By David Fox Investors in the Buttress Bermuda Fund were updated on the first six-month performance of the company to September.

The fund has grown to $13,000,000, and has received interest from local and foreign investors. The total number of investors has risen to 325.

Shareholders also learned that two new classes to the Buttress Money Market Fund will be added. Sterling and Canadian classes of the fund are to be opened. They are separate funds which will be managed, as is the flagship $US class, and like the $US class, are rated AAAm by Standard & Poors.

The Bank of N.T. Butterfield's subsidiary, Butterfield Asset Management (BAM), is directly responsible for the Bermuda dollar mutual fund and director, Mr.

Preston Hutchings, advised shareholders of the BAM game plan.

"BAM is anticipated to provide approximately seven percent of the bank's 1995 profits and because the Buttress Bermuda Fund holds nearly 172,000 shares of Butterfield stock, BAM's performance, in a real but indirect way, affects the value of Butterfield stock and returns on the Buttress Bermuda Fund.'' Mr. Hutchings said that BAM's business is, at present, heavily oriented toward the management of institutional, as opposed to individual, accounts.

The vast majority of the assets under management in the company's various Buttress funds and in segregated discretionary accounts, are managed on behalf of local life and property insurance companies, captive and catastrophe reinsurers, corporate pension funds and charitable trusts.

"Assets under management have grown from less than a billion dollars in January to almost $1.3 billion today,'' Mr. Hutchings said. "Most of these assets tend to be denominated in US$ and invested in fixed income securities and money market instruments.

"This institutional thrust, a thrust which we must continue given the $25 billion in insurance company assets here in Bermuda, actually enhances our ability to serve you as individual investors.'' The shareholders' letter for the period to September 30 showed how the net asset value per share, exclusive of dividends, decreased from $10.17 to $10.08 over the three months of the quarter, while the dividend of $0.08 was the same as the company's first quarter dividend. The fund was said to have had a total return of -0.1 percent.

The letter said that the fund had maintained a relatively stable price despite the significant volatility in the Bermuda stock and bond markets during the summer.

The letter stated: "The Bermuda Stock Exchange fell 2.7 percent during the quarter due primarily to the 12 percent drop in the price of the Bank of Bermuda stock.'' That stock today comprises more than 38 percent of the exchange's index and approximately 20 percent ($2.46 million) of the total assets of the fund.

The letter continued: "It appears that the Bank of Bermuda Rights offering encouraged the bank's investors to sell some of their holdings (at market prices in the $19 to $21 range) in order to raise cash to pay the $16 subscription price to obtain one new common share and one warrant.

"This situation, when combined with the general softness in summer trading activity, allowed the Bank of Bermuda stock price to drift to its lowest levels of 1994.

"The fund's stake in the Bank of Butterfield, which now represents about 20 percent of total assets($2.53 million), showed an unusual level of volatility as a result of the September 2.4 for one stock split.

"A month prior to the split, Bank of Butterfield's shares traded in the $30 to $31 range, yet the recent post-split price of $14.50 is equivalent to a pre-split price of $34.80. "Presumably, the lower price after the split was perceived by investors to increase the attractiveness of the stock, even though this did not produce any change in the company's underlying fundamental value.'' The fund is comprised of 12 percent investments in bonds, which is relatively low. The investment adviser still believes an under weighting in bonds is appropriate in the current rising interest rate environment and because there are very few attractively priced fixed income securities in the Bermuda dollar market.

The fund has primarily invested in $US denominated bonds which are more reasonably priced than comparable Bermuda dollar securities.