This annual report of the Digital Library Federation describes projects initiated in response to the following program priorities: (1) focus attention on libraries of materials that are born digital, including a social science data workshop and guides to quality in visual resource imaging; (2) integrate digital materials into the fabric of academic life, including academic image exchange, authorization systems, reference linking, and distributed finding aids; (3) stimulate the development of core digital library infrastructures, including a workshop on technical metadata elements for image files, international meeting on archival authority control, metadata working group, technical architecture committee, and I2-DSI (Internet2--Distributed Storage Infrastructure); and (4) develop the organizational support needed for managing digital libraries effectively, including institutional policies and practices for the long-term maintenance of digital materials and management forums. Outreach initiatives (e.g., publications and site visits) and organizational issues (e.g., executive subcommittee, new members, alliances, and staff) are also described. (MES)