10-YR TREAS. NOTES ARE DUE

IN 2001, the place to make money in the bond market was in short-term Treasuries. In 2002, according to one bond guru, the big money will be made in intermediate and long-term Treasuries, like 10-year notes.

“The Fed took interest rates all the way down to 1.75 percent – a level we haven’t seen since the 1960s,” said Brad Tank, portfolio manager of the Strong Government Securities fund. “But the 10-year note showed no price appreciation in 2001. We think this year will be different.”

One reason is 10-year Treasuries haven’t yet reacted to the Fed’s aggressive rate cuts.

Also, bonds offer safety during bad economic times.

“We believe we are in a recession,” said Tank. “The world economy is not in good shape. If you look at the signs of economic improvement, they’re still pretty tentative. It’s hard to believe we’re going to see growth in consumer spending because it never contracted. So there’s plenty of good reasons for the Fed to contine cutting. There’s good reason to believe the Fed will cut rates at the meeting at the end of this month.”

Of course, bonds play an important role in a diversified portfolio – no matter what the Fed does.

“I would instruct investors not to try to time the market,” said Tank. “Shareholders ask me if this is the right time to own bonds. Well, you’re always supposed to own some bonds. Decide what is the right mix for you in building a balanced portfolio of assets.”

Fund at a glance

Name Strong Government Securities

Portfolio manager Brad Tank

Gains

2001: 8.33%

2000: 11.32%

Fees

Load: None

Fees: 0.9%

Minimum investment

$2,500

$250 (for IRA)