Maximum
Number (or
(c) Total Number of Approximate
Shares (or Units) Dollar Value) of
Purchased as Part of Shares that May
Publicly Yet Be Purchased
(a) Total Number of (b) Average Price Announced Plans or Under the Plans or
Period Shares Purchased Paid per Share Programs Programs
------ ------------------- ----------------- -------------------- ------------------
01/01/07 - 01/31/07 0 0 0 500,000
02/01/07 - 02/28/07 0 0 0 500,000
03/01/07 - 03/31/07 0 0 0 500,000
04/01/07 - 04/30/07 0 0 0 500,000
05/01/07 - 05/31/07 0 0 0 500,000
06/01/07 - 06/30/07 0 0 0 500,000
Total 0 0 0 500,000
At the December 7, 2006 meeting of the Registrant's Board of Directors (the
"Board"), the Board approved the purchase of up to 500,000 shares of the
Registrant by Hottinger Capital Corp., the Registrant's investment adviser. The
approved purchase plan, announced to the public in a press release on
December 7, 2006, expires on December 31, 2007. The Registrant does not intend
to terminate the plan prior to its expiration.
ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No material changes to procedures.
ITEM 11. CONTROLS AND PROCEDURES
(a) The Registrant's principal executive and principal financial officers have
concluded, based on their evaluation of the Registrant's disclosure controls
and procedures as of a date within 90 days of the filing date of this report,
that the Registrant's disclosure controls and procedures are reasonably
designed to ensure that information required to be disclosed by the Registrant
on Form N-CSR is recorded, processed, summarized and reported within the
required time periods and that information required to be disclosed by the
Registrant in the reports that it files or submits on Form N-CSR is accumulated
and communicated to the Registrant's management, including its principal
executive and principal financial officers, as appropriate to allow timely
decisions regarding required disclosure.
(b) There were no changes to the Registrant's internal control over financial
reporting that occurred during the Registrant's second fiscal quarter of the
period covered by this report that have materially affected, or are reasonably
likely to materially affect, the Registrant's internal control over financial
reporting.
ITEM 12. EXHIBITS.
(a)(1) Not Applicable.
(a)(2) Certifications pursuant to Rule 30a-2(a) under the Investment Company
Act of 1940 (Exhibit filed herewith).
(a)(3) Not Applicable.
(b) Certifications pursuant to Rule 30a-2(b) under the Investment Company Act
of 1940 (Exhibit filed herewith).
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the Registrant has duly caused this report to
be signed on its behalf by the undersigned, thereunto duly authorized.
Registrant THE SWISS HELVETIA FUND, INC.
By /s/ Rodolphe E. Hottinger
--------------------------------
Rodolphe E. Hottinger,
Chief Executive Officer
Date August 24, 2007
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the Registrant and in the capacities and on the
dates indicated.
By /s/ Rodolphe E. Hottinger
--------------------------------
Rodolphe E. Hottinger,
Chief Executive Officer
Date August 24, 2007
By /s/ Rudolf Millisits
--------------------------------
Rudolf Millisits,
Chief Financial Officer
Date August 24, 2007