Press Release
March 12, 2001

ROLLOVER OF MRF 1998 III LIMITED PARTNERSHIP

Middlefield Mutual Funds Limited ("MMF") is pleased to announce that, in connection with the dissolution of MRF 1998 III Limited Partnership effective March 9, 2001 all of the assets of the Partnership were transferred to Middlefield Mutual Funds Limited, an open ended mutual fund, in exchange for the equivalent value of shares in MMF - Growth Class. For the purposes of the exchange, the net asset value of the Partnership was $869.20 per unit. As a result of the rollover, the total net assets of MMF - Growth Class increased from $70,600,000 to $87,300,000.

The transfer is a tax free exchange which means that no disposition occurs and therefore no capital gains tax is payable as a result of the rollover. The capital gains tax liability which would arise upon disposition can be deferred by retaining the shares of the mutual fund rather than redeeming them. In the event of redemption, the capital gains will be included in the shareholder's tax return for that year when the shares are redeemed. Investors have the opportunity to switch into other classes of mutual funds and still be able to defer capital gains taxes until they actually redeem their mutual fund shares for cash. To provide investors with optimal flexibility in maintaining a diversified portfolio, in addition to the Growth Class, other funds currently offered are the Income Plus Class, a balanced high income fund, and the Equity Index Class, a large cap Canadian equity fund. All the funds that are offered under this multi-class structure are fully eligible as Canadian content in RRSP's and other registered plans.

New MMF - Growth Class shareholders can determine their holdings by multiplying the number of units they held in the Partnership by 145.097. There are no fees charged on the transfer of units into MMF, nor on any redemption of the transferred assets.

For further information please contact the undersigned:

Nancy Tham
(416) 362-0714, ext. 277

March 12, 2001

SEMI-ANNUAL REPORT 1999
For the period ending June 30, 1999

MRF 1998 III Limited Partnership (the "Partnership") is pleased to present its unaudited financial statements for the six months ended June 30, 1999, the details of which are attached.

The first six months of 1999 have seen a dramatic improvement in the prospects of the Canadian oil and gas sector. Over the period the TSE Oil & Gas Producers Index was up 29%. This strong performance is attributable to an increase in world crude oil prices combined with continued strong natural gas prices. The Canadian oil and gas industry is now enjoying the benefits of the best market conditions for crude oil and natural gas in over a decade.

While the sector's performance has been good, we believe we are in the initial phase of a bull market for oil and gas producers which we expect to last for the next year or two. Considerable upside potential remains both from improved profitability due to continued strong commodity prices, as well as from the expansion of cash flow multiples which tends to occur in the latter stages of the cycle.

The Partnership's portfolio has had excellent performance over the first half of 1999. The Partnership's net asset value was $996 per unit as at August 24, 1999, up 16.2% since December 31, 1998. Subscriptions receivable from Limited Partners due in April and September prevented the Partnership from being fully invested, resulting in the Partnership's performance being somewhat below that of the Producers Index. Since June 30, 1999 the Partnership has made an investment in Elk Point Resources Inc. and an additional investment in Berkley Petroleum Corp.

Given the very favorable environment for the Canadian oil and gas market, Middlefield anticipates offering a new flow-through fund for 1999 tax deductions in the early fall.

We are well underway to completing our Year 2000 action plan and will continue our efforts in this regard throughout the balance of 1999. We will ensure that contingency plans are in place should any significant failure or delay occur as a result of the Year 2000 Issue.

For further information, contact Nancy Tham or the undersigned:
Mr. J. Dennis Dunlop
Senior Vice President

UPDATE
March 31, 2000

Our investment strategy for MRF 1998 III Limited Partnership has focused on larger capitalization companies. We believe this strategy should produce superior performance when cash flow multiples expand, as it is usually the larger capitalization companies which enjoy the first wave of expansion prior to more junior companies. The price of crude oil is close to its high for the past decade and natural gas prices are strong, yet the stock market could not seem to care less. Market watchers call this phenomenon a “disconnect”, by which they mean a decoupling of two things that are – or should be – closely linked. Unless the market knows something that no one else does, there are many stocks available at bargain prices in the oil and gas sector.

Real value cannot be ignored forever. Not only is real value in the form of cash flow being created in oil and gas, but also the price for this value is now cheaper than it has been for a long time. Energy stocks are discounting a crude oil price of less than U.S. $20 a barrel average for the full year 2000 which seems a highly unlikely scenario viewed at this point in time. As well, major gains in the U.S. market are being made by the Canadian natural gas industry. Natural gas exports are growing at over 10% per annum with export prices rising by over 15% as Canadian and U.S. wellhead prices continue to converge. One of our largest stock positions in this Partnership is Burlington Resources Inc. (BRX : TSE), which is a major gas producer and is well positioned to participate in this growth. Its stock price has risen over 20% during the past few weeks and we expect substantial further appreciation.

There does not seem to be any compelling reason why stocks of most oil and gas companies are trading at multiples to cash flow substantially below the historical average for the industry. This leads us to conclude that the oil and gas group is significantly undervalued and if our view is correct, the sector should see strong equity price appreciation over the next 12 to 18 months.

It should be noted that Middlefield actively manages the portfolio to mitigate risk to the Partnership. For example, in anticipation of unfavourable developments in Merit Energy Ltd., Middlefield sold the stock on behalf of MRF 1998 III. The resultant gain of approximately $600,000 on these sales offset to a significant degree the decline in the value of the Partnership’s investment in Merit.