Portfolio and Performance Review The Swiss Helvetia Fund, Inc.

Stefan Frischknecht, Fund Manager June 19, 2018 Agenda

01 Performance 02 Portfolio positioning 03 Outlook 04 Conclusion 05 Case for Swiss equities

1 Performance Performance NAV and price performance in USD

Net asset value

31.12.2014 – 30.06.2014 – Performance in USD % YTD 2018 1 year 3 years 31.01.2018 31.05.2018

NAV (US GAAP) as per quarterly filings -5.82% -4.03% 4.44% 15.88% 6.87%

Swiss Performance Index, SPI -6.51% -2.48% 3.72% 15.29% 8.31%

Difference NAV as per quarterly +0.69% -1.55% +0.72% +0.59% -1.44% filings

Share price

31.12.2014 – 30.06.2014 – Performance in USD % YTD 2018 1 year 3 years 31.05.2018 31.05.2018

Share price SWZ -4.73% -1.90% 10.31% 21.69% 10.85%

Swiss Performance Index, SPI -6.51% -2.48% 3.72% 15.29% 8.31%

Difference +1.78% +0.58% +6.59% +6.40% +2.54%

Source: Schroders, Citi and JPM for fund performance; Bloomberg for index performance, May 31, 2018; year-to-date performance as at May 31, 2018. Performance shown represents past performance. Past performance is no guarantee of future results and current performance may be higher or lower than the performance shown.

3 Performance comment Driving factors for relative performance of NAV

Since July 1, 2014: – Since Schroders took over as Fund adviser, relative performance is behind benchmark – However, after an initial transition period, i.e. since 31 Dec 2014, relative performance has been ahead of the benchmark Swiss Performance Index (SPI) by 0.59% after costs – Private equity positions, inherited from the Fund’s prior investment adviser and since reduced, impacted absolute and relative performance by at least -2.2% since July 1, 20141

Last 12 months – Stock picking was slightly negative – Headwinds in 2017 from strong performance of expensive growth stocks that the Fund is underweight – After costs, performance was -1.55% behind benchmark

Year to date – YTD relative performance after fees: +0.69% – Small & mid cap overweight was a tailwind (the Small & Mid Cap Index outperformed the SPI by 6.3%) – Stock picking was an additional positive

1-2.2% is the negative absolute impact calculated as a percentage of beginning period NAV. As benchmark performance was positive, the relative impact is larger. Furthermore, this includes a positive effect of action by the investment adviser taken after July 1, 2014. Source: Schroders, Citi and JPM for fund performance, Bloomberg for index performance, May 31, 2018; year-to-date performance as at May 31, 2018. Performance shown represents past performance. Past performance is no guarantee of future results and current performance may be higher or lower than the performance shown.

4 Performance attribution – stock level Top & Bottom 10 contributions to relative performance YTD 2018

Top ten stock contributions (USD) Bottom ten stock contributions (USD)

Total effect % Total effect %

Logitech (over) 0.6 Aryzta (over) -1.0

Swatch (Reg.) (over) 0.6 Zurich (under) -0.3

Tecan (over) 0.4 Swatch (Bearer) (under) -0.2

Sonova (over) 0.4 Partners Group (zero) -0.2

Implenia (over) 0.3 Temenos (zero) -0.1

Lindt & Spruengli (Reg.) (over) 0.3 Vifor Pharma (zero) -0.1

Burckhardt Compression (over) 0.3 Sika (zero) -0.1

ABB (under) 0.2 Kuros (over) -0.1

Belimo (over) 0.1 SGS (zero) -0.1

Nestlé (under) 0.1 Lonza (under) -0.1

Source: Schroders, FactSet, May 31, 2018; “over” means overweight; “under” means underweight compared to Swiss Performance Index; “zero” means no position.

5 Portfolio positioning Portfolio positioning As per May 31, 2018

Top ten holdings absolute Top relative weights

Name Absolute weight Name Relative weight % Novartis (under) 12.9% Swatch (Reg.) +2.7% Nestlé (under) 12.8% Logitech +2.4% Roche (under) 10.2% Tecan +2.4% UBS (under) 4.0% Belimo +2.4% Richemont (under) 3.4% Sonova +2.4% Swatch (Reg.) (over) 3.1% Sonova (over) 3.1% Nestlé -5.8% Logitech (over) 3.0% Swiss Re -2.1% Lindt & Sprungli (Reg.) (over) 3.0% Zurich Insurance -2.1% Swiss Life (over) 2.8% LafargeHolcim -1.9% Total 58.3% Roche -1.7%

Source: Schroders, JP Morgan, Bloomberg, May 31, 2018; “over” means overweight; “under” means underweight compared to Swiss Performance Index.

7 Portfolio positioning ICB classification

SWZ SPI Rel. %

Pharmaceuticals 23.1% 27.1% -4.0% Food & Beverage 16.7% 20.5% -3.8% Industrial Goods & Services 11.6% 10.6% 1.0% Banks 10.2% 10.2% 0.0% Insurance 6.2% 7.5% -1.3% Personal & Household Goods 6.6% 5.5% 1.1% Construction & Materials 5.9% 5.1% 0.8% Chemicals 0.9% 2.2% -1.3% Technology 3.0% 2.1% 0.9% Financial Services 2.6% 2.0% 0.6% Biotechnology 0.7% 1.9% -1.2% Real Estate 0.0% 1.4% -1.4% Telecommunications SPI Swiss Helvetia Fund 1.1% 1.1% 0.0% Medical Equipment 5.8% 1.0% 4.8% Retail 0.0% 0.7% -0.7% Medical Supplies 0.0% 0.6% -0.6% Utilities 0.4% 0.1% 0.3% Automobiles & Parts 0.4% 0.1% 0.3% Travel & Leisure 0.0% 0.1% -0.1% Media 0.0% 0.1% -0.1% Basic Resources 0.0% 0.1% -0.1% Health Care Providers 0.0% 0.0% 0.0% Cash 2.9% 0.0% 2.9% Private Equity 1.9% 0.0% 1.9%

0% 5% 10% 15% 20% 25% 30%

Source: Schroders, JP Morgan, Bloomberg, May 31, 2018.

8 Portfolio positioning Changes in positioning Q1 2018 and March 31, 2018 – May 31, 2018

Q1 2018

New Positions Increased Positions Decreased Positions Sold Positions

ABB Aryzta Autoneum Helvetia Geberit Baloise Belimo Zur Rose Givaudan Logitech Burckhardt Compression Sensirion Swiss Life Galenica Swatch (Bearer) Landis + Gyr Zurich Insurance Lindt & Sprüngli (Reg.) Nestlé Sunrise VAT Group

March 31, 2018 – May 31, 2018

CEVA Logistics Zurich Insurance Richemont Swatch (Bearer) Schindler (Bearer) Lindt & Sprüngli (Reg.) Galenica Implenia Landis + Gyr Logitech

Source: Schroders, May 31, 2018.

9 Portfolio positioning Key statistical measures

Risk measures (ex private equity) Portfolio turnover

Swiss Helvetia Fund May 31, 2018 May 31, 2017 Swiss Helvetia Fund

Turnover in % of AuM Q1 Tracking error 1.9% 2.1% 6% 2018

Turnover in % of AuM YTD Beta 0.94 0.95 10% 2018

Turnover calculation method: Relative VaR (95%) 0.9% 1.0% (lesser of buys or sells) / (average AuM)

Volatility 10.5% 10.7%

Active share 38.6% 39.5%

Source: Schroders, Charles River, Prism, May 31, 2018.

10 Outlook Investment outlook Corporate earnings

Consensus EPS development – MSCI World

35

33

31

29

27

25

23 Dec 2011 Dec 2012 Dec 2013 Dec 2014 Dec 2015 Dec 2016 Dec 2017

MSCI All-Country World Index

Source: Bloomberg, May 31, 2018.

12 Investment outlook Swiss franc development

Trade weighted exchange rate index – real, CPI-based

130

125

120

115

110

105

100 Dec 2012 Dec 2013 Dec 2014 Dec 2015 Dec 2016 Dec 2017

SNB Trade Weighted Overall Index - Real, CPI based

Source: Swiss National Bank, December 2000 = 100, April 30, 2018.

13 Investment outlook Global comparison of dividend yield versus government bond yield

5%

4%

3%

2%

1%

0%

-1%

-2%

-3%

UK

USA

Italy

Spain

Brazil

Japan

France

Canada

Australia

Germany

Shanghai

Hong Kong Switzerland Dividend yield - 10 yr government bond yield Dividend yield Netherlands

Source: Schroders, Bloomberg, May 31, 2018.

14 Investment outlook Global comparison of earnings expectations

300

250

Swiss small & mid cap earnings estimates (SPISMC Index) 200 Swiss Earnings Estimates (SPI Index)

US Earnings estimates (S&P 500)

150 Eurozone Earnings Estimates (Euro Stoxx 50)

UK Earnings Estimates (FTSE 100 Index)

100

50 Dec 2005 Dec 2007 Dec 2009 Dec 2011 Dec 2013 Dec 2015 Dec 2017

Source: Schroders, Bloomberg, May 31, 2018; all earnings converted into USD.

15 Investment outlook 2018: Is the end of this bull market near?

Macroeconomic environment – Despite differing signals from the Citigroup Global Economic Surprise Index, which peaked around turn of the year, expectations for global GDP growth in 2018 & 2019 remained stable at around 3.75%1 – Earnings expectations also paint the picture of a solid economy – Threats, such as trade and geopolitical tensions, impacted stock markets more than real economy – Similarly, bond markets were shaken more by inflation fears than reported consumer price indices

Market implications – We seem to be in the late stage of the economic cycle, i.e. “expansion” (after slowdown, recession, recovery) – As is typical for this stage, spare capacity has been almost filled, leading to bottlenecks and price increases – The cycle might be ended by policy mistakes (late, extreme monetary tightening; wrong fiscal policy) – Therefore, we expect higher volatility in the financial markets after very low volatility in 2017 – In a low interest rate environment, a small increase in bond yields has a large impact on price – Hence, we expect the bond market to continue to influence the equity market – However, as valuations have partially “reverted to the mean”, we see more upside in stock markets – Swiss equities have underperformed recently. We see no valid long-term concerns for this.

Source: Schroders, May 31, 2018, Bloomberg, Citigroup. 1Economic Forecasts polled by Bloomberg in function ECFC, as per May 31, 2018. Views expressed are the portfolio management team’s view and not necessarily a «house view». These views are subject to change.

16 Case for Swiss equities Why are Swiss equities attractive?

– The Swiss stock market has a large proportion of global market leaders (not only among large corporations), with competitive advantage

– High innovation rate

– Global diversification helps in the current environment of synchronized growth

– Generally strong ESG performance and absence of “sin stocks”

– Swiss companies remained competitive despite the historic appreciation of the Swiss franc

– The difference between dividend yield and 10 year government bond yield stands out

Source: Schroders. Views expressed are the portfolio management team’s view and not necessarily a «house view». These views are subject to change.

18 Switzerland offers an attractive business environment

The World Economic Forum (WEF) has been looking into drivers of competitiveness and prosperity in 137 economies. Amongst others, the following helps explain the strong position of Switzerland:  Innovation  Infrastructure  education  labor market efficiency  macroeconomic environment  business sophistication

The WEF crowned Switzerland for the 9th consecutive time in 2017-2018.

Source: World Economic Forum, Global Competitiveness Report 2017-18, rank out of 137 economies. See also: http://www.prosperity.com/rankings: The Legatum Institute, a London based think tank published its annual global prosperity index, where Switzerland ranked number 4 based on 104 variables split into 9 sub indices (economic quality, business environment, governance, education, health, safety & security, personal freedom, social capital and natural environment).

19 Switzerland is an innovation leader

180

160

140

120

100

80

60

40

20

0 UA RO MK BG HR PL LV TR RS HU EL SK CY IT MT ES LT EE PT CZ SI EU FR IL IE NO BE LU AT IS DE UK NL FI DK SE CH 28  Modest Innovators  Moderate Innovators  Innovation Followers  Innovation Leaders

Source: Innovation Union Scoreboard 2017 (EU).

20 Global leadership results in high profitability Swiss company leadership transforms into margins

50

45

40

35

30

25 Gross Margin Operating Margin 20 Net Profit Margin

15

10

5

0 Switzerland (SPI) USA (S&P 500) Global (MSCI World) Europe (MSCI UK (FTSE 350) Japan (Topix) Europe)

Source: Schroders, Bloomberg, December 31, 2017.

21 Swiss companies are very international

100% MEA MEA MEA 90% APAC APAC APAC 80% LATAM LATAM 70% Europe 60% N. America N. America 50% Europe 40% ex domestic Domestic 30% Europe ex domestic 20% Domestic 10% Domestic 0% Switzerland Europe US

Source: Morgan Stanley, June 13, 2017.

22 Long term outperformance of Swiss equities

Cumulative stock market return Long-term reasons to invest 1900% 10.0% p.a. Swiss Performance Index (SPI) in USD 1400% MSCI World All Country Total Return Index Long-term historic outperformance due to: 900% Many global leaders 7.4% p.a. – 400% in USD – Balanced geographical diversification -100% – High innovation rate – Highly skilled and productive labour force – High profit margins – Political system (stability, taxes, labour law) Performance difference SPI - MSCI World All Countries TR – Quality infrastructure 1500% 2.6% p.a. – Low debt (at companies and government) 1000% in USD 500% – Strong CHF seen as asset, not disadvantage 0% -500%

Source: Schroders, May 31, 2018. All data in USD. Views expressed are the portfolio management team’s view and not necessarily a «house view». These views are subject to change. Performance shown represents past performance. Past performance is no guarantee of future results and current performance may be higher or lower than the performance shown.

23 CHF appreciation is nothing new

– Swiss companies are used to an appreciating Swiss franc. – High efficiency and strong focus on productivity gains – High innovation rate – Market leaders in their respective niches – Global production footprint provides a substantial natural hedge – Solid balance sheets – Sharp moves in exchanges rate such as happened in 2011 and 2015 had short term impacts but were successfully absorbed after 1-2 years in terms of margin recovery

4

2

1

0.5

Dec 1975 Dec 1977 Dec 1979 Dec 1981 Dec 1983 Dec 1985 Dec 1987 Dec 1989 Dec 1991 Dec 1993 Dec 1995 Dec 1997 Dec 1999 Dec 2001 Dec 2003 Dec 2005 Dec 2007 Dec 2009 Dec 2011 Dec 2013 Dec 2015 Dec 2017

USDCHF EURCHF Source: Schroders, Bloomberg, May 31, 2018. Views expressed are the portfolio management team’s view and not necessarily a «house view». These views are subject to change.

24 Swiss Equity Market Attractive risk / return profile compared to Europe

2300

Switzerland (SPI TR) 10.7% p.a. / Volatility 16.0% 1800 Europe (MSCI European Monetary 10.1% p.a. / Volatility 17.7% Union TR) USA (S&P500 TR)

1300

800 7.0% p.a. / Volatility 20.2%

300

-200

Source: Bloomberg, May 31, 2018, all data in USD. Performance shown represents past performance. Past performance is no guarantee of future results and current performance may be higher or lower than the performance shown.

25 Swiss Equity Market World’s Top 10 Countries by Market Cap

Rank Market Mkt Cap (US$ trillion) 1 USA 23.8 2 China 6.6 3 Japan 5.2 4 Hong Kong 4.1 5 UK 3.0 6 Canada 1.9 7 France 1.9 8 Germany 1.8 9 India 1.7 10 Switzerland 1.4 Top 10 51.4 World 65.6

Source: Bloomberg, Truewealth Publishing, August 31, 2017.

26 Swiss Equity Market High concentration in Swiss Performance Index

Swiss Performance Index (SPI) SPI compared to SWZ 100% 100% 90% 90% 80% 80% 70% 70% 60% 60% 50% 50% 40% 40%

SPI constituents 30% constituents 30% Swiss Helvetia Fund 20% 20%

10% 10% Cumulative weight of the x largest largest x the weightof Cumulative 0% largest x the weightof Cumulative 0% 1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 1 3 5 7 9 11 13 15 17 19 21 Constituents ranked in descending weight Constituents ranked in descending weight order order

– The Swiss Performance Index’s composition is inefficient and highly concentrated – The Swiss Helvetia Fund takes advantage of diversification benefits

Source: Bloomberg, Schroders, May 31, 2018.

27 Performance of The Swiss Helvetia Fund Compared to ETF and European Index since introduction of the Euro

Total return: The Swiss Helvetia Fund, Inc. 198.4% 5.8% p.a. (since year end 1998) ETF on Swiss stocks 162.7% 5.1% “ MSCI Europe ex Switzerland 131.1% 4.4% “ 250% The Swiss Helvetia Fund, Inc. (SWZ US)

200% Swiss ETF (iShares MSCI Switzerland Capped ETF; EWL US) MSCI Europe (ex Switzerland) Index 150%

100%

50%

0%

-50%

01/12/1998 01/12/1999 01/12/2000 01/12/2001 01/12/2002 01/12/2003 01/12/2004 01/12/2005 01/12/2006 01/12/2007 01/12/2008 01/12/2009 01/12/2010 01/12/2011 01/12/2012 01/12/2013 01/12/2014 01/12/2015 01/12/2016 01/12/2017

Source: Schroders, Bloomberg May 31, 2018. Performance shown represents past performance. Past performance is no guarantee of future results and current performance may be higher or lower than the performance shown.

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