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Last week, my on-line brokerage (Schwab Canada) dropped their minimum commission from 
$33 to $25 (effective July 31).  So - that affects the computed mer taking into account
trading commissions.  So I've redone the numbers.

At current prices (XSP=$18CDA, IVV=$118U.S.), my commission is about $25/trade (was $35/
trade), representing a cost of 0.8-0.5%/trade.  (I tend to make one investment/contribution
a year, of about $3000-$5000 (Canadian).)  Over a ten-year period, ten trades X $25 = $250 
cost, spread out over an average portfolio of $20,000 (10X$4,000/2), amounts to a total cost 
of 1.25%, or .125%/year.  This .125% needs to be added to the mer, bumping the cost of XSP 
up to.425%, and the cost if IVV up to .215%.  [Is my arithmetic correct?] Even with these 
bumped-up costs, XSP and IVV are still the best choices available to me (see table following).  
And if the commissions go down, or I am able to purchase more than $4000/yr., this bumped-up 
cost gets smaller (in percentage terms).  And as my investment itself grows (excluding the 
annual contributions), this also contributes to the $25 annual trade-commission shrinking 
in percentage terms.

The following data summarize the choices of index funds/ETF's with a mer of .5%
or less, available to canucks.  They are grouped into Canadian-content and universal
funds/ETF's, sorted by mer's (lowest/best to highest), within each group.
S&P500 FUNDS/ETF's                      TYPE    MER     STARTED
Ranked (within group) by MER (lowest/best to highest)
Group 1: Canadian-content investments
Imperial Life Pool US Index-Plus 1      Fund    0.18    1997    (only available 
                                                              to group clients)
iUnits S&P 500 RSP E.T.F. (XSP-T)       ETF     0.30    2001
iUnits S&P 500 RSP E.T.F. (incl. comm)  ETF     0.425   2001
TD U.S. RSP Index - e                   Fund    0.48    1999
Altamira Precision U.S. RSP Index       Fund    0.50    1998
Group 2: 'Universal' investments
iShares S&P 500 Index Fund (IVV)        ETF     0.09    2000
Quebec Professionals American Index     Fund    0.10    2000    (only available 
                                            to specified professionals in Quebec)
Spiders (SPDRs) (SPY)                   ETF     0.12    1993
iShares S&P 500 Index Fund (incl. comm.)ETF     0.215   2000
Royal Premium U.S. Index                Fund    0.30    1998
TD U.S. Index (US$) - e                 Fund    0.31    1999
TD U.S. Index - e                       Fund    0.31    1999 (Amex ETF's - Exchange 
            Traded Funds (ETFs) on Broad-Based Indexes)

One further observation about the preceding table.  The funds/ETF's are split into two 
groups, one being deemed to be Canadian-content, i.e., your dollars are invested in 
Canadian companies/securities/banks, the second considered nonCanadian (or, 'universal'), 
i.e., any investment made in companies outside Canada.  The question has to be asked, then, 
how can a fund/ETF that tracks the S&P500 be deemed to be Canadian content.  I'm not sure 
of the technicalities/legalities, but this is how Barclay's explains their iUnits S&P500R 
investing technique (

   "The i500R fund seeks to provide long term capital growth by matching to the extent 
    possible the return of the S&P 500 Index, while remaining fully RSP-eligible [i.e., 
    qualifies as Canadian content]. To achieve this goal, the i500R Fund primarily invests 
    in exchange-traded futures contracts based on the S&P 500 Index and in high-quality 
    short-term money market instruments."
   "The i500R Fund will offer investors foreign currency exposure. This means that i500R 
    unit values will reflect changes in the value of the Canadian dollar vis-a-vis the US 
    dollar.  In this way the fund will replicate to the extent possible an investment in 
    a US-dollar denominated asset.The i500R fund will accomplish this goal by investing in 
    currency futures and forwards."

This means basically two things.  
-iUnits qualify as Canadian content, and thus are not subject to the 30% nonCanadian 
restriction.  If one wanted to, one could invest 100% of one's savings in iUnits, or 
any of the funds/ETF's in the first group.  
-The second key point is that iUnits will reflect any fluctuation in the exchange rate 
between the Canadian and U.S. dollar.  For example, if on any given day the S&P500 were 
to remain unchanged, but the Canadian dollar was to fall from 66¢U.S. to 65¢U.S. (a decline 
of approx. 1.5%) in that same day, the value of iUnits (which are traded in Canadian 
dollars on the TSE) would increase by the same percentage (1.5%), just as it would if 
you held a U.S. stock that remained unchanged during a day when the Canadian dollar's value 
And vice versa.

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