PRINCIPAL PRESERVATION PORTFOLIOS, INC.
SUPPLEMENT DATED MARCH 23, 1999
TO
PROSPECTUS DATED JULY 20, 1998
PROPOSED CHANGE IN FUNDAMENTAL INVESTMENT OBJECTIVE OF TAX-EXEMPT PORTFOLIO
The Board of Directors has recommended that shareholders of the Tax-Exempt
Portfolio approve a change in the Portfolio's fundamental investment objective.
Presently, the Portfolio's investment objective is:
"The Tax-Exempt 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 current low, stable interest rate environment, the supply of
acceptably priced municipal bonds which meet the maturity requirements of the
Portfolio's investment objective has dwindled. As a result, the portfolio
manager sometimes is unable promptly to invest the Portfolio's investable cash,
or is forced to buy municipal bonds at significant premiums over their par
values. Both of these factors make it more difficult for the Portfolio to
achieve its objective of highest total return. Longer maturity bonds more
appropriate to the Portfolio's objective, on the other hand, are readily
available. The Board of Directors therefore has recommended that shareholders
approve changing the investment objective of the Tax-Exempt Portfolio to
eliminate maturity restrictions. The new objective would state:
"The Tax-Exempt Portfolio seeks to provide the highest total
return, consistent with preserving principal, by investing in
high quality municipal bonds."
The Board of Directors has called a Special Meeting of the shareholders of
the Tax-Exempt Portfolio to vote on this proposal. The Special Meeting will be
held on April 27, 1999. Proxy materials soliciting approval of the shareholders
of the Tax-Exempt Portfolio were mailed beginning March 23, 1999. If the change
is approved, the revised investment objective will be implemented beginning
May 1, 1999. Like the present objective, the revised investment objective would
be fundamental, meaning it could be changed in the future only with the approval
of the Portfolio's shareholders.
