Like any other investment, you should learn as much as you can about a company before you invest. Try to learn about the political, economic, and social conditions in the company’s home country, so you will understand better the factors that affect the company’s financial results and stock price. If you invest internationally through mutual funds, make sure you know the
countries where the fund invests and understand the kinds of investments it makes.
Here are some sources of information:
SEC reports. Many foreign companies file reports with the SEC. The SEC requires foreign companies to file electronically, so their reports usually are available through the SEC’s web site at no charge. You can get paper copies for a fee from the SEC’s Public Reference Branch
International Regulators. You might be able to learn more about a particular company by contacting the securities regulator that oversees the markets in which that company’s securities trade. Many international securities regulators post issuer information on their websites, including audited financial statements. You’ll find a list of international securities regulators on the website of the International Organization of Securities Commissions (IOSCO).
Mutual fund firms. You can get the prospectus for a particular mutual fund directly from the mutual fund firm. Many firms also have websites that provide helpful information about international investing.
The company. Foreign companies often prepare annual reports, and some 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.
Broker-dealers. Your broker 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 also may be able to get copies of SEC reports and other information for you.
Publications. Many financial publications and international business newspapers provide extensive news coverage of foreign companies and markets.
Internet Resources. Various government, commercial, and media websites offer information about foreign companies and markets. However, as with any investment opportunity, you should be extremely wary of “hot tips,” overblown statements, and information posted on the Internet from unfamiliar sources. For tips on how to spot and avoid Internet fraud.
Investor Tidbit: International Stock Scams
Whether it’s foreign currency trading, “prime European bank” securities or fictitious coconut plantations in Costa Rica, you should be skeptical about exotic-sounding international investment “opportunities” offering returns that sound too good to be true. They usually are. In the past, con artists have used the names of well-known European banks or the International Chamber of Commerce -- without their knowledge or permission -- to convince unsophisticated investors to part with their money.
Some promoters based in the United States try to make their investment schemes sound more enticing by giving them an international flavor. Other promoters actually operate from outside the United States and use the Internet to reach potential investors around the globe. Remember that when you invest abroad and something goes wrong, it's more difficult to find out what happened and locate your money. As with any investment opportunity that promises quick profits or a high rate of return, you should stop, ask questions, and investigate before you invest.
Tracking down information on international investments requires some 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 before you invest.
