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 Sub-Advisory Agreement between BlackRock
Advisors, LLC and BlackRock International Limited with respect
to the Fund
SUB-INVESTMENT ADVISORY AGREEMENT
AGREEMENT dated August , 2013, between BlackRock
Advisors, LLC, a Delaware limited liability company (the
"Advisor"), and BlackRock International Limited, a corporation
organized under the laws of Scotland (the "Sub-Advisor").
WHEREAS, the Advisor has agreed to furnish investment
advisory services to BlackRock Emerging Markets Dividend Fund
(the "Fund"), a series of BlackRock FundsSM, a Massachusetts
business trust (the "Trust"), which is an open-end management
investment company registered under the Investment Company Act
of 1940, as amended (the "1940 Act");
WHEREAS, the Advisor wishes to retain the Sub-Advisor to
provide it with certain sub-advisory services as described
below in connection with Advisor's advisory activities on
behalf of the Fund;
WHEREAS, the amended advisory agreement between the
Advisor and the Trust, dated September 29, 2006 (such
agreement or the most recent successor agreement between such
parties relating to advisory services to the Trust is referred
to herein as the "Advisory Agreement") contemplates that the
Advisor may sub-contract investment advisory services with
respect to the Fund to a sub-advisor; and
WHEREAS, this Agreement has been approved in accordance
with the provisions of the 1940 Act, and the Sub-Advisor is
willing to furnish such services upon the terms and conditions
herein set forth;
NOW, THEREFORE, in consideration of the mutual premises
and covenants herein contained and other good and valuable
consideration, the receipt of which is hereby acknowledged, it
is agreed by and between the parties hereto as follows:
I. Appointment. The Advisor hereby appoints the Sub-
Advisor to act as sub-advisor with respect to the Fund and the
Sub-Advisor accepts such appointment and agrees to render the
services herein set forth for the compensation herein
provided. For the purposes of the rules of the Financial
Conduct Authority of the United Kingdom and based on
information obtained in respect of the Advisor, the Advisor
will be treated by the Sub-Advisor as a professional client.
II. Services of the Sub-Advisor. Subject to the
succeeding provisions of this section, the oversight and
supervision of the Advisor and the Trust's Board of Trustees,
the Sub-Advisor will perform certain of the day-to-day
operations of the Fund, which may include one or more of the
following services, at the request of the Advisor: (a) acting
as investment advisor for and managing the investment and
reinvestment of those assets of the Fund as the Advisor may
from time to time request and in connection therewith have
complete discretion in purchasing and selling such securities
and other assets for the Fund and in voting, exercising
consents and exercising all other rights appertaining to such
securities and other assets on behalf of the Fund; (b)
arranging, subject to the provisions of paragraph 3 hereof,
for the purchase and sale of securities and other assets of
the Fund; (c) providing investment research and credit
analysis concerning the Fund's investments, (d) assisting the
Advisor in determining what portion of the Fund's assets will
be invested in cash, cash equivalents and money market
instruments, (e) placing orders for all purchases and sales of
such investments made for the Fund, and (f) maintaining the
books and records as are required to support Fund investment
operations. At the request of the Advisor, the Sub-Advisor
will also, subject to the oversight and supervision of the
Advisor and the Trust's Board of Trustees, provide to the
Advisor or the Trust any of the facilities and equipment and
perform any of the services described in Section 4 of the
Advisory Agreement. In addition, the Sub-Advisor will keep
the Trust and the Advisor informed of developments materially
affecting the Fund and shall, on its own initiative, furnish
to the Fund from time to time whatever information the Sub-
Advisor believes appropriate for this purpose. The Sub-
Advisor will periodically communicate to the Advisor, at such
times as the Advisor may direct, information concerning the
purchase and sale of securities for the Fund, including: (a)
the name of the issuer, (b) the amount of the purchase or
sale, (c) the name of the broker or dealer, if any, through
which the purchase or sale will be effected, (d) the CUSIP
number of the instrument, if any, and (e) such other
information as the Advisor may reasonably require for purposes
of fulfilling its obligations to the Trust under the Advisory
Agreement. The Sub-Advisor will provide the services rendered
by it under this Agreement in accordance with the Fund's
investment objectives, policies and restrictions as stated in
the Fund'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
Trust's Board of Trustees.
The Sub-Advisor represents, warrants and covenants that it is
authorized and regulated by the Financial Conduct Authority.
III. Covenants.
A. In the performance of its duties under this
Agreement, the Sub-Advisor 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 By-Laws of the
Trust, as such documents are amended from time to time; (iv)
the investment objectives and policies of the Fund as set
forth in the Fund'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 Trust; and
B. In addition, the Sub-Advisor will:
1. 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, the Sub-Advisor will attempt to
obtain the best price and the most favorable execution of
its orders. The Advisor has been provided with a copy of
the Sub-Advisor's order execution policy and hereby
confirms that it has read and understood the information
in the order execution policy and agrees to it. In
particular, the Advisor agrees that the Sub-Advisor may
trade outside of the regulated market or multilateral
trading facility. In placing orders, the Sub-Advisor
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, the Sub-Advisor may select brokers
on the basis of the research, statistical and pricing
services they provide to the Fund and other clients of
the Advisor or the Sub-Advisor. Information and research
received from such brokers will be in addition to, and
not in lieu of, the services required to be performed by
the Sub-Advisor 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 the Sub-Advisor determines in
good faith that such commission is reasonable in terms
either of the transaction or the overall responsibility
of the Advisor and the Sub-Advisor to the Fund and their
other clients and that the total commissions paid by the
Fund will be reasonable in relation to the benefits to
the Fund over the long-term. 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, the Sub-Advisor may select brokers and
dealers with which it or the Fund is affiliated;
2. maintain books and records with respect to
the Fund's securities transactions and will render to the
Advisor and the Trust's Board of Trustees such periodic
and special reports as they may request;
3. maintain a policy and practice of
conducting its investment advisory services hereunder
independently of the commercial banking operations of its
affiliates. When the Sub-Advisor makes investment
recommendations for the Fund, its investment advisory
personnel will not inquire or take into consideration
whether the issuer of securities proposed for purchase or
sale for the Fund's account are customers of the
commercial department of its affiliates; and
4. treat confidentially and as proprietary
information of the Fund all records and other information
relative to the Fund, 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 the Sub-Advisor 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.
C. In addition, the Advisor:
1. agrees that the Sub-Advisor may aggregate
transactions for the Fund with transactions for other
clients and/ or its own account. In relation to a
particular order, aggregation may operate on some
occasions to the advantage of the Advisor and on other
occasions to the Advisor's disadvantage. However, it
must be unlikely that the aggregation of orders and
transactions will work overall to the disadvantage of the
Advisor before transactions will be aggregated;
2. instructs the Sub-Advisor not to make or
book client limit orders (being a specific instruction
from the Advisor to buy or sell a financial instrument at
a specified price limit or better and for a specified
size) in respect of securities admitted to trading on a
regulated market which are not immediately executed under
prevailing market conditions.
IV. Services Not Exclusive. Nothing in this Agreement
shall prevent the Sub-Advisor 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-Advisor 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-
Advisor will undertake no activities which, in its judgment,
will adversely affect the performance of its obligations under
this Agreement.
V. Books and Records. In compliance with the
requirements of Rule 31a-3 under the 1940 Act, the Sub-Advisor
hereby agrees that all records which it maintains for the Fund
are the property of the Trust and further agrees to surrender
promptly to the Trust any such records upon the Trust's
request. The Sub-Advisor 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 the Advisor).
VI. Expenses. During the term of this Agreement, the
Sub-Advisor will bear all costs and expenses of its employees
and any overhead incurred by the Sub-Advisor in connection
with its duties hereunder; provided that the Board of Trustees
of the Trust may approve reimbursement to the Sub-Advisor 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 and administrative services
required to be provided hereunder) of all personnel employed
by the Sub-Advisor who devote substantial time to Fund
operations or the operations of other investment companies
advised or sub-advised by the Sub-Advisor.
VII. Compensation.
A. The Advisor agrees to pay to the Sub-Advisor and
the Sub-Advisor agrees to accept as full compensation for all
services rendered by the Sub-Advisor as such, a monthly fee in
arrears at an annual rate equal to the amount set forth in
Schedule A 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 Fund shall be calculated pursuant to the procedures
adopted by resolutions of the Trustees of the Trust for
calculating the value of the Fund's assets or delegating such
calculations to third parties.
C. If Advisor waives any or all of its advisory fee
payable under the Advisory Agreement, or reimburses the Trust
pursuant to Section 8(b) of that Agreement, with respect to
the Fund, Sub-Advisor 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 Fund to the aggregate fees
that would otherwise be paid by the Trust to Advisor under the
Advisory Agreement with respect to the Fund. Advisor shall
inform Sub-Advisor prior to waiving any advisory fees.
VIII. Indemnity.
(a) The Fund may, in the discretion of the Board of
Trustees of the Trust, indemnify the Sub-Advisor, and each of
the Sub-Advisor's directors, officers, employees, agents,
associates and controlling persons and the directors,
partners, members, officers, employees and agents thereof
(including any individual who serves at the Sub-Advisor's
request as director, officer, partner, member, trustee or the
like of another entity) (each such person being an
"Indemnitee") against any liabilities and expenses, including
amounts paid in satisfaction of judgments, in compromise or as
fines and penalties, and counsel fees (all as provided in
accordance with applicable state law) reasonably incurred by
such Indemnitee in connection with the defense or disposition
of any action, suit or other proceeding, whether civil or
criminal, before any court or administrative or investigative
body in which such Indemnitee may be or may have been involved
as a party or otherwise or with which such Indemnitee may be
or may have been threatened, while acting in any capacity set
forth herein or thereafter by reason of such Indemnitee having
acted in any such capacity, except with respect to any matter
as to which such Indemnitee shall have been adjudicated not to
have acted in good faith in the reasonable belief that such
Indemnitee's action was in the best interest of the Fund and
furthermore, in the case of any criminal proceeding, so long
as such Indemnitee had no reasonable cause to believe that the
conduct was unlawful; provided, however, that (1) no
Indemnitee shall be indemnified hereunder against any
liability to the Fund or its shareholders or any expense of
such Indemnitee arising by reason of (i) willful misfeasance,
(ii) bad faith, (iii) gross negligence or (iv) reckless
disregard of the duties involved in the conduct of such
Indemnitee's position (the conduct referred to in such clauses
(i) through (iv) being sometimes referred to herein as
"disabling conduct"), (2) as to any matter disposed of by
settlement or a compromise payment by such Indemnitee,
pursuant to a consent decree or otherwise, no indemnification
either for said payment or for any other expenses shall be
provided unless there has been a determination that such
settlement or compromise is in the best interests of the Fund
and that such Indemnitee appears to have acted in good faith
in the reasonable belief that such Indemnitee's action was in
the best interest of the Fund and did not involve disabling-
conduct by such Indemnitee and (3) with respect to any action,
suit or other proceeding voluntarily prosecuted by any
Indemnitee as plaintiff, indemnification shall be mandatory
only if the prosecution of such action, suit or other
proceeding by such Indemnitee was authorized by a majority of
the full Board of Trustees of the Trust.
(b) The Fund shall make advance payments in
connection with the expenses of defending any action with
respect to which indemnification might be sought hereunder if
the Fund receives a written affirmation of the Indemnitee's
good faith belief that the standard of conduct necessary for
indemnification has been met and a written undertaking to
reimburse the Fund unless it is subsequently determined that
such Indemnitee is entitled to such indemnification and if the
Trustees of the Trust determine that the facts then known to
them would not preclude indemnification. In addition, at
least one of the following conditions must be met: (A) the
Indemnitee shall provide a security for such Indemnitee's
undertaking, (B) the Fund shall be insured against losses
arising by reason of any unlawful advance, or (C) a majority
of a quorum consisting of Trustees of the Trust who are
neither "interested persons" of the Trust (as defined in
Section 2(a)(19) of the 0000 Xxx) nor parties to the
proceeding ("Disinterested Non-Party Trustees") or an
independent legal counsel in a written opinion, shall
determine, based on a review of readily available facts (as
opposed to a full trial-type inquiry), that there is reason to
believe that the Indemnitee ultimately will be found entitled
to indemnification.
(c) All determinations with respect to the standards
for indemnification hereunder shall be made (1) by a final
decision on the merits by a court or other body before whom
the proceeding was brought that such Indemnitee is not liable
by reason of disabling conduct, or (2) in the absence of such
a decision, by (i) a majority vote of a quorum of the
Disinterested Non-Party Trustees of the Trust, or (ii) if such
a quorum is not obtainable or even, if obtainable, if a
majority vote of such quorum so directs, independent legal
counsel in a written opinion. All determinations that advance
payments in connection with the expense of defending any
proceeding shall be authorized shall be made in accordance
with the immediately preceding clause (2) above.
The rights accruing to any Indemnitee under these
provisions shall not exclude any other right to which such
Indemnitee may be lawfully entitled.
IX. Limitation on Liability.
A. The Sub-Advisor will not be liable for any error
of judgment or mistake of law or for any loss suffered by the
Advisor or by the Trust or the Fund 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 duties under this Agreement. As used in this Section
9(a), the term "Sub-Advisor" shall include any affiliates of
the Sub-Advisor performing services for the Fund contemplated
hereby and partners, directors, officers and employees of the
Sub-Advisor and such affiliates.
B. Notwithstanding anything to the contrary
contained in this Agreement, the parties hereto acknowledge
and agree that, as provided in Article Seventh of the
Declaration of Trust, this Agreement is executed by the
Trustees and/or officers of the Trust, not individually but as
such Trustees and/or officers of the Trust, and the
obligations hereunder are not binding upon any of the Trustees
or Shareholders individually but bind only the estate of the
Trust.
X. Duration and Termination. This Agreement shall
become effective as of the date hereof and, unless sooner
terminated with respect to the Fund as provided herein, shall
continue in effect for a period of two years. Thereafter, if
not terminated, this Agreement shall continue in effect with
respect to the Fund for successive periods of 12 months,
provided such continuance is specifically approved at least
annually by both (a) the vote of a majority of the Trust's
Board of Trustees or a vote of a majority of the outstanding
voting securities of the Fund at the time outstanding and
entitled to vote and (b) by the vote of a majority of the
Trustees, who are not parties to this Agreement or interested
persons (as such term is defined in the 0000 Xxx) of any such
party, cast in person at a meeting called for the purpose of
voting on such approval. Notwithstanding the foregoing, this
Agreement may be terminated by the Trust or the Advisor at any
time, without the payment of any penalty, upon giving the Sub-
Advisor 60 days' notice (which notice may be waived by the
Sub-Advisor), provided that such termination by the Trust or
the Advisor shall be directed or approved by the vote of a
majority of the Trustees of the Trust in office at the time or
by the vote of the holders of a majority of the outstanding
voting securities of the Fund entitled to vote, or by the Sub-
Advisor on 60 days' written notice (which notice may be waived
by the Trust and the Advisor), and will terminate
automatically upon any termination of the Advisory Agreement
between the Trust and the Advisor. 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 of such terms in the 1940 Act.)
XI. 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.
XII. Amendment of this Agreement. This Agreement may be
amended by the parties only if such amendment is specifically
approved by the vote of the Board of Trustees of the Trust,
including a majority of those Trustees who are not parties to
this Agreement or interested persons of any such party cast in
person at a meeting called for the purpose of voting on such
approval and, where required by the 1940 Act, by a vote of a
majority of the outstanding voting securities of the Fund.
XIII. 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.
XIV. 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.
XV. 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.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, the parties hereto have caused this
instrument to be executed by their duly authorized officers
designated below as of the day and year first above written.
BLACKROCK ADVISORS, LLC
By. /s/ Xxx Xxxxxxxxx
Name: Xxx Xxxxxxxxx
Title: Director
BLACKROCK INTERNATIONAL LIMITED
By. /s/ Xxxx Xxxxxxxxxxxx
Name: Xxxx Xxxxxxxxxxxx
Title: Managing Director
BLACKROCK INTERNATIONAL LIMITED
By. /s/ Xxxxxx Xxxxx
Name: Xxxxxx Xxxxx
Title: Authorized Signatory
AGREED AND ACCEPTED
as of the date first set forth above
BLACKROCK FUNDSSM, on behalf of
BlackRock Emerging Markets Dividend 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 Fund for
which the Sub-Advisor acts as sub-advisor, Advisor shall pay a
fee to Sub-Advisor equal to % of the advisory fee
received by the Advisor from the Fund with respect to such
portion, net of: (i) expense waivers and reimbursements, (ii)
expenses relating to distribution and sales support activities
borne by the Advisor, and (iii) administrative, networking,
recordkeeping, sub-transfer agency and shareholder services
expenses borne by the Advisor.
Exhibit 77Q1(e)
