Borrowing a page from the credit card marketing wars, Star Bank Corp. plans to announce today a program that will reward investors in its mutual funds with frequent-flier miles, sources said.

For every dollar a consumer invests in its Star Funds, the Cincinnati- based bank plans to contribute one mile to a frequent-flier account, sources said. The miles then could be exchanged for an airline ticket on the carrier of the investor's choice, with a maximum value of $500.

Star officials declined to provide details of the new program, saying a formal announcement is scheduled to take place today.

But observers of the mutual fund scene were already buzzing about the promotion Monday, saying it indicates that bankers are prepared to put the same marketing muscle behind mutual funds that they use to sell credit cards and other traditional bank products.

"The retail side (of banks) is finally interested in promoting investment products," one observer said.

Indeed, Star has been using a similar tactic to market its credit cards since 1994. Under a program dubbed TravelAccount, some consumers earn one frequent-flier point for every dollar charged on their Star Bank credit cards.

With the mutual fund program, every 10 miles in the frequent-flier account earns a consumer $1 toward an airline ticket. Miles are earned on investments up to $50,000, sources said.

"It's a good idea," said Arthur J.L. Lucey, a vice president at ALPS, a mutual fund services company in Denver. "As long as you have performance in the top quartile and you provide an extra incentive, you have something that has a little sizzle."

Some observers, however, said the program could run afoul of regulators, depending on where the money to buy the airline tickets comes from. How Star plans to pay for the airline tickets could not be learned on Monday, but sources said the company probably wouldn't be able to cover the costs by tapping the advisory fees that it collects for managing the funds.

Unlike sales fees - which cover investment advice and are added to the cost of buying a mutual fund - advisory fees are built into the cost of a fund purchase. And they are designed solely to compensate a fund's money manager, not to provide marketing incentives.

"A number of companies have considered the approach but have been stymied," Mr. Lucey said. Neither the Securities and Exchange Commission nor the National Association of Securities Dealers has issued guidelines on the issue, he added.

American Airlines began offering frequent-flier miles to investors in its own family of mutual funds three years ago, observers recalled. To satisfy regulators, it created a new "mileage" class of shares for the program that sports its own 12b-1 fees, as mutual fund marketing fees are known.

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