A preferred that is issued through a subsidiary trust to effectively modify the nature of the non-tax deductible dividend arising from common equity of the issuer into a deductible interest payment for the issuer.

An example of such securities is targeted growth enhanced terms securities (TARGETS), which by definition are a variation of mandatory convertible securities (originally issued by Smith Barney), as a vehicle to provide growth potential of an underlying (equity) stock subject to a targeted growth rate- specifically, a quarterly appreciation cap of up to 20%. Targeted growth enhanced terms securities (TARGETS), once issued, neither can be redeemed by the holder or nor called by the issuer prior to its prespecified, scheduled maturity.

Trust issued preferred is also known as a trust structured preferred stock.