CIRI's mission under ANCSA is to foster the economic, social, and cultural well being of CIRI shareholders. In mid-September, CIRI directors and executive management held a board of directors retreat at our new Talkeetna Lodge to review the corporation's five year plan and to discuss what, if anything, needs to be changed to meet the targets set in that plan earlier. We began by reviewing CIRI's current business operations and how they are doing in comparison to the company's five-year strategic plan. Each line of business was carefully reviewed, and detailed discussions analyzed future business opportunities and how they fit within the company's long-range plan.

Following our discussions of business operations, the CIRI Board of Directors and management continued to explore options that would allow shareholders to access some equity while maintaining stock restrictions. We continue to pursue a business strategy that includes a strong reinvestment program designed to increase dividends over time. We believe this strategy will enable us, as our new investments mature over the next three to five years, to make it possible for shareholders to access some equity of their stock. This should allow us to maintain Native control and continue to grow the company - which is the direction the special shareholder vote concluded we should be working toward.

In addition to accessing equity, formalizing an elders benefit program also continues to be a priority for the CIRI Board of Directors. As we shared in the April issue of the Shareholder Update, your board of directors and management have concluded after extensive research that the most beneficial

program for CIRI shareholders is to create an elders trust funded by CIRI that makes periodic payments over time.

For this type of trust to benefit shareholders, it will be necessary for congress to enact legislation allowing such a trust to be established without taxing its beneficiaries on the endowment of the trust. Arctic Slope Regional Corporation, CIRI, Sealaska, and other Native corporations are working together to solve this tax situation. Alaska Congressman Don Young has introduced legislation in the U.S. House of Representatives that would help overcome some of the problems that such a trust would create today. We will continue to pursue this avenue and hopefully will have good news soon.

Throughout the years shareholders have maintained a board of directors committed to meeting their obligations to the company and its shareholders, and have guided this corporation to where it is today. We are beginning to see change in the board of directors with the retirement of Roy Huhndorf, the decision of Allan Chase a few months ago not to seek re-election, and the recent retirement of Jerry Brown. All three served the corporation for more than 20 years and maintained the highest level of dedication to our shareholders. We will sorely miss these dedicated people. At the same time, the company must continue and grow for the future success of all, and we can do that with new, highly dedicated shareholders to take up the charge from those who retire over time. In that spirit, the shareholders have elected three new members to the board in the past two elections. These new members have the dedication and vision for the future, as our retired members had when they were first elected.

CIRI has a very bright future and a very dedicated board and management team dedicated to growing the corporation, increasing dividends and finding equitable ways to pass on some of the growth in value to our shareholders.

Long-standing CIRI Board Member Gerald G. "Jerry" Brown announced his retirement as a director of the board at a special board meeting on Sept. 17. Brown, who has been a director since the first board election in 1974, is retiring due to personal reasons and a strong commitment to his family.

"I have served on the CIRI board for 25 years, and I feel very good about leaving at this time," said Brown. "CIRI is in good shape financially and the company's board of directors and management have their hearts in the right place. I'm confident

CIRI will excel in the business world of the dominant society and the cultural world of the past."

As a director, Brown served as treasurer and second and third vice-president. He also served as chair of both the audit and planning committee, as well as the land and land negotiation committees ­ which were instrumental in resolving CIRI's land selections.

Mr. Brown extended a special thanks to CIRI shareholders for the privilege of serving on the board of directors.

The CIRI Board of Directors is now going through the selection process with the nominating committee and will appoint a shareholder to fill the remainder of the term of the vacant board seat, which expires in 2001, at their meeting on October 20, 1999.

Jerry Brown

CIRI's management and board of directors continually analyze the company's investments. This is done not only to understand how well existing investments are performing, but also to evaluate where the best opportunities are and whether a change in strategy is appropriate.

According to Carl Marrs, president and CEO, "Late last year, we concluded that the market for income properties was near its top and that it was a good time to consider selling some of CIRI's real estate portfolio. We also concluded that there were greater opportunities for growth in the communications and tourism sectors of our business. Based on this view, we decided to sell some real estate properties and re-invest the proceeds in communications and tourism."

During August and September, CIRI, through the hard work of Carol Gore, CIRI's vice president of income properties, completed the sale of 11 apartment properties in Texas, Arizona, New Mexico, Nevada and California. These properties were sold at very attractive prices and the sales generated substantial gains for the company. The proceeds from the sales are being reinvested in other growth areas that the company believes will have even greater returns in the near future.

CIRI continues to play a key role in the wireless communications industry in the United States. A new partnership with VoiceStream was the successful bidder in a Federal Communications Commission auction for wireless licenses covering

Chicago, Dallas, Omaha and other markets. In addition, CIRI has committed to participate in VoiceStream's merger with OMNIPOINT Corporation, a large East Coast wireless telephone service provider. As part of this merger, a new partnership with VoiceStream will acquire wireless systems in Philadelphia, Detroit, Miami and other important markets in the eastern United States.

CIRI also made several new investments in its tourism business in 1999. Alaska Heritage Tours, Inc. built a new hotel in Talkeetna, Alaska, and acquired a hotel in Seward, Alaska. In addition, Kenai Fjords Tours bought a new vessel and expanded facilities at Fox Island to support an increase in its marine tour business.

CIRI's 1999 capital budget demonstrates the company's active reinvestment plans. The revised capital budget approved by the board in August exceeds $230 million. New investments in communications will exceed $120 million, in real estate will approach $9 million, and in tourism will be nearly $20 million. Investments already committed, including the Kohlberg Kravis Roberts & Co.'s 1996 Fund LP, the Hyatt Regency Lake Las Vegas Resort, and others, will exceed $30 million this year. CIRI is also evaluating an additional $25 million in new acquisitions. The company's business plan calls for reinvesting the proceeds from the sale of the apartments into both existing businesses and new investments which should have greater returns over a shorter period of time, thereby enabling the company to pay greater dividends in the future.