The Tax-Free Puerto Rico Fund, Inc. (the "Fund") is pleased to present its Annual Report to Shareholders for the fiscal year ended December 31, 2017.

201 ANNUAL REPORT

Dear Shareholder: The Tax-Free Puerto Rico Fund, Inc. (the "Fund") is pleased to present its Annual Report to Shareholders for the fiscal year ended December 31, 2017. INVESTMENT OBJECTIVE The Fund's investment objective is to provide investors in its Common Stock with a high level of current income that, for Puerto Rico investors, is exempt from U.S. Federal and Puerto Rico income taxes, consistent with the preservation of capital. To achieve its investment objective, the Fund invests at least 67% of its total assets in a non-diversified portfolio of taxable and tax-exempt securities issued by Puerto Rico issuers and up to 33% in securities issued or guaranteed by the U.S. Government and its agencies and instrumentalities as well as other non-puerto Rico issuers. Currently, the Puerto Rico bond market is experiencing a period of high volatility, with Puerto Rico bonds trading at historically lower prices and higher yields. In view of these volatile market conditions, the Puerto Rico Office of Commissioner of Financial Institutions (the "OCFI") has granted to the Fund a temporary regulatory waiver through June 30, 2018, from the Fund's Puerto Rico investment requirement in Puerto Rico securities as well as the Fund's leverage limitation of 50% of its total assets and 200% asset coverage requirement described below. The effectiveness of such waiver may be extended at the OCFI's discretion. It is the Fund's intention to maintain compliance therewith as market conditions permit, though there is no assurance the Fund will be able to do so. Based on the representations and opinion of UBS Asset Managers of Puerto Rico, a division of UBS Trust Company of Puerto Rico, as the Investment Adviser, and consistent with its investment objective, the OCFI has also granted to the Fund no-objection relief with respect to the Fund s investment-grade credit rating requirement for Puerto Rico municipal securities. This permits the Fund to continue to invest in Puerto Rico municipal securities that do not have an investment-grade credit rating notwithstanding that the current credit rating of such securities is below investment-grade, under certain conditions and at the discretion of the Investment Adviser. Such no-objection relief is effective through June 30, 2018 or such other later date which may be approved by the OCFI. THE BENEFITS AND RISKS OF LEVERAGE The Fund is permitted to use leverage in an amount not to exceed 50% of the Fund's total assets. In addition, the Fund may also borrow for temporary or emergency purposes in an amount of up to an additional 5% of its total assets. The Fund obtains leverage by borrowing, using its investment portfolio as well as securities otherwise obtained as collateral.

Leverage can produce additional income when the income derived from investments financed with borrowed funds exceeds the cost of such borrowed funds. In such an event, the Fund's net income will be greater than it would be without leverage. On the other hand, if the income derived from securities purchased with borrowed funds is not sufficient to cover the cost of such funds, the Fund's net income will be less than it would be without leverage. FUND PERFORMANCE During the fiscal year ended December 31, 2017, the Fund experienced a total return of -42.37% based on the market value of the shares of the Fund's common stock and -31.68% based on the net asset value ("NAV") per-share at such date. This figure compares to a market return of 16.08% and a NAV return of 18.66%, both for fiscal year ended December 31, 2016. At December 31, 2017, the market value of the shares of the Fund's common stock was $1.54, representing 63.1% of the NAV per-share of $2.44. The comparable figure for 2016 was a market value of $2.88, representing 75.2% of the NAV per-share of $3.83. The average dividend yield during the fiscal year ended December 31, 2017, computed over the original investment of $10 per share, was 2.43%. This figure compares to a dividend yield of 4.68% for fiscal year 2016. The basis for the dividend distributions is the net investment income for tax purposes. Note 9 to the Fund's financial statements sets forth the reconciliation between the book net investment income and the tax investment income used for dividend payments. The Fund's investment portfolio is comprised of various security classes. UBS Asset Managers of Puerto Rico, a division of UBS Trust Company of Puerto Rico, as the Investment Adviser, considers numerous characteristics of each asset class, in an effort to meet the Fund's investment objective. A large number of the securities in which the Fund has invested have call dates that vary from three (3) months to ten (10) years (at the time of purchase). The call dates and final maturities of the portfolio are included in the Schedule of Investments that forms part of the accompanying financial statements. Figure 1 below reflects the breakdown of the investment portfolio as of December 31, 2017. For details of the security categories below, please refer to the enclosed Schedule of Investments. The following discussion contains financial terms that are defined in the attached Glossary of Fund Terms. 2

Asset Allocation as of December 31, 2017 AFICA Bonds 1.39% US Municipals 13.59% PR Tax-Exempt Obligations 1.38% Mortgage Backed Securities 3.64% PR Agencies 31.78% US Government, Agencies & Instrumentalities 48.22% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% ECONOMIC OVERVIEW The U.S. economy grew 2.6% for the quarter ended December 31, 2017 compared to an increase of 3.2% in the previous quarter. Labor conditions continue to improve with the unemployment rate at 4.1% as of the fourth quarterend of 2017. Inflation has been running below the 2% per year target of the U.S. Federal Reserve (the "Fed") and longer-term inflation expectations have remained stable. The Fed raised the federal funds rate three times during the Fund's fiscal year. The first increase occurred during March 2017 when the Fed raised the federal funds rate from a range of 0.50% to 0.75% to a range of 0.75% to 1.00%. On June 2017, the Fed raised the federal funds rate to a range of 1.00% to 1.25%. At its December 2017 meeting the Fed raised the rate from a range of 1.00% to 1.25% to a range of 1.25% to 1.50% and set a potential path of future hikes for 2018. The Fed will assess progress toward its objectives of maximum employment and 2% inflation. This assessment will take into consideration a wide range of information, including measures of labor market conditions, indications of inflation pressures and inflation expectations, and readings on financial and international developments. The yield on the ten-year U.S. Treasury Note closed at 2.40% on December 31, 2017 down from 2.44% on December 31, 2016. The stock markets have reacted positively to a scenario of moderate growth, low interest rates and low inflation. Major indices are trading at all-time highs; however, concerns about global growth and geopolitical risks in the Middle East, North Korea and Russia have 3

market participants on edge. The volatility in the price of oil has also impacted the market. The Puerto Rico economy is closely linked to that of the United States. Many of the important variables that affect economic growth in Puerto Rico, such as imports, exports, direct investment, interest rates, transfer payments, inflation, and tourism expenditures, are directly related to developments in the United States. The uncertainty created by the instability of the Puerto Rico government's finances, including a recurring budget deficit and the PROMESA Title III filings, have caused a prolonged contraction of economic activity. See Puerto Rico Government and Recent Developments section below for more information. Puerto Rico Government and Recent Developments: The Puerto Rico Government reported net revenues for the month of December 2017 of $697.6 million, a $109 million year-over-year reduction and $65.8 million below estimates. However, the Puerto Rico economic environment continues to remain uncertain. Fitch Ratings ("Fitch"), Moody s Investors Service ("Moody's"), and S&P Global Ratings ("S&P") have downgraded the general obligation bonds ( GOs ) of the Commonwealth of Puerto Rico, as well as the obligations of certain Commonwealth agencies and public corporations, including sales tax debt issued by the Puerto Rico Sales Tax Financing Corporation ( COFINA ) and the Employees Retirement System of the Government of the Commonwealth of Puerto Rico ("ERS"), on numerous occasions. Most recently, Fitch downgraded the GOs to D (default) and its ratings for the Commonwealth as a bond issuer, to RD on July 6, 2016, and for COFINA and ERS, both to D on July 3, 2017 and July 20, 2017, respectively. S&P had previously downgraded ERS, to "C" on September 10, 2015, and subsequently the GOs, to D (default) on July 7, 2016, and the debt ratings for the Government Development Bank for Puerto Rico, to D (default) on September 8, 2016, and for COFINA, to D (default) on June 6, 2017. Finally, Moody s downgraded ERS, to "C" on April 5, 2017, and the GOs and COFINA s senior bonds, to Ca on October 11, 2017. All non-default ratings carry a negative outlook. On June 30, 2016, the Puerto Rico Oversight, Management, and Economic Stability Act ("PROMESA") was signed into law. It created the Financial Oversight and Management Board for Puerto Rico (the "Oversight Board") with broad powers designed to help the Commonwealth balance its finances, restructure its debt, and ensure a return to the markets. The enactment of PROMESA operated as a stay of any actions or proceedings against the Commonwealth and its agencies and instrumentalities by its creditors, which stay was in effect through May 1, 2017. As of that date, the Oversight Board has filed five (5) petitions to commence cases under Title III of PROMESA in the U.S. 4

District Court for the District of Puerto Rico (the "District Court") with respect to all debt issued by: the Commonwealth of Puerto Rico; COFINA; ERS; the Puerto Rico Highways and Transportation Authority; and the Puerto Rico Electric Power Authority ( PREPA ). The filing of these petitions triggered a new stay of any actions or proceedings against these five debtors. In the COFINA Title III case, the District Court granted a motion by Bank of New York Mellon ("BNYM"), the COFINA bond trustee, ruling that all funds for payment of interest and principal on COFINA bonds were to be held by BNYM pending the resolution of the various conflicting claims of holders and insurers of COFINA bonds. Additionally, the Commonwealth has asserted claims against the collateral securing the COFINA bonds, and there is litigation pending between the Commonwealth and COFINA regarding ownership of this collateral. As a result, all interest and principal payments on the COFINA bonds are currently suspended, pending resolution of the various conflicting claims through either a decision from the District Court or a mediated settlement. The Commonwealth, COFINA, certain COFINA bondholders, and others are currently participating in a mediation process, led by a team of five judges appointed by the District Court. With respect to the ERS bonds, certain ERS bondholders reached a consensual agreement with the Commonwealth, ERS, and the Oversight Board which, among other things, provided that (i) all employer contributions received by ERS during the pendency of the PROMESA stay would be segregated in an account for the benefit of holders of the ERS bonds, and (ii) ERS would transfer to BNYM, as ERS' fiscal agent, the amounts required each month for the payment of interest on the ERS bonds. On June 5, 2017, the Puerto Rico Fiscal Agency and Financial Advisory Authority (known by its Spanish initials "AAFAF"), on behalf of ERS, delivered a non-funding notice as permitted under the agreement, stating that ERS would discontinue transferring the amounts necessary to pay interest due on the ERS bonds commencing on July 1, 2017 and going forward. Certain ERS bondholders filed a motion to lift the stay with the District Court on May 31, 2017, to seek adequate protection of the ERS bondholders' collateral. The Puerto Rico Legislature then adopted a joint resolution on June 24, 2017, which, among other things, purported to terminate the obligations of all Puerto Rico central government instrumentalities, as well as all public corporations and municipalities, to transmit any employer contributions to ERS. On June 28, 2017, the District Court ordered the ERS creditors, the Oversight Board, and the Commonwealth to attempt to reach another consensual agreement, in line with what was previously agreed. On July 17, 2017, the District Court issued an order approving the joint stipulation (the "Joint Stipulation") entered into among certain ERS bondholders, the Commonwealth, ERS, and the Oversight Board, which provides for the payment of interest on the ERS bonds through the date that the District Court enters a ruling in an action seeking declaratory relief regarding the validity of ERS 5

bondholders liens and security interests in certain collateral, as well as the deposit by the Commonwealth of approximately $18,500,000 in employer contributions from municipalities and public corporations into a segregated account of ERS for the benefit of ERS bondholders in July, August, September, and October 2017 (the "Declaratory Relief Action"). On November 3, 2017, the parties each filed motions in the Declaratory Relief Action. On December 13, 2017, the District Court heard argument on these motions and reserved its ruling. In addition to defending the ERS bondholders collateral in the Declaratory Relief Action, on July 27, 2017, certain ERS bondholders also instituted a lawsuit challenging the Puerto Rico Legislature s June 24, 2017 joint resolution purporting to terminate employer contributions to ERS; that litigation remains pending. The Fund received the interest payments on the ERS bonds through and including November 1, 2017. However, with respect to the November 1st interest payment, AAFAF argued before the District Court that the funding by BNYM of such payment was in violation of the automatic stay applicable in ERS s Title III case and demanded that BNYM reverse the payment. On December 28, 2017, the Court issued an order (the "December 2017 Order") stating that the Joint Stipulation required continued payment of monthly interest on the ERS bonds in the aggregate amount of $13,876,582.48, beyond October 31, 2017, until such date as the District Court issues a decision in the Declaratory Relief Action. The December 2017 Order also contemplated that the monthly interest payments required thereunder be applied to all series of the ERS bonds, including the capital appreciation bonds that would otherwise not be entitled to current interest, with such payments expressly constituting adequate protection payments for all ERS bondholders in accordance with the December 2017 Order, PROMESA, and the U.S. Bankruptcy Code. Accordingly, all interest payments made in accordance with the December 2017 Order are to be allocated, on a pro rata basis, using the applicable interest rate for ERS bonds that are term bonds and the yield to maturity for ERS bonds that are capital appreciation bonds, as specified in the applicable official statement for the respective bond series. The District Court reserved for future consideration the final allowance and treatment of such adequate protection payments in determining the allowed amount of the claims under the ERS bonds in the ERS Title III case. The continuation of these interest payments will depend on when the Court issues a ruling on the Declaratory Relief Action or the exhaustion of the amounts held in the segregated account for the payments. Any further payment default on Puerto Rico bonds held by the Fund can have a material adverse effect on the dividends payable to Fund shareholders. On March 14, 2018, the U.S. Senate passed the Economic Growth, Regulatory Relief, and Consumer Protection Act (S. 2155), which among other things, amends the U.S. Investment Company Act of 1940, as amended (the "1940 Act"), to repeal the exemption from its coverage of investment companies created under the laws of Puerto Rico, the U.S. Virgin Islands, or any other U.S. 6

possession. The bill amends the 1940 Act by eliminating the exemption provided to U.S. possessions under its Section 6(a)(1). The repeal of the exemption will take effect three (3) years after enactment of the bills. The amendment also provides the U.S. Securities and Exchange Commission ( SEC ) with the authority to extend the three-year safe harbor by up to an additional three (3) years. According to a report issued by the House Financial Services Committee in connection with its recommendation to pass a similar amendment contained in H.R. 1366, the elimination of the 1940 Act exemption of investment companies headquartered in a U.S. territory would subject them to existing U.S. federal requirements for investment companies, such as registering with the SEC, meeting minimum capital requirements, making disclosures to investors, and registering the securities they offer. There is no assurance as to whether this legislation will be modified or otherwise approved by the U.S. House of Representatives or whether the President will sign such legislation into law, or what its ultimate impact on the Fund may be. On September 20, 2017, the passage of Hurricane María through Puerto Rico is considered the most destructive storm to hit Puerto Rico in almost 90 years. It knocked out all electric power, destroyed more than 100,000 homes, and ruptured bridges and other public infrastructure. Puerto Rico is facing substantial economic and revenue disruption in the near term, and diminished output and revenue has negatively impacted the Puerto Rico government's ability to repay its debt. While it remains too early to determine the long-term economic effects post-hurricane María, the long-term repercussions may be mixed. On one hand, an exodus of residents relocating to the U.S. mainland has eroded Puerto Rico's economic base. However, significant amounts of U.S. federal aid and private insurance proceeds will be available to aid in rebuilding, thereby spurring economic growth and infrastructure replacement. Most recently, on February 9, 2018, President Trump signed into law the Bipartisan Budget Act of 2018, which includes a disaster relief package of up to $16 billion for Puerto Rico and the U.S. Virgin Islands, to be used for the Medicaid program and projects under the Community Development Block Grant. Governor Rosselló has also announced plans to privatize PREPA and the generation of energy in Puerto Rico, and award a concession of the distribution and transmission of energy. Thereafter, on February 13, 2018, the Commonwealth, PREPA, and the Puerto Rico Aqueducts and Sewers Authority submitted revised fiscal plans to the Oversight Board for its review and certification. Such fiscal plans will establish the fiscal roadmap for the Commonwealth through the fiscal year ending in 2023. The Oversight Board has raised objections to such fiscal plans, which will most likely result in their revision by the Commonwealth. As part of its investment portfolio, the Fund holds COFINA bonds, the payment of principal and interest of which is backed by Puerto Rico sales taxes. On or about May 5, 2017, the Financial Oversight and Management Board for Puerto Rico filed a petition to apply Title III of PROMESA to the Puerto Rico Sales Tax 7

Financing Corporation. On May 28, 2017, the Title III court suspended all interest payments on the COFINA bonds pending further determination by the court. Since the court-mandated suspension of interest payments, the Fund has discontinued the accrual of interest payments on COFINA coupon bonds as of May 1, 2017. At December 31, 2017, the aggregate value of the COFINA coupon bonds was $11,283,097, representing 41.53% of the Fund s net assets, and unpaid contractual interest on such bonds amounting to $1,539,400. The securities have been identified in the accompanying Schedule of Investments. Any future developments in this respect could result in additional interruptions in cash flow on debt payments, which may result in more price volatility, across Puerto Rico securities. There can be no assurance that any additional defaults by the Commonwealth and other Commonwealth instrumentalities will not have an additional adverse impact on the Fund s net investment income and its ability to declare and pay dividends in the future. SHARE REPURCHASE PROGRAM The Fund's Board of Directors authorized the repurchase of the Fund's shares of common stock in the open market when such shares are trading at or below NAV of the shares, up to 50% of the aggregate number of shares of common stock issued by the Fund. During the current fiscal year, the Shares continued to experience a period of limited liquidity and/or trading at a discount to their net asset value. Although the holders of the Shares do not have the right to redeem their Shares inasmuch as the Fund is closed-ended, the Fund may, at its sole discretion, effect repurchases of Shares in the open market, in an attempt to increase the liquidity of the Shares as well as reduce any market discount from their corresponding net asset value. There is no assurance that, if such action is undertaken, it will result in the improvement of the Shares' liquidity or reducing any such market discount. Moreover, while such undertaking may have a favorable effect on the market price of the Shares, the repurchase of the Shares by the Fund will decrease the Fund's total assets and therefore, have the effect of increasing the Fund's expense ratio. Repurchases by the Fund must be conducted in accordance with the terms and conditions contained in Article 10 of Regulation No. 8469 issued by the OCFI and procedures adopted by the Fund's Board of Directors to address potential conflicts of interest with affiliated broker-dealer UBS Financial Services Incorporated of Puerto Rico. Among other things, such regulation and procedures require that to the extent that various sellers indicate interest in selling shares of the Fund, it will purchase such shares starting with the lowest offered price and in the following order of priority for each price: (1) individual and corporate investors, irrespective of the broker-dealer that serves as record owner of the shares to be repurchased; (2) the trading desks of Puerto Rico broker-dealers which are unaffiliated with the Fund; and (3) the trading desk of 8

UBS Financial Services Incorporated of Puerto Rico. If sellers offer more shares for repurchase than the Fund is able to accept at any particular price for a particular level of priority, repurchase offers will be accepted on a pro-rata basis within that particular level of priority. Additionally, to the extent that UBS Financial Services Incorporated of Puerto Rico elects to offer the Fund's shares of Common Stock for repurchase from its respective securities inventory, it must do so at its corresponding offer price per share reported to the public. The Fund's Share Repurchase Program is implemented on a discretionary basis, under the direction of the Investment Adviser. The Fund's repurchase activity for each fiscal year is disclosed in the Annual Report to Shareholders attached hereto (see Note 3), as well as the quarterly reports to shareholders. The undertaking of a repurchase program does not obligate the Fund to purchase specific amounts of Shares. During the fiscal year ended December 31, 2017, the Fund repurchased 5,938 shares of its common stock in the open market, which were used to cover shares for the dividend reinvestment plan. The total shares repurchased as of December 31, 2017 amounts to 7,411,587 and represents 40.04% of the issued shares of the Fund's common stock since inception. OUTLOOK At its March 2018 meeting the Fed raised the federal fund rates from a range of 1.25% to 1.50% to a range of 1.50% to 1.75% and set a potential path of future hikes for the rest of the year. Under the current volatile market conditions, the Investment Adviser reconfirms its commitment to providing professional asset management services to the Fund. UBS Asset Managers of Puerto Rico, a division of UBS Trust Company of Puerto Rico, as Investment Adviser 9

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GLOSSARY OF FUND TERMS Bond - security issued by a government or corporation that obligates the issuer to pay interest income to the bondholder at regular intervals and to repay the entire amount borrowed at maturity date. Closed-end fund - a fund that issues a fixed amount of common stock. Coupon- the interest rate that a bond promises to pay over its life, expressed as a percent over its face value. Dividend - a per-share distribution of the income earned from a fund s portfolio holdings. When a dividend distribution is made, a fund s net asset value drops by the amount of the distribution because the distribution is no longer considered part of the fund s assets. Expense ratio- the percentage of a fund s average net assets attributable to common shareholders used to pay fund operating expenses. The expense ratio takes into account, investment t management fees, administration fees as well as other operating expenses such as legal, audit, insurance and shareholder communications. Interest Rate Swap an agreement to exchange one interest rate stream for another. No principal changes hands. Maturity- the date on which the face value of a bond must be repaid. For a portfolio it is represented in years and measures the average length to maturity of all the bonds in the portfolio. This measure does not take into account embedded options in the bonds comprising the portfolio. Net Asset Value (NAV) Per Share the NAV per share is determined by subtracting the fund s total liabilities from its total assets, and dividing that amount by the number of fund shares of Common Stock outstanding. Notional amount - refers to the specified dollar amount of the swap in which the exchange of interest payment is based. Premium/Discount- the difference between the bid price of the shares of a fund and their NAV. In a case of a premium, the bid price is above the NAV. In the case of a discount, the bid price is below the NAV. These amounts can be expressed as numerical values or percentages. The higher the percentage, the larger the difference (positive or negative) between the market price and the NAV of a fund. Total Investment Return - the change in value of a fund investment over a specified period of time, taking into account the change in a fund s market price and the reinvestment of all fund distributions. Turnover Ratio the turnover ratio represents the fund s level of trading activity. The Fund divides the lesser of purchases or sales (expressed in dollars and excluding all securities with maturities of less than one year) by the Fund s average monthly assets. Undistributed income- the net income of a fund that has not been distributed to common shareholders as of the latest available audited financial statements. In the case of the target maturity type-funds, it also includes the amounts to be distributed after the target date to return the initial (i.e. $10) investment.

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TAX-FREE PUERTO RICO FUND, INC. The following table includes selected data for a share outstanding throughout each period and other performance information derived from the financial statements. It should be read in conjunction with the financial statements and notes thereto. FINANCIAL HIGHLIGHTS For the fiscal year ended December 31, 2017 For the fiscal year ended December 31, 2016 For the fiscal year ended December 31, 2015 For the fiscal year ended December 31, 2014 For the period from February 1, 2013 to December 31, 2013 Increase (Decrease) in Net Asset Value: Per Share Net asset value applicable to common stock, beginning of period $ 3.83 $ 3.63 $ 4.93 $ 4.67 9.11 Operating Net investment income (a) 0.22 0.43 0.53 0.62 0.70 Performance: Net realized (loss) gain and unrealized (depreciation) appreciation from investments and swaps (a) (1.37) 0.24 (1.38) 0.14 (4.54) Total from investment operations (1.15) 0.67 (0.85) 0.76 (3.84) Less: Dividends from net investment income to common shareholders (0.24) (0.47) (0.56) (0.59) (0.62) Discount on repurchase of common stock 0.00* 0.00* 0.11 0.09 0.02 Net asset value applicable to common stock, end of period 2.44 $ 3.83 $ 3.63 $ 4.93 4.67 Market value, end of period (b) 1.54 $ 2.88 $ 2.79 $ 4.57 4.51 Total (b) (f) Based on market value per share (42.37)% 16.08% (30.00)% 13.58% (48.35)% Investment Return: (f) Based on net asset value per share (31.68)% 18.66% (15.59)% 18.34% (43.93)% Ratios: (c) (d) (e) Expenses to average net assets applicable to common shareholders - net of waived fees 4.19% 3.14% 2.35% 1.62% 1.96% (c) (e) Operating expenses to average net assets applicable to common shareholders - net of waived fees 2.91% 2.45% 1.75% 1.12% 1.42% (c) Interest and leverage related expenses to average net assets applicable to common shareholders 1.28% 0.69% 0.60% 0.50% 0.54% (c) (e) Net investment income to average net assets applicable to common shareholders - net of waived fees 6.93% 10.70% 12.64% 12.07% 10.12% Supplemental Net assets applicable to common shareholders, Data: end of period (in thousands) 27,166 $ 42,532 $ 40,359 $ 65,391 77,395 Portfolio turnover 16.01% 52.30% 8.83% 3.75% 6.88% Portfolio turnover excluding the proceeds from calls and maturities of portfolio securities and the proceeds from mortgage backed securities paydowns 15.29% 9.13% 8.83% 3.75% 6.88% (a) * Discount on repurchase of common stock represents an amount that rounds to zero. Refer to Note 3. (b) Period-end market values provided by UBS Financial Services Incorporated of Puerto Rico, a dealer of the Fund's shares and an affiliated party. The market values shown may reflect limited trading in the shares of the Fund. (c) (d) Expenses include both operating and interest and leverage related expenses. (e) Based on average outstanding common shares of 11,113,431; 11,113,114; 11,949,472; 14,498,805; and 18,284,960 for the fiscal year ended December 31, 2017; December 31, 2016; December 31, 2015; December 31, 2014, for the period from February 1, 2013 to December 31, 2013, respectively. Based on average net assets applicable to common shareholders of $36,084,852; $44,163,113; $50,487,873; $73,891,186; and $135,150,407 for the fiscal year ended December 31, 2017; December 31, 2016; December 31, 2015; December 31, 2014, for the period from February 1, 2013 to December 31, 2013, respectively. Ratios for the period ended December 31, 2013 were annualized using a 365 day base. The effect of the expenses waived for the fiscal year ended December 31, 2017; December 31, 2016; December 31, 2015; December 31, 2014, and for the period from February 1, 2013 to December 31, 2013 was to decrease the expense ratios, thus increasing the net investment income ratio to average net assets by 0.95%; 0.75%; 0.81%; 0.93%; and 0.59%, respectively. (f) Dividends are assumed to be reinvested at the per-share net asset value on the ex-dividend date. Investment return is not annualized for the period from February 1, 2013 to December 31, 2013. The accompanying notes are an integral part of these financial statements. 1

TAX-FREE PUERTO RICO FUND, INC. SCHEDULE OF INVESTMENTS December 31, 2017 Face Amount Issuer Coupon Next Callable Date E Puerto Rico Tax-Exempt Obligations - 2.75% of net assets applicable to common shareholders, total cost of $686,846 $ 33,443 G H F Community Endowment-Collateralized by FNMA Pool 564115 8.50% 12/01/30 $ 33,772 199,441 G H F Community Endowment-Collateralized by FNMA Pool 564122 8.00% 01/01/31 223,077 210,476 G H F Community Endowment-Collateralized by FNMA Pool 564129 8.00% 02/01/31 234,890 165,404 G H F Community Endowment-Collateralized by FNMA Pool 564130 8.50% 01/01/31 177,022 52,161 G H F Community Endowment-Collateralized by FNMA Pool 567013 8.00% 03/01/31 53,394 25,920 G H F Community Endowment-Collateralized by FNMA Pool 573425 8.00% 02/01/31 25,983 $ 686,845 D $ 748,138 Puerto Rico Agencies Bonds and Notes - 60.51% of net assets applicable to common shareholders, total cost of $44,658,269 $ 2,050,000 J O Employees Retirement System 6.15% 07/01/18 07/01/38 $ 763,625 1,300,000 J O Employees Retirement System 6.45% 07/01/18 07/01/55 484,250 1,400,000 J O Employees Retirement System 6.30% 07/01/18 07/01/36 521,500 1,400,000 J O Employees Retirement System 6.30% 07/01/18 07/01/37 521,500 1,400,000 J O Employees Retirement System 6.30% 07/01/18 07/01/38 521,500 2,000,000 J O Employees Retirement System 6.55% 07/01/18 07/01/55 745,000 2,000,000 J O Employees Retirement System 6.55% 07/01/18 07/01/56 745,000 800,000 J O Employees Retirement System 6.55% 07/01/18 07/01/57 298,000 1,000,000 J O Employees Retirement System 6.55% 07/01/18 07/01/58 372,500 290,000 I N Puerto Rico Electric Power Authority 5.25% 07/01/20 07/01/27 95,338 70,000 I N Puerto Rico Electric Power Authority 5.00% Non-callable 07/01/18 23,013 25,000 I N Puerto Rico Electric Power Authority 5.00% Non-callable 07/01/19 8,219 40,000 I N Puerto Rico Electric Power Authority 5.25% Non-callable 07/01/18 13,150 15,000 I N Puerto Rico Electric Power Authority 5.00% 02/22/18 07/01/18 4,931 50,000 I N Puerto Rico Electric Power Authority 5.00% 02/22/18 07/01/20 16,438 500,000 I N Puerto Rico Infrastructure Financing Authority 5.00% 02/22/18 07/01/41 20,000 850,000 I K O Puerto Rico Sales Tax 6.05% 02/08/18 07/01/39 340,000 850,000 I K O Puerto Rico Sales Tax 6.05% 02/08/18 08/01/39 340,000 2,750,000 I K O Puerto Rico Sales Tax 6.35% 02/08/18 05/01/57 1,100,000 2,750,000 I K O Puerto Rico Sales Tax 6.35% 02/08/18 07/01/57 1,100,000 2,750,000 I K O Puerto Rico Sales Tax 6.35% 02/08/18 07/01/57 1,100,000 2,575,900 I K O Puerto Rico Sales Tax 6.00% 08/01/19 08/01/42 251,150 6,276,380 I K O Puerto Rico Sales Tax 6.50% 08/01/19 08/01/44 611,947 2,800,000 I K O Puerto Rico Sales Tax 6.05% 02/22/18 08/01/29 238,000 6,725,000 I K O Puerto Rico Sales Tax 6.13% 08/01/18 08/01/37 2,690,000 8,780,000 I K O Puerto Rico Sales Tax 6.13% 08/01/18 08/01/38 3,512,000 $ 51,447,280 $ 16,437,061 Puerto Rico Agencies Zero Coupons Bonds - 2.99% of net assets applicable to common shareholder, total cost of $9,872,633 $ 35,900,000 I K O Puerto Rico Sales Tax 0.00% Non-callable 08/01/35 $ 810,981 Maturity Date Value AFICA Bond Exempt - 2.78% of net assets applicable to common shareholders, total cost of $3,145,000 $ 1,230,000 N Palmas del Mar Country Club Proj ect - Guaranteed by the Puerto Rico 7.00% 02/22/18 12/20/18 $ 295,200 Tourism Development Fund 1,915,000 N Palmas del Mar Country Club Proj ect - Guaranteed by the Puerto Rico 7.25% 02/22/18 12/20/30 459,600 Tourism Development Fund $ 3,145,000 A $ 754,800 Principal Outstanding Amount Mortgage-Backed Securities - 6.24% of net assets applicable to common shareholders, total cost of $2,862,519 $ 2,862,519 B G Doral Financial Participation Certificate 2001 Series A 7.58% 10/01/35 $ 1,695,183 Puerto Rico GNMA Taxable - 0.22% of net assets applicable to common shareholders, total cost of $59,500 $ 59,500 C F GNMA Pool 545812 7.00% 04/15/31 $ 60,752 Puerto Rico FNMA Taxable - 0.81% of net assets applicable to common shareholders, total cost of $211,894 $ 49,217 F FNMA Pool 573429 7.00% 03/01/31 $ 53,381 40,387 F FNMA Pool 573431 7.50% 03/01/31 40,867 80,422 F FNMA Pool 573449 7.00% 04/01/31 83,148 41,868 F FNMA Pool 573450 7.50% 04/01/31 42,423 $ 211,894 D $ 219,819 Face Amount US Government, Agency and Instrumentalities - 96.35% of net assets applicable to common shareholders, total cost of $26,043,100 $ 4,100,000 F Federal Farm Credit 3.00% 01/29/18 05/19/36 $ 3,982,551 2,000,000 F Federal Farm Credit 2.95% Non-callable 12/28/37 1,947,172 3,500,000 F Federal Home Loan Bank 3.24% 01/29/18 04/26/41 3,494,799 4,100,000 F Federal Home Loan Bank 3.00% 01/29/18 05/23/36 4,001,965 370,000 Federal Home Loan Bank 2.89% 01/29/18 08/09/41 344,984 9,000,000 F Federal Home Loan Bank 2.80% 04/27/18 10/27/36 8,558,343 2,805,000 F Federal Home Loan Bank 5.50% Non-callable 07/15/36 3,844,311 $ 25,875,000 $ 26,174,125 The accompanying notes are an integral part of these financial statements. 2

TAX-FREE PUERTO RICO FUND, INC. SCHEDULE OF INVESTMENTS December 31, 2017 Face Amount Issuer Coupon Next Callable Date E Maturity Date Value US Municipals - 27.16% of net assets applicable to common shareholders, total cost of $6,721,042 $ 2,000,000 M F City of Chicago O'Hare International Airport 6.85% 01/01/20 01/01/38 $ 2,165,780 1,380,000 F State of Illinois General Obligations 7.10% L 07/01/35 1,568,798 1,500,000 F State of Illinois General Obligations 7.35% L 07/01/35 1,734,255 250,000 F State of Illinois General Obligations 5.00% L 01/01/23 259,775 250,000 F State of Illinois General Obligations 5.15% L 01/01/24 259,200 250,000 F State of Illinois General Obligations 5.25% L 01/01/25 258,325 250,000 F State of Illinois General Obligations 5.35% L 01/01/26 258,023 840,000 M UNM Sandoval Regional Medical Center 4.50% 01/20/21 07/20/36 874,149 $ 6,720,000 $ 7,378,305 Total investments (199.80% of net assets applicable to common shareholders) Interest rate swaps (0.33% of net assets applicable to common shareholders) Other Assets and Liabilities, net (-100.13% of net assets applicable to common shareholders) Net assets applicable to common shareholders - 100% $ $ 54,279,164 89,683 (27,202,542) 27,166,305 A B C D E F G H I J K L M N O AFICA - Puerto Rico Industrial Tourism, Medical, Educational and Environmental Pollution Controls Financing Authority. Revenue bonds payable solely from cash flows generated by the underlying project. Certificates are collateralized by mortgage-backed obligations. They are subject to pre-payments or refinancing of the underlying mortgage instruments. As a result, the average life may be substantially less than the original maturity. The mortgage loans underlying these trust securities are guaranteed by the Federal Housing Administration ("FHA") or by the United States Veterans Administration ("VA"). GNMA - represents mortgage-backed obligations guaranteed by the Government National Mortgage Association. They are subject to principal paydowns as a result of pre-payments or refinancing of the underlying mortgage instruments. As a result, the average life may be substantially less than the original maturity. FNMA - represents mortgage-backed obligations guaranteed by the Federal National Mortgage Association. They are subject to principal paydowns as a result of pre-payments or refinancing of the underlying mortgage instruments. As a result, the average life may be substantially less than the original maturity. The issuer has the ability, but not the obligation, to call these securities on these dates. A portion or all of the security has been pledged as collateral for securities sold under repurchase agreements. Private Placement. The only source for payment of interest and principal is the collateral. Revenue Bonds - issued by agencies and payable from revenues and other sources of income of the agency as specified in the applicable prospectus. These bonds are not obligations of the Commonwealth of Puerto Rico. The bonds are limited, non-recourse obligations of the Employees Retirement System payable solely from, and secured solely by, employer contributions made after the date of issuance of the bonds. Puerto Rico Sales Tax Financing Corporation (the "Corporation") issues its Sales Tax Revenue Bonds to provide funds to the Commonwealth of Puerto Rico to be applied for various purposes. The bonds will be payable solely from and secured by a security interest granted under the Sales Tax Revenue Bond Resolution. These securities are subject to redemption prior to the maturity at the option of the issuer on any Business Day, at a redemption price, which is either not less than the securities face amount or make-whole as defined in the prospectus. Revenue Bonds - issued by agencies and payable from revenues and other sources of income of the agency as specified in the applicable prospectus. These securities have defaulted and are not currently accruing interest income. See Note 4 for further information. Bonds under Title III of the Puerto Rico Oversight, Management, and Economic Stability Act ("PROMESA"). See Note 4 for further information. The accompanying notes are an integral part of these financial statements. 3

TAX-FREE PUERTO RICO FUND, INC. STATEMENT OF ASSETS AND LIABILITIES December 31, 2017 Assets: Investments in securities: Securities pledged as collateral on repurchase agreements, at value, which has the right to be repledged (identified cost - $29,838,390) 30,750,003 Other securities, at value (identified cost - $64,422,413) 23,529,161 Cash 544,471 Real estate owned 122,549 Interest rate swaps, at value (Note 1) 89,683 Interest receivable 519,051 Prepaid expenses and other assets 8,764 Total assets 55,563,682 Liabilities: Securities sold under repurchase agreements, including $4,218,500 with affiliates 28,067,450 Dividends payable to common shareholders 83,360 Payables: Interest and leverage expenses 39,357 Investment advisory fees 11,547 Administration, custody, and transfer agent fees 9,062 59,966 Accrued expenses and other liabilities 186,601 Total liabilities 28,397,377 Net Assets Applicable to Common Shareholders: $ 27,166,305 Net Assets Applicable to Common Shareholders consist of: Capital stock, $0.01 par value, 98,000,000 shares authorized, 11,114,649 shares issued and outstanding $ 111,146 Additional paid-in capital 139,046,254 Undistributed net investment income (Note 1 and Note 9) 5,443,493 Accumulated net realized loss from investments, swaps and real estate owned (77,423,733) Unrealized net depreciation on investments, swaps and real estate owned (40,010,855) Net assets applicable to common shareholders 27,166,305 Net asset value applicable to common shares - per share; 11,114,649 shares outstanding $ 2.44 The accompanying notes are an integral part of these financial statements. 4

TAX-FREE PUERTO RICO FUND, INC. STATEMENT OF OPERATIONS For the fiscal year ended December 31, 2017 Investment Income: Interest $ 4,010,499 Expenses: Interest and leverage related expenses 461,394 Investment advisory fees 526,548 Administration, custody, and transfer agent fees 130,841 Professional fees 388,532 Directors' fees and expenses 39,399 Insurance expense 48,531 Mortgage servicing fees 204,245 Other 55,498 Total expenses 1,854,988 Waived investment advisory, administration, and transfer agent fees (344,480) Net expenses after waived fees by investment adviser, administration, and transfer agent 1,510,508 Net Investment Income: 2,499,991 Realized Gain (Loss) and Net realized loss on investments and real estate owned (110,795) Unrealized Appreciation Net realized gain on interest rate swaps 31,949 (Depreciation) on Change in unrealized appreciation (depreciation) on investments (14,982,119) Investments, Swaps, Change in unrealized appreciation (depreciation) on real estate owned (118,399) and Real Estate Owned: Change in unrealized appreciation (depreciation) on swaps 5,121 Total net realized and unrealized loss on investments, swaps and real estate owned (15,174,243) Net decrease in net assets resulting from operations $ (12,674,252) The accompanying notes are an integral part of these financial statements. 5

TAX-FREE PUERTO RICO FUND, INC. STATEMENT OF CHANGES IN NET ASSETS (Decrease) Increase in Net Assets: For the fiscal year ended December 31, 2017 For the fiscal year ended December 31, 2016 Net investment income $ 2,499,991 4,726,545 Net realized loss on investments and real estate owned (110,795) (3,820,745) Net realized gain (loss) on interest rate swaps 31,949 (190,755) Change in unrealized (depreciation) appreciation on investments (14,982,119) 6,394,237 Change in unrealized (depreciation) appreciation on real estate owned (118,399) 40,291 Change in unrealized (depreciation) appreciation on swaps 5,121 227,070 Net (decrease) increase in net assets resulting from operations (12,674,252) 7,376,643 Dividends to Common Shareholders From: Net investment income (2,695,211) (5,203,638) Capital Share Reinvestment of dividends on common shares 18,024 33,167 Transactions: Repurchase of common shares (13,957) (33,149) 4,067 18 Net Assets: Net (decrease) increase in net assets applicable to common shareholders (15,365,396) 2,173,023 Net assets at the beginning of the year 42,531,701 40,358,678 Net assets at the end of the year 27,166,305 42,531,701 The accompanying notes are an integral part of these financial statements. 6

TAX-FREE PUERTO RICO FUND, INC. STATEMENT OF CASH FLOWS Increase (Decrease) in Cash For the fiscal year ended December 31, 2017 Cash Provided by Net decrease in net assets from operations (12,674,252) Operations: Adjusted by: Proceeds from sale of portfolio securities 10,427,885 Proceeds from sale of real estate owned 21,639 Call and paydowns of portfolio securities 490,169 Net realized loss on investments and real estate owned 110,795 Change in unrealized (appreciation) depreciation on investments 14,982,119 Change in unrealized (appreciation) depreciation on swaps (5,121) Change in unrealized (appreciation) depreciation on real estate owned 118,399 Accretion of discounts on investments (1,009,975) Amortization of premiums on investments 5,559 Decrease in interest receivable 426,051 Decrease in prepaid expenses and other assets 580 Decrease in cash due from broker 800,000 Decrease in interest payable (3,717) Decrease in administration, custody, and transfer agent fees payable (1,432) Decrease in investment advisory fees payable (14,866) Increase in accrued expenses and other liabilities 38,840 Total cash provided by operations 13,712,673 Cash Used in Securities sold under repurchase agreements, net of issuances of $339,975,257 (10,603,151) Financing Activities: Dividends to common shareholders paid in cash (2,973,565) Repurchase of common shares (13,957) Total cash used in financing activities (13,590,673) Cash: Net increase in cash for the year 122,000 Cash at the beginning of the year 422,471 Cash at the end of the year 544,471 Cash Flow Information: Cash paid for interest and leverage related expenses 465,111 Non-cash activities-dividends reinvested by common shareholders 18,024 Real estate acquired in settlements of mortgage loans 53,307 The accompanying notes are an integral part of these financial statements. 7

Tax-Free Puerto Rico Fund, Inc. Notes to Financial Statements December 31, 2017 1. Reporting Entity and Significant Accounting Policies Tax-Free Puerto Rico Fund, Inc. (the Fund ) is a non-diversified, closed-end management investment company. The Fund is a corporation organized under the laws of the Commonwealth of Puerto Rico and is registered as an investment company under the Puerto Rico Investment Companies Act of 1954, as amended (the Puerto Rico Investment Companies Act ). The Fund was incorporated on March 24, 2000 and commenced operations on February 28, 2001. UBS Asset Managers of Puerto Rico, a division of UBS Trust Company of Puerto Rico ( UBSTC ), is the Fund s Investment Adviser (the "Investment Adviser"). UBSTC is also the Fund s Administrator ("Administrator"). The Fund's investment objective is to provide current income, consistent with the preservation of capital. The Fund is considered an investment company under the accounting principles generally accepted in the United States of America ("GAAP") and follows the accounting and reporting guidance applicable to investment companies in the Financial Accounting Standard Board ("FASB") Accounting Standards Codification 946, Financial Services-Investment Companies ("ASC 946"). The following is a summary of the Fund s significant accounting policies: Use of Estimates in Financial Statements Preparation The accompanying financial statements of the Fund have been prepared on the basis of GAAP. The preparation of financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the reported amounts and disclosures in the financial statements. Actual results could differ from those estimates. Net Asset Value Per Share The net asset value per share of the Fund is determined by the Administrator on Wednesday of each week after the close of trading on the New York Stock Exchange ("NYSE") or, if such day is not a business day in New York City and Puerto Rico, on the next succeeding business day, and at month-end if such date is not a Wednesday. The net asset value per share is computed by dividing the assets of the Fund less its liabilities, by the number of outstanding shares of the Fund. Valuation of Investments All securities are valued by UBSTC on the basis of valuations provided by pricing services or by dealers which were approved by the Fund s management and the Board of Directors. In arriving at their valuation, pricing sources may use both a grid matrix of securities values as well as the evaluations of their staff. The valuation, in either case, could be based on information concerning actual market transactions and quotations from dealers or a grid matrix performed by an outside vendor that reviews certain market and security factors to arrive at a bid price for a specific security. Certain Puerto Rico obligations have a limited number of market participants and, thus, might not have a readily ascertainable market value and may have periods of illiquidity. Certain securities of the Fund for which quotations are not readily available from any source, are valued at fair value by or under the direction of the Investment Adviser utilizing quotations and other information concerning similar securities obtained from recognized dealers. The Investment Adviser can override any price that it believes is not consistent with market conditions. Valuation adjustments are limited to those necessary to ensure that the financial instrument s fair value is adequately representative of the price that would be received or paid in the marketplace. These adjustments include amounts that reflect counterparty credit quality, constraints on liquidity, and unobservable parameters that are applied consistently. 8