Buttress Bermuda Fund expects to have better news for shareholders for the year to June 30.

The net asset value per share of the long languishing fund has spent considerably more time since its March 1994 launch, below the initial $10 price than above. But last week it neared $11, after the index of the Bermuda Stock Exchange (BSX) improved dramatically.

The net asset value reached $10.98 per share, after previously plunging toward the $9 mark.

But senior portfolio manager with Butterfield Asset Management Ltd., Sean Kelly said, "If you factor in the dividend, the total return to the shareholder from the fund's inception was better than the performance of the stock market. And the total return of the fund between January 1 of this year and June 18 is 20 percent. That simply reflects the direction in the Bermuda market.

"Things can change very quickly, but its true this market has made a very definite turning point. It's not to say that it can't go back down at some point. But in terms of expectations, institutional and other investors seem to be indicating that now that they've seen the change in momentum, now is the time to get on.'' In fact, Mr. Kelly refused to accept that the performance of the fund has so far been disappointing. He said, "No, not at all. The objectives of the fund were to capture broadly the return to the Bermuda market, without doing as badly as the Exchange on the downside. The index as a whole went down significantly more than the fund has since March of 1994 to December 31 of 1996.

"The objectives of the fund were to give investors for a long term portfolio, exposure to the Bermuda market. There will be periods of time, and sometimes long periods of time, when that exposure isn't in the best interests of clients. But if they want that exposure and they can live with the short and long term implications of that exposure, then the fund has done exactly what we had hoped it would do for those clients.

"If you look at 1972 through 1996, there were five periods where the BSX index had negative returns in any one-year or two-year periods. From 1994 to 1996 was a period when the market went south. You can't time those periods.

And this type of fund is a long term investment.

"The way we managed the fund was to not overweight the big stocks that were going down, but stay under weighted versus the index in those issues until we reached the turning point. Then we started to pick up the weightings.

"So we were conservative on the way down and then we are basically positioned for riding the wave on the way up and that's exactly what the fund has done so far. It has moved nicely in line with the index since January 1.'' Mr. Kelly has had direct responsibility to the Buttress Bermuda Fund since it began. He said the fund has responded to the jump in the BSX that began early this year.

He said, "In early 1994, Bank of Bermuda shares, for example, sold at around a high of $23 to $24. This week it traded up to $26, but for that intervening period it had traded down. It was at $16.25 in February. So since February, the stock has made a huge move ( 60 percent). Of course, that's just one stock, although the Exchange is heavy on bank stocks. The two big banks are nearly 70 percent of the index weightings.'' Mr. Kelly said the market had been under pressure for a period, because there were more sellers than buyers.

He said, "We started to see at the end of December 1996 and the beginning of 1997, institutional buyers picking at the low prices. And so since that time, I think it has not been a broad-based rally, but confined to the big stocks, that institutional players have been looking at buying.

"The history was that Bermudians bought stock and held onto them. From time to time, though, there are people who want or need to sell for whatever reason. From March '94 people who had already bought, didn't want anymore, but there was a natural stream of selling coming out, which is what pushed the market down.

"Now you have a turning point, and people jumping on the bandwagon.

Institutional players are looking at the turning point and thinking it is time to get in before the price gets too high. They are not averse to pushing the price up a couple of bucks to buy a couple hundred thousand dollars worth of shares.

"But then one group does it, and others jump in and you get a feeding frenzy, like what you've seen with the Bank of Bermuda stock. Bank of Butterfield, Bermuda Commercial Bank and some others have come up a little bit.'' BUTTRESSED AGAINST DECLINES -- This Butterfield Asset Management Ltd (BAM) graph shows the relative performance of the net asset value per share of the Buttress Bermuda fund, compared to the BSX index.