Noting that viewing reading as a communicative act can heighten educators' awareness of the ways in which one story can be embedded within another, this report presents and discusses several examples of stories within stories. The report discusses the various participants communicating in a story within a story--the real and implied authors and the real and implied readers--and the rhetorical devices that create such stories, including explicit embedding, commentary, irony, unengaged metaphor, engaged metaphor, immersion, and in-effect narration. The report then presents analyses of several basal readers and trade books in terms of embedded stories, and concludes that basal readers neither provide a full range of stories for children nor prepare them for the story types they will encounter later. (FL)