Rider D
SUB-ADVISORY AGREEMENT
AGREEMENT dated as of October 3, 2014, between
BlackRock Advisors, LLC, a Delaware limited liability company
("Adviser"), and BlackRock (Singapore) Limited, a company
incorporated under the laws of Singapore ("Sub-Adviser").
WHEREAS, Adviser has agreed to furnish investment
advisory services to BlackRock Multi-Asset Real Return Fund (the
"Portfolio") of BlackRock Funds, a Massachusetts business trust
(the "Fund"), which is an open-end, management investment
company registered under the Investment Company Act of 1940, as
amended ("1940 Act"); and
WHEREAS, Adviser wishes to retain Sub-Adviser to
provide it with certain 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 Portfolio 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;
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 and other good and valuable
consideration, the receipt of which is hereby acknowledged, 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 provisions of this section and the oversight and
supervision of Adviser and 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 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.
(a) In the performance of its duties under this
Agreement, the Sub-Adviser shall at all times conform to, and
act in accordance with, any requirements imposed by: (i) the
provisions of the 1940 Act and the Investment Advisers Act of
1940, as amended (the "Advisers Act") and all applicable Rules
and Regulations of the Securities and Exchange Commission (the
"SEC"); (ii) any other applicable provision of law; (iii) the
provisions of the Declaration of Trust and Amended and Restated
Code of Regulations of the Fund, as such documents are amended
from time to time; (iv) the investment objectives and policies
of the Portfolio as set forth in the Portfolio's Registration
Statement on Form N-1A and/or the resolutions of the Board of
Trustees; and (v) any policies and determinations of the Board
of Trustees of the Fund.
(b) Sub-Adviser further agrees that it:
(i) 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 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 Portfolio over the long-term. In no
instance, however, will the Portfolio'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;
(ii) 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 such periodic
and special reports as they may request;
(iii) 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
(iv) 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. Nothing in this
Agreement shall prevent the Sub-Adviser or any officer, employee
or other affiliate thereof from acting as investment advisor for
any other person, firm or corporation, or from engaging in any
other lawful activity, and shall not in any way limit or
restrict the Sub-Adviser or any of its officers, employees or
agents from buying, selling or trading any securities for its or
their own accounts or for the accounts of others for whom it or
they may be acting; provided, however, that the Sub-Adviser will
undertake no activities which, in its judgment, will adversely
affect the performance of its obligations under this Agreement.
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 (to the extent
such books and records are not maintained by Adviser).
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
Portfolio operations (including, without limitation, compliance
matters) (other than the provision of investment advice and
administrative services required to be provided hereunder) of
all personnel employed by Sub-Adviser who devote substantial
time to Portfolio operations or the operations of other
investment companies advised or sub-advised by Sub-Adviser.
7. Compensation.
(a) Adviser agrees to pay to Sub-Adviser and
Sub-Adviser agrees to accept as full compensation for all
services rendered by Sub-Adviser as such a fee, computed daily
and payable monthly, at the annual rate set forth on Schedule 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.
(b) For purposes of this Agreement, 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.
(c) 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. As used
in this Section 8, the term "Sub-Adviser" shall include any
affiliates of the Sub-Adviser performing services for the
Portfolio contemplated hereby and partners, directors, officers
and employees of the Sub-Adviser and such affiliates.
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.
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: /s/ Xxxx X. Xxxxxxx
Name: Xxxx X. Xxxxxxx
Title: Managing Director
BLACKROCK (SINGAPORE) LIMITED
By: /s/ Neeraj Seth
Name: Neeraj Seth
Title: Managing Director
BLACKROCK (SINGAPORE) LIMITED
By: /s/ Xxxxx Xxxxx
Name: Xxxxx Xxxxx
Title: Managing Director
AGREED AND ACCEPTED
as of the date first set forth above
BLACKROCK FUNDSSM, on behalf of BlackRock Multi-Asset Real Return Fund
By: /s/ Xxxx Xxxxxxxxx
Name: Xxxx Xxxxxxxxx
Title: President and Chief Executive Officer
Schedule 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 [ ]% 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.
