Just out of curiosity, what would happen if my returns didn't cover the MER?
The MER is never explicitly charged to you. Instead, it just continually makes the value of your mutual fund lower than what it would be if there were no expenses. In fact, if the mutual fund company didn't report the MER to you, you wouldn't even be aware that management is getting paid out of the fund; they don't send you a bill for it, or add a "MER charge" to your statement at the end of each year. The fund's value is just silently reduced, which is precisely why there are usually MER disclosure requirements for mutual funds.
It operates the same whether the underlying assets of the fund have a positive of negative return. If you own a fund with an expense ratio of 1%, and the underlying assets return 10% over the year, you would personally see a 9% return. If the underlying assets return -10% over the year, you would personally see a -11% return.
