Bond proceeds will be used for such capital improvement projects as college additions and renovations, prisons, and harbor dredging as authorized by the Legislature.

2. Why are the Mini-Bonds being offered in small denominations?

Small denominations allow more residents of South Carolina to invest in tax-free bonds issued by the State and provide a savings vehicle for college education and retirement.

3. How safe will my investment be?

The Mini-Bonds are secured by a pledge of the full faith, credit, and taxing power of the State of South Carolina.

4. In the event of the death of the owner or joint owner, or a change of address, whom should I contact concerning reissuance or disposition of the Mini-Bond?

Please contact the Registrar/Paying Agent, First Union National Bank, at:

First Union National Bank
1441 Main Street, Suite 440
Columbia SC 29201
1/800/665-9343

5. Will I be able to convert a Mini-Bond to cash prior to maturity?

No. A bondholder will not be paid by the State prior to maturity of the Mini-Bond; however, bondholders may be able to independently negotiate the sale of a Mini-Bond to another individual or securities dealer prior to the maturity date.

6. Can the State of South Carolina redeem the Mini-Bonds before maturity?

No. Mini-Bonds are not redeemable by the State.

7. Who is eligible to purchase these Mini-Bonds?

The Mini-Bonds can be purchased only by legal residents of the State of South Carolina.

8. If I purchase Mini-Bonds, will I be required to provide my Taxpayer Identification Number (Social Security Number) to the Registrar/Paying Agent?

A substitute "Payer’s Request for Taxpayer Identification Number and Certification" (W-9 Form) is included on the Order Form. If you are unable to complete the W-9 section, the Registrar/Paying Agent will send you a W-9 Form. If you do not return the W-9 Form, you may be subject to some portion of the principal amount of the Mini-Bond being withheld when it matures.

9. Will interest on the Mini-Bonds be tax-exempt?

Under current law, interest on the Mini-Bonds is excludable from gross income for Federal and State income tax purposes for S.C. residents. Even though interest on the Mini-Bonds is currently excluded from gross income for Federal and State income tax purposes for S.C. residents, receipt of interest may otherwise affect a bondholder’s income tax liability. Non-residents are subject to the state tax laws of their own states. See the next two questions for more information and consult your tax advisor.

10. If I move from South Carolina, will the interest still be tax-exempt?

Having an out-of-state address does not affect the tax-exempt nature of the interest received on Mini-Bonds for either Federal or South Carolina income tax purposes. However, interest received on Mini-Bonds may be subject to state income tax in the state in which the bondholder resides.

11. Is interest on Mini-Bonds subject to alternative minimum tax under Federal tax laws?

No. Interest on Mini-Bonds held by individuals is not currently subject to Federal alternative minimum tax under Federal law.

12. Will the interest on Mini-Bonds be included when calculating the taxability of Social Security?

Yes. Interest on Mini-Bonds is currently includable when calculating the Federal taxability of Social Security payments.

13. How can I pay for my Mini-Bonds and will I receive a confirmation of my order?

The Mini-Bonds must be purchased with either a cashier’s check, money order, or personal check (any of which must be drawn on a financial institution with offices in South Carolina) made payable to "Grady L. Patterson, Jr., State Treasurer." The Order Form and payment must be received by the State Treasurer’s Office no later than 5:00 p.m. on October 25, 2000. Once the Order Form is processed, a copy of the Order Form will be mailed to the purchaser as a confirmation.

14. How soon do I have to decide to buy these Mini-Bonds and when will they be delivered?

All orders must be received by the State Treasurer’s Office no later than 5:00 p.m. on October 25, 2000. The date postmarked on your Order Form is not controlling. The total Mini-Bonds to be sold is limited and will be sold on a "first-come, first served" basis. It is expected that the Mini-Bonds will be mailed on or about December 1, 2000.

15. May I buy both Current Interest Bearing Mini-Bonds and Capital Appreciation Mini-Bonds, and is there an order limit?

Yes. You may purchase any combination of the Current Interest Bearing and Capital Appreciation Mini-Bonds. There is no limit on the amount that you can purchase.

NO CHANGE IN YOUR ORDER WILL BE ACCEPTED AFTER OCTOBER 25, 2000.

16. How may I register ownership of the Mini-Bonds?

Refer to the reverse side of the Order Form for a few basic rules regarding the registration of these Mini-Bonds. 

CURRENT INTEREST BEARING MINI-BONDS

17. What is a Current Interest Bearing Bond?

A Current Interest Bearing Bond is a bond on which interest is paid each six months until maturity.

18. What maturity dates are offered on the Current Interest Bearing Mini-Bonds?

The Current Interest Bearing Mini-Bonds are offered with two maturity dates: November 1, 2005 (5 years) and November 1, 2010 (10 years).

19. How much do the Current Interest Bearing Mini-Bonds cost?

They may be purchased in multiples of $500.

20. What is the interest rate to be paid?

The Current Interest Bearing Mini-Bonds maturing November 1, 2005 will pay at an annual rate of 4.42%. The Current Interest Bearing Mini-Bonds maturing November 1, 2010 will pay interest at an annual rate of 4.68%. 

21. When is the interest paid?

You will receive a check twice a year by mail from the Registrar/Paying Agent. Interest is payable each May 1 and November 1, commencing May 1, 2001. Interest will start accruing on November 1, 2000.

CAPITAL APPRECIATION MINI-BONDS

22. What is a Capital Appreciation Bond?

A Capital Appreciation Bond is a bond on which the purchaser receives no interest payments between the time it is purchased and its maturity date. Instead, the interest compounds semiannually and is payable at maturity. The benefit to the purchaser is that the Capital Appreciation Bond may be purchased at a price substantially less than the final maturity value.

23. What maturity dates are offered on the Capital Appreciation Mini-Bonds?

The Capital Appreciation Mini-Bonds are offered with two maturity dates: November 1, 2005 (5 years) and November 1, 2010 (10 years).

24. How much do the Capital Appreciation Mini-Bonds cost?

The Capital Appreciation Mini-Bonds may be purchased in multiples of $200.

25. What is the interest rate to be paid?

The Capital Appreciation Mini-Bonds maturing November 1, 2005 will accrue interest at a rate of 4.42% compounded semiannually and will mature to $248.87 on November 1, 2005. The Capital Appreciation Mini-Bonds maturing November 1, 2010 will accrue interest at a rate of 4.68% compounded semiannually and will mature to $317.65 on November 1, 2010. 

26. When is the interest paid?

Interest on the Capital Appreciation Mini-Bonds will be paid on their maturity dates. The Mini-Bonds will begin accruing interest on November 1, 2000.

A request for an information package in response to this communication involves no obligation or commitment of any kind. This communication shall not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of the Bonds without delivery of the Official Statement relating to the Bonds.