Northwater Five-Year Market-Neutral Trust - Final net asset value - August 31, 2007

    TORONTO, Sept. 24 /CNW/ - The Northwater Five-Year Market-Neutral Trust
(the "Trust") is pleased to announce today that the net asset value ("NAV") of
the Trust per unit, as at August 31, 2007, is $21.98. The NAV reflects a
return of -4.19% for the month of August. The rolling 12-month return for the
Trust was 3.70%. The Trust also announced today that it has declared a regular
quarterly distribution to be payable to unitholders of record on September 30,
2007 that is $0.4375. This distribution is expected to be paid on October 15,
    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 August, 10 of the Fund's 37 managers posted positive returns. Two of the 12
market-neutral strategies included within the Fund's portfolio contributed
positively to the bottom line. The Fund's reinsurance managers, in aggregate,
were the largest positive contributors to the estimated return of the Trust
for the month.
    The decline in the investments of the Fund in the month of August was
consistent with the experience of many hedge fund investors and was due
largely to the dramatic market movements experienced throughout the month. The
losses experienced in August occurred in a wide variety of strategies in which
the Trust is invested. The main contributor was the Trust's exposure to
statistical arbitrage, which was confounded by the month's market movements.
    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 increased the Trust's
return as the interest rate environment was favourable to the Trust over the
    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 August, the Trust purchased 49,300 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

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