July 2, 1997
SUPPLEMENT TO THE PROSPECTUS OF:
PIONEER EMERGING MARKETS FUND
dated March 27, 1997
The disclosure under the caption set forth below is supplemented as follows:
III. INVESTMENT OBJECTIVES AND POLICIES
In pursuit of its objective, the Fund may employ certain active
investment management techniques including forward foreign currency exchange
contracts, options contracts on securities and securities indices, futures
contracts on currencies and securities indices and options on these futures
contracts. These techniques may be employed in an attempt to hedge foreign
currency and other risks associated with the Fund's portfolio securities.
The following section is substituted for the section "Options on Securities
Indices" in the Appendix.
APPENDIX - CERTAIN INVESTMENT PRACTICES
Options on Securities and Securities Indices
The Fund may purchase put and call options on securities indices that
are composed of securities in which it may invest to manage cash flow. In
addition, to enhance return, the Fund may write (sell) "covered" call options on
securities in which it may invest. Call options are "covered" by the Fund when
it owns the underlying securities, or owns securities convertible into or
carrying rights to acquire such securities without payment of additional
consideration, which the option holder has the right to purchase. The Fund
receives a premium from writing a call option, which increases the Fund's gross
income in the event the option expires unexercised or is closed out at a profit.
By writing a call option, the Fund limits its opportunity to profit from any
increase in the market value of the underlying security above the exercise price
of the option.
The Fund will write and purchase options to manage its exposure to
foreign stocks and stock markets instead of, or in addition to, buying and
selling stock. The Fund may also write or purchase options in an attempt to
hedge market-wide price fluctuations. Distributions to shareholders of any gains
from options transactions will be taxable. Options on securities that are
written or purchased by the Fund will be entered into on U.S. exchanges or the
exchanges of other established markets and in related over-the-counter markets.
Over-the-counter transactions involve certain risks which may not be present in
a transaction on an exchange. The staff of the Securities and Exchange
Commission (the "SEC") has taken the position that over-the-counter options and
assets used to cover over-the-counter options are illiquid and, therefore,
together with other illiquid securities, cannot exceed 15% of the Fund's net
assets.
The Fund may purchase put options in order to hedge against an
anticipated decline in securities prices that might adversely affect the value
of the Fund's portfolio securities. If the Fund purchases a put option on a
security or securities index, the amount of the payment it would receive upon
exercising the option would depend on the extent of any decline in the value of
the security or the securities index below the exercise price. Such payments
would tend to offset a decline in the value of the Fund's portfolio securities.
However, if the value of the security or securities index increases and remains
above the exercise price while the put option is outstanding, the Fund will not
be able to profitably exercise the option and will lose the amount of the
premium and any transaction costs. Such loss may be partially offset by an
increase in the value of the Fund's portfolio securities.
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The Fund may purchase call options on securities and securities indices
in order to remain fully invested in a particular stock market or to lock in a
favorable price on securities that it intends to buy in the future. If the Fund
purchases a call option on a security or securities index, the amount of the
payment it receives upon exercising the option depends on the extent of an
increase in the value of the security or securities index above the exercise
price. Such payments would in effect allow the Fund to benefit from securities
market appreciation even though it may not have had sufficient cash to purchase
the underlying securities. Such payments may also offset increases in the price
of securities that the Fund intends to purchase. If, however, the value of the
security or securities index declines and remains below the exercise price while
the call option is outstanding, the Fund will not be able to exercise the option
profitably and will lose the amount of the premium and transaction costs. Such
loss may be partially offset by a reduction in the price the Fund pays to buy
additional securities for its portfolio.
The Fund may sell an option it has purchased or a similar option prior
to the expiration of the purchased option in order to close out its position in
an option which it has purchased. The Fund may also allow options to expire
unexercised, which would result in the loss of the premium paid.
The risks associated with the use of options are more fully described
below. The Fund pays brokerage commissions or spreads in connection with its
options transactions. The writing of options could significantly increase the
Fund's portfolio turnover rate.
