The limitations - which could mute the dividend proposal's positive impact for investors and the stock market - became apparent Wednesday night, when Treasury officials held a briefing to provide greater detail about the economic stimulus package Bush unveiled on Tuesday.

Some holders of American depository receipts, or ADRs, which are dollar- denominated securities that represent holdings in foreign companies, won't benefit as much because companies that qualify under the Bush plan must pay U.S. taxes and overseas businesses pay much less U.S. income tax than domestically based businesses.

The news has taken ADR investors by surprise and "they are hollering," said Robert Willens, tax and accounting analyst at Lehman Brothers.

As a result, certain ADRs could lose some of their appeal, hobbling the performance of large, stable foreign stocks that are part of several major U.S. stock indexes and have rewarded investors well in good times, analysts say.

U.S. mutual fund investors may be the most affected by the lack of tax benefit for ADRs because these investment vehicles are the biggest owners, with Fidelity Management & Research, Putnam Investment Management, State Street Global Advisors and Templeton Investment Council among the top 10 in terms of share positions, according to ADR.com.

All told roughly 550 ADR's trade on U.S. stock exchanges, with BP PLC , GlaxcoSmithKline PLC , Novartis AG , Royal Dutch Petroleum and HSBC Holdings PLC being among the largest.

Also, under Bush's proposal foreign investors would not qualify for the dividend tax elimination because they do not file U.S. income tax returns.

That may not go over well with a myriad of overseas investors who have made a large commitment to the U.S., analysts say. Indeed, overseas buyers hold an estimated 20% of all U.S. equities.

"You could see some foreign institutional investors saying, 'Hey, what about us,' " said Chris Hyzy, head of investment policy for Merrill Lynch's international private client group.

"But at the same time, it's not like anything is being taken away from them," Hyzy said.

Indeed, foreign investors always had to pay taxes on their dividends and the way the proposal is structured - to benefit U.S. taxpayers and not push money out of the country, that approach remains appropriate, Hyzy said.

The news has taken ADR investors by surprise and "they are hollering," said Robert Willens, tax and accounting analyst at Lehman Brothers.

As a result, certain ADRs could lose some of their appeal, hobbling the performance of large, stable foreign stocks that are part of several major U.S. stock indexes and have rewarded investors well in good times, analysts say.

U.S. mutual fund investors may be the most affected by the lack of tax benefit for ADRs because these investment vehicles are the biggest owners, with Fidelity Management & Research, Putnam Investment Management, State Street Global Advisors and Templeton Investment Council among the top 10 in terms of share positions, according to ADR.com.

All told roughly 550 ADR's trade on U.S. stock exchanges, with BP PLC , GlaxcoSmithKline PLC , Novartis AG , Royal Dutch Petroleum and HSBC Holdings PLC being among the largest.

Also, under Bush's proposal foreign investors would not qualify for the dividend tax elimination because they do not file U.S. income tax returns.

That may not go over well with a myriad of overseas investors who have made a large commitment to the U.S., analysts say. Indeed, overseas buyers hold an estimated 20% of all U.S. equities.

"You could see some foreign institutional investors saying, 'Hey, what about us,' " said Chris Hyzy, head of investment policy for Merrill Lynch's international private client group.

"But at the same time, it's not like anything is being taken away from them," Hyzy said.

Indeed, foreign investors always had to pay taxes on their dividends and the way the proposal is structured - to benefit U.S. taxpayers and not push money out of the country, that approach remains appropriate, Hyzy said.