This report is one of a series presenting findings from "Prospects: The Congressionally Mandated Study of Educational Growth and Opportunity." This study, conducted in response to the 1988 Hawkins-Stafford Amendments, was a major effort to examine the effects of Chapter 1 on student achievement and other school-related educational outcomes. Data were collected during school years 1991-1994 from nationally representative samples of students from grades 1, 3, and 7 in an initial sample of about 400 schools. An essential finding of an interim report was that Chapter 1, as it was configured in 1991 and 1992, was insufficient to close the gap in academic achievement between Chapter 1 students and their more advantaged peers. In the period covered by this study, the achievement gap remained a reality. There were some highly disadvantaged schools in which children performed better than students in other high-poverty schools, and these were characterized by school-wide Chapter 1 programs; greater use of tracking by ability; more experienced principals; lower rates of student and teacher mobility; a balanced emphasis on remediation and higher-order thinking in classroom instruction; and higher levels of community, parent, and teacher support for the school's mission. Chapter 1 did serve the students most in need of help, but its assistance was insufficient to close the achievement gap. This is not to say that Chapter 1 was not helpful, but it was not enough to bring its students up to par. Data from the Prospects study support earlier research findings that the characteristics of the individual student and family account for the largest part of the variation in student achievement as measured by test scores, but that schools do make an important contribution that can be enhanced. Three appendixes present characteristics of low and high poverty schools, characteristics of high-performing high-poverty schools, and a description of the Technical and Stakeholder Work Group for the study. (Contains 13 exhibits and 9 references.) (SLD)