Question: There are two kinds of nantual funds one can buy - load shares and no-load shares. The source of load fund fees is obvious, but where are no-load commission fees derived from?

Answer: There is no commission fee associated with the purchase of a no-load fund. The no-loads charge no sales fees and pay no commissions: accordingly, they have no sales force and are not sold by brokers (who are, after all, in business to make money).

So if you want to buy shares in a no-load fund, you must do it on your own. You can identify the no-loads and check out past performances in Weisenberger's "Investment Companies," an annual compendium of facts about virtually every mutual fund around. This reference book is available in many libraries.

Some of the no-loads offer their prospectuses in newspaper and magazine ads. Or you can send your name and address to the No-Load Mutual Fund Association at Valley Forge, Pa. 19481 and ask for their "Investor Information" booklet. This is the trade association of no-load fund sponsors; the directory is free and contains information about some 170 no-load funds.

Incidentally, "no-load" refers only to the sales fee. Every fund I know of - load and no-load - charges an annual management fee, usually in the range of one-quarter to one-half percent of total fund assets.

If you wants to sell your shares, you go back to the fund sponsor. As part of the deal when you buy in, the sponsor stands ready to redeem shares tendered, again at the asset value on the redemption date. (A few funds charge a small fee for redemption.)

A closed-end fund on the other hand, issues a specific and limited number of shares. After the initial issue, the only way an investor can buy shares is from a present owner, normally through a stock exchange transcation.

In other words, you buy shares in a closed-end fund just as you would buy shares in any other corporation - by placing an order with your broker. You may pay either more or less than the actual asset value of each share, depending on market conditions. (Most closed-end funds are selling today at less than asset value.) And you pay the regular broker-age commission on the purchase.

A sale of shares in a closed-end fund works just the same. You place a sell order with your broker, and your shares may be sold at either a premium (more than asset value) or a discount (less than asset value).

One other important difference: with an open-end fund you may take distributions in cash or arrange to have the funds automatically reinvested in additional shares (often without any sales fee). Since a closed-end fund can't issue more shares, you must accept cash distributions.

The closed-end fund may be a good vehile for the sophisticated investor. Because the value of closed-end fund shares can fluctuate independently of changes in portfolio value, however, I think the average investor is better served by the open-end fund.

You pay net asset value (or net asset value plus a stated, fixed sales fee) when you buy. You get back net asset value when you sell, and you don't have to worry about whether your broker can find a buyer when you want to get out.

Like the load funds, no-loads are available to satisfy a wide range of investment appetites, from ultra-conservative to highly speculative. You should read each prospectus carefully - particularly the first couple of pages about investment goals and policies - to be sure that the fund you select conforms to your personal investment needs.

Q: What's the difference between a closed-end and an open-end mutual fund?

A: Let's talk first about how the two types are alike. Both the closed-end and the open-end funds maintain portfolios of stocks, bonds, or other investment media; and a share in either type of fund represents a fractional ownership of that portfolio.

Both funds are managed. That is, the company serving as investment adviser to the funds buys and sells securities in the portfolio based on its analysis of market conditions and the fund's stated objectives (growth, income etc).

Income in both cases is derived from interest and dividends from portfolio investments plus capital gains on portfolio transcations. This income is distributed periodically to the shareholders.

As far as the investor is concerned, the basic difference between the two types of mutual funds is in the way shares ar bought and sold.

An open-end fund is authorized to issue what is as a practical matter an unlimited number of shares (thus the term "open-ended"). You buy shares directly from the fund sponsors, and you pay precisely the net asset value on the date of purchase (plus a sales fee, in the case of a "load" fund).