A group of 34 schools considered innovative in their compensatory reading programs were selected for teacher and pupil observation. The purpose of observation was to describe the classroom activities of the teachers and students in a large variety of types of reading classes so that the relationship between what teachers and students do during reading instruction, and how well the students learn to read, could be studied systematically. Results of the teacher observations appear in Part 1 of the report; categories include: purpose and goals of scales, scale development, data collection, mode and content of instruction, and a discussion of results. Part 2 contains the results of the student observation and includes: purposes and goals of observation, information on the coding of student behavior, development of the scale, selection and training of observers, data collection, and discussion of results. Part 3 is a summary of teacher and student behavior including: mode content categories, group content categories, contrast between teacher and student behavior, and summary and conclusion. (Author/RC)