THE SWISS HELVETIA FUND, INC.

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THE SWISS HELVETIA FUND, INC.

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Source: Schroders, Bloomberg, as of September 30, 2018. Performance measured as total return in USD. Sectors mentioned should not be viewed as a recommendation to buy/sell. Portfolio composition is subject to change over time. Investors cannot invest directly in the Index.

 

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THE SWISS HELVETIA FUND, INC.

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THE SWISS HELVETIA FUND, INC.

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THE SWISS HELVETIA FUND, INC.

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THE SWISS HELVETIA FUND, INC.

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THE SWISS HELVETIA FUND, INC.

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Schedule of Investments by Industry (Unaudited)		September 30, 2018

 

 

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See Notes to Schedule of Investments.

 

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THE SWISS HELVETIA FUND, INC.

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Schedule of Investments by Industry (Unaudited) (continued)		September 30, 2018

 

 

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See Notes to Schedule of Investments.

 

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THE SWISS HELVETIA FUND, INC.

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Schedule of Investments by Industry (Unaudited) (continued)		September 30, 2018

 

 

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See Notes to Schedule of Investments.

 

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THE SWISS HELVETIA FUND, INC.

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Schedule of Investments by Industry (Unaudited) (continued)		September 30, 2018

 

 

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See Notes to Schedule of Investments.

 

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THE SWISS HELVETIA FUND, INC.

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Schedule of Investments by Industry (Unaudited) (continued)		September 30, 2018

 

 

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See Notes to Schedule of Investments.

 

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THE SWISS HELVETIA FUND, INC.

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Schedule of Investments by Industry (Unaudited) (continued)		September 30, 2018

 

 

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See Notes to Schedule of Investments.

 

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THE SWISS HELVETIA FUND, INC.

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Schedule of Investments by Industry (Unaudited) (continued)		September 30, 2018

 

 

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See Notes to Schedule of Investments.

 

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THE SWISS HELVETIA FUND, INC.

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Schedule of Investments by Industry (Unaudited) (continued)		September 30, 2018

 

 

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See Notes to Schedule of Investments.

 

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THE SWISS HELVETIA FUND, INC.

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Schedule of Investments by Industry (Unaudited) (continued)		September 30, 2018

 

No. of Shares		Security		Fair Value				Percent of Net Assets
Limited Partnership — 0.45%
Biotechnology — 0.45%
		Aravis Biotech II, Limited Partnership1,2,3,5
		(Cost $1,810,184)		$	1,010,440				0.45	%
		Total Investments* (Cost $184,882,812)			305,684,062				136.13	%
		Other Assets Less Liabilities#			(81,123,244	)			(36.13	%)
		Net Assets		$	224,560,818				100.00	%
Net Asset Value Per Share:
		($224,560,818 ÷ 25,313,872 shares outstanding, $0.001 par value: 50 million shares authorized)						$	8.87

 

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See Notes to Schedule of Investments.

 

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THE SWISS HELVETIA FUND, INC.

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Schedule of Investments by Industry (Unaudited) (continued)		September 30, 2018

 

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1

Non-income producing security.

2

Value determined using significant unobservable inputs.

3

Illiquid. There is not a public market for these securities in the United States or in any foreign jurisdiction, including Switzerland. Securities are priced at Fair Value in accordance with the Fund’s valuation policy and procedures. At the end of the period, the aggregate Fair Value of these securities amounted to $7,182,812 or 3.20% of the Fund’s net assets. Additional information on these securities is as follows:

 

Security		Acquisition Date		Cost
Aravis Biotech II, Limited Partnership		July 31, 2007 – May 29, 2018		$	1,810,184
EyeSense AG – Preferred Shares A		July 22, 2010 – October 3, 2011			3,007,048
Ixodes AG – Preferred Shares B		April 7, 2011 – June 1, 2012			2,252,142
NovImmune SA – Common Shares		October 7, 2009 – December 11, 2009			3,613,416
SelFrag AG – Class A – Preferred Shares		December 15, 2011 – January 28, 2014			1,932,198
Spineart SA – Common Shares		December 22, 2010			2,623,328
				$	15,238,316

4

As of September 30, 2018, the Fund had more than 25% of its total assets invested in Food & Beverage and the Pharmaceuticals industries as a result of the appreciation of its existing investments and due to the decrease in the Fund’s assets resulting from its distribution payable October 19, 2018. Due to regulatory restrictions that apply to the Fund’s investments in a particular industry, the Fund will not make any additional investments until such time the percentage of the Fund’s total assets invested in that industry is below 25%.

5

Affiliated Company. An affiliated company is a company in which the Fund has ownership of at least 5% of the company’s outstanding voting securities or an equivalent interest in the company. Details related to affiliated company holdings are as follows:

 

Name of Issuer		Fair Value as of 12/31/17				Gross Additions				Gross Reductions				Realized Gain/(Loss)				Change in Unrealized Gain/(Loss)				Interest Income				Fair Value as of 09/30/18
Aravis Biotech II, Limited Partnership		$	1,591,513			$	81,343			$	(1,081,211	)		$	61,007			$	357,788			$	—			$	1,010,440
Ixodes AG – Preferred Shares B			68,268				—				—				—				(19,165	)			—				49,103
		$	1,659,781			$	81,343			$	(1,081,211	)		$	61,007			$	338,623			$	—			$	1,059,543

*

Cost for Federal income tax purposes is $184,973,618 and net unrealized appreciation (depreciation) consists of:

 

Gross Unrealized Appreciation		$	137,236,033
Gross Unrealized Depreciation			(16,525,589	)
Net Unrealized Appreciation (Depreciation)		$	120,710,444

#

Includes value of distribution paid of $124,291,111 on October 19, 2018.

 

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See Notes to Schedule of Investments.

 

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THE SWISS HELVETIA FUND, INC.

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Schedule of Investments by Industry (Unaudited) (concluded)		September 30, 2018

 

 

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See Notes to Schedule of Investments.

 

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THE SWISS HELVETIA FUND, INC.

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Notes to Schedule of Investments (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 management investment 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 may also acquire and hold equity and equity-linked securities of non-Swiss companies in limited instances.

 

B. Securities Valuation

The Fund values its investments at fair value in accordance with accounting principles generally accepted in the United States (“GAAP”).

 

When valuing listed equity securities, the Fund uses the last sale price on the securities exchange or national securities market on which such securities primarily are traded (the “Primary Market”) prior to the calculation of the Fund’s net asset value (“NAV”). When valuing equity securities that are not listed (except privately-held companies and private equity limited partnerships) or that are listed but have not traded on a day on which the Fund calculates its NAV, the Fund uses the mean between the bid and asked prices for that day. If there are no asked quotations for such a security, the value of such security will be the most recent bid quotation on the Primary Market on that day. On any day when a security’s Primary Market is closed because of a local holiday or other scheduled closure, but the New York Stock Exchange is open, the Fund may use the prior day’s closing prices to value such security regardless of the length of the scheduled closing.

 

When valuing fixed-income securities, if any, the Fund uses the last bid price prior to the calculation of the Fund’s NAV. If there is no current bid price for a fixed-income security, the value of such security will be the mean between the last quoted bid and asked prices on that day. Overnight and certain other short-term fixed-income securities with maturities of less than 60 days will be valued by the amortized cost method, unless it is determined that the amortized cost method would not represent the fair value of such security.

 

It is the responsibility of the Fund’s Board of Directors (the “Board”) to establish procedures to provide for the valuation of the Fund’s portfolio holdings. 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 (a “Fair Value”). 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.

 

Swiss exchange-listed options, if any, including Eurex-listed options, are valued at their most recent sale price (latest bid for long options and the latest ask for short options) on the Primary Market, or if there are no such sales, at the average of the most recent bid and asked quotations on such Primary Market, or if such quotations are not available, at the last bid quotation (in the case of purchased options) or the last asked quotation (in the case of written options). If, however, there

 

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THE SWISS HELVETIA FUND, INC.

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Notes to Schedule of Investments (Unaudited) (continued)

 

are no such quotations, such options will be valued using the implied volatilities observed for similar options or from aggregated data as an input to a model. Options traded in the over-the-counter market, if any, are valued at the price communicated by the counterparty to the option, which typically is the price at which the counterparty would close out the transaction. Option contracts, if any, that are neither exchange-listed nor traded in the over-the-counter market, and where no broker can provide a quote or approved pricing vendor a price, may be valued using the implied volatilities observed for similar instruments or from aggregated market data received from services (e.g., Bloomberg) as an input to a widely accepted model.

 

The Fund is permitted to invest in investments that do not have readily available market quotations. For such investments, the Act requires the Board to determine their Fair Value. The aggregate value of these investments amounted to $7,182,812, or 3.20% of the Fund’s net assets at September 30, 2018, and are listed in Note 2 to the Schedule of Investments.

 

Various inputs are used to determine the value of the Fund’s investments. These inputs are summarized in the three broad levels listed below:

 

Level 1—unadjusted

quoted prices in active markets for identical assets and liabilities

Level 2—other

significant observable inputs (including quoted prices of similar securities, interest rates, prepayment speeds, credit risk, etc.)

Level 3—significant

unobservable inputs (including the Fund’s own assumptions in determining the fair value of investments)

 

The inputs or methodology used for valuing securities are not an indication of the risk associated with investing in those securities.

 

The following is a summary of the inputs used to value the Fund’s investments as of September 30, 2018:

 

		Level 1 Quoted Prices				Level 2 Other Significant Observable Inputs				Level 3 Significant Unobservable Inputs				Investments Valued at NAV**				Total
Investments in Securities*
Common Stock		$	298,501,250			$	—			$	5,889,894			$	—			$	304,391,144
Preferred Stock			—				—				282,478				—				282,478
Limited Partnership			—				—				—				1,010,440				1,010,440
Total Investments in Securities		$	298,501,250			$	—			$	6,172,372			$	1,010,440			$	305,684,062

 

*	Please see the Schedule of Investments for industry classifications.

 

**

As of September 30, 2018 certain of the Fund’s investments were valued using net asset value (“NAV”) per share (or its equivalent) as a practical expedient for fair value and have been excluded from the fair value hierarchy in accordance with ASU 2015-07. The fair value amount presented in this table is intended to permit reconciliation of the amounts presented in the fair value hierarchy to the amounts presented in the statement of assets and liabilities.

 

The Fund values its investment in a private equity limited partnership in accordance with Accounting Standards Codification 820-10-35, “Investments in Certain Entities that Calculate Net Asset Value Per Share (Or its Equivalent)” (“ASC 820-10-35”). ASC 820-10-35 permits a reporting entity to measure the fair value of an investment that does not have a readily determinable fair

 

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THE SWISS HELVETIA FUND, INC.

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Notes to Schedule of Investments (Unaudited) (continued)

 

value, based on the NAV of the investment as a practical expedient, without further adjustment, unless it is probable that the investment will be sold at a value significantly different than the NAV. If the NAV of the investment is not as of the Fund’s measurement date, then the NAV should be adjusted to reflect any significant events that may change the valuation. Inputs and valuation techniques for these adjustments may include fair valuations of the partnership and its portfolio holdings provided by the partnership’s general partner or manager, other available information about the partnership’s portfolio holdings, values obtained on redemption from other limited partners, discussions with the partnership’s general partner or manager and/or other limited partners and comparisons of previously-obtained estimates to the partnership’s audited financial statements. In using the unadjusted NAV as a practical expedient, certain attributes of the investment that may impact its fair value are not considered. Attributes of those investments include the investment strategies of the privately held companies and may also include, but are not limited to, restrictions on the investor’s ability to redeem its investments at the measurement date and any unfunded commitments.

 

Level 3 securities, which are listed in Note 3 to the Schedule of Investments, consist of the Fund’s investments in privately-held companies.

 

Inputs and valuation techniques used by the Fund to value its Level 3 investments in privately-held companies may include the following: acquisition cost; fundamental analytical data; discounted cash flow analysis; nature and duration of restrictions on disposition of the investment; public trading of similar securities of similar issuers; economic outlook and condition of the industry in which the issuer participates; financial condition of the issuer; and the issuer’s prospects, including any recent or potential management or capital structure changes. Although these valuation inputs may be observable in the marketplace as is characteristic of Level 2 investments, the privately-held companies, categorized as Level 3 investments, generally are highly illiquid in terms of resale.

 

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THE SWISS HELVETIA FUND, INC.

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Notes to Schedule of Investments (Unaudited) (continued)

 

When valuing Level 3 investments, management also may consider potential events that could have a material impact on the operations of a privately-held company. Not all of these factors may be considered or available, and other relevant factors may be considered on an investment-by-investment basis. The table below summarizes the techniques and unobservable inputs for the valuation of Level 3 investments.

 

Quantitative Information about certain Level 3 Fair Value Measurements
		Fair Value at September 30, 2018				Valuation Technique		Unobservable inputs		Range1
Biotechnology
NovImmune SA—Common Shares			$4,510,975			Market approach		Recent round of financing		N/A
										95%
Ixodes AG—Preferred Shares			49,103			Discounted cash flow		Discount rate		19%
								Probability of success rate on research and development		10%
Industrial Goods & Services
SelFrag AG—Preferred Shares			189,721			Market approach		Recent round of financing		N/A
Medical Equipment
EyeSense AG—Preferred Shares			43,654			Market approach		Recent round of financing		N/A
Spineart SA—Common Shares			1,378,919			Market approach		Recent round of financing		N/A
Total			$6,172,372

 

1

Significant changes in any of these ranges would result in a significantly higher or lower fair value measurement. Generally, a change in the probability of success rate on research and development is accompanied by a directionally similar change in fair value. Conversely, a change in the discount rate is accompanied by a directionally opposite change in fair value.

 

The Fund’s policy is to disclose transfers between Levels based on their market prices as of the beginning of the period.

 

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THE SWISS HELVETIA FUND, INC.

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Notes to Schedule of Investments (Unaudited) (continued)

 

The following is a reconciliation of Level 3 assets for which significant unobservable inputs were used to determine fair value.

 

		Common Stock				Preferred Stock				Total
Balance as of December 31, 2017		$	4,941,039			$	328,792			$	5,269,831
Change in Unrealized Appreciation/Depreciation (a)			948,855				(46,314	)			902,541
Net Realized Gain (Loss)			—				—				—
Gross Purchases			—				—				—
Gross Sales			—				—				—
Transfer out of Level 3			—				—				—
Balance as of September 30, 2018		$	5,889,894			$	282,478			$	6,172,372

 

(a)	The noted amounts of change in unrealized appreciation/depreciation relate to the fair value of Level 3 assets held on September 30, 2018.

 

C. Foreign Currency Translation

The Fund maintains its accounting records in U.S. dollars. The Fund’s assets are invested primarily in Swiss equities. In addition, the Fund can make its temporary investments in Swiss franc-denominated bank deposits, short-term debt securities and money market instruments. Substantially all income received by the Fund is in Swiss francs. The Fund’s NAV, however, is reported, and distributions from the Fund are made, in U.S. dollars, resulting in gain or loss from currency conversions in the ordinary course of business. Historically, the Fund has not entered into transactions designed to reduce currency risk and does not intend to do so in the future. The cost basis of foreign denominated assets and 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 foreign currency gain/loss. 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 shown in the Fund’s financial statements result from the sale of foreign currencies, from currency gains or losses realized between the trade and settlement dates of 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, 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 translations resulting in realized and unrealized gain or loss are disclosed separately.

 

D. Concentration of Market Risk

The Fund primarily invests in securities of Swiss issuers. Such investments may carry certain risks not ordinarily associated with investments in securities of U.S. issuers. These risks include future

 

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THE SWISS HELVETIA FUND, INC.

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Notes to Schedule of Investments (Unaudited) (concluded)

 

political and economic developments, unfavorable movements in the Swiss franc relative to the U.S. dollar, and the possible imposition of exchange controls and changes in governmental law and restrictions. In addition, concentrations of investments in securities of issuers located in a specific region expose the Fund to the economic and government policies of that region and may increase risk compared to a fund whose investments are more diversified.

 

Note 2—Capital Commitments

As of September 30, 2018, the Fund maintains an illiquid investment in one private equity limited partnership. This investment appears in the Fund’s Schedule of Investments. The Fund’s capital commitment for this partnership is shown in the table below:

 

Investments		Original Capital Commitment*				Unfunded Commitment*
Private Equity Limited Partnership—International (a)
Aravis Biotech II, Limited Partnership		$	3,327,191			$	—

 

*	The original capital commitment represents 3,250,000 Swiss francs, which has been fully funded as at September 30, 2018. The Swiss franc/U.S. dollar exchange rate as of September 30, 2018 was used for conversion and equaled 0.9768 as of such date.

 

(a)

This category consists of one private equity limited partnership that invests primarily in venture capital companies in the biotechnology and medical technology sectors. There is no redemption right for the interest in this limited partnership. Instead, the nature of investments in this category is that distributions are received through the realization of the underlying assets of the limited partnership.

 

Note 3—Subsequent Events

On November 20, 2018, pursuant to the Fund’s previously announced Tender Offer, the Fund accepted for cash purchase 24,638,918 shares of the Fund’s common stock at a price equal to $7.86 per share, which represents 98% of the Fund’s NAV per share of $8.02 as of the close of the regular trading session of the New York Stock Exchange on November 19, 2018. As a result of the purchase of the 24,638,918 shares, the Fund has 13,267,110 shares of common stock outstanding.

 

The Fund has been informed that the Fund’s Executive Officers and other officers that are employees of Schroder Investment Management North America, Inc., Schroder Investment Management North America Ltd., or their respective affiliates will resign as officers of the Fund on or about December 31, 2018. The Board is evaluating its options but intends to identify appropriate replacements for required officers, which could result in additional cost to the Fund.

 

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THE SWISS HELVETIA FUND, INC.

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Automatic Dividend Reinvestment Plan (Unaudited)

 

 

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THE SWISS HELVETIA FUND, INC.

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Automatic Dividend Reinvestment Plan (Unaudited) (continued)

 

 

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THE SWISS HELVETIA FUND, INC.

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Automatic Dividend Reinvestment Plan (Unaudited) (concluded)

 

 

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THE SWISS HELVETIA FUND, INC.

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Quarterly Report  

 

For the Period Ended

September 30, 2018

SWZ QR 9/30/18