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TOP HOLDINGS AND ALLOCATIONS

Oppenheimer Principal Protected Main Street Fund III^® Portfolio Allocation

The Fund seeks exposure to the equity markets by investing in the Oppenheimer Main Street Fund. Information relating to the Oppenheimer Main Street Fund’s portfolio holdings appears below.

Portfolio holdings and allocations are subject to change. Percentages are as of August 31, 2008, and are based on the total market value of investments.

Oppenheimer Main Street Fund (Underlying Fund) Sector Allocation


Information Technology	22.0	%
Energy	19.8
Industrials	13.9
Consumer Discretionary	10.5
Financials	8.4
Health Care	7.3
Consumer Staples	6.6
Materials	6.3
Telecommunication Services	3.4
Utilities	1.8

Portfolio holdings and allocations are subject to change. Percentages are as of August 31, 2008, and are based on the total market value of common stocks.

10 | OPPENHEIMER PRINCIPAL PROTECTED MAIN STREET FUND III

Oppenheimer Main Street Fund (Underlying Fund)

Top Ten Common Stock Industries


Oil, Gas & Consumable Fuels	17.3	%
Computers & Peripherals	5.6
Software	5.4
Semiconductors & Semiconductor Equipment	4.8
Insurance	4.3
Aerospace & Defense	4.2
Media	4.0
Specialty Retail	3.9
Pharmaceuticals	3.8
Metals & Mining	3.5

Portfolio holdings and allocations are subject to change. Percentages are as of August 31, 2008, and are based on net assets.

Oppenheimer Main Street Fund (Underlying Fund)

Top Ten Common Stock Holdings


Exxon Mobil Corp.	4.2	%
Microsoft Corp.	2.5
Chevron Corp.	2.2
Hewlett-Packard Co.	1.9
Intel Corp.	1.8
ConocoPhillips	1.8
General Electric Co.	1.7
International Business Machines Corp.	1.6
Cisco Systems, Inc.	1.5
Johnson & Johnson	1.5

Portfolio holdings and allocations are subject to change. Percentages are as of August 31, 2008, and are based on net assets. For up-to-date Top 10 Fund holdings, please visit www.oppenheimerfunds.com.

11 | OPPENHEIMER PRINCIPAL PROTECTED MAIN STREET FUND III

FUND PERFORMANCE DISCUSSION

How has the Fund performed? Below is a discussion by OppenheimerFunds, Inc., of the Fund’s performance during its fiscal year ended August 31, 2008, followed by a graphical comparison of the Fund’s performance to the S&P 500 Index.

Management’s Discussion of Fund Performance. For the 12-month period ended August 31, 2008, Oppenheimer Principal Protected Main Street Fund III’s Class A shares (without sales charge) had a total return of -7.74%, which outperformed the S&P 500 Index’s total return of -11.14%. The Fund’s exposure to Treasury STRIPS, which accounted for 61.6% of the Fund’s net assets at reporting period end and the Fund’s exposure to Oppenheimer Institutional Money Market Fund, which accounted for 10.8% of the Fund’s net assets at reporting period end, helped the Fund outperform the S&P 500 Index.¹The use of S&P 500 Index Futures as an alternative equity instrument allows the Fund to maintain liquidity to meet shareholder redemptions, reduce trading costs, and take advantage of possible imbalances in stock market fair value. The Fund lends its portfolio securities from time to time in order to earn additional income. The Fund’s exposure to Oppenheimer Main Street Fund’s Class Y shares, which accounted for 27.9% of the Fund’s net assets, detracted from Fund performance during the reporting period.²

The Fund’s equity component (the Class Y shares of Oppenheimer Main Street Fund) produced a negative total return that was lower than that of its benchmark, the S&P 500 Index, during the reporting period. An emphasis on mega-cap stocks over the first half of the reporting period exposed Oppenheimer Main Street Fund more fully to weakness among major commercial and investment banks that suffered massive losses in their sub-prime mortgage portfolios. In addition, heightened volatility during July 2008 sparked a reversal in some longer-term trends for which Oppenheimer Main Street Fund was positioned.

Oppenheimer Principal Protected Main Street Fund III may not be suitable for investors who need to redeem shares prior to maturity, or who need to receive dividends in cash.


1.		The Fund normally invests a significant portion of assets in Treasury STRIPS, which are sold at a discount and accrete interest to par value at maturity. For taxable income purposes the discount on these Treasury STRIPS is amortized into income daily using a level yield method over the holding period of the security, and thus generates taxable income for the Fund.

2.		Allocating assets to debt securities reduces the Fund’s ability to participate fully in upward movements of the equity markets. This represents some loss of opportunity, or opportunity cost, compared to a portfolio that is substantially invested in equities. The Fund may allocate a substantial portion, and under certain conditions, all of its assets, to U.S. Government securities in order to attempt to keep the value of the Fund’s assets at a level equal to or above the value of the Warranty Amount. In the event of reallocation of 100% of the Fund’s assets to U.S. Government securities, the Fund might not be permitted to allocate its assets to equity securities for the remainder of the Warranty Period.

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Although larger companies historically have fared relatively well during economic downturns, the impact of the credit crisis on some of the world’s biggest commercial and investment banks weighed more heavily on the larger market capitalization ranges, on average, than on small- and mid-cap stocks. In addition, the implementation of the seasonal “turn of the year” stock selection model in the final months of 2007 led to a decrease in Oppenheimer Main Street Fund’s exposure to better-performing energy stocks and an increase in information technology and financial stocks just after they had peaked and began to decline in the intensifying economic downturn. Oppenheimer Main Street Fund reduced its holdings of mega-cap stocks during the reporting period’s second half, increased its exposure to mid-cap stocks and substantially reduced the exposure to financial stocks in the second half (which caused much rejoicing). These changes made positive contributions to Oppenheimer Main Street Fund’s second-half performance.

Weak financial stocks had the greatest negative impact on Oppenheimer Main Street Fund’s absolute return. From a relative performance perspective, stock selection strategy in the health care sector lagged significantly due to comparatively light holdings of biotechnology firms and relatively heavy exposure to HMOs. Oppenheimer Main Street Fund also underperformed the S&P 500 Index in the consumer staples sector, primarily as a result of underweighted exposure to this traditionally defensive area. Oppenheimer Main Street Fund’s relative performance in the information technology and materials sectors proved to be more favorable, as overweight positions and strong stock selections in both areas contributed positively to Oppenheimer Main Street Fund’s results over the reporting period’s second half.

Indeed, much of Oppenheimer Main Street Fund’s improved performance over the second half of the reporting period can be attributed to a shift to the “middle of the year” security selection model, which included enhancements they made to the fund’s quantitative models in an effort to make them more effective when economic and market conditions deviate significantly from historical averages. Although these refinements have been under development for some time, the underlying fund’s portfolio managers implemented them in February 2008 when it became clear that the economic downturn and credit crisis were intensifying.

As of August 31, 2008, Oppenheimer Main Street Fund’s portfolio managers have continued to reduce the Fund’s weighted average market capitalization, reducing holdings of mega- and large-cap stocks while increasing exposure to mid- and small-cap stocks. Their models have found ample opportunities in the information technology, energy and materials sectors, and relatively few in the consumer staples, healthcare and financials sectors. In addition, they have been preparing for the implementation of their revised “turn of the

13 | OPPENHEIMER PRINCIPAL PROTECTED MAIN STREET FUND III

FUND PERFORMANCE DISCUSSION

year” stock selection model, which they believe may help the Fund capture the effects of investors’ historical, seasonal preference for smaller stocks.

Comparing the Fund’s Performance to the Market. The graphs that follow show the performance of a hypothetical $10,000 investment in each class of shares of the Fund held until August 31, 2008. Performance is measured from inception of the classes on October 7, 2004. The Fund’s performance reflects the deduction of the maximum initial sales charge on Class A shares, the applicable contingent deferred sales charge on Class B, Class C and Class N shares, and reinvestments of all dividends and capital gains distributions. Past performance cannot guarantee future results.

The Fund’s performance is compared to the performance of the S&P 500 Index. The S&P 500 Index is an unmanaged index of U.S. equity securities. Index performance reflects the reinvestment of income but does not consider the effect of transaction costs, and none of the data in the graphs shows the effect of taxes. The Fund’s performance reflects the effects of the Fund’s business and operating expenses. While index comparisons may be useful to provide a benchmark for the Fund’s performance, it must be noted that the Fund’s investments are not limited to the investments in the index.

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Class A Shares
Comparison of Change in Value of $10,000 Hypothetical Investments in:

The performance data quoted represents past performance, which does not guarantee future results. The investment return and principal value of an investment in the Fund will fluctuate so that an investor’s shares, when redeemed, may be worth more or, if redeemed prior to the end of the Warranty Period (December 16, 2011), less than their original cost. Current performance may be lower or higher than the performance quoted. For performance data current to the most recent month end, visit us at www.oppenheimerfunds.com, or call us at 1.800.525.7048. Fund returns include changes in share price, reinvested distributions, and the applicable sales charge: for Class A shares, the current maximum initial sales charge of 5.75%; for Class B shares, the contingent deferred sales charge of 5% (1-year) and 3% (since inception); and for Class C and Class N shares, the contingent 1% deferred sales charge for the 1-year period. See page 19 for further information.

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Class C Shares
Comparison of Change in Value of $10,000 Hypothetical Investments in:

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FUND PERFORMANCE DISCUSSION

Class N Shares
Comparison of Change in Value of $10,000 Hypothetical Investments in:

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NOTES

Total returns and the ending account values in the graphs include changes in share price and reinvestment of dividends and capital gains distributions in a hypothetical investment for the periods shown. The Fund’s total returns shown do not reflect the deduction of income taxes on an individual’s investment. Taxes may reduce your actual investment returns on income or gains paid by the Fund or any gains you may realize if you sell your shares.

Investors should consider the Fund’s investment objectives, risks, and other charges and expenses carefully before investing. The Fund’s prospectus contains this and other information about the Fund, and may be obtained by asking your financial advisor, calling us at 1.800.525.7048 or visiting our website at www.oppenheimerfunds.com. Read the prospectus carefully before investing.

The Fund’s investment strategy and focus can change over time. The mention of specific fund holdings does not constitute a recommendation by OppenheimerFunds, Inc.

The Fund has entered into a warranty agreement (the “Warranty”) with Merrill Lynch Bank USA (the “Warranty Provider”) which attempts to make sure that the value of each shareholder’s account on the maturity date (December 16, 2011) will be at least equal to a shareholder’s original investment (reduced by any adjustments to the warranty amount permitted by the Warranty, and less any redemptions of Fund shares or distributions taken in cash, sales charges, and extraordinary Fund expenses). The Warranty is solely the obligation of the Warranty Provider, not the shareholders. The Warranty is dependent on the financial ability of the Warranty Provider to make payment to the Fund on the Maturity Date. The Warranty Amount will be reduced by any redemptions of Fund shares or distributions taken in cash, sales charges and extraordinary fund expenses. Distributions from the Fund are taxable whether or not shareholders reinvest them in additional shares of the Fund. The Warranty does not apply to shares redeemed during the Warranty Period, and shareholders can lose money on shares unless redeemed on the Maturity Date. Neither the Fund nor OppenheimerFunds, Inc. is obligated to replace the Warranty Provider should it be unable to make payments necessary to support the Warranty Amount. The Warranty increases the Fund’s expenses that shareholders pay and could lower Fund

19 | OPPENHEIMER PRINCIPAL PROTECTED MAIN STREET FUND III

NOTES

performance. Shareholders must redeem their shares in the Fund on, and only on, the Maturity Date (expected to be December 16, 2011) to receive the greater of the then-current net asset value of the Fund or their Warranty Amount. Prior to the Maturity Date, the Fund will provide each shareholder a notice to remind them that shares must be redeemed on the Maturity Date to receive the full benefit of the Warranty. After the Maturity Date, shares of the Fund will not be covered under the terms of the Warranty and will be subject to market fluctuations and the shares will then be redeemable at the Fund’s then-current net asset value, which may be lower than the Warranty Amount.

Shares may be exchanged or redeemed at any time. However, if you redeem or exchange shares prior to the end of the seven-year Warranty Period, you will receive the then-current NAV per share, which may be higher or lower than the Warranty Amount. To receive at least the full Warranty Amount, you must maintain your original investment in the Fund until the end of the seven-year term and reinvest all dividends and distributions.

During the Warranty Period, there are substantial opportunity costs. Allocating assets to U.S. Government securities (primarily Treasury STRIPS) reduces the Fund’s ability to participate fully in upward equity market movements. Therefore, it represents some loss of opportunity, or opportunity cost, compared to a portfolio that is fully invested in equities. In the event that the Fund’s stock allocation declines substantially, generally due to heavy stock market declines, the Fund will permanently shift all investments to fixed income securities and certain of the Fund’s expenses will be reduced. In the event of reallocation of 100% of the Fund’s assets to U.S. Government securities, the Fund will not be permitted to allocate its assets to equity securities for the remainder of the Warranty Period, which will eliminate the Fund’s ability to participate in any upward equity market movement.

While these fixed income securities (primarily Treasury STRIPS) that the Fund invests in do not pay income the traditional way, an income calculation is made for tax purposes based on the purchase price and the time until the security reaches par value.

20 | OPPENHEIMER PRINCIPAL PROTECTED MAIN STREET FUND III

Like traditional interest payments, this amount is reported as income for tax purposes. The zero coupon bonds the Fund invests in do not pay interest income until maturity. However, the Fund is required to accrue and declare a dividend on such income. Thus, you will have taxable income.

Distributions from the Fund are taxable whether or not you reinvest them in additional shares of the Fund. The Fund is not obligated to replace the Warranty Provider should it be unable to make the payments necessary to support the Warranty Amount. The Warranty increases the Fund’s expenses that you pay and therefore the Fund’s expenses will generally be higher than a fund that does not offer a Warranty.

All investments have risks to some degree. Stocks and S&P 500 Index Futures fluctuate in price and their volatility at times may be great. If the issuer of an S&P 500 Index Future does not pay the amount due, the Fund can lose money on the investment. All investments have risks to some degree. Stocks fluctuate in price and their volatility at times may be great. While principal and interest payments on U.S. Treasury securities are guaranteed by the U.S. Government, the price of such securities will fluctuate with changes in prevailing interest rates. Zero-coupon U.S. Government securities are subject to greater fluctuations in price from interest rate changes than typical debt securities that pay interest on a regular basis. Investors should be aware that principal protected funds generally carry higher fees and expenses than non-protected funds.

The Fund offered its shares to the public from October 7, 2004 to December 10, 2004. From December 16, 2004, and until December 16, 2011, shares of the Fund will only be issued upon reinvestment of dividends and distributions.

An explanation of the calculation of performance is in the Fund’s Statement of Additional Information.

21 | OPPENHEIMER PRINCIPAL PROTECTED MAIN STREET FUND III

FUND EXPENSES

Fund Expenses. As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, which may include sales charges (loads) on purchase payments, contingent deferred sales charges on redemptions; and redemption fees (if applicable); and (2) ongoing costs, including management fees; distribution and service fees; and other Fund expenses. These examples are intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.

The examples are based on an investment of $1,000.00 invested at the beginning of the period and held for the entire 6-month period ended August 31, 2008.

Actual Expenses. The first section of the table provides information about actual account values and actual expenses. You may use the information in this section for the class of shares you hold, together with the amount you invested, to estimate the expense that you paid over the period. Simply divide your account value by $1,000.00 (for example, an $8,600.00 account value divided by $1,000.00 = 8.60), then multiply the result by the number in the first section under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.

Hypothetical Example for Comparison Purposes. The second section of the table provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio for each class of shares, and an assumed rate of return of 5% per year for each class before expenses, which is not the actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example for the class of shares you hold with the 5% hypothetical examples that appear in the shareholder reports of the other funds.

Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as front-end or contingent deferred sales charges (loads), or a $12.00 fee imposed annually on accounts valued at less than $500.00 (subject to exceptions described in

22 | OPPENHEIMER PRINCIPAL PROTECTED MAIN STREET FUND III

the Statement of Additional Information). Therefore, the “hypothetical” section of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.


	Beginning	Ending	Expenses
	Account	Account	Paid During
	Value	Value	6 Months Ended
Actual	March 1, 2008	August 31, 2008	August 31, 2008

Class A	$ 1,000.00	$ 972.50	$ 6.87
Class B	1,000.00	968.60	10.60
Class C	1,000.00	969.30	10.30
Class N	1,000.00	971.50	7.76

Hypothetical (5% return before expenses)

Class A	1,000.00	1,018.20	7.02
Class B	1,000.00	1,014.43	10.84
Class C	1,000.00	1,014.73	10.54
Class N	1,000.00	1,017.29	7.94

Expenses are equal to the Fund’s annualized expense ratio for that class, multiplied by the average account value over the period, multiplied by 184/366 (to reflect the one-half year period). Those annualized expense ratios, excluding indirect expenses from affiliated fund, based on the 6-month period ended August 31, 2008 are as follows:


Class	Expense Ratios

Class A		1.38	%
Class B		2.13
Class C		2.07
Class N		1.56

The expense ratios reflect reduction to custodian expenses and voluntary waivers or reimbursements of expenses by the Fund’s Manager that can be terminated at any time, without advance notice. The “Financial Highlights” tables in the Fund’s financial statements, included in this report, also show the gross expense ratios, without such waivers or reimbursements and reduction to custodian expenses, if applicable.

23 | OPPENHEIMER PRINCIPAL PROTECTED MAIN STREET FUND III

STATEMENT OF INVESTMENTS August 31, 2008


	Shares		Value

Investment Companies—38.7%¹

Money Market Fund—10.8%
Oppenheimer Institutional Money Market Fund, Cl. E, 2.76%²		5,329,955	$	5,329,955
U.S. Equity—27.9%
Oppenheimer Main Street Fund, Cl. Y		425,265		13,795,602


Total Investment Companies (Cost $20,025,542)				19,125,557


	Principal
	Amount

U.S. Government Obligations—61.6%

U.S. Treasury Bonds, STRIPS, 2.844%, 2/15/12^3,4	$	23,300,000			21,113,551
U.S. Treasury Nts., STRIPS, 3.946%, 2/15/12³		10,200,000			9,271,872


Total U.S. Government Obligations (Cost $30,049,782)					30,385,423

Total Investments, at Value (Cost $50,075,324)		100.3	%		49,510,980
Liabilities in Excess of Other Assets		(0.3	)		(148,616	)


Net Assets		100.0	%	$	49,362,364

Industry classifications are unaudited.

Footnotes to Statement of Investments



1.		Is or was an affiliate, as defined in the Investment Company Act of 1940, at or during the period ended August 31, 2008, by virtue of the Fund owning at least 5% of the voting securities of the issuer or as a result of the Fund and the issuer having the same investment adviser. Transactions during the period in which the issuer was an affiliate are as follows:


	Shares		Gross		Gross		Shares
	August 31, 2007		Additions		Reductions		August 31, 2008

Oppenheimer Institutional
Money Market Fund, Cl. E		5,355,428		36,303,788		36,329,261		5,329,955
Oppenheimer Main Street Fund, Cl. Y		1,046,720		865,483		1,486,938		425,265

					Dividend
			Value		Income		Realized Loss

Oppenheimer Institutional Money Market Fund, Cl. E			$	5,329,955	$	230,318	$	—
Oppenheimer Main Street Fund, Cl. Y				13,795,602		465,602		301,120

			$	19,125,557	$	695,920	$	301,120


2.		Rate shown is the 7-day yield as of August 31, 2008.

3.		Zero coupon bond reflects effective yield on the date of purchase.

4.		All or a portion of the security is held in collateralized accounts to cover initial margin requirements on open futures contracts. The aggregate market value of such securities is $453,081. See Note 5 of accompanying Notes.

Futures Contracts as of August 31, 2008 are as follows:

Number of

Expiration

Unrealized

Contract Description

Buy/Sell

Contracts

Date

Value

Depreciation

Standard & Poor’s 500 Index

Buy

9/18/08

4,168,450

247,855

See accompanying Notes to Financial Statements.

F1 | OPPENHEIMER PRINCIPAL PROTECTED MAIN STREET FUND III

STATEMENT OF ASSETS AND LIABILITIES August 31, 2008


Assets

Investments, at value—see accompanying statement of investments:
Unaffiliated companies (cost $30,049,782)	$	30,385,423
Affiliated companies (cost $20,025,542)		19,125,557

		49,510,980
Cash		7,971
Receivables and other assets:
Dividends		12,222
Other		7,731

Total assets		49,538,904

Liabilities

Payables and other liabilities:
Futures margins		50,375
Warranty agreement fees		49,810
Distribution and service plan fees		20,113
Shareholder communications		18,046
Legal, auditing and other professional fees		16,538
Shares of beneficial interest redeemed		12,500
Transfer and shareholder servicing agent fees		4,159
Trustees’ compensation		2,242
Other		2,757

Total liabilities		176,540

Net Assets	$	49,362,364


Composition of Net Assets

Par value of shares of beneficial interest	$	1,664
Additional paid-in capital		48,264,083
Accumulated net investment income		325,417
Accumulated net realized gain on investments		1,583,399
Net unrealized depreciation on investments		(812,199	)

Net Assets	$	49,362,364

F2 | OPPENHEIMER PRINCIPAL PROTECTED MAIN STREET FUND III

Net Asset Value Per Share


Class A Shares:
Net asset value and redemption price per share (based on net assets of $23,155,148 and 778,897 shares of beneficial interest outstanding)	$	29.73
Maximum offering price per share (net asset value plus sales charge of 5.75% of offering price)	$	31.54
Class B Shares:
Net asset value, redemption price (excludes applicable contingent deferred sales charge) and offering price per share (based on net assets of $14,037,267 and 474,645 shares of beneficial interest outstanding)	$	29.57
Class C Shares:
Net asset value, redemption price (excludes applicable contingent deferred sales charge) and offering price per share (based on net assets of $11,256,190 and 380,077 shares of beneficial interest outstanding)	$	29.62
Class N Shares:
Net asset value, redemption price (excludes applicable contingent deferred sales charge) and offering price per share (based on net assets of $913,759 and 30,805 shares of beneficial interest outstanding)	$	29.66

See accompanying Notes to Financial Statements.

F3 | OPPENHEIMER PRINCIPAL PROTECTED MAIN STREET FUND III

STATEMENT OF OPERATIONS For the Year Ended August 31, 2008


Investment Income

Interest	$	813,489
Dividend from affiliated companies		695,920
Income from investment of securities lending cash collateral, net		18,540
Other income		24

Total investment income		1,527,973

Expenses

Management fees		278,678
Distribution and service plan fees:
Class A		64,604
Class B		155,069
Class C		128,426
Class N		4,381
Transfer and shareholder servicing agent fees:
Class A		16,008
Class B		16,618
Class C		7,327
Class N		455
Shareholder communications:
Class A		14,499
Class B		7,896
Class C		3,544
Class N		260
Warranty agreement fees		334,422
Trustees’ compensation		7,427
Custodian fees and expenses		261
Other		30,070

Total expenses		1,069,945
Less reduction to custodian expenses		(153	)
Less waivers and reimbursements of expenses		(130,188	)

Net expenses		939,604

Net Investment Income		588,369

F4 | OPPENHEIMER PRINCIPAL PROTECTED MAIN STREET FUND III

STATEMENTS OF CHANGES IN NET ASSETS


Year Ended August 31,	2008			2007

Operations

Net investment income	$	588,369		$	489,670
Net realized gain		3,238,982			2,945,360
Net change in unrealized appreciation (depreciation)		(8,539,773	)		3,434,833

Net increase (decrease) in net assets resulting from operations		(4,712,422	)		6,869,863

Dividends and/or Distributions to Shareholders

Dividends from net investment income:
Class A		(846,595	)		(534,201	)
Class B		(343,461	)		(150,553	)
Class C		(309,113	)		(128,262	)
Class N		(28,320	)		(15,712	)

		(1,527,489	)		(828,728	)
Distributions from net realized gain:
Class A		(500,157	)		—
Class B		(291,589	)		—
Class C		(247,566	)		—
Class N		(17,649	)		—

		(1,056,961	)		—

Beneficial Interest Transactions

Net increase (decrease) in net assets resulting from beneficial interest transactions:
Class A		(2,836,813	)		(6,677,673	)
Class B		(854,840	)		(2,947,900	)
Class C		(1,513,909	)		(3,679,172	)
Class N		10,951			(104,407	)

		(5,194,611	)		(13,409,152	)

Net Assets

Total decrease		(12,491,483	)		(7,368,017	)
Beginning of period		61,853,847			69,221,864


End of period (including accumulated net investment income (loss) of $325,417 and $(1,847), respectively)	$	49,362,364		$	61,853,847

See accompanying Notes to Financial Statements.

F6 | OPPENHEIMER PRINCIPAL PROTECTED MAIN STREET FUND III

FINANCIAL HIGHLIGHTS


Class A Year Ended August 31,	2008			2007			2006			2005¹

Per Share Operating Data

Net asset value, beginning of period	$	33.86		$	30.99		$	30.48		$	30.00
Income (loss) from investment operations:
Net investment income²		.46			.38			.47			.25
Net realized and unrealized gain (loss)		(2.99	)		3.03			.58			.28

Total from investment operations		(2.53	)		3.41			1.05			.53
Dividends and/or distributions to shareholders:
Dividends from net investment income		(1.01	)		(.54	)		(.54	)		(.05	)
Distributions from net realized gain		(.59	)		—			—			—

Total dividends and/or distributions to shareholders		(1.60	)		(.54	)		(.54	)		(.05	)
Net asset value, end of period	$	29.73		$	33.86		$	30.99		$	30.48


Total Return, at Net Asset Value³		(7.74	)%		11.09	%		3.48	%		1.76	%

Ratios/Supplemental Data

Net assets, end of period (in thousands)	$	23,155		$	29,470		$	33,229		$	40,981
Average net assets (in thousands)	$	26,368		$	31,996		$	37,258		$	36,571
Ratios to average net assets:⁴
Net investment income		1.46	%		1.15	%		1.53	%		0.93	%
Total expenses⁵		1.53	%		1.55	%		1.49	%		1.45	%
Expenses after payments, waivers and/or reimbursements and reduction to custodian expenses		1.30	%		1.19	%		1.22	%		1.20	%
Portfolio turnover rate		174	%		130	%		133	%		37	%


1.		For the period from October 7, 2004 (commencement of operations) to August 31, 2005.

2.		Per share amounts calculated based on the average shares outstanding during the period.

3.		Assumes an investment on the business day before the first day of the fiscal period, with all dividends and distributions reinvested in additional shares on the reinvestment date, and redemption at the net asset value calculated on the last business day of the fiscal period. Sales charges are not reflected in the total returns. Total returns are not annualized for periods less than one full year. Returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.

4.		Annualized for periods less than one full year.

5.		Total expenses including all underlying fund expenses were as follows:


Year Ended August 31, 2008	1.76	%
Year Ended August 31, 2007	1.91	%
Year Ended August 31, 2006	1.76	%
Period Ended August 31, 2005	1.66	%

See accompanying Notes to Financial Statements.

F7 | OPPENHEIMER PRINCIPAL PROTECTED MAIN STREET FUND III

FINANCIAL HIGHLIGHTS Continued


Class B Year Ended August 31,	2008			2007			2006			2005¹

Per Share Operating Data

Net asset value, beginning of period	$	33.64		$	30.80		$	30.29		$	30.00
Income (loss) from investment operations:
Net investment income²		.19			.09			.21			.03
Net realized and unrealized gain (loss)		(2.97	)		3.02			.58			.28

Total from investment operations		(2.78	)		3.11			.79			.31
Dividends and/or distributions to shareholders:
Dividends from net investment income		(.70	)		(.27	)		(.28	)		(.02	)
Distributions from net realized gain		(.59	)		—			—			—

Total dividends and/or distributions to shareholders		(1.29	)		(.27	)		(.28	)		(.02	)
Net asset value, end of period	$	29.57		$	33.64		$	30.80		$	30.29


Total Return, at Net Asset Value³		(8.49	)%		10.13	%		2.62	%		1.03	%

Ratios/Supplemental Data

Net assets, end of period (in thousands)	$	14,037		$	16,903		$	18,246		$	20,856
Average net assets (in thousands)	$	15,497		$	17,872		$	19,663		$	18,576
Ratios to average net assets:⁴
Net investment income		0.61	%		0.28	%		0.70	%		0.10	%
Total expenses⁵		2.33	%		2.42	%		2.31	%		2.27	%
Expenses after payments, waivers and/or reimbursements and reduction to custodian expenses		2.10	%		2.06	%		2.04	%		2.02	%
Portfolio turnover rate		174	%		130	%		133	%		37	%


1.		For the period from October 7, 2004 (commencement of operations) to August 31, 2005.

2.		Per share amounts calculated based on the average shares outstanding during the period.

3.		Assumes an investment on the business day before the first day of the fiscal period, with all dividends and distributions reinvested in additional shares on the reinvestment date, and redemption at the net asset value calculated on the last business day of the fiscal period. Sales charges are not reflected in the total returns. Total returns are not annualized for periods less than one full year. Returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.

4.		Annualized for periods less than one full year.

5.		Total expenses including all underlying fund expenses were as follows:


Year Ended August 31, 2008	2.56	%
Year Ended August 31, 2007	2.78	%
Year Ended August 31, 2006	2.58	%
Period Ended August 31, 2005	2.48	%

See accompanying Notes to Financial Statements.

F8 | OPPENHEIMER PRINCIPAL PROTECTED MAIN STREET FUND III


Class C Year Ended August 31,	2008			2007			2006			2005¹

Per Share Operating Data

Net asset value, beginning of period	$	33.70		$	30.82		$	30.31		$	30.00
Income (loss) from investment operations:
Net investment income²		.24			.13			.24			.05
Net realized and unrealized gain (loss)		(2.99	)		3.02			.57			.28

Total from investment operations		(2.75	)		3.15			.81			.33
Dividends and/or distributions to shareholders:
Dividends from net investment income		(.74	)		(.27	)		(.30	)		(.02	)
Distributions from net realized gain		(.59	)		—			—			—

Total dividends and/or distributions to shareholders		(1.33	)		(.27	)		(.30	)		(.02	)
Net asset value, end of period	$	29.62		$	33.70		$	30.82		$	30.31


Total Return, at Net Asset Value³		(8.38	)%		10.24	%		2.69	%		1.11	%

Ratios/Supplemental Data

Net assets, end of period (in thousands)	$	11,256		$	14,454		$	16,709		$	21,414
Average net assets (in thousands)	$	12,826		$	15,427		$	19,229		$	18,591
Ratios to average net assets:⁴
Net investment income		0.76	%		0.41	%		0.80	%		0.17	%
Total expenses⁵		2.26	%		2.30	%		2.24	%		2.21	%
Expenses after payments, waivers and/or reimbursements and reduction to custodian expenses		2.03	%		1.94	%		1.97	%		1.96	%
Portfolio turnover rate		174	%		130	%		133	%		37	%


1.		For the period from October 7, 2004 (commencement of operations) to August 31, 2005.

2.		Per share amounts calculated based on the average shares outstanding during the period.

3.		Assumes an investment on the business day before the first day of the fiscal period, with all dividends and distributions reinvested in additional shares on the reinvestment date, and redemption at the net asset value calculated on the last business day of the fiscal period. Sales charges are not reflected in the total returns. Total returns are not annualized for periods less than one full year. Returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.

4.		Annualized for periods less than one full year.

5.		Total expenses including all underlying fund expenses were as follows:


Year Ended August 31, 2008	2.49	%
Year Ended August 31, 2007	2.66	%
Year Ended August 31, 2006	2.51	%
Period Ended August 31, 2005	2.42	%

See accompanying Notes to Financial Statements.

F9 | OPPENHEIMER PRINCIPAL PROTECTED MAIN STREET FUND III

FINANCIAL HIGHLIGHTS Continued


Class N Year Ended August 31,	2008			2007			2006			2005¹

Per Share Operating Data

Net asset value, beginning of period	$	33.79		$	30.92		$	30.43		$	30.00
Income (loss) from investment operations:
Net investment income²		.37			.32			.42			.19
Net realized and unrealized gain (loss)		(2.96	)		3.03			.54			.28

Total from investment operations		(2.59	)		3.35			.96			.47
Dividends and/or distributions to shareholders:
Dividends from net investment income		(.95	)		(.48	)		(.47	)		(.04	)
Distributions from net realized gain		(.59	)		—			—			—

Total dividends and/or distributions to shareholders		(1.54	)		(.48	)		(.47	)		(.04	)
Net asset value, end of period	$	29.66		$	33.79		$	30.92		$	30.43


Total Return, at Net Asset Value³		(7.90	)%		10.88	%		3.19	%		1.57	%

Ratios/Supplemental Data

Net assets, end of period (in thousands)	$	914		$	1,027		$	1,038		$	1,438
Average net assets (in thousands)	$	957		$	1,057		$	1,167		$	1,269
Ratios to average net assets:⁴
Net investment income		1.19	%		0.97	%		1.39	%		0.69	%
Total expenses⁵		1.70	%		1.75	%		1.74	%		1.70	%
Expenses after payments, waivers and/or reimbursements and reduction to custodian expenses		1.47	%		1.39	%		1.47	%		1.45	%
Portfolio turnover rate		174	%		130	%		133	%		37	%


1.		For the period from October 7, 2004 (commencement of operations) to August 31, 2005.

2.		Per share amounts calculated based on the average shares outstanding during the period.

3.		Assumes an investment on the business day before the first day of the fiscal period, with all dividends and distributions reinvested in additional shares on the reinvestment date, and redemption at the net asset value calculated on the last business day of the fiscal period. Sales charges are not reflected in the total returns. Total returns are not annualized for periods less than one full year. Returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.

4.		Annualized for periods less than one full year.

5.		Total expenses including all underlying fund expenses were as follows:


Year Ended August 31, 2008	1.93	%
Year Ended August 31, 2007	2.11	%
Year Ended August 31, 2006	2.01	%
Period Ended August 31, 2005	1.91	%

See accompanying Notes to Financial Statements.

F10 | OPPENHEIMER PRINCIPAL PROTECTED MAIN STREET FUND III

NOTES TO FINANCIAL STATEMENTS

1. Significant Accounting Policies

Oppenheimer Principal Protected Main Street Fund III (the “Fund”), a series of Oppenheimer Principal Protected Trust III, is registered under the Investment Company Act of 1940, as amended, as an open-end management investment company. During the Warranty Period, the Fund will seek capital preservation in order to have a net asset value on the Maturity Date at least equal to the Warranty Amount. The Fund seeks high total return as a secondary objective. The Fund’s investment adviser is OppenheimerFunds, Inc. (the “Manager”).

Shares of the Fund were offered during the Offering Period (October 7, 2004 to December 10, 2004). Shares are not offered during the Warranty Period (December 16, 2004 to December 16, 2011) to the Maturity Date (December 16, 2011) except in connection with reinvestment of dividends and distributions. During the Warranty Period, the Fund will allocate its assets between Oppenheimer Main Street Fund (the “Underlying Fund”), which seeks high total return, futures contracts on the S&P 500 Index and certain U.S. government securities. The allocation of the Fund’s assets between the debt portfolio and the equity portfolio will vary over time based upon the Warranty Formula. The formula is intended to allow the Fund to have a net asset value on the Maturity Date at least equal to the Warranty Amount.

The Underlying Fund has its own investment risks, and those risks can affect the value of the Fund’s investments and therefore the value of the Fund’s shares.

During the Warranty Period, the Fund will invest a portion of its assets, and in certain circumstances, the Fund may invest all of its assets, in U.S. government securities having maturities approximately equal to the period remaining in the Warranty Period.

The Fund offers Class A, Class B, Class C and Class N shares. Class A shares are sold at their offering price, which is normally net asset value plus a front-end sales charge. Class B, Class C and Class N shares are sold without a front-end sales charge but may be subject to a contingent deferred sales charge (“CDSC”). Class N shares are sold only through retirement plans. Retirement plans that offer Class N shares may impose charges on those accounts. All classes of shares have identical rights and voting privileges with respect to the Fund in general and exclusive voting rights on matters that affect that class alone. Earnings, net assets and net asset value per share may differ due to each class having its own expenses, such as transfer and shareholder servicing agent fees and shareholder communications, directly attributable to that class. Class A, B, C and N have separate distribution and/or service plans. Class B shares will automatically convert to Class A shares 90 months after the date of purchase.

The following is a summary of significant accounting policies consistently followed by the Fund.

Warranty Agreement. The Fund has entered into a Financial Warranty Agreement with Merrill Lynch Bank USA (“the Warranty Provider”) to ensure that on the Maturity Date each shareholder’s account will be no less than the value of that shareholder’s account on the second business day after the end of the Offering Period (the Warranty Amount).

F11 | OPPENHEIMER PRINCIPAL PROTECTED MAIN STREET FUND III

NOTES TO FINANCIAL STATEMENTS Continued

1. Significant Accounting Policies Continued

This value will include net income, if any, earned by the Fund during the offering period and be reduced by adjustments permitted under the Warranty Agreement, sales charges, applicable share of extraordinary expenses and proportionately reduced for dividends and distributions paid in cash and redemptions of Fund shares. To avoid a reduced Warranty Amount, shareholders must reinvest all dividends and distributions received from the Fund to purchase additional shares of the Fund and must not redeem any shares of the Fund during the Warranty Period. If the value of the Fund’s assets on the Maturity Date is insufficient to result in the value of each shareholder’s account being at least equal to the shareholder’s Warranty Amount, the Warranty Provider will pay the Fund an amount equal to the excess of his or her Warranty Amount over his or her account value.

The Financial Warranty is solely the obligation of the Warranty Provider. It is possible that the financial position of the Warranty Provider may deteriorate and it would be unable to satisfy its obligations under the Financial Warranty. The Fund’s assets and the obligations of the Warranty Provider under the Warranty Agreement are not guaranteed by Merrill Lynch & Co., Inc. (the Warranty Provider’s parent company), the United States Government, the Manager, or any other entity or person.

The Warranty Agreement requires the Manager, on behalf of the Fund, to comply with certain agreed upon investment parameters in an attempt to limit the Fund’s risk. If the Manager fails to comply with the agreed-upon investment parameters or otherwise fails to comply with certain requirements set forth in the Warranty Agreement, the Warranty Provider may terminate its Financial Warranty in certain limited circumstances. The Warranty Provider may monitor the Fund’s compliance with the Warranty Agreement solely to protect the interests of the Warranty Provider and not the Fund’s shareholders. The fee paid to the Warranty Provider is an annual fee of 0.60% of the average daily net assets of the Fund. If the Fund is required to make a complete and irreversible allocation of its assets to the debt portfolio, the Warranty Fee will thereafter be reduced to 0.35% of the average daily net assets of the Fund.

Securities Valuation. The Fund calculates the net asset value of each class of shares based upon the net asset value of the Underlying Fund. For the Underlying Fund, the net asset value per share for a class of shares is determined as of the close of the New York Stock Exchange (the “Exchange”), normally 4:00 P.M. Eastern time, on each day the Exchange is open for trading by dividing the value of the Underlying Fund’s net assets attributable to that class by the number of shares of that class outstanding on that day. To determine net asset values, the Underlying Fund’s assets are valued primarily on the basis of current market quotations.

Long term debt instruments having a remaining maturity in excess of sixty days will be valued at the mean between the “bid” and “asked” prices. “Money market-type” debt instruments with remaining maturities of sixty days or less are valued at cost adjusted by the amortization of discount or premium to maturity, or amortized cost, which approximates market value.

F12 | OPPENHEIMER PRINCIPAL PROTECTED MAIN STREET FUND III

Securities held by the Fund and/or an Underlying Fund for which market quotations are not readily available are valued at their fair value. Securities whose values have been materially affected by what the Manager identifies as a significant event occurring before the Fund and/or Underlying Fund’s assets are valued but after the close of their respective exchanges will be fair valued. Fair value is determined in good faith using consistently applied procedures under the supervision of the Fund and, when applicable, Underlying Fund’s Board of Trustees.

Investment in Oppenheimer Institutional Money Market Fund. The Fund is permitted to invest daily available cash balances in an affiliated money market fund. The Fund may invest the available cash in Class E shares of Oppenheimer Institutional Money Market Fund (“IMMF”) to seek current income while preserving liquidity. IMMF is a registered open-end management investment company, regulated as a money market fund under the Investment Company Act of 1940, as amended. The Manager is also the investment adviser of IMMF. The Fund’s investment in IMMF is included in the Statement of Investments. As a shareholder, the Fund is subject to its proportional share of IMMF’s Class E expenses, including its management fee. The Manager will waive fees and/or reimburse Fund expenses in an amount equal to the indirect management fees incurred through the Fund’s investment in IMMF.

Investments With Off-Balance Sheet Market Risk. The Fund enters into financial instrument transactions (such as swaps, futures, options and other derivatives) that may have off-balance sheet market risk. Off-balance sheet market risk exists when the maximum potential loss on a particular financial instrument is greater than the value of such financial instrument, as reflected in the Fund’s Statement of Assets and Liabilities.

Allocation of Income, Expenses, Gains and Losses. Income, expenses (other than those attributable to a specific class), gains and losses are allocated on a daily basis to each class of shares based upon the relative proportion of net assets represented by such class. Operating expenses directly attributable to a specific class are charged against the operations of that class.

Federal Taxes. The Fund intends to comply with provisions of the Internal Revenue Code applicable to regulated investment companies and to distribute substantially all of its investment company taxable income, including any net realized gain on investments not offset by capital loss carryforwards, if any, to shareholders. Therefore, no federal income or excise tax provision is required. The Fund files income tax returns in U.S. federal and applicable state jurisdictions. The statute of limitations on the Fund’s tax return filings generally remain open for the three preceding fiscal reporting period ends.

The tax components of capital shown in the following table represent distribution requirements the Fund must satisfy under the income tax regulations, losses the Fund may be able to offset against income and gains realized in future years and unrealized appreciation or depreciation of securities and other investments for federal income tax purposes.

F13 | OPPENHEIMER PRINCIPAL PROTECTED MAIN STREET FUND III

NOTES TO FINANCIAL STATEMENTS Continued

1. Significant Accounting Policies Continued

Net Unrealized

Depreciation

Based on Cost of

Securities and

Undistributed

Accumulated

Other Investments

Net Investment

Long-Term

Loss

for Federal Income

Income

Gain

Carryforward^1,2

Tax Purposes

$328,298

$ 1,713,012

$ —

$ 941,812


1.		During the fiscal year ended August 31, 2008, the Fund did not utilize any capital loss carryforward.

2.		During the fiscal year ended August 31, 2007, the Fund utilized $909,112 of capital loss carryforward to offset capital gains realized in that fiscal year.

Net investment income (loss) and net realized gain (loss) may differ for financial statement and tax purposes. The character of dividends and distributions made during the fiscal year from net investment income or net realized gains may differ from their ultimate characterization for federal income tax purposes. Also, due to timing of dividends and distributions, the fiscal year in which amounts are distributed may differ from the fiscal year in which the income or net realized gain was recorded by the Fund.

Accordingly, the following amounts have been reclassified for August 31, 2008. Net assets of the Fund were unaffected by the reclassifications.


			Reduction to
	Reduction to		Accumulated Net
Increase to	Accumulated Net		Realized Gain
Paid-in Capital	Investment Loss		on Investments³

$131,319	$	1,266,384	$	1,397,703



3.		$131,319, all of which was long-term capital gains, was distributed in connection with Fund share redemptions.

The tax character of distributions paid during the years ended August 31, 2008 and August 31, 2007 was as follows:


	Year Ended		Year Ended
	August 31, 2008		August 31, 2007

Distributions paid from:
Ordinary income	$	1,527,489	$	828,728
Long-term capital gain		1,056,961		—

Total	$	2,584,450	$	828,728

The aggregate cost of securities and other investments and the composition of unrealized appreciation and depreciation of securities and other investments for federal income tax purposes as of August 31, 2008 are noted in the following table. The primary difference between book and tax appreciation or depreciation of securities and other investments, if applicable, is attributable to the tax deferral of losses or tax realization of financial statement unrealized gain or loss.

F14 | OPPENHEIMER PRINCIPAL PROTECTED MAIN STREET FUND III


Federal tax cost of securities	$	50,452,792
Federal tax cost of other investments		4,168,450

Total federal tax cost	$	54,621,242


Gross unrealized appreciation	$	346,154
Gross unrealized depreciation		(1,287,966	)

Net unrealized depreciation	$	(941,812	)

Trustees’ Compensation. The Board of Trustees has adopted a compensation deferral plan for independent trustees that enables trustees to elect to defer receipt of all or a portion of the annual compensation they are entitled to receive from the Fund. For purposes of determining the amount owed to the Trustee under the plan, deferred amounts are treated as though equal dollar amounts had been invested in shares of the Fund or in other Oppenheimer funds selected by the Trustee. The Fund purchases shares of the funds selected for deferral by the Trustee in amounts equal to his or her deemed investment, resulting in a Fund asset equal to the deferred compensation liability. Such assets are included as a component of “Other” within the asset section of the Statement of Assets and Liabilities. Deferral of trustees’ fees under the plan will not affect the net assets of the Fund, and will not materially affect the Fund’s assets, liabilities or net investment income per share. Amounts will be deferred until distributed in accordance to the compensation deferral plan.

Dividends and Distributions to Shareholders. Dividends and distributions to shareholders, which are determined in accordance with income tax regulations and may differ from U.S. generally accepted accounting principles, are recorded on the ex-dividend date. Income and capital gain distributions, if any, are declared and paid annually or at other times as deemed necessary by the Manager.

Investment Income. Dividend income is recorded on the ex-dividend date or upon ex-dividend notification in the case of certain foreign dividends where the ex-dividend date may have passed. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Interest income is recognized on an accrual basis. Discount and premium, which are included in interest income on the Statement of Operations, are amortized or accreted daily.

Custodian Fees. “Custodian fees and expenses” in the Statement of Operations may include interest expense incurred by the Fund on any cash overdrafts of its custodian account during the period. Such cash overdrafts may result from the effects of failed trades in portfolio securities and from cash outflows resulting from unanticipated shareholder redemption activity. The Fund pays interest to its custodian on such cash overdrafts, to the extent they are not offset by positive cash balances maintained by the Fund, at a rate equal to the Federal Funds Rate plus 0.50%. The “Reduction to custodian expenses” line item, if applicable, represents earnings on cash balances maintained by the Fund during the period. Such interest expense and other custodian fees may be paid with these earnings.

F15 | OPPENHEIMER PRINCIPAL PROTECTED MAIN STREET FUND III

NOTES TO FINANCIAL STATEMENTS Continued

1. Significant Accounting Policies Continued

Security Transactions. Security transactions are recorded on the trade date. Realized gains and losses on securities sold are determined on the basis of identified cost.

Indemnifications. The Fund’s organizational documents provide current and former trustees and officers with a limited indemnification against liabilities arising in connection with the performance of their duties to the Fund. In the normal course of business, the Fund may also enter into contracts that provide general indemnifications. The Fund’s maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against the Fund. The risk of material loss from such claims is considered remote.

Other. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of increases and decreases in net assets from operations during the reporting period. Actual results could differ from those estimates.

2. Shares of Beneficial Interest

The Fund has authorized an unlimited number of $0.001 par value shares of beneficial interest of each class. Transactions in shares of beneficial interest were as follows:


	Year Ended August 31, 2008						Year Ended August 31, 2007
	Shares			Amount			Shares			Amount

Class A
Dividends and/or distributions reinvested		40,449		$	1,273,358			15,480		$	505,080
Redeemed		(131,871	)		(4,110,171	)		(217,553	)		(7,182,753	)

Net decrease		(91,422	)	$	(2,836,813	)		(202,073	)	$	(6,677,673	)


Class B
Dividends and/or distributions reinvested		19,222		$	605,084			4,403		$	143,615
Redeemed		(47,036	)		(1,459,924	)		(94,367	)		(3,091,515	)

Net decrease		(27,814	)	$	(854,840	)		(89,964	)	$	(2,947,900	)


Class C
Dividends and/or distributions reinvested		17,046		$	537,285			3,775		$	122,313
Redeemed		(65,826	)		(2,051,194	)		(117,147	)		(3,801,485	)

Net decrease		(48,780	)	$	(1,513,909	)		(113,372	)	$	(3,679,172	)

F16 | OPPENHEIMER PRINCIPAL PROTECTED MAIN STREET FUND III


	Year Ended August 31, 2008						Year Ended August 31, 2007
	Shares			Amount			Shares			Amount

Class N
Dividends and/or distributions reinvested		1,427		$	44,887			471		$	15,379
Redeemed		(1,018	)		(33,936	)		(3,635	)		(119,786	)

Net increase (decrease)		409		$	10,951			(3,164	)	$	(104,407	)

3. Purchases and Sales of Securities

The aggregate cost of purchases and proceeds from sales of securities, other than short-term obligations and investments in IMMF, for the year ended August 31, 2008, were as follows:


	Purchases		Sales

Investment securities	$	34,281,686	$	56,935,684
U.S. government and government agency obligations		52,956,796		34,813,058

4. Fees and Other Transactions with Affiliates

Management Fees. Under the investment advisory agreement, management fees paid to the Manager were in accordance with the investment advisory agreement with the Fund which provides for a fee at an annual rate of 0.50% of the average annual net assets of the Fund. That fee will apply during the Warranty Period and the Post-Warranty Period. The management fee shall be reduced to 0.40% per annum of average annual net assets of the Fund in any month during the Warranty Period following a month where the Fund’s investment in equity securities (including shares of the Underlying Fund) is, on average, less than 10% of net assets. If during the Warranty Period 100% of the Fund’s assets are completely and irreversibly invested in the debt portfolio, the management fee will be at an annual rate of 0.25% of the average annual net assets of the Fund, and if that occurs the Manager will further reduce its management fee to the extent necessary so that expenses after waivers and reductions to the Fund (other than extraordinary expenses such as litigation costs) do not exceed 1.30% for Class A shares, 2.05% for Class B shares, 2.05% for Class C shares and 1.55% for Class N shares. However, if this reduction in the management fee is not sufficient to reduce expenses after waivers and reductions to these limits, the Manager is not required to subsidize Fund expenses to assure that expenses do not exceed those limits. Furthermore, if expenses exceed these expense limits, the Warranty Amount will be reduced by any expenses that exceed those limits.

Transfer Agent Fees. OppenheimerFunds Services (“OFS”), a division of the Manager, acts as the transfer and shareholder servicing agent for the Fund. The Fund pays OFS a per account fee. For the year ended August 31, 2008, the Fund paid $41,099 to OFS for services to the Fund.

Distribution and Service Plan (12b-1) Fees. Under its General Distributor’s Agreement with the Fund, OppenheimerFunds Distributor, Inc. (the “Distributor”) acts as the Fund’s principal underwriter in the continuous public offering of the Fund’s classes of shares.

F17 | OPPENHEIMER PRINCIPAL PROTECTED MAIN STREET FUND III

NOTES TO FINANCIAL STATEMENTS Continued

4. Fees and Other Transactions with Affiliates Continued

Service Plan for Class A Shares. The Fund has adopted a Service Plan (the “Plan”) for Class A shares under Rule 12b-1 of the Investment Company Act of 1940. Under the Plan, the Fund reimburses the Distributor for a portion of its costs incurred for services provided to accounts that hold Class A shares. Reimbursement is made periodically at an annual rate of up to 0.25% of the average annual net assets of Class A shares of the Fund. The Distributor currently uses all of those fees to pay dealers, brokers, banks and other financial institutions periodically for providing personal service and maintenance of accounts of their customers that hold Class A shares. Any unreimbursed expenses the Distributor incurs with respect to Class A shares in any fiscal year cannot be recovered in subsequent periods. Fees incurred by the Fund under the Plan are detailed in the Statement of Operations.

Distribution and Service Plans for Class B, Class C and Class N Shares. The Fund has adopted Distribution and Service Plans (the “Plans”) for Class B, Class C and Class N shares under Rule 12b-1 of the Investment Company Act of 1940 to compensate the Distributor for its services in connection with the distribution of those shares and servicing accounts. Under the Plans, the Fund pays the Distributor an annual asset-based sales charge of 0.75% on Class B and Class C shares and 0.25% on Class N shares. The Distributor also receives a service fee of 0.25% per year under each plan. If either the Class B, Class C or Class N plan is terminated by the Fund or by the shareholders of a class, the Board of Trustees and its independent trustees must determine whether the Distributor shall be entitled to payment from the Fund of all or a portion of the service fee and/or asset-based sales charge in respect to shares sold prior to the effective date of such termination. The Distributor’s aggregate uncompensated expenses under the Plans at June 30, 2008 for Class B, Class C and Class N shares were $302,405, $23,969 and $11,368, respectively. Fees incurred by the Fund under the Plans are detailed in the Statement of Operations.

Sales Charges. Front-end sales charges and contingent deferred sales charges (“CDSC”) do not represent expenses of the Fund. They are deducted from the proceeds of sales of Fund shares prior to investment or from redemption proceeds prior to remittance, as applicable. The sales charges retained by the Distributor from the sale of shares and the CDSC retained by the Distributor on the redemption of shares is shown in the following table for the period indicated.

Class A

Class B

Class C

Class N

Class A

Contingent

Front-End

Deferred

Sales Charges

Retained by

Year Ended

Distributor

August 31, 2008

$ —

$ 24,795

$ —

F18 | OPPENHEIMER PRINCIPAL PROTECTED MAIN STREET FUND III

Waivers and Reimbursements of Expenses. The Manager will reimburse the Fund for expenses equal to the Underlying Fund expenses paid by the Fund as a shareholder of the Underlying Fund. That expense reimbursement will fluctuate as the Fund’s allocation between the Underlying Fund and the debt portfolio changes. During the year ended August 31, 2008, the Manager reimbursed the Fund $124,407 for such Underlying Fund expenses.

OFS has voluntarily agreed to limit transfer and shareholder servicing agent fees for all classes to 0.35% of average annual net assets per class. This undertaking may be amended or withdrawn at any time.

The Manager will waive fees and/or reimburse Fund expenses in an amount equal to the indirect management fees incurred through the Fund’s investment in IMMF. During the year ended August 31, 2008, the Manager waived $5,781 for IMMF management fees.

5. Futures Contracts

A futures contract is a commitment to buy or sell a specific amount of a commodity or financial instrument at a negotiated price on a stipulated future date. The Fund may buy and sell futures contracts on the Standard and Poor’s 500 Composite Stock Price Index. The Fund may also buy or write put or call options on these futures contracts.

Futures contracts traded on a commodities or futures exchange will be valued at the final settlement price or official closing price on the principal exchange as reported by such principal exchange at its trading session ending at, or most recently prior to, the time when the Fund’s assets are valued.

Upon entering into a futures contract, the Fund is required to deposit either cash or securities (initial margin) in an amount equal to a certain percentage of the contract value. Subsequent payments (variation margin) are made or received by the Fund each day. The variation margin payments are equal to the daily changes in the contract value and are recorded as unrealized gains and losses.

Futures contracts are reported on a schedule following the Statement of Investments. Securities held in collateralized accounts to cover initial margin requirements on open futures contracts are noted in the Statement of Investments. Cash held by the broker to cover initial margin requirements on open futures contracts and the receivable and/or payable for the daily mark to market for the variation margin are noted in the Statement of Assets and Liabilities. The net change in unrealized appreciation and depreciation is reported in the Statement of Operations. Realized gains (losses) are reported in the Statement of Operations at the closing or expiration of futures contracts.

Risks of entering into futures contracts (and related options) include the possibility that there may be an illiquid market where the Fund is unable to liquidate the contract or enter into an offsetting position and, if used for hedging purposes, the risk that the price of the contract will correlate imperfectly with the prices of the Fund’s securities.

F19 | OPPENHEIMER PRINCIPAL PROTECTED MAIN STREET FUND III

NOTES TO FINANCIAL STATEMENTS Continued

6. Securities Lending

The Fund lends portfolio securities from time to time in order to earn additional income in the form of fees or interest on securities received as collateral or the investment of any cash received as collateral. The loans are secured by collateral (either securities, letters of credit, or cash) in an amount not less than 100% of the market value of the loaned securities during the period of the loan. The market value of the loaned securities is determined at the close of each business day and any additional required collateral is delivered to the Fund on the next business day. If the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, the Fund could experience delays and cost in recovering the securities loaned or in gaining access to the collateral. The Fund continues to receive the economic benefit of interest or dividends paid on the securities loaned in the form of a substitute payment received from the borrower and recognizes the gain or loss in the fair value of the securities loaned that may occur during the term of the loan. The Fund has the right under the lending agreement to recover the securities from the borrower on demand.

As of August 31, 2008, the Fund had no securities on loan.

7. Recent Accounting Pronouncements

In September 2006, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standards (“SFAS”) No. 157, Fair Value Measurements. This standard establishes a single authoritative definition of fair value, sets out a framework for measuring fair value and expands disclosures about fair value measurements. SFAS No. 157 applies to fair value measurements already required or permitted by existing standards. SFAS No. 157 is effective for financial statements issued for fiscal years beginning after November 15, 2007, and interim periods within those fiscal years. As of August 31, 2008, the Manager does not believe the adoption of SFAS No. 157 will materially impact the financial statement amounts; however, additional disclosures may be required about the inputs used to develop the measurements and the effect of certain of the measurements on changes in net assets for the period.

In March 2008, FASB issued SFAS No. 161, Disclosures about Derivative Instruments and Hedging Activities. This standard requires enhanced disclosures about derivative and hedging activities, including qualitative disclosures about how and why the Fund uses derivative instruments, how these activities are accounted for, and their effect on the Fund’s financial position, financial performance and cash flows. SFAS No. 161 is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008. At this time, management is evaluating the implications of SFAS No. 161 and its impact on the Fund’s financial statements and related disclosures.

F20 | OPPENHEIMER PRINCIPAL PROTECTED MAIN STREET FUND III

8. Change In Independent Registered Public Accounting Firm (Unaudited)

At a meeting held on August 20, 2008, the Board of Trustees of the Fund appointed KPMG LLP as the independent registered public accounting firm to the Fund for fiscal year 2009, replacing the firm of Deloitte & Touche LLP, effective at the conclusion of the fiscal 2008 audit. During the two most recent fiscal years the audit reports of Deloitte & Touche LLP contained no adverse opinion or disclaimer of opinion and were not qualified or modified as to uncertainty, audit scope or accounting principles. Further, there were no disagreements between the Fund and Deloitte & Touche LLP on accounting principles, financial statement disclosure or audit scope, which if not resolved to the satisfaction of Deloitte & Touche LLP would have caused it to make reference to the disagreements in connection with its reports.

F21 | OPPENHEIMER PRINCIPAL PROTECTED MAIN STREET FUND III

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Trustees and Shareholders of Oppenheimer Principal Protected Trust III:

We have audited the accompanying statement of assets and liabilities of Oppenheimer Principal Protected Main Street Fund III (the “Fund”), a series of Oppenheimer Principal Protected Trust III, including the statement of investments, as of August 31, 2008, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended. These financial statements and financial highlights are the responsibility of the Fund’s management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. The Fund is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Fund’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of August 31, 2008, by correspondence with the custodian and brokers. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of the Fund as of August 31, 2008, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America.

Deloitte & Touche LLP

Denver, Colorado
October 13, 2008

F22 | OPPENHEIMER PRINCIPAL PROTECTED MAIN STREET FUND III

FEDERAL INCOME TAX INFORMATION Unaudited

In early 2008, if applicable, shareholders of record received information regarding all dividends and distributions paid to them by the Fund during calendar year 2007. Regulations of the U.S. Treasury Department require the Fund to report this information to the Internal Revenue Service.

Capital gain distributions of $0.5941 per share were paid to Class A, Class B, Class C and Class N shareholders, respectively, on December 17, 2007. Whether received in stock or in cash, the capital gain distribution should be treated by shareholders as a gain from the sale of the capital assets held for more than one year (long-term capital gains).

Dividends, if any, paid by the Fund during the fiscal year ended August 31, 2008 which are not designated as capital gain distributions should be multiplied by 65.45% to arrive at the amount eligible for the corporate dividend-received deduction.

A portion, if any, of the dividends paid by the Fund during the fiscal year ended August 31, 2008 which are not designated as capital gain distributions are eligible for lower individual income tax rates to the extent that the Fund has received qualified dividend income as stipulated by recent tax legislation. $89,615 of the Fund’s fiscal year taxable income may be eligible for the lower individual income tax rates. In early 2008, shareholders of record received information regarding the percentage of distributions that are eligible for lower individual income tax rates.

Recent tax legislation allows a regulated investment company to designate distributions not designated as capital gain distributions, as either interest related dividends or short-term capital gain dividends, both of which are exempt from the U.S. withholding tax applicable to non U.S. taxpayers. For the fiscal year ended August 31, 2008, $540,259 or 35.37% of the ordinary distributions paid by the Fund qualifies as an interest related dividend.

The foregoing information is presented to assist shareholders in reporting distributions received from the Fund to the Internal Revenue Service. Because of the complexity of the federal regulations which may affect your individual tax return and the many variations in state and local tax regulations, we recommend that you consult your tax advisor for specific guidance.

25 | OPPENHEIMER PRINCIPAL PROTECTED MAIN STREET FUND III

BOARD APPROVAL OF THE FUND’S INVESTMENT ADVISORY AGREEMENT Unaudited

Each year, the Board of Trustees (the “Board”), including a majority of the independent Trustees, is required to determine whether to renew the Fund’s investment advisory agreement (the “Agreement”). The Investment Company Act of 1940, as amended, requires that the Board request and evaluate, and that the Manager provide, such information as may be reasonably necessary to evaluate the terms of the Agreement. The Board employs an independent consultant to prepare a report that provides information, including comparative information, the Board requests for that purpose. In addition, the Board receives information throughout the year regarding Fund services, fees, expenses and performance.

The Manager and the independent consultant provided information to the Board on the following factors: (i) the nature, quality and extent of the Manager’s services, (ii) the investment performance of the Fund and the Manager, (iii) the fees and expenses of the Fund, including comparative expense information, (iv) the profitability of the Manager and its affiliates, including an analysis of the cost of providing services, (v) whether economies of scale are realized as the Fund grows and whether fee levels reflect these economies of scale for Fund investors and (vi) other benefits to the Manager from its relationship with the Fund. The Board was aware that there are alternatives to retaining the Manager.

Outlined below is a summary of the principal information considered by the Board as well as the Board’s conclusions.

Nature, Quality and Extent of Services. The Board considered information about the nature and extent of the services provided to the Fund and information regarding the Manager’s key personnel who provide such services. The Manager’s duties include providing the Fund with the services of the portfolio managers and the Manager’s investment team, who provide research, analysis and other advisory services in regard to the Fund’s investments; securities trading services; oversight of third party service providers; monitoring compliance with applicable Fund policies and procedures and adherence to the Fund’s investment restrictions. The Manager is responsible for providing certain administrative services to the Fund as well. Those services include providing and supervising all administrative and clerical personnel who are necessary in order to provide effective corporate administration for the Fund; compiling and maintaining records with respect to the Fund’s operations; preparing and filing reports required by the Securities and Exchange Commission; preparing periodic reports regarding the operations of the Fund for its shareholders; preparing proxy materials for shareholder meetings; and preparing the registration statements required by Federal and state securities laws for the sale of the Fund’s shares. The Manager also provides the Fund with office space, facilities and equipment.

The Board also considered the quality of the services provided and the quality of the Manager’s resources that are available to the Fund. The Board took account of the fact

26 | OPPENHEIMER PRINCIPAL PROTECTED MAIN STREET FUND III

that the Manager has had over forty years of experience as an investment adviser and that its assets under management rank it among the top mutual fund managers in the United States. The Board evaluated the Manager’s advisory, administrative, accounting, legal and compliance services, and information the Board has received regarding the experience and professional qualifications of the Manager’s key personnel and the size and functions of its staff. In its evaluation of the quality of the portfolio management services provided, the Board considered the experience of Angelo Manioudakis, Rudi Schadt, and Sergei Polevikov, the portfolio managers for the Fund, and the Manager’s investment team and analysts. The Board members also considered the totality of their experiences with the Manager as directors or trustees of the Fund and other funds advised by the Manager. The Board considered information regarding the quality of services provided by affiliates of the Manager, which its members have become knowledgeable about in connection with the renewal of the Fund’s service agreements. The Board concluded, in light of the Manager’s experience, reputation, personnel, operations and resources, that the Fund benefits from the services provided under the Agreement.

Investment Performance of the Manager and the Fund. Throughout the year, the Manager provided information on the investment performance of the Fund and the Manager, including comparative performance information. The Board also reviewed information, prepared by the Manager and by the independent consultant, comparing the Fund’s historical performance to relevant market indices and to the performance of other retail front-end load and no-load mixed-asset target allocation moderate funds advised by other investment advisers. The Board noted that the Fund’s one-year, three-year, and since inception performance were below its peer group median.

The Board considered that the Fund underperformed its performance universe median during the one- and three-year periods. The Board considered the Manager’s assertion that the Mixed-Asset Target Allocation – Moderate category selected by Lipper as the performance universe does not provide an appropriate comparison given the unique, specialized structure and warranty features of a principal-protected fund. The Board also noted the Manager’s assertion that for a fund like this one, performance is a function of when the fund was launched, interest rates, equity returns, the length of the warranty period and other factors. In light of this, the Board also considered that the Fund outperformed one comparable peer (the most appropriate “peer” given its launch date and portfolio construction) for the three-year period, thought it underperformed the comparable peer for the one-year period.

Costs of Services by the Manager. The Board reviewed the fees paid to the Manager and the other expenses borne by the Fund. The Board also considered the comparability

27 | OPPENHEIMER PRINCIPAL PROTECTED MAIN STREET FUND III

BOARD APPROVAL OF THE FUND’S INVESTMENT ADVISORY AGREEMENT Unaudited / Continued

of the fees charged and the services provided to the Fund to the fees and services for other clients or accounts advised by the Manager. The independent consultant provided comparative data in regard to the fees and expenses of the Fund and other mixed-asset target allocation moderate, mixed-asset target allocation growth, and mixed-asset target allocation conservative principal protected funds with comparable asset levels and distribution features. The Board noted that the Fund’s actual management fees and total expenses were lower than its peer group median.

Economies of Scale. The Board considered information regarding the Manager’s costs in serving as the Fund’s investment adviser, including the costs associated with the personnel and systems necessary to manage the Fund, and information regarding the Manager’s profitability from its relationship with the Fund. The Board reviewed whether the Manager may realize economies of scale in managing and supporting the Fund, whether those economies of scale benefit the Fund’s shareholders at the current level of Fund assets in relation to its management fee.

Other Benefits to the Manager. In addition to considering the profits realized by the Manager, the Board considered information that was provided regarding the direct and indirect benefits the Manager receives as a result of its relationship with the Fund, including compensation paid to the Manager’s affiliates. The Board also considered that the Manager must be able to pay and retain experienced professional personnel at competitive rates to provide quality services to the Fund and that maintaining the financial viability of the Manager is important in order for the Manager to continue to provide significant services to the Fund and its shareholders.

Conclusions. These factors were also considered by the independent Trustees meeting separately from the full Board, assisted by experienced counsel to the Fund and to the independent Trustees. Fund counsel and the independent Trustees’ counsel are independent of the Manager within the meaning and intent of the Securities and Exchange Commission Rules.

Based on its review of the information it received and its evaluations described above, the Board, including a majority of the independent Trustees, decided to continue the Agreement for another year. In arriving at this decision, the Board did not single out any factor or factors as being more important than others, but considered all of the above information, and considered the terms and conditions of the Agreement, including the management fee, in light of all of the surrounding circumstances.

28 | OPPENHEIMER PRINCIPAL PROTECTED MAIN STREET FUND III

PORTFOLIO PROXY VOTING POLICIES AND PROCEDURES; UPDATES TO STATEMENTS OF INVESTMENTS Unaudited

The Fund has adopted Portfolio Proxy Voting Policies and Procedures under which the Fund votes proxies relating to securities (“portfolio proxies”) held by the Fund. A description of the Fund’s Portfolio Proxy Voting Policies and Procedures is available (i) without charge, upon request, by calling the Fund toll-free at 1.800.525.7048, (ii) on the Fund’s website at www.oppenheimerfunds.com, and (iii) on the SEC’s website at www.sec.gov. In addition, the Fund is required to file Form N-PX, with its complete proxy voting record for the 12 months ended June 30th, no later than August 31st of each year. The Fund’s voting record is available (i) without charge, upon request, by calling the Fund toll-free at 1.800.525.7048, and (ii) in the Form N-PX filing on the SEC’s website at www.sec.gov.

The Fund files its complete schedule of portfolio holdings with the SEC for the first quarter and the third quarter of each fiscal year on Form N-Q. The Fund’s Form N-Q filings are available on the SEC’s website at http://www.sec.gov. Those forms may be reviewed and copied at the SEC’s Public Reference Room in Washington, D.C. Information on the operation of the Public Reference Room may be obtained by calling 1-800-SEC-0330.

29 | OPPENHEIMER PRINCIPAL PROTECTED MAIN STREET FUND III

TRUSTEES AND OFFICERS Unaudited


Name, Position(s) Held with the		Principal Occupation(s) During the Past 5 Years; Other Trusteeships/Directorships
Fund, Length of Service, Age		Held; Number of Portfolios in the Fund Complex Currently Overseen

INDEPENDENT TRUSTEES		The address of each Trustee in the chart below is 6803 S. Tucson Way, Centennial, Colorado 80112-3924. Each Trustee serves for an indefinite term, or until his or her resignation, retirement, death or removal.

William L. Armstrong, Chairman of the Board of Trustees and Trustee (since 2004) Age: 71		President, Colorado Christian University (since 2006); Chairman, Cherry Creek Mortgage Company (since 1991), Chairman, Centennial State Mortgage Company (since 1994), Chairman, The El Paso Mortgage Company (since 1993); Chairman, Ambassador Media Corporation (since 1984); Chairman, Broadway Ventures (since 1984); Director of Helmerich & Payne, Inc. (oil and gas drilling/production company) (since 1992), Campus Crusade for Christ (non-profit) (since 1991); Former Director, The Lynde and Harry Bradley Foundation, Inc. (non-profit organization) (2002-2006); former Chairman of: Transland Financial Services, Inc. (private mortgage banking company) (1997-2003), Great Frontier Insurance (1995-2000), Frontier Real Estate, Inc. (residential real estate brokerage) (1994-2000) and Frontier Title (title insurance agency) (1995-2000); former Director of the following: UNUMProvident (insurance company) (1991-2004), Storage Technology Corporation (computer equipment company) (1991-2003) and International Family Entertainment (television channel) (1992-1997); U.S. Senator (January 1979-January 1991). Oversees 39 portfolios in the OppenheimerFunds complex.

George C. Bowen, Trustee (since 2004) Age: 72		Assistant Secretary and Director of Centennial Asset Management Corporation (December 1991-April 1999); President, Treasurer and Director of Centennial Capital Corporation (June 1989-April 1999); Chief Executive Officer and Director of MultiSource Services, Inc. (March 1996-April 1999); Mr. Bowen held several positions with the Manager and with subsidiary or affiliated companies of the Manager (September 1987-April 1999). Oversees 39 portfolios in the OppenheimerFunds complex.

Edward L. Cameron, Trustee (since 2004) Age: 70		Member of The Life Guard of Mount Vernon (George Washington historical site) (June 2000 – June 2006); Partner of PricewaterhouseCoopers LLP (accounting firm) (July 1974-June 1999); Chairman of Price Waterhouse LLP Global Investment Management Industry Services Group (financial services firm) (July 1994-June 1998). Oversees 39 portfolios in the OppenheimerFunds complex.

Jon S. Fossel, Trustee (since 2004) Age: 66		Director of UNUMProvident (insurance company) (since June 2002); Director of Northwestern Energy Corp. (public utility corporation) (since November 2004); Director of P.R. Pharmaceuticals (October 1999-October 2003); Director of Rocky Mountain Elk Foundation (non-profit organization) (February 1998-February 2003 and February 2005-February 2007); Chairman and Director (until October 1996) and President and Chief Executive Officer (until October 1995) of the Manager; President, Chief Executive Officer and Director of the following: Oppenheimer Acquisition Corp. (“OAC”) (parent holding company of the Manager), Shareholders Services, Inc. and Shareholder Financial Services, Inc. (until October 1995). Oversees 39 portfolios in the OppenheimerFunds complex.

Sam Freedman, Trustee (since 2004) Age: 68		Director of Colorado UpLIFT (charitable organization) (since September 1984). Mr. Freedman held several positions with the Manager and with subsidiary or affiliated companies of the Manager (until October 1994). Oversees 39 portfolios in the OppenheimerFunds complex.

30 | OPPENHEIMER PRINCIPAL PROTECTED MAIN STREET FUND III


Name, Position(s) Held with the		Principal Occupation(s) During the Past 5 Years; Other Trusteeships/Directorships
Fund, Length of Service, Age		Held; Number of Portfolios in the Fund Complex Currently Overseen

Richard F. Grabish, Trustee (since 2008) Age: 60		Formerly Senior Vice President and Assistant Director of Sales and Marketing (March 1997-December 2007), Director (March 1987-December 2007) and Manager of Private Client Services (June 1985-June 2005) of A.G. Edwards & Sons, Inc. (broker/dealer and investment firm); Chairman and Chief Executive Officer of A.G. Edwards Trust Company, FSB (March 2001-December 2007); President and Vice Chairman of A.G. Edwards Trust Company, FSB (investment adviser) (April 1987-March 2001); President of A.G. Edwards Trust Company, FSB (investment adviser) (June 2005-December 2007). Oversees 17 portfolios in the OppenheimerFunds complex.

Beverly L. Hamilton, Trustee (since 2004) Age: 62		Trustee of Monterey Institute for International Studies (educational organization) (since February 2000); Board Member of Middlebury College (educational organization) (since December 2005); Director of The California Endowment (philanthropic organization) (since April 2002); Director (February 2002-2005) and Chairman of Trustees (2006-2007) of the Community Hospital of Monterey Peninsula; Director (October 1991-2005) and Vice Chairman (since 2006) of American Funds’ Emerging Markets Growth Fund, Inc. (mutual fund); President of ARCO Investment Management Company (February 1991-April 2000); Member of the investment committees of The Rockefeller Foundation (2001-2006) and The University of Michigan (since 2000); Advisor at Credit Suisse First Boston’s Sprout venture capital unit (venture capital fund) (1994-January 2005); Trustee of MassMutual Institutional Funds (investment company) (1996-June 2004); Trustee of MML Series Investment Fund (investment company) (April 1989-June 2004); Member of the investment committee of Hartford Hospital (2000-2003); and Advisor to Unilever (Holland) pension fund (2000-2003). Oversees 39 portfolios in the OppenheimerFunds complex.

Robert J. Malone, Trustee (since 2004) Age: 64		Board of Directors of Opera Colorado Foundation (non-profit organization) (since March 2008); Director of Jones Knowledge, Inc. (since 2006); Director of Jones International University (educational organization) (since August 2005); Chairman, Chief Executive Officer and Director of Steele Street Bank & Trust (commercial banking) (since August 2003); Director of Colorado UpLIFT (charitable organization) (since 1986); Trustee of the Gallagher Family Foundation (non-profit organization) (since 2000); Former Chairman of U.S. Bank-Colorado (subsidiary of U.S. Bancorp and formerly Colorado National Bank) (July 1996-April 1999); Director of Commercial Assets, Inc. (real estate investment trust) (1993-2000); Director of Jones Knowledge, Inc. (2001-July 2004); and Director of U.S. Exploration, Inc. (oil and gas exploration) (1997-February 2004). Oversees 39 portfolios in the OppenheimerFunds complex.

F. William Marshall, Jr., Trustee (since 2004) Age: 66		Trustee of MassMutual Select Funds (formerly MassMutual Institutional Funds) (investment company) (since 1996) and MML Series Investment Fund (investment company) (since 1996); Trustee of Worcester Polytech Institute (since 1985); Chairman (since 1994) of the Investment Committee of the Worcester Polytech Institute (private university); President and Treasurer of the SIS Funds (private charitable fund) (since January 1999); Chairman of SIS & Family Bank, F.S.B. (formerly SIS Bank) (commercial bank) (January 1999-July 1999); and Executive Vice President of Peoples Heritage Financial Group, Inc. (commercial bank) (January 1999-July 1999). Oversees 41 portfolios in the OppenheimerFunds complex.

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TRUSTEES AND OFFICERS Unaudited / Continued


Name, Position(s) Held with the		Principal Occupation(s) During the Past 5 Years; Other Trusteeships/Directorships
Fund, Length of Service, Age		Held; Number of Portfolios in the Fund Complex Currently Overseen

INTERESTED TRUSTEE AND OFFICER		The address of Mr. Murphy is Two World Financial Center, 225 Liberty Street, 11th Floor, New York, New York 10281-1008. Mr. Murphy serves as a Trustee for an indefinite term, or until his resignation, retirement, death or removal and as an Officer for an indefinite term, or until his resignation, retirement, death or removal. Mr. Murphy is an interested Trustee due to his positions with OppenheimerFunds, Inc. and its affiliates.

John V. Murphy, Trustee, President and Principal Executive Officer (since 2004) Age: 59		Chairman, Chief Executive Officer and Director of the Manager (since June 2001); President of the Manager (September 2000-February 2007); President and director or trustee of other Oppenheimer funds; President and Director of Oppenheimer Acquisition Corp. (“OAC”) (the Manager’s parent holding company) and of Oppenheimer Partnership Holdings, Inc. (holding company subsidiary of the Manager) (since July 2001); Director of OppenheimerFunds Distributor, Inc. (subsidiary of the Manager) (November 2001-December 2006); Chairman and Director of Shareholder Services, Inc. and of Shareholder Financial Services, Inc. (transfer agent subsidiaries of the Manager) (since July 2001); President and Director of OppenheimerFunds Legacy Program (charitable trust program established by the Manager) (since July 2001); Director of the following investment advisory subsidiaries of the Manager: OFI Institutional Asset Management, Inc., Centennial Asset Management Corporation, Trinity Investment Management Corporation and Tremont Capital Management, Inc. (since November 2001), HarbourView Asset Management Corporation and OFI Private Investments, Inc. (since July 2001); President (since November 2001) and Director (since July 2001) of Oppenheimer Real Asset Management, Inc.; Executive Vice President of Massachusetts Mutual Life Insurance Company (OAC’s parent company) (since February 1997); Director of DLB Acquisition Corporation (holding company parent of Babson Capital Management LLC) (since June 1995); Chairman (since October 2007) and Member of the Investment Company Institute’s Board of Governors (since October 2003). Oversees 103 portfolios in the OppenheimerFunds complex.

OTHER OFFICERS OF THE FUND		The addresses of the Officers in the chart below are as follows: for Messrs. Manioudakis, Schadt, Zack and Ms. Bloomberg, Two World Financial Center, 225 Liberty Street, New York, New York 10281-1008, for Messrs. Vandehey, Wixted, Petersen, Szilagyi and Ms. Ives, 6803 S. Tucson Way, Centennial, Colorado 80112-3924. Each Officer serves for an indefinite term or until his or her resignation, retirement, death or removal.

Angelo G. Manioudakis, Vice President and Portfolio Manager (since 2004) Age: 41		Senior Vice President of the Manager and of HarbourView Asset Management Corporation (since April 2002), and of OFI Institutional Asset Management, Inc. (since June 2002); Vice President of Oppenheimer Real Asset Management, Inc. (since November 2006). Executive Director and portfolio manager for MSIM/Miller, Anderson & Sherrerd (Morgan Stanley Asset Management) (August 1993-April 2002). A portfolio manager and officer of 15 portfolios in the OppenheimerFunds complex.

Rudi W. Schadt, Vice President and Portfolio Manager (since 2004) Age: 50		Vice President, Director of Equity Analytics and Risk in Product Design and Risk Management of the Manager (since February 2002). Director and Senior Quantitative Analyst at UBS Asset Management (2000-2001); Associate Director, Senior Researcher and Portfolio Manager (June 1997-August 2000) at State Street Global Advisors. A portfolio manager and officer of 14 portfolios in the OppenheimerFunds complex.

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Name, Position(s) Held with the		Principal Occupation(s) During the Past 5 Years; Other Trusteeships/Directorships
Fund, Length of Service, Age		Held; Number of Portfolios in the Fund Complex Currently Overseen

Mark S. Vandehey, Vice President and Chief Compliance Officer (since 2004) Age: 58		Senior Vice President and Chief Compliance Officer of the Manager (since March 2004); Chief Compliance Officer of OppenheimerFunds Distributor, Inc., Centennial Asset Management and Shareholder Services, Inc. (since March 2004); Vice President of OppenheimerFunds Distributor, Inc., Centennial Asset Management Corporation and Shareholder Services, Inc. (since June 1983); Former Vice President and Director of Internal Audit of the Manager (1997-February 2004). An officer of 103 portfolios in the OppenheimerFunds complex.

Brian W. Wixted, Treasurer and Principal Financial & Accounting Officer (since 2004) Age: 49		Senior Vice President and Treasurer of the Manager (since March 1999); Treasurer of the following: HarbourView Asset Management Corporation, Shareholder Financial Services, Inc., Shareholder Services, Inc., Oppenheimer Real Asset Management, Inc. and Oppenheimer Partnership Holdings, Inc. (since March 1999), OFI Private Investments, Inc. (since March 2000), OppenheimerFunds International Ltd. and OppenheimerFunds plc (since May 2000), OFI Institutional Asset Management, Inc. (since November 2000), and OppenheimerFunds Legacy Program (charitable trust program established by the Manager) (since June 2003); Treasurer and Chief Financial Officer of OFI Trust Company (trust company subsidiary of the Manager) (since May 2000); Assistant Treasurer of the following: OAC (since March 1999), Centennial Asset Management Corporation (March 1999-October 2003) and OppenheimerFunds Legacy Program (April 2000-June 2003). An officer of 103 portfolios in the OppenheimerFunds complex.

Brian S. Petersen, Assistant Treasurer (since 2004) Age: 38		Vice President of the Manager (since February 2007); Assistant Vice President of the Manager (August 2002-February 2007); Manager/Financial Product Accounting of the Manager (November 1998-July 2002). An officer of 103 portfolios in the OppenheimerFunds complex.

Brian C. Szilagyi, Assistant Treasurer (since 2005) Age: 38		Assistant Vice President of the Manager (since July 2004); Director of Financial Reporting and Compliance of First Data Corporation (April 2003-July 2004); Manager of Compliance of Berger Financial Group LLC (May 2001-March 2003). An officer of 103 portfolios in the OppenheimerFunds complex.

Robert G. Zack, Vice President and Secretary (since 2004) Age: 60		Executive Vice President (since January 2004) and General Counsel (since March 2002) of the Manager; General Counsel and Director of the Distributor (since December 2001); General Counsel of Centennial Asset Management Corporation (since December 2001); Senior Vice President and General Counsel of HarbourView Asset Management Corporation (since December 2001); Secretary and General Counsel of OAC (since November 2001); Assistant Secretary (since September 1997) and Director (since November 2001) of OppenheimerFunds International Ltd. and OppenheimerFunds plc; Vice President and Director of Oppenheimer Partnership Holdings, Inc. (since December 2002); Director of Oppenheimer Real Asset Management, Inc. (since November 2001); Senior Vice President, General Counsel and Director of Shareholder Financial Services, Inc. and Shareholder Services, Inc. (since December 2001); Senior Vice President, General Counsel and Director of OFI Private Investments, Inc. and OFI Trust Company (since November 2001); Vice President of OppenheimerFunds Legacy Program (since June 2003); Senior Vice President and General Counsel of OFI Institutional Asset Management, Inc. (since November 2001); Director of OppenheimerFunds (Asia) Limited (since December 2003); Senior Vice President (May 1985-December 2003). An officer of 103 portfolios in the OppenheimerFunds complex.

33 | OPPENHEIMER PRINCIPAL PROTECTED MAIN STREET FUND III

TRUSTEES AND OFFICERS Unaudited / Continued


Name, Position(s) Held with the		Principal Occupation(s) During the Past 5 Years; Other Trusteeships/Directorships
Fund, Length of Service, Age		Held; Number of Portfolios in the Fund Complex Currently Overseen

Lisa I. Bloomberg, Assistant Secretary (since 2004) Age: 40		Vice President (since May 2004) and Deputy General Counsel (since May 2008); of the Manager; Associate Counsel of the Manager (May 2004-May 2008); First Vice President (April 2001-April 2004), Associate General Counsel (December 2000-April 2004) of UBS Financial Services Inc. (formerly, PaineWebber Incorporated). An officer of 103 portfolios in the OppenheimerFunds complex.

Kathleen T. Ives, Assistant Secretary (since 2004) Age: 43		Vice President (since June 1998), Deputy General Counsel (since May 2008) and Assistant Secretary (since October 2003) of the Manager; Vice President (since 1999) and Assistant Secretary (since October 2003) of the Distributor; Assistant Secretary of Centennial Asset Management Corporation (since October 2003); Vice President and Assistant Secretary of Shareholder Services, Inc. (since 1999); Assistant Secretary of OppenheimerFunds Legacy Program and Shareholder Financial Services, Inc. (since December 2001); Senior Counsel of the Manager (October 2003-May 2008). An officer of 103 portfolios in the OppenheimerFunds complex.

The Fund’s Statement of Additional Information contains additional information about the Fund’s Trustees and Officers and is available without charge upon request, by calling 1.800.525.7048.

34 | OPPENHEIMER PRINCIPAL PROTECTED MAIN STREET FUND III

Item 4. Principal Accountant Fees and Services.

(a)

Audit Fees

The principal accountant for the audit of the registrant’s annual financial statements billed $17,000 in fiscal 2008 and $16,500 in fiscal 2007.

(b)

Audit-Related Fees

The principal accountant for the audit of the registrant’s annual financial statements billed no such fees during the last two fiscal years.

The principal accountant for the audit of the registrant’s annual financial statements billed no such fees during the last two fiscal years to the registrant’s investment adviser or any entity controlling, controlled by, or under common control with the adviser that provides ongoing services to the registrant.

(c)

Tax Fees

The principal accountant for the audit of the registrant’s annual financial statements billed no such fees to the registrant during the last two fiscal years.

The principal accountant for the audit of the registrant’s annual financial statements billed no such fees to the registrant during the last two fiscal years to the registrant’s investment adviser or any entity controlling, controlled by, or under common control with the adviser that provides ongoing services to the registrant.

(d)

All Other Fees

The principal accountant for the audit of the registrant’s annual financial statements billed no such fees to the registrant during the last two fiscal years.

The principal accountant for the audit of the registrant’s annual financial statements billed no such fees for fiscal 2008 and $32,732 for fiscal 2007 to the registrant’s investment adviser or any entity controlling, controlled by, or under common control with the adviser that provides ongoing services to the registrant.

(e)		(1) During its regularly scheduled periodic meetings, the registrant’s audit committee will pre-approve all audit, audit-related, tax and other services to be provided by the principal accountants of the registrant.

		The audit committee has delegated pre-approval authority to its Chairman for any subsequent new engagements that arise between regularly scheduled meeting dates

provided that any fees such pre-approved are presented to the audit committee at its next regularly scheduled meeting.

		Under applicable laws, pre-approval of non-audit services maybe waived provided that: 1) the aggregate amount of all such services provided constitutes no more than five percent of the total amount of fees paid by the registrant to it principal accountant during the fiscal year in which services are provided 2) such services were not recognized by the registrant at the time of engagement as non-audit services and 3) such services are promptly brought to the attention of the audit committee of the registrant and approved prior to the completion of the audit.

		(2) 100%

(f)		Not applicable as less than 50%.

(g)		The principal accountant for the audit of the registrant’s annual financial statements billed no such fees in fiscal 2008 and $32,732 in fiscal 2007 to the registrant and the registrant’s investment adviser or any entity controlling, controlled by, or under common control with the adviser that provides ongoing services to the registrant related to non-audit fees. Those billings did not include any prohibited non-audit services as defined by the Securities Exchange Act of 1934.

(h)		The registrant’s audit committee of the board of trustees has considered whether the provision of non-audit services that were rendered to the registrant’s investment adviser, and any entity controlling, controlled by, or under common control with the investment adviser that provides ongoing services to the registrant that were not pre-approved pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X is compatible with maintaining the principal accountant’s independence. No such services were rendered.

Item 5. Audit Committee of Listed Registrants

Not applicable.

Item 6. Schedule of Investments.

a) Not applicable.

b) Not applicable

Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies.

Not applicable.

Item 8. Portfolio Managers of Closed-End Management Investment Companies.

Not applicable.

Item 9. Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers.

Not applicable.

Item 10. Submission of Matters to a Vote of Security Holders.

The Fund’s Governance Committee Provisions with Respect to Nominations of Directors/Trustees to the Respective Boards

1.		The Fund’s Governance Committee (the “Committee”) will evaluate potential Board candidates to assess their qualifications. The Committee shall have the authority, upon approval of the Board, to retain an executive search firm to assist in this effort. The Committee may consider recommendations by business and personal contacts of current Board members and by executive search firms which the Committee may engage from time to time and may also consider shareholder recommendations. The Committee may consider the advice and recommendation of the Funds’ investment manager and its affiliates in making the selection.

2.		The Committee shall screen candidates for Board membership. The Committee has not established specific qualifications that it believes must be met by a trustee nominee. In evaluating trustee nominees, the Committee considers, among other things, an individual’s background, skills, and experience; whether the individual is an “interested person” as defined in the Investment Company Act of 1940; and whether the individual would be deemed an “audit committee financial expert” within the meaning of applicable SEC rules. The Committee also considers whether the individual’s background, skills, and experience will complement the background, skills, and experience of other nominees and will contribute to the Board. There are no differences in the manner in which the Committee evaluates nominees for trustees based on whether the nominee is recommended by a shareholder.

3.		The Committee may consider nominations from shareholders for the Board at such times as the Committee meets to consider new nominees for the Board. The Committee shall have the sole discretion to determine the candidates to present to the Board and, in such cases where required, to shareholders. Recommendations for trustee nominees should, at a minimum, be accompanied by the following:

•

the name, address, and business, educational, and/or other pertinent background of the person being recommended;

	•		a statement concerning whether the person is an “interested person” as defined in the Investment Company Act of 1940;

	•		any other information that the Funds would be required to include in a proxy statement concerning the person if he or she was nominated; and

	•		the name and address of the person submitting the recommendation and, if that person is a shareholder, the period for which that person held Fund shares.

		The recommendation also can include any additional information which the person submitting it believes would assist the Committee in evaluating the recommendation.

4.		Shareholders should note that a person who owns securities issued by Massachusetts Mutual Life Insurance Company (the parent company of the Funds’ investment adviser) would be deemed an “interested person” under the Investment Company Act of 1940. In addition, certain other relationships with Massachusetts Mutual Life Insurance Company or its subsidiaries, with registered broker-dealers, or with the Funds’ outside legal counsel may cause a person to be deemed an “interested person.”

5.		Before the Committee decides to nominate an individual as a trustee, Committee members and other directors customarily interview the individual in person. In addition, the individual customarily is asked to complete a detailed questionnaire which is designed to elicit information which must be disclosed under SEC and stock exchange rules and to determine whether the individual is subject to any statutory disqualification from serving as a trustee of a registered investment company.

Item 11. Controls and Procedures.

Based on their evaluation of the registrant’s disclosure controls and procedures (as defined in rule 30a-3(c) under the Investment Company Act of 1940 (17 CFR 270.30a-3(c)) as of 08/31/2008, the registrant’s principal executive officer and principal financial officer found the registrant’s disclosure controls and procedures to provide reasonable assurances that information required to be disclosed by the registrant in the reports that it files under the Securities Exchange Act of 1934 (a) is accumulated and communicated to registrant’s management, including its principal executive officer and principal financial officer, to allow timely decisions regarding required disclosure, and (b) is recorded, processed, summarized and reported, within the time periods specified in the rules and forms adopted by the U.S. Securities and Exchange Commission.

There have been no changes in the registrant’s internal controls over financial reporting that occurred during the registrant’s second fiscal quarter of the period covered by this report that have materially affected, or are reasonably likely to materially affect, the registrant’s internal control over financial reporting.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


Oppenheimer Principal Protected Trust III

By:		/s/ John V. Murphy
		John V. Murphy
		Principal Executive Officer

Date:		10/13/2008

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.


By:		/s/ John V. Murphy
		John V. Murphy
		Principal Executive Officer

Date:		10/13/2008

By:		/s/ Brian W. Wixted
		Brian W. Wixted
		Principal Financial Officer

Date:		10/13/2008


Realized and Unrealized Gain (Loss)

Net realized gain (loss) on:
Investments:
Unaffiliated companies	$	536,670
Affiliated companies		(301,120	)
Distributions received from affiliated companies		3,750,843
Closing and expiration of futures contracts		(747,411	)

Net realized gain		3,238,982
Net change in unrealized depreciation on:
Investments		(8,530,743	)
Futures contracts		(9,030	)

Net change in unrealized depreciation		(8,539,773	)

Net Decrease in Net Assets Resulting from Operations	$	(4,712,422	)

(a)		(1) Exhibit attached hereto.

		(2) Exhibits attached hereto.

		(3) Not applicable.

(b)		Exhibit attached hereto.