In chapter 23: page 4 has the table of all the components of change in EV page 5 says 'Items from 'Development costs' onwards are not covered as students are not required to have a knowledge of these' 'Investment return variances' is after 'Development costs' in the table page 7 (in section on expected return on free surplus) says 'Any difference between the actual investment return on the assets and this expected return should be included in the 'investment return variances' discussed below' ... but it doesn't seem to be discussed below and I thought we didn't need to know about it... help?
For the exam you need to know all the elements in the table on page 4, but you only need to know the further details of the elements down to the new business contribution. Page 7 refers to the 'investment return variances' discussed below'. These are very briefly mentioned again in the final Core Reading paragraph of page 10 which says: "Note that experience variances due to investment returns and currency movements are shown separately in the presentation of the analysis of the change in the embedded value, and do not form part of the operating return of the company." So as these items are not part of the operating return of the company, we do not need to know any extra details about them. I hope that helps clear up the confusion in what the Core Reading is saying is examinable. Best wishes Mark
