Children's use of proforms in spoken descriptions of real situations was studied and compared with that of adults to explore possible developmental progressions in the use of indexical reference. A discourse distinction between situational and textual reference was applied to data from 6-year-old and 10-year-old children and from adults. Subjects described simple construction tasks to a listener who could not see the action (i.e., referential communication). The results show that the use of textual anaphoric reference increases with age. The older the speakers the more likely they were to use a noun in the discourse to which the proforms could point. The proforms can point either to just the situation, as in the case with most of the descriptions of the younger children, or to the text as well as the situation. In the latter case, the indexical anaphoric item takes part of its meaning from the object in the environment, in this case a cup or a bead, and part of its meaning from the word in the spoken text -- the word "cup" or the word "bead." The discourse reference ability of verbally pointing to another word is at another level of complexity and develops much later. The earliest devices for discourse cohesion are based on direct reference to the context, that is, indexical reference. With development, conventions of reference and cohesion become important and lead to the use of more textual anaphoric references. (SW)