LIBERTY FUNDS TRUST III
497, 2000-08-24
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                    COLONIAL SHORT DURATION U.S. GOVERNMENT FUND
                    COLONIAL INTERMEDIATE U.S. GOVERNMENT FUND
                        COLONIAL FEDERAL SECURITIES FUND

    Supplement to the Statement of Additional Information dated January 1, 2000


The Funds' Statement of Additional Information is amended as follows:

(1)    Effective July 14, 2000, each Fund changed its name as follows:  Colonial
       Short  Duration U.S.  Government  Fund changed its name to "Liberty Short
       Term Government Fund", Colonial Intermediate U.S. Government Fund changed
       its name to "Liberty  Intermediate  Government Fund" and Colonial Federal
       Securities Fund changed its name to "Liberty Federal Securities Fund".

(2)    The fourth non-fundamental investment policy under the caption OTHER
       INVESTMENT POLICIES is deleted in its entirety.



GOV-35/748C-0800                                                August 23, 2000


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