Correct Answer: He told his sister that he was very proud of her.

Solution : The third option is the correct choice.

Narration Conversion:

• The verb said is replaced by the reporting verb told.
• That is used to introduce the reported clause.
• The first-person pronoun I is changed to the third-person pronoun he . Also, you is changed to her .
• The simple present tense am is changed to the simple past tense was .

Therefore, the sentence in the indirect form is: He told his sister that he was very proud of her .