A Swiss THE SWISS
Investments HELVETIA
Fund FUND, INC.
www.swz.com
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 Annual Report
(212) 332-2760 For the Year Ended
http://www.swz.com December 31, 1999
<PAGE>
THE SWISS HELVETIA FUND, INC.
Directors and Officers
Paul Hottinguer Stephen K. West, Esq.
Chairman and Director
Chief Executive Officer
Samuel B. Witt III, Esq.
Eric R. Gabus Director
Vice Chairman
(Non officer) Rodolphe Hottinger
President and
Alexandre de Takacsy Chief Operating Officer
Director
Rudolf Millisits
Claude Frey Vice President
Director
Edward J. Veilleux
Baron Hottinger Vice President and Treasurer
Director
Paul R. Brenner, Esq.
Claude Mosseri-Marlio Secretary
Director
Didier Pineau-
Valencienne
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
PFPC Trust Company
Transfer Agent
PFPC,Inc.
(800) 852-4750
Legal Counsel
Paul R. Brenner, Esq. and
Salans Hertzfeld Heilbronn
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 daily 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 Sunday edition of THE NEW YORK TIMES.
For Dividend Reinvestment Information, see page 20.
1
<PAGE>
THE SWISS HELVETIA FUND, INC.
Letter to Stockholders
Economic Developments During the Fourth Quarter of
1999.
Y2K
While most analysts had expected at least some disruptions in the
supply chain of manufactured goods, especially in the emerging markets, Y2K
concerns turned out to be a non-event. Therefore, the expected drag on the
global economy that the Y2K bug was supposed to induce can now be, to a great
extent, ruled out, opening the possibilities of upward revisions of world
economic activity in the year ahead. However, some precautionary inventories
built up during the last quarter of 1999, will first have to be worked down
during the first quarter of 2000.
Economic Growth Strengthened Further in Europe
A combination of lasting growth in the United States, a sustainable
recovery in Asia and a weak Euro boosted European and Swiss exports. This was
confirmed by the data of the European current account where the deficit at the
beginning of the year (weak exports and strong imports due to a surge in oil
prices) became a surplus during the last part of 1999. In addition, the picture
in France and Spain has improved by reason of stronger domestic growth.
Swiss Economy
The economy confirmed its recovery during the last quarter of 1999. The
unemployment rate remained low at 2.50%, exports remained very healthy and the
consumer price index was up 1.70% in December year-over-year, mainly as the
result of higher energy prices.
Currency Fluctuation and Interest Rates
The Swiss Franc followed the Euro in its downward move against the
U.S. dollar. This parallel movement of the Franc and Euro has its roots in
the fact that Switzerland is in the same economic cycle as the rest of Europe,
lagging the US cycle, and that the Swiss and European monetary policies are very
similar.
The deflation which the world economy experienced during 1998 brought
interest rates to a very low historical level. This has now been reversed and
interest rates have risen to reflect the global economic recovery in 1999.
In Switzerland, the yield on the long bond moved from 2.35% at the
beginning of the year to 3.68% at year's end.
Economic Outlook
Japan and China remain the question marks. They will most likely see
very moderate growth in their economies, which will dampen an otherwise strong
outlook for the world economy. Their limited economic growth, however, will
help in keeping the re-inflation cycle from accelerating.
2
<PAGE>
THE SWISS HELVETIA FUND, INC.
Europe will benefit from stronger consumer confidence, more
infrastructure construction and strengthening exports to South East Asia.
European fiscal policy should be more favorable for economic growth. In
addition, the access to capital markets for mergers & acquisitions and project
financing has been greatly improved by the creation of the Euro. During the last
twelve months, a Pan-European bond market has been created. In 1999, 45% of all
international bonds were issued in Euros compared with only 22% in 1998 in all
the currencies now tied to the Euro.
The Swiss economy will benefit from these developments since Euroland
is its main trading partner. Private consumption will probably remain robust
because of the lasting support from low unemployment (the 1999 decline in
unemployment should be followed by a steady but less impressive downward trend
in 2000). Capital spending should be a big positive for 2000 especially with the
awakening of the construction sector. However, the main contributor to economic
activity should again be exports which are expected to accelerate further in
2000.
Swiss Market in Review
The performance of the broader market as measured by the Swiss
Performance Index (SPI) was disappointing when compared to its European peers
and the United States main indices. The Euro served as an accelerator for
corporate restructuring in Euroland. The volume of mergers and acquisitions was
high in absolute and comparative terms with announced transactions exceeding
$1.213 trillion which was 36% of global mergers and acquisitions volume last
year, up from 23% in 1998. The onset of the Euro capital market started to
impose a new discipline on corporations and governments, with Euroland moving
closer to the "Free Market" model present at the core of the U.S Economic
System. These transformations were rewarded in 1999 by higher multiples for
equity prices in most of Europe. In addition, the pick-up in the economic
activity helped the cyclical stocks.
Switzerland did not fully participate in this rally because corporate
restructuring had started some years earlier, lessening the catch-up effect.
Furthermore, the Swiss Performance Index being a capitalization
weighted index, is heavily influenced by the behavior of the stocks of the large
multinational companies, namely, the pharmaceuticals, the banks and the
insurance companies. The relative valuation of these sectors was brought down in
1999 by higher interest rates and by these sectors' insensitivity to the
economic cycle. A closer look at the performance of the different segments of
the market makes this point clear.
3
<PAGE>
THE SWISS HELVETIA FUND, INC.
Comparative Performance in 1999 and 1998 by Sector Stated as a Percentage in
Swiss Franc Terms:
% of total market
%Increase 12/31/99 12/31/98
- ------------------------------------------------------------------------
Electrical Engineering &
Electronics +92.02% 8.2% 3.0%
Miscellaneous Services +60.82% 5.4% 7.4%
Building Material &
Construction +43.79% 2.0% 1.7%
Miscellaneous Industrials +36.78% 2.9% 2.4%
Machinery +31.50% 2.0% 1.7%
Retailers +29.50% 0.7% 0.5%
Banks +20.34% 18.7% 18.2%
Utilities +4.08% 0.6% 0.7%
Chemicals &
Pharmaceuticals +0.48% 35.4% 39.3%
Foods -1.34% 11.1% 13.2%
Transportation -4.87% 0.5% 0.8%
Insurance -8.17% 10.5% 13.2%
- ------------------------------------------------------------------------
The Swiss Helvetia Fund Performance
The Fund, while maintaining a conservative low risk profile, was
nonetheless able to achieve a total return for its net asset value above the
return of the Swiss Performance Index by a margin of over 3% in Swiss Franc
terms.
Total Return Performance Based
on Net Asset Value Per Share* U.S. Swiss
for the period ended 12/31/99 Dollars Francs
- --------------------------------------------------------------------------
Swiss Performance Index (3.69%) 11.69%
The Swiss Helvetia Fund based on (1.09%) 14.70%
Net Asset Value
The Swiss Helvetia Fund based on (7.06%) 7.78%
Market Price
- --------------------------------------------------------------------------
*Past performance is not an indicator of future results. These figures assume
the reinvestment of dividends and capital gains distributions.
The Swiss Helvetia Fund--Portfolio Holdings per Industry
As of December 31, 1999
- ------------------------------------------------------------------------
Life Sciences 18.3%
Pharmaceuticals 17.4
Banks 14.6
Food & Luxury Goods 12.4
Insurance 10.7
Electrical Engineering & Electronics 9.5
Miscellaneous Services 6.6
Building Contractors & Materials 3.3
Chemicals 3.2
Machinery 3.2
Retailers 2.1
Miscellaneous Industries 1.6
Telecommunications 1.4
Transport 0.4
Cash and Equivalents (4.7)
- ------------------------------------------------------------------------
Total 100.0%
- ------------------------------------------------------------------------
Corporate Activity During the Quarter
Swiss companies sustained their efforts to improve shareholder value
and expand internationally. The most noticeable example was the announced
spin-offs of Novartis' agribusiness and Roche's fragrance and flavor business,
both of which allow the Swiss drug makers to focus on their core pharmaceutical
activity and to free resources for potential corporate activity benefiting their
healthcare divisions.
ABB
The company announced that it would sell its nuclear-electrical-
engineering business to British Nuclear Fuels Ltd. for $485 million as it exits
the power-generation business.
4
<PAGE>
THE SWISS HELVETIA FUND, INC.
The Swiss Helvetia Fund--Ten Largest Holdings (in U.S. dollars)
As of December 31, 1999
- -------------------------------------------------------------------------------
% of
Cost Market Value Net Assets
- -------------------------------------------------------------------------------
1. Novartis Ltd. $ 30,098,514 $ 76,314,105 18.3%
2. Roche Holdings Ltd. 15,895,280 67,029,691 16.1
3. Nestle AG 17,348,232 49,437,575 11.9
4. Credit Suisse Group 7,207,699 22,250,957 5.3
5. ABB Ltd. 13,027,946 21,393,039 5.1
6. Swiss Reinsurance
Company 5,838,682 20,532,296 4.9
7. Zurich Allied Ltd. 5,196,372 18,238,654 4.4
8. UBS AG 5,933,331 17,004,582 4.1
9. Adecco SA 5,142,887 11,675,350 2.8
10. Holderbank Financiere
Glarus AG 7,136,284 10,947,210 2.6
- -------------------------------------------------------------------------------
Total $112,825,227 $314,823,459 75.5%
- -------------------------------------------------------------------------------
The Swiss Helvetia Fund--
Ten Issues Having Greatest Appreciation in 1999(1)
Market Price Market Price
per share per share
in U.S. $ in U.S. $ %
as of as of Appreciation
12/31/98 12/31/99 1998-99
- ------------------------------------------------------------------------------
1. PubliGroupe Ltd. (P) 306 989 223.20%
2. Swisslog Holding AG (R) 95 292 207.37
3. Mikron Holding AG (R) 200 439 119.50
4. Bon Appetit Holding AG (R) 545 989 81.47
5. Adecco SA (B) 456 778 70.61
6. Compagnie Financiere
Richemont AG (B) 1,414 2,385 68.67
7. Saia-Burgess
Electronics Holding AG (R) 248 352 41.94
8. Ares Serono SA (B) 1,584 2,134 34.72
9. Komax Holding Ltd. (R) 502 665 32.47
10. Credit Suisse Group (R) 157 199 26.75
(1) Among issues held for the full year.
(B) Bearer Shares
(R) Registered Shares
(P) Participation Certificates
- ------------------------------------------------------------------------------
Ciba Specialty
The company sold its Performance Poly-mers division to Morgan Grenfell
Private Equity for a price of Sfr 1.845 bn. The transaction is expected to close
during the first quarter of 2000.
Swiss Re
The Swiss company has agreed to buy Underwriters Re, the property and
casualty reinsurance operations of Alleghany Corp. for approximately $725
million.
Zurich Allied
During its Analysts' Day meetings held in London, the Company announced that it
intends to submit a filing for listing on the New York Stock Exchange during
2000.
Outlook for the Swiss Market
As mentioned in the last Quarterly Report, the Swiss market, due to its
defensive nature, benefited less than its European peers from earnings
acceleration and was more penalized by rising interest rates. As interest rate
fears recede during 2000, the Swiss market is expected to close the valuation
gap with the rest of Europe.
Insurance and reinsurance companies will benefit from a better pricing
environment that started to take place during the last quarter of 1999, after
having suffered from the high occurrence of natural catastrophes last year
(e.g., snow storm in Europe, avalanches and flooding, earthquakes in Turkey and
Taiwan).
5
<PAGE>
THE SWISS HELVETIA FUND, INC.
The investment banking activity of the main Swiss financial
institutions should, despite strong competition, be in a position to increase
the volume of their fees because the wave of mergers and acquisitions that
Europe saw last year is expected to continue. In addition, mutual funds and
private banking businesses are poised to benefit from the onset of a much
stronger individual equity culture.
Pharmaceutical companies have shown that they are ready to act in favor
of enhancing shareholder value. In addition, the strong performance of new
products already on the market (Tamiflu and Xenical for Roche) and the approval
or filing for products with good potential (FDA approval of Trileptal, and FDA
filing of Starlix for Type 2 diabetes for Novartis) places the Swiss
pharmaceutical companies in a strong position when compared to their
international peers.
The cyclical sectors will benefit from the Asian recovery, the
acceleration of activity in Europe, and continued strength in the U.S. economy.
The mid-cap and small-cap sectors should again make a compelling
investment case in 2000 and provide a favorable risk/return profile based on
earnings growth potential and supportive valuations, especially in
international terms.
- ----------------------------------------------------------------------------
Performance in 1999 Stated as a Percentage in Swiss Franc Terms:
% of total market % of total market
Performance as of 12/31/99 as of 12/31/98
- ----------------------------------------------------------------------------
SPI Index +11.69% 100% 100%
- ----------------------------------------------------------------------------
Mid cap +23.53% 12.8% 11.6%
- ----------------------------------------------------------------------------
Small caps +45.78% 2.7% 2.2%
- ----------------------------------------------------------------------------
In addition some interesting initial public offerings in the more
growth-oriented sectors are expected to come to the market during 2000.
Management believes that the Swiss market still offers valuable
investment opportunities and will continue to use its efforts to deliver
competitive consistent returns for the stockholders of the Fund.
Discount Developments
The Fund's Share Repurchase Program
During 1999, the Fund repurchased 859,300 of its shares in open market
transactions producing a net gain in net asset value for the Fund of
$2,802,763.40.
Despite this action, the discount to net asset value has widened from
16.10% on December 31, 1998 to 21.16% on December 31, 1999. Management will
continue to promote stockholder value through the Share Repurchase Program and
will continue its effort to make The Swiss Helvetia Fund a more transparent
investment vehicle for its stockholders through better communication using
direct channels such as the internet more aggressively.
6
<PAGE>
THE SWISS HELVETIA FUND, INC.
In December of 1999, The Board of Directors announced a continuation of
the Fund's Share Repurchase Program for 2000 to purchase up to 2,000,000 shares
of its common stock in open market transactions to be effected on the New York
Stock Exchange. The Board of Directors and Management expect to make such
purchases from time to time during the year 2000. The principal purpose of the
Share Repurchase Program is to enhance stockholder value by increasing the
Fund's net asset value per share without creating a meaningful adverse effect
upon the Fund's expense ratio.
Sincerely,
/s/ Paul Hottinguer
Paul Hottinguer
Chairman and Chief Executive Officer
/s/ Rodolphe Hottinger
Rodolphe Hottinger
President and Chief Operating Officer
January 24, 2000
7
<PAGE>
THE SWISS HELVETIA FUND, INC.
Review of Operations
Trading activity in 1999 involved changes in the following positions:
New Investments by the Fund
- --------------------------------------------
Barry Callebaut Ltd.
Charles Voegele Holding AG
Feintool International Holding
Forbo Holdings SA
Geberit AG
Generali (Switzerland) Holding
Gretag-Imaging Holding AG
Logitech International SA
Lonza AG
Oz Holding AG
Sia Abrasives Holding AG
Sulzer AG
Tecan AG
The Swatch Group of Switzerland
Vontobel Holding Ltd.
Additions to Existing Investments
- --------------------------------------------
ABB Ltd.
Ares Serono SA
Baer Holdings Ltd.
Baloise Holding
Bank Sarasin & Cie
Belimo Automation AG
Ciba Specialty Chemicals AG
Compagnie Financiere Richemont AG
Georg Fischer AG
Gurit-Heberlein AG
Holderbank Financiere Glarus AG
Lindt & Sprungli AG
Phoenix Mecano AG
Saia-Burgess Electronics Holding AG
SAirGroup
Schindler Holding AG
Sika Finanz AG
Swisscom AG
Valora Holding AG
Securities Disposed of
- --------------------------------------------
Alusuisse-Lonza Group Ltd.
EMS Chemie Holding AG
Gretag-Macbeth Holding AG
Hero AG
Saurer Gruppe Holding
SIG Schweizerische Industrie-Gesellschaft Holding AG
Straumann Holding AG
Swissair Convertible Bond, 0.25%
Usego-Hofer Curti AG
8
<PAGE>
THE SWISS HELVETIA FUND, INC.
Statement of Net Assets December 31, 1999
<TABLE>
<CAPTION>
Percent
No. of Value of Net
Shares Security (Note A) Assets
- -----------------------------------------------------------------------------------------
<S><C>
Common Stocks and Warrants - 104.7%
Banks - 14.6%
3,200 Bank Sarasin & Cie
Registered Shares $ 6,487,979 1.6%
A bank specializing in investment advisor
services and portfolio management for
private and institutional customers in
Europe.
(cost $3,599,372)
112,000 Credit Suisse Group(1)
Registered Shares 22,250,957 5.3
A global financial services institution
whose main holding is Credit Suisse.
(cost $7,207,699)
2,000 Julius Baer Holdings Ltd.
Bearer Shares 6,038,541 1.4
Banking group specializing in asset
management, investment consulting and
securities trading.
(cost $3,660,089)
1,500 Oz Holding AG
Bearer Shares 1,553,575 0.4
Provides brokerage and banking
services, specializing in Swiss futures
and options.
(cost $1,365,178)
UBS AG
60,000 Warrants Expiring 6/30/00(2) 821,041 0.2
(cost $605,422)
63,000 Registered Shares(1) 17,004,582 4.1
UBS AG results from 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.
(cost $5,933,331)
</TABLE>
<TABLE>
<CAPTION>
Percent
No. of Value of Net
Shares Security (Note A) Assets
- -----------------------------------------------------------------------------------------
<S><C>
Banks - (continued)
4,000 Valiant Holding AG
Registered Shares $ 1,740,004 0.4%
The largest regional bank of Switzerland
with activities focused on mortgage
loans and commercial business with
small and mid-sized companies.
(cost $1,916,008)
2,800 Vontobel Holding Ltd.
Bearer Shares 5,132,132 1.2
Provides investment, banking and
consulting services to private and
institutional customers.
(cost $5,098,977)
-------------- -----
61,028,811 14.6
Building Contractors & Materials - 3.3%
2,000 Forbo Holdings SA
Registered Shares 941,560 0.3
Manufactures building materials and
decorative home products.
(cost $854,298)
5,000 Geberit AG
Registered Shares(2) 1,710,502 0.4
Manufactures and supplies water supply
pipes and fittings, installation systems,
drainage and flushing systems for the
commercial and residential construction
markets.
(cost $1,136,056)
8,000 Holderbank Financiere Glarus AG(1)
Bearer Shares 10,947,210 2.6
Large cement producer with worldwide
operations.
(cost $7,136,284)
-------------- -----
13,599,272 3.3
</TABLE>
9
<PAGE>
THE SWISS HELVETIA FUND, INC.
Statement of Net Assets (continued) December 31, 1999
<TABLE>
<CAPTION>
Percent
No. of Value of Net
Shares Security (Note A) Assets
- -----------------------------------------------------------------------------------------
<S><C>
Common Stocks and Warrants - (continued)
Chemicals - 3.2%
28,000 Ciba Specialty Chemicals, Inc.
Registered Shares $ 2,047,580 0.5%
Develops, manufactures and markets
specialty chemical products worldwide.
These products include additives,
performance polymers, textile dyes,
consumer care chemicals and
pigments.
(cost $1,029,819)
11,000 Clariant AG
Registered Shares 5,240,726 1.3
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.
(cost $2,813,989)
2,000 Gurit-Heberlein AG
Bearer Shares 1,192,643 0.3
European market leader for wind screen
bonding systems, ski based and optically
pure thermoplastic sheeting for the auto
industry.
(cost $872,456)
4,000 Lonza AG
Registered Shares(2) 2,430,481 0.6
Produces chemicals, plastics, and
energy.
(cost $1,528,836)
7,000 Sika Finanz AG
Bearer Shares 2,284,853 0.5
Leading producer of construction
chemicals.
(cost $1,877,743)
-------------- -----
13,196,283 3.2
</TABLE>
<TABLE>
<CAPTION>
Percent
No. of Value of Net
Shares Security (Note A) Assets
- -----------------------------------------------------------------------------------------
<S><C>
Electrical Engineering & Electronics - 9.5%
175,000 ABB Ltd.(1)
The holding company for ABB Asea $ 21,393,039 5.1%
Brown Boveri Ltd. (ABB Group) which is
one of the largest electrical engineering
firms in the world.
(cost $13,027,946)
3,000 Belimo Automation AG
Registered Shares 1,148,704 0.3
World market leader in damper and
volume control actuators for ventilation
and air conditioning equipment.
(cost $746,174)
15,000 Gretag-Imaging Holding AG
Registered Shares 2,172,651 0.5
Manufactures image processing
equipment and systems.
(cost $1,423,297)
13,000 Logitech International SA
Registered Shares(2) 3,672,086 0.9
Manufactures personal computer input
devices as well as producing trackballs,
desktop publishing programs, and
related software.
(cost $1,789,886)
4,600 Saia-Burgess Electronics Holding AG
Registered Shares 1,616,973 0.4
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.
(cost $1,136,053)
</TABLE>
10
<PAGE>
THE SWISS HELVETIA FUND, INC.
Statement of Net Assets (continued) December 31, 1999
<TABLE>
<CAPTION>
Percent
No. of Value of Net
Shares Security (Note A) Assets
- -----------------------------------------------------------------------------------------
<S><C>
Common Stocks and Warrants - (continued)
Electrical Engineering & Electronics - (continued)
5,000 The Swatch Group of Switzerland
Bearer Shares $ 5,756,073 1.4%
Manufactures watches, watch
components and microelectronics.
Produces machine tools for scientific,
medical and industrial use and small
electric and alternative fuel compact cars
worldwide.
(cost $3,007,638)
9,000 Swisslog Holding, Inc.
Registered Shares 2,626,954 0.6
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.
(cost $735,745)
2,500 Tecan AG
Registered Shares 1,059,256 0.3
Manufactures and distributes
components and complete solutions for
the automation of laboratory processes.
(cost $845,950)
-------------- -----
39,445,736 9.5
Food & Luxury Goods - 12.4%
5,000 Barry Callebaut Ltd.
Registered Shares 726,571 0.2
Produces and markets raw chocolate and
other cocoa based products.
(cost $800,593)
</TABLE>
<TABLE>
<CAPTION>
Percent
No. of Value of Net
Shares Security (Note A) Assets
- -----------------------------------------------------------------------------------------
<S><C>
Food & Luxury Goods - (continued)
60 Lindt & Sprungli AG
Registered Shares $ 1,485,782 0.3%
Major manufacturer of premium Swiss
chocolates.
(cost $1,196,399)
27,000 Nestle AG(1)
Registered Shares 49,437,575 11.9
Largest food and beverage processing
company in the world.
(cost $17,348,232)
-------------- -----
51,649,928 12.4
Insurance - 10.7%
5,000 Baloise Holding
Registered Shares 3,932,584 0.9
Medium-sized insurer active in all
sectors of insurance.
(cost $1,981,491)
6,000 Generali (Switzerland) Holding
Registered Shares 1,965,978 0.5
An insurance, financial and real estate
services company.
(cost $2,243,128)
10,000 Schweizerische Ruckversicherungs-
Gesellschaft (Swiss Reinsurance
Company)(1)
Registered Shares 20,532,296 4.9
Second largest reinsurance company in
the world.
(cost $5,838,682)
32,000 Zurich Allied Ltd.(1)
Registered Shares 18,238,654 4.4
A large worldwide insurance operator.
(cost $5,196,372)
-------------- -----
44,669,512 10.7
</TABLE>
11
<PAGE>
THE SWISS HELVETIA FUND, INC.
Statement of Net Assets (continued) December 31, 1999
<TABLE>
<CAPTION>
Percent
No. of Value of Net
Shares Security (Note A) Assets
- -----------------------------------------------------------------------------------------
<S><C>
Common Stocks and Warrants - (continued)
Life Sciences - 18.3%
52,000 Novartis Ltd.(1)
Registered Shares $ 76,314,105 18.3%
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. The
second largest pharmaceutical entity in
the world.
(cost $30,098,514)
-------------- -----
76,314,105 18.3
Machinery - 3.2%
1,200 Bucher Holding Ltd.
Bearer Shares 979,223 0.3
Manufacturer of agricultural machines,
special vehicles, fruit juice equipment
and plastics machines.
(cost $798,266)
5,000 Feintool International Holding
Registered Shares 1,641,454 0.4
Supplier of integrated systems for fine-
blanking and forming technologies.
(cost $1,059,527)
7,000 Georg Fischer AG
Registered Shares 2,416,672 0.6
A mechanical engineering group that is a
market leader in vehicle engineering and
pipeline systems.
(cost $2,262,232)
</TABLE>
<TABLE>
<CAPTION>
Percent
No. of Value of Net
Shares Security (Note A) Assets
- -----------------------------------------------------------------------------------------
<S><C>
Machinery - (continued)
6,000 Mikron Holding AG
Registered Shares $ 2,632,603 0.6%
Machine tools and milling machine
producer.
(cost $773,404)
1,700 Rieter Holding AG
Registered Shares 1,003,076 0.2
Leading supplier of spinning machinery
for the textile industry.
(cost $569,618)
2,000 Schindler Holding AG
Registered Shares 3,201,306 0.8
One of the world's largest elevator
companies and a leading Swiss
machinery enterprise.
(cost $2,569,092)
2,000 Sulzer AG
Registered Shares(2) 1,299,353 0.3
Manufactures and sells industrial
equipment, machinery, and medical
devices.
(cost $1,271,190)
-------------- ----
13,173,687 3.2
Miscellaneous Industries - 1.6%
6,000 Huber & Suhner AG
Registered Shares 2,410,395 0.6
Manufactures a wide range of products,
extending from cables for energy and
electrical transmission to special
products such as rubber.
(cost $1,904,277)
</TABLE>
12
<PAGE>
THE SWISS HELVETIA FUND, INC.
Statement of Net Assets (continued) December 31, 1999
<TABLE>
<CAPTION>
Percent
No. of Value of Net
Shares Security (Note A) Assets
- -----------------------------------------------------------------------------------------
<S><C>
Common Stocks and Warrants - (continued)
Miscellaneous Industries - (continued)
3,000 Komax Holding Ltd.
Registered Shares $ 1,996,108 0.5%
World leading manufacturer of wire
processing machines.
(cost $1,332,269)
2,500 Phoenix Mecano AG
Bearer Shares 1,255,414 0.3
Leading Swiss packaging manufacturer
for the mechanical engineering and
electronics industry.
(cost $1,179,117)
6,000 Sia Abrasives Holding AG
Registered Shares(2) 883,184 0.2
Develops, manufactures and markets
surface treatment, upgrade and polishing
systems for various materials.
(cost $889,072)
-------------- -----
6,545,101 1.6
Miscellaneous Services - 6.6%
15,000 Adecco SA(1)
Bearer Shares 11,675,350 2.8
Leading personnel and temporary
employment company.
(cost $5,142,887)
3,500 Compagnie Financiere Richemont AG
Bearer Shares 8,348,503 2.0
Investment company with principal
interests in luxury goods and tobacco.
(cost $3,155,503)
</TABLE>
<TABLE>
<CAPTION>
Percent
No. of Value of Net
Shares Security (Note A) Assets
- -----------------------------------------------------------------------------------------
<S><C>
Miscellaneous Services - (continued)
700 Kuoni Travel Holding Ltd.
Registered Shares $ 2,904,400 0.7%
Leader in the Swiss travel and tourism
sector with subsidiaries in the United
Kingdom, Germany, France and Austria.
(cost $1,525,845)
740 Moevenpick Holding
Bearer Shares 366,957 0.1
Through its subsidiaries, invests in the
hotel and restaurant business worldwide.
The company also produces food items
under the Moevenpick name, including
ice cream, coffee, salmon, and jams.
(cost $220,288)
4,500 PubliGroupe Ltd.
Participation Certificates 4,448,873 1.0
Largest Swiss advertising intermediary.
(cost $1,067,926)
-------------- -----
27,744,083 6.6
Pharmaceuticals - 17.4%
2,500 Ares Serono SA
Bearer Shares 5,335,509 1.3
Develops and markets pharmaceutical
and diagnostic products, and is the
worldwide market leader in
pharmaceutical products for the
treatment of infertility.
(cost $2,944,367)
5,650 Roche Holdings Ltd.(1)
Dividend Rights Certificates 67,029,691 16.1
Worldwide pharmaceutical company.
(cost $15,895,280)
-------------- -----
72,365,200 17.4
</TABLE>
13
<PAGE>
THE SWISS HELVETIA FUND, INC.
Statement of Net Assets (concluded) December 31, 1999
<TABLE>
<CAPTION>
Percent
No. of Value of Net
Shares Security (Note A) Assets
- -----------------------------------------------------------------------------------------
<S><C>
Common Stocks and Warrants - (continued)
Retailers - 2.1%
2,500 Bon Appetit Holding AG
Registered Shares $ 2,471,596 0.6%
Swiss market leader that operates
"Cash and Carry."
(cost $1,008,766)
10,000 Charles Voegele Holding AG(2)
Manufactures and markets a variety of 1,795,242 0.4
clothing items for men, women and
children. Operates approximately 385
retail stores in Switzerland, Germany,
Austria, and the Benelux region.
(cost $1,462,733)
1,500 Jelmoli Holding Ltd.
Bearer Shares 1,788,965 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.
(cost $888,220)
10,000 Valora Holding AG
Registered Shares 2,674,032 0.7
Operates restaurants, food vending
machines and specialty retail stores.
(cost $2,333,483)
-------------- -----
8,729,835 2.1
</TABLE>
<TABLE>
<CAPTION>
Percent
No. of Value of Net
Shares Security (Note A) Assets
- -----------------------------------------------------------------------------------------
<S><C>
Telecommunications - 1.4%
15,000 Swisscom AG
Registered Shares $ 6,063,649 1.4%
Operates public telecommunication
networks and offers network application
services.
(cost $5,049,193)
-------------- -----
6,063,649 1.4
Transport - 0.4%
8,000 SAirGroup Holding Ltd.
Registered Shares 1,609,441 0.4
Switzerland's largest airline company.
(cost $1,654,158)
-------------- -----
1,609,441 0.4
801,650 Total Common Stocks and Warrants
(Cost $191,008,370)(3) $ 436,134,643 104.7%
Liabilities in Excess of Other Assets (19,536,125) (4.7)
-------------- -----
Net Assets Applicable to 23,782,732
Shares of Common Stock Outstanding $ 416,598,518 100.0%
============== =====
Net Asset Value Per Share
($416,598,518 / 23,782,732) $17.52
======
</TABLE>
- ----------
(1) One of the ten largest portfolio holdings.
(2) Non-income producing security.
(3) Aggregate cost for federal tax purposes was $191,036,787. Descriptions of
the companies have not been audited by Deloitte & Touche LLP.
See Notes to the Financial Statements.
14
<PAGE>
THE SWISS HELVETIA FUND, INC.
Statement of Operations For the Year Ended December 31, 1999
<TABLE>
<S><C>
- ------------------------------------------------------------------------------------------------------------------------
Investment Income:
Dividends (Less foreign taxes withheld of $860,335) $ 4,984,992
Interest 1,188
------------
Total income 4,986,180
------------
Expenses:
Investment advisory fee 3,259,015
Administration fee 439,036
Directors' fees and related expenses 247,958
Professional fees 201,413
Custodian fees 167,689
Accounting fee 126,522
Miscellaneous 106,911
Transfer agent fee 90,365
Franchise tax 66,026
Printing and postage 63,809
------------
Total expenses 4,768,744
------------
Net investment income 217,436
------------
Net Realized and Unrealized Gain/(Loss) on Investments:
Net realized gain from security transactions 26,511,278
Net realized foreign exchange loss (1,880,394)
Change in unrealized appreciation/depreciation of investments (39,948,195)
Change in unrealized appreciation/depreciation on translation of assets and liabilities
denominated in foreign currency (174,500)
------------
Net loss on investments (15,491,811)
------------
Net Decrease in Net Assets Resulting from Operations $(15,274,375)
============
</TABLE>
- ----------
See Notes to the Financial Statements.
15
<PAGE>
THE SWISS HELVETIA FUND, INC.
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
For the For the
Year Ended Year Ended
December 31, December 31,
1999 1998
- -----------------------------------------------------------------------------------------------------------------------
<S><C>
Increase/(Decrease) in Net Assets:
Operations:
Net investment income $ 217,436 $ 30,371
Net realized gain from security transactions 26,511,278 23,170,402
Net realized foreign exchange gain/(loss) (1,880,394) 2,462,144
Change in unrealized appreciation/depreciation of investments (39,948,195) 63,014,424
Change in unrealized appreciation/depreciation on translation
of assets and liabilities denominated in foreign currency (174,500) (14,447)
------------ ------------
Net Increase/(Decrease) in Net Assets Resulting
from Operations (15,274,375) 88,662,894
------------ ------------
Dividends to Shareholders from:
Net Investment Income: (739,261) (1,651,016)
Capital Gains: (25,045,011) (23,126,547)
------------ ------------
Total distributions to shareholders (25,784,272) (24,777,563)
------------ ------------
Capital Share Transactions:
Value of shares repurchased through stock buyback (12,258,663) --
------------ ------------
Total decrease from capital share transactions (12,258,663) --
------------ ------------
Total increase/(decrease) in net assets (53,317,310) 63,885,331
Net Assets:
Beginning of year 469,915,828 406,030,497
------------ ------------
End of year $416,598,518 $469,915,828
============ ============
</TABLE>
- -------------
See Notes to the Financial Statements.
16
<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 Years Ended December 31,
---------------------------------------------------------------------------
1999 1998 1997 1996 1995
- ----------------------------------------------------------------------------------------------------------------------------------
<S><C>
Per Share Operating Performance(1):
Net asset value at beginning of year $ 19.07 $ 16.48 $ 12.07 $ 12.28 $ 9.90
-------- -------- -------- -------- --------
Income from Investment Operations:
Net investment income/(expenses in
excess of income) 0.01 0.00(4) (0.02) 0.05 0.03
Net realized and unrealized gain/(loss)
on investments(2) (0.48) 3.60 4.86 0.12 3.41
-------- -------- -------- -------- --------
Total from Investment Operations (0.47) 3.60 4.84 0.17 3.44
-------- -------- -------- -------- --------
Capital charge resulting from the issuance
of fund shares -- -- -- -- (0.73)
-------- -------- -------- -------- --------
Less Distributions:
Dividends from net investment income (0.03) (0.07) -- (0.05) (0.03)
Distributions from net realized
capital gains (1.05) (0.94) (0.43) (0.33) (0.30)
-------- -------- -------- -------- --------
Total distributions (1.08) (1.01) (0.43) (0.38) (0.33)
-------- -------- -------- -------- --------
Net asset value at end of year $ 17.52 $ 19.07 $ 16.48 $ 12.07 $ 12.28
======== ======== ======== ======== ========
Market value per share, end of year $ 13.81 $ 16.00 $ 13.72 $ 9.94 $ 10.63
======== ======== ======== ======== ========
Total Investment Return(3):
Based on market value per share (7.06)% 23.82% 42.66% (2.93)% 16.27%
Based on net asset value per share (1.09)% 22.89% 41.08% 1.98% 28.20%
Ratios to Average Net Assets:
Expenses 1.11% 1.09% 1.17% 1.22% 1.38%
Net investment income/(expenses
in excess of income) 0.05% 0.01% (0.14)% 0.25% 0.27%
Supplemental Data:
Net assets at end of year (000) $416,599 $469,916 $406,030 $296,008 $301,204
Average net assets during period (000) $428,072 $464,967 $354,923 $306,069 $231,234
Portfolio turnover rate 14% 13% 13% 19% 10%
</TABLE>
- ----------
(1) Per share amounts for the years ended December 31, 1995 through December 31,
1997 have been restated to reflect 2:1 stock split effective October 16,
1998.
(2) Includes net realized currency gain/(loss).
(3) Total investment return based on market value differs from total investment
return based on net asset value due to changes in the relationship between
the Fund's market price and its net asset value per share. Returns from
1998, 1997 and 1995 have been restated to reflect subsequent changes to
dividend reinvestment calculations.
(4) Less than $0.01 per share.
17
<PAGE>
THE SWISS HELVETIA FUND, INC.
Notes to Financial Statements
A. Significant Accounting Policies - The Swiss Helvetia Fund, Inc. (the "Fund")
which was incorporated in Delaware on October 24, 1986 and began operations
August 27, 1987, is registered under the Investment Company Act of 1940, as
amended, as a non-diversified, closed-end Investment Management Company. Its
objective is to seek long-term growth of capital through investment in equity
and equity-linked securities of Swiss companies.
When preparing the Fund's financial statements, management makes estimates
and assumptions in accordance with generally accepted accounting principles.
These estimates affect 1) the assets and liabilities that we report at the
date of the financial statements; 2) the contingent assets and liabilities
that we disclose at the date of the financial statements; and 3) the income
and expenses that we report for the period. Our estimates could be different
from the actual results. Under certain circumstances, it is necessary to
reclassify prior year information in order to conform to the current year's
presentation. The Fund's significant accounting policies are:
Security Valuation - The Fund states its investments at value. The Fund
values a security that is traded on the Swiss stock exchange at the last
sales price on the day of valuation. If there is no sales price available,
the Fund values the security at the mean between the closing bid and asked
prices for that day. A security that is not traded on the Swiss stock
exchange is valued at the mean between the current bid and asked prices. If
bid and asked prices are not available, the Fund uses a fair value that is
determined in good faith by or under the direction of the Fund's Board of
Directors.
Securities Transactions and Investment Income - The Fund uses the trade date
to account for security transactions and the specific identification method
for financial reporting and income tax purposes to determine the cost of
investments sold or redeemed. Interest income is recorded on an accrual
basis. Dividend income is recorded on the ex-dividend date. The Fund records
Swiss withholding tax as an expense, net of an amount receivable from Swiss
tax authorities in accordance with a tax treaty.
Foreign Currency Translation - The Fund's books and records are maintained in
U.S. dollars. The Fund translates Swiss franc amounts into U.S. dollars based
on the following criteria.
o The Fund adjusts asset and liability accounts to reflect the current
exchange rate at the end of the period.
o The Fund includes in the period's net realized foreign exchange gain or
loss, the exchange gain or loss that occurs due to exchange rate changes
from the time an income or expense amount is accrued and the time it is
realized.
o The Fund records securities at cost based upon exchange rates at the time
that Swiss francs are purchased or received. Exchange rates are identified
on a first-in, first-out basis.
It is not practical for the Fund to distinguish the portion of its operation
results attributable to exchange rate changes from the portion attributable
to market price changes.
Federal Income Taxes - The Fund determines its distributions according to
income tax regulations, which may be different from generally accepted
accounting principles. As a result, the Fund occasionally makes
reclassifications within its capital accounts to reflect income and gains
that are available for distribution under income tax regulations.
The Fund declares and pays dividends from net investment income annually, and
records distributions of capital gains on the ex-dividend date. The Fund is
organized as a regulated investment company under Subchapter M of the
Internal Revenue Code. As long as it maintains this status and distributes to
its shareholders all of its taxable net investment income and net realized
capital gains, it will be exempt from most, if not all, federal income and
excise taxes. As a result, the Fund has made no provisions for federal income
taxes.
B. Investment Advisory Fees, Transactions with Affiliates and Other Fees -
Hottinger Capital Corp. ("HCC"), which is owned jointly by Hottinger U.S.,
Inc. and Hottinger & Cie (Zurich), is the Fund's investment advisor. As
compensation for its advisory services, the Fund pays HCC an annual fee based
on the Fund's month-end net assets. This fee is calculated and paid monthly
at the following annual rates. 1.00% of the first $60 million, 0.90% of the
next $40 million, 0.80% of the next $100 million, 0.70% of the next $100
million, 0.65% of the next $100 million, 0.60% of the next $100 million,
0.55% of the next $100 million, and 0.50% of the amount over $600 million.
For the year ended December 31, 1999, advisory fees were $3,259,015
18
<PAGE>
THE SWISS HELVETIA FUND, INC.
Notes to Financial Statements (concluded)
of which $272,678 was payable at the end of the period. The Fund paid
Hottinger & Cie $9,962 in brokerage commissions for the year ended December
31, 1999.
Investment Company Capital Corp. ("ICC"), is the Fund's administrator. As
compensation for its administrative services, the Fund pays ICC an annual fee
based on the Fund's average net assets. This fee is calculated daily and paid
monthly at the following annual rates: 0.20% of the first $75 million, 0.15%
of the next $75 million, 0.10% of the next $75 million, 0.05% of the next
$275 million, and 0.03% of the amount over $500 million. For the year ended
December 31, 1999, administration fees were $439,036 of which $36,920 was
payable at the end of the period.
Certain officers and/or directors of the Fund are officers and/or directors
of HCC, Hottinger U.S., Inc., Hottinger & Cie and/or ICC.
PFPC Trust Company is the Fund's custodian and PFPC, Inc. is the Fund's
transfer agent. PFPC Trust Company and the Fund have entered into an
agreement with Credit Suisse First Boston that provides for the custody of
Swiss securities that the Fund holds.
C. Capital Share Transactions - The Fund is authorized to issue up to 50 million
shares of $.001 par value capital stock. HCC owned 48,202 of the 23,782,732
shares outstanding on December 31, 1999.
D. Stock Repurchase Program - On February 5, 1999, the Fund announced that its
Board of Directors had authorized the Fund to repurchase up to 1,000,000
shares of its common stock in open market purchases to be effected on the New
York Stock Exchange. On December 7, 1999 the Fund announced that its Board of
Directors had increased this authorization by 2,000,000 shares. The Board of
Directors and Management expect to make these purchases from time to time
during 2000. The principal purpose of the repurchases is to enhance
stockholder value by increasing the Fund's net asset value per share without
creating a meaningful adverse effect upon the Fund's expense ratio. This may
also have the effect of temporarily reducing the current discount of
approximately 20 percent. During the year ended December 31, 1999 the Fund
repurchased and retired 859,300 shares for $12,258,663 at an average price of
$14.27 and a weighted average discount of 18.64%.
Notice is hereby given in accordance with section 23(c) of the Investment
Company Act of 1940 that the Fund may, from time to time, purchase shares of
its Common Stock in the open market in addition to the above program.
E. Directors' Fees - The Fund pays each director who is not affiliated with the
Fund, its investment advisor or administrator approximately $8,200 per annum
in compensation, except for the Chairman of the Audit Committee, who receives
an annual fee of approximately $9,025. In addition, each unaffiliated
director receives $750 for each attended directors' meeting, $750 for each
committee meeting attended, if it is held separately, and reimbursement for
out-of-pocket expenses in conjunction with attendance at meetings. For the
year ended December 31, 1999 accrued directors' fees were $109,308.
F. Investment Transactions - Excluding short-term obligations, purchases of
investment securities aggregated $57,278,743 and sales of investment
securities aggregated $61,666,320 for the year ended December 31, 1999.
On December 31, 1999, aggregate gross unrealized appreciation for all
securities in which there is an excess of value over tax cost was
$245,675,638 and aggregate gross unrealized depreciation of all securities in
which there is an excess of tax cost over value was $577,782.
G. 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. These
reclassifications have no effect on net assets or net asset values per
share.In addition, the Fund has deferred post October losses of $138,353 to
next year.
H. Net Assets - At December 31, 1999, net assets consisted of:
Paid-in capital $170,716,011
Undistributed net investment loss (138,353)
Undistributed net realized gain
from security transactions 1,098,872
Unrealized appreciation of investments 245,126,273
Unrealized currency translation loss (204,285)
------------
$416,598,518
============
19
<PAGE>
THE SWISS HELVETIA FUND, INC.
Independent Auditors' Report
To the Board of Directors and Stockholders of
The Swiss Helvetia Fund, Inc.:
We have audited the accompanying statement of net assets of The Swiss Helvetia
Fund, Inc. as of December 31, 1999, and the related statement of operations for
the year then ended, the statements of changes in net assets for each of the two
years in the period then ended, and the financial highlights for each of the
five years in the 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 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 as of
December 31, 1999, by correspondence with the custodian and brokers. 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, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of The
Swiss Helvetia Fund, Inc. as of December 31, 1999, the results of its operations
for the year then ended, the changes in its net assets for each of the two years
in the period then ended, and the financial highlights for each of the five
years in the period then ended, in conformity with generally accepted accounting
principles.
DELOITTE & TOUCHE LLP
Princeton, New Jersey
January 24, 2000
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.
Code of Ethics
The Board of Directors of the Fund and the Advisor have adopted Codes of Ethics
pursuant to provisions of the Investment Company Act of 1940. The Codes of
Ethics apply to the personal investing activities of various individuals
including directors and officers of the Fund and designated officers, directors
and employees of the Advisor. The provisions of the Codes place restrictions on
individuals who are involved in managing the Fund's portfolio, who help execute
the portfolio manager's decisions or who come into possession of contemporaneous
information concerning the investment activities of the Fund.
The fundamental principle of the Codes of Ethics is that the individuals covered
by the Codes have a fiduciary responsibility to the Fund and its stockholders.
They are therefore required at all times to place the interests of the Fund and
the stockholders first and to conduct all personal securities transactions in a
manner so as to avoid any actual or potential conflict of interest or abuse of
their position of trust.
Portfolio managers and other individuals with knowledge of Fund investment
activities are prohibited from purchasing or selling a security during a
blackout period of 30 calendar days before and after the date on which the Fund
effects a trade in the same or a similar security. They are also prohibited from
engaging in short term trading of Swiss equity or equity linked securities.
Additionally, the Fund's portfolio managers are prohibited from participating in
any initial public offering or private placement of Swiss equity and equity
linked securities and other covered individuals must obtain prior clearance
before doing so.
Any individual who violates the provisions of the Codes is required to reverse
the transaction and to turn over any resulting profits to the Fund.
20
<PAGE>
THE SWISS HELVETIA FUND, INC.
Additional Information (Unaudited)
(concluded)
The Fund and the Advisor have adopted compliance procedures and have appointed
compliance officers to ensure that all covered individuals comply with the
Codes.
Distributions
The following information summarizes all distributions declared by the Fund
during the year ended December 31, 1999.
Domestic Ordinary Income --
Foreign Source Income .03
-----
Total Ordinary Income .03
=====
Long-Term Capital Gains 1.05
-----
Total Distributions 1.08
=====
Foreign Taxes Paid or Withheld .035
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.
The Fund's long-term capital gain distributions of $1.05 per share are all
taxable at the 20% capital gains rate.
21
<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 reinvested 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 your
brokerage firm does permit such participation, you may not be able to transfer
such shares to another broker who does not permit such participation. You are
encouraged to contact your 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 PFPC, Inc.
To start the Plan with a specific dividend, please forward the required
form to your broker or PFPC 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, you 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, you will be issued shares at 95% of the market price of shares.
3. If net asset value exceeds the market price of shares on the valuation date,
PFPC, as agent for the participants, will buy shares on the open market on the
New York Stock Exchange or elsewhere, for your account.
If, before PFPC has completed its purchase, the market price exceeds
the net asset value of shares, the average per share purchase price paid by PFPC
may exceed the net asset value of shares, resulting in the acquisition of fewer
shares than if the dividend or distribution had 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. PFPC'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 PFPC'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 your broker
or PFPC in writing. Upon termination, you will receive a certificate for the
number of shares held in the Plan.
Where Can I Direct My Questions And Correspondence?
Questions and correspondence concerning the Plan should be directed to:
PFPC, Inc.
P.O. Box 8950
Wilmington, Delaware, 19899
1-800-852-4750
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THE SWISS HELVETIA FUND, INC.
Amendment to By-Laws
At the Board of Directors Meeting held on March 18, 1999, 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 90 nor more than 120 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.
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