The Penn State Adult Literacy Courseware project uses a "whole word" approach with some word-building activities in teaching 1,000 high frequency and functional words to adult beginning readers whose children participate in Chapter I programs. The aim of the project is to counteract the intergenerational effects of illiteracy. The courseware runs on an Apple IIe microcomputer and is interactive, branching, and responsive to the user's answers and needs. The objectives for the 1986-87 fiscal year were: (1) summative evaluation and monitoring of the courseware in parent literacy sites; (2) revision of the teacher's manual to include various models for using the courseware in parent literacy sites; (3) further development of teaching activities to facilitate the transfer of words recognized on a computer screen to recognition in print; and (4) completion of the interactive audiodisk version with formative evaluation in sites serving non-native speakers. In meeting the first objective, a group of parents and their children participated in the program. Comparison of pretests and posttests indicated that the 52 parents completing 20 hours of instructional time gained more than 1 year in reading level, compared to at least 50 hours of instructional time to make comparable gains in traditional programs. The remaining three objectives were met. Teachers in the program have noted significant attitudinal shifts in both parents and children. (RS)