Company: MYI
Filing Date: 2025-07-16
Form Type: N-14 8C
Source: 0001193125-25-159991
Chunk: 192

Company: BLACKROCK MUNIYIELD QUALITY FUND III, INC.
Filing Date: 2025-07-16
Form: N-14 8C
Chunk 192
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 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.

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The writing of a put option on