T H E S W I S S H E L V E T I A F U N D, I N C.
--------------------------------------------------------------------------------
Directors and Officers
Paul Hottinguer Rodolphe E. Hottinger
CHAIRMAN PRESIDENT
Eric R. Gabus+ CHIEF EXECUTIVE OFFICER
VICE CHAIRMAN (NON OFFICER) Rudolf Millisits
Paul R. Brenner, Esq. SENIOR VICE PRESIDENT
DIRECTOR TREASURER
Alexandre de Takacsy Philippe Comby
DIRECTOR VICE PRESIDENT
Claude Frey Edward J. Veilleux
DIRECTOR VICE PRESIDENT
Baron Hottinger SECRETARY
DIRECTOR Leslie K. Klenk
Claude Mosseri-Marlio ASSISTANT SECRETARY
DIRECTOR Frederick Skillin
Didier Pineau-Valencienne* ASSISTANT TREASURER
DIRECTOR Dawn L. Taylor
Stephen K. West, Esq.* ASSISTANT TREASURER
DIRECTOR
Samuel B. Witt III, Esq.**
DIRECTOR
--------------------------------------------------------------------------------
*Audit Committee member +Governance Committee Chairman
**Audit Committee chairman
INVESTMENT ADVISOR
Hottinger Capital Corp.
1270 Avenue of the Americas, Suite 400
New York, New York 10020
(212) 332-7930
ADMINISTRATOR
Forum Administrative Services, LLC
CUSTODIAN
Swiss American Securities Inc.
TRANSFER AGENT
PFPC Inc.
P.O. Box 43027
Providence, RI 02940-3027
(800) 331-1710
LEGAL COUNSEL
Stroock & Stroock & Lavan LLP
INDEPENDENT AUDITORS
Deloitte & Touche LLP
THE INVESTMENT ADVISOR
The Swiss Helvetia Fund, Inc. (the "Fund") is managed by Hottinger Capital
Corp., which belongs to 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, Toronto, Geneva,
Vienna, London, and the Bahamas.
EXECUTIVE OFFICES
The Swiss Helvetia Fund, Inc.
1270 Avenue of the Americas, Suite 400
New York, New York 10020
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
email: swz@swz.com
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.
The Fund has earned the Lipper, Inc. award for ranking number one among Western
European closed-end funds in ten year performance for the periods ended December
31, 2002, 2001, 2000, 1999, and 1998. The Fund had previously been recognized
for its top one year performance in the same category for the year 2000. The
Fund also maintained Morningstar's overall rating of four stars as of September
30, 2003. Of course, past performance is no guarantee of future results.
Net Asset Value is calculated daily by 6:15 P.M. (Eastern 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.
1
T H E S W I S S H E L V E T I A F U N D, I N C.
--------------------------------------------------------------------------------
Letter to Stockholders
GLOBAL MARKET REVIEW
The Swiss Performance Index (SPI) experienced a 6% increase for the third
quarter of 2003 after a sharp August rise was followed by a strong decline at
quarter end. The profit taking was triggered in part by the sudden weakness of
the U.S. dollar following the G7 meeting in September. While the G7 participants
recognized the need for an adjustment in the U.S. currency, it seemed obvious
that the U.S. administration had put some pressure on China to allow its
currency to float more freely versus the U.S. dollar. The sudden drop of the
U.S. currency revealed investors' concerns about persistent imbalances in the
global economy, where North America is still the only expanding consumer market.
Domestic demand is still weak everywhere else, especially in Europe. Volatility
in the currency market and in the U.S. Treasury market is set to continue and
most likely will affect future stock performance.
The market is also uncomfortable with the idea of an implicit end of the
strong dollar policy at the same time that the U.S. government is running a
bigger and bigger deficit. The looming presidential election and the prospect of
the continuing lack of job creation despite fiscal and monetary stimulus are
already stimulating politicians' appetite for protectionism. If enacted by
Congress, global trade impediments could be harmful to the cost structure of
U.S. corporations. These companies have been participating heavily in the global
outsourcing trend and are among the largest investors in China's manufacturing
infrastructure.
[EDGAR Representation of Graph:
SWISS FRANC/U.S. DOLLAR EXCHANGE RATE
CHF Curncy CHF Curncy
Date Px Last Date Px Last
12/31/2002 1.3836 5/19/2003 1.2967
1/2/2003 1.4017 5/20/2003 1.2906
1/3/2003 1.3982 5/21/2003 1.3003
1/6/2003 1.3932 5/22/2003 1.2958
1/7/2003 1.401 5/23/2003 1.289
1/8/2003 1.387 5/26/2003 1.2869
1/9/2003 1.3921 5/27/2003 1.2869
1/10/2003 1.3805 5/28/2003 1.2971
1/13/2003 1.3864 5/29/2003 1.2832
1/14/2003 1.3866 5/30/2003 1.2979
1/15/2003 1.3834 6/2/2003 1.299
1/16/2003 1.3747 6/3/2003 1.311
1/17/2003 1.3682 6/4/2003 1.3185
1/20/2003 1.3674 6/5/2003 1.3002
1/21/2003 1.3635 6/6/2003 1.3197
1/22/2003 1.3637 6/9/2003 1.3155
1/23/2003 1.3632 6/10/2003 1.3171
1/24/2003 1.3531 6/11/2003 1.3088
1/27/2003 1.353 6/12/2003 1.3109
1/28/2003 1.3572 6/13/2003 1.2959
1/29/2003 1.3554 6/16/2003 1.3057
1/30/2003 1.3561 6/17/2003 1.3092
1/31/2003 1.3639 6/18/2003 1.3226
2/3/2003 1.3591 6/19/2003 1.3147
2/4/2003 1.3467 6/20/2003 1.328
2/5/2003 1.3605 6/23/2003 1.3226
2/6/2003 1.3541 6/24/2003 1.3287
2/7/2003 1.3557 6/25/2003 1.33
2/10/2003 1.3683 6/26/2003 1.3508
2/11/2003 1.3673 6/27/2003 1.3501
2/12/2003 1.3715 6/30/2003 1.3509
2/13/2003 1.3549 7/1/2003 1.3428
2/14/2003 1.3621 7/2/2003 1.3445
2/17/2003 1.3725 7/3/2003 1.3482
2/18/2003 1.3766 7/4/2003 1.3481
2/19/2003 1.3675 7/7/2003 1.3734
2/20/2003 1.3568 7/8/2003 1.3686
2/21/2003 1.3648 7/9/2003 1.3597
2/24/2003 1.3558 7/10/2003 1.3609
2/25/2003 1.3583 7/11/2003 1.3764
2/26/2003 1.3548 7/14/2003 1.3736
2/27/2003 1.3618 7/15/2003 1.3851
2/28/2003 1.352 7/16/2003 1.3751
3/3/2003 1.3384 7/17/2003 1.3695
3/4/2003 1.3349 7/18/2003 1.3637
3/5/2003 1.3298 7/21/2003 1.3533
3/6/2003 1.3353 7/22/2003 1.3619
3/7/2003 1.3361 7/23/2003 1.3464
3/10/2003 1.3259 7/24/2003 1.3455
3/11/2003 1.3285 7/25/2003 1.3445
3/12/2003 1.3363 7/28/2003 1.346
3/13/2003 1.3616 7/29/2003 1.3521
3/14/2003 1.367 7/30/2003 1.366
3/17/2003 1.381 7/31/2003 1.3709
3/18/2003 1.3828 8/1/2003 1.3642
3/19/2003 1.3935 8/4/2003 1.3467
3/20/2003 1.3872 8/5/2003 1.3477
3/21/2003 1.4029 8/6/2003 1.3535
3/24/2003 1.3843 8/7/2003 1.3501
3/25/2003 1.3826 8/8/2003 1.3593
3/26/2003 1.3813 8/11/2003 1.3582
3/27/2003 1.3834 8/12/2003 1.3684
3/28/2003 1.3698 8/13/2003 1.3661
3/31/2003 1.3514 8/14/2003 1.3705
4/1/2003 1.3521 8/15/2003 1.3709
4/2/2003 1.3789 8/18/2003 1.3889
4/3/2003 1.3778 8/19/2003 1.3885
4/4/2003 1.3854 8/20/2003 1.3879
4/7/2003 1.3879 8/21/2003 1.4131
4/8/2003 1.3872 8/22/2003 1.4174
4/9/2003 1.3795 8/25/2003 1.4153
4/10/2003 1.3882 8/26/2003 1.4128
4/11/2003 1.3936 8/27/2003 1.413
4/14/2003 1.3899 8/28/2003 1.4142
4/15/2003 1.3921 8/29/2003 1.3999
4/16/2003 1.3716 9/1/2003 1.4007
4/17/2003 1.3814 9/2/2003 1.4189
4/18/2003 1.3814 9/3/2003 1.4151
4/21/2003 1.3878 9/4/2003 1.4044
4/22/2003 1.3706 9/5/2003 1.3825
4/23/2003 1.3746 9/8/2003 1.391
4/24/2003 1.3612 9/9/2003 1.3785
4/25/2003 1.362 9/10/2003 1.3835
4/28/2003 1.3713 9/11/2003 1.3834
4/29/2003 1.3613 9/12/2003 1.3791
4/30/2003 1.3547 9/15/2003 1.3802
5/1/2003 1.3452 9/16/2003 1.3895
5/2/2003 1.344 9/17/2003 1.3793
5/5/2003 1.342 9/18/2003 1.3848
5/6/2003 1.3246 9/19/2003 1.3679
5/7/2003 1.3244 9/22/2003 1.3547
5/8/2003 1.314 9/23/2003 1.3591
5/9/2003 1.3161 9/24/2003 1.3501
5/12/2003 1.311 9/25/2003 1.3436
5/13/2003 1.3133 9/26/2003 1.3449
5/14/2003 1.3183 9/29/2003 1.3253
5/15/2003 1.3243 9/30/2003 1.3192]
5/16/2003 1.3076
SWISS MARKET REVIEW AND FUND PERFORMANCE
Within the Swiss market, the cyclical, financial and technology sectors had
the best performance during the quarter, building on an already strong second
quarter. Despite the sharp increase in long-term U.S. interest rates, the
prospect of economic improvement supported equity valuations. While small and
mid capitalization stocks outperformed the rest of the market, low trading
volume and the impact of short positions being covered, were most likely more
responsible than any true improvement in the fundamentals of these companies.
The Fund's investment strategy has been to concentrate on finding mis-priced
stocks in the mid and large capitalization segment of the market. Management
increased exposure to turnaround situations, undervalued cyclical growth
companies and under priced business franchises.
2
T H E S W I S S H E L V E T I A F U N D, I N C.
--------------------------------------------------------------------------------
Letter to Stockholders (continued)
[EDGAR Representation of Graph:
SWISS PERFORMANCE INDEX IN SWISS FRANCS
SPI Index SPI Index
Date Last Price Date Last Price
1/3/2003 100.00% 5/20/2003 94.45%
1/6/2003 100.38% 5/21/2003 93.19%
1/7/2003 99.84% 5/22/2003 95.50%
1/8/2003 99.65% 5/23/2003 95.66%
1/9/2003 99.19% 5/26/2003 94.96%
1/10/2003 99.18% 5/27/2003 95.49%
1/13/2003 99.80% 5/28/2003 97.43%
1/14/2003 101.24% 5/30/2003 96.87%
1/15/2003 99.23% 6/2/2003 99.29%
1/16/2003 98.64% 6/3/2003 98.49%
1/17/2003 97.19% 6/4/2003 99.19%
1/20/2003 95.76% 6/5/2003 98.42%
1/21/2003 95.25% 6/6/2003 100.06%
1/22/2003 92.76% 6/10/2003 100.11%
1/23/2003 92.77% 6/11/2003 101.20%
1/24/2003 91.79% 6/12/2003 101.96%
1/27/2003 88.58% 6/13/2003 100.28%
1/28/2003 88.24% 6/16/2003 102.29%
1/29/2003 88.66% 6/17/2003 103.27%
1/30/2003 90.17% 6/18/2003 104.07%
1/31/2003 90.41% 6/19/2003 102.61%
2/3/2003 91.41% 6/20/2003 102.92%
2/4/2003 89.21% 6/23/2003 100.78%
2/5/2003 89.72% 6/24/2003 100.77%
2/6/2003 87.33% 6/25/2003 100.83%
2/7/2003 86.64% 6/26/2003 101.14%
2/10/2003 85.40% 6/27/2003 101.23%
2/11/2003 87.29% 6/30/2003 100.59%
2/12/2003 85.32% 7/1/2003 98.37%
2/13/2003 85.39% 7/2/2003 100.13%
2/14/2003 87.49% 7/3/2003 100.80%
2/17/2003 89.45% 7/4/2003 100.84%
2/18/2003 88.52% 7/7/2003 102.93%
2/19/2003 86.38% 7/8/2003 102.58%
2/20/2003 86.46% 7/9/2003 101.63%
2/21/2003 86.73% 7/10/2003 101.44%
2/24/2003 85.79% 7/11/2003 102.52%
2/25/2003 84.08% 7/14/2003 103.91%
2/26/2003 83.26% 7/15/2003 103.47%
2/27/2003 83.73% 7/16/2003 103.16%
2/28/2003 85.07% 7/17/2003 102.47%
3/3/2003 85.83% 7/18/2003 102.55%
3/4/2003 83.10% 7/21/2003 101.95%
3/5/2003 81.52% 7/22/2003 101.82%
3/6/2003 81.39% 7/23/2003 102.40%
3/7/2003 80.23% 7/24/2003 103.74%
3/10/2003 77.34% 7/25/2003 103.29%
3/11/2003 77.04% 7/28/2003 104.47%
3/12/2003 76.18% 7/29/2003 104.24%
3/13/2003 78.42% 7/30/2003 105.24%
3/14/2003 82.69% 7/31/2003 105.94%
3/17/2003 84.88% 8/1/2003 105.33%
3/18/2003 85.64% 8/4/2003 104.28%
3/19/2003 87.58% 8/5/2003 105.40%
3/20/2003 88.08% 8/6/2003 104.42%
3/21/2003 91.33% 8/7/2003 104.18%
3/24/2003 87.05% 8/8/2003 104.62%
3/25/2003 87.67% 8/11/2003 104.56%
3/26/2003 87.42% 8/12/2003 105.48%
3/27/2003 86.37% 8/13/2003 105.24%
3/28/2003 86.69% 8/14/2003 106.08%
3/31/2003 84.34% 8/15/2003 107.35%
4/1/2003 85.29% 8/18/2003 107.94%
4/2/2003 87.96% 8/19/2003 108.38%
4/3/2003 89.03% 8/20/2003 107.78%
4/4/2003 90.35% 8/21/2003 108.89%
4/7/2003 92.46% 8/22/2003 109.79%
4/8/2003 91.94% 8/25/2003 108.26%
4/9/2003 92.60% 8/26/2003 107.94%
4/10/2003 90.69% 8/27/2003 108.45%
4/11/2003 92.16% 8/28/2003 108.95%
4/14/2003 93.00% 8/29/2003 107.53%
4/15/2003 95.16% 9/1/2003 109.41%
4/16/2003 94.29% 9/2/2003 108.83%
4/17/2003 94.06% 9/3/2003 110.99%
4/22/2003 94.23% 9/4/2003 111.13%
4/23/2003 95.44% 9/5/2003 111.34%
4/24/2003 94.08% 9/8/2003 111.85%
4/25/2003 93.26% 9/9/2003 111.15%
4/28/2003 94.88% 9/10/2003 111.24%
4/29/2003 94.01% 9/11/2003 111.35%
4/30/2003 94.67% 9/12/2003 111.24%
5/2/2003 94.22% 9/15/2003 111.72%
5/5/2003 95.55% 9/16/2003 112.55%
5/6/2003 96.71% 9/17/2003 113.15%
5/7/2003 96.48% 9/18/2003 113.66%
5/8/2003 94.33% 9/19/2003 112.82%
5/9/2003 94.17% 9/22/2003 110.41%
5/12/2003 93.58% 9/23/2003 109.47%
5/13/2003 94.73% 9/24/2003 109.87%
5/14/2003 94.94% 9/25/2003 108.40%
5/15/2003 95.30% 9/26/2003 107.81%
5/16/2003 95.86% 9/29/2003 107.32%
5/19/2003 93.90% 9/30/2003 106.12%]
[EDGAR Representation of Graph:
SWISS PERFORMANCE INDEX IN U.S. DOLLARS
SPI Index SPI Index
Date Last Price Date Last Price
1/3/2003 100.00% 5/20/2003 102.16%
1/6/2003 100.71% 5/21/2003 100.78%
1/7/2003 99.58% 5/22/2003 102.99%
1/8/2003 100.43% 5/23/2003 103.55%
1/9/2003 99.62% 5/26/2003 103.15%
1/10/2003 100.23% 5/27/2003 104.03%
1/13/2003 100.85% 5/28/2003 105.10%
1/14/2003 102.20% 5/30/2003 104.09%
1/15/2003 100.29% 6/2/2003 106.94%
1/16/2003 100.15% 6/3/2003 105.07%
1/17/2003 99.23% 6/4/2003 105.60%
1/20/2003 97.88% 6/5/2003 106.10%
1/21/2003 97.67% 6/6/2003 105.91%
1/22/2003 95.08% 6/10/2003 106.51%
1/23/2003 95.41% 6/11/2003 108.19%
1/24/2003 94.84% 6/12/2003 108.78%
1/27/2003 91.45% 6/13/2003 107.62%
1/28/2003 90.92% 6/16/2003 109.66%
1/29/2003 91.53% 6/17/2003 110.56%
1/30/2003 92.57% 6/18/2003 109.96%
1/31/2003 92.36% 6/19/2003 108.93%
2/3/2003 93.79% 6/20/2003 107.96%
2/4/2003 92.58% 6/23/2003 106.43%
2/5/2003 91.97% 6/24/2003 105.84%
2/6/2003 90.24% 6/25/2003 106.45%
2/7/2003 89.20% 6/26/2003 104.94%
2/10/2003 87.47% 6/27/2003 104.67%
2/11/2003 89.32% 6/30/2003 103.91%
2/12/2003 87.10% 7/1/2003 102.56%
2/13/2003 88.16% 7/2/2003 103.89%
2/14/2003 89.62% 7/3/2003 104.48%
2/17/2003 91.29% 7/4/2003 104.62%
2/18/2003 89.89% 7/7/2003 104.93%
2/19/2003 88.21% 7/8/2003 104.60%
2/20/2003 89.11% 7/9/2003 104.18%
2/21/2003 89.11% 7/10/2003 104.20%
2/24/2003 88.31% 7/11/2003 104.44%
2/25/2003 86.91% 7/14/2003 105.75%
2/26/2003 85.88% 7/15/2003 104.45%
2/27/2003 85.99% 7/16/2003 104.83%
2/28/2003 87.79% 7/17/2003 104.53%
3/3/2003 89.44% 7/18/2003 105.30%
3/4/2003 86.79% 7/21/2003 105.13%
3/5/2003 85.72% 7/22/2003 104.59%
3/6/2003 85.44% 7/23/2003 106.36%
3/7/2003 83.88% 7/24/2003 107.42%
3/10/2003 81.56% 7/25/2003 107.51%
3/11/2003 80.97% 7/28/2003 108.62%
3/12/2003 79.96% 7/29/2003 108.11%
3/13/2003 81.28% 7/30/2003 107.99%
3/14/2003 84.49% 7/31/2003 108.01%
3/17/2003 85.82% 8/1/2003 107.73%
3/18/2003 86.54% 8/4/2003 108.15%
3/19/2003 88.02% 8/5/2003 109.03%
3/20/2003 88.75% 8/6/2003 108.36%
3/21/2003 90.99% 8/7/2003 107.87%
3/24/2003 87.90% 8/8/2003 107.50%
3/25/2003 88.58% 8/11/2003 107.83%
3/26/2003 88.36% 8/12/2003 107.96%
3/27/2003 87.22% 8/13/2003 107.67%
3/28/2003 88.64% 8/14/2003 107.89%
3/31/2003 87.11% 8/15/2003 109.33%
4/1/2003 88.08% 8/18/2003 108.56%
4/2/2003 89.14% 8/19/2003 108.83%
4/3/2003 90.14% 8/20/2003 108.44%
4/4/2003 91.05% 8/21/2003 107.90%
4/7/2003 92.44% 8/22/2003 108.23%
4/8/2003 92.34% 8/25/2003 106.78%
4/9/2003 93.81% 8/26/2003 107.18%
4/10/2003 91.61% 8/27/2003 107.39%
4/11/2003 92.54% 8/28/2003 107.77%
4/14/2003 93.61% 8/29/2003 107.08%
4/15/2003 95.53% 9/1/2003 109.09%
4/16/2003 95.81% 9/2/2003 107.69%
4/17/2003 95.29% 9/3/2003 109.84%
4/22/2003 95.98% 9/4/2003 110.15%
4/23/2003 96.86% 9/5/2003 112.25%
4/24/2003 96.74% 9/8/2003 112.94%
4/25/2003 95.75% 9/9/2003 112.75%
4/28/2003 96.78% 9/10/2003 112.06%
4/29/2003 96.20% 9/11/2003 112.25%
4/30/2003 97.56% 9/12/2003 113.12%
5/2/2003 97.93% 9/15/2003 113.35%
5/5/2003 99.48% 9/16/2003 113.01%
5/6/2003 101.29% 9/17/2003 114.43%
5/7/2003 101.73% 9/18/2003 114.82%
5/8/2003 100.34% 9/19/2003 115.42%
5/9/2003 100.22% 9/22/2003 114.17%
5/12/2003 99.78% 9/23/2003 113.09%
5/13/2003 100.71% 9/24/2003 113.37%
5/14/2003 101.02% 9/25/2003 112.65%
5/15/2003 100.75% 9/26/2003 112.19%
5/16/2003 102.25% 9/29/2003 112.71%
5/19/2003 101.37% 9/30/2003 112.48%]
The Swiss market performance as measured by the SPI Index for the nine
months ended September 30 was 16.99% in U.S. dollar terms compared to 14.71% for
the S&P 500. The Swiss franc loss of 6% versus the euro this year has translated
into a year to date Swiss market performance of 5.5% in euro terms. This
compares to a performance of only 1.7% in euros for the S&P 500 despite the very
strong advance of U.S. technology stocks.
The Fund underperformed the SPI with an increase in net asset value of
15.14% and a share price performance of 14.91% in U.S. dollar terms. However,
the Fund outperformed the Swiss Market Index (SMI) of blue chip companies which
was up only 14.03% in U.S. dollar terms. The Fund's portfolio has a higher
weighting in mid-sized companies than either the SPI or SMI and the accent put
on stock picking has resulted in a focus on fewer names. Management has also
reduced the Fund's exposure to the financial sector, mainly the insurance and
financial service companies, due to the increased volatility in the worldwide
bond market, especially in the U.S. Management expects the volatility in the
U.S. Treasury market to continue based on the weakness of the U.S. dollar, the
hedging activities of mortgage bankers and the increasing U.S. deficit.
--------------------------------------------------------------------------------
YEAR TO DATE
DECEMBER 31, 2002
THROUGH
SEPTEMBER 30, 2003
--------------------------------------------------------------------------------
PERFORMANCE IN SWISS FRANCS
--------------------------------------------------------------------------------
Swiss Performance Index (SPI) 11.74%
--------------------------------------------------------------------------------
Swiss Helvetia Fund
--------------------------------------------------------------------------------
Based on Net Asset Value in Swiss Francs 9.97%
--------------------------------------------------------------------------------
CHANGE IN U. S. DOLLAR VS. SWISS FRANC -4.49%
--------------------------------------------------------------------------------
PERFORMANCE IN U.S. DOLLARS
--------------------------------------------------------------------------------
SWISS HELVETIA FUND PERFORMANCE
--------------------------------------------------------------------------------
Based on Market Price 14.91%
--------------------------------------------------------------------------------
Based on Net Asset Value 15.14%
--------------------------------------------------------------------------------
S&P 500 Index 14.71%
--------------------------------------------------------------------------------
MSCI EAFE Index 18.37%
--------------------------------------------------------------------------------
Lipper European Fund Index (10 Largest) 15.31%
--------------------------------------------------------------------------------
Lipper European Fund Universe Average 15.20%
--------------------------------------------------------------------------------
SOURCES: FORUM FINANCIAL GROUP AND BLOOMBERG
3
T H E S W I S S H E L V E T I A F U N D, I N C.
--------------------------------------------------------------------------------
Letter to Stockholders (continued)
----------------------------------------------------------------------------------------------------------------------------
PEER GROUP/INDICES PERFORMANCE COMPARISON IN SWISS FRANCS 1
----------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN
YEAR TO DATE
AS OF TOTAL RETURN TOTAL RETURN TOTAL RETURN TOTAL RETURN TOTAL RETURN TOTAL RETURN
9/30/03 2002 2001 2000 1999 1998 1997
----------------------------------------------------------------------------------------------------------------------------
SWISS HELVETIA FUND 9.97% -20.40% -22.91% 14.06% 14.70% 15.57% 53.99%
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Swiss Performance Index (SPI) 11.74% -25.95% -22.03% 11.91% 11.69% 15.36% 55.19%
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Swiss Market Index (SMI) 8.91% -27.84% -21.11% 7.47% 5.71% 14.28% 58.93%
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Switzerland iShares2 (Formerly
called Webs Switzerland) 9.10% -26.23% -23.12% 7.75% 12.22% 11.74% 47.79%
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CS Equity Swiss Blue Chips3, 7 8.74% -28.75% -22.12% 10.97% 7.57% 14.21% 59.90%
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UBS Equity Inv. Switzerland4, 7 9.00% -26.02% -22.04% 7.42% 6.43% 12.75% 55.94%
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Pictet Valsuisse5, 7 9.40% -27.93% -22.35% 7.34% 9.38% 11.05% 55.65%
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Saraswiss (Bank Sarasin)6, 7 9.66% -28.51% -24.45% 9.72% 7.10% 14.41% 53.57%
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CUMULATIVE
PERFORMANCE
12/31/96 -
9/30/03
--------------------------------------------
SWISS HELVETIA FUND 57.12%
--------------------------------------------
Swiss Performance Index (SPI) 44.37%
--------------------------------------------
Swiss Market Index (SMI) 27.93%
--------------------------------------------
Switzerland iShares2 (Formerly
called Webs Switzerland) 23.55%
--------------------------------------------
CS Equity Swiss Blue Chips3, 7 31.54%
--------------------------------------------
UBS Equity Inv. Switzerland4, 7 26.37%
--------------------------------------------
Pictet Valsuisse5, 7 24.25%
--------------------------------------------
Saraswiss (Bank Sarasin)6, 7 22.29%
--------------------------------------------
SOURCES : BLOOMBERG, MANAGEMENT COMPANIES' WEBSITES, INVESTMENT COMPANY CAPITAL
CORP., AND FORUM FINANCIAL GROUP.
1Performance of funds is based on changes in the fund's NAV over a specified
period. In each case total return is calculated assuming reinvestment of all
distributions. Funds listed, other than Switzerland iShares, are not registered
with the Securities and Exchange Commission. Performance and descriptive
information about the funds are derived from their published investor reports
and websites, which are subject to change.
2Switzerland iShares are traded on the New York Stock Exchange and invest in
most of the same stocks listed in the Morgan Stanley Capital International
(Switzerland) Index. These stocks represent Switzerland's largest and most
established public companies, accounting for approximately 85% of the market
capitalization of all of Switzerland's publicly traded stocks. Performance of
iShares is calculated based upon the December 31 closing prices each year using
the Swiss franc/U.S. dollar exchange rate as of noon each such date, as reported
by Bloomberg. Such exchange rates were as follows: 12/31/96 = 1.35, 12/31/97 =
1.46, 12/31/98 = 1.38, 12/31/99 = 1.60, 12/31/00 = 1.61, 12/31/01 = 1.67,
12/31/02 = 1.39, and 9/30/03 = 1.32.
3 This fund invests in equities issued by leading Swiss companies. Stock
selection is based on economic, sector and company analyses. Preference is given
to large-cap companies.
4 This fund invests primarily in major Swiss companies. Quality criteria used
for determining relative weightings of companies include: strategic orientation,
strength of market position, quality of management, soundness of earnings,
growth potential and potential for improving shareholder value. The investment
objective seeks to provide results that are aligned with the SPI performance.
5 This fund invests in shares of Swiss companies listed on the Swiss Stock
Exchange (SWX) and included in the SPI.
6 This fund invests in shares of Swiss companies. It weights individual sectors
relative to the SPI on the basis of their expected relative performance. It
focuses on liquid blue-chip stocks.
7These funds are not available for U.S. residents or citizens.
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS.
SPECIFIC COMPANY NEWS
UBS: On September 25th, UBS announced its intention to acquire the U.S.
prime brokerage operations of ABN AMRO. The broker operates in several major
U.S. locations and its main client base of smaller U.S. hedge funds provides a
good complement to UBS's existing hedge fund service business.
ABB: On August 28th, ABB announced the issuance of 850 million Swiss franc
denominated convertible bonds maturing in 2010. The issue was well received by
the market as the amount of the issue was lower than had been expected and as
investors continued to increase their confidence in management's restructuring
plan.
4
T H E S W I S S H E L V E T I A F U N D, I N C.
--------------------------------------------------------------------------------
Letter to Stockholders (continued)
Improved market sentiment toward the company also came from prospects for
involvement of ABB's highly regarded high voltage transmission systems in the
much needed upgrade of the U.S. power grid.
NOVARTIS: On September 23rd, the U.S. Food and Drug Administration (FDA)
delayed the approval of Novartis' arthritis and pain drug, Prexige, pending
submission of additional clinical data. Given Novartis' growth base and
well-filled pipeline it is expected that this delay will not significantly alter
the company's long-term sales trends.
CREDIT-SUISSE: The announced disposal of Churchill (UK insurance
operations) and the company's Italian insurance operations are now completed.
These transactions will result in the realizing of capital gains in Credit
Suisse Group's third quarter results and a strengthening of Winterthur Group's
solvency position.
ZURICH FINANCIAL SERVICES: As part of its continued restructuring program,
the company disposed of several of its life insurance business activities. On
August 6th, it announced the closure of one of Zurich's UK life businesses and
its sale to Swiss Re. On September 1st, it completed the sale of parts of its
Dutch operations to SNS Reaal. On September 5th, it sold its life business and
part of its non-life business in France to Generali. And on September 4th, it
closed the sale of Zurich Life, part of its U.S. life and annuity operations, to
Bank One Corporation.
ACTELION: On August 1st, the U.S. FDA approved Zavesca, the first oral
treatment option for a genetic lipid storage disorder. On September 30th, the
company announced that it had agreed to buy privately held Axovan AG (whose most
advanced project is in the area of brain disorders, such as hemorrhage) for an
initial amount of $45 million. This acquisition should strengthen the company's
research efforts within its existing expertise by adding numerous pre-clinical
projects and compounds.
COMMENTS ON THE CURRENCY
U.S. DOLLAR: During the G7 meetings in Dubai, the industrialized nations
issued a statement promoting more flexibility in exchange rates based on market
mechanisms in order to smooth the necessary rebalancing of the global economy.
The core issue is the gradual downward adjustment of the U.S. dollar to reflect
the massive deficits in the U.S. versus the surpluses of, mainly, China and
Japan. Due to the expectation of fewer interventions to support it, the U.S.
dollar decreased significantly against all major currencies.
SWISS ECONOMIC NOTES
The Swiss National Bank (SNB) continues its expansionary monetary policy.
In its
5
T H E S W I S S H E L V E T I A F U N D, I N C.
--------------------------------------------------------------------------------
Letter to Stockholders (continued)
last monetary policy assessment on September 18th, the SNB decided to leave the
target range for the three-month Libor rate unchanged at 0.00% to 0.75% and to
continue to keep the three-month Libor rate at the lower end of the range at
0.25%. The main reasons were the expectation of a moderate decline in real
economic activity for 2003 and a perceptible economic upswing only in the course
of 2004.
The real gross domestic product declined again in the second quarter of
2003. It fell by 1.2% from the first quarter and by 1% year-on-year. The labor
market deteriorated further with an unemployment rate for September at 3.7% vs.
2.8% a year earlier. The unsatisfactory economic situation is primarily the
result of stagnation in Europe. Despite more favorable exchange rate conditions,
Swiss exports again fell in the second quarter. Consumer spending had a
stabilizing effect while investments continued to decline overall.
Nevertheless, there are positive signs. Business sentiment has improved,
residential construction has picked up and the financial markets have improved.
These trends could gradually improve the Swiss economy towards the end of 2003
and the beginning of 2004.
Year-on-year, the consumer price index dropped to 0.5% in the second
quarter of 2003 from 1.0% in the first quarter. The SNB forecasts a drop in
inflation bringing its rate close to 0% due to continuing weak economic
conditions in Switzerland and the generally moderate price pressure from
imported goods.
OUTLOOK
While expectations are for in-line to strong third quarter earnings reports
for the market overall and for a strong fourth quarter especially for
semi-conductor stocks, it remains a question whether this is a seasonal recovery
due to inventory rebuilding or a more fundamental one. With stock prices
discounting strong acceleration in sales and even stronger acceleration in
earnings, there is not much room for disappointment. If the NASDAQ were to drop
substantially, the impact would likely be felt in most of the other areas of the
U.S market and elsewhere, particularly in economically sensitive industry
groups. Management believes, however, that the biggest risk lies with an
increase in bond yields. For that reason the Fund reduced its exposure to the
financial sector as mentioned above. On the other hand opportunities remain for
investing in companies with on-going structural reforms and in companies in the
mid and small capitalization segment left behind by the liquidity rally.
STOCK REPURCHASE PROGRAM
Pursuant to authorization by the Board, the Fund began open market
6
T H E S W I S S H E L V E T I A F U N D, I N C.
--------------------------------------------------------------------------------
Letter to Stockholders (concluded)
purchases of its common stock on the New York Stock Exchange in 1999 and has
continued purchases in each subsequent year. The Board has authorized the
purchase of up to 500,000 shares in 2003. For the six months ended September 30,
2003, the Fund repurchased and retired 123,200 shares at an average price of
$10.12 per share (including broker commissions) and a weighted average discount
of 17.13%. These repurchases, which had a total cost of $1,247,166, resulted in
an increase of $251,661 in the Fund's net asset value.
Sincerely,
/s/ PAUL HOTTINGUER
Paul Hottinguer
CHAIRMAN
/s/ RODOLPHE HOTTINGER
Rodolphe Hottinger
PRESIDENT AND CHIEF EXECUTIVE OFFICER
September 30, 2003
7
T H E S W I S S H E L V E T I A F U N D, I N C.
--------------------------------------------------------------------------------
Schedule of Investments (Unaudited) September 30, 2003
Percent
No. of of Net
Shares Security Value Assets
--------------------------------------------------------------------------------
COMMON STOCKS - 95.54%
BANKS - 7.52%
435,000 UBS AG2
REGISTERED SHARES $24,408,224 7.52%
Largest Swiss bank. It offers
consumer, business and construction
loans, mortgages, mutual funds, export
and structured finance and securities
brokerage services, advises on mergers and
acquisitions, invests pension funds
and sponsors credit cards.
(Cost $7,578,949)
------------ -------
24,408,224 7.52%
BIOTECHNOLOGY - 5.11%
186,000 ACTELION LTD.1,2
REGISTERED SHARES 15,950,704 4.91%
Pharmaceutical company that develops and
markets synthetic small-molecule drugs against
diseases related to the endothelium. The Company's
drugs, Veletri and Tracleer, are used in the treatment
of heart and pulmonary conditions.
(Cost $12,911,748)
53,940 BERNA BIOTECH AG1
REGISTERED SHARES 645,352 0.20%
Produces vaccines for influenza,
hepatitis, travel and general immunization.
(Cost $820,168)
------------ -------
16,596,056 5.11%
Percent
No. of of Net
Shares Security Value Assets
--------------------------------------------------------------------------------
CHEMICALS - 2.65%
180,000 CLARIANT AG1
REGISTERED SHARES $ 2,364,834 0.73%
Specializes in color chemistry and
manufactures a range of dyestuffs,
pigments, chemicals, additives
and master batches for the textile,
paper, leather, plastics, synthetic
fibers and paint industries.
(Cost $2,622,095)
16,783 SIKA AG
BEARER SHARES 6,227,222 1.92%
Leading producer of construction chemicals.
(Cost $4,237,473)
------------ -------
8,592,056 2.65%
CONSTRUCTION - 0.28%
2,468 GEBERIT AG
REGISTERED SHARES 915,735 0.28%
Manufactures and supplies water supply
pipes and fittings, installation systems,
drainage and flushing systems such as
visible cisterns, and other sanitary systems
for the commercial and residential
construction markets.
(Cost $651,692)
------------ -------
915,735 0.28%
ELECTRICAL ENGINEERING & ELECTRONICS - 9.09%
2,574,725 ABB LTD.1, 2
REGISTERED SHARES 14,232,540 4.38%
The holding company for ABB Group
which is one of the largest electrical
engineering firms in the world.
(Cost $12,902,258)
8
T H E S W I S S H E L V E T I A F U N D, I N C.
--------------------------------------------------------------------------------
Schedule of Investments (Unaudited)(continued) September 30, 2003
Percent
No. of of Net
Shares Security Value Assets
--------------------------------------------------------------------------------
COMMON STOCKS - (CONTINUED)
ELECTRICAL ENGINEERING & ELECTRONICS - (CONTINUED)
2,055 BELIMO HOLDING AG
REGISTERED SHARES $ 760,938 0.23%
World market leader in damper and volume
control actuators for ventilation and
air-conditioning equipment.
(Cost $450,524)
60,000 KUDELSKI SA1
BEARER SHARES 1,601,545 0.50%
Designs, produces, and distributes
equipment under the 'Nagra' brand name
for professional data display in audio
and visual applications.
(Cost $1,735,665)
175,000 LOGITECH INTERNATIONAL SA1
REGISTERED SHARES 5,446,388 1.68%
Manufactures personal computer input
devices, as well as producing trackballs,
desktop publishing programs and
related software.
(Cost $5,635,129)
282,269 PHONAK HOLDING AG
REGISTERED SHARES 4,221,424 1.30%
Designs and produces wireless analog
and digital hearing aids, transmitters, remote
controls, microphones and receivers for use
in wireless communications within
broadcasting and sports.
(Cost $2,698,029)
Percent
No. of of Net
Shares Security Value Assets
--------------------------------------------------------------------------------
ELECTRICAL ENGINEERING & ELECTRONICS - (CONTINUED)
5,400 SAIA-BURGESS ELECTRONICS HOLDING AG
REGISTERED SHARES $ 1,729,668 0.53%
Develops and produces switches, motors
and programmable control devices.
Products are mainly used in the automobile,
heating and air conditioning and
telecommunications industries.
(Cost $1,485,298)
45,300 TECAN GROUP AG
REGISTERED SHARES 1,528,180 0.47%
Manufactures and distributes components
and complete solutions for the automation
of laboratory processes.
(Cost $1,524,349)
------------ -------
29,520,683 9.09%
FINANCIAL SERVICES - 4.33%
439,000 CREDIT SUISSE GROUP2
REGISTERED SHARES 14,044,942 4.33%
A global operating financial group.
(Cost $11,994,385)
------------ -------
14,044,942 4.33%
FOOD & LUXURY GOODS - 15.41%
300 LINDT & SPRUNGLI AG
REGISTERED SHARES 2,283,053 0.70%
Major manufacturer of premium
Swiss chocolates.
(Cost $1,196,399)
9
T H E S W I S S H E L V E T I A F U N D, I N C.
--------------------------------------------------------------------------------
Schedule of Investments (Unaudited)(continued) September 30, 2003
Percent
No. of of Net
Shares Security Value Assets
--------------------------------------------------------------------------------
COMMON STOCKS - (CONTINUED)
FOOD & LUXURY GOODS - (CONTINUED)
207,000 NESTLE AG2
REGISTERED SHARES $ 47,729,441 14.71%
Largest food and beverage processing
company in the world.
(Cost $12,427,540)
------------ -------
50,012,494 15.41%
INSURANCE - 11.02%
273,530 CONVERIUM HOLDING AG2
REGISTERED SHARES 12,531,096 3.86%
Offers reinsurance services worldwide.
Provides accident and health, automobile,
aviation and space, credit and surety,
general third party liability, engineering,
e-commerce, intellectual property, life,
marine, professional liability and property,
and catastrophe insurance.
(Cost $12,948,820)
71,030 SWISS LIFE HOLDING1
REGISTERED SHARES 9,681,508 2.98%
Provides life insurance, institutional
investment management, and private
banking services.
(Cost $7,225,714)
187,924 SWISS REINSURANCE COMPANY2
REGISTERED SHARES 11,939,137 3.68%
Second largest reinsurance company
in the world.
(Cost $11,216,784)
Percent
No. of of Net
Shares Security Value Assets
--------------------------------------------------------------------------------
INSURANCE - (CONTINUED)
13,000 ZURICH FINANCIAL SERVICES AG
REGISTERED SHARES $ 1,624,262 0.50%
Offers property, accident, health, automobile,
liability, financial risk and life insurance and
retirement products.
(Cost $1,223,672)
------------ -------
35,776,003 11.02%
MISCELLANEOUS MEDICAL SERVICES - 0.69%
17,000 GALENCIA HOLDING AG
REGISTERED SHARES 2,252,764 0.69%
Manufactures and distributes prescription
and over-the-counter drugs, toiletries and
hygiene products.
(Cost $2,123,038)
------------ -------
2,252,764 0.69%
MISCELLANEOUS SERVICES - 7.00%
284,000 ADECCO SA2
REGISTERED SHARES 14,032,258 4.32%
Leading personnel and temporary
employment company.
(Cost $10,552,675)
16,698 SGS SOCIETE GENERALE DE
SURVEILLANCE HOLDING SA
REGISTERED SHARES 8,699,246 2.68%
Provides a variety of industrial inspection,
analysis, testing and verification services
worldwide.
(Cost $4,295,869)
------------ -------
22,731,504 7.00%
10
T H E S W I S S H E L V E T I A F U N D, I N C.
--------------------------------------------------------------------------------
Schedule of Investments (Unaudited)(concluded) September 30, 2003
Percent
No. of of Net
Shares Security Value Assets
--------------------------------------------------------------------------------
COMMON STOCKS - (CONCLUDED)
PHARMACEUTICALS - 26.42%
1,315,000 NOVARTIS AG2
REGISTERED SHARES $ 50,883,311 15.69%
One of the leading manufacturers
of pharmaceutical and nutrition products.
(Cost $16,301,451)
420,000 ROCHE HOLDING AG2
DIVIDENDS RIGHTS CERTIFICATES 34,825,080 10.73%
Worldwide pharmaceutical company.
(Cost $8,467,363)
------------ -------
85,708,391 26.42%
RETAIL - 2.10%
163,650 CHARLES VOEGELE HOLDING AG1
BEARER SHARES 6,821,848 2.10%
Family apparel retailer which focuses
on the value-for-money segment of the
market. Operates retail stores in
Switzerland, Germany, Austria, and the
Benelux region.
(Cost $6,175,615)
------------ -------
6,821,848 2.10%
TECHNOLOGY - 1.87%
68,593 MICRONAS SEMICONDUCTOR HOLDING AG1
REGISTERED SHARES 2,155,543 0.66%
Develops and manufactures a wide range
of semiconductors and modules used
by the automotive and consumer goods
industries.
(Cost $1,486,445)
Percent
No. of of Net
Shares Security Value Assets
--------------------------------------------------------------------------------
TECHNOLOGY - (CONTINUED)
33,000 UNAXIS HOLDING AG
REGISTERED SHARES $ 3,910,722 1.21%
Provider of systems and IT services,
including semiconductors, data storage
and displays, as well as surface
technology and space applications.
(Cost $3,622,467)
------------ -------
6,066,265 1.87%
TRANSPORTATION - 2.05%
67,611 KUEHNE & NAGEL INTERNATIONAL AG
REGISTERED SHARES 6,655,634 2.05%
Operates sea freight, land and rail
transportation businesses and
warehousing and distribution facilities.
(Cost $3,548,676)
------------ -------
6,655,634 2.05%
TOTAL COMMON STOCKS $310,102,599 95.54%
(Cost $170,060,290)
OTHER ASSETS IN EXCESS OF LIABILITIES 14,482,177 4.46%
------------ -------
NET ASSETS $324,584,776 100.00%
============ =======
--------------------------------------------------------------------------------
1 Non-income producing security.
2 One of the ten largest portfolio holdings.
11
THE SWISS
A SWISS ---------------
INVESTMENTS HELVETIA
FUND ---------------
FUND, INC.
---------------
WWW.SWZ.COM
THE SWISS HELVETIA FUND, INC.
EXECUTIVE OFFICES
The Swiss Helvetia Fund, Inc.
1270 Avenue of the Americas
Suite 400 QUARTERLY REPORT
New York, NY 10020 FOR THE
1-888-SWISS-00 PERIOD ENDED
(212) 332-2760 SEPTEMBER 30, 2003
http://www.swz.com