UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM N-Q

 

QUARTERLY SCHEDULE OF PORTFOLIO HOLDINGS OF REGISTERED MANAGEMENT INVESTMENT COMPANY

 

 

Investment Company Act file number 811-06540

 

Name of Fund: BlackRock MuniYield Quality Fund III, Inc. (MYI)

 

Fund Address: 100 Bellevue Parkway, Wilmington, DE 19809

 

Name and address of agent for service: John M. Perlowski, Chief Executive Officer, BlackRock MuniYield Quality Fund III, Inc., 55 East 52nd Street, New York, NY 10055

 

Registrant’s telephone number, including area code: (800) 882-0052, Option 4

 

Date of fiscal year end: 07/31/2013

 

Date of reporting period: 10/31/2012

 

Item 1 – Schedule of Investments

 

  
 
Schedule of Investments October 31, 2012 (Unaudited)

BlackRock MuniYield Quality Fund III, Inc. (MYI)

(Percentages shown are based on Net Assets)

 

    Par
(000)		   Value  
Municipal Bonds  
 
Alabama — 0.4%  
Birmingham Special Care Facilities Financing Authority, RB, Children's Hospital (AGC), 6.00%, 6/01/39 $ 3,605 $ 4,287,282  
 
Alaska — 2.0%  
Alaska Housing Finance Corp., RB, General Housing, Series B (NPFGC), 5.25%, 12/01/30   2,000   2,092,720  
Alaska Housing Finance Corp., Refunding RB, General Mortgage Revenue Bonds, Series A, 4.13%, 12/01/37   3,455   3,532,668  
Alaska Industrial Development & Export Authority, RB, Providence Health Services, Series A, 5.50%, 10/01/41   2,690   3,114,563  
Borough of Matanuska-Susitna Alaska, RB, Goose Creek Correctional Center (AGC), 6.00%, 9/01/28   10,150   12,304,439  
 
  21,044,390  
 
Arizona — 0.5%  
Maricopa County & Phoenix Industrial Development Authorities, Refunding RB, S/F, Series A-2, AMT (Ginnie Mae), 5.80%, 7/01/40   770   793,485  
State of Arizona, COP, Department of Administration, Series A (AGM), 5.00%, 10/01/27   3,725   4,200,757  
 
  4,994,242  
 
California — 14.0%  
Alameda Corridor Transportation Authority, Refunding RB, CAB, Subordinate Lien, Series A (AMBAC), 5.40%, 10/01/24 (a)   10,000   11,235,100  
California Health Facilities Financing Authority, RB:  
  Saint Joseph Health System, Series A, 5.75%, 7/01/39   1,550   1,790,560  
  Sutter Health, Series B, 5.88%, 8/15/31   3,200   3,861,792  
California HFA, RB, Home Mortgage, Series K, AMT, 5.50%, 2/01/42   3,340   3,458,269  
California State University, RB, Systemwide, Series A:  
  5.50%, 11/01/39   1,525   1,748,626  
  (NPFGC), 5.00%, 5/01/13 (b)   9,865   10,100,478  
California State University, Refunding RB, Systemwide, Series A (AGM), 5.00%, 11/01/37   3,545   4,037,152  
California Statewide Communities Development Authority, RB:  
  Kaiser Permanente, Series A, 5.00%, 4/01/42   4,030   4,463,547  
  Saint Joseph Health System, Series E (AGM), 5.25%, 7/01/47   4,000   4,439,760  
           
    Par
(000)		   Value  
Municipal Bonds  
 
California (continued)  
City of Redding California, COP, Refunding, Series A (AGM), 5.00%, 6/01/30 $ 1,900 $ 2,107,366  
City of San Jose California, Refunding ARB, AMT:  
  Series A (AMBAC), 5.50%, 3/01/32   11,965   12,854,119  
  Series A-1, 5.75%, 3/01/34   2,300   2,660,341  
Coast Community College District, GO, Refunding, Election of 2002, Series C (AGM), 5.41%, 8/01/33 (c)   8,100   2,674,539  
County of Sacramento California, RB, Senior Series A (AGM), 5.00%, 7/01/41   12,500   13,596,250  
Dublin Unified School District California, GO, CAB, Election of 2004, Series D, 6.03%, 8/01/34 (c)   5,000   1,377,400  
Fairfield-Suisun Unified School District California, GO, Election of 2002 (NPFGC), 5.50%, 8/01/14 (b)   5,800   6,232,622  
Grossmont Union High School District, GO, CAB, Election of 2004, 4.68%, 8/01/31 (c)   5,110   2,146,456  
Long Beach Unified School District, GO, Election of 2008, Series B, 4.93%, 8/01/34 (c)   5,000   1,735,450  
Los Angeles Community College District California, GO, Election of 2001, Series A (AGM), 5.00%, 8/01/32   1,200   1,364,856  
Norwalk-La Mirada Unified School District California, GO, CAB, Refunding, Election of 2002, Series E (AGC), 5.06%, 8/01/38 (c)   7,620   2,107,159  
Oceanside Unified School District California, GO, Series A (AGC), 5.25%, 8/01/33   2,500   2,806,150  
Port of Oakland, Refunding RB, Series M (NPFGC), 5.38%, 11/01/27   8,030   8,030,000  
Poway Unified School District, GO, Refunding, CAB (c):  
  School Facilities Improvement, 4.80%, 8/01/35   7,820   2,656,610  
  School Facilities Improvement, Election of 2008, Series B, 4.82%, 8/01/36   10,000   3,226,500  
Rio Hondo Community College District California, GO, CAB, Election of 2004, Series C (c):  
  4.89%, 8/01/37   8,000   2,418,960  
  4.91%, 8/01/38   12,940   3,709,380  
San Bernardino Community College District, GO, Election of 2002, Series C (AGM), 5.00%, 8/01/31   2,165   2,401,158  
San Diego Unified School District California, GO, Refunding, CAB,  Series R-1, 4.68%, 7/01/31 (c)   3,485   1,469,520  
                     
BLACKROCK MUNIYIELD QUALITY FUND III, INC.OCTOBER 31, 2012                    1
 
Schedule of Investments (continued)

BlackRock MuniYield Quality Fund III, Inc. (MYI)

(Percentages shown are based on Net Assets)

 

    Par
(000)		   Value  
Municipal Bonds  
 
California (concluded)  
San Joaquin County Transportation Authority, Refunding RB, Limited Tax, Measure K, Series A, 6.00%, 3/01/36 $ 1,830 $ 2,244,166  
San Marcos Unified School District, GO, Election of 2010, Series A:  
  5.00%, 8/01/34   1,800   2,042,550  
  5.00%, 8/01/38   1,600   1,797,424  
State of California, GO:  
  5.50%, 3/01/40   1,020   1,177,264  
  Series 2007-2 (NPFGC), 5.50%, 4/01/30   10   10,540  
  Various Purpose, 5.00%, 4/01/42   2,000   2,218,520  
State of California, GO, Refunding:  
  5.00%, 2/01/38   4,000   4,447,040  
  5.00%, 10/01/41   2,555   2,823,633  
  Various Purpose, 5.00%, 9/01/41   2,700   2,981,556  
Walnut Valley Unified School District, GO, CAB, Election of 2007, Series B, 4.96%, 8/01/36 (c)   6,545   2,045,313  
West Valley-Mission Community College District, GO, Refunding, Election of 2004, Series A (AGM), 5.00%, 8/01/30   3,600   4,031,460  
 
  146,529,586  
 
Florida — 14.5%  
Broward County School Board Florida, COP, Series A (AGM), 5.25%, 7/01/33   13,100   14,850,160  
Broward County Water & Sewer Utility, Refunding RB, Series A, 5.25%, 10/01/34   2,250   2,700,563  
City of Jacksonville, Refunding RB, Transportation, Series A, 5.00%, 10/01/30   770   896,919  
Collier County School Board, COP (AGM), 5.00%, 2/15/23   5,000   5,623,000  
County of Lee Florida, Refunding RB, Series A, AMT:  
  5.63%, 10/01/26   2,600   2,961,998  
  5.38%, 10/01/32   3,440   3,802,163  
County of Miami-Dade Florida, GO, Building Better Communities Program:  
  Series B, 6.38%, 7/01/28   6,000   7,217,580  
  Series B-1, 5.75%, 7/01/33   3,700   4,342,209  
County of Miami-Dade Florida, RB, Water & Sewer System (AGM), 5.00%, 10/01/39   11,700   13,101,426  
County of Miami-Dade Florida, Refunding RB:  
  Miami International Airport AMT (AGC), 5.00%, 10/01/40   11,000   11,596,640  
  Miami International Airport AMT (NPFGC), 5.38%, 10/01/25   7,500   7,515,525  
           
    Par
(000)		   Value  
Municipal Bonds  
 
Florida (concluded)  
County of Miami-Dade Florida, Refunding RB (concluded):  
  Miami International Airport, AMT (NPFGC), 5.38%, 10/01/27 $ 1,000 $ 1,001,820  
  Miami International Airport, Series A, AMT (AGM), 5.50%, 10/01/41 19,020   20,770,981  
  Series C (BHAC), 6.00%, 10/01/23   20,095   24,892,681  
  Special Obligation, Series B, 5.00%, 10/01/35 (d)   2,520   2,798,636  
  Special Obligation, Series B, 5.00%, 10/01/37 (d)   1,940   2,152,799  
  Transit System Sales Surtax (AGM), 5.00%, 7/01/35   2,800   3,060,708  
Highlands County Health Facilities Authority, RB, Adventist Health System/Sunbelt, Series B, 6.00%, 11/15/37 (e)   1,750   2,054,203  
Orange County School Board, COP, Series A (AGC), 5.50%, 8/01/34   12,000   13,883,760  
Sarasota County Public Hospital District, RB, Sarasota Memorial Hospital Project, Series A, 5.63%, 7/01/39   5,135   5,707,604  
 
  150,931,375  
 
Georgia — 1.7%  
Burke County Development Authority, Refunding RB, Oglethorpe Power Corp., Vogtle Project, Series C, 5.70%, 1/01/43   6,450   7,026,566  
City of Atlanta Georgia, Refunding RB, General, Series B (AGM), 5.25%, 1/01/33   10,000   10,596,000  
 
  17,622,566  
 
Illinois — 17.6%  
Chicago Illinois Board of Education, GO, Series A, 5.50%, 12/01/39   6,470   7,573,588  
Chicago Illinois Transit Authority, RB, Sales Tax Receipts, 5.25%, 12/01/36   1,620   1,859,290  
Chicago Park District, GO, Harbor Facilities, Series C:  
  5.25%, 1/01/37   4,000   4,572,680  
  5.25%, 1/01/40   1,505   1,719,312  
City of Chicago Illinois, ARB:  
  O'Hare International Airport, General Third Lien, Series A, 5.75%, 1/01/39   9,000   10,623,330  
  O'Hare International Airport, General, Third Lien, Series B-2 AMT (NPFGC), 5.25%, 1/01/27   10,000   10,278,900  
  O'Hare International Airport, Third Lien, Series B-2 AMT (NPFGC), 6.00%, 1/01/27   26,230   27,558,025  
City of Chicago Illinois, GO, CAB, City Colleges (NPFGC) (c):  
  4.56%, 1/01/29   4,000   1,929,720  
                     
BLACKROCK MUNIYIELD QUALITY FUND III, INC.OCTOBER 31, 2012                    2
 
Schedule of Investments (continued)

BlackRock MuniYield Quality Fund III, Inc. (MYI)

(Percentages shown are based on Net Assets)

 

    Par
(000)		   Value  
Municipal Bonds  
 
Illinois (concluded)  
City of Chicago Illinois, GO, CAB, City Colleges (NPFGC) (c) (concluded):  
  4.79%, 1/01/33 $ 7,950 $ 3,060,511  
City of Chicago Illinois, Refunding ARB, O'Hare International Airport, General, Third Lien, Series C-2, AMT (AGM), 5.25%, 1/01/30   16,400   16,754,732  
City of Chicago Illinois, Refunding RB, Water System, Second Lien, Series A (AMBAC), 5.00%, 11/01/36   3,500   3,892,525  
Cook County Forest Preserve District, GO, Series C, 5.00%, 12/15/37   890   1,006,777  
Cook County Forest Preserve District, GO, Refunding, Limited Tax Project, Series B, 5.00%, 12/15/37   775   876,688  
Illinois Finance Authority, RB, Series A, 5.75%, 8/15/34   8,700   10,336,122  
Illinois Finance Authority, Refunding RB, Northwestern Memorial Hospital, Series A, 6.00%, 8/15/39   5,250   6,171,847  
Illinois Municipal Electric Agency, RB, Series A (NPFGC):  
  5.00%, 2/01/35   17,935   19,200,135  
  5.25%, 2/01/35   15,000   16,205,850  
Illinois State Toll Highway Authority, RB, Series B:  
  5.50%, 1/01/33   4,000   4,497,800  
  (BHAC), 5.50%, 1/01/33   2,000   2,268,300  
Kane, Kendall, Etc. Counties Community College District No. 516 Illinois, GO, CAB, Series E (NPFGC), 4.90%, 12/15/25 (c)   5,000   2,649,850  
Metropolitan Pier & Exposition Authority, RB, CAB, McCormick Place Expansion Project, Series A (NPFGC) (c):  
  4.25%, 12/15/26   9,600   5,300,832  
  4.65%, 6/15/32   14,000   5,680,640  
  4.78%, 12/15/34   41,880   14,728,777  
Metropolitan Pier & Exposition Authority, Refunding RB, CAB, McCormick Place Expansion Project, Series B (AGM), 5.11%, 6/15/44 (c)   9,430   1,912,310  
Railsplitter Tobacco Settlement Authority, RB, 6.00%, 6/01/28   1,700   2,018,240  
Regional Transportation Authority, RB, Series C (NPFGC), 7.75%, 6/01/20   1,000   1,241,340  
 
  183,918,121  
 
Indiana — 2.9%  
City of Indianapolis Indiana, Refunding RB, Second Lien, Series B (AGC), 5.25%, 8/15/27   5,000   5,597,400  
Indiana Finance Authority, RB, Wastewater Utility, 5.25%, 10/01/38   2,900   3,324,009  
           
    Par
(000)		   Value  
Municipal Bonds  
 
Indiana (concluded)  
Indiana Municipal Power Agency, RB:  
  Series A (NPFGC), 5.00%, 1/01/37 $ 3,850 $ 4,165,007  
  Series B, 5.75%, 1/01/34   1,050   1,104,789  
  Series B, 6.00%, 1/01/39   5,000   6,049,750  
Indianapolis Local Public Improvement Bond Bank, Refunding RB, Waterworks Project, Series A:  
  5.75%, 1/01/38   2,900   3,315,976  
  (AGC), 5.25%, 1/01/29   1,350   1,531,170  
  (AGC), 5.50%, 1/01/38   4,250   4,828,552  
 
  29,916,653  
 
Iowa — 3.3%  
Iowa Finance Authority, RB, Series A (AGC), 5.63%, 8/15/37   12,650   14,400,380  
Iowa Student Loan Liquidity Corp., RB, Senior Series A-2, AMT:  
  5.60%, 12/01/26   4,530   5,131,720  
  5.70%, 12/01/27   4,530   5,138,470  
  5.75%, 12/01/28   2,400   2,713,704  
  5.80%, 12/01/29   3,060   3,461,227  
  5.85%, 12/01/30   3,170   3,578,518  
 
  34,424,019  
 
Kentucky — 1.0%  
Kentucky State Property & Buildings Commission, Refunding RB, Project No. 93 (AGC), 5.25%, 2/01/28   4,000   4,727,680  
Louisville & Jefferson County Metropolitan Sewer District Kentucky, RB, Series A (NPFGC), 5.25%, 5/15/37   5,000   5,350,000  
 
  10,077,680  
 
Louisiana — 1.1%  
New Orleans Aviation Board Louisiana, RB, New Orleans Aviation, Series A, AMT (AGM), 5.25%, 1/01/32   6,405   6,927,136  
Parish of Saint Charles Louisiana Gulf Opportunity Zone, RB, Valero Energy Corp. Project, 4.00%, 12/01/40 (e)   4,270   4,686,709  
 
  11,613,845  
 
Maine — 0.1%  
Maine State Housing Authority, Refunding RB, Series B-1, AMT, 4.00%, 11/15/27   920   955,834  
 
Massachusetts — 3.7%  
Massachusetts HFA, RB:  
  S/F Housing, Series 128 AMT (AGM), 4.88%, 12/01/38 (e)   10,760   11,082,477  
  Series B, 7.00%, 12/01/38   3,150   3,631,793  
Massachusetts HFA, Refunding RB, AMT:  
  Rental Housing, Series A (AGM), 5.15%, 7/01/26   12,005   12,143,778  
                       
BLACKROCK MUNIYIELD QUALITY FUND III, INC.OCTOBER 31, 2012                    3
 
Schedule of Investments (continued)

BlackRock MuniYield Quality Fund III, Inc. (MYI)

(Percentages shown are based on Net Assets)

 

    Par
(000)		   Value  
Municipal Bonds  
 
Massachusetts (concluded)  
Massachusetts HFA, Refunding RB, AMT (concluded):  
  Series C, 5.35%, 12/01/42 $ 3,100 $ 3,336,995  
Massachusetts Port Authority, Refunding RB, BOSFUEL Project, AMT (NPFGC), 5.00%, 7/01/38   8,275   8,559,494  
 
  38,754,537  
 
Michigan — 7.0%  
City of Detroit Michigan, RB, Series B (AGM):  
  Second Lien, 6.25%, 7/01/36   1,075   1,255,622  
  Second Lien, 7.00%, 7/01/36   500   607,200  
  Senior Lien, 7.50%, 7/01/33   1,000   1,254,200  
City of Detroit Michigan, Refunding RB:  
  Senior Lien, Series C-1 (AGM), 7.00%, 7/01/27   1,500   1,836,660  
  Senior Lien, Series D (AGM), 5.00%, 7/01/23   5,000   5,371,600  
  Series D (NPFGC), 5.00%, 7/01/33   5,000   5,234,700  
Lansing Board of Water & Light Utilities, RB, Series A, 5.50%, 7/01/41   3,185   3,783,207  
Michigan State Building Authority, Refunding RB, Facilities Program:  
  Series I, 6.25%, 10/15/38   3,125   3,657,437  
  Series I (AGC), 5.25%, 10/15/24   1,750   2,104,043  
  Series I (AGC), 5.25%, 10/15/25   3,250   3,921,287  
  Series I-A, 5.38%, 10/15/36   2,075   2,406,461  
  Series II-A, 5.38%, 10/15/41   1,900   2,193,949  
  Series II-A (AGM), 5.25%, 10/15/36   8,040   9,267,145  
Michigan State HDA, RB, Series C, 5.50%, 12/01/28   2,735   2,976,719  
Michigan Strategic Fund, Refunding RB, Detroit Edison Co. Project, Series A, Series A (Syncora), 5.50%, 6/01/30   2,500   2,536,100  
State of Michigan, RB, GAB (AGM):  
  5.25%, 9/15/22   10,000   11,475,600  
  5.25%, 9/15/26   6,650   7,407,834  
Wayne County Airport Authority, Refunding RB, AMT (AGC), 5.38%, 12/01/32   5,000   5,344,150  
 
  72,633,914  
 
Minnesota — 0.6%  
City of Minneapolis Minnesota, Refunding RB, Fairview Health Services, Series B (AGC), 6.50%, 11/15/38   5,500   6,792,830  
 
Mississippi — 0.2%  
Medical Center Educational Building Corp., RB, University of Mississippi Medical Center Facilities and Expansion and Renovation Project, Series A, 5.00%, 6/01/41   2,000   2,275,580  
 
           
    Par
(000)		   Value  
Municipal Bonds  
 
Nebraska — 0.3%  
Central Plains Energy Project Nebraska, RB, Gas Project No. 3, 5.25%, 9/01/37 $ 2,825 $ 3,098,093  
 
Nevada — 2.7%  
City of Las Vegas Nevada, GO, Limited Tax, Performing Arts Center, 6.00%, 4/01/34   2,250   2,649,892  
County of Clark Nevada, ARB:  
  Las Vegas-McCarran International Airport, Series A (AGC), 5.25%, 7/01/39   5,170   5,826,073  
  Subordinate Lien, Series A-2 (NPFGC), 5.00%, 7/01/30   19,250   20,188,245  
 
  28,664,210  
 
New Jersey — 4.8%  
New Jersey EDA, RB, Cigarette Tax, 5.75%, 6/15/14 (b)   4,000   4,351,360  
New Jersey EDA, Refunding RB, School Facilities Construction, Series N-1:  
  (AMBAC), 5.50%, 9/01/24   6,500   8,282,170  
  (NPFGC), 5.50%, 9/01/28   1,685   2,192,859  
New Jersey Higher Education Student Assistance Authority, Refunding RB, Series 1, AMT:  
  5.50%, 12/01/25   1,250   1,453,887  
  5.50%, 12/01/26   1,800   2,075,472  
  5.75%, 12/01/28   200   232,384  
  5.88%, 12/01/33   6,895   7,874,090  
New Jersey Transportation Trust Fund Authority, RB, Transportation System:  
  CAB, Series A, 4.61%, 12/15/35 (c)   18,525   6,454,295  
  CAB, Series C (AGC), 3.94%, 12/15/25 (c)   10,000   5,994,000  
  Series A (NPFGC), 5.75%, 6/15/25   4,000   5,171,280  
  Series B, 5.25%, 6/15/36   4,970   5,744,376  
 
  49,826,173  
 
New York — 3.2%  
City of New York New York, GO, Series J, 5.25%, 5/15/14 (b)   10,000   10,753,000  
Hudson New York Yards Infrastructure Corp., RB, 5.75%, 2/15/47   1,920   2,266,906  
New York City Transitional Finance Authority, RB, Fiscal 2009, Series S-4, 5.50%, 1/15/34   7,250   8,429,357  
New York State Dormitory Authority, ERB, Series B, 5.25%, 3/15/38   3,250   3,922,978  
New York State Thruway Authority, Refunding RB, Series I, 5.00%, 1/01/37   3,210   3,657,570  
                     
BLACKROCK MUNIYIELD QUALITY FUND III, INC.OCTOBER 31, 2012                    4
 
Schedule of Investments (continued)

BlackRock MuniYield Quality Fund III, Inc. (MYI)

(Percentages shown are based on Net Assets)

 

    Par
(000)		   Value  
Municipal Bonds  
 
New York (concluded)  
Port Authority of New York & New Jersey, Refunding RB, Consolidated 172nd Series, AMT, 4.50%, 4/01/37 $ 3,970 $ 4,289,347  
 
  33,319,158  
 
North Carolina — 0.2%  
North Carolina Medical Care Commission, RB, Novant Health Obligation, Series A, 4.75%, 11/01/43   2,075   2,218,756  
 
Ohio — 0.6%  
County of Allen Ohio, Refunding RB, Catholic HealthCare Partners, Series A, 5.00%, 5/01/42   2,030   2,226,139  
County of Lucas Ohio, Refunding RB, Promedica Healthcare, Series A, 6.50%, 11/15/37   3,000   3,752,970  
 
  5,979,109  
 
Pennsylvania — 2.6%  
Pennsylvania Turnpike Commission, RB:  
  Series A (AMBAC), 5.50%, 12/01/31   15,600   16,907,904  
  Subordinate, Special Motor License Fund, 6.00%, 12/01/36   2,575   3,169,413  
Pennsylvania Turnpike Commission, Refunding RB, Sub-Series C (AGC), 6.25%, 6/01/38   5,695   6,911,053  
 
  26,988,370  
 
Puerto Rico — 3.0%  
Puerto Rico Sales Tax Financing Corp., RB, First Sub-Series A:  
  5.75%, 8/01/37   2,000   2,208,860  
  6.38%, 8/01/39   10,195   11,783,789  
  5.50%, 8/01/42   5,155   5,500,076  
Puerto Rico Sales Tax Financing Corp., Refunding RB:  
  CAB, Series A (NPFGC), 5.58%, 8/01/41 (c)   7,500   1,540,125  
  CAB, Series A (NPFGC), 5.60%, 8/01/42 (c)   3,190   617,520  
  CAB, Series C, 5.44%, 8/01/38 (c)   9,400   2,359,870  
  CAB, Series C, 5.45%, 8/01/39 (c)   24,000   5,695,680  
  First Sub-Series C, 6.00%, 8/01/39   1,180   1,320,833  
 
  31,026,753  
 
South Carolina — 0.4%  
South Carolina Jobs-EDA, Refunding RB, Palmetto Health, Series A (AGM), 6.50%, 8/01/39   3,600   4,429,080  
 
           
    Par
(000)		   Value  
Municipal Bonds  
 
Tennessee — 0.1%  
Memphis Center City Revenue Finance Corp., RB, Pyramid and Pinch Distribution, Series B (AGM), 5.25%, 11/01/30 $ 485 $ 570,093  
 
Texas — 13.3%  
City of Houston Texas, Refunding RB, Combined, First Lien, Series A:  
  (AGC), 6.00%, 11/15/35   5,700   7,020,177  
  (AGC), 5.38%, 11/15/38   3,650   4,224,510  
  (AGM), 5.00%, 11/15/36   10,000   11,384,100  
Dallas ISD, GO, School Building (PSF-GTD), 6.38%, 2/15/34   10,000   12,381,900  
Dallas-Fort Worth International Airport Facilities Improvement Corp., Refunding RB, Joint Series A, AMT (NPFGC), 5.63%, 11/01/26   5,670   5,670,000  
Grand Prairie ISD Texas, GO, CAB, Refunding, 5.43%, 8/15/28 (c)   10,000   4,291,300  
Harris County Hospital District, Refunding RB, Senior Lien, Series A (NPFGC), 5.25%, 2/15/37   4,055   4,300,287  
Judson ISD Texas, GO, School Building (AGC), 5.00%, 2/01/37   10,000   10,872,700  
Midland County Fresh Water Supply District No 1, Refunding RB, CAB, City of Midland Project, 4.63%, 9/15/36 (c)   5,810   1,946,408  
North Texas Tollway Authority, Refunding RB:  
  First Tier, Series A, 6.00%, 1/01/28   6,275   7,342,754  
  First Tier, System, Series A (NPFGC), 5.13%, 1/01/28   20,000   22,059,600  
  First Tier, System, Series B (NPFGC), 5.75%, 1/01/40   10,000   11,225,200  
San Antonio Public Facilities Corp., Refunding RB, Convention Center Refinancing and Expansion Project:  
  4.00%, 9/15/42   4,400   4,439,204  
  CAB, 4.92%, 9/15/35 (c)   7,160   2,357,501  
  CAB, 4.97%, 9/15/36 (c)   12,195   3,780,206  
  CAB, 5.02%, 9/15/37 (c)   8,730   2,542,700  
Texas Department of Housing & Community Affairs, MRB, Series A, AMT (NPFGC), 5.45%, 9/01/23   3,740   3,746,171  
Texas State Turnpike Authority, RB (AMBAC):  
  CAB, 5.97%, 8/15/31 (c)   20,265   6,704,878  
  First Tier, Series A, 5.50%, 8/15/39   5,500   5,540,975  
  First Tier, Series A, 5.00%, 8/15/42   6,900   6,945,057  
 
  138,775,628  
 
                     
BLACKROCK MUNIYIELD QUALITY FUND III, INC.OCTOBER 31, 2012                    5
 
Schedule of Investments (continued)

BlackRock MuniYield Quality Fund III, Inc. (MYI)

(Percentages shown are based on Net Assets)

 

    Par
(000)		   Value  
Municipal Bonds  
 
Utah — 1.6%  
Utah Transit Authority, Refunding RB, CAB, Sub-Series A (c):  
  (AGC), 3.35%, 6/15/20 $ 10,000 $ 7,762,600  
  (NPFGC), 4.17%, 6/15/24   13,930   8,622,949  
 
  16,385,549  
 
Vermont — 0.1%  
Vermont HFA, Refunding RB, Multiple Purpose, Series C, AMT (AGM), 5.50%, 11/01/38 (e)   1,510   1,610,113  
 
Washington — 1.1%  
Washington Health Care Facilities Authority, RB, Series A:  
  5.00%, 10/01/39   1,125   1,225,159  
  5.25%, 10/01/39   2,725   3,030,282  
  5.00%, 8/15/44   1,020   1,115,727  
Washington Health Care Facilities Authority, Refunding RB, Catholic Health Initiatives, Series D, 6.38%, 10/01/36   5,400   6,608,952  
 
  11,980,120  
 
Wisconsin — 0.9%  
Wisconsin Health & Educational Facilities Authority, RB:  
  Ascension Health Senior Credit Group, 5.00%, 11/15/33   3,745   4,161,818  
  SynergyHealth Inc., 6.00%, 8/01/13 (b)   3,395   3,540,544  
Wisconsin Health & Educational Facilities Authority, Refunding RB, Froedtert & Community Health, 5.00%, 4/01/42   1,300   1,450,618  
 
  9,152,980  
 
Total Municipal Bonds – 105.5%   1,100,796,639  
       
 
  
Municipal Bonds Transferred to Tender Option Bond (TOB) Trusts (f)  
 
Arizona — 1.5%  
Arizona School Facilities Board, COP (AGC), 5.13%, 9/01/21 (g)   10,000   11,437,600  
Salt River Project Agricultural Improvement & Power District, RB, Series A, 5.00%, 1/01/38   3,500   3,981,530  
 
  15,419,130  
 
California — 11.7%  
Alameda County Joint Powers Authority, Refunding RB, Lease (AGM), 5.00%, 12/01/34   6,990   7,616,863  
California State University, RB, Systemwide, Series A (AGM):  
  5.00%, 11/01/33 (g)   7,996   8,755,084  
           
    Par
(000)		   Value  
Municipal Bonds Transferred to Tender Option Bond (TOB) Trusts (f)  
 
California (concluded)  
California State University, RB, Systemwide, Series A (AGM) (concluded):  
  5.00%, 11/01/37 $ 18,435 $ 20,995,019  
City of Riverside California, RB, Issue D (AGM), 5.00%, 10/01/38   20,000   21,768,600  
Foothill-De Anza Community College District, GO, Election of 1999, Series C (NPFGC), 5.00%, 8/01/36   7,500   8,198,025  
Las Virgenes Unified School District California, GO, Series A (AGM), 5.00%, 8/01/31   10,000   10,789,092  
Los Angeles Community College District California, GO, Refunding, Series A, 6.00%, 8/01/33   5,248   6,627,240  
Orange County Sanitation District, COP, Series B (AGM), 5.00%, 2/01/37   10,780   12,039,751  
San Diego Community College District California, GO, Election of 2002, 5.25%, 8/01/33   1,047   1,265,157  
San Diego County Water Authority, COP, Refunding, Series 2008-A (AGM), 5.00%, 5/01/33   9,370   10,403,980  
San Francisco Bay Area Rapid Transit District, RB (AGM), 5.00%,  7/01/14 (b)   10,000   10,774,184  
University of California, RB, Series O, 5.75%, 5/15/34   2,205   2,648,146  
 
  121,881,141  
 
Colorado — 0.3%  
Colorado Health Facilities Authority, Refunding RB, Catholic Healthcare, Series A, 5.50%, 7/01/34 (g)   2,469   2,823,789  
 
Connecticut — 0.5%  
Connecticut State Health & Educational Facility Authority, RB, Yale University, Series T-1, 4.70%, 7/01/29   5,010   5,661,300  
 
District of Columbia — 2.6%  
District of Columbia, RB, Series A, 5.50%, 12/01/30 (g)   2,595   3,254,052  
District of Columbia Water & Sewer Authority, Refunding RB, Series A, 6.00%, 10/01/35 (g)   4,281   5,222,086  
Metropolitan Washington Airports Authority, RB, Series B, AMT (AMBAC), 5.00%, 10/01/32   10,000   10,718,500  
Metropolitan Washington Airports Authority, Refunding ARB, Series B, AMT, 5.00%, 10/01/30   6,880   7,893,493  
 
  27,088,131  
 
                     
BLACKROCK MUNIYIELD QUALITY FUND III, INC.OCTOBER 31, 2012                    6
 
Schedule of Investments (continued)

BlackRock MuniYield Quality Fund III, Inc. (MYI)

(Percentages shown are based on Net Assets)

 

    Par
(000)		   Value  
Municipal Bonds Transferred to Tender Option Bond (TOB) Trusts (f)  
 
Florida — 3.8%  
City of Tallahassee Florida, RB, Energy System (NPFGC), 5.00%,  10/01/32 (g) $ 3,300 $ 3,691,875  
County of Miami-Dade Florida, RB:  
  5.00%, 7/01/42   4,840   5,460,488  
  (Syncora), 5.00%, 7/01/31   19,800   21,264,210  
Florida State Board of Education, GO, Series D, 5.00%, 6/01/37 (g)   3,299   3,803,563  
Highlands County Health Facilities Authority, RB, Adventist, Series C, 5.25%, 11/15/36 (e)   5,400   5,915,538  
 
  40,135,674  
 
Georgia — 1.1%  
Metropolitan Atlanta Rapid Transit Authority, Refunding RB, Third Indenture, Series B (AGM), 5.00%, 7/01/37   10,000   11,388,591  
 
Hawaii — 1.0%  
Honolulu City & County Board of Water Supply, RB, Series A (NPFGC), 5.00%, 7/01/14 (b)   9,830   10,597,526  
 
Illinois — 3.5%  
City of Chicago Illinois, GO, Refunding, Series A (AGC), 5.25%, 1/01/24 (g)   11,000   12,474,440  
City of Chicago Illinois, RB, Motor Fuel Tax, Series A (AGC), 5.00%, 1/01/38   4,000   4,259,760  
City of Chicago Illinois, Refunding RB, Sales Tax Revenue, Series A, 5.00%, 1/01/41   2,190   2,463,881  
Illinois Finance Authority, RB, University of Chicago, Series B, 6.25%, 7/01/38   10,000   12,454,000  
Metropolitan Pier & Exposition Authority, RB, McCormick Place Expansion Project, Series A, 5.00%, 6/15/42   720   805,637  
State of Illinois, RB, Build Illinois, Series B, 5.25%, 6/15/34 (g)   3,499   4,015,984  
 
  36,473,702  
 
Kentucky — 0.7%  
Kentucky State Property & Building Commission, Refunding RB, Project No. 93 (AGC), 5.25%, 2/01/27   5,985   6,945,036  
 
Louisiana — 1.1%  
State of Louisiana Gas & Fuels, RB, Series A (AGM), 5.00%, 5/01/36   10,000   11,200,000  
 
Michigan — 1.2%  
Michigan Finance Authority, Refunding RB, Trinity Health, 5.00%, 12/01/39   11,600   12,895,836  
 
Nevada — 0.6%  
Clark County Water Reclamation District, GO, Series B:  
  5.50%, 7/01/29   510   628,954  
           
    Par
(000)		   Value  
Municipal Bonds Transferred to Tender Option Bond (TOB) Trusts (f)  
 
Nevada (concluded)  
Clark County Water Reclamation District, GO, Series B (concluded):  
  5.75%, 7/01/34 $ 4,813 $ 6,033,911  
 
  6,662,865  
 
New Jersey — 1.3%  
Garden State Preservation Trust, RB, Election of 2005, Series A (AGM), 5.75%, 11/01/28   10,000   13,351,000  
 
New York — 5.0%  
New York City Municipal Water Finance Authority, Refunding RB, Series DD, 5.00%, 6/15/37   17,567   19,973,848  
Port Authority of New York & New Jersey, RB, 155th Series, AMT (AGM), 5.13%, 7/15/30   19,500   20,829,705  
Port Authority of New York & New Jersey, Refunding RB, Consolidated, 143rd Series, AMT, 5.00%, 10/01/30   5,180   5,687,537  
Triborough Bridge & Tunnel Authority, RB, General, Series A-2, 5.25%, 11/15/34 (g)   4,500   5,373,945  
 
  51,865,035  
 
North Carolina — 0.9%  
North Carolina HFA, RB, Series 31-A, AMT, 5.25%, 7/01/38   9,456   9,884,622  
 
Ohio — 0.7%  
County of Montgomery Ohio, RB, Catholic Health, Series C-1 (AGM), 5.00%, 10/01/41   4,990   5,319,939  
State of Ohio, RB, Cleveland Clinic Health, Series B, 5.50%, 1/01/34   1,520   1,738,865  
 
  7,058,804  
 
Puerto Rico — 0.7%  
Puerto Rico Sales Tax Financing Corp., Refunding RB, Senior Series C, 5.25%, 8/01/40   6,540   7,178,762  
 
South Carolina — 0.4%  
South Carolina State Housing Finance & Development Authority, Refunding RB, Series B-1, 5.55%, 7/01/39   4,288   4,618,541  
 
South Dakota — 0.1%  
South Dakota HDA, Refunding RB, Homeownership Mortgage, Series K, 5.05%, 5/01/36   1,144   1,170,234  
 
Texas — 4.0%  
Friendswood ISD Texas, GO, Schoolhouse (PSF-GTD), 5.00%, 2/15/37   12,955   14,587,050  
Houston ISD, GO, Schoolhouse (PSF-GTD), 5.00%, 2/15/33   10,000   11,403,700  
                     
BLACKROCK MUNIYIELD QUALITY FUND III, INC.OCTOBER 31, 2012                    7
 
Schedule of Investments (continued)

BlackRock MuniYield Quality Fund III, Inc. (MYI)

(Percentages shown are based on Net Assets)

 

    Par
(000)		   Value  
Municipal Bonds Transferred to Tender Option Bond (TOB) Trusts (f)  
 
Texas (concluded)  
North East ISD Texas, GO, School Building, Series A, 5.00%, 8/01/37 (g) $ 3,500 $ 4,009,915  
Texas State University Systems, Refunding RB, 5.25%, 3/15/26   10,000   11,900,000  
 
  41,900,665  
 
Virginia — 0.4%  
University of Virginia, Refunding RB, General, 5.00%, 6/01/40   3,944   4,557,559  
 
Washington — 5.6%  
Central Puget Sound Regional Transit Authority, RB, Series A (AGM), 5.00%, 11/01/34   16,770   19,444,060  
County of King Washington, RB (AGM), 5.00%, 1/01/37   15,785   18,044,386  
Port of Seattle Washington, Refunding RB, Series B, AMT (NPFGC), 5.20%, 7/01/29   20,565   20,834,126  
 
  58,322,572  
 
Wisconsin — 2.0%  
State of Wisconsin, Refunding RB, Series A, 6.00%, 5/01/36   10,000   12,261,700  
Wisconsin Health & Educational Facilities Authority, Refunding RB, Froedtert & Community Health, Inc., 5.25%, 4/01/39 (g)   7,459   8,293,872  
 
  20,555,572  
 
Total Municipal Bonds Transferred to Tender Option Bond (TOB) Trusts – 50.7%   529,636,087  
 
Total Long-Term Investments
(Cost – $1,464,163,422) – 156.2%		   1,630,432,726  
 
                 

 

   
Shares		   Value  
Short-Term Securities  
 
FFI Institutional Tax-Exempt Fund, 0.04% (h)(i)   8,037,622 $ 8,037,622  
 
Total Short-Term Securities
(Cost – $8,037,622) – 0.8%		   8,037,622   
 
Total Investments (Cost - $1,472,201,044*) – 157.0% 1,638,470,348   
Other Assets Less Liabilities – 1.0%   10,467,274   
Liability for TOB Trust Certificates, Including Interest Expense and Fees Payable – (23.8)%   (248,688,284)  
VRDP Shares, at Liquidation Value – (34.2)%   (356,400,000)  
 
Net Assets Applicable to Common Shares – 100.0% $ 1,043,849,338   
       
                 

 

* As of October 31, 2012, gross unrealized appreciation and gross unrealized depreciation based on cost for federal income tax purposes were as follows:

 

  Tax cost $ 1,226,051,869   
 
  Gross unrealized appreciation $ 166,282,197   
  Gross unrealized depreciation   (2,391,933)  
 
  Net unrealized appreciation $ 163,890,264   
 

 

(a) Represents a step-up bond that pays an initial coupon rate for the first period and then a higher coupon rate for the following periods. Rate shown is as of report date.
(b) US government securities, held in escrow, are used to pay interest on this security, as well as to retire the bond in full at the date indicated, typically at a premium to par.
(c) Represents a zero-coupon bond. Rate shown reflects the current yield as of report date.
(d) When-issued security. Unsettled when-issued transactions were as follows:

 

 
  Counterparty Value Unrealized Appreciation
  Citigroup, Inc.   $ 4,951,435   $ 44,943  
                   
                             

 

(e) Variable rate security. Rate shown is as of report date.
(f) Securities represent bonds transferred to a TOB in exchange for which the Fund acquired residual interest certificates. These securities serve as collateral in a financing transaction.
(g) All or a portion of security is subject to a recourse agreement which may require the Fund to pay the Liquidity Provider in the event there is a shortfall between the TOB Trust Certificates and proceeds received from the sale of the security contributed to the TOB trust. In the case of a shortfall, the aggregate maximum potential amount the Fund could ultimately be required to pay under the agreements is $30,628,149.
   
BLACKROCK MUNIYIELD QUALITY FUND III, INC.OCTOBER 31, 2012                    8
 
Schedule of Investments (concluded)

BlackRock MuniYield Quality Fund III, Inc. (MYI)

 

 

(h) Investments in issuers considered to be an affiliate of the Fund during the period ended October 31, 2012, for purposes of Section 2(a)(3) of the Investment Company Act of 1940, as amended, were as follows:  
 

 

  Affiliate   Shares
Held at
July 31, 2012		   Net
Activity		   Shares
Held at
October 31, 2012		 Income
  FFI Institutional Tax-Exempt Fund   21,624,366 (13,586,744) 8,037,622 $     673

 

(i) Represents the current yield as of report date.

Portfolio Abbreviations

To simplify the listings of portfolio holdings in the Schedule of Investments, the names and descriptions of many of the securities have been abbreviated according to the following list: 
AGC Assured Guaranty Corp.
AGM Assured Guaranty Municipal Corp.
AMBAC American Municipal Bond Assurance Corp.
AMT Alternative Minimum Tax (subject to)
ARB Airport Revenue Bonds
BHAC Berkshire Hathaway Assurance Corp.
CAB Capital Appreciation Bonds
COP Certificates of Participation
EDA Economic Development Authority
ERB Education Revenue Bonds
GAB Grant Anticipation Bonds
Ginnie Mae Government National Mortgage Association
GO General Obligation Bonds
HDA Housing Development Authority
HFA Housing Finance Agency
ISD Independent School District
MRB Mortgage Revenue Bonds
NPFGC National Public Finance Guarantee Corp.
PSF-GTD Permanent School Fund Guaranteed
RB Revenue Bonds
S/F Single-Family
Syncora Syncora Guarantee
     

 

• Fair Value Measurements - Various inputs are used in determining the fair value of investments. These inputs to valuation techniques are categorized into a disclosure hierarchy consisting of three broad levels for financial reporting purposes as follows:
   
  • Level 1 — unadjusted price quotations in active markets/exchanges for identical assets and liabilities that the Fund has the ability to access
   
  • Level 2 — other observable inputs (including, but not limited to: quoted prices for similar assets or liabilities in markets that are active, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the assets or liabilities (such as interest rates, yield curves, volatilities, prepayment speeds, loss severities, credit risks and default rates) or other market-corroborated inputs)
       

 

  • Level 3 — unobservable inputs based on the best information available in the circumstances, to the extent observable inputs are not available (including the Fund's own assumptions used in determining the fair value of investments)
   
The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). Accordingly, the degree of judgment exercised in determining fair value is greatest for instruments categorized in Level 3. The inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the level in the fair value hierarchy within which the fair value measurement falls in its entirety is determined based on the lowest level input that is significant to the fair value measurement in its entirety.
 
Changes in valuation techniques may result in transfers into or out of an assigned level within the disclosure hierarchy. In accordance with the Fund's policy, transfers between different levels of the fair value disclosure hierarchy are deemed to have occurred as of the beginning of the reporting period. The categorization of a value determined for investments is based on the pricing transparency of the investment and is not necessarily an indication of the risks associated with investing in those securities. For information about the Fund's policy regarding valuation of investments and other significant accounting policies, please refer to the Fund's most recent financial statements as contained in its annual report.
       

 

The following table summarizes the Fund's investments categorized in the disclosure hierarchy as of October 31, 2012:

 

  Level 1 Level 2 Level 3 Total
Assets:
Investments:
  Long Term Investments1 — $1,630,432,726 — $1,630,432,726
  Short-Term Securities $  8,037,622 — — 8,037,622
Total $  8,037,622 $1,630,432,726 — $1,638,470,348
               

1See above Schedule of Investments for values in each state or political sub-division.

 

Certain of the Fund’s liabilities are held at carrying amount, which approximates fair value for financial reporting purposes. As of October 31, 2012, such liabilities are categorized within the disclosure hierarchy as follows:

  Level 1 Level 2 Level 3 Total
Liabilities:
  TOB trust certificates — $ (248,528,215) — $ (248,528,215)
  VRDP Shares — (356,400,000) — (356,400,000)
Total — $ (604,928,215) — $ (604,928,215)

 

There were no transfers between levels during the period ended October 31, 2012.

BLACKROCK MUNIYIELD QUALITY FUND III, INC.OCTOBER 31, 2012                    9
 

Item 2 – Controls and Procedures

2(a) –     The registrant's principal executive and principal financial officers, or persons performing similar functions, have concluded that the registrant's disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940, as amended (the ″1940 Act″)) are effective as of a date within 90 days of the filing of this report based on the evaluation of these controls and procedures required by Rule 30a-3(b) under the 1940 Act and Rule 13a-15(b) under the Securities Exchange Act of 1934, as amended.

2(b) –     There were no changes in the registrant's internal control over financial reporting (as defined in Rule 30a-3(d) under the 1940 Act) that occurred during the registrant's last fiscal quarter that have materially affected, or are reasonably likely to materially affect, the registrant's internal control over financial reporting.

Item 3 – Exhibits

Certifications – Attached hereto

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

BlackRock MuniYield Quality Fund III, Inc.

 

By: /s/ John M. Perlowski
  John M. Perlowski
  Chief Executive Officer (principal executive officer) of
  BlackRock MuniYield Quality Fund III, Inc.

 

Date: December 21, 2012

 

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

 

By: /s/ John M. Perlowski
  John M. Perlowski
  Chief Executive Officer (principal executive officer) of
  BlackRock MuniYield Quality Fund III, Inc.

 

Date: December 21, 2012

 

By: /s/ Neal J. Andrews
  Neal J. Andrews
  Chief Financial Officer (principal financial officer) of
  BlackRock MuniYield Quality Fund III, Inc.

 

Date: December 21, 2012