Assumptions Plan Assets Expected Contributions Note F – Other Postretirement Benefits  70 Con Edison Annual Report 2003 The Utilities have contributory comprehensive hospital, medical and prescription drug programs for all retirees, their depend- ents and surviving spouses. Con Edison has established a pension trust for the investment of assets to be used for the exclusive purpose of providing retirement benefits to participants and beneficiaries. The asset allocation for the pension plans at the end of 2003, 2002 and 2001, and the target allocation for 2004, by asset category, are as follows: The Companies also offer a defined contribution savings plan that covers substantially all employees and made contributions to the plan as follows:  Individual managers operate under written guidelines provided by Con Edison, which cover such areas as investment objec- tives, performance measurement, permissible investments, investment restrictions, trading and execution, and communi- cation and reporting requirements. Manager performance, total fund performance, and compliance with asset allocation guide- lines are monitored on an ongoing basis, and reviewed by the Named Fiduciaries and reported to the Committee on a quar- terly basis. A change in fund managers and/or rebalancing of the portfolio is undertaken as appropriate. The Named Fiduciaries approve such changes, which are also reported to the Committee.  The long-term investment objective for the pension trust is to maximize the total real return on trust assets while limiting risk, reflected in volatility of returns, to prudent levels. To that end, the investment strategy focuses on preserving and enhancing the value of assets in real terms over time through selection of investment managers within a framework that provides diversifi- cation between and among asset classes, investment styles, and managers. The target asset allocation is reviewed periodi- cally based on asset/liability studies and may be modified as appropriate. The target asset allocation for 2004 reflects the results of such a study conducted in 2003. Based on current estimates, the Companies are not required under funding regulations and laws to make any contributions to the pension plan during 2004. O&R and Con Edison’s unregulated subsidiaries expect to make discretionary contribu- tions of $22 million and $2 million, respectively, in 2004.  The expected return assumption reflects anticipated returns on the plan's current and future assets. The Companies use his- torical investment data as well as the plan's target asset class and investment management mix to determine the expected return on plan assets. This analysis incorporates such factors as real return, inflation, and expected investment manager per- formance for each broad asset class applicable to the plan. Historical plan performance and peer data are also reviewed to check for reasonability and appropriateness. Pursuant to resolutions adopted by Con Edison’s Board of Directors, the Management Development and Compensation Committee of the Board of Directors (the Committee) has gen- eral oversight responsibility for Con Edison’s pension and other employee benefit plans. The plans’ Named Fiduciaries have been granted the authority to control and manage the opera- tion and administration of the plans, including overall responsi- bility for the investment of assets in the trust and the power to appoint and terminate investment managers. The Named Fiduciaries consist of Con Edison’s chief executive, chief finan- cial and chief accounting officers and others the Board of Directors may appoint in addition to or in place of the designat- ed Named Fiduciaries.  The actuarial assumptions were as follows: 2003 2002 2001 Weighted-average assumptions  used to determine benefit  obligations at December 31: Discount rate 6.30% 6.75% 7.50% Rate of compensation increase Con Edison of New York 4.00% 4.30% 4.30% O&R 4.00% 4.15% 4.15% Weighted-average assumptions  used to determine net periodic benefit  cost for the years ended December 31: Discount rate 6.75% 7.50% 7.75% Expected return on plan assets 8.80% 9.20% 9.20% Rate of compensation increase Con Edison of New York 4.30% 4.30% 4.55% O&R 4.15% 4.15% 4.40% Target Allocation Plan Assets at December 31, Asset Category 2004 2003 2002 2001 Equity Securities 65% 64% 54% 59% Debt Securities 30% 32% 42% 37% Real Estate 5% 4% 4% 4% Total 100% 100% 100% 100% For the Years Ended December 31, (Millions of Dollars) 2003 2002 2001 Con Edison $18 $17 $17 Con Edison of New York $17 $16 $16 O&R $ 1 $ 1 $ 1