General Description of Advisory Firm and the Masterworks Platform Masterworks Advisers, LLC (the “Adviser” “we” “us” and similar terms) is a Delaware limited liability company that was formed on November 9, 2022. The Securities Exchange Commission (“SEC”) declared Adviser’s registration as an investment adviser effective on March 13, 2023 and Adviser commenced providing advisory services on June 26, 2023. Adviser is a wholly owned subsidiary of Masterworks, LLC (together with its affiliated companies, “Masterworks”), a Delaware limited liability company founded in 2017. Masterworks owns, operates, and manages the Masterworks.com online art investment platform, including mobile applications and any related URLs (the “Masterworks Platform”).
Adviser has limited its activities to (i) providing potential individual investors with education and non-discretionary investment advice on art as an alternative asset class through investment in Masterworks securities offerings (“Offerings”) and (ii) acting as investment adviser to one or more pooled investment vehicles that invest in art securities and whole artwork. Adviser does not currently offer advice with respect to other asset categories or types of investments that are not associated with art. Adviser will only recommend investments in one or more Offerings, or that investment in an Offering may be unsuitable for a particular investor.
Investors who receive a recommendation from Adviser that one or more Offerings may be suitable for that investor’s investment objectives will be given the opportunity to participate in Offerings through the Masterworks Platform.
The Masterworks Platform is the first and largest online art investment platform that allows individuals to invest in securitized artwork created by artists that have an established track record of public auction sales and historical price appreciation. Masterworks facilitates art investment by: ● Sourcing and acquiring artwork from auctions, private galleries and private collectors, ● Securitizing the artwork by transferring it to a holding company that offers shares that represent investment in distinct artworks directly to investors via its online Platform or diversified exposure to the Post-War & Contemporary segment of the art market via the Masterworks Diversified Art Portfolio, LP, ● Administering the artwork and the investment entities pursuant to a management services agreement, and ● Integrating its technology with an alternative trading platform operated by a third-party broker-dealer, which provides a means by which certain investors who have an established relationship with Masterworks and have invested in an Offering can buy and sell shares in Masterworks art securitization issuers in secondary transactions (“Secondary Transactions”).
Masterworks seeks to provide investors with long term capital appreciation and intends to hold artwork for several years before selling it opportunistically and distributing the proceeds to investors, or, in certain limited instances relating to diversified artwork investments, reinvesting the proceeds. As of February 29, 2024, Masterworks issuers had conducted more than 360 securities offerings and raised over $910 million for equity investments in artwork.
Offerings are conducted pursuant to exemptions from the registration requirements under the Securities Act of 1933, as amended, including Regulation A (Tier 2), Regulation D (Rule 506(c)) and Regulation S. Offerings are available to eligible investors in all 50 States and certain foreign countries. Masterworks currently offers the following two types of investments: ● Single Artwork Investments - ordinary shares representing membership interests in a Masterworks issuer organized as a Delaware limited liability company or in a distinct “series” of a Delaware series limited liability company, each referred to as a “single-asset issuer”, that reflects an investment in a single artwork; and ● Diversified Artwork Investments - ordinary shares in a Masterworks Delaware limited partnership, referred to as a “diversified artwork investment vehicle,” that invests offering proceeds in multiple single-asset issuers, as well as acquiring whole artwork, with the goal of creating a diversified portfolio of artwork within one or more major collecting categories. Currently, Masterworks sponsors one such vehicle, which is the Diversified Art Portfolio (“DAP”).
Advisory Services for Retail Clients Adviser provides limited non-discretionary advisory services to retail Clients. Such advisory services primarily include providing educational information and investment advice regarding Offerings and the potential risks and benefits of allocating capital to Offerings and art as an alternative asset class, as well as providing recommendations designed to help investors create a balanced and diversified art investment portfolio as part of an overall asset allocation strategy.
Adviser does not execute Client transactions on behalf of retail Clients and all investment decisions are self-directed by the Client on the Masterworks Platform.
Potential investors in Offerings are solicited primarily through general online advertising and marketing, which typically includes hyperlinks to the Masterworks Platform. Additionally, Adviser conducts outbound prospecting to solicit interest in advisory services. If a potential investor expresses interest in learning more about Offerings and developing an art investment portfolio, the investor can establish an advisory relationship with Adviser (“Client”) and schedule a call with an investment adviser representative (“Representative”)

of Adviser.
Advisory services are limited to an initial engagement and onboarding period that normally lasts approximately thirty (30) days and is focused on educating the Client about art as an asset class and the basic terms, conditions, fees and expenses and risks relating to Offerings. Investment advice will be provided primarily on an initial onboarding telephone call between a Representative and a Client who expressed interest in art investing through the Masterworks Platform. In advance of the initial onboarding call, the Representative reviews basic information submitted by the Client prior to the call. During the onboarding call the Representative asks a series of questions to develop an investor profile, including information about the potential investor’s existing portfolio, risk tolerance and objectives, and evaluates whether an investment in Offerings is suitable for such person. The Representative will then determine, based on pre-approved guidelines, the portion of the Client’s overall investment portfolio the Client should consider investing in Offerings, along with advice as to how to allocate those assets to create appropriate levels of diversification and, which of the available Offerings the Client should consider.
Subject to minimum investment requirements established by Masterworks, the recommended amount of capital investment, as well as the number of available Offerings, it may not be possible for a Client to immediately achieve the recommended asset allocation or level of diversification. In such case, Representatives will discuss with Client potential options, including a less diversified portfolio and/or potential additional investments when other Offerings become available,. The Representative may also follow up with the Client during the initial engagement and onboarding period to help the Client meet the targeted investment allocation and diversification levels. Masterworks also currently sponsors a market for Secondary Transactions in partnership with an independent broker-dealer, which is available to investors with an established relationship with Masterworks. Specifically, due to fraud and money laundering risks stemming from Automated Clearing House (“ACH”) transactions, Masterworks restricts access to Secondary Transactions for (60) days following an investor’s initial investment. Since this restricted period is greater than the (30) day advisory engagement, currently, Adviser and its Representatives are unable to provide advice on Secondary Transactions. Once an investor gains access to Secondary Transactions, they may consider those securities independently.
Adviser only recommends Offerings that are available on the Masterworks Platform on a primary basis and Masterworks diversified artwork investment vehicles, such as DAP, in each case, to eligible investors. Adviser and its Representatives only recommend an allocation to art in a suitable amount relative to the Client’s overall investment portfolio and do not currently provide advice on other alternative or traditional investments held with, or offered by, other financial institutions, but may advise that an investment in Offerings may not be in the Client’s best interest.
Further, although Representatives may provide general art investment allocation advice and recommendations, Representatives will only recommend a subset of specific Masterworks single-asset issuers that are available during the initial engagement and onboarding period. Beyond the initial engagement and onboarding period of approximately thirty (30) days, Adviser and its Representatives will not monitor the Client’s holdings or recommend specific single-asset issuers or other Offerings that may be issued subsequent to the Client’s initial investment or Secondary Transaction opportunities.
Adviser and Representatives provide recommendations to retail Clients on a non-discretionary basis, meaning that the Client decides whether to follow the advice of the Adviser, including whether to invest in any particular Offering, how much to invest, when to invest and how to allocate between Offerings. The advisory relationship will end after the initial engagement and onboarding period, though Representatives will generally be available to have one or more follow-up calls if an existing or former Client or potential investor has further questions or requires additional information. Beyond the thirty (30) day engagement and onboarding period, each subsequent telephone conversation will initiate a new investment advisory relationship.
Masterworks permits Clients, and former Clients, to make subsequent investments through the Masterworks Platform at any time on a self-directed basis without entering into a new investment advisory relationship with Adviser.
Before, during, and after the advisory relationship Masterworks will communicate with users of the Masterworks Platform, including Clients, about Offerings. These communications are not sent on behalf of the Adviser, and Clients should not deem these communications to be personalized, or an extension of the advisory relationship unless specifically designated as such.
Masterworks may also provide additional information and promotional materials relating to investments in Offerings to individuals who visit the Masterworks Platform, and such individuals may be able to invest without becoming a Client of the Adviser. Such information and promotional materials, which may appear on the Masterworks Platform, emails, newsletters, social media posts, and or educational seminars, do not constitute investment advice with respect to securities.