A mutual fund has a Management Expense Ratio (MER) of 2.00%, which includes a management fee of 1.50%. The fund also charges a fixed 0.10% for legal and audit fees, and 0.05% for custodian fees. What is the approximate 'Other Expenses' component of the MER for this fund?

Question: A mutual fund has a Management Expense Ratio (MER) of 2.00%, which includes a management fee of 1.50%. The fund also charges a fixed 0.10% for legal and audit fees, and 0.05% for custodian fees. What is the approximate 'Other Expenses' component of the MER for this fund?

Answer options:

• 0.25% ✅ 0.35%
• 0.40%
• 0.50%

Correct answer: 0.35%

Explanation: MER = Management Fee + Other Expenses. Therefore, Other Expenses = MER - Management Fee. In this case, 2.00% - 1.50% = 0.50%. The legal, audit, and custodian fees are components of these 'Other Expenses', but the direct calculation is MER minus management fee.