The fund industry is officially swinging into action, as Paul Haaga, chairman of the Investment Company Institute -- the lobbying arm of the fund industry -- is scheduled to testify before Congress on Tuesday about what the industry can do to restore investors' faith.

Haaga will speak to the House Financial Services Capital Markets subcommittee, and his remarks will essentially echo the statement he gave

last week, outlining ICI's proposal for reform.

The ICI backs the various regulatory methods aimed at curbing market-timing that the

Securities and Exchange Commission

is considering.

The three primary changes the SEC is contemplating are 1.) requiring funds to have more formalized market-timing policies and procedures, and disclosing such information; 2.) emphasizing the obligation funds have to "fair value" their securities -- a method of calculating a fund's value taking time zone differences into account; and 3.) reinforcing board oversight of market-time policies and procedures.

The two other additional suggestions for reform ICI is promoting are greater oversight (albeit an unspecific directive) of trades made by fund managers themselves and a mandatory 2% redemption fee on fund shares redeemed within five days of purchase.

Just in case investors don't find such recommendations reassuring enough, the ICI also supports a few other initiatives, most of which the SEC already has adopted -- such as a proposal to require funds to have compliance programs, changes to the fund advertising rules, and measures to ensure that investors benefit from sales charge discounts to which they are entitled.