Company: MYI
Filing Date: 2025-09-05
Form Type: 424B3
Source: 0001193125-25-196285
Chunk: 189

Company: BLACKROCK MUNIYIELD QUALITY FUND III, INC.
Filing Date: 2025-09-05
Form: 424B3
Chunk 189
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 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.

The writing of a put option on a futures contract constitutes a partial hedge against increasing prices of the securities
which are deliverable upon exercise of the futures contract. If the futures price at expiration is higher than the exercise price, MIY will retain the full amount of the option premium, which provides a partial hedge against any increase in the
price of securities which MIY intends to purchase.

The writer of an option on a futures contract is required to deposit
initial and variation margin pursuant to requirements similar to those applicable to futures contracts. Premiums received from the writing of an option will be included in initial margin. The writing of an option on a futures contract involves risks
similar to those relating to futures contracts.

The CFTC subjects advisers to registered investment companies to
regulation by the CFTC if a fund that is advised by the investment adviser either (i) invests, directly or indirectly, more than a prescribed level of its

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liquidation value in CFTC Derivatives, or (ii) markets itself as providing investment exposure to such instruments. To the extent MIY uses CFTC Derivatives, it intends to do so below such
prescribed levels and will not market itself as a “commodity pool” or a vehicle for trading such instruments. Accordingly, the Investment Advisor has claimed an exclusion from the definition of the term “commodity pool
operator” under the CEA pursuant to Rule 4.5 under the CEA. The Investment Advisor is not, therefore, subject to registration or regulation as a “commodity pool operator” under the CEA in respect of MIY.

Interest Rate Transactions.

MIY may enter into interest rate swaps and the purchase or sale of interest rate caps and floors. MIY expects to enter into
these transactions primarily to preserve a return or spread on a particular investment or portion of its portfolio as a duration management technique or to protect against any increase in the price of securities MIY anticipates purchasing at a later
date. MIY will ordinarily use these transactions as a hedge or for duration or risk management although it is permitted to enter into them to enhance income