Unassociated Document
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, 18th 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, 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, 2009          

 
Date of reporting period:          September 1, 2008 - November 30, 2008

Item 1.  Schedule of Investments
 
 
JAPAN SMALLER CAPITALIZATION FUND, INC.
SCHEDULE OF INVESTMENTS
IN SECURITIES OF UNAFFILIATED ISSUERS
November 30, 2008
 
                           
% of
  
               
Market
    
Unrealized
    
Net
  
   
Shares
    
Cost
    
Value
    
Gain/Loss
    
Assets
  
COMMON STOCKS
                              
Banks and Finance
                              
The Aichi Bank, Ltd.
     22,400     $ 2,188,303     $ 1,741,127     $ (447,176 )     1.1  
 General banking services
                                        
The Hachijuni Bank, Ltd.
     291,000       2,102,821       1,487,618       (615,203 )     1.0  
 General banking services
                                        
The Mie Bank, Ltd.
     399,000       1,985,668       1,621,747       (363,921 )     1.1  
 General banking services
                                        
The Musashino Bank, Ltd.
     63,000       2,504,563       2,032,684       (471,879 )     1.3  
 Regional bank
                                        
Seven Bank, Ltd.
     693       1,370,222       2,453,740       1,083,518       1.6  
 General banking services
                                        
The Tokyo Tomin Bank, Limited
     131,800       2,836,693       1,478,712       (1,357,981 )     1.0  
 General banking services
                                        
Total Banks and Finance
       12,988,270       10,815,628       (2,172,642 )     7.1  
                                         
Chemicals and Pharmaceuticals
                                        
Adeka Corporation
     327,900       3,187,915       2,012,879       (1,175,036 )     1.3  
 Resin products
                                        
Air Water Inc.
     360,000       3,404,778       3,001,886       (402,892 )     2.0  
 Industrial gases
                                        
Kobayashi Pharmaceutical Co., Ltd.
     66,500       2,066,508       2,438,194       371,686       1.6  
 Pharmaceuticals and medical equipment
                                        
Kuraray Co., Ltd.
     471,000       5,542,606       3,818,919       (1,723,687 )     2.5  
 Synthetic and chemical fibers
                                        
Rohto Pharmaceutical Co., Ltd.
     386,000       4,554,704       5,038,299       483,595       3.3  
 Pharmaceuticals manufacturer
                                        
Towa Pharmaceutical Co., Ltd.
     46,000       1,734,726       1,744,396       9,670       1.1  
 Generic medicine
                                        
Total Chemicals and Pharmaceuticals
       20,491,237       18,054,573       (2,436,664 )     11.8  
                                         
Electronics
                                        
Hamamatsu Photonics K.K.
     98,100       2,846,429       1,840,531       (1,005,898 )     1.2  
 Semiconductors
                                        
Total Electronics
       2,846,429       1,840,531       (1,005,898 )     1.2  
                                         
Food Manufacturing
                                        
Doutor Nichires Holdings Co., Ltd.
     102,700       1,696,525       1,846,147       149,622       1.2  
 Coffee and restaurant chain
                                        
Total Food Manufacturing
       1,696,525       1,846,147       149,622       1.2  
                                         
Information and Software
                                        
Fujitsu Business Systems Ltd.
     118,600       1,788,152       1,615,127       (173,025 )     1.1  
 Business systems network
                                        
Itochu Techno-Solutions Corporation
     82,400       2,848,450       2,110,497       (737,953 )     1.4  
 Computer network systems
                                        
Total Information and Software
       4,636,602       3,725,624       (910,978 )     2.4  
                                         
Iron and Steel
                                        
Hanwa Co., Ltd.
     653,000       2,938,953       1,853,792       (1,085,161 )     1.2  
 Steel imports/exports
                                        
Neturen Co., Ltd.
     255,500       2,453,892       1,544,348       (909,544 )     1.0  
 Induction hardening equipment
                                        

 
 
 
 
 
 
JAPAN SMALLER CAPITALIZATION FUND, INC.
SCHEDULE OF INVESTMENTS
IN SECURITIES OF UNAFFILIATED ISSUERS
November 30, 2008
 
                           
% of
  
               
Market
    
Unrealized
    
Net
  
   
Shares
    
Cost
    
Value
    
Gain/Loss
    
Assets
  
                               
Osaka Steel Co., Ltd.
     166,800     $ 2,813,563     $ 2,019,912     $ (793,651 )     1.3  
 Electric furnace steelmaker
                                        
Yamato Kogyo Co., Ltd.
     87,200       3,889,129       1,945,695       (1,943,434 )     1.3  
 Railroad related products
                                        
Total Iron and Steel
             12,095,537       7,363,747       (4,731,790 )     4.8  
                                         
Miscellaneous Manufacturing
                                        
Mani, Inc.
     29,100       1,279,364       1,832,087       552,723       1.2  
 Medical goods and equipment
                                        
Nippon Paper Group, Inc.
     613       1,703,641       2,035,627       331,986       1.3  
 Paper and pulp
                                        
Total Miscellaneous Manufacturing
       2,983,005       3,867,714       884,709       2.5  
                                         
Real Estate and Warehouse
                                        
Daibiru Corporation
     319,100       3,192,891       2,436,873       (756,018 )     1.6  
 Leases office buildings, apartments and hotels
                                        
Sekisui Chemical Co., Ltd.
     431,000       2,861,895       2,388,424       (473,471 )     1.5  
 Prefabricated residential housing
                                        
Total Real Estate and Warehouse
             6,054,786       4,825,297       (1,229,489 )     3.1  
                                         
Restaurants
                                        
Hiday Hidaka Corp
     247,400       2,187,821       2,122,571       (65,250 )     1.4  
 Chinese restaurant chain
                                        
Total Restaurants
             2,187,821       2,122,571       (65,250 )     1.4  
                                         
Retail
                                        
Cawachi Limited
     134,300       3,495,514       2,101,867       (1,393,647 )     1.4  
 Drug store chain
                                        
Felissimo Corporation
     99,800       2,444,393       2,101,383       (343,010 )     1.4  
 Catalog shopping
                                        
Shimachu Co., Ltd.
     90,600       2,137,962       2,178,158       40,196       1.4  
 Furniture store chain
                                        
Sugi Holdings Co., Ltd.
     81,800       1,941,608       1,778,075       (163,533 )     1.1  
 Drug store chain
                                        
Total Retail
       10,019,477       8,159,483       (1,859,994 )     5.3  
                                         
Services
                                        
EPS Co., Ltd.
     570       2,580,067       2,221,245       (358,822 )     1.5  
 Clinical testing
                                        
Meiko Network Japan Co., Ltd.
     497,900       2,847,349       2,571,387       (275,962 )     1.7  
 Private schools and academic tutoring
                                        
Moshi Moshi Hotline, Inc.
     215,600       5,290,554       4,347,685       (942,869 )     2.8  
 Marketing
                                        
NEC Networks & System Integration Corporation
     159,100       1,977,172       1,810,000       (167,172 )     1.2  
 Communication systems
                                        
OBIC Co., Ltd.
     24,910       4,302,405       3,890,720       (411,685 )     2.5  
 Computer system integration
                                        
Taihei Dengyo Kaisha, Ltd.
     182,000       1,502,626       1,641,546       138,920       1.1  
 Chemical plant engineering
                                        
Toppan Forms Co., Ltd.
     158,300       1,832,844       1,913,662       80,818       1.2  
 Business form printing
                                        
Total Services
       20,333,017       18,396,245       (1,936,772 )     12.0  
 
 
 
 
 
 
JAPAN SMALLER CAPITALIZATION FUND, INC.
SCHEDULE OF INVESTMENTS
IN SECURITIES OF UNAFFILIATED ISSUERS
November 30, 2008
 
                           
% of
  
               
Market
    
Unrealized
    
Net
  
   
Shares
    
Cost
    
Value
    
Gain/Loss
    
Assets
  
Telecommunications
                              
Daimei Telecom Engineering Corp
     187,000     $ 1,896,410     $ 1,584,779     $ (311,631 )     1.0  
 Wire installations and related works
                                        
Jupiter Telecommunications Co., Ltd.
     8,363       6,310,207       6,447,903       137,696       4.2  
 Cable television broadcasting
                                        
Total Telecommunications
       8,206,617       8,032,682       (173,935 )     5.2  
                                         
Textiles and Apparel
                                        
Workman Co., Ltd.
     179,600       1,952,032       2,031,930       79,898       1.3  
 Uniforms
                                        
Total Textiles and Apparel
       1,952,032       2,031,930       79,898       1.3  
                                         
Transportation
                                        
Senko Co., Ltd.
     437,000       1,530,192       1,840,289       310,097       1.2  
 Trucking and warehousing
                                        
Total Transportation
             1,530,192       1,840,289       310,097       1.2  
                                         
Wholesale
                                        
Hitachi High-Technologies Corporation
     142,200       2,885,732       2,667,926       (217,806 )     1.7  
 Electronic components
                                        
Total Wholesale
       2,885,732       2,667,926       (217,806 )     1.7  
                                         
TOTAL INVESTMENTS IN COMMON STOCKS
       110,907,279       95,590,387       (15,316,892 )     62.2  
                                         
TOTAL INVESTMENTS
     $ 110,907,279     $ 95,590,387     $ (15,316,892 )     62.2  
                                         
OTHER ASSETS LESS LIABILITIES, NET.
               58,079,419               37.8  
                                         
NET ASSETS
             $ 153,669,806               100.0  

 
               
* Aggregate gross unrealized appreciation for all securities in which there is an exceed of value over tax cost was $ 3,770,425 .
  
  Aggregate gross unrealized depreciation for all securities in which there is an excess of tax cost over value was $ 19,087,317.
  
               
               
Portfolio securities and foreign currency holdings were translated at the
          
following exchange rate as of November 30, 2008.
            
               
Japanese Yen
  
95.460
=$1.00
        
 
 
 
Financial Accounting Standards Board Statement of Financial Accounting Standards No. 157, “Fair Value Measurements” (“FAS 157”) is effective for financial statements issued for fiscal years beginning after November 15, 2007.  FAS 157 establishes a framework for measuring fair value and expands disclosure about fair value measurements.

FAS 157 provides that fair value should be based on a hierarchy that distinguishes among the following levels of input used in determining the value of an asset or liability:
 
Level 1 - quoted (unadjusted) prices in active markets for identical securities;
Level 2 - prices determined using observable inputs such as quoted prices for similar securities or interest rates; and
Level 3 - prices determined using unobservable inputs (e.g., reflecting the reporting entity’s own assumptions about the criteria that market participants would use in pricing such security).
 
The following table summarizes the valuation of the Registrant’s investments by the above fair value hierarchy levels as of November 30, 2008.


Level
Investments in Securities
Level 1
  $151,424,276
Level 2
  
Level 3
  
Total
  $151,424,276


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.

 
Exhibit (a)
 
Japan Smaller Capitalization Fund, Inc.
 
Two World Financial Center, Building B
New York, New York 10281
 
 
Telephone
  
 
(800) 833-0018
  
CERTIFICATIONS
 
I, Shigeru Shinohara, certify that:
 
1.  
I have reviewed this report on Form N-Q of Japan Smaller Capitalization Fund, Inc.
 
2.  
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
 
3.  
Based on my knowledge, the schedules of investments included in this report fairly present in all material respects the investments of the registrant as of the end of the fiscal quarter for which the report is filed;
 
4.  
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have:
 
a.  
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
 
b.  
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
 
c.  
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and
 
 
 
1
 
 
d.  
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting;
 
5.  
The registrant’s other certifying officer(s) and I have disclosed to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
 
a.  
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize, and report financial information; and
 
b.  
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
 
 
Date: January 22, 2009
                 /s/ Shigeru Shinohara             
 
Shigeru Shinohara
President (Principal Executive Officer)
 
 
 
 
2
 

 
Japan Smaller Capitalization Fund, Inc.
 
Two World Financial Center, Building B
New York, New York 10281
 
 
Telephone
  
 
(800) 833-0018
  
 
CERTIFICATIONS
 
I, Rita Chopra-Brathwaite, certify that:
 
1.  
I have reviewed this report on Form N-Q of Japan Smaller Capitalization Fund, Inc.;
 
2.  
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
 
3.  
Based on my knowledge, the schedules of investments included in this report fairly present in all material respects the investments of the registrant as of the end of the fiscal quarter for which the report is filed;
 
4.  
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have:
 
a.  
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
 
b.  
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purpose in accordance with generally accepted accounting principles;
 
c.  
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and
 
d.  
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter
 
 
 
3
 
 
 
 
 
that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting.
 
 
5.  
The registrant’s other certifying officer(s) and I have disclosed to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
 
a.  
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize, and report financial information; and
 
b.  
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
 
 
 
Date: January 22, 2009
                    /s/ Rita Chopra-Brathwaite                
 
Rita Chopra-Brathwaite
Treasurer (Principal Financial Officer)
 
 
 
 
4
 
 
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:   January 22, 2009


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/ Rita Chopra-Brathwaite         
        Rita Chopra-Brathwaite, Treasurer
        (Principal Financial Officer)

Date:   January 22, 2009