The stock market has gotten off to a rough start so far in 2008 with the S&P 500 dropping -11.91% and the Russell 3000 index declining -11.05% respectively during the first half. The first half will likely be remembered for the troubles of several financial firms, fears of a recession, and more problems in the housing related markets.

The Sparrow Small Cap Portfolio was our best performing product up +3.14% vs. a decline of -9.37% for the Russell 2000 Index. The portfolio was helped early in the year by having an above average cash balance along with having a diverse mix of stocks with superior fundamentals.

Our next best product for the first half was the Sparrow World Total Return Portfolio, which was down -5.20% vs. a decline of -11.91% for the S&P 500 Index. This portfolio is comprised of a mixture of small and large cap stocks including foreign equities, and is designed to hold up better during times of market volatility and to provide a consistent total return over time.

The Sparrow International Portfolio was our next best performing product, falling -7.03% year-t0-date, followed by the Large Cap Portfolio, down -9.01% , the Sparrow Tax Advantaged Rising Divident Portfolio, down -9.79%, and the Special Situations and Earnings Momentum Portfolio down -9.92%. All of these portfolios were helped by holding companies which do business internationally.

We appreciate your business, and promise we will continue to work hard to serve your investment needs in 2008 and beyond. All of the stocks we hold are being reviewed extensively to make sure the fundamentals are sound and that they are posed to rebound over the rest of the year. Call or talk to your financial consultant to discuss which of our different products might best fit your investment needs in today's market.

Sincerely,

Gerry Sparrow, MBA
President and Founder

This is for investment professional use only and is not for general distribution or advertising purposes. Depending upon factors such as account inception date, taxable considerations, client restrictions and cash levels, your client(s) may or may not have been affected by this activity. In addition, this summary may or may not encompass all recent trading activity within your client(s) portfolio. This should not be considered a recommendation to purchase or sell securities. Please feel free to contact us with any questions or concerns. Rates of Return consider: (a) All money flows into or out of the Fund (b) All realized capital gains and losses (c) All unrealized capital gains and losses (d) Performance results are not guaranteed (e) Past performance cannot guarantee comparable future results (f) For professional use only. The rates of return presented above depicts the dollar weighted rate of return of all actual fully discretionary equity funds under management. Deviations within the individual accounts do occur, however, these averages are generally indicative of our equity investment results generated over time. There is no statistical correlation between past and future performance. As such there is no assurance that results approximating these returns will continue in the future. Gross means before fees & commissions. The S&P 500 is an unmanaged index of 500 stocks selected by Standard & Poors.