Directors and Officers

Investment Advisor

Hottinger Capital Corp.

1270 Avenue of the Americas, Suite 400

New York, NY 10020

(212) 332-7930

Administrator

Citi Fund Services Ohio, Inc.

Custodian

Citibank, N.A.

Transfer Agent

American Stock Transfer & Trust Company

59 Maiden Lane

Plaza Level

New York, NY 10038

Legal Counsel

Stroock & Stroock & Lavan LLP

Independent Registered Public Accounting Firm

Deloitte & Touche LLP

The Investment Advisor

The Swiss Helvetia Fund, Inc. (the “Fund”) is managed by Hottinger Capital Corp., which belongs to Groupe Banque Hottinger & Cie SA.

Groupe Banque Hottinger & Cie SA dates back to Banque Hottinguer, which was formed in Paris in 1786 and is one of Europe’s oldest private banking firms. Groupe Banque Hottinger & Cie SA has remained under the control of the Hottinger family through seven generations. Its headquarters are in Zurich with offices in Geneva, Sion, Basel, Brig and New York.

Executive Offices

The Swiss Helvetia Fund, Inc.

1270 Avenue of the Americas, Suite 400

New York, NY 10020

1-888-SWISS-00 (1-888-794-7700)

(212) 332-2760

For inquiries and reports:

1-888-SWISS-00 (1-888-794-7700)

Fax: (212) 332-7931

email: swz@swz.com

Website Address

www.swz.com

The Fund

The Fund is a non-diversified, closed-end investment company whose objective is to seek long-term capital appreciation through investment in equity and equity-linked securities of Swiss companies. The Fund also may acquire and hold equity and equity-linked securities of non-Swiss companies in limited instances.

The Fund is listed on the New York Stock Exchange under the symbol “SWZ”.

Net Asset Value is calculated daily by 6:15 P.M. (Eastern Time). The most recent calculation is available by calling 1-888-SWISS-00 or by accessing our Website. Net Asset Value is also published weekly in Barron’s, the Monday edition of The Wall Street Journal and the Sunday edition of The New York Times.

Global Economic Review

During the third quarter, central banks took decisive policy actions, including a further round of Quantitative Easing (“QE”) in the United States by the Federal Reserve Board (“FRB”) and a sovereign bond buying initiative by the European Central Bank (“ECB”), which, for the first time, attempted to provide a back stop for the euro. The excess liquidity from these actions, however, had a tendency to inflate the value of risky assets as well as commodity prices.

In spite of the efforts of the central banks, the International Monetary Fund perceived an alarmingly high risk of a steeper global slowdown and cut forecasts for global economic growth to 3.3% in 2012 and 3.6% in 2013, down from its second quarter estimates of 3.5% and 3.9%, respectively. Eurozone forecasts for 2013 were cut even more, from 0.7% to 0.2%. Amidst the negative economic growth data, there are, nonetheless, encouraging signs that the global economy may be in the early stages of a bottoming process even though U.S. and European households continue to delever, while governments of Southern European peripheral countries need to start a similar process.

In the U.S., the FRB exceeded market expectations with a promise to purchase an additional $40 billion per month in mortgage-backed securities (“MBS”) until the outlook for the domestic labor market improves, while extending its zero policy rate guidance from the end of 2014 to mid-2015. By lowering returns on U.S. Treasury secu-

rities and MBS, the FRB is seeking to encourage market participants to reposition themselves in riskier investments, such as equities, corporate bonds and commodities. Another encouraging trend comes from the potential re-industrialization in the U.S. manufacturing sector, where domestic companies may have greater ability to compete in the global sphere. U.S. companies should be able to leverage their use of shale gas and oil to lower their costs of raw materials and energy and commercialize production on a larger scale than their non-U.S. competitors.

In the Eurozone, the tough measures aimed at achieving fiscal policy consolidation, particularly in the Southern European countries, are continuing to have a dampening economic effect. The gloomy economic activity motivated the ECB to further expand its balance sheet as a result of its promised Outright Monetary Transactions (“OMT”) program. Unlike previous plans, however, any subsequent bond buying by the ECB will no longer give it seniority over private investors in the event of an issuer default. In a related matter, the German Constitutional Court deemed the European Stability Mechanism (“ESM”) to be legal, although German liabilities under the ESM will be capped at 190 billion euros. From a Spanish debt crisis standpoint, the country is now caught between taking a rescue package, which could threaten the integrity of the country, or resisting financial aid and watching the risk premium on Spanish sovereign and corporate debt potentially spiral out of control. The current administration is seeking to negotiate a rescue package with minimal ERB

supervision and limited austerity demands. In Greece, the country again has fallen behind on its structural and fiscal reform commitments, and the probability of an exit from the Eurozone remains high.

Although risky assets performed strongly in the third quarter, those gains could pause in the very short-term. But the downside risk is likely to be limited, given that U.S., Japanese and European central banks have taken a more proactive accommodative stance. The ERB’s commitment to buy as much government bonds as necessary in order to stabilize borrowing costs should considerably reduce the risk of another round of economic turmoil in the Eurozone.

Chinese economic data improved slightly during the third quarter. The Chinese government sought to stimulate growth through carefully targeted infrastructure projects (i.e., subway, highway and railway projects) that accounted for 1.7% of gross domestic product (“GDP”) growth. The expectation of more spending and gradual monetary expansion in China also should help moderate fears of a hard landing, even if the more accommodative stance may be delayed due to a leadership transition in the fourth quarter of 2012.

The third quarter rally in global equity markets was driven largely by improved investor confidence resulting from the actions of the central banks and an expansion in equities’ valuation multiples, despite a weak economic backdrop. The U.S. equity markets

have performed strongly in 2012, reflecting that fundamentals are better in the U.S. than in other developed economies. News flow has been positive in the Eurozone and equity prices have bounced back strongly as well. Valuations of equity markets remain moderate, although obviously not as cheap as they were at the start of the year, with U.S. stocks approaching mid-cycle valuation levels in terms of price-to-earnings and price-to-book ratios.

Going forward, the main risks will come from the approaching U.S. fiscal cliff when automatic tax increases and government spending cuts will constitute approximately 4% of U.S. GDP if not mitigated. In the Eurozone, protests against austerity measures and failures to meet targets have the potential to reinforce recessionary conditions. Significant political tensions are likely to prevail regarding the Eurozone banking union’s framework and delays in implementing the ECB bond-buying program.

Swiss Economic Review

Switzerland remains the most economically competitive country in the world for the fourth year in a row, based on the World Economic Forum 2012-2013 Global Competitiveness Index, supported by its greatest strengths such as innovation, an efficient labor market, a sophisticated business sector and its high quality research institutions.

After a strong first quarter, Swiss GDP growth contracted in the second quarter

falling by 0.1% quarter-over-quarter, while increasing 0.5% year-over-year. Noticeably, growth rates for the preceding few quarters were revised materially downward by the State Secretariat for Economic Affairs. Momentum in the domestic economy remained well in place with private spending up 0.3% sequentially. Low interest rates, sustained housing prices, continued immigration of a highly skilled labor force and a robust labor market supported domestic demand, which then drove a strong expansion of imports. By contrast, gross fixed investments stagnated despite investment in construction rising by 1%. Exports also were negatively impacted by weak global demand particularly affecting the chemicals, machinery, equipment and electronics sectors, while precision instruments, watches and vehicles recorded positive growth.

Based on the fading momentum of global economic growth, the Swiss Government and the Swiss National Bank (“SNB”) lowered their 2012 growth outlook from 1.5% to 1%, and forecast GDP growth of 1.4% in 2013. The Swiss business sector continues to face a challenging environment, with the August Purchasing Managers Index (“PMI”) falling short of market expectations at 46.7 (below the 50 threshold). An ongoing backlog of orders also implies a further contraction in corporate activity. Furthermore, capacity utilization remained well below its long-term average with Swiss producers continuing to face the lasting effects of a strong Swiss franc. While the PMI signaled a contracting Swiss business sector, the KOF

leading indicator remained well above its long-term average, offsetting weakness in the PMI.

The SNB’s decision to cap the exchange rate of the Swiss franc at 1.20 euros has resulted in a 50% expansion of its foreign exchange reserves over the past year to 421 billion Swiss francs (more than 70% of Swiss GDP). This pressure has eased recently, but the SNB may continue to build reserves so long as inflation remains contained. The SNB revised its 2012 and 2013 inflation forecasts downward from -0.5% to -0.6% and +0.3% to +0.2%, respectively. Moreover, credit growth has not surged despite unprecedented loose monetary conditions. Against this economic backdrop, SNB continued to maintain its monetary framework for another quarter keeping the minimum exchange rate at 1.20 while leaving the Swiss franc-LIBOR target band unchanged at 0.0%-0.25%. From a risk standpoint, the SNB continues to view Swiss economic growth to be skewed to the downside on the margin as concerns about the Swiss residential mortgage and real estate markets are still present. The U.S. dollar slightly suffered in the third quarter following the QE announcement by the FRB, but all currencies are expected to trade in a fairly tight band against each other in the foreseeable future.

Sector Review

Financials: banks, insurance

So far this year, the banking sector has been trading on the perception of enhanced

tail risk, such as an uncontrollable breakup of the Eurozone or defaults of particular peripheral countries. Unlike their U.S. counterparts, European banks have been slow in raising capital to strengthen weak balance sheets and rebuild capital ratios after the financial crisis. Despite some strengthening of European banks’ capital ratios over the last two years, there has been little improvement in terms of their leverage, which, on average, remains at more than 20 times, two times as high as their U.S. peers, while the two largest Swiss banks remain above 35 times. Moreover, as European bank holdings of domestic sovereign bonds have sharply increased in recent years—especially in the Eurozone peripheral countries—this has compounded the negative sovereign-bank feedback loop. As the Eurozone has not yet undertaken any private-sector debt-deleveraging, the current debt ratios remained close to all-time highs, which continue to depress the banking sector.

During the end of July, Italy and Spain faced another liquidity crisis, causing the European banks’ index to reach an all-time low. On September 6^th, the ECB announced the OMT bond-intervention plan, which was intended to act as a backstop for the weaker Eurozone peripheral countries. The OMT marks a major paradigm change in policy in the Eurozone and has had a dramatic positive impact on bank shares, while also tightening peripheral European sovereign bond spreads versus German Bunds.

Nevertheless, regulatory pressures on banks’ earnings are continuing, and compounded with the low interest rate environment, are negatively affecting their margins. Moreover, due to the senior debt funding advantage of U.S. and European corporate issuers over banks throughout much of 2012, the disintermediation process accelerated with negative net loan issuances. The weaker real economic growth outlook in the Eurozone, relative capital and leverage weakness as well as technical issues associated with the ECB bond purchase plan, continue to weigh on the bank sector, although technical rebounds are likely to develop as a result of improved market sentiment. For instance, the fixed income segment has been supported by particularly strong volumes. The equity segment also showed stronger activity towards the end of September, which bodes well for positive surprises for the investment banking divisions of the European banks.

During the third quarter, the Fund remained underweight against its primary benchmark, the Swiss Performance Index (“SPI”), in the banking sector. The regulatory mandate for banks to build their capital ratios is likely to constrain the ability of the largest Swiss banks to maintain or increase their dividends, as in most of the improvement in Basel III core Tier 1 ratios is expected to be achieved using risk-weighted reduction strategies. UBS may benefit from an upside to net new money and gross margin in its wealth management unit from current levels. Its trading book has been substantially re-

duced, while its Basel III capitalization ratio is being supported by earnings retention. UBS posted solid third quarter results and surprised with a higher-than-expected restructuring plan in its investment banking division. UBS is targeting incremental CHF 3.4 billion annual cost savings with total savings of CHF 5.4 billion by 2015. By focusing its investment banking division on advisory, research, equities, foreign exchange and precious metals and by exiting fixed income to a large extent, UBS aims to deliver gradual capital returns with a total payout ratio above 50% after achieving its future capital plans. On a positive note, operating earnings, especially from the investment banking divisions, for Credit Suisse and UBS may start to improve but at a slower rate that previously forecasted. In particular, Credit Suisse has announced a cost cutting program and capital increase initiatives that are expected to bolster its equity ratios.

The insurance sector has re-rated sharply following the relaxation of Solvency II terms (Swiss Solvency Test as well) and the adjustment by FINMA, the Swiss banking authority, to a swap curve easing the pain for life insurance companies hurt by a very low interest rate environment. Despite the rebound, however, the overall Swiss insurance sector is still attractively valued and trading below book value. So far this year, the sector benefited from a healthy non-life market, while the life insurance market remained challenging. Moreover, the sector is expected to remain strong as dividend levels remain high in a low claims environment. Fund

management maintained a neutral weight in the sector against the SPI during the third quarter, while slightly divesting from Zurich Insurance Group (“Zurich”), which is trading at a premium in terms of valuation compared to its peers. Zurich continued to benefit from a favorable growth outlook in the U.S. and in Latin America, while the situation in Europe remained challenging. Zurich’s life insurance unit is likely to be supported by its joint-venture with Santander, which should offer solid growth in Latin America. On the non-life insurance side, management still expects positive pricing power. Zurich still paid the highest dividend (more than 7%) among companies in the Swiss Market Index.

Reinsurance remains the most attractive segment in the insurance sector driven by sustained renewals. Reinsurance rates continued to increase on the back of deteriorating economic growth in the third quarter with quality reinsurance companies (e.g., Swiss Re) pointing to higher rates, while the lower quality companies facing pressure on rates. Since the start of 2012, the claims season has turned out to be benign with the drought affecting the United States over the summer appearing to be manageable. Swiss Re’s new corporate structure (Reinsurance, Admin Re and Corporate Solutions) brought more transparency and flexibility, while investment risks have been reduced with a low risk exposure to Southern Europe. The soft non-life reinsurance market also started to recover in terms of pricing, and these higher volumes allow Swiss Re to deploy some of its excess capital. A special dividend, in addition

to the regular dividend, could be paid to shareholders for Swiss Re’s 150 year anniversary. As a result, Fund management maintained the Fund’s overweight position in the company.

Consumer discretionary: personal goods and household goods

The luxury goods sector has been quite volatile in Europe, including Switzerland. Investors continue to scrutinize data ranging from retailers’ inventories in China, to industry reports like the monthly Swiss watch exports figures, and finally to earnings reports from the companies themselves in order to assess the level of slowdown in final demand from emerging markets. Sales in Hong Kong and mainland China continued to weaken over the quarter, however the weakness of the euro shifted part of that demand back to Europe. Asian tourists, when buying in Europe, have benefited from up to 30% lower prices compared to local prices in China due mostly to currency fluctuations. While Swatch and Richemont are still reporting strong numbers, earnings releases from Burberry, LVMH and Rémy Cointreau have been meaningfully affected by a reduction in demand for luxury items. Fund management has taken a differentiated approach to this sector. The Fund’s position in Richemont has been increased as Management believes in the broad scope of Richemont’s portfolio of products and its geographical exposure as well as the strength of its brands. The Fund’s position in Swatch,

on the other hand, was sold after the end of the quarter under review.

The Fund’s position in Dufry has been increased in order to take advantage of the reported slowdown in Brazil during the second quarter of this year, which created a buying opportunity into an attractive structural growth company with strong emerging markets exposure (>60%). Fund management believes Dufry remains a leading industry consolidator. The company has exposure to a rising middle class in South America, a globally diversified concession portfolio and its corporate cash generation is strong. The company’s management has demonstrated great continuity and consistency in meeting its own expectations as well as those of the market. While facing some risks in Brazil, Dufry’s valuation seems compelling, particularly in view of its superior earnings growth and the double-digit discount to historical EV/EBITDA multiples.

Industrials Goods and Services

Companies in the service business or entities with strong brands have been able to maintain high margins and high returns on invested capital despite the global economic slowdown over the last few years, reflecting good competitive positioning in attractive markets. Other businesses continue to suffer from a lack of pricing power, vulnerability to increases in raw material costs and to swings in currencies. Operating margins for those companies are at historical lows and, despite cost cutting and acquisitions, they are not

seeing any current improvements. Sales progression remains uneven and relies primarily on big projects. Despite the massive monetary easing taking place globally, investment activity, especially from corporations, remains subdued overall. As a result, Fund management has been reducing the Fund’s exposure to smaller industrial companies, primarily in the machinery sector.

In this environment, Fund management has increased the Fund’s exposure to more service oriented companies, like SGS, and to companies with above average growth in their end market, such as Sulzer. This company, with its engineered pumps business, process technology and separation towers, benefits from increased activity in upstream and downstream operations in the oil and gas industries. On the negative side, however, the company has been hampered as the power generation market is not recovering as fast as forecasted.

Construction and Materials

The Fund started to increase its net exposure to the sector with additional investments in Geberit and Holcim, which more than offset reductions in the Fund’s investments in Sika and Belimo. Overall, the average market capitalization of the Fund’s holdings in the sector went up as well.

With Geberit, Fund management is looking to gain exposure to the recovery of German real estate prices. In addition, continued investments by the company in its

brand, as well as increases in marketing and new products lineup, should support sales growth. Meanwhile market expectations for the company’s sales growth are modest and the company’s margins should stay at historical high levels. As drivers for sustainable value creation, Fund management generally prefers a strategy of growing organically by increasing market penetration with product extension and marketing expenditures rather than growing purely by acquisitions.

Despite its strong absolute performance, Holcim’s stock has been the laggard in the global cement sector this year, as investors were seeking margin recovery situations like those of Lafarge and Cemex. Holcim, with the stronger balance sheet in the sector and higher margins to start with, did not have the same opportunity to show as much improvement as its peers. As the recovery phase plays out, Fund management believes that Holcim should start outperforming the sector due to its more defensive nature and better geographical positioning. In addition, pricing trends in the cement industry seem to finally be improving quarter-over-quarter. Holcim’s new CEO is tackling the company’s cost base to raise margins and to increase the currently depressed return on investment capital bringing it closer to the company’s cost of capital. The company has about 5% sales exposure to U.S. residential construction and another 10% exposure to U.S. infrastructure spending where the renewal of the highway bill should help. The Indian market is recovering, at least in terms of margin, and the company’s South American

business is steady. Europe, however, continues to be a challenge. Holcim also has little exposure to China and therefore at this point is not affected by the negative pricing effect of the excess capacity in that country.

Healthcare: Pharmaceuticals; medical technology; biotechnology

The mix of high yield, accelerating growth and attractive valuations continued to be the drivers of the stronger performance of global healthcare indices. With a positive total return of 7.4% (in U.S. dollars) and a three-month annualized volatility of 11%, the MSCI World Healthcare Index marginally outperformed global markets. Within the pharmaceutical sector, the return of European stocks varied considerably. The Swiss blue chips, Novartis and Roche, delivered decent performance of 8.8% and 7.4%, compared with 6.7% for the SPI.

Pharmaceuticals remain cheap compared to other defensive sectors. Compared to consumer staples, the European pharmaceutical sector trades at a 30% discount. The fundamentals of the industry are improving and should further support the re-rating of the sector. The peak of patent expiry was estimated at US$12 billion in 2012 and is expected to decline steadily each year thereafter. Globally, product pipelines have improved with the increase in the number of late stage product candidates and sales potential of drug candidates exceeding patent expiration on a risk adjusted basis for the next eight years. Also, emerging markets represent a new source of growth for

consumer health, generics and vaccines business that are less dependent on patent protection. On the other hand, the pricing environment in developed countries should continue to deteriorate, with price reduction of about 5% in Western Europe. Globally, market expectations for the European pharmaceutical companies were realistic, and the quarterly figures did not disappoint. Top line growth should continue to expand at mid-single digits in local currency terms in 2012.

Novartis’ figures for the third quarter were negatively impacted by the expiration of the patent for Diovan (high blood pressure) and weaker numbers for the Sandoz generic activities and the consumer health division. At the corporate level, net sales were down 6% with a negative currency impact of 5% as a result of the strength of the Swiss franc. The strong volume growth rate (8%) of the pharmaceutical division was neutralized by the drag of the generics division and to a less extends by pricing pressure. With respect to newly launched products, including Lucentis, Gilenya, Afinitor and Tasigna, the company has rejuvenated its pipeline and limited its exposure to price erosion.

Roche made considerable progress during the quarter, as demonstrated by the clinical success rate on its pharmaceutical division and in particular in the oncology franchise. With innovative products in the pipeline (Perjeta and T-DM1 in breast cancer), Roche is building for long term suc-

cess in cancer medicines and has the potential for future growth. Sales in the pharmaceutical division rose 4% (in Swiss francs) for the first three quarters mainly due to the oncology portfolio, which grew at 9%, driven by top-selling medicines Rituxan, Herceptin and Avastin. Additional key products in the anti-viral space (Pegasys) and rheumatoid arthritis (Actemra) continue to deliver strong growth rate while the diagnostic division is progressing at a decent rate of 4% (in Swiss francs).

During the quarter, Fund management maintained the Fund’s position in Roche and Novartis, but doubled the Fund’s exposure to Actelion. During the quarter, Actelion outperformed the SPI by 14%, primarily due to the market’s anticipation of the submission of Macitentan (pulmonary arterial hypertension) to the U.S. Food and Drug Administration. If approved, the drug should replace Tracleer, generating 87% of total revenues.

The Fund also initiated a position in the medical technology company Sonova. The launch of three hearing head products in the premium, advance and standard segments based on the company’s new Quest platform should be a driver of performance. Also, the U.S.-based company Advanced Bionics, which was acquired by Sonova in 2009, is well positioned in the cochlear implants market. Innovation is a driving force in the hearing aid industry and Sonova should be able to maintain its technical leadership in the sector.

Chemicals

During the third quarter, the chemical sector was the strongest performer in Europe with a total quarterly return of 13.5%. The sector is likely to remain attractive, as companies with good pricing power should be able to pass on higher material costs. In addition, the sector has defensive characteristics through the agribusiness segment and high consumer end market exposure. The Fund profited from its sale of Clariant, a specialty chemical company, and increased its position in Syngenta, an agribusiness company. Despite the increased currency headwind for the second part of the year, Syngenta is active in crop protection and seeds, and should continue to benefit from a favorable pricing environment. Latin American activity is experiencing another record season driven by elevated soybean prices and higher investments in Brazil and Argentina. Europe, Middle East and Africa stagnated mostly due to unfavorable weather conditions, which negatively impacted volume in the crop business. Globally, the company’s profitability evolution for the year is reassuring and is driven by strong operational leverage.

Private Equity and Other Illiquid Investments

The Fund did not invest in any new illiquid direct investments or private equity funds in the third quarter. The Fund’s total investment in its two limited partnership holdings, Aravis Biotech II, LP and Zurmont Madison Private Equity, LP represented 3.81% of the Fund’s net assets as of

September 30^th, while the Fund’s illiquid direct investments represented 3.49% of net assets as of September 30^th.

Performance Review and Strategy

During the summer, the Fund’s performance did not keep pace with its primary benchmark, the SPI. Year-to-date, the issues affecting the Fund’s relative performance to the SPI boil down to the drag of the Fund’s private equity portfolio in an up-trending public market, the underperformance of smaller industrial companies and very volatile trading conditions in larger companies in economically-sensitive sectors, making investment timing more difficult. On the other hand, the Fund’s stock selection did not suffer from any specific company’s negative performance. The Fund’s sector allocation, however, was a bit too conservatively-oriented and the Fund missed out on some of the rally in the construction material and insurance sectors. In addition, regulatory sector weight restrictions have limited the possibility of capturing trading opportunities in the pharmaceutical sector.

The traditional framework for equity investing continues to be challenging as the massive liquidity created by central banks is inflating financial asset prices and, more recently, housing prices, but so far has not created a conducive climate for corporate investments and for economic growth in general. The FRB’s actions, by making fixed-income yields very low, has encouraged companies to use their cash flow for share

buy-backs and dividend payments as opposed to investments. Dividend hikes have almost universally given a boost to share prices. On the other hand, while supporting financial asset pricing in the short term, the expansion in the FRB’s balance sheet has increased long term uncertainty for the economy overall and reduced the visibility on the required rate of return for long term projects. Both elements had a negative impact on the investment cycle.

In this environment, market share leaders with pricing power, defensive business models and high growth companies, are sought after by investors almost regardless of their valuation. On the flipside, the cyclical, smaller businesses with low visibility are progressively being abandoned by market participants despite very low capitalization of earnings or book value. In terms of economic sectors, industrial companies have been penalized by the current weak investment climate.

Taking into account the persistence of the massive influence of central banks in the financial investment process, the Fund’s investment strategy has been revisited. Management has been refocusing on larger and mid-sized companies, on defensive growth plays and on recovery investments with strong catalysts as opposed to cyclical sectors attractive on valuation basis only. The Fund’s portfolio has been partially delinked from the investment cycle with more emphasis on consumer, financials and healthcare stocks. Fund management also is

implementing complementary trades inside specific sectors. For example in the consumer discretionary sector, Richemont has been preferred to Swatch, in the pharmaceutical sector, Roche has been preferred to Novartis and Transocean has been favored over Weatherford in the energy sector.

In addition, the universe of stocks that the Fund’s management analyzes for investment opportunities, has been reduced as the need to monitor and update investment cases continues to increase due to the higher volatility and volume of incoming data.

Outlook

The U.S. economy should continue to pick up some momentum on the strength in the manufacturing and housing sectors. China’s leaders are trying to implement a soft landing and Europe is making some progress. On the negative side, the amount of debt in the system is still too high, and government budget cuts and tax increases in some parts of Europe will continue to put pressure on the economy. The U.S. election is another factor of uncertainty as its outcome could change the course of current monetary policy and determine how the U.S. fiscal cliff will be addressed. Even though stocks are expected to remain volatile, valuations are supportive for the equity asset class, especially when compared to fixed-income.

Sincerely,

Alexandre de Takacsy

President

Rudolf Millisits

Chief Executive Officer

Sources: Bloomberg, Lipper, Morningstar and Citi Fund Services Ohio, Inc.