TAX-FREE FIXED INCOME FUND III FOR PUERTO RICO RESIDENTS, INC.

FUND PERFORMANCE

A TRACK RECORD OF CONSISTENT, TAX-ADVANTAGED INCOME

The Fund’s investment objective is to provide its shareholders with current income, while preserving capital.  In fact, as noted in the table below, the Fund has distributed significant cumulative dividends to its shareholders since inception.

Measured according to its investment objectives – i.e., cumulative dividends and preservation of the Fund’s net asset value (NAV)[1] – the Fund has delivered positive returns over the past one-, three- and five-year periods, as well as since inception.

Note: Fund inception of 8/31/04. Pre-cash period defined as inception through 12/31/12, Crash defined as 12/31/12 through 12/31/15; post crash defined as 12/31/15 through 6/30/21. All other figures as of 6/30/21. Cash returns defined as cumulative cash dividends plus increase (decrease) in net asset value (NAV) over period, relative to starting NAV.

THE BOARD'S OVERSIGHT OF THE FUND'S PERFORMANCE

As a result of prudent investment management, overseen by its Board, the Fund has delivered positive cash returns over its lifetime, in spite of significant market challenges.

In fact, the Fund performed well from its inception through 2012.  The crash of the Puerto Rico municipal bond market beginning in 2013 through the end of 2015 affected all investors in these markets, as reflected in the Fund’s returns during that period.  However, under the Board’s leadership, the Fund continued to deliver monthly tax-advantaged income, conducting share repurchases to provide liquidity to selling shareholders while accreting value to those who held their investment.

Though the Puerto Rico bond markets have not yet fully recovered, the Fund has performed very strongly since the end 2015, as it has continued to provide its shareholders with consistent monthly income.  Today, the Fund delivers a very compelling, tax-advantaged yield, that shareholders are unlikely to find elsewhere at a similar risk profile.

THE FUND'S Positive outlook

As the Puerto Rico bond market emerges, both the income and liquidity of the Fund can be expected to improve.  At the current Board’s direction, the Fund continues to work tirelessly to maximize shareholder returns, including a registration with the U.S. Securities and Exchange Commission under the Investment Company Act of 1940, which may contribute to increased liquidity and reduced market discount to NAV, paving the way for further positive returns.  The Board is keenly aware of the need for liquidity in the Fund shares and will continue to make this a strategic priority.

[1] Annual returns based on cumulative dividends and NAV preservation defined as cumulative cash dividends plus increase (decrease) in net asset value (NAV) over period, relative to starting NAV.

[2] Fund inception of 8/31/04. Pre-cash period defined as inception through 12/31/12, Crash defined as 12/31/12 through 12/31/15; post crash defined as 12/31/15 through 6/30/21. All other figures as of 6/30/21. Cash returns defined as cumulative cash dividends plus increase (decrease) in net asset value (NAV) over period, relative to starting NAV.