Anybody who follows a conservative philosophy of mutual fund investing is going to miss out on some big winners along the way.

I'm looking at one of those today the Fidelity Select Electronics Fund, a member of the scruffy bunch known as sector funds, which has managed to post one of the best long-term records in the business.

Everybody knows that sector funds, which invest in stocks from a single industry, are short on diversification and subject to wild ups and downs. Select Electronics brims over with chipmakers and electronic equipment companies such as Intel Corp., Texas Instruments Inc. and Analog Devices Inc.

"Sector funds are not for buy-and-hold investors," says Sheldon Jacobs, who's been analyzing funds for 20 years, in his book "Successful No-Load Fund Investing." Few other veterans of the game would disagree.

Select Electronics, which took in its first dollar in 1985, is just one among dozens of its breed. There are 39 sector funds in the mighty stable of Fidelity Investments alone, representing almost every industry you could think of.

Some are duds for instance, Fidelity's Select Environmental Services Fund, with just $16 million in assets and an investment return for its 11 years of operation of less than 1 percent a year.

High-tech? Fidelity also has a Select Computers Fund, a Select Technology Fund, a Select Telecommunications Fund, a Select Biotechnology Fund, and a Select Software & Computer Services Fund.

So you could view Select Electronics' success as something of a random event. Among all these different sector funds, one of them had to do better than the rest.

Besides its sector label, over the years you could have found fault with Select Electronics' increasingly unwieldy size ($10.7 billion in assets at last report, making it the largest sector fund). Or its frequent manager changes, including two in the last two years.

Roy Weitz, whose independent Web site comments on the fund scene, calls this "the Fidelity game of musical managers." Asks a recent posting on an Internet message board, "Is there a Web site for Fidelity where one can keep up with management changes on a monthly basis?"

Fidelity says its sector funds were designed to be run by its research analysts, many of whom are young aspirants to bigger-money management jobs. "These are explicitly analyst funds," says Robert Pozen, president of Fidelity Management & Research. "It's a research product."


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