Topic: How To Invest

Q: Pat, I notice that you recommend some ADRs in Wall Street Stock Forecaster (like Toyota and Honda). What exactly are the fees charged to investors by U.S.-listed ADRs? Thanks.

Article Excerpt

A: An American Depositary Receipt, or ADR, is a proxy for a foreign stock that trades in the U.S. and represents a specified number of shares in the foreign corporation. ADRs also qualify as ‘investment products’, like the shares of ‘split corps’ (see above). ADRs are bought and sold on U.S. stock markets, just like regular stocks, and are issued or sponsored in the U.S. by a bank or brokerage firm. If you own an ADR, you have the right to obtain the foreign stock it represents. However, investors usually find it more convenient to continue to hold the ADR, and sell the ADR when it no longer serves your needs. One ADR certificate may represent one or more shares of the foreign stock. Or, if the stock is expensive, the ADR may represent a fraction of a share; that way the ADR will start out trading at a moderate price or be in the range of similar securities on the exchange…