<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 1-10070 (MCN Energy Group Inc.)
MCN ENERGY GROUP SAVINGS 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
MCN ENERGY GROUP SAVINGS 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
MCN Energy Group Savings and Stock Ownership Plan
Detroit, Michigan
We have audited the accompanying statement of net assets available for benefits
of the MCN Energy Group Savings 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 MCN Energy Group Savings 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
MCN ENERGY GROUP SAVINGS 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, 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
</TABLE>
<PAGE> 5
MCN ENERGY GROUP SAVINGS 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. $ 62,976,243 $ 141,792,794
Registered investment companies:
Putnam Global Growth Fund 20,368,441 17,277,301
Putnam Growth & Income Fund 46,193,330 46,713,743
Putnam Voyager Fund 46,584,325 42,098,094
Putnam New Opportunities Fund 14,231,783 11,777,680
Putnam Income Fund 2,177,971 1,478,517
Loomis Sayles Small Cap Value Fund 743,873 --
S & P 500 Fund 3,056,028 --
Loans to participants 6,355,800 6,926,815
Investment in Master Trust (Note 4) 43,330,910 44,192,146
------------- -------------
Total Investments 246,018,704 312,257,090
------------- -------------
OTHER ASSETS:
Cash on deposit and in transit (90,346) 88,263
------------- -------------
NET ASSETS AVAILABLE FOR BENEFITS $ 245,928,358 $ 312,345,353
============= =============
</TABLE>
The notes to the financial statements are an integral part of this statement.
1
<PAGE> 6
MCN ENERGY GROUP SAVINGS 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
Stock Growth & Income
Total Fund Fund Fund
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
ADDITIONS TO (DEDUCTIONS FROM) NET ASSETS
ATTRIBUTED TO:
Investment income $ 14,367,168 $ 3,372,867 $ 589,400 $ 4,233,582
Change in fair value of investments (54,972,683) (70,255,922) 4,102,219 2,294,200
Transfers by participants among
investment funds (net) -- (2,233,747) (578,391) (2,724,899)
Transfers to loan fund -- (1,024,029) (206,001) (315,215)
Transfers from loan fund -- 1,025,903 182,976 253,024
Interest on loans to participants 647,678 294,279 60,733 82,003
------------- ------------- ------------- -------------
(39,957,837) (68,820,649) 4,150,936 3,822,695
------------- ------------- ------------- -------------
Contributions:
Participant 7,714,360 n/a n/a n/a
Employer 3,570,828 n/a n/a n/a
Forfeitures to be used 57,044 n/a n/a n/a
------------- ------------- ------------- -------------
Total 11,342,231 3,814,266 920,145 1,671,321
------------- ------------- ------------- -------------
Total Additions (Deductions) (28,615,606) (65,006,383) 5,071,081 5,494,016
------------- ------------- ------------- -------------
(DEDUCTIONS FROM) NET ASSETS ATTRIBUTED TO:
Benefits Paid (35,780,347) (12,754,464) (1,949,494) (5,788,791)
Withdrawals (2,695,837) (1,417,638) (91,745) (304,831)
Interplan transfers, net 674,795 361,934 61,298 79,193
------------- ------------- ------------- -------------
Total Deductions (37,801,389) (13,810,168) (1,979,941) (6,014,429)
------------- ------------- ------------- -------------
NET INCREASE (DECREASE) (66,416,995) (78,816,551) 3,091,140 (520,413)
NET ASSETS AVAILABLE FOR BENEFITS:
Beginning of year 312,345,353 141,792,794 17,277,301 46,713,743
------------- ------------- ------------- -------------
End of year $ 245,928,358 $ 62,976,243 $ 20,368,441 $ 46,193,330
============= ============= ============= =============
<CAPTION>
Fixed New
Income Voyager Opportunities Income
Fund Fund Fund Fund
------------- ------------- ------------- -------------
ADDITIONS TO (DEDUCTIONS FROM) NET ASSETS
ATTRIBUTED TO:
Investment income $ 2,459,567 $ 3,133,993 $ 441,867 $ 125,526
Change in fair value of investments -- 6,205,112 2,350,838 (51,056)
Transfers by participants among
investment funds (net) 1,950,254 (1,904,708) 663,031 1,563,896
Transfers to loan fund (249,501) (332,804) (48,137) (11,243)
Transfers from loan fund 252,449 305,490 139,485 7,870
Interest on loans to participants 75,588 94,469 32,558 2,799
------------ ------------ ------------ ------------
4,488,357 7,501,552 3,579,642 1,637,792
------------ ------------ ------------ ------------
Contributions:
Participant n/a n/a n/a n/a
Employer n/a n/a n/a n/a
Forfeitures to be used n/a n/a n/a n/a
------------ ------------ ------------ ------------
Total 2,070,148 1,634,498 831,318 170,844
------------ ------------ ------------ ------------
Total Additions (Deductions) 6,558,505 9,136,050 4,410,960 1,808,636
------------ ------------ ------------ ------------
(DEDUCTIONS FROM) NET ASSETS ATTRIBUTED TO:
Benefits Paid (7,171,908) (4,530,560) (1,911,155) (1,122,209)
Withdrawals (434,071) (219,726) (55,006) (4,065)
Interplan transfers, net 7,628 100,467 9,304 17,092
------------ ------------ ------------ ------------
Total Deductions (7,598,351) (4,649,819) (1,956,857) (1,109,182)
------------ ------------ ------------ ------------
NET INCREASE (DECREASE) (1,039,846) 4,486,231 2,454,103 699,454
NET ASSETS AVAILABLE FOR BENEFITS:
Beginning of year 44,187,511 42,098,094 11,777,680 1,478,517
------------ ------------ ------------ ------------
End of year $ 43,147,665 $ 46,584,325 $ 14,231,783 $ 2,177,971
============ ============ ============ ============
<CAPTION>
Loomis Sayles
Small Cap Value S & P 500 Loan Forfeiture
Fund Fund Fund Fund
------------- ------------- ------------- -------------
ADDITIONS TO (DEDUCTIONS FROM) NET ASSETS
ATTRIBUTED TO:
Investment income $ 10,366 $ -- $ -- $ --
Change in fair value of investments (60,667) 442,593 -- --
Transfers by participants among
investment funds (net) 747,719 2,516,845 -- --
Transfers to loan fund (2,312) (19,490) 2,208,732 --
Transfers from loan fund 6,392 13,238 (2,186,827) --
Interest on loans to participants 2,104 3,145 -- --
----------- ----------- ----------- -----------
703,602 2,956,331 21,905 --
----------- ----------- ----------- -----------
Contributions:
Participant n/a n/a -- --
Employer n/a n/a -- --
Forfeitures to be used n/a n/a -- --
----------- ----------- ----------- -----------
Total 75,922 153,769 -- --
----------- ----------- ----------- -----------
Total Additions (Deductions) 779,524 3,110,100 21,905 --
----------- ----------- ----------- -----------
(DEDUCTIONS FROM) NET ASSETS ATTRIBUTED TO:
Benefits Paid (34,230) (52,167) (465,369) --
Withdrawals (1,453) (1,925) (165,377) --
Interplan transfers, net 32 20 37,827 --
----------- ----------- ----------- -----------
Total Deductions (35,651) (54,072) (592,919) --
----------- ----------- ----------- -----------
NET INCREASE (DECREASE) 743,873 3,056,028 (571,014) --
NET ASSETS AVAILABLE FOR BENEFITS:
Beginning of year -- -- 6,926,815 92,898
----------- ----------- ----------- -----------
End of year $ 743,873 $ 3,056,028 $ 6,355,801 $ 92,898
=========== =========== =========== ===========
</TABLE>
n/a = not available
The notes to the financial statements are an integral part of this statement.
2
<PAGE> 7
MCN ENERGY GROUP SAVINGS AND STOCK OWNERSHIP PLAN
NOTES TO FINANCIAL STATEMENTS
1. PLAN DESCRIPTION
The following description of the MCN Energy Group Savings 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 not
covered by collective bargaining agreements who have attained one year
of service and are age 21 or older. Effective February 1, 1999, the
eligibility requirement of one year of service was changed to three
months of service and the eligibility requirement of 21 years of age
was removed. The Plan is subject to the provisions of the Employee
Retirement Income Security Act of 1974 (ERISA). The Plan is sponsored
solely by MCN Energy Group Inc. (MCN) and is maintained for the benefit
of employees of MCN and any subsidiary or affiliate of MCN which may
adopt the Plan from time to time.
The employers participating in the Plan are MCN, Michigan Consolidated
Gas Company ("MichCon"), MCN Investment Corporation and some of its
subsidiaries.
CONTRIBUTIONS
Each employee electing to participate in the Plan is required to make
regular contributions by payroll deduction. 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. Prior to February 1999, participant
pre-tax contributions were limited to 9% (8% for highly compensated
participants). Effective with the first payroll in February 1999,
participant contributions are limited to 17% on a pre-tax basis (12%
for highly-compensated participants) of the participant's Compensation.
The employers make matching contributions to the Plan on behalf of each
participant, which are limited to 4% of the participant's Compensation
for individuals with less than ten years of service. For those
individuals who have completed at least ten years of service, the match
is limited to 5% of the participant's Compensation. Participants with
more than 23 years of service the employer match is limited to 6%.
Seventy-five percent of all employer-matching contributions is
allocated to the MCN Restricted Stock Fund. Effective January 1, 1999,
after a participant has completed nine years of service, the employers'
match is limited to 5% of the participant's Compensation. Effective
with the first pay period in 1999, Compensation will include overtime
wages and bonuses for cash balance plan participants.
MCN and MCNIC shall contribute annually to the MCN Restricted Stock
Fund accounts for each of its participating employees on active
payroll, who have at least 30 years of service on April 1 and do not
meet the definition of a highly compensated employee, 25 shares of MCN
stock (or an equivalent value determined by the Master Trust,
Retirement and Savings Plan Committee ("Committee") in a
nondiscriminatory manner, which may be used to purchase MCN stock). For
MichCon employees, the Plan was amended to provide that the longevity
award will be contributed to the MCN Restricted Stock Fund accounts of
employees with 30 years of service on
3
<PAGE> 8
MCN ENERGY GROUP SAVINGS AND STOCK OWNERSHIP PLAN
NOTES TO FINANCIAL STATEMENTS
March 1 of each year and the amount payable will be $600 in MCN shares.
For MCN and MCNIC employees, effective March 1, 1999, the Plan was
amended to provide that the longevity award will also be $600 in MCN
shares.
PARTICIPANT ACCOUNTS
Each participant's account is credited with the participant's
contribution, allocations of the employers' 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 employers' 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. 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 savings 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 Committee's discretion.
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:
4
<PAGE> 9
MCN ENERGY GROUP SAVINGS AND STOCK OWNERSHIP PLAN
NOTES TO FINANCIAL STATEMENTS
- 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.
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.
5
<PAGE> 10
MCN ENERGY GROUP SAVINGS AND STOCK OWNERSHIP PLAN
NOTES TO FINANCIAL STATEMENTS
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.
ADMINISTRATIVE AND BROKERAGE FEES
Expenses in connection with the purchase or sale of stock or other
securities are charged to the participant for whom the purchases or
sales are made. Participants pay 100% of the investment management and
other related expenses of the funds. The participating employers pay
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 employers have
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).
6
<PAGE> 11
MCN ENERGY GROUP SAVINGS AND STOCK OWNERSHIP PLAN
NOTES TO FINANCIAL STATEMENTS
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.
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 19, 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 Corporation 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, MichCon Investment 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 80%) of the
Master Trust
7
<PAGE> 12
MCN ENERGY GROUP SAVINGS AND STOCK OWNERSHIP PLAN
NOTES TO FINANCIAL STATEMENTS
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>
The following is a summary of the change in net assests 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 ASSESTS HELD (647,569)
NET ASSESTS, BEGINNING OF YEAR 54,846,904
------------
NET ASSESTS, 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
MCN ENERGY GROUP SAVINGS AND STOCK OWNERSHIP PLAN
EIN: 38-2820658, PN: 011
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 $ 58,112,356 $ 62,976,243
* Global Growth Fund Registered Investment Company 15,415,463 20,368,441
* Growth and Income Fund Registered Investment Company 35,826,565 46,193,330
* Fixed Income Fund Investment in Master Trust
Pacific Mutual #G-26114-00 17,165,509 17,165,509
AIG Life #GIC-18190 655,853 655,853
AIG Life #GIC-877 1,667,908 1,667,908
Hartford Life #009702 2,283,365 2,283,365
Hartford Life #GA-9950 514,602 514,602
MET Life #14289 1,136,038 1,136,038
The Boston Company #6420-002 10,394,901 10,394,901
New York Life GA #20051 2,399,442 2,399,442
New York Life GA #30783 2,976,543 2,976,543
John Hancock Mutual #8407 GAC 1,361,448 1,361,448
John Hancock Mutual #8868 GAC 2,775,301 2,775,301
* Voyager Fund Registered Investment Company 28,566,513 46,584,325
* New Opportunities Fund Registered Investment Companies 9,901,116 14,231,783
* Income Fund Registered Investment Companies 2,215,230 2,177,971
* Loomis Sayles Small Cap Value Fund Registered Investment Companies 774,448 743,873
* S & P 500 Fund Registered Investment Companies 2,669,930 3,056,028
* Putnam Cash on Deposit and in Transit (90,346) (90,346)
* Loan Fund Loans to Participants (Interest rates 9.75% to 11.00%) - 6,355,800
------------- -------------
$ 196,722,185 $ 245,928,358
============= =============
* Represents Party-in-Interest
</TABLE>
9
<PAGE> 14
MCN ENERGY GROUP SAVINGS AND STOCK OWNERSHIP PLAN
EIN: 38-2820658, PN: 011
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 n/a $ 21,874,596
Putnam Investments Fixed Income Fund $ 18,528,770 n/a
Putnam Investments Fixed Income Fund n/a $ 19,565,300
Putnam Investments Growth and Income Fund n/a $ 13,761,079
<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 $ 13,060,128 $ 21,874,596 $ 8,814,468
Putnam Investments n/a $ 18,528,770 n/a
Putnam Investments $ 19,639,726 $ 19,565,300 $ (74,426)
Putnam Investments $ 11,564,134 $ 13,761,079 $ 2,196,945
</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.
MCN ENERGY GROUP SAVINGS AND STOCK OWNERSHIP PLAN
BY: /s/ Howard L. Dow III
----------------------------------------------------
HOWARD L. DOW III
SENIOR VICE PRESIDENT, TREASURER AND CHIEF FINANCIAL OFFICER
MCN ENERGY GROUP INC.
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.
333-02105 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 MCN Energy Group
Savings and Stock Ownership Plan as of, and for the year ended, December 31,
1998.
/s/ George Johnson & Company
CERTIFIED PUBLIC ACCOUNTANTS
