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SPARROW FUNDS
CODE OF ETHICS FOR PRINCIPAL EXECUTIVE AND
SENIOR FINANCIAL OFFICERS
I. Covered Officers/Purpose of the Code
This code of ethics (this "Code") applies to the persons acting as
principal executive officer, principal financial officer and principal
accounting officer or controller of Sparrow Growth Fund (the "Fund"), as set
forth on Exhibit A and amended from time to time (collectively, the "Covered
Officers") for the purpose of promoting:
o honest and ethical conduct, including the ethical handling of actual or
apparent conflicts of interest between personal and professional relationships;
o full, fair, accurate, timely and understandable disclosure in reports and
documents that the Fund files with, or submits to, the Securities and Exchange
Commission ("SEC") and in other public communications made by the Fund;
o compliance with applicable laws and governmental rules and regulations;
o the prompt internal reporting of violations of this Code to an
appropriate person or persons identified in this Code; and
o accountability for adherence to this Code.
Each Covered Officer should adhere to a high standard of business ethics
and should be sensitive to situations that may give rise to actual as well as
apparent conflicts of interest.
II. Covered Officers Should Handle Ethically Actual and Apparent Conflicts
of Interest
Overview. A "conflict of interest" occurs when a Covered Officer's private
interests interfere with the interests of, or the Covered Officer's service to,
the Fund. For example, a conflict of interest would arise if a Covered Officer,
or a member of the Covered Officer's family, receives improper personal benefits
as a result of the Covered Officer's position with the Fund.
Certain conflicts of interest arise out of the relationships between
Covered Officers and the Fund and already are subject to conflict of interest
provisions in the Investment Company Act of 1940 ("Investment Company Act") and
the Investment Advisers Act of 1940 ("Advisers Act"). For example, Covered
Officers may not individually engage in certain transactions (such as the
purchase or sale of securities or other property) with the Fund because of their
status as "affiliated persons" of the Fund. This Code does not, and is not
intended to, repeat or replace any compliance programs and procedures of the
Fund or its investment adviser designed to prevent, or identify and correct,
violations of the Investment Company Act and the Advisers Act.
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Although typically not presenting an opportunity for improper personal
benefit, conflicts arise from, or as a result of, the contractual relationship
between the Fund and its investment adviser or administrator of which a Covered
Officer is also an officer or employee. As a result, this Code recognizes that
the Covered Officers will, in the normal course of their duties, whether
formally for the Fund or its advisor or administrator, be involved in
establishing policies and implementing decisions that will have different
effects on the adviser, the administrator and the Fund. The participation of the
Covered Officers in such activities is inherent in the contractual relationship
between the Fund and its advisor or administrator and is consistent with the
performance by the Covered Officers of their duties as officers of the Fund.
Thus, if performed in conformity with the provisions of the Investment Company
Act, such activities will be deemed to have been handled ethically. In addition,
it is recognized by the Board of Trustees ("Board") that the Covered Officers
may also be officers or employees of one or more investment companies covered by
other codes.
Other conflicts of interest are covered by this Code, even if such
conflicts of interest are not subject to provisions in the Investment Company
Act and the Advisers Act. The following list provides examples of conflicts of
interest under this Code, but Covered Officers should keep in mind that these
examples are not exhaustive. The overarching principle is that the personal
interest of a Covered Officer should not be placed improperly before the
interest of the Fund.
Each Covered Officer must:
o not use personal influence or personal relationships improperly to
influence investment decisions or financial reporting by the Fund whereby the
Covered Officer would benefit personally to the detriment of the Fund;
o not cause the Fund to take action, or fail to take action, for the
individual personal benefit of the Covered Officer rather than the benefit of
the Fund;
o not use material non-public knowledge of portfolio transactions made or
contemplated for the Fund to trade personally or cause others to trade
personally in contemplation of the market effect of such transactions;
o report at least annually any affiliations or other relationships related
to conflicts of interest that the Fund's Trustees and Officers Questionnaire
covers.
Gerald Sparrow shall be designated the Compliance Officer of the Fund,
solely for purposes of this Code of Ethics. There are some conflict of interest
situations that should always be discussed with the Compliance Officer of the
Fund, if material. Examples of these include:
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o service as a director on the board of any public company;
o the receipt of any non-nominal gifts;
o the receipt of any entertainment from any company with which the Fund has
current or prospective business dealings unless such entertainment is
business-related, reasonable in cost, appropriate as to time and place, and not
so frequent as to raise any questions of impropriety;
o any ownership interest in, or any consulting or employment relationship
with, any of the Fund's service providers, other than its investment adviser,
principal underwriter, administrator or any affiliated person thereof; and
o a direct or indirect financial interest in commissions, transaction
charges, soft dollar credits or spreads paid by the Fund for effecting portfolio
transactions or for selling or redeeming shares other than an interest arising
from the Covered Officer's employment, such as compensation or equity ownership.
III. Disclosure and Compliance
o Each Covered Officer should familiarize himself with the disclosure
requirements generally applicable to the Fund.
o Each Covered Officer should not knowingly misrepresent, or cause others
to misrepresent, facts about the Fund to others, whether within or outside the
Fund, including to the Fund's directors and auditors, and to governmental
regulators and self-regulatory organizations.
o Each Covered Officer should, to the extent appropriate within the Covered
Officer's area of responsibility, consult with other officers and employees of
the Fund's adviser or its administrator with the goal of promoting full, fair,
accurate, timely and understandable disclosure in the reports and documents the
Fund files with, or submits to, the SEC and in other public communications made
by the Fund.
o It is the responsibility of each Covered Officer to promote compliance
with the standards and restrictions imposed by applicable laws, rules and
regulations.
IV. Reporting and Accountability
Each Covered Officer must:
o upon adoption of this Code (or thereafter as applicable, upon becoming a
Covered Officer), affirm in writing to the Board that the Covered Officer has
received, read, and understands this Code;
o annually thereafter affirm to the Board that the Covered Officer has
complied with the requirements of this Code;
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o not retaliate against any other Covered Officer or any employee of the
Fund or their affiliated persons for reports of potential violations that are
made in good faith; and
o notify the Compliance Officer promptly if the Covered Officer knows of
any violation of this Code. Failure to do so is itself a violation of this Code.
The Compliance Officer is responsible for applying this Code to specific
situations in which questions are presented under it and has the authority to
interpret this Code in any particular situation. However, any approvals or
waivers sought by a Covered Officer will be considered by the Audit Committee of
the Board (the "Committee"), which will make recommendations to the Board.
The Fund will follow these procedures in investigating and enforcing this
Code:
o the Compliance Officer for the Fund will take all appropriate action to
investigate any potential violations reported to the Compliance Officer;
o the Compliance Officer will review with the outside legal counsel to the
Fund the findings and conclusions of such
investigation;
o if, after such investigation and review, the Compliance Officer believes
that no violation has occurred, the Compliance Officer is not required to take
any further action;
o any matter that the Compliance Officer believes is a violation will be
reported to the Committee;
o if the Committee concurs that a violation has occurred, it will inform
and make a recommendation to the Board, which will consider appropriate action,
which may include review of, and appropriate modifications to, applicable
policies and procedures (including changes to this Code); notification of the
violation to appropriate personnel of the investment adviser or the
administrator or its board; or a recommendation to take disciplinary action
against the Covered Officer, which may include, without limitation, dismissal;
o the Board will be responsible for granting waivers, as appropriate; and
o any changes to or waivers of this Code will, to the extent required, be
disclosed as provided by SEC rules on Form N-CSR.
V. Other Policies and Procedures
This Code shall be the sole code of ethics adopted by the Fund for purposes
of Section 406 of the Sarbanes-Oxley Act and the rules and forms applicable to
registered investment companies thereunder. The Fund's and its advisor's and
underwriter's codes of ethics under Rule 17j-1 under the Investment Company Act
are separate requirements applying to the Covered Officers and others, and are
not part of this Code.
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VI. Amendments
Any amendments to this Code, other than amendments to Exhibit A, must be
approved or ratified by a majority vote of the Board, including a majority of
trustees who are not "interested persons" of the Fund as defined in Section
2(a)(19) of the Investment Company Act.
VII. Confidentiality
To the extent possible, all records, reports and other information
prepared, maintained or acquired pursuant to this Code will be treated as
confidential, it being understood that it may be necessary or advisable, that
certain matters be disclosed to third parties (e.g., to the board of directors
or officers of the adviser or the administrator).
VIII. Internal Use
This Code is intended solely for the internal use by the Fund and does not
constitute an admission, by or on behalf of the Fund, as to any fact,
circumstance, or legal conclusion.
Adopted July 31, 2003
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Exhibit A
Persons Covered by this Code of Ethics
Gerald Sparrow
David Presson
Exhibit B
SPARROW FUNDS
Covered Officer Affirmation of Understanding
In accordance with Section IV of the Code of Ethics for Principal Executive
and Senior Financial Officers (the "Code"), the undersigned Covered Officer of
the Fund (as defined in the Code) hereby affirms to the Board that the Covered
Officer has received, read, and understands the Code.
Date: ___________________ _________________________________________
Covered Officer
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Exhibit C
SPARROW FUNDS
Covered Officer Annual Affirmation
For the period June 1, 2005 to May 31, 2006
In accordance with Section IV of the Code of Ethics for Principal Executive
and Senior Financial Officers (the "Code"), the undersigned Covered Officer of
the Fund (as defined in the Code) hereby affirms to the Board that the Covered
Officer, at all times during the period for which this affirmation is given, has
complied with each of the requirements of the Code.
Date:
Covered Officer
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