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

    TORONTO, Oct. 7 /CNW/ - The Northwater Five-Year Market-Neutral Trust
(the "Trust") announced today that the projected net asset value of the Trust
per unit, as at September 30, 2008, is $17.08. The net asset value per unit is
net of the quarterly cash distribution of $0.4375 per unit previously declared
to unitholders of record on September 30, 2008. The Trust will firm up its net
asset value per unit as reports from administrators and managers are
finalized. The final net asset value per unit will be provided to investors
once it is available.
    The return of the Trust for the month of September is estimated at
-9.73%. The rolling 12-month return for the Trust is approximately -13.44%.
    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'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
    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: Stephen Foote or Jim Sinclair at Northwater
Capital Management Inc. at (416) 360-5435

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