Company: MYI
Filing Date: 2025-08-08
Form Type: PRE 14A
Source: 0001193125-25-176952
Chunk: 199

Company: BLACKROCK MUNIYIELD QUALITY FUND III, INC.
Filing Date: 2025-08-08
Form: PRE 14A
Chunk 199
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the proceeds in securities with shorter maturities or by holding assets in cash. This strategy, however, entails increased transaction costs in the form of dealer spreads and typically would reduce the average yield of MIY’s portfolio
securities as a result of the shortening of maturities. The sale of futures contracts provides an alternative means of hedging against declines in the value of its investments. As such values decline, the value of MIY’s positions in the futures
contracts will tend to increase, thus offsetting all or a portion of the depreciation in the market value of MIY’s investments that are being hedged. While MIY 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 MIY’s investments being hedged. In addition, the ability of MIY 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 MIY. Employing futures
as a hedge also may permit MIY to assume a defensive posture without reducing the yield on its investments beyond any amounts required to engage in futures trading.

When MIY intends to purchase a security, MIY 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 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