<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, 1998
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 48266
(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, 1998 and 1997,
Supplemental Schedules for the Year Ended December 31, 1998
and Independent Auditors' Report
<PAGE> 3
INDEPENDENT AUDITORS' REPORT
June 21, 1999
To the Trustees and Participants of the
MichCon Investment and Stock Ownership Plan
Detroit, Michigan
We have audited the accompanying statement of net assets available for benefits
of the MichCon Investment and Stock Ownership Plan (the Plan) as of December 31,
1998, and the related statement of changes in net assets available for benefits
for the year then ended. 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 audit. The statement of net assets available
for benefits of the MichCon Investment and Stock Ownership Plan as of December
31, 1997 was audited by other auditors whose report dated June 25, 1998
expressed an unqualified opinion on that statement.
We conducted our audit 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 audit provides a reasonable basis for our opinion.
In our opinion, the aforementioned financial statements present fairly, in all
material respects, the net assets available for benefits of the Plan as of
December 31, 1998, and the changes in net assets available for benefits for the
year then ended, in conformity with generally accepted accounting principles.
Our audit was conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedules of assets held
for investment purposes as of December 31, 1998, and reportable transactions for
the year then ended, are presented for purposes of complying with the Department
of Labor's Rules and Regulations for Reporting and Disclosure under the Employee
Retirement Income Security Act of 1974 and are not a required part of the basic
financial statements. The fund information in the statement of changes in net
assets available for benefits is presented for purposes of additional analysis
rather than to present the changes in net assets available for benefits for each
fund. The supplemental schedules and fund information have been subjected to the
auditing procedures applied in our audit of the basic financial statements and,
in our opinion, are fairly stated, in all material respects, in relation to the
basic financial statements taken as a whole.
/s/ George Johnson & Company
CERTIFIED PUBLIC ACCOUNTANTS
<PAGE> 4
MICHCON INVESTMENT AND STOCK OWNERSHIP PLAN
TABLE OF CONTENTS
Page
----
Financial Statements:
Statement of Net Assets Available for Benefits as of
December 31, 1998 and 1997 ....................................... 1
Statement of Changes in Net Assets Available for Benefits for the
Year Ended December 31, 1998...................................... 2
Notes to Financial Statements........................................ 3-8
Supplemental Schedules:
Item 27a - Schedule of Assets Held for Investment Purposes as of
December 31, 1998 ................................................ 9
Item 27d - Schedule of Reportable Transactions For the Year Ended
December 31, 1998................................................. 10
<PAGE> 5
MICHCON INVESTMENT AND STOCK OWNERSHIP PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS
<TABLE>
<CAPTION>
DECEMBER 31,
------------------------------
1998 1997
------------- --------------
<S> <C> <C>
INVESTMENTS, AT FAIR VALUE (NOTES 1 AND 2):
Common stock - MCN Energy Group Inc. $ 30,441,763 $ 71,860,057
Registered investment companies:
Putnam Global Growth Fund 7,133,922 6,009,703
Putnam Growth & Income Fund 10,484,746 10,612,566
Putnam Voyager Fund 13,587,224 11,909,165
Putnam New Opportunities Fund 4,153,463 3,121,353
Putnam Income Fund 201,579 323,184
Loomis Sayles Small Cap Value Fund 121,426 -
S & P 500 Fund 592,583 -
Loans to participants 5,056,835 5,427,873
Investment in Master Trust (Note 4) 9,447,762 10,654,758
------------- -------------
Total Investments 81,221,303 119,918,659
------------- -------------
OTHER ASSETS:
Cash on deposit and in transit 12,639 (1,411)
------------- -------------
NET ASSETS AVAILABLE FOR BENEFITS $ 81,233,942 $ 119,917,248
============= =============
</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 CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
FOR THE YEAR ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>
MCN Global Growth Fixed
Stock Growth & Income Income
Total Fund Fund Fund Fund
------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
ADDITIONS TO (DEDUCTIONS FROM) NET ASSETS
ATTRIBUTED TO:
Investment income $ 4,463,088 $ 1,668,118 $ 206,477 $ 957,264 $ 572,870
Change in fair value of investments (30,340,104) (34,723,544) 1,427,958 515,860 -
Transfers by participants among
investment funds (net) - (732,011) (329,892) (104,226) 207,894
Transfers to loan fund - (807,629) (176,458) (216,503) (215,231)
Transfers from loan fund - 780,762 177,312 173,973 191,265
Interest on loans to participants 541,166 254,612 55,943 57,653 63,769
------------- ------------- ------------- ------------- -------------
(25,335,850) (33,559,692) 1,361,340 1,384,021 820,567
------------- ------------- ------------- ------------- -------------
Contributions:
Participant 3,997,289 n/a n/a n/a n/a
Employer 1,960,504 n/a n/a n/a n/a
Forfeitures to be used 923 n/a n/a n/a n/a
------------- ------------- ------------- ------------- -------------
Total 5,958,716 2,469,464 532,350 636,917 1,069,643
------------- ------------- ------------- ------------- -------------
Total Additions (Deductions) (19,377,134) (31,090,228) 1,893,690 2,020,938 1,890,210
------------- ------------- ------------- ------------- -------------
(DEDUCTIONS FROM) NET ASSETS ATTRIBUTED TO:
Benefits Paid (16,967,348) (9,026,534) (605,325) (1,978,451) (2,854,634)
Withdrawals (1,666,904) (944,370) (100,613) (91,114) (220,894)
Interplan transfers, net (671,920) (357,162) (63,533) (79,193) (7,628)
------------- ------------- ------------- ------------- -------------
Total Deductions (19,306,172) (10,328,066) (769,471) (2,148,758) (3,083,156)
------------- ------------- ------------- ------------- -------------
NET INCREASE (DECREASE) (38,683,306) (41,418,294) 1,124,219 (127,820) (1,192,946)
NET ASSETS AVAILABLE FOR BENEFITS:
Beginning of year 119,917,248 71,860,057 6,009,703 10,612,566 10,641,908
------------- ------------- ------------- ------------- -------------
End of year $ 81,233,942 $ 30,441,763 $ 7,133,922 $ 10,484,746 $ 9,448,962
============= ============= ============= ============= =============
</TABLE>
<TABLE>
<CAPTION>
New Loomis Sayles
Voyager Opportunities Income Small Cap Value S & P 500
Fund Fund Fund Fund Fund
------------- ------------- ------------- --------------- -------------
<S> <C> <C> <C> <C> <C>
ADDITIONS TO (DEDUCTIONS FROM) NET ASSETS
ATTRIBUTED TO:
Investment income $ 911,909 $ 128,490 $ 16,171 $ 1,789 $ -
Change in fair value of investments 1,746,535 626,904 (5,796) (1,309) 73,288
Transfers by participants among
investment funds (net) (34,643) 365,515 34,611 101,684 491,068
Transfers to loan fund (270,106) (26,763) - (46) (7,463)
Transfers from loan fund 242,087 75,365 2,956 2,768 16,014
Interest on loans to participants 82,533 22,698 1,168 566 2,224
------------- ------------- ------------- ------------- -------------
2,678,315 1,192,209 49,110 105,452 575,131
------------- ------------- ------------- ------------- -------------
Contributions:
Participant n/a n/a n/a n/a n/a
Employer n/a n/a n/a n/a n/a
Forfeitures to be used n/a n/a n/a n/a n/a
------------- ------------- ------------- ------------- -------------
Total 826,854 322,274 56,832 16,731 27,651
------------- ------------- ------------- ------------- -------------
Total Additions (Deductions) 3,505,169 1,514,483 105,942 122,183 602,782
------------- ------------- ------------- ------------- -------------
(DEDUCTIONS FROM) NET ASSETS ATTRIBUTED TO:
Benefits Paid (1,545,431) (430,763) (210,276) - (10,179)
Withdrawals (181,550) (42,306) (179) (725) -
Interplan transfers, net (100,129) (9,304) (17,092) (32) (20)
------------- ------------- ------------- ------------- -------------
Total Deductions (1,827,110) (482,373) (227,547) (757) (10,199)
------------- ------------- ------------- ------------- -------------
NET INCREASE (DECREASE) 1,678,059 1,032,110 (121,605) 121,426 592,583
NET ASSETS AVAILABLE FOR BENEFITS:
Beginning of year 11,909,165 3,121,353 323,184 - -
------------- ------------- ------------- ------------- -------------
End of year $ 13,587,224 $ 4,153,463 $ 201,579 $ 121,426 $ 592,583
============= ============= ============= ============= =============
</TABLE>
<TABLE>
<CAPTION>
Loan Forfeiture
Fund Fund
------------- -------------
<S> <C> <C>
ADDITIONS TO (DEDUCTIONS FROM) NET ASSETS
ATTRIBUTED TO:
Investment income $ - $ -
Change in fair value of investments - -
Transfers by participants among
investment funds (net) - -
Transfers to loan fund 1,720,199 -
Transfers from loan fund (1,662,502) -
Interest on loans to participants - -
------------- -------------
57,697 -
------------- -------------
Contributions:
Participant - -
Employer - -
Forfeitures to be used - -
------------- -------------
Total - -
------------- -------------
Total Additions (Deductions) 57,697 -
------------- -------------
(DEDUCTIONS FROM) NET ASSETS ATTRIBUTED TO:
Benefits Paid (305,755) -
Withdrawals (85,153) -
Interplan transfers, net (37,827) -
------------- -------------
Total Deductions (428,735) -
------------- -------------
NET INCREASE (DECREASE) (371,038) -
NET ASSETS AVAILABLE FOR BENEFITS:
Beginning of year 5,427,873 11,439
------------- -------------
End of year $ 5,056,835 $ 11,439
============= =============
</TABLE>
n/a = Not available
The notes to the financial statements are an integral part of this statement.
2
<PAGE> 7
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 document 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. The Plan 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 combined pre-tax and post-tax contributions are limited to
17% (15% for highly compensated participants) of the participant's
compensation as defined in the Plan ("Compensation"), or such maximum
rates as may be approved by the Internal Revenue Service. Participants
may elect to have their Compensation reduced (Salary Reductions) by up
to 8% (9 % for highly compensated participants) and have that amount
contributed to the Plan.
The Company's maximum matching contributions are limited, depending on
years of service, to 2% to 6% of the participant's Compensation.
Seventy-five percent of the Company's matching contributions must be
allocated to the MCN Restricted Stock Fund.
Prior to March 1, 1999, the Company shall contribute annually to the
MCN Restricted Stock Fund accounts for each of its Greater Michigan
Local participants on active payroll who have at least 30 years of
service as of the measurement date, 25 shares of MCN stock. Effective
March 1, 1999 for Greater Michigan Local participants and March 1, 1998
for Detroit Local participants, the Company shall contribute annually
to the MCN Restricted Stock Fund accounts, $600 in shares of MCN common
stock.
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.
3
<PAGE> 8
MICHCON INVESTMENT AND STOCK OWNERSHIP PLAN
NOTES TO FINANCIAL STATEMENTS
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. This fund consists of two components, restricted and
unrestricted. The restricted fund includes 75% of the employer
match. The unrestricted fund includes any employee
contributions and possibly any portion of the remaining 25% of
the employer matching contributions. The entire MCN Stock Fund
is considered to be the Employee Stock Ownership ("ESOP")
portion of the plan. Effective in 1998, MCN dividends
accumulated under the ESOP are passed through to each
participant within 90 days of the previous Plan year, unless
the participant elects not to receive such dividends by
notifying the Trustee in writing. Future dividends may be
passed through to participants at the discretion of the
MichCon Board of Directors.
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 consists
of the following:
- contracts with insurance companies and other
financial institutions providing for fixed rates of
interest.
- investments in specific government and corporate
marketable fixed income securities, which are
managed by professional investment advisors.
Amounts invested in marketable securities are 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.
4
<PAGE> 9
MICHCON INVESTMENT AND STOCK OWNERSHIP PLAN
NOTES TO FINANCIAL STATEMENTS
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. Effective June
1999, the fund was eliminated from the Plan.
The following funds were added in June 1998:
Loomis Sayles Small Cap Value Fund - Fund consists primarily
of smaller capitalization common stocks, emphasizing both
undervalued securities and securities of companies with
significant growth potential.
Putnam S&P 500 Fund - Fund consists primarily of stocks that
closely approximates the return of the Standard & Poor's (S&P)
500 index, which is an indicator of the U.S. stock market
performance.
Effective July 1, 1999, the following six funds will be added to the
Plan:
JP Morgan Institutional Disciplined Equity Fund - Fund
consists of a broadly diversified portfolio of equity
securities similar to the S&P 500 index.
Legg Mason Value Institutional Portfolio Fund - Fund consists
primarily of stocks that are believed to be undervalued and
offer above-average potential for capital appreciation.
Lord Abbett Developing Growth Fund - Fund consists primarily
of stocks of selected small companies with long-range growth
potential.
Putnam International Growth Fund - Fund consists primarily of
common stocks traded in securities markets located in a number
of foreign countries and in the U.S.
Vanguard US Growth Fund - Fund consists primarily of large,
high-quality seasoned U.S. companies with records of
exceptional growth and above-average prospects for future
growth.
Western Asset Core Portfolio - Fund consists primarily of
fixed-income securities with an average duration of four to
six years.
5
<PAGE> 10
MICHCON INVESTMENT AND STOCK OWNERSHIP PLAN
NOTES TO FINANCIAL STATEMENTS
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. Participants pay 100% of the investment management and
other related expenses of the fund. The Company pays 100% of the
recordkeeping and Trustee expenses.
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 12 months provided that the
loan balance is paid off in full.
TERMINATION OF THE PLAN
Although it has not expressed any intent to do so, the Company has the
right under the Plan to discontinue contributions at any time and to
terminate the Plan subject to the provisions of 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 fair value, which is generally based on
quoted prices. A portion of the Fixed Income Fund is reported on or at
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.
6
<PAGE> 11
MICHCON INVESTMENT AND STOCK OWNERSHIP PLAN
NOTES TO FINANCIAL STATEMENTS
Benefits are recorded when paid.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect certain reported amounts and disclosures.
Accordingly, actual results may differ from those estimates.
3. TAX STATUS
The Plan obtained its latest determination letter on November 20, 1997,
in which the Internal Revenue Service stated that the Plan, as then
designed, was in compliance with the applicable requirements of the
Internal Revenue Code (IRC). The Plan has been amended since receiving
the determination letter. However, the Plan administrator and the
Plan's tax counsel believe that the Plan is currently designed and
being operated in compliance with the applicable requirements of the
IRC. Therefore, no provision for income taxes has been included in the
Plan's financial statements.
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 of the Company and its
subsidiaries and affiliates which are qualified under Section 401(a) of
the IRC.
Currently, the Master Trust consists of certain commingled assets of
the Plan, MCN Energy Group Savings and Stock Ownership Plan and the
Citizens Gas Fuel Company Investment Share Plan. The Plan's investment
in the Master Trust in the Statement of Net Assets Available for
Benefits represents the Plan's allocated portion (approximately 17%) 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, 1998 and 1997
is as follows:
<TABLE>
<CAPTION>
1998 1997
----------- -----------
<S> <C> <C>
INVESTMENTS:
Temporary investments, at fair value $13,002,190 $ 3,805,014
Insurance contracts, including
accumulated interest, at contract value 41,197,145 51,041,890
----------- -----------
TOTAL INVESTMENTS 54,199,335 54,846,904
----------- -----------
ASSETS HELD IN MASTER TRUST $54,199,335 $54,846,904
=========== ===========
</TABLE>
7
<PAGE> 12
MICHCON INVESTMENT AND STOCK OWNERSHIP PLAN
NOTES TO FINANCIAL STATEMENTS
The following is a summary of the change in net assets held in the
Master Trust for the year ended December 31, 1998:
<TABLE>
<CAPTION>
1998
------------
<S> <C>
Transfers into Master Trust $ 44,241,646
Interest, dividend and other income on investments 3,186,647
Transfers out of Master Trust (48,075,862)
------------
CHANGE IN ASSETS HELD (647,569)
NET ASSETS, BEGINNING OF YEAR 54,846,904
------------
NET ASSETS, END OF YEAR $ 54,199,335
============
</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.
8
<PAGE> 13
MICHCON INVESTMENT AND STOCK OWNERSHIP PLAN
EIN: 38-0478040, PN: 014
ITEM 27A -- SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
AS OF DECEMBER 31, 1998
<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 $ 29,336,764 $ 30,441,763
* Global Growth Fund Registered Investment Company 5,620,635 7,133,922
* Growth and IncomeFund Registered Investment Company 8,427,129 10,484,746
* Fixed Income Fund Investment in Master Trust
Pacific Mutual #G-26114-00 3,742,724 3,742,724
AIG Life #GIC-18190 143,000 143,000
AIG Life #GIC-877 363,666 363,666
Hartford Life #009702 497,859 497,859
Hartford Life #GA-9950 112,203 112,203
MET Life #14289 247,699 247,699
The Boston Company #6420-002 2,266,478 2,266,478
New York Life GA #30783 523,168 523,168
New York Life GA #30783002 648,998 648,998
John Hancock Mutual #8407 GAC 296,847 296,847
John Hancock Mutual #8868 GAC 605,120 605,120
* Voyager Fund Registered Investment Company 8,949,719 13,587,224
* New Opportunities Fund Registered Investment Companies 3,026,042 4,153,463
* Income Fund Registered Investment Companies 204,337 201,579
* Loomis Sayles Small Cap Value Fund Registered Investment Companies 121,527 121,426
* S & P 500 Fund Registered Investment Companies 519,602 592,583
* Putnam Cash on Deposit and in Transit 12,639 12,639
* Loan Fund Loans to Participants (Interest rates 9.75% to 11.00%) - 5,056,835
------------ ------------
$ 65,666,156 $ 81,233,942
============ ============
</TABLE>
* Represents Party-in-Interest
9
<PAGE> 14
MICHCON INVESTMENT AND STOCK OWNERSHIP PLAN
EIN: 38-0478040, PN: 014
ITEM 27D -- SCHEDULE OF REPORTABLE TRANSACTIONS
FOR THE YEAR ENDED DECEMBER 31, 1998
<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 $ 6,823,668 n/a
Putnam Investments MCN Stock Fund n/a $ 13,518,418
</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 $ 6,823,668 n/a
Putnam Investments $ 7,809,911 $ 13,518,418 $ 5,708,507
</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) HAS 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, TREASURER AND CHIEF FINANCIAL OFFICER
MICHIGAN CONSOLIDATED GAS COMPANY
DATED: JUNE 30, 1999
<PAGE> 16
EXHIBIT INDEX
NUMBER
-----------------------------------------------------
23 INDEPENDENT AUDITORS' CONSENT - GEORGE JOHNSON & COMPANY
<PAGE> 1
EXHIBIT 23
INDEPENDENT AUDITORS' CONSENT
June 21, 1999
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 21,
1999, appearing in this Annual Report on Form 11-K of the MichCon Investment and
Stock Ownership Plan as of, and for the year ended, December 31, 1998.
/s/ George Johnson & Company
CERTIFIED PUBLIC ACCOUNTANTS
