Banks have demonstrated again this year that there is no single road to success in the mutual fund business. This year's crop of masters is as diverse as they are effective.

In this sixth annual edition of Masters of Mutual Funds, First Union is honored for the third year in a row and Mellon for the second - each for very different reasons.

First Union has made its mark as a steady acquirer of asset management companies and of banks that happen to sponsor funds. Despite its bank ownership, the mutual fund unit regards its peer group as the other fund giants such as Fidelity and Putnam.

Mellon, a fund powerhouse since it acquired Dreyfus Corp. four years ago, has forged five alliances with fund companies in South America and Asia and is planning a big British purchase. It sees the rapid growth of foreign investment as a natural adjunct to its booming domestic business.

For its part, Norwest Corp. is looking internally for major growth. Known as a skilled cross-marketer of banking products, Norwest is beginning to use those skills to sell investment products to its banking customers, a huge and unsaturated market. It says only 4% of its customers presently buy investments from Norwest and only half of those buy mutual funds.

A fourth Master, Riggs National Bank, has made its mark by running its fund business as a largely autonomous operation, leaving plenty of room for generous, and unbankerly, incentive compensation for the investment staff.

Finally, Deutsche Bank has transformed its business in the United States by promoting its own expertise at fund management. It has corraled $375 million in assets in less than a year by cloning eight of the funds it manages in Germany and offering them to the U.S. market.

An innovation in this year's edition is an article about one specialized aspect of fund marketing: how mutual funds are cultivating business from senior citizens through soft sell. The efforts, mostly by community banks, include seminars on investing, free checking, premium rates on savings, and even travel clubs and free movies.

The approach, though, is not for everyone. It requires patience and extensive hands-on attention to detail. Banks operating the programs say they payoff wil take time, but they are confident of long-term results.

Scattered through the section are some of the best ideas for mutual fund marketing, culled from interviews with many industry executives over the past year. An example: set up an information center aimed at an ethnic group that is concentrated in your area. Chase Manhattan did this for Chinese customers and signed up 25 new investors in two weeks.

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