As filed with the Securities and Exchange Commission on August 19, 2004
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, 2004
ITEM 1. REPORTS TO STOCKHOLDERS.
THE SWISS HELVETIA FUND, INC.
--------------------------------------------------------------------------------
Directors and Officers
Paul Hottinguer Samuel B. Witt III, Esq.**
CHAIRMAN DIRECTOR
Eric R. Gabus+ Rodolphe E. Hottinger
VICE CHAIRMAN (NON-OFFICER) PRESIDENT
CHIEF EXECUTIVE OFFICER
Paul R. Brenner, Esq.
DIRECTOR Rudolf S. Millisits
SENIOR VICE PRESIDENT
Alexandre de Takacsy TREASURER
DIRECTOR
Philippe R. Comby
Claude Frey VICE PRESIDENT
DIRECTOR
Edward J. Veilleux
Baron Hottinger VICE PRESIDENT
DIRECTOR SECRETARY
Claude Mosseri-Marlio* Leslie K. Klenk
DIRECTOR ASSISTANT SECRETARY
Didier Pineau-Valencienne* Frederick Skillin
DIRECTOR ASSISTANT TREASURER
Stephen K. West, Esq. Sara M. Morris
DIRECTOR ASSISTANT TREASURER
------------------------------------------------------
* Audit Committee member + Governance/Nominating
** Audit Committee chairman Committee chairman
INVESTMENT ADVISOR
Hottinger Capital Corp.
1270 Avenue of the Americas, Suite 400
New York, New York 10020
(212) 332-7930
ADMINISTRATOR
Forum Administrative Services, LLC
(member Citigroup Global Transaction Services)
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, 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
http://www.swz.com
The Fund
The Swiss Helvetia Fund, Inc. is a non-diversified, closed-end investment
company whose objective is to seek long-term capital appreciation through
investment in equity and equity-linked securities of Swiss companies. The Fund,
listed on the New York Stock Exchange under the symbol "SWZ," is managed by
Hottinger Capital Corp.
The Fund has earned the Lipper, Inc. award for ranking number one among Western
European closed-end funds in ten year performance for the periods ended December
31, 2002, 2001, 2000, 1999, and 1998*. The Fund has previously been recognized
for its top one year performance in the same category for the year 2000. The
Fund also maintained Morningstar's overall rating of four stars as of June 30,
2004**. Of course, past performance is no guarantee of future results. See
footnotes on page 3 for more information.
Net Asset Value is calculated daily by 6:15 P.M. (Eastern Time). The most recent
calculation is available by calling 1-888-SWISS-00 or by accessing our Website.
Weekly Net Asset Value is also published in Barron's, the Monday edition of The
Wall Street Journal and the Sunday Edition of The New York Times.
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THE SWISS HELVETIA FUND, INC.
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Letter to Stockholders
GLOBAL MARKET OVERVIEW
The long awaited interest rate increase took place at the June 30, 2004
meeting of the Federal Reserve (the "Fed"). By increasing rates by only 25 basis
points, the Fed did not surprise the market and kept rates below expected
inflation, a position that can still be viewed as very accommodative. U.S.
monetary policy is widely expected to be changed at a measured pace, especially
since the effect of higher market rates leading up to the Fed meeting was
already being felt, slowing down some sectors of the economy. This slow
tightening pace is likely to put even more selling pressure on the U.S. dollar
due to its increasingly real yield disadvantage.
Volatility and trading volume have been low in the second quarter in most
of the world markets. Large capitalization stocks have usually outperformed
small and mid capitalization stocks, as markets have become narrower, with fewer
stocks holding up the indices. Energy was the big winner as oil prices, defying
expectations, went from $30 to $40 a barrel. Financial services stocks were weak
as investors anticipated that the peak of the earning cycle had been reached.
The raw materials and industrial metals sectors were volatile due to concerns
about the magnitude of the slowdown in Chinese demand precipitated by the
implementation of government policies aimed at bringing inflation under control.
However, its underlying trend remains up.
Overall the sideways price action in stocks reflected investors' fears that
operating margins have no room left to expand and that sales are reaching a
plateau in the current cycle as U.S. consumer spending lacks the stimulus of tax
reductions and mortgage refinancings this time around.
SWISS ECONOMIC NOTES
On June 17, 2004, the Swiss National Bank (SNB) increased the target range
for the three-month LIBOR by 25 basis points. The interest rate range extends
now from 0.0% to 1.0%. This move reverses half of the latest interest rate cut
of March 6, 2003. Even after this adjustment, the SNB affirmed that its monetary
policy would remain expansionary and would continue to support the economic
upswing.
Real gross domestic product in the third and fourth quarters of 2003 grew
at an annualized rate of more than 2% compared with the previous quarter. In the
first quarter of this year the trend continued at a slightly weaker rate of
1.6%. The SNB is forecasting economic growth of close to 2% for this year.
More evidence of the economic upswing is the stabilization of the labor
market. As of June 30, 2004, the unemployment rate was 3.7%, down from a 5-year
high point of 4.1% reached in January.
The SNB noted that inflation remained within the range that equates with
price stability despite rising oil prices. A strong Swiss franc helped, to a
certain extent, to offset the increase in the oil prices. On the assumption that
the three-month LIBOR will
2
THE SWISS HELVETIA FUND, INC.
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Letter to Stockholders (continued)
remain stable at 0.5%, the SNB forecasts that average annual inflation will
amount to 0.6% this year, 1% in 2005 and 2% in 2006.
The ten-year spot interest rate on Confederation bonds climbed from its
lowest level of 2.37% in mid March to 2.87% at the end of June.
SWISS MARKET REVIEW AND FUND PERFORMANCE
The Swiss market was resilient, with the Swiss Performance Index ("SPI")
showing a return of 4% in U.S. dollar terms with a currency appreciation of
1.27%. The Fund outperformed the SPI by 0.15% due to the good performance of
most of the mid capitalization stocks in which the Fund has substantial
positions.
The best performing sectors on the Swiss market year-to-date were
Construction (+25.3%), led by Holcim Ltd. which increased by 23% helped by its
exposure to emerging markets; Basic Resources (+22.4%), mainly led by increasing
demand in steel; Utility Suppliers (+19%) led by energy stocks; and, finally,
Chemicals (+12.3%), led mainly by Syngenta AG, which increased by 27% thanks to
the increasing demand in seeds and crop protection products.
As shown in the following table, the Fund's cumulative performance since
1996 continues to be superior to its Swiss peers and its benchmark. As of June
30, 2004, the Fund maintained an overall rating of four stars from Morningstar.
Past performance is no guarantee of future results.
*Lipper, Inc. is an independent fund performance monitor. As of December 31,
2003, there were 8 funds in the Lipper Western European closed-end funds
category, which is comprised of funds that concentrate their investments in
equity securities whose primary trading markets or operations are in the Western
European region or a single country within this region.
**Morningstar is an independent fund performance monitor. Its ratings reflect
historic risk-adjusted performance and may change monthly. Its ratings of one
(low) and five (high) stars are based on a fund's three- and five-year average
annual total returns with fee adjustments, and a risk factor that reflects fund
performance relative to three-month Treasury Bill monthly returns. Only 33% of
the funds in an investment category may receive four or five stars. As of June
30, 2004, there were 10 funds in the Fund's asset category rated by Morningstar.
3
THE SWISS HELVETIA FUND, INC.
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----------------------------------------------------------------------------------------------------------------------
PEER GROUP/INDICES PERFORMANCE COMPARISON IN SWISS FRANCS(1)
----------------------------------------------------------------------------------------------------------------------
CUMULATIVE
YEAR ENDED DECEMBER 31, PERFORMANCE
YTD AS OF --------------------------------------------------------------- 12/31/96 -
6/30/04 2003 2002 2001 2000 1999 1998 1997 06/30/04
----------------------------------------------------------------------------------------------------------------------
SWISS HELVETIA FUND 5.32% 22.54% -20.40% -22.91% 14.06% 14.70% 15.57% 53.99% 84.39%
----------------------------------------------------------------------------------------------------------------------
Swiss Performance Index (SPI) 5.17% 22.06% -25.95% -22.03% 11.91% 11.69% 15.36% 55.19% 65.85%
----------------------------------------------------------------------------------------------------------------------
Swiss Market Index (SMI) 2.39% 18.51% -27.84% -21.11% 7.47% 5.71% 14.28% 58.93% 42.53%
----------------------------------------------------------------------------------------------------------------------
Switzerland iShares(2) (Formerly
called webs Switzerland) 3.88% 19.14% -26.23% -23.12% 7.75% 12.22% 11.74% 47.79% 40.16%
----------------------------------------------------------------------------------------------------------------------
CS Equity Swiss Blue
Chips(3, 7) 2.67% 18.13% -28.75% -22.12% 10.97% 7.57% 14.21% 59.90% 46.71%
----------------------------------------------------------------------------------------------------------------------
UBS Equity Inv.
Switzerland(4, 7) 5.03% 18.14% -26.02% -22.04% 7.42% 6.43% 12.75% 55.94% 43.85%
----------------------------------------------------------------------------------------------------------------------
Pictet Valsuisse(5, 7) 5.80% 20.10% -27.93% -22.35% 7.34% 9.38% 11.05% 55.65% 44.31%
----------------------------------------------------------------------------------------------------------------------
Saraswiss (Bank
Sarasin)(6, 7) 3.39% 19.64% -28.51% -24.45% 9.72% 7.10% 14.41% 53.57% 37.94%
Sources: Bloomberg, Management Companies' web sites, Investment Company Capital
Corp., and Citigroup Global Transaction Services.
(1) Performance of funds is based on changes in the fund's NAV over a specified
period. In each case total return is calculated assuming reinvestment of all
distributions. Funds listed, other than Switzerland iShares, are not registered
with the Securities and Exchange Commission. Performance and descriptive
information about the funds are derived from their published investor reports
and websites, which are subject to change.
(2) Switzerland iShares are traded on the New York Stock Exchange and invest in
most of the same stocks listed in the Morgan Stanley Capital International
(Switzerland) Index. These stocks represent Switzerland's largest and most
established public companies, accounting for approximately 85% of the market
capitalization of all of Switzerland's publicly traded stocks. Performance of
iShares is calculated based upon the closing prices of the period indicated
using the Swiss franc/U.S. dollar exchange rate as of noon each such date, as
reported by Bloomberg. Such exchange rates were as follows: 12/31/96 = 1.35,
12/31/97 = 1.46, 12/31/98 = 1.38, 12/31/99 = 1.60, 12/31/00 = 1.61, 12/31/01 =
1.67, 12/31/02 = 1.39, 12/31/03 = 1.24 and 6/30/04 = 1.25.
(3) This fund invests in equities issued by leading Swiss companies. Stock
selection is based on economic, sector and company analyses. Preference is given
to large-cap companies.
(4) This fund invests primarily in major Swiss companies. Quality criteria used
for determining relative weightings of companies include: strategic orientation,
strength of market position, quality of management, soundness of earnings,
growth potential and potential for improving shareholder value. The investment
objective seeks to provide results that are aligned with the SPI performance.
(5) This fund invests in shares of Swiss companies listed on the Swiss Stock
Exchange (SWX) and included in the SPI.
(6) This fund invests in shares of Swiss companies. It weights individual
sectors relative to the SPI on the basis of their expected relative performance.
It focuses on liquid blue-chip stocks.
(7) These funds are not available for U.S. residents or citizens.
Past performance is no guarantee of future results.
4
THE SWISS HELVETIA FUND, INC.
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Letter to Stockholders (continued)
--------------------------------------------------------
YEAR TO DATE
DECEMBER 31, 2003
THROUGH
JUNE 30, 2004
--------------------------------------------------------
PERFORMANCE IN SWISS FRANCS
Swiss Performance Index (SPI) 5.17%
--------------------------------------------------------
Swiss Helvetia Fund
--------------------------------------------------------
Based on Net Asset Value 5.32%
--------------------------------------------------------
CHANGE IN U.S. DOLLAR VS. SWISS FRANC 1.27%
--------------------------------------------------------
PERFORMANCE IN U.S. DOLLARS
--------------------------------------------------------
Swiss Helvetia Fund
--------------------------------------------------------
Based on Net Asset Value 4.00%
--------------------------------------------------------
Based on Market Price 2.54%
--------------------------------------------------------
S & P 500 Index 3.44%
--------------------------------------------------------
MSCI EAFE Index 4.56%
--------------------------------------------------------
Lipper European Fund Index (10 Largest) 3.18%
--------------------------------------------------------
Lipper European Fund Universe Average 3.30%
--------------------------------------------------------
OUTLOOK
Abundant uncertainties and high earnings expectations, especially for 2005,
increased the risk for equity investments. However, reasonable historical
valuations and the lack of other investment opportunities in a world of low
fixed-income yields are supportive factors.
In historic terms, the Swiss market's valuation is favorable, with stock
prices discounting a more difficult future, mainly in the insurance and banking
sectors. Industrial and construction companies continue to represent an
interesting long-term opportunity due to their exposure to the emerging markets.
Their performance was among the strongest on the Swiss market year-to-date.
The defensive segment of the market, which is very large for Switzerland
(about 50% of the market is represented by consumer staples and healthcare
companies), has held well and should be resilient in the case of slower global
economic growth. Moreover, it would be beneficial if long-term bond yields
stayed on a moderate upward path, as has been the case in the second quarter
under review. In fact, contrary to our expectations, U.S. long bond yields have
come down since mid June despite the weakening of the U.S. currency and the size
of the budget deficit. This shows investor nervousness about the projection for
economic expansion.
In that context, Management believes that the short term performance of
economically sensitive sectors and the market overall will be muted, with a
sequential decline, most likely in the third quarter, in sales numbers for
numerous companies, especially in the technology area.
STOCK REPURCHASE PROGRAM
Pursuant to authorization by the Board, the Fund began open market
purchases of its common stock on the New York Stock Exchange in 1999 and has
continued purchases in each subsequent year. The principal purpose of the stock
repurchase program is to enhance stockholder value by increasing the Fund's net
asset value per share without creating a meaningful adverse effect upon the
Fund's expense ratio and without realizing capital gains in order to fund the
repurchases. The Board has authorized the purchase of up to 500,000 shares in
2004. During the six months ended June 30,
5
THE SWISS HELVETIA FUND, INC.
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Letter to Stockholders (concluded)
2004, the Fund repurchased and retired 128,400 shares at an average price of
$12.89 per share (including brokerage commissions) and a weighted average
discount of 17.86%. These repurchases, which had a total cost of $1,654,922,
resulted in an increase of $359,779 to the Fund's net asset value
Sincerely,
/s/ Paul Hottinguer
Paul Hottinguer
CHAIRMAN
/s/ Rodolphe Hottinger
Rodolphe Hottinger
PRESIDENT AND CHIEF EXECUTIVE OFFICER
June 30th, 2004
6
THE SWISS HELVETIA FUND, INC.
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Review of Operations (Unaudited)
Trading activity for the six months ended June 30, 2004 involved changes in the
following positions:
-------------------------------------------------------
NEW INVESTMENTS BY THE FUND
-------------------------------------------------------
Cytos Biotechnology AG
Elektrizitaets-Gesellschaft Laufenburg AG
Huber & Suhner AG
Lonza Group AG
Swiss Life Holding
Zurich Financial Services AG
-------------------------------------------------------
ADDITIONS TO EXISTING INVESTMENTS
-------------------------------------------------------
Actelion Ltd.
Holcim Ltd. -- Registered
Kuehne & Nagel International AG
Swiss Reinsurance Company
Syngenta AG
Temenos Group AG
-------------------------------------------------------
SECURITIES DISPOSED OF
-------------------------------------------------------
Adecco SA
Converium Holding AG
Kudelski SA
Unaxis Holding AG
-------------------------------------------------------
REDUCTIONS IN EXISTING INVESTMENTS
-------------------------------------------------------
ABB Ltd.
Charles Voegele Holding AG
Credit Suisse Group
Geberit AG
Logitech International SA
Micronas Semiconductor Holding AG
Phonak Holding AG
SGS Societe Generale de Surveillance Holding SA
7
THE SWISS HELVETIA FUND, INC.
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Schedule of Investments (Unaudited) June 30, 2004
Percent
No. of of Net
Shares Security Value Assets
----------------------------------------------------------------
COMMON STOCKS -- 95.23%
BANKS -- 10.47%
243,000 CREDIT SUISSE GROUP
Registered Shares $ 8,634,222 2.30%
A global operating financial
group.
(Cost $6,575,873)
435,000 UBS AG(2)
Registered Shares 30,652,148 8.17%
Largest Swiss bank. It offers
consumer, business and
construction loans, mortgages,
mutual funds, export and
structured finance and
securities brokerage services,
advises on mergers and
acquisitions, invests pension
funds and sponsors credit
cards.
(Cost $7,578,949)
------------ ------
39,286,370 10.47%
BIOTECHNOLOGY -- 5.05%
157,491 ACTELION LTD.(1,2)
Registered Shares 18,108,196 4.82%
Pharmaceutical company that
develops and markets synthetic
small-molecule drugs against
diseases related to the
endothelium. The Company's
drugs, Veletri and Tracleer,
are used in the treatment of
heart and pulmonary
conditions.
(Cost $12,538,145)
Percent
No. of of Net
Shares Security Value Assets
----------------------------------------------------------------
COMMON STOCKS -- 95.23%
BIOTECHNOLOGY -- (CONTINUED)
35,487 CYTOS BIOTECHNOLOGY AG(1)
Registered Shares $ 878,391 0.23%
Develops and produces
biopharmaceuticals. Produces
vaccines that immunize the
patient against
disease-related proteins. This
instructs the immune system to
produce antibodies to reverse
or prevent disease
progression.
(Cost $1,433,020)
------------ ------
18,986,587 5.05%
CHEMICALS -- 7.89%
30,000 LONZA GROUP AG
Registered Shares 1,519,882 0.41%
The leading supplier of active
chemical ingredients,
intermediaries, and
biotechnology solutions to the
pharmaceutical and
agrochemical industries.
(Cost $1,535,111)
16,783 SIKA AG
Bearer Shares 9,233,062 2.46%
Leading producer of
construction chemicals.
(Cost $4,237,473)
224,931 SYNGENTA AG(2)
Registered Shares 18,857,997 5.02%
Produces herbicides,
insecticides and fungicides,
and seeds for field crops,
vegetables, and flowers.
(Cost $14,859,223)
------------ ------
29,610,941 7.89%
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THE SWISS HELVETIA FUND, INC.
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Schedule of Investments (Unaudited) (continued) June 30, 2004
Percent
No. of of Net
Shares Security Value Assets
----------------------------------------------------------------
COMMON STOCKS -- (CONTINUED)
CONSTRUCTION -- 6.81%
20,758 GEBERIT AG(2)
Registered Shares $ 13,839,772 3.69%
Manufactures and supplies
water supply pipes and
fittings, installation
systems, drainage and flushing
systems such as visible
cisterns, and other sanitary
systems for the commercial and
residential construction
markets.
(Cost $7,721,250)
215,143 HOLCIM LTD.(2)
Registered Shares 11,698,529 3.12%
Produces and markets various
building materials, in
addition to providing
consulting and engineering
services in all areas of the
cement manufacturing process.
(Cost $10,483,804)
------------ ------
25,538,301 6.81%
FOOD & BEVERAGES -- 15.65%
300 LINDT & SPRUNGLI AG
Registered Shares 3,539,205 0.94%
Major manufacturer of premium
Swiss chocolates.
(Cost $1,196,399)
207,000 NESTLE AG(2)
Registered Shares 55,204,407 14.71%
Largest food and beverage
processing company in the
world.
(Cost $12,427,541)
------------ ------
58,743,612 15.65%
Percent
No. of of Net
Shares Security Value Assets
----------------------------------------------------------------
COMMON STOCKS -- (CONTINUED)
HEALTH CARE -- 28.71%
1,315,000 NOVARTIS AG(2)
Registered Shares $ 58,011,618 15.46%
One of the leading
manufacturers of
pharmaceutical and nutrition
products.
(Cost $16,301,451)
261,766 PHONAK HOLDING AG
Registered Shares 8,140,998 2.17%
Designs and produces wireless
analog and digital hearing
aids, transmitters, remote
controls, microphones and
receivers for use in wireless
communications within
broadcasting and sports.
(Cost $2,469,614)
420,000 ROCHE HOLDING AG(2)
Dividend Rights Certificates 41,584,158 11.08%
Worldwide pharmaceutical
company.
(Cost $8,467,363)
------------ ------
107,736,774 28.71%
INDUSTRIAL GOODS & SERVICES -- 6.57%
1,924,725 ABB LTD.(1)
Registered Shares 10,527,281 2.80%
The holding company for ABB
Group which is one of the
largest electrical engineering
firms in the world.
(Cost $7,367,303)
2,055 BELIMO HOLDING AG
Registered Shares 994,355 0.26%
World market leader in damper
and volume control actuators
for ventilation and
air-conditioning equipment.
(Cost $450,523)
9
THE SWISS HELVETIA FUND, INC.
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Schedule of Investments (Unaudited) (continued) June 30, 2004
Percent
No. of of Net
Shares Security Value Assets
----------------------------------------------------------------
COMMON STOCKS -- (CONTINUED)
INDUSTRIAL GOODS & SERVICES -- (CONTINUED)
4,500 KABA HOLDINGS AG
Bearer Shares $ 928,817 0.25%
Provides mechanical and
electronic security systems.
(Cost $809,667)
59,885 KUEHNE & NAGEL INTERNATIONAL
AG
Registered Shares 8,630,823 2.30%
Operates sea freight, land and
rail transportation businesses
and warehousing and
distribution facilities.
(Cost $3,674,112)
6,598 SGS SOCIETE GENERALE DE
SURVEILLANCE HOLDING SA
Registered Shares 3,603,507 0.96%
Provides a variety of
industrial inspection,
analysis, testing and
verification services
worldwide.
(Cost $1,709,324)
------------ ------
24,684,783 6.57%
INSURANCE -- 7.25%
43,803 SWISS LIFE HOLDING
Registered Shares 6,111,924 1.63%
Provides life insurance,
institutional investment
management, and private
banking services.
(Cost $5,802,507)
104,088 SWISS REINSURANCE COMPANY
Registered Shares 6,761,066 1.80%
Second largest reinsurance
company in the world.
(Cost $6,640,407)
Percent
No. of of Net
Shares Security Value Assets
----------------------------------------------------------------
COMMON STOCKS -- (CONTINUED)
INSURANCE -- (CONTINUED)
90,849 ZURICH FINANCIAL SERVICES
AG(2)
Registered Shares $ 14,344,770 3.82%
Offers property, accident,
health, automobile, liability,
financial risk and life
insurance and retirement
products.
(Cost $15,062,591)
------------ ------
27,217,760 7.25%
RETAILERS -- 1.29%
26,984 CHARLES VOEGELE HOLDING AG
Bearer Shares 1,120,383 0.30%
Family apparel retailer which
focuses on the value-for-money
segment of the market.
Operates retail stores in
Switzerland, Germany, Austria,
and the Benelux region.
(Cost $708,999)
24,767 GALENICA HOLDING AG
Registered Shares 3,727,706 0.99%
Manufactures and distributes
prescription and
over-the-counter drugs,
toiletries and hygiene
products.
(Cost $3,158,881)
------------ ------
4,848,089 1.29%
TECHNOLOGY -- 4.65%
30,526 HUBER & SUHNER AG
Registered Shares 2,047,416 0.55%
Manufactures a wide range of
products, extending from
cables for energy and
electrical submission to
special products such as
rubber.
(Cost $1,759,815)
10
THE SWISS HELVETIA FUND, INC.
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Schedule of Investments (Unaudited) (concluded) June 30, 2004
Percent
No. of of Net
Shares Security Value Assets
----------------------------------------------------------------
COMMON STOCKS -- (CONCLUDED)
TECHNOLOGY -- (CONTINUED)
272,765 LOGITECH INTERNATIONAL SA(1,2)
Registered Shares $ 12,414,249 3.31%
Manufactures personal computer
input devices, as well as
producing trackballs, desktop
publishing programs and
related software.
(Cost $9,769,349)
15,774 MICRONAS SEMICONDUCTOR HOLDING
AG(1)
Registered Shares 717,286 0.19%
Develops and manufactures a
wide range of semiconductors
and modules used by the
automotive and consumer goods
industries.
(Cost $339,721)
247,012 TEMENOS GROUP AG(1)
Registered Shares 2,258,294 0.60%
Provides integrated software
for the banking sector.
Develops, distributes,
implements, and supports its
process-oriented real-time
enterprise software designed
for the management of
administrative tasks in
Europe, North America, Asia,
and the Middle East.
(Cost $1,823,741)
------------ ------
17,437,245 4.65%
Percent
No. of of Net
Shares Security Value Assets
----------------------------------------------------------------
COMMON STOCKS -- (CONCLUDED)
UTILITY SUPPLIERS -- 0.89%
5,000 ELEKTRIZITAETS-GESELLSCHAFT
LAUFENBURG AG
Registered Shares $ 3,325,615 0.89%
Generates and sells
electricity. Operates nuclear
and hydroelectric generating
plants. Sells excess power
throughout Europe.
(Cost $3,394,560)
------------ ------
3,325,615 0.89%
TOTAL COMMON STOCKS
(Cost $170,296,716) $357,416,077 95.23%
OTHER ASSETS IN EXCESS OF
LIABILITIES 17,893,941 4.77%
------------ ------
NET ASSETS $375,310,018 100.00%
============ ======
--------------------------------------------------------------------------------
(1) NON-INCOME PRODUCING SECURITY.
(2) ONE OF THE TEN LARGEST PORTFOLIO HOLDINGS.
SEE NOTES TO FINANCIAL STATEMENTS.
11
THE SWISS HELVETIA FUND, INC.
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Statement of Assets and Liabilities (Unaudited) June 30, 2004
--------------------------------------------------------------------------------
ASSETS:
Investments, at value (cost $170,296,716)............................. $357,416,077
Cash............................................................... 371,562
Foreign currency (cost $20,996,006)................................ 22,014,411
Tax reclaims receivable............................................ 762,614
Prepaid expenses and other......................................... 22,365
------------
Total assets.................................................. 380,587,029
------------
LIABILITIES:
Unrealized loss on currency contracts................................. 7,561
Payable for securities purchased...................................... 4,724,690
Advisory fees payable (Note 2)........................................ 240,927
Directors' fees and expenses.......................................... 73,851
Accrued expenses and other............................................ 229,982
------------
Total liabilities................................................... 5,277,011
------------
Net assets.......................................................... $375,310,018
------------
COMPOSITION OF NET ASSETS:
Paid in capital....................................................... 170,663,554
Distributable earnings
Undistributed net investment income.................... 1,836,465
Accumulated net realized gain from investment and
foreign currency transactions........................ 14,648,296
Net unrealized appreciation on investments and foreign
currency.................................................. 188,161,703
-----------
Total distributable earnings........................................ 204,646,464
------------
Net assets............................................................... $375,310,018
------------
NET ASSET VALUE PER SHARE:
($375,310,018 / 23,969,918 shares outstanding)........................ $ 15.66
============
--------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS.
12
THE SWISS HELVETIA FUND, INC.
--------------------------------------------------------------------------------
Statement of Operations (Unaudited) For the Six Months Ended June 30, 2004
--------------------------------------------------------------------------------
INVESTMENT INCOME:
Dividends (less foreign taxes withheld of $719,473)...... $ 3,902,158
Interest................................................. 31,354
Securities lending income................................ 30,581
-----------
Total income.......................................... 3,964,093
-----------
EXPENSES:
Investment advisory fees (Note 2)........................ 1,472,041
Professional fees........................................ 101,048
Directors' fees & expenses............................... 138,283
Administration fees...................................... 135,993
Custody fees............................................. 72,311
Printing and shareholder reports......................... 27,094
Accounting fees.......................................... 48,566
Transfer agent fees...................................... 20,064
Miscellaneous............................................ 112,073
-----------
Total expenses........................................ 2,127,473
-----------
Net investment income................................. 1,836,620
-----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND
FOREIGN CURRENCY:
Net realized gain (loss) from:
Investment transactions............................... 15,462,062
Foreign currency transactions......................... (264,073)
Net change in unrealized appreciation/depreciation from:
Investment transactions............................... (4,282,094)
Foreign currency translations......................... 460,550
-----------
Net Realized and Unrealized Gain (Loss) on Investments
and Foreign Currency................................. 11,376,445
-----------
NET INCREASE IN NET ASSETS FROM OPERATIONS.................. $13,213,065
===========
--------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS.
13
THE SWISS HELVETIA FUND, INC.
--------------------------------------------------------------------------------
Statement of Changes in Net Assets
For the For the
Six Months Ended Year Ended
June 30, 2004(1) December 31, 2003
-------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment (expenses in excess of) income.......... $ 1,836,620 $ (224,573)
Net realized gain (loss) from:
Investment transactions............................. 15,462,062 15,418,356
Foreign currency transactions....................... (264,073) 6,289,626
Net change in unrealized appreciation/depreciation
from:
Investments......................................... (4,282,094) 84,616,279
Foreign currency.................................... 460,550 (3,997,843)
------------ ------------
Net increase in net assets from operations............. 13,213,065 102,101,845
------------ ------------
DISTRIBUTIONS TO STOCKHOLDERS FROM:
Net investment income and net realized gains from
foreign currency transactions....................... (2,594,895) (3,470,158)
In excess of net investment income..................... (155) --
Net realized capital gains............................. (2,638,721) (13,579,287)
------------ ------------
Total distributions to stockholders................. (5,233,771) (17,049,445)
------------ ------------
CAPITAL SHARE TRANSACTIONS:
Value of shares issued in reinvestment of dividends and
distributions....................................... -- 5,961,904
Value of shares repurchased through stock buyback...... (1,654,922) (1,827,374)
------------ ------------
Total increase (decrease) from capital share
transactions........................................ (1,654,922) 4,134,530
------------ ------------
Total increase in net assets........................... 6,324,372 89,186,930
NET ASSETS:
Beginning of period.................................... 368,985,646 279,798,716
------------ ------------
End of period (including undistributed net investment
income of $1,836,465 and $2,594,895,
respectively)....................................... $375,310,018 $368,985,646
============ ============
--------------------------------------------------------------------------------
(1) UNAUDITED.
SEE NOTES TO FINANCIAL STATEMENTS.
14
THE SWISS HELVETIA FUND, INC.
--------------------------------------------------------------------------------
Financial Highlights
For the
Six Months
Ended For the Years Ended December 31,
June 30, ----------------------------------------------------
2004(1) 2003 2002 2001 2000 1999
------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE:
Net asset value at beginning of
period.............................. $ 15.31 $ 11.82 $ 13.16 $ 17.92 $ 17.52 $ 19.07
-------- -------- -------- -------- -------- --------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (expenses in
excess of income)................... 0.08 (0.01) (0.02) (0.03) --(2) 0.01
Net realized and unrealized gain
(loss) on investments(3)............ 0.48 4.24 (0.71) (4.34) 1.68 (0.60)
-------- -------- -------- -------- -------- --------
Total from investment operations...... 0.56 4.23 (0.73) (4.37) 1.68 (0.59)
-------- -------- -------- -------- -------- --------
Gain from capital share repurchases... 0.01 0.02 0.02 0.06 0.21 0.12
Capital charge resulting from the
issuance of fund shares............. -- (0.06) -- (0.14) (0.12) --
-------- -------- -------- -------- -------- --------
LESS DISTRIBUTIONS:
Dividends from net investment income
and net realized gains from foreign
currency transactions............... (0.11) (0.14) (0.06) -- -- (0.03)
Dividends in excess of net investment
income.............................. --(2) -- (0.01) -- -- --
Distributions from net realized
capital gains....................... (0.11) (0.56) (0.56) (0.31) (1.37) (1.05)
-------- -------- -------- -------- -------- --------
Total distributions................... (0.22) (0.70) (0.63) (0.31) (1.37) (1.08)
-------- -------- -------- -------- -------- --------
Net asset value at end of period...... $ 15.66 $ 15.31 $ 11.82 $ 13.16 $ 17.92 $ 17.52
======== ======== ======== ======== ======== ========
Market value per share at end of
period.............................. $ 13.03 $ 12.92 $ 9.64 $ 11.00 $ 14.50 $ 13.81
======== ======== ======== ======== ======== ========
TOTAL INVESTMENT RETURN(4):
Based on market value per share....... 2.54% 41.76% (4.46)% (22.10)% 15.06% (7.06)%
Based on net asset value per share.... 4.00% 37.00% (6.92)% (24.94)% 12.11% (1.09)%
RATIOS TO AVERAGE NET ASSETS:
Expenses.............................. 1.13%(5) 1.30% 1.31% 1.39%(6) 1.16% 1.11%
Net investment income (expenses in
excess of income)................... 0.98%(5) (0.07)% (0.14)% (0.23)% 0.01% 0.05%
SUPPLEMENTAL DATA:
Net assets at end of period (000s).... $375,310 $368,986 $279,799 $314,436 $415,315 $416,599
Average net assets during period
(000's)............................. $376,963 $306,563 $308,018 $341,806 $422,426 $428,072
Stockholders of record(7)............. 923 964 1,001 1,067 1,125 1,230
Portfolio turnover rate............... 17% 89% 83% 32% 25% 14%
--------------------------------------------------------------------------------
(1) UNAUDITED.
(2) LESS THAN $.01 PER SHARE.
(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.
(5) ANNUALIZED.
(6) THE INCREASE IN THE FUND'S EXPENSE RATIO WAS ATTRIBUTABLE TO EXTRAORDINARY
EXPENSES IN CONNECTION WITH A STOCKHOLDER'S PROXY CONTEST FOR THE ELECTION
OF DIRECTORS AND TERMINATION OF THE MANAGEMENT CONTRACT AND DEFENSE AGAINST
A LAWSUIT AGAINST THE FUND AND ITS DIRECTORS PLUS THE IMPACT OF A DECLINE
IN THE FUND'S NET ASSETS.
(7) NOT AUDITED BY DELOITTE 7 TOUCHE LLP.
SEE NOTES TO FINANCIAL STATEMENTS.
15
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.
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. On June 30,
2004, there were no fair valued securities.
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 an expense, net of any amount
receivable 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.
F. SECURITIES LENDING
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
16
THE SWISS HELVETIA FUND, INC.
--------------------------------------------------------------------------------
Notes to Financial Statements (Unaudited) (continued)
terminate the securities loan at any time. On June 30, 2004 there were no
securities on loan.
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. 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.
On June 30, 2004, the Fund held the following currency contracts:
Contracts
To Settlement Market Net
Deliver Settlement Value Value Unrealized
(CHF) Date (USD) (USD) Depreciation
--------- ---------- ---------- ------ ------------
1,261,870 07/02/04 $1,000,000 $1,007,561 $7,561
CHF Swiss Franc
USD U.S. Dollar
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.
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. For the six months ended June 30, 2004 the Fund paid the
Advisor $1,472,041 in investment advisory fees. The Fund paid Hottinger & Cie
$19,676 in brokerage commissions for the six months ended June 30, 2004.
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. The
Committee's allocations are based on its determination of the relative benefits
the Fund and the Advisor derive from the expenditures. During 2004, the
Committee allocated $9,300 of expenses incurred in connection with publicizing
the Fund as follows: $4,650 to the Fund and $4,650 to the Advisor.
Certain officers and directors of the Fund are also officers or directors of
HCC, Hottinger U.S. Inc., Hottinger & Cie (Zurich). These persons are not paid
by the Fund for serving in these capacities.
NOTE 3-- OTHER FEES
Citigroup Global Transaction Services, through its various affiliates, 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, its Advisor or Forum Administrative Services,
LLC approximately $16,000 per annum in compensation, except for the Chairmen
17
THE SWISS HELVETIA FUND, INC.
--------------------------------------------------------------------------------
Notes to Financial Statements (Unaudited) (concluded)
of the Audit Committee and the Governance/Nominating Committee, to whom the Fund
pays an annual fee of approximately $17,600. In addition, the Fund pays each
disinterested director $750 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.
NOTE 4-- CAPITAL SHARE TRANSACTIONS
The Fund is authorized to issue up to 50 million shares of capital stock. HCC
owned 113,788 of the 23,969,918 shares outstanding on June 30, 2004.
Transactions in capital shares were as follows:
For the Six Months For the Year Ended
Ended June 30, 2004 December 31, 2003
---------------------- ----------------------
Shares Amount Shares Amount
------ ------ ------ ------
Dividends Reinvested -- $ -- 597,409 $ 5,961,904(a)
Repurchased (128,400) (1,654,922) (172,100) (1,827,374)
-------- ----------- -------- -----------
Net increase
(decrease) (128,400) $(1,654,922) 425,309 $ 4,134,530
======== =========== ======== ===========
(a) REPRESENT SHARES ISSUED TO STOCKHOLDERS WHO DID NOT ELECT CASH IN
CONJUNCTION WITH CAPITAL GAINS DISTRIBUTION OF $0.541 PER SHARE PAID
JANUARY 14, 2003 TO STOCKHOLDERS OF RECORD ON DECEMBER 19, 2002.
NOTE 5-- INVESTMENT TRANSACTIONS
The aggregate cost of purchases and proceeds from sales of investments, other
than short-term obligations, for the six months ended June 30, 2004, were
$62,007,887 and $77,070,778, respectively.
The net unrealized appreciation from investments for those securities having an
excess of value over cost was $188,475,986 and the net unrealized depreciation
from investments for those securities having an excess of cost over value was
$1,356,625.
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 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 and without realizing capital gains in order to fund the repurchases. The
Board has authorized the purchase of up to 500,000 shares in 2004. During the
six months ended June 30, 2004, the Fund repurchased and retired 128,400 shares
at an average price of $12.89 per share (including brokerage commissions) and a
weighted average discount of 17.86%. These repurchases, which had a total cost
of $1,654,922, resulted in an increase of $359,779 to the Fund's net asset
value.
NOTE 7-- LITIGATION
On April 2, 2001 and May 8, 2001, two complaints were filed in purported class
actions on behalf of stockholders of the Fund, in the Court of Chancery of the
State of Delaware, against the Fund, each of its directors and HCC, the Fund's
Investment Advisor (collectively, the "defendants"). The complaints in these
cases, entitled KIMBERLY KAHN V. PAUL HOTTINGUER ET AL. and CHARLES MILLER V.
PAUL HOTTINGUER ET AL., have been voluntarily dismissed by plaintiffs with
prejudice pursuant to a settlement agreement that was approved by the Delaware
Chancery Court on June 4, 2003. In the opinion of management, the terms of the
settlement did not have a material adverse effect on the financial statements of
the Fund.
NOTE 8-- PROXY VOTING GUIDELINES
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,
by calling 1-888-SWISS-00.
18
THE SWISS HELVETIA FUND, INC.
--------------------------------------------------------------------------------
Proxy Results (Unaudited)
At the Annual Meeting of Stockholders held on May 20, 2004, shares were voted as
follows on the proposal presented to the Stockholders to elect three Class I
Directors to serve for a three year term and until their successors are elected
and qualified:
Authority
For Withheld
--- ---------
Claude W. Frey 19,693,944 543,675
Eric R. Gabus 19,660,332 577,288
Alexandre de Takacsy 19,642,379 595,241
--------------------------------------------------------------------------------
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 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.
19
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 your capital gains distributions and ordinary income dividends
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.
- 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?
Any dividends or distributions you receive will be reinvested in shares of the
Fund. The number of shares credited to your Plan account as a result of the
reinvestment will depend upon the relationship between the Fund's market price
and its net asset value per share on the record date of the distribution or
dividend, as described below:
- If the net asset value is greater than the market price (the Fund is
trading at a discount), AST as Plan Agent, will buy Fund shares for
your account on the open market on the New York Stock Exchange or
elsewhere. Your dividends or distributions will be reinvested at the
average price AST pays for those purchases.
- If the net asset value is equal to the market price (the Fund is
trading at parity), the Fund will issue for your account new shares at
net asset value.
- If the net asset value is less than but within 95% of the market price
(the Fund is trading at a premium of less than 5%), the Fund will
issue for your account new shares at net asset value.
- If the net asset value is less than 95% of the market price (the Fund
is trading at a premium of 5% or more), the Fund will issue for your
account new shares at 95% of the market price.
If AST begins to buy Fund shares for your account at a discount to net asset
value but, during the course of the purchases, the Fund's market price increases
to a level above the net asset value, AST will complete its purchases, even
though the result may be that the average price paid for the purchases exceeds
net asset value.
20
THE SWISS HELVETIA FUND, INC.
--------------------------------------------------------------------------------
Dividend Reinvestment Plan (Unaudited) (concluded)
Will the entire amount of my distribution or dividend be reinvested?
The entire amount of your distribution or dividend 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.
21
A SWISS THE SWISS
INVESTMENTS ---------------------------
FUND HELVETIA
---------------------------
FUND, INC.
---------------------------
www.swz.com
THE SWISS HELVETIA FUND, INC.
EXECUTIVE OFFICES
The Swiss Helvetia Fund, Inc.
1270 Avenue of the Americas
Suite 400
New York, New York 10020 SEMI-ANNUAL REPORT
1-888-SWISS-00 FOR THE
(212) 332-2760 PERIOD ENDED
http://www.swz.com JUNE 30, 2004
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. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS.
REGISTRANT PURCHASE OF EQUITY SECURITIES
-------------------------------------------------------------------------------------------------------------------------
(d) Maximum
Number (or
(c) Total Number of Approximate Dollar
Shares Purchased As Value)of Shares that
Part of Publicly May Yet Be
(a) Total Number of (b) Average Price Announced Plans or Purchased Under the
Period Shares Purchased Paid Per Share Programs Plans or Programs
-------------------------------------------------------------------------------------------------------------------------
01/01/04 - 01/31/04 - - - 500,000
-------------------------------------------------------------------------------------------------------------------------
02/01/04 - 02/28/04 - - - 500,000
-------------------------------------------------------------------------------------------------------------------------
03/01/04 - 03/31/04 - - - 500,000
-------------------------------------------------------------------------------------------------------------------------
04/01/04 - 04/30/04 45,000 12.9117 45,000 455,000
-------------------------------------------------------------------------------------------------------------------------
05/01/04 - 05/31/04 58,400 12.8048 58,400 396,600
-------------------------------------------------------------------------------------------------------------------------
06/01/04 - 06/30/04 25,000 12.8500 25,000 371,600
-------------------------------------------------------------------------------------------------------------------------
Total 128,400 12.8521 128,400 371,600
-------------------------------------------------------------------------------------------------------------------------
At the December 4, 2003 meeting of the Fund's Board of Directors, the Board
approved the purchase, by the Fund's investment advisor, of 500,000 shares. The
approved plan, described in the Fund's annual report dated December 31, 2003,
expires December 31, 2004.
ITEM 9. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
The Fund has a Nominating Committee, which is responsible for selecting and
nominating persons for election or appointment by the Fund's Board as Board
members. The Nominating Committee has adopted a Nominating Committee Charter
(the "Charter"). Pursuant to the Charter, the Nominating Committee will consider
recommendations for nominees from shareholders submitted to the Secretary of the
Fund, c/o The Swiss Helvetia Fund, Inc., 1270 Avenue of the Americas, Suite 400,
New York, New York 10020. A nominating submission must include information
regarding the recommended nominee as specified in the Charter. This information
includes all information relating to a recommended nominee that is required to
be disclosed in solicitations or proxy statements for the election of Board
members, as well as information sufficient to evaluate the factors to be
considered by the Nominating Committee, including character and integrity;
experience in business, investment and economic matters in Europe, the United
States, or Switzerland or political matters of Switzerland; and whether the
person has the ability to apply sound and independent business judgment and
would act in the interests of the Fund and its shareholders. Nomination
submissions are required to be accompanied by a written consent of the
individual to stand for election if nominated by the Board and to serve if
elected by the shareholders, and such additional information must be provided
regarding the recommended nominee as reasonably requested by the Nominating
Committee.
ITEM 10. CONTROLS AND PROCEDURES.
(a) The Fund's principal executive and principal financial officers have
concluded, based on their evaluation of the Fund's disclosure controls and
procedures as of a date within 90 days of the filing date of this report, that
the Fund's disclosure controls and procedures are reasonably designed to ensure
that information required to be disclosed by the Fund on Form N-CSR is recorded,
processed, summarized and reported within the required time periods and that the
information required to be disclosed by the Fund in the reports that it files or
submits on Form N-CSR is accumulated and communicated to the Fund's management,
including its principal executive and principal financial officers, as
appropriate to allow timely decisions regarding required disclosure.
(b) There were no changes in the Fund's internal control over financial
reporting that occurred during the Fund's most recently ended fiscal half-year
(the Registrant's second fiscal half-year in the case of an annual report) that
have materially affected, or are reasonably likely to materially affect, the
registrant's internal control over financial reporting.
ITEM 11. EXHIBITS.
(a)(1) Not applicable.
(a)(2) Certifications pursuant to section 302 of the Sarbanes-Oxley Act of 2002
(Exhibit filed herewith).
(b) Certification pursuant to section 906 of the Sarbanes-Oxley Act of 2002
(Exhibit furnished 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/ Rudolf S. Millisits
_______________________
Rudolf S. Millisits, Treasurer
Date August 17, 2004
_______________________
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, President
Date: August 17, 2004
_____________________________
By: /s/ Rudolf S. Millisits
_______________________
Rudolf S. Millisits, Treasurer
Date: August 17, 2004