Directors and Officers

Investment Advisor

Hottinger Capital Corp.

1270 Avenue of the Americas, Suite 400

New York, New York 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 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 Appenzell, the Bahamas, Basel, Brig, Geneva, London, Lugano, Luxembourg, New York, Paris, Sion, Toronto, Vienna, Zug and Zurich.

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.

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 Market Review

A year has passed since global stock markets reached their bottom in March 2009. While global economic growth has continued with a modest recovery in the U.S. and Europe, the recovery in Asia (excluding Japan) has been robust. As corporate earnings continue to recover, investors have moved funds from safer investments to riskier assets, including equities, corporate debt, commodities, and real estate. Indeed, ultra-low interest rates continue to be a major reason funds have been invested into these asset classes. Sceptics of a continuation of the market rallies of the past 12 months note that the greatest gains after a bear market are usually experienced in the first year of the rebound. Statistics show, however, while returns have eased in the second year, further gains have been experienced in more than 80% of the cases.

Global equities continued to advance in the first quarter of 2010, gaining nearly 10% in a volatile environment. From mid-January until the second week of February, the equity markets suffered in response to uncertainties surrounding monetary tightening in China and the financial situation in Greece. Encouraging economic data and better-than-expected corporate results helped investors to refocus on positive news. Although the global economy continued to recover, the U.S. housing market continued to be vulnerable and consumption remained weak, especially in the Eurozone. Recent U.S. job market indicators were positive, while confidence surveys improved in the services sector. This

sector, crucial to the labor market, has lagged behind the industrial sectors until recently. Furthermore, corporate results are showing top line growth in earnings based on revenue increases, not solely on cost savings. Improved earnings quality was also reflected in higher profit margins and should lead to higher operating margins going forward. Corporate profits are still expected to rise by approximately 30% worldwide this year, reverting to the mean when considering them relative to Gross Domestic Product (GDP).

Emerging markets, which have been slower to recover from past crises, appeared positioned for their largest recovery in recent business cycles. Meanwhile, Chinese and Indian central banks recently raised their reserve requirements for banks. Chinese authorities took additional measures to cool down strong domestic growth in bank lending. Although these measures came earlier than expected, they are necessary to ensure longer-term robust economic growth while avoiding negative side effects such as rising long term inflation. Concerns over the timing and speed of the central banks’ exit from monetary stimulus programs remain the biggest underlying drag on global markets.

Currency and Macro Economic Data

The Eurozone recovery, after showing surprising strength in its early stage, has become more sluggish. Despite improvements in exports, supported by Asian demand for luxury goods, autos and other machinery, companies have started to meet demand

through reductions in inventories, suggesting that rebounds in actual production and consumption have been modest and have not kept pace with the rise in consumer sentiment. Consumption was a particularly weak aspect of the Eurozone recovery. Europe also faced challenges due to rising concerns about the sustainability of debt in its peripheral countries. Moreover, broad money supply was still contracting during the first quarter, indicating that the economic recovery in the Eurozone was still lagging the recovery in other emerging and developed countries.

The biggest risk factor during the quarter was Greece’s fiscal situation and the rising interest rates it has to pay on its government bonds. While both the size of its economy and the size of its debt are small compared to the other countries of the Eurozone, until Greece’s problems are resolved in a manner that restores market confidence, concerns about the fiscal soundness of other southern European countries will linger, and it is likely that the euro will remain under pressure. The Swiss franc appreciated by nearly 4% against the euro in the first quarter of 2010, leading the Swiss National Bank to intervene in order to prevent any further appreciation. On the other hand, the Swiss franc fell by slightly less than 2% against the U.S. dollar during the same period.

The Swiss economy grew by a stronger-than-expected rate of 0.7% in the fourth quarter of 2009 compared to the previous quarter, outpacing Europe, which grew by only 0.1%. In all of 2009, the Swiss economy

contracted by 1.5% compared to a European contraction of 4.1%. The expansion in Switzerland was broad-based. All GDP components delivered positive growth. Exports in the fourth quarter of 2009 grew for the second consecutive quarter, this time by 3.2%. Swiss government debt has never been as excessive as the debt in other developed economies. Switzerland reported a fiscal surplus in 2009, and economists are expecting a very limited deficit in 2010. While major deficits are being experienced by countries throughout the world, particularly in developed economies, Swiss debt-to-GDP is likely to be below 50% over the next few years. Over the last five years, Switzerland has surpassed Europe in its rate of economic growth. One of the factors contributing to the growth is the increase of the population in Switzerland. The attraction of the Swiss financial marketplace in terms of low individual and corporate tax rates is also a contributor to its economic growth. The soundness of Switzerland’s public finances, a highly visible component of fiscal policy, is in sharp contrast with the situation of other countries in the Eurozone.

The robust increase of the KOF Economic Barometer (a combined reading of 12 economic indicators) in recent months, in combination with other encouraging figures, such as an extremely strong reading in the March Purchasing Managers’ Index, very robust retail sales and an improving labor market, all point toward sustained economic growth rates in the first half of 2010, perhaps exceeding expectations. The Swiss economy

has emerged from the global economic crisis in better shape than most other developed economies as a result of a more prudent fiscal policy. This is especially important in an environment where public debt is forcing governments to withdraw accommodative policies and to consider exit strategies.

Swiss Market Review

When compared to global world indices, the Swiss market proved to be quite resilient in the downturn. Despite some weakness in the Swiss Performance Index (SPI) in the first few weeks of the quarter, triggered by concerns about the burden of Swiss debt, Swiss equities recorded a gain of 6% for the quarter. The star performers were the personal and household goods (mainly luxury goods) sector, the travel and leisure sector and the industrial goods and services sector. The insurance sector outperformed banks, while healthcare, telecoms and utilities registered negative performance. The dispersion of returns among the sectors was quite striking with healthcare declining -1.0% compared to an increase of +20.6% for personal and household goods. This situation is not unusual in a cycle of economic recovery. Investors, looking for earnings surprises, have been actively pursuing companies with businesses geared towards discretionary spending by consumers and corporations.

Performance Review

The Fund began the year with a relatively conservative portfolio, emphasizing corporations that had surplus capital and

that were generating a high level of free cash flow. The strategy was to increase exposure to companies that were expected to increase dividend payouts. In the context of a Swiss risk free rate of 1.8%, dividend yield is a significant driver of a company’s market performance. Management, however, has been carefully monitoring signs of improvement in the sales growth of cyclical industries. Most of the companies Management follows in the sector had been cutting costs fairly early in this down cycle and are now in a position to benefit from operating leverage. As more evidence of business improvement could be seen in the results reported in the fourth quarter of 2009 and from positive comments from corporate managements, the Fund increased its exposure to the cyclical sector, an action that also had the effect of raising the portfolio’s beta.

The number of the Fund’s holdings has been increased and new positions in the small and mid capitalization segments of the market have been initiated. As the Swiss economic recovery has been gaining strength, smaller companies have benefited from the upturn in business activities.

The main positive contributors to the Fund’s performance for the quarter were Swatch Group, Dufry Group, Zurich Financial Services and Temenos Group while Actelion and the Fund’s utility holdings were negative contributors.

The Fund benefited from its underweight in the banking sector and from its

overweight in the real estate sector. The Fund’s position remained relatively defensive at the end of the quarter with the small and mid-sized companies in the industrial sectors being slightly underweight and the allocations to the food and healthcare sectors being more in line with the SPI, the Fund’s benchmark. These allocations resulted in a slight underperformance compared to the SPI.

Sector Review

Food

Once again, Nestle’s growth and its continuing ability to generate cash proved it to be an attractive story compared to the rest of the sector. The company published strong results for the second half of 2009 with improvements in both pricing and sales volume. Nestle also announced that the proceeds from its sale of Alcon would finance acquisitions and a buy-back of at least 15 billion Swiss francs worth of its shares through 2011. The stock slightly outperformed the market during the quarter.

Financials, Banks, Insurance and Real Estate

In light of a string of positive macro-economic data, European financials managed to outperform the broad market. The low earnings base of financial companies led to very strong earnings growth compared to the prior year. In addition, bank loan loss provisions, although still elevated, improved, while the steep yield curve and the normalization of capital markets activity were propelling earnings for the financial sector. As

institutional and private investors started to become less risk averse, fee income was also normalized. In the aggregate, Swiss banks outperformed the European banks, gaining 7% in the first quarter of 2010. Compared to the prior year, however, the Swiss banking sector lagged the U.S. and European banking sectors due, in part, to regulatory pressures and the debate on banking secrecy that weighed significantly on some of the stocks.

The performance of the Swiss banks was roughly in line with the SPI (gaining more than 6%) in the first quarter of 2010. The insurance sector, however, dramatically outperformed the SPI, posting an increase of 13%. An important contributor to the Fund’s performance came from its position in Zurich Financial Services, which was up 19% for the quarter.

Early in the year, UBS was impacted by negative news related to a federal investigation. The Federal Administrative Court ruled that a 2009 FINMA order to hand over client data to U.S. authorities was unlawful. At the end of February 2010, the Swiss Federal Council decided to seek parliamentary approval of the Administrative Assistance Agreement between Switzerland and the U.S.by mid-year. As a result, UBS’ stock corrected by more than 20% between mid-January and mid-February before reports of improvements in fixed income trading and a reduction in net new money outflows allowed it to finish the quarter in line with the SPI. The Fund’s underweight position in Credit Suisse, due to Management’s cautious

sector outlook, ended the quarter with a marginal underperformance compared to the SPI. As a general matter, regulatory uncertainty has raised concerns about business models and the fundamental outlook for global banks. As a result, banks have limited their risks and are being cautious in their dividend strategies. Exact rules are expected to be announced by the end of 2010, following impact assessments, and are likely to be implemented by the end of 2012. The regulatory reforms likely will have an effect on capital requirements, liquidity and funding, resulting in a significant effect on balance sheet growth. This uncertainty might weigh on risk appetite and sector performance for some time.

The real estate sector delivered strong returns compared to the SPI. The stellar performance of PSP Swiss Property (+16%), Swiss Prime Site (+14%) and Mobimo (+8%) contributed positively as the Fund was over weighted in all three stocks. This sector has a dividend yield of between 4% and 5% and is able to distribute dividends as a return of capital because the payment is treated as reduction in the nominal value of the shares.

Healthcare and Chemicals

In an environment where the macro-economic indicators turned more positive, the pharmaceutical sector was penalized. Although healthcare stocks had a decent absolute return for the period (the S&P Healthcare Index was up +4.5%), investors played the economic recovery by investing in

the industrial and cyclical sectors that drove the performance of the major indexes. The total return on Roche was marginally positive (+0.5%) while Novartis (+4.4%) gained momentum on its purchase of Alcon (expected to close mid-2010), news flow from its product pipeline and its management reorganization with a newly appointed chief executive officer (CEO) and the split of its Chairman and CEO positions. The main catalyst for Novartis’ stock will be the regulatory outcome of its first multiple sclerosis drug, Gilenia, expected in mid-2010, and the clinical progress of other specialty care drugs. Positive news flow from its product pipeline should balance concerns about the impact on sales of its cardiovascular drug, Diovan, of the U.S. introduction of Merck’s generic version, Cozaar, in the second quarter of 2010. Roche was impacted by the lack of clinical efficacy of Avastin in additional therapeutic indications that could compromise its use in treating prostate and gastric cancer. Early in the year, the Fund increased its underweight position in Roche, since the stock was trading at a low historical value, and the Fund has maintained a market neutral stance on Novartis, reflecting Management’s strategic view on the sector allocation.

The companies’ European peers also performed poorly during the first quarter, reflecting investors’ general lack of interest in the defensive nature of the industry. Research and development productivity, future regulation of biogeneric drugs and adjustments to accommodate the new environment of healthcare reform continued

to be matters of concerns. Despite these issues, pharmaceutical companies have had an accommodating dividend policy and recent proposals to increase dividends were well received by the investors.

Passage of U.S. healthcare reform was nearly stopped in early January when the Democrats lost their supermajority in the Senate. The legislation was finally adopted with some differences between the House and the Senate proposals. Only minor changes, such as the obligation to cover children with pre-existing conditions, will affect the healthcare system before 2014. Beginning in 2014, the reform measures will be broadly applicable. The consequences of the reform for the pharmaceutical industry were well received by the market, which was relieved by the absence of a public option plan. In addition, the drug industry should benefit from the expansion of health coverage to the large number of still-uncovered Americans. Hospitals should also gain from broader coverage as, today, about 70% of hospital’s bad debts are associated with uninsured patients.

Pharmaceutical companies continued to further expand their restructuring programs, as early in the year GlaxosmithKline and AstraZenecca announced reductions in sales and administrative costs and in research and development programs. These initiatives are expected to have immediate effects on profitability. For the longer term, companies have taken strategic initiatives to protect their franchises (e.g. expanding the patent life of

a drug or combination therapies) and to continue to look for attractive acquisition opportunities. In that respect, merger and acquisitions, as well as in-licensing activities, will benefit biotech companies, which offer the most innovative pipeline.

While the biotech sector lagged behind world indexes during the recovery period, the Nasdaq Biotech Index outperformed the MSCI World Index by 8% in the first quarter 2010, demonstrating a return of interest in the sector. In Switzerland, however, the sector continued to be affected by negative news. Actelion’s Tracleer did not meet its primary objective in idiopathic pulmonary fibrosis. In anticipation of the results, Management reduced the Fund’s exposure in the stock.

In the chemical sector, volumes started to recover early in the quarter and prices are expected to follow in the medium term. The gain in operating margins and net results will be dependent on cost cutting programs, which were implemented in varying degrees within the industry. In the area of crop protection chemicals and seeds, Syngenta’s performance will depend to some extent on weather conditions and on the visibility of the planting season in the Northern Hemisphere. In the crop protection business, the market contraction and increasing competition should continue to be a source of concern.

Utilities

The Fund reduced its exposure to the utility sector during the quarter. The allocation to this sector beyond its benchmark weight had been a drag on the Fund’s performance in 2009 and in the first quarter of 2010. Despite positive long-term prospects for electricity prices, the short to medium term outlook is negatively affected by greater price regulation and the need for increased capital expenditures. These factors also serve to keep dividends payouts at lower levels.

Investment Themes: Capital Expenditure and Consumer Spending in Emerging Markets

One of the Fund’s investment themes is the necessity for emerging markets to catch up to the increase in capital expenditure experienced by most markets. Capital expenditures have been lower than the depreciation of fixed assets for a long period, beginning with the implosion of the technology bubble in 2000. The current increase in global economic activity, combined with an increase in inflation, is expected to result in a return of confidence by corporate managers allowing for a resumption of investments. Corporate balance sheets, especially in the non-financial world, are very sound and the cost of issuing debt continues to go down. Switzerland offers an interesting array of mid and small capitalization companies in addition to a few large ones that are leaders in their fields and could benefit from that trend.

Because of the limited trading volume in some of these smaller companies, positions are built gradually. Expected returns have to

be large enough to compensate for additional risk and the potential negative market impact of exiting positions. Management is concentrating on companies with pricing power due to market share leadership, to products which add value that is not easily matched or to serving local markets that are not influenced by global prices.

“Global brands” has also been an investment topic for the Fund this year. Management believes that global brands benefit from the structural uptrend in consumer spending in emerging markets without incurring pricing pressure from local competition. Strong brands have shown an ability to provide protection against price erosion and have allowed companies owning them to generate sustainable high return on equity over a business cycle.

Sales development for Swiss global brands, such as the ones owned by Swatch Group and Richemont, were positive again in the first quarter due to restocking and strong demand in Asia.

Another way to gain exposure to emerging market consumer spending is through international travel. The Fund has increased its exposure to Dufry Group, a duty free retailer concentrating on travel within the Mediterranean, Asian and Latin America “corridors”. The company completed a merger with its Brazilian subsidiary at the end of March. The merger will lead to a simpler structure and significantly higher market capitalization.

Private Equity

The Fund’s private equity investments have remained unchanged since the last quarter of 2009. These holdings include two limited partnerships (Zurmont Madison and Aravis Biotech II) and three direct equity

investments (Synosia Therapeutics AG,

Kuros Biosurgery AG and NovImmune AG). As of March 31, 2010, these investments represent a total commitment of approximately 3.5%. An additional direct investment is expected to close in the second quarter of 2010.

Indices Performance Comparison

Source: Citi Fund Services Ohio, Inc.

Outlook

The Swiss economy has emerged from the global economic crisis in better shape than most other developed economies thanks, among other factors, to a more prudent fiscal policy. Robust Swiss macro-economic data and the better-than-expected earnings figures should create a strong base for positive returns in Swiss equities in 2010. Companies’ profit growth should continue to be the fundamental driving force for the equity market even if short-lived market corrections occur after the twelve month rally started in March 2009. Meanwhile, risk aversion could resurge in the second quarter of

2010, implying higher volatility due to the exit strategies of the central banks and the end of fiscal stimulus in the developed economies. Since a further expansion of price to earnings multiples is unlikely, a recovery of top line growth will be crucial in the selection of stocks. The liquidity driven bull market is slowing and giving way to a phase that will likely be driven by expanding corporate profits. Emerging markets are already witnessing a contraction of free liquidity (the creation of liquidity in excess of GDP growth).

In this market environment, growth will come primarily from a continuation of the inventory cycle, modest consumer spending and a rise in capital expenditures. With the likelihood that inflation and interest rates will remain low for some time in the Eurozone, Swiss equities should be attractive compared to other investment alternatives. Swiss equities should continue to benefit from better-than-expected earnings as well as top line growth since they do not totally reflect the leverage from a robust economic rebound. Companies are at the point where they need to increase capital spending.

In mid-April the International Monetary Fund increased its forecast for global GDP growth in 2010 from 4.0% to 4.3% with high disparities among regions which could create volatility in currency trading. 2011 will be a more difficult year as government stimuli are withdrawn.

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:

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 AST begins to buy Fund shares for your account at a discount to net asset value but, during the course of the purchases, the Fund’s market price increases to a level above the net asset value, AST will complete its purchases, even 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.