6
COSTS AND FEES
7
There are fees associated with managing the funds and with your transactions.
The MER, or Management and Operating Expenses Ratio, is the percentage of
your money that goes towards the annual expenses of the fund. These annual
expenses include fees (e.g., for investment managers, accounting and administra-
tion), and compensation to advisors. They generally also include the costs of the
guarantees in your contract (although, in some cases, the insurer may charge a
separate fee for these guarantees). As a rule, you will pay a higher MER for higher
guarantees or for more volatile funds.
Transaction fees, or loads, are the amounts that are deducted from your monies
when you make a transaction. There may be front-end loads (initial sales charges),
back-end loads (deferred sales charges) or no-load funds. An initial sales charge is
deducted from the amount you contribute to front-end load funds. That means less
of your money is invested in the fund. A deferred sales charge is deducted from the
amount you withdraw in back-end load funds (during the early years of your
contract). That means you get less of your money back.
As well, additional fees may be charged for riders (optional benefits).
