Talk to her about all the amazing things she is good at.
Point out how she's noticed that some of her friends finds some things difficult eg sport, dancing, drawing, maths, making friends, concentrating, being kind, making up games whatever she will have noticed that others find some things difficult.
Tell her she's just finding reading a bit difficult at the moment, but she brilliant at other things.
So she can see everyone is good at some things and finds some other things hard, just like her.
Her hard thing at the moment is reading, but tell her she will get there with it likeeveryone else, and when she does it will be brilliant becaus she can read all the stories she loves, but until then you can you'll keep on reading them to her because books and stories are so wonderful (I bet she loves books and stories and has a brilliant imagination doesn't she??).
Tell her she has NOT got special needs, she's just like everyone else but her hard thing is reading whereas Sophie/Ella/whoever s hard thing is swimming/going to brownies/maths/whatever. She is just like her freiends. All learning new things and finding some things hard.
She does not need to know about the term special needs, it meaningless to her.
My 8yr old son is dyslexic. He doesn't even know he's dyslexic at this point. He knows his spelling isn't good, he knows he's only recently got good at reading but that's Ok cos now he's racing through the Roald Dhal books and has forgotten he ever found it difficult, and he knows he's a brilliant drawer, really popular, knows loads of historical facts, makes up the best stories and is a wonderful performer.
end of Yr 2 I was beside myself with anxiety that his, at that time significant reading difficulties, would destroy his self esteem and his love of school and learning, but I'm now relaxed as he's learnt to accept his weaknesses and recognise his strengths and is doing brilliantly.
Your DD will be OK
.
Despite that twat.