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."

No matter how many quibbles you come up with, though, the fund's results still look awfully nice. The research firm of Wiesenberger in Maryland ranks Select Electronics as the top-performing fund of any type over the last 10 years, averaging a 39.8 percent annual return. That's more than double the 18.7 percent return of the Standard & Poor's 500 Index, which was itself pretty spectacular for such an extended period.

Since 1985, Select Electronics has averaged a 24.4 percent annual return, according to Fidelity. So far in 2000, while the average of 186 technology funds tracked by Bloomberg has struggled to a 3.2 percent gain, Select Electronics has returned 39 percent. Once again, it ranks No. 1.

If you had invested $10,000 in Select Electronics on Dec. 31, 1989, Fidelity figures, your money would have grown to $332,473.48 by April 30 of this year.

Of course, that's hypothetical. Hardly anybody ever actually experiences these sweet rides. Look at the asset history of Select Electronics, which had a measly $5 million in its coffers as the 1980s ended. That gives me the consolation of knowing that legions of other investors missed the same chance too.

Chet Currier is a columnist for Bloomberg News

Boredom Isn't High Price for Big Returns

The newest complaint against mutual funds is not that their fees are too high or that they don't beat the indexes often enough. It's that they are boring.

This brings up a new demand in my experience that a money-management vehicle must keep us entertained while it transports us down the road to prosperity and a comfortable old age. I realize that even buses have television these days, but where does it all end?

Fussing about boredom subverts the whole idea of holding fund shares patiently. When you try for faster gratification in investing, you often wind up with less of it.

Meanwhile, the fund industry seems intent at times on undermining its own buy-and-hold ethic. Look at all those new funds, and all the rapid turnover of investments by the fund managers themselves.

In the 1950s and '60s, fund investors redeemed, or cashed in, about 7 percent of their shares a year, says Jack Bogle, the founder and retired chairman of the Vanguard Group, the second-largest fund firm, with $551 billion in assets. That meant the average holding period was roughly 14 years.

In 1999 and early 2000, Bogle says, if you include money switched from one fund to another within the same firm, the redemption rate has soared to the 40 percent to 50 percent range. That collapses the holding period to between two and two and a half years.

Even if you don't count exchanges, according to the Investment Company Institute, redemptions reached 21.7 percent in 1999, the highest on record except for the market-crash year of 1987, when the rate hit 26.5 percent.

"This sea change in the character of fund owners violates the most fundamental principle of investment success invest for the long pull," Bogle says.

The performance chase, all in all, is a poor antidote to boredom. Losing money can get monotonous too.

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