Definition
A bank holds shares of a foreign company and issues receipts against them that trade in US dollars on US exchanges or over the counter. Each ADR represents a set number of the underlying shares. Many well-known foreign companies are available to US investors this way.
How it is used
Gives US-dollar access to foreign companies without opening a foreign brokerage account.
Watch out for
An ADR's price also moves with the currency of the home market, and some programs charge small custody fees.