<PAGE> 1
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-------------------------------
FORM 11-K
(Mark One)
[X] Annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934
For the fiscal year ended December 31, 1997
OR
[ ] Transition report pursuant to Section 15(d)
of the Securities Exchange Act of 1934
For the transition period from to
-------- --------
COMMISSION FILE NUMBER 1-7310 (Michigan Consolidated Gas Company)
MICHCON INVESTMENT AND STOCK OWNERSHIP PLAN
(Full title of the plan and the address of the plan,
if different from that of the issuer named below)
MCN ENERGY GROUP INC. (MCN)
500 Griswold Street
Detroit, Michigan 48226
(Name of issuer of the common stock issued pursuant to the
plan and the address of its principal executive office)
================================================================================
<PAGE> 2
MICHCON INVESTMENT AND STOCK OWNERSHIP PLAN
Financial Statements for the Years Ended December
31, 1997 and 1996, Supplemental Schedules for
the Year Ended December 31, 1997
and Independent Auditors' Report
<PAGE> 3
MICHCON INVESTMENT AND STOCK OWNERSHIP PLAN
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Financial Statements:
Statement of Net Assets Available for Benefits as of December 31, 1997 .................... 1
Statement of Assets Available for Benefits as of December 31, 1996 ........................ 2
Statement of Changes in Assets Available for Benefits for the Year Ended
December 31, 1997........................................................................ 3
Notes to Financial Statements.............................................................. 4-8
Supplemental Schedules:
Item 27a - Schedule of Assets Held for Investment Purposes as of
December 31, 1997 ....................................................................... 9
Item 27d - Schedule of Reportable Transactions For the Year Ended
December 31, 1997........................................................................ 10
</TABLE>
<PAGE> 4
INDEPENDENT AUDITOR'S REPORT
To the Trustees and Participants of
MichCon Investment and Stock Ownership Plan
Detroit, Michigan
We have audited the accompanying statements of net assets available for
benefits of the MichCon Investment and Stock Ownership Plan (the "Plan") as of
December 31, 1997 and 1996, and the related statement of changes in new assets
available for benefits for the year ended December 31, 1997. These financial
statements are the responsibility of the Plan's management. Our responsibility
is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the accompanying financial statements present fairly, in all
material respects, the net assets available for benefits of the Plan at
December 31, 1997 and 1996, and the changes in net assets available for
benefits for the year ended December 31, 1997, in conformity with generally
accepted accounting principles.
Our audits were conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedules listed in
the Table of Contents are presented for the purpose of additional analysis and
are not a required part of the basic financial statements, but are
supplementary information required by the Department of Labor's Rules and
Regulations for Reporting and Disclosure under the Employee Retirement Income
Security Act of 1974. The supplemental information by fund in the statement of
net assets available for benefits and the statement of changes in net assets
available for benefits is presented for the purpose of additional analysis
rather than to present the net assets available for benefits and changes in net
assets available for benefits of the individual funds. These supplemental
schedules and supplemental information by fund is the responsibility of the
Plan's management. Such supplemental schedules and supplemental information by
fund have been subjected to the auditing procedures applied in the audits of
the basic financial statements and, in our opinion, are fairly stated in all
material respects when considered in relation to the basic financial statements
taken as a whole.
DELOITTE & TOUCHE LLP
Detroit, Michigan
June 25, 1998
<PAGE> 5
MICHCON INVESTMENT AND STOCK OWNERSHIP PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS
AS OF DECEMBER 31, 1997
<TABLE>
<CAPTION>
Supplemental Information by Fund
----------------------------------------------------------
MCN Global Growth Fixed
Stock Growth & Income Income
Total Fund Fund Fund Fund
---------------- -------------- ---------------------------- --------------
INVESTMENTS, (Notes 1 and 2):
<S> <C> <C> <C> <C> <C>
Common stock - MCN Energy Group Inc. $ 71,860,057 $ 71,860,057
Registered investment companies 31,975,971 6,009,703 10,612,566
Investment in Master Trust (Note 4) 10,654,758 $ 10,654,758
Loans to participants 5,427,873
---------------- -------------- ---------------------------- --------------
Total Investments 119,918,659 71,860,057 6,009,703 10,612,566 10,654,758
---------------- -------------- ---------------------------- --------------
OTHER NET ASSETS:
Cash on deposit and in transit (1,411) (12,850)
---------------- -------------- ---------------------------- --------------
Total Assets 119,917,248 71,860,057 6,009,703 10,612,566 10,641,908
---------------- -------------- ---------------------------- --------------
NET ASSETS AVAILABLE FOR BENEFITS $ 119,917,248 $ 71,860,057 $6,009,703 $10,612,566 $ 10,641,908
================ ============== ============================ ==============
Participating Units - December 31, 1997
Number of Units 1,779,816 603,384 543,120 10,641,908
Value of Units $ 40.38 $ 9.96 $ 19.54 $ 1.00
</TABLE>
<TABLE>
<CAPTION>
Supplemental Information by Fund
--------------------------------------------------------------------
New
Voyager Opportunities Income Loan Forfeiture
Fund Fund Fund Fund Fund
--------------- ------------- ------------ ------------- -----------
INVESTMENTS, (Notes 1 and 2):
<S> <C> <C> <C> <C> <C>
Common stock - MCN Energy Group Inc.
Registered investment companies 11,909,165 3,121,353 323,184
Investment in Master Trust (Note 4)
Loans to participants $5,427,873
--------------- ------------- ------------ ------------- -----------
Total Investments 11,909,165 3,121,353 323,184 5,427,873 -
--------------- ------------- ------------ ------------- -----------
OTHER NET ASSETS:
Cash on deposit and in transit $ 11,439
--------------- ------------- ------------ ------------- -----------
Total Assets 11,909,165 3,121,353 323,184 5,427,873 11,439
--------------- ------------- ------------ ------------- -----------
NET ASSETS AVAILABLE FOR BENEFITS $ 11,909,165 $3,121,353 $ 323,184 $5,427,873 $ 11,439
=============== ============= ============ ============= ===========
Participating Units - December 31, 1997
Number of Units 625,153 64,159 45,455
Value of Units $ 19.05 $ 48.65 $ 7.11
</TABLE>
The notes to the financial statements are an integral part of this statement.
1
<PAGE> 6
MICHCON INVESTMENT AND STOCK OWNERSHIP PLAN
STATEMENT OF ASSETS AVAILABLE FOR BENEFITS
AS OF DECEMBER 31, 1996
<TABLE>
<CAPTION>
Supplemental Information by Fund
----------------------------------------------------------------------------
MCN Global Growth Fixed
Stock Growth & Income Income
Total Fund Fund Fund Fund
---------------- --------------- ------------- ------------- ---------------
INVESTMENTS, (Notes 1 and 2):
<S> <C> <C> <C> <C> <C>
Common stock - MCN Energy Group Inc. $ 54,122,279 $ 54,122,279
Registered investment companies 27,115,771 $5,264,142 $8,927,571
Investment in Master Trust (Note 4) 11,894,532 $ 11,894,532
Loans to participants 4,827,031
---------------- --------------- ------------- ------------- ---------------
Total Investments $ 97,959,613 54,122,279 5,264,142 8,927,571 11,894,532
---------------- --------------- ------------- ------------- ---------------
OTHER ASSETS:
Cash on deposit and in transit 3,983 (1,711)
---------------- --------------- ------------- ------------- ---------------
Total Assets 97,963,596 54,122,279 5,264,142 8,927,571 11,892,821
---------------- --------------- ------------- ------------- ---------------
ASSETS AVAILABLE FOR BENEFITS $ 97,963,596 $ 54,122,279 $5,264,142 $8,927,571 $ 11,892,821
================ =============== ============= ============= ===============
Participating Units - December 31, 1996
Number of Units 1,874,365 486,520 495,426 11,892,821
Value of Units $ 28.88 $ 10.82 $ 18.02 $ 1.00
</TABLE>
<TABLE>
<CAPTION>
Supplemental Information by Fund
-----------------------------------------------------------------
New
Voyager Opportunities Income Loan Forfeiture
Fund Fund Fund Fund Fund
------------- ------------- ------------ ------------- ----------
INVESTMENTS, (Notes 1 and 2):
<S> <C> <C> <C> <C> <C>
Common stock - MCN Energy Group Inc.
Registered investment companies $9,993,788 $2,752,712 $ 177,558
Investment in Master Trust (Note 4)
Loans to participants $4,827,031
------------- ------------- ------------ ------------- ----------
Total Investments 9,993,788 2,752,712 177,558 4,827,031 -
------------- ------------- ------------ ------------- ----------
OTHER ASSETS:
Cash on deposit and in transit $5,694
------------- ------------- ------------ ------------- ----------
Total Assets 9,993,788 2,752,712 177,558 4,827,031 5,694
------------- ------------- ------------ ------------- ----------
ASSETS AVAILABLE FOR BENEFITS $9,993,788 $2,752,712 $ 177,558 $4,827,031 $5,694
============= ============= ============ ============= ==========
Participating Units - December 31, 1996
Number of Units 619,962 67,751 25,329
Value of Units $ 16.12 $ 40.63 $ 7.01
</TABLE>
The notes to the financial statements are an integral part of this statement.
2
<PAGE> 7
MICHCON INVESTMENT AND STOCK OWNERSHIP PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
FOR THE YEAR ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
Supplemental Information by Fund
-------------------------------------------------------------------------------
MCN Global Growth Fixed
Stock Growth & Income Income
Total Fund Fund Fund Fund
--------------- --------------- ------------- --------------- -----------------
ADDITIONS TO ASSETS ATTRIBUTED TO:
<S> <C> <C> <C> <C> <C>
Investment income $ 5,758,335 $ 1,836,485 $1,085,017 $ 1,393,319 $ 653,922
Change in market value of investments 23,825,723 21,071,332 (377,742) 791,596 -
Transfers by participants between
investment funds (net) - 879,352 39,401 273,438 (630,797)
Transfers to loan fund - (1,136,712) (262,704) (287,921) (212,211)
Transfers from loan fund - 703,701 149,580 163,642 211,921
Interest on loans to participants 518,182 244,524 51,332 56,326 71,993
--------------- --------------- ------------- --------------- -----------------
30,102,240 23,598,682 684,884 2,390,400 94,828
--------------- --------------- ------------- --------------- -----------------
Contributions:
Participant 4,173,023
Employer 2,152,569
Forteitures to be used 5,745
--------------- --------------- ------------- --------------- -----------------
Total 6,331,337 2,758,147 592,021 751,909 914,759
Total Additions 36,433,577 26,356,829 1,276,905 3,142,309 1,009,587
--------------- --------------- ------------- --------------- -----------------
DEDUCTIONS FROM ASSETS ATTRIBUTED TO:
Distributions to terminated participants (13,622,300) (8,331,671) (444,706) (1,322,861) (2,074,906)
Withdrawals (810,582) (246,491) (82,168) (127,399) (193,616)
Transfers by participants between plans (net) (47,043) (40,889) (4,470) (7,054) 8,022
--------------- --------------- ------------- --------------- -----------------
Total Deductions (14,479,925) (8,619,051) (531,344) (1,457,314) (2,260,500)
--------------- --------------- ------------- --------------- -----------------
NET INCREASE(DECREASE) 21,953,652 17,737,778 745,561 1,684,995 (1,250,913)
ASSETS AVAILABLE FOR BENEFITS:
Beginning of the period 97,963,596 54,122,279 5,264,142 8,927,571 11,892,821
--------------- --------------- ------------- --------------- -----------------
End of the period $119,917,248 $ 71,860,057 $6,009,703 $ 10,612,566 $ 10,641,908
=============== =============== ============= =============== =================
</TABLE>
<TABLE>
<CAPTION>
Supplemental Information by Fund
-----------------------------------------------------------------
New
Voyager Opportunities Income Loan Forfeiture
Fund Fund Fund Fund Fund
-------------- ------------- ------------ ------------- ---------
ADDITIONS TO ASSETS ATTRIBUTED TO:
<S> <C> <C> <C> <C> <C>
Investment income $ 704,247 $ 69,391 $ 15,954 - -
Change in market value of investments 1,795,859 543,097 1,581 - -
Transfers by participants between
investment funds (net) (479,409) (157,580) 75,595 - -
Transfers to loan fund (418,616) (43,030) (423) 2,361,617 -
Transfers from loan fund 223,879 55,771 4,080 (1,512,574) -
Interest on loans to participants 73,994 18,709 1,304 - -
-------------- ------------- ------------ ------------- ---------
1,899,954 486,358 98,091 849,043 -
-------------- ------------- ------------ ------------- ---------
Contributions:
Participant
Employer
Forteitures to be used 5,745
-------------- ------------- ------------ ------------- ---------
Total 925,925 311,123 71,708 - 5,745
Total Additions 2,825,879 797,481 169,799 849,043 5,745
-------------- ------------- ------------ ------------- ---------
DEDUCTIONS FROM ASSETS ATTRIBUTED TO:
Distributions to terminated participants (786,819) (391,438) (21,733) (248,166) -
Withdrawals (121,850) (36,583) (2,440) (35) -
Transfers by participants between plans (net) (1,833) (819) - - -
-------------- ------------- ------------ ------------- ---------
Total Deductions (910,502) (428,840) (24,173) (248,201) -
-------------- ------------- ------------ ------------- ---------
NET INCREASE(DECREASE) 1,915,377 368,641 145,626 600,842 5,745
ASSETS AVAILABLE FOR BENEFITS:
Beginning of the period 9,993,788 2,752,712 177,558 4,827,031 5,694
-------------- ------------- ------------ ------------- ---------
End of the period $ 11,909,165 $3,121,353 $323,184 $5,427,873 $11,439
============== ============= ============ ============= =========
</TABLE>
The notes to the financial statements are an integral part of this statement.
3
<PAGE> 8
MICHCON INVESTMENT AND STOCK OWNERSHIP PLAN
NOTES TO FINANCIAL STATEMENTS
1. PLAN DESCRIPTION
The following description of the MichCon Investment and Stock Ownership
Plan (the Plan) provides only general information. Participants should
refer to the Plan agreement for a more complete description of the
Plan's provisions.
GENERAL
The Plan is a defined contribution benefit plan for employees covered
by the collective bargaining agreements who have attained one year of
service and are age 21 or older. It is subject to the provisions of the
Employee Retirement Income Security Act of 1974 (ERISA). The Plan is
sponsored solely by Michigan Consolidated Gas Company (MichCon or the
Company), a subsidiary of MCN Energy Group Inc. (MCN). The Plan
represents an agreed-upon benefit plan enhancement as ratified by and
between the Company and collective bargaining units within the Company.
CONTRIBUTIONS
Each employee electing to participate in the Plan is required to make
regular contributions by payroll deduction. For all union locals,
participant contributions, including any Salary Reduction Allotments,
are limited to 15% (for highly compensated participants) and 20% (for
nonhighly compensated participants) of the participant's compensation
as defined in the Plan ("Eligible Compensation"), or such maximum rates
as may be approved by the Internal Revenue Service. Participants may
elect to have their Eligible Compensation reduced (Salary Reduction
Allotments) by up to 9% (nonhighly compensated participants 8%) and
have that amount contributed to the Plan.
Effective April 1, 1998, for participants who are members of Local #80
- Detroit and the P.T.&S. locals, participant contributions are limited
to 17% (for nonhighly compensated participants) of the participant's
Eligible Compensation.
Effective July 1, 1998, for participants who are members of Local #132,
Local 799 - Northern and Local #70 - Muskegon, participant
contributions are limited to 17% (for nonhighly compensated
participants) of the participant's Eligible Compensation.
The Company's maximum matching contributions are limited, depending on
years of service, to 2% to 6% of the participant's Eligible
Compensation. Seventy-five percent of the Company's matching
contributions must be allocated to the MCN Restricted Stock Fund.
The Company shall contribute annually (April 1st) to the MCN Restricted
Stock Fund accounts for each of its participating union employees on
active payroll who have at least 30 years of service, twenty-five
shares of MCN Stock (or an equivalent value determined by the Committee
in a nondiscriminatory manner, which may be used to purchase MCN
Stock).
4
<PAGE> 9
MICHCON INVESTMENT AND STOCK OWNERSHIP PLAN
NOTES TO FINANCIAL STATEMENTS
PARTICIPANT ACCOUNTS
Each participant's account is credited with the participant's
contribution, allocations of the Company's contributions and Plan
earnings. Allocations are based on participant earnings or account
balances, as defined. Forfeited balances of terminated participants'
nonvested accounts are used to reduce future employer contributions.
The benefit to which the participant is entitled is the benefit that
can be provided from the participant's vested account.
VESTING
Participants are immediately vested in their contributions plus actual
earnings thereon. Vesting in the employer's matching contribution
portion of their accounts plus actual earnings thereon occurs after
completion of five years of service.
INVESTMENT OPTIONS
Participants may transfer existing account balances in the investment
funds on a daily basis with the exception of the MCN Restricted Stock
Fund. However, participants may change their investment direction and
amount of future contributions effective with the next payroll period.
With respect to the MCN Stock Fund, Company designated insider traders
are limited to a 30-day window following the release of quarterly
earnings. Contributions may be directed in any of the following
investment options:
MCN Stock Fund - Fund invests solely in the common stock of
MCN Energy Group Inc. This fund consists of two components,
restricted and unrestricted. The restricted fund includes 75%
of the employer match which is contributed to the employee
stock ownership plan (ESOP) portion of the Plan. The
unrestricted fund includes any employee contributions and
possibly any portion of the remaining 25% of the employer
matching contributions. All 1997 MCN dividends accumulated
under the ESOP were passed through to each participant in
March 1998 unless the participant elected not to receive such
dividends.
Putnam Global Growth Fund - Fund consists primarily of common
stocks traded in securities markets located in a number of
foreign countries and in the United States.
Putnam Fund for Growth and Income - Fund consists primarily of
common stocks that offer potential for capital growth, current
income, or both. The fund may also purchase corporate bonds,
notes and debentures, preferred stocks, or convertible
securities (both debt securities and preferred stocks) or U.S.
government securities.
Fixed Income Fund - Fund consists of higher quality
investments consistent with the Fund's objective to preserve
principal while providing a stable rate of return to the
Participant. The investments of the Fixed Income Fund consist
of the following:
- contracts with insurance companies and other
financial institutions providing for fixed rates of
interest, and
5
<PAGE> 10
MICHCON INVESTMENT AND STOCK OWNERSHIP PLAN
NOTES TO FINANCIAL STATEMENTS
- investments in specific government and corporate
marketable fixed income securities, which are
managed by professional investment advisors.
Amounts invested in marketable securities are invested
through or pursuant to contracts with insurance companies.
These contracts provide for a guarantee of the principal
invested and accrued interest under the contract. The interest
rates under these contracts are adjusted at least annually to
recognize the impacts of changing interest rate conditions.
Investment advisors for marketable fixed income securities may
use fixed income futures and options to reduce the effect of
market volatility on the Fund.
Putnam Voyager Fund - Fund consists primarily of common stocks
of companies with potential for capital appreciation which is
significantly greater than that of the market averages and
generally invests a significant portion of its assets in the
securities of smaller and newer issuers.
Putnam New Opportunities Fund - Fund consists primarily of
common stocks of companies in sectors of the economy with
potential for capital appreciation which is significantly
greater than that of the market averages and generally invests
a significant portion of its assets in the securities of small
to mid-sized companies.
Putnam Income Fund - Fund consists primarily of quality
corporate and government bonds that pay out a rate of interest
in regularly scheduled payments. The fund also invests in
selected below-investment grade bonds, which have a higher
risk of nonpayment of interest and principal.
ADMINISTRATIVE AND BROKERAGE FEES
Expenses in connection with the purchase or sale of stock or other
securities are charged to the participant for which the purchases or
sales are made.
The Company pays 100% of the recordkeeping and Trustee expenses for all
unions. Participants pay 100% of the investment management and other
related expenses of the fund.
LOANS
Subject to limitations imposed by the Internal Revenue Code and
Department of Labor regulations, Plan provisions allow a participant to
borrow from the Plan an amount up to 50% of the vested value of his or
her salary reduction and ESOP accounts, up to a maximum of $50,000, at
an interest rate of 2 1/2% over prime updated quarterly (rounded to the
nearest 1/2 %). The outstanding balances of loans are reported in the
Loan fund. A participant may have only one loan outstanding at a time
and loan refinances are available every twelve months.
TERMINATION OF THE PLAN
Although it has not expressed any intent to do so, the Company has the
right under the Plan to discontinue its contributions at any time and
to terminate the Plan subject to the provisions of
6
<PAGE> 11
MICHCON INVESTMENT AND STOCK OWNERSHIP PLAN
NOTES TO FINANCIAL STATEMENTS
ERISA. In the event of Plan termination, the Plan assets shall
be distributed ratably to the participants in proportion to the total
values of their respective Plan accounts.
Each participating employer may withdraw from or terminate its
participation in the Plan at any time. Under these circumstances, the
Committee shall direct the Trustee to (1) segregate, in a separate
trust, amounts held under the Plan which are applicable to the
participants of such employer (in the event of withdrawal); or (2)
distribute to the participants of such employer amounts attributable to
such participants' investments under the Plan (in the event of
termination).
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accompanying financial statements are prepared under the accrual
method of accounting.
Purchase and sales of securities are recorded on the trade date basis.
Dividend income is recorded on the ex-dividend date. Income from other
securities is recorded when earned.
Investments are stated at market value, which is generally based on
quoted prices. A portion of the Fixed Income Fund is reported on a
contract value (which represents contributions made under the contract
plus earnings, less withdrawals and administrative expenses) because
it is fully benefit responsive. Participant loan receivables are
presented at cost which approximates fair value.
The cost of securities sold or distributed is determined on the basis
of average cost. The MCN Stock Fund recognizes gains or losses on stock
distributed to terminated participants in settlement of their accounts
equal to the difference between cost and market value of the shares
distributed.
Benefits are recorded when paid.
3. TAX STATUS
The Internal Revenue Service has determined and informed MichCon by a
letter dated November 20, 1997 that the Plan is qualified and related
trust is tax exempt and both are designed in accordance with applicable
sections of the Internal Revenue Code (IRC). The Plan administrator
and the Plan's tax counsel believe that the Plan is designed and is
currently being operated in compliance with the applicable
requirements of the IRC.
4. DEFINED CONTRIBUTION PLANS MASTER TRUST
The Master Trust was established on August 1, 1988 and serves as a
funding medium to certain employee benefit plans for the Company and
its subsidiaries and affiliates which are qualified under Section
401(a) of the Internal Revenue Code of 1986 as amended from time to
time.
Currently, the Master Trust consists of certain commingled assets of
the Plan and the MCN Energy Group Savings and Stock Ownership Plan. The
Plan's investment in the Master Trust in the Statement of Assets
Available for Benefits represents the Plan's allocated portion
(approximately 20%) of the Master Trust investments. The Plan's
allocated portion of the investments is equal to the market value of
the Plan's assets contributed, adjusted by the Plan's allocated share
of the Master Trust investment income and expenses, employee and
employer contributions and distributions and withdrawals paid to
participants.
A summary of the Master Trust assets as of December 31, 1997 and 1996
is as follows:
7
<PAGE> 12
MICHCON INVESTMENT AND STOCK OWNERSHIP PLAN
NOTES TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
1997 1996
------------------- ------------------
INVESTMENTS,
<S> <C> <C>
Temporary investments, at market . . . . . . . . . . . . . . $ 3,805,014 $ 7,050,421
Insurance contracts, including
accumulated interest, at contract value . . . . . . . . . 51,041,890 51,150,305
------------ ------------
TOTAL INVESTMENTS . . . . . . . . . . . . . . . . . . . . . . . . . 54,846,904 58,200,726
------------ ------------
ASSETS HELD IN MASTER TRUST . . . . . . . . . . . . . . . . . . . . $ 54,846,904 $ 58,200,726
============ ============
</TABLE>
The following is a summary of the net change in assets held in the
Master Trust for the year ended December 31, 1997:
<TABLE>
<CAPTION>
1997
--------------------
<S> <C>
Transfers into Master Trust . . . . . . . . . . . . . . . . . . . . . . . . $ 44,174,098
Interest, dividend and other income on investments . . . . . . . . . . . . . 3,438,588
Transfers out of Master Trust . . . . . . . . . . . . . . . . . . . . . . . (50,966,508)
------------
NET CHANGE IN ASSETS HELD . . . . . . . . . . . . . . . . . . . . . . . . . (3,353,822)
NET ASSETS, BEGINNING OF YEAR . . . . . . . . . . . . . . . . . . . . . . . 58,200,726
------------
NET ASSETS, END OF YEAR . . . . . . . . . . . . . . . . . . . . . . . . . . $ 54,846,904
============
</TABLE>
5. RELATED PARTY TRANSACTIONS
Certain plan investments are shares of mutual funds managed by Putnam
Investments. Putnam Investments is the trustee as defined by the Plan;
therefore, these transactions qualify as party-in-interest.
6. SUBSEQUENT EVENT
The MCN Energy Group stock price as of December 31, 1997 of $40.38
declined to $25.31 At the close of business on June 25, 1998.
In the first quarter of 1998, MichCon implemented an early retirement
program. The program had no material impact on the plan. In the third
quarter of 1998, the early retirement program will be complete and it
is expected to have no material impact on the plan.
8
<PAGE> 13
MICHCON INVESTMENT AND STOCK OWNERSHIP PLAN
ITEM 27a -- SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
AS OF DECEMBER 31, 1997
<TABLE>
<CAPTION>
(c)
(b) Description of investments including (e)
Identity of issue, borrower, maturity date, rate of interest, collateral, (d) Current
(a) lessor or similar party par or maturity value Cost Value
- ----- -------------------------------- -------------------------------------------------- ---------------------- ---------------
<S> <C> <C> <C>
* MCN Stock Fund MCN Energy Group Inc. Common Stock $ 30,323,279 $ 71,860,057
* Putnam Global Growth Fund Registered Investment Company 5,755,854 6,009,703
* Putnam Fund for Growth and Income Registered Investment Company 8,529,774 10,612,566
* Fixed Income Fund Investment in Master Trust
Pacific Mutual 4,855,934 4,855,934
AIG Life #GIC-18190 211,478 211,478
AIG Life #GIC-877 538,776 538,776
Hartford Life #009702 741,640 741,640
Hartford Life #GA-9950 165,311 165,311
MET Life 548,221 548,221
The Boston Company #6420-002 739,176 739,176
New York Life GA #20051 728,601 728,601
New York Life GA #30783 780,719 780,719
John Hancock Mutual #8407 GAC 444,369 444,369
John Hancock Mutual #8868 GAC 900,533 900,533
* Putnam Voyager Fund Registered Investment Company 8,251,198 11,909,165
* Putnam Income Fund Registered Investment Companies 318,621 323,184
* Putnam New Opportunities Fund Registered Investment Companies 2,442,964 3,121,353
* Loan Fund Loans to Paritcipants (Interest rates 9% to 12%) 5,427,873 5,427,873
------------ -------------
$ 71,704,321 $ 119,918,659
============ =============
* Represents Party-in-Interest
</TABLE>
9
<PAGE> 14
MICHCON INVESTMENT AND STOCK OWNERSHIP PLAN
ITEM 27d -- SCHEDULE OF REPORTABLE TRANSACTIONS
FOR THE YEAR ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
(b)
Description of asset (f)
(a) (include interest (c) (d) (e) Expense
Identity of party rate and maturity Purchase Selling Lease incurred with
involved in case of a loan) Price Price rental transaction
- ------------------------------ -------------------------------- -------------- ------------ ----------- ----------------
<S> <C> <C> <C> <C> <C>
Putnam Investments MCN Stock Fund $ 7,440,038 n/a
Putnam Investments MCN Stock Fund n/a $ 10,776,069
Putnam Investments Fixed Income Fund $ 2,510,575 n/a
Putnam Investments Fixed Income Fund n/a $ 3,762,346
Putnam Investments Growth & Income Fund $ 3,036,798 n/a
Putnam Investments Growth & Income Fund n/a $ 2,143,400
Putnam Investments Loan Fund $ 2,879,799 n/a
Putnam Investments Loan Fund n/a $ 2,278,922
</TABLE>
<TABLE>
<CAPTION>
(h)
Current value
(a) (g) of asset on (i)
Identity of party Cost of transaction Net gain
involved asset date or (loss)
- --------------------------- ---------- --------------- -------------
<S> <C> <C> <C>
Putnam Investments n/a $ 7,440,038 n/a
Putnam Investments $ 5,409,801 $ 10,776,069 $ 5,366,268
Putnam Investments n/a $ 2,510,575 n/a
Putnam Investments $ 3,799,286 $ 3,762,346 $ (36,940)
Putnam Investments n/a $ 3,036,798 n/a
Putnam Investments $ 1,602,061 $ 2,143,400 $ 541,339
Putnam Investments n/a $ 2,879,799 n/a
Putnam Investments $ 2,278,922 $ 2,278,922 $ -
</TABLE>
10
<PAGE> 15
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Trustee (or other persons who administer the employee benefit plan) have
duly caused this annual report to be signed on its behalf by the undersigned
hereunto duly authorized.
MichCon Investment and Stock Ownership Plan
By: /s/ Howard L. Dow III
---------------------------------------------------
Howard L. Dow III
Senior Vice President and Chief Financial Officer
Michigan Consolidated Gas Company
Dated: June 29, 1998
<PAGE> 16
EXHIBIT INDEX
Number
------ ------------------------------------------------------
23 Independent Auditors' Consent - Deloitte & Touche LLP
<PAGE> 1
EXHIBIT 23
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in Registration Statement No.
333-02107 of MCN Energy Group Inc. on Form S-8 of our report dated June 25,
1998, appearing in this Annual Report on Form 11-K of the MichCon Investment
and Stock Ownership Plan for the year ended December 31, 1997.
DELOITTE & TOUCHE LLP
Detroit, Michigan
June 29, 1998
