October 7, 2015

Dear Investors,

After an already weak start to the summer, a much more significant correction has occurred over the last several weeks. While there are many different contributing factors to this decline, the biggest concerns have been the fear that emerging market troubles (particularly in China) could lead to slower overall global growth. These concerns are also coinciding with an imminent Fed decision on whether to raise interest rates for the first time in more than nine years. So far, the US economy seems to have been only been marginally affected, and is likely to continue to grow, albeit at a continued sluggish pace. Given our belief that the U.S. and other more developed economies are stable enough to avoid a dire outcome, we have been cautiously adding to some of our highest-conviction names. However, due to the extremity of this recent decline, we've been careful in consideration of new positions as we wait for more stabilization in the markets.

Jacob Internet Fund

The Jacob Internet Fund did not add any new positons in the quarter.

Jacob Small Cap Fund

The Jacob Small Cap Growth Fund added two new positions in the latest quarter: Codexis and First Northwest Bancorp. Codexis develops engineered proteins, mainly to help pharmaceutical companies increase volumes and lower costs for drug production. Recently, Codexis signed a second major platform license with Merck (one year after signing a similar deal with GlaxoSmithKline), validating their technology and proving their ability to sign additional large deals. Already close to cash flow breakeven, Codexis could achieve a significantly higher valuation with any success in their many new ventures. First Northwest Bancorp is a small commercial bank operating in the Pacific Northwest, specifically in the western half of Washington state. An IPO in January of this year, First Northwest now trades at a significant discount to tangible book value, whereas most of their peers trade at premiums. We believe that as we approach the one-year anniversary of the company going public, when they will no longer be restricted from buying back stock, we will likely see a closing of this valuation gap.

Jacob Micro Cap Growth Fund

Besides Codexis and First Northwest Bancorp, The Jacob Micro Cap Fund purchased two additional holdings in the quarter: Sajan and Imprimis Pharmaceuticals. Sajan is a leading provider of translation software and services, helping companies convert their Websites, marketing materials and instruction manuals into dozens of different languages throughout the world. Its well-regarded and proprietary Transplicity tool makes the translation process more efficient and automated over time. With physical boundaries becoming less and less important in an increasingly interconnected global economy, the need for translation services should continue to grow steadily, and Sajan appears positioned well to take advantage of the highly fragmented industry. Imprimis Pharmaceuticals plays in the important and heavily scrutinized compounding pharmacy market, where well-known and usually generic pharmaceuticals are mixed together in drug cocktails sold to doctors and hospitals. Imprimis has wisely acquired a couple of interesting proprietary compounded drugs, one of which is seeing a great deal of early success - despite some significant reimbursement hurdles - because it allows cataract surgery patients to avoid the costly and aggravating post-surgery eye-drop regimen.

Jacob Wisdom Fund

The Wisdom fund did not add any new positions in the quarter.

Ryan Jacob
Portfolio Manager
Jacob Internet Fund
Jacob Small Cap Growth Fund

Darren Chervitz
Portfolio Manager
Jacob Micro Cap Growth Fund

Frank Alexander
Portfolio Manager
Jacob Wisdom Fund

Mutual fund investing involves risk. Principal loss is possible. There are specific risks inherent in investing in the Internet area, particularly with respect to smaller capitalized companies and the high volatility of internet stocks. All four funds may invest in foreign securities, which involve greater volatility and political, economic and currency risks, and differences in accounting methods. These risks are greater in emerging markets. The Small Cap Fund, Internet Fund and Wisdom Fund will invest in smaller companies, which involve additional risks, such as limited liquidity and greater volatility. The Wisdom Fund may invest in Real Estate Investment Trusts (REITs) which may be affected by economic, legal, cultural, environmental or technological factors that affect property values, rents or occupancies of real estate related to the Fund's holdings. Investments in debt securities typically decrease in value when interest rates rise. This risk is usually greater for longer-term debt securities. 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.

Investments in micro capitalization companies may involve greater risks, as these companies tend to have limited product lines, markets and financial or managerial resources. Micro cap stocks often also have a more limited trading market, such that the Adviser may not be able to sell stocks at an optimal time or price. In addition, less frequently-traded securities may be subject to more abrupt price movements than securities of larger capitalized companies.

Any tax or legal information provided is merely a summary of our understanding and interpretation of some of the current income tax regulations and is not exhaustive. Investors must consult their tax advisor or legal counsel for advice and information concerning their particular situation. Neither the Fund nor any of its representatives may give legal or tax advice.

The information provided herein represents the opinion of Jacob Mutual Funds and is not intended to be a forecast of future events, a guarantee of future results, nor investment advice.

Cash flow measures the cash generating capability of a company by adding non-cash charges (e.g. depreciation) and interest expense to pretax income.

Tangible book value is the total net asset value of a company minus intangible assets and goodwill.

Please refer to the prospectus located at for more complete information including risks, fees and expenses.

Click here to view the holdings for the Jacob Internet Fund, as of August 31, 2015.
Click here to view the holdings for the Jacob Small Cap Growth Fund, as of August 31, 2015.
Click here to view the holdings for the Jacob Micro Cap Growth Fund, as of August 31, 2015.
Click here to view the holdings for the Jacob Wisdom Fund, as of August 31, 2015.

Please note that these holdings are subject to change and should not be considered a recommendation to buy or sell any security.

Must be preceded or accompanied by a prospectus.

Quasar Distributors, LLC, Distributor 10/15