SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A)
OF THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. )
FILED BY THE REGISTRANT [X]
FILED BY A PARTY OTHER THAN THE REGISTRANT [ ]
CHECK THE APPROPRIATE BOX:
[ ] PRELIMINARY PROXY STATEMENT
[ ] CONFIDENTIAL, FOR USE OF THE COMMISSION ONLY (AS PERMITTED BY RULE 12A-
6(E)(2))
[X ] DEFINITIVE PROXY STATEMENT
[ ] DEFINITIVE ADDITIONAL MATERIALS
[ ] SOLICITING MATERIAL PURSUANT TO SECTION 240.14A-11(C) OR SECTION 240.14A-12
PRINCIPAL PRESERVATION PORTFOLIOS, INC.
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
NOT APPLICABLE
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(NAME OF PERSON(S) FILING PROXY STATEMENT IF OTHER THAN THE REGISTRANT)
PAYMENT OF FILING FEE (CHECK THE APPROPRIATE BOX):
[X] NO FEE REQUIRED.
[ ] FEE COMPUTED ON TABLE BELOW PER EXCHANGE ACT RULES 14A-6(I)(4) AND 0-11.
1) TITLE OF EACH CLASS OF SECURITIES TO WHICH TRANSACTION APPLIES:
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2) AGGREGATE NUMBER OF SECURITIES TO WHICH TRANSACTION APPLIES:
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3) PER UNIT PRICE OR OTHER UNDERLYING VALUE OF TRANSACTION COMPUTED
PURSUANT TO EXCHANGE RULE 0-11 (SET FORTH THE AMOUNT ON WHICH THE
FILING FEE IS CALCULATED AND STATE HOW IT WAS DETERMINED):
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4) PROPOSED MAXIMUM AGGREGATE VALUE OF TRANSACTION:
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5) TOTAL FEE PAID:
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[ ] FEE PAID PREVIOUSLY WITH PRELIMINARY MATERIALS.
[ ] CHECK BOX IF ANY PART OF THE FEE IS OFFSET AS PROVIDED BY EXCHANGE ACT RULE
0-11(A)(2) AND IDENTIFY THE FILING FOR WHICH THE OFFSETTING FEE WAS PAID
PREVIOUSLY. IDENTIFY THE PREVIOUS FILING BY REGISTRATION STATEMENT NUMBER,
OR THE FORM OR SCHEDULE AND THE DATE OF ITS FILING.
1) AMOUNT PREVIOUSLY PAID:
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2) FORM, SCHEDULE OR REGISTRATION STATEMENT NO.:
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3) FILING PARTY:
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4) DATE FILED:
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PRINCIPAL PRESERVATION PORTFOLIOS, INC.
215 North Main Street
West Bend, Wisconsin 53095-3317
(414) 334-5521
March 22, 1999
Dear Shareholder:
Enclosed is a notice of a Special Meeting of Shareholders of all
shareholders of the Tax-Exempt Portfolio (the "Portfolio") of Principal
Preservation Portfolios, Inc. ("Principal Preservation") to be held on April 27,
1999, together with a Proxy Statement and Form of Proxy relating to the business
to be transacted at the meeting.
We have called this Special Meeting to consider a proposed amendment to the
investment objective of the Portfolio. The Board of Directors of Principal
Preservation recommends that the Portfolio's investment objective should be
revised to eliminate the maturity restrictions on the municipal bonds the
Portfolio may buy. This change would provide the portfolio manager
with more flexibility to select bonds of varying maturities in reaction to
various interest rate environments, and thereby enhance the Portfolio's ability
to achieve its objective of highest total return.
Thank you for your continued confidence in Principal Preservation
Portfolios, Inc. Your cooperation and participation in completing and returning
the enclosed proxy will ensure that your vote is counted.
Very truly yours,
PRINCIPAL PRESERVATION PORTFOLIOS, INC.
/s/Robert J. Tuszynski
Robert J. Tuszynski
President
PRINCIPAL PRESERVATION PORTFOLIOS, INC.
TAX-EXEMPT PORTFOLIO
215 North Main Street
West Bend, Wisconsin 53095-3317
(414) 334-5521
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
ON APRIL 27, 1999
To shareholders of the Tax-Exempt Portfolio of Principal Preservation
Portfolios, Inc.:
A Special Meeting of Shareholders of the Tax-Exempt Portfolio of Principal
Preservation Portfolios, Inc. ("Principal Preservation") will be held on
Tuesday, April 27, 1999 at 3:00 P.M., local time, at The West Bend Inn, 2520
West Washington Street, West Bend, Wisconsin, for the following purposes:
1. To approve a proposed change in the Tax-Exempt Portfolio's fundamental
investment objective; and
2. To transact such other business as may properly come before the
Special Meeting or any adjournment thereof.
The Board of Directors has fixed the close of business on March 15, 1999 as
the record date for determining shareholders entitled to notice of, and to vote
at, the Special Meeting and any adjournment thereof. Only shareholders of
record at the close of business on that date will be entitled to vote.
Your attention is invited to the Proxy Statement accompanying this notice
for a more complete statement regarding the matters to be acted upon at the
Special Meeting.
By Order of the Board of Directors,
/s/ S. CHARLES O'MEARA
S. CHARLES O'MEARA
Secretary
West Bend, Wisconsin
March 22, 1999
YOUR VOTE IS IMPORTANT. IN ORDER TO AVOID THE ADDITIONAL EXPENSE OF A SECOND
SOLICITATION, PLEASE COMPLETE, SIGN AND DATE THE ENCLOSED PROXY AND RETURN IT
PROMPTLY IN THE ENCLOSED POSTAGE-PAID ENVELOPE.
PROXY STATEMENT
PRINCIPAL PRESERVATION PORTFOLIOS, INC.
TAX-EXEMPT PORTFOLIO
215 North Main Street
West Bend, Wisconsin 53095-3317
(800) 826-4600
PROXY AND VOTING
The Board of Directors of Principal Preservation Portfolios, Inc.
("Principal Preservation") is requesting that shareholders approve a proposed
change in the fundamental investment objective of the Tax-Exempt Portfolio (the
"Portfolio"). The proposed change is described in detail in this Proxy
Statement. Only shareholders of the Tax-Exempt Portfolio will vote on this
matter. The vote will be taken at a Special Meeting of Shareholders of the
Portfolio (the "Special Meeting"), or any adjournment thereof, which will be
held on Tuesday, April 27, 1999, 3:00 P.M. local time, at the West Bend Inn,
2520 West Washington Street, West Bend, Wisconsin. We encourage you to read
this Proxy Statement carefully and mark and return the accompanying form of
proxy.
Shares represented by properly executed proxies received by Principal
Preservation will be voted at the Special Meeting and any adjournment thereof as
directed in those proxies. However, if no instructions are specified, shares of
the Portfolio will be voted "FOR" Proposal 1 by the persons named in the proxy,
and in the discretion of those persons on Proposal 2. A shareholder may revoke
his proxy at any time prior to the Special Meeting by filing a written notice of
revocation with the Secretary of Principal Preservation or by delivering a duly
executed proxy bearing a later date.
The presence at the Special Meeting, in person or by proxy, of shareholders
representing one-third of all shares of the Portfolio outstanding and entitled
to vote on a matter constitutes a quorum for the transaction of business. In
tabulating votes on any matter, abstentions and broker non-votes (i.e., proxies
from brokers or nominees indicating that such persons have not received
instructions from the beneficial owners or other persons entitled to vote shares
as to a matter with respect to which the brokers or nominees do not have
discretionary power to vote) are treated as present for purposes of determining
the presence or absence of a quorum, but will not be counted as votes cast.
Shareholders of record of the Portfolio at the close of business on March
15, 1999 will be entitled to one vote on each matter presented for each share so
held. The number of shares of the Portfolio outstanding on that date is
5,822,905 shares.
UPON REQUEST AND AT NO COST TO A REQUESTING SHAREHOLDER, PRINCIPAL
PRESERVATION WILL MAIL, BY FIRST-CLASS MAIL, A COPY OF ITS ANNUAL REPORT TO
SHAREHOLDERS FOR THE YEAR ENDED DECEMBER 31, 1998. REQUESTS SHOULD BE DIRECTED
TO THE ATTENTION OF MR. ROBERT J. TUSZYNSKI, PRESIDENT, AT PRINCIPAL
PRESERVATION PORTFOLIOS, INC., 215 NORTH MAIN STREET, WEST BEND, WISCONSIN
53095, TELEPHONE: 1-800-826-4600.
This proxy material is being mailed to shareholders on or about March 22,
1999.
PROPOSAL 1 -
CHANGE IN INVESTMENT OBJECTIVE OF TAX-EXEMPT PORTFOLIO
PROPOSAL
The Tax-Exempt Portfolio's current investment objective states that the
Portfolio "seeks to provide the highest total return, consistent with preserving
principal, by investing in high quality municipal bonds with remaining
maturities of two to twenty years."
In the low, stable interest rate environment that has persisted lately,
municipalities are issuing bonds with longer maturities in an effort to lock in
the low interest rates for longer periods of time. As a result, new issues of
municipal bonds with maturities of less than 20 years are becoming increasingly
rare. At the same time, investor demand for shorter maturities has increased,
because, if and when interest rates begin to rise, investors want the
flexibility to move out of the lower coupon bonds that are available today. The
Portfolio's manager is finding it more and more difficult to locate bonds within
the Portfolio's two to twenty year remaining maturity requirement. The short
supply causes delays in investing available cash, which hurts the Portfolio's
overall return. Also, when the manager is able to find bonds in the Portfolio's
maturity range, they typically are trading at significant premiums over par
value. These premiums reduce the total return that the Portfolio can obtain
from the bonds, and further hamper the ability of the Portfolio to achieve its
investment objective of highest total return.
The portfolio manager believes that, by extending the maturity of municipal
bonds that the Portfolio purchases beyond twenty years, he will be able to find
more attractively priced, high quality bonds which are better suited to
achieving the Portfolio's objective.
If the proposed change is approved by shareholders of the Portfolio, the
Portfolio's investment program and strategy would not change drastically. The
portfolio manager would continue looking for and purchasing high quality bonds,
but could focus his attention on the readily available supply of new issues of
longer term bonds, as well as more reasonably priced longer term bonds trading
in the secondary market. This flexibility would help the manager more rapidly
use investable cash to purchase income earning securities, and at the same time
avoid the premium prices for shorter term bonds that reduce total return.
Longer term bonds are subject to more price volatility in changing interest
rate environments than are shorter term bonds. However, the manager would seek
to minimize price volatility by focusing on bonds rated in one of the top two
rating categories (with or without credit enhancement features). Also, many
longer term bonds have sinking fund features which tend to reduce their average
lives as compared to bonds of comparable maturities without such features. These
"duration shortening" features also help to reduce price volatility. Finally,
the portfolio manager would continue to structure the Portfolio's municipal bond
portfolio in a laddered maturity, so that not all of the Portfolio's bonds would
be affected in the same manner or to the same degree by any particular trend in
interest rates. On balance, the portfolio manager believes that the increased
interest rate risk associated with longer maturity bonds can be acceptably
managed with a continued focus on these credit quality features, duration
shortening features and laddered maturity strategies. The portfolio manager
therefore believes the proposed change in the Portfolio's investment objective
is prudent in order to help the Portfolio better achieve its objective of
highest total return.
The Board of Directors believes that, by eliminating maturity restrictions
on the municipal bonds that the Portfolio may purchase, the portfolio manager
will have greater flexibility to adjust the Portfolio's investments in response
to various and changing interest rate environments, including the current low,
stable interest rate environment, and thereby enhance the ability of the
Portfolio to achieve its objective of highest total return. The Board of
Directors therefore recommends that the investment objective of the Portfolio
should be revised to read as follows:
"The Portfolio seeks to provide the highest total return, consistent
with preserving principal, by investing in high quality municipal
bonds."
The revised investment objective would remain fundamental, meaning that it could
be changed in the future only with the approval of the shareholders of the
Portfolio.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" APPROVAL OF THE
PROPOSED CHANGE IN THE PORTFOLIO'S INVESTMENT OBJECTIVE.
VOTE REQUIRED
In order for the proposed change to the Portfolio's investment objective to
be approved, shareholders holding "a majority of the outstanding voting
securities" of the Portfolio must vote in favor of the proposed change. The
Investment Company Act of 1940 defines "a majority of the outstanding voting
securities" of the Portfolio to mean at least a majority of the outstanding
voting shares of the Portfolio or, if less, 67% of the voting shares represented
at a meeting at which shareholders owning 50% or more of the outstanding voting
shares of the Portfolio are present or represented by proxy. Accordingly,
abstentions and broker non-votes will have the same effect as votes cast against
approval of the proposed change.
OTHER BUSINESS
Management of Principal Preservation is not aware of any other matters that
will come before the Special Meeting. However, if any other business should
come before the Special Meeting, your Proxy, if signed and returned, will give
discretionary authority to the persons designated in it to vote according to
their best judgment on such matters.
ADDITIONAL INFORMATION
ADVISORS, ADMINISTRATOR AND DISTRIBUTOR
Ziegler Asset Management, Inc. serves as the investment advisor for the
Portfolio. B.C. Ziegler and Company serves as the distributor for the shares of
each Portfolio, and also serves as the accounting/pricing agent and transfer and
dividend disbursing agent for the Portfolio. Ziegler Asset Management and B.C.
Ziegler are each wholly owned subsidiaries of The Ziegler Companies, Inc. The
principal address of each is 215 North Main Street, West Bend, Wisconsin 53095.
PRINCIPAL SHAREHOLDERS AND CERTAIN BENEFICIAL OWNERS
As of March 15, 1999, the voting record date for the Special Meeting, there
were no persons known to own of record or beneficially five percent (5%) or
more of the outstanding shares of the Portfolio.
A listing of the beneficial ownership of shares of the Portfolio by each
Director of Principal Preservation and of all Directors and officers as a group
is set forth in Exhibit A.
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COST OF SOLICITATION
In addition to this solicitation of proxies by use of the mails, proxies
may be solicited by officers of Principal Preservation and by officers and
employees of B.C. Ziegler and Company personally or by telephone or other
electronic means, without special compensation. Proxies may also be solicited
by a professional proxy solicitation service should management of Principal
Preservation determine that solicitation by such means is advisable. The
Portfolio will bear the cost of preparing and mailing proxy materials, of the
Special Meeting, and of soliciting proxies.
ADJOURNMENT
In the event that sufficient votes in favor of the proposal are not
received by the time scheduled for the Special Meeting, the persons named as
proxies may propose one or more adjournments of the Special Meeting to permit
further solicitation of proxies. Any such adjournment will require the
affirmative vote of a majority of the votes cast on the question in person or by
proxy at the session of the Special Meeting to be adjourned. The persons named
as proxies will vote in favor of such adjournment those proxies which they are
entitled to vote in favor of the proposal. They will vote against any such
adjournment those proxies required to be voted against the proposal. The
Portfolio will bear the costs of any such additional solicitation and of any
adjourned session.
SHAREHOLDER MEETINGS
Principal Preservation is organized as a Maryland corporation, and as such
is not required to hold annual meetings of shareholders. Its Bylaws provide
that Principal Preservation is not required to hold an annual meeting of
shareholders in any year in which the election of Directors, approval of an
investment advisory agreement (or any sub-advisory agreement) or ratification of
the selection of independent public accountants is not required to be acted upon
by shareholders of Principal Preservation or of any of its portfolio, including
the Tax-Exempt Portfolio, under the Investment Company Act of 1940. Meetings of
shareholders of Principal Preservation will be held when and as determined
necessary by the Board of Directors of Principal Preservation and in accordance
with the Investment Company Act of 1940. However, shareholders of any portfolio
wishing to submit proposals for inclusion in a Proxy Statement for any future
shareholder meetings should send their written proposals to the Secretary of
Principal Preservation at 215 North Main Street, West Bend, Wisconsin 53095.
EXHIBIT A
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OWNERSHIP OF SHARES OF TAX-EXEMPT PORTFOLIO
NUMBER OF SHARES HELD
AS OF
MARCH 15, 1999
NAME OF DIRECTOR OR OFFICER NUMBER OF SHARES(1)<F1>
- --------------------------- -----------------------
Robert J. Tuszynski(2)<F2> -0-
Richard H. Aster, M.D. -0-
August J. English 1,231
Ralph J. Eckert -0-
Richard J. Glaisner(2)<F2> -0-
All Directors and Officers As a Group (9 Persons) 1,231
- -----------------------------
(1)<F1> These figures are based on information furnished by the respective
individuals and by B.C. Ziegler and Company, Principal Preservation's
transfer agent. Certain of the individuals listed share voting and
investment power with his spouse with respect to some or all of the
shares listed opposite his name. Each individual Director or executive
officer beneficially owns less than 1% of the shares of the Portfolio.
(2)<F2> Is an "interested person" (as defined in the Investment Company Act of
1940) of Principal Preservation as a result of his affiliation(s) with
B.C. Ziegler and Company and/or its affiliates.
PRINCIPAL PRESERVATION PORTFOLIOS, INC.
TAX-EXEMPT PORTFOLIO
REVOCABLE PROXY FOR 1999 SPECIAL MEETING OF SHAREHOLDERS
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Robert J. Tuszynski, S. Charles O'Meara
and Franklin P. Ciano, and each of them, Proxy, with full power of substitution,
to represent and vote, as designated below, all shares of stock of the Tax-
Exempt Portfolio of Principal Preservation Portfolios, Inc. that the undersigned
is entitled to vote at the Special Meeting of Shareholders of Principal
Preservation Portfolios, Inc. to be held at the West Bend Inn, 2520 West
Washington Street, West Bend, Wisconsin at 3:00 P.M., on Tuesday, April 27,
1999, or at any adjournment thereof, with respect to the matters set forth on
the reverse side and described in the accompanying Notice of Special Meeting and
Proxy Statement, receipt of which is hereby acknowledged.
DATE: , 1999
(If this account is owned by more
than one person, all owners should
sign. Persons signing as
executors, administrators, trustees
or in similar capacities should so
indicate.)
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(Please sign exactly as name
appears at left)
Please place an "X" in the desired box for each item.
Shares represented by this Proxy will be voted as directed by the shareholder.
IF NO DIRECTION IS SUPPLIED, THE PROXY WILL BE VOTED FOR PROPOSAL 1.
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1.Proposal to change the investment objective of the Tax-Exempt Portfolio to
state that the Portfolio seeks to provide highest total return, consistent
with preserving principal, by investing in high quality municipal bonds.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
2.In their discretion on such other matters as may properly come before the
meeting or any adjournment thereof.
