Company: MYI
Filing Date: 2025-07-16
Form Type: N-14 8C
Source: 0001193125-25-159991
Chunk: 191

Company: BLACKROCK MUNIYIELD QUALITY FUND III, INC.
Filing Date: 2025-07-16
Form: N-14 8C
Chunk 191
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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