Assume an ETF has a stated annual expense ratio of 0.75%. On an investment of $50,000, the expected expense to be paid over the course of the year is $375. If the ETF returned precisely 0% for the year, the investor would slowly see his $50,000 move to a value of $49,625 over the course of the year.
How exactly is this $50,000 reduced to $49,625? Does my # shares decrease, is the price decreased by the fee amount (which means the tracking to the index deviates over time ?), or something else?