The Central and Eastern Europe Fund Stock Price, News & Analysis

The Central and Eastern Europe Fund, Inc. (NYSE: CEE) is a closed-end management investment company that seeks long-term capital appreciation. According to available information, the Fund invests in the equity or equity-linked securities of issuers domiciled in Central and Eastern Europe. Its shares are listed and traded on the New York Stock Exchange under the ticker symbol CEE, and once issued in an initial public offering, they are bought and sold in the open market like other exchange-traded closed-end funds.

CEE is described in company communications as a non-diversified fund. This means it can take larger positions in fewer portfolio holdings, which can increase its potential risk compared with a diversified fund that spreads assets across a wider range of issuers. The Fund focuses on foreign securities, including those from emerging markets in Central and Eastern Europe, and its objective is to provide investors with exposure to that region through professionally managed equity and equity-linked investments.

Investment focus and regional exposure

The Fund states that it invests in foreign securities, particularly in emerging markets. In its disclosures, CEE notes that emerging markets tend to be more volatile and less liquid than the markets of more mature economies, and often have less diverse and less mature economic structures and less stable political systems than those of developed countries. Company materials also highlight that any fund concentrating on a particular segment of the market or a particular geographical region will generally be more volatile than a fund that invests more broadly.

CEE’s focus on Central and Eastern Europe exposes the portfolio to economic and political developments in that region. The Fund has specifically noted that sanctions imposed by the European Union, the United States and other countries on Russia, and countermeasures adopted by Russia, have affected the economies of many countries in Europe, including those in Central and Eastern Europe. The Fund has also disclosed that Russia’s invasion of Ukraine has materially adversely affected, and may continue to materially adversely affect, the value and liquidity of its portfolio.

Closed-end fund structure

CEE’s public communications explain how closed-end funds differ from open-end mutual funds. Closed-end funds are not continuously offered. There is a one-time public offering, and once shares are issued, they trade on a stock exchange. The Fund notes that shares of closed-end funds frequently trade at a discount to net asset value (NAV). The market price of the Fund’s shares is determined by a number of factors, several of which are beyond the Fund’s control, and CEE states that it cannot predict whether its shares will trade at, below, or above NAV.

The Fund’s Board of Directors has, from time to time, authorized open-market share repurchase programs when CEE’s shares trade at a discount to NAV and such purchases are deemed to be in the best interests of the Fund. These repurchase authorizations are for defined twelve‑month periods and are implemented at the discretion of DWS Investment Management Americas, Inc., the administrator, subject to market conditions and investment considerations. The Fund has indicated that results of repurchases under its programs appear in its shareholder reports.

Distributions and income

CEE periodically announces yearly distributions to stockholders. Company press releases describe distributions that are characterized as net investment income, and they specify declaration, ex‑dividend, record, and payable dates. In certain years, the Fund has stated that total distributions will be paid in stock, with stockholders of record given the option to elect to receive the distribution in cash. These distribution announcements are made by the Fund’s Board of Directors and are communicated through public news releases.

The Fund emphasizes in its disclosures that past performance is no guarantee of future results and that its shares are not insured by the FDIC, NCUA, or any federal government agency. It also notes that investments in the Fund may lose value and that there is no bank guarantee.

Risks and geopolitical factors

CEE repeatedly highlights the risks associated with investing in foreign and emerging market securities. These include currency fluctuations, political and economic changes, market risks, and, in some cases, risks of currency and capital controls. The Fund notes that emerging markets can be more volatile and less liquid than developed markets. As a non‑diversified fund that can take larger positions in fewer issues, CEE acknowledges that this structure can increase its potential risk.

The Fund’s disclosures also discuss broader geopolitical and macroeconomic risks. These include war, terrorism, sanctions, economic uncertainty, trade disputes, public health crises and related geopolitical events, which the Fund states have led, and may in the future lead, to significant disruptions in U.S. and world economies and markets. According to the Fund, such disruptions may increase market volatility and may have significant adverse effects on the Fund and its investments.

CEE has provided detailed commentary on the impact of sanctions and other measures related to Russia. It has reported that certain Russian holdings have been valued at zero since March 14, 2022, in light of measures adopted by the Russian Central Bank and Government, as well as sanctions implemented by the United States and other countries following Russia’s invasion of Ukraine. The Fund has described the freezing of certain Russian assets held by entities organized in countries viewed as “unfriendly” by the Russian Government and has noted that these developments have materially adversely affected the value and liquidity of its portfolio.

Russian holdings and special situations

In its updates, the Fund has described efforts by its investment manager to monitor developments affecting Russian securities. It has reported observing occasional privately negotiated transactions in depositary receipts of certain non‑sanctioned Russian issuers at deeply discounted prices compared with trades on the Moscow Stock Exchange. The Fund has disclosed that it has been successful in selling depositary receipts of several non‑sanctioned Russian issuers in privately negotiated transactions, and that these transactions had a positive impact on its net asset value.

CEE has also discussed specific developments related to a former portfolio holding, Yandex N.V., which was restructured and now, as Nebius Group N.V., holds only non‑Russian assets. The Fund has stated that its shares of Nebius Group N.V. began trading on Nasdaq and that, as a result, it stopped fair valuing those securities at a discount as of October 30, 2024, which increased the Fund’s net assets. At the same time, the Fund notes that its remaining positions in Russian securities are held either as local shares, which it states cannot currently be transacted in by the Fund, or as depositary receipts of issuers subject to U.S. sanctions, which the Fund indicates cannot be sold absent special permissions that it considers unlikely to be granted at present.

CEE has further noted that a Russian Presidential Decree may result in the expropriation of certain Russian assets held by certain foreign investors, potentially including the Fund. It states that all Russian securities and depositary receipts for Russian securities held by the Fund are currently being valued at zero. The Fund has, at various times, made its portfolio holdings as of specific dates available through materials referenced in its communications.

Advisory fee waiver and governance

The Fund’s investment advisor is identified in company releases as DWS International GmbH. CEE has announced that this advisor has voluntarily agreed to waive 50% of its advisory fee for specified minimum periods, with the waiver stated to continue until further notice but at least through certain dates set out in the Fund’s communications. These waivers are presented as voluntary actions by the advisor and are subject to the terms described in the Fund’s announcements.

CEE also reports on its corporate governance through annual meeting results. It discloses the election of directors to its Board for defined terms and the ratification of Ernst & Young LLP as the Fund’s independent auditors for specified fiscal years. The Fund has described situations where director nominees did not initially receive sufficient votes, leading to adjournment and reconvening of meetings to allow additional time to solicit proxies.

Shareholder programs and corporate actions

The Fund’s Board has periodically extended share repurchase authorizations that permit open‑market repurchases when CEE’s shares trade at a discount to NAV and when such purchases are considered to be in the best interests of the Fund. The amount and timing of these repurchases are at the discretion of DWS Investment Management Americas, Inc., acting as administrator, and are subject to market conditions and investment considerations. The Board has also noted that it reserves discretion to determine whether it would be appropriate to initiate a tender offer within specified periods, and that it intends to continue to consider this matter on a regular basis.

CEE’s public statements emphasize that its communications do not constitute an offer to sell or a solicitation to buy securities in any jurisdiction where such an offer or sale would be unlawful before registration or qualification under applicable laws. The Fund also notes that certain statements in its releases may be forward‑looking in nature and identifies typical forward‑looking terminology, while reminding readers that such statements are based on information available at the time and are subject to risks and uncertainties.

Position within the financial sector

Within the broader financial and insurance sector, CEE is classified in the securities and commodity exchanges industry. It functions as a listed closed-end investment company providing exchange‑traded access to a portfolio of Central and Eastern European equity and equity‑linked securities. Its structure, focus on a specific geographic region, non‑diversified status, and exposure to emerging markets and geopolitical developments are central features of how the Fund presents itself in its own disclosures.