Professional Documents
Culture Documents
COVERPAGE
FORMADVPART2:FIRMBROCHURE
Bustamante&Co.LLC
2/22/16
Bustamante&Co.LLC
11225N.28thDrive,#B216
Phoenix,AZ85029
4806485773
www.bustamanteco.com
ThisbrochureprovidesinformationaboutthequalificationsandbusinesspracticesofBustamante&Co.
LLC.Ifyouhaveanyquestionsaboutthecontentsofthisbrochure,pleasecontactusat4806485773.
TheinformationinthisbrochurehasnotbeenapprovedorverifiedbytheUnitedStatesSecuritiesand
ExchangeCommission(theSEC)orbyanystatesecuritiesauthority.
AdditionalinformationaboutBustamante&Co.LLCalsoisavailableontheSEC'swebsiteat
www.adviserinfo.sec.gov.
RegistrationwiththeSECorwithanystatesecuritiesauthoritydoesnotimplyacertainlevelofskillor
training.
ITEM2
MATERIALCHANGES
Item4AdvisoryBusiness.SinceBustamante&Coslastamendmenton1/6/2016wehavesuspendedall
servicesrelatedtotheconsultationandsalesofannuitiesandinsuranceproducts.Also,Bustamante&Co.
willnolongerofferpaidworkshopsorseminarsforclientsandprospectiveclients.
Bustamante&Co.mainlinesofbusinesswillbefinancialplanningandinvestmentsupervisoryservicesto
highnetworthfamiliesandbusinessprofessionalsona
wrapfee
basis(See.Item4WrapFeePrograms).
Bustamante&Cohasmovedourprincipalofficeto11225N.28thDr.Phoenix,AZ85029#B216
Thefirmmayatanytimeupdatethisdocumentandeithersendacopyofitsupdatedbrochureorprovidea
summaryofmaterialchangestoitsbrochureandanoffertosendanelectronicorhardcopyformofthe
updatedbrochure.ClientsarealsoabletodownloadthisbrochurefromtheSECsWebsite:
www.adviserinfo.sec.govormaycontactourfirmat4806485773torequestacopyatanytime.
ITEM2
TABLEOFCONTENTS
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ITEM19
COVERPAGE__________________________________________________________1
MATERIALCHANGES___________________________________________________2
TABLEOFCONTENTS__________________________________________________3
ADVISORYBUSINESS_________________________________________________45
FEESANDCOMPENSATION____________________________________________68
PERFORMANCEBASEDFEESANDSIDEBYSIDE
MANAGEMENT_________________________________________________________9
TYPESOFCLIENTS____________________________________________________10
METHODSOFANALYSIS,INVESTMENTSSTRATEGIESAND
RISKOFLOSS______________________________________________________1115
DISCIPLINARYINFORMATION___________________________________________16
OTHERFINANCIALINDUSTRYACTIVITIESAND
AFFILIATIONS_________________________________________________________17
CODEOFETHICS,PARTICIPATIONINCLIENTTRANSACTIONS
ANDPERSONALTRADING___________________________________________1819
BROKERAGEPRACTICES____________________________________________2021
REVIEWOFACCOUNTS_________________________________________________22
CLIENTREFERRALSANDOTHERCOMPENSATION_________________________23
CUSTODY_____________________________________________________________24
INVESTMENTDISCRETION______________________________________________25
VOTINGCLIENTSECURITIES____________________________________________26
FINANCIALINFORMATION_______________________________________________27
REQUIREMENTSFORSTATEREGISTERED
ADVISORS____________________________________________________________28
FORMADVPART2BBROCHURESUPPLEMENT________________________________________28
ITEM4
ADVISORYBUSINESS
Bustamante&Co.LLC(Registrant,Bustamante&Co.,we,orAdviser)isaArizonalimitedliability
companyestablishedin2016.Registrant'sprincipalownerisStevenD.Bustamante.Registrantisregistered
asaninvestmentadviserwithinthestateofArizona.Bustamante&Co.anditsassociatesmayregisteror
meetcertainexemptionstoregistrationand/orlicensinginotherjurisdictionsinwhichweconductinvestment
advisorybusiness.
Bustamante&Co.providesdiscretionaryinvestmentadvisoryandfinancialplanningservicestoavarietyof
highnetworthindividualsandfamilies.Throughourinvestmentstrategies(eachamotifandcollectively,
themotifs)wemanagefourportfoliosthatarecharacterizedasconservativetoaggressiveinallocation.
Bustamante&Co.alsoprovidesmodularplanningforclientssuchasretirementplanning,riskmanagement,
estateplanning,andrelatedconsultativeservices.
Wepursueaneventdriven,valueorientedstrategythatspansacrossabroadrangeofindustries,
geographiesandassetclasseswithinourportfolios.
Bustamante&Co.periodicallyrebalancesandadjuststhemotifsbasedonmanager'sdiscretionwhile
maintainingproperriskallocationontheclient'sbehalf.
Duringorpriortoclient'sfirstmeetingBustamante&Co.,clientswillbeprovidedcurrentFormADVPart2
advisorybrochure2thatincludesastatementwithregardtoourprivacypolicy.Wewillalsoensurethatwe
discloseanymaterialconflictsofinterestthatcouldbereasonablyexpectedtoimpairtherenderingof
unbiasedandobjectiveadvice.
ShouldclientswishtoengageBustamante&Co.LLCforitsadvisoryservices,wemustfirstenterintoa
writtenagreement(ourclientservicesagreement).Thereafter,discussionandanalysiswillbeconductedto
determineclientsfinancialneeds,goals,holdings,etc.Itisimportantthattheinformationand/orfinancial
statementsclientsprovideareaccurate.Wemay,butisnotobligatedto,verifytheinformationclientshave
provided,whichwillthenbeusedintheinvestmentadvisoryprocess.
Dependingonthescopeoftheengagement,clientsmaybeaskedtoprovidecurrentcopiesofthefollowing
documentsearlyintheprocess:
Wills,codicilsandtrusts
Divorcedecree
InsurancePolicies
Mortgageinformation
Financialdatathatmayincludetaxreturns,W2sor1099sand/orpaystubs
Informationonretirementplansandbenefitsprovidedbyclientsemployers
Stockoptionsemployerplans
Employmentorotherbusinessagreementsclientsmayhaveinplace
Statementsreflectingcurrentinvestmentsinretirementandnonretirementaccounts
Creditcardbalancesandinterestrates
BroadBasedv.ModularFinancialPlanning
Abroadbasedplanisanendeavorthatrequiresdetail,therefore,certainvariablescanaffectthecost
involvedinthedevelopmentoftheplan:thequalityofclient'srecords,complexityandnumberofcurrent
investments,diversityofinsuranceproductsandemployeebenefitsclientscurrentlyhold,sizeofthe
potentialestate,andspecialneedsoftheclientortheirdependents,amongothers.
Whilecertainbroadbasedplansmayrequire10ormorehourstocomplete,complexplansmayrequire
morethan20hours.Alternatively,wemayconcentrateonreviewingonlyaspecificarea(modular
planning),suchascollegefunding,aportfolioallocation,divorceplanningissue,orevaluatingthesufficiency
ofclientsretirementplan.Notethatwhentheseservicesfocusonlyoncertainareasofclient'sinterestor
need,clientsoverallsituationorneedsmaynotbefullyaddressedduetolimitationsclientsmayhave
established.Inallinstancesinvolvingourfinancialplanningandinvestmentconsultationservices,our
clientsretainfulldiscretionoverallimplementationdecisionsandarefreetoacceptorrejectany
recommendationwemake.
Whetherwehavecreatedabroadbasedormodularplan,wewillpresentclientswithasummaryofour
recommendations,guideclientsintheimplementationofsomeorallofthemperclientsdecision,aswellas
offeryouperiodicreviewsthereafter(seeItem13).
InvestmentAccountRestrictions
Asstatedinclient'sIPSorsimilardocument,wewillaccountforanyreasonablerestrictionsclientsmay
requireforthemanagementofclient'sinvestmentaccount(s).Wewanttonotethatitwillremainclient's
responsibilitytopromptlynotifyusifthereisanychangeintheirfinancialsituationand/orinvestment
objectivesforthepurposeofourreviewing,evaluatingorrevisingpreviousaccountrestrictionsorfirm
investmentrecommendations.
WrapFeePrograms
Ourfirmactsasasponsorandservesasaportfoliomanagerintheinvestmentprograminvolvingwrapped
feeprogram.
ClientAssetsUnderManagement
AsofFebruary1,2016ourreportableassetsundermanagementhasbeen$0underdiscretionary
agreements.
ITEM5
FEES
Bustamante&Co.LLC,typicallyreceivesanannualwrapfeeof4%onassetsundermanagementwhichis
brokendownintothreetranches.Bustamante&Co.doesnotassessitswrapfeesonendingquarterly
balances,weassessourfeesonafixedstartingAUMwhenclienthiresBustamante&Co.
UnlikeotherfirmswhohaveahigherorlowerAUMfeefordifferinginvestmentamountsclient'splacewith
them,Bustamante&Co.wrapfeeis4%regardlessofinvestmentamount.
Bustamante&Co.incorporatesamodelofbreakingour4%wrapfeeintotrancheswhere
tranche2andtranche3are
NOT
paidouttoBustamante&Co.unlesswemeetcertainmetrics.
Forexample,aclientwithanaccountvalueof$250,000whenstartingwithBustamante&Co.willhavethe
followingtranchewrapfeeassessed.
Tranche10.060%(60basispoints)($1500)
whichispaidupfront(30dayrefundpolicy)bytheclientto
incorporatedatadiscovery,comprehensiveriskassessmentforportfolioselection,anddeliveranceand
implementationofclient'sfinancialplan.
Tranche21.40%(140basispoints)($3500)
whichisonlypaidouttoBustamante&Coifthefollowing
triggersareactivatedbetweentheclientandBustamante&Co.
Trigger1:A4manniversaryendingonthelastdayofthefourthmonthhastakenplacesinceclient
haveengagedadvisoryserviceswithBustamante&Co.Thiswillbeclassifiedasthedateclienthas
signedtheadvisoryagreementwithBustamante&Co.
Trigger2:Clienthashadat
least1
comprehensivereviewwithBustamante&Coandhaslistenedin
onat
least1
endofmonthconferencecall.
Trigger3:Clientsportfoliowhetherinaconservativeallocation,aggressiveallocation,orablendof
the4motifportfoliosbasedontheirIPSstatementiswithinthecomparativeband
NET
oftranche
2s140basispointwrapfee.
Tranche2onlygetspaidouttoBustamante&Coifthefollowingthreetriggersaboveareactivated.Iffor
examplefourmonthspassandclientsportfolioperformancenetoftranche2feeisnotwithinthe
comparativebandBustamante&Co.doesnotgettranche2fee.Ifafullyeargoesbyandthefollowing
triggersfortranche2,dontactivate,Bustamante&Co.willnotassesstranche2orTranche3feeto
theclient.
Clienthastheoptiontolockinpotentialgainsthatmayoccurwithinthecomparativebandandmoved
intoamoneymarketportfolioorotherlowriskinvestmentssuchastreasuries,munis,and/ormoneymarket
investments.Ifclientelectstotakethisoption,Tranche3willnotbeassessedtotheclientatanypoint
throughouttheyear.Bustamante&Co.willstillprovidefinancialplanningfortheclientandwontbe
assessedatranche3feeforcontinuedservices.
Tranche32%(200basispoints)($5000)
whichisonlypaidouttoBustamante&Coifthefollowing
triggersareactivatedbetweentheclientandBustamante&Co.
Trigger1:Tranche2feehasbeenpaidoutfromclienttoBustamante&Co.
Trigger2:ClienthascompletedamodularslidesetoutbyBustamante&Co.fortheclient'soverall
financialplan
Trigger3:Clienthashadat
least1
comprehensivereviewwithBustamante&Coandhaslistenedin
onat
least1
endofmonthconferencecallsinceTranche2waspaidouttoBustamante&Co.
Trigger4:Clientsportfoliowhetherinaconservativeallocation,aggressiveallocation,orablendof
the4motifportfoliosbasedontheirIPSstatementhasreachedtheoptimalband
NET
of
tranche3200basispointwrapfee.
Tranche3onlygetspaidouttoBustamante&Coifthefollowingfourtriggersaboveareactivated.Iffor
exampleclientreachestheanniversarydate(dateofclientsigningadvisoryagreement)andtranche3
triggersarenotactivated,Bustamante&Co.doesnotgetpaidouttranche3.If3ofthe4triggersare
activatedonbehalfoftheclientbeforetheanniversarydate,Bustamante&Co.doesnotgetpaidout
tranche3wrapfee.
Ifclientsportfolioreachestheoptimalbandnetoftranche3fees,Bustamante&Co.willinconjunctionwith
theclientswrittenapprovalallocatetheportfoliotoamoneymarketand/ortaxefficientportfoliountilthe
anniversarydate(dateclientsignedadvisoryagreement).Oncetheanniversarydatearrives,clientsassets
willberedeployedintothemotifsbasedaroundtheirrisktoleranceandliquidityneedsoncemore.
COMPARATIVE&OPTIMALBANDS
Comparativebandandoptimalbandisatermrelatingtotrackingcurrentreturnsinaclientsportfoliotothat
ofacomparativeindex(i.e.SPYorAGG).Optimalbandreferstothehighendofthecomparativeband
wherereturnsaregenerallyhigherthantheaverageforacertaininvestmentallocation.Whenselecting
portfoliosbasedonclientsrisktolerance,comparativeindexeswillbeusedtodetermineproper
performanceandoptimalbandswhichwilladjustaccordinglybasedontheunderlyingcomparativeindex.
TRANCHERESET
Bustamante&Co.resetstheWrapfeeprogrameveryanniversarydate
(whenclientsignedadvisoryagreement)backto60bps,140bps,200bpsbasedontheendingbalanceof
thelastdayofthemonthofclientsanniversarydate.AsmentionedaboveBustamante&Co.incorporatesa
AUMmodelwherewebelieveweshouldonlygetpaidbyclientsifweperformfortheminareasoffinancial
planningandinvestmentmanagement.
Bustamante&Co.feestructureisawrapfeewhichisbrokendownintotranches,whichshouldnotbe
confusedwithaperformancefeewherefirmschargeclientsafixedorvariablefeeforinterestorcapital
gainsgeneratedforbeatingacertainindexwhichisusuallyaseparatefeefromtheirAUMormanagement
fee.
FIRMEXPENSES
Bustamante&Co.bearsthecostsdirectlyrelatedtoitsongoingexistenceandinvestmentprocess.Costs
thatwillbebornbyBustamante&Co.andnotourclientswillbeasfollowsbutnotlimitedto:
InvestmentandTrading
tradesupportservicesincluding,butnotlimitedto,preandposttradesupportsoftwareandrelated
supportservices
TradingcommissionsandorothertransactionalcostsbetweenBustamante&CoandMotif
InvestingandInteractiveBrokersonbehalfoftheclientsaccounts
Research(includingperiodicals,publications,databaseservicesanddataprocessingthatare
directlyrelatedtoresearchactivitiesonbehalfoftheinvestmentmanagementBustamante&Co.
performs.
Riskanalysisandriskreportingbythirdpartiesandriskrelatedandconsultingservices
Otherbrokeragecommissionsorservices.
LegalandCompliance
LegalfeesandrelatedexpensesincurredinconnectionwithBustamante&Co.LLCsinvestment
supervisoryservices.
OrganizationalandOperational
Insurance(otherthanfireandtheftinsurance.)
Thirdpartyvaluationservices,accounting,auditingandtaxpreparation.
Interestcostsandtaxesand
custodianandtransferagencyservices
TheportfoliomanagerStevenBustamanteisresponsiblefor,andnotBustamante&Co.clientsshallnot
pay,travelexpenses.Inaddition,fortheavoidanceofdoubt,Bustamante&Co.isresponsibleforitsown
overheadexpenses,includingsalaries,benefits,rent,informationtechnology(otherthandescribedinthe
previousparagraph),bonusesandotheroverhead.
ITEM6
PERFORMANCEBASEDFEESANDSIDEBYSIDEMANAGEMENT
Bustamante&Co.advisoryfeeswillnotbebasedonashareofcapitalgainsorcapitalappreciation(growth)
ofanyportionofmanagedfunds,alsoknownasperformancebasedfees.Performancebased
compensationcreatesanincentiveforafirmortheirrepresentativestorecommendaninvestmentthatmay
carryahigherdegreeofrisktoaclient.
Ourfeeswillnotbebasedonsidebysidemanagement,whichreferstoafirmsimultaneouslymanaging
accountsthatdopayperformancebasedfees(suchasahedgefund)andthosethatdonotthistypeof
arrangement,andtheconflictofinterestitmaypose,doesnotconformtoourfirmspractices
ITEM7
TYPESOFCLIENTS
Weprovideinvestmentmanagementandfinancialplanningtohighnetworthindividuals.Forourinvestment
supervisoryservices,aminimuminvestmentof$250,000isgenerallyrequired.Detailscanbefoundinour
wrapfreesupplementarybrochure.
10
ITEM8
METHODSOFANALYSIS,INVESTMENTSTRATEGIESANDRISKOFLOSS
Weidentifyopportunitiesusingacombinationoftopdownassetallocationdecisionsandabottomup,
valueorientedapproachtosinglesecurityanalysis.Weseekdislocationsincertainareasofthecapital
marketsorinthepricingofaparticularsecurity.Wesupplementsinglesecurityanalysiswithanapproachto
portfolioconstructionthatincludessizingeachinvestmentbasedonupside/downsidecalculations,allwitha
viewtowardsappropriatelypositioningandmanagingoverallexposuresacrossspecificassetclasses,
sectorsandgeographies.Theresultingportfoliosfromconservativetoaggressiveexpressesourclients
overalltoleranceforrisksgivenmacroeconomicandmarketconditions,andreflectsconsiderationsofoverall
portfoliohedging.Wemakeinvestmentsgloballyinbothdevelopedandemergingmarketsinallsectors,
andinequity,credit,commodity,currency,optionandotherinstrumentsutilizingetfs,equities,options,and
bonds.
Bustamante&Co.doesnotaffecttransactionsinfutures,forex,privateequity,privateplacements,andor
otherinvestmentsthatmaycausehighriskforclientsoverallfinancialgoals.Bustamante&Coonlyaffects
transactionsonbehalfofclientsportfoliosinpubliclytradedequities,exchangetradedfunds,moneymarket
securities,bonds,andoptions.
Wealsoasafirmdontperformindexing.Ourstrategiesarebuilt
aroundalphadominantdrivenmodelstopotentiallyoutperformunderlyingindexesfrom
conservativetoaggressiveallocationsonbehalfofclientsportfolios.
Forthemoreaggressiveportfolioswefavoreventdrivensituations,inwhichwebelievethatacatalyst,
eitherintrinsicorextrinsic,willunlockvalueoralterthelensthroughwhichthegreatermarketvaluesa
particularinvestment.Weattempttoapplythiseventframeworktoeachofoursinglesecurityinvestments
withsomeflexibility,andthisapproachinformsthetimingandriskofeachinvestments
Bustamante&Co.LLCmakesassetallocationdecisionsbasedontheseandotherfactors.Wewilldiscuss
withclientshow,inourbestjudgment,tomeetclientsobjectiveswhileatthesametimeseekingaprudent
levelofriskexposure.
BusinessRisks
OverallInvestmentRisk.Allsecuritiesinvestmentsriskthelossofcapital.Thesecuritiestobepurchased
andtradedcouldbespeculativeinnature,andthemarketsinwhichwetransactwillbehighlycompetitive.
Changesingeneraldomesticandinternationaleconomicandpoliticalconditions,includingfluctuationsin
interestrates,theavailabilityofcredit,recessionandotherfactorsmayadverselyaffecttheinvestments.
Theinvestmenttechniquesandstrategiesweemployinanefforttomeetourinvestmentobjectiveson
behalfofourclientswillstaywithintheproperallocationbasedontheirIPSstatements.Therecanbeno
assuranceourtechniquesandstrategieswillbesuccessful,orthattheywillnotincurlosses,whichcouldbe
meaningful.Accordingly,anyinvestmentorportfoliowillbeexecutedontheclient'sbehalfonlyafter
Bustamante&Co.hasperformedproperduediligenceinrelationtotheclient'sliquiditysituation,tolerance
forrisks,andinvestmentgoals.
11
FixedIncomeSecuritiesGenerally
.Wemayinvestinfixedincomesecurities.Investmentinthesesecurities
mayofferopportunitiesforincomeandcapitalappreciation,andmayalsobeusedfortemporarydefensive
purposesandtomaintainliquidity.Fixedincomesecuritiesareobligationsoftheissuertomakepaymentsof
principaland/orinterestonfuturedates,andinclude,amongothersecurities:bankdebt,bonds,notes,and
debenturesissuedbycorporationsdebtsecuritiesissuedorguaranteedbytheU.S.governmentoroneof
itsagenciesorinstrumentalitiesorbyanonU.S.governmentoroneofitsagenciesorinstrumentalities
municipalsecuritiesandmortgagebackedandotherassetbackedsecurities.Thesesecuritiesmaypay
fixed,variable,orfloatingratesofinterest,andmayincludezerocouponobligations.Fixedincomesecurities
aresubjecttotheriskoftheissuersoraguarantorsinabilitytomeetprincipalandinterestpaymentsonits
obligations(i.e.,creditrisk)andaresubjecttopricevolatilityduetofactorssuchasinterestratesensitivity,
marketperceptionofthecreditworthinessoftheissuer,generalmarketliquidity(i.e.,marketrisk),
governmentinterference,economicnews,andinvestorsentiment.Ourfixedincomeinvestmentsmaybe
subjecttoearlyredemptionfeatures,refinancingoptions,prepaymentoptionsorsimilarprovisionswhich,in
eachcase,couldresultintheissuerrepayingtheprincipalonanobligationearlierthanexpected.Thismay
happenwhenthereisadeclineininterestrates,orwhenaborrowersperformanceallowstherefinancingof
certainclassesofdebtwithlowercostdebt.Totheextentsuchearlyprepaymentsincrease,theymayhave
amaterialadverseeffectonourinvestmentobjectivesandtheprofitsoncapitalinvestedinfixedincome
investments.Aswithotherinvestmentswemake,theremaynotbealiquidmarketforanyofthedebt
instrumentsinwhichweinvest,whichmaylimitourabilitytosellthesedebtinstrumentsortoobtainthe
desiredprice.Wemayattempttotakeadvantageofundervaluedfixedincomesecuritiesorrelative
mispricingsindisruptedcreditmarkets.Theidentificationofattractiveinvestmentopportunitiesindisrupted
creditmarketsisdifficultandinvolvesasignificantdegreeofuncertainty.Duringperiodsofcreditsqueezes
orflightstoquality,themarketforfixedincomeinvestmentscanbecomesubstantiallyreduced..
HighYieldSecurities
.Wemayinvestinhighyielddebtandpreferredsecuritieswhichareratedinthe
lowerratingcategoriesbythevariouscreditratingagencies(orincomparablenonratedsecurities).
Securitiesinthelowerratingcategoriesaresubjecttogreaterriskoflossofprincipalandinterestthan
higherratedsecuritiesandaregenerallyconsideredtobepredominantlyspeculativewithrespecttothe
issuerscapacitytopayinterestandrepayprincipal.Theyarealsogenerallyconsideredtobesubjectto
greaterriskthansecuritieswithhigherratingsinthecaseofdeteriorationofgeneraleconomicconditions.
Becauseinvestorsgenerallyperceivethattherearegreaterrisksassociatedwithlowerratedsecurities,the
yieldsandpricesofsuchsecuritiesmaytendtofluctuatemorethanthoseofhigherratedsecurities.The
marketforlowerratedsecuritiesisthinnerandlessactivethanthatforhigherratedsecurities,whichcan
adverselyaffectthepricesatwhichthesesecuritiescanbesold.Inaddition,adversepublicityandinvestor
perceptionsaboutlowerratedsecurities,whetherornotbasedonfundamentalanalysis,maybea
contributingfactorinadecreaseinthevalueandliquidityofsuchlowerratedsecurities.
CorporateBonds.Wemayinvestincorporatebonds.Corporatebondsaresubjecttotheriskoftheissuers
inabilitytomeetprincipalandinterestpaymentsontheobligationandmayalsobesubjecttopricevolatility
duetosuchfactorsasinterestratesensitivity,marketperceptionofthecreditworthinessoftheissuerand
generalmarketliquidity.Wheninterestratesdecline,thevalueofthecorporatebondscanbeexpectedto
rise,andwheninterestratesrise,thevalueofthosesecuritiescanbeexpectedtodecline.Bondswith
longermaturitiestendtobemoresensitivetointerestratemovementsthanthosewithshortermaturities.
Manysuchbondsareunsecured,whichmakesthemlesslikelytobefullyrepaidintheeventofa
bankruptcy.
12
InvestinginEmergingMarketsandForeignSecurities.
Ourinvestinginforeignsecuritiesmayinvolve
heightenedrisksincomparisontotherisksofinvestingindomesticsecurities,includingunfavorable
changesincurrencyratesandexchangecontrolregulations,reducedandlessreliableinformationabout
issuersandmarkets,lessstringentaccountingstandards,illiquidityofsecuritiesandmarkets,higher
brokeragecommissions,transfertaxesandcustodyfees,localeconomicorpoliticalinstabilityandgreater
marketriskingeneral.Inparticular,investinginsecuritiesofissuerslocatedinemergingmarketcountries
involvesadditionalrisks,suchasexposuretoeconomicstructuresthataregenerallylessdiverseand
maturethan,andtopoliticalsystemsthatcanbeexpectedtohavelessstabilitythan,thoseofdeveloped
countries.Othercharacteristicsofemergingmarketcountriesthatmayaffectinvestmentintheirmarkets
includecertainnationalpoliciesthatmayrestrictinvestmentbyforeignersinissuersorindustriesdeemed
sensitivetorelevantnationalinterestsandtheabsenceofdevelopedlegalstructuresgoverningprivateand
foreigninvestmentsandprivateproperty.Thetypicallysmallsizeofthemarketsforsecuritiesofissuers
locatedinemergingmarketsandthepossibilityofalowornonexistentvolumeoftradinginthosesecurities
mayalsoresultinalackofliquidityandinpricevolatilityofthosesecurities.Inaddition,dividendandinterest
paymentsfromandcapitalgainsinrespectofcertainforeignsecuritiesmaybesubjecttoforeigntaxesthat
mayormaynotbereclaimable.
QDIRatios.WhilemanyETFsandindexmutualfundsareknownfortheirpotentialtaxefficiencyandhigher
qualifieddividendincome(QDI)percentages,thereareassetclasseswithintheseinvestmentvehiclesor
holdingperiodswithinthatmaynotbenefit.Shorterholdingperiods,aswellascommoditiesandcurrencies
(thatmaybepartofanETFportfolio),maybeconsiderednonqualifiedundercertaintaxcodeprovisions.
WeconsideraholdingsQDIwhentaxefficiencyisanimportantaspectoftheclientsportfolio.
RisksOfSpecialTechniques
DerivativeInstrumentsinGeneral.Wemayusevariousderivativeinstruments,includingoptionswhichmay
bevolatileandspeculative.Certainpositionsmaybesubjecttowideandsuddenfluctuationsinmarket
value.Derivativesusedforhedgingpurposesmaynotcorrelateperfectlywiththeunderlyinginvestment
soughttobehedged.Derivativeinstrumentsmaynotbeliquidinallcircumstances,sothatinvolatile
marketswemaynotbeabletocloseoutapositionwithoutincurringaloss.Tradinginderivativeinstruments
maypermitustoincuradditionalleverage,whichmaymagnifyourgainsandlossesandcouldcauseour
clientsnetassetvaluetobesubjecttowiderfluctuationsthanwouldotherwisebethecase.While
derivativesusedforhedgingpurposescanreduceoreliminatelosses,suchusecanalsoreduceor
eliminategains.Whenweusederivativesasaninvestmentvehicletogainmarketexposure,ratherthanfor
hedgingpurposes,anylossonthederivativeinvestmentwillnotbeoffsetbygainsonanotherhedged
investment.Wearethereforedirectlyexposedtotherisksofthatderivative.Derivativesmaynotbe
availableuponacceptableterms.Asaresult,wemaybeunabletousederivativesforhedgingorother
purposes.
ShortSales.Wemayengageinshortsellingofanyoftheinstrumentswetrade.Insellingshort,webearthe
riskofanincreaseinthevalueoftheinstrumentsoldshortabovethepriceatwhichitwassold.Suchan
increasecouldleadtoasubstantial(theoreticallyunlimited)loss,asthemarketpriceofinstrumentssold
shortmayincreaseindefinitely.Undercertainmarketconditions,wemighthavedifficultypurchasing
instrumentstomeetourshortsaledeliveryobligations(suchastocompleteadealerbuyinoftheunderlying
instrument).Wemightalsohavetosellinstrumentstoraisethecapitalnecessarytomeetourshortsale
margincallobligationsatatimewhenfundamentalinvestmentconsiderationswouldnotfavorclosingout
suchshortposition.Useofshortsellinginourroleasanengagedinvestormayalsogiverisetolitigation
13
andotherexpenses.ShortsellingactivitiesaresubjecttorestrictionsimposedbyU.S.andnonU.S.
securitieslawsandthevarioussecuritiesexchanges.Limitationsonshortsellinghavebeenimposedonan
emergencybasisinthepastduringmarketdisruptions.ShortSellingmaybesubjecttofurtherregulatory
restrictionsinthefuture,includingreportingrequirementsonshortselling,whichmaypreventusfrom
successfullyimplementingourinvestmentstrategiesinvolvingshortselling.
Options.Boththepurchasingandsellingofcallandputoptionsentailrisks.Althoughanoptionbuyersrisk
islimitedtotheamountoftheoriginalinvestmentforthepurchaseoftheoption,aninvestmentinanoption
maybesubjecttogreaterfluctuationthananinvestmentintheunderlyingsecurities.Intheory,an
uncoveredcallwriterslossispotentiallyunlimited,butinpracticethelossislimitedbythetermofexistence
ofthecall.Theriskforawriterofaputoptionisthatthepriceoftheunderlyingsecuritymayfallbelowthe
exerciseprice.Optionsalsoinvolvecounterpartyrisk.However,wegenerallyintendtolimitourtradingin
optioncontractstostandardizedoptionswhichtradeonrecognizedexchanges.Webelievethatthese
optionsprovidegreaterliquidityandinvolvelesscounterpartyriskthancustomizedoptionsforwhicha
clearinghousedoesnotexist.
ExchangeTradedFunds(ETFs).WemayinvestinsharesofETFs,includingforhedgingpurposes.Asan
investorinETFs,wewillbearitsratableshareofvariousfees,allocationsandexpensesoftheETF,allof
whichareembeddedinthenetassetvalueoftheETF.ETFsrepresentsharesofownershipineitherfunds
orunitinvestmenttruststhatholdportfoliosofcommonstocks,bondsorotherinstruments,whichare
designedtogenerallycorrespondtothepriceandyieldperformanceofanunderlyingindex.Aprimaryrisk
factorrelatingtoETFsisthatthegenerallevelofstockorbondpricesmaydecline,thusaffectingthevalue
ofanequityorfixedincomeETF,respectively.AnETFmayalsobeadverselyaffectedbytheperformance
ofthespecificsectororgroupofindustriesonwhichitisbased.Moreover,althoughETFsaredesignedto
provideinvestmentresultsthatgenerallycorrespondtothepriceandyieldperformanceoftheirunderlying
indices,ETFsmaynotbeabletoexactlyreplicatetheperformanceoftheindicesbecauseoftheirexpenses
andotherfactors
InterestRates.Wemaybeadverselyaffectedbychangesininterestrates.Interestratesaredeterminedby
factorsofsupplyanddemandintheinternationalmoneymarketsandcanbeinfluencedbymacroeconomic
factors,speculationandotherformsofgovernmentintervention.
Turnover.Asubstantialportionclientscapitalmaybeinvestedonthebasisofshorttermmarket
considerations.Theportfolioturnoverrateofthoseinvestmentsmaybesignificant,potentiallyinvolving
substantialbrokeragecommissionsandfeeswhichBustamante&Co.paysforonourwrapprogram.
Clientsdontbearanycostsrelatedtobrokerageorothertransactionsrelatedtoinvestingand/ortrading.
MarketRisksandLackofLiquidity.Thesuccessofourinvestmentprogramdependstoagreatextentupon
ourabilitytoassesscorrectlythefuturecourseofpricemovementsofstocksandbonds.Therecanbeno
assurancethatwewillaccuratelypredictsuchmovements.Inaddition,certainofthesecuritiesinwhichwe
invest,fromtimetotime,mayhavelimitedliquidity.Duringperiodsofstressinthemarkets,pricesfor
securitieswithlessliquiditytypicallysuffersignificantlymorethanmoreliquid,exchangetradedequities.
Thislackofliquidity,togetherwithafailuretoaccuratelypredictmarketmovements,mayadverselyaffect
themarketvalueofourinvestmentsfromtimetotime.
14
OperationalRisks
DependenceonStevenD.BustamanteandAdviser.Allinvestmentdecisionsaremadeunderthegeneral
supervisionofStevenD.BustamanteAccountsinvestorshavenorightorpowertotakepartinthe
managementoftheaccounts.Asaresult,thesuccessoftheAccountsdependslargelyupontheabilitiesof
Mr.Bustamante,andnoassurancecanbegiventhatasuitablereplacementcouldbefoundforhiminthe
eventofhisdeath,disabilityorwithdrawalfromBustamante&Co.IntheeventMr.Bustamanteisnolonger
activelyengagedinformulatingtheinvestmentphilosophyofBustamante&Co.,whetherbydeath,
disability,withdrawalasmanagingmemberofthefirmorotherwise,theAccountsinvestorswillbeentitled
tospecialnoticewheretheyhavetheoptiontomovetoanotherinvestmentadvisoryfirm.
ExecutionRisksandAdviserError.Theexecutionofthetradingandinvestmentstrategiesweemploycan
oftenrequirerapidexecutionoftrades,highvolumeoftrades,complextrades,difficulttoexecutetrades,
useofnegotiatedtermswithcounterpartiessuchasintheuseofderivativesandtheexecutionoftrades
involvinglesscommonornovelinstruments.Ineachcase,weseekbestexecutioninsettlingandclearing
suchtrades.However,inlightofthehighvolumesandcomplexityinvolved,someslippage,errorsand
miscommunicationswithbrokersandcounterpartiesareinevitableandmayresultinlosses.Suchlosses
maybecausedbythebrokersandcounterpartiesorbyusorbyacombinationofthebrokerorcounterparty
andus.Wemay,butarenotrequiredto,attempttorecoverlossesfrombrokersorcounterparties.Weare
notliableforlossescausedbybrokersorcounterparties,otherthaninthecaseoffraud,badfaith,willful
misconductorgrossnegligenceonourpart.Tothefullestextentpermittedbylaw(includingtheU.S.
Federalsecuritieslaws),wewillnotbeliablefortradeerrorsexceptforactsthatconstitutebadfaithorfraud,
willfulmisconductorgrossnegligence.
LocationandInfrastructure.MostofthekeyoperationsofourfirmarelocatedinonebuildinginPhoenixAZ.
Lossofthebuildingand/orkeypersonnel,whetherthroughfire,terroristaction,earthquakeorsomeother
catastrophicevent,couldadverselyaffectouroperationsandtheinvestmentreturnsoftheAccounts.A
seriousimpairmenttotheinfrastructureofthebuildingsuchasextendedlossofpoweroraprolonged
restrictionofphysicalaccesstothebuildingbygovernmentalauthoritiesalsocouldadverselyaffectour
operationsandinvestmentreturnsoftheaccounts.Wehavecontractedforoffsitedatabackupand
recoveryandhaveadisasterrecoveryplanforoffsiteoperation,buttheriskofdisruptionofoperations
remains.Similarrisksmayapplytothebrokers,anddealersandothercustodiansoftheAccountsassets.
15
ITEM9
DISCIPLINARYINFORMATION
Neitherthefirmnoritsmanagementhasbeeninvolvedinamaterialcriminalorcivilactioninadomestic,
foreignormilitaryjurisdiction,anadministrativeenforcementaction,orselfregulatoryorganization
proceedingthatwouldreflectpoorlyuponourofferingadvisorybusinessoritsintegrity.
16
ITEM10
OTHERFINANCIALINDUSTRYACTIVITIESANDAFFILIATIONS
Firmpoliciesrequireassociatedpersonstoconductbusinessactivitiesinamannerthatavoidsconflictsof
interestbetweenthefirmanditsclients,orthatmaybecontrarytolaw.Bustamante&Co.willprovide
disclosuretoeachclientpriortoandthroughoutthetermofanengagementregardinganyconflictsof
interestwhichmightreasonablycompromiseitsimpartialityorindependence.
Neitherthefirm,management,noritsassociates,areregisteredorhaveanapplicationpendingtoregister
asaFinancialIndustryRegulatoryAuthority(FINRA)orNationalFuturesAssociation(NFA)introducing
broker/dealer,orasafuturescommissionmerchant,commoditypooloperator,commoditytradingadvisor,
oranassociatedpersonoftheforegoingentities.
MaterialRelationshipsMaintainedbythisAdvisoryBusinessandConflictsofInterest
Neitherthefirmnoritsmanagementisorhasamaterialrelationshipwithanyofthefollowingtypesof
entities:
Municipalsecuritiesdealer,orgovernmentsecuritiesdealerorbroker
bankingorthriftinstitution
lawyerorlawfirm
accountantoraccountingfirm
realestatebrokerordealer
insurancecompanyoragency
pensionconsultant
issuerofasecurity
sponsororsyndicatoroflimitedpartnerships
investmentcompanyorotherpooledinvestmentvehicle(includingamutualfund,closedend
investmentcompany,UIT,privateinvestmentcompanyorhedgefund,andoffshorefund).
Uponclientsrequest,clientsmaybeprovidedareferraltovariousprofessionals,suchasanaccountant,
attorneyorinsurancerepresentative.Whilethesereferralsarebasedonourbestinformation,wedonot
guaranteethequalityoradequacyoftheworkprovidedbythesereferredprofessionals.Wedonothavean
agreementwithorreceivefeesfromtheseprofessionalsfortheseinformalreferrals.Anyfeeschargedby
theseotherentitiesfortheirservicesarecompletelyseparatefromfeeschargedbyourfirm.
17
ITEM11
CODEOFETHICS,PARTICIPATIONORINTERESTINCLIENTTRANSACTIONS
ANDPERSONALTRADING
Wehaveadoptedacodeofethics(CodeofEthics)whichisdesignedtofostercompliancewiththe
applicablefederalstatutesandregulatoryrequirements,preventcircumstancesthatmayleadtoorgivethe
appearanceofconflictsofinterestwithclients,insidertradingorunethicalbusinessconductaswellas
promoteacultureofhighethicalstandards.Amongotherthings,theCodeofEthicsgovernspersonal
securitiestradingbyBustamante&Co.Generally,noemployeeofBustamante&Co.maypersonallytrade
orownanysecurity(withtheexceptionofcertainsecuritiessuchasU.S.governmentobligations,cash
equivalents,moneymarketfunds,openendmutualfunds,unitinvestmenttrust,investmentgradecorporate
bonds,investmentgradepreferredsecurities,limitedmortgagebonds,masterlimitedpartnerships,private
investments,etc.(ExemptSecurityorExemptTransaction))ifthetransactionistheoppositeofwhatwe
recommendforclients..ForsomeoftheExemptSecuritiesorExemptTransactions,Employeesmust
preclearanytrades.Inlimitedexceptionsituations(primarilyduetoeconomichardship),employeesmay
tradeinothersecuritiesbutonlysubjecttocompliancepreapproval.TheCodeofEthicsalsorequires
employeestodothefollowing:
1)toreportpersonaltransactionsonaquarterlybasis,toclientsand/orregulatorsuponrequest.
2)tofileannualpersonalaccountdisclosuresandreportsecuritiesholdingsand
3)tocertifytheircompliancewiththeCodeofEthicsonanannualbasis.
CodeofEthicsDescription
Thefirmholdsitselftoafiduciarystandard,whichmeanswewillactintheutmostgoodfaith,performingina
mannerbelievedtobeinthebestinterestofourclients.Bustamante&Co.periodicallyreviewsandamends
itsCodeofEthicstoensurethatitremainscurrent,andrequiresfirmpersonneltoannualattesttotheir
understandingofandadherencetothefirmsCodeofEthics.AcopyofthefirmsCodeofEthicsismade
availabletoanyclientorprospectiveclientuponrequest.
Thefirmdoesnotdisclosenonpublicpersonalinformationaboutourcustomerstoanyone,exceptinthe
followingcircumstances:
Whenrequiredtoprovideservicesourclientshaverequested
Whenourcustomershavespecificallyauthorizedustodoso
Whenrequiredduringthecourseofafirmassessment(i.e.,independentaudit)or
Whenpermittedorrequiredbylaw(i.e.,periodicregulatoryexamination).
Withinthefirm,accesstocustomerinformationisrestrictedtopersonnelthatneedtoknowthatinformation.
Allaccesspersonsandserviceprovidersunderstandthateverythinghandledinfirmofficesareconfidential
andtheyareinstructedtonotdiscusscustomerinformationwithsomeoneelsethatmayrequestinformation
aboutanaccountunlesstheyarespecificallyauthorizedinwritingbythecustomertodoso.Thisincludes,
forexample,providinginformationaboutaspousesIRAaccountortoadultchildrenaboutparents
accounts,etc.Toensuresecurityandconfidentiality,thefirmmaintainsphysical,electronic,andprocedural
safeguardstoprotecttheprivacyofcustomerinformation.Thefirmwillprovideyouwithitsprivacypolicyon
anannualbasisperfederallawandatanytime,inadvance,iffirmprivacypoliciesareexpectedtochange.
18
InvestmentRecommendationsInvolvingaMaterialFinancialInterestandConflictsofInterest
Neitherthefirmnoranassociateisauthorizedtorecommendtoaclient,oreffectatransactionforaclient,
involvinganysecurityinwhichthefirmorarelatedperson(e.g.,associate,animmediatefamilymember,
etc.)hasamaterialfinancialinterest,suchasinthecapacityasaboardmember,underwriteroradvisorto
anissuerofsecurities,etc.Anassociateisprohibitedfromborrowingfromorlendingtoaclientunlessthe
clientisanapprovedfinancialinstitution.Wewanttonotethatyouareundernoobligationtoactona
recommendationfromourfirmand,ifyouelecttodoso,youareundernoobligationtocompletethem
throughourfirmoraserviceproviderwhomwemayrecommend.
19
ITEM12
BROKERAGEPRACTICES
Bustamante&Co.doesnotmaintainphysicalcustodyofclientsassets(seeItem15).Clientsaccounts
mustbemaintainedbyaqualifiedcustodian,suchasabroker/dealer,bankortrustcompany.Bustamante
&Co.isnotacustodiannoristhereanaffiliatethatisacustodian.Whenweareengagedtoprovide
investmentconsultationservices,wemayrecommendtheserviceproviderwithwhomclientsassetsare
currentlymaintained.Whenclientsengageourfirmtoprovideitsinvestmentsupervisoryservices,we
requestclientsusetheinstitutionalservicesdivisionofInteractiveBrokers.(IB),and,MotifInvestingFINRA
andSIPCmembers,andanSECregisteredbroker/dealers.
OurfirmisindependentlyownedandoperateditisnotlegallyaffiliatedwitheitherInteractiveBrokersor
MotifInvesting.WhilewerecommendthatclientsworkwithInteractiveBrokersandMotifInvestingastheir
custodian,clientswilldecidewhethertodosoandwillopenanaccountwiththembyenteringintoan
accountagreementdirectlywiththem.Wedonottechnicallyopentheaccountforclients,althoughwe
assistclientsindoingso.IfclientsdonotwishtoplaceassetswithInteractiveBrokersandMotifInvesting
asthecustodianofrecord,weareunabletomanageclientaccountsunderourinvestmentsupervisory
servicesengagementandanotherservice(e.g.,ourinvestmentconsultationengagement)wouldbe
necessary.
InteractiveBrokersandMotifInvestingoffersindependentinvestmentadvisorsvariousserviceswhich
includecustodyofclientassets,tradeexecution,clearanceandsettlement,etc.Ourfirmmayreceive
certainbenefitsfromInteractiveBrokersandMotifInvestingthroughparticipationinitsindependentadvisor
supportprogram(pleaserefertoItem14forfurtherdetails).Weperiodicallyconductanassessmentofany
serviceproviderwerecommendwhichgenerallyinvolvesareviewoftheirrangeandqualityofservices,
reasonablenessoffees,amongotheritems,andincomparisontotheirindustrypeers.
BestExecution
Bestexecutionmeansthemostfavorabletermsforatransactionbasedonallrelevantfactors,including
thoselistedintheparagraphtitledFactorsUsedtoSelectBrokerDealersforClientTransactionsandwithin
Item14.Thefirmreceivesabenefitbecauseitdoesnothavetoproduceorpayforcertaintypesof
research,productsorservices,andthefirmmayhaveanincentivetoselectorrecommendabroker/dealer
basedonitsowninterestsinreceivingtheresearchorotherproductsorservices,ratherthanitsclient's
interestinreceivingmostfavorableexecution.
TradeErrorPolicy
Clientaccounttransactionsmaybeeffectedonoccasioninamannerthatdiffersfromwhatwasintended
fortheaccount.Wereviewanytradeerrorsthatwediscover,onacasebycasebasis,anddecidewhat
correctivestepstotake,ifany,afterreviewingtheerror.TradeerrorsareoftenbornebytheAccounts.
DirectedBrokerageAmanagedaccountclientmaydirectustoutilizeaparticularbrokerdealertoexecute
someoralltransactionsfortheclientsaccount.Insuchcircumstances,themanagedaccountclientis
responsiblefornegotiatingthetermsandarrangementsfortheaccountwiththatbrokerdealer.Wewillnot
seekbetterexecutionservicesorpricesfromotherbrokerdealersorbeabletoaggregatethemanaged
accountclient'stransactions,forexecutionthroughotherbrokersdealers,withordersfortheMOTIFSor
theothermanagedaccountwemanage.Asaresult,wemaynotobtainbestexecutiononbehalfofsuch
20
directingmanagedaccountclient,whomaypaymateriallydisparatecommissions,greaterspreadsorother
transactioncosts,orreceivelessfavorablenetpricesontransactionsfortheaccountthanwouldotherwise
bethecase.WeseektoallocateinvestmentopportunitiesamongClientsinthefairestpossiblewaytaking
intoaccountClientsbestinterestsandinvestmentobjectives/restrictions.Wewillfollowprocedurestohelp
ensurethatallocationsdonotreflectapracticeoffavoringordiscriminatingagainstanyClientorgroupof
Clients.Accountperformanceisneverafactorintradeallocations.
21
ITEM13
REVIEWOFACCOUNTS
PositionReviews:Weperformvariousdaily,weekly,monthlyandquarterlyreviewsofallAccounts.Our
portfoliomanagerconductsreviewsonaregularbasisfor,amongothersthings,exposures,trade
allocations,executionandcommissionspaidonsecuritytransactions,performancecomparisons,
investmentobjectives,guidelinesandrestrictions.
FinancialPlanningReviews:Forthoseclientswhohaveengagedourfirmforongoingplanningservices,we
willschedulereviewswithclientsinadvance.Itwillbeclient'sresponsibilitytoinitiateareviewifclients
agreementdoesnotinvolvecontinuousfinancialplanningsupport,andthesereviewsarerecommendedon
atleastonaquarterlybasiswheneverpractical.
ReviewswillbeconductedbyMr.Bustamanteandnormallyinvolveanalysisandpossiblerevisionofclients
previousfinancialplanorinvestmentallocation.Acopyofrevisedplansorassetallocationreportswillbe
providedtotheclientuponrequest.Unlessprovidedforinclientengagementagreement(e.g.,ongoing
support),financialplanningandinvestmentconsultationservicesreviewsareconductedunderanewor
amendedagreementandwillbeassessedatourcurrentwrapfee.
22
ITEM14
CLIENTREFERRALSANDOTHERCOMPENSATION
Wemayreceivecertaineconomicbenefitsfrombrokerdealersandprimebrokerswhichweconduct
businesswiththatmightnotbereceivedotherwise.Thesebenefitsmayinclude:accesstoanelectronic
communicationnetworkfororderentryandaccountinformationproprietaryresearchandparticipationin
sponsoredresearchandcapitalintroductionconferences.Whiletheseservicesaregenerallyprovidedatno
additionalcost,wemayselectcertainbrokerdealersduetoreceiptofsuchservices.Weunderstandthat
thebenefitsreceivedthroughtheserelationshipsgenerallydonotdependupontheamountoftransactions
directedtoortheamountofassetscustodied.
Wecompensatecertainthirdpartiesthatrefercertainclientstous.Compensationisbaseduponassets
broughttothefirmandpaidafixedonetimefee.Wedonotchargeanyportionofthecompensationpaidto
thethirdpartiestoclients.
23
ITEM15
CUSTODY
Clientassetswillbemaintainedbyanunaffiliated,qualifiedcustodian,suchasabank,broker/dealer(e.g.,
InteractiveBrokers,MotifInvesting),ortransferagent.Clientassetsarenotheldbyourfirmoranyassociate
orourfirm.Inkeepingwiththispolicyinvolvingourclientfundsorsecurities,Bustamante&Co.
Weprohibitanyassociatefromhavingauthoritytodirectlywithdrawsecuritiesorcashassetsfroma
clientaccount.Althoughwemaybedeemedtohaveconstructivecustodyofclientsassetssince
wemayrequestthewithdrawalofadvisoryfeesfromanaccount,wewillonlydosothroughthe
engagementofaqualifiedcustodianmaintainingclientsaccountassets,viaclientspriorwritten
approval,andfollowingourwritteninvoice
Doesnotacceptorforwardclientsecurities(i.e.,stockcertificates)erroneouslydeliveredtoourfirm
Willnotauthorizeanassociatetohaveknowledgeofaclientsaccountaccessinformation(i.e.,
online401(k),brokerageorbankaccounts)ifsuchaccesswouldallowphysicalcontroloveraccount
assets.
Clientswillbeprovidedwithtransactionconfirmationsandsummaryaccountstatementssentdirectlyto
thembytheircustodianofrecord.Typicallystatementsareprovidedonatleastaquarterlybasisoras
transactionsoccurwithintheiraccount.Bustamante&Co.willnotcreateanaccountstatementforaclientor
serveasthesolerecipientofanaccountstatement.Shouldclientsreceiveperiodicreportsfromourfirmthat
includesinvestmentperformanceinformation,clientsareurgedtocarefullyreviewandcomparetheir
accountstatementsthattheyhavereceiveddirectlyfromyourcustodianofrecordwithanyreportfromour
firm.
24
ITEM16
INVESTMENTDISCRETION
Consistentwithourclientstoleranceforrisk,liquidityneed,andinvestmentgoals,Bustamante&Co.
providesinvestmentadvisoryservicestoourclientsonadiscretionarybasisinamannerconsistentwith
eachaccountsinvestmentobjectivesandrestrictions,assetforthinthegoverningagreementsand
documents.Inprovidingdiscretionaryinvestmentadvisoryservices,wegenerallysuperviseandmanagethe
accountsportfolioandmakeinvestmentdecisions,withoutconsultingclients.Clientshoweverareableto
viewtheirportfolioholdingsthroughmotifinvestingandInteractiveBrokersclientloginportal.
Ifclientsrequiretheiraccountsbemanagedinanondiscretionarymanner,clientspriorapprovalmustbe
madeforeachtransactionwithregardtotheinvestmentandreinvestmentofaccountassets,orforourfirm
togiveinstructionstothecustodianmaintainingclientsaccount(i.e.,wireinstructions,etc.).Pleasenote
thatinlightoftherequirementforclientspreapprovalclientsmustmakeyourselfavailableandkeepus
updatedonyourcontactinformationsothatinstructionscanbeefficientlyeffectedonclientsbehalf.
Alsonotethatincertainsituationsitmaybedifficulttomanageclientsaccountsunderanondiscretionary
agreement(i.e.,youareafrequenttraveler,haveuniqueportfoliomanagementrequirements,etc.).
Therefore,weretaintherighttoeitherrefuseorterminateanondiscretionaryaccount.
ITEM17
25
VOTINGCLIENTSECURITIES
Wedonotvoteproxiesonclientsbehalfnordoweofferguidanceonhowtovoteproxies.Clientswill
maintainexclusiveresponsibilityfordirectingthemannerinwhichproxiessolicitedbyissuersofsecurities
thatarebeneficiallyownedbyclientsshallbevoted,aswellasmakingallotherelectionsrelativeto
mergers,acquisitions,tenderoffersorothereventspertainingtoclientsholdings.
Wewillhavenopower,authority,responsibility,orobligationtotakeanyactionwithregardtoanyclaimor
potentialclaiminanybankruptcyproceeding,classactionsecuritieslitigationorotherlitigationor
proceedingrelatingtosecuritiesheldatanytimeinaclientaccount,including,withoutlimitation,tofile
proofsofclaimorotherdocumentsrelatedtosuchproceeding,ortoinvestigate,initiate,superviseor
monitorclassactionorotherlitigationinvolvingclientassets.
Clientsmayreceiveproxiesorothersimilarsolicitationssentdirectlyfromclientsselectedcustodianor
transferagent.Shouldourfirmreceiveaduplicatecopy,itwillgenerallynotbeforwarded,noranyother
correspondencerelatingtothevotingofyoursecurities,classactionlitigation,orothercorporateactions.
ITEM18
26
FINANCIALINFORMATION
BalanceSheetAdvisoryfeewithdrawalsmustbedonethroughaqualifiedintermediary(e.g.,custodianof
record),peryourpriorwrittenagreement,andfollowingclientsreceiptofourwrittennoticetermed
constructivecustody.
Ourengagementsrequirethatwecollectadvancefeesfromclientsof$1500ormoreforouradvisory
servicesthatwewillperformsixmonthsormoreintothefuture.
NeitherBustamante&Co.Nor,Mr.Bustamantesservesasgeneralpartnerforapartnershiportrusteefora
trustinwhichthefirmsadvisoryclientsareeitherpartnersofthepartnershiporbeneficiariesofthetrust.
Duetothenatureofourfirmsservicesandoperationalpractices,anauditedbalancesheetisnotrequired
norincludedinthisbrochure.
FinancialConditionsReasonablyLikelytoImpairAdvisoryFirm'sAbilitytoMeetCommitmentstoClients
Thefirmanditsmanagementdonothaveafinancialconditionlikelytoimpairourabilitytomeet
commitmentstoourclients.
BankruptcyPetitionsduringthePast10YearsThefirmanditsmanagementhaveneverbeenthesubjectof
abankruptcypetition.
ITEM19
27
REQUIREMENTSFORSTATEREGISTEREDADVISERS
PleaserefertotheaccompanyingFormADVPart2Bforfurtherinformationinvolvingfirmprincipalexecutive
andmanagementpersonnel.
FormADVPart2BBrochureSupplement(AdvisoryPersonnel)
ThisbrochureprovidesinformationaboutMr.StevenBustamante,thefirm'sprincipalexecutive,and
supplementstheBustamante&Co.LLCadvisorybrochurereferencedintheprecedingpages.Ifyouhave
anyquestionsaboutthecontentsofthissupplement,pleasecontactMr.Bustamantebytelephoneat(480)
3203478.AdditionalinformationaboutMr.BustamanteandBustamante&Co.LLCisavailableonthe
SEC'swebsiteat
www.advisersinfo.sec.gov
.
Item1FirmInformation
Bustamante&Co.LLC
11225N.28thDr.
Phoenix,AZ85029#B216
www.bustamanteco.com
Item2EducationalBackgroundandBusinessExperience
Regulatoryguidancerequiresthefirmtodiscloserelevantpostsecondaryeducationandprofessional
trainingforeachprincipalexecutiveandassociateofthefirm,aswellastheirbusinessexperienceforat
leastthemostrecentfiveyears.
PrincipalExecutiveOfficersandManagementPersons
ManagingMember/Founder/ChiefComplianceOfficer(Supervisor)/InvestmentAdvisor
Representative
StevenBustamante
YearofBirth:1988
CRDNumber:5554271
EducationalBackgroundandBusinessExperience
EducationalBackground
GeneralSecuritiesRepresentativeExamination/FINRASeries7
UniformCombinedStateLawExamination/NASAASeries66
AZDeptofInsuranceLife&HealthExamination#1042850
28
BusinessExperience
Bustamante&Co.LLC(11/2015present)
Scottsdale,AZ
ManagingMember/Founder/ChiefComplianceOfficer/InvestmentAdvisorRepresentative
StevenBustamanteSelfEmployed(11/201411/2015)
Trading,FinancialMarkets
Phoenix,AZ
RoboticTradingAdvisorsLLC(06/201411/2014)
Scottsdale,AZ
FinancialAdvisor
MerrillLynch(06/201305/2014)
Chandler,AZ
FinancialAdvisor
MBTradingFutures(05/201111/2012)
Scottsdale,AZ
ForeignExchangeTradingDesk
CurrencyARC(12/200803/2013)
Phoenix,AZ
Founder,ManagingMember
ForeignExchangeInvestmentResearchtoPrivateInvestorsandMidSizedHedgeFunds
Item3DisciplinaryInformation
Registeredinvestmentadvisorsarerequiredtodisclosecertainmaterialfactsregardinganycriminal,civil,
legalor industry/professionalassociationdisciplinaryeventthatwouldbematerialtoclient'sevaluationof
eachofficeror supervisedpersonprovidinginvestmentadvice.Noreportableinformationisapplicableto
thissectionforMr.Bustamanteorhisfirm.
Item4OtherBusinessActivities
Mr.Bustamanteisnotregistered,norhasanapplicationpendingtoregister,asaregisteredrepresentative
ofabroker/dealerorassociatedpersonofafuturescommissionmerchant,commoditypooloperator,or
commoditytradingadvisor.Therefore,hedoesnotreceivecommissions,bonusesorothercompensation
basedonthesaleofsecurities,includingthatasaregisteredrepresentativeofabroker/dealerorthe
distributionorservice(trail)feesfromthesaleofmutualfundsandexchangetradedfunds.
Mr.Bustamantealsoservesasafreelancewriterandeditorinvolvingfinancialarticles.Theseactivities
representfivepercentorlessofhistimeandarenotconductedduringtraditionalmarkethours,norarethey
believedtopresentaconflictofinterestbetweenhisrolewiththefirmanditsclients.
29
Item5AdditionalCompensation
Mr.Bustamanteisnotcompensatedforadvisoryservicesinvolvingperformancebasedfees.Inaddition,
firmpolicydoesnotallowassociatedpersonstoacceptorreceiveadditionaleconomicbenefit,suchas
salesawardsor otherprizes,forprovidingadvisoryservicestofirmclients.
Item6Supervision
Mr.BustamanteservesinmultiplecapacitiesforBustamante&Co.LLCManagingMember,Founder,Chief
ComplianceOfficer,andinvestmentadvisorrepresentative.Itisrecognizedthereisaninabilitytosegregate
certainfirmdutieswhichmaypotentiallycreateconflictsofinteresthowever,policiesandproceduresare
employedtoensureappropriaterecordkeepingandoversight.Questionsrelativetothefirm,itsservicesor
thisFormADVPart2maybemadetotheattentionofMr.Bustamanteat
(480)6485773.
Additionalinformationaboutthefirm,otheradvisoryfirms,oranassociatedinvestmentadvisor
representative,includingMr.Bustamante,isavailableontheinternetat
www.adviserinfo.sec.gov
.Asearch
ofthissiteforfirmsmaybeaccomplishedbyfirmnameorauniquefirmidentifier,knownasanIARD
number.TheIARDnumberforBustamante&Co.LLCis282054.YoumaysearchforMr.Bustamanteby
nameorhisindustryreferencenumber(CRD#),whichis5554271
Thebusinessanddisciplinaryhistory,ifany,ofaninvestmentadvisoryfirmanditsrepresentativesmayalso
beobtainedbycallingtheArizonaCorporateCommissionSecuritiesDivision(602)5424242.
Item7RequirementsforStateRegisteredAdvisers
TherehavebeenneitherawardsnorsanctionsorothermatterswhereMr.Bustamantehasbeenfound
liableinaselfregulatoryoradministrativeproceeding.Mr.Bustamanteandhisfirmhasnotbeenthesubject
ofabankruptcypetition.
30