The Appalachian Regional Commission used its $120 million appropriation for fiscal year 1986 to create and retain jobs under the jobs and private investment program, provide basic public facilities to the worst-off Appalachian counties under the distressed counties program, and to work toward closing the gaps in the Appalachian Development Highway System that carry the highest volume of traffic and are most critical to economic development. Efforts to make traditional industries more competitive, improve support for homegrown businesses, and enhance the quality of the Region's educational facilities included testing a new steelmaking process, surveying over 1,500 new Pennsylvania businesses, and training adult literacy tutors. Typical of the 36 projects funded in distressed counties were sewage system upgrades and water tank construction. Technical assistance activities included studies of regional economic competitiveness, effects of oil price changes on Appalachian coal demand, substituting coal for coke, and strategies for Appalachian educational institutions to diffuse technology. Sections of this report cover financial support and distribution of funding by project type and by state. State and regional maps, county population change data, and a directory of local development districts are included. (NEC)