COLONIAL CALIFORNIA TAX-EXEMPT FUND
COLONIAL CONNECTICUT TAX-EXEMPT FUND
COLONIAL FLORIDA TAX-EXEMPT FUND
COLONIAL MASSACHUSETTS TAX-EXEMPT FUND
COLONIAL MICHIGAN TAX-EXEMPT FUND
COLONIAL MINNESOTA TAX-EXEMPT FUND
COLONIAL NEW YORK TAX-EXEMPT FUND
COLONIAL NORTH CAROLINA TAX-EXEMPT FUND
COLONIAL OHIO TAX-EXEMPT FUND
CLASS A, B AND C SHARES
SUPPLEMENT TO PROSPECTUS DATED JUNE 1, 2000
(REPLACING SUPPLEMENTS DATED JUNE 23, 2000 AND AUGUST 1, 2000)
Effective July 14, 2000, each Fund changed its name as follows: Colonial
California Tax-Exempt Fund changed its name to "Liberty California Tax-Exempt
Fund", Colonial Connecticut Tax-Exempt Fund changed its name to "Liberty
Connecticut Tax-Exempt Fund", Colonial Florida Tax-Exempt Fund changed its name
to "Liberty Florida Tax-Exempt Fund", Colonial Massachusetts Tax-Exempt Fund
changed its name to "Liberty Massachusetts Tax-Exempt Fund", Colonial Michigan
Tax-Exempt Fund changed its name to "Liberty Michigan Tax-Exempt Fund", Colonial
Minnesota Tax-Exempt Fund changed its name to "Liberty Minnesota Tax-Exempt
Fund", Colonial New York Tax-Exempt Fund changed its name to "Liberty New York
Tax-Exempt Fund", Colonial North Carolina Tax-Exempt Fund changed its name to
"Liberty North Carolina Tax-Exempt Fund" and Colonial Ohio Tax-Exempt Fund
changed its name to "Liberty Ohio Tax-Exempt Fund."
Effective August 1, 2000, the Class A contingent deferred sales charge (CDSC)
and the commission schedule on purchases over $1 million changed as follows:
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.
<PAGE>
[SIDE BAR]
UNDERSTANDING EXPENSES
SALES CHARGES are paid directly by shareholders to Liberty Funds Distributor,
Inc., the Fund's distributor.
ANNUAL FUND OPERATING EXPENSES are deducted from the Fund. They include
management fees, 12b-1 fees and administrative costs including pricing and
custody services.
EXAMPLE EXPENSES help you compare the cost of investing in the Fund to the cost
of investing in other mutual funds. The table does not take into account any
expense reduction arrangements discussed in the footnotes to the Annual Fund
Operating Expenses table. It uses the following hypothetical conditions:
o $10,000 initial investment
o 5% total return for each year
o Fund operating expenses remain
the same
o Assumes reinvestment of all dividends and distributions
o Assumes Class B shares convert to Class A shares after eight years
[END SIDE BAR]
The Annual Fund Operating Expenses tables and the Example Expenses tables under
the section YOUR EXPENSES are revised in their entirety as follows:
LIBERTY CALIFORNIA TAX-EXEMPT FUND
ANNUAL FUND OPERATING EXPENSES (DEDUCTED DIRECTLY FROM FUND ASSETS)
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
<S> <C> <C> <C>
Management fee (%) 0.50 0.50 0.50
--------------------------------------------------- ----------- ----------- -----------
Distribution and service (12b-1) fees (*) (%) 0.18 0.93 0.93(**)
--------------------------------------------------- ----------- ----------- -----------
Other expenses (%) 0.24 0.24 0.24
--------------------------------------------------- ----------- ----------- -----------
Total annual fund operating expenses (%) 0.92 1.67 1.67(**)
</TABLE>
[FN]
(*) The annual service fee portion of the 12b-1 fee may equal up to 0.10% on net
assets attributable to shares issued prior to December 1, 1994 and 0.25% on
net assets attributable to shares issued thereafter. This arrangement
results in a rate of service fee that is a blend between the 0.10% and 0.25%
rates.
(**)The Fund's distributor has voluntarily agreed to waive a portion of the
12b-1 fee for Class C shares. As a result, the actual 12b-1 fee for Class C
shares would be 0.63% and the total annual fund operating expenses for Class
C shares would be 1.37%. This arrangement may be modified or terminated by
the distributor at any time.
</FN>
EXAMPLE EXPENSES (YOUR ACTUAL COSTS MAY BE HIGHER OR LOWER)
<TABLE>
<CAPTION>
CLASS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
Class A $564 $754 $ 960 $1,553
--------------------------------------- ---------- ----------- ----------- -----------
Class B: did not sell your shares $170 $526 $ 907 $1,777
sold all your shares at
the end of the period $670 $826 $1,107 $1,777
--------------------------------------- ---------- ----------- ----------- -----------
Class C: did not sell your shares $170 $526 $ 907 $1,976
sold all your shares at
the end of the period $270 $526 $ 907 $1,976
</TABLE>
<PAGE>
[SIDE BAR]
UNDERSTANDING EXPENSES
SALES CHARGES are paid directly by shareholders to Liberty Funds Distributor,
Inc., the Fund's distributor.
ANNUAL FUND OPERATING EXPENSES are deducted from the Fund. They include
management fees, 12b-1 fees and administrative costs including pricing and
custody services.
EXAMPLE EXPENSES help you compare the cost of investing in the Fund to the cost
of investing in other mutual funds. The table does not take into account any
expense reduction arrangements discussed in the footnotes to the Annual Fund
Operating Expenses table. It uses the following hypothetical conditions:
o $10,000 initial investment
o 5% total return for each year
o Fund operating expenses remain
the same
o Assumes reinvestment of all dividends and distributions
o Assumes Class B shares convert to Class A shares after eight years
[END SIDE BAR]
LIBERTY CONNECTICUT TAX-EXEMPT FUND
ANNUAL FUND OPERATING EXPENSES (DEDUCTED DIRECTLY FROM FUND ASSETS)
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
<S> <C> <C> <C>
Management fee (*) (%) 0.50 0.50 0.50
--------------------------------------------------- ----------- ----------- -----------
Distribution and service (12b-1) fees (**) (%) 0.19 0.94 0.94(***)
--------------------------------------------------- ----------- ----------- -----------
Other expenses (%) 0.25 0.25 0.25
--------------------------------------------------- ----------- ----------- -----------
Total annual fund operating expenses (*) (%) 0.94 1.69 1.69(***)
</TABLE>
[FN]
(*) The Fund's advisor has voluntarily agreed to waive advisory fees and
reimburse the Fund for certain expenses so that the total annual fund
operating expenses (exclusive of distribution and service fees, brokerage
commissions, interest, taxes and extraordinary expenses, if any) will not
exceed 0.60%. As a result, the actual management fee for each share class
would be 0.35% and total annual fund operating expenses for Class A, B and C
shares would be 0.79%, 1.54% and 1.24%, respectively. This arrangement may
be modified or terminated by the advisor at any time.
(**)The annual service fee portion of the 12b-1 fee may equal up to 0.10% on net
assets attributable to shares issued prior to December 1, 1994 and 0.25% on
net assets attributable to shares issued thereafter. This arrangement
results in a rate of service fee that is a blend between the 0.10% and 0.25%
rates.
(***)The Fund's distributor has voluntarily agreed to waive a portion of the
12b-1 fee for Class C shares. As a result, the actual 12b-1 fee for Class C
shares would be 0.64% and the total annual fund operating expenses for Class
C shares would be 1.24%. This arrangement may be modified or terminated by
the distributor at any time.
</FN>
EXAMPLE EXPENSES (YOUR ACTUAL COSTS MAY BE HIGHER OR LOWER)
<TABLE>
<CAPTION>
CLASS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
Class A $566 $760 $ 970 $1,575
--------------------------------------- ---------- ----------- ----------- -----------
Class B: did not sell your shares $172 $533 $ 918 $1,799
sold all your shares at
the end of the period $672 $833 $1,118 $1,799
--------------------------------------- ---------- ----------- ----------- -----------
Class C: did not sell your shares $172 $533 $ 918 $1,998
sold all your shares at
the end of the period $272 $533 $ 918 $1,998
</TABLE>
<PAGE>
[SIDE BAR]
UNDERSTANDING EXPENSES
SALES CHARGES are paid directly by shareholders to Liberty Funds Distributor,
Inc., the Fund's distributor.
ANNUAL FUND OPERATING EXPENSES are deducted from the Fund. They include
management fees, 12b-1 fees and administrative costs including pricing and
custody services.
EXAMPLE EXPENSES help you compare the cost of investing in the Fund to the cost
of investing in other mutual funds. The table does not take into account any
expense reduction arrangements discussed in the footnotes to the Annual Fund
Operating Expenses table. It uses the following hypothetical conditions:
o $10,000 initial investment
o 5% total return for each year
o Fund operating expenses remain
the same
o Assumes reinvestment of all dividends and distributions
o Assumes Class B shares convert to Class A shares after eight years
[END SIDE BAR]
LIBERTY FLORIDA TAX-EXEMPT FUND
ANNUAL FUND OPERATING EXPENSES (DEDUCTED DIRECTLY FROM FUND ASSETS)
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
<S> <C> <C> <C>
Management fee (*) (%) 0.50 0.50 0.50
--------------------------------------------------- ----------- ----------- -----------
Distribution and service (12b-1) fees (**) (%) 0.19 0.94 0.94(***)
--------------------------------------------------- ----------- ----------- -----------
Other expenses (%) 0.34 0.34 0.34
--------------------------------------------------- ----------- ----------- -----------
Total annual fund operating expenses (*) (%) 1.03 1.78 1.78(***)
</TABLE>
[FN]
(*) The Fund's advisor has voluntarily agreed to waive advisory fees and
reimburse the Fund for certain expenses so that the total annual fund
operating expenses (exclusive of distribution and service fees, brokerage
commissions, interest, taxes and extraordinary expenses, if any) will not
exceed 0.75%. As a result, the actual management fee for each share class
would be 0.41% and total annual fund operating expenses for Class A, B and C
shares would be 0.94%, 1.69% and 1.39%, respectively. This arrangement may
be modified or terminated by the advisor at any time.
(**)The annual service fee portion of the 12b-1 fee may equal up to 0.10% on net
assets attributable to shares issued prior to December 1, 1994 and 0.25% on
net assets attributable to shares issued thereafter. This arrangement
results in a rate of service fee that is a blend between the 0.10% and 0.25%
rates.
(***) The Fund's distributor has voluntarily agreed to waive a portion of the
12b-1 fee for Class C shares. As a result, the actual 12b-1 fee for Class C
shares would be 0.64% and the total annual fund operating expenses for Class
C shares would be 1.39%. This arrangement may be modified or terminated by
the distributor at any time.
</FN>
EXAMPLE EXPENSES (YOUR ACTUAL COSTS MAY BE HIGHER OR LOWER)
<TABLE>
<CAPTION>
CLASS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
Class A $575 $787 $1,017 $1,675
--------------------------------------- ---------- ----------- ----------- -----------
Class B: did not sell your shares $181 $560 $ 964 $1,897
sold all your shares at
the end of the period $681 $860 $1,164 $1,897
--------------------------------------- ---------- ----------- ----------- -----------
Class C: did not sell your shares $181 $560 $ 964 $2,095
sold all your shares at
the end of the period $281 $560 $ 964 $2,095
</TABLE>
<PAGE>
[SIDE BAR]
UNDERSTANDING EXPENSES
SALES CHARGES are paid directly by shareholders to Liberty Funds Distributor,
Inc., the Fund's distributor.
ANNUAL FUND OPERATING EXPENSES are deducted from the Fund. They include
management fees, 12b-1 fees and administrative costs including pricing and
custody services.
EXAMPLE EXPENSES help you compare the cost of investing in the Fund to the cost
of investing in other mutual funds. The table does not take into account any
expense reduction arrangements discussed in the footnotes to the Annual Fund
Operating Expenses table. It uses the following hypothetical conditions:
o $10,000 initial investment
o 5% total return for each year
o Fund operating expenses remain
the same
o Assumes reinvestment of all dividends and distributions
o Assumes Class B shares convert to Class A shares after eight years
[END SIDE BAR]
LIBERTY MASSACHUSETTS TAX-EXEMPT FUND
ANNUAL FUND OPERATING EXPENSES(DEDUCTED DIRECTLY FROM FUND ASSETS)
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
<S> <C> <C> <C>
Management fee (*) (%) 0.50 0.50 0.50
--------------------------------------------------- ----------- ----------- -----------
Distribution and service (12b-1) fees (**) (%) 0.18 0.93 0.93(***)
--------------------------------------------------- ----------- ----------- -----------
Other expenses (%) 0.27 0.27 0.27
--------------------------------------------------- ----------- ----------- -----------
Total annual fund operating expenses (*) (%) 0.95 1.70 1.70(***)
</TABLE>
[FN]
(*) The Fund's advisor has voluntarily agreed to waive advisory fees and
reimburse the Fund for certain expenses so that the total annual fund
operating expenses (exclusive of distribution and service fees, brokerage
commissions, interest, taxes and extraordinary expenses, if any) will not
exceed 0.75%. As a result, the actual management fee for each share class
would be 0.48% and total annual fund operating expenses for Class A, B and C
shares would be 0.93%, 1.68% and 1.38%, respectively. This arrangement may
be modified or terminated by the advisor at any time.
(**)The annual service fee portion of the 12b-1 fee may equal up to 0.10% on
net assets attributable to shares issued prior to December 1, 1994 and 0.25%
on net assets attributable to shares issued thereafter. This arrangement
results in a rate of service fee that is a blend between the 0.10% and 0.25%
rates.
(***) The Fund's distributor has voluntarily agreed to waive a portion of the
12b-1 fee for Class C shares. As a result, the actual 12b-1 fee for Class C
shares would be 0.63% and the total annual fund operating expenses for Class
C shares would be 1.38%. This arrangement may be modified or terminated by
the distributor at any time.
</FN>
EXAMPLE EXPENSES (YOUR ACTUAL COSTS MAY BE HIGHER OR LOWER)
<TABLE>
<CAPTION>
CLASS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
Class A $567 $763 $ 976 $1,586
--------------------------------------- ---------- ----------- ----------- -----------
Class B: did not sell your shares $173 $536 $ 923 $1,810
sold all your shares at
the end of the period $673 $836 $1,123 $1,810
--------------------------------------- ---------- ----------- ----------- -----------
Class C: did not sell your shares $173 $536 $ 923 $2,009
sold all your shares at
the end of the period $273 $536 $ 923 $2,009
</TABLE>
<PAGE>
[SIDE BAR]
UNDERSTANDING EXPENSES
SALES CHARGES are paid directly by shareholders to Liberty Funds Distributor,
Inc., the Fund's distributor.
ANNUAL FUND OPERATING EXPENSES are deducted from the Fund. They include
management fees, 12b-1 fees and administrative costs including pricing and
custody services.
EXAMPLE EXPENSES help you compare the cost of investing in the Fund to the cost
of investing in other mutual funds. The table does not take into account any
expense reduction arrangements discussed in the footnotes to the Annual Fund
Operating Expenses table. It uses the following hypothetical conditions:
o $10,000 initial investment
o 5% total return for each year
o Fund operating expenses remain
the same
o Assumes reinvestment of all dividends and distributions
o Assumes Class B shares convert to Class A shares after eight years
[END SIDE BAR]
LIBERTY MICHIGAN TAX-EXEMPT FUND
ANNUAL FUND OPERATING EXPENSES (DEDUCTED DIRECTLY FROM FUND ASSETS)
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
<S> <C> <C> <C>
Management fee (%) 0.50 0.50 0.50
--------------------------------------------------- ----------- ----------- -----------
Distribution and service (12b-1) fees (*) (%) 0.18 0.93 0.93(**)
--------------------------------------------------- ----------- ----------- -----------
Other expenses (%) 0.36 0.36 0.36
--------------------------------------------------- ----------- ----------- -----------
Total annual fund operating expenses (%) 1.04 1.79 1.79(**)
</TABLE>
[FN]
(*) The annual service fee portion of the 12b-1 fee may equal up to 0.10% on net
assets attributable to shares issued prior to December 1, 1994 and 0.25% on
net assets attributable to shares issued thereafter. This arrangement
results in a rate of service fee that is a blend between the 0.10% and 0.25%
rates.
(**)The Fund's distributor has voluntarily agreed to waive a portion of the
12b-1 fee for Class C shares. As a result, the actual 12b-1 fee for Class C
shares would be 0.63% and the total annual fund operating expenses for Class
C shares would be 1.49%. This arrangement may be modified or terminated by
the distributor at any time.
</FN>
EXAMPLE EXPENSES (YOUR ACTUAL COSTS MAY BE HIGHER OR LOWER)
<TABLE>
<CAPTION>
CLASS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
Class A $576 $790 $1,022 $1,686
--------------------------------------- ---------- ----------- ----------- -----------
Class B: did not sell your shares $182 $563 $ 970 $1,908
sold all your shares at
the end of the period $682 $863 $1,170 $1,908
--------------------------------------- ---------- ----------- ----------- -----------
Class C: did not sell your shares $182 $563 $ 970 $2,105
sold all your shares at
the end of the period $282 $563 $ 970 $2,105
</TABLE>
<PAGE>
[SIDE BAR]
UNDERSTANDING EXPENSES
SALES CHARGES are paid directly by shareholders to Liberty Funds Distributor,
Inc., the Fund's distributor.
ANNUAL FUND OPERATING EXPENSES are deducted from the Fund. They include
management fees, 12b-1 fees and administrative costs including pricing and
custody services.
EXAMPLE EXPENSES help you compare the cost of investing in the Fund to the cost
of investing in other mutual funds. The table does not take into account any
expense reduction arrangements discussed in the footnotes to the Annual Fund
Operating Expenses table. It uses the following hypothetical conditions:
o $10,000 initial investment
o 5% total return for each year
o Fund operating expenses remain
the same
o Assumes reinvestment of all dividends and distributions
o Assumes Class B shares convert to Class A shares after eight years
[END SIDE BAR]
LIBERTY MINNESOTA TAX-EXEMPT FUND
ANNUAL FUND OPERATING EXPENSES (DEDUCTED DIRECTLY FROM FUND ASSETS)
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
<S> <C> <C> <C>
Management fee (%) 0.50 0.50 0.50
--------------------------------------------------- ----------- ----------- -----------
Distribution and service (12b-1) fees (*) (%) 0.19 0.94 0.94(**)
--------------------------------------------------- ----------- ----------- -----------
Other expenses (%) 0.37 0.37 0.37
--------------------------------------------------- ----------- ----------- -----------
Total annual fund operating expenses (%) 1.06 1.81 1.81(**)
</TABLE>
[FN]
(*) The annual service fee portion of the 12b-1 fee may equal up to 0.10% on net
assets attributable to shares issued prior to December 1, 1994 and 0.25% on
net assets attributable to shares issued thereafter. This arrangement
results in a rate of service fee that is a blend between the 0.10% and 0.25%
rates.
(**)The Fund's distributor has voluntarily agreed to waive a portion of the
12b-1 fee for Class C shares. As a result, the actual 12b-1 fee for Class C
shares would be 0.64% and total annual fund operating expenses for Class C
shares would be 1.51%. This arrangement may be modified or terminated by the
distributor at any time.
</FN>
EXAMPLE EXPENSES (YOUR ACTUAL COSTS MAY BE HIGHER OR LOWER)
<TABLE>
<CAPTION>
CLASS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
Class A $578 $796 $1,032 $1,708
--------------------------------------- ---------- ----------- ----------- -----------
Class B: did not sell your shares $184 $569 $ 980 $1,930
sold all your shares at
the end of the period $684 $869 $1,180 $1,930
--------------------------------------- ---------- ----------- ----------- -----------
Class C: did not sell your shares $184 $569 $ 980 $2,127
sold all your shares at
the end of the period $284 $569 $ 980 $2,127
</TABLE>
<PAGE>
[SIDE BAR]
UNDERSTANDING EXPENSES
SALES CHARGES are paid directly by shareholders to Liberty Funds Distributor,
Inc., the Fund's distributor.
ANNUAL FUND OPERATING EXPENSES are deducted from the Fund. They include
management fees, 12b-1 fees and administrative costs including pricing and
custody services.
EXAMPLE EXPENSES help you compare the cost of investing in the Fund to the cost
of investing in other mutual funds. The table does not take into account any
expense reduction arrangements discussed in the footnotes to the Annual Fund
Operating Expenses table. It uses the following hypothetical conditions:
o $10,000 initial investment
o 5% total return for each year
o Fund operating expenses remain
the same
o Assumes reinvestment of all dividends and distributions
o Assumes Class B shares convert to Class A shares after eight years
[END SIDE BAR]
LIBERTY NEW YORK TAX-EXEMPT FUND
ANNUAL FUND OPERATING EXPENSES (DEDUCTED DIRECTLY FROM FUND ASSETS)
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
<S> <C> <C> <C>
Management fee (*) (%) 0.50 0.50 0.50
--------------------------------------------------- ----------- ----------- -----------
Distribution and service (12b-1) fees (**) (%) 0.19 0.94 0.94(***)
--------------------------------------------------- ----------- ----------- -----------
Other expenses (%) 0.28 0.28 0.28
--------------------------------------------------- ----------- ----------- -----------
Total annual fund operating expenses (*) (%) 0.97 1.72 1.72(***)
</TABLE>
[FN]
(*) The Fund's advisor has voluntarily agreed to waive advisory fees and
reimburse the Fund for certain expenses so that the total annual fund
operating expenses (exclusive of distribution and service fees, brokerage
commissions, interest, taxes and extraordinary expenses, if any) will not
exceed 0.60%. As a result, the actual management fee for each share class
would be 0.32% and total annual fund operating expenses for Class A, B and C
shares would be 0.79%, 1.54% and 1.24%, respectively. This arrangement may
be modified or terminated by the advisor at any time.
(**)The annual service fee portion of the 12b-1 fee may equal up to 0.10% on
net assets attributable to shares issued prior to December 1, 1994 and 0.25%
on net assets attributable to shares issued thereafter. This arrangement
results in a rate of service fee that is a blend between the 0.10% and 0.25%
rates.
(***) The Fund's distributor has voluntarily agreed to waive a portion of the
12b-1 fee for Class C shares. As a result, the actual 12b-1 fee for Class C
shares would be 0.64% and the total annual fund operating expenses for Class
C shares would be 1.24%. This arrangement may be modified or terminated by
the distributor at any time.
</FN>
EXAMPLE EXPENSES (YOUR ACTUAL COSTS MAY BE HIGHER OR LOWER)
<TABLE>
<CAPTION>
CLASS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
Class A $569 $769 $ 986 $1,608
--------------------------------------- ---------- ----------- ----------- -----------
Class B: did not sell your shares $175 $542 $ 933 $1,831
sold all your shares at
the end of the period $675 $842 $1,133 $1,831
--------------------------------------- ---------- ----------- ----------- -----------
Class C: did not sell your shares $175 $542 $ 933 $2,030
sold all your shares at
the end of the period $275 $542 $ 933 $2,030
</TABLE>
<PAGE>
[SIDE BAR]
UNDERSTANDING EXPENSES
SALES CHARGES are paid directly by shareholders to Liberty Funds Distributor,
Inc., the Fund's distributor.
ANNUAL FUND OPERATING EXPENSES are deducted from the Fund. They include
management fees, 12b-1 fees and administrative costs including pricing and
custody services.
EXAMPLE EXPENSES help you compare the cost of investing in the Fund to the cost
of investing in other mutual funds. The table does not take into account any
expense reduction arrangements discussed in the footnotes to the Annual Fund
Operating Expenses table. It uses the following hypothetical conditions:
o $10,000 initial investment
o 5% total return for each year
o Fund operating expenses remain
the same
o Assumes reinvestment of all dividends and distributions
o Assumes Class B shares convert to Class A shares after eight years
[END SIDE BAR]
LIBERTY NORTH CAROLINA TAX-EXEMPT FUND
ANNUAL FUND OPERATING EXPENSES (DEDUCTED DIRECTLY FROM FUND ASSETS)
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
<S> <C> <C> <C>
Management fee (%) 0.50 0.50 0.50
--------------------------------------------------- ----------- ----------- -----------
Distribution and service (12b-1) fees (*) (%) 0.19 0.94 0.94(**)
--------------------------------------------------- ----------- ----------- -----------
Other expenses (%) 0.43 0.43 0.43
--------------------------------------------------- ----------- ----------- -----------
Total annual fund operating expenses (%) 1.12 1.87 1.87(**)
</TABLE>
[FN]
(*) The annual service fee portion of the 12b-1 fee may equal up to 0.10% on net
assets attributable to shares issued prior to December 1, 1994 and 0.25% on
net assets attributable to shares issued thereafter. This arrangement
results in a rate of service fee that is a blend between the 0.10% and 0.25%
rates.
(**)The Fund's distributor has voluntarily agreed to waive a portion of the
12b-1 fee for Class C shares. As a result, the actual 12b-1 fee for Class C
shares would be 0.64% and the total annual fund operating expenses for Class
C shares would be 1.57%. This arrangement may be modified or terminated by
the distributor at any time.
</FN>
EXAMPLE EXPENSES (YOUR ACTUAL COSTS MAY BE HIGHER OR LOWER)
<TABLE>
<CAPTION>
CLASS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
Class A $584 $814 $1,063 $1,773
--------------------------------------- ---------- ----------- ----------- -----------
Class B: did not sell your shares $190 $588 $1,011 $1,995
sold all your shares at
the end of the period $690 $888 $1,211 $1,995
--------------------------------------- ---------- ----------- ----------- -----------
Class C: did not sell your shares $190 $588 $1,011 $2,190
sold all your shares at
the end of the period $290 $588 $1,011 $2,190
</TABLE>
<PAGE>
[SIDE BAR]
UNDERSTANDING EXPENSES
SALES CHARGES are paid directly by shareholders to Liberty Funds Distributor,
Inc., the Fund's distributor.
ANNUAL FUND OPERATING EXPENSES are deducted from the Fund. They include
management fees, 12b-1 fees and administrative costs including pricing and
custody services.
EXAMPLE EXPENSES help you compare the cost of investing in the Fund to the cost
of investing in other mutual funds. The table does not take into account any
expense reduction arrangements discussed in the footnotes to the Annual Fund
Operating Expenses table. It uses the following hypothetical conditions:
o $10,000 initial investment
o 5% total return for each year
o Fund operating expenses remain
the same
o Assumes reinvestment of all dividends and distributions
o Assumes Class B shares convert to Class A shares after eight years
[END SIDE BAR]
LIBERTY OHIO TAX-EXEMPT FUND
ANNUAL FUND OPERATING EXPENSES (DEDUCTED DIRECTLY FROM FUND ASSETS)
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
<S> <C> <C> <C>
Management fee (%) 0.50 0.50 0.50
--------------------------------------------------- ----------- ----------- -----------
Distribution and service (12b-1) fees (*) (%) 0.17 0.92 0.92(**)
--------------------------------------------------- ----------- ----------- -----------
Other expenses (%) 0.29 0.29 0.29
--------------------------------------------------- ----------- ----------- -----------
Total annual fund operating expenses (%) 0.96 1.71 1.71(**)
</TABLE>
[FN]
(*) The annual service fee portion of the 12b-1 fee may equal up to 0.10 on net
assets attributable to shares issued prior to December 1, 1994 and 0.25% on
net assets attributable to shares issued thereafter. This arrangement
results in a rate of service fee that is a blend between the 0.10% and 0.25%
rates.
(**)The Fund's distributor has voluntarily agreed to waive a portion of the
12b-1 fee for Class C shares. As a result, the actual 12b-1 fee for Class C
shares would be 0.62% and the total annual fund operating expenses for Class
C shares would be 1.41%. This arrangement may be modified or terminated by
the distributor at any time.
</FN>
EXAMPLE EXPENSES (YOUR ACTUAL COSTS MAY BE HIGHER OR LOWER)
<TABLE>
<CAPTION>
CLASS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
Class A $568 $766 $ 981 $1,597
--------------------------------------- ---------- ----------- ----------- -----------
Class B: did not sell your shares $174 $539 $ 928 $1,821
sold all your shares at
the end of the period $674 $839 $1,128 $1,821
--------------------------------------- ---------- ----------- ----------- -----------
Class C: did not sell your shares $174 $539 $ 928 $2,019
sold all your shares at
the end of the period $274 $539 $ 928 $2,019
</TABLE>
<PAGE>
The section DISTRIBUTION AND SERVICE FEES is revised in its entirety as follows:
DISTRIBUTION AND SERVICE FEES
--------------------------------------------------------------------------------
Each Fund has adopted a plan under Rule 12b-1 that permits it to pay the Funds'
distributor marketing and other fees to support the sale and distribution of
Class A, B and C shares and certain services provided to you by your financial
advisor. The annual service fee is calculated by adding (1) 0.10% of the net
assets attributable to shares issued prior to November 30, 1994 and (2) 0.25% on
net assets attributable to shares issued thereafter. This arrangement results in
a rate of service fee payable by the Funds that is a blend between the 0.10% and
0.25% rates. For the fiscal year ended January 31, 2000, each Fund's service fee
was the following percentage of each Fund's average net assets: California
Tax-Exempt Fund 0.18%; Connecticut Tax-Exempt Fund 0.19%; Florida Tax-Exempt
Fund 0.19%; Massachusetts Tax-Exempt Fund 0.18%; Michigan Tax-Exempt Fund 0.18%;
Minnesota Tax-Exempt Fund 0.19%; New York Tax-Exempt Fund 0.19%; North Carolina
Tax-Exempt Fund, 0.19%; and Ohio Tax-Exempt Fund 0.17%. The annual distribution
fee may equal up to 0.75% for each of Class B and Class C shares. Distribution
and service fees are paid out of the assets of these classes. The distributor
has voluntarily agreed to waive a portion of each Fund's Class C share
distribution fee so that it does not exceed 0.45% annually. Over time, these
fees may reduce the return on your investment and may cost you more than paying
other types of sales charges. Class B shares automatically convert to Class A
shares after a certain number of years, eliminating the distribution fee upon
conversion. Conversion may occur three, four or eight years after purchase,
depending on the program you purchased your shares under. See "Your Account;
Sales Charges" in the Prospectus for the conversion schedule applicable to Class
B shares.
721-36/618C-0800 September 12, 2000
