efc13-450_fmnq.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:  811-05992                                

JAPAN SMALLER CAPITALIZATION FUND, INC.
(Exact name of registrant as specified in charter)

Two World Financial Center
Building B, 18th Floor
New York, New York 10281-1712
(Address of principal executive offices)

Masashi Terachi
Japan Smaller Capitalization Fund, Inc.
Two World Financial Center
Building B, 18th Floor
New York, New York 10281-1712
(Name and address of agent for service)

Registrant’s telephone number, including area code: (800) 833-0018

Date of fiscal year end:  February 28, 2014                              

Date of reporting period:  March 1, 2013 - May 31, 2013
 
 
 
 
 
 
 
JAPAN SMALLER CAPITALIZATION FUND, INC.
SCHEDULE OF INVESTMENTS
IN SECURITIES OF UNAFFILIATED ISSUERS
May 31, 2013

 
                           
% of
  
               
Market
    
Unrealized
    
Net
  
   
Shares
    
Cost
    
Value
    
Gain or Loss
    
Assets
  
                               
JAPANESE COMMON STOCKS
                              
Automotive Equipment and Parts
                              
Musashi Seimitsu Industry Co., Ltd.
     161,600     $ 3,595,153     $ 3,789,817     $ 194,664       1.4  
Ball joints, camshafts, and gears
                                        
Kinugawa Rubber Industrial Co., Ltd.
     560,000       3,131,312       3,148,594       17,282       1.2  
Manufactures automative rubber and synthetic resin
                                  
Press Kogyo Co Ltd.
     562,000       2,540,709       2,780,882       240,173       1.0  
Chassis frames, axles, and suspensions
                                        
Tachi-S Co., Ltd.
     302,200       5,362,202       4,474,040       (888,162 )     1.7  
Child transformation seats, seat components, and rotating units
                                  
Toyo Tire & Rubber Co., Ltd.
     761,000       3,371,199       4,278,715       907,516       1.6  
 Manufactures and sells various tires
                                        
Total Automotive Equipment and Parts
       18,000,575       18,472,048       471,473       6.9  
                                         
Banks and Finance
                                        
Fuyo General Lease Co., Ltd.
     131,200       4,177,510       4,904,794       727,284       1.8  
 Machinery leasing
                                        
Hitachi Capital Corporation
     245,400       5,138,639       5,516,603       377,964       2.1  
Financial services
                                        
Total Banks and Finance
       9,316,149       10,421,397       1,105,248       3.9  
                                         
Chemicals and Pharmaceuticals
                                        
Adeka Corporation
     506,000       4,894,278       4,606,159       (288,119 )     1.7  
 Resin products
                                        
Central Glass Co., Ltd.
     840,000       3,594,560       2,640,488       (954,072 )     1.0  
Glass and Chemicals
                                        
Nichi-Iko Pharmaceutical Co., Ltd.
     231,200       4,697,582       5,133,193       435,611       1.9  
 Medical drugs
                                        
Rohto Pharmaceutical Co., Ltd.
     266,000       2,973,420       3,877,436       904,016       1.5  
 Pharmaceuticals manufacturer
                                        
Taiyo Holdings Co., Ltd.
     96,000       2,978,191       3,108,136       129,945       1.2  
Manufactures and sells resist inks for printed circuit boards
                                  
Total Chemicals and Pharmaceuticals
       19,138,031       19,365,412       227,381       7.3  
                                         
Construction and Engineering
                                        
Hajime Construction Co., Ltd.
     58,200       2,375,590       3,272,289       896,699       1.2  
Detached houses
                                        
Nippo Corporation
     281,000       3,495,389       3,678,120       182,731       1.4  
Constuction business and manufacture and sale of asphalt mixtures
                                  
Total Construction and Engineering
       5,870,979       6,950,409       1,079,430       2.6  
                                         
Electronics
                                        
Fuji Machine Mfg. Co., Ltd.
     564,400       4,670,819       4,611,687       (59,132 )     1.7  
 Automated assembly machines
                                        
Hitachi Kokusai Electric Inc.
     357,000       2,990,354       3,603,808       613,454       1.4  
 Wireless communication equipment
                                        
Mimasu Semiconductor Industry Co., Ltd.
     285,000       2,681,886       2,602,856       (79,030 )     1.0  
 Silicon and gallium
                                        
Nippon Chemi-Con Corporation
     903,000       3,578,872       3,313,104       (265,768 )     1.2  
 Electronic components and circuit products
                                        
Sato Corporation
     273,200       3,366,109       5,074,159       1,708,050       1.9  
 Automation recognition systems
                                        
Siix Corporation
     300,400       3,969,867       3,458,420       (511,447 )     1.3  
Video, audio, and office equipment
                                        
Total Electronics
       21,257,907       22,664,034       1,406,127       8.5  

 
 
 
 
 
 
                           
% of
  
               
Market
    
Unrealized
    
Net
  
   
Shares
    
Cost
    
Value
    
Gain or Loss
    
Assets
  
Food Manufacturing
                              
Warabeya Nichiyo Co., Ltd.
     155,400     $ 2,149,712     $ 2,578,057     $ 428,345       1.0  
 Prepared boxed lunches
                                        
Total Food Manufacturing
       2,149,712       2,578,057       428,345       1.0  
                                         
Information and Software
                                        
DTS Corporation
     267,200       3,470,794       3,839,286       368,492       1.5  
 Information technology services
                                        
Otsuka Corporation
     68,500       4,643,856       6,378,254       1,734,398       2.4  
Computer information system developer
                                        
Square Enix Holdings Co., Ltd.
     267,400       5,091,616       3,510,711       (1,580,905 )     1.3  
 Entertainment software
                                        
Toei Company Ltd.
     473,000       2,538,265       2,753,245       214,980       1.0  
Movies, television programs, and video software
                                  
Total Information and Software
       15,744,531       16,481,496       736,965       6.2  
                                         
Iron and Steel
                                        
Hanwa Co., Ltd.
     1,292,000       5,231,636       4,804,403       (427,233 )     1.8  
 Steel imports/exports
                                        
Neturen Co., Ltd.
     428,100       3,389,337       3,120,170       (269,167 )     1.2  
 Induction hardening equipment
                                        
Yamato Kogyo Co., Ltd.
     106,500       2,837,432       3,305,518       468,086       1.2  
Structural steel products and railway track accessories
                                  
Total Iron and Steel
       11,458,405       11,230,091       (228,314 )     4.2  
                                         
Machinery and Machine Tools
                                        
Asahi Diamond Industrial Co., Ltd.
     339,400       4,740,190       3,402,582       (1,337,608 )     1.3  
Instruments and machines for diamond objects
                                        
Disco Corporation
     84,000       4,872,226       5,630,820       758,594       2.1  
Precision cutting, grinding, and polishing machines
                                  
Trusco Nakayama Corporation
     121,700       2,102,990       2,565,662       462,672       1.0  
 Industrial machinery
                                        
Total Machinery and Machine Tools
       11,715,406       11,599,064       (116,342 )     4.4  
                                         
Miscellaneous Manufacturing
                                        
Asahi Intecc Co., Ltd.
     114,800       3,033,568       6,101,720       3,068,152       2.3  
 Medical tools
                                        
Hogy Medical Co., Ltd.
     102,400       4,520,607       5,716,813       1,196,206       2.2  
 Medical supply products
                                        
Nichiha Corporation
     250,300       2,923,047       3,596,457       673,410       1.3  
 Armoring materials
                                        
Total Miscellaneous Manufacturing
       10,477,222       15,414,990       4,937,768       5.8  
                                         
Real Estate and Warehouse
                                        
Daibiru Corporation
     530,300       4,977,538       6,220,883       1,243,345       2.3  
 Leases office buildings, apartments and hotels
                                        
Total Real Estate and Warehouse
       4,977,538       6,220,883       1,243,345       2.3  
                                         
Retail
                                        
Arcs Company, Limited
     283,000       4,996,863       5,023,254       26,391       1.9  
 Supermarkets and discount stores
                                        
Asahi Co., Ltd.
     163,000       2,630,313       2,663,731       33,418       1.0  
Bicycles, parts and accessories
                                        
Heiwado Co., Ltd.
     212,000       2,662,853       3,287,897       625,044       1.2  
 Supermarkets
                                        
Kusuri No Aoki Co., Ltd.
     41,900       2,963,487       2,617,581       (345,906 )     1.0  
 Sells pharmaceutical products and cosmetics
                                        
Pal Co., Ltd.
     76,900       1,850,366       2,604,130       753,764       1.0  
Apparel
                                        
Xebio Co., Ltd.
     187,900       4,162,839       3,698,562       (464,277 )     1.4  
 Sporting goods
                                        
Total Retail
       19,266,721       19,895,155       628,434       7.5  

 
 
 
 
 
                           
% of
  
               
Market
    
Unrealized
    
Net
  
   
Shares
    
Cost
    
Value
    
Gain or Loss
    
Assets
  
Services
                              
Daiseki Co., Ltd.
     208,700     $ 3,780,873     $ 3,445,739     $ (335,134 )     1.3  
 Waste disposal
                                        
Message Co., Ltd.
     1,744       5,583,292       4,494,676       (1,088,616 )     1.7  
 Nursing facilities
                                        
NEC Networks & System Integration Corporation
     169,900       2,062,814       3,669,415       1,606,601       1.4  
 Communication systems
                                        
Nihon M&A Center Inc.
     61,800       1,863,684       3,333,750       1,470,066       1.3  
Provides merger and acquisition brokerage services
                                  
Rakuten, Inc.
     598,500       5,849,388       6,730,120       880,732       2.5  
 Manages consumer websites
                                        
Total Services
       19,140,051       21,673,700       2,533,649       8.2  
                                         
Transportation
                                        
Kintetsu World Express Inc.
     151,500       4,283,147       5,874,015       1,590,868       2.2  
 Distribution services
                                        
Senko Co., Ltd.
     710,000       2,665,314       3,541,375       876,061       1.3  
 Trucking and warehousing
                                        
Total Transportation
       6,948,461       9,415,390       2,466,929       3.5  
                                         
Wholesale
                                        
Inabata & Co., Ltd.
     333,200       2,114,576       2,682,913       568,337       0.9  
Sells chemicals and other products
                                        
Paltac Corporation
     548,700       6,553,493       6,980,833       427,340       2.6  
 Daily necessities
                                        
Total Wholesale
       8,668,069       9,663,746       995,677       3.5  
                                         
TOTAL JAPANESE COMMON STOCKS
       184,129,757       202,045,872       17,916,115       76.0  
                                         
INVESTMENTS IN FOREIGN CURRENCY
                                        
Japanese Yen
                                        
Non- interest bearing account
       2,140,344       2,145,872       5,528       0.8  
TOTAL INVESTMENTS IN FOREIGN CURRENCY
       2,140,344       2,145,872       5,528       0.8  
                                         
TOTAL INVESTMENTS
       186,270,101       204,191,744       17,921,643       76.8  
                                         
OTHER ASSETS LESS LIABILITIES, NET
       61,609,209               23.2  
                                         
NET ASSETS
       265,800,953               100.0  

Aggregate gross unrealized appreciation for all securities in which there is an excess of value over tax cost was $26,810,691.
Aggregate gross unrealized depreciation for all securities in which there is an excess of tax cost over value was $8,894,576.

Portfolio securities and foreign currency holdings were translated at the following exchange rate as of May 31, 2013:
 
Japanese Yen
100.85
=$1.00

The tax basis of investments, exclusive of investments in foreign investments of $2,145,872 at May 31, 2013 was $245,603,708.  The following table summarizes the valuation of the Fund's investments by fair value hierarchy levels as of May 31, 2013.  Level 1 - quoted prices in active markets for identical investments. Level 2 - other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, credit risk, etc.). Level 3 - significant unobservable inputs (including the Fund's own assumptions in determining the fair value of investments).
 
 
Level
Investments in Securities
Level 1
  
      Equity Securities
$202,045,872
      Foreign Currency
$2,145,872
Level 2
0
Level 3
0
Total
$204,191,744

 
During the period ended May 31, 2013, there were no transfers between Level 1 and Level 2 and the Fund did not hold any instruments which used significant observable inputs (Level 3) in determining fair value.

 
 
 
 
Item 2.  Controls and Procedures.

(a)  The Registrant’s Principal Executive Officer and Principal Financial Officer evaluated the Registrant’s disclosure controls and procedures within 90 days of the filing of this report and concluded that they were effective in providing reasonable assurance that the information required to be disclosed by the Registrant in its reports or statements filed under the 1934 Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission.
 
(b)  There were no changes in the Registrant’s internal control over financial reporting that occurred during the Registrant’s last fiscal quarter that have materially affected, or are reasonably likely to materially affect, the Registrant’s internal control over financial reporting.

Item 3.  Exhibits.

(a)  Certifications of Principal Executive Officer and Principal Financial Officer pursuant to Rule 30a-2(a) under the Investment Company Act of 1940 are attached hereto as an exhibit.
 
 
 
 
 
 
 
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.


JAPAN SMALLER CAPITALIZATION FUND, INC.



By:  /s/ Masashi Terachi      
        Masashi Terachi, President
        (Principal Executive Officer)

Date:  July 23, 2013

 

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/ Masashi Terachi      
        Masashi Terachi, President
        (Principal Executive Officer)

Date:  July 23, 2013

 

By:  /s/ Robert Kleinman      
        Robert Kleinman, Treasurer
        (Principal Financial Officer)

Date:  July 23, 2013