The percentage of fund assets paid for operating expenses and management fees, including 12b-1 fees, administrative fees, and all other asset-based costs incurred by the fund, except brokerage costs. Fund expenses are reflected in the fund's NAV. Sales charges are not included in the expense ratio.
An expense ratio is accrued on a daily basis by taking the fee rates and multiplying 1/365 of the rates against the average daily net assets of the fund. For example, if the fund expense ratio was determined to be 1.00%, the daily fee would be 1.00% of average daily net assets multiplied by 1/365. This causes the expense ratio to be accrued evenly, with little daily effect to the fund's NAV. Most companies associated with the fund, such as the investment advisor, are actually paid on a monthly basis. This expense ratio is reported in annual or semi-annual reports.