Northwater Market-Neutral Trust - Northwater Five-Year Market-Neutral Trust - (collectively, the "Trusts")

    TORONTO, Sept. 30 /CNW/ - Northwater Capital Management Inc. ("NCMI"),
the investment adviser to the Trusts, today announced that it has been advised
that one of the hedge funds in which the Trusts have invested has been the
victim of an alleged fraud. If the allegations are true, NCMI believes that it
will have a material negative impact on the net asset value of the Trusts. As
at August 31, 2008, Northwater Market-Neutral Trust had approximately 4.3% of
its net assets invested in, and Northwater Five-Year Market-Neutral Trust had
approximately 2.5% of its net assets exposed to, the affected hedge fund.
    NCMI has determined to write-down the value of such investments to zero
in determining the net asset values of the Trusts as at September 30, 2008.
Based upon the information it has received, NCMI is not clear what portion of
the Trusts' investment may be recovered, if any. A preliminary net asset value
for each of the Trusts will be available in the ordinary course when
preliminary net asset values have been obtained from the more than 30 other
hedge funds that make up the balance of the Trusts' portfolios.

    The Trusts are well-diversified funds of market-neutral hedge funds.
Units of the Trusts are listed on The Toronto Stock Exchange under the symbols

For further information:

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

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Northwater Market-Neutral Trust

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