Management Expense Rations (MERs)

Mutual fund fees and expenses are commonly known as Management Expense Ratios. †The fees are paid from the mutual fund assets to the mutual funds money manager or investment advisor for the investment portfolio manager services they provide.

These mutual fund fees and expenses include the cost of trading securities, advisory and research fees, marketing and distribution fees and expenses.† These fees are passed on the mutual fund unit holders in a variety of ways.†

Management fees on mutual fund in the Canadian marketplace and offered to Canadians are considerable higher than our United State neighbours.† Management fees in Canada on mutual funds typically range from 1% to 3% per year, however can be lower for index type investments and money market funds, but can also be higher on specific sector type funds and specially funds, including the costly international equity funds.†

Investors need to be cognisant of the MERs associated with mutual fund investing.† Although buried in the net asset value of the fund, the fee is a real cost to investors.† Investors should not solely base their investment decisions on management fees.†††

Mutual fund values are not guaranteed and individuals can lose money on mutual fund investments.† Investors should read the mutual fund prospectus prior to making an investment decisions.† Mutual fund purchases should be made taking into consideration an individualís investment experience, investment objectives, time horizon and risk tolerance level.

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