This report highlights important developments in program-understanding work in 1997 and outlines some of the opportunities in the field in 1998. A framework of three focus areas is used to categorize research and development activities in program understanding: investigating cognitive aspects, developing support mechanisms, and maturing the practice. Although significant progress was made in these areas, the rapid changes in the software engineering landscape are giving rise to several new challenges. Three of the most important in the coming year are leveraging the Web, black-box understanding, and the Year 2000 problem.

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