Security Trust Co. has halved the sales charge on its mutual funds to spur retail sales.

By reducing its back-end sales charge to 2% from 4%, the bank hopes to attract $5 million to $10 million of assets to its Capitol Funds.

"When you're competing with some of the best-known names in the business, offering a discount is one good way of introducing your product," said Theodore O. Johnson, senior vice president of the Baltimore-based bank, a unit of MNC Financial Corp.

"You've got to do something to stimulate interest and excitement," he said.

The change isn't permanent. The bank plans to reinstate the 4% charge in December after growing the assets, Mr. Johnson said.

A Four-Fund Family

Sales charges frequently are cited as an obstacle to attracting bank customers to mutual funds. Special offers like this one are a popular and time-honored way of introducing products.

The family of four funds, distributed by SEI Corp. of Wayne, Pa., has close of $900 million of assets now. Security Trust serves an investment adviser.

The funds are marketed through Security Trust, American Security Bank, and Maryland National Corp., all units of MNC. The bank operates in the Baltimore-Washington corridor.

The bank introduced the back-end-load funds in October in a bid to attract retail customers. It also offers a no-load class of shares for trust customers and for corporate cash-management clients.

Of the four portfolios in the Capitol Fund family, the Maryland Tax-Free Bond Fund has sold the best so far, racking up $3.5 million in sales, Mr. Johnson said.

The equity fund has $250,000 under management. The fixed income fund has about $50,000, while the special equity fund is just getting started with $15,000.

"We're definitely seeing the most interest in the tax-free fund," said Mr. Johnson.

Getting the Word Out

The discount program has been publicized in American Security and American National branch networks through a poster campaign. Follow up information was provided in the form of brochures.

MNC is scheduled to be acquired in October by Nations-Bank, a top bank player in the mutual fund business.

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