THE SWISS HELVETIA FUND, INC.
--------------------------------------------------------------------------------
Directors and Officers
Paul Hottinguer Rodolphe E. Hottinger
CHAIRMAN PRESIDENT
Eric R. Gabus+ CHIEF EXECUTIVE OFFICER
VICE CHAIRMAN (NON OFFICER) Rudolf Millisits
Paul R. Brenner, Esq. SENIOR VICE PRESIDENT
DIRECTOR TREASURER
Alexandre de Takacsy Philippe R. Comby, CFA
DIRECTOR VICE PRESIDENT
Claude Frey Edward J. Veilleux
DIRECTOR VICE PRESIDENT
Michael Kraynak, Jr. SECRETARY
DIRECTOR Leslie K. Klenk
Claude Mosseri-Marlio* ASSISTANT SECRETARY
DIRECTOR Frederick Skillin
Didier Pineau-Valencienne* ASSISTANT TREASURER
DIRECTOR Sara M. Morris
Stephen K. West, Esq. ASSISTANT TREASURER
DIRECTOR Peter R. Guarino, Esq.
Samuel B. Witt, Esq.** CHIEF COMPLIANCE OFFICER
DIRECTOR
Baron Hottinger
DIRECTOR EMERITUS
-------------------------------------------------------------------------------
*AUDIT COMMITTEE MEMBER +GOVERNANCE/NOMINATING COMMITTEE CHAIRMAN
**AUDIT COMMITTEE CHAIRMAN
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
Swiss American Securities Inc.
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 New York, Zurich, Luxembourg, Toronto, Geneva,
Vienna, London, Sion, Lugano, 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 Swiss Helvetia Fund, Inc. 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,
listed on the New York Stock Exchange under the symbol "SWZ," is managed by
Hottinger Capital Corp.
The Fund had a Morningstar overall rating of three stars as of September 30,
2005. Of course, past performance is no guarantee of future results. See the
footnote on page 4 for more information.
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
GLOBAL MARKET OVERVIEW
Across the world, equity markets showed good progress during the quarter.
Money has been flowing out of the United States into Japan, the emerging
markets, and Europe. However, except for Brazil and Mexico, a stronger U.S.
currency erased a large portion of the gains when expressed in dollar terms.
Monetary policy was in fact a main driver of the dispersion of performance
between the U.S. and the rest of the world. The other factors were the larger
exposure that non-U.S. companies have to the global economy (especially for
European and Swiss companies) and their relatively cheaper valuations. Those
two drivers explain why the out-performance of the non-U.S. markets in local
currencies was not completely lost after translation into U.S. dollars.
The energy sector was again the star performer, pushed up at the end of the
quarter by fears of disruption due to the wave of hurricanes hitting the Gulf
of Mexico. The parabolic acceleration of oil prices just before "Katrina" has
retraced.
SWISS MARKET CORPORATE NEWS
As investors are hungry for yields and not too concerned about credit risk
(the cycle has been benign so far), debt is cheap to issue. In addition,
equities appear to be cheap based on the low level of prevailing interest
rates. This situation continues to support a high level of merger and
acquisition activity which has, for the most part, simultaneously rewarded both
the acquirer and the acquired company with higher share prices.
Aside from business combinations, primary market activities increased in
Europe in the third quarter with a 10% increase in the number of initial public
offerings ("IPOs"). The biggest primary market transaction in Switzerland this
quarter was the IPO of Panalpina (freight shipping and supply chain
management). Panalpina was 14 times oversubscribed and came to the market with
an equity value of 2.2 billion Swiss francs. After the offerings of Basilea
last year and Arpida in May of this year, the Swiss market became richer in
healthcare companies with the first listing of Speedel. Speedel is a
biotechnology company active in the cardio-vascular therapeutic area with world
leadership in renin inhibition. After being forced to pull its IPO in May due
to a pricing disagreement with its investment banks, the company listed some of
its available shares (issued in previous private equity financing deals) in
September on the SWX Swiss Exchange main segment. The healthcare sector
(including medical technology) makes up 35% of the Swiss Performance Index
(SPI). For comparison, the Standard & Poors 500 Index has about 12% exposure to
the sector.
The Swiss private banking landscape is going through an interesting period
of transformation. Higher fixed costs and the limited growth of the offshore
market have created the need for consolidation. A rather favorable capital
market performance has facilitated deal making by pushing up valuations. After
agreeing to acquire Julius Baer Holdings AG's (Julius Baer) wealth management
operations in North America on December 4,
2
THE SWISS HELVETIA FUND, INC.
--------------------------------------------------------------------------------
LETTER TO STOCKHOLDERS (CONTINUED)
2004, UBS AG announced the sale of its three private banks (Banco di Lugano,
Ehinger & Armand von Ernst and Ferrier Lullin) and its asset management unit,
GAM, to Julius Baer on September 5, 2005. The price paid by Julius Baer was at
the high end of the valuation spectrum for private banks. However, it will
provide for much needed scale and should create a sizable amount of synergies.
Also in the news was Chiron's refusal of a Novartis AG proposal to purchase
the part of the company it did not yet own. Overall interest in the vaccine
business is growing again and Chiron's economics could improve due to the
increasing need society has for its products.
SWISS ECONOMIC NOTES
At its quarterly assessment, the Swiss National Bank (SNB) decided once
again to leave the target range for the three-month LIBOR rate unchanged at
0.25%-1.25%. It intends to keep the rate in the middle of the target range at
around 0.75%, for the time being.
The Consumer Price Index has doubled since June 2005 (from 0.7% to 1.4%)
which was significant but expected due to the impressive rise in oil prices.
The SNB, in its latest quarterly bulletin, stated that as long as long-term
inflation expectations remain "well-anchored", central banks do not need to
react as strongly to rising oil prices as they did in the past since its impact
on inflation has become faster but less pronounced.
In the second quarter of 2005, real Gross Domestic Product (GDP) was up
1.1% over the prior quarter as well as over the same quarter the prior year.
This is a positive development, especially given the surge in oil prices.
According to the KOF (Konjunkturforschungstelle) economic barometer, which
indicates the development of year-to-year growth, activity bottomed in April
2005 and has been on an uptrend since then. The KOF barometer forecasts an
acceleration of GDP growth in the fourth quarter.
The seasonally-adjusted unemployment rate remained unchanged at 3.8%.
The yield on the 10-year bond reached a record low level on September 14,
2005 at 1.793%. It ended the quarter higher, however, at 1.919%.
SWISS MARKET REVIEW AND FUND PERFORMANCE
The Swiss market is one of the best performing markets this year in U.S.
dollar terms, even though the dollar has appreciated close to 14% against the
Swiss franc. This is true, especially when compared to the other continental
European markets. The SPI has increased by 24.48% in local currency. Given the
ongoing increase in interest rates in the U.S., and attractive valuations in
Europe, foreign investors' money continued to flow into Switzerland.
The Fund's net asset value increased by 22.42% in local currency. The
appreciation of the U.S. dollar, however, reduced that return
3
THE SWISS HELVETIA FUND, INC.
--------------------------------------------------------------------------------
LETTER TO STOCKHOLDERS (CONTINUED)
to 7.97% in dollar terms. This quarter, especially in September, the strong
performance of the food & beverage sector negatively impacted the Fund's
performance relative to the SPI, as it is underweighted in Nestle AG (+30.59%
year-to-date). The Fund is more diversified than the SPI, which has 65% of its
value in the four largest companies.
Articles in the U.S. financial press have, on several occasions, mentioned
Swiss companies as favorable investments due to their operational strength and
their low valuations relative to other international investments. One of the
latest examples was Nestle AG. Obviously this has helped stock prices, and it
shows the convergence of valuations across markets at work.
At the moment, Novartis AG, Nestle AG, Roche Holding AG (Roche) and UBS AG
are the very best in their respective industries and, based on their current
structure or products, their strong competitive advantages appear to be
lasting. Roche, for example, continued its good performance (+39.58%
year-to-date) riding on the strength of its oncology portfolio (57%
participation in Genentech) and of its diagnostic business. Moreover, Roche is
benefiting from increasing sales of Tamiflu, the anti-viral agent developed by
Gilead Science, with which it has a marketing agreement. Tamiflu has been shown
to be effective in reducing the symptoms of the avian flu.
As of September 30, 2005, the Fund had a rating of three Stars from
Morningstar*.
CURRENCIES
On July 21, 2005, China's central bank announced that it was revaluing the
yuan to 8.11 to the dollar and would immediately begin to peg its currency to a
basket of currencies that will include the dollar. One of the possible impacts
of the revaluation was a potential increase in U.S. Treasury yields caused by a
reduction in the U.S. Treasury holdings of Asian countries. The yield on
10-year bonds, however, remained relatively stable. The U.S. dollar declined on
the news that day but recovered later in the quarter. In fact it strengthened
against the Japanese yen as the outflow of domestic funds from Japanese bonds
outweighed the foreign inflow into Japanese stocks.
The Swiss franc was 2% weaker against the U.S. dollar for the quarter and
almost unchanged against the euro. It appears that interest rate differential
is the main driver for international inflow into the U.S. currency for now. In
that sense the dollar benefits from the perception that the Federal Reserve
Bank is in a bigger hurry to raise interest rates than are the central banks of
the European Union or Switzerland. The dollar needs a return
*Morningstar is an independent fund performance monitor. Its ratings reflect
historic risk-adjusted performance and may change monthly. Its ratings of one
(low) and five (high) stars are based on a fund's three- and five-year average
annual total returns with fee adjustments, and a risk factor that reflects fund
performance relative to three-month Treasury Bill monthly returns. Only 33% of
the funds in an investment category may receive four or five stars. As of
September 30, 2005, there were 9 funds in the Fund's asset category rated by
Morningstar.
4
THE SWISS HELVETIA FUND, INC.
--------------------------------------------------------------------------------
LETTER TO STOCKHOLDERS (CONTINUED)
premium to continue to attract savings from the rest of the world. The depth
and the liquidity of the U.S. capital market alone are not sufficient to keep
the currency stable. As long as this risk premium is maintained, the dollar is
supported. However, if the other central banks, particularly the European
Central Bank (ECB), decide to raise interest rates as well, it is reasonable to
expect a renewed weakening of the U.S. dollar.
5
THE SWISS HELVETIA FUND, INC.
--------------------------------------------------------------------------------
LETTER TO STOCKHOLDERS (CONTINUED)
--------------------------------------------------------------------------------------------------------------------
PEER GROUP/INDICES PERFORMANCE COMPARISON IN SWISS FRANCS/1/
--------------------------------------------------------------------------------------------------------------------
YTD AS TOTAL RETURN AS OF YEAR ENDED DECEMBER 31, CUMULATIVE
OF -------------------------------------------------------- PERFORMANCE
9/30/05 2004 2003 2002 2001 2000 1999 1998 1997 12/31/96-9/30/05
---------------------------------- ------- ----- ------ ------- ------- ------ ------ ------ ------ ----------------
SWISS HELVETIA FUND 22.42% 7.75% 22.54% -20.40% -22.91% 14.06% 14.70% 15.57% 53.99% 130.94%
Swiss Performance Index (SPI) 24.48% 6.89% 22.06% -25.95% -22.03% 11.91% 11.69% 15.36% 55.19% 109.83%
Swiss Market Index (SMI) 21.18% 3.74% 18.51% -27.84% -21.11% 7.47% 5.71% 14.28% 58.93% 75.00%
Switzerland iShares/2 /(Formerly
called Webs Switzerland) 21.61% 6.34% 19.14% -26.23% -23.12% 7.75% 12.22% 11.74% 47.79% 74.48%
CS Equity Swiss Blue Chips/3,7/ 21.30% 2.75% 18.13% -28.75% -22.12% 10.97% 7.57% 14.21% 59.90% 78.10%
UBS (CH) Equity Fund/4,7/ 22.74% 5.00% 18.14% -26.02% -22.04% 7.42% 6.43% 12.75% 55.94% 76.52%
Pictet (CH) -- Swiss Equities/5,7/ 25.42% 7.05% 20.10% -27.93% -22.35% 7.34% 9.38% 11.05% 55.65% 83.13%
Saraswiss (Bank Sarasin)/6,7/ 22.18% 2.93% 19.64% -28.51% -24.45% 9.72% 7.10% 14.41% 53.57% 67.78%
/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 SWITZERLAND
ISHARES, 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/ SWITZERLAND ISHARES ARE TRADED ON THE NEW YORK STOCK EXCHANGE AND INVEST IN
MOST OF THE SAME STOCKS LISTED IN THE MORGAN STANLEY CAPITAL INTERNATIONAL
SWITZERLAND INDEX. THESE STOCKS REPRESENT SWITZERLAND'S LARGEST AND MOST
ESTABLISHED PUBLIC COMPANIES, ACCOUNTING FOR APPROXIMATELY 85% OF THE MARKET
CAPITALIZATION OF ALL OF SWITZERLAND'S PUBLICLY TRADED STOCKS. PERFORMANCE OF
ISHARES 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 AND 12/31/04 = 1.14, 09/30/05 = 1.29.
/3/ THIS FUND INVESTS IN EQUITIES ISSUED BY LEADING SWISS COMPANIES. STOCK
SELECTION IS BASED ON ECONOMIC, SECTOR AND COMPANY ANALYSES. PREFERENCE IS
GIVEN TO LARGE-CAP COMPANIES.
/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 SWISS COMPANIES LISTED ON THE SWISS STOCK
EXCHANGE (SWX) 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 (CONTINUED)
----------------------------------------------------------
PERIOD ENDED
SEPTEMBER 30, 2005
----------------------------------------------------------
PERFORMANCE IN SWISS FRANCS
Swiss Performance Index (SPI) 24.48%
Swiss Helvetia Fund
Based on Net Asset Value 22.42%
CHANGE IN U.S. DOLLAR VS. SWISS FRANC 13.38%
SWISS HELVETIA FUND PERFORMANCE IN U.S.
DOLLARS
Based on Net Asset Value 7.97%
Based on Market Price 1.95%
S & P 500 Index 2.77%
MSCI EAFE Index 9.08%
Lipper European Fund Index (10 Largest) 8.98%
Lipper European Fund Universe Average 9.72%
OUTLOOK / STRATEGY
Until now, Swiss companies have benefited from stronger than average
exposure to the global economy, favorable valuation and a benign interest rate
environment in Europe. Therefore, they have not experienced the price earnings
multiple compression that has prevailed in the United States. Going forward, a
sizable element of risk will be the potential change in the monetary policy of
the ECB, which could act out of concern for energy price-induced inflation.
However, if the European economy picks up speed and creates a reaction from the
ECB, interest rates would have a lot of room to move up and it would take a
while before they reached a neutral level.
With the U.S. entering a less favorable period in terms of growth (need for
fiscal restraint and higher rates), reflecting negatively on the global
economy, Switzerland, with its exposure to defensive sectors such as food and
healthcare and quasi-defensive sectors such as insurance (with its lower
investment exposure to the equity markets and its underwriting pricing
discipline) should fare well.
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 in 1999 and has
continued purchases in each subsequent year. The principal purpose of the stock
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 increased its authorization for open-market
repurchases under the Fund's 2005 stock repurchase program from 250,000 shares
to 500,000 shares of its common stock during 2005.
Sincerely,
/s/ Paul Hottinguer
Paul Hottinguer
CHAIRMAN
/s/ Rodolphe Hottinger
Rodolphe Hottinger
PRESIDENT AND CHIEF EXECUTIVE OFFICER
September 30, 2005
7
THE SWISS HELVETIA FUND, INC.
--------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (UNAUDITED) SEPTEMBER 30, 2005
Percent
No. of of Net
Shares Security Value Assets
--------------------------------------------------------------
COMMON STOCKS -- 98.90%
BANKS -- 15.69%
2,143 BANK SARASIN & CIE AG
REGISTERED SHARES $ 4,820,400 1.11%
Offers private banking, asset
management, investment advice,
and institutional banking
services.
(Cost $4,832,790)
428,000 CREDIT SUISSE GROUP/2/
REGISTERED SHARES 19,022,222 4.39%
A global diversified financial
service company with large
activity in private banking,
investment banking, asset
management and insurance
service.
(Cost $14,071,733)
21,851 ST. GALLER KANTONALBANK
REGISTERED SHARES 6,999,777 1.62%
A Swiss regional bank that offers
retail, commercial, private and
institutional banking. It also
provides asset management and
financial planning services.
(Cost $4,930,366)
435,000 UBS AG/2/
REGISTERED SHARES 37,114,602 8.57%
A global diversified financial
service company with large
activity in private banking,
investment banking, and asset
management.
(Cost $7,578,949)
------------ -----
67,957,001 15.69%
Percent
No. of of Net
Shares Security Value Assets
----------------------------------------------------------------
BASIC RESOURCES -- 1.81%
61,136 PRECIOUS WOODS HOLDING AG/1/
BEARER SHARES $ 5,500,699 1.27%
Through subsidiaries, manages
tropical forests using ecologically
sustainable forest management
methods. Harvests tropical trees
and processes them into lumber.
(Cost $5,609,158)
71,000 SWISS STEEL AG
REGISTERED SHARES 2,332,247 0.54%
Manufactures industrial and
construction steel.
(Cost $2,180,101)
------------ ----
7,832,946 1.81%
BIOTECHNOLOGY -- 2.81%
73,281 ACTELION LTD./1/
REGISTERED SHARES 7,929,183 1.83%
Pharmaceutical company that
develops and markets synthetic
small-molecule drugs against
diseases related to the
endothelium.
(Cost $4,675,382)
408,111 BERNA BIOTECH AG/1/
REGISTERED SHARES 3,893,555 0.90%
Develops and produces viral and
bacterial vaccines for influenza,
hepatitis, travel and general
immunization.
(Cost $3,212,899)
8
THE SWISS HELVETIA FUND, INC.
--------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (UNAUDITED) SEPTEMBER 30, 2005
(CONTINUED)
Percent
No. of of Net
Shares Security Value Assets
--------------------------------------------------------------
COMMON STOCKS -- (CONTINUED)
BIOTECHNOLOGY -- (CONTINUED)
12,273 CYTOS BIOTECHNOLOGY AG/1/
REGISTERED SHARES $ 364,120 0.08%
Develops and produces
biopharmaceuticals. Produces
vaccines that immunize the
patient against disease-related
proteins. This instructs the
immune system to produce
antibodies to reverse or prevent
disease progression.
(Cost $439,327)
------------ ----
12,186,858 2.81%
CHEMICALS -- 4.40%
50,000 LONZA GROUP AG
REGISTERED SHARES 2,962,963 0.68%
The leading supplier of active
chemical ingredients,
intermediaries, and
biotechnology solutions to the
pharmaceutical and agrochemical
industries.
(Cost $3,131,916)
2,924 SIKA AG
BEARER SHARES 2,236,233 0.52%
Leading producer of construction
chemicals.
(Cost $653,545)
131,931 SYNGENTA AG/2/
REGISTERED SHARES 13,865,930 3.20%
Produces herbicides, insecticides
and fungicides, and seeds for
field crops, vegetables, and
flowers.
(Cost $7,768,263)
------------ ----
19,065,126 4.40%
Percent
No. of of Net
Shares Security Value Assets
----------------------------------------------------------------
CONSTRUCTION -- 2.08%
14,777 AFG ARBONIA-FORSTER HOLDING AG
BEARER SHARES $ 4,263,753 0.98%
Manufactures kitchen appliances
and offers a wide range of
services. Produces heating
appliances, steel tubes,
refrigerators and kitchen fittings.
(Cost $4,317,395)
71,143 HOLCIM LTD.
REGISTERED SHARES 4,742,867 1.10%
Produces and markets various
building materials, in addition to
providing consulting and
engineering services in all areas
of the cement manufacturing
process.
(Cost $3,001,966)
------------ ----
9,006,620 2.08%
CYCLICAL GOODS & SERVICES -- 3.84%
315,000 COMPAGNIE FINANCIERE
RICHEMONT AG, CLASS A/2/
BEARER SHARES 12,521,815 2.89%
Manufactures and retails luxury
goods through subsidiaries.
Produces jewelry, watches,
leather goods, writing
instruments, and mens' and
womens' wear.
(Cost $10,534,476)
9
THE SWISS HELVETIA FUND, INC.
--------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (UNAUDITED) SEPTEMBER 30, 2005
(CONTINUED)
Percent
No. of of Net
Shares Security Value Assets
-------------------------------------------------------------
COMMON STOCKS -- (CONTINUED)
CYCLICAL GOODS & SERVICES -- (CONTINUED)
29,800 SWATCH GROUP AG
BEARER SHARES $ 4,121,264 0.95%
Manufactures finished watches,
movements and components.
Produces components necessary
to its eighteen watch brand
companies. Also operates retail
boutiques.
(Cost $4,043,965)
------------ ----
16,643,079 3.84%
FINANCIAL SERVICES -- 0.23%
15,000 OZ HOLDING AG
BEARER SHARES 977,312 0.23%
Provides brokerage and banking
services, specializing in futures
and options.
(Cost $987,525)
------------ ----
977,312 0.23%
FOOD & BEVERAGES -- 15.18%
13,183 EMMI AG
REGISTERED SHARES 1,205,566 0.28%
Swiss producer of dairy
products. Also produces a variety
of fruit juices and iced tea.
(Cost $1,287,208)
300 LINDT & SPRUNGLI AG
REGISTERED SHARES 4,979,639 1.15%
Major manufacturer of premium
Swiss chocolates.
(Cost $1,196,399)
Percent
No. of of Net
Shares Security Value Assets
------------------------------------------------------------------
FOOD & BEVERAGES -- (CONTINUED)
202,500 NESTLE AG/2/
REGISTERED SHARES $ 59,528,796 13.75%
Largest food and beverage
processing company in the
world.
(Cost $12,107,256)
------------ -----
65,714,001 15.18%
INDUSTRIAL GOODS & SERVICES -- 8.73%
1,364,000 ABB LTD./1/
REGISTERED SHARES 10,008,486 2.31%
The holding company for ABB
Group which is one of the largest
electrical engineering firms in the
world.
(Cost $9,340,872)
2,055 BELIMO HOLDING AG
REGISTERED SHARES 1,291,100 0.30%
World market leader in damper
and volume control actuators for
ventilation and air-conditioning
equipment.
(Cost $433,588)
53,914 BOBST GROUP AG
REGISTERED SHARES 2,329,269 0.54%
Manufactures printing presses,
packaging producing machinery,
and machines to produce and
print flexible packaging materials.
(Cost $2,361,485)
10
THE SWISS HELVETIA FUND, INC.
--------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (UNAUDITED) SEPTEMBER 30, 2005
(CONTINUED)
Percent
No. of of Net
Shares Security Value Assets
---------------------------------------------------------------
COMMON STOCKS -- (CONTINUED)
INDUSTRIAL GOODS & SERVICES -- (CONTINUED)
25,240 INFICON HOLDING AG/1/
REGISTERED SHARES $ 3,582,641 0.83%
Manufactures and markets
vacuum instruments used to
monitor and control production
processes. Manufactures on-site
chemical detection and
monitoring system.
(Cost $2,422,749)
950 KABA HOLDINGS AG
BEARER SHARES 249,060 0.06%
Provides mechanical and
electronic security systems.
(Cost $170,930)
27,418 KUEHNE & NAGEL INTERNATIONAL AG
REGISTERED SHARES 6,805,321 1.57%
Operates sea freight, land and rail
transportation businesses and
warehousing and distribution
facilities.
(Cost $1,388,318)
6,398 SGS SOCIETE GENERALE DE
SURVEILLANCE HOLDING SA
REGISTERED SHARES 4,955,131 1.14%
Provides a variety of industrial
inspection, analysis, testing and
verification services worldwide.
(Cost $1,657,511)
Percent
No. of of Net
Shares Security Value Assets
---------------------------------------------------------------
INDUSTRIAL GOODS & SERVICES -- (CONTINUED)
3,496 SIG HOLDING AG
REGISTERED SHARES $ 894,168 0.21%
Manufactures packaging
machinery through subsidiaries.
Produces beverage bottling
machines, beverage cartons, and
filling machines.
(Cost $697,041)
11,216 SULZER AG
REGISTERED SHARES 5,706,958 1.32%
Manufactures and sells surface
coatings, pumps, process
engineering equipment, and fuel
cells.
(Cost $3,694,119)
900,000 SWISSLOG HOLDING AG/1/
REGISTERED SHARES 893,543 0.21%
Offers consulting, financing,
general contracting, software,
and outsourcing services for
warehouses and distribution
centers.
(Cost $910,942)
615,035 VON ROLL HOLDING AG/1/
BEARER SHARES 1,054,278 0.24%
Manufactures insulation and
composite materials and offers
waste treatment services.
(Cost $904,319)
------------ ----
37,769,955 8.73%
11
THE SWISS HELVETIA FUND, INC.
--------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (UNAUDITED) SEPTEMBER 30, 2005
(CONTINUED)
Percent
No. of of Net
Shares Security Value Assets
--------------------------------------------------------------------
COMMON STOCKS -- (CONTINUED)
INSURANCE -- 5.65%
197,088 SWISS REINSURANCE COMPANY/2/
REGISTERED SHARES $ 12,993,973 3.00%
One of the leading global
reinsurers.
(Cost $12,487,648)
67,100 ZURICH FINANCIAL SERVICES AG
REGISTERED SHARES 11,476,091 2.65%
Offers property, accident, health,
automobile, liability, financial risk
and life insurance and retirement
products.
(Cost $11,508,602)
------------ -----
24,470,064 5.65%
MEDICAL TECHNOLOGY -- 0.17%
16,867 PHONAK HOLDING AG
REGISTERED SHARES 725,441 0.17%
Designs and produces wireless
analog and digital hearing aids,
transmitters, remote controls,
microphones and receivers for
use in wireless communications
within broadcasting and sports.
(Cost $143,401)
------------ -----
725,441 0.17%
PHARMACEUTICALS -- 27.04%
1,149,000 NOVARTIS AG/2/
REGISTERED SHARES 58,508,319 13.51%
One of the leading manufacturers
of pharmaceutical and nutrition
products.
(Cost $13,461,235)
Percent
No. of of Net
Shares Security Value Assets
---------------------------------------------------------------
PHARMACEUTICALS -- (CONTINUED)
420,000 ROCHE HOLDING AG/2/
DIVIDEND RIGHTS CERTIFICATES $ 58,573,589 13.53%
Worldwide pharmaceutical
company.
(Cost $8,467,363)
------------ -----
117,081,908 27.04%
RETAILERS -- 1.41%
24,767 GALENICA HOLDING AG
REGISTERED SHARES 4,975,492 1.15%
Manufactures and distributes
prescription and over-the-
counter drugs, toiletries and
hygiene products.
(Cost $3,088,902)
800 JELMOLI HOLDING AG
BEARER SHARES 1,135,544 0.26%
Owns and operates department
and retail stores and provides
mail-order catalog and real estate
leasing services.
(Cost $1,200,963)
------------ -----
6,111,036 1.41%
TECHNOLOGY -- 4.33%
13,000 ADVANCED DIGITAL BROADCAST
HOLDING/1/
REGISTERED SHARES 946,830 0.22%
Develops equipment and systems
to view and interact with digital
TV broadcast through cable,
satellite, and telecommunication
networks.
(Cost $808,958)
12
THE SWISS HELVETIA FUND, INC.
--------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (UNAUDITED) SEPTEMBER 30, 2005
(CONTINUED)
Percent
No. of of Net
Shares Security Value Assets
--------------------------------------------------------------
COMMON STOCKS -- (CONTINUED)
TECHNOLOGY -- (CONTINUED)
110,000 KUDELSKI SA
BEARER SHARES $ 4,355,633 1.01%
Designs and manufactures
conditional access systems for
TV operators.
(Cost $3,942,851)
330,898 LOGITECH INTERNATIONAL SA/1, 2/
REGISTERED SHARES 13,436,114 3.10%
Manufactures personal computer
input devices, as well as
producing trackballs, desktop
publishing programs and related
software.
(Cost $5,457,895)
------------ ----
18,738,577 4.33%
UTILITY SUPPLIERS -- 5.53%
235 AARE-TESSIN AG FUR ELEKTRIZITAET
REGISTERED SHARES 355,439 0.08%
Generates, transmits, and
distributes electricity in
Switzerland and neighboring
countries.
(Cost $403,888)
204,450 BKW FMB ENERGIE AG/2/
REGISTERED SHARES 14,747,993 3.41%
Generates and distributes
electricity. Produces electricity
using nuclear, hydroelectric,
solar, biomass and wind energy.
(Cost $10,934,886)
Percent
No. of of Net
Shares Security Value Assets
---------------------------------------------------------------
UTILITY SUPPLIERS -- (CONTINUED)
7,000 CENTRALSCHWEIZERISCHE
KRAFTWERKE
BEARER SHARES $ 1,281,365 0.30%
Supplies electric power, operates
and maintains distribution
network facilities, constructs and
installs equipment, and offers
consulting services to its clients.
(Cost $1,161,341)
12,273 ELEKTRIZITAETS-GESELLSCHAFT
LAUFENBURG AG
REGISTERED SHARES 7,520,396 1.74%
Generates and sells electricity.
Operates nuclear and
hydroelectric generating plants.
Sells excess power throughout
Europe.
(Cost $8,692,117)
------------ ------
23,905,193 5.53%
TOTAL COMMON STOCKS
(Cost $202,302,543)* $428,185,117 98.90%
OTHER ASSETS LESS LIABILITIES 4,760,327 1.10%
------------ ------
NET ASSETS $432,945,444 100.00%
============ ======
--------------------------------------------------------------------------------
/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 $227,760,797
GROSS UNREALIZED DEPRECIATION (1,878,223)
------------
NET UNREALIZED APPRECIATION $225,882,574
============
13
THE SWISS HELVETIA FUND, INC.
--------------------------------------------------------------------------------
DIVIDEND 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 val-
14
THE SWISS HELVETIA FUND, INC.
--------------------------------------------------------------------------------
DIVIDEND REINVESTMENT PLAN (UNAUDITED) (CONCLUDED)
ue, AST will complete its purchases, even though 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.
15
A SWISS THE SWISS
INVESTMENTS -------------------
FUND HELVETIA
-------------------
FUND, INC.
-------------------
www.swz.com
THE SWISS HELVETIA FUND, INC.
EXECUTIVE OFFICES
The Swiss Helvetia Fund, Inc.
1270 Avenue of the Americas QUARTERLY REPORT
Suite 400 FOR THE
New York, NY 10020 PERIOD ENDED
1-888-SWISS-00 SEPTEMBER 30, 2005
(212) 332-2760
www.swz.com