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, Luxembourg, Sion, Vienna, 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

Self-sustaining economic expansion characterized the macro-economic environment at the beginning of the second quarter this year. Global economic growth slowed and began to stabilize during this period, partially due to increasing risks such as the removal of various supports (e.g., the Federal Reserve’s second round of quantitative easing (“QE2”)), the expiration of other temporary stimulus efforts from governments and central banks and rising energy costs. During this period, the global industrial production cycle also shifted as the positive impulse from the sale of existing inventories faded while demand also slowed. This shift was reflected in the world manufacturing Purchasing Managers Indexes, which indicated a decelerating rate of expansion, with more than 85% of countries above the expansion and contraction level of 50 but with less than 25% of such countries expanding on a month-over-month basis. Investors’ risk appetite declined further in June. Indeed, economic data was surprisingly negative, particularly in the United States, with ongoing widespread disruption to supply chains after the earthquake in Japan in March, continued high inflation in the emerging markets countries and a further deterioration in the Greek debt situation. This led the International Monetary Fund (“IMF”) to reduce its worldwide growth forecast for 2011 by 0.1% to 4.3%.

The IMF reduced its forecast for U.S. growth from 2.8% to 2.5%, due to ongoing deflationary concerns arising from low interest

rates, weak lending activity and a continued expansion of the Federal Reserve’s balance sheet, which restrains its capacity to be more accommodative. A dramatic shift of debt from the private to the public sector after the 2008 financial crisis also has limited the U.S. government’s ability to use fiscal policy to address this economic “soft patch.” As a result, U.S. government bonds have experienced a surprising rally, pushing down 10-year U.S. Treasury bond yields to less than 2.9%.

In spite of all the negative headlines regarding the sovereign debt crisis facing several countries in Europe, the European economic recovery has strengthened compared to the United States, with gross domestic product (“GDP”) growth up by 3.4% in the first quarter of this year, underpinned by strong investment and export demand. Indeed, offsetting the IMF’s downward revision to the U.S. growth forecast were upward revisions to the core European outlook, led by Germany. However, leading indicators suggested that growth in most Eurozone countries was decelerating slightly, as business sentiment indicators have declined in recent months and industrial production has slackened. With respect to Greece, the Greek Parliament voted in favor of new austerity plans comprising 28 billion euros in fiscal consolidation and 50 billion euros in privatizations. This vote permitted the EU and the IMF to release a 12 billion euro loan that Greece needed to avoid defaulting on its sovereign debt obligations. Leading European governments and banks have agreed to provide aid to Greece in the

amount of 159 billion euros. Greece’s capacity to comply with the new program will be severely tested in coming months, but the European Central Bank (“ECB”) is strongly committed to addressing the larger debt situation and has purchased more than 75 billion euros’ worth of government bonds from various European countries (16% of the total Portuguese, Greek and Irish bonds outstanding). Indeed, the ECB stated that any downgrade of Greek sovereign bonds by rating agencies to “selective default” would be unacceptable.

In the emerging market countries and particularly in Asia, economic data has been more in line with prior forecasts, with the IMF leaving its estimates for the Asian emerging markets unchanged. Headline inflation rates in emerging market countries likely peaked and should come down steadily over the next few quarters. Recent improvements have resulted primarily from rapidly declining food price pressures, especially in China. Of all the emerging market economies, China and India have been most decisive in their monetary policies in recent quarters. In China, monetary growth has dropped below the Chinese Central Bank’s target rate, and credit growth has been reduced below GDP growth. Both countries are still halfway through their urbanization and industrialization processes, which continues to bode well for sustained growth going forward.

On the inflation front, the U.S. Consumer Price Index has continued to accelerate with

headline inflation approaching 4.0%, and even core inflation has continued to accelerate to 1.5%. However, the U.S. policy response has been very different compared to the European response, with the Federal Reserve focused on ensuring that the U.S. economic recovery remains intact rather than worrying about inflationary pressure. In Europe, in response to inflationary pressures, the ECB increased interest rates twice. This was done, on the back of German unemployment rates already below pre-crisis levels, to curb rising inflation in Germany even though inflation remained contained in peripheral European countries.

This mildly positive global macro-economic scenario remains vulnerable to global shocks such as the effect of the European sovereign debt crisis, rising concern over the U.S. debt-ceiling and the effect of the turmoil in the Middle East on oil prices. It is possible that this economic “soft patch” could become more protracted, especially given the leveraged nature of Western economies and the limited available policy options. Moreover, a potential bailout plan in China might be considered for provincial governments facing real estate financial issues after the dramatic infrastructure spending and over-investment during the past years.

In this context, global equities have remained range-bound in the first half of 2011, as they continue to suffer from recurring macro-economic concerns in spite of strong corporate fundamentals. Returns were

moderate and the market was characterized by a lack of sector leadership with rapid rotation. Companies are facing a mid-cycle slowdown as well, sanctioned by earnings downgrades and reaching peaks in margins. Management still expects most of the headwinds (i.e., turmoil in the Middle East, softer macro-economic data, weaker earnings momentum and weak government finances) to persist in the near-term limiting the uptrend of the market, while equity markets could resume their upward trend later in the year on improved macro-economic data and compelling valuations both from a historic perspective and as compared to other asset classes. Swiss equities should continue to present opportunities in the various phases of the economic cycle.

Swiss Economy Review

Switzerland continues to benefit from a stable and desirable fiscal situation compared to other developed nations. Switzerland has a debt-to-GDP ratio slightly above 30%, while a 0.3% GDP surplus is projected to gradually increase to around 0.5% over the next two years. Swiss economic growth slowed in the first quarter mainly because domestic demand came to a standstill and investments in equipment as well as inventories were subdued. By contrast, Swiss exports benefited from extremely resilient and robust worldwide demand, particularly from Germany and Asia (with emerging markets accounting for 50% of total export growth), even in spite of the strength of the Swiss franc. Exports of machines, metals and watches, among other

goods and services, increased notably. The level of capacity utilization in the Swiss economy also rose. High construction activity also was a key catalyst for the Swiss GDP reaching a record level, as residential construction continued to surge, supported by low interest rates and continued immigration. The May unemployment report highlighted the solid state of the labor market, with the unemployment rate dropping to 2.9% (equal to the rate in November, 2008). The lack of skilled labor, however, continued to create a challenging environment for the Swiss corporate sector. Economic as well as consumer sentiment indicators are still at levels where the Swiss National Bank (“SNB”) would normally raise interest rates. However, due to the strength of the Swiss franc, current inflation expectations and the larger concerns about the European sovereign debt situation, normalization of Swiss monetary policy is very unlikely for the foreseeable future.

On the foreign exchange markets, the U.S. dollar remained weak, depreciating by more than 8.5% against the Swiss franc during the second quarter of the year. The euro lost ground in May when concerns about the European government bond markets reappeared with Portugal’s bailout plan from the EU and the IMF, as well as fears over the restructuring of Greece’s debt. As a result, and despite the hawkish stance from ECB President Trichet who is targeting price stability in the medium-term, the euro depreciated by 6.3% against the Swiss franc

during the second quarter of the year. Needless to say, the Eurozone has recovered gradually, but the Swiss franc continued to serve as a safe haven investment in the first half of this year.

Sector Review

Consumers

In the food and beverage segment, the emerging market countries continued to offer attractive business expansion opportunities. Nestlé continued to identify strategic targets in those markets, as seen by the recent equity partnership in Yinlu Foods Group, a Chinese food company that already was a co-manufacturer for Nescafé, a well-established Nestlé brand in China along with Nan, Maggi and KitKat. Interest in the medical food segment, which still represents a small part of Nestlé’s activities, continues to increase as seen by the acquisition in May of a U.S. medical nutrition company, Prometheus Laboratories, by Nestlé Health Science. Nestlé also reaffirmed that it will not sell its stake in the French company L’Oréal before 2014 when its right of first refusal ends.

The personal goods and services segment was one of the best performers during the second quarter. The consumer discretionary sector continued to be lifted by the wave of consumer spending in the emerging market countries. Despite high expectations, negative currency implications and tight supply, Swatch and Richemont performed quite well. Export demand continued to be very strong during the second quarter and margin pressure due to the strength of the Swiss franc was

partially offset by increases in sales prices. The luxury goods industry has a key differentiating factor in the current environment, namely, the pricing power of its brands.

The growth in watch sales was broad-based and observed across price ranges. By region, the demand was sustainable in Asia (excluding Japan), followed by the United States and Europe. Chinese authorities may take some initiatives to stimulate domestic spending by reducing import taxes on luxury goods. The fine jewelry market is rising at a steady pace as seen by Cartier’s growth. In the Asia Pacific region, the jewelry segment may become the faster growth luxury goods segment surpassing the watch industry.

Industrials

Industrial companies in the manufacturing and service areas performed in line with the Swiss Performance Index (“SPI”) during the quarter, registering negative performance of 3.5% (in Swiss franc terms). However, ABB, which makes up 50% of that sector, clearly outperformed its smaller Swiss peers. ABB’s first quarter numbers showed that pricing pressure due to the competition in the emerging markets was lower than expected, early cycle business like industrial automation continued on its strong path and late cyclical power business started to improve. On the other side, smaller companies, such as Schweiter and Burckhardt Compression, after having rebounded strongly in 2010, reported some margin pressures due to the appreciation in the Swiss franc and raw material cost increases. As a result, the

performance of the Fund, which is overweight in the small- to mid-capitalization segment of the industrial sector, was penalized by that exposure.

Overall, Management believes that companies like Zehnder, Sulzer and Burckhardt, which have sales that are driven by energy conservation and trends in new energy generation, should continue to grow their business above the business cycle trend. Currently, small- and mid-capitalization stocks are more subject to profit-taking by investors and more earnings volatility caused by currency fluctuations than the larger companies. During the second quarter, the small- and mid-capitalization companies underperformed the large capitalization companies significantly, -6.35% versus -0.78%, respectively, across all sectors, as illustrated by their respective indexes. As a result, Management has continued to selectively reduce the Fund’s exposure to certain smaller sized companies that are more cyclical in nature.

In general, despite the double negative influence of a strong Swiss franc on exporters’ margins and sales growth and the increase in input costs, Swiss industrial companies should be quite resilient as a result of their conservative balance sheets and lean cost structure.

Energy

Despite strong oil prices and attractive prospects for capital expenditures by the major oil companies, whether independent or

national producers, the energy service sector was one of the worst performing sectors of the Swiss equity market. Weatherford International and Transocean each were down by almost 25% in Swiss francs.

Weatherford encountered margin issues in its international business as it was negatively affected by the turmoil in the Middle East and North Africa. On the other side, the U.S. business was strong but the market had expected that the international business would make a bigger contribution, as was the case for other companies in the sector. Transocean was negatively affected by its exposure to the weak Gulf of Mexico activity and therefore could not benefit fully from the larger rebound in the ultra-deep ocean business. Its margins were affected by cost increases linked to increased compliance and certification requirements. Finally, the fleet utilization in the first quarter of 2011 fell compared to the first quarter of 2010, mainly due to the conservative policy of management concerning capital expenditures and investment. Other companies are benefiting from younger fleets. In addition, British Petroleum (BP) filed a lawsuit against Transocean in April over the cost it incurred in the Macondo accident, alleging that every safety system, device and well control procedures on the platform failed because of Transocean’s misconduct. To date, Transocean has not admitted any mishandling of the situation. It remains to be seen if BP can recover some of the cost linked to the disaster from the drilling contractor.

Valuation of Swiss energy service companies is very low and energy service is a growing sector. Management has gradually reduced the Fund’s exposure in the sector to an underweight position and will continue to assess the execution of Weatherford and Transocean, as the two companies underperformed their international peers for the second quarter in a row.

Healthcare

Worldwide healthcare indices had a positive return for the second quarter in an unstable environment influenced by the European debt situation and investor concern about the outcome of the Federal Reserve’s QE2 program. The MSCI Healthcare Index ended June with a positive total return of 8.1% compared to a flat return for the MSCI World Index. The performance of Swiss pharmaceutical stocks started to lose momentum in June after a strong technical rebound earlier in the year. During the second quarter, Roche gained nearly 10% in relative terms compared to the SPI and ended the period with a positive return of 6.7%. The performance of the pharmaceutical industry reflects its defensive character, its sustainable dividend yield and the relatively low valuation of stocks at 11 times 2011 earnings per share.

The recent outperformance of Roche was mainly triggered by the perceived relative attractive valuation of the sector and on encouraging information from Roche about its oncology pipeline ahead of the well-attended ASCO (American Society of Clinical Oncol-

ogy) meeting in June. For the past two years, the stock’s depressed performance reflected the lack of catalysts and successive disappointing results in terms of product pipeline development. Novartis’ figures showed solid underlying growth, despite the dilution impact by the merger with Alcon. Alcon’s eye care business is expected to grow above the pharmaceutical industry rates, at a high single digit rate, and should contribute to the profitability of the group. To reverse the effect of the dilution from the merger, Novartis established a share buyback program that continued to be effective in the second quarter. The market has discounted the positive news flow and has underestimated the market potential of newly-introduced drugs on the market, such as Gilenya, where Novartis has the monopoly on building up the oral multiple sclerosis franchise. The recognition of the pharmaceutical division as a contributor to growth for the group should translate to significant upgrade potential for earnings in the years ahead.

Interest in the biotech sector picked up recently as demonstrated by the outperformance of the Nasdaq Biotech Index compared to worldwide indices. In Switzerland, however, the sector continued to be under pressure as Actelion was sued by Asahi Kasei Pharma. Actelion was awarded a penalty fee by the California Superior Court on a licensing dispute between the two companies. At the general shareholders meeting in May, Actelion’s shareholders reiterated their confidence in the company’s management and re-elected all members of the

Board, counteracting all proposals submitted by the activist manager, Elliott Advisors. Addex is undergoing organizational changes with the departure of the company’s CEO and the reprioritization of existing projects.

Chemicals

In varying degrees within the chemical industry, companies were negatively affected by increases in raw material prices. The European chemical sector is trading at a 10% premium on average to its long-term average multiples. The fine chemical manufacturer, Givaudan, should continue to grow revenues at a low single digit rate with a mix of volume and price increases. The company, which underperformed the flavor and fragrance market since the beginning of the year, is expected to return 60% of free cash flow to shareholders in the next three years through a combined share buyback program and extraordinary dividends.

The integration of the crop protection and seeds businesses is well on track at Syngenta, with the objective to streamline product offerings to customers. Sales prediction should continue to bear the effect of seasonal fluctuations, such as unfavorable weather conditions observed in the first part of 2011, but the long-term fundamentals remain sound.

Banks and Insurance

The banks and insurance sectors were supported by a re-rating at the beginning of the year mostly attributed to a sector rotation

and a technical rebound where the key catalysts coincided with abating Eurozone sovereign debt concerns and an improved global economic backdrop. For instance, insurance stocks, such as Swiss Life and Swiss Re, benefitted from rising interest rates and cost cutting. At that time, Management raised the Fund’s allocation to banks and insurance stocks, while still remaining significantly underweight compared to the SPI.

The European financial sector has faced an uncertain environment in 2011. Worries about the economic impact of the recent oil spike and the global mid-cycle slowdown weighed on investors’ willingness to invest in financial stocks. Furthermore, the first half of the year was characterized by a renewed focus on impending increases in regulatory oversight and compliance obligations (Basle III, Solvency II, EU and national regulators amendments), which will impose additional burdens on companies in this sector. Moreover, ongoing subdued investment activity and the strengthening of the Swiss franc detracted from returns for private banking companies. Insurance stocks have been hit by earthquakes, real estate issues, regulatory risks, reduced investment income as a result of low interest rates and trendless equity markets, as well as by concerns on exposure to the European peripheral countries.

From a Swiss standpoint, the banking sector was under pressure from ongoing discussions in bilateral negotiations on tax-related issues with Germany, the United Kingdom and the United States. For instance,

the Swiss-German negotiations are expected to conclude this summer, and likely will include an anonymous one-time tax levy on certain Swiss assets based on an investor’s current assets under management (or on the earnings on untaxed assets during the past ten years). Current market expectations for the one-time levy are along a 25-35% tax on the revenues during the past ten years. The final withholding tax on future revenues, with the proceeds then transferred to Germany, also is estimated at around 25%.

The Swiss financial sector also has suffered dramatically from the strong Swiss franc as, according to some studies, a 1% appreciation versus the U.S. dollar and the euro reduces pre-tax wealth management by 2%. A key concern over the last several quarters also was the reduced profitability of the investment banking segment due to meaningful regulatory headwinds and a lackluster operating environment. The higher level of capital required of banks under the Swiss Commission’s recommendations will create a challenging environment for the banking sector overall. The pre-crisis peak in return on equity likely will not be sustainable going forward due to the investment banking divisions of banks being a drag on overall results, compounded by ongoing risk aversion by clients and foreign exchange pressures.

Private Equity and Other Illiquid Investments

In the second quarter, a new illiquid direct private investment was made in Ixodes AG, which is a privately-held company that

is active in the development and production of topical products for the treatment and prevention of infections related to tick bites. Ixodes has sizable market opportunities in Western and Eastern Europe. With the addition of the new investment, the Fund’s percentage of net assets invested in illiquid direct private investments amounted to 3.90%. The Fund’s total draw-downs in its two limited partnership investments, Aravis II and Zurmont Madison, represented 2.68% of the Fund’s net assets as of June 30, 2011. In the second quarter, Zurmont closed two new private equity transactions, with a majority participation in CCS Holding, an electronic engineering and manufacturing (EMS) company, in April 2011 that was complemented later by an add-on investment in Adaxys AG, another company that is active in the EMS market.

Outlook

The global economy is showing signs of slowing down. Public sector spending is weakening both in Europe and the United States. Consumer spending is expected to remain subdued as unemployment remains stubbornly high. China is expected to be in the final phase of tightening its monetary policy, but it is difficult to assess the potential level of slowdown in the Chinese economy as business activity tends to lag the monetary cycle. On the positive side, interest rates are expected to remain low and inflation appears to be transitory, which reinforces the attraction of stocks compared to other asset classes, especially because valuations are historically low. The equity markets might very well be

in a transition phase due to macro-economic uncertainties and currency volatility, however, over the medium term, the lack of alternatives should support equity prices.

Fund Performance Review

The Fund underperformed its benchmark, the SPI, in the first half of the year. The Fund was down 5.4%, whereas the SPI was down 1.8%, in Swiss francs. The small- and mid-capitalization segments of the Swiss market underperformed due to profit-taking, higher sensitivity to adverse currency movements and higher cyclicality of those companies’ earnings. In addition the dividend yield on smaller companies is about 1% lower than on larger companies, which is a handicap in the current environment. The Swiss Market Index was down 3.9% through the first half of the year. Nevertheless, the Fund’s value in U.S. dollar terms was boosted by the sharp

appreciation of the Swiss franc versus the U.S. dollar. As a result, the Fund’s stockholders benefited from a 4.73% increase in the NAV in U.S. dollar terms and a 10.34% increase in the share’s market value compared to only a 6.02% increase in the S&P 500 Index.

Sincerely,

Alexandre de Takacsy

President

Rudolf Millisits

Chief Executive Officer and Chief Financial Officer

New Investments by the Fund

Actelion, Ltd.

AFG Arbonia-Forster Holding AG

Basilea Pharmaceutica AG

Biotie Therapies Oyj*

Bucher Industries AG

Holcim, Ltd.

Ixodes AG, Series B

Swiss Life Holding AG

Additions to Existing Investments

ABB, Ltd.

Aravis Biotech II — Limited Partnership

Burckhardt Compression Holding AG

Credit Suisse Group

Forbo Holding AG

Galenica AG

Roche Holding AG

SGS SA

Syngenta AG

UBS AG

Zehnder Group AG

Zurich Financial Services AG

Zurmont Madison Private Equity, Limited Partnership

Securities Disposed of / Expired

Clariant AG

Dufry Group

Flughafen Zuerich AG

Gategroup Holding AG

Georg Fischer AG

Mobimo Holding AG

Panalpina Welttransport Holding AG

Phoenix Mecano AG

PSP Swiss Property AG

Sika AG

Sonova Holding AG

Swiss Prime Site AG

Synosia Therapeutics Holding AG, Series A Preferred Shares*

Synosia Therapeutics Holding AG, Series B Preferred Shares*

Synosia Therapeutics Holding AG, Series C Preferred Shares*

Reductions in Existing Investments

Compagnie Financiere Richemont SA, Series A

Huber & Suhner AG

Meyer Burger Technology AG

Nestlé SA

Novartis AG

Schweiter Technologies AG

Sulzer AG

Swatch Group AG

Swissquote Group Holding SA

Temenos Group AG

Transocean, Ltd.

Weatherford International, Ltd.