<PAGE>1
                              UNITED STATES
                   SECURITIES AND EXCHANGE COMMISSION
                     	WASHINGTON, D.C. 20549

                           	FORM 10-Q


(X)	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES 
    EXCHANGE ACT OF 1934

   	For the quarterly period ended October 3, 1998  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	                      2-20910                       

                                TRUSERV 
                              CORPORATION                                     
             (Exact name of registrant as specified in its charter)

	                DELAWARE                     	     36-2099896    
  	(State or other jurisdiction of            	(I.R.S. Employer
  	incorporation or organization)                	Identification No.)

  	8600 West Bryn Mawr Avenue
	       Chicago, Illinois                       	 60631-3505  
  	(Address of principal executive offices)     	  (Zip Code)
                                (773) 695-5000                                
(Registrant's telephone number, including area code)

                                 not applicable                                 
      (Former name, former address and former fiscal year,
                  if changed since last report)

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 number of shares outstanding of each of the issuer's classes
of common stock, as of October 31, 1998.

        Class A Common Stock, $100 Par Value.          492,609 Shares.
        Class B Common Stock, $100 Par Value.        1,770,941 Shares.


<PAGE>2

             	PART I - FINANCIAL INFORMATION


Item 1.     FINANCIAL STATEMENTS



                      	TRUSERV CORPORATION

              	CONDENSED CONSOLIDATED BALANCE SHEET

                        	(000's Omitted)



<TABLE>
<CAPTION>
                                                  October 3,     December 31,
                                                    1998             1997   
                                                  ---------     ------------
                                                 (UNAUDITED)                

<S>                                            <C>              <C>
ASSETS
Current assets:
 Cash and cash equivalents                      $     1,694      $     2,224
 Accounts and notes receivable                      559,941          476,527
 Inventories                                        644,826          543,946
 Prepaid expense                                     21,592           16,092
                                                  ---------        ---------
 Total current assets                             1,228,053        1,038,789

Properties less
 accumulated depreciation                           272,014          241,236

Goodwill, net                                       109,629          107,711

Other assets                                         60,791           51,177
                                                 ----------       ----------  
TOTAL ASSETS                                     $1,670,487       $1,438,913
                                                 ==========       ==========

</TABLE>

   	See Notes to Condensed Consolidated Financial Statements.

<PAGE>3
                      	TRUSERV CORPORATION

              	CONDENSED CONSOLIDATED BALANCE SHEET

                        	(000's Omitted)
<TABLE>
<CAPTION>
                                                    October 3,   December 31,
                                                        1998           1997   
                                                    -----------  -----------
                                                     (UNAUDITED)
<S>                                                 <C>          <C>

LIABILITIES AND CAPITALIZATION

Current liabilities:
 Accounts payable and accrued expenses               $  530,634   $  572,565
 Short-term borrowings                                  337,014      215,467
 Current maturities of notes,
   long-term debt and lease obligations                  64,580       62,640
 Patronage dividends payable in cash                      5,585       12,142
                                                    -----------  ----------- 
Total current liabilities                               937,813      862,814
                                                    -----------  -----------
Long-term debt and obligations under
 capital leases                                         323,971      169,209
                                                     ----------  -----------
Capitalization:
 Promissory (subordinated) and installment notes        170,843      172,579
 Class A common stock and partially paid subscriptions
   authorized 750,000 shares; issued and fully paid
   406,388 and 387,240 shares; issued 162,700 and 
   144,865 shares (net of receivable of $6,836,000 
   and $6,269,000); subscribed 5,010 shares (net 
   of stock subscription receivable of $20,000 
   in 1997).                                             49,171       47,423
 Class B nonvoting common stock and
   paid-in capital; authorized 4,000,000 shares;
   issued and fully paid, 1,776,945 and 1,681,934 
   shares; issuable as partial payment of patronage 
   dividends 177,655 shares as of December 31, 1997.    189,151      187,259

 Retained earnings                                          931          685
                                                     ----------  -----------
                                                        410,096      407,946
 Foreign currency translation adjustment                 (1,393)      (1,056)
                                                     ----------  -----------
        Total capitalization                            408,703      406,890
                                                     ----------  -----------
TOTAL LIABILITIES AND CAPITALIZATION                 $1,670,487   $1,438,913
                                                     ==========  ===========
</TABLE>


      	See Notes to Condensed Consolidated Financial Statements.



<PAGE> 4

                          TRUSERV CORPORATION

            	CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

                           	(000's Omitted)

                              (UNAUDITED)	



<TABLE>
<CAPTION>
                         FOR THE THIRTEEN           FOR THE THIRTY-NINE
                          WEEKS ENDED                  WEEKS ENDED              
                    --------------------------   --------------------------

                     October 3, September 27,    October 3,   September 27,
                        1998          1997         1998           1997

                    -----------  -------------   -----------  -------------

			
<S>                    <C>          <C>          <C>         <C>
Revenues                $1,078,481   $1,036,622   $3,264,135  $2,243,388
                        ----------   ----------   ----------  -----------
Cost and expenses:

 Cost of revenues          990,675      952,086   2,995,703    2,068,005
 Warehouse, general and
  administrative            68,736       66,316     201,076      127,725
 Interest paid to Members    3,766        4,237      11,422       12,789 
 Other interest expense     10,543        5,979      28,456       12,484       
 Other expense (income), net    22          455        (203)         (14)
 Income tax expense            160          160         480          101 
                        ----------   ----------  ----------   ----------
                         1,073,902    1,029,233   3,236,934    2,221,090
                        ----------   ----------  ----------   ----------
Net margin before 
 integration costs           4,579        7,389      27,201       22,298

Integration costs            4,300        1,562       8,342        3,594
                        ----------   ----------  ----------   ----------
Net margins             $      279   $    5,827  $   18,859    $  18,704
                        ==========   ==========  ==========   ==========

</TABLE>

       	See Notes to Condensed Consolidated Financial Statements.

<PAGE> 5





                          TRUSERV CORPORATION

               CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

                      FOR THE THIRTY-NINE WEEKS ENDED

                             (000's Omitted)

                                 (UNAUDITED)

<TABLE>
<CAPTION>
                                                   October 3,   September 27,
                                                        1998            1997   
                                                   -----------   ------------



<S>                                               <C>             <C>
Operating activities:
Net margins                                        $    18,859     $  18,704
  Adjustments to reconcile net margins to cash and 
   cash equivalents from operating activities:
    Statement of operations components not affecting
     cash and cash equivalents                          25,368        19,931
  Net change in working capital components            (236,953)      (41,802)
                                                    -----------   -----------
  Net cash and cash equivalents used for
   operating activities                               (192,726)      ( 3,167)
                                                    -----------   -----------
Investing activities:
  Additions to properties owned                        (59,614)      (27,509)
  Proceeds from sale of properties owned                 4,716         1,100
  Changes in other assets                               (9,614)       (1,639)
                                                    -----------   -----------
  Net cash and cash equivalents used for
   investing activities                                (64,512)      (28,048)
                                                    -----------   -----------
Financing activities:
  Proceeds from short-term borrowings                  121,547       180,523
  Proceeds from long-term borrowings                   157,616        52,371
  Payment of annual patronage dividend                 (12,142)      (20,699)
  Purchase of common stock, net                           (801)      (19,530)
  Payment of notes,  long-term debt, lease
   obligations                                          (9,512)     (158,236)
                                                    -----------   -----------
Net cash and cash equivalents provided by
 financing activities                                  256,708        34,429
                                                    -----------   -----------

Net increase (decrease) in cash and cash equivalents      (530)        3,214
 Cash and cash equivalents at beginning of the period    2,224         1,662
                                                    -----------   -----------
 Cash and cash equivalents at end of the period     $    1,694    $    4,876
                                                    ===========   ===========

</TABLE>

       See Notes to Condensed Consolidated Financial Statements.

<PAGE> 6

                          TRUSERV CORPORATION

      NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

                         	(UNAUDITED)


NOTE 1 - BUSINESS COMBINATIONS

On July 1, 1997, pursuant to an Agreement and Plan of Merger dated 
December 9, 1996 between Cotter & Company ("Cotter"), a Delaware 
corporation and Servistar Coast of Coast ("SCC"), SCC merged with and 
into Cotter, with Cotter being the surviving corporation (the 
"Merger"). Cotter was renamed TruServ Corporation ("TruServ" or the 
"Company"), effective with the Merger. Each outstanding share of SCC 
Common Stock and SCC Series A Stock (excluding those shares canceled 
pursuant to Article III of the Merger Agreement) were converted into 
the right to receive one fully paid and nonassessable share of TruServ 
Class A common stock and each two outstanding shares of SCC Preferred 
Stock were converted into the right to receive one fully paid and non-
assessable share of TruServ Class B Common Stock.  A total of 270,500 
and 1,170,670 shares of TruServ Class A Common Stock and Class B 
Common Stock, respectively, were issued in connection with the Merger.  
Also 231,000 additional shares of TruServ Class A Common Stock were 
issued in exchange for Class B common stock to pre-Merger Stockholders 
of Cotter to satisfy the Class A Common Stock ownership requirement of 
60 shares per store (up to a maximum of 5 stores) applicable to such 
Members as a result of the Merger.

The Condensed Consolidated Balance Sheets as of October 3, 1998 and 
December 31, 1997 reflect the post-Merger Company.  The financial 
information for the thirty-nine weeks ended October 3, 1998, reflects the 
post-Merger results of the Company. The thirty-nine weeks ended September 
27, 1997  reflect the financial information of the pre-Merger Company 
for the twenty-six weeks ended June 28, 1997 and the results of the post-
Merger Company for the thirteen weeks ended September 27, 1997.

The following summarized unaudited pro forma operating data for the 
thirty-nine weeks ended September 27, 1997 are presented below giving effect
to the Merger, as if it had been consummated at the beginning of the 
period.  These pro forma results have been prepared for comparative 
purposes only and do not purport to be indicative of the results of 
operations that actually would have resulted had the Merger  been in 
effect  on the date indicated, or which may result in the future. The 
pro forma results exclude one-time non-recurring charges or credits 
directly attributable to the transaction. 

The pro forma adjustments consist of  (i) an adjustment for 
amortization of the estimated excess of cost over the fair value of 
the net assets of SCC, (ii) an adjustment for interest expense on 
promissory notes issued in connection with the Merger, (iii) an 
adjustment for interest expenses on short-term borrowings issued in 
connection with the Merger and (iv) an adjustment for incremental 
differences in depreciation expense. 
<TABLE>
<CAPTION>
                                             THIRTY-NINE WEEKS ENDED     
                                             ----------------------- 
                                           October 3,      September 27,
                                                 1998             1997       
                                           ------------    -------------
                                               Actual      Pro Forma (1)
                                           ------------    -------------
                                                   (000's OMITTED)

<S>                                        <C>              <C>
Revenue                                     $3,264,135       $3,135,917

Net margin before integration cost          $   27,201       $   33,289

Net margin                                  $   18,859       $   33,289

  (1) Assumes the Merger was consummated at January 1, 1997.
</TABLE>

<PAGE> 7

To refinance the existing debt of SCC and pay related fees and 
expenses, the Company entered into a revolving loan agreement of up to 
$300,000,000 in short-term credit facilities with a group of banks 
and an additional $100,000,000 of  long-term debt.  

The total purchase price of approximately $141,400,000 was allocated 
to assets and liabilities of the Company based on the estimated fair 
value as of the date of acquisition.  The allocation was based on 
preliminary estimates which could be revised up until July 1, 1998.  
The excess of consideration paid over the estimated fair value of net 
assets acquired in the amount of $113,173,000 has been recorded as 
goodwill and is being amortized on a straight-line basis over forty 
years.

In connection with the purchase business combination, an estimated 
liability of $38,200,000 was recognized for costs associated with the 
Merger plan. The Merger plan specifies that certain former SCC 
positions, approximately 1,200 in total, will be eliminated 
substantially within one year. As of October 3, 1998, approximately 94% 
of these employees have been terminated with the related cost of 
benefits of approximately $10,883,000 charged against the liability. 
The Merger plan specifies the closing of redundant former SCC 
distribution centers and the elimination of overlapping former SCC 
inventory items stockkeeping units substantially within a one-year 
period.  Distribution center closing costs include net occupancy 
and costs after facilities are vacated. In addition, stockkeeping 
unit reduction costs include losses on the sale of inventory items 
which have been discontinued solely as a result of the Merger. As of 
October 3, 1998,  $2,785,000 relating to distribution center closing 
cost and the reduction of stockkeeping units have been charged against 
the liability.  Merger integrations costs of $8,342,000 consist of 
one time non-recurring expenses directly attributable to the Merger 
including distribution center closings, severance pay, information 
service costs and general and administrative costs.

NOTE 2 - GENERAL

The condensed consolidated balance sheet, statement of operations and 
statement of cash flows at and for the period ended October 3, 1998 and 
the condensed  consolidated statement of operations and statement of 
cash flows for the period ended September 27, 1997 are unaudited and, in 
the opinion of the management of the Company, include all adjustments, 
consisting only of normal recurring adjustments, necessary for a fair 
presentation of financial position, results of operations and cash 
flows for the respective interim periods.  The accompanying unaudited 
condensed consolidated financial statements have been prepared in 
accordance with generally accepted accounting principles for interim 
financial information and with the instructions to Form 10-Q and 
Article 10 of Regulation S-X.  Accordingly, they do not include all of 
the information and footnotes required by generally accepted 
accounting principles for complete financial statements.  This 
financial information should be read in conjunction with the 
consolidated financial statements for the year ended December 31, 1997 
included in the Company's  1997 Annual Report on Form 10-K.

NOTE 3 - ESTIMATED PATRONAGE DIVIDENDS

Patronage dividends are declared and paid by the Company after the 
close of each fiscal year. The 1997 annual patronage dividend was 
distributed through a payment of 30% of the total distribution in 
cash, with the balance being paid through the issuance of the 
Company's Class B nonvoting common stock. Such patronage dividends,
consisting of substantially all of the Company's patronage source 
income, have been paid since 1949.  The estimated patronage dividend 
for the thirty-nine weeks ended October 3, 1998 is $18,613,000 compared to 
$24,354,000 for the corresponding period in 1997.

<PAGE> 8

NOTE 4 - INVENTORIES
<TABLE>
<CAPTION>
   Inventories consisted of:                      October 3,    December 31,
                                                      1998            1997
                                                   ---------     -----------
                             		          (UNAUDITED)
                                                          (000's Omitted)     



<S>                                              <C>             <C>
   Manufacturing inventories:
   Raw materials                                  $   4,826       $    4,878
   Work-in-process and finished goods                44,865           29,241
</TABLE>
                                                  ---------       ----------   
                                                     49,691           34,119
   Merchandise inventories                          595,135          509,827
                                                  ---------       ----------
                                                  $ 644,826       $  543,946
                                                  =========       ==========

NOTE 5 - COMPREHENSIVE INCOME

As of January 1, 1998, the Company adopted Statement 130, Reporting 
Comprehensive Income.  Statement 130 establishes new rules for the 
reporting and display of comprehensive income and its components; 
however, the adoption of this Statement had no impact on the Company's 
net margin or capitalization.  Statement 130 requires unrealized 
gains or losses on the Company's foreign currency translation 
adjustments, which prior to adoption were reported separately in 
shareholder's equity to be included in other comprehensive income.   
Comprehensive income for the thirteen weeks ended October 3, 1998 was
$65,000 compared to $5,813,000 for the corresponding period in 1997.
Comprehensive income for the thirty-nine weeks ended October 3, 1998
was $18,522,000 compared to $18,643,000 for the corresponding period
in 1997.
 .
Item 2.	MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION 
     AND RESULTS OF OPERATIONS

BUSINESS COMBINATION

On July 1, 1997, TruServ Corporation (the "Company"), formerly 
Cotter & Company ("Cotter"), merged with Servistar Coast to Coast Corporation 
("SCC") (the "Merger").  The transaction was accounted for using the 
purchase accounting method.  Accordingly, the financial information 
for the thirty-nine weeks ended October 3, 1998 reflects the results of 
the post-Merger Company and the financial information for the thirty-nine 
weeks ended September 27, 1997 reflects the results of the pre-Merger 
Company for the twenty-six weeks ended June 28, 1997 and the results of 
the post-Merger Company for the thirteen weeks ended September 27, 1997.  
To facilitate the comparison of interim results for 1998 and 1997, 
supplemental comparisons have been provided using pro forma financial 
information. This pro forma information has been prepared for 
comparative purposes only and does not purport to be indicative of the 
results of operation that actually would have resulted had the Merger 
been in effect on the dates indicated, or which may result in the future.
<TABLE>
<CAPTION>
                             Thirty-nine weeks ended  Thirty-nine weeks ended
                              October 3, 1998          September 27, 1997     
	 
                                 Actual                Actual   Pro Forma (1)

                           -----------------------    --------  ------------
                                       	(000'S Omitted)

<S>                             <C>                <C>          <C>
Revenue                          $3,264,135         $2,243,388     $3,135,917
Gross margin                        268,432            175,383        218,719
Warehouse, general and 
 administrative expense             201,076            127,725        154,732
Interest  expense                    39,878             25,273         31,767
Merger integration cost               8,342              3,594           --   
Net margin                           18,859             18,704         33,289

 (1) Assumes the Merger was consummated at January 1, 1997.
</TABLE>

<PAGE> 9

THIRTY-NINE WEEKS  ENDED OCTOBER 3, 1998 COMPARED TO THIRTY-NINE WEEKS ENDED 
SEPTEMBER 27, 1997

RESULTS OF OPERATIONS:

Revenues for the thirty-nine weeks ended October 3, 1998 totaled 
$3,264,135,000.  This represented an increase of $1,020,747,000 or 45.5% 
compared to the comparable period last year.  The increase was primarily
due to the addition of Servistar Coast to Coast revenues that
resulted from the July 1, 1997 merger of Cotter and SCC.

Gross margins increased by $93,049,000 or 53.1% and as a percentage of 
revenues, increased to 8.2% from 7.8% for the comparable period last year.
The increase in gross margin percentage resulted primarily from 
increased sales in manufactured products and increased margins from
improved merchandising strategies.  Certain estimates of expenses
are recorded throughout the year including expenses related to
capitalizable inventory related costs. During the thirty-nine weeks,
ended October 3, 1998, the Company recorded an increase of
approximately $4,000,000 of these estimated costs.

Warehouse, general and administrative expenses as a percentage of 
revenues increased to 6.2% from 5.7% compared with the prior year.  
The Company incurred additional warehousing expenses in association 
with commonizing inventory assortments, increased inventory 
levels, and the implementation of the distribution network strategy.  
Many of the potential cost efficiencies related to the Merger 
have not yet been realized and costs should be reduced as the 
Merger strategy is further implemented.  

Interest paid to Members decreased by $1,367,000 or 10.7% primarily due 
to a lower average interest rate and lower principal balance.  Other 
interest expense increased $15,972,000 due to higher borrowings 
compared to the same period last year.  The higher borrowings were 
required because of the increased cash requirement resulting from the 
merger and increased inventory levels.  The effective 
borrowing rate has been lowered due to the renegotiation of the rates 
since the date of the Merger.

Integration costs consist of costs associated with the implementation of
the merger plan.

The combination of increased gross margins, offset by increased
expenses and increased borrowing costs, resulted in a net margin of 
$18,859,000 compared to $18,704,000 for the same period last year.

ACTUAL THIRTY-NINE WEEKS ENDED OCTOBER 3, 1998 COMPARED TO PRO FORMA 
THIRTY-NINE WEEKS ENDED SEPTEMBER 27, 1997 ASSUMING THE MERGER WAS 
CONSUMMATED ON JANUARY 1, 1997

RESULTS OF OPERATIONS:

Revenues for the thirty-nine weeks ended October 3, 1998 totaled 
$3,264,135,000.  This represented an increase of $128,218,000 or 4.1% 
compared to the comparable period last year.  The increase was 
attributable to revenue increases in lumber/building materials and 
manufacturing products.

Gross margins increased by $49,713,000 or 22.7% and as a percentage of 
revenues, increased to 8.2% from 7.0% for the comparable period last 
year.  The increase in gross margins resulted from improved 
merchandising strategies and manufacturing margins.


Warehouse, general and administrative expenses increased by $46,344,000 
or 30.0% and as a percentage of revenues increased to 6.2% from 4.9% for 
the comparable period last year. The Company incurred additional warehousing
expenses in association with commonizing inventory assortments, 
increased inventory levels, and the implementation of the distribution 

<PAGE> 10
network strategy.  Many of the potential cost efficiencies related to
the Merger have not yet been realized and costs should be reduced as 
the Merger strategy is further implemented.

Interest expense increased from $31,767,000 to $39,878,000 primarily 
due to higher short-term borrowings because of the increased cash 
requirement resulting from increased inventory levels.

Integration costs consist of costs associated with the implementation of
the merger plan.

The combination of increased gross margin partially offset by higher 
warehouse, general and administrative expense and higher interest 
expense, resulted in a net margin of $18,859,000 compared to 
$33,289,000 for the comparable period last year.

LIQUIDITY AND CAPITAL RESOURCES:

The Company has a seasonal need for cash.  During the first thirty-nine 
weeks of the year, as seasonal inventories are purchased for resale or 
manufacture and shipment, cash and cash equivalents are used for 
operating activities.  In subsequent quarterly periods, the Company 
anticipates that cash and cash equivalents will be provided by 
operating activities and financing activities, if necessary.

During the first thirty-nine weeks of 1998, inventories increased by 
$100,880,000 to support anticipated future orders of seasonal 
merchandise, from the commonization of inventory and the
implementation of the Distribution Network Strategic plan.  Accounts 
and notes receivable increased by $83,414,000 due to the seasonal 
payment terms extended to the Company's Members.  Short-term 
borrowings increased by $121,547,000, accounts payable and accrued 
expenses decreased by $41,931,000. 

At October 3, 1998, net working capital increased to $290,240,000 from 
$175,975,000 at December 31, 1997.  The current ratio was 1.31 at 
October 3, 1998 and 1.20 at December 31, 1997.

At July 1, 1997, the Company had established a $300,000,000 five-
year revolving credit facility with a group of banks.  In addition, 
on September 30, 1998, the Company established a $100,000,000 three 
hundred sixty four day revolving credit facility.  The borrowings 
under these agreements were $324,000,000 and $210,000,000 at 
October 3, 1998 and December 31, 1997, respectively.

The Company's capital is primarily derived from Class A common stock 
and retained earnings, together with promissory (subordinated) notes 
and nonvoting Class B common stock issued in connection with the 
Company's annual patronage dividend.  The Company believes the funds 
derived from these capital resources, as well as operations and the 
credit facilities noted above, will be sufficient to satisfy capital 
needs.

Total capital expenditures, including those made under capital leases, 
were $59,614,000 for the thirty-nine weeks ended October 3, 1998 compared 
to $27,509,000 during the comparable period in 1997.  These capital 
expenditures relate to additional equipment and technological 
improvements at the regional distribution centers and at the corporate 
headquarters.

<PAGE> 11
THIRTEEN WEEKS ENDED OCTOBER 3, 1998 COMPARED TO THIRTEEN WEEKS ENDED
SEPTEMBER 27, 1997


<TABLE>
<CAPTION>

                                        Thirteen weeks ended                 
                                 --------------------------------------- 
                                 October 3, 1998      September 27, 1997
                                 ---------------      ------------------

 
                                    Actual                Actual   
                                    ------                ------
                                          (000'S OMITTED)
<S>                               <C>                      <C>
Revenue	                           $1,078,481	              $1,036,622	
Gross margin                           87,806                     84,536 
Warehouse, general and 
 administrative expense                68,736                     66,316 
Interest  expense                      14,309                     10,216 
Merger integration cost                	4,300	                   1,562  
Net margin                                279                      5,827 

 (1) Assumes the Merger was consummated at January 1, 1997.

RESULTS OF OPERATIONS:

Revenues increased by $41,859,000 or 4.0% compared to the same 
period last year. The increase was due primarily to increased sales in
Direct Shipment and in the Lumber product lines.

Gross margins increased by $3,270,000 or 3.9% compared to the same 
period last year.  Gross margins as a percentage of revenues 
remained comparable to the prior year.  

Warehouse, general and administrative expenses increased by $2,420,000 
or 3.6% and as a percent of revenues was 6.4% which is comparable 
to the same period last year. The Company incurred additional warehousing 
expenses in association with commonizing inventory assortments, 
increased inventory and the implementation of the distribution network 
strategy.

Interest paid to Members decreased by $471,000 or 11.1% primarily due to 
a lower principal balance and a lower average interest rate.  Other 
interest expense increased $4,564,000 or 76.3% due to higher borrowings
compared to the same period last year.  The higher borrowings was 
required because of increased  inventory levels and other merger 
requirements.

Integration costs consist of implementation of Merger plan.

Net margins were $279,000 compared to $5,827,000 for the same 
period last year.



YEAR 2000

A portion of the Company's information systems are not "Year 2000 
Compliant".  This means that the Company will need to incur certain 
costs to modify non-compliant systems prior to the Year 2000 in order 
to ensure that those Systems continue to serve the needs of the 
Company and its Membership.   Based upon current FASB Guideline, 
costs incurred to modify systems to be Year 2000 must be expensed.  
Accordingly, such costs will reduce patronage dividends in years 
in which they are incurred.

<PAGE> 12
The company relies on both information technology and non-information 
technology computer systems in its operations.  The mission critical 
information technology systems include the Company's operating and 
accounting systems. The non-information technology computer systems include 
such items as telecommunications, security systems, elevators and climate 
control at all warehouse locations and remote facilities.

There can be no assurance that all systems needing modification prior to
the Year 2000 will be properly and timely completed by the Company or 
third parties.  Failure to do so could have a material adverse effect 
on the Company's financial condition.  The Company cannot predict the 
actual effects on the Company if all Year 2000 issues are not resolved 
in a timely manner because of a number of uncertainties such as: (1) whether
major third parties address this issue properly and timely and (2) whether 
broad-based economic failures may occur.  The Company is currently 
unaware of any events, trends, or condition regarding this issue that 
may have a material effect on the Company's results of operations, 
liquidity, or financial position.  If the year 2000 issue is not resolved by 
January 1, 2000 the adverse affect on the Company's results of operations 
or financial condition could be material.

TruServ has established a corporate-wide Year 2000  program to help 
assure that TruServ is able to conduct business in a Year 2000 
compliant environment.  As a part of this effort, we are requiring our 
suppliers to assess their ability to continue trading with the Company 
as we approach the new millenium.  In addition, the Company is planning 
to establish an alternative supplier plan in the event our key vendors 
have difficulty providing product to us.  The program is on schedule 
for a completion date of July 1, 1999.  The Year 2000 budget has been 
established at $16,900,000.  Actual costs to date are $10,700,000.  The 
approximate percentage of the Year 2000 costs to the total 
Information Services expenses is 14.0%.  The source of these funds 
will be provided by the normal operating and financing activities of 
TruServ Corporation.

The expenses for the Year 2000 program is as follows:

			1996		$   1.0 million
			1997		$   3.2 million
			1998		$   8.5 million projected
			1999		$   4.0 million projected
			2000		$   0.2 million projected

			Total		$ 16.9 million	


                      PART II - OTHER. INFORMATION



Item 6.  EXHIBITS AND REPORTS ON FORM 8-K

     (a) Exhibits
 
     Exhibit 4. Instruments defining the rights of security holders, 
        including indentures; incorporated herein by reference those 
        items included as Exhibits 4A through 4K, inclusive, in the 
        Company's Post-Effective Amendment No. 5 on Form S-2 to Form S-
        4 Registration Statement (No. 333-18397) filed with the 
        Securities and Exchange Commission on April 4, 1998.
 
     (b) Reports on Form 8-K
 
       		NONE


SIGNATURE
<PAGE> 13





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.




                                        TRUSERV CORPORATION




Date: November 17, 1998                  By /s/ KERRY J. KIRBY
                                         Kerry J. Kirby
                                         Executive Vice President, Finance
                                         and Chief Financial Officer



(Mr. Kirby is the principal accounting officer and has been duly
authorized to sign on behalf of the Registrant.)




</TABLE>