August 31, 1997

To the Directors of
Cogeco Program Development Fund

We have audited the balance sheets of Cogeco Program Development Fund as at August 31, 1997 and 1996 and the statements of operations and fund balance for the years then ended. These financial statements are the responsibility of the Fund'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 an audit to obtain reasonable assurance 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.

In our opinion, these financial statements present fairly, in all material respects, the financial position of the Fund as at August 31, 1997 and 1996 and the results of its operations and the changes in its financial position for the years then ended in accordance with generally accepted accounting principles.

Samson Bélair / Dellitte & Touche
Chartered Accountants

November 28, 1997

Statement of Operations
Year ended August 31,

	1997	1996
REVENUE Interests and dividends Recovery of development advances	$326,279 92,500	$236,232 69,000
	418,779	305,232
EXPENSES Administration Promotion of the Fund and related activities Development Advances	29,118 20,350 217,500	23,542 --- 175,000
	266,968	198,542
EXCESS OF REVENUE OVER EXPENSES	$151,811	$106,690

Statements of Operating Fund Balance				Statements of Restricted Fund Balance
Years ended August 31,				Years ended August 31,
	1997	1996			1997	1996
Beginning of year Excess of revenue over expenses	$206,151 151,811	$133,961 106,690		Beginning of year	$5,058,000	$5,023,500
Transfer to the Restricted Fund of 50% of development advances recovered during the year	(46,250)	(34,500)		Transfer from the Operating Fund of 50% of development advances recovered during the year	46,250	34,500
End of year	$311,712	$206,151		End of year	$5,104,250	$5,058,000

Balance sheets
As at August 31,

	1997	1996
ASSETS Cash Receivables Investments (note 4)	$85,555 24,906 5,321,881	$61,568 42,608 5,164,775
	$5,432,342	$5,268,951
LIABILITIES Accounts payable	$16,380	$4,800
FUND BALANCES (note 5) Restricted Fund Operating Fund	5,104,250 311,712	5,058,000 206,151
	5,415,962	5,264,151
	$5,432,342	$5,268,951

ON BEHALF OF THE BOARD

Henri Audet, Director
Louis Audet, Director

Notes to the Financial Statements
Years ended August 31, 1997 and 1996

1. STATUS AND NATURE OF BUSINESS
The Fund, incorporated July 26, 1991 under the provisions of Part II of the Canada Corporations Act, is a non-profit organization. It encourages and promotes the development of new independently - produced Canadian Television Programming.

2. SIGNIFICANT ACCOUNTING POLICIES
The accompanying financial statements have been prepared in accordance with generally accepted accounting principles. Significant accounting policies are as follows:

1. Development advances are charged to current expenditures as disbursed. Recovery of development advances is recorded as revenue when received.
2. Interest income is accounted for on an accrual basis.
3. A statement of changes in financial position is not provided since disclosure in the statements of operations, Fund balances and the balance sheet is considered adequate.

3. DEVELOPMENT ADVANCES
The advances made during the year bear no interest and are repayable on the first day of principal photography of the series. Moreover, during the year, the Fund authorized funding for ongoing projects which were not completed by year-end. As at August 31, 1997, there were commitments for a total amount of $ 86,500 ($ 29,500 in 1996).

4. INVESTMENTS
Investments are recorded at cost. When the value has been permanently impaired, the Fund's policy is to reduce its investments to their estimated realizable value. Investments are intended to optimize fund performance with a view to ensuring the Fund's operations.

	Percentage	Market Value
Investment contracts, fixed rates varying from 6% to 9%, maturing from June 1998 to June 2000	16%	$ 942,349
Mutual funds Bonds Shares Balanced	30 29 25	1,757,342 1,743,201 1,483,898
	100%	$ 5,926,790

5. FUNDS
The Fund is comprised of a Restricted Fund and an Operating Fund. The Restricted Fund, amounting to $ 5,104,250 as at August 31, 1997 ($ 5,058,000 as at August 31, 1996), is restricted in perpetuity. 50% of recovery advances during the fiscal year is transferred from the Operating Fund to the Restricted Fund. Income earned on the Restricted Fund is used to make development advances and to finance the Operating Fund's activities. The Operating Fund includes operating revenue expenses.