LIBERTY FUNDS TRUST III
497, 1999-06-29
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                                The Colonial fund
                             Class A, B and C Shares

                  Supplement to Prospectus dated March 1, 1999

The sub-caption Portfolio Managers is revised in its entirety as follows:

The portfolio managers of the Fund's equity investments are as follows:

John E.  Lennon,  a  Chartered  Financial  Analyst  and  Senior  Vice  President
(formerly  Vice  President) of Colonial,  has co-managed the Fund since October,
1997 and has managed various other Colonial equity funds since 1982.

Peter Wiley,  a Chartered  Financial  Analyst and Vice President of Colonial has
co-managed  the Fund since June,  1999.  Prior to joining  Colonial in 1999, Mr.
Wiley was a Senior  Portfolio  Manager  and  Principal  at State  Street  Global
Advisors from April,  1997 to March,  1999 and a Vice President at Colonial from
August, 1992 to April, 1997.

The portfolio manager for the Fund's fixed-income investments is as follows:

Leslie  W.  Finnemore,  Senior  Vice  President  (formerly  Vice  President)  of
Colonial, has co-managed the Fund since December, 1997 and managed various other
Colonial taxable fixed-income funds since 1987.

TF-36/319H-0699                                                    June 28, 1999
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                               The Colonial fund
                                 Class Z Shares

                  Supplement to Prospectus dated March 1, 1999

The sub-caption Portfolio Managers is revised in its entirety as follows:

The portfolio managers of the Fund's equity investments are as follows:

John E.  Lennon,  a  Chartered  Financial  Analyst  and  Senior  Vice  President
(formerly  Vice  President) of Colonial,  has co-managed the Fund since October,
1997 and has managed various other Colonial equity funds since 1982.

Peter Wiley,  a Chartered  Financial  Analyst and Vice President of Colonial has
co-managed  the Fund since June,  1999.  Prior to joining  Colonial in 1999, Mr.
Wiley was a Senior  Portfolio  Manager  and  Principal  at State  Street  Global
Advisors from April,  1997 to March,  1999 and a Vice President at Colonial from
August, 1992 to April, 1997.

The portfolio manager for the Fund's fixed income investments is as follows:

Leslie  W.  Finnemore,  Senior  Vice  President  (formerly  Vice  President)  of
Colonial, has co-managed the Fund since December, 1997 and managed various other
Colonial taxable fixed-income funds since 1987.

TF-36/320H-0699                                                    June 28, 1999


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