United States
                       SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 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 June 30, 2001

[  ]   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 000-22979

                             Trendwest Resorts, inc.
-------------------------------------------------------------------------------
             (Exact name of registrant as specified in its charter)


             Oregon                                      93-1004403
--------------------------------               --------------------------------
  (State or other jurisdiction                        (I.R.S. Employer
        of incorporation)                            Identification No.)

9805 Willows Road
Redmond, Washington                                                      98052
-------------------------------------------------------------------------------
(Address of principal executive offices)                             (Zip Code)

(Registrant's telephone number, including area code)    (425) 498-2500


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  twelve 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 of the registrant's  no-par voting common stock outstanding
as of August 6, 2001: 25,290,298 shares.


<PAGE>

PART I - FINANCIAL INFORMATION

Item I - Financial Statements

                             TRENDWEST RESORTS, INC.
                                AND SUBSIDIARIES

                      Condensed Consolidated Balance Sheets
                             (dollars in thousands)
                                   (Unaudited)

<Table>
<Caption>
                                                                                       June 30,          December 31,
                                   Assets                                                2001                2000
                                                                                   -----------------    ----------------
<S>                                                                            <C>                      <C>
     Cash                                                                      $             846                  404
     Restricted cash                                                                      10,159                7,201
     Notes Receivable, net of allowance for doubtful accounts, sales returns
        and deferred gross profit                                                        100,302               76,197
     Accrued interest and other receivables                                               11,735                8,171
     Residual interest in Notes Receivable sold                                           58,442               52,043
     Inventories                                                                         121,069              104,218
     MountainStar development                                                             63,724               56,536
     Property and equipment, net                                                          35,252               29,948
     Refundable income taxes                                                                  --                5,688
     Deferred income taxes                                                                   634                   --
     Other assets                                                                          6,704                6,599
                                                                                   -----------------    ----------------

                     Total assets                                              $         408,867              347,005
                                                                                   =================    ================

                    Liabilities and Shareholders' Equity

     Liabilities:

     Accounts payable and bank overdraft                                       $           4,243                9,706
     Accrued liabilities                                                                  29,707               21,538
     Accrued construction in progress                                                      4,633                2,855
     Due to Parent                                                                         1,465                  419
     Note payable to Parent                                                               17,731               17,731
     Borrowing under bank line of credit                                                  72,568               48,441
     Mortgage payable                                                                     11,660               11,696
     Allowance for recourse liability and deferred gross profit on Notes
        Receivable sold                                                                   32,146               26,846
     Current income taxes payable                                                            651                   --
     Deferred income taxes                                                                    --                  330
                                                                                   -----------------    ----------------

                     Total liabilities                                                   174,804              139,562

     Shareholders' equity:

     Preferred stock, no par value.  Authorized 10,000,000 shares; no shares
        issued or outstanding                                                                 --                   --
     Common stock, no par value.  Authorized 90,000,000 shares; issued and
        outstanding 25,288,498 and 25,196,997 shares at
        June 30, 2001 and December 31, 2000, respectively.                                55,538               54,119
     Accumulated other comprehensive loss                                                 (1,143)                (522)
     Retained earnings                                                                   179,668              153,846
                                                                                   -----------------    ----------------

                     Total shareholders' equity                                          234,063              207,443

     Commitments and contingencies
                                                                                   -----------------    ----------------

                     Total liabilities and shareholders' equity                $         408,867              347,005
                                                                                   =================    ================

</Table>

See accompanying notes to the condensed consolidated financial statements.


                                       2
<PAGE>


                             TRENDWEST RESORTS, INC.
                                AND SUBSIDIARIES

                   Condensed Consolidated Statements of Income

                  (dollars in thousands, except per share data)
                                   (Unaudited)

<Table>
<Caption>
                                                                 Three months ended                   Six months ended
                                                                      June 30,                            June 30,
                                                         -----------------------------------  ----------------------------------
                                                              2001               2000              2001              2000
                                                         ----------------  -----------------  ---------------   ----------------
<S>                                                   <C>                  <C>                <C>               <C>
Revenues:
     Vacation Credit and Fractional Interest sales,
     net                                              $        110,419             71,090          202,995            133,603
     Finance income                                              5,235              4,049            8,659              8,276
     Gains on sales of Notes Receivable                          6,578              4,467           12,833              8,056
     Resort management services                                    972              1,186            1,952              2,800
     Other                                                       1,702              1,256            3,444              2,507
                                                         ----------------  -----------------  ---------------   ----------------

             Total revenues                                    124,906             82,048          229,883            155,242
                                                         ----------------  -----------------  ---------------   ----------------

Costs and operating expenses:
     Vacation Credit and Fractional Interest cost of
        sales                                                   30,979             16,754           57,027             31,345
     Resort management services                                    399                516              804                937
     Sales and marketing                                        51,534             33,606           94,765             64,187
     General and administrative                                 11,179              7,804           20,472             15,055
     Provision for doubtful accounts and recourse
        liability                                                7,933              5,177           14,684              9,430
     Interest                                                      149                 50              223                 97
                                                         ----------------  -----------------  ---------------   ----------------

             Total costs and operating expenses                102,173             63,907          187,975            121,051
                                                         ----------------  -----------------  ---------------   ----------------

             Income before income taxes                         22,733             18,141           41,908             34,191

Income tax expense                                               8,692              7,189           16,086             13,569
                                                         ----------------  -----------------  ---------------   ----------------

             Net income                               $         14,041             10,952           25,822             20,622
                                                         ================  =================  ===============   ================

Basic net income per common share                     $            .56                .43             1.02                .81

Diluted net income per common share                   $            .55                .43             1.01                .81

Weighted average shares of common stock and
 dilutive potential common stock outstanding:
     Basic                                                  25,275,478         25,410,687       25,245,455         25,432,539

     Diluted                                                25,714,510         25,506,821       25,605,547         25,530,267

</Table>

See accompanying notes to the condensed consolidated financial statements.



                                       3
<PAGE>

                             TRENDWEST RESORTS, INC.
                                AND SUBSIDIARIES

                 Condensed Consolidated Statements of Cash Flows

                             (dollars in thousands)
                                   (Unaudited)
<Table>
<Caption>
                                                                                          Six months ended June 30,
                                                                                 --------------------------------------------
                                                                                        2001                    2000
                                                                                 -------------------     --------------------
<S>                                                                          <C>                         <C>
Cash flows from operating activities:
     Net income                                                              $              25,822                  20,622
     Adjustments to reconcile net income to net cash (used in) provided
        by operating activities:
        Depreciation and amortization                                                        2,042                   1,263
        Amortization of residual interest in Notes Receivable sold                           8,435                   6,549
        Provision for doubtful accounts, sales returns and recourse
           liability                                                                        17,689                  12,066
        Recoveries of Notes Receivable charged off                                             158                     112
        Residual interest in Notes Receivables sold                                        (15,365)                 (9,892)
        Contract servicing liability arising from sale of Notes Receivable                     324                      --
        Amortization of servicer liability                                                    (886)                   (365)
        Unrealized loss on residual interest in Notes Receivable sold                        1,285                      --
        Change in deferred gross profit                                                        974                     362
        Deferred income tax benefit                                                           (908)                 (1,145)
        Issuance of Notes Receivable                                                      (172,118)               (114,203)
        Proceeds from sale of Notes Receivable                                             116,524                  84,663
        Proceeds from repayment of Notes Receivable                                         33,875                  37,737
        Purchase of Notes Receivable                                                       (16,960)                 (7,032)
        Changes in certain assets and liabilities:
              Restricted cash                                                               (2,958)                 (2,470)
              MountainStar Development                                                      (7,188)                (25,822)
              Inventories                                                                  (19,351)                (21,854)
              Accounts payable and accrued liabilities                                       6,412                   8,724
              Income taxes payable                                                             662                      --
              Refundable income taxes                                                        5,688                      --
              Other                                                                         (3,698)                 (4,785)
                                                                                 -------------------     --------------------
          Net cash used in operating activities                                            (19,542)                (15,470)
                                                                                 -------------------     --------------------

Cash flows from investing activities:
     Purchase of property and equipment                                                     (5,319)                 (2,957)
                                                                                 -------------------     --------------------

          Net cash used in investing activities                                             (5,319)                 (2,957)

Cash flows from financing activities:
     Net borrowing under bank line of credit and other                                      22,930                  20,360
     Repayments of mortgage payable                                                            (36)                     --
     Increase (decrease) in due to Parent                                                    1,046                  (1,297)
     Issuance of common stock                                                                1,445                     334
     Repurchase of common stock                                                                (26)                 (2,597)
                                                                                 -------------------     --------------------

     Net cash provided by financing activities                                              25,359                  16,800
                                                                                 -------------------     --------------------

     Net (decrease) increase in cash                                                           498                  (1,627)

Effect of foreign currency exchange rates on cash                                              (56)                   (110)

Cash at beginning of period                                                                    404                   1,760
                                                                                 -------------------     --------------------

Cash at end of period                                                        $                 846                      23
                                                                                 ===================     ====================

</Table>

See accompanying notes to the condensed consolidated financial statements.


                                       4
<PAGE>


                             TRENDWEST RESORTS, INC.
                                AND SUBSIDIARIES

           Condensed Consolidated Statements of Cash Flows (continued)
                             (dollars in thousands)
                                   (unaudited)

<Table>
<Caption>
                                                                                            Six month ended June 30,
                                                                                 -----------------------------------------------
                                                                                        2001                      2000
                                                                                 --------------------     ----------------------
<S>                                                                          <C>                          <C>
Supplemental disclosures of cash flow information -
   Cash paid during the period for:
        Interest (excluding capitalized amounts of $3,674 and $450,
          respectively)                                                      $               --                        396
        Income taxes, net of refunds received                                            11,365                     14,171

Supplemental schedule of noncash investing and financing activities:
   Issuance of note payable to parent in connection with the MountainStar
     development acquisition                                                 $               --                     17,731
   Reduction in retained earnings for the excess of the purchase price of
     the MountainStar development over the Parent's historical cost                          --                      3,300
   Extinguishment of receivable from Parent in connection with the
     MountainStar development acquisition                                                    --                      4,869

</Table>


See accompanying notes to the condensed consolidated financial statements.












                                       5
<PAGE>

                             TRENDWEST RESORTS, INC.
                                AND SUBSIDIARIES
            Notes to the Condensed Consolidated Financial Statements
                 (dollars in thousands except per share amounts)
                                   (Unaudited)

Note 1 - Background

Trendwest  Resorts,  Inc.,  (Company)  markets,  sells  and  finances  timeshare
Vacation  Ownership  Interests  in the form of Vacation  Credits and  Fractional
Interests.  The Company also acquires,  develops and manages timeshare  resorts.
The Company's  timeshare  resorts  (except  Fractional  Interests) are owned and
operated through  WorldMark,  the Club,  (WorldMark) and WorldMark South Pacific
Club  (WorldMark  South  Pacific)  (collectively  "The  Clubs").  WorldMark is a
non-profit mutual benefit corporation  organized by Trendwest in 1989 to provide
an innovative,  flexible vacation ownership system. WorldMark South Pacific is a
registered managed investment scheme regulated by the Australian  Securities and
Investments  Commission ("ASIC"). The Company presently sells Vacation Ownership
interests in the United States, Fiji, and Australia,  primarily through off-site
sales offices.  Fractional Interests are sold on-site at the Depoe Bay resort in
Oregon.

These  condensed  consolidated  financial  statements  do  not  include  certain
information and footnotes required by accounting  principles  generally accepted
in the United States of America for complete financial  statements.  However, in
the opinion of  management,  all  adjustments  considered  necessary  for a fair
presentation have been included and are of a normal recurring nature.  Operating
results for the three and six months  ended June 30, 2001,  are not  necessarily
indicative  of the  results  that may be  expected  for the fiscal  year  ending
December 31, 2001.

These  statements  should  be read in  conjunction  with the  audited  financial
statements and footnotes included in the Company's 2000 Form 10-K filed with the
Securities  and Exchange  Commission  (SEC).  The  accounting  policies  used in
preparing  these  financial  statements are the same as those  described in such
Form 10-K, unless otherwise noted herein.

Note 2 - New Accounting Pronouncements

Effective  January 1, 2001, the Company adopted Financial  Accounting  Standards
Board  Statement No. 133  "Accounting  for  Derivative  Instruments  and Hedging
Activities,"  ("FAS 133") which  requires  that all  derivative  instruments  be
recorded on the balance  sheet at fair  value.  The  adoption of FAS 133 did not
have a material  effect as of the adoption date of January 1, 2001,  nor for the
three  and six  month  periods  ended  June 30,  2001.  On the  date  derivative
contracts are entered into, the Company  designates the derivative as either (a)
a  hedge  of  the  fair  value  of a  recognized  asset  or  liability  or of an
unrecognized  firm  commitment  (fair value hedge),  (b) a hedge of a forecasted
transaction  or of the  variability of cash flows to be received or paid related
to a  recognized  asset or  liability  (cash flow  hedge),  (c) a hedge of a net
investment  in  a  foreign   operation  (net   investment   hedge),   or  (d)  a
non-accounting hedge. Changes in the fair value of derivatives are recorded each
period in current earnings or other comprehensive  income,  depending on whether
the  derivative  is  designated  as part of a hedge  transaction  and, if it is,
depending on the type of hedge transaction.  For fair value hedge  transactions,
changes in fair value of the derivative  instrument are generally  offset in the
income  statement  by changes in the fair  value of the item being  hedged.  For
cash-flow  hedge  transactions,  changes  in the fair  value  of the  derivative
instrument  are  reported  in  other  comprehensive  income  to  the  extent  of
effectiveness. For net investment hedge transactions,  changes in the fair value
are recorded as a component of the foreign currency  translation account that is
also included in other comprehensive income.

The gains and losses on cash flow hedge  transactions that are reported in other
comprehensive  income  are  reclassified  to  earnings  in the  periods in which
earnings are affected by the  variability  of the cash flows of the hedged item.
The  ineffective  portions  of all  hedges  are  recognized  in  current  period
earnings.  From time to time, the Company acquires resorts outside of the United
States, where payment for the resort is denominated in a foreign currency. It is
the  Company's  policy to assess such  transactions  and ensure that any foreign
exchange risks associated with the transaction are appropriately  managed.  As a
result  of this,  the  Company  periodically  enters  into  economic  hedges  by
purchasing  foreign  exchange  contracts as a hedge against foreign  denominated
commitments to purchase resort properties.  As of June 30, 2001, the Company had
foreign exchange contracts with notional amounts of approximately  $2,081 CDN at


                                       6
<PAGE>


a rate of $1.4955  CDN/US and $16,919 CDN at a rate of $1.4905  CDN/US for fixed
purchase  commitments.  The impact of  recording  the fair values of the forward
contracts  was  $110,  net of tax  benefit,  and  has  been  included  in  other
comprehensive income for the six months ended June 30, 2001.

In September  2000,  the FASB issued SFAS No. 140,  which replaces SFAS No. 125,
Accounting for Transfers and Servicing of Financial  Assets and  Extinguishments
of  Liabilities  and rescinds SFAS No. 127,  Deferral of the  Effective  Date of
Certain  Provisions  of FASB  Statement  No. 125.  SFAS 140  revises  SFAS 125's
standards for accounting for  securitizations  and other  transfers of financial
assets and collateral and requires certain disclosures, but it carries over most
of SFAS 125's  provisions  without  reconsideration.  SFAS 140 is effective  for
transfers and servicing of financial assets and  extinguishments  of liabilities
occurring  after March 31, 2001, and for  recognition  and  reclassification  of
collateral  and for  disclosures  relating to  securitization  transactions  and
collateral for fiscal years ending after December 15, 2000. The Company  adopted
the new disclosure  provisions  required under SFAS 140 as of December 31, 2000,
and the  remaining  provisions  as of April 1,  2001.  SFAS 140 is to be applied
prospectively with certain  exceptions.  The adoption of SFAS 140 did not have a
material impact on the Company's consolidated results of operations or financial
position.

Note 3 -- Foreign Currency Translation

Assets and liabilities in foreign functional currencies are translated into U.S.
dollars  based  upon the  prevailing  currency  exchange  rates in effect at the
balance sheet date,  while revenues and expenses are translated at average rates
prevailing  during the period.  Translation gains and losses are not included in
the  determination of net income but are accumulated in a separate  component of
shareholders' equity. Transaction gains or losses are recorded in the results of
operations and were insignificant for the three and six month periods ended June
30, 2001.

Note 4 -- Comprehensive Income

The following  illustrates  the  reconciliation  of net income to  comprehensive
income:

<Table>
<Caption>
                                                                  Three months ended               Six months ended
                                                                       June 30,                        June 30,
                                                              ----------------------------    ----------------------------
                                                                 2001            2000            2001            2000
                                                              ------------    ------------    ------------    ------------
<S>                                                        <C>                <C>             <C>             <C>
Net income                                                 $       14,041          10,952          25,822          20,622
Other comprehensive loss:
     Change in cumulative effect of foreign currency
         translation                                                  444           (106)           (511)            (92)
     Unrealized derivative gains (losses) losses, net
         of tax effect                                                298              --           (110)              --
                                                              ------------    ------------    ------------    ------------
Comprehensive income                                       $       14,783          10,846          25,201          20,530
                                                              ============    ============    ============    ============

</Table>

Note 5 - Stock Split

On February 21, 2001, the Board of Directors  declared a 3 for 2 stock split for
shareholders  of record on March 15,  2001,  payable on March 29,  2001.  Shares
outstanding  and earnings per share  figures  contained in this Form 10-Q and in
the  condensed  consolidated  financial  statements  contained  herein have been
adjusted  to reflect  the stock  split as if it were  effective  for all periods
presented.

Note 6 - Reclassifications

Certain reclassifications have been made to prior year amounts to conform to the
current presentation.



                                       7
<PAGE>

Note 7 - Basic and Diluted Net Income Per Common Share

The following illustrates the reconciliation of weighted average shares used for
basic and diluted net income per share:

<Table>
<Caption>
                                                    Three months ended                       Six months ended
                                                         June 30,                                June 30,
                                             ----------------------------------     ------------------------------------
                                                  2001               2000                2001                 2000
                                             ----------------    --------------     ---------------      ---------------
<S>                                          <C>                 <C>                <C>                  <C>
Basic
Weighted average shares outstanding             25,275,478          25,410,687         25,245,455           25,432,539

Diluted
Effect of dilutive securities                      439,032              96,134            360,092               97,728
                                             ----------------    --------------     ---------------      ---------------
Diluted weighted average shares outstanding     25,714,510          25,506,821         25,605,547           25,530,267
                                             ================    ==============     ===============      ===============

</Table>

Net income  available to common  shareholders for basic net income per share was
$14,041  and  $10,952 for the three  months  ended June 30,  2001 and 2000,  and
$25,822  and  $20,622  for  the  six  months  ended  June  30,  2001  and  2000,
respectively.

For the  three  months  ended  June  30,  2001  and  2000,  there  were  options
outstanding  to purchase 0 and  437,200  shares of common  stock,  respectively,
which were  anti-dilutive  and  therefore  not  included in the  computation  of
diluted net income per common share.  For the six months ended June 30, 2001 and
2000, there were options  outstanding to purchase 0 and 431,000 shares of common
stock, respectively,  which were anti-dilutive and therefore not included in the
computation of diluted net income per common share.

Note 8 - Inventories

Inventories consist of Vacation Credits and construction in progress as follows:

<Table>
<Caption>
                                                                           June 30,           December 31,
                                                                             2001                 2000
                                                                       -----------------     ----------------
        <S>                                                         <C>                      <C>
        Vacation Credits                                            $        12,424                16,829
        Construction in progress                                            108,645                87,389
                                                                       -----------------     ----------------

                 Total inventories                                  $       121,069               104,218
                                                                       =================     ================


</Table>







                                       8
<PAGE>

Note 9 - Notes Receivable,  Allowance For Doubtful Accounts,  Recourse Liability
and Sales Returns

The following table summarizes the Company's total Notes Receivable portfolio at
June 30, 2001, and December 30, 2000:

<Table>
<Caption>
                                                                           June 30,           December 31,
                                                                             2001                 2000
                                                                       -----------------    ------------------
        <S>                                                         <C>                     <C>
        Total Notes Receivable                                      $       584,383              502,762
        Less Notes Receivable sold                                         (462,208)            (407,215)
                                                                       -----------------    ------------------

        Gross on balance sheet Notes Receivable                             122,175               95,547
                                                                       =================    ==================

        Unencumbered Notes Receivable                                        57,206               37,873
        Retained interest in Notes Receivable sold                           64,969               57,674
                                                                       -----------------    ------------------

        Gross on balance sheet Notes Receivable                             122,175               95,547

        Less: Deferred gross profit                                          (1,408)              (1,340)
               Allowance for doubtful accounts and sales returns            (20,465)             (18,010)
                                                                       -----------------    ------------------

        Notes Receivable, net                                       $       100,302               76,197
                                                                       =================    ==================

</Table>

The activity in the  allowance  for doubtful  accounts,  recourse  liability and
sales  returns is as follows for the six months ended June 30, 2001 and the year
ended December 31, 2000:

<Table>
<Caption>
                                                                      Six months ended            Year ended
                                                                       June 30, 2001           December 31, 2000
                                                                   -----------------------   ----------------------
         <S>                                                    <C>                          <C>
         Balances at beginning of period                        $               40,292                   29,087

         Provision for doubtful accounts, sales returns and
             recourse liability                                                 17,689                   27,015
         Notes receivable charged-off and sales returns net of
             Vacation Credits recovered                                        (10,998)                 (16,061)
         Recoveries                                                                158                      251
                                                                   -----------------------   ----------------------

         Balances at end of period                              $               47,141                   40,292
                                                                   =======================   ======================

         Allowance for doubtful accounts and sales returns      $               20,465                   18,010
         Recourse Liability on notes receivable sold                            26,676                   22,282
                                                                   -----------------------   ----------------------
                                                                $               47,141                   40,292
                                                                   =======================   ======================
</Table>

Note 10 - Commitments and Contingencies

(a) Purchase Commitments

The Company  routinely  enters into purchase  agreements with various parties to
acquire  and  build  resort  properties.  At June  30,  2001,  the  Company  had
outstanding  purchase  commitments  of  $126,249  related  to  properties  under
development.

(b) Surety and Performance Bonds

The Company utilizes surety and performance  bonds as part of developing  resort
properties. As of June 30, 2001, there were $5,640 in surety bonds outstanding.



                                       9
<PAGE>


(c) Litigation

The Company is involved in various  claims and lawsuits  arising in the ordinary
course of business.  Management  believes that outcome of these matters will not
have a material adverse effect on the Company's financial  position,  results of
operations, or liquidity.

Note 11 - Segment Reporting

The Company has two reportable segments:  sales and financing. The sales segment
markets and sells Vacation Credits and Fractional Interests. The finance segment
is  primarily   responsible  for  servicing  and  collecting   Notes  Receivable
originated in  conjunction  with the financing of sales of Vacation  Credits and
Fractional Interests. The finance segment does not include the activities of the
Company's finance subsidiaries. Management evaluates the business based on sales
and marketing activities as these are the primary drivers of the business.

The accounting  policies of the segments are the same as those  described in the
summary of significant  accounting policies in the Company's 2000 Form 10-K. The
Company  evaluates  performance  based on  profits  or  losses  from  sales  and
marketing activities on a pre-tax basis.  Intersegment  revenues are recorded at
market rates as if the transactions occurred with third parties.  Assets are not
reported by segment.

The following tables summarize the segment activity of the Company:

<Table>
<Caption>
                                                                                                    Segment
Three months ended June 30, 2001:                    Sales         Finance          Other            Total
                                                   -----------    -----------     -----------    -------------
<S>                                           <C>                 <C>             <C>            <C>
External revenue                              $       110,419          1,131            972          112,522
Interest revenue - net                                     --          1,627             --            1,627
Interest revenue-intersegment                              --          1,820             --            1,820
Intersegment revenue                                       --            521             --              521
                                                   -----------    -----------     -----------    -------------
Segment revenue                               $       110,419          5,099            972          116,490

Segment profit                                $        18,213          3,254            572           22,039

Significant non-cash items:
Provision for doubtful accounts, sales
returns and recourse liability                $         9,671             --              --           9,671

</Table>

<Table>
<Caption>
                                                                                                   Segment
Three months ended June 30, 2000:                    Sales         Finance          Other           Total
                                                   -----------    -----------     -----------    -------------
<S>                                           <C>                 <C>             <C>            <C>
External revenue                              $        71,090            975          1,186           73,251
Interest revenue - net                                     --          1,240             --            1,240
Interest revenue-intersegment                              --          1,531             --            1,531
Intersegment revenue                                       --            509             --              509
                                                   -----------    -----------     -----------    -------------
Segment revenue                               $        71,090          4,255          1,186           76,531

Segment profit                                $        13,754          2,800            670           17,224

Significant non-cash items:
Provision for doubtful accounts, sales
  returns and recourse liability              $         6,452             --             --            6,452

</Table>



                                       10
<PAGE>

<Table>
<Caption>
                                                                                                   Segment
Six months ended June 30, 2001:                      Sales         Finance          Other           Total
                                                   -----------    -----------     -----------    -------------
<S>                                           <C>                 <C>             <C>            <C>
External revenue                              $       202,995          2,389          1,952          207,336
Interest revenue - net                                     --          2,709             --            2,709
Interest revenue-intersegment                              --          3,811             --            3,811
Intersegment revenue                                       --            826             --              826
                                                   -----------    -----------     -----------    -------------
Segment revenue                               $       202,995          9,735          1,952          214,682

Segment profit                                $        32,514          6,149          1,148           39,811

Significant non-cash items:
Provision for doubtful accounts, sales
returns and recourse liability                $        17,689             --              --          17,689

                                                                                                   Segment
Six months ended June 30, 2000:                      Sales         Finance          Other           Total
                                                   -----------    -----------     -----------    -------------
External revenue                              $       133,603          2,010          2,800          138,413
Interest revenue - net                                     --          2,551             --            2,551
Interest revenue-intersegment                              --          3,062             --            3,062
Intersegment revenue                                       --            805             --              805
                                                   -----------    -----------     -----------    -------------
         Segment revenue                      $       133,603          8,428          2,800          144,831

Segment profit                                $        25,643          5,666          1,863           33,172

Significant non-cash items:
Provision for doubtful accounts, sales
  returns and recourse liability              $        12,066             --             --           12,066

</Table>

The following table provides a reconciliation of segment revenues and profits to
the consolidated amounts:

<Table>
<Caption>
                                                         Three Months                    Six Months
                                                        Ended June 30,                 Ended June 30,
                                                     2001           2000            2001            2000
                                                   -----------    -----------    ------------    -------------
<S>                                             <C>               <C>            <C>             <C>
Segment revenue                                 $    116,490         76,531         214,682          144,831
Interest expense reported net of interest
    income                                               149             50             223               97
Elimination of intersegment revenue                   (2,341)        (2,040)         (4,637)          (3,867)
Finance subsidiaries revenue                          10,608          7,507          19,615           14,181
                                                   -----------    -----------    ------------    -------------
       Consolidated revenue                     $    124,906         82,048         229,883          155,242
                                                   ===========    ===========    ============    =============
Segment profit                                  $     22,039         17,224          39,811           33,172

Corporate overhead not included in segment
    reporting                                         (7,823)        (3,229)        (13,565)          (9,045)
Finance subsidiaries profit                            8,517          4,146          15,662           10,064
                                                   -----------    -----------    ------------    -------------
       Consolidated income before income        $     22,733         18,141          41,908           34,191
       taxes
                                                   ===========    ===========    ============    =============
</Table>

The  Company's  revenue from  external  customers  derived from sales within the
United States  totaled  $103,251 and $70,271 for the three months ended June 30,
2001 and 2000,  respectively.  The  Company's  revenue from  external  customers
derived from sales within the United  States  totaled  $191,251 and $132,732 for
the six months ended June 30, 2001 and 2000, respectively. Revenue from external
customers  derived from sales in all foreign  countries  totaled $7,168 and $819
for the three  months  ended June 30, 2001 and 2000,  respectively,  and totaled
$11,744 and $871 for the six months ended June 30, 2001 and 2000,  respectively.
Revenue from external customers is attributed to countries based on the location
where the sale was made.  Substantially  all of the Company's  long-lived assets
are  located  within the  United  States.  The net assets of foreign  operations
totaled $6,953 at June 30, 2001.



                                       11
<PAGE>


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

                              RESULTS OF OPERATIONS

Comparison  of the three months  ended June 30, 2001,  to the three months ended
June 30, 2000

The  statements  below and  other  statements  herein  contain  forward  looking
information  which  include  future  financing   transactions,   acquisition  of
properties,   and  the  Company's  future  prospects  and  other  forecasts  and
statements of  expectations.  Actual  results may differ  materially  from those
expressed in any  forward-looking  statement made by the Company,  due to, among
other things,  the  Company's  ability to develop or acquire  additional  resort
properties,  find acceptable debt or equity capital to fund such development, as
well as other risk  factors as  outlined  in the "Risk  Factors"  section of the
Company's Form 10-K.

The Company achieved total revenues of $124.9 million for the three months ended
June 30,  2001,  compared to $82.0  million for the three  months ended June 30,
2000, an increase of 52.3%. The principal reason for the overall improvement was
a 47.4% increase in total Vacation  Credit sales to $104.8 million for the three
months ended June 30, 2001,  from $71.1  million for the three months ended June
30,  2000,  including a $6.3  million  increase in Vacation  Credit sales in the
South Pacific,  from $0.8 million to $7.1 million. In addition,  $5.6 million in
Fractional Interest sales from the second phase of the Depoe Bay, Oregon, resort
were  recognized  during the second  quarter of 2001.  The  increase in Vacation
Credit  sales was  primarily  the  result of a 46.1%  increase  in the number of
Vacation  Credits  sold to 77.3  million  during the three months ended June 30,
2001,  from 52.9  million  during  the three  months  ended June 30,  2000.  The
increase  in  Vacation  Credits  sold  was  largely   attributable  to  improved
performance  in the eleven new  offices  opened  during  2000,  an  increase  in
Vacation Credits sold in the South Pacific to 7.9 million for the quarter versus
0.9 million  for the same period in 2000,  and  continued  increases  in Upgrade
Sales.  Revenues  from Upgrade  sales  increased  39.1% to $15.3 million for the
three months ended June 30, 2001,  from $11.0 million for the three months ended
June 30, 2000. We opened the following  sales offices  during the second quarter
of 2001, which had no material effect on revenues during the quarter:

   Location                               Opened              On/Off-Site
   ---------------------------------  -------------         ---------------
   Issaquah, WA.....................   April, 2001              Off-site
   Bison Ranch, AZ..................     May, 2001               On-site
   Coeur d'Alene, ID................    June, 2001              Off-site
   Sydney 2, QLD*...................    June, 2001              Off-site

   *Trendwest South Pacific sales office

In the United  States,  the average price per Vacation  Credit sold increased to
$1.41 per credit for the three  months  ended June 30,  2001,  versus  $1.36 per
credit for the three  months  ended June 30,  2000,  primarily  as a result of a
$0.05  increase in the selling price of new Vacation  Credits  effective July 1,
2000, and in Upgrade Vacation Credits  effective  September 1, 2000. The Company
again raised the selling price of Vacation  Credits $0.05 on May 1, 2001. In the
South Pacific,  the average price per Vacation  Credit sold decreased from $0.92
per credit to $0.90 per credit due largely to  fluctuations  in the US dollar to
Australian dollar exchange rate,  partially offset by an increase in the selling
price in the South Pacific that took effect in the second quarter.

For the  quarter  ended June 30,  2001,  financing  activities  generated  $11.8
million in  revenues,  compared to $8.5 million in the same quarter last year, a
38.8% increase.  This increase consists of a 46.7% increase in gains on sales of
Notes Receivable and a 30.0% increase in finance income.  Gains increased due to
falling  interest rates during the quarter and a $9.3 million  increase in Notes
sold over the  comparable  period.  Finance  income also  benefited from falling
interest  rates,  which  increased  the net  interest  spread  on  variable-rate
residual  interests  in Notes  Receivable  sold,  as well as  increased  average
carrying balances of Notes Receivable.

Vacation  Credit and  Fractional  Interest  cost of sales,  as a  percentage  of
Vacation Credit and Fractional  Interest  sales,  was 28.1% for the three months
ended June 30, 2001, versus 23.6% for the three months ended June 30, 2000. This
increase resulted from comparatively low construction costs associated with last
year's addition of Fiji and Rancho  Vistoso,  Arizona  properties,  higher costs

                                       12
<PAGE>



associated with the sale of Fractional Interests during 2001 at the second phase
of the Depoe Bay resort,  and more capitalized  interest in cost of sales during
the three months ended June 30, 2001, than in the same period last year.

Sales and marketing  costs increased 53.3% to $51.5 million for the three months
ended June 30,  2001,  from $33.6  million for the three  months  ended June 30,
2000. As a percentage of Vacation Credit and Fractional  Interest  sales,  sales
and marketing costs decreased to 46.6% for the three months ended June 30, 2001,
from 47.3% for the three months ended June 30, 2000. This decrease was largely a
result of the relatively lower sales and marketing costs of Fractional  Interest
sales during 2001, which are offset by higher product cost.

General and  administrative  expenses  increased  43.6% to $11.2 million for the
three months  ended June 30, 2001,  from $7.8 million for the three months ended
June 30, 2000.  As a percentage  of total  revenue,  general and  administrative
costs  decreased to 9.0% for the three months ended June 30, 2001, from 9.5% for
the three months ended June 30, 2000.  This is a result of the strong  growth in
total revenue over the prior period.

Resort management services  contributed $1.0 million to total revenue during the
second  quarter of 2001,  down from $1.2 million for the second quarter of 2000.
Higher  utility  costs at Western  resorts  continued to be a factor  during the
second  quarter of 2001,  negatively  impacting  the Clubs  profits on which the
management  fee is based.  Utility costs are expected to remain high through the
remainder of 2001.

The provision for doubtful accounts and recourse  liability,  as a percentage of
Vacation Credit and Fractional  Interest sales,  was 7.2% for the second quarter
of 2001 versus 7.3% for the comparable period last year. This decrease is due to
a mix of sales in sales  offices  with  average  default  rates  lower  than the
Company's historical average.

Comparison  of the six months ended June 30, 2001,  to the six months ended June
30, 2000

The Company  achieved  total revenues of $229.9 million for the six months ended
June 30,  2001,  compared to $155.2  million  for the six months  ended June 30,
2000, an increase of 48.1%.  The principal  reasons for the overall  improvement
were a 43.9% increase in total  Vacation  Credit sales to $192.2 million for the
six months  ended June 30, 2001,  compared to $133.6  million for the six months
ended June 30, 2000, including a $10.8 million increase in Vacation Credit sales
in the South  Pacific,  from $0.9 million to $11.7 million.  In addition,  $10.8
million in  Fractional  Interest  sales from the second  phase of the Depoe Bay,
Oregon,  resort were  recognized  during the first half of 2001.  No  Fractional
Interest sales were  recognized in 2000. All revenue from the sale of Fractional
Interests at the second phase of Depoe Bay is expected to be  recognized  by the
end of 2001.

The  increase  in  Vacation  Credit  sales was  primarily  the result of a 43.1%
increase in the number of Vacation Credits sold, to 141.4 million during the six
months ended June 30, 2001,  from 98.8 million  during the six months ended June
30, 2000.  The increase in Vacation  Credits  sold was largely  attributable  to
improved  performance  in the eleven new  offices  opened  during  2000,  a 12.2
million increase in Vacation Credits sold in the South Pacific,  to 13.2 million
in 2001 from 1.0 million in 2000,  and  continued  increases  in Upgrade  Sales.
Revenues from Upgrade sales  increased 36.2% to $28.6 million for the six months
ended June 30, 2001,  from $21.0 million for the six months ended June 30, 2000.
We opened the following  sales offices during the first half of 2001,  which did
not have a significant impact on revenues for the period:





                                       13
<PAGE>



        Location                                Opened           On/Off-Site
        ---------------------------------   ---------------   ----------------
        Steamboat, CO....................    January, 2001         On-site
        Roslyn, WA.......................    January, 2001        Off-site
        Englewood, CO....................      March, 2001        Off-site
        Overland Park, KS................      March, 2001        Off-site
        Branson, MO......................      March, 2001         On-site
        Sydney 1, QLD*...................      March, 2001        Off-site
        Issaquah, WA.....................      April, 2001        Off-site
        Bison Ranch, AZ..................        May, 2001         On-site
        Coeur d'Alene, ID................       June, 2001        Off-site
        Sydney 2, QLD*...................       June, 2001        Off-site

        *Trendwest South Pacific sales office

In the United  States,  the average price per Vacation  Credit sold increased to
$1.41 per credit for the six months ended June 30, 2001, versus $1.36 per credit
for the six  months  ended  June 30,  2000,  primarily  as a  result  of a $0.05
increase in the selling price of new Vacation  Credits  effective  July 1, 2000,
and of Upgrade  Vacation  Credits  effective  September  1,  2000.  The price of
Vacation Credits on new sales again increased $0.05 on May 1, 2001. In the South
Pacific,  the average price per Vacation  Credit sold  decreased  from $0.91 per
credit to $0.89 per  credit,  due  largely to  fluctuations  in the US dollar to
Australian dollar exchange rate,  partially offset by an increase in the selling
price per Vacation Credit in the South Pacific that became effective in 2001.

For the six months ended June 30, 2001,  financing  activities  generated  $21.5
million in revenues,  compared to $16.3  million in the same period last year, a
31.9%  increase.  This increase is largely  attributable  to a 58.0% increase in
gains on sales of Notes  Receivable.  Notes  Receivable sold for gains increased
$18.8 million for the first six months of 2001 as compared to 2000. In addition,
interest rates fell substantially during the first half of 2001,  increasing the
net interest spread on the sales and thus the gains recognized.

Vacation  Credit and  Fractional  Interest  cost of sales,  as a  percentage  of
Vacation  Credit and  Fractional  Interest  sales,  was 28.1% for the six months
ended June 30, 2001,  versus 23.4% for the six months ended June 30, 2000.  This
increase resulted from  comparatively low construction costs associated with the
addition of Fiji and Rancho  Vistoso,  Arizona  properties  during the first six
months of 2000,  higher costs  associated with the sale of Fractional  Interests
during  2001,  and more  capitalized  interest  in cost of sales  during the six
months  ended  June  30,  2001,  than in the same  period  last  year.  Over the
remainder of 2001, the Company expects product cost, as a percentage of Vacation
Credit  and  Fractional  Interest  sales,  to remain  at a similar  level to the
results for the first half of the year.  The Company  expects to  recognize  the
remaining  incremental  revenue from the Fractional  Sales program at the second
phase of Depoe Bay, with its higher  product cost as a percentage  of sales,  by
the end of the year.

Sales and marketing  costs,  as a percentage of Vacation  Credit and  Fractional
Interest sales,  decreased to 46.7% for the six months ended June 30, 2001, from
48.1% for the six months ended June 30, 2000. The difference is  attributable to
both the lower sales and marketing cost of the Fractional Interest sales program
included  in  2001  results  and  the  improved   efficiency  in  sales  offices
Company-wide.

General and administrative expenses increased 35.8% to $20.5 million for the six
months ended June 30, 2001, from $15.1 million for the six months ended June 30,
2000.  As a  percentage  of total  revenue,  general  and  administrative  costs
decreased to 8.9% of total revenue for the six months ended June 30, 2001,  from
9.7% of total  revenue for the six months ended June 30, 2000.  This decrease is
largely driven by the increase in total revenue, as well as the Company's having
fully-expensed  all  start-up  costs for new South  Pacific and Midwest  regions
opened during the first half of 2000 without the corresponding benefit of sales.

The provision for doubtful accounts and recourse  liability,  as a percentage of
Vacation  Credit and Fractional  Interest  sales,  was 7.2% and 7.0% for the six
months ended June 30, 2001 and 2000, respectively.  This increase is largely due
to the mix of sales for the period at newer sales  offices with higher  expected
default rates than the Company's average historical experience.


                                       14
<PAGE>


The Company maintains an allowance for doubtful accounts in respect of the Notes
Receivable  owned by the Company and an  allowance  for  recourse  liability  in
respect  of the  Notes  Receivable  that  have  been  sold by the  Company.  The
aggregate  amount of these  allowances  at June 30, 2001 and  December 31, 2000,
were $45.6 million and $38.9 million,  respectively,  representing approximately
7.8% and 7.7% of the  total  portfolio  of Notes  Receivable  serviced  at those
dates. No assurance can be given that these allowances will be adequate,  and if
the amount of the Notes  Receivable  that are ultimately  written off materially
exceeds the related allowances,  the Company's  business,  results of operations
and financial condition could be materially adversely affected.

The Company estimates its allowance for doubtful accounts and recourse liability
by  analysis  of bad  debts  by each  sales  site  by  year  of Note  Receivable
origination.  The Company uses this  historical  analysis,  in conjunction  with
other  factors  such as  local  economic  conditions  and  industry  trends,  in
estimating  the  allowance  for doubtful  accounts and recourse  liability.  The
Company  also  utilizes  experience  factors  of  more  mature  sales  sites  in
establishing  the  allowance  for bad debts at new sales  offices.  The  Company
generally  charges  off all  receivables  when they become 180 days past due and
returns the credits  associated with such charge-offs to inventory.  At June 30,
2001, and December 31, 2000,  2.0% and 2.3% of the Company's  total  receivables
portfolio of $584.4 million and $502.8 million, respectively,  were more than 60
days past due.

                         LIQUIDITY AND CAPITAL RESOURCES

The  Company  generates  cash from  operations  from down  payments  on sales of
Vacation  Credits and  Fractional  Interests  which are financed,  cash sales of
Vacation Credits and Fractional Interests,  collection of principal and interest
on  Notes  Receivable,  proceeds  from  sales  of Notes  Receivable,  and  other
borrowings. The Company also generates cash on the interest differential between
the interest  charged on the Notes  Receivable  and the  interest  paid on loans
collateralized by Notes Receivable.

During  the six  months  ended June 30,  2001 and 2000,  cash used in  operating
activities  was $19.5  million  and $15.5  million,  respectively.  Cash used in
operating  activities  increased  principally  due to the increased  issuance of
Notes  Receivable.  For the first six  months  of 2001,  cash used in  operating
activities was principally for the issuance and purchase of Notes  Receivable of
$189.1  million  to finance  the  purchase  of  Vacation  Credits by Owners,  an
increase  in  inventory  of $19.4  million  due to  additional  construction  in
progress to meet  increasing  sales  demand,  and  spending on the  MountainStar
resort of $7.2 million,  which was primarily related to the on-going entitlement
process.  Cash provided by operating  activities  during the first six months of
2001 resulted  primarily from sales and repayments of Notes Receivable of $150.4
million,  an  increase  in accounts  payable  and  accrued  liabilities  of $6.4
million,  and net income of $25.8  million.  For the six  months  ended June 30,
2000,  cash used in operating  activities was  principally  for the issuance and
purchase  of Notes  Receivable  of $121.2  million to finance  the  purchase  of
Vacation  Credits by Owners,  an increase in inventory  of $21.9  million due to
additional  construction  in progress to meet increasing  sales demand,  and the
acquisition of the MountainStar  development of $25.0 million.  Cash provided by
operating activities during the first six months of 2000 resulted primarily from
sales and  repayments of Notes  Receivable  of $122.4  million and net income of
$20.6 million.

Net cash used in investing activities for the six months ended June 30, 2001 and
2000,  was $5.3 million and $3.0 million,  respectively.  Cash used in investing
activities  for the six months ended June 30, 2001,  was primarily the result of
leasehold,  furniture,  and  equipment  purchases  related  to the ten new sales
offices  opened,  both in the  United  States  and in  Australia.  Cash  used in
investing  activities  for the six months ended June 30, 2000, was the result of
purchases of furniture  and  equipment to support the  Company's new regions and
sales offices opened during the period.

Net cash provided by financing activities for the six months ended June 30, 2001
and 2000, was $25.4 million and $16.8 million,  respectively. For the six months
ended June 30, 2001,  cash provided by financing  activities was principally the
result of an increase in net borrowings  under the bank line of credit and other
of $22.9 million,  issuance of common stock of $1.4 million,  and an increase in
due to Parent of $1.0  million.  For the six months  ended June 30,  2000,  cash
provided  by  financing  activities  was  principally  the  result of  increased
borrowings  under the Company's  bank line of credit and other of $20.4 million,
offset by a decrease in due to the Parent of $1.3 million and the  repurchase of
common stock of the Company of $2.6 million.


                                       15
<PAGE>


The Company has a three-year,  $85.0 million  revolving  credit agreement with a
group of  banks,  which  is  secured  by a first  mortgage  on the  MountainStar
property.  The agreement  allows for  borrowings  in Australian  dollars up to a
maximum  of $25  million  US  dollar  equivalent.  The  agreement  provides  for
borrowings  at either a  reference  rate or at LIBOR  rates plus the  applicable
margin for the level of  borrowings  outstanding.  In  addition,  the  agreement
requires a quarterly  commitment  fee of 0.30% to 0.50% based on the usage level
of the total commitment. Available borrowings under the agreement are subject to
a  borrowing  base which is a  percentage  of Notes  Receivable  and  inventory,
including  property  under  development.  The agreement  requires the Company to
maintain certain  interest  coverage ratios and  capitalization  ratios and also
imposes  limitations  on  certain  liens  and  carrying  amounts  of  inventory.
Borrowings  outstanding  at June 30,  2001 and  December  31,  2000,  were $72.6
million and $48.4 million,  respectively,  at weighted average interest rates of
6.55% and 8.48%.

The  Company  has  a  $10  million  open  line  of  credit  with  its  principal
shareholder,  JELD-WEN,  inc.  (Parent) which bears interest at prime plus 1.25%
(currently 8.00%) per annum. The line of credit is payable on demand. As of June
30, 2001, there was $1.5 million in indebtedness to the Parent.  The Company may
advance  excess  funds to the Parent at the prime rate  minus  1.75%  (currently
5.00%) per annum. At June 30, 2001, there was no receivable from Parent.

The Company  anticipates  spending  approximately $72.3 million for acquisitions
and  development  of new resort  properties  and for expansion  and  development
activities  during the  second  half of 2001,  including  $5.7  million  for the
continued  development of the MountainStar  property.  The Company plans to fund
these expenditures with cash generated from operations,  including further sales
and  securitizations  of Notes Receivable and borrowings under the $85.0 million
revolving credit agreement.  In addition,  during the third quarter of 2001, the
Company  anticipates   completing  an  private  placement  of  Notes  Receivable
previously sold through the Notes Receivable warehouse facility.  Acquisition of
new resort  sites and  properties  is an ongoing  process  and  availability  of
certain  properties in desired locations could result in increased  expenditures
for such  activities.  The Company  believes  that,  with respect to its current
operations, cash generated from operations and future borrowings available under
existing agreements will be sufficient to meet the Company's working capital and
capital expenditure needs through the end of 2001.

Since completed units at various resort  properties are acquired or developed in
advance and a significant  portion of the purchase price of Vacation  Credits is
financed  by the  Company,  the Company  continually  needs funds to acquire and
develop  property,  to carry Notes  Receivable  contracts and to provide working
capital.  The Company has historically secured additional funds through the sale
of Notes Receivable through the Finance Subsidiaries, borrowings under the $85.0
million revolving line of credit and loans from the Parent.  See "Risk Factors -
Dependence  on  Acquisitions  of  Additional  Resort Units for Growth;  Need for
Additional Capital" of the Company's 2000 Form 10-K.

The Company filed a  registration  statement with the SEC for the sale by it and
certain  shareholders of $75 million of common stock. It is anticipated that the
Company will sell 45% of the shares.  The Company may also negotiate  additional
credit  facilities,  or issue corporate debt or additional  equity securities in
the  future.  Any debt  incurred  or issued by the  Company  may be  secured  or
unsecured,  at a fixed or  variable  interest  rate,  and may be subject to such
additional terms as management deems appropriate.

Both WorldMark and WorldMark South Pacific maintain replacement reserves for the
resorts, which are funded from the annual assessments of the Owners. At June 30,
2001, the amount of The Clubs'  reserves was  approximately  $17.5 million.  The
replacement  reserves are utilized to refurbish  and replace the  interiors  and
furnishings  of the  condominium  units and to maintain the exteriors and common
areas in The  Clubs'  resorts  in which all units  are owned by The  Clubs.  The
Company may advance funds to either Club from time to time.

                        RECENT ACCOUNTING PRONOUNCEMENTS

On July 20, 2001, the FASB issued Statement No. 141, Business Combinations,  and
Statement No. 142, Goodwill and Other Intangible Assets.  Statement 141 requires
that all business  combinations  be  accounted  for under a single  method,  the
purchase method. Use of the pooling-of-interests  method is no longer permitted.
Statement  141  requires   that  the  purchase   method  be  used  for  business
combinations initiated after June 30, 2001. Statement 142 requires that goodwill
no longer be amortized to earnings, but instead be reviewed for impairment.  The
amortization  of goodwill  ceases upon adoption of the Statement,  which will be
adopted by the company on January 1, 2002. The adoption of this statement is not
expected to have a material impact on our financial statements.


                                       16
<PAGE>

Item 3 - Quantitative and Qualitative Disclosures About Market Risk

The Company is exposed to interest  rate  changes  primarily  as a result of its
financing  of  timeshare  purchases,   the  sale  and  securitization  of  Notes
Receivable and borrowing under revolving lines of credit. The Company's interest
rate risk  management  objective is to limit the impact of interest rate changes
on earnings and cash flows and to reduce overall borrowing costs. To achieve its
objectives,  the Company borrows funds,  sells or securitizes  Notes  Receivable
primarily  at fixed rates and may enter into  derivative  financial  instruments
such as interest  rate swaps,  caps and treasury  locks in order to mitigate its
interest rate risk on a related financial instrument.

The functional currency of the Company's Australian operations is the Australian
dollar.  The  Australian  operations  are funded  through the $85 million credit
facility,  which has an  Australian  dollar  sub-limit  of up to $25  million US
dollar equivalent. The Company is also subject to foreign currency exchange rate
risk when developing resort properties denominated in a foreign currency. As the
Company continues expanding its operations  worldwide,  there will be additional
exposure to foreign currency exchange rate risk. The Company occasionally enters
into foreign  exchange  contracts to reduce  exposure to exchange  rate risk. In
January 2001, the Company entered into a forward exchange  contract,  to receive
$2,081 CDN at a rate of $1.4955  CDN/US on July 3, 2001,  and  $16,919  CDN at a
rate of $1.4905  CDN/US on September  30, 2002.  On July 3, 2001,  the July 2001
contract was rolled over into a new contract to receive  $2,081 CDN at a rate of
$1.4958  CDN/US on August 2, 2001.  On August 2, 2001,  this  contract was again
rolled  over into a new  contract  to  receive  $2,081  CDN at a rate of $1.4958
CDN/US on September 4, 2001. The Company is also exposed to credit losses in the
event of nonperformance by the counterparties to its foreign exchange contracts.
The Company does not obtain  collateral  to support  financial  instruments  but
monitors  the  credit  standing  of the  counterparties.

The  Company  does not  maintain a trading  account  for any class of  financial
instrument,  it does not purchase high risk derivative instruments and it is not
directly subject to commodity price risk.

There have been no  material  changes to the  Company's  exposure to market risk
since December 31, 2000.








                                       17
<PAGE>


PART II - OTHER INFORMATION

Item 1 - Legal Proceedings
         The Company is not aware of any material legal proceeding pending
         against it. The Company may be subject to claims and legal proceedings
         from time to time in the ordinary course of business. See Note 10 of
         "Notes to Condensed Consolidated Financial Statements."

Item 2 - Changes in Securities and Use of Proceeds
         None

Item 3 - Defaults Upon Senior Securities
         None

Item 4 - Submission of Matter to a Vote of Security Holders

         Trendwest Resorts, Inc. (Company) held its Annual Meeting of
         Shareholders on June 27, 2000. The matters voted upon at the meeting
         and the votes cast with respect thereto were as follows:

1.       Election of Directors:

<Table>
<Caption>
                            Nominee:             Number of shares     Number of shares     Number of shares
                                                    voted FOR           voted AGAINST          Withheld
                   --------------------------- --------------------- -------------------- --------------------
                   <S>                         <C>                   <C>                  <C>
                   Jerol E. Andres                  24,532,126                9,952                   --
                   Roderick C. Wendt                24,532,126                9,952                   --
                   Linda M. Tubbs                   24,532,126                9,952                   --

</Table>

2.       Proposal to approve an increase in authorized shares under the 1997
         Stock Option Plan:

                     Number of shares     Number of shares     Number of shares
                        voted FOR           voted AGAINST          Withheld
                   --------------------- -------------------- -----------------
                        24,296,202              189,010            56,866

3.       Proposal to Ratify the selection of KPMG LLP as independent auditors
         of the Company for the 2001 fiscal year:

                     Number of shares     Number of shares     Number of shares
                        voted FOR           voted AGAINST          Withheld
                   --------------------- -------------------- -----------------
                        24,539,663                1,719              696

Item 5 - Other Information
                  None.

Item 6 - Exhibits and Reports on Form 8-K
(a)      Exhibits
         2.1      Restated Articles of Incorporation (1)
         2.2      Restated Bylaws (1)
         11       Statement re: Computation of Earnings per share - See note 4
                  of "Notes to Condensed Consolidated Financial Statements."

                  (1) Incorporated by reference to the Company's Registration
                      Statement on Form S-1 (File No. 333-26861).

(a)      Reports on Form 8-K
         None.


                                       18
<PAGE>

                                   SIGNATURES


Pursuant  to the  requirements  of the  Securities  Exchange  Act of  1934,  the
registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned, thereunto duly authorized.


                                     TRENDWEST RESORTS, INC.



Date:      August 14, 2001           /s/ WILLIAM F. PEARE
           --------------------      -------------------------------------
                                     William F. Peare
                                     President, Chief Executive Officer and
                                     Director (Principal Executive Officer)


Date:      August 14, 2001           /s/ TIMOTHY P. O'NEIL
           --------------------      -------------------------------------
                                     Timothy P. O'Neil
                                     Vice President, Chief Financial Officer
                                     And Treasurer
                                    (Principal Financial Officer)



















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