Northwater Five-Year Market-Neutral Trust Announces $60 Million Initial Public Offering

Date: Wednesday, June 30, 2004

Northwater Fund Management Inc., manager of Northwater Five-Year Market-Neutral Trust (the "Trust"), is pleased to announce that on June 30, 2004 the Trust completed its initial public offering of 2,400,000 trust units at a price of $25 per unit for gross proceeds of $60 million. Units of the Trust are listed on The Toronto Stock Exchange and began trading today under the symbol "NYF.UN". The Trust's investment objectives are: (i) to pay to unitholders quarterly tax-efficient cash distributions of $0.4375 per unit ($1.75 per annum to yield 7% on the subscription price of $25.00 per unit); (ii) to ensure that the performance of the Trust has a low correlation with major equity and fixed-income markets over the life of the Trust; (iii) to achieve a low volatility, which is expected to be similar to that of a mid-term bond portfolio and less than one-half that of major equity markets; and (iv) to return to unitholders at least the original subscription price of the Units of $25.00 per Unit on or about June 30, 2009. To provide the Trust with the ability to meet its investment objectives, the Trust will provide unitholders with exposure to the performance of a diversified portfolio of market-neutral hedge funds (the "Hedge Fund Portfolio") having a low correlation to major fixed-income and equity markets. The Hedge Fund Portfolio will be held by Northwater Five-Year Market-Neutral Fund Limited. The return to unitholders will be dependent upon the return of the Hedge Fund Portfolio by virtue of the Forward Agreement. Northwater Capital Management Inc. will provide investment advisory services with respect to the Hedge Fund Portfolio. The offering was made through a syndicate of agents co-led by RBC Dominion Securities Inc. and CIBC World Markets Inc. and including BMO Nesbitt Burns Inc., National Bank Financial Inc., Canaccord Capital Corporation, Desjardins Securities Inc., Dundee Securities Corporation, First Associates Investments Inc., HSBC Securities (Canada) Inc. and Raymond James Ltd. The Trust has granted to the Agents an option exercisable for a period of 30 days from the closing of the initial public offering to purchase up to 360,000 units of the Trust on the same terms as conditions. Northwater Fund Management Inc. and its sister company, Northwater Capital Management Inc. ("Northwater") are wholly-owned subsidiaries of Northwater Capital Inc. Northwater, the advisor to the Trust, is an independent, Canadian-owned investment management company. Northwater was established in 1989 and provides investment advisory and management services to a wide range of clients including pension funds, financial institutions, corporations and individuals, and as of May 31, 2004 has approximately $10.5 billion under management, including $5.0 billion in market-neutral fund of hedge fund strategies. Northwater specializes in managing sophisticated investment strategies, including market-neutral hedge fund portfolios, synthetic index strategies and enhanced indexing, a strategy that combines the benefits and attributes of both of these approaches. More information on Northwater can be found at www.northwatercapital.com. For further information: Shirley Hope or Mohamed Khaki at Northwater Capital Management Inc. at (416) 360-5435