WASHINGTON -- Seeking to stem customer confusion, the mutual fund industry is promoting uniform terminology for sales charges.

The effort, which comes amid a proliferation of new types of sales charges, was unveiled here last week at the annual convention of the Investment Company Institute. Many executives at the .conference said they were grapping with what types of fees to charge and what to call them.

Under the institute's terminology, "A shares" will refer to classes of funds with traditional, upfront loads. Classes with back-end loads - sales fees that are paid at redemption - will be called B shares. Shares with level loads, or fees that are paid annually, will be called C shares. And D shares will cover variations on level loads.

Effort to Educate

"The industry was concerned that without a uniform standard, the growing number of classes and the diversity of class designations could lead to confusion and hamper communications among shareholders, mutual funds, brokers, financial planners, and others," said Matthew P. Fink, president of the Washington-based trade group.

The effort comes as the fund industry is broadening its efforts to educate customers and thereby head off regulatory and legal problems. With mutual fund ownership becoming widespread among individuals, many experts worry that the investor base is less knowledgeable than in the past.

The growing number of mutual fund shares has clearly been a source of confusiond Focus groups have found that customers often do not understand the word "load," much less share designations.

The guidelines also include definitions for two classes of shares that are not generally available to individual investors.

Class Y shares will be used to identify shares for institutional investors, and shares purchased by mutual fund company employees will be called Z shares.

And still more class names could be just around the corner.

"If the industry adds new classes, the guidelines will be revised accordingly," Mr. Fink said.

For now, the industry seems to have enough on its plate with the existing variety of shares. Indeed, a number of companies have yet to embrace all the new types of shares.

Dreyfus Corp., for example, is contemplating extending its menu to include level-load pricing. The New York-based fund company currently offers just front-end and back-end loads

"We're trying to read the market and find out what people want," said Elie M. Genadry, president of the institutional services division at Dreyfus Service Corp.

Executives said bank customers are now gravitating toward level loads.

When Federated Securities Corp. introduced level loads last June, most of the interest was from the broker-dealer community, said James F. Getz, president of the company's brokerdealer division. "This year we seeing some interest from banks," he said.

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