A type of mandatory convertible preferred (specifically a synthetic PERCS issue) which is typically issued at a zero premium and a preset cap on capital appreciated (upside potential), i.e., limited upside participation. However, it produces an enhanced yield in comparison with a common stock. Each “depository” stock will automatically convert into a given number of shares (usually one) after the passage of a preset period of time.

This structured convertible security was first introduced by Goldman Sachs.