Management Expense Ratios (MER)

Each mutual fund pays an annual fee to a management company for managing the fund and its investments. Mutual funds also pay their own operating expenses. These include legal and accounting fees, custodial fees, bookkeeping costs and other expenses. Some mutual funds pay a fixed administration fee to cover their operating expenses. The management expense ratio (MER) is the total of the management fee and operating expenses. It’s shown as a percentage of the fund’s assets. For example, if a $100 million fund has $2 million in expenses for the year, its MER is 2%. You don’t pay management fees or operating expenses directly. These expenses affect you because they reduce the fund’s returns—and what you get on your investment.