Securities and Exchange Commission Chairman Arthur Levitt Jr. jokingly thanked "the Academy" at the state's other big event last week-the Investment Company Institute's 34th mutual fund and investment management conference.

But he swiftly moved to the matter at hand: unveiling his proposed changes for mutual fund governance and urging the industry to get the ball rolling.

The SEC's proposals are aimed at increasing the role of independent directors, or investor advocates, on the board of mutual funds.

One of the proposals calls for a majority of directors to be drawn from outside the investment company. Currently the SEC requires that 40% of board directors at investment companies come from outside.

The Investment Company Institute has responded to the SEC's proposals with a six-member committee that will examine the "best practices" for mutual fund governance.

Mutual fund governance was clearly the big issue at the conference, and Paul F. Roye, who heads the SEC's division of investment management, said it is the most important item on his agenda.

However, the SEC is looking at other ways to make investing in mutual funds more user friendly, Mr. Roye told a packed room on the second day of the conference.

The SEC is exploring the best way to show the taxes that investors can expect to pay on the basis of a fund's performance.

"Tax can be the highest cost in holding a mutual fund," said Heidi Stam, a principal with Vanguard Group.

Asked about the commission's time frame on the tax issue, Mr. Roye quipped: "As with all these initiatives, the chairman wants them done yesterday."

Mr. Roye was somewhat taken aback when a member of the audience asked whether the SEC plans to have staff working during the weekend of the calendar change to assist with possible glitches in fund pricing or other year-2000 problems.

"The SEC is more than a 9-to-5 agency," he retorted.

At the next session, R. Clark Hooper, executive vice president of NASD Regulation, sought to clarify a couple of NASD initiatives affecting mutual funds.

Ms. Hooper outlined the National Association of Securities Dealers' fee disclosure requirements for fund marketing literature.

Some fund companies are so eager to show investors the fees they don't charge that they fail to display the fees that are levied, Ms. Hooper said.

"If you're going to talk about fees, please talk about all of them," she told the group.

However, for companies that are afraid they must revamp their advertising, the NASD is prepared to compromise, she said.

"We're not asking you to dump out everything on the book, but we are asking you to look at the rules and be in compliance with them," Ms. Hooper said.

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