THE SWISS
A Swiss ----------
Investments HELVETIA
Fund ----------
FUND, INC.
----------
THE SWISS HELVETIA FUND, INC.
Executive Offices
The Swiss Helvetia Fund, Inc.
630 Fifth Avenue
Suite 915 Quarterly Report
New York, New York 10111-0001 For the Period Ended
1-888-SWISS-00 September 30, 1998
(212) 332-2760
http://www.swz.com
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THE SWISS HELVETIA FUND, INC.
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Directors and Officers
Paul Hottinguer 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
Alexandre de Takacsy Vice President and Treasurer
Director
Scott J. Liotta
Claude Frey Vice President
Director
Paul R. Brenner, Esq.
Jean-Louis Gillieron Secretary
Director
Joseph A. Finelli
Baron Hottinger Assistant Treasurer
Director
Claude Mosseri-Marlio
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 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.
1
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THE SWISS HELVETIA FUND, INC.
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Letter to Stockholders
Quarterly results
The tension and sharp reduction in asset prices mounting at the periphery of
the western financial system during the last quarter directly translated into
the core markets leading to the worst quarter in the decade for stocks and high
yield securities. The quarter was marked by the highest volatility in years for
currencies, stocks and bond prices, by an absence of improvement in South East
Asia and a worsening of the situation in Japan. The apogee was Russia's default
on foreign debt with the evaporation of the IMF's injection of $23 billion and
the deterioration of the ruble (16 rubles versus 6 rubles to the dollar in three
months). It all resulted in the demise of Long Term Capital Management LP and
the Federal Reserve Board's orchestration of a rescue operation of that
institution to the extent of some $3.5 billion. The flight to high quality
equities and cash already present prior to those events, increased, adversely
affecting the equity markets globally.
The Swiss market with its high international exposure and its high financial
sector components was hit to a larger extent than its European peers and the
U.S. stock market. The sharp downfall of the U.S. dollar against the continental
European currencies and the Swiss franc (-9.3%) was another consequence of the
global financial turmoil and added to the pressure on the European stock
markets. The Swiss market, as measured by the Swiss Performance Index (SPI),
registered a decline of -25.14% for the quarter which brought the year to date
performance into negative territory (-5.3%). The appreciation of the Swiss franc
reduced the decline as measured in U.S. dollars, to -18.1% for the quarter and
to -.02% for the year to date.
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Financial Highlights (Unaudited)
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September 30, June 30,
For the year ended: 1998 1998
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Total Net Assets
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(in Million SFr) 567.4 750.5
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(in Million $) 410.0 498.6
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Exchange Rate (Per U.S.$) 1.38 1.51
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Net Asset Value per Share (U.S.$) 33.28 40.47
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Market Price per Share (U.S.$) 27.38 32.00
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Shares Outstanding 12,321,016 12,321,016
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The Swiss Helvetia Fund showed results consistent with the Swiss Performance
Index as measured in U.S. dollar terms with a total return based on the share
price of -0.09% for the year and -14.45%, for the quarter. Based on Net Asset
Value the Fund outperformed the Index with a return of -17.8% for the quarter
and 1.14% for the year. In comparison, the broad U.S. stock market (Standard and
Poors 500) regained part of its leadership with a performance of 6.0% for the
year and -9.95% for the quarter as U.S. international money returned to the U.S.
and retail domestic investors mostly held on to their equity positions.
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Total Return (Unaudited)
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Quarter Ending Year to Date
9/30/98 9/30/98
In U.S. Dollars:
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Swiss Performance Index -18.10% -0.02%
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Swiss Helvetia Net Asset Value -17.80% 1.14%
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Swiss Helvetia Price per Share -14.45% -0.09%
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S&P 500 -9.95% 6.00%
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In Swiss Francs:
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Swiss Performance Index -25.14% -5.30%
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Swiss Helvetia Net Asset Value -24.85% -4.18%
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Swiss Helvetia Price per Share -21.82% -5.34%
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2
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THE SWISS HELVETIA FUND, INC.
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Swiss Economy
Export growth lower but domestic growth better
The export sector experienced some slowdown in orders obviously due to the
deepening of the crisis in South East Asia and Japan and a sharp reduction in
growth in Latin America. However, the total of new orders still rose because of
a significant increase in domestic demand. The better picture for domestic
growth was highlighted by good employment figures with the jobless rate for
September at 3.4% down from 3.5% in August and from 4.9% in December, 1997. The
continued trend toward an increase in the workforce was not limited to the
services sector but also extended to the rest of the economy. Retail sales were
still in an uptrend with volume rising 1.5% year-over-year during August after a
1.3% increase in July and a 2.9% increase in June. Management believes that more
solid consumer spending can compensate for the weakening of exports.
Monetary policy continues to be accommodative.
The Swiss National Bank forecasts a favorable economic environment in which
continued injection of liquidity would keep interest rates low and counteract
any rise in the Swiss franc with the hope that Gross Domestic Product positive
growth might come in as expected by economists for the moment. Management
believes that the pressure on the currency to strengthen will continue for a
while because of lower interest rates on U.S. dollar debt instruments and
uncertainties in the global financial system.
Review of the strategy for the quarter and outlook
The deterioration of the long term prospect for equities led Management to
substantially increase the cash portion of the Fund from close to zero to
roughly 13%. Due to the current environment, the number of holdings in the Fund
also was reduced by selling some small positions with perceived limited
potential like Forbo, Sulzer, Swatchgroup, Bossard, Siegfried, Oerlikon Buehrle
and smaller players in the insurance sector such as Helvetia-Patria. The
holdings in the cyclical sectors like machinery and specialty chemicals were
also reduced (namely Ciba Specialty Chemicals). In the blue chip segment Credit
Suisse and UBS have been significantly reduced. Novartis has been slightly
decreased due to a weaker outlook for its agri-business and some patent approval
delay. On the other hand, holdings in the domestic sector have been increased
especially in the retail sector.
Management believes that the Swiss market will be supported by domestic
growth and the attractive valuation level of the international
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The Swiss Helvetia Fund--Ten Largest Holdings (in U.S. dollars)
As of September 30, 1998
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Cost Market Value % of Total
in U.S.$ in U.S.$ Net Assets
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1. Novartis Ltd. $ 30,098,514 $ 83,378,857 20.34%
2. Roche Holdings AG 15,895,280 60,831,707 14.84
3. Nestle AG 17,790,019 54,725,775 13.35
4. Swiss Reinsurance
Company 7,875,841 27,769,348 6.77
5. Zurich Insurance 9,018,315 23,580,100 5.75
6. UBS AG 11,893,567 20,502,168 5.00
7. Credit Suisse Group 9,669,231 15,255,777 3.72
8. Holderbank
Financiere Glarus AG 4,909,825 6,156,514 1.50
9. ABB Asea Brown
Boveri Ltd. 5,165,459 5,076,234 1.24
10. Clariant AG 2,813,989 5,039,381 1.23
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Total $115,130,040 $302,315,861 73.73%
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THE SWISS HELVETIA FUND, INC.
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companies after the big correction their stock prices have experienced. The
Swiss global players remain strongholds of investment quality with great
experience in dealing with global risk and more specifically, currency risk.
These companies are cash-rich, which will give them the flexibility they need to
support their business and look more actively for acquisitions even if the
current environment makes financing more difficult. In addition they have first
rate products and excellent management. One example of this is the cement
manufacturer Holderbank. With the current level of cash in the Fund, Manage-ment
believes that it has sufficient flexibility to act in an environment
characterized by high volatility and difficult financial markets.
Discount to Net Asset Value
The Fund's discount to Net Asset Value (NAV) after widening in August went
back below 20% at the end of September, allowing the share price to outperform
the NAV price for the quarter. Management continues to look for measures to
improve shareholder value. Recently the Board of Directors of the Fund declared
a 100% stock dividend in order to improve the accessibility of the shares to a
larger number of investors.
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The Swiss Helvetia Fund--Portfolio Holdings per Industry
as of September 30, 1998
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[PIE CHART APPEARS HERE -- SEE PERCENTAGES BELOW]
Life Sciences 20.30%
Pharmaceuticals 15.50
Banks 10.50
Insurance 13.20
Food, Luxury Goods 13.80
Electrical Engineering
and Electronics 1.60
Machinery 1.80
Chemicals 2.90
Misc. Services 3.00
Misc. Industries 2.30
Building Materials 1.50
Transport 0.40
Retailers 1.00
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Sincerely,
/s/ Paul Hottinguer
___________________
Paul Hottinguer
Chairman and Chief Executive Officer
/s/ Rodolphe Hottinguer
_______________________
Rodolphe Hottinguer
President and Chief Operating Officer
October 19, 1998
4
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THE SWISS HELVETIA FUND, INC.
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Statement of Net Assets September 30, 1998
(Unaudited)
Percent
No. of of Net
Shares Security Value Assets
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Common Stocks and Warrants - 87.8%
Banks - 10.5%
1,200 Baer Holdings Ltd.
Bearer Shares $ 2,818,123 0.7%
Specializes in asset management,
investment consulting
and securities trading.
2,000 Bank Sarasin & Cie
Registered Shares 2,384,565 0.6
Specializes in investment advisor
services and portfolio management
for private and institutional
customers in Europe.
137,990 Credit Suisse Group*
Registered Shares 15,255,777 3.7
A global financial services institution
whose main holding is Credit Suisse.
105,085 UBS AG*
Registered Shares 20,502,168 5.0
Product of the merger of
Basel-based Swiss Bank Corp. and
Zurich-based Union Bank of Switzerland.
The group operates globally and has five
core business units: Private Banking,
Institutional Asset Management,
Investment Banking, Private and
Corporate Customers, and Private Equity.
3,500 Valiant Holding
Registered Shares 1,770,359 0.4
The largest regional bank of
Switzerland with activities focused
on mortgage loans and commercial
business with small and mid-sized
companies.
60,000 UBS AG Warrants
(Formerly SBC)
Warrants Expiring 6/30/00** 466,074 0.1
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43,197,066 10.5
Percent
No. of of Net
Shares Security Value Assets
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Building Contractors & Materials - 1.5%
6,000 Holderbank Financiere Glarus AG*
Bearer Shares $ 6,156,514 1.5%
Large cement producer with worldwide
operations.
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6,156,514 1.5
Chemicals - 2.9%
30,000 Ciba Specialty Chemicals AG
Registered Shares 2,492,955 0.6
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.
11,000 Clariant AG*
Registered Shares 5,039,381 1.2
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** 1,080,280 0.3
Produces polymers and manufactures
high-grade chemical intermediates
and fine chemicals.
600 Gurit-Heberlein AG
Bearer Shares 1,322,350 0.3
European market leader for wind
screen bonding systems, ski bases
and optically pure thermoplastic
sheeting for the auto industry.
7,500 Sika Finanz AG
Bearer Shares 2,113,592 0.5
Leading producer of construction
chemicals.
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12,048,558 2.9
5
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THE SWISS HELVETIA FUND, INC.
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Statement of Net Assets (continued) September 30, 1998
(Unaudited)
Percent
No. of of Net
Shares Security Value Assets
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Common Stocks and Warrants - (continued)
Electrical Engineering & Electronics - 1.6%
5,000 ABB Asea Brown Boveri Ltd.*
Bearer Shares $ 5,076,234 1.3%
One of the largest electrical engineering
firms in the world.
2,000 Belimo Automation AG
Registered Shares 664,788 0.2
World market leader in damper and
volume control actuators for ventilation
and air conditioning equipment.
960 Saia-Burgess
Registered Shares** 166,486
Develops and produces switches, motors
and programmable control devices. The
company's products are mainly used in
the automobile, heating & air conditioning
and telecommunications industries.
5,000 Swisslog Holding AG
Registered Shares 469,687 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.
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6,377,195 1.6
Food & Luxury Goods - 13.8%
1,200 Hero AG
Bearer Shares 676,349 0.2
Leading Swiss manufacturer of branded
jams and preserves.
50 Lindt & Spruengli AG
Registered Shares 1,192,283 0.3
Major manufacturer of premium
Swiss chocolates.
27,500 Nestle AG*
Registered Shares 54,725,775 13.3
Largest food and beverage processing
company in the world.
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56,594,407 13.8
Percent
No. of of Net
Shares Security Value Assets
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Insurance - 13.2%
4,200 Baloise-Holding
Registered Shares $ 2,564,492 0.6%
Medium-sized insurer active in all
sectors of insurance.
14,000 Schweizerische Ruckversicherungs-
Gesellschaft*
(Swiss Reinsurance Company)
Registered Shares 27,769,348 6.8
Second largest reinsurance company
in the world.
47,500 Zurich Allied Ltd
Registered Shares 23,580,100 5.8
A large worldwide insurance operator.
----------- ----
53,913,940 13.2
Life Sciences - 20.3%
52,000 Novartis Ltd.*
Registered Shares 83,378,857 20.3
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. The second largest
pharmaceutical entity in the world.
----------- ----
83,378,857 20.3
Machinery - 1.8%
1,500 Bucher Holding Ltd.
Bearer Shares 1,344,028 0.3
Manufacturer of agricultural machines,
special vehicles, fruit juice equipment and
plastics machines.
4,000 Georg Fischer AG
Registered Shares 1,107,016 0.3
A mechanical engineering group that is a
market leader in vehicle engineering and
pipeline systems.
6
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THE SWISS HELVETIA FUND, INC.
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Statement of Net Assets (continued) September 30, 1998
(Unaudited)
Percent
No. of of Net
Shares Security Value Assets
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Common Stocks and Warrants - (continued)
Machinery - (continued)
6,000 Mikron Holding AG
Registered Shares** $ 1,235,638 0.3%
Machine tools and milling machine
producer.
2,200 Rieter Holding AG
Registered Shares 1,197,052 0.3
Leading supplier of spinning machinery
for the textile industry.
1,200 Saurer Gruppe Holding AG
Registered Shares** 611,316 0.2
Machinery maker with dominant
market share.
800 Schindler Holding AG
Registered Shares 987,355 0.2
One of the world's largest elevator
companies and a leading Swiss
machinery enterprise.
1,500 SIG Schweizerische Industrie-
Gesellschaft Holding AG
Registered Shares 823,759 0.2
Medium-sized machinery manufacturer
with interests in the packaging, defense
and railway industries.
----------- ----
7,306,164 1.8
Miscellaneous Industries - 2.3%
200 AFG Arbonia-Forster Holding AG
Bearer Shares 108,389 --
Manufacturer of heating radiators,
refrigeration kitchen equipment and
steel tubing.
4,700 Alusuisse-Lonza Group Ltd
Registered Shares 4,479,587 1.1
A major aluminum producing and
processing company.
800 Gretag-Macbeth Holding AG
Registered Shares 306,381 0.1
Offers a spectrum of benchtop and portable
color measurement instrumentation, color
formulation and color quality control
systems, densitometers and visual color
standards.
Percent
No. of of Net
Shares Security Value Assets
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Miscellaneous Industries - (continued)
6,000 Huber & Suhner AG
Registered Shares $ 2,016,041 0.5%
Manufactures a wide range of products,
extending from cables for energy and
electrical transmission to special
products such as rubber.
800 Komax Holding AG
Registered Shares 346,846 0.1
World leading manufacturer of wire
processing machines.
500 Sarna Polymer Holding Inc.
Registered Shares 702,724 0.2
Specializes in the processing of high
quality plastic. Two main activities
are sealant films manufacturing with
application in construction and civil
engineering industries and injection
molding with a wide range of application
as for the automotive industry.
2,200 Phoenix Mecano AG
Bearer Shares 1,160,488 0.3
Leading Swiss packaging manufacturer
for the mechanical engineering and
electronics industry.
1,090 Straumann Holding AG
Registered Shares** 189,031 --
Develops, produces and sells surgical
implants and instruments for dental,
medicine, jaw and face surgery.
----------- ----
9,309,487 2.3
Miscellaneous Services - 3.0%
12,000 Adecco SA
Bearer Shares 4,448,298 1.1
Leading personnel and temporary
employment company.
7
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THE SWISS HELVETIA FUND, INC.
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Statement of Net Assets (concluded) September 30, 1998
(Unaudited)
Percent
No. of of Net
Shares Security Value Assets
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Common Stocks and Warrants - (continued)
Miscellaneous Services - (continued)
2,500 Compagnie Financiere Richemont AG
Bearer Shares $ 3,197,485 0.8%
Investment company with principal
interests in luxury goods and tobacco.
700 Kuoni Travel Holding Ltd.
Registered Shares 2,124,431 0.6
Leader in the Swiss travel and tourism
sector with subsidiaries in the United
Kingdom, Germany, France and Austria.
2,000 Movenpick Holding Ltd.
Bearer Shares 896,019 0.2
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 Ltd
Participation Certificates 994,292 0.2
Largest Swiss advertising intermediary.
540 Societe Generale de Surveillance
Holding AG
Bearer Shares 390,592 0.1
World's leading inspection company
and adjusting group.
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12,051,117 3.0
Pharmaceuticals - 15.5%
2,000 Ares Serono SA
Bearer Shares 2,601,344 0.7
Develops and markets pharmaceutical
and diagnostic products. The worldwide
market leader in pharmaceutical
products for the treatment of infertility.
5,650 Roche Holding AG*
Dividend Rights Certificates 60,831,707 14.8
Worldwide pharmaceutical company.
----------- ----
63,433,051 15.5
Percent
No. of of Net
Shares Security Value Assets
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Retailers - 1.0%
1,500 Jelmoli Holding Ltd.
Bearer Shares $ 1,745,068 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.
2,200 Bon Appetit Holding
Registered Shares 1,224,077 0.3
Swiss market leader that operates
"Cash and Carry."
3,300 Usego-Hofer Curti AG
Registered Shares 593,757 0.1
Wholesales and distributes food
products to its own stores,
independent retailers and franchise
shops throughout Switzerland and Austria.
4,000 Valora Holdings AG
Registered Shares 903,244 0.2
Operates restaurants, food vending
machines and specialty retail stores.
------------ -----
4,466,146 1.0
Transport - 0.4%
8,000 Sairgroup
Registered Shares 1,644,628 0.4
Switzerland's largest airline company.
------------ -----
1,644,628 0.4
606,365 Total Common Stocks and Warrants
(Cost $160,070,759) 359,877,130 87.7
Other Assets in Excess
of Liabilities 50,127,776 12.3
------------ -----
Net Assets Applicable to
12,321,016 Shares of
Common Stock Outstanding $410,004,906 100.0%
============ =====
Net Asset Value Per Share
($410,004,906 / 12,321,016) $33.28
======
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* One of the ten largest portfolio holdings.
** Non-income producing security
8
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THE SWISS HELVETIA fund, Inc.
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Dividend Reinvestment Plan
--------------------------
The Dividend Reinvestment Plan offers you a convenient and automatic way to
reinvest your income dividends and capital gains distributions in additional
shares of the Fund. For an enrollment form and detailed information about the
Plan, please contact the Fund's transfer agent at PNCBank, N.A., P.O. Box 8950,
Wilmington, DE, 19899, (800) 852-4750. If your shares are held by your
brokerage firm, please contact your investment representative.
This report is sent to the stockholders of The Swiss Helvetia Fund, Inc. for
their information. It is not a prospectus, circular or representation intended
for use in the purchase or sale of shares of the Fund or of any securities
mentioned in this report.
---------
Notice is hereby given in accordance with section 23(c) of The Investment
Company Act of 1940 that the Fund may purchase at market prices from time to
time shares of its common stock in the open market.
At the Board of Directors Meeting held on May 12, 1998, the Board adopted an
amendment to its By-Laws which requires among other things, that all matters,
including the nomination and election of Directors, to be considered and
brought before any annual or special meeting of stockholders of the Fund shall
be limited to only such matters as shall properly be brought before such
meeting in compliance with the provisions of the amendment. The amendment
provides, that any stockholder nominee for director and any other stockholder
proposal to be considered at an annual or special meeting requires a written
notice to be provided to the Secretary of the Fund, in the case of an annual
meeting, not less than 60 nor more than 90 days prior to the first anniversary
of the annual meeting of stockholders for the preceding year and, in the case
of a special meeting, not later than the close of business on the 10th day
following the day on which the date of the special meeting is publicly
announced or disclosed by the Fund. The exact text of the amendment to the
By-Laws has been filed with the Securities and Exchange Commission.
9
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