<PAGE>

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

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

                                   FORM 10-Q

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

                 FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2001
                          COMMISSION FILE NO. 0-30889

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

                           HARBOR GLOBAL COMPANY LTD.
            (exact name of registrant as specified in its charter)

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

                  BERMUDA                          52-2256071
    (STATE OR OTHER JURISDICTION OF             (I.R.S. EMPLOYER
    INCORPORATION OR ORGANIZATION)             IDENTIFICATION NO.)

        ONE FANEUIL HALL MARKETPLACE               02109-1820
                4TH FLOOR                          (ZIP CODE)
           BOSTON, MASSACHUSETTS
  (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)

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

                                 (617) 878-1600
              (REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)

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

                                   NO CHANGES
   (Former name, former address and former fiscal year, if changes since last
                                    report)

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

      Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 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 [ ]

      As of November 1, 2001, the Registrant had 5,649,311 common shares, par
value $.0025 per share, issued and outstanding.
<PAGE>

                        PART I -- FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS

                           HARBOR GLOBAL COMPANY LTD.

                          CONSOLIDATED BALANCE SHEETS
                (DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)

<TABLE>
<CAPTION>
                                                                                    September 30,          December 31,
                                                                                         2001                  2000
                                                                                    -------------         -------------
                                                                                     (Unaudited)
<S>                                                                                      <C>                  <C>
ASSETS
Cash and Cash Equivalents...............................................                 $  4,478             $ 24,338
Restricted Cash.........................................................                    2,376                  382
Marketable Securities...................................................                   32,166                5,321
Accounts Receivable.....................................................                    1,726                3,703
Prepaid Charges.........................................................                    2,806                1,897
Timber Inventory........................................................                    4,110                3,907
Other Current Assets....................................................                      324                    7
                                                                                         --------             --------
Total Current Assets....................................................                   47,986               39,555

Long-term Restricted Cash...............................................                    6,879                6,820
Goodwill................................................................                    1,024                1,239
Polish Venture Capital Investments......................................                   25,208               31,964
Marketable Securities...................................................                   11,485                5,665
Long-term Investments...................................................                    5,687               11,738
Building................................................................                   23,537               23,965
Timber Equipment........................................................                    7,901                9,899
Other Long-term Assets..................................................                      966                2,883
Note Receivable.........................................................                    8,949               10,593
                                                                                         --------             --------
Total Assets............................................................                 $139,622             $144,321
                                                                                         ========             ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Accounts Payable........................................................                 $  1,917             $  2,175
Dividend Payable........................................................                   15,669                   --
Accrued Expenses........................................................                    4,811                4,275
Foreign Taxes Payable...................................................                      523                4,238
                                                                                          --------             --------
Total Current Liabilities...............................................                   22,920               10,688

Long-term Escrow Liability..............................................                    1,800                1,800
Note Payable............................................................                    5,000                5,000
                                                                                         --------             --------
Total Liabilities.......................................................                   29,720               17,488

Minority Interest.......................................................                   43,674               51,577
                                                                                         --------             --------
SHAREHOLDERS' EQUITY
Common shares, par value $.0025 per share; authorized 48,000,000
 shares; 5,643,311 shares issued and outstanding as of September 30, 2001
 and December 31, 2000                                                                         14                   14
Preferred shares, par value $.01 per share; authorized 1,000,000
 shares; none issued....................................................                       --                   --
Paid-in Capital.........................................................                   75,763               75,763
Accumulated Deficit.....................................................                  (11,944)                (521)
Other Comprehensive Income..............................................
  Net Unrealized Gains on Hold For Sale Marketable Securities...........                    2,383                   --
  Cumulative Translation Adjustment.....................................                       12                   --
                                                                                         --------             --------
Total Shareholders' Equity..............................................                   66,228               75,256
                                                                                         --------             --------
Total Liabilities and Shareholders' Equity..............................                 $139,622             $144,321
                                                                                        =========            =========
</TABLE>


  The accompanying notes are an integral part of these consolidated financial
                                   statements.


                                       2
<PAGE>

                           HARBOR GLOBAL COMPANY LTD.

                      CONSOLIDATED STATEMENTS OF OPERATIONS
                 (DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
                                   (UNAUDITED)
<TABLE>
<CAPTION>
                                                                            Three Months               Nine Months
                                                                                Ended                     Ended
                                                                             September 30,             September 30,
                                                                          ------------------        ------------------
                                                                            2001       2000           2001       2000
                                                                          -------    -------        -------    -------
<S>                                                                       <C>        <C>            <C>        <C>
Revenues:
  Timber Sales....................................................        $ 4,313    $ 3,908        $11,656    $ 9,233
  Real Estate Rental Revenue......................................          1,614      2,510          4,740      6,556
  Other...........................................................          1,304      1,020          4,090      2,439
                                                                          -------    -------        -------    -------
          Total Revenues..........................................          7,231      7,438         20,486     18,228
                                                                          -------    -------        -------    -------
Operating Expenses:
  Timber Cost of Goods Sold.......................................         (4,827)    (4,088)       (10,912)   (10,066)
  Salary and Benefit Expenses.....................................         (1,046)    (1,133)        (3,131)    (2,537)
  Facility Expenses...............................................           (325)      (362)        (1,000)    (1,021)
  Building and Property Management Expenses.......................           (529)      (698)        (1,947)    (1,714)
  Other Expenses..................................................         (3,743)    (3,719)        (9,158)    (7,507)
  Allocation of Former Parent Company Costs.......................             --     (3,093)            --     (7,796)
                                                                          -------    -------        -------    -------
          Total Operating Expenses................................        (10,470)   (13,093)       (26,148)   (30,641)
                                                                          -------    -------        -------    -------

          Operating Loss..........................................         (3,239)    (5,655)        (5,662)   (12,413)
Other Income (Expense):
  Net Unrealized and Realized Gains on Securities.................            382      6,510          3,255      8,594
  Write-down of Venture Capital Investments.......................             --     (8,781)        (5,283)    (8,781)
  Gain on Sale of Tas-Yurjah......................................             --         --          7,303         --
  Write-Off of Investment in Polish Real Estate Fund..............             --         --         (1,875)        --
  Interest Income (Expense).......................................             --       (220)            --       (470)
                                                                          -------    -------        -------    -------
          Total Other Income (Expense)............................            382     (2,491)         3,400       (657)
                                                                          -------    -------        -------    -------
           Loss from Continuing Operations before
             Provision for Income Taxes and Minority Interest.....         (2,857)    (8,146)       (2,262)    (13,070)
  Provision for Income Taxes......................................           (291)    (2,854)       (1,297)     (3,449)
                                                                          -------    -------       -------     -------
           Loss from Continuing Operations before
             Minority Interest....................................         (3,148)   (11,000)       (3,559)    (16,519)
Minority Interest Income..........................................            294      5,933         5,186       5,659
                                                                          -------    -------        ------     -------

          Net (Loss) Income from Continuing Operations............         (2,854)    (5,067)        1,627     (10,860)
Net Income from Discontinued Operations...........................             --         19            --       1,345
                                                                          -------    -------       -------     -------

          Net (Loss) Income.......................................        ($2,854)   ($5,048)       $1,627     ($9,515)
                                                                          =======    =======       =======     =======
(Loss) Earnings Per Share:
Continuing Operations.............................................         ($0.50)    ($0.89)        $0.29      ($1.92)
Discontinued Operations...........................................             --         --            --        0.23
                                                                          -------    -------       -------     -------
Basic and Diluted (Loss) Earnings Per share.......................         ($0.50)    ($0.89)        $0.29      ($1.69)
                                                                          =======    =======       =======     =======

Weighted Average Basic and Diluted Shares Outstanding.............          5,643      5,643         5,643       5,643
                                                                          =======    =======       =======     =======
</TABLE>

   The accompanying notes are an integral part of these consolidated financial
                                   statements.


                                       3
<PAGE>

                          HARBOR GLOBAL COMPANY LTD.

                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                (DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
                                  (UNAUDITED)

<TABLE>
<CAPTION>
                                                                                   NINE MONTHS ENDED SEPTEMBER 30,
                                                                                   -------------------------------
                                                                                     2001                   2000
                                                                                   ---------             ---------
<S>                                                                                 <C>                    <C>
Cash Flows from Operating Activities:
  Net Income (Loss).............................................                    $  3,077               $(9,515)
  Net Income from Discontinued Operations.......................                          --                 1,345
                                                                                    --------              --------
        Net Income (Loss) from Continuing Operations............                       3,077               (10,860)
  Adjustments to Reconcile Net Loss to Net Cash Used in
Operating Activities --
    Depreciation and Amortization...............................                       3,768                 2,701
    Loss on Disposal of Timber Equipment........................                         383                    --
    Unrealized and Realized Losses (Gains) on Venture Capital
      Marketable Securities, and Long-term Investments, Net.....                       2,877                   187
    Minority Interest...........................................                      (5,186)               (5,659)
    Non-cash Interest Income on Note Receivable.................                        (856)                   --
    Allocation of Former Parent Company Costs...................                          --                 7,796
    Interest Earned on Restricted Cash..........................                         (59)                   --
Changes in Operating Assets and Liabilities --
    Timber Inventory............................................                        (203)                  347
    Other Current Assets........................................                     (26,093)               (1,431)
    Other Long-term Assets and Marketable Securities............                       7,211                   752
    Accrued Expenses and Accounts Payable.......................                      (4,887)               (1,666)
                                                                                    --------              --------
        Total Adjustments and Changes in Operating Assets
          and Liabilities.......................................                     (23,045)                3,027
                                                                                    --------              --------

        Net Cash Used in Continuing Operating Activities........                     (19,968)               (7,833)
                                                                                    --------              --------

        Net Cash Provided by Discontinued Operations............                          --                 8,678
                                                                                    --------              --------
Cash Flows from Investing Activities:
  Building......................................................                         (81)                   --
  Purchase of Long-term Investments.............................                      (5,697)               (3,889)
  Proceeds from Sale of Long-term Investments...................                       5,299                10,270
  Net Cash Flow from Other Investing Activities.................                       1,473                   254
  Proceeds from Note Receivable.................................                       2,500                    --
  Purchase of Timber Equipment..................................                      (1,306)                 (317)
                                                                                    --------              --------

        Net Cash Provided by Investing Activities...............                       2,188                 6,318
                                                                                    --------              --------
Cash Flows from Financing Activities:
  Capital Contributions.........................................                         --                 (1,178)
  Due to Affiliates, Net........................................                         --                  2,072
  Amount Invested by Limited Partners of Venture Capital
    Subsidiary..................................................                         --                    950
  Repayment of Note Payable.....................................                         --                 (4,960)
  Distribution from Former Parent Company.......................                         --                 19,111
  Reclassification of Restricted Cash...........................                      (1,994)                  880
                                                                                    --------              --------

        Net Cash Provided by Financing Activities...............                      (1,994)               16,875
                                                                                    --------              --------
Effect of Foreign Currency Exchange Rate Changes on Cash and
   Cash Equivalents.............................................                         (86)                   --
Net (Decrease) Increase in Cash and Cash Equivalents............                     (19,860)               24,038
                                                                                    --------              --------

Cash and Cash Equivalents, Beginning of Period..................                      24,338                 5,177
                                                                                    --------              --------

Cash and Cash Equivalents, End of Period........................                    $  4,478              $ 29,215
                                                                                    ========              ========
</TABLE>


  The accompanying notes are an integral part of these consolidated financial
                                   statements.
<PAGE>

                           HARBOR GLOBAL COMPANY LTD.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  (UNAUDITED)
                               September 30, 2001

(1) BACKGROUND AND BASIS OF PRESENTATION

BACKGROUND

      Prior to October 24, 2000, Harbor Global Company Ltd., a Bermuda limited
duration company ("Harbor Global" or the "Company"), was a wholly-owned
subsidiary of The Pioneer Group, Inc., a Delaware corporation ("Pioneer"). On
May 14, 2000, Pioneer and UniCredito Italiano, S.p.A., an Italian financial
institution ("UniCredito"), entered into a merger agreement under which a
wholly-owned subsidiary of UniCredito would merge with and into Pioneer (the
"Merger Agreement"). As a condition to closing the merger and pursuant to a
Distribution Agreement dated as of October 24, 2000 by and among the Company,
Pioneer and Harbor Global II Ltd. (the "Distribution Agreement"), Pioneer
transferred selected assets and liabilities to Harbor Global and distributed all
of the outstanding common shares of Harbor Global to its stockholders (the
"Spin-off"). Pioneer stockholders received one Harbor Global common share for
every five shares of Pioneer common stock held on that date.

      The Company's assets primarily consist of the following: Russian real
estate management and investment management operations; Polish venture capital
investment and management operations; real estate management operations; timber
harvesting and sales in Russia ("Russian timber operations"); and its other
assets and operations ("Other"). Other includes approximately $32.4 million in
cash and marketable securities of which $5 million is restricted to satisfy
liabilities associated with Pioneer's former gold mining operations and $1.8
million is restricted to satisfy a compensation liability payable to Harbor
Global's Chief Executive Officer. Other also includes a non-interest-bearing
promissory note with a face value of $13.8 million and a balance outstanding of
$11.3 million, payable to Pioglobal Goldfields II Limited, a wholly-owned
subsidiary of the Company.

      Harbor Global seeks to liquidate its assets in a timely fashion on
economically advantageous terms. Harbor Global will continue to operate its
assets as going concern businesses until they are liquidated. Harbor Global's
memorandum of association provides that the liquidation of its assets must be
completed upon the earlier of the fifth anniversary of the date of the
distribution of Harbor Global common shares to its shareholders or the
distribution by Harbor Global of all its assets to its shareholders. If Harbor
Global has not liquidated all of its assets before the fifth anniversary of the
distribution date, the Harbor Global board of directors, in its discretion, may
authorize Harbor Global to continue to operate its assets for up to three
additional one year periods.

BASIS OF PRESENTATION

      In the opinion of management, the accompanying interim financial
statements contain all adjustments necessary to present fairly the financial
position as of September 30, 2001 and results of operations for the three and
nine months ended September 30, 2001 and 2000 and cash flows for the nine months
ended September 30, 2001 and 2000. Results for interim periods may not
necessarily be indicative of the results to be expected for the year. These
interim financial statements should be read in conjunction with the Company's
2000 Annual Report on Form 10-K for the year ended December 31, 2000 filed with
the Securities and Exchange Commission.

      The consolidated financial statements included herein have been prepared
using the historical cost basis of the assets and liabilities and historical
results of operations related to the Company's businesses. The historical
consolidated financial statements for the three and nine months ended September
30, 2000 include allocations of certain Pioneer expenses relating to the
Company's businesses that were transferred to the Company from Pioneer. These
costs are included in the Statement of Operations as costs allocated by a former
parent and include an


                                       5
<PAGE>

allocation of indirect costs such as legal, finance and human resources and
direct costs such as salary and benefit costs of Pioneer employees who worked
exclusively for the Company, travel and political risk insurance. The cost of
the shared services charged to the Company is not necessarily indicative of the
costs that would have been incurred if the Company had performed these functions
as a stand-alone entity. Following the Spin-off, the Company began performing
these shared functions using its own resources or purchased services.

      Since Harbor Global is a Bermuda limited duration company, the Company
expects that for United States federal income tax purposes it will be taxed as a
partnership and, as a result, all United States federal income tax expenses have
been and will be borne by its shareholders. The income tax provisions and
deferred taxes included in the accompanying consolidated financial statements
relate to the Company's corporate subsidiaries that are located primarily in
Russia and Poland.

      The consolidated financial statements included herein may not necessarily
reflect the consolidated results of operations, financial position, and cash
flows of the Company if it had been a separate, stand-alone entity during the
periods presented.

(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

CONSOLIDATION

      The accompanying consolidated financial statements include the Company's
wholly-owned and majority-owned subsidiaries and certain partnerships that it
controls. Intercompany transactions and balances have been eliminated. The
Company has consolidated Pioneer Poland U.S., L.P. and Pioneer Poland UK, L.P.
(collectively, the "Pioneer Poland Fund") in which the Company's ownership
interests are 7.2% and 9.2%, respectively. Control is defined by several
factors, including, but not limited to, the fact that for the relevant periods
indicated in the accompanying financial statements the Company was the general
partner of both Pioneer Poland U.S., L.P. and Pioneer Poland UK, L.P., and as
the general partner had absolute and unilateral authority to make investment
decisions, the limited partners may not remove the general partner, and as the
general partner the Company had absolute and unilateral authority to declare, or
not to declare, distributions of partnership income to the partners.

      The preparation of the consolidated financial statements in conformity
with generally accepted accounting principles in the United States of America
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the consolidated financial statements and the
reported amounts of revenues and expenses. Actual results could differ from
those estimates. The most significant estimates with regard to these
consolidated financial statements relate to the valuation of investments of the
Open Joint-Stock Company "Pioneer First Investment Fund" ("Pioneer First
Investment Fund"), venture capital investments and the estimated future cash
flows of the Company's timber operations, as discussed herein.

POLISH VENTURE CAPITAL INVESTMENT

      No market quotes are available for the venture capital investments. Most
of these investments are valued at fair value, as determined in good faith by
management. In determining fair value, investments are initially stated at cost
until significant subsequent events require a change in valuation. The Company
considers the financial condition and operating results of the investee, prices
paid in subsequent private offerings of the same or similar securities, the
amount that the Company can reasonably expect to realize upon the sale of these
securities, and other factors deemed relevant. For the three and nine months
ended September 30, 2001, charges of approximately $0 and $5,283,000,
respectively, were recorded relative to the write-down of two investments in the
venture capital portfolio. For the three and nine months ended September 30,
2000, charges of approximately $9,114,000 were recorded relative to the
write-down of two portfolio investments. A majority of these write-downs,
approximately 92%, are attributable to minority shareholders.


                                       6
<PAGE>

CONCENTRATION OF RISK

      The Company's operations are concentrated in Russia and Central Europe.
Additionally, the Company's timber project sells its timber primarily in the
Asian markets. The Company performs ongoing evaluations of its subsidiaries and
investments and endeavors to mitigate its exposure in these foreign countries.

RUSSIAN INVESTMENTS

      Russian investments consist of equity securities held in the portfolio of
the Pioneer First Investment Fund. Such securities are classified as
available-for-sale and recorded at fair value pursuant to SFAS No. 115,
"Accounting for Certain Investments in Debt and Equity Securities". Inasmuch as
the breadth and scope of the Russian securities markets had not developed to
certain quantifiable levels, these equity securities were all classified as
long-term investments and carried at cost with adjustments made for any
other-than-temporary impairment in value.

      In the third quarter 2001, management determined that for certain of these
equity securities there was sufficient liquidity in the Russian market to
account for them as long-term marketable securities based on quoted prices on
the Russian Trading System. Unrealized gains and losses are recorded directly in
stockholder's equity as other comprehensive income. The cost of securities sold
is based on the specific identification method. Realized gains or losses and any
other-than-temporary declines in value are reported in other income and expense.
For Russian investments that do not meet its liquidity requirements, the Company
continues to classify these securities as long-term investments and carry such
investments at cost with adjustments made for other-than-temporary impairment.

RECENT ACCOUNTING PRONOUNCEMENTS

      For the year beginning January 1, 2001, the Company adopted SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities". The impact of
the adoption was not material to the financial statements of the Company.

      The Financial Accounting Standards Board approved the issuance SFAS No.
142, "Goodwill and Other Intangible Assets" in July 2001. SFAS No. 142 will
require that goodwill not be amortized but rather be tested for impairment at
least annually at the reporting unit level. SFAS No. 142 is effective for fiscal
years beginning after December 15, 2001 for all goodwill and other intangible
assets regardless of when those assets were initially recognized. The Company is
evaluating the impact that adopting SFAS No. 142 will have on the Company's
operating results and financial condition.

      In August 2001, the Financial Accounting Standards Board issued SFAS No.
144, "Accounting for the Impairment or Disposal of Long-Lived Assets," which is
effective January 1, 2002. SFAS No. 144 supersedes Statement No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
Be Disposed Of," and the accounting and reporting provisions relating to the
disposal of a segment of a business of Accounting Principles Board Opinion No.
30. The Company is evaluating the impact that adopting SFAS No. 144 will have on
the Company's operating results and financial condition.

(3) EARNINGS (LOSS) PER SHARE

      The earnings (loss) per share has been computed assuming that the
5,643,311 common shares of the Company issued and outstanding as of September
30, 2001 were outstanding for all periods presented.

      The Company had no share options or other common stock equivalents
outstanding during the periods presented and consequently basic and diluted loss
per share are the same.


                                       7
<PAGE>

(4) NOTE RECEIVABLE

      As part of the Spin-off, Harbor Global succeeded to Pioneer's rights and
obligations relative to Pioneer's earlier sale of its gold mining operations in
Ghana to Ashanti Goldfields Teberebie Limited. In this connection, Pioneer
contributed to the Company all proceeds from the sale of its gold mining
operation, including $5.0 million in cash, a $13.8 million non-interest bearing
promissory note and the right to receive payments of up to $5.0 million,
contingent upon prevailing gold prices and productivity. However, Harbor Global
agreed that promptly after the fifth anniversary of the closing of the purchase
agreement with Ashanti, it would return to Pioneer the lesser of $5.0 million or
the proceeds received by Pioglobal Goldfields II from Ashanti under the purchase
agreement less any indemnification claims paid under the purchase agreement. The
foregoing liability is currently recorded as a $5.0 million note payable
insomuch as management believes that this is the most likely settlement amount
as of the balance sheet date. Additionally, $5.0 million has been set aside to
satisfy this liability and is classified as restricted cash.

(5) DIVIDEND PAYABLE

      On August 1, 2001, the Company declared distributions of approximately
$14,500,000 to be distributed on November 15, 2001 to shareholders of record on
October 24, 2001 of which approximately $1,450,000 is payable to Calypso
Management LLC ("Calypso Management" or the "Manager") as compensation in
accordance with the administration and liquidation agreement (See note 7).
Accordingly, $13,050,000 has been recorded as a dividend payable and $1,450,000
has been recorded in accrued expenses.

      Also included in dividend payable is approximately $2,619,000 payable to
minority shareholders of Harbor Global's majority owned Russian subsidiary,
Pioneer First Investment Fund.

(6) COMPREHENSIVE INCOME

      For the nine months ended September 30, 2001 and 2000, the Company
reported changes in stockholders' equity and other comprehensive income as
follows:

<TABLE>
<CAPTION>
                                                                    2001         2000
                                                                   ------       ------
                                                                      (In Thousands)
<S>                                                                <C>         <C>
Net Income (Loss)................................................. $1,627      ($9,515)
Unrealized Gains on Long term Marketable Securities (See Note 2)..  2,383           --
Foreign Currency Translation Adjustment...........................     12           --
                                                                   ------       ------
Total Comprehensive Income (Loss)................................. $4,022      ($9,515)
                                                                   ======       ======
</TABLE>

(7) RELATED PARTY TRANSACTIONS

      The Company entered into an administration and liquidation agreement with
Calypso Management, under which Calypso Management manages the liquidation of
the Company and operates the Company's assets as going concern businesses until
they are liquidated. The principal executive officers of the Company also serve
as the principal executive officers of the Manager. The Manager is owned and
operated by the Company's President and Chief Executive Officer as well as the
Company's Chief Operating Officer and Chief Financial Officer. Under the
administration and liquidation agreement, the Company pays expenses of the
Manager incurred in connection with its provision of services and a percentage
of the net proceeds realized from the liquidation of its assets that are
ultimately distributed to the Company's shareholders.

      For the three and nine months ended September 30, 2001, the Company
incurred management fee expenses of $574,000 and $1,967,000, respectively. Of
the management fee expense for the period, $500,000 is outstanding at September
30, 2001.


                                       8
<PAGE>

      Harbor Global is obligated under its administration and liquidation
agreement with Calypso Management to make certain payments to Calypso Management
in connection with distributions to the Company's shareholders. As of September
30, 2001, the Company has recorded $1,450,000 as an accrued expense to reflect
the payment owed to Calypso Management in connection with the dividend payable
on November 15, 2001.

(8) COMMITMENTS

      On October 16, 1996, Pioglobal Omega L.L.C. ("Pioglobal Omega"), a
wholly-owned subsidiary of the Company, and the International Finance
Corporation ("IFC"), an unrelated party, entered into a put and call agreement
with respect to the IFC's shares of the stock of Pioneer First Russia, Inc.
("Pioneer First Russia"), a majority-owned subsidiary of the Company. Under this
agreement, from October 2000 to October 2004, upon written notice to Pioglobal
Omega, the IFC will have the right to cause Pioglobal Omega to purchase all of
the IFC's shares of Pioneer First Russia common stock. From October 2004 to
October 2006, upon written notice to the IFC, Pioglobal Omega will have the
right to buy all of the IFC's shares of Pioneer First Russia common stock.

      Under the administration and liquidation agreement, Harbor Global is
obligated to pay a $1.8 million signing and retention bonus to Stephen G.
Kasnet, President and Chief Executive Officer of Harbor Global, subject to
certain conditions, on October 24, 2002.

(9) SUBSEQUENT EVENTS

      On October 5, 2001, Harbor Global II Ltd., a wholly-owned subsidiary of
the Company, entered into a definitive agreement with AIB WBK Fund Management,
Sp. z o.o ("AIB") pursuant to which AIB would acquire for nominal consideration
Pioglobal Poland U.S. (Jersey) Limited ("Pioglobal Poland"), holder of a 59.5%
interest in the general partner of the Pioneer Poland Fund; Pioglobal Management
(Jersey) Limited ("Pioglobal Management"), manager of the Fund; and European
Convergence Partners, Sp. z o.o., sub-advisor to Pioglobal Management. Prior to
the closing of the transaction on November 1, 2001, Pioglobal Poland transferred
its 7.2% interest in Pioneer Poland U.S. Limited Partnership and its 9.2%
interest in Pioneer Poland UK Limited Partnership to Harbor Global II Ltd. As a
result of the transaction, the Company will no longer be required to fully
consolidate the Pioneer Poland Fund as it no longer manages these funds, but
will record its limited partnership interests as investments held at fair value.
Any gains or losses associated with these interests will be reported in the
operating segment titled Other.

      On October 24, 2001, the Company issued 1,500 shares of its common stock
to each of its directors pursuant to, and in accordance with, the Company's
Non-Employee Director Share Plan. Pursuant to the plan, on each anniversary of
October 24, 2000, each director of the Company who is not an employee will be
granted 1,500 common shares in consideration of each non-employee director's
service as a director.

(10) FINANCIAL INFORMATION BY BUSINESS SEGMENT

      In accordance with SFAS No. 131, "Disclosures about Segments of an
Enterprise and Related Information", the Company presents its segment
information for continuing operations using the management approach. The
management approach is based on the way that management organizes the segments
within a company for making operating decisions and assessing performance. The
Company's operating segments are organized around services and products
provided, as well as geographic regions.

      The Company derives its revenues from the following products and services
by segment:

o     Russian Real Estate Management and Investment Management Operations:
      investment and management services


                                       9
<PAGE>

o     Polish Venture Capital Investment and Management Operations: venture
      capital investment and management services

o     Real Estate Management Operations: real estate management services
      including property management and advisory services

o     Russian Timber Operations: harvest and sale of timber primarily to Pacific
      Rim countries

o     Other: management services

                            SEGMENT DISCLOSURES

<TABLE>
<CAPTION>
                                                                     Russian     Polish
                                                                   Real Estate   Venture
                                                                    Management   Capital
                                                                       and      Investment     Real
                                                                    Investment     and        Estate       Russian
                                                                    Management  Management  Management      Timber
                                                                    Operations  Operations  Operations    Operations
                                                                    ----------  ----------  ----------    ----------
<S>                                                                   <C>         <C>          <C>          <C>
As of and for the three months ended September 30, 2001
-------------------------------------------------------
Net Revenues and Sales ......................................         $1,984      $  13        $ 336        $ 4,313
                                                                      ------      -----        -----        -------
Income (Loss) from Continuing Operations before Provision for
 Income Taxes and Minority Interest .........................            137       (472)        (406)        (1,299)
Provision for Income Taxes ..................................           (268)        (7)          --            (16)

Minority Interest (Expense) Income ..........................            (23)       317           --             --
                                                                      ------      -----        -----        -------
Net (Loss) Income from Continuing Operations ................         $ (154)     $(162)       $(406)        (1,315)
                                                                      ======      =====        =====        =======
Depreciation and Amortization ...............................         $  257      $   4        $   9        $ 1,051
                                                                      ======      =====        =====        =======
Interest Expense ............................................         $   --      $  --        $  --        $    --
                                                                      ======      =====        =====        =======

<CAPTION>

                                                                    Other         Total
                                                                 ----------      --------
<S>                                                                 <C>          <C>
As of and for the three months ended September 30, 2001
-------------------------------------------------------
Net Revenues and Sales ......................................       $ 585        $ 7,231
                                                                    -----        -------
Income (Loss) from Continuing Operations before Provision for
 Income Taxes and Minority Interest .........................        (817)        (2,857)
Provision for Income Taxes ..................................          --
                                                                                    (291)
Minority Interest (Expense) Income ..........................          --            294
                                                                    -----        -------
Net (Loss) Income from Continuing Operations ................       $(817)       $(2,854)
                                                                    =====        =======
Depreciation and Amortization ...............................       $  --        $ 1,321
                                                                    =====        =======
Interest Expense ............................................       $  --        $    --
                                                                    =====        =======
</TABLE>

<TABLE>
<CAPTION>
                                                                    Russian       Polish
                                                                  Real Estate     Venture
                                                                   Management     Capital
                                                                      and        Investment       Real
                                                                   Investment       and          Estate        Russian
                                                                   Management    Management    Management       Timber
                                                                   Operations    Operations    Operations     Operations
                                                                   ----------    ----------    ----------     ----------

<S>                                                                 <C>            <C>            <C>            <C>
As of and for the three months ended September 30, 2000
-------------------------------------------------------
Net Revenues and Sales ......................................       $ 2,675        $   406        $   449        $ 3,908
                                                                    -------        -------        -------        -------
Income (Loss) from Continuing Operations before Provision for
 Income Taxes and Minority Interest .........................         5,535         (9,235)        (1,349)        (2,620)
Provision for Income Taxes ..................................        (2,871)           (16)            33             --
Minority Interest (Expense) Income ..........................        (2,288)         8,221             --             --
                                                                    -------        -------        -------        -------
Net Income (Loss) from Continuing Operations ................       $   376        $(1,030)       $(1,316)       $(2,620)
                                                                    =======        =======        =======        =======
Depreciation and Amortization ...............................       $   114        $     3        $    15        $   204
                                                                    =======        =======        =======        =======
Interest Expense ............................................       $    --        $    --        $     2        $   218
                                                                    =======        =======        =======        =======

<CAPTION>
                                                                     Other       Total
                                                                  ----------   ----------

<S>                                                                 <C>           <C>
As of and for the three months ended September 30, 2000
-------------------------------------------------------
Net Revenues and Sales ......................................       $  --        $ 7,438
                                                                    -----        -------
Income (Loss) from Continuing Operations before Provision for
 Income Taxes and Minority Interest .........................        (477)        (8,146)
Provision for Income Taxes ..................................          --         (2,854)
Minority Interest (Expense) Income ..........................          --          5,933
                                                                    -----        -------
Net Income (Loss) from Continuing Operations ................       $(477)       $(5,067)
                                                                    =====        =======
Depreciation and Amortization ...............................       $  --        $   336
                                                                    =====        =======
Interest Expense ............................................       $  --        $   220
                                                                    =====        =======
</TABLE>


                                       10
<PAGE>

                            SEGMENT DISCLOSURES
<TABLE>
<CAPTION>
                                                                    Russian        Polish
                                                                  Real Estate      Venture
                                                                   Management      Capital
                                                                      and         Investment        Real
                                                                   Investment        and           Estate        Russian
                                                                   Management     Management     Management       Timber
                                                                   Operations     Operations     Operations     Operations
                                                                   ----------     ----------     ----------     ----------
<S>                                                                 <C>             <C>             <C>            <C>
As of and for the nine months ended September 30, 2001
------------------------------------------------------
Net Revenues and Sales ......................................       $ 5,947         $   110         $   984        $11,656
                                                                    -------         -------         -------        -------
Income (Loss) from Continuing Operations before Provision for
 Income Taxes and Minority Interest .........................         2,442          (6,617)         (2,933)        (1,330)
Provision for Income Taxes ..................................        (1,266)            (15)             --            (16)
Minority Interest (Expense) Income ..........................          (668)          5,854              --             --
                                                                    -------         -------         -------        -------
Net Income (Loss) from Continuing Operations ................       $   508         $  (778)        $(2,933)       $(1,346)
                                                                    =======         =======         =======        =======
Depreciation and Amortization ...............................       $   789         $    10         $    47        $ 2,922
                                                                    =======         =======         =======        =======
Interest Expense ............................................       $    --         $    --         $    --        $    --
                                                                    =======         =======         =======        =======
Total Assets ................................................       $52,501         $25,803         $   590        $16,811
                                                                    =======         =======         =======        =======

<CAPTION>
                                                                    Other          Total
                                                                 ----------     ----------
<S>                                                                 <C>           <C>
As of and for the nine months ended September 30, 2001
------------------------------------------------------
Net Revenues and Sales ......................................       $ 1,789       $ 20,486
                                                                    -------       --------
Income (Loss) from Continuing Operations before Provision for
 Income Taxes and Minority Interest .........................         6,176         (2,262)
Provision for Income Taxes ..................................            --         (1,297)
Minority Interest (Expense) Income ..........................            --          5,186
                                                                    -------       --------
Net Income (Loss) from Continuing Operations ................       $ 6,176       $  1,627
                                                                    =======       ========
Depreciation and Amortization ...............................       $    --       $  3,768
                                                                    =======       ========
Interest Expense ............................................       $    --       $     --
                                                                    =======       ========
Total Assets ................................................       $41,534       $137,239
                                                                    =======       ========
</TABLE>

<TABLE>
<CAPTION>
                                                                     Russian      Polish
                                                                   Real Estate    Venture
                                                                    Management    Capital
                                                                       and       Investment         Real
                                                                    Investment      and            Estate        Russian
                                                                    Management   Management      Management       Timber
                                                                    Operations   Operations      Operations     Operations
                                                                    ----------   ----------      ----------     ----------
<S>                                                                 <C>             <C>             <C>            <C>
As of and for the nine months ended September 30, 2000
------------------------------------------------------
Net Revenues and Sales ......................................       $ 6,787         $   852         $ 1,356        $ 9,233
                                                                    -------         -------         -------        -------
Income (Loss) from Continuing Operations before Provision for
 Income Taxes and Minority Interest .........................         6,906          (9,918)         (3,032)        (6,421)
Provision for Income Taxes ..................................        (3,433)            (16)             --             --
Minority Interest (Expense) Income ..........................        (3,154)          8,813              --             --
                                                                    -------         -------         -------        -------
Net Income (Loss) from Continuing Operations ................       $   319         $(1,121)        $(3,032)       $(6,421)
                                                                    =======         =======         =======        =======
Depreciation and Amortization ...............................       $   579         $    10         $    76        $ 2,036
                                                                    =======         =======         =======        =======
Interest Expense ............................................       $    --         $    --         $     2        $   468
                                                                    =======         =======         =======        =======
Total Assets ................................................       $45,364         $43,165         $ 1,372        $16,523
                                                                    =======         =======         =======        =======

<CAPTION>
                                                                      Other              Total
                                                                   ----------         ----------
<S>                                                                   <C>               <C>
As of and for the nine months ended September 30, 2000
------------------------------------------------------
Net Revenues and Sales ......................................         $    --           $ 18,228
                                                                      -------           --------
Income (Loss) from Continuing Operations before Provision for
 Income Taxes and Minority Interest .........................            (605)           (13,070)
Provision for Income Taxes ..................................              --             (3,449)
Minority Interest (Expense) Income ..........................              --              5,659
                                                                      -------           --------
Net Income (Loss) from Continuing Operations ................         $  (605)          $(10,860)
                                                                      =======           ========
Depreciation and Amortization ...............................         $    --           $  2,701
                                                                      =======           ========
Interest Expense ............................................         $    --           $    470
                                                                      =======           ========
Total Assets ................................................         $36,919           $143,343
                                                                      =======           ========
</TABLE>


                                       11
<PAGE>

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

OVERVIEW

      The consolidated financial statements of Harbor Global's principal
operations include its Russian real estate management and investment management
operations, Polish venture capital investment and management operations, real
estate management operations, and Russian timber operations. Management's
Discussion and Analysis of Financial Condition and Results of Operations is
presented in three sections: Results of Operations for the three and nine months
ended September 30, 2001 and 2000; Liquidity and Capital Resources; and Future
Operating Results.

RESULTS OF OPERATIONS FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2001 AND
2000

Consolidated Operations.

      Harbor Global reported a net loss of $2.9 million ($0.50 per share) on
revenues of $7.2 million in the third quarter of 2001 compared with a net loss
of $5.1 million ($0.89 per share) on revenues of $7.4 million for the third
quarter of 2000. The $2.2 million decrease in losses reflects an approximately
$1.3 million increase in the timber operation's operating income and an
approximately $0.8 million reduction in corporate overhead expenses for the
quarter. Compared with the third quarter of 2000, the Company also reported
lower portfolio write-downs in the Pioneer Poland Fund and lower real estate
expenses offset by lower realized portfolio gains and lower rental income from
the Russian real estate management and investment management operations.

      For the nine months ended September 30, 2001, the Company reported net
income of $1.6 million ($0.29 per share). For the first nine months of 2000,
Harbor Global reported a net loss of $9.5 million ($1.69 per share), consisting
of a net loss from continuing operations of $10.9 million ($1.92 per share) and
net income from discontinued Russian banking and brokerage operations of $1.4
million ($0.23 per share). The $12.5 million increase in net income from
continuing operations was attributable to a $7.3 million gain on the sale of its
investment in Closed Joint-Stock Company "Tas-Yurjah" Mining Company"
("Tas-Yurjah"), a $4.5 million reduction in corporate overhead expenses, and a
$3.4 million increase in the timber operation's operating income. Offsetting
these increases was a $1.9 million write-off of the Company's investment in the
Pioneer Polish Real Estate Fund and the non-recurring benefit of a $0.7 million
insurance settlement received by the Russian real estate management and
investment management operations in 2000.


                                       12
<PAGE>

      Set forth on the following table are the revenues and net income (loss) by
business segment for the three and nine months ended September 30, 2001 and
2000:

                         REVENUES AND NET INCOME OR LOSS
                              (DOLLARS IN MILLIONS)

<TABLE>
<CAPTION>

                                                      NET INCOME                        NET INCOME
                                       REVENUES         (LOSS)           REVENUES          (LOSS)
                                     ------------    ------------      ------------    -------------
                                     THREE MONTHS    THREE MONTHS       NINE MONTHS     NINE MONTHS
                                         ENDED           ENDED             ENDED           ENDED
                                     SEPTEMBER 30,   SEPTEMBER 30,     SEPTEMBER 30,   SEPTEMBER 30,
                                     ------------    -------------     ------------    -------------
BUSINESS SEGMENT                     2001    2000    2001     2000     2001    2000    2001     2000
----------------                     ----    ----    ----     ----     ----    ----    ----     ----
<S>                                 <C>     <C>     <C>      <C>      <C>     <C>     <C>     <C>
Russian Real Estate Management
 and Investment Management
 Operations......................   $ 2.0   $ 2.7   $(0.2)   $ 0.4    $ 5.9   $ 6.8  $  0.5   $  0.3
Polish Venture Capital Investment
 And Management Operations.......      --     0.4    (0.2)    (1.0)     0.1     0.8    (0.8)    (1.1)
Real Estate Management Operations     0.3     0.4    (0.4)    (1.3)     1.0     1.4    (2.9)    (3.1)
Russian Timber Operations........     4.3     3.9    (1.3)    (2.6)    11.7     9.2    (1.4)    (6.4)
Other............................     0.6      --    (0.8)    (0.5)     1.8      --     6.2     (0.6)
                                    -----   -----   -----    -----    -----   -----   -----    -----
Total from continuing operations.   $ 7.2   $ 7.4   $(2.9)   $(5.1)   $20.5   $18.2   $ 1.6   $(10.9)
                                    -----   -----   -----    -----    -----   -----   -----    -----
Income from discontinued
 operations......................      --      --      --       --       --      --      --      1.4
                                    -----   -----   -----    -----    -----   -----   -----    -----
           Totals...............    $ 7.2   $ 7.4   $(2.9)   $(5.1)   $20.5   $18.2  $  1.6   $ (9.5)
                                    -----   -----   -----    -----    -----   -----  ------   ------
</TABLE>

Russian Real Estate Management and Investment Management Operations.

      The Russian real estate management and investment management operations
reported a net loss of $0.2 million for the third quarter 2001, a decrease of
$0.6 million compared with net income of $0.4 million reported in the third
quarter of 2000. The decrease was attributable to lower realized gains from
portfolio sales and a higher vacancy rate and a related increase in absorbed
building expenses at the Meridian Commercial Tower. These decreases were offset
partially by a $0.6 million reduction in corporate overhead costs and higher
interest income and unrealized gains on marketable securities.

      During the nine months ended September 30, 2001, the Russian real estate
management and investment management business reported net income of $0.5
million, an increase of $0.2 million compared with the corresponding period in
2000. The increase was attributable to a $1.8 million reduction in corporate
overhead costs and increases in interest income and unrealized gains on
marketable securities. These increases were offset partially by lower gains from
portfolio sales, decreased earnings from Meridian Commercial Tower and a
non-recurring insurance settlement.

Polish Venture Capital Investment and Management Operations.

      For the third quarter of 2001, the Polish venture capital investment and
management operations reported a net loss of $0.2 million, representing a
decrease in losses of $0.8 million compared with the third quarter of 2000. In
the third quarter of 2000, the venture capital business reported losses after
minority interest of approximately $0.8 million associated with the write-down
of two portfolio investments. For the nine months ended September 30, 2001, the
venture capital business reported losses of $0.8 million compared with losses of
$1.1 million for the same period in 2000. The decrease in losses of $0.3 million
was attributable principally to a reduction in corporate overhead expenses.

Real Estate Management Operations.

      The real estate management operations reported a net loss of $0.4 million
for the third quarter of 2001 compared with losses of $1.3 million in the third
quarter of 2000. The $0.9 million decrease in losses was due to a $0.7 million
reduction in corporate overhead costs and a $0.2 million reduction in salary and
benefit expenses due to the closure of Pioneer Real Estate Advisor's office in
Poland. For the nine


                                       13
<PAGE>

months ended September 30, 2001, the real estate management operations reported
losses of $2.9 million compared to losses of $3.1 million for the same period in
2000. The $0.2 million decrease in losses is attributable to a $1.6 million
reduction in corporate overhead costs and a $0.5 million reduction in salary and
benefit expenses due to lower headcount and the closure of the office in Poland
at the end of the second quarter. These cost reductions were offset by a $1.9
million write-off of Pioneer Real Estate Advisor's investment in the Pioneer
Polish Real Estate Fund.

Russian Timber Operations.

      The Russian timber operations reported third quarter 2001 losses of $1.3
million, a $1.3 million decrease in losses as compared with losses of $2.6
million reported in the third quarter of 2000. For the nine months ended
September 30, 2001, the Russian timber operations reported losses of $1.4
million, a decrease in losses of $5.0 million compared with the corresponding
period in 2000. The earnings increases were attributable principally to
reductions in corporate overhead costs of $0.1 million and $1.6 million for the
respective three and nine months ended September 30, 2001; increases in
production, which reduced the cost per cubic meter; and improvements in the
grade mix of logs shipped and average realized prices. Losses were also higher
in 2000 due to a $0.8 million inventory lower of cost or market adjustment and a
$0.7 million reduction in the carrying value of spare parts inventories and
value-added tax receivables.

      A comparison of production and production costs for the three and nine
months ended September 30, 2001 with the corresponding periods in 2000 is set
forth on the following table:

<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------
                                                        Percentage                              Percentage
                                Three months ended      Increase/           Nine months         Increase/
                                   September 30,        (decrease)       ended September 30,    (decrease)
                                -------------------                     -------------------
                                 2001        2000                        2001        2000
-----------------------------------------------------------------------------------------------------------
<S>                              <C>         <C>          <C>             <C>        <C>         <C>
Production (cubic meters in
thousands)                        92          70           31%            259        194          34%
-----------------------------------------------------------------------------------------------------------
Cash Costs per cubic meter
produced                         $34         $41          (17%)           $34        $41         (17%)
-----------------------------------------------------------------------------------------------------------
Total Cost per cubic meter
produced                         $45         $51          (12%)           $45        $53         (15%)
-----------------------------------------------------------------------------------------------------------
</TABLE>

      The significant increase in production is attributable to productivity
increases of Forest Starma's work force. In addition, in the first quarter of
2001 Forest Starma harvested on a new concession previously owned by Closed
Joint-Stock Company "Udinskoye", an inactive subsidiary of the Company.
Production in 2000 was hampered during the second quarter by unusually adverse
weather conditions.

      Forest-Starma shipped approximately 103,000 cubic meters in the third
quarter of 2001, an increase of 13,000 cubic meters compared with the third
quarter of 2000. The average realized price of timber during the three months
ended September 30, 2001 and 2000 was $43 per cubic meter for both periods.
During the nine months ended September 30, 2001, Forest-Starma shipped
approximately 241,000 cubic meters at an average realized price of $48 per cubic
meter compared with 197,000 cubic meters and $47 per cubic meter, respectively,
during the first nine months of 2000. Forest-Starma currently sells all of its
timber production through its marketing and sales agent, Rayonier Inc.

LIQUIDITY AND CAPITAL RESOURCES

      Liquid assets consisting of cash and marketable securities maintained for
general corporate purposes were $32.4 million as of September 30, 2001. This
represents a $6.6 million increase from the 2000 fiscal year end and is
attributable principally to proceeds from the sale of Tas-Yurjah.

      The assets of the Company's majority-owned Russian subsidiary, Pioneer
First Investment Fund, consist of cash and cash equivalents, equity securities
(both


                                       14
<PAGE>

liquid and illiquid), marketable securities, real estate holdings, and
other miscellaneous assets.

      On April 26, 2001, the shareholders of Pioneer First Investment Fund
approved a dividend of approximately $5.3 million. The dividend will be paid
over a period of one year beginning on September 1, 2001 to shareholders of
record on March 10, 2001.  During October 2001, Harbor Global received its
proportionate share of such dividend in the amount of approximately $2.7
million or approximately $2.4 million after applicable taxes.

      On August 1, 2001, Harbor Global's Board of Directors declared a
distribution of approximately $14.5 million or $2.57 per share on Harbor
Global's Common Shares. Pursuant to an administration and liquidation Agreement,
Calypso Management will receive a payment equal to 10% of such dividend or $0.26
per share. The balance of $2.31 per share will be payable on November 15, 2001
to shareholders of record as of October 24, 2001.

      At September 30, 2001 and December 31, 2000, the Company's Polish venture
capital fund, the Pioneer Poland Fund, had approximately $60.6 million in
committed capital, of which approximately $52.1 million and $50.5 million,
respectively, has been invested in 10 privately held Polish companies. The
carrying value of these investments at September 30, 2001 and December 31, 2000
was $25.2 million and $32.0 million, respectively. Subsequent to September 30,
2001, the Company entered into a definitive agreement to dispose of its general
partnership interest in the Pioneer Poland Fund. The Company will no longer be
required to fully consolidate the Pioneer Poland Fund but will record its
limited partnership interests as investments held at fair value, and any gains
or losses associated with these interests will be reported in the operating
segment titled Other.

FUTURE OPERATING RESULTS

      From time to time, management may make forward-looking statements in this
Quarterly Report on Form 10-Q, in other documents that the Company files with
the Securities and Exchange Commission (including those documents incorporated
by reference into the Form 10-Q), in press releases or in other public
discussions. The Private Securities Litigation Reform Act of 1995 provides a
"safe harbor" for these statements. For this purpose, a forward-looking
statement is any statement that is not a statement of historical fact.
Forward-looking statements include those about asset realization plans and
strategies, anticipated expenses, liquidity and capital resources and
expectations about market conditions. Forward-looking statements can be
identified by the words "may," "believes," "anticipates," "plans," "expects,"
"estimates" and similar expressions. Forward-looking statements are based on
currently available information and management's expectations of future results
but involve certain assumptions. Management cautions readers that assumptions
involve substantial risks and uncertainties. Consequently, any forward-looking
statement could turn out to be wrong. Many factors could cause actual results to
differ materially from expectations. Described below are some of the important
factors that could affect revenues or results of operations.

THERE CAN BE NO ASSURANCE THAT SHAREHOLDERS WILL BE ABLE TO SELL THEIR HARBOR
GLOBAL COMMON SHARES.

      Harbor Global common shares are not listed on any securities exchange or
on The Nasdaq Stock Market(R).

      Furthermore, Harbor Global does not intend to:

      - engage the services of any market maker;

      - facilitate the development of an active public trading market in Harbor
        Global common shares, or encourage others to do so;

      - place any advertisements in the media promoting an investment in
        Harbor Global; or

      - except as required by the Securities Exchange Act of 1934, collect or
        publish information about prices at which Harbor Global common shares
        may


                                       15
<PAGE>

        be traded.

      Harbor Global cannot provide assurances as to the prices at which Harbor
Global common shares may trade or provide assurances that shareholders will be
able to sell their Harbor Global common shares.

THE POTENTIAL VALUES TO BE REALIZED UPON THE SALE OR LIQUIDATION OF MOST OF
HARBOR GLOBAL'S ASSETS, IF ANY, ARE SPECULATIVE.

      The potential values to be realized upon the sale of Harbor Global's
Russian real estate management and investment management operations and Russian
timber operations, if any, are speculative. Harbor Global sells the timber it
harvests primarily to markets in the Pacific Rim. The value of Harbor Global's
timber harvesting and sales operations to be realized upon its sale or
liquidation, if any, is and will continue to be affected by changes in market
demand and prices for timber and the stability of the economies in the Pacific
Rim.

      A significant portion of Harbor Global's Russian real estate management
and investment management operations consists of its approximately 52% interest
in Pioneer First Investment Fund, a company that invests in Russian real estate
and, to a lesser extent, securities of Russian companies. Generally, the Russian
real estate and securities markets are significantly smaller and less liquid
than the markets in the United States, and as a result, a portion of the assets
held by Pioneer First Investment Fund are illiquid. There is also limited
liquidity in some of the publicly traded securities of Pioneer First Investment
Fund. Consequently, Harbor Global may have difficulty selling some of its
investment in Pioneer First Investment Fund or causing Pioneer First Investment
Fund to liquidate some of its underlying assets, and may only be able to do so
at prices which may not reflect the long-term value of its investments.

HARBOR GLOBAL'S BUSINESSES, PARTICULARLY THOSE CONDUCTED IN EMERGING MARKETS,
ARE SUSCEPTIBLE TO NUMEROUS RISKS AND UNCERTAINTIES ASSOCIATED WITH
INTERNATIONAL OPERATIONS.

      Harbor Global conducts business in countries outside of the United States,
primarily in Russia and Poland. Harbor Global will continue to operate its
international businesses until those businesses are liquidated and will continue
to be subject to the risks of doing business internationally, including:

      - unexpected changes in regulatory requirements and underdeveloped legal
        systems in some countries;

      - export controls relating to timber;

      - tariffs and other trade barriers;

      - difficulties in staffing and managing foreign operations;

      - political and economic instability;

      - fluctuations in currency exchange rates;

      - restrictions on currency exchange and repatriation;

      - restrictions on foreign investment in its businesses;

      - seasonal reductions in timber harvesting operations;
        and

      - potentially adverse tax consequences.

      For example, in recent years Russia has undergone substantial political,
economic and social change. As is typical of an emerging market, Russia does not
possess a well-developed business, legal and regulatory infrastructure that
would generally exist in the United States or in a more mature free market
economy. Accordingly, Harbor Global's Russian timber operations and Russian real
estate management and investment management operations involve significant
risks, such as


                                       16
<PAGE>

those listed above, that are not typically associated with developed markets.
The liquidation of these businesses and the businesses Harbor Global operates in
other emerging markets, as well as the successful operation of these businesses
pending their liquidation, will depend on the stability of, and economic
conditions in, these emerging markets.

THE LOSS OF KEY OFFICERS AND MANAGERS COULD IMPAIR THE ABILITY OF HARBOR GLOBAL
TO SUCCESSFULLY OPERATE AND MANAGE ITS ASSETS PRIOR TO THEIR LIQUIDATION.

      Mr. Kasnet is the President and Chief Executive Officer, and Mr. Hunter is
the Chief Operating Officer and Chief Financial Officer of Harbor Global. Mr.
Kasnet previously served as the President, and Mr. Hunter previously served as
the Chief Operating Officer and Senior Vice President of Pioneer Global
Investments, a division of Pioneer. As executive officers of Pioneer Global
Investments, Mr. Kasnet and Mr. Hunter operated substantially all the businesses
that Harbor Global now owns. In addition, Harbor Global has entered into an
administration and liquidation agreement with Calypso Management, an entity
owned and operated by Mr. Kasnet and Mr. Hunter, under which Calypso Management
will manage the liquidation of Harbor Global and operate its assets as going
concern businesses until they are liquidated.

      Because Harbor Global's assets are a diverse range of businesses and are
generally located in countries in which successfully conducting and selling
businesses requires significant experience, Harbor Global believes that its
success in liquidating its assets and operating its assets pending their
liquidation will depend to a significant extent upon the continued efforts of
Mr. Kasnet and Mr. Hunter. The loss of the services of either Mr. Kasnet or Mr.
Hunter could have a material adverse effect upon Harbor Global's results of
operations and financial condition. The services of Mr. Kasnet and Mr. Hunter
may also be critical to Harbor Global's ability to liquidate its assets at
prices which will enable Harbor Global to make meaningful distributions to its
shareholders.

      Mr. Kasnet and Mr. Hunter have both entered into employment agreements
with Calypso Management. Mr. Kasnet's employment agreement provides for a
minimum term of two years and may be terminated by Mr. Kasnet upon 120 days
prior written notice following the second anniversary of the distribution date.
Mr. Hunter's employment agreement provides that Mr. Hunter's employment with
Calypso Management is at will, subject to termination by either Calypso
Management or Mr. Hunter upon 60 days prior written notice. If either Mr.
Kasnet's or Mr. Hunter's employment with Calypso Management is terminated, he
will cease to be an officer of Harbor Global. In addition, if either Mr. Kasnet
or Mr. Hunter terminates his employment before the second anniversary of the
distribution date, he will forfeit his right to receive incentive compensation
under the administration and liquidation agreement and his employment agreement.
Harbor Global has obtained key officer life insurance policies with benefits
payable to Harbor Global for Mr. Kasnet and Mr. Hunter.

HARBOR GLOBAL WILL INDEMNIFY PIONEER FOR SOME LIABILITIES ACCRUING AFTER THE
SPIN-OFF.

      Under the Distribution Agreement, Harbor Global agreed to indemnify
Pioneer for liabilities, other than tax liabilities, incurred by Pioneer
relating to the businesses or operations of the Harbor Global assets. For
example, in connection with the sale of its gold mining operations in Ghana to
Ashanti, Pioneer has agreed to indemnify Ashanti for claims arising under the
purchase agreement before June 19, 2005 relating to its Ghanaian gold mining
operations. Under the Distribution Agreement, Pioneer transferred Pioglobal
Goldfields II Limited, the Pioneer subsidiary through which Pioneer's gold
mining operations in Ghana were conducted, to Harbor Global. As a result of the
transfer, Harbor Global is obligated to reimburse Pioneer in the event that
Ashanti seeks indemnification for any claim. Harbor Global's indemnification
obligations to Pioneer in connection with the Ashanti purchase agreement are
capped at the amount of the total purchase price paid by Ashanti to Pioglobal
Goldfields II under the purchase agreement.

      Additionally, under a tax separation agreement between Harbor Global and
Pioneer, generally, Harbor Global has agreed to indemnify Pioneer for tax
liabilities relating to the Harbor Global businesses. Currently, there are no
suits pending that would require payment by Harbor Global to Pioneer under the
indemnification provisions of the Distribution Agreement or tax separation


                                       17
<PAGE>

agreement. However, Harbor Global cannot provide assurances that no legal
proceeding or other claim will occur that would require Harbor Global to
indemnify Pioneer. Furthermore, Harbor Global and its subsidiaries may be
subject to legal proceedings or other claims arising in the ordinary course of
business, including employment related claims, environmental claims and
regulatory fees or fines associated with its international operations.

AS A RESULT OF HOLDING HARBOR GLOBAL COMMON SHARES, HARBOR GLOBAL'S SHAREHOLDERS
MAY RECOGNIZE TAXABLE INCOME AND BE REQUIRED TO PAY TAX WITHOUT A CORRESPONDING
DISTRIBUTION OF CASH FROM HARBOR GLOBAL TO ITS SHAREHOLDERS.

      For United States federal income tax purposes, Harbor Global is treated as
a partnership. For United States federal income tax purposes, Harbor Global's
shareholders will be treated as partners in a Bermuda partnership and their
Harbor Global common shares will represent partnership interests. Because of its
classification as a partnership for United States federal income tax purposes,
Harbor Global is not itself subject to United States federal income tax.
Instead, items of income, gain, loss, deduction and expense will flow through to
Harbor Global's shareholders, and they will be required to include their
allocable share of these items in computing their own United States federal
income tax for each taxable year of Harbor Global. Cash distributions made by
Harbor Global to its shareholders generally will not be taxable, except to the
extent that those distributions exceed a shareholder's adjusted tax basis in the
Harbor Global common shares.

      Harbor Global believes that one or more of the majority or minority owned
foreign subsidiaries of Harbor Global may be classified as a foreign personal
holding company or passive foreign investment company for United States federal
income tax purposes. If any such subsidiary is classified as a foreign personal
holding company or passive foreign investment company, Harbor Global's
shareholders may be required to recognize taxable income and pay tax with
respect to a portion of the subsidiary's income, even in the absence of the
receipt of any payment of cash or other property from the subsidiary. The tax
rules regarding foreign partnerships, foreign personal holding companies and
passive foreign investment companies are complicated. Harbor Global's
shareholders should consult their tax advisors to determine the tax consequences
to them of holding Harbor Global common shares.

HARBOR GLOBAL WILL BE SUBJECT TO SIGNIFICANT RESTRICTIONS IF IT BECOMES AN
INVESTMENT COMPANY.

      Harbor Global intends to conduct its businesses and operations so as to
avoid being required to register as an investment company. If, nevertheless,
Harbor Global were to be required to register as an investment company, because
Harbor Global is a foreign company, the Investment Company Act would prohibit
Harbor Global and any person deemed to be an underwriter of Harbor Global's
securities from offering for sale, selling or delivering after sale, in
connection with a public offering, any security issued by Harbor Global in the
United States.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

      Harbor Global monitors its exposure to adverse changes in interest rates,
foreign currency exchange rates and the market price paid for timber.

      Harbor Global is exposed to certain changes in foreign currency exchange
rates, primarily as a result of its operations in Russia and Poland. The
functional currency of its Russian operations is the United States dollar, while
the functional currency of its Polish operations is the local currency. All of
these operations have some costs denominated in the local currency, which acts
as a natural hedge to the revenues denominated in local currencies.

      In addition, Harbor Global conducts timber operations in Russia. The
prices it receives for its timber products are denominated in United States
dollars. However, as most of the timber produced is sold to the Asian markets,
the United States dollar prices have been influenced by changes in the foreign
currency exchange rates. The revenues of this business are also subject to
changes in the market price paid for timber.

PART II -- OTHER INFORMATION


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<PAGE>

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

      (a) Exhibits: The Exhibit Index immediately precedes the Exhibits filed
herein and is incorporated by reference.


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<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.

Dated: November 14, 2001

                                      HARBOR GLOBAL COMPANY LTD.

                                        /s/ Donald H. Hunter
                               --------------------------------------
                                           Donald H. Hunter
                                      Chief Operating Officer
                                      Chief Financial Officer

                          (Duly authorized officer and principal financial
                                         and accounting officer)


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<PAGE>

                                INDEX TO EXHIBITS

EXHIBIT
NUMBER                             DESCRIPTION
-------                            -----------

2.1*    Form of Distribution Agreement by and among The Pioneer Group, Inc.,
        Harbor Global Company Ltd. and Harbor Global II Ltd.

2.2***  Purchase Agreement dated October 5, 2001 by and between AIB WBK Fund
        Management Sp. z o.o. and Harbor Global II Ltd., including the
        Escrow Agreement dated November 5, 2001 by and between Harbor Global
        II Ltd., AIB WBK Fund Management Sp. z o.o. and ABN AMRO Bank
        (Polska) S. A., attached as Exhibit 1 thereto, and the Share
        Purchase Agreement dated September 20, 2001 between Harbor Global II
        Ltd. and Pioglobal Management (Jersey) Limited.(1)

3.1+    Memorandum of Association of Harbor Global Company Ltd.

3.2+    Bye-Laws of Harbor Global Company Ltd.

4.1**   Specimen Common Share Certificate

***     Filed herewith.

**      Incorporated by reference to Harbor Global Company Ltd.'s Quarterly
        Report on Form 10-Q (file number 0-30889) filed on November 13,
        2000.

*       Incorporated by reference to Amendment No. 1 to Harbor Global
        Company Ltd.'s Registration Statement on Form 10/A (file number
        0-30889) filed on August 8, 2000.

+       Incorporated by reference to Harbor Global Company Ltd.'s
        Registration Statement on Form 10 (file number 0-30889) filed on
        June 26, 2000.

(1) The Purchase Agreement listed as Exhibit 2.2. refers to the contents of
omitted schedules and exhibits described briefly therein. Harbor Global Company
Ltd. will supplementally furnish a copy of any omitted schedule or exhibit to
the Commission upon request.