Load funds are beginning to allow shareholders to purchase additional shares online.

MFS Investment Management of Boston began offering shares online Aug. 25, Phoenix Investment Partners of Hartford, Conn. plans to offer online purchases by mid-October and Alliance Capital Management of New York has been offering investors shares via the Internet since January. The firms arrange for the payments by obtaining bank account information from investors and electronically drawing the funds directly from those accounts.

Also last week, one no-load firm announced it would go a step further. Beginning Oct. 1, Invesco Funds Group of Denver, Colo. plans not only to allow investors to purchase additional shares online but also to open accounts online. Jon Pauley, vice president of electronic commerce for Invesco said he believed Invesco was the first mutual fund company to offer such a service.

Increasing online activity seems to be eroding investor qualms about security. However, it raises a new question for companies that charge a sales load. Will they begin to allow investors to do business directly with them and dipense with brokers and loads? So far, the answer seems to be no. The Internet is not changing the sales load business model since companies are still charging loads for purchases made online.

More fund companies, both load and no-load, are likely to offer on-line purchases because of the convenience of the Internet, said Jim Folwell, a consultant with Cerulli Associates, a mutual fund research and consulting firm in Boston.

However, even though the Internet gives mutual fund companies that charge loads the ability to connect directly with investors, Folwell doubts they will use the Internet as a competing channel to brokers. Fund companies that rely on brokers to sell their funds will not want to jeopardize those relationships, Folwell said.

This is precisely why Alliance, a load company, is charging investors a load even if they purchase additional shares online, said Duff Ferguson, an Alliance spokesperson. However, Alliance does not charge investors such a fee if they are merely transferring assets between funds, he said.

MFS, another load company, is following Alliance's cue and will charge investors the regular commission whether they purchase additional funds through a broker or on their own initiative on the Internet, said David Oliveri, a spokesperson for MFS. But unlike Alliance, MFS will also charge the standard commission even if an investor is exchanging shares, Oliveri said.

"It is not a question of shareholders doing this [making a purchase] without the knowledge of the broker," Oliveri said. "Our investors work with brokers, and . . . must pay a commission to their broker. We do not want to offend our distribution force. That is the way we have done business since 1924 and it is the way we will continue to do business."

MFS distributes its funds through four channels - large broker/dealers and wirehouses, banks, insurance agents and financial advisors. The latter group includes regional broker/dealers, independent financial advisors and registered investment advisors.

Phoenix, another load company, also plans to charge investors a load whether they are purchasing or exchanging shares, said Thomas Bruno, assistant vice president of mutual fund customer service for Phoenix.

"We prefer customers to come through an advisor because we have eight distinct money management groups that we oversee and it is difficult for investors to distinguish among them," Bruno said.

Phoenix distributes its funds through financial planners, regional wirehouses and banks.

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