A Swiss THE SWISS
Investments ----------
Fund HELVETIA
----------
FUND, INC.
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
Annual Report
For the Period Ended
December 31, 1996
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
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
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. 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
Year in Review
Performance
1996 was not a particularly good year for the Swiss market. Its 18.5%
return was below the averages of the European and U.S. markets, and more than
half of its return was attributable to the impact of the Ciba-Geigy/Sandoz
consolidation. Furthermore, the Swiss franc weakened considerably against the
U.S. dollar, virtually offsetting the entire 16% gain it enjoyed in 1995. As a
result, when the market's performance is stated in U.S. dollar terms, 1996's
return was 2.03%. The Swiss Helvetia Fund, which has a policy of not hedging
against currency fluctuations, had a comparable total return of 1.98% on its net
asset value.
Over the longer term, there is more reason to be pleased with the
performance of both the Swiss market and your Fund. Over the past five years,
for instance, the Fund's net asset value has had an average annual total return
of 15.35% in U.S. dollars. This is well above the performance of the broad
international markets as represented by the 8.15% return for Morgan Stanley's
unmanaged Europe, Australia and Far East (EAFE) Index. It is also comfortably
above the 12.24% return reported for Lipper Analytical's European Fund Index and
is even better than the U.S. market's 15.20% return as represented by the
Standard & Poor's 500 Index, despite its heady returns of the past two years.
Due in part to these returns, the Fund is one of the very few closed-end funds
that has been awarded a five-star rating by Morningstar, a widely respected
mutual fund ratings company.
Factors Affecting the Swiss Market
Corporate restructuring continued to be the major factor in the Swiss
market in 1996. After
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International Stock Market Comparison*
From December 31, 1995-December 31, 1996
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[Graph appears here--see plot points below]
%
Netherlands 33.099998%
France 23.9%
U.S. 22.4%
Germany 21.6%
Switzerland 18.5%
U.K. 11.6%
Italy 11.6%
Japan -2.6%
*Each country's index performance is in local currency.
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Performance of The Swiss Helvetia Fund vs. SPI Index*
From inception (August 27, 1987) through December 31, 1996
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In Swiss francs
[Graph appears here--see plot points below]
The Fund SPI Index
+127.2% +122.9%
The Fund SPI Index
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
*Gross of Fund expenses.
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THE SWISS HELVETIA FUND, INC.
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lengthy delays awaiting the necessary approvals from the U.S. government, the
consolidation of Ciba-Geigy and Sandoz was consummated in the fourth quarter of
1996. The resulting company, now named Novartis, is the second largest drug
company in the world. On a less grand but still significant level, Swiss
Reinsurance Company purchased Mercantile & General from Prudential U.K. in an
effort to diversify into a less risky business with lower capital
requirements. In addition, Clariant purchased the specialty chemical unit of
Germany's Hoechst AG, an acquisition that should allow Clariant to reach
critical mass, increase its profit margins through cost savings and diversify
into less cyclical businesses. The restructuring trend was also evident in
internal corporate changes, especially within the banking sector, which began to
make necessary but painful increases in provisions for loan losses, reorganized
international exposure based on poles of profitability and made strong
reductions in domestic overcapacity.
The Fund's strategy has been to concentrate on multinational companies and
to underweight domestically oriented companies and banks whose large loan
portfolios are dependent upon the weak Swiss economy. In fact, the domestic
sector did significantly underperform the market in general in 1996.
Outlook for 1997
We remain cautiously optimistic about the Swiss market in 1997. Although it
is not inexpensive, we believe a case can be made for further price
appreciation. There are a number of factors that contribute to this view. While
the weakness of the Swiss franc depressed the market's return as stated in U.S.
dollars, it will have a positive effect on the profit margins of companies in
the export sector, the major component of the Swiss market
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Sector Performance
December 31, 1995-December 31, 1996
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[Graph appears here--see plot points below]
%
Chemical/Pharmaceutical 26.9%
Industrial 25.799999%
Mechanical Engineering 21.299999%
Electric Light & Power 20.700001%
Food Manufacturing 12.7%
Insurance 4.6%
Banks 4.1%
Building 2.8%
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The Swiss Helvetia Fund--Portfolio Holdings per Industry
as of December 31, 1996
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[Graph appears here--see plot points below]
Pharmaceuticals 37.8%
Cash and Equiv. 1.1
Food, Luxury Goods 11.6
Insurance 12.2
Machinery 4.4
Banks 12.6
Chemicals 2.4
Misc. Services 4.5
Misc. Industries 4.4
Building Contractors 1.1
Electrical Engineering 7.3
Retailers 0.4
Transport 0.2
3
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THE SWISS HELVETIA FUND, INC.
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and the Fund's portfolio. Furthermore, we believe the continuing commitment of
Swiss companies toward enhancing shareholder value through such steps as better
capital allocation, more restructuring and adoption of international accounting
standards may be rewarded by price/earnings ratios more in line with other
international companies, especially those in the U.S. We expect interest rates
to remain relatively low since the Swiss economy is fragile and the Swiss
National Bank has no reason to change its accommodative monetary policy.
The strength of the Swiss franc in 1995 was largely rooted in pessimism
toward the European Monetary Union. The result was an overvaluation that was
corrected in 1996. We believe that the Swiss franc is close to fair value
opposite the U.S. dollar but will remain under pressure because of the diverging
cycles of the Swiss and U.S. economies.
The Fund's Market Price
The Board of Directors is concerned by the growing disparity between the
Fund's market price and its net asset value per share. While it is not uncommon
for closed-end funds to trade at a discount, and while the Fund's discount is
about average for its peers, the Board is not pleased with this development. It
would appear that the strong performance of the U.S. market over the past two
years has made investors less interested in international investments. Coupled
with the recent weakness of the Swiss franc, this trend has had particular
impact on the demand for the Fund's shares.
The Board believes that the arguments for international diversification are
as strong as ever and that the Swiss market, in particular, deserves investor
attention. To that end, the
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Financial Highlights
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1996 1995 1994 1993
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Net Assets
(in Million SFr) 396.1 347.2 238.1 273.7
(in Million $) 296.0 301.2 181.8 184.7
Outstanding Shares
(000) 12,262 12,262 9,187 8,810
Net Asset Value
per Share ($) 24.14 24.56 19.79 20.96
Dividend per Share ($) 0.75* 0.65 1.26 0.33
*Includes a $0.12 per share ordinary income dividend and a long-term capital
gains distribution of $0.63.
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THE SWISS HELVETIA FUND, INC.
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Fund's officers are intensifying efforts to acquaint brokers and investment
letter writers with the Fund's history and prospects and will continue to
enhance shareholder communications through such methods as the new toll-free
line and Internet Website which were established in 1996. We are hopeful that
these efforts will help to narrow the Fund's discount over time.
Dividend
On December 30, the Fund made a distribution to shareholders in the amount
of $0.751 per share, which was comprised of $0.105 per share in income, $0.015
per share in short-term capital gains and $0.631 per share in long-term capital
gains. Shareholders who are participating in the Fund's dividend reinvestment
plan have put this money back to work by using it to buy more Fund shares.
In Memoriam
On December 11, 1996, we lost a friend and colleague with the passing of
Georges L. de Montebello, the Fund's President and the President of Hottinger
Capital Corp., the Fund's Advisor. Georges originated the idea of The Swiss
Helvetia Fund and guided its investments from its inception in 1987. He will be
missed.
As the Fund has grown over the years, Georges built a team to assist him in
looking after its investments and they will carry on in his absence.
Dr. Henri Stalder is a Director of the Fund's Advisor and a member of the
executive management team of Hottinger & Cie (Switzerland). He has been
affiliated with the Hottinger Group since 1994. Prior to 1994,
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The Swiss Helvetia Fund--Ten Largest Holdings (in U.S. dollars)
As of December 31, 1996
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% of Total
Cost Market Value Net Assets
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1. Novartis Ltd. $ 31,190,468 $ 64,413,950 21.8%
2. Roche Holding AG 16,329,129 46,304,453 15.6
3. Nestle AG 18,418,475 31,138,758 10.5
4. Swiss Reinsurance
Company 7,322,876 15,055,593 5.1
5. Credit Suisse Holding 10,607,620 14,794,889 5.0
6. Zurich Insurance 9,616,530 14,454,158 4.9
7. ABB Asea Brown
Boveri Ltd. 11,048,623 13,685,272 4.6
8. Union Bank of
Switzerland 6,499,572 11,394,306 3.9
9. Swiss Bank
Corporation 7,576,684 9,519,252 3.2
10. Compagnie Financiere
Richemont AG 1,906,624 4,495,255 1.5
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Total $120,516,601 $225,255,886 76.1%
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5
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THE SWISS HELVETIA FUND, INC.
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Dr. Stalder was an investment executive with a number of financial institutions
specializing in the Swiss equities market and served in various capacities
with Union Bank of Switzerland for approximately 20 years.
Dieter Buchholz is a Senior Vice President of the Fund's Advisor. He
recently joined the Hottinger Group in Switzerland after extensive experience in
Swiss and international equity management with Union Bank of Switzerland and
Julius Baer Asset Management.
Rudolf Millisits is a Vice President of the Fund and Executive Vice
President of the Fund's Advisor. He has been affiliated with the Hottinger Group
since 1993 and, since 1994, has been working with Mr. de Montebello in New York
in connection with the Fund's management. Prior to joining the Hottinger Group,
Mr. Millisits was affiliated with Credit Suisse and Swiss Bank Corporation.
We encourage you to contact the Fund if you have any questions, and we
thank you for your continued interest.
Sincerely,
/s/ Paul Hottinguer
- -------------------
Paul Hottinguer
Chairman and Chief Executive Officer
/s/ Rodolphe Hottinger
- ----------------------
Rodolphe Hottinger
President and Chief Operating Officer
January 23, 1997
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The Swiss Helvetia Fund--
Ten Issues Having Greatest Appreciation in 1996(1)
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Market Price Market Price
in U.S.$ in U.S.$ %
as of as of Appreciation
12/31/95 12/31/96 1995-96
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1. Kuoni Travel
Holding Ltd. (R) $1,605 $2,428 51.28%
2. Ares Serono SA (B) 703 954 35.70
3. Clariant AG (R) 328 428 30.49
4. Societe Generale de
Surveillance Holding AG (R) 343 439 27.99
5. Sandoz AG
(now Novartis Ltd.)(2) (R) 916 1,145 25.00
6. Ciba-Geigy AG
(now Novartis Ltd.)(2) (R) 881 1,075 22.02
7. Oerlikon-Buehrle
Holding AG (R) 82 99 20.73
8. Bucher Holding
Company (B) 573 687 19.90
9. Schweizerische Industrie-
Gesellschaft (SIG) (R) 1,015 1,214 19.61
10. Siegfried AG (R) 781 933 19.46
(1) Among issues held for the full year.
(2) Sandoz and Ciba-Geigy consolidated to form Novartis. For every share
of Sandoz, the Fund received 1 share of Novartis. For every share of
Ciba-Geigy, the Fund received 1.066 shares of Novartis. The Sandoz
shares exchanged for Novartis appreciated 25.00%, and the Ciba-Geigy
shares exchanged for Novartis appreciated 22.02%.
(B)=Bearer Shares
(R)=Registered Shares
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THE SWISS HELVETIA FUND, INC.
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Review of Operations
Trading activity in 1996 involved changes in the following positions:
New Investments by the Fund
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Adecco SA
Banque Cantonale Vaudoise
Christ AG
Disetronic Holding AG
Hero AG
Huber & Suhner AG
Industrieholding Cham AG
Jelmoli Holding Ltd.
Micronas Semiconductor
Holding AG
Nokia-Maillefer Holding SA
Schweizerhall Holding AG
Stratec Holding AG
Securities Disposed of
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Agie Holding AG
Attisholz Holding AG
Brauerei Eichhof
Edipresse SA
Elco Looser Holdings AG
Elektrowatt Ltd.
EMS Chemie Holding AG
Forbo Holdings Ltd.
Fotolabo SA
Galenica Holding AG
Georg Fischer AG
Immuno International AG
Landis & Gyr AG
Merkur Holding AG**
Rieter Holding AG
Sarna Kunststoff Holding AG
Sika Finanz AG
Sources Minerales Henniez SA
Suedelektra Holding AG
Swissair AG
Swisslog Holding AG
Additions to Existing Investments
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ABB Asea Brown Boveri Ltd.
Ares Serono SA
Belimo Automation AG
Credit Suisse Holding
Danzas Holding AG
Gurit-Heberlein AG
Kuoni Travel Holding Ltd.
Lindt & Spruengli AG
Mikron Holding AG
Novartis Ltd.*
Oerlikon-Buehrle Holding AG
Phoenix Mecano AG
Publicitas Holding SA
Saurer Gruppe Holding AG
Schweizerische Industrie-Gesellschaft (SIG)
Schweizerische Ruckversicherungs-Gesellschaft (Swiss Reinsurance Company)
Schweizerischer Bankverein (Swiss Bank Corporation)
Siegfried AG
Sulzer Brothers Ltd.
Winterthur Schweizerische Versicherungs-Gesellschaft
Zurich Schweizerische Versicherungs-Gesellschaft (Zurich Insurance)
- ----------
*Created through the consolidation of Sandoz and Ciba-Geigy.
**Now called Valora Holding AG.
7
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THE SWISS HELVETIA FUND, INC.
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Statement of Net Assets December 31, 1996
Percent
No. of of Net
Shares Security Value Assets
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Common Stocks and Warrants - 98.9%
Banks - 12.6%
1,200 Baer Holdings Ltd.
Bearer Shares $ 1,258,014 0.4%
Banking group specializing in asset
management, investment consulting
and securities trading.
(cost $1,357,654)
1,000 Banque Cantonale Vaudoise
Bearer Shares 251,812 0.1
Cantonal bank in the
western part of Switzerland.
(cost $305,431)
144,000 Credit Suisse Holding*
Registered Shares 14,794,889 5.0
A global financial services
institution whose main holding
is Credit Suisse, one of
Switzerland's "Big Three" banks.
(cost $10,607,620)
13,000 Schweizerische Bankgesellschaft*
(Union Bank of Switzerland)
Bearer Shares 11,394,306 3.9
Largest Swiss full-service bank.
(cost $6,499,572)
Schweizerischer Bankverein*
(Swiss Bank Corporation)
50,000 Registered Shares 9,508,331 3.2
3,950 Warrants Expiring 6/30/00** 10,921 --
One of the three largest
international Swiss banks.
(cost $7,576,684)
----------- ----
37,218,273 12.6
Building Contractors & Materials - 1.1%
3,100 Holderbank Financiere Glarus AG
Bearer Shares 2,214,451 0.8
Large cement producer with
worldwide operations.
(cost $2,283,764)
Building Contractors & Materials - (continued)
2,000 Keramik Holding AG Laufen
Bearer Shares $ 1,014,720 0.3%
One of the largest suppliers in the
world of floor and wall tiles, sanitary
fittings, crockery and ceramics.
(cost $1,437,100)
----------- ----
3,229,171 1.1
Chemicals - 2.4%
3,000 Clariant AG
Registered Shares 1,284,465 0.4
Specializes in color chemistry and manu-
factures a range of dyestuffs, pigments,
chemicals, additives and masterbatches
for the textile, paper, leather, plastics,
synthetic fibers and paint industries.
(cost $1,019,181)
800 Gurit-Heberlein AG
Bearer Shares 1,602,032 0.6
European market leader for wind
screen bonding systems, ski bases
and optically pure thermoplastic
sheeting for the auto industry.
(cost $1,732,984)
3,200 Siegfried AG
Registered Shares 2,986,475 1.0
International producer and
supplier of chemicals and pharma-
ceuticals for major businesses.
(cost $2,169,776)
1,400 Schweizerhall Holding AG
Registered Shares 1,255,324 0.4
Wholesale trader in chemical and
pharmaceutical intermediate
products, as well as in the perfume
and fertilizer businesses.
(cost $1,275,652)
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7,128,296 2.4
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THE SWISS HELVETIA FUND, INC.
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Statement of Net Assets (continued) December 31, 1996
Percent
No. of of Net
Shares Security Value Assets
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Common Stocks and Warrants - (continued)
Electrical Engineering & Electronics - 7.3%
11,000 ABB Asea Brown Boveri Ltd.*
Bearer Shares $13,685,272 4.6%
One of the largest electrical
engineering firms in the world.
(cost $11,048,623)
700 Ascom Holdings Ltd.
Bearer Shares 712,919 0.2
Through its subsidiaries, active
in telecommunications, services
automation and enterprise
networks throughout Europe
and the United States.
(cost $756,110)
2,500 Belimo Automation AG
Registered Shares 519,316 0.2
World market leader in damper
and volume control actuators for
ventilation and air conditioning
equipment.
(cost $535,338)
1,000 Disetronic Holding AG
Bearer Shares** 2,211,761 0.8
Leading company in medical technology.
Manufactures and markets infusion
systems and injection systems used to
administer insulin and growth hormones.
(cost $2,135,488)
2,000 Kaba Holding
Registered Shares** 715,834 0.2
Specializes in mechanical and
electronic security systems.
(cost $900,436)
1,000 Micronas Semiconductor Holding AG
Bearer Shares** 754,689 0.3
Develops, produces and markets
mixed-signal integrated circuits
and systems.
(cost $805,238)
Electrical Engineering & Electronics - (continued)
1,500 Phonak Holding AG
Registered Shares $ 1,250,841 0.4%
A leader in hearing aids, ranked
fourth in the world.
(cost $873,738)
Swiss Corporation for Micro-
electronics and Watchmaking
Industries Ltd. (SMH)
800 Bearer Shares 493,163 0.2
6,000 Registered Shares 856,310 0.3
Watchmaking company.
(cost $1,372,883)
Zellweger Luwa AG
500 Bearer Shares 339,984 0.1
1,300 Warrants Expiring 5/21/97** 874 --
Worldwide diversified industrial and
service company active mainly in
textile electronics, air filtering and
conditioning techniques.
(cost $505,804)
----------- ----
21,540,963 7.3
Food, Luxury Goods - 11.6%
2,500 Hero AG
Bearer Shares 1,109,617 0.4
Leading Swiss manufacturer
of branded jams and preserves.
(cost $1,211,266)
113 Lindt & Spruengli AG
Registered Shares 2,062,337 0.7
Major manufacturer of premium
Swiss chocolates.
(cost $1,704,779)
29,000 Nestle AG*
Registered Shares 31,138,758 10.5
Largest food and beverage
processing company in the world.
(cost $18,418,475)
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34,310,712 11.6
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THE SWISS HELVETIA FUND, INC.
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Statement of Net Assets (continued) December 31, 1996
Percent
No. of of Net
Shares Security Value Assets
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Common Stocks and Warrants - (continued)
Insurance - 12.2%
750 Baloise-Holding
Registered Shares $ 1,507,510 0.5%
Medium-sized insurer active in
all sectors of insurance.
(cost $1,364,987)
14,100 Schweizerische Ruckversicherungs-
Gesellschaft*
(Swiss Reinsurance Company)
Registered Shares 15,055,593 5.1
Second largest reinsurance
company in the world.
(cost $7,322,876)
2,500 Swiss Life Insurance and
Pension (Rentenanstalt)
Participation Certificates 793,918 0.2
Medium-sized Swiss life insurance company.
(cost $675,514)
7,500 Winterthur Schweizerische
Versicherungs-Gesellschaft
Registered Shares 4,337,592 1.5
Leading Swiss international insurance company.
(cost $4,458,745)
52,000 Zurich Schweizerische
Versicherungs-Gesellschaft*
(Zurich Insurance)
Registered Shares 14,454,158 4.9
A large worldwide insurance
operator.
(cost $9,616,530)
----------- ----
36,148,771 12.2
Machinery - 4.4%
500 Bobst Ltd.
Bearer Shares 676,231 0.2
Leading international manufacturer of
cardboard packaging machines.
(cost $695,281)
Machinery - (continued)
2,000 Bucher Holding Company
Bearer Shares $ 1,374,879 0.5%
Manufacturer of agricultural
machines, special vehicles, fruit
juice equipment and plastics machines.
(cost $1,350,930)
600 Esec Holding AG
Bearer Shares 2,190,092 0.7
Market leader in the field of die
bonding technology used by
manufacturers of semiconductors.
(cost $1,121,191)
11,500 Mikron Holding AG
Registered Shares** 1,357,693 0.5
Machine tools and milling machine
producer.
(cost $1,199,278)
2,500 Nokia-Maillefer Holding SA
Bearer Shares 980,722 0.3
Europe's leading supplier of production
systems and complete services to the
electric wire and cable industry.
(cost $581,243)
4,000 Saurer Gruppe Holding AG
Registered Shares** 1,733,543 0.6
Machinery maker with dominant
market share.
(cost $1,582,765)
1,000 Schindler Holding AG
Registered Shares 1,023,687 0.4
One of the world's largest
elevator companies and a leading
Swiss machinery enterprise.
(cost $858,517)
2,000 Schweizerische Industrie-
Gesellschaft (SIG)
Registered Shares 2,428,454 0.8
Medium-sized machinery manufacturer
with interests in the packaging, defense
and railway industries.
(cost $2,235,156)
10
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THE SWISS HELVETIA FUND, INC.
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Statement of Net Assets (continued) December 31, 1996
Percent
No. of of Net
Shares Security Value Assets
- -------------------------------------------------------------------------------
Common Stocks and Warrants - (continued)
Machinery - (continued)
2,200 Sulzer Brothers Ltd.
Registered Shares $ 1,270,717 0.4%
A machine manufacturer and
worldwide leader in weaving
machines and sewing machines.
(cost $1,363,711)
----------- ----
13,036,018 4.4
Miscellaneous Industries - 4.4%
4,500 Alusuisse-Lonza Holding AG
Registered Shares 3,587,761 1.2
A major aluminum producing and
processing company.
(cost $2,750,772)
1,500 AFG Arbonia-Forster Holding AG
Bearer Shares 627,662 0.2
Manufacturer of heating
radiators, refrigeration kitchen
equipment and steel tubing.
(cost $501,841)
1,100 Baumgartner Papiers S.A.
Registered Shares 431,518 0.1
Swiss paper company active in the
field of wholesale paper, paper
processing, manufacturing of cigarette
filters and capillary reservoirs.
(cost $505,830)
1,000 Christ AG
Registered Shares** 754,689 0.3
Manufactures and markets water
purification systems and produces
customized systems for high-tech,
industrial-scale water treatment plants
as well as standard systems.
(cost $781,959)
300 Datwyler Holding AG
Bearer Shares 486,438 0.2
Diversified manufacturer of
telecommunication cable, floor
coverings and precision steel tubing.
(cost $579,283)
Miscellaneous Industries - (continued)
1,000 Huber & Suhner AG
Registered Shares $ 1,008,742 0.3%
Manufactures a wide range of
products, extending from cables for
energy and electrical transmission to
special products such as rubber.
(cost $1,052,974)
500 Industrieholding Cham AG
Registered Shares** 287,678 0.1
Manufactures paper and storage logistics
systems and owns real estate.
(cost $275,943)
2,000 Kardex AG
Bearer Shares 552,940 0.2
Specializes in industrial and office
storage systems, office machinery,
safety and computer software.
(cost $595,636)
15,000 Oerlikon-Buehrle Holding AG
Registered Shares** 1,479,489 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.
(cost $1,362,808)
2,200 Phoenix Mecano AG
Bearer Shares 1,150,714 0.4
Leading Swiss packaging
manufacturer for the mechanical
engineering and electronics industry.
(cost $833,897)
2,000 Stratec Holding AG
Registered Shares** 2,592,842 0.9
Develops, produces and distributes
instruments and implants used in
orthopedic and maxilofacial surgery.
(cost $1,949,169)
----------- ----
12,960,473 4.4
11
<PAGE>
THE SWISS HELVETIA FUND, INC.
- -------------------------------------------------------------------------------
Statement of Net Assets (continued) December 31, 1996
Percent
No. of of Net
Shares Security Value Assets
- -------------------------------------------------------------------------------
Common Stocks and Warrants - (continued)
Miscellaneous Services - 4.5%
4,000 Adecco SA
Bearer Shares $ 1,004,259 0.3%
Personnel and temporary
employment company.
(cost $1,136,970)
1,000 Bossard Holding AG
Bearer Shares 356,422 0.1
Manufactures fastening elements,
industrial adhesives, tools,
pneumatics and handling modules
and automated assembly systems.
(cost $379,287)
3,200 Compagnie Financiere
Richemont AG*
Bearer Shares 4,495,255 1.5
Investment company with principal
interests in luxury goods and tobacco.
(cost $1,906,624)
1,000 Intershop Holding Ltd.
Bearer Shares 504,371 0.2
Involved in the construction and
funding of shopping centers and
property for commercial use,
both nationally and internationally.
(cost $550,367)
850 Kuoni Travel Holding Ltd.
Registered Shares 2,064,186 0.7
Leader in the Swiss travel and
tourism sector with subsidiaries
in the United Kingdom, Germany,
France and Austria.
(cost $1,392,976)
4,000 Publicitas Holding SA
Participation Certificates 687,439 0.2
Largest Swiss advertising intermediary.
(cost $811,373)
2,000 Societe Generale d'Affichage SA
Participation Certificates 856,310 0.3
Swiss advertising firm.
(cost $799,843)
Miscellaneous Services - (continued)
8,000 Societe Generale de Surveillance
Holding AG
Registered Shares $ 3,514,907 1.2%
World's leading inspection company
and adjusting group.
(cost $1,624,194)
------------ ----
13,483,149 4.5
Pharmaceuticals - 37.8%
1,200 Ares Serono SA
Bearer Shares 1,145,035 0.4
Develops and markets pharma-
ceutical and diagnostic products,
and is the worldwide market leader
in pharmaceutical products for
the treatment of infertility.
(cost $932,644)
56,233 Novartis Ltd.*
Registered Shares 64,413,950 21.8
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 pharma-
ceutical entity in the world.
(cost $31,190,468)
5,950 Roche Holding AG*
Dividend Rights Certificates 46,304,453 15.6
Worldwide pharmaceutical
company.
(cost $16,329,129)
------------ ----
111,863,438 37.8
12
<PAGE>
THE SWISS HELVETIA FUND, INC.
- -------------------------------------------------------------------------------
Statement of Net Assets (concluded) December 31, 1996
Percent
No. of of Net
Shares Security Value Assets
- -------------------------------------------------------------------------------
Common Stocks and Warrants - (concluded)
Retailers - 0.4%
1,200 Jelmoli Holding Ltd.
Bearer Shares** $ 663,528 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.
(cost $565,734)
1,800 Prodega AG
Registered Shares 537,996 0.2
Swiss market leader that operates
"Cash and Carry."
(cost $648,826)
------------ -----
1,201,524 0.4
Transport - 0.2%
3,500 Danzas Holding AG
Participation Certificates 720,503 0.2
------------ -----
Third largest forwarding agent
in the world and the market
leader in Europe.
(cost $769,083)
514,746 Total Common Stocks and Warrants
(Cost $181,187,950) 292,841,291 98.9
Time Deposits - 1.2%
4,660 Credit Suisse Holding
3.5%, due 1/3/97
(Cost $3,453,131) $ 3,482,029 1.2%
------------ -----
Total Investments
(Cost $184,641,081)*** 296,323,320 100.1
Liabilities in Excess of
Other Assets (315,478) (0.1)
------------ -----
Net Assets Applicable to
12,261,692 Shares of
Common Stock Outstanding $296,007,842 100.0%
============ =====
Net Asset Value Per Share
($296,007,842 / 12,261,692) $24.14
======
- --------------------------------------------------------------------------------
*One of the ten largest portfolio holdings.
**Non-income producing security.
***Also aggregate cost for federal tax purposes.
Descriptions of companies have not been audited by Deloitte & Touche LLP.
See accompanying Notes to Financial Statements.
13
<PAGE>
THE SWISS HELVETIA FUND, INC.
- -------------------------------------------------------------------------------
Statement of Operations For the Year Ended December 31, 1996
<TABLE>
<S><C>
Investment Income (Note A):
Dividends (Less foreign taxes withheld of $778,761) $ 4,408,117
Interest (Less foreign taxes withheld of $4,628) 87,956
-----------
Total income 4,496,073
-----------
Expenses:
Investment advisory fee (Note B) 2,518,700
Administration fee (Note B) 378,046
Directors' fees and related expenses (Note D) 151,069
Legal fee 131,400
Transfer agent fee (Note B) 124,283
Accounting fee (Note B) 105,785
Sub-custodian fee (Note B) 79,500
Miscellaneous 78,183
Franchise fee 56,325
Printing and postage 55,470
Audit fee 30,653
Custodian fee (Note B) 23,397
Insurance 5,541
-----------
Total expenses 3,738,352
-----------
Net investment income 757,721
-----------
Net Realized and Unrealized Gain/(Loss) on Investments:
Net realized gain from security transactions 10,414,126
Net realized foreign exchange loss (557,889)
Net unrealized appreciation or depreciation of investments (6,595,590)
Net unrealized appreciation or depreciation on translation of assets and liabilities
denominated in foreign currency (14,340)
-----------
Net gain on investments 3,246,307
-----------
Net Increase in Net Assets Resulting from Operations $ 4,004,028
===========
</TABLE>
- --------------------------------------------------------------------------------
See accompanying Notes to Financial Statements.
14
<PAGE>
THE SWISS HELVETIA FUND, INC.
- -------------------------------------------------------------------------------
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
For the Year Ended December 31,
-------------------------------
1996 1995
- ------------------------------------------------------------------------------------------------------------
<S><C>
Increase/(Decrease) in Net Assets:
Operations:
Net investment income $ 757,721 $ 619,796
Net realized foreign exchange gain/(loss) (557,889) 4,617,468
Net realized gain from security transactions 10,414,126 2,652,592
Net unrealized appreciation or depreciation of investments (6,595,590) 64,578,521
Net unrealized appreciation or depreciation on translation of
assets and liabilities denominated in foreign currency (14,340) 6,323
------------ ------------
Net increase in net assets resulting from operations 4,004,028 72,474,700
------------ ------------
Dividends to Shareholders from:
Net investment income (1,292,382) (619,796)
Capital gains distributions (7,916,148) (7,174,991)
------------ ------------
Total distributions to shareholders (9,208,530) (7,794,787)
------------ ------------
Capital Share Transactions:
Value of 3,075,000 shares issued in rights offering, net (Note C) 8,253 54,729,623
------------ ------------
Total increase from capital share transactions 8,253 54,729,623
------------ ------------
Total increase/(decrease) in net assets (5,196,249) 119,409,536
Net Assets:
Beginning of period 301,204,091 181,794,555
------------ ------------
End of period $296,007,842 $301,204,091
============ ============
</TABLE>
- --------------------------------------------------------------------------------
See accompanying Notes to Financial Statements.
15
<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 Year Ended December 31,
-----------------------------------------------------------
1996 1995 1994 1993 1992
- -----------------------------------------------------------------------------------------------------------------
<S><C>
Per Share Operating Performance:
Net asset value at beginning of year $ 24.56 $ 19.79 $ 20.96 $ 14.62 $ 13.80
-------- -------- -------- -------- --------
Income from Investment Operations:
Net investment income 0.10 0.06 0.03 0.08 0.05
Net realized and unrealized gain
on investments(1) 0.23 6.82 0.12 6.59 1.04
-------- -------- -------- -------- --------
Total from Investment Operations 0.33 6.88 0.15 6.67 1.09
-------- -------- -------- -------- --------
Capital charge resulting from the issuance
of fund shares -- (1.46) (0.06) -- (0.24)
-------- -------- -------- -------- --------
Less Distributions:
Dividends from net investment income (0.10) (0.06) (0.27) (0.08) (0.03)
Distributions from net realized capital gains (0.65) (0.59) (0.99) (0.25) --
-------- -------- -------- -------- --------
Total distributions (0.75) (0.65) (1.26) (0.33) (0.03)
-------- -------- -------- -------- --------
Net asset value at end of year $ 24.14 $ 24.56 $ 19.79 $ 20.96 $ 14.62
-------- -------- -------- -------- --------
Market value per share, end of year $ 19.88 $ 21.25 $ 18.88 $ 22.75 $ 13.88
======== ======== ======== ======== ========
Total Investment Return(2):
Based on market value per share (2.93)% 16.30% (10.67)% 65.39% 6.55%
Based on net asset value per share 1.98% 26.28% 1.47% 44.90% 7.72%
Ratios to Average Net Assets:
Expenses 1.22% 1.38% 1.57% 1.50% 1.69%
Net investment income 0.25% 0.27% 0.02% 0.29% 0.39%
Supplemental Data:
Net assets at end of year (000) $296,008 $301,204 $181,795 $184,698 $128,763
Average net assets during year (000) $306,069 $231,234 $184,112 $151,936 $120,850
Portfolio turnover rate 19% 10% 28% 20% 13%
Average commissions per share $ 0.7927(3) -- -- -- --
</TABLE>
- --------------------------------------------------------------------------------
(1) 1996, 1995 & 1994 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 year.
Total investment return excludes the effects of sales loads and commissions.
(3) Disclosure of average commissions per share is effective fiscal year
beginning in 1996.
See accompanying Notes to Financial Statements.
16
<PAGE>
THE SWISS HELVETIA FUND, INC.
- -------------------------------------------------------------------------------
Notes to Financial Statements
A. Significant Accounting Policies - The Swiss Helvetia Fund, Inc. (the
"Fund") was incorporated in Delaware on October 24, 1986 and commenced
operations on August 27, 1987. The Fund is registered under the
Investment Company Act of 1940, as amended, as a closed-end,
non-diversified management investment company. The Fund's investment
objective is to seek long-term growth of capital through investment in
equity and equity-linked securities of Swiss companies.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
Significant accounting policies are as follows:
Security Valuation - Investments are stated at value. All securities that
are traded on the Zurich, Geneva or Basel stock exchanges and for which
market quotations are readily available are valued at the last sales price
on the day of valuation or, if no sales prices are available at the time, at
the mean between the closing bid and asked prices for that day. For
securities traded on two or more of the three exchanges, the Fund will use
prices reported on the Zurich exchange if the security is listed there, and
if not, the prices reported on the Geneva or Basel exchange. Securities that
are not traded on any of the three exchanges will be valued, if bid and
asked quotations are available, at the mean between the current bid and
asked price. If bid and asked quotations are not available, then such
securities will be valued at fair value as determined in good faith by or
under the direction of the Board ofDirectors of the Fund.
Securities Transactions and Investment Income - Securities transactions are
recorded on the trade date. The cost of investments sold is determined by
use of the specific identification method for both financial reporting and
income tax purposes. Interest income is recorded on an accrual basis;
dividend income is recorded on the ex-dividend date. Swiss withholding tax
is recorded as an expense, net of an amount receivable from Swiss tax
authorities pursuant to a tax treaty.
Foreign Currency Translations - The books and records of the Fund are
maintained in United States dollars. Swiss franc amounts are translated into
United States dollars on the following basis:
o Asset and liability accounts are adjusted to reflect the current exchange
rate at the end of the period.
o Exchange gain or loss that occurs because of a change in exchange rates
between the time an income or expense amount is accrued and the time it
is realized is included in net realized foreign exchange gain for the
year.
o Securities are recorded at cost based upon exchange rates at the time
Swiss francs are purchased or received. Exchange rates are identified on a
first-in, first-out basis.
It is not practical to distinguish that portion of the results of operations
of the Fund that arise as a result of changes in the exchange rates from
fluctuations that arise from changes in market prices of investments during
the period.
Federal Income Tax - No provision is made for federal income taxes as it is
the Fund's intention to continue to qualify as a regulated investment
company under Subchapter Mof the Internal Revenue Code and to make requisite
distributions to shareholders that will be sufficient to relieve it from all
or substantially all federal income taxes. The Fund's policy is to
distribute to shareholders substantially all of its taxable net investment
income and net realized long-term capital gains. Dividends from net
investment income are declared and paid annually. Distributions of capital
gains are recorded on the ex-dividend dates.
B. Investment Advisory Fee, Transactions with Affiliates and Other Fees -
Hottinger Capital Corp. ("HCC"), jointly owned by Hottinger U.S., Inc. and
Hottinger & Cie (Zurich), serves as the Fund's investment advisor. As
compensation for its advisory services at December 31, 1996, HCCreceives
from the Fund an annual fee, calculated and paid monthly, at the following
annual rates based upon the Fund's average month-end net assets: 1.00% of
the first $60 million, .90% of the next $40 million, .80% of the next $100
million and .70% of that portion in excess of $200 million. At December 31,
1996, accrued advisory fees were $205,992. For the year ended
17
<PAGE>
THE SWISS HELVETIA FUND, INC.
- -------------------------------------------------------------------------------
Notes to Financial Statements (concluded)
December 31, 1996, the Fund paid brokerage commissions of approximately
$43,000 to Hottinger & Cie.
Investment Company Capital Corp. ("ICC"), a subsidiary of Alex. Brown
Financial Corp., serves as the Fund's administrator. As compensation for
providing administrative services at December 31, 1996, ICC receives from
the Fund an annual fee, calculated daily and paid monthly, at the following
rates based upon the Fund's average monthly net assets: .20% of the first
$75 million, .15% of the next $75 million, .10% of the next $75 million and
.05% of that portion in excess of $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., acts as
the Fund's custodian and transfer agent. PNC Bank and the Fund have entered
into an agreement with Credit Suisse providing for the custody of Swiss
securities held by the Fund.
As compensation for providing accounting services, ICC receives from the
Fund an annual fee, calculated weekly and paid monthly, based on the Fund's
average daily net assets. ICC received $105,785 for accounting services for
the year ended December 31, 1996.
C. Capital Share Transactions - There are 50 million shares of $.001 par
value common stock authorized. Of the 12,261,692 shares outstanding at
December 31, 1996, HCC owned 13,432 shares. During 1995, the Fund issued
3,075,000 new shares of common stock under a non-transferable rights
offering to its shareholders, which netted proceeds of approximately
$54,737,000.
D. Directors' Fees - The Fund pays approximately $7,750 per annum in
compensation to each director who is not affiliated with the Fund,
its investment advisor or administrator, except for the Chairman of
the Audit Committee. The Chairman of the Audit Committee receives an
annual fee of approximately $8,500. In addition, each director who is
not so affiliated receives $750 for each attended directors' meeting and
$750 for each committee meeting attended if held separately, and
reimbursement for out-of-pocket expenses. At December 31, 1996, accrued
directors' fees were $34,000.
E. Investment Transactions - Purchases and sales of securities, other than
short-term obligations, aggregated $55,711,270 and $57,186,907,
respectively, for the year ended December 31, 1996. For federal tax
purposes, aggregate gross unrealized appreciation for all securities in
which there is an excess of value over tax cost was $114,070,610, aggregate
gross unrealized depreciation for all securities in which there is an excess
of tax cost over value was $2,388,371 and net unrealized appreciation was
$111,682,239.
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, current 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 - At December 31, 1996, net assets consisted of:
Paid-in capital $182,272,067
Undistributed net investment income 25,030
Undistributed net realized gain
from security transactions 2,033,586
Unrealized appreciation of
investments 111,682,239
Unrealized translation loss (5,080)
------------
$296,007,842
============
18
<PAGE>
THE SWISS HELVETIA FUND, INC.
- -------------------------------------------------------------------------------
Independent Auditors' Report
The Board of Directors and Stockholders,
The Swiss Helvetia Fund, Inc.:
We have audited the accompanying statement of net assets of The Swiss Helvetia
Fund, Inc. as of December 31, 1996, the related statements of operations for the
year then ended and changes in net assets for each of the years in the two-year
period then ended, and the financial highlights for each of the years in the
five-year period then ended. These financial statements and financial highlights
are the responsibility of the Fund's management. Our responsibility is to
express an opinion on these financial statements and financial highlights based
on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and the financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned at December
31, 1996 by correspondence with the custodian and broker. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, such financial statements and financial highlights
present fairly, in all material respects, the financial position of The
Swiss Helvetia Fund, Inc. as of December 31, 1996, the results of its
operations, the changes in its net assets, and the financial highlights for
the respective stated periods in conformity with generally accepted accounting
principles.
DELOITTE & TOUCHE LLP
Princeton, New Jersey
January 29, 1997
Additional Information (Unaudited)
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.
- --------------------------------------------------------------------------------
The following information summarizes all per share distributions declared by the
Fund during the year ended December 31, 1996.
Domestic Ordinary Income $.04
Foreign Source Income $.08
----
Total Ordinary Income $.12
====
Long-Term Capital Gains $.63
----
Total Distributions $.75
====
Foreign Tax Paid or Withheld $.05
The foreign taxes paid or withheld per share represent taxes incurred by the
Fund on interest and dividends received by the Fund from foreign sources.
Foreign taxes paid or withheld should be included in taxable income with an
offsetting deduction from gross income or as a credit for taxes paid to foreign
governments. You should consult your tax advisor regarding the appropriate
treatment of foreign taxes paid.
19
<PAGE>
THE SWISS HELVETIA FUND, INC.
- -------------------------------------------------------------------------------
Dividend Reinvestment Plan
The Plan
The Swiss Helvetia Fund's (the "Fund") Dividend Reinvestment Plan offers
you a convenient way to invest your income dividends and capital gains
distributions in additional shares of the Fund's common stock thereby increasing
your holdings of the Fund's shares. Participation in the Plan does not alter the
normal federal, state and local income tax consequences associated with income
dividends and capital gains distributions.
The Plan is designed to allow all stockholders an opportunity to
participate. Some of the Plan features are:
1. Dividend reinvestment automatically increases the number of shares you own.
2. Dividends and distributions are in additional shares at the lower of net
asset value or market price.
3. Shares purchased through the Plan are recorded in your account providing
protection against theft or destruction of share certificates.
4. You may terminate your Plan account at any time.
Not all brokerage firms holding shares in brokerage accounts permit
participation in dividend reinvestment plans such as the Plan, and even if a
stockholder's brokerage firm does permit such participation, a stockholder may
not be able to transfer such shares to another broker who does not permit such
participation. Stockholders are encouraged to contact their brokerage firm to
determine any restrictions upon participation.
How Do I Enroll In the Plan?
To participate in the Fund's Dividend Reinvestment Plan, please contact
your broker or PNC Bank, N.A. ("PNC").
To start the Plan with a specific dividend, please forward the form to
your broker or PNC 10 days prior to the record date for that dividend.
How Does The Plan Work?
When a dividend is declared, non-participants in the Plan will receive
cash. Plan participants will receive the equivalent in shares of the Fund valued
at the lower of the market price or net asset value as described below.
1. Whenever net asset value is equal to or less than market price by no more
than 5% at the time of valuation, Plan participants will be issued shares at net
asset value.
2. If the net asset value is less than 95% of the market price on the valuation
date, Plan participants will be issued shares at 95% of the market price of
shares on the valuation date.
3. If net asset value exceeds the market price of shares on the valuation date,
PNC, as agent for the participants, will buy shares on the open market, on the
New York Stock Exchange or elsewhere, for the participant's accounts.
If, before PNC has completed its purchase, the market price exceeds the net
asset value of shares, the average per share purchase price paid by PNC may
exceed the net asset value of shares, resulting in the acquisition of fewer
shares than if the dividend or distribution has been paid in shares issued by
the Fund.
Will The Entire Amount Of My Distribution Be Reinvested?
As a Plan participant, the entire amount of your distribution will be
reinvested. For any balance that is insufficient to purchase a whole share, the
amount will be credited to your account in fractional shares.
Will Stock Certificates Be Issued For Transactions in The Plan?
You will be issued a stock certificate upon request.
Is There Any Charge To Participate In The Plan?
There is no charge to participants for reinvesting dividends or
distributions. PNC's fee for handling the reinvestment of dividends and
distributions will be paid by the Fund. There will be no brokerage charge to
stockholders for shares issued directly by the Fund as a result of dividends or
distributions payable either in stock or cash. Each participant, however, will
pay a pro rata share of brokerage commissions incurred with respect to PNC's
open market purchases in connection with the reinvestment of dividends or
distributions.
How Can I Discontinue My Participation In The Plan?
You may terminate your account under the Plan by notifying PNC in writing.
Upon termination, you will receive a certificate for the number of shares held
in the Plan.
Where Can IDirect My Questions And Correspondence?
Questions and correspondence concerning the Plan should be directed to:
PNC Bank, N.A.
P.O. Box 8950
Wilmington, Delaware 19899
1-800-852-4750
20
