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 September 30, 2004

                                       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 [  ]

Indicate by check mark whether the  registrant  is an  accelerated  filer (as
defined in Rule 12b-2 of the Exchange Act).  Yes [X] No [  ]

As   of   October   31,    2004,   99,531,262  shares   of   the    registrant's
common stock were outstanding.


                                                          Page 1 of 24 pages.

<PAGE>




           THE READER'S DIGEST ASSOCIATION, INC. AND SUBSIDIARIES

                             Index to Form 10-Q

                             September 30, 2004


Part I - Financial Information                                     Page No.

Item 1. Financial Statements

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

  Consolidated Condensed Statements of Operations
   for the three-month periods ended September 30, 2004 and 2003          3

  Consolidated Condensed Balance Sheets
   as of September 30, 2004 and June 30, 2004                             4

  Consolidated Condensed Statements of Cash Flows
   for the three-month periods ended September 30, 2004 and 2003          5

  Notes to Consolidated Condensed Financial Statements                    6

Item 2. Management's Discussion and Analysis
  of Financial Condition and Results of Operations                       14

Item 4. Controls and Procedures                                          21

Part II - Other Information

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds      22

Item 6. Exhibits and Reports on Form 8-K                                 23



            The Reader's Digest Association, Inc. and Subsidiaries
               Consolidated Condensed Statements of Operations
            Three-month periods ended September 30, 2004 and 2003
                    (In millions, except per share data)
                                 (unaudited)





                                                    Three-month periods ended
                                                           September 30,
                                                         2004        2003


Revenues                                             $   490.0    $   494.7

Product, distribution and editorial expenses            (203.0)      (208.3)
Promotion, marketing and administrative expenses        (322.9)      (299.9)
                                                     ---------    ---------
  Operating loss                                         (35.9)       (13.5)

Other (expense) income, net                              (11.0)        (7.6)
                                                     ---------    ---------
  Loss before income tax benefit                         (46.9)       (21.1)

Income tax benefit                                        16.6          7.6
                                                     ---------    ---------
  Net loss                                           $   (30.3)   $   (13.5)
                                                     =========    =========


Basic and diluted loss per share:

Weighted average common shares outstanding                97.3         97.0

  Basic and diluted loss per share                   $   (0.31)   $   (0.14)
                                                     =========    =========

Dividends per common share                           $    0.05    $    0.05
                                                     =========    =========




See accompanying Notes to Consolidated Condensed Financial Statements.


<PAGE>

<TABLE>

                The Reader's Digest Association, Inc. and Subsidiaries
                         Consolidated Condensed Balance Sheets
                     As of September 30, 2004 and June 30, 2004
                                    (In millions)
                                     (unaudited)

                                                                 September 30,    June 30,
                                                                     2004           2004
<S>                                                              <C>            <C>
Assets

  Cash and cash equivalents                                      $     35.6     $     50.3
  Accounts receivable, net                                            269.6          229.0
  Inventories                                                         205.8          152.0
  Prepaid and deferred promotion costs                                108.0          106.9
  Prepaid expenses and other current assets                           188.0          152.1
                                                                 ----------     ----------
Total current assets                                                  807.0          690.3

Property, plant and equipment, net                                    155.0          155.8
Goodwill                                                            1,009.8        1,009.5
Other intangible assets, net                                          164.5          173.9
Other noncurrent assets                                               393.5          413.2
                                                                 ----------     ----------
Total assets                                                     $  2,529.8     $  2,442.7
                                                                 ==========     ==========

Liabilities and stockholders' equity

  Loans and notes payable                                        $    177.2     $     83.9
  Accounts payable                                                    119.0          110.6
  Accrued expenses                                                    264.6          268.7
  Income taxes payable                                                 16.4           15.5
  Unearned revenues                                                   426.3          403.4
  Other current liabilities                                            10.9           10.2
                                                                 ----------     ----------
Total current liabilities                                           1,014.4          892.3

Long-term debt                                                        622.2          637.7
Unearned revenues                                                     138.6          129.3
Postretirement and postemployment benefits other than pensions        116.8          119.5
Other noncurrent liabilities                                          203.0          200.8
                                                                 ----------     ----------
Total liabilities                                                   2,095.0        1,979.6

  Capital stock                                                        12.6           17.8
  Paid-in capital                                                     206.9          210.1
  Retained earnings                                                 1,295.0        1,330.4
  Accumulated other comprehensive loss                                (84.7)         (89.4)
  Treasury stock, at cost                                            (995.0)      (1,005.8)
                                                                 ----------     ----------
Total stockholders' equity                                            434.8          463.1
                                                                 ----------     ----------
Total liabilities and stockholders' equity                       $  2,529.8     $  2,442.7
                                                                 ==========     ==========

</TABLE>


See accompanying Notes to Consolidated Condensed Financial Statements.


<PAGE>

<TABLE>

                  The Reader's Digest Association, Inc. and Subsidiaries
                       Consolidated Condensed Statements of Cash Flows
                   Three-month periods ended September 30, 2004 and 2003
                                       (In millions)
                                        (unaudited)

                                                                     Three-month periods ended
                                                                            September 30,
                                                                         2004         2003

<S>                                                                    <C>         <C>
Cash flows from operating activities
 Net loss                                                              $ (30.3)    $  (13.5)
 Depreciation and amortization                                            15.1         16.1
 Amortization of debt issue costs                                          1.0          1.3
 Stock-based compensation                                                  3.1          2.9
 Net gain on the sales of a business and  certain assets                    --         (3.5)
 Changes in current assets and liabilities
   Accounts receivable, net                                              (36.6)       (25.6)
   Inventories                                                           (52.4)       (45.6)
   Unearned revenues                                                      19.2         29.1
   Accounts payable and accrued expenses                                   1.3          2.4
   Other, net                                                            (33.5)       (63.7)
 Changes in noncurrent assets and liabilities                             28.6         31.0
                                                                       -------     --------
Net change in cash due to operating activities                           (84.5)       (69.1)
                                                                       -------     --------

Cash flows from investing activities
 Proceeds from maturities and sales of marketable securities                --          0.8
 Purchases of licensing agreements                                          --         (1.3)
 Proceeds from long-term investments                                        --          2.7
 Proceeds from sales of property, plant and equipment                      0.1          0.1
   Capital expenditures                                                   (3.2)        (4.0)
                                                                       -------     --------
Net change in cash due to investing activities                            (3.1)        (1.7)
                                                                       -------     --------
Cash flows from financing activities
 Proceeds from revolving credit and other short-term facilities, net      85.8        105.0
 Repayments of Term Loan                                                  (8.0)       (18.1)
 Cash paid for financing fees                                             (0.5)          --
 Proceeds from employee stock purchase plan  and exercise of
   stock options                                                           0.1           --
 Dividends paid                                                           (5.2)        (5.2)
                                                                       -------     --------
Net change in cash due to financing activities                            72.2         81.7
                                                                       -------     --------
Effect of exchange rate changes on cash                                    0.7          0.5
                                                                       -------     --------
Net change in cash and cash equivalents                                  (14.7)        11.4

Cash and cash equivalents at beginning of period                          50.3         51.3
                                                                       -------     --------
Cash and cash equivalents at end of period                             $  35.6     $   62.7
                                                                       =======     ========

</TABLE>



See accompanying Notes to Consolidated Condensed Financial Statements.


<PAGE>


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

Unless otherwise indicated, references in Notes to Consolidated Condensed
Financial Statements to "we," "our" and "us" are to The Reader's Digest
Association, Inc. and its subsidiaries. All references to 2005 and 2004,
unless otherwise indicated, are to fiscal 2005 and fiscal 2004,
respectively.  Our fiscal year represents the period from July 1 through June
30.

(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 majority-owned
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 accounting principles generally accepted in the United
States applying certain assumptions and estimates, including all adjustments
considered necessary to present such information fairly.  All such
adjustments are of a normal recurring nature.  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 that begins on July 1.  The three-month periods
ended September 30, 2004 and 2003 are the first fiscal quarters of 2005 and
2004, 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.

In some instances certain prior period amounts have been reclassified to
conform to the current year presentation.

Recent Accounting Standards

In March 2004, the Financial Accounting Standards Board (FASB) issued an
exposure draft, Share-Based Payment, which would supersede Statement of
Financial Accounting Standards (SFAS) No. 123, Accounting for Stock-Based
Compensation, SFAS No. 148, Accounting for Stock-Based
Compensation--Transition and Disclosure--an amendment of FASB Statement No. 123
and Accounting Principles Board (APB) Opinion No. 25, Accounting for Stock
Issued to Employees.  The most significant change proposed is the requirement
to recognize in the income statements the value of employee stock options and
other stock-based compensation (including employee stock purchase plans) as
calculated using the fair value based method, as opposed to the intrinsic
value method currently used.  The full impact of this proposed statement will
not be known until the FASB issues a final SFAS, which is expected to be
effective for interim or annual periods beginning after June 15, 2005 (fiscal
2006 and thereafter for us).


(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. The preferred stock dividend requirements were
$0.3 for the three-month periods ended September 30, 2004 and 2003.

Diluted earnings per share is computed in the same manner except that the
weighted average number of common shares outstanding assumes the exercise and
conversion of certain stock options and vesting of certain restricted stock.
The assumed exercise, conversion and vesting totaled 0.3 million shares and
1.8 million shares for the three-month periods ended September 30, 2004 and
2003, respectively.  Because including these shares in our calculation of
earnings per share would result in a smaller loss per share, they are
considered anti-dilutive.  Accordingly, our diluted earnings per share is
calculated using the basic number of shares.

In addition, options to purchase 12.5 million shares and 13.4 million shares
were not included in the calculation of diluted earnings per share because
the exercise price for these options exceeded the average market price during
the period.



<PAGE>


(3)   Stock-Based Compensation

We have applied the disclosure provisions of SFAS No. 123 and SFAS No. 148;
as permitted under these statements, we continue to measure stock
compensation expense using the intrinsic value method prescribed under APB
No. 25.  Intrinsic value represents the excess of the quoted market price of
our stock at the grant date over the amount the employee must pay for the
stock.  Since our practice is to grant stock options with an exercise price
equal to the market price (based on quoted market prices) at the date of
grant, no compensation expense is recognized.  Compensation expense is
recognized with respect to restricted stock and similar instruments.

The table below shows our net loss and basic and diluted loss per share as
reported on our statements of operations for the respective periods and
adjusts these amounts to include the pro forma impact of using the fair-value
based method to calculate stock compensation expense as prescribed under SFAS
No. 123.  The fair value of our options and shares to be issued in connection
with employee stock purchase plans on the date of grant was calculated using
the Black-Scholes option-pricing model.

The pro forma stock compensation would result in an additional $(2.0) and
$(2.9) of expense, net of tax, for the three-month periods ended September
30, 2004 and 2003, respectively.


                                                         Three-month periods
                                                         ended September 30,
                                                          2004         2003

Net loss, as reported                                  $  (30.3)    $  (13.5)
                                                       ========     ========

Less:  stock-based compensation expense determined
       using the fair-value based method, net of tax       (2.0)        (2.9)
                                                       --------     --------
Net loss, pro forma                                    $  (32.3)    $  (16.4)
                                                       ========     ========
Basic and diluted loss per share, as reported          $  (0.31)    $  (0.14)
                                                       ========     ========
Basic and diluted loss per share, pro forma            $  (0.34)    $  (0.17)
                                                       ========     ========


For the three-month periods ended September 30, 2004 and 2003, $2.0 and $1.9,
net of tax, respectively, of expenses related to restricted stock and other
stock-based compensation plans are included in our as reported and pro forma
net loss and basic and diluted loss per share amounts.


(4)   Revenues and Operating Profit by Reportable Segment

In the first quarter of 2005, we modified the composition of two of our
reportable segments, Reader's Digest North America and Consumer Business
Services, to reflect a change in the way our chief operating decision
maker internally manages two smaller business units.  Reader's Digest Young
Families and the results of our financial services alliances in the United
States are now included in Reader's Digest North America.  We have restated
reportable segment results of operations to conform to our new reportable
segments.

Reportable segments are based on our method of internal reporting.  We
present our segment revenues at amounts as if the transactions were with
third parties.  Revenues and expenses attributable to intercompany
transactions are eliminated (under the intercompany eliminations caption
below) to reconcile our reportable segment amounts to consolidated amounts,
as reported in our statements of operations.  We separately report Corporate
Unallocated expenses, which include the cost of governance and centrally
managed expenses, as well as the accounting for U.S. pension plans,
postretirement healthcare costs, and executive compensation programs that are
not allocated to the operating segments.  Governance and centrally managed
expenses include costs for departments such as corporate finance, general
corporate management, investor relations, legal, public relations and
treasury and for related information technology and facility costs incurred
by these departments.



<PAGE>


The accounting policies of our segments are the same as those described in
Note 1 to the Consolidated Financial Statements included in our 2004 Annual
Report to Stockholders.

                                                Three-month periods ended
                                                       September 30,
                                                     2004        2003
                                                               Restated

Revenues
  Reader's Digest North America                   $  209.7     $  210.0
  Reader's Digest International                      214.8        215.8
  Consumer Business Services                          71.4         75.3
  Intercompany eliminations                           (5.9)        (6.4)
                                                  --------     --------
Total revenues                                    $  490.0     $  494.7
                                                  ========     ========

Operating (loss) profit
  Reader's Digest North America                   $   13.2     $   10.4
  Reader's Digest International                        0.7         (1.2)
  Consumer Business Services                         (15.9)       (12.7)
  Magazine deferred promotion amortization(1)        (25.4)          --
  Corporate Unallocated(2)                            (8.5)       (10.0)
                                                  --------     --------
Operating (loss) profit                           $  (35.9)    $  (13.5)
                                                  ========     ========
Intercompany eliminations
  Reader's Digest North America                   $   (0.9)    $   (0.3)
  Reader's Digest International                       (0.9)        (0.7)
  Consumer Business Services                          (4.1)        (5.4)
                                                  --------     --------
Total intercompany eliminations                   $   (5.9)    $   (6.4)
                                                  ========     ========

      (1) In connection with our change to expensing magazine deferred
          promotion costs when the promotion is mailed to prospective
          customers, our reportable segment operating profit in 2005 includes
          such expenses as incurred.  Amortization of previously deferred
          promotion costs is not included in segment results reviewed by
          our chief operating decision maker. Magazine deferred promotion
          amortization relates to: 85% to Reader's Digest North America and
          15% to Reader's Digest International.

      (2) Corporate Unallocated includes expenses for the cost of governance and
          centrally managed expenses, as well as the accounting for U.S. pension
          plans, postretirement healthcare costs, and executive
          compensation programs that are not allocated to the operating
          segments.  Governance and centrally managed expenses include
          costs for departments such as corporate finance, general
          corporate management, investor relations, legal, public
          relations and treasury and for related information technology
          and facility costs incurred by these departments.


(5)   Comprehensive Loss

Accumulated other comprehensive loss as reported in our balance sheets as of
September 30, 2004 and 2003 primarily represents foreign currency translation
adjustments.  The components of comprehensive loss, net of related tax, for
the three-month periods ended September 30, 2004 and 2003 were as follows:


<PAGE>


<TABLE>

                                                                Three-month periods ended
                                                                       September 30,
                                                                      2004      2003

<S>                                                                 <C>       <C>
Net loss                                                            $ (30.3)  $ (13.5)
Change in:
  Foreign currency translation adjustments                              4.7       1.6
  Net unrealized gains (losses) on certain investments(1)                --       0.2
  Reclassification adjustments for  investment gains that are
   included in net loss(2)                                               --      (0.5)
                                                                    -------   -------
Total comprehensive loss                                            $ (25.6)  $ (12.2)
                                                                    =======   =======

</TABLE>

      (1) Net unrealized gains (losses) on certain investments, which are net of
          related tax, principally represents unrealized gains (losses) related
          to our investment in the voting common shares of LookSmart,
          Ltd.  For the three-month period ended September 30, 2003,
          this amount is net of deferred taxes of $(0.1).

      (2) Reclassification adjustments for investment gains that are included in
          net loss are realized gains net of deferred taxes of $0.3 for the
          three-month period ended September 30, 2003.


(6) Other Operating Items, Net

Other operating items recorded in previous periods represent charges related
to the streamlining of our organizational structure and the strategic
repositioning of certain businesses.  The components of our restructuring
charges included in accrued expenses on our balance sheets are described in
further detail below.

-  Severance Costs - These accruals represent the cost to separate
   employees from our operations as a result of actions taken to streamline
   the organizational structure.  This separation is accomplished through
   involuntary severance programs.  Accordingly, the positions to be separated
   were identified when the charge was recorded.

-  Contract Terminations - These accruals represent anticipated costs to
   terminate contractual obligations in connection with streamlining
   activities.

The table below reflects changes for the three-month period ended September
30, 2004 to accruals recorded in previous periods.  A majority of the
reserves remaining relate to severance and guaranteed minimum payments for
products that have been discontinued.  Most of the spending to date relates to
severance costs.  Of the approximately 820 positions identified to be separated
under the charges recorded in fiscal 2003 and 2004, approximately 80% had been
separated as of September 30, 2004.

   Initial year       Balance at                    Balance at
    of charge       June 30, 2004   Spending    September 30, 2004


  2002 and prior        $  3.2       $ (0.1)         $   3.1
  2003                     6.7         (0.8)             5.9
  2004                    11.8         (1.6)            10.2
                        ------       ------          -------
     Total              $ 21.7       $ (2.5)         $  19.2
                        ======       ======          =======



<PAGE>


(7) Inventories

                                   September 30,     June 30,
                                       2004            2004

  Raw materials                      $  10.2         $   9.7
  Work-in-progress                       2.4             5.0
  Finished goods                       193.2           137.3
                                     -------         -------
  Total inventories                  $ 205.8         $ 152.0
                                     =======         =======

The method used to value our inventories is the first-in, first-out (FIFO)
method.


(8)   Investments

Available-for-Sale Marketable Securities

Marketable securities, which were included in other noncurrent assets on the
balance sheet in 2004, primarily represented the fair market value (based on
quoted market prices) of our investment in LookSmart, Ltd.  These securities
were accounted for and classified as available-for-sale securities.  As of
September 30, 2003, we had sold all of our remaining shares.

During the three-month period ended September 30, 2003, we sold 0.2 million
shares of LookSmart and recorded a pre-tax gain of $0.8 in other (expense)
income, net on the statement of operations.

Investments, at Cost

During the three-month period ended September 30, 2003, we recognized a gain
of $2.7 in other (expense) income, net as a result of proceeds received in
exchange for our interest in Schoolpop, Inc., which merged into an unrelated
third party.  We had written this investment down to zero in the fourth
quarter of fiscal 2002.


(9)   Goodwill and Other Intangible Assets, Net

During the three-month period ended September 30, 2004, the carrying amount
of goodwill increased by $0.3 due to the impact of foreign currency
translation on goodwill balances outside the United States.  The carrying
amount of goodwill as of September 30, 2004 was $1,009.8 of which $686.5 was
attributable to Reader's Digest North America and $323.3 was attributable to
Consumer Business Services.  We tested our goodwill for impairment in the
third quarter of 2004 (our designated annual period) and determined that no
impairment existed with respect to our holdings at that time.  Although the
third quarter of the fiscal year is our designated annual period, we
continually monitor changes in our businesses to assess whether the carrying
amount of goodwill has been impaired.  If circumstances indicate that the
carrying value of goodwill has been impaired, we would record a loss in the
period the impairment is identified.

The following categories of acquired intangible assets are included in other
intangible assets, net as of September 30, 2004 and June 30, 2004:
<TABLE>

                                            September 30, 2004       June 30, 2004
                                              Gross       Net       Gross      Net

<S>                                         <C>       <C>         <C>       <C>
Intangible assets with indefinite lives:
  Tradenames                                $   89.7  $   89.7    $   89.7  $   89.7
Intangible assets with finite lives:
  Licensing agreements                          56.8      35.6        56.0      36.5
  Customer lists                               137.7      39.2       137.8      47.7
  Other tradenames and
   noncompete agreements                         3.0        --         3.0        --
                                            --------  --------    --------  --------
Total intangible assets                     $  287.2  $  164.5    $  286.5  $  173.9
                                            ========  ========    ========  ========

</TABLE>


Amortization related to intangible assets with finite lives amounted to $9.8
and $9.9 for the three-month periods ended September 30, 2004 and 2003,
respectively.  Our licensing agreement (discussed below) is principally
amortized over the initial 10-year contract term, with a portion being
amortized over the total 18-year term of our amended agreement.  Customer
lists are being amortized principally between three and six years.  Estimated
fiscal year amortization expense for intangible assets with finite lives is
as follows:  fiscal 2005 - $36.9; fiscal 2006 - $15.9; fiscal 2007 - $10.6;
fiscal 2008 - $5.9 and fiscal 2009 - $5.7.

Licensing Agreement

In May 2000, QSP, Inc. entered into a long-term licensing agreement with
World's Finest Chocolate, Inc.  The cost associated with the agreement was
assigned to licensing agreements and is included in other intangible assets,
net on the balance sheets.  In September 2002, this agreement was amended to
extend the term of the original agreement by 10 years, reduce the annual
minimum tonnage purchase requirements, favorably adjust pricing and permit
QSP to sell World's Finest Chocolate products through marketing channels
other than fundraising, under specified circumstances.  In connection with
these amended terms, QSP paid World's Finest Chocolate $10.5 in 2003.  The
amount paid in May 2000 to consummate the initial agreement is being
amortized over the original 10-year license term.  Amounts paid to amend the
agreement have been assigned to various amortization periods ranging from 6
to 16 years (the remaining period of the amended agreement).

The approximate annual minimum purchase amounts under the amended agreement
are:  fiscal 2005 - $59.0; fiscal 2006 - $61.0; fiscal 2007 - $62.0; and
approximately $69.0 per year from fiscal 2008 to fiscal 2020.  These amounts
are estimates based on minimum tonnage requirements and nominal price
increases as stipulated in the amended agreement.


(10) Debt

As described in Note 11 to the Consolidated Financial Statements included in
our 2004 Annual Report to Stockholders, our borrowings consist principally of
proceeds from the Term Loan Agreement (Term Loan), our Five-Year Revolving
Credit and Competitive Advance Facility Agreement (Five-Year Facility) and
$300.0 in senior unsecured notes.  The Term Loan and the Five-Year Facility
are collectively referred to as the Credit Agreements.  The maximum borrowing
allowed under the Five-Year Facility is $192.5.  The Credit Agreements are
secured by substantially all of our assets and are subject to various
financial and non-financial covenants.

During the three-month period ended September 30, 2004, we repaid $8.0 of
principal related to the Term Loan.  The Term Loan requires us to make
scheduled principal repayments of $8.0 per quarter during the first three
quarters of 2005 and increasing principal repayments thereafter.  This amount
is continually adjusted as we continue to make voluntary and additional
mandatory repayments.  We are required to perform a calculation in the first
quarter of every fiscal year (based on an excess cash flow calculation
outlined in the Term Loan) to determine any potential additional mandatory
repayments.  During the first quarter of 2005, no additional repayments were
required pursuant to this calculation.  As of September 30, 2004, we had
$369.0 of outstanding borrowings under the Term Loan, $130.4 of outstanding
borrowings under the Five-Year Facility and $300.0 outstanding under the
senior unsecured notes.  These amounts are included in long-term debt and in
loans and notes payable on the balance sheets.

Interest expense for the three-month periods ended September 30, 2004 and
2003 was $11.5 and $11.6, respectively.  Interest income on cash balances was
$0.7 and $1.0 for the three-month periods ended September 30, 2004 and 2003,
respectively.  The weighted average interest rate on our borrowings for the
three-month periods ended September 30, 2004 and 2003 was 4.8% and 4.0%,
respectively.


(11) Derivative Instruments

Risk Management and Objectives

In the Credit Agreements (referred to in Note 10, Debt), we are required to
enter into interest rate protection agreements to fix or limit the interest
cost with respect to at least one-third of the outstanding borrowings under
the Term Loan.  We currently maintain agreements to cap at 6% the LIBOR
interest rate component of our borrowings up to a notional amount of $150.0.
Our interest rate cap agreements qualify as cash flow hedges, the effect of
which is described below.

In the normal course of business, we are exposed to market risk from the
effect of foreign exchange rate fluctuations on the U.S. dollar value of our
foreign subsidiaries' results of operations and financial condition.  A
significant portion of our risk is associated with foreign exchange rate
fluctuations of the euro.  We purchase foreign currency option and forward
contracts to minimize the effect of fluctuating foreign currencies on
specifically identifiable, anticipated transactions.

As a matter of policy, we do not speculate in financial markets and,
therefore, we do not hold financial instruments for trading purposes. We
continually monitor foreign currency risk and the use of derivative
instruments.

Cash Flow Hedges - For the three-month period ended September 30, 2004, the
fair value of our interest rate cap was largely unchanged.  For the
three-month period ended September 30, 2003, the fair value of our interest
rate cap increased, resulting in a nominal gain, net of tax.  These changes
are reported in accumulated other comprehensive loss included in
stockholders' equity on the balance sheet.  The gains and losses are deferred
until the underlying interest expense is recognized in earnings.

There were no cash flow hedges discontinued during the three-month periods
ended September 30, 2004 and 2003.


(12) Pension Information

We sponsor various pension plans including those for employees in the United
States, international employees and excess plans for executives.  The largest
plan, covering substantially all employees in the United States, is a cash
balance plan.

The table below details the components of our net periodic pension (benefit)
cost for the three-month periods ended September 30, 2004 and 2003.

                                        Three-month period ended
                                              September 30,
                                            2004        2003

Service cost                               $  4.7     $  4.6
Interest cost                                11.0       11.0
Expected return on plan assets              (17.9)     (15.8)
Amortization                                 (0.3)      (0.1)
Recognized actuarial gain                     0.8        1.3
                                           ------     ------
Net periodic pension (benefit) cost        $ (1.7)    $  1.0
                                           ======     ======

For the three-month period ended September 30, 2004, approximately $1.7 was
contributed to our pension plans.

The table below details the components of our net periodic postretirement
(benefit) cost for the three-month periods ended September 30, 2004 and 2003.

                                       Three-month period ended
                                             September 30,
                                            2004       2003

Service cost                               $  0.3     $  0.3
Interest cost                                 1.3        1.6
Amortization of prior service cost           (0.4)      (0.2)
                                           ------     ------
Net periodic postretirement cost           $  1.2     $  1.7
                                           ======     ======


(13) Share Repurchase Authorization

Under various share repurchase authorizations (announced during 2000, 2001
and 2003), we have repurchased a cumulative 8.6 million shares of our Class A
Nonvoting Common Stock for approximately $231.7.  We have not repurchased any
shares since December 31, 2001.  In May 2001 we announced a $250.0 share
repurchase authorization, of which $186.0 remains as of September 30, 2004.
Under the Credit Agreements, we are permitted to repurchase shares, pay cash
dividends and make certain other restricted payments, in any combination
thereof, up to $50.0 each fiscal year (see Note 10, Debt, for additional
information).

In addition, on December 13, 2002 we repurchased 4.6 million shares for
approximately $100.0, plus capitalizable acquisition costs of $1.7 in
connection with the recapitalization transactions.


<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)


Unless otherwise indicated, references in Management's Discussion and
Analysis to "we," "our" and "us" are to The Reader's Digest Association, Inc.
and its subsidiaries.  All references to 2005 and 2004, unless otherwise
indicated, are to fiscal 2005 and fiscal 2004, respectively.  Our fiscal year
represents the period from July 1 through June 30.

The following discussion and analysis provides information that we believe is
relevant to an assessment and understanding of our consolidated results of
operations and financial condition and has been written excluding the effect
of foreign currency translation, except as specifically noted otherwise.
This discussion should be read in conjunction with the Consolidated Condensed
Financial Statements and related notes.  Certain amounts and percentages do
not recalculate due to rounding.  Operating results for any interim period
are not necessarily indicative of the results for an entire year due to the
seasonality of our business.


Three-Month Period Ended September 30, 2004, Compared With Three-Month Period
Ended September 30, 2003

Results of Operations:  Company-Wide

Overview

Usually, the first quarter of the fiscal year is our smallest in terms of
revenues.  We usually generate a larger share of our annual revenues and the
majority of our profits in the second quarter of the fiscal year.  As such,
our businesses, especially Books Are Fun and QSP, spend the first quarter
principally preparing for the second quarter peak selling season.  The first
quarter is usually characterized by an increased debt load to fund
expenditures for inventory and other working capital items.  Consistent with
our two-year plan to achieve sustainable revenue and profit growth by the end
of 2005, we also continued to invest in our business this quarter.  Some of
the investment initiatives include developing new products and expanding into
new markets outside of North America.

In the first quarter of 2005, we modified the composition of two of our
reportable segments, Reader's Digest North America and Consumer Business
Services, to reflect a change in the way our chief operating decision
maker internally manages two smaller business units.  Reader's Digest Young
Families and the results of our financial services alliances in the United
States are now included in Reader's Digest North America.  We have restated
reportable segment results of operations and the discussion below for prior
periods to conform to our new reportable segments.


Revenues

Revenues for the first quarter of 2005 decreased 1% to $490, compared with
$495 for the first quarter of 2004.  Excluding the effect of foreign currency
translation, revenues decreased 5%.  Reader's Digest International and
Consumer Business Services principally drove the decline in revenues.
Revenues for Reader's Digest North America were flat when compared with the
prior year.

Revenues for Reader's Digest International declined in most of our markets
principally due to planned reductions in the frequency of our mailings and
shrinking membership in series products.  To stabilize the business, we
continued to reduce mail quantities and eliminate marginally profitable
campaigns.  The most significant declines were in the United Kingdom, Brazil,
Mexico and Russia.  These declines were partially offset by improved
performance in Australia.

The decline in revenues for Consumer Business Services was driven by fewer
events at Books Are Fun due to turnover in the sales force and the effects of
hurricanes in the southeastern United States.  This decline was partially
offset by increased sales for Trade Publishing and QSP.

Revenues for Reader's Digest North America were flat when compared with the
comparable period in the prior year.  Revenues were lower principally because of
the elimination of certain campaigns at Young Families, lower circulation
revenues for Reader's Digest magazine and lower membership in Select
Editions.  Offsetting these declines were increased revenues at Reiman, due
in part to strong performance of annual book products.


Operating Loss

The operating loss for the first quarter of 2005 increased to $(36), compared
with a loss of $(13) for the first quarter of 2004.  The loss was principally
driven by expenses recognized to reflect our change to expensing
magazine direct-response promotion costs when the promotion is mailed to
prospective customers (described in further detail below), lower profits for
Consumer Business Services and investments in new products and markets.  These
declines were partially offset by increased profits for Reader's Digest
International and Reader's Digest North America, and lower Corporate
Unallocated expenses.

Reader's Digest North America and Reader's Digest International profits
improved because of lower promotion and fulfillment costs for Reader's Digest
magazine, more efficient mailings in Reader's Digest International and lower
magazine promotion spending at Reiman.  In Reader's Digest North America,
profits in the first quarter of 2005 also included a $2 one time contract
termination payment from a former financial services alliance partner.  In
addition, overhead costs were lower as we continue to realize the benefits of
cost-cutting measures initiated in previous periods.  Lower Corporate
Unallocated expenses were driven by $2 of higher net pension income (from our
overfunded U.S. pension plans) and $1 of lower costs associated with
postretirement healthcare benefits (due to changes in plan benefits and the
effect of a subsidy pursuant to the Medicare Prescription Drug, Improvement
and Modernization Act of 2003).

As described in Note 9 of the accompanying Notes to Consolidated Condensed
Financial Statements and the Critical Accounting Policies section included in
our 2004 Annual Report to Stockholders, we continually monitor changes in our
business and its effect on the carrying value of our intangible assets.
Recoverability analyses are sensitive to the effects of competition and
general economic health on sales and profit margins.  Given some of the
trends in our business, and since we generate most of our profit in the second
quarter, we may undertake a reassessment of our long-term forecasts for certain
businesses with intangible assets.  Our principal intangible assets relate to
Reiman and Books Are Fun.  To the extent the carrying amount of an intangible
asset is impaired, we would record a loss.

Magazine Deferred Promotion Change
During the fourth quarter of 2004, we reassessed our accounting for
magazine direct-response promotion costs in light of changes in our business,
as well as the strategies and initiatives undertaken by our magazine
business.  As a result of these changes, pursuant to American Institute of
Certified Public Accountants Statement of Position (SOP) 93-7, Reporting on
Advertising Costs, effective July 1, 2004, we no longer defer and amortize
magazine promotion costs, but expense such costs when the promotion is mailed
to prospective customers.  During the first quarter of 2005 expenses were
affected by $25 related to amortization of previously deferred magazine
promotion costs.  Such amount is included as a component of promotion,
marketing and administrative expenses on the statements of operations.  In
addition, because we currently expense magazine direct-response promotion
costs when the promotion is mailed to prospective customers, instead of
deferring and amortizing such costs (as we did in the prior year), promotion
expense variance in the first quarter of 2005 is higher.


Other (Expense) Income, Net

Other (expense) income, net increased to $(11) in the first quarter of 2005,
compared with $(8) in the first quarter of 2004.  The primary changes were:

  -   A gain of $3 from proceeds received in exchange for our interest in
      Schoolpop, Inc. in the first quarter of 2004, which merged into an
      unrelated third party.  We had written this investment down to zero in
      the fourth quarter of fiscal 2002.
  -   Sales of shares of LookSmart, Ltd. of $1 in the first quarter of 2004.
      The sale of these shares represented the complete liquidation of our
      investment in LookSmart.


Income Taxes

The effective tax rate for the first quarter of 2005, 35.5%, was comparable
to the effective rate for the first quarter of 2004, 36.0%.




<PAGE>


Net Loss and Loss Per Share

As a result of the activities described above, for the first quarter of 2005
we incurred a net loss of $(30) or $(0.31) for both basic and diluted loss
per share, compared with a net loss of $(13) or $(0.14) for both basic and
diluted loss per share in the first quarter of 2004.  For the first quarters
of both 2005 and 2004, the effect of potentially dilutive shares was not
considered in the calculation of loss per share because such shares would
have been anti-dilutive.


Results of Operations:  Operating Segments


                                           Three-month periods ended
                                                  September 30,
                                                  2004      2003
                                                          Restated
Revenues
  Reader's Digest North America                  $ 210     $ 210
  Reader's Digest International                    215       216
  Consumer Business Services                        71        75
  Intercompany eliminations                         (6)       (6)
                                                 -----     -----
Total revenues                                   $ 490     $ 495
                                                 =====     =====

Operating (loss) profit
  Reader's Digest North America                  $  13     $  10
  Reader's Digest International                      1        (1)
  Consumer Business Services                       (16)      (13)
  Magazine deferred promotion amortization(1)      (25)       --
  Corporate Unallocated(2)                          (9)      (10)
                                                 -----     -----
Operating (loss) profit                          $ (36)    $ (13)
                                                 =====     =====

Intercompany eliminations
  Reader's Digest North America                  $  (1)    $  --
  Reader's Digest International                     (1)       (1)
  Consumer Business Services                        (4)       (5)
                                                 -----     -----
Total intercompany eliminations                  $  (6)    $  (6)
                                                 =====     =====

    (1) In connection with our change to expensing magazine deferred
          promotion costs when the promotion is mailed to prospective
          customers, our reportable segment operating profit in 2005 includes
          such expenses as incurred.  Amortization of previously deferred
          promotion costs is not included in segment results reviewed by
          our chief operating decision maker.  Magazine deferred promotion
          amortization relates to: 85% to Reader's Digest North America and
          15% to Reader's Digest International.

    (2) Corporate Unallocated includes expenses for the cost of governance and
        centrally managed expenses, as well as the accounting for U.S. pension
        plans, postretirement healthcare costs, and executive
        compensation programs that are not allocated to the operating
        segments.  Governance and centrally managed expenses include
        costs for departments such as corporate finance, general
        corporate management, investor relations, legal, public
        relations and treasury and for related information technology
        and facility costs incurred by these departments.


Reader's Digest North America

Revenues for Reader's Digest North America for the first quarter of 2005 were
flat when compared with the first quarter of 2004.  Excluding the impact of
foreign currency translation, revenues declined 1%.  Lower revenues for U.S.
Books and Home Entertainment and Reader's Digest magazine were partially
offset by improved revenues for Reiman and our Special Interest magazines.

As described in the "Overview" section, because of the change in composition
of our reportable segments, Reader's Digest Young Families is included as
part of U.S. Books and Home Entertainment.  The most significant revenue
declines in this segment relate to Young Families and Select Editions.  Young
Families revenues declined as we eliminated marginally profitable and
unprofitable activity.  Revenues for Select Editions were lower as membership
in the series continued to decline.   Planned reductions in other continuity
series membership and lower telemarketing activity due to regulatory
restrictions, contributed to the decline.  These declines were partially
offset by the addition of new mailings for products in the Entertainment
affinity.

Revenues for Reader's Digest magazine declined slightly as the rate base was
reduced in January of 2004 to improve circulation profitability.  Advertising
revenues were flat when compared with the prior year as an increase in
advertising pages was offset by the effects of this rate base reduction.

Reiman revenues increased because of the strong performance of new and
existing annual book products and revenues from Backyard Living, a new
product launched in the third quarter of 2004.  These improvements were
partially offset by lower circulation revenues for certain magazines,
attributable to lower promotional efforts in order to maximize profitability.

Revenues for some of our Special Interest magazines also improved.  Increases
in the number of advertising pages and the rate per page for Selecciones and
increased advertising and circulation revenues for The Family Handyman were
driven by strong performance in their respective markets.

Operating profit for this segment for the first quarter of 2005 increased 27%
to $13, compared with $10 in the first quarter of 2004.  Excluding the effect
of foreign currency translation, profit increased 25%.  The increase in
profit was evident in almost all of our businesses.  Other than the impact of
the revenue changes described above and a one time contract termination
payment of $2 from a former financial services alliance partner, profits for
Reader's Digest magazine increased because of improved subscription sales
efficiency, due to the January 2004 reduction in the rate base, which lead to
lower marketing and fulfillment costs.  In addition, lower promotion costs at
Reiman and lower overhead costs for the segment, attributable to cost-cutting
measures initiated in previous periods, contributed to the improvement.

The effect of expensing magazine direct-response promotion costs when the
promotion is mailed to prospective customers and investments in new products
partially offset these improvements.


Reader's Digest International

Revenues for Reader's Digest International for the first quarter of 2005 were
$215, compared with $216 for the first quarter of 2004.  Excluding the impact
of foreign currency translation, revenues declined 8%.  The most significant
revenue declines were in the United Kingdom, Brazil, Mexico, Russia, Benelux,
Switzerland, Slovakia and the Czech Republic.  Also, revenues in Norway
declined because we discontinued certain significant lines of business in
2004.  The revenue declines in these markets were principally driven by
planned reductions in the frequency of our mailings and lower membership in
series products.  As a result of these factors, the number of promotable
customers declined.  Although some of these trends showed signs of
stabilizing, a weak economic climate in the markets where we operate
contributed to the decline.

Revenues in Australia increased because of improved response rates to
promotional mailings for strong products.  In addition, revenues from the
introduction of new products and expansion into new markets partly offset the
segment revenue declines.

Operating profit for this segment for the first quarter of 2005 increased to
a profit of $1, compared with a loss of $(1) for the first quarter of 2004.
The improvement was driven by the benefits of cost-cutting measures initiated
in previous periods, resulting in a 9% reduction in overhead costs, and lower
product and promotion costs because of lower activity levels.  Investments in
new products and markets and the effect of expensing magazine direct-response
promotion costs when the promotion is mailed to prospective customers
partially offset these improvements.




<PAGE>


Consumer Business Services

Revenues for Consumer Business Services for the first quarter of 2005
decreased 5% to $71, compared with $75 for the first quarter of 2004.
Excluding the impact of foreign currency translation, revenues declined 6%.
The decline in revenues was attributable to lower revenues for Books Are Fun,
partially offset by increased revenues for our Trade Publishing businesses
and QSP.

The decline in revenues for Books Are Fun was driven by fewer events held and
lower overall average sales per event.  The decline in the number of events
held was principally caused by turnover in the independent sales force, some
of whom joined competitors.  In addition, a later school opening date and
event cancellations because of hurricanes in the southeastern United States
contributed to the decline.  Average sales per event declined because of a
shift in the mix of products sold, to lower-priced products.

Revenues for Trade Publishing improved because of increased sales to mass
marketers and strong products.

Revenues for QSP were slightly higher for the first quarter of 2005 when
compared with the first quarter of 2004 because of a shift in the timing of
orders.  In addition, gross sales of World's Finest Chocolate products
increased 11%.

Operating profit for this segment for the first quarter of 2005 decreased 25%
to $(16), when compared with $(13) in the first quarter of 2004.  The revenue
changes described above, and increased sales force incentives and freight
costs at Books Are Fun drove the decline in profitability.  Investments in
the sales force and incentives at QSP contributed to the decline.


Forward-Looking Information

Fiscal 2005 Results

In the first quarter of 2005 QSP and Books Are Fun were adversely affected by
a later labor day and hurricanes in the southeastern United States.  These
businesses also continue to experience challenges related to competition,
particularly for the sales force.  Although we are investing in the sales
force and taking other actions to mitigate the impact of these circumstances
on our operations, some of the softness in first quarter revenues may not be
recovered in the second quarter, our peak selling season.

In the second quarter of 2005 we expect to recognize gains from the sales of
two magazines and a URL, approximately $4, in other (expense) income, net.
In addition, we expect to complete the sale and partial leaseback of our
facility in Pleasantville in the second quarter.

We expect full-year 2005 earnings per share of $0.28 to $0.38, including
$(0.49) per share related to amortization of our magazine deferred promotion
asset as of June 30, 2004.  In our 2004 Annual Report to Stockholders we
communicated that our previous 2005 earnings per share guidance, a range of
$0.77 to $0.87 per share, was provided before finalizing the disposition of
our magazine deferred promotion asset.  Accordingly, our previous guidance
did not include amortization of our magazine deferred promotion asset as of
June 30, 2004.




Liquidity and Capital Resources

                                                                  Three-month
                                                                  period ended
                                                                 September 30,
                                                                      2004

  Cash and cash equivalents at June 30, 2004                         $  50
  Net change in cash due to:
    Operating activities                                               (84)
    Investing activities                                                (3)
    Financing activities                                                72
    Effect of exchange rate changes on cash and cash equivalents         1

  Net change in cash and cash equivalents                              (14)
                                                                     -----
  Cash and cash equivalents at September 30, 2004                    $  36
                                                                     =====

Cash and cash equivalents decreased 29% to $36 as of September 30, 2004,
compared with $50 as of June 30, 2004.

Uses of cash during the first quarter of 2005 included:

  -   A build-up of inventory at Books Are Fun and, to a lesser extent, QSP
      before the second quarter peak selling season.
  -   A net increase in other current assets as a result of commission
      advances made to the sales force at QSP.
  -   Seasonally higher accounts receivable balances at QSP since a majority
      of their first quarter revenues were generated in late September.
  -   Employee incentive payments made in the first quarter of 2005 that were
      earned in 2004.
  -   Mandatory repayments of $8 of principal related to the Term Loan
      (described below).

Partially offsetting the uses of cash noted above were the proceeds from
short-term borrowings to finance the cash flow requirements noted above in
anticipation of the second quarter of 2004, our peak selling season, and an
increase in unearned revenues due to increased promotional activity and
favorable response rates for magazines at Reiman.


Debt
As described in Note 11 to the Consolidated Financial Statements included in
our 2004 Annual Report to Stockholders, our borrowings principally comprise
the $950 Term Loan Agreement (Term Loan), the Five-Year Revolving Credit and
Competitive Advance Facility Agreement (Five-Year Facility) (collectively
referred to as the Credit Agreements), and $300 senior unsecured notes.  The
maximum borrowing allowed under the Five-Year Facility is $193.  During the
first quarter of 2005, we repaid $8 of principal related to the Term Loan and
borrowed $86 under the Five-Year Facility.  The Term Loan requires us to make
scheduled principal repayments of $8 per quarter during the first three
quarters of 2005 and increasing principal repayments thereafter.  This amount
is continually adjusted as we continue to make voluntary and additional
mandatory repayments.  In addition, we are required to perform a calculation
in the first quarter of every fiscal year (based on an excess cash flow
calculation outlined in the Term Loan) to determine any potential additional
mandatory repayments.  During the first quarter of 2005, no additional
repayments were required pursuant to this calculation.  The weighted average
interest rate on our borrowings for the three-month period ended September
30, 2004 was 4.8%.

During the first quarter of 2005, we amended our Credit Agreements to exclude
the amortization of our deferred magazine promotion asset as of June 30, 2004
from our leverage ratio calculation and other financial covenants.

Under the Credit Agreements, we are required to hedge at least one-third of
borrowings outstanding under the Term Loan for a period of three years.
These instruments cap at 6% the LIBOR interest rate component of $150 of our
borrowings under the Term Loan.  These instruments will terminate in the
first quarter of fiscal 2006.

We believe that our liquidity, capital resources, cash flows and borrowing
capacity are sufficient to fund normal capital expenditures, working capital
requirements, the payment of dividends, debt service and the implementation
of our strategic initiatives.

Recent Accounting Standards

In March 2004, the Financial Accounting Standards Board (FASB) issued an
exposure draft, Share-Based Payment, which would supersede Statement of
Financial Accounting Standards (SFAS) No. 123, Accounting for Stock-Based
Compensation, SFAS No. 148, Accounting for Stock-Based
Compensation--Transition and Disclosure--an amendment of FASB Statement No. 123
and Accounting Principles Board (APB) Opinion No. 25, Accounting for Stock
Issued to Employees.  The most significant change proposed is the requirement
to recognize in the income statements the value of employee stock options and
other stock-based compensation (including employee stock purchase plans) as
calculated using the fair value based method, as opposed to the intrinsic
value method currently used.  The full impact of this proposed statement will
not be known until the FASB issues a final SFAS, which is expected to be
effective for interim or annual periods beginning after June 15, 2005 (fiscal
2006 and thereafter for us).

                                     *****

This report contains "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 effects of potentially more restrictive privacy and other
   governmental regulation relating to our marketing methods;
-  the effects of modified and varied promotions;
-  our ability to identify customer trends;
-  our ability to continue to create and acquire a broadly appealing mix of
   new products;
-  our ability to attract and retain new and younger magazine subscribers
   and product customers in view of the maturing of an important portion of
   our customer base;
-  our ability to attract and retain subscribers and customers in an
   economically efficient manner;
-  the effects of selective adjustments in pricing;
-  our ability to expand and more effectively utilize our customer database;
-  our ability to expand into new international markets and to introduce
   new product lines into new and existing markets;
-  our ability to expand into new channels of distribution;
-  our ability to negotiate and implement productive acquisitions,
   strategic alliances and joint ventures;
-  our ability to successfully integrate newly acquired and newly formed
   businesses (including the Reiman business);
-  the strength of relationships of newly acquired and newly formed
   businesses (including the Reiman business) with their employees, suppliers
   and customers;
-  the accuracy of the basis of forecasts relating to newly acquired and
   newly formed businesses (including the Reiman business);
-  our ability to achieve financial savings related to restructuring
   programs;
-  our ability to contain and reduce costs, especially through global
   efficiencies;
-  the cost and effectiveness of our reengineering of business processes
   and operations;
-  the accuracy of our management's assessment of the current status of our
   business;
-  the evolution of our organizational and structural capabilities;
-  our ability to respond to competitive pressures within and outside the
   direct marketing and direct sales industries, including the Internet;
-  our ability to recruit, train and retain effective sales personnel;
-  the effects of worldwide paper and postage costs;
-  the effects of possible postal disruptions on deliveries of promotions,
   products and payments;
-  the effects of foreign currency fluctuations;
-  the accuracy of our management's assessment of the future effective tax
   rate and the effects of initiatives to reduce the rate;
-  the adequacy of our financial resources;
-  the effects of the terms of, and increased leverage resulting from
   additional borrowings under, our credit facilities;
-  the effects of interest rate fluctuations;
-  the effects of downgrades of our credit ratings;
-  the effects of economic and political changes in the markets where we
   compete;
-  the effects of weather in limiting access to consumers; and
-  the economic effects of terrorist activity and related events,
   especially those limiting access to consumers and otherwise affecting the
   direct marketing and direct sales industries.

We do not undertake to update any forward-looking statements.


<PAGE>


Item 4.    CONTROLS AND PROCEDURES

Under the supervision of our Chief Executive Officer and Chief Financial
Officer, we evaluated our disclosure controls and procedures and internal
control over financial reporting (as defined in rules 13a-15(e) and 15d-15(e)
under the Securities Exchange Act of 1934) and concluded that (i) our
disclosure controls and procedures were effective as of September 30, 2004
and (ii) no change in internal control over financial reporting occurred
during the quarter ended September 30, 2004 that has materially affected, or
is reasonably likely to materially affect, such internal control over
financial reporting.

There have been no significant changes in our internal controls or in other
factors that could significantly affect those internal controls subsequent to
the date of our evaluation thereof.








<PAGE>


                          PART II. OTHER INFORMATION

Item 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

<TABLE>

                                                     (c) Total Number of      (d) Maximum  Number (or
                       (a) Total                      Shares (or Units)         Approximate Dollar
                        Number of     (b) Average      Purchased as Part        Value) of Shares (or
                        Shares (or     Price Paid         of Publicly          Units) that May Yet Be
      Period              Units)        per Share      Announced Plans          Purchased Under the
                        Purchased      (or Unit)          or Programs            Plans or Programs

<S>                      <C>             <C>                 <C>                         <C>
July 1 - 31, 2004        10,418          $14.73              --                          --
August 1 - 31, 2004      40,535          $13.36              --                          --
September 1 - 30, 2004       --              --              --                          --
        Total            50,953          $13.64              --                          --

</TABLE>

All of the share amounts noted represent shares of the Company's Common Stock
that were surrendered to the Company in order to fulfill tax withholding
obligations of employees upon vesting of restricted stock.


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

(a) Exhibits

      10.34 Form of stock option award terms and conditions under The Reader's
            Digest Association, Inc. 1994 and 2002 Key Employee Long Term
            Incentive Plans.*

      10.35 Form of restricted stock award terms and conditions under The
            Reader's Digest Association, Inc. 1994 and 2002 Key Employee Long
            Term Incentive Plans.*

      10.36 Form of performance share award letter under The Reader's Digest
            Association, Inc. 1994 and 2002 Key Employee Long Term Incentive
            Plans.*

      10.37 Form of deferred stock award terms and conditions under The
            Reader's Digest Association, Inc. Director Compensation Program.*

      10.38 Form of First Amendment, dated as of September 9, 2004, to the
            Amended and Restated Term Loan Agreement dated as of May 24, 2004,
            among The Reader's Digest Association, Inc., the Borrowing
            Subsidiaries, and the Lenders (as defined therein), etc.

      10.39 Form of Fifth Amendment, dated as of September 9, 2004, to the
            Amended and Restated Five-Year Revolving and Competitive Advance
            Facility Agreement dated as of May 20, 2002, among The Reader's
            Digest Association, Inc., the Borrowing Subsidiaries, and the
            Lenders (as defined therein), etc.

      14    Ethical, Legal and Business Conduct Policies, effective September
            30, 2004.

      31.1  Certification of Chief Executive Officer of The Reader's Digest
            Association, Inc. pursuant to rule 13a-14(a)/15d-14(a) of the
            Securities Exchange Act of 1934.

      31.2  Certification of Chief Financial Officer of The Reader's Digest
            Association, Inc. pursuant to rule 13a-14(a)/15d-14(a) of the
            Securities Exchange Act of 1934.

      32    Certifications of Chief Executive Officer and Chief Financial
            Officer of The Reader's Digest Association, Inc. pursuant to rule
            13a-14(b)/15d-14(b) of the Securities Exchange Act of 1934.

            *Denotes a management contract or compensatory plan.


(b) Reports on Form 8-K

    During the three-month period ended September 30, 2004, we filed the
    following Current Reports on Form 8-K:

    - Current Report on Form 8-K dated July 29, 2004, Items 9 and 12.

    - Current Report on Form 8-K/A dated September 9, 2004, Items 2.02, 7.01
      and 9.01.




<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:  November 5, 2004             By: /s/MICHAEL S. GELTZEILER
                                        Michael S. Geltzeiler
                                        Vice President and Chief Financial
                                        Officer
                                        (principal financial officer and
                                        duly authorized signatory)