PRINCIPAL PRESERVATION PORTFOLIOS, INC.
PROSPECTUS SUPPLEMENT
TO
PROSPECTUS DATED MAY 1, 1997
INCREASE IN SALES CHARGES FOR EQUITY PORTFOLIOS
Effective September 8, 1997, the maximum sales charges applicable to
purchases of shares of the S&P 100 Plus Portfolio, Dividend Achievers Portfolio,
Select Value Portfolio and PSE Tech 100 Index Portfolio (the "Portfolios") of
Principal Preservation Portfolios, Inc. ("Principal Preservation") is increased
from 4.50% to 5.25% of the amount invested. Through December 31, 1998, a person
who held shares in any one of these Portfolios as of the close of business on
September 5, 1997 ("Existing Shareholders"), will be entitled to purchase
additional shares of that Portfolio at the sales charges in effect prior to this
increase. After December 31, 1998, Existing Shareholders, like all other
investors, will be subject to the increased sales charges.
Principal Preservation's Board of Directors approved this sales charge
increase in order to facilitate increased sales concessions to dealers
participating in the distribution of shares of the Portfolios. The Board of
Directors determined that concessions offered to such dealers on sales of the
Portfolios' shares were lower than concessions available to those dealers from
competitor mutual funds, which acted as a disincentive for dealers to actively
promote sales of Portfolio shares. The Board of Directors believes the
increased dealer concessions will result in increased sales of new shares of the
Portfolios. Over the long term, the anticipated resulting growth in assets
should serve to reduce the Portfolios' expense ratios by spreading their fixed
costs over a larger asset base and by potentially reaching asset levels
corresponding to breakpoints in advisory, accounting/pricing and depository
fees.
In order to initially promote sales of Portfolio shares to new investors, the
maximum dealer concession on sales to new investors will be increased from 4.00%
of the amount invested to 5.00% for the period from September 8, 1997 through
December 31, 1997, and thereafter will be reduced to 4.50%. Dealer concessions
on sales to Existing Shareholders will be increased to the full amount of the
applicable sales charge through December 31, 1997, and will revert to the
original percentages from January 1, 1998 through December 31, 1998. After
December 31, 1998, dealer concessions will be the same for sales to all
investors, including sales to Existing Shareholders.
The table below sets forth the sales charges and dealer concessions that will
be in effect for sales of shares of the Portfolios for the periods and classes
of investors indicated. All percentages are stated as a percentage of the gross
amount invested. This table replaces the comparable information for the
Portfolios included under the caption "Purchase of Shares" in Principal
Preservation's Prospectus dated May 1, 1997 (the "Current Prospectus").
<TABLE>
<CAPTION>
NEW INVESTORS
-------------------------------------------
FOR THE PERIOD
FROM 9/8/97
EXISTING SHAREHOLDERS(1)<F1> THROUGH 12/31/97 AFTER 12/31/97
-------------------------------- ------------------- ------------------
1997 1998
SALES DEALER DEALER SALES DEALER SALES DEALER
SIZE OF INVESTMENT CHARGE CONCESSION(2) CONCESSION(3)<F3> CHARGE CONCESSION CHARGE CONCESSION
<F2>
- ------------------- ------- ------------- ----------- ------- ---------- ------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Less than $25,000 4.50% 4.50% 4.00% 5.25% 5.00% 5.25% 4.50%
$25,000, but less than $50,000 4.50% 4.50% 4.00% 5.00% 4.75% 5.00% 4.25%
$50,000, but less than $100,000 4.00% 4.00% 3.50% 4.75% 4.50% 4.75% 4.25%
$100,000, but less than $250,000 3.50% 3.50% 3.00% 3.75% 3.25% 3.75% 3.25%
$250,000, but less than $500,000 3.00% 3.00% 2.60% 3.00% 2.50% 3.00% 2.50%
$500,000, but less than $1,000,000 2.00% 2.00% 1.80% 2.00% 1.80% 2.00% 1.80%
$1,000,000 or more None 0.50% 0.50% None 0.50% None 0.50%
(1)<F1>After December 31, 1998, Existing Shareholders will pay the same sales
charges as reflected in the table for New Investors.
(2)<F2>Reflects dealer concessions on sales to Existing Shareholders that will
apply from September 9, 1997 through December 31, 1997.
(3)<F3>Reflects dealer concessions that will apply on sales to Existing
Shareholders during calendar 1998. After December 31, 1998, dealer concessions
will be the same for sales to all investors, including sales to Existing
Shareholders.
</TABLE>
THE DATE OF THIS SUPPLEMENT IS SEPTEMBER 8, 1997
RESTATED SHAREHOLDER EXPENSE INFORMATION
The columns of the first line of the Shareholder Transaction Expenses table
relating to the Portfolios, as presented in Principal Preservation's Current
Prospectus under the caption "Expenses", are restated as follows to reflect the
increase in the maximum sales charge. The balance of the Shareholder
Transaction Expenses table included in the Current Prospectus is unaffected by
this change.
<TABLE>
<CAPTION>
S&P 100 PLUSDIVIDEND ACHIEVERS SELECT VALUE PSE TECH 100
SHAREHOLDER TRANSACTION EXPENSES PORTFOLIO PORTFOLIO PORTFOLIO INDEX PORTFOLIO
- --------------------------------- ------------- ---------------- ------------ ---------------
<S> <C> <C> <C> <C>
Maximum Sales Load Imposed on Purchases
(as a percentage of offering price)*<F4> 5.25% 5.25% 5.25% 5.25%
*<F4>Investors may be able to qualify for a lower sales load. See the table above
and the Sections of the Current Prospectus captioned "Purchase of Shares" and
"Shareholder Services."
</TABLE>
RESTATED EXPENSE EXAMPLE
The expenses you would pay on a $1,000 investment in each Portfolio, giving
effect to the new maximum sales charge and assuming 5% annual return and
redemption at the end of each time period, are presented below. This
information replaces the comparable information presented for the Portfolios in
the Current Prospectus under the caption "Expenses -- Example."
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
S&P 100 Plus Portfolio $61 $79 $98 $154
Dividend Achievers Portfolio 65 90 118 196
Select Value Portfolio 65 90 118 196
PSE Tech 100 Index Portfolio 58 71 84 121
The purpose of this table is to assist investors in understanding the various
costs and expenses they will bear directly or indirectly. For more complete
descriptions of the various costs and expenses, see the sections of the Current
Prospectus captioned "Management," "Purchase of Shares," "Redemptions" and
"Shareholder Services." THE ABOVE EXAMPLES SHOULD NOT BE CONSIDERED A
REPRESENTATION OF PAST OR FUTURE EXPENSES OF THE PORTFOLIOS. ACTUAL EXPENSES
MAY BE GREATER OR LESS THAN ABOVE.
OTHER INFORMATION
The increased sales charges described in this Prospectus Supplement relate
only to the referenced Portfolios of Principal Preservation. The sales charges
for the Tax-Exempt and Government Portfolios set forth in the Current Prospectus
are not affected by these changes.
