Northwater Five-Year Market-Neutral Trust - Termination distribution and update on status of Wind-Up - June 11, 2009



    TORONTO, June 11 /CNW/ - The Northwater Five-Year Market-Neutral Trust
(the "Trust") today is providing investors with a further update on the
scheduled termination of the Trust on June 30, 2009 (the "Termination Date").

    
    Termination Distribution
    ------------------------
    
    As announced previously, a portion of the Trust is subject to
restrictions on liquidity that will extend beyond the Termination Date. Based
upon information available to date, Northwater Capital Management Inc. (the
"Manager") estimates that the Trust will make a cash distribution
("Termination Distribution") in addition to the final regular quarterly
distribution unitholders of record on June 30, 2009. The Termination
Distribution and the final regular quarterly distribution are expected in
aggregate to equal $4.31 per unit, and will be paid on July 15, 2009.
    The manager expects to firm up the actual amount of the Termination
Distribution on or about June 19th, 2009.

    
    Update on Status of Wind-Up
    ---------------------------
    In accordance with the process of winding up the Trust, the following
actions will occur on or about the Termination Date:

    1.  In accordance with the terms of the forward purchase and sale
        agreement the Trust entered at the inception of the Trust (the
        "Forward Agreement"), the Forward Agreement will mature and
        terminate. The Forward Agreement provided a tax-deferred exposure to
        the portfolio of hedge funds held by Northwater
        Five-Year Market-Neutral Fund Limited (the "Fund") as well as the
        foreign currency hedge that hedged the US Dollar exposure of the
        Fund. The Trust will have direct exposure to the Fund following the
        Termination Date. As the foreign currency hedge was part of the
        Forward Agreement, the US Dollar exposure of the Fund will no longer
        be hedged to Canadian dollars. The creation of a new hedging program
        would require the Trust to hold back a material amount of cash and
        would significantly restrict the Trust's ability to distribute cash
        to unitholders on June 30, 2009.

    2.  The five-year term of the interest rate swap that the Trust entered
        at the inception of the Trust (the "Interest Rate Agreement") will
        terminate on June 30, 2009, and the Trust will no longer have direct
        exposure to interest rates from the interest rate swap. The Trust
        will maintain some direct exposure to short term interest rates going
        forward through any money market securities held by the Trust.

    Potential Tax Implications of Wind-Up and loss of Qualified Registered
    ----------------------------------------------------------------------
    Plan
    ----
    Status on June 30, 2009
    -----------------------
    

    As previously announced in press releases released by the Manager since
January 2009, it is anticipated that the percentage of certain illiquid
holdings in relation to the Trust's assets is likely to exceed the 10%
concentration limits required in order for the Trust to continue to qualify as
a unit trust for Canadian income tax purposes.
    If and when the Trust fails to qualify as a unit trust it will no longer
qualify as a mutual fund trust for Canadian income tax purposes and the Trust
will no longer be a "qualified investment" for registered accounts, including
without limitation, RRIF's, RRSP's and RESP's. The Manager anticipates that
the Trust will lose its "qualified investment" status on or about the
Termination Date. Investors are advised to speak with their advisors as soon
as possible to obtain tax advice regarding the anticipated failure of the
Trust to maintain its "qualified investment" status, and the appropriate
movement of any investment in the Trust out of registered accounts.
    Units of the Northwater Five-Year Market-Neutral Trust are listed on The
Toronto Stock Exchange under the symbol NYF.UN.





For further information:

For further information: Mohamed Khaki at Northwater Capital Management
Inc. at (416) 360-5435

Organization Profile

NORTHWATER FIVE-YEAR MARKET-NEUTRAL TRUST

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