nq013111cerf.htm
 
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  811-06041
 
The Central Europe and Russia Fund, Inc.
(Exact name of registrant as specified in charter)

345 Park Avenue
New York, NY  10154
(Address of principal executive offices)             (Zip code)
 

Paul Schubert
100 Plaza One
Jersey City, NJ 07311
(Name and address of agent for service)
 
Registrant's telephone number, including area code:  (201) 593-6408
 
Date of fiscal year end:  10/31
 
Date of reporting period: 1/31/11

ITEM 1.
SCHEDULE OF INVESTMENTS

 
THE CENTRAL EUROPE AND RUSSIA FUND, INC.
 
 
SCHEDULE OF INVESTMENTS — JANUARY 31, 2011 (unaudited)
 
Shares
 
Description
 
Value(a)
 
INVESTMENTS IN RUSSIAN
SECURITIES – 60.3%
     
   
COMMON STOCKS – 59.4%
 
   
AIRLINES – 0.8%
 
 
2,000,000
   
Aeroflot – Russian Airlines
 
$
4,800,000
   
   
CHEMICALS – 1.5%
 
 
250,000
   
Uralkali (GDR) Reg S*
   
9,487,500
   
   
COMMERCIAL BANKS – 10.3%
 
 
18,500,000
   
Sberbank
   
64,750,000
   
   
CONSTRUCTION
MATERIALS – 1.5%
 
 
1,000,000
   
LSR Group (GDR) Reg S*
   
9,750,000
   
   
ELECTRIC UTILITIES – 0.6%
 
 
216,633
   
OJSC Enel OGK-5 (GDR)*
   
1,025,757
   
 
600,000
   
RusHydro (ADR)*
   
2,976,000
   
     
4,001,757
   
   
FOOD & STAPLES
RETAILING – 1.0%
 
 
247,710
   
Magnit (GDR) (144A)
   
6,494,709
   
   
MEDIA – 1.2%
 
 
350,000
   
CTC Media†
   
7,738,500
   
   
METALS & MINING – 5.2%
 
 
276,100
   
Magnitogorsk Iron & Steel
Works (GDR)
   
4,031,060
   
 
500,000
   
Mechel Steel Group†
   
15,595,000
   
 
1,300,000
   
Raspadskaya*
   
9,685,000
   
 
200,000
   
Severstal (GDR) Reg S
   
3,566,080
   
     
32,877,140
   
   
OIL, GAS & CONSUMABLE
FUELS – 31.4%
 
 
3,198,000
   
Gazprom
   
21,010,860
   
 
2,383,774
   
Gazprom (ADR)
   
63,048,439
   
 
300,000
   
LUKOIL
   
18,440,670
   
 
415,000
   
LUKOIL (ADR)†
   
25,489,300
   
 
325,000
   
NovaTek (GDR) Reg S
   
36,660,000
   
 
300,000
   
Rosneft Oil
   
2,564,823
   
 
2,800,000
   
Rosneft Oil (GDR) Reg S
   
23,940,000
   
 
200,000
   
Tatneft (ADR)
   
7,179,000
   
 
52,000
   
Vostok Gas*†
   
1,778
   
     
198,334,870
   

Shares
 
Description
 
Value(a)
 
   
ROAD & RAIL – 0.7%
 
 
250,000
   
Globaltrans Investment (GDR)
Reg S
 
$
4,147,500
   
   
WIRELESS
TELECOMMUNICATION
SERVICES – 5.2%
 
 
1,200,000
   
Mobile Telesystems
   
9,960,000
   
 
325,000
   
Mobile Telesystems (ADR)†
   
6,101,257
   
 
250,000
   
Mobile Telesystems (GDR)
Reg S
   
4,693,275
   
 
200,000
   
Sistema JSFC (GDR) Reg S
   
4,580,000
   
 
525,000
   
VimpelCom Ltd. (ADR)†
   
7,360,238
   
     
32,694,770
   
       
Total Common Stocks
(cost $233,710,027)
   
375,076,746
   
   
PREFERRED STOCKS – 0.9%
 
   
OIL, GAS & CONSUMABLE
FUELS – 0.9%
 
 
1,000,000
   
Surgutneftegaz (ADR)†
(cost $4,690,963)
   
5,668,900
   
       
Total Investments in Russian
Securities
(cost $238,400,990)
   
380,745,646
   
INVESTMENTS IN TURKISH
COMMON STOCKS – 14.5%
     
   
AIRLINES – 0.6%
 
 
1,142,857
   
Turk Hava Yollari*
   
3,690,312
   
   
AUTOMOBILES – 0.5%
 
 
650,000
   
Tofas Turk Otomobil Fabrikasi
   
3,508,914
   
   
BUILDING PRODUCTS – 0.7%
 
 
2,000,000
   
Trakya Cam Sanayii*
   
4,164,069
   
   
COMMERCIAL BANKS – 5.8%
 
 
3,500,000
   
Asya Katilim Bankasi
   
6,108,964
   
 
3,350,000
   
Turkiye Garanti Bankasi
   
14,910,235
   
 
500,000
   
Turkiye Halk Bankasi
   
3,942,775
   
 
2,500,010
   
Turkiye IS Bankasi
   
7,854,414
   
 
1,400,000
   
Yapi ve Kredi Bankasi*
   
4,093,006
   
     
36,909,394
   
   
CONSTRUCTION &
ENGINEERING – 1.6%
 
 
2,400,000
   
Tekfen Holding
   
9,963,845
   
 

 
5
 
 
 

 

 
THE CENTRAL EUROPE AND RUSSIA FUND, INC.
 
 
SCHEDULE OF INVESTMENTS — JANUARY 31, 2011 (unaudited) (continued)
 
Shares
 
Description
 
Value(a)
 
INVESTMENTS IN TURKISH
COMMON STOCKS – 14.5% (continued)
     
   
CONSTRUCTION
MATERIALS – 0.4%
 
 
584,752
   
Akcansa Cimento
 
$
2,704,688
   
   
DIVERSIFIED FINANCIAL
SERVICES – 1.0%
 
 
1,500,000
   
Haci Omer Sabanci Holding
   
6,377,010
   
   
FOOD & STAPLES
RETAILING – 0.8%
 
 
150,000
   
Bim Birlesik Magazalar
   
4,824,835
   
   
INDUSTRIAL
CONGLOMERATES – 0.8%
 
 
400,000
   
Akfen Holding*
   
3,104,351
   
 
500,000
   
Enka Insaat ve Sanayi
   
1,888,792
   
     
4,993,143
   
   
INSURANCE – 0.7%
 
 
1,300,000
   
Anadolu Hayat Emeklilik
   
4,262,561
   
   
METALS & MINING – 0.5%
 
 
275,000
   
Koza Altin Isletmeleri†
   
3,171,363
   
   
OIL, GAS & CONSUMABLE
FUELS – 0.6%
 
 
1,483,516
   
Turcas Petrolculuk
   
3,597,355
   
   
TRANSPORTATION
INFRASTRUCTURE – 0.5%
 
 
700,000
   
TAV Havalimanlari Holding*
   
3,298,841
   
       
Total Investments in Turkish
Common Stocks
(cost $62,506,750)
   
91,466,330
   
INVESTMENTS IN POLISH
COMMON STOCKS – 12.6%
     
   
BEVERAGES – 0.7%
 
 
200,000
   
Central European Distribution*†
   
4,584,000
   
   
COMMERCIAL BANKS – 4.6%
 
 
100,000
   
Bank Pekao
   
5,961,304
   
 
50,000
   
Bank Zachodni WBK
   
3,812,097
   
 
35,000
   
BRE Bank*
   
3,709,256
   
 
1,075,000
   
Powszechna Kasa Oszczednosci
Bank Polski
   
15,421,387
   
     
28,904,044
   

Shares
 
Description
 
Value(a)
 
   
DIVERSIFIED FINANCIAL
SERVICES – 0.5%
 
 
200,000
   
Warsaw Stock Exchange*†
 
$
3,359,247
   
   
DIVERSIFIED
TELECOMMUNICATION
SERVICES – 1.1%
 
 
500,000
   
Netia*
   
918,599
   
 
1,000,000
   
Telekomunikacja Polska
   
5,856,719
   
     
6,775,318
   
   
INSURANCE – 0.9%
 
 
50,000
   
Powszechny Zaklad
Ubezpieczen
   
6,013,596
   
   
MEDIA – 0.5%
 
 
500,000
   
TVN
   
2,902,214
   
   
METALS & MINING – 2.6%
 
 
275,000
   
KGHM Polska Miedz
   
16,125,152
   
   
OIL, GAS & CONSUMABLE
FUELS – 1.7%
 
 
275,000
   
Grupa Lotos S.A.*
   
3,954,593
   
 
400,000
   
Polski Koncern Naftowy
Orlen*
   
6,651,560
   
     
10,606,153
   
       
Total Investments in Polish
Common Stocks
(cost $52,878,535)
   
79,269,724
   
INVESTMENTS IN HUNGARIAN
COMMON STOCKS – 1.7%
     
   
COMMERCIAL BANKS – 1.7%
 
 
375,000
   
OTP Bank*†
   
10,474,177
   
       
Total Investments in Hungarian
Common Stocks
(cost $4,369,816)
   
10,474,177
   
INVESTMENTS IN CZECH REPUBLIC
COMMON STOCKS – 1.2%
     
   
COMMERCIAL BANKS – 0.3%
 
 
7,500
   
Komercni Banka*
   
1,788,054
   
 

 
 
6
 
 
 

 

 
THE CENTRAL EUROPE AND RUSSIA FUND, INC.
 
 
SCHEDULE OF INVESTMENTS — JANUARY 31, 2011 (unaudited) (continued)
 
Shares
 
Description
 
Value(a)
 
INVESTMENTS IN CZECH REPUBLIC
COMMON STOCKS – 1.2% (continued)
     
   
ELECTRIC UTILITIES – 0.9%
 
 
125,000
   
Ceske Energeticke Zavody
 
$
5,881,107
   
       
Total Investments in Czech
Republic Common Stocks
(cost $2,110,830)
   
7,669,161
   
       
Total Investments in Common
and Preferred Stocks – 90.3%
(cost $360,266,921)
   
569,625,038
   
SECURITIES LENDING
COLLATERAL – 5.0%
     
 
31,360,517
   
Daily Assets Fund
Institutional, 0.25%
(cost $31,360,517)(b)(c)
   
31,360,517
   
CASH EQUIVALENTS – 10.3%
     
 
64,934,063
   
Central Cash Management
Fund, 0.18%
(cost $64,934,063)(c)
   
64,934,063
   
       
Total Investments – 105.6%
(cost $456,561,501)**
   
665,919,618
   
       
Other Assets and Liabilities,
Net – (5.6%)
   
(35,124,142
)
 
       
NET ASSETS – 100.0%
 
$
630,795,476
   
 
For information on the Fund's policies regarding the valuation of investments and other significant accounting policies, please refer to the Fund's most recent semi-annual or annual financial statements.
 
 
*  Non-income producing security.
 
 
**  The cost for federal income tax purposes was $456,647,051. At January 31, 2011, net unrealized appreciation for all securities based on tax cost was $209,272,567. This consisted of aggregate gross unrealized appreciation for all securities in which there was an excess of value over tax cost of $217,874,591 and aggregate gross unrealized depreciation for all securities in which there was an excess of tax cost over value of $8,602,024.
 
 
†  All or a portion of these securities were on loan. The value of all securities loaned at January 31, 2011 amounted to $30,870,926, which is 4.9% of the net assets.
 
 
(a)  Value stated in US dollars.
 
 
(b)  Represents collateral held in connection with securities lending. Income earned by the Fund is net of borrower rebates.
 
 
(c)  Affiliated fund managed by Deutsche Investment Management Americas Inc. The rate shown is the annualized seven-day yield at period end.
 
 
ADR – American Depositary Receipt
 
 
GDR – Global Depositary Receipt
 
 
Reg S – Securities sold under Regulation S may not be offered, sold or delivered within the United States or to, or for the account or benefit of, US persons, except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act of 1933.
 
 
144A – Security exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers.
 
 
For purposes of its industry concentration policy, the Fund classifies issuers of portfolio securities at the industry sub-group level. Certain of the categories in the above Schedule of Investments consist of multiple industry sub-groups or industries.
 
 

 
 
7
 
 
 

 

 
THE CENTRAL EUROPE AND RUSSIA FUND, INC.
 
 
SCHEDULE OF INVESTMENTS — JANUARY 31, 2011 (unaudited) (continued)
 
 
Fair Value Measurements
 
 
Various inputs are used in determining the value of the Fund's investments. These inputs are summarized in three broad levels. Level 1 includes quoted prices in active markets for identical securities. Level 2 includes other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds and credit risk). Level 3 includes 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 as of January 31, 2011 in valuing the Fund's investments.
 
Category
 
Level 1
 
Level 2
 
Level 3
 
Total
 
Common Stocks and/or Other Equity Investments(d)
 
Russia
 
$
354,228,811
   
$
26,515,057
   
$
1,778
   
$
380,745,646
   
Turkey
   
91,466,330
     
     
     
91,466,330
   
Poland
   
79,269,724
     
     
     
79,269,724
   
Hungary
   
10,474,177
     
     
     
10,474,177
   
Czech Republic
   
7,669,161
     
     
     
7,669,161
   
Short-Term Instruments(d)
   
96,294,580
     
     
     
96,294,580
   
Total
 
$
639,402,783
   
$
26,515,057
   
$
1,778
   
$
665,919,618
   
 
There have been no significant transfers between Level 1 and Level 2 fair value measurements during the period January 31, 2011.
 
 
(d) See Schedule of Investments for additional detailed categorizations.
 
 
Level 3 Reconciliation
 
 
The following is a reconciliation of the Fund's Level 3 investments for which significant unobservable inputs were used in determining value:
 
   
Common
 
   
Stocks
 
   
Russia
 
Balance as of October 31, 2010
 
$
1,705
   
Realized gain (loss)
   
   
Change in unrealized appreciation (depreciation)
   
73
   
Amortization premium/discount
   
   
Net purchases (sales)
   
   
Transfers into Level 3
   
   
Transfers (out) of Level 3
   
   
Balance as of January 31, 2011
 
$
1,778
   
Net Change in unrealized appreciation (depreciation) from investments still held as of January 31, 2011
 
$
73
   
 
Transfers between price levels are recognized at the beginning of the reporting period.
 
 
8
 

 
 

 


ITEM 2.
CONTROLS AND PROCEDURES
   
 
(a)   The Chief Executive and Financial Officers concluded that the Registrant’s Disclosure Controls and Procedures are effective based on the evaluation of the Disclosure Controls and Procedures as of a date within 90 days of the filing date of this report.
   
 
(b)   There have been no changes in the registrant’s internal control over financial reporting that occurred during the registrant’s last fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal controls over financial reporting.
   
ITEM 3.
EXHIBITS
   
 
Certification pursuant to Rule 30a-2(a) under the Investment Company Act of 1940 (17 CFR 270.30a-2(a)) is filed and attached hereto as Exhibit 99.CERT.




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 Central Europe and Russia Fund, Inc.
   
By:
/s/Michael G. Clark
Michael G. Clark
President
   
Date:
March 24, 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:
/s/Michael G. Clark
Michael G. Clark
President
   
Date:
March 24, 2011
   
   
   
By:
/s/Paul Schubert
Paul Schubert
Chief Financial Officer and Treasurer
   
Date:
March 24, 2011