For an investor, ADRs can offer advantages over purchasing individual stocks on foreign stock exchanges:

• ADRs are traded on U.S. stock exchanges. Thus, you don’t need to become familiar with foreign stock markets or deal with delays that can occur in foreign markets.

• All stock transactions are executed in U.S. dollars. These transactions include all purchases including sales, and dividends. Prices are quoted in U.S. dollars and include both changes in the stock price and currency fluctuations.

• Financial reporting tends to be more complete. If the ADR is sponsored, reports will be prepared in English. However, financial reports are based on accounting rules in effect in the company’s home country, which can differ substantially from U.S. accounting principles.

Keep in mind that you are still investing in a foreign equity. In addition to the risks associated with domestic stocks, international stocks have unique risks, such as currency fluctuations, political and social changes, and greater share price volatility.

Before investing in ADRs, consider the following:

• Research the ADR carefully before investing. You are investing in a company in a foreign country, so you should become familiar with the economics of that country.

• Only consider ADRs if you are investing for the long term. If you are trying to take advantage of short-term exchange rate movements, there are other investment vehicles more suited for that purpose.