Company: MYI
Filing Date: 2025-09-02
Form Type: N-14 8C/A
Source: 0001193125-25-193985
Chunk: 191

Company: BLACKROCK MUNIYIELD QUALITY FUND III, INC.
Filing Date: 2025-09-02
Form: N-14 8C/A
Chunk 191
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 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.

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.

91

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
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