<PAGE>

================================================================================
                                 UNITED STATES
                      SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C. 20549

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

                                   Form 10-K

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

           [X]  Annual Report Pursuant to Section 13 or 15(d) of the
                        Securities Exchange Act of 1934
                  For the Fiscal Year ended December 31, 2001

                                      or

         [_]  Transition Report Pursuant to Section 13 or 15(d) of the
                        Securities Exchange Act of 1934
                 For the Transition Period from       to

                       Commission File Number 000-30889

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

                          Harbor Global Company Ltd.
            (Exact Name of Registrant as Specified in its Charter)

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


                       Bermuda                 52-2256071
                   (State or Other          (I.R.S. Employer
                    Jurisdiction
                 of Incorporation or       Identification No.)
                    Organization)

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

                         One Faneuil Hall Marketplace
                          Boston, Massachusetts 02109
                                (617) 878-1600
  (Address, including Zip Code, and Telephone Number, including Area Code, of
                         Principal Executive Offices)

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

   Securities registered pursuant to Section 12(g) of the Act: Common Shares,
$.0025 per share.

   Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.    Yes [X]  No [_]

   Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K.  [X].

   As of March 1, 2002, the aggregate market value of the Registrant's common
shares held by non-affiliates was $32,615,802.35.

   As of March 1, 2002, the Registrant had 5,649,311 common shares, par value
$.0025 per share, issued and outstanding.

================================================================================

<PAGE>

                                    PART I

ITEM 1.  BUSINESS.

                                   OVERVIEW

   Harbor Global Company Ltd., a Bermuda limited duration company ("Harbor
Global" or the "Company"), was formed in May 2000 as a wholly owned subsidiary
of The Pioneer Group, Inc., a Delaware corporation ("Pioneer"), to facilitate
the merger between Pioneer and UniCredito Italiano, S.p.A., an Italian
financial institution ("UniCredito"). 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 agreed to transfer certain of its assets to Harbor Global and to
distribute all of the outstanding Harbor Global common shares to its
stockholders. Pioneer transferred to Harbor Global all of the assets required
to be transferred pursuant to the merger agreement and the Distribution
Agreement and, on October 24, 2000, Pioneer 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.

   Harbor Global seeks to liquidate its assets in a timely fashion on
economically advantageous terms and continues 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 October 24, 2005, the fifth anniversary of the date of the
Spin-off, or the distribution by Harbor Global of all its assets to its
shareholders. If Harbor Global has not liquidated all of its assets before
October 24, 2005, 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.

   At December 31, 2001, Harbor Global's assets consisted primarily of the
following businesses and assets:

    .  Russian real estate management and investment management operations

    .  Polish venture capital investment

    .  Real estate management operations

    .  Other:

      -- approximately $20.0 million in cash and cash equivalents and
         marketable securities held directly by Harbor Global, including
         approximately $6.9 million of restricted cash

      -- a non-interest-bearing promissory note with a face value of $13.8
         million, of which $11.3 million remained outstanding at December 31,
         2001, payable to Pioglobal Goldfields II Limited ("Pioglobal
         Goldfields II", formerly Pioneer Goldfields II Limited), a wholly
         owned subsidiary of the Company

   Harbor Global continues to own its Russian timber harvesting and sales
business; however, on February 5, 2002, the Company's Board of Directors
approved the sale of the Company's Russian timber operations segment.
Accordingly, the Company's Russian timber segment is discussed under the
heading "Discontinued Operations" in this Form 10-K. The Company is pursuing
the sale of its Russian timber segment and expects to complete the sale in 2002.

   On June 8, 2001, Harbor Global sold its Russian gold exploration operations
through the sale of its gold exploration subsidiary Closed Joint-Stock Company
"Tas-Yurjah" Mining Company ("Tas-Yurjah"), located in the Khabarovsk Territory
of the Russian Far East, to a Russian gold mining and exploration company for
an aggregate purchase price of approximately $8.5 million.

                                      2

<PAGE>

   Financial information by segment and geographic area for each of the four
business segments listed above can be found in Note 17 to the Company's
Consolidated Financial Statements included in this report. In addition,
information regarding the revenues of each business segment can be found in
Item 7--"Management's Discussion and Analysis of Financial Condition and
Results of Operations." Additional information regarding each business segment
and Harbor Global in general is set forth below.

   Harbor Global owns and operates all of its assets through a direct
majority-owned subsidiary, Harbor Global II Ltd. ("Harbor Global II"). Harbor
Global owns 99% of the share capital of Harbor Global II, and HGC Ltd. ("HGC"),
a wholly owned subsidiary of Harbor Global, owns the remaining 1% of the share
capital of Harbor Global II. Some of Harbor Global's assets are held directly
by Harbor Global II, and some assets are held indirectly by Harbor Global II
through HGCL Ltd. ("HGCL"), a wholly owned subsidiary of Harbor Global II.
Harbor Global II, HGCL and HGC are Bermuda limited duration companies and,
under their memorandums of association, each will liquidate concurrently with
the liquidation of Harbor Global.

   Stephen G. Kasnet is the President and Chief Executive Officer, and Donald
H. Hunter is the Chief Operating Officer and Chief Financial Officer, of Harbor
Global. Mr. Kasnet was formerly the President, and Mr. Hunter was formerly the
Chief Operating Officer and Senior Vice President, of Pioneer Global
Investments, a division of Pioneer. As officers of Pioneer Global Investments,
Mr. Kasnet and Mr. Hunter operated substantially all of the businesses that are
now owned or operated by Harbor Global. Prior to the distribution, Harbor
Global entered into an administration and liquidation agreement with Calypso
Management LLC ("Calypso Management") under which Calypso Management manages
the liquidation of Harbor Global and operates Harbor Global's assets as going
concern businesses pending their liquidation. Calypso Management is owned and
operated by Mr. Kasnet and Mr. Hunter. Mr. Kasnet is the President and Chief
Executive Officer, and Mr. Hunter is the Chief Operating Officer, Chief
Financial Officer and Treasurer, of Calypso Management.

   Because Harbor Global's assets are primarily located in Russia, a country in
which successfully operating 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. In order to
induce Mr. Kasnet and Mr. Hunter to become officers of Harbor Global and manage
its liquidation, Harbor Global entered into an agreement under which Mr. Kasnet
and Mr. Hunter would receive a portion of net proceeds distributed in
connection with the liquidation. Calypso Management was created, in large part,
to provide a vehicle for Mr. Kasnet and Mr. Hunter to allocate the incentive
compensation they receive among themselves and other employees of Calypso
Management who provide valuable assistance in connection with the
administration and liquidation of Harbor Global's assets. Harbor Global will
pay the operating expenses of Calypso Management and, in general, as
compensation for Calypso Management's services, Harbor Global will pay Calypso
Management up to 10% of the net proceeds distributed from the liquidation of
Harbor Global's assets. Harbor Global does not believe that the terms of the
administrative and liquidation agreement negotiated with Calypso Management are
more favorable than the terms, if any, on which Harbor Global could have
negotiated a similar arrangement with an unaffiliated third party.

   Harbor Global conducts business primarily in Russia. For the year ended
December 31, 2001, nearly all of Harbor Global's revenues were derived from
operations in Russia. Harbor Global's businesses and assets are described
below, together with the principal strategies that Harbor Global currently
intends to employ to sell or liquidate its assets.

      RUSSIAN REAL ESTATE MANAGEMENT AND INVESTMENT MANAGEMENT OPERATIONS

   Harbor Global's Russian real estate management and investment management
operations are conducted through its wholly owned subsidiary, Pioglobal Omega,
L.L.C. ("Pioglobal Omega"). Pioglobal Omega owns an approximately 82% interest
in Pioneer First Russia, Inc. ("Pioneer First Russia"), a Delaware corporation,
and

                                      3

<PAGE>

the International Finance Corporation, a member of the World Bank Group, owns
an approximately 18% interest in Pioneer First Russia. Pioneer First Russia, in
turn, operates through two wholly owned subsidiaries, Closed Joint-Stock
Company "Pioneer First", an investment management company ("Pioneer First"),
and Closed Joint-Stock Company "Pioneer Services", an information technology
services company ("Pioneer Services"). Both Pioneer First and Pioneer Services
are Russian joint stock companies. In addition, Pioglobal Omega, through its
two wholly owned Delaware subsidiaries, Luscinia, L.L.C. and Theta Enterprises,
L.L.C., holds an approximately 52% interest in Open Joint-Stock Company
"PIOGLOBAL Investment Fund" ("PIOGLOBAL Investment Fund", formerly Open
Joint-Stock Company "Pioneer First Investment Fund"), a Russian joint-stock
company managed by Pioneer First. Currently, approximately two million Russian
stockholders hold the remaining approximately 48% interest in PIOGLOBAL
Investment Fund.

   PIOGLOBAL Investment Fund.  The PIOGLOBAL Investment Fund is Harbor Global's
principal asset. PIOGLOBAL Investment Fund invests directly in real estate and,
to a lesser extent, securities of Russian companies. A significant portion of
the assets of PIOGLOBAL Investment Fund consists of its ownership of the
Meridian Commercial Tower, an 18-story, 22,600 square meter office building in
Moscow, Russia. The Meridian Commercial Tower, primarily occupied by U.S. and
European corporate tenants, is managed by PREA, L.L.C. ("PREA"), Harbor
Global's real estate management subsidiary. PIOGLOBAL Investment Fund has
agreed to pay PREA a property management fee of 5% of gross revenues less any
value-added taxes or similar taxes.

   PREA leases the Meridian Commercial Tower from PIOGLOBAL Investment Fund
under a master lease agreement and, in turn, subleases the premises to tenants.
The initial term of the master lease agreement between PIOGLOBAL Investment
Fund and PREA was to have expired in July 2001, but the term was extended by an
Amendment to the Master Lease Agreement, dated September 21, 1998, for an
additional ten years. Under the master lease agreement, PREA pays PIOGLOBAL
Investment Fund an amount equal to gross revenues less building operating
expenses, the PREA property management fee described above and any value added
taxes or similar taxes.

   The remaining assets of PIOGLOBAL Investment Fund primarily consist of real
estate related securities, including a 25% interest in the Cosmos Hotel,
located in Moscow, Russia, and securities in Russian companies, some of which
are illiquid.

   Pioneer First.  Under a management agreement between Pioneer First and
PIOGLOBAL Investment Fund, Pioneer First provides management services to
PIOGLOBAL Investment Fund for an annual fee of 5% of gross assets less any
value added taxes or similar taxes.

   Pioneer First also serves as an investment manager to three Russian open-end
unit investment funds. As compensation for its investment management services
to the funds, Pioneer First receives annual management fees ranging between
three percent and three and six-tenths of a percent of the net asset value of
the unit funds.

   Pioneer Services.  Pioneer Services provides information technology services
to PIOGLOBAL Investment Fund and the three unit funds managed by Pioneer First
for an annual fee of approximately $400,000. In 2001, Pioneer Services'
operations were supported solely by this fee.

   In 2001, 2000, and 1999, Harbor Global's Russian real estate management and
investment management operations had revenues and net income (loss) from
continuing operations as shown in the table below:

<TABLE>
<CAPTION>
                                         2001 2000 1999
                                         ---- ---- -----
                                          (In Millions)
                       <S>               <C>  <C>  <C>
                       Revenues......... $8.7 $9.0 $10.4
                       Net Income (Loss) $0.9 $3.9 $(1.6)
</TABLE>

   In 2001, revenues from the PIOGLOBAL Investment Fund comprised approximately
64% of Harbor Global's total revenue. Furthermore, Meridian Commercial Tower
lease revenues accounted for approximately

                                      4

<PAGE>

84% of the revenues of PIOGLOBAL Investment Fund and approximately 78% of the
total revenue generated by Harbor Global's Russian real estate management and
investment management operations. Harbor Global believes that a loss of one or
a few tenants of the Meridian Commercial Tower would not have a material
adverse effect on this segment. The Company maintains comprehensive property
insurance covering the full replacement cost of the building, value added taxes
incurred during any reconstruction and up to three years of lost rental revenue
during any reconstruction period. Harbor Global does not maintain political
risk insurance for any of its businesses.

   Minority Interest in Pioneer First Russia.  In connection with the
investment by the International Finance Corporation, an unrelated party, in
Pioneer First Russia, the International Finance Corporation, Pioglobal Omega
and Pioneer First Russia entered into a stockholders agreement and a put and
call agreement. Under the stockholders agreement, Pioglobal Omega may not
transfer or pledge its shares of Pioneer First Russia common stock without the
consent of the International Finance Corporation if, as a result of the
transfer or pledge, Pioglobal Omega would cease to own at least 51% of the
outstanding shares of Pioneer First Russia. In addition, under the stockholders
agreement, so long as the International Finance Corporation is a stockholder of
Pioneer First Russia, the International Finance Corporation is entitled to
nominate one person to the Pioneer First Russia Board of Directors. The
approval of the International Finance Corporation nominated director is
required to take actions that may materially affect the business of Pioneer
First Russia.

   Under the put and call agreement, from October 2000 to October 2004, upon
written notice to Pioglobal Omega, the International Finance Corporation will
have the right to cause Pioglobal Omega to purchase all of the International
Finance Corporation's shares of Pioneer First Russia common stock. From October
2004 to October 2006, upon written notice to the International Finance
Corporation, Pioglobal Omega will have the right to buy all of the
International Finance Corporation's shares of Pioneer First Russia common
stock. In each case, the purchase price to be paid by Pioglobal Omega is equal
to the greater of the International Finance Corporation's pro rata share,
calculated on a fully diluted basis, of Pioneer First Russia's net asset value
on a specified date not more than 30 or less than 60 days from the date of the
notice or 12 times the three year average of the product of net income divided
by the weighted average of the number of shares outstanding during this period
multiplied by the weighted average of shares held by the International Finance
Corporation during this period.

   Under the put and call agreement, if the International Finance Corporation
proposes to transfer any of its shares to any party, Pioglobal Omega has a
right of first refusal to purchase the shares proposed to be transferred. In
addition, if Pioneer First Russia proposes to issue any of its common stock, or
a security convertible into shares of its common stock, the International
Finance Corporation has a preemptive right to purchase its pro rata portion of
the securities to be issued.

   Asset Realization Strategy.  Pioneer First is seeking to increase the value
of the PIOGLOBAL Investment Fund through a process of restructuring the
PIOGLOBAL Investment Fund portfolio by:

   -- selling securities which are considered illiquid;

   -- increasing the value of its real estate holdings;

   -- investing in real estate and in more liquid securities;

   -- improving the value of its investments in portfolio companies through
      active board representation; and

   -- exploring alternatives to reduce the number of PIOGLOBAL Investment Fund
      stockholders.

   In addition, Pioneer First is seeking to increase the asset level of the
three Russian unit investment funds it manages. Pioneer First is working with
an independent commercial bank in Russia to jointly market the three unit
investment funds and facilitate the distribution of such funds. In addition, in
August 2000, Pioneer First was

                                      5

<PAGE>

granted a trust management license permitting it to manage private portfolios
for individuals and corporations. Pioneer First has been actively seeking to
raise such assets. Harbor Global believes that Pioneer First will be more
likely to realize economies of scale and attract additional institutional
investors by increasing its assets under management.

   Competition.  Pioneer First occupies a leading position in Russia with
respect to open-end unit fund assets under management. As of February 15, 2002,
Pioneer First's approximately $7.3 million in net assets under management
comprised approximately 20% of the total market. Pioneer First has six
significant competitors, with aggregate net assets under management comprising
the remainder of the market. Pioneer First is seeking to increase its assets
under management by competing for institutional and high net worth investors
for the three Russian unit investment funds it manages. However, some of its
competitors have substantially greater resources to attract such investors.
Several factors affect competitive conditions in the Russian unit fund
business, including the outlook for the Russian economy, levels of personal
disposable income and consumer confidence in the Russian financial services
system.

   Employees.  At December 31, 2001, Pioneer First Russia and its subsidiaries,
together with PIOGLOBAL Investment Fund, employed 50 persons.

                       POLISH VENTURE CAPITAL INVESTMENT

   Harbor Global holds minority interests in two venture capital partnerships,
Pioneer Poland U.S., L.P. and Pioneer Poland UK, L.P. Together, Pioneer Poland
U.S., L.P. and Pioneer Poland UK, L.P. constitute the Pioneer Poland Fund.
Until November 1, 2001, Pioglobal Poland U.S. (Jersey) Ltd., previously a
wholly owned subsidiary of Harbor Global, held a 7.2% interest in Pioneer
Poland U.S., L.P., an approximately 9.2% interest in Pioneer Poland UK, L.P.
and a 59.5% interest in the general partner of the Pioneer Poland Fund. In
addition, until that time, Pioglobal Management (Jersey) Limited, formerly a
wholly owned subsidiary of the Company, managed the Pioneer Poland Fund
together with European Convergence Partners, Sp. z o.o., another formerly
wholly owned subsidiary of the Company and subadvisor of the Pioneer Poland
Fund. On November 1, 2001, Harbor Global sold the manager and subadvisor of the
Pioneer Poland Fund and its general partner interest in the Pioneer Poland Fund
to AIB WBK Fund Management, Sp. z o.o. for nominal consideration through the
sale of Pioglobal Poland U.S. (Jersey) Ltd., Pioneer Management (Jersey)
Limited and European Convergence Partners Sp. z o.o. Harbor Global retained its
7.2% and 9.2% interests in Pioneer Poland U.S., L.P. and Pioneer Poland UK
L.P., respectively.

   At December 31, 2001, the Pioneer Poland Fund had received approximately
$60.6 million in committed capital of which approximately $51.9 million had
been invested in 10 privately held Polish companies engaged in:

   -- computer distribution;

   -- stainless steel distribution;

   -- the restaurant business;

   -- food distribution;

   -- wood products manufacturing;

   -- automotive parts distribution;

   -- book distribution;

   -- the video rental business; and

   -- disposable diaper manufacturing.

                                      6

<PAGE>

   In recent years, the Company has significantly written-down the carrying
values of the underlying portfolio investments. Accordingly, the estimated
market value of the portfolio at December 31, 2001 was approximately $18
million, and Harbor Global's minority interest in the portfolio was
approximately $1.2 million.

   Asset Realization Strategy.  The Company will assess opportunities to sell
its limited partnership interest to potential acquirers.

                       REAL ESTATE MANAGEMENT OPERATIONS

   Harbor Global's real estate management operations are conducted by PREA.
PREA is based in Boston and conducts its operations in Russia through a
representative office in Moscow. In 2001, virtually all of PREA's revenues were
derived from managing the Meridian Commercial Tower for PIOGLOBAL Investment
Fund. PREA also provides advisory services to third parties. The scope of its
advisory services includes property management, facilities management,
development management, feasibility and valuation analysis, fund management and
corporate advisory services.

   Prior to April 2001, PREA also provided real estate investment opportunities
in Poland to institutional investors through a pooled investment fund, the
Pioneer Polish Real Estate Fund, S.A. (the "Fund"). In April 2001, Harbor
Global announced its intention to liquidate the Fund. In connection with the
liquidation, PREA purchased all of the shares of the Fund held by the Fund's
unaffiliated investors for an aggregate purchase price of $1.59 million. The
purchase, which closed during April 2001, relieved 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.
Harbor Global wrote-off its investment in the Fund, which is included in other
income (expense), in the second quarter of 2001. In addition, Harbor Global is
in the process of liquidating PREA Poland Sp. z o.o., the subsidiary through
which it previously conducted its real estate management business in Poland.
The liquidation of both the Fund and PREA Poland Sp. z o.o. is expected to be
completed in 2002.

   Asset Realization Strategy.  The asset realization strategy for PREA's
Moscow operation will continue to be inextricably linked to that of the
Meridian Commercial Tower unless PREA is successful in attracting a significant
core of third-party customers.

   Employees.  At December 31, 2001, PREA and its subsidiaries had 28
employees, including one expatriate employee provided by PIOGlobal Corporation,
a Delaware corporation and indirect wholly owned subsidiary of Harbor Global.

                                     OTHER

Cash and Marketable Securities

   Cash and cash equivalents and marketable securities held directly by Harbor
Global at December 31, 2001 totaled approximately $20.0 million and includes
restricted cash of $6.9 million that represents $5 million to satisfy
liabilities associated with Pioneer's former gold mining operations, $1.8
million to satisfy a compensation liability payable to Harbor Global's Chief
Executive Officer and $0.1 million of interest.

Ashanti Proceeds

   In May 2000, Pioglobal Goldfields II Limited sold its gold mining operations
in Ghana to Ashanti Goldfields Teberebie Limited for an $18.8 million base
purchase price plus additional payments of up to $5 million contingent upon the
market price of gold and productivity of the Ghanaian gold mine. On June 19,
2000,

                                      7

<PAGE>

$5 million of the base purchase price was paid to Pioglobal Goldfields II in
cash and $13.8 million of the base purchase price was paid in the form of a
non-interest bearing promissory note. 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. In March 2001, the Company received the first payment in
the amount of $2.5 million.

   In addition, under the Distribution Agreement, Harbor Global agreed that,
promptly after the fifth anniversary of the closing of the purchase agreement,
it will pay to Pioneer the lesser of $5 million or the actual proceeds received
by Pioglobal Goldfields II from Ashanti under the purchase agreement less any
indemnification claims paid under the purchase agreement. If any
indemnification claim under the purchase agreement is pending on June 19, 2005,
Harbor Global will pay the appropriate amount described above promptly upon
resolution of the pending claim or claims.

   In connection with the sale to Ashanti, each of Pioglobal Goldfields II and
Pioneer agreed to indemnify Ashanti for the breach of any representation or
warranty of Pioglobal Goldfields II contained in the purchase agreement for an
amount not to exceed the total purchase price actually paid by Ashanti to
Pioglobal Goldfields II under the purchase agreement. The representations and
warranties contained in the purchase agreement, other than those relating to
tax and environmental issues, survive until June 19, 2002. The tax and
environmental representations and warranties survive until June 19, 2005. Under
the Distribution Agreement, Harbor Global has agreed to reimburse Pioneer for
any liability it incurs in connection with any claim brought by Ashanti for
indemnification under the purchase agreement.

                            DISCONTINUED OPERATIONS

Russian Timber Operations

   On February 5, 2002, the Company's Board of Directors approved the
disposition of the Russian timber segment. Further to this, on March 5, 2002,
the Company's Board of Directors approved a minimum acceptable sales price,
with a closing to occur in 2002. Accordingly, the Russian timber segment is
reflected as a discontinued operation. The Russian timber segment is conducted
through the Company's wholly owned subsidiary, Closed Joint-Stock Company
"Forest-Starma" ("Forest-Starma"), which is engaged in the harvesting and
export of timber in the Khabarovsk Territory of the Russian Far East.

   Losses from the discontinued Russian timber segment were approximately $11.3
million in 2001, including $3.1 million from operations and $8.2 million from
the estimated loss on the disposition of the Russian timber segment. The
Company is pursuing a sale of its Russian timber segment and expects to
complete the sale in 2002.

   Forest-Starma operates under long-term leases with annual cutting rights of
approximately 560,000 cubic meters. Forest-Starma exports its harvested timber
to markets in Japan, South Korea and China under an agreement with its
marketing and sales agent, Rayonier Inc.

   The following chart shows Forest-Starma's total production and shipments of
timber during the last three years.

<TABLE>
<CAPTION>
                                         2001    2000    1999
                                        ------- ------- -------
                 <S>                    <C>     <C>     <C>
                 Timber Produced (m/3/) 351,000 295,000 313,000
                 Timber Shipped (m/3/). 350,000 262,000 336,000
</TABLE>

   A three-year financial summary for the timber business is shown below:

<TABLE>
<CAPTION>
                                  2001   2000    1999
                                 ------  -----  ------
                                     (In Millions)
                        <S>      <C>     <C>    <C>
                        Revenues $ 16.3  $12.9  $ 14.4
                        Net Loss $(11.3) $(5.2) $(24.7)
</TABLE>

                                      8

<PAGE>

                                   EMPLOYEES

   At December 31, 2001, Harbor Global and its subsidiaries employed a total of
78 employees worldwide. None of the employees of Harbor Global or its
subsidiaries are unionized or parties to any collective bargaining agreement.

ITEM 2.  DESCRIPTION OF PROPERTY.

   Harbor Global's principal properties consist of its leased principal
executive offices in Boston, Massachusetts, and its leased offices in Moscow,
Russia.

   The Company and its subsidiaries conduct their principal operations from
leased premises with approximately 3,497 square feet at One Faneuil Hall
Marketplace, Boston, Massachusetts. The lease commenced November 15, 2000 at a
rate of $160,862 per annum and will expire on October 24, 2005.

   Pioneer First and Pioneer Services lease, in the aggregate, approximately
6,031 square feet of office space in Moscow, Russia. The aggregate annual rent
and related fees for these premises is approximately $377,954. A lease for
1,260 square feet expires on November 30, 2002 and leases totaling
approximately 4,771 square feet expire on February 28, 2007.

ITEM 3.  LEGAL PROCEEDINGS.

   Neither Harbor Global nor its subsidiaries are a party to, and their
property is not the subject of, any material legal proceedings.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

   The 2001 annual general meeting of the Company's shareholders (the "Annual
Meeting") was held on October 19, 2001. At the Annual Meeting, proxies
representing 3,696,859 shares, or 65.50% of the Company's outstanding shares,
were voted as follows:

1. To set the size of the Company's Board of Directors at four.

<TABLE>
<CAPTION>
                              For    Against Abstain
                           --------- ------- -------
                           <S>       <C>     <C>
                           3,606,134 89,678   1,047
</TABLE>

2. To elect John F. Cogan, Jr. as a Director for a four-year term expiring at
   the Company's 2005 annual general meeting or until his successor has been
   duly elected and qualified.

<TABLE>
<CAPTION>
                                            Withhold
                                            Authority
                             For    Against  to Vote
                          --------- ------- ---------
                          <S>       <C>     <C>
                          3,563,900 31,048    1,911
</TABLE>

3. To approve the remuneration of the Company's Directors.

<TABLE>
<CAPTION>
                              For    Against Abstain
                           --------- ------- -------
                           <S>       <C>     <C>
                           3,616,579 62,737  17,543
</TABLE>

4. To appoint Deloitte & Touche LLP as independent auditor for the Company and
   to delegate to the Company's Audit Committee the authority to fix the
   independent auditor's fee for the fiscal year ending December 31, 2001.

<TABLE>
<CAPTION>
                              For    Against Abstain
                           --------- ------- -------
                           <S>       <C>     <C>
                           3,672,402 19,199   5,258
</TABLE>

                                      9

<PAGE>

                                    PART II

ITEM 5.  MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.

   The Company's common shares commenced trading on the OTC Bulletin Board in
October 2000 under the symbol HRBG. The following table sets forth the high and
low bid quotations for the periods indicated as reported by the National
Association of Securities Dealers Automated Quotation System (NASDAQ) between
dealers and does not include retail markups, markdowns, or commissions and may
not necessarily represent actual transactions.

<TABLE>
<CAPTION>
                                                      Low    High
                                                     ------ ------
              <S>                                    <C>    <C>
              2000
              Fourth Quarter (from October 24, 2000)  3.750  5.375

              2001
              First Quarter......................... $4.750 $7.125
              Second Quarter........................  6.620  8.500
              Third Quarter.........................  8.200  9.500
              Fourth Quarter........................  6.700  9.400
</TABLE>

   On December 31, 2001 the Company had approximately 3,000 holders of record
of its common stock.

   On November 15, 2001, the Company made a distribution of $2.31 per share to
shareholders of record as of October 24, 2001. In addition, in the course of
liquidating its assets, the Company anticipates paying additional cash
dividends to its shareholders.

   Recent Sales of Unregistered Securities.  In reliance on Section 4(2) of the
Securities Act of 1933 (transactions by an issuer not involving any public
offering), and in connection with the Spin-off, Harbor Global issued 1,200,000
common shares, par value $.01 per share, to Pioneer on June 20, 2000 at a per
share purchase price of par value for aggregate cash consideration of $12,000.
Harbor Global subsequently effected a four-to-one stock split on August 15,
2000.

   In reliance on Section 4(2) of the Securities Act of 1933 (transactions by
an issuer not involving any public offering), and in connection with the
Spin-off, Harbor Global issued 843,311 common shares, par value $.0025 per
share, to Pioneer on October 24, 2000 at a per share purchase price of par
value for aggregate cash consideration of $2,108.28.

   In reliance on Section 4(2) of the Securities Act of 1933 (transactions by
an issuer not involving any public offering), and in accordance with the
Company's Non-Employee Director Share Plan, the Company issued 1,500 shares of
its common stock to each of its four directors on October 24, 2001. According
to the plan, on each anniversary of October 24, 2000, the Spin-off date, each
director of the Company who is not an employee will be granted 1,500 common
shares in consideration of his or her future services as a director.

ITEM 6.  SELECTED FINANCIAL DATA.

   The Company's discussion and analysis of its financial condition and results
of operations are based upon the Company's consolidated financial statements,
which have been prepared in accordance with accounting principles generally
accepted in the United States. The preparation of these financial statements
requires management to make estimates and judgments that affect the reported
amounts of assets, liabilities, and income. On an ongoing basis, the Company
evaluates its estimates, including those related to the fair value of Russian
Investments classified as available-for-sale pursuant to SFAS No. 115,
"Accounting for Certain Investments in Debt and Equity Securities" ("SFAS 115")
valuations of its Polish venture capital holdings, accrued management fees, and
deferred taxes.

   Russian investments consist of equity securities held in the portfolio of
the PIOGLOBAL Investment Fund. Such securities are classified as
available-for-sale and recorded at fair value pursuant to SFAS 115. In

                                      10

<PAGE>

determining fair value, individual securities must first satisfy certain
trading volume and bid-ask spread criteria established by management, to
demonstrate that there is sufficient breadth and scope in the market for that
security. Securities that satisfy these criteria are recorded in long-term
marketable securities based on the quoted price in the Russian Trading System.
Unrealized gains and losses are recorded in stockholders equity as other
comprehensive income. Realized gains or losses and any other than temporary
declines in value are reported in other income (expense). For Russian
investments that do not meet these criteria, 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.

   The Company retains an approximately 8% limited partnership interest in the
Pioneer Poland Fund. Polish venture capital investments within the Pioneer
Poland Fund are recorded at fair value as determined by the management of the
Pioneer Poland Fund. Unrealized and realized gains or losses are recorded in
the Consolidated Statement of Operations. The Company analyzes the assumptions
supporting changes in the fair value of these investments for appropriateness
on a quarterly basis.

   On August 7, 2000, Harbor Global entered into an administration and
liquidation agreement with Calypso Management pursuant to which Calypso
Management will manage the liquidation of Harbor Global and operate Harbor
Global's assets pending their liquidation. As compensation for its provision of
services to Harbor Global, Calypso Management receives a portion of the net
proceeds distributed from the liquidation of Harbor Global's assets, based upon
a predetermined schedule, which varies depending upon the source of the
distribution and the cumulative amount of distributions since the Spin-off.
Harbor Global accrues such management fees at the earlier of (1) the formal
declaration by the Board of Directors of a distribution and (2) the time when a
distributable amount is estimable following the sale or liquidation of an asset.

   The Company recognizes deferred tax assets and liabilities based on the
difference between the financial statement carrying amounts and the tax bases
of assets and liabilities. The Company regularly reviews its deferred tax
assets for recoverability and establishes a valuation allowance based on
historical taxable income, projected future taxable income, and the expected
timing of the reversals of existing temporary differences.

   The following table presents summary consolidated historical financial data
for Harbor Global for the five fiscal years ended December 31, which has been
derived from the audited consolidated financial statements of Harbor Global for
these periods. The following selected consolidated financial data should be
read in conjunction with Item 7 "Management's Discussion and Analysis of
Financial Condition and Results of Operations," and the Consolidated Financial
Statements of Harbor Global, including the notes thereto, referred to in Item
8. The consolidated financials included herein may not necessarily reflect the
consolidated results of operations, financial position, changes in
shareholders' equity and cash flows of Harbor Global if it had been a separate
stand-alone entity during the years presented, other than 2001.

<TABLE>
<CAPTION>
                                                           Year Ended December 31,
                                              ------------------------------------------------
                                                2001      2000      1999      1998      1997
                                              --------  --------  --------  --------  --------
                                               (Amounts In Thousands Except Per Share Amounts)
<S>                                           <C>       <C>       <C>       <C>       <C>
Income Statement Data
   Revenue................................... $ 12,297  $ 11,412  $ 13,724  $ 11,010  $  9,037
   Operating Expenses........................  (17,789)  (21,161)  (19,542)  (35,755)  (25,905)
   Other Income (Expense)....................    8,549     3,365     2,088   (11,255)    9,551
   Income (Loss) from Continuing Operations..    2,377    (3,889)   (6,605)  (22,726)   (9,266)
   Earnings (Loss) Per Share from Continuing
     Operations.............................. $   0.42  $  (0.69) $  (1.17) $  (4.03) $  (1.64)
Balance Sheet Data
   Total Assets.............................. $101,572  $143,509  $ 99,751  $100,321  $ 96,999
   Total Amounts Due to Former Affiliates....       --        --    41,977    44,755    35,596
   Total Long-term Obligations...............    7,086     6,800        --        --       456
   Total Equity (Deficit)....................   56,633    75,256   (58,190)  (28,752)    6,902
   Cash Distributions Per Share.............. $   2.31  $     --  $     --  $     --  $     --
</TABLE>

                                      11

<PAGE>

ITEM 7.   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 real estate management
operations. Management's Discussion and Analysis of Financial Condition and
Results of Operations is presented in three sections: Results of Operations for
the years ended December 31, 2001, 2000 and 1999, Liquidity and Capital
Resources, and Future Operating Results.

Results of Operations for the years ended December 31, 2001, 2000, and 1999

   Consolidated Operations.  For fiscal year 2001, Harbor Global reported net
losses of $8.9 million as compared to net losses of $10.0 million and $44.1
million for fiscal years 2000 and 1999, respectively.

   For fiscal year 2001, Harbor Global reported net income from continuing
operations of $2.4 million as compared to net losses from continuing operations
of $3.9 million for fiscal year 2000, reflecting a $6.3 million increase in
income. The increase in income was attributable principally to a $7.3 million
gain on the sale of Harbor Global's investment in Tas-Yurjah, a $3.3 million
increase in interest and dividend income, a $2.0 million reduction in corporate
overhead expenses, and a $1.4 million reduction in salary and benefit expenses
due to manpower reductions followed by the sale or closure of the Company's
operations in Poland. Offsetting these reductions was a $4.7 million decrease
in realized portfolio gains from the Russian real estate management and
investment management operations, a $1.9 million write-off of the Company's
investment in the Pioneer Polish Real Estate Fund, and a $0.7 million loss on
the sale of the Company's general partnership interest in the Pioneer Poland
Fund.

   The net loss from continuing operations in 2000 totaled $3.9 million, a
decrease of $2.7 million compared with net losses of $6.6 million in 1999.
Capital gains on the sale of portfolio investments by PIOGLOBAL Investment Fund
increased by $6.3 million. The increase in capital gains was offset partially
by the write-down of several venture capital portfolio investments, which
reduced 2000 consolidated income by $1.5 million, and $1.0 million of
non-recurring real estate expenses. In addition, the Company reported $1.0
million of non-recurring income in 1999 from the Russian real estate and
investment management operations from the receipt of a tax refund and the
reduction of accrued liabilities.

   Losses from discontinued Russian timber operations and Russian brokerage
operations (conducted by Harbor Global's former parent, Pioneer) totaled $11.3
million in 2001 compared to $6.1 million in 2000 and $26.1 million in 1999.
Losses from discontinued operations in 2001 reflect a $3.1 million loss from
timber operations and a $8.2 million estimated loss on the disposition of the
timber segment. Losses reported prior to 2001 were attributable primarily to
the operations of the former timber segment.

   The revenues and net income by on-going business segment for 2001, 2000 and
1999 are set forth on the following table:

<TABLE>
<CAPTION>
                                                    Revenues          Net Income (Loss)
                                                ----------------- ------------------------
                                                 12 Months Ended  12 Months Ended December
                                                  December 31,               31,
                                                ----------------- ------------------------
                                                2001  2000  1999   2001     2000    1999
                                                ----- ----- ----- -------  ------  -------
                                                  (In Millions)         (In Millions)
<S>                                             <C>   <C>   <C>   <C>      <C>     <C>
Russian Real Estate Management & Investment
  Management                                    $ 8.7 $ 9.0 $10.4  $  0.9   $ 3.9  ($  1.1)
Polish Venture Capital Investment                 0.1   0.6   1.2    (2.4)   (2.6)    (0.4)
Real Estate Management Operations                 1.2   1.8   1.7    (4.0)   (3.6)    (4.0)
Other                                             2.3    --   0.4     7.9    (1.6)    (1.1)
                                                ----- ----- ----- -------  ------  -------
       Total From Continuing Operations          12.3  11.4  13.7     2.4    (3.9)    (6.6)
Discontinued Operations                            --    --    --   (11.3)   (6.1)   (26.1)
Change in Accounting Principle (Start-up costs)    --    --    --      --      --    (11.4)
                                                ----- ----- ----- -------  ------  -------
       Totals                                   $12.3 $11.4 $13.7 ($  8.9) ($10.0) ($ 44.1)
                                                ===== ===== ===== =======  ======  =======
</TABLE>

                                      12

<PAGE>

   Russian Real Estate Management and Investment Management Operations.  Net
income from continuing operations was $0.9 million in 2001 as compared to net
income from continuing operations of $3.9 million in 2000, reflecting a
decrease in income of $3.0 million. The decrease was attributable to
approximately $4.7 million of lower realized gains from portfolio sales and
lower rental income of $0.6 million from Meridian Commercial Tower due to a
higher vacancy rate. These decreases were offset partially by a $1.1 million
reduction in corporate overhead costs and a $1.0 million increase in interest
and dividend income.

   Net income from continuing operations was $3.9 million in 2000, an increase
of $5.0 million compared to net losses of $1.1 million in 1999. The increase
was attributable principally to capital gains after minority interest, taxes
and expenses of approximately $6.6 million on the sale of several of PIOGLOBAL
Investment Fund's portfolio holdings as compared to gains of $0.3 million in
1999. The gains were offset partially by a $1.4 million reduction in revenues.
Revenues decreased by $1.4 million to $9.0 million compared to 1999, in part,
because of a reduction in rental revenues from the Meridian Commercial Tower of
$0.4 million. This decrease was attributable to the restructuring of certain
leases, which increased the term of the lease in exchange for lower current
lease rates. In 1999, Pioneer First Russia received a non-recurring tax refund
of approximately $0.6 million related to its discontinued offshore brokerage
business and realized $0.4 million in income from a reduction in accrued
liabilities.

   Polish Venture Capital Investment.  Harbor Global reported losses from its
Polish venture capital investment of $2.4 million in 2001, $2.6 million in
2000, and $0.4 million in 1999. The losses in 2001 and 2000 reflect write-downs
in the carrying values of the portfolio investments, net of minority interest,
of $1.2 million and $1.5 million, respectively. In addition to the foregoing
write-downs, the increase in losses during 2000 compared with 1999 was
attributable, in part, to increases in corporate overhead costs.

   Real Estate Management Operations.  Harbor Global's real estate management
operations reported losses of $4.0 million in 2001 compared to losses of $3.6
million in 2000. The $0.4 million increase in losses reflects the $1.9 million
write-off of PREA's investment in the Pioneer Polish Real Estate Fund offset by
a $0.9 million reduction in corporate overhead costs and a $0.7 million
reduction in salary, benefit and facility expenses due to lower headcount and
the closure of the office in Poland at the end of the second quarter of 2001.
In 2000, losses decreased by $0.4 million to $3.6 million compared with 1999
reflecting a reduction in costs associated with the development of the Pioneer
Polish Real Estate Fund and related fund and property management operations.

   Discontinued Operations.  On February 5, 2002, the Company's Board of
Directors approved the disposition of the Russian timber operations. Further to
this, on March 5, 2002, the Company's Board of Directors approved a minimum
acceptable sales price, with a closing to occur in 2002. Accordingly, as of the
fourth quarter of 2001, the Russian timber operations segment is reflected as a
discontinued operation. Management has made its best estimate of the loss on
disposal based on an estimated selling price and a projection of costs and
expenses to be incurred up until the anticipated date of disposal. The Russian
timber operations segment consists of the Company's indirect wholly owned
subsidiary, Forest-Starma.

   In 1999, the decision was made by Pioneer First Russia's management to close
its brokerage operations.

   The following table summarizes losses from discontinued operations for the
three years ended December 31:

<TABLE>
<CAPTION>
                                                 2001   2000    1999
                                                ------  -----  ------
                                                    (In Millions)
         <S>                                    <C>     <C>    <C>
         Discontinued Russian Timber Operations $(11.3) $(5.2) $(24.7)
         Discontinued Russian Brokerage........ $   --  $(0.9) $ (1.4)
                                                ------  -----  ------
                Total.......................... $(11.3) $(6.1) $(26.1)
</TABLE>

                                      13

<PAGE>

Russian Timber

   Losses from discontinued Russian timber operations during 2001 were $11.3
million, comprised of $3.1 million from operations and $8.2 million from the
estimated loss on the disposition of the Russian timber operations segment. The
Company is pursuing a sale with a view toward consummating the sale in 2002.
The 1999 loss includes a reduction in the carrying value of timber equipment
and deferred development costs of $15.3 million.

   The Company does not expect that it will have to fund cash requirements of
the timber operations up to the anticipated date of disposal.

   The Company's timber products are sensitive to changes in timber commodity
prices. At December 31, 2001, the Company had approximately $2.8 million of
timber, which is included in net assets from discontinued operations. The
carrying value approximates the commodity prices that management expects to
receive from the eventual sale of the timber.

Russian Brokerage Operations

   The Russian brokerage operations consisted of two of Pioneer First's
wholly-owned subsidiaries, Closed Joint-Stock Company "Pioneer Securities" and
UKS Securities Limited ("UKS Securities"). The liquidation of UKS Securities
was completed in August 2000. Accordingly, losses of $0.9 million and $1.4
million were recorded in the years ended December 31, 2000 and 1999,
respectively.

Liquidity and Capital Resources

   Liquid assets held directly by Harbor Global consisting of cash and cash
equivalents and marketable securities maintained for general corporate purposes
were $20.0 million as of December 31, 2001, of which $6.9 million is
restricted. This represents a $6.1 million decrease from the 2000 fiscal year
end and is attributable principally to the distribution of approximately $13.0
million to shareholders offset by proceeds from the sale of Tas-Yurjah.
Management believes that the cash available for general corporate purposes is
sufficient to fund operations over the next two years.

   The assets of the Company's majority-owned Russian subsidiary, PIOGLOBAL
Investment Fund, consist of cash and cash equivalents, equity securities (both
liquid and illiquid), marketable securities, real estate holdings, and other
miscellaneous assets.

Future Operating Results

   From time to time, management may make forward-looking statements in this
Annual Report on Form 10-K, in other documents that the Company files with the
Securities and Exchange Commission (including those documents incorporated by
reference into the Form 10-K), 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 the Company's 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 such
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 the Company's expectations. Described
below are some of the important factors that could affect the Company's
revenues or results of operations.

                                      14

<PAGE>

   HARBOR GLOBAL DOES NOT HAVE AN OPERATING HISTORY AS AN INDEPENDENT COMPANY.

   Harbor Global has operated as an independent public company since October
24, 2000. Although Harbor Global is operated by the same senior management who
operated its assets prior to the Spin-off, Harbor Global does not have an
established operating history as an independent company. The financial
statements included in this Form 10-K may not necessarily reflect the results
of operations, financial condition and cash flows that would have been achieved
had Harbor Global and its subsidiaries operated as an independent company prior
to the Spin-Off, particularly in light of Harbor Global's intent to liquidate
its assets within a limited period of time.

   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
      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, if any, are
speculative. A significant portion of Harbor Global's Russian real estate
management and investment management operations consists of its approximately
52% interest in PIOGLOBAL 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 PIOGLOBAL Investment Fund are illiquid. There
is also limited liquidity in some of the publicly traded securities of
PIOGLOBAL Investment Fund. Consequently, Harbor Global may have difficulty
selling some of its investment in PIOGLOBAL Investment Fund or causing
PIOGLOBAL 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 RUSSIA, 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. 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;

   -- tariffs and other trade barriers;

   -- difficulties in staffing and managing foreign operations;


                                      15

<PAGE>

   -- political and economic instability;

   -- fluctuations in currency exchange rates;

   -- restrictions on currency exchange and repatriation;

   -- restrictions on foreign investment in its businesses; 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 real estate management and
investment management operations involve significant risks, such as those
listed above, which 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. Furthermore, Harbor Global does not have
political risk insurance for any of its businesses.

   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 that 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 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,

                                      16

<PAGE>

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,
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
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, it is anticipated
that 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.

                                      17

<PAGE>

Recent Pronouncements of the Financial Accounting Standards Board

   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 issued SFAS No. 142, "Goodwill and
Other Intangible Assets." SFAS No. 142 requires 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 does not believe that adopting
SFAS No. 142 will have a material impact to its financial statements.

   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 does not believe that adopting SFAS No. 144 will have a
material impact on its financial statements.

ITEM 7A.   QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

   Harbor Global monitors its exposure to adverse changes in interest rates,
foreign currency exchange rates and market fluctuations.

   The Company's interest rate risk involves the short-term investment of
excess cash. This risk impacts fair values, earnings and cash flows. Excess
cash is primarily invested in foreign government bonds, United States treasury
bills and in overnight repurchase agreements backed by United States government
securities. These short-term investments are reported either as cash and cash
equivalents or marketable securities. The balance of such securities at
December 31, 2001 was approximately $2.0 million of cash and cash equivalents
and $26.3 million of marketable securities. Earnings from excess cash invested
were approximately $2.4 million for the year ended December 31, 2001. Based on
excess cash invested at December 31, 2001, a one percent increase or decrease
in current market interest rates would have the effect of causing an
approximately $0.3 million additional pre-tax credit or charge to the statement
of operations.

   Harbor Global is exposed to certain changes in foreign currency exchange
rates, primarily as a result of its operations in Russia. Due to the
hyperinflationary economy in the Russian Federation, the United States dollar
(the Company's reporting currency) has been designated as the Company's
functional currency. Translation gains and losses that result from remeasuring
into the United States dollar are included in the statements of operations. To
mitigate against currency translation risk, the Company primarily transacts in
United States dollars by contracting for most of its costs and revenues in
United States dollars. This acts as a natural hedge to protect against currency
fluctuations from the Company's operations.

   The Russian ruble is not a fully convertible currency outside of the
territory of the Russian Federation. The translation of ruble denominated
assets and liabilities into United States dollars for the purpose of these
financial statements does not indicate that the Company could realize or settle
in United States dollars the reported values of these assets and liabilities.
The Company reports all of its non monetary assets and liabilities held in the
Russian Federation at historical exchange rates, and any fluctuation in foreign
exchange rates would not have any impact on reported non monetary assets and
liabilities.

                                      18

<PAGE>

   The table below sets forth in the Company's reporting currency a summary of
the monetary assets and liabilities held in rubles at December 31, 2001.

<TABLE>
<CAPTION>
                                                   (in thousands)
               <S>                                 <C>
               Monetary Assets
               Cash and Cash Equivalents..........    $ 1,350
               Restricted Cash....................      2,280
               Marketable Securities Held for Sale     30,227
               Other..............................        605
                                                      -------
                                                      $34,462
                                                      =======
               Monetary Liabilities
               Dividend Payable...................    $ 2,549
               Taxes Payable......................      2,090
               Deferred Taxes.....................      2,086
               Other..............................         21
                                                      -------
                                                      $ 6,746
                                                      -------
               Net Position.......................    $27,716
                                                      =======
</TABLE>

   The Company indirectly invests in equity instruments of privately-held
companies through its approximately 52% interest in the PIOGLOBAL Investment
Fund and its approximately 8% interest in the Pioneer Poland Fund. Investments
in privately held companies by the PIOGLOBAL Investment Fund are recorded at
cost in long-term investments. With respect to the Company's limited
partnership interest in the Pioneer Poland Fund, such interests are recorded in
Polish Venture Capital Investment using the equity method of accounting. The
Company is exposed to market risk as it relates to the market value of its
indirect investments in privately held companies. In this connection, the
carrying value of the Company's interest in the Pioneer Poland Fund has been
written-down by approximately $1.3 million to approximately $1.2 million in
2001.

   The PIOGLOBAL Investment Fund is also invested in equity instruments of
public companies, which are classified as available-for-sale pursuant to SFAS
115. Those publicly traded equity investments that have evinced a sufficient
breadth and scope of market activity are valued based on the quoted price for
such securities according to the Russian Trading System and are recorded in
long-term marketable securities. Otherwise, the investments are recorded in
long-term investments at a fair value equivalent to its original cost basis.
These available-for-sale equity investments, primarily in oil and gas, energy
companies and the telecommunications industry, are subject to significant
fluctuations in fair value due to the volatility of the stock market and the
industries in which these companies participate. As of December 31, 2001, the
fair value of equity investments contained in long-term marketable securities
aggregated $18.8 million. As a result, the Company recorded unrealized gains
after deferred taxes and after minority interest of $3.3 million as a separate
component of stockholder's equity.Although the breadth of industries
represented on the Russian Trading System is severely limited, the Company
attempts to manage its exposure to stock market fluctuations and minimize the
impact of stock market declines to the Company's earnings and cash flow by
increased diversification of the portfolio.

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

   The Company's financial statements required by Item 8 are submitted as a
separate section beginning on page F-1 at the end of this Annual Report on Form
10-K.

ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.

   On October 23, 2000, as the sole shareholder of Harbor Global, Pioneer voted
by written consent to engage Deloitte and Touche LLP to serve as the Company's
auditor effective as of the Spin-off. Harbor Global's Board of Directors
approved the engagement of Deloitte and Touche by unanimous written consent.

                                      19

<PAGE>

   Prior to the Spin-off date, Harbor Global was a wholly owned subsidiary of
Pioneer, and Arthur Andersen LLP served as auditor for both Pioneer and Harbor
Global. The decision to change auditors was made in connection with Harbor
Global's status as an independent company following the Spin-off.

   The report of Arthur Andersen on the Company's financial statements for the
year ended December 31, 1999 does not contain an adverse opinion or a
disclaimer of opinion, and was not qualified or modified as to uncertainty,
audit scope or accounting principles. For the year ended December 31, 1999 and
through the Spin-off date, there were no disagreements with Arthur Andersen on
any matter of accounting principles or practices, financial statement
disclosure or auditing scope or procedure, which if not resolved to the
satisfaction of Arthur Andersen would have caused it to make reference to the
subject matter of the disagreement in any of its reports.

                                   PART III

ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.

DIRECTORS

   Mr. Cogan was elected for a four-year term commencing in October 2001 and
expiring at the Company's annual general meeting immediately following the
fifth anniversary of the Spin-off. All other directors were elected for a five
year term commencing in June 2000 and expiring at the annual general meeting
immediately following the fifth anniversary of the Spin-off.

<TABLE>
<CAPTION>
                             Name               Age
                             ----               ---
                             <S>                <C>
                             John F. Cogan, Jr. 75
                             John D. Curtin, Jr 69
                             W. Reid Sanders... 52
                             John H. Valentine. 77
</TABLE>

   JOHN F. COGAN, JR. has been a Director of Harbor Global since October 2001.
Mr. Cogan is Deputy Chairman and Director of Pioneer Global Asset Management
S.p.A. He is also Chairman of the Board and a Director of Pioneer Investment
Management USA Inc. and a Director of Pioneer Investment Management, Inc. and
Pioneer Alternative Investments Limited. Mr. Cogan has been a Director of
PIOGLOBAL Investment Fund since 1995. From 1963 to October 24, 2000, he was
President, Chief Executive Officer and a director of Pioneer. From 1978 to
1980, he was Chairman of the Investment Company Institute ("ICI") and is
currently a member of the Board of Governors of the ICI. From 1983 to 1986, Mr.
Cogan was a member of the Board of Governors of the National Association of
Securities Dealers, Inc. and its Legal Advisory board from 1988 through 1994.
From 1987 to 1994, he was Chairman of ICI Mutual Insurance Company and
currently is a Director. Mr. Cogan is Of Counsel at Hale and Dorr LLP, Boston,
Massachusetts.

   JOHN D. CURTIN, JR. has been a Director of Harbor Global since June 2000.
Mr. Curtin served as a director of Pioneer from February 2000 to October 2000.
From 1995 to 1998, Mr. Curtin was the Chairman, President and Chief Executive
Officer of Aearo Corporation, a provider of personal safety equipment. Prior to
1995, Mr. Curtin was the Executive Vice President and Chief Financial Officer
of Cabot Corporation, a global specialty chemicals and materials company. Mr.
Curtin serves as a Director of Aearo Corporation.

   W. REID SANDERS has been a Director of Harbor Global since June 2000. Mr.
Sanders served as a director of Pioneer from February 2000 to October 2000.
Prior to retiring in 1999, Mr. Sanders was a Director and Executive Vice
President of Southeastern Asset Management, Inc., an investment management firm
that he co-founded in 1975. In addition, Mr. Sanders serves as a Trustee of The
Hugo Dixon Foundation and Rhodes College, Trustee and member of the Executive
Committee of the Dixon Gallery and Gardens and Vice Chairman and member of the
Board of Trustees of the Hutchinson School.

                                      20

<PAGE>

   JOHN H. VALENTINE has been a Director of Harbor Global since June 2000. Mr.
Valentine served as a director of Pioneer from 1985 to October 2000. Mr.
Valentine is the Vice Chairman of the Board of Directors and Treasurer of
Boston Medical Center and serves as the Chairman of the Board of Directors of
Cypress Hill Associates, an outpatient addiction treatment facility. He is also
Director of Entrepreneurial Management at Boston University Health Policy
Institute. From 1980 to 1990, Mr. Valentine was a consultant to T.A.
Associates, a manager of venture capital. From 1972 to 1975, Mr. Valentine was
a partner of Tucker Anthony & R.L. Day, a member of the New York Stock
Exchange. Mr. Valentine also serves as a Director of Visualization Technology,
Inc., is a member of the Advisory Committees of the Hurricane Island Outward
Bound School and the Thompson Island Outward Bound Education Center and was a
Trustee of both institutions.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

   The Company does not have a Compensation Committee or other board committee
performing similar functions. All decisions regarding compensation were made by
the Company's Board of Directors.

EXECUTIVE OFFICERS AND KEY EMPLOYEES

   The following table sets forth information concerning the individuals who
are executive officers of Harbor Global. Each individual has been elected to
the office indicated and serves at the discretion of the Harbor Global Board of
Directors.

<TABLE>
<CAPTION>
  Name                 Age                      Position
  ----                 ---                      --------
  <C>                  <C> <S>
  Stephen G. Kasnet... 56  President and Chief Executive Officer
  Donald H. Hunter.... 45  Chief Operating Officer and Chief Financial Officer
  Catherine V. Mannick 47  Senior Vice President and General Counsel
</TABLE>

   STEPHEN G. KASNET has been the President and Chief Executive Office of
Harbor Global since June 2000 and has been President of PREA, L.L.C. since
1996. From 1998 to 2000, Mr. Kasnet was Executive Vice President of Pioneer and
the President of Pioneer Global Investments, a division of Pioneer. From 1995
to 1998, Mr. Kasnet was a Vice President of Pioneer. Mr. Kasnet served as a
Managing Director of First Winthrop Corporation and Winthrop Financial
Associates. Mr. Kasnet serves as a Director of Forest-Starma, Pioneer First and
PIOGLOBAL Investment Fund. He is also President of Pioneer Forest, Inc.,
Pioglobal Omega, L.L.C., PIOGlobal Corporation and Pioneer First Russia, Inc.
In addition, Mr. Kasnet serves as Chairman of the Board of Directors of Warren
Bancorp and Warren Five Cents Savings Bank and as a director of Rubicon
Limited. Mr. Kasnet has served as President and Chief Executive Officer for
Calypso Management since June 2000.

   DONALD H. HUNTER has been Chief Operating Officer and Chief Financial
Officer of Harbor Global since June 2000. From 1998 to 2000, Mr. Hunter was the
Senior Vice President and Chief Operating Officer of Pioneer Global
Investments, a division of Pioneer. From 1992 to 1998, Mr. Hunter was the
Manager of International Finance at Pioneer. Prior to 1992, Mr. Hunter served
in various high-profile finance roles at Pioneer and General Electric Company.
Mr. Hunter serves as a Director of Forest-Starma and PIOGLOBAL Investment Fund.
He is Vice President and Treasurer of Pioneer Forest, Inc., Pioglobal Omega,
L.L.C., PIOGlobal Corporation, Pioneer First Russia, Inc. and PREA L.L.C. Mr.
Hunter has served as Chief Operating Officer, Chief Financial Officer and
Treasurer for Calypso Management since June 2000.

   CATHERINE V. MANNICK has been Senior Vice President and General Counsel of
Harbor Global since July 2000. From 1996 to 2000, Ms. Mannick served as
Assistant General Counsel of Pioneer, during which time she oversaw Pioneer's
Russian legal matters. From 1998 to 2000 she was a Vice President of Pioneer.
From 1991 to 1996, Ms. Mannick was Of Counsel at Hale and Dorr LLP in the
firm's corporate department. Ms. Mannick is Secretary of Pioneer Forest, Inc.,
Pioglobal Omega, L.L.C., PIOGlobal Corporation and Pioneer First Russia, Inc.
Ms. Mannick has served as Secretary for Calypso Management since June 2000 and
as Executive Vice President of Calypso Management since October 2000.

                                      21

<PAGE>

ITEM 11.  EXECUTIVE COMPENSATION

  Compensation of Directors

   Each Harbor Global director is entitled to receive $20,000 annually as
compensation for serving on the Harbor Global Board of Directors. This annual
compensation assumes the Board of Directors will meet four times annually and
may be increased in the event of more frequent meetings. In addition, directors
of Harbor Global are entitled to be reimbursed for out of pocket expenses
incurred in connection with attendance at any meeting of the Board of Directors
or any committee meeting of the Board of Directors. Mr. Cogan was paid $5,000
in director's fees in 2001 and all other directors were paid $25,000 in
director's fees in 2001.

   On November 2, 2000, the Board of Directors of Harbor Global approved the
adoption of the Harbor Global Company Ltd. Non-employee Director Share Plan in
accordance with the approval obtained from Pioneer, the Company's sole
shareholder, on October 23, 2000. Pursuant to the plan, on each anniversary of
October 24, 2000, the Spin-off date, 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 future services as a director. The plan became
effective upon adoption by the board and will terminate upon the earlier of (i)
October 24, 2005, (ii) the grant of all of the common shares reserved for
issuance under the plan or (iii) the termination of the plan by the board in
accordance with the terms of the plan. During fiscal year 2001, each director
received 1,500 common shares pursuant to the plan.

  Compensation of Executive Officers

   Although Mr. Kasnet, Mr. Hunter and Ms. Mannick are executive officers of
Harbor Global, Harbor Global does not directly pay compensation to these
individuals. Instead, the administration and liquidation agreement between
Harbor Global and Calypso Management provides that Harbor Global will pay the
operating expenses of Calypso Management, including compensation of Mr. Kasnet,
Mr. Hunter and Ms. Mannick.

   The following table sets forth information regarding compensation earned by
the Chief Executive Officer and other executive officers of the Company during
fiscal year 2001 and 2000. Although Mr. Kasnet, Mr. Hunter and Ms. Mannick
became executive officers of Harbor Global beginning in June 2000, June 2000
and July 2000, respectively, they were also employees of Pioneer through
October 24, 2000 and thus were compensated by Pioneer through October 24, 2000.
Therefore, the information set forth below includes compensation earned by the
listed individuals as employees of Pioneer from January 1, 2000 through October
24, 2000 and as employees of Calypso Management from October 25, 2000 through
December 31, 2001. The information set forth below includes compensation earned
by the listed individuals as employees of Pioneer from January 1, 2000 through
October 24, 2000 and as employees of Calypso Management from October 25, 2000
through December 31, 2001.

<TABLE>
<CAPTION>
                                       Annual            Long Term
                                   Compensation(1)    Compensation(4)
                                   --------------- ---------------------
                                                   Restricted Securities
                            Fiscal Salary   Bonus    Stock    Underlying    All Other
Name and Principal Position  Year  ($)(2)  ($)(3)  Awards($)  Options(#) Compensation(5)
--------------------------- ------ ------- ------- ---------- ---------- ---------------
<S>                         <C>    <C>     <C>     <C>        <C>        <C>
 Stephen G. Kasnet.........  2001  325,000 325,000       --       --          76,978
  President,                 2000  308,589 495,000   61,861       --         245,301
  Chief Executive Officer
 Donald H. Hunter..........  2001  250,000 250,000       --       --          26,290
 Chief Operating Officer,    2000  233,027 375,000   37,291       --         744,100
  Chief Financial Officer
 Catherine V. Mannick......  2001  185,000  42,000       --       --          22,224
  Senior Vice President,     2000  170,585  30,000   10,102       --         225,343
  General Counsel
</TABLE>
--------
(1) Fiscal year 2000 excludes cash payments of $205,000, $716,651 and $205,923
    to Mr. Kasnet, Mr. Hunter and Ms. Mannick, respectively, paid by Pioneer
    pursuant to agreements entered into with Pioneer which provided for such
    payments upon the termination of Mr. Kasnet's, Mr. Hunter's and Ms.
    Mannick's employment with Pioneer.

                                      22

<PAGE>

(2) Fiscal 2000 includes $63,000, $48,527 and $32,885 paid to Mr. Kasnet, Mr.
    Hunter and Ms. Mannick, respectively, by Harbor Global through Calypso
    Management since October 24, 2000.
(3) Fiscal year 2000 includes $195,000, $175,000 and $30,000 paid to Mr.
    Kasnet, Mr. Hunter and Ms. Mannick respectively, by Harbor Global through
    Calypso Management as amounts earned under a bonus plan for the Company's
    officers enabling Mr. Kasnet and Mr. Hunter to receive annual bonus
    payments up to 100% of their respective salaries and Ms. Mannick to receive
    annual bonus payments up to 50% of her salary based upon the achievement of
    performance goals that are established by the Harbor Global Board of
    Directors. The 2001 and 2000 plans were reviewed and approved by the Board
    of Directors.
(4) All restricted stock awards represent shares of Pioneer common stock.
    Dollar values of 2000 restricted stock awards are based on the closing
    market price of Pioneer common stock on the date of grant. In connection
    with the merger of UniCredito and Pioneer, all restricted stock granted by
    Pioneer became fully vested prior to the consummation of the merger, and on
    October 24, 2000, each issued and outstanding share of Pioneer common stock
    converted into the right to receive a cash payment of $43.50 per share, and
    each outstanding option converted into the right to receive a cash payment
    equal to the excess of $43.50 over the per share exercise price of such
    option.
(5) Fiscal year 2001 includes contributions made by Calypso Management under
    its 401(K) plan and qualified benefit plans for the benefit of Mr. Kasnet,
    Mr. Hunter, and Ms. Mannick in the amounts of $9,251, $8,657 and $8,175,
    respectively. Additionally, payments of $62,360, $17,633 and $14,049 were
    paid to Mr. Kasnet, Mr. Hunter, and Ms. Mannick, respectively as
    supplemental pension payments by Calypso Management. Includes $5,367 paid
    to Mr. Kasnet for life insurance coverage. Fiscal year 2000 includes cash
    payments of $205,000, $716,651 and $205,923 to Mr. Kasnet, Mr. Hunter and
    Ms. Mannick respectively, paid by Pioneer pursuant to agreements entered
    into with Pioneer, which provided for such payments upon the termination of
    employment with Pioneer. Fiscal year 2000 also includes contributions made
    by Pioneer under its 401(k) and qualified benefit plans for the benefit of
    Mr. Kasnet, Mr. Hunter, and Ms. Mannick in the amounts of $15,126, $9,948
    and $11,199, respectively, and contributions made by Calypso Management
    under its 401(k) plan since October 24, 2000 for the benefit of Mr. Kasnet
    and Mr. Hunter in the amounts of $2,500 and $1,925, respectively. Includes
    $17,308, $15,576, and $8,221 of vacation pay paid to Mr. Kasnet, Mr. Hunter
    and Ms. Mannick, respectively, upon termination of their employment with
    Pioneer. Includes $5,367 paid to Mr. Kasnet for life insurance coverage.

   During fiscal year 2000, Mr. Kasnet exercised options to purchase 142,500
shares of Pioneer common stock for an aggregate realized value of $6,228,832.

ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

   The following table presents the number of shares of Harbor Global common
stock beneficially owned as of March 1, 2001, unless otherwise indicated, by:

   --each person or entity known by Harbor Global to own more than five percent
     of its issued and outstanding common shares;

   --each director of Harbor Global;

   --each of the executive officers of Harbor Global; and

   --all directors and officers of Harbor Global as a group.

                                      23

<PAGE>

   Unless otherwise indicated, each person or entity has sole voting and
investment power with respect to the shares listed opposite such person's or
entity's name. Unless otherwise indicated, the percentages set forth below are
based upon a total of 5,649,311 common shares outstanding as of March 1, 2002.

<TABLE>
<CAPTION>
                                               Number     Percent Of
                                                 Of       Outstanding
          Beneficial Owner                     Shares       Shares
          ----------------                     -------    -----------
          <S>                                  <C>        <C>
          John F. Cogan, Jr+.................. 797,999(1)    14.13%
            Pioneer Investment
             Management USA Inc
            60 State Street
            Boston, MA 02109
          S. Muoio & Co. LLC.................. 700,520(2)    12.40%
            509 Madison Avenue, Suite 406
            New York, NY 10022
          Gabelli Funds, LLC.................. 571,570(3)    10.12%
            One Corporate Center
            Rye, NY 10580
          Duetsche Bank AG.................... 522,453(4)     9.25%
            Taunusanlage 12, D-60325
            Frankfurt on Main, Germany
          Tudor Proprietary Trading, L.L.C.... 320,540(5)     5.67%
            1275 King Street
            Greenwich, CT 06831
          Perry Corp.......................... 304,209(6)     5.38%
            599 Lexington Avenue
            New York, NY 10022
          W. Reid Sanders+....................  31,500           *
          John H. Valentine+..................  12,100           *
          John D. Curtin Jr.+.................  11,500           *
          Stephen G. Kasnet+..................  33,353           *
          Donald H. Hunter+...................   1,051           *
          Catherine V. Mannick+...............     377           *
          All directors and officers of Harbor
            Global as a group (7 persons)..... 887,880       15.72%
</TABLE>
--------
*  Denotes ownership of less than 1% of outstanding shares of Harbor Global
   common shares.
+  Denotes a director or executive officer of Harbor Global.
(1) Consists of 699,131 Common Shares with respect to which Mr. Cogan exercises
    sole voting and investment power and 98,868 Common Shares with respect to
    which Mr. Cogan exercises shared voting and investment power. This
    information is based solely on information provided by John F. Cogan, Jr.
    in Amendment No. 1 to Schedule 13D, dated December 8, 2000 and filed with
    the Securities and Exchange Commission on December 8, 2000 as well as Form
    4, dated October 31, 2001 and filed with the Securities and Exchange
    Commission on November 7, 2001.
(2) Consists of 474,780 Common Shares over which S. Muoio & Co. LLC exercises
    shared voting and investment power and 225,740 Common Shares over which S.
    Muoio & Co. LLC exercises sole voting and investment power. The foregoing
    is based solely on information provided by the shareholder in Schedule
    13G/A, dated February 14, 2002, and filed with the Securities and Exchange
    Commission on February 14, 2002.
(3) Consists of Common shares held by a variety of investment advisory and
    investment company clients, over which shares GAMCO Investors, Inc.,
    Gabelli Funds, LLC, Gabelli Asset Management, Inc. or one of their
    affiliates exercises sole voting and investment power. This information is
    based solely on information provided by Gabelli Funds, LLC in Schedule 13D,
    dated November 3, 2000, and filed with the Securities and Exchange
    Commission on November 3, 2000.

                                      24

<PAGE>

(4) Consists of Common shares over which Deutsche Bank AG exercises sole voting
    and investment power. The foregoing is based solely on information provided
    by the shareholder in Schedule 13G/A, dated February 7, 2002, and filed
    with the Securities and Exchange Commission on February 7, 2002.
(5) Consists of Common Shares over which Tudor Proprietary Trading, L.L.C.
    exercises shared voting and investment power with Paul Tudor Jones, III.
    Because Mr. Jones is the indirect controlling equity holder of Tudor
    Proprietary Trading, L.L.C., Mr. Jones may be deemed to beneficially own
    the shares. Mr. Jones disclaims such beneficial ownership. The foregoing is
    based solely on information provided by the shareholder in Amendment No. 1
    to Schedule 13G, dated February 1, 2002, and filed with the Securities and
    Exchange Commission on February 5, 2002.
(6) Consists of Common Shares over which Perry Corp. exercises sole voting and
    investment power. The foregoing is based solely on information provided by
    the shareholder in Amendment No. 2 to Schedule 13G/A, dated February 14,
    2002, and filed with the Securities and Exchange Commission on February 14,
    2002.

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

   On August 7, 2000, Harbor Global entered into an administration and
liquidation agreement with Calypso Management pursuant to which Calypso
Management will manage the liquidation of Harbor Global and operate Harbor
Global's assets pending their liquidation. Calypso Management is owned and
operated by Mr. Kasnet and Mr. Hunter. Mr. Kasnet is the President and Chief
Executive Officer and Mr. Hunter is the Chief Operating Officer and Chief
Financial Officer of Calypso Management. Calypso Management performs its
services pursuant to operating plans and budgets approved by the Harbor Global
Board of Directors in accordance with the administration and liquidation
agreement. In addition, key employees of Calypso Management perform their
services as officers of Harbor Global under the supervision of the Harbor
Global Board of Directors.

   The administration and liquidation agreement provides that Harbor Global
pays the operating expenses of Calypso Management incurred in connection with
the provision of services to Harbor Global. These operating expenses include
annual salaries for Mr. Kasnet and Mr. Hunter of $325,000 and $250,000,
respectively, plus annual bonuses of up to 100% of such base salary, depending
upon the achievement of performance goals established by the Harbor Global
Board of Directors. The operating expenses include the annual salaries of
Ms. Mannick and other employees of Calypso Management. Calypso Management
provides the services of Mr. Kasnet, Mr. Hunter and Ms. Mannick and other
employees to act as officers and employees of Harbor Global. The provision of
services to Harbor Global by Calypso Management, Mr. Kasnet and Mr. Hunter is
exclusive, and Calypso Management, Mr. Kasnet and Mr. Hunter do not render
services to other persons or entities without the prior written consent of the
Harbor Global Board of Directors.

   As compensation for its provision of services to Harbor Global, Calypso
Management receives a portion of the net proceeds distributed from the
liquidation of Harbor Global's assets, generally according to the following
schedule:

   --with respect to the first $36 million in net proceeds available for
     distribution, Calypso Management shall receive a payment equal to 10% of
     such net proceeds;

   --with respect to the next $72 million in net proceeds available for
     distribution, Calypso Management shall receive a payment equal to 7.5% of
     such net proceeds; and

   --with respect to any additional net proceeds, Calypso Management shall
     receive a payment equal to 10% of such net proceeds.

   Net proceeds do not include any unexpended portion of the $19.1 million
contributed by Pioneer to Harbor Global. However, pursuant to Amendment 2 dated
as of February 1, 2001 to the administration and liquidation agreement, if
Harbor Global enters into a transaction in which it is released or otherwise
relieved of its indirect obligation to fulfill its existing capital commitment
of approximately $5.4 million to the Pioneer Polish Real

                                      25

<PAGE>

Estate Fund, the amount that otherwise would have been expended by Harbor
Global to satisfy such capital commitment shall be included in the calculation
of net proceeds. In addition, the proceeds received by Pioneer Goldfields II in
connection with the sale of its Ghanaian gold mine to Ashanti are not subject
to the preceding schedule. Instead, Calypso Management will receive only 5% of
the Ashanti proceeds that are distributed, if any. Any portion of the net
proceeds from the liquidation of Harbor Global assets prior to the second
anniversary of distribution date to which Calypso Management is entitled will
be aggregated and paid to Calypso Management on the second anniversary of the
distribution date.

   The administration and liquidation agreement has a term ending upon the
liquidation of Harbor Global, but may be terminated by either Calypso
Management or Harbor Global upon 120 days prior written notice to the other
following the second anniversary of the distribution date. If Harbor Global
elects to terminate the agreement in accordance with the preceding sentence,
Mr. Kasnet may commit, in a manner reasonably satisfactory to the Harbor Global
Board of Directors, to continue his employment with Harbor Global pursuant to
the administration and liquidation agreement and with Calypso Management
pursuant to his employment agreement (which is described below) for an
additional minimum period of one year, or a longer period as determined by Mr.
Kasnet and the Harbor Global Board of Directors. In addition, Harbor Global may
terminate the agreement in the event of:

   --Mr. Kasnet's death or disability or other termination of his employment
     with Calypso Management;

   --an uncured failure by Calypso Management to follow a reasonable direction
     of the Harbor Global Board of Directors;

   --a material breach by Mr. Kasnet of his employment agreement with Calypso
     Management; or

   --an act by Calypso Management in connection with its services to Harbor
     Global constituting bad faith, fraud or willful misconduct.

   Calypso Management is not entitled to the payments described above following
a termination of the agreement. However, in the event of Mr. Kasnet's death or
disability prior to the second anniversary of the distribution date, Calypso
Management will remain entitled to receive its deferred allocation of any net
proceeds distributed prior to such event. As part of the administration and
liquidation agreement, Calypso Management has agreed to customary
confidentiality and non-competition covenants with respect to Harbor Global.

   In addition, under the administration and liquidation agreement Harbor
Global is obligated to pay a $1.8 million signing and retention bonus to Mr.
Kasnet following the second anniversary of the distribution date if Mr. Kasnet
has not:

   --voluntarily terminated his employment with either Harbor Global or Calypso
     Management;

   --committed an act, in connection with the performance of his services with
     Calypso Management or Harbor Global constituting bad faith, fraud or
     willful misconduct;

   --willfully failed to carry out a vote of Harbor Global's board of directors
     which results in material economic harm to Harbor Global; or

   --become disabled.

   Calypso Management provides Mr. Kasnet with life insurance in the amount of
$1.8 million from the distribution date through the second anniversary of the
distribution date, and Harbor Global reimburses Calypso Management for the cost
of this insurance.

   Harbor Global has deposited $1.8 million in an escrow account. Mr. Kasnet's
$1.8 million signing and retention bonus is held in the escrow account and is
payable to Mr. Kasnet in accordance with the escrow agreement as described
above.

                                      26

<PAGE>

   Mr. Kasnet and Mr. Hunter each entered into employment agreements with
Calypso Management as of August 8, 2000. The employment agreements provide for
salaries and bonuses as described above in connection with the administration
and liquidation agreement. Mr. Kasnet's employment agreement has a term ending
upon the liquidation of Harbor Global, but may be terminated by Mr. Kasnet upon
120 days prior written notice to Calypso Management and Harbor Global following
the second anniversary of the distribution date. The employment agreement
provides that Mr. Kasnet will be entitled to receive 50% of the amounts paid by
Harbor Global to Calypso Management from the liquidation of Harbor Global's
assets. If Mr. Kasnet is paid the $1.8 million signing and retention bonus as
described above, his allocation percentage will be reduced to 33 1/3% of
amounts paid by Harbor Global to Calypso Management with respect to
distributions of more than $36 million in the aggregate and less than $108
million in the aggregate. Calypso Management, at the direction of the Harbor
Global Board of Directors, may terminate Mr. Kasnet in the event he:

   --materially breaches the employment agreement or the administration and
liquidation agreement;

   --is convicted of a felony;

   --fails to follow a reasonable direction of the Harbor Global board of
directors; or

   --becomes disabled.

   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 Calypso
Management terminates Mr. Hunter other than for cause prior to the second
anniversary of the distribution date, Calypso Management is obligated to pay
Mr. Hunter $300,000. The employment agreement also provides that Mr. Hunter is
entitled to receive 30% of the amounts paid by Harbor Global to Calypso
Management from the liquidation of Harbor Global's assets. If Mr. Hunter
remains employed by Calypso Management on the second anniversary of the
distribution date, Calypso Management is obligated to pay Mr. Hunter a
retention payment of $300,000, which amount will be reduced dollar for dollar
by any deferred amounts payable to him on that date from the liquidation of
Harbor Global's assets.

                                    PART IV

ITEM 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.

   (a)  The following documents are included as part of this Annual Report on
Form 10-K.

   1.  FINANCIAL STATEMENTS:

Reference is made to the Report of Independent Public Accountants, the
          Consolidated Financial Statements, the Notes to Consolidated
          Financial Statements included in this Annual Report on Form 10-K at
          pages F-1 through F-23.

   2.  FINANCIAL STATEMENT SCHEDULES:

       Financial statement schedules are omitted because they are not
       applicable or the required information is shown in the Consolidated
       Financial Statements or the Notes thereto.

   3.  EXHIBITS:

   The The exhibits filed with or incorporated into this Annual Report on Form
       10-K are listed on the "Index to Exhibits" below.

                                      27

<PAGE>

                                INDEX TO EXHIBITS

<TABLE>
<CAPTION>
Exhibit
Number                                               Description
------                                               -----------
<C>      <S>
2.1/b/   Form of Distribution Agreement by and among The Pioneer Group, Inc., Harbor Global Company Ltd.
         and Harbor Global II Ltd.
2.2/i/   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/
2.3/e/   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.
2.4/e/   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.
2.5/e/   Share Purchase Agreement dated 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.
2.6/h/   Supplemental Agreement dated May 28, 2001, to Share Purchase Agreement dated 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.
3.1/a/   Memorandum of Association of Harbor Global Company Ltd.
3.2/a/   Bye-Laws of Harbor Global Company Ltd.
4.1/d/   Specimen Common Share Certificate
10.1/a/  Form of Tax Separation Agreement by and among The Pioneer Group, Inc., Harbor Global Company
         Ltd. and Harbor Global II Ltd.
10.2/b/  Form of Administration and Liquidation Agreement by and between Calypso Management LLC and
         Harbor Global Company Ltd.
10.3/b*/ Form of Escrow Agreement by and among Harbor Global Company Ltd., Calypso Management LLC,
         Stephen G. Kasnet and State Street Bank and Trust Company
10.4/a/  Purchase Agreement dated as of May 11, 2000 by and among Ashanti Goldfields Company Limited,
         The Pioneer Group, Inc., Pioglobal Goldfields II Limited (formerly Pioneer Goldfields II Limited) and
         Ashanti Goldfields (Teberebie) Limited
10.5/a/  Form of Promissory Note from Ashanti Goldfields Teberebie Limited to Pioglobal Goldfields II
         Limited (formerly Pioneer Goldfields II Limited)
10.6/a/  Amended and Restated Limited Partnership Agreement of Pioneer Poland U.S., L.P. dated as of
         January 20, 1995 by and between Pioglobal Poland U.S. (Jersey) Limited (formerly Pioneer Poland
         U.S. (Jersey) Limited) and Pioneer Poland U.K. (Jersey) Limited, as amended July 18, 1995, September
         15, 1995, October 18, 1995 and August 3, 1999
10.7/a/  Limited Partnership Agreement of Pioneer Poland UK, L.P. dated as of January 20, 1995 by and among
         Pioneer Poland UK Limited, Pioneer Poland U.K. (Jersey) Limited and the Limited Partners, as
         amended July 18, 1995, September 15, 1995, October 18, 1995 and August 3, 1999
10.8/a/  Limited Partnership Agreement of Pioneer Poland GP Limited Partnership dated as of August 3, 1999
         by and among Pioglobal Poland U.S. (Jersey) Limited (formerly Pioneer Poland U.S. (Jersey) Limited)
         and the Limited Partners
10.9/a/  Joint Management Agreement dated as of January 20, 1995 by and among Pioneer Poland U.S., L.P.,
         Pioneer Poland UK Limited and Pioglobal Management (Jersey) Limited (formerly Pioneering
         Management (Jersey) Limited), as amended September 15, 1995 and August 3, 1999
10.10/f/ Log Sales Contract No. 11-21-00 dated as of November 27, 2000 by and between Rayonier Inc. and
         Closed Joint-Stock Company "Forest-Starma"
</TABLE>

                                      28

<PAGE>

<TABLE>
<CAPTION>
 Exhibit
 Number                                               Description
 ------                                               -----------
<C>         <S>
 10.11/f/   Letter Agreement dated as of November 27, 2000 by and between Rayonier Inc. and Closed Joint-
            Stock Company "Forest-Starma"
 10.12/a/   Advisory Agreement dated as of January 20, 1995 by and between Pioglobal Management (Jersey)
            Limited (formerly Pioneering Management (Jersey) Limited) and European Convergence Partners
            Sp. a o.o (formerly Pioneer Investment Poland Sp. z o.o), as amended September 15, 1995
10.13/d*/   Harbor Global Company Ltd. Non-employee Director Share Plan
 10.14/f/   Massachusetts Full-Service Office Lease Faneuil Hall Marketplace, dated as of October 26, 2000,
            between Faneuil Hall Marketplace, Inc. and Harbor Global Company Ltd., as amended by First
            Amendment to Lease dated as of December 13, 2000
 10.15/f/   Amendment No. 1 to Administration and Liquidation Agreement dated as of October 30, 2000 by
            and between Harbor Global Company Ltd. and Calypso Management LLC
 10.16/f/   Amendment No. 2 to Administration and Liquidation Agreement dated as of February 1, 2001 by
            and between Harbor Global Company Ltd. and Calypso Management LLC
 10.17/a/   Subscription and Shareholders' Agreement dated as of October 20, 1999 by and among Pioneer
            Polski Fundusz Nieruchomosci S.A., Fundacja Na Rzecz Nauki Polskiej, Towarzystwo Obrotu
            Nieruchomosciami AGRO S.A., Vienna Leas International S.A., Pioneer Real Estate Advisors
            Poland Sp. z o.o., Pioneer Pierwsze Polskie Towarzystwo Funduszy Inwestycyjnych S.A., PREA,
            L.L.C. (formerly Pioneer Real Estate Advisors, Inc.), CADIM Servotech B.V. and The European
            Bank for Reconstruction and Development
 10.18/a/   Investment Advisory Agreement dated as of October 27, 1999 by and between Pioneer Polski
            Fundusz Nieruchomosci S.A. and Pioneer Real Estate Advisors Poland Sp. z o.o.
    10.19   [Reserved]
    10.20   [Reserved]
 10.21/f/   Amendment dated as of September 21, 1998 to the Master Lease Agreement dated as of July 1, 1996
            by and between Open Joint-Stock Company "PIOGLOBAL Investment Fund" (formerly Open Joint-
            Stock Company "First Investment Voucher Fund") and PREA, L.L.C. (formerly Pioneer Real Estate
            Advisors, Inc.)
 10.22/a/   Master Transaction Agreement dated as of May 15, 1996 by and between Open Joint-Stock
            Company "PIOGLOBAL Investment Fund" (formerly Open Joint-Stock Company "First Investment
            Voucher Fund") and PREA, L.L.C. (formerly Pioneer Real Estate Advisors, Inc.)
 10.23/a/   Property Management Agreement dated as of May 15, 1996 by and between Open Joint-Stock
            Company "PIOGLOBAL Investment Fund" (formerly Open Joint-Stock Company "First Investment
            Voucher Fund") and PREA, L.L.C. (formerly Pioneer Real Estate Advisors, Inc.)
 10.24/a/   Master Lease Agreement dated as of July 1, 1996 by and between Open Joint-Stock Company
            "PIOGLOBAL Investment Fund" (formerly Open Joint-Stock Company "First Investment Voucher
            Fund") and PREA, L.L.C. (formerly Pioneer Real Estate Advisors, Inc.)
10.25/a/... Management Agreement dated as of November 24, 1998 by and between Closed Joint-Stock
            Company "Pioneer First" and Open Joint-Stock Company "PIOGLOBAL Investment Fund"
            (formerly Open Joint-Stock Company "First Investment Voucher Fund"), as amended
            December 13, 1998
    10.26   [Reserved]
    10.27   [Reserved]
    10.28   [Reserved]
    10.29   [Reserved]
    10.30   [Reserved]
    10.31   [Reserved]
 10.32/a/   Agreement on Lease of Timber Tracts dated as of March 10, 1998 by and between Vysokogorny
            Leskhoz and Closed Joint-Stock Company "Forest-Starma"
 10.33/a/   Agreement on Lease of Timber Tracts dated as of March 13, 1998 by and between Tumninsky
            Leskhoz and Closed Joint-Stock Company "Forest-Starma"
</TABLE>

                                      29

<PAGE>

<TABLE>
<CAPTION>
Exhibit
 Number                                               Description
 ------                                               -----------
<C>         <S>
 10.34/a/   License No. 11 for Long-Term Use (Lease) of Timber Tracts in the Khabarovsk Territory dated as of
            January 12, 1998 issued by the Federal Timber Service of Russia to Closed Joint-Stock Company
            "Forest-Starma"
 10.35/a/   License No. 18 for Long-Term Use (Lease) of Timber Tracts in the Khabarovsk Territory dated as of
            November 15, 1997 issued by the Federal Timber Service of Russia to Closed Joint-Stock Company
            "Forest-Starma"
 10.36/a/   License No. 19 for Long-Term Use (Lease) of Timber Tracts in the Khabarovsk Territory dated as of
            November 15, 1997 issued by the Federal Timber Service of Russia to Closed Joint-Stock Company
            "Forest-Starma"
    10.37   [Reserved]
    10.38   [Reserved]
    10.39   [Reserved]
    10.40   [Reserved]
    10.41   [Reserved]
    10.42   [Reserved]
 10.43/a/   Services Agreement dated as of January 5, 1994 by and between The Pioneer Group, Inc. and Closed
            Joint-Stock Company "Forest-Starma"
 10.44/a/   Assignment Agreement dated as of May 16, 2000 by and among Pioneer Forest, LLC, The Pioneer
            Group, Inc. and Closed Joint-Stock Company "Forest-Starma"
 10.45/a/   Services and Professional Personal Secondment Agreement dated as of April 1, 1996 by and between
            PIOGlobal Corporation and Joint-Stock Company "Forest-Starma"
 10.46/a/   Contract No. RU/10325105/30198 dated as of July 15, 1998 by and between Pioneer Forest, Inc. and
            Closed Joint-Stock Company "Forest-Starma"
 10.47/a/   License Series DMT 1008 No. 003930 dated as of July 1, 1996 issued by the Ministry of
            Transportation of the Russian Federation to Closed Joint-Stock Company "Forest-Starma"
 10.48/a/   Contract No. 11/2000 On Fuel Delivery dated as of February 3, 2000 by and between Closed Joint-
            Stock Company "Transbunker-Trading" and Closed Joint-Stock Company "Forest-Starma"
 10.49/a/   Shareholders Agreement dated as of October 16, 1996 by and among Pioneer First Russia, Inc.,
            Pioglobal Omega, L.L.C. (formerly Pioneer Omega, Inc.) and International Finance Corporation
 10.50/a/   Put and Call Agreement dated as of October 16, 1996 by and among Pioneer First Russia, Inc.,
            Pioglobal Omega, L.L.C. (formerly Pioneer Omega, Inc.) and International Finance Corporation
 10.51/a/   Land Lease Agreement No. M-09-000979 dated as of September 6, 1994 by and between the
            Moscow Government and Open Joint-Stock Company "PIOGLOBAL Investment Fund" (formerly
            Open Joint-Stock Company "First Investment Voucher Fund"), as amended February 14, 2000 by
            Supplemental Agreement No. 7
 10.52/a/   Land Sublease Agreement dated as of April 18, 2000 by and between Open Joint-Stock Company
            "PIOGLOBAL Investment Fund" (formerly Open Joint-Stock Company "First Investment Voucher
            Fund") and PREA, L.L.C. (formerly Pioneer Real Estate Advisors, Inc.)
    10.53   [Reserved]
    10.54   [Reserved]
10.55/b*/   Form of Employment Agreement by and between Calypso Management LLC and Stephen G. Kasnet
10.56/b*/   Form of Employment Agreement by and between Calypso Management LLC and Donald H. Hunter
10.57/g#/   Guaranty, dated as of March 12, 2001, issued by Harbor Global Company Ltd. in favor of Rayonier
            Inc.
10.58/g#/   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.
10.59/g#/   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.
</TABLE>

                                      30

<PAGE>

<TABLE>
<CAPTION>
 Exhibit
 Number                                                Description
 ------                                                -----------
<C>         <S>
    10.60   [Reserved]
    10.61   [Reserved]
 10.62/e/   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.
    10.63   [Reserved]
 10.64/h/   Delivery Contract #DT1 dated June 25, 2001 between Turner Equipment Services LTD and JSC
            "Forest-Starma"
 10.65/h/   Delivery Contract #30199 dated July 15, 2001 between Pioneer Forest, Inc. and JSC "Forest-Starma"
 10.66/j/   Addendum No. 2 dated April 25, 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.
 10.67/j/   Addendum #3 dated May 10, 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.
10.68/j#/   Supplemental Agreement No. 4 dated November 1, 2001 to Contract #11-2-01 dated November 27,
            2000 by and between Closed Joint-Stock Company "Forest-Starma" and Rayonier Inc.
10.69/j#/   Supplemental Agreement No. 5 dated January 15, 2002 to Contract # 11-21-01 dated November 27,
            2000 by and between Closed Joint-Stock Company "Forest-Starma" and Rayonier Inc.
 10.70/j/   Assignment Agreement dated November 16, 2001 by and among FM, LLC, PIOGlobal Corporation
            and Closed Joint-Stock Company "Forest-Starma"
 10.71/j/   Assignment Agreement dated November 16, 2001 by and among FM, LLC and PIOGlobal
            Corporation
 10.72/j/   Assignment Agreement dated January 23, 2002 by and among Pioglobal Forest, L.L.C., Pioneer
            Forest, Inc. and Closed Joint-Stock Company "Forest-Starma"
 10.73/j/   Amendment to Limited Partnership Agreement dated October 18, 2001 by and Pioneer Poland GP
            Limited Partnership, Pioglobal Poland U.S. (Jersey) Limited and Harbor Global II Ltd.
 10.74/j/   Amendment to Amended and Restated Limited Partnership Agreement dated October 18, 2001 by
            and among Pioneer Poland GP Limited Partnership, Pioglobal Poland U.S. (Jersey) Limited and
            Harbor Global II Ltd.
 10.75/j/   Timber Lease Agreement dated September 20, 2000 between Kerbinsky Leskhoz and JSC "Forest-
            Starma"
 10.76/j/   Supplemental Agreement dated May 30, 2001 to Timber Lease Agreement dated September 20, 2000
            between Kerbinsky Leskhoz and JSC "Forest-Starma"
 10.77/j/   Extract from the Minutes No. 14 of the Meeting of the Territorial Forest Use Commission dated
            September 15, 2000
 10.78/j/   Extract from the Minutes No. 14 of the Meeting of the Forest Use Commission dated September 15,
            2001
 10.79/j/   Extract from the Minutes No. 6 of the Meeting of the Territorial Forest Use Commission dated
            July 13, 2001
10.80/j#/   Log Sales Contract No. 01-02-02 dated January 2, 2002 by and between Closed Joint-Stock
            Company "Forest-Starma" and Rayonier Inc.
10.81/j#/   Letter Agreement dated January 2, 2002 by and between Rayonier Inc. and Closed Joint-Stock
            Company "Forest-Starma"
10.82/j#/   Guaranty, dated as of January 2, 2002, issued by Harbor Global Company Ltd. in favor of Rayonier
            Inc.
10.83/j#/   Addendum No. 1 dated January 2, 2002 to Log Sales Contract No. 01-02-02 dated January 2, 2002
            by and between Closed Joint-Stock Company "Forest-Starma" and Rayonier Inc.
10.84/j#/   Agreement on Pledge of Goods in Circulation dated as of January 2, 2002 by and between Closed
            Joint-Stock Company "Forest-Starma" and Rayonier Inc.
</TABLE>

                                      31

<PAGE>

<TABLE>
<CAPTION>
           Exhibit
           Number                     Description
           ------                     -----------
           <C>     <S>
           16.1/c/ Letter of Arthur Andersen LLP
           21.1/j/ List of Subsidiaries of Harbor Global Company Ltd.
           99.1/j/ Letter to Commission Pursuant to Temporary Note 3T
</TABLE>
--------
/j/  Filed herewith.
/i/  Incorporated by reference to Harbor Global Company Ltd.'s Quarterly Report
     on Form 10-Q (file number 0-30889) filed on November 13, 2001.
/h/  Incorporated by reference to Harbor Global Company Ltd.'s Quarterly Report
     on Form 10-Q (file number 0-30889) filed on August 6, 2001.
/g/  Incorporated by reference to Harbor Global Company Ltd.'s Quarterly Report
     on Form 10-Q (file number 0-30889) filed on May 10, 2001, as amended by
     Harbor Global Company Ltd.'s Report on Form 10-QA (file number 0-30889)
     filed on May 25, 2001.
/f/  Incorporated by reference to Harbor Global Company Ltd.'s Annual Report on
     Form 10-K (file number 000-30889) filed on March 28, 2001.
/e/  Incorporated by reference to Harbor Global's Report on Form 8-K (file
     number 000-30889) filed on April 11, 2001.
/d/  Incorporated by reference to Harbor Global Company Ltd.'s Quarterly Report
     on Form 10-Q (file number 0-30889) filed on November 13, 2000.
/c/  Incorporated by reference to Harbor Global's Report on Form 8-K (file
     number 0-30889) filed on October 26, 2000.
/b/  Incorporated by reference to Amendment No. 1 to Harbor Global Company
     Ltd.'s Registration Statement on Form 10 (file number 0-30889) filed on
     August 8, 2000.
/a/  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.
/*/  Denotes a management contract or compensatory plan or arrangement.
/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.

(b) Reports on Form 8-K: None.

                                      32

<PAGE>

                                  SIGNATURES

   Pursuant to the requirements of Section 13 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.

                                          HARBOR GLOBAL COMPANY LTD.

   Dated: March 26, 2002
                                               By:  /s/  DONALD H. HUNTER
                                         --------------------------------------
                                                     Donald H. Hunter,
                                                  Chief Operating Officer
                                                  Chief Financial Officer

   Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the date indicated.

<TABLE>
<CAPTION>
            Signature                     Title                   Date
            ---------                     -----                   ----
     <S>                     <C>                             <C>

     /s/  STEPHEN G. KASNET  Principal Executive Officer     March 26, 2002
     -----------------------
        Stephen G. Kasnet

      /s/  DONALD H. HUNTER  Principal Operating Officer,    March 26, 2002
     ----------------------- Principal Financial Officer and
        Donald H. Hunter     Principal Accounting Officer

     /s/  JOHN F. COGAN, JR. Director                        March 26, 2002
     -----------------------
       John F. Cogan, Jr.

     /s/  JOHN D. CURTIN JR. Director                        March 26, 2002
     -----------------------
       John D. Curtin Jr.

      /s/  W. REID SANDERS   Director                        March 26, 2002
     -----------------------
         W. Reid Sanders

     /s/  JOHN H. VALENTINE  Director                        March 26, 2002
     -----------------------
        John H. Valentine
</TABLE>

                                      33

<PAGE>

                          HARBOR GLOBAL COMPANY LTD.

                         INDEX TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
                                                                                                    Page
                                                                                                    ----
<S>                                                                                                 <C>
Independent Auditors' Report....................................................................... F-1
Report of Independent Public Accountants........................................................... F-2
Consolidated Statements of Operations--Years Ended December 31, 2001, 2000 and 1999................ F-3
Consolidated Balance Sheets as of December 31, 2001 and 2000....................................... F-4
Consolidated Statements of Changes in Stockholders' Equity--Years Ended December 31, 2001, 2000 and
  1999............................................................................................. F-5
Consolidated Statements of Cash Flows--Years Ended December 31, 2001, 2000 and 1999................ F-6
Notes to Consolidated Financial Statements......................................................... F-7
</TABLE>

<PAGE>

                         INDEPENDENT AUDITORS' REPORT

To the Board of Directors and Stockholders of
Harbor Global Company Limited
Boston, MA

   We have audited the accompanying consolidated balance sheets of Harbor
Global Company Limited (a Bermuda limited duration company) (the "Company") as
of December 31, 2001 and 2000, and the related consolidated statements of
operations, stockholders' equity, and cash flows for the years then ended.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements based
on our audits. The financial statements of the Company for the year ended
December 31, 1999, before the reclassification of discontinued operations as
described in Notes 16 and 17 to the financial statements, were audited by other
auditors whose report, dated June 9, 2000 and updated for subsequent events to
August 21, 2000, expressed an unqualified opinion on those statements.

   We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.

   In our opinion, such 2001 and 2000 consolidated financial statements present
fairly, in all material respects, the financial position of the Company at
December 31, 2001 and 2000, and the results of its operations and its cash
flows for the years then ended in conformity with accounting principles
generally accepted in the United States of America.

   We also audited the adjustments described in Notes 16 and 17 that were
applied to reclassify the 1999 consolidated statements of operations and cash
flows, and disclosures of 1999 segment information in the accompanying
consolidated financial statements to give retroactive effect to the
discontinued operations. In our opinion, such adjustments are appropriate and
have been properly applied.

DELOITTE & TOUCHE LLP

February 5, 2002
(March 5, 2002 as to Note 16)




                                      F-1

<PAGE>

                   Report of Independent Public Accountants

To Harbor Global Company Ltd.:

   We have audited the accompanying consolidated statements of operations,
changes in stockholders' equity (deficit) and cash flows of Harbor Global
Company Ltd. (a Bermuda limited duration company) for the year ended December
31, 1999 prior to the presentation of the Russian Timber operations as a
discontinued operation as described in Note 16 to the restated financial
statements included on pages 35-53. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audit.

   We conducted our audit in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

   In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the results of its operations and its
cash flows for the year ended December 31, 1999 in conformity with accounting
principles generally accepted in the United States.

ARTHUR ANDERSEN LLP

Boston, Massachusetts
June 9, 2000


                                      F-2

<PAGE>

                          HARBOR GLOBAL COMPANY LTD.

                     CONSOLIDATED STATEMENTS OF OPERATIONS
             For The Years Ended December 31, 2001, 2000 and 1999

<TABLE>
<CAPTION>
                                                                                           2001      2000      1999
                                                                                         --------  --------  --------
                                                                                             (In Thousands Except
                                                                                              Per Share Amounts)
<S>                                                                                      <C>       <C>       <C>
Revenues:
    Real Estate Rental Revenue.......................................................... $  6,630  $  8,211  $  9,495
    Service and Other Revenue...........................................................    5,667     3,201     4,229
                                                                                         --------  --------  --------
       Total Revenues...................................................................   12,297    11,412    13,724
Operating Expenses:
    Salary and Benefit Expenses.........................................................   (3,161)   (4,189)   (3,814)
    Facility Expenses...................................................................   (1,294)   (1,368)   (1,489)
    Building and Property Management Expenses...........................................   (2,628)   (2,073)   (2,350)
    Management Fee Expense..............................................................   (4,116)     (853)       --
    Other Expenses......................................................................   (6,590)   (6,937)   (5,624)
    Allocation of Former Parent Company Costs...........................................       --    (5,741)   (6,265)
                                                                                         --------  --------  --------
       Total Operating Expenses.........................................................  (17,789)  (21,161)  (19,542)
                                                                                         --------  --------  --------
       Loss from Operations.............................................................   (5,492)   (9,749)   (5,818)
Other Income (Expense):
    Net Unrealized and Realized Gains on Securities.....................................    9,084    21,525     2,095
    Write-down of Venture Capital Investments...........................................   (5,283)  (18,159)       --
    Gain on Sale of Tas-Yurjah..........................................................    7,303        --        --
    Write-Off of Investment in Polish Real Estate Fund..................................   (1,875)       --        --
    Loss on Sale of Venture Capital General Partnership.................................     (680)       --        --
    Interest Expense....................................................................       --        (1)       (7)
                                                                                         --------  --------  --------
       Total Other Income...............................................................    8,549     3,365     2,088
       Income (Loss) from Continuing Operations before Provision for Income Taxes
        and Minority Interest and Equity Loss on Investment.............................    3,057    (6,384)   (3,730)
Provision for Income Taxes..............................................................   (3,414)   (8,003)   (1,437)
                                                                                         --------  --------  --------
       Loss from Continuing Operations before Minority Interest and Equity Loss on
        Investment......................................................................     (357)  (14,387)   (5,167)
Minority Interest Income (Expense)......................................................    3,491    10,498    (1,438)
Equity Loss on Venture Capital Investments..............................................     (757)       --        --
                                                                                         --------  --------  --------
       Net Income (Loss) from Continuing Operations Before Discontinued Operations
        and Cumulative Effect of a Change in Accounting Principle.......................    2,377    (3,889)   (6,605)
Discontinued Operations:
Net Loss from Operations................................................................   (3,056)   (6,147)  (26,095)
Loss on Disposal........................................................................   (8,253)       --        --
                                                                                         --------  --------  --------
       Net Loss Before Cumulative Effect Of a Change in Accounting Principle............   (8,932)  (10,036)  (32,700)
Cumulative Effect of Change in Accounting Principle.....................................       --        --   (11,371)
                                                                                         --------  --------  --------
       Net Loss......................................................................... $ (8,932) $(10,036) $(44,071)
                                                                                         ========  ========  ========
Earnings (Loss) Per Share:
Continuing Operations:
Basic and Diluted Earnings (Loss) Per Share............................................. $   0.42  $  (0.69) $  (1.17)
Discontinued Operations--Basic and Diluted Loss Per Share...............................    (2.00)    (1.09)    (4.62)
Cumulative Effect of Change in Accounting Principle--Basic and Diluted Loss Per Share...       --        --     (2.02)
                                                                                         --------  --------  --------
Basic and Diluted Net Loss Per Share.................................................... $  (1.58) $  (1.78) $  (7.81)
                                                                                         ========  ========  ========
Weighted Average Basic and Diluted Shares Outstanding...................................    5,644     5,643     5,643
</TABLE>

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

                                      F-3

<PAGE>

                          HARBOR GLOBAL COMPANY LTD.

                          CONSOLIDATED BALANCE SHEETS
                          December 31, 2001 AND 2000

<TABLE>
<CAPTION>
                                                                                      2001      2000
                                                                                    --------  --------
                                                                                      (In Thousands)
<S>                                                                                 <C>       <C>
ASSETS
Cash and Cash Equivalents.......................................................... $  4,660  $ 23,786
Restricted Cash....................................................................    4,440       382
Marketable Securities..............................................................   19,653     5,321
Accounts Receivable................................................................      469     1,418
Other Current Assets...............................................................      940       751
Net Current Assets of Discontinued Operations......................................    6,479        --
                                                                                    --------  --------
 Total Current Assets..............................................................   36,641    31,658
Long-term Restricted Cash and Investments..........................................    5,000     6,820
Polish Venture Capital Investment..................................................    1,235    31,964
Marketable Securities..............................................................   18,800     5,665
Long-term Investments..............................................................    5,322    11,738
Building...........................................................................   23,370    23,965
Other Long-term Assets.............................................................    1,022     2,824
Note Receivable....................................................................    9,229    10,593
Net Non-current Assets of Discontinued Operations..................................       --    17,043
Goodwill...........................................................................      953     1,239
                                                                                    --------  --------
 Total Assets...................................................................... $101,572  $143,509
                                                                                    ========  ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Accounts Payable................................................................... $  1,299  $  1,821
Dividends Payable..................................................................    2,549        --
Accrued Expenses...................................................................    2,403     3,355
Accrued Fees Payable to Calypso Management.........................................    2,160       462
Amount Due to Officer on Compensation Liability....................................    1,800        --
Foreign Taxes Payable..............................................................    2,162     4,238
                                                                                    --------  --------
 Total Current Liabilities.........................................................   12,373     9,876
Amount Due to Officer on Compensation Liability....................................       --     1,800
Deferred Taxes.....................................................................    2,086        --
Note Payable.......................................................................    5,000     5,000
                                                                                    --------  --------
 Total Liabilities.................................................................   19,459    16,676
Minority Interest..................................................................   25,480    51,577
STOCKHOLDERS' EQUITY
Common shares, par value $.0025 per share; authorized 48,000,000 shares; 5,649,311
  and 5,643,311 shares issued and outstanding as of December 31, 2001 and 2000,
  respectively.....................................................................       14        14
Preferred shares par value $.01 per share; authorized 1,000,000 shares; none issued       --        --
Paid-in Capital....................................................................   62,768    75,763
Accumulated Deficit................................................................   (9,453)     (521)
Other Comprehensive Income.........................................................
 Net Unrealized Gains on Available for Sale Marketable Securities..................    3,304        --
                                                                                    --------  --------
 Total Stockholders' Equity........................................................   56,633    75,256
                                                                                    --------  --------
 Total Liabilities and Stockholders' Equity........................................ $101,572  $143,509
                                                                                    ========  ========
</TABLE>

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

                                      F-4

<PAGE>

                          HARBOR GLOBAL COMPANY LTD.

          CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
             For the Years Ended December 31, 2001, 2000 and 1999

<TABLE>
<CAPTION>
                                                                 Former
                                 Common Shares                   Parent                 Accumulated      Total
                              --------------------               Company                   Other     Stockholders'
                               Shares                 Paid-in    Equity    Accumulated Comprehensive    Equity
                               Issued   Amount    Par Capital   (Deficit)    Deficit      Income       (Deficit)
                              --------- ------    --- --------  ---------  ----------- ------------- -------------
                                                            Dollars in Thousands
<S>                           <C>       <C>       <C> <C>       <C>        <C>         <C>           <C>
Balance, January 1, 1999.....                                   ($ 28,752)                             ($ 28,752)
Net Loss.....................                                     (44,071)                               (44,071)
Former Parent Company
 Investment..................                                      14,633                                 14,633
                                                                ---------                              ---------
Balance, December 31, 1999...                                     (58,190)                               (58,190)
Net Loss to Contribution Date
 October 24, 2000............                                      (9,515)                                (9,515)
Former Parent Company
 Investment and Forgiveness
 of Payables to Affiliates...                                     143,468                                143,468
                                                                ---------                              ---------
Balance to Contribution Date.                                      75,763                                 75,763
Former Parent Company
 Contribution................                         $ 75,763    (75,763)                                    --
Shares Issued................ 5,643,311 $   --    $14                                                         14
Net Loss Subsequent to
 Contribution Date...........                                                $  (521)                       (521)
                                                  --- --------  ---------    -------                   ---------
Balance, December 31, 2000...                      14   75,763         --       (521)                     75,256
Shares Issued................     6,000 $   --     --       55                                                55
Net Loss.....................                                                 (8,932)                     (8,932)
Other Comprehensive Income
 Gains on Marketable
 Securities, net of deferred
 Taxes of $2,086,000)........                                                             $3,304           3,304
Distribution.................                          (13,050)                                          (13,050)
                              ---------           --- --------  ---------    -------      ------       ---------
Balance, December 31, 2001... 5,649,311           $14 $ 62,768   $     --    $(9,453)     $3,304        $ 56,633
</TABLE>

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

                                      F-5

<PAGE>

                          HARBOR GLOBAL COMPANY LTD.

                     CONSOLIDATED STATEMENTS OF CASH FLOWS
             For The Years Ended December 31, 2001, 2000 and 1999


<TABLE>
<CAPTION>
                                                                                        2001      2000      1999
                                                                                      --------  --------  --------
                                                                                             (In Thousands)
<S>                                                                                   <C>       <C>       <C>
Cash Flows from Operating Activities:
  Net Loss........................................................................... $ (8,932) $(10,036) $(44,071)
  Net Loss of Discontinued Operations................................................  (11,309)   (6,147)  (26,095)
  Cumulative Effect of Change in Accounting Principle................................       --        --   (11,371)
                                                                                      --------  --------  --------
       Net Income (Loss) from Continuing Operations..................................    2,377    (3,889)   (6,605)
Adjustments to Reconcile Net Loss to Net Cash Used in Operating Activities:
  Depreciation and Amortization......................................................    1,126     1,165     1,208
  Unrealized and Realized Gains on Venture Capital, Marketable Securities, and Long-
   term Investments, Net.............................................................   (1,981)   (3,366)   (2,095)
  (Gains) Losses on Other Investments................................................       --      (420)       81
  Gain on Sale of Tas-Yurjah.........................................................   (7,303)       --        --
  Write-Off of Investment in Polish Real Estate Fund.................................    1,875        --        --
  Cash Costs of Polish Real Estate Fund Liquidation..................................   (1,590)       --        --
  Loss on Sale of Venture Capital General Partnership................................      680        --        --
  Minority Interest (Expense) Income.................................................   (3,491)  (10,498)    1,438
  Non-cash Interest Income on Note Receivable........................................   (1,136)     (322)       --
  Allocation of Former Parent Company Costs..........................................       --     5,741     6,265
  Interest Earned on Restricted Cash.................................................      (59)      (32)       --
  Non-Cash Expense from Common Shares Issued.........................................       55        --        --
Changes in Operating Assets and Liabilities--
  Other Current Assets...............................................................  (13,981)   (5,783)    1,333
  Other Long-term Assets.............................................................    6,346    (6,011)      689
  Accrued Expenses and Accounts Payable..............................................   (1,636)     (370)     (696)
                                                                                      --------  --------  --------
       Total Adjustments and Changes in Operating Assets and Liabilities.............  (21,095)  (19,896)    8,223
                                                                                      --------  --------  --------
       Net Cash (Used in) Provided by Continuing Operating Activities................  (18,718)  (23,785)    1,618
                                                                                      --------  --------  --------
       Net Cash (Used in) Provided by Discontinued Operations........................     (745)    4,040    (2,345)
                                                                                      --------  --------  --------
Cash Flows from Investing Activities:
  Additions to Building..............................................................      (81)      (77)     (556)
  Purchase of Long-term Investments..................................................   (9,505)  (14,196)     (189)
  Proceeds from Sale of Long-term Investments........................................   13,199    31,115       768
  Net Proceeds from Polish Venture Capital Investing Activities......................   -1,836       970       802
  Net Proceeds from Sale of Tas-Yurjah...............................................    8,255        --        --
  Net Out Flow from Sale of Venture Capital General Partnership......................     (459)       --        --
  Proceeds from Payment on Note Receivable...........................................    2,500        --        --
                                                                                      --------  --------  --------
       Net Cash Provided by Investing Activities.....................................   15,745    17,812       825
                                                                                      --------  --------  --------
Cash Flows from Financing Activities:
  Distributions Paid.................................................................  (13,050)       --        --
  Dividends Paid.....................................................................     (168)       --        --
  Capital Contributions..............................................................       --        --     3,202
  Due to Affiliates, Net.............................................................       --     1,508    (2,778)
  Amounts Invested by Limited Partners of Venture Capital Subsidiary.................       --       950       475
  Repayment of Notes Payable.........................................................       --        --      (459)
  Distribution from Former Parent Company............................................       --    19,111        --
  Reclassification of Restricted Cash................................................   (2,190)      880       633
                                                                                      --------  --------  --------
       Net Cash (Used In) Provided by Financing Activities...........................  (15,408)   22,449     1,073
                                                                                      --------  --------  --------
Effect of Foreign Currency Exchange Rate Changes on Cash and Cash Equivalents........       --        14        12
Net (Decrease) Increase in Cash and Cash Equivalents.................................  (19,126)   20,530     1,183
                                                                                      --------  --------  --------
Cash and Cash Equivalents, Beginning of Period.......................................   23,786     3,256     2,073
                                                                                      --------  --------  --------
Cash and Cash Equivalents, End of Period............................................. $  4,660  $ 23,786  $  3,256
                                                                                      ========  ========  ========
Income Taxes Paid.................................................................... $  5,490  $  5,309  $    870
</TABLE>

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

                                      F-6

<PAGE>

                          HARBOR GLOBAL COMPANY LTD.

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               December 31, 2001


(1)  BACKGROUND AND BASIS OF PRESENTATION

  Background

   Harbor Global Company Ltd., a Bermuda limited duration company ("Harbor
Global" or the "Company"), was formed in May 2000 as a wholly owned subsidiary
of The Pioneer Group, Inc., a Delaware corporation ("Pioneer"), to facilitate
the merger between Pioneer and UniCredito Italiano, S.p.A., an Italian
financial institution ("UniCredito"). 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 agreed to transfer certain of its assets to Harbor Global and to
distribute all of the outstanding Harbor Global common shares to its
stockholders. Pioneer transferred to Harbor Global all of the assets required
to be transferred pursuant to the Merger Agreement and the Distribution
Agreement and, on October 24, 2000, Pioneer 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; real estate management operations; and its other assets and
operations ("Other"). Other includes remaining assets and liabilities of
discontinued businesses, approximately $20.0 million in cash and cash
equivalents and marketable securities held directly by Harbor Global 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 an original
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 and continues 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 October 24, 2005, the fifth anniversary of the date of the
Spin-off, or the distribution by Harbor Global of all its assets to its
shareholders. If Harbor Global has not liquidated all of its assets before
October 24, 2005, the Harbor Global Board of Directors, at 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 financial statements contain
all adjustments necessary to present fairly the results of operations for the
years ended December 31 2001, 2000 and 1999, the financial position as of
December 31, 2001 and 2000 and cash flows for the years ended December 31,
2001, 2000 and 1999.

   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 years ended December 31, 2000 and
1999 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 the 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 services charged to the Company is not necessarily
indicative of the costs that would have been

                                      F-7

<PAGE>

                          HARBOR GLOBAL COMPANY LTD.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
                               December 31, 2001

incurred if the Company had performed these functions as a stand-alone entity.
Following the Spin-off, the Company began performing these 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.

   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 for the
periods presented prior to the Spin-Off.

(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
controlled. Intercompany transactions and balances have been eliminated. For
the years ended December 31, 2000 and 1999, the Company fully 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. As a holder of a 59.5% general partnership interest in the
general partner of the Pioneer Poland Fund, the Company could not be removed as
general partner and had absolute and unilateral authority to make investment
decisions and to declare, or not to declare, distributions of partnership
income to the partners. Effective November 2001, the Company sold its general
partnership interest and as a result, from this date ceased to fully
consolidate the Pioneer Poland Fund. The Company now reports its approximately
8% limited partnership interest in the Pioneer Poland Fund on the equity basis
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
Open Joint-Stock Company "PIOGLOBAL Investment Fund" ("PIOGLOBAL Investment
Fund", formerly Open Joint-Stock Company "Pioneer First Investment Fund") and
venture capital investments.

  Revenue Recognition

   Real estate rental revenue is recorded monthly over the terms of the leases.
Service and other revenue includes investment management, shareholder services,
trustee and other fees as well as interest income. Service revenue is recorded
as income during the period in which services are performed. Other income is
recorded when earned. The Company recognizes revenue when persuasive evidence
of an arrangement exists, delivery has occurred or services have been rendered,
the Company's price is fixed or determinable and collectibility is reasonably
assured.

  Management Fee

   The Company entered into an administration and liquidation agreement with
Calypso Management LLC ("the Manager"), under which the Manager manages the
liquidation of the Company and operates the Company's assets as going concern
businesses until they are liquidated. The Company pays the expenses of the
Manager

                                      F-8

<PAGE>

                          HARBOR GLOBAL COMPANY LTD.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
                               December 31, 2001

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. The Company incurs management fees
on a monthly basis related to the reimbursement of expenses and accrues
management fees related to the distribution of proceeds at the earlier of (1)
the formal declaration by the Board of Directors of a distribution or (2) the
time when a distributable amount is estimable following the sale or liquidation
of an asset. See Note 13 for further discussion of this related party
arrangement.

  Cash And Cash Equivalents

   All highly liquid investments purchased with a maturity of three months or
less are considered to be cash equivalents. All highly liquid investments
purchased with a maturity of greater than three months are classified under
marketable securities.

  Goodwill

   Harbor Global acquired its Russian real estate management and investment
management operations in 1995 for approximately $20,000,000. At inception, the
excess of the purchase price over the estimated fair value of the assets
approximated $2,858,000. As of December 31, 2001 and 2000, goodwill totaled
approximately $953,000 and $1,239,000, respectively, and is being amortized
over 10 years. Amortization expense was approximately $286,000 for 2001 and
$285,000 for 2000 and 1999. At December 31, 2001 and 2000, the accumulated
amortization of goodwill was approximately $1,905,000 and $1,619,000,
respectively.

  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 by Pioneer Poland
Fund's management. For the year ended December 31, 2001, the carrying value of
investments in the venture capital portfolio was written down by approximately
$6,040,000, of which approximately $5,283,000 was recorded through October 31,
2001. Through this date the Company fully consolidated the Pioneer Poland Fund.
Approximately 92% of the write-downs through October 31, 2001 were attributable
to minority shareholders. Between October 31, 2001 and December 31, 2001, the
Company wrote-down its investment by $757,000, comprising its approximately 8%
equity share of write-downs occurring during that period. For the year ended
December 31, 2000 the Company fully consolidated the Pioneer Poland Fund and
wrote-down the underlying portfolio investments by approximately $18,159,000;
however, a majority of these write-downs, approximately 92%, were attributable
to minority shareholders. There were no write-downs for the year ended December
31, 1999.

  Russian Investments

   Russian investments consist of equity securities held in the portfolio of
the PIOGLOBAL 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" ("SFAS
115"). Inasmuch as the breadth and scope of the Russian securities markets had
not developed to certain quantifiable levels, these equity securities had
previously been 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 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

                                      F-9

<PAGE>

                          HARBOR GLOBAL COMPANY LTD.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
                               December 31, 2001

long-term investments and carry such investments at cost with adjustments made
for other-than-temporary impairment. Of the Company's Russian investment
portfolio, approximately $18.8 million is carried at quoted market prices at
December 31, 2001.

  Building

   The building represents an office building in Russia, the Meridian
Commercial Tower. The Meridian Commercial Tower is carried at cost and is being
depreciated on a straight-line basis over 40 years.

  Valuation Of Financial Instruments

   Financial instruments consist primarily of cash and cash equivalents, note
receivable, marketable securities, accounts payable and note payable. The
Company considers the available market quotations when estimating fair value of
financial instruments. As stated in the accompanying consolidated balance
sheets, except for certain marketable securities and the note receivable, the
carrying values of the Company's financial instruments approximate fair value.

   Marketable securities primarily consist of foreign equity securities
characterized as available-for-sale and recorded at fair value pursuant to SFAS
115, foreign government bonds which approximate fair value and U.S. treasury
bills. Pursuant to SFAS 115, foreign government bonds and U.S. treasury bills
are characterized as held-to-maturity and are carried at cost. At December 31,
2001, the carrying value of the U.S. treasury bills, which are recorded in
short-term marketable securities and long-term restricted cash and investments,
was approximately $16,828,000. Based on available market quotations, the fair
value of the U.S. treasury bills exceeded their carrying value by approximately
$473,000. At December 31, 2000 the fair value of the U.S. treasury bills
approximated their carrying value.

   The Company's note receivable is carried at cost. At December 31, 2001, the
fair value of the Company's note receivable was approximately $10,082,000,
which exceeded the carrying value by approximately $853,000 based on
management's best estimate using discounted projected cash flows. At December
31, 2000, management estimated that the fair value of the note receivable
approximated its carrying value.

  Foreign Currency Translation

   Generally, the Company's operations are conducted in Russia, which has a
highly inflationary economy and, as a result, the functional currency used for
the Company's Russian subsidiaries is currently the U.S. dollar. For those
entities, the translation gains and losses that result from remeasuring into
the U.S. dollar for reporting purposes are included in the accompanying
consolidated statements of operations. The net foreign currency losses in the
statement of operations were approximately $489,000 in 2001, $288,000 in 2000,
and $135,000 in 1999.

  Long-lived Assets

   The Company reviews its long-lived assets for impairment whenever events or
changes in circumstances indicate that the carrying value of the asset may not
be recoverable. In accordance with SFAS No. 121, Accounting for the Impairment
of Long-lived Assets and for the Long-lived Assets to Be Disposed Of, the
Company uses an estimate of the future undiscounted cash flows of the related
asset or asset grouping in measuring whether the assets are impaired. If any
impairment is identified, an impairment charge is recorded to write down the
assets by the excess of the carrying value over fair value. The Company
periodically reviews its long-lived assets and assesses the future useful life
of these assets whenever events or changes in circumstances indicate that the
current useful life has diminished.

                                     F-10

<PAGE>

                          HARBOR GLOBAL COMPANY LTD.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
                               December 31, 2001


   In 1999, the Company performed an analysis in accordance with the provisions
of SFAS No. 121 related to assets to be disposed. An estimate of fair market
value that was based upon, among other items, a recent appraisal and an
estimate of selling costs was used in the analysis. Based upon the decline in
value, the Company recorded a $15.3 million reduction in the carrying value of
the timber project, which is included in net loss from discontinued operations.

  Concentration Of Risk

   The Company's operations are generally concentrated in Russia. The Company
endeavors to mitigate its exposure by performing ongoing evaluations of its
Russian subsidiaries and investments. The Company does not maintain political
risk insurance for any of its businesses.

  Change Of Accounting Principle

   On January 1, 1999, the Company adopted SOP 98-5. This standard requires
that entities expense costs of start-up activities as those costs are incurred.
The Company previously capitalized certain pre-operating costs in connection
with its natural resource operations and certain organizational costs
associated with its financial services operations. In the first quarter of
1999, the Company recorded the cumulative effect of a change in accounting
principle and wrote off unamortized capitalized start-up costs, net of tax, of
approximately $11,371,000.

  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 has issued SFAS No. 142, "Goodwill
and Other Intangible Assets." SFAS No. 142 requires 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. In January 2002, the Company
will cease to amortize goodwill of approximately $286,000 per annum. The
Company does not believe that adopting SFAS No. 142 will have a material impact
on its financial statements.

   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 does not believe that adopting SFAS No. 144 will have a
material impact on its financial statements.

(3)  STOCKHOLDERS' EQUITY

   On August 15, 2000, the Company effected a four-for-one share split which
increased its authorized share capital from 12,000,000 common shares, par value
$.01 per share, to 48,000,000 common shares, par value $.0025 per share. All
common share and per share data in the accompanying consolidated financial
statements reflect the share split.

(4)  EARNINGS (LOSS) PER SHARE

   Basic and diluted earnings (loss) per share ("EPS") is computed by dividing
reported earnings by weighted average shares outstanding. There are currently
no potentially dilutive securities.

                                     F-11

<PAGE>

                          HARBOR GLOBAL COMPANY LTD.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
                               December 31, 2001


(5)  BUILDING

   The cost and the accumulated depreciation for the building is as follows:

<TABLE>
<CAPTION>
                                             2001     2000
                                            -------  -------
                                             (in thousands)
                   <S>                      <C>      <C>
                   Building Cost........... $26,709  $26,627
                   Accumulated Depreciation  (3,339)  (2,662)
                                            -------  -------
                                            $23,370  $23,965
                                            =======  =======
</TABLE>

(6)  POLISH VENTURE CAPITAL INVESTMENT

   The Company's long-term venture capital investment consists of the following:

<TABLE>
<CAPTION>
                                                            December 31,
                                                           --------------
                                                            2001   2000
                                                           ------ -------
                                                           (in thousands)
      <S>                                                  <C>    <C>
      Cash Restricted for Future Investment Purposes...... $   -- $ 4,000
      Venture Capital Investments at Cost, Less Impairment     --  27,964
      Equity Investment in Pioneer Poland Fund............  1,235      --
                                                           ------ -------
                                                           $1,235 $31,964
                                                           ====== =======
</TABLE>

(7)  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 connection with the sale to
Ashanti, each of Pioglobal Goldfields II and Pioneer agreed to indemnify
Ashanti for the breach of any representation or warranty of Pioglobal
Goldfields II contained in the purchase agreement for an amount not to exceed
the total purchase price actually paid by Ashanti to Pioglobal Goldfields II
under the purchase agreement. The representations and warranties contained in
the purchase agreement, other than those relating to tax and environmental
issues, survive until June 19, 2002. The tax and environmental representations
and warranties survive until June 19, 2005. Under the Distribution Agreement,
Harbor Global has agreed to reimburse Pioneer for any liability it incurs in
connection with any claim brought by Ashanti for indemnification under the
purchase agreement.

   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 long
term restricted cash and investments. The terms of the promissory note obligate
Ashanti to pay the face value over five years, with principal amounts of
between $2.5 million and $3.75 million due annually.

   During 2001, the Company received $2.5 million from Ashanti and recognized
interest income in 2001 and 2000 of approximately $1,136,000 and $321,000,
respectively.

                                     F-12

<PAGE>

                          HARBOR GLOBAL COMPANY LTD.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
                               December 31, 2001


(8)  DIVIDENDS PAYABLE
   The dividend payable of approximately $2.6 million at December 31, 2001
represents a payable to minority shareholders of PIOGLOBAL Investment Fund.
$2.6 million has been set aside by PIOGLOBAL Investment Fund to satisfy this
liability and is classified as restricted cash.

(9)  OTHER EXPENSES

   Other expenses consist of the following:

<TABLE>
<CAPTION>
                                                            December 31,
                                                        --------------------
                                                         2001   2000   1999
                                                        ------ ------ ------
                                                           (in thousands)
   <S>                                                  <C>    <C>    <C>
   Insurance and Other Taxes........................... $1,964 $2,335 $1,772
   Professional Services...............................  1,491  1,208  1,137
   Realized Losses on Foreign Currency Transactions and
    Translation Losses.................................    489    263    135
   Travel, Subscriptions, and Dues.....................    158    177    471
   Amortization Expense................................    286    285    285
   Telephone and Data Processing.......................    201    178    242
   Selling Expense.....................................    727    130    136
   Other...............................................  1,274  2,361  1,446
                                                        ------ ------ ------
      Total Other Expenses............................. $6,590 $6,937 $5,624
                                                        ====== ====== ======
</TABLE>

(10)  INCOME TAXES

   The results of operations of certain subsidiaries of the Company prior to
the Spin-off were included in the U.S. federal consolidated tax returns of
Pioneer. In the Company's consolidated financial statements, the provision for
income taxes includes a provision for its subsidiary operations calculated on
the separate-return basis in accordance with the requirements of SFAS No. 109,
"Accounting for Income Taxes". The separate return method allocates current and
deferred taxes to members of a group by applying the provisions of SFAS No. 109
to each member as if it were a separate taxpayer.

   The following is a summary of the components of income (loss) from
continuing operations before provision for income taxes and minority interest
for financial reporting purposes:

<TABLE>
<CAPTION>
                                 2001    2000     1999
                                ------  -------  -------
                                     (in thousands)
                       <S>      <C>     <C>      <C>
                       Domestic $3,102  $(4,888) $    --
                       Foreign.    (45)  (1,496)  (3,730)
                                ------  -------  -------
                                $3,057  $(6,384) $(3,730)
                                ======  =======  =======
</TABLE>

   The Company is a Bermuda limited duration company and will not be subject to
taxation in Bermuda. Under the separate-return method, the losses incurred in
the United States prior to the Spin-Off have not been benefited in that there
would be no mechanism for recovery of the losses. However, Pioneer has made
capital contributions to the Company in exchange for the tax benefits that
Pioneer realized. Pioneer has no future obligations to pay the Company for tax
benefits Pioneer utilizes.

                                     F-13

<PAGE>

                          HARBOR GLOBAL COMPANY LTD.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
                               December 31, 2001


   Pioneer, Harbor Global and Harbor Global II Ltd., a wholly owned subsidiary
of the Company, entered into a tax separation agreement before consummation of
the Spin-Off. Under the tax separation agreement, the Company agreed to
indemnify Pioneer for any income tax liabilities relating to the businesses
Pioneer transferred to Harbor Global prior to the Spin-Off.

   The components of the provision for foreign income taxes on continuing
operations consist of:

<TABLE>
<CAPTION>
                                       2001   2000   1999
                                      ------ ------ ------
                                         (in thousands)
                      <S>             <C>    <C>    <C>
                      Current Foreign $3,414 $8,003 $1,437
                                      ====== ====== ======
</TABLE>

   Income taxes, as stated as a percentage of loss from continuing operations
before provision for income taxes, are comprised of the following:

<TABLE>
              <S>                                 <C>     <C>
                                                   2000    1999
                                                  -----   -----
              Federal Statutory Rate............. (35.0)% (35.0)%
              Losses Incurred with No Tax Benefit 120.0    64.4
              Foreign Rate Differential..........  16.9    12.9
              Temporary Differences Not Benefited   7.5     4.6
              Other..............................  16.0    (8.4)
                                                  -----   -----
               Effective Tax Rate................ 125.4%   38.5%
                                                  =====   =====
</TABLE>

   In connection with the Spin-Off in October, 2000, a foreign holding company
was established which has been recharacterized as partnership for U.S. tax
purposes. Because of its classification as a partnership for United States
federal income tax purposes, Harbor Global itself is not subject to United
States federal income tax and hence the effective tax rate is zero. Operations
in Poland are primarily conducted through partnerships that are not taxable.
The income tax provision for 2001 and the deferred taxes included in the
accompanying consolidated financial statements for 2001 relate to the Company's
corporate subsidiaries that are located primarily in Russia.

   The total income tax provision (benefit) included in the accompanying
consolidated statements of operations is as follows:

<TABLE>
<CAPTION>
                                             2001   2000    1999
                                            ------ ------- ------
                                                (in thousands)
             <S>                            <C>    <C>     <C>
             Continuing Operations......... $3,414 $ 8,003 $1,437
             Discontinued Operations.......    375   2,763   (365)
             Change in Accounting Principle     --      --   (249)
                                            ------ ------- ------
                                            $3,789 $10,766 $  823
                                            ====== ======= ======
</TABLE>

                                     F-14

<PAGE>

                          HARBOR GLOBAL COMPANY LTD.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
                               December 31, 2001

   The tax effects of significant temporary differences are as follows:

<TABLE>
             <S>                                    <C>     <C>
                                                     2001    2000
                                                    ------  -----
                                                    (in thousands)
             Current Deferred Tax Asset............ $   --  $ 315
             Less Valuation Allowance..............     --   (315)
                                                    ------  -----
             Net Current Deferred Tax Asset........ $   --  $  --
             Non-Current Deferred Tax Asset........ $   79  $  99
             Less Valuation Allowance..............    (79)   (99)
                                                    ------  -----
             Net Non-Current Deferred Tax Asset....     --     --
             Non-Current Deferred Tax Liability....  2,086     --
                                                    ------  -----
             Net Non-Current Deferred Tax Liability $2,086  $  --
                                                    ======  =====
</TABLE>

(11)  MINORITY INTEREST

   The Company's minority interest liability includes the interests of the
other equity holders of the Company's consolidated subsidiaries. The liability
for each entity is recorded based upon the net book value of that entity at the
balance sheet date, except for those instances in which agreements could result
in the Company redeeming those interests at amounts greater than their share of
the net book value. In those instances, adjustments are made to the liability
to reflect the minority equity holders' economic interests under those
agreements, refer to Note 14 for further information. As of December 31, 2001
and 2000, the Company's minority interest liability consisted of the following:

<TABLE>
            <S>                                      <C>     <C>
                                                      2001    2000
                                                     ------- -------
                                                     (in thousands)
            PIOGLOBAL Investment Fund............... $23,361 $20,830
            Pioneer First Russia....................   2,119   1,960
            The Pioneer Poland Fund--Venture Capital      --  28,787
                                                     ------- -------
                                                     $25,480 $51,577
                                                     ======= =======
</TABLE>

(12)   BENEFIT PLANS

   Prior to the Spin-Off, the Company's employees participated in a retirement
benefit plan and a savings and investment plan of Pioneer (the "Benefit
Plans"), which qualified under Section 401(k) of the Internal Revenue Code.
Pioneer made contributions to a trustee, on behalf of eligible employees to
fund both Benefit Plans. The contributions allocable to the Company's employees
in 2000 and 1999 have been included in the costs and expenses in the
accompanying consolidated financial statements. These costs were approximately
$45,000 and $164,000 respectively. Following the Spin-Off, the Company's
employees are no longer eligible to participate in the Benefit Plans.

(13)  RELATED PARTY TRANSACTIONS

   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.


                                     F-15

<PAGE>

                          HARBOR GLOBAL COMPANY LTD.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
                               December 31, 2001

   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, generally
according to the following schedule:

    .  with respect to the first $36 million in net proceeds available for
       distribution, Calypso Management shall receive a payment equal to 10% of
       such net proceeds;

    .  with respect to the next $72 million in net proceeds available for
       distribution, Calypso Management shall receive a payment equal to 7.5%
       of such net proceeds; and

    .  with respect to any additional net proceeds, Calypso Management shall
       receive a payment equal to 10% of such net proceeds.

   Net proceeds do not include any unexpended portion of the $19.1 million
contributed by Pioneer to Harbor Global at the time of the Spin-Off. However,
pursuant to Amendment 2 dated as of February 1, 2001 to the administration and
liquidation agreement, the Manager is now entitled to share in distributions of
$5.4 million of the unexpended cash contributed by Pioneer. In addition, the
proceeds received by Pioneer Goldfields II in connection with the sale of its
Ghanaian gold mine to Ashanti are not subject to the preceding schedule.
Instead, Calypso Management will receive only 5% of the Ashanti proceeds that
are distributed, if any. Any portion of the net proceeds from the liquidation
of Harbor Global assets prior to the second anniversary of distribution date to
which Calypso Management is entitled will be aggregated and paid to Calypso
Management on the second anniversary of the distribution date.

   The Company incurred management fee expenses of approximately $2,666,000 and
$853,000 during 2001 and 2000, respectively related to the reimbursement of
expenses. Of this management fee, approximately $710,000 and $462,000 was
outstanding at December 31, 2001 and 2000, respectively.

   In addition, as of December 31, 2001, the Company recorded $1,450,000 as an
additional accrued expense to reflect the amount owed to Calypso Management and
payable on October 24, 2002 in connection with the distribution paid to
shareholders on November 15, 2001.

(14)  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 at a
value specified in the agreement. 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. The fair value of the
obligation to buy back IFC's shares is currently less than the minority
interest obligation.

   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. The Company maintains in $1.8 million
in restricted cash to satisfy this liability. The obligation is reflected on
the balance sheet as amount due to officer on compensation liability.


                                     F-16

<PAGE>

                          HARBOR GLOBAL COMPANY LTD.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
                               December 31, 2001

   Operating lease expenses were approximately $546,000, $396,000 and $376,000
for the years ended December 31, 2001, 2000, and 1999, respectively. The table
below provides information about future operating lease commitments having
initial or remaining non cancelable terms in excess of one year.

<TABLE>
                      <S>                      <C>
                      Year Ending December 31,
                      2002.................... $  457,855
                      2003....................    457,855
                      2004....................    457,855
                      2005....................    443,704
                      2006....................    288,011
                      Beyond..................    235,520
                                               ----------
                                               $2,340,800
                                               ==========
</TABLE>

(15)  COMPENSATION ARRANGEMENTS

   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, the Spin-Off date, each director of the Company who is not an
employee will be granted and issued 1,500 fully vested common shares in
consideration of each non-employee director's future service as a director.

(16)  DISCONTINUED OPERATIONS

   On February 5, 2002, the Company's Board of Directors approved the
disposition of the Russian timber operations. Further to this, on March 5,
2002, the Company's Board of Directors approved a minimum acceptable sales
price, with a closing to occur in 2002. Management has made its best estimate
of the loss on disposal based on an estimated selling price and a projection of
costs and expenses to be incurred up until the anticipated date of disposal.
The Russian timber operations segment consists of the Company's indirect wholly
owned subsidiary, Closed Joint-Stock Company "Forest-Starma" ("Forest-Starma").

   Accordingly, the operating results of the discontinued Russian timber
operations segment have been segregated from the results of continuing
operations and are reported separately on the consolidated statement of
operations for all periods presented. The assets and liabilities from the
Russian timber operations segment are aggregated and reported separately on the
consolidated balance sheet for all periods presented as net assets from
discontinued operations. The remaining assets at December 31, 2001 consist
principally of cash, trade receivables, timber inventory, timber equipment,
buildings and a self-constructed port facility.

   The following is a summary of the results of the discontinued operations of
the Russian timber segment for the years ended December 31, 2001, 2000 and
1999, respectively:

<TABLE>
<CAPTION>
                                                          Year Ended December 31,
                                                        ---------------------------
                                                          2001     2000      1999
                                                        --------  -------  --------
                                                               (in thousands)
<S>                                                     <C>       <C>      <C>
Revenues from Timber Sales............................. $ 16,330  $12,853  $ 14,383
                                                        --------  -------  --------
Loss before Income Taxes...............................   (2,681)  (5,236)  (24,682)
Income Tax Expense.....................................     (375)      --        --
Estimated loss on Disposal of Russian Timber Operations   (8,253)      --        --
                                                        --------  -------  --------
 Net Loss from Discontinued Russian Timber Operations.. $(11,309) $(5,236) $(24,682)
                                                        ========  =======  ========
</TABLE>

                                     F-17

<PAGE>

                          HARBOR GLOBAL COMPANY LTD.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
                               December 31, 2001


   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 and, as a result, incurred U.S. income tax
expense on the earnings and profits of the liquidated entity.

   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 all periods
presented.

   The following is a summary of the results of discontinued operations for the
years ended December 31, 2001, 2000, and 1999, respectively for the Russian
brokerage operations.

<TABLE>
<CAPTION>
                                                            Year Ended December 31,
                                                            ----------------------
                                                            2001   2000     1999
                                                            ----- -------  -------
                                                                (in thousands)
<S>                                                         <C>   <C>      <C>
Revenues from Brokerage.................................... $  -- $    --  $   728
                                                            ----- -------  -------
 Loss before Income Taxes and Minority Interest............    --      --   (2,096)
Gain on Disposition and Insurance Claim Proceeds...........    --   1,647       --
Income Tax (Expense) Benefit...............................    --  (2,763)     365
                                                            ----- -------  -------
 Loss from Discontinued Operations before Minority Interest    --  (1,116)  (1,731)
Minority Interest Income...................................    --     205      318
                                                            ----- -------  -------
 Net Loss from Discontinued Operations..................... $  -- $  (911) $(1,413)
                                                            ===== =======  =======
</TABLE>

(17)  FINANCIAL INFORMATION BY BUSINESS SEGMENT (unaudited)

   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.

   Previously the Company reported its Russian timber operations as a separate
segment. However, due to the proposed sale of the segment, the results from the
Russian timber operations have been segregated from continuing operations and
the segment disclosures previously reported have been reformatted to reflect
the Company's continuing segments.

   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: venture capital investment

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

                                     F-18

<PAGE>

                          HARBOR GLOBAL COMPANY LTD.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
                               December 31, 2001


                              SEGMENT DISCLOSURES

<TABLE>
<CAPTION>
                                                                   Russian Real
                                                                      Estate
                                                                    Management         Polish
                                                                       and            Venture   Real Estate
                                                                    Investment        Capital   Management
                                                                    Operations       Investment Operations   Other     Total
                                                                   ------------      ---------- ----------- -------  --------
<S>                                                                <C>               <C>        <C>         <C>      <C>
                                                                   In Thousands as of and for the year ended December 31, 2001
Net Revenues and Sales............................................   $ 8,709          $   136     $ 1,168   $ 2,284  $ 12,297
                                                                     -------          -------     -------   -------  --------
  Income (Loss) before Income Taxes, Minority Interest and Equity
   Loss in Investments............................................     6,733           (7,607)     (3,971)    7,902     3,057
Income Taxes......................................................    (3,396)             (18)         --        --    (3,414)
Minority Interest (Expense) Income................................    (2,453)           5,944          --        --     3,491
Equity Loss on Investment.........................................        --             (757)         --        --      (757)
                                                                     -------          -------     -------   -------  --------
   Net Income (Loss) from Continuing Operations...................   $   884          $(2,438)    $(3,971)  $ 7,902  $  2,377
                                                                     =======          =======     =======   =======  ========
Depreciation and Amortization.....................................   $(1,060)             (11)    $   (55)  $    --  $ (1,126)
                                                                     =======          =======     =======   =======  ========
Write Down of Venture Capital Investment Projects.................   $    --          $(5,283)    $    --   $    --  $ (5,283)
                                                                     =======          =======     =======   =======  ========
Capital Expenditures..............................................   $    81          $    --     $    --   $    --  $     81
                                                                     =======          =======     =======   =======  ========
Total Assets......................................................   $66,276          $ 1,235     $   438   $33,623  $101,572
                                                                     =======          =======     =======   =======  ========
</TABLE>

                          ENTERPRISE-WIDE DISCLOSURES
                                (in thousands)

<TABLE>
<CAPTION>
                 2001
                 <S>                                    <C>
                    Revenues from External Customers--
                        Russia......................... $ 9,567
                        Poland.........................     446
                        Other..........................   2,284
                                                        -------
                           Total....................... $12,297
                                                        =======
                    Long-lived Assets
                        Russia......................... $24,325
                        Other..........................   1,387
                                                        -------
                           Total....................... $25,712
                                                        =======
</TABLE>


                                     F-19

<PAGE>

                          HARBOR GLOBAL COMPANY LTD.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
                               December 31, 2001



                              SEGMENT DISCLOSURES

<TABLE>
<CAPTION>
                                                           Russian Real
                                                              Estate
                                                            Management         Polish
                                                               and            Venture   Real Estate
                                                            Investment        Capital   Management
                                                            Operations       Investment Operations   Other     Total
                                                           ------------      ---------- ----------- -------  --------
<S>                                                        <C>               <C>        <C>         <C>      <C>
                                                           In Thousands as of and for the year ended December 31, 2000
Net Revenues and Sales....................................   $ 8,999          $    624    $ 1,789   $    --  $ 11,412
                                                             -------          --------    -------   -------  --------
  Income (Loss) before Income Taxes and Minority Interest.    19,111           (20,320)    (3,632)   (1,543)   (6,384)
Income Taxes..............................................    (7,997)               (5)        (1)       --    (8,003)
Minority Interest (Expense) Income........................    (7,189)           17,687         --        --    10,498
                                                             -------          --------    -------   -------  --------
   Net Income (Loss) from Continuing Operations...........   $ 3,925          $ (2,638)   $(3,633)  $(1,543) $ (3,889)
                                                             =======          ========    =======   =======  ========
Depreciation and Amortization.............................   $(1,050)              (13)   $  (102)  $    --  $ (1,165)
                                                             =======          ========    =======   =======  ========
Write Down of Venture Capital Investment Projects.........   $    --          $(18,159)   $    --   $    --  $(18,159)
                                                             =======          ========    =======   =======  ========
Capital Expenditures......................................   $    77          $     --    $    --   $    --  $     77
                                                             =======          ========    =======   =======  ========
Total Assets..............................................   $54,748          $ 33,194    $ 1,034   $54,533  $143,509
                                                             =======          ========    =======   =======  ========
</TABLE>

                          ENTERPRISE-WIDE DISCLOSURES
                                (in thousands)

<TABLE>
<CAPTION>
                2000
                <S>                                     <C>
                   Revenues from External Customers --
                       Russia.......................... $ 8,999
                       Poland..........................   2,398
                       Other...........................      15
                                                        -------
                          Total........................ $11,412
                                                        =======
                   Long-lived Assets
                       Russia.......................... $25,423
                       Poland..........................     465
                       Other...........................     952
                                                        -------
                          Total........................ $26,840
                                                        =======
</TABLE>


                                     F-20

<PAGE>

                          HARBOR GLOBAL COMPANY LTD.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
                               December 31, 2001

                              SEGMENT DISCLOSURES

<TABLE>
<CAPTION>
                                                             Russian Real
                                                                Estate
                                                              Management
                                                                 and            Polish
                                                              Investment       Venture   Real Estate
                                                              Management       Capital   Management
                                                              Operations      Investment Operations    Other    Total
                                                             ------------     ---------- ----------- --------  --------
                                                             In Thousands as of and for the Year Ended December 31, 1999
<S>                                                          <C>              <C>        <C>         <C>       <C>
Net Revenues and Sales......................................   $10,386         $ 1,221     $ 1,737   $    380  $ 13,724
                                                               -------         -------     -------   --------  --------
  Income (Loss) before Income Taxes, Minority Interest, and
   Cumulative Effect of Accounting Change...................       839             481      (3,937)    (1,113)   (3,730)
Income Taxes................................................    (1,352)            (17)        (68)        --    (1,437)
Minority Interest Expense...................................      (600)           (838)         --         --    (1,438)
                                                               -------         -------     -------   --------  --------
  Net Loss from Continuing Operations before Change in
   Accounting Principle.....................................    (1,113)           (374)     (4,005)    (1,113)   (6,605)
Cumulative Effect of Change in Accounting Principle.........      (450)           (294)         --    (10,627)  (11,371)
                                                               -------         -------     -------   --------  --------
  Net Loss from Continuing Operations.......................   $(1,563)        $  (668)    $(4,005)  $(11,740) $(17,976)
                                                               =======         =======     =======   ========  ========
Depreciation and Amortization...............................   $(1,073)        $   (12)    $  (119)  $     (4) $ (1,208)
                                                               =======         =======     =======   ========  ========
Capital Expenditures........................................   $   652         $     4     $    --   $     --  $    656
                                                               =======         =======     =======   ========  ========
Total Assets................................................   $37,795         $51,794     $ 1,317   $  8,845  $ 99,751
</TABLE>

                          ENTERPRISE-WIDE DISCLOSURES
                                (in thousands)

<TABLE>
<CAPTION>
                 1999
                 <S>                                    <C>
                    Revenues from External Customers--
                        Russia......................... $10,386
                        Poland.........................   2,958
                        Other..........................     380
                                                        -------
                           Total....................... $13,724
                                                        =======
                    Long-lived Assets
                        Russia......................... $25,735
                        Poland.........................     263
                        Other..........................   2,445
                                                        -------
                           Total....................... $28,443
                                                        =======
</TABLE>

                                     F-21

<PAGE>

(18)  SUPPLEMENTARY CASH FLOW INFORMATION

   The following is a summary of the cash flow effects from the sale of
formerly consolidated subsidiaries that were sold during the year ended
December 31, 2001.

<TABLE>
<CAPTION>
                                                                   2001
                                                                   ----
                                                              (in thousands)
    <S>                                                       <C>
    Assets and Liabilities Sold:
    Cash.....................................................      $ 325
    Restricted Cash..........................................         13
    Accounts Receivable......................................        409
    Long Term Assets.........................................         14
    Accounts Payable.........................................       (201)
    Accrued Expenses.........................................        (15)
                                                                  ------
       Net Assets Sold.......................................      $ 545
                                                                  ======
    Loss on Sale of Subsidiaries.............................     ($ 680)
    Cash Received Net of Cash Given Up and related Sale Costs     ($ 459)
</TABLE>

   For the year ended December 31, 2000, the contribution made by Pioneer at
the Spin-Off is presented below.

<TABLE>
<CAPTION>
                                                                2000
                                                                ----
                                                           (in thousands)
      <S>                                                  <C>
      Restricted Cash.....................................   $   7,170
      Note Receivable.....................................      10,271
      Accrued Liability...................................        (370)
      Long Term Escrow Liability..........................      (1,800)
      Due to Former Affiliates............................    (134,628)
      Note Payable........................................      (5,000)
      Former Parent Company Investment....................     143,468
                                                             ---------
         Net Cash Distribution from Former Parent Company.   $  19,111
                                                             =========
</TABLE>

                                     F-22

<PAGE>

(19)  SELECTED QUARTERLY FINANCIAL DATA (unaudited)

   Summarized quarterly financial data is presented below.

<TABLE>
<CAPTION>
                                             Year Ended December 31, 2001
                                       ----------------------------------------
                                       1st Qtr. 2nd Qtr.(1) 3rd Qtr. 4th Qtr.(2)
                                       -------- ----------- -------- -----------
                                         (In Thousands Except Per Share Data)
<S>                                    <C>      <C>         <C>      <C>
Net Revenues and Sales from Continuing
  Operations..........................  $3,127    $2,785    $ 2,918   $  3,467
Revenues and Sales from Discontinued
  Timber Operations...................     365     6,978      4,313
                                        ------    ------    -------   --------
Net Revenues and Sales as previously
  Reported (3)........................  $3,492    $9,763    $ 7,231
Net (Loss) Income.....................    (709)    5,190     (2,854)   (10,559)
Basic and Diluted Loss per Share:
(Loss) Earnings per Share.............  $(0.13)   $ 0.92    $ (0.50)  $  (1.87)
</TABLE>
--------
(1) Second quarter earnings reflects the $7.3 million gain on the sale of
    Company's gold exploration subsidiary, Tas-Yurjah.
(2) Fourth quarter loss reflects the estimated $5.5 million loss on disposal of
    the Russian timber operations segment.
(3) The operating results of the discontinued Russian timber operations segment
    have been segregated from the results of continuing operations and are
    reported separately on the consolidated statement of operations. Refer to
    footnote 16.

<TABLE>
<CAPTION>
                                             Year Ended December 31, 2000
                                        -------------------------------------
                                        1st Qtr. 2nd Qtr. 3rd Qtr. 4th Qtr.(1)
                                        -------- -------- -------- -----------
                                         (In Thousands Except Per Share Data)
 <S>                                    <C>      <C>      <C>      <C>
 Net Revenues and Sales from Continuing
   Operations.......................... $ 2,819  $ 2,646  $ 3,530    $2,417
 Revenues and Sales from Discontinued
   Timber Operations...................      --    5,325    3,908     3,620
                                        -------  -------  -------    ------
 Net Revenues and Sales as previously
   Reported (2)........................ $ 2,819  $ 7,971  $ 7,438    $6,037
 Net Loss..............................  (2,132)  (2,335)  (5,048)     (521)
 Basic and Diluted Loss per Share:
 Loss per Share........................ $ (0.38) $ (0.41) $ (0.90)   $(0.09)
</TABLE>
--------
(1) Fourth quarter reduction in losses due to reduction of corporate overhead
    allocations. Allocations for the fourth quarter 2000 were $1.6M compared to
    $3.1M for the third quarter 2000.
(2) The operating results of the discontinued Russian timber operations segment
    have been segregated from the results of continuing operations and are
    reported separately on the consolidated statement of operations. Refer to
    footnote 16.

                                     F-23