Which fees should be included in the disclosure of expense ratios for UITFs?

The correct answer focuses on the essential components of the expense ratios for Unit Investment Trust Funds (UITFs), which are critical for potential investors to understand the total costs associated with the fund. Trust fees, audit fees, and custody fees are significant because they collectively represent the operational costs incurred by the UITF in managing the assets, maintaining records and statements, and providing oversight and safeguarding of the investments.

Trust fees are typically charged for the administration of the trust and ensure proper management of the assets. Audit fees pertain to the annual review by an external auditor, which is crucial for maintaining transparency and compliance with financial regulations. Custody fees are for the safekeeping of the trust's assets, ensuring security and proper transaction processing.

In contrast, while marketing fees, transaction fees, sales fees, and redemption fees play roles in the operations of funds, they are not usually included in the standard expense ratio because they can vary greatly based on the fund's marketing strategy or the investor's own transactions. This can lead to a misunderstanding of the ongoing costs associated with maintaining an investment in the UITF if those fees were included in the expense ratio. Focusing on trust, audit, and custody fees provides a clearer picture of the fundamental costs of operating a UITF