This report describes an observational study of one family-grouped classroom, a system in which elementary school children remain with the same teacher for two or more years. The class was composed of junior kindergarten, senior kindergarten, and grade 1 pupils. Each child was observed over a period of one year. A detailed observation schedule, included in the report, was designed to record the types of activities each child engaged in, the level at which he worked, who initiated the activity, the role of the child, and the length of the activity. Group composition and the presence of the teacher or other adult were also recorded when applicable. A measure of reading achievement and a teacher rating of behavioral growth were also taken. The results of the study question some of the arguments for family grouping. It was found that little cross-grade grouping occurred spontaneously, and there were very few instances of older children teaching younger children. However, attention span was found to be high, no doubt due to the skill of the teacher in guiding and directing the work of the group. There were no differences in the reading achievement of graduates of this group and a control group, and the greatest behavioral growth was in the area of expressive language and social development. (Author/CS)