Company: MYI
Filing Date: 2025-07-16
Form Type: N-14 8C
Source: 0001193125-25-159991
Chunk: 193

Company: BLACKROCK MUNIYIELD QUALITY FUND III, INC.
Filing Date: 2025-07-16
Form: N-14 8C
Chunk 193
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 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 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 or gain. MIY may not sell interest rate caps or floors that it does not own. Interest rate swaps involve
the exchange by MIY with another party of their respective commitments to pay or receive interest, e.g., an exchange of floating rate payments for fixed rate payments with respect to a notional amount of principal. The purchase of an interest rate
cap entitles the purchaser, to the extent that a