According to the Investment Company Institute, the trade group for the mutual fund industry, global bond funds were one of that industry's fastest-growing products in 1990, and with good reason.

At the end of 1989, there were 29 open-end global bond funds with $3.1 billion in assets. By the end of 1990, there were 37 funds with assets of $14.3 billion. After net sales, reinvested dividends and net exchanges into global funds, $5.9 billion of new money went into the global funds. That means that most of the additional growth of some $5.4 billion was from currency appreciation, a phenomenal advantage.

When the individual government markets are tracked in their own currencies on a total return basis -- which reflects coupon, price and currency changes -- the U.S. government bond market finished sixth out of 11 countries with an 8.64 percent return, according to J.P. Morgan's Government Bond Index Monitor for 1990. The top three countries with their returns: Australia, 18.81 percent; Spain, 14.78 percent; and Italy, 14.61 percent. The bottom two were Germany, 1.09 percent, and Japan, 0.78 percent. The latter two were especially influenced by rising interest rates through most of the year.

However, when the returns on the various government markets are translated back into U.S. dollars, we have entirely different rankings and much higher returns.

This reflects the fact that, on average, the dollar fell 10 percent in value against the currencies of the major industrial nations last year. Of these 11 countries, the United States's 8.64 percent return ranks ninth. The top performers were the United Kingdom, 31.30 percent; Spain, 31.07 percent; and Italy, 28.81 percent. The bottom two were Canada, 7.23 percent, and Japan, 7.20 percent. The countries with high yields and stable or improving currencies outperformed the other markets.

J.P. Morgan points out that 1990 was an excellent year for owning bonds denominated in foreign currencies and not in dollars. With a return of 15.64 percent, Morgan's Non-U.S. Government Index outperformed its U.S. Government Index by 7 percentage points. Morgan attributes 70 percent of that 15.64 percent return to currency appreciation. This fact is verified by the $5.3 billion growth in the global funds that came from "other" than new sales, dividend reinvestments and exchanges.

In the longer-term "world income" bond fund category, the two top performers in 1990 were the Kemper Global Income Fund, which returned 22.66 percent, and the Scudder Global Bond Fund, which returned 21.08 percent, according to Lipper Analytical Services.

Before you jump in, remember that interest and currency rates can change on a dime. The dollar could improve as the economy improves, and this would be reflected in your overall return when you repatriated your money from the overseas investment. In 1990, you were better off going out of dollars and going into foreign currencies. This year is a new ballgame.

The Treasury will hold its biggest refunding when it offers three-year notes in $5,000 minimums on Tuesday, 10-year notes in $1,000 minimums on Wednesday and 30-year bonds in $1,000 minimums on Thursday. They should return 7.05 percent, 7.95 percent and 8.15 percent, respectively. With the many uncertainties facing this nation now, extending beyond the seven-year range may be unwise.