Question

Which of the following statements would you not expect to find in a collective fund plan document?

a. Purchase information for the collective fund's investments including cost.
b. Fees and expenses charged to the fund and to participating accounts.
c. Fund asset valuation methodology and frequency.
d. Allocation of income, profits, and losses.

Answer 1

The statement not expected in a collective fund plan document is 'Purchase information for the collective fund's investments including cost.' The correct answer is (A).

Step-by-step explanation:

The statement that you would not expect to find in a collective fund plan document is 'Purchase information for the collective fund's investments including cost.'

This is because the details about the specific purchase information, including the costs of individual investments within the collective fund, are typically not disclosed in the plan document.

The document generally includes information on fees and expenses charged to the fund and participating accounts, the methodology and frequency of fund asset valuation, and the allocation of income, profits, and losses.

These details are essential for participants to understand the operations and potential returns of their investments.

Mutual funds, which are often structured as collective funds, offer several benefits such as professional management, the ease of converting assets to cash due to liquidity, and the practice of diversification to spread risk.

These funds might be actively managed or can be index funds designed to imitate the behavior of the stock market, thus providing investors with different options to match their investment strategies and risk tolerance.