What is the MER and what costs does it cover?

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Multiple Choice

What is the MER and what costs does it cover?

The key idea is that the MER represents the fund’s ongoing annual cost, shown as a percent of assets. It covers the fees paid to run the fund: the manager’s fee for overseeing the portfolio and other operating expenses such as administration, record-keeping, and custody. It does not include costs from buying or selling securities (trading costs) or any sales charges paid by investors to purchase the fund. So the description that MER = management fee plus operating costs, and excludes trading costs and sales charges, is the correct understanding. Trading costs and sales charges are separate items from the MER.

The key idea is that the MER represents the fund’s ongoing annual cost, shown as a percent of assets. It covers the fees paid to run the fund: the manager’s fee for overseeing the portfolio and other operating expenses such as administration, record-keeping, and custody. It does not include costs from buying or selling securities (trading costs) or any sales charges paid by investors to purchase the fund. So the description that MER = management fee plus operating costs, and excludes trading costs and sales charges, is the correct understanding. Trading costs and sales charges are separate items from the MER.

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