Company: MYI
Filing Date: 2025-09-08
Form Type: DEF 14A
Source: 0001193125-25-198172
Chunk: 236

Company: BLACKROCK MUNIYIELD QUALITY FUND III, INC.
Filing Date: 2025-09-08
Form: DEF 14A
Chunk 236
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 value of MVF’s
assets must be at least 200% of the liquidation value of its outstanding preferred shares). In addition, MVF would not be permitted to declare any cash dividend or other distribution on its common shares unless, at the time of such declaration, the
value of MVF’s assets less liabilities other than borrowings is at least 200% of such liquidation value.

For tax purposes, MVF is
currently required to allocate tax-exempt interest income, net capital gain and other taxable income, if any, between its common shares and preferred shares outstanding in proportion to total dividends paid to
each class for the year in which or with respect to which tax-exempt income, the net capital gain or other taxable income is paid. If net capital gain or other taxable income is allocated to preferred shares,
instead of solely tax- exempt income, MVF will likely have to pay higher total dividends to preferred shareholders or make special payments to preferred shareholders to compensate them for the increased tax liability. This would reduce the total
amount of dividends paid to the common shareholders, but would increase the portion of the dividend that is tax- exempt. If the increase in dividend payments or the special payments to preferred shareholders are not entirely offset by a reduction in
the tax liability of, and an increase in the tax-exempt dividends received by, the common shareholders, the advantage of MVF’s leveraged structure to common shareholders will be reduced.

Tender Option Bond Transactions.MVF currently leverages its assets through the use of TOB Residuals, which are derivative interests in
MVF Municipal Bonds. The TOB Residuals in which MVF will invest pay interest or income that, in the opinion of counsel to the issuer of such TOB Residuals, is exempt from regular U.S. federal income tax. No independent investigation will be made to
confirm the tax-exempt status of the interest or income paid by TOB Residuals held by MVF. Although volatile, TOB Residuals typically offer the potential for yields exceeding the yields available on fixed rate
MVF Municipal Bonds with comparable credit quality.

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TOB Residuals represent beneficial interests in a TOB Trust formed for the purpose of
holding MVF Municipal Bonds contributed by one or more funds. A TOB Trust typically issues two classes of beneficial interests: TOB Floaters, which are sold to third party investors, and TOB Residuals, which are generally issued to MVF(s) that
transferred MV