Putnam Investments’ board of trustees approved a 2% redemption fee on short-term trades today, a move that should help curtail the market timing practices that have marred the nation’s fifth largest fund firm.

Investors in both mutual funds and Putnam 401(k) plans who sell fund shares within five days after purchasing them will be subject to the 2% fee beginning this first quarter of 2004. The company said other fees are already in place for short-term traders.

"The trustees believe that the 2 percent short-term trading fee, combined with other enhancements being added to our fair value pricing regime, will virtually eliminate any potential market timing of Putnam Funds," said Putnam Funds Chairman John A. Hill.

Money from the fees will be thrown back into the Putnam funds, benefiting individual investors and countering transaction expenses facilitated by the in-and-out trades.

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