Fund mergers happen often enough, but that doesn't mean they should be taken lightly, stresses a report released by the Independent Directors Council Wednesday.

Entitled Board Consideration of Fund Mergers, the report was prepared by a task force of independent fund directors. It offers board directors guidelines for weighing up the pros and cons of proposed mergers, outlining specific items that boards should take into account when deciding whether to merge funds.

Some of the factors identified: whether the funds to be merged have similar investment objectives, policies, restrictions, and risks; direct and indirect costs the merger may incur; the consequences for distribution; and impact on the acquiring fund's fees and expenses.

Federal and many states' laws require directors to protect the interests of shareholders when agreeing to mergers, and the report offers "practical guidance" as to how directors can fulfill this responsibility, said co-author Susan Kerley, an independent director for the Legg Mason/Citi Funds and the Mainstay Funds.

"We hope that this report will help reassure them that they're taking the necessary concerns into account," she said. 

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