efc7-1737_6256854formnq.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:                                 811-5992                                
 
JAPAN SMALLER CAPITALIZATION FUND, INC.
 
(Exact name of registrant as specified in charter)
 
Two World Financial Center
Building B, 22nd Floor
New York, New York 10281-1712
 
(Address of principal executive offices)
 
Shigeru Shinohara
Japan Smaller Capitalization Fund, Inc.
Two World Financial Center
Building B, 22nd 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 29, 2008                                
 
Date of reporting period:                                 March 1, 2007 – May 31, 2007                         
 
Item 1.  Schedule of Investments
 
JAPAN SMALLER CAPITALIZATION FUND, INC.    
  
SCHEDULE OF INVESTMENTS    
  
IN SECURITIES OF UNAFFILIATED ISSUERS    
  
May 31, 2007    
  
                           
% of
  
               
Market
    
Unrealized
    
Net
  
   
Shares
    
Cost
    
Value
    
Gain/Loss
    
Assets
  
COMMON STOCKS
                              
Automotive Equipment and Parts
                              
Eagle Industry Co., Ltd.
    
369,000
     $
3,789,191
     $
4,652,088
     $
862,897
      
2.0
  
  Valves and mechanical seals
                                        
Futaba Industrial Co., Ltd.
    
208,300
      
4,706,392
      
5,149,546
      
443,154
      
2.2
  
 Exhaust system parts
                                        
Nittan Valve Co, Ltd.
    
344,200
      
2,944,938
      
2,739,352
       (205,586 )    
1.1
  
 Engine valves
                                        
Tokai Rika Co., Ltd.
    
140,400
      
3,458,877
      
3,643,908
      
185,031
      
1.5
  
 Electronic parts
                                        
Total Automotive Equipment and Parts
      
14,899,398
      
16,184,894
      
1,285,496
      
6.8
  
                                         
Banks and Finance
                                        
Asset Managers Co., Ltd.
    
2,587
      
5,202,357
      
3,718,328
       (1,484,029 )    
1.6
  
 Real state funds
                                        
The Hachijuni Bank, Ltd.
    
309,000
      
2,311,888
      
2,357,693
      
45,805
      
1.0
  
 General banking services
                                        
Iwai Securities Co., Ltd.
    
151,300
      
3,806,363
      
2,783,557
       (1,022,806 )    
1.2
  
 Financial services
                                        
Kansai Urban Banking Corporation
    
1,057,000
      
4,435,175
      
4,114,969
       (320,206 )    
1.7
  
 General banking services
                                        
Total Banks and Finance
      
15,755,783
      
12,974,547
       (2,781,236 )    
5.5
  
                                         
Chemicals and Pharmaceuticals
                                        
Hisamitsu Pharmaceutical Co., Inc.
    
127,200
      
3,551,680
      
3,572,946
      
21,266
      
1.5
  
 Salonpas brand pharmaceuticals
                                        
Nissan Chemical Industries, Ltd.
    
279,000
      
3,371,675
      
3,024,763
       (346,912 )    
1.3
  
  Chemical producer
                                        
Taiyo Ink Mfg. Co., Ltd.
   
139,600
      
3,734,109
      
3,726,336
       (7,773 )    
1.6
  
 Resist inks for printed circuit boards
                                        
Total Chemicals and Pharmaceuticals
      
10,657,464
      
10,324,045
       (333,419 )    
4.4
  
                                         
Electric
                                        
Mirai Co., Ltd.
   
271,800
      
2,607,161
      
3,538,278
      
931,117
      
1.5
  
 Plastic molded electric materials
                                        
Total Electric
            
2,607,161
      
3,538,278
      
931,117
      
1.5
  
                                         
Electronics
                                        
Daishinku Corp.
    
405,000
      
2,454,688
      
2,411,605
       (43,083 )    
1.0
  
 Monolithic crystal filters
                                        
Macnica, Inc.
    
93,700
      
2,757,685
      
2,362,605
       (395,080 )    
1.0
  
 Semiconductors
                                        
Meiko Electronics Co., Ltd
    
114,900
      
4,917,049
      
3,737,046
       (1,180,003 )    
1.6
  
 Printed circuit boards
                                        
Total Electronics
            
10,129,422
      
8,511,256
       (1,618,166 )    
3.6
  
                                         
Food Manufacturing
                                        
Ozeki Co., Ltd.
    
120,600
      
3,535,682
      
3,080,498
       (455,184 )    
1.3
  
 Supermarket chain
                                        
Total Food Manufacturing
      
3,535,682
      
3,080,498
       (455,184 )    
1.3
  
                                         
Information and Software
                                        
Sorun Corporation
    
558,700
      
4,330,752
      
4,249,158
       (81,594 )    
1.8
  
 Computer software development
                                        
SRA Holdings, Inc.
    
254,900
      
3,278,299
      
3,799,791
      
521,492
      
1.6
  
 Business application software
                                        
Total Information and Software
      
7,609,051
      
8,048,949
      
439,898
      
3.4
  
                                         
Machinery and Machine Tools
                                        
Disco Corporation
    
71,900
      
4,566,437
      
4,033,321
       (533,116 )    
1.7
  
 Cutting & grinding industrial machinery
                                        
Hitachi Construction Machinery Co., Ltd.
    
81,100
      
2,072,643
      
2,710,993
      
638,350
      
1.1
  
 Construction machinery
                                        
Makino Milling Machine Co., Ltd.
    
175,000
      
2,115,266
      
2,314,073
      
198,807
      
1.0
  
 Industrial machinery
                                        
                                   
% of
  
                   
Market
    
Unrealized
    
Net
  
   
Shares
    
Cost
    
Value
    
Gain/Loss
    
Assets
  
                                         
Yamatake Corporation
    
167,200
     $
4,043,885
     $
4,627,851
     $
583,966
      
2.0
  
 Industrial automation equipment
                                        
Yokohama Rubber Company, Ltd.
    
589,000
      
3,507,281
      
4,247,398
      
740,117
      
1.8
  
 Rubber products
                                        
Yuken Kogyo Co., Ltd.
    
626,000
      
2,226,520
      
2,318,804
      
92,284
      
1.0
  
  Hydraulic equipment
                                        
Total Machinery and Machine Tools
      
18,532,032
      
20,252,440
      
1,720,408
      
8.6
  
                                         
Miscellaneous Manufacturing
                                        
Dowa Holdings, Co., Ltd.
    
346,000
      
3,392,928
      
3,333,399
       (59,529 )    
1.4
  
  Various metal-related products
                                        
Mani, Inc.
    
67,200
      
1,821,924
      
3,532,340
      
1,710,416
      
1.5
  
 Medical goods and equipment
                                        
Nichias Corporation
    
871,000
      
5,592,440
      
8,620,221
      
3,027,781
      
3.7
  
 Building and construction materials
                                        
Tokai Rubber Industries, Ltd.
    
256,000
      
3,912,198
      
4,594,144
      
681,946
      
1.9
  
 Rubber and plastic products
                                        
Total Miscellaneous Manufacturing
      
14,719,490
      
20,080,104
      
5,360,614
      
8.5
  
                                         
Real Estate and Warehouse
                                        
Daibiru Corporation
    
272,600
      
2,509,149
      
4,408,438
      
1,899,289
      
1.9
  
 Leases office buildings, apartments and hotels
                                        
Suruga Corporation.
    
253,800
      
5,703,228
      
5,878,329
      
175,101
      
2.5
  
 Multi-unit commercial and residential building
                                        
Total Real Estate and Warehouse
      
8,212,377
      
10,286,767
      
2,074,390
      
4.4
  
                                         
Retail
                                        
Shimamura Co., Ltd.
    
28,700
      
2,826,823
      
3,085,565
      
258,742
      
1.3
  
 Clothing chain
                                        
Village Vanguard Co., Ltd.
    
452
      
2,484,059
      
2,535,551
      
51,492
      
1.1
  
 Books, cd's, videos and office supplies
                                        
Yaoko Co., Ltd.
    
115,200
      
2,686,389
      
2,933,103
      
246,714
      
1.2
  
 Supermarkets
                                        
Total Retail
            
7,997,271
      
8,554,219
      
556,948
      
3.6
  
                                         
Services
                                        
Aeon Delight Co., Ltd.
    
172,500
      
3,874,684
      
4,462,856
      
588,172
      
1.9
  
 Building management
                                        
Chintai Corporation
    
4,002
      
3,280,253
      
2,238,398
       (1,041,855 )    
1.0
  
 Real estate information magazines
                                        
DTS Corporation
    
125,800
      
4,364,217
      
3,802,259
       (561,958 )    
1.6
  
 System and network engineering
                                        
Meiko Network Japan Co., Ltd.
    
582,200
      
3,264,355
      
2,878,604
       (385,751 )    
1.2
  
 Private schools and academic tutoring
                                        
Resorttrust, Inc.
    
103,100
      
2,388,444
      
2,345,587
       (42,857 )    
1.0
  
 Timeshare resort hotels
                                        
Tempstaff Co., Ltd.
    
2,729
      
4,274,438
      
3,608,632
       (665,806 )    
1.5
  
 Employment and outsourcing
                                        
Total Services
            
21,446,391
      
19,336,336
       (2,110,055 )    
8.2
  
                                         
Telecommunications
                                        
Jupiter Telecommunications Co., Ltd †
    
7,337
      
5,543,231
      
6,086,296
      
543,065
      
2.5
  
 Cable television broadcasting
                                        
Total Telecommunications
      
5,543,231
      
6,086,296
      
543,065
      
2.5
  
                                         
Textiles and Apparel
                                        
Workman Co., Ltd.
    
90,900
      
1,968,253
      
3,732,906
      
1,764,653
      
1.6
  
 Uniforms
                                        
Total Textiles and Apparel
      
1,968,253
      
3,732,906
      
1,764,653
      
1.6
  
                                         
Wholesale
                                        
Nagase & Company, Ltd.
    
318,000
      
4,037,450
      
4,113,589
      
76,139
      
1.7
  
  Dyestuff
                                        
Total Wholesale
      
4,037,450
      
4,113,589
      
76,139
      
1.7
  
                                         
TOTAL INVESTMENTS IN COMMON STOCKS
     $
147,650,456
     $
155,105,124
     $
7,454,668
      
65.6
  
                                         
OTHER ASSETS LESS LIABILITIES, NET
      
81,534,519
              
34.4
  
                                         
NET ASSETS
             $
236,639,643
              
100.0
  
                                         
                                         
† Non-Income Producing Security
                                        
* Aggregate gross unrealized appreciation for all securities in which there is an exceed of value over tax cost was $ 16,287,796.
  
Aggregate gross unrealized depreciation for all securities in which there is an excess of tax cost over value was $ 8,833,128.
  
                                         
                                         
Portfolio securities and foreign currency holdings were translated at the
                                  
following exchange rate as of May 31, 2007.
                                        
                                         
Japanese Yen
            
121.76
    
=$1.00
                  
 
 
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/ Shigeru Shinohara
        Shigeru Shinohara, President
        (Principal Executive Officer)
 
Date:   June 29, 2007
 
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/ Shigeru Shinohara
        Shigeru Shinohara, President
        (Principal Executive Officer)
 
Date:   June 29, 2007
 
 
By:  /s/ Rita Chopra-Brathwaite
        Rita Chopra-Brathwaite, Treasurer
        (Principal Financial Officer)
 
Date:   June 29, 2007