American Depositary Receipts

Many international companies are listed as American Depositary Receipts (ADRs) on U.S. exchanges and trade in U.S. dollars. ADRs, which are issued by U.S. depositary banks, represent shares of companies' stock that the bank holds. This is often the simplest approach to investing overseas, as the depositary bank handles the dividend payments, taxes and other investor issues. However, ADRs are still subject to currency risk because they represent indirect ownership of international companies.

Companies with ADRs listed on the exchanges must offer English versions of their annual reports, comply with U.S. accounting policies and grant certain shareholder rights. If an ADR isn't eligible to list on an exchange - usually because the company is too small - it can trade over the counter. Companies with ADRs trading over the counter aren't required to provide the same level of financial information as those trading on an exchange.