Company: MYI
Filing Date: 2025-09-05
Form Type: 424B3
Source: 0001193125-25-196285
Chunk: 202

Company: BLACKROCK MUNIYIELD QUALITY FUND III, INC.
Filing Date: 2025-09-05
Form: 424B3
Chunk 202
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 As a result, a TOB transaction, in effect, creates exposure for MIY to the
entire return of the municipal bonds in the TOB

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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). 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.

MIY 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 MIY’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 MIY upon the occurrence of termination events, as defined in the TOB Trust agreements, including if TOB Floaters that are
tendered to the TOBs Liquidity Provider cannot be remarketed. Attempts to remarket tendered securities often failed during volatile market conditions in the past. Upon the occurrence of a termination event, a TOB Trust would be liquidated with the
proceeds applied first to any accrued fees owed to the trustee of the TOB Trust, the remarketing agent of the TOB Floaters and the TOBs Liquidity Provider. Upon certain termination events, the holders of the TOB Floaters would be paid before the TOB
Residual holders (i.e., MIY) whereas in other termination events, the TOB Floaters and TOB Residual holders would be paid pro rata. If the proceeds upon liquidation of a TOB Trust, net of payment of fees, are less than the aggregate amount the TOB
Residual and TOB Floater holders invested in the TOB Trust, MIY as a TOB Residual holder will realize a loss on its investment, particularly if the TOB Floater holders are paid before the TOB Residual holders. The risk of such a loss may be greater
during volatile market conditions when it may be difficult to sell the bonds held by a TOB Trust.

TOB Trusts