(MONEY Magazine) – THIS MONTH: --Safe ways to play the world's hottest markets --Windsor's new man is a winner. --A fund to calm your Dow jitters

Odds are that you own a greatest-hits album by your favorite artist--Elvis, Bob Dylan or Pavarotti--for a simple reason: You want to enjoy the stars at their best. So how would you like to own a mutual fund packed with leading money managers' favorite stock picks--that is, all the chart toppers without any of the also-sangs. Well, now you can. During the past couple of years, a handful of greatest-hits funds have been launched. While each takes a slightly different approach, all restrict their manager or managers to four to 20 of their most promising picks.

The idea is that you'll get higher returns by concentrating on the stocks a manager believes in most strongly. Says noted fund skipper Donald Yacktman: "The best way to beat the market is to have most of your cash in stock picks one through 10, where your confidence is highest, rather than in choices 90 to 100, where you are less certain." That's what he does at his $873 million Yacktman fund; he holds 32 stocks (vs. 118 for the average fund) with 49% of assets jammed into his top 10 holdings. And the fund has trounced its peers during the past three years--by an annual average return of 22.8% to 15.9%.

"The concept of funds that are limited to their managers' best ideas is a great way for investors to aim for market-beating returns," says Sheldon Jacobs, editor of the No-Load Fund Investor. He adds that such highly concentrated funds can be an ideal complement to your core holding of index funds.

To help you decide whether one of these funds deserves a place in your collection, we profile four of the most compelling greatest-hits portfolios, moving from oldest to newest. But before jumping into any of them, please note that while the premise is intriguing, it is still largely untested. All four funds have put up solid numbers this year, but only one has been around long enough to establish a track record of three years or longer.

--MFS Research A. To fill this $2.6 billion, 134-stock portfolio, each of MFS' 26 industry analysts selects his four to six favorite stocks. Every Friday, the group meets to discuss which issues to buy or sell. "By focusing on just two industries each, our analysts are able to know their companies inside and out," says research director Kevin Parke. The fund's performance bears out his claim: In the past five years, MFS Research, which carries a 5.75% sales charge, has returned an annual average of 18.6%, vs. 16.9% for the S&P 500.

Roughly 50% of the fund's assets are now in such large-company issues as $76 billion (estimated 1997 sales) Philip Morris and $9.9 billion Colgate Palmolive, with another 30% in mid-size firms and 15% in small stocks. In addition, the five international analysts are finding so many bargain growth stocks abroad that the fund now holds 9% in foreign shares, up from 1% two years ago. Says Parke: "We choose the most attractive markets and industries at any given time." A plus: This broad diversification has helped MFS Research post impressive returns while taking 14% less risk than the average stock fund, according to Chicago fund rater Morningstar.

--Montgomery Select 50. This 18-month-old, $116 million portfolio divides its assets equally among the teams that run five of San Francisco-based Montgomery's funds: Growth, Micro Cap, Equity Income, International and Emerging Markets. Each team then chooses the 10 best ideas in its specialty for Select 50's portfolio. The resulting portfolio has a 19% stake in emerging markets issues that can make it volatile over short time periods. For example, a full 10% of assets are now in risky Russian shares, including nearly 7% in $920 million electric-power producer Irkutskenegro. Montgomery analysts peg the company's true worth at about three times its $1.4 billion market value. "We've built our reputation as great stock pickers," says Kevin Hamilton, managing director of Montgomery's investment oversight committee. "And we'll go anywhere in the world to grab the biggest gains." The fund's adventurous spirit is paying off: Since its October 1995 inception, Select 50 has returned a cumulative 51.3%, vs. 40.2% for the S&P 500. One drawback: This aggressive fund has above-average annual expenses of 1.8%. Says Hamilton: "Trading costs and other expenses for emerging markets stocks are higher than for U.S. shares."

--Oakmark Select. This $160 million fund from venerable Chicago value investors Harris Associates restricts its portfolio to the top 20 or so midcap and large-company stocks from the firm's buy list of 80 to 100 issues. Such intense concentration--the fund's three largest holdings account for 40% of assets--can lead to sharp swings in value. However, manager Bill Nygren, 38, expects to produce long-term returns that will more than compensate for that risk. "During the past decade, funds that finished in the top 5% beat the S&P 500 by at least three percentage points a year," says Nygren, who is also the firm's director of research. "By focusing on just our 20 best ideas, we believe this fund can match that going forward." Certainly, Select is off to a strong start: Since its November 1996 launch, it has gained 26.8%, vs. 13.4% for the S&P 500.

To post those big numbers, Nygren and his team of six analysts tear apart a company's financial data, loading up on shares that are selling for no more than two-thirds of their true value, according to cash flow and other measures. One example: $2.5 billion cable company Liberty Media, which recently traded at $22.50--or a third below Nygren's estimate of its real worth. "Value investing reduces risk," says Nygren, "because when things go temporarily wrong at a company, expectations are usually already so low that the stock price doesn't tank." (For more on value investing, see "Will the Real Value Fund Please Stand Up" on page 140.)

--Masters' Select Equity. This $130 million fund, launched in January, consists of five to 15 choices each from an All Star team of fund managers: Shelby Davis of Davis New York Venture (who handles 20% of the fund's assets), Jean-Marie Eveillard of SoGen International (20%), Foster Friess of Brandywine (10%), Mason Hawkins of Longleaf Partners (20%), Sig Segalas of Harbor Capital Appreciation (20%) and Dick Weiss of Strong Common Stock (10%).

Although each stock picker runs a highly concentrated portfolio, the mix of different styles creates a broadly diversified fund. For instance, Friess likes small- and mid-cap growth issues, while Hawkins buys mid- and large-cap value shares. At present, large-company stocks such as $45 billion Hewlett-Packard and $80 billion IBM make up 37% of assets, with 27% going to midcaps and 21% to small-company issues. Foreign stocks account for 7%. Says Eveillard: "Having to limit myself to just 15 picks--when my other funds can hold 200 or more--really forces me to focus on the very best investments I can find in the world."

FUND DATA AS OF MARCH 3