Which item is explicitly excluded from the MER?

• A. Management fee
• B. Administrative expenses
• C. Trading costs
• D. Sales charges

Answer: (C)

MER represents the ongoing costs to run a fund, such as the management fee and administrative/operating expenses. Trading costs are excluded because they are transactional, arising from buying and selling securities inside the fund, and they can vary with turnover. They’re not part of the fund’s ongoing, fixed expense ratio. While sales charges are paid by the investor at purchase or redemption and aren’t part of the fund’s annual operating costs, the key point here is that trading costs are the ones explicitly not included in the MER.