SECURITIES AND EXCHANGE COMMISSION
                     Washington, D.C.  20549
                            FORM 10-K
    [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                 SECURITIES EXCHANGE ACT OF 1934
           For the fiscal year ended June 30, 1997
               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.
        incorporation or organization)       Employer
                                           Identificati
                                              on No.)
            Pleasantville, New York            10570
        (Address of principal executive     (Zip Code)
                   offices)

 Registrant's telephone number, including area code: (914)238-1000
                              
Securities registered pursuant to Section 12(b) of the Act:

                                          Name of each exchange
           Title of each class            on which registered
     Class A Nonvoting Common Stock       
        par value $.01 per share          New York Stock Exchange  
                                           
       Stock Class B Voting Common Stock  New York Stock Exchange
        par value $.01 per share

                                            
Securities  registered  pursuant to Section  12(g)  of  the
Act: None
                        ______________
                               
Indicate  by  check  mark  if  disclosure  of  delinquent
filers pursuant  to Item 405 of Regulation S-K is not contained
herein, and  will  not  be  contained, to the best of  the
registrant's knowledge,   in   definitive  proxy  or
information   statements incorporated by reference in Part III
of this Form  10-K  or  any amendment to this Form 10-K.  [X]

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 [   ]

The  aggregate market value of registrant's voting stock held
by non-affiliates    of   registrant,  at  August   29,   1997,
was approximately  $164,280,722  based  on  the  closing
price   of registrant's Class B Voting Stock on the New York
Stock Exchange-Composite Transactions on such date.

As  of  August  29,  1997, 84,605,586 shares of the
registrant's Class  A  Nonvoting  Common Stock and 21,716,057
shares  of the registrant's Class B Voting Common Stock were
outstanding.

              DOCUMENTS INCORPORATED BY REFERENCE
                               
Annual  Report to Stockholders of registrant for the fiscal
year ended June 30, 1997.  Certain information therein is
incorporated by reference into Part I and Part II hereof.

Proxy Statement for the Annual Meeting of Stockholders of
registrant to be held on December 12, 1997.  Certain
information therein is incorporated by reference into Part III
hereof.


                       TABLE OF CONTENTS
                               
                               
                                                            Page
                                                              
PART I
   ITEM 1.  BUSINESS                                          1
     Reader's Digest Magazine                                 1
      Circulation                                             1
      Advertising                                             2
      Editorial                                               2
      Production and Fulfillment                              3
     Books and Home Entertainment Products                    3
      Condensed Books                                         3
      Series Books                                            3
      General Books                                           4
      Music                                                   4
      Television and Video                                    4
      Production and Fulfillment                              5
     Direct Marketing Operations                              5
     Management Information Systems and Customer List         7
       Enhancement
     Special Interest Magazines                               7
     QSP, Inc.                                                8
     Competition and Trademarks                               8
     Employees                                                8
     Executive Officers of the Company                        9


   ITEM 2.  PROPERTIES                                       10

   ITEM 3.  LEGAL PROCEEDINGS                                11

   ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY      11
             HOLDERS

PART II
   ITEM 5.  MARKET FOR REGISTRANT'S COMMON EQUITY AND
            RELATED STOCKHOLDER MATTERS                      11


   ITEM 6.  SELECTED FINANCIAL DATA                          11

   ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF
              FINANCIAL CONDITION AND RESULTS OF OPERATIONS  11

   ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA      12

   ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
            ON ACCOUNTING AND FINANCIAL DISCLOSURE           12

PART III
   ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE          12
             REGISTRANT

   ITEM 11. EXECUTIVE COMPENSATION                           12

   ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
             OWNERS AND MANAGEMENT                           12

   ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS   12

PART IV

   ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND
            REPORTS on Form 8-K                               13
                                                              
   SIGNATURES                                                 17

   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS                18


  "Reader's Digest" is  a registered trademark of The Reader's
                    Digest Association, Inc.
                               
                               
                               
                            PART I
ITEM 1.BUSINESS

      The Reader's Digest Association, Inc. (the "Company") is
a preeminent  global  leader in publishing  and  direct
marketing, creating  and  delivering products, including
magazines,  books, recorded music collections, home videos and
other products,  that inform, enrich, entertain and inspire.
      The  Company is a Delaware corporation that was
originally incorporated  in  New  York  in 1926 and  was
reincorporated  in Delaware in 1951.  The mailing address of
its principal executive offices  is  Pleasantville, New York
10570  and  its  telephone number is (914) 238-1000.
      For  fiscal 1997, the Company's operations are reported
in four  business segments:  (1) Reader's Digest magazine, (2)
books and  home  entertainment products, (3) special interest
magazines and  (4) other businesses.  For financial information
by business segment,  see  Note  16  to the Company's
consolidated  financial statements  appearing  in the Company's
1997  Annual  Report  to Stockholders, which Note is
incorporated herein by reference.
      In fiscal 1997, the Company's businesses were organized
in four  operating  groups. The organization of the Company's
three geographic groups--Reader's Digest Europe, Reader's
Digest U.S.A. and  Reader's  Digest Pacific--recognizes the
distinct  business needs  and strategies appropriate in
different markets throughout the  world.   The Company's fourth
operating group  operated  the Company's school and youth group
fundraising business and focused on  developing new products
and entering new marketing  channels. For  financial
information by geographic area, see Note 16 to the Company's
consolidated  financial statements  appearing  in  the
Company's  1997  Annual  Report to Stockholders,  which  Note
is incorporated herein by reference.


Reader's Digest Magazine

      Reader's  Digest  magazine is a monthly,  general
interest magazine consisting of original articles and
previously published articles  in condensed form, a condensed
version of a  previously published or soon-to-be published full-
length book, monthly humor columns,  such as "Laughter, The
Best Medicine," "Life In  These United  States,"   "Humor In
Uniform,"  and  "All  In  A  Day's Work,"  and  other
regular  features,  including  "Heroes   For Today,"  "It
Pays To Enrich Your Word Power," "News  From  The World Of
Medicine," "Tales Out of School," "Virtual Hilarity," and
"The Verbal Edge."  DeWitt and Lila Wallace founded Reader's
Digest  magazine in 1922.  Today, Reader's Digest has a
worldwide circulation  of almost 28 million and  approximately
100  million readers  each  month, generating revenues of
$729.2  million  in fiscal  1997, as compared with $739.8
million in fiscal 1996  and $732.9  million in fiscal 1995.
Reader's Digest is published  in 48 editions and 19 languages,
including a Slovak language edition that  began  publication in
July 1997.   In  addition,  a  Korean edition,  an  Indian
edition, a braille edition  and  a  recorded edition are
published by third parties pursuant to licenses.


  Circulation

  Based  on the most recent audit report issued by the  Audit
Bureau   of   Circulation,   Inc.   ("ABC"), a   not-
for-profit organization that monitors circulation in the United
States  and Canada, the Company has determined that the United
States English language  edition  of  Reader's  Digest  has
the  largest   paid circulation  of  any  United States
magazine,  other  than  those automatically  distributed  to
all  members  of   the   American Association of Retired
Persons.  Approximately 95% of the  United States paid
circulation  of  Reader's  Digest   consists of subscriptions.
The  balance consists of single  copy  sales  at newsstands and
in supermarkets and similar establishments.

Reader's  Digest is truly a global magazine.  Many  of  its
international  editions  have the largest  paid  circulation
for monthly  magazines both in the individual countries  and
in  the regions  in  which  they are published.  For  most
international editions of Reader's Digest, subscriptions
comprise about 90%  of circulation.  The balance is
attributable to newsstand and  other retail sales.

      The  Company  maintains its circulation rate  base
through annual  subscription renewals and new subscriptions.
The  global circulation  rate  base  for  Reader's  Digest  of
27.7  million includes  a  circulation rate base of 15 million
for  the  United States--English  language edition.  In  the
United  States,  the Company  sells approximately five million
new subscriptions  each year  in  order  to  maintain  its
circulation  rate  base. New subscriptions  are sold primarily
by direct mail, with  extensive useof   sweepstakes  entries.
The  largest   percentage of subscriptions  is sold between
July and December  of  each  year. Subscriptions to Reader's
Digest may be canceled at any time  and the unused subscription
price is refunded.

      Worldwide  revenues from circulation accounted  for
$558.9 million,  or  77%  of  the  total  revenues  of
Reader's  Digest magazine, in the fiscal year ended June 30,
1997.


  Advertising

       In fiscal 1997, Reader's Digest carried 13,484
advertising pages:  1,075  advertising  pages in its  United
States--English language  edition  and  12,409 advertising
pages  in  its  other editions.    The  United  States  and
the  larger  international editions  of Reader's Digest offer
advertisers different regional editions, major market editions
and demographic editions.   These editions, usually containing
the same editorial material,  permit advertisers to concentrate
their advertising in specific  markets or   to target  specific
audiences.   Reader's  Digest   sells advertising in both the
United States and international  editions principally  through
an internal advertising  sales  force.  The Company sells
advertisements in multiple editions worldwide,  and offers
advertisers discounts for placing advertisements in  more than
one edition.

      Worldwide  revenues from advertising accounted  for
$170.3 million,  or  23%  of  the  total  revenues  of
Reader's  Digest magazine, in the fiscal year ended June 30,
1997.


  Editorial

       Reader's  Digest  is  a  reader-driven,  family
magazine. Editorial  content is, therefore, crucial to the
loyal subscriber base that   constitutes  the  cornerstone  of
the   Company's operations.   The  editorial mission of
Reader's  Digest  is  to inform,  enrich,  entertain  and
inspire.   The  articles,  book section  and features included
in Reader's Digest cover  a  broad range  of  contemporary
issues  and  reflect  an  awareness of traditional values.

     A  substantial portion of the selections in Reader's
Digest are  original  articles  written by staff writers  or
free-lance writers.  The  balance  is  selected  from  existing
published sources. All material is condensed by Reader's Digest
editors.  The  Company employs a professional staff to research
and  factcheck all published pieces.

      Each  international  edition has a  local  editorial
staff responsible for the editorial content of the edition.
The mix of locally  generated editorial material, material
taken  from  the United States edition and material taken from
other international editions varies  greatly  among  editions.
In  general, the Company's  larger international editions, for
example,  those  in Canada,  France,  Germany  and the  United
Kingdom,  carry  more original or locally adapted material than
do smaller editions.

  Production and Fulfillment

      All  editions of Reader's Digest are printed by
independent third parties.  The United States edition is
printed exclusively by  one  printer  in Pennsylvania under a
10-year  contract  that commenced  in  fiscal 1997.  The
Company believes that  generally there  is  an  adequate supply
of alternative  printing  services available to the Company at
competitive prices, should  the  need arise.  The Company has
developed plans to minimize recovery time in the event of a
disaster at an existing printing facility.

      The  principal  raw  materials used in the  publication
of Reader's  Digest are coated and uncoated paper.  The Company
has supply  contracts with a number of global suppliers of
paper  and believes  that those supply contracts provide an
adequate  supply of  paper  for  its  needs  and that, in any
event,  alternative sources  are available at competitive
prices.  Paper  prices  are affected  by  a  variety of
factors, including demand,  capacity, pulp supply, and by
general economic conditions.

     Subscription copies of the United States edition of
Reader's Digest are delivered through the United States Postal
Service  as "periodicals"  class mail.  Subscription copies of
international editions  are also delivered through the postal
service  in  each country.For  additional information  about
postal  rates  and service, see " Direct Marketing Operations."

      Newsstand  and  other retail distribution  is
accomplished through  a  distribution network.  The Company has
contracted  in each country with a magazine distributor for the
distribution  of Reader's Digest.


Books and Home Entertainment Products

      The  Company publishes and markets, principally  by
direct mail,  Reader's  Digest  Condensed Books, series  books,
general books,  recorded  music  collections and series  and
home  video products.  See "Direct Marketing Operations."


  Condensed Books

      Reader's  Digest Condensed Books is a continuing series
of condensed  versions  of  current popular  fiction.
Condensation reduces  the  length  of an existing text,  while
retaining  the author's  style, integrity and purpose.  Today,
16  editions  of Condensed  Books, published in 13 languages,
are marketed  in  24 countries.   In fiscal 1997, Condensed
Books generated  worldwide revenues  of $305.0 million, as
compared with $370.4  million  in fiscal 1996 and $392.1
million in fiscal 1995.

      International editions of Condensed Books generally
include some  material  from  the United States  edition  or
from  other international editions, translated and edited as
appropriate, and some  condensations  of  locally  published
works.   Each  local editorial  staff  determines  whether
existing  Condensed  Books selections are appropriate for their
local market.

      The Company publishes six volumes of Condensed Books a
year in  the  United  States.   Some  of the  Company's
international subsidiaries  also  publish  six volumes  a
year,  while  others publish five.


  Series Books

      The  Company  markets two types of series  books:
reading series  and illustrated series.  These book series may
be  openended  continuing series, or may consist of a limited
number  of volumes.

  Series  books  are published  in  nine  languages  and
marketed  in 18 countries. In fiscal 1997, series books
generated worldwide  revenues  of $209.5 million, as compared
with  $264.3 million in fiscal 1996 and $236.6 million in
fiscal 1995.

     Reading series marketed in the United States include
Today's Best  Nonfictionr, which consists of five volumes per
year  each generally  containing  condensed versions  of  four
contemporary works  of nonfiction and The World's Best Reading,
consisting  of full-length editions of classic works of
literature, of which six volumes  are  published each year.
Today's  Best  Nonfiction  is published in 10 countries in
three languages and The World's Best Reading is published in
eight countries in three languages.

      The Company markets illustrated series, which are
generally closed-ended, in the United States and several other
countries.


  General Books

      The  Company's general books consist primarily of
reference books, cookbooks, "how-to" and "do-it-yourself"
books, children's books  and  books on subjects such as
history, travel,  religion, health, nature and the home.
General books are published  in  16 languages  and  are
marketed in 37 countries.   In  fiscal  1997, general books
generated worldwide revenues of $675.9 million,  as compared
with $753.5 million in fiscal 1996 and $808.7 million in fiscal
1995.

      New  general  books are generally original Reader's
Digest books,  but  may  also be books acquired from  other
publishers. During  the  development period for an original
Reader's  Digest book,  the  Company conducts extensive
research and  prepares  an appropriate marketing strategy for
the book.

      Although most sales of a general book will result from
the initial  bulk  promotional mailing, substantial additional
sales occur through subsequent promotions, catalog sales and
the use of sales  inserts  in  mailings for other Reader's
Digest  products. The Company also distributes its books for
retail sale in stores, through third-party distributors.

      The Company has entered into strategic alliances with
third parties,  such  as  Meredith Corporation and  Dove
Audio,  Inc., giving the Company direct marketing rights with
respect to  books and other products created by those parties
or jointly with those parties or bearing their brands.

  Music

      The  Company publishes recorded music packages on
cassettes and  compact  discs, which it sells principally by
direct  mail. The  music  packages  are  generally  collections
of  previously recorded and newly commissioned material by a
variety of artists, although  they may include selections from
the Company's  17,000selection library.  The collections span a
broad range of musical styles.  In certain markets, the Company
also sells music series, which  are  marketed  in the same
manner as Condensed  Books  and series  books.   The  marketing
strategy for  music  packages  is similar  to  that for general
books.  The Company  markets  music products  in  32 countries,
offering different music products  in the various international
markets because of diverse tastes.

  In fiscal  1997,  music  products generated  worldwide
revenues  of $404.2  million, as compared with $460.1 million
in  fiscal  1996 and $435.9 million in fiscal 1995.


  Television and Video

      The  Company's  television and home video products  are
in genres  similar to its general books.  Several original
programs have  won  awards of excellence, including five Emmy
awards,  and have  appeared  on the Disney Channel and the
Discovery  Channel. The  Company  continues  to expand its
video  operations  in  the United  States  and  in
international markets  and  is  presently marketing video
products principally by direct mail in the United States  and
30 other countries.  Most of the Company's  original programs
have  been licensed to cable television networks.    The
Company  also  sells  its  home  video  products  through
retail establishments.   In  fiscal 1997, home video products
generated worldwide  revenues  of $243.5 million, as compared
with  $241.3 million in fiscal 1996 and $218.7 million in
fiscal 1995.

      In  November 1995, the Company formed a strategic
alliance with the Public Broadcasting Service ("PBS") to
develop, acquire, create  and distribute television series,
miniseries and specials for  initial  broadcast  on  PBS.  PBS
has  domestic  television distribution and U.S. retail
distribution rights and the  Company has  worldwide direct
marketing rights for home videos, books and certain other home
entertainment products based on the television programs.


  Production and Fulfillment

      The  various  editions of Condensed Books are  printed
and bound  by third-party contractors.  The Company is a party
to  an exclusive  agreement through 2002 for printing  English
language Condensed Books distributed in the United States and
Canada.  The Company  solicits  bids  for the printing  and
binding  of  each general book or book series.  Production and
manufacture of music and  video  products  is  typically
accomplished  through  third parties.

      The principal raw material necessary for the publication
of Condensed  Books, series books and general books is  paper.
The Company  has  a number of paper supply arrangements
relating  to paper  for  Condensed Books.  Paper for series
books and  general books is purchased for each printing.  The
Company believes  that existing contractual and other available
sources of paper provide an  adequate supply at competitive
prices.  Third parties arrange for  the  acquisition of some of
the necessary raw materials  for the manufacture of music and
video products.

      Fulfillment,  warehousing,  customer  service  and
payment processing  are conducted principally by independent
contractors. Most of the Company's products are packaged and
delivered to  the Postal  Service  directly  by  the  printer
or  supplier. For information about postal rates and service,
see "Direct Marketing Operations."

      In  all of the Company's direct marketing sales, a
customer may  return any book or home entertainment product to
the Company either  prior  to  payment or after payment for  a
refund.    The Company  believes that its returned goods policy
is essential  to its  reputation and also elicits a greater
number of orders, many of which  are  not  returned  because
of  the  generally  high satisfaction rate of consumers with
the Company's products.  This policy  and  a "first book free"
policy for Condensed  Books  and series books result in a
significant amount of returned goods.

     Sales of the Company's books and home entertainment
products are seasonal to some extent.  In the direct marketing
industry as a whole, the winter months have traditionally had
higher consumer response  than  other times of the year.  Sales
are  also  higher during the pre-Christmas season than in
spring and summer.


Direct Marketing Operations

      The sale of magazine subscriptions, Condensed Books,
series books,  general  books,  music and video  products,  as
well  as certain  other  products,  is  accomplished
principally  through direct mail solicitations to households on
the Company's customer lists,  usually accompanied by
sweepstakes entries and,  in  some cases,  premium merchandise
offers.  For many years  the  Company has  been  acknowledged
as a pioneer and innovator in the  direct mail industry.

      As  part  of its growth strategy, the Company has begun
to pursue  increased  distribution of its  products  through
direct response channels other than direct mail, such as direct
response television,  telemarketing and the Internet, as well
as  expanded direct  marketing channels, such as catalogs and
clubs.  Under  a September  1995  agreement, the Company and
Avon  Products,  Inc. ("Avon")  are  testing  door-to-door
sales  of  Reader's  Digest magazine subscriptions  and  books
to  be  offered   by Avon representatives  in two countries
outside of the  United  States. Also, in August 1996, the
Company entered into an agreement  with Spiegel  Inc.  to
conduct  a two-year  test  that  will  involve development  of
jointly  branded catalogs  and  the  taking  and fulfillment by
Spiegel Inc. of orders from new Company catalogs.

      The  Company  is  adapting the editorial  content  and
the marketing   methods  of  its  magazines  and   books   and
home entertainment products to new technologies, such as
computer  online  services.   In 1997, the Company launched
Reader's  Digest World,  a World Wide Web site for shopping and
information  about the Company's products.

      To  promote the sale of its products in the United
States, the  Company  usually  offers a sweepstakes  in  its
promotional mailings.  Prizes totaled about $15 million for the
1997  edition of The sweepstakes.   Generally,  each   of   the
Company's international  subsidiaries sponsors  its  own
sweepstakes,  the mechanics  of  which  vary  from
jurisdiction  to  jurisdiction, depending upon local law.

      From  time  to time, the Company is involved in
proceedings concerning  its direct marketing promotions.  Also
from  time  to time,  more restrictive laws or regulations
governing sweepstakes or   direct  marketing  are  considered
in  some  jurisdictions, principally  in Europe.  The Company
does not believe  that  such proceedings  and  proposed  laws
and  regulations  will  have  a material   adverse  effect  on
the  Company's  direct  marketing business.

      The  Company  is  subject to postal rate  increases,
which affect its product deliveries, promotional mailings and
billings. Postage  is  one  of  the  Company's  largest
expenses  in its promotional and billing activities.  In the
past, the Company has had  sufficient advance notice of most
increases in postal  rates so  that  the  higher rates could be
factored into the  Company's pricing strategies and operating
plans.  Because increased prices (or  increased  delivery
charges paid by customers)  may  have  a negative effect on
sales, the Company may strategically determine from  time  to
time  the extent, if any,  to  which  these  cost increases are
passed on to its customers.

      The  Company  relies  on  postal delivery  service  in
the jurisdictions  in which it operates for timely  delivery
of  its products and promotional mailings.  In the United
States and most international    markets,   delivery   service
is    generally satisfactory.    Some   international
jurisdictions,   however, experience periodic work stoppages in
postal delivery service  or less  than  adequate postal
efficiency, although  these  problems have not had a
significant impact on the Company.

      In  some  states in the United States and in  some
foreign jurisdictions, some or all of the Company's products
are  subject to  sales  tax  or  value  added tax.   Tax,  like
delivery,  is generally stated  separately  on  bills  where
permitted   by applicable law.  Nonetheless, tax increases or
imposition of  new taxes increases the total cost to the
customer and thus may  have a  negative  effect  on sales.
Moreover, in jurisdictions  where applicable  tax  must  be
included in the  purchase  price,  the Company may be unable to
fully recover from customers the  amount of any tax increase or
new tax.


Management Information Systems and Customer List Enhancement

      The size and quality of the Company's computerized
customer list  of  current  and prospective customers in each
country  in which  it  operates contribute significantly to its
business  and the  Company  is constantly striving to improve
its  lists.  The Company  believes that its United States list
of over 50  million households--over  half  the total number
of  households  in  the country--is  one  of  the largest
direct response  lists  in  the United  States.   The
Company's international  lists  include  a comparable number of
households, in the aggregate.

      The Company is making and will continue to make
significant investments in management information systems in
order to improve its operating  efficiencies,  increase  the
level  of  service provided to its customer base and facilitate
globalization of the Company.

      List  management activity is limited in some
international subsidiaries because local jurisdictions,
particularly in Europe, have  data protection laws or
regulations prohibiting or limiting the  exchange  of  such
information.  Certain jurisdictions  also prohibit  the
retention of information, other than certain  basic facts,
about noncurrent customers.  Although data protection laws in
effect  from  time  to  time may hinder  the  Company's  list
enhancement capacity, the Company believes that current laws
and regulations   do  not  prevent  the  Company  from
engaging   in activities necessary to its business.
Special Interest Magazines

      The  Company  publishes several special interest
magazines that it deems consistent with its image, editorial
philosophy and market   expertise.   The  Family  Handymanr
magazine   provides instructions  and guidance for "do-it-
yourself" home  improvement projects.  New Choices: Living Even
Better After 50r magazine  is aimed  at  active,  mature
readers and provides  information  on entertainment,  travel,
health  and  leisure  time   activities. American Health for
WomenTM magazine provides helpful information on  medicine,
nutrition, psychology and fitness as those  issues relate   to
women.   In  1997,  the  Company  acquired  Walkingr magazine,
which provides information on health and  fitness  for walking
enthusiasts.  These magazines are sold  by  subscription and on
the newsstand.  Like most magazines, the Company's special
interest  magazines are highly dependent on advertising
revenue. Each  of  these  magazines publishes 10 issues per
year,  except Walking,  which publishes six times per year.
The  Company  also publishes  Moneywise  magazine, a  magazine
devoted  to  helping families manage their finances, in the
United Kingdom.

      The following table sets forth the circulation rate base
of each of the Company's United States special interest
magazines at June 30, 1997, as well as the number of
advertising pages carried for  the fiscal year ended June 30,
1997.  Circulation rate  base data is as reported to ABC.

                                                    Number of
                                    Circulation   Advertising
                                     Rate Base    Pages Carried
     The Family Handyman              1,000,000       580
     American Health for Women          900,000       461
     New Choices: Living Even Better    600,000       486
       After 50
     Walking                            625,000       327


      Moneywise had a circulation rate base of 107,800 as of
the end of fiscal 1997 and carried 515 pages of advertising.

     Of total revenues of $81.9 million for the Company's
special interest magazines  in  fiscal  1997,  61%  was
generated   by circulation revenues and 39% by advertising
revenues.

      The  U.S.  magazines  are promoted to  the  Company's
U.S. customer  list and the Company's other products are
promoted  to each  magazine's  customer list, as appropriate.
This  strategy helps  to  expand  the Company's customer base
for  all  of  its products.


QSP, Inc.

      The  Company's  wholly owned subsidiaries,  QSP,  Inc.
and Quality  Service  Plan,  Inc. ("QSP"), are  in  the
business  of assisting  schools  and  youth groups in the
United  States  and Canada  in their fundraising efforts.
QSP's staff helps  schools and youth  groups  prepare
fundraising  campaigns   in   which participants  sell
magazine  subscriptions,  music   and   video products, books,
food and gifts.  QSP derives its revenue from  a portion of the
proceeds of each sale.  Several hundred publishers (including
the Company) make magazine subscriptions available  to QSP at a
substantial discount.  QSP also obtains discounted music
products  from a large music publisher.  Processing  of
magazine subscription  orders  and payments is performed  for
QSP  by  an independent contractor.


Competition and Trademarks

      Although  Reader's Digest magazine is a  unique  and
wellestablished  institution in the magazine publishing
industry,  it competes  with other magazines for subscribers
and with magazines and all  other  media,  including  radio
and  television,  for advertising.   The  Company  believes
that  the  extensive and longstanding international operations
of Reader's Digest  provide the Company with a significant
advantage over competitors seeking to establish a global
publication.

      The  Company owns numerous trademarks that it uses  in
its business  worldwide.   Its  two  most  important
trademarks  are "Reader's  Digest" and the "Pegasus" logo.  The
Company  believes that  the  name  recognition, reputation and
image  that  it  has developed  in each of its markets
significantly enhance  customer response  to  the  Company's
direct marketing  sales  promotions. Accordingly,  trademarks
are important to the Company's  business and the Company
aggressively defends its trademarks.

     The Company believes that its name, image and reputation,
as well  as the quality of its customer lists, provide a
significant competitive advantage over many other direct
marketers.  However, the  Company's books and home
entertainment products business  is in  competition with
companies selling similar products at retail as  well  as  by
direct  marketing.   Because  tests  show  that consumers'
responses  to  direct  marketing  promotions  can  be adversely
affected  by the overall volume  of  direct  marketing
promotions,  the Company is also in competition  with  all
other direct  marketers,  regardless  of  whether  the
products  being offered are similar to the Company's products.

      Each  of  the  Company's special interest magazines  is
in competition  with other magazines of the same genre  for
readers and  advertising.   Nearly all of the Company's
products  compete with  other  products and services that
utilize leisure  activity time or disposable income.


Employees

      As  of  June  30, 1997, the Company employed
approximately 5,900 persons worldwide; approximately 2,200 were
employed in the United   States   and  3,700  were  employed
by  the   Company's international subsidiaries.  The Company's
relationship with  its employees is generally satisfactory.


Executive Officers of the Company

     The following paragraphs set forth the name, age and
offices with  the  Company  of  each  present executive
officer  of  the Company,  the  period  during which each
executive  officer  has served  as  such and each executive
officer's business experience during the past five years:

    Name and Age        Positions and Offices With the Company
George V. Grune  (68)      Mr. Grune returned to the Company to
                           serve as   Chairman  of  the  Board
                           and ChiefExecutive  Officer  on
                           August  10,  1997, after having
                           previously served as Chairman of
                           the  Board  of the Company  until
                           his retirement  in August 1995
                           and  as Chief Executive Officer
                           until August 1994. Mr.Grune first
                           joined the Company in 1960.
                           
Melvin R. Laird  (75)       Mr.  Laird has been a member of the
                            Board of  Directors of the Company
                            since  1990. He  has  served  as
                            Senior Counsellor for
                            national  and international
                            affairs  since 1974  and  was
                            elected to the  additional position
                            of Vice President in 1989. Mr.
                            Laird joined the Company in 1974.

M. John Bohane  (61)        Mr.  Bohane has been Senior Vice
                            President of the Company and
                            President, International
                            Operations since  September 8,
                            1997.  He first joined the Company
                            in 1964  and  served in a number of
                            executive capacities,  including
                            President,  Direct Marketing Group,
                            until leaving the Company in  July
                            1991.   Prior to  rejoining the
                            Company,  Mr.  Bohane served as
                            President and  Chief  Executive
                            Officer of  Newfield Publications
                            from April 1994 to July  1995 and
                            as Vice  President  of   Corporate
                            Database  Marketing of Time-Warner,
                            Inc., from April 1992 to December
                            1993.

Peter  J.C. Davenport (57)  Mr. Davenport  has  been   Senior
                            Vice President, Global Marketing of
                            the Company since  September 8,
                            1997.   He  served  as Senior
                            Vice  President,  Global   Direct
                            Marketing  from  January  1994
                            until his retirement  in  March
                            1997  and  as  Vice President,
                            Global Direct  Marketing  from
                            September  1991  to  January  1994.
                            Mr.Davenport  first  joined  the
                            Company  in 1958.
                            
Richard A. Garvey (49)      Mr. Garvey has been Senior Vice
                            President,Corporate Planning  and
                            New Business Development  since
                            September 8,  1997 and was  a Vice
                            President and Group President,
                            Global  Marketing and New Channels
                            of the Company from the time he
                            joined the Company in September
                            1996. He was previously  Vice
                            President,  Marketing  of LEGO
                            Systems, Inc. (children's
                            educational and entertainment
                            products).
                            
                            
Marcia M. Lefkowitz (53)    Ms.  Lefkowitz  has  been  a
                            Senior  Vice President and
                            President of Reader's Digest U.S.A.
                            since  September 8, 1997.Prior
                            thereto,  Ms.  Lefkowitz served as
                            the Company's  Senior Consultant
                            for Marketing and   Marketing
                            Systems  Projects from
                            November 1995,   as   Vice
                            President, Marketing,  Reader's
                            Digest  U.S.A.  from July   1993,
                            Vice  President, MarketingSystems
                            from  February  1993  and Vice
                            President, Global New Business
                            Development prior  thereto.  Ms.
                            Lefkowitz joined  the Company in
                            1967.
                            
Barbara J. Morgan (52)      Mrs. Morgan has been Senior Vice
                            President and Editor-in-Chief,
                            Books and Home Entertainment since
                            April 1995. She  was Vice President
                            and Editor-in-Chief, Condensed
                            Books from August 1987 to  April
                            1995.  She joined the Company in
                            1973.
                            
George S. Scimone (50)      Mr. Scimone  has been Vice President
                            and Chief  Financial Officer  of
                            the  Company since  September 8,
                            1997.  Prior  thereto, he  was  a
                            Vice President and  President,
                            Reader's Digest U.S.A. from
                            November  1996 and Vice
                            President and Corporate Controller
                            from September 1995.  Prior  to
                            joining  the  Company,  Mr.Scimone
                            was Business Chief Financial
                            Officer, Electrical  Distribution
                            and  Control  of General Electric
                            Company.
                            
Christopher P. Willcox (50) Mr.Willcox has beenSenior Vice
                            President and Editor-in-Chief of
                            Reader's Digest  magazine  since
                            March  1996.   He served   as
                            World-wide  Executive  Editor from
                            June  1994 to March 1996,
                            Executive Editor,  International
                            from  October  1991 to   June1994
                            and  Assistant  Managing Editor
                            from 1990 to 1991.  He joined  the
                            Company in 1988.
                            
                            
                            
      Pursuant to the By-Laws of the Company, officers  serve
at the  pleasure of the Board of Directors.  Officers of the
Company are  elected annually to serve until their respective
successors are elected and qualified.


ITEM 2. PROPERTIES

The Company's headquarters and principal operating
facilities are situated on approximately 120 acres in
Westchester County,  New  York, much of which the Company
acquired  in  1940. The site includes five principal buildings
aggregating approximately   697,000   square  feet  that
house executive, administrative,  editorial  and  operational
offices,  and  data processing  and other facilities.  In New
York City, the  Company leases  approximately 181,000 square
feet of office  space  in  a total of three buildings, portions
of which are used as editorial offices  for its books and home
entertainment products  business, as  advertising sales offices
for Reader's Digest magazine and as offices  for  the
Company's  special  interest  magazines.   The Company  leases
space totaling approximately 52,000  square  feet for  an
editorial  bureau, advertising sales offices  and  other
purposes in various cities in the United States.  A subsidiary
of the  Company  also leases 36,000 square feet of office
space  in Westport, Connecticut.

      QSP  leases  approximately 163,000 square feet in
Conyers, Georgia,  4,000 square feet in Danbury, Connecticut,
and  21,000 square feet in Ridgefield, Connecticut.

     The  Company  owns approximately 1,613,200 square  feet
and leases  approximately 531,000 square feet of  space
outside  the United  States  that  is utilized by the Company's
international operating     subsidiaries principally as
headquarters, administrative  and editorial offices and
warehouse  space. The foregoing properties owned by the Company
include 207,000  square feet  of  space in Swindon, England, in
a building owned  by  the Company on land leased by the Company
through 2076.

      The  Company believes that its current facilities,
together with expansions and upgrading of facilities presently
underway or planned,are  adequate  to  meet  its  present  and
reasonably foreseeable needs.  The Company also believes that
adequate space will be available to replace any leased
facilities for which  the leases expire in the near future.


ITEM 3.LEGAL PROCEEDINGS

      The  Company and its subsidiaries are defendants in
various lawsuits  and  claims arising in the regular course of
business. Based on the opinions of management and counsel for
such matters, recoveries,  if  any,  by  plaintiffs  and
claimants  would  not materially  affect the financial position
of the Company  or  its results of operations.


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

     No matter was submitted to a vote of security holders of
the Company  during the fourth quarter of the fiscal year ended
June 30, 1997.


                            PART II
                               
                               
ITEM 5.MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
       STOCKHOLDER MATTERS
       
      The  information  contained  under  the  caption
"Selected Quarterly Financial Data and Dividend and Market
Information"  in the  Company's 1997 Annual Report to
Stockholders is incorporated herein by reference.


ITEM 6.SELECTED FINANCIAL DATA

      The  information  contained  under  the  caption
"Selected Quarterly Financial Data and Dividend and Market
Information" and "Selected Financial Data" in the Company's
1997 Annual Report  to Stockholders is incorporated herein by
reference.


ITEM 7.MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
       CONDITION AND RESULTS OF OPERATION
       
      The  information contained under the caption
"Management's Discussion and Analysis" in the Company's 1997
Annual  Report  to Stockholders is incorporated herein by
reference.


ITEM 8.FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

     The Company's Consolidated Financial Statements appearing
on pages 18  through  29  of the Company's 1997  Annual  Report
to Stockholders,  together  with the report  thereon  of  KPMG
Peat Marwick  LLP  appearing  on page 30, are incorporated
herein  by reference.


ITEM 9.CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
       ACCOUNTING AND FINANCIAL DISCLOSURE
       
     None.


                           PART III
                               
                               
ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

      Information with respect to directors of the Company
under the  caption  "Proposal 1: Election of Directors"  in
the  Proxy Statement  for the Annual Meeting of Stockholders of
the  Company to  be  held  on  December  12, 1997 is
incorporated  herein  by reference.  Information with respect
to executive officers of the Company  appears  under the
caption "Executive  Officers  of  the Company" in Item 1 of
Part I hereof and is incorporated herein by reference.


ITEM 11.   EXECUTIVE COMPENSATION

     Information with respect to executive compensation under
the captions "Executive Compensation," "Report of the
Compensation  & Nominating  Committee"  and  "Performance
Graph"  in  the  Proxy Statement  for the Annual Meeting of
Stockholders of the  Company to  be  held  on  December  12,
1997 is  incorporated  herein  by reference.


ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT

      Information with respect to security ownership  of
certain beneficial  owners  and  management  under  the
caption  "Equity Security Ownership" in the Proxy Statement for
the Annual Meeting of Stockholders of the Company to be held on
December 12, 1997 is incorporated herein by reference.


ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

      Information  with  respect  to  certain  relationships
and related  transactions under the caption "Executive
Compensation-Miscellaneous" in the Proxy Statement for the
Annual  Meeting  of Stockholders of the Company to be held on
December  12,  1997  is incorporated herein by reference.

                            PART IV
                               
                               
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON
         FORM 8-K

(a) (1) Financial Statements
       See  the  Index  to Consolidated Financial  Statements
       on page 17 of this Report.
       
   (2) Financial Statement Schedules
       All  schedules  have  been omitted since  the
       information required  to  be  submitted  has  been
       included  in   the Consolidated Financial Statements or
       Notes thereto or  has been omitted as not applicable or
       not required.
       
   (3) Exhibits

3.1.1   Restated Certificate of Incorporation of The  Reader's
     Digest Association, Inc. filed with the State of Delaware
     on February  7, 1990 filed as Exhibit 3.1.1 to the
     registrant's Form  10-K for the year ended June 30, 1993,
     is incorporated herein by reference.
     
3.1.2  Certificate  of  Amendment  of  the  Certificate of
     Incorporation of The Reader's Digest Association, Inc.
     filed with  the  State of Delaware on February 22, 1991
     filed  as Exhibit  3.1.2 to the registrant's Form 10-K
     for  the  year ended June 30, 1993, is incorporated herein
     by reference.
     
3.2  Amended and  Restated  By-Laws  of  The  Reader's   Digest
     Association,  Inc., effective February  22,  1991  filed
     as Exhibit 3.2 to the registrant's Form 10-K for the year
     ended June 30, 1993, is incorporated herein by reference.
     
10.1 The  Reader's Digest Association, Inc. Management
     Incentive Compensation Plan (Amendment and Restatement as
     of  July  1, 1994)  filed as Exhibit 10.1 to the
     registrant's  Form  10-K for the year ended June 30, 1994,
     is incorporated herein  by reference.*
     
10.2 The Reader's Digest Association, Inc. 1989 Key Employee
     Long Term Incentive  Plan  filed  as  Exhibit   10.2 to
     the Registration  Statement on Form S-1  (Registration
     No.  33 -32566)  filed  by  registrant  on  December  19,
     1989, is incorporated herein by reference.*
     
     10.3 The Reader's Digest Association, Inc. 1994 Key
     Employee Long Term Incentive  Plan  filed  as  Exhibit
     10.17 to the registrant's Form 10-Q for the quarter ended
     March 31, 1994, is incorporated herein by reference.*
     
10.4 The  Reader's Digest Association, Inc. Deferred
     Compensation Plan (Amendment and Restatement as of July 8,
     1994) filed as Exhibit  10.4  to the registrant's Form 10-
     K  for  the  year ended June 30, 1994, is incorporated
     herein by reference.*
     
10.5 The  Reader's  Digest Association, Inc. Severance  Plan
     for Senior  Management (Amendment and Restatement as of
     July  8, 1994)  filed as Exhibit 10.5 to the registrant's
     Form  10-K for the year ended June 30, 1994, is
     incorporated herein  by reference.*
     
     *Denotes a management contract or compensatory plan.
                               
10.6 The  Reader's  Digest Association, Inc. Income
     Continuation Plan  for Senior Management (amended and
     restated) filed  as Exhibit  10.5  to the registrant's
     Form 10-K  for  the  year ended June 30, 1993, is
     incorporated herein by reference.*

10.7 Excess  Benefit  Retirement  Plan  of  The  Reader's
     Digest Association, Inc. (Amendment and Restatement as of
     July  1, 1994)  filed as Exhibit 10.7 to the registrant's
     Form  10-K for the year ended June 30, 1994, is
     incorporated herein  by reference.*
     
     
     
10.8 Supplemental Retirement Benefit Agreement dated as of
     August 25,  1988 between the registrant and Kenneth A.
     Gordon filed as  Exhibit 10.10 to the Registration
     Statement on Form  S-1 (Registration No. 33-32566) filed
     by registrant on  December 19, 1989, is incorporated
     herein by reference.*
     
10.9 Supplemental  Retirement  Benefit  Agreement  dated  as of
     December  12,  1989  between the registrant  and  Thomas
     M. Kenney filed as Exhibit 10.21 to the registrant's Form
     10-K for the year ended June 30, 1991, is incorporated
     herein  by reference.*
     
10.10 Supplemental Retirement Benefit Agreement dated as  of
     September  13,  1991  between the registrant  and  James
     P. Schadt filed as Exhibit 10.16 to the registrant's Form
     10-K for the year ended June 30, 1993, is incorporated
     herein  by reference.*
     
10.11 Supplemental Retirement Benefit Agreement dated as  of
     June  8,  1994 between the registrant and Martin J.
     Pearson filed as Exhibit 10.15 to the registrant's Form 10-
     K for the year   ended  June  30,  1995  is  incorporated
     herein by reference.*

10.12  The  Reader's  Digest 1992 Executive  Retirement  Plan
     (Amendment and Restatement as of October 10, 1996).*

10.13  The Reader's  Digest  Association,  Inc.   Deferred
      Compensation  Plan  for  Non--Employee  Directors  filed
      as Exhibit  10.20 to the registrant's Form 10-K  for  the
      year ended June 30, 1990, is incorporated herein by
      reference.*

10.14  Resolution of the Board of Directors of the registrant
     adopted January 10, 1986 relating to compensation for
     former members of the Board of Directors filed as Exhibit
     10.19  to the  registrant's Form 10-K for the year ended
     June 30, 1995 is incorporated herein by reference.*

10.15  Agreement dated as of August 22, 1996 between the
     registrant and Thomas M. Kenney, filed as Exhibit 10.15 to
     the registrant's Form 10-K for the year ended June 30,
     1996, is incorporated herein by reference.*

10.16  Agreement dated as of June 10, 1996 between the
     registrant and Kenneth A. Gordon, filed as Exhibit 10.16
     to the registrant's Form 10-K for the year ended June 30,
     1996, is incorporated herein by reference.*

10.17  The Reader's  Digest  Association,  Inc.  Executive
     Financial  Counseling  Plan,  filed  as  Exhibit   10.17
     to  the registrant's  Form  10-K for the year ended  June
     30,  1996,  is incorporated herein by   reference.*
     
     *Denotes a management contract or compensatory plan.

10.18  Amendment No. 1 to The Reader's Digest Association, Inc.
     Management Incentive Compensation Plan (effective as of
     April 11, 1996) filed as Exhibit 10.1.1 to the
     registrant's Form 10-Q for the quarter ended March 31,
     1996, is incorporated herein by reference.*
     
10.19 Amendment No. 1 to The Reader's Digest Association, Inc.
     1994 Key Employee Long Term Incentive Plan (effective as
     of April 11, 1996) filed as Exhibit 10.3.1 to the
     registrant's Form 10-Q for the quarter ended March 31,
     1996, is incorporated herein by reference.*
     
10.20 Termination Agreement dated as of April 1, 1996 between
     the registrant and James P. Schadt, filed as Exhibit 10.23
     to the registrant's Form 10-Q for the quarter ended March
     31, 1996, is incorporated herein by reference.*
     
10.21 Termination Agreement dated as of April 1, 1996 between
     the registrant and Paul A. Soden, filed as Exhibit 10.25
     to the registrant's Form 10-Q for the quarter ended March
     31, 1996, is incorporated herein by reference.*
     
10.22 Termination Agreement dated as of April 1, 1996 between
     the registrant and Stephen R. Wilson, filed as Exhibit
     10.26 to the registrant's Form 10-Q for the quarter ended
     March 31, 1996, is incorporated herein by reference.*
     
10.23  Termination Agreement dated as of April 1, 1996 between
     the registrant and Martin J. Pearson, filed as Exhibit
     10.24 to the registrant's Form 10-Q for the quarter ended
     December 31, 1996, is incorporated herein by reference.*
     
10.24 Agreement dated June 18, 1997 between the registrant and
     James P. Schadt.*

10.25 Agreement dated as of August 1, 1997 between the
      registrant and Martin J. Pearson.*
                               
10.26   Agreement dated August 10, 1997 between the registrant
     and James P. Schadt.*
     
10.27  US$400,000  Competitive Advance and  Revolving  Credit
     Facility Agreement dated as of November 12, 1996 between
     the registrant, the Borrowing Subsidiaries, The Chase
     Manhattan Bank and J.P. Morgan Securities Inc., filed as
     Exhibit 10.23 to the registrant's Form 10-Q for the
     quarter ended December 31, 1996, is incorporated herein by
     reference.
     
13   Financial  information appearing at pages 12 through  31
     of the   registrant's  1997  Annual  Report  to
     Stockholders, together  with the report thereon of KPMG
     Peat  Marwick  LLP appearing on page 30 (furnished for the
     information  of  the Securities and Exchange Commission
     only and not to be deemed filed as part of this Annual
     Report on Form 10-K, except for the  portions  thereof
     that  are specifically  incorporated herein by reference).

21   Subsidiaries of the registrant.

23   Consent of KPMG Peat Marwick LLP.

27   Financial Data Schedule.


*Denotes a management contract or compensatory plan.


(b)  Reports on Form 8-K

     During  the  three months ended June 30, 1997,  the
     Company filed the following report on Form 8-K:
     
     Form  8-K  dated April 23, 1997 containing  a  copy  of
     the Company's  quarterly  earnings news release  for  the
     third fiscal  quarter  and  a copy of the Company's  news
     release announcing its $400 million investment program
     
                          SIGNATURES
                               
      Pursuant to the requirements of Section 13 or 15(d) 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.
                        By: George V. Grune
                           (George V. Grune)
                           Chairman and Chief Executive Officer



Date:  September 25, 1997


      Pursuant to the requirements of the Securities Exchange
Act of  1934,  this  report has been signed below  by  the
following persons on behalf of the registrant and in the
capacities and  on the dates indicated.

Signature               Title                     Date


George V. Grune      Chairman and Chief    September 25, 1997
(George V. Grune)    Executive Officer
                     and Director

Melvin R. Laird      Vice President and    September 25, 1997
(Melvin R. Laird)     Senior Counsellor
                      and Director

George S. Scimone     Vice President and   September 25, 1997
(George S. Scimone)   Chief Financial
                       Officer

John S. Gross         Vice President and   September 25, 1997
(John S. Gross)       Controller
                      (Chief Accounting
                       Officer)

Lynne V. Cheney        Director            September 25, 1997
(Lynne V. Cheney)

M. Christine DeVita    Director            September 25, 1997
(M.Christine DeVita)

James E. Preston       Director            September 25, 1997
(James E. Preston)

Robert G. Schwartz     Director            September 25,1 997
(Robert G. Schwartz)

Walter V. Shipley      Director            September 25, 1997
(Walter V. Shipley)

C.J. Silas             Director            September 25, 1997
(C.J. Silas)

William J. White       Director            September 25, 1997
(William J. White)


                               
                               
                               
                               
                               
                               
             THE READER'S DIGEST ASSOCIATION, INC.
                               
                               
                      INDEX TO CONSOLIDATED
                     FINANCIAL STATEMENTS

Report of KPMG Peat Marwick LLP, Independent Auditors*

Financial Statements:

  Consolidated Statements of Income--For the Years Ended June
       30, 1997, 1996 and 1995                                     *

   Consolidated Balance Sheets--June 30, 1997 and 1996             *

  Consolidated Statements of Cash Flows--For the Years Ended
     June 30, 1997,1996 and 1995                                   *

 Consolidated Statements of Changes in Stockholders' Equity--
       For the Years Ended June 30, 1997, 1996 and 1995            *

   Notes to Consolidated Financial Statements                     *



____________
      *Incorporated  by  reference to the Company's  1997
Annual Report to Stockholders.  See Item 8 of the Annual Report
on  Form 10-K.