What are American Depository Receipts?
(Source: transcript from 6/25/97 on NBR) Investing overseas used to mean putting cash on a steamship and waiting weeks to have your shares sent back. The same with dividends. Foreign shares had to be presented at company offices to get dividends. More delays. In 1927 J.P. Morgan and Company found a way around this. It bought shares of foreign companies and held them in vaults overseas. U.S. investors who wanted to buy those shares were given receipts representing the shares. The receipts then were traded in dollars just like shares in U.S. companies and dividends were paid in dollars. So was born the American Depository Receipt. The ADR. And trading in ADRs has grown huge. Eric Frank who runs the ADR program at J.P. Morgan says this reflects the increased emphasis on foreign investment. Total U.S. holdings of foreign equities have grown at a rate of about 25 percent compounded growth over the last 5 years. And the ADR is mirroring that for the domestic portfolio and anything that you w
