Amid rapid growth in its mutual fund business, Norwest Corp. is reorganizing the management of its brokerage unit and rolling out some new products.

In a key change prompted by the recent departure of mutual fund chief Mary K. Stern, two executives will split responsibilities for the Minneapolis bank's Norwest Investment Services unit.

Executives say the bank is also implementing several changes initiated during Ms. Stern's tenure. Specifically:

* Norwest's proprietary mutual funds - which have been marketed under the Prime Value Funds label - are to be renamed the Norwest Funds on Aug. 2 if shareholders approve the move in a July 30 vote.

The Prime Value Funds currently have assets of $4 billion, up from $3 billion in October 1992.

* Two new portfolios have been added to the fund lineup, bringing the total to 13. and several others are in the works.

* Customers will be offered the option of paying sales fees when they, redeem mutual funds, instead of the traditional up-front charges, or "loads."

Under the new management structure, Lee Chase will oversee investment management and trust funds, and Dean Jarnow will continue to manage the proprietary mutual fund business, according to Jay Kiedrowski, a Norwest executive vice president.

Moved to Society National

Ms. Chase joined Norwest this month from IDS Financial Services, Minneapolis. where she was manager of new business development.

Ms. Stern, who formerly over saw both areas, jumped ship in May to run Society National Corp.'s mutual fund business.

In a telephone interview, Mr. Kiedrowski said the restructuring should enable the bank to target "resources to distribution channels more effectively."

Vote Set on Back-End Loads

In another vote on July 30, shareholders will decide whether back-end sales loads should be added to Norwest's mutual fund lineup.

Back-end loads are gaining ground in banks. A frequently cited reason is that bank customers aren't used to paying commissions for services, but they are familiar with penalties for early withdrawal.

Norwest is also considering combining its $3 billion Advantage Funds for employee benefit programs into the Norwest Funds, and offering them as a special no-load class of shares, Mr. Kiedrowski said.

3 Funds on Drawing Board

Scott Spiker, a senior vice president in charge of institutional trust service at the bank, heads the Advantage Funds.

Finally, Norwest is adding several portfolios to its fund lineup.

In June, Norwest added an income-stock fund and a Colorado tax-free fund. Three more products - an Arizona tax-free fund, a high-yield bond fund, and a balanced fund - are on the drawing board.

Portfolio manager Jeff Lund runs the income stock fund in Minneapolis. It invests primarily in blue-chip stocks with strong dividends and appreciation potential.

Norwest launched the Colorado tax-free municipal bond fund to fill a gap that was created in its product lineup last year.

Norwest had served as investment adviser to another Colorado tax-free fund, having inherited the account through its acquisition of United Bank of Denver. But the tax-free fund's distributor, Aquila Management, New York, reassigned the account to Kirkpatrick, Pettis Inc., a municipal bond underwriting unit of Mutual of Omaha.

Norwest uses Forum Financial Services Inc. as its distributor.

|Good Time to Buy Munis'

Marjorie Grace, who recently moved from Minneapolis to Denver to manage the new Colorado fund, said that its assets now total $20 million, including $1 million in seed money from Norwest Investment Services and $1 million transferred from trust accounts.

"We're very pleased with the response from customers," Ms. Grace said. "It's money Norwest didn't have under management before. Right now it's a very good time to buy munis overall, when you can get a tax-free yield over 5%"

Ms. Grace said she will also manage the planned Arizona fund, at least initially.

The Arizona fund will be introduced upon completion of Norwest's purchase of $2.1 billion-asset Citibank in Phoenix, which is expected late this year.

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