THE SWISS HELVETIA FUND, INC.
--------------------------------------------------------------------------------
Directors and Officers
Samuel B. Witt III, Esq. Baron Hottinger
CHAIRMAN (NON-EXECUTIVE) DIRECTOR EMERITUS
Eric R. Gabus/1/ Rodolphe E. Hottinger
VICE CHAIRMAN (NON- EXECUTIVE) PRESIDENT
Jean-Marc Boillat CHIEF EXECUTIVE OFFICER
DIRECTOR Rudolf Millisits
Paul R. Brenner, Esq./3/ SENIOR VICE PRESIDENT
DIRECTOR CHIEF FINANCIAL OFFICER
Alexandre de Takacsy Philippe R. Comby,
DIRECTOR CFA, FRM
Claude Frey VICE PRESIDENT
DIRECTOR Edward J. Veilleux
Paul Hottinguer VICE PRESIDENT
DIRECTOR SECRETARY
Michael Kraynak, Jr./2/ Scot E. Draeger
DIRECTOR ASSISTANT SECRETARY
Didier Pineau-Valencienne/2/ Frederick Skillin
DIRECTOR ASSISTANT TREASURER
Stephen K. West, Esq./2/ Jean L. Seidel
DIRECTOR ASSISTANT TREASURER
Peter R. Guarino, Esq.
CHIEF COMPLIANCE OFFICER
-------------------------------------------------------------------------------
/1/GOVERNANCE/NOMINATING /2/AUDIT COMMITTEE MEMBER
COMMITTEE CHAIRMAN /3/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 the Bahamas, Basel, Geneva, London, Lugano,
Luxembourg, New York, Sion, Toronto, Vienna and Zurich.
EXECUTIVE OFFICES
The Swiss Helvetia Fund, Inc.
1270 Avenue of the Americas, Suite 400
New York, New York 10020
(212) 332-2760
FOR INQUIRIES AND REPORTS:
1-888-SWISS-00 (1-888-794-7700)
Fax: (212) 332-7931
email: swz@swz.com
WEBSITE ADDRESS
www.swz.com
The Fund
The Fund is a non-diversified, closed-end investment company whose objective is
to seek long-term capital appreciation through investment in equity and
equity-linked securities of Swiss companies. The Fund also may acquire and hold
equity and equity-linked securities of non-Swiss companies in limited instances.
The Fund is listed on the New York Stock Exchange under the symbol "SWZ".
Net Asset Value is calculated daily by 6:15 P.M. (Eastern Time). The most
recent calculation is available by calling 1-888-SWISS-00 or by accessing our
Website. Net Asset Value is also published weekly in BARRON'S, the Monday
edition of THE WALL STREET JOURNAL and the Sunday Edition of THE NEW YORK TIMES.
1
THE SWISS HELVETIA FUND, INC.
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Letter to Stockholders
GLOBAL OVERVIEW
A defining moment for the world equity markets during the past quarter was
the Federal Reserve Board's June 29/th/ decision to put interest rate increases
on hold. After having sounded the inflation alarm, the Fed's course change was
based on its data dependent anticipation of a slowdown in the economy. This
stance was confirmed at the Fed's August 8/th/ and September 20/th/ meetings.
This change created conditions for lower volatility and recovery of stock
markets across the globe. As a result of this change, the interest rate on ten
year Treasury bonds dropped from 5.2% to 4.6% during the quarter.
The Chinese economy continued to grow strongly with a real GDP increase
above 10%. But inflation, as measured by consumer prices, remained contained at
well below 3%. In the emerging markets, current account balances continued to
be strongly positive, foreign currency reserves continued to increase and
public sector debt continued to decline. The much discussed "glut of savings"
situation continued to keep downward pressure on the government bond yields of
the developed markets and probably played a large role in preventing the May
sell-off in the equity markets from getting out-of-hand.
On the currency front, the dollar strengthened despite the lack of Fed
action. As we discussed in our last report, we believe that one explanation was
repatriation of some money to the US markets due to the threat of a world
economic slowdown.
SWISS MARKET CORPORATE NEWS
Swiss Steel announced on August 28/th/ 2006 that its majority owner Schmolz
+ Bickenbach of Germany will contribute some of its assets to the company,
increasing its turnover to 5 billion Swiss francs. In addition, Swiss Steel
will be renamed Schmolz + Bickenbach.
In Swiss exchange news at the end of September, Swiss Life Holding was
promoted from the Swiss Performance Index's ("SPI") mid cap index basket to its
large cap index basket.
SWISS ECONOMIC NOTES
The purchasing managers' index (PMI), the composite index of leading
indicators and the sentiment among companies and private households are all at
their highest level in years. After years of slower growth, the Swiss economy
has caught up, and with the benefit of a more expansionary monetary policy than
the rest of Europe and is experiencing a sharper upswing than its neighbors.
The differential in growth should benefit the Swiss franc and bring a halt to
its recent depreciation against the euro. Economists expect real GDP growth of
3% for 2006. Exports are surging and industrial capacity utilization has
reached its highest level since 1991. For those reasons, the Swiss National
Bank increased the 3-month Libor target rate by 25 basis points to 1.25%-2.25%
on September 14/th/ with the intention to hold the rate in the middle of the
range "for the time being."
2
THE SWISS HELVETIA FUND, INC.
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Letter to Stockholders (continued)
SWISS MARKET REVIEW AND FUND PERFORMANCE
The Swiss market experienced a strong recovery during the quarter with a
change in leadership from the small capitalization companies to the large
capitalization companies. The SPI reached an all-time high at the end of
September on the back of strong half-year results and lower interest rates on
the long end of the yield curve. The market, despite its recent advance pushing
its valuation slightly higher than the average of this cycle (2001-2006), has
retained the same level of risk premium thanks to lower bond yields. The food,
insurance, retail, luxury goods and technology sectors have outperformed during
the quarter. The notable laggards were the energy and basic materials sectors.
The Swiss Helvetia Fund recovered slightly less than the SPI from the lows
of June. The Fund suffered somewhat from its lower exposure to the large
capitalization stocks, which were the first to rebound, and from its higher
than usual cash position. The Fund did not benefit from its higher exposure to
energy stocks (utilities), as they are still in a consolidation mode, and from
its low exposure to industrial stocks, as they proved to be very resilient in
the last part of the quarter. Nonetheless, Management remains comfortable with
its overall stock selection, as illustrated in the mid cap health care space,
where volatility is not generated by macro factors, such as the economic cycle,
but by specific company related factors, and has started to reinvest some of
the cash. Overall, the Fund's stock selection has led to a lower than market
volatility despite the Fund's higher exposure to small and mid cap stocks.
3
THE SWISS HELVETIA FUND, INC.
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Letter to Stockholders (continued)
-------------------------------------------------------------------------------------------------------------------------
PEER GROUP/INDICES PERFORMANCE COMPARISON IN SWISS FRANCS/1/
-------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN TOTAL RETURN AS OF YEAR ENDED DECEMBER 31, CUMULATIVE
YTD AS --------------------------------------------------------------- PERFORMANCE
OF 9/30/06 2005 2004 2003 2002 2001 2000 1999 1998 1997 12/31/96-9/30/06
--------------------------- ------------ ------ ----- ------ ------- ------- ------ ------ ------ ------ ----------------
SWISS HELVETIA FUND 13.44% 33.20% 7.75% 22.54% -20.40% -22.91% 14.06% 14.70% 15.57% 53.99% 185.04%
Swiss Performance
Index (SPI) 14.37% 35.61% 6.89% 22.06% -25.95% -22.03% 11.91% 11.69% 15.36% 55.19% 161.44%
Swiss Market Index
(SMI) 11.10% 33.21% 3.74% 18.51% -27.84% -21.11% 7.47% 5.71% 14.28% 58.93% 113.72%
iShares MSCI Switzerland/2/
(Formerly called Webs
Switzerland) 12.94% 33.21% 3.74% 18.51% -27.84% -21.11% 7.47% 5.71% 14.28% 58.93% 117.26%
CS EF Swiss Blue
Chips/3,7/ 12.03% 32.27% 2.75% 18.13% -28.75% -22.12% 10.97% 7.57% 14.21% 59.90% 117.57%
UBS (CH) Equity Fund/4,7/ 13.52% 33.50% 5.00% 18.14% -26.02% -22.04% 7.42% 6.43% 12.75% 55.94% 117.95%
Pictet (CH) - Swiss
Equities/5,7/ 11.16% 37.06% 7.05% 20.10% -27.93% -22.35% 7.34% 9.38% 11.05% 55.65% 122.46%
Saraswiss (Bank
Sarasin)/6,7/ 12.65% 33.05% 2.93% 19.64% -28.51% -24.45% 9.72% 7.10% 14.41% 53.57% 105.82%
SOURCES : BLOOMBERG, MANAGEMENT COMPANIES' WEBSITES AND CITIGROUP FUND SERVICES.
/1/ PERFORMANCE OF FUNDS IS BASED ON CHANGES IN THE FUND'S NAV OVER A SPECIFIED
PERIOD. IN EACH CASE TOTAL RETURN IS CALCULATED ASSUMING REINVESTMENT OF ALL
DISTRIBUTIONS. FUNDS LISTED, OTHER THAN ISHARES MSCI SWITZERLAND, ARE NOT
REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION. PERFORMANCE AND
DESCRIPTIVE INFORMATION ABOUT THE FUNDS ARE DERIVED FROM THEIR PUBLISHED
INVESTOR REPORTS AND WEBSITES, WHICH ARE SUBJECT TO CHANGE.
/2/ SHARES OF ISHARES MSCI SWITZERLAND ARE TRADED ON THE NEW YORK STOCK
EXCHANGE AND SEEKS TO PROVIDE INVESTMENT RESULTS THAT CORRESPOND TO THE
PERFORMANCE OF THE SWISS MARKET, AS MEASURED BY THE MSCI SWITZERLAND INDEX.
THESE STOCKS REPRESENT SWITZERLAND'S LARGEST AND MOST ESTABLISHED PUBLIC
COMPANIES, ACCOUNTING FOR APPROXIMATELY 85% OF THE MARKET CAPITALIZATION OF ALL
SWITZERLAND'S PUBLICLY TRADED STOCKS. PERFORMANCE OF SHARES OF ISHARES MSCI
SWITZERLAND IS CALCULATED BASED UPON THE CLOSING PRICES OF THE PERIOD INDICATED
USING THE SWISS FRANC/U.S. DOLLAR EXCHANGE RATE AS OF NOON EACH SUCH DATE, AS
REPORTED BY BLOOMBERG. SUCH EXCHANGE RATES WERE AS FOLLOWS: 12/31/96 = 1.35,
12/31/97 = 1.46, 12/31/98 = 1.38, 12/31/99 = 1.60, 12/31/00 = 1.61, 12/31/01 =
1.67, 12/31/02 = 1.39, 12/31/03 = 1.24, 12/31/04 = 1.14, 12/31/05 = 1.32, AND
9/30/06 = 1.25.
/3/ THIS FUND GIVES INVESTORS ACCESS TO THE SWISS EQUITY MARKET. IT HAS A
BROADLY-DIVERSIFIED PORTFOLIO GEARED TO THE LONG-TERM VALUE GROWTH, WITH A
PREFERENCE TO THE LARGE CAP STOCKS. STOCK SELECTION IS BASED ON CRITERIA SUCH
AS COMPANY VALUATION, BUSINESS CLIMATE, MARKET POSITIONING AND MANAGEMENT
QUALITY.
/4/ THIS FUND INVESTS PRIMARILY IN MAJOR SWISS COMPANIES. QUALITY CRITERIA USED
FOR DETERMINING RELATIVE WEIGHTINGS OF COMPANIES INCLUDE: STRATEGIC
ORIENTATION, STRENGTH OF MARKET POSITION, QUALITY OF MANAGEMENT, SOUNDNESS OF
EARNINGS, GROWTH POTENTIAL AND POTENTIAL FOR IMPROVING SHAREHOLDER VALUE. THE
INVESTMENT OBJECTIVE SEEKS TO PROVIDE RESULTS THAT ARE ALIGNED WITH THE SPI
PERFORMANCE.
/5/ THIS FUND INVESTS IN SHARES OF COMPANIES LISTED IN SWITZERLAND AND INCLUDED
IN THE SPI, MAINLY IN BLUE CHIP STOCKS.
/6/ THIS FUND INVESTS IN SHARES OF SWISS COMPANIES. IT WEIGHTS INDIVIDUAL
SECTORS RELATIVE TO THE SPI ON THE BASIS OF THEIR EXPECTED RELATIVE
PERFORMANCE. IT FOCUSES ON LIQUID BLUE-CHIP STOCKS.
/7/ THESE FUNDS ARE NOT AVAILABLE FOR U.S. RESIDENTS OR CITIZENS.
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS.
4
THE SWISS HELVETIA FUND, INC.
--------------------------------------------------------------------------------
Letter to Stockholders (continued)
----------------------------------------------------------
YEAR TO DATE
DECEMBER 31, 2005
THROUGH
SEPTEMBER 30, 2006
--------------------------------------- ------------------
PERFORMANCE IN SWISS FRANCS
Swiss Performance Index (SPI) 14.37%
Swiss Helvetia Fund
Based on Net Asset Value 13.44%
CHANGE IN U. S. DOLLAR VS. SWISS FRANC -4.86%
PERFORMANCE IN U.S. DOLLARS
SWISS HELVETIA FUND PERFORMANCE
Based on Net Asset Value 19.23%
Based on Market Price 25.17%
S & P 500 Index 8.53%
MSCI EAFE Index 14.49%
Lipper European Fund Index (10 Largest) 18.61%
Lipper European Fund Universe Average 18.91%
SOURCES: CITIGROUP FUND SERVICES, LLC AND BLOOMBERG
OUTLOOK / STRATEGY
European stock markets are less liquidity driven than the US market because
the interest rate cycle is currently more favorable in the US. The Fed's next
move is expected to be an interest rate cut while the European Central Bank's
next move is expected to be an increase. In that context the overseas markets
could under-perform. However, it is not obvious that this will translate into a
worse performance once currency effects are taken into account. Based on
valuation, interest rate direction, and macro economic conditions, a
consolidation move after the strong advance during the summer is possible
across the globe. On the other hand, it is difficult to see a trigger for a
substantial market correction aside from an external geo-political event. Even
if the US economy slows down to a near halt on the back of the housing market's
impact on consumer spending, capital markets should be supported by the
abundant global savings and the economic momentum outside of the United States.
The strategy of the Fund's Management will continue to be to build up
positions in long term, sustainable growth investment cases and to try to
identify undervalued franchises while looking at add-ons, such as covered call
writing strategies, in order to generate additional income, especially if
analysis shows a tendency for the market to enter a sideways pattern.
STOCK REPURCHASE PROGRAM
Pursuant to authorization by the Board, the Fund began open market
purchases of its common stock on the New York Stock Exchange ("NYSE") in 1999
and has continued purchases in each subsequent year. The principal purpose of
the stock repurchase program is to enhance stockholder value by increasing the
Fund's net asset value per share without creating a meaningful adverse effect
upon the Fund's expense ratio. The Board has authorized the Fund to repurchase
up to 1,000,000 shares during 2006. During the period ended September 30, 2006,
the Fund repurchased and retired 430,800 shares at an average price of $17.53
per share (including brokerage commissions) and a weighted average discount of
10.25%. These
5
THE SWISS HELVETIA FUND, INC.
--------------------------------------------------------------------------------
Letter to Stockholders (concluded)
repurchases, which had a total cost of $7,550,175, resulted in an increase of
$843,650 to the Fund's net asset value.
Sincerely,
/s/ Rodolphe Hottinger
Rodolphe E. Hottinger
PRESIDENT AND CHIEF EXECUTIVE OFFICER
/s/ Rudolf Millisits
Rudolf Millisits
SENIOR VICE PRESIDENT AND CHIEF FINANCIAL OFFICER
September 30, 2006
6
THE SWISS HELVETIA FUND, INC.
--------------------------------------------------------------------------------
Schedule of Investments (Unaudited) September 30, 2006
Percent
No. of of Net
Shares Security Value Assets
----------------------------------------------------------------
COMMON STOCKS -- 96.76%
BANKS -- 15.61%
530 BANK SARASIN & CIE AG
REGISTERED SHARES $ 1,559,632 0.31%
Offers private banking, asset
management, investment
advisory, and institutional
banking services.
(Cost $1,184,730)
428,000 CREDIT SUISSE GROUP/2/
REGISTERED SHARES 24,694,605 4.93%
A global diversified financial
service company with large
activity in private banking,
investment banking, asset
management and insurance
service.
(Cost $14,071,733)
870,000 UBS AG/2/
REGISTERED SHARES 51,896,806 10.37%
A global diversified financial
service company with large
activity in private banking,
investment banking, and asset
management.
(Cost $7,403,841)
------------ -----
78,151,043 15.61%
BASIC RESOURCES -- 2.66%
101,136 PRECIOUS WOODS HOLDING AG/1/
REGISTERED SHARES 7,258,854 1.45%
Through subsidiaries, manages
tropical forests using ecologically
sustainable forest management
methods. Harvests tropical trees
and processes them into lumber.
(Cost $9,076,879)
Percent
No. of of Net
Shares Security Value Assets
-------------------------------------------------------------
BASIC RESOURCES -- (CONTINUED)
103,960 SCHMOLZ AND BICKENBACH AG
REGISTERED SHARES $ 6,039,703 1.21%
Manufactures industrial and
construction steel.
(Cost $3,313,494)
------------ ----
13,298,557 2.66%
BIOTECHNOLOGY -- 6.56%
40,731 ACTELION LTD./1/
REGISTERED SHARES 5,827,299 1.16%
Biotechnology company that
develops and markets synthetic
small-molecule drugs against
diseases related to the
endothelium.
(Cost $4,035,704)
126,200 BASILEA PHARMACEUTICA/1,2/
REGISTERED SHARES 19,927,110 3.98%
Conducts research into the
development of drugs for the
treatment of infectious diseases
and dermatological problems.
(Cost $16,683,171)
48,453 SPEEDEL HOLDING AG/1/
REGISTERED SHARES 7,086,630 1.42%
Researches and develops
therapies for cardiovascular and
metabolic diseases
(Cost $6,068,480)
------------ ----
32,841,039 6.56%
CHEMICALS -- 3.59%
5,220 SIKA AG
BEARER SHARES 6,556,483 1.31%
Leading producer of construction
chemicals.
(Cost $2,806,198)
7
THE SWISS HELVETIA FUND, INC.
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Schedule of Investments (Unaudited) September 30, 2006
(continued)
Percent
No. of of Net
Shares Security Value Assets
-------------------------------------------------------------
COMMON STOCKS -- (CONTINUED)
CHEMICALS -- (CONTINUED)
75,931 SYNGENTA AG
REGISTERED SHARES $ 11,420,381 2.28%
Produces herbicides, insecticides
and fungicides, and seeds for
field crops, vegetables, and
flowers.
(Cost $4,167,564)
------------ ----
17,976,864 3.59%
FINANCIAL SERVICES -- 2.43%
50,000 EFG INTERNATIONAL/1/
REGISTERED SHARES 1,638,821 0.33%
Holding company of EFG Bank.
The Bank offers private banking
and asset management services.
(Cost $1,565,336)
84,600 JULIUS BAER HOLDING AG
REGISTERED SHARES 8,426,604 1.68%
Offers private banking,
institutional asset management,
mutual fund, securities
brokerage, and corporate finance
services.
(Cost $7,769,430)
30,227 OZ HOLDING AG
BEARER SHARES 2,091,147 0.42%
Provides brokerage and banking
services, specializing in futures
and options.
(Cost $2,263,780)
------------ ----
12,156,572 2.43%
FOOD & BEVERAGES -- 14.70%
340 LINDT & SPRUNGLI AG
REGISTERED SHARES 8,080,067 1.61%
Major manufacturer of premium
Swiss chocolates.
(Cost $1,977,813)
Percent
No. of of Net
Shares Security Value Assets
---------------------------------------------------------------
FOOD & BEVERAGES -- (CONTINUED)
188,500 NESTLE SA/2/
REGISTERED SHARES $65,541,688 13.09%
Largest food and beverage
processing company in the world.
(Cost $11,110,815)
----------- -----
73,621,755 14.70%
INDUSTRIAL GOODS & SERVICES -- 5.21%
467,457 ABB LTD.
REGISTERED SHARES 6,132,356 1.23%
The holding company for ABB
Group which is one of the largest
electrical engineering firms in the
world.
(Cost $3,109,639)
232,000 ADECCO SA
REGISTERED SHARES 13,959,408 2.79%
Leading personnel and temporary
employment company.
(Cost $12,120,878)
1,141 BELIMO HOLDING AG
REGISTERED SHARES 918,114 0.18%
World market leader in damper
and volume control actuators for
ventilation and air-conditioning
equipment.
(Cost $231,391)
8,440 INFICON HOLDING AG
REGISTERED SHARES 1,117,301 0.22%
Manufactures and markets
vacuum instruments used to
monitor and control production
processes. Manufactures on-site
chemical detection and monitoring
system.
(Cost $762,355)
8
THE SWISS HELVETIA FUND, INC.
--------------------------------------------------------------------------------
Schedule of Investments (Unaudited) September 30, 2006
(continued)
Percent
No. of of Net
Shares Security Value Assets
------------------------------------------------------------------
COMMON STOCKS -- (CONTINUED)
INDUSTRIAL GOODS & SERVICES -- (CONTINUED)
4,946 SULZER AG
REGISTERED SHARES $ 3,930,531 0.79%
Manufactures and sells surface
coatings, pumps, and process
engineering equipment.
(Cost $1,609,155)
------------ ----
26,057,710 5.21%
INSURANCE -- 7.64%
103,000 SWISS LIFE HOLDING/2/
REGISTERED SHARES 24,026,078 4.80%
Offers financial services including
life and property insurance,
institutional investment
management, and private
banking services.
(Cost $19,830,574)
58,000 ZURICH FINANCIAL SERVICES AG/2/
REGISTERED SHARES 14,211,492 2.84%
Offers property, accident, health,
automobile, liability, financial risk
and life insurance and retirement
products.
(Cost $9,705,686)
------------ ----
38,237,570 7.64%
MEDICAL TECHNOLOGY -- 0.41%
32,205 PHONAK HOLDING AG
REGISTERED SHARES 2,031,513 0.41%
Designs and produces analog
and digital hearing aids.
(Cost $1,100,139)
------------ ----
2,031,513 0.41%
Percent
No. of of Net
Shares Security Value Assets
---------------------------------------------------------------
PERSONAL & HOUSEHOLD GOODS -- 1.21%
100,084 COMPAGNIE FINANCIERE
RICHEMONT AG, CLASS A
BEARER SHARES $ 4,804,862 0.96%
Manufactures and retails luxury
goods through subsidiaries.
Produces jewelry, watches,
leather goods, writing
instruments, and mens' and
womens' wear.
(Cost $3,328,765)
6,367 SWATCH GROUP AG
BEARER SHARES 1,226,737 0.25%
Manufactures finished watches,
movements and components.
Produces components necessary
to its eighteen watch brand
companies. Also operates retail
boutiques.
(Cost $859,824)
------------ -----
6,031,599 1.21%
PHARMACEUTICALS -- 26.01%
1,076,000 NOVARTIS AG/2/
REGISTERED SHARES 62,640,456 12.51%
One of the leading manufacturers
of branded and generic
pharmaceutical products. The
company also manufactures
nutrition products.
(Cost $12,415,546)
392,000 ROCHE HOLDING AG/2/
DIVIDEND RIGHTS CERTIFICATES 67,586,746 13.50%
Worldwide pharmaceutical
company.
(Cost $7,529,739)
------------ -----
130,227,202 26.01%
9
THE SWISS HELVETIA FUND, INC.
--------------------------------------------------------------------------------
Schedule of Investments (Unaudited) September 30, 2006
(concluded)
Percent
No. of of Net
Shares Security Value Assets
---------------------------------------------------------------
COMMON STOCKS -- (CONTINUED)
RETAILERS -- 5.40%
75,950 GALENICA HOLDING AG/2/
REGISTERED SHARES $ 19,669,654 3.93%
Manufactures and distributes
prescription and over-the-
counter drugs, toiletries and
hygiene products.
(Cost $14,745,078)
3,600 JELMOLI HOLDING AG
BEARER SHARES 7,361,059 1.47%
Owns and operates department
and retail stores and provides
mail-order catalog and real estate
leasing services.
(Cost $6,678,168)
------------ ----
27,030,713 5.40%
TECHNOLOGY -- 0.77%
62,213 ADVANCED DIGITAL BROADCAST
HOLDING/1/
REGISTERED SHARES 3,869,862 0.77%
Develops equipment and systems
to view and interact with digital
TV broadcast through cable,
satellite, and telecommunication
networks.
(Cost $4,464,413)
------------ ----
3,869,862 0.77%
UTILITY SUPPLIERS -- 4.56%
214,450 BKW FMB ENERGIE AG/2/
REGISTERED SHARES 20,864,389 4.17%
Produces electricity using
nuclear, hydroelectric, solar,
biomass and wind energy.
(Cost $11,699,646)
Percent
No. of of Net
Shares Security Value Assets
---------------------------------------------------------------
UTILITY SUPPLIERS -- (CONTINUED)
7,000 CENTRALSCHWEIZERISCHE
KRAFTWERKE
REGISTERED SHARES $ 1,928,705 0.39%
Supplies electric power, operates
and maintains distribution
network facilities, constructs and
installs equipment, and offers
consulting services to its clients.
(Cost $1,161,341)
------------ ------
22,793,094 4.56%
TOTAL COMMON STOCKS
(Cost $204,851,305)* $484,325,093 96.76%
OTHER ASSETS LESS OTHER
LIABILITIES, NET 16,230,571 3.24%
------------ ------
NET ASSETS $500,555,664 100.00%
============ ======
--------------------------------------------------------------------------------
/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 $282,058,998
GROSS UNREALIZED DEPRECIATION (2,585,210)
------------
NET UNREALIZED APPRECIATION $279,473,788
============
10
THE SWISS HELVETIA FUND, INC.
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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 value, AST will complete its
purchases, even
11
THE SWISS HELVETIA FUND, INC.
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Dividend Reinvestment Plan (Unaudited) (concluded)
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.
12
A SWISS INVESTMENTS FUND
THE SWISS HELVETIA FUND, INC.
EXECUTIVE OFFICES
The Swiss Helvetia Fund, Inc.
1270 Avenue of the Americas
Suite 400
New York, New York 10020
1-888-SWISS-00
(212) 332-2760
www.swz.com
THE SWISS
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HELVETIA
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FUND, INC.
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www.swz.com
QUARTERLY REPORT
FOR THE
PERIOD ENDED SEPTEMBER 30, 2006