Northwater Five-Year Market-Neutral Trust final net asset value - September 30, 2008



    TORONTO, Oct. 22 /CNW/ - The Northwater Five-Year Market-Neutral Trust
(the "Trust") announced today that the net asset value of the Trust per unit
as at September 30, 2008 is $16.91. The NAV per unit is net of the quarterly
cash distribution of $0.4375 per unit previously declared to unitholders of
record on September 30, 2008. This reflects a return of the Trust for the
month of September of -10.63%. The rolling 12-month return for the Trust is
-14.30%
    The Trust, through a forward purchase and sale agreement, has exposure to
approximately 150% of a portfolio of market-neutral hedge funds held by
Northwater Five-Year Market-Neutral Fund Limited (the "Fund"). For the month
of September, 1 of the Fund's 33 managers posted positive returns and none out
of the 10 market-neutral strategies included within the Fund's portfolio
contributed positively to the bottom line. Specifically, the Trust's
structured finance strategy was the largest negative contributor to the
estimated return of the Trust for the month. The estimated return reflects the
impact of writing down 100% of the value of one of the Fund's investments in
an underlying fund that has been subject to an alleged fraud, as previously
announced in our September 30, 2008 press release. The underlying fund
represented a 2.5% weight in the investment portfolio of the Fund.
    The Fund relies on estimates provided by administrators of each of the
Fund's underlying hedge funds. Occasionally, these estimates may be revised
and the Fund will be required to capture these revisions in subsequent net
asset value calculations. The net asset value of the Fund is also affected by
the finalization of the net asset value by the administrators of the
underlying hedge funds. Ultimately, the net asset value of the Fund impacts
the reported net asset value of the Trust and, accordingly, the Trust
indirectly relies on the estimates provided by administrators of each of the
Fund's underlying hedge funds.
    The Fund's exposure to a fixed interest rate swap decreased the Trust's
return as the interest rate environment was unfavourable to the Trust over the
period.
    Subject to limits set out in the Trust's prospectus, the Trust is
required to purchase its units in the market in the event that the market
price of a unit of the Trust falls below 95% of the net asset value of the
Trust per unit. For the month of September, the Trust did not purchase any
units under this program.

    The Northwater Five-Year Market-Neutral Trust is a well-diversified fund
of market-neutral hedge funds. Units are listed on The Toronto Stock Exchange
under the symbol NYF.UN.





For further information:

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

Organization Profile

NORTHWATER FIVE-YEAR MARKET-NEUTRAL TRUST

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