THE SPARROW FUNDS
MULTIPLE CLASS PLAN PURSUANT TO RULE 18f-3
ADOPTED AUGUST 30, 2000
This Multiple Class Plan (the "Plan") is adopted in accordance with
Rule 18f-3 (the "Rule") under the Investment Company Act of 1940, as amended
(the "Act") by The Sparrow Funds (the "Trust") on behalf of its current series,
The Sparrow Growth Fund, and any series that may be established in the future
(collectively the "Funds" and individually a "Fund"). A majority of the
Trustees, including a majority of the Trustees who are not interested persons of
the Trust (as defined in the Act), having determined that the Plan is in the
best interests of each class of each Fund individually and of the Trust as a
whole, have approved the Plan.
The provisions of the Plan are:
1. General Description Of Classes. Each class of shares of a Fund shall
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represent interests in the same portfolio of investments of that Fund and
shall be identical in all respects, except that each class shall differ
with respect to: (i) the Rule 12b-1 Plan adopted with respect to the class;
(ii) distribution and related services and expenses as provided for in the
applicable Plan; (iii) such differences relating to purchase minimums,
eligible investors and exchange privileges as may be set forth in the
prospectus(es) and statement(s) of additional information of the Series, as
the same may be amended or supplemented from time to time; and (iv) the
designation of each class of Shares. There currently are two classes
designated: Class A and Class C.
a. Class A Shares are offered and sold at net asset
value plus a maximum sales load of 5.75%. Class A
Shares are subject to a maximum 0.50% annual
distribution fee.
b. Class C Shares are offered at net asset value,
without initial sales charge, subject to a maximum
1.00% annual distribution fee (of which .75% is a
distribution (12b-1) fee and .25% is a service fee)
and a CDSC, based on the lower of the shares' cost
and current net asset value, of 1% if redeemed within
one year of the purchase date.
2. Expense Allocations To Each Class.
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a. In addition to the distribution and service fees
described above, certain expenses may be attributable
to a particular class of shares of a Fund ("Class
Expenses"). Class Expenses are charged directly to
net assets of the class to which the expense is
attributed and are borne on a pro rata basis by the
outstanding shares of that class. Class Expenses may
include;
(i) distribution (12b-1) fees and service fees;
(ii) expenses incurred in connection with a meeting of
shareholders;
(iii)litigation expenses;
(iv) printing and postage expenses of shareholders reports,
prospectuses and proxies to current shareholders of a
specific class;
(v) expenses of administrative personnel and services
required to support the shareholders of a specific
class;
(vi) transfer agent fees and expenses; and
(vii)such other expenses incurred by or attributable to a
specific class.
b. All other expenses of a Fund are allocated to each
class on the basis of the net asset value of that
class in relation to the net asset value of the Fund.
Notwithstanding the foregoing, the distributor or
adviser of a Fund may waive or reimburse the expenses
of a specific class or classes to the extent
permitted under the Rule.
3. Class Designation. Subject to the approval by the Trustees of the Trust, a
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Fund may alter the nomenclature for the designations of one or more of its
classes of shares.
4. Additional Information. This plan is qualified by and subject to the terms
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of the then current Prospectus for the applicable class of shares;
provided, however, that none of the terms set forth in any such Prospectus
shall be inconsistent with the terms of this Plan. The Prospectus for each
class contains additional information about the class and the Fund's
multiple class structure.
5. Effective Date. This Plan is effective on the day before the registration
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of Class C shares of the Fund is effective. This Plan may be terminated or
amended at any time with respect to the Trust or any Fund or class thereof
by a majority of the Trustees, including a majority of the Trustees who are
not interested persons of the Trust (as defined in the Act).
