They reduce induced drag by providing a net forward force using the upwash off the wingtip. The feathers are angled downwards into the upwash and the net force therefore has a forward component. It's been tried with a fair anount of success in tunnel tests (Sorry, I don't know where/when). I'm amazed that everybody doesn't have them now.
Come to think of it, there's an interesting picture of an experimental aircraft on page 19 of "Today's Pilot" magazine (July) that appears to use a combination of fences and wing tip sails. It's worth a look.
Pie
[This message has been edited by Pielander (edited 25 June 2001).]