Stock prices may have turned around in the second quarter, but they did not move enough to save Putnam Investments from reporting a smaller profit.

The unit of Marsh & McLennan Companies is the nation's fifth largest mutual fund firm as measured by assets under management.

It reported profits that were 26 percent below the second quarter of 2002. In dollar figures, the fund firm earned a reported $125 million compared to $169 million a year ago.

Still, profits fell faster than revenues. Putnam's said its second quarter revenue fell 15 percent to $495 million from $581 million in 2002.

One of the reasons for the decline in sales and earnings from a year ago was a smaller asset base. Putnam reported that average assets under management during the second quarter were $260 billion, 14 percent below the $301 billion in the second quarter of 2002, but 7 percent higher than the $244 billion in the first quarter of 2003.

The numbers also suggest that Putnam's asset base rebounded with the stock market during the quarter. Its assets under management on June 30 were $267 billion down just 6 percent from $284 billion in 2002. And, that figure is up 10.8 percent from March when Putnam reported $241 billion of assets under management.

Meanwhile, investors continued to pull assets from the Boston-based fund firm. All counted, individual and institutional investors withdrew $3 billion from Putnam funds during the quarter. That figure is comparable to the second quarter in 2002 when shareholders pulled $3.2 billion. The outflows showed an increase from the first quarter when investors redeemed $1.3 billion in net assets.

Putnam also reported that mutual fund sales continued at the same pace as the first quarter. Institutional assets ended the quarter at $96 billion, an increase of 12 percent during the second quarter and 3 percent from the end of the second quarter last year.

Putnam said that its international flows were especially strong. International assets ended the quarter at $37 billion, an increase from $33 billion at the end of the first quarter of 2003 and up 23 percent over 2002.  

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