As filed with the Securities and Exchange Commission on September 7, 2006
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT
INVESTMENT COMPANIES
Investment Company Act file number 811-05128
THE SWISS HELVETIA FUND, INC.
1270 Avenue of the Americas, Suite 400
New York, New York 10020
1-888-SWISS-00
Rodolphe E. Hottinger, President
Hottinger et Cie
3 Place des Bergues
C.P. 395
CH-1201 Geneva
Switzerland
Date of fiscal year end: December 31
Date of reporting period: June 30, 2006
Form N-CSR is to be used by management investment companies to file reports with
the Commission not later than 10 days after the transmission to stockholders of
any report that is required to be transmitted to stockholders under Rule 30e-1
under the Investment Company Act of 1940 (17 CFR 270.30e-1). The Commission may
use the information provided on Form N-CSR in its regulatory, disclosure review,
inspection, and policymaking roles.
A registrant is required to disclose the information specified by Form N-CSR,
and the Commission will make this information public. A registrant is not
required to respond to the collection of information contained in Form N-CSR
unless the Form displays a currently valid Office of Management and Budget
("OMB") control number. Please direct comments concerning the accuracy of the
information collection burden estimate and any suggestions for reducing the
burden to Secretary, Securities and Exchange Commission, 100 F Street, NE,
Washington, DC 20549. The OMB has reviewed this collection of information under
the clearance requirements of 44 U.S.C. ss. 3507.
ITEM 1. REPORT TO STOCKHOLDERS
THE SWISS HELVETIA FUND, INC.
--------------------------------------------------------------------------------
Directors and Officers
Samuel B. Witt III, Esq. Baron Hottinger
CHAIRMAN (NON OFFICER) DIRECTOR EMERITUS
Eric R. Gabus+ Rodolphe E. Hottinger
VICE CHAIRMAN (NON OFFICER) PRESIDENT
Jean-Marc Boillat CHIEF EXECUTIVE OFFICER
DIRECTOR Rudolf Millisits
Paul R. Brenner, Esq.** SENIOR VICE PRESIDENT
DIRECTOR CHIEF FINANCIAL OFFICER
Alexandre de Takacsy Philippe R. Comby, CFA, FRM
DIRECTOR VICE PRESIDENT
Claude Frey Edward J. Veilleux
DIRECTOR VICE PRESIDENT
Paul Hottinguer SECRETARY
DIRECTOR Scot E. Draeger
Michael Kraynak, Jr.* ASSISTANT SECRETARY
DIRECTOR Frederick Skillin
Didier Pineau-Valencienne* ASSISTANT TREASURER
DIRECTOR Jean L. Seidel
Stephen K. West, Esq.* ASSISTANT TREASURER
DIRECTOR Peter R. Guarino, Esq.
CHIEF COMPLIANCE OFFICER
-------------------------------------------------------------------------------
*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 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
as more fully described in this report.
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.
--------------------------------------------------------------------------------
Letter to Stockholders
GLOBAL MARKET OVERVIEW
SWISS MARKET REVIEW AND FUND PERFORMANCE
After a strong start for the second quarter, global equity markets had a
severe and abrupt correction in the May and June period. The end of earnings
season was the trigger for a move, which had been in the making, caused by
investor anticipation that corporate earnings and margins may have peaked. It
was also becoming more and more obvious that the central banks had embarked on
a program to remove excess liquidity from the marketplace as consumer price
indices began to indicate increasing inflationary pressures. Unlike previous
corrections during the cyclical bull market that started in 2003, however,
government bonds did not benefit from a flight to quality. While part of this
can be explained by investors' fears of creeping inflation, it was at odds with
their worries that the Federal Reserve Board ("FRB") was going to trigger a
recession by increasing interest rates too much. Volatility also increased
because the central banks' bias toward tightening had become much more data
dependent than in the recent past.
The large drawdown happened both globally and across industry sectors with
high risk assets suffering the most. Emerging markets were the worst hit with a
26% correction in the iShares Emerging Markets Index from early May to early
June. The United States equity market was the least affected due to
anticipation that the FRB was getting closer to a pause in its campaign to
raise interest rates and also due to the previous lukewarm performance of U.S.
stocks.
The Swiss market was not an exception to this downward trend despite the
heavy presence of food and pharmaceutical companies considered as defensive.
Swiss large capitalization companies were down 12% and Swiss mid-sized
companies were down 17% during the period. Among the sectors that were the
worst affected were, understandably, industrials goods and services (with a
decline of 23%, which was almost as much as the emerging markets as a whole),
banks (down 18% due to sensitivity to the capital market cycle of their
investment banking and asset management operations) and insurance (with a
similar decline, although probably less warranted). The sectors that were the
least affected were healthcare (with a drop of 6%) and food (with a negative
performance of only 5%).
Despite the sudden change in market conditions (which witnessed a steep
115% increase in the Swiss Market Index implied volatility index), losses were
contained and no real chain effect of forced liquidation by leveraged players
was reported. The sell-off was definitely more of a market event than an
economic event. The market situation stabilized somewhat towards the end of
June and leadership was assumed by large capitalization stocks with defensive
characteristics.
Reporting season was strong in Switzerland for the first quarter of the
year and management comments were reassuring.
2
THE SWISS HELVETIA FUND, INC.
--------------------------------------------------------------------------------
Letter to Stockholders (continued)
Investors, nonetheless, had to witness a contraction in the valuation of the
cyclical sectors of the market, as stock prices stopped their upward movement
despite upbeat earnings releases. This, together with private equity fund
successes in raising capital for buy outs, are among the many signs of a
typical peak in the business cycle and investor sentiment.
Management has started to reduce the Fund's position in the cyclical
sectors, especially in the mid and small capitalization areas, and to reinforce
the Fund's exposure to the mid cap healthcare sector. This tactical shift has
created a sizeable cash position. Management will reinvest it opportunistically
in higher quality names.
The outperformance of large cap defensive stocks penalized the Fund's
performance as compared to the Swiss Performance Index ("SPI"). During the last
two months, only four stocks of the twenty seven in the large cap Swiss Market
Index ("SMI") had positive performance: Roche, Nestle, Basilea and Serono. The
Fund was also invested in sectors trading at historical low valuations
(insurance) and in restructuring stories with equally low valuations (e.g. ABB
and Adecco). Their discount to management's estimated fair value was not
enough, however, to protect these investments from macro risk and they
underperformed the market during the last part of the quarter under review.
SWISS MARKET CORPORATE NEWS
In terms of corporate activity during the quarter the following
transactions are of note:
Nestle continued to follow its strategic focus to move towards nutrition,
health and wellness. On May 23, 2006, Nestle agreed to acquire Uncle Tobys
business in Australia for 890 million Australian dollars in cash. Uncle Tobys
is active in breakfast cereals, nutritious snacks and instant soups, as well as
the rights to brand in New Zealand. As a result of this transaction, Nestle
becomes number one in nutritious snacks and number two in instant soups in
Australia exceeded only by Campbell's. In addition, on June 19, 2006, Nestle
reached agreement to acquire Jenny Craig, a weight management company offering
consumers a range of branded nutritional products and services, for $600
million.
On June 14, 2006, Axa agreed to buy Credit Suisse Group's Winterthur unit
for $9.9 billion in cash. Later in the year Credit Suisse will disclose how it
will re-invest its proceeds and, specifically, how it will maintain its 2007
profit target without the contribution from Winterthur.
On May 9, 2006, UBS, increased its long term commitment to emerging markets
investments and announced that it was acquiring Banco Pactual S.A, a Brazilian
investment bank and one of Brazil's leading equity and bond underwriters. The
payment of up to $2.6 billion will be done in two parts (an initial payment of
$1 billion with another payment of $1.6 billion in five years based on the
bank's ability to meet certain performance targets).
On May 25, 2006, UBS announced an acquisition of ABN AMRO's global futures
3
THE SWISS HELVETIA FUND, INC.
--------------------------------------------------------------------------------
Letter to Stockholders (continued)
and options business for $386 million in cash. This acquisition will position
UBS as a market leader in the futures and options industry.
FUND NEWS
At the Fund's annual meeting on June 8, 2006, the stockholders approved
changes to the Fund's fundamental investment policies and restrictions to
permit the Fund to leverage up to 10% of its total assets (including the amount
borrowed); to invest in equity and equity-linked securities issued by Swiss
real estate companies (including real estate investment trusts ("REITs") or
REIT-like structures), to acquire equity and equity-linked securities of
non-Swiss companies in limited instances, and to engage in certain options
transactions.
SWISS ECONOMIC NOTES
At its last monetary policy assessment on June 15, 2006, the Swiss National
Bank ("SNB") once again increased the target range for the three-month London
Interbank Offer Rate ("LIBOR") by 0.25 percentage points to 1.0%-2.0%. The SNB
is continuing to align its monetary policy course into line with economic
activity, ensuring that the inflation outlook remains favorable.
The increase in real Gross Domestic Product ("GDP") in the first quarter
was 0.9% quarter to quarter and 3.5% versus the prior year, a level last
reached in 2000. The SNB increased its forecast for increases in real GDP for
the year from an average rate of over 2% to an average rate of over 2.5% for
the year. The SNB also increased its inflation forecast from 1% to 1.2% for the
year, assuming a three-month LIBOR of 1.5%. Inflation, therefore, is expected
to remain lower than the SNB target of 2%.
Along with the increase in short-term yields, long term rates continued
their upward movement. The yield on the 10-year Swiss Confederation bond
increased by 34 basis points from the end of last quarter, resulting in a rate
of 2.82% at the end of this quarter. Short term real interest rates remained
positive at 0.7% in the first quarter, equal to the rate in the preceding
quarter.
The KOF (Swiss Institute for Business Cycle Research) economic barometer
indicates the development of overall economic output relative to the previous
year. At the moment it is showing a continued positive trend. According to the
results of the KOF's economic surveys, expectations within the Swiss industrial
sector are weakening. However, the retail sector is showing a rise in sales
expectations. Reinforcing these readings, corresponding economic surveys
conducted by the EU Commission continue to point to an improvement in
industrial activity in key EU countries, a favorable prospect for Swiss exports.
CURRENCIES
The US dollar lost about 7% in relation to the Swiss franc during the
second quarter of 2006. During the same period, the Swiss franc remained more
or less stable in comparison to the euro, mainly due to similarities in
monetary policy decisions.
4
THE SWISS HELVETIA FUND, INC.
--------------------------------------------------------------------------------
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 6/30/06 2005 2004 2003 2002 2001 2000 1999 1998 1997 12/31/96-6/30/06
--------------------------- ------------ ------ ----- ------ ------- ------- ------ ------ ------ ------ ----------------
SWISS HELVETIA FUND 2.88% 33.20% 7.75% 22.54% -20.40% -22.91% 14.06% 14.70% 15.57% 53.99% 158.51%
Swiss Performance
Index (SPI) 3.71% 35.61% 6.89% 22.06% -25.95% -22.03% 11.91% 11.69% 15.36% 55.19% 137.07%
Swiss Market Index
(SMI) 0.90% 33.21% 3.74% 18.51% -27.84% -21.11% 7.47% 5.71% 14.28% 58.93% 94.10%
iShares MSCI Switzerland/2/
(Formerly called Webs
Switzerland) 2.85% 33.21% 3.74% 18.51% -27.84% -21.11% 7.47% 5.71% 14.28% 58.93% 97.85%
CS EF Swiss Blue
Chips/3,7/ 2.02% 32.27% 2.75% 18.13% -28.75% -22.12% 10.97% 7.57% 14.21% 59.90% 98.13%
UBS (CH) Equity Fund -
Switzerland/4,7/ 3.45% 33.50% 5.00% 18.14% -26.02% -22.04% 7.42% 6.43% 12.75% 55.94% 98.61%
Pictet (CH) - Swiss
Equities/5,7/ 2.20% 37.06% 7.05% 20.10% -27.93% -22.35% 7.34% 9.38% 11.05% 55.65% 104.53%
Saraswiss (Bank
Sarasin)/6,7/ 2.65% 33.05% 2.93% 19.64% -28.51% -24.45% 9.72% 7.10% 14.41% 53.57% 87.55%
SOURCES : BLOOMBERG, MANAGEMENT COMPANIES' WEBSITES AND CITIGROUP FUND
SERVICES, LLC.
/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
OF 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 = 1.3179 AND
6/30/06 = 1.225.
/3/ THIS FUND GIVES INVESTORS ACCESS TO THE SWISS EQUITY MARKET. IT HAS A
BROADLY-DIVERSIFIED PORTFOLIO GEARED TO LONG-TERM VALUE GROWTH, WITH A
PREFERENCE TO 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.
5
THE SWISS HELVETIA FUND, INC.
--------------------------------------------------------------------------------
Letter to Stockholders (continued)
-----------------------------------------------------
PERIOD ENDED
JUNE 30, 2006
--------------------------------------- -------------
PERFORMANCE IN SWISS FRANCS
Swiss Performance Index (SPI) 3.71%
Swiss Helvetia Fund
Based on Net Asset Value 2.88%
CHANGE IN U. S. DOLLAR VS. SWISS FRANC -7.05%
PERFORMANCE IN U.S. DOLLARS
SWISS HELVETIA FUND PERFORMANCE
Based on Net Asset Value 10.68%
Based on Market Price 10.39%
S & P 500 Index 2.71%
MSCI EAFE Index 10.16%
Lipper European Fund Index (10 Largest) 11.84%
Lipper European Fund Universe Average 13.50%
SOURCES: CITIGROUP FUND SERVICES, LLC AND BLOOMBERG
OUTLOOK / STRATEGY
The Swiss market's valuations are in line with or slightly lower than
historical averages, similar to the valuations of most markets in the developed
economies. This valuation level, however, assumes an 11% increase in earnings
per share for the whole market for 2007, following a 14% increase in 2006. This
appears to be rather ambitious. If earnings growth expectations are lowered to
8% for 2007, the equity risk premium (earnings yield minus high quality
corporate bond yields) would still be comfortably positive, allowing for an
increase of government yields and credit spread.
The medium-term outlook for the Swiss franc against the U.S. dollar is
unclear. On the one hand European economies are still in an uptrend, even
though they are topping out, and the US economy is clearly decelerating. This
should support the Swiss franc as interest rate differentials, currently in
favor of the US dollar, get smaller. On the other hand, a higher risk level for
global economic growth could lead to capital flowing back to the US from
emerging markets and Europe, supporting the US dollar. As its economy slows,
the US trade deficit will benefit from lower US imports and higher US exports
to a still vibrant international economy. This should, at least temporarily,
help the dollar.
As mentioned above, there are multiple signs indicating a potential decline
in the business cycle. Euro futures, for example, indicate that the market is
already pricing in a rate cut by the Federal Reserve next year. Economies in
Japan, Europe and emerging markets countries are still strong, but the central
banks' reaction to lagging indicators, such as inflation, is creating a strong
headwind for these economies. In particular, as the emerging market cycle
matures, the question will be whether Japan and Europe can absorb excess supply
created by reduced U.S. consumer spending and mitigate the global economic
slowdown. Historically, a Fed pause is not followed by strong performance of
riskier assets, including emerging market equities. A slowing US economy will
also have a negative impact on European export oriented sectors, which are
heavily represented in European stock indices.
On a more positive note, valuations are equal to or lower than historical
averages. A
6
THE SWISS HELVETIA FUND, INC.
--------------------------------------------------------------------------------
Letter to Stockholders (concluded)
soft landing of the U.S. economy next year (instead of a few quarters of
negative growth) would trigger some upside for equities.
Management's strategy is to continue to reduce exposure to industrial
companies unless their valuation is low enough to offset the systemic risk
represented by a slowing global economy. The financial services sector will be
a key factor in the performance of the market. Management is looking at a
number of factors in determining its investment strategy with regard to this
sector. Swiss private and investment banks are exposed to the negative effects
of a slowdown in capital market activities resulting from a tightening monetary
policy. In addition increased volatility and risk premiums are negative for
equities, the high margin portion of the private banking business. Finally, the
compression of long term rates would reduce margins for new business in the
life insurance sector and higher inflation would penalize the non-life
insurance sector. Management is closely monitoring the defensive quality of
some asset managers (alternative products), and the impact of the growth in
derivative products used to mitigate market risk. Overall the financial sector
requires a careful investment approach. As a result the Fund's exposure to
sectors with low earnings volatility and relatively low expectations is
expected to increase.
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 six months ended June 30, 2006,
the Fund repurchased and retired 76,700 shares at an average price of $16.04
per share (including brokerage commissions) and a weighted average discount of
11.71%. These repurchases, which had a total cost of $1,230,030, resulted in an
increase of $168,821 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
June 30th, 2006
7
THE SWISS HELVETIA FUND, INC.
--------------------------------------------------------------------------------
Review of Operations (Unaudited)
Trading activity for the six months ended June 30, 2006 involved changes in the
following positions:
--------------------------------------------------------------------------------
NEW INVESTMENTS BY THE FUND
--------------------------------------------------------------------------------
Basilea Pharmaceutica
Julius Baer Holding AG
Speedel Holding AG
Swiss Life Holding
--------------------------------------------------------------------------------
ADDITIONS TO EXISTING INVESTMENTS
--------------------------------------------------------------------------------
Adecco SA
Advanced Digital Broadcast Holdings SA
BKW FMB Energie AG
Jelmoli Holding AG
Lindt & Sprungli AG
OZ Holding AG
Phonak Holding AG
Sika AG
Swiss Steel AG
--------------------------------------------------------------------------------
SECURITIES DISPOSED OF
--------------------------------------------------------------------------------
Berna Biotech AG
Elektrizitaets-Gesellschaft Laufenburg AG
IsoTis SA
Kuehne & Nagel International AG
SGS Societe Generale de Surveillance Holding SA
Swiss Reinsurance Company
Swisslog Holding AG
--------------------------------------------------------------------------------
REDUCTIONS IN EXISTING INVESTMENTS
--------------------------------------------------------------------------------
ABB Ltd.
Actelion Ltd.
Bank Sarasin & Cie AG
Belimo Holding AG
Compagnie Financiere Richemont AG, Class A
Logitech International SA
Nestle SA
Novartis AG
Roche Holding AG
Sulzer AG
Swatch Group AG
Syngenta AG
Zurich Financial Services AG
8
THE SWISS HELVETIA FUND, INC.
--------------------------------------------------------------------------------
Schedule of Investments (Unaudited) June 30, 2006
Percent
No. of of Net
Shares Security Value Assets
---------------------------------------------------------------
COMMON STOCKS -- 94.23%
BANKS -- 15.46%
530 BANK SARASIN & CIE AG
REGISTERED SHARES $ 1,393,143 0.30%
Offers private banking, asset
management, investment
advisory, and institutional banking
services.
(Cost $1,184,730)
428,000 CREDIT SUISSE GROUP/2/
REGISTERED SHARES 23,898,123 5.07%
A global diversified financial
service company with large
activity in private banking,
investment banking, asset
management and insurance
service.
(Cost $14,071,733)
435,000 UBS AG/2/
REGISTERED SHARES 47,583,673 10.09%
A global diversified financial
service company with large
activity in private banking,
investment banking, and asset
management.
(Cost $7,578,949)
----------- -----
72,874,939 15.46%
BASIC RESOURCES -- 3.81%
101,136 PRECIOUS WOODS HOLDING AG/1/
BEARER SHARES 8,421,120 1.79%
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)
193,960 SWISS STEEL AG
REGISTERED SHARES $ 9,500,082 2.02%
Manufactures industrial and
construction steel.
(Cost $7,306,032)
----------- ----
17,921,202 3.81%
BIOTECHNOLOGY -- 5.54%
31,331 ACTELION LTD./1/
REGISTERED SHARES 3,151,003 0.67%
Biotechnology company that
develops and markets synthetic
small-molecule drugs against
diseases related to the
endothelium.
(Cost $1,864,624)
133,200 BASILEA PHARMACEUTICA/1,2/
REGISTERED SHARES 19,300,408 4.09%
Conducts research into the
development of drugs for the
treatment of infectious diseases
and dermatological problems.
(Cost $17,799,053)
28,132 SPEEDEL HOLDING AG/1/
REGISTERED SHARES 3,674,384 0.78%
Researches and develops
therapies for cardiovascular and
metabolic diseases
(Cost $3,471,828)
----------- ----
26,125,795 5.54%
CHEMICALS -- 4.27%
9,045 SIKA AG
BEARER SHARES 10,041,796 2.13%
Leading producer of construction
chemicals.
(Cost $7,239,562)
9
THE SWISS HELVETIA FUND, INC.
--------------------------------------------------------------------------------
Schedule of Investments (Unaudited) June 30, 2006
(continued)
Percent
No. of of Net
Shares Security Value Assets
---------------------------------------------------------------
COMMON STOCKS -- (CONTINUED)
CHEMICALS -- (CONTINUED)
75,931 SYNGENTA AG
REGISTERED SHARES $ 10,072,480 2.14%
Produces herbicides, insecticides
and fungicides, and seeds for
field crops, vegetables, and
flowers.
(Cost $4,361,658)
------------ -----
20,114,276 4.27%
FINANCIAL SERVICES -- 1.62%
61,800 JULIUS BAER HOLDING AG
REGISTERED SHARES 5,357,682 1.14%
Offers private banking,
institutional asset management,
mutual fund, securities brokerage,
and corporate finance services.
(Cost $5,524,033)
30,227 OZ HOLDING AG
BEARER SHARES 2,278,746 0.48%
Provides brokerage and banking
services, specializing in futures
and options.
(Cost $2,263,780)
------------ -----
7,636,428 1.62%
FOOD & BEVERAGES -- 14.03%
340 LINDT & SPRUNGLI AG
REGISTERED SHARES 7,096,980 1.51%
Major manufacturer of premium
Swiss chocolates.
(Cost $1,977,813)
188,500 NESTLE SA/2/
REGISTERED SHARES 59,088,980 12.52%
Largest food and beverage
processing company in the
world.
(Cost $11,110,815)
------------ -----
66,185,960 14.03%
Percent
No. of of Net
Shares Security Value Assets
---------------------------------------------------------------
INDUSTRIAL GOODS & SERVICES -- 6.65%
557,457 ABB LTD.
REGISTERED SHARES $ 7,235,564 1.53%
The holding company for ABB
Group which is one of the largest
electrical engineering firms in the
world.
(Cost $3,710,066)
302,000 ADECCO SA/2/
REGISTERED SHARES 17,824,163 3.78%
Leading personnel and temporary
employment company.
(Cost $16,117,206)
1,141 BELIMO HOLDING AG
REGISTERED SHARES 832,697 0.18%
World market leader in damper
and volume control actuators for
ventilation and air-conditioning
equipment.
(Cost $231,391)
15,240 INFICON HOLDING AG
REGISTERED SHARES 1,803,918 0.38%
Manufactures and markets
vacuum instruments used to
monitor and control production
processes. Manufactures on-site
chemical detection and monitoring
system.
(Cost $1,444,912)
4,946 SULZER AG
REGISTERED SHARES 3,698,397 0.78%
Manufactures and sells surface
coatings, pumps, and process
engineering equipment.
(Cost $1,609,155)
----------- ----
31,394,739 6.65%
10
THE SWISS HELVETIA FUND, INC.
--------------------------------------------------------------------------------
Schedule of Investments (Unaudited) June 30, 2006
(continued)
Percent
No. of of Net
Shares Security Value Assets
------------------------------------------------------------------
COMMON STOCKS -- (CONTINUED)
INSURANCE -- 8.26%
103,000 SWISS LIFE HOLDING/2/
REGISTERED SHARES $ 24,089,388 5.11%
Offers financial services including
life and property insurance,
institutional investment
management, and private
banking services.
(Cost $20,225,550)
67,900 ZURICH FINANCIAL SERVICES AG/2/
REGISTERED SHARES 14,854,857 3.15%
Offers property, accident, health,
automobile, liability, financial risk
and life insurance and retirement
products.
(Cost $11,650,638)
------------ ----
38,944,245 8.26%
MEDICAL TECHNOLOGY -- 0.43%
32,205 PHONAK HOLDING AG
REGISTERED SHARES 2,009,855 0.43%
Designs and produces analog
and digital hearing aids.
(Cost $1,100,139)
------------ ----
2,009,855 0.43%
PERSONAL & HOUSEHOLD GOODS -- 1.20%
100,084 COMPAGNIE FINANCIERE
RICHEMONT AG, CLASS A
BEARER SHARES 4,575,269 0.97%
Manufactures and retails luxury
goods through subsidiaries.
Produces jewelry, watches,
leather goods, writing
instruments, and mens' and
womens' wear.
(Cost $3,328,765)
Percent
No. of of Net
Shares Security Value Assets
---------------------------------------------------------------
PERSONAL & HOUSEHOLD GOODS -- (CONTINUED)
6,367 SWATCH GROUP AG
BEARER SHARES $ 1,073,294 0.23%
Manufactures finished watches,
movements and components.
Produces components necessary
to its eighteen watch brand
companies. Also operates retail
boutiques.
(Cost $859,824)
------------ -----
5,648,563 1.20%
PHARMACEUTICALS -- 26.05%
1,076,000 NOVARTIS AG/2/
REGISTERED SHARES 58,147,918 12.33%
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 64,672,000 13.71%
Worldwide pharmaceutical
company.
(Cost $7,529,739)
------------ -----
122,819,918 26.04%
RETAILERS -- 2.00%
24,767 GALENICA HOLDING AG
REGISTERED SHARES 4,983,727 1.06%
Manufactures and distributes
prescription and over-the-
counter drugs, toiletries and
hygiene products.
(Cost $3,088,902)
11
THE SWISS HELVETIA FUND, INC.
--------------------------------------------------------------------------------
Schedule of Investments (Unaudited) June 30, 2006
(concluded)
Percent
No. of of Net
Shares Security Value Assets
----------------------------------------------------------------
COMMON STOCKS -- (CONTINUED)
RETAILERS -- (CONTINUED)
2,400 JELMOLI HOLDING AG
BEARER SHARES $ 4,416,000 0.94%
Owns and operates department
and retail stores and provides
mail-order catalog and real estate
leasing services.
(Cost $4,285,642)
----------- ----
9,399,727 2.00%
TECHNOLOGY -- 0.59%
62,213 ADVANCED DIGITAL BROADCAST
HOLDING/1/
REGISTERED SHARES 2,234,589 0.47%
Develops equipment and systems
to view and interact with digital TV
broadcast through cable, satellite,
and telecommunication networks.
(Cost $4,464,413)
14,230 LOGITECH INTERNATIONAL SA/1/
REGISTERED SHARES 548,291 0.12%
Manufactures personal computer
input devices, as well as
producing trackballs, desktop
publishing programs and related
software.
(Cost $219,768)
----------- ----
2,782,880 0.59%
UTILITY SUPPLIERS -- 4.32%
214,450 BKW FMB ENERGIE AG/2/
REGISTERED SHARES 18,696,539 3.97%
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
BEARER SHARES $ 1,657,143 0.35%
Supplies electric power, operates
and maintains distribution
network facilities, constructs and
installs equipment, and offers
consulting services to its clients.
(Cost $1,161,341)
------------ ------
20,353,682 4.32%
TOTAL COMMON STOCKS
(Cost $199,974,132)* $444,212,209 94.22%
OTHER ASSETS LESS OTHER
LIABILITIES, NET 27,237,952 5.78%
------------ ------
NET ASSETS $471,450,161 100.00%
============ ======
12
THE SWISS HELVETIA FUND, INC.
--------------------------------------------------------------------------------
Schedule of Investments (concluded) June 30, 2006
PORTFOLIO HOLDINGS
% OF TOTAL INVESTMENTS
Pharmaceuticals 27.64%
Banks 16.41%
Food & Beverages 14.90%
Insurance 8.77%
Industrial Goods & Services 7.07%
Biotechnology 5.88%
Utility Suppliers 4.58%
Chemicals 4.53%
Basic Resources 4.03%
Retailers 2.12%
Financial Services 1.72%
Personal & Household Goods 1.27%
Technology 0.63%
Medical Technology 0.45%
------
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 $247,290,011
GROSS UNREALIZED DEPRECIATION (3,051,934)
------------
NET UNREALIZED APPRECIATION $244,238,077
============
13
THE SWISS HELVETIA FUND, INC.
--------------------------------------------------------------------------------
Statement of Assets and Liabilities (Unaudited) June 30, 2006
ASSETS:
Investments, at value (cost $199,974,132)....................................... $444,212,209
Cash............................................................................ 7,334,323
Foreign currency (cost $21,171,920)............................................. 21,389,900
Receivable for securities sold.................................................. 2,970,672
Tax reclaims receivable......................................................... 2,664,024
------------
Total assets................................................................ 478,571,128
------------
LIABILITIES:
Capital gain distribution payable............................................... 5,626,162
Income distribution payable..................................................... 693,976
Capital shares payable.......................................................... 233,051
Advisory fees payable (Note 2).................................................. 279,983
Directors' fees and expenses (Note 3)........................................... 130,265
Accrued expenses and other...................................................... 157,530
------------
Total liabilities........................................................... 7,120,967
------------
Net assets.................................................................. $471,450,161
------------
COMPOSITION OF NET ASSETS:
Paid in capital................................................................. 182,529,206
Distributable earnings
Undistributed net investment income.................................. 2,745,196
Accumulated net realized gain from investment and foreign currency
transactions....................................................... 41,651,324
Net unrealized appreciation on investments and foreign currency...... 244,524,435
-----------
Total distributable earnings................................................ 288,920,955
------------
Net assets............................................................................ $471,450,161
------------
NET ASSET VALUE PER SHARE:
($471,450,161 / 24,751,755 shares outstanding, 50 million shares authorized).... $ 19.05
============
--------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS.
14
THE SWISS HELVETIA FUND, INC.
--------------------------------------------------------------------------------
Statement of Operations (Unaudited) For the Six Months Ended June 30, 2006
INVESTMENT INCOME:
Dividends (less foreign taxes withheld of $989,255)...................... $ 5,605,777
Interest (less foreign taxes withheld of $1,517)......................... 60,351
-----------
Total income........................................................... 5,666,128
-----------
EXPENSES:
Investment advisory fees (Note 2)........................................ 1,749,664
Directors' fees & expenses (Note 3)...................................... 309,932
Professional fees........................................................ 166,719
Administration fees...................................................... 158,485
Custody fees............................................................. 101,489
Printing and shareholder reports......................................... 39,672
Accounting fees.......................................................... 53,013
Transfer agent fees...................................................... 15,868
Miscellaneous............................................................ 102,627
-----------
Total expenses......................................................... 2,697,469
-----------
Net investment income.................................................. 2,968,659
-----------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS AND FOREIGN CURRENCY:
Net realized gain from:
Investment transactions................................................ 41,079,452
Foreign currency transactions.......................................... 646,201
Net change in unrealized appreciation/depreciation from:
Investment transactions................................................ 1,058,215
Foreign currency translations.......................................... 531,014
-----------
Net Realized and Unrealized Gain on Investments and Foreign Currency... 43,314,882
-----------
NET INCREASE IN NET ASSETS FROM OPERATIONS.................................. $46,283,541
===========
--------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS.
15
THE SWISS HELVETIA FUND, INC.
--------------------------------------------------------------------------------
Statements of Changes in Net Assets (Unaudited)
For the For the
Six Months Ended Year Ended
June 30, 2006/1/ December 31, 2005
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income........................................... $ 2,968,659 $ 1,140,823
Net realized gain (loss) from:
Investment transactions....................................... 41,079,452 37,161,885
Foreign currency transactions................................. 646,201 (670,310)
Net change in unrealized appreciation/depreciation from:
Investment transactions....................................... 1,058,215 19,996,117
Foreign currency translations................................. 531,014 (1,564,407)
------------ ------------
Net increase in net assets from operations...................... 46,283,541 56,064,108
------------ ------------
DISTRIBUTIONS TO STOCKHOLDERS FROM:
Net investment income and net realized gains from foreign
currency transactions......................................... (693,976) (514,998)
In excess of net investment income.............................. -- --
Net realized capital gains...................................... (5,626,162) (38,324,832)/2/
------------ ------------
Total distributions to stockholders........................... (6,320,138) (38,839,830)
------------ ------------
CAPITAL SHARE TRANSACTIONS:
Value of shares issued in reinvestment of dividends and
distributions................................................. 12,903,158 7,643,488
Value of shares repurchased through stock buyback............... (1,230,030) (6,568,476)
------------ ------------
Total increase (decrease) from capital share transactions....... 11,673,128 1,075,012
------------ ------------
Total increase in net assets.................................... 51,636,531 18,299,290
NET ASSETS:
Beginning of year............................................... 419,813,630 401,514,340
------------ ------------
End of period (including undistributed net investment income of
$2,745,196 and $470,513, respectively)........................ $471,450,161 $419,813,630
============ ============
--------------------------------------------------------------------------------
/1/UNAUDITED.
/2/INCLUDES A REPORTING ADJUSTMENT OF $2,357 FOR SHORT-TERM CAPITAL GAINS AND
$4,598 FOR LONG-TERM CAPITAL GAINS, WHICH WERE PROPERLY DISTRIBUTED IN THE
PREVIOUS YEAR.
SEE NOTES TO FINANCIAL STATEMENTS.
16
THE SWISS HELVETIA FUND, INC.
--------------------------------------------------------------------------------
Financial Highlights
For the
Six Months
Ended For the Years Ended December 31,
June 30, -----------------------------------------------------
2006/1/ 2005 2004 2003 2002 2001
-------------------------------------------------------- ---------- -------- -------- -------- -------- --------
PER SHARE OPERATING PERFORMANCE:
Net asset value at beginning of period................. $ 17.47 $ 16.79 $ 15.31 $ 11.82 $ 13.16 $ 17.92
-------- -------- -------- -------- -------- --------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (expenses in excess of
income)............................................... 0.12/2/ 0.05/2/ (0.01) (0.01) (0.02) (0.03)
Net realized and unrealized gain (loss) on
investments/3/........................................ 1.78 2.24 2.41 4.24 (0.71) (4.34)
-------- -------- -------- -------- -------- --------
Total from investment operations....................... 1.90 2.29 2.40 4.23 (0.73) (4.37)
-------- -------- -------- -------- -------- --------
Gain from capital share repurchases.................... 0.01 0.04 0.02 0.02 0.02 0.06
Capital charge resulting from the issuance of fund
shares................................................ (0.07) (0.04) -- (0.06) -- (0.14)
-------- -------- -------- -------- -------- --------
LESS DISTRIBUTIONS:
Dividends from net investment income and net realized
gains from foreign currency transactions.............. (0.03) (0.02) (0.10) (0.14) (0.06) --
Dividends in excess of net investment income........... -- -- (0.01) -- (0.01) --
Distributions from net realized capital gains.......... (0.23) (1.59) (0.83) (0.56) (0.56) (0.31)
-------- -------- -------- -------- -------- --------
Total distributions.................................... (0.26) (1.61) (0.94) (0.70) (0.63) (0.31)
-------- -------- -------- -------- -------- --------
Net asset value at end of period....................... $ 19.05 $ 17.47 $ 16.79 $ 15.31 $ 11.82 $ 13.16
======== ======== ======== ======== ======== ========
Market value per share at end of period................ $ 16.65 $ 15.31 $ 14.95 $ 12.92 $ 9.64 $ 11.00
======== ======== ======== ======== ======== ========
TOTAL INVESTMENT RETURN/4/:
Based on market value per share........................ 10.39% 13.11% 23.65% 41.76% (4.46)% (22.10)%
Based on net asset value per share..................... 10.68% 14.92% 17.19% 37.00% (6.92)% (24.94)%
RATIOS TO AVERAGE NET ASSETS/5/:
Expenses............................................... 1.16% 1.19% 1.14% 1.30% 1.31% 1.39%
Net investment income (expenses in excess of
income)............................................... 1.27% 0.27% (0.08)% (0.07)% (0.14)% (0.23)%
SUPPLEMENTAL DATA:
Net assets at end of period (000's).................... $471,450 $419,814 $401,514 $368,986 $279,799 $314,436
Average net assets during period (000's)............... $469,863 $415,074 $378,205 $306,563 $308,018 $341,806
Stockholders of record/6/.............................. 819 740 926 964 1,001 1,067
Portfolio turnover rate................................ 18% 37% 41% 89% 83% 32%
--------------------------------------------------------------------------------
/1/UNAUDITED.
/2/CALCULATED USING THE AVERAGE SHARES METHOD.
/3/INCLUDES NET REALIZED AND UNREALIZED CURRENCY GAIN (LOSS).
/4/TOTAL INVESTMENT RETURN BASED ON MARKET VALUE DIFFERS FROM TOTAL INVESTMENT
RETURN BASED ON NET ASSET VALUE DUE TO CHANGES IN THE RELATIONSHIP BETWEEN
THE FUND'S MARKET PRICE AND ITS NET ASSET VALUE PER SHARE. NOT ANNUALIZED
FOR PERIODS LESS THAN ONE YEAR.
/5/ANNUALIZED FOR PERIODS LESS THAN ONE YEAR.
/6/NOT AUDITED BY DELOITTE & TOUCHE LLP.
SEE NOTES TO FINANCIAL STATEMENTS.
17
THE SWISS HELVETIA FUND, INC.
--------------------------------------------------------------------------------
Notes to Financial Statements (Unaudited)
NOTE 1--ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
A. ORGANIZATION
The Swiss Helvetia Fund, Inc. (the "Fund") is registered under the Investment
Company Act of 1940, as amended (the "Act"), as a non-diversified, closed-end
investment management company. The Fund is organized as a corporation under the
laws of the State of Delaware.
The investment objective of the Fund is to seek long-term growth of capital
through investment in equity and equity-linked securities of Swiss companies.
The Fund also may acquire and hold equity and equity-linked securities of
non-Swiss companies in the limited instance where: (1) the Fund holds an
investment in a Swiss company, and (2) such Swiss company undergoes a merger,
takeover, reorganization or other form of business combination with a non-Swiss
issuer (a "reorganization"), or reorganizes (or "redomiciles") itself as a new
corporate entity outside of Switzerland, and (3) the Fund, as a shareholder in
the Swiss company, acquires equity or equity-linked securities in the non-Swiss
issuer as a result of the transaction. The Fund would be permitted, but not
required, to reacquire equity and equity-linked securities of Swiss companies
that have redomiciled, so long as the Fund held an investment in the Swiss
company at or before the time the company redomiciled.
B. VALUATION OF SECURITIES
The Fund values its investments at market value.
When valuing listed equity securities, the Fund uses the last sale price prior
to the calculation of the Fund's net asset value. When valuing equity
securities that are not listed or that are listed but have not traded, the Fund
uses the mean between the bid and asked prices for that day.
When valuing fixed income securities, the Fund uses the last bid price prior to
the calculation of the Fund's net asset value. If a current bid price is not
available, the Fund uses the mean between the latest quoted bid and asked
prices. When valuing fixed income securities that mature within sixty days, the
Fund uses amortized cost.
It is the responsibility of the Fund's Board of Directors (the "Board") to
establish fair valuation procedures. When valuing securities for which market
quotations are not readily available or for which the market quotations that
are available are considered unreliable, the Fund determines a fair value in
good faith in accordance with these procedures. The Fund may use these
procedures to establish the fair value of securities when, for example, a
significant event occurs between the time the market closes and the time the
Fund values its investments. After consideration of various factors, the Fund
may value the securities at their last reported price or at some other value.
There were no fair valued securities on June 30, 2006.
C. SECURITIES TRANSACTIONS AND INVESTMENT INCOME
Securities transactions are recorded on the trade date. Realized gains and
losses are determined by comparing the proceeds of a sale or the cost of a
purchase with a specific offsetting transaction.
Dividend income, net of any foreign taxes withheld, is recorded on the
ex-dividend date. Interest income, including amortization of premiums and
accretion of discounts, is accrued daily. Estimated expenses are also accrued
daily.
The Fund records Swiss withholding tax as a reduction of dividend income, net
of any amount reclaimable from Swiss tax authorities in accordance with the tax
treaty between the United States and Switzerland.
D. DISTRIBUTIONS
The Fund pays dividends annually to the extent it has any net investment income
and net realized gains from foreign currency transactions and makes
distributions of any net realized capital gains to the extent they exceed any
capital loss carryforwards. The Fund determines the size and nature of these
distributions in accordance with provisions of the Internal Revenue Code.
Distributions may be paid either in cash or in stock with an option to take
cash. The Fund records dividends and distributions on its books on the
ex-dividend date.
E. FEDERAL INCOME TAXES
The Fund's policy is to continue to comply with the requirements of the
Internal Revenue Code that are applicable to regulated investment companies and
to distribute all its taxable income to its stockholders. Therefore, no federal
income tax provision is required. See Note 5 for Federal income tax treatment
of foreign currency gains/losses.
18
THE SWISS HELVETIA FUND, INC.
--------------------------------------------------------------------------------
Notes to Financial Statements (Unaudited) (continued)
Income and capital gain distributions are determined in accordance with federal
income tax regulations, which may differ from generally accepted accounting
principles.
F. SECURITIES LENDING INCOME
The Fund may lend securities to financial institutions. The Fund retains
beneficial ownership of the securities it has loaned and continues to receive
amounts equivalent to the dividends paid on these securities and to participate
in any changes in their market value. For the initial transaction, the Fund
requires the borrowers of the securities to establish collateral with the Fund
in the form of cash and/or government securities equal to 105% of the value of
the securities loaned. Subsequent to the initial transaction, the Fund requires
the borrowers to maintain collateral with the Fund equal to 100% of the value
of the securities loaned. The Fund receives fees as compensation for lending
its securities. Either the Fund or the borrower may terminate the securities
loan at any time. There were no securities on loan during the period ended June
30, 2006.
G. FOREIGN CURRENCY TRANSLATION
The Fund maintains its accounting records in U.S. dollars. The Fund determines
the U.S. dollar value of foreign currency denominated assets, liabilities and
transactions by using prevailing exchange rates. The cost basis of foreign
denominated assets & liabilities is determined on the date that they are first
recorded within the Fund and translated to U.S. dollars. These assets and
liabilities are subsequently valued each day at prevailing exchange rates. The
difference between the original cost and current value denominated in U.S.
dollars is recorded as Unrealized Currency Gain/Loss. In valuing assets and
liabilities, the Fund uses the prevailing exchange rate on the valuation date.
In valuing securities transactions, the receipt of income and the payment of
expenses, the Fund uses the prevailing exchange rate on the transaction date.
Net realized and unrealized gains and losses on foreign currency translations
shown on the Fund's financial statements result from the sale of foreign
currencies, from currency gains or losses realized between the trade and
settlement dates on securities transactions, and from the difference between
the amounts of dividends, interest, and foreign withholding taxes recorded on
the Fund's books and the U.S. dollar equivalent of the amounts actually
received or paid.
When calculating realized and unrealized gains or losses on investments in
equity securities, the Fund does not separate the gain or loss attributable to
changes in the foreign currency price of the security from the gain or loss
attributable to the change in the U.S. dollar value of the foreign currency.
Other foreign currency transactions resulting in realized and unrealized gain
(loss) are disclosed separately.
H. ESTIMATES
In preparing its financial statements in conformity with accounting principles
generally accepted in the United States, management makes estimates and
assumptions. Actual results may be different.
I. NEW ACCOUNTING PRONOUNCEMENTS
In June 2006, the Financial Accounting Standards Board issued Financial
Interpretation No. 48, "Accounting for Uncertainty in Income Taxes" (the
"Interpretation") which is effective for fiscal years beginning after December
15, 2006 and is to be applied to all open tax years as of the effective date.
This Interpretation prescribes a minimum threshold for financial statement
recognition of the benefit of a tax position taken or expected to be taken in a
tax return, and requires certain expanded disclosures. Management has recently
begun to evaluate the application of the Interpretation to the Fund, and has
not at this time determined the impact, if any, resulting from the adoption of
this Interpretation on the Fund's financial statements.
NOTE 2--FEES AND TRANSACTIONS WITH AFFILIATES
Hottinger Capital Corp. ("HCC"), which is owned jointly by Hottinger U.S., Inc.
and Hottinger & Cie (Zurich), is the Fund's advisor (the "Advisor"). The Fund
pays the Advisor an annual fee based on its month-end net assets which is
calculated and paid monthly at the following annual rates: 1.00% of the first
$60 million, 0.90% of the next $40 million, 0.80% of the next $100 million,
0.70% of the next $100 million, 0.65% of the next $100 million, 0.60% of the
next $100 million, 0.55% of the next $100 million, and 0.50% of such assets in
excess of $600 million. The Fund paid the Advisor $1,749,664 in investment
advisory fees for the six months ended June 30, 2006. The Fund paid Hottinger &
Cie (Zurich) $30,917 in brokerage commissions for the six months ended June 30,
2006.
19
THE SWISS HELVETIA FUND, INC.
--------------------------------------------------------------------------------
Notes to Financial Statements (Unaudited) (continued)
The Fund and the Advisor have agreed to share certain common expenses subject
to review and allocation by the Audit Committee (the "Committee") of the Board.
During the period ending June 30, 2006, the Committee allocated $60,512 of
expenses incurred in connection with publicizing the Fund as follows: $38,156
to the Fund and $22,356 to the Advisor.
Certain officers and directors of the Fund are also officers or directors of
HCC, Hottinger U.S., Inc. and Hottinger & Cie (Zurich). These persons are not
paid by the Fund for serving in these capacities.
NOTE 3--OTHER FEES
Citigroup Fund Services, LLC ("Citigroup") provides certain administration and
portfolio accounting services to the Fund.
American Stock Transfer & Trust Company is the Fund's transfer agent. The Fund
pays the transfer agent an annual fee which is accrued daily and paid monthly.
Swiss American Securities Inc. is the Fund's U.S. custodian. Credit Suisse
First Boston is the Fund's Swiss sub-custodian. The Fund pays the custodian and
sub-custodian an annual fee.
The Fund pays each director who is not an "interested person" (as such term is
defined in the Act) of the Fund, the Advisor, or Citigroup, approximately
$23,800 per annum in compensation, except for the Chairmen of the Audit
Committee and the Governance/Nominating Committee, to whom the Fund pays an
annual fee of approximately $28,800. In addition, the Fund pays each
non-interested director $1,300 for each Board meeting attended and $750 for
each committee meeting attended, if it is held separately. In addition, the
Fund reimburses directors who are not employees of or affiliated with the
Advisor for out-of-pocket expenses incurred in conjunction with attendance at
meetings.
Directors' fees and expenses payable of $130,265 shown on the Statements of
Assets & Liabilities represents total dollars owed to Directors that have been
accrued and not paid. Directors' fees and expenses of $309,932 shown on the
Statement of Operations represent the portion of Directors' fees and expenses
accrued during the period January 1, 2006 through June 30, 2006. These fees are
calculated by projecting Directors' fee contractually owed and adding estimates
of reimbursable expenses based on historical activity.
NOTE 4--CAPITAL SHARE TRANSACTIONS
The Fund is authorized to issue up to 50 million shares of capital stock. The
Advisor owned 128,435 of the 24,751,755 shares outstanding on June 30, 2006.
Transactions in capital shares were as follows:
For the Six Months For the Year Ended
Ended June 30, 2006 December 31, 2005
------------------- ------------------
Shares Amount Shares Amount
------ ------ ------ ------
Dividends
Reinvested 798,957 $12,903,158/(a)/ 542,380 $ 7,643,488
Repurchased (76,700) (1,230,030) (422,100) (6,568,476)
------- ----------- -------- -----------
Net increase
(decrease) 722,257 $11,673,128 120,280 $ 1,075,012
======= =========== ======== ===========
(A)REPRESENTS SHARES ISSUED TO STOCKHOLDERS WHO DID NOT ELECT CASH IN
CONJUNCTION WITH A LONG TERM CAPITAL GAINS DISTRIBUTION OF $1.276 PER SHARE
PAID JANUARY 31, 2006 TO STOCKHOLDERS OF RECORD ON DECEMBER 19, 2005.
NOTE 5--FEDERAL INCOME TAX AND INVESTMENT TRANSACTIONS
Reclassifications are made to the Fund's capital accounts to reflect income and
gains available for distribution (or available capital loss carryforward) under
income tax regulations. The tax character of distributions paid during the year
and the tax components of net assets will be updated at the Fund's fiscal
year-end.
At December 31, 2005, the components of distributable earnings on a tax basis
were as follows:
Ordinary income $ 1,283,784
Long-term capital gains $ 5,017,526
Capital and other losses $ (220,049)
Unrealized appreciation $242,876,291
Gains from foreign currency transactions will be treated as ordinary income for
Federal income tax purposes.
The aggregate cost of purchases and proceeds from sales of investments, other
than short-term obligations, for the six months ended June 30, 2006, were
$84,360,990 and $117,476,401, respectively.
20
THE SWISS HELVETIA FUND, INC.
--------------------------------------------------------------------------------
Notes to Financial Statements (Unaudited) (continued)
NOTE 6--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 six months ended June 30, 2006, the
Fund repurchased and retired 76,700 shares at an average price of $16.04 per
share (including brokerage commissions) and a weighted average discount of
11.71%. These repurchases, which had a total cost of $1,230,030, resulted in an
increase of $168,821 to the Fund's net asset value.
NOTE 7--PROXY VOTING INFORMATION
A description of the policies and procedures that the Fund uses to determine
how to vote proxies relating to portfolio securities is available, without
charge and upon request, by calling 1-888-SWISS-00 and on the SEC's website at
http://www.sec.gov. The Fund's proxy voting record for the twelve-month period
ended June 30 is available, without charge and upon request, by calling
1-888-SWISS-00 or by visiting the Fund's website at www.swz.com. This
information is also available on the SEC's website at http://www.sec.gov.
NOTE 8--AVAILABILITY OF QUARTERLY PORTFOLIO SCHEDULES
The Fund files its complete schedule of portfolio holdings with the SEC for the
first and third quarters of each fiscal year on Form N-Q. The Fund's Form N-Q
is available, without charge and upon request, by visiting the Fund's website
at www.swz.com and on the SEC's website at http://www.sec.gov or may be
reviewed and copied at the SEC's Public Reference Room in Washington, DC.
Information on the operation of the Public Reference Room may be obtained by
calling (800) SEC-0330.
NOTE 9--ADVISORY AGREEMENT APPROVAL
The continuance of the Investment Advisory Agreement between the Fund and HCC
(the "Agreement") was approved by the Board at a meeting on June 8, 2006. The
Independent Directors met with representatives of HCC before the meeting and
evaluated information that they deemed necessary to enable them to determine
that the Investment Advisory Agreement (the "Agreement") would be in the best
interests of the Fund and its stockholders. Their evaluation included
information concerning the Fund's performance and expenses (including the fees
paid to HCC for its services), the nature, extent and quality of the services
HCC provided to the Fund, the financial position and profitability of HCC, and
other benefits that HCC or its parent derived from managing the Fund.
The Independent Directors reviewed the Fund's investment performance,
determining that the relevant measures should be in terms of its net asset
value as measured in Swiss francs because the Fund's portfolio securities and
cash were denominated in Swiss francs and because, as a matter of policy, the
Fund did not hedge its currency exposure. They compared the Fund's one- and
three-year investment performance as well as its longer term performance with
the Swiss Performance Index ("SPI"), with the performance of the Swiss iShares
traded on the New York Stock Exchange, and with the performance of a peer group
of equity investment funds of comparable or larger size managed by Swiss
advisers with publicly available performance information. Because the iShares
performance was stated in U.S. dollar terms, the comparison of the Fund's
performance with the performance of iShares was on that basis. In comparing the
Fund's performance with the performance of the SPI, they considered the fact
that, unlike the Fund, the performance of the SPI did not include the impact of
any expenses. As a result of this evaluation, they concluded that the Fund's
performance for the four months of 2006 and each of the nine years ended 2005
was reasonable in relation to the comparisons and outperformed them for the
four-month 2006 period and on a cumulative basis.
The Independent Directors expressed concern with the market price per share of
the Fund relative to its net asset value per share, but determined that this
was essentially unrelated to HCC's investment performance.
The Independent Directors also evaluated the fees HCC charged the Fund for
investment advisory services as compared to the fees paid by U.S. registered
closed-end European country funds. They determined that the fees paid to HCC,
even when combined with the seven basis point administration fee paid to the
Fund's unaffiliated administrator, were
21
THE SWISS HELVETIA FUND, INC.
--------------------------------------------------------------------------------
Notes to Financial Statements (Unaudited) (concluded)
among the lowest in each group. HCC also had represented that the combined
investment advisory fee and administration fee was also lower than the fees
HCC's parent charged to its private advisory clients and to a Luxembourg-based
fund it managed with similar investment objectives and strategies.
The Independent Directors separately considered the fees charged by HCC
including breakpoints at various asset levels. They concluded that the
breakpoints (which were voluntarily adjusted by HCC in 1995 to the benefit of
the Fund) allowed the Fund to share in economies of scale as its assets grow.
The Independent Directors evaluated the nature of the Fund, the creativity of
HCC in developing the Fund's investment strategies, and the complexity of the
Swiss securities market. They determined that HCC's services to the Fund were
highly professional and that the qualifications and number of HCC personnel,
the availability of company research and market and financial information from
HCC's parent in Switzerland, and the continuity of HCC personnel over time were
all desirable factors.
The Independent Directors considered the financial condition of HCC, noting
that the advisory fees it received from the Fund comprised the majority of its
income. They concluded that HCC's financial condition was sound and that its
profitability was reasonable for the services it provided to the Fund. They
considered other benefits that HCC or its parent could be considered to derive
from their relationship with the Fund including limited brokerage commissions
from executing Fund transactions, the marketing value of the Fund's performance
in attracting other clients, and the cost benefits to HCC of soft dollar
research and portfolio and financial information services. They determined that
these benefits were relatively minor and did not affect their overall
assessment of the reasonableness of the relationship.
Based on the evaluation of these factors and the assistance of independent
legal counsel, the Independent Directors concluded that the Fund's advisory fee
rate was reasonable in relation to the service to be rendered by HCC and
therefore recommended that the Board approve the continuance of the Agreement.
22
THE SWISS HELVETIA FUND, INC.
--------------------------------------------------------------------------------
Proxy Results (Unaudited)
At the Annual Meeting of Stockholders, held on June 8, 2006, as adjourned to
July 7, 2006, shares were voted as follows on the proposals presented to the
Stockholders:
1. To elect three Class II Directors to serve for a three year term:
Authority
For Withheld
--- ---------
Paul Hottinguer 15,297,960 1,478,722
Michael Kraynak, Jr. 15,179,139 1,597,543
Stephen K. West, Esq. 15,185,955 1,590,727
2. To ratify the selection by the Board of Directors of Deloitte & Touche LLP
as the Fund's independent registered public accounting firm for the year
ending December 31, 2006:
For Against Abstain
--- ------- -------
15,884,483 660,114 232,083
3. To approve changes to certain of the Fund's fundamental investment policies
and restrictions to permit the Fund to:
A. leverage up to 10% of its total assets (including the amount borrowed)
For Against Abstain
--- ------- -------
12,671,113 2,248,116 233,949
B. invest in securities of Swiss Real Estate Companies (as defined in the
Proxy Statement)
For Against Abstain
--- ------- -------
13,073,344 1,831,211 248,631
C. acquire equity and equity-lined securities of non-Swiss companies in
limited instances
For Against Abstain
--- ------- -------
12,978,474 1,887,103 287,606
D. permit the Fund to invest up to 20% (increased from 10%) of its total
assets in illiquid securities
For Against Abstain
--- ------- -------
9,839,453 5,177,373 277,213
E. engage in certain options transactions
For Against Abstain
--- ------- -------
11,980,548 2,837,835 334,794
The stockholders approved all of the proposals, except for proposal 3D.
--------------------------------------------------------------------------------
Privacy Policy (Unaudited)
The Swiss Helvetia Fund, Inc. believes that the privacy of its stockholders is
extremely important. We are firmly committed to protecting any personal and
financial information you provide to us. When you provide us personal
information, we use it only to develop and deliver products and services that
you request. For example, we may disclose information to affiliates and service
providers who work with us. We will also use or disclose your personal
information if required by or in conformity with legal or regulatory
requirements. We require our officers, affiliates and
23
THE SWISS HELVETIA FUND, INC.
--------------------------------------------------------------------------------
Privacy Policy (Unaudited) (concluded)
service providers to maintain appropriate safeguards to ensure the security of
your non-public personal information. Otherwise, we do not disclose any
information about current or former stockholders.
Limits of Use of Personal Information
We limit the use, collection and retention of stockholder information to what
we believe is necessary to provide personal financial service and related
products. We collect information about our stockholders from sources such as
applications and other required forms as well as from account and website and
other communications. Access to this information is limited to only those
people who require that information to service your account.
Accuracy of Personal Information
We strive to keep your personal and financial information accurate. If our
records are incorrect or out-of-date, please notify us immediately by
contacting the Fund at 1-888-794-7700.
Changes to Our Policies
If you have any questions about our privacy policy, please contact Mr. Rudolf
Millisits at 1-888-794-7700. We may, in our discretion, change this Privacy
Policy at any time. If we make material changes we will provide you with notice
of these changes.
Sincerely,
The Swiss Helvetia Fund, Inc.
24
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
25
THE SWISS HELVETIA FUND, INC.
--------------------------------------------------------------------------------
Dividend Reinvestment Plan (Unaudited) (concluded)
value, 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.
26
A SWISS INVESTMENTS FUND THE SWISS
----------------------
HELVETIA FUND, INC.
----------------------
www.swz.com
----------------------
THE SWISS HELVETIA FUND, INC.
EXECUTIVE OFFICES
The Swiss Helvetia Fund, Inc. SEMI-ANNUAL
1270 Avenue of the Americas REPORT
Suite 400 FOR THE
New York, New York 10020 PERIOD ENDED
1-888-SWISS-00 JUNE 30, 2006
(212) 332-2760
www.swz.com
ITEM 2. CODE OF ETHICS
Not Applicable.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT
Not Applicable.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES
Not Applicable.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS
Not Applicable.
ITEM 6. SCHEDULE OF INVESTMENTS
Not Applicable.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES
Not Applicable.
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES
Not Applicable.
ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS
------------------------------------------------------------------------------------------------------------
(d) Maximum
Number (or
Approximate)
(c) Total Number Dollar Value) of
of Shares (or Units) Shares that May
Purchased as Part of Yet Be Purchased
(a) Total Number of (b) Average Price Publicly Announced Under the Plans
Period Shares Purchased Paid per Share Plans or Programs or Programs
------------------------------------------------------------------------------------------------------------
01/01/06 - 01/31/06 24,000 15.6069 24,000 976,000
------------------------------------------------------------------------------------------------------------
02/01/06 - 02/28/06 976,000
------------------------------------------------------------------------------------------------------------
03/01/06 - 03/31/06 976,000
------------------------------------------------------------------------------------------------------------
04/01/06 - 04/30/06 976,000
------------------------------------------------------------------------------------------------------------
05/01/06 - 05/31/06 976,000
------------------------------------------------------------------------------------------------------------
06/01/06 - 06/30/06 52,700 16.2299 52,700 923,300
------------------------------------------------------------------------------------------------------------
Total 76,700 15.9184 76,700 923,300
------------------------------------------------------------------------------------------------------------
At the December 8, 2005 meeting of the Registrant's Board of Directors (the
"Board"), the Board approved the purchase of up to 1,000,000 shares of the Fund
by Hottinger Capital Corp., the Fund's investment adviser. The approved purchase
plan, announced to the public in a press release on December 8, 2005, expires on
December 31, 2006.
ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No material changes to procedures.
ITEM 11. CONTROLS AND PROCEDURES
(a) The Registrant's principal executive and principal financial officers have
concluded, based on their evaluation of the Registrant's disclosure controls and
procedures as of a date within 90 days of the filing date of this report, that
the Registrant's disclosure controls and procedures are reasonably designed to
ensure that information required to be disclosed by the Registrant on Form N-CSR
is recorded, processed, summarized and reported within the required time periods
and that information required to be disclosed by the Registrant in the reports
that it files or submits on Form N-CSR is accumulated and communicated to the
Registrant's management, including its principal executive and principal
financial officers, as appropriate to allow timely decisions regarding required
disclosure.
(b) There were no changes to the Registrant's internal control over financial
reporting that occurred during the Registrant's second fiscal quarter of the
period covered by this report that have materially affected, or are reasonably
likely to materially affect, the Registrant's internal control over financial
reporting.
ITEM 12. EXHIBITS.
(a)(1) Not Applicable.
(a)(2) Certifications pursuant to Rule 30a-2(a) under the Investment Company Act
of 1940 (Exhibit filed herewith).
(a)(3) Not Applicable.
(b) Certifications pursuant to Rule 30a-2(b) under the Investment Company Act of
1940 (Exhibit filed herewith).
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the Registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
Registrant THE SWISS HELVETIA FUND, INC.
By /s/ Rodolphe E. Hottinger
---------------------------
Rodolphe E. Hottinger, Chief Executive Officer
Date 9/4/06
---------------------------
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the Registrant and in the capacities and on the
dates indicated.
By /s/ Rodolphe E. Hottinger
-----------------------------------
Rodolphe E. Hottinger, Chief Executive Officer
Date 9/4/06
-----------------------------------
By /s/ Rudolf Millisits
-----------------------------------
Rudolf Millisits, Chief Financial Officer
Date 9/1/06
-----------------------------------