No-Load Mutual Fund

Baker, John JBaker at STRADLEY.COM
Mon Apr 16 17:10:52 UTC 2001

        The term "no-load mutual fund" derives from the use of the term
"sales load" or "load," meaning a sales charge in connection with the
purchase of shares of a mutual fund.  The earliest use I found is in In the
Matter of Registration Statements of Income Estates of America, Inc.,
Securities and Exchange Commission Release No. 33-1480 (June 29, 1937),
where the SEC was describing an innovative pricing structure that it found
highly questionable:

        >>With respect to the underlying trust, T.I.S., the principal charge
is a 'load', which may be described as the fee charged by T.I.S. Management
Corporation for its services in creating the T.I.S. certificates, viz., in
purchasing the common stocks in the T.I.S. portfolio and in making interests
therein available in small denominations in the form of T.I.S.

        The earliest use I found of "no-load" was from 1958, although the
term has probably been around as long as there have been mutual funds sold
without a sales charge.  (I'm not sure exactly when that would be; the
modern mutual fund dates to the mid-1920s, but the earliest mutual funds had
sales loads.)  From In the Matter of Civil and Military Investors Mutual
Fund, Inc., Securities and Exchange Release No. IC-2723, 38 S.E.C. 451 (June
9, 1958):

        >>Thus, the record discloses that two funds . . . have no sales load
at all . . . . Registrant asserts that the 2 no-load funds make no effort to
reach persons able to make only small investments . . . .<<

John Baker

> -----Original Message-----
> From: Bapopik at AOL.COM [SMTP:Bapopik at AOL.COM]
> Sent: Monday, April 16, 2001 12:02 AM
> Subject:      Backlash, Frontlash, Sidelash, Smearlash....
>    OED also has 1964.
>    From the NEW YORK HERALD TRIBUNE, 15 July 1964, pg. 28, col. 2:
> _"No Load" Mutual Funds_
> _--An SEC Ad Yardstick_

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