N-CSR

As filed with the Securities and Exchange Commission on November 6, 2009

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM N-CSR

CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES

Investment Company Act file number 811-09447

Jacob Internet Fund Inc.

(Exact name of registrant as specified in charter)

C/O Jacob Asset Management of New York LLC
653 Manhattan Beach Blvd. #J
Manhattan Beach, CA 90266
(Address of principal executive offices) (Zip code)

Ryan Jacob
C/O Jacob Asset Management of New York LLC
653 Manhattan Beach Blvd. #J
Manhattan Beach, CA 90266
(Name and address of agent for service)

(310)-421-4942
Registrant’s telephone number, including area code

Date of fiscal year end: August 31

Date of reporting period: August 31, 2009

Item 1.  Report to Stockholders.

Jacob Internet Fund Inc.

Annual Report

August 31, 2009

The Jacob Internet Fund is a mutual fund with the primary investment

objective of long-term growth of capital and current income

as a secondary objective.

Investment Adviser

Jacob Asset Management of New York LLC

TABLE OF CONTENTS

Letter From the Manager	1
Industry Breakdown	3
Schedule of Investments	5
Statement of Assets and Liabilities	8
Statement of Operations	9
Statement of Changes in Net Assets	10
Financial Highlights	11
Notes to the Financial Statements	12
Report of Independent Registered Public Accounting Firm	21
Additional Information on Fund Expenses	22
Additional Information	24

Dear Fellow Investors,

It’s been a remarkable fiscal year, almost equal parts challenge and opportunity. Our Fund suffered losses along with the general market during the downturn last fall, but as we entered 2009, the Fund was buoyed by substantial outperformance as the markets began to recover. As an end result, we were pleased to add value for our clients—our Fund was down just 3.86% from September 1, 2008 to August 31, 2009, while our benchmarks fared far worse: the Nasdaq Composite declined 14.23%, and the Bloomberg US Internet Index fell 10.95%. Thus far in the 2009 calendar year, we are pleased with our results.

We had taken a defensive stance going into last fall, having pared the portfolio down to larger positions in only what we felt were the best quality tech names—including Apple, Electronic Arts, Google and Red Hat—and taking a higher than usual cash position of close to 20%. As it turned out, our investments were mostly rewarded: though Electronic Arts has struggled with its particular issues this year, the other three of our top positions did well, outperforming the market and giving a boost to our performance numbers. The Fund’s cash position worked to our advantage as tech stocks started to bottom in November (several months before the general market hit their lows in March), enabling us to aggressively add to the Fund’s portfolio when valuations were down. We invested almost all available cash when stock prices were most discounted, with some high quality companies trading at prices close to the amount of cash on their balance sheets. We were glad to be able to take full advantage of these rare opportunities. These moves last fall sowed the seeds that led to the Fund’s outperformance during the rebound.

In the international component of the Fund’s portfolio, we are currently increasing our weighting in China. In the past six months, we regained confidence in the direction of the Chinese economy. The companies the Fund owned—which made up about 5% of the portfolio—held up better than we expected in the global downturn. The Fund’s biggest Chinese positions now include search engine Baidu Inc., travel website Ctrip.com, and Tencent Holdings, operator of the mainland’s largest online instant messaging service. We remain bullish and have increased our Chinese exposure to about 10% of the Fund’s portfolio.

Our view now is that valuations have become more reasonable and the outlook is positive for large and mid-sized tech companies. One benefit of having experienced the turbulence of the past year is that the companies that remain in our Fund’s portfolio have been stress-tested, giving us greater confidence that they should perform well even in a weak environment.

One example is Netflix, a recession-resistant company that we started buying earlier this year. Despite the economic downturn, their innovative management team successfully faced down a challenge to their mail order business from rival Blockbuster, and their subscriber growth has remained consistently north of 20%. Netflix continues to top customer service surveys, and we believe they will be winners whether economic conditions are good or bad.

Another industry that we believe is well positioned is semiconductor chip producers, which is why the Fund has invested in SanDisk and Broadcom. These companies have enjoyed strong tailwinds as the economy rebounded and pent up demand for their products appears to be driving growth in orders. Their pricing power has been improving and we think these companies may thrive in the next few years.

We also added a position in a smaller player, Cypress Semiconductor, which is dominant in programmable-system-on-a-chip (PSOC) technology used in touchscreens for smart phones and laptops. In the coming years,

we expect to see continued steady growth in this important technology, with the new Windows 7 operation system incorporating built-in touchscreen navigation, and as touchpads are increasingly incorporated in consumer electronics and appliances, as well as netbooks (which are now the fastest growing category of PCs).

Looking ahead, we remain positive on the Internet sector for the next few years, because of our belief that the financial crisis we have weathered has positioned technology companies as potentially “safer” growth opportunities than they have been viewed in the past—even if the broader economic recovery is slower than expected. Once again, we thank you for entrusting us with your investments and look forward to a bright future together.

Ryan Jacob

Portfolio Manager

Past performance is not a guarantee of future results.

Must be preceded or accompanied by a prospectus.

The opinions expressed above are those of the portfolio manager and are subject to change. Forecasts cannot be guaranteed.

Mutual fund investing involves risk; loss of principal is possible. The Fund invests in foreign securities which involve greater volatility and political, economic and currency risks and differences in accounting methods. Growth stocks typically are more volatile than value stocks; however, value stocks have a lower expected growth rate in earnings and sales.

Fund holdings are subject to change and should not be construed as a recommendation to buy or sell any security. Please refer to the schedule of investments for complete fund holdings information.

The NASDAQ Composite Index is a broad-based capitalization-weighted index of all NASDAQ stocks. The Bloomberg U.S. Internet Index is a capitalization-weighted index comprised of U.S. internet companies that have a market capitalization greater than $250 million. One cannot invest directly in an index.

Quasar Distributors, LLC.  Distributor (10/09)

2

INDUSTRY BREAKDOWN AS OF AUGUST 31, 2009
(as a percentage of total investments)

The Fund’s Semi-Annual and Annual Reports include a complete schedule of portfolio holdings for the second and fourth quarters of each fiscal year.

The Fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. The Fund’s Forms N-Q are available on the SEC website at http://www.sec.gov and may be reviewed and copied at the SEC’s Public Reference Room in Washington, D.C. Information on the operation of the Public Reference Room may be obtained by calling 1-800-SEC-0330.

3

					Annual Since
	One Year		Five Year		Inception
Jacob Internet Fund		(3.86)%		6.48%		(14.98	)%
S&P 500®		(18.25)%		0.49%		(1.56	)%
NASDAQ Composite Index		(14.23)%		2.64%		(5.41	)%
Bloomberg U.S. Internet Index		(10.95)%		0.59%		(16.87	)%

The Standard & Poor’s 500^® Index (S&P 500^®) is a capital-weighted index, representing the aggregate market value of the common equity of 500 stocks primarily traded on the New York Stock Exchange. The NASDAQ Composite Index is a broad-based capitalization-weighted index of all NASDAQ stocks. The Bloomberg U.S. Internet Index is a capitalization-weighted index comprised of U.S. internet companies that have a market capitalization greater than $250 million. The returns of the indices are not reduced by any fees or operating expenses.

This chart assumes an initial gross investment of $10,000 made on December 14, 1999 (commencement of operations) and reflects the fees charged on an account. Returns shown include the reinvestment of all dividends, but do not include the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. Past performance is not predictive of future performance. Investment return and principal value will fluctuate, so that your shares, when redeemed, may be worth more or less than the original cost.

4

JACOB INTERNET FUND
SCHEDULE OF INVESTMENTS
August 31, 2009

Shares						Value
		COMMON STOCKS		86.0	%
		Internet—Commerce	15.2%
	20,000	Ctrip.com International Ltd.—ADR*^				$	978,800
	20,221	Digital River, Inc.*					714,206
	12,000	eBay Inc.*					265,680
	34,000	Expedia, Inc.*					783,700
	87,297	Global Sources Ltd.^					598,857
	26,000	Monster Worldwide Inc.*					421,720
	20,000	Netflix, Inc.*(a)					873,200
	14,000	Perfect World Co. Ltd.—ADR*^					534,100
	31,107	Shutterfly, Inc.*					449,807
							5,620,070
		Internet—Communications	11.0%
	244,900	Earthlink, Inc.*(a)					2,037,568
	733,958	Openwave Systems Inc.*					2,033,064
							4,070,632
		Internet—Infrastructure	21.5%
	12,000	Adobe Systems Incorporated*					377,040
	15,000	Apple Computer, Inc.*					2,523,150
	24,000	Broadcom Corporation—Class A*					682,800
	12,000	Citrix Systems, Inc.*					428,160
	84,000	Cypress Semiconductor Corp.*					850,080
	234,400	Novell, Inc.*					1,019,640
	44,000	Red Hat, Inc.*					1,010,240
	58,596	SanDisk Corporation*					1,037,149
							7,928,259
		Internet—Media	38.3%
	2,500	Baidu.com, Inc.—ADR*^					825,150
	12,000	Electronic Arts Inc.*					218,640
	4,500	Google Inc.*(a)					2,077,515
	736,632	Hollywood Media Corp.*					1,178,611
	70,000	IAC/InterActiveCorp.*					1,296,400
	141,055	Move, Inc.*					407,649
	12,000	Salesforce.com, Inc.*					622,440
	1,179,172	SourceForge, Inc.*					1,556,507

The accompanying notes are an integral part of these financial statements.

5

JACOB INTERNET FUND
SCHEDULE OF INVESTMENTS
August 31, 2009

Shares						Value
		COMMON STOCKS—(continued)		86.0	%
		Internet—Media—(continued)	38.3%
	187,654	Take-Two Interactive Software, Inc.*				$	1,970,367
	60,000	Tencent Holdings Limited (HK)^					892,889
	31,988	The Knot, Inc.*					323,079
	481,631	TheStreet.com					1,228,159
	103,874	Yahoo! Inc.*					1,517,599
							14,115,005
		TOTAL COMMON STOCKS (Cost $29,524,976)					31,733,966
Principal
Amount
		SHORT TERM INVESTMENTS		14.8	%
		U.S. Treasury Bills	14.8%
$	950,000	0.06%, 09/24/2009					949,964
	2,000,000	0.05%, 10/01/2009					1,999,914
	1,000,000	0.03%, 10/08/2009(a)					999,973
	1,000,000	0.03%, 10/15/2009					999,962
	500,000	0.00%, 10/22/2009					499,998
		TOTAL SHORT TERM INVESTMENTS (Cost $5,449,811)					5,449,811
		INVESTMENTS PURCHASED WITH CASH PROCEEDS FROM SECURITIES LENDING		1.9	%
		Commercial Paper	1.9%
	913,608	Atlantic East Funding LLC, 3.06%, Due 03/25/10(b)					496,631
	808,956	Ottimo Funding LLC, 4.71%, Due 10/30/09(b)					214,056
							710,687

The accompanying notes are an integral part of these financial statements.

6

JACOB INTERNET FUND
SCHEDULE OF INVESTMENTS
August 31, 2009

Shares						Value
		INVESTMENTS PURCHASED WITH CASH PROCEEDS FROM SECURITIES LENDING—(continued)		1.9	%
		Money Market Mutual Fund	0.0%
	7,173	Reserve Primary Fund(b)				$	4,463
		Total Money Market Mutual Fund					4,463
		TOTAL INVESTMENTS PURCHASED WITH CASH PROCEEDS FROM SECURITIES LENDING (Cost $1,729,737)					715,150
		TOTAL INVESTMENTS (Cost $36,704,524)		102.7	%		37,898,927
		LIABILITIES LESS OTHER ASSETS		(2.7)	%		(985,893	)
		TOTAL NET ASSETS		100.0	%	$	36,913,034

*	Non Income Producing.
^	Foreign Security.
(a)	All or portion of shares are on loan.
(b)	Fair valued by Valuation Committee as delegated by the Jacob Internet Fund’s Board of Directors.
ADR	American Depository Receipt.
HK	Security denominated in Hong Kong dollars. Value translated into U.S. dollars.

The accompanying notes are an integral part of these financial statements.

7

JACOB INTERNET FUND
STATEMENT OF ASSETS AND LIABILITIES
August 31, 2009

Assets:
Investments, at value (cost $36,704,524)(1)	$	37,898,927
Cash		966,062
Cash from securities lending broker		162,930
Receivable for capital shares sold		7,925
Receivable for investments sold		104,944
Other assets		36,741
Total Assets		39,177,529
Liabilities:
Payable for collateral received for securities loaned		1,892,667
Payable for investments purchased		175,774
Payable to Adviser		35,999
Payable for distribution expenses (see Note 7)		10,610
Payable for capital shares repurchased		17,608
Accrued expenses and other liabilities		131,837
Total Liabilities		2,264,495
Net Assets	$	36,913,034
Net Assets Consist Of:
Capital stock	$	144,380,971
Accumulated net realized loss on investments		(108,662,340	)
Net unrealized appreciation on investments		1,194,403
Total Net Assets	$	36,913,034
Shares outstanding (20 billion shares of $0.001 par value authorized)		18,526,655
Net asset value, redemption price and offering price per share	$	1.99

(1) Includes securities out on loan to brokers with a market value of $1,817,223.

The accompanying notes are an integral part of these financial statements.

8

JACOB INTERNET FUND
STATEMENT OF OPERATIONS
For the Year Ended August 31, 2009

Investment Income
Dividend income	$	34,207
Interest income		6,557
Securities lending income		9,583
Total Investment Income		50,347
Expenses
Investment advisory fee		375,349
Distribution expenses (See Note 7)		105,098
Administration fee		49,037
Fund accounting fees		28,876
Transfer agent fees		190,233
Custody fees		12,190
Federal and state registration		30,096
Insurance expense		28,657
Audit fees		30,227
Legal fees		107,724
Reports to shareholders		66,817
Directors’ fees and expenses		87,774
Other		416
Total Expenses		1,112,494
Expense Waiver (See Note 5)		(19,996	)
Net expenses		1,092,498
Net Investment Loss		(1,042,151	)
Realized and Unrealized Gain (Loss) on Investments
Net realized loss on investments		(11,396,531	)
Change in net unrealized appreciation/depreciation on investments		9,291,943
Net realized and unrealized loss on investments		(2,104,588	)
Net Decrease in Net Assets Resulting from Operations	$	(3,146,739	)

The accompanying notes are an integral part of these financial statements.

9

JACOB INTERNET FUND
STATEMENTS OF CHANGES IN NET ASSETS

	Year Ended			Year Ended
	August 31, 2009			August 31, 2008
Operations:
Net investment income (loss)	$	(1,042,151	)	$	552,016
Net realized loss on investments		(11,396,531	)		(5,101,503	)
Change in net unrealized appreciation/depreciation on investments		9,291,943			(9,451,379	)
Net decrease in net assets resulting from operations		(3,146,739	)		(14,000,866	)
Distributions to Shareholders
From net investment income		—			(1,819,561	)
Capital Share Transactions: (Note 3)
Proceeds from shares sold		3,423,395			7,592,708
Proceeds from reinvestment of distribution		—			1,702,289
Cost of shares redeemed		(7,882,700	)		(26,488,961	)
Redemption fees		3,366			11,996
Net decrease in net assets resulting from capital share transactions		(4,455,939	)		(17,181,968	)
Net Decrease in Net Assets		(7,602,678	)		(33,002,395	)
Net Assets:
Beginning of period		44,515,712			77,518,107
End of period	$	36,913,034		$	44,515,712
* Includes undistributed net investment income of:	$	—		$	—

The accompanying notes are an integral part of these financial statements.

10

JACOB INTERNET FUND
FINANCIAL HIGHLIGHTS

	Year Ended			Year Ended			Year Ended			Year Ended			Year Ended
	August 31, 2009			August 31, 2008			August 31, 2007			August 31, 2006			August 31, 2005
Per Share Data:
Net asset value, beginning of period	$	2.07		$	2.71		$	2.47		$	2.06		$	1.51
Income from investment operations:
Net investment income (loss)		(0.06	)(1)		0.02	(2)		(0.01	)(1)		(0.03	)		(0.05	)(1)
Net realized and unrealized gains (losses) on investments		(0.02	)		(0.59	)		0.28			0.44			0.60
Total from investment operations		(0.08	)		(0.57	)		0.27			0.41			0.55
Less distributions from net investment income		—			(0.07	)		(0.03	)		—			—
Net asset value, end of period	$	1.99		$	2.07		$	2.71		$	2.47		$	2.06
Total return		(3.86)%			(21.63)%			11.06%			19.90%			36.42%
Supplemental data and ratios:
Net assets, end of period	$	36,913,034		$	44,515,712		$	77,518,107		$	73,106,363		$	65,820,015
Ratio of gross operating expenses (prior to waiver or reimbursements) to average net assets		3.71%			2.69%			2.36%			2.42%			2.64%
Ratio of net operating expenses (after waiver or reimbursements) to average net assets		3.64%	(4)		2.65%	(3)		2.26%	(3)		2.35%	(3)		2.64%
Ratio of net investment income (loss) (prior to waiver or reimbursements) to average net assets		(3.54)%			0.86%			(0.26)%			(1.65)%			(2.29)%
Ratio of net investment income (loss) (after waiver or reimbursements) to average net assets		(3.47)%	(4)		0.90%	(3)		(0.16)%	(3)		(1.58)%	(3)		(2.29)%
Portfolio turnover rate		106.98%			80.46%			91.44%			125.99%			127.13%

(1)	Net investment loss per share is calculated using ending balances prior to consideration of adjustments for permanent book and tax differences.
(2)	Net investment income per share represents net investment income divided by the average shares outstanding throughout the period.
(3)	Reflects Adviser’s waiver of 0.10% of the shareholder servicing fee beginning December 29, 2005 and ending December 31, 2007.
(4)	For the period January 1, 2009 through January 2, 2010, the Adviser has contractually agreed to waive its advisory fees in an amount up to an annual rate of 0.10% of the Fund’s average daily net assets, to the extent that the Fund’s expense ratio exceeds 2.95%.

The accompanying notes are an integral part of these financial statements.

11

JACOB INTERNET FUND
NOTES TO THE FINANCIAL STATEMENTS
August 31, 2009

NOTE 1—DESCRIPTION OF FUND

Jacob Internet Fund Inc. (the “Corporation”) was organized as a Maryland corporation on July 13, 1999 and is registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as an open-end management investment company issuing its shares in series. The Corporation currently consists of one “diversified” series, the Jacob Internet Fund (the “Fund”) and the authorized capital stock of the Fund consists of twenty billion shares of stock having a par value of one-tenth of one cent ($0.001) per share. The primary investment objective of the Fund is long-term growth of capital with current income as a secondary objective. The Fund commenced operations on December 14, 1999.

NOTE 2—SIGNIFICANT ACCOUNTING POLICIES

The following is a summary of significant accounting policies consistently followed by the Fund.

(a) Investment Valuation—Investment securities traded on a national securities exchange are valued at their market value determined by their last sales price in the principal market in which these securities are normally traded (except those traded on the NASDAQ National Market and Capital Market exchanges which are valued at the NASDAQ Official Closing Price (“NOCP”)), unless there are no transactions on the valuation date, in which case they are valued at the mean between the closing bid and ask prices. Securities traded over-the-counter are valued at the last reported sales price unless there is no reported sales price, in which case the mean between the closing bid and ask prices is used. Foreign securities, currencies and other assets denominated in foreign currencies are translated into U.S. dollars at the exchange rate of such currencies. Foreign equity securities are valued at the last sale price at the close of the exchange on which the security is principally traded. Debt securities with maturities of 60 days or less are valued at amortized cost, which approximates market value. Short-term securities with 60 days or less remaining to maturity are, unless conditions indicate otherwise, amortized to maturity based on their cost to the Fund if acquired within 60 days of maturity or, if already held by the Fund on the 60^th day, based on the value determined on the 61^st day. If amortized cost does not approximate fair value, short-term securities are reported at fair value. Where market quotations are not readily available, are unreliable or when values have been materially affected by events occurring before the close of U.S. markets but after the close of the securities’ primary markets, securities are valued at fair value using procedures approved by the Board of Directors that are designed to determine a security’s fair value.

In September 2006, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standards (“SFAS”) No. 157, “Fair Value Measurements.” SFAS No. 157 defines fair value, establishes a framework for measuring fair value in accordance with generally accepted accounting principles (“GAAP”) and expands disclosure about fair value measurements. Management has determined that SFAS No. 157 had no material impact on the Fund’s financial statements, except for additional disclosure.

12

JACOB INTERNET FUND
NOTES TO THE FINANCIAL STATEMENTS (Continued)
August 31, 2009

FAS 157—Summary of Fair Value Exposure at August 31, 2009

The Fund has adopted the provisions of Statement of Financial Accounting Standards No. 157, “Fair Value Measurements” (SFAS 157). SFAS 157 establishes a hierarchy that prioritizes the inputs to valuation techniques giving the highest priority to readily available unadjusted quoted prices in active markets for identical assets (level 1 measurements) and the lowest priority to unobservable inputs (level 3 measurements) when market prices are not readily available or reliable.

Various inputs are used in determining the value of the Fund’s investments. These inputs are summarized in the three broad levels listed below:

Level 1—Quoted prices in active markets for identical securities.

Level 2—Other significant observable inputs (including quoted prices for similar securities, 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)

The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities.

The following is a summary of the inputs used to value the Fund’s investments as of August 31, 2009:

	Level 1		Level 2		Level 3		Total
Common Stock
Internet—Commerce	$	5,620,070	$	—	$	—	$	5,620,070
Internet—Communications		4,070,632		—		—		4,070,632
Internet—Infrastructure		7,928,259		—		—		7,928,259
Internet—Media		14,115,005		—		—		14,115,005
Total Common Stock		31,733,966		—		—		31,733,966
Short Term Investments
United States Treasury Bills		—		5,449,811		—		5,449,811
Total Short Term Investments		—		5,449,811		—		5,449,811
Investments Purchased With Cash Proceeds From Securities Lending
Commercial Paper		—		—		710,687		710,687
Money Market Mutual Fund		—		—		4,463		4,463
Total Investments Purchased With Cash Proceeds From Securities Lending		—		—		715,150		715,150
Total Investments	$	31,733,966	$	5,449,811	$	715,150	$	37,898,927

13

JACOB INTERNET FUND
NOTES TO THE FINANCIAL STATEMENTS (Continued)
August 31, 2009

Level 3 Reconciliation Disclosure

Following is a reconciliation of Level 3 assets for which significant unobservable inputs were used to determine fair value.

Description	Investments
Balance as of August 31, 2008	$	1,808,922
Accrued discounts/premiums		—
Realized gain (loss)		—
Change in unrealized appreciation (depreciation)		(473,932	)
Net purchases (sales)		(665,890	)
Transfers in and/or out of Level 3*		46,050
Balance as of August 31, 2009	$	715,150

*  The information used in the above reconciliation represents fiscal year to date activity for any investments identified as using Level 3 inputs at either the beginning or end of the current fiscal period. Transfers in or out of Level 3 represents either the beginning value (for transfers in) or ending value (for transfers out) of any security or instrument where a change in the pricing level occurred from the beginning to the end of the period.

In March 2008, Statement of Financial Accounting Standards No. 161, “Disclosures about Derivative Instruments and Hedging Activities” (“SFAS 161”) was issued and is effective for fiscal years beginning after November 15, 2008. SFAS 161 is intended to improve financial reporting for derivative instruments by requiring enhanced disclosure that enables investors to understand how and why an entity uses derivatives, how derivatives are accounted for, and how derivative instruments affect an entity’s results of operations and financial position. Management has determined that SFAS 161 had no material impact on the Fund’s financial statement disclosures because the Fund does not maintain any positions in derivative instruments or engage in hedging activities.

In May 2009, the FASB issued SFAS No. 165, “Subsequent Events” (SFAS No. 165). The Fund adopted SFAS No. 165 which requires an entity to recognize in the financial statements the effects of all subsequent events that provide additional evidence about conditions that existed at the date of the balance sheet. For non-recognized subsequent events that must be disclosed to keep the financial statements from being misleading, an entity will be required to disclose the nature of the event as well as an estimate of its financial effect, or a statement that such an estimate cannot be made. In addition, SFAS No. 165 requires an entity to disclose the date through which subsequent events have been evaluated. The Fund has evaluated subsequent events through October 28, 2009, the date that the financial statements were available to be issued.

14

JACOB INTERNET FUND
NOTES TO THE FINANCIAL STATEMENTS (Continued)
August 31, 2009

In June 2009, Statement of Financial Accounting Standards No. 168, “The FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles” (“SFAS 168”) was issued and is effective for fiscal reporting periods ending after September 15, 2009. SFAS 168 is intended to establish the FASB Codification as the source of authoritative accounting principles recognized by the FASB to be applied to nongovernmental entities in preparation of financial statements in conformity with GAAP. Management is currently evaluating the implications of SFAS 168.

(b) Repurchase Agreements—The Fund may enter into repurchase agreements with member banks of the Federal Reserve System and with broker-dealers who are recognized as primary dealers in U.S. government securities by the Federal Reserve Bank of New York. Repurchase agreements involve an agreement to purchase a security and to sell that security back to the original seller at an agreed-upon price and an agreed-upon time. Because the security purchased constitutes collateral for the repurchase obligation, a repurchase agreement may be considered a loan that is collateralized by the security purchased. Although the securities subject to the repurchase agreement might bear maturities exceeding one year, settlement for the repurchase would never be more than 397 days after the Fund’s acquisition of the securities and normally would be within a shorter period of time. The resale price of the security back to the original seller will be in excess of the purchase price, reflecting an agreed upon market rate effective for the period of time the Fund’s money will be invested in the security, and will not be related to the coupon rate of the purchased security. In the event that the repurchase agreement is held for more than one day, the security serving as collateral for the repurchase agreement will be marked-to-market daily to ensure that the value of the collateral does not decrease below the purchase price, plus accrued interest. If a decrease occurs, the seller will provide additional collateral to add to the account to maintain appropriate collateralization.

The use of repurchase agreements involves certain risks. One risk is the seller’s ability to pay the agreed upon repurchase price on the repurchase date. If the seller defaults, the Fund may incur costs in disposing of the collateral, which would reduce the amount realized thereon. If the seller seeks relief under the bankruptcy laws, the disposition of the collateral may be delayed or limited. Delays may result in possible decline in the value of the underlying security while the Fund seeks its rights thereto, possible lack of access to income on the underlying security during the delayed period, and expenses in enforcing the Fund’s rights.

(c) Income Recognition—Interest income is accrued as earned. Dividend income is recorded on the ex-dividend date. All discounts and premiums are amortized using the effective interest method for tax and financial reporting purposes.

(d) Securities Transactions—Security transactions are accounted for on trade date. Realized gains and losses on securities sold are determined using specific identification.

(e) Foreign Currency Transactions—The books and records are maintained in U.S. dollars. Foreign currency denominated transactions (i.e. market value of investment securities, assets and liabilities,

15

JACOB INTERNET FUND
NOTES TO THE FINANCIAL STATEMENTS (Continued)
August 31, 2009

purchases and sales of investment securities, and income and expenses) are translated into U.S. dollars at the current rate of exchange.

The Fund does not isolate that portion of the results of operations resulting from changes in foreign exchange rates on investments from the fluctuations arising from changes in market prices of securities held. Such fluctuations are included with the net realized and unrealized gain or loss from investments.

(f) Distributions to Shareholders—The Fund records distributions to shareholders on the ex-dividend date. Dividends from net investment income, if any, are declared and paid annually. Distributions of net realized capital gains, if any, will be declared and distributed at least annually. The amounts of distributions from net investment income and net realized capital gains are determined in accordance with federal income tax regulations, which may differ from those amounts determined under U.S. generally accepted accounting principles. These book/tax differences are either temporary or permanent in nature. To the extent these differences are permanent, reclassifications are made in the capital accounts in the period that the differences arise. The reclassifications have no effect on net assets or net asset value per share.

(g) Federal Income Taxes—The Fund complies with provisions of Subchapter M of the Internal Revenue Code applicable to regulated investment companies, including the distribution of substantially all of the Fund’s taxable income. Accordingly, no provision for federal income taxes is considered necessary in the financial statements.

Effective February 29, 2008 the Fund adopted Financial Accounting Standards Board (“FASB”) Interpretation No. 48 (“FIN 48”), “Accounting for Uncertainty in Income Taxes,” a clarification of FASB Statement No. 109 “Accounting for Income Taxes.” FIN 48 establishes financial reporting rules regarding recognition and measurement of tax positions taken or expected to be taken on a tax return. No material uncertain tax positions existed as of August 31, 2009. As a result, the Fund has not recorded any liabilities for uncertain tax positions as of August 31, 2009. FIN 48 requires the Fund to analyze all open tax years, as defined by the Statute of Limitations, for all major jurisdictions. Open tax years are those that are open for exam by taxing authorities. Major jurisdictions for the Fund only relate to federal tax years. As of August 31, 2009, open federal tax years include the tax year ended August 31, 2006 through August 31, 2009.

(h) Use of Estimates—The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amount of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

16

JACOB INTERNET FUND
NOTES TO THE FINANCIAL STATEMENTS (Continued)
August 31, 2009

NOTE 3—CAPITAL SHARE TRANSACTIONS

At August 31, 2009, there were twenty billion shares, $0.001 par value, authorized. Transactions in shares of the Fund were as follows:

	Year Ended
	August 31, 2009
	Shares			Amount
Sales		2,129,996		$	3,423,395
Redemptions		(5,110,570	)		(7,882,700	)
Redemption Fees		—			3,366
Net Decrease		(2,980,574	)	$	(4,455,939	)
Shares Outstanding:
Beginning of period		21,507,229
End of period		18,526,655

	Year Ended
	August 31, 2008
	Shares			Amount
Sales		2,853,471		$	7,592,708
Reinvestments		649,728			1,702,289
Redemptions		(10,647,425	)		(26,488,961	)
Redemption Fees		—			11,996
Net Decrease		(7,144,226	)	$	(17,181,968	)
Shares Outstanding:
Beginning of period		28,651,455
End of period		21,507,229

NOTE 4—INVESTMENT TRANSACTIONS

During the year ended August 31, 2009, purchases and sales of investment securities (excluding short-term investments) were $30,651,006 and $34,114,023, respectively. The Fund did not purchase long-term U.S. Government securities as a part of its investment strategy during the year ended August 31, 2009.

17

JACOB INTERNET FUND
NOTES TO THE FINANCIAL STATEMENTS (Continued)
August 31, 2009

At August 31, 2009, the components of accumulated earnings/(losses) on a tax basis were as follows:

Cost of Investments	$	39,169,402
Gross unrealized appreciation		9,003,944
Gross unrealized depreciation		(10,274,419	)
Net unrealized depreciation	$	(1,270,475	)
Undistributed ordinary income		—
Undistributed long-term capital gain		—
Total distributable earnings	$	—
Other accumulated losses	$	(106,197,462	)
Total accumulated losses	$	(107,467,937	)

The differences between cost amounts for book purposes and tax purposes are primarily due to the tax deferral of losses on wash sales. At August 31, 2009, the Fund had an accumulated net realized capital loss carryover of $99,157,405, of which $89,876,360 expires in 2010, and $9,281,045 expires in 2017. To the extent the Fund realizes future net capital gains, taxable distributions to its shareholders will be offset by any unused capital loss carryover. For the year ended August 31, 2009 the Fund had $38,961,920 in capital loss carryover expire. At August 31, 2009, the Fund had net realized losses from transactions between November 1, 2008 and August 31, 2009 of $7,040,057, which is deferred for tax purposes and were recognized on September 1, 2009.

The Fund made no distributions during the year ended August 31, 2009 and paid $1,819,561 out of ordinary income during the fiscal year ended August 31, 2008.

Reclassification Adjustments:  Paid-in capital, undistributed net investment income, and accumulated net realized gain (loss) have been adjusted in the Statements of Assets and Liabilities for permanent book-tax differences for the Fund.

Differences primarily relate to the tax treatment of net operating losses, expiring capital losses, and foreign currency gains and losses. To the extent these book and tax differences are permanent in nature, such amounts are reclassified at the end of the fiscal year among paid-in capital in excess of par value, undistributed net investment income (loss) and undistributed net realized gain (loss) on investments and foreign currency translations. Accordingly, at August 31, 2009 reclassifications were recorded as follows:

Paid-in Capital decreased by $40,004,689, Undistributed Net Investment Income (Loss) increased by $1,042,769 and Accumulated Net Realized Gain (Loss) increased by $38,961,920.

NOTE 5—INVESTMENT ADVISORY AND OTHER AGREEMENTS

The Corporation has an Investment Advisory Agreement (the “Advisory Agreement”) with Jacob Asset Management of New York LLC (the “Adviser”), with whom certain officers and Directors of the Board are

18

JACOB INTERNET FUND
NOTES TO THE FINANCIAL STATEMENTS (Continued)
August 31, 2009

affiliated, to furnish investment advisory services to the Fund. Under the terms of the Advisory Agreement, the Corporation, on behalf of the Fund, compensates the Adviser for its management services based on an annual rate of 1.25% of the Fund’s average daily net assets.

Effective January 1, 2009, the Adviser has contractually agreed to waive up to 0.10% of the average daily net assets from its Advisory Fee to the extent the Fund’s total annual operating expenses exceed 2.95% of the average daily net assets through January 2, 2010. The Adviser has the ability to recoup amounts waived for a period of three years following such fee waivers to the extent that such recoupment by the Adviser will not cause the Fund to exceed any applicable expense limitation in place when the fee was waived. For the year ended August 31, 2009, fees of $19,996 were waived by the Adviser.

U.S. Bancorp Fund Services, LLC serves as transfer agent, administrator and accounting services agent for the Fund. U.S. Bank, N.A. serves as custodian for the Fund. FAF Advisors, Inc. serves as the securities lending agent.

NOTE 6—SECURITIES LENDING

The Fund may lend portfolio securities equal in value to up to 33% of its total assets (including such loans) to borrowers under terms of participation in a securities lending program administered by FAF Advisors, Inc. The Agreement requires that loans are collateralized at all times in an amount equal to at least 102% of the market value of any loaned securities at the time of the loan, plus accrued interest.

The Fund receives compensation in the form of fees and earns interest on the cash collateral. The amount of fees depends on a number of factors including the types of security, length of the loan and credit standing of the borrower. The Fund continues to receive interest or dividends on the securities loaned during the borrowing period. The Fund has the right under the terms of the securities lending agreement to recover the securities from the borrower on demand. FAF Advisors, Inc. received $3,594 from the Fund for its securities lending administrative services during the year ended August 31, 2009.

As of August 31, 2009, the Fund had loaned securities that were collateralized by cash proceeds that the borrower paid to the Fund. The cash collateral is invested by the custodian with the approval of the Adviser. Although risk is mitigated by the collateral and by an indemnification by the securities lending agent, the Fund could experience a delay in recovering its securities and possible loss of income or value if the borrower fails to return the borrowed securities. The Fund is also exposed to market risk on the investments it purchases with the proceeds of the cash collateral. As of August 31, 2009, the value of the Fund’s securities on loan was $1,817,223. The cost of the related collateral was $1,729,737 and the fair value of the investments purchased was $715,150. An amount of $162,930 of the collateral was not invested and held in cash. As of August 31, 2009, the Fund had experienced $1,014,587 of unrealized depreciation on the investments it purchased with proceeds of the cash collateral.

NOTE 7—DISTRIBUTION AND SERVICE PLAN

The Corporation, on behalf of the Fund, has adopted a distribution and service plan (the “Plan”), pursuant to Rule 12b-1 under the 1940 Act. The Plan provides that the Fund will compensate the Adviser up to 0.25% per

19

JACOB INTERNET FUND
NOTES TO THE FINANCIAL STATEMENTS (Continued)
August 31, 2009

annum of the Fund’s average daily net assets for certain expenses and costs incurred in connection with providing shareholder servicing and maintaining shareholder accounts and to compensate parties with which it has written agreements and whose clients own shares of the Fund for providing servicing to their clients (“Shareholder Servicing Fee”). The Adviser had contractually agreed to waive 0.10% of the Shareholder Servicing Fee from December 29, 2005 through December 31, 2007. The Plan also provides for a distribution fee equal to 0.10% of the Fund’s average daily net assets on an annual basis (“Asset Based Sales Charge”). The fee is used to compensate Quasar Distributors, LLC, the Fund’s distributor (the “Distributor”), for basic distribution services, out of pocket expenses incurred in connection with activities to sell Fund shares, advertising, compliance reviews, and licensing of the Adviser’s staff. The Distributor may make payments from time to time from the Asset Based Sales Charge to broker-dealers and other financial professionals whose clients are Fund shareholders for providing distribution assistance and promotional support to the Fund. Remaining amounts of the Asset Based Sales Charge may be used to satisfy distribution costs as directed by the Adviser. The Fund incurred $105,098 in expenses pursuant to the 12b-1 Plan for the year ended August 31, 2009. At August 31, 2009, $10,610 of the Shareholder Servicing Fee was available for eligible 12b-1 expenses.

NOTE 8—SUBSEQUENT EVENTS

On September 22, 2009, the Board approved an agreement and plan of reorganization to add two series in Jacob Internet Fund Inc. The newly-formed series would merge with existing stand alone funds and join the Fund as series of the Corporation if the reorganization is approved by the existing shareholders of the funds currently not a member of the Corporation. The boards of the existing funds have also approved the reorganization and each fund’s shareholders will consider approval of the agreement and plan of reorganization at a special shareholders meeting expected to take place on or around December 31, 2009.

20

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Shareholders and Board of Directors of

Jacob Internet Fund Inc.

We have audited the accompanying statement of assets and liabilities of Jacob Internet Fund Inc. (the “Fund”), including the schedule of investments, as of August 31, 2009, and the related statements of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended. These financial statements and financial highlights are the responsibility of the Fund’s management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. The Fund is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Fund’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of August 31, 2009, by correspondence with the custodian and brokers. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of Jacob Internet Fund Inc. as of August 31, 2009, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America.

Milwaukee, WI

October 28, 2009

21

JACOB INTERNET FUND
ADDITIONAL INFORMATION ON FUND EXPENSES

For the Six Months Ended August 31, 2009

As a shareholder of a mutual fund, you may incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments, reinvested dividends, or other distributions; redemption fees; and exchange fees; and (2) ongoing costs, including management fees; distribution and/or service (12b-1) fees; and other fund expenses. The Fund does not currently charge sales charges (loads) or exchange fees. The Fund assesses a redemption fee of 2% on shares sold within 30 days following their purchase date. In addition, you will be assessed fees for outgoing wire transfers, returned checks and stop payment orders. The Fund charges management fees and distribution and/or service (12b-1) fees. The Expense Example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (3/1/09–8/31/09).

Actual Expenses

The first line of the table below provides information about account values based on actual returns and actual expenses. Although the Fund charges no sales load, the Fund charges a redemption fee of 2% on shares sold within 30 days following the purchase date. In addition, you will be assessed fees for outgoing wire transfers, returned checks and stop payment orders at prevailing rates charged by U.S. Bancorp Fund Services, LLC, the Fund’s transfer agent. If you request that a redemption be made by wire transfer, currently the Fund’s transfer agent charges a $15.00 fee. The Example does not reflect transactional costs, such as redemption fees. You may use the information in the first line below, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading entitled “Expenses Paid During the Period” to estimate the expenses you paid on your account during this period.

Hypothetical Example for Comparison Purposes

The second line of the table below provides information about hypothetical account values based on a hypothetical return and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect transactional costs, such as redemption fees. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the

22

JACOB INTERNET FUND
ADDITIONAL INFORMATION ON FUND EXPENSES (Continued)

relative total costs of owning different funds. In addition, if the transactional costs were included, your costs would have been higher.

					Expenses Paid
	Beginning Account		Ending Account		During the Period
	Value 3/1/09		Value 8/31/09		3/1/09–8/31/09*
Actual	$	1,000.00	$	1,617.90	$	23.36
Hypothetical (5% annual return before expenses)	$	1,000.00	$	994.86	$	17.80

* Expenses are equal to the Fund’s annualized expense ratio of 3.54% multiplied by the average account value over the period multiplied by 184/365 (to reflect the one-half year period).

23

JACOB INTERNET FUND
ADDITIONAL INFORMATION

Information about Directors

The business and affairs of the Fund are managed under the direction of the Corporation’s Board of Directors. Information pertaining to the Directors of the Corporation is set forth below. The Statement of Additional Information includes additional information about the Corporation’s Directors and Officers and is available, without charge, upon request by calling toll-free 1-888-Jacob-fx (1-888-522-6239).

				Number of
		Term of		Portfolios
		Office &		in Fund	Other
	Position(s)	Length of		Complex	Directorships
	Held within	Time	Principal Occupation During	Overseen	Held By
Name, Address and Age	the Corporation	Served(1)	Past Five Years	by Director	Director
Independent Directors:
William B. Fell 653 Manhattan Beach Blvd. #J Manhattan Beach, CA 90266 Age: 40	Director	Since 1999	Controller, ABB Inc., Instrumentation Division, since September 2009; General Accounting Manager, ABB Inc., Instrumentation Division, February 2004–September 2009.	1	None
Christopher V. Hajinian 653 Manhattan Beach Blvd. #J Manhattan Beach, CA 90266 Age: 40	Director	Since 1999	Attorney, Neil A. Morris Associates, P.C., 2006–2007; Attorney, 2004 to present; Property Management, 2009.	1	None
Jeffrey I. Schwarzschild 653 Manhattan Beach Blvd. #J Manhattan Beach, CA 90266 Age: 38	Director	Since 1999	Deputy Attorney General, The State of California, since October 2006; Associate attorney, Law Office of Mark E. Merin, April 2003–September 2006; Associate attorney, Goldstein, Gellman, Melbostad, Gibson & Harris, LLP, June 2001–March 2003.	1	None
Interested Directors:
Ryan I. Jacob(2)(3) 653 Manhattan Beach Blvd. #J Manhattan Beach, CA 90266 Age: 40	Director, President, Chairman of the Board and Chief Executive Officer	Since 1999	Chairman and Chief Executive Officer of the Adviser since 1999; Chief Portfolio Manager of The Internet Fund, Inc. from December 1997–June 1999; Analyst for Horizon Asset Management, 1994–August 1998.	1	None
Leonard S. Jacob, M.D., Ph.D. (2)(4) 653 Manhattan Beach Blvd. #J Manhattan Beach, CA 90266 Age: 60	Director	Since 1999	Chairman, Life Sciences Advisors (a consulting group in the healthcare industry) since January 2006; Chairman and Chief Executive Officer, InKine Pharmaceutical Company, Inc. from November 1997 until September 2005.	1	Chairman of the Board and Chairman of the Nominating and Corporate Governance Committee, Antares Pharma Inc.; Board of Directors for the Colon Cancer Alliance; Board of Overseers for Temple University School of Medicine; Boards of QuiqMeds Inc. and Gyconix Corp., (both private companies).

(continued on next page)

24

JACOB INTERNET FUND
ADDITIONAL INFORMATION (Continued)

(continued from previous page)

				Number of
		Term of		Portfolios
		Office &		in Fund	Other
	Position(s)	Length of		Complex	Directorships
	Held within	Time	Principal Occupation During	Overseen	Held By
Name, Address and Age	the Corporation	Served(1)	Past Five Years	by Director	Director
Officers:
Francis J. Alexander(5) 653 Manhattan Beach Blvd. #J Manhattan Beach, CA 90266 Age: 65	Vice President, Secretary and Treasurer	Since 1999	Member of the Adviser and portfolio manager of the Fund since inception in 1999, Director of the Fund, 1999–October 2003; President, Alexander Capital Management, Inc., March 1985–present; Managing Member, ACMG, LLC (registered investment adviser), October 1999 to December 2003; Director and portfolio manager, 1998–March 2002, chairman of investment committee, March 1999–March 2002, Lepereq, de Neuflize & Co. Inc. (financial services company in investment advisory and broker/dealer business).	N/A	N/A
Shane Morris(5) 653 Manhattan Beach Blvd. #J Manhattan Beach, CA 90266 Age: 32	Chief Compliance Officer and Anti-Money Laundering Compliance Officer	2004-2007 and since July 2008	Operations Manager for the Adviser since July 2008; Writer, Walt Disney Animation Studios, October 2007-July 2008; Operations Manager for the Adviser, February 2002-October 2007.	N/A	N/A

(1)	Each Director holds office during the lifetime of the Fund, until his termination, or until the election and qualification of his successor.
(2)	Ryan I. Jacob and Leonard S. Jacob are related to each other as nephew and uncle, respectively.
(3)	Ryan I. Jacob is deemed to be an “interested person” of the Fund (as defined in the 1940 Act) because of his affiliation with the Adviser.
(4)	Under the 1940 Act definition of “interested person,” Leonard S. Jacob qualifies as an independent director. Since the Fund’s inception, Dr. Jacob acted and served in the role of independent director. In October 2003, the Board of Directors voted to re-classify Dr. Jacob as an interested Director as a result of a new “best practice” corporate governance recommendation for mutual funds.
(5)	Francis J. Alexander and Shane Morris are related to each other as stepfather and stepson, respectively.

Proxy Voting

A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities is available by calling toll-free 1-888-Jacob-fx (522-6239) or on the SEC website at http://www.sec.gov.

Proxy Voting Record

Information regarding how the Fund voted proxies relating to portfolio securities during the most recent 12-month period ended June 30 is available without charge by calling 1-888-Jacob-fx (522-6239) or on the SEC website at http://www.sec.gov.

25

Investment Advisor

Jacob Asset Management of New York LLC

Administrator and Transfer Agent

and Dividend Agent

U.S. Bancorp Fund Services, LLC

Underwriter and Distributor

Quasar Distributors, LLC

Custodian

U.S. Bank, N.A.

Legal Counsel

Stradley Ronon Stevens & Young, LLP

Independent Registered Public

Accounting Firm

Deloitte & Touche LLP

This report has been prepared for the information of shareholders of the Jacob Internet Fund and is not authorized for distribution to prospective investors unless preceded or accompanied by an effective prospectus that includes information regarding the Fund’s objectives, policies, management, records and other information.

Jacob Asset Management of New York LLC

1-888-Jacob-fx (522-6239)

www.JacobInternet.com

Jacob Internet

Fund Inc.

Annual

Report

August 31, 2009

Item 2. Code of Ethics.

The registrant has adopted a code of ethics that applies to the registrant’s principal executive officer and principal financial officer. The registrant has not made any amendments to its code of ethics during the period covered by this report. The registrant has not granted any waivers from any provisions of the code of ethics during the period covered by this report. The registrant has posted its code of ethics on its Internet website: www.jacobinternet.com

Item 3. Audit Committee Financial Expert.

The registrant’s board of directors has determined that William B. Fell possesses the technical attributes to qualify as an “audit committee financial expert” serving on the registrant’s audit committee and designated William B. Fell as the “audit committee financial expert.” Mr. Fell is independent under the standards set forth in Item 3 of Form N-CSR.

Item 4. Principal Accountant Fees and Services.

The registrant has engaged its principal accountant to perform audit services and tax services during the past two fiscal years. “Audit services” refer to performing an audit of the registrant’s annual financial statements or services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements for those fiscal years. “Audit-related services” refer to the assurance and related services by the principal accountant that are reasonably related to the performance of the audit. “Tax services” refer to professional services rendered by the principal accountant for tax compliance, tax advice, and tax planning. The following table details the aggregate fees billed or expected to be billed for each of the last two fiscal years for audit fees, audit-related fees, tax fees and other fees by the principal accountant.

	FYE 8/31/2009		FYE 8/31/2008
Audit Fees	$	26,000	$	24,500
Audit-Related Fees	$	0	$	0
Tax Fees	$	4,150	$	4,050
All Other Fees	$	0	$	0

The registrant’s audit committee has adopted an Audit Committee Charter that provides that the audit committee shall pre-approve all audit and non-audit services of the registrant, including services provided to the registrant’s investment adviser or any entity controlling, controlled by, or under common control with the investment adviser that provides ongoing services to the registrant, if the engagement relates directly to the operations and financial reporting of the registrant.

The percentage of fees billed by Deloitte & Touche LLP applicable to non-audit services pursuant to waiver of pre-approval requirement were as follows:

	FYE 8/31/2009			FYE 8/31/2008
Audit-Related Fees		0	%		0	%
Tax Fees		0	%		0	%
All Other Fees		0	%		0	%

All of the principal accountant’s hours spent on auditing the registrant’s financial statements were attributed to work performed by full-time permanent employees of the principal accountant.

The following table indicates the non-audit fees billed or expected to be billed by the registrant’s accountant for services to the registrant and to the registrant’s investment adviser (and any other entity controlling, controlled by or under common control with the investment adviser) for the last two fiscal years.

Non-Audit Related Fees	FYE 8/31/2009		FYE 8/31/2008
Registrant	$	4,150	$	4,050
Registrant’s Investment Adviser	$	0	$	0

Item 5. Audit Committee of Listed Registrants.

Not applicable to registrants who are not listed issuers (as defined in Rule 10A-3 under the Securities Exchange Act of 1934).

Item 6. Investments.

The Schedule of Investments is included as part of the report to shareholders filed under Item 1 of this Form.

Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies.

Not applicable to open-end investment companies.

Item 8. Portfolio Managers of Closed-End Management Investment Companies.

Not applicable to open-end investment companies.

Item 9. Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers.

Not applicable to open-end investment companies.

Item 10. Submission of Matters to a Vote of Security Holders.

Not Applicable.

Item 11. Controls and Procedures.

(a)

The registrant’s principal executive officer/President and principal financial officer/Treasurer have reviewed the registrant’s disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940 (the “Act”)) as of a date within 90 days of the filing of this report, as required by Rule 30a-3(b) under the Act and Rules 13a-15(b) or 15d-15(b) under the Securities Exchange Act of 1934. Based on their review, such officers have concluded that the disclosure controls and procedures are effective in ensuring that information required to be disclosed in this report is appropriately recorded, processed, summarized and reported and made known to them by others within the registrant and by the registrant’s service provider.

(b)

There were no changes in the registrant’s internal control over financial reporting (as defined in Rule 30a-3(d) under the Act) that occurred during the second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting.

Item 12. Exhibits.

(a)	(1) Any code of ethics or amendment thereto, that is the subject of the disclosure required by Item 2, to the extent that the registrant intends to satisfy Item 2 requirements through filing an exhibit. The registrant has posted its Code of Ethics on its website at www.jacobinternet.com.
	(2) A separate certification for each principal executive and principal financial officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. Filed herewith.
	(3) Any written solicitation to purchase securities under Rule 23c-1 under the Act sent or given during the period covered by the report by or on behalf of the registrant to 10 or more persons. Not applicable to open-end investment companies.
(b)	Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. Furnished herewith.

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.

(Registrant) Jacob Internet Fund Inc.
By (Signature and Title)		/s/  Ryan Jacob
		Ryan Jacob, President
Date	11/5/2009

     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 persons on behalf of the registrant and in the capacities and on the dates indicated.

By (Signature and Title)		/s/  Ryan Jacob
		Ryan Jacob, President
Date	11/5/2009
By (Signature and Title)		/s/  Francis Alexander
		Francis Alexander, Treasurer
Date	11/5/2009

EX-99.CERT

EX.99.CERT

CERTIFICATIONS

I, Ryan Jacob, certify that:

1.	I have reviewed this report on Form N-CSR of Jacob Internet 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 financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report;
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
(d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the second fiscal quarter of the period covered by this report 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:	11/5/2009	/s/  Ryan Jacob
		Ryan Jacob
		President

EX.99.CERT

CERTIFICATIONS

I, Francis Alexander, certify that:

1.	I have reviewed this report on Form N-CSR of Jacob Internet 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 financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report;
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
(d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the second fiscal quarter of the period covered by this report 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:	11/5/2009	/s/ Francis Alexander
		Francis Alexander
		Treasurer

EX-99.906CERT

EX.99.906CERT

Certification Pursuant to Section 906 of the Sarbanes-Oxley Act

     Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, each of the undersigned officers of Jacob Internet Fund Inc., does hereby certify, to such officer’s knowledge, that the report on Form N-CSR of Jacob Internet Fund Inc. for the year ended August 31, 2009 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as applicable, and that the information contained in the Form N-CSR fairly presents, in all material respects, the financial condition and results of operations of Jacob Internet Fund Inc. for the stated period.

/s/ Ryan Jacob		/s/ Francis Alexander
Ryan Jacob		Francis Alexander
President, Jacob Internet Fund Inc.		Treasurer, Jacob Internet Fund Inc.
Dated:	11/5/2009

This statement accompanies this report on Form N-CSR pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not be deemed as filed by Jacob Internet Fund Inc. for purposes of Section 18 of the Securities Exchange Act of 1934.