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: 811-8002
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JAPAN SMALLER CAPITALIZATION FUND, INC.
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(Exact name of registrant as specified in charter)
Two World Financial Center
Building B, 22nd Floor
New York, New York 10281-1712
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(Address of principal executive offices)
Hiroshi Terasaki
Japan Smaller Capitalization Fund, Inc.
Two World Financial Center
Building B, 22nd Floor
New York, New York 10281-1712
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(Name and address of agent for service)
Registrant's telephone number, including area code: (800) 833-0018
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Date of fiscal year end: May 31, 2006
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Date of reporting period: March 1, 2006 - May 31, 2006
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Item 1. Schedule of Investments
JAPAN SMALLER CAPITALIZATION FUND, INC.
SCHEDULE OF INVESTMENTS
IN SECURITIES OF UNAFFILIATED ISSUERS
May 31, 2006
% of
Market Unrealized Net
Shares Cost Value Gain/Loss Assets
------ ---- ------ ---------- ------
COMMON STOCKS
Automotive Equipment and Parts
Musashi Seimitsu Industry Co., Ltd .................... 122,900 $3,419,183 $3,019,575 ($399,608) 1.0
Ball joints, camshafts and gears
Nittan Valve Co, Ltd .................................. 371,400 3,115,238 3,478,104 362,866 1.0
---------- ---------- -------- ---
Engine valves
Total Automotive Equipment and Parts ....................................... 6,534,421 6,497,679 (36,742) 2.0
========== ========== ======== ===
Banks and Finance
The Bank of Fukuoka, Ltd. ............................. 408,000 2,569,215 2,967,339 398,124 1.0
Deposits, loans and exchange transactions
Iwai Securities Co., Ltd. ............................. 195,200 5,317,278 4,265,955 (1,051,323) 1.3
Financial services
Jaccs Co., Ltd. ....................................... 626,000 6,449,160 6,586,834 137,674 2.1
Consumer credit services
Matsui Securities Co., Ltd. ........................... 344,100 4,746,259 3,767,686 (978,573) 1.2
Online brokerage services
Sapporo Hokuyo Holdings, Inc. ......................... 367 3,632,434 4,345,128 712,694 1.4
---------- ---------- -------- ---
General banking services
Total Banks and Finance .................................................... 22,714,346 21,932,942 (781,404) 7.0
=========== =========== ========= ===
Chemicals and Pharmaceuticals
Shizuokagas Co., Ltd. ................................. 721,000 3,870,294 6,180,825 2,310,531 2.0
---------- ---------- ---------- ---
Natural gas supplier
Total Chemicals and Pharmaceuticals ........................................ 3,870,294 6,180,825 2,310,531 2.0
========== ========== ========== ===
Electric
Mirai Industry Co., Ltd. .............................. 274,700 2,672,664 3,386,830 714,166 1.1
---------- ---------- -------- ---
Plastic molded electric materials
Total Electric ............................................................. 2,672,664 3,386,830 714,166 1.1
========== ========== ======== ===
Electronics
Dainippon Screen Mfg Co., Ltd. ........................ 406,000 2,284,104 3,953,924 1,669,820 1.3
Electronic components
Meiko Electronics Co., Ltd. ........................... 140,700 5,448,225 8,880,251 3,432,026 2.8
Printed circuit boards
Sanken Electric Co.,Ltd. .............................. 303,000 4,833,173 4,393,884 (439,289) 1.4
---------- ---------- --------- ---
Semiconductors
Total Electronics .......................................................... 12,565,502 17,228,059 4,662,557 5.5
=========== =========== ========== ===
Food Manufacturing
Ozeki Co., Ltd. ....................................... 123,200 3,722,662 3,816,584 93,922 1.2
---------- ---------- ------- ---
Supermarket chain
Total Food Manufacturing ................................................... 3,722,662 3,816,584 93,922 1.2
========== ========== ======= ===
Information and Software
Jastec Co., Ltd. ...................................... 281,000 2,945,922 3,079,281 133,359 1.0
Applications software
Sorun Corporation ..................................... 449,200 3,317,326 3,934,774 617,448 1.2
---------- ---------- -------- ---
Computer software development
Total Information and Software ............................................. 6,263,248 7,014,055 750,807 2.2
========== ========== ======== ===
Iron and Steel
Godo Steel Ltd ........................................ 539,000 3,440,315 3,224,356 (215,959) 1.0
Construction steel products
Neturen Co., Ltd. ..................................... 275,900 2,359,367 3,043,042 683,675 1.0
---------- ---------- -------- ---
Metal processors
Total Iron and Steel ....................................................... 5,799,682 6,267,398 467,716 2.0
========== ========== ======== ===
JAPAN SMALLER CAPITALIZATION FUND, INC.
SCHEDULE OF INVESTMENTS
IN SECURITIES OF UNAFFILIATED ISSUERS
May 31, 2006
% of
Market Unrealized Net
Shares Cost Value Gain/Loss Assets
------ ---- ------ ---------- ------
Machinery and Machine Tools
Hitachi Construction Machinery Co., Ltd + ............. 395,800 $7,128,915 $9,513,153 $2,384,238 3.0
Construction machinery
Makino Milling Machine Co., Ltd. ...................... 966,000 8,838,695 11,712,218 2,873,523 3.7
Industrial machinery
Sintokogio, Ltd. ...................................... 414,000 4,049,346 5,845,053 1,795,707 1.9
Engineering equipment
Yamatake Corp. ........................................ 223,200 5,317,500 5,662,705 345,205 1.8
---------- ---------- -------- ---
Industrial Automation equipment
Total Machinery and Machine Tools .......................................... 25,334,456 32,733,129 7,398,673 10.4
=========== =========== ========== ====
Miscellaneous Manufacturing
Dowa Mining Co., Ltd. ................................. 741,000 5,893,805 6,622,727 728,922 2.1
Produces various metal-related products
Hamamatsu Photonics K.K. .............................. 220,000 5,292,182 7,148,262 1,856,080 2.3
Electron tubes, semiconductors, and image processors
Kimmon Manufacturing Co. Ltd. ......................... 1,186,000 4,081,110 3,146,197 (934,913) 1.0
Produces various electronic measurement equipments
Mani, Inc. ............................................ 80,100 1,994,046 6,060,889 4,066,843 1.9
Medical goods and equipment
Nichias Corporation ................................... 720,000 3,880,584 5,210,843 1,330,259 1.7
Building and construction materials
Nichiha Corporation ................................... 215,600 3,382,853 4,452,682 1,069,829 1.4
Ceramic exterior walls and fiber boards
Seiko Corp. ........................................... 426,000 2,725,197 3,978,048 1,252,851 1.3
Medical and commercial equipment
Topcon Corporation .................................... 301,600 3,858,391 6,376,463 2,518,072 2.0
Medical instruments
Toppan Forms Co.,Ltd. ................................. 224,700 3,235,906 3,144,420 (91,486) 1.0
Commercial printing
Ulvac, Inc. ........................................... 77,300 3,012,643 3,302,978 290,335 1.1
---------- ---------- -------- ---
Vaccuum devices
Total Miscellaneous Manufacturing .......................................... 37,356,717 49,443,509 12,086,792 15.8
=========== =========== =========== ====
Real Estate and Warehouse
Daibiru Corporation ................................... 423,800 3,544,150 4,715,805 1,171,655 1.5
Leases office buildings, apartments and hotels
Leopalace21 Corporation ............................... 100,900 3,483,137 3,017,973 (465,164) 1.0
Property manager
Suruga Corporation .................................... 45,400 2,839,369 2,990,697 151,328 1.0
---------- ---------- -------- ---
Multi-unit commercial and residential building
Total Real Estate and Warehouse ............................................ 9,866,656 10,724,475 857,819 3.5
========== =========== ======== ===
Restaurants
Doutor Coffee Co., Ltd. ............................... 260,000 5,082,643 4,453,109 (629,534) 1.4
---------- ---------- --------- ---
Coffee shop chains
Total Restaurants .......................................................... 5,082,643 4,453,109 (629,534) 1.4
========== ========== ========= ===
Retail
Askul Corp. ........................................... 156,000 4,574,005 4,034,183 (539,822) 1.3
Office equipment products
Culture Convenience Club Co., Ltd. .................... 343,800 3,620,923 4,177,567 556,644 1.3
Speciality bookstore
Village Vanguard Co., Ltd. ............................ 522 2,745,331 4,019,495 1,274,164 1.3
---------- ---------- ---------- ---
Books, cd's, videos and office supplies
Total Retail ............................................................... 10,940,259 12,231,245 1,290,986 3.9
=========== =========== ========== ===
JAPAN SMALLER CAPITALIZATION FUND, INC.
SCHEDULE OF INVESTMENTS
IN SECURITIES OF UNAFFILIATED ISSUERS
May 31, 2006
% of
Market Unrealized Net
Shares Cost Value Gain/Loss Assets
------ ---- ------ ---------- ------
Services
DTS Corporation ....................................... 112,900 $3,871,678 $3,859,314 ($12,364) 1.2
System and network engineering
Meiko Network Japan Co., Ltd. ......................... 589,100 3,280,998 3,151,726 (129,272) 1.0
---------- ---------- --------- ---
Private schools and academic tutoring
Total Services ............................................................. 7,152,676 7,011,040 (141,636) 2.2
========== ========== ========= ===
Telecommunications
Daimei Telecom Engineering Corp. ...................... 383,000 3,916,318 4,739,129 822,811 1.5
---------- ---------- -------- ---
Telecommunication wire installations
Total Telecommunications ................................................... 3,916,318 4,739,129 822,811 1.5
========== ========== ======== ===
Textiles and Apparel
Workman Co., Ltd. ..................................... 80,700 1,598,227 3,067,512 1,469,285 1.0
---------- ---------- ---------- ---
Uniforms
Total Textiles and Apparel 1,598,227 3,067,512 1,469,285 1.0
........................................................................... ========== ========== ========== ===
Wholesale
Hitachi High-Technologies Corporation ................. 212,500 4,288,552 6,091,156 1,802,604 1.9
Computers and electrical devices
Kondotec, Inc. ........................................ 251,500 1,986,800 3,235,123 1,248,323 1.0
Construction materials
Yuasa Trading Co., Ltd. ............................... 3,503,000 7,181,256 7,359,309 178,053 2.3
---------- ---------- -------- ---
Industrial machinery
Total Wholesale ............................................................ 13,456,608 16,685,588 3,228,980 5.2
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TOTAL INVESTMENTS IN COMMON STOCKS ......................................... $178,847,379 $213,413,108 $34,565,729 67.9
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JAPAN SMALLER CAPITALIZATION FUND, INC.
SCHEDULE OF INVESTMENTS
IN SECURITIES OF UNAFFILIATED ISSUERS
May 31, 2006
% of
Principal Market Unrealized Net
Amount Cost Value Gain or Loss Assets
------ ---- ----- ------------ ------
INVESTMENTS IN FOREIGN CURRENCY
Hong Kong Shanghai Bank- Tokyo
Non- interest bearing account ................................JPY 365,192,983 $3,250,928 $3,250,928 $0 1.0
----------- ----------- --- ---
TOTAL INVESTMENTS IN FOREIGN CURRENCY ................................... 3,250,928 3,250,928 0 1.0
---------- ---------- -- ---
TOTAL INVESTMENTS ....................................................... $182,098,307 $216,664,036 $34,565,729 68.9
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OTHER ASSETS LESS LIABILITIES, NET ......................................................... $97,240,610 31.1
------------ ----
NET ASSETS ................................................................................. $313,904,646 100.0
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+ Non-Income Producing Security
* Aggregate gross unrealized appreciation for all securities in which there is
an exceed of value over tax cost was $40,453,036.
Aggregate gross unrealized depreciation for all securities in which there is
an excess of tax cost over value was $5,887,307.
Portfolio securities and foreign currency holdings were translated
at the following exchange rate as of May 31, 2006.
Japanese Yen 112.34 =$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/ Hiroshi Terasaki
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Hiroshi Terasaki, President
(Principal Executive Officer)
Date: July 26, 2006
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/ Rita Chopra-Brathwaite
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Rita Chopra-Brathwaite, Treasurer
(Principal Financial Officer)
Date: July 26, 2006