Company: MYI
Filing Date: 2025-07-15
Form Type: 425
Source: 0001193125-25-159406
Chunk: 28

Company: BLACKROCK MUNIYIELD QUALITY FUND III, INC.
Filing Date: 2025-07-15
Form: 425
Chunk 28
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 second, to raise cash to make the distributions, the Fund might need to sell additional portfolio securities, thereby possibly being forced to realize and recognize additional capital gains. It is impossible to predict what the amount of unrealized gains or losses would be in the Fund’s portfolio at the time that the Fund is required to liquidate portfolio securities (and hence the amount of capital gains or losses that would be realized and recognized). As of July 31, 2024, the end of the Fund’s most recently completed fiscal year, the Fund had net unrealized capital appreciation of approximately $13.1 million. As of July 31, 2024, the Fund had non-expiringcapital loss carryforwards of approximately $65.4 million. In addition, some distributed gains may be realized on securities held for one year or less, which would generate income taxable to the stockholders at ordinary income rates. This could adversely affect the Fund’s after-taxperformance. C. Tax Consequences of Purchases to Stockholders. The Fund’s purchase of tendered Shares pursuant to the Offer will have tax consequences for tendering stockholders. See Section 14, “Certain U.S. Federal Income Tax Consequences.” D. Effect on Remaining Stockholders, Higher Expense Ratio and Less Investment Flexibility. The purchase of Shares by the Fund pursuant to the Offer will have the effect of increasing the proportionate interest in the Fund of non-tenderingstockholders. All stockholders remaining after the Offer will be subject to any increased risks associated with the reduction in the Fund’s aggregate assets resulting from payment for the tendered Shares, such as greater volatility due to decreased diversification and proportionately higher expenses due to a decreased asset base. The reduced net assets of the Fund as a result of the Offer may result in less investment flexibility for the Fund and may have an adverse effect on the Fund’s investment performance. E. Effect on Leverage. The Fund currently utilizes financial leverage for investment purposes through the issuance of Variable Rate Muni Term Preferred Shares and through the use of TOB Trusts. As of June 30, 2025, this leverage represented approximately 40% of the Fund’s Managed Assets (approximately 67% of the Fund’s net assets). The Fund’s net assets attributable to Shares are the Fund’s Managed Assets minus the value of the Fund’s assets attributable to money borrowed for investment purposes. The Fund intends to maintain approximately the same level of leverage, as a percentage of Managed Assets, following the Offer. Based on the 9