Company: MYI
Filing Date: 2025-08-08
Form Type: PRE 14A
Source: 0001193125-25-176952
Chunk: 186

Company: BLACKROCK MUNIYIELD QUALITY FUND III, INC.
Filing Date: 2025-08-08
Form: PRE 14A
Chunk 186
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 a proportionate amount of the municipal bonds owned by the TOB Trust.

Other registered investment companies advised by the Investment Advisor or its affiliates (“”) may
contribute municipal bonds to a TOB Trust into which MVT has contributed municipal bonds. If multiple BlackRock-Advised Funds participate in the same TOB Trust, the economic rights and obligations under the TOB Residual will generally be shared
among the funds ratably in proportion to their participation in the TOB Trust.

The municipal bonds transferred to a TOB Trust typically
are high grade municipal bonds. In certain cases, when municipal bonds transferred are lower grade municipal bonds, the TOB Trust transaction includes a credit enhancement feature that provides for the timely payment of principal and interest on the
bonds to the TOB Trust by a credit enhancement provider. The TOB Trust would be responsible for the payment of the credit enhancement fee and MVT, as a TOB Residual holder, would be responsible for reimbursement of any payments of principal and
interest made by the credit enhancement provider.

94

The TOB Residuals held by MVT generally provide MVT with the right to cause the holders of a
proportional share of the TOB Floaters to tender their notes to the TOB Trust at par plus accrued interest. Thereafter, MVT may withdraw a corresponding share of the municipal bonds from the TOB Trust. As a result, a tender option bond transaction,
in effect, creates exposure for MVT to the entire return of the municipal bonds in the TOB Trust, with a net cash investment by MVT that is less than the value of the municipal bonds in the TOB Trust. This multiplies the positive or negative impact
of the municipal bonds’ return within MVT (thereby creating leverage). The leverage within a TOB Trust depends on the value of the municipal bonds deposited in the TOB Trust relative to the value of the TOB Floaters it issues.

MVT may invest in highly leveraged TOB Residuals. A TOB Residual generally is considered highly leveraged if the principal amount of the TOB
Floaters issued by the related TOB Trust exceeds 75% of the principal amount of the municipal bonds owned by the TOB Trust.

The leverage
attributable to MVT’s use of TOB Residuals may be “called away” on relatively short notice and therefore may be less permanent than more traditional forms of leverage. The TOB Trust may be collapsed without the consent of MVT upon