Blue Chip Growth Portfolio Series 40

Under normal circumstances, the Trust will invest at least 80% of the value of its assets in large-cap equity securities. The Trust aims to provide a portfolio of securities that the Sponsor believes includes large, high quality U.S. growth companies. The U.S.-listed common stocks held by the Trust may include the common stocks of U.S. and non-U.S. companies. The Trust may invest in real estate investment Trusts. The Sponsor believes that companies that exhibit strong growth characteristics may demonstrate an ability to accelerate revenues, returns and profits. This acceleration, relative to a firm’s peer group, usually reflects an innovative product or service, an expanding geographic operating footprint, or a competitive advantage enabling the firm to capture additional market share. However, there can be no assurance that any security held by the Trust will meet the Trust objective.

As a result of this strategy, the Trust is concentrated in the information technology sector and the consumer products sector.

As of the date of deposit, this Trust will hold a significant amount of its assets in growth stocks and large-capitalization U.S. common stocks.

The Trust’s portfolio is constructed by the Sponsor using the methodology described below:

• Begin with an initial universe of all U.S.-listed growth securities.
• Focus on factors including, but not limited to:
  • Valuation. The Sponsor favors companies whose valuations appear to be attractive based on measures such as price-to-earnings, price-to-book and price-to-cash flow.
  • Growth. The Sponsor may screen for companies with a history of (and prospects for) above average growth of dividends, sales and earnings.
  • Profitability. The Sponsor may screen for companies with a history of consistent and high profitability as measured by return-on-assets, return-on equity, gross margin and net margin.
  • Industry leadership. The Sponsor favors companies that possess a strong competitive position among their domestic and global peers.
  • Balance sheet. The Sponsor favors companies that possess overall financial strength and exhibit balance sheet improvements relative to their peers and the marketplace.
  • Cash-flow adequacy. The Sponsor favors companies with recent earnings and operating cash-flow significantly higher than the dividends paid as of the company’s most recent financial reporting period.
• Select a portfolio of securities from the remaining universe by selecting the most attractive candidates, as determined by the Sponsor, from each sector for expected performance and risk, while maintaining diversification with limits on sector and market capitalization.

As with all investments, you may lose some or all of your investment in the Trust. No assurance can be given that the Trust’s investment objective will be achieved. The Trust also might not perform as well as you expect. This can happen for reasons such as these:

• Securities prices can be volatile. The value of your investment may fall over time. Market value fluctuates in response to various factors. These can include stock market movements, purchases or sales of securities by the Trust, government policies, litigation, and changes in interest rates, inflation, the financial condition of the securities’ issuer or even perceptions of the issuer. Changes in legal, political, regulatory, tax and economic conditions may cause fluctuations in markets and securities prices, which could negatively impact the value of the Trust. Additionally, events such war, terrorism, natural and environmental disasters and the spread of infectious illnesses or other public health emergencies may adversely affect the economy, various markets and issuers. An outbreak of a novel form of coronavirus disease (“COVID-19”) was first detected in December 2019 and rapidly spread around the globe leading the World Health Organization to declare the COVID-19 outbreak a pandemic in March 2020 and resulting in major disruptions to economies and markets around the world. The complete economic impacts of COVID-19 are not yet fully known. The COVID-19 pandemic, or any future public health crisis, is impossible to predict and could result in adverse market conditions which may negatively impact the performance of the Trust and the Trust's ability to achieve its investment objectives. Units of the Trust are not deposits of any bank and are not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency.
• Share prices or dividend rates on the securities in the Trust may decline during the life of the Trust. There is no guarantee that share prices of the securities in the Trust will not decline and that the issuers of the securities will declare dividends in the future and, if declared, whether they will remain at current levels or increase over time.
• The Trust invests in “growth” stocks. Growth stocks are issued by companies which, based upon their higher than average price/book ratios, are expected to experience greater earnings growth rates relative to other companies in the same industry or the economy as a whole. Securities of growth companies may be more volatile than other stocks. If the perception of a company’s growth potential is not realized, the securities purchased may not perform as expected, reducing the Trust’s return. In addition, because different types of stocks tend to shift in and out of favor depending on market and economic conditions, “growth” stocks may perform differently from the market as a whole and other types of securities.
• The Trust is concentrated in the information technology sector. As a result, the factors that impact the information technology sector will likely have a greater effect on this Trust than on a more broadly diversified Trust. Companies involved in this sector must contend with rapid changes in technology, intense competition, government regulation and the rapid obsolescence of products and services. Furthermore, sector predictions may not materialize and the companies selected for the Trust may not represent the entire sector and may not participate in the overall sector growth.
• The Trust is concentrated in the consumer products sector. As a result, the factors that impact the consumer products sector will likely have a greater effect on this Trust than on a more broadly diversified trust. General risks of companies in the consumer products sector include cyclicality of revenues and earnings, economic recession, currency fluctuations, changing consumer tastes, extensive competition, product liability litigation and increased government regulation. A weak economy and its effect on consumer spending would adversely affect companies in the consumer products sector.
• The Trust may be susceptible to potential risks through breaches in cybersecurity. A breach in cybersecurity refers to both intentional and unintentional events that may cause the Trust to lose proprietary information, suffer data corruption or lose operational capacity. Such events could cause the Sponsor of the Trust to incur regulatory penalties, reputational damage, additional compliance costs associated with corrective measures and/or financial loss. In addition, cybersecurity breaches of the Trust’s third-party service providers, or issuers in which the Trust invests, can also subject the Trust to many of the same risks associated with direct cybersecurity breaches.
• The Trust is subject to risks arising from various operational factors and their service providers. Operational factors include, but not limited to, human error, processing and communication errors, errors of the Trust’s service providers, counterparties or other third-parties, failed or inadequate processes and technology or systems failures. Additionally, the Trust may be subject to the risk that a service provider may not be willing or able to perform their duties as required or contemplated by their agreements with the Trust. Although the Trust seeks to reduce these operational risks through controls and procedures, there is no way to completely protect against such risks.
• Inflation may lead to a decrease in the value of assets or income from investments.
• The Sponsor does not actively manage the portfolio. The Trust will generally hold, and may, when creating additional units, continue to buy, the same securities even though a security’s outlook, market value or yield may have changed.

See “Investment Risks” in Part A of the prospectus and “Risk Factors” in Part B of the prospectus for additional information.