DTE Energy 2007 Annual Report Download - page 27

We employ a total return investment approach whereby a mix of equities, fixed income and other investments are used to maximize
the long-term return of plan assets consistent with prudent levels of risk. The intent of this strategy is to minimize plan expenses over
the long term. Risk tolerance is established through consideration of future plan cash flows, plan funded status, and corporate financial
considerations. The investment portfolio contains a diversified blend of equity, fixed income and other investments. Furthermore,
equity investments are diversified across U.S. and non-U.S. stocks, growth and value investment styles, and large and small market
capitalizations. Other assets such as private equity and absolute return funds are used judiciously to enhance long term returns while
improving portfolio diversification. Derivatives may be used to gain market exposure in an efficient and timely manner; however,
derivatives may not be used to leverage the portfolio beyond the market value of the underlying investments. Investment risk is
measured and monitored on an ongoing basis through annual liability measurements, periodic asset/liability studies, and quarterly
investment portfolio reviews.
Our plan’ s weighted-average asset allocations and related targets by asset category at December 31 were as follows:
2007 2006 Target
Equity securities 66% 68% 55%
Debt securities 19 23 20
Other 15 9 25
100% 100% 100%
We also sponsor a defined contribution retirement savings plan for represented employees and participate in a defined contribution
plan for non-represented employees. Participation in one of these plans is available to substantially all represented and non-
represented employees. We match employee contributions up to certain predefined limits based upon eligible compensation, the
employee’ s contribution rate and, in some cases, years of credited service. The cost of these plans was $4 million in 2007 and $5
million in 2006, and 2005.
Other Postretirement Benefits
We provide certain postretirement health care and life insurance benefits for retired employees who are eligible for these benefits.
Separate qualified Voluntary Employees’ Beneficiary Association (VEBA) trusts exist for represented and non-represented
employees. Our policy is to fund certain trusts to meet our postretirement benefit obligations. In 2007, we made no cash contributions
to our postretirement benefit plans. At the discretion of management, we may make up to a $40 million contribution to our VEBA
trusts in 2008.
Net postretirement cost includes the following components:
(in Millions) 2007 2006 2005
Service cost $ 14 $ 14 $ 11
Interest cost 28 26 24
Expected return on plan assets (14) (12) (12)
Amortization of
Net loss 10 9 7
Prior service cost 2 2 2
Net transition obligation 5 5 6
Special termination benefits — 2 —
Net postretirement cost $ 45 $ 46 $ 38
Special termination benefits in the above table represent cost associated with our Performance Excellence Process.
Retrospective application of the changes required by SFAS No. 158 is prohibited; therefore certain disclosures below are not
comparable.
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