nq073111cerf.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: 7/31/2011

ITEM 1.
SCHEDULE OF INVESTMENTS


  THE CENTRAL EUROPE AND RUSSIA FUND, INC.   JULY 31, 2011 (unaudited)
 

Shares
 
Description
 
Value(a)
 
INVESTMENTS IN RUSSIAN
SECURITIES – 66.3%
     
   
COMMON STOCKS – 65.5%
 
   
AIRLINES – 0.6%
 
 
1,500,000
   
Aeroflot – Russian Airlines
 
$
3,802,500
   
   
CHEMICALS – 1.9%
 
 
250,000
   
Uralkali (GDR) Reg S*
   
12,315,000
   
   
COMMERCIAL BANKS – 9.3%
 
 
16,500,000
   
Sberbank
   
60,555,000
   
   
CONSTRUCTION
MATERIALS – 1.2%
 
 
1,000,000
   
LSR Group (GDR) Reg S
   
7,550,000
   
   
ELECTRIC UTILITIES – 0.6%
 
 
216,633
   
OJSC Enel OGK-5 (GDR)*
   
977,665
   
 
600,000
   
RusHydro (ADR)
   
3,000,000
   
     
3,977,665
   
   
FOOD & STAPLES
RETAILING – 1.1%
 
 
247,710
   
Magnit (GDR) (144A)
   
7,090,600
   
   
MEDIA – 1.1%
 
 
350,000
   
CTC Media†
   
7,304,500
   
   
METALS & MINING – 7.1%
 
 
250,000
   
Evraz Group (GDR)*
   
8,350,000
   
 
500,000
   
Mechel Steel Group†
   
12,454,500
   
 
50,000
   
MMC Norilsk Nickel
   
13,200,000
   
 
150,000
   
Polymetal JSC*
   
3,112,500
   
 
900,000
   
Raspadskaya
   
5,445,000
   
 
200,000
   
Severstal (GDR) Reg S*
   
3,844,000
   
     
46,406,000
   
   
OIL, GAS & CONSUMABLE
FUELS – 35.8%
 
 
3,198,000
   
Gazprom
   
22,785,750
   
 
4,620,000
   
Gazprom (ADR)
   
66,759,000
   
 
300,000
   
LUKOIL
   
20,075,220
   
 
415,000
   
LUKOIL (ADR)
   
27,846,500
   
 
325,000
   
NovaTek (GDR) Reg S
   
50,635,000
   
 
285,000
   
Rosneft Oil
   
2,430,993
   
 
2,500,000
   
Rosneft Oil (GDR) Reg S
   
21,325,000
   
 
500,000
   
Tatneft (ADR)
   
20,915,000
   
 
52,000
   
Vostok Gas*†
   
1,813
   
     
232,774,276
   
 
Shares
 
Description
 
Value(a)
 
   
REAL ESTATE MANAGEMENT & DEVELOPMENT – 1.1%
 
 
1,000,000
   
Etalon Group Ltd.* (GDR) Reg S
 
$
7,000,000
   
   
ROAD & RAIL – 0.7%
 
 
250,000
   
Globaltrans Investment (GDR)
Reg S
   
4,562,500
   
   
WIRELESS
TELECOMMUNICATION
SERVICES – 5.0%
 
 
1,200,000
   
Mobile Telesystems
   
10,620,000
   
 
325,000
   
Mobile Telesystems (ADR)†
   
5,973,727
   
 
250,000
   
Mobile Telesystems (GDR) Reg S
   
4,595,175
   
 
200,000
   
Sistema JSFC (GDR) Reg S
   
4,952,000
   
 
525,000
   
VimpelCom Ltd. (ADR)
   
6,541,500
   
     
32,682,402
   
       
Total Common Stocks
(cost $261,500,751)
   
426,020,443
   
   
PREFERRED STOCKS – 0.8%
 
   
OIL, GAS & CONSUMABLE
FUELS – 0.8%
 
 
1,000,000
   
Surgutneftegaz (ADR)†
(cost $4,690,963)
   
5,064,580
   
       
Total Investments in
Russian Securities
(cost $266,191,714)
   
431,085,023
   
INVESTMENTS IN POLISH
COMMON STOCKS – 13.6%
     
   
COMMERCIAL BANKS – 3.6%
 
 
100,000
   
Bank Pekao
   
5,715,413
   
 
35,000
   
BRE Bank*†
   
3,999,534
   
 
900,000
   
Powszechna Kasa Oszczednosci
Bank Polski
   
13,277,841
   
     
22,992,788
   
   
DIVERSIFIED FINANCIAL
SERVICES – 0.8%
 
 
300,000
   
Warsaw Stock Exchange†
   
5,252,583
   
   
DIVERSIFIED
TELECOMMUNICATION
SERVICES – 1.6%
 
 
1,950,000
   
Netia*
   
4,057,836
   
 
1,000,000
   
Telekomunikacja Polska
   
6,257,176
   
     
10,315,012
   
 
 

 
 
6
 
 
THE CENTRAL EUROPE AND RUSSIA FUND, INC.
 
 
SCHEDULE OF INVESTMENTS — JULY 31, 2011 (unaudited) (continued)
 
Shares
 
Description
 
Value(a)
 
INVESTMENTS IN POLISH
COMMON STOCKS – 13.6% (continued)
     
   
INSURANCE – 2.2%
 
 
105,718
   
Powszechny Zaklad Ubezpieczen
 
$
14,375,403
   
   
MEDIA – 0.2%
 
 
216,039
   
TVN
   
1,309,938
   
   
METALS & MINING – 3.1%
 
 
100,000
   
Jastrzebska Spolka Weglowa*
   
4,897,388
   
 
225,000
   
KGHM Polska Miedz†
   
15,410,627
   
     
20,308,015
   
   
OIL, GAS & CONSUMABLE
FUELS – 2.1%
 
 
275,000
   
Grupa Lotos*
   
3,771,975
   
 
600,000
   
Polski Koncern Naftowy Orlen*
   
10,070,322
   
     
13,842,297
   
       
Total Investments in
Polish Common Stocks
(cost $59,145,057)
   
88,396,036
   
INVESTMENTS IN TURKISH
COMMON STOCKS – 11.2%
     
   
AUTOMOBILES – 0.4%
 
 
579,000
   
Tofas Turk Otomobil Fabrikasi
   
2,413,937
   
   
COMMERCIAL BANKS – 3.9%
 
 
3,500,000
   
Asya Katilim Bankasi*
   
4,982,132
   
 
1,750,000
   
Turkiye Garanti Bankasi
   
7,775,462
   
 
500,000
   
Turkiye Halk Bankasi
   
3,528,886
   
 
2,500,010
   
Turkiye IS Bankasi
   
7,221,589
   
 
800,000
   
Yapi ve Kredi Bankasi*
   
1,920,191
   
     
25,428,260
   
   
CONSTRUCTION &
ENGINEERING – 1.3%
 
 
2,400,000
   
Tekfen Holding
   
8,405,003
   
   
DIVERSIFIED FINANCIAL
SERVICES – 0.6%
 
 
1,000,000
   
Haci Omer Sabanci Holding
   
3,942,823
   
   
FOOD & STAPLES
RETAILING – 1.2%
 
 
150,000
   
Bim Birlesik Magazalar
   
5,136,986
   
 
750,000
   
Kiler Alisveris Hizmetleri
Gida Sanayi ve Ticaret*
   
2,510,423
   
     
7,647,409
   
 
Shares
 
Description
 
Value(a)
 
   
INDEPENDENT POWER
PRODUCERS & ENERGY
TRADERS – 0.6%
 
 
1,750,000
   
Akenerji Elektrik Uretim*†
 
$
3,741,811
   
   
INDUSTRIAL
CONGLOMERATES – 0.8%
 
 
550,000
   
Akfen Holding*
   
3,357,653
   
 
568,181
   
Enka Insaat ve Sanayi
   
1,566,813
   
     
4,924,466
   
   
INSURANCE – 0.6%
 
 
1,800,000
   
Anadolu Hayat Emeklilik
   
3,913,043
   
   
MEDIA – 0.1%
 
 
1,500,000
   
Hurriyet Gazetecilik*
   
1,009,530
   
   
METALS & MINING – 0.6%
 
 
275,000
   
Koza Altin Isletmeleri
   
4,029,184
   
   
OIL, GAS & CONSUMABLE
FUELS – 0.5%
 
 
1,483,516
   
Turcas Petrolculuk†
   
3,021,813
   
   
TRANSPORTATION
INFRASTRUCTURE – 0.6%
 
 
850,000
   
TAV Havalimanlari Holding*
   
4,181,656
   
       
Total Investments in
Turkish Common Stocks
(cost $55,024,977)
   
72,658,935
   
INVESTMENTS IN CZECH REPUBLIC
COMMON STOCKS – 1.8%
     
   
COMMERCIAL BANKS – 0.8%
 
 
22,500
   
Komercni Banka
   
5,019,734
   
   
ELECTRIC UTILITIES – 1.0%
 
 
125,000
   
Ceske Energeticke Zavody
   
6,454,389
   
       
Total Investments in Czech
Republic Common Stocks
(cost $5,750,836)
   
11,474,123
   
 
 

 
 
7
 
 
THE CENTRAL EUROPE AND RUSSIA FUND, INC.
 
 
SCHEDULE OF INVESTMENTS — JULY 31, 2011 (unaudited) (continued)
 
Shares
 
Description
 
Value(a)
 
INVESTMENTS IN HUNGARIAN
COMMON STOCKS – 1.7%
     
   
COMMERCIAL BANKS – 1.7%
 
 
375,000
   
OTP Bank
 
$
10,888,966
   
       
Total Investments in
Hungarian Common Stocks
(cost $4,369,816)
   
10,888,966
   
       
Total Investments in Common
and Preferred Stocks – 94.6%
(cost $390,482,400)
   
614,503,083
   
SECURITIES LENDING
COLLATERAL – 6.1%
     
 
39,662,320
   
Daily Assets Fund
Institutional, 0.13%
(cost $39,662,320)(b)(c)
   
39,662,320
   
CASH EQUIVALENTS – 3.8%
     
 
24,586,514
   
Central Cash Management
Fund, 0.12%
(cost $24,586,514)(c)
   
24,586,514
   
       
Total Investments – 104.5%
(cost $454,731,234)**
   
678,751,917
   
       
Other Assets and Liabilities,
Net – (4.5%)
   
(29,047,061
)
 
       
NET ASSETS – 100.0%
 
$
649,704,856
   
 
 
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 $454,816,784. At July 31, 2011, net unrealized appreciation for all securities based on tax cost was $223,935,133. This consisted of aggregate gross unrealized appreciation for all securities in which there was an excess of value over tax cost of $240,651,280 and aggregate gross unrealized depreciation for all securities in which there was an excess of tax cost over value of $16,716,147.
 
 
†  All or a portion of these securities were on loan. The value of all securities loaned at July 31, 2011 amounted to $38,190,147, which is 5.9% of 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.
 
 

 
 
8
 
 
THE CENTRAL EUROPE AND RUSSIA FUND, INC.
 
 
SCHEDULE OF INVESTMENTS — JULY 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 July 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
 
$
368,144,045
   
$
62,939,165
   
$
1,813
   
$
431,085,023
   
Poland
   
88,396,036
     
     
     
88,396,036
   
Turkey
   
72,658,935
     
     
     
72,658,935
   
Czech Republic
   
11,474,123
     
     
     
11,474,123
   
Hungary
   
10,888,966
     
     
     
10,888,966
   
Short-Term Instruments(d)
   
64,248,834
     
     
     
64,248,834
   
Total
 
$
615,810,939
   
$
62,939,165
   
$
1,813
   
$
678,751,917
   
 
 
(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)
   
108
   
Amortization premium/discount
   
   
Net purchases
   
   
Net (sales)
   
   
Transfers into Level 3
   
   
Transfers (out) of Level 3
   
   
Balance as of July 31, 2011
 
$
1,813
   
Net change in unrealized appreciation (depreciation) from investments still held as of July 31, 2011
 
$
108
   
 
 
Transfers between price levels are recognized at the beginning of the reporting period.
 
 

 
 
9
 

 

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/W. Douglas Beck
W. Douglas Beck
President
   
Date:
September 21, 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/W. Douglas Beck
W. Douglas Beck
President
   
Date:
September 21, 2011
   
   
   
By:
/s/Paul Schubert
Paul Schubert
Chief Financial Officer and Treasurer
   
Date:
September 21, 2011