The first number is the one visible on the website's description for each fund, e.g. the Canadian Fundamental Value Index Fund (TSX: CRQ) says the fund's "Management Fees" are 0.65%. (The other fundamental equity index funds - International, US and Japan have the same annual fee.)
The second number appears on page 19 in the Prospectus. CRQ in 2008 had a "Management Expense Ratio" (MER) of 0.70% in 2008 and 0.69% in 2007.
The difference between the Management Fee and the MER is not directly explained but it seems to be that the MER also includes other costs (i.e. MER = Management Fee + Other Expenses). Page 18 of the Prospectus says such expenses come directly out of the fund and they include: "... expenses related to the implementation and on-going operation of an independent review committee under NI 81-107, brokerage expenses and commissions, income taxes and withholding taxes, transaction costs incurred by the Custodian and extraordinary expenses."
Maybe there is a cap on fees to limit what comes out of the fund, which is what it actually costs a Claymore investor, but I could not find this stated anywhere in the Prospectus. It is the MER that counts to the investor and Claymore should post the MER front and center on the ETF's webpage. Better yet, they should do as iShares does (see the iShares Prospectus e.g. page 23 last paragraph) and simply cap the fees.
The danger of Claymore's approach is the confusion evident over at Morningstar, where the CRQ Management Fee has been relabelled the MER).
The same problem applies to the other Fundamental Equity Funds:
- Japan - 2008 MER 0.80% vs Management Fee 0.65%
- US (Hedged) - 2008 MER 0.82% vs Management Fee 0.65%
- International (TSX: CIE) - 2008 MER 0.56% ... but Claymore charges 0.65%? Huh? How can it be that the investor pays less than the Management Fee charged, which doesn't even include all expenses?
Update ... on page 36 of the Prospectus, Claymore says that when funds like CIE hold other Claymore ETFs within them, it is bound by securities regulations not charge management fees twice. If they excluded the fees charged within the Japan and Canada funds - about a quarter of the holdings - from the calculation of CIE's expenses, that would lower CIE's fees by about a quarter. Adding back that missing quarter (0.56%/0.75 = 0.74%) would bring CIE's MER up to around the same level as the other funds.