BlackRock Funds (the "Registrant"): BlackRock Emerging Markets
Dividend Fund (the "Fund")
77Q1(e):
Copies of any new or amended Registrant investment advisory
Contracts
Attached please find as an exhibit to Sub-Item 77Q1(e) of Form
N-SAR, a copy of the form of Sub-Investment Advisory Agreement
between BlackRock Advisors, LLC and BlackRock Asset Management
North Asia Limited with respect to the Fund
SUB-ADVISORY AGREEMENT
AGREEMENT dated as of , 2017, between
BlackRock Advisors, LLC, a Delaware limited liability company
("Adviser"), and BlackRock Asset Management North Asia Limited,
a corporation organized under the laws of Hong Kong ("Sub-
Adviser").
WHEREAS, Adviser has agreed to furnish investment
advisory services to BlackRock Emerging Markets Dividend Fund
(the "Portfolio") of BlackRock FundsSM (the "Fund"), a
Massachusetts business trust and an open-end, management
investment company registered under the Investment Company Act
of 1940, as amended ("1940 Act");
WHEREAS, Adviser wishes to retain Sub-Adviser to
provide it with sub-advisory services as described below in
connection with Adviser's advisory activities on behalf of the
Portfolio;
WHEREAS, the investment advisory agreement between
Adviser and the Fund dated September 29, 2006 (such Agreement or
the most recent successor agreement between such parties
relating to advisory services to the Fund is referred to herein
as the "Advisory Agreement") contemplates that Adviser may
appoint a sub-advisor to perform investment advisory services
with respect to the Portfolio; and
WHEREAS, this Agreement has been approved in
accordance with the provisions of the 1940 Act, and Sub-Adviser
is willing to furnish such services upon the terms and
conditions herein set forth;
NOW, THEREFORE, in consideration of the premises and
mutual covenants herein contained, it is agreed between the
parties hereto as follows:
1. Appointment. Adviser hereby appoints Sub-Adviser
to act as sub-advisor with respect to the Portfolio as provided
in Section 2 of the Advisory Agreement. Sub-Adviser accepts
such appointment and agrees to render the services herein set
forth for the compensation herein provided.
2. Services of Sub-Adviser. Subject to the
succeeding provision of this section, the oversight and
supervision of Adviser and the direction and control of the
Fund's Board of Trustees, Sub-Adviser will perform certain of
the day-to-day operations of the Portfolio which may include one
or more of the following services: (i) act as investment
advisor for and manage the investment and reinvestment of those
assets of the Portfolio as Adviser may from time to time request
and in connection therewith have complete discretion in
purchasing and selling such securities and other assets for the
Portfolio and in voting, exercising consents and exercising all
other rights appertaining to such securities and other assets on
behalf of the Portfolio; (ii) provide investment research and
credit analysis concerning the Portfolio's investments; (iii)
assist Adviser in determining what portion of the Portfolio's
assets will be invested in cash and cash equivalents and money
market instruments; (iv) place orders for all purchases and
sales of investments, other than short-term cash equivalents
made for the Portfolio; and (v) maintain the books and records
as are required to support Fund operations (in conjunction with
record-keeping and accounting functions performed by Adviser).
At the request of Adviser, Sub-Adviser will also, subject to the
oversight and supervision of Adviser and the Fund's Board of
Trustees, provide to Adviser or the Fund any of the facilities
and equipment and perform any of the services described in
Section 4 of the Advisory Agreement. In addition, Sub-Adviser
will keep the Fund and Adviser informed of developments
materially affecting the Portfolio and shall, on its own
initiative, furnish to the Fund from time to time whatever
information Sub-Adviser believes appropriate for this purpose.
Sub-Adviser will periodically communicate to Adviser, at such
times as Adviser may direct, information concerning the purchase
and sale of securities for the Portfolio, including: (i) the
name of the issuer; (ii) the amount of the purchase or sale;
(iii) the name of the broker or dealer, if any, through which
the purchase or sale will be effected; (iv) the CUSIP number of
the instrument, if any; and (v) such other information as
Adviser may reasonably require for purposes of fulfilling its
obligations to the Fund under the Advisory Agreement. Sub-
Adviser will provide the services rendered by it under this
Agreement in accordance with the Portfolio's investment
objective, policies and restrictions as stated in the
Portfolio's prospectus and statement of additional information
(as currently in effect and as they may be amended or
supplemented from time to time), and the resolutions of the
Fund's Board of Trustees.
3. Other Sub-Adviser Covenants. Sub-Adviser further
agrees that it:
(a) will comply with (i) the provisions of the
1940 Act and the Investment Advisers Act of 1940, as amended and
all applicable rules and regulations of the Securities and
Exchange Commission (the "SEC"), (ii) any other applicable
provision of law and (iii) the provisions of this Agreement, the
Declaration of Trust and the Amended and Restated Code of
Regulations of the Fund as such documents are amended from time
to time;
(b) will place orders either directly with the
issuer or with any broker or dealer. Subject to the other
provisions of this paragraph, in placing orders with brokers and
dealers, Sub-Adviser will attempt to obtain the best price and
the most favorable execution of its orders. In placing orders,
Sub-Adviser will consider the experience and skill of the firm's
securities traders as well as the firm's financial
responsibility and administrative efficiency. Consistent with
this obligation, Sub-Adviser may, subject to the approval of the
Fund's Board of Trustees, select brokers on the basis of the
research, statistical and pricing services they provide to the
Portfolio and other clients of Adviser or Sub-Adviser.
Information and research received from such brokers will be in
addition to, and not in lieu of, the services required to be
performed by Sub-Adviser hereunder. A commission paid to such
brokers may be higher than that which another qualified broker
would have charged for effecting the same transaction, provided
that Sub-Adviser determines in good faith that such commission
is reasonable in terms of either the transaction or the overall
responsibility of Adviser and Sub-Adviser to the Portfolio and
their other clients and that the total commissions paid by the
Portfolio will be reasonable in relation to the benefits to the
Fund over the long-term. In no instance, however, will the
Fund's securities be purchased from or sold to Adviser, Sub-
Adviser, the Fund's distributor or any affiliated person
thereof, except to the extent permitted by the SEC or by
applicable law. It is understood that Sub-Adviser may utilize
affiliates in connection with the placement of orders with
issuers and brokers or dealers, but such use of affiliates shall
not affect the responsibility of Sub-Adviser to Adviser for such
activities. Subject to the foregoing and the provisions of the
1940 Act, the Securities Exchange Act of 1934, as amended, and
other applicable provisions of law, Sub-Adviser may select
brokers and dealers with which it or the Fund is affiliated;
(c) will maintain or cause Adviser to maintain
books and records with respect to the Portfolio's securities
transactions and will furnish Adviser and the Fund's Board of
Trustees periodic and special reports as they may request;
(d) will maintain a policy and practice of
conducting its investment advisory services hereunder
independently of the commercial banking operations of its
affiliates. When Sub-Adviser makes investment recommendations
for the Portfolio, its investment advisory personnel will not
inquire or take into consideration whether the issuer of
securities proposed for purchase or sale for the Portfolio's
account are customers of the commercial departments of its
affiliates. In dealing with commercial customers of its
affiliates, Sub-Adviser will not inquire or take into
consideration whether securities of those customers are held by
the Fund; and
(e) will treat confidentially and as proprietary
information of the Fund all records and other information
relative to the Fund, any of the Portfolio's and the Fund's
prior, current or potential shareholders, and will not use such
records and information for any purpose other than performance
of its responsibilities and duties hereunder, except after prior
notification to and approval in writing by the Fund, which
approval shall not be unreasonably withheld and may not be
withheld where Sub-Adviser may be exposed to civil or criminal
contempt proceedings for failure to comply, when requested to
divulge such information by duly constituted authorities, or
when so requested by the Fund.
4. Services Not Exclusive. Sub-Adviser's services
hereunder are not deemed to be exclusive, and Sub-Adviser shall
be free to render similar services to others so long as its
services under this Agreement are not impaired thereby.
5. Books and Records. In compliance with the
requirements of Rule 31a-3 under the 1940 Act, Sub-Adviser
hereby agrees that all records which it maintains for the
Portfolio are the property of the Fund and further agrees to
surrender promptly to the Fund any such records upon the Fund's
request. Sub-Adviser further agrees to preserve for the periods
prescribed by Rule 31a-2 under the 1940 Act the records required
to be maintained by Rule 31a-1 under the 1940 Act.
6. Expenses. During the term of this Agreement,
Sub-Adviser will bear all costs and expenses of its employees
and any overhead incurred by Sub-Adviser in connection with its
duties hereunder; provided that the Board of Trustees of the
Fund may approve reimbursement to Sub-Adviser of the pro rata
portion of the salaries, bonuses, health insurance, retirement
benefits and all similar employment costs for the time spent on
Fund operations (including, without limitation, compliance
matters) (other than the provision of investment advice required
to be provided hereunder) of all personnel employed by Sub-
Adviser who devote substantial time to Fund operations or the
operations of other investment companies advised or sub-advised
by Sub-Adviser.
7. Compensation. For the services provided and the
expenses assumed pursuant to this Agreement, Adviser will pay to
Sub-Adviser a fee, computed daily and payable monthly, at the
annual rate set forth on Appendix A attached hereto. For any
period less than a month during which this Agreement is in
effect, the fee shall be prorated according to the proportion
which such period bears to a full month of 28, 29, 30 or 31
days, as the case may be.
For purposes of the fee rates set forth on Appendix A,
the net assets of the Portfolio shall be calculated pursuant to
the procedures adopted by resolutions of the Fund's Board of
Trustees for calculating the value of the Fund's assets or
delegating such calculations to third parties.
If Adviser waives any or all of its advisory fee
payable under the Advisory Agreement, or reimburses the Fund
pursuant to Section 8(b) of that Agreement, with respect to the
Portfolio, Sub-Adviser will bear its share of the amount of such
waiver or reimbursement by waiving fees otherwise payable to it
hereunder on a proportionate basis to be determined by comparing
the aggregate fees that would otherwise be paid to it hereunder
with respect to the Portfolio to the aggregate fees that would
otherwise be paid by the Fund to Adviser under the Advisory
Agreement with respect to the Portfolio. Adviser shall inform
Sub-Adviser prior to waiving any advisory fees.
8. Limitation of Liability. Sub-Adviser shall not
be liable for any error of judgment or mistake of law or for any
loss suffered by Adviser or by the Fund or the Portfolio in
connection with the performance of this Agreement, except a loss
resulting from a breach of fiduciary duty with respect to the
receipt of compensation for services or a loss resulting from
willful misfeasance, bad faith or gross negligence on its part
in the performance of its duties or from reckless disregard by
it of its obligations or duties under this Agreement.
9. Duration and Termination. This Agreement will
become effective as of the date hereof and, unless sooner
terminated with respect to the Portfolio as provided herein,
shall continue in effect with respect to the Portfolio for a
period of two years. Thereafter, if not terminated, this
Agreement shall continue in effect with respect to the Portfolio
for successive periods of 12 months, provided such continuance
is specifically approved at least annually (a) by the vote of a
majority of those members of the Fund's Board of Trustees who
are not interested persons of any party to this Agreement, cast
in person at a meeting called for the purpose of voting on such
approval, and (b) by the Fund's Board of Trustees or by a vote
of a majority of the outstanding voting securities of the
Portfolio. Notwithstanding the foregoing, this Agreement may be
terminated with respect to the Portfolio at any time, without
the payment of any penalty, by the Fund (by vote of the Fund's
Board of Trustees or by vote of a majority of the outstanding
voting securities of the Portfolio), or by Adviser or Sub-
Adviser on sixty days' written notice, and will terminate
automatically upon any termination of the Advisory Agreement
between the Fund and Adviser. This Agreement will also
immediately terminate in the event of its assignment. (As used
in this Agreement, the terms "majority of the outstanding voting
securities," "interested person" and "assignment" shall have the
same meanings as such terms in the 1940 Act.)
10. Notices. Any notice under this Agreement shall
be in writing to the other party at such address as the other
party may designate from time to time for the receipt of such
notice and shall be deemed to be received on the earlier of the
date actually received or on the fourth day after the postmark
if such notice is mailed first class postage prepaid.
11. Amendment of this Agreement. No provision of
this Agreement may be changed, waived, discharged or terminated
orally, but only by an instrument in writing signed by the party
against which enforcement of the change, waiver, discharge or
termination is sought. Any amendment of this Agreement shall be
subject to the 1940 Act.
12. Miscellaneous. The captions in this Agreement
are included for convenience of reference only and in no way
define or delimit any of the provisions hereof or otherwise
affect their construction or effect. If any provision of this
Agreement shall be held or made invalid by a court decision,
statute, rule or otherwise, the remainder of this Agreement
shall not be affected thereby. This Agreement shall be binding
on, and shall inure to the benefit of the parties hereto and
their respective successors.
13. Governing Law. This Agreement shall be governed
by and construed in accordance with the laws of the State of
Delaware for contracts to be performed entirely therein without
reference to choice of law principles thereof and in accordance
with the applicable provisions of the 1940 Act. To the extent
that the applicable laws of the State of Delaware, or any of the
provisions, conflict with the applicable provisions of the 1940
Act, the latter shall control.
14. Counterparts. This Agreement may be executed in
counterparts by the parties hereto, each of which shall
constitute an original counterpart, and all of which, together,
shall constitute one Agreement.
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IN WITNESS WHEREOF, the parties hereto have caused
this instrument to be executed by their officers designated
below as of the day and year first above written.
BLACKROCK ADVISORS, LLC
By:
Name:
Title:
BLACKROCK ASSET MANAGEMENT NORTH ASIA LIMITED
By:
Name:
Title:
AGREED AND ACCEPTED
as of the date first set forth above
BLACKROCK FUNDSSM
By. ______________________________
Name:
Title:
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Appendix A
Sub-Investment Advisory Fee
Pursuant to Section 7, for that portion of the Portfolio
for which the Sub-Adviser acts as sub-advisor, Adviser shall pay
a fee to Sub-Adviser equal to percent ( %) of the
advisory fee received by the Adviser from the Portfolio with
respect to such portion, net of: (i) expense waivers and
reimbursements, (ii) expenses relating to distribution and sales
support activities borne by the Adviser, and (iii)
administrative, networking, recordkeeping, sub-transfer agency
and shareholder services expenses borne by the Adviser.
Appendix A-1
