<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 March 31, 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
                  4TH FLOOR                             02109-1820
            BOSTON, MASSACHUSETTS                       (ZIP CODE)
    (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 March 31, 2001, the Registrant had 5,643,311 common shares, par value
$.0025 per share, issued and outstanding.

                                       1
<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>
                                                                         March 31,   December 31,
                                                                            2001          2000
                                                                         --------    -----------
                                                                        (Unaudited)
<S>                                                                     <C>          <C>
ASSETS
Cash and Cash Equivalents.............................................   $  9,525       $ 24,338
Restricted Cash.......................................................         13            382
Marketable Securities.................................................     23,546          5,321
Accounts Receivable...................................................      2,425          3,703
Prepaid Charges.......................................................        878          1,897
Timber Inventory......................................................      8,157          3,907
Other Current Assets..................................................        249              7
                                                                         --------       --------
Total Current Assets..................................................     44,793         39,555

Long-Term Restricted Cash.............................................      6,845          6,820
Goodwill..............................................................      1,167          1,239
Polish Venture Capital Investments....................................     28,595         31,964
Long-term Investments.................................................     14,793         11,738
Building..............................................................     23,798         23,965
Timber Equipment......................................................      9,065          9,899
Other Long-term Assets................................................      2,381          2,883
Marketable Securities.................................................        916          5,665
Notes Receivable......................................................      8,417         10,593
                                                                         --------       --------
Total Assets..........................................................   $140,770       $144,321
                                                                         ========       ========

LIABILITIES AND SHAREHOLDERS' EQUITY
Accounts Payable......................................................   $  3,973       $  2,175
Accrued Expenses......................................................      2,230          4,275
Foreign Taxes Payable.................................................      4,272          4,238
                                                                         --------       --------
Total Current Liabilities.............................................     10,475         10,688

Long-term Escrow Liability............................................      1,800          1,800
Note Payable..........................................................      5,000          5,000
                                                                         --------       --------
Total Liabilities.....................................................     17,275         17,488

Minority Interest.....................................................     48,948         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 March 31, 2001
and December 31, 2000                                                          14             14
Preferred shares, par value $.01 per share; authorized 1,000,000
shares; none issued...................................................         --             --
Accumulated Deficit...................................................     (1,230)          (521)
Paid-in Capital.......................................................     75,763         75,763
                                                                         --------       --------
Total Shareholders' Equity............................................     74,547         75,256
                                                                         --------       --------

Total Liabilities and Shareholders' Equity............................   $140,770       $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
                                                                          Ended
                                                                        March 31,
                                                                   ------------------
                                                                      2001       2000
                                                                   -------   --------
<S>                                                                <C>       <C>
Revenues:
 Timber Sales..................................................    $   365   $     --
 Real Estate Rental Revenue....................................      1,561      1,955
 Other.........................................................      1,566        646
                                                                   -------   --------
  Total Revenues...............................................      3,492      2,601
                                                                   -------   --------

Operating Expenses:
 Timber Cost of Goods Sold.....................................       (333)        --
 Salary and Benefit Expenses...................................       (763)      (658)
 Facility Expenses.............................................       (325)      (350)
 Building and Property Management Expenses.....................       (584)      (440)
 Other Expenses................................................     (2,730)    (2,236)
 Allocation of Former Parent Company Costs.....................         --     (2,140)
                                                                   -------   --------
  Total Operating Expenses.....................................     (4,735)    (5,824)
                                                                   -------   --------

  Operating Loss...............................................     (1,243)    (3,223)
                                                                   -------   --------
Other Income (Expense):
 Net Unrealized and Realized Gains on Securities...............        734      1,478
 Write-down of Venture Capital Investments.....................     (2,853)        --
 Interest Income (Expense).....................................          2       (100)
                                                                   -------   --------
  Total Other (Expense) Income.................................     (2,117)     1,378
                                                                   -------   --------

  Loss from Continuing Operations before Provision for Income
   Taxes and Minority Interest.................................     (3,360)    (1,845)
                                                                   -------   --------

Provision for Income Taxes.....................................         21       (321)

  Loss from Continuing Operations before Minority
    Interest...................................................     (3,339)    (2,166)
                                                                   -------   --------
Minority Interest Income (Expense).............................      2,630       (156)
                                                                   -------   --------

  Net Loss from Continuing Operations..........................       (709)    (2,322)
                                                                   -------   --------
Net Income from Discontinued Operations........................         --        192
                                                                   -------   --------

  Net Loss.....................................................      ($709)   ($2,130)
                                                                   =======   ========
Loss Per Share:
Continuing Operations..........................................     ($0.13)    ($0.41)
Discontinued Operations........................................         --       0.03
                                                                   -------   --------
Basic and Diluted Loss Per share...............................     ($0.13)    ($0.38)
                                                                   =======   ========

Weighted Average Shares Outstanding............................      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>
                                                                 THREE MONTHS ENDED MARCH 31,
                                                                 ----------------------------
                                                                     2001                2000
                                                                 --------             -------
<S>                                                              <C>                  <C>
Cash Flows from Operating Activities:
  Net Loss.....................................................  $   (709)            $(2,130)
  Net Income from Discontinued Operations......................        --                 192
                                                                 --------             -------
        Net Loss from Continuing Operations....................      (709)             (2,322)
  Adjustments to Reconcile Net Loss to Net Cash Used in
Operating Activities --
    Depreciation and Amortization..............................     1,317               1,134
    Loss on Disposal of Timber Equipment.......................       248                  --
    Unrealized and Realized (Gains) Losses on Venture Capital
      Marketable Securities, and Long-term Investments, Net....     2,449                  --
    Minority Interest..........................................    (2,630)                156
    Non-cash Interest Income on Note Receivable................      (324)                 --
    Allocation of Former Parent Company Costs..................        --               2,140
    Interest Earned on Restricted Cash.........................       (25)                 --
Changes in Operating Assets and Liabilities --
    Timber Inventory...........................................    (4,250)             (4,579)
    Other Current Assets.......................................   (16,170)              1,985
    Other Long-term Assets and Marketable Securities...........     5,221              (1,292)
    Accrued Expenses and Accounts Payable......................      (213)              1,778
                                                                 --------             -------

        Total Adjustments and Changes in Operating Assets
          and Liabilities......................................   (14,377)              1,322
                                                                 --------             -------

        Net Cash Used in Continuing Operating Activities.......   (15,086)             (1,000)
                                                                 --------             -------

        Net Cash Provided by Discontinued Operations...........        --               6,251
                                                                 --------             -------

Cash Flows from Investing Activities:
  Building.....................................................        --                (311)
  Purchase of Long-term Investments............................    (3,768)             (1,465)
  Proceeds from Sale of Long-term Investments..................     1,117                  --
  Net Cash Flow from Other Investing Activities................       516                 328
  Proceeds from Note Receivable................................     2,500                  --
  Purchase of Timber Equipment.................................      (462)               (868)
                                                                 --------             -------

        Net Cash Used in Investing Activities..................       (97)             (2,316)
                                                                 --------             -------

Cash Flows from Financing Activities:
  Capital Contributions........................................        --               1,156
  Due to Affiliates, Net.......................................        --              (3,704)
  Amounts Invested by Limited Partners of Venture Capital
    Subsidiary.................................................        --                 540
  Reclassification of Restricted Cash..........................       369                  --
                                                                 --------             -------

        Net Cash Provided by (Used in) Financing Activities....       369              (2,008)
                                                                 --------             -------
Effect of Foreign Currency Exchange Rate Changes on Cash and
   Cash Equivalents............................................         1                  10
Net (Decrease) Increase in Cash and Cash Equivalents...........   (14,813)                937
                                                                 --------             -------

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

Cash and Cash Equivalents, End of Period.......................  $  9,525             $ 6,114
                                                                 ========             =======

</TABLE>


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

                                       4
<PAGE>

                          HARBOR GLOBAL COMPANY LTD.

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  (UNAUDITED)
              As of and for the Three Months Ended March 31, 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; Polish real estate management operations;
timber harvesting and sales in Russia ("Russian timber operations"); and its
other assets and operations ("Other"). Other includes gold exploration
operations in Russia, approximately $25.9 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, and a non-interest-bearing promissory note with a face value of $13.8
million and a balance outstanding of $11.3 million, payable to Pioneer
Goldfields II Limited, a wholly-owned subsidiary of the Company.

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
March 31, 2001 and the results of operations and cash flows for the three months
ended March 31, 2001 and 2000.  Results for interim periods may not be
necessarily 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 months ended March 31, 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 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

                                       5
<PAGE>

partnership and, as a result, all United States federal income tax expenses will
be borne by its shareholders.

     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, PRINCIPLES OF CONSOLIDATION

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 the Company is the general
partner of both Pioneer Poland U.S., L.P. and Pioneer Poland UK, L.P., the
general partner has absolute and unilateral authority to make investment
decisions, the limited partners may not remove the general partner, and the
general partner has absolute and unilateral authority to declare, or not to
declare, distributions of partnership income to the partners.  Investments in
which the Company has less than a 20% ownership interest are generally accounted
for under the cost method of accounting.

     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") and 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
the Company's venture capital 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 months ended March 31, 2001, a charge of approximately $2,853,000
was recorded relative to the write-down of two investments in the venture
capital portfolio. A majority of this, approximately 92%, was attributable to
minority shareholders.

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.

     Harbor Global's Russian real estate management and investment management
operations and its Russian timber business are no longer eligible for political
risk insurance coverage previously provided by the Overseas Private Investment
Corporation ("OPIC"). Pursuant to its charter, OPIC may only insure companies
with beneficial US ownership of at least 51%. Since Harbor Global does not meet
this criterion, the Company has been actively pursuing political risk insurance
from other sources.

                                       6
<PAGE>

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.


(3)  LOSS PER SHARE

     The loss per share has been computed assuming that the 5,643,311 common
shares of the Company issued and outstanding as of March 31, 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 is the same.


(4)  RESTRICTED CASH

     Restricted cash of $6.8 million at March 31, 2001 represents $5 million to
satisfy liabilities associated with Pioneer's former gold mining operations and
$1.8 million to satisfy a compensation liability payable to Harbor Global's
Chief Executive Officer.  After the fifth anniversary of the closing of the sale
of Pioneer's former gold mining operations, Harbor Global is obliged to pay
Pioneer the lesser of $5 million or the actual proceeds received by Pioneer
Goldfields II from Ashanti Goldfields Teberebie Limited ("Ashanti") under the
purchase agreement less any indemnification claims paid under the purchase
agreement.  With respect to the compensation liability, which is disclosed as a
long-term escrow liability, $1.8 million is payable on October 24, 2002.


(5)  NOTES RECEIVABLE

     Notes receivable consist of a stated non-interest-bearing promissory note
from Ashanti with a face value of $13.8 million, of which $11.3 million remains
outstanding at March 31, 2001. The effective interest rate is thirteen percent
based on LIBOR plus an appropriate credit risk factor for the underlying payee.
The note represents part of the base purchase price paid to Pioneer Goldfields
II Limited, a wholly-owned subsidiary of Harbor Global, for the sale of its gold
mining operations in Ghana.  Under the promissory note, Ashanti is obligated to
pay the purchase price over five years, with principal amounts of between $2.5
million and $3.75 million due annually, as specified in the purchase agreement.
For the three months ended March 31, 2001, approximately $324,000 of interest
income was recognized by the Company.


(6)  NOTE PAYABLE

     The non-interest bearing note payable of $5.0 million at March 31, 2001
represents that portion of proceeds received by Pioneer in connection with the
sale of its gold mining operations in Ghana to Ashanti.  In connection with the
merger with Unicredito, Pioneer contributed all proceeds from the sale of its
gold mining operation, including $5.0 million in cash, $13.8 million in a 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 will return to Pioneer the lesser of
$5.0 million or the proceeds received by Pioneer Goldfields II from Ashanti
under the purchase agreement less any indemnification claims paid under the
purchase agreement.


(7)  RELATED PARTY TRANSACTIONS

     The Company entered into an administration and liquidation agreement with
Calypso Management LLC ("Calypso Management" or the "Manager"), under which

                                       7
<PAGE>

Calypso 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.

     For the three months ended March 31, 2001, the Company had management fee
expenses of $673,000.  Of the management fee expense for the period, $100,000 is
outstanding at March 31, 2001.

     Harbor Global is obligated under its administration and liquidation
agreement with Calypso Management to make certain distributions.  When it
becomes probable that amounts will become payable under this agreement, an
accrual will be recorded.


(8)  COMMITMENTS

     The Company has committed to contribute up to $5,700,000 for Class B shares
of the Pioneer Polish Real Estate Fund, an investee of the Company, of which
approximately $285,000 has been contributed as of March 31, 2001.  In April
2001, Harbor Global announced its intent to liquidate the Fund and, thereby,
relieve the Company of its capital commitment (See Note 10).

     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.  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 (See Note 4).


(9)  DISCONTINUED OPERATIONS

     Pioneer First Russia's wholly-owned subsidiaries, Closed Joint-Stock
Company "Pioneer Securities" and UKS Securities Limited ("UKS Securities"),
previously traded in various Russian securities on behalf of customers and, to a
lesser extent, on their own account. In 1999, the decision was made by Pioneer
First Russia's management to close the operations of these two companies after
all transfers of customers' positions were complete. No loss was realized in
connection with the closure. In August 2000, the Company completed the
liquidation of UKS Securities.

     Accordingly, the operating results for the Russian brokerage operations
have been segregated from the results of continuing operations and are reported
separately on the consolidated statements of operations for the period ended
March 31, 2000.


(10) SUBSEQUENT EVENTS

     On March 31, 2001, Harbor Far East Exploration, L.L.C. ("Harbor Far East
Exploration"), a wholly-owned subsidiary of the Company, entered into a
definitive sales agreement with respect to its gold exploration business
conducted by Closed Joint-Stock Company "Tas-Yurjah" Mining Company" ("Tas-
Yurjah"), located in the Khabarovsk Territory of the Russian Far East. Under the
terms of the agreement, Harbor Far East Exploration has agreed to sell its
entire 94.5% direct interest in Tas-Yurjah to a Russian gold

                                       8
<PAGE>

mining and exploration company for an aggregate purchase price of $8.5 million.
Harbor Global expects the transaction to close during the second quarter of
2001, subject to completion of financing by the purchaser through a Russian
bank.

     In April 2001, Harbor Global announced its intention to liquidate its
Polish real estate fund, the Pioneer Polish Real Estate Fund, S.A. (the "Fund").
In connection with the liquidation, Harbor Global's wholly-owned subsidiary,
PREA, L.L.C. ("PREA"), entered into definitive agreements with the Fund's
unaffiliated investors to purchase all of the shares held by such investors for
an aggregate purchase price of $1.59 million.  The purchase, which closed during
April 2001, and subsequent liquidation will relieve Harbor Global of its
obligation to make capital contributions to the Fund in the amount of
approximately $5.4 million pursuant to the Subscription and Shareholders'
Agreement dated as of October 20, 1999 by and among the Fund and the investors.
The Fund's sole asset at the time of liquidation is expected to consist of
approximately $250,000, which will be distributed to PREA.  The Company will
recognize a loss from the liquidation of approximately $1.6 million plus legal
and other closing costs in the second quarter of 2001.  In addition, the Company
currently intends to commence liquidation of its Polish real estate management
business, PREA Poland Sp. z o.o., in the second quarter of 2001.

     On April 26, 2001, the shareholders of Pioneer First Investment Fund
approved a dividend of approximately $5.3 million. The dividend will be issued
on September 1, 2001 to shareholders of record on March 10, 2001. The Company's
proportionate share of such dividend is approximately $2.8 million.


(11) 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:

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

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

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

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

                                       9
<PAGE>

                              SEGMENT DISCLOSURES




<TABLE>
<CAPTION>
                                                       Russian      Polish
                                                      Real Estate   Venture
                                                      Management    Capital
                                                         and       Investment    Polish Real
                                                      Investment      and          Estate       Russian
                                                      Management   Management    Management      Timber
                                                      Operations   Operations    Operations    Operations      Other       Total
                                                      ----------   ----------    ----------    ----------   ----------   ----------
<S>                                                   <C>          <C>           <C>           <C>          <C>          <C>
Three Months Ended March  31, 2001
----------------------------------
Net Revenues and Sales............................    $    2,022   $       64    $      390    $      365   $      651   $    3,492
                                                      ----------   ----------    ----------    ----------   ----------   ----------
Income (Loss) from Continuing Operations
  before Provision for Income Taxes and
  Minority  Interest..............................           522       (3,220)         (143)         (422)         (97)      (3,360)

Provision for Income Taxes........................            25           (4)           --            --           --          (21)

Minority Interest (Expense) Income................          (274)       2,904            --            --           --        2,630
                                                      ----------   ----------    ----------    ----------   ----------   ----------
Net Income (Loss) from Continuing
  Operations......................................    $      273   $     (320)   $     (143)   $     (422)  $      (97)  $     (709)
                                                      ==========   ==========    ==========    ==========   ==========   ==========

Depreciation and  Amortization....................    $      247   $        3    $       19    $    1,048   $       --   $    1,317
                                                      ==========   ==========    ==========    ==========   ==========   ==========

Interest Expense..................................    $       --   $       --    $       --    $       --   $       --   $       --
                                                      ==========   ==========    ==========    ==========   ==========   ==========

Total Assets......................................    $   55,335   $   29,154    $      836    $   19,626   $   35,819   $  140,770
                                                      ==========   ==========    ==========    ==========   ==========   ==========


                                                        Russian     Polish
                                                      Real Estate   Venture
                                                      Management    Capital
                                                          and      Investment    Polish Real
                                                      Investment      and          Estate       Russian
                                                      Management   Management    Management      Timber
                                                      Operations   Operations    Operations    Operations      Other        Total
                                                      ----------   ----------    ----------    ----------   ----------   ----------
Three Months Ended March 31, 2000
---------------------------------
Net Revenues and Sales............................    $    1,945   $      240    $      416    $       --   $       --   $    2,601
                                                      ----------   ----------    ----------    ----------   ----------   ----------
Income (Loss) from Continuing Operations
  before Provision for Income Taxes and
  Minority Interest...............................           464         (215)         (794)       (1,300)          --       (1,845)

Provision for Income Taxes........................          (321)          --            --            --           --         (321)

Minority Interest (Expense) Income................          (441)         285            --            --           --         (156)
                                                      ----------   ----------    ----------    ----------   ----------   ----------
Net (Loss) Income from Continuing
  Operations......................................    $     (298)  $       70    $     (794)   $   (1,300)  $       --   $   (2,322)
                                                      ==========   ==========    ==========    ==========   ==========   ==========

Depreciation and Amortization.....................    $      342   $        4    $       31    $      757   $       --   $    1,134
                                                      ==========   ==========    ==========    ==========   ==========   ==========

Interest Expense..................................    $       --   $       --    $       --    $     (100)  $       --   $     (100)
                                                      ==========   ==========    ==========    ==========   ==========   ==========

Total Assets......................................    $   40,772   $   51,613    $    1,442    $   22,834   $      952   $  117,613
                                                      ==========   ==========    ==========    ==========   ==========   ==========


</TABLE>

                                       10
<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, Polish
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 months ended
March 31, 2001 and 2000, Liquidity and Capital Resources, and Future Operating
Results.

RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 2001 AND 2000

Consolidated Operations.

     Harbor Global reported a net loss of $0.7 million ($0.13 per share) on
revenues of $3.5 million in the first quarter of 2001 compared with a net loss
of $2.1 million ($0.38 per share) on revenues of $2.6 million for the first
quarter of 2000.  The decrease in losses was attributable primarily to a general
reduction in corporate overhead costs and associated cost allocations occurring
after the Spin-off.  During the first quarter of 2001, the Company reduced
overhead costs by $1.7 million compared with the first quarter of 2000.  In
addition, losses reported by the Polish real estate management operations
decreased by approximately $0.3 million as a result of first quarter 2000 non-
recurring salary and fund development costs.  These decreases were offset
partially by a $2.9 million write-down in the carrying value of the Pioneer
Poland Fund in the first quarter of 2001, which resulted in a loss after
minority interest of approximately $0.3 million.  Income from discontinued
Russian banking and brokerage operations totaled $0.2 million in the first
quarter of 2000.

     Set forth on the following table are the details of revenues and net income
(loss) by business segment for the three months ended March 31, 2001 and 2000:

                        REVENUES AND NET INCOME OR LOSS
                             (DOLLARS IN MILLIONS)

                                                                 NET INCOME
                                                  REVENUES         (LOSS)
                                                -------------   -------------
                                                THREE MONTHS    THREE MONTHS
                                                    ENDED           ENDED
                                                  MARCH 31,       MARCH 31,
                                                -------------   -------------

BUSINESS SEGMENT                                 2001    2000    2001    2000
----------------                                -----   -----   -----   -----
Russian Real Estate Management
  and Investment Management Operations......    $ 2.0   $ 2.0   $ 0.3   $(0.3)
Polish Venture Capital Investment
  and Management Operations.................      0.1     0.2    (0.3)    0.1
Polish Real Estate Management Operations....      0.4     0.4    (0.2)   (0.8)
Russian Timber Operations...................      0.4      --    (0.4)   (1.3)
Other.......................................      0.6      --    (0.1)     --
                                                -----   -----   -----   -----
Total from continuing
  operations................................    $ 3.5   $ 2.6   $(0.7)  $(2.3)
                                                -----   -----   -----   -----
Income from discontinued
  operations................................       --      --      --     0.2
                                                -----   -----   -----   -----

     Totals.................................    $ 3.5   $ 2.6   $(0.7)  $(2.1)
                                                -----   -----   -----   -----

                                       11
<PAGE>

Russian Real Estate Management and Investment Management Operations.

     The Russian real estate management and investment management operations
reported net income of $0.3 million for the first quarter 2001. This represents
an increase of $0.6 million compared with losses of $0.3 million reported in the
first quarter of 2000. The increase was attributable principally to a $0.5
million reduction in allocated corporate overhead costs in the first quarter of
2001. Additionally, higher dividend and interest income and lower intercompany
expenses during the first quarter of 2001 contributed to higher net income.
These increases were offset by lower gains from the sale of portfolio securities
and lower rental income from the Meridian Commercial Tower. The rental income
decrease was attributable, in part, to the restructuring of certain leases,
which increased the term of the lease in exchange for lower lease rates.

Polish Venture Capital Investment and Management Operations.

     For the three months ended March 31, 2001, the Polish venture capital
investment and management operations reported losses of $0.3 million compared
with net income of $0.1 million in the first quarter of 2000.  The decrease of
$0.4 million was attributable principally to the $2.9 million write-down of two
portfolio positions.  The Company reported a loss, net of minority interest, of
$0.3 million associated with these write-downs.  In addition, the venture
capital business received approximately $0.1 million in supplemental management
fee income during the first quarter of 2000.

Polish Real Estate Management Operations.

     The Polish real estate management operations reported losses of $0.2
million in the first quarter of 2001 compared with losses of $0.8 million in the
first quarter of 2000.  The decrease in losses was attributable principally to a
reduction in allocated corporate overhead costs in the first quarter of 2001. In
addition, losses during the three months ended March 31, 2000 included $0.3
million of non-recurring salary and real estate fund development costs.

Russian Timber Operations.

     The results of the Russian timber businesses are substantially attributable
to the operations of Forest-Starma.  Forest-Starma, which harvests timber in the
Khabarovsk Territory of Russia, has developed a modern logging camp, including a
jetty from which it exports timber to markets in the Pacific Rim.

     The Russian timber operations reported losses of $0.4 million for the first
quarter of 2001. This represents a decrease of $0.9 million compared with losses
of $1.3 million reported in the first quarter of 2000. The decrease was
attributable principally to a reduction in allocated corporate overhead costs in
the first quarter of 2001.

     Forest-Starma produced 92,200 cubic meters in the first quarter of 2001, a
41% increase over first quarter 2000 production of 65,200 cubic meters.
Production costs for the first quarter of 2001 were approximately $43 per cubic
meter, including $13 per cubic meter of depreciation and amortization. These
costs were recorded in inventory at the end of the first quarter. During the
first quarter of 2000, the average production cost was $47 per cubic meter,
which included depreciation and amortization of $11 per cubic meter. The
significant increase in production and related decrease in the cost per cubic
meter is a result of the harvesting and development of a new concession
previously owned by Closed Joint-Stock Company "Udinskoye", an inactive indirect
subsidiary of the Company. In 2001, the Company expects that the timber on this
concession will be harvested primarily during the first and fourth quarters and
shipped during the summer months.

     Forest-Starma experienced an extended shipping season last year due to
favorable weather conditions and, as a result, shipped approximately 6,200 cubic
meters in the first quarter of 2001 at an average realized price of $59 per
cubic meter.  There were no shipments during the first quarter of 2000. Forest-
Starma currently sells all of its timber production through its marketing and
sales agent, Rayonier, Inc.

                                       12
<PAGE>

LIQUIDITY AND CAPITAL RESOURCES

     Liquid assets consisting of cash and marketable securities maintained for
general corporate purposes were $25.9 million as of March 31, 2001. This
represents a $0.1 million increase from the 2000 fiscal year end.

     Pioneer First Investment Fund's assets consist of cash and cash
equivalents, equity securities (both liquid and illiquid), marketable
securities, real estate holdings, and other miscellaneous assets.  The carrying
value of the securities held by Pioneer First Investment Fund at March 31, 2001
and December 31, 2000 was $14.8 million and $11.7 million, respectively.  The
value of these securities at March 31, 2001 and December 31, 2000 (based on
market quotations, if available) was approximately $19.2 million and $13.2
million, respectively. In recent years Russia has undergone substantial
political, economic and social change, and as a result, the Russian securities
markets are volatile and are strongly influenced by global trends and trends
that influence emerging markets.  In addition, the Russian securities markets
are significantly smaller and less liquid than the securities markets in the
United States.  As a result, the Company recognizes gains or losses on its
income statement only when the securities are sold.  In the view of management
of the Company and Pioneer First Investment Fund, many of the market quotations
do not accurately reflect the value that would be realized upon a current sale.

     At March 31, 2001 and December 31, 2000, the Pioneer Poland Fund had
approximately $60.6 million in committed capital, of which approximately $50.5
million has been invested in 10 privately held Polish companies.  The carrying
value of these investments at March 31, 2001 and December 31, 2000 was $28.6
million and $32.0 million, respectively.

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

                                       13
<PAGE>

     - except as required by the Securities Exchange Act of 1934, collect or
       publish information about prices at which Harbor Global common shares may
       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. During 1998, timber prices
were significantly depressed and, although prices have continually increased
since the last quarter of 1998, Harbor Global cannot provide assurance that this
trend will continue. 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 the publicly traded securities of Pioneer First Investment Fund.
Consequently, Harbor Global may have difficulty selling its investment in
Pioneer First Investment Fund or causing Pioneer First Investment Fund to
liquidate 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.

                                       14
<PAGE>

     For example, in recent years Russia has undergone substantial political,
economic and social change. The economic conditions in Russia, together with
actions of the Russian government, led to a severe devaluation of the ruble, a
sharp increase in the rate of inflation, the near collapse of the banking
system, significant defaults on foreign currency obligations and a dramatic
decline in the prices of Russian debt and equity securities. In addition, 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 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 Pioneer 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 of Pioneer Goldfields
II to Harbor Global,

                                       15
<PAGE>

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 Pioneer 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
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 AND THE BUSINESSES IT OPERATES MAY NOT BE ABLE TO RAISE ADDITIONAL
CAPITAL OR OBTAIN DEBT FINANCING.

     Based on budget projections, Harbor Global currently has sufficient
capital, without liquidating any of its assets, to continue to operate its
assets for approximately three years. As such, it may be necessary for Harbor
Global to liquidate some of its assets within three years of the Spin-off to
continue to operate its remaining assets pending their liquidation. If Harbor
Global is unable to liquidate some of its assets, it will require additional
funding. Harbor Global may not be able to obtain additional funding, either in
the form of additional capital or debt financing, because of the nature of its
operations, namely its intent to hold its assets for liquidation and its limited
duration. If adequate funding is not available, Harbor Global may be forced to
liquidate its assets prematurely for a discounted sale price or on other less
favorable terms than those that may otherwise be available if Harbor Global
could obtain additional funding.

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

                                       16
<PAGE>

     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

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.

 (b) Reports on Form 8-K:

     On April 11, 2001, the Company filed a Current Report on Form 8-K in
connection with the execution by Harbor Far East Exploration of a definitive
agreement to sell its Russian gold exploration business and the execution by
PREA of definitive agreements to purchase all outstanding shares of the Pioneer
Polish Real Estate Fund.

                                       17
<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: May 10, 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)

                                       18
<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.
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
10.1++    Share Purchase Agreement dated as of March 30, 2001 by and between
          Harbor Far East Exploration L.L.C., Closed Joint-Stock Company "Artel
          Staratelei Amur" and Closed Joint-Stock Company "Tas-Yurjah" Mining
          Company.
10.2++    Share Purchase Agreement dated April 06, 2001 between Cadim Servotech
          B.V., Vienna Leas International S. A., Towarzystwo Obrotu
          Nieruchomosciami Agro S. A., Fundacja Na Rzecz Nauki Polskiej, Pioneer
          Real Estate Advisors Poland Spolka z o.o. i Spolka Spolka Komandytowa,
          PREA, L.L.C. and Pioneer Polski Fundusz Nieruchomosci S. A.
10.3++    Share Purchase Agreement dated April 06, 2001 between European Bank
          for Reconstruction and Development, PREA, L.L.C. and Pioneer Polski
          Fundusz Nieruchomosci S. A.
10.4++    Termination Agreement dated as of April 06, 2001 by and between
          European Bank for Reconstruction and Development, Cadim Servotech
          B.V., Vienna Leas International S. A., Towarzystwo Obrotu
          Nieruchomosciami Agro S. A., Fundacja Na Rzecz Nauki Polskiej, Pioneer
          Real Estate Advisors Poland Spolka z o.o. i Spolka Spolka Komandytowa,
          PREA, L.L.C. and Pioneer Polski Fundusz Nieruchomosci S. A.
10.5***#  Guaranty, dated as of March 12, 2001, issued by Harbor Global Company
          Ltd. in favor of Rayonier Inc.
10.6***#  Addendum No. 1, dated as of March 12, 2001, to Log Sales Contract No.
          11-21-01 dated November 27, 2000 by and between Closed Joint-Stock
          Company "Forest-Starma" and Rayonier Inc.
10.7***#  Agreement on Pledge of Goods in Circulation dated as of March 12, 2001
          by and between Closed Joint-Stock Company Forest-Starma and Rayonier
          Inc.
***       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 Harbor Global's Report on Form 8-K (file
          number 000-30889) filed on April 11, 2001.
*         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.
#         Confidential treatment has been requested with respect to certain
          portions of this exhibit. Such portions have been omitted from this
          exhibit and filed separately with the Securities and Exchange
          Commission. Asterisks (*) denote such omissions.