Japan Smaller Capitalization Fund, Inc. Announces Initiatives to Enhance Shareholder Value

Core Viewpoint - Japan Smaller Capitalization Fund, Inc. has announced two initiatives to address its trading discount, including a Level Distribution Plan and a Conditional Tender Offer, aimed at enhancing shareholder value and providing consistent distributions to long-term shareholders [1][2]. Level Distribution Plan - The Fund will implement a Level Distribution Plan to pay monthly distributions at an annualized rate of 10% of the Fund's Net Asset Value (NAV) as of May 31, 2025, with a monthly distribution of $0.0887 per common share for July, August, and September 2025 [3][5]. - The distribution schedule includes record dates, ex-dividend dates, and payment dates for the months of July, August, and September 2025 [3]. - Distributions will primarily be made in cash, but shareholders can opt for shares under the Fund's dividend-reinvestment plan [4]. - The sources of distributions may include net investment income, realized capital gains, and/or a return of shareholder capital, with the actual composition reported to shareholders at year-end [5]. Conditional Tender Offer - The Board has approved a Conditional Tender Offer for 10% of its outstanding shares, contingent upon the shares trading at an average daily market price discount of 9% or greater to NAV during a nine-month measurement period from July 1, 2025, to March 31, 2026 [7]. - The Conditional Tender Offer is designed to provide shareholders with clear, time-bounded relief if the discount persists and is complementary to the Level Distribution Plan [8]. Investment Outlook - The Japanese market is expected to have growth rates comparable to the United States in most sectors, with improvements in Return on Equity (ROE) supported by profit margin enhancements and revenue growth [11]. - Share buybacks and dividend increases are anticipated to continue, raising financial leverage, with ongoing corporate reforms potentially leading to further increases in ROE [11]. Continued Focus on Long-Term Value - The announcement reflects the Fund's commitment to delivering competitive performance and stable distributions, with a focus on long-term value creation for shareholders [12]. About the Fund - The Fund primarily invests in smaller capitalization companies in Japan and is managed by Nomura Asset Management U.S.A. Inc., a subsidiary of one of Japan's largest investment advisory companies [13].