A Swiss THE SWISS
Investments -------------
Fund HELVETIA
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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 Quarterly Report
(212) 332-2760 For the Period Ended
http://www.swz.com March 31, 1998
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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
Director Treasurer
Jean-Louis Gillieron Scott J. Liotta
Director Vice President
Baron Hottinger Paul R. Brenner, Esq.
Director Secretary
Claude Mosseri-Marlio Joseph A. Finelli
Director Assistant Treasurer
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
PNCBank, N.A.
TRANSFER AGENT
PNC Bank, N.A.
(800) 852-4750
LEGAL COUNSEL
Paul R. Brenner, Esq.
and
Christy & Viener
INDEPENDENT AUDITORS
Deloitte & Touche LLP
The Investment Advisor
The Fund is managed by Hottinger Capital Corp., which is 100% owned by the
Hottinger Group.
The Hottinger Group dates back to Banque Hottinguer, which was formed in Paris
in 1786 and is one of Europe's oldest private banking firms. The Hottinger Group
has remained under the control of the Hottinger family through seven
generations. It has offices in New York, Zurich, Luxembourg, Geneva, and the
Bahamas.
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 day by 6:00 P.M. (Eastern Standard Time).
The most recent calculation is available by calling 1-888-SWISS-00 or by
accessing our Website. Weekly Net Asset Value is also published in Barron's, the
Monday edition of The Wall Street Journal and the Saturday edition of The New
York Times.
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THE SWISS HELVETIA FUND, INC.
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Letter to Stockholders
First Quarter Results
Swiss equities turned in a strong performance again for the first quarter
of 1998. In local currency terms the Swiss Performance Index (SPI) advanced by
21.0%, consistent with very strong performance of the other European continental
markets. Over the same period the Swiss Helvetia Fund was able to outperform
slightly the SPI, increasing its net asset value by 21.4% when measured in Swiss
Franc terms.
The 4.3% advance of the U.S. Dollar against the Swiss franc during the
quarter reduced part of this return for U.S. Dollar investors. Nevertheless
the U.S. Dollar-performances of 15.9% for the SPI and 16.4% for the Swiss
Helvetia Fund was better than the 13.5% return of U.S. market as represented
by the Standard & Poor's 500 Index. The market value of the Fund increased by
15.5% over the period.
Swiss Market in Review
The healthy return on Swiss equities was driven by several factors. First,
the Swiss National Bank continued to pursue an expansive monetary policy. This
had the effect of lowering the yield on interest rate instruments and served as
an impetus for driving more investors into the Swiss stock market in the hopes
of better returns. Second, after a multi-year period of below average domestic
economic growth and extensive efforts at restructuring, Swiss corporations were
able to achieve an excellent level of earnings in 1997, meeting, or in some
cases exceeding, analysts' expectations. Third, after lagging for several
quarters, the stocks of domestic and smaller companies again attracted investor
attention, adding breadth to the market returns.
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FINANCIAL HIGHLIGHTS (UNAUDITED)
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March 31, December 31,
1998 1997
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TOTAL NET ASSETS
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(in Million SFr) 720.3 593.1
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(in Million $) 472.5 406.0
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NET ASSET VALUE PER SHARE (U.S.$) 38.35 32.95
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SHARES OUTSTANDING 12,321,016 12,321,016
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The economic picture has started to brighten as well. The continued
improvement in the unemployment rate, which has now dropped below 5%, has helped
to increase consumer confidence. The stronger demand for export goods has forced
international companies to accelerate their investment spending plans. Inflation
has remained subdued and the beginnings of competition in public works, such as
telecommunications and electric power, should have a price dampening effect in
the future.
The Swiss market experienced some sector rotation during the quarter.
Because of the demand for export goods, machinery stocks, followed by the food
industry, have led the market. The building supply and retailing sectors, which
have been out of favor for a long time, have turned in a superior performance.
The financial industries, banking and insurance, continued to outperform. At the
same time there was some profit taking in the previously leading market segments
of life sciences, pharmaceuticals and chemicals.
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THE SWISS HELVETIA FUND, INC.
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Changes in the Fund's Holdings
During the reporting period, Management took advantage of the rebound in
South East Asian markets and reduced positions in companies with a heavy
exposure to the region (e.g. Agie Charmilles Holding, Christ, "SMH" and Societe
Generale de Surveillance).
Profits were taken in machinery stocks after the excellent performance of
that sector. Management also reduced positions in companies whose prospects for
business growth did not justify their valuations. These included Disetronic and
Sulzer Medica.
Management continues to look for undervalued situations that could benefit
from a change in market sentiment. These include Swisslog, active in automation
systems, and Valiant, the largest regional bank in Switzerland. These companies
are new to the Portfolio. In addition, holdings in some of the laggards of 1997
have been increased because of an improved business outlook and favorable
valuations. These include Adecco, Ares Serono and Bossard.
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THE SWISS HELVETIA FUND--TEN LARGEST HOLDINGS (IN U.S. DOLLARS)
AS OF MARCH 31, 1998
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Cost Market Value % of Total
in U.S.$ in U.S.$ Net Assets
1. Novartis Ltd. $ 31,190,468 $ 99,532,004 21.1%
2. Roche Holdings AG 16,329,129 64,406,613 13.6
3. Nestle AG 18,418,475 55,420,193 11.7
4. Credit Suisse Group 13,321,545 35,214,164 7.5
5. Swiss Reinsurance
Company 8,253,411 32,956,111 7.0
6. Zurich Group 9,350,656 29,029,718 6.1
7. Union Bank of
Switzerland 9,559,891 26,136,587 5.5
8. Swiss Bank
Corporation 8,518,201 20,114,150 4.0
9. ABB AseaBrown
Boveri Ltd. 7,910,828 11,208,423 2.4
10. Holderbank
Financiere AG 4,461,410 5,878,108 1.2
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Total $127,314,014 $379,896,071 80.1%
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Outlook
The introduction of the European Monetary Union (EMU) currency continues to
be on schedule. On January 1, 1999 the "Euro" will become the main currency in
Europe. Corporations have much to do to prepare for this event. As Switzerland
will not be part of the EMU, Swiss companies will have to continue to improve
efficiency to stay competitive. Their earlier efforts to restructure in response
to decade long strengthening of the Swiss Franc have given them a good head
start on their European competitors. This is particularly relevant for the
capital goods industries. Notwithstanding their efforts, these companies might
lose some earnings growth in the future unless they can implement strategic
alliances. In that respect Management anticipates an increase in cross border
mergers and acquisitions, an example of which was the first quarter takeover of
the UK company, Allied Colloids by CIBA Specialty Chemicals for $2.3 billion.
Another benefit of the "Euro" should also be more price transparency and
less foreign currency transaction costs, both of which should have an inflation
dampening effect across all of continental Europe. Therefore the level of
interest rates is expected to remain relatively low, a
3
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positive factor for the equities market. With the introduction of a strong new
currency, a new and highly liquid securities market may well follow, possibly
serving as a valuable alternative to U.S. Dollar investments. The recent
introduction of the "Euro Stoxx 50 Index" might be one of the first steps in
this direction. The expectations are that international money managers will
adopt a sectoral approach rather than a country approach for their asset
allocations in Europe. This should benefit some of the large Swiss companies
that comprise some 15% of the Euro Stoxx 50 Index. These companies include
Novartis, Nestle, UBS, Credit Suisse Group and Swiss Re.
Generally speaking, Management remains cautiously optimistic on the outlook
for the Swiss equities market. The positive earnings picture, continued efforts
in creating shareholder value, a healthy cash flow into stocks due to inferior
investment alternatives and a neutral to positive monetary environment should
make up for what appears to be fair valuation of Swiss equities. While we cannot
rule out a market consolidation in the short to intermediate term, Management
believes that such a consolidation would create a sound foundation for the
future.
The Discount to Net Asset Value
The discount has remained in the range between 15% and 19% with a slight
trend towards the lower part of the range. Management and the Board of Directors
continue to monitor this situation by concentrating on marketing and shareholder
communications, with a special emphasis on the exciting new developments in
Europe which, it is believed, will also benefit Switzerland.
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THE SWISS HELVETIA FUND--PORTFOLIO HOLDINGS PER INDUSTRY
AS OF MARCH 31, 1998
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[PLOT POINTS FOLLOW]
Life Sciences 21.19%
Banks 18.88
Pharmaceuticals 14.31
Insurance 13.96
Food, Luxury Goods 12.19
Chemicals 4.19
Misc. Services 3.86
Electrical Engineering 3.11
Machinery 2.80
Misc. Industries 2.63
Building Contractors 1.33
Retailers 0.80
Transport 0.75
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Management is grateful for your continued interest in the Fund.
Sincerely,
/s/ Paul Hottinguer
______________________
Paul Hottinguer
Chairman and Chief Executive Officer
/s/ Rudolphe Hottinger
______________________
Rodolphe Hottinger
President and Chief Operating Officer
April 20, 1998
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THE SWISS HELVETIA FUND, INC.
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Statement of Net Assets March 31, 1998
(Unaudited)
Percent
No. of of Net
Shares Security Value Assets
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COMMON STOCKS AND WARRANTS - 99.4%
BANKS - 18.8%
1,200 BAER HOLDINGS LTD.
Bearer Shares $ 2,912,812 0.6%
Banking group specializing in asset
management, investment consulting
and securities trading.
3,000 BANK SARASIN &CIE
Registered Shares 3,778,784 0.8
A bank specializing in investment
advisory services and portfolio
management for private and institutional
customers in Europe.
175,990 CREDIT SUISSE GROUP*
Registered Shares 35,214,164 7.5
A global financial services institution
whose main holding is Credit Suisse,
one of Switzerland's "Big Three" banks.
16,000 SCHWEIZERISCHE BANKGESELLSCHAFT*
(UNION BANK OF SWITZERLAND)
Bearer Shares 26,136,587 5.6
One of the three largest Swiss
full-service banks.
SCHWEIZERISCHER BANKVEREIN*
(SWISS BANK CORPORATION)
54,000 Registered Shares 19,023,814 4.0
60,000 Warrants Expiring 6/30/00 1,090,336 0.2
One of the three largest international
Swiss banks.
1,100 VALIANT HOLDING AG
Registered Shares 519,583 0.1
The largest regional bank of
Switzerland with activities focused
on mortgage loans and commercial
business with small and mid-sized
companies.
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88,676,080 18.8
Percent
No. of of Net
Shares Security Value Assets
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BUILDING CONTRACTORS & MATERIALS - 1.3%
700 FORBO HOLDINGS LTD.
Registered Shares $ 386,210 0.1%
Manufacturer of wall and floor coverings.
5,600 HOLDERBANK FINANCIERE GLARUS AG*
Bearer Shares 5,878,108 1.2
Large cement producer with worldwide
operations.
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6,264,318 1.3
CHEMICALS - 4.2%
45,000 CIBA SPECIALTY CHEMICALS AG
Registered Shares 5,756,741 1.2
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.
5,000 CLARIANT AG
Registered Shares 5,395,919 1.1
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.
200 EMS CHEMIE HOLDING AG
Bearer Shares 1,049,006 0.2
Produces polymers and manufactures
high-grade chemical intermediates
and fine chemicals.
600 GURIT-HEBERLEIN AG
Bearer Shares 2,074,395 0.5
European market leader for wind
screen bonding systems, ski bases
and optically pure thermoplastic
sheeting for the auto industry.
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THE SWISS HELVETIA FUND, INC.
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Statement of Net Assets (continued) March 31, 1998
(Unaudited)
Percent
No. of of Net
Shares Security Value Assets
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COMMON STOCKS AND WARRANTS - (CONTINUED)
CHEMICALS - (CONTINUED)
2,000 SIEGFRIED AG
Registered Shares $ 2,617,595 0.6%
International producer and supplier of
chemicals and pharmaceuticals for
major businesses.
SIKA FINANZ AG
7,000 Bearer Shares 2,792,101 0.6
Leading producer of construction
chemicals.
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19,685,757 4.2
ELECTRICAL ENGINEERING & ELECTRONICS - 3.1%
7,500 ABB ASEA BROWN BOVERI LTD.*
Bearer Shares 11,208,423 2.4
One of the largest electrical engineering
firms in the world.
2,000 BELIMO AUTOMATION AG
Registered Shares 852,850 0.2
World market leader in damper and
volume control actuators for ventilation
and air conditioning equipment.
5,000 SWISSLOG HOLDING AG-REG
Registered Shares 511,710 0.1
Provides turnkey delivery of automated
material handling systems, storage, order
picking and transport systems. Delivers its
systems to production, distribution
and service companies throughout Europe.
3,200 SWISS CORPORATION FOR MICRO-ELECTRONICS
AND WATCHMAKING INDUSTRIES LTD. (SMH)
Bearer Shares 2,055,238 0.4
Watchmaking company.
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14,628,221 3.1
Percent
No. of of Net
Shares Security Value Assets
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FOOD & LUXURY GOODS - 12.1%
1,200 HERO AG
Bearer Shares $ 759,693 0.2%
Leading Swiss manufacturer of branded
jams and preserves.
50 LINDT & SPRUENGLI AG
Registered Shares 1,092,305 0.2
Major manufacturer of premium
Swiss chocolates.
29,000 NESTLE AG*
Registered Shares 55,420,193 11.7
Largest food and beverage processing
company in the world.
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57,272,191 12.1
INSURANCE - 13.9%
1,400 BALOISE-HOLDING
Registered Shares 2,860,985 0.6
Medium-sized insurer active in all
sectors of insurance.
600 HELVETIA PATRIA
Registered Shares 700,649 0.1
Through its subsidiaries, Helvetia
Schweizerische Versicherungs-
Gesellschaft and Patria Schweizerische
Lebensversicherungs-Gesellschaft,
offer all types of life, property and
casualty insurance in Switzerland
and elsewhere.
15,000 SCHWEIZERISCHE RUCKVERSICHERUNGS-
GESELLSCHAFT*
(SWISS REINSURANCE COMPANY)
Registered Shares 32,956,111 7.0
Second largest reinsurance company
in the world.
50,000 ZURICH SCHWEIZERISCHE
VERSICHERUNGS-GESELLSCHAFT*
(ZURICH GROUP)
Registered Shares 29,029,718 6.2
A large worldwide insurance operator.
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65,547,463 13.9
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THE SWISS HELVETIA FUND, INC.
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Statement of Net Assets (continued) March 31, 1998
(Unaudited)
Percent
No. of of Net
Shares Security Value Assets
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COMMON STOCKS AND WARRANTS - (CONTINUED)
LIFE SCIENCES - 21.1%
56,233 NOVARTIS LTD.*
Registered Shares $99,532,004 21.1%
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.
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99,532,004 21.1
MACHINERY - 2.8%
1,600 BUCHER HOLDING LTD.
Bearer Shares 1,647,970 0.3
Manufacturer of agricultural machines,
special vehicles, fruit juice equipment
and plastics machines.
800 GEORG FISCHER AG
Bearer Shares 1,516,762 0.3
A mechanical engineering group that is a
market leader in vehicle engineering and
pipeline systems.
5,000 MIKRON HOLDING AG
Registered Shares 1,079,184 0.2
Machine tools and milling machine
producer.
2,500 RIETER HOLDING AG
Registered Shares 1,412,124 0.3
Leading supplier of spinning machinery
for the textile industry.
1,200 SAURER GRUPPE HOLDING AG
Registered Shares 1,242,275 0.3
Machinery maker with dominant
market share.
800 SCHINDLER HOLDING AG
Registered Shares 1,180,870 0.3
One of the world's largest elevator
companies and a leading Swiss
machinery enterprise.
Percent
No. of of Net
Shares Security Value Assets
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MACHINERY - (CONTINUED)
1,500 SIG SCHWEIZERISCHE INDUSTRIE-
GESELLSCHAFT HOLDING AG
Registered Shares $ 2,342,059 0.5%
Medium-sized machinery manufacturer
with interests in the packaging, defense
and railway industries.
3,500 SULZER AG
Registered Shares 2,736,994 0.6
A machine manufacturer and worldwide
leader in weaving machines and sewing
machines.
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13,158,238 2.9
MISCELLANEOUS INDUSTRIES - 2.6%
400 AFG ARBONIA-FORSTER HOLDING AG
Bearer Shares 265,040 0.1
Manufacturer of heating radiators,
refrigeration kitchen equipment and
steel tubing.
ALUSUISSE-LONZA HOLDING AG
1,500 Bearer Shares 1,825,428 0.4
3,200 Registered Shares 3,883,750 0.8
A major aluminum producing and
processing company.
500 GRETAG-MACBETH HOLDING AG
Registered Shares 196,812 --
Offers a spectrum of benchtop and portable
color measurement instrumentation, color
formulation and color quality control
systems, densitometers and visual color
standards.
1,200 HUBER & SUHNER AG
Registered Shares 2,361,740 0.5
Manufactures a wide range of products,
extending from cables for energy and
electrical transmission to special
products such as rubber.
600 INDUSTRIEHOLDING CHAM AG
Registered Shares 551,073 0.1
Manufactures paper and storage logistics
systems and owns real estate.
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THE SWISS HELVETIA FUND, INC.
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Statement of Net Assets (continued) March 31, 1998
(Unaudited)
Percent
No. of of Net
Shares Security Value Assets
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COMMON STOCKS AND WARRANTS - (CONTINUED)
MISCELLANEOUS INDUSTRIES - (CONTINUED)
1,000 KOMAX HOLDING AG
Registered Shares $ 488,749 0.1%
World leading manufacturer of wire
processing machines.
10,000 OERLIKON-BUEHRLE HOLDING AG
Registered Shares 1,761,464 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).
1,800 PHOENIX MECANO AG
Bearer Shares 1,015,548 0.2
Leading Swiss packaging manufacturer
for the mechanical engineering and
electronics industry.
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12,349,604 2.6
MISCELLANEOUS SERVICES - 3.8%
13,000 ADECCO SA
Bearer Shares 4,596,864 1.0
Leading personnel and temporary
employment company.
1,200 BOSSARD HOLDING AG
Bearer Shares 724,267 0.2
Manufactures fastening elements,
industrial adhesives, tools, pneumatics
and handling modules and automated
assembly systems.
3,200 COMPAGNIE FINANCIERE RICHEMONT AG
Bearer Shares 4,303,615 0.9
Investment company with principal
interests in luxury goods and tobacco.
800 KUONI TRAVEL HOLDING LTD.
Registered Shares 4,014,958 0.8
Leader in the Swiss travel and tourism
sector with subsidiaries in the United
Kingdom, Germany, France and Austria.
Percent
No. of of Net
Shares Security Value Assets
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MISCELLANEOUS SERVICES - (CONTINUED)
3,000 MOVENPICK HOLDING LTD.
Bearer Shares $ 1,495,769 0.3%
Through its subsidiaries, invests in the
hotel and restaurant business worldwide.
Also produces food items under the
Movenpick name, including ice cream,
coffee, salmon and jams.
4,000 PUBLIGROUPE SA
Participation Certificates 892,213 0.2
Largest Swiss advertising intermediary.
6,000 SOCIETE GENERALE DE SURVEILLANCE
HOLDING AG
Registered Shares 2,082,267 0.4
World's leading inspection company
and adjusting group.
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18,109,953 3.8
PHARMACEUTICALS - 14.2%
1,800 ARES SERONO SA
Bearer Shares 2,822,279 0.6
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 64,406,613 13.6
Worldwide pharmaceutical company.
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67,228,892 14.2
RETAILERS - 0.8%
1,500 JELMOLI HOLDING LTD.
Bearer Shares 1,805,747 0.4
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.
8
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THE SWISS HELVETIA FUND, INC.
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Statement of Net Assets (continued) March 31, 1998
(Unaudited)
Percent
No. of of Net
Shares Security Value Assets
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COMMON STOCKS AND WARRANTS - (CONCLUDED)
RETAILERS - (CONTINUED)
2,000 PRODEGA AG
Registered Shares $ 1,200,551 0.2%
Swiss market leader that operates
"Cash and Carry."
3,000 VALORA HOLDINGS AG
Registered Shares 753,789 0.2
Operates restaurants, food vending
machines and specialty retail stores.
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3,760,087 0.8
TRANSPORT - 0.7%
2,500 SAIRGROUP HOLDING LTD.
Registered Shares 3,491,767 0.7
Switzerland's largest airline company.
-----------
3,491,767 0.7
Percent
No. of of Net
Shares Security Value Assets
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TOTAL COMMON STOCKS AND WARRANTS
(Cost $181,336,768) $469,704,575 99.4%
OTHER ASSETS IN EXCESS
OF LIABILITIES 2,837,706 0.6
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NET ASSETS APPLICABLE TO
12,321,016 SHARES OF
COMMON STOCK OUTSTANDING $472,542,281 100.0%
============ =====
NET ASSET VALUE PER SHARE
($472,542,281 (divided by) 12,321,016) $38.35
======
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*One of the ten largest portfolio holdings.
9
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THE SWISS HELVETIA FUND, INC.
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DIVIDEND REINVESTMENT PLAN
--------------------------
The Dividend Reinvestment Plan offers you a convenient and automatic way to
reinvest your income dividends and capital gains distributions in additional
shares of the Fund. For an enrollment form and detailed information about the
Plan, please contact the Fund's transfer agent at PNC Bank, N.A., P.O. Box
8950, Wilmington, DE, 19899, (800) 852-4750. If your shares are held by your
brokerage firm, please contact your investment representative.
This report is sent to the stockholders of The Swiss Helvetia Fund, Inc. for
their information. It is not a prospectus, circular or representation intended
for use in the purchase or sale of shares of the Fund or of any securities
mentioned in this report.
-----------------
Notice is hereby given in accordance with section 23(c) of The Investment
Company Act of 1940 that the Fund may purchase at market prices from time to
time shares of its common stock in the open market.
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