Item 1 Cover Page. Ara Capital (ACap) Asset Management, Inc.

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1 Item1 CoverPage AraCapital(ACap)AssetManagement,Inc VenturaBlvd.,Suite1200 ShermanOaks,CA March2011 ThisBrochureprovidesinformationaboutthequalificationsandbusinesspracticesofAra CapitalAssetManagement,Inc.(hereinafterknownas ACap or Advisor ).Ifyouhave anyquestionsaboutthecontentsofthisbrochure,pleasecontactusat(310) or theunitedstatessecuritiesandexchangecommissionorbyanystatesecuritiesauthority. ACapisaregisteredinvestmentadviser.RegistrationofanInvestmentAdviserdoesnot implyanylevelofskillortraining.theoralandwrittencommunicationsofanadviser provideyouwithinformationaboutwhichyoudeterminetohireorretainanadviser. AdditionalinformationaboutACapalsoisavailableontheSEC swebsiteat Item2 MaterialChanges OnJuly28,2010,theUnitedStateSecuritiesandExchangeCommissionpublished AmendmentstoFormADV whichamendsthedisclosuredocumentthatweprovideto clientsasrequiredbysecrules.thisbrochuredatedmarch2011isanewdocument preparedaccordingtothesec snewrequirementsandrules.assuch,thisdocumentis materiallydifferentinstructureandrequirescertainnewinformationthatourprevious brochuredidnotrequire. Inthefuture,thisItemwilldiscussonlyspecificmaterialchangesthataremadetothe Brochureandprovideclientswithasummaryofsuchchanges.Wewillalsoreferencethe dateofourlastannualupdateofourbrochure. Inthepastwehaveofferedordeliveredinformationaboutourqualificationsandbusiness practicestoclientsonatleastanannualbasis.pursuanttonewsecrules,wewillensure thatyoureceiveasummaryofanymaterialschangestothisandsubsequentbrochures i

2 within120daysofthecloseofourbusiness fiscalyear.wemayfurtherprovideother ongoingdisclosureinformationaboutmaterialchangesasnecessary. WewillfurtherprovideyouwithanewBrochureasnecessarybasedonchangesornew information,atanytime,withoutcharge. Currently,ourBrochuremayberequestedbycontactingAraOghoorian,CFAat(310)779 AdditionalinformationaboutACapisalsoavailableviatheSEC swebsite swebsitealsoprovidesinformationaboutanypersons affiliatedwithadviserwhoareregistered,orarerequiredtoberegistered,asinvestment adviserrepresentativesofacap. ii

3 Item3 TableofContents Item1 CoverPage... i Item2 MaterialChanges... i Item3 TableofContents... iii Item4 AdvisoryBusiness...1 Item5 FeesandCompensation...2 Item6 Performance BasedFeesandSide By SideManagement...4 Item7 TypesofClients...4 Item8 MethodsofAnalysis,InvestmentStrategiesandRiskofLoss...4 Item9 DisciplinaryInformation...5 Item10 OtherFinancialIndustryActivitiesandAffiliations...5 tem11 CodeofEthics...5 Item12 BrokeragePractices...5 Item13 ReviewofAccounts...7 Item14 ClientReferralsandOtherCompensation...8 Item15 Custody...8 Item16 InvestmentDiscretion...8 Item17 VotingClientSecurities...9 Item18 FinancialInformation...9 Item19 RequirementsforState RegisteredAdvisers...9 iii

4 Item4 AdvisoryBusiness AraCapitalAssetManagement,Inc.(hereinafterknownas ACap or Advisor )isans corporationformedonjanuary24,2009,underthelawsofthestateofcalifornia.adviser offersinvestmentadvisoryservicestoindividuals,pensionandprofitsharingplans,charitable organizations,corporationsandbusinessentities.advisor sservicesandfeearrangements aredescribedinthefollowingpages. ThisnarrativedocumentprovidesClientswithinformationregardingAdviserandthe qualifications,businesspractices,andnatureofadvisoryservicesthatshouldbe consideredbeforebecominganadvisoryclientofadviser. AdditionalinformationaboutAdviserisavailableontheInternetat acrdnumber.thecrdnumberforadviseracapis SpecializedServices: AssetManagement Adviserwillemphasizecontinuousandregularaccountsupervisiononadiscretionaryor non discretionarybasis.advisermaycreateaportfolio,consistingofindividualstocksor bonds;exchangetradedfunds,mutualfundsandothersecurities.throughextensive interviewsandquestionnaireswitheachclientadviserwilldraftaclientipsthatwill documentindividualreturnobjective,risktolerance(includingboththeabilityand willingnesstotakerisk),acceptableallocationstoassetclasses,andallrelevant constraints.adviserwilltradeinclientaccountsinaccordancewiththeips,rebalanceto targetassetallocationsaswarranted,andtax lossharvestwheneverappropriate.oncethe appropriateportfoliohasbeendetermined,adviserwillreviewtheportfolioatleast annuallyandissueperformancereports;andifnecessary,adviserwillrebalancethe portfoliobasedupontheclient sindividualneeds,statedgoalsandobjectives.however, eachclientwillhavetheopportunitytoplacereasonablerestrictionsonthetypesof investmentstobeheldintheportfolio. PlanningandConsultingServices Thecomprehensivefinancialplanningserviceisdesignedtohelpclientswithallaspectsof financialplanningwithoutongoingassetmanagement.theclientwillundergothesame interviewingandfact findingprocessasacliententeringanassetmanagement engagement.afterevaluatingtherawdatausingfinancialplanningsoftware,adviserwill presenttheclientwithawrittenfinancialplan.thefinancialplanmayinclude:anetworth statement,cashflowstatement,areviewofallinvestmentaccounts,taxreturns,insurance policies,educationalaccounts,andawrittenfinancialplan. 1

5 Detailedinvestmentadviceandspecificrecommendationswillbeprovidedaspartofa financialplan;implementationoftherecommendationswillbeatthediscretionofthe client.thefeeforeachfinancialplanwillbepredicatedonwhatfactsareknownatthe startoftheengagement.ifitbecomesevidentthattheclient ssituationissubstantially differentfromthatwhichwasdisclosedattheinitialmeeting,arevisedfeemayapply.after deliveryofafinancialplan,futureface to facemeetingsmaybescheduledasnecessaryfor uptoonemonth.implementationandadditionalconsultingworkwillbebilledseparately. Hourly consulting services will be offered to clients who seek assistance with finite financial matters. Such services may include, but are not limited to: buy/lease analysis, college plan comparisons and 401k plan analysis. PersonalizedBookkeepingServices Additionally,Advisermayprovidepersonalizedbookkeepingservicesforbusyclientsor clientswhowanttooutsourcetheirday to dayfinancialresponsibilities.servicesmay includetrackinghouseholdexpensesthroughquicken,reconcilingcredit card/mortgage/bankaccountstatements,creatingandtrackingabudget,payingbills,and generatingpertinentreports. Selection,Recommendation,DueDiligence,PerformanceReportingOfThirdParty AdvisoryServices InordertoassisttheClientintheselectionofaThirdPartyAdvisoryService,Adviserwill typically gather information from the Clients about the Client s financial situation, investment objectives, and reasonable restrictions the Client wants imposed on the managementoftheaccount.adviserwillnotofferadviceonanyspecificsecuritiesorother investmentsinconnectionwiththisservice. Item5 FeesandCompensation Adviser sannualfeeforinvestmentmanagementservicesprovidedunderthisagreement shallbebasedonthemarketvalueoftheassetsundermanagementandbecalculatedas follows: AssetsUnderManagement AnnualAdvisoryFee $0 $500, % $500,001 $2,000, % 2

6 $2,000,001 $5,000, % Over$5,000, % Withrespecttocomprehensivefinancialplanning,Adviserwillchargeafixedfeegenerally withintherangeof$1,500to$10,000,andpaidtoadviser50%upfrontand50%upon completion. Withrespecttofinancialconsulting,Adviserwillgenerallychargeanhourlyfeeof $250/hourwithatwo hourminimumcharge.hourlyconsultingservicefeeswillnotapply toassetmanagementclients.thetotalnumberofhourswillbeestimatedpriortothe engagementandthetotalestimatedfeeswillbespecifiedinadviser sfinancialplanning andconsultingagreement.theclientwillbeinvoiceddirectlyforthehourlyfees. Withrespecttopersonalizedbookkeepingservices,Adviserwillgenerallychargeafixed feerangingfrom$500to$10,000oranhourlyfeeofnomorethan$250/hourwithatwo hourminimum.thefeeforthisservicewillbedeterminedbasedonthecomplexityofthe project.thetotalnumberofhourswillbeestimatedpriortotheengagementandthetotal estimatedfeeswillbespecifiedinadviser spersonalizedbookkeepingservicesagreement. Theclientwillbeinvoiceddirectlyforthefees. Theseannualfeesmaybenegotiableincertaincasesandbepro ratedandpaidinarrears onaquarterlybasis.noincreaseintheannualfeeshallbeeffectivewithoutpriorwritten notificationtotheclient.clientsareresponsibleforcustodialfeesandtransactioncosts.in theeventthattheclientterminatesadviser sservicesbeforetheendofacalendarquarter, Clientshallbeassessedapro ratafeebasedonthenumberofdaystheclient saccountwas managedbyadviser. UnlesstheClientrequestsdirectbilling,feeswillbeautomaticallydeductedfromthe account.clientswillbeprovidedwithaquarterlystatementreflectingdeductionofthe advisoryfee. Eitherpartymayterminatetheagreementatanytimebyprovidingwrittennoticetothe otherparty.fullrefundswillonlybemadeincaseswherecancellationoccurswithinfive (5)businessdaysofsigningtheAdvisor sinvestmentadvisoryagreement.afterfive(5) businessdays,clientswillreceivepro ratarefunds,whichtakeintoaccountwork completedbytheadvisoronbehalfoftheclient.theclientwillincurchargesforbonafide advisoryservicesrenderedtothepointofterminationandsuchfeeswillbedueand payablebytheclient.refundswillbegivenonapro ratabasis. 3

7 Adviser sfeescheduledoesnotincludethefollowingseparatelybilledfees,whichadviser doesnotreceiveanypartof:mutualfundexpenses,tradingandcustodialcosts.thesefees willbeseparatelychargedbytherelevantpartiesandbornebytheclient. Advisorbelievesthatitsannualfeeisreasonableinrelationtotheadvisoryservices provided,andthefeeschargedbyotherinvestmentadvisersofferingsimilarservices. However,lowerfeesforcomparableservicesmaybeavailablefromothersources. NoportionofAdviser scompensationshallbebasedoncapitalgainsorcapital appreciationoftheassetsexceptasprovidedforundertheinvestmentadvisersactof AdviserwilladheretotheSECStaffNo ActionLetter,SMCCapital,Inc.intheeventthat ordersareaggregated. Item6 Performance BasedFeesandSide By SideManagement Advisordoesnotchargeanyperformance basedfees(feesbasedonashareofcapitalgains onorcapitalappreciationoftheassetsofaclient). Item7 TypesofClients Adviserprovidesportfoliomanagementservicestoindividuals,highnetworthindividuals, pensionandprofit sharingplans,charitableinstitutions,foundations,andendowments. Item8 MethodsofAnalysis,InvestmentStrategiesandRiskofLoss Investinginsecuritiesinvolvesriskoflossthatclientsshouldbepreparedtobear. AtACap,webelieveininvesting,notspeculating.Ourgoalisnottospeculateonthe directionofthemarket,buttoachieveahealthyrateofreturnthatallowsourclientsto achievetheirfinancialdreamswithoutexposingthemtounreasonablerisk. Webelieveinasset classinvestingandthatinvestorsshouldhaveexposuretoseveral broadlydiversifiedassetclassesbasedontheirgoalsandrisk tolerance. 4

8 Basedonathoroughunderstandingoftheclient'sfinancialobjectives,risk toleranceand investment time horizon;wehelpbuildadiversifiedportfoliousinglowcostandtax efficientstockindexmutualfundsandexchangetradedfunds(etfs). Item9 DisciplinaryInformation Registeredinvestmentadvisersarerequiredtodiscloseallmaterialfactsregardingany legalordisciplinaryeventsthatwouldbematerialtoyourevaluationofadviserorthe integrityofadviser smanagement.adviserhasnoinformationapplicabletothisitem. Item10 OtherFinancialIndustryActivitiesandAffiliations Adviserisrequiredtodisclosewhetheradviserisregistered,orhasanapplicationpending toregisterasabroker dealeroraregisteredrepresentativeofabroker dealer.adviseris alsorequiredtodisclosewhetheradviserisregistered,orhasanapplicationpendingto registerasafuturescommissionmerchant,commoditypooloperator,oracommoditytradingadvisor,oranassociatedpersonoftheforegoingentities.adviserhasno informationapplicabletothisitem. Item11 CodeofEthics ParticipationorInterestinClientTransactions AssociatedpersonsofAdvisermaybuyorsell fortheirpersonalaccount(s) investment productsidenticaltothoserecommendtoclients;andadvisermayrecommendstoclients thattheybuyorsellsecuritiesorinvestmentproductsinwhichassociatedpersonsof Adviserhassomefinancialinterest.Theseinvestmentproductsarewidelyheldand publiclytraded.itistheexpressedpolicyofadviserthatnopersonemployedbyadviser shallgivepreferencetohisorherowninteresttothatoftheadvisoryclient. ItisfurthernotedthatAdviser sinvestmentadvisorybusinessisinandshallcontinuetobe intotalcompliancewiththeinsidertradingandsecuritiesfraudenforcementactof 1988.Specifically,AdviserhasadoptedafirmwidepolicystatementoutlininginsidertradingcompliancebyAdviser,itsassociatedpersons,andotheremployees. InsiderTrading 5

9 InaccordancewithSection204AoftheInvestmentAdvisorsActof1940,Adviseralso maintainsandenforceswrittenpoliciesreasonablydesignedtopreventthemisuseof materialnon publicinformationbyadviser. CodeofEthics Asthesesituationsrepresentaconflictofinterest,Adviserhasestablishedthefollowing restrictionsinordertoensureitsfiduciaryresponsibilities: 1) AssociatedpersonsofAdvisershallnotbuyorsellsecuritiesfortheirpersonal portfolio(s)wheretheirdecisionissubstantiallyderived,inwholeorinpart,byreason ofhisorheraffiliationwiththeadviser,unlesstheinformationisalsoavailabletothe investingpubliconreasonableinquiry.nopersonshallpreferhisorherowninterest tothatoftheadvisoryclients. (1)(2) 2) Allclientsarefullyinformedthatcertainindividualsmayreceiveseparate compensationwheneffectingtransactionsduringtheimplementationprocess. 3) Adviseremphasizestheunrestrictedrightoftheclientstodeclinetoimplementany advicerendered,exceptinsituationswhereathirdpartyadvisoryserviceisgranted discretionaryauthorityintheclient'saccount. 4) AdviserrequiresthatallindividualsmustactinaccordancewithallapplicableFederal andstateregulationsgoverningregisteredinvestmentadvisorypractices. 5) Anyindividualnotinobservanceoftheabovemaybesubjecttotermination. Notes: (1) Thisinvestmentpolicyhasbeenestablishedrecognizingthatsomesecuritiesbeing consideredforpurchaseandsaleonbehalfofadviser'sclientstradeinsufficientlybroad marketstopermittransactionsbyclientstobecompletedwithoutanappreciableimpact onthemarketsofthesecurities.undercertaincircumstances,exceptionsmaybemadeto thepoliciesstatedabove.recordsofthesetrades,includingthereasonsfortheexceptions, willbemaintainedwithadviser'srecordsinthemannersetforthabove. (2) Open endmutualfundsand/ortheinvestmentsub accounts,whichmaycomprisea variableinsuranceproduct,arepurchasedorredeemedatafixednetassetvaluepriceper sharespecifictothedateofpurchaseofredemption.assuch,transactionsinmutualfunds and/orvariableinsuranceproductsbyiarsarenotlikelytohaveanimpactontheprices ofthefundsharesinwhichclientsinvest,andarethereforenotprohibitedbyadviser's Investmentpoliciesandprocedures. AcopyofAdviser scodeofethicsisavailableuponrequest. 6

10 AllmaterialconflictsofinterestunderCCRSection (k)aredisclosedregardingthe investmentadviser,itsrepresentativesoranyofitsemployees,whichcouldbereasonably expectedtoimpairtherenderingofunbiasedandobjectiveadvice. Item12 BrokeragePractices Adviserisrequiredtodiscloseanyresearchorotherproductsorservicesotherthan executionfromabroker dealerorathirdpartyinconnectionwithclientsecurities transactions( softdollarbenefits )whichmaycreateconflictsofinterestforclients.acap doesnotacceptanysoft dollarbenefits. AlthoughAdviserdoesnothaveauthoritytodetermine,withoutobtainingspecificclient consent,thebrokertobeused,adviserrecommendscertainbrokersforadvisoryaccounts basedonavarietyoffactors,includingbutnotlimitedtocommissionratesandbest execution.adviserdoesnotreceivebenefits,includingaccesstoinstitutionalclient resourcesthatbenefititsclientthatitwouldnotreceiveifitdidnotexecutetradesthrough thesebrokers.ifaclientchoosestodirectitsbrokeragetoanotherbroker,theclientmay forgocertainbenefitsorpayadditionalfees.adviserreviewstheactivityineachclient portfoliodailyandmonitorsfinancialmarketsandportfoliosasmarketconditionsorclient circumstanceswarrant. Item13 ReviewofAccounts AdviserwillreviewtheClientaccountsandissueperformancereportsquarterlynoless thanquarterly.morefrequentreviewsmaybewarrantedgivenanychangesinclient circumstances.adviserwillbeavailabletodiscussthemanagementandperformanceofthe Client saccountandchangesintheclient ssituationwhichmayhaveanimpactonthe managementoftheclient saccount.araoghoorian,presidentandchiefcompliance Officer,isinchargeofprovidingallinvestmentadviceandconductingtheon goingreview ofallaccountsonbehalfofadviser.araoghoorianwilldeterminethemoneymanagers usedtomanageclientaccounts. Clientassetsmanagedbymoneymanagersarereviewedandmonitoredbytheselected moneymanager.thefrequencyofreviewsconductedbymoneymanagerswillvaryfrom managertomanager,buttypicallyreviewsareconductedatleastquarterly.triggering factorsforchangestounderlyingportfolioswithinamoneymanagerportfolioincludethe relativevaluationchangesbetweenassetclasses,deviationfrommanagementstyleby manager,orfundclosures. 7

11 Clientswillreceivestatementsatleastquarterlyfromthecustodianatwhichtheiraccounts aremaintained. Item14 ClientReferralsandOtherCompensation ACapdoesnotsolicitoracceptreferralfees. Item15 Custody Adviserdoesnotmaintaincustodyofclientassets.Instead,clientassetsarecustodiesat ScottradeAdvisorServices( custodian ).Inallmanagedaccountcases,thecustodiansends quarterlystatementstoadviser sclientsshowingalldisbursementsfromtheclient s account,includingadvisoryfees.clientsprovidewrittenauthorizationpermittingadviser tobepaiddirectlyfortheiraccountsheldbythecustodianortrustee. Advisergenerallyhasdiscretiononclientaccountstodeterminethespecificsecuritiesto bepurchasedorsoldaswellastheamountofsecuritiestobepurchasedorsold.for discretionaryclients,adviserrequireswrittenauthority,viaalimitedpowerofattorney,to determinewhichsecuritiesandtheamountsofsuchsecuritiestobuyandsell,without consultationwiththeclient.theauthoritymaybesubjecttocertainrestrictionsor prohibitionsontransactionsinsecuritiesofspecificcompaniesorindustries. Adviserurgesyoutocarefullyreviewsuchstatementsandcomparesuchofficialcustodial recordstotheaccountstatementsthatwemayprovidetoyou.ourstatementmayvary fromcustodialstatementsbasedonaccountingprocedures,reportingdates,orvaluation methodologiesofcertainsecurities. Item16 InvestmentDiscretion Adviserusuallyreceivesdiscretionaryauthorityfromtheclientattheoutsetofanadvisory relationshiptoselecttheidentityandamountofsecuritiestobeboughtorsold.inallcases, however,suchdiscretionistobeexercisedinamannerconsistentwiththestated investmentobjectivesfortheparticularclientaccount. Whenselectingsecuritiesanddeterminingamounts,Adviserobservestheinvestment 8

12 policies,limitationsandrestrictionsoftheclientsforwhichitadvises.investment guidelinesandrestrictionsmustbeprovidedtoadviserinwriting. Item17 VotingClientSecurities AdviserdoesnotvoteClientproxies.However,moneymanagersselectedbyAdvisermayvoteproxies forclients.therefore,exceptintheeventamoneymanagervotesproxies,clientsmaintainexclusive responsibilityfor:(1)directingthemannerinwhichproxiessolicitedbyissuersofsecuritiesbeneficially ownedbytheclientshallbevoted,and(2)makingallelectionsrelativetoanymergers,acquisitions, tenderoffers,bankruptcyproceedingsorothertypeeventspertainingtotheclient sinvestmentassets. Therefore(exceptforproxiesthatmaybevotedbyamoneymanager),Adviserand/ortheClientshall instructtheclient squalifiedcustodiantoforwardtotheclientcopiesofallproxiesandshareholder communicationsrelatingtotheclient sinvestmentassets. Item18 FinancialInformation RegisteredinvestmentadvisersarerequiredinthisItemtoprovideyouwithcertain financialinformationordisclosuresaboutadviser sfinancialcondition.adviserhasno financialcommitmentthatimpairsitsabilitytomeetcontractualandfiduciary commitmentstoclients,andhasnotbeenthesubjectofabankruptcyproceeding. Item19 RequirementsforState RegisteredAdvisers EducationandBusinessStandards Advisergenerallyrequiresacollegedegreeand/orfive(5)yearsofequivalentindustry experienceforsomeonetobecomeaninvestmentadvisoryrepresentativewiththefirm.in addition,allinvestmentadvisoryrepresentativesmusthaveobtainedallrequiredlicenses oraprofessionaldesignationsuchasthecfp. EducationandBusinessBackground. AraOghoorian,CFA,CFP Born1974 BusinessExperience 2009 Present,AraCapitalAssetManagement,Inc.,PresidentandChiefComplianceOfficer ,AegisWealthManagementLLC,Associate ,AltiusFinancialAdvisors,AssistantFinancialPlanner 9

13 ,U.S.DepartmentoftheTreasury,ResidentAdvisorforInternalAudittothe RepublicofArmenia ,FederalReserveBankofSanFrancisco,commissionedBankExaminer EducationandProfessionalLicensing 1998 BSinBusinessAdministrationwithFinanceConcentration,SanFranciscoState University 2001 CommissionBankExaminerfromtheFederalReserveBoardofGovernors 2008 Series65exam 2010 CFAcharterholder 2011 CFP Designation CarinaOghoorian Born1976 BusinessExperience February2009 Present,AraCapitalAssetManagement,Inc.,VicePresidentandDirector ofmarketing August2007 August2009,Prepmatters,Inc.,Tutor August2006 June2007,Self employed,resourceteacher/specialist/tutor August2005 June2006,QualitySchoolsInternational,1stGradeTeacher,School wide ReadingSpecialist August2004 June2005,Full timegraduatestudent August2002 June2004,SanFranciscoUnifiedSchoolDistrict,2ndGradeTeacher EducationandProfessionalLicensing 1994 BachelorofArts,UniversityofMaryland(HonorsProgram) 2002 CaliforniaMultipleSubjectTeachingCredential,SanFranciscoStateUniversity 2006 CaliforniaReadingTeacherCertificate,SanFranciscoStateUniversity 2006 MasterofArts,ElementaryEducation Language&Literacy,SanFranciscoState University 2009 Series65Exam 10