Investor Bulletin:

International Investing

Individual investors in the United States have access to 

a wide selection of investment opportunities, including 

international investments. The SEC’s Office of Investor 

Education and Advocacy is issuing this Investor Bulletin to 

help educate investors about international investing. This 

Investor Bulletin describes ways individual investors may 

obtain information about international investments—

including special factors to consider when investing 

internationally.

Should I consider international 

investments?

Two of the chief reasons individual investors invest 

internationally are: 

diversification (spreading your investment risk 

among foreign companies and markets in addition 

to U.S. companies and markets); and

growth (taking advantage of the potential for 

growth in some foreign economies, particularly in 

emerging markets). 

Investors should consider various factors when 

assessing potential investments, be they domestic or 

international. 

International investment returns may move in a 

different direction, or at a different pace, than U.S. 

investment returns. Including exposure to both 

domestic and foreign securities in your portfolio may 

reduce the risk that you will lose money if there is a 

drop in U.S. investment returns and your portfolio’s 

overall investment returns over time may have less 

volatility. Keep in mind that with globalization, 

markets are increasingly intertwined across borders. 

Investors should balance these considerations along 

with factors unique to international investing, including 

those described below.

How can I invest internationally? 

There are a number of ways individual investors may 

gain exposure to international investments. As with 

domestic investments, investors should first learn as 

much as they can about an investment.

Mutual funds.  There are different kinds of mutual 

funds that invest in foreign securities, including: global 

and international funds (that invest in companies and 

businesses outside of the United States); regional or 

country funds (that invest in a particular region or 

country); or international index funds (that seek to 

track the results of a particular foreign market or 

international index). Investing through mutual funds 

may reduce some of the potential risks of investing 

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internationally because mutual funds provide more 

diversification than most investors could achieve on 

their own. If you want to learn more about investing 

in these types of mutual funds, as well as in mutual 

funds generally, information is available in Mutual 

Funds – A Guide for Investors.

Exchange-traded funds.  An exchange-traded fund 

(ETF) is a type of investment that typically has an 

objective to achieve the same return as a particular 

market index.  ETFs are listed on stock exchanges 

and, like stocks (and in contrast to mutual funds), trade 

throughout the trading day with fluctuating market 

prices.  A share in an ETF that tracks an international 

or foreign index seeks to give an investor exposure to 

the performance of the underlying international or 

foreign stock or bond portfolio along with the ability 

to trade the ETF shares like any other exchangetraded security. 

American depositary receipts.  The stocks of most 

foreign companies that trade in U.S. markets are traded 

as American depositary receipts (ADRs) issued by 

U.S. depositary banks (rather than the actual foreign 

company stock). Each ADR represents one or more 

shares of a foreign stock or a fraction of a share. If 

you own an ADR you have the right to obtain the 

foreign stock it represents, but U.S. investors usually 

find it more convenient and cost-effective to own the 

ADR. The price of an ADR generally corresponds 

to the price of the foreign stock in its home market, 

adjusted for the ratio of ADRs to foreign company 

shares. Sometimes the terms “ADR” and “ADS” (for 

American depositary share) are used interchangeably. 

U.S-traded foreign stocks. Although most foreign 

stocks trade in the U.S. markets as ADRs, some foreign 

companies list their stock directly here as well as in 

their local market. For example, some Canadian stocks 

that are listed and trade on Canadian markets are also 

listed and trade directly in U.S. markets, rather than as 

ADRs.  Some foreign companies list their securities 

in multiple markets, which may include U.S. markets. 

You can purchase ADRs and U.S.-listed foreign stocks 

that trade in the United States through your U.S. 

broker.   

Trading on foreign markets. Your U.S. broker may 

be able to process an order for a company that only 

trades on a foreign securities market. These foreign 

companies are not likely to file reports with the SEC. 

The information available about these companies 

may be different than the information available about 

companies that file reports with the SEC. Moreover, 

the information may not be available in English. 

Where can I find information about 

investing internationally?

You should learn as much as you can about an 

investment, and about an investment adviser or brokerdealer, before you invest. Tracking down information 

on international investments may require extra effort, 

but it will make you a more informed investor.  One 

of the most important things to remember is to read and 

understand the information about an investment before 

you invest.  Here are some sources of information to 

consider:

SEC reports.  Foreign companies listed on U.S. 

stock exchanges or that publicly offer their securities 

in the United States must file reports with the 

SEC.  The SEC requires these foreign companies 

to file electronically, so their reports are available 

through the SEC’s EDGAR website at www.sec.gov/

edgar/searchedgar/companysearch.html at no charge. 

However, if the company’s securities trade on the overthe-counter markets in the United States rather than 

on a stock exchange, the company may not be required 

to file reports with the SEC.

Mutual fund firms.  You can get the prospectus for a 

particular mutual fund directly from the mutual fund 

firm. Many firms also have websites and phone lines 

that provide helpful information about international 

investing.

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Broker-dealers and investment advisers. Your 

broker or investment adviser may have research reports 

on particular foreign companies, individual countries 

or geographic regions. Ask whether updated reports 

are available on a regular basis. Your broker or 

investment adviser also may be able to provide you 

with copies of SEC reports and other information.

Foreign companies.  Foreign companies often 

prepare annual reports, and some, but not all, 

companies also publish an English language version of 

their annual report. Ask your broker for copies of the 

company’s reports or check to see if they are available 

from the SEC. Some foreign companies post their 

annual reports and other financial information on 

their websites.

Foreign regulators.  You may be able to learn 

more about a particular foreign public company by 

contacting the foreign securities regulator that oversees 

the markets in which that company’s securities trade.  

You may also be able to learn more about a particular 

foreign broker-dealer or foreign investment adviser 

by contacting the securities regulator with which the 

firm is registered. Many foreign securities regulators 

post information about issuers and registrants on their 

websites, including audited financial statements.  

You will find a list of international securities regulators 

on the website of the International Organization of 

Securities Commissions (IOSCO) at 

www.iosco.org. Foreign regulators sometimes post 

warnings about investment scams and information 

about their enforcement actions that can be useful 

to investors. IOSCO publishes investor alerts that it 

receives from its securities regulator members on its 

website.

You may already be investing 

internationally. In the United States, we 

have access to information and products from 

all over the world. Foreign companies can 

achieve the status of household names in the 

United States without public awareness that 

these companies are domiciled outside of the 

United States, or they may conduct a majority 

of their business operations abroad. You should 

conduct your own review of your holdings to 

determine whether the securities you own or 

are considering for purchase already provide 

you with international or foreign exposure. 

What issues and risks should I consider 

when investing internationally?

While investing in any security requires careful 

consideration, international investing raises some 

special issues and risks. These include:

Access to different information.  In some 

jurisdictions, the information provided by foreign 

companies is different than information provided 

by U.S. companies. The nature and frequency of 

disclosures required under foreign law may also be 

different from that of U.S. companies. In addition, 

foreign companies’ financial statements may be 

prepared using a different set of accounting standards 

than companies use in the United States. Information 

foreign companies publish may not be in English. 

Moreover, the financial statements of publicly listed 

companies in the United States, whether based in 

the United States or abroad, must be audited by 

an independent public accounting firm subject 

to oversight by the Public Company Accounting 

Oversight Board (PCAOB). The financial statements 

of a foreign company that is not publicly listed in the 

United States may or may not be subject to analogous 

auditing and auditor oversight arrangements. 

 www.investor.gov

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Investor Assistance (800) 732-0330

Costs of international investments. International 

investing can be more expensive than investing in 

U.S. companies. In some countries there may be 

unexpected taxes, such as withholding taxes on 

dividends. In addition, transaction costs such as fees, 

broker’s commissions and taxes may be higher than 

in U.S. markets. You also should be aware of the 

potential effects of currency conversion costs on your 

investment.  Mutual funds that invest abroad may 

have higher fees and expenses than funds that invest in 

U.S. securities, in part because of the extra expense of 

trading in foreign markets. 

Working with a broker or investment adviser. 

If you are working with a broker, make sure the 

broker is registered with the SEC.  It is against the 

law for a broker, foreign or domestic, to contact you 

and solicit your investment unless it is registered with 

the SEC. You can obtain information about a U.S.-

registered broker by visiting FINRA’s BrokerCheck

website or calling FINRA’s toll-free BrokerCheck 

hotline at (800) 289-9999. If you are working with 

a U.S.-registered investment adviser, you may be able 

to obtain information about the investment adviser 

by visiting the SEC’s Investment Adviser Public 

Disclosure (IAPD) website. If you directly contact and 

work with a foreign broker not registered with the SEC, 

you may not have all the protections under the laws of 

the United States as would be the case if the broker were 

registered with the SEC.  

Changes in currency exchange rates. A foreign 

investment also has foreign currency exchange risks. 

When the exchange rate between the foreign currency 

of an international investment and the U.S. dollar 

changes, it can increase or reduce your investment 

return in the foreign security. In fact, it is possible 

that a foreign investment may increase in value in its 

home market but, because of changing exchange rates, 

the value of that investment in U.S. dollars is actually 

lower. In addition to exchange rates, you should 

be aware that some countries might impose foreign 

currency controls that restrict or delay you from 

moving currency out of a country.

Changes in market value.  All securities markets can 

experience dramatic changes in market value. One 

way to attempt to reduce the impact of these price 

changes is to be prepared to hold your investments 

through adverse times and sharp downturns in 

domestic or foreign markets, which may be long 

lasting.  

Political, economic and social events.  Depending 

on the country or region, it can be more difficult for 

individual investors to obtain information about and 

comprehensively analyze all the political, economic 

and social factors that influence a particular foreign 

market.  These factors may provide diversification from 

a domestically-focused portfolio, but they may also 

contribute to the risk of international investing.

Different levels of liquidity.  Some foreign markets 

may have lower trading volumes for securities or fewer 

listed companies than U.S. markets.  Some foreign 

markets are open for shorter periods than U.S. markets. 

In addition, some countries may restrict the amount or 

type of securities that foreign investors may purchase. 

Where these factors exist, they can contribute to less 

liquidity when you want to sell and lead to difficulty 

finding a buyer. 

Legal remedies.  Where you purchase a security 

can impact whether you have, and where you can 

pursue, legal remedies against the foreign company 

or any other foreign-based entities involved in your 

transaction, such as a foreign broker. Even if you sue 

successfully in a U.S. court, you may not be able to 

collect on a U.S. judgment against a foreign company, 

entity or person. You may have to rely on legal 

remedies that are available in the home country, if any. 

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Investors should be mindful when either 

buying or selling securities on foreign 

securities exchanges or otherwise outside 

the United States, or entering into securities 

transactions with parties located outside the 

United States, that, as a result of a recent 

Supreme Court decision, Morrison v. National 

Australia Bank, investors may not have the 

ability to seek certain legal remedies in U.S. 

courts as private plaintiffs. Investors who 

purchase or sell securities outside the territory 

of the United States will generally not be able 

to bring suit as private plaintiffs in U.S. courts 

to address fraudulent activity that may occur 

in connection with these transactions—even 

if the fraudulent activities occur within the 

United States.  

Please note, however, that the SEC’s law 

enforcement authority with respect to 

fraudulent conduct within the United States, 

and conduct outside the United States that 

has a foreseeable substantial effect within the 

United States, is generally not subject to the 

limitations placed on private rights of action by 

the Morrison decision. 

Morrison v. National Australia Bank

Different market operations.  Foreign markets may 

operate differently from the major U.S. trading markets. 

For example, there may be different time periods for 

clearance and settlement of securities transactions. 

Some foreign markets may not report securities 

trades within the same period as U.S. markets. Rules 

providing for the safekeeping of shares held by foreign 

custodian banks or depositories may differ from those 

in the United States. If a foreign custodian has credit 

problems or fails, shares purchased in a foreign market 

may have different levels of protection than provided 

under the laws of the United States. 

Investors who would like to provide information 

about fraud or wrongdoing involving potential 

violations of the U.S. securities laws may contact the 

SEC using the SEC’s Tips, Complaints and Referrals 

Portal. SEC action may or may not lead to the 

investor receiving funds to redress any fraud. 

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Where can I go for help?

If you have a question or concern about an 

investment, or you think you have encountered 

fraud, please contact the SEC, FINRA or your state 

securities regulator to report the fraud and to get 

assistance.

U.S. Securities and Exchange Commission

Office of Investor Education and Advocacy

100 F Street, NE

Washington, D.C. 20549-0213

Telephone: (800) 732-0330

Fax: (202) 772-9295

www.sec.gov

www.investor.gov 

Financial Industry Regulatory Authority (FINRA)

FINRA Complaints and Tips

9509 Key West Avenue

Rockville, Maryland 20850

Telephone: (301) 590-6500

Fax: (866) 397-3290

www.finra.org/Investors/

North American Securities Administrators Association 

(NASAA)

750 First Street, NE

Suite 1140

Washington, D.C. 20002

Telephone: (202) 737-0900

Fax: (202) 783-3571

www.nasaa.org

The Office of Investor Education and Advocacy 

has provided this information as a service to 

investors. It is neither a legal interpretation nor 

a statement of SEC policy. If you have questions 

concerning the meaning or application of a 

particular law or rule, please consult with an 

attorney who specializes in securities law.

Additional Information

For basic information about investment products, 

visit www.investor.gov/investing-basics/

investment-products. 

For our publication titled Mutual Funds – A 

Guide for Investors, visit www.investor.gov/

Mutual-Funds. 

For FINRA’s BrokerCheck resource, visit 

www.finra.org/Investors/ToolsCalculators/

BrokerCheck/. 

For our Investment Adviser Public Disclosure 

(IAPD) website, visit www.adviserinfo.sec.gov.

For the Morrison v. National Australia Bank

opinion, visit www.supremecourt.gov/

opinions/09pdf/08-1191.pdf.

For additional investor educational information, 

see the SEC’s website for individual investors, 

www.investor.gov. 

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