American Depository Receipts (ADRs)

Certificates of ownership issued by a U.S. depositary bank, representing a claom on foreign shares held by the bank, usually by a branch or correspondent in the country of issue. One A.D.R. may represent a portion of a foreign share, one share or a bundle of shares of a foreign corporation. If the A.D.R.s are sponsored, the corporation provides financial information and other assistance to the bank and may subsidize the administration of the A.D.R.s. Unsponsored A.D.R.s do not receive such assistance. A.D.R.s carry the same currency, political and economic risks as the underlying foreign share. ADRs may be traded in lieu of trading in the actual underlying shares. Arbitrage keeps the prices of A.D.R.s and underlying foreign shares, adjusted for the SDR/ordinary ration essentially equal.