PRINCIPAL PRESERVATION S&P 100 PLUS PORTFOLIO
SUPPLEMENT DATED FEBRUARY 14, 1997 TO PROSPECTUS DATED MAY 1, 1996
PROPOSED CHANGES TO INVESTMENT OBJECTIVE, PROGRAM AND SUB-ADVISOR OF THE S&P 100
PLUS PORTFOLIO
The Board of Directors of Principal Preservation Portfolios, Inc. ("Principal
Preservation") has determined that it is in the best interests of the
S&P 100 Plus Portfolio's shareholders to make certain changes in the
Portfolio's investment objective and its investment program and policies, and,
in connection therewith, to rely on Ziegler Asset Management, Inc. ("Ziegler
Asset Management") to directly manage the investment of the Portfolio's assets
without the assistance of PanAgora Asset Management, Inc. ("PanAgora") as
sub-advisor.
The Board of Directors has been monitoring for some time the small, but
continuing, negative variation of the S&P 100 Plus Portfolio from the total
return of the S&P 100 Index. While the total return on this Portfolio has been
very good compared to other stock funds, it has not achieved its objective to
obtain a total return from dividends and capital gains which exceeds that of the
S&P 100 Index. The Board of Directors believes this investment objective would
be very difficult to achieve under current and anticipated market conditions
unless the Portfolio more aggressively utilized the options, futures and related
enhancement strategies described in its current Prospectus. More aggressive use
of these strategies exposes the Portfolio to greater volatility relative to
the S&P 100 Index, and potentially would require the Portfolio to pay higher
management fees.
The Board of Directors has concluded that a more prudent course would be to
modify the investment objective of the S&P 100 Plus Portfolio. The modified
objective would be to obtain a total return from dividends and capital gains
which, before deducting the operating expenses of the Portfolio, exceeds the
total return of the S&P 100 Index. The Board of Directors believes this modified
objective is a more appropriate one for your Portfolio, and can be attained
primarily through overweighting/underweighting strategies, with less emphasis
on more complex and riskier options and futures strategies. Reduced reliance
on the Portfolio's options and futures strategies would eliminate the need for
the Portfolio to employ PanAgora's specialized services in this area.
Ziegler Asset Management therefore would directly provide all investment
advisory services to the Portfolio, without the assistance of a sub-advisor.
Advisory fees paid by the S&P 100 Plus Portfolio would not be affected by the
proposed changes.
The proposed change to the S&P 100 Plus Portfolio's investment objective
requires approval by the Portfolio's shareholders. A special meeting of the
shareholders of the S&P 100 Plus Portfolio will be held in late April, 1997 for
this purpose. Proxy materials describing the proposed changes in more detail and
soliciting shareholder approval will be distributed in early to mid-March, 1997.
If the proposed change in the Portfolio's investment objective is approved by
shareholders, it is anticipated that the Board of Directors' recommendations
would be implemented beginning May 1, 1997.
