Company: MYI
Filing Date: 2025-07-16
Form Type: N-14 8C
Source: 0001193125-25-159991
Chunk: 205

Company: BLACKROCK MUNIYIELD QUALITY FUND III, INC.
Filing Date: 2025-07-16
Form: N-14 8C
Chunk 205
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 tender their position at par (plus accrued interest). MIY, as a holder of TOB Residuals, is paid the residual cash flow from the TOB Trust after payment of TOB Trust expenses and interest on the TOB Floaters. MIY contributes municipal
bonds to the TOB Trust and is paid the cash received by the TOB Trust from the sale of the TOB Floaters, less certain transaction costs, and typically will invest the cash to purchase additional municipal bonds or other investments permitted by its
investment policies. If MIY ever purchases all or a portion of the TOB Floaters sold by the TOB Trust, it may surrender those TOB Floaters together with a proportionate amount of TOB Residuals to the TOB Trust in exchange for a proportionate amount
of the municipal bonds owned by the TOB Trust.

Other BlackRock-Advised Funds may contribute municipal bonds to a TOB Trust into which MIY
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 MIY, as a TOB Residual holder, would be responsible for reimbursement of any payments of principal and interest made by the credit enhancement provider.

The TOB Residuals held by MIY generally provide MIY 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, MIY may withdraw a corresponding share of the municipal bonds from the TOB Trust. As a result, a TOB transaction, in effect, creates exposure for MIY to the entire return
of the municipal bonds in the TOB Trust, with a net cash investment by MIY 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 MIY (thereby
creating leverage).