Jacob Funds N-CSRS Certified semi-annual shareholder report (management investment company)

As filed with the Securities and Exchange Commission on May 6, 2011

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 Funds 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)

(424)237-2164
Registrant’s telephone number, including area code

Date of fiscal year end: August 31

Date of reporting period: February 28, 2011

TABLE OF CONTENTS

	Item 1. Report to Stockholders
	Item 2. Code of Ethics
	Item 3. Audit Committee Financial Expert
	Item 4. Principal Accountant Fees and Services
	Item 5. Audit Committee of Listed Registrants
	Item 6. Investments
	Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies
	Item 8. Portfolio Managers of Closed-End Management Investment Companies
	Item 9. Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers
	Item 10. Submission of Matters to a Vote of Security Holders
	Item 11. Controls and Procedures
	Item 12. Exhibits
SIGNATURES

Item 1.  Report to Stockholders.

Jacob Internet Fund

Jacob Small Cap Growth Fund

Jacob Wisdom Fund

Semi-Annual Report

February 28, 2011

The Jacob Internet Fund and Jacob Small Cap Growth Fund are mutual funds with the primary investment objective of long-term growth of capital.

The Jacob Wisdom Fund is a mutual fund with the primary investment objective to maximize total investment return consisting of a combination of income and capital appreciation.

The Jacob Internet Fund has 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	4
Schedule of Investments	7
Statement of Assets and Liabilities	15
Statement of Operations	16
Statement of Changes in Net Assets	17
Financial Highlights	20
Notes to the Financial Statements	23
Additional Information on Fund Expenses	38
Additional Information	40

Dear Fellow Investors,

Despite major challenges around the world, it’s becoming clearer that a global recovery is well underway. Importantly, employment figures have finally shown improvement in the past few months. The stock market has been volatile, but it is heartening that market averages have continued to post significant gains—in spite of the disaster in Japan, unrest in the Middle East, and sharply rising commodity prices.

The recent upward movement in stock prices may have some investors wondering whether the market is getting a bit ahead of itself. We at Jacob Funds feel confident that current levels are justified, noting that valuations remain well within historic norms. The key is that corporate earnings and cash flow are improving in lockstep with stock prices. As stock-pickers, this makes us optimistic about the current opportunities to invest in strong companies that are positioned for fast growth and high returns on invested capital, even if the economic recovery continues to be a bumpy ride.

Jacob Internet Fund

Jacob Internet Fund returned 36.84% in the past six months ending February 28, 2011, compared to the benchmark NASDAQ Composite Index which rose 31.61%.

Among the top drivers of our performance were two chip companies, both of which have nearly doubled since August—TriQuint Semiconductor and Cypress Semiconductor. TriQuint is a supplier of components to Apple for use in its iPhone and iPad products. Cypress’s touchscreen technology is used in mobile devices of many of the major players. With growth in the computer industry coming mainly from mobile devices, these manufacturers have seen their sales and backlogs go up significantly.

Also contributing to our outperformance were our two top Chinese holdings, SINA Corp. and Baidu.com. SINA has seen its growth explode after internally developing a service that is a hybrid of Twitter and Facebook. Meanwhile Baidu, the largest Chinese language internet search provider, continues to increase its margins and marketshare in the wake of Google’s exit from China. Baidu’s revenue growth has accelerated to over 90% annually and the positive impact on profitability has been even greater than we anticipated.

Another top performer is photo site Shutterfly, which is expanding its margins as its product mix moves away from photo prints toward consumer items such as photo books, calendars and mugs.

We added a new name in NetSpend, a fast-growing prepaid debit card company serving customers who lack established credit or are underserved by traditional banks. We also exited a few value names, including EarthLink, Global Solutions and TheStreet.com. While we still believe their prospects are good, we felt that there were better investment opportunities elsewhere.

Jacob Small Cap Fund

Jacob Small Cap fund enjoyed extremely strong performance for the six month period ending February 28, 2011, up 49.27%, while the Russell 2000 Growth Index was up 40.76%. The majority of our investments in this portfolio are in the technology, healthcare and energy sectors. Our favorite technology holdings in this fund include TriQuint and Cypress (see above).

Our performance was boosted by a name that is new to the portfolio, and which has become our largest holding. Amarin Corp. is a clinical stage biopharmaceutical company developing a prescription strength

omega-3 fish oil drug for treating patients with high triglyceride levels. The existing FDA approved drug in this billion-dollar market, Lovaza, is reported to have an undesirable side effect of raising LDL (bad) cholesterol. Amarin’s drug is expected to have almost the same effectiveness without this side effect. Our confidence in this stock is high, due to the fact that the product has already received approval in Japan, which has very stringent safety standards.

Another top performer was Achillion, a biopharmaceutical company which has three new drugs in development to treat hepatitis C infection, a multi-billion dollar market with few good treatment options.

Our energy company holdings also did well, not surprisingly in a period when oil prices rose to over $100 a barrel—though we believe our companies would have performed well even if oil prices were stable. Brigham Exploration uses advanced seismic imaging techniques in the oil-rich Bakken region of North Dakota. A new name, Rosetta Resources, has significant acreage in Texas as well as in the newer Alberta Bakken region in Canada, where exploratory drilling has yielded promising data. We also bought three smaller speculative positions in the Alberta Bakken.

We have exited a couple of alternative energy names over the period, EnerNOC and American Semiconductor. While alternative energy is a hot investment area and these are interesting companies, we decided to step away from the risks of dealing in these heavily regulated industries where the economics are still too uncertain.

Jacob Wisdom Fund

Our conservatively-run Jacob Wisdom Fund rose 13.96% in the six month period ending February 28, 2011, though it underperformed the S&P 500 Index, which was up 26.48%.

This fund is designed to preserve capital in down markets, so not surprisingly its performance did not keep pace in such an exuberant market. Generally speaking, when more speculative sectors lead the market, it is more difficult for the fund to match most major indices. That being said, we are still pleased with the high returns for the fund over the last six months and believe we are well positioned for future growth. Many of our mid-sized holdings of stalwart companies—such as Wal-Mart Stores, McDonald’s, Anheuser-Busch InBev and Visa—showed solid returns of between 1% and 5%. Our mortgage REITs were also up slightly, while continuing to pay high dividends.

We made just a few changes to this low turnover portfolio during the period. We added a position in Unilever, while cutting back on competitor Procter & Gamble. While both companies sell home care and personal care products, Unilever also derives approximately half of its sales from food products, and has greater exposure to emerging markets (about 50%) than Procter & Gamble (about 30%). Unilever manufactures close to 400 brands and enjoys a higher return on invested capital—and sports a higher dividend yield—than Procter & Gamble.

We’ve also added significantly to our position in Wal-Mart Stores, a company which has consistently demonstrated excellent return on invested capital even while it has grown tremendously in the past 11 years. When the stock price dipped recently, we felt it was an attractive opportunity to add aggressively to the position. It is now a top five holding of ours.

2

Once again, we thank you for entrusting us with your investments, and we look forward to a bright future together.

Ryan Jacob

Chairman and Chief Investment Officer

Frank Alexander

Portfolio Manager

Past performance is not a guarantee of future results.

Must be accompanied or preceded 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 Funds invest 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. 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.

The Funds’ can invest in small-and mid-cap securities which involve additional risks such as limited liquidity and greater volatility. Investments in debt securities typically decrease in value when interest rates rise. This risk is usually greater for longer-term debt securities.

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 S&P 500 Index is a broad based unmanaged index of 500 stocks, which is widely recognized as representative of the equity market in general. The NASDAQ Composite Index is a market capitalization weighted index that is designed to represent the performance of the National Market System which includes over 5,000 stocks traded only over-the-counter and not on an exchange. The Russell 2000 Growth Index measures the performance of the small-cap growth segment of the U.S. equity universe. It includes those Russell 2000 companies with higher price-to-book ratios and higher forecasted growth values. It is not possible to invest directly in an index.

Performance data reflects fee waivers and in the absence of these waivers performance would be reduced.

The Funds are distributed by Quasar Distributors, LLC.

3

Jacob Internet Fund

INDUSTRY BREAKDOWN AS OF FEBRUARY 28, 2011
(as a percentage of total investments)

4

Jacob Small Cap Growth Fund
INDUSTRY BREAKDOWN AS OF FEBRUARY 28, 2011
(as a percentage of total investments)

5

Jacob Wisdom Fund

INDUSTRY BREAKDOWN AS OF FEBRUARY 28, 2011
(as a percentage of total investments)

6

JACOB INTERNET FUND
SCHEDULE OF INVESTMENTS
February 28, 2011 (Unaudited)

Shares							Value
		COMMON STOCKS			98.1	%
		Internet—Commerce	26.0	%
	68,100	Bottomline Technologies, Inc.*					$	1,505,691
	40,000	Ctrip.com International Ltd.—ADR*^						1,550,800
	32,121	Digital River, Inc.*						1,078,623
	40,000	eBay Inc.*						1,340,200
	104,000	Expedia, Inc.						2,065,440
	4,500	Netflix, Inc.*(a)						930,015
	113,410	Netspend Holdings, Inc.*(a)						1,486,805
	10,000	New Oriental Education & Technology Group, Inc.—ADR*^						966,100
	28,794	Shutterfly, Inc.*						1,229,504
								12,153,178
		Internet—Infrastructure	40.3	%
	7,000	Apple Computer, Inc.*						2,472,470
	14,700	athenahealth Inc.*(a)						666,498
	34,000	Broadcom Corporation—Class A						1,401,480
	45,050	Cypress Semiconductor Corp.*						944,248
	51,250	LogMeIn, Inc.*						1,839,362
	25,500	Netlogic Microsystems Inc.*						1,055,445
	54,800	NetScout Systems, Inc.*						1,369,452
	600,558	Openwave Systems Inc.*						1,333,239
	20,000	Red Hat, Inc.*						825,600
	6,000	Salesforce.com, Inc.*						793,620
	39,596	SanDisk Corporation*						1,963,961
	67,447	Sourcefire Inc.*						1,827,814
	26,500	SuccessFactors, Inc.*						951,615
	100,000	TriQuint Semiconductor, Inc.*						1,425,000
								18,869,804
		Internet—Media	31.8	%
	20,000	Baidu.com, Inc.—ADR*^						2,423,200
	65,757	Geeknet, Inc.*						1,841,202
	4,000	Google Inc.*						2,453,600
	491,951	Hollywood Media Corp.*						811,719
	50,000	IAC/InterActiveCorp.*						1,553,500
	25,500	SINA Corporation*^						2,082,585

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

7

JACOB INTERNET FUND
SCHEDULE OF INVESTMENTS
February 28, 2011 (Unaudited)

Shares							Value
		COMMON STOCKS—(continued)			98.1	%
		Internet—Media—(continued)	31.8	%
	60,000	Tencent Holdings Limited (HK)					$	1,595,472
	127,874	Yahoo! Inc.*						2,097,134
								14,858,412
		TOTAL COMMON STOCKS (Cost $28,141,790)						45,881,394
Principal
Amount
		SHORT TERM INVESTMENTS			1.7	%
		U.S. Treasury Bills	1.7	%
$	200,000	0.05%, 03/10/2011						199,997
	200,000	0.05%, 03/31/2011						199,992
	200,000	0.13%, 06/30/2011						199,911
	200,000	0.16%, 08/25/2011						199,843
		TOTAL SHORT TERM INVESTMENTS (Cost $799,833)						799,743
		INVESTMENTS PURCHASED WITH CASH PROCEEDS FROM SECURITIES LENDING			0.4	%
		Commercial Paper	0.4	%
	718,910	Ottimo Funding LLC, 4.71%, Due 10/27/11(b)						192,320
		TOTAL INVESTMENTS PURCHASED WITH CASH PROCEEDS FROM SECURITIES LENDING (Cost $718,910)						192,320
		TOTAL INVESTMENTS (Cost $29,660,533)			100.2	%		46,873,457
		LIABILITIES IN EXCESS OF OTHER ASSETS			(0.2	)%		(116,880	)
		TOTAL NET ASSETS			100.0	%	$	46,756,577

*	Non Income Producing.
^	U.S. Dollar-denominated foreign security.
(a)	All or portion of shares are on loan.
(b)	Illiquid security fair valued by Valuation Committee as delegated by the Jacob Funds’ Board of Directors.
ADR	American Depositary 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.

8

JACOB SMALL CAP GROWTH FUND
SCHEDULE OF INVESTMENTS
February 28, 2011 (Unaudited)

Shares							Value
		COMMON STOCKS			92.1	%
		Accommodation & Food Services	6.5	%
	6,000	Home Inns & Hotels Management, Inc—ADR*^					$	202,860
	11,000	7 Days Group Holdings Ltd.—ADR*^						208,010
								410,870
		Alternative Energy	3.0	%
	7,000	American Superconductor Corporation*						185,640
		Health Care Services & Supplies	7.6	%
	9,000	Bio-Reference Laboratories, Inc.*						188,280
	22,000	Delcath Systems Inc.*						144,100
	3,500	IPC The Hospitalist Co*						142,800
								475,180
		Internet Services	16.0	%
	4,100	Digital River, Inc.*						137,678
	6,750	LogMeIn, Inc.*						242,258
	14,058	Netspend Holdings, Inc.*						184,300
	3,600	Shutterfly, Inc.*						153,720
	3,500	SINA Corporation*^						285,845
								1,003,801
		Oil & Gas—Exploration & Production	17.8	%
	120,000	Bowood Energy Inc.* ^						65,462
	9,000	Brigham Exploration Company*						329,220
	20,000	DeeThree Exploration Ltd.* ^						96,753
	8,000	Northern Oil and Gas, Inc.*						254,160
	100,000	Primary Petroleum Corp.* ^						77,196
	6,500	Rosetta Resources, Inc.*						294,840
								1,117,631
		Pharmaceuticals	19.3	%
	31,089	Achillion Pharmaceuticals Inc.*						180,627
	50,000	AEterna Zentaris Inc.*^						91,000
	50,000	Amarin Corporation PLC—ADR*^						386,500
	20,000	Keryx Biopharmaceuticals, Inc.*						79,000
	10,000	MAP Pharmaceuticals Inc.*						161,300

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

9

JACOB SMALL CAP GROWTH FUND
SCHEDULE OF INVESTMENTS
February 28, 2011 (Unaudited)

Shares							Value
		COMMON STOCKS—(continued)			92.1	%
		Pharmaceuticals—(continued)	19.3	%
	20,000	Rigel Pharmaceuticals, Inc.*					$	139,800
	26,000	Trius Therapeutics, Inc.*						174,980
								1,213,207
		Semiconductors	8.4	%
	6,000	Cypress Semiconductor Corporation*						125,760
	3,500	Netlogic Microsystems Inc.*						144,865
	18,000	TriQuint Semiconductor, Inc.*						256,500
								527,125
		Software	13.5	%
	1,900	athenahealth Inc.*						86,146
	9,000	Bottomline Technologies, Inc.*						198,990
	7,200	Netscout Systems, Inc.*						179,928
	9,700	Sourcefire Inc.*						262,870
	3,400	SuccessFactors, Inc.*						122,094
								850,028
		TOTAL COMMON STOCKS (Cost $4,111,181)						5,783,482
Shares/
Principal
Amount
		Warrants	0.0	%
	2,030	GreenHunter Energy, Inc.*(a)						203
		Total Warrants (Cost $0)						203
		SHORT TERM INVESTMENTS			2.4	%
		U.S. Treasury Bills	2.4	%
$	50,000	0.05%, 03/31/2011						49,998
	50,000	0.13%, 06/30/2011						49,978
	50,000	0.16%, 08/25/2011						49,961
		TOTAL SHORT TERM INVESTMENTS (Cost $149,959)						149,937
		TOTAL INVESTMENTS (Cost $4,261,140)			94.5	%		5,933,622
		OTHER ASSETS IN EXCESS OF LIABILITIES			5.5	%		343,843
		TOTAL NET ASSETS			100.0	%	$	6,277,465

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

10

JACOB SMALL CAP GROWTH FUND
SCHEDULE OF INVESTMENTS
February 28, 2011 (Unaudited)

*	Non Income Producing.
^	U.S. Dollar-denominated foreign security.
(a)	Illiquid security — acquired through private placement.
ADR	American Depositary Receipt.

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

11

JACOB WISDOM FUND
SCHEDULE OF INVESTMENTS
February 28, 2011 (Unaudited)

Shares							Value
		COMMON STOCKS			99.2	%
		Air Freight & Logistics	7.9	%
	3,000	C.H. Robinson Worldwide, Inc.					$	217,170
	4,500	Expeditors International of Washington, Inc.						215,100
	6,000	United Parcel Service, Inc. (UPS)—Class B						442,800
								875,070
		Beverages	12.0	%
	5,000	Anheuser-Busch InBev NV—ADR^						280,150
	7,800	The Coca-Cola Company						498,576
	3,000	Diageo plc—ADR^						234,780
	5,000	PepsiCo, Inc.						317,100
								1,330,606
		Commercial Banks	3.0	%
	20,000	Banco Latinoamericano de Comercio Exterior SA^						336,000
		Commercial Services & Supplies	4.7	%
	2,400	The Sherwin-Williams Company						197,088
	10,000	Verisk Analytics, Inc.—Class A*						323,500
								520,588
		Consumer Finance	9.0	%
	6,000	American Express Company						261,420
	12,000	Lender Processing Services, Inc.						408,840
	4,500	Visa Inc.—Class A						328,725
								998,985
		Education	2.9	%
	3,300	New Oriental Education & Technology Group, Inc.—ADR*^						318,813
		Food & Staples Retailing	2.4	%
	3,500	Costco Wholesale Corporation						261,765
		Food Products	5.5	%
	6,000	Mead Johnson Nutrition Company						359,100
	8,400	Unilever NV—NY Shares^						254,016
								613,116
		Health Care Equipment & Supplies	6.5	%
	3,000	Becton Dickinson & Company						240,000

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

12

JACOB WISDOM FUND
SCHEDULE OF INVESTMENTS
February 28, 2011 (Unaudited)

Shares							Value
		COMMON STOCKS—(continued)			99.2	%
		Health Care Equipment & Supplies—(continued)	6.5	%
	3,600	C. R. Bard, Inc.					$	351,936
	2,000	Johnson & Johnson						122,880
								714,816
		Hotels, Restaurants & Leisure	2.4	%
	3,500	McDonald’s Corporation						264,880
		Household Products	3.4	%
	6,000	The Procter & Gamble Company						378,300
		Insurance	7.4	%
	2	Berkshire Hathaway Inc.—Class A*						262,600
	6,000	The Chubb Corporation						364,080
	3,000	Torchmark Corporation						195,750
								822,430
		Machinery	1.1	%
	2,063	WABCO Holdings Inc.*						120,541
		Oil, Gas & Consumable Fuels	7.8	%
	4,500	Exxon Mobil Corporation						384,885
	12,000	Southwestern Energy Company*						473,760
								858,645
		Pharmaceuticals	2.8	%
	9,000	Sanofi-Aventis—ADR^						311,220
		Real Estate Investment Trusts (REITs)	13.5	%
	22,800	Annaly Capital Management Inc.						408,804
	78,000	Anworth Mortgage Asset Corporation						556,920
	15,000	Cypress Sharpridge Investments, Inc						186,900
	40,000	MFA Financial, Inc.						338,800
								1,491,424
		Software	1.6	%
	5,000	MSCI Inc.—Class A*						177,500
		Specialty Retail	1.9	%
	4,000	Wal-Mart Stores, Inc.						207,920

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

13

JACOB WISDOM FUND
SCHEDULE OF INVESTMENTS
February 28, 2011 (Unaudited)

Shares/
Principal
Amount							Value
		COMMON STOCKS—(continued)			99.2	%
		Textiles, Apparel & Luxury Goods	3.4	%
	4,200	Nike, Inc.—Class B					$	373,926
		TOTAL COMMON STOCKS (Cost $9,357,344)						10,976,545
		SHORT TERM INVESTMENTS			0.1	%
		U.S. Treasury Bills	0.1	%
$	15,000	0.16%, 08/25/2011						14,988
		TOTAL SHORT TERM INVESTMENTS (Cost $14,993)						14,988
		TOTAL INVESTMENTS (Cost $9,372,337)			99.3	%		10,991,533
		OTHER ASSETS IN EXCESS OF LIABILITIES			0.7	%		79,134
		TOTAL NET ASSETS			100.0	%	$	11,070,667

*	Non Income Producing.
^	U.S. Dollar-denominated foreign security.
ADR	American Depository Receipt.

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

14

JACOB FUNDS INC.
STATEMENT OF ASSETS AND LIABILITIES
February 28, 2011 (Unaudited)

				Jacob
	Jacob			Small Cap			Jacob
	Internet Fund			Growth Fund			Wisdom Fund
Assets:
Investments, at value (cost $29,660,533, $4,261,140 and $9,372,337, respectively)	$	46,873,457	(1)	$	5,933,622		$	10,991,533
Cash		921,882			372,276			130,344
Cash from securities lending broker (See Note 6)		100,815			—			—
Receivable for capital shares sold		26,419			—			300
Receivable for investments sold		640,043			62,344			—
Dividend Receivable		1,980			—			11,909
Other assets		19,625			25,224			19,656
Total Assets		48,584,221			6,393,466			11,153,742
Liabilities:
Payable for collateral received for securities loaned		819,726			—			—
Payable for securities purchased		582,928			53,062			—
Payable for capital shares repurchased		191,777			—			2,000
Payable to Adviser		59,824			—			—
Payable to Custodian		2,895			2,533			2,829
Payable for distribution expenses (See Note 7)		20,324			2,155			16,671
Accrued printing and mailing fees		21,607			3,208			1,278
Accrued transfer agent fees		54,782			11,973			19,569
Accrued expenses and other liabilities		73,781			43,070			40,728
Total Liabilities		1,827,644			116,001			83,075
Net Assets	$	46,756,577		$	6,277,465		$	11,070,667
Net Assets Consist Of:
Capital Stock	$	44,940,361		$	21,316,990		$	11,058,017
Undistributed net investment income		—			—			54,482
Accumulated net realized loss on investments		(15,396,708	)		(16,712,007	)		(1,661,028	)
Net unrealized appreciation on investments		17,212,924			1,672,482			1,619,196
Total Net Assets	$	46,756,577		$	6,277,465		$	11,070,667
Shares outstanding (20 billion shares of $0.001 par value authorized)		14,939,030			385,539			1,274,467
Net asset value, redemption price and offering price per share	$	3.13		$	16.28		$	8.69

(1) Includes securities out on loan to brokers with a market value of $786,827.

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

15

JACOB FUNDS INC.
STATEMENT OF OPERATIONS
For the Six Months Ended February 28, 2011 (Unaudited)

				Jacob
	Jacob			Small Cap			Jacob
	Internet Fund			Growth Fund			Wisdom Fund
Investment Income
Dividend income	$	38,616		$	—		$	189,878	(1)
Interest income		191			43			—
Securities lending income		8,269			���			—
Total Investment Income		47,076			43			189,878
Expenses
Investment advisory fee		270,391			24,452			28,385
Distribution expenses (See Note 7)		75,710			9,509			19,870
Administration fee		23,642			19,200			20,462
Fund accounting fees		14,837			13,837			14,540
Transfer agent fees		86,604			15,996			20,586
Custody fees		3,801			3,065			3,271
Federal and state registration		15,885			14,154			16,316
Insurance expense		9,300			6,890			3,006
Audit fees		7,471			7,371			7,355
Legal fees		42,397			12,894			14,484
Reports to shareholders		28,884			3,089			6,873
Directors’ fees and expenses		34,373			3,961			8,588
Other		181			255			45
Total Expenses		613,476			134,673			163,781
Expense Waiver (See Note 5)		—			(24,452	)		(28,385	)
Expense Recoupment (See Note 5)		24,647			—			—
Net expenses		638,123			110,221			135,396
Net Investment Income (Loss)		(591,047	)		(110,178	)		54,482
Realized and Unrealized Gain on Investments
Net realized gain on investments		3,015,106			588,895			78,971
Change in net unrealized appreciation/depreciation on investments		10,460,729			1,523,880			1,353,865
Net realized and unrealized gain on investments		13,475,835			2,112,775			1,432,836
Net Increase in Net Assets Resulting from Operations	$	12,884,788		$	2,002,597		$	1,487,318

(1) Net of foreign tax withheld of $728 for Wisdom Fund.

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

16

JACOB FUNDS INC.
JACOB INTERNET FUND
STATEMENTS OF CHANGES IN NET ASSETS

	Six Months Ended			Year Ended
	February 28, 2011			August 31, 2010
	(Unaudited)
Operations:
Net investment loss	$	(591,047	)	$	(892,853	)
Net realized gain on investments		3,015,106			374,166
Change in net unrealized appreciation/depreciation on investments		10,460,729			5,557,792
Net increase in net assets resulting from operations		12,884,788			5,039,105
Capital Share Transactions: (Note 3)
Proceeds from shares sold		4,263,961			2,607,596
Cost of shares redeemed		(5,452,101	)		(9,504,225	)
Redemption fees		1,512			2,907
Net decrease in net assets resulting from capital share transactions		(1,186,628	)		(6,893,722	)
Net Increase (Decrease) in Net Assets		11,698,160			(1,854,617	)
Net Assets:
Beginning of period		35,058,417			36,913,034
End of period	$	46,756,577		$	35,058,417

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

17

JACOB FUNDS INC.
JACOB SMALL CAP GROWTH FUND
STATEMENTS OF CHANGES IN NET ASSETS

	Six Months Ended			Period Ended
	February 28, 2011			August 31, 2010*
	(Unaudited)
Operations:
Net investment loss	$	(110,178	)	$	(234,241	)
Net realized gain on investments		588,895			1,514,092
Change in net unrealized appreciation/depreciation on investments		1,523,880			(1,331,963	)
Net increase (decrease) in net assets resulting from operations		2,002,597			(52,112	)
Capital Share Transactions: (Note 3)
Proceeds from shares sold		734,764			551,595
Cost of shares redeemed		(533,449	)		(4,747,889	)
Redemption fees		527			61
Net increase (decrease) in net assets resulting from capital share transactions		201,842			(4,196,233	)
Net Increase (Decrease) in Net Assets		2,204,439			(4,248,345	)
Net Assets:
Beginning of period		4,073,026			8,321,371
End of period	$	6,277,465		$	4,073,026

* The Jacob Small Cap Growth Fund’s predecessor Fund had a fiscal year end of September 30, so the activity began on October 1, 2009 and the numbers shown above were for the eleven month period.

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

18

JACOB FUNDS INC.
JACOB WISDOM FUND
STATEMENTS OF CHANGES IN NET ASSETS

	Six Months Ended			Period Ended
	February 28, 2011			August 31, 2010*
	(Unaudited)
Operations:
Net investment income	$	54,482		$	23,502
Net realized gain (loss) on investments		78,971			(186,905	)
Change in net unrealized appreciation/depreciation on investments		1,353,865			168,807
Net increase in net assets resulting from operations		1,487,318			5,404
Distributions to Shareholders:
From net realized gain		(23,502	)		—
Total distributions to shareholders		(23,502	)		—
Capital Share Transactions: (Note 3)
Proceeds from shares sold		22,790			168,755
Proceeds from reinvestment of distribution		18,963			—
Cost of shares redeemed		(1,619,940	)		(751,818	)
Redemption fees		4			—
Net decrease in net assets resulting from capital share transactions		(1,578,183	)		(583,063	)
Net Decrease in Net Assets		(114,367	)		(577,659	)
Net Assets:
Beginning of period		11,185,034			11,762,693
End of period**	$	11,070,667		$	11,185,034
** Includes undistributed net investment income of:	$	54,482		$	23,502

* The Jacob Wisdom Fund’s predecessor Fund had a fiscal year end of May 31, so the activity began on June 1, 2010 and the numbers shown above were for the three month period.

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

19

JACOB FUNDS INC.
JACOB INTERNET FUND
FINANCIAL HIGHLIGHTS

	Six Months Ended			Year Ended			Year Ended			Year Ended			Year Ended			Year Ended
	February 28, 2011			August 31, 2010			August 31, 2009			August 31, 2008			August 31, 2007			August 31, 2006
	(Unaudited)
Per Share Data:
Net asset value, beginning of period	$	2.28		$	1.99		$	2.07		$	2.71		$	2.47		$	2.06
Income (loss) from investment operations:
Net investment income (loss)		(0.04	)(1)		(0.06	)(1)		(0.06	)(1)		0.02	(2)		(0.01	)(1)		(0.03	)
Net realized and unrealized gains (losses) on investments		0.89			0.35			(0.02	)		(0.59	)		0.28			0.44
Total from investment operations		0.85			0.29			(0.08	)		(0.57	)		0.27			0.41
Less distributions from net investment income		—			—			—			(0.07	)		(0.03	)		—
Net asset value, end of period	$	3.13		$	2.28		$	1.99		$	2.07		$	2.71		$	2.47
Total return		36.84%	(5)		14.57%			(3.86)%			(21.63)%			11.06%			19.90%
Supplemental data and ratios:
Net assets, end of period (in thousands)	$	46,757		$	35,058		$	36,913		$	44,516		$	77,518		$	73,106
Ratio of gross operating expenses (prior to waiver or recoupment) to average net assets		2.84%	(4)(6)		3.06%			3.71%			2.69%			2.36%			2.42%
Ratio of net operating expenses (after waiver or recoupment) to average net assets		2.95%	(6)		2.96%	(4)		3.64%	(4)		2.65%	(3)		2.26%	(3)		2.35%	(3)
Ratio of net investment income (loss) (prior to waiver or recoupment) to average net assets		(2.62)%	(4)(6)		(2.49)%			(3.54)%			0.86%			(0.26)%			(1.65)%
Ratio of net investment income (loss) (after waiver or recoupment) to average net assets		(2.73)%	(6)		(2.39)%	(4)		(3.47)%	(4)		0.90%	(3)		(0.16)%	(3)		(1.58)%	(3)
Portfolio turnover rate		26.74%	(5)		52.09%			106.98%			80.46%			91.44%			125.99%

(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, 2012, 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%.
(5)	Not Annualized.
(6)	Annualized.

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

20

JACOB FUNDS INC.

JACOB SMALL CAP GROWTH FUND
FINANCIAL HIGHLIGHTS

				October 1, 2009
	Six Months Ended			Through			Year Ended			Year Ended			Year Ended			Year Ended
	February 28, 2011			August 31, 2010(1)			September 30, 2009			September 30, 2008			September 30, 2007			September 30, 2006
	(Unaudited)
Per Share Data:
Net asset value, beginning of period	$	10.90		$	11.16		$	13.82		$	21.94		$	15.81		$	16.16
Income (loss) from investment operations:
Net investment loss		(0.29	)(3)		(0.48	)(2)		(0.17	)(2)		(0.29	)(3)		(0.31	)(2)		(0.27	)(2)
Net realized and unrealized gain (loss) on investments		5.67			0.22			(2.49	)		(7.83	)		6.44			(0.08	)
Total from investment operations		5.38			(0.26	)		(2.66	)		(8.12	)		6.13			(0.35	)
Net asset value, end of period	$	16.28		$	10.90		$	11.16		$	13.82		$	21.94		$	15.81
Total return		49.27%	(7)		(2.33)%	(7)		(19.25)%			(37.01)%			38.77%			(2.17)%
Supplemental data and ratios:
Net assets, end of period (in thousands)	$	6,277		$	4,073		$	8,321		$	31,907		$	50,378		$	40,627
Ratio of gross operating expenses (prior to waiver or reimbursements) to average net assets		4.96%	(8)		5.43%	(4)(5)(8)		2.64%	(4)(5)		1.86%	(4)		1.83%	(4)		1.73%	(4)
Ratio of net operating expenses (after waiver or reimbursements) to average net assets		4.06%	(6)(8)		4.82%	(4)(5)(6)(8)		2.64%	(4)(5)		1.86%	(4)		1.83%	(4)		1.73%	(4)
Ratio of net investment loss (prior to waiver or reimbursements) to average net assets		(4.96)%	(8)		(5.21)%	(8)		(1.87)%			(1.56)%			(1.72)%			(1.61)%
Ratio of net investment loss (after waiver or reimbursements) to average net assets		(4.06)%	(6)(8)		(4.60)%	(5)(6)(8)		(1.87)%	(5)		(1.56)%			(1.72)%			(1.61)%
Portfolio turnover rate		54.08%	(7)		228.16%	(7)		307.06%			246.41%			231.96%			246.66%

(1)	The financial highlights set forth herein include the historical financial highlights of the Rockland Small Cap Growth Fund. The assets of the Rockland Small Cap Growth Fund were acquired by the Jacob Small Cap Growth Fund on February 1, 2010. At the time of the reorganization, the adviser changed from Gould Investment Partners, LLC to Jacob Asset Management of New York LLC. The Fund’s fiscal year was changed to August 31 to align with the other Jacob Funds.
(2)	Net investment loss per share represents net investment loss divided by the average shares outstanding throughout the year.
(3)	Net investment loss per share is calculated using ending balances prior to consideration of adjustments for permanent book and tax differences.
(4)	The expense ratio includes interest expense paid to the custodian on overdrafts to cover shareholder redemptions. The expense ratio for interest expense paid to the custodian for the period ended August 31, 2010 and the years ended September 30, 2009, 2008, 2007, 2006 and 2005 was 0.02%, 0.01%, 0.01%, 0.01%, 0.01% and 0.02%, respectively.
(5)	Effective September 1, 2009, Gould Investment Partners, LLC agreed to voluntarily waive 0.25% of its advisory fee indefinitely. The impact on the net expense ratio was (0.01)% for the fiscal year ended September 30, 2009 and (0.25)% for the period October 1, 2009 through January 31, 2010.
(6)	Effective February 1, 2010 (date of reorganization) and for a period of two years following the reorganization, the Adviser has contractually agreed to waive its advisory fees in an amount up to an annual rate of 0.90% of the average daily net assets, to the extent that the Fund’s operating expenses exceed 2.45% of average daily net assets.
(7)	Not annualized.
(8)	Annualized.

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

21

JACOB FUNDS INC.

JACOB WISDOM FUND
FINANCIAL HIGHLIGHTS

				June 1, 2010
	Six Months Ended			Through			Year Ended			Year Ended			Year Ended			Year Ended			Year Ended
	February 28, 2011			August 31, 2010(1)			May 31, 2010(2)			May 31, 2009			May 31, 2008			May 31, 2007			May 31, 2006
	(Unaudited)
Net asset value, beginning of period	$	7.65		$	7.65		$	6.48		$	10.34		$	13.28		$	12.16		$	12.72
Income (loss) from investment operations:
Net investment income (loss)		0.03			0.02			0.00			(0.02	)		(0.11	)		(0.10	)		0.00	(4)
Net realized and unrealized gain (loss) on securities		1.03			(0.02	)		1.18			(3.23	)		(1.13	)		2.29			0.22
Total from investment operations		1.06			0.00			1.18			(3.25	)		(1.24	)		2.19			0.22
Less distributions:
Dividends from net investment income		—			—			—			—			—			—			(0.06	)
Distributions from capital gains		(0.02)			—			(0.01	)		(0.61	)		(1.70	)		(1.07	)		(0.72	)
Total distributions		(0.02)			—			(0.01	)		(0.61	)		(1.70	)		(1.07	)		(0.78	)
Net asset value, end of period	$	8.69		$	7.65		$	7.65		$	6.48		$	10.34		$	13.28		$	12.16
Total return		13.96%	(5)		0.00%	(5)		18.24%			(31.46)%			(9.77)%			18.59%			1.66%
Net assets, end of period (in thousands)	$	11,071		$	11,185		$	11,763		$	4,315		$	8,539		$	12,154		$	12,842
Ratios of:
Gross operating expenses (prior to waiver or reimbursements) to average net assets(3)		2.88%	(6)		3.22%	(6)		4.24%			3.44%			2.72%			2.48%			2.28%
Net operating expenses (after waiver or reimbursements) to average net assets(3)		2.38%	(3)(6)		2.72%	(6)		3.14%			2.75%			2.71%			2.48%			2.28%
Net investment income (loss) (prior to waiver or reimbursements) to average net assets		0.46%	(6)		0.30%	(6)		(0.80)%			(0.86)%			(0.90)%			(0.76)%			0.07%
Net investment income (loss) (after waiver or reimbursements) to average net assets		0.96%	(3)(6)		0.80%	(6)		0.30%			(0.17)%			(0.89)%			(0.76)%			0.07%
Portfolio turnover rate		5.05%	(5)		6.50%	(5)		60.69%			37.12%			30.89%			10.72%			19.03%

(1)	The Fund’s fiscal year was changed to August 31 to align with the other Jacob Funds.
(2)	The financial highlights set forth herein include the historical financial highlights of the Wisdom Fund. The Wisdom Fund was reorganized into Jacob Wisdom Fund on February 18, 2010. On December 1, 2009, the adviser changed from Atlanta Investment Counsel, LLC to Jacob Asset Management of New York LLC. Information prior to February 18, 2010 reflects the performance of the Wisdom Fund’s Class B shares. The return of capital listed in Note 4 was paid out of the Wisdom Fund’s Institutional Class and Investor Class.
(3)	Effective February 18, 2010 (date of reorganization) and for a period of two years following the reorganization, the Adviser has contractually agreed to waive its advisory fees in an amount up to an annual rate of 0.50% of the average daily net assets, to the extent that the Fund’s operating expenses exceed 1.95% of average daily net assets. Prior to November 30, 2009, the previous adviser agreed to waive operating expenses over 1.75% of the Fund’s average daily net assets, exclusive of interest, taxes, brokerage fees and 12b-1 fees.
(4)	No effect to net investment income due to reimbursement of $10,752 by the previous adviser for certain trade errors.
(5)	Not annualized.
(6)	Annualized.

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

22

JACOB FUNDS INC.
NOTES TO THE FINANCIAL STATEMENTS
February 28, 2011 (Unaudited)

NOTE 1—DESCRIPTION OF FUND

Jacob Funds 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 three “diversified” series, the Jacob Internet Fund (the “Internet Fund”), the Jacob Small Cap Growth Fund (the “Small Cap Growth Fund”) and the Jacob Wisdom Fund (the “Wisdom Fund”), collectively the “Funds” and the authorized capital stock of the Corporation 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 Internet Fund is long-term growth of capital with current income as a secondary objective. The primary investment objective of the Small Cap Growth Fund is long-term growth of capital. The primary investment objective of the Wisdom Fund is to maximize total investment return consisting of a combination of income and capital appreciation. The Internet Fund commenced operations on December 14, 1999. The Small Cap Growth Fund commenced operations on February 1, 2010 when it acquired the assets and liabilities of the Rockland Small Cap Growth Fund in a reorganization transaction (the Small Cap Growth Fund is the successor fund to the Rockland Small Cap Growth Fund), and the Jacob Wisdom Fund commenced operations when it acquired the assets and liabilities of the Wisdom Fund on February 18, 2010 in a reorganization transaction (the Jacob Wisdom Fund is the successor fund to the Wisdom Fund).

NOTE 2—SIGNIFICANT ACCOUNTING POLICIES

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

(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 a Fund if acquired within 60 days of maturity or, if already held by a 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.

23

JACOB FUNDS INC.
NOTES TO THE FINANCIAL STATEMENTS (Continued)
February 28, 2011 (Unaudited)

The Funds adopted fair valuation accounting standards which establish an authoritative definition of fair value and set out a hierarchy for measuring fair value. These standards require additional disclosures about the various inputs and valuation techniques used to develop the measurements of fair value and a discussion in changes in valuation techniques and related inputs during the period. These standards define fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value hierarchy is organized into three levels based upon the assumptions (referred to as “inputs”) used in pricing the asset or liability. These standards state that “observable inputs” reflect the assumptions market participants would use in pricing the asset or liability based on market data obtained from independent sources and “unobservable inputs” reflect an entity’s own assumptions about the assumptions market participants would use in pricing the asset or liability.

Summary of Fair Value Exposure

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

Level 1—Unadjusted quoted prices in active markets for identical assets or liabilities that the Corporation has the ability to access.

Level 2—Observable inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. These inputs may include quoted prices for the identical instrument on an inactive market, prices for similar instruments, interest rates, prepayment speeds, credit risk, yield curves, default rates and similar data.

Level 3—Unobservable inputs for the asset or liability, to the extent relevant observable inputs are not available, representing the Corporation’s own assumptions about the assumptions a market participant would use in valuing the asset or liability, and based on the best information available.

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

24

JACOB FUNDS INC.
NOTES TO THE FINANCIAL STATEMENTS (Continued)
February 28, 2011 (Unaudited)

The following is a summary of the inputs used to value the Internet Fund’s investments as of February 28, 2011:

	Level 1		Level 2		Level 3		Total
Common Stock
Internet—Commerce	$	12,153,178	$	—	$	—	$	12,153,178
Internet—Infrastructure		18,869,804		—		—		18,869,804
Internet—Media		14,858,412		—		—		14,858,412
Total Common Stock		45,881,394		—		—		45,881,394
Short Term Investments
U.S. Treasury Bills		—		799,743		—		799,743
Total Short Term Investments		—		799,743		—		799,743
Investments Purchased With Cash Proceeds From Securities Lending
Commercial Paper		—		—		192,320		192,320
Total Investments Purchased With Cash Proceeds From Securities Lending		—		—		192,320		192,320
Total Investments in Securities	$	45,881,394	$	799,743	$	192,320	$	46,873,457

*  There were no significant transfers into or out of Level 1 and Level 2 fair value measurements during the reporting period, as compared to their classification from the most recent annual report.

Level 3 Reconciliation Disclosure

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

	Investments
Description	in Securities
Balance as of August 31, 2010	$	193,118
Accrued discounts/premiums		—
Realized gain (loss)		(694	)
Change in unrealized appreciation (depreciation)		19,528
Net purchases (sales)		(19,632	)
Transfers in and/or out of Level 3*		—
Balance as of February 28, 2011	$	192,320

25

JACOB FUNDS INC.
NOTES TO THE FINANCIAL STATEMENTS (Continued)
February 28, 2011 (Unaudited)

*  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.

The following is a summary of the inputs used to value the Small Cap Growth Fund’s investments as of February 28, 2011:

	Level 1		Level 2		Level 3		Total
Common Stock
Accommodation & Food Services	$	410,870	$	—	$	—	$	410,870
Alternative Energy		185,640		—		—		185,640
Health Care Services and Supplies		475,180		—		—		475,180
Internet Services		1,003,801		—		—		1,003,801
Oil & Gas-Exploration & Production		1,117,631		—		—		1,117,631
Pharmaceuticals		1,213,207		—		—		1,213,207
Semiconductors		527,125		—		—		527,125
Software		850,028		—		—		850,028
Total Common Stock		5,783,482		—		—		5,783,482
Warrants		—		203		—		203
Short Term Investments
U.S. Treasury Bills		—		149,937		—		149,937
Total Short Term Investments		—		149,937		—		149,937
Total Investments in Securities	$	5,783,482	$	150,140	$	—	$	5,933,622

*  There were no significant transfers into or out of Level 1 and Level 2 fair value measurements during the reporting period, as compared to their classification from the most recent annual report.

26

JACOB FUNDS INC.
NOTES TO THE FINANCIAL STATEMENTS (Continued)
February 28, 2011 (Unaudited)

The following is a summary of the inputs used to value the Wisdom Fund’s investments as of February 28, 2011:

	Level 1		Level 2		Level 3		Total
Common Stock
Air Freight & Logistics	$	875,070	$	—	$	—	$	875,070
Beverages		1,330,606		—		—		1,330,606
Commercial Banks		336,000		—		—		336,000
Commercial Services & Supplies		520,588		—		—		520,588
Consumer Finance		998,985		—		—		998,985
Education		318,813		—		—		318,813
Food & Staples Retailing		261,765		—		—		261,765
Food Products		613,116		—		—		613,116
Health Care Equipment & Supplies		714,816		—		—		714,816
Hotels, Restaurants & Leisure		264,880		—		—		264,880
Household Products		378,300		—		—		378,300
Insurance		822,430		—		—		822,430
Machinery		120,541		—		—		120,541
Oil, Gas & Consumable Fuels		858,645		—		—		858,645
Pharmaceuticals		311,220		—		—		311,220
Real Estate Investment Trusts		1,491,424		—		—		1,491,424
Software		177,500		—		—		177,500
Specialty Retail		207,920		—		—		207,920
Textiles, Apparel & Luxury Goods		373,926		—		—		373,926
Total Common Stock		10,976,545		—		—		10,976,545
Short Term Investments
U.S. Treasury Bills		—		14,988		—		14,988
Total Short Term Investments		—		14,988		—		14,988
Total Investments in Securities	$	10,976,545	$	14,988	$	—	$	10,991,533

*  There were no significant transfers into or out of Level 1 and Level 2 fair value measurements during the reporting period, as compared to their classification from the most recent annual report.

In March 2008, accounting standards regarding disclosures about derivative instruments and hedging activity standards were issued. These standards were 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. These standards do not have any impact on the

27

JACOB FUNDS INC.
NOTES TO THE FINANCIAL STATEMENTS (Continued)
February 28, 2011 (Unaudited)

Funds’ financial statement disclosures because the Funds have not maintained any positions in derivative instruments or engaged in hedging activities.

In May 2009, the Financial Accounting Standards Board (“FASB”) issued subsequent event standards. The Funds adopted these standards which require 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 is 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.

(b) Repurchase Agreements—The Funds 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 Funds’ 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 Funds’ 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 Funds 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 Funds seek their rights thereto, possible lack of access to income on the underlying security during the delayed period, and expenses in enforcing the Funds’ 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.

28

JACOB FUNDS INC.
NOTES TO THE FINANCIAL STATEMENTS (Continued)
February 28, 2011 (Unaudited)

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

The Funds do 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 Funds record 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 Funds comply with provisions of Subchapter M of the Internal Revenue Code applicable to regulated investment companies, including the distribution of substantially all of the Funds’ taxable income. Accordingly, no provision for federal income taxes is considered necessary in the financial statements.

The Funds adopted accounting standards regarding recognition and measurement of tax positions taken on a tax return. No material uncertain tax positions existed as of February 28, 2011. As a result, the Funds have not recorded any liabilities for uncertain tax positions as of February 28, 2011. The standards require the Funds 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 examinations by taxing authorities. Major jurisdictions for the Funds only relate to federal tax years. As of February 28, 2011, open federal tax years include the tax years ended August 31, 2007 through August 31, 2010 for the Internet Fund, the tax years ended September 30, 2007 through September 2010 and period ended August 31, 2010 for the Small Cap Growth Fund and the tax years ended May 31, 2007 through May 31, 2010 and period ended August 31, 2010 for the Wisdom Fund.

(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 and disclosure of contingent 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.

29

JACOB FUNDS INC.
NOTES TO THE FINANCIAL STATEMENTS (Continued)
February 28, 2011 (Unaudited)

(i) Contingencies and Commitments—The Funds indemnify the Corporation’s officers and Directors for certain liabilities that might arise from their performance of their duties to the Funds. Additionally, in the normal course of business, the Funds enter into contracts that contain a variety of representations and warranties and which provide general indemnifications. Each Fund’s maximum exposure under these arrangements is unknown, as this would involve future claims that may be made against the Funds that have not yet occurred. However, based on experience, the Corporation expects the risk of loss to be remote.

NOTE 3—CAPITAL SHARE TRANSACTIONS

At February 28, 2011 there were twenty billion shares, $0.001 par value, authorized. Transactions in shares of the Internet Fund were as follows:

	Six Months Ended
	February 28, 2011
	Shares			Amount
Sales		1,437,076		$	4,263,961
Redemptions		(1,892,623	)		(5,452,101	)
Redemption Fees		—			1,512
Net Decrease		(455,547	)	$	(1,186,628	)
Shares Outstanding:
Beginning of period		15,394,577
End of period		14,939,030

	Year Ended
	August 31, 2010
	Shares			Amount
Sales		1,163,307		$	2,607,596
Redemptions		(4,295,385	)		(9,504,225	)
Redemption Fees		—			2,907
Net Decrease		(3,132,078	)	$	(6,893,722	)
Shares Outstanding:
Beginning of period		18,526,655
End of period		15,394,577

30

JACOB FUNDS INC.
NOTES TO THE FINANCIAL STATEMENTS (Continued)
February 28, 2011 (Unaudited)

Transactions in shares of the Small Cap Growth Fund were as follows:

	Six Months Ended
	February 28, 2011
	Shares			Amount
Sales		47,763		$	734,764
Redemptions		(35,960	)		(533,449	)
Redemption Fees		—			527
Net Increase		11,803		$	201,842
Shares Outstanding
Beginning of period		373,736
End of period		385,539
	October 1, 2009*
	Through
	August 31, 2010
	Shares			Amount
Sales		46,886		$	551,595
Redemptions		(418,856	)		(4,747,889	)
Redemption Fees		—			61
Net Decrease		(371,970	)	$	(4,196,233	)
Shares Outstanding
Beginning of period		745,706
End of period		373,736
	Year Ended
	September 30, 2009
	Shares			Amount
Sales		396,759		$	3,717,444
Redemptions		(1,959,349	)		(18,909,229	)
Redemption Fees		—			14,509
Net Decrease		(1,562,590	)	$	(15,177,276	)
Shares Outstanding
Beginning of period		2,308,296
End of period		745,706

*  The Small Cap Growth Fund’s predecessor Fund had a fiscal year end of September 30, so the activity began on October 1, 2009.

31

JACOB FUNDS INC.
NOTES TO THE FINANCIAL STATEMENTS (Continued)
February 28, 2011 (Unaudited)

Transactions in shares of the Wisdom Fund were as follows:

	Six Months Ended
	February 28, 2011
	Shares			Amount
Sales		2,645		$	22,790
Reinvestments		2,184			18,963
Redemptions		(192,925	)		(1,619,940	)
Redemption Fees		—			4
Net Decrease		(188,096	)	$	(1,578,183	)
Shares Outstanding
Beginning of period		1,462,563
End of period		1,274,467
	June 1, 2010*
	Through
	August 31, 2010
	Shares			Amount
Sales		21,685		$	168,755
Reinvestments		—			—
Redemptions		(97,107	)		(751,818	)
Net Decrease		(75,422	)	$	(583,063	)
Shares Outstanding
Beginning of period		1,537,985
End of period		1,462,563
	Year Ended
	May 31, 2010
	Shares			Amount
Sales		174,779		$	1,402,974
Net shares issued as part of Reorganization		62,778			—
Reinvestments		4,561			37,169
Redemptions		(466,437	)		(3,563,889	)
Redemption Fees		—			39
Net Decrease		(224,319	)	$	(2,123,707	)
Shares Outstanding
Beginning of period		1,762,304
End of period		1,537,985

32

JACOB FUNDS INC.
NOTES TO THE FINANCIAL STATEMENTS (Continued)
February 28, 2011 (Unaudited)

*   The Wisdom Fund’s had a fiscal year end of May 31, which was the Predecessor Fund’s year end, so the activity began on June 1, 2010. The fiscal year end was changed to August 31 to align with the other Jacob Funds.

From time to time, the Funds may have a concentration of shareholders holding a significant percentage of shares outstanding. Investment activities of these shareholders could have a material impact on the Funds. As of February 28, 2011, two shareholders own greater than 10% of the Wisdom Fund’s outstanding shares.

NOTE 4—INVESTMENT TRANSACTIONS

During the six months ended February 28, 2011 for the Internet Fund, the Small Cap Growth Fund and the Wisdom Fund, purchases and sales of investment securities (excluding short-term investments) were as follows:

Fund	Purchases		Sales
Jacob Internet Fund	$	11,041,615	$	13,592,363
Jacob Small Cap Growth Fund		2,681,987		2,959,021
Jacob Wisdom Fund		563,015		2,268,858

The Funds did not purchase long-term U.S. Government securities as a part of their investment strategies during the six months ended February 28, 2011.

At August 31, 2010, the components of accumulated earnings/(losses) on a tax basis for the Funds were as follows:

	Internet			Small Cap			Wisdom
	Fund			Growth Fund			Fund
Cost of Investments	$	30,172,192		$	3,874,939		$	10,984,202
Gross unrealized appreciation		11,869,845			478,810			938,731
Gross unrealized depreciation		(6,873,866	)		(366,085	)		(673,400	)
Net unrealized appreciation	$	4,995,979		$	112,725		$	265,331
Undistributed ordinary income		—			—			23,502
Undistributed long-term capital gain		—			—			—
Total distributable earnings	$	—			—		$	23,502
Other accumulated losses	$	(16,655,598	)	$	(17,265,025	)	$	(1,739,999	)
Total accumulated losses	$	(11,659,619	)	$	(17,152,300	)	$	(1,451,166	)

33

JACOB FUNDS INC.
NOTES TO THE FINANCIAL STATEMENTS (Continued)
February 28, 2011 (Unaudited)

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, 2010, the Funds had accumulated net realized capital loss carryovers as follows:

Internet		Small Cap		Wisdom
Fund		Growth Fund		Fund		Expiration
$	—	$	2,765,334	$	—		8/31/2011
	9,281,045		8,454,402		1,304,999		8/31/2017
	6,513,248		6,045,289		435,000		8/31/2018
$	15,794,293	$	17,265,025	$	1,739,999

To the extent the Funds realize future net capital gains, taxable distributions to its shareholders will be offset by any unused capital loss carryover. For the year ended August 31, 2010, the Internet Fund and Small Cap Growth Fund had $89,876,360 and $87,076 in capital loss carryover expire, respectively. At August 31, 2010, the Internet Fund had net realized losses from transactions between November 1, 2009 and August 31, 2010 of $861,305, which were deferred for tax purposes and were recognized on September 1, 2010.

The Internet Fund made no distributions during the six months ended February 28, 2011 and during the fiscal year ended August 31, 2010. The Small Cap Growth Fund made no distributions during the six months ended February 28, 2011, during the period from October 1, 2009 through August 31, 2010 and during the fiscal year ended September 30, 2009. The Wisdom Fund paid $23,502 out of capital gains during the six months ended February 28, 2011. The Wisdom Fund made no distributions during the period from June 1, 2010 through August 31, 2010 and paid $20,060 as a return of capital and paid $18,597 out of capital gains during the year ended May 31, 2010.

NOTE 5—INVESTMENT ADVISORY AND OTHER AGREEMENTS

The Corporation has Investment Advisory Agreements (the “Advisory Agreements”) 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 Funds. Under the terms of the Advisory Agreements, the Corporation, on behalf of the Funds, compensates the Adviser for its management services based on an annual rate of 1.25% of the Internet Fund’s average daily net assets, 0.90% of the Small Cap Growth Fund’s average daily net assets and 0.50% of the Wisdom 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 Internet Fund’s total annual operating expenses exceed 2.95% of the average daily net assets through January 2, 2012. 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

34

JACOB FUNDS INC.
NOTES TO THE FINANCIAL STATEMENTS (Continued)
February 28, 2011 (Unaudited)

cause the Internet Fund to exceed any applicable expense limitation in place when the fee was waived. For the six months ended February 28, 2011, fees of $24,647 were recouped by the Adviser.

Effective February 1, 2010 (date of reorganization of the Small Cap Growth Fund), the Adviser has contractually agreed for a period of two years to waive its advisory fees in an amount up to an annual rate of 0.90% of the Small Cap Growth Fund’s average daily net assets, to the extent that the Fund’s total annual operating expenses exceed 2.45% of average daily net assets. 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 Small Cap Growth Fund’s expenses to exceed 2.45%. For the six months ended February 28, 2011, fees of $24,452 were waived by the Adviser.

Effective February 18, 2010 (date of reorganization of the Wisdom Fund), the Adviser has contractually agreed for a period of two years to waive its advisory fees in an amount up to an annual rate of 0.50% of the Fund’s average daily net assets, to the extent that the Wisdom Fund’s total annual operating expenses exceed 1.95% of average daily net assets. 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 Wisdom Fund’s expenses to exceed 1.95%. For the six months ended February 28, 2011, fees of $28,385 were waived by the Adviser.

Following is a schedule of when fees may be recouped:

Internet		Small Cap		Wisdom
Fund		Growth Fund		Fund		Expiration
$	—	$	—	$	17,306		May 31, 2013
	32,645		25,607		14,645		August 31, 2013
	—		24,452		28,385		August 31, 2014
$	32,645	$	50,059	$	60,336

The Rockland Small Cap Growth Fund was the predecessor fund of the Small Cap Growth Fund. All performance and operations reported for the period prior to February 1, 2010 represent the activity of the Rockland Small Cap Growth Fund.

The Wisdom Fund was the predecessor fund of the Jacob Wisdom Fund. All performance and operations reported for the periods prior to February 18, 2010 represent the activity of the Wisdom Fund.

Gould Investment Partners, LLC (“Gould”) was the adviser of the Rockland Small Cap Growth Fund (prior to February 1, 2010). Under terms of the former advisory agreement, Gould received a monthly fee at the annual rate of 1.00% of the Fund’s average daily net assets. Effective September 1, 2009, Gould agreed to voluntarily waive 0.25% of its advisory fee until the reorganization of the Rockland Small Cap Growth Fund into the Small Cap Growth Fund. For the period from October 1, 2009 through January 31, 2010, fees of $5,612 were waived by Gould.

35

JACOB FUNDS INC.
NOTES TO THE FINANCIAL STATEMENTS (Continued)
February 28, 2011 (Unaudited)

Atlanta Investment Counsel, LLC (“AIC”) was the adviser of the Wisdom Fund (prior to December 1, 2009). Under terms of the former advisory agreement, AIC received a monthly fee at the annual rate of 0.50% of the Fund’s average daily net assets. AIC agreed to voluntarily waive all or a portion of its advisory fee and to reimburse fees and expense to the extent the Wisdom Fund’s total annual operating expenses exceeded 1.75% of the average daily net assets, exclusive of interest, taxes, brokerage fees and 12b-1 fees.

U.S. Bancorp Fund Services, LLC serves as transfer agent, administrator and accounting services agent for the Funds. U.S. Bank, N.A. serves as custodian for the Funds. U.S. Bancorp Asset Management, Inc. (formerly known as FAF Advisors, Inc.) serves as the securities lending agent.

NOTE 6—SECURITIES LENDING

The Funds may lend portfolio securities equal in value to up to 33% of their total assets (including such loans) to borrowers under terms of participation in a securities lending program administered by U.S. Bancorp Asset Management, 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 Funds receive 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 Funds continue to receive interest or dividends on the securities loaned during the borrowing period. The Funds have the right under the terms of the securities lending agreement to recover the securities from the borrower on demand. U.S. Bancorp Asset Management, Inc. received no income from the Internet Fund for its securities lending administrative services during the six months ended February 28, 2011. The Small Cap Growth Fund and Wisdom Fund did not participate in securities lending during the six months ended February 28, 2011.

As of February 28, 2011, the Internet Fund had loaned securities that were collateralized by cash proceeds that the borrower paid to the Internet 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 Internet 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 Internet Fund is also exposed to market risk on the investments it purchases with the proceeds of the cash collateral. As of February 28, 2011, the value of the Internet Fund’s securities on loan was $786,827. The cost of the related collateral was $718,910 and the fair value of the investments purchased was $192,320. An amount of $100,815 of the collateral was not invested and held in cash. As of February 28, 2011, the Internet Fund had experienced $526,590 of unrealized depreciation and $694 of realized loss on the investments it purchased with proceeds of the cash collateral.

NOTE 7—DISTRIBUTION AND SERVICE PLAN

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

36

JACOB FUNDS INC.
NOTES TO THE FINANCIAL STATEMENTS (Continued)
February 28, 2011 (Unaudited)

Fund will compensate the Adviser up to 0.25% per annum of the Internet 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 Internet Fund for providing servicing to their clients (“Shareholder Servicing Fee”). The Internet Fund Plan also provides for a distribution fee equal to 0.10% of the Internet Fund’s average daily net assets on an annual basis (“Asset Based Sales Charge”). The fee is used to compensate Quasar Distributors, LLC, the Funds’ distributor (the “Distributor”), for basic distribution services, out of pocket expenses incurred in connection with activities to sell Internet 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 Internet Fund shareholders for providing distribution assistance and promotional support to the Internet Fund. Remaining amounts of the Asset Based Sales Charge may be used to satisfy distribution costs as directed by the Adviser. The Internet Fund incurred $75,710 in expenses pursuant to the 12b-1 Plan for the six months ended February 28, 2011. At February 28, 2011, $20,324 of the Shareholder Servicing Fee was available for eligible 12b-1 expenses for the Internet Fund.

The Corporation, on behalf of the Small Cap Growth Fund and Wisdom Fund, has adopted a distribution and service plan (the “Plan”) pursuant to Rule 12b-1 under the 1940 Act. Rule 12b-1 provides that an investment company that bears any direct or indirect expense of distributing its shares must do so only in accordance with the Plan permitted by Rule 12b-1. Pursuant to the Plan, the Small Cap Growth Fund and Wisdom Fund make payments to the Distributor, the Adviser, financial intermediaries or others to reimburse such parties for distribution and/or shareholder servicing activity in an amount not to exceed 0.35% of the average daily net assets on an annual basis. The distribution fees are “asset based” sales charges and, therefore, long-term shareholders may pay more in total sales charges than the economic equivalent of the maximum front-end sales charge permitted by the Financial Industry Regulatory Authority (FINRA). The Small Cap Growth Fund incurred $9,509 and the Wisdom Fund incurred $19,870 in expenses pursuant to the 12b-1 Plan for the six months ended February 28, 2011. At February 28, 2011, $2,155 and $16,671 of the Shareholder Servicing Fee was available for eligible 12b-1 expenses for the Small Cap Growth Fund and Wisdom Fund, respectively.

NOTE 8— SUBSEQUENT EVENTS

In connection with the preparation of the Funds’ financial statements, management has evaluated subsequent events after February 28, 2011. There have been no significant subsequent events since February 28, 2011 that would require adjustment to or additional disclosure in these financial statements.

37

JACOB FUNDS INC.
ADDITIONAL INFORMATION ON FUND EXPENSES (Unaudited)

For the Six Months Ended February 28, 2011 for the Internet Fund, Small Cap Growth Fund and Wisdom Fund

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 Funds do not currently charge sales charges (loads) or exchange fees. The Funds assess a redemption fee of 2% on shares sold within 30 days for the Internet Fund and 90 days for the Small Cap Growth Fund and Wisdom Fund following their purchase date. In addition, you will be assessed fees for outgoing wire transfers, returned checks and stop payment orders. The Funds charge 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 Funds 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 (9/1/10–2/28/11) for the Internet Fund, Small Cap Growth Fund and Wisdom Fund.

Actual Expenses

The first line of the table below provides information about account values based on actual returns and actual expenses. Although the Funds charge no sales load, the Funds charge a redemption fee of 2% on shares sold within 30 days for the Internet Fund and 90 days for the Small Cap Growth Fund and Wisdom Fund 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 Funds’ transfer agent. If you request that a redemption be made by wire transfer, currently the Funds’ 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 a Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not a 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 Funds 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 relative total costs of

38

JACOB FUNDS INC.
ADDITIONAL INFORMATION ON FUND EXPENSES (Unaudited) (Continued)

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

Internet Fund

					Expenses Paid
	Beginning Account		Ending Account		During the Period
	Value 9/1/10		Value 2/28/11		9/1/10–2/28/11*
Actual	$	1,000.00	$	1,368.40	$	17.32
Hypothetical (5% annual return before expenses)	$	1,000.00	$	997.67	$	14.61

* Expenses are equal to the Internet Fund’s annualized expense ratio of 2.95% multiplied by the average account value over the period multiplied by 181/365 (to reflect the one-half year period).

Small Cap Growth Fund

					Expenses Paid
	Beginning Account		Ending Account		During the Period
	Value 9/1/10		Value 2/28/11		9/1/10–2/28/11*
Actual	$	1,000.00	$	1,492.70	$	25.09
Hypothetical (5% annual return before expenses)	$	1,000.00	$	992.16	$	20.05

* Expenses are equal to the Small Cap Growth Fund’s annualized expense ratio of 4.06% multiplied by the average account value over the period multiplied by 181/365 (to reflect the one-half year period).

Wisdom Fund

					Expenses Paid
	Beginning Account		Ending Account		During the Period
	Value 9/1/10		Value 2/28/11		9/1/10–2/28/11*
Actual	$	1,000.00	$	1,139.60	$	12.63
Hypothetical (5% annual return before expenses)	$	1,000.00	$	1,000.49	$	11.81

* Expenses are equal to the Wisdom Fund’s annualized expense ratio of 2.38% multiplied by the average account value over the period multiplied by 181/365 (to reflect the one-half year period).

39

JACOB FUNDS INC.
ADDITIONAL INFORMATION

Approval of the Investment Advisory Agreement

During the fiscal quarter ended November 30, 2010, the Board of Directors, including all of the independent Directors, approved the renewal of the Investment Advisory Agreement between Jacob Funds Inc., on behalf of the Jacob Internet Fund (the “Internet Fund”), and Jacob Asset Management of New York LLC for an additional year. In reaching this decision, the Board took into account a combination of factors, including the nature, extent and quality of services provided by the Adviser; the Internet Fund’s performance; the Internet Fund’s fees and expenses; the costs of the services to be provided and the profits realized by the Adviser and the extent to which economies of scale would be realized as the Internet Fund grows. The Board did not identify any single factor as all-important or controlling, and this summary does not detail all of the matters considered.

In evaluating the nature, extent and quality of services provided by the Adviser, the Board concluded that the experience and capabilities of the portfolio managers and research team dedicated to the continued management of the Internet Fund were sufficient and beneficial to the Internet Fund, as evidenced by the Internet Fund’s performance record over varying periods. The Board also concluded that the Adviser had sufficient resources dedicated to the operation and management of the Internet Fund.

The Board considered the Adviser’s ability to manage the Internet Fund while also managing the Jacob Small Cap Growth Fund and Jacob Wisdom Fund. The Board reviewed the Adviser’s financial condition and considered the economics associated with the advisory fees and waivers for all of the Funds. The Board concluded that the Adviser had appropriate resources to continue managing the Internet Fund. The Board also concluded that the Adviser was not experiencing economies of scale at the Internet Fund’s current asset levels.

The Board reviewed the advisory fees and overall expenses of the Internet Fund and discussed the difference in fees and expenses compared to the Small Cap Growth Fund and Wisdom Fund, as well as other funds within the Internet Fund’s peer group. The Board discussed the allocation of expenses among the three Funds and the manner in which each Fund bears its appropriate share of the expenses.

In considering the various factors, the Board’s fiduciary duties to the Internet Fund’s shareholders and the body of law governing the approval of investment advisory agreements, the independent Directors received assistance and advice from independent counsel. Based upon its review of such material and information together with such other information as it deemed relevant, the Board, including a majority of the independent Directors, concluded that the Adviser had demonstrated the capability and resources to perform the duties required under the Investment Advisory Agreement, the compensation payable to the Adviser was fair and reasonable, and the compensation and other terms were in the best interests of the Internet Fund and its shareholders.

40

JACOB FUNDS INC.
ADDITIONAL INFORMATION (Unaudited)

Proxy Voting

A description of the policies and procedures that the Funds use to determine how to vote proxies relating to portfolio securities is available without charge 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 Funds 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.

Holdings Disclosure

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

The Funds file their complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. The Funds’ 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.

41

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

BBD, LLP

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

Jacob Asset Management of New York LLC

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

www.Jacobmutualfunds.com

Semi-Annual

Report

February 28, 2011

Item 2. Code of Ethics.

Not applicable for semi-annual reports.

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 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.jacobmutualfunds.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.

2

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 Funds Inc.
By (Signature and Title)	/s/ Ryan Jacob
	Ryan Jacob, President
Date	5/4/11

     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	5/4/11
By (Signature and Title)	/s/ Francis Alexander
	Francis Alexander, Treasurer
Date	5/4/11

3