The Council on Library Resources was created to address the problems of libraries and is now committed to the most significant library problem of all, ensuring that library resources are embraced as part of the solution for people who seek to solve their own problems and those of their communities and institutions. In this annual report, the Council assesses the environment in which it and the libraries it serves must operate as characterized by: (1) a switch to a service-based society, (2) an increased emphasis on accountability, (3) the changing demographic makeup of the United States, (4) increasing globalization of institutions, and (5) a troubled economy in the United States and worldwide. The annual report describes both completed and initiated programs in the Council's program areas (human resources, economics, infrastructure, access/processing) as it gives a picture of current activities. A special insert, "Shaping a Foundation for the Future," by Robert Gurwitt, examines these unsettling times for libraries. The organization's financial report includes breakdowns for various projects. (SLD)