Company: MYI
Filing Date: 2025-09-08
Form Type: DEF 14A
Source: 0001193125-25-198172
Chunk: 175

Company: BLACKROCK MUNIYIELD QUALITY FUND III, INC.
Filing Date: 2025-09-08
Form: DEF 14A
Chunk 175
---
 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