Note 9. Retirement Plans (Continued) SHENANDOAH TELECOMMUNICATIONS COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS The investment policy of the Company’s Pension Plan is for assets to be invested in a manner consistent with the fiduciary standards of ERISA. More specifically, the investment focus is to preserve capital which includes inflationary protection as well as protection of the principal amounts contributed to the Plan. Of lesser importance is the consistency of growth, which will tend to minimize the annual fluctuations in the normal cost. It is anticipated that growth of the fund will result from both capital appreciation and the re-investment of current income. The Company expects to contribute $0.5 million to the noncontributory defined benefit plan in 2004, and contributed $0.4 million in 2003, and $0.3 million in 2002. 31 ■  2003 ANNUAL REPORT Investment Policy Contributions The Company’s pension plan asset allocations based on market value at December 31, 2003 and 2002, by asset category were as follows: Weighted average assumptions used by the Company in the determination of net pension cost for the years ended December 31, 2003, 2002, and 2001 were as follows: Weighted average assumptions used by the Company in the determination of benefit obligations at December 31, 2003, 2002 and 2001 were as follows: The accumulated benefit obligation for the qualified retirement plan was $7,872, $6,551 and $5,399 at December 31, 2003, 2002 and 2001, respectively. 2003 2002 2001 Funded status $(3,797) $ (2,880) $ (1,163) Unrecognized net (gain) loss 2,229 1,505  (124) Unrecognized prior service cost 252 283 315 Unrecognized net transition asset (9) (38)  (67) Accrued benefit cost $(1,325) $ (1,130) $ (1,039) Components of net periodic benefit costs: Service cost $ 486 $ 420 $ 313 Interest cost 615 591 507 Expected return on plan assets (494) (582) (640) Amortization of prior service costs 31 31 31 Amortization of net gain 32 - (102) Amortization of net transition asset (29) (29) (29) Net periodic benefit cost $ 641 $ 431 $  80 2003 2002 2001 Discount rate 6.00% 6.50% 7.00% Rate of increase in compensation levels 4.50% 4.50% 5.00% 2003 2002 2001 Discount Rate 6.50% 7.00% 7.50% Rate of increase in compensation level 4.50% 5.00% 5.00% Expected long-term rate of return on plan assets 7.50% 8.00% 8.00% Asset Category 2003 2002 Equity securities 69.8% 62.9% Debt securities 26.6% 32.2% Cash and cash equivalents 3.6% 4.9% 100.0% 100.0% 2003 2002 69.8% 62.9% 26.6% 32.2% 3.6% 4.9% 100.0%