A Swiss
Investments
Fund
THE SWISS
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HELVETIA
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FUND, INC.
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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
Semi-Annual Report
For the Period Ended
June 30, 1997
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THE SWISS HELVETIA FUND, INC.
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Directors and Officers
Paul Hottinguer Rodolphe Hottinger
Chairman and President and
Chief Executive Officer Chief Operating Officer
Eric R. Gabus Rudolf Millisits
Vice Chairman Vice President
(Non officer)
Edward J. Veilleux
Claude Frey Vice President and Treasurer
Director
Scott J. Liotta
Jean-Louis Gillieron Vice President
Director
Paul R. Brenner, Esq.
Baron Hottinger Secretary
Director
Joseph A. Finelli
Claude Mosseri-Marlio Assistant Treasurer
Director
Stephen K. West, Esq.
Director
Samuel B. Witt III, Esq.
Director
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
PNC Bank, 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
Fund Performance
We are pleased to report on the performance of your Fund for the second
quarter of 1997. The past three months have seen a continuation of the strong
returns that began early this year in the Swiss market. During the second
quarter, the Swiss market as measured by the Swiss Performance Index was up
20.4% in Swiss franc terms, bringing its total return for the first six months
of 1997 to 41.3%. Your Fund's performance was in line with those results with
total returns, in Swiss franc terms, of 21.1% for the second quarter and 41.7%
for the six months. While the continued weakness of the Swiss franc vs. the U.S.
dollar served to moderate these excellent returns for U.S. shareholders, the
Fund's second-quarter total return of 19.4% and six-month total return of 29.6%,
as measured in U.S. dollar terms, were extremely rewarding. The table to the
right puts these returns into perspective.
As indicated by the numbers in the table, the Fund has had excellent
returns, outperforming both European funds specifically and international
markets in general as measured by the Lipper European Fund Average and the EAFE
Index, respectively. We are particularly gratified to note that despite the
extraordinary recent performance of the U.S. market, your Fund's performance has
been every bit as extraordinary as measured against the S&P 500 Index over the
past five years. We continue to believe that the Fund is a sound investment for
those who seek international diversification of their portfolios.
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Total Return Performance Based on Net Asset Value Per Share*
For the periods ended 6/30/97
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In U.S. dollars
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Six Months 1 Year 3 Years** 5 Years**
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The Swiss Helvetia Fund 29.6% 27.0% 19.6% 19.8%
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S&P 500 Index 20.5% 34.7% 28.8% 19.8%
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EAFE Index 11.2% 12.8% 9.1% 12.8%
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Lipper European Fund
Average 12.7% 24.8% 18.6% 13.7%
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* These figures assume the reinvestment of dividends and capital gains
distributions and exclude the impact of any sales charge. If the sales
charge were reflected, the quoted performance would be lower. The Standard
& Poor's 500 Index is an unmanaged index that is widely recognized as an
indicator of general U.S. equity market performance. The Morgan Stanley
Europe, Australia and Far East (EAFE) Index is an unmanaged index that is
widely recognized as an indicator of general international equity
performance. The Lipper European Fund Average is an index of approximately
80 managed funds that invest in equity securities in European markets. Past
performance is not an indicator of future results.
** Average annual returns.
2
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THE SWISS HELVETIA FUND, INC.
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The Fund's market price per share has responded to this performance by
increasing to $25.625 as of June 30. Based on this price and assuming
reinvestment of the $0.2017 per share distribution on May 9, the Fund's total
return was 30.1% for the first six months of the year. While the Fund continues
to trade at a relatively wide discount to its net asset value, there was some
improvement in the discount over the past quarter, and we are hopeful that the
market is beginning to rediscover the attractiveness of the Swiss equity market.
The Swiss Market In Review
We believe the strong year-to-date performance of the Swiss market is
attributable to a variety of factors, which are described below.
o The reduction in interest rates. Short-term interest rates have declined
from 1.9% to 1.5%, while rates on government bonds have dropped from 3.6% to
3.2%. Because of these low rates, investors have sought higher returns in the
equities markets.
o Positive corporate earnings. Strong international economies and the
weakness of the Swiss franc have both contributed to excellent earnings results
for internationally-oriented Swiss companies.
o Currency developments. Continued uncertainty over the impact of the
introduction of a single European currency has weakened the German mark and
helped to stabilize the Swiss franc vs. European currencies.
o Valuations. For example, Novartis Ltd., the Fund's top holding, has
benefited from a revaluation that puts it more in line with its international
peers.
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Performance of The Swiss Helvetia Fund* vs. SPI Index
From inception (August 27, 1987) through June 30, 1997
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In Swiss francs
[GRAPH APPEARS HERE--SEE PLOT POINTS BELOW]
The Fund SPI Index
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8/87 100 100
12/87 76.32 68.27
12/88 81.93 83.63
12/89 101.56 100.97
12/90 86.77 80.59
12/91 99.01 93.42
12/92 116.7 109.9
12/93 175.05 165.73
12/94 159.59 153.11
12/95 191.52 188.41
12/96 227.24 222.88
6/97 321.92 314.85
*Gross of Fund expenses. The Fund's performance is calculated using the
Modified Dietz method.
3
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THE SWISS HELVETIA FUND, INC.
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o Corporate restructuring. As can be seen by the following list, Swiss
companies continue to be active acquirors and to engage in restructuring that
allows them to internationalize into very profitable businesses.
Acquisitions
o Zurich Insurance purchased Scudder Stevens & Clark Inc.
o Roche Holding AG purchased Boehringer Mannheim GmbH and Tastemaker
o Swiss Bank Corp. purchased Dillon, Read & Co.
o Clariant AG purchased the specialty chemicals unit of Hoechst AG
Spinoffs
o Valora Holdings AG spun off Selecta Group
o Sulzer AG announced spinoff of Sulzer Medica AG
Initial Public Offerings
o Komax Holding AG
o Interroll Holding AG
o Gretag-Macbeth Holding AG
Changes in the Fund's Holdings
We continue to manage the Fund in a way that we believe will take advantage
of the trends listed above. We remain underweighted in the banking sector,
preferring to concentrate on those banks that are active in asset management. We
have also increased our exposure to
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Financial Highlights
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June 30, June 30,
For the year ended: 1997 1996
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Total Net Assets
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In million SFr. $557.9* $392.0
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In million U.S. $ 382.0* 313.5
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Exchange Rate (per U.S. $) 1.46 1.25
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Net Asset Value per Share $ 31.00 $ 25.57
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Market Price per Share (U.S. $) 25.625 21.25
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Shares Outstanding 12,321,016* 12,261,692
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* Includes additional shares issued to stockholders through the reinvestment
of dividends in shares in 1997.
4
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THE SWISS HELVETIA FUND, INC.
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the building, retailing and miscellaneous services sectors because we believe
these sectors will benefit from expected increases in consumer confidence.
Finally, a strong order flow has persuaded us to increase our holdings in the
machinery sector, particularly Rieter Holding AG and Sulzer AG.
On the other side of the ledger we have decreased our exposure to
electrical engineering, chemicals and miscellaneous industries, largely in
reaction to slightly disappointing results for companies such as Disetronic
Holding AG, Phoenix Mecano AG and Stratec Holding AG.
Outlook
After the strong performance of the Swiss market this year, we expect a
consolidation at current levels, but a continuing of the market's growth over
the long term. This belief is based on fundamental factors such as anticipated
double-digit earnings growth in 1998, thanks to the continued benefits of
corporate restructuring, but is further supported by several other important
factors. First, we expect a significant increase in the amount of money flowing
into the equities market. This expectation is based on the absence of enticing
alternatives in light of continued low interest rates and the lack of any
significant demand for capital by business and industry. Second, corporations
will be buying more of their own stock in the near
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The Swiss Helvetia Fund--Ten Largest Holdings (in U.S. dollars)
As of June 30, 1997
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% of Total
Cost Market Value Net Assets
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1. Novartis Ltd. $ 31,190,468 $ 89,864,993 23.5%
2. Roche Holding AG 16,329,129 53,796,474 14.1
3. Nestle AG 18,418,475 38,243,067 10.0
4. Swiss Reinsurance
Company 8,253,411 21,208,490 5.6
5. Zurich Insurance 9,616,530 20,686,066 5.4
6. Credit Suisse Group 10,607,620 18,486,820 4.8
7. Union Bank of
Switzerland 7,401,333 16,008,216 4.2
8. Swiss Bank
Corporation 8,347,002 14,476,611 3.8
9. ABB Asea Brown
Boveri Ltd. 8,565,601 12,105,443 3.2
10. Winterthur
Schweizerische
Versicherungs-
Gesellschaft 3,918,468 5,811,434 1.5
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Total $122,648,037 $290,687,614 76.1%
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THE SWISS HELVETIA FUND, INC.
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future. These stock buybacks will be used for the purposes of shareholder value
enhancement and for executive compensation. Finally, on a longer term basis, the
Swiss Social Security system is experiencing funding difficulties all too
familiar to U.S. investors. We expect the resulting search for alternatives will
drive Swiss investors to the equities market either directly or through
insurance or investment fund products and that this flow of new cash will
increase valuations of Swiss stocks.
Thank you for your continued interest in the Fund.
Sincerely,
/s/ Paul Hottinguer
____________________________________
Paul Hottinguer
Chairman and Chief Executive Officer
/s/ Rodolphe Hottinger
_____________________________________
Rodolphe Hottinger
President and Chief Operating Officer
July 25, 1997
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The Swiss Helvetia Fund--Portfolio Holdings per Industry
as of June 30, 1997
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Pharmaceuticals 14.5%
Cash and Equiv. 0.5
Food, Luxury Goods 10.6
Insurance 13.0
Machinery 4.5
Banks 13.8 [PIE CHART APPEARS HERE]
Chemicals 4.4 [SEE VALUES TO THE LEFT]
Misc. Services 4.0
Misc. Industries 3.4
Building Contractors 1.3
Electrical Engineering 5.1
Retailers 0.5
Transport 0.9
Life Sciences 23.5
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THE SWISS HELVETIA FUND, INC.
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Statement of Net Assets June 30, 1997
(Unaudited)
Percent
No. of of Net
Shares Security Value Assets
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Common Stocks and Warrants - 99.5%
Banks - 13.8%
1,200 Baer Holdings Ltd.
Bearer Shares $ 1,836,357 0.5%
Banking group specializing in asset
management, investment consulting
and securities trading.
2,400 Bank Sarasin & Cie
Registered Shares 1,741,869 0.5
A bank specializing in investment
advisor services and portfolio
management for private and institutional
customers in Europe.
144,000 Credit Suisse Group*
Registered Shares 18,486,820 4.8
A global financial services institution
whose main holding is Credit Suisse,
one of Switzerland's "Big Three" banks.
14,000 Schweizerische Bankgesellschaft*
(Union Bank of Switzerland)
Bearer Shares 16,008,216 4.2
One of the three largest Swiss
full-service banks.
54,000 Schweizerischer Bankverein*
(Swiss Bank Corporation)
Registered Shares 14,438,206 3.8
3,950 Warrants Expiring 6/30/00 38,405 --
One of the three largest international
Swiss banks.
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52,549,873 13.8
Building Contractors & Materials - 1.3%
1,400 Forbo Holdings Ltd.
Registered Shares 603,903 0.2
Manufacturer of wall and floor coverings.
3,200 Holderbank Financiere Glarus AG
Bearer Shares 3,021,431 0.8
Large cement producer with worldwide
operations.
Percent
No. of of Net
Shares Security Value Assets
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Building Contractors & Materials - (continued)
2,000 Keramik Holding AG Laufen
Bearer Shares $ 1,198,220 0.3%
One of the largest suppliers in the world
of floor and wall tiles, sanitary fittings,
crockery and ceramics.
----------- -----
4,823,554 1.3
Chemicals - 4.4%
50,000 Ciba Specialty Chemicals AG
Registered Shares** 4,621,705 1.2
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.
4,400 Clariant AG
Registered Shares 2,846,970 0.7
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 1,780,212 0.5
Produces polymers and manufactures
high-grade chemical intermediates
and fine chemicals.
700 Gurit-Heberlein AG
Bearer Shares 2,180,760 0.6
European market leader for wind
screen bonding systems, ski bases
and optically pure thermoplastic
sheeting for the auto industry.
7
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THE SWISS HELVETIA FUND, INC.
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Statement of Net Assets (continued) June 30, 1997
(Unaudited)
Percent
No. of of Net
Shares Security Value Assets
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Common Stocks and Warrants - (continued)
Chemicals - (continued)
700 Schweizerhall Holding AG
Registered Shares $ 666,210 0.2%
Wholesale trader in chemical and
pharmaceutical intermediate products,
as well as in the perfume and
fertilizer businesses.
2,600 Siegfried AG
Registered Shares 2,892,845 0.8
International producer and supplier of
chemicals and pharmaceuticals for
major businesses.
4,700 Sika Finanz AG
Bearer Shares 1,473,879 0.4
3,000 Registered Shares 147,895 --
Leading producer of construction
chemicals. ----------- ----
16,610,476 4.4
Electrical Engineering & Electronics - 5.1%
8,000 ABB Asea Brown Boveri Ltd.*
Bearer Shares 12,105,443 3.2
One of the largest electrical engineering
firms in the world.
8,000 Agie Charmilles Holding AG
Registered Shares** 794,249 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.
2,000 Belimo Automation AG
Registered Shares 575,146 0.1
World market leader in damper and
volume control actuators for ventilation
and air conditioning equipment.
Percent
No. of of Net
Shares Security Value Assets
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Electrical Engineering & Electronics - (continued)
500 Disetronic Holding AG
Bearer Shares $ 1,011,640 0.3%
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 476,549 0.1
Specializes in mechanical and electronic
security systems.
900 Micronas Semiconductor Holding AG
Bearer Shares 807,258 0.2
Develops, produces and markets
mixed-signal integrated circuits
and systems.
800 Phonak Holding AG
Registered Shares 597,604 0.2
A leader in hearing aids, ranked fourth
in the world.
4,200 Swiss Corporation for Micro-electronics
and Watchmaking Industries Ltd. (SMH)
Bearer Shares 2,398,357 0.6
3,500 Registered Shares 473,896 0.1
Watchmaking company.
400 Zellweger Luwa AG
Bearer Shares 296,337 0.1
Worldwide diversified industrial and
service company active mainly in textile
electronics, air filtering and conditioning
techniques.
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19,536,479 5.1
Food, Luxury Goods - 10.6%
1,800 Hero AG
Bearer Shares 1,004,451 0.3
Leading Swiss manufacturer of branded
jams and preserves.
50 Lindt & Spruengli AG
Registered Shares 1,095,515 0.3
Major manufacturer of premium
Swiss chocolates.
8
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THE SWISS HELVETIA FUND, INC.
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Statement of Net Assets (continued) June 30, 1997
(Unaudited)
Percent
No. of of Net
Shares Security Value Assets
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Common Stocks and Warrants - (continued)
Food, Luxury Goods - (continued)
29,000 Nestle AG*
Registered Shares $38,243,067 10.0%
Largest food and beverage processing
company in the world.
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40,343,033 10.6
Insurance - 13.0%
700 Baloise-Holding
Registered Shares 1,667,922 0.5
Medium-sized insurer active in
all sectors of insurance.
300 Helvetia Patria
Registered Shares 162,273 --
Through its subsidiaries, Helvetia
Schweizerische Versicherungs-
Gesellschaft and Patria Schweizerische
Lebensversicherungs-Gesellschaft,
offers all types of life, property and
casualty insurance in Switzerland
and elsewhere.
15,000 Schweizerische Ruckversicherungs -
Gesellschaft*
(Swiss Reinsurance Company)
Registered Shares 21,208,490 5.6
Second largest reinsurance company
in the world.
6,600 Winterthur Schweizerische
Versicherungs-Gesellschaft*
Registered Shares 5,811,434 1.5
Leading Swiss international insurance
company.
52,000 Zurich Schweizerische
Versicherungs-Gesellschaft*
(Zurich Insurance)
Registered Shares 20,686,066 5.4
A large worldwide insurance operator.
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49,536,185 13.0
Percent
No. of of Net
Shares Security Value Assets
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Life Sciences - 23.5%
56,233 Novartis Ltd.*
Registered Shares $89,864,993 23.5%
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.
----------- -----
89,864,993 23.5
Machinery - 4.5%
400 Bobst Ltd.
Bearer Shares 679,219 0.2
Leading international manufacturer of
cardboard packaging machines.
2,000 Bucher Holding Ltd.
Bearer Shares 2,081,479 0.5
Manufacturer of agricultural machines,
special vehicles, fruit juice equipment
and plastics machines.
500 Esec Holding AG
Bearer Shares 1,639,849 0.4
Market leader in the field of die bonding
technology used by manufacturers of
semiconductors.
8,000 Mikron Holding AG
Registered Shares** 1,424,170 0.4
Machine tools and milling machine
producer.
3,000 Rieter Holding AG
Registered Shares 1,172,886 0.3
Leading supplier of spinning machinery
for the textile industry.
2,400 Saurer Gruppe Holding AG
Registered Shares 1,589,045 0.4
Machinery maker with dominant
market share.
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THE SWISS HELVETIA FUND, INC.
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Statement of Net Assets (continued) June 30, 1997
(Unaudited)
Percent
No. of of Net
Shares Security Value Assets
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Common Stocks and Warrants - (continued)
Machinery - (continued)
2,000 Schindler Holding AG
Registered Shares $ 2,567,614 0.7%
One of the world's largest elevator
companies and a leading Swiss
machinery enterprise.
1,500 SIG Schweizerische Industrie-
Gesellschaft Holding AG
Registered Shares 2,228,689 0.6
Medium-sized machinery manufacturer
with interests in the packaging, defense
and railway industries.
4,000 Sulzer AG
Registered Shares 3,423,485 0.9
A machine manufacturer and worldwide
leader in weaving machines and sewing
machines.
500 Zehnder Holdings AG
Bearer Shares 239,644 0.1
Through its subsidiaries, manufactures
furnaces, measuring instruments, battery
chargers, sheet metal housing and
welding machines. The company also
refines paper.
----------- -----
17,046,080 4.5
Miscellaneous Industries - 3.4%
600 AFG Arbonia-Forster Holding AG
Bearer Shares** 365,628 0.1
Manufacturer of heating radiators,
refrigeration kitchen equipment and
steel tubing.
2,200 Alusuisse-Lonza Holding AG
Bearer Shares 2,251,969 0.6
3,200 Registered Shares 3,312,838 0.9
A major aluminum producing and
processing company.
Percent
No. of of Net
Shares Security Value Assets
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Miscellaneous Industries - (continued)
600 Christ AG
Registered Shares $ 439,575 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.
200 Datwyler Holding AG
Bearer Shares 347,826 0.1
Diversified manufacturer of
telecommunication cable, floor
coverings and precision steel tubing.
300 Gretag-Macbeth Holding AG
Registered Shares** 103,732 --
Offers a spectrum of benchtop and portable
color measurement instrumentation, color
formulation and color quality control systems,
densitometers and visual color standards.
1,100 Huber & Suhner AG
Registered Shares 1,393,358 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 586,101 0.1
Manufactures paper and storage logistics
systems and owns real estate.
500 Interroll Holding AG
Registered Shares** 83,704 --
Leading international supplier of
modules, components and systems for
the storage and conveyance of discrete
goods and bulk products.
1,000 Kardex AG
Bearer Shares** 301,267 0.1
Specializing in industrial and office
storage systems, office machinery,
safety and computer software.
10
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THE SWISS HELVETIA FUND, INC.
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Statement of Net Assets (continued) June 30, 1997
(Unaudited)
Percent
No. of of Net
Shares Security Value Assets
- --------------------------------------------------------------------------------
Common Stocks and Warrants - (continued)
Miscellaneous Industries - (continued)
250 Komax Holding AG
Registered Shares** $ 92,434 --%
World leading manufacturer of wire
processing machines.
12,000 Oerlikon-Buehrle Holding AG
Registered Shares 1,404,998 0.4
The diversified holding company includes
Bally (shoes and accessories), Balzers
and Leybold (surface technologies),
Oerlikon Contraves (military products and space
technology) and Pilatus (aircraft).
1,600 Phoenix Mecano AG
Bearer Shares 832,592 0.2
Leading Swiss packaging manufacturer
for the mechanical engineering and
electronics industry.
1,200 Stratec Holding AG
Registered Shares 1,824,033 0.5
Develops, produces and distributes
instruments and implants used in
orthopedic and maxilofacial surgery.
----------- -----
13,340,055 3.4
Miscellaneous Services - 4.0%
6,000 Adecco SA
Bearer Shares 2,300,582 0.6
Leading personnel and temporary
employment company.
1,000 Bossard Holding AG
Bearer Shares 492,982 0.1
Manufactures fastening elements,
industrial adhesives, tools, pneumatics
and handling modules and automated
assembly systems.
3,000 Compagnie Financiere Richemont AG
Bearer Shares 4,334,132 1.2
Investment company with principal
interests in luxury goods and tobacco.
Percent
No. of of Net
Shares Security Value Assets
- --------------------------------------------------------------------------------
Miscellaneous Services - (continued)
800 Intershop Holding Ltd.
Bearer Shares $ 456,830 0.1%
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 2,738,788 0.7
Leader in the Swiss travel and tourism
sector with subsidiaries in the United
Kingdom, Germany, France and Austria.
2,500 Movenpick Holding Ltd.
Bearer Shares 754,023 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 761,383 0.2
Largest Swiss advertising intermediary.
500 Selecta Group
Registered Shares** 76,001 --
Owns and operates food and beverage
vending machines and snack shops
throughout Europe. The company also
sells and leases vending machines and
equipment and offers repair and
maintenance services for its products.
800 Societe Generale d'Affichage SA
Participation Certificates 290,312 0.1
Swiss advertising firm.
8,000 Societe Generale de Surveillance
Holding AG
Registered Shares 3,149,606 0.8
World's leading inspection company
and adjusting group.
----------- -----
15,354,639 4.0
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THE SWISS HELVETIA FUND, INC.
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Statement of Net Assets (concluded) June 30, 1997
(Unaudited)
Percent
No. of of Net
Shares Security Value Assets
- --------------------------------------------------------------------------------
Common Stocks and Warrants - (concluded)
Pharmaceuticals - 14.5%
1,200 Ares Serono SA
Bearer Shares $ 1,737,761 0.4%
Develops and markets pharmaceutical and
diagnostic products, and is the worldwide
market leader in pharmaceutical
products for the treatment of infertility.
5,950 Roche Holding AG*
Dividend Rights Certificates 53,796,474 14.1
Worldwide pharmaceutical company.
----------- -----
55,534,235 14.5
Retailers - 0.5%
1,000 Jelmoli Holding Ltd.
Bearer Shares 623,074 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.
2,000 Prodega AG
Registered Shares 917,494 0.2
Swiss market leader that operates
"Cash and Carry."
2,000 Valora Holdings AG
Registered Shares 424,512 0.1
Operates restaurants, food vending
machines and specialty retail stores.
----------- -----
1,965,080 0.5
Transport - 0.9%
1,000 Danzas Holding AG
Participation Certificates $ 195,139 0.1%
Third largest forwarding agent
in the world and the market leader in Europe.
700 Kuehne & Nagel International AG
Bearer Shares 431,359 0.1
Operates sea freight, land and rail
transportation businesses and
warehousing and distribution facilities.
2,500 Sairgroup
Registered Shares** 2,800,410 0.7
Switzerland's largest airline company.
------------ -----
3,426,908 0.9
577,433 Total Common Stocks and Warrants
(Cost $187,745,290)*** 379,931,590 99.5
Other Assets in Excess
of Liabilities 2,038,485 0.5
------------ -----
Net Assets Applicable to
12,321,016 Shares of
Common Stock Outstanding $381,970,075 100.0%
============ =====
Net Asset Value Per Share
($381,970,075 / 12,321,016) $31.00
======
- --------------------------------------------------------------------------------
*One of the ten largest portfolio holdings.
**Non-income producing security.
***Also aggregate cost for federal tax purposes.
See Notes to Financial Statements.
12
<PAGE>
THE SWISS HELVETIA FUND, INC.
- --------------------------------------------------------------------------------
Statement of Operations For the Six Months Ended June 30, 1997
- --------------------------------------------------------------------------------
Investment Income (Note A):
Dividends (Less foreign taxes withheld of $578,571) $ 3,280,684
Interest (Less foreign taxes withheld of $441) 8,733
-----------
Total income 3,289,417
-----------
Expenses:
Investment advisory fee (Note B) 1,322,881
Administration fee (Note B) 191,467
Transfer agent fee (Note B) 56,369
Accounting fee (Note B) 53,843
Miscellaneous 51,715
Legal fee 51,714
Sub-custodian fee (Note B) 51,456
Directors' fees and related expenses (Note D) 46,542
Printing and postage 33,614
Custodian fee (Note B) 18,618
Franchise fee 18,100
Audit fee 14,739
Pricing fee 4,654
Insurance 2,740
----------
Total expenses 1,918,452
----------
Net investment income 1,370,965
----------
Net Realized and Unrealized Gain/(Loss) on Investments:
Net realized gain from security transactions 5,434,493
Net realized foreign exchange loss (156,150)
Net unrealized appreciation or depreciation of
investments 80,504,061
Net unrealized appreciation or depreciation on
translation of assets and liabilities
denominated in foreign currency (33,467)
-----------
Net gain on investments 85,748,937
-----------
Net Increase in Net Assets Resulting from Operations $87,119,902
===========
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
13
<PAGE>
THE SWISS HELVETIA FUND, INC.
- --------------------------------------------------------------------------------
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
For the
Six Months Ended For the
June 30, 1997 Year Ended
(Unaudited) December 31, 1996
- ----------------------------------------------------------------------------------------------------------------
<S> <C>
Increase/(Decrease) in Net Assets:
Operations:
Net investment income $ 1,370,965 $ 757,721
Net realized foreign exchange loss (156,150) (557,889)
Net realized gain from security transactions 5,434,493 10,414,126
Net unrealized appreciation or depreciation of investments 80,504,061 (6,595,590)
Net unrealized appreciation or depreciation on translation of
assets and liabilities denominated in foreign currency (33,467) (14,340)
------------ ------------
Net increase in net assets resulting from operations 87,119,902 4,004,028
------------ ------------
Dividends to Shareholders from:
Net investment income (447,552) (1,292,382)
Capital gains distribution (2,025,632) (7,916,148)
------------ ------------
Total distributions to shareholders (2,473,184) (9,208,530)
------------ ------------
Capital Share Transactions:
Value of other capital share transactions in connection with
1995 rights offering -- 8,253
Value of 59,324 shares issued in dividend reinvestment (Note C) 1,315,515 --
------------ ------------
Total increase from capital share transactions 1,315,515 8,253
------------ ------------
Total increase/(decrease) in net assets 85,962,233 (5,196,249)
Net Assets:
Beginning of period 296,007,842 301,204,091
------------ ------------
End of period $381,970,075 $296,007,842
============ ============
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
14
<PAGE>
THE SWISS HELVETIA FUND, INC.
- --------------------------------------------------------------------------------
Financial Highlights
Contained below is per share operating performance data for a share of common
stock outstanding, total investment return, ratios to average net assets and
other supplemental data. This information has been derived from information
provided in the financial statements and market price data for the Fund's
shares.
<TABLE>
<CAPTION>
For the
Six Months Ended For the Year Ended December 31,
June 30, 1997 -----------------------------------------------------
(Unaudited) 1996 1995 1994 1993 1992
- --------------------------------------------------------------------------------------------------------------------
<S> <C>
Per Share Operating Performance:
Net asset value at beginning of period $ 24.14 $ 24.56 $ 19.79 $ 20.96 $ 14.62 $ 13.80
------- ------- ------- ------- ------- -------
Income from Investment Operations:
Net investment income 0.11 0.04 0.06 0.03 0.08 0.05
Net realized and unrealized gain
on investments(1) 6.98 0.29 6.82 0.12 6.59 1.04
------- ------- ------- ------- ------- -------
Total from Investment Operations 7.09 0.33 6.88 0.15 6.67 1.09
------- ------- ------- ------- ------- -------
Capital charge resulting from the issuance
of fund shares (0.03) -- (1.46) (0.06) -- (0.24)
------- ------- ------- ------- ------- -------
Less Distributions:
Dividends from net investment income
and net realized currency gain or loss (0.03) (0.10) (0.06) (0.27) (0.08) (0.03)
Distributions from net realized
capital gains (0.17) (0.65) (0.59) (0.99) (0.25) --
------- ------- ------- ------- ------- -------
Total distributions (0.20) (0.75) (0.65) (1.26) (0.33) (0.03)
------- ------- ------- ------- ------- -------
Net asset value at end of period $ 31.00 $ 24.14 $ 24.56 $ 19.79 $ 20.96 $ 14.62
======= ======= ======= ======= ======= =======
Market value per share, end of period $ 25.63 $ 19.88 $ 21.25 $ 18.88 $ 22.75 $ 13.88
======= ======= ======= ======= ======= =======
Total Investment Return(2):
Based on market value per share 30.07% (2.93)% 16.30% (10.67)% 65.39% 6.55%
Based on net asset value per share 29.59% 1.98% 26.28% 1.47% 44.90% 7.72%
Ratios to Average Net Assets:
Expenses 1.19%(3) 1.22% 1.38% 1.57% 1.50% 1.69%
Net investment income 0.85%(3) 0.25% 0.27% 0.02% 0.29% 0.39%
Supplemental Data:
Net assets at end of period (000) $381,970 $296,008 $301,204 $181,795 $184,698 $128,763
Average net assets during period (000) $323,958 $306,069 $231,234 $184,112 $151,936 $120,850
Portfolio turnover rate 15%(3) 19% 10% 28% 20% 13%
Average commissions per share(4) $ 0.5336 $ 0.7927 -- -- -- --
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) The period ended June 30, 1997, and the years ended 1996, 1995 and1994
include net realized currency gain. Prior years' net realized currency
gain/(loss) is included in net investment income.
(2) Total investment return based on market value differs from that as measured
based on net asset value due to an increase or decrease in the discount to
net asset value at which the Fund's shares traded throughout the period.
Total investment return excludes the effects of sales loads and commissions.
(3) Annualized.
(4) Disclosure of average commissions per share is effective beginning in fiscal
year 1996.
See Notes to Financial Statements.
15
<PAGE>
THE SWISS HELVETIA FUND, INC.
- --------------------------------------------------------------------------------
Notes to Financial Statements
A. Significant Accounting Policies - The Swiss Helvetia Fund, Inc. (the
"Fund"), which was incorporated in Delaware on October 24, 1986 and
commenced operations August 27, 1987, is registered under the Investment
Company Act of 1940, as amended, as a non-diversified, closed-end Investment
Management Company. Its objective is to seek long-term growth of capital
through investment in equity and equity-linked securities of Swiss
companies.
When preparing the Fund's financial statements, management makes estimates
and assumptions to comply with generally accepted accounting principles.
These estimates affect 1) the assets and liabilities that we report at the
date of the financial statements; 2) the contingent assets and liabilities
that we disclose at the date of the financial statements; and 3) the
revenues and expenses that we report for the period. Our estimates could be
different from the actual results. The Fund's significant accounting
policies are:
Security Valuation - The Fund states its investments at value. The Fund
values a security that is traded on the Zurich, Geneva or Basel stock
exchanges at the last sales price on the day of valuation. If there is no
sales price available, the Fund values the security at the mean between the
closing bid and asked prices for that day. When a security is traded on more
than one of the three exchanges, the Fund will use the price reported on the
Zurich exchange if the security is listed there, and if it is not, the price
reported on the Geneva or Basel exchange. A security that is not traded on
any of the three exchanges will be valued at the mean between the current
bid and asked prices. If bid and asked prices are not available, the Fund
will use a fair value that is determined in good faith by or under the
direction of the Fund's Board of Directors.
Securities Transactions and Investment Income - The Fund uses the trade date
to account for security transactions and the specific identification method
for financial reporting and income tax purposes to determine the cost of
investments sold or redeemed. Interest income is recorded on an accrual
basis. Dividend income is recorded on the ex-dividend date. The Fund records
Swiss withholding tax as an expense, net of an amount receivable from Swiss
tax authorities in accordance with a tax treaty.
Foreign Currency Translation - The Fund's books and records are maintained
in U.S. dollars. The Fund translates Swiss franc amounts into U.S. dollars
based on the following criteria.
o The Fund adjusts asset and liability accounts to reflect the current
exchange rate at the end of the period.
o The Fund includes in the period's net realized foreign exchange gain, the
exchange gain or loss that occurs due to exchange rate changes from the
time an income or expense amount is accrued and the time it is realized.
o The Fund records securities at cost based upon exchange rates at the time
that Swiss francs are purchased or received. Exchange rates are identified
on a first-in, first-out basis.
It is not practical for the Fund to distinguish the portion of its operation
results that occur due to exchange rate changes from the fluctuations that
occur due to market price changes.
Federal Income Taxes - The Fund determines its distributions according to
income tax regulations, which may be different from generally accepted
accounting principles. As a result, the Fund occasionally makes
reclassifications within its capital accounts to reflect income and gains
that are available for distribution under income tax regulations.
The Fund declares and pays dividends from net investment income annually,
and records distributions of capital gains on the ex-dividend date. The Fund
is organized as a regulated investment company. As long as it maintains this
status and distributes to its shareholders substantially all of its taxable
net investment income and net realized capital gains, it will be exempt from
most, if not all, federal income and excise taxes. As a result, the Fund has
made no provisions for federal income taxes.
B. Investment Advisory Fees, Transactions with Affiliates and Other Fees -
Hottinger Capital Corp. ("HCC"), which is owned jointly by Hottinger U.S.,
Inc. and Hottinger & Cie (Zurich), is the Fund's investment advisor. As
compensation for its advisory services, the Fund pays HCC an annual fee
based on the Fund's average month-end net assets. This fee is calculated
daily 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 and
0.70% of the amount over $200 mil-
16
<PAGE>
THE SWISS HELVETIA FUND, INC.
- --------------------------------------------------------------------------------
Notes to Financial Statements (concluded)
lion. Accrued advisory fees were $249,359 on June 30, 1997. The Fund paid
Hottinger & Cie $918 in brokerage commissions for the six months ended June
30, 1997.
Investment Company Capital Corp. ("ICC"), a subsidiary of Alex. Brown
Financial Corp., is the Fund's administrator. As compensation for its
administrative services, the Fund pays ICC an annual fee based on the Fund's
average monthly net assets. This fee is calculated daily and paid monthly at
the following annual rates: 0.20% of the first $75 million, 0.15% of the
next $75 million, 0.10% of the next $75 million and 0.05% of the amount over
$225 million.
Certain officers and/or directors of the Fund are officers and/or directors
of HCC, Hottinger U.S., Inc., Hottinger & Cie and/or ICC.
PNC Bank, N.A., a wholly-owned subsidiary of PNC Financial Corp., is the
Fund's custodian and transfer agent. PNC Bank and the Fund have entered into
an agreement with Credit Suisse that provides for the custody of Swiss
securities that the Fund holds.
As compensation for its accounting services, the Fund pays ICC an annual fee
that is calculated weekly and paid monthly based on the Fund's average daily
net assets. The Fund paid ICC $53,843 for accounting services for the six
months ended June 30, 1997.
C. Capital Share Transactions - The Fund is authorized to issue up to 50
million shares of $.001 par value capital stock. HCC owned 14,064 of the
12,321,016 shares outstanding on June 30, 1997. The Fund issued 59,324 new
shares of common stock through the reinvestment of dividends in 1997.
D. Directors' Fees - The Fund pays each director who is not affiliated with the
Fund, its investment advisor or administrator approximately $7,750 per annum
in compensation, except for the Chairman of the Audit Committee, who
receives an annual fee of approximately $8,500. In addition, each
unaffiliated director receives $750 for each attended directors' meeting,
$750 for each committee meeting attended if it is held separately and
reimbursement for out-of-pocket expenses. Accrued directors' fees were
$52,346 on June 30, 1997.
E. Investment Transactions - Excluding short-term obligations, purchases of
investment securities aggregated $25,167,013 and sales of investment
securities aggregated $24,044,167 for the six months ended June 30, 1997.
On June 30, 1997, aggregate gross unrealized appreciation for all securities
in which there is an excess of value over tax cost was $193,233,387,
aggregate gross unrealized depreciation of all securities in which there is
an excess of tax cost over value was $1,047,087 and net realized
appreciation was $192,186,300.
F. Federal Income Tax Information - Generally accepted accounting principles
require that certain components of net assets be reclassified to reflect
permanent differences between financial reporting and tax purposes.
Accordingly, last year's permanent book/tax differences of $176,083 and
$383,608 have been reclassified between (i) net investment income and
paid-in capital and (ii) net investment income and undistributed net
realized gain from security transactions, respectively. These
reclassifications have no effect on net assets or net asset values per
share.
G. Net Assets - On June 30, 1997, net assets consisted of:
Paid-in capital..................................... $183,587,582
Undistributed net investment income................. 948,443
Undistributed net realized gain
from security transactions...................... 5,286,297
Unrealized appreciation of investments.............. 192,186,300
Unrealized translation loss......................... (38,547)
------------
$381,970,075
============
- --------------------------------------------------------------------------------
1997 Annual Meeting of Stockholders--Voting Results
At the May 14, 1997 Annual Meeting of Stockholders, Paul Hottinguer, Claude
Mosseri-Marlio and Stephen K. West, Esq. were re-elected to the Board of
Directors for three-year terms that expire in 2000. In addition, the
accounting firm Deloitte & Touche LLP was selected as the Fund's independent
auditors for the calendar year ending December 31, 1997. Deloitte & Touche has
served as the Fund's independent auditors since 1987.
- --------------------------------------------------------------------------------
17
<PAGE>
THE SWISS HELVETIA FUND, INC.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
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.
- --------------------------------------------------------------------------------
18
<PAGE>
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