-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, F4MHDNh5uCPb3cl7P05s0Bmp4TznGDBKnDLIcvTaDHar/JZ2mhqA1z0HNTs5qvd/ gA+gVxHsGBN6ZNhzrdgd0g== 0000950117-04-001755.txt : 20040506 0000950117-04-001755.hdr.sgml : 20040506 20040506101547 ACCESSION NUMBER: 0000950117-04-001755 CONFORMED SUBMISSION TYPE: N-CSRS PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20040229 FILED AS OF DATE: 20040506 EFFECTIVENESS DATE: 20040506 FILER: COMPANY DATA: COMPANY CONFORMED NAME: JACOB INTERNET FUND INC CENTRAL INDEX KEY: 0001090372 STATE OF INCORPORATION: MD FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: N-CSRS SEC ACT: 1940 Act SEC FILE NUMBER: 811-09447 FILM NUMBER: 04783495 BUSINESS ADDRESS: STREET 1: C/O BATTLE FOWLER LLP STREET 2: 75 EAST 55TH STREET CITY: NEW YORK STATE: NY ZIP: 10022 BUSINESS PHONE: 2128567000 MAIL ADDRESS: STREET 1: C/O BATTLE FOWLER LLP STREET 2: 75 EAST 55TH STREET CITY: NEW YORK STATE: NY ZIP: 10022 N-CSRS 1 a37417.txt JACOB INTERNET FUND INC. 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 1675 Broadway New York, NY 10019 (Address of principal executive offices) (Zip code) Ryan Jacob C/O Jacob Asset Management of New York LLC 1675 Broadway New York, NY 10019 (Name and address of agent for service) (212)-698-0700 Registrant's telephone number, including area code Date of fiscal year end: August 31, 2004 Date of reporting period: February 29, 2004 Item 1. Report to Stockholders. April 2004 Dear Fellow Investors, Over the past six months, we have seen corporate results in general, and Internet-related spending in particular, increasing at a robust pace. While not all companies are participating equally in this improved climate, those in attractive markets with unique products and services are clearly benefiting. By focusing on companies that are well-positioned in high-growth markets, the Fund has continued to post strong gains over the last six months. However, geopolitical events have recently moved back to the forefront of investors' concerns, raising new questions as to the pace of growth we should expect for the rest of 2004. While we do not expect economic growth figures to remain at the levels of the past year, and we are specifically concerned about employment gains, we expect general business activity to remain strong. Given that our near-term expectations are for more uneven growth in the economy and the markets, we believe that selectivity will now be one of the most important elements in delivering good performance. This has resulted in a number of shifts in the Fund's composition since our last shareholder report. First, we have decreased somewhat our exposure in small capitalization names, as values in this area have become more difficult to find with the recent advance of the equity markets. Instead, we have weighted the Fund's portfolio toward slightly larger companies whose stocks have not enjoyed as strong of a move but whose businesses are still exhibiting solid growth characteristics. However, many of the largest companies within the Internet sector still sport valuations such that we believe the risks outweigh the potential rewards. For that reason, we still tend to lean toward small to mid-size companies compared to other funds in the technology space. Additionally, we have had a modest shift to more growth-oriented holdings in the Fund. For instance, Internet advertising and gaming are two areas experiencing increased adoption in their respective markets, leading us to increase our ownership in these companies. Meanwhile, as a result of the broad market advance we have had recently, many situations we once viewed as value plays are now trading at levels that assume increasing earnings in their stock prices, causing us to scale back the Fund's weightings in some of these positions. However, some individual names that still offer unique value opportunities have recently been added to the Fund. We continue to believe a mix of growth and value holdings is helpful in mitigating overall portfolio volatility. In combination with an active trading approach, we hope to balance a lower risk profile for the Fund while allowing for participation in future gains. Once again, we would like to thank all of the Fund's shareholders for their trust and confidence. If anything, the past couple of years have helped strengthen our beliefs that the outlook for online usage and adoption remains strong and that the Internet will play an increasingly more important role in businesses and households throughout the world. Ryan Jacob Portfolio Manager The opinions expressed above are those of the portfolio manager and are subject to change. Forecasts made cannot be guaranteed. Past performance does not guarantee future results. Mutual fund investing involves risk; loss of principal is possible. There are specific risks inherent in investing in the Internet area, particularly with respect to smaller capitalized companies and the high volatility of Internet stocks. Must be preceded or accompanied by a prospectus. Quasar Distributors, LLC, distributor. (04/04) JACOB INTERNET FUND SCHEDULE OF INVESTMENTS FEBRUARY 29, 2004 (UNAUDITED) - --------------------------------------------------------------------------------
SHARES VALUE ------ ----- COMMON STOCKS 94.6% - ----------------------------------------------------------------------------------------------------- INTERNET -- COMMERCE 32.7% 35,773 Autobytel Inc.* $ 501,180 35,000 Ctrip.com International Ltd. -- ADR*^ 1,022,350 103,291 Digital River, Inc.* 2,261,040 5,000 eBay Inc.* 344,300 40,000 E*Trade Group, Inc.* 572,400 46,206 FreeMarkets, Inc.* 410,309 12,000 Getty Images, Inc.* 611,520 349,087 HomeStore, Inc.* 1,703,544 70,000 InterActiveCorp* 2,279,900 169,470 MatchNet PLC -- Spons Reg S GDR*^(EUR) 1,568,720 75,000 Monster Worldwide Inc.* 1,650,000 71,400 Netflix Inc.* 2,456,160 100,000 Orbitz, Inc. -- Class A* 2,611,000 50,000 The Charles Schwab Corporation 612,000 261,165 ValueClick, Inc.* 2,859,757 ----------- 21,464,180 - ----------------------------------------------------------------------------------------------------- INTERNET -- COMMUNICATIONS 2.1% 1,000 CIENA Corporation* 5,730 85,400 GlobespanVirata, Inc.* 757,498 42,800 Nuance Communications Inc.* 319,716 21,050 Openwave Systems Inc.* 319,118 ----------- 1,402,062 INTERNET -- INFRASTRUCTURE 28.4% - ----------------------------------------------------------------------------------------------------- 1,000 Adobe Systems Incorporated 37,240 36,609 Agile Software Corporation* 371,532 1,000 Akamai Technologies, Inc.* 15,000 100,000 Apple Computer, Inc.* 2,393,000 108,500 Digital Insight Corporation* 2,350,110 10,000 Docent, Inc.* 55,400 126,222 Internet Security Systems, Inc.* 2,235,392 62,071 MatrixOne, Inc.* 402,841 137,195 Netegrity, Inc.* 1,255,334 5,000 Network Associates, Inc.* 87,700 127,900 PalmOne, Inc.* 1,282,837 151,829 PalmSource, Inc.* 2,937,891 358,500 Plumtree Software, Inc.* 1,652,685 202,300 RealNetworks, Inc.* 1,151,087 187,400 Roxio, Inc.* 674,640 22,700 SafeNet, Inc.* 863,281 30,000 VeriSign, Inc.* 522,300 31,977 webMethods, Inc.* 338,956 ----------- 18,627,226 -----------
See notes to the financial statements. 2 JACOB INTERNET FUND SCHEDULE OF INVESTMENTS FEBRUARY 29, 2004 (UNAUDITED) - --------------------------------------------------------------------------------
SHARES VALUE ------ ----- COMMON STOCKS -- (CONTINUED) 94.6% - ----------------------------------------------------------------------------------------------------- INTERNET -- MEDIA CONTENT 31.4% 490,094 Alloy, Inc.* $ 2,626,904 1,600 Ask Jeeves, Inc.* 32,304 3,200 CNET Networks, Inc.* 31,808 25,000 DoubleClick Inc.* 271,250 48,000 Electronic Arts Inc.* 2,263,680 14,686 InfoSpace, Inc.* 533,983 185,100 iVillage Inc.* 1,106,898 290,791 MarketWatch.com, Inc.* 3,599,993 1,000 Netease.com Inc. -- ADR*^ 53,030 92,100 SINA.com*^ 4,069,070 73,800 Sohu.com Inc.*^ 2,073,780 87,942 Take-Two Interactive Software, Inc.* 2,752,585 58,704 THQ Inc.* 1,109,505 1,637 Yahoo! Inc.* 72,683 ----------- 20,597,473 ----------- TOTAL COMMON STOCKS (COST $45,957,953) 62,090,941 -----------
PRINCIPAL AMOUNT ------ SHORT-TERM INVESTMENTS 5.3% - ----------------------------------------------------------------------------------------------------- U.S. GOVERNMENT AGENCY OBLIGATIONS 3.4% $2,240,000 Federal Home Loan Bank, 0.70%, 3/1/04 2,240,000 ----------- Total U.S. Government Agency Obligations 2,240,000 ----------- VARIABLE RATE DEMAND NOTES # 1.9% 1,762 American Family Financial Services, Inc., 0.7108% 1,762 1,247,529 Wisconsin Corporate Central Credit Union, 0.76% 1,247,529 ----------- Total Variable Rate Demand Notes 1,249,291 ----------- TOTAL SHORT-TERM INVESTMENTS (COST $3,489,291) 3,489,291 ----------- TOTAL INVESTMENTS (COST $49,447,244) 99.9% 65,580,232 ----------- OTHER ASSETS, LESS LIABILITIES 0.1% 54,676 ----------- TOTAL NET ASSETS 100.0% $65,634,908 ----------- -----------
* Non-income producing security. ^ Foreign security. ADR -- American Depository Receipt. GDR -- Global Depository Receipt. EUR -- European Monetary Unit. # Variable rate demand notes are considered short-term obligations and are payable upon demand. Interest rates change periodically on specified dates. The rates listed are as of February 29, 2004. 3 JACOB INTERNET FUND STATEMENT OF ASSETS AND LIABILITIES FEBRUARY 29, 2004 (UNAUDITED) - -------------------------------------------------------------------------------- ASSETS: Investments, at value (cost $49,447,244) $ 65,580,232 Receivable for investments sold 127,021 Receivable for capital shares sold 237,260 Interest receivable 640 Other assets 74,470 ------------- Total Assets 66,019,623 ------------- LIABILITIES: Payable for investments purchased 162,522 Capital shares repurchased 9,666 Payable to Adviser 64,065 Accrued expenses and other liabilities 148,462 ------------- Total Liabilities 384,715 ------------- NET ASSETS $ 65,634,908 ------------- ------------- NET ASSETS CONSIST OF: Capital Stock $ 219,581,787 Accumulated net realized loss on investments (170,079,867) Net unrealized appreciation on investments 16,132,988 ------------- Total Net Assets $ 65,634,908 ------------- ------------- Shares outstanding (20 billion shares of $0.001 par value authorized) 36,003,342 ------------- Net asset value, redemption price and offering price per share $ 1.82 ------------- -------------
See notes to the financial statements. 4 JACOB INTERNET FUND STATEMENT OF OPERATIONS FOR THE SIX MONTHS ENDED FEBRUARY 29, 2004 (UNAUDITED) - -------------------------------------------------------------------------------- INVESTMENT INCOME Dividend income $ 2,363 Interest income 43,013 ----------- Total Investment Income 45,376 ----------- EXPENSES Investment advisory fee 513,859 Distribution expenses 143,881 Administration fee 28,515 Shareholder servicing and accounting costs 155,022 Custody fees 20,358 Federal and state registration 43,708 Professional fees 55,517 Reports to shareholders 29,849 Directors' fees and expenses 34,819 Other 12,812 ----------- Net expenses 1,038,340 ----------- NET INVESTMENT LOSS (992,964) ----------- REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS Net realized gain on investments 19,285,278 Change in net unrealized appreciation/depreciation on investments (4,669,335) ----------- Net realized and unrealized gain on investments 14,615,943 ----------- NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $13,622,979 ----------- -----------
See notes to the financial statements. 5 JACOB INTERNET FUND STATEMENTS OF CHANGES IN NET ASSETS - --------------------------------------------------------------------------------
SIX MONTHS ENDED YEAR ENDED FEBRUARY 29, 2004 AUGUST 31, 2003 ----------------- --------------- (UNAUDITED) OPERATIONS: Net investment loss $ (992,964) $ (911,432) Net realized gain on investments 19,285,278 18,959,885 Change in net unrealized appreciation/depreciation on investments (4,669,335) 25,566,197 ------------- ------------- Net increase in net assets resulting from operations 13,622,979 43,614,650 ------------- ------------- CAPITAL SHARE TRANSACTIONS: (NOTE 3) Proceeds from shares sold 93,753,692 179,365,586 Cost of shares redeemed (134,248,815) (142,564,481) ------------- ------------- Net increase (decrease) in net assets resulting from capital share transactions (40,495,123) 36,801,105 ------------- ------------- NET INCREASE (DECREASE) IN NET ASSETS (26,872,144) 80,415,755 NET ASSETS: Beginning of period 92,507,052 12,091,297 ------------- ------------- End of period $ 65,634,908 $ 92,507,052 ------------- ------------- ------------- -------------
See notes to the financial statements. 6 JACOB INTERNET FUND FINANCIAL HIGHLIGHTS - --------------------------------------------------------------------------------
DECEMBER 14, 1999(1) SIX MONTHS ENDED YEAR ENDED YEAR ENDED YEAR ENDED THROUGH FEBRUARY 29, 2004 AUGUST 31, 2003 AUGUST 31, 2002 AUGUST 31, 2001 AUGUST 31, 2000 ----------------- --------------- --------------- --------------- --------------- (UNAUDITED) PER SHARE DATA: Net asset value, beginning of period $ 1.48 $ 0.60 $ 0.83 $ 5.54 $ 10.00 ----------- ----------- ----------- ----------- ------------ INCOME FROM INVESTMENT OPERATIONS: Net investment loss(2) (0.03) (0.01) (0.04) (0.05) (0.09) Net realized and unrealized gains (losses) on investments 0.37 0.89 (0.19) (4.66) (4.37) ----------- ----------- ----------- ----------- ------------ Total from investment operations 0.34 0.88 (0.23) (4.71) (4.46) ----------- ----------- ----------- ----------- ------------ Net asset value, end of period $ 1.82 $ 1.48 $ 0.60 $ 0.83 $ 5.54 ----------- ----------- ----------- ----------- ------------ ----------- ----------- ----------- ----------- ------------ Total return 22.97%(3) 146.67% (27.71%) (85.02%)(4) (44.60%)(3) SUPPLEMENTAL DATA AND RATIOS: Net assets, end of period $65,634,908 $92,507,052 $12,091,297 $17,017,392 $127,779,557 Ratio of gross operating expenses to average net assets 2.52%(7) 2.85%(5) 5.29%(5) 2.99%(6) 2.30%(6)(7) Ratio of net operating expenses to average net assets 2.52%(7) 2.13%(5) 4.60%(5) 2.82%(6) 2.00%(6)(7) Ratio of net investment loss to average net assets reflecting gross operating expenses (2.41%)(7) (2.60%)(5) (5.06%)(5) (2.42%)(6) (1.85%)(6)(7) Ratio of net investment loss to average net assets reflecting net operating expenses (2.41%)(7) (1.88%)(5) (4.37%)(5) (2.25%)(6) (1.55%)(6)(7) Portfolio turnover rate 64.83% 363.27% 1,080.63% 347.84% 195.24%
- --------- (1) Commencement of operations. (2) Net investment loss per share is calculated using ending balances prior to consideration of adjustments for permanent book and tax differences. (3) Not annualized. (4) If certain losses had not been assumed by the affiliate, total return would have been lower by less than 0.01%. (5) The net operating expense ratio and the net investment loss ratio includes expense reductions from fees paid indirectly with brokerage commissions. (6) The net operating expense ratio and the net investment loss ratio includes expense reimbursements made by the Adviser. (7) Annualized. See notes to the financial statements. 7 JACOB INTERNET FUND NOTES TO THE FINANCIAL STATEMENTS FEBRUARY 29, 2004 (UNAUDITED) - -------------------------------------------------------------------------------- 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. 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 NMS and Small Cap exchanges, unless there are no transactions on the valuation date, in which case they are valued at the mean between the closing asked and bid 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 asked and bid prices is used. Securities traded on the NASDAQ NMS and Small Cap exchanges are valued at the NASDAQ Official Closing Price ('NOCP'). Debt securities with maturities of sixty days or less are valued at amortized cost, which approximates market value. Where market quotations are not readily available, securities are valued at fair value using procedures approved by the Board of Directors that are designed to determine a security's fair value. (b) 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. (c) Securities Transactions -- Security transactions are accounted for on the date the securities are purchased or sold. Realized gains and losses on securities sold are determined using the high cost method. (d) 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 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 difference arises. 8 JACOB INTERNET FUND NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) FEBRUARY 29, 2004 (UNAUDITED) - -------------------------------------------------------------------------------- (e) Federal Income Taxes -- The Fund intends to comply with provisions 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. (f) 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. NOTE 3 -- CAPITAL SHARE TRANSACTIONS At February 29, 2004, there were twenty billion shares, $0.001 par value, authorized. Transactions in shares of the Fund were as follows:
SIX MONTHS ENDED FEBRUARY 29, 2004 ---------------------------- SHARES AMOUNT ------ ------ Sales 57,532,891 $ 93,753,692 Redemptions (83,885,170) (134,248,815) ------------ ------------- Net Decrease (26,352,279) $ (40,495,123) ------------ ------------- ------------- SHARES OUTSTANDING: Beginning of period 62,355,621 ------------ End of period 36,003,342 ------------ ------------
YEAR ENDED AUGUST 31, 2003 ---------------------------- SHARES AMOUNT ------ ------ Sales 181,576,002 $ 179,365,586 Redemptions (139,216,257) (142,564,481) ------------ ------------- Net Increase 42,359,745 $ 36,801,105 ------------ ------------- ------------- SHARES OUTSTANDING: Beginning of period 19,995,876 ------------ End of period 62,355,621 ------------ ------------
9 JACOB INTERNET FUND NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) FEBRUARY 29, 2004 (UNAUDITED) - -------------------------------------------------------------------------------- NOTE 4 -- INVESTMENT TRANSACTIONS During the six months ended February 29, 2004, purchases and sales of investment securities (excluding short-term investments) for the Fund were $44,983,268 and $74,164,819, respectively. The Fund did not purchase U.S. Government securities as a part of its investment strategy during the six months ended February 29, 2004. At August 31, 2003, the components of accumulated earnings/(losses) on a tax basis were as follows: Cost of Investments. $ 73,482,494 -------------- -------------- Gross unrealized appreciation............................. 24,564,518 Gross unrealized depreciation............................. (8,632,241) -------------- Net unrealized appreciation............................... $ 15,932,277 -------------- -------------- Undistributed ordinary income............................. -- Undistributed long-term capital gain...................... -- -------------- Total distributable earnings.............................. $ -- -------------- -------------- Other accumulated losses.................................. $ (184,495,098) -------------- Total accumulated losses.................................. $ (168,562,821) -------------- --------------
At August 31, 2003, the Fund had an accumulated net realized capital loss carryover of $182,044,805, of which $92,168,445 expires in 2009 and $89,876,360 expires in 2010. 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 Fund. In addition, the Fund realized, on a tax basis, post October losses through August 31, 2003 of $2,450,293, which are not recognized for tax purposes until the first day of the following fiscal year. The Fund made no distributions during the fiscal year ended August 31, 2003. NOTE 5 -- INVESTMENT ADVISORY AND OTHER AGREEMENTS The Corporation has an Investment Advisory Agreement (the 'Agreement') with Jacob Asset Management of New York LLC (the 'Adviser'), with whom certain officers and Directors of the Board are affiliated, to furnish investment advisory services to the Fund. Under the terms of the 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. 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. 10 JACOB INTERNET FUND NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) FEBRUARY 29, 2004 (UNAUDITED) - -------------------------------------------------------------------------------- NOTE 6 -- 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 annum of the Funds' 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'). The Plan also provides for a distribution fee equal to 0.10% of the Fund's average daily net assets on an annual basis. Such a fee is paid in part to Quasar Distributors, LLC, the Fund's distributor, with the balance paid at the direction of the Adviser to broker-dealers, other financial professionals whose clients are Fund shareholders, and for providing distribution assistance and promotional support to the Fund. The Fund incurred $143,881 in expenses pursuant to the 12b-1 Plan for the six months ended February 29, 2004. 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. 11 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. Independent Auditors Ernst & Young 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. The prospectus should be read carefully before investing and can be obtained by calling: 1-888-Jacob-fx (522-6239) Jacob Asset Management of New York LLC 19 West 34th Street, Suite 816A, New York, NY, 10001 www.JacobInternet.com Jacob Internet Fund Inc. [Jacob Internet Fund JAM logo] Semi-Annual Report --------------------- February 29, 2004 Item 2. Code of Ethics. Not applicable. Item 3. Audit Committee Financial Expert. Not applicable for semi-annual reports. Item 4. Principal Accountant Fees and Services. Not applicable for semi-annual reports. Item 5. Audit Committee of Listed Registrants. Not applicable to open-end investment companies. Item 6. Schedule of Investments. Not applicable for periods ending before July 9, 2004. Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies. Not applicable to open-end investment companies. Item 8. Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchases. Not applicable to open-end investment companies. Item 9. Submission of Matters to a Vote of Security Holders. None. Item 10. Controls and Procedures. (a) The Registrant's President/Chief Executive Officer and Treasurer/Chief Financial Officer 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 Rule 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 registrant's last fiscal half-year that materially affected, or were reasonably likely to materially affect, the registrant's internal control over financial reporting. Item 11. Exhibits. (a) (1) Any code of ethics or amendment thereto, that is subject of the disclosure required by Item 2, to the extent that the registrant intends to satisfy Item 2 requirements through filing an exhibit. Not Applicable. (2) Certifications 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) Certification 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 04/27/04 ---------------------------------------------------------------- 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 04/27/04 ----------------------------------------------------------------- By (Signature and Title) /s/ Francis Alexander ---------------------------------------------- Francis Alexander, Treasurer Date 04/27/04 ------------------------------------------------------------------ EX-99.CERT 2 exa2.txt EXHIBIT (A)(2) CERT EX. (a)(2) 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) 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) Reserved 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 half-year (the registrant's second fiscal half-year in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 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: 04/27/04 /s/ Ryan Jacob - -------------------------- --------------------- Ryan Jacob President EX. (a)(2) 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) 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) Reserved 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 half-year (the registrant's second fiscal half-year in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 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: 04/27/04 Francis Alexander - ----------------------- ----------------- Francis Alexander Treasurer EX-99.906CERT 3 exb.txt EXHIBIT (B) CERT EX. (b) CERT 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 the Jacob Internet Fund Inc. does hereby certify, to such officer's knowledge, that the report on Form N-CSR of the Jacob Internet Fund Inc. for the period ended February 29, 2004 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 the 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: 04/27/04 - ------------------------------------ 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 the Securities Exchange Act of 1934. -----END PRIVACY-ENHANCED MESSAGE-----