Date of fiscal year end: | February 28, 2017 | |
Date of reporting period: | August 31, 2016 |
DISCLOSURES
Sources: Nomura Asset Management U.S.A. Inc. and Bloomberg L.P. Past performance is not indicative of future results. There is a risk of loss.
The NAV price is adjusted for reinvestment of income dividends, ordinary income distributions, and capital gain distributions. The New York Stock Exchange’s closing market price is adjusted for reinvestment of income dividends, ordinary income distributions, and capital gain distributions. The Fund’s performance does not reflect sales commissions.
This material contains the current opinions of the Fund’s manager, which are subject to change without notice. This material should not be considered investment advice. Statements concerning financial market trends are based on current market conditions, which will fluctuate. There is no guarantee that these investment strategies will work under all market conditions, and each investor should evaluate their ability to invest for the long term.
Comparisons between changes in the Fund’s net asset value or market price per share and changes in the Fund’s Benchmark should be considered in light of the Fund’s investment policy and objective, the characteristics and quality of the Fund’s investments, the size of the Fund, and variations in the Yen/U.S. Dollar exchange rate. This report is for informational purposes only. Investment products offered are not FDIC insured, may lose value, and are not bank guaranteed.
Indices are unmanaged. An index cannot be directly invested into.
Certain information discussed in this report may constitute forward-looking statements within the meaning of the U.S. federal securities laws. The Fund believes that the expectations reflected in such forward-looking statements are based on reasonable assumptions and can give no assurance that the Fund’s expectations will be achieved. Forward-looking information is subject to certain risks, trends and uncertainties that could cause actual results to differ materially from those projected.
The Russell/Nomura Small CapTM Index represents approximately 15% of the total market capitalization of the Russell/Nomura Total MarketTM Index. It measures the performance of the smallest Japanese equity securities in the Russell/Nomura Total MarketTM Index. As of August 31, 2016, there are 1,047 securities in the Russell/Nomura Small CapTM Index.
|
SHAREHOLDERS ACCOUNT INFORMATION
Shareholders whose accounts are held in their own name may contact the Fund’s registrar, Computershare Trust Company, N.A., at (800) 426-5523 for information concerning their accounts.
|
PROXY VOTING
A description of the policies and procedures that the Fund uses to vote proxies relating to portfolio securities is available (1) without charge, upon request, by calling toll-free 1‑800‑833-0018; and (2) on the website of the Securities and Exchange Commission (“SEC”) at http://www.sec.gov. Information about how the Fund voted proxies relating to securities held in the Fund’s portfolio during the most recent 12-month period ended June 30 is available (1) without charge, upon request, by calling toll-free 1‑800‑833-0018; and (2) on the SEC’s website at http://www.sec.gov.
Additional information about the Fund’s Board of Directors is available (1) without charge upon request by calling toll-free 1‑800‑833-0018; and (2) on the website of the SEC at http://www.sec.gov in the Fund’s most recent proxy statement filing.
|
AVAILABILITY OF QUARTERLY SCHEDULE OF INVESTMENTS
The Fund files a schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. The Fund’s Forms N-Q are available on the SEC’s web site at http://www.sec.gov. The Fund’s Forms N-Q may also be reviewed and copied at the SEC’s Public Reference Room in Washington, D.C. Information on the operation of the Public Reference Room may be obtained by calling 1‑800‑SEC-0330.
|
FUND CERTIFICATION
In December 2015, the Fund filed its Principal Executive Officer Certification with the New York Stock Exchange pursuant to Section 303A.12(a) of the New York Stock Exchange Corporate Governance Listing Standards.
The Fund’s Principal Executive Officer and Principal Financial Officer Certifications pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 were filed with the Fund’s Form N-CSR and are available on the SEC’s web site at http://www.sec.gov.
|
SHARE REPURCHASES
Notice is hereby given in accordance with Section 23(c) of the Investment Company Act of 1940 Act that from time to time the Fund may repurchase shares of its common stock in the open market.
|
INTERNET WEBSITE
Nomura Asset Management U.S.A. Inc. has established an Internet website which highlights its history, investment philosophy and process and products, which includes the Fund. The Internet web address is http://funds.nomura-asset.com.
|
KEY STATISTICS
|
||||
Net Assets
|
|
$327,838,526
|
||
Net Asset Value per Share
|
|
$11.57
|
||
Closing NYSE Market Price
|
|
$10.09
|
||
Percentage Change in Net Asset Value per Share*
|
10.2%
|
|
||
Percentage Change in NYSE Market Price*
|
12.4%
|
|
MARKET INDICES
|
|||
Percentage change in market indices:*
|
|||
YEN
|
U.S.$
|
||
Russell/Nomura Small CapTM Index
|
3.1%
|
12.6%
|
|
Tokyo Price Index
|
2.4%
|
11.9%
|
|
Nikkei Stock Average Index
|
5.4%
|
15.1%
|
|
*From March 1, 2016 through August 31, 2016.
|
INDUSTRY DIVERSIFICATION
|
% of
|
% of
|
||
Net Assets
|
Net Assets
|
|||
Wholesale Trade | 12.8 | Other Products | 3.3 | |
Chemicals | 12.2 | Textiles and Apparel | 3.1 | |
Retail Trade | 9.5 | Information and Communication | 2.9 | |
Construction | 7.1 | Services | 2.5 | |
Electric Appliances | 7.0 | Financing Business | 2.2 | |
Machinery | 6.9 | Transportation Equipment | 2.1 | |
Iron and Steel | 6.6 | Utilities | 1.5 | |
Transportation and Warehousing | 5.7 | Pharmaceutical | 0.8 | |
Metal Products | 4.6 | Precision Instruments | 0.5 | |
Banks | 3.5 | Food | 0.1 | |
Real Estate | 3.5 |
TEN LARGEST EQUITY HOLDINGS BY FAIR VALUE
|
||||||||
Fair
|
% of
|
|||||||
Security
|
Value
|
Net Assets
|
||||||
MIRAIT Holdings Corporation
|
|
$12,645,982
|
3.9
|
|||||
Ryoden Trading Company, Ltd.
|
7,333,559
|
2.2
|
||||||
Sakai Chemical Industry Co., Ltd.
|
7,256,372
|
2.2
|
||||||
SIIX Corporation
|
6,714,707
|
2.0
|
||||||
Toenec Corporation
|
6,661,508
|
2.0
|
||||||
Hisaka Works, Ltd.
|
6,074,924
|
1.8
|
||||||
Oiles Corporation
|
5,993,890
|
1.8
|
||||||
Osaka Steel Co., Ltd.
|
5,963,230
|
1.8
|
||||||
Japan Transcity Corporation
|
5,947,826
|
1.8
|
||||||
Matsuda Sangyo Co., Ltd.
|
5,825,216
|
1.8
|
Shares
|
Cost
|
Fair
Value |
% of
Net Assets |
|||||||||||||
JAPANESE EQUITY SECURITIES
|
||||||||||||||||
Banks
|
||||||||||||||||
The Akita Bank, Ltd.
|
1,003,000
|
|
$2,774,457
|
|
$2,958,988
|
0.9
|
||||||||||
General banking services
|
||||||||||||||||
The Bank of Saga Ltd.
|
429,000
|
946,647
|
966,842
|
0.3
|
||||||||||||
General banking services
|
||||||||||||||||
The Taiko Bank, Ltd.
|
1,480,000
|
2,965,100
|
2,991,923
|
0.9
|
||||||||||||
General banking services
|
||||||||||||||||
The Yamanashi Chuo Bank, Ltd.
|
1,099,000
|
4,846,442
|
4,613,493
|
1.4
|
||||||||||||
General banking services
|
||||||||||||||||
Total Banks
|
11,532,646
|
11,531,246
|
3.5
|
|||||||||||||
Chemicals
|
||||||||||||||||
C. Uyemura & Co., Ltd.
|
130,200
|
5,912,048
|
5,490,855
|
1.7
|
||||||||||||
Plating chemicals
|
||||||||||||||||
Fujikura Kasei Co., Ltd.
|
820,100
|
3,862,013
|
4,727,761
|
1.4
|
||||||||||||
Specialty coating materials and fine chemicals
|
||||||||||||||||
Fuso Chemical Co., Ltd.
|
9,800
|
116,681
|
176,312
|
0.1
|
||||||||||||
Manufactures fruit acids, electronic and functional chemical products
|
||||||||||||||||
JSR Corporation
|
165,700
|
3,157,805
|
2,424,956
|
0.7
|
||||||||||||
Manufactures synthetic resin products
|
||||||||||||||||
Koatsu Gas Kogyo Co., Ltd.
|
425,000
|
2,380,328
|
2,532,282
|
0.8
|
||||||||||||
High-pressured gases and chemicals
|
||||||||||||||||
Sakai Chemical Industry Co., Ltd.
|
2,420,000
|
7,469,338
|
7,256,372
|
2.2
|
||||||||||||
Manufactures components for cosmetics and pharmaceuticals
|
||||||||||||||||
Sekisui Jushi Corporation
|
230,000
|
3,072,485
|
3,597,330
|
1.1
|
||||||||||||
Manufactures plastics and other resin materials
|
||||||||||||||||
Shikoku Chemicals Corporation
|
39,000
|
287,560
|
356,483
|
0.1
|
||||||||||||
Manufactures chemical products
|
||||||||||||||||
Soken Chemical & Engineering Co., Ltd.
|
272,300
|
3,259,128
|
2,533,758
|
0.8
|
||||||||||||
Manufactures chemical products
|
||||||||||||||||
Takiron Co., Ltd.
|
433,000
|
1,855,213
|
1,905,644
|
0.6
|
||||||||||||
Manufactures resin and composite products
|
||||||||||||||||
Tenma Corporation
|
200,500
|
2,665,045
|
3,093,267
|
0.9
|
||||||||||||
Manufactures synthetic resin products
|
Shares
|
Cost
|
Fair
Value |
% of
Net Assets |
|||||||||||||
Teraoka Seisakusho Co., Ltd.
|
372,800
|
|
$1,520,467
|
|
$1,222,413
|
0.4
|
||||||||||
Manufactures various adhesive tapes
|
||||||||||||||||
T&K Toka Co., Ltd.
|
122,100
|
1,125,592
|
1,072,368
|
0.3
|
||||||||||||
Manufactures specialized inks for printing applications
|
||||||||||||||||
Yushiro Chemical Industry Co., Ltd.
|
129,600
|
1,498,528
|
1,728,669
|
0.5
|
||||||||||||
Manufactures metalworking fluids
|
||||||||||||||||
Zeon Corporation
|
218,000
|
1,927,720
|
1,876,675
|
0.6
|
||||||||||||
Manufactures synthetic resin products
|
||||||||||||||||
Total Chemicals
|
40,109,951
|
39,995,145
|
12.2
|
|||||||||||||
Construction
|
||||||||||||||||
Daiichi Kensetsu Corporation
|
20,000
|
213,538
|
207,574
|
0.1
|
||||||||||||
Construction and real estate businesses
|
||||||||||||||||
Mirai Industry Co., Ltd.
|
35,700
|
499,333
|
483,436
|
0.1
|
||||||||||||
Manufactures electrical installation materials
|
||||||||||||||||
MIRAIT Holdings Corporation
|
1,497,600
|
12,801,430
|
12,645,982
|
3.9
|
||||||||||||
Construction of electrical and telecommunication facilities
|
||||||||||||||||
NDS Co., Ltd.
|
184,000
|
510,758
|
443,159
|
0.1
|
||||||||||||
Construction of communication infrastructure
|
||||||||||||||||
Taihei Dengyo Kaisha, Ltd.
|
209,000
|
1,660,146
|
1,890,168
|
0.6
|
||||||||||||
Construction of thermal and nuclear plant facilities
|
||||||||||||||||
Toenec Corporation
|
1,420,000
|
8,019,674
|
6,661,508
|
2.0
|
||||||||||||
Construction of comprehensive building facilities
|
||||||||||||||||
Yondenko Corporation
|
245,000
|
866,341
|
902,887
|
0.3
|
||||||||||||
Construction of electrical distribution systems
|
||||||||||||||||
Total Construction
|
24,571,220
|
23,234,714
|
7.1
|
|||||||||||||
Electric Appliances
|
||||||||||||||||
Espec Corp.
|
334,700
|
2,727,315
|
4,480,580
|
1.4
|
||||||||||||
Manufactures environmental testing products
|
||||||||||||||||
Hitachi Maxell, Ltd.
|
177,500
|
3,081,199
|
2,776,201
|
0.8
|
||||||||||||
Manufactures media devices, batteries and electrical appliances
|
||||||||||||||||
Hosiden Corporation
|
176,900
|
946,378
|
1,324,376
|
0.4
|
||||||||||||
Manufactures electronic components
|
Shares
|
Cost
|
Fair
Value
|
% of
Net
Assets
|
|||||||||||||
Kitagawa Industries Co., Ltd.
|
352,000
|
|
$3,717,375
|
|
$3,643,082
|
1.1
|
||||||||||
Manufactures various industrial and consumer products
|
||||||||||||||||
Koito Manufacturing Co., Ltd.
|
68,100
|
1,474,187
|
3,244,112
|
1.0
|
||||||||||||
Manufactures lighting equipment
|
||||||||||||||||
Kyowa Electronic Instruments Co., Ltd.
|
3,100
|
10,323
|
9,985
|
0.0
|
||||||||||||
Manufactures electrical measuring instruments
|
||||||||||||||||
Nichicon Corporation
|
595,000
|
4,629,020
|
4,834,357
|
1.5
|
||||||||||||
Manufactures capacitors and transformers
|
||||||||||||||||
Nihon Kohden Corporation
|
75,900
|
1,565,253
|
1,729,655
|
0.5
|
||||||||||||
Manufactures medical electronic equipment
|
||||||||||||||||
Shindengen Electric Manufacturing Co., Ltd.
|
251,000
|
951,350
|
990,550
|
0.3
|
||||||||||||
Manufactures semiconductor products, electrical components, and power supplies
|
||||||||||||||||
Total Electric Appliances
|
19,102,400
|
23,032,898
|
7.0
|
|||||||||||||
Financing Business
|
||||||||||||||||
Hitachi Capital Corporation
|
133,600
|
2,892,044
|
2,780,937
|
0.9
|
||||||||||||
General financial services
|
||||||||||||||||
Ricoh Leasing Company, Ltd.
|
167,800
|
4,481,506
|
4,369,276
|
1.3
|
||||||||||||
Leasing and financial services
|
||||||||||||||||
Total Financing Business
|
7,373,550
|
7,150,213
|
2.2
|
|||||||||||||
Food
|
||||||||||||||||
Taiyo Kagaku Co., Ltd.
|
53,700
|
389,976
|
409,301
|
0.1
|
||||||||||||
General food manufacturer
|
||||||||||||||||
Total Food
|
389,976
|
409,301
|
0.1
|
|||||||||||||
Information and Communication
|
||||||||||||||||
NS Solutions Corporation
|
8,500
|
159,749
|
147,086
|
0.0
|
||||||||||||
System consulting services and software development
|
||||||||||||||||
OBIC Co., Ltd.
|
49,800
|
1,583,966
|
2,552,982
|
0.8
|
||||||||||||
Computer system integration
|
||||||||||||||||
Okinawa Cellular Telephone Company
|
164,000
|
4,240,710
|
4,949,267
|
1.5
|
||||||||||||
Telecommunications
|
||||||||||||||||
Otsuka Corporation
|
36,900
|
1,366,343
|
1,565,087
|
0.5
|
||||||||||||
Computer information system developer
|
Shares
|
Cost
|
Fair
Value |
% of
Net Assets |
|||||||||||||
Software Service Inc.
|
4,200
|
|
$153,605
|
|
$172,249
|
0.1
|
||||||||||
Provides medical information systems
|
||||||||||||||||
Total Information and Communication
|
7,504,373
|
9,386,671
|
2.9
|
|||||||||||||
Iron and Steel
|
||||||||||||||||
Chubu Steel Plate Co., Ltd.
|
831,700
|
3,498,270
|
4,086,701
|
1.2
|
||||||||||||
Manufactures steel-related products
|
||||||||||||||||
Mory Industries Inc.
|
1,774,000
|
6,064,939
|
5,147,749
|
1.6
|
||||||||||||
Manufactures steel tubing products
|
||||||||||||||||
Nichia Steel Works, Ltd.
|
1,945,900
|
5,995,768
|
4,121,992
|
1.3
|
||||||||||||
Manufactures steel-related products
|
||||||||||||||||
Nippon Seisen Co., Ltd.
|
578,000
|
2,589,042
|
2,376,070
|
0.7
|
||||||||||||
Manufactures stainless steel wires and metal fibers
|
||||||||||||||||
Osaka Steel Co., Ltd.
|
353,300
|
6,355,520
|
5,963,230
|
1.8
|
||||||||||||
Manufactures steel-related products
|
||||||||||||||||
Tohoku Steel Co., Ltd.
|
500
|
5,735
|
4,967
|
0.0
|
||||||||||||
Manufactures specialty steel
|
||||||||||||||||
Total Iron and Steel
|
24,509,274
|
21,700,709
|
6.6
|
|||||||||||||
Machinery
|
||||||||||||||||
Hisaka Works, Ltd.
|
793,000
|
7,124,715
|
6,074,924
|
1.8
|
||||||||||||
Manufactures heat exchangers and other machinery
|
||||||||||||||||
Miura Co., Ltd.
|
83,700
|
958,525
|
1,581,139
|
0.5
|
||||||||||||
Manufactures boilers and related products
|
||||||||||||||||
Nippon Pillar Packing Co., Ltd.
|
300,600
|
2,370,478
|
2,826,166
|
0.9
|
||||||||||||
Manufactures mechanical seals
|
||||||||||||||||
Nissei ASB Machine Co., Ltd.
|
9,800
|
171,657
|
155,932
|
0.0
|
||||||||||||
Manufactures strech blow molding machines
|
||||||||||||||||
Nissei Corporation
|
24,400
|
216,980
|
220,670
|
0.1
|
||||||||||||
Manufactures reducers and gears
|
||||||||||||||||
Nitto Kohki Co., Ltd.
|
103,400
|
1,966,602
|
2,258,328
|
0.7
|
||||||||||||
Manufactures machine tools and motor pumps
|
||||||||||||||||
Oiles Corporation
|
367,980
|
6,337,094
|
5,993,890
|
1.8
|
||||||||||||
Manufactures bearing equipment
|
% of
|
||||||||||||||||
Fair
|
Net
|
|||||||||||||||
Shares
|
Cost
|
Value
|
Assets
|
|||||||||||||
Sato Holdings Corporation
|
76,800
|
|
$1,635,757
|
|
$1,617,937
|
0.5
|
||||||||||
Manufactures electronic printers and other products
|
||||||||||||||||
Shibuya Kogyo Co., Ltd.
|
31,500
|
347,584
|
581,037
|
0.2
|
||||||||||||
Engaged in the packing plant business
|
||||||||||||||||
Tsubakimoto Chain Co.
|
122,000
|
942,575
|
921,623
|
0.3
|
||||||||||||
Manufactures chains for power transmission and other transportation components
|
||||||||||||||||
Yamashin-Filter Corporation
|
49,300
|
249,997
|
216,494
|
0.1
|
||||||||||||
Manufactures filters
|
||||||||||||||||
Total Machinery
|
22,321,964
|
22,448,140
|
6.9
|
|||||||||||||
Metal Products
|
||||||||||||||||
Dainichi Co., Ltd.
|
275,000
|
2,070,986
|
1,606,616
|
0.5
|
||||||||||||
Manufactures oil heating equipment
|
||||||||||||||||
Neturen Co.,Ltd.
|
613,200
|
4,167,278
|
4,264,553
|
1.3
|
||||||||||||
Manufactures steel bars and induction heating equipment
|
||||||||||||||||
NHK Spring Co., Ltd.
|
400,600
|
3,821,490
|
3,774,091
|
1.2
|
||||||||||||
Manufactures automobile-related products
|
||||||||||||||||
Piolax, Inc.
|
65,600
|
2,420,097
|
3,743,677
|
1.1
|
||||||||||||
Manufactures automobile-related products
|
||||||||||||||||
Rinnai Corporation
|
18,300
|
1,327,852
|
1,716,980
|
0.5
|
||||||||||||
Manufactures heating appliances and components
|
||||||||||||||||
Total Metal Products
|
13,807,703
|
15,105,917
|
4.6
|
|||||||||||||
Other Products
|
||||||||||||||||
Fuji Seal International, Inc.
|
70,500
|
2,086,363
|
2,679,934
|
0.8
|
||||||||||||
Packaging-related materials and machinery
|
||||||||||||||||
Nishikawa Rubber Co., Ltd.
|
315,300
|
5,204,376
|
4,687,489
|
1.4
|
||||||||||||
Manufactures rubber automobile parts
|
||||||||||||||||
Nissha Printing Co., Ltd. .
|
3,000
|
62,512
|
72,370
|
0.0
|
||||||||||||
Manufactures various materials and devices
|
||||||||||||||||
Pigeon Corporation
|
47,000
|
839,998
|
1,251,545
|
0.4
|
||||||||||||
Manufactures baby care products
|
||||||||||||||||
The Pack Corporation
|
87,600
|
1,634,868
|
2,075,930
|
0.7
|
||||||||||||
Manufactures paper and chemical products
|
||||||||||||||||
Total Other Products
|
9,828,117
|
10,767,268
|
3.3
|
% of
|
||||||||||||||||
Fair
|
Net
|
|||||||||||||||
Shares
|
Cost
|
Value
|
Assets
|
|||||||||||||
Pharmaceutical
|
||||||||||||||||
KYORIN Holdings, Inc.
|
123,300
|
|
$2,600,749
|
|
$2,472,321
|
0.8
|
||||||||||
Manufactures pharmaceuticals
|
||||||||||||||||
Total Pharmaceutical
|
2,600,749
|
2,472,321
|
0.8
|
|||||||||||||
Precision Instruments
|
||||||||||||||||
Nakanishi Inc.
|
44,200
|
1,420,206
|
1,598,955
|
0.5
|
||||||||||||
Manufactures dental instruments
|
||||||||||||||||
Total Precision Instruments
|
1,420,206
|
1,598,955
|
0.5
|
|||||||||||||
Real Estate
|
||||||||||||||||
Daibiru Corporation
|
278,800
|
2,364,759
|
2,567,274
|
0.8
|
||||||||||||
Real estate leasing and building management
|
||||||||||||||||
Heiwa Real Estate Co., Ltd.
|
56,100
|
696,301
|
724,956
|
0.2
|
||||||||||||
Leasing, development and management of real estate
|
||||||||||||||||
Keihanshin Building Co., Ltd.
|
986,200
|
5,519,090
|
5,046,185
|
1.5
|
||||||||||||
Real estate leasing and building management
|
||||||||||||||||
Sanyo Housing Nagoya Co., Ltd.
|
200,500
|
1,979,507
|
1,731,842
|
0.5
|
||||||||||||
Designs and constructs housing
|
||||||||||||||||
Starts Corporation Inc.
|
85,200
|
1,550,121
|
1,464,433
|
0.5
|
||||||||||||
Construction, leasing and management of real estate
|
||||||||||||||||
Total Real Estate
|
12,109,778
|
11,534,690
|
3.5
|
|||||||||||||
Retail Trade
|
||||||||||||||||
ABC-Mart, Inc.
|
49,300
|
2,356,334
|
3,099,579
|
1.0
|
||||||||||||
Retail sales of shoes
|
||||||||||||||||
AIN Pharmaciez Inc.
|
2,300
|
53,844
|
130,590
|
0.0
|
||||||||||||
Operates pharmacies and drug store chains
|
||||||||||||||||
Amiyaki Tei Co., Ltd.
|
99,700
|
3,389,215
|
3,399,357
|
1.0
|
||||||||||||
Operates barbecue restaurant chains
|
||||||||||||||||
Arc Land Sakamoto Co., Ltd.
|
418,900
|
3,772,852
|
4,493,496
|
1.4
|
||||||||||||
Retail sales, wholesale, food and real estate
|
||||||||||||||||
Create SD Holdings Co., Ltd.
|
65,100
|
786,833
|
1,426,867
|
0.4
|
||||||||||||
Operates pharmacies and drug store chains
|
Shares
|
Cost
|
Fair
Value |
% of
Net Assets |
|||||||||||||
Daikokutenbussan Co., Ltd.
|
69,200
|
|
$2,016,909
|
|
$3,078,977
|
0.9
|
||||||||||
Operates supermarkets
|
||||||||||||||||
Heiwado Co., Ltd.
|
2,600
|
56,286
|
46,827
|
0.0
|
||||||||||||
Operates supermarkets
|
||||||||||||||||
Hiday Hidaka Corp.
|
75,743
|
1,112,489
|
1,650,616
|
0.5
|
||||||||||||
Operates restaurant chains
|
||||||||||||||||
Jin Co., Ltd.
|
71,200
|
2,169,350
|
3,271,268
|
1.0
|
||||||||||||
Retail sales of eyewear and fashion accessories
|
||||||||||||||||
Saint Marc Holdings Co., Ltd.
|
84,300
|
1,905,941
|
2,158,361
|
0.7
|
||||||||||||
Operates restaurant chains
|
||||||||||||||||
San-A Co., Ltd.
|
900
|
39,922
|
42,221
|
0.0
|
||||||||||||
Retail sales of home goods
|
||||||||||||||||
Seria Co., Ltd.
|
51,600
|
1,553,340
|
3,413,880
|
1.0
|
||||||||||||
Discount retail sales
|
||||||||||||||||
Start Today Co., Ltd.
|
77,100
|
1,729,199
|
3,583,358
|
1.1
|
||||||||||||
Operates retail E-commerce websites
|
||||||||||||||||
Sundrug Co., Ltd.
|
3,900
|
201,449
|
282,923
|
0.1
|
||||||||||||
Operates pharmacies and drug store chains
|
||||||||||||||||
Tokyo Base Co., Ltd.†
|
11,400
|
45,632
|
181,941
|
0.1
|
||||||||||||
Retail sales of apparel
|
||||||||||||||||
United Arrows Ltd.
|
40,900
|
1,171,446
|
1,047,176
|
0.3
|
||||||||||||
Retail sales of apparel
|
||||||||||||||||
Total Retail Trade
|
22,361,041
|
31,307,437
|
9.5
|
|||||||||||||
Services
|
||||||||||||||||
EPS Holdings, Inc.
|
106,400
|
1,220,080
|
1,337,912
|
0.4
|
||||||||||||
Performs contract medical research services
|
||||||||||||||||
H.I.S Co., Ltd.
|
12,400
|
335,600
|
312,324
|
0.1
|
||||||||||||
Engaged in the travel business
|
||||||||||||||||
JP-Holdings, Inc.
|
171,900
|
959,044
|
440,620
|
0.1
|
||||||||||||
Operates child-care centers
|
||||||||||||||||
Nihon M&A Center Inc.
|
24,300
|
477,968
|
1,337,399
|
0.4
|
||||||||||||
Provides merger and acquisition brokerage services
|
||||||||||||||||
Nippon Air Conditioning Services Co., Ltd.
|
3,100
|
15,046
|
17,211
|
0.0
|
||||||||||||
Provides maintenance and management of building facilities
|
Shares
|
Cost
|
Fair
Value |
% of
Net Assets |
|||||||||||||
Relia, Inc.
|
147,100
|
|
$1,350,191
|
|
$1,392,957
|
0.4
|
||||||||||
Provides telemarketing services
|
||||||||||||||||
Septeni Holdings Co., Ltd.
|
48,700
|
428,521
|
1,268,080
|
0.4
|
||||||||||||
Internet advertising and media content business
|
||||||||||||||||
SHL-Japan Ltd.
|
1,900
|
51,331
|
51,330
|
0.0
|
||||||||||||
Provides personnel assessment services
|
||||||||||||||||
Step Co., Ltd.
|
219,900
|
1,889,110
|
2,320,558
|
0.7
|
||||||||||||
Operates preparatory schools
|
||||||||||||||||
Total Services
|
6,726,891
|
8,478,391
|
2.5
|
|||||||||||||
Textiles and Apparel
|
||||||||||||||||
Hogy Medical Co., Ltd.
|
48,300
|
2,468,515
|
3,284,316
|
1.0
|
||||||||||||
Manufactures medical products
|
||||||||||||||||
Komatsu Seiren Co., Ltd.
|
306,500
|
1,558,237
|
1,918,126
|
0.6
|
||||||||||||
Manufactures synthetic fibers and textile products
|
||||||||||||||||
Seiren Co., Ltd.
|
437,400
|
4,255,710
|
4,882,329
|
1.5
|
||||||||||||
Manufactures synthetic fibers and textile products
|
||||||||||||||||
Total Textiles and Apparel
|
8,282,462
|
10,084,771
|
3.1
|
|||||||||||||
Transportation and Warehousing
|
||||||||||||||||
Alps Logistics Co., Ltd.
|
526,300
|
2,779,883
|
2,850,781
|
0.9
|
||||||||||||
General logistics services
|
||||||||||||||||
Japan Transcity Corporation
|
1,767,000
|
6,027,445
|
5,947,826
|
1.8
|
||||||||||||
General logistics services
|
||||||||||||||||
Meiko Trans Co., Ltd.
|
409,000
|
4,189,202
|
3,952,130
|
1.2
|
||||||||||||
Marine logistics services
|
||||||||||||||||
Nissin Corporation
|
545,000
|
1,574,310
|
1,512,937
|
0.4
|
||||||||||||
General logistics services
|
||||||||||||||||
Trancom Co., Ltd.
|
73,800
|
2,566,218
|
4,447,202
|
1.4
|
||||||||||||
General logistics services
|
||||||||||||||||
Total Transportation and Warehousing
|
17,137,058
|
18,710,876
|
5.7
|
|||||||||||||
Transportation Equipment
|
||||||||||||||||
Hi-Lex Corporation
|
45,500
|
1,027,502
|
1,195,759
|
0.4
|
||||||||||||
Manufactures control cables
|
Shares
|
Cost
|
Fair
Value |
% of
Net Assets |
|||||||||||||
Nissin Kogyo Co., Ltd.
|
239,000
|
|
$4,161,932
|
|
$3,481,492
|
1.0
|
||||||||||
Manufactures automobile brake systems
|
||||||||||||||||
Sanoh Industrial Co., Ltd.
|
405,500
|
2,825,312
|
2,200,372
|
0.7
|
||||||||||||
Manufactures automobile components
|
||||||||||||||||
Total Transportation Equipment
|
8,014,746
|
6,877,623
|
2.1
|
|||||||||||||
Utilities
|
||||||||||||||||
Keiyo Gas Co., Ltd.
|
408,000
|
2,069,626
|
1,823,243
|
0.6
|
||||||||||||
Produces gas and energy products
|
||||||||||||||||
The Okinawa Electric Power Company, Incorporated
|
142,575
|
2,135,479
|
2,909,835
|
0.9
|
||||||||||||
Produces thermal energy products
|
||||||||||||||||
Total Utilities
|
4,205,105
|
4,733,078
|
1.5
|
|||||||||||||
Wholesale Trade
|
||||||||||||||||
Happinet Corporation
|
141,400
|
1,713,572
|
1,555,079
|
0.5
|
||||||||||||
Toy products
|
||||||||||||||||
Kanaden Corporation
|
229,600
|
1,558,501
|
2,078,692
|
0.6
|
||||||||||||
Factory automation business
|
||||||||||||||||
Kohsoku Corporation
|
207,900
|
1,775,588
|
1,805,815
|
0.6
|
||||||||||||
Food and industrial packaging materials
|
||||||||||||||||
Matsuda Sangyo Co., Ltd.
|
470,500
|
5,758,297
|
5,825,216
|
1.8
|
||||||||||||
Precious metals, electronic materials, and food
|
||||||||||||||||
Paltac Corporation
|
76,000
|
985,093
|
1,580,500
|
0.5
|
||||||||||||
Cosmetics and daily necessities
|
||||||||||||||||
Ryoden Trading Company, Ltd.
|
1,135,000
|
7,752,258
|
7,333,559
|
2.2
|
||||||||||||
Purchases electronic and electrical devices
|
||||||||||||||||
Senshu Electric Co., Ltd.
|
258,900
|
3,557,429
|
3,821,458
|
1.2
|
||||||||||||
Electrical wires and cables
|
||||||||||||||||
Shinko Shoji Co., Ltd.
|
354,500
|
3,239,397
|
3,545,514
|
1.1
|
||||||||||||
Electronic components and devices
|
||||||||||||||||
SIIX Corporation
|
178,000
|
2,324,404
|
6,714,707
|
2.0
|
||||||||||||
Parts procurement, logistics, and manufacturing of electronics
|
||||||||||||||||
SPK Corporation
|
23,400
|
423,699
|
456,525
|
0.1
|
||||||||||||
Automobile components for assembly
|
Shares
|
Cost
|
Fair
Value |
% of
Net Assets |
|||||||||||||
Sugimoto & Co., Ltd.
|
324,300
|
|
$3,017,796
|
|
$3,685,762
|
1.1
|
||||||||||
Machine tools and measuring instruments
|
||||||||||||||||
Techno Associe Co., Ltd.
|
355,700
|
3,316,624
|
3,210,022
|
1.0
|
||||||||||||
Screws and nonferrous metal products
|
||||||||||||||||
Win-Partners Co., Ltd.
|
25,000
|
331,364
|
365,140
|
0.1
|
||||||||||||
Engaged in the medical equipment supply business
|
||||||||||||||||
Total Wholesale Trade
|
35,754,022
|
41,977,989
|
12.8
|
|||||||||||||
TOTAL JAPANESE EQUITY SECURITIES
|
|
$299,663,232
|
|
$322,538,353
|
98.4
|
|||||||||||
INVESTMENT IN FOREIGN CURRENCY
|
||||||||||||||||
Japanese Yen
|
||||||||||||||||
Non-interest bearing account
|
|
$4,046,352
|
|
$3,964,703
|
1.2
|
|||||||||||
TOTAL INVESTMENT IN FOREIGN CURRENCY
|
4,046,352
|
3,964,703
|
1.2
|
|||||||||||||
TOTAL INVESTMENTS
|
|
$303,709,584
|
|
$326,503,056
|
99.6
|
|||||||||||
OTHER ASSETS LESS LIABILITIES, NET
|
1,335,470
|
0.4
|
||||||||||||||
NET ASSETS
|
|
$327,838,526
|
100.0
|
|||||||||||||
†Non-income producing security.
|
ASSETS:
|
||||
Investments in Japanese equity securities, at fair value (cost—$299,663,232)
|
|
$322,538,353
|
||
Investments in foreign currency, at fair value (cost—$4,046,532)
|
3,964,703
|
|||
Receivable for investments sold
|
1,373,325
|
|||
Receivable for dividends and interest, net of withholding taxes
|
265,125
|
|||
Prepaid expenses
|
53,711
|
|||
Cash and cash equivalents
|
249,442
|
|||
Total Assets
|
328,444,659
|
|||
LIABILITIES:
|
||||
Payable for investments purchased
|
229,800
|
|||
Accrued management fee
|
246,291
|
|||
Accrued directors’ fees and expenses
|
1,899
|
|||
Other accrued expenses
|
128,143
|
|||
Total Liabilities
|
606,133
|
|||
NET ASSETS:
|
||||
Capital stock (28,333,893 shares of capital stock outstanding,
|
||||
100,000,000 shares authorized, par value $0.10 each)
|
2,833,389
|
|||
Paid-in capital
|
286,055,217
|
|||
Accumulated net realized gain on investments and foreign currency transactions.
|
17,415,659
|
|||
Net unrealized appreciation on investments and foreign currency transactions . . .
|
22,791,306
|
|||
Accumulated net investment loss
|
(1,257,045
|
)
|
||
Net Assets
|
|
$327,838,526
|
||
Net asset value per share
|
|
$11.57
|
INCOME:
|
||||||||
Dividend income (net of $389,356 withholding taxes)
|
|
$3,504,208
|
||||||
Interest income
|
176
|
|||||||
Total Income
|
|
$3,504,384
|
||||||
EXPENSES:
|
||||||||
Management fee
|
1,420,622
|
|||||||
Custodian fees
|
113,214
|
|||||||
Directors’ fees and expenses
|
77,813
|
|||||||
Legal fees
|
59,924
|
|||||||
Other expenses
|
99,387
|
|||||||
Total Expenses
|
1,770,960
|
|||||||
INVESTMENT INCOME—NET
|
1,733,424
|
|||||||
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCY:
|
||||||||
Realized gain on investments and foreign currency transactions:
|
||||||||
Net realized gain on investments
|
5,798,206
|
|||||||
Net realized gain on foreign currency transactions
|
657,555
|
|||||||
Net realized gain on investments and foreign currency transactions
|
6,455,761
|
|||||||
Net change in unrealized depreciation on investments
|
(4,695,587
|
)
|
||||||
Net change in unrealized appreciation on foreign currency transactions and translation
|
26,795,072
|
|||||||
Net realized and unrealized gain on investments and foreign currency
|
||||||||
transactions and translation
|
28,555,246
|
|||||||
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS
|
|
$30,288,670
|
For the Six
Months Ended August 31, 2016 (Unaudited) |
For the Year Ended
February 29, 2016 |
|||||||
FROM OPERATIONS:
|
||||||||
Net investment income
|
|
$1,733,424
|
|
$1,637,190
|
||||
Net realized gain on investments
|
5,798,206
|
27,779,563
|
||||||
Net realized gain (loss) on foreign currency transactions
|
657,555
|
(88,246
|
)
|
|||||
Net change in unrealized depreciation on investments
|
(4,695,587
|
)
|
(45,368,645
|
)
|
||||
Net change in unrealized appreciation on foreign
|
||||||||
currency transactions and translation
|
26,795,072
|
27,358,774
|
||||||
Increase in net assets resulting from operations
|
30,288,670
|
11,318,636
|
||||||
FROM DISTRIBUTIONS TO SHAREHOLDERS:
|
||||||||
Ordinary income distribution
|
—
|
(4,728,927
|
)
|
|||||
Capital gain distribution
|
—
|
(20,134,064
|
)
|
|||||
Decrease in net assets derived from distributions to shareholders
|
—
|
(24,862,991
|
)
|
|||||
NET ASSETS:
|
||||||||
Beginning of period
|
297,549,856
|
311,094,211
|
||||||
End of period (including accumulated net investment
|
||||||||
loss of $1,257,045 and $2,990,469 respectively)
|
|
$327,838,526
|
|
$297,549,856
|
Undistributed long-term capital gains
|
|
$9,628,572
|
||
Unrealized depreciation on
|
||||
investments and foreign
|
||||
currency transactions
|
(2,592,589
|
)(a)
|
||
Undistributed ordinary income
|
1,625,267
|
|||
Total accumulated earnings
|
|
$8,661,250
|
||
(a) The differences between book basis and tax basis unrealized depreciation is attributable to the tax deferral of losses on wash sales and the tax treatment of passive foreign investment companies.
|
February-16
|
February-15
|
|||||||
Ordinary Income
|
|
$8,777,840
|
|
$16,085,151
|
||||
Capital Gains
|
|
$3,383,067
|
|
$371,174
|
·
|
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)
|
Investments in
|
||||
Level
|
Securities
|
|||
Level 1
|
||||
Equity Securities*
|
$
|
322,538,353
|
||
Foreign Currency
|
3,964,703
|
|||
Level 2
|
-0-
|
|||
Level 3
|
-0-
|
|||
Total
|
$
|
326,503,056
|
||
* Please refer to the Schedule of Investments for breakdown of the valuation by industry type.
|
For the Six Months Ended |
For the Fiscal Year Ended
|
|||||||||||||||||||||||
August 31, 2016 | February 29, | February 28, | February 29, | |||||||||||||||||||||
(Unaudited) | 2016 | 2015 | 2014 | 2013 | 2012 | |||||||||||||||||||
Net asset value, beginning of period
|
|
$10.50
|
|
$10.98
|
|
$9.85
|
|
$8.83
|
|
$8.85
|
|
$9.80
|
||||||||||||
Net investment income*
|
0.06
|
0.06
|
0.06
|
0.05
|
0.07
|
0.06
|
||||||||||||||||||
Net realized and unrealized gain (loss)
|
||||||||||||||||||||||||
on investments and foreign currency
|
1.01
|
0.34
|
1.20
|
1.17
|
(0.01)
|
|
(0.50)
|
|
||||||||||||||||
Total from investment operations
|
1.07
|
0.40
|
1.26
|
1.22
|
0.06
|
(0.44)
|
|
|||||||||||||||||
Distributions:
|
||||||||||||||||||||||||
Distributions from ordinary income
|
—
|
(0.17)
|
|
(0.12)
|
|
(0.20)
|
|
(0.08)
|
|
(0.04)
|
|
|||||||||||||
Distributions from capital gains
|
—
|
(0.71)
|
|
(0.01)
|
|
—
|
—
|
—
|
||||||||||||||||
Total from distributions
|
—
|
(0.88)
|
|
(0.13)
|
|
(0.20)
|
|
(0.08)
|
|
(0.04)
|
|
|||||||||||||
Fund Share Transactions
|
||||||||||||||||||||||||
Dilutive effect of Rights Offering**
|
—
|
—
|
—
|
—
|
—
|
(0.47)
|
|
|||||||||||||||||
Net asset value, end of period
|
|
$11.57
|
|
$10.50
|
|
$10.98
|
|
$9.85
|
|
$8.83
|
|
$8.85
|
||||||||||||
Market value, end of period
|
|
$10.09
|
|
$8.98
|
|
$9.69
|
|
$8.84
|
|
$8.00
|
|
$7.83
|
||||||||||||
Total investment return***
|
12.4%
|
|
0.7%
|
|
11.2%
|
|
13.0%
|
|
3.4%
|
|
(17.9%)
|
|
||||||||||||
Ratio to average net assets/supplemental data:
|
||||||||||||||||||||||||
Net assets, end of period (in 000)
|
|
$327,839
|
|
$297,550
|
|
$311,094
|
|
$278,994
|
|
$250,273
|
|
$250,732
|
||||||||||||
Operating expenses
|
1.11%†
|
|
1.11%
|
|
1.13%
|
|
1.19%
|
|
1.19%
|
|
1.34%
|
|
||||||||||||
Net investment income
|
1.08%†
|
|
0.50%
|
|
0.62%
|
|
0.53%
|
|
0.86%
|
|
0.67%
|
|
||||||||||||
Portfolio turnover
|
9%
|
|
24%
|
|
41%
|
|
101%
|
|
37%
|
|
66%
|
|
BOARD OF DIRECTORS
|
JAPAN
Smaller Capitalization
Fund, Inc.
SEMI-ANNUAL REPORT
AUGUST 31, 2016
|
Rodney A. Buck
|
|
David B. Chemidlin
|
|
Yutaka Itabashi
|
|
E. Han Kim
|
|
Marcia L. MacHarg
|
|
OFFICERS
|
|
Yutaka Itabashi, President
|
|
Takeshi Toyoshima, Vice President
|
|
Maria R. Premole, Vice President
|
|
Neil A. Daniele, Secretary and Chief Compliance Officer
|
|
Amy J. Marose, Treasurer
|
|
Kelly S. Lee, Assistant Treasurer
|
|
MANAGER
|
|
Nomura Asset Management U.S.A. Inc.
|
|
Worldwide Plaza
|
|
309 West 49th Street
|
|
New York, New York 10019-7316
|
|
Internet Address
|
|
http://funds.nomura-asset.com
|
|
INVESTMENT ADVISER
|
|
Nomura Asset Management Co., Ltd.
|
|
1-12-1, Nihonbashi, Chuo-ku,
|
|
Tokyo 103-8260, Japan
|
|
DIVIDEND PAYING AGENT, TRANSFER AGENT AND REGISTRAR
|
|
Computershare Trust Company, N.A.
|
|
P.O. Box 30170
|
|
College Station, Texas 77842-3170
|
|
CUSTODIAN
|
|
Brown Brothers Harriman & Co.
|
|
50 Post Office Square
|
|
Boston, Massachusetts 02110-1548
|
|
COUNSEL
|
|
Sidley Austin LLP
|
|
787 Seventh Avenue
|
|
New York, New York 10019
|
|
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
|
|
RSM US LLP (formerly McGladrey LLP)
|
|
80 City Square
|
|
Boston, Massachusetts 02129
|
|
JAPAN SMALLER CAPITALIZATION FUND, INC.
|
|
WORLDWIDE PLAZA
|
|
309 WEST 49TH STREET
|
|
NEW YORK, NEW YORK 10019-7316
|
|
This Report, including the Financial Statements, is transmitted to the Shareholders of Japan Smaller Capitalization Fund, Inc. for their information. This is not a prospectus, circular or representation intended for use in the purchase of shares of the Fund or any securities mentioned in the Report.
|
(a)
|
Not applicable to this semi-annual report.
|
(b)
|
None.
|
(a)
|
Not applicable.
|
(b)
|
Not applicable.
|
(a)
|
The Registrant’s Principal Executive Officer and Principal Financial Officer have evaluated the Registrant’s disclosure controls and procedures within 90 days of the filing of this report and have concluded that they are effective in providing reasonable assurance that the information required to be disclosed by the Registrant in its reports or statements filed under the Securities Exchange Act of 1934 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 second fiscal quarter of the period covered by this Report that have materially affected, or are reasonably likely to materially affect, the Registrant’s internal control over financial reporting.
|
(a) (1)
|
Not applicable to this semi-annual report.
|
(a) (2)
|
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.
|
(b)
|
Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 are furnished herewith as an exhibit.
|