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 December 31, 2003

                               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 January 30,  2004,  99,061,777  shares of the  registrant's
common stock were outstanding.


                                              Page 1 of 30 pages.


<PAGE>



     THE READER'S DIGEST ASSOCIATION, INC. AND SUBSIDIARIES

                       Index to Form 10-Q
                           (unaudited)

                        December 31, 2003


                                                                  Page No.

Part I - Financial Information:

Item 1.  Financial Statements

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

  Consolidated Condensed Statements of Income
   for the three-month and six-month periods ended December 31,
   2003 and 2002                                                        3

  Consolidated Condensed Balance Sheets
   as of December 31, 2003 and June 30, 2003                            4

  Consolidated Condensed Statements of Cash Flows
   for the six-month periods ended December 31, 2003 and 2002           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
27

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

Part II - Other Information:

Item 2. Changes in Securities, Use of Proceeds and Issuer Purchases
         of Equity Securities                                          28

Item 4. Submission of Matters to a Vote of Security Holders            28

Item 6. Exhibits and Reports on Form 8-K                               29


<PAGE>

             The Reader's Digest Association, Inc. and Subsidiaries
                   Consolidated Condensed Statements of Income
       Three-month and six-month periods ended December 31, 2003 and 2002
                      (In millions, except per share data)
                                   (unaudited)


<TABLE>

                                             Three-month period ended   Six-month period ended
                                                     December 31,            December 31,
                                                  2003       2002        2003          2002

<S>                                            <C>        <C>        <C>          <C>
Revenues                                       $   796.4  $   830.6  $   1,291.1  $   1,347.7

Product, distribution and editorial expenses      (310.1)    (313.2)      (518.4)      (529.1)
Promotion, marketing and administrative
 expenses                                         (363.3)    (370.8)      (663.1)      (672.8)
Other operating items, net                          (9.1)        --         (9.1)         2.8
                                               ---------  ---------  -----------  -----------
  Operating profit                                 113.9      146.6        100.5        148.6

Other expense, net                                 (10.0)     (13.1)       (17.6)       (23.2)
                                               ---------  ---------  -----------  -----------
  Income before provision for income
    taxes                                          103.9      133.5         82.9        125.4

Provision for income taxes                         (37.4)     (49.3)       (29.8)       (46.4)
                                               ---------  ---------  -----------  -----------
  Net income                                   $    66.5  $    84.2  $      53.1  $      79.0
                                               =========  =========  ===========  ===========

Basic earnings per share:
  Weighted average common shares
   outstanding                                      97.0       98.9         97.0         99.1
                                               =========  =========  ===========  ===========
  Basic earnings per share                     $    0.68  $    0.85  $      0.54  $      0.79
                                               =========  =========  ===========  ===========
Diluted earnings per share:
  Adjusted weighted average common
   shares outstanding                               99.3      100.0         99.1        100.2
                                               =========  =========  ===========  ===========

  Diluted earnings per share                   $    0.67  $    0.84  $      0.53  $      0.78
                                               =========  =========  ===========  ===========
Dividends per common share                     $    0.05  $    0.05  $      0.10  $      0.10
                                               =========  =========  ===========  ===========

</TABLE>




See accompanying Notes to Consolidated Condensed Financial Statements.


<PAGE>


             The Reader's Digest Association, Inc. and Subsidiaries
                      Consolidated Condensed Balance Sheets
                    As of December 31, 2003 and June 30, 2003
                                  (In millions)
                                   (unaudited)





                                                 December 31,   June 30,
                                                    2003          2003

Assets

  Cash and cash equivalents                       $   68.4     $   51.3
  Accounts receivable, net                           343.4        256.5
  Inventories                                        165.9        155.7
  Prepaid and deferred promotion costs               134.0        132.7
  Prepaid expenses and other current assets          161.3        191.8
                                                  --------     --------
Total current assets                                 873.0        788.0

  Property, plant and equipment, net                 162.8        162.5
  Goodwill                                         1,009.6      1,009.4
  Other intangible assets, net                       194.1        212.3
  Other noncurrent assets                            411.6        427.3
                                                  --------     --------
Total assets                                      $2,651.1     $2,599.5
                                                  ========     ========

Liabilities and stockholders' equity
  Loans and notes payable                         $   40.8     $   31.3
  Accounts payable                                   113.2         97.5
  Accrued expenses                                   293.7        281.4
  Income taxes payable                                20.6         36.5
  Unearned revenue                                   454.8        414.8
  Other current liabilities                           20.8         19.7
                                                  --------     --------
Total current liabilities                            943.9        881.2

  Long-term debt                                     757.3        834.7
  Unearned revenue                                   141.6        127.6
  Other noncurrent liabilities                       350.2        355.7
                                                  --------     --------
Total liabilities                                  2,193.0      2,199.2

  Capital stock                                       12.5         17.6
  Paid-in capital                                    209.5        215.0
  Retained earnings                                1,344.3      1,301.6
  Accumulated other comprehensive (loss) income     (102.1)      (109.2)
  Treasury stock, at cost                         (1,006.1)    (1,024.7)
                                                  --------     --------
Total stockholders' equity                           458.1        400.3
                                                  --------     --------
Total liabilities and stockholders' equity        $2,651.1     $2,599.5
                                                  ========     ========




See accompanying Notes to Consolidated Condensed Financial Statements.


<PAGE>


<TABLE>

             The Reader's Digest Association, Inc. and Subsidiaries
                 Consolidated Condensed Statements of Cash Flows
               Six-month periods ended December 31, 2003 and 2002
                                  (In millions)
                                   (unaudited)

                                                                     Six-month period ended
                                                                         December 31,
                                                                        2003       2002
<S>                                                                    <C>      <C>
Cash flows from operating activities
  Net income                                                           $  53.1  $   79.0
  Depreciation and amortization                                           32.2      32.0
  Asset impairments                                                        0.5        --
  Stock-based compensation                                                 5.6       3.1
  Net gain on marketable securities, the sales of certain assets and
   investments                                                            (3.7)     (5.3)
  Changes in current assets and liabilities, net of effects of
   acquisitions and dispositions
    Accounts receivable, net                                             (77.1)    (84.5)
    Inventories                                                           (6.6)     (9.1)
    Unearned revenues                                                     33.4      39.7
    Accounts payable and accrued expenses                                 17.5     (13.2)
    Other, net                                                            19.7      24.8
  Changes in noncurrent assets and liabilities, net of effects of
   acquisitions and dispositions                                          22.1      13.8
                                                                       -------  --------
Net change in cash due to operating activities                            96.7      80.3
                                                                       -------  --------
Cash flows from investing activities
  Proceeds from maturities and sales of short-term investments and
   marketable securities                                                   0.8       3.2
  Purchases of marketable securities, licensing agreements and
   other investments                                                      (1.3)     (7.6)
  Proceeds from other long-term investments                                3.0        --
  Proceeds from sales of property, plant and equipment                     0.1       3.4
  Capital expenditures                                                    (8.5)     (6.6)
                                                                       -------  --------
Net change in cash due to investing activities                            (5.9)     (7.6)
                                                                       -------  --------
Cash flows from financing activities
  Repayments of term loan                                                (67.4)    (16.0)
  (Repayments) proceeds from revolving credit and other facilities,
   net                                                                    (0.6)     15.6
  Dividends paid                                                         (10.3)    (10.6)
  Common stock repurchased                                                  --    (101.7)
  Proceeds from employee stock purchase plan and exercise of
   stock options                                                           1.4       1.8
  Other, net                                                              (0.1)     (0.5)
                                                                       -------  --------
Net change in cash due to financing activities                           (77.0)   (111.4)
                                                                       -------  --------
Effect of exchange rate changes on cash                                    3.3      (0.9)
                                                                       -------  --------
Net change in cash and cash equivalents                                   17.1     (39.6)

Cash and cash equivalents at beginning of period                          51.3     107.6
                                                                       -------  --------
Cash and cash equivalents at end of period                             $  68.4  $   68.0
                                                                       =======  ========

</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 indicated otherwise, 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 2004, 2003 and 2002, unless otherwise indicated,
are to fiscal 2004, fiscal 2003 and fiscal 2002, respectively.
Our fiscal year is 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 beginning July 1.  The three-month
periods ended December 31, 2003 and 2002 are the second fiscal
quarters of 2004 and 2003, 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.

New Accounting Standards

In May 2003, the Financial Accounting Standards Board (FASB)
issued Statement of Financial Accounting Standards (SFAS) No.
150, Accounting for Certain Financial Instruments with
Characteristics of both Liabilities and Equity.  SFAS No. 150
established standards for classifying certain financial
instruments that represent obligations yet also have
characteristics similar to equity instruments.  Specifically,
SFAS No. 150 addresses the accounting for instruments such as
mandatorily redeemable securities, certain option contracts
and obligations to be settled in shares.  In November 2003,
the FASB indefinitely delayed the effective date of the
classification and measurement provisions that relate to
noncontrolling interests in limited life entities.  We
adopted SFAS No. 150 as of July 1, 2003.  Adoption of this
standard did not have a material impact on our operating
results or financial position.

In December 2003, the FASB issued FASB Interpretation (FIN)
No. 46R, a revision to FIN No. 46, Consolidation of Variable
Interest Entities, an Interpretation of Accounting Research
Bulletin No. 51.  FIN No. 46 introduced a new consolidation
model with respect to variable interest entities.  The new
model requires that the determination of control should be
based on the potential variability in gains and losses of the
variable interest entity being evaluated.  The entity with
the majority of the variability in gains and losses is deemed
to control the variable interest entity and is required to
consolidate it.  FIN No. 46R revised the effective dates for
different types of entities.  FIN No. 46R must be applied to
all entities considered special purpose entities for the
period ending after December 15, 2003 (the second quarter of
2004 for us).  However, FIN No. 46R is effective for the
first reporting period that ends after March 15, 2004 (the
third quarter of 2004 for us) for all other types of variable
interest entities.

In December 2003, the FASB issued a revision to SFAS No. 132,
Employers' Disclosures about Pensions and Other Postretirement
Benefits.  The statement revises the financial statement
disclosures required for pension and postretirement obligations.
Additional disclosures include descriptions of plan assets and
the investment strategy employed.  In addition to these annual
disclosures, SFAS No. 132 also requires interim disclosures such
as the components of net periodic pension cost.  The statement
does not change the recognition or measurement of benefit plan
obligations.  The annual disclosure requirements are effective
for fiscal years ending after December 15, 2003 (fiscal 2004 for
us).  The interim disclosure requirements are effective for
interim periods beginning after December 15, 2003 (the third
quarter of 2004 for us).

Adoption of FIN No. 46R and the revision to SFAS No. 132 will
not have any impact on our operating results or financial
position.


(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 each of the
three-month periods ended December 31, 2003 and 2002 and $0.7 for
each of the six-month periods ended December 31, 2003 and 2002.

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.  For the three-month periods
ended December 31, 2003 and 2002, the assumed exercise,
conversion and vesting were 2.3 million shares and 1.1 million
shares, respectively.  For the six-month periods ended December
31, 2003 and 2002, the assumed exercise, conversion and vesting
was 2.2 million shares and 1.1 million shares, respectively.

In addition, options to purchase 11.4 million shares and 13.1
million shares were not included in the calculation of diluted
earnings per share for the three-month periods ended December 31,
2003 and 2002, respectively, because the exercise price for these
options exceeded the average market price during the period.
Accordingly, the effect of including these options in the
calculation of earnings per share would have been anti-dilutive
for the three-month periods ended December 31, 2003 and 2002,
respectively.  For the six-month periods ended December 31, 2003
and 2002, 11.4 million shares and 11.1 million shares,
respectively, were not included in the calculation of diluted
earnings per share for this reason.




<PAGE>


(3)  Stock-Based Compensation

The table below shows our net income and also basic and diluted
earnings per share as reported on our income statements 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 on the date of grant was calculated
using the Black-Scholes option-pricing model.  The pro forma
stock compensation would result in additional expense of $(2.7)
and $(5.6), net of tax, for the three- and six-month periods
ended December 31, 2003, respectively.  For the three- and
six-month periods ended December 31, 2002, such amounts would be
$(3.1) and $(6.6), net of tax, respectively.

                             Three-month period ended     Six-month period ended
                                    December 31,               December 31,
                                  2003       2002            2003        2002

Net income, as reported        $   66.5    $   84.2        $   53.1    $   79.0
                               ========    ========        ========    ========

Less:  stock-based
  compensation expense
  determined using the fair
  value based method, net of
  tax                              (2.7)       (3.1)           (5.6)       (6.6)
                               --------    --------        --------    --------

Net income, pro forma          $   63.8    $   81.1        $   47.5    $   72.4
                               ========    ========        ========    ========

Basic earnings per share, as
 reported                      $   0.68    $   0.85        $   0.54    $   0.79
                               ========    ========        ========    ========
Basic earnings per share,
 pro forma                     $   0.65    $   0.82        $   0.48    $   0.72
                               ========    ========        ========    ========
Diluted earnings per share,
 as reported                   $   0.67    $   0.84        $   0.53    $   0.78
                               ========    ========        ========    ========
Diluted earnings per share,
 pro forma                     $   0.64    $   0.81        $   0.47    $   0.72
                               ========    ========        ========    ========

For the three- and six-month periods ended December 31, 2003,
$1.8 and $3.6, net of tax, respectively, of expenses related to
restricted stock and other stock-based compensation plans are
included in our reported net income and earnings per share
amounts.  For the three- and six-months periods ended December
31, 2002, those amounts were approximately $1.1 and $2.0, net of
tax, respectively.


(4) Revenues and Operating Profit by Reportable Segment

We modified our reportable segments during the fourth quarter of
2003 to reflect our new internal management organization.  The
three reportable segments are Reader's Digest North America,
International Businesses and Consumer Business Services.  We have
restated segment results of operations for prior periods to
conform to our new reportable segments.

Reportable segments are based on our method of internal
reporting.  We present our segment revenues 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 income statements.  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, post-retirement 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.

The accounting policies of our segments are the same as those
described in Note 1 to the Consolidated Financial Statements
included in our 2003 Annual Report to Stockholders.

<TABLE>

                               Three-month period ended    Six-month period ended
                                      December 31,              December 31,
                                     2003      2002            2003       2002
<S>                               <C>       <C>            <C>         <C>
Revenues
  Reader's Digest North America   $  234.9  $  233.7       $    435.0  $    441.9
  International Businesses           275.5     291.1            491.3       519.9
  Consumer Business Services         298.8     317.1            384.0       402.7
  Intercompany eliminations          (12.8)    (11.3)           (19.2)      (16.8)
                                  --------  --------       ----------  ----------
 Total revenues                   $  796.4  $  830.6       $  1,291.1  $  1,347.7
                                  ========  ========       ==========  ==========
Operating profit
  Reader's Digest North America   $   31.7  $   28.1       $     43.3  $     38.2
  International Businesses            23.6      28.5             22.4        30.0
  Consumer Business Services          80.8      98.7             67.0        88.6
  Corporate Unallocated              (13.1)     (8.7)           (23.1)      (11.0)
  Other operating items, net          (9.1)       --             (9.1)        2.8
                                  --------  --------       ----------  ----------
Operating profit                  $  113.9  $  146.6       $    100.5  $    148.6
                                  ========  ========       ==========  ==========
Intercompany eliminations
  Reader's Digest North America   $   (0.3) $   (1.7)      $     (0.5) $     (2.9)
  International Businesses            (0.7)     (1.6)            (1.4)       (2.2)
  Consumer Business Services         (11.8)     (8.0)           (17.3)      (11.7)
                                  --------  --------       ----------  ----------
Total intercompany eliminations   $  (12.8) $  (11.3)      $    (19.2) $    (16.8)
                                  ========  ========       ==========  ==========

</TABLE>


(5)  Comprehensive (Loss) Income

Accumulated other comprehensive (loss) income, as reported in the
balance sheets, primarily represents foreign currency translation
adjustments.  The components of comprehensive income, net of
related tax, for the three- and six-month periods ended December
31, 2003 and 2002 were as follows:

<TABLE>

                                                    Three-month period ended     Six-month period ended
                                                            December 31,              December 31,
                                                          2003      2002             2003     2002

<S>                                                     <C>       <C>              <C>      <C>
Net income                                              $  66.5   $  84.2          $  53.1  $  79.0
Change in:
  Foreign currency translation adjustments                  5.8       6.9              7.4      2.5
  Net unrealized gains (losses) on certain
   investments(1)                                            --       1.3              0.2     (0.2)
  Reclassification adjustments for gains that are
   included in net income(2)                                 --      (1.2)            (0.5)    (2.0)
  Net unrealized gains (losses) on certain derivative
   transactions(3)                                           --      (0.4)              --     (1.0)
                                                        -------   -------          -------  -------

Total comprehensive (loss) income                       $  72.3   $  90.8          $  60.2  $  78.3
                                                        =======   =======          =======  =======

</TABLE>


    (1)Net unrealized gains (losses) on certain investments, net of
       related tax, principally represents our investment
       in the voting common shares of LookSmart, Ltd.  For
       the three- and six-month periods ended December 31,
       2003, these amounts are net of deferred taxes of
       zero and a deferred tax liability of $(0.1),
       respectively.  For the three- and six-month periods
       ended December 31, 2002, these amounts are net of a
       deferred tax liability of $(0.7) and a deferred tax
       asset of $0.1.

    (2)Reclassification adjustments for gains that are included in
       net income are net of deferred taxes of zero and a
       deferred tax asset of $0.3 for the three- and
       six-month periods ended December 31, 2003,
       respectively.  For the three- and six-month periods
       ended December 31, 2002, these amounts are deferred
       tax assets of $0.6 and $1.1, respectively.

    (3)Net unrealized gains (losses) on certain derivative transactions
       in 2003 and 2002, net of related tax, principally
       represent gains and losses on the value of our
       interest rate caps.  For both the three- and
       six-month periods ended December 31, 2003, these
       amounts are net of deferred taxes of zero.  For the
       three- and six-month periods ended December 31,
       2002, this amount is net of deferred tax assets of
       $0.2 and $0.5, respectively.  See Note 11,
       Derivative Instruments, for additional information.


(6)  Other Operating Items and Restructuring Charges

In the three-month period ended December 31, 2003, we recorded
restructuring charges of $9.1.  The charges comprised $7.6 for
severance and $1.5 for contract terminations and other charges.
The severance charges relate to the termination of approximately
130 employees to integrate Reiman's customer service department
with our outsource provider and to streamline operations in
certain European markets and corporate departments.  These
individuals are expected to be terminated during the third and
fourth quarters of 2004 and the first half of fiscal 2005.  These
actions were taken to streamline our operations.

For the six-month period ended December 31, 2002, we recorded
income of $2.8 comprised primarily of net adjustments to
litigation-related accrual balances that were established in
previous years, following settlement of a lawsuit in the first
quarter of 2003.

Other operating items recorded in previous periods also represent
charges related to the streamlining of our organizational
structure and the strategic repositioning of certain businesses.
The components of these charges, included in accrued expenses on
the 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 a combination of voluntary
   and involuntary severance programs.  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.

-  Impairment Losses - As a result of restructuring activities,
   we have previously incurred charges related to the carrying
   value of certain long-lived assets, computer hardware and
   software, and property, plant and equipment no longer used in
   our operations.

The table below reflects changes for the three-month period ended
December 31, 2003 to accruals recorded in the current and
previous periods.  A majority of the reserves remaining and
spending to date relate to severance costs.  Of the approximately
700 positions identified to be separated under the charges
recorded in the third and fourth quarters of 2003 and in the
second quarter of 2004, approximately 65% had been separated as
of December 31, 2003.  Included in the September 30, 2003 balance
is a reclassification of approximately $0.9 to properly reflect
spending against the appropriate year of the charge.  These
adjustments did not affect our operating results or aggregate
reserve levels.

 Initial year        Balance at                                    Balance at
  of charge      September 30, 2003    Spending     Charges    December 31, 2003

2002 & prior          $   5.2           $ (0.8)      $  --          $   4.4
        2003             18.2             (5.9)         --             12.3
        2004               --             (0.2)        9.1              8.9
                      -------           ------      ------          -------
Total                 $  23.4           $ (6.9)     $  9.1          $  25.6
                      =======           ======      ======          =======


<PAGE>


For the six-month period ended December 31, 2003, spending
charged against reserves recorded in the current and previous
periods amounted to $18.2 primarily related to severance and
costs incurred to restructure business processes in certain
corporate departments.  Included in the June 30, 2003 balance is
a reclassification of approximately $0.9 to properly reflect
spending against the appropriate year of the charge.

   Initial year      Balance at                                  Balance at
    of charge      June 30, 2003    Spending     Charges     December 31, 2003

  2002 & prior       $    7.0       $ (2.6)       $  --           $   4.4
  2003                   27.7        (15.4)          --              12.3
  2004                     --         (0.2)         9.1               8.9
                     --------       ------        -----           -------
     Total           $   34.7       $(18.2)       $ 9.1           $  25.6
                     ========       ======        =====           =======


(7)   Inventories

                                            December 31,      June 30,
                                                2003            2003


  Raw materials                               $  11.1         $   9.3
  Work-in-progress                                2.2             6.2
  Finished goods                                152.6           140.2
                                              -------         -------
Total inventories                             $ 165.9         $ 155.7
                                              =======         =======

We use the first-in, first-out (FIFO) method to value our inventories.


(8)   Investments

Available-for-Sale Marketable Securities

Marketable securities included in other noncurrent assets on the
balance sheets primarily represent the fair market value (based
on quoted market prices) of our investment in LookSmart, Ltd.
These securities are accounted for, and classified as,
available-for-sale securities.  As of September 30, 2003, we had
sold all of our remaining shares.  As of June 30, 2003, the
market value of these shares totaled $0.6.

During the six-month period ended December 31, 2003, we sold 0.2
million shares of LookSmart and recorded pre-tax gains of $0.8 in
other expense, net on the income statement.  During the three-
and six-month periods ended December 31, 2002, we sold 0.7
million shares and 2.0 million shares of LookSmart, respectively,
and recorded pre-tax gains of $1.8 and $3.1, respectively, in
other expense, net on the income statements.


(9)   Goodwill and Intangible Assets, Net

There were no changes in the carrying amount of goodwill during
the three-month period ended December 31, 2003.  The carrying
amount of goodwill as of December 31, 2003 was $1,009.6 of which
$686.4 was attributable to Reader's Digest North America and
$323.2 was attributable to Consumer Business Services.  We tested
our goodwill for impairment in the third quarter of 2003 (our
designated annual period) and determined that no impairment
existed with respect to our holdings at that time.  We will
evaluate the carrying amount of goodwill for recoverability
during the third quarter of 2004 and, if necessary, adjust the
carrying value of our goodwill at that time.



<PAGE>


The following categories of acquired intangible assets are
included in other intangible assets, net, on the balance sheets,
as of December 31, 2003 and June 30, 2003:

<TABLE>

                                            December 31, 2003       June 30, 2003
                                             Gross       Net       Gross       Net

<S>                                        <C>        <C>        <C>        <C>
Intangible assets with indefinite lives:
  Trade names                              $   89.7   $   89.7   $   89.7   $   89.7

Intangible assets with finite lives:
  Licensing agreements                         56.6       39.7       54.8       41.0
  Customer lists                              137.9       64.7      137.8       81.6
  Other trade names and
   noncompete agreements                        3.0         --        3.0         --
                                           --------   --------   --------   --------
Total intangible assets                    $  287.2   $  194.1   $  285.3   $  212.3
                                           ========   ========   ========   ========

</TABLE>


Amortization related to intangible assets with finite lives
amounted to $9.9 and $19.8 for the three- and six-month periods
ended December 31, 2003, respectively.  For the three- and
six-month periods ended December 31, 2002 amortization amounted
to $9.9 and $19.7, respectively.  Our most significant licensing
agreement (discussed below) is principally amortized over the
initial 10-year contract term, with a portion being amortized
over the remaining 17-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 2004 -
$39.6; fiscal 2005 - $36.9; fiscal 2006 - $16.0; fiscal 2007 -
$10.5 and fiscal 2008 - $5.8.

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 7 to 17 years (the remaining period of the
amended agreement).

The approximate annual minimum purchase amounts under the amended
agreement are: fiscal 2004 - $55.0; fiscal 2005 - $59.0; fiscal
2006 - $61.0; fiscal 2007 - $62.0; and approximately $69.0 per
year from fiscal 2008 to fiscal 2020.  The 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 2003 Annual Report to Stockholders, our
borrowings consist principally of proceeds from the Term Loan
Agreement (Term Loan) and our Five-Year Revolving Credit and
Competitive Advance Facility Agreement (Five-Year Facility).
(The Term Loan and the Five-Year Facility are collectively
referred to as the 2002 Credit Agreements.)  The maximum
borrowing allowed under the Five-Year Facility is $192.5.  The
2002 Credit Agreements are secured by substantially all of our
assets and are subject to various financial and non-financial
covenants.

During the six-month period ended December 31, 2003, we repaid
$67.4 of principal related to the Term Loan (consisting of $14.6
in mandatory repayments, $10.8 in additional mandatory repayments
pursuant to an excess cash flow calculation performed annually,
and $42.0 in voluntary prepayments).  The Term Loan requires us
to make scheduled principal repayments of $7.3 per quarter during
2004 and increasing principal repayments thereafter.  The amount
of scheduled repayments is continually adjusted to the extent
that we continue to make voluntary repayments 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.  As of December 31,
2003, we had $797.9 of outstanding borrowings under the Term Loan
and zero outstanding under the Five-Year Facility.  These amounts
are included in long-term debt and in loans and notes payable on
the balance sheets.

Interest expense for the three- and six-month periods ended
December 31, 2003 was $12.7 and $24.3, respectively ($12.6 and
$25.5 for the three- and six-month periods ended December 31,
2002, respectively).  Interest income on cash balances was $1.4
and $2.4 for the three- and six-month periods ended December 31,
2003, respectively ($1.8 and $3.4 for the three- and six-month
periods ended December 31, 2002, respectively).  The weighted
average interest rate on our borrowings for the six-month periods
ended December 31, 2003 and 2002 was 4.1% and 4.2%, respectively.


(11) Derivative Instruments

Risk Management and Objectives

In the 2002 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.  Accordingly,
in July 2002 we entered into agreements to cap at 6% the LIBOR
interest rate component of $400.0 of our borrowings for a period
of three years.  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
significant known 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 six-month period ended December 31,
2003, the fair value of our interest rate caps increased by a
nominal amount, net of deferred taxes (for the three-month period
ended December 31, 2003, the fair value of our interest rate caps
was unchanged).  For the three- and six-month periods ended
December 31, 2002, the fair value of our interest rate caps
decreased, resulting in a loss of $(0.4) and $(1.0),
respectively, net of deferred taxes of $0.2 and $0.5,
respectively.  These changes are reported in accumulated other
comprehensive (loss) income included in stockholders' equity on
the balance sheets.  The gains and losses are deferred until the
underlying transaction is recognized in earnings.

There were no cash flow hedges discontinued during the three- and
six-month periods ended December 31, 2003 and 2002.


(12) Share Repurchase Authorization

As of December 31, 2003, under various share repurchase
authorizations (announced during 2000, 2001 and 2002), we have
repurchased 8.6 million shares of our Class A Nonvoting Common
Stock for approximately $231.7 in previous periods.  In May 2001
we announced a $250.0 share repurchase authorization, of which
$186.0 remains as of December 31, 2003.  Under the 2002 Credit
Agreements, we are prohibited from repurchasing our Common Stock
until our credit ratings are investment grade (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 described in Note 12 to the Consolidated Financial
Statements included in our 2003 Annual Report to Stockholders.



<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," "our" and "us" are to The Reader's Digest
Association, Inc. and its subsidiaries.  All references to 2004
and 2003, unless otherwise indicated, are to fiscal 2004 and
fiscal 2003, respectively.  Our fiscal year is 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.  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 December 31, 2003, Compared With
Three-Month Period Ended December 31, 2002

Results of Operations:  Company-Wide

Overview

The second quarter of the fiscal year is our most significant in
terms of revenues and operating profit.  The second quarter of
2004 marked a period of increased challenges for QSP and Books
Are Fun, while Reader's Digest magazine, our Special Interest
Magazines and our U.S. Books and Home Entertainment business
exhibited strong improvements in profit when compared with the
second quarter of 2003.  We continued to invest in Reiman, QSP
and Books Are Fun and to implement plans to reduce unfavorable
trends in International Businesses.  Despite a difficult quarter,
cash flow improved, enabling us to voluntarily pay down a portion
of our outstanding long-term debt.

In 2003, we announced a plan to achieve sustainable revenue and
profit growth by fiscal 2005.  The plan included cost-reduction
actions that were announced in the third and fourth quarters of
2003.  In the second quarter of 2004, we announced additional
actions (principally employee separations) necessary to complete
certain restructuring and cost-reduction programs, primarily in
our international markets.

Revenues

Revenues for the second quarter of 2004 decreased 4% to $796,
compared with $831 for the second quarter of 2003.  Excluding the
impact of foreign currency translation, revenues decreased 9%.
The decline in revenues was principally attributable to declines
in International Businesses and Consumer Business Services.  In
addition, revenues for Reader's Digest North America declined
slightly.

We anticipated a decline in revenues for International
Businesses.  The most significant declines were in the United
Kingdom, France and Germany and were evident for most products.
The principal reasons for the decline were strategic reductions
in mail quantities, exiting of marginal revenue streams, smaller
numbers of active promotable customers and adverse trends in
response rates in certain markets.  Additionally, weak economic
conditions in Europe also contributed to these trends.

The decline in revenues for Consumer Business Services was
principally attributable to lower revenues at QSP and Books Are
Fun, partially offset by increased sales at Trade Publishing.
The decline in revenues at QSP was driven by lower sales of gift
and magazine products.  The decline in revenues at Books Are Fun
was driven by lower average sales per event and fewer events.

The modest decline in revenues for Reader's Digest North America was
attributable to lower Reader's Digest magazine circulation and
advertising revenues, and lower revenues in Canada.

Operating Profit

Operating profit for the second quarter of 2004 declined 22% to
$114, compared with $147 for the second quarter of 2003.
Excluding the impact of foreign currency translation, profit
declined 24%.  Lower profits were driven by:

  -     A decline in profits for Consumer Business Services
  -     Restructuring charges of $(9)
  -     A decline in profits for International Businesses
  -     A net increase in Corporate Unallocated expenses of $(4)
  -     Incremental investment spending of $(7), which is included
        in the results of our reportable segments

These declines were slightly offset by increased profit for
Reader's Digest North America.

Profits in Consumer Business Services declined due to lower sales
for QSP and, to a lesser extent, Books Are Fun.  Investments in
the sales force at QSP, Inc. contributed to the decline.

Profits in our International Businesses declined principally due
to lower revenues in most markets and increased promotion
spending to drive new customer acquisition in certain markets.
The most significant declines were noted in Germany, the United
Kingdom and Switzerland.  These declines were partially offset by
increased profits as a result of cost reductions in Australia,
Mexico and certain other markets.

The increase in profits for Reader's Digest North America was
primarily driven by lower promotion costs for Reader's Digest
magazine and U.S. Books and Home Entertainment.  In addition,
increased profits for our Special Interest Magazines and new
products contributed to the improvement.  These increases were
partially offset by investments in new magazines and increased
customer acquisition efforts.

Corporate Unallocated expenses reflect the cost of governance and
centrally managed expenses, as well as the accounting for U.S.
pension plans, post-retirement healthcare costs, and executive
compensation programs that are not allocated to the operating
segments.  For the second quarter of 2004, these costs increased
$(4) when compared with the second quarter of 2003.  The increase
was attributable to a $(5) decrease in net pension income (from
our over-funded U.S. pension plan), a $(1) increase in
compensation expense due to a greater mix of restricted stock
versus stock options, and a $(1) increase associated with
post-retirement healthcare costs.  These increases were partially
offset by $3 of lower overhead costs because of the benefits of
cost-reduction efforts.

During the second quarter of 2004, we recorded restructuring
charges of $(9).  The charges principally comprised severance of
$(8), primarily in European markets, and contract terminations
and other charges of $(1).  The severance charges relate to the
termination of approximately 130 employees to integrate Reiman's
customer service department with our outsource provider, and to
streamline operations in certain European markets and corporate
departments.  These individuals are expected to be separated in
the third and fourth quarters of 2004 and the first half of
fiscal 2005.


Other Expense, Net

Other expense, net decreased 24% to $(10) in the second quarter
of 2004, compared with $(13) in the second quarter of 2003.  The
most significant component of other expense, net is interest
expense.  For the second quarter of 2004 and 2003 interest
expense was $(13).  The following items affected the
comparability of other expense, net in the second quarter of 2003:

  - Expenses of $(6) incurred in the second quarter of 2003 in
    connection with our recapitalization transactions that were
    completed during that quarter
  - A gain of $2 from the sale of a building in Australia in the
    second quarter of 2003
  - Income from the sale of LookSmart, Ltd. shares of $2 in the
    second quarter of 2003 (we completely liquidated our
    investment in LookSmart in the first quarter of 2004)


Income Taxes

The effective tax rate for the second quarter of 2004 was 36.0%.
The effective tax rate for the second quarter of 2003 was 36.9%,
which included expenses associated with the recapitalization
transactions that were not tax deductible.  Excluding these
expenses, our effective tax rate for the second quarter of 2003
was 35.4%.


Net Income and Earnings Per Share

For the second quarter of 2004, net income was $67, or $0.67 per
share for diluted earnings per share ($0.68 for basic earnings
per share).  In the prior year period, net income was $84, or
$0.84 per share for diluted earnings per share ($0.85 for basic
earnings per share).


Results of Operations:  Operating Segments


                                    Three-month periods ended
                                           December 31,
                                          2003     2002

Revenues
  Reader's Digest North America          $ 235    $ 234
  International Businesses                 275      291
  Consumer Business Services               299      317
  Intercompany eliminations                (13)     (11)
                                         -----    -----
Total revenues                           $ 796    $ 831
                                         =====    =====

Operating profit
  Reader's Digest North America          $  32    $  28
  International Businesses                  23       29
  Consumer Business Services                81       99
  Corporate Unallocated(1)                 (13)      (9)
  Other operating items, net(2)             (9)      --
                                         -----    -----
Operating profit                         $ 114    $ 147
                                         =====    =====

Intercompany eliminations
  Reader's Digest North America          $  --    $  (2)
  International Businesses                  (1)      (1)
  Consumer Business Services               (12)      (8)
                                         -----    -----
Total intercompany eliminations          $ (13)   $ (11)
                                         =====    =====

    (1)Corporate Unallocated includes expenses for the cost of governance
       and centrally managed expenses, as well as the
       accounting for U.S. pension plans, post-retirement
       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.

    (2)Other operating items, net in 2004 consists primarily of severance
       and other charges taken to streamline our
       operations.  The charge related to: 7% to Reader's
       Digest North America, 73% to International
       Businesses, 11% to Consumer Business Services and
       9% to corporate departments that benefit the entire
       organization.




<PAGE>


Reader's Digest North America

Revenues for Reader's Digest North America for the second quarter
of 2004 increased to $235, compared with $234 for the second
quarter of 2003.  Excluding the impact of foreign currency
translation, revenues declined 1%.  Revenues declined for
Reader's Digest magazine and our business in Canada.  Increased
revenues for our U.S. Books and Home Entertainment business and
RD Specials partially offset these declines.

 -  Revenues for Reader's Digest magazine declined principally
    due to lower circulation and advertising revenues.
    Circulation revenues continue to be adversely affected by a
    decline in renewal pools, partially offset by the addition of
    new subscribers at lower introductory rates.  In addition,
    newsstand sales continued to decline due to softness in the
    newsstand market.  Advertising revenues were adversely
    affected by lower revenue per page, primarily due to the
    January 2003 reduction in the rate base for Reader's Digest
    magazine, partially offset by an increase in the number of
    advertising pages.
 -  The decline in revenues in Canada was driven by lower sales
    for Books and Home Entertainment products, due to strategic
    reductions in mail quantities and lower response rates to
    promotional mailings, and less than $1 in lower advertising
    revenues for Reader's Digest magazine, due to the expiration
    of certain nonrecurring advertising contracts.

Partially offsetting the revenue declines for Reader's Digest
magazine and Canada were:

 -  Increased revenues for U.S. Books and Home Entertainment
    driven by increased promotional mailings for music, video and
    book products.  Also, payment rates and prices for Select
    Editions were higher.  These increases were partially offset
    by lower response rates and lower membership in Select
    Editions.
 -  Increased revenues for RD Specials due to the publication of
    an additional issue in the second quarter of 2004 when
    compared with the second quarter of 2003 and due to increased
    sales volume.  RD Specials is a newsstand product that was
    introduced in the second quarter of 2003.

Revenues for Reiman for the second quarter of 2004 were flat with
the second quarter of 2003 at approximately $100.  Increased
revenues from new products were offset by lower payment rates for
new book products and lower renewals for certain magazines.

Operating profit for this segment for the second quarter of 2004
increased 13% to $32, compared with $28 for the second quarter of
2003.  Excluding the impact of foreign currency translation,
profit increased 10%.  The profit increase was driven by a
significant improvement in results for Reader's Digest magazine,
U.S. Books and Home Entertainment and Special Interest Magazines
due to lower promotion and overhead costs resulting from
cost-reduction initiatives.  These improvements were partially
offset by costs incurred to launch new magazines, including
Backyard Living, as well as a decrease in profits at Reiman
resulting from investments to acquire new customers for Taste of
Home magazine and from the revenue changes described above.


International Businesses

Revenues for International Businesses for the second quarter of
2004 declined 5% to $275, compared with $291 for the second
quarter of 2003.  Excluding the impact of foreign currency
translation, revenues declined 16%.  The decline was the result
of a lower number of active promotable customers and adverse
trends in response rates in certain markets.  We believe that
weak economic conditions in Europe and lower consumer spending
patterns are contributing to these trends.  To mitigate the
impact of these factors, we have strategically reduced mail
quantities and the frequency of our mailings.  These reductions
are intended to reduce the risk of unprofitable mailings and
mailing intensity, and they have resulted in lower revenues in
most markets.

The most significant declines were in the United Kingdom, France
and Germany.  Revenues in Spain also declined as we discontinued
certain significant lines of business in that market.

Partially offsetting these declines were higher revenues in
Russia, due to increased promotional mailings, and the expansion
of new businesses in a number of markets.

Operating profit for this segment for the second quarter of 2004
decreased 17% to $23, compared with a profit of $29 for the
second quarter of 2003.  Excluding the impact of foreign currency
translation, profits declined 25%.  The profit decline was driven
by lower revenues, increased promotion spending to drive new
customer acquisition and testing of products in new markets.  The
most significant declines in profit were in Germany, the United
Kingdom and Switzerland.  These declines were partially offset by
lower promotion and overhead costs and the effect of
cost-reduction initiatives in certain European markets,
Australia, Mexico and Asia.


Consumer Business Services

Revenues for Consumer Business Services for the second quarter of
2004 declined 6% to $299, compared with $317 for the second
quarter of 2003.  The decline was attributable to lower revenues
for QSP and Books Are Fun, partially offset by increased revenues
for Trade Publishing.

The 9% decline in revenues for QSP was driven by lower
same-account sales and a decrease in the number of accounts
launched when compared with the second quarter of 2003.  This
resulted in lower gift and magazine volumes and was attributable
to turnover in the sales force in certain territories, increased
competition for fundraising dollars, a soft economy and slightly
increased account incentives.

The 8% decline in revenues for Books Are Fun was driven by lower
average sales per event and a decrease in the number of events
held.  Lower average sales per event were attributable to weaker
product selection in the current quarter relative to the second
quarter of 2003 and shortages of strong selling products.
Turnover in the sales force during the first quarter of 2004
primarily contributed to the decline in events.  Shortages of
strong selling products were the result of higher than expected
selling rates for certain products and our aggressive efforts to
manage inventory.  In order to rectify these issues we:

  -    Changed management in our purchasing department
  -    Implemented new incentive programs to encourage our sales
       force to increase the number of events held
  -    Are reviewing our product allocation strategy and product
       testing processes
  -    Are overhauling our recruiting process

Our efforts to grow the sales force in 2004 have resulted in an
overall increase in the number of sales representatives to serve
new and existing markets for both QSP and Books Are Fun.
However, because of the time required to develop territories, the
impact of the additional sales representatives was not
significant in the second quarter.  In addition, a majority of
the new sales representatives were contracted to serve new and
developing markets.

Revenue declines for QSP and Books Are Fun were partially offset
by a 29% increase in revenues for Trade Publishing due to increased
promotional mailings for certain products and increased sales to
mass marketers.

Operating profit for this segment for the second quarter of 2004
declined 18% to $81, compared with $99 for the second quarter of
2003.  The decline in profits was driven by an approximate 20%
decline in profits for QSP as well as Books Are Fun due to the
revenue changes described above and investments in the sales
force at QSP.  Increased commission rates, higher freight costs and an
unfavorable mix of products sold at Books Are Fun adversely affected
profit margins.


Six-Month Period Ended December 31, 2003, Compared With Six-Month
Period Ended December 31, 2002

Results of Operations:  Company-Wide

Overview

Because of the significance of revenues and operating profit
generated in the second quarter, the primary drivers of
performance for the six-month period are similar to those for the
second quarter.  The first half of 2004, particularly the second
quarter, marked a period of increased challenges for QSP and
Books Are Fun.  However, results for our U.S. Books and Home
Entertainment business and Reader's Digest magazine improved.  We
continued to invest in Reiman, QSP and Books Are Fun and to
implement programs to reduce unfavorable trends in International
Businesses.  Despite a difficult first half, cash flow improved,
enabling us to voluntarily pay down some of our outstanding
long-term debt.

In 2003 we announced a plan to achieve sustainable revenue and
profit growth by fiscal 2005.  The plan included cost-reduction
actions that were announced in the third and fourth quarters of
2003.  In the second quarter of 2004, we announced additional
actions (principally employee separations) necessary to complete
certain restructuring and cost-reduction programs, primarily in
our international markets.


Revenues

Revenues for the six-month period ended December 31, 2003
declined 4% to $1,291, compared with $1,348 for the six-month
period ended December 31, 2002.  Excluding the impact of foreign
currency translation, revenues declined 8%.  The decline was
attributable to lower revenues for all of our reportable
segments.

We anticipated a decline in revenues for International
Businesses.  The most significant declines were in France,
Germany, the United Kingdom, Australia, Asia and Mexico.  The
principal reasons for the decline were strategic reductions in
mail quantities, exiting of marginal revenue streams, a smaller
number of active promotable customers and adverse trends in
response rates in certain markets.  Weak economic conditions
contributed to these trends.

Revenues for Consumer Business Services declined due to lower
revenues at QSP and Books Are Fun, partially offset by improved
performance for Trade Publishing.  The decline in revenues for
QSP was driven by lower sales of gift and magazine products.
Books Are Fun experienced lower average sales per event and fewer
events.

Revenues for Reader's Digest North America declined principally
because of lower circulation and advertising revenues for
Reader's Digest magazine and, to a lesser extent, for U.S. Books
and Home Entertainment and our business in Canada.

Operating Profit

Operating profit for the six-month period ended December 31, 2003
declined 32% to $100, compared with $149 for the six-month period
ended December 31, 2002.  Excluding the impact of foreign
currency translation, profit declined 34%.  The profit decline
was driven by lower profits for Consumer Business Services and
International Businesses, a net increase in Corporate Unallocated
expenses, and restructuring charges taken in the second quarter
of 2004.  These declines were partially offset by increased
profits for Reader's Digest North America.  The results of our
reportable segments include incremental investment spending of
$(10).

The decline in profit for Consumer Business Services was
attributable to lower sales for QSP and Books Are Fun and
investments in the sales force for both of these businesses.

Profits for International Businesses declined because of lower
overall revenues, partially offset by lower promotion costs and
the impact of cost-reduction initiatives in certain markets.  The
most significant declines were in Germany, the United Kingdom and
Switzerland.  However, results did improve in Australia, Mexico
and Asia.

Results for Reader's Digest North America improved due to lower
promotion, fulfillment and overhead costs for Reader's Digest
magazine and U.S. Books and Home Entertainment and to the impact
of cost-reduction initiatives.  These improvements were partially
offset by lower advertising profits for Reader's Digest magazine,
investments in new magazines and increased customer acquisition
efforts.

Corporate Unallocated expenses represent the cost of governance
and centrally managed expenses, as well as the accounting for
U.S. pension plans, post-retirement healthcare costs, and
executive compensation programs that are not allocated to the
operating segments.  For the six-month period ended December 31,
2003, these expenses increased $(12) to $(23).  The increase was
principally driven by non-cash expenses, including $(9) in lower
net pension income (from our over funded U.S. pension plan),
increased costs of $(2) associated with postretirement healthcare
benefits and $(2) in restricted stock grants (due to a greater
mix of restricted stock versus stock options)  Partially
offsetting these increases was a reduction in costs for corporate
departments of $2 as a result of cost-cutting initiatives.

During the six-month period ended December 31, 2003, we recorded
a restructuring charge of $(9), comprised of severance of $(8),
primarily in European markets, and contract terminations and
other charges of $(1).  The severance charges relate to the
termination of approximately 130 employees to integrate Reiman's
customer service department with our outsource provider, and to
streamline operations in certain European markets and corporate
departments.  These individuals are expected to be separated in
the third and fourth quarters of 2004 and the first half of
fiscal 2005.

During the six-month period ended December 31, 2002, we recorded
income of $3 for net adjustments to litigation-related accrual
balances following the settlement of a lawsuit in the first
quarter of 2003.


Other Expense, Net

Other expense, net decreased 24% to $(18) for the six-month
period ended December 31, 2003, compared with $(23) for the
six-month period ended December 31, 2002.  The most significant
component of other expense, net is interest expense.  For the
six-month period ended December 31, 2003 interest expense was
$(24), compared with $(26) for the six-month period ended
December 31, 2002.  The primary factors affecting comparability
were:

  -  Expenses of $(6) incurred in the second quarter of 2003 in
     connection with our recapitalization transactions that were
     completed during that quarter
  -  A gain of $2 from the sale of a building in Australia in the
     second quarter of 2003
  -  Higher income from the sale of LookSmart, Ltd. shares of $2
     in the first half of 2003.  We completely liquidated our
     investment in LookSmart in the first quarter of 2004
  -  A gain of $3 from proceeds received in exchange for our
     interest in Schoolpop, Inc., which merged into an unrelated
     third party in the first quarter of 2004 (we had written this
     investment down to zero in the fourth quarter of fiscal 2002)


Income Taxes

The effective income tax rate for the six-month period ended
December 31, 2003 was 36.0%.   The effective income tax rate for
the six-month period ended December 31, 2002, 37.0%, included
expenses associated with the recapitalization transactions that
were not tax deductible.  Excluding these costs, our effective
tax rate for the six-month period ended December 31, 2002 was
35.3%.


Net Income and Earnings Per Share

For the six-month period ended December 31, 2003, net income was
$53, or $0.53 per share for diluted earnings per share ($0.54 for
basic earnings per share).  In the prior year period, net income
was $79, or $0.78 per share for diluted earnings per share ($0.79
for basic earnings per share).




<PAGE>


Results of Operations:  Operating Segments


                                            Six-month periods ended
                                                  December 31,
                                                2003       2002
Revenues
  Reader's Digest North America               $   435    $   442
  International Businesses                        491        520
  Consumer Business Services                      384        403
  Intercompany eliminations                       (19)       (17)
                                              -------    -------
Total revenues                                $ 1,291    $ 1,348
                                              =======    =======

Operating profit
  Reader's Digest North America               $    43    $    38
  International Businesses                         22         30
  Consumer Business Services                       67         89
  Corporate Unallocated(1)                        (23)       (11)
  Other operating items, net(2)                    (9)         3
                                              -------    -------
Operating profit                              $   100    $   149
                                              =======    =======

Intercompany eliminations
  Reader's Digest North America               $    (1)   $    (3)
  International Businesses                         (1)        (2)
  Consumer Business Services                      (17)       (12)
                                              -------    -------
Total intercompany eliminations               $   (19)   $   (17)
                                              =======    =======

   (1) Corporate Unallocated includes expenses for the cost of governance
       and centrally managed expenses, as well as the
       accounting for U.S. pension plans, post-retirement
       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.

   (2) Other operating items, net in 2004 consists primarily of severance
       and other charges taken to streamline our
       operations.  This charge related to: 7% to Reader's
       Digest North America, 73% to International
       Businesses, 11% to Consumer Business Services and
       9% to corporate departments that benefit the entire
       organization.  In 2003, this line item consists
       primarily of net adjustments to litigation-related
       accrual balances following settlement of a lawsuit
       in the first quarter of 2003.

Reader's Digest North America

Revenues for Reader's Digest North America for the six-month
period ended December 31, 2003 declined 2% to $435, compared with
$442 for the six-month period ended December 31, 2002.  Excluding
the effect of foreign currency translation, revenues declined
3%.  The decline in revenues was driven by lower revenues for
Reader's Digest magazine and, to a lesser extent, U.S. Books and
Home Entertainment and our business in Canada.  These declines
were partially offset by increased revenues for RD Specials.

  - Revenues for Reader's Digest magazine declined due to lower
    circulation and advertising revenues.  The decline in
    circulation revenues was driven by a continued decline in
    renewal pools, partially offset by the addition of new
    subscribers at lower introductory rates.  Also, newsstand
    sales continued to decline due to softness in the newsstand
    market.  The decline in advertising revenues was driven by
    lower revenue per page, primarily due to the January 2003
    reduction in the rate base for Reader's Digest magazine.
  - The decline in revenues for U.S. Books and Home
    Entertainment was attributable to lower membership in Select
    Editions.  This decline was partially offset by increased
    promotional mailings, higher payment rates and increased
    prices for Select Editions.  In addition, sales of book
    products in the Home and Health affinity increased due to more
    targeted products and mailings.
  - Revenues in Canada declined because of lower sales for video
    products, which was due to strategic reductions in mail
    quantities, lower response rates to promotional mailings and
    the elimination of certain series products.  Advertising and
    circulation revenues for Reader's Digest magazine in Canada
    declined $1 due to a lower circulation base, higher newsstand
    returns and the expiration of certain nonrecurring advertising
    contracts.  These declines were partially offset by increased
    sales of book and music products as a result of increased
    response rates to promotional mailings.

Revenues for Reiman were flat for the six-month period ended
December 31, 2003, when compared with the comparable period in
the prior year.  The comparability of revenues between the
periods was favorably affected by a shift in the timing of
certain book sales.  In addition, increased revenues from new
products were offset by higher book returns, lower response rates
for certain magazine promotions and lower sales of ancillary
products.

Revenues for RD Specials were higher due to an increase in the
number of issues published in 2004 when compared with the
comparable period in 2003 and to increased sales volume.  RD
Specials is a newsstand product that was introduced in the second
quarter of 2003.

Operating profit for this segment for the six-month period ended
December 31, 2003 increased 13% to $43, compared with $38 for the
six-month period ended December 31, 2002.  Excluding the impact
of foreign currency translation profits increased 10%.  The
improvement in profit was attributable to lower promotion and
fulfillment costs for Reader's Digest magazine and lower
promotion costs for U.S. Books and Home Entertainment, which
resulted from cost-reduction initiatives.  In addition,
advertising profits for certain Special Interest Magazines
improved.

These improvements were partially offset by a decrease in profits
at Reiman because of the revenue changes described above and
investments to drive new customer acquisition for Taste of Home
magazine.  In addition, costs incurred to launch a new magazine,
Backyard Living, and lower advertising profits for Reader's
Digest magazine adversely affected profit.


International Businesses

Revenues for International Businesses for the six-month period
ended December 31, 2003 declined 6% to $491, compared with $520
for the six-month period ended December 31, 2002.  Excluding the
effect of foreign currency translation, revenues declined 15%.
Revenues for International Businesses declined for a majority of
the product lines in most of our markets due to depressed
economic conditions and weaker consumer spending patterns.  The
most significant declines were in France, Germany and the United
Kingdom.  The decline was the result of a lower number of active
promotable customers and adverse trends in response rates in
certain markets.  We believe that weak economic conditions and
lower consumer spending patterns are contributing to these
trends.  To mitigate the impact of these factors, we have
strategically reduced mail quantities and the frequency of our
mailings.  These reductions are intended to reduce the risk of
unprofitable mailings and mailing intensity, and have resulted in
lower revenues in most markets.  In addition, lower membership in
some series products adversely affected revenues.

Partially offsetting these declines were higher revenues in
Russia due to increased promotional mailings and the expansion of
new businesses in a number of markets.

Operating profit for this segment for the six-month period ended
December 31, 2003 decreased 25% to $22, compared with $30 for the
six-month period ended December 31, 2002.  Excluding the impact
of foreign currency translation, profits declined 33%.  The most
significant declines in profit were noted in Germany, the United
Kingdom and Switzerland.  The profit decline was driven by lower
revenues and increased costs for new products and costs related
to entering new markets.  These declines were partially offset by
lower promotion and overhead costs, the effect of cost-reduction
initiatives in certain markets and profit improvement in
Australia, Mexico and Asia.




<PAGE>


Consumer Business Services

Revenues for Consumer Business Services for the six-month period
ended December 31, 2003 declined 5% to $384, compared with $403
for the six-month period ended December 31, 2002.  The decline
was attributable to lower revenues for QSP and Books Are Fun,
partially offset by increased revenues for Trade Publishing.

The 9% decline in revenues for QSP was driven by lower
same-account sales and a decrease in the number of accounts
launched when compared with the comparable period in the prior
year.  This resulted in lower gift and magazine volumes and was
attributable to turnover in the sales force in certain
territories, increased competition for fundraising dollars, a
soft economy and slightly increased account incentives.

The 8% decline in revenues for Books Are Fun was driven by lower
average sales per event and fewer events held.  Lower average
sales per event were driven by a weaker product selection and
shortages of strong selling products.  Turnover in the sales
force during the first quarter of 2004 primarily contributed to
the decline in events.  Shortages of strong selling products were
the result of higher than expected selling rates for certain
products and our aggressive efforts to manage inventory.  In
order to rectify these issues we:

  -   Changed management in our purchasing department
  -   Implemented new incentive programs to encourage our sales
      force to increase the number of events held
  -   Are reviewing our product allocation strategy and product
      testing processes
  -   Are overhauling our recruiting process

During 2004, we increased our efforts to grow the sales force at
both QSP and Books Are Fun.  These investments have successfully
increased the aggregate number of sales representatives at both
of these businesses.  However, because of the time required to
develop territories, the impact of the additional sales
representatives was not significant in the second quarter.  In
addition, a majority of the new sales representatives were
contracted to serve new and developing markets.

Revenue declines for QSP and Books Are Fun were partially offset
by increased revenues for Trade Publishing due to increased sales
to Books Are Fun and QSP, increased promotional mailings and
increased international sales of certain products.

Operating profit for this segment for the six-month period ended
December 31, 2003 decreased 24% to $67, compared with $89 for the
six-month period ended December 31, 2002.  The decline in profits
was driven by a 27% decline in profits for QSP and Books Are Fun
due to the revenue changes described above and investments in the
sales force for both businesses.  In addition, increased
commission rates, higher freight costs and an unfavorable mix of products
sold at Books Are Fun adversely affected profit margins.


Forward-Looking Information

Fiscal 2004 Results

We continue to make progress in our two-year plan to achieve
sustainable revenue and profit growth by fiscal 2005 while
steadily improving our already strong cash-flow generation.  The
plan is principally driven by re-engineering and cost-reduction
activities to eliminate a minimum of $70 in costs by fiscal 2005
(we expect that these activities will result in overhead savings
in excess of $50 in 2004).  In addition, we are investing an
incremental $20 in specific growth initiatives across all
businesses to drive future revenue growth.

To track the progress of the plan in 2004, we identified 15 key
metrics related to growth targets, operating performance,
cost-reduction targets and investments.  Under the plan, we
expected that the initial phase would result in lower first-half
results due to reduced marketing activity in international
markets, timing of cost-reduction benefits and incremental
investment spending, and that year-over-year growth would be
achieved beginning in the second half of 2004.  Through the first
half of the year, we remain on track to achieve most of the
metrics.

However, the softness at Books Are Fun and QSP was greater than
anticipated.  We expect modest revenue and profit growth for
Consumer Business Services in the second half, although not
enough to offset the first half decline.  As a result, certain
revenue and profit-related metrics will not be achieved.

We expect International Businesses profits to grow by
double-digits in the second half of the year, leading to full
year low double-digit gains in that business unit.  We also
expect Reader's Digest North America to continue to grow at a
double-digit pace in the second half of the year, primarily
fourth quarter weighted.   However, improved profits in the
second half of the year in all operating segments will not be
sufficient to offset the first half decline for Consumer Business
Services.  As a result, we are lowering full-year diluted
earnings per share guidance from a range of $0.75 to $0.85 to a
range of $0.65 to $0.75.   This guidance excludes the impact of
the second quarter restructuring charge, as well as any benefits
from the planned sale and partial leaseback of our Westchester
headquarters facility.


Liquidity and Capital Resources

Six-month period ended December 31, 2003

Cash and cash equivalents at June 30, 2003                          $  51

Net change in cash due to:
  Operating activities                                                 97
  Investing activities                                                 (6)
  Financing activities                                                (77)
  Effect of exchange rate changes on cash and cash equivalents          3
                                                                    -----
Net change in cash and cash equivalents                                17

Cash and cash equivalents at December 31, 2003                      $  68
                                                                    =====

Cash and cash equivalents increased 33% to $68 as of December 31,
2003, compared with $51 as of June 30, 2003.  The increase in
cash was due to cash flow from operations.  Positive cash flow
was driven by net income, depreciation and amortization, lower
cash paid for taxes, advances received for new subscriptions and
other products, and management of payables and receivables.
These increases were partially offset by cash payments related to
our restructuring charges.  Uses of cash, principally related to
financing, were repayment of $67 of principal related to the Term
Loan and cash payment for dividends of $10.


Debt

As described in Note 11 to the Consolidated Financial Statements
included in our 2003 Annual Report to Stockholders, our
borrowings principally comprise the $950 Term Loan Agreement
(Term Loan) and the Five-Year Revolving Credit and Competitive
Advance Facility Agreement (Five-Year Facility) (collectively
referred to as the 2002 Credit Agreements).  The maximum
borrowing allowed under the Five-Year Facility is $193.  As of
December 31, 2003, there were no outstanding borrowings under the
Five-Year Facility and $798 outstanding under the Term Loan.
During the six-month period ended December 31, 2003, we repaid
$67 of principal related to the Term Loan (consisting of $14 in
scheduled mandatory repayments, $11 in additional mandatory
repayments pursuant to an excess cash flow calculation performed
annually and $42 in voluntary prepayments).  The Term Loan
requires us to make scheduled principal repayments of $7 per
quarter during 2004 and increasing principal repayments
thereafter.  The amount of scheduled repayments is continually
adjusted to the extent that we continue to make voluntary
repayments 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.  The weighted average interest rate on our
borrowings for the six-month periods ended December 31, 2003 and
2002 was 4.1% and 4.2%, respectively (4.2% and 4.1%, for the
three-month periods ended December 31, 2003 and 2002,
respectively).

Under the 2002 Credit Agreements, we are required to hedge at
least one-third of borrowings outstanding under the Term Loan.
In July 2002, we entered into agreements to cap at 6% the LIBOR
interest rate component of $400 of our borrowings under the Term
Loan for a period of three years.

Historically, in the first quarter of the fiscal year, we use
proceeds from short-term borrowings to finance cash flow
requirements in anticipation of the second quarter, our
peak-selling season.  During the second quarter of the fiscal
year, we normally generate cash from operations and pay down our
short-term borrowings.  During the second half of the fiscal
year, cash flow is generally sufficient to fund operations.
Accordingly, 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 and the implementation of our strategic initiatives.


Recent Accounting Standards

In May 2003, the Financial Accounting Standards Board (FASB)
issued Statement of Financial Accounting Standards (SFAS) No.
150, Accounting for Certain Financial Instruments with
Characteristics of both Liabilities and Equity.  SFAS No. 150
established standards for classifying certain financial
instruments that represent obligations yet also have
characteristics similar to equity instruments.  Specifically,
SFAS No. 150 addresses the accounting for instruments such as
mandatorily redeemable securities, certain option contracts
and obligations to be settled in shares.  In November 2003,
the FASB indefinitely delayed the effective date of the
classification and measurement provisions that relate to
noncontrolling interests in limited life entities.  We
adopted SFAS No. 150 as of July 1, 2003.  Adoption of this
standard did not have a material impact on our operating
results or financial position.

In December 2003, the FASB issued FASB Interpretation (FIN)
No. 46R, a revision to FIN No. 46, Consolidation of Variable
Interest Entities, an Interpretation of Accounting Research
Bulletin No. 51.  FIN No. 46 introduced a new consolidation
model with respect to variable interest entities.  The new
model requires that the determination of control should be
based on the potential variability in gains and losses of the
variable interest entity being evaluated.  The entity with
the majority of the variability in gains and losses is deemed
to control the variable interest entity and is required to
consolidate it.  FIN No. 46R revised the effective dates for
different types of entities.  FIN No. 46R must be applied to
all entities considered special purpose entities for the
period ending after December 15, 2003 (the second quarter of
2004 for us).  However, FIN No. 46R is effective for the
first reporting period that ends after March 15, 2004 (the
third quarter of 2004 for us) for all other types of variable
interest entities.

In December 2003, the FASB issued a revision to SFAS No. 132,
Employers' Disclosures about Pensions and Other Postretirement
Benefits.  The statement revises the financial statement
disclosures required for pension and postretirement obligations.
Additional disclosures include descriptions of plan assets and
the investment strategy employed.  In addition to these annual
disclosures, SFAS No. 132 also requires interim disclosures such
as the components of net periodic pension cost.  The statement
does not change the recognition or measurement of benefit plan
obligations.  The annual disclosure requirements are effective
for fiscal years ending after December 15, 2003 (fiscal 2004 for
us).  The interim disclosure requirements are effective for
interim periods beginning after December 15, 2003 (the third
quarter of 2004 for us).

Adoption of FIN No. 46R and the revision to SFAS No. 132 will not
have any impact on our operating results or financial position.

                               *****



<PAGE>


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.  Except as required by those laws, we have no
obligation to update publicly any forward-looking statements and
we have no intention to update them.

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 re-engineering 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

Within 90 days prior to the filing date of this report, under the
supervision of our Chief Executive Officer and Chief Financial
Officer, we evaluated our disclosure controls and procedures (as
defined in rules 13a-15(e) and 15d-15(e) under the Securities
Exchange Act of 1934).  Based on that evaluation, our Chief
Executive Officer and Chief Financial Officer concluded that our
disclosure controls and procedures were sufficient to provide
reasonable assurances that the information required to be
disclosed by us in the reports that we file or submit under the
Securities Exchange Act of 1934 is recorded, processed,
summarized and reported within the time periods specified in the
Securities and Exchange Commission's rules and forms.

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.    CHANGES IN SECURITIES, USE OF PROCEEDS AND ISSUER
           PURCHASES OF EQUITY SECURITIES

Shown in the table below are securities of the registrant that
were not registered under the Securities Act of 1933 and were
sold by the registrant within the past three years.  The
securities were sold to employees of subsidiaries of the
registrant located outside of the United States pursuant to
international employee stock purchase plans that permit the
participants to purchase shares of company stock generally at a
purchase price of 85% of the lower of the fair market value of
the company stock on the first or the last day of a six-month
period.  These sales were made outside of the United States in
reliance on the safe harbor under Regulation S under the
Securities Act.

                                                      Number of      Aggregate
    Class of security               Date of sale     shares sold  purchase price
Class A Nonvoting Common Stock    June 30, 2001         7,275        $176,078
Class A Nonvoting Common Stock    December 31, 2001     7,993        $159,391
Class A Nonvoting Common Stock    June 30, 2002         8,257        $134,393
Common Stock                      December 31, 2002     9,255        $120,160
Common Stock                      June 30, 2003         8,231        $ 95,665
Common Stock                      December 31, 2003     8,102        $ 94,922



Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

At the 2003 Annual Meeting of Stockholders of The Reader's Digest
Association, Inc. held on November 21, 2003, the following matter
was voted on by stockholders:

  Proposal 1: Election of Class 1 Directors to hold office until
              the 2006 Annual Meeting or until their successors are
              duly elected and qualified.  Each nominee was elected
              by the votes cast as follows:

                                       For      Withheld
       Jonathan B. Bulkeley        86,797,292   2,190,947
       Herman Cain                 86,797,091   2,191,148
       William E. Mayer            84,288,053   4,700,186






<PAGE>


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

 (a)  Exhibits

      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.

      10.31 Amendment to Employment Agreement dated as of November
            21, 2003, between The Reader's Digest Association, Inc.
            and Thomas O. Ryder.*

*Denotes a management contract or compensatory plan.


 (b)  Reports on Form 8-K

      During the three months ended December 31, 2003, we filed
      the following current reports on Form 8-K.

      - Current report on Form 8-K dated October 30, 2003, Items 9
        and 12.





<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:  February 6, 2004             By:   /s/ THOMAS D. BARRY
                                          Thomas D. Barry
                                          Vice President and
                                          Corporate Controller
                                          (chief accounting officer and
                                          authorized signatory)