# EDGAR Filing Document

**Accession Number:** 0000835948
**File Stem:** 0001193125-25-176952
**Filing Date:** 2025-8
**Character Count:** 1007154
**Document Hash:** b0258fc33995d12845fbd0c9e41b6325
**Contains OCR:** False
**Source Format:** 

## Filing Content

## Filing Summary
**0001193125-25-176952.hdr.sgml**: 20250808

**ACCESSION NUMBER**: 0001193125-25-176952

**CONFORMED SUBMISSION TYPE**: PRE 14A

**PUBLIC DOCUMENT COUNT**: 6

**CONFORMED PERIOD OF REPORT**: 20251015

**FILED AS OF DATE**: 20250808

**DATE AS OF CHANGE**: 20250808

**FILER**: 

**COMPANY DATA:**
- **COMPANY CONFORMED NAME:** BLACKROCK MUNIVEST FUND II, INC.
- **CENTRAL INDEX KEY:** 0000897269

**ORGANIZATION NAME:**
- **EIN:** 223220659
- **STATE OF INCORPORATION:** MD
- **FISCAL YEAR END:** 1031

**FILING VALUES:**
- **FORM TYPE:** PRE 14A
- **SEC ACT:** 1934 Act
- **SEC FILE NUMBER:** 811-07478
- **FILM NUMBER:** 251198169

**BUSINESS ADDRESS:**
- **STREET 1:** 100 BELLEVUE PARKWAY
- **CITY:** WILMINGTON
- **STATE:** DE
- **ZIP:** 19809
- **BUSINESS PHONE:** 800-441-7762

**MAIL ADDRESS:**
- **STREET 1:** 100 BELLEVUE PARKWAY
- **CITY:** WILMINGTON
- **STATE:** DE
- **ZIP:** 19809

**FORMER COMPANY:**
- **FORMER CONFORMED NAME:** BLACKROCK MUNIVEST FUND II INC
- **DATE OF NAME CHANGE:** 20061026

**FORMER COMPANY:**
- **FORMER CONFORMED NAME:** MUNIVEST FUND II INC
- **DATE OF NAME CHANGE:** 19930714
**FILER**: 

**COMPANY DATA:**
- **COMPANY CONFORMED NAME:** BLACKROCK MUNIYIELD MICHIGAN QUALITY FUND, INC.
- **CENTRAL INDEX KEY:** 0000890393

**ORGANIZATION NAME:**
- **EIN:** 223196060
- **STATE OF INCORPORATION:** NJ
- **FISCAL YEAR END:** 0930

**FILING VALUES:**
- **FORM TYPE:** PRE 14A
- **SEC ACT:** 1934 Act
- **SEC FILE NUMBER:** 811-07080
- **FILM NUMBER:** 251198172

**BUSINESS ADDRESS:**
- **STREET 1:** 100 BELLEVUE PARKWAY
- **CITY:** WILMINGTON
- **STATE:** DE
- **ZIP:** 19809-3700
- **BUSINESS PHONE:** (800) 882-0052

**MAIL ADDRESS:**
- **STREET 1:** 100 BELLEVUE PARKWAY
- **CITY:** WILMINGTON
- **STATE:** DE
- **ZIP:** 19809-3700

**FORMER COMPANY:**
- **FORMER CONFORMED NAME:** BLACKROCK MUNIYIELD MICHIGAN INSURED FUND, INC.
- **DATE OF NAME CHANGE:** 20070611

**FORMER COMPANY:**
- **FORMER CONFORMED NAME:** MUNIYIELD MICHIGAN INSURED FUND INC
- **DATE OF NAME CHANGE:** 20020620

**FORMER COMPANY:**
- **FORMER CONFORMED NAME:** MUNIYIELD MICHIGAN INSURED FUND II INC
- **DATE OF NAME CHANGE:** 20020620
**FILER**: 

**COMPANY DATA:**
- **COMPANY CONFORMED NAME:** BLACKROCK MUNIVEST FUND, INC.
- **CENTRAL INDEX KEY:** 0000835948

**ORGANIZATION NAME:**
- **EIN:** 222919170
- **STATE OF INCORPORATION:** MD
- **FISCAL YEAR END:** 0831

**FILING VALUES:**
- **FORM TYPE:** PRE 14A
- **SEC ACT:** 1934 Act
- **SEC FILE NUMBER:** 811-05611
- **FILM NUMBER:** 251198171

**BUSINESS ADDRESS:**
- **STREET 1:** 100 BELLEVUE PARKWAY
- **CITY:** WILMINGTON
- **STATE:** DE
- **ZIP:** 19809
- **BUSINESS PHONE:** 800-441-7762

**MAIL ADDRESS:**
- **STREET 1:** 100 BELLEVUE PARKWAY
- **CITY:** WILMINGTON
- **STATE:** DE
- **ZIP:** 19809

**FORMER COMPANY:**
- **FORMER CONFORMED NAME:** BLACKROCK MUNIVEST FUND INC
- **DATE OF NAME CHANGE:** 20061026

**FORMER COMPANY:**
- **FORMER CONFORMED NAME:** MUNIVEST FUND INC
- **DATE OF NAME CHANGE:** 19920703

**FORMER COMPANY:**
- **FORMER CONFORMED NAME:** MUNIPLUS FUND INC
- **DATE OF NAME CHANGE:** 19880913
**FILER**: 

**COMPANY DATA:**
- **COMPANY CONFORMED NAME:** BLACKROCK MUNIYIELD QUALITY FUND III, INC.
- **CENTRAL INDEX KEY:** 0000883412

**ORGANIZATION NAME:**
- **EIN:** 223165131
- **FISCAL YEAR END:** 1031

**FILING VALUES:**
- **FORM TYPE:** PRE 14A
- **SEC ACT:** 1934 Act
- **SEC FILE NUMBER:** 811-06540
- **FILM NUMBER:** 251198170

**BUSINESS ADDRESS:**
- **STREET 1:** 100 BELLEVUE PARKWAY
- **CITY:** WILMINGTON
- **STATE:** DE
- **ZIP:** 19809
- **BUSINESS PHONE:** 800-441-7762

**MAIL ADDRESS:**
- **STREET 1:** 100 BELLEVUE PARKWAY
- **CITY:** WILMINGTON
- **STATE:** DE
- **ZIP:** 19809

**FORMER COMPANY:**
- **FORMER CONFORMED NAME:** BLACKROCK MUNIYIELD QUALITY FUND III, INC
- **DATE OF NAME CHANGE:** 20101109

**FORMER COMPANY:**
- **FORMER CONFORMED NAME:** BLACKROCK MUNIYIELD INSURED FUND, INC
- **DATE OF NAME CHANGE:** 20070612

**FORMER COMPANY:**
- **FORMER CONFORMED NAME:** MUNIYIELD INSURED FUND INC
- **DATE OF NAME CHANGE:** 19920717

##### [**Table of Contents**](#toc)
**UNITED STATES** 

**SECURITIES AND EXCHANGE COMMISSION** 

**Washington, D.C. 20549** 

**SCHEDULE 14A INFORMATION** 

**Proxy Statement Pursuant to Section 14(a) of the** 

**Securities Exchange Act of 1934** 

Filed by the Registrant ☒

Filed by a Party other than the Registrant ☐

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|:---|:---|
|  Check the appropriate box: |  |
| ☒ Preliminary Proxy Statement | ☐ Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) |
| ☐ Definitive Proxy Statement |  |
| ☐ Definitive Additional Materials |  |
| ☐ Soliciting Material Pursuant to § 240.14a-12 |  |

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**BLACKROCK MUNIVEST FUND II, INC.** 

**BLACKROCK MUNIYIELD MICHIGAN QUALITY FUND, INC.** 

**BLACKROCK MUNIVEST FUND, INC.** 

**BLACKROCK MUNIYIELD QUALITY FUND III, INC.** 

(Name of Registrant as Specified In Its Charter)

(Name of Person(s) Filing Proxy Statement, if Other than the Registrant)

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| |
|:---|
|  Payment of Filing Fee (Check the appropriate box): |
|  ☒ No fee required. |
|  ☐ Fee paid previously with preliminary materials. |
|  ☐ Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a-6(i)(1) and 0-11. |

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##### [**Table of Contents**](#toc)
**BLACKROCK MUNIVEST FUND II, INC.** 

**BLACKROCK MUNIYIELD MICHIGAN QUALITY FUND, INC.** 

**BLACKROCK MUNIVEST FUND, INC.** 

**BLACKROCK MUNIYIELD QUALITY FUND III, INC.** 

**100 Bellevue Parkway** 

**Wilmington, Delaware 19809** 

**(800) 882-0052** 

August [●], 2025

Dear Preferred Shareholder:

You are cordially invited to attend a joint special shareholder meeting (the "Special Meeting") of BlackRock MuniVest Fund II, Inc. ("MVT"), BlackRock MuniYield Michigan Quality Fund, Inc. ("MIY"), BlackRock MuniVest Fund, Inc. ("MVF") and BlackRock MuniYield Quality Fund III, Inc. ("MYI" or the "Acquiring Fund" and collectively with MVT, MIY and MVF, the "Funds," and each, a "Fund"), to be held on October 15, 2025 at [●] (Eastern Time). The Special Meeting will be held in a virtual meeting format only. Shareholders will not have to travel to attend the Special Meeting, but will be able to view the Special Meeting live, have a meaningful opportunity to participate, including the ability to ask questions of management, and cast their votes by accessing a web link. Before the Special Meeting, I would like to provide you with additional background information and ask for your vote on important proposals affecting the Funds.

*Preferred Shareholders of MVT*: You and the common shareholders of MVT are being asked to vote as a single class on a proposal to approve an Agreement and Plan of Reorganization between MVT and the Acquiring Fund (the "MVT Reorganization Agreement") and the transactions contemplated therein, including the termination of MVT's registration under the Investment Company Act of 1940, as amended (the "1940 Act"), and the dissolution of MVT under Maryland law (the "MVT Reorganization"). The Acquiring Fund has a similar investment objective and similar investment strategies, policies and restrictions as MVT, although there are some differences. You are also being asked to vote as a separate class on a proposal to approve the MVT Reorganization Agreement and the MVT Reorganization.

*Preferred Shareholders of MIY*: You and the common shareholders of MIY are being asked to vote as a single class on a proposal to approve an Agreement and Plan of Reorganization between MIY and the Acquiring Fund (the "MIY Reorganization Agreement") and the transactions contemplated therein, including the termination of MIY's registration under the 1940 Act and the dissolution of MIY under Maryland law (the "MIY Reorganization"). The Acquiring Fund has a similar investment objective and similar investment strategies, policies and restrictions as MIY, although there are some differences. You are also being asked to vote as a separate class on a proposal to approve the MIY Reorganization Agreement and the MIY Reorganization.

*Preferred Shareholders of MVF*: You and the common shareholders of MVF are being asked to vote as a single class on a proposal to approve an Agreement and Plan of Reorganization between MVF and the Acquiring Fund (the "MVF Reorganization Agreement" and collectively with the MVT Reorganization Agreement and the MIY Reorganization Agreement, the "Reorganization Agreements") and the transactions contemplated therein, including the termination of MVF's registration under the 1940 Act and the dissolution of MVF under Maryland law (the "MVF Reorganization"). The Acquiring Fund has a similar investment objective and similar investment strategies, policies and restrictions as MVF, although there are some differences. You are also being asked to vote as a separate class on a proposal to approve the MVF Reorganization Agreement and the MVF Reorganization.

*Preferred Shareholders of the Acquiring Fund*: You and the common shareholders of the Acquiring Fund are being asked to vote as a single class on a proposal to approve the issuance of additional common shares of the Acquiring Fund in connection with the MVT Reorganization, the MIY Reorganization and the MVF Reorganization (each, a "Reorganization"). You are also being asked to vote as a separate class on a proposal to approve each Reorganization Agreement and the transactions contemplated therein.

The enclosed Joint Proxy Statement/Prospectus is only being delivered to the Funds' preferred shareholders. The common shareholders of each Fund are also being asked to attend the Special Meeting and to vote with respect to the

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##### [**Table of Contents**](#toc)
proposals described above that require the vote of the common shareholders and preferred shareholders as a single class. Each Fund is delivering to its common shareholders a separate proxy statement with respect to the proposals described above.

The Board of Directors of each Fund believes that the proposal that the preferred shareholders of its Fund are being asked to vote upon is in the best interests of its respective Fund and its shareholders and unanimously recommends that you vote "FOR" such proposal.

**Your vote is important**. Attendance at the Special Meeting will be limited to each Fund's shareholders as of [●], the record date for the Special Meeting.

If your shares in a Fund are registered in your name, you may attend and participate in the Special Meeting at [●] by entering the control number found in the shaded box on your proxy card on the date and time of the Special Meeting. You may vote during the Special Meeting by following the instructions that will be available on the Special Meeting website during the Special Meeting.

If you are a beneficial shareholder of a Fund (that is if you hold your shares of a Fund through a bank, broker, financial intermediary or other nominee) and want to attend the Special Meeting you must register in advance of the Special Meeting. To register, you must submit proof of your proxy power (legal proxy), which you can obtain from your financial intermediary or other nominee, reflecting your Fund holdings along with your name and email address to Georgeson LLC, each Fund's tabulator. You may email an image of your legal proxy to <u>shareholdermeetings@computershare.com</u>. Requests for registration must be received no later than 5:00 p.m. (Eastern Time) three business days prior to the Special Meeting date. You will receive a confirmation email from Georgeson LLC of your registration and a control number and security code that will allow you to vote at the Special Meeting.

Even if you plan to attend the Special Meeting, please promptly follow the enclosed instructions to submit voting instructions by telephone or via the Internet. Alternatively, you may submit voting instructions by signing and dating each proxy card or voting instruction form you receive, and if received by mail, returning it in the accompanying postage-paid return envelope.

We encourage you to carefully review the enclosed materials, which explain the proposals in more detail. As a shareholder, your vote is important, and we hope that you will respond today to ensure that your shares will be represented at the meeting. You may vote using one of the methods below by following the instructions on your proxy card or voting instruction form(s):

● By touch-tone phone;

● By internet;

● By signing, dating and returning the enclosed proxy card or voting instruction form(s) in the postage-paid
envelope; or

● By participating at the Special Meeting as described above.

If you do not vote using one of the methods described above, you may be called by Georgeson LLC, the Funds' proxy solicitor, to vote your shares.

If you have any questions about the proposals to be voted on or the virtual Special Meeting, please call Georgeson LLC, the firm assisting us in the solicitation of proxies, toll free at 1-888-686-6309.

As always, we appreciate your support.

Sincerely,

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##### [**Table of Contents**](#toc)
JOHN M. PERLOWSKI

President and Chief Executive Officer of the Funds

**Please vote <u>now</u>. Your vote is important.** 

**To avoid the wasteful and unnecessary expense of further solicitation(s), we urge you to indicate your voting instructions on the enclosed proxy card, date and sign it and return it promptly in the postage-paid envelope provided, or record your voting instructions by telephone or via the internet, no matter how large or small your holdings may be. If you submit a properly executed proxy but do not indicate how you wish your common shares to be voted, your common shares will be voted "FOR" the proposal. If your common shares are held through a broker, you must provide voting instructions to your broker about how to vote your common shares in order for your broker to vote your common shares as you instruct at the Special Meeting.** 

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##### [**Table of Contents**](#toc)
**[**●**]** 

**IMPORTANT NOTICE** 

**TO COMMON SHAREHOLDERS OFBLACKROCK MUNIVEST FUND II, INC.** 

**BLACKROCK MUNIYIELD MICHIGAN QUALITY FUND, INC.** 

**BLACKROCK MUNIVEST FUND, INC.** 

**BLACKROCK MUNIYIELD QUALITY FUND III, INC.** 

**QUESTIONS & ANSWERS** 

Although we urge you to read the entire Proxy Statement, we have provided for your convenience a brief overview of some of the important questions concerning the joint special shareholder meeting (the "Special Meeting") of BlackRock MuniVest Fund II, Inc. ("MVT"), BlackRock MuniYield Michigan Quality Fund, Inc. ("MIY") and BlackRock MuniVest Fund, Inc. ("MVF") (collectively, the "Target Funds") and BlackRock MuniYield Quality Fund III, Inc. ("MYI" or the "Acquiring Fund" and collectively with MVT, MIY and MVF, the "Funds," and each, a "Fund") and the proposals to be voted on. It is expected that the effective dates (collectively, the "Closing Date") of the Reorganizations will be sometime during the fourth quarter of 2025, but they may be at a different time as described in the Proxy Statement.

The enclosed Proxy Statement is being sent only to the holders of Variable Rate Demand Preferred Shares ("VRDP Shares" and the holders thereof, "VRDP Holders,") of the Acquiring Fund and MIY, and the holders of Variable Rate Muni Term Preferred Shares ("VMTP Shares" and the holders thereof, "VMTP Holders") of MVT and MVF. Each Fund is separately soliciting the votes of its holders of common shares (together with VRDP Shares and VMTP Shares of each Fund, the "Shares") through a separate proxy statement.

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|:---|:---|
| **Q:** | **Why is a shareholder meeting being held?**  |

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A: *Preferred Shareholders of BlackRock MuniVest Fund II, Inc. (NYSE Ticker: MVT)*: You and the common shareholders are being asked to vote as a single class on a proposal to approve an Agreement and Plan of Reorganization between MVT and the Acquiring Fund (the "MVT Reorganization Agreement") and the transactions contemplated therein, including (i) the acquisition by the Acquiring Fund of substantially all of MVT's assets and the assumption by the Acquiring Fund of substantially all of MVT's liabilities in exchange solely for newly issued common shares and VRDP Shares of the Acquiring Fund, which will be distributed to the common shareholders (although cash may be distributed in lieu of fractional common shares) and VMTP Holders, respectively, of MVT, and which shall constitute the sole consideration to be distributed or paid to the common shareholders (although cash may be distributed in lieu of fractional common shares) and the VMTP Holders of MVT in respect of their common shares and VMTP Shares of MVT, respectively, and (ii) the termination by MVT of its registration under the Investment Company Act of 1940, as amended (the "1940 Act"), and the liquidation, dissolution and termination of MVT in accordance with its charter and Maryland law (the "MVT Reorganization").

You are also being asked to vote as a separate class on a proposal to approve the MVT Reorganization Agreement and the MVT Reorganization.

*Preferred Shareholders of BlackRock MuniYield Michigan Quality Fund, Inc. (NYSE Ticker: MIY)*: You and the common shareholders of MIY are being asked to vote as a single class on a proposal to approve an Agreement and Plan of Reorganization between MIY and the Acquiring Fund (the "MIY Reorganization Agreement") and the transactions contemplated therein, including (i) the acquisition by the Acquiring Fund of substantially all of MIY's assets and the assumption by the Acquiring Fund of substantially all of MIY's liabilities in exchange solely for newly issued common shares and VRDP Shares of the Acquiring Fund, which will be distributed to the common shareholders (although cash may be distributed in lieu of fractional common shares) and VRDP Holders, respectively, of MIY, and which shall constitute the sole consideration to be distributed or paid to the common shareholders (although cash may be distributed in lieu of fractional common shares) and the VRDP Holders of MIY in respect of their common shares and VRDP Shares of MIY, respectively, and (ii) the termination by MIY of its registration under the 1940 Act, and the liquidation, dissolution and termination of MIY in accordance with its charter and Maryland law (the "MIY Reorganization").

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##### [**Table of Contents**](#toc)
You are also being asked to vote as a separate class on a proposal to approve the MIY Reorganization Agreement and the MIY Reorganization.

*Preferred Shareholders of BlackRock MuniVest Fund, Inc. (NYSE Ticker: MVF)*: You and the common shareholders are being asked to vote as a single class on a proposal to approve an Agreement and Plan of Reorganization between MVF and the Acquiring Fund (the "MVF Reorganization Agreement" and collectively with the MVT Reorganization Agreement and the MIY Reorganization Agreement, the "Reorganization Agreements") and the transactions contemplated therein, including (i) the acquisition by the Acquiring Fund of substantially all of MVF's assets and the assumption by the Acquiring Fund of substantially all of MVF's liabilities in exchange solely for newly issued common shares and VRDP Shares of the Acquiring Fund, which will be distributed to the common shareholders (although cash may be distributed in lieu of fractional common shares) and VMTP Holders, respectively, of MVF, and which shall constitute the sole consideration to be distributed or paid to the common shareholders (although cash may be distributed in lieu of fractional common shares) and the VMTP Holders of MVF in respect of their common shares and VMTP Shares of MVF, respectively, and (ii) the termination by MVF of its registration under the 1940 Act, and the liquidation, dissolution and termination of MVF in accordance with its charter and Maryland law (the "MVF Reorganization" and collectively with the MVT Reorganization and the MIY Reorganization, the "Reorganizations").

You are also being asked to vote as a separate class on a proposal to approve the MVF Reorganization Agreement and the MVF Reorganization.

*Preferred Shareholders of BlackRock MuniYield Quality Fund III, Inc. (NYSE Ticker: MYI)*: You and the common shareholders are being asked to vote as a single class on a proposal to approve the issuance of additional common shares of the Acquiring Fund in connection with each Reorganization Agreement (each, an "Issuance" and collectively, the "Issuances").

You are also being asked to vote as a separate class on a proposal to approve each Reorganization Agreement and the transactions contemplated therein, including amendments to Articles Supplementary of Variable Rate Demand Preferred Shares of the Acquiring Fund ("MYI Articles Supplementary") in connection with the issuance of additional Acquiring Fund VRDP Shares .

The term "Combined Fund" refers to the Acquiring Fund as the surviving Fund after the consummation of each of the Reorganizations.

Each Reorganization is not contingent upon the approval of any other Reorganization. If a Reorganization is not consummated, the Fund for which such Reorganization(s) was not consummated would continue to exist and operate on a standalone basis.

**Q: Why has each Fund's Board recommended these proposals?** 

A: The Board of Directors (each, a "Board" and each member thereof, a "Board Member") of each Fund has determined that its Reorganization(s) is in the best interests of its Fund and that the interests of existing common shareholders and preferred shareholders of its Fund will not be diluted with respect to net asset value ("NAV") and liquidation preference, respectively, as a result of the Reorganization. The Reorganizations seek to achieve certain economies of scale and other operational efficiencies by combining four funds that have similar investment objectives and similar investment strategies, policies and restrictions and are managed by the same investment adviser, BlackRock Advisors, LLC (the "Investment Advisor").

In light of these similarities, the Reorganizations are intended to reduce fund redundancies and create a single, larger fund that may benefit from anticipated operating efficiencies and economies of scale. The Reorganizations are intended to result in the following potential benefits to common shareholders:

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##### [**Table of Contents**](#toc)
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) lower net total expenses (excluding interest expense) per Common Share for common shareholders of each Fund
(as common shareholders of the Combined Fund following the Reorganizations) due to economies of scale resulting from the larger size of the Combined Fund;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) improved net earnings yield on NAV for common shareholders of MVT and MIY;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) improved secondary market trading of the common shares of the Combined Fund; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) operating and administrative efficiencies for the Combined Fund, including the potential for the following:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) greater investment flexibility and investment options;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) greater diversification of portfolio investments;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) the ability to trade portfolio securities in larger positions and more favorable transaction terms;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) additional sources of leverage or more competitive leverage terms and more favorable transaction terms;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) benefits from having fewer closed-end funds offering similar
products in the market, including an increased focus by investors on the remaining funds in the market (including the Combined Fund) and additional research coverage; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) benefits from having fewer similar funds in the same fund complex, including a simplified operational model
and a reduction in risk of operational, legal and financial errors.

The Board of each Fund, including Board Members thereof who are not "interested persons" (as defined in the 1940 Act), approved its Reorganization Agreement(s) and the Issuances, as applicable, concluding that the Reorganization(s) is in the best interests of its Fund and that the interests of existing common shareholders and preferred shareholders of its Fund will not be diluted with respect to NAV and liquidation preference, respectively, as a result of the Reorganization(s). As a result of the Reorganizations, however, common and preferred shareholders of each Fund may hold a reduced percentage of ownership in the larger Combined Fund than they did in any of the individual Funds before the Reorganizations. Each Board's conclusion was based on each Board Member's business judgment after consideration of all relevant factors taken as a whole with respect to its Fund and the Fund's common and preferred shareholders, although individual Board Members may have placed different weight on various factors and assigned different degrees of materiality to various factors.

Because the shareholders of each Fund will vote separately on the Fund's respective Reorganization(s) or Issuances, as applicable, there are multiple potential combinations of Reorganizations. To the extent any Reorganization is not completed, any expected expense savings by the Combined Fund, or other potential benefits resulting from the Reorganizations, may be reduced.

If a Reorganization is not consummated, then the Investment Advisor may, in connection with ongoing management of the Fund for which such Reorganization(s) was not consummated and its product line, recommend alternative proposals to the Board of that Fund.

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| **Q:** | **How will holders of preferred shares be affected by the Reorganizations?**  |

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A: As of the date of the enclosed Joint Proxy Statement/Prospectus, the Acquiring Fund and MIY each has VRDP Shares outstanding, and MVT and MVF each has VMTP Shares outstanding. As of July 31, 2025, MVT had [777] Series W-7 VMTP Shares outstanding, MIY had [2,319] Series W-7 VRDP Shares outstanding, MVF had [1,536] Series W-7 VMTP Shares outstanding and the Acquiring Fund had [3,564] Series W-7 VRDP Shares outstanding.

The Board of each Fund has authorized the redemption of up to 67% of the Fund's currently outstanding VRDP or VMTP Shares, as applicable, on one or more occasions between April 1, 2025 and October 1, 2025. Any such

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##### [**Table of Contents**](#toc)
redemption is not related to a Reorganization or contingent on shareholder approval of a Reorganization. The timing and amount of any redemption of a Fund's currently outstanding VRDP Shares or VMTP Shares would depend on a number of factors, including, among others, the desired mix of leverage from preferred shares versus TOBs, yield levels and borrowing costs.

In connection with the Reorganizations, the Acquiring Fund expects to issue [777] additional VRDP Shares to MVT (for issuance to MVT VRDP Holders), [2,319] additional VRDP Shares to MIY (for issuance to MIY VRDP Holders), and [1,536] additional VRDP Shares to MVF (for issuance to MVF VRDP Holders). Following the completion of the Reorganizations, the Combined Fund is expected to have [8,196] VRDP Shares outstanding.

Assuming all of the Reorganizations are approved by the requisite shareholders, upon the Closing Date of the Reorganizations, MVT, MIY and MVF VMTP each will receive newly issued Acquiring Fund VRDP Share, par value $0.10 per share and with a liquidation preference of $100,000 per share (plus an amount equivalent to any accumulated and unpaid dividends that have accrued on the MVT, MIY or MVF VMTP Shares or VRDP Shares, as applicable, up to and including the day immediately preceding the Closing Date if such dividends have not been paid prior to the Closing Date) in such number equivalent to the respective number VMTP Shares or VRDP Shares, in exchange for all of the assets of each MVT, MIY and MVF, respectively, and such newly issued Acquiring Fund VRDP Shares received by each of MVT, MIY and MVF will be distributed to the respective VMTP Holders or VRDP Holders, as applicable, of each of MVT, MIY, and MVF, as applicable, in such Holders pro rata immediately prior to the Closing Date. The newly issued Acquiring Fund VRDP Shares are expected to be of a substantially identical series as those of the Acquiring Fund's outstanding VRDP Shares. No fractional Acquiring Fund VRDP Shares will be issued. The terms of the Acquiring Fund VRDP Shares to be issued in connection with the Reorganizations will be substantially identical to the terms of the Acquiring Fund's outstanding VRDP Shares and will rank on parity with the Acquiring Fund's outstanding VRDP Shares as to the payment of dividends and the distribution of assets upon dissolution, liquidation or winding up of the affairs of the Acquiring Fund.

The newly issued Acquiring Fund VRDP Shares will be subject to the same special rate period (including the terms thereof) applicable to the outstanding Acquiring Fund VRDP Shares as of the Closing Date of the Reorganizations. Such special rate period will terminate on June 17, 2026, unless extended. A Fund may designate any succeeding subsequent rate period of the VRDP Shares as a "special rate period" subject to the restrictions and requirements set forth in the governing instrument for such Fund's VRDP Shares. During a special rate period, a Fund may choose to modify the terms of the VRDP Shares as permitted by the governing instrument for such Fund's VRDP Shares, including, for example, special provisions relating to the calculation of dividends and the redemption of the VRDP Shares. The Reorganizations will not result in any changes to the terms of the Acquiring Fund's VRDP Shares currently outstanding.

The newly issued Acquiring Fund VRDP Shares will have terms that are similar to the terms of the outstanding MIY VRDP Shares, with certain differences. While the MIY VRDP Shares have a mandatory redemption date of May 1, 2041, the newly issued Acquiring Fund VRDP Shares are expected to have a mandatory redemption date of June 1, 2041.

None of the expenses of the Reorganizations are expected to be borne by the VRDP Holders of the Funds.

To the extent that the Acquiring Fund issues any new VRDP Shares of MYI in the Reorganizations, the VRDP Holders of each Fund, if any, will be VRDP Holders of the larger Combined Fund that will have a larger asset base and more VRDP Shares outstanding than any Fund individually before the Reorganizations. With respect to matters requiring all preferred shareholders to vote separately or common and preferred shareholders to vote together as a single class, following the Reorganizations, any VRDP Holders of the Combined Fund may hold a smaller percentage of the outstanding VRDP Shares of the Combined Fund as compared to their percentage holdings of outstanding VRDP Shares, if any, of their respective Fund prior to the Reorganizations.

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| | |
|:---|:---|
| **Q:** | **How similar are the Funds?**  |

---

A: The Funds have the same investment adviser, officers and directors. MVT, MIY, MVF and the Acquiring Fund are each formed as a Maryland corporation.

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Each of the Acquiring Fund, MVT, MIY and MVF has its common shares listed on the NYSE. The Acquiring Fund and MIY each has privately placed VRDP Shares outstanding. MVT and MVF each has privately placed VMTP Shares outstanding. Each of the Acquiring Fund, MVT, MIY and MVF are managed by a team of investment professionals led by Michael Kalinoski, CFA, Director at BlackRock, Walter O'Connor, CFA, Managing Director at BlackRock, Christian Romaglino, CFA, Director at BlackRock, Kevin Maloney, CFA, Director at BlackRock, Phillip Soccio, CFA, Director at BlackRock and Kristi Manidis, Director at BlackRock. Following the Reorganizations, it is expected that the Combined Fund will be managed by the same team of investment professionals.

The investment objective, significant investment strategies and operating policies, and investment restrictions of the Combined Fund will be those of the Acquiring Fund, which are similar to those of MVT, MIY and MVF, although there are some differences.

*<u>Investment Objective</u>*:

---

| | | | |
|:---|:---|:---|:---|
| **MVT** | **MIY** | **MVF** | **Acquiring Fund (MYI)** |
| MVT's investment objective is to provide stockholders with as high a level of current income exempt from federal income taxes as is consistent with its investment policies and prudent investment management. | MIY's investment objective is to provide shareholders with as high a level of current income exempt from federal and Michigan income taxes as is consistent with its investment policies and prudent investment management. | MVF's investment objective is to provide shareholders with as high a level of current income exempt from federal income taxes as is consistent with its investment policies and prudent investment management. | The Acquiring Fund's investment objective is to provide shareholders with as high a level of current income exempt from federal income taxes as is consistent with its investment policies and prudent investment management. |

---

*<u>Municipal Bonds</u>*: Below is a comparison of each Fund's 80% investment policy with respect to municipal obligations issued by or on behalf of states, territories and possessions of the United States and their political subdivisions, agencies or instrumentalities, each of which pays interest that, in the opinion of bond counsel to the issuer, is excludable from gross income for federal income tax purposes (except that the interest may be includable in taxable income for purposes of the federal alternative minimum tax) ("Municipal Bonds") or investments the income from which is exempt from federal income tax (except that the interest may be subject to the federal alternative minimum tax).

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| | | | |
|:---|:---|:---|:---|
| **MVT** | **MIY** | **MVF** | **Acquiring Fund (MYI)** |
| MVT seeks to achieve its investment objective by investing at least 80% of an aggregate of MVT's net assets (including proceeds from the issuance of any preferred stock) and the proceeds of any borrowings for investment purposes, in a portfolio of Municipal Bonds. | MIY seeks to achieve its investment objective by investing at least 80% of an aggregate of MIY's net assets (including proceeds from the issuance of any preferred stock) and the proceeds of any borrowings for investment purposes, in a portfolio of Municipal Bonds. | MVF's investment policies provide that it seeks to achieve its investment objective by investing, as a fundamental policy, at least 80% of an aggregate of MVF's net assets (including proceeds from the issuance of preferred stock), and the proceeds of any borrowings for investment purposes, in a portfolio of Municipal Bonds. | MYI seeks to achieve its investment objective by investing, as a fundamental policy, at least 80% of an aggregate of MYI's net assets (including proceeds from the issuance of any preferred stock) and the proceeds of any borrowings for investment purposes, in a portfolio of Municipal Bonds. |

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*<u>Investment Grade and Non-Investment Grade Securities</u>*: Below is a comparison of each Fund's policy with respect to investment in investment grade quality securities and non-investment grade quality securities. Investment grade quality means that such bonds are rated, at the time of investment, within the four highest grades (Baa or BBB or better by Moody's Investor Service Inc. ("Moody's"), S&P Global Ratings ("S&P") or Fitch Ratings, Inc. ("Fitch")) or are unrated but judged to be of comparable quality by the Investment Advisor. Below investment grade quality means securities rated at the time of purchase Ba or below by Moody's, BB or below by S&P or Fitch, or securities determined by the Investment Advisor to be of comparable quality. Below investment grade quality is regarded as predominantly speculative with respect to the issuer's capacity to pay interest and repay principal. Such securities commonly are referred to as "high yield" or "junk" bonds.

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| | | | |
|:---|:---|:---|:---|
| **MVT** | **MIY** | **MVF** | **Acquiring Fund (MYI)** |
| MVT's investment policies provide that, under normal market conditions, MVT will invest at least 75% of its total assets in a portfolio of Municipal Bonds that are commonly referred to as "investment grade" securities, which are obligations rated at the time of purchase within the four highest-quality ratings as determined by either Moody's (currently Aaa, Aa, A and Baa), S&P (currently AAA, AA, A and BBB) or Fitch (currently AAA, AA, A and BBB).<br>MVT may also invest up to 25% of its total assets in Municipal Bonds that are rated below Baa by Moody's or below BBB by S&P or Fitch or, if unrated, are considered by the Manager to possess similar credit characteristics., | Under normal market conditions, MIY expects to invest at least 80% of its net assets, plus the amount of any borrowings for investment purposes, in "investment grade" securities, which are obligations rated at the time of purchase within the four highest-quality ratings as determined by either Moody's (currently Aaa, Aa, A and Baa), S&P (currently AAA, AA, A and BBB) or Fitch (currently AAA, AA, A and BBB). In the case of short-term notes, the investment grade rating categories are SP-1+ through SP-2 for S&P, MIG-1 through MIG-3 for Moody's and F-1+ through F-3 for Fitch. In the case of tax-exempt commercial paper, the investment grade rating categories are A-1+ through A-3 for S&P, Prime-1 through Prime-3 for Moody's and F-1+ through F-3 for Fitch.<br>MIY also may invest in securities that are rated, at the time of investment, below investment grade quality. | MVF may invest up to 20% of its total assets in securities that are rated below investment grade at the time of purchase, or deemed equivalent. | Under normal market conditions, MYI expects to invest primarily in a portfolio of long-term Municipal Bonds that are commonly referred to as "investment grade" securities, which are obligations rated at the time of purchase within the four highest-quality ratings as determined by either Moody's (currently Aaa, Aa, A and Baa), S&P (currently AAA, AA, A and BBB) or Fitch (currently AAA, AA, A and BBB). In the case of short-term notes, the investment grade rating categories are SP-1+ through SP-2 for S&P, MIG-1 through MIG-3 for Moody's and F-1+ through F-3 for Fitch. In the case of tax-exempt commercial paper, the investment grade rating categories are A-1+ through A-3 for S&P, Prime-1 through Prime-3 for Moody's and F-1+ through F-3 for Fitch.<br>MYI may invest up to 20% of its managed assets in securities that are rated below investment grade, or are considered by the MYI's investment adviser to be of comparable quality, at the time of purchase. |

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*<u>Bond Maturity</u>*: Below is a comparison of each Fund's policy with respect to bond maturity.

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| | | | |
|:---|:---|:---|:---|
| **MVT** | **MIY** | **MVF** | **Acquiring Fund (MYI)** |
| The average maturity of MVT's portfolio securities varies from time to time based upon an assessment of economic and market conditions by the Investment Advisor. MVT's portfolio at any given time may include long- term, intermediate-term and short-term municipal bonds. | The average maturity of MIY's portfolio securities varies from time to time based upon an assessment of economic and market conditions by the Investment Advisor. MIY's portfolio at any given time may include both long-term, intermediate-term and short-term municipal bonds. | The average maturity of MVF's portfolio securities varies from time to time based upon an assessment of economic and market conditions by the Investment Advisor. MVF's portfolio at any given time may include both long-term, intermediate-term and short-term municipal bonds. | The average maturity of MYI's portfolio securities varies from time to time based upon an assessment of economic and market conditions by the Investment Advisor. MYI's portfolio at any given time may include both long-term and intermediate-term municipal bonds. |

---

*<u>Leverage</u>*: Each Fund utilizes leverage through the issuance of either VMTP Shares or VRDP Shares and residual interest municipal tender option bonds ("TOBs"). See "The Acquiring Fund's Investments—Leverage;" "General Risks of Investing in the Acquiring Fund—Leverage Risk;" and "General Risks of Investing in the Acquiring Fund—Tender Option Bond Risk." Each of MVT and MVF leverages its assets through the use of VMTP Shares and TOBs. Each of the Acquiring Fund and MIY currently leverages its assets through the use of VRDP Shares and TOBs. The Acquiring Fund is expected to continue to leverage its assets after the Closing Date of the Reorganizations through the use of VRDP Shares and TOBs. After the consummation of the Reorganizations, common shareholders of the Acquiring Fund, including former Target Fund common shareholders, will bear the leverage costs associated with the Acquiring Fund VRDP Shares and will be subject to the terms of the Acquiring Fund VRDP Shares, including that the Acquiring Fund VRDP Shares will be senior in priority to the Acquiring Fund common shares as to the payment of dividends and the distribution of assets upon dissolution, liquidation or winding up of the affairs of the Acquiring Fund. Please see "Information about the Preferred Shares of the Funds" in the Joint Proxy Statement/Prospectus for additional information about the preferred shares of each Fund.

The annualized dividend rates for the preferred shares for the twelve-month period ended January 31, 2025 were as follows:

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| | | |
|:---|:---|:---|
| **Fund** | **Preferred Shares** | **Rate** |
|  MVT | VMTP Shares | 4.69% |
|  MIY | VRDP Shares | 4.22% |
|  MVF | VMTP Shares | 4.69% |
|  Acquiring Fund (MYI) | VRDP Shares | 4.22% |

---

Please see below a comparison of certain important ratios related to (i) each Fund's use of leverage as of June 30, 2025, (ii) the Combined Fund's estimated use of leverage, assuming only the Reorganization of MVT into the Acquiring Fund had taken place as of June 30, 2025 (iii) the Combined Fund's estimated use of leverage, assuming the Reorganizations of all the Funds had taken place as of June 30, 2025.

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| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| **Ratios** | **MVT** | **MIY** | **MVF** | **Acquiring** <br>**Fund<br>(MYI)** | ***Pro forma*<br> Combined<br>Fund**<br> **(MVT into** <br>**MYI)** | ***Pro forma*<br>Combined Fund**<br> **(MVT, MIY and** <br>**MVF into MYI)** |
|  Asset Coverage Ratio | 403.0% | 249.4% | 370.6% | 313.7% | 329.7% | 314.6% |
|  Regulatory Leverage Ratio<sup>(1)</sup> | 24.8% | 40.1% | 27.0% | 31.9% | 30.3% | 31.8% |

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| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| **Ratios** | **MVT** | **MIY** | **MVF** | **Acquiring** <br>**Fund<br>(MYI)** | ***Pro forma*<br> Combined<br>Fund**<br> **(MVT into** <br>**MYI)** | ***Pro forma*<br>Combined Fund**<br> **(MVT, MIY and** <br>**MVF into MYI)** |
|  Effective Leverage Ratio<sup>(2)</sup> | 40.3% | 40.2% | 40.8% | 40.8% | 40.7% | 40.6% |

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(1) Regulatory leverage consists of preferred shares issued by the Fund, which is a part of the Fund's
capital structure. Regulatory leverage is sometimes referred to as "1940 Act Leverage" and is subject to asset coverage limits set forth in the 1940 Act.

(2) Effective leverage is a Fund's effective economic leverage and includes both regulatory leverage and the
leverage effects of certain derivative investments in the Fund's portfolio. Currently, the leverage effects of TOB inverse floater holdings, in addition to any regulatory leverage, are included in effective leverage ratios.

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| | |
|:---|:---|
| **Q:** | **How will the Reorganizations be effected?**  |

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A: Assuming a Reorganization receives the requisite shareholder approvals, as well as certain consents, confirmations and/or waivers from various third parties, including the liquidity providers with respect to the outstanding MIY and Acquiring Fund VRDP Shares, the Acquiring Fund will acquire substantially all of a Target Fund's assets and assume substantially all of such Target Fund's liabilities in exchange solely for newly issued common shares and VRDP Shares of the Acquiring Fund, which will be distributed to the shareholders of the Target Fund (although cash will be distributed in lieu of fractional common shares). A Target Fund will then terminate its registration under the 1940 Act and liquidate, dissolve and terminate in accordance with its respective charter and Maryland law.

Shareholders of MVT, MIY and MVF will become shareholders of the Acquiring Fund. Common shareholders of MVT, MIY and MVF will receive newly issued common shares of the Acquiring Fund, par value $0.10 per share, the aggregate NAV (not the market value) of which will equal the aggregate NAV (not the market value) of the common shares of MVT, MIY and MVF such shareholders held immediately prior to the Closing Date (although common shareholders of MVT, MIY and MVF may receive cash for fractional common shares). The aggregate NAV of each Fund immediately prior to the applicable Reorganization will reflect accrued expenses associated with such Reorganization. The NAV of MVT, MIY and MVF common shares will not be diluted as a result of the Reorganizations. The common shareholders of each Fund have substantially similar voting rights and rights with respect to the payment of dividends and distribution of assets upon liquidation of their respective Fund and have no preemptive, conversion or exchange rights.

On the Closing Date of the Reorganizations, MVT, MIY and MVF VMTP Holders or VRDP Holders, as applicable, each will receive newly issued Acquiring Fund VRDP Share, par value $0.10 per share and with a liquidation preference of $100,000 per share (plus any accumulated and unpaid dividends that have accrued on the MVT, MIY or MVF VMTP Shares or VRDP Shares, as applicable, up to and including the day immediately preceding the Closing Date of the Reorganizations if such dividends have not been paid prior to the Closing Date), such number equivalent to the respective number of VMTP Shares or VRDP Shares of each Target, in exchange for all of the assets of each of each MVT, MIY or MVF respectively, and such newly issued Acquiring Fund VRDP Shares received by each Target Fund, will be distributed to the respective VRDP Share or VMTP Share held by the MVT, MIY or MVF VMTP Holders or VRDP Holders, pro rata, immediately prior to the Closing Date. The terms of the special rate period applicable to the newly issued Acquiring Fund VRDP Shares are expected to be identical to the terms of the special rate period applicable to the outstanding Acquiring Fund VRDP Shares as of the Closing Date. Such special rate period will terminate on June 17, 2026, unless extended. A Fund may designate any succeeding subsequent rate period of the VRDP Shares as a "special rate period" subject to the restrictions and requirements set forth in the governing instrument for such Fund's VRDP Shares. During a special rate period, a Fund may choose to modify the terms of the VRDP Shares as permitted by the governing instrument for such Fund's VRDP Shares, including, for example, special provisions relating to the calculation of dividends and the redemption of the VRDP Shares. The Reorganizations will not result in any changes to the terms of the Acquiring Fund's VRDP Shares currently outstanding. The terms of the Acquiring Fund's VRDP Shares may change from time to time, subject to Board approval.

The newly issued Acquiring Fund VRDP Shares will have terms that are similar to the terms of the outstanding MIY VRDP Shares, with certain differences. While the MIY VRDP Shares have a mandatory redemption date of May 1,

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2041, the newly issued Acquiring Fund VRDP Shares are expected to have a mandatory redemption date of June 1, 2041.

Shareholders of the Acquiring Fund will remain shareholders of the Acquiring Fund, which will have additional common shares and VRDP Shares outstanding after the Reorganizations.

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| | |
|:---|:---|
| **Q:** | **Will I have to pay any U.S. federal income taxes as a result of the Reorganizations?**  |

---

A: Each Reorganization is intended to qualify as a "reorganization" within the meaning of Section 368(a) of the Code. If a Reorganization so qualifies, in general, common shareholders of MVT, MIY and MVF will recognize no gain or loss for U.S. federal income tax purposes upon the exchange of their common shares for Acquiring Fund Shares pursuant to their Reorganization (except with respect to cash received in lieu of fractional common shares). Additionally, each of MVT, MIY and MVF will recognize no gain or loss for U.S. federal income tax purposes by reason of its Reorganization. Neither the Acquiring Fund nor its shareholders will recognize any gain or loss for U.S. federal income tax purposes pursuant to the Reorganizations.

As discussed above, shareholders of each Fund may receive distributions prior to, or after, the consummation of the Reorganizations, including distributions attributable to their proportionate share of each Fund's undistributed net investment income declared prior to the consummation of the Reorganizations or the Combined Fund built-in gains, if any, recognized after the Reorganizations, when such income and gains are eventually distributed by the Combined Fund. To the extent that such a distribution is not an "exempt interest dividend" (as defined in the Code), the distribution may be taxable to shareholders for U.S. federal income tax purposes.

The Funds' shareholders should consult their own tax advisers regarding the U.S. federal income tax consequences of the Reorganizations, as well as the effects of state, local and non-U.S. tax laws, including possible changes in tax laws.

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| | |
|:---|:---|
| **Q:** | **Will I have to pay any sales load, commission or other similar fees in connection with the Reorganizations?**  |

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A: You will pay no sales loads or commissions in connection with the Reorganizations. Regardless of whether the Reorganizations are completed, however, the costs associated with the Reorganizations, including the costs associated with the Special Meeting, will be borne directly by each of the respective Funds incurring the expense.

Common shareholders of each Fund will indirectly bear all or a portion of the costs of the Reorganizations. The expenses of the Reorganizations of MVT, MIY, MVF and the Acquiring Fund are estimated to be approximately $242,000, $364,000, $319,000 and $480,000. The actual costs associated with the Reorganizations may be more or less than the estimated costs discussed herein.

VMTP Holders and VRDP Holders, as applicable, are not expected to bear any costs of the Reorganizations.

Neither the Funds nor the Investment Advisor will pay any direct expenses of shareholders arising out of or in connection with the Reorganizations (*e.g.*, expenses incurred by the shareholder as a result of attending the Special Meeting, voting on the Reorganizations or other action taken by the shareholder in connection with the Reorganizations).

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| | |
|:---|:---|
| **Q:** | **What shareholder approvals are required to complete the Reorganizations?**  |

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A: The MVT Reorganization is contingent upon the following approvals:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1. The approval of the MVT Reorganization Agreement and the transactions contemplated therein, including the
termination of MVT's registration under the 1940 Act and the dissolution of MVT under Maryland law, by MVT's common shareholders and VMTP Holders voting as a single class;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2. The approval of the MVT Reorganization Agreement and the transactions contemplated therein, including the
termination of MVT's registration under the 1940 Act and the dissolution of MVT under Maryland law, by MVT's VMTP Holders voting as a separate class;

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3. The approval of the MVT Reorganization Agreement and the transactions contemplated therein, including the
amendments to MYI Articles Supplementary in connection with the issuance of additional Acquiring Fund VRDP Shares, by Acquiring Fund VRDP Holders voting as a separate class; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4. The approval of the Issuance with respect to the MVT Reorganization by the Acquiring Fund's common
shareholders and Acquiring Fund VRDP Holders voting as a single class.

The MIY Reorganization is contingent upon the following approvals:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1. The approval of the MIY Reorganization Agreement and the transactions contemplated therein, including the
termination of MIY's registration under the 1940 Act and the dissolution of MIY under Maryland law, by MIY's common shareholders and VRDP Holders voting as a single class;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2. The approval of the MIY Reorganization Agreement and the transactions contemplated therein, including the
termination of MIY's registration under the 1940 Act and the dissolution of MIY under Maryland law, by MIY's VRDP Holders voting as a separate class;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3. The approval of the MIY Reorganization Agreement and the transactions contemplated therein, including the
amendment to MYI Articles Supplementary in connection with the issuance of additional Acquiring Fund VRDP Shares, by Acquiring Fund VRDP Holders voting as a separate class; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4. The approval of the Issuance with respect to the MIY Reorganization by the Acquiring Fund's common
shareholders and Acquiring Fund VRDP Holders voting as a single class.

The MVF Reorganization is contingent upon the following approvals:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1. The approval of the MVF Reorganization Agreement and the transactions contemplated therein, including the
termination of MVF's registration under the 1940 Act and the dissolution of MVF under Maryland law, by MVF's common shareholders and VMTP Holders voting as a single class;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2. The approval of the MVF Reorganization Agreement and the transactions contemplated therein, including the
termination of MVF's registration under the 1940 Act and the dissolution of MVF under Maryland law, by MVF's VMTP Holders voting as a separate class;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3. The approval of the MVF Reorganization Agreement and the transactions contemplated therein, including the
adoption of MYI Articles Supplementary in connection with the issuance of additional Acquiring Fund VRDP Shares, by Acquiring Fund VRDP Holders voting as a separate class; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4. The approval of the Issuance with respect to the MVF Reorganization by the Acquiring Fund's common
shareholders and Acquiring Fund VRDP Holders voting as a single class.

Each Reorganization is not contingent upon the approval of any other Reorganization. If a Reorganization is not consummated, the Fund for which such Reorganization(s) was not consummated would continue to exist and operate on a standalone basis.

If the requisite shareholder approvals for a Reorganization are not obtained or a Reorganization is not otherwise consummated, the Board of the Fund for which such Reorganization(s) were not consummated may take such actions as it deems in the best interests of the Fund, including conducting additional solicitations with respect to the Reorganization(s) or continuing to operate the Fund as a standalone Maryland corporation registered under the 1940 Act as a closed-end management investment company advised by the Investment Advisor. The Investment Advisor may, in connection with the ongoing management of the Fund and its product line, recommend alternative proposals to the Board of the Fund.

In order for the Reorganizations to occur, each Fund must obtain all requisite shareholder approvals with respect to the Reorganizations, as well as certain consents, confirmations and/or waivers from various third parties, including

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the liquidity providers with respect to the outstanding Acquiring Fund and MIY VRDP Shares. Because the closing of each Reorganization is contingent upon the applicable Fund and the Acquiring Fund obtaining the requisite shareholder approvals and third-party consents and satisfying (or obtaining the waiver of) other closing conditions, it is possible that a Reorganization will not occur, or that only one of MVT, MIY or MVF will be reorganized into the Acquiring Fund, even if shareholders of a Fund entitled to vote on the Reorganization approve the Reorganization and such Fund satisfies all of its closing conditions, if the other Fund does not obtain its requisite shareholder approvals or satisfy its closing conditions.

The preferred shares were issued on a private placement basis to one or a small number of institutional holders. Please see "Information about the Preferred Shares of the Funds" for additional information. To the extent that one or more preferred shareholder of MVT, MIY, MVF or the Acquiring Fund owns, holds or controls, individually or in the aggregate, all or a significant portion of such Fund's outstanding preferred shares, the preferred shareholder approval required for a Reorganization may turn on the exercise of voting rights by such particular preferred shareholder(s) and its (or their) determination as to the favorability of the Reorganization with respect to its (or their) interests. The Funds exercise no influence or control over the determinations of such preferred shareholder(s) with respect to the Reorganizations; there is no guarantee that such preferred shareholder(s) will approve the Reorganizations, over which it (or they) may exercise effective disposition power.

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| | |
|:---|:---|
| **Q:** | **Why is the vote of shareholders of the Acquiring Fund being solicited in connection with the Reorganizations?**  |

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| | |
|:---|:---|
| A: | The rules of the New York Stock Exchange (on which the Acquiring Fund common shares are listed) require the Acquiring Fund's shareholders to approve each Issuance with respect to a Reorganization. If the Issuance with respect to a Reorganization is not approved, then the corresponding Reorganization will not occur.  |

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We are also seeking the approval of each Reorganization Agreement and the transactions contemplated therein, including the adoption of MYI Articles Supplementary in connection with the issuance of additional Acquiring Fund VRDP Shares, by the Acquiring Fund VRDP Holders voting as a separate class pursuant to the governing documents of the Acquiring Fund VRDP Shares. If Acquiring Fund VRDP Holders do not approve a Reorganization Agreement as a separate class, then the corresponding Reorganization will not occur.

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| | |
|:---|:---|
| **Q:** | **How does the Board of my Fund suggest that I vote?**  |

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| | |
|:---|:---|
| A: | After careful consideration, the Board of your Fund unanimously recommends that you vote "**FOR**" the proposal(s) relating to your Fund.  |

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|:---|:---|
| **Q:** | **When and where will the Special Meeting be held?**  |

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| | |
|:---|:---|
| A: | The Special Meeting will be held on October 15, 2025, at [●] (Eastern Time). The Special Meeting will be held in virtual meeting format only. Shareholders will not have to travel to attend the Special Meeting, but will be able to view the Special Meeting live, meaningful opportunity to participate, including the ability to ask questions of management, and cast their votes by accessing a web link. The Special Meeting will provide shareholders with a meaningful opportunity to participate, including the ability to ask questions of management. To support these efforts, the Funds will:  |

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► Provide for shareholders to begin logging into the Special Meeting at [●] (Eastern Time) on
October 15, 2025, thirty minutes in advance of the Special Meeting.

► Permit shareholders attending the Special Meeting to submit questions via live webcast during the Special
Meeting by following the instructions available on the meeting website during the Special Meeting. Questions relevant to Special Meeting matters will be answered during the Special Meeting, subject to time constraints.

► Engage with and respond to shareholders who ask questions relevant to Special Meeting matters that are not
answered during the Special Meeting due to time constraints.

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|:---|:---|
| **Q:** | **How do I vote my proxy?**  |

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|:---|:---|
| A: | Shareholders of record of each Fund as of the close of business on August 18, 2025, (the "Record Date") are entitled to notice of and to vote at the Special Meeting or any adjournment or postponement thereof. You may cast your vote by mail, phone, internet or by participating at the Special Meeting as described below.  |

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To vote by mail, please mark your vote on the enclosed proxy card and sign, date and return the card in the postage-paid envelope provided.

If you choose to vote by phone or internet, please refer to the instructions found on the proxy card accompanying the Joint Proxy Statement/Prospectus. To vote by phone or internet, you will need the "control number" that appears on the proxy card. In addition, we ask that you please note the following:

If your shares in a Fund are registered in your name, you may attend and participate in the Special Meeting at [●] by entering the control number found in the shaded box in your proxy card on the date and timing of the Special Meeting. You may vote during the Special Meeting by following the instructions that will be available on the Special Meeting website during the Special Meeting.

Also, if you are a beneficial shareholder of a Fund, you will not be able to vote at the virtual Special Meeting unless you have registered in advance to attend the Special Meeting. To register, you must submit proof of your proxy power (legal proxy), which you can obtain from your financial intermediary or other nominee, reflecting your Fund holdings along with your name and email address to Georgeson LLC ("Georgeson"), each Fund's tabulator. You may email an image of your legal proxy to shareholdermeetings@computershare.com. Requests for registration must be received no later than 5:00 p.m. (Eastern Time) three business days prior to the Special Meeting date. You will receive a confirmation email from Georgeson of your registration and a control number and security code that will allow you to vote at the Special Meeting.

Even if you plan to attend the Special Meeting, please promptly follow the enclosed instructions to submit voting instructions by telephone or via the Internet. Alternatively, you may submit voting instructions by signing and dating each proxy card you receive, and if received by mail, returning it in the accompanying postage-paid return envelope.

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| | |
|:---|:---|
| **Q:** | **Whom do I contact for further information?**  |

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A: You may contact your financial advisor for further information. You may also call Georgeson, the Funds' proxy solicitor, at 1-866-666-2580.

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|:---|:---|
| **Q:** | **Will anyone contact me?**  |

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| | |
|:---|:---|
| A: | You may receive a call from Georgeson, the proxy solicitor hired by the Funds, to verify that you received your proxy materials, to answer any questions you may have about the proposals and to encourage you to vote your proxy.  |

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We recognize the inconvenience of the proxy solicitation process and would not impose on you if we did not believe that the matters being proposed were important. Once your vote has been registered with the proxy solicitor, your name will be removed from the solicitor's follow-up contact list.

**Your vote is very important. We encourage you as a shareholder to participate by returning your vote as soon as possible. If enough shareholders fail to cast their votes, a Fund may not be able to hold the Special Meeting or the vote on the applicable proposals, and will be required to incur additional solicitation costs in order to obtain sufficient shareholder participation.** 

**Important additional information about the Reorganizations is set forth** 

**in the accompanying Joint Proxy Statement/Prospectus.** 

**Please read it carefully.** 

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**BLACKROCK MUNIVEST FUND II, INC.** 

**BLACKROCK MUNIYIELD MICHIGAN QUALITY FUND, INC.** 

**BLACKROCK MUNIVEST FUND, INC.** 

**BLACKROCK MUNIYIELD QUALITY FUND III, INC.** 

**100 Bellevue Parkway** 

**Wilmington, Delaware 19809** 

**(800) 882-0052** 

**NOTICE OF JOINT SPECIAL MEETING OF SHAREHOLDERS** 

**TO BE HELD ON OCTOBER 15, 2025** 

Notice is hereby given that a joint special meeting of shareholders (the "Special Meeting") of BlackRock MuniVest Fund II, Inc. (NYSE Ticker: MVT) ("MVT"), BlackRock MuniYield Michigan Quality Fund, Inc. (NYSE Ticker: MIY) ("MIY"), BlackRock MuniVest Fund, Inc. (NYSE Ticker: MVF) ("MVF") and BlackRock MuniYield Quality Fund III, Inc. NYSE Ticker: MYI) ("MYI" or the "Acquiring Fund," and collectively with MVT, MIY and MVF, the "Funds," and each, a "Fund") will be held on October 15, 2025, at [●] (Eastern Time) for the following purposes:

**Proposal 1: The Reorganizations of the Funds** 

<u>For Shareholders of MVT:</u> 

*Proposal 1(A)*: The common shareholders and holders of Variable Rate Muni Term Preferred Shares ("VMTP Shares" and the holders thereof, "VMTP Holders") of MVT are being asked to vote as a single class on a proposal to approve an Agreement and Plan of Reorganization between MVT and the Acquiring Fund (the "MVT Reorganization Agreement") and the transactions contemplated therein, including (i) the acquisition by the Acquiring Fund of substantially all of MVT's assets and the assumption by the Acquiring Fund of substantially all of MVT's liabilities in exchange solely for newly issued common shares and Variable Rate Demand Preferred Shares ("VRDP Shares" and the holders thereof, "VRDP Holders") of the Acquiring Fund, which will be distributed to the common shareholders (although cash may be distributed in lieu of fractional common shares) and VMTP Holders, respectively, of MVT, and which shall constitute the sole consideration to be distributed or paid to the common shareholders (although cash may be distributed in lieu of fractional common shares) and the VMTP Holders in respect of their common shares and VMTP Shares, respectively, and (ii) the termination by MVT of its registration under the Investment Company Act of 1940, as amended (the "1940 Act"), and the liquidation, dissolution and termination of MVT in accordance with its charter and Maryland law (the "MVT Reorganization").

*Proposal 1(B)*: The VMTP Holders of MVT are being asked to vote as a separate class on a proposal to approve the MVT Reorganization Agreement and the MVT Reorganization.

<u>For Shareholders of MIY:</u> 

*Proposal 1(C)*: The common shareholders and VRDP Holders of MIY are being asked to vote as a single class on a proposal to approve an Agreement and Plan of Reorganization between MIY and the Acquiring Fund (the "MIY Reorganization Agreement") and the transactions contemplated therein, including (i) the acquisition by the Acquiring Fund of substantially all of MIY's assets and the assumption by the Acquiring Fund of substantially all of MIY's liabilities in exchange solely for newly issued common shares and VRDP Shares of the Acquiring Fund, which will be distributed to the common shareholders (although cash may be distributed in lieu of fractional common shares) and VRDP Holders, respectively, of MIY, and which shall constitute the sole consideration to be distributed or paid to the common shareholders (although cash may be distributed in lieu of fractional common shares) and the VRDP Holders in respect of their common shares and VRDP Shares, respectively, and (ii) the termination by MIY of its registration under the 1940 Act, and the liquidation, dissolution and termination of MIY in accordance with its charter and Maryland law (the "MIY Reorganization").

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*Proposal 1(D)*: The VRDP Holders of MIY are being asked to vote as a separate class on a proposal to approve the MIY Reorganization Agreement and the MIY Reorganization.

<u>For Shareholders of MVF:</u> 

*Proposal 1(E)*: The common shareholders and VMTP Holders of MVF are being asked to vote as a single class on a proposal to approve an Agreement and Plan of Reorganization between MVF and the Acquiring Fund (the "MVF Reorganization Agreement" and collectively with the MVT Reorganization Agreement and MIY Reorganization Agreement, the "Reorganization Agreements") and the transactions contemplated therein, including (i) the acquisition by the Acquiring Fund of substantially all of MVF's assets and the assumption by the Acquiring Fund of substantially all of MVF's liabilities in exchange solely for newly issued common shares and VRDP Shares of the Acquiring Fund, which will be distributed to the common shareholders (although cash may be distributed in lieu of fractional common shares) and VMTP Holders, respectively, of MVF, and which shall constitute the sole consideration to be distributed or paid to the common shareholders (although cash may be distributed in lieu of fractional common shares) and the VMTP Holders in respect of their common shares and VMTP Shares, respectively, and (ii) the termination by MVF of its registration under the 1940 Act, and the liquidation, dissolution and termination of MVF in accordance with its charter and Maryland law (the "MVF Reorganization" and collectively with the MVT Reorganization and the MIY Reorganization, the "Reorganizations").

*Proposal 1(F)*: The VMTP Holders of MVF are being asked to vote as a separate class on a proposal to approve the MVF Reorganization Agreement and the MVF Reorganization.

<u>For Shareholders of the Acquiring Fund:</u> 

*Proposal 1(G)*: The VRDP Holders of the Acquiring Fund are being asked to vote as a separate class on a proposal to approve the MVT Reorganization Agreement and the transactions contemplated therein, including the adoption of Articles Supplementary of Variable Rate Demand Preferred Shares of the Acquiring Fund ("MYI Articles Supplementary") in connection with the issuance of additional Acquiring Fund VRDP Shares.

*Proposal 1(H)*: The VRDP Holders of the Acquiring Fund are being asked to vote as a separate class on a proposal to approve the MIY Reorganization Agreement and the transactions contemplated therein, including the adoption of MYI Articles Supplementary in connection with the issuance of additional Acquiring Fund VRDP Shares.

*Proposal 1(I)*: The VRDP Holders of the Acquiring Fund are being asked to vote as a separate class on a proposal to approve the MVF Reorganization Agreement and the transactions contemplated therein, including the adoption of MYI Articles Supplementary in connection with the issuance of additional Acquiring Fund VRDP Shares.

**Proposal 2: The Issuance of Additional Acquiring Fund Common Shares** 

*Proposal 2(A)*: The common shareholders and VRDP Holders of the Acquiring Fund are being asked to vote as a single class on a proposal to approve the issuance of additional common shares of the Acquiring Fund in connection with the MVT Reorganization Agreement (the "MVT Issuance").

*Proposal 2(B)*: The common shareholders and VRDP Holders of the Acquiring Fund are being asked to vote as a single class on a proposal to approve the issuance of additional common shares of the Acquiring Fund in connection with the MIY Reorganization Agreement (the "MIY Issuance").

*Proposal 2(C)*: The common shareholders and VRDP Holders of the Acquiring Fund are being asked to vote as a single class on a proposal to approve the issuance of additional common shares of the Acquiring Fund in connection with the MVF Reorganization Agreement (the "MVF Issuance" and collectively with the MVT Issuance and the MIY Issuance, the "Issuances").

Each Reorganization is not contingent upon the approval of any other Reorganization. If a Reorganization is not consummated, the Fund for which such Reorganization(s) was not consummated would continue to exist and operate on a standalone basis.

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Shareholders of record of each Fund as of the close of business on August 18, 2025, are entitled to notice of and to vote at the Special Meeting or any adjournment or postponement thereof.

The Funds are soliciting the vote of their common shareholders on Proposal 1(A), Proposal 1(C), Proposal 1(E), Proposal 2(A), Proposal 2(B) and Proposal 2(C) through a separate joint proxy statement/prospectus.

Each Fund is soliciting the votes of its respective preferred shareholders on the applicable proposals through the Proxy Statement and not through the joint proxy statement/prospectus.

The Special Meeting will be held in a virtual meeting format only. Shareholders will not have to travel to attend the Special Meeting but will be able to view the meeting live, have a meaningful opportunity to participate, including the ability to ask questions of management, and cast their votes by accessing a web link.

**All shareholders are cordially invited to attend the Special Meeting. In order to avoid delay and additional expense for the Funds and to assure that your shares are represented, please vote as promptly as possible, regardless of whether or not you plan to attend the Special Meeting. You may vote by mail, by telephone or over the Internet. To vote by mail, please mark, sign, date and mail the enclosed proxy card or voting instruction form. No postage is required if mailed in the United States. To vote by telephone, please call the toll-free number located on your proxy card or voting instruction form and follow the recorded instructions. To vote over the Internet, go to the Internet address provided on your proxy card or voting instruction form and follow the instructions.** 

**If your shares in a Fund are registered in your name, you may attend and participate in the Special Meeting at** [●] **by entering the control number found in the shaded box on your proxy card on the date and time of the Special Meeting. You may vote during the Special Meeting by following the instructions that will be available on the Special Meeting website during the Special Meeting.**

**If you are a beneficial shareholder of a Fund (that is if you hold your Fund shares through a bank, broker, financial intermediary or other nominee) and want to attend the Special Meeting you must register in advance of the Special Meeting. To register, you must submit proof of your proxy power (legal proxy), which you can obtain from your financial intermediary or other nominee, reflecting your Fund holdings along with your name and email address to Georgeson LLC, each Fund's tabulator. You may email an image of your legal proxy to <u>shareholdermeetings@computershare.com</u>. Requests for registration must be received no later than 5:00 p.m. (Eastern Time) three business days prior to the Special Meeting date. You will receive a confirmation email from Georgeson LLC of your registration and a control number and security code that will allow you to vote at the Special Meeting.** 

**Even if you plan to attend the Special Meeting, please promptly follow the enclosed instructions to submit voting instructions by telephone or via the Internet. Alternatively, you may submit voting instructions by signing and dating each proxy card or voting instruction form you receive, and if received by mail, returning it in the accompanying postage-paid return envelope.** 

The officers or directors of each Fund named as proxies by shareholders may participate in the Special Meeting by remote communications, including, without limitation, by means of a conference telephone or similar communications equipment by means of which all persons participating in the Special Meeting can hear and be heard by each other, and the participation of such officers, directors or trustees in the Special Meeting pursuant to any such communications system shall constitute presence at the Special Meeting.

**THE BOARD OF DIRECTORS (EACH, A "BOARD") OF EACH OF THE FUNDS RECOMMENDS THAT YOU VOTE YOUR SHARES BY INDICATING YOUR VOTING INSTRUCTIONS ON THE ENCLOSED PROXY CARD, DATING AND SIGNING SUCH PROXY CARD AND RETURNING IT IN THE ENVELOPE PROVIDED, WHICH IS ADDRESSED FOR YOUR CONVENIENCE AND NEEDS NO POSTAGE IF MAILED IN THE UNITED STATES, OR BY RECORDING YOUR VOTING INSTRUCTIONS BY TELEPHONE OR VIA THE INTERNET.** 

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**THE BOARD OF EACH FUND UNANIMOUSLY RECOMMENDS THAT YOU CAST YOUR VOTE <u>FOR</u> THE APPLICABLE REORGANIZATION AGREEMENT AND <u>FOR</u> THE ISSUANCE OF ADDITIONAL COMMON SHARES OF THE ACQUIRING FUND, AS APPLICABLE, IN EACH CASE, AS DESCRIBED IN THE JOINT PROXY STATEMENT/PROSPECTUS FOR COMMON SHAREHOLDERS OR THE PROXY STATEMENT FOR PREFERRED SHAREHOLDERS, AS APPLICABLE.** 

**IN ORDER TO AVOID THE ADDITIONAL EXPENSE OF FURTHER SOLICITATION, WE ASK THAT YOU MAIL YOUR PROXY CARD OR RECORD YOUR VOTING INSTRUCTIONS BY TELEPHONE OR VIA THE INTERNET PROMPTLY.** 

For the Board of each Fund,

JOHN M. PERLOWSKI 

*President and Chief Executive Officer of the Funds*

[●], 2025

**YOUR VOTE IS IMPORTANT.** 

**PLEASE VOTE PROMPTLY BY SIGNING AND RETURNING THE ENCLOSED PROXY CARD OR BY RECORDING YOUR VOTING INSTRUCTIONS BY TELEPHONE OR VIA THE INTERNET, NO** 

**MATTER HOW MANY SHARES YOU OWN.** 

**IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE JOINT** 

**SPECIAL MEETING OF SHAREHOLDERS TO BE HELD ON OCTOBER 15, 2025.** 

**THE PROXY STATEMENT FOR THIS MEETING IS AVAILABLE AT:** [•]

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**PROXY STATEMENT** 

**Dated [**●**], 2025** 

**BLACKROCK MUNIVEST FUND II, INC.** 

**BLACKROCK MUNIYIELD MICHIGAN QUALITY FUND, INC.** 

**BLACKROCK MUNIVEST FUND, INC.** 

**BLACKROCK MUNIYIELD QUALITY FUND III, INC.** 

**100 Bellevue Parkway** 

**Wilmington, Delaware 19809** 

**(800) 882-0052** 

This Proxy Statement is furnished to you as a preferred shareholder of BlackRock MuniVest Fund II, Inc. (NYSE Ticker: MVT) ("MVT"), BlackRock MuniYield Michigan Quality Fund, inc. (NYSE Ticker: MIY) ("MIY"), BlackRock MuniVest Fund, Inc. (NYSE Ticker: MVF) ("MVF") and BlackRock MuniYield Quality Fund III, Inc. (NYSE Ticker: MYI) ("MYI" or the "Acquiring Fund," and collectively with MVT, MIY and MVF, the "Funds," and each, a "Fund") in connection with the solicitation of proxies by each Fund's Board of Directors (each, a "Board," the members of which are referred to as "Board Members"). Each of MVT, MIY and MVF may be referred to herein individually as a "Target Fund" or collectively as the "Target Funds." The proxies will be voted at the joint special meeting of the shareholders of each Fund and at any and all adjournments, postponements and delays thereof (the "Special Meeting"). The Special Meeting will be held on October 15, 2025 at [●] (Eastern Time) to consider the proposals set forth below and discussed in greater detail elsewhere in this Proxy Statement. The Special Meeting will be held in a virtual meeting format only. Shareholders will not have to travel to attend the Special Meeting, but will be able to view the meeting live, have a meaningful opportunity to participate, including the ability to ask questions of management, and cast their votes by accessing a web link. If you are unable to attend the Special Meeting or any adjournment or postponement thereof, the Board of your Fund recommends that you vote your common shares, by completing and returning the enclosed proxy card or by recording your voting instructions by telephone or via the internet. The approximate mailing date of this Proxy Statement and accompanying form of proxy is August [●], 2025.

**THE SEC HAS NOT APPROVED OR DISAPPROVED THESE SECURITIES OR PASSED UPON THE ADEQUACY OF THIS PROXY STATEMENT``. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.** 

The purposes of the Special Meeting are:

**Proposal 1: The Reorganizations of the Funds** 

<u>For Shareholders of MVT:</u> 

*Proposal 1(A)*: The common shareholders and holders of Variable Rate Muni Term Preferred Shares ("VMTP Shares" and the holders thereof, "VMTP Holders") of MVT are being asked to vote as a single class on a proposal to approve an Agreement and Plan of Reorganization between MVT and the Acquiring Fund (the "MVT Reorganization Agreement") and the transactions contemplated therein, including (i) the acquisition by the Acquiring Fund of substantially all of MVT's assets and the assumption by the Acquiring Fund of substantially all of MVT's liabilities in exchange solely for newly issued common shares and Variable Rate Demand Preferred Shares ("VRDP Shares" and the holders thereof, "VRDP Holders") of the Acquiring Fund, which will be distributed to the common shareholders (although cash may be distributed in lieu of fractional common shares) and VMTP Holders, respectively, of MVT, and which shall constitute the sole consideration to be distributed or paid to the common shareholders (although cash may be distributed in lieu of fractional common shares) and the VMTP Holders in respect of their common shares and VMTP Shares, respectively, and (ii) the termination by MVT of its registration under the Investment Company Act of 1940, as amended (the "1940 Act"), and the liquidation, dissolution and termination of MVT in accordance with its charter and Maryland law (the "MVT Reorganization").

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*Proposal 1(B)*: The VMTP Holders of MVT are being asked to vote as a separate class on a proposal to approve the MVT Reorganization Agreement and the MVT Reorganization.

<u>For Shareholders of MIY</u> 

*Proposal 1(C)*: The common shareholders and VRDP Holders of MIY are being asked to vote as a single class on a proposal to approve an Agreement and Plan of Reorganization between MIY and the Acquiring Fund (the "MIY Reorganization Agreement") and the transactions contemplated therein, including (i) the acquisition by the Acquiring Fund of substantially all of MIY's assets and the assumption by the Acquiring Fund of substantially all of MIY's liabilities in exchange solely for newly issued common shares and VRDP Shares of the Acquiring Fund, which will be distributed to the common shareholders (although cash may be distributed in lieu of fractional common shares) and VRDP Holders, respectively, of MIY, and which shall constitute the sole consideration to be distributed or paid to the common shareholders (although cash may be distributed in lieu of fractional common shares) and the VRDP Holders in respect of their common shares and VRDP Shares, respectively, and (ii) the termination by MIY of its registration under the 1940 Act, and the liquidation, dissolution and termination of MIY in accordance with its charter and Maryland law (the "MIY Reorganization").

*Proposal 1(D)*: The VRDP Holders of MIY are being asked to vote as a separate class on a proposal to approve the MIY Reorganization Agreement and the MIY Reorganization.

<u>For Shareholders of MVF:</u> 

*Proposal 1(E)*: The common shareholders and VMTP Holders of MVF are being asked to vote as a single class on a proposal to approve an Agreement and Plan of Reorganization between MVF and the Acquiring Fund (the "MVF Reorganization Agreement" and collectively with the MVT Reorganization Agreement and MIY Reorganization Agreement, the "Reorganization Agreements") and the transactions contemplated therein, including (i) the acquisition by the Acquiring Fund of substantially all of MVF's assets and the assumption by the Acquiring Fund of substantially all of MVF's liabilities in exchange solely for newly issued common shares and VRDP Shares of the Acquiring Fund, which will be distributed to the common shareholders (although cash may be distributed in lieu of fractional common shares) and VMTP Holders, respectively, of MVF, and which shall constitute the sole consideration to be distributed or paid to the common shareholders (although cash may be distributed in lieu of fractional common shares) and the VMTP Holders in respect of their common shares and VMTP Shares, respectively, and (ii) the termination by MVF of its registration under the 1940 Act, and the liquidation, dissolution and termination of MVF in accordance with its charter and Maryland law (the "MVF Reorganization" and collectively with the MVT Reorganization and the MIY Reorganization, the "Reorganizations").

*Proposal 1(F)*: The VMTP Holders of MVF are being asked to vote as a separate class on a proposal to approve the MVF Reorganization Agreement and the MVF Reorganization.

<u>For Shareholders of the Acquiring Fund:</u> 

*Proposal 1(G)*: The VRDP Holders of the Acquiring Fund are being asked to vote as a separate class on a proposal to approve the MVT Reorganization Agreement and the transactions contemplated therein, including the adoption of Articles Supplementary of Variable Rate Demand Preferred Shares of the Acquiring Fund ("MYI Articles Supplementary") in connection with the issuance of additional Acquiring Fund VRDP Shares.

*Proposal 1(H)*: The VRDP Holders of the Acquiring Fund are being asked to vote as a separate class on a proposal to approve the MIY Reorganization Agreement and the transactions contemplated therein, including the adoption of MYI Articles Supplementary in connection with the issuance of additional Acquiring Fund VRDP Shares.

*Proposal 1(I)*: The VRDP Holders of the Acquiring Fund are being asked to vote as a separate class on a proposal to approve the MVF Reorganization Agreement and the transactions contemplated therein, including the adoption of MYI Articles Supplementary in connection with the issuance of additional Acquiring Fund VRDP Shares.

**Proposal 2: The Issuance of Additional Acquiring Fund Common Shares** 

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*Proposal 2(A)*: The common shareholders and VRDP Holders of the Acquiring Fund are being asked to vote as a single class on a proposal to approve the issuance of additional common shares of the Acquiring Fund in connection with the MVT Reorganization Agreement (the "MVT Issuance").

*Proposal 2(B)*: The common shareholders and VRDP Holders of the Acquiring Fund are being asked to vote as a single class on a proposal to approve the issuance of additional common shares of the Acquiring Fund in connection with the MIY Reorganization Agreement (the "MIY Issuance").

*Proposal 2(C)*: The common shareholders and VRDP Holders of the Acquiring Fund are being asked to vote as a single class on a proposal to approve the issuance of additional common shares of the Acquiring Fund in connection with the MVF Reorganization Agreement (the "MVF Issuance" and collectively with the MVT Issuance and the MIY Issuance, the "Issuances").

It is expected that the effective dates (collectively, the "Closing Date") of the Reorganizations will be sometime during the fourth quarter of 2025, but they may be at a different time as described herein. The term "Combined Fund" refers to the Acquiring Fund as the surviving Fund after the consummation of each of the Reorganizations.

Each Reorganization is not contingent upon the approval of any other Reorganization. If a Reorganization is not consummated, the Fund for which such Reorganization(s) was not consummated would continue to exist and operate on a standalone basis.

The Board of each Fund has determined that including these proposals applicable to common shareholders of the Funds in one Joint Proxy Statement/Prospectus will reduce costs and is in the best interest of each Fund's shareholders.

Distribution to the shareholders of this Proxy Statement and the accompanying materials will commence on or about August [●], 2025.

Shareholders of record of each Fund as of the close of business on August 18, 2025 (the "Record Date") are entitled to notice of and to vote at the Special Meeting or any adjournment or postponement thereof.

Shareholders of each Fund are entitled to one vote for each common share or VMTP Share or VRDP Share, as applicable (each, a "Share"), held, with no Shares having cumulative voting rights. Preferred shareholders of each Fund will have equal voting rights with the common shareholders of such Fund with respect to the proposals that require the vote of the Fund's VMTP Shares or VRDP Shares, as applicable, and common shares as a single class. The quorum and voting requirements for each Fund are described in the section herein entitled "Voting Information and Requirements."

This Proxy Statement is only being delivered to the preferred shareholders of each Fund. Each Fund is separately soliciting the votes of its respective common shareholders on each of the foregoing proposals that require the vote of common shareholders through a separate joint proxy statement/prospectus and not through this Proxy Statement.

MVT, MIY, MVF and the Acquiring Fund are each formed as a Maryland corporation. Each of MVT, MIY, MVF and the Acquiring Fund is a diversified, closed-end management investment company registered under the 1940 Act. The Reorganizations seek to achieve certain economies of scale and other operational efficiencies by combining four funds that have similar investment objectives and similar investment strategies, policies and restrictions.

Assuming each of the Reorganizations receives the necessary approvals, the Acquiring Fund will acquire substantially all of the assets and assume substantially all of the liabilities of MVT, MIY and MVF in exchange solely for newly issued common shares and VRDP Shares of the Acquiring Fund in the form of book-entry interests. The Acquiring Fund will list the newly issued common shares on the New York Stock Exchange ("NYSE"). Such newly issued Acquiring Fund Shares will be distributed to MVT, MIY and MVF shareholders (although cash may be distributed in lieu of fractional common shares) and each of MVT, MIY and MVF will terminate its registration under the 1940 Act and liquidate, dissolve and terminate in accordance with its respective charter and Maryland law. The Acquiring Fund will continue to operate after the Reorganizations as a registered, diversified, closed-end management investment

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company with the investment objective, investment strategies, investment policies and investment restrictions described in this Joint Proxy Statement/Prospectus.

All properly executed proxies received prior to the Special Meeting will be voted in accordance with the instructions marked thereon or otherwise as provided therein. On any matter coming before the Special Meeting as to which a shareholder has specified a choice on that shareholder's proxy, the Shares will be voted accordingly. If a proxy card is properly executed and returned and no choice is specified with respect to a proposal, the Shares will be voted "FOR" the proposal. Shareholders who execute proxies or provide voting instructions by telephone or via the Internet may revoke them with respect to a proposal at any time before a vote is taken on the proposal by filing with the applicable Fund a written notice of revocation (addressed to the Secretary of the Fund at the principal executive offices of the Fund at the New York address provided herein), by delivering a duly executed proxy bearing a later date or by attending the Special Meeting and voting by ballot, in all cases prior to the exercise of the authority granted in the proxy card. Merely attending the Special Meeting, however, will not revoke any previously executed proxy. If you hold Shares through a bank or other intermediary, please consult your bank or intermediary regarding your ability to revoke voting instructions after such instructions have been provided.

**If your shares in a Fund are registered in your name, you may attend and participate in the Special Meeting at** [●] **by entering the control number found in the shaded box on your proxy card on the date and time of the Special Meeting. You may vote during the Special Meeting by following the instructions that will be available on the Special Meeting website during the Special Meeting.**

**The Special Meeting will provide shareholders with a meaningful opportunity to participate, including the ability to ask questions of management. To support these efforts, the Funds will:** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;● Provide for shareholders to begin logging into the Special Meeting at [●] (Eastern Time) on
October 15, 2025, thirty minutes in advance of the Special Meeting.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;● Permit shareholders attending the Special Meeting to submit questions via live webcast during the Special
Meeting by following the instructions available on the meeting website during the Special Meeting. Questions relevant to Meeting matters will be answered during the Special Meeting, subject to time constraints.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;● Engage with and respond to shareholders who ask questions relevant to Special Meeting matters that are not
answered during the Special Meeting due to time constraints.

**If you are a beneficial shareholder of a Fund (that is if you hold your Fund shares through a bank, broker, financial intermediary or other nominee) and want to attend the Special Meeting you must register in advance of the Special Meeting. To register, you must submit proof of your proxy power (legal proxy), which you can obtain from your financial intermediary or other nominee, reflecting your Fund holdings along with your name and email address to Georgeson LLC, each Fund's tabulator. You may email an image of your legal proxy to <u>shareholdermeetings@computershare.com</u>. Requests for registration must be received no later than 5:00 p.m. (Eastern Time) three business days prior to the Special Meeting date. You will receive a confirmation email from Georgeson LLC of your registration and a control number and security code that will allow you to vote at the Special Meeting.** 

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**Even if you plan to attend the Special Meeting, please promptly follow the enclosed instructions to submit voting instructions by telephone or via the Internet. Alternatively, you may submit voting instructions by signing and dating each proxy card you receive, and if received by mail, returning it in the accompanying postage-paid return envelope.** 

For information regarding how to access the Special Meeting, please contact Georgeson LLC, the firm assisting us in the solicitation of proxies, toll free at 1-888-686-6309.

This Proxy Statement sets forth concisely the information that preferred shareholders of each Fund should know before voting on the proposals set forth herein. Please read it carefully and retain it for future reference. A Statement of Additional Information, dated August [●], 2025, relating to this Joint Proxy Statement/Prospectus (the "Statement of Additional Information") has been filed with the United States Securities and Exchange Commission (the "SEC") and is incorporated herein by reference. Copies of each Fund's most recent annual report and semi-annual report can be obtained on a website maintained by BlackRock, Inc. ("BlackRock") at www.blackrock.com. In addition, each Fund will furnish, without charge, a copy of the Statement of Additional Information, or its most recent annual report or semi-annual report to any shareholder upon request. Any such request should be directed to BlackRock by calling (800) 882-0052 or by writing to the respective Fund at 100 Bellevue Parkway, Wilmington, Delaware 19809. The Statement of Additional Information and the annual and semi-annual reports of each Fund are available on the EDGAR Database on the SEC's website at www.sec.gov. The address of the principal executive offices of the Funds is 100 Bellevue Parkway, Wilmington, Delaware 19809, and the telephone number is (800) 882-0052.

Each Fund is subject to the informational requirements of the Securities Exchange Act of 1934 (the "Exchange Act") and the 1940 Act and, in accordance therewith, file reports, proxy statements, proxy materials and other information with the SEC. Materials filed with the SEC can be downloaded from the SEC's website at www.sec.gov. You may also request copies of these materials, upon payment at the prescribed rates of a duplicating fee, by electronic request to the SEC's e-mail address (publicinfo@sec.gov). Reports, proxy statements and other information concerning the Funds may also be inspected at the offices of the NYSE, 20 Broad Street, New York, New York 10005.

BlackRock updates performance information and certain other data for the Funds on a monthly basis on its website in the "Closed-End Funds" section of www.blackrock.com as well as certain other material information as necessary from time to time. Investors and others are advised to check the website for updated performance information and the release of other material information about the Funds. References to BlackRock's website are intended to allow investors public access to information regarding the Funds and do not, and are not intended to, incorporate BlackRock's website in this Joint Proxy Statement/Prospectus.

Please note that only one copy of shareholder documents, including annual or semi-annual reports and proxy materials, may be delivered to two or more shareholders of the Funds who share an address, unless the Funds have received instructions to the contrary. This practice is commonly called "householding" and it is intended to reduce expenses and eliminate duplicate mailings of shareholder documents. Mailings of your shareholder documents may be householded indefinitely unless you instruct us otherwise. To request a separate copy of any shareholder document or for instructions as to how to request a separate copy of these documents or as to how to request a single copy if multiple copies of these documents are received, shareholders should contact the respective Fund at the address and phone number set forth above.

The common shares of BlackRock MuniVest Fund II, Inc. are listed on the NYSE under the ticker symbol "MVT," the common shares of BlackRock MuniYield Michigan Quality Fund, inc. are listed on the NYSE under the ticker symbol "MIY," and the common shares of BlackRock MuniVest Fund, Inc. are listed on the NYSE under the ticker symbol "MVF." The common shares of BlackRock MuniYield Quality Fund III, Inc. are listed on the NYSE under the ticker symbol "MYI" and will continue to be so listed after the completion of the Reorganizations. The preferred shares of each Fund are not listed on any exchange and have not been registered under the Securities Act of 1933 (the "Securities Act"), or any state securities laws, and unless so registered under the Securities Act, may not be offered, sold, assigned, transferred, pledged, encumbered or otherwise disposed of except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and applicable state securities laws. Accordingly, the VRDP Shares to be issued in the Reorganization are expected to be issued only to holders of VRDP Shares of the Target Fund that are "qualified institutional buyers" (as defined in Rule 144A under

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the Securities Act) in accordance with the exemption from the registration requirements of the Securities Act provided by Section 4(a)(2) of the Securities Act and are subject to restrictions on transfer.

**This Joint Proxy Statement/Prospectus serves as a prospectus of the Acquiring Fund in connection with each Issuance. No person has been authorized to give any information or make any representation not contained in this Joint Proxy Statement/Prospectus and, if so given or made, such information or representation must not be relied upon as having been authorized. This Joint Proxy Statement/Prospectus does not constitute an offer to sell or a solicitation of an offer to buy any securities in any jurisdiction in which, or to any person to whom, it is unlawful to make such offer or solicitation.** 

**TABLE OF CONTENTS** 

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|:---|:---|
|  | **Page** |
|  [SUMMARY](#tx12999_1) | 1 |
|  [PROPOSAL 1 – INFORMATION ABOUT THE REORGANIZATIONS](#tx12999_2) | 10 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Description of the Reorganizations](#tx12999_3) | 10 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [The Board's Recommendation](#tx12999_4) | 11 |
|  [REASONS FOR THE REORGANIZATIONS](#tx12999_5) | 12 |
|  [TERMS OF THE REORGANIZATION AGREEMENTS](#tx12999_6) | 19 |
|  [APPRAISAL RIGHTS](#tx12999_7) | 21 |
|  [U.S. FEDERAL INCOME TAX CONSEQUENCES OF THE REORGANIZATIONS](#tx12999_8) | 22 |
|  [PROPOSAL 2 – ISSUANCE OF ACQUIRING FUND COMMON SHARES](#tx12999_9) | 25 |
|  [INFORMATION ABOUT THE PREFERRED SHARES OF THE FUNDS](#tx12999_10) | 26 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Description of the VRDP Shares of the Acquiring Fund and MIY](#tx12999_11) | 29 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Description of the VMTP Shares of MVT and MVF](#tx12999_12) | 31 |
|  [RISK FACTORS AND SPECIAL CONSIDERATIONS](#tx12999_13) | 33 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Comparison of Risks](#tx12999_14) | 33 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [General Risks of Investing in the Acquiring Fund](#tx12999_15) | 33 |
|  [DESCRIPTION OF THE FUNDS](#tx12999_16) | 57 |
|  [MANAGEMENT OF THE FUNDS](#tx12999_17) | 57 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [The Board of Directors and Officers](#tx12999_18) | 57 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [The Board and Officers](#tx12999_19) | 62 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Information Pertaining to the Officers](#tx12999_20) | 62 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [The Investment Advisor](#tx12999_21) | 63 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Portfolio Management](#tx12999_22) | 64 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Portfolio Transactions with Affiliates](#tx12999_23) | 65 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Other Service Providers](#tx12999_24) | 65 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Accounting Agent](#tx12999_25) | 65 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Custody of Assets](#tx12999_26) | 66 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Transfer Agent, Dividend Disbursing Agent and Registrar](#tx12999_27) | 66 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [VMTP Shares Redemption and Paying Agent; VRDP Shares Tender and Paying Agent](#tx12999_28) | 66 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Acquiring Fund and MIY VRDP Shares Liquidity Providers](#tx12999_29) | 66 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Acquiring Fund and MIY VRDP Shares Remarketing Agents](#tx12999_30) | 66 |
|  [THE ACQUIRING FUND'S INVESTMENTS](#tx12999_31) | 67 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Investment Objective and Policies](#tx12999_32) | 67 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Investment Restrictions](#tx12999_33) | 86 |
|  [THE TARGET FUNDS' INVESTMENT OBJECTIVES AND POLICIES](#tx12999_34) | 86 |

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|:---|:---|
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [MVT's Investment Objective and Policies](#tx12999_35) | 86 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [MIY's Investment Objective and Policies](#tx12999_36) | 97 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [MVF's Investment Objective and Policies](#tx12999_37) | 110 |
|  [INFORMATION ABOUT THE COMMON SHARES OF THE FUNDS](#tx12999_38) | 125 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [General](#tx12999_39) | 125 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Purchase and Sale of Common Shares](#tx12999_40) | 125 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Common Share Price Data](#tx12999_41) | 125 |
|  [EXPENSE TABLE FOR COMMON SHAREHOLDERS](#tx12999_42) | 128 |
|  [CAPITALIZATION TABLE](#tx12999_43) | 131 |
|  [FINANCIAL HIGHLIGHTS](#tx12999_44) | 134 |
|  [FINANCIAL STATEMENTS](#tx12999_45) | 150 |
|  [SUPPLEMENTAL FINANCIAL STATEMENTS](#tx12999_46) | 150 |
|  [CERTAIN PROVISIONS OF THE CHARTERS AND BYLAWS](#tx12999_47) | 151 |
|  [GOVERNING LAW](#tx12999_48) | 157 |
|  [CONVERSION TO OPEN-END FUND](#tx12999_49) | 158 |
|  [VOTING INFORMATION AND REQUIREMENTS](#tx12999_50) | 159 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Record Date](#tx12999_51) | 159 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Proxies](#tx12999_52) | 159 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Voting Requirement for Proposal 1: The Reorganizations of the Funds](#tx12999_53) | 160 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Voting Requirement for Proposal 2: The Issuance of Acquiring Fund Common Shares](#tx12999_54) | 162 |
|  [ADDITIONAL INFORMATION](#tx12999_55) | 162 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Share Ownership](#tx12999_56) | 162 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Independent Board Member Ownership of Securities](#tx12999_57) | 163 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Indemnification of Board Members and Officers](#tx12999_58) | 163 |
|  [SHAREHOLDER INFORMATION](#tx12999_59) | 164 |
|  [SHAREHOLDER PROPOSALS](#tx12999_60) | 164 |
|  [STANDSTILL AGREEMENTS](#tx12999_61) | 164 |
|  [SOLICITATION OF PROXIES](#tx12999_62) | 164 |
|  [LEGAL MATTERS](#tx12999_63) | 165 |
|  [INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM](#tx12999_64) | 165 |
|  [OTHER MATTERS WITH RESPECT TO THE MEETING](#tx12999_65) | 165 |
|  [ADJOURNMENTS AND POSTPONEMENTS](#tx12999_66) | 165 |
|  [PRIVACY PRINCIPLES OF THE FUNDS](#tx12999_67) | 165 |
|  [OTHER INFORMATION](#tx12999_68) | 166 |
|  [APPENDIX A FORM OF AGREEMENT AND PLAN OF REORGANIZATION](#tx12999_69) | A-1 |
|  [APPENDIX B FUNDAMENTAL AND NON-FUNDAMENTAL INVESTMENT RESTRICTIONS](#tx12999_70) | B-1 |
|  [APPENDIX C FORM OF AMENDMENT TO MYI ARTICLES SUPPLEMENTARY](#tx12999_71) | C-1 |
|  [APPENDIX D RATINGS OF INVESTMENTS](#tx12999_72) | D-1 |

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**SUMMARY** 

*The following is a summary of certain information contained elsewhere in this Proxy Statement and is qualified in its entirety by reference to the more complete information contained in this Proxy Statement. Shareholders should read the entire Joint Proxy Statement/Prospectus carefully.* 

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| &nbsp;&nbsp;&nbsp;&nbsp; **The Reorganizations** | Assuming all of the Reorganizations receive the requisite shareholder approvals, as well as certain consents, confirmations and/or waivers from various third parties, including the liquidity providers with respect to the outstanding Acquiring Fund and MIY VRDP Shares, the Acquiring Fund will acquire substantially all of the assets and assume substantially all of the liabilities of MVT, MIY and MVF in exchange solely for each Target Fund's newly issued Acquiring Fund Shares in the form of book-entry interests. The Acquiring Fund will list the newly issued common shares on the NYSE. Such newly issued Acquiring Fund Shares will be distributed to MVT, MIY and MVF shareholders (although cash may be distributed in lieu of fractional common shares) and each of MVT, MIY and MVF will terminate its registration under the 1940 Act and liquidate, dissolve and terminate in accordance with its respective charter and Maryland law. The Acquiring Fund will continue to operate after the Reorganizations as a registered, diversified, closed-end management investment company with the investment objective, investment strategies, investment policies and investment restrictions described in this Proxy Statement. |
|  | On the Closing Date of the Reorganizations, each VRDP Holder or VMTP Holder, as applicable, of MVT, MIY and MVF will, without any action on the part of the holder thereof, receive a distribution from MVT, MIY, or MVF, respectively, of such number of VRDP Shares of the Acquiring Fund in a number equal to the outstanding VRDP or VMTP Shares of such holder with respect to each respective Target Fund. The terms of the Acquiring Fund VRDP Shares to be issued in connection with the Reorganizations will be substantially identical to the terms of the Acquiring Fund's outstanding VRDP Shares and will rank on parity with the Acquiring Fund's outstanding VRDP Shares as to the payment of dividends and the distribution of assets upon dissolution, liquidation or winding up of the affairs of the Acquiring Fund. The Reorganizations will not result in any changes to the terms of the Acquiring Fund's VRDP Shares currently outstanding.<br>The newly issued Acquiring Fund VRDP Shares will have terms that are similar to the terms of the outstanding MIY VRDP Shares, with certain differences. While the MIY VRDP Shares have a mandatory redemption date of May 1, 2041, the newly issued Acquiring Fund VRDP Shares are expected to have a mandatory redemption date of June 1, 2041.<br>Subject to the requisite approval of the shareholders of each Fund with respect to its respective Reorganization, as well as certain consents, confirmations and/or waivers from various third parties, including the liquidity providers with respect to the outstanding Acquiring Fund and MIY VRDP Shares, it is expected that the Closing Date of the Reorganizations will be sometime during the fourth quarter of 2025, but it may be at a different time as described herein. |
|  | Each Reorganization is not contingent upon the approval of any other Reorganization. If the requisite shareholder approvals for a Reorganization are not obtained, or a Reorganization is not otherwise consummated, the Board of such Fund for which such Reorganization(s) was not consummated may take such actions as it deems in the best interests of such Fund, including conducting additional solicitations with respect to the Reorganization(s) or continuing to operate such Fund as a standalone Maryland corporation, registered under the 1940 Act as a closed-end management investment company advised by BlackRock Advisors, LLC (the "Investment Advisor"). The Investment Advisor may, in connection with the ongoing management of such Fund and its product line, recommend alternative proposals to the Board of such Fund. |

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 The proposed Reorganizations are intended to result in the following potential benefits to common shareholders: (i) lower net total expenses (excluding leverage expenses) per Common Share for common shareholders of each Fund (as common shareholders of the Combined Fund following the Reorganizations) due to economies of scale resulting from the larger size of the Combined Fund; (ii) improved net earnings yield on NAV for common shareholders of MVT and MIY; (iii) improved secondary market trading of the common shares of the Combined Fund; and (iv) operating and administrative efficiencies for the Combined Fund, including the potential for the following: (a) greater investment flexibility and investment options; (b) greater diversification of portfolio investments; (c) the ability to trade in larger positions and more favorable transaction terms; (d) additional sources of leverage or more competitive leverage terms and more favorable transaction terms; (e) benefits from having fewer closed-end funds offering similar products in the market, including an increased focus by investors on the remaining funds in the market (including the Combined Fund) and additional research coverage; and (f) benefits from having fewer similar funds in the same fund complex, including a simplified operational model and a reduction in risk of operational, legal and financial errors.

 The Board of each Fund, including the Board Members who are not "interested persons" of each Fund (as defined in the 1940 Act) ("Independent Board Members"), has unanimously approved the Reorganizations, concluding that the Reorganizations are in the best interests of its Fund and that the interests of existing common shareholders and preferred shareholders of its Fund will not be diluted with respect to NAV and liquidation preference, respectively, as a result of the Reorganizations. As a result of the Reorganizations, however, common and preferred shareholders of each Fund may hold a reduced percentage of ownership in the larger Combined Fund than they did in any of the individual Funds before the Reorganizations. Each Board's conclusion was based on each Board Member's business judgment after consideration of all relevant factors taken as a whole with respect to its Fund and the Fund's common and preferred shareholders, although individual Board Members may have placed different weight on various factors and assigned different degrees of materiality to various factors. Please see "Reasons for the Reorganizations" for additional information about the factors considered by each Board.

 Because the shareholders of each Fund will vote separately on the Fund's respective Reorganization(s) or Issuances, as applicable, there are multiple potential combinations of Reorganizations. To the extent that any Reorganization is not completed, any expected expense savings by the Combined Fund, or other potential benefits resulting from the Reorganizations, may be reduced.

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| &nbsp;&nbsp;&nbsp;&nbsp; **Preferred Shares** | As of July 31, 2025, MVT had [777] Series W-7 VRDP Shares outstanding, MIY had [2,319] Series W-7 VRDP Shares outstanding, MVF had [1,536] Series W-7 VMTP Shares outstanding and the Acquiring Fund had [3,564] Series W-7 VRDP Shares outstanding. |
|  | For the twelve-month period ended January 31, 2025, the annualized dividend rates for the VMTP Shares or VRDP Shares, as applicable, of MVT, MIY, MVF and the Acquiring Fund were 4.69%, 4.22%, 4.69% and 4.22%, respectively.<br>The Board of each Fund has authorized the redemption of up to 67% of the Fund's currently outstanding VRDP or VMTP Shares, as applicable, on one or more occasions between April 1, 2025 and October 1, 2025. Any such redemption is not related to the Reorganization or contingent on shareholder approval of the Reorganization. The timing and amount of any redemption of a Fund's currently outstanding VRDP Shares would depend on a number of factors, including, among others, the desired mix of leverage from preferred shares versus TOBs, yield levels and borrowing costs. |
|  | In connection with the Reorganizations, the Acquiring Fund expects to issue 777 additional VRDP Shares to MVT (for distribution to MVT VMPT Holders), 2,319 additional VRDP Shares to MIY (for distribution to MIY VRDP Holders) and 1,536 additional VRDP Shares to MVF (for distribution to MVF VMPT Holders). Following the completion of the Reorganizations, the Combined Fund is expected to have 8,196 VRDP Shares outstanding. |
|  | Assuming all of the Reorganizations are approved by the requisite shareholders, upon the Closing Date of the Reorganizations, MVT, MIY and MVF each will receive newly issued Acquiring Fund VRDP Share, par value $0.10 per share and with a liquidation preference of $100,000 per share (plus an amount equivalent to any accumulated and unpaid dividends that have accrued on the MVT, MIY or MVF VMTP Shares or VRDP Shares, as applicable, up to and including the day immediately preceding the Closing Date if such dividends have not been paid prior to the Closing Date), in an amount equal to the number of issued and outstanding MVT, MIY and MVF VMTP Shares or VRDP Shares, respectively, and such newly issued Acquiring Fund VRDP Shares will then be distributed to the MVT, MIY and MVF VMTP Holders or VRDP Holders, as applicable, pro rata. The newly issued Acquiring Fund VRDP Shares are expected to be of a substantially identical series as those of the Acquiring Fund's outstanding VRDP Shares. No fractional Acquiring Fund VRDP Shares will be issued. The terms of the Acquiring Fund VRDP Shares to be issued in connection with the Reorganizations will be substantially identical to the terms of the Acquiring Fund's outstanding VRDP Shares and will rank on parity with the Acquiring Fund's outstanding VRDP Shares as to the payment of dividends and the distribution of assets upon dissolution, liquidation or winding up of the affairs of the Acquiring Fund. The newly issued Acquiring Fund VRDP Shares will be subject to the same special rate period (including the terms thereof) applicable to the outstanding Acquiring Fund VRDP Shares as of the Closing Date of the Reorganizations. Such special rate period will terminate on June 17, 2026, unless extended. The Reorganizations will not result in any changes to the terms of the Acquiring Fund's VRDP Shares currently outstanding. |
|  | The newly issued Acquiring Fund VRDP Shares will have terms that are similar to the terms of the outstanding MIY VRDP Shares, with certain differences. While the MIY VRDP Shares have a mandatory redemption date of May 1, 2041, the newly issued Acquiring Fund VRDP Shares are expected to have a mandatory redemption date of June 1, 2041. |
|  | None of the expenses of the Reorganizations are expected to be borne by the VMTP Holders or the VRDP Holders, as applicable, of the Funds. See "Summary—Expenses of the Reorganizations" for additional information. |
|  | To the extent that the Acquiring Fund issues any new VRDP Shares in the Reorganizations, the VRPDP Holders of each Fund, if any, will be VRDP Holders of the larger Combined |

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|  | Fund that will have a larger asset base and more VRDP Shares outstanding than any Fund individually before the Reorganizations. With respect to matters requiring all preferred shareholders to vote separately or common and preferred shareholders to vote together as a single class, following the Reorganizations, any VRDP Holders of the Combined Fund may hold a smaller percentage of the outstanding VRDP Shares of the Combined Fund as compared to their percentage holdings of outstanding VRDP Shares, if any, of their respective Fund prior to the Reorganizations. |
|  | Please see "Information about the Preferred Shares of the Funds" for additional information. |
| &nbsp;&nbsp;&nbsp;&nbsp; **Expenses of the Reorganizations** | Common shareholders of each Fund will indirectly bear all or a portion of the costs of the Reorganizations. The expenses of the Reorganizations of MVT, MIY, MVF and the Acquiring Fund are estimated to be approximately $242,000, $364,000, $319,000 and $480,000, respectively. The actual costs associated with the Reorganizations may be more or less than the estimated costs discussed herein. |
| &nbsp;&nbsp;&nbsp;&nbsp; **Appraisal Rights** | Under Maryland law, a shareholder of a corporation does not have any preemptive rights to subscribe to any additional issue of stock unless expressly provided for in the corporation's charter (which the charter of the Acquiring Fund, does not provide). Under Maryland law, stockholders are entitled to demand the fair value of their shares from the successor entity in connection with a reorganization except where any exceptions apply, which exceptions include if any shares of the class or series are listed on a national securities exchange, such as the common shares of MYI, on the Record Date. No exception exists for the MYI VRDP Shares and therefore the VRDP Holders of MYI are entitled to demand the fair value of their VRDP Shares from the Acquiring Fund. |
| &nbsp;&nbsp;&nbsp;&nbsp; **U.S. Federal Income Tax Consequences of the Reorganizations** | Each Reorganization is intended to qualify as a "reorganization" within the meaning of Section 368(a) of the Code. If a Reorganization so qualifies, in general, common shareholders of MVT, MIY and MVF will recognize no gain or loss for U.S. federal income tax purposes upon the exchange of their common shares for Acquiring Fund Shares pursuant to their Reorganization (except with respect to cash received in lieu of fractional common shares). Additionally, each of MVT, MIY and MVF will recognize no gain or loss for U.S. federal income tax purposes by reason of its Reorganization. Neither the Acquiring Fund nor its shareholders will recognize any gain or loss for U.S. federal income tax purposes pursuant to the Reorganizations. |
|  | As discussed above, shareholders of each Fund may receive distributions prior to, or after, the consummation of the Reorganizations, including distributions attributable to their proportionate share of each Fund's undistributed net investment income declared prior to the consummation of the Reorganizations or the Combined Fund built-in gains, if any, recognized after the Reorganizations, when such income and gains are eventually distributed by the Combined Fund. To the extent that such a distribution is not an "exempt interest dividend" (as defined in the Code), the distribution may be taxable to shareholders for U.S. federal income tax purposes. |
|  | The Funds' shareholders should consult their own tax advisers regarding the U.S. federal income tax consequences of the Reorganizations, as well as the effects of state, local and non-U.S. tax laws, including possible changes in tax laws. |
| &nbsp;&nbsp;&nbsp;&nbsp; **General Information and History** | MVT, MIY, MVF and the Acquiring Fund are each incorporated as a Maryland corporation and are each a diversified, closed-end management investment company registered under the 1940 Act. |

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|  | Each Fund's principal place of business is located at 100 Bellevue Parkway, Wilmington, Delaware 19809, and its telephone number is (800) 882-0052. |
|  | Each Fund has a July 31 fiscal year end. |
|  | The Acquiring Fund common shares are listed on the NYSE as "MYI." |
|  | MVT common shares are listed on the NYSE as "MVT" |
|  | MIY common shares are listed on the NYSE as "MIY" |
|  | MVF common shares are listed on the NYSE as "MVF." |
|  | The Acquiring Fund and MIY each has VRDP Shares outstanding and MVT and MVF each has VMTP Shares outstanding. Each Fund's preferred shares are not listed on a national stock exchange and have not been registered under the Securities Act of 1933, as amended (the "Securities Act"), or any state securities laws, and unless so registered, may not be offered, sold, assigned, transferred, pledged, encumbered or otherwise disposed of except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and applicable state securities laws. |
| &nbsp;&nbsp;&nbsp;&nbsp; **Investment Objective and Policies** | The investment objective, significant investment strategies and operating policies, and investment restrictions of the Combined Fund will be those of the Acquiring Fund, which are similar to those of MVT, MIY and MVF, although there are some differences. |
|  | *Investment Objective:* |
|  | MVT's investment objective is to provide shareholders with as high a level of current income exempt from U.S. federal income taxes as is consistent with its investment policies and prudent investment management.<br>MIY's investment objective is to provide shareholders with as high a level of current income exempt from U.S. federal and Michigan income taxes as is consistent with its investment policies and prudent investment management.<br>MVF's investment objective is to provide shareholders with as high a level of current income exempt from U.S. federal income taxes as is consistent with its investment policies and prudent investment management.<br>The Acquiring Fund's investment objective is to provide shareholders with as high a level of current income exempt from U.S. federal income taxes as is consistent with its investment policies and prudent investment management.<br>The investment objective of each of the Funds is a fundamental policy that may not be changed without a vote of a majority of the applicable Fund's outstanding voting securities. |
|  | *Municipal Bonds:* |
|  | MVT seeks to achieve its investment objective by investing at least 80% of its Managed Assets in investments the income from which is exempt from federal income tax (except that the interest may be subject to the federal alternative minimum tax) ("MVT Municipal Bonds"). "Managed Assets" means MVT's total assets (including any assets attributable to money borrowed for investment purposes) minus the sum of MVT's accrued liabilities |

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(other than money borrowed for investment purposes). MVT may invest directly in securities or synthetically through the use of derivatives<br>MIY seeks to achieve its investment objective by investing at least 80% of an aggregate of MIY's net assets (including proceeds from the issuance of any preferred stock) and the proceeds of any borrowings for investment purposes, in a portfolio of municipal obligations issued by or on behalf of states, territories and possessions of the United States and their political subdivisions, agencies or instrumentalities, each of which pays interest that, in the opinion of bond counsel to the issuer, is excludable from gross income for federal income tax purposes (except that the interest may be includable in taxable income for purposes of the federal alternative minimum tax) ("MIY Municipal Bonds"). MIY may invest directly in securities or synthetically through the use of derivatives.<br>MVF seeks to achieve its investment objective by investing, as a fundamental policy, at least 80% of an aggregate of MVF's net assets (including proceeds from the issuance of preferred stock), and the proceeds of any borrowings for investment purposes, in a portfolio of municipal obligations issued by or on behalf of states, territories and possessions of the United States and their political subdivisions, agencies or instrumentalities, each of which pays interest that, in the opinion of bond counsel to the issuer, is excludable from gross income for federal income tax purposes (except that the interest may be includable in taxable income for purposes of the Federal alternative minimum tax) ("MVF Municipal Bonds"). MVF may invest directly in securities or synthetically through the use of derivatives.<br>The Acquiring Fund's investment policies provide that the Acquiring Fund will seek to achieve its investment objective by investing at least 80% of an aggregate of the Acquiring Fund's net assets (including proceeds from the issuance of any preferred stock) and the proceeds of any borrowings for investment purposes, in a portfolio of municipal obligations issued by or on behalf of states, territories and possessions of the United States and their political subdivisions, agencies or instrumentalities, each of which pays interest that, in the opinion of bond counsel to the issuer, is excludable from gross income for federal income tax purposes (except that the interest may be includable in taxable income for purposes of the federal alternative minimum tax) ("MYI Municipal Bonds," and collectively with MVT Municipal Bonds, MIY Municipal Bonds and MVF Municipal Bonds, "Municipal Bonds"). The Acquiring Fund may invest directly in securities or synthetically through the use of derivatives.<br>Please see below a comparison of the approximate amount invested in Municipal Bonds as a percentage of total assets for (i) each Fund as of June 30, 2025, (ii) the Combined Fund, assuming only the Reorganization of MVT into the Acquiring Fund, and (iii) the Combined Fund, assuming all of the Reorganizations were consummated as of June 30, 2025.<br>

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| **MVT** | **MIY** | **MVF** | **Acquiring<br>Fund<br>(MYI)** | ***Pro<br>forma*<br>Combined<br>Fund<br>(MVT into<br>MYI)** | ***Pro<br>forma*<br>Combined<br>Fund<br>(MVT, MIY<br>and MVF<br>into<br>MYI)** |
| 97% | 99% | 98% | 99% | 99% | 98% |

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| *Investment Grade and Non-Investment Grade Securities:* |
| MVT's investment policies provide that, under normal market conditions, the MVT will invest at least 80% of its Managed Assets in investment quality securities. For the purposes of the foregoing |

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| policy, an investment quality security is a security that is rated BBB or Baa or higher by Moody's, S&P, Fitch or another nationally recognized rating agency or, if unrated, deemed to be of comparable quality by the Investment Advisor. Municipal Bonds rated Baa by Moody's are investment grade, but Moody's considers Municipal Bonds rated Baa to have speculative characteristics. In the case of short-term notes, the investment grade rating categories are SP-1+ through SP-2 for S&P, MIG-1 through MIG-3 for Moody's and F-1+ through F-3 for Fitch. In the case of tax-exempt commercial paper, the investment grade rating categories are A-1+ through A-3 for S&P, Prime-1 through Prime-3 for Moody's and F-1+ through F-3 for Fitch.<br>MVT may invest up to 20% of its Managed Assets, measured at the time of investment, in securities rated BB/Ba or B by Moody's S&P, Fitch or another nationally recognized rating agency or, if unrated, deemed to be of comparable credit quality by the Investment Advisor.<br>Under normal market conditions, the MIY expects to invest at least 75% of its total assets in a portfolio of long-term Municipal Bonds that are commonly referred to as "investment grade" securities, which are obligations rated at the time of purchase within the four highest-quality ratings as determined by either Moody's (currently Aaa, Aa, A and Baa), S&P (currently AAA, AA, A and BBB) or Fitch (currently AAA, AA, A and BBB). In the case of short-term notes, the investment grade rating categories are SP-1+ through SP-2 for S&P, MIG-1 through MIG-3 for Moody's and F-1+ through F-3 for Fitch. In the case of tax-exempt commercial paper, the investment grade rating categories are A-1+ through A-3 for S&P, Prime-1 through Prime-3 for Moody's and F-1+ through F-3 for Fitch.<br>MIY also may invest up to 25% of its total assets in Municipal Bonds that are rated below Baa by Moody's or below BBB by S&P or Fitch or, if unrated, are considered by the Investment Advisor to possess similar credit characteristics.<br>MVF may invest up to 20% of its managed assets in securities that are rated below investment grade, or are considered by the Investment Advisor to be of comparable quality, at the time of purchase, subject to MVF's other investment policies.<br>MYI may invest up to 20% of its managed assets in securities that are rated below investment grade, or are considered by the Investment Advisor to be of comparable quality, at the time of purchase, subject to MYI's other investment policies. |
| *Bond Maturity:* |
| The average maturity of MVT's portfolio securities varies from time to time based upon an assessment of economic and market conditions by the Investment Advisor. MVT's portfolio at any given time may include long- term and intermediate-term Municipal Bonds<br>MIY intends to invest primarily in long-term Municipal Bonds with maturities of more than ten years. However, MIY also may invest in intermediate term Municipal Bonds with maturities of between three years and ten years. The Fund also may invest from time to time in short-term Municipal Bonds with maturities of less than three years. The average maturity of MIY's portfolio securities will vary based upon the Investment Advisor's assessment of economic and market conditions.<br>The average maturity of MVF's portfolio securities varies from time to time based upon an assessment of economic and market conditions by the Investment Advisor. MVF's portfolio at any given time may include both long-term, intermediate-term and short-term Municipal Bonds. |

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|:---|
| The average maturity of MYI's portfolio securities varies from time to time based upon an assessment of economic and market conditions by the Investment Advisor. MYI's portfolio at any given time may include both long-term and intermediate-term Municipal Bonds |
| *Leverage:* |
| Each Fund utilizes leverage through the issuance of either VMTP Shares or VRDP Shares and TOBs. See "The Acquiring Fund's Investments—Leverage;" "General Risks of Investing in the Acquiring Fund—Leverage Risk;" and "General Risks of Investing in the Acquiring Fund—Tender Option Bond Risk." Each of MVT and MVF currently leverages its assets through the use of VMTP Shares and tender option bonds ("TOBs"). Each of the Acquiring Fund and MIY currently leverages its assets through the use of VRDP Shares and TOBs. The Acquiring Fund is expected to continue to leverage its assets after the Closing Date of the Reorganizations through the use of VRDP Shares and TOBs. After the consummation of the Reorganizations, common shareholders of the Acquiring Fund, including former Target Fund common shareholders, will bear the leverage costs associated with the Acquiring Fund VRDP Shares and will be subject to the terms of the Acquiring Fund VRDP Shares, including that the Acquiring Fund VRDP Shares will be senior in priority to the Acquiring Fund common shares as to the payment of dividends and the distribution of assets upon dissolution, liquidation or winding up of the affairs of the Acquiring Fund. Please see "Information about the Preferred Shares of the Funds" for additional information about the preferred shares of each Fund. |
| The annualized dividend rates for the preferred shares for each Fund for the twelve-month period ended January 31, 2025 were as follows: |

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| | | |
|:---|:---|:---|
| **Fund** | **Preferred Shares** | **Rate** |
|  MVT | VMTP Shares | 4.69% |
|  MIY | VRDP Shares | 4.22% |
|  MVF | VMTP Shares | 4.69% |
|  Acquiring Fund (MYI) | VRDP Shares | 4.22% |

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Please see below a comparison of certain important ratios related to (i) each Fund's use of leverage as of June 30, 2025, (ii) the Combined Fund's estimated use of leverage, assuming only the Reorganization of MVT into the Acquiring Fund had taken place as of June 30, 2025, (iii) the Combined Fund's estimated use of leverage, assuming the Reorganizations of all the Funds had taken place as of June 30, 2025.<br>

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| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| **Ratios** | **MVT** | **MIY** | **MVF** | **Acquiring** <br>**Fund<br>(MYI)** | ***Pro forma*<br>Combined<br>Fund<br>(MVT<br>into MYI)** | ***Pro forma*<br>Combined<br>Fund<br>(MVT,<br>MIY and<br>MVF into<br>MYI)** |
|  Asset Coverage Ratio | 403.0% | 249.4% | 370.6% | 313.7% | 329.7% | 314.6% |
|  Regulatory Leverage Ratio(1) | 24.8% | 40.1% | 27.0% | 31.9% | 30.3% | 31.8% |
|  Effective Leverage Ratio(2) | 40.3% | 40.2% | 40.8% | 40.8% | 40.7% | 40.6% |

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 (1) Regulatory leverage consists of preferred shares issued by the Fund, which is a part of the Fund's capital structure. Regulatory leverage is sometimes referred to as "1940 Act Leverage" and is subject to asset coverage limits set forth in the 1940 Act.

 (2) Effective leverage is a Fund's effective economic leverage and includes both regulatory leverage and the leverage effects of certain derivative investments in the Fund's portfolio. Currently, the leverage effects of TOB inverse floater holdings, in addition to any regulatory leverage, are included in effective leverage ratios.

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**PROPOSAL 1 – INFORMATION ABOUT THE REORGANIZATIONS** 

The Reorganizations seek to combine four funds that have the same investment adviser, the same Board Members, and similar investment objectives and similar investment strategies, policies and restrictions.

**Description of the Reorganizations** 

Each Reorganization Agreement (a form of which is attached as <u>Appendix A</u> to this Joint Proxy Statement/Prospectus) provides for the Acquiring Fund's acquisition of substantially all of the assets of the applicable Target Fund and assumption of substantially all of the liabilities of the applicable Target Fund in exchange for newly issued Acquiring Fund common shares, with a par value $0.10 per share, and newly issued Acquiring Fund VRDP Shares, with a par value of $0.10 per share and liquidation preference of $100,000 per share (plus an amount equal to any accumulated and unpaid dividends that have accrued on the Target Fund VRDP Shares or VMTP Shares, as applicable, up to and including the day immediately preceding the Closing Date if such dividends have not been paid prior to the Closing Date). The Acquiring Fund will list the newly issued common shares on the NYSE. The Target Fund will distribute Acquiring Fund Shares received by it pro rata to its shareholders (although cash may be paid in lieu of any fractional common shares). The newly-issued Acquiring Fund Shares will be issued in the form of book-entry interests. Such distribution of Acquiring Fund Shares to Target Fund shareholders will be accomplished by opening new accounts on the books of the Acquiring Fund in the names of the Target Fund shareholders and transferring to those shareholder accounts Acquiring Fund Shares.

Each newly-opened account on the books of the Acquiring Fund for the former common shareholders of MVT, MIY and MVF will represent the respective pro rata number of Acquiring Fund common shares (rounded down, in the case of fractional common shares held other than in an automatic dividend reinvestment plan account ("Plan Account"), to the next largest number of whole common shares) due such common shareholder. No fractional Acquiring Fund common shares will be issued (except for common shares held in a Plan Account). In the event there are fractional common shares in an account other than a Plan Account, the Acquiring Fund's transfer agent will aggregate all such fractional MVT, MIY or MVF common shares and sell the resulting whole common shares on the NYSE for the account of all holders of such fractional interests, and each such holder will be entitled to the pro rata share of the proceeds from such sale upon being issued book-entry interests for the Acquiring Fund common shares. See "—Terms of the Reorganization Agreements—Book-Entry Interests" for a description of the procedures to be followed by MVT, MIY and MVF common shareholders to obtain their Acquiring Fund common shares (and cash in lieu of fractional common shares, if any). Similarly, each newly-opened account on the books of the Acquiring Fund for MVT, MIY and MVF VMTP Holders or VRDP Holders, as applicable, would represent the number of Acquiring Fund VRDP Shares issued equal to each such VMTP Holder's or VRDP Holder's, as applicable, holdings of MVT, MIY and MVF VMTP Shares or VRDP Shares as of immediately prior to the Closing Date.

As a result of the Reorganizations, each common shareholder of MVT, MIY and MVF will own Acquiring Fund common shares that (except for cash payments received in lieu of fractional common shares) will have an aggregate NAV (not the market value) immediately after the Closing Date equal to the aggregate NAV (not the market value) of that shareholder's MVT, MIY or MVF common shares, respectively, immediately prior to the Closing Date. The aggregate NAV of each Fund immediately prior to the applicable Reorganization will reflect accrued expenses associated with such Reorganization. The NAV of MVT, MIY and MVF common shares will not be diluted as a result of the Reorganizations. The value of each Fund's net assets will be calculated net of the liquidation preference (including accumulated and unpaid dividends) of all outstanding VRDP Shares or VMTP Shares, as applicable, of such Fund. The market value per share of the common shares of the Combined Fund may be less than the market value per share of the common shares of each respective Fund prior to the Reorganizations.

Assuming all of the Reorganizations are approved by the requisite shareholders, upon the Closing Date of the Reorganizations, each Target Fund will receive newly issued Acquiring Fund VRDP Share, par value $0.10 per share and with a liquidation preference of $100,000 per share (plus an amount equal to any accumulated and unpaid dividends that have accrued on the VMTP Shares or VRDP Shares, as applicable, of the applicable Target Fund up to and including the day immediately preceding the Closing Date of the Reorganizations if such dividends have not been paid prior to the Closing Date), in an amount equal to the number of issued and outstanding Target Fund VMTP Shares or VRDP Share, as applicable, immediately prior to the Closing Date, and then each Target Fund will distribute such newly issued Acquiring Fund VRDP Shares to such Target Fund VMTP Holder or VRDP Holder, as applicable, pro

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rata. The newly issued Acquiring Fund VRDP Shares are expected to be of a substantially identical series as the Acquiring Fund's outstanding VRDP Shares. No fractional Acquiring Fund VRDP Shares will be issued. The terms of the Acquiring Fund VRDP Shares to be issued in connection with the Reorganizations will be substantially identical to the terms of the Acquiring Fund's outstanding VRDP Shares and will rank on parity with the Acquiring Fund's outstanding VRDP Shares as to the payment of dividends and the distribution of assets upon dissolution, liquidation or winding up of the affairs of the Acquiring Fund. The Reorganizations will not result in any changes to the terms of the Acquiring Fund's VRDP Shares currently outstanding.

Since the Acquiring Fund VRDP Shares would be issued at a liquidation preference and value per share equal to the liquidation preference and value per share of the VMTP Shares or VRDP Shares, as applicable, of MVT, MIY and MVF will not be diluted as a result of the Reorganizations. As a result of the Reorganizations, a common or preferred shareholder of any of the Funds may hold a reduced percentage of ownership in the Combined Fund than they did in MVT, MIY, MVF and the Acquiring Fund. No sales charge or fee of any kind will be charged to shareholders of MVT, MIY and MVF in connection with their receipt of Acquiring Fund Shares in the Reorganizations.

As soon as practicable after the Closing Date for the Reorganizations, each of MVT, MIY and MVF will deregister as an investment company under the 1940 Act and liquidate, dissolve and terminate in accordance with its respective charter and Maryland law. The Acquiring Fund will continue to operate after the Reorganizations as a registered, diversified, closed-end management investment company with the investment objective, investment strategies, investment policies and investment restrictions described in this Joint Proxy Statement/Prospectus.

Each Reorganization is not contingent upon the approval of any other Reorganization. If a Reorganization is not consummated, the Fund for which such Reorganization(s) was not consummated would continue to exist and operate on a standalone basis. Both the Target Fund and the Acquiring Fund will continue to be advised by the Investment Advisor. If a Reorganization is not consummated, the Investment Advisor may recommend alternative proposals to the Board of each Fund for which such Reorganization was not consummated.

**The Board's Recommendation** 

The Board of MVT recommends that the common shareholders of MVT vote "FOR" the proposed MVT Reorganization Agreement at the Special Meeting.

The Board of MIY recommends that the common shareholders of MIY vote "FOR" the proposed MIY Reorganization Agreement at the Special Meeting.

The Board of MVF recommends that the common shareholders of MVF vote "FOR" the proposed MVF Reorganization Agreement at the Special Meeting.

The Board of the Acquiring Fund recommends that common shareholders of the Acquiring Fund vote "FOR" the proposed MVT Issuance at the Special Meeting.

The Board of the Acquiring Fund recommends that common shareholders of the Acquiring Fund vote "FOR" the proposed MIY Issuance at the Special Meeting.

The Board of the Acquiring Fund recommends that common shareholders of the Acquiring Fund vote "FOR" the proposed MVF Issuance at the Special Meeting.

Shareholder approval of the MVT Reorganization Agreement requires (i) with respect to Proposal 1(A), the affirmative vote of the holders of a majority of the outstanding MVT common shares and MVT VMTP Shares voting as a single class, (ii) with respect to Proposal 1(B), the affirmative vote of the holders of a 1940 Act Majority (as defined below) of MVT VMTP Shares voting as a separate class, and (iii) with respect to Proposal 1(G), the affirmative vote of the holders of a 1940 Act Majority of Acquiring Fund VRDP Shares voting as a separate class.

Shareholder approval of the MIY Reorganization Agreement requires (i) with respect to Proposal 1(C), the affirmative vote of a the holders of a majority of the outstanding MIY common shares and MIY VRDP Shares voting as a single

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class, (ii) with respect to Proposal 1(D), the affirmative vote of the holders of a 1940 Act Majority of MIY VRDP Shares voting as a separate class and (iii) with respect to Proposal 1(H), the affirmative vote of the holders of a 1940 Act Majority of Acquiring Fund VRDP Shares voting as a separate class

Shareholder approval of the MVF Reorganization Agreement requires (i) with respect to Proposal 1(E), the affirmative vote of a the holders of a majority of the outstanding MVF common shares and MVF VMTP Shares voting as a single class, (ii) with respect to Proposal 1(F), the affirmative vote of the holders of a 1940 Act Majority of MVF VMTP Shares voting as a separate class and (iii) with respect to Proposal 1(I), the affirmative vote of the holders of a 1940 Act Majority of Acquiring Fund VRDP Shares voting as a separate class

Each Issuance contemplated by Proposal 2(A), Proposal 2(B) and Proposal 2(C) requires the affirmative vote of the holders of a majority of the Acquiring Fund common shares and Acquiring Fund VRDP Shares entitled to be cast voting as a single class.

A "1940 Act Majority" means the affirmative vote of either (i) 67% or more of the voting securities present at the Special Meeting, if the holders of more than 50% of the outstanding voting securities of the Fund are present or represented by proxy or (ii) more than 50% of the outstanding voting securities of the Fund, whichever is less.

In order for each Reorganization to occur, each Fund must obtain all requisite shareholder approvals with respect to its Reorganization, as well as certain consents, confirmations and/or waivers from various third parties, including the liquidity providers with respect to the outstanding Acquiring Fund and MIY VRDP Shares. Because the closing of each Reorganization with respect to MVT, MIY and MVF is contingent upon such Fund and the Acquiring Fund obtaining the requisite shareholder approvals and third-party consents and satisfying (or obtaining the waiver of) other closing conditions for such Reorganization, it is possible that a Reorganization will not occur, even if shareholders of a Fund entitled to vote on such Reorganization approve the Reorganization and such Fund satisfies all of its closing conditions, if the other Fund in the Reorganization does not obtain its requisite shareholder approvals or satisfy its closing conditions. Share, as applicable, immediately prior to the Closing Date, and then each Target Fund will distribute such newly issued Acquiring Fund VRDP Shares to

Each Reorganization is not contingent upon the approval of any other Reorganization. If a Reorganization is not consummated, the Fund for which such Reorganization(s) was not consummated would continue to exist and operate on a standalone basis.

The preferred shares of the Funds were issued on a private placement basis to one or a small number of institutional holders. Please see "Information about the Preferred Shares of the Funds" for additional information. To the extent that one or more preferred shareholder of MVT, MIY, MVF or the Acquiring Fund owns, holds or controls, individually or in the aggregate, all or a significant portion of such Fund's outstanding preferred shares, the preferred shareholder approval required for the Reorganizations may turn on the exercise of voting rights by such particular preferred shareholder(s) and its (or their) determination as to the favorability of the Reorganization with respect to its (or their) interests. The Funds exercise no influence or control over the determinations of such preferred shareholder(s) with respect to the Reorganization; there is no guarantee that such preferred shareholder(s) will approve the Reorganization, over which it (or they) may exercise effective disposition power.

Subject to the requisite approval of the shareholders of each Fund with respect to its respective Reorganization, as well as certain consents, confirmations and/or waivers from various third parties, including the liquidity providers with respect to the outstanding Acquiring Fund and MIY VRDP Shares, it is expected that the Closing Date of the Reorganizations will be sometime during the [third] quarter of 2025, but it may be at a different time as described herein.

For additional information regarding voting requirements, see "Voting Information and Requirements."

**REASONS FOR THE REORGANIZATIONS** 

The Board of each Fund, including the Independent Board Members, considered the Reorganizations at meetings held on May 8, 2025 and/or June 6, 2025. Each Board, including the Independent Board Members, has unanimously

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approved the applicable Reorganization Agreement(s) (the "Approval"). Based on the considerations below, the Board of each Fund, including the Independent Board Members, has determined that the Reorganizations are in the best interests of such Fund and that the interests of its existing common shareholders and preferred shareholders would not be diluted with respect to NAV and the liquidation preference, respectively, as a result of the Reorganizations. As a result of the Reorganizations, however, common shareholders and preferred shareholders of each Fund may hold a reduced percentage of ownership in the larger Combined Fund than they did in any of the individual Funds before the Reorganizations.

Each Board's determination to approve the Reorganizations was made on the basis of each Board Member's business judgment after consideration of all of the factors taken as a whole with respect to each Fund and its shareholders, although individual Board Members may have placed different weight and assigned different degrees of materiality to various factors. Because the shareholders of each Fund will vote separately on the Fund's respective Reorganization(s) or Issuances, as applicable, there are multiple potential combinations of Reorganizations. To the extent that any Reorganization is not completed, any expected expense savings by the Combined Fund, or other potential benefits resulting from the Reorganizations, may be reduced. If a Reorganization is not consummated, then the Investment Advisor may, in connection with ongoing management of the Fund for which such Reorganization(s) was not consummated and its product line, recommend alternative proposals to the Board of that Fund. Before reaching these conclusions, the Board of each Fund, including the Independent Board Members, engaged in a thorough review process relating to the Reorganizations, as well as alternatives to the Reorganizations. The Board of each Fund also received a memorandum outlining, among other things, the legal standards and certain other considerations relevant to the Board's deliberations.

The Board of each Fund considered the Reorganizations over a series of meetings. In preparation for the Approval, the Investment Advisor provided each Board with information regarding the Reorganizations, including the rationale therefor and alternatives considered to the Reorganizations.

Each Board considered a number of factors presented at the time of the Approval or prior meetings in reaching their determinations, including, but not limited to, the following, which are discussed in further detail below:

● potential for improved economies of scale and a lower Total Expense Ratio (excluding interest expenses) with
respect to each Fund;

● the potential effects of the Reorganizations on the earnings and distributions of each Fund;

● the potential effects of the Reorganizations on each Fund's premium/discount to NAV of common shares;

● the potential effects of the Reorganizations on each Fund's preferred shares;

● the compatibility of the Funds' investment objectives, investment strategies and policies and related
risks and risk profiles;

● consistency of portfolio management and portfolio composition;

● the potential for improved secondary market trading, including the potential for greater secondary market
liquidity for the Combined Fund's common shares, which may result in tighter bid-ask spreads and better trade execution for the Combined Fund's common shareholders when purchasing or selling the
Combined Fund's common shares;

● the potential for operating and administrative efficiencies for the Combined Fund, including the potential for
the following benefits:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;● greater investment flexibility and investment options, greater diversification of portfolio investments, the
ability to trade in larger positions, additional sources of leverage or more competitive leverage terms and more favorable transaction terms;

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;● benefits from having fewer closed-end funds offering similar products
in the market, including an increased focus by investors on the remaining funds in the market (including the Combined Fund) and additional research coverage; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;● benefits from having fewer similar funds in the same fund complex, including a simplified operational model
and a reduction in risk of operational, legal and financial errors;

● the anticipated tax-free nature of the Reorganizations (except with
respect to taxable distributions, if any, from any Fund prior to, or after, the consummation of the Reorganizations, and the receipt of cash in lieu of fractional Shares);

● the potential effects on the Funds' capital loss carryforwards;

● the potential effects on each Fund's undistributed net investment income;

● the expected costs of the Reorganizations;

● the terms of the Reorganizations and whether the Reorganizations would dilute the interests of shareholders of
the Funds;

● the effect of the Reorganizations on shareholder rights;

● alternatives to the Reorganizations for each Fund; and

● any potential benefits of the Reorganizations to the Investment Advisor and its affiliates.

*Potential for Improved Economies of Scale and Potential for a Lower Expense Ratio*. Each Board considered the fees and Total Operating Expenses of its Fund (including estimated expenses of the Combined Fund after the Reorganizations). In the Investment Advisor's view, the most likely combination is the Reorganizations of all of the Funds, which is also expected to result in the lowest Total Expense Ratio for the Combined Fund. As of [●], 2025, any combination of Reorganizations is expected to result in a Total Expense Ratio (excluding interest expense) for the Combined Fund that is lower than the Total Expense Ratio of each Target Fund. If the only Reorganization discussed in this Joint Proxy Statement/Prospectus that is completed is the Reorganization of MVT into the Acquiring Fund, the Combined Fund would be expected to have a higher Total Expense Ratio than if any other combination of Reorganizations were completed. For the twelve-month period ended January 31, 2025, any combination of Reorganizations is expected to result in a Total Expense Ratio (excluding leverage expenses and extraordinary expenses) for the Combined Fund that is equal to or lower than the Total Expense Ratio (excluding leverage expenses and extraordinary expenses) of each Target Fund. "Total Expenses" means a Fund's total annual operating expenses. "Total Expense Ratio" means a Fund's Total Expenses expressed as a percentage of its average net assets attributable to its common shares.

*Potential Effects of the Reorganizations on Earnings and Distributions*. The Boards noted that the Combined Fund's net earnings yield on NAV for common shareholders following the Reorganizations is expected to be potentially higher than MVT's and MIY's current net earnings yield on NAV and lower than MVF's and MYI's current net earnings yield on NAV.] The distribution level of any fund is subject to change based upon a number of factors, including the current and projected level of the fund's earnings, and may fluctuate over time; thus, subject to a number of other factors, including the fund's distribution policy, a higher earnings profile may potentially have a positive impact on such fund's distribution level over time. A Fund's earnings and net investment income are variables which depend on many factors, including its asset mix, portfolio turnover level, the amount of leverage utilized by the Fund, the costs of such leverage, the performance of its investments, the movement of interest rates and general market conditions. In addition, the Combined Fund's future earnings will vary depending upon the combination of completed Reorganizations. There can be no assurance that the future earnings of a Fund, including the Combined Fund after the Reorganizations, will remain constant.

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*Potential Effects of the Reorganizations on Premium/Discount to NAV of Common Shares*. Each Board noted that the common shares of its Fund have historically traded at both a premium and a discount. As of July 31, 2025, the NAV per common share of MVT was $[●] and the market price per common share of MVT was $[●], representing a discount to NAV of [●]%, the NAV per common share of MIY was $[●] and the market price per common share of MIY was $[●], representing a discount to NAV of [●]%, the NAV per common share of MVF was $[●] and the market price per common share of MVF was $[●], representing a discount to NAV of [●]%, and the NAV per common share of the Acquiring Fund was $[●] and the market price per common share of the Acquiring Fund was $[●], representing a discount to NAV of [●]%. The Boards of MVT, MIY and MVF noted that to the extent MVT's, MIY's and MVF's common shares are trading at a wider discount (or a narrower premium) than the Acquiring Fund at the time of the Reorganizations, MVT's, MIY's and MVF's common shareholders would have the potential for an economic benefit by the narrowing of the discount or widening of the premium. The Boards of MVT, MIY and MVF also noted that to the extent MVT's, MIY's or MVF's common shares are trading at a narrower discount (or wider premium) than the Acquiring Fund at the time of the Reorganizations, MVT's, MIY's and MVF's common shareholders may be negatively impacted if its Reorganization is consummated. The Board of the Acquiring Fund noted that Acquiring Fund common shareholders would only benefit from a premium/discount perspective to the extent the post-Reorganization discount (or premium) of the Acquiring Fund common shares improves. There can be no assurance that, after the Reorganizations, common shares of the Combined Fund will trade at a narrower discount to NAV or wider premium to NAV than the common shares of any individual Fund prior to the Reorganizations. Upon consummation of the Reorganizations, the Combined Fund common shares may trade at a price that is less than the current market price of Acquiring Fund common shares. In the Reorganizations, common shareholders of MVT, MIY and MVF will receive Acquiring Fund common shares based on the relative NAVs (not the market values) of the respective Fund's common shares. The market value of the common shares of the Combined Fund may be less than the market value of the common shares of each respective Fund prior to the Reorganizations.

The Board noted that effective upon Closing, the Combined Fund will adopt a discount management program under which the Combined Fund will, beginning in 2026, intend to offer to purchase a minimum of 5% of its outstanding common shares, subject to the Board's discretion, at a price equal to 98% of NAV per common share via annual tender offer if the Combined Fund's common shares trade at an average daily discount to NAV of more than 10.00% during a measurement period beginning on January 1st and concluding on September 30th of each calendar year (the "Discount Management Program"). Even if a tender offer is triggered under the Discount Management Program, there is no guarantee that Combined Fund shareholders will be able to sell all of the shares that they desire to sell in any particular tender offer and there can be no assurances as to the effect that the Discount Management Program will have on the market for the Combined Fund's shares or the discount at which the Combined Fund's shares may trade relative to its NAV.

*Potential Effects of the Reorganizations on the Preferred Shares*. The Board noted that each Fund has preferred shares outstanding. As of July 31, 2025, MVT had [777] Series W-7 VMTP Shares outstanding, MIY had [2,319] Series W-7 VRDP Shares outstanding, MVF had [1,536] Series W-7 VMTP Shares outstanding and the Acquiring Fund had [26,364] Series W-7A VRDP Shares and [3,564] Series W-7 VRDP Shares outstanding. In connection with the Reorganizations, the Acquiring Fund expects to issue [777] additional VRDP Shares to MVT VRDP Holders, [2,319] additional VRDP Shares to MIY VRDP Holders and [1,536] additional VRDP Shares to MVF VRDP Holders. Following the completion of the Reorganizations, the Combined Fund is expected to have [8,196] VRDP Shares outstanding.

The Board noted that, assuming all of the Reorganizations are approved by the requisite shareholders, upon the Closing Date of the Reorganizations, MVT, MIY and MVF VRDP each will receive newly issued Acquiring Fund VRDP Shares, par value $0.10 per share and with a liquidation preference of $100,000 per share (plus an amount equal to any accumulated and unpaid dividends that have accrued on the MVT, MIY, MVF VRDP Shares or VMTP Shares, as applicable, up to and including the day immediately preceding the Closing Date if such dividends have not been paid prior to the Closing Date), in an amount equal to the number of issued and outstanding MVT, MIY and MVF VRDP Shares or VMTP Shares, applicable, immediately prior to the Closing Date, and then each MVT, MIY or MVF will distribute such newly issued Acquiring Fund VRDP Shares to the MVT, MIY, or MVF VRDP Holders or VMTP Holders, as applicable, pro rata. The newly issued Acquiring Fund VRDP Shares are expected to be of a substantially identical series as those of the Acquiring Fund's outstanding VRDP Shares. No fractional Acquiring Fund VRDP Shares will be issued. The terms of the Acquiring Fund VRDP Shares to be issued in connection with the Reorganizations will be substantially identical to the terms of the Acquiring Fund's outstanding VRDP Shares and

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will rank on parity with the Acquiring Fund's outstanding VRDP Shares as to the payment of dividends and the distribution of assets upon dissolution, liquidation or winding up of the affairs of the Acquiring Fund. The Reorganizations will not result in any changes to the terms of the Acquiring Fund's VRDP Shares currently outstanding.

The Board noted that none of the expenses of the Reorganizations are expected to be borne by the VMTP Holders or the VRDP Holders, as applicable, of the Funds.

Following the Reorganizations, the VRDP Holders or VMTP Holders of each Fund, as applicable, will be VRDP Holders of the larger Combined Fund that will have a larger asset base and more preferred shares outstanding than any Fund individually before the Reorganizations. With respect to matters requiring all preferred shareholders to vote separately or common and preferred shareholders to vote together as a single class, following the Reorganizations, VRDP Holders of the Combined Fund may hold a smaller percentage of the outstanding preferred shares of the Combined Fund as compared to their percentage holdings of outstanding preferred shares of their respective Fund prior to the Reorganizations.

*Compatibility of Investment Objectives, Investment Strategies and Policies and Related Risks and Risk Profiles*. Each Board noted that its Fund's shareholders will remain invested in an exchange-listed, closed-end management investment company registered under the 1940 Act that will have substantially greater net assets and the same (in the case of the Acquiring Fund), or similar (in the case of MVT, MIY and MVF) investment objective and the same (in the case of the Acquiring Fund) or similar (in the case of MVT, MIY and MVF) investment strategies, policies and restrictions. The risk/return profile of the Combined Fund is expected to remain comparable to those of each Fund before the Reorganizations because of the similarities in the investment policies of each Fund.

*Consistency of Portfolio Management and Portfolio Composition*. Each Board noted that each Fund has the same investment adviser and a common portfolio manager and that each Fund's shareholders will benefit from the experience and expertise of the Combined Fund's anticipated portfolio management team.

Each of the Acquiring Fund, MVT, MIY and MVF is managed by a team of investment professionals led by Michael Kalinoski, CFA, Director at BlackRock, Walter O'Connor, CFA, Managing Director at BlackRock, Christian Romaglino, CFA, Director at BlackRock, Kevin Maloney, CFA, Director at BlackRock, Phillip Soccio, CFA, Director at BlackRock and Kristi Manidis, Director at BlackRock. Following the Reorganizations, it is expected that the Combined Fund will be managed by the same team of investment professionals. Each Board also considered the portfolio composition of its Fund and the impact of the Reorganizations on the Fund's portfolio. Each Board noted that it is not anticipated that there will be any significant disposition of the holdings in its Fund as a result of the Reorganizations because of the similarities among the portfolio guidelines of the Funds. For additional information, please see "Comparison of the Funds' Investments" and "Risk Factors and Special Considerations."

*Potential for Improved Secondary Market Trading for Common Shares*. While it is not possible to predict trading levels at the time the Reorganizations close, each Board considered that the Combined Fund may provide greater secondary market liquidity for its common shares as it would be larger than any of the Funds, which may result in tighter bid-ask spreads, better trade execution for the Combined Fund's common shareholders when purchasing or selling Combined Fund common shares. However, there can be no assurance that the Reorganizations will result in such benefits or that the common shares of the Combined Fund will trade at a narrower discount to NAV or wider premium to NAV than the common shares of any individual Fund prior to the Reorganizations. Upon consummation of the Reorganizations, the secondary market liquidity, bid-ask spreads, and trade execution with respect to the Combined Fund's common shares may deteriorate. Furthermore, the Combined Fund common shares may trade at a price that is less than the current market price of Acquiring Fund common shares.

*Potential for Operating and Administrative Efficiencies*. Each Board noted that the Combined Fund may achieve certain operating and administrative efficiencies from its larger net asset size, including greater investment flexibility and investment options, greater diversification of portfolio investments, the ability to trade in larger positions, additional sources of leverage or more competitive leverage terms and more favorable transaction terms. Each Board also noted that the Combined Fund may experience potential benefits from having fewer closed-end funds offering similar products in the market, including an increased focus by investors on the remaining funds in the market (including the Combined Fund) and additional research coverage.

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Each Board also noted that the Combined Fund may experience potential benefits from having fewer similar funds in the same fund complex, including a simplified operational model, the elimination of complexities involved with having duplicative funds, easier product differentiation for shareholders (including shareholders of the Combined Fund) and reduced risk of operational, legal and financial errors.

*Anticipated Tax-Free Reorganizations*. Each Board noted that it is anticipated that shareholders of its Fund will generally recognize no gain or loss for U.S. federal income tax purposes as a result of the Reorganizations (except with respect to cash received in lieu of fractional common shares), as each Reorganization is intended to qualify as a "reorganization" within the meaning of Section 368(a) of the Code.

Shareholders of each Fund may receive distributions prior to, or after, the consummation of the Reorganizations, including distributions attributable to their proportionate share of each Fund's undistributed net investment income declared prior to the consummation of the Reorganizations or the Combined Fund built-in gains, if any, recognized after the Reorganizations, when such income and gains are eventually distributed by the Combined Fund. To the extent that such a distribution is not an "exempt interest dividend" (as defined in the Code), the distribution may be taxable to shareholders for U.S. federal income tax purposes.

*Capital Loss Carryforward Considerations*. Each Board considered that capital loss carryforwards of the Combined Fund attributable to each Fund will be subject to tax loss limitation rules by reason of each Fund's undergoing an "ownership change" in the Reorganizations. Each Board also noted that the Combined Fund's capital loss carryforward loss on a per share basis is expected to be lower than MVT's and MVF's capital loss carryforward loss per share but higher than the capital loss carryforward loss for MIY and NYI. Each Board considered that the ability of its Fund to fully utilize its existing capital loss carryforwards depends on many variables and assumptions, including projected performance, and is, therefore, highly uncertain.

*Potential Effects of the Reorganizations on Undistributed Net Investment Income*. If the Reorganizations are approved by shareholders, then the greater of (1) substantially all of the undistributed net investment income, if any, or (2) the monthly distribution of each Fund is expected to be declared to such Fund's common shareholders prior to the Closing Date (the "Pre-Reorganization Declared UNII Distributions"). The declaration date, ex-dividend date (the "Ex-Dividend Date") and record date of the Pre-Reorganization Declared UNII Distributions will occur prior to the Closing Date. However, all or a significant portion of the Pre-Reorganization Declared UNII Distributions may be paid in one or more distributions to common shareholders of the Funds entitled to such Pre-Reorganization Declared UNII Distributions after the Closing Date. Former MVT, MIY and MVF shareholders entitled to such Pre-Reorganization Declared UNII Distributions paid after the Closing Date will receive such distributions in cash.

Persons who purchase common shares of any of the Funds on or after the Ex-Dividend Date for the Pre-Reorganization Declared UNII Distributions should not expect to receive any distributions from any Fund until distributions, if any, are declared by the Board of the Combined Fund and paid to shareholders entitled to any such distributions. No such distributions are expected to be paid by the Combined Fund until at least approximately one month following the Closing Date.

Additionally, the Acquiring Fund, in order to seek to provide its common shareholders with distribution rate stability, may include in its Pre-Reorganization Declared UNII Distribution amounts in excess of its undistributed net investment income and net investment income accrued through the Closing Date. This would result in the Acquiring Fund issuing incrementally more common shares in the Reorganizations since its NAV as of the Valuation Time would be lower relative to a scenario where such excess amounts were not included in the Acquiring Fund's Pre-Reorganization Declared UNII Distribution.

To the extent any Pre-Reorganization Declared UNII Distribution is not an "exempt interest dividend" (as defined in the Code), the distribution may be taxable to shareholders for U.S. federal income tax purposes.

*Expected Costs of the Reorganizations*. Each Board considered the terms and conditions of the applicable Fund's Reorganization Agreement(s), including the estimated costs associated with the Reorganizations, and the allocation of such costs among the Funds. Each Board noted, however, that the Investment Advisor anticipated that the projected costs of the Reorganizations may be recovered over time. Common shareholders of each Fund will indirectly bear all or a portion of the costs of the Reorganizations. The expenses of the Reorganizations of MVT, MIY, MVF and the

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Acquiring Fund are estimated to be approximately $242,000, $364,000, $319,000 and $480,000, respectively. The actual costs associated with the Reorganizations may be more or less than the estimated costs discussed herein. Each Board also noted that the VMTP Holders or VRDP Holders, as applicable, are not expected to bear any of the costs of the Reorganizations, while the common shareholders of the Funds will indirectly bear the costs of the Reorganizations.

*Terms of the Reorganizations and Impact on Shareholders*. Each Board noted that the aggregate NAV (not the market value) of the Acquiring Fund common shares that a Target Fund's common shareholders will receive in the applicable Reorganization is expected to equal the aggregate NAV (not the market value) of the Target Fund common shares that the Target Fund's common shareholders owned immediately prior to the Closing Date. The aggregate NAV of each Fund immediately prior to the applicable Reorganization will reflect accrued expenses associated with such Reorganization. The NAV of MVT, MIY's and MVF's common shares will not be diluted as a result of the Reorganizations. Fractional Acquiring Fund common shares will generally not be issued to MVT, MIY and MVF common shareholders in connection with the Reorganizations, and MVT, MIY and MVF common shareholders should expect to receive cash in lieu of such fractional common shares.

Each Board further noted that holders of MVT, MIY and MVF VMTP Shares or VRDP Shares, as applicable, will receive the same number of Acquiring Fund VRDP Shares as the MVT, MIY and MVF VMTP Shares or VRDP Shares held by such VMTP Holders or VRDP Holders, as applicable, immediately prior to the Closing Date.

*Effect on Shareholder Rights*. Each Board noted that MVT, MIY, MVF and the Acquiring Fund are each organized as a Maryland corporation. Each Board also noted that the common shareholders of each Fund have substantially similar voting rights and rights with respect to the payment of dividends and distribution of assets upon liquidation of their respective Fund and have no preemptive, conversion or exchange rights.

Each Board also noted that the terms of the Acquiring Fund VRDP Shares to be issued in connection with the Reorganizations will have terms that are substantially identical to the terms of the Acquiring Fund's outstanding VRDP Shares and will rank on parity with the Acquiring Fund's outstanding VRDP Shares as to the payment of dividends and the distribution of assets upon dissolution, liquidation or winding up of the affairs of the Acquiring Fund. The Reorganizations will not result in any changes to the terms of the Acquiring Fund's VRDP Shares currently outstanding.

*Alternatives to the Reorganizations*. In reaching its decision to approve the Reorganizations, the Board considered alternatives to the Reorganizations, including continuing to operate each Fund as a separate Fund.

*Potential Benefits to the Investment Advisor and its Affiliates*. Each Board recognized that the Reorganizations may result in some benefits and economies of scale for the Investment Advisor and its affiliates. These may include, for example, administrative and operational efficiencies or a reduction in certain operational expenses as a result of the elimination of MVT, MIY and MVF as separate funds in the BlackRock Fixed-Income Complex.

Each Board noted that, if the Reorganizations are consummated, the annual contractual investment management fee rate of the Acquiring Fund will be the annual contractual investment management fee rate of the Combined Fund, which will be 0.50% of the average daily value of the net assets of the Combined Fund.

*Conclusion*. Each Board, including the Independent Board Members, unanimously approved each Reorganization Agreement and each Issuance, as applicable, concluding that the Reorganizations are in the best interests of its Fund and that the interests of existing common shareholders and preferred shareholders of its Fund will not be diluted with respect to NAV and liquidation preference, respectively, as a result of the Reorganizations. This determination was made on the basis of each Board Member's business judgment after consideration of all of the factors taken as a whole with respect to its Fund and the Fund's common and preferred shareholders, although individual Board Members may have placed different weight on various factors and assigned different degrees of materiality to various factors.

Because the shareholders of each Fund will vote separately on the Fund's respective Reorganization(s) or Issuances, as applicable, there are multiple potential combinations of Reorganizations. To the extent that any Reorganization is

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not completed, any expected expense savings by the Combined Fund, or other potential benefits resulting from the Reorganizations, may be reduced.

If a Reorganization is not consummated, then the Investment Advisor may, in connection with ongoing management of the Fund for which such Reorganization(s) was not consummated and its product line, recommend alternative proposals to the Board of that Fund.]

**TERMS OF THE REORGANIZATION AGREEMENTS** 

The following is a summary of the significant terms of each Reorganization Agreement. This summary is qualified in its entirety by reference to the Forms of Agreement and Plan of Reorganization attached as <u>Appendix A</u> to this Joint Proxy Statement/Prospectus.

<u>Valuation of Assets and Liabilities</u> 

The respective assets of each of the Funds will be valued on the business day prior to the Closing Date of the Reorganizations (the "Valuation Time"). The valuation procedures are the same for each Fund: the NAV per Common Share of each Fund will be determined after the close of business on the NYSE (generally, 4:00 p.m., Eastern Time) at the Valuation Time. For the purpose of determining the NAV of a Common Share of each Fund, the value of the securities held by such Fund plus any cash or other assets (including interest accrued but not yet received) minus all liabilities (including accrued expenses) of such Fund is divided by the total number of common shares of such Fund outstanding at such time. Daily expenses, including the fees payable to the Investment Advisor, will accrue at the Valuation Time.

Dividends will accumulate on the Target Fund's VMTP Shares or VRDP Shares, as applicable, up to and including the day immediately preceding the Closing Date. MVT, MIY and MVF, will receive newly issued VRDP Shares of the Acquiring Fund, par value $0.10 per share and with a liquidation preference of $100,000 per share (plus an amount equal to any accumulated and unpaid dividends that have accrued on the MVT, MIY and MVF VMTP Shares or VRDP Shares, as applicable, up to and including the day immediately preceding the Closing Date if such dividends have not been paid prior to Closing Date), in an amount equal to the number of issued and outstanding MVT, MIY and MVF VMTP Shares or VRDP Shares, as applicable, immediately prior to the Closing Date, and then each of MVT, MIY and MVF VMTP will distribute such newly issued Acquiring Fund VRDP Shares to the MVT, MIY, or MVF VRDP Holders or VMTP Holders, as applicable, pro rata. The newly issued Acquiring Fund VRDP Shares are expected to be of a substantially identical series as those of the Acquiring Fund's outstanding VRDP Shares. No fractional Acquiring Fund VRDP Shares will be issued.

The first dividend period for the Acquiring Fund VRDP Shares to be issued in the Reorganizations will commence on the Closing Date and end on the day immediately preceding the first dividend payment date for such VRDP Shares, which will be the first business day of the month following the month in which the Closing Date occurs.

<u>Amendments and Conditions</u> 

A Reorganization Agreement may be amended at any time prior to the Closing Date with respect to any of the terms therein upon mutual agreement. However, after adoption of the Reorganization Agreement and approval of the Reorganization, no amendment or modification may be made which by law requires further approval by shareholders without such further approval. The obligations of each Fund pursuant to a Reorganization Agreement are subject to various conditions, including a registration statement on Form N-14 being declared effective by the SEC, approval of the Reorganization Agreement by the shareholders of the applicable Target Fund and the Acquiring Fund, certain third-party consents, the approval of each Issuance by the shareholders of the Acquiring Fund, receipt of an opinion of counsel as to tax matters, receipt of an opinion of counsel as to corporate and securities matters and the continuing accuracy of various representations and warranties of the Funds being confirmed by the respective parties.

Each Reorganization is not contingent upon the approval of any other Reorganization. If a Reorganization is not consummated, the Fund for which such Reorganization(s) was not consummated would continue to exist and operate on a standalone basis.

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<u>Postponement; Termination</u> 

Under a Reorganization Agreement, the Board of any Fund that is a party to the Reorganization Agreement may cause the related Reorganization to be postponed or abandoned under certain circumstances should such Board determine that it is in the best interests of the shareholders of its respective Fund to do so. A Reorganization Agreement may be terminated, and the related Reorganization abandoned at any time (whether before or after adoption thereof by the shareholders of either of the Funds involved in the Reorganization) prior to the Closing Date, or the Closing Date may be postponed: (i) by mutual consent of the Boards of such Funds and (ii) by the Board of either such Fund if any condition to that Fund's obligations set forth in the Reorganization Agreement has not been fulfilled or waived by such Board.

<u>Book-Entry Interests</u> 

The Acquiring Fund will issue to MVT, MIY and MVF VRDP Holders or VMTP Holders, as applicable, book-entry interests for the newly issued Acquiring Fund VRDP Shares registered in the name of each of MVT, MIY and MVF and then each of MVT, MIY, and MVF will distribute such newly issued Acquiring Fund VRDP Shares to each holder of MVT, MIY and MVF VRDP Shares or VMTP Shares, as applicable, pro rata. Each Fund's VRDP Shares or VMTP Shares, as applicable, were or will be issued in book-entry form as global securities, and such global securities were deposited with, or on behalf of, The Depository Trust Company ("DTC") and registered in the name of Cede & Co., the nominee of DTC. Beneficial interests in the global securities are held only through DTC and any of its participants.

The Acquiring Fund will issue to MVT, MIY and MVF common shareholders book-entry interests and cash in lieu of fractional common shares, if applicable, for the Acquiring Fund common shares registered in the name of such shareholders on the basis of each shareholder's proportionate interest in the aggregate net asset value of MVT, MIY and MVF common shares, respectively.

<u>Expenses of the Reorganizations</u> 

Each Fund will bear expenses incurred in connection with its Reorganization(s). The expenses incurred in connection with the Reorganizations include but are not limited to, costs related to the preparation and distribution of materials distributed to each Fund's Board, expenses incurred in connection with the preparation of the Reorganization Agreements, the registration statement on Form N-14 and the separate Joint Proxy Statement to preferred shareholders, the printing and distribution of this Joint Proxy Statement/Prospectus delivered to common shareholders, the separate Joint Proxy Statement delivered to preferred shareholders and any other materials required to be distributed to shareholders, SEC and state securities commission filing fees, and legal and audit fees in connection with the Reorganizations, including fees incurred in obtaining the requisite consents of rating agencies, counterparties or service providers to the VMTP Shares or VRDP Shares, legal fees incurred in connection with amending the transaction documents for the VMTP Shares or VRDP Shares, which may include the legal fees of counterparties and service providers to the extent applicable, legal fees incurred preparing each Fund's Board materials, attending each Fund's Board meetings and preparing the minutes, rating agency fees associated with the ratings of the preferred shares in connection with the Reorganization, auditing fees associated with each Fund's financial statements, stock exchange fees, transfer agency fees, rating agency fees, portfolio transfer taxes (if any), and any similar expenses incurred in connection with the Reorganizations.

Common shareholders of each Fund will indirectly bear all or a portion of the costs of the Reorganizations. The expenses of the Reorganizations of MVT, MIY, MVF and the Acquiring Fund are estimated to be approximately $242,000, $364,000, $319,000 and $480,000, respectively. The actual costs associated with the Reorganizations may be more or less than the estimated costs discussed herein. Each Board also noted that the VMTP Holders or VRDP Holders, as applicable, are not expected to bear any of the costs of the Reorganizations, while the common shareholders of the Funds will indirectly bear the costs of the Reorganizations.

Neither the Funds nor the Investment Advisor will pay any direct expenses of shareholders arising out of or in connection with the Reorganizations (*e.g.*, expenses incurred by the shareholder as a result of attending the Special Meeting, voting on the Reorganizations or other action taken by the shareholder in connection with the Reorganizations). The actual costs associated with the Reorganizations may be more or less than the estimated costs discussed herein.

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**APPRAISAL RIGHTS** 

Under Maryland law, a shareholder of a corporation does not have any preemptive rights to subscribe to any additional issue of stock unless expressly provided for in the corporation's charter (which the charter of the Acquiring Fund, does not provide). Under Maryland law, stockholders are entitled to demand the fair value of their shares from the successor entity in connection with a reorganization except where any exceptions apply, which exceptions include if any shares of the class or series are listed on a national securities exchange, such as the common shares of MYI, on the Record Date. No exception exists for the MYI VRDP Shares and therefore the VRDP Holders of MYI are entitled to demand the fair value of their VRDP Shares from the Acquiring Fund.

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**U.S. FEDERAL INCOME TAX CONSEQUENCES OF THE REORGANIZATIONS** 

The following is a general summary of the U.S. federal income tax consequences of the Reorganizations to the U.S. holders of MVT, MIY or MVF common shares. The discussion is based upon the Code, Treasury regulations, court decisions, published positions of the IRS and other applicable authorities, all as in effect on the date hereof and all of which are subject to change or differing interpretations (possibly with retroactive effect). The discussion is limited to U.S. persons who hold common shares of MVT, MIY or MVF as capital assets for U.S. federal income tax purposes (generally, assets held for investment). This summary does not address all of the U.S. federal income tax consequences that may be relevant to a particular shareholder or to shareholders who may be subject to special treatment under U.S. federal income tax laws. No ruling has been or will be obtained from the IRS regarding any matter relating to the Reorganizations. No assurance can be given that the IRS would not assert, or that a court would not sustain, a position contrary to any of the tax aspects described below. This summary of U.S. federal income tax consequences is for general information only. The Funds' shareholders should consult their own tax advisers regarding the U.S. federal income tax consequences of the Reorganizations, as well as the effects of state, local and non-U.S. tax laws, including possible changes in tax law.

It is a condition to the closing of the Reorganizations that each Fund receives an opinion from Willkie, dated as of the Closing Date, regarding the characterization of each Reorganization as a "reorganization" within the meaning of Section 368(a) of the Code. The opinion of Willkie will be based on U.S. federal income tax law in effect on the Closing Date. In rendering its opinion, Willkie will also rely upon certain representations of the management of each Fund and assume, among other things, that the Reorganizations will be consummated in accordance with each Reorganization Agreement and other operative documents and as described herein. An opinion of counsel is not binding on the IRS or any court.

As a reorganization, the U.S. federal income tax consequences of the Reorganizations can be summarized as follows:

● No gain or loss will be recognized by a Fund by reason of the Reorganizations.

● No gain or loss will be recognized by a shareholder of MVT, MIY and MVF who exchanges, as the case may be, all
of its common shares solely for Acquiring Fund common shares or all of its MVT, MIY or MVF VRDP Shares solely for Acquiring Fund VRDP Shares pursuant to the Reorganizations (except with respect to cash received in lieu of a fractional Acquiring Fund
Common Share, as discussed below).

● The aggregate tax basis of Acquiring Fund common shares received by a shareholder of MVT, MIY or MVF pursuant
to the Reorganizations will be the same as the aggregate tax basis of the shareholder's MVT, MIY or MVF common shares surrendered in exchange therefor (reduced by any amount of tax basis allocable to a fractional Acquiring Fund Common Share for
which cash is received).

● The holding period of Acquiring Fund common shares received by a shareholder of MVT, MIY and MVF pursuant to
the Reorganizations will include the holding period of the shareholder's common shares surrendered in exchange therefor.

● A shareholder of MVT, MIY and MVF that receives cash in lieu of a fractional Acquiring Fund Common Share in
connection with the Reorganizations will be treated as having received cash in exchange for such fractional Acquiring Fund Common Share. A MVT, MIY or MVF shareholder that receives cash in lieu of a fractional Acquiring Fund Common Share will
recognize capital gain or loss equal to the difference between the amount of cash deemed received for the fractional Acquiring Fund Common Share and MVT, MIY or MVF shareholder's tax basis in MVT, MIY or MVF common shares allocable to the
fractional Acquiring Fund Common Share. The capital gain or loss will be a long-term capital gain or loss if MVT, MIY or MVF shareholder's holding period for MVT, MIY or MVF common shares is more than one year as of the date the Reorganizations
are consummated.

● The Acquiring Fund's tax basis in MVT's, MIY's and MVF's assets received by the Acquiring
Fund pursuant to the Reorganizations will, in each instance, equal the tax basis of such assets in the hands of MVT, MIY and MVF

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immediately prior to the Closing Date, and the Acquiring Fund's holding period for such assets will, in each instance, include the period during which the assets were held by MVT, MIY or MVF.

The Acquiring Fund intends to continue to be taxed under the rules applicable to regulated investment companies as defined in Section 851 of the Code, which are the same rules currently applicable to each Fund and its shareholders.

None of the Funds intend to sell any assets in connection with the Reorganizations other than in the ordinary course of business. If, however, assets of MVT, MIY and MVF were to be sold in connection with the Reorganizations, or if such assets were required to be marked to market as a result of the termination of MVT's, MIY's and MVF's taxable year or as a result of the transfer of certain assets in the Reorganizations, the tax impact of any such sales (or deemed sales) would depend on the difference between the price at which such portfolio assets are sold and MVT's, MIY's and MVF's basis in such assets. Any capital gains recognized in these sales (or deemed sales) on a net basis will be distributed to MVT, MIY or MVF shareholders as capital gain dividends (to the extent of net realized long-term capital gains) and/or ordinary dividends (to the extent of net realized short-term capital gains) during or with respect to the year of sale (or deemed sale) and prior to or after the date of the Reorganizations, and such distributions will be taxable to MVT, MIY or MVF shareholders.

Prior to the Closing Date, each Fund will declare a distribution to its shareholders, which together with all previous distributions, will have the effect of distributing to the shareholders of such Fund all of the Fund's (i) investment company income (computed without regard to the deduction for dividends paid), if any, through the Closing Date, (ii) net capital gains, if any, through the Closing Date, and (iii) net tax-exempt interest income, if any, through the Closing Date. To the extent that such a distribution is not an "exempt interest dividend" (as defined in the Code), the distribution may be taxable to shareholders for U.S. federal income tax purposes.

The Acquiring Fund will succeed to capital loss carryforwards (and certain unrealized built-in losses, if any) of MVT, MIY and MVF, which are expected to be subject to tax loss limitation rules because each Fund will undergo an "ownership change" for U.S. federal income tax purposes. Because each Fund will undergo an "ownership change," the Code will generally limit the amount of pre-ownership change losses of each Fund that may be used to offset post-ownership change gains to a specific "annual loss limitation amount" (generally the product of (i) the fair market value of the stock of the Fund, with certain adjustments, immediately prior to the Reorganizations and (ii) a rate established by the IRS). Subject to certain limitations, any unused portion of these losses may be available in subsequent years, subject to the remaining portion of any applicable capital loss carryforward limit, as measured from the date of recognition.

Although the capital loss carryforwards of the Combined Fund attributable to MVT, MIY or MVF may be subject to tax loss limitation rules to the extent outlined above, it is currently expected that such tax loss limitation rules should not have a material adverse effect on the Combined Fund's utilization of MVT's, MIY's or MVF's capital loss carryforward as compared with what each Fund's utilization of its own capital loss carryforward would be without the Reorganizations. The ability of each Fund (and the Combined Fund) to utilize any capital loss carryforwards now or in the future depends on many variables and assumptions, including but not limited to, projected performance of a Fund, the unrealized gain/loss position of a Fund, the types of securities held by a Fund, the current and future market environment (including the level of interest rates), portfolio turnover and applicable law, and is, therefore, highly uncertain. As of July 31, 2025, the Funds' unused capital loss carryforwards, which have no expiration date and may be carried forward indefinitely, were as follows:

**Capital Loss Carryforward Amount** 

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| | | | |
|:---|:---|:---|:---|
| **MVT** | **MIY** | **MVF** | **Acquiring Fund (MYI)** |
| [●] | [●] | $[●] | $[●] |

---

Due to the operation of these tax loss limitation rules, it is possible that shareholders of MVT, MIY or MVF or the Acquiring Fund would receive taxable distributions of short-term and long-term capital gains earlier than they would have in the absence of the Reorganizations. Such taxable distributions will be treated either as ordinary income (and not as favorably taxed "qualified dividend income") if such capital gains are short-term or as favorably taxed capital

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gain dividends if such capital gains are long-term. The actual financial effect of the loss limitation rules on a shareholder of MVT, MIY or MVF whose losses are subject to the loss limitation rules would depend on many variables, including MVT's, MIY's or MVF's expected growth rate if the relevant Reorganization were not to occur (*i.e.*, whether, in the absence of the Reorganizations, MVT, MIY or MVF would generate sufficient capital gains against which to utilize its capital loss carryforwards (and certain realized built-in losses), in excess of what would have been the "annual loss limitation amount" had the relevant Reorganizations occurred), the timing and amount of future capital gains recognized by the Combined Fund if the Reorganizations were to occur, and the timing of a historic MVT, MIY or MVF shareholder's disposition of its Shares (the tax basis of which might, depending on the facts, reflect that shareholder's share of such Fund's capital losses). Shareholders of all of the Funds should consult their own tax advisors in this regard.

For five years beginning on the Closing Date of the Reorganizations, the Combined Fund will not be allowed to offset certain pre-Reorganization built-in gains attributable to a Fund that is a gain corporation with capital loss carryforwards (and certain built-in losses) attributable to another Fund.

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**PROPOSAL 2 – ISSUANCE OF ACQUIRING FUND COMMON SHARES** 

In connection with the proposed Reorganization described under "Proposal 1: Reorganization of the Funds," the common shareholders and the VRDP Holders of the Acquiring Fund are being asked to approve the issuance of additional Acquiring Fund common shares.

Please see "Information about the Common Shares of the Funds" for information about the Funds' common shares.

In each Reorganization, the Acquiring Fund will acquire substantially all of the assets and assume substantially all of the liabilities of the Target Fund in exchange solely for newly issued common shares, with a par value of $0.10 per share, and newly issued Acquiring Fund VRDP Shares, with a par value of $0.10 per share and liquidation preference of $100,000 per share (plus any accumulated and unpaid dividends that have accrued on such Target Fund's VRDP Shares up to and including the day immediately preceding the Closing Date of the Reorganization if such dividends have not been paid prior to the Closing Date). The Acquiring Fund will list the newly issued common shares on the NYSEEach of MVT, MIY and MVF will distribute Acquiring Fund Shares received by it pro rata to MVT, MIY and MVF shareholders, respectively (although cash may be paid in lieu of any fractional common shares). The newly-issued Acquiring Fund Shares will be issued in the form of book-entry interests. Such distribution of Acquiring Fund Shares to each Target Fund's shareholders will be accomplished by opening new accounts on the books of the Acquiring Fund in the names of the shareholders of the Target Fund and transferring to those shareholder accounts Acquiring Fund Shares.

The Acquiring Fund will continue to operate after the Reorganization as a registered, diversified, closed-end management investment company with the investment objective, investment strategies, investment policies and investment restrictions described in this Proxy Statement. As a result of the Reorganizations, however, a shareholder of each Fund may hold a reduced percentage of ownership in the larger Combined Fund than such shareholder did in any of the individual Funds before the Reorganization.

If the Issuance with respect to the Reorganization is not approved, the Investment Advisor may, in connection with the ongoing management of that Fund and its product line, recommend alternative proposals to the Board of that Fund.

The Board of the Acquiring Fund recommends that the Acquiring Fund VRDP Holders vote "FOR" each Issuance at the Special Meeting.

The affirmative vote of the holders of a majority of the votes entitled to be cast by holders of the Acquiring Fund common shares and Acquiring Fund VRDP Shares present at the Special Meeting or represented by proxy, voting together as a single class, is required to approve each Issuance under Proposal 2(A), Proposal 2(B) and Proposal 2(C).. For additional information regarding voting requirements, see "Voting Information and Requirements."

Subject to the requisite approval of the shareholders of each Fund with respect to the the respective Reorganization, as well as certain consents, confirmations and/or waivers from various third parties, including the liquidity provider with respect to the outstanding VRDP Shares, it is expected that the Closing Date of the Reorganization will be sometime during the fourth quarter of 2025, but it may be at a different time as described herein.

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**INFORMATION ABOUT THE PREFERRED SHARES OF THE FUNDS** 

MVT's charter authorizes the issuance of 199,990,823 shares of common stock, par value $0.10 per share (the "MVT Common Shares") and 2,700 shares of Auction Market Preferred Stock, par value $0.05, with a liquidation preference of $25,000, plus an amount equal to all accumulated but unpaid dividends (whether or not earned or declared) (the "MVT AMPS Non-Series Shares"), 900 shares of Auction Market Preferred Stock, Series A, par value $0.05, with a liquidation preference of $25,000, plus an amount equal to all accumulated but unpaid dividends (whether or not earned or declared) (the "MVT AMPS Series A Shares"), 900 shares of Auction Market Preferred Stock, Series B, par value $0.05, with a liquidation preference of $25,000, plus an amount equal to all accumulated but unpaid dividends (whether or not earned or declared) (the "MVT AMPS Series B Shares"), 900 shares of of Auction Market Preferred Stock, Series C, par value $0.05, with a liquidation preference of $25,000, plus an amount equal to all accumulated but unpaid dividends (whether or not earned or declared) (the "MVT AMPS Series C Shares"), 1,600 shares of of Auction Market Preferred Stock, Series D, par value $0.05, with a liquidation preference of $25,000, plus an amount equal to all accumulated but unpaid dividends (whether or not earned or declared) (the "MVT AMPS Series D Shares"), 1,400 shares of Series W-7 Retired Variable Rate Muni-Term Preferred Shares, par value $0.10, with a liquidation preference of $100,000 (the "MVT Retired Preferred Shares"), and 777 shares of Series W-7 Variable Rate Muni-Term Preferred Shares, par value $0.10, with a liquidation preference of $100,000 (the "MVT VMPT Shares").

MIY's charter authorizes the issuance of 199,991,081 shares of common stock, par value $0.10 per shares (the "MIY Common Shares") and 2,000 shares of Auction Market Preferred Stock, Series A, par value $0.05, with a liquidation preference of $25,000, plus an amount equal to all accumulated but unpaid dividends (whether or not earned or declared) (the "MIY AMPS Series A Shares"), 1,000 shares of Auction Market Preferred Stock, Series B, par value $0.05, with a liquidation preference of $25,000, plus an amount equal to all accumulated but unpaid dividends (whether or not earned or declared) (the "MIY AMPS Series B Shares"), 1,000 shares of of Auction Market Preferred Stock, Series C, par value $0.05, with a liquidation preference of $25,000, plus an amount equal to all accumulated but unpaid dividends (whether or not earned or declared) (the "MIY AMPS Series C Shares"), 1,000 shares of Auction Market Preferred Stock, Series D, par value $0.05, with a liquidation preference of $25,000, plus an amount equal to all accumulated but unpaid dividends (whether or not earned or declared) (the "MIY AMPS Series D Shares"), and 2,319 shares of Series W-7 Variable Rate Demand Preferred Shares, par value $0.10, with a liquidation preference of $100,000 (the "MIY VRDP Preferred Shares").

MVF's charter authorizes the issuance of 150,000,000 shares of common stock, and 9,968,092 shares of preferred stock (the "MVF General Non-Classified Preferred Stock"), and further classified as 8,250 shares of preferred stock, par value $0.05, with a liquidation preference of $25,000, plus an amount equal to all accumulated but unpaid dividends (whether or not earned or declared) (the "MVF Classified Non-Series Preferred Shares"), 500 shares of Auction Market Preferred Stock, Series A, par value $0.05, with a liquidation preference of $25,000, plus an amount equal to all accumulated but unpaid dividends (whether or not earned or declared) (the "MVF AMPS Series A Shares"), 500 shares of Auction Market Preferred Stock, Series B, par value $0.05, with a liquidation preference of $25,000, plus an amount equal to all accumulated but unpaid dividends (whether or not earned or declared) (the "MVF AMPS Series B Shares"), 500 shares of of Auction Market Preferred Stock, Series C, par value $0.05, with a liquidation preference of $25,000, plus an amount equal to all accumulated but unpaid dividends (whether or not earned or declared) (the "MVF AMPS Series C Shares"), 1,000 shares of Auction Market Preferred Stock, Series D, par value $0.05, with a liquidation preference of $25,000, plus an amount equal to all accumulated but unpaid dividends (whether or not earned or declared) (the "MVF AMPS Series D Shares"), 750 shares of Auction Market Preferred Stock, Series E, par value $0.05, with a liquidation preference of $25,000, plus an amount equal to all accumulated but unpaid dividends (whether or not earned or declared) (the "MVF AMPS Series E Shares"), 2,360 shares of Auction Market Preferred Stock, Series F, par value $0.10, with a liquidation preference of $25,000, plus an amount equal to all accumulated but unpaid dividends (whether or not earned or declared) (the "MVF AMPS Series F Shares") and 2,438 shares of Series W-7 Retired Variable Rate Muni-Term Preferred Shares, par value $0.10, with a liquidation preference of $100,000 (the "MVF Retired Preferred Shares"), and 1,536 shares of Series W-7 Variable Rate Muni-Term Preferred Shares, par value $0.10, with a liquidation preference of $100,000 (the "MVF VMPT Shares").

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The Board of each Fund is authorized, however, to reclassify any unissued common shares to preferred shares without the approval of its common shareholders.

Assuming all of the Reorganizations are approved by the requisite shareholders, upon the Closing Date of the Reorganizations, MVT, MIY and MVF will receive newly issued Acquiring Fund VRDP Shares, par value $0.10 per share and with a liquidation preference of $100,000 per share (plus an amount equivalent to any accumulated and unpaid dividends that have accrued on the MVT, MIY or MVF VMTP Shares or VRDP Shares, as applicable, up to and including the day immediately preceding the Closing Date of the Reorganizations if such dividends have not been paid prior to the Closing Date), in such number equal to the issued and outstanding MVT, MIY or MVF VMTP Shares or VRDP Shares, as applicable, immediately prior to the Closing Date, and such newly issued Acquiring Fund VRDP Shares will then be distributed to the MVT, MIY or MVF VMTP Holders or VRDP Holders, as applicable, pro rata. The newly issued Acquiring Fund VRDP Shares are expected to be of a substantially identical series as those of the Acquiring Fund's outstanding VRDP Shares. No fractional Acquiring Fund VRDP Shares will be issued. The terms of the Acquiring Fund VRDP Shares to be issued in connection with the Reorganizations will be substantially identical to the terms of the Acquiring Fund's outstanding VRDP Shares and will rank on parity with the Acquiring Fund's outstanding VRDP Shares as to the payment of dividends and the distribution of assets upon dissolution, liquidation or winding up of the affairs of the Acquiring Fund. The Reorganizations will not result in any changes to the terms of the Acquiring Fund's VRPD Shares currently outstanding.

The newly issued Acquiring Fund VRDP Shares will have terms that are substantially similar to the terms of the outstanding MIY VRDP Shares, except that the dividend rate of the newly issued Acquiring Fund VRDP Shares will be set weekly by the remarketing agent for the Acquiring Fund VRDP Shares, whereas the dividend rates of the currently outstanding MIY VRDP Shares are based on a variable rate set weekly at a fixed rate spread to the Securities Industry and Financial Markets Association Municipal Swap Index. In addition, the MIY VRDP Shares have a mandatory redemption date of May 1, 2041, while the newly issued Acquiring Fund VRDP Shares are expected to have a mandatory redemption date of June 1, 2041. A Fund may designate any succeeding subsequent rate period of the VRDP Shares as a "special rate period" subject to the restrictions and requirements set forth in the governing instrument for such Fund's VRDP Shares. During a special rate period, a Fund may choose to modify the terms of the VRDP Shares as permitted by the governing instrument for such Fund's VRDP Shares, including, for example, special provisions relating to the calculation of dividends and the redemption of the VRDP Shares. The Reorganizations will not result in any changes to the terms of the Acquiring Fund's VRDP Shares currently outstanding.

In connection with the Reorganizations, the Acquiring Fund expects to issue [777] additional VRDP Shares to MVT VRDP Holders, [2,319] additional VRDP Shares to MIY VRDP Holders and [1,536] additional VRDP Shares to MVF VRDP Holders. Following the completion of the Reorganizations, the Combined Fund is expected to have [8,196] VRDP Shares outstanding. As a result of the Reorganization, the Acquiring Fund's Articles Supplementary will be amended to authorize to issue [777] additional VRDP Shares to MVT VRDP Holders, [2,319] additional VRDP Shares to MIY VRDP Holders and [1,536] additional VRDP Shares to MVF VRDP Holders. A form of such amendment is attached as <u>Appendix C</u>.

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Set forth below is information about each Fund's outstanding preferred shares as of July 31, 2025.

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| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
| **Fund** | **Title of** <br>**Class** | **Amount<br> Authorized** | **Amount<br>Authorized<br>Under Each<br>Series** | **Amount<br>Held by<br>Fund for<br>its Own<br>Account** | **Amount<br>Outstanding<br>Exclusive of<br>Amount<br>Shown in<br>Previous<br>Column** | **Issue**<br> **Date** | **Mandatory/Term<br>Redemption Date** |
| MVT | VMTP<br>Shares | [8,400] | [●] | [●] | [●] | [●] | [●] |
| MIY | VRDP<br>Shares | [8,919] | [●] | [●] | [●] | [●] | [●] |
| MVF | VMTP<br>Shares | [10,000,000] | [●] | [●] | [●] | [●] | [●] |
| Acquiring Fund (MYI) | VRDP<br>Shares | [26,364] | [●] | [●] | [●] | [●] | [●] |

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The outstanding preferred shares of each Fund are fully paid and non-assessable, except as provided by each Fund's respective charter, and have no preemptive or cumulative voting rights.

Below is a table that details, as of July 31, 2025, (i) each Fund's current leverage attributable to preferred shares as a percentage of its total net assets, (ii) the Combined Fund's leverage attributable to preferred shares on a *pro forma* basis as a percentage of its total net assets assuming only the MVT Reorganization was consummated as of June 30, 2025 and (iii) the Combined Fund's leverage attributable to preferred shares on a *pro forma* basis as a percentage of its total net assets assuming all of the Reorganizations were consummated as of June 30, 2025.

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| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| **Fund**  | **Title of** <br>**Class** | **Shares**<br> **Outstanding** | **Liquidation** <br>**Preference<br>Per Share** | **Aggregate**<br> **Liquidation** <br>**Preference** | **Total Managed <br>Assets** | **As<br>Percentage<br>of Net<br>Assets** |
|  MVT | VMTP<br>Shares | [777] | $100000 | $77700000 | $393832030.67 | 33.00% |
|  MIY | VRDP<br>Shares | [2,319] | $100000 | $231900000 | $578363287.71 | 66.93% |
|  MVF | VMTP<br>Shares | [1,536] | $100000 | $153600000 | $700900102.51 | 36.96% |
|  Acquiring Fund (MYI) | VRDP<br>Shares | [3,564] | $100000 | $356400000 | $1284467352.88 | 46.80% |
|  *Pro forma* Combined Fund (MVT into MYI) | VRDP<br>Shares | 4341 | $100000 | $434100000 | $1678299384 | 43.54% |
|  *Pro forma* Combined Fund (MVT, MIY, MVF into MYI) | VRDP<br>Shares | 8196 | $100000 | $819600000 | $2957562774 | 46.59% |

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The MVT and MVF VMTP Shares and the Acquiring Fund and MIY VRDP Shares were offered to qualified institutional buyers in private transactions exempt from registration under the Securities Act.

The annualized dividend rates for the preferred shares for each Fund for the twelve-month period ended January 31, 2025 were as follows:

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| | | |
|:---|:---|:---|
| **Fund** | **Preferred Shares**  | **Rate**  |
|  MVT | VMTP Shares | 4.69% |

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|:---|:---|:---|
|  MIY | VRDP Shares | 4.22% |
|  MVF | VMTP Shares | 4.69% |
|  Acquiring Fund (MYI) | VRDP Shares | 4.22% |

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The Board of each Fund has authorized the redemption of up to 67% of the Fund's currently outstanding VRDP or VMTP Shares, as applicable, on one or more occasions between April 1, 2025 and October 1, 2025. Any such redemption is not related to the Reorganization or contingent on shareholder approval of the Reorganization. The timing and amount of any redemption of a Fund's currently outstanding VRDP Shares would depend on a number of factors, including, among others, the desired mix of leverage from preferred shares versus TOBs, yield levels and borrowing costs.

**Description of the VRDP Shares of the Acquiring Fund and MIY** 

The Acquiring Fund and MIY VRDP Shares each have the benefit of an unconditional demand feature pursuant to a purchase agreement provided by Toronto-Dominion Bank acting as liquidity provider to ensure full and timely repayment of the liquidation preference amount plus any accumulated and unpaid dividends to holders upon the occurrence of certain events (the "Liquidity Facility"). The Acquiring Fund and MIY each entered into fee agreements with the liquidity provider (each, a "Fee Agreement") in connection with the applicable Liquidity Facility that requires a monthly liquidity fee payable to the liquidity provider. The Fee Agreements between each of the Acquiring Fund and MIY and the liquidity provider are scheduled to expire, unless renewed or terminated in advance, on July 5, 2026.

Each Liquidity Facility requires the liquidity provider to purchase all VRDP Shares tendered for sale that were not successfully remarketed. The applicable Fund is required to redeem its VRDP Shares owned by the liquidity provider after six months of continuous, unsuccessful remarketing. Upon the occurrence of the first unsuccessful remarketing, the Fund is required to segregate liquid assets to fund the redemption.

In the event the VRDP Shares Purchase Agreement (the "Purchase Agreement") for the Acquiring Fund or MIY is not renewed, and the applicable Fund does not arrange for a Purchase Agreement with an alternate liquidity provider, the Fund's VRDP Shares will be subject to mandatory purchase by the liquidity provider prior to the termination of the Purchase Agreement. There is no assurance the applicable Fund will replace such redeemed VRDP Shares with any other preferred shares or other form of leverage.

Except during a special rate period, VRDP Holders have the right to give notice on any business day to tender the Acquiring Fund's or MIY's VRDP Shares for remarketing in seven days, the VRDP Shares are subject to a mandatory tender for remarketing upon the occurrence of certain events, and should a remarketing be unsuccessful, the dividend rate for such VRDP Shares will reset to a maximum rate as defined in the governing documents of the VRDP Shares. The VRDP Shares are also subject to certain restrictions on transfer outside of the remarketing process. Except during a special rate period, the applicable Fund may incur remarketing fees at the annual rate set forth below:

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| | | |
|:---|:---|:---|
| **Fund** | **Remarketing Agent** | **Remarketing Agent Fee** |
|  MIY | TD Securities (USA) LLC | [●] |
|  Acquiring<br> Fund (MYI) | TD Securities (USA) LLC | [●] |

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The Acquiring Fund and MIY are required to redeem their VRDP Shares on June 1, 2041 and May 1, 2041, respectively, the mandatory redemption date for such VRDP Shares, unless earlier redeemed or repurchased. Six months prior to the mandatory redemption date, the applicable Fund is required to begin to segregate liquid assets with its custodian to fund the redemption. In addition, the Fund is required to redeem certain of its outstanding VRDP Shares if it fails to maintain certain asset coverage, basic maintenance amount or leverage requirements.

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Subject to certain conditions, the Acquiring Fund's and MIY's VRDP Shares may be redeemed, in whole or in part, at any time at the option of the applicable Fund. The redemption price per VRDP Share is equal to the liquidation value per VRDP Share plus any outstanding unpaid dividends.

Except during a special rate period, dividends on the Acquiring Fund's and MIY's VRDP Shares are payable monthly at a variable rate set weekly by the remarketing agent. Such dividend rates are generally based upon a spread over a base rate and cannot exceed a maximum rate. In the event of a failed remarketing, the dividend rate of the VRDP Shares will be reset to a maximum rate. The maximum rate is determined based on, among other things, the long-term preferred share rating assigned to the VRDP Shares and the length of time that the VRDP Shares fail to be remarketed. The maximum rate of the VRDP Shares will not exceed 15% per annum, exclusive of any applicable gross-up payments or increased dividend payment relating to the inclusion in any dividend of net capital gains or ordinary income taxable for regular U.S. federal income tax purposes.

As of July 31, 2025, the VRDP Shares of the Acquiring Fund and MIY have a long-term ratings of [Aa1] and [Aa2] from Moody's, respectively, and [AA] and [AA] from Fitch, respectively.

The short-term ratings on the VRDP Shares of the Acquiring Fund and MIY were withdrawn by Moody's, Fitch and/or S&P at the commencement of the special rate period, as described below. The short-term ratings on a Fund's VRDP Shares are directly related to the short-term ratings of the liquidity provider for the Fund's VRDP Shares. Changes in the credit quality of the liquidity provider could cause a change in the short-term credit ratings of the VRDP Shares. Except during a special rate period, a change in the short-term credit rating of the liquidity provider or the VRDP Shares may adversely affect the dividend rate paid on such VRDP Shares, although the dividend rate paid on the VRDP Shares is not directly related to the short-term rating. The liquidity provider may be terminated prior to the scheduled termination date if the liquidity provider fails to maintain short-term debt ratings in one of the two highest rating categories.

The Acquiring Fund's and MIY's VRDP Shares are senior in priority to the applicable Fund's common shares as to the payment of dividends and the distribution of assets upon dissolution, liquidation or winding up of the affairs of such Fund. The VRDP Shares will rank on parity with other preferred shares of the Fund as to the payment of dividends and the distribution of assets upon dissolution, liquidation or winding up of the affairs of the applicable Fund. The 1940 Act prohibits the declaration of any dividend on common shares or the repurchase of common shares prior to the declaration of any dividend on the VRDP Shares or redemption of the VRDP Shares if the applicable Fund fails to maintain the asset coverage of at least 200% of the liquidation preference of the outstanding VRDP Shares. In addition, pursuant to the VRDP Shares' governing instruments, each of the Acquiring Fund and MIY is restricted from declaring and paying dividends on classes of shares ranking junior to or on parity with the VRDP Shares or repurchasing such shares if the applicable Fund fails to declare and pay dividends on the VRDP Shares, redeem any VRDP Shares required to be redeemed under the VRDP Shares' governing instruments or comply with the basic maintenance amount requirement of the agencies rating the VRDP Shares.

The VRDP Holders have voting rights equal to the Acquiring Fund's and MIY's common shareholders (one vote per Share) and will vote together with such common shareholders (one vote per Share) as a single class. However, the VRDP Holders, voting as a separate class, are also entitled to elect two Board Members for the applicable Fund. In addition, the 1940 Act requires that along with approval by shareholders that might otherwise be required, the approval of a 1940 Act Majority of the VRDP Holders of the applicable Fund, voting separately as a class, would be required to (a) adopt any plan of reorganization that would adversely affect the VRDP Shares of the Fund, (b) change the Fund's sub-classification as a closed-end management investment company or change its fundamental investment restrictions or (c) change its business so as to cease to be an investment company.

Each of the Acquiring Fund and MIY previously commenced a special rate period on the date set forth below. The Acquiring Fund's special rate period commenced on June 22, 2022 and is currently set to expire on June 17, 2026. MIY's special rate period commenced on June 25, 20201 and is currently set to expire on June 17, 2026.

The VRDP Holders and the Acquiring Fund may mutually agree to extend the special rate period prior to the expiration of the special rate period. If the special rate period is not extended, the VRDP Shares will revert to remarketable securities upon the termination of the special rate period and will be remarketed and available for purchase by qualified institutional investors. A Liquidity Facility remains in effect for the duration of the special rate

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period and the VRDP Shares are still subject to mandatory redemption by the Acquiring Fund on their mandatory redemption date. However, the VRDP Shares will not be remarketed or subject to optional or mandatory tender events during such time.

During the special rate period, each of the Acquiring Fund and MIY are required to maintain the same asset coverage, basic maintenance amount and leverage requirements for the VRDP Shares as was required prior to the special rate period.

During its current special rate period, each of the Acquiring Fund and MIY pay dividends monthly based on the sum of the SIFMA Municipal Swap Index and a percentage per annum based on the long-term ratings assigned to the VRDP Shares (the "Ratings Spread"). The Ratings Spread will increase in the event the VRDP Shares are rated below Aa3/AA- by all of the rating agencies rating the VRDP Shares at the time such Ratings Spread is determined, up to a maximum of 3.40% in the event the VRDP Shares are either rated below Baa3/BBB- by at least one of the rating agencies then rating the VRDP Shares or not rated by any rating agency. As of July 31, 2025, the VRDP Shares of the Acquiring Fund and MIY were assigned long-term ratings of [Aa1] and [Aa2] from Moody's, respectively, and [AA] and [AA] from Fitch, respectively.

The annualized dividend rate of the MIY and the Acquiring Fund VRDP Shares for the twelve-month period ended January 31, 2025 were as follows:

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|:---|:---|
| **Fund** | **Rate** |
|  MIY | 4.22% |
|  Acquiring Fund (MYI) | 4.22% |

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If a special rate period is not extended, the VRDP Shares will revert back to remarketable securities and will be remarketed and available for purchase by qualified institutional investors. There is no assurance that the VRDP Shares will be remarketed or purchased by investors after the termination of a special rate period. If the VRDP Shares are not remarketed or purchased, then a failed remarketing will occur. As described above, in the event of a failed remarketing, the dividend rate of the VRDP Shares will be reset to the maximum rate and the VRDP Shares that have not been remarketed are required to be purchased by the liquidity provider and subject to redemption by the applicable Fund after six months of continuous, unsuccessful remarketing.

**Description of the VMTP Shares of MVT and MVF** 

The MVT and MVF VMTP Shares may be redeemed, in whole or in part, at any time at the option of the applicable Fund. The redemption price per VMTP Share is equal to the liquidation preference per share plus any outstanding unpaid dividends. Each of MVT and MVF is required to redeem its VMTP Shares on the term redemption date of the VMTP Shares, unless earlier redeemed or repurchased or unless extended. Such term redemption date is July 2, 2026, unless extended. Six months prior to the term redemption date of the VMTP Shares, the applicable Fund is required to begin to segregate liquid assets with the Fund's custodian to fund the redemption. In addition, the applicable Fund is required to redeem certain of its outstanding VMTP Shares if it fails to comply with certain asset coverage, basic maintenance amount or leverage requirements.

Dividends on MVT's and MVF's VMTP Shares are declared daily and payable monthly at a variable rate set weekly at a fixed rate spread to to the Securities Industry and Financial Markets Association Municipal Swap Index. The fixed spread is determined based on the long-term preferred share rating assigned to the VMTP Shares by the ratings agencies then rating the VMTP Shares. As of July 31, 2025, the VMTP Shares of each of MVT and MVF have a long-term rating of [Aa1] from Moody's and [AA] from Fitch. The dividend rate on the MVT and MVF VMTP Shares is subject to a step-up spread if the applicable Fund fails to comply with certain provisions, including, among other things, the timely payment of dividends, redemptions or gross-up payments, and complying with certain asset coverage and leverage requirements. The annualized dividend rate of the MVT and MVF VMTP Shares for the twelve-month period ended January 31, 2025 were as follows:

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|:---|:---|
| **Fund** | **Rate** |
|  MVT | 4.69% |

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|:---|:---|
|  MVF | 4.69% |

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MVT's and MVF's VMTP Shares are subject to certain restrictions on transfer, and the applicable Fund may also be required to register its VMTP Shares for sale under the Securities Act under certain circumstances. In addition, amendments to MVT's and MVF's VMTP Shares' governing documents generally require the consent of the holders of VMTP Shares.

For each of MVT and MVF, its VMTP Shares rank prior its common shares as to the payment of dividends by the applicable Fund, and distribution of assets upon dissolution or liquidation of the applicable Fund. For MVT and MVF, the 1940 Act prohibits the declaration of any dividend on the applicable Fund's common shares or the repurchase of the Fund's common shares if the Fund fails to maintain asset coverage of at least 200% of the liquidation preference of its outstanding VMTP Shares. In addition, pursuant to the VMTP Shares' governing instruments, MVT and MVF are restricted from declaring and paying dividends on classes of shares ranking junior to or on parity with the applicable Fund's VMTP Shares or repurchasing such shares if the Fund fails to declare and pay dividends on the VMTP Shares, redeem any VMTP Shares required to be redeemed under the VMTP Shares' governing instrument or comply with the basic maintenance amount requirement of the ratings agencies rating the VMTP Shares.

The holders of MVT's and MVF's VMTP Shares have voting rights equal to the voting rights of the holders of its common shares (one vote per share) and will vote together with holders of its common shares (one vote per share) as a single class on certain matters. However, the VMTP Shareholders, voting as a separate class, are also entitled to elect two directors to the Board of the applicable Fund. VMTP Shareholders are also entitled to elect the smallest number of directors onto the applicable Fund's board of directors that would constitute a majority if dividends on the VMTP Shares are not paid for a period of two years. VMTP Shareholders are also generally entitled to a separate class vote to amend the VMTP Shares' governing document as long as such amendment does not adversely affect the rights of holders of other classes of shares. In addition, the 1940 Act requires the approval of the holders of a majority of any outstanding VMTP Shares, voting as a separate class, to (a) adopt any plan of reorganization that would adversely affect the VMTP Shares, (b) change the respective fund's sub-classification as a closed-end investment company or change its fundamental investment restrictions or (c) change its business so as to cease to be an investment company.

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**RISK FACTORS AND SPECIAL CONSIDERATIONS** 

**Comparison of Risks** 

The Combined Fund will be managed in accordance with the same investment objective and investment strategies and policies, and subject to the same risks, as the Acquiring Fund. The Funds have similar investment objectives and similar investment strategies, policies and restrictions and are subject to similar investment risks.

Each Fund utilizes leverage through the issuance of either VMTP Shares or VRDP Shares and TOBs. See "The Acquiring Fund's Investments—Leverage;" "General Risks of Investing in the Acquiring Fund—Leverage Risk;" and "General Risks of Investing in the Acquiring Fund—Tender Option Bond Risk." Each of the Acquiring Fund and MIY currently leverages its assets through the use of VRDP Share and TOBs. Each of MVT and MVF currently leverages its assets through the use of VMTP Shares and TOBs. The Acquiring Fund is expected to continue to leverage its assets after the Closing Date of the Reorganizations through the use of VRDP Shares and TOBs. After the consummation of the Reorganizations, common shareholders of the Acquiring Fund, including former Target Fund common shareholders, will bear the leverage costs associated with the Acquiring Fund VRDP Shares and will be subject to the terms of the Acquiring Fund VRDP Shares, including that the Acquiring Fund VRDP Shares will be senior in priority to the Acquiring Fund common shares as to the payment of dividends and the distribution of assets upon dissolution, liquidation or winding up of the affairs of the Acquiring Fund. Please see "Information about the Preferred Shares of the Funds" for additional information about the preferred shares of each Fund.

Risks that predominately affect the common shares of the Funds include risks associated with municipal obligations, such as interest rate risk, credit risk, and leverage risk. In addition, as exchange-traded closed-end funds, the Funds are subject to the risk that the Funds' common shares may trade at a discount from the Funds' NAV. Accordingly, the Funds are primarily designed for long-term investors and should not be considered a vehicle for trading purposes. In the normal course of business, each Fund invests in securities and enters into transactions where risks exist due to fluctuations in the market (market risk) or failure of the issuer of a security to meet all its obligations (issuer credit risk). The value of securities held by the Funds may decline in response to certain events, including those directly involving the issuers whose securities are owned by the Funds; conditions affecting the general economy; overall market changes; pandemics, epidemics and other global health events; local, regional or global political, social or economic instability; and currency and interest rate and price fluctuations. Similar to issuer credit risk, the Funds may be exposed to counterparty credit risk, or the risk that an entity with which the Funds have unsettled or open transactions may fail to or be unable to perform on its commitments.

Risk is inherent in all investing. An investment in the common shares of the Acquiring Fund should not be considered a complete investment program. Each shareholder should take into account the Acquiring Fund's investment objective as well as the shareholder's other investments when considering an investment in the Acquiring Fund. You may lose part or all of your investment in the Acquiring Fund or your investment may not perform as well as other similar investments.

**General Risks of Investing in the Acquiring Fund** 

Because of their similar investment objectives and similar investment strategies, each Fund is subject to similar investment risks associated with an investment in common shares of the relevant Fund. With respect to the differences in risks, those risks of MVT, MIY and/or MVF that are not shared with the Acquiring Fund are generally a result of differences in the Funds' principal investment strategies described above under "Summary—Investment Objective and Policies."

The Combined Fund will be managed in accordance with the same investment objective, investment strategies and investment policies, and subject to the same risks, as the Acquiring Fund. Risk is inherent in all investing. The value of your investment in the Acquiring Fund, as well as the amount of return you receive on your investment, may fluctuate significantly from day to day and over time. The Acquiring Fund is not meant to provide a vehicle for those who wish to exploit short-term swings in the stock market and is intended for long-term investors. An investment in common shares of the Acquiring Fund should not be considered a complete investment program. Each shareholder should take into account the Acquiring Fund's investment objective as well as the shareholder's other investments

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when considering an investment in the Acquiring Fund. You may lose part or all of your investment in the Acquiring Fund or your investment may not perform as well as other similar investments.

The risks that predominately affect common shares of the Acquiring Fund, and therefore, the Combined Fund, include the following:

*Investment and Market Discount Risk.* An investment in the Acquiring Fund's common shares is subject to investment risk, including the possible loss of the entire amount that you invest. As with any stock, the price of the Acquiring Fund's common shares will fluctuate with market conditions and other factors. If shares are sold, the price received may be more or less than the original investment. Common shares are designed for long-term investors and the Acquiring Fund should not be treated as a trading vehicle. Shares of closed-end management investment companies frequently trade at a discount from their net asset value. This risk is separate and distinct from the risk that the Acquiring Fund's net asset value could decrease as a result of its investment activities. At any point in time an investment in the Acquiring Fund's common shares may be worth less than the original amount invested, even after taking into account distributions paid by the Acquiring Fund. During periods in which the Acquiring Fund is using leverage, the Acquiring Fund's investment, market discount and certain other risks will be magnified. 

*Municipal Securities Market Risk*. Economic exposure to the municipal securities market involves certain risks. The Acquiring Fund's economic exposure to municipal securities includes municipal securities in the Acquiring Fund's portfolio and municipal securities to which the Acquiring Fund is exposed through the ownership of residual interests in municipal TOBs ("TOB Residuals"). The municipal market is one in which dealer firms make markets in bonds on a principal basis using their proprietary capital. Most municipal securities will not be registered with the SEC or any state securities commission and will not be listed on any national securities exchange. The amount of public information available about the municipal securities to which the Acquiring Fund is economically exposed is generally less than that for corporate equities or bonds, and the investment performance of the Acquiring Fund may therefore be more dependent on the analytical abilities of the Investment Advisor than would be a fund investing solely in stocks or taxable bonds. The secondary market for municipal securities, particularly the below investment grade securities to which the Acquiring Fund may be economically exposed, also tends to be less well-developed or liquid than many other securities markets, which may adversely affect the Acquiring Fund's ability to sell such securities at attractive prices or at prices approximating those at which the Acquiring Fund currently values them.

In addition, many state and municipal governments that issue securities are under significant economic and financial stress and may not be able to satisfy their obligations. The ability of municipal issuers to make timely payments of interest and principal may be diminished during general economic downturns and as governmental cost burdens are reallocated among federal, state and local governments. The taxing power of any governmental entity may be limited by provisions of state constitutions or laws and an entity's credit will depend on many factors, including the entity's tax base, the extent to which the entity relies on federal or state aid, and other factors which are beyond the entity's control. In addition, laws enacted in the future by Congress or state legislatures or referenda could extend the time for payment of principal and/or interest, or impose other constraints on enforcement of such obligations or on the ability of municipalities to levy taxes. Issuers of municipal securities might seek protection under the bankruptcy laws. In the event of bankruptcy of such an issuer, holders of municipal securities could experience delays in collecting principal and interest and such holders may not, in all circumstances, be able to collect all principal and interest to which they are entitled. To enforce its rights in the event of a default in the payment of interest or repayment of principal, or both, the Acquiring Fund may take possession of and manage the assets securing the issuer's obligations on such securities, which may increase the Acquiring Fund's operating expenses. Any income derived from the Acquiring Fund's ownership or operation of such assets may not be tax-exempt or may fail to generate qualifying income for purposes of the income tests applicable to regulated investment companies ("RICs").

*Taxable Municipal Securities Risk.* Build America Bonds involve similar risks as municipal bonds, including credit and market risk. In particular, should a Build America Bond's issuer fail to continue to meet the applicable requirements imposed on the bonds as provided by the American Recovery and Reinvestment Act ("<u>ARRA</u>"), it is possible that such issuer may not receive federal cash subsidy payments, impairing the issuer's ability to make scheduled interest payments. The Build America Bond program expired on December 31, 2010 and no further issuance is permitted unless Congress renews the program. As a result, the number of available Build America Bonds is limited, which may negatively affect the value of the Build America Bonds. In addition, there can be no assurance that Build

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America Bonds will be actively traded. It is difficult to predict the extent to which a market for such bonds will continue, meaning that Build America Bonds may experience greater illiquidity than other municipal obligations. The Build America Bonds outstanding as of December 31, 2010 will continue to be eligible for the federal interest rate subsidy, which continues for the life of the Build America Bonds; however, no bonds issued following expiration of the Build America Bond program will be eligible for the U.S. federal tax subsidy.

*Municipal Securities Risks*. Municipal securities risks include the ability of the issuer to repay the obligation, the relative lack of information about certain issuers of municipal securities, and the possibility of future legislative changes which could affect the market for and value of municipal securities. These risks include:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) General Obligation Bonds Risks — Timely payments depend on the issuer's credit quality, ability to
raise tax revenues and ability to maintain an adequate tax base.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) Revenue Bonds Risks — These payments depend on the money earned by the particular facility or class of
facilities, or the amount of revenues derived from another source.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3) Private Activity Bonds Risks — Municipalities and other public authorities issue private activity bonds
to finance development of industrial facilities for use by a private enterprise. The private enterprise pays the principal and interest on the bond, and the issuer does not pledge its faith, credit and taxing power for repayment.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(4) Moral Obligation Bonds Risks — Moral obligation bonds are generally issued by special purpose public
authorities of a state or municipality. If the issuer is unable to meet its obligations, repayment of these bonds becomes a moral commitment, but not a legal obligation, of the state or municipality.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(5) Municipal Notes Risks — Municipal notes are shorter term municipal debt obligations. If there is a
shortfall in the anticipated proceeds, the notes may not be fully repaid and the Acquiring Fund may lose money.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(6) Municipal Lease Obligations Risks — In a municipal lease obligation, the issuer agrees to make payments
when due on the lease obligation. Although the issuer does not pledge its unlimited taxing power for payment of the lease obligation, the lease obligation is secured by the leased property.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(7) Tax-exempt Status Risk — The Acquiring Fund and the Investment
Advisor will rely on the opinion of issuers' bond counsel and, in the case of certain derivative securities, sponsors' counsel, on the tax-exempt status of interest on municipal bonds and payments
under derivative securities. Neither the Acquiring Fund nor the Investment Advisor will independently review the bases for those tax opinions, which may ultimately be determined to be incorrect and subject the Acquiring Fund and its shareholders to
substantial tax liabilities.

*Risk Factors and Special Considerations Relating to Municipal Securities*. The risks and special considerations involved in investment in municipal securities vary with the types of instruments being acquired. Certain instruments in which the Acquiring Fund may invest may be characterized as derivative instruments. See "The Acquiring Fund's Investments—Description of MYI Municipal Bonds" and "The Acquiring Fund's Investments—Strategic Transactions and Other Management Techniques—Financial Futures Transactions and Options."

The value of municipal securities generally may be affected by uncertainties in the municipal markets as a result of legislation or litigation, including legislation or litigation that changes the taxation of municipal securities or the rights of municipal security holders in the event of a bankruptcy. Municipal bankruptcies are rare, and certain provisions of the U.S. Bankruptcy Code governing such bankruptcies are unclear. Further, the application of state law to municipal security issuers could produce varying results among the states or among municipal security issuers within a state.

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These uncertainties could have a significant impact on the prices of the municipal securities in which the Acquiring Fund invests.

*Taxability Risk.* The Acquiring Fund intends to minimize the payment of taxable income to shareholders by investing in tax-exempt or municipal securities in reliance at the time of purchase on an opinion of bond counsel to the issuer that the interest paid on those securities will be excludable from gross income for U.S. federal income tax purposes. Such securities, however, may be determined to pay, or have paid, taxable income subsequent to the Acquiring Fund's acquisition of the securities. In that event, the treatment of dividends previously paid or to be paid by the Acquiring Fund as "exempt interest dividends" could be adversely affected, subjecting the Acquiring Fund's shareholders to increased U.S. federal income tax liabilities. Alternatively, the Acquiring Fund might enter into an agreement with the IRS to pay an agreed upon amount in lieu of the IRS adjusting individual shareholders' income tax liabilities. If the Acquiring Fund agrees to enter into such an agreement, the Acquiring Fund's yield could be adversely affected. Further, shareholders at the time the Acquiring Fund enters into such an agreement that were not shareholders when the dividends in question were paid would bear some cost for a benefit they did not receive. Federal tax legislation may limit the types and volume of bonds the interest on which qualifies for a federal income tax-exemption. As a result, current legislation and legislation that may be enacted in the future may affect the availability of municipal securities for investment by the Acquiring Fund. In addition, future laws, regulations, rulings or court decisions may cause interest on municipal securities to be subject, directly or indirectly, to U.S. federal income taxation or interest on state municipal securities to be subject to state or local income taxation, or the value of state municipal securities to be subject to state or local intangible personal property tax, or may otherwise prevent the Acquiring Fund from realizing the full current benefit of the tax-exempt status of such securities. Any such change could also affect the market price of such securities, and thus the value of an investment in the Acquiring Fund.

*Alternative Minimum Tax and Capital Gain Tax Risk*. The Acquiring Fund expects that a portion of the interest or income it produces will be includable in alternative minimum taxable income. There is no limit on the portion of the Acquiring Fund's assets that may be invested in municipal securities the income from which would be subject to the alternative minimum tax. Exempt interest dividends also are likely to be subject to state and local income taxes. Distributions of any capital gain or other taxable income will be taxable to shareholders. The Acquiring Fund's common shares may not be a suitable investment for investors who are subject to the federal alternative minimum tax or who would become subject to such tax by purchasing common shares. The suitability of an investment in the Acquiring Fund's common shares will depend upon a comparison of the after-tax yield likely to be provided from the Acquiring Fund with that from comparable tax-exempt investments not subject to the alternative minimum tax, and from comparable fully taxable investments, in light of each such investor's tax position.

*Nonpayment Risk*. Municipal bonds, like other debt obligations, are subject to the risk of nonpayment. The ability of issuers of municipal securities to make timely payments of interest and principal may be adversely impacted in general economic downturns and as relative governmental cost burdens are allocated and reallocated among federal, state and local governmental units. Such nonpayment would result in a reduction of income to the Acquiring Fund and could result in a reduction in the value of the municipal security experiencing nonpayment and a potential decrease in the net asset value of the Acquiring Fund.

*Fixed-Income Securities Risks*. Fixed-income securities in which the Acquiring Fund may invest are generally subject to the following risks:

<u>Interest Rate Risk</u>. The market value of bonds and other fixed-income securities changes in response to interest rate changes and other factors. Interest rate risk is the risk that prices of bonds and other fixed-income securities will increase as interest rates fall and decrease as interest rates rise. The Acquiring Fund may be subject to a greater risk of rising interest rates due to the recent period of historically low interest rates. The Federal Reserve has recently begun to raise the federal funds rate as part of its efforts to address rising inflation. There is risk that interest rates will continue to rise, which will likely drive down prices of bonds and other fixed-income securities. The magnitude of these price reductions in the market price of bonds and other fixed-income securities is generally greater for those securities with longer maturities. Fluctuations in the market price of the Acquiring Fund's investments will not affect interest income derived from instruments already owned by the Acquiring Fund, but will be reflected in the Acquiring Fund's NAV. The Acquiring Fund may lose money if short-term or long-term interest rates rise sharply in a manner not anticipated by the Acquiring Fund's management. To the extent the Acquiring Fund invests in debt securities that may be prepaid at the option of the obligor, the sensitivity of such securities to changes in interest rates may increase

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(to the detriment of the Acquiring Fund) when interest rates rise. Moreover, because rates on certain floating rate debt securities typically reset only periodically, changes in prevailing interest rates (and particularly sudden and significant changes) can be expected to cause some fluctuations in the NAV of the Acquiring Fund to the extent that it invests in floating rate debt securities. These basic principles of bond prices also apply to U.S. Government securities. A security backed by the "full faith and credit" of the U.S. Government is guaranteed only as to its stated interest rate and face value at maturity, not its current market price. Just like other fixed-income securities, government-guaranteed securities will fluctuate in value when interest rates change.

The Acquiring Fund's use of leverage will tend to increase the Acquiring Fund's interest rate risk. The Acquiring Fund may utilize certain strategies, including taking positions in futures or interest rate swaps, for the purpose of reducing the interest rate sensitivity of fixed-income securities held by the Acquiring Fund and decreasing the Acquiring Fund's exposure to interest rate risk. The Acquiring Fund is not required to hedge its exposure to interest rate risk and may choose not to do so. In addition, there is no assurance that any attempts by the Acquiring Fund to reduce interest rate risk will be successful or that any hedges that the Acquiring Fund may establish will perfectly correlate with movements in interest rates.

The Acquiring Fund may invest in variable and floating rate debt instruments, which generally are less sensitive to interest rate changes than longer duration fixed rate instruments, but may decline in value in response to rising interest rates if, for example, the rates at which they pay interest do not rise as much, or as quickly, as market interest rates in general. Conversely, variable and floating rate instruments generally will not increase in value if interest rates decline. The Acquiring Fund also may invest in inverse floating rate debt securities, which may decrease in value if interest rates increase, and which also may exhibit greater price volatility than fixed rate debt obligations with similar credit quality. To the extent the Acquiring Fund holds variable or floating rate instruments, a decrease (or, in the case of inverse floating rate securities, an increase) in market interest rates will adversely affect the income received from such securities, which may adversely affect the NAV of the Acquiring Fund's common shares.

<u>Issuer Risk</u>. The value of fixed-income securities may decline for a number of reasons which directly relate to the issuer, such as management performance, financial leverage, reduced demand for the issuer's goods and services, historical and prospective earnings of the issuer and the value of the assets of the issuer.

<u>Credit Risk</u>. Credit risk is the risk that one or more fixed-income securities in the Acquiring Fund's portfolio will decline in price or fail to pay interest or principal when due because the issuer of the security experiences a decline in its financial status. Credit risk is increased when a portfolio security is downgraded or the perceived creditworthiness of the issuer deteriorates. To the extent the Acquiring Fund invests in below investment grade securities, it will be exposed to a greater amount of credit risk than a fund which only invests in investment grade securities. In addition, to the extent the Acquiring Fund uses credit derivatives to sell credit protection to its counterparty, such use will expose it to additional risk of the occurrence of a credit event in respect of the bonds underlying the derivatives default. The degree of credit risk depends on the issuer's financial condition and on the terms of the securities. If rating agencies lower their ratings of municipal securities in the Acquiring Fund's portfolio, the value of those securities could decline, which could jeopardize rating agencies' ratings of Acquiring Fund VRDP Shares. Because a significant source of income for the Acquiring Fund is the interest and principal payments on the municipal securities in which it invests, any default by an issuer of a municipal security could have a negative impact on the Acquiring Fund's ability to pay dividends on common shares or any VRDP Shares then outstanding and could result in the redemption of some or all of any VRDP Shares then outstanding.

<u>Prepayment Risk</u>. During periods of declining interest rates, borrowers may exercise their option to prepay principal earlier than scheduled. For fixed rate securities, such payments often occur during periods of declining interest rates, forcing the Acquiring Fund to reinvest in lower yielding securities, resulting in a possible decline in the Acquiring Fund's income and distributions to shareholders. This is known as prepayment or "call" risk. Below investment grade securities frequently have call features that allow the issuer to redeem the security at dates prior to its stated maturity at a specified price (typically greater than par) only if certain prescribed conditions are met (*i.e.*, "call protection"). For premium bonds (bonds acquired at prices that exceed their par or principal value) purchased by the Acquiring Fund, prepayment risk may be enhanced.

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<u>Reinvestment Risk</u>. Reinvestment risk is the risk that income from the Acquiring Fund's portfolio will decline if the Acquiring Fund invests the proceeds from matured, traded or called fixed-income securities at market interest rates that are below the Acquiring Fund portfolio's current earnings rate.

<u>Duration and Maturity Risk</u>. The Investment Advisor may seek to adjust the portfolio's duration or maturity based on its assessment of current and projected market conditions and all factors that the Investment Advisor deems relevant. In comparison to maturity (which is the date on which the issuer of a debt instrument is obligated to repay the principal amount), duration is a measure of the price volatility of a debt instrument as a result in changes in market rates of interest, based on the weighted average timing of the instrument's expected principal and interest payments. Specifically, duration measures the anticipated percentage change in NAV that is expected for every percentage point change in interest rates. The two have an inverse relationship. Duration can be a useful tool to estimate anticipated price changes to a fixed pool of income securities associated with changes in interest rates. For example, a duration of five years means that a 1% decrease in interest rates will increase the NAV of the portfolio by approximately 5%; if interest rates increase by 1%, the NAV will decrease by 5%. However, in a managed portfolio of fixed-income securities having differing interest or dividend rates or payment schedules, maturities, redemption provisions, call or prepayment provisions and credit qualities, actual price changes in response to changes in interest rates may differ significantly from a duration-based estimate at any given time. Actual price movements experienced by a portfolio of fixed-income securities will be affected by how interest rates move (*i.e.*, changes in the relationship of long-term interest rates to short-term interest rates and in the relationship of interest rates for highly rated securities and rates for below investment grade securities), the magnitude of any move in interest rates, actual and anticipated prepayments of principal through call or redemption features, the extension of maturities through restructuring, the sale of securities for portfolio management purposes, the reinvestment of proceeds from prepayments on and from sales of securities, and credit quality-related considerations whether associated with financing costs to lower credit quality borrowers or otherwise, as well as other factors. Accordingly, while duration maybe a useful tool to estimate potential price movements in relation to changes in interest rates, investors are cautioned that duration alone will not predict actual changes in the net asset or market value of the Acquiring Fund's shares and that actual price movements in the Acquiring Fund's portfolio may differ significantly from duration-based estimates. Duration differs from maturity in that it takes into account a security's yield, coupon payments and its principal payments in addition to the amount of time until the security finally matures. As the value of a security changes over time, so will its duration. Prices of securities with longer durations tend to be more sensitive to interest rate changes than securities with shorter durations. In general, a portfolio of securities with a longer duration can be expected to be more sensitive to interest rate changes than a portfolio with a shorter duration. Any decisions as to the targeted duration or maturity of any particular category of investments or of the Acquiring Fund's portfolio generally will be made based on all pertinent market factors at any given time. The Acquiring Fund may incur costs in seeking to adjust the portfolio's average duration or maturity. There can be no assurances that the Investment Advisor's assessment of current and projected market conditions will be correct or that any strategy to adjust the portfolio's duration or maturity will be successful at any given time.

*Leverage Risk.* The use of leverage creates an opportunity for increased common share net investment income dividends, but also creates risks for the holders of common shares. The Acquiring Fund cannot assure you that the use of leverage, if employed, will result in a higher yield on the common shares. Any leveraging strategy the Acquiring Fund employs may not be successful.

Leverage involves risks and special considerations for common shareholders, including:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) the likelihood of greater volatility of NAV, market price and dividend rate of the common shares than a
comparable portfolio without leverage;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) the risk that fluctuations in interest rates or dividend rates on any leverage that the Acquiring Fund must
pay will reduce the return to the common shareholders;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3) the effect of leverage in a declining market, which is likely to cause a greater decline in the NAV of the
common shares than if the Acquiring Fund were not leveraged, which may result in a greater decline in the market price of the common shares;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(4) when the Acquiring Fund uses financial leverage, the management fee payable to the Investment Advisor will
be higher than if the Acquiring Fund did not use leverage; and

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(5) leverage may increase operating costs, which may reduce total return.

Any decline in the NAV of the Acquiring Fund's investments will be borne entirely by the holders of common shares. Therefore, if the market value of the Acquiring Fund's portfolio declines, leverage will result in a greater decrease in NAV to the common shareholders than if the Acquiring Fund were not leveraged. This greater NAV decrease will also tend to cause a greater decline in the market price for the common shares. While the Acquiring Fund may from time to time consider reducing any outstanding leverage in response to actual or anticipated changes in interest rates in an effort to mitigate the increased volatility of current income and NAV associated with leverage, there can be no assurance that the Acquiring Fund will actually reduce any outstanding leverage in the future or that any reduction, if undertaken, will benefit the holders of common shares. Changes in the future direction of interest rates are very difficult to predict accurately. If the Acquiring Fund were to reduce any outstanding leverage based on a prediction about future changes to interest rates, and that prediction turned out to be incorrect, the reduction in any outstanding leverage would likely operate to reduce the income and/or total returns to the holders of common shares relative to the circumstance where the Acquiring Fund had not reduced any of its outstanding leverage. The Acquiring Fund may decide that this risk outweighs the likelihood of achieving the desired reduction to volatility in income and share price if the prediction were to turn out to be correct, and determine not to reduce any of its outstanding leverage as described above.

The Acquiring Fund currently utilizes leverage through the issuance of VRDP Shares and investments in TOB Residuals (see "—Tender Option Bond Risk" and "The Acquiring Fund's Investments—Investment Objective and Policies—Leverage—Tender Option Bond Transactions"). The Acquiring Fund may enter into derivative instruments, including investments in TOB Residuals, with leverage embedded in them. See "Risk Factors—General Risks of Investing in the Acquiring Fund—Strategic Transactions and Derivatives Risk." Under Rule 18f-4 under the 1940 Act, among other things, the Acquiring Fund must either use derivatives in a limited manner or comply with an outer limit on fund leverage risk based on value-at-risk. The use of leverage may cause the Acquiring Fund to liquidate portfolio positions when it may not be advantageous to do so to satisfy its obligations or to meet the applicable requirements of 1940 Act and the rules thereunder.

Because the Acquiring Fund's management fee is calculated as a percentage of the Acquiring Fund's net assets, which, for such purposes, include those assets purchased with leverage, during periods in which the Acquiring Fund is using leverage, the fee paid to the Investment Advisor will be higher than if the Acquiring Fund did not use leverage.

Certain types of leverage used by the Acquiring Fund may result in the Acquiring Fund being subject to covenants relating to asset coverage and portfolio composition requirements. The Acquiring Fund may be subject to certain restrictions on investments imposed by guidelines of one or more rating agencies, which issue ratings for the VRDP Shares issued by the Acquiring Fund, or the governing instrument for the Acquiring Fund VRDP Shares. These guidelines may impose asset coverage or portfolio composition requirements that are more stringent than those imposed by the 1940 Act. The Investment Advisor does not believe that these covenants or guidelines will impede it from managing the Acquiring Fund's portfolio in accordance with the Acquiring Fund's investment objective and policies.

While there are any preferred shares of the Acquiring Fund outstanding, the Acquiring Fund may not declare any cash dividend or other distribution on its common shares, unless at the time of such declaration, (i) all accrued preferred shares dividends have been paid and (ii) the value of the Acquiring Fund's total assets (determined after deducting the amount of such dividend or other distribution), less all liabilities and indebtedness of the Acquiring Fund, is at least 200% (as required by the 1940 Act) of the liquidation preference of the outstanding preferred shares (expected to equal the aggregate original purchase price of the outstanding preferred shares plus any accrued and unpaid dividends thereon, whether or not earned or declared on a cumulative basis). This limitation on the Acquiring Fund's ability to make distributions on its common shares could in certain circumstances impair the ability of the Acquiring Fund to maintain its qualification for taxation as a regulated investment company under the Code. The Acquiring Fund may, however, to the extent possible, purchase or redeem preferred shares from time to time to maintain compliance with such asset coverage requirements and may pay special dividends to the holders of the preferred shares in certain circumstances in connection with any such impairment of the Acquiring Fund's status as a regulated investment company under the Code.

The Acquiring Fund may invest in the securities of other investment companies. Such investment companies may also be leveraged, and will therefore be subject to the leverage risks described above. This additional leverage may in

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certain market conditions reduce the NAV of the Acquiring Fund's common shares and the returns to the holders of common shares.

*Tender Option Bond Risk.* The Acquiring Fund currently leverages its assets through the use of TOB Residuals, which are derivative interests in municipal bonds. The TOB Residuals in which the Acquiring Fund may 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 the Acquiring Fund. There is no assurance that the Acquiring Fund's strategy of using TOB Residuals to leverage its assets, if employed, will be successful.

TOB Residuals represent beneficial interests in a TOB Trust. A TOB Trust typically issues two classes of beneficial interests: short-term floating rate interests ("TOB Floaters"), which are sold to third party investors, and TOB Residuals, which are generally issued to the fund(s) that transferred municipal bonds to the TOB Trust. TOB Floaters may have first priority on the cash flow from the municipal bonds held by the TOB Trust and are enhanced with a liquidity support arrangement provided by a third party bank or other financial institution (the "TOBs Liquidity Provider") which allows holders to tender their position at par (plus accrued interest). The Acquiring Fund, 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. As result, distributions on TOB Residuals will bear an inverse relationship to short-term municipal security interest rates. Distributions on the TOB Residuals paid to the Acquiring Fund will be reduced or, in the extreme, eliminated as short-term municipal interest rates rise and will increase when short-term municipal interest rates fall. The amount of such reduction or increase is a function, in part, of the amount of TOB Floaters sold by the TOB Trust relative to the amount of the TOB Residuals that it sells. The greater the amount of TOB Floaters sold relative to the TOB Residuals, the more volatile the distributions on the TOB Residuals will be. Short-term interest rates have been at historic lows in recent years, but have begun to increase and are generally expected to continue to do so in the current market environment.

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 the Acquiring Fund, as a TOB Residual holder, would be responsible for reimbursement of any payments of principal and interest made by the credit enhancement provider.

Any leverage achieved through the Acquiring Fund's investment in TOB Residuals will increase the possibility that common share long-term returns will be diminished if the cost of the TOB Floaters issued by a TOB Trust exceeds the return on the securities in the TOB Trust. If the income and gains earned on municipal securities owned by a TOB Trust that issues TOB Residuals to the Acquiring Fund are greater than the payments due on the TOB Floaters issued by the TOB Trust, the Acquiring Fund's returns will be greater than if it had not invested in the TOB Residuals.

Although the Acquiring Fund generally would unwind a TOB transaction rather than try to sell a TOB Residual, if it did try to sell a TOB Residual, its ability to do so would depend on the liquidity of the TOB Residual. TOB Residuals have varying degrees of liquidity based, among other things, upon the liquidity of the underlying securities deposited in the TOB Trust. The market price of TOB Residuals is more volatile than the underlying municipal bonds due to leverage.

The leverage attributable to the Acquiring Fund'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 the Acquiring Fund 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., the Acquiring Fund) whereas in other termination events, the TOB Floater 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, the Acquiring Fund as a TOB Residual holder will

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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.

The Acquiring Fund may invest in a TOB Trust on either a non-recourse or recourse basis. If the Acquiring Fund invests in a TOB Trust on a recourse basis, it will typically enter into a reimbursement agreement with the TOBs Liquidity Provider pursuant to which the Acquiring Fund is required to reimburse the TOBs Liquidity Provider the balance, if any, of the amount owed under the liquidity facility over the liquidation proceeds (the "Liquidation Shortfall"). As a result, if the Acquiring Fund invests in a recourse TOB Trust, the Acquiring Fund will bear the risk of loss with respect to any Liquidation Shortfall.

The Acquiring Fund structures and "sponsors" the TOB Trusts in which it holds TOB Residuals and has certain duties and responsibilities, which may give rise to certain additional risks including, but not limited to, compliance, securities law and operational risks.

TOB Trusts constitute an important component of the municipal bond market. Any modifications or changes to the rules governing TOB Trusts may adversely impact the municipal market and the Acquiring Fund, including through reduced demand for and liquidity of municipal bonds and increased financing costs for municipal issuers. The ultimate impact of any potential modifications on the TOB market and the overall municipal market is not yet certain.

Please see "The Acquiring Fund's Investments—Leverage—Tender Option Bond Transactions" for additional information.

*Insurance Risk.* The Acquiring Fund may purchase municipal securities that are secured by insurance or may purchase insurance for municipal securities it owns. Insurance guarantees that interest payments on a municipal security will be made on time and that the principal will be repaid when the security matures. Insurance is expected to protect the Acquiring Fund against losses caused by a municipal security issuer's failure to make interest and principal payments. However, insurance does not protect the Acquiring Fund or its shareholders against losses caused by declines in a municipal security's value. Also, the Acquiring Fund cannot be certain that any insurance company will make the payments it guarantees. While an insured municipal security will typically be deemed to have the rating of its insurer, if the insurer of a municipal security suffers a downgrade in its credit rating or the market discounts the value of the insurance provided by the insurer, the rating of the underlying municipal security will be more relevant and the value of the municipal security would more closely, if not entirely, reflect such rating. The Acquiring Fund may lose money on its investment if the insurance company does not make payments it guarantees. If a municipal security's insurer fails to fulfill its obligations or loses its credit rating, the value of the security could drop.

*Yield and Ratings Risk.* The yields on debt obligations are dependent on a variety of factors, including general market conditions, conditions in the particular market for the obligation, the financial condition of the issuer, the size of the offering, the maturity of the obligation and the ratings of the issue. The ratings of Moody's, S&P and Fitch which are described in Appendix B to the Statement of Additional Information, represent their respective opinions as to the quality of the obligations they undertake to rate. Ratings, however, are general and are not absolute standards of quality. Consequently, obligations with the same rating, maturity and interest rate may have different market prices. Subsequent to its purchase by the Acquiring Fund, a rated security may cease to be rated. The Investment Advisor will consider such an event in determining whether the Acquiring Fund should continue to hold the security.

Ratings are relative and subjective and, although ratings may be useful in evaluating the safety of interest and principal payments, they do not evaluate the market value risk of such obligations. Although these ratings may be an initial criterion for selection of portfolio investments, the Investment Advisor also will independently evaluate these securities and the ability of the issuers of such securities to pay interest and principal. To the extent that the Acquiring Fund invests in lower grade securities that have not been rated by a rating agency, the Acquiring Fund's ability to achieve its investment objective will be more dependent on the Investment Advisor's credit analysis than would be the case when the Acquiring Fund invests in rated securities.

*Below Investment Grade Securities Risk.* Subject to its investment policies, the Acquiring Fund may invest in securities that are rated, at the time of investment, below investment grade quality (rated Ba/BB or below by Moody's, S&P or Fitch, or judged to be of comparable quality by the Investment Advisor), which are commonly referred to as "high

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yield" or "junk" bonds and are regarded as predominantly speculative with respect to the issuer's capacity to pay interest and repay principal when due. The value of high yield, lower quality bonds is affected by the creditworthiness of the issuers of the securities and by general economic and specific industry conditions. Issuers of high yield bonds are not perceived to be as strong financially as those with higher credit ratings. These issuers are more vulnerable to financial setbacks and recession than more creditworthy issuers, which may impair their ability to make interest and principal payments. Lower grade securities may be particularly susceptible to economic downturns. It is likely that an economic recession could severely disrupt the market for such securities and may have an adverse impact on the value of such securities. In addition, it is likely that any such economic downturn could adversely affect the ability of the issuers of such securities to repay principal and pay interest thereon and increase the incidence of default for such securities. See "—Risk Associated with Recent Market Events."

Lower grade securities, though high yielding, are characterized by high risk. They may be subject to certain risks with respect to the issuing entity and to greater market fluctuations than certain lower yielding, higher rated securities. The secondary market for lower grade securities may be less liquid than that for higher rated securities. Adverse conditions could make it difficult at times for the Acquiring Fund to sell certain securities or could result in lower prices than those used in calculating the Acquiring Fund's NAV. Because of the substantial risks associated with investments in lower grade securities, you could lose money on your investment in common shares of the Acquiring Fund, both in the short-term and the long-term.

The prices of fixed-income securities generally are inversely related to interest rate changes; however, below investment grade securities historically have been somewhat less sensitive to interest rate changes than higher quality securities of comparable maturity because credit quality is also a significant factor in the valuation of lower grade securities. On the other hand, an increased rate environment results in increased borrowing costs generally, which may impair the credit quality of low-grade issuers and thus have a more significant effect on the value of some lower grade securities. In addition, the current low rate environment has expanded the historic universe of buyers of lower grade securities as traditional investment grade oriented investors have been forced to accept more risk in order to maintain income. As rates rise, these recent entrants to the low-grade securities market may exit the market and reduce demand for lower grade securities, potentially resulting in greater price volatility.

The ratings of Moody's, S&P, Fitch and other rating agencies represent their opinions as to the quality of the obligations which they undertake to rate. Ratings are relative and subjective and, although ratings may be useful in evaluating the safety of interest and principal payments, they do not evaluate the market value risk of such obligations. Although these ratings may be an initial criterion for selection of portfolio investments, the Investment Advisor also will independently evaluate these securities and the ability of the issuers of such securities to pay interest and principal. To the extent that the Acquiring Fund invests in lower grade securities that have not been rated by a rating agency, the Acquiring Fund's ability to achieve its investment objective will be more dependent on the Investment Advisor's credit analysis than would be the case when the Acquiring Fund invests in rated securities.

*Unrated Securities Risk.* Because the Acquiring Fund may purchase securities that are not rated by any rating organization, the Investment Advisor may, after assessing their credit quality, internally assign ratings to certain of those securities in categories similar to those of rating organizations. Some unrated securities may not have an active trading market or may be difficult to value, which means the Acquiring Fund might have difficulty selling them promptly at an acceptable price. To the extent that the Acquiring Fund invests in unrated securities, the Acquiring Fund's ability to achieve its investment objective will be more dependent on the Investment Advisor's credit analysis than would be the case when the Acquiring Fund invests in rated securities.

*Zero-Coupon Securities Risk*.** Zero-coupon securities are securities that are sold at a discount to par value and do not pay interest during the life of the security. The discount approximates the total amount of interest the security will accrue and compound over the period until maturity at a rate of interest reflecting the market rate of the security at the time of issuance. Upon maturity, the holder of a zero-coupon security is entitled to receive the par value of the security.

The Acquiring Fund accrues income with respect to these securities for U.S. federal income tax and accounting purposes prior to the receipt of cash payments. Zero-coupon securities may be subject to greater fluctuation in value and less liquidity in the event of adverse market conditions than comparably rated securities that pay cash interest at regular intervals.

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Further, to maintain its qualification for pass-through treatment under the federal tax laws, the Acquiring Fund is required to distribute income to its shareholders and, consequently, may have to dispose of other, more liquid portfolio securities under disadvantageous circumstances or may have to leverage itself by borrowing in order to generate the cash to satisfy these distributions. The required distributions may result in an increase in the Acquiring Fund's exposure to zero-coupon securities.

In addition to the above-described risks, there are certain other risks related to investing in zero-coupon securities. During a period of severe market conditions, the market for such securities may become even less liquid. In addition, as these securities do not pay cash interest, the Acquiring Fund's investment exposure to these securities and their risks, including credit risk, will increase during the time these securities are held in the Acquiring Fund's portfolio.

*Variable Rate Demand Obligations Risk.* Variable Rate Demand Obligations ("VRDOs") are floating rate securities that combine an interest in a long-term municipal bond with a right to demand payment before maturity from a bank or other financial institution. If the bank or financial institution is unable to pay, the Acquiring Fund may lose money.

*Indexed and Inverse Securities Risk*. Investments in inverse floaters, residual interest TOBs and similar instruments expose the Acquiring Fund to the same risks as investments in fixed-income securities and derivatives, as well as other risks, including those associated with leverage and increased volatility. An investment in these securities typically will involve greater risk than an investment in a fixed rate security. Distributions on inverse floaters, residual interest TOBs and similar instruments will typically bear an inverse relationship to short-term interest rates and typically will be reduced or, potentially, eliminated as interest rates rise. Inverse floaters, residual interest TOBs and similar instruments will underperform the market for fixed rate securities in a rising interest rate environment. Inverse floaters may be considered to be leveraged to the extent that their interest rates vary by a magnitude that exceeds the magnitude of the change in a reference rate of interest (typically a short-term interest rate). The leverage inherent in inverse floaters is associated with greater volatility in their market values. Investments in inverse floaters, residual interest TOBs and similar instruments that have fixed-income securities underlying them will expose the Acquiring Fund to the risks associated with those fixed-income securities and the values of those investments may be especially sensitive to changes in prepayment rates on the underlying fixed-income securities.

*When-Issued, Forward Commitment and Delayed Delivery Transactions Risk.* The Acquiring Fund may purchase securities on a when-issued basis (including on a forward commitment or "TBA" (to be announced) basis) and may purchase or sell securities for delayed delivery. When-issued and delayed delivery transactions occur when securities are purchased or sold by the Acquiring Fund with payment and delivery taking place in the future to secure an advantageous yield or price. Securities purchased on a when-issued or delayed delivery basis may expose the Acquiring Fund to counterparty risk of default as well as the risk that securities may experience fluctuations in value prior to their actual delivery. The Acquiring Fund will not accrue income with respect to a when-issued or delayed delivery security prior to its stated delivery date. Purchasing securities on a when-issued or delayed delivery basis can involve the additional risk that the price or yield available in the market when the delivery takes place may not be as favorable as that obtained in the transaction itself.

*Repurchase Agreements Risk.* Repurchase agreements typically involve the acquisition by the Acquiring Fund of fixed-income securities from a selling financial institution such as a bank, savings and loan association or broker-dealer. The agreement provides that the Acquiring Fund will sell the securities back to the institution at a fixed time in the future. The Acquiring Fund does not bear the risk of a decline in the value of the underlying security unless the seller defaults under its repurchase obligation. In the event of the bankruptcy or other default of a seller of a repurchase agreement, the Acquiring Fund could experience both delays in liquidating the underlying securities and losses, including possible decline in the value of the underlying security during the period in which the Acquiring Fund seeks to enforce its rights thereto; possible lack of access to income on the underlying security during this period; and expenses of enforcing its rights. While repurchase agreements involve certain risks not associated with direct investments in fixed-income securities, the Acquiring Fund follows procedures approved by the Board that are designed to minimize such risks. In addition, the value of the collateral underlying the repurchase agreement will be at least equal to the repurchase price, including any accrued interest earned on the repurchase agreement. In the event of a default or bankruptcy by a selling financial institution, the Acquiring Fund generally will seek to liquidate such collateral. However, the exercise of the Acquiring Fund's right to liquidate such collateral could involve certain costs

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or delays and, to the extent that proceeds from any sale upon a default of the obligation to repurchase were less than the repurchase price, the Acquiring Fund could suffer a loss.

*Reverse Repurchase Agreements Risk*. Reverse repurchase agreements involve the risks that the interest income earned on the investment of the proceeds will be less than the interest expense of the Acquiring Fund, that the market value of the securities sold by the Acquiring Fund may decline below the price at which the Acquiring Fund is obligated to repurchase the securities and that the securities may not be returned to the Acquiring Fund. There is no assurance that reverse repurchase agreements can be successfully employed.

*Securities Lending Risk*. The Acquiring Fund may lend securities to financial institutions. Securities lending involves exposure to certain risks, including operational risk (i.e., the risk of losses resulting from problems in the settlement and accounting process), "gap" risk (i.e., the risk of a mismatch between the return on cash collateral reinvestments and the fees the Acquiring Fund has agreed to pay a borrower), foreign exchange risk (i.e., the risk of a shortfall at default when a cash collateral investment is denominated in a currency other than the currency of the assets being loaned due to movements in foreign exchange rates), and credit, legal, counterparty and market risks. If a securities lending counterparty were to default, the Acquiring Fund would be subject to the risk of a possible delay in receiving collateral or in recovering the loaned securities, or to a possible loss of rights in the collateral. In the event a borrower does not return the Acquiring Fund's securities as agreed, the Acquiring Fund may experience losses if the proceeds received from liquidating the collateral do not at least equal the value of the loaned security at the time the collateral is liquidated, plus the transaction costs incurred in purchasing replacement securities. This event could trigger adverse tax consequences for the Acquiring Fund. The Acquiring Fund could lose money if its short-term investment of the collateral declines in value over the period of the loan. Substitute payments for dividends received by the Acquiring Fund for securities loaned out by the Acquiring Fund will generally not be considered qualified dividend income. The securities lending agent will take the tax effects on shareholders of this difference into account in connection with the Acquiring Fund's securities lending program. Substitute payments received on tax-exempt securities loaned out will generally not be tax-exempt income.

*Restricted and Illiquid Investments Risk.* The Acquiring Fund may invest without limitation in illiquid or less liquid investments or investments in which no secondary market is readily available or which are otherwise illiquid, including private placement securities. The Acquiring Fund may not be able to readily dispose of such investments at prices that approximate those at which the Acquiring Fund could sell such investments if they were more widely traded and, as a result of such illiquidity, the Acquiring Fund may have to sell other investments or engage in borrowing transactions if necessary to raise cash to meet its obligations. Limited liquidity can also affect the market price of investments, thereby adversely affecting the Acquiring Fund's NAV and ability to make dividend distributions. The financial markets have in recent years experienced periods of extreme secondary market supply and demand imbalance, resulting in a loss of liquidity during which market prices were suddenly and substantially below traditional measures of intrinsic value. During such periods, some investments could be sold only at arbitrary prices and with substantial losses. Periods of such market dislocation may occur again at any time.

Restricted securities are securities that may not be sold to the public without an effective registration statement under the Securities Act, or that may be sold only in a privately negotiated transaction or pursuant to an exemption from registration. For example, Rule 144A under the Securities Act provides an exemption from the registration requirements of the Securities Act for the resale of certain restricted securities to qualified institutional buyers, such as the Acquiring Fund. However, an insufficient number of qualified institutional buyers interested in purchasing the Rule 144A-eligible securities that the Acquiring Fund holds could affect adversely the marketability of certain Rule 144A securities, and the Acquiring Fund might be unable to dispose of such securities promptly or at reasonable prices. When registration is required to sell a security, the Acquiring Fund may be obligated to pay all or part of the registration expenses and considerable time may pass before the Acquiring Fund is permitted to sell a security under an effective registration statement. If adverse market conditions develop during this period, the Acquiring Fund might obtain a less favorable price than the price that prevailed when the Acquiring Fund decided to sell. The Acquiring Fund may be unable to sell restricted and other illiquid investments at opportune times or prices.

*Investment Companies and ETFs Risk.* The Acquiring Fund may invest in other investment companies, including exchange traded funds ("ETFs") or business development companies ("BDCs"), some of which may be affiliated investment companies. The market value of the shares of other investment companies may differ from their NAV. As an investor in investment companies, including ETFs or BDCs, the Acquiring Fund would bear its ratable share of

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that entity's expenses, including its investment advisory and administration fees, while continuing to pay its own advisory and administration fees and other expenses. As a result, shareholders will be absorbing duplicate levels of fees with respect to investments in other investment companies, including ETFs or BDCs.

The securities of other investment companies, including ETFs or BDCs, in which the Acquiring Fund may invest may be leveraged. As a result, the Acquiring Fund may be indirectly exposed to leverage through an investment in such securities. An investment in securities of other investment companies, including ETFs or BDCs, that use leverage may expose the Acquiring Fund to higher volatility in the market value of such securities and the possibility that the Acquiring Fund's long-term returns on such securities (and, indirectly, the long-term returns of the Acquiring Fund's common shares) will be diminished.

The portfolios of ETFs are generally not actively managed and may be affected by a general decline in market segments relating to its index. An ETF typically invests in securities included in, or representative of, its index regardless of their investment merits and does not attempt to take defensive positions in declining markets.

*Strategic Transactions and Derivatives Risk.* The Acquiring Fund may engage in various Strategic Transactions for duration management and other investment and risk management purposes, including to attempt to protect against possible changes in the market value of the Acquiring Fund's portfolio resulting from trends in the securities markets and changes in interest rates or to protect the Acquiring Fund's unrealized gains in the value of its portfolio securities, to facilitate the sale of portfolio securities for investment purposes or to establish a position in the securities markets as a temporary substitute for purchasing particular securities or to enhance income or gain. Derivatives are financial contracts or instruments whose value depends on, or is derived from, the value of an underlying asset, reference rate or index (or relationship between two indices). The Acquiring Fund also may use derivatives to add leverage to the portfolio and/or to hedge against increases in the Acquiring Fund's costs associated with any leverage strategy that it may employ. The use of Strategic Transactions to enhance current income may be speculative.

Strategic Transactions involve risks. The risks associated with Strategic Transactions include (i) the imperfect correlation between the value of such instruments and the underlying assets, (ii) the possible default of the counterparty to the transaction, (iii) illiquidity of the derivative instruments, and (iv) high volatility losses caused by unanticipated market movements, which are potentially unlimited. Although both OTC and exchange-traded derivatives markets may experience a lack of liquidity, OTC non-standardized derivative transactions are generally less liquid than exchange-traded instruments. The illiquidity of the derivatives markets may be due to various factors, including congestion, disorderly markets, limitations on deliverable supplies, the participation of speculators, government regulation and intervention, and technical and operational or system failures. In addition, daily limits on price fluctuations and speculative position limits on exchanges on which the Acquiring Fund may conduct its transactions in derivative instruments may prevent prompt liquidation of positions, subjecting the Acquiring Fund to the potential of greater losses. Furthermore, the Acquiring Fund's ability to successfully use Strategic Transactions depends on the Investment Advisor's ability to predict pertinent asset prices, interest rates, currency exchange rates and other economic factors, which cannot be assured. The use of Strategic Transactions may result in losses greater than if they had not been used, may require the Acquiring Fund to sell or purchase portfolio securities at inopportune times or for prices other than current market values, may limit the amount of appreciation the Acquiring Fund can realize on an investment or may cause the Acquiring Fund to hold a security that it might otherwise sell. Additionally, amounts paid by the Acquiring Fund as premiums and cash or other assets held in margin accounts with respect to Strategic Transactions are not otherwise available to the Acquiring Fund for investment purposes.

Exchange-traded derivatives and OTC derivative transactions submitted for clearing through a central counterparty have become subject to minimum initial and variation margin requirements set by the relevant clearinghouse, as well as possible margin requirements mandated by the SEC or the CFTC. The CFTC and federal banking regulators also have imposed margin requirements on non-cleared OTC derivatives, and the SEC's non-cleared margin requirements for security-based swaps became effective on November 1, 2021. Applicable margin requirements may increase the overall costs for the Acquiring Fund.

Many OTC derivatives are valued on the basis of dealers' pricing of these instruments. However, the price at which dealers value a particular derivative and the price that the same dealers would actually be willing to pay for such derivative should the Acquiring Fund wish or be forced to sell such position may be materially different. Such

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differences can result in an overstatement of the Acquiring Fund's NAV and may materially adversely affect the Acquiring Fund in situations in which the Acquiring Fund is required to sell derivative instruments.

While hedging can reduce or eliminate losses, it can also reduce or eliminate gains. Hedges are sometimes subject to imperfect matching between the derivative and the underlying security, and there can be no assurance that the Acquiring Fund's hedging transactions will be effective.

Derivatives may give rise to a form of leverage and may expose the Acquiring Fund to greater risk and increase its costs. Recent legislation calls for new regulation of the derivatives markets. The extent and impact of the regulation is not yet known and may not be known for some time. New regulation may make derivatives more costly, may limit the availability of derivatives, or may otherwise adversely affect the value or performance of derivatives.

Future regulatory developments may impact the Acquiring Fund's ability to invest or remain invested in certain derivatives. Legislation or regulation may also change the way in which the Acquiring Fund itself is regulated. The Investment Advisor cannot predict the effects of any new governmental regulation that may be implemented on the ability of the Acquiring Fund to use swaps or any other financial derivatives product, and there can be no assurance that any new governmental regulation will not adversely affect the Acquiring Fund's ability to achieve its investment objective.

The Acquiring Fund's use of derivative instruments involves risks different from, and possibly greater than, the risks associated with investing directly in securities and other traditional investments. There are significant risks that apply generally to derivatives transactions, including:

• *Correlation Risk* —the risk that changes in the value of a derivative will not match the changes in
the value of the portfolio holdings that are being hedged or of the particular market or security to which the Acquiring Fund seeks exposure. There are a number of factors which may prevent a derivative instrument from achieving the desired
correlation (or inverse correlation) with an underlying asset, rate or index, such as the impact of fees, expenses and transaction costs, the timing of pricing, and disruptions or illiquidity in the markets for such derivative instrument.

• *Counterparty Risk* —the risk that the counterparty in a derivative transaction will be unable to
honor its financial obligation to the Acquiring Fund. In particular, derivatives traded in OTC markets often are not guaranteed by an exchange or clearing corporation and often do not require payment of margin, and to the extent that the Acquiring
Fund has unrealized gains in such instruments or has deposited collateral with its counterparties the Acquiring Fund is at risk that its counterparties will become bankrupt or otherwise fail to honor their obligations. The Acquiring Fund will
typically attempt to minimize counterparty risk by engaging in OTC derivatives transactions only with creditworthy entities that have substantial capital or that have provided the Acquiring Fund with a third-party guaranty or other credit support.

• *Credit Risk* —the risk that the reference entity in a credit default swap or similar derivative will
not be able to honor its financial obligations.

• *Currency Risk* —the risk that changes in the exchange rate between two currencies will adversely
affect the value (in U.S. dollar terms) of an investment.

• *Illiquidity Risk* —the risk that certain securities or instruments may be difficult or impossible to
sell at the time or at the price desired by the counterparty in connection with payments of margin, collateral, or settlement payments. There can be no assurance that the Acquiring Fund will be able to unwind or offset a derivative at its desired
price, in a secondary market or otherwise. It may, therefore, not be possible for the Acquiring Fund to unwind its position in a derivative without incurring substantial losses (if at all). The absence of liquidity may also make it more difficult
for the Acquiring Fund to ascertain a market value for such instruments. Although both OTC and exchange-traded derivatives markets may experience a lack of liquidity, certain derivatives traded in OTC markets, including swaps and OTC options,
involve substantial illiquidity risk. The Acquiring Fund will, therefore, acquire illiquid OTC derivatives (i) if the agreement pursuant to which the instrument is purchased contains a formula price at which the instrument may be terminated or
sold, or (ii) for which the Investment Advisor anticipates the Acquiring Fund can receive on each business day at least two independent bids or offers, unless a quotation from only one dealer is available, in which case that dealer's
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illiquidity of the derivatives markets may be due to various factors, including congestion, disorderly markets, limitations on deliverable supplies, the participation of speculators, government regulation and intervention, and technical and operational or system failures. In addition, the liquidity of a secondary market in an exchange-traded derivative contract may be adversely affected by "daily price fluctuation limits" established by the exchanges which limit the amount of fluctuation in an exchange-traded contract price during a single trading day. Once the daily limit has been reached in the contract, no trades may be entered into at a price beyond the limit, thus preventing the liquidation of open positions. Prices have in the past moved beyond the daily limit on a number of consecutive trading days. If it is not possible to close an open derivative position entered into by the Acquiring Fund, the Acquiring Fund would continue to be required to make daily cash payments of variation margin in the event of adverse price movements. In such a situation, if the Acquiring Fund has insufficient cash, it may have to sell portfolio securities to meet daily variation margin requirements at a time when it may be disadvantageous to do so. <br>

• *Index Risk* —if the derivative is linked to the performance of an index, it will be subject to the
risks associated with changes in that index. If the index changes, the Acquiring Fund could receive lower interest payments or experience a reduction in the value of the derivative to below the price that the Acquiring Fund paid for such derivative.

• *Legal Risk* —the risk of insufficient documentation, insufficient capacity or authority of
counterparty, or legality or enforceability of a contract.

• *Leverage Risk—* the risk that the Acquiring Fund's derivatives transactions can magnify the
Acquiring Fund's gains and losses. Relatively small market movements may result in large changes in the value of a derivatives position and can result in losses that greatly exceed the amount originally invested.

• *Market Risk* —the risk that changes in the value of one or more markets or changes with respect to
the value of the underlying asset will adversely affect the value of a derivative. In the event of an adverse movement, the Acquiring Fund may be required to pay substantial additional margin to maintain its position or the Acquiring Fund's
returns may be adversely affected.

● *Operational Risk* —the risk related to potential operational issues, including documentation issues, settlement issues, systems failures, inadequate controls and human error.

● *Valuation Risk* —the risk that valuation sources for a derivative will not be readily available in the market. This is possible especially in times of market distress, since many market participants may be reluctant to purchase complex instruments or quote prices for them.

● *Volatility Risk* —the risk that the value of derivatives will fluctuate significantly within a short time period.

When a derivative is used as a hedge against a position that the Acquiring Fund holds, any loss generated by the derivative generally should be substantially offset by gains on the hedged investment, and vice versa. While hedging can reduce or eliminate losses, it can also reduce or eliminate gains. Hedges are sometimes subject to imperfect matching between the derivative and the underlying security, and there can be no assurances that the Acquiring Fund's hedging transactions will be effective. The Acquiring Fund could also suffer losses related to its derivative positions as a result of unanticipated market movements, which losses are potentially unlimited. The Investment Advisor may not be able to predict correctly the direction of securities prices, interest rates and other economic factors, which could cause the Acquiring Fund's derivatives positions to lose value. In addition, some derivatives are more sensitive to interest rate changes and market price fluctuations than other securities. The possible lack of a liquid secondary market for derivatives and the resulting inability of the Acquiring Fund to sell or otherwise close a derivatives position could expose the Acquiring Fund to losses and could make derivatives more difficult for the Acquiring Fund to value accurately.

When engaging in a hedging transaction, the Acquiring Fund may determine not to seek to establish a perfect correlation between the hedging instruments utilized and the portfolio holdings being hedged. Such an imperfect correlation may prevent the Acquiring Fund from achieving the intended hedge or expose the Acquiring Fund to a risk of loss. The Acquiring Fund may also determine not to hedge against a particular risk because it does not regard the probability of the risk occurring to be sufficiently high as to justify the cost of the hedge or because it does not

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foresee the occurrence of the risk. It may not be possible for the Acquiring Fund to hedge against a change or event at attractive prices or at a price sufficient to protect the assets of the Acquiring Fund from the decline in value of the portfolio positions anticipated as a result of such change. In addition, it may not be possible to hedge at all against certain risks.

If the Acquiring Fund invests in a derivative instrument it could lose more than the principal amount invested. Moreover, derivatives raise certain tax, legal, regulatory and accounting issues that may not be presented by investments in securities, and there is some risk that certain issues could be resolved in a manner that could adversely impact the performance of the Acquiring Fund.

The Acquiring Fund is not required to use derivatives or other portfolio strategies to seek to increase return or to seek to hedge its portfolio and may choose not to do so. Also, suitable derivative transactions may not be available in all circumstances and there can be no assurances that the Acquiring Fund will engage in these transactions to reduce exposure to other risks when that would be beneficial. Although the Investment Advisor seeks to use derivatives to further the Acquiring Fund's investment objective, there is no assurance that the use of derivatives will achieve this result.

*Swaps Risk*. Swaps are a type of derivative. Swap agreements involve the risk that the party with which the Acquiring Fund has entered into the swap will default on its obligation to pay the Acquiring Fund and the risk that the Acquiring Fund will not be able to meet its obligations to pay the other party to the agreement. In order to seek to hedge the value of the Acquiring Fund's portfolio, to hedge against increases in the Acquiring Fund's cost associated with interest payments on any outstanding borrowings or to seek to increase the Acquiring Fund's return, the Fund may enter into swaps, including interest rate swap, total return swap and/or credit default swap transactions. In interest rate swap transactions, there is a risk that yields will move in the direction opposite of the direction anticipated by the Acquiring Fund, which would cause the Acquiring Fund to make payments to its counterparty in the transaction that could adversely affect Acquiring Fund performance. In addition to the risks applicable to swaps generally (including counterparty risk, high volatility, liquidity risk and credit risk), credit default swap transactions involve special risks because they are difficult to value, are highly susceptible to liquidity and credit risk, and generally pay a return to the party that has paid the premium only in the event of an actual default by the issuer of the underlying obligation (as opposed to a credit downgrade or other indication of financial difficulty).

Historically, swap transactions have been individually negotiated non-standardized transactions entered into in OTC markets and have not been subject to the same type of government regulation as exchange-traded instruments. However, since the global financial crisis, the OTC derivatives markets have recently become subject to comprehensive statutes and regulations. In particular, in the United States, the Dodd-Frank Act requires that certain derivatives with U.S. persons must be executed on a regulated market and a substantial portion of OTC derivatives must be submitted for clearing to regulated clearinghouses. As a result, swap transactions entered into by the Fund may become subject to various requirements applicable to swaps under the Dodd-Frank Act, including clearing, exchange-execution, reporting and recordkeeping requirements, which may make it more difficult and costly for the Fund to enter into swap transactions and may also render certain strategies in which the Fund might otherwise engage impossible or so costly that they will no longer be economical to implement. Furthermore, the number of counterparties that may be willing to enter into swap transactions with the Fund may also be limited if the swap transactions with the Fund are subject to the swap regulation under the Dodd-Frank Act.

Credit default and total return swap agreements may effectively add leverage to the Acquiring Fund's portfolio because, in addition to its managed assets, the Acquiring Fund would be subject to investment exposure on the notional amount of the swap. Total return swap agreements are subject to the risk that a counterparty will default on its payment obligations to the Acquiring Fund thereunder. The Acquiring Fund is not required to enter into swap transactions for hedging purposes or to enhance income or gain and may choose not to do so. In addition, the swaps market is subject to a changing regulatory environment. It is possible that regulatory or other developments in the swaps market could adversely affect the Acquiring Fund's ability to successfully use swaps.

*Legal, Tax and Regulatory Risks*. Legal, tax and regulatory changes could occur that may have material adverse effects on the Acquiring Fund.

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To qualify for the favorable U.S. federal income tax treatment generally accorded to RICs, the Acquiring Fund must, among other things, derive in each taxable year at least 90% of its gross income from certain prescribed sources and distribute for each taxable year at least 90% of its "investment company taxable income" (generally, ordinary income plus the excess, if any, of net short-term capital gain over net long-term capital loss). If for any taxable year the Acquiring Fund does not qualify as a RIC, all of its taxable income for that year (including its net capital gain) would be subject to tax at regular corporate rates without any deduction for distributions to shareholders, and such distributions would be taxable as ordinary dividends to the extent of the Acquiring Fund's current and accumulated earnings and profits.

The current presidential administration has called for significant changes to U.S. fiscal, tax, trade, healthcare, immigration, foreign, and government regulatory policy. In this regard, there is significant uncertainty with respect to legislation, regulation and government policy at the federal level, as well as the state and local levels. Recent events have created a climate of heightened uncertainty and introduced new and difficult-to-quantify macroeconomic and political risks with potentially far-reaching implications. There has been a corresponding meaningful increase in the uncertainty surrounding interest rates, inflation, foreign exchange rates, trade volumes and fiscal and monetary policy. To the extent the U.S. Congress or the current presidential administration implements changes to U.S. policy, those changes may impact, among other things, the U.S. and global economy, international trade and relations, unemployment, immigration, corporate taxes, healthcare, the U.S. regulatory environment, inflation and other areas. Although the Acquiring Fund cannot predict the impact, if any, of these changes to the Acquiring Fund's business, they could adversely affect the Acquiring Fund's business, financial condition, operating results and cash flows. Until the Acquiring Fund knows what policy changes are made and how those changes impact the Acquiring Fund's business and the business of the Acquiring Fund's competitors over the long term, the Acquiring Fund will not know if, overall, the Acquiring Fund will benefit from them or be negatively affected by them.

The rules dealing with U.S. federal income taxation are constantly under review by persons involved in the legislative process and by the Internal Revenue Service and the U.S. Treasury Department. Revisions in U.S. federal tax laws and interpretations of these laws could adversely affect the tax consequences of your investment.

*Investment Company Act Regulations.* The Acquiring Fund is a registered closed-end management investment company and as such is subject to regulations under the Investment Company Act. Generally speaking, any contract or provision thereof that is made, or where performance involves a violation of the Investment Company Act or any rule or regulation thereunder is unenforceable by either party unless a court finds otherwise. 

*Reference Rate Replacement Risk.* The Acquiring Fund may be exposed to financial instruments that recently transitioned from, or continue to be tied to, the London Interbank Offered Rate ("<u>LIBOR</u>") to determine payment obligations, financing terms, hedging strategies or investment value.

The United Kingdom's Financial Conduct Authority ("<u>FCA</u>"), which regulates LIBOR, has ceased publishing all LIBOR settings. In April 2023, however, the FCA announced that some USD LIBOR settings would continue to be published under a synthetic methodology until September 30, 2024 for certain legacy contracts. After September 30, 2024, the remaining synthetic LIBOR settings ceased to be published, and all LIBOR settings have permanently ceased. The Secured Overnight Financing Rate ("<u>SOFR</u>") is a broad measure of the cost of borrowing cash overnight collateralized by U.S. Treasury securities in the repurchase agreement ("<u>repo</u>") market and has been used increasingly on a voluntary basis in new instruments and transactions. Under U.S. regulations that implement a statutory fallback mechanism to replace LIBOR, benchmark rates based on SOFR have replaced LIBOR in certain financial contracts.

Neither the effect of the LIBOR transition process nor its ultimate success can yet be known. While some existing LIBOR-based instruments may contemplate a scenario where LIBOR is no longer available by providing for an alternative rate-setting methodology, there may be significant uncertainty regarding the effectiveness of any such alternative methodologies to replicate LIBOR. Not all existing LIBOR-based instruments may have alternative rate-setting provisions and there remains uncertainty regarding the willingness and ability of issuers to add alternative rate-setting provisions in certain existing instruments. Parties to contracts, securities or other instruments using LIBOR may disagree on transition rates or the application of transition regulation, potentially resulting in uncertainty of performance and the possibility of litigation. The Acquiring Fund may have instruments linked to other interbank offered rates that may also cease to be published in the future.

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*Risk Associated with Recent Market Events.* Although interest rates were unusually low in recent years in the U.S. and abroad, in 2022, the Federal Reserve and certain foreign central banks raised interest rates as part of their efforts to address rising inflation. The Federal Reserve and certain foreign central banks have started to lower interest rates, though economic or other factors, such as inflation, could stop such changes. It is difficult to accurately predict the pace at which interest rates might change, the timing, frequency or magnitude of any such changes in interest rates, or when such changes might stop or again reverse course. Additionally, various economic and political factors could cause the Federal Reserve or other foreign central banks to change their approach in the future and such actions may result in an economic slowdown both in the U.S. and abroad. Unexpected changes in interest rates could lead to significant market volatility or reduce liquidity in certain sectors of the market. Deteriorating economic fundamentals may, in turn, increase the risk of default or insolvency of particular issuers, negatively impact market value, cause credit spreads to widen, and reduce bank balance sheets. Any of these could cause an increase in market volatility, reduce liquidity across various markets or decrease confidence in the markets, which could negatively affect the value of debt instruments held by the Acquiring Fund and result in a negative impact on the Acquiring Fund's performance. See "—Inflation Risk."

Political and diplomatic events within the United States, including a contentious domestic political environment, changes in political party control of one or more branches of the U.S. Government, the U.S. Government's inability at times to agree on a long-term budget and deficit reduction plan, the threat of a U.S. Government shutdown, and disagreements over, or threats not to increase, the U.S. Government's borrowing limit (or "debt ceiling"), as well as political and diplomatic events abroad, may affect investor and consumer confidence and may adversely impact financial markets and the broader economy, perhaps suddenly and to a significant degree. A downgrade of the ratings of U.S. Government debt obligations, or concerns about the U.S. Government's credit quality in general, could have a substantial negative effect on the U.S. and global economies. For example, concerns about the U.S. Government's credit quality may cause increased volatility in the stock and bond markets, higher interest rates, reduced prices and liquidity of U.S. Treasury securities, and/or increased costs of various kinds of debt. Moreover, although the U.S. Government has honored its credit obligations, there remains a possibility that the United States could default on its obligations. The consequences of such an unprecedented event are impossible to predict, but it is likely that a default by the United States would be highly disruptive to the U.S. and global securities markets and could significantly impair the value of the Acquiring Fund's investments.

In recent years, some countries, including the United States, have adopted more protectionist trade policies. Slowing global economic growth, the rise in protectionist trade policies, inflationary pressures, changes to some major international trade agreements, risks associated with the trade agreements between countries and regions, including the U.S. and other foreign nations, political or economic dysfunction within some countries or regions, including the U.S., and dramatic changes in commodity and currency prices could affect the economies of many nations in ways that cannot necessarily be foreseen at the present time. In addition, if the U.S. dollar continues to be strong, it may decrease foreign demand for U.S. assets, which could have a negative impact on certain issuers and/or industries.

*Market Disruption and Geopolitical Risk.* The occurrence of events similar to those in recent years, such as the aftermath of the war in Iraq, instability in Afghanistan, Pakistan, Egypt, Libya, Syria and the Middle East, international war or conflict (including the Israel-Hamas war), new and ongoing epidemics and pandemics of infectious diseases and other global health events, natural/environmental disasters, terrorist attacks in the United States and around the world, social and political discord, debt crises (such as the Greek crisis), sovereign debt downgrades, the Russian invasion of Ukraine, increasingly strained relations between the United States and a number of foreign countries, including historical adversaries, such as North Korea, Iran, China and Russia, and the international community generally, new and continued political unrest in various countries, such as Venezuela and Spain, the exit or potential exit of one or more countries from the EU or the EMU, and continued changes in the balance of political power among and within the branches of the U.S. Government, among others, may result in market volatility, may have long term effects on the U.S. and worldwide financial markets, and may cause further economic uncertainties in the United States and worldwide.

Russia launched a large-scale invasion of Ukraine on February 24, 2022. The extent and duration of the military action, resulting sanctions and resulting future market disruptions, including declines in its stock markets and the value of the ruble against the U.S. dollar, in the region are impossible to predict, but could be significant. Any such disruptions caused by Russian military action or other actions (including cyberattacks and espionage) or resulting actual and threatened responses to such activity, including purchasing and financing restrictions, boycotts or changes in consumer

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or purchaser preferences, sanctions, tariffs or cyberattacks on the Russian government, Russian companies or Russian individuals, including politicians, could have a severe adverse effect on Russia and the European region, including significant negative impacts on the Russian economy, the European economy and the markets for certain securities and commodities, such as oil and natural gas, and may likely have collateral impacts on such sectors globally as well as other sectors. How long such military action and related events will last cannot be predicted.

Trade tensions between the United States and China have led to concerns about economic stability and could have an adverse impact on global economic conditions. The United States and China have each been implementing increased tariffs on imports from the other, and the United States has also adopted certain targeted measures such as export controls or sanctions implicating Chinese companies and officials. While certain trade agreements have been agreed between the two countries, there remains much uncertainty as to whether the trade negotiations between the United States and China will be successful and how the trade war between the United States and China will progress. Uncertainty regarding the outcome of the trade tensions and the potential for a trade war could cause the U.S. dollar to decline against safe haven currencies, such as the Japanese yen and the Euro. Events such as these and their consequences are difficult to predict and it is unclear whether further tariffs may be imposed or other escalating actions may be taken in the future. If the trade war between the United States and China continues or escalates, or if additional tariffs or trade restrictions are implemented by the United States, China or other countries in connection with a global trade war, there could be material adverse effects on the global economy, and the Acquiring Fund and its portfolio investments could be materially and adversely affected.

On January 31, 2020, the United Kingdom officially left the European Union (Brexit), subject to a transitional period that ended December 31, 2020. The United Kingdom and European Union have reached an agreement on the terms of their future trading relationship effective January 1, 2021, which principally relates to the trading of goods rather than services, including financial services. Further discussions are to be held between the United Kingdom and the European Union in relation to matters not covered by the trade agreement, such as financial services. The Acquiring Fund faces risks associated with the potential uncertainty and consequences that may follow Brexit, including with respect to volatility in exchange rates and interest rates. Brexit could adversely affect European or worldwide political, regulatory, economic or market conditions and could contribute to instability in global political institutions, regulatory agencies and financial markets. Brexit has also led to legal uncertainty and could lead to politically divergent national laws and regulations as a new relationship between the United Kingdom and European Union is defined and the United Kingdom determines which European Union laws to replace or replicate. Any of these effects of Brexit could adversely affect any of the companies to which the Acquiring Fund has exposure and any other assets that the Acquiring Fund invests in. The political, economic and legal consequences of Brexit are not yet known. In the short term, financial markets may experience heightened volatility, particularly those in the United Kingdom and Europe, but possibly worldwide. The United Kingdom and Europe may be less stable than they have been in recent years, and investments in the United Kingdom and the European Union may be difficult to value or subject to greater or more frequent volatility. In the longer term, there is likely to be a period of significant political, regulatory and commercial uncertainty as the United Kingdom continues to negotiate the terms of its future trading relationship with the European Union.

Cybersecurity incidents affecting particular companies or industries may adversely affect the economies of particular countries, regions or parts of the world in which the Acquiring Fund invests.

The occurrence of any of these above events could have a significant adverse impact on the value and risk profile of the Acquiring Fund's portfolio. The Acquiring Fund does not know how long the securities markets may be affected by similar events and cannot predict the effects of similar events in the future on the U.S. economy and securities markets. There can be no assurance that similar events and other market disruptions will not have other material and adverse implications.*Regulation and Government Intervention Risk.* Federal, state, and other governments, their regulatory agencies or self-regulatory organizations may take actions that affect the regulation of the issuers in which the Acquiring Fund invests in ways that are unforeseeable. Legislation or regulation may also change the way in which the Acquiring Fund is regulated. Such legislation or regulation could limit or preclude the Acquiring Fund's ability to achieve its investment objective.

In light of popular, political and judicial focus on finance related consumer protection, financial institution practices are also subject to greater scrutiny and criticism generally. In the case of transactions between financial institutions and the general public, there may be a greater tendency toward strict interpretation of terms and legal rights in favor

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of the consuming public, particularly where there is a real or perceived disparity in risk allocation and/or where consumers are perceived as not having had an opportunity to exercise informed consent to the transaction. In the event of conflicting interests between retail investors holding common shares of a closed-end investment company such as the Acquiring Fund and a large financial institution, a court may similarly seek to strictly interpret terms and legal rights in favor of retail investors.

The Acquiring Fund may be affected by governmental action in ways that are not foreseeable, and there is a possibility that such actions could have a significant adverse effect on the Acquiring Fund and its ability to achieve its investment objective.

*Potential Conflicts of Interest of the Investment Advisor and Others.* The investment activities of the Investment Advisor and its affiliates (including BlackRock, Inc. and its subsidiaries (collectively, the "Affiliates")), and their respective directors, officers or employees, in managing their own accounts and other accounts, may present conflicts of interest that could disadvantage the Acquiring Fund and its shareholders. The Investment Advisor and its Affiliates may engage in proprietary trading and advise accounts and other funds that have investment objectives similar to those of the Acquiring Fund and/or that engage in and compete for transactions in the same or similar types of securities, currencies and other assets as are held by the Acquiring Fund. Subject to the requirements of the Investment Company Act, the Investment Advisor and its Affiliates intend to engage in such activities and may receive compensation from third parties for their services. Neither the Investment Advisor nor any Affiliate is under any obligation to share any investment opportunity, idea or strategy with the Acquiring Fund. As a result, an Affiliate may compete with the Acquiring Fund for appropriate investment opportunities. The results of the Acquiring Fund's investment activities, therefore, may differ from those of an Affiliate and of other accounts managed by an Affiliate. It is possible that the Acquiring Fund could sustain losses during periods in which one or more Affiliates and other accounts achieve profits on their trading for proprietary or other accounts. The opposite result is also possible. The Investment Advisor has adopted policies and procedures designed to address potential conflicts of interest.

*Market and Selection Risk*. Market risk is the possibility that the market values of securities and other assets owned by the Acquiring Fund will decline. There is a risk that equity and/or bond markets will go down in value, including the possibility that such markets will go down sharply and unpredictably.

Stock markets are volatile, and the price of equity securities fluctuates based on changes in a company's financial condition and overall market and economic conditions. Local, regional or global events such as war, acts of terrorism, the spread of infectious illness or other public health issue, recessions, or other events could have a significant impact on the Acquiring Fund and its investments. An adverse event, such as an unfavorable earnings report, may depress the value of a particular common stock held by the Acquiring Fund. Also, the price of common stocks is sensitive to general movements in the stock market and a drop in the stock market may depress the price of common stocks to which the Acquiring Fund has exposure. Common stock prices fluctuate for several reasons, including changes in investors' perceptions of the financial condition of an issuer or the general condition of the relevant stock market, or when political or economic events affecting the issuers occur.

The prices of fixed-income securities tend to fall as interest rates rise, and such declines tend to be greater among fixed-income securities with longer maturities. Market risk is often greater among certain types of fixed-income securities, such as zero coupon bonds that do not make regular interest payments but are instead bought at a discount to their face values and paid in full upon maturity. As interest rates change, these securities often fluctuate more in price than securities that make regular interest payments and therefore subject the Acquiring Fund to greater market risk than a fund that does not own these types of securities.

When-issued and delayed delivery transactions are subject to changes in market conditions from the time of the commitment until settlement, which may adversely affect the prices or yields of the securities being purchased. The greater the Acquiring Fund's outstanding commitments for these securities, the greater the Acquiring Fund's exposure to market price fluctuations.

Selection risk is the risk that the securities that the Acquiring Fund's management selects will underperform the equity and/or bond market, the market relevant indices or other funds with similar investment objectives and investment strategies.

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*Defensive Investing Risk.* For defensive purposes, the Acquiring Fund may allocate assets into cash or short-term fixed-income securities without limitation. In doing so, the Acquiring Fund may succeed in avoiding losses but may otherwise fail to achieve its investment objective. Further, the value of short-term fixed-income securities may be affected by changing interest rates and by changes in credit ratings of the investments. If the Acquiring Fund holds cash uninvested it will be subject to the credit risk of the depository institution holding the cash.

*Decision-Making Authority Risk*. Investors have no authority to make decisions or to exercise business discretion on behalf of the Acquiring Fund, except as set forth in the Acquiring Fund's governing document. The authority for all such decisions is generally delegated to the Board, which in turn, has delegated the day-to-day management of the Acquiring Fund's investment activities to the Investment Advisor, subject to oversight by the Board.

*Management Risk*. The Acquiring Fund is subject to management risk because it is an actively managed investment portfolio. The Investment Advisor and the individual portfolio managers will apply investment techniques and risk analyses in making investment decisions for the Acquiring Fund, but there can be no guarantee that these will produce the desired results. The Acquiring Fund may be subject to a relatively high level of management risk because the Acquiring Fund may invest in derivative instruments, which may be highly specialized instruments that require investment techniques and risk analyses different from those associated with equities and bonds.

*Valuation Risk.* The Acquiring Fund is subject to valuation risk, which is the risk that one or more of the securities in which the Acquiring Fund invests are valued at prices that the Acquiring Fund is unable to obtain upon sale due to factors such as incomplete data, market instability or human error. The Investment Advisor may use an independent pricing service or prices provided by dealers to value securities at their market value. Because the secondary markets for certain investments may be limited, such instruments may be difficult to value. See "Net Asset Value." When market quotations are not available, the Investment Advisor may price such investments pursuant to a number of methodologies, such as computer-based analytical modeling or individual security evaluations. These methodologies generate approximations of market values, and there may be significant professional disagreement about the best methodology for a particular type of financial instrument or different methodologies that might be used under different circumstances. In the absence of an actual market transaction, reliance on such methodologies is essential, but may introduce significant variances in the ultimate valuation of the Acquiring Fund's investments. Technological issues and/or errors by pricing services or other third-party service providers may also impact the Acquiring Fund's ability to value its investments and the calculation of the Acquiring Fund's NAV.

When market quotations are not readily available or are believed by the Investment Advisor to be unreliable, the Investment Advisor will fair value the Acquiring Fund's investments in accordance with its policies and procedures. Fair value represents a good faith approximation of the value of an asset or liability. The fair value of an asset or liability held by the Acquiring Fund is the amount the Acquiring Fund might reasonably expect to receive from the current sale of that asset or the cost to extinguish that liability in an arm's-length transaction. Fair value pricing may require determinations that are inherently subjective and inexact about the value of a security or other asset. As a result, there can be no assurance that fair value priced assets will not result in future adjustments to the prices of securities or other assets, or that fair value pricing will reflect a price that the Acquiring Fund is able to obtain upon sale, and it is possible that the fair value determined for a security or other asset will be materially different from quoted or published prices, from the prices used by others for the same security or other asset and/or from the value that actually could be or is realized upon the sale of that security or other asset. For example, the Acquiring Fund's NAV could be adversely affected if the Acquiring Fund's determinations regarding the fair value of the Acquiring Fund's investments were materially higher than the values that the Acquiring Fund ultimately realizes upon the disposal of such investments. Where market quotations are not readily available, valuation may require more research than for more liquid investments. In addition, elements of judgment may play a greater role in valuation in such cases than for investments with a more active secondary market because there is less reliable objective data available.

Because of overall size, duration and maturities of positions held by the Acquiring Fund, the value at which its investments can be liquidated may differ, sometimes significantly, from the interim valuations obtained by the Acquiring Fund. In addition, the timing of liquidations may also affect the values obtained on liquidation. Securities held by the Acquiring Fund may routinely trade with bid-offer spreads that may be significant. There can be no guarantee that the Acquiring Fund's investments could ultimately be realized at the Acquiring Fund's valuation of such investments. In addition, the Acquiring Fund's compliance with the asset diversification tests applicable to regulated investment companies depends on the fair market values of the Acquiring Fund's assets, and, accordingly,

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a challenge to the valuations ascribed by the Acquiring Fund could affect its ability to comply with those tests or require it to pay penalty taxes in order to cure a violation thereof.

The Acquiring Fund's NAV per common share is a critical component in several operational matters including computation of advisory and services fees and determination of the price at which a tender offer will be made under the Discount Management Program or otherwise. Consequently, variance in the valuation of the Acquiring Fund's investments will impact, positively or negatively, the fees and expenses shareholders will pay.

*Reliance on the Investment Advisor Risk*. The Acquiring Fund is dependent upon services and resources provided by the Investment Advisor, and therefore the Investment Advisor's parent, BlackRock, Inc. The Investment Advisor is not required to devote its full time to the business of the Acquiring Fund and there is no guarantee or requirement that any investment professional or other employee of the Investment Advisor will allocate a substantial portion of his or her time to the Acquiring Fund. The loss of one or more individuals involved with the Investment Advisor could have a material adverse effect on the performance or the continued operation of the Acquiring Fund.

*Reliance on Service Providers Risk*. The Acquiring Fund must rely upon the performance of service providers to perform certain functions, which may include functions that are integral to the Acquiring Fund's operations and financial performance. Failure by any service provider to carry out its obligations to the Acquiring Fund in accordance with the terms of its appointment, to exercise due care and skill or to perform its obligations to the Acquiring Fund at all as a result of insolvency, bankruptcy or other causes could have a material adverse effect on the Acquiring Fund's performance and returns to shareholders. The termination of the Acquiring Fund's relationship with any service provider, or any delay in appointing a replacement for such service provider, could materially disrupt the business of the Acquiring Fund and could have a material adverse effect on the Acquiring Fund's performance and returns to shareholders.

*Information Technology Systems Risk*. The Acquiring Fund is dependent on the Investment Advisor for certain management services as well as back-office functions. The Investment Advisor depends on information technology systems in order to assess investment opportunities, strategies and markets and to monitor and control risks for the Acquiring Fund. It is possible that a failure of some kind which causes disruptions to these information technology systems could materially limit the Investment Advisor's ability to adequately assess and adjust investments, formulate strategies and provide adequate risk control. Any such information technology-related difficulty could harm the performance of the Acquiring Fund. Further, failure of the back-office functions of the Investment Advisor to process trades in a timely fashion could prejudice the investment performance of the Acquiring Fund.

*Operational and Technology Risk*. The Acquiring Fund and the entities with which it interacts directly or indirectly are susceptible to operational and technology risks, including those related to human errors, processing errors, communication errors, systems failures, cybersecurity incidents, and the use of artificial intelligence and machine learning ("AI"), which may result in losses for the Acquiring Fund and its shareholders or impair the Acquiring Fund's operations. These entities include, but are not limited to, the Acquiring Fund's adviser, administrator, distributor, other service providers (e.g., index and benchmark providers, accountants, custodians, and transfer agents), financial intermediaries, counterparties, market makers, authorized participants, listing exchanges, other financial market operators, and governmental authorities. Operational and technology risks for the issuers in which the Acquiring Fund invests could also result in material adverse consequences for such issuers and may cause the Acquiring Fund's investments in such issuers to lose value. The Acquiring Fund may incur substantial costs in order to mitigate operational and technology risks.

Cybersecurity incidents can result from deliberate attacks or unintentional events against an issuer in which the Acquiring Fund invests, the Acquiring Fund or any of its service providers. They include, but are not limited to, gaining unauthorized access to systems, misappropriating assets or sensitive information, corrupting or destroying data, and causing operational disruption. Geopolitical tension may increase the scale and sophistication of deliberate attacks, particularly those from nation states or from entities with nation state backing. Cybersecurity incidents may result in any of the following: financial losses; interference with the Acquiring Fund's ability to calculate its NAV; disclosure of confidential information; impediments to trading; submission of erroneous trades by the Acquiring Fund or erroneous subscription or redemption orders; the inability of the Acquiring Fund or its service providers to transact business; violations of applicable privacy and other laws; regulatory fines; penalties; reputational damage; reimbursement or other compensation costs; and other legal and compliance expenses. Furthermore, cybersecurity incidents may render records of the Acquiring Fund, including records relating to its assets and transactions,

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shareholder ownership of Acquiring Fund shares, and other data integral to the Acquiring Fund's functioning, inaccessible, inaccurate or incomplete. Power outages, natural disasters, equipment malfunctions and processing errors that threaten information and technology systems relied upon by the Acquiring Fund or its service providers, as well as market events that occur at a pace that overloads these systems, may also disrupt business operations or impact critical data. In addition, the risks of increased use of AI technologies, such as machine learning, include data risk, transparency risk, and operational risk. The AI technologies, which are generally highly reliant on the collection and analysis of large amounts of data, may incorporate biased or inaccurate data, and it is not possible or practicable to incorporate all relevant data into such technologies. The output or results of any such AI technologies may therefore be incomplete, erroneous, distorted or misleading. Further, AI tools may lack transparency as to how data is utilized and how outputs are generated. AI technologies may also allow the unintended introduction of vulnerabilities into infrastructures and applications. The Acquiring Fund and its shareholders could be negatively impacted as a result of these risks associated with AI technologies. AI technologies and their current and potential future applications, and the regulatory frameworks within which they operate, continue to quickly evolve, and it is impossible to anticipate the full scope of future AI capabilities or rules and the associated risks to the Acquiring Fund.

While the Acquiring Fund's service providers are required to have appropriate operational, information security and cybersecurity risk management policies and procedures, their methods of risk management may differ from those of the Acquiring Fund in the setting of priorities, the personnel and resources available or the effectiveness of relevant controls. The Acquiring Fund and its adviser seek to reduce these risks through controls, procedures and oversight, including establishing business continuity plans and risk management systems. However, there are inherent limitations in such plans and systems, including the possibility that certain risks that may affect the Acquiring Fund have not been identified or may emerge in the future; that such plans and systems may not completely eliminate the occurrence or mitigate the effects of operational or information security disruptions or failures or of cybersecurity incidents; or that prevention and remediation efforts will not be successful or that incidents will go undetected. The Acquiring Fund cannot control the systems, information security or other cybersecurity of the issuers in which it invests or its service providers, counterparties, and other third parties whose activities affect the Acquiring Fund.

Lastly, the regulatory climate governing cybersecurity and data protection is developing quickly and may vary considerably across jurisdictions. Regulators continue to develop new rules and standards related to cybersecurity and data protection. Compliance with evolving regulations can be demanding and costly, requiring substantial resources to monitor and implement required changes.

*Misconduct of Employees and of Service Providers Risk*. Misconduct or misrepresentations by employees of the Investment Advisor or the Acquiring Fund's service providers could cause significant losses to the Acquiring Fund. Employee misconduct may include binding the Acquiring Fund to transactions that exceed authorized limits or present unacceptable risks and unauthorized trading activities, concealing unsuccessful trading activities (which, in any case, may result in unknown and unmanaged risks or losses) or making misrepresentations regarding any of the foregoing. Losses could also result from actions by the Acquiring Fund's service providers, including, without limitation, failing to recognize trades and misappropriating assets. In addition, employees and service providers may improperly use or disclose confidential information, which could result in litigation or serious financial harm, including limiting the Acquiring Fund's business prospects or future marketing activities. Despite the Investment Advisor's due diligence efforts, misconduct and intentional misrepresentations may be undetected or not fully comprehended, thereby potentially undermining the Investment Advisor's due diligence efforts. As a result, no assurances can be given that the due diligence performed by the Investment Advisor will identify or prevent any such misconduct.

*Inflation Risk.* Inflation risk is the risk that the value of assets or income from investment will be worth less in the future, as inflation decreases the value of money. Inflation rates may change frequently and drastically as a result of various factors, including unexpected shifts in the domestic or global economy. As inflation increases, the real value of the common shares and distributions on those shares can decline. In addition, during any periods of rising inflation, interest rates on any borrowings by the Acquiring Fund would likely increase, which would tend to further reduce returns to the holders of common shares.

*Deflation Risk.* Deflation risk is the risk that prices throughout the economy decline over time, which may have an adverse effect on the market valuation of companies, their assets and their revenues. In addition, deflation may have

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an adverse effect on the creditworthiness of issuers and may make issuer default more likely, which may result in a decline in the value of the Acquiring Fund's portfolio.

*Portfolio Turnover Risk*. The Acquiring Fund's annual portfolio turnover rate may vary greatly from year to year, as well as within a given year. Portfolio turnover rate is not considered a limiting factor in the execution of investment decisions for the Acquiring Fund. A higher portfolio turnover rate results in correspondingly greater brokerage commissions and other transactional expenses that are borne by the Acquiring Fund. High portfolio turnover may result in an increased realization of net short-term capital gains by the Acquiring Fund which, when distributed to common shareholders, will be taxable as ordinary income. Additionally, in a declining market, portfolio turnover may create realized capital losses.

*Anti-Takeover Provisions Risk*. The Acquiring Fund's Articles of Incorporation and Bylaws include provisions that could limit the ability of other entities or persons to acquire control of the Acquiring Fund or convert the Acquiring Fund to open-end status or to change the composition of the Board. Such provisions could limit the ability of shareholders to sell their shares at a premium over prevailing market prices by discouraging a third party from seeking to obtain control of the Acquiring Fund. See "Certain Provisions in the Articles of Incorporation and Bylaws of the Acquiring Fund."

*Shareholder Activism Risk*. Shareholder activism involving closed-end funds has recently been increasing. Shareholder activism can take many forms, including engaging in public campaigns to demand that the Acquiring Fund consider significant transactions such as a tender offer, merger or liquidation or to attempt to influence the Acquiring Fund's corporate governance and/or management, commencing proxy contests to attempt to elect the activists' representatives or others to the Acquiring Fund's Board, or to seek other actions such as a termination of the Acquiring Fund's investment advisory contract with its current investment manager or commencing litigation. If the Acquiring Fund becomes the subject of shareholder activism, then management and the Board may be required to divert significant resources and attention to respond to the activist and the Acquiring Fund may incur substantial costs defending against such activism if management and the Board determine that the activist's demands are not in the best interest of the Acquiring Fund. Further, the Acquiring Fund's share price could be subject to significant fluctuation or otherwise be adversely affected by the events, risks and uncertainties of any shareholder activism.

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**DESCRIPTION OF THE FUNDS** 

The Funds are each formed as a Maryland corporation and are each a diversified, closed-end management investment company registered under the 1940 Act. Each Fund's principal place of business is located at 100 Bellevue Parkway, Wilmington, Delaware 19809, and each Fund's telephone number is (800) 882-0052.

MVT was incorporated as a Maryland corporation governed by the laws of the State of Maryland on February 3, 1993, and commenced operations on March 29, 1993.

MIY was incorporated as a Maryland corporation governed by the laws of the State of Maryland on June 30, 1992, and commenced operations on October 30, 1992.

MVF was incorporated as a Maryland corporation governed by the laws of the State of Maryland on July 6, 1988, and commenced operations on September 29, 1988.

The Acquiring Fund was incorporated as a Maryland corporation governed by the laws of the State of Maryland on January 13, 1992, and commenced operations on April 13, 1992.

The Acquiring Fund common shares are listed on the NYSE as "MYI." MVT's common shares are listed on the NYSE as "MVT." MIY's common shares are listed on the NYSE as "MIY." MVF's common shares are listed on the NYSE as "MVF."

Each of the Acquiring Fund, MVT, MIY and MVF have a July 31 fiscal year end.

Each of MVT and MVF has VMTP Shares outstanding, and each of the Acquiring Fund and MIY has VRDP Shares outstanding. Each Fund's preferred shares are not listed on a national stock exchange and have not been registered under the Securities Act, or any state securities laws, and unless so registered, may not be offered, sold, assigned, transferred, pledged, encumbered or otherwise disposed of except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and applicable state securities laws. Please see "Information about the Preferred Shares of the Funds" for additional information.

Following the Reorganization(s), the Acquiring Fund will be the accounting survivor.

**MANAGEMENT OF THE FUNDS** 

**The Board of Directors and Officers** 

The Board of Trustees or the Board of Directors, as applicable (each, a "Board"), currently consists of ten individuals (each, a "Board Member"), eight of whom are not "interested persons" of each Fund as defined in the 1940 Act (the "Independent Board Members"). The BlackRock-Advised Funds are organized into one complex of closed-end funds and open-end non-index fixed-income funds (the "BlackRock Fixed-Income Complex"), one complex of open-end equity, multi-asset, index and money market funds (the "BlackRock Multi-Asset Complex") and one complex of exchange-traded funds (each, a "BlackRock Fund Complex"). Each Fund is included in the BlackRock Fixed-Income Complex. The Board Members also oversee as Board members the operations of the other closed-end registered investment companies included in the BlackRock Fixed-Income Complex.

Certain biographical and other information relating to the Board Members and officers of each Fund is set forth below, including their year of birth, their principal occupation for at least the last five years, the length of time served, the total number of investment companies overseen in the BlackRock Fund Complexes and any public directorships or trusteeships.

Please refer to the below table which identifies the Board Members and sets forth certain biographical information about the Board Members for each Fund.

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|:---|:---|:---|:---|:---|
| **Name and<br>Year of Birth<sup>1,2</sup>** | **Position(s)<br>Held<br>(Length of<br>Service)<sup>3</sup>** | **Principal**<br> **Occupation(s)<br>During Past Five**<br> **Years** | **Number of<br>BlackRock-Advised<br>Registered Investment<br>Companies ("RICs")<br>Consisting of Investment<br>Portfolios ("Portfolios")<br>Overseen** | **Public<br>Company and<br>Other<br>Investment<br>Company<br>Directorships<br>Held During<br>Past Five Years** |
|  *Independent Board Members* | *Independent Board Members* | *Independent Board Members* | *Independent Board Members* | *Independent Board Members* |
| **R. Glenn**<br> **Hubbard**<br> 1958 | Chair of the Board (Since 2022) and Director<br> (Since 2007) | Dean, Columbia Business School from 2004 to 2019; Faculty member, Columbia Business School since 1988. | 68 RICs consisting of 103 Portfolios | ADP (data and information services) from 2004 to 2020; Metropolitan Life Insurance Company (insurance); TotalEnergies SE (multi-energy) |
| **W. Carl**<br> **Kester**<sup>4</sup> 1951 | Vice Chair of the Board (Since 2022) and Director<br> (Since 2007) | Baker Foundation Professor and George Fisher Baker Jr. Professor of Business Administration, Emeritus, Harvard Business School since 2022; George Fisher Baker Jr. Professor of Business Administration, Harvard Business School from 2008 to 2022; Deputy Dean for Academic Affairs from 2006 to 2010; Chairman of the Finance Unit, from 2005 to 2006; Senior Associate Dean and Chairman of the MBA Program from 1999 to 2005; Member of the faculty of Harvard Business School since 1981. | 70 RICs consisting of 105 Portfolios |  |

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|:---|:---|:---|:---|:---|
| **Name and<br>Year of Birth<sup>1,2</sup>** | **Position(s)<br>Held<br>(Length of<br>Service)<sup>3</sup>** | **Principal**<br> **Occupation(s)<br>During Past Five**<br> **Years** | **Number of<br>BlackRock-Advised<br>Registered Investment<br>Companies ("RICs")<br>Consisting of Investment<br>Portfolios ("Portfolios")<br>Overseen** | **Public<br>Company and<br>Other<br>Investment<br>Company<br>Directorships<br>Held During<br>Past Five Years** |
| **Cynthia L.**<br> **Egan<sup>4</sup>**<br> 1955 | Director<br> (Since 2016) | Advisor, U.S. Department of the Treasury from 2014 to 2015; President, Retirement Plan Services, for T. Rowe Price Group, Inc. from 2007 to 2012; executive positions within Fidelity Investments from 1989 to 2007. | 70 RICs consisting of 105 Portfolios | Unum (insurance); The Hanover Insurance Group (Board Chair); Huntsman Corporation (Lead Independent Director and non-Executive Vice Chair of the Board) (chemical products) |
| **Lorenzo A.**<br> **Flores**<br> 1964 | Director<br> (Since 2021) | Chief Financial Officer, Lattice Semiconductor Corporation (LSCC) since 2025; Chief Financial Officer, Intel Foundry from 2024 to 2025; Vice Chairman, Kioxia, Inc. from 2019 to 2024; Chief Financial Officer, Xilinx, Inc. from 2016 to 2019; Corporate Controller, Xilinx, Inc. from 2008 to 2016. | 68 RICs consisting of 103 Portfolios |  |
| **Stayce D.**<br> **Harris**<br> 1959 | Director<br> (Since 2021) | Lieutenant General, Inspector General of the United States Air Force from 2017 to 2019; Lieutenant General, Assistant Vice Chief of Staff and Director, Air Staff, United States Air Force from 2016 to 2017; Major General, Commander, 22nd Air Force, AFRC, Dobbins Air Reserve Base, Georgia from | 68 RICs consisting of 103 Portfolios | KULR Technology Group, Inc. in 2021; The Boeing Company (airplane manufacturer) |

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|:---|:---|:---|:---|:---|
| **Name and<br>Year of Birth<sup>1,2</sup>** | **Position(s)<br>Held<br>(Length of<br>Service)<sup>3</sup>** | **Principal**<br> **Occupation(s)<br>During Past Five**<br> **Years** | **Number of<br>BlackRock-Advised<br>Registered Investment<br>Companies ("RICs")<br>Consisting of Investment<br>Portfolios ("Portfolios")<br>Overseen** | **Public<br>Company and<br>Other<br>Investment<br>Company<br>Directorships<br>Held During<br>Past Five Years** |
|  |  | 2014 to 2016; Pilot, United Airlines from 1990 to 2020. |  |  |
| **J. Phillip**<br> **Holloman**<br> 1955 | Director<br> (Since 2021) | Interim Executive Chairman, President and Chief Executive Officer of Vestis Corporation since 2025; President and Chief Operating Officer, Cintas Corporation from 2008 to 2018. | 68 RICs consisting of 103 Portfolios | Vestis Corporation (uniforms and facilities services) |
| **Catherine A.**<br> **Lynch<sup>4</sup>**<br> 1961 | Director<br> (Since 2016) | Chief Executive Officer, Chief Investment Officer and various other positions, National Railroad Retirement Investment Trust from 2003 to 2016; Associate Vice President for Treasury Management, The George Washington University from 1999 to 2003; Assistant Treasurer, Episcopal Church of America from 1995 to 1999. | 70 RICs consisting of 105 Portfolios | PennyMac Mortgage Investment Trust |
| **Arthur P.**<br> **Steinmetz<sup>4</sup>**<br> 1958 | Director<br> (Since 2023) | Trustee of Denison University since 2020; Consultant, Posit PBC (enterprise data science) since 2020; Director, ScotiaBank (U.S.) from 2020 to 2023; Chairman, Chief Executive Officer and President of OppenheimerFunds, Inc. from 2015, 2014 and 2013, respectively to 2019); Trustee, President and | 70 RICs consisting of 105 Portfolios | Trustee of 104 OppenheimerFunds funds from 2014 to 2019 |

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|:---|:---|:---|:---|:---|
| **Name and<br>Year of Birth<sup>1,2</sup>** | **<br>Position(s)<br>Held<br>(Length of<br>Service)<sup>3</sup>** | **Principal**<br> **Occupation(s)<br>During Past Five**<br> **Years** | **Number of<br>BlackRock-Advised<br>Registered Investment<br>Companies ("RICs")<br>Consisting of Investment<br>Portfolios ("Portfolios")<br>Overseen** | **Public<br>Company and<br>Other<br>Investment<br>Company<br>Directorships<br>Held During<br>Past Five Years** |
|  |  | Principal Executive Officer of 104 OppenheimerFunds funds from 2014 to 2019. Portfolio manager of various OppenheimerFunds fixed income mutual funds from 1986 to 2014. |  |  |
|  *Interested Directors*<sup>5</sup> | *Interested Directors*<sup>5</sup> | *Interested Directors*<sup>5</sup> | *Interested Directors*<sup>5</sup> | *Interested Directors*<sup>5</sup> |
| **Robert**<br> **Fairbairn**<br> 1965 | Director<br> (Since 2018) | Vice Chairman of BlackRock, Inc. since 2019; Member of BlackRock's Global Executive and Global Operating Committees; Co-Chair of BlackRock's Human Capital Committee; Senior Managing Director of BlackRock, Inc. from 2010 to 2019; oversaw BlackRock's Strategic Partner Program and Strategic Product Management Group from 2012 to 2019; Member of the Board of Managers of BlackRock Investments, LLC from 2011 to 2018; Global Head of BlackRock's Retail and iShares<sup>®</sup> businesses from 2012 to 2016. | 96 RICs consisting of 271 Portfolios |  |
| **John M.**<br> **Perlowski<sup>4</sup>**<br> 1964 | Director<br> (Since 2015)<br> President and Chief Executive Officer (Since 2010) | Managing Director of BlackRock, Inc. since 2009; Head of BlackRock Global Accounting and Product Services since 2009; | 98 RICs consisting of 273 Portfolios |  |

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|:---|:---|:---|:---|:---|
| **Name and<br>Year of Birth<sup>1,2</sup>** | **<br>Position(s)<br>Held<br>(Length of<br>Service)<sup>3</sup>** | **Principal Occupation(s)<br>During Past Five Years** | **Number of<br>BlackRock-Advised<br>Registered Investment<br>Companies ("RICs")<br>Consisting of Investment<br>Portfolios ("Portfolios")<br>Overseen** | **Public<br>Company and<br>Other<br>Investment<br>Company<br>Directorships<br>Held During<br>Past Five Years** |
|  |  | Advisory Director of Family Resource Network (charitable foundation) since 2009. |  |  |

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(1) The address of each Board Member is c/o BlackRock, Inc., 50 Hudson Yards, New York, New York 10001.

(2) Each Independent Board Member holds office until his or her successor is duly elected and qualifies or until
his or her earlier death, resignation, retirement or removal as provided by the applicable Fund's by-laws or charter, or statute, or until December 31 of the year in which he or she turns 75.
Directors who are "interested persons," as defined in the 1940 Act (each, an "Interested Board Member"), serve until their successor is duly elected and qualifies or until their earlier death, resignation, retirement or removal
as provided by the applicable Fund's by-laws or statute, or until December 31 of the year in which they turn 72. The Board may determine to extend the terms of Independent Board Members on a case-by-case basis, as appropriate.

(3) Date shown in the earliest date a person has served for the Funds. Following the combination of Merrill Lynch
Investment Managers, L.P. ("MLIM") and BlackRock, Inc. in September 2006, the various legacy MLIM and legacy BlackRock fund boards were realigned and consolidated into three new fund boards in 2007. Certain Independent Board Members first
became members of the boards of other legacy MLIM or legacy BlackRock funds as follows: R. Glenn Hubbard, 2004 and W. Carl Kester, 1995. Certain other Independent Directors became members of the boards of the closed-end funds in the BlackRock Fixed-Income Complex as follows: Cynthia L. Egan, 2016 and Catherine A. Lynch, 2016.

(4) Ms. Egan, Dr. Kester, Ms. Lynch, Mr. Steinmetz and Mr. Perlowski are also trustees
of the BlackRock Credit Strategies Fund and BlackRock Private Investments Fund.

(5) Mr. Fairbairn and Mr. Perlowski are both "interested persons," as defined in the 1940
Act, of each Fund based on their positions with BlackRock, Inc. and its affiliates. Mr. Fairbairn and Mr. Perlowski are also board members of the BlackRock Multi-Asset Complex.

**The Board and Officers** 

The Funds have the same Board Members and officers. The Board of each Fund is responsible for the overall supervision of the operations of the Fund and performs the various duties imposed on the directors of investment companies by the 1940 Act and under applicable state law. A list of the Board Members and officers of the Funds, a brief biography of each Board Member and officer and additional information relating to the Board and officers are included in "Management of the Funds" in the Statement of Additional Information.

**Information Pertaining to the Officers** 

Certain biographical and other information relating to the officers of the Funds who are not Board Members is set forth below, including their address and year of birth, principal occupations for at least the last five years and length of time served. With the exception of the Chief Compliance Officer ("CCO"), executive officers receive no compensation from the Funds. The Acquiring Fund compensates the CCO for his services as its CCO.

Each executive officer is an "interested person" of the Funds (as defined in the 1940 Act) by virtue of that individual's position with BlackRock or its affiliates described in the table below.

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|:---|:---|:---|
| **Name and <br> Year of Birth<sup>1,2</sup>** | **Position(s) Held <br>(Length of Service)** | **Principal Occupation(s)<br>During Past Five Years** |
| **Officers Who Are Not Directors** | **Officers Who Are Not Directors** | **Officers Who Are Not Directors** |
| **Stephen Minar** <br> 1984 | Vice President<br> (Since 2025) | Managing Director of BlackRock, Inc. since 2023; Director of BlackRock, Inc. since 2018. |

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|:---|:---|:---|
| **Name and <br> Year of Birth<sup>1,2</sup>** | **Position(s) Held <br>(Length of Service)** | **Principal Occupation(s)<br>During Past Five Years** |
| **Trent Walker**<br> 1974 | Chief Financial Officer<br> (Since 2021) | Managing Director of BlackRock, Inc. since 2019; Executive Vice President of PIMCO from 2016 to 2019. |
| **Jay M. Fife**<br> 1970 | Treasurer<br> (Since 2007) | Managing Director of BlackRock, Inc. since 2007. |
| **Aaron Wasserman**<br> 1974 | Chief Compliance Officer<br> (Since 2023) | Managing Director of BlackRock, Inc. since 2018; Chief Compliance Officer of the BlackRock-Advised funds in the BlackRock Multi-Asset Complex, the BlackRock Fixed-Income Complex and the iShares Complex since 2023; Deputy Chief Compliance Officer for the BlackRock-Advised funds in the BlackRock Multi-Asset Complex, the BlackRock Fixed-Income Complex and the iShares Complex from 2014 to 2023. |
| **Lisa Belle** <br> 1968 | Anti-Money Laundering Compliance Officer<br> (Since 2019) | Managing Director of BlackRock, Inc. since 2019; Global Financial Crime Head for Asset and Wealth Management of JP Morgan from 2013 to 2019. |
| **Janey Ahn**<br> 1975 | Secretary<br> (Since 2019) | Managing Director of BlackRock, Inc. since 2018. |

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(1) The address of each executive officer is c/o BlackRock, Inc., 50 Hudson Yards, New York, New York 10001

(2) Officers of the Funds serve at the pleasure of the Board.

**The Investment Advisor** 

BlackRock Advisors, LLC serves as the investment adviser for each Fund and is expected to continue to serve as investment adviser for the Combined Fund. The Investment Advisor is responsible for the management of each Fund's portfolio and provides the necessary personnel, facilities, equipment and certain other services necessary to the operations of each Fund.

Each of MVT, MIY, MVF and the Acquiring Fund currently pays the Investment Advisor a monthly fee at an annual contractual investment management fee rate of 0.50% of its average weekly managed assets. For purposes of calculating these fees, "managed assets" are determined as total assets of the Fund (including any assets attributable to money borrowed for investment purposes) less the sum of its accrued liabilities (other than money borrowed for investment purposes).

Each Fund and the Investment Advisor have entered into a fee waiver agreement (the "Fee Waiver Agreement"), pursuant to which the Investment Advisor has contractually agreed to waive the management fee with respect to any portion of each Fund's assets attributable to investments in any equity and fixed-income mutual funds and ETFs managed by the Investment Advisor or its affiliates that have a contractual fee, through June 30, 2027. Pursuant to the Fee Waiver Agreement, the Investment Advisor has contractually agreed to waive its management fees by the amount of investment advisory fees each Fund pays to the Investment Advisor indirectly through its investment in money market funds advised by the Investment Advisor or its affiliates, through June 30, 2027. The Fee Waiver Agreement may be continued from year to year thereafter, provided that such continuance is specifically approved by the Investment Advisor and each Fund (including by a majority of the Independent Board Members). Neither the Investment Advisor nor the Funds are obligated to extend the Fee Waiver Agreement. The Fee Waiver Agreement may be terminated at any time, without the payment of any penalty, only by each Fund (upon the vote of a majority of the Independent Board Members or a majority of the outstanding voting securities of each Fund), upon 90 days' written notice by each Fund to the Investment Advisor.

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If the Reorganizations are consummated, the annual contractual investment management fee rate of the Acquiring Fund will be the annual contractual investment management fee rate of the Combined Fund, which will be 0.50% of the average daily value of net assets of the Combined Fund. The Combined Fund will have the same annual contractual investment management fee rate as MIY, MVF and the Acquiring Fund.

Based on a *pro forma* Broadridge peer expense universe for the Combined Fund, the estimated total annual fund expense ratio (excluding investment-related expenses and taxes) is expected to be in the first quartile and contractual investment management fee rate and actual investment management fee rate over total assets are each expected to be in the first quartile. Each fund in the Broadridge peer expense universe is placed in one of four quartiles for each relevant comparison, with the first quartile including funds with the lowest relative expenses and the fourth quartile including funds with the highest relative expenses

There can be no assurance that future expenses of the Combined Fund will not increase or that any expense savings for any Fund will be realized as a result of any Reorganization.

A discussion regarding the basis for the approval of the Investment Management Agreement by the Board of each Fund is provided in such Fund's Form N-CSR for such Fund's recent fiscal year end, which will be available at www.sec.gov or by visiting www.blackrock.com.

The Investment Advisor is located at 100 Bellevue Parkway, Wilmington, Delaware 19809 and is a majority-owned subsidiary of BlackRock. BlackRock is one of the world's largest publicly-traded investment management firms. As of [•], 2025, BlackRock's assets under management were approximately $[•] trillion. BlackRock has over 35 years of experience managing closed-end products and, as of June 30, 2025, advised a registered closed-end family of 49 exchange-listed active funds with approximately $43 billion in assets.

BlackRock is a global leader in investment management, risk management and advisory services for institutional and retail clients. BlackRock helps clients meet their goals and overcome challenges with a range of products that include separate accounts, mutual funds, iShares<sup>®</sup> (exchange-traded funds), and other pooled investment vehicles. BlackRock also offers risk management, advisory and enterprise investment system services to a broad base of institutional investors through BlackRock Solutions<sup>®</sup>. Headquartered in New York City, as of [•], 2025, the firm had approximately [•] employees in more than 30 countries and a major presence in key global markets, including North and South America, Europe, Asia, Australia and the Middle East and Africa.

**Portfolio Management** 

Each of the Funds is managed by a team of investment professionals led by Michael Kalinoski, CFA, Director at BlackRock, Walter O'Connor, CFA, Managing Director at BlackRock, Christian Romaglino, CFA, Director at BlackRock, Kevin Maloney, CFA, Director at BlackRock, Phillip Soccio, CFA, Director at BlackRock and Kristi Manidis, Director at BlackRock. Each is jointly responsible for the day-to-day management of the Fund's portfolio, which includes setting the registrant's overall investment strategy, overseeing the management of the Fund and/or selection of its investments.

The biography of each portfolio manager of the Funds are set forth below:

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| **Portfolio Manager** | **Biography** |
|  Phillip Soccio, CFA | Director of BlackRock since 2009. |
|  Walter O'Connor, CFA | Managing Director of BlackRock since 2006. |
|  Michael Kalinoski, CFA | Director of BlackRock since 2006. |
| Kevin Maloney, CFA | Director of BlackRock since 2021; Vice President of BlackRock from 2018 to 2020. |
|  Kristi Manidis | Director of BlackRock, Inc. since 2016. |

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| **Portfolio Manager** | **Biography** |
| Christian Romaglino, CFA | Director of BlackRock since 2017; Portfolio Manager for the Municipal Mutual Fund Desk within BlackRock's Global Fixed Income Group since 2017. |

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Following the Reorganizations, it is expected that the Combined Fund will be managed by the same team of investment professionals.

The Statement of Additional Information provides additional information about the portfolio managers' compensation, other accounts managed by the portfolio managers, and the portfolio managers' ownership of securities in each Fund.

**Portfolio Transactions with Affiliates** 

The Investment Advisor may place portfolio transactions, to the extent permitted by law, with brokerage firms affiliated with the Funds and the Investment Advisor, if it reasonably believes that the quality of execution and the commission are comparable to that available from other qualified brokerage firms.

[None of the Funds paid brokerage commissions to affiliated broker-dealers during their three most recent fiscal years.]

**Other Service Providers** 

The professional service providers for the Funds are or will be as follows:

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|:---|:---|
| **Service** | **Service Providers to the Funds** |
| Accounting Agent | State Street Bank and Trust Company |
| Custodian | State Street Bank and Trust Company |
| Transfer Agent, Dividend Disbursing Agent and Registrar | Computershare Trust Company, N.A. |
| Liquidity Providers to MYI VRDP Shares | Toronto-Dominion Bank, acting through its New York branch |
| Liquidity Provider to MIY VRDP Shares | Toronto-Dominion Bank, acting through its New York branch |
| Remarketing Agents to MYI VRDP Shares | RBC Capital Markets, LLC and TD Securities (USA) LLC |
| Remarketing Agent to MIY VRDP Shares | BofA Securities, Inc. |
| Redemption and Paying Agent to MVT and MVF VTMP Shares; Tender and Paying Agent to MYI and MIY VRDP Shares | The Bank of New York Mellon |
| Independent Registered Public Accounting Firm | [•] |
| Fund Counsel | Willkie Farr & Gallagher LLP |
| Counsel to the Independent Board Members | Stradley Ronon Stevens & Young, LLP |

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It is not anticipated that the Reorganizations will result in any change in the organizations providing services to the Acquiring Fund as set forth above. As a result of the Reorganizations, the service providers to the Acquiring Fund are anticipated to be the service providers to the Combined Fund.

**Accounting Agent** 

State Street Bank and Trust Company provides certain administration and accounting services to the Funds pursuant to an Administration and Fund Accounting Services Agreement (the "Administration Agreement"). Pursuant to the Administration Agreement, State Street Bank and Trust Company provides the Funds with, among other things, customary fund accounting services, including computing each Fund's NAV and maintaining books, records and other documents relating to each Fund's financial and portfolio transactions, and customary fund administration services,

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including assisting the Funds with regulatory filings, tax compliance and other oversight activities. For these and other services it provides to the Funds, State Street Bank and Trust Company is paid a monthly fee from the Funds at an annual rate ranging from 0.0075% to 0.015% of each Fund's Managed Assets, along with an annual fixed fee ranging from $0 to $10,000 for the services it provides to the Funds.

**Custody of Assets** 

The custodian of the assets of each Fund is State Street Bank and Trust Company, One Congress Street, Boston, Massachusetts 02114. The custodian is responsible for, among other things, receipt of and disbursement of funds from each Fund's accounts, establishment of segregated accounts as necessary, and transfer, exchange and delivery of Fund portfolio securities.

**Transfer Agent, Dividend Disbursing Agent and Registrar** 

Computershare Trust Company, N.A., 150 Royall Street, Canton, Massachusetts 02021, serves as each Fund's transfer agent with respect to such Fund's common shares.

**VMTP Shares Redemption and Paying Agent; VRDP Shares Tender and Paying Agent** 

The Bank of New York Mellon, One Wall Street, New York, New York 10286, acts as the tender agent, transfer agent and registrar, dividend disbursing agent and paying agent and/or redemption price disbursing agent with respect to the Acquiring Fund and MIY VRDP Shares and the MVT and MVF VMTP Shares, as applicable, and will serve in such capacity with respect to the VRDP Shares of the Combined Fund.

**Acquiring Fund and MIY VRDP Shares Liquidity Providers** 

Toronto-Dominion Bank, acting through its New York branch serves as the liquidity provider for a series of the Acquiring Fund VRDP Shares and the MIY VRDP Shares.

**Acquiring Fund and MIY VRDP Shares Remarketing Agents** 

RBC Capital Markets, LLC and TD Securities (USA) LLC each serve as the remarketing agent for a series of the Acquiring Fund VRDP Shares. BofA Securities, Inc. serves as the remarketing agent for the MIY VRDP Shares.

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**THE ACQUIRING FUND'S INVESTMENTS** 

**Investment Objective and Policies** 

The Acquiring Fund's investment objective is to provide shareholders with as high a level of current income exempt from federal income taxes as is consistent with its investment policies and prudent investment management. The Acquiring Fund seeks to achieve its investment objective by investing at least 80% of an aggregate of the Acquiring Fund's net assets including proceeds from the issuance of any preferred stock) and the proceeds of any borrowings for investment purposes, in a portfolio of municipal obligations issued by or on behalf of states, territories and possessions of the United States and their political subdivisions, agencies or instrumentalities, each of which pays interest that, in the opinion of bond counsel to the issuer, is excludable from gross income for federal income tax purposes (except that the interest may be includable in taxable income for purposes of the federal alternative minimum tax) ("MYI Municipal Bonds"). The Acquiring Fund may invest directly in securities or synthetically through the use of derivatives. The Acquiring Fund's investment objective and its policy of investing at least 80% of an aggregate of the Acquiring Fund's net assets (including proceeds from the issuance of any preferred stock) and the proceeds of any borrowings for investment purposes, in MYI Municipal Bonds are fundamental policies that may not be changed without the approval of a majority of the outstanding voting securities of the Acquiring Fund (as defined in 1940 Act, as amended). There can be no assurance that the Acquiring Fund's investment objective will be realized.

The Acquiring Fund may invest in certain tax-exempt securities classified as "private activity bonds" ("PABs") (in general, bonds that benefit nongovernmental entities) that may subject certain investors in the Acquiring Fund to an alternative minimum tax. The percentage of the Acquiring Fund's total assets invested in PABs will vary from time to time. The Acquiring Fund also will not invest more than 25% of its total assets (taken at market value at the time of each investment) in MYI Municipal Bonds whose issuers are located in the same state.

Under normal market conditions, the Acquiring Fund expects to invest at least 75% of its total assets in a portfolio of long-term MYI Municipal Bonds that are commonly referred to as "investment grade" securities, which are obligations rated at the time of purchase within the four highest-quality ratings as determined by either Moody's (currently Aaa, Aa, A and Baa), S&P (currently AAA, AA, A and BBB) or Fitch (currently AAA, AA, A and BBB). In the case of short-term notes, the investment grade rating categories are SP-1+ through SP-2 for S&P, MIG-1 through MIG-3 for Moody's and F-1+ through F-3 for Fitch. In the case of tax-exempt commercial paper, the investment grade rating categories are A-1+ through A-3 for S&P, P-1 through P-3 for Moody's and F-1+ through F-3 for Fitch. Obligations ranked in the lowest investment grade rating category (BBB, SP-2 and A-3 for S&P; Baa, MIG-3 and P-3 for Moody's; and BBB and F-3 for Fitch), while considered "investment grade," may have certain speculative characteristics. There may be sub- categories or gradations indicating relative standing within the rating categories set forth above. In assessing the quality of MYI Municipal Bonds with respect to the foregoing requirements, the Investment Advisor takes into account the nature of any letters of credit or similar credit enhancement to which particular MYI Municipal Bonds are entitled and the creditworthiness of the financial institution that provided such credit enhancement. If unrated, such securities will possess creditworthiness comparable, in the opinion of the Investment Advisor, to other obligations in which the Acquiring Fund may invest.

The Acquiring Fund also may invest up to 25% of its total assets in MYI Municipal Bonds that are rated below Baa by Moody's or below BBB by S&P or Fitch or, if unrated, are considered by the Investment Advisor to possess similar credit characteristics. Such securities, sometimes referred to as "high yield" or "junk" bonds, are predominantly speculative with respect to the capacity to pay interest and repay principal in accordance with the terms of the security and generally involve a greater volatility of price than securities in higher rating categories. The Acquiring Fund does not intend to purchase MYI Municipal Bonds that are in default or which the Investment Advisor believes will soon be in default. Below investment grade securities and comparable unrated securities involve substantial risk of loss, are considered speculative with respect to the issuer's ability to pay interest and any required redemption or principal payments and are susceptible to default or decline in market value due to adverse economic and business developments.

All percentage and ratings limitations on securities in which the Acquiring Fund may invest apply at the time of making an investment and shall not be considered violated if an investment rating is subsequently downgraded to a rating that would have precluded the Acquiring Fund's initial investment in such security. In the event that the

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Acquiring Fund disposes of a portfolio security subsequent to its being downgraded, the Acquiring Fund may experience a greater risk of loss than if such security had been sold prior to such downgrade.

The Acquiring Fund intends to invest primarily in long-term MYI Municipal Bonds with maturities of more than ten years. However, the Acquiring Fund also may invest in intermediate term MYI Municipal Bonds with maturities of between three years and ten years. The Acquiring Fund also may invest from time to time in short-term MYI Municipal Bonds with maturities of less than three years. The average maturity of the Acquiring Fund's portfolio securities will vary based upon the Investment Advisor's assessment of economic and market conditions.

For temporary periods or to provide liquidity, the Acquiring Fund has the authority to invest as much as 20% of its total assets in tax-exempt and taxable money market obligations with a maturity of one year or less (such short-term obligations being referred to herein as "Temporary Investments"). In addition, the Acquiring Fund reserves the right as a defensive measure to invest temporarily a greater portion of its assets in Temporary Investments, when, in the opinion of the Investment Advisor, prevailing market or financial conditions warrant. Taxable money market obligations will yield taxable income. The Acquiring Fund also may invest in VRDOs and VRDOs in the form of Participating VRDOs in variable rate tax-exempt obligations held by a financial institution. The Acquiring Fund's hedging strategies are not fundamental policies and may be modified by the Board of the Acquiring Fund without the approval of the Acquiring Fund's shareholders. The Acquiring Fund is also authorized to invest in indexed and inverse floating rate obligations for hedging purposes and to seek to enhance return.

The Acquiring Fund may invest in securities not issued by or on behalf of a state or territory or by an agency or instrumentality thereof, if the Acquiring Fund receives an opinion of counsel to the issuer that such securities pay interest that is excludable from gross income for federal income tax purposes ("Non-Municipal Tax-Exempt Securities"). Non- Municipal Tax-Exempt Securities could include trust certificates, partnership interests or other instruments evidencing interest in one or more long-term MYI Municipal Bonds. Non-Municipal Tax-Exempt Securities also may include securities issued by other investment companies that invest in MYI Municipal Bonds, to the extent such investments are permitted by the Acquiring Fund's investment restrictions and applicable law. Non-Municipal Tax-Exempt Securities are subject to the same risks associated with an investment in MYI Municipal Bonds as well as many of the risks associated with investments in derivatives.

The Acquiring Fund ordinarily does not intend to realize significant investment income not exempt from federal income tax. From time to time, the Acquiring Fund may realize taxable capital gains.

Federal tax legislation has limited the types and volume of bonds the interest on which qualifies for a federal income tax-exemption. As a result, this legislation and legislation that may be enacted in the future may affect the availability of MYI Municipal Bonds for investment by the Acquiring Fund.

**Description of MYI Municipal Bonds** 

Set forth below is a detailed description of the MYI Municipal Bonds in which the Acquiring Fund invests. Information with respect to ratings assigned to tax-exempt obligations that the Acquiring Fund may purchase is set forth in <u>Appendix B</u> to this Joint Proxy Statement/Prospectus. Obligations are included within the term MYI Municipal Bonds if the interest paid thereon is excluded from gross income for federal income tax purposes in the opinion of bond counsel to the issuer.

MYI Municipal Bonds include debt obligations issued to obtain funds for various public purposes, including the construction of a wide range of public facilities, refunding of outstanding obligations and obtaining funds for general operating expenses and loans to other public institutions and facilities. In addition, certain types of PABs are issued by or on behalf of public authorities to finance various privately owned or operated facilities, including among other things, airports, public ports, mass commuting facilities, multi-family housing projects, as well as facilities for water supply, gas, electricity, sewage or solid waste disposal and other specialized facilities. Other types of PABs, the proceeds of which are used for the construction, equipment or improvement of privately operated industrial or commercial facilities, may constitute MYI Municipal Bonds. The interest on MYI Municipal Bonds may bear a fixed rate or be payable at a variable or floating rate. The two principal classifications of MYI Municipal Bonds are "general obligation" bonds and "revenue" bonds, which latter category includes PABs and, for bonds issued on or before

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August 15, 1986, industrial development bonds. MYI Municipal Bonds typically are issued to finance public projects, such as roads or public buildings, to pay general operating expenses or to refinance outstanding debt. MYI Municipal Bonds may also be issued for private activities, such as housing, medical and educational facility construction, or for privately owned industrial development and pollution control projects. General obligation bonds are backed by the full faith and credit, or taxing authority, of the issuer and may be repaid from any revenue source. Revenue bonds may be repaid only from the revenues of a specific facility or source. MYI Municipal Bonds may be issued on a long-term basis to provide permanent financing. The repayment of such debt may be secured generally by a pledge of the full faith and credit taxing power of the issuer, a limited or special tax, or any other revenue source, including project revenues, which may include tolls, fees and other user charges, lease payments and mortgage payments. MYI Municipal Bonds may also be issued to finance projects on a short-term interim basis, anticipating repayment with the proceeds of the later issuance of long-term debt.

The MYI Municipal Bonds in which the Acquiring Fund invests pay interest or income that, in the opinion of bond counsel to the issuer, is exempt from regular federal income tax. The Investment Advisor does not conduct its own analysis of the tax status of the interest or income paid by MYI Municipal Bonds held by the Acquiring Fund, but will rely on the opinion of counsel to the issuer of each such instrument. The Acquiring Fund may also invest in MYI Municipal Bonds issued by United States Territories (such as Puerto Rico or Guam) that are exempt from regular federal income tax. The Acquiring Fund may invest in other securities that pay interest or income that is, or make other distributions that are, exempt from regular federal income tax and/or state and local personal taxes, regardless of the technical structure of the issuer of the instrument. The Acquiring Fund treats all of such tax-exempt securities as MYI Municipal Bonds.

The yields on MYI Municipal Bonds are dependent on a variety of factors, including prevailing interest rates and the condition of the general money market and the MYI Municipal Bond market, the size of a particular offering, the maturity of the obligation and the rating of the issue. The market value of MYI Municipal Bonds will vary with changes in interest rate levels and as a result of changing evaluations of the ability of bond issuers to meet interest and principal payments.

The Acquiring Fund has not established any limit on the percentage of its portfolio that may be invested in PABs. The Acquiring Fund may not be a suitable investment for investors who are already subject to the federal alternative minimum tax or who would become subject to the federal alternative minimum tax as a result of an investment in the Acquiring Fund's common shares.

*General Obligation Bonds*. General obligation bonds are typically secured by the issuer's pledge of its faith, credit and taxing power for the repayment of principal and the payment of interest. The taxing power of any governmental entity may be limited, however, by provisions of its state constitution or laws, and an entity's creditworthiness will depend on many factors, including potential erosion of its tax base due to population declines, natural disasters, declines in the state's industrial base or inability to attract new industries, economic limits on the ability to tax without eroding the tax base, state legislative proposals or voter initiatives to limit ad valorem real property taxes and the extent to which the entity relies on federal or state aid, access to capital markets or other factors beyond the state's or entity's control. Accordingly, the capacity of the issuer of a general obligation bond as to the timely payment of interest and the repayment of principal when due is affected by the issuer's maintenance of its tax base.

*Revenue Bonds*. Revenue or special obligation bonds are typically payable only from the revenues derived from a particular facility or class of facilities or, in some cases, from the proceeds of a special excise tax or other specific revenue sources such as payments from the user of the facility being financed. Accordingly, the timely payment of interest and the repayment of principal in accordance with the terms of the revenue or special obligation bond is a function of the economic viability of such facility or such revenue source. Revenue bonds issued by state or local agencies to finance the development of low-income, multi-family housing involve special risks in addition to those associated with municipal securities generally, including that the underlying properties may not generate sufficient income to pay expenses and interest costs. Such bonds are generally non-recourse against the property owner, may be junior to the rights of others with an interest in the properties, may pay interest that changes based in part on the financial performance of the property, may be prepayable without penalty and may be used to finance the construction of housing developments which, until completed and rented, do not generate income to pay interest. Increases in

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interest rates payable on senior obligations may make it more difficult for issuers to meet payment obligations on subordinated bonds.

*Municipal Notes*. Municipal notes are shorter term municipal debt obligations. They may provide interim financing in anticipation of tax collection, bond sales or revenue receipts. If there is a shortfall in the anticipated proceeds, repayment on the note may be delayed or the note may not be fully repaid, and the Acquiring Fund may lose money.

*Municipal Commercial Paper*. Municipal commercial paper is generally unsecured and issued to meet short-term financing needs. The lack of security presents some risk of loss to the Acquiring Fund since, in the event of an issuer's bankruptcy, unsecured creditors are repaid only after the secured creditors out of the assets, if any, that remain.

*Moral Obligation Bonds*. MYI Municipal Bonds may also include "moral obligation" bonds, which are normally issued by special purpose public authorities. If an issuer of moral obligation bonds is unable to meet its obligations, the repayment of such bonds becomes a moral commitment but not a legal obligation of the state or municipality in question.

*Municipal Lease Obligations*. Also included within the general category of MYI Municipal Bonds are certificates of participation ("<u>COPs</u>") issued by government authorities or entities to finance the acquisition or construction of equipment, land and/or facilities. COPs represent participations in a lease, an installment purchase contract or a conditional sales contract (hereinafter collectively called "<u>lease obligations</u>") relating to such equipment, land or facilities. Municipal leases, like other municipal debt obligations, are subject to the risk of non-payment. Although lease obligations do not constitute general obligations of the issuer for which the issuer's unlimited taxing power is pledged, a lease obligation is frequently backed by the issuer's covenant to budget for, appropriate and make the payments due under the lease obligation. However, certain lease obligations contain "non-appropriation" clauses which provide that the issuer has no obligation to make lease or installment purchase payments in future years unless money is appropriated for such purpose on a yearly basis. Although "non-appropriation" lease obligations are secured by the leased property, disposition of the property in the event of foreclosure might prove difficult and the value of the property may be insufficient to pay lease obligations. Certain investments in lease obligations may be illiquid.

The ability of issuers of municipal leases to make timely lease payments may be adversely impacted in general economic downturns and as relative governmental cost burdens are allocated and reallocated among federal, state and local governmental units. Such non-payment would result in a reduction of income to the Acquiring Fund, and could result in a reduction in the value of the municipal lease experiencing non-payment and a potential decrease in the NAV of the Acquiring Fund. Issuers of municipal lease obligations might seek protection under the bankruptcy laws. In the event of bankruptcy of such an issuer, the Acquiring Fund could experience delays and limitations with respect to the collection of principal and interest on such municipal leases and the Acquiring Fund may not, in all circumstances, be able to collect all principal and interest to which it is entitled. To enforce its rights in the event of a default in lease payments, the Acquiring Fund might take possession of and manage the assets securing the issuer's obligations on such securities, which may increase the Acquiring Fund's operating expenses and adversely affect the NAV of the Acquiring Fund. When the lease contains a non-appropriation clause, however, the failure to pay would not be a default and the Acquiring Fund would not have the right to take possession of the assets. Any income derived from the Acquiring Fund's ownership or operation of such assets may not be tax-exempt or may fail to generate qualifying income for purposes of the income tests applicable to regulated investment companies. In addition, the Acquiring Fund's intention to qualify as a regulated investment company under the Code may limit the extent to which the Acquiring Fund may exercise its rights by taking possession of such assets, because as a regulated investment company the Acquiring Fund is subject to certain limitations on its investments and on the nature of its income.

*Zero-Coupon Bonds*. MYI Municipal Bonds may include zero-coupon bonds. Zero-coupon bonds are securities that are sold at a discount to par value and do not pay interest during the life of the security. The discount approximates the total amount of interest the security will accrue and compound over the period until maturity at a rate of interest reflecting the market rate of the security at the time of issuance. Upon maturity, the holder of a zero-coupon bond is entitled to receive the par value of the security.

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While interest payments are not made on such securities, holders of such securities are deemed to have received income annually, notwithstanding that cash may not be received currently. The effect of owning instruments that do not make current interest payments is that a fixed yield is earned not only on the original investment but also, in effect, on all discount accretion during the life of the obligations. This implicit reinvestment of earnings at a fixed rate eliminates the risk of being unable to invest distributions at a rate as high as the implicit yield on the zero-coupon bond, but at the same time eliminates the holder's ability to reinvest at higher rates in the future. For this reason, some of these securities may be subject to substantially greater price fluctuations during periods of changing market interest rates than are comparable securities that pay interest currently. Longer term zero-coupon bonds are more exposed to interest rate risk than shorter term zero-coupon bonds. These investments benefit the issuer by mitigating its need for cash to meet debt service, but also require a higher rate of return to attract investors who are willing to defer receipt of cash.

The Acquiring Fund accrues income with respect to these securities for U.S. federal income tax and accounting purposes prior to the receipt of cash payments. Zero-coupon bonds may be subject to greater fluctuation in value and less liquidity in the event of adverse market conditions than comparably rated securities that pay cash interest at regular intervals.

Further, to maintain its qualification for pass-through treatment under the federal tax laws, the Acquiring Fund is required to distribute income to its shareholders and, consequently, may have to dispose of other, more liquid portfolio securities under disadvantageous circumstances or may have to leverage itself by borrowing in order to generate the cash to satisfy these distributions. The required distributions may result in an increase in the Acquiring Fund's exposure to zero-coupon bonds.

In addition to the above-described risks, there are certain other risks related to investing in zero-coupon bonds. During a period of severe market conditions, the market for such securities may become even less liquid. In addition, as these securities do not pay cash interest, the Acquiring Fund's investment exposure to these securities and their risks, including credit risk, will increase during the time these securities are held in the Acquiring Fund's portfolio.

*Pre-Refunded Municipal Securities*. The principal of, and interest on, pre-refunded municipal securities are no longer paid from the original revenue source for the securities. Instead, the source of such payments is typically an escrow fund consisting of U.S. Government securities. The assets in the escrow fund are derived from the proceeds of refunding bonds issued by the same issuer as the pre-refunded municipal securities. Issuers of municipal securities use this advance refunding technique to obtain more favorable terms with respect to securities that are not yet subject to call or redemption by the issuer. For example, advance refunding enables an issuer to refinance debt at lower market interest rates, restructure debt to improve cash flow or eliminate restrictive covenants in the indenture or other governing instrument for the pre-refunded municipal securities.

However, except for a change in the revenue source from which principal and interest payments are made, the pre-refunded municipal securities remain outstanding on their original terms until they mature or are redeemed by the issuer.

*Private Activity Bonds*. Private activity bonds, formerly referred to as industrial development bonds, are issued by, or on behalf of, states, municipalities or public authorities to obtain funds to provide privately operated housing facilities, airport, mass transit or port facilities, sewage disposal, solid waste disposal or hazardous waste treatment or disposal facilities and certain local facilities for water supply, gas or electricity. Other types of PABs, the proceeds of which are used for the construction, equipment, repair or improvement of privately operated industrial or commercial facilities, may constitute MYI Municipal Bonds, although the federal tax laws may place substantial limitations on the size of such issues. Such bonds are secured primarily by revenues derived from loan repayments or lease payments due from the entity which may or may not be guaranteed by a parent company or otherwise secured. PABs generally are not secured by a pledge of the taxing power of the issuer of such bonds. Therefore, an investor should be aware that repayment of such bonds generally depends on the revenues of a private entity and be aware of the risks that such an investment may entail. The continued ability of an entity to generate sufficient revenues for the payment of principal and interest on such bonds will be affected by many factors including the size of the entity, capital structure, demand for its products or services, competition, general economic conditions, government regulation and the entity's dependence on revenues for the operation of the particular facility being financed.

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*Special Taxing Districts*. Special taxing districts are organized to plan and finance infrastructure developments to induce residential, commercial and industrial growth and redevelopment. The bond financing methods such as tax increment finance, tax assessment, special services district and Mello-Roos bonds (a type of municipal security established by the Mello-Roos Community Facilities Act of 1982), are generally payable solely from taxes or other revenues attributable to the specific projects financed by the bonds without recourse to the credit or taxing power of related or overlapping municipalities. They often are exposed to real estate development-related risks and can have more taxpayer concentration risk than general tax-supported bonds, such as general obligation bonds. Further, the fees, special taxes, or tax allocations and other revenues that are established to secure such financings are generally limited as to the rate or amount that may be levied or assessed and are not subject to increase pursuant to rate covenants or municipal or corporate guarantees. The bonds could default if development failed to progress as anticipated or if larger taxpayers failed to pay the assessments, fees and taxes as provided in the financing plans of the districts.

*Indexed and Inverse Floating Rate Securities*. The Acquiring Fund may invest in MYI Municipal Bonds (and Non-Municipal Tax-Exempt Securities) that yield a return based on a particular index of value or interest rates. For example, the Acquiring Fund may invest in MYI Municipal Bonds that pay interest based on an index of MYI Municipal Bond interest rates. The principal amount payable upon maturity of certain MYI Municipal Bonds also may be based on the value of the index. To the extent the Acquiring Fund invests in these types of MYI Municipal Bonds, the Acquiring Fund's return on such MYI Municipal Bonds will be subject to risk with respect to the value of the particular index. Interest and principal payable on the MYI Municipal Bonds may also be based on relative changes among particular indices. Also, the Acquiring Fund may invest in so-called "inverse floating rate bonds" or "residual interest bonds" on which the interest rates vary inversely with a short-term floating rate (which may be reset periodically by a Dutch auction, a remarketing agent, or by reference to a short-term tax-exempt interest rate index). The Acquiring Fund may purchase synthetically created inverse floating rate bonds evidenced by custodial or trust receipts. Generally, income on inverse floating rate bonds will decrease when short-term interest rates increase, and will increase when short-term interest rates decrease. Such securities have the effect of providing a degree of investment leverage, since they may increase or decrease in value in response to changes, as an illustration, in market interest rates at a rate which is a multiple (typically two) of the rate at which fixed rate long-term tax-exempt securities increase or decrease in response to such changes. As a result, the market values of such securities will generally be more volatile than the market values of fixed rate tax-exempt securities. To seek to limit the volatility of these securities, the Acquiring Fund may purchase inverse floating rate bonds with shorter-term maturities or limitations on the extent to which the interest rate may vary. Certain investments in such obligations may be illiquid.

*When-Issued Securities, Delayed Delivery Securities and Forward Commitments*. The Acquiring Fund may purchase or sell securities that it is entitled to receive on a when-issued basis. The Acquiring Fund may also purchase or sell securities on a delayed delivery basis. The Acquiring Fund may also purchase or sell securities through a forward commitment. These transactions involve the purchase or sale of securities by the Acquiring Fund at an established price with payment and delivery taking place in the future. The purchase will be recorded on the date the Acquiring Fund enters into the commitment and the value of the securities will thereafter be reflected in the Acquiring Fund's NAV. The Acquiring Fund has not established any limit on the percentage of its assets that may be committed in connection with these transactions.

There can be no assurance that a security purchased on a when-issued basis will be issued or that a security purchased or sold through a forward commitment will be delivered. A default by a counterparty may result in the Acquiring Fund missing the opportunity of obtaining a price considered to be advantageous. The value of securities in these transactions on the delivery date may be more or less than the Acquiring Fund's purchase price. The Acquiring Fund may bear the risk of a decline in the value of the security in these transactions and may not benefit from an appreciation in the value of the security during the commitment period.

If deemed advisable as a matter of investment strategy, the Acquiring Fund may dispose of or renegotiate a commitment after it has been entered into, and may sell securities it has committed to purchase before those securities are delivered to the Acquiring Fund on the settlement date. In these cases the Acquiring Fund may realize a taxable capital gain or loss.

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When the Acquiring Fund engages in when-issued, delayed delivery or forward commitment transactions, it relies on the other party to consummate the trade. Failure of such party to do so may result in the Acquiring Fund's incurring a loss or missing an opportunity to obtain a price considered to be advantageous.

The market value of the securities underlying a commitment to purchase securities, and any subsequent fluctuations in their market value, is taken into account when determining the market value of the Acquiring Fund starting on the day the Acquiring Fund agrees to purchase the securities. The Acquiring Fund does not earn interest on the securities it has committed to purchase until they are paid for and delivered on the settlement date.

Rule 18f-4 under the 1940 Act permits the Acquiring Fund to enter into when-issued or forward-settling securities (e.g., firm and standby commitments, including TBA commitments, and dollar rolls) and non-standard settlement cycle securities notwithstanding the limitation on the issuance of senior securities in Section 18 of the 1940 Act, provided that the Acquiring Fund intends to physically settle the transaction and the transaction will settle within 35 days of its trade date (the "Delayed-Settlement Securities Provision"). If a when-issued, forward-settling or non-standard settlement cycle security does not satisfy the Delayed-Settlement Securities Provision, then it is treated as a derivatives transaction under Rule 18f-4.

*Call Rights.* The Acquiring Fund may purchase a MYI Municipal Bond issuer's right to call all or a portion of such MYI Municipal Bond for mandatory tender for purchase (a "Call Right"). A holder of a Call Right may exercise such right to require a mandatory tender for the purchase of related MYI Municipal Bonds, subject to certain conditions. A Call Right that is not exercised prior to maturity of the related MYI Municipal Bond will expire without value. The economic effect of holding both the Call Right and the related MYI Municipal Bond is identical to holding a MYI Municipal Bond as a non-callable security. Certain investments in such obligations may be illiquid.

*Yields*. Yields on MYI Municipal Bonds are dependent on a variety of factors, including the general condition of the money market and of the MYI Municipal Bond market, the size of a particular offering, the financial condition of the issuer, the maturity of the obligation and the rating of the issue. The ability of the Acquiring Fund to achieve its investment objective is also dependent on the continuing ability of the issuers of the securities in which the Acquiring Fund invests to meet their obligations for the payment of interest and principal when due. There are variations in the risks involved in holding MYI Municipal Bonds, both within a particular classification and between classifications, depending on numerous factors. Furthermore, the rights of owners of MYI Municipal Bonds and the obligations of the issuer of such MYI Municipal Bonds may be subject to applicable bankruptcy, insolvency and similar laws and court decisions affecting the rights of creditors generally and to general equitable principles, which may limit the enforcement of certain remedies.

*"High Yield" or "Junk" Bonds*. The Acquiring Fund may invest up to 20% of its managed assets in securities that are rated below investment grade, or are considered by BlackRock to be of comparable quality, at the time of purchase, subject to the Acquiring Fund's other investment policies. Information with respect to ratings assigned to tax-exempt obligations that the Acquiring Fund may purchase is set forth in <u>Appendix B</u> —Ratings of Investments. MYI Municipal Bonds of below investment grade quality ("Ba/BB" or below) are commonly known as "junk bonds." Securities rated below investment grade are judged to have speculative characteristics with respect to their interest and principal payments. Such securities may face major ongoing uncertainties or exposure to adverse business, financial or economic conditions which could lead to inadequate capacity to meet timely interest and principal payments.

**Strategic Transactions and Other Management Techniques** 

The Acquiring Fund may purchase and sell futures contracts, enter into various interest rate transactions and swap contracts (including, but not limited to, credit default swaps) and may purchase and sell exchange-listed and over-the-counter ("<u>OTC</u>") put and call options on securities and swap contracts, financial indices and futures contracts and use other derivative instruments or management techniques (collectively, "Strategic Transactions"). These Strategic Transactions may be used for duration management and other risk management purposes, subject to the Acquiring Fund's investment restrictions. While the Acquiring Fund's use of Strategic Transactions is intended to reduce the

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volatility of the NAV of the Acquiring Fund's common shares, the NAV of the Acquiring Fund's common shares will fluctuate. No assurance can be given that the Acquiring Fund's Strategic Transactions will be effective.

There is no particular strategy that requires use of one technique rather than another as the decision to use any particular strategy or instrument is a function of market conditions and the composition of the portfolio. The ability of the Acquiring Fund to use Strategic Transactions successfully will depend on the Investment Advisor's ability to predict pertinent market movements as well as sufficient correlation among the instruments, which cannot be assured. Strategic Transactions subject the Acquiring Fund to the risk that, if the Investment Advisor incorrectly forecasts market values, interest rates or other applicable factors, the Acquiring Fund's performance could suffer. Certain of these Strategic Transactions, such as investments in inverse floating rate securities and credit default swaps, may provide investment leverage to the Acquiring Fund's portfolio. The Acquiring Fund is not required to use derivatives or other portfolio strategies to seek to hedge its portfolio and may choose not to do so.

The use of Strategic Transactions may result in losses greater than if they had not been used, may require the Acquiring Fund to sell or purchase portfolio securities at inopportune times or for prices other than current market values, may limit the amount of appreciation the Acquiring Fund can realize on an investment or may cause the Acquiring Fund to hold a security that it might otherwise sell. Furthermore, the Acquiring Fund may only engage in Strategic Transactions from time to time and may not necessarily be engaging in hedging activities when movements in interest rates occur.

The Acquiring Fund's investment objective and the requirements of Subchapter M of the Code for qualification as a regulated investment company may restrict or affect the ability of the Acquiring Fund to engage in Strategic Transactions. In addition, the use of certain Strategic Transactions may give rise to taxable income and have certain other consequences, such as subjecting a portion of the Acquiring Fund's dividends to regular federal income tax. However, under normal circumstances, the Acquiring Fund does not intend to use Strategic Transactions that give rise to taxable income.

*Put and Call Options on Securities and Indices*. The Acquiring Fund may purchase and sell put and call options on securities and indices. A put option gives the purchaser of the option the right to sell and the writer the obligation to buy the underlying security at the exercise price during the option period. The Acquiring Fund may also purchase and sell options on bond indices ("<u>index options</u>"). Index options are similar to options on securities except that, rather than taking or making delivery of securities underlying the option at a specified price upon exercise, an index option gives the holder the right to receive cash upon exercise of the option if the level of the bond index upon which the option is based is greater, in the case of a call, or less, in the case of a put, than the exercise price of the option. The purchase of a put option on a debt security could protect the Acquiring Fund's holdings in a security or a number of securities against a substantial decline in the market value. A call option gives the purchaser of the option the right to buy and the seller the obligation to sell the underlying security or index at the exercise price during the option period or for a specified period prior to a fixed date. The purchase of a call option on a security could protect the Acquiring Fund against an increase in the price of a security that it intended to purchase in the future.

*Writing Covered Call Options*. The Acquiring Fund is authorized to write (i.e., sell) covered call options with respect to MYI Municipal Bonds it owns, thereby giving the holder of the option the right to buy the underlying security covered by the option from the Acquiring Fund at the stated exercise price until the option expires. The Acquiring Fund writes only covered call options, which means that so long as the Acquiring Fund is obligated as the writer of a call option, it will own the underlying securities subject to the option.

The Acquiring Fund receives a premium from writing a call option, which increases the Acquiring Fund's return on the underlying security in the event the option expires unexercised or is closed out at a profit. By writing a call, the Acquiring Fund limits its opportunity to profit from an increase in the market value of the underlying security above the exercise price of the option for as long as the Acquiring Fund's obligation as a writer continues. Covered call options serve as a partial hedge against a decline in the price of the underlying security. The Acquiring Fund may engage in closing transactions in order to terminate outstanding options that it has written.

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*Additional Information About Options*. The Acquiring Fund's ability to close out its position as a purchaser or seller of an exchange-listed put or call option is dependent upon the existence of a liquid secondary market on option exchanges. Among the possible reasons for the absence of a liquid secondary market on an exchange are: (i) insufficient trading interest in certain options; (ii) restrictions on transactions imposed by an exchange; (iii) trading halts, suspensions or other restrictions imposed with respect to particular classes or series of options or underlying securities; (iv) interruption of the normal operations on an exchange; (v) inadequacy of the facilities of an exchange or the Office of the Comptroller of the Currency ("<u>OCC</u>") to handle current trading volume; or (vi) a decision by one or more exchanges to discontinue the trading of options (or a particular class or series of options), in which event the secondary market on that exchange (or in that class or series of options) would cease to exist, although outstanding options on that exchange that had been listed by the OCC as a result of trades on that exchange would generally continue to be exercisable in accordance with their terms. OTC options are purchased from or sold to dealers, financial institutions or other counterparties which have entered into direct agreements with the Acquiring Fund. With OTC options, such variables as expiration date, exercise price and premium will be agreed upon between the Acquiring Fund and the counterparty, without the intermediation of a third party such as the OCC. If the counterparty fails to make or take delivery of the securities underlying an option it has written, or otherwise settle the transaction in accordance with the terms of that option as written, the Acquiring Fund would lose the premium paid for the option as well as any anticipated benefit of the transaction. OTC options and assets used to cover OTC options written by the Acquiring Fund are considered by the staff of the SEC to be illiquid. The illiquidity of such options or assets may prevent a successful sale of such options or assets, result in a delay of sale, or reduce the amount of proceeds that might otherwise be realized.

The Acquiring Fund may engage in options and futures transactions on exchanges and options in the over-the-counter markets. The Acquiring Fund will only enter into OTC options with counterparties the Investment Advisor believes to be creditworthy at the time they enter into such transactions.

The hours of trading for options on debt securities may not conform to the hours during which the underlying securities are traded. To the extent that the option markets close before the markets for the underlying securities, significant price and rate movements can take place in the underlying markets that cannot be reflected in the option markets.

*Financial Futures Transactions and Options*. The Acquiring Fund is authorized to purchase and sell certain exchange traded financial futures contracts ("<u>financial futures contracts</u>") in order to hedge its investments against declines in value, and to hedge against increases in the cost of securities it intends to purchase or to seek to enhance the Acquiring Fund's return. However, any transactions involving financial futures or options (including puts and calls associated therewith) will be in accordance with the Acquiring Fund's investment policies and limitations. A financial futures contract obligates the seller of a contract to deliver and the purchaser of a contract to take delivery of the type of financial instrument covered by the contract, or in the case of index-based futures contracts to make and accept a cash settlement, at a specific future time for a specified price. To hedge its portfolio, the Acquiring Fund may take an investment position in a futures contract which will move in the opposite direction from the portfolio position being hedged. A sale of financial futures contracts may provide a hedge against a decline in the value of portfolio securities because such depreciation may be offset, in whole or in part, by an increase in the value of the position in the financial futures contracts. A purchase of financial futures contracts may provide a hedge against an increase in the cost of securities intended to be purchased because such appreciation may be offset, in whole or in part, by an increase in the value of the position in the futures contracts.

Distributions, if any, of net long-term capital gains from certain transactions in futures or options are taxable at long-term capital gains rates for U.S. federal income tax purposes.

*Futures Contracts*. A futures contract is an agreement between two parties to buy and sell a security or, in the case of an index-based futures contract, to make and accept a cash settlement for a set price on a future date. A majority of transactions in futures contracts, however, do not result in the actual delivery of the underlying instrument or cash settlement, but are settled through liquidation, i.e., by entering into an offsetting transaction. Futures contracts have been designed by boards of trade which have been designated "contracts markets" by the Commodity Futures Trading Commission ("<u>CFTC</u>").

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The purchase or sale of a futures contract differs from the purchase or sale of a security in that no price or premium is paid or received. Instead, an amount of cash or securities acceptable to the broker and the relevant contract market, which varies, but is generally about 5% of the contract amount, must be deposited with the broker. This amount is known as "initial margin" and represents a "good faith" deposit assuring the performance of both the purchaser and seller under the futures contract. Subsequent payments to and from the broker, called "variation margin," are required to be made on a daily basis as the price of the futures contract fluctuates making the long and short positions in the futures contract more or less valuable, a process known as "marking to the market." At any time prior to the settlement date of the futures contract, the position may be closed out by taking an opposite position that will operate to terminate the position in the futures contract. A final determination of variation margin is then made, additional cash is required to be paid to or released by the broker and the purchaser realizes a loss or gain. In addition, a nominal commission is paid on each completed sale transaction.

The Acquiring Fund may also purchase and sell financial futures contracts on U.S. Government securities as a hedge against adverse changes in interest rates as described below. With respect to U.S. Government securities, currently there are financial futures contracts based on long-term U.S. Treasury bonds, U.S. Treasury notes, Government National Mortgage Association Certificates and three-month U.S. Treasury bills. The Acquiring Fund may purchase and write call and put options on futures contracts on U.S. Government securities and purchase and sell Municipal Bond Index futures contracts in connection with its hedging strategies.

The Acquiring Fund also may engage in other futures contracts transactions such as futures contracts on other municipal bond indices that may become available if the Investment Advisor should determine that there is normally a sufficient correlation between the prices of such futures contracts and the MYI Municipal Bonds in which the Acquiring Fund invests to make such hedging appropriate.

*Futures Strategies*. The Acquiring Fund may sell a financial futures contract (i.e., assume a short position) in anticipation of a decline in the value of its investments resulting from an increase in interest rates or otherwise. The risk of decline could be reduced without employing futures as a hedge by selling investments and either reinvesting the proceeds in securities with shorter maturities or by holding assets in cash. This strategy, however, entails increased transaction costs in the form of dealer spreads and typically would reduce the average yield of the Acquiring Fund's portfolio securities as a result of the shortening of maturities. The sale of futures contracts provides an alternative means of hedging against declines in the value of its investments. As such values decline, the value of the Acquiring Fund's positions in the futures contracts will tend to increase, thus offsetting all or a portion of the depreciation in the market value of the Acquiring Fund's investments that are being hedged. While the Acquiring Fund will incur commission expenses in selling and closing out futures positions, commissions on futures transactions are typically lower than transaction costs incurred in the purchase and sale of the Acquiring Fund's investments being hedged. In addition, the ability of the Acquiring Fund to trade in the standardized contracts available in the futures markets may offer a more effective defensive position than a program to reduce the average maturity of the portfolio securities due to the unique and varied credit and technical characteristics of the instruments available to the Acquiring Fund. Employing futures as a hedge also may permit the Acquiring Fund to assume a defensive posture without reducing the yield on its investments beyond any amounts required to engage in futures trading.

When the Acquiring Fund intends to purchase a security, the Acquiring Fund may purchase futures contracts as a hedge against any increase in the cost of such security resulting from a decrease in interest rates or otherwise, that may occur before such purchase can be effected. Subject to the degree of correlation between such securities and the futures contracts, subsequent increases in the cost of such securities should be reflected in the value of the futures held by the Acquiring Fund. As such purchases are made, an equivalent amount of futures contracts will be closed out. Due to changing market conditions and interest rate forecasts, however, a futures position may be terminated without a corresponding purchase of portfolio securities.

*Call Options on Futures Contracts*. The Acquiring Fund may also purchase and sell exchange traded call and put options on financial futures contracts. The purchase of a call option on a futures contract is analogous to the purchase of a call option on an individual security. Depending on the pricing of the option compared to either the futures contract upon which it is based or the price of the underlying securities, it may or may not be less risky than ownership of the futures contract or underlying securities. Like the purchase of a futures contract, the Acquiring Fund may purchase a call option on a futures contract to hedge against a market advance when the Acquiring Fund is not fully invested.

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The writing of a call option on a futures contract constitutes a partial hedge against declining prices of the securities which are deliverable upon exercise of the futures contract. If the futures price at expiration is below the exercise price, the Acquiring Fund will retain the full amount of the option premium, which provides a partial hedge against any decline that may have occurred in the Acquiring Fund's portfolio holdings.

*Put Options on Futures Contracts*. The purchase of a put option on a futures contract is analogous to the purchase of a protective put option on portfolio securities. The Acquiring Fund may purchase a put option on a futures contract to hedge the Acquiring Fund's portfolio against the risk of rising interest rates.

The writing of a put option on a futures contract constitutes a partial hedge against increasing prices of the securities which are deliverable upon exercise of the futures contract. If the futures price at expiration is higher than the exercise price, the Acquiring Fund will retain the full amount of the option premium, which provides a partial hedge against any increase in the price of securities which the Acquiring Fund intends to purchase.

The writer of an option on a futures contract is required to deposit initial and variation margin pursuant to requirements similar to those applicable to futures contracts. Premiums received from the writing of an option will be included in initial margin. The writing of an option on a futures contract involves risks similar to those relating to futures contracts.

The CFTC subjects advisers to registered investment companies to regulation by the CFTC if a fund that is advised by the investment adviser either (i) invests, directly or indirectly, more than a prescribed level of its liquidation value in CFTC Derivatives, or (ii) markets itself as providing investment exposure to such instruments. To the extent the Acquiring Fund uses CFTC Derivatives, it intends to do so below such prescribed levels and will not market itself as a "commodity pool" or a vehicle for trading such instruments. Accordingly, the Investment Advisor has claimed an exclusion from the definition of the term "commodity pool operator" under the Commodity Exchange Act ("<u>CEA</u>") pursuant to Rule 4.5 under the CEA. The Investment Advisor is not, therefore, subject to registration or regulation as a "commodity pool operator" under the CEA in respect of the Acquiring Fund.

*Interest Rate Transactions*.

The Acquiring Fund may enter into interest rate swaps and the purchase or sale of interest rate caps and floors. The Acquiring Fund expects to enter into these transactions primarily to preserve a return or spread on a particular investment or portion of its portfolio as a duration management technique or to protect against any increase in the price of securities the Acquiring Fund anticipates purchasing at a later date. The Acquiring Fund will ordinarily use these transactions as a hedge or for duration or risk management although it is permitted to enter into them to enhance income or gain. The Acquiring Fund may not sell interest rate caps or floors that it does not own. Interest rate swaps involve the exchange by the Acquiring Fund with another party of their respective commitments to pay or receive interest, e.g., an exchange of floating rate payments for fixed rate payments with respect to a notional amount of principal. The purchase of an interest rate cap entitles the purchaser, to the extent that a specified index exceeds a predetermined interest rate, to receive payments of interest on a notional principal amount from the party selling such interest rate cap. The purchase of an interest rate floor entitles the purchaser, to the extent that a specified index falls below a predetermined interest rate, to receive payments of interest on a notional principal amount from the party selling such interest rate floor.

The Acquiring Fund may enter into interest rate swaps, caps and floors on either an asset-based or liability-based basis, and will usually enter into interest rate swaps on a net basis, i.e., the two payment streams are netted out, with the Acquiring Fund receiving or paying, as the case may be, only the net amount of the two payments on the payment dates. The Acquiring Fund will accrue the net amount of the excess, if any, of the Acquiring Fund's obligations over its entitlements with respect to each interest rate swap on a daily basis and will segregate with a custodian an amount of cash or liquid high grade securities having an aggregate net asset value at all times at least equal to the accrued excess. If there is a default by the other party to such a transaction, the Acquiring Fund will have contractual remedies pursuant to the agreements related to the transaction. The swap market has grown substantially in recent years with a large number of banks and investment banking firms acting both as principals and as agents utilizing standardized swap documentation. Caps and floors are more recent innovations for which standardized documentation has not yet been developed and, accordingly, they are less liquid than swaps.

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The Acquiring Fund may enter into interest rate swap transactions such as Municipal Market Data AAA Cash Curve swaps ("<u>MMD Swaps</u>") or Securities Industry and Financial Markets Association Municipal Swap Index swaps ("<u>SIFMA Swaps</u>"). To the extent that the Acquiring Fund enters into these transactions, the Acquiring Fund expects to do so primarily to preserve a return or spread on a particular investment or portion of its portfolio as a duration management technique or to protect against any increase in the price of securities the Acquiring Fund anticipates purchasing at a later date. The Acquiring Fund may enter into these transactions primarily as a hedge or for duration or risk management rather than as a speculative investment. However, the Acquiring Fund also may invest in MMD Swaps and SIFMA Swaps to seek to enhance return or gain or to increase the Acquiring Fund's yield, for example, during periods of steep interest rate yield curves (i.e., wide differences between short-term and long-term interest rates).

The Acquiring Fund may purchase and sell SIFMA Swaps in the SIFMA swap market. In a SIFMA Swap, the Acquiring Fund exchanges with another party their respective commitments to pay or receive interest (e.g., an exchange of fixed rate payments for floating rate payments linked to the SIFMA Municipal Swap Index). Because the underlying index is a tax-exempt index, SIFMA Swaps may reduce cross-market risks incurred by the Acquiring Fund and increase the Acquiring Fund's ability to hedge effectively. SIFMA Swaps are typically quoted for the entire yield curve, beginning with a seven day floating rate index out to 30 years. The duration of a SIFMA Swap is approximately equal to the duration of a fixed-rate MYI Municipal Bond with the same attributes as the swap (e.g., coupon, maturity, call feature).

The Acquiring Fund may also purchase and sell MMD Swaps, also known as MMD rate locks. An MMD Swap permits the Acquiring Fund to lock in a specified municipal interest rate for a portion of its portfolio to preserve a return on a particular investment or a portion of its portfolio as a duration management technique or to protect against any increase in the price of securities to be purchased at a later date. By using an MMD Swap, the Acquiring Fund can create a synthetic long or short position, allowing the Acquiring Fund to select the most attractive part of the yield curve. An MMD Swap is a contract between the Acquiring Fund and an MMD Swap provider pursuant to which the parties agree to make payments to each other on a notional amount, contingent upon whether the Municipal Market Data AAA General Obligation Scale is above or below a specified level on the expiration date of the contract. For example, if the Acquiring Fund buys an MMD Swap and the Municipal Market Data AAA General Obligation Scale is below the specified level on the expiration date, the counterparty to the contract will make a payment to the Acquiring Fund equal to the specified level minus the actual level, multiplied by the notional amount of the contract. If the Municipal Market Data AAA General Obligation Scale is above the specified level on the expiration date, the Acquiring Fund will make a payment to the counterparty equal to the actual level minus the specified level, multiplied by the notional amount of the contract.

In connection with investments in SIFMA and MMD Swaps, there is a risk that municipal yields will move in the opposite direction than anticipated by the Acquiring Fund, which would cause the Acquiring Fund to make payments to its counterparty in the transaction that could adversely affect the Acquiring Fund's performance.

The Acquiring Fund has no obligation to enter into SIFMA Swaps or MMD Swaps and may elect not to do so. The net amount of the excess, if any, of the Acquiring Fund's obligations over its entitlements with respect to each interest rate swap will be accrued on a daily basis, and the Acquiring Fund will segregate or designate on its books and records liquid assets having an aggregate NAV at least equal to the accrued excess.

If there is a default by the other party to an uncleared interest rate swap transaction, generally the Acquiring Fund will have contractual remedies pursuant to the agreements related to the transaction. With respect to interest rate swap transactions cleared through a central clearing counterparty, a clearing organization will be substituted for the counterparty and will guarantee the parties' performance under the swap agreement. However, there can be no assurances that the clearing organization will satisfy its obligation to the Acquiring Fund or that the Acquiring Fund would be able to recover the full amount of assets deposited on its behalf with the clearing organization in the event of the default by the clearing organization or the Acquiring Fund's clearing broker. Certain U.S. federal income tax requirements may limit the Acquiring Fund's ability to engage in interest rate swaps. Distributions attributable to transactions in interest rate swaps generally will be taxable as ordinary income to shareholders.

*Counterparty Credit Standards*.

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To the extent that the Acquiring Fund engages in principal transactions, including, but not limited to, OTC options, forward currency transactions, swap transactions, repurchase and reverse repurchase agreements and the purchase and sale of bonds and other fixed-income securities, it must rely on the creditworthiness of its counterparties under such transactions. In certain instances, the credit risk of a counterparty is increased by the lack of a central clearing house for certain transactions, including certain swap contracts. In the event of the insolvency of a counterparty, the Acquiring Fund may not be able to recover its assets, in full or at all, during the insolvency process. Counterparties to investments may have no obligation to make markets in such investments and may have the ability to apply essentially discretionary margin and credit requirements. Similarly, the Acquiring Fund will be subject to the risk of bankruptcy of, or the inability or refusal to perform with respect to such investments by, the counterparties with which it deals. The Investment Advisor will seek to minimize the Acquiring Fund's exposure to counterparty risk by entering into such transactions with counterparties the Investment Advisor believes to be creditworthy at the time it enters into the transaction. Certain option transactions and Strategic Transactions may require the Acquiring Fund to provide collateral to secure its performance obligations under a contract, which would also entail counterparty credit risk.

**Other Investment Policies** 

The Acquiring Fund has adopted certain other policies as set forth below.

*Index and Inverse Securities* 

The Acquiring Fund may invest in MYI Municipal Bonds yielding a return based on a particular index of value or interest rates. Also, the Acquiring Fund may invest in so-called "inverse floating obligations" or "residual interest bonds" on which the interest rates typically vary inversely with a short-term floating rate (which may be reset periodically by a dutch auction, a remarketing agent, or by reference to a short-term tax-exempt interest rate index). The Acquiring Fund may purchase synthetically-created inverse floating obligations evidenced by custodial or trust receipts.

*Call Rights* 

The Acquiring Fund may purchase a MYI Municipal Bond issuer's right to call all or a portion of such MYI Municipal Bond for mandatory tender for purchase (a "Call Right"). A holder of a Call Right may exercise such right to require a mandatory tender for the purchase of related MYI Municipal Bonds, subject to certain conditions. A Call Right that is not exercised prior to maturity of the related MYI Municipal Bond will expire without value. The economic effect of holding both the Call Right and the related MYI Municipal Bond is identical to holding a MYI Municipal Bond as a non-callable security. Certain investments in such obligations may be illiquid.

*Repurchase Agreements* 

The Acquiring Fund may invest in securities pursuant to repurchase agreements. Repurchase agreements may be entered into only with a member bank of the Federal Reserve System or a primary dealer or an affiliate thereof, in U.S. Government securities. A repurchase agreement is a contractual agreement whereby the seller of securities agrees to repurchase the same security at a specified price on a future date agreed upon by the parties. The agreed-upon repurchase price determines the yield during the Acquiring Fund's holding period. Repurchase agreements are considered to be loans collateralized by the underlying security that is the subject of the repurchase contract. The risk to the Acquiring Fund is limited to the ability of the issuer to pay the agreed-upon repurchase price on the delivery date; however, although the value of the underlying collateral at the time the transaction is entered into always equals or exceeds the agreed-upon repurchase price, if the value of the collateral declines there is a risk of loss of both principal and interest. In the event of default, the collateral may be sold but the Acquiring Fund might incur a loss if the value of the collateral declines, and might incur disposition costs or experience delays in connection with liquidating the collateral. In addition, if bankruptcy proceedings are commenced with respect to the seller of the security, realization upon the collateral by the Acquiring Fund may be delayed or limited. The Investment Advisor will monitor the value of the collateral at the time the transaction is entered into and throughout the term of the repurchase agreement in an effort to determine that such value always equals or exceeds the agreed-upon repurchase price. In the event the value of the collateral declines below the repurchase price, the Investment Advisor will demand

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additional collateral from the issuer to increase the value of the collateral to at least that of the repurchase price, including interest.

In general, for federal income tax purposes, repurchase agreements are treated as collateralized loans secured by the securities "sold." Therefore, amounts earned under such agreements will not be considered tax exempt interest. The treatment of purchase and sales contracts is less certain.

*Temporary Investments* 

The Acquiring Fund may invest in short-term tax-exempt and taxable securities subject to the limitations set forth above. The tax-exempt money market securities may include municipal notes, municipal commercial paper, MYI Municipal Bonds with a remaining maturity of less than one year, variable rate demand notes and participations therein. Municipal notes include tax anticipation notes, bond anticipation notes, revenue anticipation notes and grant anticipation notes. Anticipation notes are sold as interim financing in anticipation of tax collection, bond sales, government grants or revenue receipts. Municipal commercial paper refers to short-term unsecured promissory notes generally issued to finance short-term credit needs. The taxable money market securities in which the Acquiring Fund may invest as Temporary Investments consist of U.S. Government securities, U.S. Government agency securities, domestic bank or savings institution certificates of deposit and bankers' acceptances, short-term corporate debt securities such as commercial paper and repurchase agreements. These Temporary Investments must have a stated maturity not in excess of one year from the date of purchase. The Acquiring Fund may not invest in any security issued by a commercial bank or a savings institution unless the bank or institution is organized and operating in the United States, has total assets of at least one billion dollars and is a member of the Federal Deposit Insurance Corporation ("FDIC"), except that up to 10% of total assets may be invested in certificates of deposit of smaller institutions if such certificates are fully insured by the FDIC.

Short-term taxable fixed income investments include, without limitation, the following:

(1) U.S. Government securities, including bills, notes and bonds differing as to maturity and rates of interest that are either issued or guaranteed by the U.S. Treasury or by U.S. Government agencies or instrumentalities. U.S. Government securities include securities issued by (a) the Federal Housing Administration, Farmers Home Administration, Export-Import Bank of the United States, Small Business Administration, and the Government National Mortgage Association, whose securities are supported by the full faith and credit of the United States; (b) the Federal Home Loan Banks, Federal Intermediate Credit Banks, and the Tennessee Valley Authority, whose securities are supported by the right of the agency to borrow from the U.S. Treasury; (c) the Federal National Mortgage Association, whose securities are supported by the discretionary authority of the U.S. Government to purchase certain obligations of the agency or instrumentality; and (d) the Student Loan Marketing Association, whose securities are supported only by its credit. While the U.S. Government provides financial support to such U.S. Government-sponsored agencies or instrumentalities, no assurance can be given that it always will do so since it is not so obligated by law. The U.S. Government, its agencies and instrumentalities do not guarantee the market value of their securities. Consequently, the value of such securities may fluctuate.

(2) Certificates of deposit issued against funds deposited in a bank or a savings and loan association. Such certificates are for a definite period of time, earn a specified rate of return, and are normally negotiable. The issuer of a certificate of deposit agrees to pay the amount deposited plus interest to the bearer of the certificate on the date specified thereon. Certificates of deposit purchased by the Acquiring Fund may not be fully insured by the Federal Deposit Insurance Corporation.

(3) Repurchase agreements, which involve purchases of debt securities. At the time the Acquiring Fund purchases securities pursuant to a repurchase agreement, it simultaneously agrees to resell and redeliver such securities to the seller, who also simultaneously agrees to buy back the securities at a fixed price and time. This assures a predetermined yield for the Acquiring Fund during its holding period, since the resale price is always greater than the purchase price and reflects an agreed-upon market rate. Such actions afford an opportunity for the Acquiring Fund to invest temporarily available cash. The Acquiring Fund may enter into repurchase agreements only with respect to obligations of the U.S. Government, its agencies or instrumentalities; certificates of deposit; or bankers' acceptances in which the Acquiring Fund may invest. Repurchase agreements may be considered loans to the seller, collateralized by the

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underlying securities. The risk to the Acquiring Fund is limited to the ability of the seller to pay the agreed-upon sum on the repurchase date; in the event of default, the repurchase agreement provides that the Acquiring Fund is entitled to sell the underlying collateral. If the value of the collateral declines after the agreement is entered into, and if the seller defaults under a repurchase agreement when the value of the underlying collateral is less than the repurchase price, the Acquiring Fund could incur a loss of both principal and interest. The Investment Advisors monitors the value of the collateral at the time the action is entered into and at all times during the term of the repurchase agreement. The Investment Advisors does so in an effort to determine that the value of the collateral always equals or exceeds the agreed-upon repurchase price to be paid to the Acquiring Fund. If the seller were to be subject to a federal bankruptcy proceeding, the ability of the Acquiring Fund to liquidate the collateral could be delayed or impaired because of certain provisions of the bankruptcy laws.

(4) Commercial paper, which consists of short-term unsecured promissory notes, including variable rate master demand notes issued by corporations to finance their current operations. Master demand notes are direct lending arrangements between the Acquiring Fund and a corporation. There is no secondary market for such notes. However, they are redeemable by the Acquiring Fund at any time. The Investment Advisor will consider the financial condition of the corporation (e.g., earning power, cash flow and other liquidity ratios) and will continuously monitor the corporation's ability to meet all of its financial obligations, because the Acquiring Fund's liquidity might be impaired if the corporation were unable to pay principal and interest on demand. Investments in commercial paper will be limited to commercial paper rated in the highest categories by a major rating agency and which mature within one year of the date of purchase or carry a variable or floating rate of interest.

Short-term tax-exempt fixed income securities are securities that are exempt from regular federal income tax and mature within three years or less from the date of issuance. Short-term tax-exempt fixed income securities include, without limitation, the following:

Bond Anticipation Notes ("BANs") are usually general obligations of state and local governmental issuers which are sold to obtain interim financing for projects that will eventually be funded through the sale of long-term debt obligations or bonds. The ability of an issuer to meet its obligations on its BANs is primarily dependent on the issuer's access to the long-term municipal bond market and the likelihood that the proceeds of such bond sales will be used to pay the principal and interest on the BANs.

Tax Anticipation Notes ("TANs") are issued by state and local governments to finance the current operations of such governments. Repayment is generally to be derived from specific future tax revenues. TANs are usually general obligations of the issuer. A weakness in an issuer's capacity to raise taxes due to, among other things, a decline in its tax base or a rise in delinquencies could adversely affect the issuer's ability to meet its obligations on outstanding TANs.

Revenue Anticipation Notes ("RANs") are issued by governments or governmental bodies with the expectation that future revenues from a designated source will be used to repay the notes. In general, they also constitute general obligations of the issuer. A decline in the receipt of projected revenues, such as anticipated revenues from another level of government, could adversely affect an issuer's ability to meet its obligations on outstanding RANs. In addition, the possibility that the revenues would, when received, be used to meet other obligations could affect the ability of the issuer to pay the principal and interest on RANs.

Construction Loan Notes are issued to provide construction financing for specific projects. Frequently, these notes are redeemed with funds obtained from the Federal Housing Administration.

Bank Notes are notes issued by local government bodies and agencies to commercial banks as evidence of borrowings. The purposes for which the notes are issued are varied but they are frequently issued to meet short-term working capital or capital-project needs. These notes may have risks similar to the risks associated with TANs and RANs.

Tax-Exempt Commercial Paper ("municipal paper") represents very short-term unsecured, negotiable promissory notes, issued by states, municipalities and their agencies. Payment of principal and interest on issues of municipal paper may be made from various sources, to the extent the funds are available therefrom. Maturities on municipal

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paper generally will be shorter than the maturities of TANs, BANs or RANs. There is a limited secondary market for issues of municipal paper.

Certain municipal bonds may carry variable or floating rates of interest whereby the rate of interest is not fixed but varies with changes in specified market rates or indices, such as a bank prime rate or tax-exempt money market indices.

While the various types of notes described above as a group represent the major portion of the tax-exempt note market, other types of notes are available in the marketplace and the Acquiring Fund may invest in such other types of notes to the extent permitted under its investment objective, policies and limitations. Such notes may be issued for different purposes and may be secured differently from those mentioned above.

**Leverage** 

The Acquiring Fund currently leverages its assets through the use of residual interest municipal TOBs. The Acquiring Fund currently does not intend to borrow money or issue debt securities. Although it has no present intention to do so, the Acquiring Fund reserves the right to borrow money from banks or other financial institutions, or issue debt securities, in the future if it believes that market conditions would be conducive to the successful implementation of a leveraging strategy through borrowing money or issuing debt securities. Any such leveraging will not be fully achieved until the proceeds resulting from the use of leverage have been invested in accordance with the Acquiring Fund's investment objective and policies. The Acquiring Fund is authorized to borrow money in amounts of up to 5% of the value of its total assets at the time of such borrowings; provided, however, that the Acquiring Fund is authorized to borrow moneys in amounts of up to 33 1/3% of the value of its total assets at the time of such borrowings to finance the repurchase of its own common shares pursuant to tender offers or otherwise to redeem or repurchase preferred shares.

The use of leverage can create risks. When leverage is employed, the NAV and market price of the common shares and the yield to holders of common shares will be more volatile than if leverage were not used. Changes in the value of the Acquiring Fund's portfolio, including securities bought with the proceeds of leverage, will be borne entirely by the holders of common shares. If there is a net decrease or increase in the value of the Acquiring Fund's investment portfolio, leverage will decrease or increase, as the case may be, the NAV per common share to a greater extent than if the Acquiring Fund did not utilize leverage. A reduction in the Acquiring Fund's NAV may cause a reduction in the market price of its shares. During periods in which the Acquiring Fund is using leverage, the fee paid to the Investment Advisor for advisory services will be higher than if the Acquiring Fund did not use leverage, because the fees paid will be calculated on the basis of the Acquiring Fund's NAV, which includes the proceeds from leverage. The Acquiring Fund's leveraging strategy may not be successful.

Certain types of leverage the Acquiring Fund may use may result in the Acquiring Fund being subject to covenants relating to asset coverage and portfolio composition requirements. The Acquiring Fund may be subject to certain restrictions on investments imposed by one or more lenders or by guidelines of one or more rating agencies, which may issue ratings for any short-term debt securities or preferred shares issued by the Acquiring Fund. The terms of any borrowings or rating agency guidelines may impose asset coverage or portfolio composition requirements that are more stringent than those imposed by the 1940 Act. The Investment Advisor does not believe that these covenants or guidelines will impede it from managing the Acquiring Fund's portfolio in accordance with its investment objective and policies if the Acquiring Fund were to utilize leverage.

Under the 1940 Act, the Acquiring Fund is not permitted to issue senior securities if, immediately after the issuance of such senior securities, the Acquiring Fund would have an asset coverage ratio (as defined in the 1940 Act) of less than 300% with respect to senior securities representing indebtedness (*i.e.*, for every dollar of indebtedness outstanding, the Acquiring Fund is required to have at least three dollars of assets) or less than 200% with respect to senior securities representing preferred shares (*i.e.*, for every dollar of preferred shares outstanding, the Acquiring Fund is required to have at least two dollars of assets). The 1940 Act also provides that the Acquiring Fund may not declare distributions or purchase its stock (including through tender offers) if, immediately after doing so, it will have an asset coverage ratio of less than 300% or 200%, as applicable. Under the 1940 Act, certain short-term borrowings (such as for cash management purposes) are not subject to these limitations if (i) repaid within 60 days, (ii) not extended or renewed and (iii) not in excess of 5% of the total assets of the Acquiring Fund.

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*Effects of Leverage* 

Assuming that leverage will represent approximately 35.7% of the Combined Fund's total managed assets and that the Combined Fund will bear expenses relating to that leverage at an average annual rate of 3.27%, the income generated by the Combined Fund's portfolio (net of estimated expenses) must exceed 1.17% in order to cover the expenses specifically related to the Combined Fund's estimated use of leverage. Of course, these numbers are merely estimates used for illustration. Actual leverage expenses will vary frequently and may be significantly higher or lower than the rate estimated above.

The following table is furnished in response to requirements of the SEC. It is designed to illustrate the effect of leverage on Common Share total return, assuming investment portfolio total returns (comprised of income and changes in the value of securities held in the Combined Fund's portfolio) of -10%, -5%, 0%, 5% and 10%. These assumed investment portfolio returns are hypothetical figures and are not necessarily indicative of the investment portfolio returns experienced or expected to be experienced by the Combined Fund. The table further reflects the use of leverage representing 35.7% of the Combined Fund's total managed assets and the Combined Fund's currently projected annual leverage expenses of 3.27%.

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| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  Assumed Portfolio Total Return (net of expenses) | -10% | -5% | 0% | 5% | 10% |
|  Common Share Total Return | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(17.4)% | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(9.6)% | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1.8)% | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.0% | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;13.7% |

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Common Share total return is composed of two elements: the Common Share dividends paid by the Combined Fund (the amount of which is largely determined by the net investment income of the Combined Fund) and gains or losses on the value of the securities the Combined Fund owns. As required by SEC rules, the table assumes that the Combined Fund is more likely to suffer capital losses than to enjoy capital appreciation. For example, a total return of 0% assumes that the tax-exempt interest the Combined Fund receives on its municipal bonds investments is entirely offset by losses in the value of those securities.

*Preferred Shares* 

The Acquiring Fund has leveraged its portfolio by issuing preferred shares. Under the 1940 Act, the Acquiring Fund is not permitted to issue preferred shares if, immediately after such issuance, the liquidation value of the Acquiring Fund's outstanding preferred shares exceeds 50% of its assets (including the proceeds from the issuance) less liabilities other than borrowings (*i.e.*, the value of the Acquiring Fund's assets must be at least 200% of the liquidation value of its outstanding preferred shares). In addition, the Acquiring Fund 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 the Acquiring Fund's assets less liabilities other than borrowings is at least 200% of such liquidation value.

For tax purposes, the Acquiring Fund 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, the Acquiring Fund 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 the Acquiring Fund's leveraged structure to common shareholders will be reduced.

*Tender Option Bond Transactions* 

The Acquiring Fund currently leverages its assets through the use of TOB Residuals, which are derivative interests in municipal bonds. The TOB Residuals in which the Acquiring Fund 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

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independent investigation will be made to confirm the tax-exempt status of the interest or income paid by TOB Residuals held by the Acquiring Fund. Although volatile, TOB Residuals typically offer the potential for yields exceeding the yields available on fixed rate municipal bonds with comparable credit quality.

TOB Residuals represent beneficial interests in a TOB Trust. 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 the fund(s) that transferred municipal bonds to the TOB Trust. The Acquiring Fund may invest in both TOB Floaters and TOB Residuals. TOB Floaters may have first priority on the cash flow from the municipal bonds held by the TOB Trust and are enhanced with a liquidity support arrangement from TOBs Liquidity Provider which allows holders to tender their position at par (plus accrued interest). The Acquiring Fund, 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. The Acquiring Fund 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 the Acquiring Fund 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 (as defined below) may contribute municipal bonds to a TOB Trust into which the Acquiring Fund 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 the Acquiring Fund, 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 the Acquiring Fund generally provide the Acquiring Fund 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, the Acquiring Fund may withdraw a corresponding share of the municipal bonds from the TOB Trust. As a result, a TOB transaction, in effect, creates exposure for the Acquiring Fund to the entire return of the municipal bonds in the TOB Trust, with a net cash investment by the Acquiring Fund 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 the Acquiring Fund (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.

The Acquiring Fund 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 the Acquiring Fund'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 the Acquiring Fund 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., the Acquiring Fund) 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, the Acquiring Fund 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

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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 are typically supported by a liquidity facility provided by a TOBs Liquidity Provider that allows the holders of the TOB Floaters to tender their TOB Floaters in exchange for payment of par plus accrued interest on any business day (subject to the non-occurrence of a termination event). The tendered TOB Floaters are remarketed by a remarketing agent. In the event of a failed remarketing, the TOB Trust may draw upon a loan from the TOBs Liquidity Provider to purchase the tendered TOB Floaters. Any loans made by the TOBs Liquidity Provider will be secured by the purchased TOB Floaters held by the TOB Trust and will be subject to an increased interest rate based on number of days the loan is outstanding.

The Acquiring Fund may invest in a TOB Trust on either a non-recourse or recourse basis. When the Acquiring Fund invests in TOB Trusts on a non-recourse basis, and the TOBs Liquidity Provider is required to make a payment under the liquidity facility, the TOBs Liquidity Provider will typically liquidate all or a portion of the municipal bonds held in the TOB Trust and then fund the balance, if any, of the Liquidation Shortfall. If the Acquiring Fund invests in a TOB Trust on a recourse basis, it will typically enter into a reimbursement agreement with the TOBs Liquidity Provider pursuant to which the Acquiring Fund is required to reimburse the TOBs Liquidity Provider the amount of any Liquidation Shortfall. As a result, if the Acquiring Fund invests in a recourse TOB Trust, the Acquiring Fund will bear the risk of loss with respect to any Liquidation Shortfall. If multiple BlackRock-advised Funds participate in any such TOB Trust, these losses will be shared ratably, in proportion to their participation in the TOB Trust.

Under accounting rules, MYI Municipal Bonds of the Acquiring Fund that are deposited into a TOB Trust are investments of the Acquiring Fund and are presented on the Acquiring Fund's Schedule of Investments and outstanding TOB Floaters issued by a TOB Trust are presented as liabilities in the Acquiring Fund's Statement of Assets and Liabilities. Interest income from the underlying MYI Municipal Bonds is recorded by the Acquiring Fund on an accrual basis. Interest expense incurred on the TOB Floaters and other expenses related to remarketing, administration, trustee and other services to a TOB Trust are reported as expenses of the Acquiring Fund. In addition, under accounting rules, loans made to a TOB Trust sponsored by the Acquiring Fund may be presented as loans of the Acquiring Fund in the Acquiring Fund's financial statements even if there is no recourse to the Acquiring Fund's assets.

For TOB Floaters, generally, the interest rate earned will be based upon the market rates for municipal bonds with maturities or remarketing provisions that are comparable in duration to the periodic interval of the tender option. Since the tender option feature has a shorter term than the final maturity or first call date of the underlying municipal bonds deposited in the TOB Trust, the holder of the TOB Floaters relies upon the terms of the agreement with the financial institution furnishing the liquidity facility as well as the credit strength of that institution. The perceived reliability and creditworthiness, of many major financial institutions, some of which sponsor and/or provide liquidity support to TOB Trusts increases the risk associated with TOB Floaters. This in turn may reduce the desirability of TOB Floaters as investments, which could impair the viability or availability of TOB Trusts.

Rule 18f-4 under the 1940 Act permits the Acquiring Fund to enter into TOB Trust transactions and similar financing transactions (e.g., borrowed bonds) notwithstanding the limitation on the issuance of senior securities in Section 18 of the 1940 Act, provided that the Acquiring Fund either (i) complies with the 300% asset coverage ratio applicable to senior securities representing indebtedness with respect to such transactions and any other borrowings in the aggregate, or (ii) treats such transactions as derivatives transactions under Rule 18f-4. Future regulatory requirements or SEC guidance may necessitate more onerous contractual or regulatory requirements, which may increase the costs or reduce the degree of potential economic benefits of TOB Trust transactions or limit the Acquiring Fund's ability to enter into or manage TOB Trust transactions.

**Credit Facility** 

The Acquiring Fund is permitted to leverage its portfolio by entering into one or more credit facilities. If the Acquiring Fund enters into a credit facility, the Acquiring Fund may be required to prepay outstanding amounts or incur a penalty rate of interest upon the occurrence of certain events of default. The Acquiring Fund would also likely have to indemnify the lenders under the credit facility against liabilities they may incur in connection therewith. In addition, the Acquiring Fund expects that any credit facility would contain covenants that, among other things, likely would

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limit the Acquiring Fund's ability to pay distributions in certain circumstances, incur additional debt, change certain of its investment policies and engage in certain transactions, including mergers and consolidations, and require asset coverage ratios in addition to those required by the 1940 Act. The Acquiring Fund may be required to pledge its assets and to maintain a portion of its assets in cash or high-grade securities as a reserve against interest or principal payments and expenses. The Acquiring Fund expects that any credit facility would have customary covenant, negative covenant and default provisions. There can be no assurance that the Acquiring Fund will enter into an agreement for a credit facility, or one on terms and conditions representative of the foregoing, or that additional material terms will not apply. In addition, if entered into, a credit facility may in the future be replaced or refinanced by one or more credit facilities having substantially different terms or by the issuance of preferred shares.

**Derivatives** 

The Acquiring Fund may enter into derivative transactions that have leverage embedded in them. Derivative transactions that the Acquiring Fund may enter into and the risks associated with them are described elsewhere and are also referred to as "<u>Strategic Transactions</u>." The Acquiring Fund cannot assure you that investments in derivative transactions that have leverage embedded in them will result in a higher return on its common shares. Under Rule 18f-4 under the 1940 Act, among other things, the Acquiring Fund must either use derivatives in a limited manner or comply with an outer limit on fund leverage risk based on value-at-risk.

**Temporary Borrowings** 

The Acquiring Fund may also borrow money as a temporary measure for extraordinary or emergency purposes, including the payment of dividends and the settlement of securities transactions which otherwise might require untimely dispositions of Acquiring Fund securities.

**Investment Restrictions** 

Each Fund has adopted certain investment restrictions that are "fundamental," meaning such investment restrictions cannot be changed without approval by holders of a "majority of the Fund's outstanding voting securities" as defined in the 1940 Act. As defined in the 1940 Act, this phrase means the vote of (1) 67% or more of the voting securities present at a meeting, if the holders of more than 50% of the outstanding voting securities are present or represented by proxy, or (2) more than 50% of the outstanding voting securities, whichever is less. Each Fund has also adopted certain non-fundamental investment restrictions. The investment restrictions of the Funds are similar, although there are some differences, and are set forth in <u>Appendix B</u> to this Joint Proxy Statement/Prospectus.

Each Fund's VRDP Shares or VMTP Shares, as applicable, are assigned long-term ratings by Moody's and Fitch. In order to maintain the required ratings, each Fund is required to comply with certain investment quality, diversification and other guidelines established by Moody's and Fitch. Such guidelines may be more restrictive than the restrictions set forth above. Each Fund does not anticipate that such guidelines would have a material adverse effect on its ability to achieve its investment objective. Moody's and Fitch receive fees in connection with their ratings issuances. Each Fund is also subject to certain covenants and requirements under the terms of the VRDP Shares or VMTP Shares, as applicable, and related documents, including the terms of the liquidity facility supporting the VRDP Shares or VMTP Shares. Such requirements may be more restrictive than the restrictions set forth above. Each Fund does not anticipate that such requirements would have a material adverse effect on its ability to achieve its investment objective. Please see "Information about the Preferred Shares of the Funds" for additional information.

**THE TARGET FUNDS' INVESTMENT OBJECTIVES AND POLICIES** 

**MVT's Investment Objective and Policies** 

MVT's investment objective is to provide shareholders with as high a level of current income exempt from U.S. federal income taxes as is consistent with its investment policies and prudent investment management. No assurance can be given that MVT will achieve its investment objective. As a matter of fundamental policy, under normal market conditions, MVT will invest at least 80% of its Managed Assets in investments the income from which is exempt from federal income tax (except that the interest may be subject to the federal alternative minimum tax). "Managed Assets"

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means MVT's total assets (including any assets attributable to money borrowed for investment purposes) minus the sum of MVT's accrued liabilities (other than money borrowed for investment purposes). MVT may invest directly in securities or synthetically through the use of derivatives. MVT cannot change its investment objective or the foregoing fundamental policy without the approval of the holders of a majority of the outstanding common shares and the outstanding preferred shares, including MVT's VMTP Shares, voting together as a single class, and of the holders of a majority of the outstanding preferred shares, including the VMTP Shares, voting as a separate class. A majority of the outstanding means (1) 67% or more of the shares present at a meeting, if the holders of more than 50% of the outstanding shares are present or represented by proxy, or (2) more than 50% of the outstanding shares, whichever is less.

MVT's investment policies provide that, under normal market conditions, MVT will invest at least 80% of its Managed Assets in investment quality securities. For the purposes of the foregoing policy, an investment quality security is a security that is rated BBB or Baa or higher by Moody's, S&P or Fitch or another nationally recognized rating agency or, if unrated, deemed to be of comparable quality by the Investment Advisor. MVT Municipal Bonds rated Baa by Moody's are investment grade, but Moody's considers MVT Municipal Bonds rated Baa to have speculative characteristics. Changes in economic conditions or other circumstances are more likely to lead to a weakened capacity for issuers of MVT Municipal Bonds that are rated BBB or Baa (or that have equivalent ratings) to make principal and interest payments than is the case for issues of higher grade MVT Municipal Bonds. "MVT Municipal Bonds" means municipal obligations issued by or on behalf of states, territories and possessions of the United States and their political subdivisions, agencies or instrumentalities, each of which pays interest that, in the opinion of bond counsel to the issuer, is excludable from gross income for federal income tax purposes (except that the interest may be includable in taxable income for purposes of the federal alternative minimum tax). In the case of short term notes, the investment grade rating categories are SP-1+ through SP-2 for S&P, MIG-1 through MIG-3 for Moody's and F-1+ through F-3 for Fitch. In the case of tax exempt commercial paper, the investment grade rating categories are A-1+ through A-3 for S&P, Prime-1 through Prime-3 for Moody's and F-1+ through F-3 for Fitch. Obligations ranked in the lowest investment grade rating category (BBB, SP-2 and A-3 for S&P; Baa, MIG-3 and Prime-3 for Moody's and BBB and F-3 for Fitch), while considered "investment grade," may have certain speculative characteristics. There may be sub-categories or gradations indicating relative standing within the rating categories set forth above. In assessing the quality of MVT Municipal Bonds with respect to the foregoing requirements, the Investment Advisor takes into account the nature of any letters of credit or similar credit enhancement to which particular MVT Municipal Bonds are entitled and the creditworthiness of the financial institution that provided such credit enhancement.

MVT may invest up to 20% of its Managed Assets, measured at the time of investment, in securities rated BB/Ba or B by Moody's S&P, Fitch or another nationally recognized rating agency or, if unrated, deemed to be of comparable credit quality by the Investment Advisor. Bonds of below investment grade quality (Ba/BB or below) are commonly referred to as "junk bonds." Bonds of below investment grade quality are regarded as having predominantly speculative characteristics with respect to the issuer's capacity to pay interest and repay principal. Such securities, sometimes referred to as "high yield" or "junk" bonds, are predominantly speculative with respect to the capacity to pay interest and repay principal in accordance with the terms of the security and generally involve a greater volatility of price than securities in higher rating categories. Below investment grade securities and comparable unrated securities involve substantial risk of loss, are considered speculative with respect to the issuer's ability to pay interest and any required redemption or principal payments and are susceptible to default or decline in market value due to adverse economic and business developments.

The foregoing credit quality policies apply only at the time a security is purchased, and MVT is not required to dispose of a security if a rating agency downgrades its assessment of the credit characteristics of a particular issuer. In determining whether to retain or sell a security that a rating agency has downgraded, the Investment Advisor may consider such factors as the Investment Advisor's assessment of the credit quality of the issuer of the security, the price at which the security could be sold and the rating, if any, assigned to the security by other rating agencies. In the event that MVT disposes of a portfolio security subsequent to its being downgraded, MVT may experience a greater risk of loss than if such security had been sold prior to such downgrade.

MVT does not ordinarily invest more than 25% of its managed assets (taken at market value) in municipal obligations whose issuers are located in the same state.

In addition, MVT may purchase MVT Municipal Bonds that are additionally secured by insurance, bank credit agreements or escrow accounts. The credit quality of companies which provide these credit enhancements will affect

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the value of those securities. Although the insurance feature reduces certain financial risks, the premiums for insurance and the higher market price paid for insured obligations may reduce MVT's income. The insurance feature does not guarantee the market value of the insured obligations or the net asset value of MVT's common shares. MVT may purchase insured bonds and may purchase insurance for bonds in its portfolio.

MVT may invest in certain tax exempt securities classified as PABs (in general, bonds that benefit non-governmental entities) that may subject certain investors in MVT to an alternative minimum tax. The percentage of MVT's total assets invested in PABs will vary from time to time. MVT expects that a portion of the income it produces will be includable in alternative minimum taxable income. VMTP Shares therefore would not ordinarily be a suitable investment for investors who are subject to the federal alternative minimum tax or who would become subject to such tax by purchasing VMTP Shares. The suitability of an investment in VMTP Shares will depend upon a comparison of the after-tax yield likely to be provided from MVT with that from comparable tax-exempt investments not subject to the alternative minimum tax, and from comparable fully taxable investments, in light of each such investor's tax position. Special considerations may apply to corporate investors.

The average maturity of MVT's portfolio securities varies from time to time based upon an assessment of economic and market conditions by the Investment Advisor. MVT's portfolio at any given time may include long- term and intermediate-term MVT Municipal Bonds.

MVT's stated expectation is that it will invest in MVT Municipal Bonds that, in the Investment Advisor's opinion, are underrated or undervalued. Underrated MVT Municipal Bonds are those whose ratings do not, in the opinion of the Investment Advisor, reflect their true higher creditworthiness. Undervalued MVT Municipal Bonds are bonds that, in the opinion of the Investment Advisor, are worth more than the value assigned to them in the marketplace. The Investment Advisor may at times believe that bonds associated with a particular municipal market sector (for example, but not limited to electric utilities), or issued by a particular municipal issuer, are undervalued. The Investment Advisor may purchase those bonds for MVT's portfolio because they represent a market sector or issuer that the Investment Advisor considers undervalued, even if the value of those particular bonds appears to be consistent with the value of similar bonds. MVT Municipal Bonds of particular types (for example, but not limited to hospital bonds, industrial revenue bonds or bonds issued by a particular municipal issuer) may be undervalued because there is a temporary excess of supply in that market sector, or because of a general decline in the market price of MVT Municipal Bonds of the market sector for reasons that do not apply to the particular MVT Municipal Bonds that are considered undervalued. MVT's investment in underrated or undervalued MVT Municipal Bonds will be based on the Investment Advisor's belief that their yield is higher than that available on bonds bearing equivalent levels of interest rate risk, credit risk and other forms of risk, and that their prices will ultimately rise, relative to the market, to reflect their true value. Any capital appreciation realized by MVT will generally result in capital gain distributions subject to federal capital gains taxation.

MVT ordinarily does not intend to realize significant investment income not exempt from federal income tax. From time to time, MVT may realize taxable capital gains.

Federal tax legislation has limited the types and volume of bonds the interest on which qualifies for a federal income tax exemption. As a result, this legislation and legislation that may be enacted in the future may affect the availability of MVT Municipal Bonds for investment by MVT.

**Description of MVT Municipal Bonds** 

See "The Acquiring Fund's Investments – Description of MYI Municipal Bonds" for additional information regarding the types of municipal bonds in which MVT invests.

**Strategic Transactions and Other Management Techniques** 

MVT may purchase and sell futures contracts, enter into various interest rate transactions and swap contracts (including, but not limited to, credit default swaps) and may purchase and sell exchange-listed and OTC put and call options on securities and swap contracts, financial indices and futures contracts and use other derivative instruments or management techniques (collectively, "Strategic Transactions"). These Strategic Transactions may be used for duration management and other risk management purposes, subject to MVT's investment restrictions. While MVT's

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use of Strategic Transactions is intended to reduce the volatility of the NAV of MVT's common shares, the NAV of MVT's common shares will fluctuate. No assurance can be given that MVT's Strategic Transactions will be effective.

There is no particular strategy that requires use of one technique rather than another as the decision to use any particular strategy or instrument is a function of market conditions and the composition of the portfolio. The ability of MVT to use Strategic Transactions successfully will depend on the Investment Advisor's ability to predict pertinent market movements as well as sufficient correlation among the instruments, which cannot be assured. Strategic Transactions subject MVT to the risk that, if the Investment Advisor incorrectly forecasts market values, interest rates or other applicable factors, MVT's performance could suffer. Certain of these Strategic Transactions, such as investments in inverse floating rate securities and credit default swaps, may provide investment leverage to MVT's portfolio. MVT is not required to use derivatives or other portfolio strategies to seek to hedge its portfolio and may choose not to do so.

The use of Strategic Transactions may result in losses greater than if they had not been used, may require MVT to sell or purchase portfolio securities at inopportune times or for prices other than current market values, may limit the amount of appreciation MVT can realize on an investment or may cause MVT to hold a security that it might otherwise sell. Furthermore, MVT may only engage in Strategic Transactions from time to time and may not necessarily be engaging in hedging activities when movements in interest rates occur.

For so long as the VMTP Shares are rated by a rating agency, MVT's use of options and certain financial futures and options thereon will be subject to such rating agency's guidelines and limitations on such transactions. In order to maintain ratings on the VMTP Shares from one or more rating agencies, MVT may be required to limit its use of Strategic Transactions in accordance with the specified guidelines of the applicable rating agencies.

Certain federal income tax requirements may restrict or affect the ability of MVT to engage in Strategic Transactions. In addition, the use of certain Strategic Transactions may give rise to taxable income and have certain other consequences.

*Put and Call Options on Securities and Indices*. MVT may purchase and sell put and call options on securities and indices. A put option gives the purchaser of the option the right to sell and the writer the obligation to buy the underlying security at the exercise price during the option period. MVT may also purchase and sell options on bond indices ("index options"). Index options are similar to options on securities except that, rather than taking or making delivery of securities underlying the option at a specified price upon exercise, an index option gives the holder the right to receive cash upon exercise of the option if the level of the bond index upon which the option is based is greater, in the case of a call, or less, in the case of a put, than the exercise price of the option. The purchase of a put option on a debt security could protect MVT's holdings in a security or a number of securities against a substantial decline in the market value. A call option gives the purchaser of the option the right to buy and the seller the obligation to sell the underlying security or index at the exercise price during the option period or for a specified period prior to a fixed date. The purchase of a call option on a security could protect MVT against an increase in the price of a security that it intended to purchase in the future.

*Writing Covered Call Options*. MVT is authorized to write (*i.e.*, sell) covered call options with respect to MVT Municipal Bonds it owns, thereby giving the holder of the option the right to buy the underlying security covered by the option from MVT at the stated exercise price until the option expires. MVT writes only covered call options, which means that so long as MVT is obligated as the writer of a call option, it will own the underlying securities subject to the option.

MVT receives a premium from writing a call option, which increases MVT's return on the underlying security in the event the option expires unexercised or is closed out at a profit. By writing a call, MVT limits its opportunity to profit from an increase in the market value of the underlying security above the exercise price of the option for as long as MVT's obligation as a writer continues. Covered call options serve as a partial hedge against a decline in the price of the underlying security. MVT may engage in closing transactions in order to terminate outstanding options that it has written.

*Additional Information About Options*. MVT's ability to close out its position as a purchaser or seller of an exchange-listed put or call option is dependent upon the existence of a liquid secondary market on option exchanges. Among the possible reasons for the absence of a liquid secondary market on an exchange are: (i) insufficient trading interest

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in certain options; (ii) restrictions on transactions imposed by an exchange; (iii) trading halts, suspensions or other restrictions imposed with respect to particular classes or series of options or underlying securities; (iv) interruption of the normal operations on an exchange; (v) inadequacy of the facilities of an exchange or Office of the Comptroller of the Currency (the "<u>OCC</u>") to handle current trading volume; or (vi) a decision by one or more exchanges to discontinue the trading of options (or a particular class or series of options), in which event the secondary market on that exchange (or in that class or series of options) would cease to exist, although outstanding options on that exchange that had been listed by the OCC as a result of trades on that exchange would generally continue to be exercisable in accordance with their terms. OTC options are purchased from or sold to dealers, financial institutions or other counterparties which have entered into direct agreements with MVT. With OTC options, such variables as expiration date, exercise price and premium will be agreed upon between MVT and the counterparty, without the intermediation of a third party such as the OCC. If the counterparty fails to make or take delivery of the securities underlying an option it has written, or otherwise settle the transaction in accordance with the terms of that option as written, MVT would lose the premium paid for the option as well as any anticipated benefit of the transaction. OTC options and assets used to cover OTC options written by MVT are considered by the staff of the SEC to be illiquid. The illiquidity of such options or assets may prevent a successful sale of such options or assets, result in a delay of sale, or reduce the amount of proceeds that might otherwise be realized.

MVT may engage in options and futures transactions on exchanges and options in the over-the-counter markets. MVT will only enter into OTC options with counterparties the Investment Advisor believes to be creditworthy at the time they enter into such transactions.

The hours of trading for options on debt securities may not conform to the hours during which the underlying securities are traded. To the extent that the option markets close before the markets for the underlying securities, significant price and rate movements can take place in the underlying markets that cannot be reflected in the option markets.

*Financial Futures Transactions and Options*. MVT is authorized to purchase and sell certain exchange traded financial futures contracts ("financial futures contracts") in order to hedge its investments against declines in value, and to hedge against increases in the cost of securities it intends to purchase or to seek to enhance MVT's return. However, any transactions involving financial futures or options (including puts and calls associated therewith) will be in accordance with MVT's investment policies and limitations. A financial futures contract obligates the seller of a contract to deliver and the purchaser of a contract to take delivery of the type of financial instrument covered by the contract, or in the case of index-based futures contracts to make and accept a cash settlement, at a specific future time for a specified price. To hedge its portfolio, MVT may take an investment position in a futures contract which will move in the opposite direction from the portfolio position being hedged. A sale of financial futures contracts may provide a hedge against a decline in the value of portfolio securities because such depreciation may be offset, in whole or in part, by an increase in the value of the position in the financial futures contracts. A purchase of financial futures contracts may provide a hedge against an increase in the cost of securities intended to be purchased because such appreciation may be offset, in whole or in part, by an increase in the value of the position in the futures contracts.

Distributions, if any, of net long term capital gains from certain transactions in futures or options are taxable at long term capital gains rates for U.S. federal income tax purposes.

*Futures Contracts*. A futures contract is an agreement between two parties to buy and sell a security or, in the case of an index-based futures contract, to make and accept a cash settlement for a set price on a future date. A majority of transactions in futures contracts, however, do not result in the actual delivery of the underlying instrument or cash settlement, but are settled through liquidation (*i.e.*, by entering into an offsetting transaction). Futures contracts have been designed by boards of trade which have been designated "contracts markets" by the CFTC.

The purchase or sale of a futures contract differs from the purchase or sale of a security in that no price or premium is paid or received. Instead, an amount of cash or securities acceptable to the broker and the relevant contract market, which varies, but is generally about 5% of the contract amount, must be deposited with the broker. This amount is known as "initial margin" and represents a "good faith" deposit assuring the performance of both the purchaser and seller under the futures contract. Subsequent payments to and from the broker, called "variation margin," are required to be made on a daily basis as the price of the futures contract fluctuates making the long and short positions in the futures contract more or less valuable, a process known as "marking to the market." At any time prior to the settlement date of the futures contract, the position may be closed out by taking an opposite position that will operate to terminate the position in the futures contract. A final determination of variation margin is then made, additional cash is required

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to be paid to or released by the broker and the purchaser realizes a loss or gain. In addition, a nominal commission is paid on each completed sale transaction.

MVT may also purchase and sell financial futures contracts on U.S. Government securities as a hedge against adverse changes in interest rates as described below. With respect to U.S. Government securities, currently there are financial futures contracts based on long-term U.S. Treasury bonds, U.S. Treasury notes, Government National Mortgage Association ("<u>GNMA</u>") Certificates and three-month U.S. Treasury bills. MVT may purchase and write call and put options on futures contracts on U.S. Government securities and purchase and sell municipal security index futures contracts in connection with its hedging strategies.

MVT also may engage in other futures contracts transactions such as futures contracts on other municipal bond indices that may become available if the Investment Advisor should determine that there is normally a sufficient correlation between the prices of such futures contracts and MVT Municipal Bonds in which MVT invests to make such hedging appropriate.

*Futures Strategies*. MVT may sell a financial futures contract (*i.e.*, assume a short position) in anticipation of a decline in the value of its investments resulting from an increase in interest rates or otherwise. The risk of decline could be reduced without employing futures as a hedge by selling investments and either reinvesting the proceeds in securities with shorter maturities or by holding assets in cash. This strategy, however, entails increased transaction costs in the form of dealer spreads and typically would reduce the average yield of MVT's portfolio securities as a result of the shortening of maturities. The sale of futures contracts provides an alternative means of hedging against declines in the value of its investments. As such values decline, the value of MVT's positions in the futures contracts will tend to increase, thus offsetting all or a portion of the depreciation in the market value of MVT's investments that are being hedged. While MVT will incur commission expenses in selling and closing out futures positions, commissions on futures transactions are typically lower than transaction costs incurred in the purchase and sale of MVT's investments being hedged. In addition, the ability of MVT to trade in the standardized contracts available in the futures markets may offer a more effective defensive position than a program to reduce the average maturity of the portfolio securities due to the unique and varied credit and technical characteristics of the instruments available to MVT. Employing futures as a hedge also may permit MVT to assume a defensive posture without reducing the yield on its investments beyond any amounts required to engage in futures trading.

When MVT intends to purchase a security, MVT may purchase futures contracts as a hedge against any increase in the cost of such security resulting from a decrease in interest rates or otherwise, that may occur before such purchase can be effected. Subject to the degree of correlation between such securities and the futures contracts, subsequent increases in the cost of such securities should be reflected in the value of the futures held by MVT. As such purchases are made, an equivalent amount of futures contracts will be closed out. Due to changing market conditions and interest rate forecasts, however, a futures position may be terminated without a corresponding purchase of portfolio securities.

*Call Options on Futures Contracts*. MVT may also purchase and sell exchange traded call and put options on financial futures contracts. The purchase of a call option on a futures contract is analogous to the purchase of a call option on an individual security. Depending on the pricing of the option compared to either the futures contract upon which it is based or the price of the underlying securities, it may or may not be less risky than ownership of the futures contract or underlying securities. Like the purchase of a futures contract, MVT may purchase a call option on a futures contract to hedge against a market advance when MVT is not fully invested.

The writing of a call option on a futures contract constitutes a partial hedge against declining prices of the securities which are deliverable upon exercise of the futures contract. If the futures price at expiration is below the exercise price, MVT will retain the full amount of the option premium which provides a partial hedge against any decline that may have occurred in MVT's portfolio holdings.

*Put Options on Futures Contracts*. The purchase of a put option on a futures contract is analogous to the purchase of a protective put option on portfolio securities. MVT may purchase a put option on a futures contract to hedge MVT's portfolio against the risk of rising interest rates.

The writing of a put option on a futures contract constitutes a partial hedge against increasing prices of the securities which are deliverable upon exercise of the futures contract. If the futures price at expiration is higher than the exercise

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price, MVT will retain the full amount of the option premium which provides a partial hedge against any increase in the price of securities which MVT intends to purchase.

The writer of an option on a futures contract is required to deposit initial and variation margin pursuant to requirements similar to those applicable to futures contracts. Premiums received from the writing of an option will be included in initial margin. The writing of an option on a futures contract involves risks similar to those relating to futures contracts.

The CFTC subjects advisers to registered investment companies to regulation by the CFTC if a fund that is advised by the investment adviser either (i) invests, directly or indirectly, more than a prescribed level of its liquidation value in CFTC Derivatives, or (ii) markets itself as providing investment exposure to such instruments. To the extent MVT uses CFTC Derivatives, it intends to do so below such prescribed levels and will not market itself as a "commodity pool" or a vehicle for trading such instruments. Accordingly, the Investment Advisor has claimed an exclusion from the definition of the term "commodity pool operator" under the CEA pursuant to Rule 4.5 under the CEA. The Investment Advisor is not, therefore, subject to registration or regulation as a "commodity pool operator" under the CEA in respect of MVT.

*Interest Rate Swap Transactions*. In order to seek to hedge the value of MVT against interest rate fluctuations, to hedge against increases in MVT's costs associated with the dividend payments on any preferred shares, including the VMTP Shares, or to seek to increase MVT's return, MVT may enter into interest rate swap transactions such as MMD Swaps or SIFMA Swaps. To the extent that MVT enters into these transactions, MVT expects to do so primarily to preserve a return or spread on a particular investment or portion of its portfolio as a duration management technique or to protect against any increase in the price of securities MVT anticipates purchasing at a later date. MVT may enter into these transactions primarily as a hedge or for duration or risk management rather than as a speculative investment. However, MVT also may invest in MMD Swaps and SIFMA Swaps to seek to enhance return or gain or to increase MVT's yield, for example, during periods of steep interest rate yield curves (*i.e.*, wide differences between short-term and long-term interest rates).

MVT may purchase and sell SIFMA Swaps in the SIFMA swap market. In a SIFMA Swap, MVT exchanges with another party their respective commitments to pay or receive interest (*e.g.*, an exchange of fixed rate payments for floating rate payments linked to the SIFMA Municipal Swap Index). Because the underlying index is a tax-exempt index, SIFMA Swaps may reduce cross-market risks incurred by MVT and increase MVT's ability to hedge effectively. SIFMA Swaps are typically quoted for the entire yield curve, beginning with a seven day floating rate index out to 30 years. The duration of a SIFMA Swap is approximately equal to the duration of a fixed-rate MVT Municipal Bond with the same attributes as the swap (*e.g.*, coupon, maturity, call feature).

MVT may also purchase and sell MMD Swaps, also known as MMD rate locks. An MMD Swap permits MVT to lock in a specified municipal interest rate for a portion of its portfolio to preserve a return on a particular investment or a portion of its portfolio as a duration management technique or to protect against any increase in the price of securities to be purchased at a later date. By using an MMD Swap, MVT can create a synthetic long or short position, allowing MVT to select the most attractive part of the yield curve. An MMD Swap is a contract between MVT and an MMD Swap provider pursuant to which the parties agree to make payments to each other on a notional amount, contingent upon whether the Municipal Market Data AAA General Obligation Scale is above or below a specified level on the expiration date of the contract. For example, if MVT buys an MMD Swap and the Municipal Market Data AAA General Obligation Scale is below the specified level on the expiration date, the counterparty to the contract will make a payment to MVT equal to the specified level minus the actual level, multiplied by the notional amount of the contract. If the Municipal Market Data AAA General Obligation Scale is above the specified level on the expiration date, MVT will make a payment to the counterparty equal to the actual level minus the specified level, multiplied by the notional amount of the contract.

In connection with investments in SIFMA and MMD Swaps, there is a risk that municipal yields will move in the opposite direction than anticipated by MVT, which would cause MVT to make payments to its counterparty in the transaction that could adversely affect MVT's performance.

If there is a default by the other party to an uncleared interest rate swap transaction, generally MVT will have contractual remedies pursuant to the agreements related to the transaction. With respect to interest rate swap transactions cleared through a central clearing counterparty, a clearing organization will be substituted for the counterparty and will guarantee the parties' performance under the swap agreement. However, there can be no

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assurances that the clearing organization will satisfy its obligation to MVT or that MVT would be able to recover the full amount of assets deposited on its behalf with the clearing organization in the event of the default by the clearing organization or MVT's clearing broker. Certain U.S. federal income tax requirements may limit MVT's ability to engage in interest rate swaps. Distributions attributable to transactions in interest rate swaps generally will be taxable as ordinary income to stockholders.

*Counterparty Credit Standards*. To the extent that MVT engages in principal transactions, including, but not limited to, OTC options, forward currency transactions, swap transactions, repurchase and reverse repurchase agreements and the purchase and sale of bonds and other fixed-income securities, it must rely on the creditworthiness of its counterparties under such transactions. In certain instances, the credit risk of a counterparty is increased by the lack of a central clearing house for certain transactions, including certain swap contracts. In the event of the insolvency of a counterparty, MVT may not be able to recover its assets, in full or at all, during the insolvency process. Counterparties to investments may have no obligation to make markets in such investments and may have the ability to apply essentially discretionary margin and credit requirements. Similarly, MVT will be subject to the risk of bankruptcy of, or the inability or refusal to perform with respect to such investments by, the counterparties with which it deals. The Investment Advisor will seek to minimize MVT's exposure to counterparty risk by entering into such transactions with counterparties the Investment Advisor believes to be creditworthy at the time it enters into the transaction. Certain option transactions and Strategic Transactions may require MVT to provide collateral to secure its performance obligations under a contract, which would also entail counterparty credit risk.

**Leverage** 

MVT currently leverages its assets through the use of VMTP Shares and investments in TOB Residuals. MVT currently does not intend to borrow money or issue debt securities. MVT is permitted to borrow money (including by investing in TOB Residuals) or issue debt securities in an amount up to 33 1/3% of its Managed Assets (50% of its net assets), issue preferred shares in an amount up to 50% of its Managed Assets (100% of its net assets) and enter into derivative instruments with leverage embedded in them in a limited manner or subject to a limit on leverage risk calculated based on value-at-risk, as required by Rule 18f-4 under the 1940 Act. Although it has no present intention to do so, MVT reserves the right to borrow money from banks or other financial institutions, or issue debt securities, in the future if it believes that market conditions would be conducive to the successful implementation of a leveraging strategy through borrowing money or issuing debt securities. Any such leveraging will not be fully achieved until the proceeds resulting from the use of leverage have been invested in accordance with MVT's investment objective and policies.

The use of leverage can create risks. When leverage is employed, the NAV and market price of the common shares and the yield to holders of common shares will be more volatile than if leverage were not used. Changes in the value of MVT's portfolio, including securities bought with the proceeds of leverage, will be borne entirely by the holders of common shares. If there is a net decrease or increase in the value of MVT's investment portfolio, leverage will decrease or increase, as the case may be, the NAV per common share to a greater extent than if MVT did not utilize leverage. A reduction in MVT's NAV may cause a reduction in the market price of its shares. During periods in which MVT is using leverage, the fee paid to the Investment Advisor for advisory services will be higher than if MVT did not use leverage, because the fees paid will be calculated on the basis of MVT's Managed Assets, which includes the proceeds from leverage. MVT's leveraging strategy may not be successful.

Certain types of leverage MVT may use may result in MVT being subject to covenants relating to asset coverage and portfolio composition requirements. MVT may be subject to certain restrictions on investments imposed by one or more lenders or by guidelines of one or more rating agencies, which may issue ratings for any short-term debt securities or preferred shares issued by MVT. The terms of any borrowings or rating agency guidelines may impose asset coverage or portfolio composition requirements that are more stringent than those imposed by the 1940 Act. The Investment Advisor does not believe that these covenants or guidelines will impede it from managing MVT's portfolio in accordance with its investment objective and policies if MVT were to utilize leverage.

Under the 1940 Act, MVT is not permitted to issue senior securities if, immediately after the issuance of such senior securities, MVT would have an asset coverage ratio (as defined in the 1940 Act) of less than 300% with respect to senior securities representing indebtedness (*i.e.*, for every dollar of indebtedness outstanding, MVT is required to have at least three dollars of assets) or less than 200% with respect to senior securities representing preferred shares (*i.e.*, for every dollar of preferred shares outstanding, MVT is required to have at least two dollars of assets). The 1940 Act

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also provides that MVT may not declare distributions, or purchase its stock (including through tender offers) if, immediately after doing so, it will have an asset coverage ratio of less than 300% or 200%, as applicable. Under the 1940 Act, certain short-term borrowings (such as for cash management purposes) are not subject to these limitations if (i) repaid within 60 days, (ii) not extended or renewed, and (iii) not in excess of 5% of the total assets of MVT.

*Preferred Shares.* MVT has leveraged its portfolio by issuing VMTP Shares. Under the 1940 Act, MVT is not permitted to issue preferred shares if, immediately after such issuance, the liquidation value of MVT's outstanding preferred shares exceeds 50% of its assets (including the proceeds from the issuance) less liabilities other than borrowings (*i.e.*, the value of MVT's assets must be at least 200% of the liquidation value of its outstanding preferred shares). In addition, MVT 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 MVT's assets less liabilities other than borrowings is at least 200% of such liquidation value.

For tax purposes, MVT 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, MVT 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 MVT's leveraged structure to common shareholders will be reduced.

*Tender Option Bond Transactions.* MVT currently leverages its assets through the use of TOB Residuals, which are derivative interests in municipal bonds. The TOB Residuals in which MVT 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 MVT. Although volatile, TOB Residuals typically offer the potential for yields exceeding the yields available on fixed rate municipal bonds with comparable credit quality.

TOB Residuals represent beneficial interests in a TOB Trust formed for the purpose of holding 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 the fund(s) that transferred municipal bonds to the TOB Trust. MVT may invest in both TOB Floaters and TOB Residuals. TOB Floaters may have first priority on the cash flow from the municipal bonds held by the TOB Trust and are enhanced with a liquidity support arrangement provided by a TOB Liquidity Provider which allows holders to tender their position at par (plus accrued interest). MVT, as a holder of TOB Residuals, is paid the residual cash flow from the TOB Trust. MVT 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 MVT 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 registered investment companies advised by the Investment Advisor or its affiliates ("<u>BlackRock-Advised Funds</u>") 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.

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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 the occurrence of termination events, as defined in the TOB Trust agreements. 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.*, MVT) whereas in other termination events, the holders of TOB Floaters and the TOB Residual holders would be paid pro rata.

TOB Trusts are typically supported by a liquidity facility provided by a TOBs Liquidity Provider that allows the holders of the TOB Floaters to tender their TOB Floaters in exchange for payment of par plus accrued interest on any business day (subject to the non-occurrence of a termination event). The tendered TOB Floaters are remarketed by a remarketing agent. In the event of a failed remarketing, the TOB Trust may draw upon a loan from the TOBs Liquidity Provider to purchase the tendered TOB Floaters. Any loans made by the TOBs Liquidity Provider will be secured by the purchased TOB Floaters held by the TOB Trust and will be subject to an increased interest rate based on number of days the loan is outstanding.

MVT may invest in a TOB Trust on either a non-recourse or recourse basis. When MVT invests in TOB Trusts on a non-recourse basis, and the TOBs Liquidity Provider is required to make a payment under the liquidity facility, the TOBs Liquidity Provider will typically liquidate all or a portion of the municipal bonds held in the TOB Trust and then fund the balance, if any, of the Liquidation Shortfall. If MVT invests in a TOB Trust on a recourse basis, it will typically enter into a reimbursement agreement with the TOBs Liquidity Provider pursuant to which MVT is required to reimburse the TOBs Liquidity Provider the amount of any Liquidation Shortfall. As a result, if MVT invests in a recourse TOB Trust, MVT will bear the risk of loss with respect to any Liquidation Shortfall. If multiple BlackRock-Advised Funds participate in any such TOB Trust, these losses will be shared ratably, in proportion to their participation in the TOB Trust.

Under accounting rules, MVT Municipal Bonds of MVT that are deposited into a TOB Trust are investments of MVT and are presented on MVT's Schedule of Investments and outstanding TOB Floaters issued by a TOB Trust are presented as liabilities in MVT's Statement of Assets and Liabilities. Interest income from the underlying MVT Municipal Bonds is recorded by MVT on an accrual basis. Interest expense incurred on the TOB Floaters and other expenses related to remarketing, administration, trustee and other services to a TOB Trust are reported as expenses of MVT. In addition, under accounting rules, loans made to a TOB Trust sponsored by MVT may be presented as loans of MVT in MVT's financial statements even if there is no recourse to MVT's assets.

For TOB Floaters, generally, the interest rate earned will be based upon the market rates for municipal bonds with maturities or remarketing provisions that are comparable in duration to the periodic interval of the tender option. Since the tender option feature has a shorter term than the final maturity or first call date of the underlying municipal bonds deposited in the TOB Trust, the holder of the TOB Floaters relies upon the terms of the agreement with the financial institution furnishing the liquidity facility as well as the credit strength of that institution. The perceived reliability and creditworthiness, of many major financial institutions, some of which sponsor and/or provide liquidity support to TOB Trusts increases the risk associated with TOB Floaters. This in turn may reduce the desirability of TOB Floaters as investments, which could impair the viability or availability of TOB Trusts.

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Rule 18f-4 under the 1940 Act permits MVT to enter into TOB Trust transactions, reverse repurchase agreements and similar financing transactions (*e.g.*, borrowed bonds) notwithstanding the limitation on the issuance of senior securities in Section 18 of the 1940 Act, provided that MVT either (i) complies with the 300% asset coverage ratio with respect to such transactions and any other borrowings in the aggregate, or (ii) treats such transactions as derivatives transactions under Rule 18f-4.

Future regulatory requirements or SEC guidance may necessitate more onerous contractual or regulatory requirements, which may increase the costs or reduce the degree of potential economic benefits of TOB Trust transactions or limit MVT's ability to enter into or manage TOB Trust transactions.

See "Risk Factors and Special Considerations— General Risks of Investing in the Acquiring Fund—Tender Option Bond Risk" for a description of the risks involved with a TOB issuer.

*Credit Facility.* ****MVT is permitted to leverage its portfolio by entering into one or more credit facilities. If MVT enters into a credit facility, MVT may be required to prepay outstanding amounts or incur a penalty rate of interest upon the occurrence of certain events of default. MVT would also likely have to indemnify the lenders under the credit facility against liabilities they may incur in connection therewith. In addition, MVT expects that any credit facility would contain covenants that, among other things, likely would limit MVT's ability to pay distributions in certain circumstances, incur additional debt, change certain of its investment policies and engage in certain transactions, including mergers and consolidations, and require asset coverage ratios in addition to those required by the 1940 Act. MVT may be required to pledge its assets and to maintain a portion of its assets in cash or high-grade securities as a reserve against interest or principal payments and expenses. MVT expects that any credit facility would have customary covenant, negative covenant and default provisions. There can be no assurance that MVT will enter into an agreement for a credit facility or one on terms and conditions representative of the foregoing, or that additional material terms will not apply. In addition, if entered into, a credit facility may in the future be replaced or refinanced by one or more credit facilities having substantially different terms or by the issuance of preferred shares.

*Reverse Repurchase Agreements.* ****MVT may enter into reverse repurchase agreements with respect to its portfolio investments subject to the investment restrictions set forth herein. Reverse repurchase agreements involve the sale of securities held by MVT with an agreement by MVT to repurchase the securities at an agreed upon price, date and interest payment. In accordance with Rule 18f-4 under the 1940 Act, when MVT engages in reverse repurchase agreements and similar financing transactions, MVT may either (i) maintain asset coverage of at least 300% with respect to such transactions and any other borrowings in the aggregate, or (ii) treat such transactions as "derivatives transactions" and comply with Rule 18f-4 with respect to such transactions. Reverse repurchase agreements involve the risk that the market value of the securities acquired in connection with the reverse repurchase agreement may decline below the price of the securities MVT has sold but is obligated to repurchase. Also, reverse repurchase agreements involve the risk that the market value of the securities retained in lieu of sale by MVT in connection with the reverse repurchase agreement may decline in price.

If the buyer of securities under a reverse repurchase agreement files for bankruptcy or becomes insolvent, such buyer or its trustee or receiver may receive an extension of time to determine whether to enforce MVT's obligation to repurchase the securities and MVT's use of the proceeds of the reverse repurchase agreement may effectively be restricted pending such decision. Also, MVT would bear the risk of loss to the extent that the proceeds of the reverse repurchase agreement are less than the value of the securities subject to such agreement.

MVT also may effect simultaneous purchase and sale transactions that are known as "sale-buybacks." A sale-buyback is similar to a reverse repurchase agreement, except that in a sale-buyback, the counterparty that purchases the security is entitled to receive any principal or interest payments made on the underlying security pending settlement of MVT's repurchase of the underlying security.

*Derivatives.* MVT may enter into derivative transactions that have leverage embedded in them. Derivative transactions that MVT may enter into and the risks associated with them are described elsewhere and are also referred to as "Strategic Transactions." MVT cannot assure you that investments in derivative transactions that have leverage embedded in them will result in a higher return on its common shares. Under Rule 18f-4 under the 1940 Act, among other things, MVT must either use derivatives in a limited manner or comply with an outer limit on fund leverage risk based on value-at-risk.

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*Temporary Borrowings.* MVT may also borrow money as a temporary measure for extraordinary or emergency purposes, including the payment of dividends and the settlement of securities transactions which otherwise might require untimely dispositions of MVT securities.

**MIY's Investment Objective and Policies** 

MIY's investment objective is to provide shareholders with as high a level of current income exempt from U.S. federal and Michigan income taxes as is consistent with its investment policies and prudent investment management. MIY seeks to achieve its investment objective by investing at least 80% of an aggregate of MIY's net assets including proceeds from the issuance of any preferred stock) and the proceeds of any borrowings for investment purposes, in a portfolio of municipal obligations issued by or on behalf of states, territories and possessions of the United States and their political subdivisions, agencies or instrumentalities, each of which pays interest that, in the opinion of bond counsel to the issuer, is excludable from gross income for federal income tax purposes and Michigan income taxes (except that the interest may be includable in taxable income for purposes of the federal alternative minimum tax) ("MIY Municipal Bonds"). MIY may invest directly in securities or synthetically through the use of derivatives. MIY's investment objective and its policy of investing at least 80% of an aggregate of MIY's net assets (including proceeds from the issuance of any preferred stock) and the proceeds of any borrowings for investment purposes, in MIY Municipal Bonds are fundamental policies that may not be changed without the approval of a majority of the outstanding voting securities of MIY (as defined in 1940 Act, as amended). There can be no assurance that MIY's investment objective will be realized.

MIY may invest in certain tax-exempt securities classified as PABs (in general, bonds that benefit nongovernmental entities) that may subject certain investors in MIY to an alternative minimum tax. The percentage of MIY's total assets invested in PABs will vary from time to time. MIY also will not invest more than 25% of its total assets (taken at market value at the time of each investment) in MIY Municipal Bonds whose issuers are located in the same state.

Under normal market conditions, MIY expects to invest at least 75% of its total assets in a portfolio of long-term MIY Municipal Bonds that are commonly referred to as "investment grade" securities, which are obligations rated at the time of purchase within the four highest-quality ratings as determined by either Moody's (currently Aaa, Aa, A and Baa), S&P (currently AAA, AA, A and BBB) or Fitch (currently AAA, AA, A and BBB). In the case of short-term notes, the investment grade rating categories are SP-1+ through SP-2 for S&P, MIG-1 through MIG-3 for Moody's and F-1+ through F-3 for Fitch. In the case of tax-exempt commercial paper, the investment grade rating categories are A-1+ through A-3 for S&P, P-1 through P-3 for Moody's and F-1+ through F-3 for Fitch. Obligations ranked in the lowest investment grade rating category (BBB, SP-2 and A-3 for S&P; Baa, MIG-3 and P-3 for Moody's; and BBB and F-3 for Fitch), while considered "investment grade," may have certain speculative characteristics. There may be sub- categories or gradations indicating relative standing within the rating categories set forth above. In assessing the quality of MIY Municipal Bonds with respect to the foregoing requirements, the Investment Advisor takes into account the nature of any letters of credit or similar credit enhancement to which particular MIY Municipal Bonds are entitled and the creditworthiness of the financial institution that provided such credit enhancement. If unrated, such securities will possess creditworthiness comparable, in the opinion of the Investment Advisor, to other obligations in which MIY may invest.

MIY also may invest up to 25% of its total assets in MIY Municipal Bonds that are rated below Baa by Moody's or below BBB by S&P or Fitch or, if unrated, are considered by the Investment Advisor to possess similar credit characteristics. Such securities, sometimes referred to as "high yield" or "junk" bonds, are predominantly speculative with respect to the capacity to pay interest and repay principal in accordance with the terms of the security and generally involve a greater volatility of price than securities in higher rating categories. MIY does not intend to purchase MIY Municipal Bonds that are in default or which the Investment Advisor believes will soon be in default. Below investment grade securities and comparable unrated securities involve substantial risk of loss, are considered speculative with respect to the issuer's ability to pay interest and any required redemption or principal payments and are susceptible to default or decline in market value due to adverse economic and business developments.

All percentage and ratings limitations on securities in which MIY may invest apply at the time of making an investment and shall not be considered violated if an investment rating is subsequently downgraded to a rating that would have precluded MIY's initial investment in such security. In the event that MIY disposes of a portfolio security subsequent

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to its being downgraded, MIY may experience a greater risk of loss than if such security had been sold prior to such downgrade.

MIY intends to invest primarily in long-term MIY Municipal Bonds with maturities of more than ten years. However, MIY also may invest in intermediate term MIY Municipal Bonds with maturities of between three years and ten years. MIY also may invest from time to time in short-term MIY Municipal Bonds with maturities of less than three years. The average maturity of MIY's portfolio securities will vary based upon the Investment Advisor's assessment of economic and market conditions.

For temporary periods or to provide liquidity, MIY has the authority to invest as much as 20% of its total assets in tax-exempt and taxable money market obligations with a maturity of one year or less (such short-term obligations being referred to herein as "Temporary Investments"). In addition, MIY reserves the right as a defensive measure to invest temporarily a greater portion of its assets in Temporary Investments, when, in the opinion of the Investment Advisor, prevailing market or financial conditions warrant. Taxable money market obligations will yield taxable income. MIY also may invest in VRDOs and VRDOs in the form of Participating VRDOs in variable rate tax-exempt obligations held by a financial institution. MIY's hedging strategies are not fundamental policies and may be modified by the Board of MIY without the approval of MIY's shareholders. MIY is also authorized to invest in indexed and inverse floating rate obligations for hedging purposes and to seek to enhance return.

MIY may invest in securities not issued by or on behalf of a state or territory or by an agency or instrumentality thereof, if MIY receives an opinion of counsel to the issuer that such securities pay interest that is excludable from gross income for federal income tax purposes ("Non-Municipal Tax-Exempt Securities"). Non- Municipal Tax-Exempt Securities could include trust certificates, partnership interests or other instruments evidencing interest in one or more long-term MIY Municipal Bonds. Non-Municipal Tax-Exempt Securities also may include securities issued by other investment companies that invest in MIY Municipal Bonds, to the extent such investments are permitted by MIY's investment restrictions and applicable law. Non-Municipal Tax-Exempt Securities are subject to the same risks associated with an investment in MIY Municipal Bonds as well as many of the risks associated with investments in derivatives.

MIY ordinarily does not intend to realize significant investment income not exempt from federal income tax. From time to time, MIY may realize taxable capital gains.

Federal tax legislation has limited the types and volume of bonds the interest on which qualifies for a federal income tax-exemption. As a result, this legislation and legislation that may be enacted in the future may affect the availability of MIY Municipal Bonds for investment by MIY.

**Description of MIY Municipal Bonds** 

See "The Acquiring Fund's Investments – Description of MYI Municipal Bonds" for additional information regarding the types of municipal bonds in which MIY invests.

**Strategic Transactions and Other Management Techniques** 

MIY may purchase and sell futures contracts, enter into various interest rate transactions and swap contracts (including, but not limited to, credit default swaps) and may purchase and sell exchange-listed and OTC put and call options on securities and swap contracts, financial indices and futures contracts and use other derivative instruments or management techniques (collectively, "Strategic Transactions"). These Strategic Transactions may be used for duration management and other risk management purposes, subject to MIY's investment restrictions. While MIY's use of Strategic Transactions is intended to reduce the volatility of the NAV of MIY's common shares, the NAV of MIY's common shares will fluctuate. No assurance can be given that MIY's Strategic Transactions will be effective.

There is no particular strategy that requires use of one technique rather than another as the decision to use any particular strategy or instrument is a function of market conditions and the composition of the portfolio. The ability of MIY to use Strategic Transactions successfully will depend on the Investment Advisor's ability to predict pertinent market movements as well as sufficient correlation among the instruments, which cannot be assured. Strategic Transactions

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subject MIY to the risk that, if the Investment Advisor incorrectly forecasts market values, interest rates or other applicable factors, MIY's performance could suffer. Certain of these Strategic Transactions, such as investments in inverse floating rate securities and credit default swaps, may provide investment leverage to MIY's portfolio. MIY is not required to use derivatives or other portfolio strategies to seek to hedge its portfolio and may choose not to do so.

The use of Strategic Transactions may result in losses greater than if they had not been used, may require MIY to sell or purchase portfolio securities at inopportune times or for prices other than current market values, may limit the amount of appreciation MIY can realize on an investment or may cause MIY to hold a security that it might otherwise sell. Furthermore, MIY may only engage in Strategic Transactions from time to time and may not necessarily be engaging in hedging activities when movements in interest rates occur.

MIY's investment objective and the requirements of Subchapter M of the Code for qualification as a regulated investment company may restrict or affect the ability of MIY to engage in Strategic Transactions. In addition, the use of certain Strategic Transactions may give rise to taxable income and have certain other consequences, such as subjecting a portion of MIY's dividends to regular federal income tax. However, under normal circumstances, MIY does not intend to use Strategic Transactions that give rise to taxable income.

*Put and Call Options on Securities and Indices*. MIY may purchase and sell put and call options on securities and indices. A put option gives the purchaser of the option the right to sell and the writer the obligation to buy the underlying security at the exercise price during the option period. MIY may also purchase and sell options on bond indices ("<u>index options</u>"). Index options are similar to options on securities except that, rather than taking or making delivery of securities underlying the option at a specified price upon exercise, an index option gives the holder the right to receive cash upon exercise of the option if the level of the bond index upon which the option is based is greater, in the case of a call, or less, in the case of a put, than the exercise price of the option. The purchase of a put option on a debt security could protect MIY's holdings in a security or a number of securities against a substantial decline in the market value. A call option gives the purchaser of the option the right to buy and the seller the obligation to sell the underlying security or index at the exercise price during the option period or for a specified period prior to a fixed date. The purchase of a call option on a security could protect MIY against an increase in the price of a security that it intended to purchase in the future.

*Writing Covered Call Options*. MIY is authorized to write (i.e., sell) covered call options with respect to MIY Municipal Bonds it owns, thereby giving the holder of the option the right to buy the underlying security covered by the option from MIY at the stated exercise price until the option expires. MIY writes only covered call options, which means that so long as MIY is obligated as the writer of a call option, it will own the underlying securities subject to the option.

MIY receives a premium from writing a call option, which increases MIY's return on the underlying security in the event the option expires unexercised or is closed out at a profit. By writing a call, MIY limits its opportunity to profit from an increase in the market value of the underlying security above the exercise price of the option for as long as MIY's obligation as a writer continues. Covered call options serve as a partial hedge against a decline in the price of the underlying security. MIY may engage in closing transactions in order to terminate outstanding options that it has written.

*Additional Information About Options*. MIY's ability to close out its position as a purchaser or seller of an exchange-listed put or call option is dependent upon the existence of a liquid secondary market on option exchanges. Among the possible reasons for the absence of a liquid secondary market on an exchange are: (i) insufficient trading interest in certain options; (ii) restrictions on transactions imposed by an exchange; (iii) trading halts, suspensions or other restrictions imposed with respect to particular classes or series of options or underlying securities; (iv) interruption of the normal operations on an exchange; (v) inadequacy of the facilities of an exchange or the Office of the Comptroller of the Currency ("<u>OCC</u>") to handle current trading volume; or (vi) a decision by one or more exchanges to discontinue the trading of options (or a particular class or series of options), in which event the secondary market on that exchange (or in that class or series of options) would cease to exist, although outstanding options on that exchange that had been listed by the OCC as a result of trades on that exchange would generally continue to be exercisable in accordance with their terms. OTC options are purchased from or sold to dealers, financial institutions or other counterparties which have entered into direct agreements with MIY. With OTC options, such variables as expiration date, exercise price

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and premium will be agreed upon between MIY and the counterparty, without the intermediation of a third party such as the OCC. If the counterparty fails to make or take delivery of the securities underlying an option it has written, or otherwise settle the transaction in accordance with the terms of that option as written, MIY would lose the premium paid for the option as well as any anticipated benefit of the transaction. OTC options and assets used to cover OTC options written by MIY are considered by the staff of the SEC to be illiquid. The illiquidity of such options or assets may prevent a successful sale of such options or assets, result in a delay of sale, or reduce the amount of proceeds that might otherwise be realized.

MIY may engage in options and futures transactions on exchanges and options in the over-the-counter markets. MIY will only enter into OTC options with counterparties the Investment Advisor believes to be creditworthy at the time they enter into such transactions.

The hours of trading for options on debt securities may not conform to the hours during which the underlying securities are traded. To the extent that the option markets close before the markets for the underlying securities, significant price and rate movements can take place in the underlying markets that cannot be reflected in the option markets.

*Financial Futures Transactions and Options*. MIY is authorized to purchase and sell certain exchange traded financial futures contracts ("<u>financial futures contracts</u>") in order to hedge its investments against declines in value, and to hedge against increases in the cost of securities it intends to purchase or to seek to enhance MIY's return. However, any transactions involving financial futures or options (including puts and calls associated therewith) will be in accordance with MIY's investment policies and limitations. A financial futures contract obligates the seller of a contract to deliver and the purchaser of a contract to take delivery of the type of financial instrument covered by the contract, or in the case of index-based futures contracts to make and accept a cash settlement, at a specific future time for a specified price. To hedge its portfolio, MIY may take an investment position in a futures contract which will move in the opposite direction from the portfolio position being hedged. A sale of financial futures contracts may provide a hedge against a decline in the value of portfolio securities because such depreciation may be offset, in whole or in part, by an increase in the value of the position in the financial futures contracts. A purchase of financial futures contracts may provide a hedge against an increase in the cost of securities intended to be purchased because such appreciation may be offset, in whole or in part, by an increase in the value of the position in the futures contracts.

Distributions, if any, of net long-term capital gains from certain transactions in futures or options are taxable at long-term capital gains rates for U.S. federal income tax purposes.

*Futures Contracts*. A futures contract is an agreement between two parties to buy and sell a security or, in the case of an index-based futures contract, to make and accept a cash settlement for a set price on a future date. A majority of transactions in futures contracts, however, do not result in the actual delivery of the underlying instrument or cash settlement, but are settled through liquidation, i.e., by entering into an offsetting transaction. Futures contracts have been designed by boards of trade which have been designated "contracts markets" by the CFTC.

The purchase or sale of a futures contract differs from the purchase or sale of a security in that no price or premium is paid or received. Instead, an amount of cash or securities acceptable to the broker and the relevant contract market, which varies, but is generally about 5% of the contract amount, must be deposited with the broker. This amount is known as "initial margin" and represents a "good faith" deposit assuring the performance of both the purchaser and seller under the futures contract. Subsequent payments to and from the broker, called "variation margin," are required to be made on a daily basis as the price of the futures contract fluctuates making the long and short positions in the futures contract more or less valuable, a process known as "marking to the market." At any time prior to the settlement date of the futures contract, the position may be closed out by taking an opposite position that will operate to terminate the position in the futures contract. A final determination of variation margin is then made, additional cash is required to be paid to or released by the broker and the purchaser realizes a loss or gain. In addition, a nominal commission is paid on each completed sale transaction.

MIY may also purchase and sell financial futures contracts on U.S. Government securities as a hedge against adverse changes in interest rates as described below. With respect to U.S. Government securities, currently there are financial futures contracts based on long-term U.S. Treasury bonds, U.S. Treasury notes, Government National Mortgage

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Association Certificates and three-month U.S. Treasury bills. MIY may purchase and write call and put options on futures contracts on U.S. Government securities and purchase and sell Municipal Bond Index futures contracts in connection with its hedging strategies.

MIY also may engage in other futures contracts transactions such as futures contracts on other municipal bond indices that may become available if the Investment Advisor should determine that there is normally a sufficient correlation between the prices of such futures contracts and MIY Municipal Bonds in which MIY invests to make such hedging appropriate.

*Futures Strategies*. MIY may sell a financial futures contract (i.e., assume a short position) in anticipation of a decline in the value of its investments resulting from an increase in interest rates or otherwise. The risk of decline could be reduced without employing futures as a hedge by selling investments and either reinvesting the proceeds in securities with shorter maturities or by holding assets in cash. This strategy, however, entails increased transaction costs in the form of dealer spreads and typically would reduce the average yield of MIY's portfolio securities as a result of the shortening of maturities. The sale of futures contracts provides an alternative means of hedging against declines in the value of its investments. As such values decline, the value of MIY's positions in the futures contracts will tend to increase, thus offsetting all or a portion of the depreciation in the market value of MIY's investments that are being hedged. While MIY will incur commission expenses in selling and closing out futures positions, commissions on futures transactions are typically lower than transaction costs incurred in the purchase and sale of MIY's investments being hedged. In addition, the ability of MIY to trade in the standardized contracts available in the futures markets may offer a more effective defensive position than a program to reduce the average maturity of the portfolio securities due to the unique and varied credit and technical characteristics of the instruments available to MIY. Employing futures as a hedge also may permit MIY to assume a defensive posture without reducing the yield on its investments beyond any amounts required to engage in futures trading.

When MIY intends to purchase a security, MIY may purchase futures contracts as a hedge against any increase in the cost of such security resulting from a decrease in interest rates or otherwise, that may occur before such purchase can be effected. Subject to the degree of correlation between such securities and the futures contracts, subsequent increases in the cost of such securities should be reflected in the value of the futures held by MIY. As such purchases are made, an equivalent amount of futures contracts will be closed out. Due to changing market conditions and interest rate forecasts, however, a futures position may be terminated without a corresponding purchase of portfolio securities.

*Call Options on Futures Contracts*. MIY may also purchase and sell exchange traded call and put options on financial futures contracts. The purchase of a call option on a futures contract is analogous to the purchase of a call option on an individual security. Depending on the pricing of the option compared to either the futures contract upon which it is based or the price of the underlying securities, it may or may not be less risky than ownership of the futures contract or underlying securities. Like the purchase of a futures contract, MIY may purchase a call option on a futures contract to hedge against a market advance when MIY is not fully invested.

The writing of a call option on a futures contract constitutes a partial hedge against declining prices of the securities which are deliverable upon exercise of the futures contract. If the futures price at expiration is below the exercise price, MIY will retain the full amount of the option premium, which provides a partial hedge against any decline that may have occurred in MIY's portfolio holdings.

*Put Options on Futures Contracts*. The purchase of a put option on a futures contract is analogous to the purchase of a protective put option on portfolio securities. MIY may purchase a put option on a futures contract to hedge MIY's portfolio against the risk of rising interest rates.

The writing of a put option on a futures contract constitutes a partial hedge against increasing prices of the securities which are deliverable upon exercise of the futures contract. If the futures price at expiration is higher than the exercise price, MIY will retain the full amount of the option premium, which provides a partial hedge against any increase in the price of securities which MIY intends to purchase.

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The writer of an option on a futures contract is required to deposit initial and variation margin pursuant to requirements similar to those applicable to futures contracts. Premiums received from the writing of an option will be included in initial margin. The writing of an option on a futures contract involves risks similar to those relating to futures contracts.

The CFTC subjects advisers to registered investment companies to regulation by the CFTC if a fund that is advised by the investment adviser either (i) invests, directly or indirectly, more than a prescribed level of its liquidation value in CFTC Derivatives, or (ii) markets itself as providing investment exposure to such instruments. To the extent MIY uses CFTC Derivatives, it intends to do so below such prescribed levels and will not market itself as a "commodity pool" or a vehicle for trading such instruments. Accordingly, the Investment Advisor has claimed an exclusion from the definition of the term "commodity pool operator" under the CEA pursuant to Rule 4.5 under the CEA. The Investment Advisor is not, therefore, subject to registration or regulation as a "commodity pool operator" under the CEA in respect of MIY.

*Interest Rate Transactions*.

MIY may enter into interest rate swaps and the purchase or sale of interest rate caps and floors. MIY expects to enter into these transactions primarily to preserve a return or spread on a particular investment or portion of its portfolio as a duration management technique or to protect against any increase in the price of securities MIY anticipates purchasing at a later date. MIY will ordinarily use these transactions as a hedge or for duration or risk management although it is permitted to enter into them to enhance income or gain. MIY may not sell interest rate caps or floors that it does not own. Interest rate swaps involve the exchange by MIY with another party of their respective commitments to pay or receive interest, e.g., an exchange of floating rate payments for fixed rate payments with respect to a notional amount of principal. The purchase of an interest rate cap entitles the purchaser, to the extent that a specified index exceeds a predetermined interest rate, to receive payments of interest on a notional principal amount from the party selling such interest rate cap. The purchase of an interest rate floor entitles the purchaser, to the extent that a specified index falls below a predetermined interest rate, to receive payments of interest on a notional principal amount from the party selling such interest rate floor.

MIY may enter into interest rate swaps, caps and floors on either an asset-based or liability-based basis, and will usually enter into interest rate swaps on a net basis, i.e., the two payment streams are netted out, with MIY receiving or paying, as the case may be, only the net amount of the two payments on the payment dates. MIY will accrue the net amount of the excess, if any, of MIY's obligations over its entitlements with respect to each interest rate swap on a daily basis and will segregate with a custodian an amount of cash or liquid high grade securities having an aggregate net asset value at all times at least equal to the accrued excess. If there is a default by the other party to such a transaction, MIY will have contractual remedies pursuant to the agreements related to the transaction. The swap market has grown substantially in recent years with a large number of banks and investment banking firms acting both as principals and as agents utilizing standardized swap documentation. Caps and floors are more recent innovations for which standardized documentation has not yet been developed and, accordingly, they are less liquid than swaps.

MIY may enter into interest rate swap transactions such as MMD Swaps or SIFMA Swaps. To the extent that MIY enters into these transactions, MIY expects to do so primarily to preserve a return or spread on a particular investment or portion of its portfolio as a duration management technique or to protect against any increase in the price of securities MIY anticipates purchasing at a later date. MIY may enter into these transactions primarily as a hedge or for duration or risk management rather than as a speculative investment. However, MIY also may invest in MMD Swaps and SIFMA Swaps to seek to enhance return or gain or to increase MIY's yield, for example, during periods of steep interest rate yield curves (i.e., wide differences between short-term and long-term interest rates).

MIY may purchase and sell SIFMA Swaps in the SIFMA swap market. In a SIFMA Swap, MIY exchanges with another party their respective commitments to pay or receive interest (e.g., an exchange of fixed rate payments for floating rate payments linked to the SIFMA Municipal Swap Index). Because the underlying index is a tax-exempt index, SIFMA Swaps may reduce cross-market risks incurred by MIY and increase MIY's ability to hedge effectively. SIFMA Swaps are typically quoted for the entire yield curve, beginning with a seven day floating rate index out to 30 years. The duration of a SIFMA Swap is approximately equal to the duration of a fixed-rate MIY Municipal Bond with the same attributes as the swap (e.g., coupon, maturity, call feature).

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MIY may also purchase and sell MMD Swaps, also known as MMD rate locks. An MMD Swap permits MIY to lock in a specified municipal interest rate for a portion of its portfolio to preserve a return on a particular investment or a portion of its portfolio as a duration management technique or to protect against any increase in the price of securities to be purchased at a later date. By using an MMD Swap, MIY can create a synthetic long or short position, allowing MIY to select the most attractive part of the yield curve. An MMD Swap is a contract between MIY and an MMD Swap provider pursuant to which the parties agree to make payments to each other on a notional amount, contingent upon whether the Municipal Market Data AAA General Obligation Scale is above or below a specified level on the expiration date of the contract. For example, if MIY buys an MMD Swap and the Municipal Market Data AAA General Obligation Scale is below the specified level on the expiration date, the counterparty to the contract will make a payment to MIY equal to the specified level minus the actual level, multiplied by the notional amount of the contract. If the Municipal Market Data AAA General Obligation Scale is above the specified level on the expiration date, MIY will make a payment to the counterparty equal to the actual level minus the specified level, multiplied by the notional amount of the contract.

In connection with investments in SIFMA and MMD Swaps, there is a risk that municipal yields will move in the opposite direction than anticipated by MIY, which would cause MIY to make payments to its counterparty in the transaction that could adversely affect MIY's performance.

MIY has no obligation to enter into SIFMA Swaps or MMD Swaps and may elect not to do so. The net amount of the excess, if any, of MIY's obligations over its entitlements with respect to each interest rate swap will be accrued on a daily basis, and MIY will segregate or designate on its books and records liquid assets having an aggregate NAV at least equal to the accrued excess.

If there is a default by the other party to an uncleared interest rate swap transaction, generally MIY will have contractual remedies pursuant to the agreements related to the transaction. With respect to interest rate swap transactions cleared through a central clearing counterparty, a clearing organization will be substituted for the counterparty and will guarantee the parties' performance under the swap agreement. However, there can be no assurances that the clearing organization will satisfy its obligation to MIY or that MIY would be able to recover the full amount of assets deposited on its behalf with the clearing organization in the event of the default by the clearing organization or MIY's clearing broker. Certain U.S. federal income tax requirements may limit MIY's ability to engage in interest rate swaps. Distributions attributable to transactions in interest rate swaps generally will be taxable as ordinary income to shareholders.

*Counterparty Credit Standards*.

To the extent that MIY engages in principal transactions, including, but not limited to, OTC options, forward currency transactions, swap transactions, repurchase and reverse repurchase agreements and the purchase and sale of bonds and other fixed-income securities, it must rely on the creditworthiness of its counterparties under such transactions. In certain instances, the credit risk of a counterparty is increased by the lack of a central clearing house for certain transactions, including certain swap contracts. In the event of the insolvency of a counterparty, MIY may not be able to recover its assets, in full or at all, during the insolvency process. Counterparties to investments may have no obligation to make markets in such investments and may have the ability to apply essentially discretionary margin and credit requirements. Similarly, MIY will be subject to the risk of bankruptcy of, or the inability or refusal to perform with respect to such investments by, the counterparties with which it deals. The Investment Advisor will seek to minimize MIY's exposure to counterparty risk by entering into such transactions with counterparties the Investment Advisor believes to be creditworthy at the time it enters into the transaction. Certain option transactions and Strategic Transactions may require MIY to provide collateral to secure its performance obligations under a contract, which would also entail counterparty credit risk.

**Other Investment Policies** 

MIY has adopted certain other policies as set forth below.

*Index and Inverse Securities* 

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MIY may invest in MIY Municipal Bonds yielding a return based on a particular index of value or interest rates. Also, MIY may invest in so-called "inverse floating obligations" or "residual interest bonds" on which the interest rates typically vary inversely with a short-term floating rate (which may be reset periodically by a dutch auction, a remarketing agent, or by reference to a short-term tax-exempt interest rate index). MIY may purchase synthetically-created inverse floating obligations evidenced by custodial or trust receipts.

*Call Rights* 

MIY may purchase a MIY Municipal Bond issuer's right to call all or a portion of such MIY Municipal Bond for mandatory tender for purchase (a "Call Right"). A holder of a Call Right may exercise such right to require a mandatory tender for the purchase of related MIY Municipal Bonds, subject to certain conditions. A Call Right that is not exercised prior to maturity of the related MIY Municipal Bond will expire without value. The economic effect of holding both the Call Right and the related MIY Municipal Bond is identical to holding a MIY Municipal Bond as a non-callable security. Certain investments in such obligations may be illiquid.

*Repurchase Agreements* 

MIY may invest in securities pursuant to repurchase agreements. Repurchase agreements may be entered into only with a member bank of the Federal Reserve System or a primary dealer or an affiliate thereof, in U.S. Government securities. A repurchase agreement is a contractual agreement whereby the seller of securities agrees to repurchase the same security at a specified price on a future date agreed upon by the parties. The agreed-upon repurchase price determines the yield during MIY's holding period. Repurchase agreements are considered to be loans collateralized by the underlying security that is the subject of the repurchase contract. The risk to MIY is limited to the ability of the issuer to pay the agreed-upon repurchase price on the delivery date; however, although the value of the underlying collateral at the time the transaction is entered into always equals or exceeds the agreed-upon repurchase price, if the value of the collateral declines there is a risk of loss of both principal and interest. In the event of default, the collateral may be sold but MIY might incur a loss if the value of the collateral declines, and might incur disposition costs or experience delays in connection with liquidating the collateral. In addition, if bankruptcy proceedings are commenced with respect to the seller of the security, realization upon the collateral by MIY may be delayed or limited. The Investment Advisor will monitor the value of the collateral at the time the transaction is entered into and throughout the term of the repurchase agreement in an effort to determine that such value always equals or exceeds the agreed-upon repurchase price. In the event the value of the collateral declines below the repurchase price, the Investment Advisor will demand additional collateral from the issuer to increase the value of the collateral to at least that of the repurchase price, including interest.

In general, for federal income tax purposes, repurchase agreements are treated as collateralized loans secured by the securities "sold." Therefore, amounts earned under such agreements will not be considered tax exempt interest. The treatment of purchase and sales contracts is less certain.

*Temporary Investments* 

MIY may invest in short-term tax-exempt and taxable securities subject to the limitations set forth above. The tax-exempt money market securities may include municipal notes, municipal commercial paper, MIY Municipal Bonds with a remaining maturity of less than one year, variable rate demand notes and participations therein. Municipal notes include tax anticipation notes, bond anticipation notes, revenue anticipation notes and grant anticipation notes. Anticipation notes are sold as interim financing in anticipation of tax collection, bond sales, government grants or revenue receipts. Municipal commercial paper refers to short-term unsecured promissory notes generally issued to finance short-term credit needs. The taxable money market securities in which MIY may invest as Temporary Investments consist of U.S. Government securities, U.S. Government agency securities, domestic bank or savings institution certificates of deposit and bankers' acceptances, short-term corporate debt securities such as commercial paper and repurchase agreements. These Temporary Investments must have a stated maturity not in excess of one year from the date of purchase. MIY may not invest in any security issued by a commercial bank or a savings institution unless the bank or institution is organized and operating in the United States, has total assets of at least one billion dollars and is a member of the Federal Deposit Insurance Corporation ("FDIC"), except that up to 10% of total assets may be invested in certificates of deposit of smaller institutions if such certificates are fully insured by the FDIC.

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Short-term taxable fixed income investments include, without limitation, the following:

(1) U.S. Government securities, including bills, notes and bonds differing as to maturity and rates of interest that are either issued or guaranteed by the U.S. Treasury or by U.S. Government agencies or instrumentalities. U.S. Government securities include securities issued by (a) the Federal Housing Administration, Farmers Home Administration, Export-Import Bank of the United States, Small Business Administration, and the Government National Mortgage Association, whose securities are supported by the full faith and credit of the United States; (b) the Federal Home Loan Banks, Federal Intermediate Credit Banks, and the Tennessee Valley Authority, whose securities are supported by the right of the agency to borrow from the U.S. Treasury; (c) the Federal National Mortgage Association, whose securities are supported by the discretionary authority of the U.S. Government to purchase certain obligations of the agency or instrumentality; and (d) the Student Loan Marketing Association, whose securities are supported only by its credit. While the U.S. Government provides financial support to such U.S. Government-sponsored agencies or instrumentalities, no assurance can be given that it always will do so since it is not so obligated by law. The U.S. Government, its agencies and instrumentalities do not guarantee the market value of their securities. Consequently, the value of such securities may fluctuate.

(2) Certificates of deposit issued against funds deposited in a bank or a savings and loan association. Such certificates are for a definite period of time, earn a specified rate of return, and are normally negotiable. The issuer of a certificate of deposit agrees to pay the amount deposited plus interest to the bearer of the certificate on the date specified thereon. Certificates of deposit purchased by MIY may not be fully insured by the Federal Deposit Insurance Corporation.

(3) Repurchase agreements, which involve purchases of debt securities. At the time MIY purchases securities pursuant to a repurchase agreement, it simultaneously agrees to resell and redeliver such securities to the seller, who also simultaneously agrees to buy back the securities at a fixed price and time. This assures a predetermined yield for MIY during its holding period, since the resale price is always greater than the purchase price and reflects an agreed-upon market rate. Such actions afford an opportunity for MIY to invest temporarily available cash. MIY may enter into repurchase agreements only with respect to obligations of the U.S. Government, its agencies or instrumentalities; certificates of deposit; or bankers' acceptances in which MIY may invest. Repurchase agreements may be considered loans to the seller, collateralized by the underlying securities. The risk to MIY is limited to the ability of the seller to pay the agreed-upon sum on the repurchase date; in the event of default, the repurchase agreement provides that MIY is entitled to sell the underlying collateral. If the value of the collateral declines after the agreement is entered into, and if the seller defaults under a repurchase agreement when the value of the underlying collateral is less than the repurchase price, MIY could incur a loss of both principal and interest. The Investment Advisors monitors the value of the collateral at the time the action is entered into and at all times during the term of the repurchase agreement. The Investment Advisors does so in an effort to determine that the value of the collateral always equals or exceeds the agreed-upon repurchase price to be paid to MIY. If the seller were to be subject to a federal bankruptcy proceeding, the ability of MIY to liquidate the collateral could be delayed or impaired because of certain provisions of the bankruptcy laws.

(4) Commercial paper, which consists of short-term unsecured promissory notes, including variable rate master demand notes issued by corporations to finance their current operations. Master demand notes are direct lending arrangements between MIY and a corporation. There is no secondary market for such notes. However, they are redeemable by MIY at any time. The Investment Advisor will consider the financial condition of the corporation (e.g., earning power, cash flow and other liquidity ratios) and will continuously monitor the corporation's ability to meet all of its financial obligations, because MIY's liquidity might be impaired if the corporation were unable to pay principal and interest on demand. Investments in commercial paper will be limited to commercial paper rated in the highest categories by a major rating agency and which mature within one year of the date of purchase or carry a variable or floating rate of interest.

Short-term tax-exempt fixed income securities are securities that are exempt from regular federal income tax and mature within three years or less from the date of issuance. Short-term tax-exempt fixed income securities include, without limitation, the following:

Bond Anticipation Notes ("BANs") are usually general obligations of state and local governmental issuers which are sold to obtain interim financing for projects that will eventually be funded through the sale of long-term debt

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obligations or bonds. The ability of an issuer to meet its obligations on its BANs is primarily dependent on the issuer's access to the long-term municipal bond market and the likelihood that the proceeds of such bond sales will be used to pay the principal and interest on the BANs.

Tax Anticipation Notes ("TANs") are issued by state and local governments to finance the current operations of such governments. Repayment is generally to be derived from specific future tax revenues. TANs are usually general obligations of the issuer. A weakness in an issuer's capacity to raise taxes due to, among other things, a decline in its tax base or a rise in delinquencies could adversely affect the issuer's ability to meet its obligations on outstanding TANs.

Revenue Anticipation Notes ("RANs") are issued by governments or governmental bodies with the expectation that future revenues from a designated source will be used to repay the notes. In general, they also constitute general obligations of the issuer. A decline in the receipt of projected revenues, such as anticipated revenues from another level of government, could adversely affect an issuer's ability to meet its obligations on outstanding RANs. In addition, the possibility that the revenues would, when received, be used to meet other obligations could affect the ability of the issuer to pay the principal and interest on RANs.

Construction Loan Notes are issued to provide construction financing for specific projects. Frequently, these notes are redeemed with funds obtained from the Federal Housing Administration.

Bank Notes are notes issued by local government bodies and agencies to commercial banks as evidence of borrowings. The purposes for which the notes are issued are varied but they are frequently issued to meet short-term working capital or capital-project needs. These notes may have risks similar to the risks associated with TANs and RANs.

Tax-Exempt Commercial Paper ("municipal paper") represents very short-term unsecured, negotiable promissory notes, issued by states, municipalities and their agencies. Payment of principal and interest on issues of municipal paper may be made from various sources, to the extent the funds are available therefrom. Maturities on municipal paper generally will be shorter than the maturities of TANs, BANs or RANs. There is a limited secondary market for issues of municipal paper.

Certain municipal bonds may carry variable or floating rates of interest whereby the rate of interest is not fixed but varies with changes in specified market rates or indices, such as a bank prime rate or tax-exempt money market indices.

While the various types of notes described above as a group represent the major portion of the tax-exempt note market, other types of notes are available in the marketplace and MIY may invest in such other types of notes to the extent permitted under its investment objective, policies and limitations. Such notes may be issued for different purposes and may be secured differently from those mentioned above.

**Leverage** 

MIY currently leverages its assets through the use of preferred shares and residual interest municipal TOBs. MIY currently does not intend to borrow money or issue debt securities. Although it has no present intention to do so, MIY reserves the right to borrow money from banks or other financial institutions, or issue debt securities, in the future if it believes that market conditions would be conducive to the successful implementation of a leveraging strategy through borrowing money or issuing debt securities. Any such leveraging will not be fully achieved until the proceeds resulting from the use of leverage have been invested in accordance with MIY's investment objective and policies. MIY is authorized to borrow money in amounts of up to 5% of the value of its total assets at the time of such borrowings; provided, however, that MIY is authorized to borrow moneys in amounts of up to 33 1/3% of the value of its total assets at the time of such borrowings to finance the repurchase of its own common shares pursuant to tender offers or otherwise to redeem or repurchase preferred shares.

The use of leverage can create risks. When leverage is employed, the NAV and market price of the common shares and the yield to holders of common shares will be more volatile than if leverage were not used. Changes in the value of MIY's portfolio, including securities bought with the proceeds of leverage, will be borne entirely by the holders of common shares. If there is a net decrease or increase in the value of MIY's investment portfolio, leverage will decrease

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or increase, as the case may be, the NAV per common share to a greater extent than if MIY did not utilize leverage. A reduction in MIY's NAV may cause a reduction in the market price of its shares. During periods in which MIY is using leverage, the fee paid to the Investment Advisor for advisory services will be higher than if MIY did not use leverage, because the fees paid will be calculated on the basis of MIY's Net Assets, which includes the proceeds from leverage. MIY's leveraging strategy may not be successful.

Certain types of leverage MIY may use may result in MIY being subject to covenants relating to asset coverage and portfolio composition requirements. MIY may be subject to certain restrictions on investments imposed by one or more lenders or by guidelines of one or more rating agencies, which may issue ratings for any short-term debt securities or preferred shares issued by MIY. The terms of any borrowings or rating agency guidelines may impose asset coverage or portfolio composition requirements that are more stringent than those imposed by the 1940 Act. The Investment Advisor does not believe that these covenants or guidelines will impede it from managing MIY's portfolio in accordance with its investment objective and policies if MIY were to utilize leverage.

Under the 1940 Act, MIY is not permitted to issue senior securities if, immediately after the issuance of such senior securities, MIY would have an asset coverage ratio (as defined in the 1940 Act) of less than 300% with respect to senior securities representing indebtedness (*i.e.*, for every dollar of indebtedness outstanding, MIY is required to have at least three dollars of assets) or less than 200% with respect to senior securities representing preferred shares (*i.e.*, for every dollar of preferred shares outstanding, MIY is required to have at least two dollars of assets). The 1940 Act also provides that MIY may not declare distributions or purchase its stock (including through tender offers) if, immediately after doing so, it will have an asset coverage ratio of less than 300% or 200%, as applicable. Under the 1940 Act, certain short-term borrowings (such as for cash management purposes) are not subject to these limitations if (i) repaid within 60 days, (ii) not extended or renewed and (iii) not in excess of 5% of the total assets of MIY.

*Preferred Shares.* MIY has leveraged its portfolio by issuing preferred shares. Under the 1940 Act, MIY is not permitted to issue preferred shares if, immediately after such issuance, the liquidation value of MIY's outstanding preferred shares exceeds 50% of its assets (including the proceeds from the issuance) less liabilities other than borrowings (*i.e.*, the value of MIY's assets must be at least 200% of the liquidation value of its outstanding preferred shares). In addition, MIY 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 MIY's assets less liabilities other than borrowings is at least 200% of such liquidation value.

For tax purposes, MIY 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, MIY 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 MIY's leveraged structure to common shareholders will be reduced.

*Tender Option Bond Transactions.* MIY currently leverages its assets through the use of TOB Residuals, which are derivative interests in municipal bonds. The TOB Residuals in which MIY 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 MIY. Although volatile, TOB Residuals typically offer the potential for yields exceeding the yields available on fixed rate municipal bonds with comparable credit quality.

TOB Residuals represent beneficial interests in a TOB Trust. 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 the fund(s) that transferred municipal bonds to the TOB Trust. MIY may invest in both TOB Floaters and TOB Residuals. TOB Floaters may have first priority on the cash flow from the municipal bonds held by the TOB Trust and are enhanced with a liquidity support arrangement from TOBs Liquidity Provider which allows holders to tender their

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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). 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 are typically supported by a liquidity facility provided by a TOBs Liquidity Provider that allows the holders of the TOB Floaters to tender their TOB Floaters in exchange for payment of par plus accrued interest on any business day (subject to the non-occurrence of a termination event). The tendered TOB Floaters are remarketed by a remarketing agent. In the event of a failed remarketing, the TOB Trust may draw upon a loan from the TOBs Liquidity Provider to purchase the tendered TOB Floaters. Any loans made by the TOBs Liquidity Provider will be secured by the purchased TOB Floaters held by the TOB Trust and will be subject to an increased interest rate based on number of days the loan is outstanding.

MIY may invest in a TOB Trust on either a non-recourse or recourse basis. When MIY invests in TOB Trusts on a non-recourse basis, and the TOBs Liquidity Provider is required to make a payment under the liquidity facility, the

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TOBs Liquidity Provider will typically liquidate all or a portion of the municipal bonds held in the TOB Trust and then fund the balance, if any, of the Liquidation Shortfall. If MIY invests in a TOB Trust on a recourse basis, it will typically enter into a reimbursement agreement with the TOBs Liquidity Provider pursuant to which MIY is required to reimburse the TOBs Liquidity Provider the amount of any Liquidation Shortfall. As a result, if MIY invests in a recourse TOB Trust, MIY will bear the risk of loss with respect to any Liquidation Shortfall. If multiple BlackRock-advised Funds participate in any such TOB Trust, these losses will be shared ratably, in proportion to their participation in the TOB Trust.

Under accounting rules, MIY Municipal Bonds of MIY that are deposited into a TOB Trust are investments of MIY and are presented on MIY's Schedule of Investments and outstanding TOB Floaters issued by a TOB Trust are presented as liabilities in MIY's Statement of Assets and Liabilities. Interest income from the underlying MIY Municipal Bonds is recorded by MIY on an accrual basis. Interest expense incurred on the TOB Floaters and other expenses related to remarketing, administration, trustee and other services to a TOB Trust are reported as expenses of MIY. In addition, under accounting rules, loans made to a TOB Trust sponsored by MIY may be presented as loans of MIY in MIY's financial statements even if there is no recourse to MIY's assets.

For TOB Floaters, generally, the interest rate earned will be based upon the market rates for municipal bonds with maturities or remarketing provisions that are comparable in duration to the periodic interval of the tender option. Since the tender option feature has a shorter term than the final maturity or first call date of the underlying municipal bonds deposited in the TOB Trust, the holder of the TOB Floaters relies upon the terms of the agreement with the financial institution furnishing the liquidity facility as well as the credit strength of that institution. The perceived reliability and creditworthiness, of many major financial institutions, some of which sponsor and/or provide liquidity support to TOB Trusts increases the risk associated with TOB Floaters. This in turn may reduce the desirability of TOB Floaters as investments, which could impair the viability or availability of TOB Trusts.

Rule 18f-4 under the 1940 Act permits MIY to enter into TOB Trust transactions and similar financing transactions (e.g., borrowed bonds) notwithstanding the limitation on the issuance of senior securities in Section 18 of the 1940 Act, provided that MIY either (i) complies with the 300% asset coverage ratio applicable to senior securities representing indebtedness with respect to such transactions and any other borrowings in the aggregate, or (ii) treats such transactions as derivatives transactions under Rule 18f-4. Future regulatory requirements or SEC guidance may necessitate more onerous contractual or regulatory requirements, which may increase the costs or reduce the degree of potential economic benefits of TOB Trust transactions or limit MIY's ability to enter into or manage TOB Trust transactions.

See "Risk Factors and Special Considerations—General Risks of Investing in the Acquiring Fund—Tender Option Bond Risk" for a description of the risks involved with a TOB issuer.

*Credit Facility.* MIY is permitted to leverage its portfolio by entering into one or more credit facilities. If MIY enters into a credit facility, MIY may be required to prepay outstanding amounts or incur a penalty rate of interest upon the occurrence of certain events of default. MIY would also likely have to indemnify the lenders under the credit facility against liabilities they may incur in connection therewith. In addition, MIY expects that any credit facility would contain covenants that, among other things, likely would limit MIY's ability to pay distributions in certain circumstances, incur additional debt, change certain of its investment policies and engage in certain transactions, including mergers and consolidations, and require asset coverage ratios in addition to those required by the 1940 Act. MIY may be required to pledge its assets and to maintain a portion of its assets in cash or high-grade securities as a reserve against interest or principal payments and expenses. MIY expects that any credit facility would have customary covenant, negative covenant and default provisions. There can be no assurance that MIY will enter into an agreement for a credit facility, or one on terms and conditions representative of the foregoing, or that additional material terms will not apply. In addition, if entered into, a credit facility may in the future be replaced or refinanced by one or more credit facilities having substantially different terms or by the issuance of preferred shares.

*Derivatives.* MIY may enter into derivative transactions that have leverage embedded in them. Derivative transactions that MIY may enter into and the risks associated with them are described elsewhere and are also referred to as "<u>Strategic Transactions</u>." MIY cannot assure you that investments in derivative transactions that have leverage embedded in them will result in a higher return on its common shares. Under Rule 18f-4 under the 1940 Act, among

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other things, MIY must either use derivatives in a limited manner or comply with an outer limit on fund leverage risk based on value-at-risk.

*Temporary Borrowings.* MIY may also borrow money as a temporary measure for extraordinary or emergency purposes, including the payment of dividends and the settlement of securities transactions which otherwise might require untimely dispositions of MIY securities.

**MVF's Investment Objective and Policies** 

MVF's investment objective is to provide stockholders with as high a level of current income exempt from federal income taxes as is consistent with its investment policies and prudent investment management. MVF's investment policies provide that it seeks to achieve its investment objective by investing, as a fundamental policy, at least 80% of an aggregate of MVF's net assets (including proceeds from the issuance of preferred stock), and the proceeds of any borrowings for investment purposes, in a portfolio of municipal obligations issued by or on behalf of states, territories and possessions of the United States and their political subdivisions, agencies or instrumentalities, each of which pays interest that, in the opinion of bond counsel to the issuer, is excludable from gross income for federal income tax purposes (except that the interest may be includable in taxable income for purposes of the Federal alternative minimum tax) ("<u>MVF Municipal Bonds</u>"). MVF may invest directly in securities or synthetically through the use of derivatives. There can be no assurance that MVF's investment objective will be realized.

MVF may invest up to 20% of its managed assets in securities that are rated below investment grade, or are considered by the Investment Advisor to be of comparable quality, at the time of purchase, subject to MVF's other investment policies. Bonds of below investment grade quality are regarded as having predominantly speculative characteristics with respect to the issuer's capacity to pay interest and repay principal. Such securities, sometimes referred to as "high yield" or "junk" bonds, are predominantly speculative with respect to the capacity to pay interest and repay principal in accordance with the terms of the security and generally involve a greater volatility of price than securities in higher rating categories. Below investment grade securities and comparable unrated securities involve substantial risk of loss, are considered speculative with respect to the issuer's ability to pay interest and any required redemption or principal payments and are susceptible to default or decline in market value due to adverse economic and business developments.

MVF's investment objective and its policy of investing at least 80% of an aggregate of MVF's net assets (including proceeds from the issuance of any preferred stock) and the proceeds of any borrowings for investment purposes, in MVF Municipal Bonds are fundamental policies that may not be changed without the approval of the holders of a majority of the outstanding common stock and the outstanding preferred shares, including the VMTP Shares, voting together as a single class, and of the holders of a majority of the outstanding preferred shares, including the VMTP Shares, voting as a separate class. A majority of the outstanding means (1) 67% or more of the stock present at a meeting, if the holders of more than 50% of the outstanding stock are present or represented by proxy, or (2) more than 50% of the outstanding stock, whichever is less.

MVF's credit quality policies apply only at the time a security is purchased, and MVF is not required to dispose of a security if a rating agency downgrades its assessment of the credit characteristics of a particular issue. In determining whether to retain or sell a security that a rating agency has downgraded, the Investment Advisor may consider such factors as the Investment Advisor's assessment of the credit quality of the issuer of the security, the price at which the security could be sold and the rating, if any, assigned to the security by other rating agencies. In the event that MVF disposes of a portfolio security subsequent to its being downgraded, MVF may experience a greater risk of loss than if such security had been sold prior to such downgrade.

MVF may also purchase MVF Municipal Bonds that are additionally secured by insurance, bank credit agreements or escrow accounts. The credit quality of companies which provide these credit enhancements will affect the value of those securities. Although the insurance feature reduces certain financial risks, the premiums for insurance and the higher market price paid for insured obligations may reduce MVF's income. The insurance feature does not guarantee the market value of the insured obligations or the net asset value of the common stock. MVF may purchase insured bonds and may purchase insurance for bonds in its portfolio.

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MVF may invest in certain tax exempt securities classified as PABs (in general, bonds that benefit non-governmental entities) that may subject certain investors in MVF to an alternative minimum tax. The percentage of MVF's total assets invested in PABs will vary from time to time. MVF has not established any limit on the percentage of its portfolio that may be invested in MVF Municipal Bonds subject to the federal alternative minimum tax provisions of federal tax law, and MVF expects that a portion of the income it produces will be includable in alternative minimum taxable income.

MVF also may not invest more than 25% of its total assets (taken at market value at the time of each investment) in MVF Municipal Bonds whose issuers are located in the same state.

The average maturity of MVF's portfolio securities varies from time to time based upon an assessment of economic and market conditions by the Investment Advisor. MVF's portfolio at any given time may include both long-term, intermediate-term and short-term MVF Municipal Bonds.

MVF's stated expectation is that it will invest in MVF Municipal Bonds that, in the Investment Advisor's opinion, are underrated or undervalued. Underrated MVF Municipal Bonds are those whose ratings do not, in the opinion of the Investment Advisor, reflect their true higher creditworthiness. Undervalued MVF Municipal Bonds are bonds that, in the opinion of the Investment Advisor, are worth more than the value assigned to them in the marketplace. The Investment Advisor may at times believe that bonds associated with a particular municipal market sector (for example, but not limited to electric utilities), or issued by a particular municipal issuer, are undervalued. The Investment Advisor may purchase those bonds for MVF's portfolio because they represent a market sector or issuer that the Investment Advisor considers undervalued, even if the value of those particular bonds appears to be consistent with the value of similar bonds. MVF Municipal Bonds of particular types (for example, but not limited to hospital bonds, industrial revenue bonds or bonds issued by a particular municipal issuer) may be undervalued because there is a temporary excess of supply in that market sector, or because of a general decline in the market price of MVF Municipal Bonds of the market sector for reasons that do not apply to the particular MVF Municipal Bonds that are considered undervalued. MVF's investment in underrated or undervalued MVF Municipal Bonds will be based on the Investment Advisor's belief that their yield is higher than that available on bonds bearing equivalent levels of interest rate risk, credit risk and other forms of risk, and that their prices will ultimately rise, relative to the market, to reflect their true value. Any capital appreciation realized by MVF will generally result in capital gain distributions subject to federal capital gains taxation.

MVF ordinarily does not intend to realize significant investment income not exempt from federal income tax. From time to time, MVF may realize taxable capital gains.

Federal tax legislation has limited the types and volume of bonds the interest on which qualifies for a federal income tax exemption. As a result, this legislation and legislation that may be enacted in the future may affect the availability of MVF Municipal Bonds for investment by MVF.

**Description of MVF Municipal Bonds** 

See "The Acquiring Fund's Investments – Description of MYI Municipal Bonds" for additional information regarding the types of municipal bonds in which MVF invests.

**Temporary Investments** 

During temporary defensive periods (e.g., times when, in Investment Advisor's opinion, temporary imbalances of supply and demand or other temporary dislocations in the tax-exempt bond market adversely affect the price at which long-term or intermediate-term MVF Municipal Bonds are available), and in order to keep cash on hand fully invested, MVF may invest up to 100% of its total assets in liquid, short-term investments including high quality, short-term securities which may be either tax-exempt or taxable and securities of other open- or closed-end investment companies that invest primarily in MVF Municipal Bonds of the type in which MVF may invest directly. MVF intends to invest in taxable short-term investments only in the event that suitable tax-exempt temporary investments are not available at reasonable prices and yields. MVF's stated expectation is that it will invest only in taxable temporary investments which are U.S. government securities and which mature within one year from the date of purchase or carry a variable or floating rate of interest (such short-term obligations being referred to herein

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as "Temporary Investments"). Temporary Investments of MVF may include certificates of deposit issued by U.S. banks with assets of at least $1 billion, commercial paper or corporate notes, bonds or debentures with a remaining maturity of one year or less, or repurchase agreements. See "Repurchase Agreements." To the extent MVF invests in Temporary Investments, MVF will not at such times be in a position to achieve its investment objective of tax-exempt income.

Short-term taxable fixed income investments include, without limitation, the following:

(1) U.S. Government securities, including bills, notes and bonds differing as to maturity and rates of interest that are either issued or guaranteed by the U.S. Treasury or by U.S. Government agencies or instrumentalities. U.S. Government securities include securities issued by (a) the Federal Housing Administration, Farmers Home Administration, Export-Import Bank of the United States, Small Business Administration, and the Government National Mortgage Association, whose securities are supported by the full faith and credit of the United States; (b) the Federal Home Loan Banks, Federal Intermediate Credit Banks, and the Tennessee Valley Authority, whose securities are supported by the right of the agency to borrow from the U.S. Treasury; (c) the Federal National Mortgage Association, whose securities are supported by the discretionary authority of the U.S. Government to purchase certain obligations of the agency or instrumentality; and (d) the Student Loan Marketing Association, whose securities are supported only by its credit. While the U.S. Government provides financial support to such U.S. Government- sponsored agencies or instrumentalities, no assurance can be given that it always will do so since it is not so obligated by law. The U.S. Government, its agencies and instrumentalities do not guarantee the market value of their securities. Consequently, the value of such securities may fluctuate.

(2) Certificates of deposit issued against funds deposited in a bank or a savings and loan association. Such certificates are for a definite period of time, earn a specified rate of return, and are normally negotiable. The issuer of a certificate of deposit agrees to pay the amount deposited plus interest to the bearer of the certificate on the date specified thereon. Certificates of deposit purchased by MVF may not be fully insured by the Federal Deposit Insurance Corporation.

(3) Repurchase agreements, which involve purchases of debt securities. At the time MVF purchases securities pursuant to a repurchase agreement, it simultaneously agrees to resell and redeliver such securities to the seller, who also simultaneously agrees to buy back the securities at a fixed price and time. This assures a predetermined yield for MVF during its holding period, since the resale price is always greater than the purchase price and reflects an agreed-upon market rate. Such actions afford an opportunity for MVF to invest temporarily available cash. MVF may enter into repurchase agreements only with respect to obligations of the U.S. Government, its agencies or instrumentalities; certificates of deposit; or bankers' acceptances in which MVF may invest. Repurchase agreements may be considered loans to the seller, collateralized by the underlying securities. The risk to MVF is limited to the ability of the seller to pay the agreed-upon sum on the repurchase date; in the event of default, the repurchase agreement provides that MVF is entitled to sell the underlying collateral. If the value of the collateral declines after the agreement is entered into, and if the seller defaults under a repurchase agreement when the value of the underlying collateral is less than the repurchase price, MVF could incur a loss of both principal and interest. The Investment Advisor monitors the value of the collateral at the time the action is entered into and at all times during the term of the repurchase agreement. The Investment Advisor does so in an effort to determine that the value of the collateral always equals or exceeds the agreed-upon repurchase price to be paid to MVF. If the seller were to be subject to a federal bankruptcy proceeding, the ability of MVF to liquidate the collateral could be delayed or impaired because of certain provisions of the bankruptcy laws.

(4) Commercial paper, which consists of short-term unsecured promissory notes, including variable rate master demand notes issued by corporations to finance their current operations. Master demand notes are direct lending arrangements between MVF and a corporation. There is no secondary market for such notes. However, they are redeemable by MVF at any time. The Investment Advisor will consider the financial condition of the corporation (e.g., earning power, cash flow and other liquidity ratios) and will continuously monitor the corporation's ability to meet all of its financial obligations, because MVF's liquidity might be impaired if the corporation were unable to pay principal and interest on demand. MVF's stated expectation is that its investments in commercial paper will be limited to commercial paper rated in the highest categories by a major rating agency and which mature within one year of the date of purchase or carry a variable or floating rate of interest.

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Tax-exempt temporary investments include various obligations issued by state and local governmental issuers, such as tax-exempt notes (bond anticipation notes, tax anticipation notes and revenue anticipation notes or other such

MVF Municipal Bonds maturing in three years or less from the date of issuance) and municipal commercial paper. Short-term tax-exempt fixed income securities include, without limitation, the following:

Bond Anticipation Notes ("BANs") are usually general obligations of state and local governmental issuers which are sold to obtain interim financing for projects that will eventually be funded through the sale of long-term debt obligations or bonds. The ability of an issuer to meet its obligations on its BANs is primarily dependent on the issuer's access to the long-term municipal bond market and the likelihood that the proceeds of such bond sales will be used to pay the principal and interest on the BANs.

Tax Anticipation Notes ("TANs'") are issued by state and local governments to finance the current operations of such governments. Repayment is generally to be derived from specific future tax revenues. TANs are usually general obligations of the issuer. A weakness in an issuer's capacity to raise taxes due to, among other things, a decline in its tax base or a rise in delinquencies could adversely affect the issuer's ability to meet its obligations on outstanding TANs.

Revenue Anticipation Notes ("RANs") are issued by governments or governmental bodies with the expectation that future revenues from a designated source will be used to repay the notes. In general, they also constitute general obligations of the issuer. A decline in the receipt of projected revenues, such as anticipated revenues from another level of government, could adversely affect an issuer's ability to meet its obligations on outstanding RANs. In addition, the possibility that the revenues would, when received, be used to meet other obligations could affect the ability of the issuer to pay the principal and interest on RANs

Construction Loan Notes are issued to provide construction financing for specific projects. Frequently, these notes are redeemed with funds obtained from the Federal Housing Administration.

Bank Notes are notes issued by local government bodies and agencies to commercial banks as evidence of borrowings. The purposes for which the notes are issued are varied but they are frequently issued to meet short-term working capital or capital-project needs. These notes may have risks similar to the risks associated with TANs and RANs.

Tax-Exempt Commercial Paper ("municipal paper") represents very short-term unsecured, negotiable promissory notes, issued by states, municipalities and their agencies. Payment of principal and interest on issues of municipal paper may be made from various sources, to the extent MVFs are available therefrom. Maturities on municipal paper generally will be shorter than the maturities of TANs, BANs or RANs. There is a limited secondary market for issues of municipal paper.

VRDOs are tax-exempt obligations that contain a floating or variable interest rate adjustment formula and right of demand on the part of the holder thereof to receive payment of the unpaid principal balance plus accrued interest upon a short notice period not to exceed seven days. There is, however, the possibility that because of default or insolvency the demand feature of VRDOs may not be honored. The interest rates are adjustable at intervals (ranging from daily to up to one year) to some prevailing market rate for similar investments, such adjustment formula being calculated to maintain the market value of the VRDOs, at approximately the par value of the VRDOs on the adjustment date. The adjustments typically are based upon SIFMA or some other appropriate interest rate adjustment index. MVF may invest in all types of tax exempt instruments currently outstanding or to be issued in the future which satisfy its short term maturity and quality standards. VRDOs that contain an unconditional right of demand to receive payment of the unpaid principal balance plus accrued interest on a notice period exceeding seven days may be deemed to be illiquid securities.

Certain MVF Municipal Bonds may carry variable or floating rates of interest whereby the rate of interest is not fixed but varies with changes in specified market rates or indices, such as a bank prime rate or tax-exempt money market indices.

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While the various types of notes described above as a group represent the major portion of the tax-exempt note market, other types of notes are available in the marketplace and MVF may invest in such other types of notes to the extent permitted under its investment objective, policies and limitations. Such notes may be issued for different purposes and may be secured differently from those mentioned above.

MVF's investment policies provide that the Temporary Investments and VRDOs in which MVF may invest will be in the following rating categories at the time of purchase: MIG-1/VMIG-1 through MIG- 3/VMIG-3 for notes and VRDOs and Prime-1 through Prime-3 for commercial paper (as determined by Moody's), SP-1 through SP-2 for notes and A-1 through A-3 for VRDOs and commercial paper (as determined by S&P), or F- 1 through F-3 for notes, VRDOs and commercial paper (as determined by Fitch). Temporary Investments, if not rated, must be of comparable quality in the opinion of the Investment Advisor. In addition, MVF reserves the right to invest temporarily a greater portion of its assets in Temporary Investments for defensive purposes, when, in the judgment of the Investment Advisor, market conditions warrant.

**Strategic Transactions and Other Management Techniques** 

MVF may purchase and sell futures contracts, enter into various interest rate transactions and swap contracts (including, but not limited to, credit default swaps) and may purchase and sell exchange-listed and OTC put and call options on securities and swap contracts, financial indices and futures contracts and use other derivative instruments or management techniques (collectively, "Strategic Transactions"). These Strategic Transactions may be used for duration management and other risk management purposes, subject to MVF's investment restrictions. While MVF's use of Strategic Transactions is intended to reduce the volatility of the NAV of MVF's common shares, the NAV of MVF's common shares will fluctuate. No assurance can be given that MVF's Strategic Transactions will be effective.

There is no particular strategy that requires use of one technique rather than another as the decision to use any particular strategy or instrument is a function of market conditions and the composition of the portfolio. The ability of MVF to use Strategic Transactions successfully will depend on the Investment Advisor's ability to predict pertinent market movements as well as sufficient correlation among the instruments, which cannot be assured. Strategic Transactions subject MVF to the risk that, if the Investment Advisor incorrectly forecasts market values, interest rates or other applicable factors, MVF's performance could suffer. Certain of these Strategic Transactions, such as investments in inverse floating rate securities and credit default swaps, may provide investment leverage to MVF's portfolio. MVF is not required to use derivatives or other portfolio strategies to seek to hedge its portfolio and may choose not to do so.

The use of Strategic Transactions may result in losses greater than if they had not been used, may require MVF to sell or purchase portfolio securities at inopportune times or for prices other than current market values, may limit the amount of appreciation MVF can realize on an investment or may cause MVF to hold a security that it might otherwise sell. Furthermore, MVF may only engage in Strategic Transactions from time to time and may not necessarily be engaging in hedging activities when movements in interest rates occur.

MVF's investment objectives and the requirements of Subchapter M of the Code for qualification as a regulated investment company may restrict or affect the ability of MVF to engage in Strategic Transactions. In addition, the use of certain Strategic Transactions may give rise to taxable income and have certain other consequences, such as subjecting a portion of MVF's dividends to regular federal income tax. However, under normal circumstances, MVF does not intend to use Strategic Transactions that give rise to taxable income.

*Put and Call Options on Securities and Indices*. MVF may purchase and sell put and call options on securities and indices. A put option gives the purchaser of the option the right to sell and the writer the obligation to buy the underlying security at the exercise price during the option period. MVF may also purchase and sell options on bond indices ("index options"). Index options are similar to options on securities except that, rather than taking or making delivery of securities underlying the option at a specified price upon exercise, an index option gives the holder the right to receive cash upon exercise of the option if the level of the bond index upon which the option is based is greater, in the case of a call, or less, in the case of a put, than the exercise price of the option. The purchase of a put option on a debt security could protect MVF's holdings in a security or a number of securities against a substantial decline in the market value. A call option gives the purchaser of the option the right to buy and the seller the obligation

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to sell the underlying security or index at the exercise price during the option period or for a specified period prior to a fixed date. The purchase of a call option on a security could protect MVF against an increase in the price of a security that it intended to purchase in the future.

*Writing Covered Call Options*. MVF is authorized to write (i.e., sell) covered call options with respect to municipal securities it owns, thereby giving the holder of the option the right to buy the underlying security covered by the option from MVF at the stated exercise price until the option expires. MVF writes only covered call options, which means that so long as MVF is obligated as the writer of a call option, it will own the underlying securities subject to the option.

MVF receives a premium from writing a call option, which increases MVF's return on the underlying security in the event the option expires unexercised or is closed out at a profit. By writing a call, MVF limits its opportunity to profit from an increase in the market value of the underlying security above the exercise price of the option for as long as MVF's obligation as a writer continues. Covered call options serve as a partial hedge against a decline in the price of the underlying security. MVF may engage in closing transactions in order to terminate outstanding options that it has written.

*Additional Information About Options*. MVF's ability to close out its position as a purchaser or seller of an exchange-listed put or call option is dependent upon the existence of a liquid secondary market on option exchanges. Among the possible reasons for the absence of a liquid secondary market on an exchange are: (i) insufficient trading interest in certain options; (ii) restrictions on transactions imposed by an exchange; (iii) trading halts, suspensions or other restrictions imposed with respect to particular classes or series of options or underlying securities; (iv) interruption of the normal operations on an exchange; (v) inadequacy of the facilities of an exchange or the Office of the Comptroller of the Currency (the "<u>OCC</u>") to handle current trading volume; or (vi) a decision by one or more exchanges to discontinue the trading of options (or a particular class or series of options), in which event the secondary market on that exchange (or in that class or series of options) would cease to exist, although outstanding options on that exchange that had been listed by the OCC as a result of trades on that exchange would generally continue to be exercisable in accordance with their terms. OTC options are purchased from or sold to dealers, financial institutions or other counterparties which have entered into direct agreements with MVF. With OTC options, such variables as expiration date, exercise price and premium will be agreed upon between MVF and the counterparty, without the intermediation of a third party such as the OCC. If the counterparty fails to make or take delivery of the securities underlying an option it has written, or otherwise settle the transaction in accordance with the terms of that option as written, MVF would lose the premium paid for the option as well as any anticipated benefit of the transaction. OTC options and assets used to cover OTC options written by MVF are considered by the staff of the SEC to be illiquid. The illiquidity of such options or assets may prevent a successful sale of such options or assets, result in a delay of sale, or reduce the amount of proceeds that might otherwise be realized.

MVF may engage in options and futures transactions on exchanges and options in the over-the-counter markets. MVF will only enter into OTC options with counterparties the Investment Advisor believes to be creditworthy at the time they enter into such transactions.

The hours of trading for options on debt securities may not conform to the hours during which the underlying securities are traded. To the extent that the option markets close before the markets for the underlying securities, significant price and rate movements can take place in the underlying markets that cannot be reflected in the option markets.

*Financial Futures Transactions and Options*. MVF is authorized to purchase and sell certain exchange traded financial futures contracts ("financial futures contracts") in order to hedge its investments against declines in value, and to hedge against increases in the cost of securities it intends to purchase or to seek to enhance MVF's return. However, any transactions involving financial futures or options (including puts and calls associated therewith) will be in accordance with MVF's investment policies and limitations. A financial futures contract obligates the seller of a contract to deliver and the purchaser of a contract to take delivery of the type of financial instrument covered by the contract, or in the case of index-based futures contracts to make and accept a cash settlement, at a specific future time for a specified price. To hedge its portfolio, MVF may take an investment position in a futures contract which will move in the opposite direction from the portfolio position being hedged. A

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sale of financial futures contracts may provide a hedge against a decline in the value of portfolio securities because such depreciation may be offset, in whole or in part, by an increase in the value of the position in the financial futures contracts. A purchase of financial futures contracts may provide a hedge against an increase in the cost of securities intended to be purchased because such appreciation may be offset, in whole or in part, by an increase in the value of the position in the futures contracts.

Distributions, if any, of net long-term capital gains from certain transactions in futures or options are taxable at long-term capital gains rates for U.S. federal income tax purposes.

*Futures Contracts*. A futures contract is an agreement between two parties to buy and sell a security or, in the case of an index-based futures contract, to make and accept a cash settlement for a set price on a future date. A majority of transactions in futures contracts, however, do not result in the actual delivery of the underlying instrument or cash settlement, but are settled through liquidation, i.e., by entering into an offsetting transaction. Futures contracts have been designed by boards of trade which have been designated "contracts markets" by the CFTC.

The purchase or sale of a futures contract differs from the purchase or sale of a security in that no price or premium is paid or received. Instead, an amount of cash or securities acceptable to the broker and the relevant contract market, which varies, but is generally about 5% of the contract amount, must be deposited with the broker. This amount is known as "initial margin" and represents a "good faith" deposit assuring the performance of both the purchaser and seller under the futures contract. Subsequent payments to and from the broker, called "variation margin," are required to be made on a daily basis as the price of the futures contract fluctuates making the long and short positions in the futures contract more or less valuable, a process known as "marking to the market." At any time prior to the settlement date of the futures contract, the position may be closed out by taking an opposite position that will operate to terminate the position in the futures contract. A final determination of variation margin is then made, additional cash is required to be paid to or released by the broker and the purchaser realizes a loss or gain. In addition, a nominal commission is paid on each completed sale transaction.

MVF may also purchase and sell financial futures contracts on U.S. Government securities as a hedge against adverse changes in interest rates as described below. With respect to U.S. Government securities, currently there are financial futures contracts based on long-term U.S. Treasury bonds, U.S. Treasury notes, Government National Mortgage Association ("GNMA") Certificates and three-month U.S. Treasury bills. MVF may purchase and write call and put options on futures contracts on U.S. Government securities and purchase and sell municipal security index futures contracts in connection with its hedging strategies.

MVF also may engage in other futures contracts transactions such as futures contracts on other municipal bond indices that may become available if the Investment Advisor should determine that there is normally a sufficient correlation between the prices of such futures contracts and the municipal securities in which MVF invests to make such hedging appropriate.

*Futures Strategies*. MVF may sell a financial futures contract (i.e., assume a short position) in anticipation of a decline in the value of its investments resulting from an increase in interest rates or otherwise. The risk of decline could be reduced without employing futures as a hedge by selling investments and either reinvesting the proceeds in securities with shorter maturities or by holding assets in cash. This strategy, however, entails increased transaction costs in the form of dealer spreads and typically would reduce the average yield of MVF's portfolio securities as a result of the shortening of maturities. The sale of futures contracts provides an alternative means of hedging against declines in the value of its investments. As such values decline, the value of MVF's positions in the futures contracts will tend to increase, thus offsetting all or a portion of the depreciation in the market value of MVF's investments that are being hedged. While MVF will incur commission expenses in selling and closing out futures positions, commissions on futures transactions are typically lower than transaction costs incurred in the purchase and sale of MVF's investments being hedged. In addition, the ability of MVF to trade in the standardized contracts available in the futures markets may offer a more effective defensive position than a program to reduce the average maturity of the portfolio securities due to the unique and varied credit and technical characteristics of the instruments available to MVF. Employing futures as a hedge also may permit MVF to assume a defensive posture without reducing the yield on its investments beyond any amounts required to engage in futures trading.

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When MVF intends to purchase a security, MVF may purchase futures contracts as a hedge against any increase in the cost of such security resulting from a decrease in interest rates or otherwise, that may occur before such purchase can be effected. Subject to the degree of correlation between such securities and the futures contracts, subsequent increases in the cost of such securities should be reflected in the value of the futures held by MVF. As such purchases are made, an equivalent amount of futures contracts will be closed out. Due to changing market conditions and interest rate forecasts, however, a futures position may be terminated without a corresponding purchase of portfolio securities.

*Call Options on Futures Contracts*. MVF may also purchase and sell exchange traded call and put options on financial futures contracts. The purchase of a call option on a futures contract is analogous to the purchase of a call option on an individual security. Depending on the pricing of the option compared to either the futures contract upon which it is based or the price of the underlying securities, it may or may not be less risky than ownership of the futures contract or underlying securities. Like the purchase of a futures contract, MVF may purchase a call option on a futures contract to hedge against a market advance when MVF is not fully invested.

The writing of a call option on a futures contract constitutes a partial hedge against declining prices of the securities which are deliverable upon exercise of the futures contract. If the futures price at expiration is below the exercise price, MVF will retain the full amount of the option premium, which provides a partial hedge against any decline that may have occurred in MVF's portfolio holdings.

*Put Options on Futures Contracts*. The purchase of a put option on a futures contract is analogous to the purchase of a protective put option on portfolio securities. MVF may purchase a put option on a futures contract to hedge MVF's portfolio against the risk of rising interest rates.

The writing of a put option on a futures contract constitutes a partial hedge against increasing prices of the securities which are deliverable upon exercise of the futures contract. If the futures price at expiration is higher than the exercise price, MVF will retain the full amount of the option premium, which provides a partial hedge against any increase in the price of securities which MVF intends to purchase.

The writer of an option on a futures contract is required to deposit initial and variation margin pursuant to requirements similar to those applicable to futures contracts. Premiums received from the writing of an option will be included in initial margin. The writing of an option on a futures contract involves risks similar to those relating to futures contracts.

The CFTC subjects advisers to registered investment companies to regulation by the CFTC if a fund that is advised by the investment adviser either (i) invests, directly or indirectly, more than a prescribed level of its liquidation value in CFTC Derivatives, or (ii) markets itself as providing investment exposure to such instruments. To the extent MVF uses CFTC Derivatives, it intends to do so below such prescribed levels and will not market itself as a "commodity pool" or a vehicle for trading such instruments. Accordingly, the Investment Advisor has claimed an exclusion from the definition of the term "commodity pool operator" under the CEA pursuant to Rule 4.5 under the CEA. The Investment Advisor is not, therefore, subject to registration or regulation as a "commodity pool operator" under the CEA in respect of MVF.

*Interest Rate Transactions*. MVF may enter into interest rate swaps and the purchase or sale of interest rate caps and floors. MVF expects to enter into these transactions primarily to preserve a return or spread on a particular investment or portion of its portfolio as a duration management technique or to protect against any increase in the price of securities MVF anticipates purchasing at a later date. MVF will ordinarily use these transactions as a hedge or for duration or risk management although it is permitted to enter into them to enhance income or gain. MVF may not sell interest rate caps or floors that it does not own. Interest rate swaps involve the exchange by MVF with another party of their respective commitments to pay or receive interest, e.g., an exchange of floating rate payments for fixed rate payments with respect to a notional amount of principal. The purchase of an interest rate cap entitles the purchaser, to the extent that a specified index exceeds a predetermined interest rate, to receive payments of interest on a notional principal amount from the party selling such interest rate cap. The purchase of an interest rate floor entitles the purchaser, to the extent that a specified index falls below a predetermined interest rate, to receive payments of interest on a notional principal amount from the party selling such interest rate floor.

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MVF may enter into interest rate swaps, caps and floors on either an asset-based or liability-based basis, and will usually enter into interest rate swaps on a net basis, i.e., the two payment streams are netted out, with MVF receiving or paying, as the case may be, only the net amount of the two payments on the payment dates. MVF will accrue the net amount of the excess, if any, of MVF's obligations over its entitlements with respect to each interest rate swap on a daily basis and will segregate with a custodian an amount of cash or liquid high grade securities having an aggregate net asset value at all times at least equal to the accrued excess. If there is a default by the other party to such a transaction, MVF will have contractual remedies pursuant to the agreements related to the transaction. The swap market has grown substantially in recent years with a large number of banks and investment banking firms acting both as principals and as agents utilizing standardized swap documentation. Caps and floors are more recent innovations for which standardized documentation has not yet been developed and, accordingly, they are less liquid than swaps.

*Credit Default Swap Agreements*. MVF may enter into credit default swap agreements for hedging purposes or to seek to increase its return. The credit default swap agreement may have as reference obligations one or more securities that are not currently held by MVF. The protection "buyer" in a credit default contract may be obligated to pay the protection "seller" an upfront or a periodic stream of payments over the term of the contract, provided that no credit event on a reference obligation has occurred. If a credit event occurs, the seller generally must pay the buyer the "par value" (full notional value) of the swap in exchange for an equal face amount of deliverable obligations of the reference entity described in the swap, or the seller may be required to deliver the related net cash amount (the difference between the market value of the reference obligation and its par value), if the swap is cash settled. MVF may be either the buyer or seller in the transaction. If MVF is a buyer and no credit event occurs, MVF may recover nothing if the swap is held through its termination date. However, if a credit event occurs, the buyer generally may elect to receive the full notional value of the swap in exchange for an equal face amount of deliverable obligations of the reference entity whose value may have significantly decreased. As a seller, MVF generally receives an upfront payment or a fixed rate of income throughout the term of the swap, which typically is between six (6) months and three years, provided that there is no credit event. If a credit event occurs, generally the seller must pay the buyer the full notional value of the swap in exchange for an equal face amount of deliverable obligations of the reference entity whose value may have significantly decreased. As the seller, MVF would effectively add leverage to its portfolio because, in addition to its total net assets, MVF would be subject to investment exposure on the notional amount of the swap.

Credit default swap agreements involve greater risks than if MVF had invested in the reference obligation directly since, in addition to general market risks, credit default swaps are subject to illiquidity risk, counterparty risk and credit risks. MVF will enter into credit default swap agreements only with counterparties the Investment Advisor believes to be creditworthy at the time they enter into such transactions. A buyer generally also will lose its investment and recover nothing should no credit event occur and the swap is held to its termination date. If a credit event were to occur, the value of any deliverable obligation received by the seller, coupled with the upfront or periodic payments previously received, may be less than the full notional value it pays to the buyer, resulting in a loss of value to the seller.

*Municipal Market Data Rate Locks*. MVF may purchase and sell Municipal Market Data Rate Locks ("MMD Rate Locks"). An MMD Rate Lock permits MVF to lock in a specified municipal interest rate for a portion of its portfolio to preserve a return on a particular investment or a portion of its portfolio as a duration management technique or to protect against any increase in the price of securities to be purchased at a later date. MVF will ordinarily use these transactions as a hedge or for duration or risk management although it is permitted to enter into them to enhance income or gain. An MMD Rate Lock is a contract between MVF and an MMD Rate Lock provider pursuant to which the parties agree to make payments to each other on a notional amount, contingent upon whether the Municipal Market Data AAA General Obligation Scale is above or below a specified level on the expiration date of the contract. For example, if MVF buys an MMD Rate Lock and the Municipal Market Data AAA General Obligation Scale is below the specified level on the expiration date, the counterparty to the contract will make a payment to MVF equal to the specified level minus the actual level, multiplied by the notional amount of the contract. If the Municipal Market Data AAA General Obligation Scale is above the specified level on the expiration date, MVF will make a payment to the counterparty equal to the actual level minus the specified level multiplied by the notional amount of the contract. In entering into MMD Rate Locks, there is a risk that municipal yields will move in the direction opposite of the direction anticipated by MVF. MVF may not enter into MMD Rate Locks if, as a result, more than

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50% of its total assets would be required to cover its potential obligations under its hedging and other investment transactions.

*Counterparty Credit Standards*. To the extent that MVF engages in principal transactions, including, but not limited to, OTC options, forward currency transactions, swap transactions, repurchase agreements and the purchase and sale of bonds and other fixed-income securities, it must rely on the creditworthiness of its counterparties under such transactions. In certain instances, the credit risk of a counterparty is increased by the lack of a central clearing house for certain transactions, including certain swap contracts. In the event of the insolvency of a counterparty, MVF may not be able to recover its assets, in full or at all, during the insolvency process. Counterparties to investments may have no obligation to make markets in such investments and may have the ability to apply essentially discretionary margin and credit requirements. Similarly, MVF will be subject to the risk of bankruptcy of, or the inability or refusal to perform with respect to such investments by, the counterparties with which it deals. The Investment Advisor will seek to minimize MVF's exposure to counterparty risk by entering into such transactions with counterparties the Investment Advisor believes to be creditworthy at the time it enters into the transaction. Certain option transactions and Strategic Transactions may require MVF to provide collateral to secure its performance obligations under a contract, which would also entail counterparty credit risk.

*Restricted and Illiquid Securities.* Certain of MVF's investments may be illiquid. Illiquid securities are securities which cannot be sold within seven days in the ordinary course of business at approximately the value used by MVF in determining its NAV. Illiquid securities are subject to legal or contractual restrictions on disposition or lack of an established secondary trading market. The sale of restricted and illiquid securities often requires more time and results in higher brokerage charges or dealer discounts and other selling expenses than does the sale of securities eligible for trading on national securities exchanges or in the OTC markets. Restricted securities may sell at a price lower than similar securities that are not subject to restrictions on resale.

*Repurchase Agreements.* As temporary investments, MVF may invest in repurchase agreements. A repurchase agreement is a contractual agreement whereby the seller of securities agrees to repurchase the same security at a specified price on a future date agreed upon by the parties. The agreed-upon repurchase price determines the yield during MVF's holding period. Repurchase agreements are considered to be loans collateralized by the underlying security that is the subject of the repurchase contract. MVF may only enter into repurchase agreements with registered securities dealers or domestic banks that, in the opinion of the Investment Advisor, present minimal credit risk. The risk to MVF is limited to the ability of the issuer to pay the agreed-upon repurchase price on the delivery date; however, although the value of the underlying collateral at the time the transaction is entered into always equals or exceeds the agreed-upon repurchase price, if the value of the collateral declines there is a risk of loss of both principal and interest. In the event of default, the collateral may be sold but MVF might incur a loss if the value of the collateral declines, and might incur disposition costs or experience delays in connection with liquidating the collateral. In addition, if bankruptcy proceedings are commenced with respect to the seller of the security, realization upon the collateral by MVF may be delayed or limited. The Investment Advisor will monitor the value of the collateral at the time the transaction is entered into and at all times subsequent during the term of the repurchase agreement in an effort to determine that such value always equals or exceeds the agreed-upon repurchase price. In the event the value of the collateral declines below the repurchase price, the Investment Advisor will demand additional collateral from the issuer to increase the value of the collateral to at least that of the repurchase price, including interest.

*Securities Lending.* MVF may lend portfolio securities to certain borrowers determined to be creditworthy by the Investment Advisor, including to borrowers affiliated with the Investment Advisor. The borrowers provide collateral that is maintained in an amount at least equal to the current market value of the securities loaned. No securities loan will be made on behalf of MVF if, as a result, the aggregate value of all securities loans of MVF exceeds one-third of the value of MVF's total assets (including the value of the collateral received). MVF may terminate a loan at any time and obtain the return of the securities loaned. MVF receives the value of any interest or cash or non- cash distributions paid on the loaned securities.

With respect to loans that are collateralized by cash, the borrower may be entitled to receive a fee based on the amount of cash collateral. MVF is compensated by the difference between the amount earned on the reinvestment of cash collateral and the fee paid to the borrower. In the case of collateral other than cash, MVF is compensated by a fee paid by the borrower equal to a percentage of the market value of the loaned securities. Any cash collateral received by

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MVF for such loans, and uninvested cash, may be invested, among other things, in a private investment company managed by an affiliate of the Investment Advisor or in registered money market funds advised by the Investment Advisor or their affiliates; such investments are subject to investment risk.

MVF conducts its securities lending pursuant to an exemptive order from the SEC permitting it to lend portfolio securities to borrowers affiliated with MVF and to retain an affiliate of MVF as lending agent. To the extent that MVF engages in securities lending, BlackRock Investment Management, LLC ("BIM"), an affiliate of the Investment Advisor, acts as securities lending agent for MVF, subject to the overall supervision of the Investment Advisor. BIM administers the lending program in accordance with guidelines approved by the Board.

To the extent that MVF engages in securities lending, MVF retains a portion of securities lending income and remits a remaining portion to BIM as compensation for its services as securities lending agent. Securities lending income is equal to the total of income earned from the reinvestment of cash collateral (and excludes collateral investment expenses as defined below), and any fees or other payments to and from borrowers of securities. As securities lending agent, BIM bears all operational costs directly related to securities lending. MVF is responsible for expenses in connection with the investment of cash collateral received for securities on loan (the "<u>collateral</u> <u>investment expenses</u>"). The cash collateral is invested in a private investment company managed by the Investment Advisor or its affiliates. However, BIM has agreed to cap the collateral investment expenses of the private investment company to an annual rate of 0.04%. In addition, in accordance with the exemptive order, the investment adviser to the private investment company will not charge any advisory fees with respect to shares purchased by MVF. Such shares also will not be subject to a sales load, distribution fee or service fee. If the private investment company's weekly liquid assets fall below 30% of its total assets, BIM, as managing member of the private investment company, is permitted at any time, if it determines it to be in the best interests of the private investment company, to impose a liquidity fee of up to 2% of the value of units withdrawn or impose a redemption gate that temporarily suspends the right of withdrawal out of the private investment company. In addition, if the private investment company's weekly liquid assets fall below 10% of its total assets at the end of any business day, the private investment company will impose a liquidity fee in the default amount of 1% of the amount withdrawn, generally effective as of the next business day, unless BIM determines that a higher (not to exceed 2%) or lower fee level or not imposing a liquidity fee is in the best interests of the private investment company. The shares of the private investment company purchased by MVF would be subject to any such liquidity fee or redemption gate imposed.

Under the securities lending program, MVF is categorized into a specific asset class. The determination of MVF's asset class category (fixed income, domestic equity, international equity, or fund of funds), each of which may be subject to a different fee arrangement, is based on a methodology agreed to between MVF and BIM.

Pursuant to the current securities lending agreement: (i) if MVF were to engage in securities lending, MVF retains 82% of securities lending income (which excludes collateral investment expenses), and (ii) this amount can never be less than 70% of the sum of securities lending income plus collateral investment expenses.

In addition, commencing the business day following the date that the aggregate securities lending income earned across the BlackRock Fixed-Income Complex in a calendar year exceeds a specified threshold, MVF, pursuant to the current securities lending agreement, will receive for the remainder of that calendar year securities lending income as follows: (i) if MVF were to engage in securities lending, 85% of securities lending income (which excludes collateral investment expenses); and (ii) this amount can never be less than 70% of the sum of securities lending income plus collateral investment expenses.

**Leverage** 

MVF currently leverages its assets through the use of VMTP Shares and investments in TOB Residuals. MVF currently does not intend to borrow money or issue debt securities. MVF is permitted to borrow money (including by investing in TOB Residuals) or issue debt securities in an amount up to 33 1/3% of its Managed Assets (50% of its net assets), issue preferred shares in an amount up to 50% of its Managed Assets (100% of its net assets) and enter into derivative instruments with leverage embedded in them in a limited manner or subject to a limit on leverage risk calculated based on value-at-risk, as required by Rule 18f-4 under the 1940 Act. Although it has no present intention to do so, MVF reserves the right to borrow money from banks or other financial institutions, or issue debt securities, in the future if it believes that market conditions would be conducive to the successful implementation

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of a leveraging strategy through borrowing money or issuing debt securities. Any such leveraging will not be fully achieved until the proceeds resulting from the use of leverage have been invested in accordance with MVF's investment objective and policies.

The use of leverage can create risks. When leverage is employed, the NAV and market price of the common shares and the yield to holders of common shares will be more volatile than if leverage were not used. Changes in the value of MVF's portfolio, including securities bought with the proceeds of leverage, will be borne entirely by the holders of common shares. If there is a net decrease or increase in the value of MVF's investment portfolio, leverage will decrease or increase, as the case may be, the NAV per common share to a greater extent than if MVF did not utilize leverage. A reduction in MVF's NAV may cause a reduction in the market price of its shares. During periods in which MVF is using leverage, the fee paid to the Investment Advisor for advisory services will be higher than if MVF did not use leverage, because the fees paid will be calculated on the basis of MVF's net assets, which includes the proceeds from leverage. MVF's leveraging strategy may not be successful.

Certain types of leverage MVF may use may result in MVF being subject to covenants relating to asset coverage and portfolio composition requirements. MVF may be subject to certain restrictions on investments imposed by one or more lenders or by guidelines of one or more rating agencies, which may issue ratings for any short-term debt securities or preferred shares issued by MVF. The terms of any borrowings or rating agency guidelines may impose asset coverage or portfolio composition requirements that are more stringent than those imposed by the 1940 Act. The Investment Advisor does not believe that these covenants or guidelines will impede it from managing MVF's portfolio in accordance with its investment objective and policies if MVF were to utilize leverage.

Under the Investment Company Act, MVF is not permitted to issue senior securities if, immediately after the issuance of such senior securities, MVF would have an asset coverage ratio (as defined in the 1940 Act) of less than 300% with respect to senior securities representing indebtedness (*i.e.*, for every dollar of indebtedness outstanding, MVF is required to have at least three dollars of assets) or less than 200% with respect to senior securities representing preferred shares (*i.e.*, for every dollar of preferred shares outstanding, MVF is required to have at least two dollars of assets). The Investment Company Act also provides that MVF may not declare distributions, or purchase its stock (including through tender offers) if, immediately after doing so, it will have an asset coverage ratio of less than 300% or 200%, as applicable. Under the 1940 Act, certain short-term borrowings (such as for cash management purposes) are not subject to these limitations if (i) repaid within 60 days, (ii) not extended or renewed, and (iii) not in excess of 5% of the total assets of MVF.

*Preferred Shares.* MVF has leveraged its portfolio by issuing VMTP Shares. Under the 1940 Act, MVF is not permitted to issue preferred shares if, immediately after such issuance, the liquidation value of MVF's outstanding preferred shares exceeds 50% of its assets (including the proceeds from the issuance) less liabilities other than borrowings (i.e., the 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

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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.

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 MVF Municipal Bonds to the TOB Trust. MVF may invest in both TOB Floaters and TOB Residuals. TOB Floaters may have first priority on the cash flow from the MVF Municipal Bonds held by the TOB Trust and are enhanced with a liquidity support arrangement from a third party TOBs Liquidity Provider which allows holders to tender their position at par (plus accrued interest). MVF, 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. MVF contributes MVF 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 MVF Municipal Bonds or other investments permitted by its investment policies. If MVF 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 MVF Municipal Bonds owned by the TOB Trust.

Other BlackRock-advised funds may contribute MVF Municipal Bonds to a TOB Trust into which MVF has contributed MVF 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 MVFs ratably in proportion to their participation in the TOB Trust.

The MVF Municipal Bonds transferred to a TOB Trust typically are high grade MVF Municipal Bonds. In certain cases, when MVF Municipal Bonds transferred are lower grade MVF 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 MVF, 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 MVF generally provide MVF 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, MVF may withdraw a corresponding share of the MVF Municipal Bonds from the TOB Trust. As a result, a TOB transaction, in effect, creates exposure for MVF to the entire return of the MVF Municipal Bonds in the TOB Trust, with a net cash investment by MVF that is less than the value of the MVF Municipal Bonds in the TOB Trust. This multiplies the positive or negative impact of the MVF Municipal Bonds' return within MVF (thereby creating leverage). The leverage within a TOB Trust depends on the value of the MVF Municipal Bonds deposited in the TOB Trust relative to the value of the TOB Floaters it issues.

MVF 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 MVF Municipal Bonds owned by the TOB Trust.

The leverage attributable to MVF'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 MVF 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., MVF) whereas in other termination events, the TOB Floater 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, MVF 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

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loss may be greater during volatile market conditions when it may be difficult to sell the bonds held by a TOB Trust.

TOB Trusts are typically supported by a liquidity facility provided by a TOBs Liquidity Provider that allows the holders of the TOB Floaters to tender their TOB Floaters in exchange for payment of par plus accrued interest on any business day (subject to the non-occurrence of a termination event). The tendered TOB Floaters are remarketed by a remarketing agent. In the event of a failed remarketing, the TOB Trust may draw upon a loan from the TOBs Liquidity Provider to purchase the tendered TOB Floaters. Any loans made by the TOBs Liquidity Provider will be secured by the purchased TOB Floaters held by the TOB Trust and will be subject to an increased interest rate based on number of days the loan is outstanding.

MVF may invest in a TOB Trust on either a non-recourse or recourse basis. When MVF invests in TOB Trusts on a non-recourse basis, and the TOBs Liquidity Provider is required to make a payment under the liquidity facility, the TOBs Liquidity Provider will typically liquidate all or a portion of the MVF Municipal Bonds held in the TOB Trust and then fund the balance, if any, of the Liquidation Shortfall. If MVF invests in a TOB Trust on a recourse basis, it will typically enter into a reimbursement agreement with the TOBs Liquidity Provider pursuant to which MVF is required to reimburse the TOBs Liquidity Provider the amount of any Liquidation Shortfall. As a result, if MVF invests in a recourse TOB Trust, MVF will bear the risk of loss with respect to any Liquidation Shortfall. If multiple BlackRock-advised Funds participate in any such TOB Trust, these losses will be shared ratably, in proportion to their participation in the TOB Trust.

Under accounting rules, municipal securities of MVF that are deposited into a TOB Trust are investments of MVF and are presented on MVF's Schedule of Investments and outstanding TOB Floaters issued by a TOB Trust are presented as liabilities in MVF's Statement of Assets and Liabilities. Interest income from the underlying municipal securities is recorded by MVF on an accrual basis. Interest expense incurred on the TOB Floaters and other expenses related to remarketing, administration, trustee and other services to a TOB Trust are reported as expenses of MVF. In addition, under accounting rules, loans made to a TOB Trust sponsored by MVF may be presented as loans of MVF in MVF's financial statements even if there is no recourse to MVF's assets.

For TOB Floaters, generally, the interest rate earned will be based upon the market rates for MVF Municipal Bonds with maturities or remarketing provisions that are comparable in duration to the periodic interval of the tender option. Since the tender option feature has a shorter term than the final maturity or first call date of the underlying MVF Municipal Bonds deposited in the TOB Trust, the holder of the TOB Floaters relies upon the terms of the agreement with the financial institution furnishing the liquidity facility as well as the credit strength of that institution. The perceived reliability and creditworthiness, of many major financial institutions, some of which sponsor and/or provide liquidity support to TOB Trusts increases the risk associated with TOB Floaters. This in turn may reduce the desirability of TOB Floaters as investments, which could impair the viability or availability of TOB Trusts.

Rule 18f-4 under the 1940 Act permits MVF to enter into TOB Trust transactions, reverse repurchase agreements and similar financing transactions (e.g., borrowed bonds) notwithstanding the limitation on the issuance of senior securities in Section 18 of the 1940 Act, provided that MVF either (i) complies with the 300% asset coverage ratio applicable to senior securities representing indebtedness with respect to such transactions and any other borrowings in the aggregate, or (ii) treats such transactions as derivatives transactions under Rule 18f-4. Future regulatory requirements or SEC guidance may necessitate more onerous contractual or regulatory requirements, which may increase the costs or reduce the degree of potential economic benefits of TOB Trust transactions or limit MVF's ability to enter into or manage TOB Trust transactions.

See "Risk Factors and Special Considerations—General Risks of Investing in the Acquiring Fund—Tender Option Bond Risk" for a description of the risks involved with a TOB issuer.

*Reverse Repurchase Agreements.* MVF may enter into reverse repurchase agreements with respect to its portfolio investments subject to the investment restrictions set forth herein. Reverse repurchase agreements involve the sale of securities held by MVF with an agreement by MVF to repurchase the securities at an agreed upon price, date and interest payment. In accordance with Rule 18f-4 under the 1940 Act, when MVF engages in reverse repurchase agreements and similar financing transactions, MVF may either (i) maintain asset coverage of at least 300% with respect to such transactions and any other borrowings in the aggregate, or (ii) treat such transactions as

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"derivatives transactions" and comply with Rule 18f-4 with respect to such transactions. Reverse repurchase agreements involve the risk that the market value of the securities acquired in connection with the reverse repurchase agreement may decline below the price of the securities MVF has sold but is obligated to repurchase. Also, reverse repurchase agreements involve the risk that the market value of the securities retained in lieu of sale by MVF in connection with the reverse repurchase agreement may decline in price.

If the buyer of securities under a reverse repurchase agreement files for bankruptcy or becomes insolvent, such buyer or its trustee or receiver may receive an extension of time to determine whether to enforce MVF's obligation to repurchase the securities and MVF's use of the proceeds of the reverse repurchase agreement may effectively be restricted pending such decision. Also, MVF would bear the risk of loss to the extent that the proceeds of the reverse repurchase agreement are less than the value of the securities subject to such agreement.

MVF also may effect simultaneous purchase and sale transactions that are known as "sale-buybacks." A sale-buyback is similar to a reverse repurchase agreement, except that in a sale-buyback, the counterparty that purchases the security is entitled to receive any principal or interest payments made on the underlying security pending settlement of MVF's repurchase of the underlying security.

*Borrowings.* MVF is authorized to borrow money in amounts of up to 5% of the value of its total assets at the time of such borrowings; provided, however, that MVF is authorized to borrow moneys in amounts of up to 33 1/3% of the value of its total assets at the time of such borrowings to finance the repurchase of its own common stock pursuant to tender offers or otherwise to redeem or repurchase shares of preferred stock. Borrowings by MVF (commonly known, as with the issuance of preferred stock, as "leveraging") create an opportunity for greater total return since, for example, MVF will not be required to sell portfolio securities to repurchase or redeem shares but, at the same time, increase exposure to capital risk. In addition, borrowed funds are subject to interest costs that may offset or exceed the return earned on the borrowed funds.

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**INFORMATION ABOUT THE COMMON SHARES OF THE FUNDS** 

**General** 

Common shareholders of each Fund are entitled to share pro rata in dividends declared by such Fund's Board as payable to holders of the Fund's common shares and in the net assets of the Fund available for distribution to holders of the common shares. Common shareholders do not have preemptive or conversion rights and each Fund's common shares are not redeemable. Voting rights are identical for the common shareholders of each Fund. Common shareholders of each Fund are entitled to one vote for each Share held by them and do not have any preemptive or preferential right to purchase or subscribe to any Shares of such Fund. Each Fund's common shares do not have cumulative voting rights, which means that the holders of more than 50% of a Fund's common shares voting for the election of Board Members can elect all of the Board Members standing for election by such holders, and, in such event, the holders of the Fund's remaining common shares will not be able to elect any Board Members. The outstanding MVT, MIY, MVF and Acquiring Fund common shares are fully paid and non-assessable, except that the Board of each Fund has the power to cause common shareholders to pay certain expenses of the applicable Fund by setting off charges due from common shareholders from declared but unpaid dividends or distributions owed the common shareholders and/or by reducing the number of common shares owned by each respective common shareholder. Whenever preferred shares, including VMTP Shares or VRDP Shares, as applicable, are outstanding, a Fund may not declare a dividend or distribution to common shareholders (other than a distribution paid in shares of, or in options, warrants or rights to subscribe for or purchase, common shares or other shares, if any, ranking junior to the preferred shares, as to the payment of dividends and the distribution of assets upon dissolution, liquidation or winding up of the Fund) or call for redemption, redeem, purchase or otherwise acquire for consideration any common shares (except by conversion into or exchange for shares of the Fund ranking junior to the preferred shares) unless all accumulated dividends on preferred shares have been paid and the Fund has redeemed the full number of any shares of preferred required to be redeemed, and unless asset coverage (as defined in the 1940 Act) with respect to preferred shares at the time of declaration of such dividend or distribution or at the time of such purchase would be at least 200% after giving effect to the dividend or distribution or purchase price.

**Purchase and Sale of Common Shares** 

Purchase and sale procedures for the common shares of each of the Funds are identical. Each Fund has its common shares listed on the NYSE. Investors typically purchase and sell common shares of the Funds through a registered broker-dealer on the NYSE, thereby incurring a brokerage commission set by the broker-dealer. Alternatively, investors may purchase or sell common shares of each of the Funds through privately negotiated transactions with existing common shareholders. Set forth below is information about each Fund's common shares as of June 30, 2025.

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|:---|:---|:---|:---|:---|
| **Fund** | **Title of Class** | **Amount**<br>**Authorized** | **Amount<br>Held by<br>Fund for its<br>Own<br>Account** | **Amount<br>Outstanding<br>Exclusive of<br>Amount<br>Shown in<br>Previous<br>Column** |
|  MVT | Common Shares | 199991600 | 0 | 20861423 |
|  MIY | Common Shares | 199991081 | 0 | 28964750 |
|  MVF | Common Shares | 150000000 | 0 | 57335699 |
|  Acquiring Fund (MYI) | Common Shares | 199973636 | 0 | 66467251 |

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**Common Share Price Data** 

The following tables set forth the high and low market prices for common shares of each Fund on the NYSE for each full quarterly period within each Fund's two most recent fiscal years and each full quarter since the beginning of each Fund's current fiscal year, along with the NAV and discount or premium to NAV for each quotation.

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|:---|:---|:---|:---|:---|:---|:---|:---|
| MVT | *NYSE Market Price*<br> *Per Common Share* | *NYSE Market Price*<br> *Per Common Share* | *NAV per Common*<br> *Share on Date of*<br> *Market Price* | *NAV per Common*<br> *Share on Date of*<br> *Market Price* | *Premium/*<br> *(Discount)*<br> *on Date of*<br> *Market Price* | *Premium/*<br> *(Discount)*<br> *on Date of*<br> *Market Price* |  |
|  During Quarter Ended | High | Low | High | Low | High | Low | Trading Volume |
|  July 31, 2025 | $[●] | $[●] | $[●] | $[●] | [●]% | [●]% | [●] |
|  April 30, 2025 | $11.04 | $9.81 | $12.16 | $11.20 | -9.21% | -12.41% | 3273082 |
|  January 31 2025 | $11.27 | $10.43 | $12.53 | $12.01 | -10.06% | -13.16% | 5426171 |
|  October 31, 2024 | $11.70 | $10.86 | $12.58 | $12.16 | -7.00% | -10.69% | 3109283 |
|  July 31, 2024 | $11.10 | $10.41 | $12.41 | $12.09 | -10.60% | -13.90% | 2249476 |
|  April 30, 2024 | $10.98 | $10.36 | $12.57 | $12.08 | -12.65% | -14.24% | 2636052 |
|  January 31, 2024 | $10.91 | $9.26 | $12.60 | $10.93 | -13.41% | -15.28% | 3492260 |
|  October 31, 2023 | $10.62 | $9.02 | $12.28 | $10.89 | -13.52% | -17.17% | 4021201 |

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|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| MIY | *NYSE Market Price*<br> *Per Common Share* | *NYSE Market Price*<br> *Per Common Share* | *NYSE Market Price*<br> *Per Common Share* |  | *NAV per Common*<br> *Share on Date of*<br> *Market Price* | *NAV per Common*<br> *Share on Date of*<br> *Market Price* | *NAV per Common*<br> *Share on Date of*<br> *Market Price* |  | *Premium/*<br> *(Discount)*<br> *on Date of*<br> *Market Price* | *Premium/*<br> *(Discount)*<br> *on Date of*<br> *Market Price* | *Premium/*<br> *(Discount)*<br> *on Date of*<br> *Market Price* |  |  |  |
|  During Quarter Ended | High |  | Low |  | High |  | Low |  | High |  | Low |  | Trading Volume |  |
|  July 31, 2025 | $[●] |  | $[●] |  | $[●] |  | $[●] |  | [●]% |  | [●]% |  | [●] |  |
|  April 30, 2025 | $11.73 |  | $10.95 |  | $12.86 |  | $11.93 |  | -8.79 | % | -8.21 | % | 3192977 |  |
|  January 31 2025 | $12.09 |  | $11.09 |  | $13.23 |  | $12.68 |  | -8.62 | % | -12.54 | % | 4517223 |  |
|  October 31, 2024 | $12.06 |  | $11.50 |  | $13.36 |  | $12.85 |  | -9.73 | % | -10.51 | % | 3661870 |  |
|  July 31, 2024 | $11.68 |  | $11.02 |  | $13.09 |  | $12.71 |  | -10.77 | % | -13.30 | % | 2884820 |  |
|  April 30, 2024 | $11.62 |  | $11.01 |  | $13.14 |  | $12.73 |  | -11.57 | % | -13.51 | % | 3028654 |  |
|  January 31, 2024 | $11.68 |  | $9.67 |  | $13.23 |  | $11.55 |  | -11.72 | % | -16.28 | % | 4972088 |  |
|  October 31, 2023 | $11.10 |  | $9.47 |  | $12.86 |  | $11.47 |  | -13.69 | % | -17.48 | % | 4271055 |  |
| MVF | *NYSE Market Price*<br> *Per Common Share* | *NYSE Market Price*<br> *Per Common Share* | *NYSE Market Price*<br> *Per Common Share* |  | *NAV per Common*<br> *Share on Date of*<br> *Market Price* | *NAV per Common*<br> *Share on Date of*<br> *Market Price* | *NAV per Common*<br> *Share on Date of*<br> *Market Price* |  | *Premium/*<br> *(Discount)*<br> *on Date of*<br> *Market Price* | *Premium/*<br> *(Discount)*<br> *on Date of*<br> *Market Price* | *Premium/*<br> *(Discount)*<br> *on Date of*<br> *Market Price* |  |  |  |
|  During Quarter Ended | High |  | Low |  | High |  | Low |  | High |  | Low |  | Trading Volume |  |
|  July 31, 2025 | $— | [●] | $— | [●] | $— | [●] | $— | [●] | [ | ●]% | [ | ●]% | [ | ●] |
|  April 30, 2025 | $7.34 |  | $6.61 |  | $7.90 |  | $7.41 |  | -7.09% |  | -10.80% |  | 6610119 |  |
|  January 31 2025 | $7.55 |  | $7.02 |  | $8.17 |  | $7.83 |  | -7.59 | % | -10.34 | % | 7562405 |  |
|  October 31, 2024 | $7.61 |  | $7.22 |  | $8.21 |  | $7.88 |  | -7.31 | % | -8.38 | % | 6159984 |  |
|  July 31, 2024 | $7.41 |  | $6.81 |  | $8.04 |  | $7.83 |  | -7.84 | % | -13.03 | % | 6918941 |  |
|  April 30, 2024 | $7.14 |  | $6.78 |  | $8.13 |  | $7.85 |  | -12.18 | % | -13.58 | % | 8583961 |  |
|  January 31, 2024 | $7.12 |  | $6.25 |  | $8.17 |  | $7.11 |  | -12.85 | % | -12.10 | % | 11693300 |  |
|  October 31, 2023 | $6.80 |  | $5.85 |  | $7.86 |  | $7.08 |  | -13.49 | % | -17.37 | % | 9069647 |  |

---

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##### [**Table of Contents**](#toc)

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| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
| *Acquiring Fund (MYI)* | *NYSE Market Price*<br> *Per Common Share* | *NYSE Market Price*<br> *Per Common Share* | *NAV per Common*<br> *Share on Date of*<br> *Market Price* | *NAV per Common*<br> *Share on Date of*<br> *Market Price* | *Premium/*<br> *(Discount)*<br> *on Date of*<br> *Market Price* | *Premium/*<br> *(Discount)*<br> *on Date of*<br> *Market Price* |  |
|  During Quarter Ended | High | Low | High | Low | High | Low | Trading Volume |
|  July 31, 2025 | $[●] | $[●] | $[●] | $[●] | [●]% | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[●]% | [●] |
|  April 30, 2025 | $11.30 | $10.23 | $12.30 | $11.37 | -8.13% | -10.03% | 14252386 |
|  January 31 2025 | $11.63 | $10.88 | $12.61 | $11.98 | -7.77% | -9.18% | 16371637 |
|  October 31, 2024 | $12.01 | $11.22 | $12.77 | $12.30 | -5.95% | -8.78% | 13706581 |
|  July 31, 2024 | $11.45 | $10.83 | $12.53 | $12.20 | -8.62% | -11.23% | 13234686 |
|  April 30, 2024 | $11.63 | $10.92 | $12.74 | $12.26 | -8.71% | -10.93% | 13167724 |
|  January 31, 2024 | $11.64 | $9.83 | $12.86 | $11.13 | -9.49% | -11.68% | 19188120 |
|  October 31, 2023 | $11.10 | $9.34 | $12.45 | $11.11 | -10.84% | -15.93% | 15247674 |

---

For the periods shown in the tables above, the common shares of each Fund have traded at a discount to NAV.

The common shares of each Fund have historically traded at both a premium and a discount. The table below sets forth the market price, NAV, and the premium/discount to NAV of each Fund as of June 30, 2025.

---

| | | | |
|:---|:---|:---|:---|
| **Fund** | **Market Price** | **NAV** | **Premium/(Discount) to NAV** |
|  MVT | $10.32% | $11.29% | -8.59% |
|  MIY | $11.04% | $11.96% | -7.69% |
|  MVF | $6.58% | $7.25% | -9.24% |
|  Acquiring Fund (MYI) | $10.49% | $11.46% | -8.46% |

---

To the extent MVT's, MIY's or MVF's common shares are trading at a wider discount (or a narrower premium) than the Acquiring Fund at the time of its Reorganization, MVT's, MIY's or MVF's common shareholders would have the potential for an economic benefit by the narrowing of the discount or widening of the premium. To the extent MVT's, MIY's or MVF's common shares are trading at a narrower discount (or wider premium) than the Acquiring Fund at the time of its Reorganization, MVT's, MIY's or MVF's common shareholders may be negatively impacted if its Reorganization is consummated. Acquiring Fund common shareholders would only benefit from a premium/discount perspective to the extent the post-Reorganization discount (or premium) of the Acquiring Fund common shares improves.

There can be no assurance that, after the Reorganizations, common shares of the Combined Fund will trade at, above or below NAV. Upon consummation of the Reorganizations, the Combined Fund common shares may trade at a price that is less than the current market price of Acquiring Fund common shares. In the Reorganizations, common shareholders of MVT, MIY and MVF will receive Acquiring Fund common shares based on the relative NAVs (not the market values) of the respective Fund's common shares. The market value of the common shares of the Combined Fund may be less than the market value of the common shares of a Fund prior to the Reorganizations.

If the Reorganization is approved by shareholders, effective upon the closing of the Reorganization, the Combined Fund will adopt a discount management program under which the Combined Fund will, beginning in 2026, intend to offer to purchase a minimum of 5% of its outstanding common shares, subject to the Board's discretion, at a price equal to 98% of NAV per common share via annual tender offer if the Combined Fund's common shares trade at an average daily discount to NAV of more than 10.00% during a measurement period beginning on January 1st and concluding on September 30th of each calendar year (the "Discount Management Program"). Even if a tender offer is triggered under the Discount Management Program, there is no guarantee that Combined Fund shareholders will be able to sell all of the shares that they desire to sell in any particular tender offer and there can be no assurances as to the effect that the Discount Management Program will have on the market for the Combined Fund's shares or the discount at which the Combined Fund's shares may trade relative to its NAV.

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##### [**Table of Contents**](#toc)
**EXPENSE TABLE FOR COMMON SHAREHOLDERS** 

The purpose of the comparative fee table below is to assist shareholders of each Fund in understanding the various costs and expenses of investing in common shares of each Fund and Combined Fund. The information in the table reflects (i) the fees and expenses of each of MVT, MIY, MVF and the Acquiring Fund (unaudited); (ii) the *pro forma* expenses of the Combined Fund, assuming only the Reorganization of MVT into the Acquiring Fund had taken place on February 1, 2024, which represents the combination of completed Reorganizations presented in this Joint Proxy Statement/Prospectus that would result in the highest Total Expense Ratio for the Combined Fund; and (iii) the *pro forma* expenses of the Combined Fund, assuming all Reorganizations had taken place on February 1, 2024, which represents, in the Investment Advisor's view, the most likely combination of the Reorganizations and the combination of the Reorganizations that would result in the lowest Total Expense Ratio for the Combined Fund. The fees and expenses for the Funds are based on actual fees and expenses incurred by the Funds for the twelve-month period ended January 31, 2025.

The level of expense savings (or increases) will vary depending upon the combination of the Funds in the Reorganizations and the resulting size of the Combined Fund, and furthermore, there can be no assurance that future expenses will not increase or that any expense savings for any Fund will be realized. Because each of the Reorganizations may occur whether or not the other Reorganization is approved, several combinations are possible, and the *pro forma* effects on operating expenses for all possible combinations are not illustrated in the table below. As noted above, however, the scenarios presented below capture the high and low range of possible *pro forma* outcomes for the Reorganizations presented in this Joint Proxy Statement/Prospectus.

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **MVT** | **MIY** | **MVF** | **Acquiring Fund<br>(MYI)** | **Combined Fund**<br> **(MVT into MYI)** | **Combined Fund**<br> **(MVT, MIY and MVF<br>into MYI)** |
|  **Shareholder Transaction Expenses** |  |  |  |  |  |  |
|  Maximum Sales Load (as a percentage of the offering price) imposed on purchases of common shares<sup>(1)</sup> |  |  |  |  |  |  |
|  Dividend Reinvestment Plan Fees<sup>(2)</sup> | $0.02 per share for open market purchases of<br> common shares | $0.02 per share for open market purchases of common shares | $0.02 per share for open market purchases of common shares | $0.02 per share for open market purchases of common shares | $0.02 per share for open market purchases of common shares | $0.02 per share for open market purchases of common<br> shares |
|  Dividend Reinvestment Plan Sale Transaction Fee <sup>(2)</sup> | [$2.50] |  |  | [$2.50] | [●] | [●] |
|  **Annual Total Expenses (as a percentage of average net assets attributable to common shares)** |  |  |  |  |  |  |
|  Investment Management Fees<sup>(3)(4)</sup> | 0.73% | 0.79% | 0.74% | 0.80% | 0.78% | 0.78% |
|  Other Expenses | 0.12% | 0.09% | 0.10% | 0.07% | 0.06% | 0.04% |
|  Interest Expense<sup>(5)</sup> | 1.42% | 2.59% | 1.44% | 1.81% | 1.72% | 1.82% |

---

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##### [**Table of Contents**](#toc)

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| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  Acquired Fund Fees and Expenses | 0.01% | 0.01% | 0.00% | 0.00% | 0.00% | 0.01% |
|  Total Annual Fund Operating Expenses<sup>(5)</sup> | 2.28% | 3.48% | 2.28% | 2.68% | 2.56% | 2.65% |

---

(1) No sales load will be charged in connection with the issuance of Acquiring Fund common shares as part of the
Reorganizations. Common shares are not available for purchase from the Funds but may be purchased on the NYSE through a broker-dealer subject to individually negotiated commission rates. Common shares purchased in the secondary market may be subject
to brokerage commissions or other charges.

(2) The Reinvestment Plan Agent's fees for the handling of the reinvestment of distributions will be paid
by the Fund. However, each participant will pay a $0.02 per share fee incurred in connection with open-market purchases, which will be deducted from the value of the dividend. The automatic reinvestment of all distributions will not relieve
participants of any U.S. federal, state or local income tax that may be payable on such dividends or distributions. [For [●] and [●], participants that request a sale of shares are subject to a $0.02 per share brokerage commission. For
the Acquiring Fund and MVT, participants that request a sale of shares are subject to a $2.50 sales fee and a $0.15 per share sold brokerage commission fee. See "Automatic Dividend Reinvestment Plan" for additional information.]

(3) Each of MVT, MIY, MVF and the Acquiring Fund currently pays the Investment Advisor a monthly fee at an
annual contractual investment management fee rate of 0.50% of its average weekly managed assets. For purposes of calculating these fees, "managed assets" are determined as total assets of the Fund (including any assets attributable to
money borrowed for investment purposes) less the sum of its accrued liabilities (other than money borrowed for investment purposes). It is understood that the liquidation preference of any outstanding preferred shares (other than accumulated
dividends) and TOB Trusts is not considered a liability in determining the relevant Fund's NAV. If the Reorganizations are consummated, the annual contractual investment management fee rate of the Acquiring Fund will be the annual contractual
investment management fee rate of the Combined Fund, which will be 0.50% of the average daily net assets of the Combined Fund. The Combined Fund will have the same annual contractual investment management fee rate as MIY, MVF and the Acquiring Fund.

(4) Each Fund and the Investment Advisor have entered into the Fee Waiver Agreement, pursuant to which the
Investment Advisor has contractually agreed to waive the management fee with respect to any portion of each Fund's assets attributable to investments in any equity and fixed-income mutual funds and exchange-traded funds managed by the
Investment Advisor or its affiliates and other exchange-traded products sponsored by the Investment Advisor or its affiliates, in each case that have a contractual fee, through June 30, 2027. In addition, pursuant to the Fee Waiver Agreement,
the Investment Advisor has contractually agreed to waive its management fees by the amount of investment advisory fees each Fund pays to the Investment Advisor indirectly through its investment in money market funds managed by the Investment Advisor
or its affiliates, through June 30, 2027. The Fee Waiver Agreement may be terminated at any time, without the payment of any penalty, only by the Funds (upon the vote of a majority of the Independent Board Members or a majority of the
outstanding voting securities of each Fund), upon 90 days' written notice by each Fund to the Investment Advisor.

(5) The total expense table includes interest expense associated with the Funds' investments in TOBs (also
known as "inverse floaters"). Although such interest expense is actually paid by special purpose vehicles in which the Funds invest, they are recorded on the Funds' financial statements for accounting purposes. The total expense table
also includes, in interest expense, dividends associated with the VMTP Shares and VRDP Shares, as applicable, because the VMTP Shares and VRDP Shares, as applicable, are considered debt of the Funds for financial reporting purposes.

Each Fund uses leverage to seek to enhance its returns to common shareholders. This leverage generally takes two forms: the issuance of preferred shares and investment in TOBs. Both forms of leverage benefit common shareholders if the cost of the leverage is lower than the returns earned by a Fund when it invests the proceeds from the leverage. In order to help you better understand the costs associated with the Funds' leverage strategy, the Total Annual Fund Operating Expenses *(excluding interest expense)* for the Funds are presented below:

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| **MVT** | **MIY** | **MVF** | **Acquiring Fund<br>(MYI)** | ***Pro forma* Combined Fund**<br> **(MVT into MYI)** | ***Pro forma* Combined Fund**<br> **(MVT, MIY and MVF into MYI)** |
| [0.86%] | [0.89%] | [0.84%] | [0.87%] | [0.84%] | [0.83%] |

---

The following example is intended to help you compare the costs of investing in the common shares of the Combined Fund *pro forma* if (i) only the MVT Reorganization is completed (and (ii) all of the Reorganizations are completed with the costs of investing in MVT, MIY, MVF and the Acquiring Fund without the Reorganizations. An investor in common shares would pay the following expenses on a $1,000 investment, assuming (1) the "Total Annual Fund Operating Expenses" for each Fund set forth in the total expenses table above and (2) a 5% annual return throughout the period:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **1 Year** | **3 Years** | **5 Years** | **10 Years** |
|  MVT | $23 | $71 | $122 | $262 |

---

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##### [**Table of Contents**](#toc)

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **1 Year** | **3 Years** | **5 Years** | **10 Years** |
|  MIY | $35 | $107 | $181 | $376 |
|  MVF | $23 | $71 | $122 | $262 |
|  Acquiring Fund (MYI) | $27 | $83 | $142 | $302 |
|  *Pro forma* Combined Fund (MVT into MYI) | $26 | $80 | $136 | $290 |
|  *Pro forma* Combined Fund (MVT, MIY and MVF into MYI) | $27 | $82 | $141 | $298 |

---

The examples set forth above assume common shares of each Fund were owned as of the completion of the Reorganizations and the reinvestment of all dividends and distributions and uses a 5% annual rate of return as mandated by SEC regulations. The examples should not be considered a representation of past or future expenses or annual rates of return. Actual expenses or annual rates of return may be more or less than those assumed for purposes of the examples.

Common shareholders of each Fund will indirectly bear all or a portion of the costs of the Reorganizations. The expenses of the Reorganizations of MVT, MIY, MVF and the Acquiring Fund are estimated to be approximately $242,000, $364,000, $319,000 and $480,000. The actual costs associated with the Reorganizations may be more or less than the estimated costs discussed herein.

VMTP Holders and VRDP Holders, as applicable, are not expected to bear any costs of the Reorganizations.

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##### [**Table of Contents**](#toc)
**CAPITALIZATION TABLE** 

The Board of each Fund may authorize separate classes of shares together with such designation of preferences, rights, voting powers, restrictions, limitations, qualifications or terms as may be determined from time to time by the Board of such Fund. The tables below set forth (i) the capitalization of MVT and MYI as of July 31, 2025 and the *pro forma* capitalization of the Combined Fund assuming only the MVT Reorganization was consummated as of July 31, 2025; (ii) the capitalization of MIY and MYI as of July 31, 2025 and the *pro forma* capitalization of the Combined Fund assuming only the MIY Reorganization was consummated as of July 31, 2025; (iii) the capitalization of MVF and MYI as of July 31, 2025 and the *pro forma* capitalization of the Combined Fund assuming only the MVF Reorganization was consummated as of July 31, 2025; and (iv) the capitalization of the Funds as of July 31, 2025 and the *pro forma* capitalization of the Combined Fund assuming all of the Reorganizations were consummated as of July 31, 2025.

**Capitalization of MVT and MYI as of July 31, 2025 and *pro forma* capitalization of the Combined Fund assuming only the MVT Reorganization was consummated as of July 31, 2025 (unaudited)** 

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **MVT** | **Acquiring Fund**<br> **(MYI)** | **Adjustments** | ***Pro forma***<br>**Combined**<br>**Fund (MVT**<br>**into MYI)** |
|  **Net Assets Attributable to:** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Common Shares<sup>(1)</sup>  | $[●] | $[●] | $[●] | $[●] |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; VMTP/VRDP Shares | $[●] | $[●] | $[●] | $[●] |
|  **Shares Outstanding** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Common Shares | $[●] | $[●] | $[●] | $[●] |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; VMTP/VRDP Shares | $[77,700,000] | $[356,400,000] | $[●] | $[●] |
|  **NAV per Common Share** | **$[**●**]** | **$[**●**]** | **$[**●**]** | **$[**●**]** |
|  **Liquidation Preference per VMTP/VRDP Share** | $100000 | $100000 | $100000 | $100000 |

---

(1) Based on the number of outstanding common shares as of July 31, 2025.

(2) Reflects non-recurring aggregate estimated Reorganization expenses of
$[●], of which $[●] was attributable to MVT, and $[●] was attributable to the Acquiring Fund. The actual costs associated with the Reorganizations may be more or less than the estimated costs discussed herein. These costs will be
amortized over the life of the VRDP Shares by the Combined Fund. Reflects undistributed net investment income (previously defined as "UNII") of $[●], of which $[●] was attributable to MVT and $[●] was attributable to the
Acquiring Fund. Reflects Undistributed Long Term Capital Gains of $[●] attributed to MVT.

(3) Reflects adjustments due to differences in per common share NAV.

**Capitalization of MIY and MYI as of July 31, 2025 and *pro forma* capitalization of the Combined Fund assuming only the MIY Reorganization is consummated (unaudited)** 

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **MIY** | **Acquiring Fund**<br> **(MYI)** | **Adjustments** | ***Pro forma***<br>**Combined**<br>**Fund (MIY**<br>**into MYI)** |
|  **Net Assets Attributable to:** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Common Shares<sup>(1)</sup>  | $[●] | $[●] | $[●] | $[●] |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; VMTP/VRDP Shares | $[●] | $[●] | $[●] | $[●] |
|  **Shares Outstanding** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Common Shares | $[●] | $[●] | $[●] | $[●] |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; VMTP/VRDP Shares | $[231,900,000] | $[356,400,000] | $[●] | $[●] |
|  **NAV per Common Share** | **$[**●**]** | **$[**●**]** | **$[**●**]** | **$[**●**]** |
|  **Liquidation Preference per VMTP/VRDP Share** | $100000 | $100000 | $100000 | $100000 |

---

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##### [**Table of Contents**](#toc)
(1) Based on the number of outstanding common shares as of July 31, 2025.

(2) Reflects non-recurring aggregate estimated Reorganization expenses of
$[●], of which $[●] was attributable to MIY, and $[●] was attributable to the Acquiring Fund. The actual costs associated with the Reorganizations may be more or less than the estimated costs discussed herein. These costs will be
amortized over the life of the VRDP Shares by the Combined Fund. Reflects undistributed net investment income (previously defined as "UNII") of $[●], of which $[●] was attributable to MIY and $[●] was attributable to the
Acquiring Fund. Reflects Undistributed Long Term Capital Gains of $[●] attributed to MIY.

(3) Reflects adjustments due to differences in per common share NAV.

**Capitalization of MVF and MYI as of July 31, 2025 and *pro forma* capitalization of the Combined Fund assuming only the MVF Reorganization is consummated (unaudited)** 

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **MVF** | **Acquiring Fund**<br> **(MYI)** | **Adjustments** | ***Pro forma***<br>**Combined**<br>**Fund (MVF**<br>**into MYI)** |
|  **Net Assets Attributable to:** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Common Shares<sup>(1)</sup>  | $[●] | $[●] | $[●] | $[●] |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; VMTP/VRDP Shares | $[●] | $[●] | $[●] | $[●] |
|  **Shares Outstanding** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Common Shares | $| $[●] | $[●] | $[●] |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; VMTP/VRDP Shares | $[153,600,000] | $[356,400,000] | $[●] | $[●] |
|  **NAV per Common Share** | **$[**●**]** | **$[**●**]** | **$[**●**]** | **$[**●**]** |
|  **Liquidation Preference per VMTP/VRDP Share** | $100000 | $100000 | $100000 | $100000 |

---

(1) Based on the number of outstanding common shares as of July 31, 2025.

(2) Reflects non-recurring aggregate estimated Reorganization expenses of
$[●], of which $[●] was attributable to MVF, and $[●] was attributable to the Acquiring Fund. These costs will be amortized over the life of the VRDP Shares by the Combined Fund. Reflects undistributed net investment income
(previously defined as "UNII") of $[●], of which $[●] was attributable to MVF and $[●] was attributable to the Acquiring Fund. Reflects Undistributed Long Term Capital Gains of $[●] attributed to MVF.

(3) Reflects adjustments due to differences in per common share NAV.

**Capitalization of each Fund as of July 31, 2025 and *pro forma* capitalization of the Combined Fund assuming all Reorganizations are consummated (unaudited)** 

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **MVT** | **MIY** | **MVF** | **Acquiring Fund**<br>**(MYI)** | **Adjustments** | ***Pro forma***<br>**Combined**<br>**Fund (MVT,<br>MIY and**<br>**MVF**<br>**into MYI)** |
|  **Net Assets Attributable to:** |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Common Shares<sup>(1)</sup>  | $[●] | $[●] | $[●] | $[●] | $[●] | $[●] |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; VMTP/VRDP Shares | $[●] | $[●] | $[●] | $[●] | $[●] | $[●] |
|  **Shares Outstanding** |  |  |  |  | **—** |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Common Shares | $[●] | $[●] | $[●] | $[●] | $[●] | $[●] |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; VMTP/VRDP Shares | $[77,700,000] | $[231,900,000] | $[153,600,000] | $[356,400,000] | $[●] | $[819,600,000] |
|  **NAV per Common Share** | $[●] | $[●] | $[●] | $[●] | **$[**●**]** | $[●] |
|  **Liquidation Preference per VMTP/VRDP Share** | $100000 | $100000 | $100000 | $100000 | $100000 | $100000 |

---

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##### [**Table of Contents**](#toc)
(1) Based on the number of outstanding common shares as of July 31, 2025.

(2) Reflects non-recurring aggregate estimated Reorganization expenses of
$[●], of which $[●] was attributable to MVT, $[●] was attributable to MIY, $[●] was attributable to MVF and $[●] was attributable to the Acquiring Fund. The actual costs associated with the Reorganizations may be more
or less than the estimated costs discussed herein. These costs will be amortized over the life of the VRDP Shares by the Combined Fund. Reflects UNII of $[●], of which $[●] was attributable to MVT, $[●] was attributable to MIY,
$[●] was attributable to MVF and $[●] was attributable to the Acquiring Fund.

(3) Reflects adjustments due to differences in per common share NAV.

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##### [**Table of Contents**](#toc)
**FINANCIAL HIGHLIGHTS** 

<u>BlackRock MuniVest Fund II, Inc. (MVT)</u> 

The Financial Highlights table is intended to help you understand MVT's financial performance for the periods shown. Certain information reflects the financial results for a single common share of MVT. The total returns in the table represent the rate an investor would have earned or lost on an investment in MVT (assuming reinvestment of all dividends and/or distributions, if applicable). The information for the six-month period ended January 31, 2025 is unaudited. The information for the remaining periods shown has been audited by [●], MVT's independent registered public accounting firm. Financial statements for the fiscal year ended July 31, 2024 and the Report of the Independent Registered Public Accounting Firm thereon appear in MVT's Annual Report for the fiscal year ended July 31, 2024 and financial statements for the six-month period ended January 31, 2025 appear in MVT's most recent Semi-Annual Report, which is available upon request.

*Please see next page for Financial Highlights Table* 

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##### [**Table of Contents**](#toc)
**MVT Financial Highlights** 

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| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
|  | MVT | MVT | MVT | MVT | MVT | MVT | MVT |
|  | Six Months<br>Ended<br>01/31/25<br>(unaudited) | Year Ended<br>07/31/24 | Year Ended<br>07/31/23 | Period from<br>05/01/22<br>to 07/31/22 | Year Ended<br>04/30/22 | Year Ended<br>04/30/21 | Year Ended<br>04/30/20 |
|  **Net asset value, beginning of period** | $12.40 | $12.36 | $12.91 | $12.91 | $15.60 | $13.60 | $14.87 |
| &nbsp;&nbsp;&nbsp;&nbsp; Net investment income(a) | 0.24 | 0.43 | 0.42 | 0.13 | 0.65 | 0.72 | 0.68 |
| &nbsp;&nbsp;&nbsp;&nbsp; Net realized and unrealized gain (loss) | (0.24) | 0.14 | (0.52) | 0.03 | (2.64) | 1.97 | (1.27) |
|  Net increase (decrease) from investment operations |  | 0.57 | (0.10) | 0.16 | (1.99) | 2.69 | (0.59) |
|  **Distributions to Common Shareholders**(b) |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; From net investment income | (0.32)(c) | (0.48) | (0.38) | (0.16) | (0.70) | (0.69) | (0.68) |
| &nbsp;&nbsp;&nbsp;&nbsp; Return of capital |  | (0.05) | (0.07) |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total distributions to Common Shareholders | (0.32) | (0.53) | (0.45) | (0.16) | (0.70) | (0.69) | (0.68) |
|  **Net asset value, end of period** | $12.08 | $12.40 | $12.36 | $12.91 | $12.91 | $15.60 | $13.60 |
|  **Market price, end of period** | $10.73 | $11.04 | $10.66 | $12.04 | $11.89 | $15.15 | $12.55 |
|  **Total Return Applicable to Common Shareholders**(e) |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Based on net asset value | 0.24 %(e) | 5.47% | (0.14)% | 1.31 %(e) | (13.19)% | 20.22% | (4.21)% |
| &nbsp;&nbsp;&nbsp;&nbsp; Based on market price | 0.01 %(e) | 8.88% | (7.65)% | 2.58 %(e) | (17.67)% | 26.52% | (8.02)% |
|  **Ratios to Average Net Assets Applicable to Common Shareholders**(g) |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Total expenses | 2.91 %(g) | 3.13% | 3.41% | 2.26 %(g)(h) | 1.49% | 1.47% | 2.14% |
| &nbsp;&nbsp;&nbsp;&nbsp; Total expenses after fees waived and/or reimbursed | 2.78 %(g) | 3.07% | (7.65)% | 2.58 %(e) | 1.49% | 1.47% | 2.13% |
| &nbsp;&nbsp;&nbsp;&nbsp; Total expenses after fees waived and/or reimbursed and excluding interest expense, fees, amortization of offering costs and reorganization costs(i)(j) | 0.74 %<sup>(g)</sup> | 0.79% | 0.92% | 0.96 %(g)(h) | 0.90% | 0.90% | 0.89% |
| &nbsp;&nbsp;&nbsp;&nbsp; Net investment income to Common Shareholders | 3.80 %(g) | 3.57% | 3.45% | 4.24 %(g) | 4.28% | 4.75% | 4.51% |
|  **Supplemental Data** |  |  |  |  |  |  |  |
|  Net assets applicable to Common Shareholders, end of period (000) | $252024 | $258638 | $260771 | $275901 | $275829 | $332905 | $290223 |
|  VRDP Shares outstanding at $100,000 liquidation value, end of period (000) | $77700 | $77700 | $140000 | $140000 | $140000 | $140000 | $140000 |
|  Asset coverage per VRDP Shares at $100,000 liquidation value, end of period | $284859 (j) | $319704 (j) | $280704 (j) | $243146 (j) | $297021 (k) | $337789 (k) | $307302 (k) |
|  TOB Trust Certificates, end of period (000) | $58633 | $40021 | $4308 | $52740 | $60726 | $57997 | $56198 |
|  Asset coverage per $1,000 of TOB Trust Certificates, end of period(m) | $6624 | $9404 | $94029 | $8886 | N/A | N/A | N/A |
|  Portfolio turnover rate | 8% | 38% | 51% | 4% | 14% | 13% | 18% |

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Based on average Common Shares outstanding.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Distributions for annual periods determined in accordance with U.S. federal income tax regulations.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) A portion of the distributions from net investment income may be deemed a return of capital or net realized
gain at fiscal year-end.

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(d) Total returns based on market price, which can be significantly greater or less than the net asset value, may
result in substantially different returns. Where applicable, excludes the effects of any sales charges and assumes the reinvestment of distributions at actual reinvestment prices.

(e) Not annualized.

(f) Excludes fees and expenses incurred indirectly as a result of investments in underlying funds.

(g) Annualized.

(h) Audit and printing costs were not annualized in the calculation of the expense ratios. If these expenses were
annualized, the total expenses, total expenses after fees waived and/or reimbursed and total expenses after fees waived and/or reimbursed and excluding interest expense, fees and amortization of offering costs would have been 2.31%, 2.31% and 1.01%,
respectively.

(i) Interest expense, fees and amortization of offering costs related to TOB Trusts and/or VMTP Shares. See Note
4 and Note 10 of the Notes to Financial Statements for details.

(j) Calculated by subtracting the Fund's total liabilities (not including VMTP Shares and TOBs) from the
Fund's total assets and dividing this by the sum of the amount of TOBs and liquidation value of the VMTP Shares, and by multiplying the results by 100,000.

(k) Calculated by subtracting the Fund's total liabilities (not including VMTP Shares) from the Fund's
total assets and dividing this by the liquidation value of the VMTP Shares, and by multiplying the results by 100,000.

(l) Effective July 18, 2022, TOB Trust Certificates are treated as senior securities pursuant to Rule 18f-4 of the 1940 Act. Calculated by subtracting the Fund's total liabilities (not including VMTP Shares and TOBs) from the Fund's total assets and dividing this by the amount of TOBs, and by multiplying
the results by 1,000.

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| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | MVT | MVT | MVT | MVT | MVT |
|  | Year Ended April 30, | Year Ended April 30, | Year Ended April 30, | Year Ended April 30, | Year Ended April 30, |
|  | 2019 | 2018 | 2017 | 2016 | 2015 |
|  **Net asset value, beginning of year** | $15.26 | $15.39 | $16.83 | $16.09 | $15.34 |
| &nbsp;&nbsp;&nbsp;&nbsp; Net investment income(a) | 0.71 | 0.73 | 0.79 | 0.88 | 0.90 |
| &nbsp;&nbsp;&nbsp;&nbsp; Net realized and unrealized gain (loss) | 0.46 | 0.02 | (1.12) | 0.77 | 0.80 |
|  Net increase (decrease) from investment operations | 1.17 | 0.75 | (0.33) | 1.65 | 1.70 |
|  **Distributions to Common Shareholders(b)** | **Distributions to Common Shareholders(b)** | **Distributions to Common Shareholders(b)** | **Distributions to Common Shareholders(b)** | **Distributions to Common Shareholders(b)** | **Distributions to Common Shareholders(b)** |
| &nbsp;&nbsp;&nbsp;&nbsp; From net investment income | (0.68) | (0.73) | (0.85) | (0.91) | (0.95) |
| &nbsp;&nbsp;&nbsp;&nbsp; From net realized gain | (0.00)(c) | (0.15) | (0.26) |  |  |
|  Total distributions to Common Shareholders | (0.68) | (0.88) | (1.11) | (0.91) | (0.95) |
|  **Net asset value, end of year** | $15.75 | $15.26 | $15.39 | $16.83 | $16.09 |
|  **Market price, end of year** | $14.31 | $13.57 | $14.59 | $16.94 | $15.60 |
|  **Total Return Applicable to Common Shareholders(d)** | **Total Return Applicable to Common Shareholders(d)** | **Total Return Applicable to Common Shareholders(d)** | **Total Return Applicable to Common Shareholders(d)** | **Total Return Applicable to Common Shareholders(d)** | **Total Return Applicable to Common Shareholders(d)** |
|  Based on net asset value | 8.45% | 5.34% | (1.84)% | 10.92% | 11.43% |
|  Based on market price | 10.81% | (1.20)% | (7.55)% | 15.15% | 11.52% |
|  **Ratios to Average Net Assets Applicable to Common Shareholders** | **Ratios to Average Net Assets Applicable to Common Shareholders** | **Ratios to Average Net Assets Applicable to Common Shareholders** | **Ratios to Average Net Assets Applicable to Common Shareholders** | **Ratios to Average Net Assets Applicable to Common Shareholders** | **Ratios to Average Net Assets Applicable to Common Shareholders** |
|  Total expenses | 2.53% | 2.12% | 1.84% | 1.46% | 1.46% |
|  Total expenses after fees waived and/or reimbursed and paid indirectly | 2.53% | 2.11% | 1.84% | 1.46% | 1.45% |
|  Total expenses after fees waived and/or reimbursed and paid indirectly and excluding interest expense, fees and amortization of offering costs(e) | 0.94% | 0.90% | 0.90% | 0.89% | 0.90% |
|  Net investment income to Common Shareholders | 4.64% | 4.64% | 4.87% | 5.48% | 5.61% |
|  **Supplemental Data** | **Supplemental Data** | **Supplemental Data** | **Supplemental Data** | **Supplemental Data** | **Supplemental Data** |
|  Net assets applicable to Common Shareholders, end of year (000) | $270707 | $262198 | $264551 | $289003 | $276308 |
|  VMTP Shares outstanding at $100,000 liquidation value, end of year (000) | $125900 | $125900 | $125900 | $125900 | $125900 |
|  Asset coverage per VMTP Shares at $100,000 liquidation value, end of year | $315017 | $308259 | $310128 | $329549 | $319467 |
|  Borrowings outstanding, end of year (000) | $51999 | $41043 | $30783 | $31286 | $28685 |
|  Portfolio turnover rate | 29% | 31% | 36% | 28% | 37% |

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(a) Based on average Common Shares outstanding.

(b) Distributions for annual periods determined in accordance with U.S. federal income tax regulations.

(c) Amount is greater than $(0.005) per share.

(d) Total returns based on market price, which can be significantly greater or less than the net asset value, may result in
substantially different returns. Where applicable, excludes the effects of any sales charges and assumes the reinvestment of distributions at actual reinvestment prices.

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(e) Interest expense, fees and amortization of offering costs related to TOB Trusts and/or VMTP Shares. See Note 4 and Note
10 of the Notes to Financial Statements for details.

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##### [**Table of Contents**](#toc)
<u>BlackRock MuniYield Michigan Quality Fund, inc. (MIY)</u> 

The Financial Highlights table is intended to help you understand MIY's financial performance for the periods shown. Certain information reflects the financial results for a single common share of MIY. The total returns in the table represent the rate an investor would have earned or lost on an investment in MIY (assuming reinvestment of all dividends and/or distributions, if applicable). The information for the six-month period ended January 31, 2025 is unaudited. The information for the remaining periods shownhas been audited by [●], MIY's independent registered public accounting firm. Financial statements for the fiscal year ended July 31, 2024 and the Report of the Independent Registered Public Accounting Firm thereon appear in MIY's Annual Report for the fiscal year ended July 31, 2024 and financial statements for the six-month period ended January 31, 2025 appear in MIY's most recent Semi-Annual Report, which is available upon request.

*Please see next page for Financial Highlights Table* 

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##### [**Table of Contents**](#toc)
**MIY Financial Highlights** 

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| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **MIY** | **MIY** | **MIY** | **MIY** | **MIY** | **MIY** |
|  | Six Months<br>Ended<br>01/31/25<br>(unaudited) | Year Ended<br>07/31/24 | Year Ended<br>07/31/23 | Year Ended<br>07/31/22 | Year Ended<br>07/31/21 | Year Ended<br>07/31/20 |
|  **Net asset value, beginning of period** | $13.08 | $12.94 | $13.56 | $16.04 | $15.88 | $15.70 |
| &nbsp;&nbsp;&nbsp;&nbsp; Net investment income(a) | 0.22 | 0.42 | 0.42 | 0.61 | 0.68 | 0.63 |
| &nbsp;&nbsp;&nbsp;&nbsp; Net realized and unrealized gain (loss) | (0.25) | 0.23 | (0.55) | (2.42) | 0.14 | 0.14 |
|  Net increase (decrease) from investment operations | (0.03) | 0.65 | (0.13) | (1.81) | 0.82 | 0.77 |
|  **Distributions to Common Shareholders**(b) |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; From net investment income | (0.31)(c) | (0.46) | (0.43) | (0.67) | (0.66) | (0.59) |
| &nbsp;&nbsp;&nbsp;&nbsp; Return of capital |  | (0.05) | (0.06) |  |  |  |
|  Total distributions to Common Shareholders | (0.31) | (0.51) | (0.49) | (0.67) | (0.66) | (0.59) |
|  **Net asset value, end of period** | $12.74 | $13.08 | $12.94 | $13.56 | $16.04 | $15.88 |
|  **Market price, end of period** | $11.70 | $11.61 | $11.12 | $13.67 | $15.80 | $14.24 |
|  **Total Return Applicable to Common Shareholders**(e) |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Based on net asset value | 0.01 %(e) | 5.82% | (0.40)% | (11.35)% | 5.61% | 5.52% |
| &nbsp;&nbsp;&nbsp;&nbsp; Based on market price | 3.47 %(e) | 9.30% | (15.09)% | (9.28)% | 16.02% | 4.31% |
|  **Ratios to Average Net Assets Applicable to Common Shareholders**(g) |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Total expenses | 3.37 %(g) | 3.66 %(h) | 3.27% | 1.66% | 1.44% | 2.07% |
| &nbsp;&nbsp;&nbsp;&nbsp; Total expenses after fees waived and/or reimbursed | 3.32 %(g) | 3.62 %(h) | 3.27% | 1.66% | 1.44% | 2.07% |
| &nbsp;&nbsp;&nbsp;&nbsp; Total expenses after fees waived and/or reimbursed and excluding interest expense, fees, amortization of offering costs and reorganization costs(i)(j) | 0.83 %(g) | 0.87 %<sup>(h)</sup> | 0.91% | 0.88% | 0.85% | 1.20% |
| &nbsp;&nbsp;&nbsp;&nbsp; Net investment income to Common Shareholders | 3.43 %(g) | 3.28% | 3.31% | 4.10% | 4.32% | 4.06% |
|  **Supplemental Data** |  |  |  |  |  |  |
|  Net assets applicable to Common Shareholders, end of period (000) | $368919 | $378950 | $378173 | $400206 | $473464 | $468752 |
|  VRDP Shares outstanding at $100,000 liquidation value, end of period (000) | $231900 | $231900 | $231900 | $231900 | $231900 | $231900 |
|  Asset coverage per VRDP Shares at $100,000 liquidation value, end of period | $259085 (k) | $263411 (k) | $258740 (k) | $246506 (k) | $304167 (l) | $302135 (l) |
|  TOB Trust Certificates, end of period (000) | $— | $— | $6334 | $41267 | $41267 | $41362 |
|  Asset coverage per $1,000 of TOB Trust Certificates, end of period(m) | N/A | N/A | $97262 | $16309 | N/A | N/A |
|  Portfolio turnover rate | 12% | 27% | 37% | 22% | 7% | 9% |

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(a) Based on average Common Shares outstanding.

(b) Distributions for annual periods determined in accordance with U.S. federal income tax regulations.

(c) A portion of the distributions from net investment income may be deemed a return of capital or net realized
gain at fiscal year-end.

(d) Total returns based on market price, which can be significantly greater or less than the net asset value, may
result in substantially different returns. Where applicable, excludes the effects of any sales charges and assumes the reinvestment of distributions at actual reinvestment prices.

(e) Not annualized.

(f) Excludes fees and expenses incurred indirectly as a result of investments in underlying funds.

(g) Annualized.

(h) Includes non-recurring expenses of reorganization costs. Without
these costs, total expenses, total expenses after fees waived and/or reimbursed and total expenses after fees waived and/or reimbursed and excluding interest expense, fees, and amortization of offering costs would have been 3.64%, 3.60% and 0.85%,
respectively.

(i) Interest expense, fees and amortization of offering costs related to TOB Trusts and/or VRDP Shares. See Note
4 and Note 10 of the Notes to Financial Statements for details.

(j) The total expense ratio after fees waived and/or reimbursed and excluding interest expense, fees,
amortization of offering costs, liquidity and remarketing fees as follows:

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| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | Six Months<br>Ended<br>01/31/25<br>(unaudited) | Year<br>Ended<br>07/31/24 | Year<br>Ended<br>07/31/23 | Year<br>Ended<br>07/31/22 | Year<br>Ended<br>07/31/21 | Year<br>Ended<br>07/31/20 |
|  Expense Ratios | 0.83% | 0.87% | 0.91% | 0.88% | 0.85% | 0.88% |

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(k) Calculated by subtracting the Fund's total liabilities (not including VRDP Shares and TOBs) from the
Fund's total assets and dividing this by the sum of the amount of TOBs and liquidation value of the VRDP Shares, and by multiplying the results by 100,000.

(l) Calculated by subtracting the Fund's total liabilities (not including VRDP Shares) from the Fund's
total assets and dividing this by the liquidation value of the VRDP Shares, and by multiplying the results by 100,000.

(m) Effective July 18, 2022, TOB Trust Certificates are treated as senior securities pursuant to Rule 18f-4 of the 1940 Act. Calculated by subtracting the Fund's total liabilities (not including VRDP Shares and TOBs) from the Fund's total assets and dividing this by the amount of TOBs, and by multiplying
the results by 1,000.

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| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | MIY | MIY | MIY | MIY | MIY |
|  | Year Ended April 30, | Year Ended April 30, | Year Ended April 30, | Year Ended April 30, | Year Ended April 30, |
| | 2019 | 2018 | 2017 | 2016 | 2015 |
|  **Net asset value, beginning of year** | $14.38 | $14.71 | $15.61 | $15.29 | $14.71 |
| &nbsp;&nbsp;&nbsp;&nbsp; Net investment income(a) | 0.73 | 0.79 | 0.84 | 0.90 | 0.91 |
| &nbsp;&nbsp;&nbsp;&nbsp; Net realized and unrealized gain (loss) | 0.17 | (0.30) | (0.87) | 0.35 | 0.62 |
|  Net increase (decrease) from investment operations | 0.90 | 0.49 | (0.03) | 1.25 | 1.53 |
|  Distributions to Common Shareholders from net investment income(b) | (0.72) | (0.82) | (0.87) | (0.93) | (0.95) |
|  **Net asset value, end of year** | $14.56 | $14.38 | $14.71 | $15.61 | $15.29 |
|  **Market price, end of year** | $14.15 | $13.12 | $14.75 | $15.73 | $14.91 |
|  **Total Return Applicable to Common Shareholders(c)** | **Total Return Applicable to Common Shareholders(c)** | **Total Return Applicable to Common Shareholders(c)** | **Total Return Applicable to Common Shareholders(c)** | **Total Return Applicable to Common Shareholders(c)** | **Total Return Applicable to Common Shareholders(c)** |
|  Based on net asset value | 6.80% | 3.47% | (0.16)% | 8.81% | 10.91% |
|  Based on market price | 13.76% | (5.85)% | (0.65)% | 12.36% | 12.51% |
|  **Ratios to Average Net Assets Applicable to Common Shareholders** | **Ratios to Average Net Assets Applicable to Common Shareholders** | **Ratios to Average Net Assets Applicable to Common Shareholders** | **Ratios to Average Net Assets Applicable to Common Shareholders** | **Ratios to Average Net Assets Applicable to Common Shareholders** | **Ratios to Average Net Assets Applicable to Common Shareholders** |
|  Total expenses | 2.27% | 2.00% | 1.75% | 1.39% | 1.37% |
|  Total expenses after fees waived and/or reimbursed | 2.27% | 2.00% | 1.75% | 1.39% | 1.36% |
|  Total expenses after fees waived and/or reimbursed and excluding interest expense, fees and amortization of offering costs(d)(e) | 0.88% | 0.89% | 0.89% | 0.88% | 0.89% |
|  Net investment income to Common Shareholders | 5.10% | 5.33% | 5.52% | 5.91% | 5.94% |
|  **Supplemental Data** | **Supplemental Data** | **Supplemental Data** | **Supplemental Data** | **Supplemental Data** | **Supplemental Data** |
|  Net assets applicable to Common Shareholders, end of year (000) | $682832 | $674077 | $687869 | $728621 | $713237 |
|  VRDP Shares outstanding at $100,000 liquidation value, end of year (000) | $251400 | $251400 | $251400 | $251400 | $251400 |
|  Asset coverage per VRDP Shares at $100,000 liquidation value, end of year | $371612 | $368129 | $373615 | $389825 | $383706 |
|  Borrowings outstanding, end of year (000) | $136925 | $167150 | $168316 | $173776 | $163621 |
|  Portfolio turnover rate | 17% | 9% | 10% | 9% | 11% |

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(a) Based on average Common Shares outstanding.

(b) Distributions for annual periods determined in accordance with U.S. federal income tax regulations.

(c) Total returns based on market price, which can be significantly greater or less than the net asset value, may result in
substantially different returns. Where applicable, excludes the effects of any sales charges and assumes the reinvestment of distributions at actual reinvestment prices.

(d) Interest expense, fees and amortization of offering costs related to TOB Trusts and/or VRDP Shares. See Note 4 and Note
10 of the Notes to Financial Statements for details.

(e) The total expense ratio after fees waived and/or reimbursed and excluding interest expense, fees, amortization of
offering costs, liquidity and remarketing fees as follows:

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| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | Year Ended April 30, | Year Ended April 30, | Year Ended April 30, | Year Ended April 30, | Year Ended April 30, |
| | 2019 | 2018 | 2017 | 2016 | 2015 |
|  Expense ratios | 0.88% | 0.88% | 0.89% | 0.88% | 0.88% |

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<u>BlackRock MuniVest Fund, Inc. (MVF)</u> 

The Financial Highlights table is intended to help you understand MVF's financial performance for the periods shown. Certain information reflects the financial results for a single common share of MVF. The total returns in the table represent the rate an investor would have earned or lost on an investment in MVF (assuming reinvestment of all dividends and/or distributions, if applicable). The information for the six-month period ended January 31, 2025 is unaudited. The information for the remaining periods shown has been audited by [●], MVF's independent registered public accounting firm. Financial statements for the fiscal year ended July 31, 2024 and the Report of the Independent Registered Public Accounting Firm thereon appear in MVF's Annual Report for the fiscal year ended July 31, 2024 and financial statements for the six-month period ended January 31, 2025 appear in MVF's most recent Semi-Annual Report, which is available upon request.

*Please see next page for Financial Highlights Table* 

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##### [**Table of Contents**](#toc)
**MVF Financial Highlights** 

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| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
|  | MVF | MVF | MVF | MVF | MVF | MVF | MVF |
|  | Six Months<br>Ended<br>01/31/25<br>(unaudited) | Year Ended<br>07/31/24 | Year Ended<br>07/31/23 | Period from<br>09/01/21<br>to 07/31/22 | Year Ended<br>08/31/21 | Year Ended<br>08/31/20 | Year Ended<br>08/31/19 |
|  **Net asset value, beginning of period** | $8.05 | $7.90 | $8.37 | $10.08 | $9.60 | $9.83 | $9.35 |
| &nbsp;&nbsp;&nbsp;&nbsp; Net investment income(a) | 0.16 | 0.28 | 0.26 | 0.35 | 0.41 | 0.43 | 0.44 |
| &nbsp;&nbsp;&nbsp;&nbsp; Net realized and unrealized gain (loss) | (0.18) | 0.19 | (0.44) | (1.69) | 0.47 | (0.25) | 0.50 |
|  Net increase (decrease) from investment operations | (0.02) | 0.47 | (0.18) | (1.34) | 0.88 | 0.18 | 0.94 |
|  **Distributions to Common Shareholders**(b) |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; From net investment income | (0.20)(c) | (0.30) | (0.26) | (0.37) | (0.40) | (0.41) | (0.46) |
| &nbsp;&nbsp;&nbsp;&nbsp; Return of capital |  | (0.02) | (0.03) |  |  |  |  |
|  Total distributions to Common Shareholders | (0.20) | (0.32) | (0.29) | (0.37) | (0.40) | (0.41) | (0.46) |
|  **Net asset value, end of period** | $7.83 | $8.05 | $7.90 | $8.37 | $10.08 | $9.60 | $9.83 |
|  **Market price, end of period** | $7.25 | $7.35 | $6.83 | $7.81 | $9.80 | $8.77 | $9.49 |
|  **Total Return Applicable to Common Shareholders**(e) |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Based on net asset value | (0.02)%(e) | 6.78% | (1.57)% | (13.30)%(e) | 9.62% | 2.30% | 10.76% |
| &nbsp;&nbsp;&nbsp;&nbsp; Based on market price | 1.40 %<sup>(e)</sup> | 12.77% | (8.80)% | (16.79)%(e) | 16.66% | (3.19)% | 13.47% |
|  **Ratios to Average Net Assets Applicable to Common Shareholders**(g) |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Total expenses | 2.99 %(g) | 3.08% | 3.07% | 1.58 %(g) | 1.34% | 1.77% | 2.29% |
| &nbsp;&nbsp;&nbsp;&nbsp; Total expenses after fees waived and/or reimbursed | 2.88 %(g) | 3.02% | 3.06% | 1.58 %(g) | 1.34% | 1.77% | 2.29% |
| &nbsp;&nbsp;&nbsp;&nbsp; Total expenses after fees waived and/or reimbursed and excluding interest expense, fees, amortization of offering costs and reorganization costs(i)(j) | 0.75 %(g) | 0.76% | 0.85% | 0.86 %(g) | 0.84% | 0.85% | 0.87% |
| &nbsp;&nbsp;&nbsp;&nbsp; Net investment income to Common Shareholders | 3.90 %(g) | 3.62% | 3.37% | 4.18 %(g) | 4.17% | 4.48% | 4.74% |
|  **Supplemental Data** |  |  |  |  |  |  |  |
|  Net assets applicable to Common Shareholders, end of period (000) | $472282 | $510547 | $505761 | $542470 | $653755 | $622750 | $637636 |
|  VRDP Shares outstanding at $100,000 liquidation value, end of period (000) | $153600 | $153600 | $243800 | $243800 | $243800 | $243800 | $243800 |
|  Asset coverage per VRDP Shares at $100,000 liquidation value, end of period | $276415 <br>(i) | $322905 <br>(i) | $287855 <br>(i) | $260636 <br>(i) | $368152 <br>(j) | $355435 <br>(j) | $361541 <br>(j) |
|  TOB Trust Certificates, end of period (000) | $114111 | $75443 | $25430 | $93902 | $106029 | $97266 | $100463 |
|  Asset coverage per $1,000 of TOB Trust Certificates, end of period(m) | $6485 | $9803 | $30475 | $9373 | N/A | N/A | N/A |
|  Portfolio turnover rate | 18% | 37% | 37% | 26% | 13% | 18% | 31% |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Based on average Common Shares outstanding.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Distributions for annual periods determined in accordance with U.S. federal income tax regulations.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) A portion of the distributions from net investment income may be deemed a return of capital or net realized
gain at fiscal year-end.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) Total returns based on market price, which can be significantly greater or less than the net asset value, may
result in substantially different returns. Where applicable, excludes the effects of any sales charges and assumes the reinvestment of distributions at actual reinvestment prices.

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##### [**Table of Contents**](#toc)
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) Not annualized.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) Excludes fees and expenses incurred indirectly as a result of investments in underlying funds.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g) Annualized.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h) Interest expense, fees and amortization of offering costs related to TOB Trusts and/or VMTP Shares. See Note
4 and Note 10 of the Notes to Financial Statements for details.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) Calculated by subtracting the Fund's total liabilities (not including VMTP Shares and TOBs) from the
Fund's total assets and dividing this by the sum of the amount of TOBs and liquidation value of the VMTP Shares, and by multiplying the results by 100,000.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(j) Calculated by subtracting the Fund's total liabilities (not including VMTP Shares) from the Fund's
total assets and dividing this by the liquidation value of the VMTP Shares, and by multiplying the results by 100,000.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(k) Effective July 18, 2022, TOB Trust Certificates are treated as senior securities pursuant to Rule 18f-4 of the 1940 Act. Calculated by subtracting the Fund's total liabilities (not including VMTP Shares and TOBs) from the Fund's total assets and dividing this by the amount of TOBs, and by multiplying
the results by 1,000.

------

##### [**Table of Contents**](#toc)

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | MVF | MVF | MVF | MVF | MVF |
|  | Year Ended April 30, | Year Ended April 30, | Year Ended April 30, | Year Ended April 30, | Year Ended April 30, |
| | 2019 | 2018 | 2017 | 2016 | 2015 |
|  **Net asset value, beginning of year** | $13.37 | $13.69 | $14.45 | $14.18 | $13.78 |
| &nbsp;&nbsp;&nbsp;&nbsp; Net investment income(a) | 0.60 | 0.66 | 0.73 | 0.79 | 0.80 |
| &nbsp;&nbsp;&nbsp;&nbsp; Net realized and unrealized gain (loss) | 0.39 | (0.29) | (0.74) | 0.30 | 0.45 |
|  Net increase (decrease) from investment operations | 0.99 | 0.37 | (0.01) | 1.09 | 1.25 |
|  Distributions to Common Shareholders from net investment income(b) | (0.59) | (0.69) | (0.75) | (0.82) | (0.85) |
|  **Net asset value, end of year** | $13.77 | $13.37 | $13.69 | $14.45 | $14.18 |
|  **Market price, end of year** | $12.26 | $11.98 | $12.94 | $14.33 | $13.44 |
|  **Total Return Applicable to Common Shareholders(c)** | **Total Return Applicable to Common Shareholders(c)** | **Total Return Applicable to Common Shareholders(c)** | **Total Return Applicable to Common Shareholders(c)** | **Total Return Applicable to Common Shareholders(c)** | **Total Return Applicable to Common Shareholders(c)** |
|  Based on net asset value | 8.21% | 3.01% | 0.12% | 8.48% | 9.70% |
|  Based on market price | 7.52% | (2.35)% | (4.57)% | 13.42% | 10.98% |
|  **Ratios to Average Net Assets Applicable to Common Shareholders** | **Ratios to Average Net Assets Applicable to Common Shareholders** | **Ratios to Average Net Assets Applicable to Common Shareholders** | **Ratios to Average Net Assets Applicable to Common Shareholders** | **Ratios to Average Net Assets Applicable to Common Shareholders** | **Ratios to Average Net Assets Applicable to Common Shareholders** |
|  Total expenses | 2.59% | 2.10% | 1.79% | 1.48% | 1.47% |
|  Total expenses after fees waived and/or reimbursed | 2.58% | 2.10% | 1.79% | 1.48% | 1.47% |
|  Total expenses after fees waived and/or reimbursed and excluding interest expense, fees, and amortization of offering costs(d) | 0.95% | 0.92% | 0.90% | 0.91% | 0.92% |
|  Net investment income to Common Shareholders | 4.47% | 4.75% | 5.13% | 5.60% | 5.65% |
|  **Supplemental Data** | **Supplemental Data** | **Supplemental Data** | **Supplemental Data** | **Supplemental Data** | **Supplemental Data** |
|  Net assets applicable to Common Shareholders, end of year (000) | $310611 | $301697 | $308707 | $326072 | $319848 |
|  VMTP Shares outstanding at $100,000 liquidation value, end of year (000) | $116500 | $116500 | $116500 | $116500 | $116500 |
|  Asset coverage per VMTP Shares at $100,000 liquidation value, end of year | $366619 | $358967 | $364984 | $379890 | $374548 |
|  Borrowings outstanding, end of year (000) | $90517 | $87513 | $72634 | $75273 | $78851 |
|  Portfolio turnover rate | 22% | 21% | 13% | 10% | 13% |

---

(a) Based on average Common Shares outstanding.

(b) Distributions for annual periods determined in accordance with U.S. federal income tax regulations.

(c) Total returns based on market price, which can be significantly greater or less than the net asset value, may result in
substantially different returns. Where applicable, excludes the effects of any sales charges and assumes the reinvestment of distributions at actual reinvestment prices.

(d) Interest expense, fees and amortization of offering costs related to TOB Trusts and/or VMTP Shares. See Note 4 and Note
10 of the Notes to Financial Statements for details.

------

##### [**Table of Contents**](#toc)
<u>BlackRock MuniYield Quality Fund III, Inc. (MYI)</u> 

The Financial Highlights table is intended to help you understand the Acquiring Fund's financial performance for the periods shown. Certain information reflects the financial results for a single common share of the Acquiring Fund. The total returns in the table represent the rate an investor would have earned or lost on an investment in the Acquiring Fund (assuming reinvestment of all dividends and/or distributions, if applicable). The information for the six-month period ended January 31, 2025 is unaudited. The information for the remaining periods shown has been audited by [●], MYI's independent registered public accounting firm. Financial statements for the fiscal year ended July 31, 2024 and the Report of the Independent Registered Public Accounting Firm thereon appear in MYI's Annual Report for the fiscal year ended July 31, 2024 and financial statements for the six-month period ended January 31, 2025 appear in MYI's most recent Semi-Annual Report, which is available upon request.

*Please see next page for Financial Highlights Table* 

------

##### [**Table of Contents**](#toc)
**The Acquiring Fund (MYI) Financial Highlights**

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | MYI | MYI | MYI | MYI | MYI | MYI |
|  | Six Months<br>Ended<br>01/31/25<br>(unaudited) | Year Ended<br>07/31/24 | Year Ended<br>07/31/23 | Year Ended<br>07/31/22 | Year Ended<br>07/31/21 | Year Ended<br>07/31/20 |
|  **Net asset value, beginning of period** | $12.52 | $12.51 | $13.04 | $15.64 | $15.03 | $14.81 |
| &nbsp;&nbsp;&nbsp;&nbsp; Net investment income(a) | 0.24 | 0.46 | 0.47 | 0.60 | 0.64 | 0.58 |
| &nbsp;&nbsp;&nbsp;&nbsp; Net realized and unrealized gain (loss) | (0.24) | 0.16 | (0.49) | (2.58) | 0.57 | 0.17 |
|  Net increase (decrease) from investment operations |  | 0.62 | (0.02) | (1.98) | 1.21 | 0.75 |
|  **Distributions to Common Shareholders**(b) |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; From net investment income | (0.33)(c) | (0.52) | (0.51) | (0.62) | (0.60) | (0.53) |
| &nbsp;&nbsp;&nbsp;&nbsp; Return of capital |  | (0.09) | (0.00)(d) |  |  |  |
|  Total distributions to Common Shareholders | (0.33) | (0.61) | (0.51) | (0.62) | (0.60) | (0.53) |
|  **Net asset value, end of period** | $12.19 | $12.52 | $12.51 | $13.04 | $15.64 | $15.03 |
|  **Market price, end of period** | $11.20 | $11.37 | $11.13 | $12.24 | $15.12 | $13.55 |
|  **Total Return Applicable to Common Shareholders**(e) |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Based on net asset value | 0.22 %(f) | 5.73% | 0.48% | (12.66)% | 8.55% | 5.61% |
| &nbsp;&nbsp;&nbsp;&nbsp; Based on market price | 1.40 %(f) | 7.92% | (4.76)% | (15.20)% | 16.40% | 4.92% |
|  **Ratios to Average Net Assets Applicable to Common Shareholders**(g) |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Total expenses | 3.27 %(h) | 3.48% | 3.15% | 1.55% | 1.37% | 1.95% |
| &nbsp;&nbsp;&nbsp;&nbsp; Total expenses after fees waived and/or reimbursed | 3.20 %(h) | 3.43% | 3.15% | 1.55% | 1.37% | 1.95% |
| &nbsp;&nbsp;&nbsp;&nbsp; Total expenses after fees waived and/or reimbursed and excluding interest expense, fees, amortization of offering costs and reorganization costs(i)(j) | 0.80 %(h) | 0.83% | 0.89% | 1.14% | 1.15% | 1.12% |
| &nbsp;&nbsp;&nbsp;&nbsp; Net investment income to Common Shareholders | 3.89 %(h) | 3.75% | 3.80% | 4.18% | 4.22% | 3.93% |
|  Supplemental Data |  |  |  |  |  |  |
|  Net assets applicable to Common Shareholders, end of period (000) | $810352 | $832094 | $844604 | $888808 | $1066013 | $1024515 |
|  VRDP Shares outstanding at $100,000 liquidation value, end of period (000) | $356400 | $356400 | $356400 | $356400 | $356400 | $356400 |
|  Asset coverage per VRDP Shares at $100,000 liquidation value, end of period | $257031 (k) | $269274 (k) | $260885 (k) | $248593 (k) | $399106 (l) | $387462 (l) |
|  TOB Trust Certificates, end of period (000) | $159645 | $135165 | $168574 | $241747 | $239177 | $233968 |
|  Asset coverage per $1,000 of TOB Trust Certificates, end of period(m) | $8307 | $9791 | $8123 | $6150 | N/A | N/A |
|  Portfolio turnover rate | 10% | 24% | 49% | 15% | 5% | 18% |

---

(a) Based on average Common Shares outstanding.

(b) Distributions for annual periods determined in accordance with U.S. federal income tax regulations.

(c) A portion of the distributions from net investment income may be deemed a return of capital or net realized
gain at fiscal year-end.

(d) Amount is less than $0.005 per share.

(e) Total returns based on market price, which can be significantly greater or less than the net asset value, may
result in substantially different returns. Where applicable, excludes the effects of any sales charges and assumes the reinvestment of distributions at actual reinvestment prices.

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##### [**Table of Contents**](#toc)
(f) Not annualized.

(g) Excludes fees and expenses incurred indirectly as a result of investments in underlying funds.

(h) Annualized.

(i) Interest expense, fees and amortization of offering costs related to TOB Trusts and/or VRDP Shares. See Note
4 and Note 10 of the Notes to Financial Statements for details.

(j) The total expense ratio after fees waived and/or reimbursed and excluding interest expense, fees,
amortization of offering costs, reorganization costs, liquidity and remarketing fees as follows:

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | Six Months<br>Ended<br>01/31/25<br>(unaudited) | Year Ended<br>07/31/24 | Year Ended<br>07/31/23 | Year Ended<br>07/31/22 | Year Ended<br>07/31/21 | Year Ended<br>07/31/20 |
|  Expense ratios | 0.80% | 0.83% | 0.89% | 0.86% | 0.85% | 0.86% |

---

(k) Calculated by subtracting the Fund's total liabilities (not including VRDP Shares and TOBs) from the
Fund's total assets and dividing this by the sum of the amount of TOBs and liquidation value of the VRDP Shares, and by multiplying the results by 100,000.

(l) Calculated by subtracting the Fund's total liabilities (not including VRDP Shares) from the Fund's
total assets and dividing this by the liquidation value of the VRDP Shares, and by multiplying the results by 100,000.

------

##### [**Table of Contents**](#toc)

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | MYI | MYI | MYI | MYI | MYI |
|  | Year Ended April 30, | Year Ended April 30, | Year Ended April 30, | Year Ended April 30, | Year Ended April 30, |
| | 2019 | 2018 | 2017 | 2016 | 2015 |
|  **Net asset value, beginning of year** | $15.22 | $15.56 | $16.47 | $16.12 | $15.73 |
| &nbsp;&nbsp;&nbsp;&nbsp; Net investment income(a) | 0.69 | 0.77 | 0.85 | 0.90 | 0.92 |
| &nbsp;&nbsp;&nbsp;&nbsp; Net realized and unrealized gain (loss) | 0.47 | (0.29) | (0.89) | 0.40 | 0.43 |
|  Net increase (decrease) from investment operations | 1.16 | 0.48 | (0.04) | 1.30 | 1.35 |
|  **Distributions to Common Shareholders(b)** | **Distributions to Common Shareholders(b)** | **Distributions to Common Shareholders(b)** | **Distributions to Common Shareholders(b)** | **Distributions to Common Shareholders(b)** | **Distributions to Common Shareholders(b)** |
| &nbsp;&nbsp;&nbsp;&nbsp; From net investment income | (0.69) | (0.82) | (0.87) | (0.95) | (0.96) |
| &nbsp;&nbsp;&nbsp;&nbsp; From net realized gain | (0.02) |  |  |  |  |
|  Total distributions | (0.71) | (0.82) | (0.87) | (0.95) | (0.96) |
|  **Net asset value, end of year** | $15.67 | $15.22 | $15.56 | $16.47 | $16.12 |
|  **Market price, end of year** | $13.99 | $13.83 | $15.14 | $16.56 | $15.52 |
|  **Total Return Applicable to Common Shareholders(c)** |  |  |  |  |  |
|  Based on net asset value | 8.42% | 3.28% | (0.12)% | 8.61% | 9.09% |
|  Based on market price | 6.53% | (3.55)% | (3.34)% | 13.35% | 11.32% |
|  **Ratios to Average Net Assets Applicable to Common Shareholders** | **Ratios to Average Net Assets Applicable to Common Shareholders** | **Ratios to Average Net Assets Applicable to Common Shareholders** | **Ratios to Average Net Assets Applicable to Common Shareholders** | **Ratios to Average Net Assets Applicable to Common Shareholders** | **Ratios to Average Net Assets Applicable to Common Shareholders** |
|  Total expenses | 2.48% | 2.05% | 1.74% | 1.47% | 1.46% |
|  Total expenses after fees waived and/or reimbursed | 2.48% | 2.05% | 1.74% | 1.47% | 1.46% |
|  Total expenses after fees waived and/or reimbursed and excluding interest expense fees, and amortization of offering costs(d)(e) | 0.93% | 0.91% | 0.89% | 1.09% | 1.25% |
|  Net investment income to Common Shareholders | 4.55% | 4.91% | 5.28% | 5.62% | 5.65% |
|  **Supplemental Data** | **Supplemental Data** | **Supplemental Data** | **Supplemental Data** | **Supplemental Data** | **Supplemental Data** |
|  Net assets applicable to Common Shareholders, end of year (000) | $481212 | $467334 | $477758 | $505367 | $494475 |
|  VRDP Shares outstanding at $100,000 liquidation value, end of year (000) | $176600 | $176600 | $176600 | $176600 | $176600 |
|  Asset coverage per VRDP Shares at $100,000 liquidation value, end of year | $372487 | $364628 | $370531 | $386165 | $379997 |
|  Borrowings outstanding, end of year (000) | $134198 | $139144 | $119144 | $112111 | $114962 |
|  Portfolio turnover rate | 21% | 20% | 13% | 10% | 14% |

---

(a) Based on average Common Shares outstanding.

(b) Distributions for annual periods determined in accordance with U.S. federal income tax regulations.

(c) Total returns based on market price, which can be significantly greater or less than the net asset value, may result in
substantially different returns. Where applicable, excludes the effects of any sales charges and assumes the reinvestment of distributions at actual reinvestment prices.

(d) Interest expense, fees and amortization of offering costs related to TOBs and/or VRDP Shares. See Note 4 and Note 10 of
the Notes to Financial Statements for details.

(e) The total expense ratio after fees waived and/or reimbursed and excluding interest expense, fees, amortization of
offering costs, liquidity and remarketing fees as follows:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | Year Ended April 30, | Year Ended April 30, | Year Ended April 30, | Year Ended April 30, |
| 2019 | 2018 | 2017 | 2016 | 2015 |
| 0.93% | 0.91% | 0.89% | 0.92% | 0.89% |

---

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##### [**Table of Contents**](#toc)
**FINANCIAL STATEMENTS** 

The financial statements of the Acquiring Fund for the fiscal year ended July 31, 2024 are incorporated by reference herein to the Acquiring Fund's [annual report](http://www.sec.gov/Archives/edgar/data/883412/000119312524231926/d881782dncsr.htm) filed on Form N-CSR on October 3, 2024. The financial statements of the Acquiring Fund for the six-month period ended January 31, 2025 are incorporated by reference herein to the Acquiring Fund's [semi-annual report](http://www.sec.gov/Archives/edgar/data/883412/000119312525074486/d915534dncsrs.htm) filed on Form N-CSR on April 7, 2025.

The financial statements of MVT for the fiscal year ended July 31, 2024 are incorporated by reference herein to MVT's [annual report](http://www.sec.gov/Archives/edgar/data/897269/000119312524232013/d881668dncsr.htm) filed on Form N-CSR on October 3, 2024. The financial statements of MVT for the six-month period ended January 31, 2025 are incorporated by reference herein to MVT's [semi-annual report](http://www.sec.gov/Archives/edgar/data/897269/000119312525074453/d900541dncsrs.htm) filed on Form N-CSR on April 7, 2025.

The financial statements of MIY for the fiscal year ended July 31, 2024 are incorporated by reference herein to MIY's [annual report](http://www.sec.gov/Archives/edgar/data/890393/000119312524231947/d882220dncsr.htm) filed on Form N-CSR on October 3, 2024. The financial statements of MIY for the six-month period ended January 31, 2025 are incorporated by reference herein to MIY's [semi-annual report](http://www.sec.gov/Archives/edgar/data/890393/000119312525074452/d915586dncsrs.htm) filed on Form N-CSR on April 7, 2025.

The financial statements of MVF for the fiscal year ended July 31, 2024 are incorporated by reference herein to MVF's [annual report](http://www.sec.gov/Archives/edgar/data/835948/000119312524232007/d881665dncsr.htm) filed on Form N-CSR on October 3, 2024. The financial statements of MVF for the six-month period ended January 31, 2025 are incorporated by reference herein to MVF's [semi-annual report](http://www.sec.gov/Archives/edgar/data/835948/000119312525074439/d888478dncsrs.htm) filed on Form N-CSR on April 7, 2025.

**SUPPLEMENTAL FINANCIAL STATEMENTS** 

A table showing the fees of the Acquiring Fund and each Target Fund, and the fees and expenses of the Acquiring Fund on a pro forma basis after giving effect to the proposed Reorganization, is included in the section entitled "Expense Table for Common Shareholders" of the Joint Proxy Statement/Prospectus.

Each Reorganization will not result in a material change to each Target Fund's investment portfolio due to the investment restrictions of the Acquiring Fund. As a result, a schedule of investments of each Target Fund modified to show the effects of the change is not required and is not included. Notwithstanding the foregoing, changes may be made to a Target Fund's portfolio in advance of the Reorganization and/or the Acquiring Fund's portfolio following the Reorganization.

There are no material differences in the accounting, taxation and valuation policies of each Target Fund as compared to those of the Acquiring Fund.

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##### [**Table of Contents**](#toc)
**CERTAIN PROVISIONS OF THE CHARTERS AND BYLAWS** 

**Certain Provisions in the Charter and Bylaws of MVT** 

MVT's charter includes provisions that could have the effect of limiting the ability of other entities or persons to acquire control of the Fund or to change the composition of its Board and could have the effect of depriving common shareholders of an opportunity to sell their shares at a premium over prevailing market prices by discouraging a third-party from seeking to obtain control of MVT. A Director may be removed from office with or without cause but only by vote of the holders of at least 66 2/3% of the shares entitled to vote in an election to fill that directorship. A director elected by all of the holders of capital stock may be removed only by action of such holders, and a director elected by the holders of preferred stock may be removed only by action of the holders of preferred stock.

In addition, the charter requires the favorable vote of the holders of at least 66 2/3% of MVT's shares to approve, adopt or authorize various actions, including the following:

● a merger or consolidation or statutory share exchange of MVT with any other corporation;

● a sale of all or substantially all of MVT's assets (other than in the regular course of MVT's investment activities); or

● a liquidation or dissolution of MVT;

unless such action has been approved, adopted or authorized by the affirmative vote of at least two-thirds of the total number of Directors fixed in accordance with the Bylaws, in which case the affirmative vote of a majority of MVT's shares of capital stock is required. The approval, adoption or authorization of the foregoing also requires the favorable vote of a majority of MVT's outstanding preferred stock (as defined in the 1940 Act), then entitled to be voted, voting as a separate class.

The charter and Bylaws of MVT provide that the Board has the power, to the exclusion of shareholders, to make, alter or repeal any of the Bylaws (except for any Bylaw specified not to be amended or repealed by the Board), subject to the requirements of the 1940 Act. Neither this provision of the charter, nor any of the foregoing provisions of the charter requiring the affirmative vote of 66 2/3% of shares of capital stock of MVT, can be amended or repealed except by the vote of such required number of shares.

MVT's Board has determined that the 66 2/3% voting requirements described above, which are greater than the minimum requirements under the 1940 Act, are in the best interests of shareholders generally. Reference should be made to the charter on file with the SEC for the full text of these provisions.

MVT's Bylaws generally require that advance notice be given to MVT in the event a stockholders desires to nominate a person for election to the Board or to transact any other business at an annual meeting of stockholders. Notice of any such nomination or business must be delivered to or received at the principal executive offices of MVT not less than 120 calendar days nor more than 150 calendar days prior to the anniversary date of the prior year's annual meeting (subject to certain exceptions). Any notice by a stockholder must be delivered must be accompanied by certain information as provided in the Bylaws.

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stockholder approval. A corporation may be prohibited by its charter or by resolution of its board of directors from electing any of the provisions of the statute. MVT is not prohibited from implementing any or all of the statute and, pursuant to MVT's Bylaws and charter, MVT has elected to be subject to such provisions of the statute such that MVT's Board is classified and all vacancies on the Board resulting from an increase in the size of the Board or the death, resignation or removal of a Board Member, may be filled only by the affirmative vote of a majority of the remaining Direcotr, even if the remaining Director do not constitute a quorum. That election does not limit the power of MVT to confer on the holders of a class or series of Preferred Stock the right to elect one or more Directors pursuant to a provision in its charter.

**Certain Provisions in the Charter and Bylaws of MIY** 

MIY's charter includes provisions that could have the effect of limiting the ability of other entities or persons to acquire control of the Fund or to change the composition of its Board and could have the effect of depriving common shareholders of an opportunity to sell their shares at a premium over prevailing market prices by discouraging a third-party from seeking to obtain control of MIY. A Director may be removed from office with or without cause but only by vote of the holders of at least 66 2/3% of the shares entitled to vote in an election to fill that directorship. A director elected by all of the holders of capital stock may be removed only by action of such holders, and a director elected by the holders of preferred stock may be removed only by action of the holders of preferred stock.Ð'dIn addition, the charter requires the favorable vote of the holders of at least 66 2/3% of MIY's shares to approve, adopt or authorize various actions, including the following:

● a merger or consolidation or statutory share exchange of MIY with any other corporation;

● a sale of all or substantially all of MIY's assets (other than in the regular course of MIY's investment activities); or

● a liquidation or dissolution of MIY;

unless such action has been approved, adopted or authorized by the affirmative vote of at least two-thirds of the total number of Directors fixed in accordance with the Bylaws, in which case the affirmative vote of a majority of MIY's shares of capital stock is required. The approval, adoption or authorization of the foregoing also requires the favorable vote of a majority of MIY's outstanding preferred stock (as defined in the 1940 Act), then entitled to be voted, voting as a separate class.

The charter and Bylaws of MIY provide that the Board has the power, to the exclusion of shareholders, to make, alter or repeal any of the Bylaws (except for any Bylaw specified not to be amended or repealed by the Board), subject to the requirements of the 1940 Act. Neither this provision of the charter, nor any of the foregoing provisions of the charter requiring the affirmative vote of 66 2/3% of shares of capital stock of MIY, can be amended or repealed except by the vote of such required number of shares.

In addition, conversion of MIY to an open-end investment company would require an amendment to MIY's charter. The amendment would have to be declared advisable by the Board prior to its submission to shareholders. Such an amendment would then require the favorable vote of the holders of at least 66 2/3% of MIY's outstanding shares of capital stock entitled to be voted on the matter, voting as a single class (or a majority of such shares if the amendment was previously approved, adopted or authorized by two-thirds of the total number of Board Members fixed in accordance with the Bylaws). Such a vote also would satisfy a separate requirement in the 1940 Act that the change be approved by the shareholders. Shareholders of an open-end investment company may require the company to redeem their common shares at any time (except in certain circumstances as authorized by or under the 1940 Act) at their NAV, less such redemption charge, if any, as might be in effect at the time of a redemption. If the Acquiring Fund is converted to an open-end investment company, it could be required to liquidate portfolio securities to meet requests for redemption, and the Common Shares would no longer be listed on a stock exchange.

MIY's Board has determined that the 66 2/3% voting requirements described above, which are greater than the minimum requirements under Maryland law or the 1940 Act, are in the best interests of shareholders generally. Reference should be made to the charter on file with the SEC for the full text of these provisions.

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MYI's Bylaws generally require that advance notice be given to MYI in the event a stockholder desires to nominate a person for election to the Board or to transact any other business at an annual meeting of stockholders. Notice of any such nomination or business must be delivered to or received at the principal executive offices of MYI not less than 120 calendar days nor more than 150 calendar days prior to the anniversary date of the prior year's annual meeting (subject to certain exceptions). Any notice by a stockholder must be delivered, accompanied by certain information, as provided in the Bylaws.

**Certain Provisions in the Charter and Bylaws of MVF** 

MVF's charter includes provisions that could have the effect of limiting the ability of other entities or persons to acquire control of the Fund or to change the composition of its Board and could have the effect of depriving common shareholders of an opportunity to sell their shares at a premium over prevailing market prices by discouraging a third-party from seeking to obtain control of MVF. A Director elected by the holders of MVF's preferred shares may only be removed from office for cause and then by the vote of the holders of at least 66 2/3% of MVF's preferres shares entitled to vote in an election to fill that directorship. MVF's charter provides the holders of MVF's outstanding preferred shares, including VRDP Shares, voting together as a class, to the exclusion of the holders of all other securities and classes of shares of MVF, the right to elect two Board Members of MVF at all times and, under certain circumstances, to elect such number of additional directors in order to entitle such holders of MVF's outstanding preferred shares to elect the majority of the Board.

In addition, the charter requires the favorable vote of the holders of at least 75% of MVF's shares to approve, adopt or authorize various actions, including the following:

● a merger or consolidation or statutory share exchange of MVF with any other corporation;

● a sale of all or substantially all of MVF's assets (other than in the regular course of MVF's investment activities); or

● a liquidation or dissolution of MVF;

unless such action has been approved, adopted or authorized by the affirmative vote of at least two-thirds of the total number of Directors fixed in accordance with the Bylaws, in which case the affirmative vote of a majority of MVF's shares of capital stock is required. The approval, adoption or authorization of the foregoing also requires the favorable vote of a majority of MVF's outstanding Preferred Shares (as defined in the 1940 Act), then entitled to be voted, voting as a separate class. MVF's charter further provides that the vote of the holders of at least a majority of

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MVF's preferred shares is required to make any amendments to the charter that would otherwise adversely affects the rights of the holders of MVF's preferred shares.

The charter and Bylaws of MVF provide that the Board has the power, to the exclusion of shareholders, to make, alter or repeal any of the Bylaws (except for any Bylaw specified not to be amended or repealed by the Board), subject to the requirements of the 1940 Act. Neither this provision of the charter, nor any of the foregoing provisions of the charter requiring the affirmative vote of 66 2/3% of shares of capital stock of MVF, can be amended or repealed except by the vote of such required number of shares.

In addition, conversion of MVF to an open-end investment company would require an amendment to MVF's charter. The amendment would have to be declared advisable by the Board prior to its submission to shareholders. Such an amendment would require the favorable vote of the holders of at least 75% of MVF's outstanding shares of capital stock entitled to be voted on the matter, voting as a single class (or a majority of such shares if the amendment was previously approved, adopted or authorized by two-thirds of the total number of Board Members fixed in accordance with the Bylaws). Such a vote also would satisfy a separate requirement in the 1940 Act that the change be approved by the shareholers. Shareholders of an open-end investment company may require the company to redeem their common share at any time (except in certain circumstances as authorized by or under the 1940 Act) at their NAV, less such redemption charge, if any, as might be in effect at the time of a redemption. If the Acquiring Fund is converted to an open-end investment company, it could be required to liquidate portfolio securities to meet requests for redemption, and the Common Shares would no longer be listed on a stock exchange.

MVF's Board has determined that the 75% of shares of capital stock of MVF, can be amended or repealed except by the vote of such required number of shares. The Board has determined that the 66 2/3% voting requirements described above, which are greater than the minimum requirements under Maryland law or the 1940 Act, are in the best interests of stockholders generally. Reference should be made to the charter on file with the SEC for the full text of these provisions. MVF's Bylaws generally require that advance notice be given to MVF in the event a stockholder desires to nominate a person for election to the Board or to transact any other business at an annual meeting of stockholders. Notice of any such nomination or business must be delivered to or received at the principal executive offices of MVF not less than 120 calendar days nor more than 150 calendar days prior to the anniversary date of the prior year's annual meeting (subject to certain exceptions). Any notice by a stockholder must be accompanied by certain information as provided in the Bylaws.

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**Certain Provisions in the Charter and Bylaws of the Acquiring Fund** 

The Acquiring Fund's charter includes provisions that could have the effect of limiting the ability of other entities or persons to acquire control of the Fund or to change the composition of its Board and could have the effect of depriving common shareholders of an opportunity to sell their shares at a premium over prevailing market prices by discouraging a third-party from seeking to obtain control of Acquiring Fund. A Director may be removed from office with or without cause but only by vote of the holders of at least 66 2/3% of the shares entitled to vote in an election to fill that directorship. A director elected by all of the holders of capital stock may be removed only by action of such holders, and a director elected by the holders of preferred stock may be removed only by action of the holders of preferred stock.

In addition, the charter requires the favorable vote of the holders of at least 66 2/3% of Acquiring Fund's shares to approve, adopt or authorize various actions, including the following:

● a merger or consolidation or statutory share exchange of the Acquiring Fund with any other corporation;

● a sale of all or substantially all of the Acquiring Fund's assets (other than in the regular course of the Acquiring Fund's investment activities); or

● a liquidation or dissolution of the Acquiring Fund;

unless such action has been approved, adopted or authorized by the affirmative vote of at least two-thirds of the total number of Directors fixed in accordance with the Bylaws, in which case the affirmative vote of a majority of the Acquiring Fund's shares of capital stock is required. The approval, adoption or authorization of the foregoing also requires the favorable vote of a majority of Acquiring Fund's outstanding preferred stock (as defined in the 1940 Act), then entitled to be voted, voting as a separate class.

The charter and Bylaws of Acquiring Fund provide that the Board has the power, to the exclusion of shareholders, to make, alter or repeal any of the Bylaws (except for any Bylaw specified not to be amended or repealed by the Board), subject to the requirements of the 1940 Act. Neither this provision of the charter, nor any of the foregoing provisions of the charter requiring the affirmative vote of 66 2/3% of shares of capital stock of Acquiring Fund, can be amended or repealed except by the vote of such required number of shares.

In addition, conversion of the Acquiring Fund to an open-end investment company would require an amendment to the Acquiring Fund's charter. The amendment would have to be declared advisable by the Board prior to its submission to shareholders. Such an amendment would require the favorable vote of the holders of at least 66 2/3% of the Acquiring Fund's outstanding shares of capital stock entitled to be voted on the matter, voting as a single class (or a majority of such shares if the amendment was previously approved, adopted or authorized by two-thirds of the total number of Board Members fixed in accordance with the Bylaws). Such a vote also would satisfy a separate requirement in the 1940 Act that the change be approved by the shareholders. Shareholders of an open-end investment company may require the company to redeem their common shares at any time (except in certain circumstances as authorized by or under the 1940 Act) at their NAV, less such redemption charge, if any, as might be in effect at the time of a redemption. If the Acquiring Fund is converted to an open-end investment company, it could be required to liquidate portfolio securities to meet requests for redemption, and the Common Shares would no longer be listed on a stock exchange.

The Board has determined that the 66 2/3% voting requirements described above, which are greater than the minimum requirements under the 1940 Act, are in the best interest of shareholders generally. Reference should be made to the Articles of Incorporation on file with the SEC for the full text of these provisions.

The Acquiring Fund's Bylaws generally require that advance notice be given to the Acquiring Fund in the event a shareholder desires to nominate a person for election to the Board or to transact any other business at an annual meeting of shareholders. Notice of any such nomination or business must be delivered to or received at the principal executive offices of the Acquiring Fund not less than 120 calendar days nor more than 150 calendar days prior to the anniversary

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date of the prior year's annual meeting (subject to certain exceptions). Any notice by a shareholder must be accompanied by certain information as provided in the Bylaws.

Pursuant to the Acquiring Fund's Bylaws, the Acquiring Fund has elected to be subject to a specific provision of the statute such that, at all times that the Acquiring Fund is eligible to make that election, all vacancies on the Board resulting from an increase in the size of the Board or the death, resignation or removal of a Board Member, may be filled only by the affirmative vote of a majority of the remaining Board Members, even if the remaining Board Members do not constitute a quorum.

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**GOVERNING LAW** 

MVT was formed as a Maryland corporation governed by the laws of the State of Maryland on February 3, 1993, and commenced operations on March 29, 1993.

MIY was formed as a Maryland corporation governed by the laws of the State of Maryland on June 30, 1992, and commenced operations on October 30, 1992.

MVF was formed as a Maryland corporation governed by the laws of the State of Maryland on July 6, 1988, and commenced operations on September 29, 1988.

The Acquiring Fund was formed as a Maryland corporation governed by the laws of the State of Maryland on January 13, 1992, and commenced operations on April 13, 1992.

Shareholders of a Maryland corporation currently have no personal liability for the corporation's acts or obligations, except that a shareholder may be liable to the extent that (i) the shareholder knowingly accepted a distribution in violation of such Maryland corporation's charter or the Maryland General Corporation Law or (ii) the subscription price or other agreed upon consideration for stock subscribed for has not been paid.

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**CONVERSION TO OPEN-END FUND** 

The MVF Charter provides that that a favorable vote of the holders of at least seventy-five percent (75%) of the shares of capital stock entitled to be voted on the matter shall be required to convert the MVF to an open-end investment company, unless such action has previously been approved, adopted or authorized by the affirmative vote of at least two-thirds of each Fund's Board Members, in which case the affirmative vote of the holders of a majority of the outstanding shares of capital stock of the Fund entitled to vote thereon shall be required. For each of MVF and the Acquiring Fund, each Fund's Charter provides that a favorable vote of the holders of at least 66 2/3% of the outstanding shares of capital stock entitled to be voted on the matter shall be required to convert the Fund to an open-end investment company, unless such action has previously been approved, adopted or authorized by the affirmative vote of at least two-thirds of each Fund's Directors, in which case the affirmative vote of the holders of a majority of the outstanding shares of capital stock of the Fund entitled to vote thereon shall be required.

The foregoing votes would satisfy a separate requirement in the 1940 Act that any conversion of a Fund to an open-end investment company be approved by the shareholders. If approved in the foregoing manners, we anticipate conversion of a Fund to an open-end investment company might not occur until 90 days after the shareholders' meeting at which such conversion was approved and would also require at least 10 days' prior notice to all shareholders. Following any such conversion, it is possible that certain of the Fund's investment policies and strategies would have to be modified to assure sufficient portfolio liquidity. In the event of conversion, the Fund's common shares would cease to be listed on the NYSE and the Fund's preferred shares would be redeemed. Shareholders of an open-end investment company may require the company to redeem their shares at any time, except in certain circumstances as authorized by or under the 1940 Act, at their NAV, less such redemption charge, if any, as might be in effect at the time of redemption. An open-end investment company expects to pay all such redemption requests in cash, but reserves the right to pay redemption requests in a combination of cash and securities. If such partial payment in securities were made, investors may incur brokerage costs in converting such securities to cash. If a Fund were converted to an open-end investment company, it is likely that new shares would be sold at NAV plus a sales load. Each Board believes, however, that its Fund's closed-end structure is desirable in light of its Fund's investment objective and policies. Therefore, shareholders should assume that it is not likely that any Board would vote to convert its Fund to an open-end fund.

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**VOTING INFORMATION AND REQUIREMENTS** 

**Record Date** 

The Funds' have fixed the close of business on August 18, 2025 as the Record Date for the determination of shareholders entitled to notice of, and to vote at, the Special Meeting or any adjournment or postponement thereof. Shareholders on the Record Date will be entitled to one vote for each Share held, with no Shares having cumulative voting rights.

A list of each Fund's shareholders of record as of the Record Date will be available for inspection at the Special Meeting.

As of the Record Date, the Funds had the following number of common shares and preferred shares outstanding:

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| | | | | |
|:---|:---|:---|:---|:---|
| **Title of Class** | **MVT** | **MIY** | **MVF** | **Acquiring Fund**<br> **(MYI)** |
|  Common Shares | [●] | [●] | [●] | [●] |
|  VMTP/VRDP Shares | [●] | [●] | [●] | [●] |

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**Proxies** 

Shareholders may vote by participating at the Special Meeting remotely, by returning the enclosed proxy card or by casting their vote via telephone or the Internet using the instructions provided on the enclosed proxy card (described in greater detail below). Shareholders of each Fund have the opportunity to submit their voting instructions via the Internet or by "touch-tone" telephone voting. The giving of such a proxy will not affect your right to vote should you decide to attend the Special Meeting remotely. To use the Internet, please access the Internet address found on your proxy card. To record your voting instructions by automated telephone, please call the toll-free number listed on your proxy card. The Internet and automated telephone voting instructions are designed to authenticate shareholder identities, to allow shareholders to give their voting instructions, and to confirm that shareholders' instructions have been recorded properly. Shareholders submitting their voting instructions via the Internet should understand that there may be costs associated with Internet access, such as usage charges from Internet access providers and telephone companies that must be borne by the shareholders. Any person giving a proxy may revoke it at any time prior to its exercise by giving written notice of the revocation to the Secretary of the Fund at 50 Hudson Yards, New York, New York 10001, by delivering a duly executed proxy bearing a later date, by recording later-dated voting instructions via the Internet or automated telephone or by attending the Special Meeting and voting. The giving of a proxy will not affect your right to vote if you attend the Special Meeting and wish to do so.

Votes cast by proxy or at the Special Meeting will be tabulated by the inspectors of election appointed for the Special Meeting. The presence at the Special Meeting by proxy of the holders of shares entitled to cast one-third of the votes entitled to be cast shall constitute a quorum to conduct business at the Special Meeting, except with respect to any matter which requires approval by a separate vote of one or more classes or series of shares, in which case the presence at the Special Meeting by proxy of the holders of shares entitled to cast one-third of the votes entitled to be cast by each class or series entitled to vote as a separate class or series shall constitute a quorum to conduct business at the Special Meeting. A quorum, once established, shall not be broken by the withdrawal of enough votes to leave less than a quorum. If, however, such quorum shall not be present or represented at any meeting of the shareholders, the chair of the Special Meeting shall have power to adjourn the meeting from time to time, in the manner provided in the Fund's bylaws, until a quorum shall be present or represented.

The inspectors of election, who may be employees of BlackRock, will determine whether or not a quorum is present at the Special Meeting. The inspectors of election will generally treat abstentions and "broker non-votes", if any, as present for purposes of determining a quorum, subject to any applicable rules of the NYSE.

Broker-dealer firms holding shares of a Fund in "street name" for the benefit of their customers and clients will request the instructions of such customers and clients on how to vote their shares on the applicable proposals before the Special Meeting. Each Fund expects that broker-dealer firms holding shares of the Fund in "street name" for their customers

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will not be permitted by NYSE rules to vote on the applicable proposals on behalf of their customers and beneficial owners in the absence of voting instructions from their customers and beneficial owners. Accordingly, each Fund does not expect to receive any "broker non-votes." Broker non-votes occur when shares are held by brokers or nominees for which proxies have been returned but (a) voting instructions have not been received from the beneficial owners or persons entitled to vote, (b) the broker or nominee does not have discretionary voting power or elects not to exercise discretion on a particular matter and (c) the shares are present at the meeting. **We urge you to instruct your broker or other nominee to vote your shares.**

If you hold your shares directly (not through a broker-dealer, bank or other financial institution) and if you return a properly executed proxy card that does not specify how you wish to vote on a proposal, your shares will be voted "FOR" each proposal on which you are entitled to vote.

If you hold shares of a Fund through a bank or other financial institution or intermediary (called a service agent) that has entered into a service agreement with the Fund or a distributor of the Fund, the service agent may be the record holder of your shares. At the Special Meeting, a service agent will vote shares for which it receives instructions from its customers in accordance with those instructions. A properly executed proxy card or other authorization by a shareholder that does not specify how the shareholder's shares should be voted on a proposal may be deemed to authorize a service provider to vote such shares in favor of the proposal. Depending on its policies, applicable law or contractual or other restrictions, a service agent may be permitted to vote shares with respect to which it has not received specific voting instructions from its customers. In those cases, the service agent may, but may not be required to, vote such shares in the same proportion as those shares for which the service agent has received voting instructions. This practice is commonly referred to as "echo voting."

All properly executed proxies received prior to the Special Meeting will be voted in accordance with the instructions marked thereon or otherwise as provided therein. Unless instructions to the contrary are marked, proxies will be voted "FOR" the approval of each proposal. Abstentions and broker non-votes, if any, will not be voted.

Common shareholders of MVT are being asked to consider Proposal 1(A) below. With respect to Proposal 1(A), abstentions and broker non-votes will be counted as shares present and will therefore have the same effect as votes "AGAINST" the proposal.

Common shareholders of MIY are being asked to consider Proposal 1(C) below. With respect to Proposal 1(C), abstentions and broker non-votes will be counted as shares present and will therefore have the same effect as votes "AGAINST" the proposal.

Common shareholders of MVF are being asked to consider Proposal 1(E) below. With respect to Proposal 1(E), abstentions and broker non-votes will be counted as shares present and will therefore have the same effect as votes "AGAINST" the proposal.

Common shareholders of the Acquiring Fund are being asked to consider Proposals 2(A) and 2(B) below. With respect to Proposals 2(A), 2(B) and 2(C), abstentions will be counted as "votes cast" and will therefore have the same effect as votes "AGAINST" the proposal and broker non-votes will not have any effect on the result of the vote.

**Voting Requirement for Proposal 1: The Reorganizations of the Funds** 

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| | |
|:---|:---|
| **Proposals** | **Required Approval of**<br> **Shareholders** |
| *Proposal 1(a):* The common shareholders and VMTP Holders of MVT are being asked to vote as a single class on a proposal to approve the MVT Reorganization Agreement and the transactions contemplated therein, including (i) the acquisition by the Acquiring Fund of substantially all of MVT's assets and the assumption by the Acquiring Fund of substantially all of MVT's liabilities in exchange solely for newly issued common | Majority of votes entitled to be cast |

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|:---|:---|
| shares and VRDP Shares of the Acquiring Fund, which will be distributed to the common shareholders (although cash may be distributed in lieu of fractional common shares) and VMTP Holders, respectively, of MVT, and which shall constitute the sole consideration to be distributed or paid to the common shareholders (although cash may be distributed in lieu of fractional common shares) and the VMTP Holders in respect of their common shares and VMTP Shares, respectively, and (ii) the termination by MVT of its registration under the 1940 Act, and the liquidation, dissolution and termination of MVT in accordance with its charter and Maryland law. |  |
| *Proposal 1(C)*: The common shareholders and VRDP Holders of MIY are being asked to vote as a single class on a proposal to approve the MIY Reorganization Agreement and the transactions contemplated therein, including (i) the acquisition by the Acquiring Fund of substantially all of MIY's assets and the assumption by the Acquiring Fund of substantially all of MIY's liabilities in exchange solely for newly issued common shares and VRDP Shares of the Acquiring Fund, which will be distributed to the common shareholders (although cash may be distributed in lieu of fractional common shares) and VRDP Holders, respectively, of MIY, and which shall constitute the sole consideration to be distributed or paid to the common shareholders (although cash may be distributed in lieu of fractional common shares) and the VRDP Holders in respect of their common shares and VRDP Shares, respectively, and (ii) the termination by MIY of its registration under the 1940 Act, and the liquidation, dissolution and termination of MIY in accordance with its charter and Maryland law. | Majority of outstanding shares |
| *Proposal 1(E)*: The common shareholders and VMTP Holders of MVF are being asked to vote as a single class on a proposal to approve the MVF Reorganization Agreement and the transactions contemplated therein, including (i) the acquisition by the Acquiring Fund of substantially all of MVF's assets and the assumption by the Acquiring Fund of substantially all of MVF's liabilities in exchange solely for newly issued common shares and VRDP Shares of the Acquiring Fund, which will be distributed to the common shareholders (although cash may be distributed in lieu of fractional common shares) and VMTP Holders, respectively, of MVF, and which shall constitute the sole consideration to be distributed or paid to the common shareholders (although cash may be distributed in lieu of fractional common shares) and the VMTP Holders in respect of their common shares and VMTP Shares, respectively, and (ii) the termination by MVF of its registration under | Majority of outstanding shares |

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the 1940 Act, and the liquidation, dissolution and termination of MVF in accordance with its charter and Maryland law.

**Voting Requirement for Proposal 2: The Issuance of Acquiring Fund Common Shares** 

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| | |
|:---|:---|
| **Proposals** | **Required Approval of**<br> **Shareholders** |
| *Proposal 2(A)*: The common shareholders and VRDP Holders of the Acquiring Fund are being asked to vote as a single class on a proposal to approve the MVT Issuance. | Majority of votes entitled to be cast |
| *Proposal 2(B)*: The common shareholders and VRDP Holders of the Acquiring Fund are being asked to vote as a single class on a proposal to approve the MIY Issuance. | Majority of outstanding shares |
| *Proposal 2(C)*: The common shareholders and VRDP Holders of the Acquiring Fund are being asked to vote as a single class on a proposal to approve the MVF Issuance. | Majority of outstanding shares. |

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**ADDITIONAL INFORMATION** 

**Share Ownership** 

Information relating to each Board Member's share ownership in each Fund and in the other funds in the BlackRock Fixed-Income Complex that are overseen by the respective director ("Supervised Funds") as of December 31, 2024 is set forth in the chart below:

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| | | | | | |
|:---|:---|:---|:---|:---|:---|
| **Name of Board**<br> **Member** | **Aggregate**<br> **Dollar Range**<br> **of Common**<br> **Shares in**<br> **MVT** | **Aggregate**<br> **Dollar Range**<br> **of Common**<br> **Shares in**<br> **MIY** | **Aggregate<br>Dollar Range<br>of Common Shares in**<br> **MVF** | **Aggregate<br>Dollar Range<br>of Common<br>Shares in the<br>Acquiring<br>Fund (MYI)** | **Aggregate<br>Dollar Range**<br> **of Common<br>Shares in<br>Supervised**<br> **Funds\*** |
| Cynthia L. Egan |  |  |  |  | Over $100,000 |
| Lorenzo A. Flores |  |  |  |  | Over $100,000 |
| Stayce D. Harris | $1-$10000 |  |  | $1-$10000 | Over $100,000 |
| J. Phillip Holloman |  |  |  |  | Over $100,000 |
| R. Glenn Hubbard |  |  |  |  | Over $100,000 |
| W. Carl Kester |  |  |  |  | Over $100,000 |
| Catherine A. Lynch |  |  |  |  | Over $100,000 |
| Arthur P. Steinmetz |  |  |  |  | Over $100,000 |
| John M. Perlowski |  |  |  |  | Over $100,000 |

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| | | | | | |
|:---|:---|:---|:---|:---|:---|
| **Name of Board**<br> **Member** | **Aggregate**<br> **Dollar Range**<br> **of Common**<br> **Shares in**<br> **MVT** | **Aggregate**<br> **Dollar Range**<br> **of Common**<br> **Shares in**<br> **MIY** | **Aggregate<br>Dollar Range<br>of Common<br>Shares in**<br> **MVF** | **Aggregate<br>Dollar Range<br>of Common<br>Shares in the<br>Acquiring<br>Fund (MYI)** | **Aggregate<br>Dollar Range**<br> **of Common<br>Shares in<br>Supervised**<br> **Funds\*** |
| Robert Fairbairn |  |  |  |  | Over $100,000 |

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\* Includes share equivalents owned under the deferred compensation plan in the Supervised Funds by certain Independent Board Members who have participated in the deferred compensation plan of the Supervised Funds.

As of December 31, 2024, none of the Independent Board Members of each Fund or their immediate family members owned beneficially or of record any securities of BlackRock or any affiliate of BlackRock or underwriter or any person controlling, controlled by or under common control with any such entities nor did any Independent Board Member of each Fund or their immediate family member have any material interest in any transaction, or series of similar transactions, during the most recently completed two calendar years involving each Fund, BlackRock or any affiliate of BlackRock or underwriter or any person controlling, controlled by or under common control with any such entities.

**Independent Board Member Ownership of Securities** 

As of December 31, 2024, the Independent Board Members (and their respective immediate family members) did not beneficially own securities of the Investment Advisor, or an entity controlling, controlled by or under common control with the Investment Advisor (not including registered investment companies).

**Indemnification of Board Members and Officers** 

The governing documents of each Fund generally provide that, to the extent permitted by applicable law, the Fund will indemnify its Board Members and officers against liabilities and expenses incurred in connection with litigation in which they may be involved because of their offices with the Fund unless they engaged in willful misfeasance, bad faith, gross negligence or reckless disregard of the duties involved in their offices. In addition, the Fund will not indemnify Board Members with respect to any matter as to which Board Members did not act in good faith in the reasonable belief that his or her action was in the best interest of the Fund or, in the case of any criminal proceeding, as to which Board Members had reasonable cause to believe that the conduct was unlawful. Indemnification provisions contained in a Fund's governing documents are subject to any limitations imposed by applicable law.

The funds in the BlackRock Fixed-Income Complex, including the Funds, have also entered into a separate indemnification agreement with the Board Members of each Board (the "Indemnification Agreement"). The Indemnification Agreement (i) extends the indemnification provisions contained in a Fund's governing documents to Board Members who leave that Fund's Board and serve on an advisory board of a different fund in the BlackRock Fixed-Income Complex; (ii) sets in place the terms of the indemnification provisions of a Fund's governing documents once a director retires from a Board; and (iii) in the case of Board Members who left the Board of a Fund in connection with or prior to the board consolidation that occurred in 2007 as a result of the merger of BlackRock and Merrill Lynch & Co., Inc.'s investment management business, clarifies that such Fund continues to indemnify the director for claims arising out of his or her past service to that Fund.

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**SHAREHOLDER INFORMATION** 

Unless otherwise indicated, the information set forth below is as of [•], 2025. To each Fund's knowledge, no person beneficially owned more than 5% of the Fund's respective outstanding common shares, except as set forth below.

---

| | | | | |
|:---|:---|:---|:---|:---|
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **Fund<sup>†</sup>**  | **Investor** | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Address**  | **Common<br>Shares %<br>Held** | **Preferred<br>Shares %<br>Held** |
|  [•] | [•] | [•] | [•] | [•] |

---

† The information contained in this table is based on Schedule 13D/13G filings made on or before [•],
2025. As of [•], 2025, the officers and Board Members of each Fund, as a group, beneficially owned less than 1% of the outstanding common shares of each such Fund and none of the outstanding VMTP Shares or VRDP Shares, as applicable of each such Fund.

**SHAREHOLDER PROPOSALS** 

To be considered for presentation at a shareholder's meeting, rules promulgated by the SEC generally require that, among other things, a shareholder's proposal must be received at the offices of the relevant Fund a reasonable time before solicitation is made. In addition, each Fund's bylaws provide for advance notice provisions, which require shareholders to give timely notice in proper written form with accompanying information (in each case pursuant to the Bylaws of such Fund) to the Secretary of the Fund. Shareholders should review each Fund's bylaws for additional information regarding the Funds' advance notice provisions. The amended and restated bylaws of MVT and MIY, MVF and the Acquiring Fund were filed with the SEC on November 2, 2021. Shareholders may obtain copies of such documents as described on page v of this Joint Proxy Statement/Prospectus.

The timely submission of a proposal does not necessarily mean that such proposal will be included. Any shareholder who wishes to submit a proposal for consideration at a meeting of such shareholder's Fund should send such proposal to the relevant Fund at 50 Hudson Yards, New York, New York 10001.

**STANDSTILL AGREEMENTS** 

On May 3, 2024, each Fund and the Investment Advisor separately entered into a standstill agreement with Karpus Management, Inc ("Karpus"). During the effective period of each such standstill agreement, Karpus, each Fund and the Investment Advisor agreed to be bound by the terms of such agreement, which include an agreement by Karpus to (1) abide by certain standstill covenants, and (2) vote its common shares of the Fund, if any, in accordance with the recommendation of such Fund's Board on all proposals submitted to shareholders. Each such standstill agreement will remain in effect until the earlier of (A) May 3, 2027 and (B) 10 days prior to the record date for the applicable Fund's 2027 annual meeting of shareholders, unless the agreement is terminated earlier by the parties.

On January 20, 2025, each Fund and the Investment Advisor entered into a standstill agreement with Saba Capital Management, L.P. ("Saba"). During the effective period of each such standstill agreement, Saba, each Fund and the Investment Advisor agreed to be bound by the terms of such agreement, which include an agreement by Saba to (1) abide by certain customary standstill covenants, and (2) vote its common shares of the Fund, if any, in accordance with the recommendation of such Fund's Board on all matters submitted to shareholders. Each such standstill agreement will remain in effect until the day following completion of the applicable Fund's 2027 annual meeting of shareholders or August 31, 2027, whichever is earlier, unless the agreement is terminated earlier by the parties.

**SOLICITATION OF PROXIES** 

Solicitation of proxies is being made primarily by the mailing of this Notice and Proxy Statement with its enclosures on or about [•]. Shareholders of the Funds whose shares are held by nominees such as brokers can vote their proxies

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by contacting their respective nominee. In addition to the solicitation of proxies by mail, employees of the Investment Advisor and their affiliates as well as dealers or their representatives may solicit proxies by mail, telephone, fax or the internet. The Funds and the Investment Advisor have retained Georgeson LLC to assist with the distribution of proxy materials and the solicitation and tabulation of proxies. The cost of Georgeson LLC's services in connection with the proxy is anticipated to be approximately $43,000, $66,000, $93,000, and $143,000 for MVT, MVF, MIY and the Acquiring Fund, respectively.

**LEGAL MATTERS** 

Certain legal matters concerning the U.S. federal income tax consequences of the Reorganizations will be passed upon by Willkie Farr & Gallagher LLP, which serves as counsel to the Funds. Certain legal matters concerning the issuance of the common shares of the Acquiring Fund and the new issuance of Acquiring Fund VRDP Shares, will be passed upon by Miles & Stockbridge P.C., which serves as special Maryland counsel to the Acquiring Fund.

**INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM** 

[The independent registered public accounting firm for the Funds performs an annual audit of each Fund's financial statements. Each Fund's Board has appointed [●] to be each Fund's independent registered public accounting firm. [●] is located at [●].]

**OTHER MATTERS WITH RESPECT TO THE MEETING** 

Shareholders who want to communicate with the Board or any individual Board Member should write to the attention of the Secretary of their Fund, 50 Hudson Yards, New York, New York 10001. Shareholders may communicate with the Boards electronically by sending an e-mail to *closedendfundsbod@blackrock.com*. The communication should indicate that you are a Fund shareholder. If the communication is intended for a specific Board Member and so indicates, it will be sent only to that Board Member. If a communication does not indicate a specific Board Member, it will be sent to the Chair of the Governance Committee and the outside counsel to the Independent Board Members for further distribution as deemed appropriate by such persons.

Additionally, shareholders with complaints or concerns regarding accounting matters may address letters to the CCO of their respective Fund 50 Hudson Yards, New York, New York 10001. Shareholders who are uncomfortable submitting complaints to the CCO may address letters directly to the Chair of the Audit Committee of the Board that oversees the Fund. Such letters may be submitted on an anonymous basis.

**ADJOURNMENTS AND POSTPONEMENTS** 

Failure of a quorum to be present at the Special Meeting may necessitate adjournment. The Board of each Fund, prior to the Special Meeting being convened, may postpone such meeting from time to time to a date not more than 120 days after the original record date. The chair of the Special Meeting may also adjourn the Special Meeting from time to time with respect to a Fund and one or more matters to be considered by a Fund, to reconvene at the same or some other place, and notice need not be given of any such adjourned meeting if the time and place by which shareholders may be deemed to be present and vote at such adjourned meeting are announced at the meeting at which the adjournment is taken. The chair of the Special Meeting may adjourn the Special Meeting under various circumstances, including to permit further solicitation of proxies with respect to a proposal if the chair determines that adjournment and further solicitation is reasonable and in the best interests of shareholders. At the adjourned meeting, the Fund may transact any business which might have been transacted at the original meeting. Any adjourned meeting may be held as adjourned one or more times without further notice not later than 120 days after the original record date.

**PRIVACY PRINCIPLES OF THE FUNDS** 

The Funds are committed to maintaining the privacy of shareholders and to safeguarding their non-public personal information. The following information is provided to help you understand what personal information the Funds collect, how we protect that information, and why in certain cases we may share such information with select other parties.

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The Funds do not receive any non-public personal information relating to their shareholders who purchase shares through their broker-dealers. In the case of shareholders who are record holders of a Fund, the Fund receives personal non-public information on account applications or other forms. With respect to these shareholders, the Funds also have access to specific information regarding their transactions in each Fund.

The Funds do not disclose any non-public personal information about their shareholders or former shareholders to anyone, except as permitted by law or as is necessary in order to service our shareholders' accounts (for example, to a transfer agent).

The Funds restrict access to non-public personal information about their shareholders to BlackRock employees with a legitimate business need for the information. The Funds maintain physical, electronic and procedural safeguards designed to protect the non-public personal information of our shareholders.

**OTHER INFORMATION** 

BlackRock is independent in ownership and governance, with no single majority stockholder and a majority of independent directors.

If you cannot be present at the Special Meeting, please fill in, sign and return the enclosed proxy card or please record your voting instructions by telephone or via the Internet promptly. No postage is necessary if the enclosed proxy card is mailed in the United States.

John M. Perlowski

*President and Chief Executive Officer* 

BLACKROCK MUNIVEST FUND II, INC.

BLACKROCK MUNIYIELD MICHIGAN QUALITY FUND, INC.

BLACKROCK MUNIVEST FUND, INC.

BLACKROCK MUNIYIELD QUALITY FUND III, INC.

[●], 2025

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**APPENDIX A** 

**FORM OF AGREEMENT AND PLAN OF REORGANIZATION** 

[•], 2025

In order to consummate the reorganization contemplated herein (the "<u>Reorganization</u>") and in consideration of the promises and the covenants and agreements hereinafter set forth, and intending to be legally bound, BlackRock MuniVest Fund, Inc., a registered diversified closed-end investment company, File No. 811-05611, BlackRock MuniVest Fund II, Inc., a registered diversified closed-end investment company, File No. 811-07478, BlackRock MuniYield Michigan Quality Fund, Inc. a registered non-diversified closed-end investment company, File No. 811-07080 (the "<u>Target Fund</u>"), and BlackRock MuniYield Quality Fund III, Inc., a registered diversified closed-end investment company, File No. 811-06540 (the "<u>Acquiring Fund</u>" and together with the Target Fund, the "<u>Funds</u>"), each hereby enter into this Agreement and Plan of Reorganization (the "<u>Agreement</u>") as of the date first set forth above and agree as follows:

1. REPRESENTATIONS AND WARRANTIES OF THE ACQUIRING FUND.

The Acquiring Fund represents and warrants to, and agrees with, the Target Fund that:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) The Acquiring Fund is a corporation duly incorporated, validly existing and in good standing in conformity with the laws of the State of Maryland and has the power to own all of its assets and to carry out this Agreement. The Acquiring Fund has all necessary federal, state and local authorizations to carry on its business as it is now being conducted and to carry out this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) The Acquiring Fund is duly registered under the Investment Company Act of 1940, as amended (the "<u>1940 Act</u>") as a diversified, closed-end management investment company and such registration has not been revoked or rescinded and is in full force and effect.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) The Acquiring Fund has full power and authority to enter into and perform its obligations under this Agreement subject:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) in the case of the consummation of the Reorganization, to the approval of this Agreement and the transactions contemplated herein, including amendments to the Articles Supplementary (as defined below) in connection with the issuance of additional Acquiring Fund VRDP Shares (as defined in Section 1(o) herein) in the Reorganization, by the holders of the Acquiring Fund VRDP Shares ("<u>Acquiring Fund VRDP Holders</u>") voting as a separate class, and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) in the case of the issuance of additional Acquiring Fund Common Shares (as defined in Section 1(o) herein) in connection with the Reorganization, to the approval of such issuance of additional Acquiring Fund Common Shares by the common shareholders of the Acquiring Fund ("<u>Acquiring Fund Common Shareholders</u>" and together with the Acquiring Fund VRDP Holders, the "<u>Acquiring Fund Shareholders</u>") and the Acquiring Fund VRDP Holders voting as a single class, in each case as described in Sections 9(a) and 9(b) hereof.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) The execution, delivery and performance of this Agreement have been duly authorized by all necessary action of the Acquiring Fund's Board of Directors, and this Agreement constitutes a valid and binding contract of the Acquiring Fund enforceable against the Acquiring Fund in accordance with its terms, subject to the effects of bankruptcy, insolvency, moratorium, fraudulent conveyance and similar laws relating to or affecting creditors' rights generally and court decisions with respect thereto.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) The Acquiring Fund has provided or made available (including by electronic format) to the Target Fund the most recent audited annual financial statements of the Acquiring Fund, which have been prepared in accordance with generally accepted accounting principles in the United States of America ("<u>US GAAP</u>") consistently applied and have been audited by [•], each Fund's independent registered public accounting firm, and such statements

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fairly present the financial condition and the results of operations of the Acquiring Fund as of the respective dates indicated and the results of operations and changes in net assets for the periods indicated, and there are no liabilities of the Acquiring Fund whether actual or contingent and whether or not determined or determinable as of such date that are required to be disclosed but are not disclosed in such statements.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) An unaudited statement of assets, capital and liabilities of the Acquiring Fund and an unaudited schedule of investments of the Acquiring Fund, each as of the Valuation Time (as defined in Section 3(e) herein) (together, the "<u>Acquiring Fund Closing Financial Statements</u>"), will be provided or made available (including by electronic format) to the Target Fund, at or prior to the Closing Date (as defined in Section 7(a) herein), for the purpose of determining the number of Acquiring Fund Shares (as defined in Section 1(o) herein) to be issued to the Target Fund shareholders (the "<u>Target Fund Shareholders</u>") pursuant to Section 3 of this Agreement; the Acquiring Fund Closing Financial Statements will fairly present the financial position of the Acquiring Fund as of the Valuation Time in conformity US GAAP consistently applied.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g) There are no material legal, administrative or other proceedings pending or, to the knowledge of the Acquiring Fund, threatened against it which assert liability on the part of the Acquiring Fund or which materially affect its financial condition or its ability to consummate the Reorganization other than as have been disclosed to the Target Fund and/or in the N-14 Registration Statement (as defined in Section 1(l) herein). The Acquiring Fund is not charged with or, to the best of its knowledge, threatened with any violation or investigation of any possible violation of any provisions of any federal, state or local law or regulation or administrative ruling relating to any aspect of its business.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h) There are no material contracts outstanding to which the Acquiring Fund is a party that have not been disclosed in the N-14 Registration Statement or that will not otherwise be disclosed to the Target Fund prior to the Valuation Time.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) The Acquiring Fund is not obligated under any provision of its charter or By-laws, each as amended to the date hereof, and is not a party to any contract or other commitment or obligation, and is not subject to any order or decree, which would be violated by its execution of or performance under this Agreement, except insofar as the Funds have mutually agreed to amend such contract or other commitment or obligation to cure any potential violation as a condition precedent to the Reorganization.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(j) The Acquiring Fund has no known liabilities of a material amount, contingent or otherwise, other than those shown on the Acquiring Fund's Annual Report for the fiscal year ended July 31, 2025, those incurred since the date thereof in the ordinary course of its business as an investment company, and those incurred in connection with the Reorganization. As of the Valuation Time, the Acquiring Fund will advise the Target Fund of all known liabilities, contingent or otherwise, whether or not incurred in the ordinary course of business, existing or accrued as of such time, except to the extent disclosed in the Acquiring Fund Closing Financial Statements or to the extent already known by the Target Fund.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(k) No consent, approval, authorization or order of any court or government authority is required for the consummation by the Acquiring Fund of the Reorganization, except such as may be required under the Securities Act of 1933, as amended (the "<u>1933 Act</u>"), the Securities Exchange Act of 1934, as amended (the "<u>1934 Act</u>"), and the 1940 Act or state securities laws (which term as used herein shall include the laws of the District of Columbia and Puerto Rico) or the rules of the New York Stock Exchange, each of which will have been obtained on or prior to the Closing Date.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(l) The registration statement filed by the Acquiring Fund on Form N-14, which includes the proxy statement for the common shareholders of the Target Fund and the Acquiring Fund with respect to the transactions contemplated herein (the "<u>Joint Proxy Statement/Prospectus</u>"), and any supplement or amendment thereto or to the documents included or incorporated by reference therein (collectively, as so amended or supplemented, the "<u>N-14 Registration Statement</u>"), on its effective date, at the time of the shareholder meeting called to vote on this Agreement and on the Closing Date, insofar as it relates to the Acquiring Fund, (i) complied or will comply in all material respects with the provisions of the 1933 Act, the 1934 Act and the 1940 Act and the rules and regulations thereunder and (ii) did not or will not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, not misleading; and the Joint Proxy Statement/Prospectus included

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therein did not or will not contain any untrue statement of a material fact or omit to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; <u>provided</u>, <u>however</u>, that the representations and warranties in this subsection only shall apply to statements in or omissions from the N-14 Registration Statement made in reliance upon and in conformity with information furnished by the Acquiring Fund for use in the N-14 Registration Statement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(m) The proxy statement for the Acquiring Fund VRDP Holders and holders of the Target Fund VRDP<sup>1</sup> VMTP<sup>2</sup> Shares (as defined in section 2(o) herein) (the "<u>Target Fund</u> VRDP<sup>3</sup>VMTP<sup>4</sup> <u>Holders</u>") with respect to the transactions contemplated herein, and any supplement or amendment thereto (the "<u>Preferred Shares Proxy Statement</u>") or to the documents included or incorporated by reference therein, at the time of the shareholder meeting called to vote on this Agreement and on the Closing Date, insofar as it relates to the Acquiring Fund, (i) complied or will comply in all material respects with the provisions of the 1934 Act and the 1940 Act and the rules and regulations thereunder and (ii) did not or will not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein in light of the circumstances under which they were made, not misleading; <u>provided</u>, <u>however</u>, that the representations and warranties in this subsection only shall apply to statements in or omissions from the Preferred Shares Proxy Statement made in reliance upon and in conformity with information furnished by the Acquiring Fund for use in the Preferred Shares Proxy Statement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(n) The Acquiring Fund has filed, or intends to file, or has obtained extensions to file, all federal, state and local tax returns which are required to be filed by it, and has paid or has obtained extensions to pay, all federal, state and local taxes shown on said returns to be due and owing and all assessments received by it, up to and including the taxable year in which the Closing Date occurs. All tax liabilities of the Acquiring Fund have been adequately provided for on its books, and no tax deficiency or liability of the Acquiring Fund has been asserted and no question with respect thereto has been raised by the Internal Revenue Service or by any state or local tax authority for taxes in excess of those already paid, up to and including the taxable year in which the Closing Date occurs.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(o) The Acquiring Fund is authorized to issue [199,973,636] shares of common stock, par value $0.10 per share (the "<u>Acquiring Fund Common Shares</u>"), and 6,400 Auction Market Preferred Stock, par value $0.05, with a liquidation preference of $25,000, plus an amount equal to all accumulated but unpaid dividends (whether or not earned or declared) (the "Acquiring Fund AMPS Non-Series Shares"), 1,100 shares of Auction Market Preferred Stock, Series A, par value $0.05, with a liquidation preference of $25,000, plus an amount equal to all accumulated but unpaid dividends (whether or not earned or declared) (the "Acquiring Fund AMPS Series A Shares"), 1,100 shares of Auction Market Preferred Stock, Series B, par value $0.05, with a liquidation preference of $25,000, plus an amount equal to all accumulated but unpaid dividends (whether or not earned or declared) (the "Acquiring Fund AMPS Series B Shares"), 1,100 shares of of Auction Market Preferred Stock, Series C, par value $0.05, with a liquidation preference of $25,000, plus an amount equal to all accumulated but unpaid dividends (whether or not earned or declared) (the "Acquiring Fund AMPS Series C Shares"), 1,100 shares of Auction Market Preferred Stock, Series D, par value $0.05, with a liquidation preference of $25,000, plus an amount equal to all accumulated but unpaid dividends (whether or not earned or declared) (the "Acquiring Fund AMPS Series D Shares"), 2,000 shares of Auction Market Preferred Stock, Series E, par value $0.05, with a liquidation preference of $25,000, plus an amount equal to all accumulated but unpaid dividends (whether or not earned or declared) (the "Acquiring Fund AMPS Series E Shares"), 2,400 shares of Auction Market Preferred Stock, Series F, par value $0.10, with a liquidation preference of $25,000, plus an amount equal to all accumulated but unpaid dividends (whether or not earned or declared) (the "Acquiring Fund AMPS Series F Shares"), 2,400 shares of Auction Market Preferred Stock, Series G, par value $0.10, with a liquidation preference of $25,000, plus an amount equal to all accumulated but unpaid dividends (whether or not earned or declared) (the "Acquiring Fund AMPS Series G Shares"), 2,600 shares of Auction Market Preferred Stock, Series H, par value $0.10, with a liquidation preference of $25,000, plus an amount equal to all accumulated but unpaid dividends (whether or not earned or declared) (the "Acquiring Fund AMPS Series H Shares"), and 3,564 shares of Series W-7 Variable Rate Demand Preferred Shares, par value $0.10, with a liquidation preference of $100,000 (the "Acquiring Fund VRDP Shares" and together with the Acquiring Fund Common Shares, the Acquiring Fund AMPS Non-Series Shares, the Acquiring Fund AMPS Series A Shares, Acquiring Fund AMPS Series B Shares, Acquiring Fund AMPS Series C Shares, Acquiring Fund AMPS Series D Shares, Acquiring Fund AMPS Series E Shares, Acquiring Fund AMPS

<sup>1</sup> [Applies to MIY.]

<sup>2</sup> [Applies to MVF and MVT.]

<sup>3</sup> [Applies to MIY.]

<sup>4</sup> [Applies to MVF and MVT.]

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Series F Shares, Acquiring Fund AMPS Series G Shares, and the Acquiring Fund AMPS Series H Shares, collectively the "Acquiring Fund Shares"). Each issued and outstanding Acquiring Fund Share is fully paid and nonassessable, and has the voting rights provided by the Acquiring Fund's charter, By-laws and applicable law.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(p) The books and records of the Acquiring Fund made available to the Target Fund and/or its counsel are substantially true and correct and contain no material misstatements or omissions with respect to the operations of the Acquiring Fund.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(q) The Acquiring Fund Shares to be issued to the Target Fund Shareholders pursuant to this Agreement will have been duly authorized and, when issued and delivered pursuant to this Agreement, will be legally and validly issued and will be fully paid and nonassessable and will have full voting rights, except as provided by the Acquiring Fund's charter or applicable law, and no Acquiring Fund Shareholder will have any preemptive right of subscription or purchase in respect thereof.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(r) At or prior to the Closing Date, the Acquiring Fund Common Shares to be transferred to the Target Fund for distribution to the Target Fund Shareholders on the Closing Date will be duly qualified for offering to the public in all states of the United States in which the sale of shares of the Funds presently are qualified, and there will be a sufficient number of such Acquiring Fund Common Shares registered under the 1933 Act and, as may be necessary, with each pertinent state securities commission to permit the transfers contemplated by this Agreement to be consummated.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(s) At or prior to the Closing Date, the Acquiring Fund will have obtained any and all regulatory, board and shareholder approvals necessary to issue the Acquiring Fund Shares to the Target Fund Shareholders.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(t) The Acquiring Fund has elected to qualify and has qualified as a regulated investment company ("<u>RIC</u>") within the meaning of Section 851 of the Internal Revenue Code of 1986, as amended (the "<u>Code</u>") for each of its taxable years since its inception, and the Acquiring Fund has satisfied the distribution requirements imposed by Section 852 of the Code to maintain RIC status for each of its taxable years.

2. REPRESENTATIONS AND WARRANTIES OF THE TARGET FUND.

The Target Fund represents and warrants to, and agrees with, the Acquiring Fund that:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) The Target Fund is a corporation duly organized, validly existing and in good standing in conformity with the laws of the State of Maryland and has the power to own all of its assets and to carry out this Agreement. The Target Fund has all necessary federal, state and local authorizations to carry on its business as it is now being conducted and to carry out this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) The Target Fund is duly registered under the 1940 Act as a [diversified]<sup>5</sup>[non-diversified]<sup>6</sup>, closed-end management investment company, and such registration has not been revoked or rescinded and is in full force and effect.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) The Target Fund has full power and authority to enter into and perform its obligations under this Agreement subject, in the case of consummation of the Reorganization, to the approval and adoption of this Agreement by the Target Fund Shareholders as described in Section 8(a) hereof. The execution, delivery and performance of this Agreement have been duly authorized by all necessary action of the Target Fund's Board of Directors and this Agreement constitutes a valid and binding contract of the Target Fund enforceable against the Target Fund in accordance with its terms, subject to the effects of bankruptcy, insolvency, moratorium, fraudulent conveyance and similar laws relating to or affecting creditors' rights generally and court decisions with respect thereto.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) The Target Fund has provided or made available (including by electronic format) to the Acquiring Fund the most recent audited annual financial statements of the Target Fund which have been prepared in accordance with US GAAP consistently applied and have been audited by [•], and such statements fairly present the financial

<sup>5</sup> [Applies to MVF and MVT.]

<sup>6</sup> [Applies to MIY.]

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condition and the results of operations of the Target Fund as of the respective dates indicated and the results of operations and changes in net assets for the periods indicated, and there are no liabilities of the Target Fund whether actual or contingent and whether or not determined or determinable as of such date that are required to be disclosed but are not disclosed in such statements.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) An unaudited statement of assets, capital and liabilities of the Target Fund and an unaudited schedule of investments of the Target Fund, each as of the Valuation Time (together, the "<u>Target Fund Closing Financial Statements</u>"), will be provided or made available (including by electronic format) to the Acquiring Fund at or prior to the Closing Date, for the purpose of determining the number of Acquiring Fund Shares to be issued to the Target Fund Shareholders pursuant to Section 3 of this Agreement; the Target Fund Closing Financial Statements will fairly present the financial position of the Target Fund as of the Valuation Time in conformity with US GAAP consistently applied.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) There are no material legal, administrative or other proceedings pending or, to the knowledge of the Target Fund, threatened against it which assert liability on the part of the Target Fund or which materially affect its financial condition or its ability to consummate the Reorganization other than as have been disclosed to the Acquiring Fund. The Target Fund is not charged with or, to the best of its knowledge, threatened with any violation or investigation of any possible violation of any provisions of any federal, state or local law or regulation or administrative ruling relating to any aspect of its business.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g) There are no material contracts outstanding to which the Target Fund is a party that have not been disclosed in the N-14 Registration Statement or will not otherwise be disclosed to the Acquiring Fund prior to the Valuation Time.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h) The Target Fund is not obligated under any provision of its charter or By-laws, each as amended to the date hereof, or a party to any contract or other commitment or obligation, and is not subject to any order or decree, which would be violated by its execution of or performance under this Agreement, except insofar as the Funds have mutually agreed to amend such contract or other commitment or obligation to cure any potential violation as a condition precedent to the Reorganization.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) The Target Fund has no known liabilities of a material amount, contingent or otherwise, other than those shown on the Target Fund's Annual Report for the fiscal year ended July 31, 2025, those incurred since the date thereof in the ordinary course of its business as an investment company and those incurred in connection with the Reorganization. As of the Valuation Time, the Target Fund will advise the Acquiring Fund of all known liabilities, contingent or otherwise, whether or not incurred in the ordinary course of business, existing or accrued as of such time, except to the extent disclosed in the Target Fund Closing Financial Statements or to the extent already known by the Acquiring Fund.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(j) At both the Valuation Time and the Closing Date, the Target Fund will have full right, power and authority to sell, assign, transfer and deliver the Target Fund Investments. As used in this Agreement, the term "<u>Target Fund Investments</u>" shall mean (i) the investments of the Target Fund shown on the schedule of its investments as of the Valuation Time furnished to the Acquiring Fund; and (ii) all other assets owned by the Target Fund as of the Valuation Time, other than cash held in liability reserves in amounts necessary to pay taxes and expenses as provided in Section 6(a)(ii) and Section 6(c)(iv) of this Agreement, respectively, and distributions, if any, as provided in Section 3(c) and Section 9(l) of this Agreement. At the Closing Date, subject only to the obligation to deliver the Target Fund Investments as contemplated by this Agreement, the Target Fund will have good and marketable title to all of the Target Fund Investments, and the Acquiring Fund will acquire all of the Target Fund Investments free and clear of any encumbrances, liens or security interests and without any restrictions upon the transfer thereof (except those imposed by the federal or state securities laws and those imperfections of title or encumbrances as do not materially detract from the value or use of the Target Fund Investments or materially affect title thereto).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(k) No consent, approval, authorization or order of any court or governmental authority is required for the consummation by the Target Fund of the Reorganization, except such as may be required under the 1933 Act, the 1934 Act and the 1940 Act or state securities laws (which term as used herein shall include the laws of the District of Columbia and Puerto Rico) or the rules of the New York Stock Exchange, each of which will have been obtained on or prior to the Closing Date.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(l) The N-14 Registration Statement, on its effective date, at the time of the Target Fund Shareholders meeting called to vote on this Agreement and on the Closing Date, insofar as it relates to the Target Fund (i) complied or will comply in all material respects with the provisions of the 1933 Act, the 1934 Act and the 1940 Act and the rules and regulations thereunder and (ii) did not or will not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein in light of the circumstances under which they were made, not misleading; and the Joint Proxy Statement/Prospectus included therein did not or will not contain any untrue statement of a material fact or omit to state any material fact necessary to make the statements therein, not misleading; <u>provided</u>, <u>however</u>, that the representations and warranties in this subsection shall apply only to statements in or omissions from the N-14 Registration Statement made in reliance upon and in conformity with information furnished by the Target Fund for use in the N-14 Registration Statement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(m) The Preferred Shares Proxy Statement for the Target Fund [VRDP]<sup>7</sup>[VMTP]<sup>8</sup> Holders with respect to the transactions contemplated herein, and any supplement or amendment thereto or to the documents included or incorporated by reference therein, at the time of the shareholder meeting called to vote on this Agreement and on the Closing Date, insofar as it relates to the Target Fund, (i) complied or will comply in all material respects with the provisions of the 1934 Act and the 1940 Act and the rules and regulations thereunder and (ii) did not or will not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein in light of the circumstances under which they were made, not misleading; <u>provided</u>, <u>however</u>, that the representations and warranties in this subsection shall apply only to statements in or omissions from the Preferred Shares Proxy Statement made in reliance upon and in conformity with information furnished by the Target Fund for use in the Preferred Shares Proxy Statement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(n) The Target Fund has filed, or intends to file, or has obtained extensions to file, all federal, state and local tax returns which are required to be filed by it, and has paid or has obtained extensions to pay, all federal, state and local taxes shown on said returns to be due and owing and all assessments received by it, up to and including the taxable year in which the Closing Date occurs. All tax liabilities of the Target Fund have been adequately provided for on its books, and no tax deficiency or liability of the Target Fund has been asserted and no question with respect thereto has been raised by the Internal Revenue Service or by any state or local tax authority for taxes in excess of those already paid, up to and including the taxable year in which the Closing Date occurs.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(o) The Target Fund is authorized to issue [149,998,464] [199,990,823] [199,991,081] shares of common stock, par value $0.10 per share (the "Target Fund Common Shares"), [and 2,000 shares of Auction Market Preferred Stock, Series A, par value $0.05, with a liquidation preference of $25,000, plus an amount equal to all accumulated but unpaid dividends (whether or not earned or declared) (the "MIY AMPS Series A Shares"), 1,000 shares of Auction Market Preferred Stock, Series B, par value $0.05, with a liquidation preference of $25,000, plus an amount equal to all accumulated but unpaid dividends (whether or not earned or declared) (the "MIY AMPS Series B Shares"), 1,000 shares of of Auction Market Preferred Stock, Series C, par value $0.05, with a liquidation preference of $25,000, plus an amount equal to all accumulated but unpaid dividends (whether or not earned or declared) (the "MIY AMPS Series C Shares"), 1,000 shares of Auction Market Preferred Stock, Series D, par value $0.05, with a liquidation preference of $25,000, plus an amount equal to all accumulated but unpaid dividends (whether or not earned or declared) (the "MIY AMPS Series D Shares"), and 2,319 shares of Series W-7 Variable Rate Demand Preferred Shares, par value $0.10, with a liquidation preference of $100,000 (the "Target Fund VRDP Shares" and (a) together with the Target Fund Common Shares, the MIY AMPS Series A Shares, the MIY AMPS Series B Shares, the MIY AMPS Series C Shares, and the MIY AMPS Series D Shares, collectively the "Target Fund Shares")][and 9,968,092 shares of preferred stock (the "MVF General Non-Classified Preferred Stock"), and further classified as 8,250 shares of preferred stock, par value $0.05, with a liquidation preference of $25,000, plus an amount equal to all accumulated but unpaid dividends (whether or not earned or declared) (the "MVF Classified Non-Series Preferred Shares"), 500 shares of Auction Market Preferred Stock, Series A, par value $0.05, with a liquidation preference of $25,000, plus an amount equal to all accumulated but unpaid dividends (whether or not earned or declared) (the "MVF AMPS Series A Shares"), 500 shares of Auction Market Preferred Stock, Series B, par value $0.05, with a liquidation preference of $25,000, plus an amount equal to all accumulated but unpaid dividends (whether or not earned or declared) (the "MVF AMPS Series B Shares"), 500 shares of of Auction Market Preferred Stock, Series C, par value $0.05, with a liquidation preference of $25,000, plus an amount equal to all accumulated

<sup>7</sup> [Applies to MIY.]

<sup>8</sup> [Applies to MVF and MVT.]

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but unpaid dividends (whether or not earned or declared) (the "MVF AMPS Series C Shares"), 1,000 shares of Auction Market Preferred Stock, Series D, par value $0.05, with a liquidation preference of $25,000, plus an amount equal to all accumulated but unpaid dividends (whether or not earned or declared) (the "MVF AMPS Series D Shares"), 750 shares of Auction Market Preferred Stock, Series E, par value $0.05, with a liquidation preference of $25,000, plus an amount equal to all accumulated but unpaid dividends (whether or not earned or declared) (the "MVF AMPS Series E Shares"), 2,360 shares of Auction Market Preferred Stock, Series F, par value $0.10, with a liquidation preference of $25,000, plus an amount equal to all accumulated but unpaid dividends (whether or not earned or declared) (the "MVF AMPS Series F Shares") and 2,438 shares of Series W-7 Retired Variable Rate Muni-Term Preferred Shares, par value $0.10, with a liquidation preference of $100,000 (the "MVF Retired Preferred Shares"), and 1,536 shares of Series W-7 Variable Rate Muni-Term Preferred Shares, par value $0.10, with a liquidation preference of $100,000 (the "Target Fund VMTP Shares Shares" and together with the Target Fund Common Shares, the MVF Classified Non-Series Preferred Shares, the MVF AMPS Series A Shares, the MVF AMPS Series B Shares, the MVF AMPS Series C Shares, the MVF AMPS Series D Shares, the MVF AMPS Series E Shares, the MVF AMPS Series F Shares, and the MVF Retired Preferred Shares)] [2,700 shares of Auction Market Preferred Stock, par value $0.05, with a liquidation preference of $25,000, plus an amount equal to all accumulated but unpaid dividends (whether or not earned or declared) (the "MVT AMPS Non-Series Shares"), 900 shares of Auction Market Preferred Stock, Series A, par value $0.05, with a liquidation preference of $25,000, plus an amount equal to all accumulated but unpaid dividends (whether or not earned or declared) (the "MVT AMPS Series A Shares"), 900 shares of Auction Market Preferred Stock, Series B, par value $0.05, with a liquidation preference of $25,000, plus an amount equal to all accumulated but unpaid dividends (whether or not earned or declared) (the "MVT AMPS Series B Shares"), 900 shares of of Auction Market Preferred Stock, Series C, par value $0.05, with a liquidation preference of $25,000, plus an amount equal to all accumulated but unpaid dividends (whether or not earned or declared) (the "MVT AMPS Series C Shares"), 1,600 shares of of Auction Market Preferred Stock, Series D, par value $0.05, with a liquidation preference of $25,000, plus an amount equal to all accumulated but unpaid dividends (whether or not earned or declared) (the "MVT AMPS Series D Shares"), 1,400 shares of Series W-7 Retired Variable Rate Muni-Term Preferred Shares, par value $0.10, with a liquidation preference of $100,000 (the "MVT Retired Preferred Shares"), and 777 shares of Series W-7 Variable Rate Muni-Term Preferred Shares, par value $0.10, with a liquidation preference of $100,000 (the "Target Fund VMTP Shares" and together with the Target Fund Common Shares, the MVT AMPS Non-Series Shares, the MVT AMPS Series A Shares, MVT AMPS Series B Shares, MVT AMPS Series C Shares, MVT AMPS Series D Shares, and the MVT Retired Preferred Shares, collectively the "Target Fund Shares")]. Each issued and outstanding Target Fund Share is duly and validly issued and is fully paid and nonassessable, except as provided by the Target Fund's charter, and has the voting rights provided by the Target Fund's charter, By-laws and applicable law. The Target Fund has no issued and outstanding preferred shares other than [2,319 Target Fund VRDP] [[1,536] [777] Target Fund VMTP] Shares; no outstanding options, warrants or other rights to subscribe for or purchase any Target Fund Shares; and no outstanding securities convertible into Target Fund Shares. All of the issued and outstanding Target Fund Common Shares will, at the time of the Closing, be held by the persons and in the amounts set forth in the records of the Target Fund's transfer agent as provided in Section 7(d).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(p) All of the issued and outstanding Target Fund Shares were offered for sale and sold in conformity with all applicable federal and state securities laws.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(q) The Target Fund will not sell or otherwise dispose of any of the Acquiring Fund Shares to be received in the Reorganization, except in distribution to the Target Fund Shareholders as provided in Section 3 of this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(r) The books and records of the Target Fund made available to the Acquiring Fund and/or its counsel are substantially true and correct and contain no material misstatements or omissions with respect to the operations of the Target Fund.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(s) The Target Fund has elected to qualify and has qualified as a RIC within the meaning of Section 851 of the Code for each of its taxable years since its inception, and the Target Fund has satisfied the distribution requirements imposed by Section 852 of the Code to maintain RIC status for each of its taxable years.

3. THE REORGANIZATION.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Subject to receiving the requisite approvals of the Target Fund Shareholders and the Acquiring Fund Shareholders, and to the other terms and conditions contained herein, and in accordance with the applicable law, the Target Fund agrees to convey, transfer and deliver to the Acquiring Fund and the Acquiring Fund agrees to acquire from the Target Fund, on the Closing Date, all of the Target Fund Investments (including interest accrued as of the Valuation Time on debt instruments held by the Target Fund), and assume substantially all of the liabilities of the Target Fund, in exchange for that number of Acquiring Fund Shares provided in Section 4 of this Agreement, provided however that if, pursuant to the provisions of paragraph (c) of this Section 3 and paragraph (l) of Section 9 hereof, (i) the Target Fund determines to make any portion of the UNII Distributions (as defined in Section 3(c) herein) to the Target Fund Common Shareholders (as defined below) after the Closing Date, the Target Fund Investments to be conveyed, transferred and delivered to the Acquiring Fund hereunder will exclude the amounts required for the payment of such portion of the UNII Distributions and the liabilities to be assumed by the Acquiring Fund shall not include such undistributed amount of such UNII Distributions, or (ii) the Target Fund determines that the Acquiring Fund will pay amounts in respect of such UNII Distributions on behalf of the Target Fund to the Target Fund Common Shareholders entitled to receive such UNII Distributions after the Closing Date, then the Target Fund Investments to be conveyed, transferred and delivered to the Acquiring Fund hereunder will include the amounts required for the payment of such portion of the UNII Distributions and the liabilities to be assumed by the Acquiring Fund shall include such undistributed amount of such UNII Distributions. The existence of the Acquiring Fund shall continue unaffected and unimpaired by the Reorganization and it shall be governed by the laws of Maryland.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) If the investment adviser determines that the portfolios of the Target Fund and the Acquiring Fund, when aggregated, would contain investments exceeding certain percentage limitations imposed upon the Acquiring Fund with respect to such investments or that the disposition of certain assets is necessary to ensure that the resulting portfolio will meet the Acquiring Fund's investment objective, policies and restrictions, as set forth in the Joint Proxy Statement/Prospectus, a copy of which has been delivered (including by electronic format) to the Target Fund, the Target Fund, if requested by the Acquiring Fund, will dispose of a sufficient amount of such investments as may be necessary to avoid violating such limitations as of the Closing Date. Notwithstanding the foregoing, nothing herein will require the Target Fund to dispose of any portion of its assets if, in the reasonable judgment of the Target Fund's Board of Directors or investment adviser, such disposition would create more than an insignificant risk that the Reorganization would not be treated as a "reorganization" described in Section 368(a) of the Code or would otherwise not be in the best interests of the Target Fund.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) Prior to the Closing Date, the Target Fund shall declare a dividend or dividends which, together with all such previous dividends, shall have the effect of distributing to holders of Target Fund Common Shares ("<u>Target Fund Common Shareholders</u>") entitled to such dividends (i) all of its investment company taxable income to and including the Closing Date, if any (computed without regard to any deduction for dividends paid), (ii) all of its net capital gain, if any, recognized to and including the Closing Date and (iii) the excess of its interest income excludable from gross income under Section 103(a) of the Code, if any, over its deductions disallowed under Sections 265 and 171(a)(2) of the Code for the period to and including the Closing Date. The Target Fund may pay amounts in respect of such distributions ("<u>UNII Distributions</u>") in one or more distributions to Target Fund Common Shareholders entitled to receive such UNII Distributions after the Closing Date. In addition, the Acquiring Fund may pay amounts in respect of such UNII Distributions on behalf of the Target Fund to the Target Fund Common Shareholders entitled to receive such UNII Distributions after the Closing Date as an agent out of cash or other short-term liquid assets maturing prior to the payment date of the UNII Distributions acquired from the Target Fund in the Reorganization, segregated for this purpose and maintained in an amount at least equal to the remaining payment obligations in respect of the UNII Distributions.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) Pursuant to this Agreement, as soon as practicable, and in no event more than 48 hours, exclusive of Sundays and holidays, after the Closing Date, the Target Fund will distribute all Acquiring Fund Common Shares and Acquiring Fund VRDP Shares received by it and cash in lieu of fractional shares, AS APPLICABLE, WITH RESPECT TO Target Fund Common Shares, to its shareholders, pro rata, as provided in subsection (f) of Section 4 below. Such distributions shall be accomplished by the opening of shareholder accounts on the share ledger records of the Acquiring Fund in the names of and in the amounts due to the Target Fund Shareholders based on their respective holdings in the Target Fund as of the Valuation Time.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) The Valuation Time shall be at the close of business of the New York Stock Exchange on the business day immediately preceding the Closing Date, or such earlier or later day and time as may be mutually agreed upon in writing by the Funds (the "<u>Valuation Time</u>").

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) The Target Fund will pay or cause to be paid to the Acquiring Fund any interest the Target Fund receives on or after the Closing Date with respect to any of the Target Fund Investments transferred to the Acquiring Fund hereunder.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g) Recourse for liabilities assumed from the Target Fund by the Acquiring Fund in the Reorganization will be limited to the net assets acquired by the Acquiring Fund. The known liabilities of the Target Fund, as of the Valuation Time, shall be confirmed to the Acquiring Fund pursuant to Section 2(i) of this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h) The Target Fund will be terminated as soon as practicable following the Closing Date by terminating its registration under the 1940 Act and dissolving and terminating under the laws of the State of Maryland and will withdraw its authority to do business in any state where it is registered.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) For U.S. federal income tax purposes, the parties to this Agreement intend that (i) the Reorganization qualify as a reorganization within the meaning of Section 368(a) of the Code, (ii) this Agreement constitutes a plan of reorganization within the meaning of U.S. Treasury Regulations Section 1.368-2(g), and (iii) the parties to this Agreement will each be a party to such reorganization within the meaning of Section 368(b) of the Code.

4. ISSUANCE AND VALUATION OF ACQUIRING FUND SHARES IN THE REORGANIZATION.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) A number of Acquiring Fund Common Shares with an aggregate net asset value equal to the value of the Target Fund Investments (including interest accrued as of the Valuation Time on debt instruments held by the Target Fund) acquired in the Reorganization determined as hereinafter provided, reduced by the amount of liabilities of the Target Fund assumed by the Acquiring Fund in the Reorganization, shall be issued by the Acquiring Fund to the Target Fund in exchange for such Target Fund Investments, which shall be determined as set forth below. The value of each Fund's net assets shall be calculated net of the liquidation preference (including accumulated and unpaid dividends) of all outstanding preferred shares of such Fund.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) A number of Acquiring Fund VRDP Shares equal to the number of Target Fund [VRDP]<sup>9</sup>[VMTP]<sup>10</sup> Shares outstanding immediately prior to the Closing Date, with the terms described in the Preferred Shares Proxy Statement, shall be issued by the Acquiring Fund to the Target Fund. No fractional Acquiring Fund VRDP Shares will be issued. Target Fund any accumulated and unpaid dividends Target Fund [VRDP]<sup>11</sup>[VMTP]<sup>12</sup> up to and including the day immediately preceding the Closing Date.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) The net asset value of the Acquiring Fund and the Target Fund, the values of their assets, the amounts of their liabilities, and the liquidation preference (including accumulated and unpaid dividends) of the Target Fund [VRDP]<sup>13</sup>[VMTP]<sup>14</sup> Shares and the Acquiring Fund VRDP Shares shall be determined as of the Valuation Time in accordance with the regular procedures of the Acquiring Fund or such other valuation procedures as shall be mutually agreed by the parties, and no adjustment will be made to the net asset value or liquidation preference so determined of any Fund to take into account differences in realized and unrealized gains and losses.

Such valuation and determination shall be made by the Acquiring Fund in cooperation with the Target Fund and shall be confirmed by the Acquiring Fund to the Target Fund. The net asset value per share of the Acquiring Fund Common Shares and the liquidation preference (including accumulated and unpaid dividends) per share of the Acquiring Fund VRDP Shares shall be determined in accordance with such procedures.

<sup>9</sup> [Applies to MIY.]

<sup>10</sup> [Applies to MVF and MVT.]

<sup>11</sup> [Applies to MIY.]

<sup>12</sup> [Applies to MVF and MVT.]

<sup>13</sup> [Applies to MIY.]

<sup>14</sup> [Applies to MVF and MVT.]

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For purposes of determining the net asset value per share of Target Fund Common Shares and the Acquiring Fund Common Shares, the value of the securities held by the applicable Fund plus any cash or other assets (including interest accrued but not yet received) minus all liabilities (including accrued expenses) and the aggregate liquidation value of the outstanding Target Fund [VRDP]<sup>15</sup>[VMTP]<sup>16</sup> Shares or Acquiring Fund VRDP Shares, as the case may be, shall be divided by the total number of Target Fund Common Shares or Acquiring Fund Common Shares, as the case may be, outstanding at such time.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) The Acquiring Fund shall issue to each Target Fund book-entry interests for the Acquiring Fund Common Shares registered in the name of such Target Fund proportionate interest in the aggregate net asset value of the Target Fund Common Shares, subject to paragraph (f) below with respect to fractional shares.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) The Acquiring Fund shall issue to each Target Fund Holder book-entry interests for the Acquiring Fund VRDP Shares registered in the name of such Target Fund of the Target Fund [VRDP]<sup>17</sup>[VMTP]<sup>18</sup>Shares. The Target Fund [VRDP]<sup>19</sup>[VMTP]<sup>20</sup> Holders shall not receive, or be entitled to, any payment or other consideration in connection with or as a result of the Reorganization other than as provided in this Agreement. In connection with such issuance, the Acquiring Fund shall amend (or shall already have amended) the Acquiring Fund VRDP Shares' Articles Supplementary Establishing and Fixing the Rights and Preferences of Variable Rate Demand Preferred Shares (the "<u>Articles Supplementary</u>"), share certificates representing such Acquiring Fund VRDP Shares and such other agreements, instruments or documents relating to the Acquiring Fund VRDP Shares, in each case as of, or prior to, the Closing Date and only to the extent necessary or applicable to such agreement, instrument or document, to reflect the authorization and issuance of additional Acquiring Fund VRDP Shares in connection with the Reorganization.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) No fractional shares of Acquiring Fund Common Shares will be issued to holders of Target Fund Common Shares unless such shares are held in a Dividend Reinvestment Plan account. In lieu thereof, the Acquiring Fund's transfer agent will aggregate all fractional Acquiring Fund Common Shares to be issued in connection with the Reorganization (other than those issued to a Dividend Reinvestment Plan account) and sell the resulting full shares on the New York Stock Exchange at the current market price for Acquiring Fund Common Shares for the account of all holders of such fractional interests, and each such holder will receive such holder's pro rata share of the proceeds of such sale upon issuance of book-entry interests representing Acquiring Fund Common Shares.

5. PAYMENT OF EXPENSES.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) The Target Fund and the Acquiring Fund will bear expenses incurred in connection with the Reorganization, including but not limited to, costs related to the preparation and distribution of materials distributed to each Fund's Board of Directors (the "<u>Board</u>"), expenses incurred in connection with the preparation of this Agreement, the preparation and filing of any documents required by such Fund's state of organization, the preparation and filing of the N-14 Registration Statement and the Preferred Shares Proxy Statement with the U.S. Securities and Exchange Commission ("<u>SEC</u>"), the printing and distribution of the Joint Proxy Statement/Prospectus, the Preferred Shares Proxy Statement and any other materials required to be distributed to shareholders, the SEC, state securities commission and secretary of state filing fees and legal and audit fees in connection with the Reorganization, fees incurred in obtaining the requisite consents of rating agencies, counterparties or service providers to the preferred shares, legal fees incurred in connection with amending the transaction documents for the preferred shares, which may include the legal fees of counterparties and service providers to the extent applicable, legal fees incurred preparing each Fund's board materials, attending each Fund's board meetings and preparing the minutes, rating agency fees associated with the ratings of the preferred shares in connection with the Reorganization, audit fees associated with each Fund's financial statements, stock exchange fees, transfer agency fees, rating agency fees, portfolio transfer taxes (if any) and any similar expenses incurred in connection with the Reorganization, which will be borne directly by the respective Fund incurring the expense or allocated among the Funds based upon any reasonable methodology approved by the Boards of the Funds, provided, that the Acquiring Fund's investment adviser may bear all or a portion

<sup>15</sup> [Applies to MIY.]

<sup>16</sup> [Applies to MVF and MVT.]

<sup>17</sup> [Applies to MIY.]

<sup>18</sup> [Applies to MVF and MVT.]

<sup>19</sup> [Applies to MIY.]

<sup>20</sup> [Applies to MVF and MVT.]

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of the reorganization expenses of each Fund as set forth in the N-14 Registration Statement. Neither the Funds nor the investment adviser will pay any expenses of shareholders arising out of or in connection with the Reorganization.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) If for any reason the Reorganization is not consummated, no party shall be liable to any other party for any damages resulting therefrom, including, without limitation, consequential damages, and each Fund shall be responsible, on a proportionate total assets basis, for all expenses incurred in connection with the Reorganization.

6. COVENANTS OF THE FUNDS.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) COVENANTS OF EACH FUND.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) Each Fund covenants to operate its business as presently conducted between the date hereof and the Closing Date, except to the extent that the Target Fund is required or permitted to dispose of assets prior to the Closing Date pursuant to Section 3(b) of this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) Each of the Funds agrees that by the Closing Date all of its U.S. federal and other tax returns and reports required to be filed on or before such date shall have been filed and all taxes shown as due on said returns either have been paid or adequate liability reserves have been provided for the payment of such taxes.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(iii)</u> The intention of the parties is that the transaction contemplated by this Agreement will qualify as a "reorganization" within the meaning of Section 368(a) of the Code. Neither the Acquiring Fund nor the Target Fund shall take any action or cause any action to be taken (including, without limitation, the filing of any tax return) that is inconsistent with such treatment or results in the failure of the transaction to qualify as a reorganization within the meaning of Section 368(a) of the Code. At or prior to the Closing Date, the Acquiring Fund and the Target Fund will take such action, or cause such action to be taken, as is reasonably necessary to enable Willkie Farr & Gallagher LLP ("<u>Willkie</u>"), counsel to the Funds, to render the tax opinion required herein (including, without limitation, each party's execution of representations reasonably requested by and addressed to Willkie).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) In connection with this covenant, the Funds agree to cooperate with each other in filing any tax return, amended return or claim for refund, determining a liability for taxes or a right to a refund of taxes or participating in or conducting any audit or other proceeding in respect of taxes. The Acquiring Fund agrees to retain for a period of ten (10) years following the Closing Date all returns, schedules and work papers and all material records or other documents relating to tax matters of the Target Fund for each of such Fund's taxable periods ending on or before the Closing Date.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(v) The Acquiring Fund VRDP Shares to be transferred to the Target Fund for distribution to the Target Fund [VRDP]<sup>21</sup>[VMTP]<sup>22</sup> Holders on the Closing Date shall only be distributed to the Target Fund [VRDP]<sup>23</sup>[VMTP]<sup>24</sup> Holders in accordance with an available exemption from registration under the 1933 Act, in a manner not involving any public offering within the meaning of Section 4(a)(2) of the 1933 Act.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vi) Each Fund shall use reasonable efforts to obtain all requisite consents and approvals necessary to consummate the Reorganization.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) COVENANTS OF THE ACQUIRING FUND.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) The Acquiring Fund will file the N-14 Registration Statement and the Preferred Shares Proxy Statement with the SEC and will use its best efforts to provide that the N-14 Registration Statement becomes effective as promptly as practicable. Each Fund agrees to cooperate fully with the other, and each will furnish to the other the information relating to itself to be set forth in the N-14 Registration Statement

<sup>21</sup> [Applies to MIY.]

<sup>22</sup> [Applies to MVF and MVT.]

<sup>23</sup> [Applies to MIY.]

<sup>24</sup> [Applies to MVF and MVT.]

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and the Preferred Shares Proxy Statement as required by the 1933 Act, the 1934 Act and the 1940 Act, and the rules and regulations thereunder and the state securities laws.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) The Acquiring Fund has no plan or intention to sell or otherwise dispose of the Target Fund Investments, except for dispositions made in the ordinary course of business.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) Following the consummation of the Reorganization, the Acquiring Fund will continue its business as a diversified, closed-end management investment company registered under the 1940 Act.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) The Acquiring Fund shall use reasonable efforts to cause the Acquiring Fund Common Shares to be issued in the Reorganization to be approved for listing on the New York Stock Exchange prior to the Closing Date.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(v) The Acquiring Fund agrees to mail to its shareholders of record entitled to vote at the special meeting of shareholders at which action is to be considered regarding this Agreement, in sufficient time to comply with requirements as to notice thereof, the Joint Proxy Statement/Prospectus (but only to the Acquiring Fund Common Shareholders) and the Preferred Shares Proxy Statement (but only to the Acquiring Fund VRDP Holders), each of which complies in all material respects with the applicable provisions of Section 14(a) of the 1934 Act and Section 20(a) of the 1940 Act, and the rules and regulations, respectively, thereunder.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vi) The Acquiring Fund shall use reasonable efforts to cause the Acquiring Fund VRDP Shares to be issued in connection with the Reorganization to be rated no lower than the rating assigned to the Acquiring Fund VRDP Shares immediately prior to the Closing Date by the rating agencies then rating the Acquiring Fund VRDP Shares.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vii) The Acquiring Fund shall use reasonable efforts to amend the following documents to reflect the authorization and issuance of additional Acquiring Fund VRDP Shares in connection with the Reorganization: (1) the Articles Supplementary; (2) share certificates representing Acquiring Fund VRDP Shares; (3) the VRDP Shares Fee Agreement for the Acquiring Fund VRDP Shares; (4) the VRDP Shares Purchase Agreement for the Acquiring Fund VRDP Shares; (5) the VRDP Shares Remarketing Agreement for the Acquiring Fund VRDP Shares; (6) the Tender and Paying Agent Agreement for the Acquiring Fund VRDP Shares; and (7) such other agreements, instruments or documents relating to the Acquiring Fund VRDP Shares, in each case by the Closing Date and only to the extent necessary or applicable to such agreement, instrument or document.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) COVENANTS OF THE TARGET FUND.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) The Target Fund agrees that following the consummation of the Reorganization, following the payment of any portion of the UNII Distribution to be paid to the Target Fund Common Shareholders by the Target Fund in accordance with Sections 3(c) and 9(l) hereof following the Closing, it will dissolve in accordance with the laws of the State of Maryland, and any other applicable law, it will not make any distributions of any Acquiring Fund Common Shares other than to its shareholders and without first paying or adequately providing for the payment of all of its respective liabilities not assumed by the Acquiring Fund, and on and after the Closing Date it shall not conduct any business except in connection with its termination.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) The Target Fund undertakes that if the Reorganization is consummated, it will file an application pursuant to Section 8(f) of the 1940 Act for an order declaring that the Target Fund has ceased to be a registered investment company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) The Target Fund agrees to mail to its shareholders of record entitled to vote at the special meeting of shareholders at which action is to be considered regarding this Agreement, in sufficient time to comply with requirements as to notice thereof, the Joint Proxy Statement/Prospectus (but only to the Target Fund Common Shareholders) and the Preferred Shares Proxy Statement (but only to the Target Fund

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[VRDP]<sup>25</sup>[VMTP]<sup>26</sup> Holders), each of which complies in all material respects with the applicable provisions of Section 14(a) of the 1934 Act and Section 20(a) of the 1940 Act, and the rules and regulations, respectively, thereunder.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) After the Closing Date, the Target Fund shall prepare, or cause its agents to prepare, any U.S. federal, state or local tax returns required to be filed by such Target Fund with respect to its final taxable year ending with its complete liquidation and dissolution and for any prior periods or taxable years and further shall cause such tax returns to be duly filed with the appropriate taxing authorities. Notwithstanding the aforementioned provisions of this subsection, any expenses incurred by the Target Fund (other than for payment of taxes) in connection with the preparation and filing of said tax returns after the Closing Date shall be borne by such Target Fund to the extent such expenses have been accrued by such Target Fund in the ordinary course without regard to the Reorganization; any excess expenses shall be paid from a liability reserve established to provide for the payment of such expenses.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(v) Upon the request of the Acquiring Fund, the Target Fund shall use reasonable efforts to perform the following actions by the Closing Date or such later time as may be agreed to by the Acquiring Fund: (a) terminate the [VRDP Shares Fee Agreement, the VRDP Shares Purchase Agreement, the VRDP Shares Remarketing Agreement and the Tender and Paying Agent Agreement]<sup>27</sup>[Redemption and Paying Agent Agreement]<sup>28</sup> and such other agreements, instruments or documents related to the Target Fund [VRDP]<sup>29</sup>[VMTP]<sup>30</sup> Shares, (b) withdraw the ratings assigned to the Target Fund [VRDP]<sup>31</sup>[VMTP]<sup>32</sup> Shares, (c) cancel the share certificates representing Target Fund [VRDP]<sup>33</sup>[VMTP]<sup>34</sup> Shares, and (d) withdraw or deregister the Target Fund [VRDP]<sup>35</sup>[VMTP]<sup>36</sup> Shares from The Depository Trust Company.

7. CLOSING DATE.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) The closing of the Reorganization (the "<u>Closing</u>") shall occur prior to the opening of the NYSE at the offices of Willkie, 787 Seventh Avenue, New York, New York 10019, or at such other time or location as may be mutually agreed to by the Funds, on the next full business day following the Valuation Time to occur after the satisfaction or waiver of all of the conditions set forth in Sections 8 and 9 of this Agreement (other than the conditions that relate to actions to be taken, or documents to be delivered at the Closing, it being understood that the occurrence of the Closing shall remain subject to the satisfaction or waiver of such conditions at Closing), or at such other time and date as may be mutually agreed to by the Funds (such date, the "<u>Closing Date</u>").

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) On the Closing Date, the Target Fund shall deliver the Target Fund Investments to the Acquiring Fund, and the Acquiring Fund shall issue the Acquiring Fund Shares as provided in this Agreement. To the extent that any Target Fund Investments, for any reason, are not transferable on the Closing Date, the Target Fund shall cause such Target Fund Investments to be transferred to the Acquiring Fund's account with its custodian at the earliest practicable date thereafter.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) The Target Fund will deliver to the Acquiring Fund on the Closing Date confirmation or other adequate evidence as to the tax basis of the Target Fund Investments delivered to the Acquiring Fund hereunder.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) On the Closing Date, the Target Fund shall deliver or make available to (including by electronic format) the Acquiring Fund a list of the names and addresses of all of the Target Fund Common Shareholders of record immediately prior to the Closing Date and the number of Target Fund Common Shares owned by each such Target

<sup>25</sup> [Applies to MIY.]

<sup>26</sup> [Applies to MVF and MVT.]

<sup>27</sup> [Applies to MIY.]

<sup>28</sup> [Applies to MVF and MVT.]

<sup>29</sup> [Applies to MIY.]

<sup>30</sup> [Applies to MVF and MVT.]

<sup>31</sup> [Applies to MIY.]

<sup>32</sup> [Applies to MVF and MVT.]

<sup>33</sup> [Applies to MIY.]

<sup>34</sup> [Applies to MVF and MVT.]

<sup>35</sup> [Applies to MIY.]

<sup>36</sup> [Applies to MVF and MVT.]

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Fund Common Shareholder, certified to the best of its knowledge and belief by the transfer agent for the Target Fund Common Shares or by the Target Fund's Chief Executive Officer, President, any Vice President, Chief Financial Officer, Treasurer or any Assistant Treasurer, or Secretary or any Assistant Secretary.

8. CONDITIONS OF THE TARGET FUND.

The obligations of the Target Fund hereunder shall be subject to the following conditions:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) That this Agreement shall have been approved by at least two-thirds of the members of the Board of the Target Fund and by the affirmative vote of the Target Fund Common Shareholders and the Target Fund [VRDP]<sup>37</sup>[VMTP]<sup>38</sup> Holders, voting as a single class, representing a majority of the outstanding shares entitled to vote on this Agreement, and by the affirmative vote of the Target Fund [VRDP]<sup>39</sup>[VMTP]<sup>40</sup> Holders, voting as a separate class, representing a 1940 Act Majority (as defined below) of the outstanding [VRDP]<sup>41</sup>[VMTP]<sup>42</sup> Shares entitled to vote on this Agreement. A "<u>1940 Act Majority</u>" means the affirmative vote of either (i) 67% or more of the class or classes of Target Fund Shares entitled to vote on such proposal present at the Target Fund's shareholder meeting where this Agreement shall be approved, if the holders of more than 50% of the outstanding class or classes of Target Fund Shares entitled to vote on such proposal are present or represented by proxy or (ii) more than 50% of the outstanding class or classes of Target Fund Shares entitled to vote on such proposal, whichever is less.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) That the Acquiring Fund shall have delivered (including in electronic format) to the Target Fund (i) a copy of the resolutions approving this Agreement and the issuance of additional Acquiring Fund Shares in connection with the Reorganization adopted by the Board of the Acquiring Fund, (ii) a certificate setting forth the vote of the Acquiring Fund VRDP Holders, voting as a separate class, approving this Agreement and the issuance of additional Acquiring Fund VRDP Shares in connection with the Reorganization, and the vote of the Acquiring Fund Common Shareholders and the Acquiring Fund VRDP Holders, voting as a single class, approving the issuance of additional Acquiring Fund Common Shares in connection with the Reorganization, and (iii) a certificate certifying that the Acquiring Fund has received all requisite consents and approvals necessary to consummate the Reorganization, each certified by the Acquiring Fund's Secretary or any Assistant Secretary.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) That the Acquiring Fund shall have provided or made available (including by electronic format) to the Target Fund the Acquiring Fund Closing Financial Statements, together with a schedule of the Acquiring Fund's investments, all as of the Valuation Time, certified on the Acquiring Fund's behalf by its Chief Executive Officer, President, any Vice President, Chief Financial Officer, Treasurer or any Assistant Treasurer, and a certificate signed by the Acquiring Fund's Chief Executive Officer, President, any Vice President, Chief Financial Officer, Treasurer or any Assistant Treasurer, dated as of the Closing Date, certifying that as of the Valuation Time and as of the Closing Date there has been no material adverse change in the financial position of the Acquiring Fund since the date of the Acquiring Fund's most recent Annual or Semi-Annual Report, as applicable, other than changes in its portfolio securities since that date or changes in the market value of its portfolio securities.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) That the Acquiring Fund shall have furnished to the Target Fund a certificate signed by the Acquiring Fund's Chief Executive Officer, President, any Vice President, Chief Financial Officer, Treasurer or any Assistant Treasurer, dated as of the Closing Date, certifying that, as of the Valuation Time and as of the Closing Date, all representations and warranties of the Acquiring Fund made in this Agreement are true and correct in all material respects with the same effect as if made at and as of such dates, and that the Acquiring Fund has complied with all of the agreements and satisfied all of the conditions on its part to be performed or satisfied at or prior to each of such dates.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) That there shall not be any material litigation pending with respect to the matters contemplated by this Agreement.

<sup>37</sup> [Applies to MIY.]

<sup>38</sup> [Applies to MVF and MVT.]

<sup>39</sup> [Applies to MIY.]

<sup>40</sup> [Applies to MVF and MVT.]

<sup>41</sup> [Applies to MIY.]

<sup>42</sup> [Applies to MVF and MVT.]

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) That the Target Fund shall have received the opinion of Miles & Stockbridge P.C., special Maryland counsel to the Acquiring Fund, dated as of the Closing Date, addressed to the Target Fund, that substantively provides the following:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) The Acquiring Fund is validly existing as a corporation under the laws of the State of Maryland and in good standing under the laws of the State of Maryland and has the corporate power to conduct its business as described in the definitive Joint Proxy Statement/Prospectus filed with the SEC pursuant to Rule 424(b) under the 1933 Act.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) The Acquiring Fund has the corporate power and authority to execute and deliver the Agreement and perform all of its obligations under the Agreement under the applicable laws of the State of Maryland. The execution and delivery of the Agreement and the consummation by the Acquiring Fund of the transactions contemplated hereby have been duly authorized by all requisite corporate action on the part of the Acquiring Fund under the laws of the State of Maryland and the Acquiring Fund's charter.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) The execution and delivery by the Acquiring Fund of this Agreement and the performance of the Acquiring Fund's obligations under the Agreement will not violate the Acquiring Fund's charter or Bylaws.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) Neither the execution, delivery or performance by the Acquiring Fund of the Agreement nor the compliance by the Acquiring Fund with the terms and provisions thereof will violate any provision of law of the State of Maryland applicable to the Acquiring Fund.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(v) Assuming that the Acquiring Fund Shares will be issued in accordance with the terms of this Agreement, the Acquiring Fund Shares to be issued and delivered to the Target Fund Shareholders as provided by this Agreement are duly authorized and upon such delivery will be validly issued and fully paid and non-assessable by the Acquiring Fund, and no shareholder of the Acquiring Fund has, as such holder, any preemptive rights to acquire, purchase or subscribe for any securities of the Acquiring Fund under the Acquiring Fund's charter, By-laws or the laws of the State of Maryland.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g) That the Target Fund shall have received the opinion of Willkie, counsel to the Acquiring Fund, dated as of the Closing Date, addressed to the Target Fund, that substantively provides the following:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) The Acquiring Fund is registered with the SEC as a closed-end management investment company under the 1940 Act.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) To the best of such counsel's knowledge, no governmental approval, which has not been obtained and is not in full force and effect, is required to authorize, or is required in connection with, the execution or delivery of the Agreement by the Acquiring Fund, or the enforceability of the Agreement against the Acquiring Fund.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) Neither the execution, delivery or performance by the Acquiring Fund of the Agreement nor the compliance by the Acquiring Fund with the terms and provisions thereof will contravene any provision of applicable federal securities law of the United States of America.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h) That the Target Fund shall have obtained an opinion from counsel for the Acquiring Fund, dated as of the Closing Date, addressed to the Target Fund, that the consummation of the transactions set forth in this Agreement complies with the requirements of a reorganization as described in Section 368(a) of the Code.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) That all proceedings taken by the Acquiring Fund and its counsel in connection with the Reorganization and all documents incidental thereto shall be satisfactory in form and substance to the Target Fund.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(j) That the N-14 Registration Statement shall have become effective under the 1933 Act, and no stop order suspending such effectiveness shall have been instituted or, to the knowledge of the Acquiring Fund, be contemplated by the SEC.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(k) [That the liquidity provider for the Target Fund VRDP Shares shall have consented to this Agreement.]<sup>43</sup>

9. CONDITIONS OF THE ACQUIRING FUND.

The obligations of the Acquiring Fund hereunder shall be subject to the following conditions:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) That this Agreement and amendments to the Articles Supplementary in connection with the issuance of additional Acquiring Fund VRDP Shares in connection with the Reorganization shall have been approved by the Board of the Acquiring Fund and by the affirmative vote of the Acquiring Fund VRDP Holders, voting as a separate class, of a 1940 Act Majority of the outstanding Acquiring Fund VRDP Shares.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) That the issuance of additional Acquiring Fund Common Shares in connection with the Reorganization shall have been approved by the Board of the Acquiring Fund and by the affirmative vote of the Acquiring Fund Common Shareholders and the Acquiring Fund VRDP Holders, voting as a single class, of a majority of shares entitled to vote on such issuance.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) The Target Fund shall have delivered (including in electronic format) to the Acquiring Fund (i) a copy of the resolutions approving this Agreement adopted by the Board of the Target Fund, (ii) a certificate setting forth the vote of the Target Fund Common Shareholders and the Target Fund [VRDP]<sup>44</sup>[VMTP]<sup>45</sup> Holders, voting as a single class, approving this Agreement, and the vote of the Target Fund [VRDP]<sup>46</sup>[VMTP]<sup>47</sup> Holders, voting as a separate class, approving this Agreement, and (iii) a certificate certifying that the Target Fund has received all requisite consents and approvals necessary to consummate the Reorganization, each certified by the Target Fund's Secretary or any Assistant Secretary.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) That the Target Fund shall have provided or made available (including by electronic format) to the Acquiring Fund the Target Fund Closing Financial Statements, together with a schedule of the Target Fund's investments with their respective dates of acquisition and tax costs, all as of the Valuation Time, certified on the Target Fund's behalf by its Chief Executive Officer, President, any Vice President, Chief Financial Officer, Treasurer or any Assistant Treasurer, and a certificate signed the Target Fund's Chief Executive Officer, President, any Vice President, Chief Financial Officer, Treasurer or any Assistant Treasurer, dated as of the Closing Date, certifying that as of the Valuation Time and as of the Closing Date there has been no material adverse change in the financial position of the Target Fund since the date of the Target Fund's most recent Annual Report or Semi-Annual Report, as applicable, other than changes in the Target Fund Investments since that date or changes in the market value of the Target Fund Investments.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) That the Target Fund shall have furnished to the Acquiring Fund a certificate signed by the Target Fund's Chief Executive Officer, President, any Vice President, Chief Financial Officer, Treasurer or any Assistant Treasurer, dated as of the Closing Date, certifying that as of the Valuation Time and as of the Closing Date all representations and warranties of the Target Fund made in this Agreement are true and correct in all material respects with the same effect as if made at and as of such dates and the Target Fund has complied with all of the agreements and satisfied all of the conditions on its part to be performed or satisfied at or prior to such dates.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) That there shall not be any material litigation pending with respect to the matters contemplated by this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g) That the Acquiring Fund shall have received the opinion of Miles & Stockbridge P.C., special Maryland counsel to the Target Fund, dated as of the Closing Date, addressed to the Acquiring Fund, that substantively provides the following:

<sup>43</sup> [Applies to MIY.]

<sup>44</sup> [Applies to MIY.]

<sup>45</sup> [Applies to MVF and MVT.]

<sup>46</sup> [Applies to MIY.]

<sup>47</sup> [Applies to MVF and MVT.]

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) The Target Fund is validly existing and is in good standing under the laws of the State of Maryland.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) The Target Fund has the corporate power and authority to execute and deliver the Agreement and perform all of its obligations under the Agreement under the laws of the State of Maryland. The execution and delivery of the Agreement and the consummation by the Target Fund of the transactions contemplated thereby have been duly authorized by all necessary corporate action on the part of the Target Fund under the laws of the State of Maryland and the Target Fund's charter.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) The Agreement has been duly executed by the Target Fund.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) The execution and delivery by the Target Fund of the Agreement did not, and the performance of the Target Fund's obligations under the Agreement will not, violate the charter or the By-laws of the Target Fund.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(v) Neither the execution, delivery or performance by the Target Fund of the Agreement nor the compliance by the Target Fund with the terms and provisions thereof will violate any provision of any applicable law of the State of Maryland.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h) That the Acquiring Fund shall have received the opinion of Willkie, counsel to the Target Fund, dated as of the Closing Date, addressed to the Acquiring Fund, that substantively provides the following:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) The Target Fund is registered with the SEC as a closed-end management investment company under the 1940 Act.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) To the best of such counsel's knowledge, no governmental approval, which has not been obtained and is not in full force and effect, is required to authorize, or is required in connection with, the execution or delivery of the Agreement by the Target Fund, or the enforceability of the Agreement against the Target Fund.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) Neither the execution, delivery or performance by the Target Fund of the Agreement nor the compliance by the Target Fund with the terms and provisions thereof will contravene any provision of applicable federal securities law of the United States of America.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) That the Acquiring Fund shall have obtained an opinion from counsel for the Target Fund, dated as of the Closing Date, addressed to the Acquiring Fund, that the consummation of the transactions set forth in this Agreement complies with the requirements of a reorganization as described in Section 368(a) of the Code.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(j) That all proceedings taken by the Target Fund and its counsel in connection with the Reorganization and all documents incidental thereto shall be satisfactory in form and substance to the Acquiring Fund.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(k) That the N-14 Registration Statement shall have become effective under the 1933 Act and no stop order suspending such effectiveness shall have been instituted or, to the knowledge of the Target Fund, be contemplated by the SEC.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(l) That prior to the Closing Date, the Target Fund shall have declared a dividend or dividends which, together with all such previous dividends, shall have the effect of distributing to the Target Fund Common Shareholders entitled to such dividends (i) all of its investment company taxable income to and including the Closing Date, if any (computed without regard to any deduction for dividends paid), (ii) all of its net capital gain, if any, recognized to and including the Closing Date and (iii) the excess of its interest income excludable from gross income under Section 103(a) of the Code, if any, over its deductions disallowed under Sections 265 and 171(a)(2) of the Code for the period to and including the Closing Date. The Target Fund may pay amounts in respect of such UNII Distributions in one or more distributions to Target Fund Common Shareholders entitled to receive such UNII Distributions after the Closing Date. In addition, the Acquiring Fund may pay amounts in respect of such UNII Distributions on behalf of the Target Fund to the Target Fund Common Shareholders entitled to receive such UNII

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Distributions after the Closing Date as an agent out of cash or other short-term liquid assets maturing prior to the payment date of the UNII Distributions acquired from the Target Fund in the Reorganization, segregated for this purpose and maintained in an amount at least equal to the remaining payment obligations in respect of the UNII Distributions.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(m) That the liquidity provider for the Acquiring Fund VRDP Shares shall have consented to this Agreement and the issuance of additional Acquiring Fund VRDP Shares in connection with the Reorganization.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(n) That the liquidity provider, remarketing agent, tender and paying agent and the rating agencies for the Acquiring Fund VRDP Shares shall have consented to any amendments to the Articles Supplementary, the Notice of Special Rate Period for the Acquiring Fund VRDP Shares, share certificates representing Acquiring Fund VRDP Shares and such other agreements, instruments or documents relating to the Acquiring Fund VRDP Shares that are necessary to reflect the issuance of additional Acquiring Fund VRDP Shares in connection with the Reorganization, but only to the extent such consent is required under the Related Documents (as defined in the Articles Supplementary).

10. TERMINATION, POSTPONEMENT AND WAIVERS.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Notwithstanding anything contained in this Agreement to the contrary, this Agreement may be terminated and the Reorganization abandoned at any time (whether before or after adoption thereof by the shareholders of the Target Fund and the Acquiring Fund) prior to the Closing Date, or the Closing Date may be postponed, (i) by mutual consent of the Boards of the Acquiring Fund and the Target Fund; (ii) by the Board of the Target Fund if any condition of the Target Fund's obligations set forth in Section 8 of this Agreement has not been fulfilled or waived by such Board; and (iii) by the Board of the Acquiring Fund if any condition of the Acquiring Fund's obligations set forth in Section 9 of this Agreement has not been fulfilled or waived by such Board.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) If the transactions contemplated by this Agreement have not been consummated by [●], 2025, this Agreement automatically shall terminate on that date, unless a later date is mutually agreed to by the Boards of the Acquiring Fund and the Target Fund.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) In the event of termination of this Agreement pursuant to the provisions hereof, the same shall become void and have no further effect, and there shall not be any liability on the part of any Fund or its respective directors, trustees, officers, agents or shareholders in respect of this Agreement other than with respect to Section 11 and payment by each Fund of its respective expenses incurred in connection with the Reorganization.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) At any time prior to the Closing Date, any of the terms or conditions of this Agreement may be waived by the Board of the Acquiring Fund or the Target Fund (whichever is entitled to the benefit thereof), if, in the judgment of such Board after consultation with its counsel, such action or waiver will not have a material adverse effect on the benefits intended under this Agreement to the shareholders of their respective Fund, on behalf of which such action is taken.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) The respective representations and warranties contained in Sections 1 and 2 of this Agreement shall expire with, and be terminated by, the consummation of the Reorganization, and neither the Funds, nor any of their respective officers, directors, trustees, agents or shareholders shall have any liability with respect to such representations or warranties after the Closing Date. This provision shall not protect any officer, director, trustee, agent or shareholder of either of the Funds against any liability to the entity for which that officer, director, trustee, agent or shareholder so acts or to its shareholders, to which that officer, director, trustee, agent or shareholder otherwise would be subject by reason of willful misfeasance, bad faith, gross negligence, or reckless disregard of his or her duties in the conduct of such office.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) If any order or orders of the SEC with respect to this Agreement shall be issued prior to the Closing Date and shall impose any terms or conditions which are determined by action of the Boards of the Acquiring Fund and the Target Fund to be acceptable, such terms and conditions shall be binding as if a part of this Agreement without further vote or approval of the Target Fund Shareholders and the Acquiring Fund Shareholders unless such terms and conditions shall result in a change in the method of computing the number of Acquiring Fund Shares to be issued to

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the Target Fund Shareholders, in which event, unless such terms and conditions shall have been included in the proxy solicitation materials furnished to the Target Fund Shareholders prior to the meeting at which the Reorganization shall have been approved, this Agreement shall not be consummated and shall terminate unless the Target Fund promptly shall call a special meeting of the Target Fund Shareholders at which such conditions so imposed shall be submitted for approval.

11. INDEMNIFICATION.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Each party (an "<u>Indemnitor</u>") shall indemnify and hold the other and its officers, directors, trustees, agents and persons controlled by or controlling any of them (each an "<u>Indemnified Party</u>") harmless from and against any and all losses, damages, liabilities, claims, demands, judgments, settlements, deficiencies, taxes, assessments, charges, costs and expenses of any nature whatsoever (including reasonable attorneys' fees) including amounts paid in satisfaction of judgments, in compromise or as fines and penalties, and counsel fees reasonably incurred by such Indemnified Party in connection with the defense or disposition of any claim, action, suit or other proceeding, whether civil or criminal, before any court or administrative or investigative body in which such Indemnified Party may be or may have been involved as a party or otherwise or with which such Indemnified Party may be or may have been threatened (collectively, the "<u>Losses</u>") arising out of or related to any claim of a breach of any representation, warranty or covenant made herein by the Indemnitor; <u>provided</u>, <u>however</u>, that no Indemnified Party shall be indemnified hereunder against any Losses arising directly from such Indemnified Party's (i) willful misfeasance, (ii) bad faith, (iii) gross negligence or (iv) reckless disregard of the duties involved in the conduct of such Indemnified Party's position.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) The Indemnified Party shall use its best efforts to minimize any liabilities, damages, deficiencies, claims, judgments, assessments, costs and expenses in respect of which indemnity may be sought hereunder. The Indemnified Party shall give written notice to Indemnitor within the earlier of ten (10) days of receipt of written notice to the Indemnified Party or thirty (30) days from discovery by the Indemnified Party of any matters which may give rise to a claim for indemnification or reimbursement under this Agreement. The failure to give such notice shall not affect the right of the Indemnified Party to indemnity hereunder unless such failure has materially and adversely affected the rights of the Indemnitor. At any time after ten (10) days from the giving of such notice, the Indemnified Party may, at its option, resist, settle or otherwise compromise, or pay such claim unless it shall have received notice from the Indemnitor that the Indemnitor intends, at the Indemnitor's sole cost and expense, to assume the defense of any such matter, in which case the Indemnified Party shall have the right, at no cost or expense to the Indemnitor, to participate in such defense. If the Indemnitor does not assume the defense of such matter, and in any event until the Indemnitor states in writing that it will assume the defense, the Indemnitor shall pay all costs of the Indemnified Party arising out of the defense until the defense is assumed; <u>provided</u>, <u>however</u>, that the Indemnified Party shall consult with the Indemnitor and obtain indemnitor's prior written consent to any payment or settlement of any such claim. The Indemnitor shall keep the Indemnified Party fully apprised at all times as to the status of the defense. If the Indemnitor does not assume the defense, the Indemnified Party shall keep the Indemnitor apprised at all times as to the status of the defense. Following indemnification as provided for hereunder, the Indemnitor shall be subrogated to all rights of the Indemnified Party with respect to all third parties, firms or corporations relating to the matter for which indemnification has been made.

12. OTHER MATTERS.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) All covenants, agreements, representations and warranties made under this Agreement and any certificates delivered pursuant to this Agreement shall be deemed to have been material and relied upon by each of the parties, notwithstanding any investigation made by them or on their behalf.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) All notices hereunder shall be sufficiently given for all purposes hereunder if in writing and delivered personally or sent by registered mail or certified mail, postage prepaid. Notice to the Target Fund shall be addressed to [BlackRock MuniVest Fund, Inc.] [BlackRock MuniVest Fund II, Inc.] [BlackRock MuniYield Michigan Quality Fund, Inc.] c/o BlackRock Advisors, LLC, 50 Hudson Yards, New York, NY 10001, Attention: Janey Ahn, Secretary of the Target Fund or at such other address as the Target Fund may designate by written notice to the Acquiring Fund. Notice to the Acquiring Fund shall be addressed to BlackRock MuniYield Quality Fund III, Inc. c/o BlackRock Advisors, LLC, 50 Hudson Yards, New York, NY 10001, Attention: Janey Ahn, Secretary of the Acquiring Fund, or at such other address and to the attention of such other person as the Acquiring Fund may designate by written

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notice to the Target Fund. Any notice shall be deemed to have been served or given as of the date such notice is delivered personally or mailed.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) This Agreement supersedes all previous correspondence and oral communications between the Funds regarding the Reorganization, constitutes the only understanding with respect to the Reorganization, may not be changed except by a letter of agreement signed by each Fund and shall be governed by and construed in accordance with the laws of the State of New York applicable to agreements made and to be performed in said state.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) This Agreement may be amended or modified by the parties hereto prior to the Closing Date, by action taken or authorized by their respective Boards at any time before or after adoption of this Agreement and approval of the Reorganization by the Target Fund Shareholders or the Acquiring Fund Shareholders, but, after any such adoption and approval, no amendment or modification shall be made which by law requires further approval by shareholders without such further approval. This Agreement may not be amended or modified except by an instrument in writing signed on behalf of each of the Funds.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) This Agreement is not intended to confer upon any person other than the parties hereto (or their respective successors and assigns) any rights, remedies, obligations or liabilities hereunder. If any provision of this Agreement shall be held or made invalid by statute rule, regulation, decision of a tribunal or otherwise, the remainder of this Agreement shall not be affected thereby and, to such extent, the provisions of this Agreement shall be deemed severable provided that this Agreement shall be deemed modified to give effect to the fullest extent permitted under applicable law to the intentions of the party as reflected by this Agreement prior to the invalidity of such provision.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) It is expressly agreed that the obligations of the Funds hereunder shall not be binding upon any of their respective directors, trustees, shareholders, nominees, officers, agents, or employees personally, but shall bind only the property of the respective Fund. The execution and delivery of this Agreement has been authorized by the Boards of the Acquiring Fund and the Target Fund and signed by an authorized officer of each of the Acquiring Fund and the Target Fund, acting as such, and neither such authorization by such Board nor such execution and delivery by such officer shall be deemed to have been made by any of them individually or to impose any liability on any of them personally, but shall bind only the trust property of each Fund.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g) This Agreement may be executed in any number of counterparts, each of which, when executed and delivered, shall be deemed to be an original but all such counterparts together shall constitute but one instrument.

*[Remainder of Page Intentionally Left Blank]* 

IN WITNESS WHEREOF, the parties have hereunto caused this Agreement to be executed and delivered by their duly authorized officers as of the day and year first written above.

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| | | |
|:---|:---|:---|
| BLACKROCK MUNIYIELD QUALITY FUND III, INC. | BLACKROCK MUNIYIELD QUALITY FUND III, INC. | BLACKROCK MUNIYIELD QUALITY FUND III, INC. |
| By: |  |  |
|  | Name: | John M. Perlowski |
|  | Title: | President and Chief Executive Officer |
| BLACKROCK MUNIVEST FUND, INC. BLACKROCK MUNIVEST FUND II, INC. BLACKROCK MUNIYIELD MICHIGAN QUALITY FUND, INC. | BLACKROCK MUNIVEST FUND, INC. BLACKROCK MUNIVEST FUND II, INC. BLACKROCK MUNIYIELD MICHIGAN QUALITY FUND, INC. | BLACKROCK MUNIVEST FUND, INC. BLACKROCK MUNIVEST FUND II, INC. BLACKROCK MUNIYIELD MICHIGAN QUALITY FUND, INC. |

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| | | |
|:---|:---|:---|
| By: |  |  |
|  | Name:  | Stephen Minar |
|  | Title:  | Vice President |

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**APPENDIX B** 

**FUNDAMENTAL AND NON-FUNDAMENTAL INVESTMENT RESTRICTIONS** 

**<u>Acquiring Fund (MYI)</u>**

The following are fundamental investment restrictions of the Acquiring Fund and may not be changed without the approval of the holders of a majority of the Acquiring Fund's outstanding Common Shares and outstanding Preferred Shares, voting together as a single class, and a majority of the outstanding Preferred Shares, voting as a separate class (which for this purpose and under the 1940 Act means the lesser of (i) 67% of the shares of each class of capital stock represented at a meeting at which more than 50% of the outstanding shares of each class of capital stock are represented or (ii) more than 50% of the outstanding shares of each class of capital stock). The Acquiring Fund may not:

&nbsp;&nbsp;&nbsp;&nbsp;● Make investments for the purpose of exercising control or management.

&nbsp;&nbsp;&nbsp;&nbsp;● Purchase securities of other investment companies, except (i) in connection with a merger, consolidation,
acquisition or reorganization, (ii) by purchase of shares of tax-exempt money market funds advised by the Investment Advisor or its affiliates (as defined in the 1940 Act) to the extent permitted by an
exemptive order issued to the Fund by the SEC, or (iii) by purchase in the open market of securities of closed-end investment companies and only if immediately thereafter not more than 10% of the
Fund's total assets would be invested in such securities.

&nbsp;&nbsp;&nbsp;&nbsp;● Purchase or sell real estate, real estate limited partnerships, commodities or commodity contracts; provided
that the Fund may invest in securities secured by real estate or interests therein or issued by companies that invest in real estate or interests therein and the Fund may purchase and sell financial futures contracts and options thereon.

&nbsp;&nbsp;&nbsp;&nbsp;● Issue senior securities other than preferred stock or borrow in excess of 5% of its total assets taken at
market value; provided, however, that the Fund is authorized to borrow moneys in excess of 5% of the value of its total assets for the purpose of repurchasing shares of common stock or redeeming shares of preferred stock.

&nbsp;&nbsp;&nbsp;&nbsp;● Underwrite securities of other issuers except insofar as the Fund may be deemed an underwriter under the
Securities Act of 1933, as amended, in selling portfolio securities.

&nbsp;&nbsp;&nbsp;&nbsp;● Make loans to other persons, except that the Fund may purchase MYI Municipal Bonds and other debt securities
in accordance with its investment objective, policies and limitations.

&nbsp;&nbsp;&nbsp;&nbsp;● Purchase any securities on margin, except that the Fund may obtain such short-term credit as may be necessary
for the clearance of purchases and sales of portfolio securities (the deposit or payment by the Fund of initial or variation margin in connection with financial futures contracts and options thereon is not considered the purchase of a security on
margin).

&nbsp;&nbsp;&nbsp;&nbsp;● Make short sales of securities or maintain a short position or invest in put, call, straddle or spread
options, except that the Fund may write, purchase and sell options and futures on MYI Municipal Bonds, U.S. Government obligations and related indices or otherwise in connection with bona fide hedging activities.

&nbsp;&nbsp;&nbsp;&nbsp;● Invest more than 25% of its total assets (taken at market value at the time of each investment) in securities
of issuers in a single industry; provided that, for purposes of this restriction, states, municipalities and their political subdivisions are not considered to be part of any industry.

For purposes of fundamental investment restriction (4) above, the Fund may borrow moneys in excess of 5% of the value of its total assets to the extent permitted by Section 18 of the 1940 Act or otherwise as permitted by applicable law for the purpose of repurchasing shares of common stock or redeeming shares of preferred stock. For

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purposes of fundamental investment restriction (9) above, the exception for states, municipalities and their political subdivisions applies only to tax-exempt securities issued by such entities.

An additional investment restriction adopted by the Fund, which may be changed by the Board without stockholder approval, provides that the Fund may not mortgage, pledge, hypothecate or in any manner transfer, as security for indebtedness, any securities owned or held by the Fund except as may be necessary in connection with borrowings mentioned in investment restriction (4) above or except as may be necessary in connection with transactions in financial futures contracts and options thereon.

If a percentage restriction on the investment policies or the investment or use of assets set forth above is adhered to at the time a transaction is effected, later changes in percentage resulting from changing values will not be considered a violation.

The Fund is currently classified as a diversified fund under the 1940 Act. This means that the Fund may not purchase securities of an issuer (other than (i) obligations issued or guaranteed by the U.S. government, its agencies or instrumentalities and (ii) securities of other investment companies) if, with respect to 75% of the market value of its total assets, (a) more than 5% of the market value of the Fund's total assets would be invested in securities of a single issuer or (b) the Fund would hold more than 10% of the outstanding voting securities of that issuer. With respect to the remaining 25% of its total assets, the Fund can invest more than 5% of its assets in one issuer. Under the 1940 Act, a fund cannot change its classification from diversified to non-diversified without shareholder approval.

**<u>MVT</u>**

The Fund's investment objective and the following investment restrictions are fundamental and cannot be changed without the approval of the holders of a majority of the Fund's outstanding voting securities (defined in the 1940 Act as the lesser of (a) more than 50% of the outstanding shares (including common shares and any outstanding shares of preferred stock ("preferred shares")) or (b) 67% or more of the shares (including common shares and any outstanding preferred shares) represented at a meeting at which more than 50% of the outstanding shares (including common shares and any outstanding preferred shares) are represented) and the approval of the holders of a majority of any outstanding preferred shares voting separately as a class. All other investment policies or practices are considered by the Fund not to be fundamental and accordingly may be changed without shareholder approval. If a percentage restriction on investment or use of assets set forth below is adhered to at a time a transaction is effected, later changes in the percentage resulting from changing market values will not be considered a deviation from policy. The Fund may not:

&nbsp;&nbsp;&nbsp;&nbsp;● with respect to 75% of its total assets, invest more than 5% of the value of its total assets (taken at market
value at time of purchase) in the outstanding securities of any other issuer or own more than 10% of the outstanding voting securities of any one issuer, in each case other than securities issued or guaranteed by the U.S. government or any agency or
instrumentality thereof or other investment companies;

&nbsp;&nbsp;&nbsp;&nbsp;● invest 25% of more of the value of its total assets in any one industry provided that such limitation shall
not be applicable to municipal obligations other than those municipal obligations backed only by assets and revenues of non-governmental users;

&nbsp;&nbsp;&nbsp;&nbsp;● issue senior securities other than (a) preferred shares not in excess of the excess of 50% of its total
assets over any senior securities described in clause (b) below that are outstanding, (b) senior securities other than preferred shares (including borrowing money, including on margin if margin securities are owned and through entering
into reverse repurchase agreements) not in excess of 33 1/3% of its total assets, and (c) borrowings up to 5% of its total assets for temporary purposes without regard to the amount of senior securities outstanding under clauses (a) and
(b) above; provided, however, that the Fund's obligations under interest rate swaps, when issued and forward commitment transactions and similar transactions are not treated as senior securities if covering assets are appropriately segregated;
or pledge its assets other than to secure such issuances or in connection with Hedging Transactions, short sales, when-issued and forward commitment transactions and similar investment strategies. For purposes of clauses (a), (b) and (c) above,

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"total assets" shall be calculated after giving effect to the net proceeds of any such issuance and net of any liabilities and indebtedness that do not constitute senior securities except for such liabilities and indebtedness as are excluded from treatment as senior securities by the proviso to this item (3); <br>

&nbsp;&nbsp;&nbsp;&nbsp;● make loans of money or property to any person, except through loans of portfolio securities, the purchase of
fixed income securities consistent with the Fund's investment objective and policies or the acquisition of securities subject to repurchase agreements;

&nbsp;&nbsp;&nbsp;&nbsp;● underwrite the securities of other issuers, except to the extent that in connection with the disposition of
portfolio securities or the sale of its own shares the Fund may be deemed to be an underwriter;

&nbsp;&nbsp;&nbsp;&nbsp;● invest for the purpose of exercising control over any issuer, except that the Fund may control a portfolio
subsidiary;

&nbsp;&nbsp;&nbsp;&nbsp;● purchase or sell real estate or interests therein other than municipal obligations secured by real estate or
interests therein;

&nbsp;&nbsp;&nbsp;&nbsp;● purchase or sell commodities or commodity contracts except for purposes, and only to the extent, permitted by
applicable law without the Fund becoming subject to registration with the Commodity Futures Trading Commission as a commodity pool; or

&nbsp;&nbsp;&nbsp;&nbsp;● make any short sale of securities except in conformity with applicable laws, rules and regulations and unless,
giving effect to such sale, the market value of all securities sold short does not exceed 25% of the value of the Fund's total assets and the Fund's aggregate short sales of a particular class of securities does not exceed 25% of the then
outstanding securities of that class.

As a matter of fundamental policy, under normal market conditions, the Fund will invest at least 80% of its Managed Assets in investments the income from which is exempt from federal income tax.

As a matter of non-fundamental policy, under normal market conditions, the Fund will invest at least 80% of its Managed Assets in investment quality securities. For the purposes of the foregoing policy, an investment quality security is a security that is rated BBB or Baa or higher by Moody's, S&P or Fitch or another nationally recognized rating agency or, if unrated, deemed to be of comparable quality by the Investment Advisor. The Fund has adopted a policy to provide shareholders of the Fund at least 60 days' prior notice of any change in this non fundamental investment policy, if the change is not first approved by shareholders, which notice will comply with the 1940 Act, as amended, and the rules and regulations thereunder.

The Fund's VMTP Shares are assigned long-term ratings by Moody's and Fitch. In order to maintain the required ratings, the Fund is required to comply with certain investment quality, diversification and other guidelines established by Moody's and Fitch. Such guidelines may be more restrictive than the restrictions set forth above. The Fund does not anticipate that such guidelines would have a material adverse effect on its ability to achieve its investment objective. Moody's and Fitch receive fees in connection with their ratings issuances. The Fund is also subject to certain covenants and requirements under the terms of the VMTP Shares and related documents. Such requirements may be more restrictive than the restrictions set forth above. The Fund does not anticipate that such requirements would have a material adverse effect on its ability to achieve its investment objective**<u> </u>**

**<u>MIY</u>**

The Fund has adopted restrictions and policies relating to the investment of the Fund's assets and its activities. Certain of the restrictions are fundamental policies of the Fund and may not be changed without the approval of the holders of a majority of the Fund's outstanding voting securities (which for this purpose and under the 1940 Act means the lesser of (i) 67% of the shares of each class of capital stock represented at a meeting at which more than 50% of the outstanding shares of each class of capital stock are represented or (ii) more than 50% of the outstanding share of each class of capital stock, but for shares of preferred stock voting separately as a single class, "majority" means more than 50% of the outstanding shares of preferred stock.

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*Fundamental Investment Restrictions*. Under these fundamental investment restrictions, the Fund may not:

&nbsp;&nbsp;&nbsp;&nbsp;● Make investments for the purpose of exercising control or management.

&nbsp;&nbsp;&nbsp;&nbsp;● Purchase securities of other investment companies, except (i) in connection with a merger, consolidation,
acquisition or reorganization, (ii) by purchase of shares of tax-exempt money market funds advised by the Investment Advisor or its affiliates (as defined in the Investment Company Act) to the extent
permitted by an exemptive order issued to the Fund by the Securities and Exchange Commission, or (iii) by purchase in the open market of securities of closed-end investment companies and only if
immediately thereafter not more than 10% of the Fund's total assets would be invested in such securities.

&nbsp;&nbsp;&nbsp;&nbsp;● Purchase or sell real estate, real estate limited partnerships, commodities or commodity contracts; provided
that the Fund may invest in securities secured by real estate or interests therein or issued by companies that invest in real estate or interests therein and the Fund may purchase and sell financial futures contracts and options thereon.

&nbsp;&nbsp;&nbsp;&nbsp;● Issue senior securities other than preferred stock or borrow in excess of 5% of its total assets taken at
market value; provided, however, that the Fund is authorized to borrow moneys in excess of 5% of the value of its total assets for the purpose of repurchasing shares of common stock or redeeming shares of preferred stock.

&nbsp;&nbsp;&nbsp;&nbsp;● Underwrite securities of other issuers except insofar as the Fund may be deemed an underwriter under the
Securities Act of 1933, as amended, in selling portfolio securities.

&nbsp;&nbsp;&nbsp;&nbsp;● Make loans to other persons, except that the Fund may purchase MYI Municipal Bonds and other debt securities
in accordance with its investment objective, policies and limitation.

&nbsp;&nbsp;&nbsp;&nbsp;● Purchase any securities on margin, except that the Fund may obtain such short-term credit as may be necessary
for the clearance of purchases and sales of portfolio securities (the deposit or payment by the Fund of initial or variation margin in connection with financial futures contracts and options thereon is not considered the purchase of a security on
margin).

&nbsp;&nbsp;&nbsp;&nbsp;● Make short sales of securities or maintain a short position or invest in put, call, straddle or spread
options, except that the Fund may write, purchase and sell options and futures on MYI Municipal Bonds, U.S. Government obligations and related indices or otherwise in connection with bona fide hedging activities.

&nbsp;&nbsp;&nbsp;&nbsp;● Invest more than 25% of its total assets (taken at market value at the time of each investment) in securities
of issuers in a single industry; provided that, for purposes of this restriction, states municipalities and their political subdivisions are not considered to be part of any industry.

For purposes of fundamental investment restriction (4) above, the Fund may borrow money in excess of 5% of the value of its total assets to the extent permitted by Section 18 of the 1940 Act or otherwise as permitted by applicable law for the purpose of repurchasing shares of common stock or redeeming shares of preferred stock. For purposes of fundamental investment restriction (9) above, the exception for states, municipalities and their political subdivisions applies only to tax-exempt securities issued by such entities.

An additional investment restriction adopted by the Fund, which may be changed by the Board without shareholder approval, provides that the Fund may not mortgage, pledge, hypothecate or in any manner transfer, as security for indebtedness, any securities owned or held by the Fund except as may be necessary in connection with borrowings mentioned in investment restriction (4) above or except as may be necessary in connection with transactions in financial futures contracts and options thereon.

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If a percentage restriction on the investment policies or the investment or use of assets set forth above is adhered to at the time a transaction is effected, later changes in percentage resulting from changing values will not be considered a violation.

**<u>MVF</u>**

The following are fundamental investment restrictions of the Fund and may not be changed without the approval of the holders of a majority of the Fund's outstanding Common Shares and outstanding Preferred Shares, voting together as a single class, and a majority of the outstanding Preferred Shares, voting as a separate class (which for this purpose and under the 1940 Act means the lesser of (i) 67% of the shares of each class of capital stock represented at a meeting at which more than 50% of the outstanding shares of each class of capital stock are represented or (ii) more than 50% of the outstanding shares of each class of capital stock). The Fund may not:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1. Make investments for the purpose of exercising control or management.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2. Purchase securities of other investment companies, except (i) in connection with a merger, consolidation, acquisition or reorganization, (ii) by purchase of shares of tax-exempt money market funds advised by the Investment Advisor or its affiliates (as defined in the 1940 Act) to the extent permitted by an exemptive order issued to the Fund by the Securities and Exchange Commission, or (iii) by purchase in the open market of securities of closed-end investment companies and only if immediately thereafter not more than 10% of the Fund's total assets would be invested in such securities.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3. Purchase or sell real estate, real estate limited partnerships, commodities or commodity contracts; provided that the Fund may invest in securities secured by real estate or interests therein or issued by companies that invest in real estate or interests therein and the Fund may purchase and sell financial futures contracts and options thereon.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4. Issue senior securities other than preferred stock or borrow in excess of 5% of its total assets taken at market value; provided, however, that the Fund is authorized to borrow money in excess of 5% of the value of its total assets for the purpose of repurchasing shares of common stock or redeeming shares of preferred stock.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5. Underwrite securities of other issuers except insofar as the Fund may be deemed an underwriter under the Securities Act in selling portfolio securities.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6. Make loans to other persons, except that the Fund may purchase MYI Municipal Bonds and other debt securities in accordance with its investment objective, policies and limitations.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7. Purchase any securities on margin, except that the Fund may obtain such short-term credit as may be necessary for the clearance of purchases and sales of portfolio securities (the deposit or payment by the Fund of initial or variation margin in connection with financial futures contracts and options thereon is not considered the purchase of a security on margin).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8. Make short sales of securities or maintain a short position or invest in put, call, straddle or spread options, except that the Fund may write, purchase and sell options and futures on MYI Municipal Bonds, U.S. Government obligations and related indices or otherwise in connection with bona fide hedging activities.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9. Invest more than 25% of its total assets (taken at market value at the time of each investment) in securities of issuers in a single industry; provided that, for purposes of this restriction, states municipalities and their political subdivisions are not considered to be part of any industry.

For purposes of fundamental investment restriction (4) above, the Fund may borrow moneys in excess of 5% of the value of its total assets to the extent permitted by Section 18 of the 1940 Act or otherwise as permitted by applicable law for the purpose of repurchasing shares of common stock or redeeming shares of preferred stock. For purposes

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of fundamental investment restriction (9) above, the exception for states, municipalities and their political subdivisions applies only to tax-exempt securities issued by such entities.

An additional investment restriction adopted by the Fund, which may be changed by the Board without stockholder approval, provides that the Fund may not mortgage, pledge, hypothecate or in any manner transfer, as security for indebtedness, any securities owned or held by the Fund except as may be necessary in connection with borrowings mentioned in investment restriction (4) above or except as may be necessary in connection with transactions in financial futures contracts and options thereon.

If a percentage restriction on the investment policies or the investment or use of assets set forth above is adhered to at the time a transaction is effected, later changes in percentage resulting from changing values will not be considered a violation.

The Fund is currently classified as a diversified fund under the 1940 Act. This means that the Fund may not purchase securities of an issuer (other than (i) obligations issued or guaranteed by the U.S. government, its agencies or instrumentalities and (ii) securities of other investment companies) if, with respect to 75% of its total assets, (a) more than 5% of the Fund's total assets would be invested in securities of that issuer or (b) the Fund would hold more than 10% of the outstanding voting securities of that issuer. For purposes of this restriction, the Fund will regard each state and each political subdivision, agency or instrumentality of such state and each multi-state agency of which such state is a member and each public authority which issues securities on behalf of a private entity as a separate issuer, except that if the security is backed only by the assets and revenues of a non-government entity then the entity with the ultimate responsibility for the payment of interest and principal may be regarded as the sole issuer. With respect to the remaining 25% of its total assets, the Fund can invest more than 5% of its assets in one issuer. Under the 1940 Act, a fund cannot change its classification from diversified to non-diversified without shareholder approval.

In order to obtain and maintain the desired ratings for the VMTP Shares from Moody's and Fitch and to comply with the Eligible Assets requirement of the Articles Supplementary, the Fund will be required to comply with investment quality, diversification and other guidelines established by Moody's and Fitch. Such guidelines will likely be more restrictive than the restrictions set forth above.

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**APPENDIX C** 

**FORM OF AMENDMENT TO MYI ARTICLES SUPPLEMENTARY** 

**BLACKROCK MUNIYIELD QUALITY FUND III, INC. ARTICLES OF AMENDMENT** 

This is to certify that:

<u>First</u>: The charter of BlackRock MuniYield Quality Fund III, Inc., a Maryland corporation (the "**Corporation**"), is amended by these Articles of Amendment, which amend that section of the charter titled Articles Supplementary Establishing and Fixing the Rights and Preferences of Variable Rate Demand Preferred Shares, dated as of May 17, 2011 (as amended to date, the "**Governing Document**").

<u>Second</u>: The charter of the Corporation is hereby amended by deleting the first and second recitals of the Governing Document in their entirety and replacing them with the following:

FIRST: Pursuant to authority expressly vested in the Board of Directors of the Corporation by Article V of the Corporation's Charter, the Board of Directors has, by resolution duly adopted on April 14, 2011, reclassified 3,564 authorized and unissued shares of common stock of the Corporation as shares of preferred stock of the Corporation, par value $0.10 per share, as Variable Rate Demand Preferred Shares (the "**VRDP Shares**"). The VRDP Shares may be issued in one or more series, as designated and authorized by the Board of Directors or a duly authorized committee thereof from time to time (each series of VRDP Shares that may be authorized and issued, a "**Series**").

SECOND: Pursuant to authority expressly vested in the Board of Directors of the Corporation by Article V of the Corporation's Charter, the Board of Directors, by resolution duly adopted on [•], 2025, approved the reclassification of [•] authorized and unissued shares of common stock of the Corporation as additional VRDP Shares.

THIRD: The preferences (including liquidation preference), voting powers, restrictions, limitations as to dividends, qualifications, and terms and conditions of redemption of the shares of each Series of VRDP Shares are as follows or as set forth in an amendment to these Articles Supplementary or otherwise in the Corporation's Charter (each such Series being referred to herein as a "**Series of VRDP Shares**"):

<u>Third</u>: The charter of the Corporation is hereby amended by deleting the section titled "Designation" in the Governing Document in its entirety and replacing it with the following:

**DESIGNATION** 

Series W-7: A series of preferred stock, par value $0.10 per share, liquidation preference $100,000 per share, has been authorized and designated as "Series W-

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7 Variable Rate Demand Preferred Shares," also referred to herein as "Series W-7 VRDP Shares". The number of Series W-7 VRDP Shares approved for issuance is [•]. Each Series W-7 VRDP Share shall be issued on a date or dates determined by the Board of Directors of the Corporation or pursuant to their delegated authority; have an Applicable Rate equal to the sum of 0.20% per annum plus the Securities Industry and Financial Markets Association ("**SIFMA**") Municipal Swap Index, published at 3:00 p.m., New York City time, on Wednesday, May 18, 2011, or 0.41% per annum, if the SIFMA Municipal Swap Index is not so published for the Initial Rate Period from, and including, the Date of Original Issue to, and including, May 25, 2011, and an initial Dividend Payment Date of June 1, 2011; and have such other preferences, voting powers, restrictions, limitations as to dividends and distributions, qualifications and terms and conditions of redemption, in addition to those required by applicable law or as set forth in the Charter, as set forth in Parts I and II of these Articles Supplementary. The Series W-7 VRDP Shares shall constitute a separate series of preferred stock of the Corporation and each Series W-7 VRDP Share shall be identical. Except as otherwise provided with respect to any additional Series of VRDP Shares, the terms and conditions of these Articles Supplementary apply to each Series of VRDP Shares and each share of such Series.

<u>Fourth</u>: The charter of the Corporation is hereby amended by deleting Section 1of the Governing Document in its entirety and replacing it with the following:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**1.** **Number of Authorized Shares.** 

The number of authorized shares constituting the Series W-7 VRDP Shares is as set forth above under the title "Designation."

<u>Fifth</u>: The amendment to the charter of the Corporation as set forth above in these Articles of Amendment has been duly advised by the board of directors of the Corporation and approved by the stockholders of the Corporation as and to the extent required by law and in accordance with the charter of the Corporation.

<u>Sixth</u>: These Articles of Amendment shall be effective as of [•], 2025.

[Signature Page Follows]

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IN WITNESS WHEREOF, BlackRock MuniYield Quality Fund III, Inc. has caused these Articles of Amendment to be signed as of [•], 2025 in its name and on its behalf by the person named below, who acknowledges that these Articles of Amendment are the act of the Corporation and, to the best of such person's knowledge, information, and belief and under penalties for perjury, all matters and facts contained in these Articles of Amendment are true in all material respects.

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| |
|:---|
| BLACKROCK MUNIYIELD QUALITY FUND III, INC. |
| By: |
| Name: Stephen Minar |
| Title: Vice President |

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|:---|
| ATTEST: |
| Name: Janey Ahn |
| Title: Secretary |

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**APPENDIX D** 

**RATINGS OF INVESTMENTS** 

**A Description of Moody's Investors Service, Inc.'s ("Moody's") Global Rating Scales** 

Ratings assigned on Moody's global long-term and short-term rating scales are forward-looking opinions of the relative credit risks of financial obligations issued by non-financial corporates, financial institutions, structured finance vehicles, project finance vehicles, and public sector entities. Moody's defines credit risk as the risk that an entity may not meet its contractual financial obligations as they come due and any estimated financial loss in the event of default or impairment. The contractual financial obligations addressed by Moody's ratings are those that call for, without regard to enforceability, the payment of an ascertainable amount, which may vary based upon standard sources of variation (e.g., floating interest rates), by an ascertainable date. Moody's rating addresses the issuer's ability to obtain cash sufficient to service the obligation, and its willingness to pay. Moody's ratings do not address non-standard sources of variation in the amount of the principal obligation (e.g., equity indexed), absent an express statement to the contrary in a press release accompanying an initial rating. Long-term ratings are assigned to issuers or obligations with an original maturity of one year or more and reflect both on the likelihood of a default or impairment on contractual financial obligations and the expected financial loss suffered in the event of default or impairment. Short-term ratings are assigned for obligations with an original maturity of thirteen months or less and reflect both on the likelihood of a default or impairment on contractual financial obligations and the expected financial loss suffered in the event of default or impairment. Moody's issues ratings at the issuer level and instrument level on both the long-term scale and the short-term scale. Typically, ratings are made publicly available although private and unpublished ratings may also be assigned.

Moody's differentiates structured finance ratings from fundamental ratings (i.e., ratings on nonfinancial corporate, financial institution, and public sector entities) on the global long-term scale by adding (sf) to all structured finance ratings. The addition of (sf) to structured finance ratings should eliminate any presumption that such ratings and fundamental ratings at the same letter grade level will behave the same. The (sf) indicator for structured finance security ratings indicates that otherwise similarly rated structured finance and fundamental securities may have different risk characteristics. Through its current methodologies, however, Moody's aspires to achieve broad expected equivalence in structured finance and fundamental rating performance when measured over a long period of time.

**Description of Moody's Global Long-Term Rating Scale** 

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|  Aaa | Obligations rated Aaa are judged to be of the highest quality, subject to the lowest level of credit risk. |
|  Aa | Obligations rated Aa are judged to be of high quality and are subject to very low credit risk. |
|  A | Obligations rated A are judged to be upper-medium grade and are subject to low credit risk. |
|  Baa | Obligations rated Baa are judged to be medium-grade and subject to moderate credit risk and as such may possess certain speculative characteristics. |
|  Ba | Obligations rated Ba are judged to be speculative and are subject to substantial credit risk. |
|  B | Obligations rated B are considered speculative and are subject to high credit risk. |
|  Caa  | Obligations rated Caa are judged to be speculative of poor standing and are subject to very high credit risk. |
|  Ca | Obligations rated Ca are highly speculative and are likely in, or very near, default, with some prospect of recovery of principal and interest. |
|  C | Obligations rated C are the lowest rated and are typically in default, with little prospect for recovery of principal or interest. |

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*Note*: Moody's appends numerical modifiers 1, 2, and 3 to each generic rating classification from Aa through Caa. The modifier 1 indicates that the obligation ranks in the higher end of its generic rating category; the modifier 2 indicates a mid-range ranking; and the modifier 3 indicates a ranking in the lower end of that generic rating category. Additionally, a "(hyb)" indicator is appended to all ratings of hybrid securities issued by banks, insurers, finance companies, and securities firms.

By their terms, hybrid securities allow for the omission of scheduled dividends, interest, or principal payments, which can potentially result in impairment if such an omission occurs. Hybrid securities may also be subject to contractually allowable write-downs of principal that could result in impairment. Together with the hybrid indicator, the long-term obligation rating assigned to a hybrid security is an expression of the relative credit risk associated with that security.

**Description of Moody's Global Short-Term Rating Scale** 

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| P-1 | Ratings of Prime-1 reflect a superior ability to repay short-term obligations. |
| P-2 | Ratings of Prime-2 reflect a strong ability to repay short-term obligations. |
| P-3 | Ratings of Prime-3 reflect an acceptable ability to repay short-term obligations. |
| NP | Issuers (or supporting institutions) rated Not Prime do not fall within any of the Prime rating categories. |

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**Description of Moody's U.S. Municipal Short-Term Debt and Demand Obligation Ratings** 

**Description of Moody's Short-Term Obligation Ratings** 

Moody's uses the global short-term Prime rating scale for commercial paper issued by U.S. municipalities and nonprofits. These commercial paper programs may be backed by external letters of credit or liquidity facilities, or by an issuer's self-liquidity.

For other short-term municipal obligations, Moody's uses one of two other short-term rating scales, the Municipal Investment Grade ("MIG") and Variable Municipal Investment Grade ("VMIG") scales discussed below.

Moody's uses the MIG scale for U.S. municipal cash flow notes, bond anticipation notes and certain other short-term obligations, which typically mature in three years or less. Under certain circumstances, Moody's uses the MIG scale for bond anticipation notes with maturities of up to five years.

<u>MIG Scale</u> 

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|:---|:---|
| MIG 1 | This designation denotes superior credit quality. Excellent protection is afforded by established cash flows, highly reliable liquidity support, or demonstrated broad-based access to the market for refinancing. |
| MIG 2 | This designation denotes strong credit quality. Margins of protection are ample, although not as large as in the preceding group. |
| MIG 3 | This designation denotes acceptable credit quality. Liquidity and cash-flow protection may be narrow, and market access for refinancing is likely to be less well-established. |
| SG | This designation denotes speculative-grade credit quality. Debt instruments in this category may lack sufficient margins of protection. |

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**Description of Moody's Demand Obligation Ratings** 

In the case of variable rate demand obligations ("VRDOs"), a two-component rating is assigned. The components are a long-term rating and a short-term demand obligation rating. The long-term rating addresses the issuer's ability

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to meet scheduled principal and interest payments. The short-term demand obligation rating addresses the ability of the issuer or the liquidity provider to make payments associated with the purchase-price-upon-demand feature ("demand feature") of the VRDO. The short-term demand obligation rating uses the VMIG scale. VMIG ratings with liquidity support use as an input the short-term Counterparty Risk Assessment of the support provider, or the long-term rating of the underlying obligor in the absence of third party liquidity support. Transitions of VMIG ratings of demand obligations with conditional liquidity support differ from transitions on the Prime scale to reflect the risk that external liquidity support will terminate if the issuer's long-term rating drops below investment grade.

Moody's typically assigns the VMIG short-term demand obligation rating if the frequency of the demand feature is less than every three years. If the frequency of the demand feature is less than three years but the purchase price is payable only with remarketing proceeds, the short-term demand obligation rating is "NR".

<u>VMIG Scale</u> 

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|:---|:---|
| VMIG 1 | This designation denotes superior credit quality. Excellent protection is afforded by the superior short-term credit strength of the liquidity provider and structural and legal protections that ensure the timely payment of purchase price upon demand. |
| VMIG 2 | This designation denotes strong credit quality. Good protection is afforded by the strong short-term credit strength of the liquidity provider and structural and legal protections that ensure the timely payment of purchase price upon demand. |
| VMIG 3 | This designation denotes acceptable credit quality. Adequate protection is afforded by the satisfactory short-term credit strength of the liquidity provider and structural and legal protections that ensure the timely payment of purchase price upon demand. |
| SG | This designation denotes speculative-grade credit quality. Demand features rated in this category may be supported by a liquidity provider that does not have a sufficiently strong short-term rating or may lack the structural or legal protections necessary to ensure the timely payment of purchase price upon demand. |

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**Description of S&P Global Ratings ("S&P"), a Division of S&P Global Inc., Issue Credit Ratings** 

An S&P issue credit rating is a forward-looking opinion about the creditworthiness of an obligor with respect to a specific financial obligation, a specific class of financial obligations, or a specific financial program (including ratings on medium-term note programs and commercial paper programs). It takes into consideration the creditworthiness of guarantors, insurers, or other forms of credit enhancement on the obligation and takes into account the currency in which the obligation is denominated. The opinion reflects S&P's view of the obligor's capacity and willingness to meet its financial commitments as they come due, and this opinion may assess terms, such as collateral security and subordination, which could affect ultimate payment in the event of default.

Issue credit ratings can be either long-term or short-term. Short-term issue credit ratings are generally assigned to those obligations considered short-term in the relevant market, typically with an original maturity of no more than 365 days. Short-term issue credit ratings are also used to indicate the creditworthiness of an obligor with respect to put features on long-term obligations. S&P would typically assign a long-term issue credit rating to an obligation with an original maturity of greater than 365 days. However, the ratings S&P assigns to certain instruments may diverge from these guidelines based on market practices. Medium-term notes are assigned long-term ratings.

Issue credit ratings are based, in varying degrees, on S&P's analysis of the following considerations:

<sup>1</sup> The likelihood of payment—the capacity and willingness of the obligor to meet its financial commitments on an obligation in accordance with the terms of the obligation;

<sup>2</sup> The nature and provisions of the financial obligation, and the promise S&P imputes; and

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<sup>3</sup> The protection afforded by, and relative position of, the financial obligation in the event of a bankruptcy, reorganization, or other arrangement under the laws of bankruptcy and other laws affecting creditors' rights.

An issue rating is an assessment of default risk but may incorporate an assessment of relative seniority or ultimate recovery in the event of default. Junior obligations are typically rated lower than senior obligations, to reflect lower priority in bankruptcy, as noted above. (Such differentiation may apply when an entity has both senior and subordinated obligations, secured and unsecured obligations, or operating company and holding company obligations.)

**Long-Term Issue Credit Ratings\*** 

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|  AAA | An obligation rated 'AAA' has the highest rating assigned by S&P. The obligor's capacity to meet its financial commitments on the obligation is extremely strong. |
|  AA | An obligation rated 'AA' differs from the highest-rated obligations only to a small degree. The obligor's capacity to meet its financial commitments on the obligation is very strong. |
|  A | An obligation rated 'A' is somewhat more susceptible to the adverse effects of changes in circumstances and economic conditions than obligations in higher-rated categories. However, the obligor's capacity to meet its financial commitments on the obligation is still strong. |
|  BBB | An obligation rated 'BBB' exhibits adequate protection parameters. However, adverse economic conditions or changing circumstances are more likely to weaken the obligor's capacity to meet its financial commitments on the obligation. |
|  BB,<br> B, CCC,<br> CC,<br> and C | Obligations rated 'BB', 'B', 'CCC', 'CC', and 'C' are regarded as having significant speculative characteristics. 'BB' indicates the least degree of speculation and 'C' the highest. While such obligations will likely have some quality and protective characteristics, these may be outweighed by large uncertainties or major exposure to adverse conditions. |
|  BB | An obligation rated 'BB' is less vulnerable to nonpayment than other speculative issues. However, it faces major ongoing uncertainties or exposure to adverse business, financial, or economic conditions that could lead to the obligor's inadequate capacity to meet its financial commitments on the obligation. |
|  B | An obligation rated 'B' is more vulnerable to nonpayment than obligations rated 'BB', but the obligor currently has the capacity to meet its financial commitments on the obligation. Adverse business, financial, or economic conditions will likely impair the obligor's capacity or willingness to meet its financial commitments on the obligation. |
|  CCC | An obligation rated 'CCC' is currently vulnerable to nonpayment and is dependent upon favorable business, financial, and economic conditions for the obligor to meet its financial commitments on the obligation. In the event of adverse business, financial, or economic conditions, the obligor is not likely to have the capacity to meet its financial commitments on the obligation. |
|  CC | An obligation rated 'CC' is currently highly vulnerable to nonpayment. The 'CC' rating is used when a default has not yet occurred but S&P expects default to be a virtual certainty, regardless of the anticipated time to default. |
|  C | An obligation rated 'C' is currently highly vulnerable to nonpayment, and the obligation is expected to have lower relative seniority or lower ultimate recovery compared with obligations that are rated higher. |
|  D | An obligation rated 'D' is in default or in breach of an imputed promise. For non-hybrid capital instruments, the 'D' rating category is used when payments on an obligation are not made on the date due, |

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unless S&P believes that such payments will be made within five business days in the absence of a stated grace period or within the earlier of the stated grace period or 30 calendar days. The 'D' rating also will be used upon the filing of a bankruptcy petition or the taking of similar action and where default on an obligation is a virtual certainty, for example due to automatic stay provisions. A rating on an obligation is lowered to 'D' if it is subject to a distressed debt restructuring.

\* Ratings from 'AA' to 'CCC' may be modified by the addition of a plus (+) or minus (-) sign to show relative standing within the rating categories.

**Short-Term Issue Credit Ratings** 

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| A-1 | A short-term obligation rated 'A-1' is rated in the highest category by S&P. The obligor's capacity to meet its financial commitments on the obligation is strong. Within this category, certain obligations are designated with a plus sign (+). This indicates that the obligor's capacity to meet its financial commitments on these obligations is extremely strong. |
| A-2 | A short-term obligation rated 'A-2' is somewhat more susceptible to the adverse effects of changes in circumstances and economic conditions than obligations in higher rating categories. However, the obligor's capacity to meet its financial commitments on the obligation is satisfactory. |
| A-3 | A short-term obligation rated 'A-3' exhibits adequate protection parameters. However, adverse economic conditions or changing circumstances are more likely to weaken an obligor's capacity to meet its financial commitments on the obligation. |
| B | A short-term obligation rated 'B' is regarded as vulnerable and has significant speculative characteristics. The obligor currently has the capacity to meet its financial commitments; however, it faces major ongoing uncertainties that could lead to the obligor's inadequate capacity to meet its financial commitments. |
| C | A short-term obligation rated 'C' is currently vulnerable to nonpayment and is dependent upon favorable business, financial, and economic conditions for the obligor to meet its financial commitments on the obligation. |
| D | A short-term obligation rated 'D' is in default or in breach of an imputed promise. For non-hybrid capital instruments, the 'D' rating category is used when payments on an obligation are not made on the date due, unless S&P believes that such payments will be made within any stated grace period. However, any stated grace period longer than five business days will be treated as five business days. The 'D' rating also will be used upon the filing of a bankruptcy petition or the taking of a similar action and where default on an obligation is a virtual certainty, for example due to automatic stay provisions. A rating on an obligation is lowered to 'D' if it is subject to a distressed debt restructuring. |

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**Description of S&P's Municipal Short-Term Note Ratings** 

An S&P U.S. municipal note rating reflects S&P's opinion about the liquidity factors and market access risks unique to the notes. Notes due in three years or less will likely receive a note rating. Notes with an original maturity of more than three years will most likely receive a long-term debt rating. In determining which type of rating, if any, to assign, S&P's analysis will review the following considerations:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Amortization schedule—the larger the final maturity relative to other maturities, the more likely it will be
treated as a note; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Source of payment—the more dependent the issue is on the market for its refinancing, the more likely it will
be treated as a note.

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S&P's municipal short-term note rating symbols are as follows:

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|  SP-1  | Strong capacity to pay principal and interest. An issue determined to possess a very strong capacity to pay debt service is given a plus (+) designation. |
|  SP-2 | Satisfactory capacity to pay principal and interest, with some vulnerability to adverse financial and economic changes over the term of the notes. |
|  SP-3 | Speculative capacity to pay principal and interest. |
|  D | 'D' is assigned upon failure to pay the note when due, completion of a distressed debt restructuring, or the filing of a bankruptcy petition or the taking of similar action and where default on an obligation is a virtual certainty, for example due to automatic stay provisions. |

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**Description of Fitch Ratings' ("Fitch's") Credit Ratings Scales** 

Fitch Ratings publishes opinions on a variety of scales. The most common of these are credit ratings, but the agency also publishes ratings, scores and other relative opinions relating to financial or operational strength. For example, Fitch also provides specialized ratings of servicers of residential and commercial mortgages, asset managers and funds. In each case, users should refer to the definitions of each individual scale for guidance on the dimensions of risk covered in each assessment.

Fitch's credit ratings relating to issuers are an opinion on the relative ability of an entity to meet financial commitments, such as interest, preferred dividends, repayment of principal, insurance claims or counterparty obligations. Credit ratings relating to securities and obligations of an issuer can include a recovery expectation. Credit ratings are used by investors as indications of the likelihood of receiving the money owed to them in accordance with the terms on which they invested. The agency's credit ratings cover the global spectrum of corporate, sovereign financial, bank, insurance, and public finance entities (including supranational and sub-national entities) and the securities or other obligations they issue, as well as structured finance securities backed by receivables or other financial assets.

The terms "investment grade" and "speculative grade" have established themselves over time as shorthand to describe the categories 'AAA' to 'BBB' (investment grade) and 'BB' to 'D' (speculative grade). The terms investment grade and speculative grade are market conventions and do not imply any recommendation or endorsement of a specific security for investment purposes. Investment grade categories indicate relatively low to moderate credit risk, while ratings in the speculative categories either signal a higher level of credit risk or that a default has already occurred.

For the convenience of investors, Fitch may also include issues relating to a rated issuer that are not and have not been rated on its web page. Such issues are also denoted as 'NR'.

Credit ratings express risk in relative rank order, which is to say they are ordinal measures of credit risk and are not predictive of a specific frequency of default or loss. For information about the historical performance of ratings please refer to Fitch's Ratings Transition and Default studies which detail the historical default rates and their meaning. The European Securities and Markets Authority also maintains a central repository of historical default rates.

Fitch's credit ratings do not directly address any risk other than credit risk. In particular, ratings do not deal with the risk of a market value loss on a rated security due to changes in interest rates, liquidity and other market considerations. However, in terms of payment obligation on the rated liability, market risk may be considered to the extent that it influences the ability of an issuer to pay upon a commitment.

Ratings nonetheless do not reflect market risk to the extent that they influence the size or other conditionality of the obligation to pay upon a commitment (for example, in the case of index-linked bonds).

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In the default components of ratings assigned to individual obligations or instruments, the agency typically rates to the likelihood of non-payment or default in accordance with the terms of that instrument's documentation. In limited cases, Fitch may include additional considerations (i.e. rate to a higher or lower standard than that implied in the obligation's documentation).

The primary credit rating scales can be used to provide a rating of privately issued obligations or certain note issuance programs or for private ratings. In this case the rating is not published, but only provided to the issuer or its agents in the form of a rating letter.

The primary credit rating scales may also be used to provide ratings for a more narrow scope, including interest strips and return of principal or in other forms of opinions such as credit opinions or rating assessment services. Credit opinions are either a notch- or category-specific view using the primary rating scale and omit one or more characteristics of a full rating or meet them to a different standard. Credit opinions will be indicated using a lower case letter symbol combined with either an '\*' (e.g. 'bbb+\*') or (cat) suffix to denote the opinion status. Credit opinions will be point-in-time typically but may be monitored if the analytical group believes information will be sufficiently available. Rating assessment services are a notch-specific view using the primary rating scale of how an existing or potential rating may be changed by a given set of hypothetical circumstances. While credit opinions and rating assessment services are point-in-time and are not monitored, they may have a directional watch or outlook assigned, which can signify the trajectory of the credit profile.

**Description of Fitch's Long-Term Corporate Finance Obligations Rating Scales** 

Ratings of individual securities or financial obligations of a corporate issuer address relative vulnerability to default on an ordinal scale. In addition, for financial obligations in corporate finance, a measure of recovery given default on that liability is also included in the rating assessment. This notably applies to covered bonds ratings, which incorporate both an indication of the probability of default and of the recovery given a default of this debt instrument. On the contrary, Ratings of debtor-in-possession ("DIP") obligations incorporate the expectation of full repayment.

The relationship between the issuer scale and obligation scale assumes a generic historical average recovery. Individual obligations can be assigned ratings higher, lower, or the same as that entity's issuer rating or issuer default rating ("IDR"), based on their relative ranking, relative vulnerability to default or based on explicit Recovery Ratings.

As a result, individual obligations of entities, such as corporations, are assigned ratings higher, lower, or the same as that entity's issuer rating or IDR, except DIP obligation ratings that are not based off an IDR. At the lower end of the ratings scale, Fitch publishes explicit Recovery Ratings in many cases to complement issuer and obligation ratings.

Fitch long-term obligations rating scales are as follows:

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|  AAA  | Highest Credit Quality. 'AAA' ratings denote the lowest expectation of credit risk. They are assigned only in cases of exceptionally strong capacity for payment of financial commitments. This capacity is highly unlikely to be adversely affected by foreseeable events. |
|  AA | Very High Credit Quality. 'AA' ratings denote expectations of very low credit risk. They indicate very strong capacity for payment of financial commitments. This capacity is not significantly vulnerable to foreseeable events. |
|  A | High Credit Quality. 'A' ratings denote expectations of low credit risk. The capacity for payment of financial commitments is considered strong. This capacity may, nevertheless, be more vulnerable to adverse business or economic conditions than is the case for higher ratings. |

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| BBB | Good Credit Quality. 'BBB' ratings indicate that expectations of credit risk are currently low. The capacity for payment of financial commitments is considered adequate, but adverse business or economic conditions are more likely to impair this capacity. |
| BB | Speculative. 'BB' ratings indicate an elevated vulnerability to credit risk, particularly in the event of adverse changes in business or economic conditions over time; however, business or financial alternatives may be available to allow financial commitments to be met. |
| B | Highly Speculative. 'B' ratings indicate that material credit risk is present. |
| CCC  | Substantial Credit Risk. 'CCC' ratings indicate that substantial credit risk is present. |
| CC | Very High Levels of Credit Risk. 'CC' ratings indicate very high levels of credit risk. |
| C | Exceptionally High Levels of Credit Risk. 'C' indicates exceptionally high levels of credit risk. |

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Within rating categories, Fitch may use modifiers. The modifiers "+" or "-" may be appended to a rating to denote relative status within major rating categories.

For example, the rating category 'AA' has three notch-specific rating levels ('AA+'; 'AA'; 'AA–'; each a rating level). Such suffixes are not added to 'AAA' ratings and ratings below the 'CCC' category. For the short-term rating category of 'F1', a '+' may be appended.

**Description of Fitch's Short-Term Ratings Assigned to Issuers and Obligations** 

A short-term issuer or obligation rating is based in all cases on the short-term vulnerability to default of the rated entity and relates to the capacity to meet financial obligations in accordance with the documentation governing the relevant obligation. Short-term deposit ratings may be adjusted for loss severity. Short-term ratings are assigned to obligations whose initial maturity is viewed as "short term" based on market convention. Typically, this means up to 13 months for corporate, sovereign, and structured obligations and up to 36 months for obligations in U.S. public finance markets.

Fitch short-term ratings are as follows:

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| | |
|:---|:---|
| F1 | Highest Short-Term Credit Quality. Indicates the strongest intrinsic capacity for timely payment of financial commitments; may have an added "+" to denote any exceptionally strong credit feature. |
| F2 | Good Short-Term Credit Quality. Good intrinsic capacity for timely payment of financial commitments. |
| F3 | Fair Short-Term Credit Quality. The intrinsic capacity for timely payment of financial commitments is adequate. |
| B | Speculative Short-Term Credit Quality. Minimal capacity for timely payment of financial commitments, plus heightened vulnerability to near term adverse changes in financial and economic conditions. |
| C | High Short-Term Default Risk. Default is a real possibility. |
| RD  | Restricted Default. Indicates an entity that has defaulted on one or more of its financial commitments, although it continues to meet other financial obligations. Typically applicable to entity ratings only. |
| D | Default. Indicates a broad-based default event for an entity, or the default of a short-term obligation. |

---

------

##### [**Table of Contents**](#toc)

---

| | | |
|:---|:---|:---|
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **BlackRock MuniYield Quality Fund III, Inc.**<br> **PO Box 43131**<br> **Providence, RI 02940-3131** | **EVERY VOTE IS IMPORTANT** | **EVERY VOTE IS IMPORTANT** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **BlackRock MuniYield Quality Fund III, Inc.**<br> **PO Box 43131**<br> **Providence, RI 02940-3131** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **BlackRock MuniYield Quality Fund III, Inc.**<br> **PO Box 43131**<br> **Providence, RI 02940-3131** |  |  |
|  |  | MAIL |
|  | ![LOGO](g12999g0807125004630.jpg) | Vote, Sign and Mail in the |
|  | ![LOGO](g12999g0807125004630.jpg) | enclosed Business Reply Envelope |

---

![LOGO](g12999dsp232.jpg)

---

| | |
|:---|:---|
| **PROXY** | **BLACKROCK MUNIYIELD QUALITY FUND III, INC.**<br> **JOINT SPECIAL MEETING OF SHAREHOLDERS**<br> **TO BE HELD ON OCTOBER 15, 2025**<br> **PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS** |

---

**PREFERRED SHARES** 

The undersigned hereby appoints John M. Perlowski and Jay M. Fife, and each of them, as proxies, each with the power to appoint his substitute, and hereby authorizes them to represent and to vote, as designated on the reverse side hereof, all of the shares of BlackRock MuniYield Quality Fund III, Inc., a Maryland corporation (the "Acquiring Fund"), that the undersigned is entitled to vote at the Joint Special Meeting of Shareholders of the Fund to be held on October 15, 2025, at [•] a.m. (Eastern Time) (the "Joint Special Meeting"), and any adjournment(s) or postponement(s) thereof, to cast on behalf of the undersigned all votes that the undersigned is entitled to cast at the Joint Special Meeting and otherwise to represent the undersigned at the Joint Special Meeting with all powers possessed by the undersigned as if personally present at the Joint Special Meeting. The Joint Special Meeting will be held in a virtual meeting format only, at the following Website: **<u>https://meetnow.global/MUUJ79Z</u>**. To attend and participate in the virtual Joint Special Meeting, enter the 14-digit control number from the shaded box on this card. The validity of this proxy is governed by Maryland law. This proxy does not revoke any prior powers of attorney except for prior proxies given in connection with the Joint Special Meeting. The undersigned hereby acknowledges receipt of the Joint Proxy Statement/Prospectus, the terms of which are incorporated herein by reference, and revokes any proxy heretofore given with respect to the Joint Special Meeting.

**THIS PROXY, IF PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED "FOR" THE PROPOSALS. IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH OTHER BUSINESS AS MAY PROPERLY BE PRESENTED AT THE JOINT SPECIAL MEETING AND ANY ADJOURNMENTS OR POSTPONEMENTS THEREOF.** 

**MYI_34668_071425_Pref** 

**PLEASE MARK, SIGN AND DATE THIS PROXY CARD ON THE REVERSE SIDE AND RETURN IT PROMPTLY USING THE ENCLOSED ENVELOPE.** 

xxxxxxxxxxxxxx   <u>code</u>

------

##### [**Table of Contents**](#toc)
**THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD. THE BOARD RECOMMENDS VOTING "FOR" THE PROPOSALS.** 

**TO VOTE MARK BLOCKS BELOW IN BLUE OR BLACK INK AS SHOWN IN THIS EXAMPLE:**☒

 **![LOGO](g12999dsp233a.jpg) Proposals** 

---

| | | | | |
|:---|:---|:---|:---|:---|
|  |  | FOR | AGAINST | ABSTAIN |
| <br> 1g. | <br> Holders of Variable Rate Demand Preferred Shares ("VRDP Shares" and the holders thereof, "VRDP Holders") of the Acquiring Fund are being asked to vote as a separate class on a proposal to approve the MVT Reorganization Agreement and the transactions contemplated therein, including the adoption of Articles Supplementary of Variable Rate Demand Preferred Shares of the Acquiring Fund ("MYI Articles Supplementary") in connection with the issuance of additional Acquiring Fund VRDP Shares. | ☐ | ☐ | ☐ |
|  |  | FOR | AGAINST | ABSTAIN |
| <br> 1h. | <br> The VRDP Holders of the Acquiring Fund are being asked to vote as a separate class on a proposal to approve the MIY Reorganization Agreement and the transactions contemplated therein, including the adoption of MYI Articles Supplementary in connection with the issuance of additional Acquiring Fund VRDP Shares. | ☐ | ☐ | ☐ |
|  |  | FOR | AGAINST | ABSTAIN |
| <br> 1i. | <br> The VRDP Holders of the Acquiring Fund are being asked to vote as a separate class on a proposal to approve the MVF Reorganization Agreement and the transactions contemplated therein, including the adoption of MYI Articles Supplementary in connection with the issuance of additional Acquiring Fund VRDP Shares**.**  | ☐ | ☐ | ☐ |
|  |  | FOR | AGAINST | ABSTAIN |
| <br> 2a. | <br> The common shareholders and holders of Variable Rate Demand Preferred Shares ("VRDP Shares" and the holders thereof, "VRDP Holders") of the Acquiring Fund are being asked to vote as a single class on a proposal to approve the issuance of additional common shares of the Acquiring Fund in connection with the MVT Reorganization Agreement. | ☐ | ☐ | ☐ |
|  |  | FOR | AGAINST | ABSTAIN |
| <br> 2b. | <br> The common shareholders and VRDP Holders of the Acquiring Fund are being asked to vote as a single class on a proposal to approve the issuance of additional common shares of the Acquiring Fund in connection with the MIY Reorganization Agreement. | ☐ | ☐ | ☐ |
|  |  | FOR | AGAINST | ABSTAIN |
| <br> 2c. | <br> The common shareholders and VRDP Holders of the Acquiring Fund are being asked to vote as a single class on a proposal to approve the issuance of additional common shares of the Acquiring Fund in connection with the MVF Reorganization Agreement. | ☐ | ☐ | ☐ |

---

To transact such other business as may properly come before the Joint Special Meeting and any adjournments, postponements or delays thereof.

**Important Notice Regarding the Availability of Proxy Materials for the** 

**Joint Special Meeting of Shareholders on October 15, 2025.** 

**The Joint Proxy Statement/Prospectus and Proxy card for this meeting are available at:** 

**<u>https://www.proxy-direct.com/blk-34668</u>** 

 **![LOGO](g12999dsp233b.jpg) Authorized Signatures — This section must be completed for your vote to be counted. — Sign and Date Below** 

---

| | |
|:---|:---|
| **Note**: | Please sign exactly as your name(s) appear(s) on this Proxy Card, and date it. When shares are held jointly, each holder should sign. When signing as attorney, executor, guardian, administrator, trustee, officer of corporation or other entity or in another representative capacity, please give the full title under the signature.  |

---

---

| | | |
|:---|:---|:---|
| **Date (mm/dd/yyyy) – Please print date below** | **Signature 1 – Please keep signature within the box** | **Signature 2 – Please keep signature within the box** |
| &nbsp;&nbsp;/ / | | |

---

Scanner bar code <br> xxxxxxxxxxxxxx MYI 2 34668 xxxxxxxx

------

##### [**Table of Contents**](#toc)

---

| | | |
|:---|:---|:---|
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **BlackRock MuniYield Michigan Quality Fund, Inc.**<br> **PO Box 43131**<br> **Providence, RI 02940-3131** | **EVERY VOTE IS IMPORTANT** | **EVERY VOTE IS IMPORTANT** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **BlackRock MuniYield Michigan Quality Fund, Inc.**<br> **PO Box 43131**<br> **Providence, RI 02940-3131** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **BlackRock MuniYield Michigan Quality Fund, Inc.**<br> **PO Box 43131**<br> **Providence, RI 02940-3131** |  |  |
|  |  | MAIL |
|  | ![LOGO](g12999g0807125004630.jpg) | Vote, Sign and Mail in the |
|  | ![LOGO](g12999g0807125004630.jpg) | enclosed Business Reply Envelope |

---

![LOGO](g12999dsp232.jpg)

---

| | |
|:---|:---|
| **PROXY** | **BLACKROCK MUNIYIELD MICHIGAN QUALITY FUND INC.**<br> **JOINT SPECIAL MEETING OF SHAREHOLDERS**<br> **TO BE HELD ON OCTOBER 15, 2025**<br> **PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS** |

---

**PREFERRED SHARES** 

The undersigned hereby appoints John M. Perlowski and Jay M. Fife, and each of them, as proxies, each with the power to appoint his substitute, and hereby authorizes them to represent and to vote, as designated on the reverse side hereof, all of the shares of BlackRock MuniYield Michigan Quality Fund, Inc., a Maryland corporation ("MIY"), that the undersigned is entitled to vote at the Joint Special Meeting of Shareholders of the Fund to be held on October 15, 2025, at [•] a.m. (Eastern Time) (the "Joint Special Meeting"), and any adjournment(s) or postponement(s) thereof, to cast on behalf of the undersigned all votes that the undersigned is entitled to cast at the Joint Special Meeting and otherwise to represent the undersigned at the Joint Special Meeting with all powers possessed by the undersigned as if personally present at the Joint Special Meeting. The Joint Special Meeting will be held in a virtual meeting format only, at the following Website: **<u>https://meetnow.global/MUUJ79Z</u>**. To attend and participate in the virtual Joint Special Meeting, enter the 14-digit control number from the shaded box on this card. The validity of this proxy is governed by Maryland law. This proxy does not revoke any prior powers of attorney except for prior proxies given in connection with the Joint Special Meeting. The undersigned hereby acknowledges receipt of the Joint Proxy Statement/Prospectus, the terms of which are incorporated herein by reference, and revokes any proxy heretofore given with respect to the Joint Special Meeting.

**THIS PROXY, IF PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED "FOR" THE PROPOSALS. IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH OTHER BUSINESS AS MAY PROPERLY BE PRESENTED AT THE JOINT SPECIAL MEETING AND ANY ADJOURNMENTS OR POSTPONEMENTS THEREOF.** 

**MIY_34668_071425_Pref** 

**PLEASE MARK, SIGN AND DATE THIS PROXY CARD ON THE REVERSE SIDE AND RETURN IT PROMPTLY USING THE ENCLOSED ENVELOPE.** 

xxxxxxxxxxxxxx   <u>code</u>

------

##### [**Table of Contents**](#toc)
**THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD. THE BOARD RECOMMENDS VOTING "FOR" THE PROPOSALS.** 

**TO VOTE MARK BLOCKS BELOW IN BLUE OR BLACK INK AS SHOWN IN THIS EXAMPLE:**☒

 **![LOGO](g12999dsp233a.jpg) Proposals** 

---

| | | | | |
|:---|:---|:---|:---|:---|
|  |  | FOR | AGAINST | ABSTAIN |
| <br> 1c. | <br> The common shareholders and holders of Variable Rate Demand Preferred Shares ("VRDP Shares" and the holders thereof, "VRDP Holders") of MIY are being asked to vote as a single class on a proposal to approve an Agreement and Plan of Reorganization between MIY and BlackRock MuniYield Quality Fund III, Inc. (the "Acquiring Fund") and the transactions contemplated therein, including (i) the acquisition by the Acquiring Fund of substantially all of MIY's assets and the assumption by the Acquiring Fund of substantially all of MIY's liabilities in exchange solely for newly issued common shares and VRDP Shares of the Acquiring Fund, which will be distributed to the common shareholders (although cash may be distributed in lieu of fractional common shares) and VRDP Holders, respectively, of MIY, and which shall constitute the sole consideration to be distributed or paid to the common shareholders (although cash may be distributed in lieu of fractional common shares) and the VRDP Holders in respect of their common shares and VRDP Shares, respectively, and (ii) the termination by MIY of its registration under the Investment Company Act of 1940, as amended, and the liquidation, dissolution and termination of MIY in accordance with its charter and Maryland law. | ☐ | ☐ | ☐ |
|  |  | FOR | AGAINST | ABSTAIN |
| <br> 1d. | <br> The VRDP Holders of MIY are being asked to vote as a separate class on a proposal to approve the MIY Reorganization Agreement and the MIY Reorganization. | ☐ | ☐ | ☐ |

---

To transact such other business as may properly come before the Joint Special Meeting and any adjournments, postponements or delays thereof.

**Important Notice Regarding the Availability of Proxy Materials for the** 

**Joint Special Meeting of Shareholders on October 15, 2025.** 

**The Joint Proxy Statement/Prospectus and Proxy card for this meeting are available at:** 

**<u>https://www.proxy-direct.com/blk-34668</u>** 

 **![LOGO](g12999dsp233b.jpg) Authorized Signatures — This section must be completed for your vote to be counted. — Sign and Date Below** 

---

| | |
|:---|:---|
| **Note**: | Please sign exactly as your name(s) appear(s) on this Proxy Card, and date it. When shares are held jointly, each holder should sign. When signing as attorney, executor, guardian, administrator, trustee, officer of corporation or other entity or in another representative capacity, please give the full title under the signature.  |

---

---

| | | |
|:---|:---|:---|
| **Date (mm/dd/yyyy) – Please print date below** | **Signature 1 – Please keep signature within the box** | **Signature 2 – Please keep signature within the box** |
| &nbsp;&nbsp;/ / | | |

---

Scanner bar code <br> xxxxxxxxxxxxxx MIY 2 34668 xxxxxxxx

------

##### [**Table of Contents**](#toc)

---

| | | |
|:---|:---|:---|
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **BlackRock MuniVest Fund, Inc.**<br> **PO Box 43131**<br> **Providence, RI 02940-3131** | **EVERY VOTE IS IMPORTANT** | **EVERY VOTE IS IMPORTANT** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **BlackRock MuniVest Fund, Inc.**<br> **PO Box 43131**<br> **Providence, RI 02940-3131** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **BlackRock MuniVest Fund, Inc.**<br> **PO Box 43131**<br> **Providence, RI 02940-3131** |  |  |
|  |  | MAIL |
|  | ![LOGO](g12999g0807125004630.jpg) | Vote, Sign and Mail in the |
|  | ![LOGO](g12999g0807125004630.jpg) | enclosed Business Reply Envelope |

---

![LOGO](g12999dsp232.jpg)

---

| | |
|:---|:---|
| **PROXY** | **BLACKROCK MUNIVEST FUND, INC.**<br> **JOINT SPECIAL MEETING OF SHAREHOLDERS**<br> **TO BE HELD ON OCTOBER 15, 2025**<br> **PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS** |

---

**PREFERRED SHARES** 

The undersigned hereby appoints John M. Perlowski and Jay M. Fife, and each of them, as proxies, each with the power to appoint his substitute, and hereby authorizes them to represent and to vote, as designated on the reverse side hereof, all of the shares of BlackRock MuniVest Fund, Inc., a Maryland corporation ("MVF"), that the undersigned is entitled to vote at the Joint Special Meeting of Shareholders of the Fund to be held on October 15, 2025, at [•] a.m. (Eastern Time) (the "Joint Special Meeting"), and any adjournment(s) or postponement(s) thereof, to cast on behalf of the undersigned all votes that the undersigned is entitled to cast at the Joint Special Meeting and otherwise to represent the undersigned at the Joint Special Meeting with all powers possessed by the undersigned as if personally present at the Joint Special Meeting. The Joint Special Meeting will be held in a virtual meeting format only, at the following Website: **<u>https://meetnow.global/MUUJ79Z</u>**. To attend and participate in the virtual Joint Special Meeting, enter the 14-digit control number from the shaded box on this card. The validity of this proxy is governed by Maryland law. This proxy does not revoke any prior powers of attorney except for prior proxies given in connection with the Joint Special Meeting. The undersigned hereby acknowledges receipt of the Joint Proxy Statement/Prospectus, the terms of which are incorporated herein by reference, and revokes any proxy heretofore given with respect to the Joint Special Meeting.

**THIS PROXY, IF PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED "FOR" THE PROPOSALS. IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH OTHER BUSINESS AS MAY PROPERLY BE PRESENTED AT THE JOINT SPECIAL MEETING AND ANY ADJOURNMENTS OR POSTPONEMENTS THEREOF.** 

**MVF_34668_071425_Pref** 

**PLEASE MARK, SIGN AND DATE THIS PROXY CARD ON THE REVERSE SIDE AND RETURN IT PROMPTLY USING THE ENCLOSED ENVELOPE.** 

xxxxxxxxxxxxxx   <u>code</u>

------

##### [**Table of Contents**](#toc)
**THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD. THE BOARD RECOMMENDS VOTING "FOR" THE PROPOSALS.** 

**TO VOTE MARK BLOCKS BELOW IN BLUE OR BLACK INK AS SHOWN IN THIS EXAMPLE:**☒

 **![LOGO](g12999dsp233a.jpg) Proposals** 

---

| | | | | |
|:---|:---|:---|:---|:---|
|  |  | FOR | AGAINST | ABSTAIN |
| <br> 1e. | <br> The common shareholders and holders of Variable Rate Muni Term Preferred Shares ("VMTP Shares" and the holders thereof, "VMTP Holders") of MVF are being asked to vote as a single class on a proposal to approve an Agreement and Plan of Reorganization between MVF and BlackRock MuniYield Quality Fund III, Inc. (the "Acquiring Fund") and the transactions contemplated therein, including (i) the acquisition by the Acquiring Fund of substantially all of MVF's assets and the assumption by the Acquiring Fund of substantially all of MVF's liabilities in exchange solely for newly issued common shares and Variable Rate Demand Preferred Shares ("VRDP Shares") of the Acquiring Fund, which will be distributed to the common shareholders (although cash may be distributed in lieu of fractional common shares) and VMTP Holders, respectively, of MVF, and which shall constitute the sole consideration to be distributed or paid to the common shareholders (although cash may be distributed in lieu of fractional common shares) and the VMTP Holders in respect of their common shares and VMTP Shares, respectively, and (ii) the termination by MVF of its registration under the Investment Company Act of 1940, as amended, and the liquidation, dissolution and termination of MVF in accordance with its charter and Maryland law. | ☐ | ☐ | ☐ |
|  |  | FOR | AGAINST | ABSTAIN |
| <br> 1f. | <br> The VMTP Holders of MVF are being asked to vote as a separate class on a proposal to approve the MVF Reorganization Agreement and the MVF Reorganization. | ☐ | ☐ | ☐ |

---

To transact such other business as may properly come before the Joint Special Meeting and any adjournments, postponements or delays thereof.

**Important Notice Regarding the Availability of Proxy Materials for the** 

**Joint Special Meeting of Shareholders on October 15, 2025.** 

**The Joint Proxy Statement/Prospectus and Proxy card for this meeting are available at:** 

**<u>https://www.proxy-direct.com/blk-34668</u>** 

 **![LOGO](g12999dsp233b.jpg) Authorized Signatures — This section must be completed for your vote to be counted. — Sign and Date Below** 

---

| | |
|:---|:---|
| **Note**: | Please sign exactly as your name(s) appear(s) on this Proxy Card, and date it. When shares are held jointly, each holder should sign. When signing as attorney, executor, guardian, administrator, trustee, officer of corporation or other entity or in another representative capacity, please give the full title under the signature.  |

---

---

| | | |
|:---|:---|:---|
| **Date (mm/dd/yyyy) – Please print date below** | **Signature 1 – Please keep signature within the box** | **Signature 2 – Please keep signature within the box** |
| &nbsp;&nbsp;/ / | | |

---

Scanner bar code <br> xxxxxxxxxxxxxx MVF 2 34668 xxxxxxxx

------

##### [**Table of Contents**](#toc)

---

| | | |
|:---|:---|:---|
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **BlackRock MuniVest Fund II, Inc.**<br> **PO Box 43131**<br> **Providence, RI 02940-3131** | **EVERY VOTE IS IMPORTANT** | **EVERY VOTE IS IMPORTANT** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **BlackRock MuniVest Fund II, Inc.**<br> **PO Box 43131**<br> **Providence, RI 02940-3131** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **BlackRock MuniVest Fund II, Inc.**<br> **PO Box 43131**<br> **Providence, RI 02940-3131** |  |  |
|  |  | MAIL |
|  | ![LOGO](g12999g0807125004630.jpg) | Vote, Sign and Mail in the |
|  | ![LOGO](g12999g0807125004630.jpg) | enclosed Business Reply Envelope |

---

![LOGO](g12999dsp232.jpg)

---

| | |
|:---|:---|
| **PROXY** | **BLACKROCK MUNIVEST FUND II, INC.**<br> **JOINT SPECIAL MEETING OF SHAREHOLDERS**<br> **TO BE HELD ON OCTOBER 15, 2025**<br> **PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS** |

---

**PREFERRED SHARES** 

The undersigned hereby appoints John M. Perlowski and Jay M. Fife, and each of them, as proxies, each with the power to appoint his substitute, and hereby authorizes them to represent and to vote, as designated on the reverse side hereof, all of the shares of BlackRock MuniVest Fund II, Inc., a Maryland corporation ("MVT"), that the undersigned is entitled to vote at the Joint Special Meeting of Shareholders of the Fund to be held on October 15, 2025, at [•] a.m. (Eastern Time) (the "Joint Special Meeting"), and any adjournment(s) or postponement(s) thereof, to cast on behalf of the undersigned all votes that the undersigned is entitled to cast at the Joint Special Meeting and otherwise to represent the undersigned at the Joint Special Meeting with all powers possessed by the undersigned as if personally present at the Joint Special Meeting. The Joint Special Meeting will be held in a virtual meeting format only, at the following Website: **<u>https://meetnow.global/MUUJ79Z</u>**. To attend and participate in the virtual Joint Special Meeting, enter the 14-digit control number from the shaded box on this card. The validity of this proxy is governed by Maryland law. This proxy does not revoke any prior powers of attorney except for prior proxies given in connection with the Joint Special Meeting. The undersigned hereby acknowledges receipt of the Joint Proxy Statement/Prospectus, the terms of which are incorporated herein by reference, and revokes any proxy heretofore given with respect to the Joint Special Meeting.

**THIS PROXY, IF PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED "FOR" THE PROPOSALS. IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH OTHER BUSINESS AS MAY PROPERLY BE PRESENTED AT THE JOINT SPECIAL MEETING AND ANY ADJOURNMENTS OR POSTPONEMENTS THEREOF.** 

**MVT_34668_071425_Pref** 

**PLEASE MARK, SIGN AND DATE THIS PROXY CARD ON THE REVERSE SIDE AND RETURN IT PROMPTLY USING THE ENCLOSED ENVELOPE.** 

xxxxxxxxxxxxxx   <u>code</u>

------

##### [**Table of Contents**](#toc)
**THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD. THE BOARD RECOMMENDS VOTING "FOR" THE PROPOSALS.** 

**TO VOTE MARK BLOCKS BELOW IN BLUE OR BLACK INK AS SHOWN IN THIS EXAMPLE:**☒

 **![LOGO](g12999dsp233a.jpg) Proposals** 

---

| | | | | |
|:---|:---|:---|:---|:---|
|  |  | FOR | AGAINST | ABSTAIN |
| <br> 1a. | <br> The common shareholders and holders of Variable Rate Muni Term Preferred Shares ("VMTP Shares" and the holders thereof, "VMTP Holders") of MVT are being asked to vote as a single class on a proposal to approve an Agreement and Plan of Reorganization between MVT and BlackRock MuniYield Quality Fund III, Inc. (the "Acquiring Fund") (the "MVT Reorganization Agreement") and the transactions contemplated therein, including (i) the acquisition by the Acquiring Fund of substantially all of MVT's assets and the assumption by the Acquiring Fund of substantially all of MVT's liabilities in exchange solely for newly issued common shares and Variable Rate Demand Preferred Shares ("VRDP Shares" and the holders thereof, "VRDP Holders") of the Acquiring Fund, which will be distributed to the common shareholders (although cash may be distributed in lieu of fractional common shares) and VMTP Holders, respectively, of MVT, and which shall constitute the sole consideration to be distributed or paid to the common shareholders (although cash may be distributed in lieu of fractional common shares) and the VMTP Holders in respect of their common shares and VMTP Shares, respectively, and (ii) the termination by MVT of its registration under the Investment Company Act of 1940, as amended, and the liquidation, dissolution and termination of MVT in accordance with its charter and Maryland law. | ☐ | ☐ | ☐ |
|  |  | FOR | AGAINST | ABSTAIN |
| <br> 1b. | <br> The VMTP Holders of MVT are being asked to vote as a separate class on a proposal to approve the MVT Reorganization Agreement and the MVT Reorganization. | ☐ | ☐ | ☐ |

---

To transact such other business as may properly come before the Joint Special Meeting and any adjournments, postponements or delays thereof.

**Important Notice Regarding the Availability of Proxy Materials for the** 

**Joint Special Meeting of Shareholders on October 15, 2025.** 

**The Joint Proxy Statement/Prospectus and Proxy card for this meeting are available at:** 

**<u>https://www.proxy-direct.com/blk-34668</u>** 

 **![LOGO](g12999dsp233b.jpg) Authorized Signatures — This section must be completed for your vote to be counted. — Sign and Date Below** 

---

| | |
|:---|:---|
| **Note**: | Please sign exactly as your name(s) appear(s) on this Proxy Card, and date it. When shares are held jointly, each holder should sign. When signing as attorney, executor, guardian, administrator, trustee, officer of corporation or other entity or in another representative capacity, please give the full title under the signature.  |

---

---

| | | |
|:---|:---|:---|
| **Date (mm/dd/yyyy) – Please print date below** | **Signature 1 – Please keep signature within the box** | **Signature 2 – Please keep signature within the box** |
| &nbsp;&nbsp;/ / | | |

---

Scanner bar code <br> xxxxxxxxxxxxxx MVT 2 34668 xxxxxxxx