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Zero-Coupon Instruments 
(Source: Merrill Lynch)

Safe and reliable investment 
How zero-coupon instruments work 
Ideal for long-term financial planning (Member section)
No reinvestment risk (Member section)
Tax considerations for U.S. investors (Member section)
Market value considerations  (Member section)

Safe and reliable investment
If you are seeking a safe, reliable investment that provides attractive, predictable returns, zero-coupon instruments can be an ideal solution. Their many advantages include the following:

• Assured growth, assuming you hold the securities until maturity.
• Low minimum investment.
• Automatic compounding of interest.
• A wide selection of issuers, and maturities ranging from one year to 30 years or more.
• Liquidity through a secondary market maintained by Merrill Lynch.

How zero-coupon instruments work
Zero-coupon instruments do not make periodic interest payments. Instead, the interest accrues and is paid in a lump sum at maturity. You buy zero-coupon instruments at substantial discounts to their par value (face value) at maturity.

When each instrument matures, you receive its par value, which represents your original principal investment and the compound interest you earned, but did not receive, during the life of the instrument...............................

More information is provided in the Member Area

Recommended further reading:
Fixed Income - Zero Coupon Instruments 
Type of Instruments
Books on Financial Instruments