A pilot project (to run from 1974 to 1979) to improve the delivery system of primary education in rural areas of the Philippines (Project Impact) and Indonesia (Proyek Pamong) is described in this progress report. Underway in seven villages, the experiment (aimed specifically at increasing schooling opportunities for young people in the Third World, combating high dropout rates, and encouraging out-of-school youth and older people to complete primary courses in their own time) is described in terms of its components: self-instructional modules as basic learning materials; traditional school buildings transformed into Community Learning Centers (CLC's); instructional supervisors in place of classroom teachers; rural education coordinator (daily link between research team, CLC's, and community); peer tutors, high school tutors, and programed teachers (volunteers from higher primary grades to lead lower grades in reading and math); home tutors (parents, siblings, neighbors); parents and community as part of the learning system. Problems encountered so far are outlined, and the encouraging assessment of preliminary results in terms of both learning and cost effectiveness is included. Other concerns covered are displacement of teachers, student attendence, language of instruction (bilingual methodologies), and replication of the project elsewhere. (RS)