N-Q
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)

Hiroshi Terasaki
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 28, 2007 

Date of reporting period:  June 1, 2006 - November 30, 2006

Item 1. Schedule of Investments
JAPAN SMALLER CAPITALIZATION FUND, INC.
SCHEDULE OF INVESTMENTS
IN SECURITIES OF UNAFFILIATED ISSUERS
November 30, 2006
 
                   
% of
  
           
Market
  
Unrealized
  
Net
  
   
Shares
  
Cost
  
Value
  
Gain/Loss
  
Assets
  
COMMON STOCKS
                      
Automotive Equipment and Parts
                      
Bosch Corp
    
1,313,000
 
$
6,579,842
  
$
7,284,658
  
$
704,816
    
2.8
 
Automotive parts
                                
Futaba Industrial Co, Ltd
    
153,200
   
3,384,991
   
3,580,214
   
195,223
   
1.4
 
Exhaust system parts
                                
Nittan Valve Co, Ltd
    
362,600
   
3,061,638
   
3,081,951
   
20,313
   
1.1 
  
Engine valves
                                
Total Automotive Equipment and Parts
          
13,026,471
   
13,946,823
   
920,352
   
5.3
 
                                 
Banks and Finance
                                
Asset Managers Co, Ltd
    
1,248
   
3,328,967
   
2,786,896
   
(542,071
)
  
1.1
 
Real estate funds
                                
The Bank of Fukuoka, Ltd
   
378,000
   
2,451,826
   
2,931,475
   
479,649
   
1.1
 
Deposits, loans and exchange transactions
                                
Kansai Urban Banking Corp
    
920,000
   
3,832,036
   
4,045,181
   
213,145
   
1.6
 
General banking services
                                
Sapporo Hokuyo Holdings, Inc
    
276
   
2,700,398
   
2,747,219
   
46,821
   
1.0 
  
General banking services
                                
Total Banks and Finance
          
12,313,227
   
12,510,771
   
197,544
   
4.8
 
                                 
Chemicals and Pharmaceuticals
                                
Hisamitsu Pharmaceutical Co, Inc
    
196,100
   
5,458,331
   
5,940,624
   
482,293
   
2.3
 
Salonpas brand pharmaceuticals
                                
Taiyo Ink MFG Co, Ltd
    
50,300
   
2,605,237
   
2,725,391
   
120,154
   
1.0
 
Resist inks for printed circuit boards
                                
Total Chemicals and Pharmaceuticals
          
8,063,568
   
8,666,015
   
602,447
   
3.3
 
                                 
Electric
                                
Mirai Industry Co, Ltd
    
276,100
   
2,683,732
   
2,819,907
   
136,175
   
1.1
 
Plastic molded electric materials
                               
Total Electric
          
2,683,732
   
2,819,907
   
136,175
   
1.1
 
                                 
Electronics
                                
Iriso Electronics Co, Ltd
    
72,600
   
2,024,646
   
2,488,389
   
463,743
   
1.0
 
Electronic connectors
                                
Meiko Electronics Co, Ltd
    
121,200
   
5,059,637
   
5,979,487
   
919,850
   
2.3
 
Printed circuit boards
                                
Toshiba Ceramics Co, Ltd
    
795,000
   
3,787,776
   
4,073,571
   
285,795
   
1.5 
  
Semiconductors
                                
Total Electronics
          
10,872,059
   
12,541,447
   
1,669,388
   
4.8
 
                                 
Food Manufacturing
                                
Ozeki Co, Ltd
    
126,100
   
3,810,038
   
3,645,423
   
(164,615
)
  
1.4
 
Supermarket chain
                                
Total Food Manufacturing
          
3,810,038
   
3,645,423
   
(164,615
)
  
1.4
 
                                 
Information and Software
                                
Nihon Unisys, Ltd
    
318,600
   
5,088,596
   
5,639,304
   
550,708
   
2.2
 
Computer software development
                                
Sorun Corporation
    
554,200
   
4,267,206
   
5,501,947
   
1,234,741
   
2.1
 
Computer software development
                                
SRA Holdings, Inc+
    
289,400
   
3,689,446
   
4,373,501
   
684,055
   
1.6
  
Business application software
                                
Total Information and Software
          
13,045,248
   
15,514,752
   
2,469,504
   
5.9
 
                                 
Machinery and Machine Tools
                                
Disco Corporation
    
65,400
   
4,102,750
   
4,460,570
   
357,820
   
1.7
 
Industrial cutting & grinding
                                
Yamatake Corp
    
219,600
   
5,258,736
   
4,694,785
   
(563,951
)
  
1.8
 
Industrial automation equipment
                                
Total Machinery and Machine Tools
          
9,361,486
   
9,155,355
   
(206,131
)
  
3.5
 
                                 
Miscellaneous Manufacturing
                                
Dowa Holdings Co, Ltd
    
376,000
   
3,580,033
   
3,143,775
   
(436,258
)
  
1.1
  
Various metal-related products
                                
Kinki Sharyo Co, Ltd
    
543,000
   
2,441,877
   
2,655,429
   
213,552
   
1.0
 
Passenger trains
                                
Mani, Inc
    
79,100
   
1,980,084
   
6,024,841
   
4,044,757
   
2.3
 
Medical goods and equipment
                                
Nichias Corporation
    
900,000
   
5,351,909
   
6,418,834
   
1,066,925
   
2.5
 
Building and construction materials
                                
Seiko Corp
    
486,000
   
3,373,159
   
3,264,258
   
(108,901
)
  
1.3
 
Medical and commercial equipment
                                
                                 
 
 
 
 
JAPAN SMALLER CAPITALIZATION FUND, INC.
SCHEDULE OF INVESTMENTS
IN SECURITIES OF UNAFFILIATED ISSUERS
November 30, 2006
 
                   
% of
  
           
Market
  
Unrealized
  
Net
  
   
Shares
  
Cost
  
Value
  
Gain/Loss
  
Assets
  
                       
Tokai Rubber Industries
    
305,400
 
$
4,720,482
  
$
5,432,094
  
$
711,612
    
2.1
 
Rubber and plastic products
                                
Toppan Forms Co.,Ltd.
    
324,500
   
4,510,504
   
4,527,580
   
17,076
   
1.7
 
Commercial printing
                                
Total Miscellaneous Manufacturing
          
25,958,048
   
31,466,811
   
5,508,763
   
12.0
 
                                 
Oil and Gas
                                
Shizuokagas Co., Ltd
    
764,000
   
4,410,980
   
5,739,836
   
1,328,856
   
2.2
 
Natural gas supplier
                               
Total Oil and Gas
          
4,410,980
   
5,739,836
   
1,328,856
   
2.2
 
                                 
Real Estate and Warehouse
                                
Daibiru Corporation
    
317,700
   
2,820,998
   
3,525,264
   
704,266
   
1.4
 
Leases office buildings, apartments and hotels
                                
Haseko Corporation+
    
1,123,500
   
4,005,532
   
3,870,282
   
(135,250
)
  
1.5
 
Institutional buildings
                                
Suruga Corporation
    
79,600
   
5,289,977
   
6,062,925
   
772,948
   
2.2
 
Multi-unit commercial and residential building
                                
Total Real Estate and Warehouse
          
12,116,507
   
13,458,471
   
1,341,964
   
5.1
 
                                 
Restaurants
                                
Doutor Coffee Co., Ltd
    
307,700
   
5,874,368
   
5,198,688
   
(675,680
)
  
2.0
 
Coffee shop chains
                                
Total Restaurants
          
5,874,368
   
5,198,688
   
(675,680
)
  
2.0
 
                                 
Retail
                                
Aoyama Trading Co., Ltd
    
102,200
   
3,222,519
   
2,883,732
   
(338,787
)
  
1.1
 
Menswear
                                
Culture Convenience Club Co., Ltd.
    
359,000
   
3,700,666
   
2,892,881
   
(807,785
)
  
1.1
 
Speciality bookstore
                                
Isetan Co., Ltd.
    
193,800
   
3,209,591
   
3,497,408
   
287,817
   
1.3
 
Department stores
                                
Ryohin Keikaku Co., Ltd
    
68,900
   
5,031,254
    
5,343,351
    
312,097
   
2.0
 
Knitwear, food and household items
                                
Shimamura Co., Ltd.
    
52,300
   
5,047,282
   
6,097,555
   
1,050,273
   
2.3
 
Clothing chain
                                
Village Vanguard Co., Ltd.
    
519
   
2,765,461
   
2,919,894
   
154,433
   
1.0
 
Books, cd's, videos and office supplies
                                
Yaoko Co., Ltd..
    
116,100
   
2,691,701
   
2,823,742
   
132,041
   
1.1
 
Supermarkets
                                
Total Retail
          
25,668,474
   
26,458,563
   
790,089
   
10.1
 
                                 
Services
                                
Aeon Delight Co., Ltd.
    
167,800
   
3,770,154
   
3,420,340
   
(349,814
)
  
1.3
 
Building management
                                
Chintai Corporation
    
4,092
   
3,343,820
   
3,478,032
   
134,212
   
1.3
 
Real estate information magazines
                                
DTS Corporation
    
127,400
   
4,399,495
   
4,708,513
   
309,018
   
1.8
 
System and network engineering
                                
Meiko Network Japan Co., Ltd
    
602,200
   
3,349,883
   
3,096,090
   
(253,793
)
  
1.2
 
Private schools and academic tutoring
                                
Resorttrust, Inc.
    
112,600
   
3,149,508
   
3,128,455
   
(21,053
)
  
1.2
 
Timeshare resort hotels
                                
Tempstaff Co., Ltd.
    
3,198
   
4,996,216
   
4,899,347
   
(96,869
)
  
1.9
 
Employment and outsourcing
                                
Total Services
          
23,009,076
   
22,730,777
   
(278,299
)
  
8.7
 
                                 
Telecommunications
                                
Jupiter Telecommunications Co., Ltd+
    
8,511
   
6,487,783
   
6,998,269
   
510,486
   
2.7
 
Cable television broadcasting
                                
Total Telecommunications
          
6,487,783
   
6,998,269
   
510,486
   
2.7
 
                                 
Textiles and Apparel
                                
Workman Co., Ltd.
    
90,900
   
1,968,253
   
4,169,905
   
2,201,652
   
1.6
 
Uniforms
                                
Total Textiles and Apparel
          
1,968,253
   
4,169,905
   
2,201,652
   
1.6
 
                                 
Wholesale
                                
Hitachi High-Technologies Corporation.
    
105,700
   
2,634,383
   
3,092,275
   
457,892
   
1.2
 
Computers and electrical devices
                                
Total Wholesale
          
2,634,383
   
3,092,275
   
457,892
   
1.2
 
                                 
TOTAL INVESTMENTS IN COMMON STOCKS
        
$
181,303,701
  
$
198,114,088
  
$
16,810,387
    
75.7
 
 
 
 
 
JAPAN SMALLER CAPITALIZATION FUND, INC.
SCHEDULE OF INVESTMENTS
IN SECURITIES OF UNAFFILIATED ISSUERS
November 30, 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 109,314,737
  
$
946,161
  
$
946,161
  
$
0
    
0.3
 
TOTAL INVESTMENTS IN FOREIGN CURRENCY
          
946,161
   
946,161
   
0
   
0.3
 
                                 
TOTAL INVESTMENTS
        
$
182,249,862
  
$
199,060,249
  
$
16,810,387
    
76.0
 
                                 
OTHER ASSETS LESS LIABILITIES, NET
              
$
62,733,060
          
24.0
 
                                 
NET ASSETS`
              
$
261,793,309
          
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 $21,305,214.
           
Aggregate gross unrealized depreciation for all securities in which there is an excess of tax cost over value was $4,494,827.
              
                                 
                               
Portfolio securities and foreign currency holdings were translated at the
following exchange rate as of November 30, 2006.
                                 
 
  
Japanese Yen
115.54
    
=$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.


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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        
Hiroshi Terasaki, President
(Principal Executive Officer)

Date: January 24, 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 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 24, 2006

3