THE SWISS
---------------
HELVETIA
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FUND, INC.
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Quarterly Report
For the Period Ended
March 31, 1997
A Swiss
Investments
Fund
THE SWISS HELVETIA FUND, INC.
Executive Offices
The Swiss Helvetia Fund, Inc.
630 Fifth Avenue
Suite 915
New York, New York 10111-0001
1-888-SWISS-00
(212) 332-2760
http://www.swz.com
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THE SWISS HELVETIA FUND, INC.
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Directors and Officers
Paul Hottinguer
Chairman and
Chief Executive Officer
Eric R. Gabus
Vice Chairman
(Non officer)
Claude Frey
Director
Jean-Louis Gillieron
Director
Baron Hottinger
Director
Claude Mosseri-Marlio
Director
Stephen K. West, Esq.
Director
Samuel B. Witt III, Esq.
Director
Rodolphe Hottinger
Acting President and
Chief Operating Officer
Rudolf Millisits
Vice President
Edward J. Veilleux
Vice President and Treasurer
Scott J. Liotta
Vice President
Paul R. Brenner, Esq.
Secretary
Joseph A. Finelli
Assistant Treasurer
Investment Advisor
Hottinger Capital Corp.
630 Fifth Avenue
Suite 915
New York, New York 10111-0001
(212) 332-7930
Administrator
Investment Company Capital Corp.
Custodian
PNCBank, N.A.
Transfer Agent
PNC Bank, N.A.
(800) 852-4750
Legal Counsel
Paul R. Brenner, Esq.
and
Christy & Viener
Independent Auditors
Deloitte & Touche LLP
The Investment Advisor
The Fund is managed by Hottinger Capital Corp., which is 100% owned by the
Hottinger Group.
The Hottinger Group includes 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, Geneva, Paris and Luxembourg.
Executive Offices
The Swiss Helvetia Fund, Inc.
630 Fifth Avenue
Suite 915
New York, New York 10111-0001
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
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.
Net Asset Value is calculated every Friday by 6:00 P.M. (Eastern Standard 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 Saturday edition of The New
York Times.
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THE SWISS HELVETIA FUND, INC.
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Letter to Stockholders
First Quarter Results
The Swiss market turned in a strong performance for the first quarter of
1997. The 17.29% return of the Swiss Performance Index nearly equaled its
results for all of 1996. While the continued weakness of the Swiss franc in
relation to the U.S. dollar served to offset some of this return for U.S.
investors, the market's first quarter gain of 9.12% in dollar terms was more
than satisfactory. The Swiss Helvetia Fund's first quarter return of 8.53% on
its net asset value was consistent with these results.
The Fund's slightly lower performance came from the underperformance of
three of its major holdings. First, ABB Asea Brown Boveri's results for 1996
came out short of expectations, due to fierce competition in power generation
and continuing weak business in Europe. Second, Swiss Reinsurance Company's
share performance did not keep up with the market due to fears surrounding the
Lloyd's reinsurance market. Third, Societe Generale de Surveillance shares have
been under pressure because of the loss of two government contracts, which will
hamper 1997's results. Despite these problems, which we believe are temporary,
the quality of these companies remains intact because they have strong positions
in their respective businesses.
Nevertheless, the Fund's performance was significantly better than the
2.67% return posted by U.S. stocks as represented by the Standard & Poor's 500
Index and the 1.57% loss experienced in international markets as represented by
the Morgan Stanley Europe, Australia and Far East (EAFE) Index.
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Financial Highlights
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March 31, December 31,
1997 1996
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Net Assets
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(in Million SFr) 462.1 396.1
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(in Million $) 321.3 296.0
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Outstanding Shares (000) 12,262 12,262
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Net Asset Value per Share ($) 26.20 24.14
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The Quarter in Review
The Swiss domestic economy continues to be sluggish. Although inflation
remains subdued at a current annualized rate of 1/2 of 1%, expectations for GDP
growth are situated below 1% and unemployment, at 5.7%, continues at a
relatively high rate for Switzerland. We believe the positive results of the
first quarter were due to several factors.
o Unappealing yields of 1.25% to 1.50% for money market instruments and
approximately 3.60% for five-year bonds drove Swiss investors to commit their
cash to equities, where they found prospects for capital appreciation and, in
some cases, dividend yields that were competitive with fixed-income investments.
The charge was led by Swiss institutions, which had no sound alternative, and
international investors, who were attracted by the positive prospects for the
Swiss franc.
o Swiss companies continued to simplify their corporate structures and
emphasize shareholder value through such activities as buying back their shares
and distributing excess capital to their shareholders. Positive investor
recep-
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THE SWISS HELVETIA FUND, INC.
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tion to these activities was especially evident in the successful offering of
Ciba Specialty Chemicals after its spin-off from Novartis.
o The current level of the Swiss franc in relation to the major currencies
continues to improve the competitiveness of the Swiss export sector, which led
international brokerage houses to raise earnings estimates for these companies.
This was a particularly powerful development since the 20 largest Swiss
companies, which account for over 80% of the Swiss market's capitalization, have
significant exposure to the foreign markets. On the other hand, the Swiss franc,
again benefiting from its particular status outside the European Monetary Union
(EMU), seems to have found some support at the current level. This recent
development has also attracted capital inflows from international portfolios.
o Investor perception of the banking sector improved, largely based upon a
belief that the reorganization of the corporate structure of the big Swiss banks
will allow them to participate in growing opportunities in international
business. The market was also recognizing the banks' efforts to streamline their
domestic business. The Fund's investments in such international banks as Credit
Suisse, Swiss Bank Corp. and Baer Holdings benefited from this development.
Outlook for the Remainder of the Year
We believe that the trend toward higher interest rates in the U.S. will not
be repeated in Switzerland. While the U.S. Federal Reserve is adopting a more
restrictive monetary policy, the Swiss National Bank, recognizing that
Switzerland is in a different economic cycle, will remain accommodative. This
should serve to support the Swiss equity market and prevent any big correction.
The recent small appreciation of the Swiss franc and the latest economic reports
point in this direction.
The Fund's Discount
During the quarter, the Fund continued to trade at a discount to its net
asset value. While it appeared that a marketing effort geared toward generating
interest in the Fund's shares was initially successful in narrowing this
discount, the market price failed to keep up with the increase in net asset
value due to the Fund's strong first quarter performance. As a result, the
Fund's discount was approximately the same at the end of the quarter as it was
at the beginning. The
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The Swiss Helvetia Fund--Ten Largest Holdings (in U.S. dollars)
As of March 31, 1997
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% of Total
Cost Market Value Net Assets
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1. Novartis Ltd. $ 31,190,468 $ 69,817,267 21.7%
2. Roche Holding AG 16,329,129 51,475,669 16.0
3. Nestle AG 18,418,475 33,969,413 10.6
4. Credit Suisse Group 10,607,620 17,293,014 5.4
5. Zurich Insurance 9,616,530 16,375,391 5.1
6. Swiss Reinsurance
Company 8,253,411 15,954,119 5.0
7. Union Bank of
Switzerland 6,499,572 11,694,126 3.6
8. Swiss Bank
Corporation 8,347,002 11,561,672 3.6
9. ABB Asea Brown
Boveri Ltd. 9,808,468 11,425,096 3.6
10. Winterthur
Schweizerische
Versicherungs-
Gesellschaft 4,769,514 5,561,349 1.7
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Total $123,840,189 $245,127,116 76.3%
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THE SWISS HELVETIA FUND, INC.
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Fund will continue its marketing efforts through its Internet site and
toll-free line as well as meetings with brokers and analysts on a regular
basis. We are confident that the underlying assets of the Fund, priced at a
significant discount, should attract attention, especially from investors
concerned about excessive valuations in the U.S. market.
In Memoriam
We have the sad duty of reporting to you the loss of a friend and
colleague. Henry B. Hyde, a director of the Fund from its inception in 1987
until his retirement a year ago, passed away this month. Henry was an
accomplished international lawyer who brought grace, humor and wisdom to the
board's deliberations. He will be missed.
Sincerely,
/s/ Paul Hottinguer
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Paul Hottinguer
Chairman and Chief Executive Officer
/s/ Rodolphe Hottinger
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Rodolphe Hottinger
Acting President and Chief Operating Officer
April 21, 1997
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The Swiss Helvetia Fund--Portfolio Holdings per Industry
as of March 31, 1997
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Pharmaceuticals 38.2%
Cash and Equiv. 0.5
Food, Luxury Goods 11.2
Insurance 12.3
Machinery 3.8
Banks 13.1
Chemicals 4.3
Misc. Services 4.4
Misc. Industries 3.8
Building Contractors 1.2
Electrical Engineering 6.1
Retailers 0.3
Transport 0.8
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THE SWISS HELVETIA FUND, INC.
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Statement of Net Assets March 31, 1997
(Unaudited)
Percent
No. of of Net
Shares Security Value Assets
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Common Stocks and Warrants - 99.5%
Banks - 13.1%
1,200 Baer Holdings Ltd.
Bearer Shares $ 1,451,512 0.5%
Banking group specializing in asset
management, investment consulting
and securities trading.
144,000 Credit Suisse Group*
Registered Shares 17,293,014 5.4
A global financial services institution
whose main holding is Credit Suisse,
one of Switzerland's "Big Three" banks.
13,000 Schweizerische Bankgesellschaft*
(Union Bank of Switzerland)
Bearer Shares 11,694,126 3.6
Largest Swiss full-service bank.
Schweizerischer Bankverein*
(Swiss Bank Corporation)
54,000 Registered Shares 11,543,274 3.6
3,950 Warrants Expiring 6/30/00** 18,398 --
One of the three largest international
Swiss banks. ----------- ----
42,000,324 13.1
Building Contractors & Materials - 1.2%
800 Forbo Holdings Ltd.
Bearer Shares 329,788 0.1
Manufacturer of wall and floor coverings.
3,100 Holderbank Financiere Glarus AG
Bearer Shares 2,379,145 0.8
Large cement producer with worldwide
operations.
2,000 Keramik Holding AG Laufen
Bearer Shares 1,014,946 0.3
One of the largest suppliers in the world
of floor and wall tiles, sanitary fittings,
crockery and ceramics. ----------- ----
3,723,879 1.2
Chemicals - 4.3%
50,000 Ciba Specialty Chemicals AG
Registered Shares** $ 4,136,253 1.3%
The company, a spin-off from Novartis
in February 1997, develops, manufactures
and markets specialty chemical products
worldwide. These products include
additives, performance polymers,
textile dyes, consumer care chemicals
and pigments.
3,400 Clariant AG
Registered Shares 1,675,773 0.5
Specializes in color chemistry and
manufactures a range of dyestuffs,
pigments, chemicals, additives and
masterbatches for the textile, paper,
leather, plastics, synthetic fibers and
paint industries.
400 EMS Chemie Holding AG
Bearer Shares 1,651,721 0.5
Produces polymers and manufactures
high-grade chemical intermediates
and fine chemicals.
800 Gurit-Heberlein AG
Bearer Shares 1,929,788 0.6
European market leader for wind
screen bonding systems, ski bases
and optically pure thermoplastic
sheeting for the auto industry.
1,400 Schweizerhall Holding AG
Registered Shares 1,187,348 0.4
Wholesale trader in chemical and
pharmaceutical intermediate products,
as well as in the perfume and fertilizer
businesses.
3,000 Siegfried AG
Registered Shares 2,752,868 0.9
International producer and supplier of
chemicals and pharmaceuticals for
major businesses.
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THE SWISS HELVETIA FUND, INC.
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Statement of Net Assets (continued) March 31, 1997
(Unaudited)
Percent
No. of of Net
Shares Security Value Assets
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Common Stocks and Warrants - (continued)
Chemicals - (continued)
Sika Finanz AG
2,000 Bearer Shares $ 488,008 0.1%
3,000 Registered Shares 131,387 --
Leading producer of construction
chemicals. ----------- ----
13,953,146 4.3
Electrical Engineering & Electronics - 6.1%
9,500 ABB Asea Brown Boveri Ltd.*
Bearer Shares 11,425,096 3.6
One of the largest electrical engineering
firms in the world.
8,000 Agie Charmilles Holding AG
Registered Shares 800,834 0.2
Holding company for a group of
companies that produce electric discharge
erosion machines and equipment for the
automobile and electronics industries.
Agie Holdings distributes and sells
products internationally.
500 Ascom Holdings Ltd.
Bearer Shares** 535,627 0.2
Through its subsidiaries, active in
telecommunications, services automation
and enterprise networks throughout
Europe and the United States.
2,000 Belimo Automation AG
Registered Shares 431,005 0.1
World market leader in damper and
volume control actuators for ventilation
and air conditioning equipment.
600 Disetronic Holding AG
Bearer Shares** 1,226,277 0.4
Leading company in medical technology.
Manufactures and markets infusion
systems and injection systems used to
administer insulin and growth hormones.
1,200 Kaba Holding Ltd.
Registered Shares 433,785 0.1
Specializes in mechanical and electronic
security systems.
Electrical Engineering & Electronics - (continued)
1,000 Micronas Semiconductor Holding AG
Bearer Shares $ 722,975 0.2%
Develops, produces and markets
mixed-signal integrated circuits
and systems.
1,200 Phonak Holding AG
Registered Shares 846,715 0.3
A leader in hearing aids, ranked fourth
in the world.
Swiss Corporation for Micro-electronics
and Watchmaking Industries Ltd. (SMH)
4,150 Bearer Shares 2,307,960 0.7
4,000 Registered Shares 519,986 0.2
Watchmaking company.
400 Zellweger Luwa AG
Bearer Shares 298,922 0.1
Worldwide diversified industrial and
service company active mainly in textile
electronics, air filtering and conditioning
techniques. ----------- ----
19,549,182 6.1
Food, Luxury Goods - 11.2%
1,800 Hero AG
Bearer Shares 857,143 0.3
Leading Swiss manufacturer of branded
jams and preserves.
50 Lindt & Spruengli AG
Registered Shares 966,284 0.3
Major manufacturer of premium
Swiss chocolates.
29,000 Nestle AG*
Registered Shares 33,969,413 10.6
Largest food and beverage processing
company in the world. ----------- ----
35,792,840 11.2
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THE SWISS HELVETIA FUND, INC.
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Statement of Net Assets (continued) March 31, 1997
(Unaudited)
Percent
No. of of Net
Shares Security Value Assets
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Common Stocks and Warrants - (continued)
Insurance - 12.3%
700 Baloise-Holding
Registered Shares $ 1,430,657 0.4%
Medium-sized insurer active in all
sectors of insurance.
15,000 Schweizerische Ruckversicherungs -
Gesellschaft*
(Swiss Reinsurance Company)
Registered Shares 15,954,119 5.0
Second largest reinsurance company
in the world.
700 Swiss Life Insurance and
Pension Company (Rentenanstalt)
Participation Certificates 224,818 0.1
Medium-sized Swiss life insurance
company.
8,000 Winterthur Schweizerische
Versicherungs-Gesellschaft*
Registered Shares 5,561,349 1.7
Leading Swiss international insurance
company.
52,000 Zurich Schweizerische
Versicherungs-Gesellschaft*
(Zurich Insurance)
Registered Shares 16,375,391 5.1
A large worldwide insurance operator. ----------- ----
39,546,334 12.3
Machinery - 3.8%
400 Bobst Ltd.
Bearer Shares 590,893 0.2
Leading international manufacturer of
cardboard packaging machines.
2,000 Bucher Holding Ltd.
Bearer Shares 1,710,115 0.5
Manufacturer of agricultural machines,
special vehicles, fruit juice equipment
and plastics machines.
Machinery - (continued)
600 Esec Holding AG
Bearer Shares $ 1,856,100 0.6%
Market leader in the field of die bonding
technology used by manufacturers of
semiconductors.
11,500 Mikron Holding AG
Registered Shares** 1,558,916 0.5
Machine tools and milling machine
producer.
2,400 Saurer Gruppe Holding AG
Registered Shares** 1,147,862 0.3
Machinery maker with dominant
market share.
2,200 Schindler Holding AG
Registered Shares 2,569,343 0.8
One of the world's largest elevator
companies and a leading Swiss
machinery enterprise.
1,000 SIG Schweizerische Industrie-
Gesellschaft Holding AG
Registered Shares 1,237,400 0.4
Medium-sized machinery manufacturer
with interests in the packaging, defense
and railway industries.
2,500 Sulzer AG
Registered Shares 1,642,336 0.5
A machine manufacturer and worldwide
leader in weaving machines and sewing
machines. ----------- ----
12,312,965 3.8
Miscellaneous Industries - 3.8%
1,200 AFG Arbonia-Forster Holding AG
Bearer Shares** 625,652 0.2
Manufacturer of heating radiators,
refrigeration kitchen equipment and
steel tubing.
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THE SWISS HELVETIA FUND, INC.
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Statement of Net Assets (continued) March 31, 1997
(Unaudited)
Percent
No. of of Net
Shares Security Value Assets
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Common Stocks and Warrants - (continued)
Miscellaneous Industries - (continued)
Alusuisse-Lonza Holding AG
1,600 Bearer Shares $ 1,334,724 0.4%
3,400 Registered Shares 2,874,105 0.9
A major aluminum producing and
processing company.
200 Baumgartner Papiers S.A.
Registered Shares 72,993 --
Swiss paper company active in the field of
wholesale paper, paper processing,
manufacturing of cigarette filters and
capillary reservoirs.
600 Christ AG
Registered Shares** 356,621 0.1
Manufactures and markets water
purification systems and produces
customized systems for high-tech,
industrial-scale water treatment plants
as well as standard systems.
300 Datwyler Holding AG
Bearer Shares 530,761 0.2
Diversified manufacturer of
telecommunication cable, floor coverings and
precision steel tubing.
1,000 Huber & Suhner AG
Registered Shares 1,108,794 0.3
Manufactures a wide range of products,
extending from cables for energy and
electrical transmission to special
products such as rubber.
800 Industrieholding Cham AG
Registered Shares** 494,960 0.2
Manufactures paper and storage logistics
systems and owns real estate.
1,000 Kardex AG
Bearer Shares 326,034 0.1
Specializing in industrial and office
storage systems, office machinery,
safety and computer software.
Miscellaneous Industries - (continued)
15,000 Oerlikon-Buehrle Holding AG
Registered Shares** $ 1,509,385 0.5%
The diversified holding company includes
Bally (shoes and accessories), Balzers
and Leybold (surface technologies),
Oerlikon Contraves (military products and
space technology), Pilatus (aircraft), Kunz
and Dietfurt (threads and yarns), real
estate and hotels.
1,800 Phoenix Mecano AG
Bearer Shares 850,886 0.3
Leading Swiss packaging manufacturer
for the mechanical engineering and
electronics industry.
1,400 Stratec Holding AG
Registered Shares 1,965,937 0.6
Develops, produces and distributes
instruments and implants used in
orthopedic and maxilofacial surgery. ----------- ----
12,050,852 3.8
Miscellaneous Services - 4.4%
4,000 Adecco SA
Bearer Shares 1,304,136 0.4
Personnel and temporary employment
company.
890 Bossard Holding AG
Bearer Shares 355,753 0.1
Manufactures fastening elements,
industrial adhesives, tools, pneumatics
and handling modules and automated
assembly systems.
3,200 Compagnie Financiere Richemont AG
Bearer Shares 4,237,748 1.3
Investment company with principal
interests in luxury goods and tobacco.
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THE SWISS HELVETIA FUND, INC.
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Statement of Net Assets (continued) March 31, 1997
(Unaudited)
Percent
No. of of Net
Shares Security Value Assets
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Common Stocks and Warrants - (continued)
Miscellaneous Services - (continued)
2,000 Intershop Holding Ltd.
Bearer Shares $ 1,095,586 0.3%
Involved in the construction and funding
of shopping centers and property for
commercial use, both nationally and
internationally.
800 Kuoni Travel Holding Ltd.
Registered Shares 2,257,908 0.7
Leader in the Swiss travel and tourism
sector with subsidiaries in the United
Kingdom, Germany, France and Austria.
2,000 Movenpick Holding Ltd.
Bearer Shares 604,797 0.2
Through its subsidiaries, invests in the
hotel and restaurant business worldwide.
The company also produces food items
under the Movenpick name, including
ice cream, coffee, salmon and jams.
4,000 Publicitas Holding SA
Participation Certificates 721,585 0.2
Largest Swiss advertising intermediary.
1,600 Societe Generale d'Affichage SA
Participation Certificates 622,871 0.2
Swiss advertising firm.
8,000 Societe Generale de Surveillance
Holding AG
Registered Shares 3,058,742 1.0
World's leading inspection company
and adjusting group. ------------ ----
14,259,126 4.4
Pharmaceuticals - 38.2%
1,200 Ares Serono SA
Bearer Shares 1,579,979 0.5
Develops and markets pharmaceutical
and diagnostic products, and is the
worldwide market leader in pharmaceutical
products for the treatment of infertility.
Pharmaceuticals - (continued)
56,233 Novartis Ltd.*
Registered Shares $ 69,817,267 21.7%
Life science group created by the
consolidation of Sandoz and Ciba-Geigy.
Manufactures health care products
for use in a broad range of medical
fields, as well as agricultural products,
and is the second largest pharmaceutical
entity in the world.
5,950 Roche Holding AG*
Dividend Rights Certificates 51,475,669 16.0
Worldwide pharmaceutical company. ------------ ----
122,872,915 38.2
Retailers - 0.3%
1,000 Jelmoli Holding Ltd.
Bearer Shares 574,904 0.2
Operates a network of retail/service
outlets throughout Switzerland,
including local dry cleaners, auto body
shops, opticians, interior decorators,
travel agencies, restaurants,
pharmacies and retailers.
1,600 Prodega AG
Registered Shares 450,469 0.1
Swiss market leader that operates
"Cash and Carry." ------------ ----
1,025,373 0.3
Transport - 0.8%
2,200 Danzas Holding AG
Participation Certificates 434,341 0.1
Third largest forwarding agent in the
world and the market leader in Europe.
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THE SWISS HELVETIA FUND, INC.
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Statement of Net Assets (concluded) March 31, 1997
(Unaudited)
Percent
No. of of Net
Shares Security Value Assets
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Common Stocks and Warrants - (concluded)
Transport - (continued)
700 Kuehne & Nagel International AG
Registered Shares $ 390,754 0.1%
Operates sea freight, land and rail
transportation businesses and
warehousing and distribution facilities.
2,000 Swissair AG
Registered Shares** 1,785,190 0.6
Switzerland's largest airline company. ---------- ----
2,610,285 0.8
Percent
No. of of Net
Shares Value Assets
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574,123 Total Common Stocks and Warrants
(Cost $184,694,311)*** $319,697,221 99.5%
Other Assets in Excess
of Liabilities 1,553,568 0.5
------------ -----
Net Assets Applicable to
12,261,692 Shares of
Common Stock Outstanding $321,250,789 100.0%
============ =====
Net Asset Value Per Share
($321,250,789 / 12,261,692) $26.20
======
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*One of the ten largest portfolio holdings.
**Non-income producing security.
***Also aggregate cost for federal tax purposes.
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THE SWISS HELVETIA FUND, INC.
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Dividend Reinvestment Plan
--------------------------
The Dividend Reinvestment Plan offers you a convenient and automatic way to
reinvest your income dividends and capital gains distributions in additional
shares of the Fund. For an enrollment form and detailed information about the
Plan, please contact the Fund's transfer agent at PNCBank, N.A., P.O. Box
8950, Wilmington, DE, 19899, (800) 852-4750. If your shares are held by your
brokerage firm, please contact your investment representative.
This report is sent to the stockholders of The Swiss Helvetia Fund, Inc. for
their information. It is not a prospectus, circular or representation intended
for use in the purchase or sale of shares of the Fund or of any securities
mentioned in this report.
--------------------
Notice is hereby given in accordance with section 23(c) of The Investment
Company Act of 1940 that the Fund may purchase at market prices from time to
time shares of its common stock in the open market.
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