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 March 31, 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 of         (I.R.S. Employer Identification No.)
           incorporation)

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 May 8, 2001: 25,274,955 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>

                                                                                      March 31,          December 31,
                                   Assets                                                2001                2000
                                                                                   -----------------    ----------------
     <S>                                                                       <C>                      <C>
     Cash                                                                      $           447                 404
     Restricted cash                                                                    11,093               7,201
     Notes Receivable, net of allowance for doubtful accounts, sales
        returns and deferred gross profit                                               87,594              76,197
     Accrued interest and other receivables                                              7,825               8,171
     Residual interest in Notes Receivable sold                                         55,905              52,043
     Inventories                                                                       123,041             104,218
     MountainStar development                                                           60,361              56,536
     Property and equipment, net                                                        32,849              29,948
     Refundable income taxes                                                                --               5,688
     Other assets                                                                        7,121               6,599
                                                                                   -----------------    ----------------

                     Total assets                                              $       386,236             347,005
                                                                                   =================    ================

                    Liabilities and Shareholders' Equity

Liabilities:
     Accounts payable and bank overdraft                                                 4,293               9,706
     Accrued liabilities                                                                27,511              21,538
     Accrued construction in progress                                                    6,250               2,855
     Due to Parent                                                                       1,243                 419
     Note payable to Parent                                                             17,731              17,731
     Borrowing under bank line of credit                                                62,228              48,441
     Mortgage payable                                                                   11,686              11,696
     Allowance for recourse liability and deferred gross profit on Notes
        Receivable sold                                                                 30,771              26,846
     Current income taxes payable                                                        5,628                  --
     Deferred income taxes                                                                 136                 330
                                                                                   -----------------    ----------------

                     Total liabilities                                                 167,477             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 25,258,755 and 25,196,997 shares at
        March 31, 2001 and December 31, 2000, respectively.                             55,017              54,119
     Accumulated other comprehensive loss                                              (1,885)               (522)
     Retained earnings                                                                 165,627             153,846
                                                                                   -----------------    ----------------

                     Total shareholders' equity                                        218,759             207,443

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

                     Total liabilities and shareholders' equity                $       386,236             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 March 31,
                                                                                         2001                2000
                                                                                   -----------------    ----------------
<S>                                                                            <C>                       <C>
Revenues:
     Vacation Credit and Fractional Interest sales, net                        $        92,576              62,513
     Finance income                                                                      3,424               4,228
     Gains on sales of Notes Receivable                                                  6,255               3,589
     Resort management services                                                            980               1,613
     Other                                                                               1,742               1,251
                                                                                   -----------------    ----------------

                  Total revenues                                                       104,977              73,194
                                                                                   -----------------    ----------------

Costs and operating expenses:
     Vacation Credit and Fractional Interest cost of sales                              26,048              14,591
     Resort management services                                                            404                 422
     Sales and marketing                                                                43,231              30,580
     General and administrative                                                          9,294               7,250
     Provision for doubtful accounts and recourse
        liability                                                                        6,751               4,254
     Interest                                                                               74                  47
                                                                                   -----------------    ----------------

             Total costs and operating expenses                                         85,802              57,144
                                                                                   -----------------    ----------------

             Income before income taxes                                                 19,175              16,050

Income tax expense                                                                       7,394               6,380
                                                                                   -----------------    ----------------

             Net income                                                        $        11,781               9,670
                                                                                   =================    ================


Basic net income per common share                                              $           .47                 .38

Diluted net income per common share                                            $           .46                 .38


Weighted average shares of common stock and dilutive potential common stock
   outstanding:
     Basic                                                                             25,215,096          25,454,405

     Diluted                                                                           25,496,248          25,553,636


</TABLE>

See accompanying notes to the condensed consolidated financial statements.

                                       3

<PAGE>

                                           TRENDWEST RESORTS, INC.
                                              AND SUBSIDIARIES

                               Condensed Consolidated Statements of Cash Flow
                                           (dollars in thousands)
                                                 (Unaudited)
<TABLE>
<CAPTION>
                                                                                       Three months ended March 31,
                                                                                   -------------------------------------
                                                                                         2001                2000
                                                                                   -----------------    ----------------
<S>                                                                            <C>                      <C>
Cash flows from operating activities:
     Net income                                                                $           11,781               9,670
     Adjustments to reconcile net income to net cash (used in) provided by
        operating activities:
        Depreciation and amortization                                                         881                 594
        Amortization of residual interest in Notes Receivable sold                          3,638               3,125
        Provision for doubtful accounts, sales returns and recourse liability               8,018               5,620
        Recoveries of Notes Receivable charged off                                             44                  52
        Residual interest in Notes Receivables sold                                        (7,741)             (3,674)
        Unrealized loss on residual interest in Notes Receivable sold                         616                  --
        Contract servicing liability arising from sale of Notes Receivable                    148                  --
        Amortization of contract servicing liability                                         (413)               (186)
        Change in deferred gross profit                                                       498                 (30)
        Deferred income tax expense (benefit)                                                  56                (539)
        Issuance of Notes Receivable                                                      (77,687)            (54,338)
        Proceeds from sale of Notes Receivable                                             54,200              42,332
        Proceeds from repayment of Notes Receivable                                        12,137              16,596
        Purchase of Notes Receivable                                                       (5,656)             (4,950)
        Changes in certain assets and liabilities:
           Restricted cash                                                                 (3,892)             (4,120)
           MountainStar development                                                        (3,825)                 --
           Inventories                                                                    (20,911)             (6,405)
           Accounts payable and accrued liabilities                                         4,426                 713
           Income taxes payable                                                             5,628               6,319
           Refundable income taxes                                                          5,688                  --
           Other                                                                             (226)             (2,154)
                                                                                   -----------------    ----------------

     Net cash (used in) provided by operating activities                                  (12,592)              8,625
                                                                                   -----------------    ----------------

Cash flows from investing activities:
     Purchase of property and equipment                                                    (2,422)             (1,178)
                                                                                   -----------------    ----------------

     Net cash provided by (used in) investing activities                                   (2,422)             (1,178)
                                                                                   -----------------    ----------------

Cash flows from financing activities:
     Net borrowing (repayment) under bank line of credit and other                         13,401              (3,900)
     Repayments of mortgage payable                                                           (10)                 --
     Decrease in receivable from Parent                                                        --              (1,279)
     Increase in due to Parent                                                                824                  --
     Issuance of common stock                                                                 923                 166
     Repurchase of common stock                                                               (25)             (2,597)
                                                                                   -----------------    ----------------

     Net cash provided by (used in) financing activities                                   15,113              (7,610)
                                                                                   -----------------    ----------------

     Net (decrease) increase in cash                                                           99                (163)

Effect of foreign currency exchange rates on cash                                             (56)                 58

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

Cash at end of period                                                          $              447               1,655
                                                                                   =================    ================
</TABLE>
See accompanying notes to the condensed consolidated financial statements.

                                       4

<PAGE>

                                            TRENDWEST RESORTS, INC.
                                               AND SUBSIDIARIES

                                 Condensed Consolidated Cash Flow Information
                                                  (continued)
                                            (dollars in thousands)
                                                  (unaudited)
<TABLE>
<CAPTION>
                                                                                       Three months ended March 31,
                                                                                   -------------------------------------
                                                                                         2001                2000
                                                                                   -----------------    ----------------
<S>                                                                             <C>                     <C>
Supplemental disclosures of cash flow information - cash paid during the period
     for:
        Interest (excluding capitalized amounts of $1,840 and $102,
          respectively)                                                        $             --                  47
        Income taxes, net of refunds received                                           (3,261)                  --


</TABLE>
See accompanying notes to condensed consolidated financial statements.






















                                       5
<PAGE>

                             TRENDWEST RESORTS, INC.
                                AND SUBSIDIARIES
            Notes to the Condensed Consolidated Financial Statements
                             (dollars in thousands)
                                   (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  months  ended  March  31,  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
period ended March 31, 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 March 31, 2001, the Company had
foreign exchange contracts with notional amounts of

                                       6
<PAGE>

approximately  $2,081 CDN at 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  were $408,  net of tax benefit,  and have
been included in other comprehensive income for the quarter.

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 disclosures required under SFAS 140 as of December 31, 2000. SFAS 140 is
to be applied prospectively with certain exceptions. SFAS 140 is not expected to
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 year. 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 month  period ended March 31,
2001.

Note 4 -- Comprehensive Income

Comprehensive income is comprised of the following:

<TABLE>
<CAPTION>
                                                                  Three months ended
                                                                       March 31,
                                                              ----------------------------
                                                                 2001            2000
                                                              ------------    ------------
<S>                                                        <C>                <C>
Net income                                                 $       11,781           9,670
Other comprehensive loss:
     Change in cumulative effect of foreign currency
     translation                                                    (955)              14
     Unrealized derivative losses, net of tax effect                (408)              --
                                                              ------------    ------------
Comprehensive income                                       $       10,418           9,684
                                                              ============    ============

</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  presents the  reconciliation  of weighted average shares used for
basic and diluted net income per share:

<TABLE>
<CAPTION>
                                                                              Three months ended March 31,
                                                                         ----------------------------------------
                                                                               2001                  2000
                                                                         -----------------     ------------------
         <S>                                                             <C>                   <C>
         Basic
         Basic weighted average shares                                      25,215,096            25,454,404

         Diluted
         Effect of dilutive securities                                         281,152                99,232
                                                                         -----------------     ------------------
         Diluted weighted average shares outstanding                        25,496,248            25,553,636
                                                                         =================     ==================
</TABLE>

Net income  available to common  shareholders for basic net income per share was
$11,781  and  $9,670  for the  three  months  ended  March  31,  2001 and  2000,
respectively.

At March 31, 2001 and 2000,  there were options to purchase 0 and 669,000 shares
of common stock outstanding, respectively, which were antidilutive and therefore
not included in the computation of diluted net income per share.

Note 8 - Inventories

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

<TABLE>
<CAPTION>
                                                                          March 31,           December 31,
                                                                             2001                 2000
                                                                       -----------------     ----------------
        <S>                                                         <C>                      <C>
        Vacation Credits                                            $        18,246                16,829
        Construction in progress                                            104,795                87,389
                                                                       -----------------     ----------------

                 Total inventories                                  $       123,041               104,218
                                                                       =================     ================

</TABLE>

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:

<TABLE>
<CAPTION>
                                                                          March 31,           December 31,
                                                                             2001                 2000
                                                                       -----------------    ------------------
        <S>                                                         <C>                     <C>
        Total Notes Receivable                                      $       538,091              502,762
        Less Notes Receivable sold                                         (432,027)            (407,215)
                                                                       -----------------    ------------------

        Gross on balance sheet Notes Receivable                             106,064               95,547
                                                                       =================    ==================

        Unencumbered Notes Receivable                                        51,206               37,873
        Retained interest in Notes Receivable sold                           54,858               57,674
                                                                       -----------------    ------------------

        Gross on balance sheet Notes Receivable                             106,064               95,547

        Less: Deferred gross profit                                          (1,381)              (1,340)
               Allowance for doubtful accounts and sales returns            (17,089)             (18,010)
                                                                       -----------------    ------------------

        Notes Receivable, net                                       $        87,594               76,197
                                                                       =================    ==================

</TABLE>

                                       8
<PAGE>

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

<TABLE>
<CAPTION>
                                                                               2001                  2000
                                                                         -----------------     ------------------
         <S>                                                        <C>                        <C>
         Balances at beginning of period                            $          40,292                29,087

         Provision for doubtful accounts, sales returns and
             recourse liability                                                 8,018                27,015
         Notes receivable charged-off and sales returns net of
             Vacation Credits recovered                                        (5,515)              (16,061)
         Recoveries                                                                44                   251
                                                                         -----------------     ------------------

         Balances at end of period                                  $          42,839                40,292
                                                                         =================     ==================


         Allowance for doubtful accounts and sales returns          $          17,089                18,010
         Recourse Liability on notes receivable sold                           25,750                22,282
                                                                         -----------------     ------------------
                                                                    $          42,839                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 March 31,  2001,  the  Company  had
outstanding   purchase  commitments  of  $51,124  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 March 31, 2001, there were $5,587 in surety bonds outstanding.

(c) Litigation
The Company is involved in various claims and lawsuits arising from 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  interest Sales.  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.  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.

                                       9

<PAGE>



The following tables summarize the segment activity of the Company:

<TABLE>
<CAPTION>
                                                                                                   Segment
Three months ended March 31, 2001:                   Sales         Finance          Other           Total
                                                   -----------    -----------     -----------    -------------
<S>                                           <C>                 <C>             <C>            <C>
External revenue                              $        92,576          1,258            980           94,814
Interest revenue - net                                     --          1,082             --            1,082
Interest revenue-intersegment                              --          1,991             --            1,991
Intersegment revenue                                       --            305             --              305
                                                   -----------    -----------     -----------    -------------
         Segment revenue                      $        92,576          4,636            980           98,192

Segment profit                                $        14,301          2,895            576           17,772

Significant non-cash items:
Provision for doubtful accounts, sales
  returns and recourse liability                        8,018             --             --            8,018

                                                                                                   Segment
Three months ended March 31, 2000:                   Sales         Finance          Other           Total
                                                   -----------    -----------     -----------    -------------
External revenue                              $        62,513          1,036          1,613           65,162
Interest revenue - net                                     --          1,311             --            1,311
Interest revenue-intersegment                              --          1,531             --            1,531
Intersegment revenue                                       --            296             --              296
                                                   -----------    -----------     -----------    -------------
Segment revenue                               $        62,513          4,174          1,613           68,300

Segment profit                                $        11,889          2,868          1,191           15,948

Significant non-cash items:
Provision for doubtful accounts, sales
returns and recourse liability                          5,614             --             --            5,614

</TABLE>

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

<TABLE>
<CAPTION>
                                                       Three months ended March 31,
                                                    ---------------------------------------
                                                         2001                    2000
                                                    ----------------        ---------------
<S>                                               <C>                       <C>
Segment revenue                                   $       98,192                  68,300
\Interest expense reported net of interest
    income                                                    74                      47
Elimination of intersegment revenue                       (2,296)                 (1,827)
Other subsidiaries revenue                                 9,007                   6,674
                                                    ----------------        ---------------
                 Consolidated revenue             $      104,977                  73,194
                                                    ================        ===============

Segment profit                                    $       17,772                  15,948
Corporate overhead not included in segment
    reporting                                             (5,742)                 (4,212)
Other subsidiaries profit                                  7,145                   4,314
                                                    ----------------        ---------------
             Consolidated pre-tax income          $       19,175                  16,050
                                                    ================        ===============
</TABLE>

The  Company's  revenue from  external  customers  derived from sales within the
United States  totaled  $88,000 and $62,513 for the three months ended March 31,
2001 and 2000, respectively.  Revenue from external customers derived from sales
in all foreign  countries totaled $4,576 and $0 for the three months ended March
31, 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 $6,822 at March 31, 2001.

                                       10
<PAGE>



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

                              RESULTS OF OPERATIONS

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 among other
things,  to 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 $105.0 million for the three months ended
March 31, 2001,  compared to $73.2  million for the three months ended March 31,
2000, an increase of 43.4%. The principal reason for the overall improvement was
a 39.8% increase in Vacation  Credit sales to $87.4 million for the three months
ended March 31,  2001,  from $62.5  million for the three months ended March 31,
2000. In addition, $5.2 million in Fractional Interest sales from the Depoe Bay,
Oregon,  resort  were  recognized  during  the first  three  months of 2001.  No
Fractional  Interest  sales were  recognized  in 2000.  The increase in Vacation
Credit  sales was  primarily  the  result of a 28.6%  increase  in the number of
Vacation Credits sold in the United States, to 58.9 million for the three months
ended March 31,  2001,  from 45.8  million for the three  months ended March 31,
2000.  The  increase  in  Vacation  Credits  sold was  largely  attributable  to
continued  improvement in existing sales  offices,  improved  performance in the
eleven new offices  opened during 2000, and increased  Upgrade  Sales.  Revenues
from Upgrade Sales  increased  34.0% to $13.4 million for the three months ended
March 31,  2001,  from $10.0  million for the three months ended March 31, 2000.
The increase in Upgrade  sales is the result of continuing  satisfaction  on the
part of WorldMark Owners and the ongoing growth in the owner base.

In the United  States,  the average price per Vacation  Credit sold increased to
$1.41 per credit for the three  months  ended March 31,  2001,  versus $1.37 per
credit for the three  months  ended March 31,  2000,  primarily as a result of a
$0.05 increase in the selling price of Vacation Credits  effective July 1, 2000,
and an  $0.05  increase  in the  price of  Upgrade  Vacation  Credits  effective
September 1, 2000.

For the quarter  ended  March 31,  2001,  financing  activities  generated  $9.7
million in  revenues,  compared to $7.8 million in the same quarter last year, a
24% increase.  This increase is largely due to increased gains on sales of Notes
Receivable.  Gains  increased  due to increased  sales of Notes  Receivable.  In
addition,  interest  rates fell during the quarter,  increasing the net interest
spread and thus increasing 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 three months
ended March 31,  2001,  versus  23.4% for the three months ended March 31, 2000.
This  increase  is a result of the higher cost of sales of  Fractional  Interest
sold during  2001,  as well as the lower cost of the units at Fiji and at Rancho
Vistoso in Arizona  contributed  to WorldMark  during the first quarter of 2000,
both of which had product  costs lower than the  Company's  historical  average.
Over the remainder of 2001, the Company expects product cost, as a percentage of
Vacation  Credit sales,  to remain at a similar level to first quarter  results.
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 third  quarter,  with
most of this revenue being recognized in the second quarter.

Sales and marketing  costs,  as a percentage of Vacation  Credit and  Fractional
Interest  sales,  were  46.7% for the three  months  ended  March 31,  2001,  as
compared to 49.0% for the three months ended March 31, 2000. This decrease was a
result of the Company  experiencing  strong  sales  system  wide.  In  addition,
Fractional  Interest sales have lower relative sales and marketing costs, offset
by higher product cost.

General and  administrative  expenses  increased  27.4% to $9.3  million for the
three months ended March 31, 2001,  from $7.3 million for the three months ended
March 31, 2000. As a percentage  of total  revenue,  general and  administrative
costs decreased to 8.9% for the three months ended March 31, 2001,  versus 10.0%
for the three  months ended March 31, 2000.  In the first  quarter of 2000,  the
Company  fully  expensed  start-up  costs for the new Midwest and South  Pacific
regions without the corresponding benefit of sales.

                                       11
<PAGE>

Resort management services contributed $1.0 million to total revenues, down from
last year's $1.6 million as higher  utility costs at Western  resorts and higher
labor costs negatively impacted the management fee received from WorldMark.  The
Company is currently evaluating various profit improvement  initiatives to bring
management fees more in line with prior periods.

Provision  for  doubtful  accounts and recourse  liability,  as a percentage  of
Vacation Credit and Fractional Interest sales, was 7.3% for the first quarter of
2001 versus 6.9% for the  comparable  period last year.  This  increase  was the
result of a higher mix of sales in newer sales  offices  with  expected  default
rates higher than the Company's average historical experience.

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 March 31, 2001 and December 31, 2000,
were  $41.4  million,  and  $38.9  million,   respectively,   both  representing
approximately  7.7% of the total  portfolio of Notes  Receivable at those dates,
including the Notes  Receivable that had been sold by the Company.  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  exceed 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 March 31,
2001 and December 31, 2000,  2.2% and 2.3% of the  Company's  total  receivables
portfolio of $538.1 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 which are financed,  cash sales of Vacation Credits,  principal
and  interest  payments  on  Notes  Receivable,  and  proceeds  from  sales  and
borrowings  collateralized by Notes Receivable.  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 three months  ended March 31, 2001 and 2000,  cash (used in) provided
by operating activities was ($12.6) million and $8.6 million, respectively. Cash
used in operating activities increased principally due to the increased issuance
of Notes  Receivable and increased  expenditures  for  inventory.  For the three
months ended March 31, 2001,  cash  provided by  operating  activities  resulted
primarily  from sales and  repayments of Notes  Receivable of $66.3  million,  a
decrease  in  accounts  payable  and accrued  liabilities  of $4.4  million,  an
increase in taxes payable of $5.6 million,  and net income of $11.8 million. For
the three  months ended March 31, 2001,  cash used in operating  activities  was
principally for the issuance and purchase of Notes  Receivable of $83.3 million,
and an increase in inventory of $20.9 million.  For the three months ended March
31, 2000, cash provided by operating  activities  resulted  primarily from sales
and  repayments  of Notes  Receivable  of $58.9  million,  an  increase in taxes
payable of $6.3 million,  and net income of $9.7  million.  For the three months
ended March 31, 2000, cash used in operating  activities was principally for the
issuance  and  purchase  of Notes  Receivable  of $59.3  million to finance  the
purchase of Vacation  Credits by Owners,  and an increase in  inventory  of $6.4
million.

Net cash used in investing  activities for the three months ended March 31, 2001
and  2000,  was  $2.4  million  and $1.2  million,  respectively.  Cash  used in
investing  activities  for the three months ended March 31, 2001, was the result
of  leasehold,  furniture,  and  equipment  purchases  to support  the new sales
offices  opened to support  expansion of both US and South  Pacific  operations.
Cash used in investing activities for the three months ended March 31, 2000, was
the result of furniture and equipment purchases to support the Company's ongoing
growth.

                                       12
<PAGE>

Net cash provided by (used in) financing  activities  for the three months ended
March 31, 2001 and 2000, was $15.1 million and ($7.6) million, respectively. For
the three months ended March 31, 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 $13.4 million, issuance of common stock of $0.9 million, and
an increase in due to Parent of $0.8  million.  For the three months ended March
31, 2000,  cash used in financing  activities  was  principally  the result of a
decrease  in net  borrowings  under the bank  line of  credit  of $3.9  million,
repurchase  of common stock of $2.6  million,  and decrease in  receivable  from
Parent of $1.3 million.

The Company has a three-year, $85.0 million unsecured revolving credit agreement
(Credit Agreement) with a group of banks. 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.  Under the terms of the Credit
Agreement,  the Company is required to maintain certain interest coverage ratios
and  capitalization  ratios and also imposes  limitations  on certain  liens and
carrying  amounts of  inventory.  The  Agreement  was  amended  during the first
quarter.  The amendment  increased the total  commitment from $60 million to $85
million, raised the Australian dollar limit to $25 million US dollar equivalent,
increased the  quarterly  commitment  fee, and provided a first  mortgage on the
MountainStar property. Borrowings outstanding at March 31, 2001 and December 31,
2000, were $62.2 million and $48.4 million,  respectively,  at weighted  average
interest rates of 7.60% and 8.48%.

The Company has a $10  million  open line of credit with the Parent  which bears
interest at prime plus 1.25% (currently  9.25%) per annum. The line of credit is
payable on demand.  As of March 31, 2001, there was $1.2 million in indebtedness
to the Parent.  The Company may advance  excess funds to the Parent at the prime
rate minus 1.75%  (currently  6.25%) per annum. At March 31, 2001,  there was no
Receivable from Parent.

For the remainder of 2001, the Company anticipates spending  approximately $85.5
million  for  acquisitions  and  development  of new resort  properties  and for
expansion  and  development   activities.   The  Company  plans  to  fund  these
expenditures with cash generated from operations, borrowings on the bank line of
credit  and  further  sales  and   securitizations  of  Notes  Receivable.   The
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, 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.

In the future, the Company may negotiate additional credit facilities,  or issue
corporate debt or equity securities.  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  The Club  and  WorldMark  South  Pacific  maintain  replacement
reserves for the Resorts,  which are funded from the annual  assessments  of the
Owners.  At March 31, 2001, the amount of The Clubs'  reserve was  approximately
$17.1 million.  The replacement reserve is 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.

                                       13
<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.  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.









                                       14
<PAGE>

PART II - OTHER INFORMATION

Item 1 - Legal Proceedings

          Incorporated  by  reference.  See  Note  11  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

          None

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

                  FORM 8-K dated February 27, 2001, on Item 5. Other Events -
                  Stock Split., relating to the 3 for 2 stock split declared by
                  the Board of Directors on February 21, 2001, effective for
                  stockholders of record on March 15, 2001.







                                       15
<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:      May 15, 2001               /s/ WILLIAM F. PEARE
           ----------------           -----------------------------------------
                                      William F. Peare
                                      President, Chief Executive Officer and
                                      Director (Principal Executive Officer)


Date:      May 15, 2001               /s/ TIMOTHY P. O'NEIL
           ----------------           -----------------------------------------
                                      Timothy P. O'Neil
                                      Vice President, Chief Financial Officer
                                      (Principal Financial Officer)











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