November 9, 2000
Securities and Exchange Commission
Judiciary Plaza
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: Liberty Funds Trust III
Liberty Contrarian Small Cap Fund
Liberty Special Fund
Liberty Contrarian Equity Fund
Liberty Contrarian Balanced Fund
Liberty Contrarian Income Fund ( the "Funds")
File Nos. 811-881 & 2-15184
---------------------------
Dear Sir or Madam:
Pursuant to the requirements of Rule 497(e), submitted for filing via EDGAR is
the form of Prospectus Supplement dated November 7, 2000, which will be used in
connection with the public offering and sale of shares of the Fund. This
supplement replaces supplements dated May 5, 2000, June 23,2000, August 1, 2000,
and October 23, 2000. Please be advised that the Fund's Prospectus, Statement of
Additional Information and Annual Report (each of which was filed via EDGAR)
have not been revised since the date of the last filing.
Sincerely,
LIBERTY FUNDS TRUST III
By:/s/Tracy DiRienzo
Tracy DiRienzo
Assistant Secretary
Enclosures
cc Rebecca Kelley (E&Y)
John Crabbe
John Johnson
John Maack Jr.
Robert Anton
Garth Nisbet
Paul Rocheleau
Deborah Young (2)
Blue Sky
CRABBE HUSON SMALL CAP FUND
THE CRABBE HUSON SPECIAL FUND
CRABBE HUSON EQUITY FUND
CRABBE HUSON MANAGED INCOME & EQUITY FUND
CRABBE HUSON CONTRARIAN INCOME FUND
Class A, B, and C Shares
Supplement to Prospectus dated March 1, 2000
(Replacing Supplements dated May 5, 2000, June 23, 2000,
August 1, 2000 and October 23, 2000)
Effective July 14, 2000 Crabbe Huson Small Cap Fund changed its name to Liberty
Contrarian Small Cap Fund; Crabbe Huson Special Fund changed its name to Liberty
Special Fund; Crabbe Huson Equity Fund changed its name to Liberty Contrarian
Equity Fund; Crabbe Huson Managed Income & Equity Fund changed its name to
Liberty Contrarian Balanced Fund; and Crabbe Huson Contrarian Income Fund change
its name to Liberty Contrarian Income Fund.
Performance history (CRABBE HUSON SPECIAL FUND)
--------------------------------------------------------------------------------
The bar chart below shows the Fund's performance from year to year by
illustrating the Fund's calendar-year total returns for its Class A shares. The
performance table following the bar chart shows how the Fund's average annual
returns for Class A, compare with those of a broad measure of market performance
for 1 year, 5 years and 10 years. As of December 31, 1999 no Class B or Class C
shares had been issued, however they would have had substantially similar
returns to those of Class A. The chart and table are intended to illustrate some
of the risks of investing in the Fund by showing the changes in the Fund's
performance. All returns include the reinvestment of dividends and
distributions. Performance results include the effect of expense reduction
arrangements, if any. If these arrangements were not in place, then the
performance results would have been lower. Any expense reduction arrangements
may be discontinued at any time. As with all mutual funds, past performance does
not predict the Fund's future performance.
For period shown in bar chart:
Best quarter: 2nd quarter 1999, +29.61%
Worst quarter: 3rd quarter 1998, -33.61%
<TABLE>
<S> <C> <C> <C> <C>
Inception
Date 1 Year 5 Years 10 Years
Class A (%) 4/9/87 1.92 -5.32 6.37
------------------------------- ------------ ------------ ----------- ------------
------------------------------- ------------ ------------ ----------- ------------
Russell Index (%) N/A 21.26 13.08 13.40
------------------------------- ------------ ------------ ----------- ------------
Lipper Average (%) N/A 39.35 23.31 16.04
</TABLE>
<PAGE>
Performance history (crabbe huson equity fund)
--------------------------------------------------------------------------------
The bar chart below shows changes in the Fund's performance from year to year by
illustrating the Fund's total calendar-year returns for its Class A shares. The
performance table following the bar chart shows how the Fund's average annual
returns for Class A, B and C compare with those of a broad measure of market
performance for 1 year, 5 years and 10 years. The chart and table are intended
to illustrate some of the risks of investing in the Fund by showing the changes
in the Fund's performance. All returns include the reinvestment of dividends and
distributions. Performance results include the effect of expense reduction
arrangements. If these arrangements were not in place, then the performance
results would have been lower. Any expense reduction arrangements may be
discontinued at any time. As with all mutual funds, past performance does not
predict the Fund's future performance.
For period shown in bar chart:
Best quarter: 1st quarter 1991, +18.98%
Worst quarter: 3rd quarter 1998, -19.93%
<TABLE>
<S> <C> <C>
1 Year 5 Years 10 Years
Class A (%) 4.09 10.54 12.58
------------------------- ------------------ -------------------------------
Class B (%) 4.53(10) 11.41(10) 13.15(10)
------------------------- ------------------ ------------------------------
Class C (%) 8.53(10) 11.67(10) 13.15(10)
------------------------- ------------------ ------------------------------
S&P 500 Index (%) 21.03 16.53 18.19
------------------------- ------------------ ------------------------------
------------------------- ------------------ ------------------------------
Lipper Average (%) 29.32 25.05 16.53
</TABLE>
<PAGE>
Performance history (CRABBE HUSON BALANCED FUND)
--------------------------------------------------------------------------------
The bar chart below shows changes in the Fund's performance from year to year by
illustrating the Fund's calendar year total returns for its Class A shares. The
performance table following the bar chart shows how the Fund's average annual
returns for Class A, B and C compare with those of a broad measure of market
performance for 1 year, 5 years and 10 years. The chart and table are intended
to illustrate some of the risks of investing in the Fund by showing the changes
in the Fund's performance. All returns include the reinvestment of dividends and
distributions. Performance results include the effect of expense reduction
arrangements, if any. If these arrangements were not in place, then the
performance results would have been lower. Any expense reduction arrangements
may be discontinued at any time. As with all mutual funds, past performance does
not predict the Fund's future performance.
For period shown in bar chart:
Best quarter: 2nd quarter 1997, +11.85%
Worst quarter: 3rd quarter 1998, -10.21%
<TABLE>
<S> <C> <C> <C>
1 Year 5 Years 10 Years
Class A (%) 1.12 9.09 9.35
-------------------------- ------------------ ------------------ ---------------
-------------------------- ------------------ ------------------ ---------------
Class B (%) 0.58(15) 9.73(15) 9.80(15)
-------------------------- ------------------ ------------------ ---------------
-------------------------- ------------------ ------------------ ---------------
Class C (%) 4.45(15) 10.00(15) 9.80(15)
-------------------------- ------------------ ------------------ ---------------
-------------------------- ------------------ ------------------ ---------------
Lehman Index (%) -2.15 7.61 7.65
-------------------------- ------------------ ------------------ ---------------
-------------------------- ------------------ ------------------ ---------------
S&P Index (%) 21.03 28.54 18.19
-------------------------- ------------------ ------------------ ---------------
Lipper Average (%) 12.53 16.84 12.27
</TABLE>
<PAGE>
Performance history (crabbe huson contrarian income fund)
--------------------------------------------------------------------------------
The bar chart below shows changes in the Fund's performance from year to year by
illustrating the Fund's total calendar-year returns for its Class A shares. The
performance table following the bar chart shows how the Fund's average annual
returns for Class A, B, and C shares compare with those of a broad measure of
market performance for 1 year, 5 years and 10 years. The chart and table are
intended to illustrate some of the risks of investing in the Fund by showing the
changes in the Fund's performance. All returns include the reinvestment of
dividends and distributions. If these arrangements were not in place, then the
performance results would have been lower. Any reduction arrangements may be
discontinued at any time. As with all mutual funds, past performance does not
predict the Fund's future performance. Performance results include the effect of
expense reduction arrangements, if any.
For period shown in bar chart:
Best quarter: 4th quarter 1991, + 6.09%
Worst quarter: 1st quarter 1996, -2.73%
<TABLE>
<S> <C> <C> <C>
1 Year 5 Years 10 Years
Class A (%) -5.40 6.69 6.35
------------------------------------------- ------------ ---------------------
Class B (%) -5.52(20) 7.40(20) .85(20)
------------------------------------------- ------------ ------------- -------
Class C (%) -1.72(20) 7.41(20) .86(20)
------------------------------------------- ------------ ------------- -------
Lehman Index (%) -2.15 7.61 7.65
------------------------------------------- ------------ ------------- --------
Lipper Average (%) -2.59 6.89 7.29
</TABLE>
<PAGE>
Under the section "Sales Charges" the first Class B sales charges table is
replaced in its entirety by the following two tables:
Purchases of less than $250,000:
% deducted when
Holding period after purchase shares are sold
Through first year 5.00
-------------------------------------------- -----------------------------------
-------------------------------------------- -----------------------------------
Through second year 4.00
-------------------------------------------- -----------------------------------
Through third year 3.00
-------------------------------------------- -----------------------------------
Through fourth year 3.00
-------------------------------------------- -----------------------------------
Through fifth year 2.00
-------------------------------------------- -----------------------------------
Through sixth year 1.00
-------------------------------------------- -----------------------------------
Longer than six years 0.00
Commission to financial advisors is 5.00%
Automatic conversion to Class A shares is eight years after purchase.
Purchases of less than $250,000:
% deducted when
Holding period after purchase shares are sold
Through first year 5.00
-------------------------------------------- -----------------------------------
-------------------------------------------- -----------------------------------
Through second year 4.00
-------------------------------------------- -----------------------------------
Through third year 3.00
-------------------------------------------- -----------------------------------
Through fourth year 3.00
-------------------------------------------- -----------------------------------
Through fifth year 2.00
-------------------------------------------- -----------------------------------
Through sixth year 1.00
-------------------------------------------- -----------------------------------
Longer than six years 0.00
Commission to financial advisors is 4.00%
Automatic conversion to Class A shares is eight years after purchase. The
footnote to the table "Class A Sales Charges" under the sub-caption SALES
CHARGES under the section YOUR ACCOUNT is revised as follows:
Class A shares bought without an initial sales charge in accounts aggregating $1
million to $25 million at the time of purchase are subject to a 1% CDSC if the
shares are sold within 18 months of the time of purchase. Subsequent Class A
purchases that bring your account value above $1 million are subject to a CDSC
if redeemed within 18 months of the date of purchase. The 18 month period begins
on the first day of the month following each purchase. The contingent deferred
sales charge does not apply to retirement plans purchased through a fee-based
program.
The following replaces the table called "Purchases Over $1 Million" under the
sub-caption SALES CHARGES under the section YOUR ACCOUNT:
Amount purchased Commission %
First $3 million 1.00
$3 million to less than $5 million 0.80
$5 million to less than $25 million 0.50
$25 million or more 0.25*
* Paid over 12 months but only to the extent the shares remain outstanding.
For Class A share purchases by participants in certain group retirement plans
offered through a fee-based program, financial advisors receive a 1% commission
from the distributor on all purchases of less than $3 million.
Under the section "Sales Charges" the second Class B sales charges table is
revised in its entirety as follows:
Purchases of $250,000 to less than $500,000:
% deducted when
Holding period after purchase shares are sold
Through first year 3.00
-------------------------------------------- -----------------------------------
-------------------------------------------- -----------------------------------
Through second year 2.00
-------------------------------------------- -----------------------------------
-------------------------------------------- -----------------------------------
Through third year 1.00
-------------------------------------------- -----------------------------------
Longer than four years 0.00
Commission to financial advisors is 2.50%.
Automatic conversion to Class A shares is eight years after purchase.
Effective October 23, 2000, the Fund's prospectus was amended to replace the
caption How To Exchange Shares in its entirety as follows:
How to Exchange Shares
You may exchange your shares for shares of the same share class of another fund
distributed by Liberty Funds Distributor, Inc. at net asset value. Shareholders
of Liberty Acorn funds that qualify to purchase Class A shares at net asset
value may exchange their Class A shares for Class Z shares of another fund
distributed by Liberty Funds Distributor, Inc. (see the Statement of Additional
Information for a description of these situations). If your shares are subject
to a CDSC, you will not be charged a CDSC upon the exchange. However, when you
sell the shares acquired through the exchange, the shares sold may be subject to
a CDSC, depending upon when you originally purchased the shares you exchanged.
For purposes of computing the CDSC, the length of time you have owned your
shares will be computed from the date of your original purchase, and the
applicable CDSC will be the CDSC of the original fund. Unless your account is
part of a tax-deferred retirement plan, an exchange is a taxable event.
Therefore, you may realize a gain or a loss for tax purposes. The Fund may
terminate your exchange privilege if the advisor determines that your exchange
activity is likely to adversely impact its ability to manage the Fund. To
exchange by telephone, call 1-800-422-3737.
G-36/979C-0900 November 7, 2000
