M&E fees (also referred to as mortality and expense charges) are part of the expense structure of annuities.  In general, these charges cover the insurance guarantees provided by the insurance company.

A glossary definition of M&E fees is here: http://www.annuitydigest.com/me-fee/definition

The Annuity Digest Buying Guide also discusses annuity expenses.  The chapter on expenses can be found here:

http://www.annuitydigest.com/best-annuity/annuity-fees-and-expenses

M&E fees are incurred directly by the annuity owner, so ask your financial advisor or insurance company to explain these charges.