Lately, if it comes from the ground, it's been as good as gold -- or sometimes, even better.

Oil's near its high of $135 a barrel, up from $70 less than a year ago. Precious metals have come off their highs but are still way above last year's levels. Even farm products like soybeans and corn have seen big price hikes lately.

Amid all this, the Jennison Natural Resources Z (PNRZX) fund has capitalized on the long rise in commodities prices more effectively than any of its competitors over the long haul. Its 10-year annualized return of more than 25% tops all natural resources funds covered by Morningstar -- more than 8 percentage points above the average fund in that sector.

Climbing above the crowd
Of course, the bull markets in oil and metals have lifted most commodity mutual funds higher. But Jennison has been particularly impressive, finishing in the top quartile of its peers in all but one of the past six years.

The key to Jennison's success lies in the mix of stocks it has chosen. In 2005, when the fund was up nearly 55%, it already owned sizable positions in Freeport-McMoRan (NYSE:FCX), Petroleo Brasileiro (NYSE:PBR), and Transocean (NYSE:RIG) -- companies that many investors had never even heard of back then, but which have proceeded to run up strongly ever since.

The fund has continued to show its strong stock selection abilities. So far this year, all of the fund's top 20 holdings have seen their stock prices rise, with Cleveland-Cliffs (NYSE:CLF) having more than doubled since January, and Southwestern Energy (NYSE:SWN) up more than 65%.

What the future holds
Jennison's past performance is undeniably impressive. The big question for prospective investors, however, is how the fund will perform going forward. Despite recent new highs in crude prices, some believe an oil bust is imminent -- and they're looking for the best ways to profit from it.

Jennison, however, isn't shying away from its bets in the energy sector. The fund has more than 60% of its portfolio invested in energy, split between oil and gas producers like Suncor Energy (NYSE:SU) and makers of energy-related equipment and supplies like Schlumberger (NYSE:SLB). Most of the rest of the portfolio is invested in industrial materials, which includes mining companies. If boom times in natural resources come to an abrupt end, then you can expect to see this fund respond quite negatively.

On the other hand, plenty of people think there's much further to go for energy and mining stocks. With Goldman Sachs predicting $200 oil in the near future, that would likely translate into further gains for Jennison's portfolio.

Got $10 million?
The one problem with the Jennison Natural Resources fund is its cost structure. To buy Class Z shares, which have no sales load and the lowest costs, you have to be an institutional investor with at least $10 million. For those of more limited means, the most likely way you'd be able to buy these low-cost shares is through an employer retirement plan.

If that's not an option, standard Class A shares of the fund carry a load of as much as 5.5%, along with 12b-1 marketing fees of 0.30% per year. That has a significant impact on returns, although all of Jennison's share classes maintain an edge over competing funds.

In general, sector-specific funds like Jennison Natural Resources should play a limited role in your overall portfolio, as the risks that a sector will fall out of favor are much higher than overall market risk. For those who believe we've only seen the beginning of the commodities boom, however, Jennison has to be one of your top fund candidates -- especially if you can get in without sales charges.

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