Company: MYI
Filing Date: 2025-09-08
Form Type: DEF 14A
Source: 0001193125-25-198172
Chunk: 226

Company: BLACKROCK MUNIYIELD QUALITY FUND III, INC.
Filing Date: 2025-09-08
Form: DEF 14A
Chunk 226
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 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.

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.

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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