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, 2004

                                       OR

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

                For the transition period from _______ to _______

                         Commission file number: 1-10434

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


                     Delaware                          13-1726769


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



              Pleasantville, New York                    10570-7000


       (Address of principal executive offices)           (Zip Code)


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


Indicate  by check  mark  whether  the  registrant  (1) has  filed all
reports   required  to  be  filed  by  Section  13  or  15(d)  of  the
Securities  Exchange  Act of 1934 during the  preceding  12 months (or
for such  shorter  period  that the  registrant  was  required to file
such  reports),  and (2) has been subject to such filing  requirements
for the past 90 days.  Yes [X] No [  ]

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

As of January 31, 2005,  99,566,574 shares of the registrant's common
stock were outstanding.

                                                   Page 1 of 31 pages.


<PAGE>



        THE READER'S DIGEST ASSOCIATION, INC. AND SUBSIDIARIES

                          Index to Form 10-Q

                          December 31, 2004


                                                                      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, 2004
   and 2003                                                                3

  Consolidated Condensed Balance Sheets
   as of December 31, 2004 and June 30, 2004                               4

  Consolidated Condensed Statements of Cash Flows
   for the six-month periods ended December 31, 2004 and 2003              5

  Notes to Consolidated Condensed Financial Statements                     6

Item 2.  Management's Discussion and Analysis of Financial Condition
          and Results of Operations                                       15

Item 4.   Controls and Procedures                                         28


Part II - Other Information:

Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds      29

Item 4.  Submission of Matters to a Vote of Security Holders              29

Item 6.  Exhibits and Reports on Form 8-K                                 30


<TABLE>

                   The Reader's Digest Association, Inc. and Subsidiaries
                        Consolidated Condensed Statements of Income
             Three-month and six-month periods ended December 31, 2004 and 2003
                            (In millions, except per share data)
                                      (unaudited)


                                             Three-month period ended    Six-month period ended
                                                    December 31,                December 31,
                                                  2004       2003            2004        2003

<S>                                            <C>        <C>           <C>          <C>
Revenues                                       $   798.0  $   796.4     $   1,288.0  $   1,291.1

Product, distribution and editorial expenses      (308.5)    (310.1)         (511.5)      (518.4)
Promotion, marketing and administrative
  expenses                                        (401.3)    (363.3)         (724.3)      (663.1)
Other operating items, net                            --       (9.1)             --         (9.1)
                                               ---------  ---------     -----------  -----------
  Operating profit                                  88.2      113.9            52.2        100.5

Other expense, net                                  (3.6)     (10.0)          (14.5)       (17.6)
                                               ---------  ---------     -----------  -----------
  Income before provision for income
    taxes                                           84.6      103.9            37.7         82.9

Provision for income taxes                         (26.8)     (37.4)          (10.2)       (29.8)
                                               ---------  ---------     -----------  -----------
  Net income                                   $    57.8  $    66.5     $      27.5  $      53.1
                                               =========  =========     ===========  ===========

Basic earnings per share:
  Weighted average common shares
   outstanding                                      97.4       97.0            97.4         97.0
                                               =========  =========     ===========  ===========

  Basic earnings per share                     $    0.59  $    0.68     $      0.28  $      0.54
                                               =========  =========     ===========  ===========

Diluted earnings per share:
  Adjusted weighted average common
   shares outstanding                               99.9       99.3            99.9         99.1
                                               =========  =========     ===========  ===========
  Diluted earnings per share                   $    0.58  $    0.67     $     0.27   $      0.53
                                               =========  =========     ===========  ===========
Dividends per common share                     $    0.05  $    0.05     $     0.10   $      0.10
                                               =========  =========     ===========  ===========

</TABLE>

See accompanying Notes to Consolidated Condensed Financial Statements.


<PAGE>

<TABLE>

                  The Reader's Digest Association, Inc. and Subsidiaries
                             Consolidated Condensed Balance Sheets
                          As of December 31, 2004 and June 30, 2004
                                        (In millions)
                                         (unaudited)





                                                                  December 31,     June 30,
                                                                       2004          2004

<S>                                                                <C>            <C>
Assets

  Cash and cash equivalents                                        $     56.4     $     50.3
  Accounts receivable, net                                              343.7          229.0
  Inventories                                                           175.2          152.0
  Prepaid and deferred promotion costs                                   63.7          106.9
  Prepaid expenses and other current assets                             180.6          152.1
                                                                   ----------     ----------
Total current assets                                                    819.6          690.3

  Property, plant and equipment, net                                    120.3          155.8
  Goodwill                                                            1,010.0        1,009.5
  Other intangible assets, net                                          155.1          173.9
  Other noncurrent assets                                               416.0          413.2
                                                                   ----------     ----------
Total assets                                                       $  2,521.0     $  2,442.7
                                                                   ==========     ==========

Liabilities and stockholders' equity
  Loans and notes payable                                          $     54.3     $     83.9
  Accounts payable                                                      115.9          110.6
  Accrued expenses                                                      328.9          268.7
  Income taxes payable                                                   35.2           15.5
  Unearned revenue                                                      441.5          403.4
  Other current liabilities                                              12.0           10.2
                                                                   ----------     ----------
Total current liabilities                                               987.8          892.3

  Long-term debt                                                        541.8          637.7
  Postretirement and postemployment benefits other than pensions        116.7          119.5
  Unearned revenue                                                      141.0          129.3
  Other noncurrent liabilities                                          232.5          200.8
                                                                   ----------     ----------
Total liabilities                                                     2,019.8        1,979.6

  Capital stock                                                          16.0           17.8
  Paid-in capital                                                       206.9          210.1
  Retained earnings                                                   1,347.2        1,330.4
  Accumulated other comprehensive (loss) income                         (74.0)         (89.4)
  Treasury stock, at cost                                              (994.9)      (1,005.8)
                                                                   ----------     ----------
Total stockholders' equity                                              501.2          463.1
                                                                   ----------     ----------
Total liabilities and stockholders' equity                         $  2,521.0     $  2,442.7
                                                                   ==========     ==========

</TABLE>

See accompanying Notes to Consolidated Condensed Financial Statements.


<PAGE>


<TABLE>

                    The Reader's Digest Association, Inc. and Subsidiaries
                        Consolidated Condensed Statements of Cash Flows
                       Six-month periods ended December 31, 2004 and 2003
                                          (In millions)
                                           (unaudited)

                                                                   Six-month period ended
                                                                         December 31,
                                                                        2004      2003
<S>                                                                   <C>       <C>
Cash flows from operating activities
  Net income                                                          $   27.5  $  53.1
  Depreciation and amortization                                           30.4     32.2
  Asset impairments                                                         --      0.5
  Amortization of debt issue costs                                         2.0      2.6
  Stock-based compensation                                                 5.5      5.6
  Net gain on marketable securities and sales of certain assets           (7.2)    (3.7)
  Changes in current assets and liabilities, net of effects of
    acquisitions and dispositions
     Accounts receivable, net                                            (97.6)   (77.1)
     Inventories                                                         (17.8)    (6.6)
     Unearned revenues                                                    26.2     33.4
     Accounts payable and accrued expenses                                44.5     17.5
     Other, net                                                           44.0     19.7
  Changes in noncurrent assets and liabilities, net of effects of
   acquisitions  and dispositions                                         23.7     19.5
                                                                      --------  -------
Net change in cash due to operating activities                            81.2     96.7
                                                                      --------  -------

Cash flows from investing activities
  Proceeds from sales of marketable securities                              --      0.8
  Purchases of licensing agreements                                         --     (1.3)
  Proceeds from other long-term investments and sales of businesses        4.2      3.0
  Proceeds from sales of property, plant and equipment                    58.4      0.1
  Capital expenditures                                                    (7.6)    (8.5)
                                                                      --------  -------
Net change in cash due to investing activities                            55.0     (5.9)
                                                                      --------  -------
Cash flows from financing activities
  Repayments of term loan                                                (80.9)   (67.4)
  Proceeds (repayments) of revolving credit and other short-term
   facilities, net                                                       (44.6)    (0.6)
  Dividends paid                                                         (10.4)   (10.3)
  Cash paid for financing fees                                            (0.5)      --
  Proceeds from employee stock purchase plan and exercise of stock
   options                                                                 1.4      1.4
  Other, net                                                              (1.9)    (0.1)
                                                                      --------  -------
Net change in cash due to financing activities                          (136.9)   (77.0)
                                                                      --------  -------
Effect of exchange rate changes on cash                                    6.8      3.3
                                                                      --------  -------

Net change in cash and cash equivalents                                    6.1     17.1

Cash and cash equivalents at beginning of period                          50.3     51.3
                                                                      --------  -------
Cash and cash equivalents at end of period                            $   56.4  $  68.4
                                                                      ========  =======

</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 2005 and 2004, unless otherwise indicated, are to fiscal 2005 and
fiscal 2004, 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, 2004 and 2003 are the second fiscal quarters of 2005
and 2004, respectively.  Operating results for any interim period are
not necessarily indicative of the results for an entire year due to the
seasonality of our business.

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

Recent Accounting Standards

In December 2004, the Financial Accounting Standards Board (FASB)
issued Statement of Financial Accounting Standards (SFAS) No. 123
(revised 2004), Share-Based Payment (SFAS No. 123R).  This statement
supersedes SFAS No. 123, Accounting for Stock-Based Compensation, SFAS
No. 148, Accounting for Stock-Based Compensation-Transition and
Disclosure-an amendment of FASB Statement No. 123, and Accounting
Principles Board (APB) Opinion No. 25, Accounting for Stock Issued to
Employees.  The most significant change is the requirement to
recognize, in the statements of income, the value of employee stock
options and other stock-based compensation (including employee stock
purchase plans) as calculated using the fair value based method, as
opposed to the intrinsic value method currently used.  The statement is
effective for interim or annual periods beginning after June 15, 2005.
We are continuing to evaluate the full impact of SFAS No. 123R for its
adoption in first quarter of fiscal 2006.

In December 2004, the FASB issued FASB Staff Position (FSP) 109-2,
Accounting and Disclosure Guidance for the Foreign Earnings
Repatriation Provision within the American Jobs Creation Act of 2004.
The American Jobs Creation Act (the Act), signed into law by President
Bush on October 22, 2004, allows a one-time dividends received
deduction on the repatriation of certain foreign earnings, provided
certain criteria in the Act are satisfied.  Based on our analysis, we
do not expect to derive any benefit from this provision.  Accordingly,
no tax expense has been recognized in the statement of income for the
three-month period ended December 31, 2004.


(2)   Basic and Diluted Earnings Per Share

Basic earnings per share is computed by dividing net income less
preferred stock dividend requirements by the weighted average number of
common shares outstanding during the period. The preferred stock
dividend requirements were $0.3 for the three-month periods ended
December 31, 2004 and 2003 and $0.7 for the six-month periods ended
December 31, 2004 and 2003.

Diluted earnings per share is computed in the same manner except that
the weighted average number of common shares outstanding assumes the
exercise and conversion of certain stock options and vesting of certain
restricted stock.  For the three-month periods ended December 31, 2004
and 2003, the assumed exercise, conversion and vesting were 2.5 million
shares and 2.3 million shares, respectively.  For the six-month periods
ended December 31, 2004 and 2003, the assumed exercise, conversion and
vesting were 2.5 million shares and 2.2 million shares, respectively.

In addition, options to purchase 12.2 million shares and 11.4 million
shares were not included in the calculation of diluted earnings per
share for the three-month periods ended December 31, 2004 and 2003,
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,
2004 and 2003, respectively.  For the six-month periods ended December
31, 2004 and 2003, 12.2 million shares and 11.4 million shares,
respectively were not included in the calculation of diluted earnings
per share for this reason.


(3)   Stock-Based Compensation

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

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

The pro forma stock compensation would result in additional expense of
$(1.6) and $(3.6), net of tax, for the three- and six-month periods
ended December 31, 2004, respectively.  For the three- and six-month
periods ended December 31, 2003, such amounts would be $(2.7) and
$(5.6), net of tax, respectively.

<TABLE>

                                     Three-month period ended   Six-month period ended
                                             December 31,             December 31,
                                           2004       2003         2004       2003

<S>                                     <C>        <C>           <C>        <C>
Net income, as reported                 $   57.8   $   66.5      $   27.5   $   53.1
                                        ========   ========      ========   ========
Less:  stock-based
  compensation expense
  determined using the fair
  value based method, net of
  tax                                       (1.6)      (2.7)         (3.6)      (5.6)
                                        --------   --------      --------   --------
Net income, pro forma                   $   56.2   $   63.8      $   23.9   $   47.5
                                        ========   ========      ========   ========
Basic earnings per share, as
  reported                              $   0.59   $   0.68      $   0.28   $   0.54
                                        ========   ========      ========   ========
Basic earnings per share,
  pro forma                             $   0.57   $   0.65      $   0.24   $   0.48
                                        ========   ========      ========   ========
Diluted earnings per share,
  as reported                           $   0.58   $   0.67      $   0.27   $   0.53
                                        ========   ========      ========   ========
Diluted earnings per share,
  pro forma                             $   0.56   $   0.64      $   0.23   $   0.47
                                        ========   ========      ========   ========

</TABLE>


For the three- and six-month periods ended December 31, 2004, $1.6 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, 2003, those amounts were
approximately $1.8 and $3.6, net of tax, respectively.


(4)       Revenues and Operating Profit by Reportable Segment

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

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

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

<TABLE>

                                    Three-month period ended    Six-month period ended
                                           December 31,               December 31,
                                         2004       2003            2004       2003
                                                 Restated                    Restated
<S>                                    <C>       <C>            <C>         <C>
Revenues
  Reader's Digest North America        $  251.8  $  259.6       $    478.0  $    484.5
  Reader's Digest International           306.2     275.5            521.0       491.3
  Consumer Business Services              250.3     274.1            305.3       334.5
  Intercompany eliminations               (10.3)    (12.8)           (16.3)      (19.2)
                                       --------  --------       ----------  ----------
Total revenues                         $  798.0  $  796.4       $  1,288.0  $  1,291.1
                                       ========  ========       ==========  ==========
Operating profit
  Reader's Digest North America        $   25.2  $   33.1       $     41.1  $     45.2
  Reader's Digest International            41.2      23.6             41.9        22.4
  Consumer Business Services               61.2      79.4             42.7        65.0
  Magazine deferred promotion
   amortization(1)                        (26.1)       --            (51.6)         --
  Corporate Unallocated                   (13.3)    (13.1)           (21.9)      (23.0)
  Other operating items, net                 --      (9.1)              --        (9.1)
                                       --------  --------       ----------  ----------
Operating profit                       $   88.2  $  113.9       $     52.2  $    100.5
                                       ========  ========       ==========  ==========
Intercompany eliminations
  Reader's Digest North America        $   (1.0) $   (3.1)      $     (5.7) $     (7.8)
  Reader's Digest International            (1.0)     (0.6)            (2.0)       (1.4)
  Consumer Business Services               (8.3)     (9.1)            (8.6)      (10.0)
                                       --------  --------       ----------  ----------
Total intercompany eliminations        $  (10.3) $  (12.8)      $    (16.3) $    (19.2)
                                       ========  ========       ==========  ==========

</TABLE>

      (1)In connection with our change to expensing magazine deferred
         promotion costs when the promotion is mailed to prospective
        customers, our reportable segment operating profit in
        2005 includes such expenses as incurred.  Amortization
        of previously deferred promotion costs is not included
        in segment results reviewed by our chief operating
        decision maker.  For the three-month period ended
        December 31, 2004, magazine deferred promotion
        amortization relates to: 89% to Reader's Digest North
        America and 11% to Reader's Digest International.  For
        the six-month period ended December 31, 2004, magazine
        deferred promotion amortization relates to: 87% to
        Reader's Digest North America and 13% to Reader's
        Digest International.


(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 (loss) income, net of
related tax, for the three- and six-month periods ended December 31,
2004 and 2003 were as follows:

<TABLE>

                                                    Three-month period ended    Six-month period ended
                                                            December 31,               December 31,
                                                          2004      2003             2004      2003

<S>                                                     <C>       <C>              <C>       <C>
Net income                                              $  57.8   $  66.5          $  27.5   $  53.1
Change in:
  Foreign currency translation adjustments                 10.6       5.8             15.3       7.4
  Net unrealized gains (losses) on certain
    investments(1)                                           --        --               --       0.2
  Reclassification adjustments for gains that are
    included in net  income(2)                               --        --               --      (0.5)
  Net unrealized gains (losses) on certain derivative
    transactions(3)                                         0.1        --              0.1        --
                                                        -------   -------          -------   -------
Total comprehensive (loss) income                       $  68.5   $  72.3          $  42.9   $  60.2
                                                        =======   =======          =======   =======
</TABLE>

    (1)Net unrealized gains (losses) on certain investments, net of related
       tax, principally represented 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.

    (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.

    (3)Net unrealized gains (losses) on certain derivative transactions,
       net of related tax, principally represent gains and
       losses on the value of our interest rate caps.  For the
       three- and six-month periods ended December 31, 2004,
       these amounts are net of deferred taxes of zero and a
       deferred tax asset of $0.1, respectively.


(6)    Other Operating Items and Restructuring Charges

Other operating items recorded in previous periods represent charges
related to the streamlining of our organizational structure and the
strategic repositioning of certain businesses.  The components of 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 involuntary severance programs.  Accordingly,
   the positions to be separated were identified when the charge was
   recorded.

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



<PAGE>


The tables below reflects changes for the six-month period ended
December 31, 2004 to accruals recorded in previous periods.  The
majority of the reserves remaining relate to severance and guaranteed
minimum payments for products that have been discontinued.  Most of the
spending to date relates to severance costs.  Of the approximately 820
positions identified to be separated under the charges recorded in
fiscal 2003 and 2004, approximately 86% had been separated as of
December 31, 2004.

   Initial year         Balance at                    Balance at
    of charge         June 30, 2004   Spending    December 31, 2004

Fiscal 2002 & prior     $   3.2        $ (1.2)        $   2.0
Fiscal 2003                 6.7          (1.2)            5.5
Fiscal 2004                11.8          (3.8)            8.0
                        -------        ------         -------
   Total                $  21.7        $ (6.2)        $  15.5
                        =======        ======         =======


(7)   Inventories

                                          December 31,      June 30,
                                              2004            2004


  Raw materials                             $   8.6         $   9.7
  Work-in-progress                              3.2             5.0
  Finished goods                              163.4           137.3
                                            -------         -------
Total inventories                           $ 175.2         $ 152.0
                                            =======         =======

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


(8)   Investments

Available-for-Sale Marketable Securities

During the six-month period ended December 31, 2003, we sold 0.2
million shares of LookSmart, Ltd. and recorded pre-tax gains of $0.8 in
other expense, net on the statement of income.  This represented the
complete liquidation of our investment in LookSmart.

Investments, at Cost

During the six-month period ended December 31, 2003, we recognized a
gain of $2.7 in other expense, net as a result of proceeds received in
exchange for our interest in Schoolpop, Inc., which merged into an
unrelated third party.  We had written this investment down to zero in
the fourth quarter of fiscal 2002.



<PAGE>


(9)   Goodwill and Intangible Assets, Net

Changes in the carrying amount of goodwill by segment for the six-month
period ended December 31, 2004, are as follows:

<TABLE>

                                                                      Consumer
                                                   Reader's Digest    Business
                                                    North America     Services     Total



<S>                                                    <C>            <C>        <C>
Balance as of June 30, 2004                            $  686.5       $  323.0   $  1,009.5
  Reclassification as a result of change in
    reportable segments                                     1.0           (1.0)          --
  Impact of foreign currency translation on goodwill
    balances outside the United States                       --            0.5          0.5
                                                       --------       --------   ----------
Balance as of  December  31, 2004                      $  687.5       $  322.5   $  1,010.0
                                                       ========       ========   ==========

</TABLE>


Our principal goodwill assets relate to Reiman, in Reader's Digest
North America, and Books Are Fun, in Consumer Business Services.  We
tested our goodwill for impairment in the third quarter of 2004 (our
designated annual period) and determined that no impairment existed
with respect to our holdings at that time.  Although the third quarter
of the fiscal year is our designated annual period, we continually
monitor changes in our businesses to assess whether the carrying amount
of goodwill has been impaired.  Assessments of recoverability are
directly correlated with the performance of these businesses.  If
circumstances indicate that the carrying value of goodwill has been
impaired, we would record a loss in the period the impairment is
identified.

The following categories of acquired intangible assets are included in
other intangible assets, net, on the balance sheets, as of December 31,
2004 and June 30, 2004:

<TABLE>

                                            December 31, 2004       June 30, 2004
                                             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                         57.5       34.7       56.0       36.5
  Customer lists                              137.9       30.7      137.8       47.7
  Other trade names and
   noncompete agreements                        3.0         --        3.0         --
                                           --------   --------   --------   --------
Total intangible assets                    $  288.1   $  155.1   $  286.5   $  173.9
                                           ========   ========   ========   ========

</TABLE>


Amortization related to intangible assets with finite lives amounted to
$9.9 and $19.7 for the three- and six-month periods ended December 31,
2004, respectively.  For the three- and six-month periods ended
December 31, 2003 amortization amounted to $9.9 and $19.8,
respectively.  Our licensing agreement (discussed below) is principally
amortized over the initial 10-year contract term, with a portion being
amortized over the total 18-year term of our amended agreement.
Customer lists are being amortized principally between three and six
years.  Estimated fiscal year amortization expense for intangible
assets with finite lives is as follows:  fiscal 2005 - $36.9; fiscal
2006 - $16.0; fiscal 2007 - $10.6; fiscal 2008 - $5.9 and fiscal 2009 -
$5.7.

Licensing Agreement

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

The approximate annual minimum purchase amounts under the amended
agreement are: calendar year 2005 - $57.3; calendar year 2006 - $60.1;
calendar year 2007 - $61.9; calendar year 2008 - $63.7; calendar year
2009 - $65.6; and approximately $78.7 per year from calendar year 2010
to calendar year 2020.  These amounts are estimates based on minimum
tonnage requirements and nominal price increases as stipulated in the
amended agreement.


(10) Debt

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

During the six-month period ended December 31, 2004, we repaid $80.9 of
principal outstanding related to the Term Loan (consisting of $15.9 in
mandatory repayments and $65.0 in voluntary repayments) and $44.6
related to the Five-Year Facility.  The Term Loan requires us to make
scheduled principal repayments of $8.0 per quarter during the first
three quarters of 2005 and increasing principal repayments thereafter.
This amount is continually adjusted as we continue to make voluntary
and additional mandatory repayments.  We are required to perform a
calculation in the first quarter of every fiscal year (based on an
excess cash flow calculation outlined in the Term Loan) to determine
any potential additional mandatory repayments.  During the first
quarter of 2005, no additional repayments were required pursuant to
this calculation.  As of December 31, 2004, we had $296.1 of
outstanding borrowings under the Term Loan, no outstanding borrowings
under the Five-Year Facility and $300.0 outstanding under the senior
unsecured notes.  These amounts are included in long-term debt and in
loans and notes payable on the balance sheets.

Interest expense for the three- and six-month periods ended December
31, 2004 was $12.3 and $23.8, respectively ($12.7 and $24.3 for the
three- and six-month periods ended December 31, 2003, respectively).
Interest income on cash balances was $1.9 and $2.7 for the three- and
six-month periods ended December 31, 2004, respectively ($1.4 and $2.4
for the three- and six-month periods ended December 31, 2003,
respectively).  The weighted average interest rate on our borrowings
for the six-month periods ended December 31, 2004 and 2003 was 4.9% and
4.1%, respectively.


(11) Derivative Instruments

Risk Management and Objectives

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

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

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

Cash Flow Hedges - For the three- and six-month periods ended December
31, 2004 and 2003, the fair value of our interest rate caps was largely
unchanged.  Any changes in fair value 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, 2004 and 2003.


(12) Pension Information

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

The table below details the components of our net periodic pension
(benefit) cost for the three- and six-month periods ended December 31,
2004 and 2003.

<TABLE>

                                     Three-month period ended    Six-month period ended
                                             December 31,               December 31,
                                            2004     2003             2004      2003

<S>                                      <C>      <C>              <C>      <C>
Service cost                             $   4.8  $   4.9          $   9.5  $   9.5
Interest cost                               11.2     11.3             22.2     22.3
Expected return on plan assets             (18.1)   (16.0)           (36.0)   (31.8)
Amortization                                (0.3)    (0.2)            (0.6)    (0.3)
Recognized actuarial gain                    0.8      1.4              1.6      2.7
                                         -------  -------          -------  -------
Net periodic pension (benefit) cost      $  (1.6) $   1.4          $  (3.3) $   2.4
                                         =======  =======          =======  =======

</TABLE>


For the three- and six-month periods ended December 31, 2004,
approximately $4.1 and $5.8, respectively, was contributed to our
pension plans.

The table below details the components of our net periodic
postretirement (benefit) cost for the three- and six-month periods
ended December 31, 2004 and 2003.

<TABLE>

                                 Three-month period ended   Six-month period ended
                                        December 31,              December 31,
                                      2004        2003           2004       2003

<S>                                  <C>         <C>           <C>        <C>
Service cost                         $  0.3      $  0.3        $  0.6     $  0.6
Interest cost                           1.2         1.5           2.5        3.1
Amortization                           (0.5)       (0.2)         (0.9)      (0.4)
                                     ------      ------        ------     ------
Net periodic postretirement cost     $  1.0      $  1.6        $  2.2     $  3.3
                                     ======      ======        ======     ======

</TABLE>


(13) Share Repurchase Authorization

In May 2001, our Board of Directors authorized $250.0 in share
repurchases, of which $186.0 remains available as of December 31,
2004.  We have not repurchased any shares under this authorization
since December 31, 2001.  Under the Credit Agreements, we are permitted
to repurchase shares, pay cash dividends and make certain other
restricted payments, in any combination thereof, up to $50.0 each
fiscal year (see Note 10, Debt, for additional information).



<PAGE>


(14) Sale-Leaseback Transaction

On December 22, 2004, we completed the sale and partial leaseback of
our corporate headquarters facility in Westchester, New York.  Under
the agreement, we received $48.5 in cash and will receive an additional
$10.0 on the second anniversary of closing, subject to certain
conditions.  Because of this transaction, the gain of $22.8 was
deferred and will be amortized over the initial 20-year lease term as a
reduction in rent expense.  During the lease term, we will make annual
minimum lease payments of approximately $3.0, subject to increases
every five years based on changes in the Consumer Price Index.  In
addition, we have leased additional space for three years at an annual
cost of $0.6.


(15) Subsequent Events

On January 21, 2005, we announced that the Board of Directors approved
an increase in the quarterly dividend on our common stock from $0.05 to
$0.10 per share.  The initial dividend at the increased rate is payable
on February 15, 2005, to stockholders of record at the close of
business on February 1, 2005.




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

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


Three-Month Period Ended December 31, 2004, Compared With Three-Month
Period Ended December 31, 2003

Results of Operations:  Company-Wide

Overview

The second quarter of the fiscal year is our most significant in terms
of revenues and operating profit.  As such, the second quarter is also
when we pay down a significant portion of our outstanding borrowings,
including borrowings incurred in the first quarter to fund expenditures
as we prepared for this peak-selling season.  During the second quarter
of 2005, revenues and profits declined at Consumer Business Services,
and to a lesser extent, at Reader's Digest North America, compared with
the comparable period in the prior year.  The profit decline in
Reader's Digest North America was due in part to the timing of
recognizing direct-response promotion costs and to planned activity
reductions in certain businesses.  The revenue and profit decline in
Consumer Business Services was directly attributable to softness in the
business and competitive influences.  Reader's Digest International had
a strong quarter because of improved performance in some of our markets
and revenues from new markets.

Despite the reduced profit, operating cash flow remained strong,
enabling us to pay down a significant portion of outstanding
indebtedness.  The sale of certain non-strategic assets, including our
headquarters facility in Westchester, New York, contributed to these
strong cash flows.

During the second quarter of 2005 we modified two of our reportable
segments, Reader's Digest North America and Consumer Business Services,
to reflect changes in the composition of senior management, and
consequently, the way we manage our Trade Publishing business.  Trade
Publishing is now included in Reader's Digest North America.  We have
restated reportable segment results of operations and the discussion
below for prior periods to conform to our new reportable segments.


Revenues

Revenues for the second quarter of 2005 increased slightly to $798,
compared with $796 for the second quarter of 2004.  Excluding the
effect of foreign currency translation, revenues declined 3%.  The
decline in revenues was attributable to Consumer Business Services, and
to a lesser extent, Reader's Digest North America.  These declines were
partially offset by increased revenues for Reader's Digest
International.

Lower sales volumes at QSP, and to a lesser extent Books Are Fun,
translated into lower revenues for Consumer Business Services.  The
decline in sales at QSP was driven by lower sales of magazine and gift
products, whereas fewer display events held drove the decline at Books
Are Fun.

Reiman and Reader's Digest Young Families principally drove the decline
in revenues for Reader's Digest North America.  Reiman revenues were
lower principally due to lower sales of annual book products and lower
renewals from certain magazines.  Revenues at Reader's Digest Young
Families declined due to the elimination of marginally profitable and
unprofitable activity.  Also contributing to the decline were Books and
Home Entertainment products and lower circulation revenues for Reader's
Digest magazine.  Partially offsetting these declines was a
double-digit increase in revenues in Canada and revenues from new
products.

Revenues for Reader's Digest International improved due to stronger
performance in some of our markets, including Russia, Australia and
France, and certain developing markets.  Across Europe, improved sales
of Books and Home Entertainment products was partially offset by lower
magazine sales, planned reductions in mail quantities and shrinking
membership in certain series products.


Operating Profit

Operating profit for the second quarter of 2005 decreased 23% to $88,
compared with $114 for the second quarter of 2004.  The loss was
principally driven by $(26) of expense related to our magazine deferred
promotion change (described in further detail below).  Profits were also
adversely affected by performance at Consumer Business Services, Reader's
Digest North America, and investments in new products and markets.  These
declines were partially offset by a significant increase in profits for
Reader's Digest International.

The decline in profits was driven by lower revenues for Consumer
Business Services and the negative timing impact of $(11) of promotion
related expenses in Reader's Digest North America.  In Consumer
Business Services, in addition to the decline in revenues, increased
incentive costs and overhead at QSP and Books Are Fun, investments in
new products, and new markets further reduced profits.  These declines
were partially offset by higher profits for Reader's Digest
International, due to increased sales and lower costs.  Also, overhead
costs in various businesses were lower as a result of cost-cutting
measures initiated in previous periods.

Corporate Unallocated expenses were flat in the second quarter of 2005,
when compared with the second quarter of 2004.  A shift in the timing
of certain expenses into the second quarter of 2005 was offset by
higher net pension income (from our overfunded U.S. pension plans) and
lower costs associated with postretirement healthcare benefits (due to
changes in plan benefits and the effect of a subsidy pursuant to the
Medicare Prescription Drug, Improvement and Modernization Act of
2003).

Magazine Deferred Promotion Change
During the fourth quarter of 2004, we reassessed our accounting for
magazine direct-response promotion costs in light of changes in our
business, as well as the strategies and initiatives undertaken by our
magazine business.  As a result of these changes, pursuant to American
Institute of Certified Public Accountants Statement of Position (SOP)
93-7, Reporting on Advertising Costs, effective July 1, 2004, we no
longer defer and amortize magazine promotion costs, but expense such
costs when the promotion is mailed to prospective customers.  During
the second quarter of 2005, expenses were affected by $(26) related to
amortization of previously deferred magazine promotion costs.  Such
amount is included as a component of promotion, marketing and
administrative expenses on the income statements.  In addition, because
we currently expense magazine direct-response promotion costs when the
promotion is mailed to prospective customers, instead of deferring and
amortizing such costs (as we did in the prior year), promotion expense
variance in the second quarter of 2005 is higher.


Other Expense, Net

Other expense, net decreased 64% to $(4) in the second quarter of 2005,
compared with $(10) in the second quarter of 2004.  The most
significant recurring component of other expense, net, is interest
expense, net.  For the second quarter, net interest expense was $(10),
compared with $(11) for the second quarter of 2004.  Other changes were:

   -  A gain of $2 from the sale of a building in Australia.
   -  Gains of $3 from the sale of Moneywise magazine in the United
      Kingdom and Crafting Traditions magazine in the United States.
   -  Gains from the sale of other non-strategic assets of $2.


Income Taxes

The effective tax rate for the second quarter of 2005 of 31.7%,
compared with the effective rate for the second quarter of 2004 of
36.0%.  The reduction in the effective tax rate primarily relates to
non-recurring events in the second quarter of 2005.  These events
include the reversal of tax reserves resulting from various settlements
of U.S. federal and state tax audits, partially offset by a reduction
in the value of certain deferred tax assets as a result of a change to
the tax law of a foreign jurisdiction.


Net Income and Earnings Per Share

For the second quarter of 2005, net income was $58, or $0.58 per share
for diluted earnings per share ($0.59 for basic earnings per share).
In the prior year period, net income was $67, or $0.67 per share for
diluted earnings per share ($0.68 for basic earnings per share).


Results of Operations:  Reportable Segments


                                                  Three-month periods ended
                                                         December 31,
                                                       2004        2003
                                                                Restated
Revenues
  Reader's Digest North America                       $ 252       $ 260
  Reader's Digest International                         306         275
  Consumer Business Services                            250         274
  Intercompany eliminations                             (10)        (13)
                                                      -----       -----
Total revenues                                        $ 798       $ 796
                                                      =====       =====

Operating profit
  Reader's Digest North America                       $  25       $  33
  Reader's Digest International                          41          24
  Consumer Business Services                             61          79
  Magazine deferred promotion amortization(1)           (26)         --
  Corporate Unallocated(2)                              (13)        (13)
  Other operating items, net(3)                          --          (9)
                                                      -----       -----
Operating profit                                      $  88       $ 114
                                                      =====       =====

Intercompany eliminations
  Reader's Digest North America                       $  (1)      $  (3)
  Reader's Digest International                          (1)         (1)
  Consumer Business Services                             (8)         (9)
                                                      -----       -----
Total intercompany eliminations                       $ (10)      $ (13)
                                                      =====       =====

    (1)In connection with our change to expensing magazine deferred
       promotion costs when the promotion is mailed to prospective
       customers, our reportable segment operating profit in
       2005 includes such expenses as incurred.  Amortization
       of previously deferred promotion costs is not included
       in segment results reviewed by our chief operating
       decision maker.  Magazine deferred promotion
       amortization relates to: 89% to Reader's Digest North
       America and 11% to Reader's Digest International.

    (2)Corporate Unallocated includes expenses for the cost of
       governance and centrally managed expenses, as well as the
       accounting for U.S. pension plans, postretirement
       healthcare costs and executive compensation programs
       that are not allocated to the reportable 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.

    (3)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 Reader's Digest International, 11% to
       Consumer Business Services and 9% to corporate
       departments that benefit the entire organization.

Reader's Digest North America

Revenues for Reader's Digest North America for the second quarter of
2005 declined 3% to $252, compared with $260 for the second quarter of
2004.  Excluding the effect of foreign currency translation, revenues
declined 4%, driven by Reiman and U.S. Books and Home Entertainment.

Revenues at Reiman declined principally because of lower sales of
annual book products and lower renewals for certain cooking titles.
These declines were partially offset by increased revenues for new
products, including Backyard Living magazine (launched in the third
quarter of 2004), and improved catalog sales.

Lower revenues for U.S. Books and Home Entertainment were principally
driven by the elimination of marginally profitable and unprofitable
activity in Reader's Digest Young Families, a continued decline in
Select Editions membership, and planned reductions in continuity series
and telemarketing activity in the Home & Health affinity.

Revenues for Reader's Digest magazine declined in part, because the
rate base was reduced in January of 2004 to improve circulation
profitability.  In addition, circulation revenues continue to be
adversely affected by a decline in renewal pools.  Improved advertising
revenues, due to an increase in the rate per page, partially offset
these declines.

These revenue declines were partially offset by improved performance in
Canada, because of increased response rates to promotional mailings for
Books and Home Entertainment products and the addition of revenues from
Our Canada magazine (launched in the third quarter of 2004).  Response
rates in Canada increased as a result of previous efforts to enhance
our customer base and a stronger product selection.  Also, advertising
revenues for Selecciones magazine improved, due to an increase in the
rate per page and increased advertising pages.

Operating profit for this segment for the second quarter of 2005
declined 24% to $25, compared with $33 for the second quarter of 2004.
The most significant single factor affecting profitability this quarter
was $(11) of expenses to recognize the effect of expensing magazine
direct-response promotion costs when the promotion is mailed to
prospective customers.  Profit also declined as a result of lower
revenues for certain businesses and investments in new products.

These declines were partially offset by lower production costs for
Reader's Digest magazine, due to the January 2004 reduction in the rate
base, lower production costs at Reiman, and improved profits in Canada
as a result of increased sales.  Lower overhead costs in U.S. Books and
Home Entertainment attributable to cost-cutting measures initiated in
previous periods contributed to the improvement.


Reader's Digest International

Revenues for Reader's Digest International for the second quarter of
2005 increased 11% to $306, compared with $275 for the second quarter
of 2004.  Excluding the effect of foreign currency translation,
revenues increased 2%.  Increased revenues were driven by improved
response rates to promotional mailings for certain Books and Home
Entertainment products, particularly catalogs, partially offset by
lower membership in series products and planned reductions in magazine
circulation.  We have intentionally reduced circulation levels in
certain markets to better manage customer acquisition costs.  The most
significant increases in revenue were in Russia, Australia, France,
Hungary and Portugal.  Revenues also increased because of investments
made in previous periods to enter new markets, specifically Romania and
the Ukraine.

These improvements were partially offset by lower revenues in other
markets, including Germany, Brazil and Mexico.  Also, revenues in
Norway declined because we changed how we conduct business in this
market, including licensing the publication of Reader's Digest magazine
to a third-party.

Operating profit for this segment for the second quarter of 2005
increased 75% to $41, compared with $24 for the second quarter of
2004.  Excluding the effect of foreign currency translation, profits
improved 56%.  The profit improvement was attributable to the revenue
changes described above and lower promotion and overhead costs as a
result of cost-cutting measures initiated in previous periods.  The
effect of expensing magazine direct-response promotion costs when the
promotion is mailed to prospective customers contributed to the
increase.  These improvements were partially offset by investments in
new products and markets.


Consumer Business Services

Revenues for Consumer Business Services for the second quarter of 2005
declined 9% to $250, compared with $274 for the second quarter of
2004.  The decline in revenues was driven by QSP, and to a lesser
extent, Books Are Fun.

Revenues at QSP were adversely affected by a double-digit decline in
magazine and gift sales volumes.  The overall decline was driven by
lower participation in fundraising programs.  These declines were
partially offset by a favorable price-mix of products sold and
increased sales of food products, including World's Finest Chocolate
products.  During the quarter, sales of World's Finest Chocolate
products increased 6% because of an increase in the number of accounts.

Revenues at Books Are Fun declined because of fewer display events and
lower average sales per event in school markets.  The decline in events
held was driven by turnover in the independent sales force.  The
decline in average sales per event in school markets was attributable
to increased competition and weaker performance of certain seasonal
products.  The performance and underlying trends of Books Are Fun are
monitored closely as they are critical components in our assessment of
the intangible assets related to this business.

Operating profit for this segment for the second quarter of 2005
declined 23% to $61, compared with $79 for the second quarter of 2004.
The decline in profits was driven primarily by the revenue changes
described above.  In addition, higher investment spending at QSP, and
increased investment spending and overhead costs at Books Are Fun
contributed to the decline in profits.  Investment spending included
additional account incentives and costs incurred to increase the size
of the sales force.  In addition, QSP made investments to enhance
promotional materials and expand product offerings.  These declines
were partially offset by improved product margins at Books Are Fun
because of an improved purchasing discipline.


Six-Month Period Ended December 31, 2004, Compared With Six-Month
Period Ended December 31, 2003

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.  During
the first half of 2005, Consumer Business Services continued to
experience softness in their business and the effects of competitive
pressure.  While revenues for Reader's Digest North America declined in
part due to planned activity reductions, the profit decline was
principally driven by the timing of recognizing direct-response
promotion costs.  In contrast, profits for Reader's Digest
International increased significantly because of a strong second
quarter and a right-sized cost base.

Despite the reduced profit, operating cash flow remained strong,
enabling us to pay down a significant portion of outstanding
indebtedness.  The sale of certain non-strategic assets, including our
headquarters facility in Westchester, New York, contributed to these
strong cash flows.

During the six-month period ended December 31, 2004, we modified the
composition of two of our reportable segments, Reader's Digest North
America and Consumer Business Services.  Three smaller business units
were reclassified to reflect a change in the way we manage these
businesses, including synergies with some of our other businesses.
Reader's Digest Young Families, Trade Publishing and the results of our
financial services alliances in the United States are now included in
Reader's Digest North America.  We have restated reportable segment
results of operations and the discussion below for prior periods to
conform to our new reportable segments.


Revenues

Revenues for the six-month period ended December 31, 2004 decreased
slightly to $1,288, compared with $1,291 for the six-month period ended
December 31, 2003.  Excluding the effect of foreign currency
translation, revenues declined 4%.  Although revenues were lower in all
three of our reportable segments, the most significant decline was in
Consumer Business Services.

Revenues for Consumer Business Services declined because QSP, and to a
lesser extent, Books Are Fun continue to experience adverse trends in
their respective businesses.  Revenues at QSP declined because of lower
magazine and gift volumes, while fewer events held and lower average
sales for certain events drove the decline at Books Are Fun.

The decline in revenues for Reader's Digest North America was driven by
the elimination of marginal activity at Reader's Digest Young Families
and planned reductions in continuity series membership.  Lower revenues
for Reader's Digest magazine, due to the January 2004 reduction in the
rate base and lower renewal pools, and lower promotion efforts at
Reiman contributed to the decline.

Revenues for Reader's Digest International declined because of planned
reductions in circulation for Reader's Digest magazine and a continued
decline in the number of promotable customers.  The most significant
declines were in Brazil, the United Kingdom, Mexico and Germany.  These
declines were partially offset by improved performance in certain
markets, including Australia and France.


Operating Profit

Operating profit for the six-month period ended December 31, 2004
declined 48% to $52, compared with $100 for the six-month period ended
December 31, 2003.  The decline in profitability was principally driven
by $(52) of expense related to our magazine deferred promotion change
(described in further detail below).  Lower profits for Consumer Business
Services, and to a lesser extent, Reader's Digest North America, and
investments in new products and markets contributed to the decline.

Increased profits for Reader's Digest International and lower
production costs for Reader's Digest magazine and at Reiman partially
offset these declines.  In addition, certain costs were lower as a
result of cost-reduction measures initiated in previous periods.

Corporate Unallocated expenses decreased slightly during the six-month
period ended December 31, 2004, when compared with the six-month period
ended December 31, 2003.  A shift in the timing of certain expenses
into the first half of 2005 and increased costs related to incentive
plans were offset by higher net pension income (from our overfunded
U.S. pension plans) and lower costs associated with postretirement
healthcare benefits (due to changes in plan benefits and the effect of
a subsidy pursuant to the Medicare Prescription Drug, Improvement and
Modernization Act of 2003).

Magazine Deferred Promotion Change
During the fourth quarter of 2004, we reassessed our accounting for
magazine direct-response promotion costs in light of changes in our
business, as well as the strategies and initiatives undertaken by our
magazine business.  As a result of these changes, pursuant to American
Institute of Certified Public Accountants Statement of Position (SOP)
93-7, Reporting on Advertising Costs, effective July 1, 2004, we no
longer defer and amortize magazine promotion costs, but expense such
costs when the promotion is mailed to prospective customers.  During
the six-month period ended December 31, 2004, expenses were affected by
$(52) related to amortization of previously deferred magazine promotion
costs.  Such amount is included as a component of promotion, marketing
and administrative expenses on the income statements.  In addition,
because we currently expense magazine direct-response promotion costs
when the promotion is mailed to prospective customers, instead of
deferring and amortizing such costs (as we did in the prior year),
promotion expense variance for the six-month period ended December 31,
2004 is higher.


Other Expense, Net

Other expense, net decreased 18% to $(14) for the six-month period
ended December 31, 2004, compared with $(18) for the six-month period
ended December 31, 2003.  The most significant component of other
expense, net, is interest expense, net.  For the six-month period ended
December 31, 2004, net interest expense was $(21), compared with $(22)
for the six-month period ended December 31, 2003.  Other changes were:

   -  A gain of $2 from the sale of a building in Australia.
   -  Gains of $3 from the sale of Moneywise magazine in the United
      Kingdom and Crafting Traditions magazine in the United States.
   -  Gains from the sale of other non-strategic assets of $2.
   -  A gain of $3 from proceeds received in exchange for our interest
      in Schoolpop, Inc. in the first quarter of 2004, which merged
      into an unrelated third party.
   -  Higher income from the sale of LookSmart, Ltd. shares of $1 in
      the first half of 2004.  The sale of these shares represented the
      complete liquidation of our investment in LookSmart.


Income Taxes

The effective tax rate for the six-month period ended December 31, 2004
was 27.0%, compared with a rate of 36.0% for the six-month period ended
December 31, 2003.  The reduction in the effective tax rate primarily
relates to non-recurring events in the second quarter of 2005.  These
events include the reversal of tax reserves resulting from various
settlements of U.S. federal and state tax audits, partially offset by a
reduction in the value of certain deferred tax assets as a result of a
change to the tax law of a foreign jurisdiction.


Net Income and Earnings Per Share

For the six-month period ended December 31, 2004, net income was $27,
or $0.27 per share for diluted earnings per share ($0.28 for basic
earnings per share).  In the prior year period, net income was $53, or
$0.53 per share for diluted earnings per share ($0.54 for basic
earnings per share).




<PAGE>


Results of Operations:  Reportable Segments


                                                     Six-month periods ended
                                                           December 31,
                                                        2004         2003
                                                                   Restated
Revenues
  Reader's Digest North America                       $   478      $   484
  Reader's Digest International                           521          491
  Consumer Business Services                              305          335
  Intercompany eliminations                               (16)         (19)
                                                      -------      -------
Total revenues                                        $ 1,288      $ 1,291
                                                      =======      =======

Operating profit
  Reader's Digest North America                       $    41      $    45
  Reader's Digest International                            42           22
  Consumer Business Services                               43           65
  Magazine deferred promotion amortization(1)             (52)          --
  Corporate Unallocated(2)                                (22)         (23)
  Other operating items, net(3)                            --           (9)
                                                      -------      -------
Operating profit                                      $    52      $   100
                                                      =======      =======

Intercompany eliminations
  Reader's Digest North America                       $    (6)     $    (8)
  Reader's Digest International                            (2)          (1)
  Consumer Business Services                               (8)         (10)
                                                      -------      -------
Total intercompany eliminations                       $   (16)     $   (19)
                                                      =======      =======

    (1)In connection with our change to expensing magazine deferred
       promotion costs when the promotion is mailed to prospective
       customers, our reportable segment operating profit in
       2005 includes such expenses as incurred.  Amortization
       of previously deferred promotion costs is not included
       in segment results reviewed by our chief operating
       decision maker.  Magazine deferred promotion
       amortization relates to: 87% to Reader's Digest North
       America and 13% to Reader's Digest International.

    (2)Corporate Unallocated includes expenses for the cost of
       governance and centrally managed expenses, as well as the
       accounting for U.S. pension plans, postretirement
       healthcare costs, and executive compensation programs
       that are not allocated to the reportable 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.

    (3)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 Reader's Digest International, 11% to
       Consumer Business Services and 9% to corporate
       departments that benefit the entire organization.

Reader's Digest North America

Revenues for Reader's Digest North America for the six-month period
ended December 31, 2004 decreased 1% to $478, compared with $484 for
the six-month period ended December 31, 2003.  Excluding the effect of
foreign currency translation, revenues decreased 2%.  The decline in
revenues was principally driven by U.S. Books and Home Entertainment,
Reader's Digest magazine and Reiman.  Improved revenues in Canada
partially offset these declines.

The decline in revenues for U.S. Books and Home Entertainment was due
to the elimination of marginally profitable and unprofitable activity
at Reader's Digest Young Families, and a continued decline in
membership for series products, primarily Select Editions.  Planned
reductions in other continuity series membership and lower
telemarketing activity in the Home & Health and Entertainment
affinities contributed to the decline.

Revenues continued to decline for Reader's Digest magazine due to the
January 2004 reduction in the rate base, to improve circulation
profitability, and declining renewal pools.  Advertising revenues
improved because of increased advertising pages, partially offset by a
lower rate per page.

Revenues for Reiman were slightly lower principally due to lower
circulation revenues, attributable to lower promotion efforts to
maximize profitability.  Lower sales of certain annual book products
and the absence of revenues from Crafting Traditions magazine (sold in
the second quarter of 2005) contributed to the decline.  Increased
revenues attributable to sales of newer annual book products and
revenues from Backyard Living magazine (launched in the third quarter
of 2004) partially offset the decline.

These declines were partially offset by increased revenues in Canada,
due to the addition of revenues from Our Canada magazine (launched in
the third quarter of 2004), increased advertising revenues and
increased response rates to promotional mailings for Books and Home
Entertainment products.  Response rates in Canada increased as a result
of previous efforts to enhance our customer base and a stronger product
selection.  In addition, advertising revenues for Selecciones magazine
increased.

Operating profit for this segment for the six-month period ended
December 31, 2004 decreased 9% to $41, compared with $45 for the
six-month period ended December 31, 2003.  Reduced profits were
principally driven by the effect of expensing magazine direct-response
promotion costs when the promotion is mailed to prospective customers
and the revenue changes described above.  In addition, investments in
new products contributed to the decline in profitability.  Partially
offsetting these declines were lower production costs for Reader's
Digest magazine, due to the January 2004 reduction in the rate base,
the effect of cost-cutting measures initiated in previous periods and a
one-time contract termination payment of $2 from a former financial
services alliance partner in the first quarter of 2005.


Reader's Digest International

Revenues for Reader's Digest International for the six-month period
ended December 31, 2004 increased 6% to $521, compared with $491 for
the six-month period ended December 31, 2003.  Excluding the effect of
foreign currency translation, revenues decreased 2%.  The most
significant declines in revenues were in Brazil, the United Kingdom,
Germany and Mexico.  The declines in these markets were driven by
planned reductions in circulation for Reader's Digest magazine, to
better manage customer acquisition costs, and a continued decline in
the number of promotable customers.  In addition, declining membership
in series products contributed to the lower revenues.  These declines
were partially offset by improved response rates for Books and Home
Entertainment products.  Revenues in Norway declined because we changed
how we conduct business in this market, including licensing the
publication of Reader's Digest magazine to a third-party.

These declines were partially offset by improved revenues in Australia,
France, Russia and Hungary because of improved response rates to
promotional mailings for Books and Home Entertainment products.
Revenues also improved because of investments made in previous periods,
including entering into new markets such as Romania and the Ukraine,
and introducing a number of new products.

Operating profit for this segment for the six-month period ended
December 31, 2004 increased 87% to $42, compared with $22 for the
six-month period ended December 31, 2003.  Excluding the effect of
foreign currency translation, profits increased 65%.  The profit
improvement was driven by higher contributing margins on most product
lines driven by more efficient mailings for Books and Home
Entertainment products.  Lower overhead costs due to cost-cutting
measures initiated in previous periods and the renegotiation of certain
supply contacts contributed to the increase in profits.

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


Consumer Business Services

Revenues for Consumer Business Services for the six-month period ended
December 31, 2004 decreased 9% to $305, compared with $335 for the
six-month period ended December 31, 2003.  The revenue decline was
evident in both QSP and Books Are Fun.

Lower magazine and gift volumes drove the decline in revenues at QSP.
This decrease was principally the result of lower participation in
schools.  These declines were partially offset by a favorable price-mix
of products sold and higher food product sales, including an 8%
increase in sales of World's Finest Chocolate products.

The decline in sales at Books Are Fun was attributable to fewer events
held and lower average sales per event in school markets.  The decline
in the number of events held was principally driven by turnover in the
independent sales force.  In addition, a number of events scheduled in
the first quarter of 2005 were cancelled due to hurricanes in the
southeastern United States.  Average sales per event declined because
of increased competition and a shift in the mix of products sold, to
lower-priced products.  The performance and underlying trends of Books
Are Fun are monitored closely as they are critical components in our
assessment of the intangible assets related to this business.

Operating profit for this segment for the six-month period ended
December 31, 2004 decreased 34% to $43, compared with $65 for the
six-month period ended December 31, 2003.  The decline in profitability
was driven primarily by the revenue changes described above.  In
addition, increased investments at QSP and Books Are Fun drove higher
promotion and overhead costs.


Forward-Looking Information

Fiscal 2005 Results

We expect full-year 2005 earnings per share of $0.28 to $0.38,
including $(0.49) per share related to amortization of our magazine
deferred promotion asset as of June 30, 2004.  This estimate does not
include the effect of special items, including restructuring charges,
that cannot be forecasted at this time.  In our 2004 Annual Report to
Stockholders we communicated that our previous 2005 earnings per share
guidance, a range of $0.77 to $0.87 per share, was provided before
finalizing the disposition of our magazine deferred promotion asset.
Accordingly, our previous guidance did not include amortization of our
magazine deferred promotion asset as of June 30, 2004.

We believe results in the third quarter of 2005 will be lower, but the
fourth quarter of 2005 will be higher, when compared with the
comparable periods in the previous year because of how we planned major
marketing campaigns and investments in Reader's Digest International
and Reader's Digest North America.

Given the level debt repayments during the second quarter of 2005 and
the anticipated strength in cash flow, we believe our credit profile is
improving.  This may allow us to supplement our dividend increase with
other initiatives to increase shareholder value.




<PAGE>


Liquidity and Capital Resources

                                                                  Six-month
                                                                  period ended
                                                               December 31, 2004

Cash and cash equivalents at June 30, 2004                           $  50

Net change in cash due to:
  Operating activities                                                  81
  Investing activities                                                  55
  Financing activities                                                (137)
  Effect of exchange rate changes on cash and cash equivalents           7
                                                                     -----
Net change in cash and cash equivalents                                  6

Cash and cash equivalents at December 31, 2004                       $  56
                                                                     =====

Cash and cash equivalents increased 12% to $56 as of December 31, 2004,
compared with $50 as of June 30, 2004.  The increase in cash was due to
cash flow from operations and investing activities.   The sale of
non-strategic assets, including our headquarters facility in
Westchester, New York (discussed below) and the sale of our building in
Australia generated $63 in cash.  In addition, positive cash flow was
driven by net income, depreciation, amortization and advances received
for new subscriptions and other products. These increases were
partially offset by an increase in our working capital of $34.   Uses
of cash, principally related to financing activities, were repayments
of $126 of outstanding debt and cash payments for dividends of $10.

Debt
As described in Note 11 to the Consolidated Financial Statements
included in our 2004 Annual Report to Stockholders, our borrowings
principally comprise the $950 Term Loan Agreement (Term Loan), the
Five-Year Revolving Credit and Competitive Advance Facility Agreement
(Five-Year Facility) (collectively referred to as the Credit
Agreements), and $300 in senior unsecured notes.  The maximum borrowing
allowed under the Five-Year Facility is $193.  As of December 31, 2004,
there were no outstanding borrowings under the Five-Year Facility and
$296 outstanding under the Term Loan.  During the six-month period
ended December 31, 2004, we repaid $81 of principal related to the Term
Loan (consisting of $16 in scheduled mandatory repayments and $65 in
voluntary prepayments) and $45 related to the Five-Year Facility.  The
Term Loan requires us to make scheduled principal repayments of $8 per
quarter during the first three quarters of 2005 and increasing
principal repayments thereafter.  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.
During the first quarter of 2005, no additional
repayments were required pursuant to this calculation.  The weighted
average interest rate on our borrowings for the six-month periods ended
December 31, 2004 and 2003 was 4.9% and 4.1%, respectively (5.1% and
4.2%, for the three-month periods ended December 31, 2004 and 2003,
respectively).

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

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.

Sale-Leaseback Transaction
In the second quarter of 2005, we completed the sale and partial
leaseback of our corporate headquarters facility in Westchester, New
York.  Under the agreement, we received $49 in cash and will receive an
additional $10 on the second anniversary of closing, subject to certain
conditions.  Because of this transaction, the gain of $23 was deferred
and will be amortized over the initial 20-year lease term as a
reduction in rent expense.  During the lease term, we will make annual
minimum lease payments of approximately $3, subject to increases every
five years based on changes in the Consumer Price Index.  In addition,
we have leased additional space for three years at an annual cost of
$1.  This transaction is expected to lower operating costs and reduce
interest expense by $10 annually.

Dividend Increase
On January 21, 2005, we announced an increase in the quarterly dividend
per common share from $0.05 to $0.10.


Recent Accounting Standards

In December 2004, the Financial Accounting Standards Board (FASB)
issued Statement of Financial Accounting Standards (SFAS) No. 123
(revised 2004), Share-Based Payment (SFAS No. 123R).  This statement
supersedes SFAS No. 123, Accounting for Stock-Based Compensation, SFAS
No. 148, Accounting for Stock-Based Compensation-Transition and
Disclosure-an amendment of FASB Statement No. 123, and Accounting
Principles Board (APB) Opinion No. 25, Accounting for Stock Issued to
Employees.  The most significant change is the requirement to
recognize, in the statements of income, the value of employee stock
options and other stock-based compensation (including employee stock
purchase plans) as calculated using the fair value based method, as
opposed to the intrinsic value method currently used.  The statement is
effective for interim or annual periods beginning after June 15, 2005.
We are continuing to evaluate the full impact of SFAS No. 123R for its
adoption in first quarter fiscal 2006.

In December 2004, the FASB issued FASB Staff Position (FSP) 109-2,
Accounting and Disclosure Guidance for the Foreign Earnings
Repatriation Provision within the American Jobs Creation Act of 2004.
The American Jobs Creation Act (the Act), signed into law by President
Bush on October 22, 2004, allows a one-time dividends received
deduction on the repatriation of certain foreign earnings, provided
certain criteria in the Act are satisfied.  Based on our analysis, we
do not expect to derive any benefit from this provision.  Accordingly,
no tax expense has been recognized in the statement of income for the
three-month period ended December 31, 2004.

                                 *****



<PAGE>


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

Some of these risks and uncertainties include factors relating to:

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

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



<PAGE>


Item 4.    CONTROLS AND PROCEDURES

Under the supervision of our Chief Executive Officer and Chief
Financial Officer, we evaluated our disclosure controls and procedures
and internal control over financial reporting (as defined in rules
13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934) and
concluded that (i) our disclosure controls and procedures were
effective as of December 31, 2004 and (ii) no change in internal
control over financial reporting occurred during the quarter ended
December 31, 2004 that has materially affected, or is reasonably likely
to materially affect, such internal control over financial reporting.

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




<PAGE>



PART II.  OTHER INFORMATION

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

<TABLE>

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

<S>                         <C>            <C>               <C>                       <C>
October 1 - 31, 2004           --               --            --                        --
November 1 - 30, 2004          --               --            --                        --
December 1 - 31, 2004       1,361          $ 13.95            --                        --
                            -----          -------           ----                      ----
        Total               1,361          $ 13.95            --                        --

</TABLE>


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


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

At the 2004 Annual Meeting of Stockholders of The Reader's Digest
Association, Inc. held on November 19, 2004, the following matter was
voted on by stockholders:

  Proposal 1:  Election of Class 2 Directors to hold office until the
               2007 Annual Meeting or until their successors are duly
               elected and qualified.  Each nominee was elected by the
               votes cast as follows:

                                       For           Withheld
       Lawrence R. Ricciardi        81,638,252       9,006,897
       William J. White             80,616,423      10,028,726
       Ed Zschau                    82,086,361       8,558,788



<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.


 (b)  Reports on Form 8-K

      During the three months ended December 31, 2004, we filed the
      following current reports on Form 8-K.

      -   Current report on Form 8-K dated December 22, 2004, Item 8.
      -   Current report on Form 8-K dated November 18, 2004, Item 8.
      -   Current report on Form 8-K dated November 16, 2004, Item 8.
      -   Current report on Form 8-K dated October 28, 2004, Items 2, 7 and 9.





<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 7, 2005             By:   /s/ THOMAS D. BARRY
                                          Thomas D. Barry
                                          Vice President and
                                          Corporate Controller
                                          (chief accounting officer and
                                          authorized signatory)