Directors and Officers

Investment Advisor

Hottinger Capital Corp.

1270 Avenue of the Americas, Suite 400

New York, NY 10020

(212) 332-7930

Administrator

Citi Fund Services Ohio, Inc.

Custodian

Citibank, N.A.

Transfer Agent

American Stock Transfer & Trust Company

59 Maiden Lane

Plaza Level

New York, NY 10038

Legal Counsel

Stroock & Stroock & Lavan LLP

Independent Registered Public Accounting Firm

Deloitte & Touche LLP

The Investment Advisor

The Swiss Helvetia Fund, Inc. (the “Fund”) is managed by Hottinger Capital Corp., which belongs to Groupe Banque Hottinger & Cie SA.

Groupe Banque Hottinger & Cie SA dates back to Banque Hottinguer, which was formed in Paris in 1786 and is one of Europe’s oldest private banking firms. Groupe Banque Hottinger & Cie SA has remained under the control of the Hottinger family through seven generations. Its headquarters are in Zurich with offices in Geneva, Sion, Basel, Brig and New York.

Executive Offices

The Swiss Helvetia Fund, Inc.

1270 Avenue of the Americas, Suite 400

New York, NY 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

www.swz.com

The Fund

The Fund 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 also may acquire and hold equity and equity-linked securities of non-Swiss companies in limited instances.

The Fund is listed on the New York Stock Exchange under the symbol “SWZ”.

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. Net Asset Value is also published weekly in Barron’s, the Monday edition of The Wall Street Journal and the Sunday edition of The New York Times.

Overall Investment Strategy and Process

The goal of the Fund is to provide shareholders with broad exposure to the Swiss equity market and to returns based on long term capital appreciation. The Fund invests in Swiss companies ranging from some of the largest global businesses to mid- and smaller-size companies that are less represented in the major Swiss indices, including private equity investments in early stage companies.

Fund management seeks to invest in companies whose earnings growth potential appears to be undervalued by the market. Fund management looks for companies with low enterprise value relative to the size of the opportunity (e.g., market share potential). In addition, Fund management also looks for investment opportunities in turnaround cases where enterprise value is low compared to the earnings recovery potential. The center piece of the strategy is to identify companies with under-estimated cash flow generation.

Analyzing competitive advantage is a key element of the Fund’s stock selection, especially in a world where competition is on the rise as economic growth is tepid. Even with high technological know how, and quality assets, it takes time for companies to build and develop their brands, business processes and market knowledge, while mitigating legal and regulatory risks. This is why Fund management believes in a long term approach in selecting investments for the Fund that reflect the time needed for companies to build up sustainable competitive advantages.

The Fund’s investment team uses fundamental, in-depth analysis to evaluate the growth drivers of a company’s business and, importantly, underlying improvement of the health of the company before it is revealed by the reported financial numbers. Often changes are intangible: a better quality sales pipeline for companies with long sales cycles or an improvement in customer relations. This analysis is based on industry specialization, local knowledge and extensive due diligence including frequent on-site company visits. Management also makes use of in-depth industry knowledge, especially in the healthcare sector, from its private equity investments where due diligence and valuation testing is extensive and ongoing.

“Soft factor” analysis is also important to Fund management’s fundamental research efforts. It is based on assessment of a company’s management and board performance. Fund management looks for a clearly articulated and consistent strategy with set goals that are easy to assess and will help management monitor the progress of a company’s recovery or growth. In addition, Fund management undertakes careful analysis of specific and systematic risks, including testing to assess the probability of bad outcomes, the risk of technological displacement of a company’s business model and the analysis of potential damage to the competitive positioning of companies.

In addition to the bottom-up stock selection approach, the team looks at various macro-economic factors, including market

volatility, interest rates and inflation forecasts, capacity, gross domestic product (GDP) growth and earnings growth, as the recovery and undervalued growth analysis on a company-by-company basis has to be calibrated with these macro-economic variables.

Investment Results:

Portfolio Composition:

As of the end of the first quarter, the Fund’s portfolio composition is, on balance, positioned to benefit from slightly higher interest rates, a rebound in Swiss GDP growth and from pent-up demand in business investments. On the other hand, in relation to the market capitalization of the companies in the Fund’s portfolio, the Fund is somewhat under-exposed to high dividend-paying stocks and companies that are less dependent on the business cycle for sales development.

As of March 31^st, the Fund had approximately 73% exposure to the larger Swiss companies, and about 25% exposure, including the Fund’s private equity investments, to the mid and smaller-size Swiss

companies. As of the same date, the Swiss Performance Index (SPI) had 92% of its weight in the larger Swiss companies, with Nestle, Novartis and Roche representing cumulatively 50% of the SPI. As a comparison, those positions represented 35% of the Fund’s portfolio.

The Fund has positioned its portfolio in sectors that should benefit from the economic recovery, including the industrial goods and services sector, where the Fund maintained a 13.0% average weight during the quarter, and the material and construction sector, where the Fund maintained an 8.5% average weight during the same period. During the quarter, the Fund’s portfolio had a 13.6% average weighting in financials, including banks and insurance, and an 6.5% average weighting in energy services.

The Fund’s exposure to industrials is becoming less dependent on macro-economic factors, as the cash flows of companies in the Fund’s portfolio are increasingly generated by recurring services that are less capital intensive. This change in business mix should improve the portion of those companies’ cash flows available for distribution to shareholders by lowering their on-going capital expenditure needs. What also increases the competitive advantage of these companies and their footprint is the expanding opportunity to add sales with new applications for their technologies by innovation in their current portfolio of products or by synergistic acquisitions. For example, Sulzer’s advanced coating and surface enhancement technology

business continues to evolve with new applications, and Burckhardt Compression is expanding into new markets like low pressure fuel gas injection for dual fuel propulsion systems on LNG carriers. Schindler is a good example of increased service opportunities. Servicing elevators is mandated by law, so as Schindler expands its installed customer base, it is making a long term investment in a very sustainable service activity.

The healthcare sector, including pharmaceuticals, biotechnology and medical technology, continues to make up a significant portion of the Fund’s portfolio. The Fund’s average exposure to this sector during the quarter was above 30%, with half of that being the Fund’s position in Roche. The Fund also maintains exposure to the important mid-capitalization component of this sector through its positions in Nobel Biocare, Lonza and Actelion. The performance of these, and other similar-sized companies, should depend more on specific developments of those companies than from the current global re-rating of pharmaceutical and large capitalization biotech companies.

During the quarter, the Fund’s exposure to UBS and Credit Suisse was increased slightly, consistent with applicable U.S. regulatory investment restrictions. Management believes that the Fund’s position in larger banks like UBS and Credit Suisse is a good illustration of its investment strategy focused on a company’s long-term earnings power.

Management believes that investors may be too focused on current issues in the

investment banking and off-shore private banking businesses of UBS and Credit Suisse, and have overlooked the increasing competitive advantage of the banks’ global on-shore wealth management franchises, as few banks are capable of serving ultra-high net worth individuals globally. The earnings power of UBS and Credit Suisse might be impaired temporarily due to increased regulation and litigation costs. However, these banks have made significant efforts to lower costs, lower compensation ratios and reduce risk-weighted assets used by their investment in order to cope with increased regulation, both at global and local levels. In their business mix, the large Swiss banks should see a substantial increase in cash flow generation as wealth management, an activity that generates above 50% return on Basel III capital, expands and investment banking shrinks. In addition, there is a high probability that the amount of dividends being paid by these banks will increase substantially in 2014 and beyond as the banks’ mandatory capital ratio targets are expected to be fully met.

Performance Analysis:

The Swiss equity market ended the first quarter at a new high, as investors pushed up valuations of low beta, high dividend stocks. As a result, the Swiss indexes with the heaviest weightings in large capitalization companies reported the best results, with the SPI, the Swiss Leader Index and the Dow Jones Swiss Titan Index 30 reporting performance of 10.80%, 9.49% and 9.22%, respectively (in U.S. dollars). While mid- and

small-capitalization stocks also performed well during the quarter, their returns trailed the largest companies, as reflected by the 5.81% total return for the SPI Extra Index (in U.S. dollars).

All market sectors contributed positively to the performance of the Fund for the quarter, except for private equity as no specific developments justified an increase in the Fund’s valuation of its investments in the sector. Overall, the investment horizon for some of the Fund’s private equity investments has been extended as those companies work to execute their business strategies in light of ongoing adjustments in Swiss, European and global fiscal and monetary policies. In the healthcare segment of the Fund’s private equity investments, opportunities exist but deal making is still progressing slowly in the current environment.

The healthcare sector was the main contributor to the Fund’s return for the quarter, with 5.4% weighted performance (in Swiss francs). The significant drivers for the valuation expansion in the sector were a reduction of the risk of generic competition, investors’ hunt for yield and low beta. For example, Roche had a very large return during the quarter (+24% in Swiss francs). Timely follow-on products from Roche’s pipeline are helping not only to protect sales against competition from biosimilars, especially in the breast cancer and B-cell disorders areas, but also to potentially expand those franchises as the new drug candidates have shown significant additional

efficacy. Price erosion also has been lower than expected, especially in oncology drugs in the United States.

Novartis attracted a lot of interest since the departure of Mr. Vasella, the former CEO and Chairman. Some market participants anticipate a new era, with a more shareholder-friendly company, and added about 15 billion Swiss francs to the market capitalization of the company since then. In addition, sales of Diovan, the blockbuster blood pressure lowering drug held up better than expected as generic competition is struggling to get approval in monotherapy. The pathway-based medicine initiative started ten years ago also appears to be bearing fruit.

The pharmaceutical industry is in a sweet spot driven by government policies, particularly in the United States. The healthcare economy is avoiding spending cuts that have affected other parts of the public economy. In emerging markets, drug costs continue to be financed mostly out-of-pocket, and the low base effect is favorable.

The food sector was the second best contributor to the performance of the Fund, with a 2.2% weighted performance (in Swiss francs). Nestle, despite growing a bit below expectations, returned 15% for the quarter (in Swiss francs) and Lindt, showing acceleration in sales development in the second half of 2012, returned 24% for the quarter (in Swiss francs). Valuation expansion was at work again in this sector, with investors seeing the benefit of low business volatility.

The industrial sector, with the same average weighting in the Fund’s portfolio as the food sector, had a weighted performance of 1.6% (in Swiss francs). This portion of the Fund’s portfolio tends to be more composed of smaller companies that, after a strong showing in January, had a correction triggered by lowered economic growth expectations. During the quarter, the Fund sold its positions in SGS and Givaudan, as valuations reached a level that reflected high expectations for top line growth and margins.

It was a relatively difficult quarter for the energy and consumer discretionary sectors (Richemont and Swatch). Their contribution to the performance of the Fund was below 1.0% in both cases (in Swiss francs). The performance of companies in these two sectors was subpar, except for Transocean, as the announcement of a lower than expected settlement with the U.S. Department of Justice sent its shares soaring early in the quarter. However, because of the worse than expected operating performance of the company, the stock partially retreated later on.

The Fund has limited exposure to information technology through its investment in Temenos. The company’s share price recovered meaningfully during the last two quarters as the company was able to convince investors of measures it took to better address challenges in enterprise software sales. With a 30% return (in Swiss francs) and an average weight of 1.2% in the Fund’s portfolio during the quarter, Temenos’ contribution to the Fund’s performance was 0.4%.

Macro-Economic Insights:

In the current business cycle, the Swiss stock market is caught between a tight fiscal policy and an extremely loose monetary policy. Overall economic growth and inflation expectations came back down during the quarter, which dampened investors’ appetite for riskier investments. Business spending remained muted, despite the aging of capital stock and the abundance of savings because of stubbornly high cost of capital. The persistency of large risk premiums is explained by concern over the possibility of deflation and the lack of perceived growth despite actions by the U.S. Federal Reserve to convince investors otherwise. Overall, the macro-economic picture varies globally. The U.S. fiscal policy, while tighter in 2013, is looser than Europe’s policy while its monetary stimulus is more aggressive. The Chairman of the U.S. Federal Reserve has reiterated the United States’ ongoing and committed defense of a long term continuation of quantitative easing. In China, the fiscal policy remains supportive of growth. On the credit side however, the Chinese government has imposed tighter regulation of banks’ wealth management products that fuel the shadow banking system and has renewed controls over the housing market. The expanding size of the Chinese shadow banking system is another example of financial suppression creating excess risk appetite for yield products. The reduction in available credit should restrain investment spending in China. So far, the negative impact has been mainly on commodities. Consumer spending is relatively strong in the United States but

weak in China. The painful downward adjustment of labor costs for countries like Spain, Italy, Greece and even France is set to continue amidst lower government spending. These adjustments continue to depress consumer spending in these regions. A more onerous tax system also is penalizing investment in France, although global investment generally has been weak, with the exception of China until recently.

The Cyprus banking crisis, as an illustration of European strict austerity generating economic contraction, was an important macro-economic event during the first quarter and may be much more significant than the markets first believed. The long term threat of confiscation has not yet contaminated the sentiment of deposit holders in banks in Spain and Italy, but such a threat could spill over and undermine trust in other countries with undercapitalized banking sectors and troubled public finances. This will only exacerbate capital outflows towards markets like Switzerland and the United States.

Switzerland continues to differentiate itself in Europe, as its current and forecasted economic activity is outperforming the rest of Europe. Much like Germany, Switzerland benefits from strong exports and resilient domestic demand. Construction is strong, although demand in the industrial sector is at a subdued level. Imports are increasing on the back of the strong Swiss franc and, for the same reason, consumers are starting to shop more abroad putting downside pressure on

domestic prices. Inflation rates are estimated to be -0.2% for 2013, 0.2% for 2014, and 0.7% for 2015. These low rates should allow the Swiss National Bank (SNB) to pursue its monetary policy to protect the minimum exchange rate between the euro and the Swiss franc with the utmost determination. Excess liquidity is starting to find its way into the stock market which partially explains the strong performance of large companies whose stocks look like bonds, combining low earnings volatility and high dividend payments.

The SNB has been increasingly investing some of its vast reserves in equities. As of the end of the March quarter, the SNB had 15%, about 72 billion (in U.S. dollars) of its reserves in that asset class. The SNB communicated that equities were managed on a purely passive basis, whereby broad market indices of advanced economies were replicated. Other Central Banks have been diversifying reserves into equities by purchasing exchange traded funds as well.

The SNB and the Swiss government expect the Swiss economy to grow above 1.0% this year, while accelerating in 2014 above 2.0%. The SNB reported that the M3 money supply growth in Switzerland climbed at a pace of 9.8% year-over-year in February, far higher than the Eurozone M3 growth at 3.1%, which should further support the domestic economy.

From a monetary policy and currency standpoint, the U.S. dollar appreciation cou-

pled with rising equity prices pushed up the value of the SNB’s reserves (measured in Swiss francs) to 438.3 billion in March, up from 430 billion in the previous month. The stabilization in the SNB’s balance sheet has clearly demonstrated the coherence and the credibility of its monetary approach defending the Swiss franc pegged rate without creating inflation pressure.

Market and Sector Outlook:

Quantitative easing in the United States and Japan and austerity policies throughout Europe continue to be the main factors that will most likely explain equity returns going forward. Emerging markets growth appears to be slowing down due, in part, to debt issues in China and the potential negative impact from re-industrialization in the United States.

How much risk is building up in the financial system as a consequence of the hunt for yield? Corporations are re-leveraging and capital arbitrage is in force, as debt is cheap and equity remains expensive. Companies are increasingly issuing debt to buy back stocks. The misallocation of capital, as investors are looking for short term return, is a significant factor building up risk in the market. The other element of risk is the amount of carry taking place in the system, as strategies of borrowing capital at low rates to buy high yield bonds or dividend stocks are spreading. Normalization of U.S. fiscal policy will reveal those risks and the road could be somewhat bumpy in the medium term.

The globalization trend now looks a lot like a zero sum game. Increased competition through currency devaluation to increase share of global exports is a consequence of the fight against domestic deflation, illustrated by Japanese and U.S. quantitative easing. In addition, as labor costs converge, the emerging markets could see a reduction of the share of production while the United States should see an increase. Large Swiss companies should not be too affected as they tend to have exposure both to developed and emerging markets. At the corporate level, increased competition and rapid change in technology has created additional volatility for businesses. Trends like open source software, virtualization in computing (reduce the need for hardware) and crowd sourcing, to name a few, lower the cost of doing business for most companies but reduce the value of legacy business for a non-trivial number of large companies as they make the transition to the next generation of products and services.

The healthcare sector along with the food sector have been the star performers in the Swiss market, similar to what is occurring in the U.S. market. The risks that Fund management is monitoring in the pharmaceuticals area, aside from a rotation out of the sector for reason of high valuations compared to the broad market, are increased competition and push back from payers. On the other side, factors like an increase in purchasing power of the emerging market middle class help the sector. Healthcare spending is still mostly out-of-the pocket which limits price pressure to a certain extent. Relative re-

rating of the pharmaceutical sector could continue because of the lack of growth in other sectors. Cash flow generation is strong enough at this point to finance high pay-outs and share buy-backs.

Management believes that selecting businesses based on strong fundamental analysis, while paying close attention to the global risks mentioned above, will be rewarding over the current business cycle. The recovery approach, where specific factors can trump macro-economic developments over the cycle, along with the undervalued growth strategy should reveal companies that are able to increase free cash flow generation and thereby have the potential to both increase dividend payments to investors and to expand their business footprints.

Why Invest in Swiss Equities?

Over the last twenty-five years, Fund management has considered the business and cultural factors that it believes are responsible for the success of Swiss companies in a competitive global marketplace. Swiss culture is one of openness towards the rest of the world. For instance, the level of immigration is high; according to the Swiss Federal Statistical Office, foreign residents make up 22% of the overall resident population, but 25% of foreign residents were born in Switzerland. The export-oriented business mentality, which is essential given the inherent small size of the domestic market, has positioned the country very well to meet the challenges of globalization. In addition, the lack of natural resources and the

strength of the Swiss franc have forced Swiss companies to innovate and to move up the value-added chain in order to stay competitive on the global scene. The high level of education of the workforce has been another key factor pushing Switzerland to the top of the rankings of global competiveness. In fact, in the past four years Switzerland has been declared the most competitive in the world by the World Economic Forum, ahead of Singapore, Finland and Sweden, particularly due to its capacity for innovation and labor market efficiency. Producing high quality goods and services has made it possible to established brand names known for their reliability (some examples are watches, chocolate and engineered products). The quality label of Swiss production, know-how and processes has attracted foreign entrepreneurs to the country.

Although Swiss companies are very internationally-oriented, they also have been able, for the most part, to keep their Swiss values. Orientation towards long term strategic planning, helped in some instances by the high degree of ownership and investment by the founding entrepreneurs or their families, is one of those values. Corporate development is usually unrushed, taking place step-by-step with little pressure from investors to deliver short term results to the detriment of long term performance. The flexibility of Swiss culture and the long history of being present internationally are very positive factors that reduce the integration risk from mergers and acquisitions. Swiss corporate management and boards are usu-

ally very diverse in geographic provenance. A small domestic market, the presence of multiple cultures and official languages fosters openness to the world very early on in a company’s development. The decentralization of the Swiss political system also has influenced corporate structure. Swiss corporations are usually quite decentralized, with substantial room for decision making at the local country level which helps to identify growth opportunities.

Overall, the unique business culture and political climate of Switzerland help to differentiate its equity market from those of many other developed countries. In the view of Fund management, this gives Swiss equities an important role to play in a well-diversified global investment strategy.

Sincerely,

Alexandre de Takacsy

President

Rudolf Millisits

Chief Executive Officer

Sources: Bloomberg, Lipper, Morningstar and Citi Fund Services Ohio, Inc.