Edgar Filing: JAPAN SMALLER CAPITALIZATION FUND INC

efc15-498_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)

Worldwide Plaza

309 West 49th Street

New York, New York 10019

(Address of principal executive offices)

Yutaka Itabashi

Worldwide Plaza

309 West 49th Street

New York, New York 10019

(Name and address of agent for service)

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

Date of fiscal year end: February 28, 2016

Date of reporting period: March 1, 2015 - May 31, 2015

Item 1. Schedule of Investments

JAPAN SMALLER CAPITALIZATION FUND, INC.

SCHEDULE OF INVESTMENTS

May 31, 2015

										% of
					Market		Unrealized			Net
	Shares		Cost		Value		Gain or Loss			Assets
JAPANESE EQUITY SECURITIES

Banks
Akita Bank, Ltd.*		1,465,000	$	3,981,598	$	4,547,305	$	565,707			1.4
General banking services
The Kagoshima Bank, Ltd.		816,000		5,520,073		5,743,282		223,209			1.7
General banking services
The Yamanashi Chuo Bank, Ltd.		1,417,000		6,222,241		6,511,791		289,550			2.0
General banking services
Total Banks				15,723,912		16,802,378		1,078,466			5.1

Chemicals
Fujikura Kasei Co., Ltd.*		701,700		3,254,651		3,332,134		77,483			1.0
Specialty coating materials and fine chemicals
Sakai Chemical Industry Co., Ltd.*		2,255,000		6,953,182		7,453,944		500,762			2.2
Titanium oxide, polyvinyl chloride stabilizers, and pharmaceuticals
Tenma Corporation		210,500		2,708,709		3,575,793		867,084			1.1
Plastic molding company
Total Chemicals				12,916,542		14,361,871		1,445,329			4.3

Construction
Toenec Corporation		1,785,000		9,895,381		9,483,734		(411,647	)		2.8
Constructs comprehensive building facilities
Total Construction				9,895,381		9,483,734		(411,647	)		2.8

Electric Appliances
Espec Corp		316,300		2,417,346		3,575,222		1,157,876			1.1
Meteorological testing devices
Kitagawa Industries Co., Ltd.		342,000		3,596,953		3,915,346		318,393			1.2
Industrial fasteners and electromagnetic wave resistant parts
Nichicon Corporation		513,800		4,044,932		4,357,783		312,851			1.3
Manufacture and sale of capacitors and transformers
Total Electric Appliances				10,059,231		11,848,351		1,789,120			3.6

Financing Business
Hitachi Capital Corporation		159,400		3,411,544		3,836,087		424,543			1.2
Financial services
Ricoh Leasing Company, Ltd.		140,500		3,707,406		4,140,182		432,776			1.2
Office automation equipment leasing
Total Financing Business				7,118,950		7,976,269		857,319			2.4

Food
Fuji Oil Co., Ltd.		305,200		5,159,268		4,854,756		(304,512	)		1.5
Palm oil and coconut oil
Total Food				5,159,268		4,854,756		(304,512	)		1.5

Glass and Ceramics Products
Nichiha Corporation		315,300		3,212,280		4,268,059		1,055,779			1.3
Ceramic exterior walls and other construction materials
Total Glass and Ceramics Products				3,212,280		4,268,059		1,055,779			1.3

Information and Communication
Okinawa Cellular Telephone Company		139,700		3,574,107		3,919,507		345,400			1.2
Cellular and car phone services
Otsuka Corporation		87,500		2,884,720		4,260,894		1,376,174			1.3
Computer information system developer
Total Information and Communication				6,458,827		8,180,401		1,721,574			2.5

										% of
					Market		Unrealized			Net
	Shares		Cost		Value		Gain or Loss			Assets
Iron and Steel
Chubu Steel Plate Co., Ltd.		795,400	$	3,330,889	$	3,360,258	$	29,369			1.0
Manufactures electric furnace steel plates
Mory Industries Inc.		1,085,000		3,979,554		3,516,507		(463,047	)		1.1
Stainless pipes
Nichia Steel Works, Ltd.*		1,686,500		5,353,393		4,201,463		(1,151,930	)		1.3
Produces and sells steel products
Osaka Steel Co., Ltd.		316,800		5,743,215		5,928,107		184,892			1.8
Electric furnace steelmaker
Total Iron and Steel				18,407,051		17,006,335		(1,400,716	)		5.2

Machinery
Hisaka Works, Ltd.		553,200		5,233,914		4,964,015		(269,899	)		1.5
Heat exchangers and evaporators
Oiles Corporation		186,980		3,469,711		3,311,929		(157,782	)		1.0
Manufactures oilless bearings
Sato Corporation		127,200		2,182,432		3,297,037		1,114,605			1.0
Automation recognition systems
Sintokogio, Ltd.		598,800		4,540,071		5,691,822		1,151,751			1.7
Engineering equipment
Total Machinery				15,426,128		17,264,803		1,838,675			5.2

Metal Products
Neturen Co., Ltd.		524,300		3,519,314		3,817,011		297,697			1.1
Induction hardening equipment
NHK Spring Co., Ltd.		343,600		3,299,287		4,047,242		747,955			1.2
Automobile-related products
Piolax, Inc.		89,500		2,818,833		4,170,678		1,351,845			1.2
Production and sale of automobile parts
Rinnai Corporation		53,000		3,472,217		4,089,249		617,032			1.2
Manufactures and sells gas appliances
Total Metal Products				13,109,651		16,124,180		3,014,529			4.7

Other Products
Fuji Seal International, Inc.		117,100		3,460,624		3,299,589		(161,035	)		1.0
Packaging-related materials and machinery
Nishikawa Rubber Company Ltd.		279,900		4,635,260		4,438,774		(196,486	)		1.3
Rubber products
Total Other Products				8,095,884		7,738,363		(357,521	)		2.3

Real Estate
Keihanshin Building Co., Ltd.		851,200		4,767,206		4,906,744		139,538			1.5
Real estate leasing and building management
Total Real Estate				4,767,206		4,906,744		139,538			1.5

Retail Trade
Arc Land Sakamoto Co., Ltd.		169,600		2,903,872		3,984,475		1,080,603			1.2
Operates home centers
Create S D Co., Ltd.		145,600		5,023,904		6,057,129		1,033,225			1.8
Drug store chain
Shimamura Co., Ltd.		33,000		3,767,092		3,562,462		(204,630	)		1.1
Clothing chain
United Arrows Ltd.		117,000		3,970,019		3,815,576		(154,443	)		1.1
Operates fashion stores
Total Retail Trade				15,664,887		17,419,642		1,754,755			5.2

Textiles and Apparel
Hogy Medical Co., Ltd.		77,000		3,684,008		3,762,002		77,994			1.1
Medical supply products
Total Textiles and Apparel				3,684,008		3,762,002		77,994			1.1

										% of
					Market		Unrealized			Net
	Shares		Cost		Value		Gain or Loss			Assets
Transportation and Warehousing
Japan Transcity Corporation		1,574,000	$	5,370,779	$	5,393,236	$	22,457			1.6
Warehousing and transportation services
Meiko Trans Co., Ltd.		419,000		4,321,368		3,415,238		(906,130	)		1.0
Operates port-harbor transport facilities
Trancom Co., Ltd.		84,100		2,629,530		3,939,380		1,309,850			1.2
Logistics services
Total Transportation and Warehousing				12,321,677		12,747,854		426,177			3.8

Transportation Equipment
Nissin Kogyo Co., Ltd.		227,500		4,021,936		3,862,739		(159,197	)		1.2
Brake systems
Total Transportation Equipment				4,021,936		3,862,739		(159,197	)		1.2

Utilities
The Okinawa Electric Power Company, Incorporated*		251,250		5,792,629		6,502,298		709,669			2.0
Thermal power
Total Utilities				5,792,629		6,502,298		709,669			2.0

Wholesale Trade
Matsuda Sangyo Co., Ltd.		387,100		4,800,191		4,818,658		18,467			1.4
Wholesales precious metals, electronic materials, and food
Siix Corporation		249,100		3,226,101		7,300,185		4,074,084			2.2
Video, audio, and office equipment
Ryoden Trading Company, Ltd.		929,000		6,355,013		6,920,595		565,582			2.1
Electronic components
Sugimoto & Co., Ltd.		277,700		2,495,938		3,358,326		862,388			1.0
Tools and measuring instruments
Total Wholesale Trade				16,877,243		22,397,764		5,520,521			6.7

TOTAL INVESTMENTS IN JAPANESE EQUITY SECURITIES			$	188,712,691	$	207,508,543	$	18,795,852			62.4

INVESTMENT IN FOREIGN CURRENCY
Japanese Yen
Non- interest bearing account				3,982,822		3,856,341		(126,481	)		1.2
TOTAL INVESTMENT IN FOREIGN CURRENCY			$	3,982,822	$	3,856,341	$	(126,481	)		1.2

TOTAL INVESTMENTS			$	192,695,513	$	211,364,884	$	18,669,371			63.6

OTHER ASSETS LESS LIABILITIES, NET					$	121,575,888					36.4

NET ASSETS					$	332,940,772					100.0


Aggregate gross unrealized appreciation for all securities in which there is an excess of value over tax cost was $23,336,590
Aggregate gross unrealized depreciation for all securities in which there is an excess of value over tax cost was $(4,540,738)

*Non-Income Producing Security

Portfolio securities and foreign currency holdings were translated at the
following exchange rate as of May 31, 2015
Japanese Yen:	124.035 = $1.00

The following table summarizes the valuation of the Fund's investments by fair value hierarchy levels as of May 31, 2015.

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

207,508,543.00

Foreign Currency

3,856,341.00

Level 2

–

Level 3

–

Total

211,364,884.00

During the quarter ended May 31, 2015, there were no transfers between Level 1 and Level 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/ Yutaka Itabashi
	Yutaka Itabashi, President
	(Principal Executive Officer)

Date: July 1, 2015

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/ Yutaka Itabashi
	Yutaka Itabashi, President
	(Principal Executive Officer)

Date: July 1, 2015

By:	/s/ Amy J. Marose
	Amy J. Marose, Treasurer
	(Principal Financial Officer)

Date: July 1, 2015