N-Q 1 dnq.htm THE SWISS HELVETIA FUND, INC. The Swiss Helvetia Fund, Inc.

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM N-Q

QUARTERLY SCHEDULE OF PORTFOLIO HOLDINGS OF REGISTERED

MANAGEMENT INVESTMENT COMPANY

Investment Company Act file number: 811-05128

THE SWISS HELVETIA FUND, INC.

1270 Avenue of the Americas, Suite 400

New York, New York 10020

1-888-SWISS-00

Alexandre de Takacsy

Hottinger et Cie

3 Place des Bergues

C.P. 395

CH-1201 Geneva

Switzerland

Date of fiscal year end:       December 31                                

Date of reporting period:       March 31, 2011                          

Item 1. Schedule of Investments.

THE SWISS HELVETIA FUND, INC.

Schedule of Investments (Unaudited)   March 31, 2011

 

No. of
Shares		   Security   Fair
Value		     Percent
of Net
Assets		  
Common Stocks — 92.04%                
Banks — 7.01%                
300,000   Credit Suisse Group1
Registered Shares		   $ 12,798,819        2.71 % 
    A global diversified financial service company with significant activity in private banking, investment banking, asset management and insurance service.
(Cost $14,650,140)		                
1,130,000   UBS AG1,2
Registered Shares		     20,355,687        4.30 % 
    A global diversified financial service company with significant activity in private banking, investment banking, and asset management.
(Cost $15,447,077)		                
       
 
            33,154,506        7.01 % 
Biotechnology — 2.63%                
352,155   Addex Pharmaceuticals, Ltd.2,3
Registered Shares		     4,080,279        0.86 % 
    Bio-pharmaceutical company that discovers and develops allosteric modulators for human health. Allosteric modulators are a different kind of orally available small molecule therapeutic agent.
(Cost $17,167,028)		                
48,500   Basilea Pharmaceutica AG2
Registered Shares		     3,509,537        0.74 % 
    Conducts research into the development of drugs for the treatment of infectious diseases and dermatological problems.
(Cost $3,693,035)		                
No. of
Shares		   Security   Fair
Value		     Percent
of Net
Assets		  
           
Biotechnology — (continued)                
3,829,299   Biotie Therapies Oyj2,4
Bearer Shares		   $     2,586,666        0.55 % 
    Develops drugs that treat dependence disorders, inflammatory diseases, and thrombosis.
(Cost $2,118,548)		                
3,029   NovImmune SA2,4
Common Shares		     2,244,807        0.48 % 
    Discovers and develops therapeutic monoclonal antibodies (mAbs) to treat patients suffering from immune-related disorders.
(Cost $1,551,109)		                
       
 
          12,421,289        2.63 % 
Chemicals — 4.55%                
1,500   Givaudan SA
Registered Shares		     1,514,182        0.32 % 
    Manufactures and markets fragrances and flavors from natural and synthetic ingredients.
(Cost $1,324,258)		                
61,300   Syngenta AG1
Registered Shares		     20,001,148        4.23 % 
    Produces herbicides, insecticides and fungicides, and seeds for field crops, vegetables, and flowers.
(Cost $18,923,886)		                
       
 
          21,515,330        4.55 % 
 

 

See Notes to Schedule of Investments.

 

1

THE SWISS HELVETIA FUND, INC.

Schedule of Investments (Unaudited) (continued)   March 31, 2011

 

No. of
Shares		   Security   Fair
Value		     Percent
of Net
Assets		  
Common Stocks — (continued)                
Construction & Materials — 2.21%           
1,401   AFG Arbonia-Forster Holding AG
Registered Shares		   $ 53,982        0.01 % 
    Has positions as an integrated construction industry supplier, and in selected areas of technology.
(Cost $51,598)		                
2,850   Belimo Holding AG
Registered Shares		     6,227,414        1.32 % 
    World market leader in damper and volume control actuators for ventilation and air-conditioning equipment.
(Cost $2,786,562)		                
5,498   Forbo Holding AG
Registered Shares		     4,146,713        0.88 % 
    Produces floor coverings, adhesives, and belts for conveying and power transmission.
(Cost $2,960,499)		                
       
 
            10,428,109        2.21 % 
Energy — 5.89%                
209,000   Transocean Ltd.1,2
Bearer Shares		     16,494,289        3.49 % 
    Owns or operates mobile offshore drilling units, inland drilling barges and other assets utilized in the support of offshore drilling activities worldwide.
(Cost $12,738,704)		                
No. of
Shares		   Security   Fair
Value		     Percent
of Net
Assets		  
           
Energy — (continued)                
509,700   Weatherford International Ltd.2
Bearer Shares		   $   11,371,238        2.40 % 
    Provides equipment and services used for the drilling, completion, and production of oil and natural gas wells. Offers drilling and intervention services, completion systems, artificial lift systems, and compression services.
(Cost $11,117,901)		                
       
 
          27,865,527        5.89 % 
Financial Services — 1.99%           
14,700   Allreal Holding AG
Registered Shares		     2,284,899        0.49 % 
    Develops and manages real estate. Operates as a general contractor offering planning, architect, and construction management services.
(Cost $2,094,153)		                
118,000   Swissquote Group Holding SA
Registered Shares		     7,106,958        1.50 % 
    Operates an online trading system which offers customer real-time securities quotes on the Swiss Stock Exchange.
(Cost $6,133,382)		                
       
 
          9,391,857        1.99 % 
Food & Beverages — 15.92%           
135   Lindt & Sprüngli AG
Registered Shares		     4,407,034        0.93 % 
    Major manufacturer of premium Swiss chocolates.
(Cost $471,625)		                
 

 

See Notes to Schedule of Investments.

 

2

THE SWISS HELVETIA FUND, INC.

Schedule of Investments (Unaudited) (continued)   March 31, 2011

 

No. of
Shares		   Security   Fair
Value		     Percent
of Net
Assets		  
Common Stocks — (continued)                
Food & Beverages — (continued)           
1,231,100   Nestlé SA1
Registered Shares		   $   70,850,320        14.99 % 
    Largest food and beverage processing company in the world.
(Cost $24,928,562)		                
       
 
          75,257,354        15.92 % 
Industrial Goods & Services — 16.09%           
630,000   ABB, Ltd.1
Registered Shares		     15,191,343        3.21 % 
    The holding company for ABB Group, which is one of the largest electrical engineering firms in the world.
(Cost $14,435,937)		                
3,000   Bucher Industries AG
Registered Shares		     688,638        0.14 % 
    Manufactures food processing machinery, vehicles, and hydraulic components. Produces fruit and vegetable juice processing machinery, farming machinery and outdoor equipment.
(Cost $625,977)		                
31,800   Burckhardt Compression Holding AG
Bearer Shares		     10,054,271        2.13 % 
    Produces compressors for oil refining, the chemical and petrochemical industries, industrial gases, and gas transport and storage.
(Cost $6,488,476)		                
No. of
Shares		   Security   Fair
Value		     Percent
of Net
Assets		  
           
Industrial Goods & Services — (continued)           
6,440  

Inficon Holding AG

Registered Shares

   $     1,355,085        0.29 % 
    Manufactures and markets vacuum instruments used to monitor and control production processes. Manufactures on-site chemical detection and monitoring systems.
(Cost $581,616)		                
8,100   Kaba Holding AG, Series B
Registered Shares		     3,391,048        0.72 % 
    Provides mechanical and electronic security systems. Offers individually tailored “Total Access Control” including high-security locking devices for heavy safes, modular access and time management applications, as well as no-contact identification technology.
(Cost $3,048,081)		                
54,744   Kuehne + Nagel International AG
Registered Shares		     7,689,352        1.63 % 
    Transports freight worldwide.
(Cost $4,438,559)		                
121,000   Meyer Burger Technology AG2
Bearer Shares		     5,482,265        1.16 % 
    Manufactures industrial cutting equipment. Produces wire, band, ID, OD and diamond wire saws, and slurry reclamation equipment.
(Cost $3,274,962)		                
 

 

See Notes to Schedule of Investments.

 

3

THE SWISS HELVETIA FUND, INC.

Schedule of Investments (Unaudited) (continued)   March 31, 2011

 

No. of
Shares		   Security   Fair
Value		     Percent
of Net
Assets		  
Common Stocks — (continued)           
Industrial Goods & Services — (continued)           
16,000   Panalpina Welttransport Holding AG2
Registered Shares		   $     2,004,263        0.42 % 
    Offers freight shipping and supply chain management services. Transports freight by air and ship, and offers warehousing and distribution services.
(Cost $2,103,725)		                
5,500   Phoenix Mecano AG
Bearer Shares		     4,058,042        0.86 % 
    Produces and sells enclosures, electromechanical components and mechanical components.
(Cost $3,128,496)		                
8,464   Schweiter Technologies AG
Bearer Shares		     6,291,217        1.33 % 
    Manufactures textile machinery used primarily in the production and treatment of yarn, thread and textile samples. Produces machines for the assembly and packaging of semiconductor devices.
(Cost $4,757,569)		                
3,200   SGS SA
Registered Shares		     5,718,970        1.21 % 
    Provides industrial inspection, analysis, testing, and verification services worldwide.
(Cost $4,144,258)		                
No. of
Shares		   Security   Fair
Value		     Percent
of Net
Assets		  
           
Industrial Goods & Services — (continued)           
66,500   Sulzer AG
Registered Shares		   $   10,060,228        2.13 % 
    Manufactures and sells surface coatings, pumps, process engineering equipment, and fuel cells.
(Cost $7,510,289)		                
1,437   Zehnder Group AG
Bearer Shares		     4,083,948        0.86 % 
    Produces bathroom radiators, electric and aluminium radiators, as well as steel radiators.
(Cost $2,978,572)		                
       
 
          76,068,670        16.09 % 
Insurance — 5.44%                
40,210   Swiss Life Holding AG
Registered Shares		     6,671,999        1.41 % 
    Financial services company provides life and property insurance, institutional investment management, and private banking services.
(Cost $6,550,569)		                
67,800   Zurich Financial Services AG1
Registered Shares		     19,053,812        4.03 % 
    Offers property, accident, health, automobile, liability, financial risk and life insurance and retirement products.
(Cost $15,888,095)		                
       
 
          25,725,811        5.44 % 
 

 

See Notes to Schedule of Investments.

 

4

THE SWISS HELVETIA FUND, INC.

Schedule of Investments (Unaudited) (continued)   March 31, 2011

 

No. of
Shares		   Security   Fair
Value		     Percent
of Net
Assets		  
Common Stocks — (continued)           
Medical Technology — 1.98%                
168,000   Kuros Biosurgery AG2,4
Common Shares		   $     2,974,914        0.63 % 
    Develops biomaterials and bioactive biomaterial combination products for trauma, wound and spine indications.
(Cost $2,516,639)		                
40,900   Sonova Holding AG
Registered Shares		     3,659,250        0.77 % 
    Designs and produces wireless analog and digital in-the-ear and behind-the-ear hearing aids and miniaturized voice communications systems.
(Cost $5,121,993)		                
3,731  

Spineart SA2,4

Common Shares

     2,732,437        0.58 % 
    Designs and markets an innovative full range of spine products, including fusion and motion preservation devices, focusing on easy to implant high-end products to simplify the surgical act.
(Cost $2,623,329)		                
       
 
          9,366,601        1.98 % 
Personal & Household Goods — 4.17%                
195,400   Compagnie Financiere Richemont SA, Series A
Bearer Shares		     11,330,786        2.40 % 
    Manufactures and retails luxury goods. Produces jewelry, watches, leather goods, writing instruments, and men’s and women’s wear.
(Cost $7,741,515)		                
No. of
Shares		   Security   Fair
Value		     Percent
of Net
Assets		  
           
Personal & Household Goods — (continued)           
18,900   Swatch Group AG
Bearer Shares		   $ 8,389,671        1.77 % 
    Manufactures finished watches, movements and components. Produces components necessary to its eighteen watch brand companies. Also operates retail boutiques.
(Cost $5,723,844)		                
       
 
            19,720,457        4.17 % 
Pharmaceuticals — 15.94%           
1,021,500   Novartis AG1
Registered Shares		     55,627,841        11.76 % 
    One of the leading manufacturers of branded and generic pharmaceutical products. Manufactures nutrition products.
(Cost $31,018,448)		                
137,800   Roche Holding AG1
Non-voting equity securities		     19,762,103        4.18 % 
    Develops and manufactures pharmaceutical and diagnostic products. Produces prescription drugs in the area of cardiovascular, infectious, autoimmune and respiratory diseases, dermatology, oncology and other areas.
(Cost $2,772,103)		                
       
 
          75,389,944        15.94 % 
 

 

See Notes to Schedule of Investments.

 

5

THE SWISS HELVETIA FUND, INC.

Schedule of Investments (Unaudited) (continued)   March 31, 2011

 

No. of
Shares		   Security   Fair
Value		     Percent
of Net
Assets		  
Common Stocks — (continued)           
Retailers — 3.91%           
24,950   Galenica AG1
Registered Shares		   $   15,449,719        3.27 % 
    Manufactures and distributes prescription and over-the-counter drugs, toiletries and hygiene products.
(Cost $11,088,507)		                
9,000   Valora Holding AG
Registered Shares		     3,030,005        0.64 % 
    Owns and operates kiosks, self-service stores, food, coffee and snack shops and wholesale outlets.
(Cost $3,108,288)		                
       
 
          18,479,724        3.91 % 
Technology — 2.40%           
298,563   Temenos Group AG2
Registered Shares		     11,357,045        2.40 % 
    Provides integrated software for the banking sector.
(Cost $9,072,543)		                
       
 
          11,357,045        2.40 % 
Travel & Leisure — 1.91%           
45,000   Gategroup Holding AG2
Bearer Shares		     2,378,259        0.50 % 
    Provides a wide range of global services for airlines, railroads, and hotels. Specializes in catering and hospitality, provisioning and logistics, and onboard solutions to companies that serve people on the move.
(Cost $1,874,153)		                
No. of
Shares		   Security   Fair
Value		     Percent
of Net
Assets		  
           
Travel & Leisure — (continued)           
94,000   Huber & Suhner AG
Registered Shares		   $ 6,673,553        1.41 % 
    Manufactures telecommunications products and polymer systems. Produces antenna systems, lightning protection, fiber optic cables and connectors, and hybrid cables.
(Cost $4,954,531)		                
       
 
          9,051,812        1.91 % 
    Total Common Stocks
(Cost $305,729,141)		     435,194,036        92.04 % 
Preferred Stocks — 1.01%           
Biotechnology — 0.49%           
3,162   NovImmune SA, Series B2,4
Preferred Shares		     2,343,374        0.49 % 
    Discovers and develops therapeutic monoclonal antibodies (mAbs) to treat patients suffering from immune-related disorders.
(Cost $2,062,307)		                
       
 
          2,343,374        0.49 % 
Medical Technology — 0.52%           
83,611   EyeSense AG, Series C2,4
Preferred Shares		     2,448,495        0.52 % 
    A spin-out from Ciba Vision AG. Develops novel ophthalmic self-diagnostic systems for glucose monitoring of diabetes patients. (Cost $2,149,305)                
       
 
          2,448,495        0.52 % 
    Total Preferred Stocks
(Cost $4,211,612)		     4,791,869        1.01 % 
 

 

See Notes to Schedule of Investments.

 

6

THE SWISS HELVETIA FUND, INC.

Schedule of Investments (Unaudited) (continued)   March 31, 2011

 

No. of
Shares		   Security   Fair
Value		     Percent
of Net
Assets		  
Convertible Corporate Bond — 1.74%           
Industrial Goods & Services — 1.74%           
6,500,000   Adecco Investment Bond,
6.50%, 11/26/12		                
    (Cost $6,387,196)   $ 8,241,788        1.74 % 
       
 
    Total Convertible Corporate Bond
(Cost $6,387,196)		         8,241,788        1.74 % 
Private Equity Limited Partnerships — 2.01%           
    Aravis Biotech Il - Limited Partnership2,4                
    (Cost $1,759,036)     1,952,344        0.41 % 
No. of
Shares		   Security   Fair
Value		     Percent
of Net
Assets		  
           
Private Equity Limited Partnerships — (continued)           
    Zurmont Madison Private Equity, Limited Partnership2,4
(Cost $8,641,962)		   $ 7,538,468        1.60 % 
       
 
    Total Private Equity Limited Partnerships
(Cost $10,400,998)		     9,490,812        2.01 % 
    Total Investments*
(Cost $326,728,947)		     457,718,505        96.80 % 
    Other Assets Less Other Liabilities, net     15,132,319        3.20 % 
       
 
    Net Assets   $ 472,850,824        100.0 % 
       
 
 
1   

One of the ten largest portfolio holdings.

2   

Non-income producing security.

3   

Affiliated Company. An affiliated company is a company in which the Fund has ownership of at least 5% of the company’s outstanding voting securities. Transactions during the year with companies which were affiliates are as follows:

 

Name of Issuer

   

Shares
Held as of
12/31/10

     

Value as of
12/31/10

     

Gross
Additions

     

Gross
Reductions

     

Income

     

Shares
Held as of
03/31/11

     

Value as of
03/31/11

  

Addex Pharmaceuticals, Ltd.

      352,155       $ 3,706,298       $ —       $ —       $ —         352,155       $ 4,080,279   
4   

Illiquid. There is no public market for these securities. Securities priced at Fair Value as determined by the Board’s Pricing Committee. Restricted Securities are not registered under the Securities Act of 1933, as amended, other than Rule 144A securities. At the end of the period, the aggregate value of these securities amounted to $24,821,505 or 5.25% of the Fund’s net assets. Additional information on these securities is as follows:

 

Security

   

Acquisition Date

   

Acquisition
Cost

  

Aravis Biotech II, LP

    July 31, 2007 — December 8, 2010    $ 1,759,036   

Biotie Therapies OYJ

    October 17, 2008 — December 13, 2010      2,118,548   

Kuros Biosurgery Holding AG

    August 10, 2009 — August 28, 2009      2,516,639   

EyeSense AG — Preferred Shares C

    July 22, 2010      2,149,305   

NovImmune SA — Common Shares

    October 7, 2009 — December 11, 2009      1,551,109   

NovImmune SA — Preferred Shares B

    October 7, 2009 — December 11, 2009      2,062,307   

Spineart SA

    December 22, 2010      2,623,329   

Zurmont Madison Private Equity, LP

    September 13, 2007 — January 13, 2011      8,641,962   
         
          $ 23,422,235   
         

 

See Notes to Schedule of Investments.

 

7

THE SWISS HELVETIA FUND, INC.

Schedule of Investments (Unaudited) (concluded)   March 31, 2011

 

*   Cost for Federal income tax purposes is $330,666,640 and net unrealized appreciation (depreciation) consists of:

 

Gross Unrealized Appreciation

    $ 148,855,108   

Gross Unrealized Depreciation

      (21,803,243 ) 
    

Net Unrealized Appreciation (Depreciation)

    $ 127,051,865   
    

 

 

PORTFOLIO HOLDINGS

         

% of Net Assets

         

Common Stocks

         

Industrial Goods & Services

      16.09 % 

Pharmaceuticals

      15.94 % 

Food & Beverages

      15.92 % 

Banks

      7.01 % 

Energy

      5.89 % 

Insurance

      5.44 % 

Chemicals

      4.55 % 

Personal & Household Goods

      4.17 % 

Retailers

      3.91 % 

Biotechnology

      2.63 % 

Technology

      2.40 % 

Construction & Materials

      2.21 % 

Financial Services

      1.99 % 

Medical Technology

      1.98 % 

Travel & Leisure

      1.91 % 

Private Equity Limited Partnerships

      2.01 % 

Convertible Corporate Bond

      1.74 % 

Preferred Stocks

      1.01 % 

Other Assets and Liabilities

      3.20 % 
    
       100.00 % 
    

 

See Notes to Schedule of Investments.

 

8

THE SWISS HELVETIA FUND, INC.

 

Notes to Schedule of Investments (Unaudited)

 

Note 1—Organization and Significant Accounting Policies

 

A. Organization

The Swiss Helvetia Fund, Inc. (the “Fund”) is registered under the Investment Company Act of 1940, as amended (the “Act”), as a non-diversified, closed-end management investment company. The Fund is organized as a corporation under the laws of the State of Delaware.

 

The investment objective of the Fund is to seek long-term growth of capital through investment in equity and equity-linked securities of Swiss companies. The Fund may also acquire and hold equity and equity-linked securities of non-Swiss companies in limited instances.

 

B. Securities Valuation

The Fund values its investments at fair value.

 

When valuing listed equity securities, the Fund uses the last sale price prior to the calculation of the Fund’s net asset value (“NAV”). When valuing equity securities that are not listed or that are listed but have not traded, the Fund uses the mean between the bid and asked prices for that day.

 

When valuing fixed income securities, the Fund uses the last bid price prior to the calculation of the Fund’s NAV. If a current bid price is not available, the Fund uses the mean between the last quoted bid and asked prices. When valuing fixed income securities that mature within sixty days, the Fund uses amortized cost, which approximates fair value.

 

It is the responsibility of the Fund’s Board of Directors (the “Board”) to establish fair valuation procedures. When valuing securities for which market quotations are not readily available, or for which the market quotations that are available are considered unreliable, the Fund determines a fair value in good faith in accordance with these procedures. The Fund may use these procedures to establish the fair value of securities when, for example, a significant event occurs between the time the market closes and the time the Fund values its investments. After consideration of various factors, the Fund may value the securities at their last reported price or at some other value. Additional consideration is given to securities that have experienced a decrease in the volume or level of activity or to circumstances that indicate that a transaction is not orderly.

 

Swiss exchange-listed options or options that are not listed at the request of a counterparty are valued using implied volatilities as input into widely accepted models (e.g., Black-Scholes). Eurex-listed options are valued at their most recent sale price (latest bid for long options and the latest ask for short options), or if there are no such sales, at the average of the most recent bid and asked quotations, or if such quotations are not available, at the last bid quotation (in the case of purchased options) or the last asked quotation (in the case of written options); however, if there are no such quotations, such contracts will be valued using the implied volatilities observed for similar options as an input to a model. Options traded in the over-the-counter market are valued at the price communicated by the counterparty to the option, which typically is the price at which the counterparty would close out the transaction.

 

The Fund is permitted to invest in alternative investments that do not have a readily determinable fair value, and, as such, has elected to use the NAV of these investments, as a practical expedient, as calculated on the fund’s measurement date as the fair value of the investment.

 

Various inputs are used to determine the value of the Fund’s investments. These inputs are summarized in the three broad levels listed below:

 

Level 1—quoted prices in active markets for identical assets and liabilities

Level 2—other significant observable inputs (including quoted prices of similar securities, interest rates, prepayment speeds, credit risk, etc.)

 

9

THE SWISS HELVETIA FUND, INC.

 

Notes to Schedule of Investments (Unaudited) (continued)

 

Level 3—significant unobservable inputs (including the Fund’s own assumptions in determining the fair value of investments)

 

The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities.

 

The following is a summary of the inputs used to value the Fund’s net assets as of March 31, 2011:

 

    

Level 1
Quoted Prices

     

Level 2
Other Significant
Observable Inputs

     

Level 3
Significant
Unobservable Inputs

     

Total

  

Investments in Securities

                                    

Common Stock*

    $ 424,655,212       $ —       $ 10,538,824       $ 435,194,036   

Preferred Stock

      —         —         4,791,869         4,791,869   

Convertible Corporate Bond

      —         8,241,788         —         8,241,788   

Private Equity Limited Partnerships

      —         —         9,490,812         9,490,812   
    
  
  
  

Total Investments in Securities

    $ 424,655,212       $ 8,241,788       $ 24,821,505       $ 457,718,505   
    
  
  
  

 

* Please see the Schedule of Investments for Industry classifications.

 

The inputs and valuation techniques used to value Level 2 securities, which consist of an exchange-listed corporate convertible bond, are based on a pricing service model, which may include consideration of dealer quotes, trade execution data, conversion prices compared to the current market quotation of the underlying stock and, when available, the last sale price on the exchange on which it trades.

 

Level 3 securities consist of the Fund’s investments in privately-held companies and the Fund’s investments in limited partnerships (“private equity partnerships”) that invest in privately-held companies. The Fund values all of its investments in accordance with accounting principles generally accepted in the United States (“GAAP”).

 

Inputs and valuation techniques used by the Fund to value its Level 3 investments in privately-held companies may include the following: acquisition cost; fundamental analytical data; nature and duration of restrictions on disposition of the investment; public trading of similar securities of similar issuers; economic outlook and condition of the industry in which the issuer participates; financial condition of the issuer; and the issuer’s prospects, including any recent or potential management or capital structure changes.

 

The Fund values its Level 3 investments in private equity partnerships in accordance with Accounting Standards Codification 820-10-35, “Investments in Certain Entities that Calculate Net Asset Value Per Share (Or its Equivalent)” (“ASC 820-10-35”). ASC 820-10-35 permits a reporting entity to measure the fair value of an investment that does not have a readily determinable fair value, based on the NAV of the investment as a practical expedient, without further adjustment, unless it is probable that the investment will be sold at a value significantly different than the NAV. If the NAV of the investment is not as of the Fund’s measurement date, then the NAV should be adjusted to reflect any significant events that may change the valuation. Inputs and valuation techniques for these adjustments may include fair valuations of the partnerships and their portfolio holdings provided by the partnerships’ general partners or managers, other available information about the partnerships’ portfolio holdings, values obtained on redemption from other limited partners, discussions with the partnerships’ general partners or managers and/or other limited partners and comparisons of previously-obtained estimates against the partnerships’ audited financial statements. In using the NAV as a practical expedient, certain attributes of the investment that may impact the fair value of the investment are not considered in measuring fair value. Attributes of those investments include the investment strategies of the privately held companies and may also include, but are not limited to, restrictions on the investor’s ability to redeem its investments at the measurement date and any unfunded commitments.

 

10

THE SWISS HELVETIA FUND, INC.

 

Notes to Schedule of Investments (Unaudited) (continued)

 

When valuing Level 3 investments, management also may consider potential events that could have a material impact on the operations of a privately-held company or private equity partnership. Not all of these factors may be considered or available, and other relevant factors may be considered on an investment-by-investment basis.

 

The Fund has adopted a policy of recognizing significant transfers between all Levels based on their market prices at the reporting period end. For the three-month period ended March 31, 2011, there were no significant transfers between Level 1, Level 2, and Level 3.

 

The following is a reconciliation of Level 3 assets for which significant unobservable inputs were used to determine fair value.

 

    

Common Stock

     

Preferred Stock

    

Private Equity
Limited
Partnerships

     

Total

  

Balance as of December 31, 2010

    $ 7,804,991       $ 5,650,685      $ 8,845,515       $ 22,301,191   

Change in Unrealized Appreciation/Depreciation

      615,285         (352,247 )      483,385         746,423   

Net Realized Gain (Loss)

      —         (241,205 )      —         (241,205 ) 

Gross Purchases

      2,118,548         1,853,184        161,912         4,133,644   

Gross Sales

      —         (2,118,548 )      —         (2,118,548 ) 
    
  
 
  

Balance as of March 31, 2011

    $ 10,538,824       $ 4,791,869      $ 9,490,812       $ 24,821,505   
    
  
 
  

 

C. When-Issued and Delayed-Delivery Transactions

The Fund may purchase or sell securities on a when-issued or delayed-delivery basis. The Fund records when-issued or delayed-delivery securities as of trade date and maintains security positions such that sufficient liquid assets will be available to make payment for the securities purchased. Securities purchased on a when-issued or delayed-delivery basis are marked-to-market daily and begin earning interest on the settlement date. The Fund may dispose of or renegotiate a delayed-delivery transaction after it is entered into, which may result in a capital gain or loss. Losses may occur on these transactions due to changes in market conditions or the failure of counterparties to perform under the contract.

 

D. Options

The Fund may buy call options and put options, and may sell (write) covered call options. Options may be entered into on securities in which the Fund may invest and on Swiss stock indices. Option contracts are utilized to manage the Fund’s exposure to changing security prices and to generate income. Purchasing call options tends to increase the Fund’s exposure to the underlying instrument. Purchasing put options tends to decrease the Fund’s exposure to the underlying instrument. The Fund pays a premium as an investment that is subsequently marked-to-market to reflect the current value of the option purchased. Premiums paid for purchasing options which expire are treated as realized losses. The risk associated with purchasing put and call options is limited to the premium paid and the exposure to the risk that the counterparty would be unable to meet the terms of the contract. Premiums paid for purchasing options which are exercised or closed are added to the amounts paid or offset against the proceeds on the underlying instrument to determine the realized gain or loss.

 

Writing call options tends to decrease the Fund’s exposure to the underlying instrument. When the Fund writes a call option, such option is “covered,” meaning that the Fund holds the underlying instrument subject to being called by the option counterparty. When the Fund writes a call option, an amount equal to the premium received is recorded as a liability and subsequently marked-to-market to reflect the current value of the option written. Premiums received from writing options which expire are treated as realized gains. Premiums received from writing options which are exercised or closed are added to the proceeds or offset against amounts paid on the underlying instrument to determine the realized gain or loss. The Fund as a writer of an option has no control over whether the option will be exercised and, as a result, bears the market risk of an unfavorable change in the price of the

 

11

THE SWISS HELVETIA FUND, INC.

 

Notes to Schedule of Investments (Unaudited) (continued)

 

instrument underlying the written option. There is the risk that the Fund may not be able to enter into a closing transaction because of an illiquid market.

 

The Fund did not have any written call option transactions during the three-month period ended March 31, 2011.

 

E. Foreign Currency Translation

The Fund maintains its accounting records in U.S. dollars. The Fund’s assets are invested primarily in Swiss equities and equity-linked securities. In addition, the Fund makes its temporary investments in Swiss franc-denominated bank deposits, short-term debt securities and money market instruments. Substantially all income received by the Fund is in Swiss francs. The Fund’s NAV, however, is reported, and distributions from the Fund are made, in U.S. dollars resulting in gain or loss from currency conversions in the ordinary course of business. Historically, the Fund has not entered into transactions designed to reduce currency risk and does not intend to do so in the future. The cost basis of foreign denominated assets and liabilities is determined on the date that they are first recorded within the Fund and translated to U.S. dollars. These assets and liabilities are subsequently valued each day at prevailing exchange rates. The difference between the original cost and current value denominated in U.S. dollars is recorded as unrealized foreign currency gain/loss. In valuing securities transactions, the receipt of income and the payment of expenses, the Fund uses the prevailing exchange rate on the transaction date.

 

F. Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the Schedule of Investments. Actual results could differ from those estimates.

 

G. Concentration of Market Risk

The Fund primarily invests in securities of Swiss issuers. Such investments may carry certain risks not ordinarily associated with investments in securities of U.S. issuers. These risks include future political and economic developments, unfavorable movements in the U.S. dollar relative to the Swiss franc, and the possible imposition of exchange controls and changes in governmental law and restrictions. In addition, concentrations of investments in securities of issuers located in a specific region exposes the Fund to the economic and government policies of that region and may increase risk compared to a fund whose investments are more diversified.

 

Note 2—Capital Commitments

As of March 31, 2011, the Fund invested in private equity partnerships and preferred stocks. The Fund’s investments are summarized in the Schedule of Investments. The Fund’s capital commitments and the amounts disbursed to the private equity partnerships and preferred stocks are shown in the table below:

 

Investments

   

Original Capital
Commitment*

     

Unfunded
Commitments

     

Fair Value as of
March 31, 2011

  

Private Equity Limited Partnerships—International (a)

                           

Aravis Biotech II LP

    $ 3,552,495       $ 1,440,181       $ 1,952,344   

Zurmont Madison Private Equity LP

      15,303,055         5,401,393         7,538,468   

Preferred Stock—International

                           

EyeSense AG, Series C (b)

      3,060,618         612,123         2,448,495   

 

* The original capital commitment represents 3,250,000, 14,000,000 and 2,800,006 Swiss francs for Aravis Biotech II LP, Zurmont Madison Private Equity LP and EyeSense AG, Series C respectively. The exchange rate as of March 31, 2011 was used for conversion and equals 0.9149.

 

12

THE SWISS HELVETIA FUND, INC.

 

Notes to Schedule of Investments (Unaudited) (concluded)

 

(a) This category includes two private equity limited partnerships that invest primarily in ventures, biotechnology and in management buyout of industrial and consumer goods companies. There is no redemption right for the interests in these two funds. Instead, the nature of the investments in this category is that distributions are received through the realization of the underlying assets of a fund. If these investments were held, it is estimated that the underlying assets of each fund would be realized over 4 to 6 years.

 

(b) The unfunded commitment for this security represents future payments contingent upon contractual milestones achieved by EyeSense.

 

THE SCHEDULE OF INVESTMENTS SHOULD BE READ IN CONJUNCTION WITH THE FINANCIAL STATEMENTS AND NOTES TO FINANCIAL STATEMENTS WHICH ARE INCLUDED IN THE FUND’S SEMIANNUAL REPORT OR AUDITED ANNUAL REPORT. THESE REPORTS INCLUDE ADDITIONAL INFORMATION ABOUT CERTAIN SECURITY TYPES IN WHICH THE FUND INVESTS.

 

13

Item 2. Controls and Procedures.

 

(a) The registrant’s principal executive officer and principal financial officer have concluded, based on their evaluation of the registrant’s disclosure controls and procedures as conducted within 90 days of the filing date of this report, that these disclosure controls and procedures are adequately designed and are operating effectively to ensure that information required to be disclosed by the registrant on Form N-Q is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms.

 

(b) There were no changes in the registrant’s internal control over financial reporting (as defined in Rule 30a-3(d) under the Act (17 CFR 270.30a-3(d)) that occurred during the registrant’s most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, the registrant’s internal control over financial reporting.

Item 3. Exhibits.

Certifications pursuant to Rule 30a-2(a) are attached hereto.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

(Registrant)

                   The Swiss Helvetia Fund, Inc.
   
 

By (Signature and Title)*

       /s/ Rudolf Millisits
   
      Rudolf Millisits, Chief Executive Officer
  
  

Date  May 25, 2011                                                                                                                                                                                          

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

 

By (Signature and Title)*

       /s/ Rudolf Millisits
   
      Rudolf Millisits, Chief Executive Officer
  
  

Date  May 25, 2011                                                                                                                                                                                          

 

By (Signature and Title)*

       /s/ Rudolf Millisits
   
      Rudolf Millisits, Chief Financial Officer
 
 

Date  May 25, 2011