efc13-64_nq.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, 2013                              

Date of reporting period:  September 1, 2012 –  November 30, 2012
 
 
 
 
 
 
JAPAN SMALLER CAPITALIZATION FUND, INC.
SCHEDULE OF INVESTMENTS
IN SECURITIES OF UNAFFILIATED ISSUERS
November 30, 2012
 
 
 
 
                           
% of
  
               
Market
    
Unrealized
    
Net
  
   
Shares
    
Cost
    
Value
    
Gain or Loss
    
Assets
  
                               
JAPANESE COMMON STOCKS
                              
Automotive Equipment and Parts
                              
Musashi Seimitsu Industry Co., Ltd.
     285,800     $ 6,375,009     $ 5,942,119     $ (432,890 )     2.6  
Ball joints, camshafts, and gears
                                        
Tachi-S Co., Ltd.
     140,200       2,630,647       2,700,891       70,244       1.2  
Child transformation seats, seat components, and rotating units
                                        
Total Automotive Equipment and Parts
       9,005,656       8,643,010       (362,646 )     3.8  
                                         
Banks and Finance
                                        
Fuyo General Lease Co., Ltd.
     175,200       4,987,603       4,918,379       (69,224 )     2.2  
 Machinery leasing
                                        
Total Banks and Finance
       4,987,603       4,918,379       (69,224 )     2.2  
                                         
Chemicals and Pharmaceuticals
                                        
Adeka Corporation
     689,900       6,625,819       5,508,501       (1,117,318 )     2.5  
 Resin products
                                        
Central Glass Co., Ltd.
     840,000       3,594,560       2,473,133       (1,121,427 )     1.1  
Glass and Chemicals
                                        
Nichi-Iko Pharmaceutical Co., Ltd.
     204,200       4,158,450       4,032,786       (125,664 )     1.8  
Medical drugs
                                        
Rohto Pharmaceutical Co., Ltd.
     266,000       2,973,420       3,387,242       413,822       1.5  
 Pharmaceuticals manufacturer
                                        
Total Chemicals and Pharmaceuticals
       17,352,249       15,401,662       (1,950,587 )     6.9  
                                         
Electronics
                                        
Alpine Electronics, Inc.
     405,000       5,254,053       3,420,185       (1,833,868 )     1.5  
 Car audio and navigation systems
                                        
Fuji Machine Mfg. Co., Ltd.
     300,900       4,931,330       4,702,987       (228,343 )     2.1  
 Automated assembly machines
                                        
Mimasu Semiconductor Industry Co., Ltd.
     285,000       2,681,886       2,158,175       (523,711 )     1.0  
 Silicon and gallium
                                        
Nippon Chemi-Con Corporation
     1,437,000       6,862,939       2,472,333       (4,390,606 )     1.1  
 Electronic components and circuit products
                                        
Sato Corporation
     289,500       3,517,664       4,658,097       1,140,433       2.1  
 Automation recognition systems
                                        
Siix Corporation
     285,400       3,795,870       3,575,496       (220,374 )     1.6  
Video, audio, and office equipment
                                        
Total Electronics
       27,043,742       20,987,273       (6,056,469 )     9.4  
                                         
Information and Software
                                        
DTS Corporation
     334,200       4,234,098       4,340,733       106,635       1.9  
Information technology services
                                        
Kadokawa Group Holdings, Inc.
     74,800       2,278,887       2,214,047       (64,840 )     1.0  
Publishing, movie/visual, and internet-related businesses
                                        
Otsuka Corporation
     68,500       4,643,856       5,427,879       784,023       2.4  
Computer information system developer
                                        
SKY Perfect JSAT Holdings Inc
     7,550       3,363,149       3,206,246       (156,903 )     1.4  
 Broadcasting and data transmission
                                        
Square Enix Holdings Co., Ltd.
     267,400       5,091,616       3,592,980       (1,498,636 )     1.6  
 Entertainment software
                                        
Total Information and Software
       19,611,606       18,781,885       (829,721 )     8.3  
 
 
 
 
 
 
                               
                           
% of
  
               
Market
    
Unrealized
    
Net
  
   
Shares
    
Cost
    
Value
    
Gain or Loss
    
Assets
  
Iron and Steel
                              
Hanwa Co., Ltd.
     1,292,000     $ 5,231,636     $ 4,257,878       ($973,758 )     1.9  
 Steel imports/exports
                                        
Yamato Kogyo Co., Ltd.
     176,800       4,801,894       4,766,220       (35,674 )     2.1  
Structural steel products and railway track accessories
                                        
Total Iron and Steel
       10,033,530       9,024,098       (1,009,432 )     4.0  
                                         
Machinery and Machine Tools
                                        
Asahi Diamond Industrial Co., Ltd.
     339,400       4,740,190       3,129,380       (1,610,810 )     1.4  
Instruments and machines for diamond objects
                                        
Disco Corporation
     88,500       5,142,520       4,701,914       (440,606 )     2.1  
Precision cutting, grinding, and polishing machines
                                        
Star Micronics Co., Ltd.
     342,100       3,350,326       3,324,216       (26,110 )     1.5  
Small-sized precision components and equipments
                                        
THK Co., Ltd.
     248,500       5,888,163       4,266,366       (1,621,797 )     1.9  
 Linear motion systems
                                        
Total Machinery and Machine Tools
       19,121,199       15,421,876       (3,699,323 )     6.9  
                                         
Miscellaneous Manufacturing
                                        
Asahi Intecc Co., Ltd.
     149,300       3,870,240       5,390,610       1,520,370       2.4  
 Medical tools
                                        
Hogy Medical Co., Ltd.
     102,400       4,520,607       5,018,574       497,967       2.2  
 Medical supply products
                                        
Nihon Kohden Corporation
     79,900       2,188,066       2,618,641       430,575       1.2  
 Medical equipment
                                        
Nichiha Corporation
     198,300       2,298,013       2,234,434       (63,579 )     1.0  
Armoring materials
                                        
Toyo Tanso Co., Ltd.
     147,400       6,364,454       2,794,948       (3,569,506 )     1.2  
 Carbon and graphite
                                        
Total Miscellaneous Manufacturing
       19,241,380       18,057,207       (1,184,173 )     8.0  
                                         
Real Estate and Warehouse
                                        
Daibiru Corporation
     437,900       3,900,301       3,538,854       (361,447 )     1.6  
 Leases office buildings, apartments and hotels
                                        
Total Real Estate and Warehouse
       3,900,301       3,538,854       (361,447 )     1.6  
                                         
Restaurants
                                        
Saint Marc Holdings Co., Ltd.
     69,000       2,659,319       2,495,487       (163,832 )     1.1  
Restaurants and cafes
                                        
Total Restaurants
       2,659,319       2,495,487       (163,832 )     1.1  
                                         
Retail
                                        
Arcs Company, Limited
     283,000       4,996,863       5,835,900       839,037       2.6  
 Supermarkets and discount stores
                                        
Asahi Co., Ltd.
     163,000       2,630,313       2,231,659       (398,654 )     1.0  
Bicycles, parts and accessories
                                        
Heiwado Co., Ltd.
     212,000       2,662,853       2,941,055       278,202       1.3  
 Supermarkets
                                        
Xebio Co., Ltd.
     187,900       4,162,839       3,376,213       (786,626 )     1.5  
 Sporting goods
                                        
Total Retail
       14,452,868       14,384,827       (68,041 )     6.4  
 
 
 
 
 
 
 
                           
% of
  
               
Market
    
Unrealized
    
Net
  
   
Shares
    
Cost
    
Value
    
Gain or Loss
    
Assets
  
Services
                              
Daiseki Co., Ltd.
     350,700     $ 6,684,713     $ 4,674,017       ($2,010,696 )     2.1  
 Waste disposal
                                        
Message Co., Ltd.
     1,781       5,674,827       5,068,842       (605,985 )     2.3  
 Nursing facilities
                                        
NEC Networks & System Integration Corporation
     169,900       2,062,814       3,036,318       973,504       1.3  
 Communication systems
                                        
Nihon M&A Center Inc.
     90,800       2,739,898       2,961,575       221,677       1.3  
Provides merger and acquisition brokerage services
                                        
Park24 Co., Ltd.
     128,500       1,464,809       2,167,226       702,417       1.0  
 Parking garages
                                        
Rakuten, Inc.
     995,500       9,360,009       8,382,777       (977,232 )     3.7  
 Manages consumer websites
                                        
Toppan Forms Co., Ltd.
     230,500       1,857,345       2,150,421       293,076       1.0  
 Printing company
                                        
Total Services
             29,844,415       28,441,176       (1,403,239 )     12.7  
                                         
Transportation
                                        
Kintetsu World Express Inc.
     151,500       4,283,147       4,572,442       289,295       2.0  
 Distribution services
                                        
Total Transportation
       4,283,147       4,572,442       289,295       2.0  
                                         
Wholesale
                                        
Mitsui Matsushima Co., Ltd.
     1,757,000       3,338,077       2,831,296       (506,781 )     1.3  
 Coal
                                        
Paltac Corporation
     247,600       2,979,925       2,936,941       (42,984 )     1.3  
 Daily necessities
                                        
Total Wholesale
             6,318,002       5,768,237       (549,765 )     2.6  
                                         
TOTAL JAPANESE COMMON STOCKS
     $ 187,855,017     $ 170,436,413       ($17,418,604 )     75.9  
                                         
INVESTMENTS IN FOREIGN CURRENCY
                                        
Japanese Yen
                                        
Non- interest bearing account
     $ 2,819,075     $ 2,804,681       ($14,394 )     1.2  
TOTAL INVESTMENTS IN FOREIGN CURRENCY
       2,819,075       2,804,681       (14,394 )     1.2  
                                         
TOTAL INVESTMENTS
     $ 190,674,092     $ 173,241,094       ($17,432,998 )     77.1  
                                         
OTHER ASSETS LESS LIABILITIES, NET
       51,848,850               22.9  
                                         
NET ASSETS
     $ 225,089,944               100.0  
 
 
*
Aggregate gross unrealized appreciation for all securities in which there is an excess of value over tax cost was $8,561,277.
Aggregate gross unrealized depreciation for all securities in which there is an excess of tax cost over value was $25,979,881.
 
 
Portfolio securities and foreign currency holdings were translated at the
following exchange rate as of November 30, 2012.
 
Japanese Yen 82.535 =$1.00
 
 
 
The tax basis of investments, exclusive of investments in foreign currencies of $2,819,075, at November 30, 2012 was $187,855,017.
 
The following table summarizes the valuation of the Fund’s investments by fair value hierarchy levels as of November 30, 2012.  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 spreads, credit risk, etc.). Level 3 - (including the Fund’s own assumptions in determining the fair value of investments).
 
Level 1
  
Investment in Securities
  
Level 1
      
     Equity Securities
   $ 170,436,413  
     Foreign Currency     2,804,681  
Level 2
     -0-  
Level 3
     -0-  
Total
   $ 173,241,094  

 
During the quarter ended November 30th 2012, there were no transfers between Level 1 and 2 and the Fund did not hold any instruments which used significant unobservable 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:  January 28, 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 person on behalf of the registrant and in the capacities and on the dates indicated.



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

Date:  January 28, 2013