FORM 10-Q

                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

              [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

                  For the quarterly period ended March 31, 2000

                                       OR

              [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

                For the transition period from _______ to _______

                         Commission file number: 1-10434

                      THE READER'S DIGEST ASSOCIATION, INC.
             (Exact name of registrant as specified in its charter)


                               Delaware 13-1726769

                (State or other jurisdiction of (I.R.S. Employer
                  incorporation or organization) Identification
                                      No.)

                       Pleasantville, New York 10570-7000

               (Address of principal executive offices) (Zip Code)

                                 (914) 238-1000
              (Registrant's telephone number, including area code)

                 ----------------------------------------------

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  registrant  was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days.

Yes [X] No [  ]


As of April 28, 2000, the following shares of the registrant's common stock were
outstanding:

Class A Nonvoting Common Stock, $0.01 par value:      92,814,123 shares
Class B Voting Common Stock, $0.01 par value:         12,432,164 shares



                                                             Page 1 of 22 pages.


<PAGE>



             THE READER'S DIGEST ASSOCIATION, INC. AND SUBSIDIARIES

                               Index to Form 10-Q
                                   (unaudited)

                                 March 31, 2000

                                                                        Page No.

================================================================================

Part I - Financial Information:

The Reader's Digest Association, Inc. and Subsidiaries
Consolidated Condensed Financial Statements:

  Consolidated Condensed Statements of Income
   for the three-month and nine-month periods ended March 31, 2000 and 1999  3

  Consolidated Condensed Balance Sheets
   as of March 31, 2000 and June 30, 1999                                    4

  Consolidated Condensed Statements of Cash Flows
   for the nine-month periods ended March 31, 2000 and 1999                  5

  Notes to Consolidated Condensed Financial Statements                       6

Management's Discussion and Analysis
  of Financial Condition and Results of Operations                          11


Part II - Other Information                                                 20
================================================================================


             The Reader's Digest Association, Inc. and Subsidiaries
                   Consolidated Condensed Statements of Income
        Three-month and nine-month periods ended March 31, 2000 and 1999
                      (In millions, except per share data)
                                   (unaudited)
<TABLE>
<CAPTION>

                                        Three-month period ended  Nine-month period ended
                                               March 31,                 March 31,
                                           2000         1999         2000         1999


<S>                                      <C>          <C>       <C>          <C>
Revenues                                 $ 620.4      $ 605.0   $ 1,983.6    $ 2,001.7

Product, distribution and editorial        218.4        228.9       708.5        755.5
 expenses
Promotion, marketing and
 administrative expenses                   361.6        341.8     1,049.7      1,096.4
Other operating items                        9.3           --         9.3         31.0
                                           -----        -----     -------      -------
  Operating profit                          31.1         34.3       216.1        118.8

Other income, net                            4.5          5.8        14.0         69.0
                                           -----        -----     -------      -------
  Income before provision for
   income taxes                             35.6         40.1       230.1        187.8

Provision for income taxes                  10.5         15.1        79.6         73.8
                                           -----        -----     -------      -------
  Income before cumulative effect of
   change in accounting principles          25.1         25.0       150.5        114.0

Cumulative effect of change in
  accounting principles for pension
  assets (net of tax provision
  of $15.2)                                   --           --          --         25.3
                                           -----        -----     -------      -------
  Net income                              $ 25.1       $ 25.0     $ 150.5      $ 139.3
                                           =====        =====     =======      =======
Basic earnings per share:
  Weighted-average common shares
   outstanding                             106.2        107.3       106.7        107.2
  Before cumulative effect of
   change in accounting principles        $ 0.23       $ 0.23     $  1.40      $  1.05
  Cumulative effect of change in
   accounting principles                      --           --          --         0.24
                                           -----        -----     -------      -------
  Basic earnings per share                $ 0.23       $ 0.23     $  1.40      $  1.29
                                           =====        =====     =======      =======
Diluted earnings per share:
  Adjusted weighted-average common
   shares outstanding                      107.4        108.3       107.7        107.7
  Before cumulative effect of
   change in accounting principles        $ 0.23       $ 0.23     $  1.39      $  1.05
  Cumulative effect of change in
   accounting principles                      --           --          --         0.24
                                           -----        -----     -------      -------
  Diluted earnings per share              $ 0.23       $ 0.23     $  1.39      $  1.29
                                           =====        =====     =======      =======
Dividends per common share                $ 0.05       $ 0.05     $  0.15      $ 0.325
                                           =====        =====     =======      =======
</TABLE>

See accompanying Notes to Consolidated Condensed Financial Statements.


<PAGE>


             The Reader's Digest Association, Inc. and Subsidiaries
                      Consolidated Condensed Balance Sheets
                     As of March 31, 2000 and June 30, 1999
                                  (In millions)
                                   (unaudited)

                                                      March 31,     June 30,
                                                        2000          1999
Assets

  Cash and cash equivalents                         $    157.8    $    413.4
  Receivables, net                                       322.3         319.9
  Inventories, net                                       145.6          94.9
  Prepaid expenses and other current assets              339.3         318.3
                                                      --------      --------
Total current assets                                     965.0       1,146.5

  Marketable securities                                  406.5          20.9
  Property, plant and equipment, net                     143.9         148.4
  Intangible assets, net                                 400.8          68.5
  Other noncurrent assets                                273.3         326.2
                                                      --------      --------
Total assets                                        $  2,189.5    $  1,710.5
                                                      ========      ========

Liabilities and stockholders' equity

  Accounts payable                                  $    154.7    $    130.7
  Accrued expenses                                       339.3         352.2
  Income taxes payable                                    71.6          56.0
  Unearned revenue                                       365.8         336.5
  Other current liabilities                              131.7         110.9
                                                      --------      --------
Total current liabilities                              1,063.1         986.3

  Postretirement and postemployment
   benefits other than pensions                          147.9         146.9
  Other noncurrent liabilities                           251.1         195.8
                                                      --------      --------
Total liabilities                                      1,462.1       1,329.0

  Capital stock                                           28.5          24.8
  Paid-in capital                                        222.4         146.2
  Retained earnings                                    1,088.9         955.4
  Accumulated other comprehensive income (loss)          189.4         (56.6)
  Treasury stock, at cost                               (801.8)       (688.3)
                                                      --------      --------
Total stockholders' equity                               727.4         381.5
                                                      --------      --------
Total liabilities and stockholders' equity          $  2,189.5     $ 1,710.5
                                                      ========      ========



See accompanying Notes to Consolidated Condensed Financial Statements.


<PAGE>



             The Reader's Digest Association, Inc. and Subsidiaries
                 Consolidated Condensed Statements of Cash Flows
                Nine-month periods ended March 31, 2000 and 1999
                                  (In millions)
                                   (unaudited)

                                                        Nine-month period ended
                                                                 March 31,
                                                             2000       1999

Cash flows from operating activities
  Net income                                             $  150.5    $  139.3
  Cumulative effect of change in accounting
   principles                                                  --       (25.3)
  Depreciation, amortization and asset impairments           37.1        46.0
  Minority interest                                          (2.6)         --
  Gains on the sales of businesses, certain assets
   and certain investments                                   (8.1)      (75.2)
  Other, net of the effects of acquisitions and
   dispositions                                              37.0        81.9
                                                         --------    --------

Net change in cash from operating activities                213.9       166.7
                                                         --------    --------
Cash flows from investing activities
  Proceeds from maturities and sales of short-term
   investments and marketable securities                     23.2         3.8
  Proceeds from sales of businesses and other
   long-term investments, net                                12.4         0.3
  Proceeds from sales of property, plant and
   equipment                                                  2.7       170.1

  Purchases of investments and marketable securities        (53.0)       (1.7)
  Payments for business acquisitions                       (393.9)      (32.7)
  Capital expenditures                                      (14.1)      (17.8)
                                                         --------    --------

Net change in cash from investing activities               (422.7)      122.0
                                                         --------    --------
Cash flows from financing activities
  Short-term borrowings, net                                  6.5       (12.4)
  Dividends paid                                            (17.0)      (35.8)
  Common stock repurchased                                  (45.5)         --
  Other, net                                                 14.5        13.1
                                                         --------    --------

Net change in cash from financing activities                (41.5)      (35.1)
                                                         --------    --------

Effect of exchange rate changes on cash                      (5.3)       (6.2)
                                                         --------    --------

Net change in cash and cash equivalents                    (255.6)      247.4

Cash and cash equivalents at beginning of period            413.4       122.8
                                                         --------    --------

Cash and cash equivalents at end of period               $  157.8    $  370.2
                                                         ========    ========



See accompanying Notes to Consolidated Condensed Financial Statements.


<PAGE>


             The Reader's Digest Association, Inc. and Subsidiaries
              Notes to Consolidated Condensed Financial Statements
                  (Dollars in millions, except per share data)
                                   (unaudited)

Unless  indicated  otherwise,  references  in  Notes to  Consolidated  Condensed
Financial  Statements  to  "we",  "us"  and  "our"  are to The  Reader's  Digest
Association,  Inc. and  Subsidiaries.  All  references to 2000 and 1999,  unless
specifically identified, are to fiscal 2000 and fiscal 1999, respectively.

(1) Basis of Presentation and Use of Estimates

The  accompanying   consolidated  condensed  financial  statements  include  the
accounts of The Reader's  Digest  Association,  Inc.  and its United  States and
international   subsidiaries.   All   significant   intercompany   accounts  and
transactions  have  been  eliminated  in  consolidation.  These  statements  and
accompanying notes have not been audited but, in the opinion of management, have
been  prepared in  conformity  with  generally  accepted  accounting  principles
applying certain assumptions and estimates, including all adjustments considered
necessary to present such information fairly. Although these estimates are based
on management's knowledge of current events and actions that we may undertake in
the future, actual results may ultimately differ from those estimates.

We report on a fiscal year beginning July 1. The three-month periods ended March
31, 2000 and 1999 are the third fiscal quarters of 2000 and 1999,  respectively.
Operating  results for any interim period are not necessarily  indicative of the
results for an entire year due to the seasonality of our business.

Certain  prior year  amounts  have been  restated to conform to the current year
presentation.  Revenues  have been  reclassified  to reflect  certain  publisher
remittances as a component of product, distribution and editorial expenses.

(2) Basic and Diluted Earnings Per Share

Basic  earnings  per share is computed by dividing  net income,  less  preferred
stock dividend  requirements,  by the  weighted-average  number of common shares
outstanding  during the period.  Diluted  earnings  per share is computed in the
same  manner,   except  that  the  weighted-average   number  of  common  shares
outstanding  is adjusted to assume the exercise and  conversion of certain stock
options.  The preferred  stock dividend  requirements  were $0.3 for each of the
three-month  periods  ended  March 31,  2000 and 1999,  and $1.0 for each of the
nine-month periods ended March 31, 2000 and 1999.

(3) Inventories

                                                    March 31    June 30,
                                                      2000        1999

Raw materials                                       $   11.3   $  12.7
Work-in-progress                                        18.0      20.2
Finished goods                                         116.3      62.0
Total inventories                                   $  145.6   $  94.9


<PAGE>


(4) Revenues and Operating Profit (Loss) by Operating Segments

In the first quarter of 2000, we modified our segment  reporting  information to
include an "Other Businesses" segment.  Other Businesses includes the activities
of  gifts.com,   Inc.,   financial  services,   Internet  and  other  developing
businesses. Reportable segments are based on our method of internal reporting.

Prior period revenue and operating  profit (loss) segment  information  has been
restated to present the four reportable segments indicated below. The accounting
policies  of the  segments  are the same as those  described  in Note One to our
consolidated  financial  statements  included  in  our  1999  Annual  Report  to
Stockholders.  The restatement did not materially affect our segment  disclosure
included in Note Twelve to our consolidated financial statements included in our
1999 Annual Report to Stockholders.

                           Three-month period ended   Nine-month period ended
                                    March 31,               March 31,
                                 2000       1999         2000         1999
Revenues

  Global Books and Home
   Entertainment              $  401.3   $  374.3    $  1,202.6   $  1,203.5
  U.S. Magazines                 136.8      147.9         521.7        538.6
  International Magazines         73.0       76.1         224.0        240.0
  Other Businesses                 9.3        6.7          35.3         19.6
                              --------   --------    ----------   ----------

Total revenues                $  620.4   $  605.0    $  1,983.6   $  2,001.7
                              ========   ========    ==========   ==========


                            Three-month period ended  Nine-month period ended
                                     March 31,               March 31,
                                 2000       1999          2000        1999
Operating Profit (Loss)
  Global Books and Home
   Entertainment              $  46.7    $  27.0       $  173.9    $   82.6
  U.S. Magazines                  7.8       15.4           85.1        82.4
  International Magazines        (2.0)      (6.7)           2.2       (14.6)
  Other Businesses              (12.1)      (1.4)         (35.8)       (0.6)
                              -------    -------       --------    --------
Segment operating profit         40.4       34.3          225.4       149.8
  Other operating items          (9.3)        --           (9.3)      (31.0)
                              -------    -------       --------    --------

Total operating profit        $  31.1    $  34.3       $  216.1    $  118.8
                              =======    =======       ========    ========


(5) Comprehensive Income

Accumulated  other  comprehensive  income (loss) as reported in the Consolidated
Condensed  Balance  Sheets as of March 31,  2000 and June 30,  1999,  represents
unrealized  gains/losses on certain investments and foreign currency translation
adjustments. The components of comprehensive income, net of related tax, for the
three-  month and  nine-month  periods  ended  March  31,  2000 and 1999 were as
follows:

<TABLE>
<CAPTION>
                                              Three-month period ended  Nine-month period ended
                                                       March 31,               March 31,
                                                   2000        1999        2000        1999

<S>                                              <C>         <C>        <C>         <C>
Net income                                       $   25.1    $  25.0    $  150.5    $  139.3
Change in other comprehensive income (loss):
  Foreign currency translation
   adjustments                                       (7.8)     (14.8)       (9.4)       (2.3)
  Net unrealized gains on certain
   investments, net of deferred
   taxes of $45.1 and $137.5,
   respectively                                     101.4         --       255.4          --
                                                 --------    -------    --------    --------
Total comprehensive income                       $  118.7    $  10.2    $  396.5    $  137.0
                                                 ========    =======    ========    ========
</TABLE>


Net unrealized gains on certain investments,  net of deferred taxes, principally
represent our  investments  in the voting common shares of LookSmart,  Ltd., and
Healtheon/WebMD  Corporation.  These securities are accounted for and classified
as available for sale  securities  and are included in marketable  securities in
the  Consolidated  Condensed  Balance Sheet at fair value based on quoted market
prices.

As of March 31,  2000,  the  market  value of those  shares  totaled  $396.0 for
LookSmart, Ltd., and $9.9 for Healtheon/WebMD Corporation. As of April 28, 2000,
the market value of those shares totaled  $216.0 for  LookSmart,  Ltd., and $9.1
for Healtheon/WebMD Corporation.

(6)  Other Operating Items

In the third quarter of 2000, we recorded  other  operating  items of $9.3 ($6.2
after tax, or $0.06 per share) comprised of:

-  Charges of $9.7 ($6.4 after tax or $0.06 per share)  primarily  for severance
   costs  associated  with  the  outsourcing  of  customer  service  in  certain
   countries  and  centralization  of  certain  accounting  functions  and costs
   related to the discontinuance of certain unproductive activities.

-  Adjustments to remaining accrual balances from charges originally recorded in
   1999,  1998 and 1996.  This  resulted in a benefit of $4.0 ($2.7 after tax or
   $0.02 per share).

-  Asset  impairments  of $3.6  ($2.5  after  tax or $0.02  per  share)  related
   principally to property, plant and equipment in the United Kingdom.

In the second quarter of 1999, we recorded other operating items of $31.0 ($21.5
after tax or $0.20 per share).  The other operating items and impairment  losses
recorded in the second quarter of 1999  comprised  charges of $66.0 ($43.7 after
tax or $0.41 per share)  primarily  for: (i)  severance  costs  associated  with
re-engineering activities,  (ii) costs related to the discontinuation of certain
unproductive  businesses  and  (iii)  asset  impairments.   These  charges  were
partially  offset by  adjustments  to accrual  balances from prior year charges,
resulting in a benefit of $35.0 ($22.2 after tax or $0.21 per share).

As described in Note Two to our consolidated  financial  statements  included in
our 1999 Annual Report to Stockholders,  we recorded charges of $37.9, $70.0 and
$35.0 in the years  ended  June 30,  1999,  1998 and 1997,  respectively.  Other
operating items in 1999, net of reversals of $55.6 for adjustments to prior year
accruals,  related primarily to the streamlining of our organizational structure
and the strategic repositioning of certain businesses.  Other operating items in
1998  consisted   primarily  of  severance   costs   associated  with  workforce
reductions.  Other operating items in 1997 related  primarily to the realignment
of our organizational structure and operations.

The  current  activity  and  reserve  balances  remaining  at  March  31,  2000,
associated with other operating  items,  excluding  asset  impairment  activity,
were:

<TABLE>
<CAPTION>
                                              Balance at    Current       Balance
                                            June 30, 1999   Activity     Remaining

<S>                                            <C>          <C>           <C>
Employee retirement and severance benefits     $  48.0      $ (17.0)      $  31.0
Contract terminations                             15.0         (8.6)          6.4

Totals                                         $  63.0      $ (25.6)      $  37.4
</TABLE>


<PAGE>


(7) Debt

As described in Note Nine to our consolidated  financial  statements included in
our 1999 Annual Report to Stockholders,  we are a party to a Competitive Advance
and Revolving Credit Facility Agreement (the Credit  Agreement),  which provides
for borrowings of up to $300.0. The Credit Agreement was amended as of September
2, 1999.  Prior to the amendment,  the Credit  Agreement  included a covenant to
maintain a minimum  level of  consolidated  tangible  net worth.  The  amendment
provides  borrowing  flexibility  by replacing  this covenant with  covenants to
maintain minimum levels of consolidated assets and net worth and a maximum level
of leverage.  At March 31, 2000, no borrowings were outstanding under the Credit
Agreement.

(8) Share Exchange

In September 1999, we executed a share exchange with the DeWitt Wallace-Reader's
Digest Fund and the Lila  Wallace-Reader's  Digest Fund (the  Funds).  Under the
terms of the exchange,  the Funds exchanged  approximately 9.3 million shares of
Class B voting  common  stock for  approximately  8.0 million  shares of Class A
nonvoting  common stock,  at an exchange  ratio of 0.865 Class A shares for each
Class B share.  As a result,  we exchanged  Class A treasury shares at a cost of
$164.9 and a market value of $239.9, for Class B shares, resulting in additional
paid-in capital of $75.0.

(9) Change in Accounting for Pension Assets

Effective July 1, 1998, we changed our method for calculating the market-related
value  of  pension  plan  assets.   This  method  is  used  in  determining  the
return-on-asset  component  of annual  pension  expense and the  cumulative  net
unrecognized gain (loss) subject to amortization. We believe that the new method
is more  widely used in practice  and  preferable  because it results in pension
plan  asset  values  that more  closely  approximate  fair  value,  while  still
mitigating the effect of annual market value fluctuations.  In addition, the new
method facilitates the global management of our pension plans as it results in a
consistent methodology for all plans. This change resulted in a non-cash benefit
in the first quarter of 1999 of $40.5 ($25.3 after tax or $0.24 per share). This
benefit  represented the cumulative  effect of the change related to years prior
to 1999.

(10) Acquisition of Books Are Fun, Ltd.

On October 1, 1999, we purchased 100% of the  outstanding  common stock of Books
Are Fun,  Ltd.  Books  Are Fun,  Ltd.  sells  books  and gift  items by  display
marketing those products on-site at schools and corporate businesses.  The total
purchase  price of $393.2 was financed  through a combination  of internal funds
and bank  borrowings of $120.0 and was repaid during the second quarter of 2000.
The  acquisition  was accounted for using the purchase  method of accounting and
generated  $346.0 in purchased  goodwill.  The goodwill is being amortized using
the  straight-line  method  over a period of 20 years.  The results of Books Are
Fun, Ltd. have been consolidated  since October 1, 1999, and are included in our
financial  results for the  three-month  and nine-month  periods ended March 31,
2000.


<PAGE>


The following  presents pro forma  information  as though the  acquisition  took
place at the beginning of each period presented.

<TABLE>
<CAPTION>
                                  Three-month period ended     Nine-month period ended
                                         March 31,                    March 31,
                                      2000        1999            2000           1999

<S>                               <C>         <C>            <C>           <C>
Pro forma information:
  Revenues                        $   620.4   $   636.1      $   2,014.5   $   2,143.7
  Income before extraordinary
   items                          $    25.1   $    20.0      $     144.9   $     108.2
  Net income                      $    25.1   $    20.0      $     144.9   $     133.5

Earnings per share:
  Basic                           $    0.23   $    0.18      $      1.35   $      1.24
  Diluted                         $    0.23   $    0.18      $      1.34   $      1.23
</TABLE>

These  unaudited pro forma results have been prepared for  comparative  purposes
only and include certain adjustments, such as additional amortization expense as
a result of goodwill,  increased  interest expense from the acquisition debt and
lower interest income from reduced cash on hand. The results are not intended to
be indicative of past or future results of operations had the  acquisition  took
place at the beginning of each period.

(11) Sale of American Health

In August 1999, we sold American  Health  magazine,  which resulted in a gain of
$6.5 ($4.1 after tax or $0.04 per share) recorded in other income, net.

(12) Commitments

In February  2000,  we announced  our plans to enter into a long-term  licensing
agreement with World's Finest Chocolate,  Inc. Under the terms of the agreement,
QSP, Inc. will have a long-term commitment to purchase World's Finest Chocolate,
Inc.  products and the exclusive  right to sell those  products for  fundraising
purposes.  The  purchase  commitment  will be based on  annual  minimum  tonnage
amounts.

In October 1999, we entered into an agreement with  BrandDirect  Marketing Inc.,
an affinity  membership-based direct marketing company, to acquire an 18% equity
interest  in  BrandDirect  Marketing  Inc.  and to develop  and market  Reader's
Digest-branded  membership  clubs. As prescribed by the agreement,  we have paid
$25.0 in October 1999 and are scheduled to make another payment of $25.0 in July
2000 for a total  investment of $50.0.  The agreement also permits us to acquire
additional equity in BrandDirect Marketing Inc. through the exercise of warrants
and other rights.  This  investment is being accounted for using the cost method
and is included in other noncurrent assets in the Consolidated Condensed Balance
Sheet.

 (13) Share Repurchase Plan

In January  2000, we announced  plans to  repurchase  up to 5 million  shares or
about 5 percent of our outstanding  Class A nonvoting  common stock. As of March
31, 2000, we have purchased approximately 1.3 million shares totaling $45.5.


<PAGE>


             The Reader's Digest Association, Inc. and Subsidiaries
                      Management's Discussion and Analysis
                of Financial Condition and Results of Operations
                  (Dollars in millions, except per share data)
                                   (unaudited)

 Unless indicated otherwise, references in Management's Discussion and Analysis
to "we" and "our" are to The Reader's Digest Association, Inc. and Subsidiaries.
All references to 2000 and 1999, unless specifically  identified,  are to fiscal
2000 and fiscal 1999, respectively.

Management's  Discussion  and  Analysis  of  operating  profit has been  written
excluding the net effect of:

- Third  quarter  2000  other  operating  items of $9 ($6 after tax or $0.06 per
  share).

- Second quarter 1999 other  operating  items of $31 ($21 after tax or $0.20 per
  share).

The other  operating  items  recorded  in the third  quarter  of 2000  comprised
charges  of  $13,  primarily  for:  (i)  severance  costs  associated  with  the
outsourcing of customer service in certain  countries and the  centralization of
certain accounting  operations of $6, (ii) costs related to the  discontinuation
of certain  activities  of $3 and (iii) asset  impairments  of $4. These charges
were  partially  offset by  adjustments  to  accrual  balances  from  prior year
charges, resulting in a benefit of $4.

The other  operating  items  recorded  in the second  quarter of 1999  comprised
charges  of  $66,   primarily   for:  (i)  severance   costs   associated   with
re-engineering activities,  (ii) costs related to the discontinuation of certain
unproductive  businesses  and  (iii)  asset  impairments.   These  charges  were
partially  offset by  adjustments  to accrual  balances from prior year charges,
resulting in a benefit of $35.

THREE-MONTH PERIOD ENDED MARCH 31, 2000,  COMPARED WITH THREE-MONTH PERIOD ENDED
MARCH 31, 1999

Results of Operations:  Company-Wide

Revenues and Operating Profit

Revenues for the third quarter of 2000 increased 3% to $620,  compared with $605
in the third quarter of 1999. Excluding the adverse effect of changes in foreign
currency  exchange  rates,  revenues  increased  6%. The  revenue  increase  was
primarily  attributable  to the  addition  of Books  Are Fun,  Ltd.,  which  was
acquired  during  the  second  quarter of 2000 and  provided  $45 in  additional
revenues. We also experienced revenue growth because of our other new businesses
(insurance alliances and gifts.com,  Inc.) and in certain  international markets
for Global Books and Home  Entertainment  products and Reader's Digest magazine.
Partially offsetting these increases were:

-     Revenue declines for certain Global Books and Home Entertainment  products
      from the elimination of marginally profitable  activities.  These declines
      were  experienced  in the United States for video products and in Finland,
      Germany and Benelux for music products.

-     Declines  in  sales  of  Reader's  Digest  magazine  in  certain  markets,
      primarily  because of previously  planned  reductions  in the  circulation
      levels.

-     Lower revenues from the sale of the  subscription  list of American Health
      magazine during the first quarter of 2000.


<PAGE>


Operating  profit for the third quarter of 2000  increased 18% to $40,  compared
with $34 in the third quarter of 1999. The increase in operating profit,  mostly
in the United States,  was principally from overhead cost reduction  initiatives
in Global Books and Home  Entertainment.  Contributing  to Global Books and Home
Entertainment's profit improvement were higher sales of Select Editions products
sold  globally  and a  higher-priced  mix of sales of  general  books  and music
products in Brazil and Poland.

Partially  offsetting  these  increases in operating  profit were  marketing and
start-up costs related to gifts.com,  Inc. and other new businesses,  along with
operating profit declines experienced by U.S. Magazines.

Other Income, Net

Other income, net decreased in the third quarter of 2000 to $5, compared with $6
in the third quarter of 1999.

Income Taxes

For the third  quarter of 2000,  the reported tax rate was 29.5%,  compared with
37.7%  for the  third  quarter  of  1999.  Excluding  the  items  affecting  the
comparability  of  reported  results in the third  quarter of 2000,  the overall
effective  tax rate were  34.5% for the third  quarter of 2000 and 37.5% for the
prior year period.  The lower overall effective rate for 2000 is a result of tax
initiatives in certain  international  markets,  as well as the deductibility of
goodwill associated with the sale of American Health magazine.

Net Income and Earnings Per Share

Net income was $25 or $0.23 per share on both a basic and diluted-earnings basis
for the third quarter of 2000 and 1999.  Excluding  the items in 2000  affecting
the comparability of reported results,  basic and diluted earnings per share was
$0.29 in the third quarter of 2000.

Results of Operations:  Operating Segments

Global Books and Home Entertainment

Revenues  for  Global  Books and Home  Entertainment  increased  7% in the third
quarter  of 2000 to $401,  compared  with  $374 in the  third  quarter  of 1999.
Excluding  the adverse  effect of changes in foreign  currency  exchange  rates,
revenues increased 12%. The primary reasons for the increase in revenues were:

-    The  addition  of Books Are Fun,  Ltd.,  which was  acquired  in the second
     quarter of 2000, and provided $45 in revenue for the third quarter of 2000.

-     Revenue growth in France,  Brazil, Mexico and Australia,  principally as a
      result of growth in Select  Editions  product sales and increased  pricing
      and higher unit sales of general books products.

-     Growth in the United States from higher sales of Young  Families  products
      primarily because of increased promotions.

Partially offsetting these increases were revenue declines resulting principally
from the  continued  strategic  reduction  in the  number of  mailings  and mail
quantities  sent  to  marginal  customers  and  the  elimination  of  marginally
profitable activities. These declines were most notably in the United States for
video products and Germany, Finland and Benelux for music products.

Operating profit for Global Books and Home Entertainment increased significantly
in the third  quarter of 2000 to $47,  compared with $27 in the third quarter of
1999.  The increase was  primarily the result of improved  profitability  in the
United States, Brazil, Australia and Poland.

In the United  States,  benefits were  realized  primarily  from  re-engineering
efforts to reduce overhead costs. In Brazil,  results improved  principally from
the successful  performance of music products and a  higher-priced  mix of music
and Select  Editions  products.  Higher prices and increases in sales of general
books  products  in  Australia,  along  with the  closing  of a retail  business
improved  profits  in that  country.  Profits  increased  in Poland  because  of
higher-priced  and increased  sales of music products and the  elimination of an
unprofitable music club.

U.S. Magazines

Revenues for U.S.  Magazines  decreased 8% in the third quarter of 2000 to $137,
compared  with $148 in the third  quarter of 1999.  The decrease in revenues was
primarily attributable to:

-     The absence of American Health magazine,  whose subscription list was sold
      during the first  quarter of 2000.  The last issue for that  magazine  was
      published in October 1999.

-     Lower  subscription   revenues  from  Reader's  Digest  magazine,   mostly
      resulting from the planned reduction in the circulation rate base.

Partially  offsetting  these  decreases  was higher  advertising  revenues  from
Reader's  Digest  magazine,   resulting  from  an  increase  in  the  number  of
advertising pages sold at a slightly higher rate per page.

Operating  profit for U.S.  Magazines  decreased in the third quarter of 2000 to
$8, compared with $15 in the third quarter of 1999. The decrease mostly reflects
reduced profit from increased  investment spending in new marketing channels for
Reader's  Digest  magazine and higher  circulation  promotion  costs for certain
special interest magazines.

International Magazines

Revenues for International  Magazines  decreased 4% in the third quarter of 2000
to $73,  compared with $76 in the third  quarter of 1999.  Excluding the adverse
effect of changes in foreign  currency  exchange rates,  revenues  increased 1%.
Revenues  increased  primarily  because of subscription  and  advertising  price
increases  in many  markets,  especially  Germany,  Mexico and Hong Kong.  These
increases  were partially  offset by previously  planned  circulation  rate base
reductions experienced in most markets.

Operating losses declined in the third quarter of 2000 to $(2) from an operating
loss of $(7) in the third quarter of 1999, primarily as a result of subscription
price  increases in many markets and the closure of  unprofitable  operations in
Chile,  Colombia and Peru.  These profit  improvements  were partially offset by
increased marketing investments in international markets.

Other Businesses

Revenues from Other Businesses increased 39% in the third quarter of 2000 to $9,
compared with $7 in the third quarter of 1999,  primarily as a result of revenue
from insurance alliances and gifts.com, Inc.

Operating losses from Other Businesses amounted to $(12) in the third quarter of
2000,  compared with a loss in the third  quarter of 1999 of $(1).  These losses
were  primarily  attributable  to marketing  and start-up  costs for a number of
ventures,  principally  gifts.com,  Inc. Partially  offsetting these losses were
profits from insurance alliances during the quarter.


<PAGE>


NINE-MONTH  PERIOD ENDED MARCH 31, 2000,  COMPARED WITH NINE-MONTH  PERIOD ENDED
MARCH 31, 1999

Results of Operations:  Company-Wide

Revenues and Operating Profit

Revenues for the nine-month  period ended March 31, 2000 decreased 1% to $1,984,
compared with $2,002 for the prior year period.  Excluding the adverse effect of
changes in foreign currency exchange rates,  revenues  increased 2%. The primary
reasons for the increase in revenues were:

-    The  addition of Books Are Fun,  Ltd.,  which was acquired as of October 1,
     1999 and  provided  $143 in  additional  revenues to Global  Books and Home
     Entertainment.

-    Additional  revenues from Other Businesses,  primarily because of increased
     activity from gifts.com, Inc. and insurance alliances.

Offsetting a portion of these  increases  were lower  revenues from Global Books
and Home  Entertainment,  principally  because of the strategic reduction in the
number of mailings and mail quantities  within mailings in the first half of the
year.  These  reductions  were  primarily  for  general  books,  music and video
products.  Also,  planned  reductions in the  circulation  rate base of Reader's
Digest  magazine sold in the United  States and  international  markets  reduced
sales volumes.

Operating  profit for the  nine-month  period  ended  March 31,  2000  increased
significantly  to $225,  compared  with $150 for the prior year  period.  Profit
increases  were  realized in virtually all  countries,  especially in the United
States and to a lesser extent in Germany,  Brazil, France, Poland, Australia and
the United  Kingdom.  The increase in operating  profit in the United States was
primarily  the result of  re-engineering  efforts,  particularly  the  strategic
reduction of promotional  mailings,  which lowered product and promotion  costs.
Additionally,  overhead  costs were  lower on a  company-wide  basis,  primarily
because  of  initiatives  to  re-engineer   critical   processes  and  eliminate
marginally profitable activities.

International  Magazines also  contributed to the increase in operating  profit,
primarily from  subscription  price  increases,  lower  promotion costs from the
strategic  reduction  in  promotional  mailings  and  the  closing  or  sale  of
marginally profitable operations. A portion of the operating profit increase was
offset by marketing and start-up  costs for new business  ventures,  principally
gifts.com, Inc.

Other Income, Net

Other income,  net decreased for the  nine-month  period ended March 31, 2000 to
$14,  compared  with $69 for the prior  year  period.  Items that  affected  the
comparability of other income,  net during the nine-month period ended March 31,
2000 included:

-    A gain from the sale of  American  Health  magazine  of $6 ($4 after tax or
     $0.04 per share).

-     A net  increase in  interest  income of $5 because of higher cash and cash
      equivalents balances compared with the prior year.

Items that affected the comparability of other income, net during the nine-month
period ended March 31, 1999 included:

-     A gain  from  the  sale of  important  works  of art  from  our  fine  art
      collection of $85 ($53 after tax or $0.50 per share).

-    Foreign exchange losses, principally from the devaluation of the Russian
     ruble.

-    A loss from the sale of our  operations in South Africa of $8 ($6 after tax
     or $0.06 per share).

Income Taxes

For the nine-month period ended March 31, 2000, the reported tax rate was 34.6%,
compared with 39.3% for the  nine-month  period ended March 31, 1999.  Excluding
the items  affecting the  comparability  of reported  results for the nine-month
period ended March 31, 2000 and 1999,  the overall  effective tax rate was 34.5%
for 2000 and 37.5% for 1999.  The  lower  overall  effective  rate for 2000 is a
result of tax  initiatives  in  certain  international  markets,  as well as the
deductibility of goodwill associated with the sale of American Health magazine.

Change in Accounting Principles

In the first quarter of 1999, we adopted a preferred  method for calculating the
market-related  value of pension plan assets. This method is used in determining
the  return-on-asset  component of annual pension expense and the cumulative net
unrecognized  gain (loss)  subject to  amortization.  The  cumulative  effect of
adopting  this change,  for years prior to 1999,  was a non-cash  benefit of $40
($25 after tax or $0.24 per share).

Net Income and Earnings Per Share

Net income was $150 or $1.39 per share on a  diluted-earnings  basis  ($1.40 per
share for basic  earnings per share) for the  nine-month  period ended March 31,
2000.  For the prior year  period,  net income was $139 or $1.29 for diluted and
basic earnings per share.  Excluding other operating items in 2000 affecting the
comparability of reported  results,  diluted earnings per share was $1.45 ($1.46
per share for basic  earnings per share) for the  nine-month  period ended March
31, 2000. Excluding the cumulative effect of change in accounting principles for
pension  assets in the first quarter of 1999 and other  operating  items in 1999
affecting the comparability of reported results,  basic and diluted earnings per
share were $1.25 for the nine-month period ended March 31, 1999.

Results of Operations:  Operating Segments

Global Books and Home Entertainment

Revenues for Global Books and Home  Entertainment were $1,203 for the nine-month
periods ended March 31, 2000 and 1999.  Excluding the adverse  effect of changes
in foreign  currency  exchange rates,  revenues  increased 4% for the nine-month
period ended March 31, 2000.  Revenue  growth of $143 from the addition of Books
Are Fun,  Ltd.  in the second  quarter of 2000 and other  revenue  gains in some
international  markets were partially  offset by certain  revenue  declines.  We
experienced  significant  revenue growth in Brazil,  Mexico,  Poland and France.
Improved payment performance,  along with a higher-priced  product mix of Select
Editions and general books products in these four countries,  increased revenues
for Global Books and Home Entertainment products.

The declines in revenues were primarily  attributable to the strategic reduction
in the  number  of  mailings  to  marginal  customers  and  the  elimination  of
marginally profitable activities. These actions, which took place principally in
the first half of the fiscal year in the United States,  resulted in lower sales
of general books, music and video products.  In our European markets,  including
Finland,  Benelux,  Germany,  Switzerland and the United Kingdom,  these efforts
resulted  in lower  sales of music and general  books  products.  The closing of
unprofitable  operations  in Chile,  Colombia and Peru and the sale of our South
African operations in 1999 also contributed to the revenue decline.

Operating profit for Global Books and Home Entertainment increased significantly
for the  nine-month  period ended March 31, 2000 to $174,  compared with $83 for
the  prior  year  period.  Profit  increases  were  realized  in  virtually  all
countries,  especially  in the United  States and to a lesser extent in Germany,
Poland, France,  Australia,  the United Kingdom and Brazil.  Operating profit in
most countries improved due to substantial reductions in overhead,  product, and
promotion  costs  from  re-engineering   efforts.   In  some  countries,   these
improvements  were  partially  offset by the effect of lower sales  volumes from
fewer mailings to marginal customers.


<PAGE>


Operating  profit  in the  United  States  increased  primarily  because  of the
addition of Books Are Fun, Ltd., and reduced costs from re-engineering  efforts.
In Germany,  improved operating profit was primarily from re-engineering efforts
to reduce product and promotion costs. Contributing to the profit improvement in
Poland, France,  Australia and the United Kingdom, were re-engineering  efforts,
which reduced  product costs and promotional  mailings to marginally  profitable
customers. In addition, Poland and France benefited from higher overall response
rates to Select Editions and general books products. Brazil realized an increase
in operating  profit from higher average prices for Select  Editions and general
books products.

In Russia,  we scaled back our operations in response to the economic  crisis in
that country in August 1999. As a result, an operating loss was realized for the
nine-months ended March 31, 1999. In the current year period, we have realized a
profit in Russia, principally from revenue growth in the third quarter of 2000.

U.S. Magazines

Revenues for U.S.  Magazines  decreased 3% for the nine-month period ended March
31, 2000 to $522,  compared with $539 for the prior year period. The decrease in
revenues was attributable to:

-     Lower subscription revenues from Reader's Digest magazine,  resulting from
      the planned reduction in the circulation rate base to 12.5 million,  which
      was  effective on July 1, 1999,  compared  with a base of 15.0 million for
      the period  from July 1 to December  31,  1998,  and 13.3  million for the
      period from January 1 to June 30, 1999.

-     Slightly  lower  advertising   revenues  from  Reader's  Digest  magazine,
      resulting from a reduction in  advertising  pages sold at a slightly lower
      rate per page.

-     Lower revenues for American Health magazine,  whose  subscription list was
      sold during the first  quarter of 2000.  The last issue for that  magazine
      was published in October 1999.

Partially  offsetting  these decreases were higher average selling prices across
all QSP, Inc. product lines and an increase in sales of QSP, Inc. gift products.
In addition,  revenues  increased  from the sale of three  additional  issues of
American Woodworker magazine, which was acquired in the second quarter of fiscal
1999.

Operating profit for U.S. Magazines increased 3% for the nine-month period ended
March 31, 2000 to $85, compared with $82 for the prior year period. The increase
mostly reflects  improved  margins of QSP, Inc., and lower promotion and product
costs for Reader's Digest  magazine,  primarily  attributable to the circulation
rate base reduction.

International Magazines

Revenues for  International  Magazines  decreased 7% for the  nine-month  period
ended  March 31,  2000 to $224,  compared  with $240 for the prior year  period.
Excluding  the adverse  effect of changes in foreign  currency  exchange  rates,
revenues  decreased  1%.  Revenues  declined  principally  as a  result  of  our
strategic reduction of the circulation rate base for Reader's Digest magazine in
most markets to improve profitability.

Revenues  declined in part because  operations  in Russia were  sharply  reduced
after the second  quarter of 1999 in  response  to the  economic  crisis in that
country,  and as a result,  there were  significantly  fewer  subscribers in the
nine-month  period ended March 31, 2000. The closing of unprofitable  operations
in Chile, Colombia and Peru and the sale of our South African operations in 1999
also  contributed  to the decline in revenues.  These  declines in revenues were
partially  offset by  subscription  price increases and increases in circulation
rates, particularly in Mexico and Brazil.

Operating  profit improved to $2 for the nine-month  period ended March 31, 2000
from an operating loss of $(15) for the prior year period, primarily as a result
of  subscription  price increases in many markets and lower promotion costs from
the strategic reduction in promotional mailings.  In addition,  operating profit
improved from the closing or sale of unprofitable operations.


<PAGE>


Other Businesses

Revenues from Other  Businesses  increased 80% for the  nine-month  period ended
March 31, 2000 to $35, compared with $20 for the prior year period, primarily as
a result of revenue increases from gifts.com, Inc. and insurance alliances.

Operating  losses from Other  Businesses  amounted  to $(36) for the  nine-month
period ended March 31, 2000,  compared  with losses for the prior year period of
$(1).  These losses were  primarily  attributable  to the marketing and start-up
costs  for a number  of  ventures,  principally  gifts.com,  Inc.  Profits  from
insurance alliances during the period partially offset these losses.

Forward-Looking Information

Fiscal 2000 Results

We continue to expect  significant  full-year  operating profit growth in fiscal
year 2000. Our outlook  reflects the positive effects of Books Are Fun, Ltd. and
our  financial  services  partnerships,  partially  offset  by  the  effects  of
significant investment spending as a percentage of operating profit. As a result
of revenue  declines more modest than  previously  expected for the year and the
acquisition of Books Are Fun, Ltd. in October 1999, we believe that revenues for
the full fiscal year 2000 may be slightly higher than full fiscal year 1999.

Liquidity and Capital Resources


                                                     Activity for the nine-month
                                                     period ended March 31, 2000

Cash and cash equivalents at June 30, 1999                     $  413.4

Net change in cash from:
  Operating activities                                            213.9
  Investing activities                                           (422.7)
  Financing activities                                            (41.5)
  Effect of exchange rate changes on cash and cash
   equivalents                                                     (5.3)

Net change in cash and cash equivalents                          (255.6)
                                                               --------
Cash and cash equivalents at March 31, 2000                    $  157.8
                                                               ========

Cash and cash equivalents decreased 62% to $158 at March 31, 2000, compared with
$413 at June 30, 1999. The decrease consisted  principally of the acquisition of
Books Are Fun, Ltd. for $393,  investments in new  initiatives of $53 (primarily
BrandDirect  Marketing,  Inc. and  schoolpop.com)  and common stock  repurchases
totaling $46. Offsetting these investments of cash were positive cash flows from
operating activities.

As described in Note Nine to our consolidated  financial  statements included in
our 1999 Annual Report to Stockholders,  we are a party to a Competitive Advance
and Revolving  Credit  Facility  Agreement  (the Credit  Agreement).  The Credit
Agreement  was amended as of  September  2, 1999.  Prior to the  amendment,  the
Credit Agreement included a covenant to maintain a minimum level of consolidated
tangible net worth. The amendment  provides  borrowing  flexibility by replacing
this covenant with covenants to maintain  minimum levels of consolidated  assets
and net worth and a maximum level of leverage.  At March 31, 2000, no borrowings
were outstanding under the Credit Agreement.

In January  2000, we announced  plans to  repurchase  up to 5 million  shares or
about 5 percent of our outstanding  Class A nonvoting  common stock. As of March
31, 2000, we have purchased approximately 1.3 million shares totaling $46.


<PAGE>


In September 1999, we executed a share exchange with the DeWitt Wallace-Reader's
Digest Fund and the Lila  Wallace-Reader's  Digest Fund (the  Funds).  Under the
terms of the exchange,  the Funds exchanged  approximately 9.3 million shares of
our Class B voting  common  stock for  approximately  8.0 million  shares of our
Class A nonvoting common stock, at an exchange ratio of 0.865 Class A shares for
each Class B share. As a result,  we exchanged Class A treasury shares at a cost
of $165 and a market value of $240, for Class B shares,  resulting in additional
paid-in capital of $75.

We  believe  that our  liquidity,  capital  resources,  cash flow and  borrowing
capacity are sufficient to fund normal  capital  expenditures,  working  capital
requirements,  the payment of dividends,  the execution of our share  repurchase
program and the implementation of our strategic initiatives.

Currency Risk Management

In the normal  course of  business,  we are  exposed  to the  effects of foreign
exchange rate fluctuations on the U.S. dollar value of our foreign subsidiaries'
results of operations  and financial  condition.  We purchase  foreign  currency
option and forward  contracts  to  minimize  the effect of  fluctuating  foreign
currency   exchange  rates  on  our  earnings  and   specifically   identifiable
anticipated  transactions.  In  addition,  we enter into  forward  contracts  to
minimize the effect of fluctuating  foreign  currency  exchange rates on certain
foreign currency denominated assets and liabilities.

At March 31, 2000, our primary foreign  currency market  exposures  included the
euro and the  British  pound.  We  estimate  that the  results of a uniform  10%
weakening and 10%  strengthening in the value of the U.S. dollar relative to the
currencies in which the option and forward  contracts are denominated,  with all
other variables held constant, would have the following effect:

                                      Effect of a 10%         Effect of a 10%
                                         Weakening             Strengthening
                                    of the U.S. Dollar       of the U.S. Dollar

Option Contracts                        $  (4.9)                    $ 8.1
Forward Contracts                       $ (12.0)                    $ 9.8


These  estimates  represent  changes to the fair value of the option and forward
contracts on a stand-alone basis. Such changes would be substantially  offset by
the related  impact on the  assets,  liabilities  and  operating  profits  being
hedged.  Also, this calculation  assumes that each exchange rate would change in
the same direction  relative to the U.S.  dollar.  Changes in exchange rates not
only  affect  the U.S.  dollar  value of the fair  value,  but also  affect  the
underlying foreign  subsidiaries'  income. Our sensitivity analysis as described
above does not consider potential changes in local sales levels,  local currency
prices, or amounts of option or forward contracts to cover these changes.

Impact of the Euro Conversion

On  January  1,  1999,  11 of the 15  member  countries  of the  European  Union
established fixed conversion rates between their existing  sovereign  currencies
(legacy currencies) and a single currency called the euro. The legacy currencies
are  scheduled to remain legal  tender as  denominations  of the euro during the
transition  period from January 1, 1999 to December 31, 2001.  Beginning January
1,  2002,  euro-denominated  bills and coins will be  introduced  and by July 1,
2002, legacy currencies will no longer be legal tender.

We  performed an internal  analysis  regarding  the business and systems  issues
related to the euro conversion and developed a strategic plan to ensure that all
necessary  modifications  are made on a timely basis.  Our operations in markets
that have  adopted the euro are able to accept  payments  and pay  suppliers  in
euros,  and are able to indicate  the euro  equivalent  of pricing on  invoices.
During  the  transition  period,  we  will  continue  to  monitor  customer  and
competitor reaction to the euro and will update the strategic plan as needed.


<PAGE>


During the  transition  period,  we believe that the conversion to the euro will
not  have  a  significant  impact  on the  marketing  strategy  of our  European
operations. We do not anticipate the need to synchronize prices between markets,
primarily  because the editorial  content of our publishing  products varies. In
addition,  products are published in local  languages  and are sold  principally
through  direct  mail  rather  than retail  channels.  These  factors  result in
products that tend to be unique to each market and do not easily lend themselves
to price comparisons across borders. The estimated costs to convert all affected
systems to the euro are not  expected to have a material  adverse  effect on our
results of operations, financial position or cash flow.



This report includes "forward-looking statements" within the meaning of the U.S.
federal securities laws.  Forward-looking statements include any statements that
address  future  results  or  occurrences.   These  forward-looking   statements
inherently  involve  risks and  uncertainties  that could  cause  actual  future
results  and  occurrences  to  differ   materially   from  the   forward-looking
statements.  Some of these risks and  uncertainties  include factors relating to
the:

-     effect of potentially more restrictive privacy and other governmental
      regulation relating to our marketing methods;
-     effect of modified and varied promotions;
-     ability to identify customer trends;
-     ability to continue to create a broadly appealing mix of new products;
-     ability to attract  and retain new and  younger  magazine  subscribers
      and product  customers in view of the  maturing of an  important  portion
      of the U.S. customer base;
-     ability to attract and retain subscribers and customers in an economically
      efficient manner;
-     effect of selective adjustments in pricing;
-     ability to expand and more effectively utilize our customer database;
-     ability to expand into new international markets and to introduce new
      product lines into new and existing markets;
-     ability to expand into new channels of distribution;
-     ability to negotiate and implement productive acquisitions, strategic
      alliances and joint ventures;
-     ability to integrate newly acquired and newly formed businesses
      successfully;
-     strength of relationships of newly acquired and newly formed businesses
      with their employees, suppliers and customers;
-     accuracy of the basis of forecasts relating to newly acquired and newly
      formed businesses;
-     ability to contain and reduce costs, especially through global
      efficiencies;
-     cost and effectiveness of reengineering of business processes and
      operations;
-     accuracy of  management's  assessment of the current  status of our
      business;
-     evolution of our organizational and structural  capabilities;
-     ability we have to respond to competitive pressures within and outside the
      direct marketing industry, including the Internet;
-     effect of worldwide paper and postage costs;
-     effect of postal disruptions on deliveries;
-     effect of foreign currency fluctuations;
-     accuracy of management's assessment of the future effective tax rate and
      the effect of initiatives to reduce the rate;
-     effect of the transition to the euro;
-     effect and pace of our stock repurchase program; and
-     general economic conditions.



<PAGE>


                                 PART II. OTHER INFORMATION

Item 6.  EXHIBITS AND REPORTS ON FORM 8-K.


(a)   EXHIBITS

      10.29  Certificate  of Amendment of the Certificate of  Incorporation of
             The Reader's Digest Association, Inc. filed with the State of
             Delaware on November 19, 1999.

      10.30  Termination  Agreement  dated as of September 1, 1996 between The
             Reader's Digest Association,  Inc. and Christopher P. Willcox, as
             amended on February 24, 2000.

      27    Financial Data Schedule

(b)   REPORTS ON FORM 8-K

      During  the  three  months  ended  March  31,  2000,  The  Reader's
      Digest Association, Inc. has not filed any reports on Form 8-K.



<PAGE>










                                         SIGNATURES

================================================================================


Pursuant  to the  requirements  of the  Securities  Exchange  Act of  1934,  the
registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned thereunto duly authorized.

                                           The Reader's Digest Association, Inc.
                                           (Registrant)

Date:  May 8, 2000                   By:   /s/GEORGE S. SCIMONE
                                           George S. Scimone
                                           Senior Vice President and
                                           Chief Financial Officer
                                           (and authorized signatory)


<PAGE>



                                  EXHIBIT INDEX

Exhibit                                                                     Page

10.29     Certificate of Amendment of the Certificate of Incorporation of
          The Reader's Digest Association, Inc. filed with the State of
          Delaware on November 19, 1999.
10.30     Termination Agreement dated as of September 1, 1996 between The
          Reader's Digest Association, Inc. and Christopher P. Willcox, as
          amended on February 24, 2000.
27        Financial Data Schedule



EXHIBIT 10.29

                            CERTIFICATE OF AMENDMENT

                                     OF THE

                      RESTATED CERTIFICATE OF INCORPORATION

                                       OF

                      THE READER'S DIGEST ASSOCIATION, INC.

     The  undersigned,  being the Chairman of the Board of  Directors  and Chief
Executive  Officer  of  The  Reader's  Digest  Association,   Inc.,  a  Delaware
corporation,

                  DOES HEREBY CERTIFY:

                  FIRST:  That  resolutions  of the Board of  Directors  of this
            Corporation  were duly adopted setting forth proposed  amendments to
            the Restated  Certificate of  Incorporation of this Corporation (the
            "Restated  Certificate")  declaring said  amendments to be advisable
            and submitting the amendments to the stockholders of the Corporation
            for their consideration.  The resolutions setting forth the proposed
            amendments are as follows:

                  RESOLVED,  that subparagraph (2) of paragraph (b) of Article V
                  of the Restated  Certificate be, and it hereby is, amended and
                  restated in its entirety to read as follows:

                        (a) To provide for the  issuance,  from time to time, of
                  the  shares  of  stock  of  the  Corporation,  whether  now or
                  hereafter authorized, for such consideration and on such terms
                  and  conditions as it may lawfully fix from time to time;  and
                  all shares so  issued,  the full  consideration  for which has
                  been  paid,  shall be  deemed  fully  paid and  nonassessable;
                  provided,  however, that (i) authorized but unissued shares of
                  the capital stock of the Corporation  having any voting rights
                  in addition to those prescribed by law shall only be issued if
                  such  issuance is approved by vote of the holders of shares of
                  Class B Voting  Common Stock and (ii) issued shares of capital
                  stock of the Corporation  having any voting rights in addition
                  to those  prescribed by law which are owned by the Corporation
                  shall  only  be  sold,  assigned,   transferred  or  otherwise
                  disposed  of by the  Corporation  if  such  sale,  assignment,
                  transfer  or  other  disposition  is  approved  by vote of the
                  holders of shares of Class B Voting Common Stock,  except that
                  no such  approval  shall be  required  in the  case of  either
                  clause (i) or (ii) for (A) the  issuance or sale,  assignment,
                  transfer  or other  disposition  of  shares  of Class B Voting
                  Common Stock to the holders of shares of Class B Voting Common
                  Stock in payment of a dividend or other distribution  declared
                  by the  Board  of  Directors  upon  the  common  stock  of the
                  Corporation   that  is   payable   in  common   stock  of  the
                  Corporation, or (B) the issuance or sale, assignment, transfer
                  or other  disposition  of  Preference  Stock  having  only the
                  voting rights described in paragraph (k)(B)(ii) of Article IV.

                  SECOND:  That thereafter,  pursuant to resolution of its Board
            of Directors, the officers of the Corporation submitted the proposed
            amendments to a vote of the stockholders entitled to vote thereon at
            the annual meeting of stockholders of the Corporation.

               THIRD:  That the amendments  were duly adopted in accordance with
          the provisions of Section 242 of the Delaware General Corporation Law.


            IN WITNESS WHEREOF, the Chairman of the Board of Directors and Chief
Executive  Officer of the Corporation has executed this certificate on this 17th
day of November, 1999.

                                  By:  /s/THOMAS O. RYDER
                                       Name: Thomas O. Ryder
                                       Title: Chairman of the Board of Directors
                                              and Chief Executive Officer

ATTEST:

/s/CLIFFORD H.R. DUPREE
Clifford H.R. DuPree
Secretary



EXHIBIT 10.30
                                [RDA Letterhead]

                                          April 1, 1996



Mr. Christopher P. Willcox
Senior Vice President and Editor-in-Chief, Reader's Digest Magazine
The Reader's Digest Association, Inc.

Reader's Digest Road
Pleasantville, NY   10570-7000


Dear Chris:

This letter serves to confirm those payments and benefits that you will receive,
subject to and in accordance  with the terms and conditions of this Agreement in
connection with a termination of your employment with the Company.

1.    Termination of Employment

1.1   The Company may terminate  your  employment  at any time,  with or without
      stated reason.  You shall receive the benefits provided hereunder upon the
      termination  of your  employment  by you for "Good  Reason," as defined in
      Section 1.2, or the termination of your employment by the Company,  unless
      such  termination  is  for  "Cause,"  as  defined  in  Section  3.1 of the
      Severance  Plan. Any  termination by you shall be  communicated by written
      Notice  of  Termination  indicating  the  termination  provision  in  this
      Agreement relied upon, if any, and the Date of Termination;  provided that
      the Date of Termination shall in no event be earlier than 10 business days
      after the date on which such Notice of Termination  is effective  pursuant
      to Section 15 hereof.

1.2   For purposes of this Agreement, "Good Reason" shall mean the occurrence of
      any of the following without your express written consent:

      1.2.1 the  assignment  to you without your  written  consent of any duties
            materially  inconsistent  with your then current  position,  duties,
            responsibilities  and status with the Company,  or a material change
            or  a  substantial   diminution  in  your  then  current  authority,
            reporting  responsibilities,  titles or offices,  or removal from or
            failure to re-elect you to any such position or office except in the
            event of a termination of your  employment for Cause,  death,  total
            disability  (as defined in The  Reader's  Digest  Association,  Inc.
            Retirement Plan) or mandatory retirement;

      1.2.2 a  reduction  by the Company in your annual base salary as in effect
            on the date of this  Agreement or as the same may be increased  from
            time to time, unless such reduction is part of and consistent with a
            good faith management-wide or Company-wide cost cutting program, and
            then only if the  percentage  of your  reduction  is no greater than
            that of the other management personnel;

      1.2.3 a  relocation  without  your  written  consent to an office  located
            anywhere  other  than  within  50 miles of your  primary  residence,
            except  for  required  travel  on  Company  business  to  an  extent
            substantially  consistent  with your then  current  business  travel
            obligations;

      1.2.4 the failure by the  Company to  continue in effect any  compensation
            plan or other  fringe  benefit  provided by the Company in which you
            participate on the date of this Agreement  that, by itself or in the
            aggregate,  is material to your total compensation from the Company,
            unless there shall have been  instituted a replacement or substitute
            plan or fringe benefit providing  comparable benefits or unless such
            failure  is  part  of  and  consistent  with a  good  faith  benefit
            discontinuance  applicable to all of the management personnel of the
            Company  and  then  only if the  scope  of the  discontinuance  with
            respect  to you is no  greater  than  that of the  other  management
            personnel; or

      1.2.5 the failure of the Company to obtain a  satisfactory  agreement from
            any  successor  to the  Company to assume and agree to perform  this
            Agreement.  The  Company  shall use its best  efforts to require any
            successor  (whether  direct  or  indirect,   by  purchase,   merger,
            consolidation  or  otherwise)  to  all or  substantially  all of the
            businesses or assets of the Company to expressly assume and agree to
            perform this Agreement.

1.3   Any  termination of your employment by you for "Good Reason" shall be made
      within 180 days after the occurrence of the "Good Reason."

2.    Compensation Upon Termination

2.1   If your  employment  shall be terminated  and you are entitled to benefits
      under Section 1 of this Agreement then,  except as provided in Section 2.2
      and 2.3,  you shall  receive the  following  benefits for each year of the
      Severance Period (as defined below):

      2.1.1  the  Company  shall pay to you as  severance  pay a total
             amount equal to the sum of

            (a)   your highest  annual base salary in effect any time during the
                  12-month period prior to the Date of Termination plus


<PAGE>


            (b)   the higher of the following:

                  (i)   the highest amount paid to you under The Reader's Digest
                        Association, Inc. Management Incentive Compensation Plan
                        (the  "Annual  Incentive  Plan")  during  the three plan
                        years  most   recently   ended  prior  to  the  Date  of
                        Termination; or

                  (ii)  the  originally  approved  target  amount of the highest
                        award,   if  any,   under  the  Annual   Incentive  Plan
                        outstanding on the Date of  Termination,  as such target
                        amount  may  have  been  increased  prior to the Date of
                        Termination.

                  Any compensation  received by you or granted to you in lieu of
                  an  amount  paid  under  the  Annual  Incentive  Plan  for any
                  one-year  period  (whether in the form of restricted  stock or
                  otherwise)  shall be deemed to be an amount  paid to you under
                  the Annual  Incentive  Plan for purposes of this Section.  Any
                  compensation  receivable  by you in lieu of an amount  payable
                  under the Annual Incentive Plan for any period shall be deemed
                  to be  an  additional  target  amount  for  purposes  of  this
                  Section. The amount of any non-cash  compensation  received or
                  receivable  shall be the greater of the fair  market  value of
                  such compensation on the date of award or the cash amount that
                  would  have  been  received  by you in lieu  of such  non-cash
                  compensation.

            The aggregate  amount of severance  payable under this Section shall
            be paid in equal installments on a bi-weekly basis,  commencing upon
            the Date of Termination.

      2.1.2 the  Company  shall  maintain  in full  force and  effect,  for your
            continued  benefit for the  Severance  Period,  all welfare  benefit
            plans  and  programs  or  arrangements  in  which  you  participated
            immediately  prior to the Date of  Termination,  provided  that your
            continued  participation  is possible  under the  general  terms and
            conditions  of such welfare  plans and  programs.  In the event that
            your  participation  in any such  plan or  program  is  barred,  the
            Company  shall provide you with  benefits  substantially  similar to
            those  which you would  have been  entitled  to  receive  under such
            welfare plans and programs had your participation not been barred.

2.2   If your  employment  is  terminated  by you for "Good  Reason"  or if your
      employment  is  terminated by the Company other than for "Cause," then the
      Severance  Period shall be the period of two years  immediately  following
      the Date of Termination.

2.3   If your employment is terminated for Cause, the Company shall pay you your
      base salary through the Date of Termination, and the Company shall have no
      further obligations to you under this Agreement.

3.    Long-Term Incentive Plan Benefits

3.1   You shall have the right to exercise  your  outstanding  stock options and
      stock  appreciation  rights under the 1989 and 1994 Key Employee Long-Term
      Incentive  Plans (the "Long Term Incentive  Plans") to the extent they are
      exercisable or would become  exercisable during the Severance Period as if
      your employment with the Company  continued  during the Severance  Period.
      Such stock options and stock  appreciation  rights shall  continue to vest
      during  the  Severance  Period  as if your  employment  with  the  Company
      continued  during  the  Severance  Period  and,  upon  completion  of  the
      Severance  Period,  shall vest and be  exercisable  as if your  employment
      terminated at that time by reason of either (a) an involuntary termination
      without cause or a mutual  agreement  (within the terms of the  particular
      award) or (b) retirement  (within the terms of the particular  award),  if
      applicable.

3.2   Your  outstanding  performance  units,  restricted stock and awards (other
      than stock  options  and stock  appreciation  rights)  under the Long Term
      Incentive  Plans shall continue to be  outstanding  and payable during the
      Severance  Period as if your employment with the Company  continued during
      the Severance Period and, if applicable, shall vest upon completion of the
      Severance  Period  in  accordance  with the  terms of the award as if your
      employment  terminated at that time by reason of either (a) an involuntary
      termination  without cause or a mutual agreement  (within the terms of the
      particular  award) or (b)  retirement  (within the terms of the particular
      award),  if  applicable.  Any such  award  that is  based  on a period  of
      employment  shall be payable on a prorated basis as if your employment had
      continued during the Severance Period.

      3.2.1 If any such award is subject to specific  performance goals and your
            employment is terminated by you for "Good Reason" or your employment
            is  terminated by the Company other than for "Cause," then the award
            shall be payable to the extent such performance goals are attained.

3.3   If any benefits  due under  Section 3 cannot be paid under the existing or
      amended terms of an applicable plan or award agreement,  the Company shall
      pay you the value of such  benefits  at the time they would  otherwise  be
      payable if they were payable under such terms.

4.    Retirement Plan Benefits

4.1   The Company  shall pay to you an amount  equal to the  difference  between
      your  monthly   retirement  benefit  payable  under  The  Reader's  Digest
      Association,  Inc.  Retirement Plan (the  "Retirement  Plan"),  the Excess
      Benefit  Retirement  Plan of The Reader's  Digest  Association,  Inc. (the
      "Excess  Benefit  Retirement  Plan")  and The  Reader's  Digest  Executive
      Retirement  Plan (the  "Executive  Retirement  Plan") and the amount  that
      would have been payable if your age and aggregate periods of service under
      those plans  included the  Severance  Period.  In addition,  the Severance
      Period  shall be  considered  to be  additional  Credited  Service for all
      purposes  (including  vesting)  under the Executive  Retirement  Plan. Any
      amount  payable  under this  Section 4.1 shall be payable at the same time
      and in the same form as such  payments  would  have  been  made  under the
      Retirement Plan.

4.2   Upon completion of the Severance  Period,  if you are not vested under the
      Retirement  Plan, the Excess  Retirement Plan or the Executive  Retirement
      Plan,  you will receive a lump sum payment in the amount of the equivalent
      actuarial  value (as  determined  under the  Retirement  Plan) of  pension
      credits  that  would have been  earned  through  the end of the  Severance
      Period, without regard to vesting, with any such payment to be made within
      90 days of the end of the Severance Period.

5.   Your participation in The Reader's Digest Employees Profit-Sharing Plan and
     the  Profit  -Sharing  Benefit  Restoration  Plan  of The  Reader's  Digest
     Association, Inc. (the "Profit-Sharing Plans") ceases upon your termination
     of employment  with the Company.  However,  you shall receive cash payments
     equal to the amounts that would have been  contributed  to your account had
     your employment with the Company continued for the Severance  Period,  with
     payments  to be made to you by the  Company  at the time any  contributions
     have been made for participants in the  Profit-Sharing  Plans. In addition,
     the Severance Period shall be considered to be additional  Credited Service
     for purposes of your vesting in any amounts previously  contributed to your
     account under the Profit-Sharing Plans.

6.   Any benefits payable under this Agreement shall be reduced by the amount of
     any benefits paid under The Reader's  Digest  Association,  Inc.  Severance
     Plan for Senior Management or The Reader's Digest Association,  Inc. Income
     Continuation Plan for Senior Management.

7.    The payment of any amounts or benefits  under this  Agreement is expressly
      conditioned  on the  receipt by the  Company  from you of a duly  executed
      General  Waiver  and  Release  of Claims in the form  specified  under the
      Severance Plan, the repayment by you of any outstanding  advances or loans
      due the Company and the return by you of all Company property.

8.    Any  reference  to a specific  plan in this  Agreement  shall be deemed to
      include any similar  plan or program of the Company then in effect that is
      the  predecessor  of,  the  successor  to, or the  replacement  for,  such
      specific plan.

9.    The Company may withhold from any benefits  payable  under this  Agreement
      all federal,  state,  local or other applicable taxes as shall be required
      pursuant to any law or governmental regulation or ruling.

10.   In case of your death  while any  amounts  are still  payable to you under
      this Agreement,  the Company shall pay all such amounts to your designated
      beneficiary  or, if none has been  designated,  to your  estate as if your
      employment had continued until the end of the Severance Period.

11.   The Company  shall  indemnify  you and hold you harmless  from any and all
      liabilities,  losses,  costs  or  damages,  including  defense  costs  and
      expenses (including, without limitation, fees and disbursements of counsel
      incurred  by you in any action or  proceeding  between the parties to this
      Agreement or between you and any third party or  otherwise)  in connection
      with all claims,  suits or proceeding relating to or arising from a breach
      or alleged breach of this Agreement by the Company.

12.   You  acknowledge  that (i) prior to executing this  Agreement,  you had an
      opportunity  to consult with an attorney of your  choosing and review this
      Agreement  with  such  counsel,  (ii)  you are  executing  this  Agreement
      knowingly and  voluntarily  and (iii) you  understand all of the terms set
      forth herein.

13.  In the event  the  Company  terminates  your  employment  for Cause and you
     dispute the Company's  right to do so or you claim that you are entitled to
     terminate  your  employment  for Good Reason and the Company  disputes your
     right  to do so,  a  mediator  acceptable  to you and the  Company  will be
     appointed  within 10 days to assist in  reaching  a  mutually  satisfactory
     resolution,  but will have no authority to issue a binding  decision.  Such
     mediation  must be concluded  within 60 days of the date of  termination or
     claim to termination for Good Reason. You agree that you will not institute
     any legal  proceeding  relating to the matter until the  conclusion of such
     mediation. Should such mediation fail to reach an acceptable conclusion and
     you are  successful in any  litigation or settlement  that issues from such
     dispute,  you shall be  entitled  to receive  from the  Company  all of the
     expenses  incurred by you in connection  with any such  dispute,  including
     reasonable attorney's fees.

14.   Acts Detrimental to the Company

14.1 You agree that you will not do any of the  following  during the  Severance
     Period:

     14.1.1 commit any  criminal  act  against the Company or any act that would
            constitute "Cause;"

     14.1.2 disclose any information likely to be regarded as confidential
            and relating to the Company's business;

     14.1.3 solicit the  Company's  employees  to work for a  competitor  of the
            Company; or

     14.1.4 perform any act detrimental to the Company or its employees,
            including, but not limited to, disparaging the Company, its senior
            management or its products.

14.2  You agree  that any  breach or  threatened  breach of  Section  14.1 shall
      entitle the Company to apply for and to obtain  injunctive  relief,  which
      shall be in addition to any and all other rights and remedies available to
      the company at law or in equity.

14.3  All of your rights and benefits under this Agreement  shall cease upon any
      breach by you of Section 14.1 of this Agreement.

15.   Miscellaneous

15.1  Notices and other  communications  provided for herein shall be in writing
      and shall be effective upon delivery addressed as follows:

      if to the Company:

            The Reader's Digest Association, Inc.
            Reader's Digest Road
            Pleasantville, NY  10570-7000
            Attention:  Senior Vice President, Human Resources

            with a copy to

            The Reader's Digest Association, Inc.
            Reader's Digest Road
            Pleasantville, NY  10570-7000
            Attention:  General Counsel

      or if to you, at the address set forth above,

      or to such other  address as to which  either  party  shall give notice in
      accordance with the foregoing.

15.2  This Agreement shall be binding upon and shall inure to the benefit of the
      parties  hereto and their  respective  successors  and assigns;  provided,
      however,  that this  Agreement may not be assigned by either party without
      the consent of the other party.

15.3  Any provision of this Agreement that is prohibited or unenforceable in any
      jurisdiction shall, as to such jurisdiction,  be ineffective to the extent
      of such prohibition or unenforceability without invalidating the remaining
      provisions of this  Agreement or affecting the validity or  enforceability
      of such provision in any other jurisdiction.

15.4  This Agreement  constitutes the entire understanding of the parties hereto
      with  respect  to the  subject  matter  hereof  and  supersedes  any prior
      agreements, written or oral, with respect thereto.

15.5  This Agreement may be amended or modified only by a written agreement duly
      executed by both of the parties hereto.

15.6  This Agreement shall be governed by and interpreted in accordance with the
      laws of the State of New York  applicable to contracts  executed in and to
      be wholly performed within that State.

                                          Very truly yours,

                                          THE READER'S DIGEST ASSOCIATION, INC.


                                          By  /s/GLENDA K. BURKHART
                                          Name: Glenda K. Burkhart
                                          Title Senior Vice President,
                                                Strategic Planning and Human
                                                Resources

Agreed to and accepted as of September 10, 1996:

/s/CHRISTOPHER P. WILLCOX
Name:  Christopher P. Willcox


<PAGE>



                                February 24, 2000

Mr. Christopher P. Willcox
Senior Vice President and Editor-in-Chief, Reader's Digest Magazine
The Reader's Digest Association, Inc.
Reader's Digest Road
Pleasantville, NY 10570

Dear Chris:

This letter agreement amends the terms of the agreement dated as of September 1,
1996 between you and The Reader's  Digest  Association,  Inc.  (the  "Company"),
which  was  subsequently  "amended"  by a  letter  dated  July 10,  1997,  which
"amendment"  the  Company  advised  you it deemed  ineffective  by letter  dated
September 30, 1997  (collectively,  the  "Termination  Agreement").  This letter
agreement  also  resolves  any  and all  disputes  between  you and the  Company
regarding the compensation and benefits you will be eligible to receive upon the
termination  of your  employment,  recognizing  that you and the Company want to
resolve all such matters on an amicable  basis,  and that certain  disputes have
arisen  between  you  and  the  Company   regarding  the  amount  and  types  of
compensation and benefits due to you upon the termination of your employment.

You and the  Company  hereby  agree  that the  Termination  Agreement  is hereby
amended as follows:

1. Sections 1, 2.2, 4.2, 5, 7 and 13 of the Termination Agreement are deleted in
   their  entirety  and  the  remaining  Sections  and  section  references  are
   renumbered accordingly.

2. Section 1.1 (formerly Section 2.1) is amended to read in its entirety as
   follows:

   1.1   If your  employment  shall be  terminated,  except a termination by the
         Company for "Cause" (as defined below), you shall receive the following
         benefits for each year of the Severance Period (as defined below):

3.    Section 1.1.1 (formerly Section 2.1.1) of the Termination Agreement is
   amended to read in its entirety as follows:

   1.1.1 Your employment with the Company shall terminate  effective on June 30,
         2000 (the "Date of Termination").  Between the date hereof and the Date
         of Termination (the "Remaining  Employment Period"),  you shall perform
         such duties as the  Editor-In-Chief  or the Chief Executive  Officer of
         the Company or their  designees  request,  at the  Company's  corporate
         headquarters,  or at other location(s)  mutually agreed upon by you and
         the Company.  During the Remaining  Employment  Period,  unless you are
         terminated  for  "Cause"  (as  defined  below),  you shall  continue to
         receive  your  base  salary  and  shall  continue  to  be  eligible  to
         participate  in all  employee  benefits  generally  made  available  to
         employees  of the  Company,  under  the same  terms and  conditions  as
         previously   made   available   to  you  (e.g.,   subject  to  employee
         contributions and other eligibility requirements). You will continue to
         receive financial  counseling services during the Remaining  Employment
         Period, but such services shall cease as of June 30, 2000.

4. Section 1.1.2 (formerly Section 2.1.2) of the Termination Agreement is
   amended to read in its entirety as follows:

   1.1.2 During  the  period of 18  months  following  the Date of  Termination,
         namely July 1, 2000 through December 31, 2001 (the "Severance Period"),
         you shall receive  $852,000 payable in bi-weekly  payments.  During the
         Severance  Period,  you shall  continue  to receive  medical and dental
         benefits  (but not  welfare  benefits,  including  but not  limited  to
         disability   benefits  or  life  insurance  benefits)  under  the  same
         conditions  as  previously  made  available  to you  (e.g.,  subject to
         employee contributions and other eligibility  requirements).  You shall
         also receive  outplacement  counseling  services  during the  Severance
         Period  commensurate with your position,  at a provider mutually agreed
         to by you and the  Company,  following  consultation  with you.  At the
         commencement of the Severance  Period,  you will be paid for four weeks
         of unused vacation pay in the amount of $25,108.

5. A new Section 1.1.3 is added to the Termination Agreement to read in its
   entirety as follows:

   1.1.3 "Cause"  shall  mean  your  embezzlement,  proven  dishonesty  or fraud
         related to the  business of the  Company,  conviction  of  felonious or
         other charge  involving  moral  turpitude,  improper  communication  of
         confidential information obtained in the course of employment, material
         violation  of Company  rules,  including  but not limited to a material
         violation of the Company's  Proprietary  and  Confidential  Information
         Policy or a material  violation  of the  Company's  Ethical,  Legal and
         Business  Conduct  Policies  or action  that would have  constituted  a
         material violation of such Policies if the participant had continued to
         be employed by the Company.

6. Section 2.1 (formerly Section 3.1) of the Termination  Agreement is amended
   to read in its entirety as follows:

   2.1   You  shall  receive  an award of  $280,800  under The  Reader's  Digest
         Association,  Inc. Management  Incentive  Compensation Plan ("MIP") for
         Fiscal Year 2000 which  amount  shall be payable at the time awards are
         generally paid to eligible  employees of Company,  but in any event, by
         no later than September 30, 2000.

7. Section 2.2 (formerly Section 3.2) of the Termination Agreement is amended to
   read in its entirety as follows:

   2.2   The  outstanding  stock options that have been granted to you under The
         Reader's Digest Association, Inc. 1989 Key Employee Long Term Incentive
         Plan and The Reader's Digest  Association,  Inc. 1994 Key Employee Long
         Term  Incentive  Plan  (jointly  referred  to  hereinafter  as the "Key
         Employee Long Term Incentive  Plans") shall continue to vest and remain
         exercisable  during the Severance Period as if your employment with the
         Company continued during the Severance Period,  and shall vest upon the
         completion of the Severance Period as if your employment  terminated at
         the end of the Severance  Period by reason of your  retirement from the
         Company.  A chart  illustrating  the vesting of your stock  options and
         restricted  stock  awards  received  under the Key  Employee  Long Term
         Incentive  Plans in accordance with this Section 2.2 is attached hereto
         as Exhibit A.

8. Section 2.3 (formerly Section 3.3) of the Termination Agreement is amended to
   read in its entirety as follows:

   2.3   The 6,700 shares of  Restricted  Stock  granted to you on April 9, 1998
         under  the 1994 Key  Employee  Long Term  Incentive  Plan  shall  vest,
         subject to and in accordance with their terms on April 9, 2000.

9. A new Section 2.4 is added to the Termination Agreement to read in its
   entirety as follows:

   2.4   All Performance  Shares granted to you under the 1994 Key Employee Long
         Term  Incentive  Plan  for  the  1999-2000,   1999-2001  and  2000-2002
         Performance  Cycles  shall  be  forfeited  by you and  canceled  by the
         Company  effective  immediately  and you understand  that you shall not
         receive  any  future  grants  under  the 1994 Key  Employee  Long  Term
         Incentive Plan.

10.Section 3.1 (formerly Section 4.1) of the Termination Agreement is amended to
   read in its entirety as follows:

   3.1   The Company shall pay to you an amount equal to the difference  between
         your monthly  retirement  benefit  payable  under The  Reader's  Digest
         Association,  Inc.  Retirement Plan (the "Retirement Plan"), the Excess
         Benefit Retirement Plan of The Reader's Digest  Association,  Inc. (the
         "Excess Benefit  Retirement  Plan") and The Reader's  Digest  Executive
         Retirement Plan (the "Executive  Retirement  Plan") and the amount that
         would have been  payable if your age and  aggregate  periods of service
         under those plans  included the  Severance  Period.  In  addition,  the
         Severance Period shall be considered to be additional  Credited Service
         for all purposes  (including  vesting)  under the Executive  Retirement
         Plan.  Any amount  payable  under this  Section 3.1 shall be payable in
         accordance  with your election of any annuity form then available under
         the  Retirement  Plan,  the  Excess  Benefit  Retirement  Plan  or  the
         Executive Retirement Plan, as the case may be. The Executive Retirement
         Plan benefit is the result of a calculated  target benefit of $132,828,
         offset  by the  annuity  amounts  that  would be  payable  if  benefits
         commenced at the same date from the Retirement  Plan and Excess Benefit
         Retirement  Plan. The Executive  Retirement Plan  calculation  includes
         earnings  through  June 30,  2000  (including  the Fiscal Year 2000 MIP
         payment of $280,800),  and service  credited through December 31, 2001.
         Based on current interest rates and plan provisions,  these offsets are
         estimated to be $49,572 and the  resulting  Executive  Retirement  Plan
         benefit to be $83,256.  In any case,  the sum of the annuities that you
         will be  eligible to  commence  receiving  on January 1, 2002 cannot be
         less than the target  benefit of  $132,828,  before  reduction  for any
         survivorship form.

11.  New Sections 3.2 and 3.3 are added to the Termination Agreement to read in
     their entirety as follows:

     3.2  As of July 1, 2000,  you may  choose to receive a lump sum  payment of
          the value of your Cash Balance  Account under the Retirement  Plan and
          Excess Plan, determined in accordance with the terms of the Retirement
          Plan (illustrated below in Alternative 1). In the alternative, you may
          elect to continue  earning  interest credits only on your Cash Balance
          Account  during the Severance  Period and receive the lump sum payment
          on or about January 1, 2002,  determined in accordance  with the terms
          of the  Retirement  Plan  (illustrated  below in  Alternative  2). The
          estimated amounts to be received,  based on a current interest rate of
          6.62%, are the following:


                                                 Alternative1 1    Alternative 2

Value of Cash Balance Account as of 12/31/99       $ 496,271         $ 496,271
   Base Credits for 1/1/00 to 6/30/00                 16,320            16,320
   Interest Credits for 1/1/00 to  6/30/00            16,883            16,883
Lump sum payment as of 7/1/00                      $ 529,474         $ 529,474
   Interest credits for 7/1/00 to 12/31/01               N/A            55,120
Lump sum payment as of 1/1/02                            N/A         $ 584,594


   3.3   Commencing  on January 1, 2002,  you shall be eligible  for the retiree
         medical and dental coverage that is available generally to employees of
         the Company (for you and your  spouse)  under the terms of the Reader's
         Digest Healthcare  Program (as in effect from time to time),  including
         any  payment  requirement.  To the  extent  that such  coverage  is not
         available  to you  under the terms of the  Reader's  Digest  Healthcare
         Program  because you did not retire  under the terms of the  Retirement
         Plan as a  normal  or  early  retiree,  equivalent  coverage  shall  be
         provided to you and your  spouse by the  Company at no greater  cost to
         you and your spouse than under the Reader's Digest Healthcare Program.

12.As of the date on which this letter  agreement is signed by the Company,  the
   Company  shall  provide  you with a signed  letter of  reference  on  Company
   letterhead that is essentially identical to Exhibit B attached hereto.

13.You must sign the  General  Waiver  and  Release  of Claims  form in the form
   attached to this letter  agreement (the "General  Waiver and  Release"),  you
   must repay any  outstanding  advances  or loans due the  Company and you must
   return all Company  property as a condition  to receipt of the  payments  and
   benefits hereunder.  You acknowledge and agree that you have at least 21 days
   to review the  General  Waiver  and  Release,  that you have been  advised to
   consult an attorney with respect to the  Termination  Agreement as amended by
   this letter agreement and the General Waiver and Release, that you understand
   the Termination Agreement as amended by this letter agreement and the General
   Waiver and  Release,  are  executing  this letter  agreement  and the General
   Waiver and Release  voluntarily,  and further understand that you have 7 days
   to revoke the General Waiver and Release by transmitting a written revocation
   of same to the undersigned prior to the expiration of the 7-day period.

Except as amended by this letter  agreement,  all other terms in the Termination
Agreement shall remain in full force and effect. This letter agreement shall not
otherwise  modify  or serve to amend the  terms of any  benefit  plans or awards
and/or grants or benefits due thereunder.  In the event of any future litigation
or other  contested  proceeding  between you and the Company,  solely related to
this Letter  Agreement and  underlying  Termination  Agreement,  the  prevailing
party,  as  determined  by the trier of fact,  shall be  entitled to recover its
reasonable  attorneys'  fees and costs,  as well as any damages  available under
applicable law.

This letter agreement shall become effective  (subject to and in accordance with
its terms)  after you and the Company  have signed  below.  Please  signify your
agreement with the above by signing on the line below and returning the original
to me for our files,  together with a fully executed  General Waiver and Release
of Claims.

                                   Sincerely,

                                   /s/GARY S. RICH
                                   Gary S. Rich
                                   Senior Vice President, Human Resources

                                   Date:  March 1, 2000
Accepted and Agreed to by:
/s/CHRISTOPHER P. WILLCOX
Christopher P. Willcox

Date:  February 24, 2000

                                          May 8, 2000


Securities and Exchange Commission
450 Fifth Street, NW
Washington, DC  20549-1005

         Re:  The Reader's Digest Association, Inc.
              Commission File No. 1-10434
              Central Index Key 0000858558

Ladies and Gentlemen:

         Filed  herewith  by direct  electronic  transmission  is the  Quarterly
Report on Form 10-Q of The Reader's Digest Association, Inc. (the "Company") for
the fiscal quarter ended March 31, 2000.

                                          Very truly yours,


                                          CLIFFORD H.R. DUPREE
                                          Clifford H.R. DuPree


Enclosures