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## Assumptions 

The actuarial assumptions were as follows: 

<img src='content_image/44856.jpg'>

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. 

## Expected Contributions 

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. 

## Plan Assets 

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: 

<img src='content_image/44857.jpg'>

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. 

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 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. 

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 Companies also offer a defined contribution savings plan that covers substantially all employees and made contributions to the plan as follows: 

<img src='content_image/44858.jpg'>

## Note F – Other Postretirement Benefits 

The Utilities have contributory comprehensive hospital, medical and prescription drug programs for all retirees, their depend- ents and surviving spouses. 

