BlackRock Exemptive Application

FROM SECTIONS 2(a)(32), 5(a)(1), 18(f)(1), 18(i), 22(d) AND 22(e) OF THE 1940 ACT

BlackRock Funds^SM, BlackRock Funds II, BlackRock Funds III and BlackRock Funds V (each a “Company,” and together, the “Companies”), BlackRock Advisors, LLC (“BAL”) and BlackRock Fund Advisors (“BFA” and together with BAL, “BlackRock” or the “Advisor”) (the Companies and BlackRock together are the “Applicants”) hereby file this application, as may be amended (the “Application”), for an order (“Order”) of the Securities and Exchange Commission (the “Commission”) under Section 6(c) of the Investment Company Act of 1940, as amended (the “1940 Act”), for an exemption from Sections 2(a)(32), 5(a)(1), 18(f)(1), 18(i), 22(d) and 22(e) of the 1940 Act and Rule 22c-1 under the 1940 Act and under Sections 6(c) and 17(b) of the 1940 Act for an exemption from Sections 17(a)(1) and 17(a)(2) of the 1940 Act.¹ Applicants request that the Order apply not only to the Companies named as Applicants and their existing series (if any), but also to any other existing or future series of the

Companies and any other existing or future open-end management investment companies registered under the 1940 Act and existing and future series thereof (if any) (each, a “Fund,” and collectively, the “Funds”) that are advised by the Advisor and either are actively managed or track the performance of an index.² The Funds will comply with the terms and conditions of the Application.

Applicants request an Order that would permit a Fund, no shares of which are listed for trading on an exchange (a “Mutual Fund”), to offer a class of exchange-traded shares (each such class, an “ETF Class,” and such shares, “ETF Shares”) in addition to classes of shares that are not exchange-traded (each such class, a “Mutual Fund Class,” and such shares, “Mutual Fund Shares”). The Order would provide Funds with two broad categories of relief: (i) the relief necessary to permit standard exchange-traded fund (“ETF”) operations consistent with Rule 6c-11 under the 1940 Act (“ETF Operational Relief”); and (ii) the relief necessary for a Mutual Fund to offer an ETF Class (“ETF Class Relief”).

Pursuant to the ETF Operational Relief, the Order would permit: (i) ETF Shares of the Funds to be listed on a national securities exchange (“Exchange”), as defined in Rule 6c-11, and traded at market-determined prices, rather than at the ETF Shares’ next-determined net asset value (“NAV”) per share; (ii) ETF Shares to be issued and redeemed only in creation unit increments, as defined in Rule 6c-11 (“Creation Units”), except with respect to the Exchange Privilege (as defined and discussed in the “Legal Analysis and Discussion” section below); (iii) certain affiliated persons of a Fund to purchase Creation Units with (or redeem Creation Units for) baskets, as defined in Rule 6c-11 (“Baskets”); and (iv) certain Funds that include foreign investments in their Baskets to pay redemption proceeds more than seven calendar days after ETF Shares are tendered for redemption. As described below, the ETF Operational Relief would provide the Funds with the same relief as contained in Rule 6c-11, subject to the same conditions contained in Rule 6c-11.

Pursuant to the ETF Class Relief, the Order would permit a Fund to offer both an ETF Class and one or more Mutual Fund Classes. This multi-class structure would comply with Rule 18f-3 under the 1940 Act, except for certain ways in which an ETF Class and Mutual Fund Class would have different rights and obligations, as described below.

Each of BlackRock Funds^SM, BlackRock Funds II and BlackRock Funds V is organized as a Massachusetts business trust. BlackRock Funds III is organized as a Delaware statutory trust. Each Company is registered with the Commission as an open-end management investment company under the 1940 Act and offers shares of multiple series pursuant to a registration statement on Form N-1A, as amended, filed with the Commission under the Securities Act of 1933, as amended (the “Securities Act”), and the 1940 Act.

The Funds that initially would rely on the relief are separate series of the Companies and pursue distinct investment objectives and strategies. Each Fund will choose to offer an ETF Class and Mutual Fund Classes only when the board of trustees/directors of the relevant Company (the “Board”), including a majority of the directors/trustees (collectively, “directors”) who are not “interested persons” of the Company as defined in Section 2(a)(19) of the 1940 Act (the “Independent Directors”), determines that such multi-class structure is in the best interest of the ETF Class and each Mutual Fund Class individually, and the Fund as a whole. Many Fund shareholders are long-term investors. The investor base for the Funds reflects a variety of shareholder types, including clients represented by independent financial advisors, broker-dealers or other intermediaries (“Financial Intermediaries”), institutional investors, direct investors and employer-sponsored retirement plans.

BAL is a Delaware limited liability company with its principal place of business in New York, New York, and BFA is a California corporation with its principal place of business in San Francisco, California. BAL and BFA are each registered with the Commission as an investment adviser under the Investment Advisers Act of 1940, as amended (the “Advisers Act”). Any other Advisor also will be registered with the Commission as an investment adviser under the Advisers Act. The Advisor serves or will serve as the investment adviser to one or more Funds pursuant to separate investment management agreements with the relevant Company.

In 2000, the Commission granted an exemptive order to The Vanguard Group, Inc. (“Vanguard”) permitting Vanguard to offer certain index-based open-end management investment companies with mutual fund classes and exchange-traded classes.³ In 2003, the Commission amended the original exemptive order to expand the relief to cover additional domestic equity index funds.⁴ Also in 2003, the Commission granted an exemptive order to permit Vanguard to offer international equity index funds with mutual fund classes and exchange-traded classes.⁵ Finally, in 2007, the Commission granted an exemptive order to permit Vanguard’s bond index funds to offer mutual fund classes and exchange-traded classes.⁶

Relying on these four exemptive orders (collectively, the “Vanguard Orders”), Vanguard has become a major sponsor of index-based ETFs.⁷

In 2019, the Commission adopted Rule 6c-11 under the 1940 Act to provide the exemptive relief necessary under the 1940 Act to permit ETF operations.⁸ However, the Commission determined not to provide the necessary exemptive relief to allow for ETF Classes as part of Rule 6c-11. The Adopting Release explains that ETF Class Relief raises policy considerations that are different from those that the Commission intended to address in Rule 6c-11. The Adopting Release specifically notes that an ETF class that transacts with authorized participants, as defined in Rule 6c-11 (“Authorized Participants”), on an in-kind basis and a mutual fund class that transacts with shareholders on a cash basis may give rise to differing costs to the portfolio. As a result, certain costs may result from transactions through one class, but all shareholders would generally bear the costs.⁹

The Commission concluded that a fund seeking to offer an ETF class and mutual fund classes should request relief through the exemptive application process so that the Commission may assess all relevant policy considerations in the context of the facts and circumstances of particular applicants.¹⁰

Applicants are filing the Application because they believe that the ability of a Fund to offer both Mutual Fund Shares and ETF Shares could be beneficial to the Fund and to shareholders of each type of class, as discussed below. As noted above, the investor base for the Funds reflects a variety of shareholder types, including clients represented by Financial Intermediaries, institutional investors, direct investors and employer-sponsored retirement plans. In recent years, Financial Intermediaries and their clients have reported a greater interest in ETFs, particularly as the Financial Intermediaries’ clients hold more ETFs in their accounts and as ETF model portfolios grow in popularity. Applicants continue to see demand for ETFs to help investors meet their distinct financial goals and look for opportunities to grow their lineup with innovative strategies that offer choice, value, and new opportunities to help meet the evolving needs of investors. Applicants are committed to providing customers choice in the investment products they offer.

Applicants believe that the multi-class structure will allow an investor to choose the manner in which such investor wishes to hold interests in a Fund based on the share class characteristics that are most important to that investor. For shareholders already invested in a Mutual Fund, a Fund’s ability to add an ETF Class and offer the exchange feature described below would improve the investor experience by providing those shareholders with the ability to choose their preferred wrapper, without incurring transaction costs or potentially adverse tax consequences, through the ability to exchange into ETF Shares or to continue to hold Mutual Fund Shares of the same Fund.

Many retirement or “401(k)” plans do not offer ETFs to their plan participants because retirement plan administrators are often unable to accommodate investments with intra-day trading, and so such retirement plan investors often invest in Mutual Funds. If the relief sought by this Application were granted, Mutual Fund Shares offered by a Fund could be made available to those retirement plan participants on those retirement plan platforms, which could be beneficial to both ETF Class and Mutual Fund Class shareholders of the Fund. If the relief sought by this Application is not granted, Applicants may be required to offer two separate funds – a Mutual Fund and an ETF – with substantially similar strategies to meet investor demand. By having an ETF Class, Mutual Fund Class shareholders of a Fund may benefit from broader distribution opportunities and ultimately from greater scale. By having one or more Mutual Fund Classes, ETF Class shareholders may benefit from having access to a retirement or “401(k)” distribution channel and ultimately from greater scale. Such asset growth could make it possible for a Fund’s shareholders to realize the benefits of breakpoints, if any, in the Fund’s fee schedule and for a Fund to spread fixed costs over a larger asset base, driving economies of scale to the benefit of all shareholders. Similarly, the ability to add an ETF Class to a Mutual Fund would allow a Fund that already has access to the retirement distribution channel to attract assets from investors seeking access to the same strategy through an ETF.

Prior to relying on the relief requested herein with respect to any particular Fund, the Advisor would evaluate the compatibility of the Fund with offering an ETF Class, taking into account all appropriate considerations, including, without limitation, (i) investment strategy compatibility, which would include an analysis of whether the Fund’s underlying holdings could support overall ETF market quality, taking into account the degree to which the current ETF ecosystem supports such holdings, and whether the Fund would transact with Authorized Participants in respect of the ETF Class primarily on an in-kind basis or regularly in whole or in part on a cash basis; (ii) portfolio management team readiness, which would include the appropriateness of daily transparency and ETF trading requirements for the investment strategy; (iii) potential capacity constraints, if any; and (iv) underlying shareholder composition, to the extent known and relevant. The Advisor also expects to take into account commercial considerations, including a strategy’s distribution footprint, and whether there is demand for an ETF offering of that strategy.

In assessing whether a particular Fund should have both one or more Mutual Fund Classes and an ETF Class, the Board, including a majority of the Independent Directors, would take into account all factors deemed relevant to determine that the multi-class structure is in the best interests of each Mutual Fund Class and ETF Class individually and of the Fund as a whole before such a structure is implemented. In particular, when approving a multi-class plan that includes an ETF Class as well as one or more Mutual Fund Classes, the Board would consider, among other factors: (i) the investment strategy of the Fund, including the ability of the Fund’s investment holdings to support overall ETF market quality, and whether the Fund would transact with Authorized Participants in respect of the ETF Class primarily on an in-kind basis or regularly in whole or in part on a cash basis; (ii) if an existing Fund is adding an ETF Class, the size of the Mutual Fund Class(es) and historical information about the Fund’s cash holdings, transaction costs, capital gains distributions, tax loss carryforwards, and current amount of unrealized capital gain/loss in the Fund; (iii) for an existing Fund, historical Fund-wide flow information; (iv) the ability to operate the Fund with daily portfolio transparency in accordance with conditions that mirror those of Rule 6c-11; (v) any anticipated capacity constraints based on the Fund’s strategy; and (vi) the portfolio managers’ reasonable expectations with respect to the potential for cash drag due to the existence of the Mutual Fund Class(es) and the portfolio management techniques that will be used to minimize any such cash drag. In making this determination, the Board would be subject to its fiduciary duties, as well as the same standard imposed on fund boards today under Rule 18f-3 when determining whether to approve any multi-class arrangement. As required by Rule 18f-3, before any Board vote on a multi-class plan that includes an ETF Class and one or more Mutual Fund Classes, the directors will request and evaluate, and any agreement relating to the class arrangement will require the Advisor to furnish, such information as may be reasonably necessary to evaluate the plan.

Each Fund’s operations in the multi-class structure will be subject to ongoing monitoring, including monitoring by the Advisor of brokerage and other costs associated with the Fund’s portfolio transactions, cash drag, and the tax results of the Fund. Each Fund’s operations will also be subject to ongoing monitoring of data concerning inflows and outflows on a per class basis. In the event that the Advisor identifies material issues in the functioning of the Fund’s multi-class structure, the Advisor will notify the Board or a designated committee (“Committee”) thereof and present recommendations for appropriate remedial measures to the Board or Committee for its consideration. The Board or Committee will then decide whether to take any corrective action. Potential actions may include, but are not limited to, requiring the Advisor to modify the Fund’s investment strategy or to take other actions to optimize the performance of the ETF Class and the Fund as a whole, or more permanent structural actions (in each case, subject to operational feasibility). These may include converting the Fund as a whole to an ETF, restructuring a Fund’s ETF Class or Mutual Fund Class(es) as shares of a separate Fund that offers only an ETF Class or one or more Mutual Fund Classes but is otherwise substantially similar to the Fund (i.e., has the same investment objective(s) and fundamental investment policies), or providing ETF Class shareholders a one-time conversion option to convert their shares of the ETF Class into shares of a Mutual Fund Class. The range of corrective measures may vary depending on the particular facts and circumstances relating to a Fund’s operations. The Board or Committee may consider additional corrective measures if deemed necessary.

Each Fund’s registration statement also will clearly describe the multi-class structure, including the key characteristics of, and any risks associated with, the multi-class structure, such as the potential that transactions through one class could generate portfolio transaction costs and tax consequences for shareholders in other classes. Investors therefore will be able to assess whether they wish to invest in the Fund, and through which type of class.

Applicants believe that an ETF Class would offer the following significant benefits to shareholders in a Fund’s Mutual Fund Classes.

First, in-kind transactions through the ETF Class (where applicable) may contribute to lower portfolio transaction costs and greater tax efficiency. In general, in-kind transactions through the ETF Class in connection with creations and redemptions could allow a Fund to reduce some portfolio transaction costs. This could be particularly true through the use of the custom basket flexibility permitted under Rule 6c-11. For example, on days when there may be limited cash inflows through the Mutual Fund Classes, in-kind transactions through the ETF Class could allow the Fund to rebalance or otherwise adjust its portfolio efficiently while keeping cash balances low and without needing to sell and purchase portfolio securities in the market. In-kind redemptions also could serve to limit the realization of capital gains and reduce unrealized capital gains within the portfolio and improve the tax profile of the Fund, which could help shareholders minimize current capital gains to the extent that portfolio adjustments and cash redemptions by a Mutual Fund Class require the sale of portfolio securities. An improved tax profile for the Fund also may assist the competitive positioning of the Fund for attracting prospective shareholders.

As described in greater detail below, Applicants also believe that an exchange feature could allow holders of Mutual Fund Shares to exchange Mutual Fund Shares for ETF Shares at the time(s) of their own choosing in light of their then-current circumstances and investment preferences and without adverse consequences to the Fund, thereby enhancing the benefits to a Fund and its shareholders. To the extent that some existing holders of Mutual Fund Shares would prefer to hold ETF Shares, the existence of an ETF Class could allow for those shareholders to exchange their shares into the ETF Class of the same Fund rather than redeeming their Mutual Fund Shares and buying shares of another ETF. In so doing, the exchanging shareholder could save on transaction costs and potential tax consequences that may otherwise be incurred in redeeming their Mutual Fund Shares and buying shares of a separate ETF. The Fund (and thus other shareholders) may also save on transaction costs and potential tax consequences that could otherwise arise if the Fund needed to sell portfolio securities (a potential capital gain event) to raise cash to satisfy the redemption of Mutual Fund Shares and would also retain the benefits of scale in the Fund as shareholders exchange their Mutual Fund Shares for ETF Shares of the same Fund.

In addition, the ETF Class would provide additional distribution opportunities for a Fund that could lead to additional asset growth and economies of scale. ETFs are an increasingly popular choice for investors and may attract additional investment to a Fund. Greater assets under management (“AUM”) may lead to additional cost efficiencies. Having higher AUM and an established performance history or track record can be an important factor in whether a Fund may qualify for placement on distribution platforms maintained by Financial Intermediaries. The addition of a new share class to an existing Fund can benefit the Fund and existing shareholders by allowing, among other things, the Fund’s fixed expenses to be spread over a larger asset base. The Commission previously recognized these benefits when considering the adoption of Rule 18f-3.¹¹

Although many of the Funds are generally intended for long-term investors, ETF Shares also could allow certain investors to engage in more frequent trading without disrupting the Fund’s portfolio. For example, model portfolios that rebalance periodically could trade in and out of the ETF Class on the secondary market. Similarly, to the extent holders of Mutual Fund Shares want to engage in tax-loss harvesting following a market decline, such shareholders could exchange Mutual Fund Shares for ETF Shares and then trade more frequently in the secondary market. Such secondary market transactions would not disrupt the portfolio of the Fund and would help long-term investors avoid the adverse consequences of frequent trading and market timing by a few short-term investors.

Applicants believe that the existence of one or more Mutual Fund Classes would offer the following significant benefits to shareholders in a Fund’s ETF Class.

First, investor cash flows through a Mutual Fund Class can be used for efficient portfolio rebalancing and other portfolio adjustments. As part of the Advisor’s approach to investing, certain Fund portfolios may contain a large number of portfolio positions where small adjustments are made on a frequent basis. To the extent that cash flows come into a Fund through a Mutual Fund Class, a portfolio manager may be able to deploy that cash strategically to rebalance or otherwise adjust the portfolio and establish desired exposures. Under these circumstances, cash flows through a Mutual Fund Class could help facilitate portfolio management to the benefit of all shareholders, including ETF Class shareholders, particularly if there are no creations through the ETF Class on a given day.

Second, cash flows through a Mutual Fund Class may allow for greater Basket flexibility for creations and redemptions through the ETF Class, which could promote arbitrage efficiency and narrower spreads on the trading of ETF Shares in the secondary market. Some Funds may hold a large number of securities with a wide range of portfolio exposures. If cash flows from a Mutual Fund Class can be utilized strategically by the portfolio manager to obtain exposure to some portfolio positions (e.g., small portfolio positions), the portfolio manager could specify a smaller number of different securities for the Baskets used for creations and redemptions of ETF Shares by Authorized Participants. As recognized in the Adopting Release, if Baskets contain a smaller number of securities, Authorized Participants may be able to assemble or liquidate such Baskets with lower transaction costs. Reducing the costs of Authorized Participants to create and redeem ETF Shares potentially could result in greater arbitrage efficiency and narrower spreads in connection with the trading of ETF Shares in the secondary market by the Authorized Participants, and could make the Fund more attractive, thus increasing overall Fund assets.¹²

With respect to existing Funds, the addition of an ETF Class would permit investors that prefer the ETF structure to gain access to established Funds’ investment strategies. For those investors who prefer investing in ETFs and are interested in existing Funds, an ETF Class could be an attractive investment opportunity. As discussed above under “Benefits of an ETF Class for Mutual Fund Class Shareholders,” having higher AUM and an established performance history or track record can be an important factor in whether a Fund may qualify for placement on distribution platforms maintained by Financial Intermediaries. An ETF Class of an existing Fund could benefit from pre-existing assets and performance, which could improve the availability of the Fund to investors. Further, an ETF Class of an existing Fund could potentially benefit from a larger, more diverse shareholder base across the Fund as a whole and the Fund’s ability to implement its investment strategy at scale, both of which are key considerations for Financial Intermediaries. Applicants believe that holders of ETF Shares of a Fund that also offers one or more Mutual Fund Classes would benefit from the ability to participate in the growth of a single portfolio offered through multiple channels and the resultant benefits of scale associated with a diversified portfolio with lower overall costs.

Applicants note that existing Funds that would be candidates for an ETF Class would include only those strategies that the Advisor believes can grow with the addition of ETF Class assets, and would be able to continue to deliver on their investment objectives if such growth were achieved. This ability for a Fund to scale would likely be the result of a number of factors, such as a broad investable universe, the ability of the strategy’s investable universe to grow as the Fund grows, and/or the adaptability of the Fund’s investment strategy to support the growth of AUM without materially impacting the Fund’s ability to meet its investment objective.

Applicants also believe that the establishment of an ETF Class as part of an existing Mutual Fund could lead to cost efficiencies. In terms of Fund expenses, an ETF Class could have initial and ongoing advantages for its shareholders. As an initial matter, Applicants expect that shareholders of an ETF Class of a Mutual Fund that already has substantial assets could immediately benefit from economies of scale. These are the same types of benefits that the Commission originally recognized in adopting Rule 18f-3.¹³

Tax-free exchanges of shares from the Mutual Fund Class for shares of the ETF Class also may accelerate the development of an ETF shareholder base. Subsequent secondary market transactions by the ETF Class shareholders could generate greater trading volume, resulting in lower trading spreads and/or premiums or discounts in the market prices of the ETF Shares to the benefit of ETF shareholders.

Finally, the establishment of an ETF Class as part of an existing or a future Fund that already participates in a securities lending program would provide ETF Class shareholders the benefit of such securities lending program from the inception of the ETF Class.

The Adopting Release indicates that share class ETFs raise certain additional policy considerations. Specifically, the Commission notes that the cash flows associated with other classes could impact a fund’s portfolio, generating costs that shareholders of all classes would share.

With respect to the potential consequences of cash flows, the Commission identifies three categories of costs: (1) brokerage and other costs associated with buying and selling portfolio securities in response to mutual fund share class inflows and outflows; (2) cash drag associated with holding the cash necessary to satisfy mutual fund share class redemptions; and (3) distributable capital gains associated with portfolio transactions. Applicants believe that each of these issues could be considered by the Advisor and the Board in determining whether a particular Fund should offer both Mutual Fund Classes and an ETF Class.

In terms of brokerage and other costs in connection with portfolio transactions, Funds will be selected where the Advisor believes shareholders of all classes will benefit from the scale, efficiency, and flexibility of the multi-class structure. Applicants believe that shareholder flows, cash balances, and portfolio rebalances and other portfolio adjustments can be managed holistically with in-kind transactions, where appropriate and consistent with the Fund’s investment strategy and underlying holdings, as well as efficient portfolio trading, to the mutual benefit of shareholders of all classes, significantly reducing the potential risk to the ETF Class, which will be clearly disclosed. In cases where a Fund, because of its underlying holdings and/or trading markets, will not transact with Authorized Participants in respect of the ETF Class primarily on an in-kind basis, the Advisor has extensive experience managing ETFs that transact with Authorized Participants in Baskets that consist in whole or in substantial part of cash, and do so efficiently and on a cost-effective basis. Applicants believe that this experience will support achieving similar outcomes for shareholders of all classes of a Fund.

As described above, cash inflows also may allow a portfolio manager to make specific portfolio adjustments that could be more difficult to achieve strictly using Basket transactions through a stand-alone ETF. At times, an ETF may not be able to establish desired portfolio positions purely through in-kind creation and redemption activity, and therefore could incur portfolio transaction costs if it becomes necessary to sell portfolio securities in order to generate cash to invest in new positions. Accordingly, the possibility of cash inflows through a Mutual Fund Class and in-kind transactions through an ETF Class is a combination that could allow for benefits to all Fund shareholders: in-kind creations and redemptions through the ETF Class could save some portfolio transaction costs, while cash inflows through the Mutual Fund Class could save transaction costs that the Fund might have incurred if otherwise forced to liquidate holdings to reposition the portfolio. Having both cash inflows and in-kind creation unit activity permits a Fund’s portfolio management team to manage the Fund’s investment program from a tax perspective as well.

With respect to the issue of cash drag, Funds will be chosen where the Advisor believes cash balances (if needed) can be efficiently raised and invested and/or are often part of the portfolio management strategy, and Mutual Fund Class cash flows can be efficiently used to effect rebalances and other portfolio adjustments. Applicants note that the Advisor’s active portfolio managers have various tools to minimize any cash drag associated with investor cash flows through a Mutual Fund Class, including cash equitization through futures and other financial instruments. In addition, portfolio managers manage cash at the portfolio level based on their investment strategy and are sensitive to the impact of cash holdings on a Fund’s performance. Cash equitization can help portfolio managers ensure sufficient liquidity to meet redemptions while maintaining intended levels of market exposure. The Advisor reviews overall risk and performance outcomes in Funds periodically and expects that any unintended or significant cash drag would be identified as part of those reviews. Applicants do not expect the Funds that would offer an ETF Class to maintain cash balances at a level that would cause any significant adverse impact on Fund performance.

Finally, the tax management of a Fund’s portfolio can have many elements. As a general matter, in-kind redemptions through the ETF Class could limit a Fund’s realization of capital gains and reduce the unrealized capital gains for the Fund’s portfolio generally, in which case cash redemption activity through the Mutual Fund Class might generate less capital gain on an ongoing basis for the Fund as a whole. In addition, a Mutual Fund Class also may have the ability to engage in in-kind redemptions with certain large shareholders, which could minimize capital gains. In determining the positions to include in an in-kind redemption, a Fund could also use tax lot selection to minimize gains remaining in its portfolio, as permitted by the tax code and regulations. In addition, a Fund could, to the extent available, reduce its capital gain distribution requirement by the portion of redemption proceeds that is represented by accumulated earnings and profits. The Mutual Fund Class may also provide cash inflows that could reduce the need to liquidate holdings to reposition or otherwise adjust the portfolio (as described in connection with transaction costs above) or to pay dividends and thereby reduce capital gain realization that may otherwise occur on liquidation of holdings.

A portfolio manager also may engage in selective tax management through portfolio transactions and could generate capital losses in connection with some cash redemptions that could offset gains from other portfolio transactions. Such capital losses (including capital loss carryforwards from the Mutual Fund Classes) could be particularly useful in connection with actively managed Funds, where the realization of some capital gains can occur in connection with portfolio management activity rather than as a result of cash redemptions. Cash redemptions through a Mutual Fund Class therefore could allow for some tax loss harvesting and potentially generate tax offsets for capital gains that in-kind redemptions through an ETF Class would not.

In addition to the specific issues that the Commission raised in the Adopting Release relating to cash flows through a Mutual Fund Class, the Commission also noted in the Adopting Release that unlike the ETFs covered by Rule 6c-11, existing share class ETFs do not provide daily portfolio transparency.¹⁴ Applicants note that a lack of daily portfolio transparency is not a necessary characteristic of investment companies that offer an ETF Class but, consistent with the requirements of Rule 6c-11, Applicants will publish the portfolio of each Fund that offers an ETF Class on a daily basis. Currently, the Funds make portfolio holdings information available to shareholders with a lag. As with existing fully transparent active ETFs, the Advisor believes that full portfolio transparency could be provided for Funds that operate pursuant to the requested Order without significant adverse consequences to shareholders. In making the determination as to which Funds would be appropriate for daily portfolio transparency, the Advisor will consider a range of factors, including the types of asset classes in which the Fund invests, the Fund’s liquidity profile, sources of alpha, and overall trading patterns (e.g., anticipated trade sizes relative to average daily volume, time it takes to build or reduce a position, and other relevant factors). The Advisor will also consider whether the portfolio management team manages other investment vehicles with similar strategies. The Advisor would only utilize a multi-class structure in reliance on the requested Order where the Advisor believes that displaying the portfolio holdings of the Fund on a daily basis would not negatively impact the Fund or its shareholders.

Taking into account the Commission’s concerns in the Adopting Release, Applicants have proposed conditions to the relief that will ensure that the Advisor and the Board focus on these issues with the initial approval and on an ongoing basis. Applicants also will include appropriate disclosure in a Fund’s registration statement regarding the key characteristics of, and any significant risks associated with, the multi-class structure, including the potential that transactions through one class could generate portfolio transaction costs and tax consequences for shareholders in other classes. Accordingly, investors will be able to make an informed investment decision when investing in a Fund with Mutual Fund Classes and an ETF Class.

Section 6(c) of the 1940 Act provides that the Commission may exempt any person, security, or transaction or any class or classes of persons, securities, or transactions from any provisions of the 1940 Act, or any rule or regulation thereunder, if such relief is necessary or appropriate in the public interest and consistent with the protection of investors and the purposes fairly intended by the policy and provisions of the 1940 Act.

Section 17(b) of the 1940 Act provides that the Commission will grant an exemption from the provisions of Section 17(a) of the 1940 Act if evidence establishes that the terms of the proposed transaction are reasonable and fair, including the consideration to be paid or received, and do not involve overreaching on the part of any person concerned, that the proposed transaction is consistent with the policy of each registered investment company concerned, and that the proposed transaction is consistent with the general purposes of the 1940 Act.

Applicants believe that the requested relief described in this Application meets these standards.

With respect to the ETF Operational Relief, Applicants seek the same exemptive relief as provided by Rule 6c-11, subject to the same conditions contained in Rule 6c-11. Applicants believe that they are technically unable to rely on Rule 6c-11 because “exchange-traded fund” is defined, in part, to mean a registered open-end management investment company “whose shares are listed on an Exchange and traded at market-determined prices.” To the extent that this definition suggests that all of the investment company’s shares must be listed on an Exchange, a Fund with both Mutual Fund Shares and ETF Shares would not meet this definition.

In addition, the Funds may offer an “Exchange Privilege” that would permit shareholders in a Mutual Fund Class to exchange Mutual Fund Shares for ETF Shares, but not vice versa (i.e., shareholders in an ETF Class would not be permitted to exchange ETF Shares for Mutual Fund Shares). The Exchange Privilege will conform with Section 11(a) of the 1940 Act. In particular, any exchange would occur at the relative NAVs of the respective securities. To the extent a Fund imposes any administrative fee on the exchange, the fee will be applied in compliance with Rule 11a-3 under the 1940 Act. ETF Shares issued to a shareholder as part of the Exchange Privilege will be newly issued ETF Shares, and not ETF Shares purchased in the secondary market. The issuance of ETF Shares in connection with the Exchange Privilege will comply with the Securities Act. Because the definition of “exchange-traded fund” in Rule 6c-11 requires that the ETF “issues (and redeems) creation units to (and from) authorized participants in exchange for a basket and a cash balancing amount if any,” a Fund that permits a holder of Mutual Fund Shares to acquire individual ETF Shares directly from the Fund through the Exchange Privilege may not satisfy this definition.

Although Applicants otherwise would comply with Rule 6c-11 as required by condition 1 below, because the Funds cannot rely on Rule 6c-11, Applicants request the ETF Operational Relief described below.

Section 5(a)(1) of the 1940 Act defines an “open-end company” as a management investment company that is offering for sale or has outstanding any redeemable security of which it is the issuer. Section 2(a)(32) of the 1940 Act defines a redeemable security as any security, other than short-term paper, under the terms of which the holder, upon its presentation to the issuer, is entitled to receive approximately such holder’s proportionate share of the issuer’s current net assets, or the cash equivalent.

Because ETF shares are not individually redeemable, a possible question arises as to whether the definitional requirements of a “redeemable security” or an “open-end company” under the 1940 Act are met. Rule 6c-11(b)(1) resolves this issue for exchange-traded funds relying on Rule 6c-11 by specifically providing that an exchange-traded fund share is considered a redeemable security within the meaning of Section 2(a)(32). Because the operations of an ETF Class would adhere to all of the requirements of Rule 6c-11, except that a Fund will list only one class of its shares on an Exchange and may offer an Exchange Privilege, Applicants request an Order under Section 6(c) granting an exemption from Sections 2(a)(32) and 5(a)(1) to permit a Fund to register as an open-end management investment company and, except as otherwise permitted by Rule 6c-11, redeem ETF Shares in Creation Unit increments only.

Section 22(d) of the 1940 Act, among other things, prohibits investment companies, their principal underwriters, and dealers from selling a redeemable security to the public except at a current public offering price described in the prospectus. Rule 22c-1 under the 1940 Act generally requires that a dealer selling, redeeming, or repurchasing a redeemable security do so only at a price based on its NAV.

Because investors may purchase and sell individual ETF shares from and to dealers on the secondary market at market-determined prices (i.e., at prices other than those described in the prospectus or based on NAV), Rule 6c-11 provides exemptions from these provisions. As noted, the operations of an ETF Class, including the ways in which the ETF Shares trade at market-determined prices, would be the same as for ETFs relying on Rule 6c-11. Accordingly, Applicants seek the same relief pursuant to Section 6(c) as provided by Rule 6c-11.

Section 22(e) generally prohibits a registered open-end management investment company from postponing the date of satisfaction of redemption requests for more than seven days after the tender of a security for redemption.

Rule 6c-11 provides an exemption from Section 22(e) to permit an ETF to delay satisfaction of a redemption request for more than seven days if a local market holiday, or series of consecutive holidays, or the extended delivery cycles for transferring foreign investments to redeeming Authorized Participants, or the combination thereof, prevents timely delivery of the foreign investment included in the ETF’s Basket. Pursuant to Section 6(c), Applicants seek the same relief for an ETF Class, subject to the requirements of Rule 6c-11.

Section 17(a) of the 1940 Act generally prohibits an affiliated person of a registered investment company, or an affiliated person of such person, from knowingly selling any security or other property to or purchasing any security or other property from the company.

Rule 6c-11 provides an exemption from these provisions to permit purchases and redemptions of Creation Units through Basket transactions between exchange-traded funds and certain types of affiliated persons as described in Rule 6c-11. Applicants seek an exemption from Sections 17(a)(1) and 17(a)(2) of the 1940 Act pursuant to Sections 6(c) and 17(b) of the 1940 Act to permit the Funds to engage in the same types of Basket transactions through the ETF Class, subject to the requirements of Rule 6c-11.

In addition to the ETF Operational Relief that parallels the exemptive relief provided by Rule 6c-11, Applicants request an order under Section 6(c) for relief from Sections 18(f)(1) and 18(i) of the 1940 Act in order for a Mutual Fund to offer an ETF Class.

Section 18(f)(1) of the 1940 Act provides that “it shall be unlawful for any registered open-end investment company to issue any class of senior security or to sell any senior security of which it is the issuer” with exceptions not here relevant. The term “senior security” is defined in Section 18(g) to mean “any stock of a class having priority over any other class as to distribution of assets or payment of dividends,” Section 18(i) provides that every share of stock issued by an open-end investment company “shall be a voting stock and have equal voting rights with every other outstanding voting stock.”

Section 18(f)(1) was enacted to protect investors from abuses associated with complex investment company capital structures, including excessive leverage, conflicts of interest among classes, and investor confusion, while Section 18(i) was intended to prevent inequitable and discriminatory shareholder voting provisions.¹⁵ The Commission generally takes the position that an open-end investment company that issues multiple classes could raise issues under Sections 18(f)(1) and 18(i) because differences in the rights accorded to, or expenses paid by, different shareholders of the same investment company may raise senior security issues under Section 18.

In 1995, the Commission adopted Rule 18f-3, which provides an exemption from Sections 18(f)(1) and 18(i) for any open-end investment company (or series thereof) with a multi-class structure, provided that the company complies with the requirements of the rule.¹⁶ Although Applicants will comply substantially with the requirements of Rule 18f-3, the Funds would not be able to comply with the requirement in Rule 18f-3(a)(4) that, aside from the differences permitted by the rule, the Mutual Fund Classes and the ETF Class will have the same rights and obligations.

Applicants have identified various ways in which Mutual Fund Shares and ETF Shares will have different rights. First, Mutual Fund Shares will be individually redeemable while ETF Shares will be redeemable only in Creation Unit increments. Second, ETF Shares will be tradable on an Exchange while Mutual Fund Shares will not; thus, the benefits of an ETF (trading any time during market hours with advanced trading features, such as limit and stop loss orders) will only be available to the ETF Shares. Third, the Exchange Privilege will be limited to the Mutual Fund Class (i.e., the Exchange Privilege will not be offered to holders of ETF Shares of the Fund). Fourth, dividends of Mutual Fund Shares may be automatically reinvested in additional Mutual Fund Shares issued by a Fund at its NAV, while holders of ETF Shares may only participate in a dividend reinvestment plan to the extent their broker-dealers make available the DTC book-entry and/or broker-dealer sponsored dividend reinvestment service. Fifth, although all share classes of a Fund will declare dividends on the same schedule (e.g., monthly, quarterly, annually), it is currently expected that the dividend declaration date for Mutual Fund Shares will be the ex-dividend date, whereas due to current Exchange requirements, the declaration date for ETF Shares would generally be one business day before the ex-dividend date (although it is possible that changes to Exchange requirements could alter this approach for ETF Shares and possibly result in no difference between ETF Shares and Mutual Fund Shares in this regard). Sixth, while all share classes of a Fund will pay dividends on the same schedule (e.g., monthly, quarterly, annually), dividends on the Mutual Fund Shares are expected to be paid by the business day after ex-dividend date, whereas the payment date for ETF Shares is expected to be several days after the ex-dividend date.

Applicants do not believe that the differences in class rights noted above implicate the concerns at which Section 18 is directed (i.e., excessive leverage, conflicts of interest, and investor confusion).

The issuance of classes of shares with different rights and obligations, and different dividend declaration and payable dates, does not create any opportunity for leverage.

While having more than one class of shares creates the potential for conflicts of interest between the classes, Applicants do not believe that the potential conflicts that could arise with respect to an ETF Class of a Mutual Fund are any different from those that could arise in any multi-class arrangement. Rule 18f-3 contains provisions designed to minimize or eliminate potential conflicts between classes, such as requiring separate approval on any matter submitted to shareholders in which the interests of one class differ from the interests of any other class, and requiring the use of certain formulas for allocating income, gains and losses, and appreciation and depreciation. Under this framework, multi-class funds have successfully addressed conflicts of interest between classes and have become one of the prevalent types of registered investment companies in the asset management industry. The Funds will comply with these voting and allocation provisions. Applicants do not believe that potential conflicts of interest beyond those raised generally by a multi-class structure are raised specifically when classes have different redemption and trading rights, different timing of dividend declaration and payment dates, differences in the availability of a dividend reinvestment plan, and, in some cases, different exchange rights.

Although Mutual Fund Shares and ETF Shares will both pay dividends, the dividend declaration date for Mutual Fund Shares of certain Funds is expected to be the ex-dividend date while the declaration date for ETF Shares is expected to be one business day before the ex-dividend date. Applicants expect that the difference in the dates on which dividends of Funds are declared for Mutual Fund Shares and ETF Shares will be due solely to Exchange rules applicable to ETFs, not to the intent of management to adopt specific measures that could be favorable to one class and prejudicial to another. Applicants note that they do not expect that there will be an economic impact on a particular share class as a result of this difference in dividend declaration dates.

Although Mutual Fund Shares and ETF Shares may both pay dividends, dividends on Mutual Fund Shares are expected to be paid by the business day after the ex-dividend date and can be automatically and immediately reinvested in additional Mutual Fund Shares at the NAV on the ex-dividend date, while the payment date for ETF Shares is expected to be several days after the ex-dividend date and ETF Class shareholders will not be able to reinvest their dividends until several days after the ex-dividend date. The delay between the ex-dividend date and the payment/reinvestment date occurs for all ETFs, whether they are stand-alone ETFs or part of a multi-class structure, and regardless of whether an ETF Class shareholder elects to reinvest dividends.

As a result of the difference in when dividends are paid, Mutual Fund Class shareholders who reinvest dividends will be continuously invested, while ETF Class shareholders who reinvest will be “out of the market” for several days with respect to the amount of the dividend. This difference will affect the relative performance of the classes because, during the period when the dividend is out of the market, ETF Class shareholders will not receive income or experience appreciation or depreciation on the amount of the dividend. Applicants do not believe that this economic difference will be significant.

Applicants do not believe that this difference between Mutual Fund Classes and ETF Classes resulting from the different dividend payment schedules results in a conflict between the share classes or is inconsistent with the purposes underlying Section 18 of the 1940 Act for the following reasons:

As noted, Section 18(i) provides that “every share of stock . . . issued by a registered management investment company . . . shall be a voting stock and have equal voting rights with every other outstanding voting stock.” Because shareholders of each Fund have voting rights based on the number of shares owned, and because the shareholders in the Mutual Fund Class may be able to reinvest dividends sooner than shareholders in the ETF Class, each Mutual Fund Class shareholder could obtain more voting power than an ETF Class shareholder in the days immediately following an ex-dividend date.

Applicants believe that their proposed treatment of voting rights meets the standards of Section 18(i) because every share issued by the Funds will have equal voting rights in that each share will be entitled to one vote per each share or dollar of NAV (number of shares owned multiplied by the NAV per share) and a fractional vote per each fractional share or dollar amount. While the voting power of a Mutual Fund Class shareholder arguably could be different due to the ability to reinvest dividends more quickly, voting power and voting rights are not necessarily the same thing. Even if one takes the position that the classes have different voting rights as a result of their different dividend policies, Applicants’ proposal merits an exemption from Section 18(i) because, given the immaterial difference in voting power between the classes, it is extremely unlikely that the outcome of a proxy vote would be affected.

As discussed above in section IV.C. of this Application, the Commission has expressed concern in the context of the Adopting Release that the cash flows associated with Mutual Fund Classes could impact a Fund’s portfolio, generating costs that shareholders of all classes, including

the ETF Class, would share.¹⁷ This potential for “cross-subsidization” between the classes might be viewed as a potential conflict between the classes. However, Applicants note as an initial matter that an inherent part of the mutual fund structure is the fact that some investors in the mutual fund will transact with the mutual fund more frequently than others, which may generate transaction costs and tax realizations that are experienced by all shareholders, including non-transacting shareholders. In this regard, the creation of an ETF Class could permit shareholders that wish to purchase and sell shares on a more frequent basis to do so through secondary market trading of ETF Shares rather than through purchases and redemptions of Mutual Fund Shares.¹⁸ Because such secondary market transactions would not impact the portfolio of a Fund, the existence of the ETF Class could reduce transaction costs and adverse tax consequences for the Fund as a general matter, a benefit that would be shared by all Fund shareholders.

Applicants also note that the sharing of portfolio transaction costs and tax realizations at the portfolio level is a characteristic of all multi-class funds that operate under Rule 18f-3. For example, even though different classes may be offered to different types of investors that may have different levels of transaction activity or different transaction sizes (e.g., institutional investors, retail investors), Rule 18f-3 does not seek to isolate the portfolio transaction costs or any tax realizations caused by cash inflows and outflows to the specific class “responsible” for that transaction activity. Instead of seeking to allocate such costs, Rule 18f-3 requires that the Board, including a majority of the Independent Directors, determine that the multi-class plan for the Fund is in the best interests of each class individually and of the Fund as a whole.¹⁹

Applicants generally propose to take the same approach with respect to a Fund that would offer a Mutual Fund Class (or Mutual Fund Classes) and an ETF Class. In light of the concerns expressed in the Adopting Release, however, Applicants propose several conditions to the requested relief that will help ensure that the Advisor and the Board, including the Independent Directors, are keenly focused on these issues as an initial and ongoing matter.²⁰ As discussed above, Applicants believe that shareholders of both Mutual Fund Classes and an ETF Class of certain Funds would benefit from the multi-class structure. As addressed in the next section, Applicants also will take steps to inform and educate investors regarding the characteristics of the multi-class structure, including the potential that transactions through one class could generate portfolio transaction costs and tax consequences for shareholders in other classes.

While Applicants believe the potential for investor confusion is limited, Applicants intend to take the steps described below, which Applicants believe will minimize or eliminate any potential for investor confusion. Applicants note that ETFs have been in existence for more than thirty years, and some ETFs are consistently among the highest volume securities on the Exchange on which they trade. Applicants believe that investors are familiar with the concept of ETF shares and understand the fundamental differences between them and conventional mutual fund shares, regardless of whether the ETF shares are issued by stand-alone ETFs or through ETF Classes. As the Commission noted in the Adopting Release, “ETF investors have grown familiar with ETFs and the fundamental distinctions between ETFs and mutual funds,” and the Commission therefore determined that Rule 6c-11 did not need to include special disclosure requirements to highlight the ways in which mutual funds and ETFs differ.²¹ Further, even though Rule 6c-11 does not include exemptive relief to permit ETF Classes, the Commission did consider the disclosure requirements that apply to ETF Classes at the time of the rulemaking, and its amendments to Form N-1A regarding ETF trading costs apply equally to ETFs and ETF Classes.²² Applicants also believe that it is extremely unlikely that any investor acquiring ETF Shares through the Exchange Privilege, if available, will do so without understanding the differences between the classes, since an investor would make an exchange only if the investor wanted to own shares with different characteristics.

Applicants will take numerous steps to ensure that investors have the information necessary to understand the differences between Mutual Fund Shares and ETF Shares.

Applicants believe that the efforts outlined above will ensure that interested investors have the information necessary to understand the differences between Mutual Fund Shares and ETF Shares.

As noted above, the Commission has granted similar requested relief on four previous occasions, as reflected in the Vanguard Orders.²⁴ Although Applicants seek similar relief, Applicants have proposed different conditions to the relief that reflect the adoption of Rule 6c-11 and that address the concerns expressed by the Commission in the Adopting Release relating to ETF Class Relief. Applicants believe that the Advisor and the Board of each Company will be well-positioned to determine whether it is appropriate for a given Fund to offer both Mutual Fund Classes and an ETF Class and to evaluate this structure on an ongoing basis. In addition, a new condition will require Applicants to provide the information necessary for shareholders to fully inform themselves of the characteristics of a Fund’s multi-class structure.

Applicants agree that any order of the Commission granting the requested relief will be subject to the following conditions:

All of the requirements for execution and filing of this Application on behalf of Applicants have been complied with in accordance with the applicable organizational documents of Applicants, and the undersigned officers of Applicants are fully authorized to execute this Application. The authorizations of Applicants, including the resolutions of Applicants authorizing the filing of this Application, required by Rule 0-2(c) under the 1940 Act are included as Exhibits A-1 through A-6 to this Application. The verifications required by Rule 0-2(d) under the 1940 Act are included as Exhibits B-1 through B-6 to this Application.

Pursuant to Rule 0-2(f) under the 1940 Act, Applicants state that their address is 50 Hudson Yards, New York, New York 10001, with respect to BAL, 100 Bellevue Parkway, Wilmington, Delaware 19809, with respect to BlackRock Funds^SM, BlackRock Funds II and BlackRock Funds V, and 400 Howard Street, San Francisco, California 94105, with respect to BFA and BlackRock Funds III, and that all written communications regarding this Application should be directed to the individuals and addresses indicated on the first page of this Application.

Applicants desire that the Commission issue the requested order pursuant to Rule 0-5 under the 1940 Act without conducting a hearing.

Based on the facts, analysis and conditions in the Application, Applicants respectfully request that the Commission issue an Order under Sections 6(c) and 17(b) of the 1940 Act granting the relief requested by Applicants. Applicants submit that the requested exemptions are necessary or appropriate in the public interest, consistent with the protection of investors and consistent with the purposes fairly intended by the policy and provisions of the 1940 Act. In addition, Applicants submit that the terms of the proposed transactions are reasonable and fair, including the consideration to be paid or received, and do not involve overreaching on the part of any person concerned, that the proposed transactions are consistent with the policy of each registered investment company concerned, and that the proposed transactions are consistent with the general purposes of the 1940 Act.

Applicants have caused this Application to be duly signed on their behalf on October 30, 2024.


BLACKROCK FUNDS^SM

By:		/s/ Janey Ahn
		Name: Janey Ahn
		Title: Secretary

BLACKROCK FUNDS II

By:		/s/ Janey Ahn
		Name: Janey Ahn
		Title: Secretary

BLACKROCK FUNDS III

By:		/s/ Janey Ahn
		Name: Janey Ahn
		Title: Secretary

BLACKROCK FUNDS V

By:		/s/ Janey Ahn
		Name: Janey Ahn
		Title: Secretary

BLACKROCK ADVISORS, LLC

By:		/s/ Janey Ahn
		Name: Janey Ahn
		Title: Managing Director

BLACKROCK FUND ADVISORS

By:		/s/ Janey Ahn
		Name: Janey Ahn
		Title: Managing Director

The following materials are made a part of the Application and are attached hereto:

I, Janey Ahn, do hereby certify that I am the Secretary of BlackRock Funds^SM. I further certify that the following resolutions were duly adopted by the trustees of BlackRock Funds^SM and that such resolutions have not been revoked, modified, rescinded, or amended and are in full force and effect:

RESOLVED, that BlackRock Funds^SM (the “Trust”) be, and each of the Proper Officers (as defined below) of the Trust acting on its behalf be, and they hereby are, authorized to prepare or cause to be prepared, execute and file with the Securities and Exchange Commission (the “SEC”) an application for an exemptive order (the “Order”), and any and all amendments thereto, pursuant to Section 6(c) of the Investment Company Act of 1940, as amended (the “1940 Act”), granting an exemption from Sections 2(a)(32), 5(a)(1), 18(f)(1), 18(i), 22(d) and 22(e) of the 1940 Act and Rule 22c-1 under the 1940 Act, and pursuant to Sections 6(c) and 17(b) of the 1940 Act, granting an exemption from Sections 17(a)(1) and 17(a)(2) of the 1940 Act, to permit certain existing and future series of the Trust (and affiliated investment companies) to offer a class of exchange-traded shares in addition to classes of shares that are not exchange-traded; and further

RESOLVED, that any and all actions previously taken in connection with the preparation, execution and filing with the SEC of an application for the Order, and any and all amendments thereto, pursuant to Section 6(c) of the 1940 Act, granting an exemption from Sections 2(a)(32), 5(a)(1), 18(f)(1), 18(i), 22(d) and 22(e) of the 1940 Act and Rule 22c-1 under the 1940 Act, and pursuant to Sections 6(c) and 17(b) of the 1940 Act, granting an exemption from Sections 17(a)(1) and 17(a)(2) of the 1940 Act be, and they hereby are, ratified; and further

RESOLVED, that the Chief Executive Officer, the President, any Vice President, Chief Financial Officer, Treasurer or any Assistant Treasurer and Secretary or any Assistant Secretary (the “Proper Officers”) be, and they hereby are, authorized to take such further actions and execute and deliver such other documents, including any filings with the SEC or other entities, as they shall deem necessary or advisable to obtain the Order; and further

RESOLVED, that the Proper Officers of the Trust be, and they hereby are, authorized and directed to do and perform any and all further acts and things which are necessary or appropriate to carry out the foregoing resolutions.

IN WITNESS WHEREOF, I have hereunder subscribed my name to this Certificate as of this 30th day of October, 2024.

I, Janey Ahn, do hereby certify that I am the Secretary of BlackRock Funds II. I further certify that the following resolutions were duly adopted by the trustees of BlackRock Funds II and that such resolutions have not been revoked, modified, rescinded, or amended and are in full force and effect:

RESOLVED, that BlackRock Funds II (the “Trust”) be, and each of the Proper Officers (as defined below) of the Trust acting on its behalf be, and they hereby are, authorized to prepare or cause to be prepared, execute and file with the Securities and Exchange Commission (the “SEC”) an application for an exemptive order (the “Order”), and any and all amendments thereto, pursuant to Section 6(c) of the Investment Company Act of 1940, as amended (the “1940 Act”), granting an exemption from Sections 2(a)(32), 5(a)(1), 18(f)(1), 18(i), 22(d) and 22(e) of the 1940 Act and Rule 22c-1 under the 1940 Act, and pursuant to Sections 6(c) and 17(b) of the 1940 Act, granting an exemption from Sections 17(a)(1) and 17(a)(2) of the 1940 Act, to permit certain existing and future series of the Trust (and affiliated investment companies) to offer a class of exchange-traded shares in addition to classes of shares that are not exchange-traded; and further

IN WITNESS WHEREOF, I have hereunder subscribed my name to this Certificate as of this 30th day of October, 2024.

I, Janey Ahn, do hereby certify that I am the Secretary of BlackRock Funds III. I further certify that the following resolutions were duly adopted by the trustees of BlackRock Funds III and that such resolutions have not been revoked, modified, rescinded, or amended and are in full force and effect:

RESOLVED, that BlackRock Funds III (the “Trust”) be, and each of the Proper Officers (as defined below) of the Trust acting on its behalf be, and they hereby are, authorized to prepare or cause to be prepared, execute and file with the Securities and Exchange Commission (the “SEC”) an application for an exemptive order (the “Order”), and any and all amendments thereto, pursuant to Section 6(c) of the Investment Company Act of 1940, as amended (the “1940 Act”), granting an exemption from Sections 2(a)(32), 5(a)(1), 18(f)(1), 18(i), 22(d) and 22(e) of the 1940 Act and Rule 22c-1 under the 1940 Act, and pursuant to Sections 6(c) and 17(b) of the 1940 Act, granting an exemption from Sections 17(a)(1) and 17(a)(2) of the 1940 Act, to permit certain existing and future series of the Trust (and affiliated investment companies) to offer a class of exchange-traded shares in addition to classes of shares that are not exchange-traded; and further

IN WITNESS WHEREOF, I have hereunder subscribed my name to this Certificate as of this 30th day of October, 2024.

I, Janey Ahn, do hereby certify that I am the Secretary of BlackRock Funds V. I further certify that the following resolutions were duly adopted by the trustees of BlackRock Funds V and that such resolutions have not been revoked, modified, rescinded, or amended and are in full force and effect:

RESOLVED, that BlackRock Funds V (the “Trust”) be, and each of the Proper Officers (as defined below) of the Trust acting on its behalf be, and they hereby are, authorized to prepare or cause to be prepared, execute and file with the Securities and Exchange Commission (the “SEC”) an application for an exemptive order (the “Order”), and any and all amendments thereto, pursuant to Section 6(c) of the Investment Company Act of 1940, as amended (the “1940 Act”), granting an exemption from Sections 2(a)(32), 5(a)(1), 18(f)(1), 18(i), 22(d) and 22(e) of the 1940 Act and Rule 22c-1 under the 1940 Act, and pursuant to Sections 6(c) and 17(b) of the 1940 Act, granting an exemption from Sections 17(a)(1) and 17(a)(2) of the 1940 Act, to permit certain existing and future series of the Trust (and affiliated investment companies) to offer a class of exchange-traded shares in addition to classes of shares that are not exchange-traded; and further

IN WITNESS WHEREOF, I have hereunder subscribed my name to this Certificate as of this 30th day of October, 2024.

All requirements for the execution and filing of this Application in the name and on behalf of BlackRock Advisors, LLC by the undersigned have been complied with and the undersigned is fully authorized to do so and has duly executed this Application as of this 30th day of October, 2024.

All requirements for the execution and filing of this application in the name and on behalf of BlackRock Fund Advisors by the undersigned have been complied with and the undersigned is fully authorized to do so and has duly executed this Application as of this 30th day of October, 2024.

The undersigned states that she has duly executed the attached application for exemption dated October 30, 2024, for and on behalf of BlackRock Funds^SM, that she is the Secretary of BlackRock Funds^SM, and that all actions by trustees, officers and other bodies necessary to authorize the undersigned to execute and file the application have been taken. The undersigned further says that she is familiar with the application, and the contents thereof, and that the facts therein set forth are true to the best of her knowledge, information and belief.

The undersigned states that she has duly executed the attached application for exemption dated October 30, 2024, for and on behalf of BlackRock Funds II, that she is the Secretary of BlackRock Funds II, and that all actions by trustees, officers and other bodies necessary to authorize the undersigned to execute and file the application have been taken. The undersigned further says that she is familiar with the application, and the contents thereof, and that the facts therein set forth are true to the best of her knowledge, information and belief.

The undersigned states that she has duly executed the attached application for exemption dated October 30, 2024, for and on behalf of BlackRock Funds III, that she is the Secretary of BlackRock Funds III, and that all actions by trustees, officers and other bodies necessary to authorize the undersigned to execute and file the application have been taken. The undersigned further says that she is familiar with the application, and the contents thereof, and that the facts therein set forth are true to the best of her knowledge, information and belief.

The undersigned states that she has duly executed the attached application for exemption dated October 30, 2024, for and on behalf of BlackRock Funds V, that she is the Secretary of BlackRock Funds V, and that all actions by trustees, officers and other bodies necessary to authorize the undersigned to execute and file the application have been taken. The undersigned further says that she is familiar with the application, and the contents thereof, and that the facts therein set forth are true to the best of her knowledge, information and belief.

The undersigned states that she has duly executed the attached application for exemption dated October 30, 2024, for and on behalf of BlackRock Advisors, LLC, that she is a managing director of BlackRock Advisors, LLC, and that all action by officers and other bodies necessary to authorize the undersigned to execute and file this application has been taken. The undersigned further states that she is familiar with this application, and the contents thereof, and that the facts therein set forth are true to the best of her knowledge, information and belief.

The undersigned states that she has duly executed the attached application for exemption dated October 30, 2024, for and on behalf of BlackRock Fund Advisors, that she is a managing director of BlackRock Fund Advisors, and that all action by officers and other bodies necessary to authorize the undersigned to execute and file this application has been taken. The undersigned further states that she is familiar with this application, and the contents thereof, and that the facts therein set forth are true to the best of her knowledge, information and belief.


	Page
I. INTRODUCTION		1
II. THE APPLICANTS		2
A. The Companies		2
B. BlackRock		3
III. BACKGROUND		3
IV. IN SUPPORT OF THE APPLICATION		4
A. Benefits of an ETF Class for Mutual Fund Class Shareholders		6
B. Benefits of a Mutual Fund Class or Classes for ETF Class Shareholders		7
C. Adopting Release Concerns about ETF Classes		9
V. REQUEST FOR EXEMPTIVE RELIEF		11
VI. LEGAL ANALYSIS AND DISCUSSION		12
A. ETF Operational Relief		12
1. Sections 2(a)(32) and 5(a)(1) of the 1940 Act		12
2. Section 22(d) of the 1940 Act and Rule 22c-1 under the 1940 Act		13
3. Section 22(e) of the 1940 Act		13
4. Sections 17(a)(1) and 17(a)(2) of the 1940 Act		13
B. ETF Class Relief		13
1. Section 18 of the 1940 Act and Rule 18f-3 under the 1940 Act		14
2. Addressing Policy Concerns under Section 18 and Rule 18f-3		15
(a) Leverage		15
(b) Conflicts of Interest		15
(i) Potential conflicts of interest resulting from different classes declaring dividends on different days		15
(ii) Potential conflicts of interest resulting from different classes paying/reinvesting dividends on different days		16
(iii) Potential inequitable voting power		17
(iv) Cross-Subsidization		17
(c) Investor Confusion		19
C. Precedent		20
VII. CONDITIONS		21
VIII. PROCEDURAL MATTERS		22
IX. CONCLUSION		22


Designation		Document
Exhibits A-1 through A-6		Authorizations
Exhibits B-1 through B-6		Verifications

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