JACOB INTERNET FUND INC
485BPOS, 2000-12-29
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<PAGE>

                                                              File No. 333-82865
                                                              File No. 811-09447


                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM N-1A


REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933                      X
                                                                           -----

         Pre-Effective Amendment No.
                                     -----                                 -----

         Post-Effective Amendment No. 1                                      X
                                     ---                                   -----

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940              X
                                                                           -----

         Amendment No. 4                                                     X
                      ---                                                  -----

                            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, New York 10019
                            ------------------------
               (Address of Principal Executive Office) (Zip Code)

Registrant's Telephone Number, including Area Code:   (212) 698-0700
                                                      --------------

                                  RYAN I. JACOB
                         c/o Jacob Asset Management LLC
                                  1675 Broadway
                            New York, New York 10019
                            ------------------------
                     (Name and Address of Agent for Service)

Copies of communications to:     Michael P. O'Hare, Esquire
                                 Stradley, Ronon, Stevens & Young, LLP
                                 2600 One Commerce Square
                                 Philadelphia, Pennsylvania 19103-7098


It is proposed that this filing will become effective

(check appropriate box):


     [ ] immediately upon filing pursuant to paragraph (b)
     [X] on December 29, 2000 pursuant to paragraph (b)
     [ ] 60 days after filing pursuant to paragraph (a)(1)
     [ ] on (date) pursuant to paragraph (a)(1)



                                        1


<PAGE>

     [ ] 75 days after filing pursuant to paragraph (a)(2)
     [ ] on (date) pursuant to paragraph (a)(2) of Rule 485.

If appropriate, check the following box:

     [ ] This post-effective amendment designates a new effective date for a
         previously filed post-effective amendment.


                                         2




<PAGE>


                            JACOB INTERNET FUND, INC.


                            PROSPECTUS & APPLICATION
                                DECEMBER 31, 2000

        TheJacob Internet Fund is a mutual fund whose primary investment
          objective is long-term growth of capital with current income
                            as a secondary objective.

         This Prospectus contains important information about the fund.
     For your own benefit and protection, please read it before you invest,
                        and keep it for future reference.



                               Investment Adviser
                     JACOB ASSET MANAGEMENT OF NEW YORK LLC


                                     [LOGO]


             THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED
         OR DISAPPROVED THESE SECURITIES OR PASSED UPON THE ADEQUACY OF
    THE PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENCE.



<PAGE>


             TABLE OF CONTENTS

<TABLE>
<S>                                    <C>
Summary..............................    1

Fees and Expenses....................    3

Investment Objectives, Principal
  Investment Strategies and Related
  Risks..............................    3

Management, Organization and Capital
  Structure..........................    6

Purchase of Fund Shares..............    8

Redemption of Fund Shares............   11

Pricing of Fund Shares...............   14

Dividends and Distributions..........   15

Tax Consequences.....................   15

Distribution Arrangements............   16

Financial Highlights.................   17
</TABLE>




<PAGE>

                                    SUMMARY

INVESTMENT OBJECTIVES

The Fund's primary investment objective is to seek long-term growth of capital.
Current income is a secondary objective. There is no assurance that the Fund
will achieve its investment objectives.

PRINCIPAL INVESTMENT STRATEGIES

The Fund seeks to achieve its investment objectives by investing primarily in
common stocks and securities convertible into common stocks of companies whose
primary focus is Internet related. The Internet is a collection of connected
computers that allows commercial and professional organizations, educational
institutions, government agencies, and consumers to communicate electronically,
access and share information, and conduct business around the world. The Fund's
investment adviser selects investments in companies that derive a substantial
portion of their revenue from Internet or Internet-related businesses or those
that are aggressively developing and expanding their Internet and
Internet-related business operations. The investment adviser believes that the
Internet offers unique investment opportunities because of its ever-growing
popularity among business and personal users alike.

The Fund concentrates its investments in securities of Internet companies and
companies in Internet-related industries. The Fund invests in common stock and
other securities of companies who emphasize research and development with
respect to proprietary products and services for Internet users and businesses
because the investment adviser believes that these stocks have the greatest
potential to rise in value. The investment adviser's overall stock selections
are based on an assessment of a company's fundamental prospects. The Fund does
not trade in securities for short-term profits, but when circumstances warrant,
securities may be sold without regard to the length of time they have been held.

PRINCIPAL RISKS

Investing in common stock has inherent risks, which could cause you to lose
money. The principal risks of investing in the Fund are listed below and could
adversely affect the Fund's net asset value and total return.

      The value of the Fund's shares and the securities held by the Fund can
      each decline in value. Even when the stock market in general is rising,
      the stocks selected by the investment adviser may decline. You could lose
      money that you invest in the Fund.

      Companies in the same or similar industries may share common
      characteristics and are more likely to react to industry specific market
      or economic developments. Because the Fund concentrates its investments in
      securities of companies whose primary focus is Internet related,
      investments in the Fund may be more risky than investments in a less
      concentrated portfolio.

      While the Fund's portfolio is diversified, the Fund generally holds fewer
      stocks than most other mutual funds, which can result in dramatic changes
      in the Fund's share price, because changes in the price of an individual
      stock can significantly affect the Fund.

                                       1





<PAGE>

      Investments in companies in the rapidly changing field of
      computer/Internet technology face special risks such as technological
      obsolescence and may also be subject to greater governmental regulation
      than many other industries.

      Many Internet-related companies have incurred large losses since their
      inception and will continue to incur large losses in the hope of capturing
      market share and generating future revenues.

      The investment adviser may not be able to sell stocks at an optimal time
      or price.

      Investments in smaller capitalized companies may involve greater risks, as
      these companies tend to have limited product lines, markets and financial
      or managerial resources.

      The market value of convertible securities tends to decline as interest
      rates increase and, conversely, to increase as interest rates decline. In
      addition, convertible securities generally offer lower interest or
      dividend yields than non-convertible securities of similar quality.

WHO MAY WANT TO INVEST IN THE FUND

The Fund is designed for long-term investors who understand and are willing to
accept the risk of loss involved in investing in a fund seeking long-term growth
of capital and investing in the Internet sector. Investors should consider their
investment goals, their time horizon for achieving them, and their tolerance for
risks before investing in the Fund. If you seek an aggressive approach to
capital growth and can accept the above average level of price fluctuations that
this Fund is expected to experience, this Fund could be an appropriate part of
your overall investment strategy. The Fund should not represent your complete
investment program or be used for short-term trading purposes.

RISK/RETURN BAR CHART AND TABLE

A bar chart and table will be available to track the Fund's performance once the
Fund has been in operation for a full calendar year.

                                       2




<PAGE>

                               FEES AND EXPENSES

This table describes the fees and expenses that you may pay if you buy and hold
shares of the Fund.


SHAREHOLDER FEES
(fees paid directly from your investment)

<TABLE>
<S>                                                           <C>
Maximum Sales Charge (Load) Imposed on Purchases............  None
Maximum Deferred Sales Charge (Load)........................  None
Maximum Sales Charge (Load) Imposed on Reinvested
  Dividends.................................................  None
Redemption Fees*............................................  None
Exchange Fees...............................................  None
</TABLE>


ANNUAL FUND OPERATING EXPENSES
(expenses that are deducted from Fund assets)


<TABLE>
<S>                                                           <C>
Management Fees.............................................  1.25%
Distribution and/or Service 12b-1 Fees**....................  0.35%
Other Expenses***...........................................  0.70%
                                                              -----
Total Annual Fund Operating Expenses........................  2.30%
</TABLE>


---------
  *  There is a $15.00 fee imposed on redemption proceeds sent by wire.

 **  The investment adviser is currently waiving its right to receive a portion
     of the distribution fee such that the Fund is paying up to 0.15% of
     distribution and/or service 12b-1 fees. The investment adviser expects to
     continue this voluntary waiver but may terminate it at any time.
***  'Other Expenses' are estimated for a year based on amounts expended by the
     Fund during its initial fiscal period.


EXAMPLE:  This example is intended to help you compare the cost of investing in
the Fund with the cost of investing in other mutual funds. The Example assumes
that you invest $10,000 in the Fund over the time periods indicated and then
redeem all of your shares at the end of those periods. The Example also assumes
that your investment has a 5% return each year and that the Fund's operating
expenses remain the same. Although your actual costs may be higher or lower,
based on these assumptions your costs would be:


<TABLE>
<CAPTION>
       YEAR 1               YEAR 3             YEAR 5             YEAR 10
       ------               ------             ------             -------
<S>                    <C>                <C>                <C>
        $233                 $718              $1,230             $2,636
</TABLE>


                  INVESTMENT OBJECTIVES, PRINCIPAL INVESTMENT
                          STRATEGIES AND RELATED RISKS

INVESTMENT OBJECTIVES.  The Fund's primary investment objective is long-term
growth of capital. Current income is a secondary objective. There is no
assurance that the Fund will achieve its investment objectives.

                                       3





<PAGE>


PRINCIPAL INVESTMENT STRATEGIES.  The Fund seeks to achieve its investment
objectives by investing primarily in common stocks and securities convertible
into common stocks of companies whose primary focus is Internet related. The
investment adviser selects investments in companies that derive a substantial
portion of their revenue from Internet businesses and businesses in
Internet-related industries or those that are aggressively developing and
expanding their Internet and Internet-related business operations. Under normal
circumstances, at least 80% of the Fund's total assets will be invested in
securities of companies in the Internet and Internet-related industries.

The investment adviser believes that companies that provide products or services
designed for the Internet offer favorable investment opportunities. Accordingly,
the Fund seeks to invest in common stock and convertible securities of companies
that emphasize research and development with respect to proprietary products and
services for Internet users and businesses because the investment adviser
believes that these stocks have the greatest potential to rise in value.

The Internet is a world-wide network of computers designed to permit users to
share information and transfer data quickly and easily. The world wide web
('web') is a means of graphically interfacing with the Internet. It is a
hyper-text based publishing medium containing text, graphics, interactive
feedback mechanisms and links within web documents and to other web documents.

The investment adviser believes that because of rapid advances in the breadth
and scope of products and services offered over the Internet, an investment in
companies with business operations in this industry will offer substantial
opportunities for long-term capital appreciation. Of course, prices of common
stocks of even the best managed, most profitable corporations are subject to
market risk, which means their stock prices can decline. In addition, swings in
investor psychology or significant trading by large institutional investors can
result in price fluctuations.

The Internet has exhibited and continues to demonstrate rapid growth, both
through increasing demand for existing products and services and the broadening
of the Internet market. Many internet companies are newer and have small to
medium market capitalizations. However, the Fund's investment policy is not
limited to any minimum capitalization requirement and the Fund may hold
securities without regard to the capitalization of the company. The investment
adviser's overall process of stock selection for the Fund is not based on the
capitalization or size of the company but rather on an assessment of the
company's fundamental prospects.

Portfolio securities generally will be selected from companies in the following
groups:

        Media and Content Providers:  Companies that provide information and
        entertainment services over the Internet, supported by subscriptions,
        advertising and/or transactional revenues.

        E-commerce:  Companies that sell goods and services using the Internet,
        and companies that distribute products directly over the Internet.

        Infrastructure:  Companies that develop and manufacture solutions to
        enable businesses to implement Internet strategies.

        Communications:  Companies engaged in the transmission of voice, video
        and data over the Internet, with emphasis on providers of high speed
        Internet access.

                                       4





<PAGE>

BUY/SELL DECISIONS.  The investment adviser considers the following factors when
buying and selling securities for the Fund: (i) the value of individual
securities relative to other investment alternatives, (ii) trends in the
determinants of corporate profits, (iii) corporate cash flow, (iv) balance sheet
changes, (v) management capability and practices and (vi) the economic and
political outlook. The Fund does not intend to trade in securities for
short-term profits, but when circumstances warrant, securities may be sold
without regard to the length of time they have been held.

RISK FACTORS.  Lack of Profitability of Many Internet Companies:  Many
Internet-related companies have incurred large losses since their inception and
will continue to incur large losses in the hope of capturing market share and
generating future revenues. Accordingly, many such companies expect to incur
significant operating losses for the foreseeable future, and may never be
profitable.

The Computer/Internet Technology Area:  Companies in the rapidly changing field
of computer/Internet technology face special risks. For example, their products
or services may not prove commercially successful or may become obsolete
quickly. The value of the Fund's shares may be susceptible to factors affecting
the computer/Internet technology area and to greater risk and market fluctuation
than an investment in a fund that invests in a broader range of portfolio
securities not concentrated in any particular industry. As such, the Fund is not
an appropriate investment for individuals who are not long-term investors and
who, as their primary objective, require safety of principal or stable income
from their investments. The computer/Internet technology area may be subject to
greater governmental regulation than many other areas and changes in
governmental policies and the need for regulatory approvals may have a material
adverse effect on these areas. Additionally, companies in these areas may be
subject to risks of developing technologies, competitive pressures and other
factors and are dependent upon consumer and business acceptance as new
technologies evolve.

Smaller Capitalized or Unseasoned Companies.  The investment adviser believes
that smaller capitalized or unseasoned companies generally have greater earnings
and sales growth potential than larger capitalized companies. However,
investments in smaller capitalized or unseasoned companies may involve greater
risks, in part because they have limited product lines, markets and financial or
managerial resources. In addition, less frequently-traded securities may be
subject to more abrupt price movements than securities of larger capitalized
companies. The level of risk will be increased to the extent that the Fund has
significant exposure to smaller capitalized or unseasoned companies (those with
less than a three-year operating history).

Convertible Securities.  The Fund may invest in convertible securities, which
may include corporate notes or preferred stock, but are ordinarily long-term
debt obligations of the issuer convertible at a stated exchange rate into common
stock of the issuer. As with all debt securities, the market value of
convertible securities tends to decline as interest rates increase and,
conversely, to increase as interest rates decline. Convertible securities
generally offer lower interest or dividend yields than non-convertible
securities of similar quality. However, when the market price of the common
stock underlying a convertible security exceeds the conversion price, the price
of the convertible security tends to reflect the value of the underlying common
stock. As the market price of the underlying common stock declines, the
convertible security tends to trade increasingly on a yield basis, and thus may
not depreciate to the same extent as the underlying common stock. Convertible
securities rank senior to common stocks on an issuer's capital

                                       5





<PAGE>

structure and are consequently of higher quality and generally entail less risk
than the issuer's common stock.

TEMPORARY INVESTMENTS.  In response to unfavorable market, economic, political
or other conditions, the Fund may invest up to 100% of its assets in U.S. and
foreign short-term money market instruments as a temporary, defensive strategy.
The Fund may invest up to 35% of its assets in these securities to maintain
liquidity. Some of the short-term money instruments in which the Fund may invest
include:

        commercial paper;

        certificates of deposit, demand and time deposits and banker's
        acceptances;

        U.S. government securities; and

        repurchase agreements.

To the extent the Fund engages in a temporary, defensive strategy, the Fund may
not achieve its investment objectives. The Statement of Additional Information
contains more information about the Fund and the types of securities in which it
may invest.

PORTFOLIO TURNOVER.  Purchases and sales are made whenever the investment
adviser believes they are necessary in order to meet the Fund's investment
objectives, other investment policies, and the liquidity to meet redemptions.
Portfolio turnover may involve the payment by the Fund of brokerage and other
transaction costs, on the sale of securities, as well as on the investment of
the proceeds in other securities. The greater the portfolio turnover the greater
the transaction costs to the Fund, which could have an adverse effect on the
Fund's total rate of return. In addition, funds with high portfolio turnover
rates may be more likely than low-turnover funds to generate capital gains that
must be distributed to shareholders as taxable income. The Fund does not seek to
realize profits by anticipating short-term market movements and under ordinary
circumstances, the investment adviser intends to buy securities for long-term
capital appreciation.

ILLIQUID SECURITIES.  The Fund may invest up to 15% of its net assets in
illiquid securities, including restricted securities (i.e., securities subject
to certain restrictions on their transfer) and other securities that are not
readily marketable, such as repurchase agreements maturing in more than one
week, provided, however, that any illiquid securities purchased by the Fund will
have been registered under the Securities Act of 1933 or be securities of a
class, or convertible into a class, which is already publicly traded and the
issuer of which is filing reports required by Section 13 or 15 of the Securities
Exchange Act of 1934.

                 MANAGEMENT, ORGANIZATION AND CAPITAL STRUCTURE

ADVISER.  Jacob Asset Management of New York LLC (the 'Adviser'), a federally
registered investment adviser, is a Delaware limited liability company with its
principal office located at 1675 Broadway, New York, NY 10019. Pursuant to the
Investment Advisory Agreement for the Fund, the Adviser manages the Fund's
portfolio of securities and makes the decisions with respect to the purchase and
sale of investments, subject to the general supervision of the Fund's Board of
Directors. The Adviser is also responsible for overseeing the performance of the
Fund's administrator and other service providers.

Ryan I. Jacob, founder and Chief Executive Officer of the Adviser, as well as
President and Chief Portfolio Manager of the Fund, is primarily responsible for
the day-to-day management of the Fund's

                                       6





<PAGE>


portfolio. Mr. Jacob served as Chief Portfolio Manager of The Internet Fund,
Inc. from December 20, 1997 through June 24, 1999. Mr. Jacob also served as a
financial analyst for Lepercq, de Neuflize & Co. Inc. from September 1998 to
June 1999 and as an analyst for Horizon Asset Management from October 1994
through August 1998. Previously, Mr. Jacob was an assistant portfolio manager in
the private clients group at Bankers Trust from October 1992 through October
1994 and Director of Research for IPO Value Monitor, an investment related
research service from 1996 to August 1998. Mr. Jacob, a graduate of Drexel
University, has over 9 years of investment management experience.

Francis J. Alexander is a portfolio manager of the Fund. Mr. Alexander assists
Mr. Jacob in the day-to-day management of the Fund's assets and securities. Mr.
Alexander was Chief Portfolio Manager of The Internet Fund, Inc. from October
21, 1996 (inception) through December 19, 1997 and was a portfolio manager of
that fund while Mr. Jacob served as Chief Portfolio Manager. Mr. Alexander has
been a portfolio manager with Lepercq, de Neuflize & Co. Inc. since May 1998 and
has also served as President of Alexander Capital Management, Inc. since 1985.
Mr. Alexander received his Bachelor of Arts from Notre Dame University and his
Master of Business Administration from St. John's University. Mr. Alexander has
over 29 years of investment management experience.


The following is the historical performance of The Internet Fund, Inc. The
Internet Fund, Inc. and the Fund are managed in substantially similar styles,
although The Internet Fund, Inc. is a separate fund and its historical
performance is not indicative of the future performance of this Fund. Share
prices and investment returns will fluctuate reflecting market conditions, as
well as changes in company-specific fundamentals of portfolio securities.

Sections (a) and (b) below reflect average annual returns of The Internet Fund,
Inc. for the one-year period ended December 31, 1998, and for the period
December 20, 1997 through June 24, 1999, which are the relevant periods during
which Mr. Jacob was primarily responsible for the management of The Internet
Fund, Inc. and during which Mr. Alexander assisted Mr. Jacob as a portfolio
manager. In addition, section (c) below reflects the average annual return of
the Internet Fund, Inc. from inception of that fund through December 19, 1997,
the period during which Mr. Alexander was primarily responsible for the
management of that fund. All performance numbers as compared with the
performance of the Standard & Poor's 500 Composite Stock Total Return Index
were:

<TABLE>
<CAPTION>
                                          THE INTERNET FUND, INC.   S&P 500 INDEX (c)
                                          -----------------------   -----------------
                                           (ADVISED BY KINETICS
                                             ASSET MANAGEMENT,
                                                   INC.)
<S>                                       <C>                       <C>
(a) One Year............................          196.14%                 28.58%
(b) December 20, 1997 through June 24,
    1999................................          232.36%                 20.03%
(c) October 21, 1996 (inception) through
    December 19, 1997...................            1.89%                 30.54%
</TABLE>

The cumulative total return for The Internet Fund, Inc. from December 20, 1997
through June 24, 1999 (approximately eighteen months) was 516.98%. It is
generally considered that internet and internet related stocks performed well
compared to the S&P 500 Index during this time period. The cumulative total
return for The Internet Fund, Inc. from October 21, 1996 (inception) through
December 19, 1997 was 2.20%. At June 30, 1999, that fund had over $715 million
in net assets.

                                       7





<PAGE>


ADVISER'S FEES.  Pursuant to the terms of the Investment Advisory Agreement, the
Fund pays the adviser a monthly advisory fee equal to an annual rate of 1.25% of
the Fund's average daily net assets. This fee is higher than the fee paid by
most other mutual funds; however, the Board of Directors believes it to be
reasonable in light of the advisory services the Fund receives. The Adviser may
voluntarily waive a portion of its fee or assume certain expenses of the Fund.
This would have the effect of lowering the overall expense ratio of the Fund and
of increasing yield to investors in the Fund. The Adviser contractually agreed
to waive a portion of its advisory fees to limit the Fund's Net Annual Operating
Expenses to no more than 2.00% through August 31, 2000. The Adviser voluntarily
continued this waiver through December 31, 2000. To the extent that the Adviser
waived its fees, the Fund may reimburse the Adviser for the three years after
the year in which fees were waived or reimbursed. The Fund will only make such
payments to the Adviser if the Total Annual Fund Operating Expenses do not
exceed the expense limit of 2.00% that was in effect at the time of the waiver.


                            PURCHASE OF FUND SHARES

The Fund sells (and redeems) its shares on a continuous basis at net asset value
('NAV') and does not apply any front-end or back-end sales charges. A completed
application must be submitted to the Fund, along with payment of the purchase
price by check or wire. Your purchase will be calculated at the next determined
net asset value after the Transfer Agent receives and accepts your order.

MINIMUM INVESTMENTS.  To purchase shares, you need to invest at least $2,500
initially. Investments made under the Uniform Gift to Minor's Act, an IRA
account, 401(k) plan, or other retirement accounts need to invest only $1,000 to
start. Once you have an account with the Fund, you may make additional
investments in amounts as low as $100.

The Fund reserves the right to vary the initial and subsequent minimum
investment requirements at any time, to reject any purchase order or to suspend
the offering of its shares.

HOW TO OPEN AN ACCOUNT:

BY MAIL

Complete and sign the New Account Application and make a check or money order
payable to JACOB INTERNET FUND.

<TABLE>
         <S>                               <C>
         $2,500 minimum.                   $1,000 minimum for IRA, UGMA, 401K and other retirement
                                           accounts.

         Any lesser amount must be approved by the Fund.
</TABLE>

<TABLE>
         <S>                                      <C>
         MAIL TO:                                 OVERNIGHT OR EXPRESS MAIL TO:
         JACOB INTERNET FUND                      JACOB INTERNET FUND
         c/o Firstar Mutual Fund Services, LLC    c/o Firstar Mutual Fund Services, LLC
         P.O. Box 701                             615 East Michigan Street, 3rd Floor
         Milwaukee, WI 53201-0701                 Milwaukee, WI 53202
</TABLE>

                                       8





<PAGE>


Setting up an IRA account?  Please call the Fund at 1-888-JACOB-FX
(1-888-522-6239) for details. All checks and money orders must be in U.S.
Dollars only. No cash will be accepted.

    NOTE: THE TRANSFER AGENT CHARGES A $25 FEE FOR ANY RETURNED CHECKS DUE TO
          INSUFFICIENT FUNDS. YOU WILL BE RESPONSIBLE FOR ANY LOSSES SUFFERED BY
          THE FUND AS A RESULT.

BY WIRE

Please call the Fund at 1-888-JACOB-FX to notify the Fund that the wire is
coming and to verify the proper wire instructions so that the wire is properly
applied when received. The Fund is not responsible for delays resulting from the
banking or Federal Reserve wire system.

Immediately send a completed New Account Application form to the Fund at the
above address to have all accurate information recorded to your account. Your
purchase request should be wired through the Federal Reserve Bank as follows:

<TABLE>
         <S>                                      <C>
         Firstar Bank, N.A.                       Credit to: Firstar Mutual Fund Services, LLC
         777 East Wisconsin Avenue                Account Number: 112-952-137
         Milwaukee, Wisconsin 53202               Further credit to: Jacob Internet Fund
         ABA Number: 042000013                    Your account name and account number
</TABLE>

           (For new accounts, include taxpayer identification number)

HOW TO PURCHASE ADDITIONAL SHARES:

BY MAIL

You may add to your account at any time by mailing the remittance form which is
attached to your individual account statement along with any subsequent
investments. All requests must include your account registration number in order
to assure that your funds are credited properly.

BY WIRE

Please follow the wiring instructions detailed above.

BY TELEPHONE

If you have completed the appropriate section of the New Account Application or
if you make subsequent arrangements in writing, you may purchase additional
shares by telephoning the Fund toll-free at 1-888-JACOB-FX. This option allows
investors to move money from their predesignated bank account to their Fund
account upon request. Only bank accounts held at domestic institutions that are
Automated Clearing House (ACH) members may be used for telephone transactions.

To have your Fund shares purchased at the NAV determined at the close of regular
trading on a given date, the Transfer Agent must receive both your purchase
order and payment by Electronic Funds Transfer through the ACH System before the
close of regular trading on that date. YOU MAY NOT USE TELEPHONE TRANSACTIONS
FOR YOUR INITIAL PURCHASE OF FUND SHARES.

                                       9





<PAGE>


The Fund may alter, modify or terminate the telephone purchase option at any
time.  The minimum amount that can be transferred by telephone is $100. For more
information about telephonic transactions, please call the Fund at
1-888-JACOB-FX.

BY INTERNET

This option allows you to purchase additional shares directly through the Fund's
website at www.JacobInternet.com. To choose this option, complete the
appropriate section of the New Account Application or make subsequent
arrangements in writing. Only bank accounts held at a domestic institution which
is an ACH member may be used for internet transactions.

To have your Fund shares purchased at the NAV determined at the close of regular
trading on a given date, the Transfer Agent must receive both your purchase
order and payment via ACH transfer before the close of regular trading on that
date. YOU MAY NOT USE INTERNET TRANSACTIONS FOR YOUR INITIAL PURCHASE OF FUND
SHARES.

The Fund may alter, modify or terminate the internet purchase option at any
time.  The minimum amount that can be transferred by internet is $100. For more
information about internet transactions, please call the Fund at 1-888-JACOB-FX.

BY AUTOMATIC INVESTMENT PLAN

You may purchase additional shares of the Fund through an Automatic Investment
Plan which allows monies to be deducted directly from your checking, savings or
bank money market accounts to invest in the Fund. You may make automatic
investments on a weekly, monthly, bi-monthly (every other month) or quarterly
basis.

<TABLE>
<S>                                                           <C>
Minimum initial investment..................................  $1000
Subsequent monthly investments..............................  $ 100
</TABLE>

You are eligible for this plan if your bank account is maintained at a domestic
financial institution which is an ACH member.

The Fund may alter, modify or terminate this Plan at any time.  For information
about participating in the Automatic Investment Plan, please call the Fund at
1-888-JACOB-FX.

INVESTING THROUGH BROKERS OR AGENTS.  You may invest in the Fund through brokers
or agents who have entered into selling agreements with the Fund's distributor.
Investors may be charged a separate fee by a broker or agent. The broker or
agent may also set their own initial and subsequent investment minimums.

RETIREMENT PLANS.  Shares of the Fund are available for use in tax-deferred
retirement plans such as:

      IRAs,

      employer-sponsored defined contribution plans (including 401(k) plans),
      and

      tax-sheltered custodial accounts described in Section 403(b)(7) of the
      Internal Revenue Code.

RECEIPT OF ORDERS.  Shares may only be purchased on days the New York Stock
Exchange is open for business. If you are paying with federal funds (wire), your
order will be considered received when Firstar

                                       10





<PAGE>


Bank, N.A. receives the federal funds. When making a purchase request in
writing, make sure your request is in good order. 'Good order' means your letter
of instruction includes:

      the name of the Fund

      the dollar amount of shares to be purchased

      purchase application or investment slip

      check payable to JACOB INTERNET FUND

TIMING OF REQUESTS.  All requests received and accepted by the Transfer Agent
before 4:00 p.m. (Eastern time) will be executed on that same day. Requests
received after 4:00 p.m. will be processed on the next business day.

                           REDEMPTION OF FUND SHARES

WHEN REDEMPTION PROCEEDS ARE SENT TO YOU:  You may redeem your shares at any
time without a charge. Once the Transfer Agent receives and accepts your
redemption request, your request will be processed at the next determined NAV.
If you purchase shares by check or ACH transfer and request a redemption soon
after the purchase, the Fund will honor the redemption request, but will not
mail the proceeds until your purchase check has cleared (usually within 12 days,
but in no case more than 15 days). If you make a purchase by check or ACH
transfer that does not clear, the purchase will be canceled and you will be
responsible for any losses or fees incurred in that transaction.

A redemption request received and accepted before 4:00 p.m. (Eastern time) will
normally be wired to the bank you indicate on the following business day or
mailed on the following business day to the address of record; in the case of
redemptions via ACH transfer, proceeds will normally be sent to the bank you
indicate on the second business day after the redemption request has been
received and accepted. In no event will proceeds be wired, mailed or transferred
through the ACH system more than 7 days after the Transfer Agent receives and
accepts a redemption request. If the proceeds of the redemption are requested to
be sent to an address other than the address of record or if the address of
record has been changed within 15 days of the redemption request, the request
must be in writing with your signature(s) guaranteed. The Fund is not
responsible for interest on redemption amounts due to lost or misdirected mail.

The Fund and the Transfer Agent each reserve the right to refuse a wire,
telephone or internet redemption if it is believed advisable to do so.
Procedures for redeeming Fund shares by wire, telephone or internet may be
modified or terminated at any time by the Fund.

HOW TO REDEEM SHARES:

BY MAIL

Send written redemption requests to:

       Jacob Internet Fund
       c/o Firstar Mutual Fund Services, LLC
       P.O. Box 701
       Milwaukee, WI 53201-0701

                                       11





<PAGE>

If a redemption request is inadvertently sent to the Fund at its corporate
address, it will be forwarded to the Transfer Agent and the effective date of
redemption will be delayed until the request is received by the Transfer Agent.

The Fund cannot honor any redemption requests with special conditions or which
specify an effective date other than as provided.

When making a redemption request, make sure your request is in good order. 'Good
order' means your letter of instruction includes:

      the name of the Fund

      the number of shares or the dollar amount of shares to be redeemed

      the account registration number

      signatures of all registered shareholders exactly as the shares are
      registered

<TABLE>
<CAPTION>
                   ACCOUNT                                                SIGNATURE
                 REGISTRATION                                           REQUIREMENTS
                 ------------                                           ------------
<S>                                                  <C>
Individual, Joint Tenants, Sole                      Redemption requests must be signed by all person(s)
  Proprietorship, Custodial (UGMA), General          required to sign for the account, exactly as it is
  Partners....................................       registered.

Corporations, Associations....................       Redemption request and a corporate resolution,
                                                     signed by person(s) required to sign for the
                                                     account, accompanied by signature guarantee(s).

Trusts........................................       Redemption request signed by the Trustee(s), with a
                                                     signature guarantee. (If the Trustee's name is not
                                                     registered on the account, a copy of the trust
                                                     document certified within the past 60 days is also
                                                     required.)
</TABLE>

BY TELEPHONE

If you are set up to perform telephone transactions (either through your New
Account Application or by subsequent arrangements in writing), you may redeem
shares in any amount up to $50,000 by instructing the Fund by telephone at:
1-888-JACOB-FX. You must redeem at least $100 for each telephone redemption.
Redemption requests for amounts exceeding $50,000 must be made in writing. A
signature guarantee is required of all shareholders in order to change telephone
redemption privileges.

BY INTERNET

If you are set up to perform internet transactions (either through your New
Account Application or by subsequent arrangements in writing), you may redeem
shares in any amount up to $50,000 through the Fund's website at
www.JacobInternet.com. You must redeem at least $100 for each internet
redemption. Redemption requests for amounts exceeding $50,000 must be made in
writing. A signature guarantee is required of all shareholders in order to
change internet redemption privileges.

                                       12





<PAGE>

BY SYSTEMATIC WITHDRAWAL PLAN

If you own shares with a value of $10,000 or more, you may participate in the
Systematic Withdrawal Plan. The Fund's systematic withdrawal option allows you
to move money automatically from your Fund account to your bank account
according to the withdrawal schedule you select. To select the systematic
withdrawal option, you must check the appropriate box on the New Account
Application. The minimum systematic withdrawal amount is $100.

If you expect to purchase additional Fund shares, it may not be to your
advantage to participate in the Systematic Withdrawal Plan because
contemporaneous purchases and redemptions may result in adverse tax
consequences.

For further details about this service, see the New Account Application or call
the Fund at 1-888-JACOB-FX.


ELECTRONIC TRANSFERS.  The proceeds of a redemption can be sent directly to your
bank account via wire or ACH transfer. You can elect these options by completing
the appropriate section of the New Account Application or making subsequent
arrangements in writing. In order to arrange for redemption by wire or ACH
transfer after an account has been opened, or to change the bank or account
designated to receive redemption proceeds, a written request must be sent to the
Fund at the address listed above. If the proceeds are sent by wire, Firstar will
assess a $15.00 wire fee. If money is moved via ACH transfer, you will not be
charged by the Fund for these services. There is a $100 minimum per transfer.


TELEPHONE/INTERNET REQUESTS.  Neither the Fund nor any of its service
contractors will be liable for any loss or expense in acting upon any telephone
or internet instructions for redemptions that are reasonably believed to be
genuine. The Fund will use reasonable procedures to attempt to confirm that all
telephone and internet instructions are genuine such as requesting that a
shareholder provide:

<TABLE>
<CAPTION>
                 TELEPHONE                                         INTERNET
                 ---------                                         --------
<S>                                          <C>
    the name in which the account is          the name in which the account is registered, and
    registered, and                           the Fund account number and social security number,
    the Fund account number or his/her        and
    social security number.                   his/her Personal Identification Number (PIN) which
                                              can be established on the web site.
</TABLE>

If the Fund fails to follow these reasonable procedures, it may be liable for
any loss due to unauthorized or fraudulent transactions. Telephone and internet
redemptions may be difficult during periods of drastic economic or market
changes. If you are unable to contact the Fund by telephone or internet, you may
also redeem shares by mail following the instructions above.

IRA REDEMPTIONS.  If you have an IRA, you must indicate on your redemption
request whether or not to withhold federal income tax. Redemption requests not
indicating an election to have federal tax withheld will be subject to
withholding. If you are uncertain of the redemption requirements, please contact
Firstar in advance: 1-888-JACOB-FX.

SIGNATURE GUARANTEES.  Signature guarantees are needed for:

      Redemption requests over $50,000

                                       13





<PAGE>

      Redemption requests to be sent to a different address other than the
      address of record

      Changing telephone redemption privileges

Signature guarantees can be obtained from banks and securities dealers, but not
from a notary public. The Transfer Agent may require additional supporting
documents for redemptions made by corporations, executors, administrators,
trustees and guardians. Call the Fund at 1-888-JACOB-FX for more information and
a form on which to make the signature guarantee.

REDEMPTIONS IN-KIND.  If your redemption request exceeds the lesser of $250,000
or 1% of the NAV (an amount that would affect Fund operations), the Fund
reserves the right to make a 'redemption in-kind'. A redemption in-kind is a
payment in portfolio securities rather than cash. The portfolio securities would
be valued using the same method as the Fund uses to calculate its NAV. You may
experience additional expenses such as brokerage commissions in order to sell
the securities received from the Fund. In-kind payments do not have to
constitute a cross section of the Fund's portfolio. The Fund will not recognize
gain or loss for federal tax purposes on the securities used to complete an
in-kind redemption, but you will recognize gain or loss equal to the difference
between the fair market value of the securities received and your basis in the
Fund shares redeemed.

ACCOUNTS WITH LOW BALANCES.  Due to the high cost of maintaining accounts with
low balances, the Fund may mail you a notice if your account falls below $2,500,
other than as a result of a decline in the value per share of the Fund,
requesting that you bring the account back up to $2,500 or close it out. If you
do not respond to the request within 30 days, the Fund may close your account
and send you the proceeds.

                             PRICING OF FUND SHARES

HOW NAV IS DETERMINED.  The net asset value per share ('NAV') is equal to the
value of the Fund's securities, cash and other assets less all expenses and
liabilities divided by the number of shares outstanding. The net asset value is
determined once daily on Monday through Friday as of the close of business of
the New York Stock Exchange on each day that the Exchange is open. The Fund does
not determine NAV on the following holidays:

<TABLE>
<S>                                  <C>                     <C>
[ ] New Year's Day                   [ ] Good Friday         [ ] Labor Day
[ ] Martin Luther King, Jr. Day      [ ] Memorial Day        [ ] Thanksgiving Day
[ ] Presidents' Day                  [ ] Independence Day    [ ] Christmas Day
</TABLE>

The Fund's portfolio securities are valued each day at the last quoted sales
price on each security's principal exchange. If market quotations are not
readily available, securities will be valued at their fair market value as
determined in good faith, or in accordance with procedures approved by the Board
of Directors. The Fund may use independent pricing services to assist in
calculating the NAV. In addition, if the Fund owns any foreign securities which
are traded on foreign exchanges that are open on weekends or other days when the
Fund does not price its shares, the NAV may change on days when shareholders
will not be able to purchase or redeem Fund shares.

                                       14





<PAGE>

                          DIVIDENDS AND DISTRIBUTIONS

At least 90% of the Fund's net taxable income will be declared as dividends or
distributions and paid annually. If an investor's shares are redeemed prior to
the date on which dividends are normally declared and paid, accrued but unpaid
dividends will be paid with the redemption proceeds. Substantially all the
realized net capital gains of the Fund, if any, are declared and paid on an
annual basis. Dividends are payable to investors of record at the time of
declaration. For a discussion of the taxation of dividends or distributions, see
'Tax Consequences.'

The net investment income of the Fund for each business day is determined
immediately prior to the determination of NAV. Net investment income for other
days is determined at the time NAV is determined on the prior business day.
Shares of the Fund earn dividends on the business day their purchase is
effective but not on the business day their redemption is effective.

CHOOSING A DISTRIBUTION OPTION.  Distribution of dividends from the Fund may be
made in accordance with several options. A shareholder may select one of four
distribution options:

   1.  AUTOMATIC REINVESTMENT OPTION.  Both dividends and capital gains
       distributions will be automatically reinvested in additional shares of
       the Fund unless the investor has elected one of the other three options.

   2.  CASH DIVIDEND OPTION.  Dividends will be paid in cash, and capital gains
       will be reinvested in additional shares.

   3.  CASH CAPITAL GAIN OPTION.  Capital gains will be paid in cash and
       dividends will be reinvested in additional shares.

   4.  ALL CASH OPTION.  Both dividends and capital gains distributions will be
       paid in cash.

                                TAX CONSEQUENCES

AVOID 'BUYING A DIVIDEND.'  If you invest in the Fund shortly before the record
date of a taxable distribution, the distribution will lower the value of the
Fund's shares by the amount of the distribution and, in effect, you will receive
some of your investment back in the form of a taxable distribution.

TAX CONSIDERATIONS.  In general, if you are a taxable investor, Fund
distributions will be taxable to you as either ordinary income or capital gain.
This is true whether you reinvest your distributions in additional Fund shares
or receive them in cash. Any capital gains the Fund distributes will be taxable
as long-term capital gain no matter how long you have held your shares. Every
January, you will receive a statement that shows the tax status of distributions
you received for the previous year.

By law, the Fund must withhold 31% of your taxable distributions and redemption
proceeds unless you are a corporate or other exempt shareholder or you:

      provide your correct social security or taxpayer identification number,

      certify that this number is correct, and

      certify that you are not subject to backup withholding.

The Fund must also withhold if the IRS instructs it to do so.

When you sell your shares of the Fund, you may realize a capital gain or loss.

                                       15





<PAGE>

Fund distributions and gains from the sale or exchange of your shares generally
will be subject to state and local taxes. Non-U.S. investors may be subject to
U.S. withholding and estate tax, and will be subject to special U.S. tax
certification requirements. You should consult your tax advisor about the
federal, state, local or foreign tax consequences of your investment in the
Fund.

                           DISTRIBUTION ARRANGEMENTS

DISTRIBUTOR.  Lepercq, de Neuflize Securities Inc. (the 'Distributor') has
entered into a distribution agreement with the Fund to serve as the Fund's
distributor. The Distributor will be entitled to receive a distribution fee up
to 0.10% of the Fund shares' average daily net assets (the 'Distribution Fee')
under the terms of the Fund's Rule 12b-1 Plan and will pay the promotional and
advertising expenses related to the distribution of the Fund's shares and for
the printing of all Fund prospectuses used in connection with the distribution
and sale of Fund shares. In addition, pursuant to such distribution agreement,
the Distributor may use a portion of the distribution fee to compensate
financial intermediaries for providing distribution assistance with respect to
the sale of Fund shares. See 'Investment Advisory and Other Services' in the
Statement of Additional Information.


12b-1 PLAN.  The Fund has adopted a distribution and service plan, pursuant to
Rule 12b-1 under the Investment Company Act of 1940 (the 'Plan'). Rule 12b-1
provides that an investment company which bears any direct or indirect expense
of distributing its shares must do so only in accordance with the Plan permitted
by Rule 12b-1. The Plan provides that the Fund will compensate the Adviser 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'), which is subject
to a service fee of up to 0.25% per annum of the Fund's average daily net
assets. Because these fees are paid out of the Fund's assets on an ongoing
basis, over time these fees will increase the cost of your investment and may
cost you more than paying other types of sales charges. As noted above, the Plan
also provides that the Distributor is paid the Distribution Fee, on an annual
basis, to enable it to provide promotional support to the Fund and to make
payments to broker-dealers and other financial institutions with which it has
written agreements and whose clients are Fund shareholders (each a
'broker-dealer') for providing distribution assistance. The Distribution Fee is
an 'asset based sales charge' 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 National Association of Securities
Dealers, Inc. Fees paid under the Plan may not be waived for individual
shareholders.


Shareholder servicing agents and broker-dealers may charge investors a fee in
connection with their provision of specialized purchase and redemption
procedures. In addition, shareholder servicing agents and broker-dealers
offering purchase and redemption procedures similar to those offered to
shareholders who invest in the Fund directly may impose charges, limitations,
minimums and restrictions in addition to or different from those applicable to
shareholders who invest in the Fund directly. Accordingly, the net yield to
investors who invest through shareholder servicing agents and broker-dealers may
be less than it is to investors who invest in the Fund directly. An investor
should read the Prospectus in conjunction with the materials provided by the
shareholder servicing agent and broker-dealer describing the procedures under
which Fund shares may be purchased and redeemed through the shareholder
servicing agent and broker-dealer.

                                       16






<PAGE>
                              FINANCIAL HIGHLIGHTS

The financial highlights table is intended to help you understand the Fund's
financial performance from its commencement of operations on December 14, 1999
until the end of its first fiscal year (or portion thereof) on August 31, 2000.
Certain information reflects financial results for a single fund share. The
total return in the table represents the rate that an investor would have earned
on an investment in the Fund (assuming reinvestment of all dividends and
distributions). This information has been audited by Ernst & Young LLP, whose
report, along with the Fund's financial statements, are included in the Fund's
Annual Report to Shareholders which is available upon request. Per share data
for a share of beneficial interest outstanding for the entire period and
selected information for the period are as follows:


<TABLE>
<CAPTION>
                                                              DECEMBER 14, 1999(1)
                                                                    THROUGH
                                                                AUGUST 31, 2000
                                                              --------------------
<S>                                                           <C>
PER SHARE DATA:
Net asset value, beginning of period                                        $10.00
                                                              --------------------

INCOME FROM INVESTMENT OPERATIONS:
    Net investment loss(2)                                                  (0.09)
    Net realized and unrealized losses on investments                       (4.37)
                                                              --------------------
    Total from investment operations                                        (4.46)
                                                              --------------------
Net asset value, end of period                                               $5.54
                                                              --------------------
                                                              --------------------
Total return(3)                                                           (44.60%)

SUPPLEMENTAL DATA AND RATIOS:
Net assets, end of period                                             $127,779,557

RATIO OF OPERATING EXPENSES TO AVERAGE NET ASSETS:
    Before reimbursement by Adviser(4)                                       2.30%
    After reimbursement by Adviser(4)                                        2.00%

RATIO OF NET INVESTMENT LOSS TO AVERAGE NET ASSETS:
    Before reimbursement by Adviser(4)                                     (1.85%)
    After reimbursement by Adviser(4)                                      (1.55%)

Portfolio turnover rate                                                    195.24%
</TABLE>


---------

(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 for the period December 14, 1999 through August 31, 2000.

(4) Annualized for the period December 14, 1999 through August 31, 2000.

                                       17





<PAGE>



                   [THIS PAGE INTENTIONALLY LEFT BLANK]










<PAGE>

<TABLE>
<S>                                                                                                <C>
                               INVESTMENT ADVISER
                     Jacob Asset Management of New York LLC
                                                                                                 JACOB INTERNET
                        ADMINISTRATOR AND TRANSFER AGENT                                            FUND, INC.
                               AND DIVIDEND AGENT
                        Firstar Mutual Fund Services LLC

                          UNDERWRITER AND DISTRIBUTOR
                      Lepercq, de Neuflize Securities Inc.

                                   CUSTODIAN
                               Firstar Bank, N.A.

                                 LEGAL COUNSEL
                      Stradley Ronon Stevens & Young, LLP

                              INDEPENDENT AUDITORS
                               Ernst & Young LLP


                                                                                            JACOB INTERNET FUND [LOGO]


A Statement of Additional Information (SAI), dated December 31, 2000 and the
Fund's Annual and Semi-Annual Reports include additional information about the
Fund and its investments and are incorporated by reference into this Prospectus.
The Fund's Annual Report contains a discussion of the market conditions and
investment strategies that significantly affected the Fund's performance during
its prior fiscal year or part thereof. You may obtain the SAI, the Annual and
Semi-Annual Reports and material incorporated by reference with out charge by
calling the Fund at1888 JACOBFX. To request other information or to make
inquiries, please call you financial intermediary or the Fund.

A Current SAI has been filed with the Securities and Exchange Commission. You
may visit the Securities and Exchange Commission's Internet website
(www.sec.gov) to view the SAI, material incorporated by reference and other
information. These materials can also be reviewed and copied at the Commission's                   PROSPECTUS
Public Reference Room in Washington, DC. Information on the operation of the                     & APPLICATION
Public Reference Room may be obtained by calling the Commission at                              -----------------
1-800-SEC-0330. In addition, copies of these materials may be obtained, upon                    DECEMBER 31, 2000
payment of a duplicating fee, by writing the Public Reference Section of the
Commission, Washington, DC 20549-6009.

           JACOB ASSET MANAGEMENT OF NEW YORK LLC
        1675 BROADWAY, 16TH FLOOR, NEW YORK, NY 10019
                  1-888-JACOB-FX (522-6239)
                   www. JacobInternet.com

811-09447
</TABLE>





<PAGE>

                            JACOB INTERNET FUND, INC.

                                 --------------

                       STATEMENT OF ADDITIONAL INFORMATION

                                DECEMBER 31, 2000
                                 --------------

                    RELATING TO THE JACOB INTERNET FUND, INC.
                       PROSPECTUS DATED DECEMBER 31, 2000




                  This Statement of Additional Information sets forth
information which may be of interest to investors but which is not necessarily
included in the Fund's Prospectus, dated December 31, 2000 (the "Prospectus").



                  This Statement of Additional Information is not a prospectus
and should be read in conjunction with the Prospectus, a copy of which may be
obtained without charge by writing or calling the Fund toll-free at
1-888-JACOB-FX. The material relating to the purchase, redemption and pricing of
shares has been incorporated by reference into the Statement of Additional
Information from the Fund's Prospectus.

                  This Statement of Additional Information is incorporated by
reference into the Prospectus in its entirety.







<PAGE>


                                TABLE OF CONTENTS

<TABLE>

<S>                                                                                <C>
Fund History....................................................................   2
Description of the Fund and its Investments and Risks...........................   2
Management of the Fund..........................................................  11
Codes of Ethics.................................................................  13
Control Persons and Principal Holders of Securities.............................  13
Investment Advisory and Other Services..........................................  14
Brokerage Allocation and Other Practices........................................  20
Capital Stock and Other Securities..............................................  22
Purchase, Redemption and Pricing of Shares......................................  23
Taxation of the Fund............................................................  23
Underwriters....................................................................  26
Calculation of Performance Data.................................................  26
Financial Statements............................................................  28
</TABLE>



                                      (i)





<PAGE>


I.       FUND HISTORY

                  Jacob Internet Fund Inc. (the "Fund") was incorporated in
Maryland on July 13, 1999.


II.      DESCRIPTION OF THE FUND AND ITS INVESTMENTS AND RISKS

         A. INVESTMENT STRATEGIES AND RISKS


                  The Fund's primary investment objective is long-term growth of
capital, a goal it seeks by investing primarily in common stocks and securities
convertible into common stocks of companies whose primary focus is Internet
related. The Fund's investment adviser selects investments in companies that
derive a substantial portion of their revenue from Internet or Internet-related
businesses or that are aggressively developing and expanding their Internet and
Internet-related business operations. Current income is a secondary investment
objective.


                  Except during temporary defensive periods, not less than 80%
of the Fund's total assets will be invested in the securities of companies
engaged in Internet and Internet-related activities. As a diversified, open-end
management investment company, at least 75% of the Fund's total assets are
required to be invested in securities limited in respect of any one issuer to
not more than 5% of the Fund's total assets and to not more than 10% of the
issuer's voting securities.

         B. DESCRIPTION OF THE FUND'S INVESTMENT SECURITIES AND DERIVATIVES


                  The following expands upon the descriptions in the Prospectus
of the types of securities in which the Fund may invest and their related risks.
In addition, this section discusses certain potential Fund investments which
were not previously described in the Prospectus.


                  1. The Computer/Internet Technology Area. The Adviser believes
that because of rapid advances in computer/Internet technology, an investment in
companies with business operations in these areas will offer substantial
opportunities for long-term capital appreciation. Of course, prices of common
stocks of even the best managed, most profitable corporations are subject to
market risk, which means their stock prices can decline. In addition, swings in
investor psychology or significant trading by large institutional investors can
result in price fluctuations. The Fund may also invest in the stocks of
companies that should benefit from the commercialization of technological
advances, although they may not be directly involved in research and
development.

                  The computer/Internet technology area has exhibited and
continues to exhibit rapid growth, both through increasing demand for existing
products and services and the broadening of the technology market. In general,
the stocks of large capitalized companies that are well established in the
computer/Internet technology market can be expected to grow with the market and
will frequently be found in the Fund's portfolio. The expansion of
computer/Internet

                                      (2)





<PAGE>

technology and its related industries, however, also provides a favorable
environment for investment in small to medium capitalized companies. The Fund's
investment policy is not limited to any minimum capitalization requirement and
the Fund may hold securities without regard to the capitalization of the issuer.
The Adviser's overall stock selection for the Fund is not based on the
capitalization or size of the company but rather on an assessment of the
company's fundamental prospects.

                  Companies in the rapidly changing field of computer/Internet
technology face special risks. For example, their products or services may not
prove commercially successful or may become obsolete quickly. The value of the
Fund's shares may be susceptible to factors affecting the computer/Internet
technology area and to greater risk and market fluctuation than an investment in
a fund that invests in a broader range of portfolio securities not concentrated
in any particular industry. As such, the Fund is not an appropriate investment
for individuals who are not long-term investors and who, as their primary
objective, require safety of principal or stable income from their investments.
The computer/Internet technology area may be subject to greater governmental
regulation than many other areas and changes in governmental policies and the
need for regulatory approvals may have a material adverse effect on these areas.
Additionally, companies in these areas may be subject to risks of developing
technologies, competitive pressures and other factors and are dependent upon
consumer and business acceptance as new technologies evolve.

                  2. Foreign Securities. The Fund may invest up to 15% of its
assets in foreign securities. It is, however, the present intention of the Fund
to limit the investment in foreign securities to no more than 5% of its assets.
By investing a portion of its assets in foreign securities, the Fund will
attempt to take advantage of differences among economic trends and the
performance of securities markets in various countries. To date, the market
values of securities of issuers located in different countries have moved
relatively independently of each other. During certain periods, the return on
equity investments in some countries has exceeded the return on similar
investments in the United States. The Adviser believes that, in comparison with
investment companies investing solely in domestic securities, it may be possible
to obtain significant appreciation from a portfolio of foreign investments and
securities from various markets that offer different investment opportunities
and are affected by different economic trends. International diversification
reduces the effect that events in any one country will have on the Fund's entire
investment portfolio. On the other hand, a decline in the value of the Fund's
investments in one country may offset potential gains from investments in
another country.

                  Investment in obligations of foreign issuers and in direct
obligations of foreign nations involves somewhat different investment risks from
those affecting obligations of United States domestic issuers. There may be
limited publicly available information with respect to foreign issuers and
foreign issuers are not generally subject to uniform accounting, auditing and
financial standards and requirements comparable to those applicable to domestic
companies. There may also be less government supervision and regulation of
foreign securities exchanges, brokers and listed companies than in the United
States. Foreign securities settlements may in some instances be subject to
delays and related administrative uncertainties that could result in temporary
periods when assets of the Fund are uninvested and no return is earned thereon
and may involve a risk of loss to the Fund. Foreign securities markets have
substantially less volume


                                      (3)




<PAGE>


than domestic securities exchanges and securities of some foreign companies are
less liquid and more volatile than securities of comparable domestic companies.
Brokerage commissions and other transaction costs on foreign securities
exchanges are generally higher than in the United States. Dividends and interest
paid by foreign issuers may be subject to withholding and other foreign taxes,
which may decrease the net return on foreign investments as compared to
dividends and interest paid to the Fund by domestic companies. Additional risks
include future political and economic developments, the possibility that a
foreign jurisdiction might impose or increase withholding taxes on income
payable with respect to foreign securities, the possible seizure,
nationalization or expropriation of the foreign issuer or foreign deposits (in
which the Fund could lose its entire investment in a certain market) and the
possible adoption of foreign governmental restrictions such as exchange
controls. To the extent the Fund invests in foreign securities, shareholders may
be subject to additional risks than if the Fund's portfolio contained only
domestic securities.

                  Foreign Currency. Investments in foreign securities will
usually be denominated in foreign currency, and the Fund may contemporarily hold
funds in foreign currencies. The value of the Fund's investments denominated in
foreign currencies may be affected, favorably or unfavorably, by the relative
strength of the U.S. dollar, changes in foreign currency and U.S. dollar
exchange rates and exchange control regulations. The Fund may incur costs in
connection with conversions between various currencies. The Fund's net asset
value per share will be affected by changes in currency exchange rates. Changes
in foreign currency exchange rates may also affect the value of dividends and
interest earned, gains and losses realized on the sale of securities and net
investment income and gains, if any, to be distributed to shareholders by the
Fund. The rate of exchange between the U.S. dollar and other currencies is
determined by the forces of supply and demand in the foreign exchange markets
(which in turn are affected by interest rates, trade flow and numerous other
factors, including, in some countries, local governmental intervention).

                  3. U.S. Government Obligations. U.S. Government obligations
are obligations that are backed by the full faith and credit of the United
States, by the credit of the issuing or guaranteeing agency or by the agency's
right to borrow from the U.S. Treasury. They include (i) U.S. Treasury
obligations, which differ only in their interest rates, maturities and times of
issuance as follows: U.S. Treasury bills (maturity of one year or less), U.S.
Treasury notes (maturity of one year or ten years), U.S. Treasury bonds
(generally maturities of more than ten years), and (ii) obligations issued or
guaranteed by U.S. Government agencies and instrumentalities that are supported
by the full faith and credit of the United States (such as securities issued by
the Government National Mortgage Association, the Federal Housing
Administration, the Department of Housing and Urban Development, the
Export-Import Bank, the General Services Administration and the Maritime
Administration, and certain securities issued by the Farmers' Home
Administration and the Small Business Administration, most of which are
explained below under the section entitled "Mortgage-Backed Securities"). The
maturities of U.S. Government obligations usually range from three months to
thirty years.

                  4. Repurchase Agreements. When the Fund purchases securities,
it may enter into a repurchase agreement with the seller wherein the seller
agrees, at the time of sale, to repurchase the security at a mutually agreed
upon time and price. The Fund may enter into


                                      (4)




<PAGE>



repurchase agreements with member banks of the Federal Reserve System and with
broker-dealers who are recognized as primary dealers in United States Government
securities by the Federal Reserve Bank of New York. Although the securities
subject to the repurchase agreement might bear maturities exceeding one year,
settlement for the repurchase would never be more than 397 days after the Fund's
acquisition of the securities and normally would be within a shorter period of
time. The resale price will be in excess of the purchase price, reflecting an
agreed upon market rate effective for the period of time the Fund's money will
be invested in the security, and will not be related to the coupon rate of the
purchased security. At the time the Fund enters into a repurchase agreement, the
value of the underlying security, including accrued interest, will be equal to
or exceed the value of the repurchase agreement, and, in the case of a
repurchase agreement exceeding one day, the seller will agree that the value of
the underlying security, including accrued interest, will at all times be equal
to or exceed the value of the repurchase agreement. The Fund may engage in a
repurchase agreement with respect to any security in which it is authorized to
invest, even though the underlying security may mature in more than one year.
The collateral securing the seller's obligation must be of a credit quality at
least equal to the Fund's investment criteria for securities in which it invests
and will be held by the Custodian or in the Federal Reserve Book Entry System.


                  For purposes of the Investment Company Act of 1940, as amended
(the "1940 Act"), a repurchase agreement is deemed to be a loan from the Fund to
the seller subject to the repurchase agreement and is therefore subject to the
Fund's investment restriction applicable to loans. It is not clear whether a
court would consider the securities purchased by the Fund subject to a
repurchase agreement as being owned by the Fund or as being collateral for a
loan by the Fund to the seller. In the event of the commencement of bankruptcy
or insolvency proceedings with respect to the seller of the securities before
repurchase of the security under a repurchase agreement, the Fund may encounter
a delay and incur costs before being able to sell the security. Delays may
involve loss of interest or decline in price of the security. If the court
characterized the transaction as a loan and the Fund has not perfected a
security interest in the security, the Fund may be required to return the
security to the seller's estate and be treated as an unsecured creditor of the
seller. As an unsecured creditor, the Fund would be at the risk of losing some
or all of the principal and income involved in the transaction. As with any
unsecured debt obligation purchased for the Fund, the Adviser seeks to minimize
the risk of loss through repurchase agreements by analyzing the creditworthiness
of the obligor, in this case the seller. Apart from the risk of bankruptcy or
insolvency proceedings, there is also the risk that the seller may fail to
repurchase the security, in which case the Fund may incur a loss if the proceeds
of the sale to a third party are less than the repurchase price. However, if the
market value of the securities subject to the repurchase agreement becomes less
than the repurchase price (including interest), the Fund involved will direct
the seller of the security to deliver additional securities so that the market
value of all securities subject to the repurchase agreement will equal or exceed
the repurchase price. It is possible that a Fund will be unsuccessful in seeking
to impose on the seller a contractual obligation to deliver additional
securities.

                  5. Hedging Transactions. The Fund may, but does not currently
intend to, enter into hedging transactions. Hedging is a means of transferring
risk which an investor does not desire to assume during an uncertain market
environment. The Fund is permitted to enter into the transactions solely (a) to
hedge against changes in the market value of portfolio

                                      (5)




<PAGE>


securities or (b) to close out or offset existing positions. The transactions
must be appropriate to reduction of risk; they cannot be for speculation. In
particular, the Fund may write covered call options on securities or stock
indices. By writing call options, the Fund limits its profit to the amount of
the premium received. By writing a covered call option, the Fund assumes the
risk that it may be required to deliver the security having a market value
higher than its market value at the time the option was written. The Fund will
not write options if immediately after such sale the aggregate value of the
obligations under the outstanding options would exceed 25% of the Fund's net
assets.

                  To the extent the Fund uses hedging instruments which do not
involve specific portfolio securities, offsetting price changes between the
hedging instruments and the securities being hedged will not always be possible,
and market value fluctuations of the Fund may not be completely eliminated. When
using hedging instruments that do not specifically correlate with securities in
the Fund, the Adviser will attempt to create a very closely correlated hedge.

                  Short Sales. The Fund may make short sales of securities
"against-the-box." A short sale "against-the-box" is a sale of a security that
the Fund either owns an equal amount of or has the immediate and unconditional
right to acquire at no additional cost. The Fund will make short sales
"against-the-box" as a form of hedging to offset potential declines in long
positions in the same or similar securities.

                  6. Options Transactions. The Fund may, but does not currently
intend to, enter into options transactions. The Fund may purchase call and put
options on securities and on stock indices in an attempt to hedge its portfolio
and to increase its total return. Call options may be purchased when it is
believed that the market price of the underlying security or index will increase
above the exercise price. Put options may be purchased when the market price of
the underlying security or index is expected to decrease below the exercise
price. The Fund may also purchase all options to provide a hedge against an
increase in the price of a security sold short by it. When the Fund purchases a
call option, it will pay a premium to the party writing the option and a
commission to the broker selling the option. If the option is exercised by the
Fund, the amount of the premium and the commission paid may be greater than the
amount of the brokerage commission that would be charged if the security were
purchased directly.

                  In addition, the Fund may write covered call options on
securities or stock indices. By writing options, the Fund limits its profits to
the amount of the premium received. By writing a call option, the Fund assumes
the risk that it may be required to deliver the security at a market value
higher than its market value at the time the option was written plus the
difference between the original purchase price of the stock and the strike
price. By writing a put option, the Fund assumes the risk that it may be
required to purchase the underlying security at a price in excess of its current
market value.

                  7. Lending of Securities. The Fund may lend its portfolio
securities to qualified institutions as determined by the Adviser. By lending
its portfolio securities, the Fund attempts to increase its income through the
receipt of interest on the loan. Any gain or loss in the market price of the
securities loaned that may occur during the term of the loan will be for the
account of the Fund in such transaction. The Fund will not lend portfolio
securities if, as a


                                      (6)




<PAGE>


result, the aggregate of such loans exceeds 33% of the value of its total assets
(including such loans). All relevant facts and circumstances, including the
creditworthiness of the qualified institution, will be monitored by the Adviser,
and will be considered in making decisions with respect to lending of
securities, subject to review by the Fund's Board of Directors. The Fund may pay
reasonable negotiated fees in connection with loaned securities, so long as such
fees are set forth in a written contract and their reasonableness is determined
by the Fund's Board of Directors.

                  8. Variable-Amount Master Demand Notes. The Fund may purchase
variable amount master demand notes ("VANs"). VANs are debt obligations that
provide for a periodic adjustment in the interest rate paid on the instrument
and permit the holder to demand payment of the unpaid principal balance plus
accrued interest at specified intervals upon a specified number of days' notice
either from the issuer or by drawing on a bank letter of credit, a guarantee,
insurance or other credit facility issued with respect to such instrument.

                  The VANs in which the Fund may invest are payable on not more
than seven calendar days' notice either on demand or at specified intervals not
exceeding one year depending upon the terms of the instrument. The terms of the
instruments provide that interest rates are adjustable at intervals ranging from
daily to up to one year and their adjustments are based upon the prime rate of a
bank or other appropriate interest rate adjustment index as provided in the
respective instruments. The Fund will decide which variable rate demand
instruments it will purchase in accordance with procedures prescribed by its
Board of Directors to minimize credit risks.

                  The VANs that the Fund may invest in include participation
certificates purchased by the Fund from banks, insurance companies or other
financial institutions in fixed or variable rate, or taxable debt obligations
(VANs) owned by such institutions or affiliated organizations. A participation
certificate gives the Fund an undivided interest in the obligation in the
proportion that the Fund's participation interest bears to the total principal
amount of the obligation and provides the demand repurchase feature described
below. Where the institution issuing the participation does not meet the Fund's
high quality standards, the participation is backed by an irrevocable letter of
credit or guaranty of a bank (which may be a bank issuing a confirming letter of
credit, or a bank serving as agent of the issuing bank with respect to the
possible repurchase of the certificate of participation or a bank serving as
agent of the issuer with respect to the possible repurchase of the issue) or
insurance policy of an insurance company that the Board of Directors of the Fund
has determined meets the prescribed quality standards for the Fund. The Fund has
the right to sell the participation certificate back to the institution and,
where applicable, draw on the letter of credit, guarantee or insurance after no
more than 30 days' notice either on demand or at specified intervals not
exceeding 397 days (depending on the terms of the participation), for all or any
part of the full principal amount of the Fund's participation interest in the
security, plus accrued interest. The Fund intends to exercise the demand only
(1) upon a default under the terms of the bond documents, (2) as needed to
provide liquidity to the Fund in order to make redemptions of the Fund's shares,
or (3) to maintain a high quality investment portfolio. The institutions issuing
the participation certificates will retain a service and letter of credit fee
(where applicable) and a fee for providing the demand repurchase feature, in an
amount equal to the excess of the interest paid on the instruments over the
negotiated yield


                                      (7)




<PAGE>


at which the participations were purchased by the Fund. The total fees generally
range from 5% to 15% of the applicable prime rate* or other interest rate index.
With respect to insurance, the Fund will attempt to have the issuer of the
participation certificate bear the cost of the insurance, although the Fund
retains the option to purchase insurance if necessary, in which case the cost of
insurance will be an expense of the Fund. The Adviser has been instructed by the
Fund's Board of Directors to continually monitor the pricing, quality and
liquidity of the variable rate demand instruments held by the Fund, including
the participation certificates, on the basis of published financial information
and reports of the rating agencies and other bank analytical services to which
the Fund may subscribe. Although these instruments may be sold by the Fund, the
Fund intends to hold them until maturity, except under the circumstances stated
above.


                  While the value of the underlying variable rate demand
instruments may change with changes in interest rates generally, the variable
rate nature of the underlying variable rate demand instruments should minimize
changes in value of the instruments. Accordingly, as interest rates decrease or
increase, the potential for capital appreciation and the risk of potential
capital depreciation is less than would be the case with a portfolio of fixed
income securities. The Fund may contain VANs on which stated minimum or maximum
rates, or maximum rates set by state law, limit the degree to which interest on
such VANs may fluctuate. To the extent that the Fund holds VANs with these
limits, increases or decreases in value may be somewhat greater than would be
the case without such limits. In the event that interest rates increased so that
the variable rate exceeded the fixed-rate on the obligations, the obligations
could no longer be valued at par and this may cause the Fund to take corrective
action, including the elimination of the instruments. Because the adjustment of
interest rates on the VANs is made in relation to movements of the applicable
banks' "prime rate,*" or other interest rate adjustment index, the VANs are not
comparable to long-term fixed-rate securities. Accordingly, interest rates on
the VANs may be higher or lower than current market rates for fixed-rate
obligations or obligations of comparable quality with similar maturities.


                  For purposes of determining whether a VAN held by a Fund
matures within 397 days from the date of its acquisition, the maturity of the
instrument will be deemed to be the longer of (1) the period required before the
Fund is entitled to receive payment of the principal amount of the instrument or
(2) the period remaining until the instrument's next interest rate adjustment.
If a variable rate demand instrument ceases to meet the investment criteria of
the Fund, it will be sold in the market or through exercise of the repurchase
demand.

                  9. Investment Companies. The Fund may purchase securities of
other investment companies only to the extent that (i) not more than 5% of the
value of the Fund's total assets will be invested in the securities of any one
investment company, (ii) not more than 10% of the value of its total assets will
be invested in the aggregate in securities of investment companies as a group,
and (iii) not more than 3% of the outstanding voting stock of any one investment
company will be owned by the Fund, except as such securities may be acquired as


----------
*    The "prime rate" is generally the rate charged by a bank to its most
     creditworthy customers for short term loans. The prime rate of a particular
     bank may differ from other banks and will be the rate announced by each
     bank on a particular day. Changes in the prime rate may occur with great
     frequency and generally become effective on the date announced.


                                      (8)




<PAGE>


part of a merger, consolidation or acquisition of assets and further, except as
may be permitted by Section 12(d) of the 1940 Act or by the Securities and
Exchange Commission.


                  10. Borrowing. The Fund may from time to time borrow money
from banks for temporary, extraordinary or emergency purposes. Such borrowing
will not exceed an amount equal to one-third of the value of the Fund's total
assets less its liabilities and will be made at prevailing interest rates. The
Fund may not, however, purchase additional securities while borrowings exceed 5%
of its total assets. Interest paid on borrowings will reduce net income.



         C. FUND POLICIES - INVESTMENT RESTRICTIONS

                  The Fund has adopted the following fundamental investment
restrictions which may not be changed unless approved by a majority of the
Fund's outstanding shares. As used in this Prospectus, the term "majority of the
outstanding shares" of the Fund means, respectively, the vote of the lesser of
(i) 67% or more of the shares of the Fund present at the meeting, if more than
50% of the outstanding shares of the Fund are present or represented by proxy,
or (ii) more than 50% of the outstanding shares of the Fund.

                  The Fund may not:

         (1)      Borrow money. This restriction shall not apply to borrowing
                  from banks for temporary or emergency (not leveraging)
                  purposes, including the meeting of redemption requests that
                  might otherwise require the untimely disposition of
                  securities, in an amount up to one-third of the value of the
                  Fund's total assets (including the amount borrowed) valued at
                  market less liabilities (not including the amount borrowed) at
                  the time the borrowing was made.

         (2)      With respect to 75% of its total assets, the Fund will not
                  invest more than 5% of its assets in the securities of any one
                  issuer (except securities issued or guaranteed by the U.S.
                  Government, its agencies, and instrumentalities).

         (3)      With respect to 75% of its total assets, the Fund will not
                  invest in the securities of any issuer if as a result the Fund
                  holds more than 10% of the outstanding securities or more than
                  10% of the outstanding voting securities of such issuer.


         (4)      Mortgage, pledge or hypothecate any assets except that the
                  Fund may pledge not more than one-third of its total assets to
                  secure borrowings made in accordance with paragraph (1) above.


         (5)      Sell securities short, except short sales "against-the-box,"
                  or purchase securities on margin in connection with hedging
                  transactions.

         (6)      Underwrite the securities of other issuers, except insofar as
                  the Fund may be deemed an underwriter under the Securities Act
                  of 1933 in disposing of a portfolio security.


                                      (9)




<PAGE>

         (7)      Invest more than an aggregate of 15% of its net assets in
                  illiquid securities, including restricted securities and other
                  securities that are not readily marketable, such as repurchase
                  agreements maturing in more than seven days and variable rate
                  demand instruments exercisable in more than seven days.

         (8)      Purchase or sell real estate, real estate investment trust
                  securities, commodities or commodity contracts, or oil and gas
                  interests, but this shall not prevent the Fund from investing
                  in obligations secured by real estate or interests in real
                  estate.

         (9)      Make loans to others, except through the purchase of portfolio
                  investments, including repurchase agreements, exceeding in the
                  aggregate one-third of the market value of the Fund's total
                  assets less liabilities other than obligations created by
                  these transactions.

         (10)     Invest 25% or more of its assets in the securities of
                  "issuers" in any single industry, except that the Fund will
                  concentrate (invest 25% or more of its assets) in the Internet
                  industry and provided that there shall be no limitation on the
                  Fund to purchase obligations issued or guaranteed by the
                  United States Government, its agencies or instrumentalities.

         (11)     Invest in securities of other investment companies, except (i)
                  the Fund may purchase unit investment trust securities where
                  such unit investment trusts meet the investment objective of
                  the Fund and then only up to 5% of the Fund's net assets,
                  except as they may be acquired as part of a merger,
                  consolidation or acquisition of assets and (ii) as permitted
                  by Section 12(d) of the 1940 Act or by the Securities and
                  Exchange Commission.

         (12)     Issue senior securities except insofar as the Fund may be
                  deemed to have issued a senior security in connection with any
                  permitted borrowing.

                  The Fund will not be in violation of any maximum percentage
limitation when the change in the percentage of the Fund's holdings is due to a
change in value of the Fund's securities. This qualification does not apply to
the restriction on the Fund's ability to purchase additional securities when
borrowings earn 5% of the value of the Fund's total assets. Investment
restrictions that involve a maximum percentage of securities or assets will be
violated, however, if an excess over the percentage occurs immediately after,
and is caused by, an acquisition of securities or assets of, or borrowings by,
the Fund.

         D. TEMPORARY DEFENSIVE POSITIONS

                  When the Adviser believes that market conditions warrant a
temporary defensive position, the Fund may invest up to 100% of its assets in
short-term instruments such as commercial paper, bank certificates of deposit,
bankers' acceptances, variable rate demand instruments or repurchase agreements
for such securities and securities of the U.S. Government and its agencies and
instrumentalities, as well as cash and cash equivalents denominated in


                                      (10)




<PAGE>


foreign currencies. Investments in domestic bank certificates of deposit and
bankers' acceptances will be limited to banks that have total assets in excess
of $500 million and are subject to regulatory supervision by the U.S. Government
or state governments. The Fund's investments in foreign short-term instruments
will be limited to those that, in the opinion of the Adviser, equate generally
to the standards established for U.S. short-term instruments.

III. MANAGEMENT OF THE FUND


                  The Fund's Board of Directors is responsible for the overall
management and supervision of the Fund. The Board employs Jacob Asset Management
of New York LLC (the "Adviser") as the investment adviser to the Fund. The
Adviser supervises all aspects of the Fund's operations and provides investment
advice and portfolio management services to the Fund. Subject to the Board's
supervision, the Adviser makes all of the day-to-day investment decisions,
arranges for the execution of portfolio transactions and generally manages the
portfolio investments.



               The Directors and officers of the Fund and their principal
occupations during the past five years are set forth below. Their titles may
have varied during this period. Asterisks indicate that those Directors are
"interested persons" of the Fund, as defined in the 1940 Act. Unless otherwise
indicated, the address of each Director and officer is 1675 Broadway, New York,
New York 10019.




                       OFFICERS AND DIRECTORS OF THE FUND




<TABLE>
<CAPTION>
NAME, (AGE), ADDRESS                                 POSITION WITH THE FUND, PRINCIPAL OCCUPATIONS
----------------------------------------------------------------------------------------------------------------------
<S>                                                  <C>
RYAN I. JACOB*  (31)                                 President, Chief Executive Officer and Director of the Fund as
1675 Broadway, 16th Floor                            well as founder, Chairman and Chief Executive Officer of the
New York, New York 10019                             Adviser.  Mr. Jacob served as Chief Portfolio Manager of The
                                                     Internet Fund, Inc. from December 20, 1997 through June 24,
                                                     1999.  Mr. Jacob also served as an analyst for Horizon Asset
                                                     Management from 1994 through August 1998 and was an assistant
                                                     portfolio manager in the private client group at Bankers Trust
                                                     from 1992 through 1994.  From 1996 through August 1998, Mr.
                                                     Jacob was Director of Research for IPO Value Monitor, an
                                                     investment research service.  Mr. Jacob, a graduate of Drexel
                                                     University, has over 8 years of investment management
                                                     experience.
</TABLE>



                                      (11)




<PAGE>



<TABLE>
<CAPTION>
NAME, (AGE), ADDRESS                                 POSITION WITH THE FUND, PRINCIPAL OCCUPATIONS
----------------------------------------------------------------------------------------------------------------------
<S>                                                  <C>
FRANCIS J. ALEXANDER* (56)                           Vice President, Secretary, Treasurer and Director of the Fund.
1675 Broadway, 16th Floor                            Mr. Alexander has been a portfolio manager with Lepercq, de
New York, New York 10019                             Neuflize & Co. Inc. since May 1998.  Mr. Alexander has also
                                                     been President of Alexander Capital Management, Inc. since
                                                     March 1985.

WILLIAM B. FELL (31)                                 Director of the Fund.  Mr. Fell has served as
13 Poplar Court, Newtown,                            Manager-Accounting Services with Maritrans Inc. since September
Pennsylvania 18940                                   1996.  From March 1995 to September 1996, he was a Senior
                                                     Accountant with Maritrans Inc.  Mr. Fell was formerly a Senior
                                                     Accountant with Ernst & Young LLP from September 1994 to March
                                                     1995.

CHRISTOPHER V. HAJINIAN (31)                         Director of the Fund.  Mr. Hajinian is currently a
11 Charles Drive, Richboro,                          self-employed attorney.  He was an attorney with Naulty,
Pennsylvania 18954                                   Scaricamazza & McDevitt Ltd. from September 1996 to July 1999.

LEONARD S. JACOB,                                    Director of the Fund.  Dr. Jacob has served as Chairman and
M.D., Ph.D.** (51)                                   Chief Executive Officer of InKine Pharmaceutical Company, Inc.
1787 Sentry Park West,                               since November 1997.  Prior to joining InKine, Dr. Jacob served
Building 18, Suite 440,                              as the President and Chief Executive Officer of Sangen
Blue Bell, Pennsylvania 19422                        Pharmaceutical Company and as a consultant to various
                                                     biotechnology companies since June 1996.  From 1989 to 1996,
                                                     Dr. Jacob, as a co-founder of Magainin Pharmaceutical Inc.,
                                                     served as Chief Operating Officer.

JEFFREY I. SCHWARZSCHILD  (29)                       Director of the Fund.  Mr. Schwarzschild has worked as a
845 Malcolm Road, Ste. 200                           consultant for International Venture Associates ("IVA"), a
Burlingame, CA 94010                                 high-level strategic consulting and business development firm
                                                     based in Silicon Valley, since February 2000.  Prior to joining
                                                     IVA, Mr. Schwarzschild was an associate attorney at Goldstein,
                                                     Gellman, Melbostad, Gibson & Harris, LLP.
----------------------------------------------------------------------------------------------------------------------
</TABLE>



*  "Interested person" of the Fund, as defined in the 1940 Act.
** Leonard S. Jacob is the uncle of Ryan I. Jacob.



                                      (12)




<PAGE>



                               COMPENSATION TABLE
      (For Period Beginning December 14, 1999 and Ending August 31, 2000)*


<TABLE>
<CAPTION>

                                                   Pension or
                                                   Retirement        Estimated
                                                   Benefits          Annual
                                  Aggregate        Accrued           Benefit        Total
         Name of Person and       Compensation     as Part of        Upon           Compensation
         Position with Fund       From Fund        Fund Expenses     Retirement     From the Fund
         ------------------       ---------        -------------     ----------     -------------

<S>                                <C>               <C>             <C>              <C>
William B. Fell                    $ 9,000           $       0       $       0        $  9,000
Director                           -------           ---------       ---------        --------

Christopher V. Hajinian            $ 9,000           $       0       $      0         $  9,000
Director                           -------           ---------       --------         --------

Dr. Leonard Jacob                  $ 9,000           $       0       $      0         $  9,000
Director                           -------           ---------       --------         --------

Jeffrey I. Schwarzschild           $ 9,000           $       0       $      0         $  9,000
Director                            -------           ---------       --------         --------

</TABLE>


* December 14, 1999 is the inception date and August 31 is the Fund's fiscal
year end.

                  Each Director who is not an interested person of the Fund
receives $1,000 for each meeting attended, as well as a $5,000 annual retainer
fee, and is reimbursed for all out-of-pocket expenses incurred in connection
with attendance at such meetings.

IV. CODES OF ETHICS

                  The Fund, the Adviser and the Fund's Distributor have adopted
Codes of Ethics that govern the conduct of employees of the Fund, Adviser and
Distributor who may have access to information about the Fund's securities
transactions. The Codes of Ethics recognize that such persons owe a fiduciary
duty to the Fund's shareholders and must place the interests of shareholders
ahead of their own interests. Among other things, the Codes of Ethics require
the preclearance of personal securities transactions; certain blackout periods
for personal trading of securities which may be considered for purchase or sale
by the Fund; and contain prohibitions against personal trading of initial public
offerings. Violations of the codes are subject to review by the Directors and
could result in severe penalties.

V. CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES

                  As of November 30, 2000, the principal shareholders of the
Fund, beneficial or of record, were:


<TABLE>
<CAPTION>

NAME AND ADDRESS                                             PERCENTAGE (%)
-----------------------------------------------------------------------------------
<S>                                                              <C>
National Financial Services Corporation                          23.9%
200 Liberty Street
New York, NY 10281

</TABLE>


                                      (13)




<PAGE>


<TABLE>
<CAPTION>

NAME AND ADDRESS                                             PERCENTAGE (%)
-----------------------------------------------------------------------------------
<S>                                                              <C>
Charles Schwab & Co. Inc.                                        11.2%
101 Montgomery Street
San Francisco, CA 94104

</TABLE>



                  As of November 30, 2000, the officers and Directors, as a
group, owned of record and beneficially less than 1% of the Fund's shares.



VI. INVESTMENT ADVISORY AND OTHER SERVICES

         A. INVESTMENT ADVISER


                  1. General Information. Jacob Asset Management of New York LLC
(the "Adviser"), a registered investment adviser, is a Delaware limited
liability company with its principal office located at 1675 Broadway, New York,
New York 10019. The Adviser has been selected by the Board of Directors to serve
as the investment adviser of the Fund pursuant to an Investment Advisory
Agreement entered into by the Fund. The Adviser supervises all aspects of the
Fund's operations and provides investment advice and portfolio management
services to the Fund. Pursuant to the Advisory Agreement and subject to the
supervision of the Fund's Board of Directors, the Adviser makes the Fund's
day-to-day investment decisions, arranges for the execution of portfolio
transactions and generally manages the Fund's investments.


                  Ryan I. Jacob, founder, Chairman and Chief Executive Officer
of the Adviser and President, Chief Executive Officer and Director of the Fund,
is a controlling person of the Adviser based on his majority ownership interest
and is both a control and affiliated person of the Fund. Francis J. Alexander is
an affiliated person of both the Adviser and the Fund. Mr. Alexander has a
minority ownership interest in the Adviser and is Vice President, Secretary,
Treasurer and Director of the Fund.

                  Lepercq, de Neuflize & Co. Incorporated is an affiliate of the
Adviser based on its minority ownership interest. It acts as investment adviser
to a mutual fund and also manages portfolios for individuals and institutional
clients. Lepercq, de Neuflize Securities Inc., the Fund's distributor, is a
wholly-owned subsidiary of Lepercq, de Neuflize & Co. Incorporated.


                  The Adviser provides persons satisfactory to the Board of
Directors of the Fund to serve as officers of the Fund. Such officers, as well
as certain other employees and Directors of the Fund, may be directors, officers
or employees of the Adviser or its affiliates.


                  The Adviser may also provide the Fund with supervisory
personnel who will be responsible for supervising the performance of
administrative services, accounting and related services, net asset value and
yield calculation, reports to and filings with regulatory authorities, and
services relating to such functions. However, the Administrator will provide
personnel who will be responsible for performing the operational components of
such services. The personnel rendering such supervisory services may be
employees of the Adviser, of its affiliates or of other organizations.


                                      (14)




<PAGE>


                  The Advisory Agreement was initially approved on August 27,
1999 by the Board of Directors, including a majority of the directors who are
not interested persons (as defined in the 1940 Act) of the Fund or the Adviser
and by the initial shareholder. The Agreement, which currently extends to August
31, 2001, may be continued in force thereafter for successive twelve-month
periods beginning each September 1, provided that such continuance is
specifically approved annually by majority vote of the Fund's outstanding voting
securities or by the Board of Directors, and in either case by a majority of the
directors who are not parties to the Advisory Agreement or interested persons of
any such party, by votes cast in person at a meeting called for the purpose of
voting on such matter.

                  The Advisory Agreement is terminable without penalty by the
Fund on sixty days' written notice when authorized either by majority vote of
the outstanding voting shares of the Fund or by a vote of a majority of the
Fund's Board of Directors, or by the Adviser on sixty days' written notice, and
will automatically terminate in the event of its assignment. The Advisory
Agreement provides that in the absence of willful misfeasance, bad faith or
gross negligence on the part of the Adviser, or of reckless disregard of its
obligations thereunder, the Adviser shall not be liable for any action or
failure to act in accordance with its duties thereunder.


                  2. Adviser's Fees. Pursuant to the terms of the Advisory
Agreement, the Fund, will pay monthly an advisory fee equal to an annual rate of
1.25% of the Fund's average daily net assets. For the period December 14, 1999
to August 31, 2000, the Fund incurred $1,634,140 in fees payable to the Adviser
for its services. The Adviser waived $393,086 of those fees in accordance with
its contractual agreement to limit total annual operating expenses for the
period December 14, 1999 to August 31, 2000.


                  This fee is higher than the fee paid by most other mutual
funds; however, the Board of Directors believes that this fee is reasonable in
light of the advisory services performed by the Adviser for the Fund. Any
portion of the advisory fees received by the Adviser may be used by the Adviser
to provide investor and administrative services and for distribution of Fund
shares.


                  Expense Subsidization. The Adviser contractually agreed to
waive a portion of its advisory fees to limit the Fund's Net Annual Operating
Expenses to no more than 2.00% through August 31, 2000. The Adviser voluntarily
continued this waiver through December 31, 2000. To the extent that the Adviser
waived its fees, the Fund may reimburse the Adviser for three years after the
year in which fees were waived or reimbursed. The Fund will only make such
payments to the Adviser if the Total Annual Fund Operating Expenses do not
exceed the expense limits in effect at the time of the waiver. Any such
recoupment may cause new shareholders to pay higher expenses than if amounts
were not being recouped.

                  Subject to the assumption of certain expenses by the Adviser,
the Fund has, under the Advisory Agreement, confirmed its obligation for payment
of all other expenses, including without limitation: (i) fees payable to the
Adviser, Administrator, Custodian, Transfer Agent and Dividend Agent; (ii)
brokerage and commission expenses; (iii) Federal, state or local taxes,


                                      (15)




<PAGE>


including issuance and transfer taxes incurred by or levied on it; (iv)
commitment fees, certain insurance premiums and membership fees and dues in
investment company organizations; (v) interest charges on borrowings; (vi)
telecommunications expenses; (vii) recurring and non-recurring legal and
accounting expenses; (viii) costs of organizing and maintaining the Fund's
existence as a corporation; (ix) compensation, including Directors' fees, of any
Directors, officers or employees who are not also officers of the Adviser or its
affiliates and costs of other personnel providing administrative and clerical
services; (x) costs of shareholders' services and costs of shareholders'
reports, proxy solicitations, and corporate meetings; (xi) fees and expenses of
registering its shares under the appropriate Federal securities laws and of
qualifying its shares under applicable state securities laws, including expenses
attendant upon the initial registration and qualification of these shares and
attendant upon renewals of, or amendments to, those registrations and
qualifications; and (xii) expenses of preparing, printing and delivering the
Prospectus to existing shareholders and of printing shareholder application
forms for shareholder accounts.


                  The Fund may from time-to-time hire its own employees or
contract to have management services performed by third parties, and the
management of the Fund intends to do so whenever it appears advantageous to the
Fund. The Fund's expenses for employees and for such services are among the
expenses subject to the expense limitation described above.

         B. THE DISTRIBUTION AND SERVICE PLAN

                  The Fund has adopted a distribution and service plan, pursuant
to Rule 12b-1 under the Investment Company Act of 1940 (the "Plan"). Rule 12b-1
provides that an investment company which bears any direct or indirect expense
of distributing its shares must do so only in accordance with a plan permitted
by the Rule. The Plan requires that the Fund enter into a Shareholder Servicing
Agreement and a Distribution Agreement.


                  The Fund has entered into a Shareholder Servicing Agreement
with the Adviser, which provides that the Fund will compensate the Adviser
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"). These fees are
subject to a maximum of 0.25% per annum of the Fund's average daily net assets.
The Adviser is currently voluntarily waiving its right to receive 0.20% in
Rule 12b-1 fees. Rule 12b-1 are a portion of the Total Annual Fund
Operating Expenses. This waiver has the effect of lowering the overall expense
ratio of the Fund and of increasing yield to investors.

                  The Fund has also entered into a Distribution Agreement with
Lepercq, de Neuflize Securities Inc. (the "Distributor"), which provides that
the Distributor is paid a fee of 0.10% of the Fund's average daily net
assets (the "Distribution Fee") on an annual basis to permit it to make payments
to broker-dealers and other financial institutions with which it has written
agreements and whose clients are Fund shareholders (each a "broker-dealer") for
providing distribution assistance and promotional support to the Fund. In view
of the current level of services provided by the Distributor, the Fund and the
Distributor are operating under an arrangement whereby the Fund directs the
Distributor to pay a portion of these fees to third parties.Fees paid under the
Plan may not be waived for individual shareholders.



                                      (16)




<PAGE>



                  Under the Plan, each shareholder servicing agent and
broker-dealer will, as agent for its customers, among other things: (i) answer
customer inquiries regarding account status and history, the manner in which
purchases and redemptions of shares of each Class of the Fund may be effected
and certain other matters pertaining to the Fund; (ii) assist shareholders in
designating and changing dividend options, account designations and addresses;
(iii) provide necessary personnel and facilities to establish and maintain
shareholder accounts and records; (iv) assist in processing purchase and
redemption transactions; (v) arrange for the wiring of funds; (vi) transmit and
receive funds in connection with customer orders to purchase or redeem shares;
(vii) verify and guarantee shareholder signatures in connection with redemption
orders and transfers and changes in shareholder designated accounts; (viii)
furnish quarterly and year-end statements and confirmations within five business
days after activity in the account; (ix) transmit to shareholders of each Class
proxy statements, annual reports, updated prospectuses and other communications;
(x) receive, tabulate and transmit proxies executed by shareholders with respect
to meetings of shareholders of the Fund; and (xi) provide such other related
services as the Fund or a shareholder may request.

                  The Plan, the shareholder servicing agreements and the
distribution agreement each provide that the Adviser and the Distributor may
make payments from time to time from their own resources which may include the
advisory fee, the Distribution Fee and past profits for the following purposes:
(i) to defray the costs of and to compensate others, including financial
intermediaries with whom the Distributor or the Adviser has entered into written
agreements, for performing shareholder servicing and related administrative
functions of the Fund; (ii) to compensate certain financial intermediaries for
providing assistance in distributing Fund shares; (iii) to pay the costs of
printing and distributing the Fund's Prospectus to prospective investors; and
(iv) to defray the cost of the preparation and printing of brochures and other
promotional materials, mailings to prospective shareholders, advertising, and
other promotional activities, including the salaries and/or commissions of sales
personnel in connection with the distribution of the Fund's shares. Further, the
Agreements provide that the Adviser may use its service fee for the purposes
enumerated in (i) above and any asset based sales charges paid to the
Distributor also may be used for purposes of (ii), (iii), or (iv) above. The
Distributor or the Adviser, as the case may be, in their sole discretion, will
determine the amount of such payments made pursuant to the Plan with the
shareholder servicing agents and broker-dealers with whom they have contracted,
provided that such payments made pursuant to the Plan will not increase the
amount which the Fund is required to pay the Distributor or the Adviser for any
fiscal year under the shareholder servicing agreements or otherwise.

                  Shareholder servicing agents and broker-dealers may charge
investors a fee in connection with their use of specialized purchase and
redemption procedures offered to investors by the shareholder servicing agents
and broker-dealers. In addition, shareholder servicing agents and broker-dealers
offering purchase and redemption procedures similar to those offered to
shareholders who invest in the Fund directly may impose charges, limitations,
minimums and restrictions in addition to or different from those applicable to
shareholders who invest in the Fund directly. Accordingly, the net yield to
investors who invest through shareholder servicing agents and broker-dealers may
be less than realized by investing in the Fund directly. An investor should read
the Prospectus in conjunction with the materials provided by the shareholder
servicing agent and broker-dealer describing the procedures under which Fund



                                      (17)




<PAGE>


shares may be purchased and redeemed through the shareholder servicing agent and
broker-dealer.


                  In accordance with the Rule, the Plan provides that all
written agreements relating to the Plan entered into by the Fund, the
Distributor or the Adviser, and the shareholder servicing agents,
broker-dealers, or other organizations, must be in a form satisfactory to the
Fund's Board of Directors. In addition, the Plan requires the Fund and the
Distributor to prepare, at least quarterly, written reports setting forth all
amounts expended for distribution purposes by the Fund and the Distributor
pursuant to the Plan and identifying the distribution activities for which those
expenditures were made.


                  Below are the itemized expenditures made by the Distributor
pursuant to payments made under the Plan from December 14, 1999 (inception date)
until the fiscal year ended August 31, 2000:


<TABLE>

---------------------------------------------------------------------------------------------
<S>                                                                             <C>
     Advertising                                                                $48,414
     Printing and Mailing of Prospectuses to
        other than Current Shareholders                                         204,548
     Compensation to Dealers                                                    171,492
     Compensation to Sales Personnel                                                  0
     Interest or Other Finance Charges                                                0
     Administration and Shareholder Servicing                                         0
     Other Fees                                                                   2,500
---------------------------------------------------------------------------------------------
         TOTAL                                                                 $426,954
---------------------------------------------------------------------------------------------

</TABLE>


         C. ADMINISTRATOR

                  General Information. The Administrator and Fund Accountant for
the Fund is Firstar Mutual Fund Services, LLC (the "Administrator"), which has
its principal office at 615 East Michigan Street, Milwaukee, Wisconsin 53202 and
is primarily in the business of providing administrative, fund accounting and
stock transfer services to retail and institutional mutual funds. The
Administrator performs these services pursuant to two separate agreements, a
Fund Administration Servicing Agreement and a Fund Accounting Servicing
Agreement.

                  Administration Agreement. Pursuant to the Fund Administration
Servicing Agreement ("Administration Agreement") with the Fund, the
Administrator provides all administrative services necessary for the Fund, other
than those provided by the Adviser, subject to the supervision of the Fund's
Board of Directors. The Administrator will provide persons to serve as officers
of the Fund. Such officers may be directors, officers or employees of the
Administrator or its affiliates.



                  The Administration Agreement is terminable by the Board of
Directors of the Fund or the Administrator on sixty days' written notice and may
be assigned provided the non-assigning party provides prior written consent. The
Agreement shall remain in effect for two years from the date of its initial
approval, and subject to annual approval of the Fund's Board of


                                      (18)




<PAGE>



Directors for one-year periods thereafter. The Agreement provides that in the
absence of willful misfeasance, bad faith or gross negligence on the part of the
Administrator or reckless disregard of its obligations thereunder, the
Administrator shall not be liable for any action or failure to act in accordance
with its duties thereunder.

                  Under the Administration Agreement, the Administrator provides
all administrative services, including, without limitation: (i) providing
services of persons competent to perform such administrative and clerical
functions as are necessary to provide effective administration of the Fund; (ii)
overseeing the performance of administrative and professional services to the
Fund by others, including the Fund's Custodian; (iii) preparing, but not paying
for, the periodic updating of the Fund's Registration Statement, Prospectus and
Statement of Additional Information in conjunction with Fund counsel, including
the printing of such documents for the purpose of filings with the Securities
and Exchange Commission and state securities administrators, preparing the
Fund's tax returns, and preparing reports to the Fund's shareholders and the
Securities and Exchange Commission; (iv) calculation of yield and total return
for the Fund; (v) monitoring and evaluating daily income and expense accruals,
and sales and redemptions of shares of the Fund (vi) preparing in conjunction
with Fund counsel, but not paying for, all filings under the securities or "Blue
Sky" laws of such states or countries as are designated by the Distributor,
which may be required to register or qualify, or continue the registration or
qualification, of the Fund and/or its shares under such laws; (vii) preparing
notices and agendas for meetings of the Fund's Board of Directors and minutes of
such meetings in all matters required by the 1940 Act to be acted upon by the
Board; and (viii) monitoring periodic compliance with respect to all
requirements and restrictions of the Investment Company Act, the Internal
Revenue Code and the Prospectus.

                   For the administrative services rendered to the Fund by the
Administrator, the Fund pays the Administrator a minimum annual fee of $35,000.
The Administrator charges the Fund an annual fee of .07% of the average daily
net assets on the first $200 million, .05% on the next $500 million, and .04% on
the balance. For the period from December 14, 1999 to August 31, 2000, the Fund
paid the Administrator $62,115 for services under the Administration Agreement.

                  Accounting Agreement. The Fund Accountant, pursuant to the
Fund Accounting Servicing Agreement ("Accounting Agreement"), provides the Fund
with all accounting services, including, without limitation: (i) daily
computation of net asset value; (ii) maintenance of security ledgers and books
and records as required by the Investment Company Act; (iii) production of the
Fund's listing of portfolio securities and general ledger reports; (iv)
reconciliation of accounting records; and (v) maintaining certain books and
records described in Rule 31a-1 under the 1940 Act, and reconciling account
information and balances among the Fund's Custodian and Adviser.



                  For the fund accounting services rendered to the Fund by the
Fund Accountant, the Fund pays the Fund Accountant at an annual rate of $23,000
for the first $40 million, .01% of the average daily net assets of the Fund on
the next $200 million, and .005% on the balance. The Fund Accountant is also
entitled to certain out-of-pocket expenses, including pricing expenses. For the
period from December 14, 1999 to August 31, 2000, the Fund paid the Accountant



                                      (19)




<PAGE>



$17,342 for the services it provided to the Fund under the Fund Accounting
Servicing Agreement.


         D. CUSTODIAN, TRANSFER AGENT AND DIVIDEND AGENT


                  Firstar Bank, N.A., 425 Walnut Street, Cincinnati, Ohio 45202,
serves as custodian for the Fund's cash and securities. Pursuant to a Custodian
Servicing Agreement with the Fund, it is responsible for maintaining the books
and records of the Fund's portfolio securities and cash. The Custodian receives
an annual fee equal to .02% of the Fund's average daily net assets. The
Custodian does not assist in, and is not responsible for, investment decisions
involving assets of the Fund. Firstar Mutual Fund Services LLC, the Fund's
Administrator, also acts as the Fund's transfer and dividend agent. Firstar
Mutual Fund Services LLC has its principal office at 615 East Michigan Street,
Milwaukee, Wisconsin 53202.


         E. COUNSEL AND INDEPENDENT AUDITORS


                  Legal matters in connection with the issuance of shares of
common stock of the Fund are passed upon by Stradley, Ronon, Stevens & Young
LLP, 2600 One Commerce Square, Philadelphia, PA 19103. Ernst & Young LLP, 111 E.
Kilbourn Avenue, Floor 9, Milwaukee, WI 53202-6612, have been selected as
auditors for the Fund.

VII. BROKERAGE ALLOCATION AND OTHER PRACTICES


                  The Adviser makes the Fund's portfolio decisions. In the
over-the-counter market, where a majority of the portfolio securities are
expected to be traded, orders are placed with responsible primary market-makers
unless a more favorable execution or price is believed to be obtainable.
Regarding exchange-traded securities, the Adviser determines the broker to be
used in each specific transaction with the objective of negotiating a
combination of the most favorable commission and the best price obtainable on
each transaction (generally defined as best execution). The Adviser will also
consider the reliability, integrity and financial condition of the
broker-dealer, the size of and difficulty in executing the order, the value of
the expected contribution of the broker-dealer to the investment performance of
the Fund on a continuing basis, as well as other factors such as the
broker-dealer's ability to engage in transactions in securities of issuers which
are thinly traded. The Adviser does not intend to employ a broker-dealer whose
commission rates fall outside of the prevailing ranges of execution costs
charged by other broker-dealers offering similar services. When consistent with
the objective of obtaining best execution, brokerage may be directed to persons
or firms supplying investment information to the Adviser, or portfolio
transactions may be effected by the Adviser or through the Distributor. Neither
the Fund nor the Adviser has entered into agreements or understandings with any
brokers regarding the placement of securities transactions because of research
services they provide. To the extent that such persons or firms supply
investment information to the Adviser for use in rendering investment advice to
the Fund, such information may be supplied at no cost to the Adviser and,
therefore, may have the effect of reducing the expenses of the Adviser in
rendering advice to the Fund. While it is impossible to place an actual dollar
value on such investment information, its receipt by the Adviser probably does
not reduce the overall expenses of the Adviser to any material extent.
Consistent with the Conduct Rules of the NASD,


                                      (20)




<PAGE>


and subject to seeking best execution, the Adviser may consider sales of shares
of the Fund as a factor in the selection of brokers to execute portfolio
transactions for the Fund.


                  The investment information provided to the Adviser is of the
type described in Section 28(e) of the Securities Exchange Act of 1934 and is
designed to augment the Adviser's own internal research and investment strategy
capabilities. Research services furnished by brokers through which the Fund
effects securities transactions are used by the Adviser in carrying out its
investment management responsibilities with respect to all of its clients'
accounts. There may be occasions where the transaction cost charged by a broker
may be greater than that which another broker may charge if the Adviser
determines in good faith that the amount of such transaction cost is reasonable
in relation to the value of brokerage and research services provided by the
executing broker.


                  A majority of the portfolio securities that the Fund purchases
or sells will be done as principal transactions. In addition, debt instruments
are normally purchased directly from the issuer, from banks and financial
institutions or from an underwriter or market maker for the securities. There
usually are not brokerage commissions paid for any such purchases. Any
transactions involving such securities for which the Fund pays a brokerage
commission will be effected at the best price and execution available. Purchases
from underwriters of portfolio securities include a commission or concession
paid by the issuer to the underwriter, and purchases from dealers serving as
market makers include the spread between the bid and asked price. The Fund may
purchase Government Obligations with a demand feature from banks or other
financial institutions at a negotiated yield to the Fund based on the applicable
interest rate adjustment index for the security. The interest received by the
Fund is net of a fee charged by the issuing institution for servicing the
underlying obligation and issuing the participation certificate, letter of
credit, guarantee or insurance and providing the demand repurchase feature.


                  For the period December 14, 1999 (inception) to August 31,
2000 (fiscal year end), the Fund paid $2,756 in brokerage commissions.


                  Allocation of transactions, including their frequency, to
various dealers is determined by the Adviser in its best judgment and in a
manner deemed in the best interest of shareholders of the Fund rather than by a
formula. The primary consideration is prompt execution of orders in an effective
manner at the most favorable price.

                  Investment decisions for the Fund will be made independently
from those for any other investment companies or accounts that may become
managed by the Adviser or its affiliates. If, however, the Fund and other
investment companies or accounts managed by the Adviser are simultaneously
engaged in the purchase or sale of the same security, the transactions will be
averaged as to price and allocated equitably to each account. In some cases,
this policy might adversely affect the price paid or received by the Fund or the
size of the position obtainable for the Fund. In addition, when purchases or
sales of the same security for the Fund and for other investment companies
managed by the Adviser occur contemporaneously, the purchase or sale orders may
be aggregated in order to obtain any price advantage available to large
denomination purchasers or sellers.


                                      (21)




<PAGE>


                  In addition to managing the assets of the Fund, the Adviser
manages assets on a discretionary basis for other clients and, as a result, the
Adviser may effect transactions in such clients' accounts in securities in which
the Fund currently holds or, in the near future may hold, a position. The
Adviser makes the determination to purchase or sell a security based on numerous
factors, including those that may be particular to one or more of its clients.
Therefore, it is possible that the Adviser will effect transactions in certain
securities for select clients, which may or may not include the Fund, that it
may not deem, in its sole discretion, as being appropriate for other clients,
which may or may not include the Fund.


VIII. CAPITAL STOCK AND OTHER SECURITIES

                  The authorized capital stock of the Fund consists of twenty
billion shares of stock having a par value of one-tenth of one cent ($.001) per
share. The Fund's Board of Directors is authorized to divide the unissued shares
into separate classes and series of stock, each series representing a separate,
additional investment portfolio. Currently there is only one class of shares
outstanding. Shares of any class or series will have identical voting rights,
except where, by law, certain matters must be approved by a majority of the
shares of the affected class or series. Each share of any class or series of
shares when issued has equal dividend, distribution and liquidation rights
within the class or series for which it was issued, and each fractional share
has those rights in proportion to the percentage that the fractional share
represents of a whole share. Shares will be voted in the aggregate.


                  There are no conversion or preemptive rights in connection
with any shares of the Fund. All shares, when issued in accordance with the
terms of the offering, will be fully paid and non-assessable. Shares are
redeemable at net asset value, at the option of the investor.

                  The shares of the Fund have non-cumulative voting rights,
which means that the holders of more than 50% of the shares outstanding voting
for the election of directors can elect 100% of the directors if the holders
choose to do so, and, in that event, the holders of the remaining shares will
not be able to elect any person or persons to the Board of Directors. Unless
specifically requested by an investor who is an investor of record, the Fund
does not issue certificates evidencing Fund shares.


                  As a general matter, the Fund will not hold annual or other
meetings of the Fund's shareholders. This is because the By-laws of the Fund
provide for annual meetings only (a) for the election of directors, (b) for
approval of revisions to the Fund's investment advisory agreement, (c) for
approval of revisions to the Fund's distribution agreement with respect to a
particular class or series of stock, and (d) upon the written request of holders
of shares entitled to cast not less than twenty-five percent of all the votes
entitled to be cast at such meeting. Annual and other meetings may be required
with respect to such additional matters relating to the Fund as may be required
by the 1940 Act including the removal of Fund Directors and communication among
shareholders, any registration of the Fund with the Securities and Exchange
Commission or any state, or as the Directors may consider necessary or
desirable. Each Director serves until the next meeting of shareholders called
for the purpose of considering the election or reelection of such Director or of
a successor to such Director, and until the election and qualification of his



                                      (22)




<PAGE>



or her successor, elected at such meeting, or until such Director sooner dies,
resigns, retires or is removed by the vote of the shareholders.

IX. PURCHASE, REDEMPTION AND PRICING OF SHARES


                  The material relating to the purchase, redemption and pricing
of shares is located in the Shareholder Information section of the Prospectus
and is incorporated by reference herein.


X. TAXATION OF THE FUND

                  Distributions of Net Investment Income. The Fund receives
income generally in the form of dividends and interest on its investments. This
income, less expenses incurred in the operation of the Fund, constitutes the
Fund's net investment income from which dividends may be paid to you. If you are
a taxable investor, any distributions by the Fund from such income will be
taxable to you as ordinary income, whether you receive them in cash or in
additional shares.

                  Distributions of Capital Gains. The Fund may realize capital
gains or losses in connection with sales or other dispositions of its portfolio
securities. Distributions from net short-term capital gain will be taxable to
you as ordinary income. Distributions from net long-term capital gain will be
taxable to you as long-term capital gain, regardless of how long you have held
your shares in the Fund. Any net capital gain realized by the Fund generally
will be distributed once each year, and may be distributed more frequently, if
necessary, to reduce or eliminate excise or income taxes on the Fund.

                  Distributions of Five-year Gain. Beginning in the year 2001
for shareholders in the 15% federal income tax bracket (or in the year 2006 for
shareholders in the 28% or higher bracket), capital gain distributions from the
Fund's sale of securities held for more than five years will be subject to a
maximum rate of tax of 8% (or 18% for shareholders in the 28% or higher
bracket).

                  Effect of Foreign Investments on Distributions. Most foreign
exchange gain realized by the Fund on the sale of debt securities is treated as
ordinary income. Similarly, foreign exchange loss realized on the sale of debt
securities generally is treated as ordinary loss. This gain when distributed
will be taxable to you as ordinary income, and any loss will reduce the Fund's
ordinary income otherwise available for distribution to you. This treatment
could increase or decrease the Fund's ordinary income distributions to you, and
may cause some or all of the Fund's previously distributed income to be
classified as a return of capital. A return of capital generally is not taxable
to you, but reduces the tax basis of your shares in the Fund. Any return of
capital in excess of your basis is taxable as a capital gain.

                  Effect of Foreign Withholding Taxes. The Fund may be subject
to foreign withholding taxes on income from certain foreign securities. This, in
turn, could reduce the Fund's distributions paid to you.



                                      (23)




<PAGE>


                  Information on the Amount and Tax Character of Distributions.
The Fund will inform you of the amount of your ordinary income and capital gain
distributions at the time they are paid, and will advise you of their tax status
for federal income tax purposes shortly after the end of each calendar year. If
you have not held Fund shares for a full year, the Fund may designate and
distribute to you, as ordinary income or capital gain, a percentage of income
that may not be equal to the actual amount of this type of income earned during
the period of your investment in the Fund. Taxable distributions declared by the
Fund in December but paid in January will be taxable to you as if they were paid
in December.

                  Election to be Taxed as a Regulated Investment Company. The
Fund intends to qualify and elect to be treated as a regulated investment
company under Subchapter M of the Internal Revenue Code ("Code"). As a regulated
investment company, the Fund generally will pay no federal income tax on the
income and gain it distributes to you. The Board reserves the right not to
distribute the Fund's net long-term capital gain or not to have the Fund elect
or continue regulated investment company status if it determines such a course
of action to be beneficial to shareholders. If net long-term capital gain is
retained, the Fund would be taxed on the gain, and shareholders would be
notified that they are entitled to a credit or refund for the tax paid by the
Fund. If the Fund fails to qualify as a regulated investment company, it would
be subject to federal, and possibly state, corporate taxes on its taxable income
and gain, and distributions to you would be taxed as ordinary income to the
extent of the Fund's earnings and profits.

                  Excise Tax Distribution Requirements. To avoid federal excise
taxes, the Code requires the Fund to distribute to you by December 31 of each
year, at a minimum, the following amounts: 98% of its taxable ordinary income
earned during the calendar year; 98% of its capital gain net income earned
during the twelve-month period ending October 31; and 100% of any undistributed
amounts from the prior year. The Fund intends to declare and pay these
distributions in December (or to pay them in January, in which case you must
treat them as received in December), but can give no assurances that its
distributions will be sufficient to eliminate all taxes.

                  Redemption of Fund Shares. Redemptions (including redemptions
in kind) are taxable transactions for federal and state income tax purposes. If
you redeem your Fund shares the Internal Revenue Service requires you to report
any gain or loss on your redemption or exchange. If you held your shares as a
capital asset, the gain or loss that you realize will be capital gain or loss
and will be long-term or short-term, generally depending on how long you have
held your shares.

                  Redemptions at a Loss Within Six Months of Purchase. Any loss
incurred on a redemption of shares held for six months or less will be treated
as long-term capital loss to the extent of any long-term capital gain
distributed to you by the Fund on those shares.

                  Wash Sales. All or a portion of any loss that you realize on a
redemption of your Fund shares will be disallowed to the extent that you buy
other shares in the Fund (through reinvestment of dividends or otherwise) within
30 days before or after your share redemption. Any loss disallowed under these
rules will be added to your tax basis in the new shares.



                                      (24)




<PAGE>



                  Redemptions and Five-year Gains. Beginning in the year 2001
for shareholders in the 15% federal income tax bracket (or in the year 2006 for
shareholders in the 28% or higher bracket), gain from the sale of Fund shares
held for more than five years may be subject to a maximum rate of tax of 8% (or
18% for shareholders in the 28% or higher bracket). If you are in the 28% or
higher bracket, you may elect to mark your Fund shares to market as of January
2, 2001. If you make this election, any Fund shares that you acquire before this
date will be eligible for the 18% maximum rate of tax, beginning in 2006.
However, in making the election, you would be required to pay a tax on any
appreciation in the value of your shares as of January 2, 2001, and to restart
your holding period in the shares on this date.

                  U.S. Government Securities. The income earned on certain U.S.
government securities would be exempt from state and local personal income taxes
if earned directly by you. States also grant tax-free status to dividends paid
to you from interest earned by the Fund on these securities, subject in some
states to minimum investment or reporting requirements that must be met by the
Fund. The income on Fund investments in certain securities, such as repurchase
agreements, commercial paper and federal agency-backed obligations (e.g.,
Government National Mortgage Association (GNMA) or Federal National Mortgage
Association (FNMA) securities) generally does not qualify for tax-free
treatment. The rules on exclusion of dividends paid from interest earned on U.S.
government securities are different for corporations.

                  Dividends-received Deduction for Corporations. For corporate
shareholders, it is anticipated that a small portion of the distributions paid
by the Fund will qualify for the dividends-received deduction. You may be
allowed to deduct these qualified dividends, thereby reducing the tax that you
would otherwise be required to pay on these dividends. The dividends-received
deduction will be available only with respect to dividends designated by the
Fund as qualifying for such treatment. All dividends (including the deducted
portion) must be included in your alternative minimum taxable income
calculation.

                  Investment in Complex Securities. The Fund may invest in
complex securities that could be subject to numerous special and complex tax
rules. These rules could accelerate the recognition of income by the Fund
(possibly causing the Fund to sell securities to raise the cash for necessary
distributions) and/or defer the Fund's ability to recognize a loss, and, in
limited cases, subject the Fund to U.S. federal income tax on income from
certain foreign securities. These rules could also affect whether gain or loss
recognized by the Fund is treated as ordinary or capital, or as interest or
dividend income. For example, if the Fund is permitted to invest in option or
futures contracts, it could be required to mark these contracts to market,
recognizing any associated gain or loss at its fiscal year end, and to treat
gains or losses on these contracts as 60% long-term and 40% short-term capital
gain or loss to the Fund. These rules could therefore affect the amount, timing
or character of the income distributed to you by the Fund.

                  Certification of Foreign Status. Treasury regulations have
been issued that modify the information and forms that must be provided starting
January 1, 2001, to certify that an owner of Fund shares is a foreign person.
Foreign persons should consult their tax advisors about the applicability of
U.S. tax withholding and the use of the appropriate forms to certify their
status.



                                      (25)




<PAGE>



XI. UNDERWRITERS


                  The Fund sells and redeems its shares on a continuing basis at
their net asset value. In effecting sales of Fund shares under the Distribution
Agreement, the Distributor, as agent for the Fund, will solicit orders for the
purchase of the Fund's shares, provided that any subscriptions and orders will
not be binding on the Fund until accepted by the Fund as a principal. For its
services under the Distribution Agreement, the Distributor will be entitled to
receive the Distribution Fee.


XII. CALCULATION OF PERFORMANCE DATA


                  The Fund may from time to time include yield, effective yield
and total return information in advertisements or reports to investors or
prospective investors. Currently, the Fund intends to provide these reports to
investors and prospective investors semi-annually, but may from time to time, in
its sole discretion, provide reports on a more frequent basis, such as
quarterly. The "yield" refers to income generated by an investment in the Fund
over a thirty-day period. This income is then "annualized." That is, the amount
of income generated by the investment during that month is assumed to be
generated each month over a 12-month period and is shown as a percentage of the
investment. The "effective yield" is calculated similarly but, when annualized,
the monthly income earned by an investment in the Fund is assumed to be
reinvested. The "effective yield" will be slightly higher than the "yield"
because of the compounding effect of this assumed reinvestment. The "total
return" of the Fund is required to be included in any advertisement containing
the Fund's yield. Total return is the average annual total return for the period
which began at the inception of the Fund and ended on the date of the most
recent balance sheet, and is computed by finding the average annual compound
rates of return over the period that would equate the initial amount invested to
the ending redeemable value. Yield, effective yield and total return may
fluctuate daily and do not provide a basis for determining future yields,
effective yields or total returns. One-, five- and ten-year periods will be
shown, unless the Fund has been in existence for a shorter period.

                  The yield and the net asset value of the Fund will vary based
on the current market value of the securities held by the Fund and changes in
the Fund's expenses. The Adviser, the Administrator or the Distributor may
voluntarily waive a portion of their fees on a month-to-month basis. These
actions would have the effect of increasing the net income (and therefore the
yield and total rate of return) of the Fund during the period such waivers are
in effect. These factors and possible differences in the methods used to
calculate the yields and total rates of return should be considered when
comparing the yields or total rates of return of the Fund to yields and total
rates of return published for other investment companies and other investment
vehicles.

                  The Fund computes yield based on a 30-day (or one month)
period ended on the date of the most recent balance sheet included in the
registration statement, computed by dividing the net investment income per share
earned during the period by the maximum offering price per share on the last day
of the period, according to the following formula:


                                      (26)




<PAGE>



                     YIELD = 2[('pp'a-b/cd + 1)'pp'6 - 1]



<TABLE>
<S>     <C>     <C> <C>
Where:    a      =  dividends and interest earned during the period.

          b      =  expenses accrued for the period (net of reimbursements).

          c      =  the average daily number of shares outstanding during the
                    period that were entitled to dividends.

          d      =  the maximum offering price per share on the last day of the
                    period.
</TABLE>

                  Actual future yields will depend on the type, quality, and
maturities of the investments held by the Fund, changes in interest rates on
investments, and the Fund's expenses during the period.

                  COMPUTATION OF TOTAL RETURN. Total return is the average
annual total return for the 1-, 5- and 10-year period ended on the date of the
most recent balance sheet included in the Statement of Additional Information,
computed by finding the average annual compounded rates of return over 1-, 5-
and 10-year periods that would equate the initial amount invested to the ending
redeemable value according to the following formula:

                             P(1 + T)'pp'n = ERV

<TABLE>
Where:
<S>     <C>     <C> <C>
          P      =  a hypothetical initial investment of $1000

          T      =  average annual total return

          n      =  number of years

          ERV    =  ending redeemable value of a hypothetical $1000 payment made
                    at the beginning of the 1-, 5- or 10-year periods at the end
                    of the 1-, 5-or 10-year periods (or fractions thereof).
</TABLE>

                  Because the Fund has not had a registration in effect for 5 or
10 years, the period during which the registration has been effective shall be
substituted.

                  From time to time evaluations of performance of the Fund made
by independent sources may be used in advertisements. These sources may include
Lipper Analytical Services, Wiesenberger Investment Company Service, Donoghue's
Money Fund Report, Barron's, Business Week, Changing Times, Financial World,
Forbes, Fortune, Money, Personal Investor, Bank Rate Monitor, and The Wall
Street Journal. From time to time evaluations of performance of the Adviser made
by independent sources may be used in advertisements of the Fund.


                                      (27)




<PAGE>


                  The performance of the Fund may be compared in various
financial and news publications to the performance of various indices and
investments for which reliable performance data is available. The performance of
the Fund may be compared in publications to averages, performance rankings, or
other information prepared by nationally recognized mutual fund ranking and
statistical services. As with other performance data, performance comparisons
should not be considered representative of the Fund's relative performance for
any future period.


XIII. FINANCIAL STATEMENTS

                  The financial statements and financial highlights of the Fund
for the fiscal year ended August 31, 2000, which appear in the Fund's Annual
Report to Shareholders and the report thereon by Ernst & Young LLP, the Fund's
independent auditors, also appearing therein, are incorporated by reference into
this Statement of Additional Information. The Annual Report may be obtained,
without charge, by writing or calling the Fund's Distributor at the address or
number listed on the cover page of this Statement of Additional Information.




                                      (28)




<PAGE>

                            JACOB INTERNET FUND INC.

                                     PART C

                                OTHER INFORMATION

ITEM 23.       EXHIBITS

<TABLE>
               <S>     <C>
               (a)     Articles of Incorporation of the Registrant dated July
                       12, 1999 are incorporated herein by reference to
                       Registrant's Registration Statement on Form N-1A as filed
                       with the Securities and Exchange Commission (the "SEC")
                       via EDGAR on July 14, 1999 (File No. 333-82865).

               (b)     By-Laws of the Registrant are incorporated herein by
                       reference to Registrant's Registration Statement on Form
                       N-1A as filed with the SEC via EDGAR on July 14, 1999
                       (File No. 333-82865).

               (c)     Instruments Defining Rights of Security Holders.

                       See the SIXTH and EIGHTH Articles of the Registrant's
                       Articles of Incorporation.

                       See also, Article II, "Meetings of Stockholders," of the
                       Registrant's By-Laws.

               (d)     Form of Investment Advisory Agreement between the
                       Registrant and Jacob Asset Management of New York LLC is
                       incorporated herein by reference to Registrant's
                       Pre-Effective Amendment No. 1 on Form N-1A as filed with
                       the SEC via EDGAR on September 24, 1999 (File No.
                       333-82865).

               (e)     Form of Distribution Agreement between the Registrant and
                       Lepercq, de Neuflize Securities, Inc. is incorporated
                       herein by reference to Registrant's Pre-Effective
                       Amendment No. 1 on Form N-1A as filed with the SEC via
                       EDGAR on September 24, 1999 (File No. 333-82865).

               (f)     Bonus or Profit Sharing Contracts.
                       Not Applicable.

               (g)     Form of Custodian Servicing Agreement between the
                       Registrant and Firstar Bank Milwaukee, N.A. is
                       incorporated herein by reference to Registrant's
                       Pre-Effective Amendment No. 1 on Form N-1A as filed with
                       the SEC via EDGAR on September 24, 1999 (File No.
                       333-82865).

               (h)     Form of Fund Administration Servicing Agreement between
                       the Registrant and Firstar Mutual Fund Services, LLC is
                       incorporated herein by reference to Registrant's
                       Pre-Effective Amendment No. 2 on Form N-1A as filed with
                       the SEC via EDGAR on October 22, 1999 (File No.
                       333-82865).

               (i)     Opinion and Consent of Counsel of Stradley, Ronon,
                       Stevens & Young, LLC dated December 29, 2000 is filed
                       herewith as Exhibit No. EX-99.i.

               (j)(1)  Consent of Independent Auditors of Ernst & Young, LLP
                       dated as of December 27, 2000 is filed herewith as
                       Exhibit No. EX-99.j.1.

               (j)(2)  Powers of Attorney are incorporated herein by reference
                       to Registrant's Pre-Effective Amendment No. 1 on Form
                       N-1A as filed with the SEC via EDGAR on September 24,
                       1999 (File No. 333-82865).

               (k)     Not applicable
</TABLE>







<PAGE>


<TABLE>
               <S>     <C>
               (l)     Subscription Letter of Initial Shareholder dated
                       September 20, 1999 is incorporated herein by reference to
                       Registrant's Pre-Effective Amendment No. 2 on Form N-1A
                       as filed with the SEC via EDGAR on October 22, 1999 (File
                       No. 333-82865).

               (m)(1)  Form of Distribution and Service Plan pursuant to Rule
                       12b-1 under the Investment Company Act of 1940 is
                       incorporated herein by reference to Registrant's
                       Pre-Effective Amendment No. 1 on Form N-1A as filed with
                       the SEC via EDGAR on September 24, 1999 (File No.
                       333-82865).

               (m)(2)  Form of Shareholder Servicing Agreement between the
                       Registrant and Jacob Asset Management of New York LLC is
                       incorporated herein by reference to Registrant's
                       Pre-Effective Amendment No. 1 on Form N-1A as filed with
                       the SEC via EDGAR on September 24, 1999 (File No.
                       333-82865).

               (n)     Rule 18f-3 Plan.
                       Not Applicable.

               (p)(1)  Joint Code of Ethics of the Registrant and Jacob Asset
                       Management of New York LLC, the Registrant's investment
                       adviser, is filed herewith as Exhibit No. EX-99.p.1.

               (p)(2)  Code of Ethics of Lepercq, de Neuflize Securities, Inc.
                       is filed herewith as Exhibit No. EX-99.p.2.

</TABLE>

ITEM 24.       PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH THE REGISTRANT

               None.


ITEM 25.       INDEMNIFICATION

               In accordance with Section 2-418 of the General Corporation Law
of the State of Maryland, Article NINTH of the Registrant's Articles of
Incorporation provides as follows:

         "NINTH: (1) The Corporation shall indemnify (i) its currently acting
and former directors and officers, whether serving the Corporation or at its
request any other entity, to the fullest extent required or permitted by the
General Laws of the State of Maryland now or hereafter in force, including the
advance of expenses under the procedures and to the fullest extent permitted by
law, and (ii) other employees and agents to such extent as shall be authorized
by the Board of Directors or the By-Laws and as permitted by law. Nothing
contained herein shall be construed to protect any director or officer of the
Corporation against any liability to the Corporation or its security holders to
which he would otherwise be subject by reason of willful misfeasance, bad faith,
gross negligence, or reckless disregard of the duties involved in the conduct of
his office. The foregoing rights of indemnification shall not be exclusive of
any other rights to which those seeking indemnification may be entitled. The
Board of Directors may take such action as is necessary to carry out these
indemnification provisions and is expressly empowered to adopt, approve and
amend from time to time such by-laws, resolutions or contracts implementing such
provisions or such indemnification arrangements as may be permitted by law. No
amendment of the charter of the Corporation or repeal of any of its provisions
shall limit or eliminate the right of indemnification provided hereunder with
respect to acts or omissions occurring prior to such amendment or repeal.

                 (2) To the fullest extent permitted by Maryland statutory or
decisional law, as amended or interpreted, and the Investment Company Act of
1940, no director or officer of the Corporation shall be personally liable to
the Corporation or its stockholders for money damages; provided, however, that
nothing herein shall be construed to protect any director or officer of the






<PAGE>

Corporation against any liability to the Corporation or its security holders to
which he would otherwise be subject by reason of willful misfeasance, bad faith,
gross negligence, or reckless disregard of the duties involved in the conduct of
his office. No amendment of the charter of the Corporation or repeal of any of
its provisions shall limit or eliminate the limitation of liability provided to
directors and officers hereunder with respect to any act or omission occurring
prior to such amendment or repeal."

                 In Section 8 of the Distribution Agreement relating to the
securities being offered hereby, the Registrant agrees to indemnify the
Distributor and any person who controls the Distributor within the meaning of
Section 15 of the Securities Act of 1933, against certain types of civil
liabilities arising in connection with the Registration Statement or Prospectus.
In addition, in Section 9 of the Distribution Agreement, the Distributor agrees
to indemnify the Registrant, its officers and directors, and any person who
controls the Registrant within the meaning of Section 15 of the Securities Act
of 1933, against certain types of civil liabilities arising in connection with
the Registration Statement or Prospectus.

                 Insofar as indemnification for liability arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the registrant pursuant to the foregoing provisions, or otherwise,
the Registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered will, unless in the opinion of
its counsel the matter has been settled by controlling precedent, submit to a
court of appropriate jurisdiction the question whether such indemnification by
it is against public policy as expressed in the Act and will be governed by the
final adjudication of such issue.

ITEM 26.       BUSINESS AND OTHER CONNECTIONS OF THE INVESTMENT ADVISER

               The description of Jacob Asset Management LLC ("Adviser") under
the caption "Management, Organization and Capital Structure" in the Prospectus
and "Management of the Fund" and "Investment Advisory and Other Services" in the
Statement of Additional Information of the Registration Statement is
incorporated herein by reference.


ITEM 27.       PRINCIPAL UNDERWRITER

               (a) Lepercq, de Neuflize Securities, Inc., the Registrant's
Distributor, is also the distributor for Lepercq-Istel Trust.

               (b) The following are the directors and officers of Lepercq, de
Neuflize Securities, Inc.:

<TABLE>
<CAPTION>

                                     Positions and Offices with          Positions and Offices with
            Name                           the Distributor                     the Registrant
------------------------------      ------------------------------      -----------------------------
<S>                                 <C>                                 <C>
Bruno Desforges                         Managing Director                    None
1675 Broadway
New York, NY 10019

Peter Hartnedy                          Vice President and                   None
1675 Broadway                           Director
New York, NY 10019

Francois Letaconnoux                    President and Director               None
1675 Broadway
New York, NY 10019

Tsering Ngudu                           Executive Vice                       None

</TABLE>







<PAGE>

<TABLE>
<S>                                 <C>                                 <C>
1675 Broadway                           President
New York, NY 10019                      and Director


</TABLE>


               (c)      Not applicable.


ITEM 28.       LOCATION OF ACCOUNTS AND RECORDS

               Accounts, books and other documents required to be maintained
by Section 31(a) of the Investment Company Act of 1940 and the Rules promulgated
thereunder are maintained in the physical possession of the Registrant at Jacob
Asset Management of New York LLC, 1675 Broadway, New York, New York 10019, the
Registrant's Adviser; Firstar Mutual Fund Services LLC, 615 East Michigan
Street, Milwaukee, Wisconsin 53202, the Registrant's transfer agent and dividend
distributing agent; and at Firstar Bank, N.A., 615 East Michigan Street,
Milwaukee, Wisconsin 53202, the Registrant's custodian.

ITEM 29.       MANAGEMENT SERVICES

               There are no management related service contracts not discussed
in Part A or Part B.

ITEM 30.       UNDERTAKINGS

               Not applicable.







<PAGE>


                                   SIGNATURES

         Pursuant to the requirements of the Securities Act of 1933, as amended
(the "1933 Act") and the Investment Company Act of 1940, as amended, the
Registrant certifies that it meets all of the requirements for effectiveness of
this Registration Statement under Rule 485(b) under the 1933 Act and has duly
caused this Registration Statement to be signed on its behalf by the
undersigned, duly authorized, on the 29th day of December, 2000.

                                     Jacob Internet Fund Inc.


                                     /s/ Ryan I. Jacob
                                     _________________
                                     Ryan I. Jacob
                                     President, Chief Executive Officer
                                     and Director


         Pursuant to the requirements of the 1933 Act, this Registration
Statement has been signed below by the following persons in the capacities and
the date(s) indicated.


<TABLE>
<CAPTION>

Signature                                   Title                                       Date
---------                                   -----                                       ----

<S>                                         <C>                                         <C>

/s/ Ryan I. Jacob                           President,                                  December 22, 2000
---------------------------                 Chief Executive Officer and
Ryan I. Jacob                               Director

/s/ Francis J. Alexander                    Vice President,                             December 20, 2000
---------------------------                 Secretary, Treasurer and
Francis J. Alexander                        Director

/s/ William B. Fell                         Director                                    December 29, 2000
---------------------------
William B. Fell

/s/ Christopher V. Hajinian                 Director                                    December 29, 2000
---------------------------
Christopher V. Hajinian

/s/ Leonard S. Jacob, M.D. Ph.D.            Director                                    December 29, 2000
--------------------------------
Leonard S. Jacob, M.D. Ph.D.


/s/ Jeffrey I. Schwarzschild                Director                                    December 23, 2000
----------------------------
Jeffrey I. Schwarzschild

</TABLE>








<PAGE>


                                  EXHIBIT INDEX



<TABLE>
<CAPTION>

                   EXHIBITS                                       EXHIBIT NO.

<S>                                                                <C>
Opinion and Consent of Counsel                                     EX-99.i

Consent of Independent Public Auditor                              EX-99.j.1

Joint Code of Ethics of Registrant and Jacob                       EX-99.p.1
Asset Management of New York  LLC

Code of Ethics of Lepercq, de Neuflize                             EX-99.p.2
Securities, Inc.

</TABLE>




                          STATEMENT OF DIFFERENCES
                          ------------------------

Characters normally expressed as superscript shall be preceded by .... 'pp'







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