485BPOS

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM N-1A

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 o

Pre-Effective Amendment No. o

Post-Effective Amendment No. 21 x

and/or

 REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940            x

Post-Effective Amendment No. 23  

SPARROW FUNDS – File Nos. 333-59877 and 811-08897

(Exact Name of Registrant as Specified In Charter)

211 North Broadway

Suite 2080

St. Louis, Missouri  63102

(Address of Principal Executive Offices) (Zip Code)

Registrant’s Telephone Number, Including Area Code: (314) 725-6161

Gerald R. Sparrow

President

211 North Broadway

Suite 2080

St. Louis, Missouri  63102

(Name and Address of Agent for Service)

Copies to:

JoAnn M. Strasser

Thompson Hine LLP

41 S. High Walnut Street, 17^th Floor

Columbus, Ohio 43215

It is proposed that this filing will become effective:

ý	immediately upon filing pursuant to paragraph (b)
o	on (date) pursuant to paragraph (b)
o	60 days after filing pursuant to paragraph (a)(1)
o	on (date) pursuant to paragraph (a)(1)
o	75 days after filing pursuant to paragraph (a)(2)
o	on (date) pursuant to paragraph (a)(2) of rule 485

If appropriate check this box:  o  this post-effective amendment designates a new effective date for a previously filed post-effective amendment

SIGNATURES

          Pursuant to the requirements of the Securities Act of 1933, as amended, 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 Securities Act and has duly caused this Post-Effective Amendment No. 21 to its Registration Statement on Form N-1A to be signed on its behalf by the undersigned, thereto duly authorized, in the City of  Columbus, State of Ohio, on the 10th day of January, 2013.

Sparrow Funds

By:		/s/ JoAnn M. Strasser
	JoAnn M. Strasser, Attorney-in-Fact

          Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed below by the following persons in the capacities indicated on January 10, 2013.

Gerald R. Sparrow*

Trustee, President (Principal Executive Officer), and Treasurer (Principal Financial Officer/Principal Accounting Officer)

Richard Priest*

Trustee

Donald D. Woodruff*

Trustee

By:/s/ JoAnn M. Strasser

*JoAnn M. Strasser, Attorney-in-Fact

Exhibit Index

Index No Description of Exhibit

1.

EX-101.INS

XBRL Instance Document

2.

EX-101.SCH

XBRL Taxonomy Extension Schema Document

3.

EX-101.CAL

XBRL Taxonomy Extension Calculation Linkbase

4.

EX-101.DEF

XBRL Taxonomy Extension Definition Linkbase

5.

EX-101.LAB

XBRL Taxonomy Extension Labels Linkbase

6.

EX-101.PRE ………………………………………….XBRL Taxonomy Extension Presentation Linkbase

XML

Label

Element

Value

Risk/Return:

rr_RiskReturnAbstract

Document Type

dei_DocumentType

485BPOS

Document Period End Date

dei_DocumentPeriodEndDate

Aug. 31, 2012

Registrant Name

dei_EntityRegistrantName

Sparrow Funds

Central Index Key

dei_EntityCentralIndexKey

0001066241

Amendment Flag

dei_AmendmentFlag

false

Prospectus Date

rr_ProspectusDate

Dec. 31, 2012

Sparrow Growth Fund

Risk/Return:

rr_RiskReturnAbstract

Objective [Heading]

rr_ObjectiveHeading

Investment Objective

Objective, Primary [Text Block]

rr_ObjectivePrimaryTextBlock

The investment objective of the Sparrow Growth Fund is long-term capital appreciation.

Expense [Heading]

rr_ExpenseHeading

Fees and Expenses of the Fund

Expense Narrative [Text Block]

rr_ExpenseNarrativeTextBlock

This table describes the fees and expenses that you may pay if you buy and hold shares of the Fund. You may qualify for sales charge discounts if you and or your family invest, or agree to invest in the future, at least $50,000 in Class A shares of the Fund.  More information about these and other discounts is available from your financial professional and in the section entitled "Sales Charge Reduction and Waivers" in this prospectus.

Shareholder Fees Caption [Text]

rr_ShareholderFeesCaption

Shareholder Fees (fees paid directly from your investment)

Operating Expenses Caption [Text]

rr_OperatingExpensesCaption

Annual Fund Operating Expenses (expenses that are deducted from Fund assets)

Portfolio Turnover [Heading]

rr_PortfolioTurnoverHeading

Portfolio Turnover

Portfolio Turnover [Text Block]

rr_PortfolioTurnoverTextBlock

The Fund pays transaction costs, such as commissions, when it buys and sells securities (or “turns over” its portfolio). A higher portfolio turnover rate may indicate higher transaction costs and may result in higher taxes when Fund shares are held in a taxable account. These costs, which are not reflected in annual fund operating expenses or in the example, affect the Fund’s performance. During the most recent fiscal year, the Fund’s portfolio turnover rate was 149.36% of the average value of its portfolio.

Portfolio Turnover, Rate

rr_PortfolioTurnoverRate

149.36%

Expense Example [Heading]

rr_ExpenseExampleHeading

Example

Expense Example Narrative [Text Block]

rr_ExpenseExampleNarrativeTextBlock

The example below is intended to help you compare the cost of investing in the Fund’s Class A and Class C shares with the cost of investing in other mutual funds. The Example assumes that you invest $10,000 in the Fund’s Class A and Class C shares for 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 Class A and Class C operating expenses remain the same. Although your actual costs may be higher or lower, based on these assumptions your costs would be:

Strategy [Heading]

rr_StrategyHeading

Principal Investment Strategies of the Fund

Strategy Narrative [Text Block]

rr_StrategyNarrativeTextBlock

The Fund typically invests in a broad range of foreign and U.S. common stocks which Sparrow Capital Management, Inc., the Fund’s adviser, believes have above-average prospects for appreciation, based on a proprietary investment model developed by the adviser.  The model looks at a variety of factors to select stocks that the adviser believes demonstrate strong earnings momentum.  These growth momentum factors include expanding profit margins, accelerating earnings, positive earnings surprises, positive earnings estimate revisions, and positive relative price strength. 

The Fund may invest in stocks of all market capitalization ranges based on the adviser’s assessment of the relative opportunities and risks of each category.  The Fund may invest without limitation in stocks of foreign issuers operating in developed or emerging markets through American Depositary Receipts (“ADRs”).  The Fund may also invest without limitation in one or more underlying investment companies whose investments conform to the Fund’s investment limitations or investment policies, such as open-end mutual funds and exchange-traded funds (“ETFs”) that invest in equity securities represented by various indices (including foreign indices).  Stocks are sold when there is a significant decline in earnings momentum, a better stock is found, or a significant breakdown in relative price performance occurs.

The Fund may invest up to 15% of its assets in corporate and government bonds that are rated investment grade at the time of purchase (BBB/Baa or higher by S&P or Moody’s or, unrated, but determined to be of comparable quality by the adviser). 

Risk [Heading]

rr_RiskHeading

Principal Risks of Investing in the Fund

Risk Narrative [Text Block]

rr_RiskNarrativeTextBlock

All mutual funds carry a certain amount of risk.  An investment in the Fund is not a deposit of any bank and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency.  The Fund is not a complete investment program.  As with any mutual fund investment, the Fund’s returns will vary and you could lose money.  The following are the principal risks of investing in the Fund:

         Market Risk.  Overall stock market risks may affect the value of the Fund.  Factors such as domestic economic growth and market conditions, interest rate levels, and political events affect the securities markets and could cause the Fund’s share price to fall.

         Company Risk.  The value of the Fund may decrease in response to the activities and financial prospects of an individual company in the Fund’s portfolio.  The value of an individual company can be more volatile than the market as a whole.

         Growth Style Investing Risk.  If the adviser’s perceptions of a company’s growth potential are wrong, the securities purchased may not perform as expected, reducing the Fund’s return.

         Management Risk.  If the adviser’s assessment of the prospects for individual securities is incorrect, it could result in significant losses in the Fund’s investment in those securities, which can also result in possible losses overall for the Fund. 

         Mid Cap Risk. Stocks of mid-cap companies are riskier than stocks of larger companies. Many of these companies are young and have a limited track record. Their securities may trade less frequently and in more limited volume than those of more mature companies.  Mid-cap companies also may lack the managerial, financial or other resources necessary to implement their business plans or succeed in the face of competition.

         Small Cap Risk. To the extent the Fund invests in small-cap companies, the Fund will be subject to additional risks. These include:

         The earnings and prospects of smaller companies are more volatile than larger companies.

         Smaller companies may experience higher failure rates than do larger companies.

         The trading volume of securities of smaller companies is normally less than that of larger companies and, therefore, may disproportionately affect their market price, tending to make them fall more in response to selling pressure than is the case with larger companies.

         Smaller companies may have limited markets, product lines or financial resources and may lack management experience.

         Fixed Income Risk.  The issuer of a bond may not be able to make interest and principal payments when due.  Generally, the lower the credit rating of a security, the greater the risk that the issuer will default on its obligation.  If a rating agency gives a debt security a lower rating, the value of the debt security will decline because investors will demand a higher rate of return.  The value of fixed income securities generally decreases when interest rates rise and increases when interest rates fall. 

         Foreign and Emerging Markets Securities Risk.  Common stocks of companies in foreign countries may experience more rapid and extreme changes in value than securities of U.S. companies because the securities markets of many foreign countries are relatively smaller than those in the U.S.  Foreign issuers are not subject to the same degree of regulation as U.S. issuers.  Also, nationalization, expropriation or confiscatory taxation or political changes could adversely affect the Fund’s investments in a foreign country.  There is a risk that fluctuations in the exchange rates between the U.S. dollar and foreign currencies may negatively affect the value of the Fund’s investments in foreign securities.  To the extent that the Fund invests in securities of foreign companies located in emerging markets, it will be subject to additional risks that can increase the potential for losses in the Fund. 

         Sector Risk.  If the Fund’s portfolio is overweighted in a certain industry sector, any negative development affecting that sector will have a greater impact on the Fund than a fund that is not overweighted in that sector. 

         ETF Risk and Other Investment Company.  When the Fund invests in ETFs and other investment companies, it will indirectly bear its proportionate share of any fees and expenses payable directly by the underlying ETF or other investment company.  Therefore, the Fund will incur higher expenses. In addition, ETFs are also subject to the following risks: (i) the market price of an ETF’s shares may trade above or below its net asset value; (ii) an active trading market for an ETF’s shares may not develop or be maintained; (iii) trading of an ETF’s shares may be halted if the listing exchange’s officials deem such action appropriate, the shares are de-listed from the exchange, or the activation of market-wide “circuit breakers” (which are tied to large decreases in stock prices) halts stock trading generally; or (iv) the ETF may fail to achieve close correlation with the index that it  tracks due to a variety of factors, such as rounding of prices and changes to the index and/or  regulatory policies, resulting in the deviating of the ETF’s returns from that of the index.

         Portfolio Turnover Risk.  The Fund may experience high portfolio turnover.  Increased portfolio turnover may cause the Fund to incur higher brokerage costs, which may adversely affect the Fund’s performance, and may produce taxable distributions, significant portions of which are short-term capital gains that are taxable as ordinary income.

Is the Fund Right for You?

The Fund may be suitable for:

         Long-term investors seeking a mutual fund with a growth investment strategy

         Investors willing to accept price fluctuations in their investment

         Investors who can tolerate the risks associated with common stocks

Risk Lose Money [Text]

rr_RiskLoseMoney

As with any mutual fund investment, the Fund’s returns will vary and you could lose money.

Bar Chart and Performance Table [Heading]

rr_BarChartAndPerformanceTableHeading

Performance

Performance Narrative [Text Block]

rr_PerformanceNarrativeTextBlock

The following bar chart and table provide some indication of the risks of investing in the Fund’s Class A shares by showing changes in the Fund’s Class A shares’ performance from year to year and by showing how the Fund’s Class A shares’ average annual returns for 1-year, 5-year and 10-year periods compare with those of a broad measure of market performance. To obtain updated performance information, please call (888) 727-3301. The Fund’s past performance, before and after taxes, is not necessarily an indication of its future performance.

Performance Availability Phone [Text]

rr_PerformanceAvailabilityPhone

888-727-3301

Performance Past Does Not Indicate Future [Text]

rr_PerformancePastDoesNotIndicateFuture

The Fund’s past performance, before and after taxes, is not necessarily an indication of its future performance.

Bar Chart [Heading]

rr_BarChartHeading

Class A Annual Total Returns as of December 31^st

Annual Return 2002

rr_AnnualReturn2002

(25.57%)

Annual Return 2003

rr_AnnualReturn2003

30.98%

Annual Return 2004

rr_AnnualReturn2004

6.14%

Annual Return 2005

rr_AnnualReturn2005

6.96%

Annual Return 2006

rr_AnnualReturn2006

15.57%

Annual Return 2007

rr_AnnualReturn2007

9.68%

Annual Return 2008

rr_AnnualReturn2008

(46.25%)

Annual Return 2009

rr_AnnualReturn2009

19.27%

Annual Return 2010

rr_AnnualReturn2010

13.23%

Annual Return 2011

rr_AnnualReturn2011

4.23%

Bar Chart Closing [Text Block]

rr_BarChartClosingTextBlock

The Fund’s Class A Share year-to-date performance as of September 30, 2012 was 11.72%.

During the period shown in the chart for Class A, the highest return for a quarter was 17.67% (quarter ended September 30, 2009); and the lowest return was -26.90% (quarter ended December 31, 2008).  Class A shares are sold subject to a sales load, which is not reflected in the bar chart.  If the sales load was included, the returns would be less than those shown.

Highest Quarterly Return, Label

rr_HighestQuarterlyReturnLabel

Highest return for a quarter

Highest Quarterly Return, Date

rr_BarChartHighestQuarterlyReturnDate

Sep. 30, 2009

Highest Quarterly Return

rr_BarChartHighestQuarterlyReturn

17.67%

Lowest Quarterly Return, Label

rr_LowestQuarterlyReturnLabel

Lowest return for a quarter

Lowest Quarterly Return, Date

rr_BarChartLowestQuarterlyReturnDate

Dec. 31, 2008

Lowest Quarterly Return

rr_BarChartLowestQuarterlyReturn

(26.90%)

Performance Table Heading

rr_PerformanceTableHeading

Average Annual Total Returns

(For the periods ended December 31, 2011)

Performance Table Uses Highest Federal Rate

rr_PerformanceTableUsesHighestFederalRate

After-tax returns are calculated using the historical highest individual federal marginal income tax rates

Performance Table Not Relevant to Tax Deferred

rr_PerformanceTableNotRelevantToTaxDeferred

after-tax returns shown are not relevant to investors who hold their Fund shares through tax-deferred arrangements, such as 401(k) plans or individual retirement accounts.

Performance Table Narrative

rr_PerformanceTableNarrativeTextBlock

After-tax returns are calculated using the historical highest individual federal marginal income tax rates and do not reflect the impact of state and local taxes.  Actual after-tax returns depend on an investor’s tax situation and may differ from those shown, and after-tax returns shown are not relevant to investors who hold their Fund shares through tax-deferred arrangements, such as 401(k) plans or individual retirement accounts.  After-tax returns are shown for only the Fund’s Class A, and after-tax returns for other classes will vary. 

Sparrow Growth Fund | - Comparison Index - S&P 500 Index (reflects no deduction for fees, expenses or taxes)

Risk/Return:

rr_RiskReturnAbstract

1 Year

rr_AverageAnnualReturnYear01

2.09%

5 Years

rr_AverageAnnualReturnYear05

(0.25%)

10 Years

rr_AverageAnnualReturnYear10

2.92%

Sparrow Growth Fund | Class A

Risk/Return:

rr_RiskReturnAbstract

Maximum Sales Charge (Load) Imposed on Purchases (as a percentage of offering price)

rr_MaximumSalesChargeImposedOnPurchasesOverOfferingPrice

5.75%

Maximum Deferred Sales Charge (Load) (as a percentage of the lower of original purchase or redemption proceeds)

rr_MaximumDeferredSalesChargeOverOther

1.00%

Management Fees

rr_ManagementFeesOverAssets

1.00%

Distribution (12b-1) Fees

rr_DistributionAndService12b1FeesOverAssets

0.50%

Other Expenses

rr_OtherExpensesOverAssets

1.11%

Total Annual Fund Operating Expenses

rr_ExpensesOverAssets

2.61%

Expense Example, with Redemption, 1 Year

rr_ExpenseExampleYear01

824

Expense Example, with Redemption, 3 Years

rr_ExpenseExampleYear03

1,340

Expense Example, with Redemption, 5 Years

rr_ExpenseExampleYear05

1,881

Expense Example, with Redemption, 10 Years

rr_ExpenseExampleYear10

3,350

1 Year

rr_AverageAnnualReturnYear01

4.23%

5 Years

rr_AverageAnnualReturnYear05

(3.66%)

10 Years

rr_AverageAnnualReturnYear10

1.19%

Sparrow Growth Fund | Class A | Return After Taxes on Distributions

Risk/Return:

rr_RiskReturnAbstract

1 Year

rr_AverageAnnualReturnYear01

4.23%

5 Years

rr_AverageAnnualReturnYear05

(3.70%)

10 Years

rr_AverageAnnualReturnYear10

1.18%

Sparrow Growth Fund | Class A | Return After Taxes on Distributions and Sale of Fund Shares

Risk/Return:

rr_RiskReturnAbstract

1 Year

rr_AverageAnnualReturnYear01

2.75%

5 Years

rr_AverageAnnualReturnYear05

(3.10%)

10 Years

rr_AverageAnnualReturnYear10

1.01%

Sparrow Growth Fund | Class C

Risk/Return:

rr_RiskReturnAbstract

Maximum Sales Charge (Load) Imposed on Purchases (as a percentage of offering price)

rr_MaximumSalesChargeImposedOnPurchasesOverOfferingPrice

none

Maximum Deferred Sales Charge (Load) (as a percentage of the lower of original purchase or redemption proceeds)

rr_MaximumDeferredSalesChargeOverOther

none

Management Fees

rr_ManagementFeesOverAssets

1.00%

Distribution (12b-1) Fees

rr_DistributionAndService12b1FeesOverAssets

1.00%

Other Expenses

rr_OtherExpensesOverAssets

1.19%

Total Annual Fund Operating Expenses

rr_ExpensesOverAssets

3.19%

Expense Example, with Redemption, 1 Year

rr_ExpenseExampleYear01

322

Expense Example, with Redemption, 3 Years

rr_ExpenseExampleYear03

983

Expense Example, with Redemption, 5 Years

rr_ExpenseExampleYear05

1,669

Expense Example, with Redemption, 10 Years

rr_ExpenseExampleYear10

3,494

XML

Sparrow Growth Fund

Investment Objective

The investment objective of the Sparrow Growth Fund is long-term capital appreciation.

Fees and Expenses of the Fund

This table describes the fees and expenses that you may pay if you buy and hold shares of the Fund. You may qualify for sales charge discounts if you and or your family invest, or agree to invest in the future, at least $50,000 in Class A shares of the Fund.  More information about these and other discounts is available from your financial professional and in the section entitled "Sales Charge Reduction and Waivers" in this prospectus.

Shareholder Fees (fees paid directly from your investment)

Shareholder Fees Sparrow Growth Fund	Class A	Class C
Maximum Sales Charge (Load) Imposed on Purchases (as a percentage of offering price)	5.75%	none
Maximum Deferred Sales Charge (Load) (as a percentage of the lower of original purchase or redemption proceeds)	1.00%	none

Annual Fund Operating Expenses (expenses that are deducted from Fund assets)

Annual Fund Operating Expenses Sparrow Growth Fund	Class A	Class C
Management Fees	1.00%	1.00%
Distribution (12b-1) Fees	0.50%	1.00%
Other Expenses	1.11%	1.19%
Total Annual Fund Operating Expenses	2.61%	3.19%

Example

The example below is intended to help you compare the cost of investing in the Fund’s Class A and Class C shares with the cost of investing in other mutual funds. The Example assumes that you invest $10,000 in the Fund’s Class A and Class C shares for 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 Class A and Class C operating expenses remain the same. Although your actual costs may be higher or lower, based on these assumptions your costs would be:

Expense Example Sparrow Growth Fund (USD $)	Expense Example, with Redemption, 1 Year	Expense Example, with Redemption, 3 Years	Expense Example, with Redemption, 5 Years	Expense Example, with Redemption, 10 Years
Class A	824	1,340	1,881	3,350
Class C	322	983	1,669	3,494

Portfolio Turnover

The Fund pays transaction costs, such as commissions, when it buys and sells securities (or “turns over” its portfolio). A higher portfolio turnover rate may indicate higher transaction costs and may result in higher taxes when Fund shares are held in a taxable account. These costs, which are not reflected in annual fund operating expenses or in the example, affect the Fund’s performance. During the most recent fiscal year, the Fund’s portfolio turnover rate was 149.36% of the average value of its portfolio.

Principal Investment Strategies of the Fund

The Fund typically invests in a broad range of foreign and U.S. common stocks which Sparrow Capital Management, Inc., the Fund’s adviser, believes have above-average prospects for appreciation, based on a proprietary investment model developed by the adviser.  The model looks at a variety of factors to select stocks that the adviser believes demonstrate strong earnings momentum.  These growth momentum factors include expanding profit margins, accelerating earnings, positive earnings surprises, positive earnings estimate revisions, and positive relative price strength. 

The Fund may invest in stocks of all market capitalization ranges based on the adviser’s assessment of the relative opportunities and risks of each category.  The Fund may invest without limitation in stocks of foreign issuers operating in developed or emerging markets through American Depositary Receipts (“ADRs”).  The Fund may also invest without limitation in one or more underlying investment companies whose investments conform to the Fund’s investment limitations or investment policies, such as open-end mutual funds and exchange-traded funds (“ETFs”) that invest in equity securities represented by various indices (including foreign indices).  Stocks are sold when there is a significant decline in earnings momentum, a better stock is found, or a significant breakdown in relative price performance occurs.

The Fund may invest up to 15% of its assets in corporate and government bonds that are rated investment grade at the time of purchase (BBB/Baa or higher by S&P or Moody’s or, unrated, but determined to be of comparable quality by the adviser). 

Principal Risks of Investing in the Fund

All mutual funds carry a certain amount of risk.  An investment in the Fund is not a deposit of any bank and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency.  The Fund is not a complete investment program.  As with any mutual fund investment, the Fund’s returns will vary and you could lose money.  The following are the principal risks of investing in the Fund:

         Market Risk.  Overall stock market risks may affect the value of the Fund.  Factors such as domestic economic growth and market conditions, interest rate levels, and political events affect the securities markets and could cause the Fund’s share price to fall.

         Company Risk.  The value of the Fund may decrease in response to the activities and financial prospects of an individual company in the Fund’s portfolio.  The value of an individual company can be more volatile than the market as a whole.

         Growth Style Investing Risk.  If the adviser’s perceptions of a company’s growth potential are wrong, the securities purchased may not perform as expected, reducing the Fund’s return.

         Management Risk.  If the adviser’s assessment of the prospects for individual securities is incorrect, it could result in significant losses in the Fund’s investment in those securities, which can also result in possible losses overall for the Fund. 

         Mid Cap Risk. Stocks of mid-cap companies are riskier than stocks of larger companies. Many of these companies are young and have a limited track record. Their securities may trade less frequently and in more limited volume than those of more mature companies.  Mid-cap companies also may lack the managerial, financial or other resources necessary to implement their business plans or succeed in the face of competition.

         Small Cap Risk. To the extent the Fund invests in small-cap companies, the Fund will be subject to additional risks. These include:

         The earnings and prospects of smaller companies are more volatile than larger companies.

         Smaller companies may experience higher failure rates than do larger companies.

         The trading volume of securities of smaller companies is normally less than that of larger companies and, therefore, may disproportionately affect their market price, tending to make them fall more in response to selling pressure than is the case with larger companies.

         Smaller companies may have limited markets, product lines or financial resources and may lack management experience.

         Fixed Income Risk.  The issuer of a bond may not be able to make interest and principal payments when due.  Generally, the lower the credit rating of a security, the greater the risk that the issuer will default on its obligation.  If a rating agency gives a debt security a lower rating, the value of the debt security will decline because investors will demand a higher rate of return.  The value of fixed income securities generally decreases when interest rates rise and increases when interest rates fall. 

         Foreign and Emerging Markets Securities Risk.  Common stocks of companies in foreign countries may experience more rapid and extreme changes in value than securities of U.S. companies because the securities markets of many foreign countries are relatively smaller than those in the U.S.  Foreign issuers are not subject to the same degree of regulation as U.S. issuers.  Also, nationalization, expropriation or confiscatory taxation or political changes could adversely affect the Fund’s investments in a foreign country.  There is a risk that fluctuations in the exchange rates between the U.S. dollar and foreign currencies may negatively affect the value of the Fund’s investments in foreign securities.  To the extent that the Fund invests in securities of foreign companies located in emerging markets, it will be subject to additional risks that can increase the potential for losses in the Fund. 

         Sector Risk.  If the Fund’s portfolio is overweighted in a certain industry sector, any negative development affecting that sector will have a greater impact on the Fund than a fund that is not overweighted in that sector. 

         ETF Risk and Other Investment Company.  When the Fund invests in ETFs and other investment companies, it will indirectly bear its proportionate share of any fees and expenses payable directly by the underlying ETF or other investment company.  Therefore, the Fund will incur higher expenses. In addition, ETFs are also subject to the following risks: (i) the market price of an ETF’s shares may trade above or below its net asset value; (ii) an active trading market for an ETF’s shares may not develop or be maintained; (iii) trading of an ETF’s shares may be halted if the listing exchange’s officials deem such action appropriate, the shares are de-listed from the exchange, or the activation of market-wide “circuit breakers” (which are tied to large decreases in stock prices) halts stock trading generally; or (iv) the ETF may fail to achieve close correlation with the index that it  tracks due to a variety of factors, such as rounding of prices and changes to the index and/or  regulatory policies, resulting in the deviating of the ETF’s returns from that of the index.

         Portfolio Turnover Risk.  The Fund may experience high portfolio turnover.  Increased portfolio turnover may cause the Fund to incur higher brokerage costs, which may adversely affect the Fund’s performance, and may produce taxable distributions, significant portions of which are short-term capital gains that are taxable as ordinary income.

Is the Fund Right for You?

The Fund may be suitable for:

         Long-term investors seeking a mutual fund with a growth investment strategy

         Investors willing to accept price fluctuations in their investment

         Investors who can tolerate the risks associated with common stocks

Performance

The following bar chart and table provide some indication of the risks of investing in the Fund’s Class A shares by showing changes in the Fund’s Class A shares’ performance from year to year and by showing how the Fund’s Class A shares’ average annual returns for 1-year, 5-year and 10-year periods compare with those of a broad measure of market performance. To obtain updated performance information, please call (888) 727-3301. The Fund’s past performance, before and after taxes, is not necessarily an indication of its future performance.

Class A Annual Total Returns as of December 31^st

The Fund’s Class A Share year-to-date performance as of September 30, 2012 was 11.72%.

During the period shown in the chart for Class A, the highest return for a quarter was 17.67% (quarter ended September 30, 2009); and the lowest return was -26.90% (quarter ended December 31, 2008).  Class A shares are sold subject to a sales load, which is not reflected in the bar chart.  If the sales load was included, the returns would be less than those shown.

Average Annual Total Returns

(For the periods ended December 31, 2011)

After-tax returns are calculated using the historical highest individual federal marginal income tax rates and do not reflect the impact of state and local taxes.  Actual after-tax returns depend on an investor’s tax situation and may differ from those shown, and after-tax returns shown are not relevant to investors who hold their Fund shares through tax-deferred arrangements, such as 401(k) plans or individual retirement accounts.  After-tax returns are shown for only the Fund’s Class A, and after-tax returns for other classes will vary. 

Average Annual Total Returns Sparrow Growth Fund	1 Year	5 Years	10 Years
- Comparison Index - S&P 500 Index (reflects no deduction for fees, expenses or taxes)	2.09%	(0.25%)	2.92%
Class A	4.23%	(3.66%)	1.19%
Class A Return After Taxes on Distributions	4.23%	(3.70%)	1.18%
Class A Return After Taxes on Distributions and Sale of Fund Shares	2.75%	(3.10%)	1.01%