The annual report presents 1987 activities of the Transition Institute at the University of Illinois which was contracted to assist in evaluating and extending the federal initiative relating to educational and employment difficulties experienced by young people with disabilities. Briefly reported are activities related to the contracted tasks of conducting a literature review (Linda Leach), conducting the annual meeting (Janus Chadsey-Rusch), and communicating with model projects (Merle Levy and Cindy Dobbs). The major portion of the document is given to a status report, summary of findings, and year 3 plans of the Institute's research efforts in the following areas: social ecology of the workplace (Janus Chadsey-Rusch); coworker mediated intervention strategies (Frank R. Rusch); instructional strategies for encouraging independence (James Halle); social support of transition programs (Richard P. Schutz); assessing and facilitating employers' positive acceptance of employees with handicaps (Adelle Renzaglia); the impact of federal policy on transition (Lizanne DeStefano); and the National Parent Study (Frank R. Rusch and Jeffrey McNair). Reports on evaluation research tasks cover: the model program data base (Jane Dowling); meta-analysis of transition education (Laird W. Heal); assessment of student characteristics/competencies (Robert Linn and Lizanne DeStefano); secondary education and transitional service outcomes (Delwyn Harnisch); and research on evaluation approaches (Robert Stake). Additional Institute tasks reported on include evaluation of technical assistance (Jane Dowling), experience for graduate students (Frank R. Rusch), and the performance measurement system (Rusch). (DB)