Company: MYI
Filing Date: 2025-08-08
Form Type: PRE 14A
Source: 0001193125-25-176952
Chunk: 200

Company: BLACKROCK MUNIYIELD QUALITY FUND III, INC.
Filing Date: 2025-08-08
Form: PRE 14A
Chunk 200
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 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.

101

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